<PAGE>
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[GRAPHIC]
Smith Barney
New Jersey
Municipals
Fund Inc.
ANNUAL REPORT
March 31, 1998
[LOGO] Smith Barney Mutual Funds
Investing for your future
Every day.(SM)
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<PAGE>
Smith Barney
New Jersey
Municipals
Fund Inc.
[PHOTO] [PHOTO]
HEATH B. LAWRENCE T.
MCLENDON MCDERMOTT
Chairman Vice President and
Investment Officer
Dear Shareholder:
We are pleased to provide the annual report for the Smith Barney New Jersey
Municipals Fund Inc. ("Fund") for the year ended March 31, 1998. In this report,
we summarize the period's prevailing economic and market conditions and outline
our portfolio strategy. A detailed summary of the Fund's performance can be
found in the appropriate sections that follow.
Performance Update
For the year ended March 31, 1998, the Class A shares of the Fund had a total
return of 10.20% outperforming its Lipper Analytical Services, Inc. peer group
average total return of 9.75% for the same period. (Lipper is an independent
fund-tracking organization.) Over the twelve months covered by the report, the
Fund distributed income dividends totaling $0.71 per Class A share. Based on its
net asset value ("NAV") of $13.44 as of March 31, 1998 for Class A shares, and
the current income dividend of $0.059 per Class A share, this equates to an
annualized yield of 5.27%. For a New Jersey State resident in the combined
federal and state income tax bracket of 42.37%, the Fund's tax-free yield of
5.27% is equivalent to a taxable yield of 9.14%. (This figure assumes a federal
income tax bracket of 36% which, according the Internal Revenue Service,
constitutes 10% of all U.S. taxpayers.) We believe our emphasis on income and
the Fund's defensive positioning during the reporting period contributed to its
competitive performance versus its Lipper peer group.
Market and Economic Overview
Interest rates continued to decline overall during the course of the reporting
period. However, the bond markets did experience volatility as investors
responded to a conflicting combination of low inflation and falling
unemployment. The Federal Reserve Board ("Fed") last raised the federal-funds
rate by 0.25% in March 1997, but has since chosen to remain on the sidelines.
(The federal-funds rate is the interest rate banks charge each other for
overnight loans and is a closely watched indicator of the direction of interest
rates.)
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Smith Barney New Jersey Municipals Fund Inc. 1
<PAGE>
However, the persistent strength of the U.S. economy heightened fears among many
investors that the Fed would raise short-term interest rates.
Since the end of October, one of the dominant themes in the financial markets
has been the Asian financial crisis and the extent of its impact on the U.S.
economy. We expect at least a modest dampening effect on economic growth in the
second quarter of this year with inflation continuing to trend lower in spite of
wage pressures resulting from an extremely tight labor market. Yet the ultimate
effect of the Asian crisis is still unknown. In comparison to the international
bond markets and in light of recent events in Asia, we think that many domestic
bonds represent good value based on current market conditions.
New Jersey Economic Highlights
New Jersey's economy continues to grow, although moderately. As schools age and
overall infrastructure needs rise in New Jersey (combined with lower interest
rates), there has been a heavy supply of municipal bonds issued by the Garden
State. However, we have identified attractive opportunities in select New Jersey
health care and housing municipal bonds. Many health care companies have been
extremely successful because of strategic joint ventures and mergers. Hospitals
and health maintenance organizations ("HMOs") throughout New Jersey and the U.S.
have become more cost-conscious and efficient. In addition, recent technological
developments have enabled many hospitals to accurately monitor their own
financial health and that's been generally positive for the entire industry.
Moreover, we continue to favor select New Jersey housing bonds due to their
attractive dividend yield potential. While many investors fear the risks of
prepayment, we think current economic conditions make these risks almost
nonexistent.
Investment Strategy
The Fund's objective 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. The Fund's
manager is supported by an experienced credit analysis team that utilizes
extensive research to identify what they believe to be undervalued issues with
less risk potential.
Over the period covered by this report, the Fund continues to focus on
high-quality issues and remains broadly-diversified across various sectors. As
of March 31, 1998, approximately 80% of the Fund's holdings were rated
investment grade (BBB/Baa and higher) by either Standard and Poor's Ratings
Services or Moody's Investors Service Inc., and about 51% of the Fund's
portfolio was invested in AAA-rated bonds, the highest rating. (Standard and
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2 1998 Annual Report to Shareholders
<PAGE>
Poor's Ratings Services and Moody's Investors Service are two major credit
reporting and bond rating agencies.) The Fund's largest holdings are
concentrated in hospital bonds (22.2%), general obligation bonds (11.2%),
housing bonds (10.1%) and education bonds (9.9%). The Fund's average weighted
maturity was 20.6 years as of March 31, 1998.
Municipal Bond Market Outlook
Municipal bond issuance in 1997 was the second largest issuance ever and helped
to create a number of investment opportunities. Insurance companies were among
the largest buyers, but we believe that more and more individual investors are
beginning to recognize the attractive investment opportunities that tax-free
municipal bonds represent. Moreover, the heavy supply of bond issues usually
depresses prices, that in turn enables us to purchase longer-term bonds
inexpensively and enhance the call protection and the relative performance of
the funds we manage. In addition, municipalities have benefited from the
economy's strength and low inflation.
Going forward, we remain positive on the prospects for the municipal bond
market. We expect a moderately expanding U.S. economy with the Fed maintaining
its vigilance against higher inflationary pressures. However, as previously
noted, we think that inflation should remain subdued despite rising wage
pressures from a tight U.S. labor market. Therefore, our outlook for municipal
bonds over the next six months remains bright.
In closing, thank you for investing in the Smith Barney New Jersey Municipals
Fund. We look forward to continuing to help you pursue your financial goals.
