<PAGE>
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Annual Report
- --------------------------------------------------------------------------------
1996
1996
1996
1996
1996
Smith Barney
New Jersey
Municipals
Fund Inc.
-------------------------------------
March 31, 1996
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
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Smith Barney New Jersey Municipals Fund Inc.
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Dear Shareholder:
We are pleased to provide you with the annual report for the Smith Barney New
Jersey Municipals Fund Inc. for the year ended March 31, 1996. For your
convenience, we have summarized the period's prevailing economic and market
conditions below and outlined our portfolio strategy during this time. A
detailed summary of performance and current holdings can be found in the
appropriate sections that follow in the annual report.
New Jersey Economic Highlights
Governor Whitman and the State Assembly have certainly made New Jersey a much
more friendly place for taxpayers and businesses in recent years. Despite some
recent significant job losses from large banks and major employers such as AT&T
that had a slightly negative ripple effect on many businesses, the Garden State
has maintained its high credit ratings from Moody's Investors Services, Inc. and
Standard & Poor's Corporation, two major credit reporting and bond rating
agencies. After implementing an aggressive income tax reduction of 30% these
past few years, New Jersey officials have no new major tax reduction initiatives
in the works at present as they assess the economic impact of earlier tax
reductions.
Fund Performance Update
and Investment Strategy
The Smith Barney New Jersey Municipals Fund posted a one-year total return of
7.77% for Class A shares, which was significantly better than its New Jersey
bond fund peer group average of 6.90% for the same period, as reported by Lipper
Analytical Services, Inc., a major fund tracking organization. The Fund's
weighted average maturity as of March 31, 1996 was just over 20 years. With over
85% of its assets in investment-grade securities, the New Jersey Municipals Fund
has maintained a high-quality portfolio. (An investment-grade security is a
security with a rating of BBB/Baa or better from Standard & Poor's Corporation
or Moody's Investors Services, Inc., respectively.)
Against a backdrop of increased turbulence in the municipal bond market, we
believe the Smith Barney New Jersey Municipals Fund's high-quality orientation
and broad sector diversification is a prudent investment strategy. In our view,
the Fund's current structure should provide investors with an attractive level
of income while helping to minimize the fluctuation of its net asset value in an
increasingly volatile municipal bond market.
1
<PAGE>
In addition, the Fund has concentrated primarily on high-grade general
obligation and education issues because they represent, in our view, good value,
especially in light of New Jersey's current spending priorities. However, we
have been very cautious about purchasing State health care issues recently
because of the difficulty some New Jersey hospitals have had in getting
reimbursed from the State for the care of uninsured patients. We are closely
monitoring this situation and will make changes to the Fund's portfolio as
market conditions warrant.
Municipal Bond Market Outlook
The two main issues affecting the municipal bond market today are the economy
and, to a lesser extent since the beginning of the year, potential tax reform.
So far in 1996, the U.S. economy has been stronger than many had originally
anticipated. Although the rate of inflation appears to be under control, this
stronger-than-expected economic growth has exerted upward pressure on long-term
interest rates. In our view, continued strength in the economy should keep
long-term interest rates high throughout the remainder of 1996 and into 1997.
Although there may be a rally in the middle of 1996, we believe that the bulk of
the decline in long-term interest rates is behind us.
This increase in interest rates could provide investors with a window of
opportunity in the municipal bond market. Supply and demand in the tax-exempt
market is as balanced as it has been in a long time, and there does not appear
to be any real weak spots or weak sectors of the economy. In addition, if the
stock market and interest rates go up, bonds should begin to look relatively
more attractive to a larger number of investors, and that should help municipal
bonds.
Supply and demand fundamentals are increasingly favorable for the tax-exempt
market. New municipal bond issuance is light, with only $150 billion in new
municipal bonds expected to be issued in 1996 with an equivalent amount of
municipal bonds projected to be retired. As interest rates have moved higher and
the supply of municipal bonds has decreased, investor demand for tax-exempt
securities has risen. In fact, in some higher-tax states such as New Jersey,
shortages of municipal bonds have begun to develop. We expect municipal bonds
will continue to outperform taxable securities because of the lower volume of
municipal bonds being issued today.
Reforming the complex U.S. tax code remains a popular idea among politicians and
their constituents, especially in an election year. Concerns about what impact
any tax changes might have on interest from municipal bonds have caused their
yields to approach 90% of what Treasuries are currently yielding. With respect
to the flat tax, the exit of Republican candidate Steve Forbes from the
Presidential race has caused that issue to recede from the
2
<PAGE>
political debate. However, between now and November, tax reform will probably
move in and out of the political spotlight as the campaign intensifies. In all
probability, tax reform will be a gradual, long-term process that will unlikely
be enacted until 1997 to 1998 at the earliest. In the meantime, we believe the
municipal bond market will be rewarding for investors who are now well
compensated for any potential downside risk from most aspects of tax reform.
Although we believe the tax-exempt market is currently attractive regardless of
the final outcome of the tax reform debate, this issue will continue to be an
important one for the municipal bond market over the next two to three years. In
addition, state-specific municipal bond funds have been somewhat insulated from
the tax reform debate because their income will still be exempt from state tax.
Over the near term, we believe the municipal bond market will remain in its
current trading range until the Federal Reserve Board acts. However, because
this is an election year, there is also a good chance that the Federal Reserve
Board may pursue a neutral interest-rate policy and take no action until after
the Presidential election is held in November.
Thank you for investing in the Smith Barney New Jersey Municipals Fund. We look
forward to helping you achieve your financial goals.
