July 30, 2001

STATEMENT OF ADDITIONAL INFORMATION

SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC.

7 World Trade Center
New York, New York 10048
(800) 451-2010


This Statement of Additional Information ("SAI") is
not a prospectus and is meant to be read in
conjunction with the prospectus of the Smith Barney
New Jersey Municipals Fund Inc. (the "fund") dated
July 30, 2001, as amended or supplemented from time to
time (the "prospectus"), and is incorporated by
reference in its entirety into the prospectus.
Additional information about the fund's investments is
available in the fund's annual and semi-annual reports
to shareholders that are incorporated herein by
reference.  The prospectus and copies of the reports
may be obtained free of charge by contacting a Salomon
Smith Barney Financial Consultant, a broker/dealer,
financial intermediary, or a financial institution
(each called a "Service Agent") or by writing or
calling the fund at the address or telephone number
above.

TABLE OF CONTENTS

Directors and Executive Officers of the Fund	2
Investment Objective and Management Policies of the
Fund	5
Investment Restrictions	15
Risk Factors	17
Special Considerations Relating to New Jersey
Municipal Securities	20
Special Considerations Regarding Puerto Rico,
the U.S. Virgin Islands and Guam	24
Portfolio Transactions	26
Portfolio Turnover	27
Purchase of Shares	27
Determination of Net Asset Value	33
Redemption of Shares	34
Investment Management and Other Services	37
Valuation of Shares	41
Exchange Privilege	42
Performance Data	43
Dividends, Distributions and Taxes	47
Additional Information	51
Financial Statements	52
Other Information	52
Appendix A	54



DIRECTORS AND EXECUTIVE OFFICERS OF THE FUND

The names of the directors of the fund and executive
officers of the fund, together with information as to
their principal business occupations, are set forth
below.  The executive officers of the fund are
employees of organizations that provide services to
the fund.  Each director who is an "interested person"
of the fund, as defined in the Investment Company Act
of 1940, as amended (the "1940 Act"), is indicated by
an asterisk.  The address of the "non-interested"
directors and executive officers of the fund is 7
World Trade Center, New York, New York  10048, unless
otherwise indicated.

Herbert Barg (Age 78).  Director
Private Investor. Director or trustee of 16 investment
companies associated with Citigroup Inc. ("Citigroup")
His address is 273 Montgomery Avenue, Bala Cynwyd,
Pennsylvania 19004.

*Alfred J. Bianchetti (Age 78).  Director
Retired; formerly Senior Consultant to Dean Witter
Reynolds Inc. Director or trustee of 11 investment
companies associated with Citigroup.  His address is
19 Circle End Drive, Ramsey, New Jersey 07466.

Martin Brody (Age 79).  Director
Consultant, HMK Associates; Retired Vice Chairman of
the Board of Restaurant Associates Corp. Director or
trustee of 20 investment companies associated with
Citigroup. His address is c/o HMK Associates, 30
Columbia Turnpike, Florham Park, New Jersey 07932.

Dwight B. Crane (Age 63).  Director
Professor, Harvard Business School. Director or
trustee of 23 investment companies associated with
Citigroup. His address is c/o Harvard Business School,
Soldiers Field Road, Boston, Massachusetts 02163.

Burt N. Dorsett (Age 70).  Director
Managing Partner of Dorsett McCabe Management Inc., an
investment counseling firm; Director of Research
Corporation Technologies, Inc., a nonprofit patent
clearing and licensing firm. Director or trustee of 11
investment companies associated with Citigroup. His
address is 201 East 62nd Street, New York, New York
10021.

Elliot S. Jaffe (Age 75).  Director
Chairman of the Board and President of The Dress Barn,
Inc. Director or trustee of 11 investment companies
associated with Citigroup. His address is 30 Dunnigan
Drive, Suffern, New York 10901.

Stephen E. Kaufman (Age 69).  Director
Attorney. Director or trustee of 13 investment
companies associated with Citigroup. His address is
277 Park Avenue, New York, New York 10172.


Joseph J. McCann (Age 70).  Director
Financial Consultant; Retired Financial Executive,
Ryan Homes, Inc. Director or trustee of 11 investment
companies associated with Citigroup. His address is
200 Oak Park Place, Pittsburgh, Pennsylvania 15243.

*Heath B. McLendon (Age 68).  Chairman of the Board
and Investment Officer
Managing Director of Salomon Smith Barney Inc.
("Salomon Smith Barney"); President of Smith Barney
Fund Management LLC ("SBFM" or the "manager"),
(formerly known as SSB Citi Fund Management LLC) and
Travelers Investment Adviser, Inc. ("TIA"); Chairman
or Co-Chairman of the Board and Director or trustee of
71 investment companies associated with Citigroup. His
address is 7 World Trade Center, New York, New York
10048.

Cornelius C. Rose, Jr. (Age 68). Director
President, Cornelius C. Rose Associates, Inc.,
financial consultants, and Chairman and Director of
Performance Learning Systems, an educational
consultant. Director or trustee of 11 investment
companies associated with Citigroup. His address is
Meadowbrook Village, Building 4, Apt 6, West Lebanon,
New Hampshire 03784.

Lewis E. Daidone (Age 43).  Senior Vice President and
Treasurer
Managing Director of Salomon Smith Barney; Chief
Financial Officer of the Smith Barney Mutual funds;
Director and Senior Vice President of SBFM and TIA.
Senior Vice President or Executive Vice President and
Treasurer of 61 investment companies associated with
Citigroup.  His address is 125 Broad Street, New York,
New York 10004.

Joseph P. Deane (Age 53).  Vice President and
Investment Officer
Investment Officer of SBFM; Managing Director of
Salomon Smith Barney.  Investment officer of 9 Smith
Barney mutual funds.  His address is 7 World Trade
Center, New York, New York 10048.

Paul Brook (Age 47). Controller
Director of Salomon Smith Barney; from 1997-1998
Managing Director of AMT Capital Services Inc.; prior
to 1997 Partner with Ernst & Young LLP. Controller or
Assistant Treasurer of 43 investment companies
associated with Citigroup.  His address is 125 Broad
Street, New York, New York 10004.

Christina T. Sydor (Age 50). Secretary
Managing Director of Salomon Smith Barney; General
Counsel and Secretary of SBFM and TIA. Secretary of 61
investment companies associated with Citigroup.  Her
address is 7 World Trade Center, New York, New York
10048.

As of July 9, 2001, the directors and officers of the
fund, as a group, owned less than 1% of the outstanding
shares of beneficial interest of the fund.

To the best knowledge of the directors, as of July 9,
2001, no single shareholder or "group" (as such term
is defined in Section 13(d) of the Securities Exchange
Act of 1934, as amended) beneficially owned more than
5% of the outstanding shares of the fund.

No officer, director or employee of Salomon Smith
Barney or any of its affiliates receives any
compensation from the fund for serving as an officer
of the fund or director of the fund.  The fund pays
each director who is not an officer, director or
employee of Salomon Smith Barney or any of its
affiliates a fee of $1,000 per annum plus $100 per in-
person meeting and $100 per telephonic meeting.  Each
director emeritus who is not an officer, director or
employee of Salomon Smith Barney or its affiliates
receives a fee of $500 per annum plus $50 per in-
person meeting and $50 per telephonic meeting.  All
directors are reimbursed for travel and out-of-pocket
expenses incurred to attend such meetings.  For the
fiscal year ended March 31, 2001, such expenses
totaled $7,347.

For the fiscal year ended March 31, 2001, the
directors of the fund were paid the following
compensation:







Name of Person





Aggregate
Compensati
on
from Fund
Total
Pension or
Retirement
Benefits
Accrued
As part of
Fund
Expenses


Compensati
on
From Fund
And Fund
Complex
Paid to
Directors



Number of
Funds for
Which
Director
Serves
Within
Fund Complex

Herbert Barg **
$1,400
$0
$116,075
16
Alfred
Bianchetti *
 1,409
  0
   58,900
11
Martin Brody **
 1,200
  0
 132,950
20
Dwight B. Crane
**
 1,409
  0
 153,175
23
Burt N. Dorsett
**
1,409
  0
   59,500
11
Elliot S. Jaffe
**
 1,300
  0
  58,700
11
Stephen E.
Kaufman **
1,409
  0
114,400
13
Joseph J. McCann
**
1,409
  0
59,500
11
Heath B.
McLendon *
0
  0
0
71
Cornelius C.
Rose, Jr. **
 1,409
  0
59,500
11

*	Designates an "interested" director.
**	Designates member of Audit Committee.

Upon attainment of age 80, fund directors are required
to change to emeritus status. Directors emeritus
are entitled to serve in emeritus status for a
maximum of 10 years.  A director emeritus may attend
meetings but has no voting rights. During the
fund's last fiscal year, aggregate compensation
 paid by the fund to directors achieving emeritus
status totaled $700.


INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES OF THE
FUND

The prospectus discusses the fund's investment
objective and policies. The following discussion
supplements the description of the fund's investment
policies in the prospectus.  For purposes of this SAI,
obligations of non-New Jersey municipal issuers, the
interest on which is at least exempt from federal
income taxation ("Other Municipal Securities"), and
obligations of the State of New Jersey and its
political subdivisions, agencies and public
authorities (together with certain municipal issuers
such as the Commonwealth of Puerto Rico, the Virgin
Islands and Guam) that pay interest which is excluded
from gross income for federal income tax purposes and
exempt from New Jersey personal income taxes ("New
Jersey Municipal Securities") are collectively
referred to as "Municipal Bonds." SBFM serves as
investment manager and administrator to the fund.

The fund operates subject to an investment policy
providing that, under normal market conditions, the
fund will invest at least 80% of its net assets in
Municipal Securities and at least 65% of the aggregate
principal amount of its investments in New Jersey
Municipal Securities.  Whenever less than 80% of the
fund's assets are invested in New Jersey Municipal
Securities, the fund, in order to maintain its status
as a "qualified investment fund" under New Jersey law,
will seek to invest in debt obligations which, in the
opinion of counsel to the issuers, are free from state
or local taxation under New Jersey or federal laws
("Tax-Exempt Obligations").  The fund's investments in
New Jersey Municipal Securities and Tax-Exempt
Obligations will represent at least 80% of the
aggregate principal amount of all of its investments,
excluding cash and cash items (including receivables).
Subject to these minimum investment requirements, the
fund also may acquire intermediate- and long-term debt
obligations consisting of Other Municipal Securities,
the interest on which is at least exempt from federal
income taxation (not including the possible
applicability of the alternative minimum  tax).  When
the manager believes that market conditions warrant
adoption of a temporary defensive investment posture,
the fund may invest without limit in Other Municipal
Securities and in "Temporary Investments" as described
below.

