<PAGE>
[GRAPHIC]
Smith Barney
New Jersey
Municipals
Fund Inc.
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ANNUAL REPORT
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March 31, 1999
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.(R)
<PAGE>
Smith Barney
New Jersey
Municipals
Fund Inc.
[PHOTO] [PHOTO]
HEATH B. JOSEPH P.
MCLENDON DEANE
Chairman Vice President
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, 1999. 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. We hope you find this report to
be useful and informative.
Please note that on February 2, 1999, Joseph P. Deane assumed management
responsibilities for the Fund. Mr. Deane has more than 28 years of investment
experience and currently manages the Smith Barney Managed Municipals Fund among
many others.
Performance Update
For the year ended March 31, 1999, the Class A shares of the Fund had a total
return of 5.41%, without the effects of sales charges and outperformed its
Lipper Inc. peer group average total return of 4.97% 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 $0.66 per
Class A share.
Based on its net asset value ("NAV") of $13.26 as of March 31, 1999 for Class A
shares, and the current monthly income dividend rate of $0.053 per Class A
share, this equates to an annualized yield of 4.80%. 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 4.80% is equivalent to a taxable yield of 8.33%. (This
figure assumes a federal income tax bracket of 36%.)
Market Overview and Outlook
For bonds, 1999 has certainly gotten off to a more challenging start than we had
originally anticipated. The main story in the municipal bond market has been
that it has traded in a very narrow range. The central core of the New Jersey
Municipal Fund's portfolio remains primarily high-grade securities with
intermediate maturities. We have bought some longer maturity bonds
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Smith Barney New Jersey Municipals Fund Inc. 1
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recently to be better positioned for the better market conditions we expect
between now and mid-summer.
We anticipate that the U.S. economy should start to slow down in the months
ahead and with Federal Reserve Board ("Fed") monetary policy on hold, we could
see some price appreciation over the next few months. Over the longer term, we
still remain cautious and will not tinker with our core portfolio for that
reason.
We are more sanguine about the U.S. Treasury market that sets the tone for all
other fixed income markets. The levels that the market rose to in early fall
were driven primarily by emotion rather than economic fundamentals. In our view,
this was caused by hedge funds covering short positions.
We may now be returning to a more predictable environment. The early increase in
rates has put the U.S. Treasury market more in line with economic fundamentals.
The U.S. economy remains strong and the Fed is on hold. This makes some sense
and provides investors with a more normal positively sloped yield curve. (The
yield curve shows the difference between the yields of varying maturities.)
The current pattern of trading in municipal bonds should not change. In bond
market rallies, municipal bonds will underperform versus U.S. Treasuries. Yet
the direct opposite will hold true if we experience any upward pressures on
rates. We therefore expect some upside potential from municipal bonds in the
near term, but not too much. Over the longer term, we want a portfolio that
possesses liquidity with less risk and offers investors some downside
protection.
New Jersey Economic Highlights
At the beginning of the year, Moody's Investor Services, Inc. assigned New
Jersey an "Aa1" rating for the state's general obligation bonds. (Moody's
Investors Services, Inc. is a major credit reporting and bond-rating agency.)
According to Moody's, "this high-quality rating is a product of the state's
large and diverse economy, high personal income levels and record of strong
financial controls producing sound results and sizeable ending balances."
The rating outlook for New Jersey remains stable, a reflection of the view by
Moody's that the Garden State is moderately well positioned to maintain
budgetary discipline if the economy slows down because of healthy fund balances,
the final implementation of multi-year income tax cuts and the apparent end of
court-ordered increases in school operations funding.
Investment Strategy
The investment objective of the Fund is to provide New Jersey investors with as
high a level of income exempt from federal and New Jersey personal income taxes
as is consistent with prudent investment management and the preservation of
capital.
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2 1999 Annual Report to Shareholders
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We do not intend to sell any bonds that we believe have low costs and high
current yields. Yet we do plan to analyze and monitor the lower-rated debt we
own in the hospital industry and to slowly eliminate our zero coupon bond
holdings. In today's near perfect bond market conditions, zero coupon bonds are
acceptable; yet, in a more hostile environment, they can be very illiquid. If
market conditions change and rates rise, we should then have greater flexibility
to restructure the Fund's portfolio.
As of March 31, 1999, approximately 81.1% 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 51.6% of the Fund's
portfolio was invested in AAA-rated bonds, the highest rating. (Standard and
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 (25.9%), industrial development bonds (15.2%) and
education bonds (12.3%). The Fund's average weighted maturity was 20.8 years as
of March 31, 1999.