Sincerely,
/s/ HEATH B. MCLENDON /s/ LAWRENCE T. MCDERMOTT
Heath B. McLendon Lawrence T. McDermott
Chairman Vice President and
Investment Officer
April 30, 1998
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Smith Barney New Jersey Municipals Fund Inc. 3
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================
Historical Performance - Class A Shares
===================================================================================================
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>
3/31/98 $ 12.92 $ 13.44 $ 0.71 $ 0.06 $ 0.00 10.20%
- ---------------------------------------------------------------------------------------------------
3/31/97 12.88 12.92 0.68 0.00 0.00 5.74
- ---------------------------------------------------------------------------------------------------
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 $ 7.48 $ 0.57 $ 0.06
===================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================
Historical Performance - Class B Shares
===================================================================================================
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>
3/31/98 $ 12.92 $ 13.44 $ 0.64 $ 0.06 $ 0.00 9.66%
- ---------------------------------------------------------------------------------------------------
3/31/97 12.88 12.92 0.62 0.00 0.00 5.23
- ---------------------------------------------------------------------------------------------------
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 $ 3.41 $ 0.35 $ 0.01
===================================================================================================
</TABLE>
<TABLE>
<CAPTION>
===================================================================================================
Historical Performance - Class C Shares
===================================================================================================
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>
3/31/98 $ 12.92 $ 13.43 $ 0.63 $ 0.06 $ 0.00 9.50%
- ---------------------------------------------------------------------------------------------------
3/31/97 12.88 12.92 0.61 0.00 0.00 5.17
- ---------------------------------------------------------------------------------------------------
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 $ 2.05 $ 0.06 $ 0.00
===================================================================================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
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4 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Average Annual Total Return
================================================================================
<TABLE>
<CAPTION>
Without Sales Charge(1)
-----------------------------
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Year Ended 3/31/98 10.20% 9.66% 9.50
- --------------------------------------------------------------------------------
Five Years Ended 3/31/98 6.31 5.76 N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/98 8.48 6.58 9.11
================================================================================
<CAPTION>
With Sales Charge(2)
-----------------------------
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Year Ended 3/31/98 5.77% 5.16% 8.50
- --------------------------------------------------------------------------------
Five Years Ended 3/31/98 5.44 5.60 N/A
- --------------------------------------------------------------------------------
Inception* through 3/31/98 8.03 6.58 9.11
================================================================================
</TABLE>
================================================================================
Cumulative Total Return
================================================================================
<TABLE>
<CAPTION>
Without Sales Charge(1)
-----------------------------
<S> <C>
Class A (Inception* through 3/31/98) 124.71%
================================================================================
Class B (Inception* through 3/31/98) 41.08
- --------------------------------------------------------------------------------
Class C (Inception* through 3/31/98) 33.31
================================================================================
</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 charges 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 within one
year from 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.
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Fund Inc. 5
<PAGE>
================================================================================
Historical Performance (unaudited)
================================================================================
Growth of $10,000 Invested in Class A Shares of the
Smith Barney New Jersey Municipals Fund Inc.
vs. Lehman Brothers Municipal Bond Index+
- --------------------------------------------------------------------------------
April 1988 -- March 1998
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATTER]
Smith Barney New Jersey Lehman Brothers
Municipals Fund Inc. Municipal Bond Index
----------------------- --------------------
4/22/88 9596 10000
3/89 10540 10641
3/90 11554 11763
3/91 12696 12847
3/92 13992 14131
3/93 15879 15900
3/94 16143 16269
3/95 17171 17479
3/96 18505 18945
3/97 19568 19975
3/31/98 21563 22116
+ 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, 1998. The Lehman
Brothers Municipal Bond Index is a broad-based, total return index
comprised of investment grade, fixed rate municipal bonds selected from
issues larger than $50 million dated since January 1991. 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 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Portfolio Highlights (unaudited) March 31, 1998
================================================================================
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATTER]
Portfolio Breakdown
<TABLE>
<S> <C>
Transportation 9.8%
Housing 10.1%
Pollution Control 6.7%
Industrial development 7.9%
Education 9.9%
General Obligation 11.2%
Hospital 22.2%
Utilities 7.0%
Other 15.2%
</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 51.1%
Aa AA 11.6
A A 3.6
Baa BBB 13.5
Ba BB 4.4
B B 0.8
VMIG 1 A-1 0.9
NR NR 14.1
-----
100.0%
=====
</TABLE>
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Smith Barney New Jersey Municipals Fund Inc. 7
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================
Schedule of Investments March 31, 1998
==============================================================================================
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================
<S> <C> <C> <C>
Education -- 9.9%
$ 750,000 AAA Hamilton Township Board of Education, FSA-Insured,
7.000% due 12/15/15 $ 816,563
500,000 AAA Jersey City, (Hudson County), Fiscal Year Adjustment
Bonds, Series 1991 B, FSA-Insured, 8.400% due 5/15/06 632,500
650,000 AAA Lakewood Township School District, AMBAC-Insured,
Bank Qualified, Series 92, 6.250% due 2/15/11 742,625
New Jersey EDR:
1,000,000 AAA Educational Testing Service, MBIA-Insured,
Series E, 6.000% due 5/15/25 1,086,250
600,000 Aa3* Princeton Montessori Society, LOC Banque National
De Paris, Series S, 6.500% due 6/1/12 638,250
New Jersey State Educational Facilities,
Financing Authority Revenue:
1,000,000 NR Caldwell College, Series A, 7.250% due 7/1/25 1,083,750
2,700,000 NR Fairleigh Dickinson University, Series C,
6.625% due 7/1/23 2,801,250
3,000,000 AAA Princeton Theological, Series A, 5.000% due 7/1/22 2,996,250
4,365,000 AAA Richard Stockton College, AMBAC-Insured,
Series F, 5.400% due 7/1/21 4,463,212
2,500,000 AAA New Jersey State Higher Educational Assistance
Authority, Student Loan Revenue, New Jersey
Class Loan Program, Series A, MBIA-Insured,
5.800% due 6/1/16(a) 2,637,500
Rutgers State University:
600,000 AA Refunding, Series 92A, 6.400% due 5/1/13 702,750
Series U:
1,810,000 AA 5.000% due 5/1/20 1,780,587
1,905,000 AA 5.000% due 5/1/21 1,871,662
1,000,000 Baa1* Shrewsbury Board of Education, COP, 6.600% due 8/15/15 1,083,750
- ----------------------------------------------------------------------------------------------
23,336,899
- ----------------------------------------------------------------------------------------------
General Obligations -- 11.2%
2,500,000 AAA Atlantic County COP, Public Facilities Lease Agreements,
FGIC-Insured, 7.400% due 3/1/09(b) 3,109,375
1,340,000 AAA Bayonne GO, FGIC-Insured, 6.125% due 5/1/14 1,438,825
665,000 AAA Belvedere GO, AMBAC-Insured, 7.300% due 12/1/14 710,719
200,000 AAA Hudson County GO, FGIC-Insured, 6.550% due 7/1/10 235,250
1,000,000 AAA Lumberton Township School District COP, MBIA-Insured,
6.100% due 10/1/13 1,063,750
1,550,000 Aaa* Middle Township GO, MBIA-Insured, 5.000% due 12/15/25 1,522,875
Morris Township GO:
550,000 AA 6.550% due 7/1/09 651,063
550,000 AA 6.550% due 7/1/10 652,438
500,000 AA 6.550% due 7/1/11 594,375
2,500,000 A+ New Jersey State COP, Equipment Leasing Revenue,
Series A, 6.400% due 4/1/05 2,706,250
See Notes to Financial Statements.