Sincerely,
/s/ HEATH B. MCLENDON /s/ LAWRENCE T. MCDERMOTT
Heath B. McLendon Lawrence T. McDermott
Chairman and Vice President and
Chief Executive Officer Investment Officer
April 15, 1996
3
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
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Historical Performance -- Class A Shares
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<TABLE>
<CAPTION>
Net Asset Value
------------------
Beginning End Income Capital Gain Return Total
Year Ended of Year of Year Dividends Distributions of Capital Returns(1)
================================================================================
<S> <C> <C> <C> <C> <C> <C>
3/31/96 $12.62 $12.88 $0.70 $0.00 $0.00 7.77%
- --------------------------------------------------------------------------------
3/31/95 12.55 12.62 0.70 0.00 0.00 6.37
- --------------------------------------------------------------------------------
3/31/94 13.16 12.55 0.70 0.15 0.00 1.66
- --------------------------------------------------------------------------------
3/31/93 12.44 13.16 0.75 0.14 0.01 13.49
- --------------------------------------------------------------------------------
3/31/92 12.17 12.44 0.77 0.13 0.04 10.22
- --------------------------------------------------------------------------------
3/31/91 11.92 12.17 0.83 0.05 0.01 9.89
- --------------------------------------------------------------------------------
3/31/90 11.67 11.92 0.82 0.03 0.00 9.62
- --------------------------------------------------------------------------------
Inception*
- 3/31/89 11.40 11.67 0.82 0.01 0.00 9.84+
================================================================================
Total $6.09 $0.51 $0.06
================================================================================
</TABLE>
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Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
------------------
Beginning End Income Capital Gain Return Total
Year Ended of Year of Year Dividends Distributions of Capital Returns(1)
================================================================================
<C> <C> <C> <C> <C> <C> <C>
3/31/96 $12.62 $12.88 $0.63 $0.00 $0.00 7.20%
- --------------------------------------------------------------------------------
3/31/95 12.55 12.62 0.62 0.00 0.00 5.76
- --------------------------------------------------------------------------------
3/31/94 13.16 12.55 0.63 0.15 0.00 1.15
- --------------------------------------------------------------------------------
Inception*
- 3/31/93 12.75 13.16 0.27 0.14 0.01 6.60+
================================================================================
Total $2.15 $0.29 $0.01
================================================================================
</TABLE>
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Historical Performance -- Class C Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
------------------
Beginning End Income Capital Gain Return Total
Year Ended of Year of Year Dividends Distributions of Capital Returns(1)
================================================================================
<C> <C> <C> <C> <C> <C> <C>
3/31/96 $12.62 $12.88 $0.63 $0.00 $0.00 7.17%
- --------------------------------------------------------------------------------
Inception*
- 3/31/95 11.86 12.62 0.18 0.00 0.00 8.01+
================================================================================
Total $0.81 $0.00 $0.00
================================================================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
4
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
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Average Annual Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge(1)
----------------------------------
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Year Ended 3/31/96 7.77% 7.20% 7.17%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/96 7.83 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/96 8.62 6.09 11.93
================================================================================
</TABLE>
<TABLE>
<CAPTION>
With Sales Charge(2)
---------------------------------
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Year Ended 3/31/96 3.43% 2.70% 6.17%
- --------------------------------------------------------------------------------
Five Years Ended 3/31/96 6.94 N/A N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/96 8.07 5.57 11.93
================================================================================
</TABLE>
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Cumulative Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charge(1)
================================================================================
<S> <C>
Class A (Inception* through 3/31/96) 92.84%
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Class B (Inception* through 3/31/96) 22.24
- --------------------------------------------------------------------------------
Class C (Inception* through 3/31/96) 15.76
================================================================================
</TABLE>
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charge with respect to Class A shares or the applicable
contingent deferred sales charges ("CDSC") with respect to Class B and C
shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A shares reflect the deduction
of the maximum initial sales charge of 4.00% and Class B shares reflect the
deduction of a 4.50% CDSC, which applies if shares are redeemed less than
one year from initial purchase. This CDSC declines by 0.50% the first year
after purchase and thereafter by 1.00% per year until no CDSC is incurred.
Class C shares reflect the deduction of a 1.00% CDSC, which applies if
shares are redeemed within the first year of purchase.
* Inception dates for Class A, B and C shares are April 22, 1988, November 6,
1992 and December 13, 1994, respectively.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
5
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
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Historical Performance (unaudited)
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Growth of $10,000 Invested in Class A Shares of the
Smith Barney New Jersey Municipals Fund Inc.
vs. Lehman Municipal Bond Fund Index+
- --------------------------------------------------------------------------------
April 1988 -- March 1996
The following table is represented as a line chart in the printed material
[INSERT TABLE HERE]
+ Hypothetical illustration of $10,000 invested in Class A shares at
inception on April 22, 1988, assuming deduction of the maximum 4.00% sales
charge at the time of investment and reinvestment of dividends and capital
gains, if any, at net asset value through March 31, 1996. The Lehman
Municipal Bond Fund Index is a broad based, total return index comprised of
8,000 bonds which are all investment grade, fixed rate, longer term
maturities (greater than two years) and are selected from issues larger
than $50 million dated since January, 1984. The index is unmanaged and is
not subject to the same management and trading expenses of a mutual fund.
The performance of the Fund's other classes may be greater or less than the
Class A shares' performance indicated on this chart, depending on whether
greater or lesser sales charges and fees were incurred by shareholders
investing in the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost.