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/ J P Deane
Heath B. McLendon Joseph P. Deane
Chairman Vice President
May 5, 1999
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Smith Barney New Jersey Municipals Fund Inc. 3
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Historical Performance -- Class A Shares
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Net Asset Value
------------------
Beginning End Income Capital Gain Return Total
Year Ended of Year of Year Dividends Distributions of Capital Returns(1)
================================================================================
3/31/99 $13.44 $13.26 $0.66 $0.23 $0.00 5.41%
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3/31/98 12.92 13.44 0.71 0.06 0.00 10.20
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3/31/97 12.88 12.92 0.68 0.00 0.00 5.74
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3/31/96 12.62 12.88 0.70 0.00 0.00 7.77
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3/31/95 12.55 12.62 0.70 0.00 0.00 6.37
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3/31/94 13.16 12.55 0.70 0.15 0.00 1.66
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3/31/93 12.44 13.16 0.75 0.14 0.01 13.49
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3/31/92 12.17 12.44 0.77 0.13 0.04 10.22
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3/31/91 11.92 12.17 0.83 0.05 0.01 9.89
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3/31/90 11.67 11.92 0.82 0.03 0.00 9.62
================================================================================
Total $7.32 $0.79 $0.06
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Historical Performance -- Class B Shares
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Net Asset Value
------------------
Beginning End Income Capital Gain Return Total
Year Ended of Year of Year Dividends Distributions of Capital Returns(1)
================================================================================
3/31/99 $13.44 $13.25 $0.59 $0.23 $0.00 4.80%
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3/31/98 12.92 13.44 0.64 0.06 0.00 9.66
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3/31/97 12.88 12.92 0.62 0.00 0.00 5.23
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3/31/96 12.62 12.88 0.63 0.00 0.00 7.20
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3/31/95 12.55 12.62 0.62 0.00 0.00 5.76
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3/31/94 13.16 12.55 0.63 0.15 0.00 1.15
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Inception*
- - 3/31/93 12.75 13.16 0.27 0.14 0.01 6.60+
================================================================================
Total $4.00 $0.58 $0.01
================================================================================
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Historical Performance -- Class L Shares(2)
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Net Asset Value
------------------
Beginning End Income Capital Gain Return Total
Year Ended of Year of Year Dividends Distributions of Capital Returns(1)
================================================================================
3/31/99 $13.43 $13.25 $0.58 $0.23 $0.00 4.78%
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3/31/98 12.92 13.43 0.63 0.06 0.00 9.50
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3/31/97 12.88 12.92 0.61 0.00 0.00 5.17
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3/31/96 12.62 12.88 0.63 0.00 0.00 7.17
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Inception*
- - 3/31/95 11.86 12.62 0.18 0.00 0.00 8.01+
================================================================================
Total $2.63 $0.29 $0.00
================================================================================
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
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4 1999 Annual Report to Shareholders
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Average Annual Total Returns
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Without Sales Charge(1)
------------------------------
Class A Class B Class L(2)
================================================================================
Year Ended 3/31/99 5.41% 4.80% 4.78%
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Five Years Ended 3/31/99 7.08 6.52 N/A
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Ten Years Ended 3/31/99 7.99 N/A N/A
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Inception* through 3/31/99 8.20 6.30 8.08
================================================================================
With Sales Charge(3)
------------------------------
Class A Class B Class L(2)
================================================================================
Year Ended 3/31/99 1.20% 0.37% 2.72%
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Five Years Ended 3/31/99 6.22 6.36 N/A
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Ten Years Ended 3/31/99 7.54 N/A N/A
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Inception* through 3/31/99 7.79 6.30 7.83
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Cumulative Total Returns
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Without Sales Charge(1)
================================================================================
Class A (3/31/89* through 3/31/99) 115.65%
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Class B (Inception* through 3/31/99) 47.84
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Class L (Inception* through 3/31/99)(2) 39.68
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(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 and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 4.00% and 1.00%,
respectively. 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 L 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 L 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.
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Smith Barney New Jersey Municipals Fund Inc. 5
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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 Brothers Municipal Bond Index+
March 1989 -- March 1999
[GRAPHIC]
Smith Barney New Jersey Lehman Brothers
Municipals Fund Inc. Municipal Bond Index
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3/31/89 $ 9,597 $10,000
3/90 10,520 11,055
3/91 11,560 12,074
3/92 12,740 13,281
3/93 14,459 14,943
3/94 14,698 15,289
3/95 15,634 16,427
3/96 16,849 17,804
3/97 17,817 18,773
3/98 19,634 20,784
3/99 20,696 22,073
+ Hypothetical illustration of $10,000 invested in Class A shares on March
31, 1989, 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, 1999. 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 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.
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6 1999 Annual Report to Shareholders
<PAGE>
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Portfolio Highlights (unaudited) March 31, 1999
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Portfolio Breakdown
[PIE CHART]
Solid Waste 2.4%
Life Care 5.0%
General Obligation 11.1%
Hospital 25.9%
Utilities 10.0%
Other 6.3%
Water & Sewer 0.7%
Education 12.3%
Industrial Development 15.2%
Pollution Control 2.3%
Housing 3.2%
Transportation 5.6%
Summary of Investments by Combined Ratings
Standard & Percentage of
Moody's and/or Poor's Total Investments
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Aaa AAA 51.6%
Aa AA 10.8
A A 1.7
Baa BBB 17.0
Ba BB 3.0
B B 0.7
VMIG 1 A-1 0.3
NR NR 14.9
-----
100.0%
=====
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Smith Barney New Jersey Municipals Fund Inc. 7
<PAGE>
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Schedule of Investments March 31, 1999
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<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===================================================================================================
<S> <C> <C> <C>
Education -- 12.3%
East Orange, Board of Education, COP, FSA-Insured:
$1,400,000 AAA Zero coupon due 8/1/14 $ 663,250
1,000,000 AAA Zero coupon due 8/1/15 446,250
1,845,000 AAA Zero coupon due 2/1/19 668,812
2,845,000 AAA Zero coupon due 2/1/23 839,275
1,000,000 AAA Zero coupon due 8/1/23 287,500
2,845,000 AAA Zero coupon due 2/1/27 682,800
1,300,000 AAA 5.000% due 2/1/14 1,311,375
750,000 AAA Hamilton Township, Mercer County, Board of Education,
COP, Series B, FSA-Insured, 7.000% due 12/15/15 809,062
1,000,000 AAA Lumberton Township School District COP, MBIA-Insured,
6.100% due 10/1/13 1,072,500
New Jersey EDA, Revenue:
1,030,000 AAA Educational Testing Service, Series A,
4.750% due 5/15/25 984,938
575,000 Aa3* Princeton Montessori Society, LOC Banque National
De Paris, Series S, 6.500% due 6/1/12 609,500
New Jersey State Educational Facilities Authority Revenue:
1,000,000 NR Caldwell College, Series A, 7.250% due 7/1/25 1,077,500
2,700,000 NR Fairleigh Dickinson University, Series C,
6.625% due 7/1/23 2,824,875
550,000 BBB Monmouth University, Series D, 5.125% due 7/1/24 539,000
4,365,000 AAA Richard Stockton College, Series F, AMBAC-Insured,
5.400% due 7/1/21 4,506,863
1,250,000 AAA Seton Hall University Project, Series F, AMBAC-Insured,
5.000% due 7/1/21 1,245,313
St. Peters College, Series B:
1,000,000 BBB 5.375% due 7/1/18 998,750
2,000,000 BBB 5.500% due 7/1/27 2,012,500
2,385,000 AAA New Jersey State Higher Education Assistance
Authority, Student Loan Revenue, New Jersey Class
Loan Program, Series A, MBIA-Insured,
5.800% due 6/1/16(b) 2,492,325
2,200,000 AAA Perth Amboy Board of Education, COP, FSA-Insured,
5.000% due 12/15/17 2,197,250
Rutgers State University Revenue:
600,000 AA Refunding, Series A, 6.400% due 5/1/13 696,750
Series U:
1,810,000 AAA++ 5.000% due 5/1/20 1,807,738
1,905,000 AAA++ 5.000% due 5/1/21 1,897,856
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30,671,982
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</TABLE>
See Notes to Financial Statements.