- ----------------------------------------------------------------------------------------------
8 1998 Annual Report to Shareholders
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================
Schedule of Investments (continued) March 31, 1998
==============================================================================================
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================
<S> <C> <C> <C>
General Obligations -- 11.2% (continued)
$2,500,000 AA+ New Jersey State GO, Series D, 8.000% due 2/15/07 $ 3,143,750
1,500,000 AAA North Bergen Township Capital Appreciation, FSA-Insured,
8.000% due 8/15/07 1,897,500
Parsippany-Troy Hills Township GO, MBIA-Insured:
550,000 AAA 5.000% due 12/1/16 540,375
565,000 AAA 5.000% due 12/1/17 554,406
Puerto Rico Commonwealth GO Unlimited:
495,000 A 8.000% due 7/1/08 509,484
2,430,000 A Public Improvement, 5.000% due 7/1/26 2,347,987 Randolph
Township School District, GO, FGIC-Insured:
1,000,000 AAA 5.000% due 8/1/17 981,250
1,000,000 AAA 5.000% due 8/1/18 977,500
500,000 AAA South Amboy GO Unlimited, MBIA-Insured,
6.375% due 12/1/10 545,000
854,000 AAA Weehawken Township GO, FSA-Insured, 6.350% due 7/1/07 919,117
West Windsor/Plainsboro GO, Regional School
District:
180,000 AA 6.750% due 4/1/06 208,575
490,000 AA 6.750% due 4/1/07 572,687
435,000 AA 6.800% due 4/1/08 516,562
170,000 AA 6.800% due 4/1/09 203,362
- ----------------------------------------------------------------------------------------------
26,602,475
- ----------------------------------------------------------------------------------------------
Hospital -- 22.2%
Camden County Improvement Authority Revenue:
3,775,000 Baa2* Health Care Redevelopment Project, (Cooper Health),
5.875% due 2/15/15 3,907,125
Health Systems, Catholic Health East,
Series B, AMBAC-Insured:
1,000,000 AAA 5.000% due 11/15/18 980,000
750,000 AAA 5.000% due 11/15/28 725,625
2,500,000 AAA New Jersey EDA, Nursing Home Revenue, RWJ Health
Care Corp., FSA-Insured, 6.500% due 7/1/24 2,750,000
New Jersey Health Care Facilities Financing Authority Revenue:
Bayonne Hospital Obligation Group, FSA-Insured:
1,300,000 Aaa* 4.750% due 7/1/18 1,235,000
2,250,000 Aaa* 4.750% due 7/1/27 2,098,125
Burdett Tomlin Memorial Hospital, Series D, FGIC-Insured:
1,400,000 AAA 6.500% due 7/1/12 1,508,500
850,000 AAA 6.500% due 7/1/21 912,688
Cathedral Health Services Inc., MBIA/FHA-Insured:
1,985,000 AA 7.250% due 2/15/21 2,185,981
2,500,000 AAA 5.250% due 8/1/21 2,493,750
Columbus Hospital, Series A:
750,000 Baa3* 7.200% due 7/1/01 773,438
1,000,000 Baa3* 7.500% due 7/1/21 1,078,750
2,300,000 Baa2* Deborah Heart & Lung Center, 6.300% due 7/1/23 2,446,625
See Notes to Financial Statements.
- ----------------------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Funds Inc. 9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================
Schedule of Investments (continued) March 31, 1998
==============================================================================================
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================
<S> <C> <C> <C>
Hospital -- 22.2% (continued)
$ 750,000 BBB+ East Orange General Hospital, Series B,
7.750% due 7/1/20 $ 803,437
4,500,000 AAA Irvington General Hospital, FHA-Insured,
6.375% due 8/1/15 4,950,000
1,125,000 AAA J.F.K. Health System, Obligated Group, FGIC-Insured,
6.700% due 7/1/21 1,213,594
260,000 A1* Kennedy Memorial University Medical Center, Series D,
7.875% due 7/1/09 267,800
120,000 BBB- Kimball Medical Center, Series C, 8.000% due 7/1/98 121,272
825,000 AAA Medical Center of Ocean County, Series C, FSA-Insured,
6.750% due 7/1/20 891,000
825,000 AAA Muhlenberg Regional Medical Center, Series A,
AMBAC-Insured, 8.000% due 7/1/18 849,998
2,750,000 AAA Newark Beth Israel Medical Center, FSA-Insured,
6.000% due 7/1/24 2,949,375
445,000 Ba3* Newcomb Medical Center, Series A, 7.875% due 7/1/03 475,038
1,000,000 BBB+ Pascack Valley Hospital, Series 91, 6.700% due 7/1/11 1,047,500
2,500,000 NR Raritan Bay Medical Center, 7.250% due 7/1/27 2,746,875
1,150,000 AAA Somerset Medical Center, Series A, FGIC-Insured,
5.200% due 7/1/24 1,150,000
Southern Ocean County Hospital:
2,000,000 Baa1* 6.250% due 7/1/23 2,140,000
3,000,000 AAA FSA-Insured, 5.000% due 7/1/27 2,910,000
2,000,000 BBB St. Elizabeth's Hospital, 6.000% due 7/1/14 2,110,000
2,750,000 Baa1* St. Mary Hospital, 5.875% due 7/1/12 2,829,063
665,000 AAA Wayne General Hospital, Series B, FHA-Insured,
5.750% due 8/1/11 701,575
1,500,000 AAA University Medicine & Dentistry, Series A, MBIA-Insured,
5.000% due 9/1/22 1,456,875
- ----------------------------------------------------------------------------------------------
52,709,009
- ----------------------------------------------------------------------------------------------
Housing: Multi-Family -- 2.6%
650,000 BBB+ Essex County Improvement Authority, Lease Revenue
Bonds, 6.600% due 4/1/14 696,313
1,500,000 AAA Newark Housing Financing Corp., Mortgage Revenue,
Refunding, Manor Apartments, Series A, FHA-Insured,
7.500% due 2/15/24 1,655,625
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(b) 2,766,750
1,000,000 AA Regency Park Project, GNMA-Collateralized,
Series H, 7.700% due 11/1/30 1,036,800
- ----------------------------------------------------------------------------------------------
6,155,488
- ----------------------------------------------------------------------------------------------
See Notes to Financial Statements.