No adjustment has been made for shareholder tax liability on dividends or
capital gains.
6
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Portfolio Highlights (unaudited) March 31, 1996
- --------------------------------------------------------------------------------
Industry Breakdown
The following table is represented as a pie chart in the printed material
<TABLE>
<CAPTION>
<S> <C>
Other 15.8%
Education 10.8%
Industrial Development 6.5%
Pollution Control 7.4%
Housing: Multi-Family 5.1%
Transportation 4.0%
General Obligation 13.6%
Hospital 20.1%
Utilities 16.7%
</TABLE>
Summary of Investments by Combined Ratings
<TABLE>
<CAPTION>
Standard & Percentage of
Moody's and/or Poor's Total Investments
- --------------------------------------------------------------------------------
<S> <C> <C>
Aaa AAA 52.9%
Aa AA 12.7
A A 13.4
Baa BBB 9.7
Ba BB 0.7
NR NR 10.6
-----
100.0%
=====
</TABLE>
7
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments March 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
================================================================================================
<C> <C> <S> <C>
Education -- 10.8%
$ 760,000 AAA Branchburg Township School District, FGIC-Insured,
5.625% due 2/1/23 $ 725,800
750,000 AAA Hamilton Township Board of Education, FSA-Insured,
7.000% due 12/15/15 810,938
500,000 AAA The City of Jersey City, (Hudson County), Fiscal Year
Adjustment Bonds, Series 1991 B, FSA-Insured,
8.400% due 5/15/06 621,250
650,000 AAA Lakewood Township School District, AMBAC-Insured,
Bank Qualified, Series 92, 6.250% due 2/15/11 696,313
880,000 AAA Lumberton Township Board of Education,
5.625% due 2/15/19 851,400
New Jersey EDR:
1,000,000 AAA Educational Testing Service, MBIA-Insured,
Series E, 6.000% due 5/15/25 998,750
640,000 Aa3* Princeton Montessori Society, LOC Banque National
De Paris, Series S, 6.500% due 6/1/12 667,200
New Jersey State Educational Facilities,
Financing Authority Revenue:
1,000,000 NR Caldwell College, Series A, 7.250% due 7/1/25 1,002,500
1,195,000 A- Drew University, Series B, 7.450% due 2/1/05 1,271,181
Fairleigh Dickinson University, Series C:
1,145,000 NR Escrowed to Maturity with U.S. Government
Securities, 7.750% due 7/1/01(a) 1,238,031
2,700,000 NR 6.625% due 7/1/23 2,507,625
2,000,000 AAA University Medicine and Dentistry, AMBAC-Insured,
Series B, 5.250% due 12/1/16 1,855,000
2,360,000 A+ New Jersey State Higher Education Assistance,
5.300% due 7/1/10(b) 2,203,650
1,475,000 AAA Ocean Township School District, MBIA-Insured,
5.400% due 6/1/14 1,419,688
Rutgers State University Refunding, State University
of New Jersey:
600,000 AA Series 92A, 6.400% due 5/1/13 648,750
750,000 AA Series P, 6.850% due 5/1/21 814,688
1,000,000 Baa1* Shrewsbury Board of Education, COP,
6.600% due 8/15/15 1,040,000
South Brunswick Township, New Jersey Board
of Education, FGIC-Insured:
1,500,000 AAA 6.400% due 8/1/18 1,588,125
1,500,000 AAA 6.400% due 8/1/19 1,582,500
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
================================================================================================
<C> <C> <S> <C>
Education -- 10.8% (continued)
$1,000,000 AAA 6.400% due 8/1/21 $ 1,055,000
- ------------------------------------------------------------------------------------------------
23,598,389
- ------------------------------------------------------------------------------------------------
General Obligation -- 13.6%
2,500,000 AAA Atlantic County COP, Lease Agreement, FGIC-Insured,
7.400% due 3/1/09 2,981,250
1,340,000 AAA Bayonne GO, FGIC-Insured, 6.125% due 5/1/14 1,376,850
665,000 AAA Belvedere GO, AMBAC-Insured, 7.300% due 12/1/14 723,188
385,000 A1* Cape May Bridge Commission, Guaranteed Revenue Bonds,
6.700% due 6/1/02 401,363
550,000 AAA Dover Board of Education COP, FGIC-Insured,
6.600% due 6/1/11 580,250
Essex County GO:
175,000 AAA FSA-Insured, 6.500% due 12/1/11 183,531
2,500,000 AAA Improvement Authority, FGIC-Insured,
5.200% due 12/1/24 2,278,125
750,000 AAA Evesham Township Board of Education COP, FGIC-Insured,
6.875% due 9/1/11 821,250
Hudson County:
425,000 AAA Correctional Facilities, MBIA-Insured, 6.600% due 12/1/21 449,438
200,000 AAA GO, FGIC-Insured, 6.550% due 7/1/10 222,250
1,000,000 AAA Lumberton Township School District COP,
MBIA-Insured, 6.100% due 10/1/13 1,036,250
Morris Township GO:
550,000 AA 6.550% due 7/1/09 618,750
550,000 AA 6.550% due 7/1/10 616,000
500,000 AA 6.550% due 7/1/11 557,500
1,200,000 A+ Morristown GO, Revenue Refunding, 6.500% due 2/1/06 1,240,224
500,000 AAA New Jersey State GO, (Pre-Refunded--Escrowed with
U.S. Government Securities to 9/15/01 Call @ 101.5),
6.800% due 9/15/11(a) 556,875
2,500,000 AA+ New Jersey State GO, Series D, 8.000% due 2/15/07 3,125,000
2,500,000 A+ New Jersey State COP, Equipment Leasing Revenue,
Series A, 6.400% due 4/1/05 2,700,000
1,500,000 AAA North Bergen Township Capital Appreciation, FSA-Insured,
8.000% due 8/15/07 1,854,375
500,000 AAA Perth Amboy Board of Education COP, FSA-Insured,
6.125% due 12/15/17 512,500
1,750,000 AAA Piscataway Township School District COP, FHA-Insured,
5.375% due 12/15/10 1,743,438
495,000 A Puerto Rico Commonwealth GO Unlimited,
8.000% due 7/1/08 537,075
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
================================================================================================
<C> <C> <S> <C>
General Obligation -- 13.6% (continued)
$ 500,000 AAA South Amboy GO Unlimited, MBIA-Insured,
6.375% due 12/1/10 $ 532,500
750,000 AAA Trenton GO, MBIA-Insured, 6.550% due 8/15/09 801,563
900,000 AAA Union City GO, MBIA-Insured, 6.700% due 9/1/12 982,125
125,000 AAA Virgin Islands Public Financing Authority Revenue, Series A,
(Escrowed to Maturity with U.S. Government Securities),
7.300% due 10/1/18(a) 154,844
854,000 AAA Weehawken Township GO, FSA-Insured, 6.350% due 7/1/07 910,578
West Windsor/Plainsboro GO, Regional School District:
180,000 AA 6.750% due 4/1/06 203,400
490,000 AA 6.750% due 4/1/07 557,988
435,000 AA 6.800% due 4/1/08 499,706
170,000 AA 6.800% due 4/1/09 195,288
- ------------------------------------------------------------------------------------------------
29,953,474
- ------------------------------------------------------------------------------------------------
Hospital -- 20.1%
1,000,000 AAA Camden County Improvement Authority, Health Services
Project B, AMBAC-Insured, 5.250% due 12/1/18 938,750
New Jersey EDA:
2,500,000 AAA Nursing Home Revenue, RWJ Health Care Corporation,
FSA-Insured, 6.500% due 7/1/24 2,650,000
1,500,000 AAA Clara Maass Health Systems Project, FSA-Insured,
5.000% due 7/1/96
New Jersey Health Care Facilities Financing Authority Revenue: 1,365,000
3,000,000 A* Atlantic City Medical Center, Series C,
6.800% due 7/1/11 3,161,250
Burdett Tomlin Memorial Hospital, Series D, FGIC-Insured:
1,400,000 AAA 6.500% due 7/1/12 1,489,250
850,000 AAA 6.500% due 7/1/21 906,313
1,985,000 Aa* Cathedral Health Services Inc., FHA-Insured,
7.250% due 2/15/21 2,121,469
Columbus Hospital, Series A:
1,050,000 Baa* 7.200% due 7/1/01 1,088,063
1,000,000 Baa* 7.500% due 7/1/21 1,017,500
1,500,000 AAA Community Medical Center, Series D, MBIA-Insured,
6.000% due 7/1/19 1,516,875
250,000 A Community Memorial Hospital Association, Series C,
8.000% due 7/1/14 269,688
2,300,000 Baa1* Deborah Heart & Lung Center, 6.300% due 7/1/23 2,282,750
750,000 BBB+ East Orange General Hospital, Series B,
7.750% due 7/1/20 789,375