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8 1999 Annual Report to Shareholders
<PAGE>
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Schedule of Investments (continued) March 31, 1999
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<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===================================================================================================
<S> <C> <C> <C>
General Obligation -- 11.1%
$ 200,000 AAA Hudson County GO, FGIC-Insured, 6.550% due 7/1/10 $ 236,750
500,000 AAA Jersey City GO, Series 1991B, FSA-Insured,
8.400% due 5/15/06 628,125
650,000 AAA Lakewood Township School District, GO, Series 92,
AMBAC-Insured, 6.250% due 2/15/11 751,562
Morris Township GO:
550,000 Aa1* 6.550% due 7/1/09 649,000
550,000 Aa1* 6.550% due 7/1/10 654,500
500,000 Aa1* 6.550% due 7/1/11 593,125
New Jersey State GO:
2,500,000 AA+ Series D, 8.000% due 2/15/07 3,131,250
9,000,000 AA+ 4.500% due 2/1/18 8,538,750
1,500,000 AAA North Bergen Township GO, FSA-Insured,
8.000% due 8/15/07 1,886,250
Parsippany-Troy Hills Township GO, MBIA-Insured:
550,000 AAA 5.000% due 12/1/16 556,875
565,000 AAA 5.000% due 12/1/17 568,531
4,620,000 AAA Plainfield Board of Education, GO, FSA-Insured,
5.000% due 8/1/20 4,608,450
Randolph Township School District, GO, FGIC-Insured:
1,000,000 AAA 5.000% due 8/1/17 1,006,250
1,000,000 AAA 5.000% due 8/1/18 1,003,750
500,000 AAA South Amboy GO, MBIA-Insured,
6.375% due 12/1/10 544,375
854,000 AAA Weehawken Township GO, FSA-Insured,
6.350% due 7/1/07 912,713
West Windsor/Plainsboro GO, Regional School District:
180,000 AA 6.750% due 4/1/06 208,575
490,000 AA 6.750% due 4/1/07 573,913
435,000 AA 6.800% due 4/1/08 516,563
170,000 AA 6.800% due 4/1/09 203,363
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27,772,670
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Hospital -- 25.9%
Camden County Improvement Authority Revenue:
3,775,000 Ba2* Health Care Redevelopment Project, Cooper Health,
5.875% due 2/15/15 3,392,780
1,000,000 AAA Health Systems, Catholic Health East, Series B,
AMBAC-Insured, 5.000% due 11/15/18 995,000
2,500,000 AAA New Jersey EDA, Nursing Home Revenue,
RWJ Health Care Corp., FSA-Insured, 6.500% due 7/1/24 2,768,750
New Jersey Health Care Facilities Financing
Authority Revenue:
2,715,000 AAA Barnert Hospital, MBIA/FHA-Insured,
5.000% due 8/1/25 2,670,881
</TABLE>
See Notes to Financial Statements.
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Smith Barney New Jersey Municipals Fund Inc. 9
<PAGE>
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Schedule of Investments (continued) March 31, 1999
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<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===================================================================================================
<S> <C> <C> <C>
Hospital -- 25.9% (continued)
Bayonne Hospital Obligation Group, FSA-Insured:
$1,300,000 Aaa* 4.750% due 7/1/18 $ 1,256,125
2,250,000 Aaa* 4.750% due 7/1/27 2,131,875
Burdett Tomlin Memorial Hospital, Series D,
FGIC-Insured:
1,400,000 AAA 6.500% due 7/1/12 1,498,000
850,000 AAA 6.500% due 7/1/21 908,437
Cathedral Health Services Inc., MBIA/FHA-Insured,
2,500,000 AAA 5.250% due 8/1/21 2,537,500
3,000,000 AAA Catholic Health East, Series E, AMBAC-Insured,
5.000% due 11/15/28 2,955,000
Columbus Hospital, Series A:
600,000 B 7.200% due 7/1/01 604,548
1,000,000 B 7.500% due 7/1/21 1,037,500
2,300,000 Baa2* Deborah Heart & Lung Center, 6.300% due 7/1/23 2,438,000
750,000 BBB+ East Orange General Hospital, Series B,
7.750% due 7/1/20 788,437
Hackensack University Medical Center, MBIA-Insured:
3,100,000 AAA Series A, 5.000% due 1/1/21 3,053,500
1,250,000 AAA Series B, 5.200% due 1/1/28 1,265,625
Medical Center at Princeton Obligation Group,
AMBAC-Insured:
1,000,000 AAA 5.000% due 7/1/23 985,000
1,000,000 AAA 5.000% due 7/1/28 985,000
825,000 AAA Medical Center of Ocean County, FSA-Insured,
6.750% due 7/1/20 884,812
825,000 AAA Muhlenberg Regional Medical Center, Series B,
AMBAC-Insured, 8.000% due 7/1/18 842,185
370,000 Ba3* Newcomb Medical Center, Series A,
7.875% due 7/1/03 387,575
Pascack Valley Hospital Association:
2,000,000 BBB 5.125% due 7/1/18 1,932,500
5,000,000 BBB 5.125% due 7/1/28 4,718,750
3,700,000 NR Raritan Bay Medical Center, 7.250% due 7/1/27 3,908,125
St. Barnabas Hospital Obligation Group, MBIA-Insured:
750,000 AAA Zero coupon due 7/1/16 317,812
3,700,000 AAA Zero coupon due 7/1/17 1,475,375
3,450,000 AAA Zero coupon due 7/1/23 996,187
St. Barnabas Medical Center, MBIA-Insured:
2,500,000 Aaa* Series A, 5.000% due 7/1/23 2,468,750
4,625,000 AAA Series B, 5.000% due 7/1/24 4,572,969
2,000,000 BBB St. Elizabeth's Hospital, 6.000% due 7/1/14 2,092,500
2,750,000 Baa1* St. Mary Hospital, 5.875% due 7/1/12 2,846,250
1,150,000 AAA Somerset Medical Center, Series A, FGIC-Insured,
5.200% due 7/1/24 1,155,750
</TABLE>
See Notes to Financial Statements.