- ----------------------------------------------------------------------------------------------
10 1998 Annual Report to Shareholders
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================
Schedule of Investments (continued) March 31, 1998
==============================================================================================
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================
<S> <C> <C> <C>
Housing: Single-Family -- 7.5%
New Jersey EDA Revenue, First Mortgage:
Franciscan Oaks Project:
$ 250,000 NR 5.600% due 10/1/12 $ 251,250
850,000 NR 5.700% due 10/1/17 857,437
Keswick Pines:
2,885,000 NR 5.700% due 1/1/18 2,888,606
2,300,000 NR 5.750% due 1/1/24 2,302,875
New Jersey State Housing & Mortgage Finance Agency
Revenue, MBIA-Insured:
5,300,000 AAA Home Buyer, Series U, 5.850% due 4/1/29(a) 5,518,625
315,000 AAA Home Mortgage, Series C, 8.000% due 4/1/12 327,433
1,940,000 AAA Series R, 5.750% due 4/1/17(b) 2,061,250
2,440,000 AAA Series S, 5.950% due 10/1/17(a)(b) 2,592,500
1,000,000 AAA Virgin Islands HFA, Single-Family Mortgage,
GNMA-Collateralized, 6.500% due 3/1/25(a) 1,065,000
- ----------------------------------------------------------------------------------------------
17,864,976
- ----------------------------------------------------------------------------------------------
Industrial Development -- 7.9%
New Jersey EDA, EDR:
970,000 Aa3* Economic Growth Bonds, LOC Banque National De Paris,
6.550% due 12/1/07(a) 1,035,475
1,500,000 BB+ Electric Revenue, Vineland Cogeneration LP,
7.875% due 6/1/19(a) 1,663,125
1,000,000 AAA Miscellaneous Revenue, State Contract, FSA-Insured,
6.000 due 3/15/21 1,061,250
1,000,000 A+ Nursing Home Revenue, Morris Hall-St. Lawrence,
6.250% due 4/1/25 1,062,500
1,495,000 BBB+ Preston Trucking Company, 6.500% due 9/1/14 1,618,338
1,040,000 Aaa* Series L, 7.100% due 12/1/11(a) 1,125,800
1,500,000 BBB+ Terminal Revenue, GATX Terminal Corp., Series 1994,
7.300% due 9/1/19 1,719,375
1,000,000 NR Trane Division, 1990 Project, 9.500% due 9/1/00 1,091,250
1,500,000 NR Zirbser-Greenbriar, 7.375% due 7/15/03 1,618,125
1,000,000 AAA New Jersey EDA, Natural Gas Facilities Revenue, NUI Corp.,
Series A, AMBAC-Insured, 6.350% due 10/1/22 1,087,500
New Jersey EDA Revenue Refunding, Harrogate Inc.,
Series A:
2,000,000 BBB 5.750% due 12/1/16 2,055,000
1,500,000 BBB 5.875% due 12/1/26 1,543,125
2,000,000 Ba2* New Jersey EDA, Special Facility Revenue, (Continental
Airlines Inc. Project) 5.500% due 4/1/28(a) 1,997,500
- ----------------------------------------------------------------------------------------------
18,678,363
- ----------------------------------------------------------------------------------------------
See Notes to Financial Statements.
- ----------------------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Funds Inc. 11
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================
Schedule of Investments (continued) March 31, 1998
==============================================================================================
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================
<S> <C> <C> <C>
Life Care -- 0.8%
- ----------------------------------------------------------------------------------------------
$1,000,000 Aaa* New Jersey EDA, EDR, Eagle Rock Convalescent, Inc.,
GNMA-Collateralized, 7.375% due 12/20/06 $ 1,096,250
775,000 AAA New Jersey Health Care Facilities Financing Authority
Revenue, Spectrum for the Living, FHA-Insured,
6.500% due 2/1/22 835,063
- ----------------------------------------------------------------------------------------------
1,931,313
- ----------------------------------------------------------------------------------------------
Miscellaneous -- 5.2%
615,000 A- Atlantic City COP, Series 1991 (Public Facilities Lease
Agreements Atlantic City Project), 8.875% due 1/15/13 852,544
240,000 A+ The Hudson County Improvement Authority, (Essential
Purpose Pooled Governmental Loan Project),
Series 1986, 7.600% due 8/1/25 260,700
1,015,000 AAA Mercer County Improvement Authority Revenue,
Youth Center, Series A, FGIC-Insured,
5.000% due 2/15/18 994,700
1,000,000 AAA New Brunswick Parking Authority Revenue, City
Guaranteed Parking, Series A, FGIC-Insured,
6.500% due 9/1/19 1,086,250
New Jersey EDA:
480,000 NR EDR, National Association of Accountants,
7.650% due 7/1/09 514,800
2,000,000 BBB- First Mortgage, Fellowship Village, Series A,
5.500% due 1/1/18 2,002,500
1,865,000 NR Industrial Revenue, State Plaza Park and Ride LP,
6.625% due 7/1/03(a) 1,965,244
1,000,000 NR Waste Paper Recycling Revenue, (Marcal Paper Project),
8.500% due 2/1/10(a) 1,187,500
3,000,000 NR New Jersey Sports and Expo Authority, Monmouth Park,
Refunding, Series A, 8.000% due 1/1/25 3,405,000
- ----------------------------------------------------------------------------------------------
12,269,238
- ----------------------------------------------------------------------------------------------
Pollution Control -- 6.7%
1,950,000 B1* Atlantic County Utilities Authority, Solid Waste Revenue,
7.125% due 3/1/16 1,989,000
Middlesex County Pollution Control Authority Financing
Revenue, Amerada Hess Corp.:
1,000,000 NR 7.875% due 6/1/22 1,172,500
2,000,000 NR 6.875% due 12/1/22(b) 2,170,000
New Jersey EDA:
5,500,000 AAA PSE&G Corp., MBIA-Insured, 6.400% due 5/1/32(a) 5,926,250
2,245,000 NR Sewer Facility, Atlantic City Sewer Co.,
7.250% due 12/1/11(a) 2,472,306
1,000,000 AAA Salem County Industrial Pollution Control Finance
Authority, (PSE&G Project C), MBIA-Insured,
6.200% due 8/1/30 1,081,250
See Notes to Financial Statements.