Non-Diversified Classification

The fund is classified as a non-diversified fund under
the 1940 Act, which means the fund is not limited by
the Act in the proportion of its assets it may invest
in the obligations of a single issuer. The fund
intends to conduct its operations, however, so as to
qualify as a "regulated investment company" for
purposes of the Internal Revenue Code of 1986, as
amended (the "Code"), which will relieve the fund of
any liability for federal income tax and New Jersey
franchise tax, as applicable, to the extent its
earnings are distributed to shareholders.  To qualify
as a regulated investment company, the fund will,
among other things, limit its investments so that, at
the close of each quarter of the taxable year (a) not
more than 25% of the market value of the fund's total
assets will be invested in the securities of a single
issuer and (b) with respect to 50% of the market value
of its total assets, not more than 5% of the market
value of its total assets will be invested in the
securities of a single issuer and the fund will not
own more than 10% of the outstanding voting securities
of a single issuer.

As a result of the fund's non-diversified status, an
investment in the fund may present greater risks to
investors than an investment in a diversified fund.
The investment return on a non-diversified fund
typically is dependent upon the performance of a
smaller number of securities relative to the number of
securities held in a diversified fund.  The fund's
assumption of large positions in the obligations of a
small number of issuers will affect the value of its
portfolio to a greater extent than that of a
diversified fund in the event of changes in the
financial condition, or in the market's assessment, of
the issuers.

The identification of the issuer of Tax-Exempt
Obligations generally depends upon the terms and
conditions of the security.  When the assets and
revenues of an agency, authority, instrumentality or
other political subdivision are separate from those of
the government creating the issuing entity and the
security is backed only by the assets and revenues of
such entity, such entity would be deemed to be the
sole issuer.  Similarly, in the case of a private
activity bond, if that bond is backed only by the
assets and revenues of the nongovernmental user, then
such nongovernmental user is deemed to be the sole
issuer.  If in either case, however, the creating
government or some other entity guarantees a security,
such a guarantee would be considered a separate
security and would be treated as an issue of such
government or other entity.

Ratings as Investment Criteria.  In general, the
ratings of Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Ratings Group ("S&P")
and other nationally recognized statistical ratings
organizations ("NRSROs") represent the opinions of
those agencies as to the quality of the Municipal
Bonds and short-term investments which they rate. It
should be emphasized, however, that such ratings are
relative and subjective, are not absolute standards of
quality and do not evaluate the market risk of
securities.  These ratings will be used by the fund as
initial criteria for the selection of portfolio
securities, but the fund also will rely upon the
independent advice of the manager to evaluate
potential investments.  Among the factors that will be
considered are the long-term ability of the issuer to
pay principal and interest, as well as general
economic trends.  To the extent the fund invests in
lower-rated and comparable unrated securities, the
fund's achievement of its investment objective may be
more dependent on the manager's credit analysis of
such securities than would be the case for a portfolio
consisting entirely of higher-rated securities.  The
Appendix contains information concerning the ratings
of Moody's and  S&P.

Subsequent to its purchase by the fund, an issue of
Municipal Bonds may cease to be rated or its rating
may be reduced below the rating given at the time the
securities were acquired by the fund. Neither event
will require the sale of such Municipal Bonds by the
fund, but the manager will consider such event in its
determination of whether the fund should continue to
hold the Municipal Bonds. In addition, to the extent
that the ratings change as a result of changes in such
organizations or their rating systems or due to a
corporate restructuring of Moody's or S&P or other
NRSRO's, the fund will attempt to use comparable
ratings as standards for its investments in accordance
with its investment objective and policies.

The fund generally will invest at least 75% of its
total assets in investment grade debt obligations
rated no lower than Baa, MIG 3 or Prime-1 by Moody's
or BBB, SP-2 or A-1 by S&P, or have the equivalent
rating by any other NRSRO or in unrated obligations of
comparable quality. Unrated obligations will be
considered to be of investment grade if deemed by the
manager to be comparable in quality to instruments so
rated, or if other outstanding obligations of the
issuers thereof are rated Baa or better by Moody's or
BBB or better by S&P.  The balance of the fund's
assets may be invested in securities rated as low as C
by Moody's or D by S&P or have the equivalent rating
by any other NRSRO, or deemed by the manager to be
comparable unrated securities, which are sometimes
referred to as "junk bonds."  Securities in the fourth
highest rating category, though considered to be
investment grade, have speculative characteristics.
Securities rated as low as D are extremely speculative
and are in actual default of interest and/or principal
payments.

Low and Comparable Unrated Securities.  While the
market values of low-rated and comparable unrated
securities tend to react less to fluctuations in
interest rate levels than the market values of higher
rated securities, the market values of certain low-
rated and comparable unrated municipal securities also
tend to be more sensitive than higher-rated securities
to short-term corporate and industry developments and
changes in economic conditions (including recession)
in specific regions or localities or among specific
types of issuers.  In addition, low-rated securities
and comparable unrated securities generally present a
higher degree of credit risk.  During an economic
downturn or a prolonged period of rising interest
rates, the ability of issuers of low-rated and
comparable unrated securities to service their payment
obligations, meet projected goals or obtain additional
financing may be impaired.  The risk of loss due to
default by such issuers is significantly greater
because low-rated and comparable unrated securities
generally are unsecured and frequently are
subordinated to the prior payment of senior
indebtedness.  The fund may incur additional expenses
to the extent it is required to seek recovery upon a
default in payment of principal or interest on its
portfolio holdings.

While the market for municipal securities is
considered to be generally adequate, the existence of
limited markets for particular low-rated and
comparable unrated securities may diminish the fund's
ability to (a) obtain accurate market quotations for
purposes of valuing such securities and calculating
its net asset value and (b) sell the securities at
fair value either to meet redemption requests or to
respond to changes in the economy or in the financial
markets.  The market for certain low-rated and
comparable unrated securities has not fully weathered
a major economic recession. Any such recession,
however, would likely disrupt severely the market for
such securities and adversely affect the value of the
securities and the ability of the issuers of such
securities to repay principal and pay interest
thereon.

Fixed-income securities, including low-rated
securities and comparable unrated securities,
frequently have call or buy-back features that permit
their issuers to call or repurchase the securities
from their holders, such as the fund.  If an issuer
exercises these rights during periods of declining
interest rates, the fund may have to replace the
security with a lower yielding security, thus
resulting in a decreased return to the fund.

Because many issuers of New Jersey Municipal
Securities may choose not to have their obligations
rated, it is possible that a large portion of the
fund's portfolio may consist of unrated obligations.
Unrated obligations are not necessarily of lower
quality than rated obligations, but to the extent the
fund invests in unrated obligations, the fund will be
more reliant on the manager's judgment, analysis and
experience than would be the case if the fund invested
only in rated obligations.

Municipal Bonds.  Municipal Bonds generally are
understood to include debt obligations issued to
obtain funds for various public purposes, including
construction of a wide range of public facilities,
refunding of outstanding obligations, payment of
general operating expenses and extensions of loans to
public institutions and facilities.  Private activity
bonds that are issued by or on behalf of public
authorities to finance various privately operated
facilities are included within the term Municipal
Bonds if the interest paid thereon qualifies as
excluded from gross income (but not necessarily from
alternative minimum taxable income) for federal income
tax purposes in the opinion of bond counsel to the
issuer.

The yield on Municipal Bonds is dependent upon a
variety of factors, including general economic and
monetary conditions, general money market conditions,
general conditions of the Municipal Bond market, the
financial condition of the issuer, the size of a
particular offering, the maturity of the obligation
offered and the rating of the issue.

Municipal Bonds also are subject to the provisions of
bankruptcy, insolvency and other laws affecting the
rights and remedies of creditors, such as the federal
Bankruptcy Code, and laws, if any, that may be enacted
by Congress or state legislatures extending the time
for payment of principal or interest, or both, or
imposing other constraints upon enforcement of such
obligations or upon the ability of municipalities to
levy taxes.  There is also the possibility that, as a
result of litigation or other conditions, the power or
ability of any one or more issuers to pay, when due,
the principal of and interest on its or their
Municipal Bonds may be materially affected.

Municipal Leases.  The fund may invest without limit
in "municipal leases," which generally are
participations in intermediate-and short-term debt
obligations issued by municipalities consisting of
leases or installment purchase contracts for property
or equipment.  Although lease obligations do not
constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a
lease obligation is ordinarily backed by the
municipality's covenant to budget for, appropriate and
make the payments due under the lease obligation.
However, certain lease obligations contain "non-
appropriation" clauses that provide that the
municipality has no obligation to make lease or
installment purchase payments in future years unless
money is appropriated for such purpose yearly.  In
addition to the "non-appropriation" risk, these
securities represent a relatively new type of
financing that has not yet developed the depth of
marketability associated with more conventional bonds.
 Although "non-appropriation" lease obligations are
often secured by the underlying property, disposition
of the property in the event of foreclosure might
prove difficult. There is no limitation on the
percentage of the fund's assets that may be invested
in municipal lease obligations.  In evaluating
municipal lease obligations, the manager will consider
such factors as it deems appropriate, which may
include: (a) whether the lease can be canceled; (b)
the ability of the lease obligee to direct the sale of
the underlying assets; (c) the general
creditworthiness of the lease obligor; (d) the
likelihood that the municipality will discontinue
appropriating funding for the leased property in the
event such property is no longer considered essential
by the municipality; (e) the legal recourse of the
lease obligee in the event of such a failure to
appropriate funding; (f) whether the security is
backed by a credit enhancement such as insurance; and
(g) any limitations which are imposed on the lease
obligor's ability to utilize substitute property or
services rather than those covered by the lease
obligation.