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10 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===================================================================================================
<S> <C> <C> <C>
Hospital -- 25.9% (continued)
$2,000,000 Baa1* Southern Ocean County Hospital, Series A,
6.250% due 7/1/23 $ 2,132,500
1,500,000 AAA University Medicine & Dentistry, Series A, MBIA-Insured,
5.000% due 9/1/22 1,486,875
- ---------------------------------------------------------------------------------------------------
64,490,873
- ---------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 2.2%
1,500,000 AAA Newark Housing Financing Corp., Mortgage Revenue,
Refunding, Manor Apartments, Series A, FHA-Insured,
7.500% due 2/15/24 1,636,875
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) 2,763,563
1,000,000 AA Regency Park Project, Series H, GNMA-Collateralized,
7.700% due 11/1/30 1,031,730
- ---------------------------------------------------------------------------------------------------
5,432,168
- ---------------------------------------------------------------------------------------------------
Housing: Single-Family -- 1.0%
1,940,000 AAA New Jersey State Housing & Mortgage Finance Agency
Revenue, Home Buyer, Series R, MBIA-Insured,
5.750% due 4/1/17(c) 2,044,275
425,000 AAA Virgin Islands HFA, Single-Family Mortgage Revenue,
Series A, GNMA-Collateralized, 6.500% due
3/1/25(b) 449,969
- ---------------------------------------------------------------------------------------------------
2,494,244
- ---------------------------------------------------------------------------------------------------
Industrial Development -- 15.2%
650,000 BBB+ Essex County Improvement Authority, Lease Revenue,
6.600% due 4/1/14 724,750
New Jersey EDA, EDR:
1,495,000 BBB+ Preston Trucking Co., 6.500% due 9/1/14 1,616,469
995,000 Aaa* Series L, 7.100% due 12/1/11(b) 1,067,137
1,600,000 NR Station Plaza Park and Ride LP Project,
6.625% due 7/1/03(b) 1,672,000
1,000,000 NR Trane Division, 1990 Project, 9.500% due 9/1/00 1,055,000
1,500,000 NR Zirbser-Greenbriar Inc., Series A, 7.375% due 7/15/03 1,601,250
1,500,000 BB+ New Jersey EDA, Electric Energy Facility Revenue,
Vineland Cogeneration LP Project, 7.875% due 6/1/19 1,635,000
1,000,000 AAA New Jersey EDA, Natural Gas Facilities Revenue, NUI Corp.,
Series A, AMBAC-Insured, 6.350% due 10/1/22 1,103,750
New Jersey EDA, Revenue:
Cadbury Corp. Project, ACA-Insured, Series A:
750,000 A 5.500% due 7/1/18 772,500
1,250,000 A 5.500% due 7/1/28 1,287,500
970,000 Aa3* Economic Growth, Series A, LOC Banque
Nationale de Paris, 6.550% due 12/1/07(b) 1,029,412
</TABLE>
See Notes to Financial Statements.
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Smith Barney New Jersey Municipals Fund Inc. 11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===================================================================================================
<S> <C> <C> <C>
Industrial Development -- 15.2% (continued)
First Mortgage, Fellowship Village, Series A:
$2,000,000 BBB 5.500% due 1/1/18 $ 1,982,500
2,500,000 BBB 5.500% due 1/1/25 2,456,250
Harrogate Inc., Series A:
2,000,000 BBB 5.750% due 12/1/16 2,047,500
1,500,000 BBB 5.875% due 12/1/26 1,539,375
1,000,000 A+ Morris Hall/St. Lawrence Project, Series A,
LOC Corestates First Bank, 6.250% due 4/1/25 1,053,750
4,000,000 NR Sr. Mortgage, Arbor Glen, Series A,
6.000% due 5/15/28 3,910,000
3,890,000 BBB New Jersey EDA, Special Facility Revenue, Continental
Airlines Inc. Project, 5.500% due 4/1/28(b) 3,880,275
1,000,000 AAA New Jersey EDA, State Contract, Economic Recovery
Revenue, Series A, FSA-Insured, 6.000%
due 3/15/21 1,072,500
5,000,000 Aaa* New Jersey EDA, State Lease Revenue, Bergen County
Administration Complex, MBIA-Insured,
4.750% due 11/15/26 4,775,000
1,500,000 BBB+ New Jersey EDA, Terminal Revenue, GATX Terminal
Corp., Series 1994, 7.300% due 9/1/19 1,695,000
- ---------------------------------------------------------------------------------------------------
37,976,918
- ---------------------------------------------------------------------------------------------------
Life Care -- 5.0%
New Jersey EDA Revenue, First Mortgage, Keswick Pines:
2,885,000 NR 5.700% due 1/1/18 2,877,787
2,800,000 NR 5.750% due 1/1/24 2,775,500
New Jersey EDA, EDR:
1,000,000 Aaa* Eagle Rock Convalescent, Inc., GNMA-Collateralized,
7.375% due 12/20/06 1,076,250
5,250,000 BBB- Refunding United Methodist Homes, 5.125% due 7/1/2 4,875,937
755,000 AAA New Jersey Health Care Facilities Financing Authority
Revenue, Spectrum for Living, Series B, FHA-Insured,
6.500% due 2/1/22 805,962
- ---------------------------------------------------------------------------------------------------