- ----------------------------------------------------------------------------------------------
12 1998 Annual Report to Shareholders
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================
Schedule of Investments (continued) March 31, 1998
==============================================================================================
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================
<S> <C> <C> <C>
Pollution Control -- 6.7% (continued)
$1,000,000 AA- Salem County Pollution Control Financing Authority,
Waste Disposal Revenue, E.I. du Pont De
Nemours & Co., 6.125% due 7/15/22(a) $ 1,060,000
- ----------------------------------------------------------------------------------------------
15,871,306
- ----------------------------------------------------------------------------------------------
Solid Waste -- 4.3%
2,500,000 Aa2* Mercer County, Improvement Authority, County Guaranteed
Solid Waste Revenue, 5.750% due 9/15/16 2,662,500
1,250,000 Aa2* New Jersey EDA, Solid Waste Revenue,
Garden State Paper Co., 7.125% due 4/1/22(a) 1,317,187
Union County Utility Authority, Solid Waste Revenue,
Series A:
5,130,000 BB 7.150% due 6/15/09(a) 5,142,825
1,035,000 BB 7.200% due 6/15/14(a) 1,035,000
- ----------------------------------------------------------------------------------------------
10,157,512
- ----------------------------------------------------------------------------------------------
Transportation -- 9.8%
385,000 A1* Cape May Bridge Commission, Guaranteed Revenue Bonds,
6.700% due 6/1/02 386,644
500,000 AAA Delaware River Port Authority, PA & NJ Delaware
River Bridges, Revenue Refunding, AMBAC-Insured,
7.375% due 1/1/07 521,690
800,000 Baa1* Essex County Improvement Authority Airport Project Revenue,
Series 92, 6.800% due 11/1/21(a) 848,000
1,000,000 Baa2* New Jersey EDA Revenue, (American Airlines Inc. Project),
7.100% due 11/1/31(a) 1,095,000
4,000,000 AAA New Jersey State Transportation Toll Road Fund,
Transportation System, Series A, FSA-Insured,
5.000% due 6/15/18 3,940,000
Port Authority of New York & New Jersey:
1,500,000 AA- 67th Series, 6.875% due 1/1/25 1,578,750
2,500,000 AA- 111th Series, 5.000% due 10/1/22 2,434,375
Special Obligation Revenue:
3,500,000 NR 5th Installment, 6.750% due 10/1/19(a) 3,902,500
2,000,000 AAA 96th Series, FGIC-Insured, 6.600% due 10/1/23(a) 2,215,000
2,200,000 A-1+ Versatile Structure Obligation, Series 2,
3.700% due 5/1/19(c) 2,200,000
10,000,000 AAA Puerto Rico Commonwealth Highway & Transportation
Authority, Transportation Revenue, Series A, AMBAC-
Insured, zero coupon bond to yield 4.982% due 7/1/16 3,987,500
- ----------------------------------------------------------------------------------------------
23,109,459
- ----------------------------------------------------------------------------------------------
Utilities -- 7.0%
700,000 Baa1* Beachwood Sewer Authority Revenue, Junior Lien,
6.500% due 12/1/12 754,250
1,000,000 AAA Bordentown Sewerage Authority Revenue, Series C,
MBIA-Insured, 6.900% due 12/1/16 1,078,750
See Notes to Financial Statements.
- ----------------------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Funds Inc. 13
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
==============================================================================================
Schedule of Investments (continued) March 31, 1998
==============================================================================================
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================
<S> <C> <C> <C>
Utilities -- 7.0% (continued)
Camden County Municipal Utilities Authority, Sewer
Revenue, FGIC-Insured:
$1,500,000 AAA 5.250% due 7/15/16 $ 1,520,625
1,000,000 AAA 5.250% due 7/15/17 1,011,250
2,500,000 AAA Hamilton Township, Atlantic County Municipal
Utilities Authority, FGIC-Insured, 5.000% due 8/15/17 2,468,750
1,385,000 AAA Kearny Municipal Utilities Authority Revenue,
FGIC-Insured, 7.300% due 11/15/18 1,828,200
1,000,000 AAA Middlesex County Utilities Authority, Sewer
Revenue, Series A, MBIA-Insured, 6.250% due 8/15/10 1,153,750
1,000,000 AAA New Jersey EDA, Natural Gas Facilities Revenue,
Series A, AMBAC-Insured, 6.250% due 8/1/24 1,081,250
750,000 AAA Old Bridge Township Municipal Utilities Authority
Revenue, FGIC-Insured, 6.400% due 11/1/09 825,000
1,250,000 BBB+ Puerto Rico Electric Power Authority, Power Revenue,
Series DD, 5.000% due 7/1/28 1,195,312
2,500,000 AA Somerset/Raritan Valley Sewer Authority Revenue,
6.750% due 7/1/10 2,671,875
1,000,000 AAA Southeast Morris County Municipal Utilities Authority,
Water Revenue, Series A, FGIC-Insured,
6.500% due 1/1/11 1,073,750
- ----------------------------------------------------------------------------------------------
16,662,762
- ----------------------------------------------------------------------------------------------
Water & Sewer -- 4.9%
3,840,000 Aaa* Lacey Municipal Utilities Authority, Water Revenue,
MBIA-Insured, 5.200% due 12/1/24 3,878,400
New Jersey EDA:
1,610,000 AAA Middlesex County Water Revenue, MBIA-Insured,
5.250% due 2/1/29(a) 1,622,075
Water Facilities Revenue, (American Water Co.
Inc. Project), FGIC-Insured:
1,000,000 NR Series 1991, 7.400% due 11/1/01(a) 1,072,500
4,000,000 AAA Series B, 5.375% due 5/1/32(a) 4,030,000
1,000,000 Aaa* Wanaque Valley Regional Sewer Authority, FGIC-Insured,
5.000% due 9/1/22 980,000
- ----------------------------------------------------------------------------------------------
11,582,975
- ----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost-- $223,308,553**) $236,931,775
==============================================================================================
(a) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(b) Security segregated by Custodian for open purchase commitment.
(c) Variable rate obligation payable at par on demand on no more than seven
days notice.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 15 and 16 for definitions of ratings and certain security descriptions.