1,500,000 A Helene Fuld Medical Center, Series C, 8.125% due 7/1/13 1,601,250
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
================================================================================================
<C> <C> <S> <C>
Hospital -- 20.1% (continued)
$4,500,000 AAA Irvington General Hospital, FHA-Insured,
6.375% due 8/1/15 $ 4,696,875
1,125,000 AAA J.F.K. Health System, Obligated Group, FGIC-Insured,
6.700% due 7/1/21 1,219,219
260,000 A1* Kennedy Memorial University Medical Center, Series D,
7.875% due 7/1/09 275,275
340,000 Baa1* Kimball Medical Center, Series C, 8.000% due 7/1/98 352,325
825,000 AAA Medical Center of Ocean County, Series C, FSA-Insured,
6.750% due 7/1/20 895,125
3,350,000 AAA Newark Beth Israel Medical Center, FSA-Insured,
6.000% due 7/1/24 3,375,125
600,000 BBB+ Newcomb Medical Center, Series A, 7.875% due 7/1/03 647,250
2,000,000 Baa* Ocean County Hospital, 6.250% due 7/1/23 1,870,000
585,000 AAA Overlook Hospital Association, Series E, FGIC-Insured,
6.700% due 7/1/17 613,519
1,000,000 A- Pascack Valley Hospital, Series 91, 6.700% due 7/1/11 1,011,250
1,000,000 NR Raritan Bay Medical Center, 7.250% due 7/1/27 1,016,250
825,000 AAA Riverview Medical Center, Series A, AMBAC-Insured,
8.000% due 7/1/18 904,406
1,150,000 AAA Somerset Medical Center, Series A, FGIC-Insured,
5.200% due 7/1/24 1,043,625
1,250,000 Baa* St. Elizabeth's Hospital Project, Series B,
8.250% due 7/1/20 1,367,188
2,750,000 Baa* St. Mary Hospital, 5.875% due 7/1/12 2,605,625
725,000 AAA Wayne General Hospital, FHA-Insured, 5.750% due 8/1/11 722,281
- ------------------------------------------------------------------------------------------------
43,812,871
- ------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 5.1%
650,000 BBB+ Essex County Improvement Authority, Lease Revenue Bonds,
6.600% due 4/1/14 659,750
1,000,000 A+ Hudson County Improvement Authority, Solid Waste
System Revenue, Series A, 6.100% due 7/1/20 1,002,500
1,500,000 AAA Newark Housing Financing Corporation, Mortgage Revenue
Refunding, Manor Apartments, Series A, FHA-Insured,
7.500% due 2/15/24 1,616,250
New Jersey State Housing & Mortgage Finance Agency,
Multi-Family Housing Revenue:
2,550,000 AAA Presidential Plaza, Series 1, FHA-Insured,
7.000% due 5/1/30 2,658,375
1,000,000 AAA Refunding, Series A, AMBAC-Insured,
6.000% due 11/1/14 1,006,250
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
================================================================================================
<C> <C> <S> <C>
Housing: Multi-Family -- 5.1% (continued)
$1,000,000 AA Regency Park Project, Series H, 7.700% due 11/1/30 $ 1,035,000
2,500,000 AAA Series Q, MBIA-Insured, 5.875% due 4/1/17(b) 2,487,500
730,000 AAA Sayreville Housing Development Corporation, Mortgage
Revenue Refunding, Lakeview Apartments, FHA-Insured,
7.750% due 8/1/24 738,213
- ------------------------------------------------------------------------------------------------
11,203,838
- ------------------------------------------------------------------------------------------------
Housing: Single-Family -- 1.7%
New Jersey State Housing & Mortgage Finance Agency
Revenue, MBIA-Insured:
100,000 AAA Home Mortgage, Series A, 7.875% due 10/1/17 104,625
395,000 AAA Home Mortgage, Series C, 8.000% due 4/1/12 416,231
1,000,000 AAA Home Mortgage, Series N, 5.900% due 10/1/12 1,003,750
740,000 AAA Series B, 8.100% due 10/1/17 778,850
30,000 AAA Series C, 8.375% due 4/1/17 31,725
300,000 AAA Series D, 7.700% due 10/1/29(b) 313,500
45,000 AAA Puerto Rico Housing Finance Corporation, Single-Family
Mortgage, Series A, GNMA-Collateralized,
7.800% due 10/15/21 46,969
1,000,000 AAA Virgin Islands HFA, Single-Family Mortgage,
GNMA-Collateralized, 6.500% due 3/1/25(b) 1,007,500
- ------------------------------------------------------------------------------------------------
3,703,150
- ------------------------------------------------------------------------------------------------
Industrial Development -- 6.5%
1,000,000 AAA New Jersey EDA, Natural Gas Facilities Revenue, NUI
Corporation, Series A, AMBAC-Insured,
6.350% due 10/1/22 1,042,500
New Jersey EDA, EDR:
1,000,000 Aa3* Economic Growth Bonds, LOC Banque
Nationale De Paris, 6.550% due 12/1/07(b) 1,048,750
1,370,000 AA- Economic Growth Bonds, Series E, LOC National
Westminster USA, 5.400% due 10/1/13(b) 1,325,475
1,500,000 BB+ Electric Revenue, Vineland Cogeneration LP,
7.875% due 6/1/19(b) 1,610,625
1,000,000 AAA Miscellaneous Revenue, State Contract, FSA-Insured,
6.000% due 3/15/21 1,017,500
Nursing Home Revenue:
1,500,000 NR Franciscan Oaks, Series A, 8.500% due 10/1/23 1,599,375
1,000,000 A+ Morris Hall-St. Lawrence, 6.250% due 4/1/25 1,020,000
1,120,000 Aaa* Series L, 7.100% due 12/1/11(b) 1,208,200
1,500,000 A- Terminal Revenue, GATX Terminal Corporation,
Series 1994, 7.300% due 9/1/19 1,665,000
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
================================================================================================
<C> <C> <S> <C>
Industrial Development -- 6.5% (continued)
$1,000,000 NR Trane Division, 1990 Project, 9.500% due 9/1/00 $ 1,113,750
1,500,000 NR Zirser-Greenbriar, 7.375% due 7/15/03 1,518,750
- ------------------------------------------------------------------------------------------------
14,169,925
- ------------------------------------------------------------------------------------------------
Lifecare -- 2.4%
New Jersey EDA, EDR:
1,000,000 BBB Health Village Inc., 7.800% due 5/1/16 1,048,750
1,000,000 Aaa* Eagle Rock Convalescent, Inc. 1990,
GNMA-Collateralized, 7.375% due 12/20/06 1,100,000
New Jersey Health Care Facilities, Financing
Authority Revenue:
2,500,000 AAA Berkeley Heights Convalescent, 5.000% due 7/1/15 2,265,625
805,000 AAA Spectrum for the Living, FHA-Insured,
6.500% due 2/1/22 835,188
- ------------------------------------------------------------------------------------------------
5,249,563
- ------------------------------------------------------------------------------------------------
Miscellaneous -- 10.6%
615,000 A- City of Atlantic City COP, Series 1991 (Public Facilities Lease
Agreements Atlantic City Project), 8.875% due 1/15/13 802,575
200,000 AAA Delaware River Junction, Toll Bridge Commission,
Refunding Bonds, FGIC-Insured, 6.250% due 7/1/12 209,000
1,000,000 AAA New Brunswick Parking Authority Revenue, City Guaranteed
Parking, Series A, FGIC-Insured, 6.500% due 9/1/19 1,060,000
New Jersey EDA:
480,000 NR EDR, National Association of Accountants,
7.650% due 7/1/09 511,800
1,975,000 NR Industrial Revenue, State Plaza Park and Ride LP,
6.625% due 7/1/03 2,029,313
500,000 A+ Performing Arts Center Site (Pre-Refunded--Escrowed
with U.S. Government Securities to 6/15/01 Call @ 102),
6.750% due 6/15/12(a) 529,375
2,000,000 A+ State Contract Economic Recovery, zero coupon
due 9/15/10 900,000
1,000,000 NR Waste Paper Recycling Revenue, Marcal Paper Project,
8.500% due 2/1/10(b) 1,137,500
750,000 Aaa* New Jersey Highway Authority, Garden State Parkway
Revenue, (Pre-Refunded--Escrowed with U.S. Government
Securities to 1/1/99 Call @ 102), 7.250% due 1/1/16(a) 821,250
New Jersey Sports and Expo Authority:
1,250,000 AAA Convention Center, Luxury Tax Revenue, MBIA-Insured,
6.250% due 7/1/20 1,289,063
3,000,000 NR Monmouth Park, Refunding, Series A, 8.000% due 1/1/25 3,277,500
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
================================================================================================