12,411,436
- ---------------------------------------------------------------------------------------------------
Miscellaneous -- 6.3%
615,000 A Atlantic City COP, Series 1991, 8.875% due 1/15/13 852,544
2,500,000 AAA Atlantic County COP, Public Facilities Lease Agreements,
FGIC-Insured, 7.400% due 3/1/09(c) 3,093,750
1,000,000 AAA Essex County Improvement Authority Parking
Facilities Revenue, AMBAC-Insured,
5.000% due 10/1/17 998,750
240,000 A+ Hudson County Improvement Authority, (Essential
Purpose Pooled Governmental Loan Project),
Series 1986, Remarketed 11/1/90, 7.600% due 8/1/25 256,800
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===================================================================================================
<S> <C> <C> <C>
Miscellaneous -- 6.3% (continued)
$1,500,000 AAA Middlesex County COP, MBIA-Insured,
5.000% due 2/15/19 $ 1,490,625
1,000,000 Aaa* Morristown Parking Authority, Guaranteed Revenue,
FSA-Insured, 5.150% due 8/1/25 1,005,000
1,700,000 AAA New Brunswick Housing Authority, Lease Revenue,
Rutgers University, FGIC-Insured, 4.750% due 7/1/18 1,644,750
1,000,000 AAA New Brunswick Parking Authority Revenue, Series A,
FGIC-Insured, 6.500% due 9/1/19 1,091,250
480,000 BBB++ New Jersey EDA, EDR, National Association of Accountants,
7.650% due 7/1/09 507,600
1,000,000 NR New Jersey EDA, Waste Paper Recycling Revenue,
(Marcal Paper Mills Inc. Project), 8.500% due 2/1/10(b) 1,178,750
3,000,000 NR New Jersey Sports and Exposition Authority, Monmouth
Park, Refunding, Series A, 8.000% due 1/1/25 3,645,000
- ---------------------------------------------------------------------------------------------------
15,764,819
- ---------------------------------------------------------------------------------------------------
Pollution Control -- 2.3%
Middlesex County Pollution Control Authority Financing
Revenue, Amerada Hess Corp.:
1,000,000 NR 7.875% due 6/1/22 1,147,500
2,000,000 NR 6.875% due 12/1/22(c) 2,145,000
2,150,000 NR New Jersey EDA, Revenue, Sewer Facilities,
Atlantic City Sewer Co., 7.250% due 12/1/11(b) 2,340,812
- ---------------------------------------------------------------------------------------------------
5,633,312
- ---------------------------------------------------------------------------------------------------
Solid Waste -- 2.4%
1,950,000 BB++ Atlantic County Utilities Authority, Solid Waste Revenue,
7.125% due 3/1/16 1,986,563
2,500,000 Aa2* Mercer County, Improvement Authority,
County Guaranteed Solid Waste Revenue,
5.750% due 9/15/16 2,675,000
1,250,000 Aa3* New Jersey EDA, Solid Waste Revenue Disposal Facility,
Garden State Paper Co., LOC Toronto Dominion Bank,
7.125% due 4/1/22 1,314,062
- ---------------------------------------------------------------------------------------------------
5,975,625
- ---------------------------------------------------------------------------------------------------
Transportation -- 5.6%
800,000 Baa1* Essex County Improvement Authority, Airport Project
Revenue, 6.800% due 11/1/21(b) 841,000
1,250,000 AAA New Brunswick Parking Authority Revenue, City Guaranteed
Parking, FGIC-Insured, 5.000% due 1/1/29 1,239,062
1,000,000 Baa1* New Jersey EDA, EDR, (American Airlines Inc. Project),
7.100% due 11/1/31(b) 1,076,250
3,030,000 Aa2* New Jersey State Transportation Trust Fund Authority,
Transportation System, Series A, 5.000% due 6/15/17 3,033,788
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Fund Inc. 13
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===================================================================================================
<S> <C> <C> <C>
Transportation -- 5.6% (continued)
Port Authority of New York & New Jersey:
$1,500,000 AA- 67th Series, 6.875% due 1/1/25 $ 1,549,200
Special Obligation Revenue:
3,500,000 NR 5th Installment, 6.750% due 10/1/19(b) 3,871,875
2,000,000 AAA 96th Series, FGIC-Insured, 6.600% Due 10/1/23(b) 2,230,000
- ---------------------------------------------------------------------------------------------------
13,841,175
- ---------------------------------------------------------------------------------------------------
Utilities -- 10.0%
700,000 Baa1* Beachwood Sewer Authority Revenue, Junior Lien,
6.500% due 12/1/12 748,125
1,000,000 AAA Bordentown Sewer Authority Revenue, Series C,
MBIA-Insured, 6.900% due 12/1/16 1,067,500
Camden County Municipal Utilities Authority,
Sewer Revenue, FGIC-Insured:
1,500,000 AAA 5.250% due 7/15/16 1,546,875
1,000,000 AAA 5.250% due 7/15/17 1,027,500
2,500,000 AAA Hamilton Township, Atlantic County Municipal Utilities
Authority, FGIC-Insured, 5.000% due 8/15/17 2,496,875
1,385,000 AAA Kearny Municipal Utilities Authority Revenue,