See Notes to Financial Statements.
- ----------------------------------------------------------------------------------------------
14 1998 Annual Report to Shareholders
</TABLE>
<PAGE>
================================================================================
Bond Ratings (unaudited)
================================================================================
All ratings are by Standard & Poor's Rating Services ("Standard & Poor's"),
except that those identified by an asterisk (*) are rated by Moody's Investors
Service Inc. ("Moody's"). The definitions of the applicable rating symbols are
set forth below:
Standard & Poor's -- Ratings from "AA" to "BB" 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 "B", 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.
B -- Bonds that are rated "B" generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
NR -- Indicates that the bond is not rated by either Standard & Poor's or
Moody's.
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Fund Inc. 15
<PAGE>
================================================================================
Short-Term Security Ratings (unaudited)
================================================================================
SP-1 -- Standard & Poor's highest 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 (unaudited)
- --------------------------------------------------------------------------------
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 -- Financing Security Assurance
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation Bonds
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
- --------------------------------------------------------------------------------
16 1998 Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities March 31, 1998
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, at value (Cost -- $223,308,553) $236,931,775
Cash 85,721
Interest receivable 3,706,137
Receivable for Fund shares sold 478,986
Receivable for securities sold 15,000
- --------------------------------------------------------------------------------
Total Assets 241,217,619
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 10,670,849
Payable for Fund shares purchased 70,176
Investment advisory fees payable 62,170
Administration fees payable 41,447
Distribution fees payable 22,505
Accrued expenses 49,481
- --------------------------------------------------------------------------------
Total Liabilities 10,916,628
- --------------------------------------------------------------------------------
Total Net Assets $230,300,991
================================================================================
NET ASSETS:
Par value of capital shares $ 17,132
Capital paid in excess of par value 215,169,797
Undistributed net investment income 34,699
Accumulated net realized gains from security transactions 1,456,141
Net unrealized appreciation of investments 13,623,222
- --------------------------------------------------------------------------------
Total Net Assets $230,300,991
================================================================================
Shares Outstanding:
Class A 11,779,592
-----------------------------------------------------------------------------
Class B 4,894,325
-----------------------------------------------------------------------------
Class C 458,269
-----------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $13.44
-----------------------------------------------------------------------------
Class B* $13.44
-----------------------------------------------------------------------------
Class C** $13.43
-----------------------------------------------------------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 4.17% of net asset value per share) $14.00
================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if shares
are redeemed within one year from 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.
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Fund Inc. 17
<PAGE>
<TABLE>
<CAPTION>
================================================================================
Statement of Operations For the Year Ended March 31, 1998
================================================================================
<S> <C>
INVESTMENT INCOME:
Interest $ 13,253,554
- --------------------------------------------------------------------------------
EXPENSES:
Distribution fees (Note 4) 682,245
Investment advisory fees (Note 4) 665,651
Administration fees (Note 4) 443,768
Shareholder and system servicing fees 81,672
Audit and legal 40,980
Shareholder communications 37,903
Pricing service fees 19,399
Registration fees 20,001
Directors' fees 15,502
Custody 11,554
Other 7,500
- --------------------------------------------------------------------------------
Total Expenses 2,026,175
- --------------------------------------------------------------------------------
Net Investment Income 11,227,379
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (NOTE 5):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 120,436,964
Cost of securities sold 117,342,063
- --------------------------------------------------------------------------------
Net Realized Gain 3,094,901
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 6,851,702
End of year 13,623,222
- --------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 6,771,520
- --------------------------------------------------------------------------------
Net Gain on Investments 9,866,421
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 21,093,800
================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18 1998 Annual Report to Shareholders
<PAGE>
<TABLE>
<CAPTION>
====================================================================================
Statement of Changes in Net Assets For the Years Ended March 31,
====================================================================================
1998 1997
====================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 11,227,379 $ 11,461,123
Net realized gain 3,094,901 1,773,629
Increase (decrease) in net unrealized appreciation 6,771,520 (1,544,152)
- ------------------------------------------------------------------------------------
Increase in Net Assets From Operations 21,093,800 11,690,600
- ------------------------------------------------------------------------------------
DISTRIBUTION TO SHAREHOLDERS
FROM (NOTE 3):
Net investment income (11,457,998) (11,120,528)
Net realized gain (1,015,534) --
- ------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (12,473,532) (11,120,528)
- ------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 26,651,401 18,876,611
Net asset value of shares issued for
reinvestment of dividends 7,471,348 6,665,371
Cost of shares reacquired (27,799,598) (31,528,120)
- ------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions 6,323,151 (5,986,138)
- ------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 14,943,419 (5,416,066)
NET ASSETS:
Beginning of year 215,357,572 220,773,638
- ------------------------------------------------------------------------------------
End of year* $ 230,300,991 $ 215,357,572
====================================================================================
* Includes undistributed net investment income of: $ 34,699 $ 265,318
====================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Fund Inc. 19
<PAGE>
================================================================================
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 trade date; (b) securities are valued
at the mean between the quoted bid and ask prices provided 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) securities maturing
within 60 days are valued at cost plus accreted discount or minus amotized
premium, which approximates 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 premium and accretion of original issue discount,
is recorded on an 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 by class; (g) dividends and distributions to shareholders
are recorded on the ex-dividend date; (h) 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; (i) 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; 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 parameters used in determining
these estimates could cause actual results to differ.
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 regular Federal income tax and from designated
state income taxes, to retain such tax-exempt status when distributed to the
shareholders of the Fund.
- --------------------------------------------------------------------------------
20 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
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
Mutual Management Corp. ("MMC"), formerly known as Smith Barney Mutual Funds
Management Inc., a subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"),
acts as investment adviser to the Fund. The Fund pays MMC an advisory fee
calculated at an annual rate of 0.30% of the average daily net assets. This fee
is calculated daily and paid monthly.
MMC 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.
Smith Barney Inc. ("SB"), another subsidiary of SSBH, acts as distributor of
Fund shares. For the year ended March 31, 1998, SB received sales charges of
approximately $236,000 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 within 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, 1998, CDSCs paid to SB were approximately:
<TABLE>
<CAPTION>
Class B Class C
================================================================================
<S> <C> <C>
CDSCs $97,000 $2,000
================================================================================
</TABLE>
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, 1998, total Distribution Plan fees
incurred were:
<TABLE>
<CAPTION>
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Distribution Plan Fees $228,814 $415,461 $37,970
================================================================================
</TABLE>
All officers and one Director of the Fund are employees of SB.