Private Activity Bonds.  The fund may invest without
limits in private activity bonds.  Interest income on
certain types of private activity bonds issued after
August 7, 1986 to finance non-governmental activities
is a specific tax preference item for purposes of the
federal individual and corporate alternative minimum
taxes.  Individual and corporate shareholders may be
subject to a federal alternative minimum tax to the
extent that the fund's dividends are derived from
interest on those bonds.  Dividends derived from
interest income on New Jersey Municipal Securities are
a component of the "current earnings" adjustment item
for purposes of the federal corporate alternative
minimum tax.

The fund may invest without limit in debt obligations
which are repayable out of revenue streams generated
from economically-related projects or facilities or
debt obligations whose issuers are located in the same
state.  Sizeable investments in such obligations could
involve an increased risk to the fund should any of
the related projects or facilities experience
financial difficulties  Revenue securities may also
include private activity bonds which may be issued by
or on behalf of public authorities to finance various
privately operated facilities and are not payable from
the unrestricted revenues of the issuers.  Sizable
investments in such obligations could involve an
increased risk to the fund should any of the related
projects or facilities experience financial
difficulties.

Zero Coupon Securities.  Zero coupon securities
involve special considerations.  The fund may also
invest in zero coupon bonds.  Zero coupon securities
are debt obligations which do not entitle the holder
to any periodic payments of interest prior to maturity
of a specified cash payment date when the securities
begin paying current interest (the "cash payment
date") and therefore are issued and traded at a
discount from their face amounts or par values. The
discount varies depending on the time remaining until
maturity or cash payment date, prevailing interest
rates, liquidity of the security and the perceived
credit quality of the issuer. The discount, in the
absence of financial difficulties of the issuer,
decreases as the final maturity or cash payment date
of the security approaches.  The market prices of zero
coupon securities generally are more volatile than the
market prices of other debt securities that pay
interest periodically and are likely to respond to
changes in interest rates to a greater degree than do
debt securities having similar maturities and credit
quality.  The credit risk factors pertaining to low-
rated securities also apply to low-rated zero coupon
bonds.  Such zero coupon bonds carry an additional
risk in that, unlike bonds which pay interest
throughout the period to maturity, the fund will
realize no cash until the cash payment date unless a
portion of such securities is sold and, if the issuer
defaults, the fund may obtain no return at all on its
investment.

Current federal income tax laws may require the holder
of a zero coupon security to accrue income with
respect to that security prior to the receipt of cash
payments. To maintain its qualification as a regulated
investment company and avoid liability for federal
income taxes, the fund may be required to distribute
income accrued with respect to zero coupon securities
and may have to dispose of portfolio securities under
disadvantageous circumstances in order to generate
cash to satisfy these distribution requirements.

When-Issued Securities.  The fund may purchase
Municipal Bonds on a "when-issued" basis (i.e., for
delivery beyond the normal settlement date at a stated
price and yield).  The payment obligation and the
interest rate that will be received on the Municipal
Bonds purchased on a when-issued basis are each fixed
at the time the buyer enters into the commitment.
Although the fund will purchase Municipal Bonds on a
when-issued basis only with the intention of actually
acquiring the securities, the fund may sell these
securities before the settlement date if it is deemed
advisable as a matter of investment strategy.

Municipal Bonds are subject to changes in value based
upon the public's perception of the creditworthiness
of the issuers and changes, real or anticipated, in
the level of interest rates. In general, Municipal
Bonds tend to appreciate when interest rates decline
and depreciate when interest rates rise. Purchasing
Municipal Bonds on a when-issued basis, therefore, can
involve the risk that the yields available in the
market when the delivery takes place may actually be
higher than those obtained in the transaction itself.
To account for this risk, a separate account of the
fund consisting of cash or liquid debt securities
equal to the amount of the when-issued commitments
will be established at the fund's custodian bank. For
the purpose of determining the adequacy of the
securities in the account, the deposited securities
will be valued at market or fair value. If the market
or fair value of such securities declines, additional
cash or securities will be placed in the account on a
daily basis so the value of the account will equal the
amount of such commitments by the fund. Placing
securities rather than cash in the segregated account
may have a leveraging effect on the fund's net assets.
 That is, to the extent the fund remains substantially
fully invested in securities at the same time it has
committed to purchase securities on a when-issued
basis, there will be greater fluctuations in its net
assets than if it had set aside cash to satisfy its
purchase commitments. Upon the settlement date of the
when-issued securities, the fund will meet obligations
from then-available cash flow, sale of securities held
in the segregated account, sale of other securities
or, although it normally would not expect to do so,
from the sale of the when-issued securities themselves
(which may have a value greater or less than the
fund's payment obligations). Sales of securities to
meet such obligations may involve the realization of
capital gains, which are not exempt from federal
income taxes or New Jersey state personal income tax.

When the fund engages in when-issued transactions, it
relies on the seller to consummate the trade. Failure
of the seller to do so may result in the fund's
incurring a loss or missing an opportunity to obtain
an advantageous price.

Repurchase Agreements. As a defensive position only,
the fund may enter into repurchase agreements with
banks which are the issuers of instruments acceptable
for purchase by the fund and with certain dealers on
the Federal Reserve Bank of New York's list of
reporting dealers. A repurchase agreement is a
contract under which the buyer of a security
simultaneously commits to resell the security to the
seller at an agreed-upon price on an agreed-upon date.
Under the terms of a typical repurchase agreement, the
fund would acquire an underlying debt obligation for a
relatively short period of time (usually not more than
seven days) subject to an obligation of the seller to
repurchase, and the fund to resell, the obligation at
an agreed-upon price and time, thereby determining the
yield during the fund's holding period. This
arrangement results in a fixed rate of return that is
not subject to market fluctuations during the fund's
holding period. Under each repurchase agreement, the
selling institution will be required to maintain the
value of the securities subject to the repurchase
agreement at not less than their repurchase price.
Repurchase agreements could involve certain risks in
the event of default or insolvency of the other party,
including possible delays or restrictions upon the
fund's ability to dispose of the underlying
securities, the risk of a possible decline in the
value of the underlying securities during the period
in which the fund seeks to assert its rights to them,
the risk of incurring expenses associated with
asserting those rights and the risk of losing all or
part of the income from the agreement. In evaluating
these potential risks, the manager, acting under the
supervision of the fund's board of directors, reviews
on an ongoing basis the value of the collateral and
the creditworthiness of those banks and dealers with
which the fund enters into repurchase agreements.

Lending of Portfolio Securities.  Consistent with
applicable regulatory requirements, the fund may lend
its portfolio securities to brokers, dealers and other
financial organizations.  Loans of portfolio
securities by the fund will be collateralized by cash,
letters of credit or obligations of the United States
government or its agencies and instrumentalities which
are maintained at all times in an amount equal to at
least 100% of the current market value of the loaned
securities.  By lending its portfolio securities, the
fund will seek to generate income by continuing to
receive interest on the loaned securities, by
investing the cash collateral in short-term
instruments or by obtaining yield in the form of
interest paid by the borrower when U.S. government
securities are used as collateral. The risks in
lending portfolio securities, as with other extensions
of secured credit, consist of possible delays in
receiving additional collateral or in the recovery of
the securities or possible loss of rights in the
collateral should the borrower fail financially.
Loans will be made to firms deemed by the manager to
be of good standing and will not be made unless, in
the judgment of the manager, the consideration to be
earned from such loans would justify the risk.

Temporary Investments.  When the fund is maintaining a
defensive position, the fund may invest in short-term
investments ("Temporary Investments") consisting of:
(a) tax-exempt securities in the form of notes of
municipal issuers having, at the time of purchase, a
rating within the three highest grades of Moody's, S&P
or the equivalent rating from another NRSRO or, if not
rated, having an issue of outstanding Municipal Bonds
rated within the three highest grades by Moody's, S&P
or the equivalent rating from another NRSRO; and (b)
the following taxable securities: obligations of the
United States government, its agencies or
instrumentalities ("U.S. government securities"),
repurchase agreements, other debt securities rated
within the three highest grades by Moody's, S&P or the
equivalent rating from another NRSRO, commercial paper
rated in the highest grade by either of such rating
services, and certificates of deposit of domestic
banks with assets of $1 billion or more. The fund may
invest in Temporary Investments for defensive reasons
in anticipation of a market decline. At no time will
more than 20% of the fund's total assets be invested
in Temporary Investments unless the fund has adopted a
defensive investment policy. The fund intends,
however, to purchase tax-exempt Temporary Investments
pending the investment of the proceeds of the sale of
portfolio securities or shares of the fund's common
stock, or in order to have highly liquid securities
available to meet anticipated redemptions.

Financial Futures and Options Transactions.  The fund
may enter into financial futures contracts and invest
in options on financial futures contracts that are
traded on a domestic exchange or board of trade.  Such
investments, if any, by the fund will be made for the
purpose of hedging against changes in the value of
portfolio securities due to anticipated changes in
interest rates and market conditions and where the
transactions are economically appropriate to the
reduction of risks inherent in the management of the
fund. The futures contracts or options on futures
contracts that may be entered into by the fund will be
restricted to those that are either based on a
municipal bond index or related to debt securities,
the prices of which are anticipated by the manager to
correlate with the prices of the New Jersey Municipal
Securities owned or to be purchased by the fund.

In entering into a financial futures contract, the
fund will be required to deposit with the broker
through which it undertakes the transaction an amount
of cash or cash equivalents equal to approximately 5%
of the contract amount.  This amount, which is known
as "initial margin," is subject to change by the
exchange or board of trade, which may charge a higher
amount.  Initial margin is in the nature of a
performance bond or good faith deposit on the contract
that is returned to the fund upon termination of the
futures contract, assuming all contractual obligations
have been satisfied. In accordance with a process
known as "marking-to-market," subsequent payments,
known as "variation margin," to and from the broker
will be made daily as the price of the index or
securities underlying the futures contract fluctuates,
making the long and short positions in the futures
contract more or less valuable.  At any time prior to
the expiration of a futures contract, the fund may
elect to close the position by taking an opposite
position, which will operate to terminate the fund's
existing position in the contract.