<C> <C> <S> <C>
Miscellaneous -- 10.6% (continued)
$3,400,000 Aa* State Contract, Series A, 6.000% due 3/1/21 $ 3,425,500
650,000 AAA Old Bridge Township, FGIC-Insured, 5.000% due 7/15/11 619,125
2,000,000 AAA Port Authority of NY & NJ, Consolidated Loan, Series 96,
FGIC-Insured, 6.600% due 10/1/23(b) 2,115,000
3,000,000 AAA Port Authority of NY & NJ, MBIA-Insured,
5.875% due 10/15/27 2,988,750
240,000 A+ The Hudson County Improvement Authority (Essential
Purpose Pooled Governmental Loan Project),
Series 1986, 7.600% due 8/1/25 261,000
1,000,000 A+ Union County Improvement Authority Revenue, Cranford
Township Project, 7.750% due 5/1/03 1,087,500
- ------------------------------------------------------------------------------------------------
23,064,251
- ------------------------------------------------------------------------------------------------
Pollution Control -- 7.4%
1,950,000 Ba* Atlantic County Utilities Authority, Solid Waste Revenue,
7.125% due 3/1/16 1,945,125
2,750,000 BBB- Hudson County Improvement Authority, Solid Waste
System Revenue, 7.100% due 1/1/20 2,743,125
1,200,000 AAA Mercer County Improvement Revenue, FGIC-Insured,
Series A, 6.700% due 4/1/13(b) 1,221,000
Middlesex County Pollution Control Authority Financing
Revenue, Amerada Hess Corp.:
1,000,000 NR 7.875% due 6/1/22 1,115,000
2,000,000 NR 6.875% due 12/1/22 2,085,000
New Jersey EDA:
1,000,000 A- Salem County Pollution Control Financing Authority,
Waste Disposal Revenue, (E.I. du Pont De Nemours & Co.),
6.125% due 7/15/22(b) 1,010,000
2,420,000 NR Sewer Facility, Atlantic City Sewer Co.,
7.250% due 12/1/11(b) 2,643,850
1,250,000 Aa1* Solid Waste Revenue, (Garden State Paper Co.),
7.125% due 4/1/22(b) 1,284,375
2,000,000 A- Union County Utility Authority, Solid Waste Revenue,
Series A, 7.150% due 6/15/09(b) 2,082,500
- ------------------------------------------------------------------------------------------------
16,129,975
- ------------------------------------------------------------------------------------------------
Transportation -- 4.0%
500,000 AAA Delaware River Port Authority, PA & NJ Delaware River
Bridges, Revenue Refunding, AMBAC-Insured,
7.375% due 1/1/07 540,625
800,000 Baa1* Essex County Improvement Authority Airport Project
Revenue, Series 92, 6.800% due 11/1/21(b) 841,000
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
================================================================================================
<C> <C> <S> <C>
Transportation -- 4.0% (continued)
$500,000 AAA Hoboken Parking Authority Revenue, FGIC-Insured,
6.000% due 6/1/24 $ 510,625
1,000,000 Baa2* New Jersey EDA Revenue, (American Airlines Inc. Project),
7.100% due 11/1/31(b) 1,037,500
2,255,000 AAA New Jersey State Turnpike Authority Revenue Refunding,
(Escrowed to Maturity with U.S. Government Securities),
10.375% due 1/1/03(a) 2,728,550
1,500,000 AA- Port Authority of NY & NJ, 67th Series,
6.875% due 1/1/25 1,601,250
1,500,000 A Puerto Rico Commonwealth Highway & Transportation
Authority Highway Revenue, Series W, 5.500% due 7/1/15 1,445,625
- ------------------------------------------------------------------------------------------------
8,705,175
- ------------------------------------------------------------------------------------------------
Utilities -- 16.7%
700,000 Baa1* Beachwood Sewer Authority Revenue, Junior Lien,
6.500% due 12/1/12 734,125
1,000,000 AAA Bordentown Sewerage Authority Revenue, Series C,
MBIA-Insured, 6.900% due 12/1/16 1,080,000
2,500,000 AAA Camden County Municipals Utilities Authority, Sewer
Revenue, FGIC-Insured, 5.125% due 7/15/17 2,306,250
Gloucester County Utilities Authority, Sewer Revenue:
1,000,000 AA- 6.500% due 1/1/21 1,042,500
900,000 AA- 6.250% due 1/1/24 940,500
Jersey City:
1,700,000 AAA Sewer Authority, AMBAC-Insured, 6.250% due 1/1/14 1,844,500
530,000 AAA Water Utility, AMBAC-Insured, 7.500% due 10/1/03 563,125
1,385,000 AAA Kearney Municipal Utilities Authority Revenue,
FGIC-Insured, 7.300% due 11/15/18 1,696,625
1,500,000 AAA Lower Township Municipal Utilities Authority, MBIA-Insured,
6.125% due 12/1/13 1,554,375
Middlesex County Utilities Authority, Sewer Revenue:
1,000,000 AAA Refunding, Series A, MBIA-Insured, (Inverse Floating
Rate Security convertible to 6.250% on 8/15/97),
7.600% due 8/15/10(c) 1,091,250
1,250,000 AAA FGIC-Insured, 5.375% due 9/15/15 1,204,688
500,000 AAA Monroe Township Municipal Utilities Authority, Gloucester
County Revenue, AMBAC-Insured, 6.650% due 7/1/11 545,625
New Jersey EDA:
1,000,000 AAA Natural Gas Facilities Revenue, Series A, AMBAC-Insured,
6.250% due 8/1/24 1,030,000
4,500,000 AAA PCR, PSE&G Corp., MBIA-Insured, 6.400% due 5/1/32(b) 4,657,500
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
================================================================================================
<C> <C> <S> <C>
Utilities -- 16.7% (continued)
$750,000 A Water Facilities Revenue, Hackensack Water, Series D,
7.000% due 10/1/17(b) $ 770,740
1,960,000 AAA North Bergen Township Municipal Utilities Authority,
Sewer Revenue, FGIC-Insured, 7.875% due 12/15/09 2,474,500
North Jersey District Water Supply Commission Refunding,
Wanaque North Project, Series A, MBIA-Insured:
2,500,000 AAA 6.000% due 7/1/21 2,553,125
1,195,000 AAA 6.500% due 11/15/21 1,281,638
750,000 AAA Old Bridge Township Municipal Utilities Authority Revenue,
FGIC-Insured, 6.400% due 11/1/09 810,938
2,000,000 AAA Salem County PCR Finance Authority, Public Service Electric
and Gas Co., Project C, MBIA-Insured, 6.200% due 8/1/30 2,037,500
2,500,000 AA Somerset/Raritan Valley Sewer Authority Revenue,
6.750% due 7/1/10 2,687,500
1,000,000 AAA Southeast Morris County Municipal Utilities Authority,
Water Revenue, Series A, FGIC-Insured,
6.500% due 1/1/11 1,070,000
1,500,000 AAA Stafford Municipal Utilities Authority, Sewer and
Water Revenue, FGIC-Insured, 6.125% due 12/1/22 1,537,500
1,035,000 A- Union County Utilities Authority, Solid Waste Revenue,
Series A, 7.200% due 6/15/14(b) 1,069,931
- ------------------------------------------------------------------------------------------------
36,584,435
- ------------------------------------------------------------------------------------------------
Water and Sewer -- 1.1%
New Jersey EDA:
1,000,000 NR Water Facilities Revenue, Series 1991, (New Jersey
American Water Company Inc. Project),
7.400% due 11/1/01(b) 1,071,250
345,000 A* Pennsville Authority Sewer Revenue, 7.100% due 11/1/20 375,188
100,000 AAA Passaic Valley Sewer Commission Revenue, Water Supply
Revenue, Series A, FGIC-Insured, 6.400% due 12/15/22 105,500
750,000 AAA South Monmouth Regional Sewer Authority, MBIA-Insured,
6.000% due 1/15/14 775,314
- ------------------------------------------------------------------------------------------------
2,327,252
- ------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $210,106,444*) $218,502,298
- ------------------------------------------------------------------------------------------------
</TABLE>
(a) Pre-Refunded bonds escrowed by U.S. Government Securities and bonds
escrowed to maturity by U.S. Government Securities are considered by the
investment adviser to be triple-A rated even if issuer has not applied for
new ratings.
(b) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(c) Residual interest bonds-coupon varies inversely with level of short-term
tax-exempt interest rates.
* Aggregate cost for Federal income tax purposes is substantially the same.