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals 21
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
5. Investments
During the year ended March 31, 1998, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
<TABLE>
================================================================================
<S> <C>
Purchases $128,984,207
- --------------------------------------------------------------------------------
Sales 120,436,964
================================================================================
</TABLE>
At March 31, 1998, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
<TABLE>
================================================================================
<S> <C>
Gross unrealized appreciation $13,917,504
Gross unrealized depreciation (294,282)
- --------------------------------------------------------------------------------
Net unrealized appreciation $13,623,222
================================================================================
</TABLE>
6. Capital Shares
At March 31, 1998, 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, 1998, total paid-in capital amounted to the following for each
class:
<TABLE>
Class A Class B Class C
================================================================================
<S> <C> <C> <C>
Total Paid-in Capital $144,457,725 $64,684,485 $6,044,719
================================================================================
</TABLE>
- --------------------------------------------------------------------------------
22 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Notes to Financial Statements (continued)
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1998 March 31, 1997
-------------------------- -------------------------
Shares Amount Shares Amount
============================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 1,254,490 $ 16,808,489 754,734 $ 9,803,565
Shares issued on reinvestment 382,956 5,097,645 351,876 4,551,202
Shares redeemed (1,331,406) (17,702,432) (1,561,652) (20,175,651)
- --------------------------------------------------------------------------------------------
Net Increase (Decrease) 306,040 $ 4,203,702 (455,042) $ (5,820,884)
============================================================================================
Class B
Shares sold 609,600 $ 8,121,587 591,988 $ 7,667,049
Shares issued on reinvestment 163,158 2,170,492 151,661 1,961,786
Shares redeemed (696,778) (9,268,625) (835,657) (10,832,102)
- --------------------------------------------------------------------------------------------
Net Increase (Decrease) 75,980 $ 1,023,454 (92,008) $ (1,203,267)
============================================================================================
Class C
Shares sold 128,843 $ 1,721,325 108,779 $ 1,405,997
Shares issued on reinvestment 15,280 203,211 11,777 152,383
Shares redeemed (62,246) (828,541) (40,098) (520,367)
- --------------------------------------------------------------------------------------------
Net Increase 81,877 $ 1,095,995 80,458 $ 1,038,013
============================================================================================
</TABLE>
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Fund Inc. 23
<PAGE>
================================================================================
Financial Highlights
================================================================================
For a share of each class of beneficial interest outstanding throughout each
year:
<TABLE>
<CAPTION>
Class A Shares 1998 1997 1996 1995 1994
===============================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $12.92 $12.88 $12.62 $12.55 $13.16
- -----------------------------------------------------------------------------------------------
Income From Operations:
Net investment income (1) 0.70 0.70 0.70 0.70 0.70
Net realized and unrealized gain (loss) 0.59 0.02 0.26 0.07 (0.46)
- -----------------------------------------------------------------------------------------------
Total Income From Operations 1.29 0.72 0.96 0.77 0.24
- -----------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.71) (0.68) (0.70) (0.70) (0.70)
Net realized gains (0.06) -- -- -- (0.15)
- -----------------------------------------------------------------------------------------------
Total Distributions (0.77) (0.68) (0.70) (0.70) (0.85)
- -----------------------------------------------------------------------------------------------
Net Asset Value, End of Year $13.44 $12.92 $12.88 $12.62 $12.55
- -----------------------------------------------------------------------------------------------
Total Return 10.20% 5.74% 7.77% 6.37% 1.66%
- -----------------------------------------------------------------------------------------------
Net Assets, End of Year (millions) $ 158 $ 148 $ 154 $ 107 $ 120
- -----------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (1) 0.75% 0.76% 0.84% 0.88%* 0.83%
Net investment income 5.22 5.44 5.41 5.61 5.17
- -----------------------------------------------------------------------------------------------
Portfolio Turnover Rate 55% 36% 22% 32% 32%
===============================================================================================
</TABLE>
(1) The investment adviser waived all or part of its fees in the year ended
March 31, 1994. If such fees were not waived, the per share decrease to net
investment income would have been $0.01 and the expense ratio would have
been 0.88%.
* Expense ratios exclude interest expense. Expense ratio including interest
expense would have been 0.89% for the year ended March 31, 1995.
- --------------------------------------------------------------------------------
24 1998 Annual Report to Shareholders
<PAGE>
================================================================================
Financial Highlights (continued)
================================================================================
For a share of each class of beneficial interest outstanding throughout
each year:
<TABLE>
<CAPTION>
Class B Shares 1998 1997 1996 1995 1994
====================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 12.92 $ 12.88 $ 12.62 $ 12.55 $ 13.16
- ----------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income (1) 0.63 0.64 0.63 0.63 0.64
Net realized and unrealized gain (loss) 0.59 0.02 0.26 0.06 (0.47)
- ----------------------------------------------------------------------------------------------------
Total Income From Operations 1.22 0.66 0.89 0.69 0.17
- ----------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.64) (0.62) (0.63) (0.62) (0.63)
Net realized gains (0.06) -- -- -- (0.15)
- ----------------------------------------------------------------------------------------------------
Total Distributions (0.70) (0.62) (0.63) (0.62) (0.78)
- ----------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $ 13.44 $ 12.92 $ 12.88 $ 12.62 $ 12.55
- ----------------------------------------------------------------------------------------------------
Total Return 9.66% 5.23% 7.20% 5.76% 1.15%
- ----------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $65,773 $62,249 $63,272 $55,334 $48,375
- ----------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses (1) 1.27% 1.28% $ 1.36% 1.39%* 1.36%
Net investment income 4.70 4.92 4.90 5.09 4.64
- ----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 55% 36% 22% 32% 32%
====================================================================================================
</TABLE>
(1) The investment adviser waived all or part of its fees in the year ended
March 31, 1994. If such fees were not waived, the per share decrease to net
investment income would have been $0.01 and the expense ratio would have
been 1.41%.
* Expense ratios exclude interest expense. Expense ratio including interest
expense would have been 1.40% for the year ended March 31, 1995.