A financial futures contract provides for the future
sale by one party and the purchase by the other party
of a certain amount of a specified property at a
specified price, date, time and place.  Unlike the
direct investment in a futures contract, an option on
a financial futures contract gives the purchaser the
right, in return for the premium paid, to assume a
position in the financial futures contract at a
specified exercise price at any time prior to the
expiration date of the option.  Upon exercise of an
option, the delivery of the futures position by the
writer of the option to the holder of the option will
be accompanied by delivery of the accumulated balance
in the writer's futures margin account, which
represents the amount by which the market price of the
futures contract exceeds, in the case of a call, or is
less than, in the case of a put, the exercise price of
the option on the futures contract.  The potential
loss related to the purchase of an option on a
financial futures contract is limited to the premium
paid for the option (plus transaction costs).  The
value of the option may change daily and that change
would be reflected in the net asset value of the fund.

Regulations of the Commodity Futures Trading
Commission applicable to the fund require that its
transactions in financial futures contracts and
options on financial futures contracts be engaged in
for bona fide hedging purposes, or if the fund enters
into futures contracts for speculative purposes, that
the aggregate initial margin deposits and premiums
paid by the fund will not exceed 5% of the market
value of its assets.  In addition, the fund will, with
respect to its purchases of financial futures
contracts, establish a segregated account consisting
of cash or cash equivalents in an amount equal to the
total market value of the futures contracts, less the
amount of initial margin on a deposit for the
contracts.

Municipal Bond Index Futures Contracts. A municipal
bond index futures contract is an agreement pursuant
to which two parties agree to take or make delivery of
an amount of cash equal to a specific dollar amount
multiplied by the difference between the value of the
index at the close of the last trading day of the
contract and the price at which the index contract was
originally written. No physical delivery of the
underlying municipal bonds in the index is made.
Municipal bond index futures contracts based on an
index of 40 tax-exempt, long-term municipal bonds with
an original issue size of at least $50 million and a
rating of A- or higher by S&P or A or higher by
Moody's began trading in mid-1985.  The purpose of the
acquisition or sale of a municipal bond index futures
contract by the fund, as the holder of long-term
municipal securities, is to protect the fund from
fluctuations in interest rates on tax-exempt
securities without actually buying or selling long-
term municipal securities.

There are several risks in connection with the use of
futures contracts as a hedging device. Successful use
of futures contracts by the fund is subject to the
manager's ability to predict correctly movements in
the direction of interest rates. Such predictions
involve skills and techniques which may be different
from those involved in the management of a long-term
municipal bond portfolio. In addition, there can be no
assurance that there will be a correlation between
movements in the price of the municipal bond index and
movements in the price of the Municipal Bonds that are
the subject of the hedge.  The degree of imperfection
of correlation depends upon various circumstances,
such as variations in speculative market demand for
futures contracts and municipal securities, technical
influences on futures trading, and differences between
the municipal securities being hedged and the
municipal securities underlying the futures contracts,
in such respects as interest rate levels, maturities
and creditworthiness of issuers.  A decision of
whether, when and how to hedge involves the exercise
of skill and judgment and even a well-conceived hedge
may be unsuccessful to some degree because of market
behavior or unexpected trends in interest rates.

Although the fund intends to purchase or sell futures
contracts only if there is an active market for such
contracts, there is no assurance that a liquid market
will exist for the contracts at any particular time.
Most domestic futures exchanges and boards of trade
limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily
limit establishes the maximum amount the price of a
futures contract may vary either up or down from the
previous day's settlement price at the end of a
trading session.  Once the daily limit has been
reached in a particular contract, no trades may be
made that day at a price beyond that limit. The daily
limit governs only price movement during a particular
trading day and, therefore, does not limit potential
losses because the limit may prevent the liquidation
of unfavorable positions. It is possible that futures
contract prices could move to the daily limit for
several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of
futures positions and subjecting some futures traders
to substantial losses. In such event, it will not be
possible to close a futures position and, in the event
of adverse price movements, the fund would be required
to make daily cash payments of variation margin.  In
such circumstances, an increase in the value of the
portion of the portfolio being hedged, if any, may
partially or completely offset losses on the futures
contract. As described above, however, there is no
guarantee that the price of Municipal Bonds will, in
fact, correlate with the price movements in the
municipal bond index futures contract and thus provide
an offset to losses on a futures contract.

If the fund has hedged against the possibility of an
increase in interest rates adversely affecting the
value of the Municipal Bonds held in its portfolio and
rates decrease instead, the fund will lose part or all
of the benefit of the increased value of the Municipal
Bonds it has hedged because it will have offsetting
losses in its futures positions. In addition, in such
situations, if the fund has insufficient cash, it may
have to sell securities to meet daily variation margin
requirements. Such sales of securities may, but will
not necessarily, be at increased prices which reflect
the decline in interest rates. The fund may have to
sell securities at a time when it may be
disadvantageous to do so.

When the fund purchases municipal bond index futures
contracts, an amount of cash and U.S. government
securities or other high grade debt securities equal
to the market value of the futures contracts will be
deposited in a segregated account with the fund's
custodian (and/or such other persons as appropriate)
to collateralize the positions and thereby insure that
the use of such futures contracts is not leveraged.

Options on Financial Futures Contracts. The fund may
purchase put and call options on futures contracts
which are traded on a domestic exchange or board of
trade as a hedge against changes in interest rates,
and may enter into closing transactions with respect
to such options to terminate existing positions. The
fund will sell put and call options on interest rate
futures contracts only as part of closing sale
transactions to terminate its options positions. There
is no guarantee that such closing transactions can be
effected.

Options on futures contracts, as contrasted with the
direct investment in such contracts, give the
purchaser the right, in return for the premium paid,
to assume a position in futures contracts at a
specified exercise price at any time prior to the
expiration date of the options. Upon exercise of an
option, the delivery of the futures position by the
writer of the option to the holder of the option will
be accompanied by delivery of the accumulated balance
in the writer's futures contract margin account, which
represents the amount by which the market price of the
futures contract exceeds, in the case of a call, or is
less than, in the case of a put, the exercise price of
the option on the futures contract. The potential loss
related to the purchase of an option on interest rate
futures contracts is limited to the premium paid for
the option (plus transaction costs). Because the value
of the option is fixed at the point of sale, there are
no daily cash payments to reflect changes in the value
of the underlying contract; however, the value of the
option does change daily and that change would be
reflected in the net asset value of the fund.

There are several risks relating to options on futures
contracts.  The ability to establish and close out
positions on such options will be subject to the
existence of a liquid market. In addition, the fund's
purchase of put or call options will be based upon
predictions as to anticipated interest rate trends by
the manager, which could prove to be inaccurate.  Even
if the manager's expectations are correct there may be
an imperfect correlation between the change in the
value of the options and of the fund's portfolio
securities.

Other Investments. The fund may invest up to 15% of
its total assets in securities with contractual or
other restrictions on resale and other instruments
which are not readily marketable. Notwithstanding the
foregoing, the fund will not invest more than 10% of
its assets in securities (excluding those subject to
Rule 144A under the Securities Act of 1933, as amended
(the "1933 Act")) that are restricted.  The fund does
not expect to invest more than 5% of its assets in
repurchase agreements. In addition, the fund may
invest up to 5% of its assets in the securities of
issuers which have been in continuous operation for
less than three years. The fund also is authorized to
borrow an amount of up to 10% of its total assets
(including the amount borrowed) valued at market less
liabilities (not including the amount borrowed) in
order to meet anticipated redemptions and to pledge
its assets to the same extent in connection with the
borrowings.

INVESTMENT RESTRICTIONS

The fund has adopted the following investment
restrictions for the protection of shareholders.
Restrictions 1 through 6 below may not be changed
without the approval of the holders of a majority of
the outstanding shares of the fund, defined as the
lesser of (a) 67% of the fund's shares present at a
meeting if the holders of more than 50% of the
outstanding shares are present in person or by proxy
or (b) more than 50% of the fund's outstanding shares.
 The remaining restrictions may be changed by the
fund's board of directors at any time.  The fund's
investment objective is fundamental and may not be
changed without the approval of the holders of a
majority of the outstanding shares of the fund.



The fund may not:

	1.	Issue "senior securities" as defined in
the 1940 Act and the rules, regulations and orders
thereunder, except as permitted under the 1940 Act and
the rules, regulations and orders thereunder.

	2.	Invest more than 25% of its total assets
in securities, the issuers of which are in the same
industry.  For purposes of this limitation, U.S.
government securities and securities of state or
municipal governments and their political subdivisions
are not considered to be issued by members of any
industry.

	3. 	Borrow money, except that (a) the fund may
borrow from banks for temporary or emergency (not
leveraging) purposes, including the meeting of
redemption requests which might otherwise require the
untimely disposition of securities, and (b) the fund
may, to the extent consistent with its investment
policies, enter into reverse repurchase agreements,
forward roll transactions and similar investment
strategies and techniques.  To the extent that it
engages in transactions described in (a) and (b), the
fund will be limited so that no more than 33 1/3% of
the value of its total assets (including the amount
borrowed), valued at the lesser of cost or market,
less liabilities (not including the amount borrowed)
is derived from such transactions.

	4.	Make loans.  This restriction does not
apply to: (a) the purchase of debt obligations in
which the fund may invest consistent with its
investment objectives and policies; (b) repurchase
agreements; and (c) loans of its portfolio securities,
to the fullest extent permitted under the 1940 Act.

	5.	Engage in the business of underwriting
securities issued by other persons, except to the
extent that the fund may technically be deemed to be
an underwriter under the 1933 Act in disposing of
portfolio securities.

	6.	Purchase or sell real estate, real estate
mortgages, commodities or commodity contracts, but
this restriction shall not prevent the fund from (a)
investing in securities of issuers engaged in the real
estate business or the business of investing in real
estate (including interests in limited partnerships
owning or otherwise engaging in the real estate
business or the business of investing in real estate)
and securities which are secured by real estate or
interests therein; (b) holding or selling real estate
received in connection with securities it holds or
held; (c) trading in futures contracts and options on
futures contracts (including options on currencies to
the extent consistent with the fund's investment
objective and policies); or (d) investing in real
estate investment trust securities.

	7. 	Purchase any securities on margin (except
for such short-term credits as are necessary for the
clearance of purchases and sales of portfolio
securities) or sell any securities short (except
"against the box").  For purposes of this restriction,
the deposit or payment by the fund of underlying
securities and other assets in escrow and collateral
agreements with respect to initial or maintenance
margin in connection with futures contracts and
related options and options on securities, indexes or
similar items is not considered to be the purchase of
a security on margin.