See pages 17 and 18 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
16
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Bond Ratings
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Corporation ("Standard & Poor's"), except
those identified by an asterisk (*) are rated by Moody's Investors Services
("Moody's"). The definitions of the applicable rating symbols are set forth
below:
Standard & Poor's -- Ratings from "AA" to "BBB" may be modified by the addition
of a plus (+) or minus (-) sign to show relative standings within the major
rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and
repay principal and differ from the highest rated issue only in a
small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
BB -- Bonds rated "BB " have less near-term vulnerability to default than
other speculative issues. However, they face major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments.
Moody's -- Numerical modifiers 1, 2 and 3 may be applied to each generic rating
from "Aa" to "Baa", where 1 is the highest and 3 the lowest ranking
within its generic category.
Aaa -- Bonds that are rated "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 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
some time 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
thereby not well safeguarded during both good and bad times over the
future. Uncertainty of position characterizes bonds in this class.
NR -- Indicates that the bond is not rated by Standard & Poor's or Moody's.
17
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Short-Term Securities Ratings
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rate rating indicating very strong or
strong capacity to pay principal and interest; those issues
determined to possess overwhelming safety characteristics are denoted
with a plus (+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong; those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG 1 rating.
- --------------------------------------------------------------------------------
Security Descriptions
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governments
AIG -- American International Guaranty
AMBAC -- American Municipal Bond Assurance Corporation
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
COP -- Certificate of Participation
EDA -- Economic Development Authority
EDR -- Economic Development Revenue
FAIRS -- Floating Adjustable Interest Rate Securities
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Federal Savings Association
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
RIBS -- Residual Interest Bonds
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday Demand
18
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities March 31, 1996
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, at value (Cost -- $210,106,444) $ 218,502,298
Receivable for Fund shares sold 175,855
Interest receivable 3,839,471
Receivable for securities sold 501,728
- --------------------------------------------------------------------------------
Total Assets 223,019,352
- --------------------------------------------------------------------------------
LIABILITIES:
Payable to bank 1,476,819
Dividend payable 374,806
Payable for Fund shares purchased 184,266
Investment advisory fees payable 56,884
Administration fees payable 37,923
Distribution fees payable 21,605
Accrued expenses 93,411
- --------------------------------------------------------------------------------
Total Liabilities 2,245,714
- --------------------------------------------------------------------------------
Total Net Assets $ 220,773,638
================================================================================
NET ASSETS:
Par value of capital shares $ 17,135
Capital paid in excess of par value 214,832,781
Overdistributed net investment income (75,277)
Accumulated net realized loss from security transactions (2,396,855)
Net unrealized appreciation of investments 8,395,854
- --------------------------------------------------------------------------------
Total Net Assets $ 220,773,638
================================================================================
Shares Outstanding:
Class A 11,928,594
------------------------------------------------------------------------------
Class B 4,910,353
------------------------------------------------------------------------------
Class C 295,934
------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $12.88
------------------------------------------------------------------------------
Class B * $12.88
------------------------------------------------------------------------------
Class C ** $12.88
------------------------------------------------------------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 4.17% of net asset value per share) $13.42
================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if shares
are redeemed less than one year from initial purchase (See Note 4).
** Redemption price is NAV of Class C shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase.
See Notes to Financial Statements.
19
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended March 31, 1996
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest $11,477,894
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 4) 612,606
Distribution fees (Note 4) 582,541
Administration fees (Note 4) 372,916
Shareholder and system servicing fees 64,802
Shareholder communications 61,438
Audit and legal 48,601
Registration fees 45,655
Custody 17,057
Directors' fees 13,874
Other 33,803
- --------------------------------------------------------------------------------
Total Expenses 1,853,293
- --------------------------------------------------------------------------------
Net Investment Income 9,624,601
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (NOTE 5):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 41,854,026
Cost of securities sold 40,424,333
- --------------------------------------------------------------------------------
Net Realized Gain 1,429,693
Increase in Net Unrealized Appreciation (Note 8) 380,803
- --------------------------------------------------------------------------------
Net Gain on Investments 1,810,496
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $11,435,097
================================================================================
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets For the Years Ended March 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
======================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 9,624,601 $ 9,021,931
Net realized gain (loss) 1,429,693 (3,197,132)
Increase in net unrealized appreciation 380,803 3,571,504
- --------------------------------------------------------------------------------------
Increase in Net Assets From Operations 11,435,097 9,396,303
- --------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 3):
Net investment income (9,588,581) (9,001,936)
Net realized gains -- (29,564)
- --------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (9,588,581) (9,031,500)
- --------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net proceeds from sale of shares 17,834,164 22,726,723
Net asset value of shares issued in connection with
the transfer of the Smith Barney Muni Funds--
New Jersey Portfolio's net assets (Note 8) 62,810,369 --
Net asset value of shares issued for reinvestment
of dividends 5,893,070 5,847,777
Cost of shares reacquired (30,112,356) (34,725,222)
- --------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions 56,425,247 (6,150,722)
- --------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 58,271,763 (5,785,919)
NET ASSETS
Beginning of year 162,501,875 168,287,794
- --------------------------------------------------------------------------------------
End of year* $ 220,773,638 $ 162,501,875
======================================================================================
*Includes overdistributed net investment income of: $ (75,277) $ (111,297)
======================================================================================
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Smith Barney New Jersey Municipals Fund Inc. ("Fund"), a Maryland
corporation, is registered under the Investment Company Act of 1940, as amended,
as a non-diversified, open-end management investment company.
The significant accounting policies consistently followed by the Fund are:
(a) security transactions are accounted for on the trade date; (b) securities
are valued at the mean between the quoted bid and asked prices by an independent
pricing service that are based on transactions in municipal obligations,
quotations from municipal bond dealers, market transactions in comparable
securities and various relationships between securities; (c) short-term
investments and securities maturing within 60 days are valued at cost plus
(minus) accreted discount (amortized premium), which approximates market value;
(d) gains or losses on the sale of securities are calculated by using the
specific identification method; (e) interest income, adjusted for amortization
of premiums and accretion of original issue discount, is recorded on the accrual
basis; market discount is recognized upon the disposition of the security; (f)
direct expenses are charged to the Fund and each class; management fees and
general fund expenses are allocated on the basis of relative net assets; (g)
dividends and distributions to shareholders are recorded on the ex-dividend
date; (h) the Fund intends to comply with the applicable provisions of the
Internal Revenue Code of 1986, as amended, pertaining to regulated investment
companies and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes; (i) the character of
income and gains to be distributed are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles. At
March 31, 1996, reclassifications were made to the Fund's capital accounts to
reflect permanent book/tax differences and income and gains available for
distributions under income tax regulations. Accordingly, a portion of
accumulated realized losses amounting to $268 has been reclassified to paid-in
capital. Net investment income, net realized gains and net assets were not
affected by this change; and (j) estimates and assumptions are required to be
made regarding assets, liabilities and changes in net assets resulting from
operations when financial statements are prepared. Changes in the economic
environment, financial markets and any other
22
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
parameters used in determining these estimates could cause actual results to
differ from these amounts.
2. Fund Concentration
Since the Fund invests primarily in obligations of issuers within New
Jersey, it is subject to possible concentration risks associated with economic,
political or legal developments or industrial or regional matters specifically
affecting New Jersey.
3. Exempt-Interest Dividends and Other Distributions
The Fund intends to satisfy conditions that will enable interest from
municipal securities, which is exempt from Federal income tax and from
designated state income taxes, to retain such tax-exempt status when distributed
to the shareholders of the Fund.
Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
4. Investment Advisory Agreement, Administration
Agreement and Other Transactions
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment adviser to the Fund. Effective
November 17, 1995, the Fund pays SBMFM an annual advisory fee of 0.30% of the
Fund's average daily net assets. This fee is calculated daily and paid monthly.
Prior to November 17, 1995, the Fund paid SBMFM an investment advisory fee at
the following annual rates: 0.35% of average daily net assets up to $500 million
and 0.32% of average daily net assets in excess of $500 million.
SBMFM also acts as the Fund's administrator for which the Fund pays a fee
calculated at an annual rate of 0.20% of the average daily net assets up to $500
million and 0.18% of the average daily net assets in excess of $500 million.
This fee is calculated daily and paid monthly.
In addition, The Boston Company Advisors, Inc. ("Boston Advisors"), an
indirect wholly owned subsidiary of Mellon Bank Corporation, acted as
sub-administrator to the Fund. SBMFM paid
23
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Boston Advisors a portion of its administration fee at a rate agreed upon from
time to time between SBMFM and Boston Advisors. As of June 12, 1995 this
relationship was terminated.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares. For the year ended March 31, 1996, SB received sales charges of
approximately $154,000 on sales of the Fund's Class A shares.
There is a contingent deferred sales charge ("CDSC") of 4.50% on Class B
shares, which applies if redemption occurs less than one year from initial
purchase. This CDSC declines by 0.50% the first year after purchase and
thereafter by 1.00% per year until no CDSC is incurred. Class C shares have a
1.00% CDSC, which applies if redemption occurs within the first year of
purchase. For the year ended March 31, 1996, CDSCs paid to SB were approximately
$117,000 for Class B shares.
Pursuant to a Distribution Plan, the Fund pays a service fee with respect
to its Class A, B and C shares, calculated at the annual rate of 0.15% of the
average daily net assets for each respective class. In addition, the Fund pays a
distribution fee with respect to its Class B and C shares calculated at the
annual rate of 0.50% and 0.55% of the average daily net assets for each class,
respectively. For the year ended March 31, 1996, total Distribution Plan fees
incurred were:
<TABLE>
<CAPTION>
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Distribution Plan Fees $185,007 $387,729 $9,805
================================================================================
</TABLE>
All officers and one Director of the Fund are employees of SB.
5. Investments
During the year ended March 31, 1996, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
<TABLE>
<CAPTION>
================================================================================
<S> <C>
Purchases $39,398,540
- --------------------------------------------------------------------------------
Sales 41,854,026
================================================================================
</TABLE>
24
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
At March 31, 1996, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were approximately
as follows:
<TABLE>
<CAPTION>
================================================================================
<S> <C>
Gross unrealized appreciation $9,957,600
Gross unrealized depreciation (1,561,746)
- --------------------------------------------------------------------------------
Net unrealized appreciation $8,395,854
================================================================================
</TABLE>
6. Capital Loss Carryforward
At March 31, 1996, the Fund had, for Federal tax purposes, approximately
$2,397,000 of capital loss carryforwards available to offset future capital
gains. To the extent that these carryforward losses are used to offset capital
gains, it is probable that the gains so offset will not be distributed. The
amount and expiration of the carryforwards are indicated below. Expiration
occurs on March 31 of the year indicated:
<TABLE>
<CAPTION>
2002 2003
================================================================================
<S> <C> <C>
Carryforward Amounts $629,000 $1,768,000
================================================================================
</TABLE>
7. Capital Shares
As of March 31, 1996, the Fund had 100 million shares of capital stock
authorized with a par value of $0.001 per share. The Fund has the ability to
issue multiple classes of shares. Each share of a class represents an identical
interest and has the same rights, except that each class bears certain direct
expenses, including those specifically related to the distribution of its
shares.
At March 31, 1996, total paid-in capital amounted to the following for each
class:
<TABLE>
<CAPTION>
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Total Paid-in Capital $146,074,907 $64,864,298 $3,910,711
================================================================================
</TABLE>
25
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1996 March 31, 1995*
--------------------------- ---------------------------
Shares Amount Shares Amount
=============================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 599,655 $ 7,845,574 806,228 $ 9,970,151
Net asset value of shares
issued in connection
with the transfer of the
New Jersey Portfolio's
net assets (Note 8) 4,320,421 57,233,493 -- --
Shares issued on
reinvestment 304,318 3,936,961 326,175 4,033,183
Shares redeemed (1,770,314) (23,106,072) (2,211,779) (27,041,571)
- ---------------------------------------------------------------------------------------------
Net Increase (Decrease) 3,454,080 $ 45,909,956 (1,079,376) $(13,038,237)
=============================================================================================
Class B
Shares sold 736,489 $ 9,548,116 1,011,453 $ 12,515,653
Net asset value of shares
issued in connection
with the transfer of the
New Jersey Portfolio's
net assets (Note 8) 163,375 2,164,960 -- --
Shares issued on
reinvestment 147,425 1,905,056 146,701 1,813,092
Shares redeemed (521,676) (6,758,534) (628,611) (7,683,651)
- ---------------------------------------------------------------------------------------------
Net Increase 525,613 $ 6,859,598 529,543 $ 6,645,094
=============================================================================================
Class C
Shares sold 33,600 $ 440,474 19,546 $ 240,919
Net asset value of shares
issued in connection
with the transfer of the
New Jersey Portfolio's
net assets (Note 8) 257,534 3,411,916 -- --
Shares issued on
reinvestment 3,911 51,053 120 1,502
Shares redeemed (18,777) (247,750) -- --
- ---------------------------------------------------------------------------------------------
Net Increase 276,268 $ 3,655,693 19,666 $ 242,421
=============================================================================================
</TABLE>
* For Class C shares, transactions are for the period from December 13, 1994
(inception date) to March 31, 1995.
26
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
8. Transfer of Net Assets
On December 8, 1995, the Fund acquired the assets and certain liabilities
of the Smith Barney Muni Funds--New Jersey Portfolio ("New Jersey Portfolio")
pursuant to a plan of reorganization approved by Smith Barney New Jersey
Municipals Fund Inc. shareholders on December 1, 1995. Total shares issued by
the Fund and the total net assets of New Jersey Portfolio and the Fund on the
date of the transfer were as follows:
<TABLE>
<CAPTION>
Total Net
Shares Assets of Total Net
Issued by Acquired Assets of
Acquired Portfolio the Fund Portfolio the Fund
================================================================================
<S> <C> <C> <C>
New Jersey Portfolio 4,741,331 $62,810,369 $168,346,376
================================================================================
</TABLE>
The total net assets of New Jersey Portfolio before acquisition included
unrealized appreciation of $4,397,508 and a net realized loss of $629,684. The
total net assets of the Fund immediately after the transfer were $231,156,745.
The transaction was structured for tax purposes to qualify as a tax-free
reorganization under the Internal Revenue Code of 1986, as amended.