FGIC-Insured, 7.300% due 11/15/18 1,802,231
1,000,000 AAA Middlesex County Utilities Authority, Sewer Revenue,
Series A, MBIA-Insured, 6.250% due 8/15/10 1,161,250
2,465,000 Aaa* Mount Holly Municipal Utilities Authority, Sewer
Revenue, MBIA-Insured, 4.750% due 12/1/28 2,338,669
1,000,000 AAA New Jersey EDA, Natural Gas Facilities Revenue,
(New Jersey Natural Gas Co, Project) Series A,
AMBAC-Insured, 6.250% due 8/1/24 1,101,250
750,000 AAA Old Bridge Township Municipal Utilities Authority Revenue,
FGIC-Insured, 6.400% due 11/1/09 822,188
1,000,000 AAA Southeast Morris County Municipal Utilities Authority,
Water Revenue, Series A, FGIC-Insured,
6.500% due 1/1/11 1,058,750
Union County Utilities Authority:
Sr. Lease Obligation, Ogden Martin, Series A:
1,000,000 AAA 5.000% due 6/1/23(b) 977,500
5,000,000 AAA 5.350% due 6/1/23(b) 5,081,250
Capital Appreciation, County Deficiency, Series A1:
1,010,000 Aaa* Zero coupon due 6/15/16(b) 427,988
1,010,000 Aaa* Zero coupon due 6/15/17(b) 406,525
1,010,000 Aaa* Zero coupon due 6/15/18(b) 378,750
1,850,000 Aaa* Capital Appreciation, County Deficiency, Series A2,
Zero coupon due 6/15/16(b) 783,938
Capital Appreciation, County Deficiency, Series C1:
275,000 Aaa* Zero coupon due 6/15/13 139,219
275,000 Aaa* Zero coupon due 6/15/14 133,031
275,000 Aaa* Zero coupon due 6/15/15 126,156
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) March 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===================================================================================================
<S> <C> <C> <C>
Utilities -- 10.0% (continued)
$ 280,000 Aaa* Zero coupon due 6/15/16 $ 119,700
275,000 Aaa* Zero coupon due 6/15/17 111,719
275,000 Aaa* Zero coupon due 6/15/18 104,156
Capital Appreciation, County Deficiency, Series C2:
310,000 Aaa* Zero coupon due 6/15/13 158,100
310,000 Aaa* Zero coupon due 6/15/14 149,963
310,000 Aaa* Zero coupon due 6/15/15 142,213
305,000 Aaa* Zero coupon due 6/15/16 130,388
310,000 Aaa* Zero coupon due 6/15/17 125,938
310,000 Aaa* Zero coupon due 6/15/18 117,413
- ---------------------------------------------------------------------------------------------------
24,785,160
- ---------------------------------------------------------------------------------------------------
Water and Sewer -- 0.7%
New Jersey EDA Water Facilities Revenue:
700,000 A-1+ Variable Refunding, (United Water New Jersey Inc.
Project), Series B, 2.550% due 11/1/25(d) 700,000
1,000,000 NR American Water Co. Inc. Project, 7.400% due 11/1/01(b) 1,053,750
- ---------------------------------------------------------------------------------------------------
1,753,750
- ---------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $239,075,286**) $249,004,132
===================================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Rating Service, except those
identified by an asterisk (*) or a double dagger (++), which are rated by
Moody's Investor Services Inc. and Fitch Investor Services, Inc.,
respectively.
(b) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(c) Security segregated by Custodian for open purchase commitments.
(d) 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 16 through 18 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Fund Inc. 15
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings (unaudited)
- --------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Rating Service ("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 Investors Service, Inc. ("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.
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings (unaudited) (continued)
- --------------------------------------------------------------------------------
Fitch Investors Services, Inc. ("Fitch") -- Rating may be modified by the
addition of a plus (+) or minus (-) sign to show relative standings with the
major ratings categories.
AAA -- Bonds rated AAA by Fitch have the lowest expectation of credit risk.
The obligor has an exceptionally strong capacity for timely payment of
financial commitments which is highly unlikely to be adversely affected
by foreseeable events
BBB -- Bonds rated BBB by Fitch currently have a low expectation of credit
risk. The capacity for timely payment of financial commitments is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to impair this capicity. This
is the lowest investment grade category assigned by Fitch.
BB -- Bonds rated BB by Fitch carry the possibility of credit risk
developing, particularly as the result of adverse economic change over
time. Business or financial alternatives may, however, be available to
allow financial commitments to be met. Securities rated in this
category are not considered by Fitch to be investment grade.