	8.	Purchase or otherwise acquire any security
if, as a result, more than 15% of its net assets would
be invested in securities that are illiquid.

	9.	Purchase or sell oil and gas interests.

	10.	Invest more than 5% of the value of its
total assets in the securities of issuers having a
record, including predecessors, of less than three
years of continuous operation, except U.S. government
securities.  For purposes of this restriction, issuers
include predecessors, sponsors, controlling persons,
general partners, guarantors and originators of
underlying assets.

	11.	Invest in companies for the purpose of
exercising control.

	12. 	Invest in securities of other investment
companies, except as they may be acquired as part of a
merger, consolidation or acquisition of assets and
except to the extent permitted by Section 12 of the
1940 Act (currently, up to 5% of the total assets of
the fund and no more than 3% of the total outstanding
voting stock of any one investment company).

	13.	Engage in the purchase or sale of put,
call, straddle or spread options or in the writing of
such options, except that the fund may engage in
transactions involving municipal bond index and
interest rate futures contracts and options thereon
after approval of these investment strategies by the
board of directors and notice thereof to the fund's
shareholders.

Certain restrictions listed above permit the fund to
engage in investment practices that the fund does not
currently pursue.  The fund has no present intention
of altering its current investment practices as
otherwise described in the prospectus and this SAI and
any future change in those practices would require
Board approval and appropriate notice to shareholders.
 If a percentage restriction is complied with at the
time of an investment, a later increase or decrease in
the percentage of assets resulting from a change in
the values of portfolio securities or in the amount of
the fund's assets will not constitute a violation of
such restriction.

RISK FACTORS

The following summaries are included for the purpose
of providing certain information regarding the
economic climate and financial condition of the State
of New Jersey and Puerto Rico, and are based primarily
on information from official statements made available
in connection with the issuance of certain securities
and other documents and sources and does not purport
to be complete. The fund has not undertaken to verify
independently such information and the fund assumes no
responsibility for the accuracy of such information.
These summaries do not provide information regarding
most securities in which the fund is permitted to
invest and in particular do not provide specific
information on the issuers or types of municipal
securities in which the fund invests or the private
business entities whose obligations support the
payments on private activity bonds ("AMT-Subject
bonds"), which include industrial development bonds
and bonds issued to finance such projects as airports,
housing projects, solid waste disposal facilities,
student loan programs and water and sewage projects,
in which the fund will invest.  See "Alternative
Minimum Tax" below.  Therefore, the general risk
factors as to the credit of the state or its political
subdivisions discussed herein may not be relevant to
the fund.  Although revenue obligations of a state or
its political subdivisions may be payable from a
specific project or source, there can be no assurance
that future economic difficulties and the resulting
impact on state and local government finances will not
adversely affect the market value of the fund or the
ability of the respective obligors to make timely
payments of principal and interest on such
obligations.  In addition, a number of factors may
adversely affect the ability of the issuers of
municipal securities to repay their borrowings that
are unrelated to the financial or economic condition
of a state, and that, in some cases, are beyond their
control. Furthermore, issuers of municipal securities
are generally not required to provide ongoing
information about their finances and operations to
holders of their debt obligations, although a number
of cities, counties and other issuers prepare annual
reports.

Alternative Minimum Tax

Under current federal income tax law, (1) interest on
tax-exempt municipal securities issued after August 7,
1986 which are "specified private activity bonds," and
the proportionate share of any exempt-interest
dividend paid by a regulated investment company which
receives interest from such specified private activity
bonds, will be treated as an item of tax preference
for purposes of the alternative minimum tax ("AMT")
imposed on individuals and corporations, though for
regular federal income tax purposes such interest will
remain fully tax-exempt, and (2) interest on all Tax-
Exempt Obligations will be included in "adjusted
current earnings" of corporations for AMT purposes.
Such AMT-subject bonds have provided, and may continue
to provide, somewhat higher yields than other
comparable municipal securities.

Investors should consider that, in most instances, no
state, municipality or other governmental unit with
taxing power will be obligated with respect to AMT-
Subject bonds.  AMT-Subject bonds are in most cases
revenue bonds and do not generally have the pledge of
the credit or the taxing power, if any, of the issuer
of such bonds.  AMT-Subject bonds are generally
limited obligations of the issuer supported by
payments from private business entities and not by the
full faith and credit of a state or any governmental
subdivision.  Typically the obligation of the issuer
of AMT-Subject bonds is to make payments to bond
holders only out of and to the extent of, payments
made by the private business entity for whose benefit
the AMT-Subject bonds were issued.  Payment of the
principal and interest on such revenue bonds depends
solely on the ability of the user of the facilities
financed by the bonds to meet its financial
obligations and the pledge, if any, of real and
personal property so financed as security for such
payment.  It is not possible to provide specific
detail on each of these obligations in which fund
assets may be invested.

Risk of Concentration In a Single State

The primary purpose of investing in a portfolio of a
single state's municipal securities is the special tax
treatment accorded the state's resident individual
investors.  However, payment of interest and
preservation of principal is dependent upon the
continuing ability of the state's issuers and/or
obligors on state, municipal and public authority debt
obligations to meet their obligations thereunder.
Investors should be aware of certain factors that
might affect the financial condition of issuers of
municipal securities, consider the greater risk of the
concentration of a fund versus the safety that comes
with a less concentrated investment portfolio and
compare yields available in portfolios of the relevant
state's issues with those of more diversified
portfolios, including out-of-state issues, before
making an investment decision.

Municipal securities in which the fund's assets are
invested may include debt obligations of the
municipalities and other subdivisions of the relevant
state issued to obtain funds for various public
purposes, including the construction of a wide range
of public facilities such as airports, bridges,
highways, schools, streets and water and sewer works.
 Other purposes for which municipal securities may be
issued include the obtaining of funds to lend to
public or private institutions for the construction of
facilities such as educational, hospital, housing, and
solid waste disposal facilities.  The latter,
including most AMT-Subject bonds, are generally
payable from private sources which, in varying
degrees, may depend on local economic conditions, but
are not necessarily affected by the ability of the
state and its political subdivisions to pay their
debts.  It is not possible to provide specific details
on each of these obligations in which fund  assets may
be invested. However, all such securities, the payment
of which is not a general obligation of an issuer
having general taxing power, must satisfy, at the time
of an acquisition by the fund, the minimum rating(s).
See "Appendix A: Bond and Commercial Paper Ratings"
for a description of ratings and rating criteria.
Some municipal securities may be rated based on a
"moral obligation" contract which allows the
municipality to terminate its obligation by deciding
not to make an appropriation.  Generally, no legal
remedy is available against the municipality that is a
party to the "moral obligation" contract in the event
of such non-appropriation.

Municipal Market Volatility. Municipal securities can
be significantly affected by political changes as well
as uncertainties in the municipal market related to
taxation, legislative changes, or the rights of
municipal security holders. Because many municipal
securities are issued to finance similar projects,
especially those relating to education, health care,
transportation and utilities, conditions in those
sectors can affect the overall municipal market. In
addition, changes in the financial condition of an
individual municipal insurer can affect the overall
municipal market.

Interest Rate Changes.  Debt securities have varying
levels of sensitivity to changes in interest rates. In
general, the price of a debt security can fall when
interest rates rise and can rise when interest rates
fall. Securities with longer maturities can be more
sensitive to interest rate changes. In other words,
the longer the maturity of a security, the greater the
impact a change in interest rates could have on the
security's price. In addition, short-term and long-
term interest rates do not necessarily move in the
same amount or the same direction. Short-term
securities tend to react to changes in short-term
interest rates, and long-term securities tend to react
to changes in long-term interest rates.

Issuer-Specific Changes. Changes in the financial
condition of an issuer, changes in specific economic
or political conditions that affect a particular type
of security or issuer, and changes in general economic
or political conditions can affect the credit quality
or value of an issuer's securities. Lower-quality debt
securities (those of less than investment-grade
quality) tend to be more sensitive to these changes
than higher-quality debt securities. Entities
providing credit support or a maturity-shortening
structure also can be affected by these types of
changes. Municipal securities backed by current or
anticipated revenues from a specific project or
specific assets can be affected negatively by the
discontinuance of the taxation supporting the project
or assets or the inability to collect revenues from
the project or from the assets. If the Internal
Revenue Service determines an issuer of a municipal
security has not complied with applicable tax
requirements, or the structure of a security fails to
function as intended, interest from the security could
become taxable or the security could decline
significantly in value.

Municipal Market Disruption Risk. The value of
municipal securities may be affected by uncertainties
in the municipal market related to legislation or
litigation involving the taxation of municipal
securities or the rights of municipal securities
holders in the event of a bankruptcy. Proposals to
restrict or eliminate the federal income tax exemption
for interest on municipal securities are introduced
before Congress from time to time.  Proposals also may
be introduced before the New Jersey legislature that
would affect the state tax treatment of a municipal
fund's distributions.  If such proposals were enacted,
the availability of municipal securities and the value
of a municipal fund's holdings would be affected and
the Trustees would reevaluate the fund's investment
objectives and policies.  Municipal bankruptcies are
relatively rare, and certain provisions of the U.S.
Bankruptcy Code governing such bankruptcies are
unclear and remain untested.  Further, the application
of state law to municipal issuers could produce
varying results among the states or among municipal
securities issuers within a state.  These legal
uncertainties could affect the municipal securities
market generally, certain specific segments of the
market, or the relative credit quality of particular
securities.  Any of these effects could have a
significant impact on the prices of some or all of the
municipal securities held by a fund, making it more
difficult for a money market fund to maintain a stable
net asset value per share.