27
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class A Shares 1996 1995 1994 1993 1992
================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $12.62 $12.55 $13.16 $12.44 $12.17
- ----------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income(1) 0.70 0.70 0.70 0.75 0.77
Net realized and unrealized gain (loss) 0.26 0.07 (0.46) 0.87 0.44
- ----------------------------------------------------------------------------------------------------------------
Total Income From Operations 0.96 0.77 0.24 1.62 1.21
- ----------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.70) (0.70) (0.69) (0.75) (0.77)
Overdistribution of net investment income -- -- (0.01) -- --
Net realized gains -- (0.00)* (0.15) (0.14) (0.13)
Capital -- -- (0.00) (0.04)
- ----------------------------------------------------------------------------------------------------------------
Total Distributions (0.70) (0.70) (0.85) (0.90) (0.94)
- ----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $12.88 $12.62 $12.55 $13.16 $12.44
- ----------------------------------------------------------------------------------------------------------------
Total Return 7.77% 6.37% 1.66% 13.49% 10.22%
- ----------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $153,690 $106,919 $119,913 $115,694 $92,797
- ----------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(1)(2) 0.84% 0.88% 0.83% 0.74% 0.67%
Net investment income 5.41 5.61 5.17 5.76 6.18
- ----------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 22% 32% 32% 58% 98%
================================================================================================================
</TABLE>
(1) The investment adviser waived all or part of its fees in the years ended
March 31, 1992, March 31, 1993 and March 31, 1994. If such fees were not
waived, the per share effects on net investment income and expense ratios
would have been as follows:
<TABLE>
<CAPTION>
Per Share Decreases to Expense Ratios
Net Investment Income Without Fee Waivers
--------------------------- --------------------------
1994 1993 1992 1994 1993 1992
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Class A $0.01 $0.02 $0.02 0.88% 0.90% 0.83%
</TABLE>
(2) Expense ratios exclude interest expense. Expense ratios including interest
expense would have been 0.89% and 0.68% for the years ended March 31, 1995
and March 31, 1992, respectively.
* Amount represents less than $0.01.
28
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class B Shares 1996 1995 1994 1993(1)
======================================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $12.62 $12.55 $13.16 $12.75
- ------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income(2) 0.63 0.63 0.64 0.28
Net realized and unrealized gain (loss) 0.26 0.06 (0.47) 0.55
- ------------------------------------------------------------------------------------------------------
Total Income From Operations 0.89 0.69 0.17 0.83
- ------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.63) (0.62) (0.62) (0.27)
Overdistribution of net investment income -- -- (0.01) --
Net realized gains -- (0.00)* (0.15) (0.14)
Capital -- -- (0.00)* (0.01)
- ------------------------------------------------------------------------------------------------------
Total Distributions (0.63) (0.62) (0.78) (0.42)
- ------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $12.88 $12.62 $12.55 $13.16
- ------------------------------------------------------------------------------------------------------
Total Return 7.20% 5.76% 1.15% 6.60%++
- ------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $63,272 $55,334 $48,375 $16,293
- ------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets
Expenses(2)(3) 1.36% 1.39% 1.36% 1.33%+
Net investment income 4.90 5.09 4.64 5.17+
- ------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 22% 32% 32% 58%
======================================================================================================
</TABLE>
(1) For the period from November 6, 1992 (inception date) to March 31, 1993.
(2) The investment adviser waived all or part of its fees in the years ended
March 31, 1993 and March 31, 1994. If such fees were not waived, the per
share effects on net investment income and expense ratios would have been
as follows:
<TABLE>
<CAPTION>
Per Share Decreases to Expense Ratios
Net Investment Income Without Fee Waivers
--------------------- -------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Class B $0.01 $0.01 1.41% 1.49%+
</TABLE>
(3) Expense ratios exclude interest expense. Expense ratio including interest
expense would have been 1.40% for the year ended March 31, 1995.
* Amount represents less than $0.01.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
29
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
Class C Shares 1996 1995(1)
================================================================================
<S> <C> <C>
Net Asset Value, Beginning of Year $12.62 $11.86
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.62 0.20
Net realized and unrealized gain 0.27 0.74
- --------------------------------------------------------------------------------
Total Income From Operations 0.89 0.94
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.63) (0.18)
Net realized gains -- (0.00)*
- --------------------------------------------------------------------------------
Total Distributions (0.63) (0.18)
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $12.88 $12.62
- --------------------------------------------------------------------------------
Total Return 7.17% 8.01%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $3,812 $248
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.41% 1.44%+
Net investment income 4.82 5.05+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 22% 32%
================================================================================
</TABLE>
(1) For the period from December 13, 1994 (inception date) to March 31, 1995.
* Amount represents less than $0.01.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
30
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
Smith Barney New Jersey Municipals Fund Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the Smith Barney New Jersey Municipals
Fund Inc. as of March 31, 1996, and the related statements of operations,
changes in net assets, and financial highlights for the year then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit. The statement
of changes in net assets for the year ended March 31, 1995 and the financial
highlights for each of the years in the four-year period then ended were audited
by other auditors whose report thereon, dated May 10, 1995 expressed an
unqualified opinion on that statement of changes in net assets and those
financial highlights.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1996, by correspondence with the custodian. As to securities sold but not
delivered, we performed other appropriate auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Smith Barney New Jersey
Municipals Fund Inc. as of March 31, 1996, and the results of its operations,
changes in its net assets and financial highlights for the year then ended, in
conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
New York, New York
May 21, 1996
31
<PAGE>
Smith Barney
New Jersey Municipals Fund Inc.
- --------------------------------------------------------------------------------
Additional Information
- --------------------------------------------------------------------------------
Change in Independent Auditor: On October 20, 1994, based upon the
recommendation of the Audit Committee of the Fund, the Board of Directors
determined not to retain Coopers & Lybrand L.L.P ("Coopers & Lybrand") as the
Fund's independent auditor and voted to appoint KPMG Peat Marwick LLP. During
the Fund's two most recent fiscal years, Coopers & Lybrand's audit reports
contained no adverse opinion or disclaimer of opinion; nor were the reports
qualified or modified as to uncertainty, audit scope, or accounting principles.
Further, during this same period there were no disagreements with Coopers &
Lybrand on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Coopers & Lybrand, would have caused it to make reference
to the subject matter of such disagreements in connection with its audit
reports. The Fund has requested Coopers & Lybrand to provide a letter to the
Securities and Exchange Commission stating whether Coopers & Lybrand agrees with
the foregoing statements, and to provide the Fund with a copy of such letter. A
copy of this letter is available upon request by calling the Fund at (212)
723-9218.
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For the year ended March 31, 1996, 100% of the dividends paid by the Fund
from net investment income were tax-exempt for regular Federal income tax
purposes.
32
<PAGE>
Smith Barney
New Jersey
Municipals
Fund Inc.
Directors
Herbert Barg
Alfred J. Bianchetti
Martin Brody
Dwight B. Crane
Burt Dorsett
Elliot Jaffe
Stephen E. Kaufman
Joseph J. McCann
Heath B. McLendon, Chairman
Cornelius Rose
Officers
Heath B. McLendon
Chief Executive Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
Lawrence T. McDermott
Vice President
and Investment Officer
Karen L. Mahoney-Malcomson
Investment Officer
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
Smith Barney
- ----------------------------------
A Member of Travelers Group [LOGO]
Investment Adviser
and Administrator
Smith Barney Mutual Funds
Management Inc.
Distributor
Smith Barney Inc.
Custodian
PNC Bank
Shareholder
Servicing Agent
First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney New Jersey Municipals Fund Inc. It is not authorized for
distribution to prospective investors unless accompanied or preceded by a
current Prospectus for the Fund, which contains information concerning the
Fund's investment policies and expenses as well as other pertinent information.
Smith Barney
New Jersey
Municipals Fund Inc.
388 Greenwich Street
New York, New York 10013
FD0370 5/96