NR -- Indicates that the bond is not rated by Standard & Poor's, Moody's or
Fitch.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Fund Inc. 17
<PAGE>
- --------------------------------------------------------------------------------
Security Descriptions (unaudited)
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governments
ACA -- American Credit Association
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
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities March 31, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $239,075,286) $ 249,004,132
Cash 67,797
Interest receivable 3,642,833
Receivable for Fund shares sold 227,898
- --------------------------------------------------------------------------------
Total Assets 252,942,660
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 4,582,907
Payable for Fund shares purchased 132,121
Investment advisory fees payable 67,143
Administration fees payable 48,331
Distribution fees payable 19,580
Accrued expenses 70,215
- --------------------------------------------------------------------------------
Total Liabilities 4,920,297
- --------------------------------------------------------------------------------
Total Net Assets $ 248,022,363
================================================================================
NET ASSETS:
Par value of capital shares $ 18,707
Capital paid in excess of par value 236,335,274
Overdistributed net investment income (3,338)
Accumulated net realized gain from security transactions 1,742,874
Net unrealized appreciation of investments 9,928,846
- --------------------------------------------------------------------------------
Total Net Assets $ 248,022,363
================================================================================
Shares Outstanding:
Class A 12,787,045
- --------------------------------------------------------------------------------
Class B 5,233,042
- --------------------------------------------------------------------------------
Class L 686,324
- --------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $13.26
- --------------------------------------------------------------------------------
Class B* $13.25
- --------------------------------------------------------------------------------
Class L** $13.25
- --------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.17% of net asset value per share) $13.81
- --------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $13.38
================================================================================
* 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 L 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. 19
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended March 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 13,593,690
- --------------------------------------------------------------------------------
EXPENSES:
Distribution fees (Note 4) 741,720
Investment advisory fees (Note 4) 722,522
Administration fees (Note 4) 481,681
Shareholder and system servicing fees 89,550
Audit and legal 52,300
Shareholder communications 45,001
Pricing service fees 21,698
Registration fees 20,002
Directors' fees 14,502
Custody 11,405
Other 5,392
- --------------------------------------------------------------------------------
Total Expenses 2,205,773
- --------------------------------------------------------------------------------
Net Investment Income 11,387,917
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 5):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 124,985,489
Cost of securities sold 120,560,131
- --------------------------------------------------------------------------------
Net Realized Gain 4,425,358
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 13,623,222
End of year 9,928,846
- --------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (3,694,376)
- --------------------------------------------------------------------------------
Net Gain on Investments 730,982
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 12,118,899
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
20 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets For the Year Ended March 31, 1999
- --------------------------------------------------------------------------------
1999 1998
================================================================================
OPERATIONS:
Net investment income $ 11,387,917 $ 11,227,379
Net realized gain 4,425,358 3,094,901
Increase (decrease) in net unrealized
appreciation (3,694,376) 6,771,520
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 12,118,899 21,093,800
- --------------------------------------------------------------------------------
DISTRIBUTION TO SHAREHOLDERS FROM (NOTE 3):
Net investment income (11,425,954) (11,457,998)
Net realized gains (4,138,625) (1,015,534)
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (15,564,579) (12,473,532)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 37,708,339 26,651,401
Net asset value of shares issued for
reinvestment of dividends 9,304,918 7,471,348
Cost of shares reacquired (25,846,205) (27,799,598)
- --------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 21,167,052 6,323,151
- --------------------------------------------------------------------------------
Increase in Net Assets 17,721,372 14,943,419
NET ASSETS:
Beginning of year 230,300,991 215,357,572
- --------------------------------------------------------------------------------
End of year* $ 248,022,363 $ 230,300,991
================================================================================
* Includes undistributed (overdistributed) net
investment income of: $(3,338) $34,699
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Fund Inc. 21
<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 for
which market quotations are not available will be valued in good faith at fair
value by or under the direction of the Board of Directors; (d) securities
maturing within 60 days are valued at cost plus accreted discount or minus
amortized premium, which approximates value; (e) gains or losses on the sale of
securities are calculated by using the specific identification method; (f)
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; (g) 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; (h) dividends and distributions to
shareholders are recorded on the ex-dividend date; (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; (j)
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 (k) 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
- --------------------------------------------------------------------------------
22 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
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
SSBC Fund Management Inc. ("SSBC") formerly known as Mutual Management Corp., a
subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), acts as investment
adviser to the Fund. The Fund pays SSBC 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.
SSBC 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.
On October 8, 1998, CFBDS, Inc. ("CFBDS"), became the Fund's distributor. Prior
to that date, Salomon Smith Barney Inc. ("SSB"), another subsidiary of SSBH, was
the Fund's distributor. SSB, as well as certain other broker-dealers, continues
to sell Fund shares to the public as a member of the selling group.
On June 12, 1998, the Portfolio's existing Class C shares were renamed Class L
shares. Effective June 15, 1998, Class L shares are being sold at net asset
value plus a maximum initial sales charge of 1.00%. Class L shares also have a
1.00% contingent deferred sales charge ("CDSC"), which applies if redemption
occurs within the first year of purchase.
There is also a CDSC of 4.50% on Class B shares, which applies if redemption
occurs 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.
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Fund Inc. 23
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
For the year ended March 31, 1999, SSB or CFBDS received sales charges of
$341,000 and $25,000 on sales of the Fund's Class A and Class L shares,
respectively. In addition, CDSCs paid to SSB or CFBDS were approximately:
Class B Class L
================================================================================
CDSCs $51,000 $2,000
================================================================================
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to its
Class A, B and L 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 L 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, 1999, total Distribution Plan fees
incurred were:
Class A Class B Class L
================================================================================
Distribution Plan Fees $248,265 $440,192 $53,263
================================================================================
All officers and one Director of the Fund are employees of SSB.
5. Investments
During the year ended March 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $137,166,730
- --------------------------------------------------------------------------------
Sales 124,985,489
================================================================================
At March 31, 1999, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $10,954,997
Gross unrealized depreciation (1,026,151)
- --------------------------------------------------------------------------------
Net unrealized appreciation $9,928,846
================================================================================
6. Capital Shares
At March 31, 1999, 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.
Effective June 12, 1998, the Fund adopted the renaming of existing Class C
shares as Class L shares.
- --------------------------------------------------------------------------------
24 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
At March 31, 1999, total paid-in capital amounted to the following for each
class:
Class A Class B Class L
================================================================================
Total Paid-in Capital $158,004,718 $69,227,082 $9,122,181
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
March 31, 1999 March 31, 1998
------------------------- --------------------------
Shares Amount Shares Amount
==========================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 1,710,440 $ 23,029,562 1,254,490 $ 16,808,489
Shares issued on reinvestment 468,877 6,294,593 382,956 5,097,645
Shares reacquired (1,171,864) (15,777,162) (1,331,406) (17,702,432)
- ------------------------------------------------------------------------------------------
Net Increase 1,007,453 $ 13,546,993 306,040 $ 4,203,702
==========================================================================================
Class B
Shares sold 834,214 $ 11,214,455 609,600 $ 8,121,587
Shares issued on reinvestment 198,587 2,663,886 163,158 2,170,492
Shares reacquired (694,084) (9,335,744) (696,778) (9,268,625)
- ------------------------------------------------------------------------------------------
Net Increase 338,717 $ 4,542,597 75,980 $ 1,023,454
==========================================================================================
Class L+
Shares sold 256,602 $ 3,464,322 128,843 $ 1,721,325
Shares issued on reinvestment 25,853 346,439 15,280 203,211
Shares reacquired (54,400) (733,299) (62,246) (828,541)
- ------------------------------------------------------------------------------------------
Net Increase 228,055 $ 3,077,462 81,877 $ 1,095,995
==========================================================================================
</TABLE>
+ On June 12, 1998, Class C shares were renamed Class L shares.