Education. In general, there are two types of
education-related bonds; those issued to finance
projects for public and private colleges and
universities, and those representing pooled interests
in student loans.  Bonds issued to supply educational
institutions with funds are subject to the risk of
unanticipated revenue decline, primarily the result of
decreasing student enrollment or decreasing state and
federal funding.  Among the factors that may lead to
declining or insufficient revenues are restrictions on
students' ability to pay tuition, availability of
state and federal funding, and general economic
conditions.  Student loan revenue bonds are generally
offered by state (or substate) authorities or
commissions and are backed by pools of student loans.
 Underlying student loans may be guaranteed by state
guarantee agencies and may be subject to reimbursement
by the United States Department of Education through
its guaranteed student loan program.  Others may be
private, uninsured loans made to parents or students
which are supported by reserves or other forms of
credit enhancement. Recoveries of principal due to
loan defaults may be applied to redemption of bonds or
may be used to re-lend, depending on program latitude
and demand for loans.  Cash flows supporting student
loan revenue bonds are impacted by numerous factors,
including the rate of student loan defaults, seasoning
of the loan portfolio, and student repayment deferral
periods of forbearance. Other risks associated with
student loan revenue bonds include potential changes
in federal legislation regarding student loan revenue
bonds, state guarantee agency reimbursement and
continued federal interest and other program subsidies
currently in effect.

Electric Utilities. The electric utilities industry
has been experiencing, and will continue to
experience, increased competitive pressures.  Federal
legislation in the last two years will open
transmission access to any electricity supplier,
although it is not presently known to what extent
competition will evolve.  Other risks include: (a) the
availability and cost of fuel, (b) the availability
and cost of capital, (c) the effects of conservation
on energy demand, (d) the effects of rapidly changing
environmental, safety, and licensing requirements, and
other federal, state, and local regulations, (e)
timely and sufficient rate increases, and (f)
opposition to nuclear power.

Health Care. The health care industry is subject to
regulatory action by a number of private and
governmental agencies, including federal, state, and
local governmental agencies.  A major source of
revenues for the health care industry is payments from
the Medicare and Medicaid programs. As a result, the
industry is sensitive to legislative changes and
reductions in governmental spending for such programs.
 Numerous other factors may affect the industry, such
as general and local economic conditions; demand for
services; expenses (including malpractice insurance
premiums); and competition among health care
providers. In the future, the following elements may
adversely affect health care facility operations:
adoption of legislation proposing a national health
insurance program; other state or local health care
reform measures; medical and technological advances
which dramatically alter the need for health services
or the way in which such services are delivered;
changes in medical coverage which alter the
traditional fee-for-service revenue stream; and
efforts by employers, insurers, and governmental
agencies to reduce the costs of health insurance and
health care services.

Housing. Housing revenue bonds are generally issued by
a state, county, city, local housing authority, or
other public agency.  They generally are secured by
the revenues derived from mortgages purchased with the
proceeds of the bond issue.  It is extremely difficult
to predict the supply of available mortgages to be
purchased with the proceeds of an issue or the future
cash flow from the underlying mortgages.
Consequently, there are risks that proceeds will
exceed supply, resulting in early retirement of bonds,
or that homeowner repayments will create an irregular
cash flow.  Many factors may affect the financing of
multi-family housing projects, including acceptable
completion of construction, proper management,
occupancy and rent levels, economic conditions, and
changes to current laws and regulations.

Transportation. Transportation debt may be issued to
finance the construction of airports, toll roads,
highways, or other transit facilities.  Airport bonds
are dependent on the general stability of the airline
industry and on the stability of a specific carrier
who uses the airport as a hub.  Air traffic generally
follows broader economic trends and is also affected
by the price and availability of fuel. Toll road bonds
are also affected by the cost and availability of fuel
as well as toll levels, the presence of competing
roads and the general economic health of an area.
Fuel costs and availability also affect other
transportation-related securities, as do the presence
of alternate forms of transportation, such as public
transportation.

Water and Sewer. Water and sewer revenue bonds are
often considered to have relatively secure credit as a
result of their issuer's importance, monopoly status,
and generally unimpeded ability to raise rates.
Despite this, lack of water supply due to insufficient
rain, run-off, or snow pack is a concern that has led
to past defaults. Further, public resistance to rate
increases, costly environmental litigation, and
Federal environmental mandates are challenges faced by
issuers of water and sewer bonds.

RISK FACTORS

The following summaries are included for the purpose
of providing certain information regarding the
economic climate and financial condition of the State
of New Jersey, Puerto Rico, Guam and the U.S. Virgin
Islands, and are based primarily on information from
official statements made available in connection with
the issuance of certain securities and other documents
and sources and does not purport to be complete. The
fund has not undertaken to verify independently such
information and the trust assumes no responsibility
for the accuracy of such information and will not
update it during the year.  These summaries do not
provide information regarding most securities in which
the fund is permitted to invest and in particular do
not provide specific information on the issuers or
types of municipal securities in which the fund
invests or the private business entities whose
obligations support the payments on Alternative
Minimum Tax-Subject bonds in which the fund will
invest.

Therefore, the general risk factors as to the credit
of the state or its political subdivisions discussed
herein may not be relevant to the fund.  Although
revenue obligations of a state or its political
subdivisions may be payable from a specific project or
source, there can be no assurance that future economic
difficulties and the resulting impact on state and
local government finances will not adversely affect
the market value of the fund or the ability of the
respective obligors to make timely payments of
principal and interest on such obligations.  In
addition, a number of factors may adversely affect the
ability of the issuers of municipal securities to
repay their borrowings that are unrelated to the
financial or economic condition of a state, and that,
in some cases, are beyond their control.  Furthermore,
issuers of municipal securities are generally not
required to provide ongoing information about their
finances and operations to holders of their debt
obligations, although a number of cities, counties and
other issuers prepare annual reports.

NEW JERSEY RISK FACTORS.

The State of New Jersey and public entities therein
are authorized to issue two general classes of
indebtedness, the interest on which is exempt from
federal income taxation: general obligation bonds and
special obligation or revenue bonds. Both classes of
bonds may be included in the fund portfolio. The
repayment of principal and interest on general
obligation bonds is secured by the full faith and
credit of the issuing entity, backed up by such
entity's taxing authority, without recourse to any
specific project or source of revenue. Special
obligation or revenue bonds are typically repaid only
from revenues received in connection with the project
for which the bonds are issued, special excise taxes,
or other special revenue sources and are issued by
entities without taxing power. Unless specifically
guaranteed, neither the State of New Jersey, any
county, municipality nor any political subdivisions
thereof (except for the issuing entity) are liable for
the payment of principal of or interest on revenue
bonds.

General obligation bonds are repaid from revenues
obtained through the issuing entity's general taxing
authority. The current political climate encourages
maintaining or even lowering current tax levels. New
Jersey law, however, requires taxes to be levied to
repay debt.

Any reduction in the amount of revenue generated by a
facility or project financed by special obligation
bonds will affect the issuing entity's ability to pay
debt service on such bonds and no assurance can be
given that sufficient revenues will be obtained from
the facility or project to make such payments,
although in some instances repayment may be guaranteed
or otherwise secured.

There are several types of public agencies in New
Jersey that are authorized to issue revenue bonds for
essential public purposes, including utilities
authorities, improvement authorities, sewerage
authorities, housing authorities, parking authorities,
redevelopment agencies and various other authorities
and agencies. These public agencies have issued bonds
for the construction of hospitals, housing facilities,
pollution control facilities, water and sewage
facilities, power and electric facilities, resource
recovery facilities and other public projects or
facilities.

Certain difficulties may occur in the construction or
operation of such facilities or projects that would
adversely affect the amount of revenues derived
therefrom in order to support the issuing entity's
payment obligation on the bonds issued therefor.
Hospital facilities, for example, are subject to 70
changes in Medicare and Medicaid reimbursement
regulations, attempts by federal and state legislature
to limit costs for health care and management's
ability to complete construction projects on a timely
basis as well as to maintain projected rates of
occupancy and utilization. At any given time, there
may be several proposals pending on a federal and
state level concerning health care which may further
affect a hospital's debt service obligation. Housing
facilities may be subject to increases in operating
costs, management's ability to maintain occupancy
levels, rent restrictions and availability of federal
or state subsidies, while power and electric
facilities and resource recovery facilities may be
subject to increased costs resulting from
environmental restrictions, fluctuations in fuel
costs, delays in licensing procedures and the general
regulatory framework in which these facilities
operate. All of these entities are constructed and
operated under rigid regulatory guidelines.

The New Jersey Economic Development Authority (the
"EDA") is a major issuer of special obligation bonds
on a conduit basis in connection with its authority,
pursuant to New Jersey law, to make loans and extend
credit for the financing of projects for public
purposes. The EDA issues the bonds and loans the
proceeds to a borrower who agrees to repay the EDA
amounts sufficient to pay principal and interest on
the bonds when the same becomes due.

Some borrowers that financed facilities with proceeds
of industrial development bonds issued by the EDA have
defaulted on their repayment obligations to the EDA.
Since these special obligation bonds were payable only
from money received from the specific projects that
were funded or from other sources pledged by the
borrower to support its repayment obligation, the EDA
was unable to pay debt service to the holders of the
bonds issued for the respective projects. However,
because each issue of special obligation bonds depends
on its own revenue for repayment, these defaults
should not affect the ability of the EDA to pay debt
service on other bonds it issues in the future on
behalf of qualified borrowers.

New Jersey is the ninth largest state in population
and the fifth smallest in land area. With an average
of 1,098 persons per square mile, it is the most
densely populated of all the states. New Jersey is
located at the center of the megalopolis which extends
from Boston to Washington, and which includes over
one-fifth of the country's population. The extensive
facilities of the Port Authority of New York and New
Jersey, the Delaware River Port Authority and the
South Jersey Port Corporation across the Delaware
River from Philadelphia augment the air, land and
water transportation complex which has influenced most
of New Jersey's economy. This central location in the
northeastern corridor, the transportation and port
facilities and proximity to New York City make New
Jersey an attractive location for corporate
headquarters and international business offices. A
number of Fortune Magazine's top 500 companies
maintain headquarters or major facilities in New
Jersey, and many foreign-owned firms have located
facilities in New Jersey.

New Jersey's economic base is diversified, consisting
of a variety of manufacturing, construction and
service industries, supplemented by rural areas with
selective commercial agriculture. New Jersey has the
Atlantic seashore on the east and lakes and mountains
in the north and northwest, which provide recreation
for residents as well as for out-of-state visitors.
Since 1976, casino gambling in Atlantic City has been
an important New Jersey tourist attraction.