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Fund Inc. 25
<PAGE>
================================================================================
Financial Highlights (continued)
================================================================================
For a share of each class of beneficial interest outstanding throughout
each year:
<TABLE>
<CAPTION>
Class C Shares 1998 1997 1996 1995(1)
================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $12.92 $12.88 $12.62 $11.86
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.61 0.63 0.62 0.20
Net realized and unrealized gain 0.59 0.02 0.27 0.74
- --------------------------------------------------------------------------------
Total Income From Operations 1.20 0.65 0.89 0.94
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.63) (0.61) (0.63) (0.18)
Net realized gains (0.06) -- -- --
- --------------------------------------------------------------------------------
Total Distributions (0.69) (0.61) (0.63) (0.18)
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $13.43 $12.92 $12.88 $12.62
- --------------------------------------------------------------------------------
Total Return 9.50% 5.17% 7.17% 8.01%++
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $6,153 $4,861 $3,812 $248
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.39% 1.32% 1.41% 1.44%+
Net investment income 4.58 4.88 4.82 5.05+
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 55% 36% 22% 32%
================================================================================
</TABLE>
(1) For the period from December 13, 1994 (inception date) to March 31, 1995.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
================================================================================
Tax Information (unaudited)
================================================================================
For Federal tax purposes the Fund hereby designates for the fiscal year ended
March 31, 1998:
-- 100% of the dividends paid by the Fund from net investment income as
tax-exempt for regular Federal income tax purposes.
-- The Taxpayer Relief Act of 1997 enacted differing rates of tax on
various long-term capital gain transactions. As a result, the Fund
designates:
-- Total long-term capital gain distributions paid of $849,053 which
are considered "20 percent rate gains".
- --------------------------------------------------------------------------------
26 1998 Annual Report to Shareholders
<PAGE>
================================================================================
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, 1998, the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended and financial highlights for each of the years in the
three-year period 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 audits. The financial highlights for each of the years in the
two-year period ended March 31, 1995 were audited by other auditors whose report
thereon, dated May 10, 1995, expressed an unqualified opinion on those financial
highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and 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, 1998, by correspondence with the custodian. As to securities sold or
purchased but not yet delivered or received, 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Smith Barney New Jersey Municipals Fund Inc. as of March 31, 1998, the results
of its operations for the year then ended, the changes in its net assets for
each of the years in the two-year period then ended and financial highlights for
each of the years in the three-year period then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
May 15, 1998
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Fund Inc. 27
<PAGE>
================================================================================
Additional Shareholders Information (unaudited)
================================================================================
On March 9, 1998, a special meeting of shareholders of the Fund was held for the
purpose of voting on the following matters:
1. To elect Directors of the Fund; and
2. To approve or disapprove the reclassification, modification and/or
elimination of certain fundamental investment policies.
The results of the vote on Proposal 1 were as follows:
<TABLE>
<CAPTION>
Percentage Percentage
Shares Voted of Shares Shares Voted of Shares
Name of Directors For Voted Against Voted
================================================================================
<S> <C> <C> <C> <C>
Herbert Barg 8,570,862.537 95.315% 421,270.662 4.685%
Alfred J. Bianchetti 8,576,951.237 95.383% 415,181.962 4.617%
Martin Brody 8,579,330.474 95.409% 412,802.725 4.591%
Dwight B. Crane 8,576,212.641 95.375% 415,920.558 4.625%
Burt N. Dorsett 8,584,680.578 95.469% 407,452.621 4.531%
Elliot S. Jaffe 8,579,330.474 95.409% 412,802.725 4.591%
Stephen E. Kaufman 8,584,680.508 95.469% 407,452.691 4.531%
Joseph J. McCann 8,584,680.578 95.469% 407,452.621 4.531%
Heath B. McLendon 8,576,212.641 95.375% 415,920.558 4.625%
Cornelius C. Rose, Jr. 8,584,680.578 95.469% 407,452.621 4.531%
================================================================================
</TABLE>
Proposal 2 requested that shareholders approve certain changes to the
fundamental policies of the Fund in order to modernize them in view of certain
regulatory, business or industry developments that have occurred since original
adoption of these policies by the Fund. The chart below demonstrates that all
proposals were approved by shareholders.
<TABLE>
================================================================================
<S> <C>
Modification of the Fundamental Policy/Senior Securities Approved
- --------------------------------------------------------------------------------
Modification of the Fundamental Policy/Borrowing Approved
- --------------------------------------------------------------------------------
Modification of the Fundamental Policy/Lending by the Fund Approved
- --------------------------------------------------------------------------------
Modification of the Fundamental Policy/Margin and the
Short Sales of Securities Approved
- --------------------------------------------------------------------------------
Modification of the Fundamental Policy/Real Estate Approved
================================================================================
</TABLE>
The information below reports the lowest percentage of shares voting for
Proposal 2, the highest percentage of shares voting against and abstaining by
shareholders of the Fund on all proposals.
<TABLE>
<CAPTION>
Percentage Percentage Percentage
Shares Voted of Shares Shares Voted of Shares Shares of Shares
For Voted Against Voted Abstaining Abstained
================================================================================
<S> <C> <C> <C> <C> <C>
7,925,697.787 88.864% 114,961.316 1.289% 878,292.096 9.847%
================================================================================
</TABLE>
- --------------------------------------------------------------------------------
28 1998 Annual Report to Shareholders
<PAGE>
Smith Barney
New Jersey
Municipals
Fund Inc.
Directors Investment Adviser
and Administrator
Herbert Barg
Alfred J. Bianchetti Mutual Management Corp.
Martin Brody
Dwight B. Crane Distributor
Burt Dorsett
Elliot Jaffe Smith Barney Inc.
Stephen E. Kaufman
Joseph J. McCann Custodian
Heath B. McLendon, Chairman
Cornelius Rose PNC Bank, N.A.
James J. Crisona, Emeritus
Shareholder
Officers Servicing Agent
Heath B. McLendon First Data Investor Services Group, Inc.
President and P.O. Box 9134
Chief Executive Officer Boston, MA 02205-9134
Lewis E. Daidone This report is submitted for the general
Senior Vice President information of the shareholders of
and Treasurer Smith Barney New Jersey Municipals Fund Inc.
It is not authorized for distribution to
Lawrence T. McDermott prospective investors unless accompanied or
Vice President preceded by a current Prospectus for the
and Investment Officer Fund, which contains information concerning
the Fund's investment policies and expenses
Thomas M. Reynolds as well as other pertinent information.
Controller
Smith Barney
Christina T. Sydor New Jersey
Secretary Municipals Fund Inc.
388 Greenwich Street
New York, New York 10013
www.smithbarney.com
FD0370 5/98