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Fund Inc. 25
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class A Shares 1999(1) 1998 1997 1996 1995
========================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $13.44 $12.92 $12.88 $12.62 $12.55
- ----------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.66 0.70 0.70 0.70 0.70
Net realized and unrealized gain 0.05 0.59 0.02 0.26 0.07
- ----------------------------------------------------------------------------------------
Total Income From Operations 0.71 1.29 0.72 0.96 0.77
- ----------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.66) (0.71) (0.68) (0.70) (0.70)
Net realized gains (0.23) (0.06) -- -- --
- ----------------------------------------------------------------------------------------
Total Distributions (0.89) (0.77) (0.68) (0.70) (0.70)
- ----------------------------------------------------------------------------------------
Net Asset Value, End of Year $13.26 $13.44 $12.92 $12.88 $12.62
- ----------------------------------------------------------------------------------------
Total Return 5.41% 10.20% 5.74% 7.77% 6.37%
- ----------------------------------------------------------------------------------------
Net Assets, End of Year (millions) $ 170 $ 158 $ 148 $ 154 $ 107
- ----------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.75% 0.75% 0.76% 0.84% 0.88%*
Net investment income 4.89 5.22 5.44 5.41 5.61
- ----------------------------------------------------------------------------------------
Portfolio Turnover Rate 52% 55% 36% 22% 32%
========================================================================================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
* Expense ratio excludes interest expense. Expense ratio including interest
expense would have been 0.89% for the year ended March 31, 1995.
- --------------------------------------------------------------------------------
26 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class B Shares 1999(1) 1998 1997 1996 1995
========================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $13.44 $12.92 $12.88 $12.62 $12.55
- ----------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.59 0.63 0.64 0.63 0.63
Net realized and unrealized gain 0.04 0.59 0.02 0.26 0.06
- ----------------------------------------------------------------------------------------
Total Income From Operations 0.63 1.22 0.66 0.89 0.69
- ----------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.59) (0.64) (0.62) (0.63) (0.62)
Net realized gains (0.23) (0.06) -- -- --
- ----------------------------------------------------------------------------------------
Total Distributions (0.82) (0.70) (0.62) (0.63) (0.62)
- ----------------------------------------------------------------------------------------
Net Asset Value, End of Year $13.25 $13.44 $12.92 $12.88 $12.62
- ----------------------------------------------------------------------------------------
Total Return 4.80% 9.66% 5.23% 7.20% 5.76%
- ----------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $69,350 $65,773 $62,249 $63,272 $55,334
- ----------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.28% 1.27% 1.28% 1.36% 1.39%*
Net investment income 4.37 4.70 4.92 4.90 5.09
- ----------------------------------------------------------------------------------------
Portfolio Turnover Rate 52% 55% 36% 22% 32%
========================================================================================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
* Expense ratio excludes 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. 27
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of beneficial interest outstanding throughout each
year ended March 31:
<TABLE>
<CAPTION>
Class L Shares(1) 1999(2) 1998 1997 1996 1995(3)
========================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $13.43 $12.92 $12.88 $12.62 $11.86
- ----------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.58 0.61 0.63 0.62 0.20
Net realized and unrealized gain 0.05 0.59 0.02 0.27 0.74
- ----------------------------------------------------------------------------------------
Total Income From Operations 0.63 1.20 0.65 0.89 0.94
- ----------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.58) (0.63) (0.61) (0.63) (0.18)
Net realized gains (0.23) (0.06) -- -- --
- ----------------------------------------------------------------------------------------
Total Distributions (0.81) (0.69) (0.61) (0.63) (0.18)
- ----------------------------------------------------------------------------------------
Net Asset Value, End of Year $13.25 $13.43 $12.92 $12.88 $12.62
- ----------------------------------------------------------------------------------------
Total Return 4.78% 9.50% 5.17% 7.17% 8.01%++
- ----------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $9,093 $6,153 $4,861 $3,812 $248
- ----------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.32% 1.39% 1.32% 1.41% 1.44%+*
Net investment income 4.32 4.58 4.88 4.82 5.05+
- ----------------------------------------------------------------------------------------
Portfolio Turnover Rate 52% 55% 36% 22% 32%
========================================================================================
</TABLE>
(1) On June 12, 1998, Class C shares were renamed Class L shares.
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from December 13, 1994 (inception date) to March 31, 1995.
* Expense ratio excludes interest expense. Expense ratio including interest
expense would have been 1.45% for the period ended March 31, 1995.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
28 1999 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, 1999, 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 the financial highlights for each of the years in
the four-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 the year 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, 1999, by correspondence with the custodian. As to securities purchased but
not yet 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, 1999, 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 four-year period then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
May 12, 1999
- --------------------------------------------------------------------------------
Smith Barney New Jersey Municipals Fund Inc. 29
<PAGE>
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
March 31, 1999:
-- 100% of the dividends paid by the Fund from net investment income as
tax-exempt for regular Federal income tax purposes.
-- Long-term capital gain distributions paid of $2,678,819.*30
- --------------------------------------------------------------------------------
30 1999 Annual Report to Shareholders
<PAGE>
SALOMONSMITHBARNEY
----------------------------
A member of citigroup [LOGO]
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
James J. Crisona, Emeritus
Officers
Heath B. McLendon
President and Chief Executive Officer
Lewis E. Daidone
Senior Vice President and Treasurer
Joseph P. Deane
Vice President and Investment Officer
Paul A. Brook
Controller
Christina T. Sydor
Secretary
Investment Adviser and Administrator
SSBC Fund Management Inc.
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
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.
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
Smith Barney New Jersey
Municipals Fund Inc.
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com
FD0370 5/99