New Jersey's population grew rapidly in the years
following World War II, before slowing to an annual
rate of 0.27% in the 1970s. Between 1980 and 1990, the
annual rate of growth rose to 0.51% and between 1990
and 1999, accelerated to .55% (according to the United
States Department of Commerce, Bureau of the Census).
While this rate of growth is less than that for the
United States, it compares favorably with other Middle
Atlantic States.

The small increase in New Jersey's total population
during the past quarter century masks the
redistribution of population within New Jersey. There
has been a significant shift from the northeastern
industrial areas toward the four coastal counties
(Cape May, Atlantic, Ocean and Monmouth) and toward
the central New Jersey counties of Hunterdon, Somerset
and Middlesex.

During 1999, a continuation of the national business
expansion, a strong business climate in New Jersey and
positive developments in neighboring metropolitan
areas contributed to New Jersey's economic expansion -
the second strongest year for economic growth since
1988.

Employment within New Jersey increased by 1.7% in
1999, resulting in an increase of over 65,000 jobs.
Job gains were primarily spread across the service
producing industries with particularly strong growth
in wholesale and retail trade (20,500) and business
services (20,200). Computer software and personnel
supply related companies accounted for the bulk of the
job growth in the business services sub-sector, adding
15,000 jobs.

During the past decade, New Jersey's job growth has
been concentrated in five major "growth clusters":
health, high technology, logistics, financial and
entertainment. Combined, these five growth clusters
added over 200,000 jobs during the ten years from 1988
to 1998, a 19% growth rate compared to a 4% growth
rate for all other industries in New Jersey. These
growth clusters grew by 2.6% in 1999, over twice the
rate of 1.2% for all other industries in New Jersey.

With strong labor market conditions, New Jersey's
personal income increased at a pace of 5.6% in 1999,
just below the 5.8% national rate. The strong New
Jersey economy also led to a 7.0% growth in retail
sales. Low inflation, approximately 2%, continues to
benefit New Jersey consumers and businesses, and low
interest rates have increased spending on housing and
other consumers durables. In 1999, home building was
at its highest level since 1988.

New Jersey's unemployment rate remained low in 1999 -
close to the national average. Joblessness, in terms
of both absolute level and its rate, has been falling
steadily since its peak in 1992. The early trends in
year 2000 indicate that the number of unemployed
persons in New Jersey has dropped to its lowest level
since mid-1989.

The economic outlook for 2000/2001 is for continued
growth, but at somewhat more moderate rates.
Employment is expected to increase by approximately
58,000 jobs, reflecting a slowing national economy and
shortages in skilled technical specialties that will
constrain job growth. The outlook also indicates a
slowing in New Jersey personal income growth from 6.2%
in 2000 to 5.9% in 2001.

A slower growing national economy makes it
increasingly unlikely that any changes in national
economic or fiscal policy will be implemented that
will impact New Jersey's economy significantly in the
forecast period. However, uncertainties in the
international economy are likely to remain due to oil
price and currency issues. Other areas of concern
include the volatility in the stock market, possible
significant shifts in consumer and investor
confidence, unstable and potentially deflationary
international economic conditions, and the prospect of
leaner United States corporate profits. In addition,
the restructuring of major industries will continue
due to cost containment, globalization of competition
and deregulation concerns. Although the forecasts for
2000/2001 contain more risks than in the recent past,
the basic fundamentals of New Jersey's economic health
remain favorable.

The New Jersey outlook is based on expected national
economic performance and on recent New Jersey
strategic policy actions aimed at infrastructure
improvements, effective education and training of New
Jersey's workforce, and maintaining a competitive
business environment. Investments in each of these
policy areas are critical to maintaining the long-term
health of New Jersey's economy.

To the extent that any adverse conditions exist in the
future that affect the ability of public agencies
within New Jersey to pay debt service on their
obligations, the value of the fund may be immediately
and substantially affected.

PUERTO RICO RISK FACTORS

Puerto Rico is a commonwealth of the United States.
Its economy is based on manufacturing, services, and
tourism and generally parallels the United States's
economy.  Historically, Puerto Rico's economy
benefited from tax incentives contained in Section 936
of the Internal Revenue Code.  These tax incentives
allow tax credit claims to U.S. domestic corporations
that operate a large amount of their business in
Puerto Rico; however, these incentives will be phased
out by the year 2006.  This may decrease Puerto Rico's
competitive advantage for attracting new businesses in
the future.  Economic difficulties in the United
States and natural disasters could have a negative on
the overall economy of Puerto Rico.

VIRGIN ISLANDS RISK FACTORS

The Virgin Islands are a self-governed territory of
the United States and include St. Thomas, St. John and
St. Croix.  The islands are located in the Lesser
Antilles, southeast of Florida.  The Virgin Islands'
economy is heavily dependent on tourism for both
revenue and employment.  Natural disasters and
economic difficulties in the United States could have
a negative impact on the tourism industry and may also
have a negative impact on the overall economy of the
Virgin Islands.

GUAM RISK FACTORS

Guam is a self-governed territory of the United States
located west-southwest of Hawaii and southeast of
Japan.  Guam's economy is dependent on revenues from
tourism, the U.S. military and service industries.
Its employment is concentrated in local government and
federal jobs.  A decrease in U.S. military operations
and natural disasters may have a negative impact on
Guam's economy.

PORTFOLIO TRANSACTIONS

Newly issued securities normally are purchased
directly from the issuer or from an underwriter acting
as principal.  Other purchases and sales usually are
placed with those dealers from which it appears that
the best price or execution will be obtained; those
dealers may be acting as either agents or principals.
 The purchase price paid by the fund to underwriters
of newly issued securities usually includes a
concession paid by the issuer to the underwriter, and
purchases of after-market securities from dealers
normally are executed at a price between the bid and
asked prices. For the 1999, 2000 and 2001 fiscal
years, the fund has paid no brokerage commissions.

Allocation of transactions, including their frequency,
to various dealers is determined by the manager in its
best judgment and in a manner deemed fair and
reasonable to shareholders.  The primary
considerations are availability of the desired
security and the prompt execution of orders in an
effective manner at the most favorable prices.
Subject to these considerations, dealers that provide
supplemental investment research and statistical or
other services to the manager may receive orders for
portfolio transactions by the fund.  Information so
received is in addition to, and not in lieu of,
services required to be performed by the manager, and
the fees of the manager are not reduced as a
consequence of its use of such supplemental
information.  Such information may be useful to the
manager in serving both the fund and other clients
and, conversely, supplemental information obtained by
the placement of business of other clients may be
useful to the manager in carrying out its obligations
to the fund.

The fund will not purchase Tax-Exempt Obligations
during the existence of any underwriting or selling
group relating thereto of which Salomon Smith Barney
is a member, except to the extent permitted by the
Securities and Exchange Commission ("SEC"). Under
certain circumstances, the fund may be at a
disadvantage because of this limitation in comparison
with other investment companies which have a similar
investment objective but which are not subject to such
limitation.  The fund also may execute portfolio
transactions through Salomon Smith Barney and its
affiliates in accordance with rules promulgated by the
SEC.

While investment decisions for the fund are made
independently from those of the other accounts managed
by the manager, investments of the type the fund may
make also may be made by those other accounts.  When
the fund and one or more other accounts managed by the
manager are prepared to invest in, or desire to
dispose of, the same security, available investments
or opportunities for sales will be allocated in a
manner believed by the manager to be equitable to
each. In some cases, this procedure may adversely
affect the price paid or received by the fund or the
size of the position obtained or disposed of by the
fund.

PORTFOLIO TURNOVER

The fund's portfolio turnover rate (the lesser of
purchases or sales of portfolio securities during the
year, excluding purchases or sales of short-term
securities, divided by the monthly average value of
portfolio securities) generally is not expected to
exceed 100%, but the portfolio turnover rate will not
be a limiting factor whenever the fund deems it
desirable to sell or purchase securities. Securities
may be sold in anticipation of a rise in interest
rates (market decline) or purchased in anticipation of
a decline in interest rates (market rise) and later
sold.  In addition, a security may be sold and another
security of comparable quality may be purchased at
approximately the same time in order to take advantage
of what the fund believes to be a temporary disparity
in the normal yield relationship between the two
securities.  These yield disparities may occur for
reasons not directly related to the investment quality
of particular issues or the general movement of
interest rates, such as changes in the overall demand
for or supply of various types of tax-exempt
securities.  For the 2001 and 2000 fiscal years, the
fund's portfolio turnover rates were 18% and 21%,
respectively.

PURCHASE OF SHARES

Sales Charge Alternatives

The following classes of shares are available for
purchase.  See the prospectus for a discussion of
factors to consider in selecting which Class of shares
to purchase.

Class A Shares.  Class A shares are sold to investors
at the public offering price, which is the net asset
value plus an initial sales charge as follows:



Amount of
Investment

Sales Charge as
a %
Of Transaction

Sales Charge as
a %
of Amount
Invested
Dealers'
Reallowance as %
of Offering Price
Less than $25,000

4.00%

 4.17%

  3.60%
$ 25,000 - 49,999

3.50

 3.63

  3.15
50,000    99,999

3.00

 3.09

  2.70
100,000    249,999

2.50

 2.56

  2.25
250,000    499,999

1.50

 1.52

  1.35
500,000 or more

 *

    *
*

*  Purchases of Class A shares of $500,000 or more
will be made at net asset value without any initial
sales charge, but will be subject to a deferred
sales charge of 1.00% on redemptions made within 12
months of purchase. The deferred sales charge on
Class A shares is payable to Salomon Smith Barney,
which compensates Salomon Smith Barney Financial
Consultants and other dealers whose clients make
purchases of $500,000 or more. The deferred sales
charge is waived in the same circumstances in which
the deferred sales charge applicable to Class B and
Class L shares is waived.

Members of the selling group may receive up to 90% of
the sales charge and may be deemed to be underwriters
of the fund as defined in the 1933 Act.  The reduced
sales charges shown above apply to the aggregate of
purchases of Class A shares of the fund made at one
time by "any person," which includes an individual and
his or her immediate family, or a trustee or other
fiduciary of a single trust estate or single fiduciary
account.

Class B Shares.  Class B shares are sold without an
initial sales charge but are subject to a deferred
sales charge payable upon certain redemptions.  See
"Deferred Sales Charge Provisions" section.

Class L Shares.  Class L shares are sold with an
initial sales charge of 1.00% (which is equal to 1.01%
of the amount invested) and are subject to a deferred
sales charge payable upon certain redemptions.  See
"Deferred Sales Charge Provisions" section. Until June
22, 2002 purchases of Class L shares by investors who
were holders of Class C shares of the fund and/or
other Smith Barney mutual funds on June 12, 1998 will
not be subject to the 1% initial sales charge.

Class Y Shares.  Class Y shares are sold without an
initial sales charge or deferred sales charge and are
available only to investors investing a minimum of
$15,000,000 (except purchases of Class Y shares by
Smith Barney Allocation Series Inc., for which there
is no minimum purchase amount).

General

Investors may purchase shares from a Service Agent.
When purchasing shares of the fund, investors must
specify whether the purchase is for Class A, Class B,
Class L or Class Y shares.  Service Agents may charge
their customers an annual account maintenance fee in
connection with a brokerage account through which an
investor purchases or holds shares.  Accounts held
directly at the sub-transfer agent are not subject to
a maintenance fee.

Investors in Class A, Class B and Class L shares may
open an account in the fund by making an initial
investment of at least $1,000 for each account, in the
fund. Investors in Class Y shares may open an account
by making an initial investment of $15,000,000.
Subsequent investments of at least $50 may be made for
all Classes. For shareholders purchasing shares of the
fund through the Systematic Investment Plan on a
monthly basis, the minimum initial investment
requirement for Class A, Class B and Class L shares
and subsequent investment requirement for all Classes
is $25. For shareholders purchasing shares of the fund
through the Systematic Investment Plan on a quarterly
basis, the minimum initial investment required for
Class A, Class B and Class L shares and the subsequent
investment requirement for all Classes is $50.  There
are no minimum investment requirements for Class A
shares for employees of Citigroup including Salomon
Smith Barney, unitholders who invest distributions
from a Unit Investment Trust ("UIT") sponsored by
Salomon Smith Barney, and Directors/Trustees of any of
the Smith Barney mutual funds, and their spouses and
children. The fund reserves the right to waive or
change minimums, to decline any order to purchase its
shares and to suspend the offering of shares from time
to time. Shares purchased will be held in the
shareholder's account by the sub-transfer agent.
Share certificates are issued only upon a
shareholder's written request to the sub-transfer
agent. It is not recommended that the fund be used as
a vehicle for Keogh, Individual Retirement Account or
other qualified retirement plans.

Purchase orders received by the fund or a Service
Agent prior to the close of regular trading on the New
York Stock Exchange, Inc. (the "NYSE"), on any day the
fund calculates its net asset value, are priced
according to the net asset value determined on that
day (the ''trade date'').  Orders received by a
Service Agent prior to the close of regular trading on
the NYSE on any day the fund calculates its net asset
value, are priced according to the net asset value
determined on that day, provided the order is received
by the fund or the fund's agent prior to its close of
business. For shares purchased through Salomon Smith
Barney or a Service Agent purchasing through Salomon
Smith Barney, payment for shares of the fund is due on
the third business day after the trade date. In all
other cases, payment must be made with the purchase
order.

Systematic Investment Plan.  Shareholders may make
additions to their accounts at any time by purchasing
shares through a service known as the Systematic
Investment Plan.  Under the Systematic Investment
Plan, Salomon Smith Barney or the sub-transfer agent
is authorized through preauthorized transfers of at
least $25 on a monthly basis or at least $50 on a
quarterly basis to charge the shareholder's account
held with a bank or other financial institution on a
monthly or quarterly basis as indicated by the
shareholder, to provide for systematic additions to
the shareholder's fund account. A shareholder who has
insufficient funds to complete the transfer will be
charged a fee of up to $25 by Salomon Smith Barney or
the sub-transfer agent.  The Systematic Investment
Plan also authorizes Salomon Smith Barney to apply
cash held in the shareholder's Salomon Smith Barney
brokerage account or redeem the shareholder's shares
of a Smith Barney money market fund to make additions
to the account. Additional information is available
from the fund or a Service Agent.

Sales Charge Waivers and Reductions

Initial Sales Charge Waivers.  Purchases of Class A
shares may be made at net asset value without a sales
charge in the following circumstances: (a) sales to
(i) board members and employees of Citigroup and its
subsidiaries and any Citigroup affiliated funds
including the Smith Barney mutual funds (including
retired board members and employees); the immediate
families of such persons (including the surviving
spouse of a deceased board member or employee); and to
a pension, profit-sharing or other benefit plan for
such persons and (ii) employees of members of the
National Association of Securities Dealers, Inc.,
provided such sales are made upon the assurance of the
purchaser that the purchase is made for investment
purposes and that the securities will not be resold
except through redemption or repurchase; (b) offers of
Class A shares to any other investment company to
effect the combination of such company with the fund
by merger, acquisition of assets or otherwise; (c)
purchases of Class A shares by any client of a newly
employed Salomon Smith Barney Financial Consultant
(for a period up to 90 days from the commencement of
the Financial Consultant's employment with Salomon
Smith Barney), on the condition the purchase of Class
A shares is made with the proceeds of the redemption
of shares of a mutual fund which (i) was sponsored by
the Financial Consultant's prior employer, (ii) was
sold to the client by the Financial Consultant and
(iii) was subject to a sales charge; (d) purchases by
shareholders who have redeemed Class A shares in the
fund (or Class A shares of another Smith Barney mutual
fund that is offered with a sales charge) and who wish
to reinvest their redemption proceeds in the fund,
provided the reinvestment is made within 60 calendar
days of the redemption; (e) purchases by accounts
managed by registered investment advisory subsidiaries
of Citigroup; (f) investments of distributions from or
proceeds from a sale of a UIT sponsored by Salomon
Smith Barney; and (g) purchases by investors
participating in a Salomon Smith Barney fee-based
arrangement. In order to obtain such discounts, the
purchaser must provide sufficient information at the
time of purchase to permit verification that the
purchase would qualify for the elimination of the
sales charge.

Right of Accumulation.  Class A shares of the fund may
be purchased by ''any person'' (as defined above) at a
reduced sales charge or at net asset value determined
by aggregating the dollar amount of the new purchase
and the total net asset value of all Class A shares of
the fund and of other Smith Barney mutual funds that
are offered with a sales charge as currently listed
under ''Exchange Privilege'' then held by such person
and applying the sales charge applicable to such
aggregate.  In order to obtain such discount, the
purchaser must provide sufficient information at the
time of purchase to permit verification that the
purchase qualifies for the reduced sales charge.  The
right of accumulation is subject to modification or
discontinuance at any time with respect to all shares
purchased thereafter.

Letter of Intent - Class A Shares.  A Letter of Intent
for an amount of $50,000 or more provides an
opportunity for an investor to obtain a reduced sales
charge by aggregating investments over a 13 month
period, provided that the investor refers to such
Letter when placing orders.  For purposes of a Letter
of Intent, the ''Amount of Investment'' as referred to
in the preceding sales charge table includes (i) all
Class A shares of the fund and other Smith Barney
mutual funds offered with a sales charge acquired
during the term of the letter plus (ii) the value of
all Class A shares previously purchased and still
owned.  Each investment made during the period
receives the reduced sales charge applicable to the
total amount of the investment goal.  If the goal is
not achieved within the period, the investor must pay
the difference between the sales charges applicable to
the purchases made and the charges previously paid, or
an appropriate number of escrowed shares will be
redeemed.  The term of the Letter will commence upon
the date the Letter is signed, or at the options of
the investor, up to 90 days before such date.  Please
contact a Service Agent or Citi Fiduciary Trust
Company (the "transfer agent") to obtain a Letter of
Intent application.

Letter of Intent - Class Y Shares.  A Letter of Intent
may also be used as a way for investors to meet the
minimum investment requirement for Class Y shares
(except purchases of Class Y shares by Smith Barney
Allocation Series Inc., for which there is no minimum
purchase amount).  Such investors must make an initial
minimum purchase of $5,000,000 in Class Y shares of
the fund and agree to purchase a total of $15,000,000
of Class Y shares of the fund within 13 months from
the date of the Letter. If a total investment of
$15,000,000 is not made within the 13-month period,
all Class Y shares purchased to date will be
transferred to Class A shares, where they will be
subject to all fees (including a service fee of 0.15%)
and expenses applicable to the fund's Class A shares,
which may include a deferred sales charge of 1.00%.
Please contact a Service Agent or the transfer agent
for further information.

Deferred Sales Charge Provisions

''Deferred Sales Charge Shares'' are: (a) Class B
shares; (b) Class L shares; and (c) Class A shares
that were purchased without an initial sales charge
but are subject to a deferred sales charge.  A
deferred sales charge may be imposed on certain
redemptions of these shares.

Any applicable deferred sales charge will be assessed
on an amount equal to the lesser of the original cost
of the shares being redeemed or their net asset value
at the time of redemption. Deferred Sales Charge
Shares that are redeemed will not be subject to a
deferred sales charge to the extent the value of such
shares represents: (a) capital appreciation of fund
assets; (b) reinvestment of dividends or capital gain
distributions; (c) with respect to Class B shares,
shares redeemed more than five years after their
purchase; or (d) with respect to Class L shares and
Class A shares that are Deferred Sales Charge Shares,
shares redeemed more than 12 months after their
purchase.

Class L shares and Class A shares that are Deferred
Sales Charge Shares are subject to a 1.00% deferred
sales charge if redeemed within 12 months of purchase.
In circumstances in which the deferred sales charge is
imposed on Class B shares, the amount of the charge
will depend on the number of years since the
shareholder made the purchase payment from which the
amount is being redeemed.  Solely for purposes of
determining the number of years since a purchase
payment, all purchase payments made during a month
will be aggregated and deemed to have been made on the
last day of the preceding Salomon Smith Barney
statement month. The following table sets forth the
rates of the charge for redemptions of Class B shares
by shareholders.




Year Since Purchase Payment Was
Made

Deferred sales charge

First

4.50%

Second

4.00

Third

3.00

Fourth

2.00

Fifth

1.00

Sixth and thereafter

0.00

Class B shares will convert automatically to Class A
shares eight years after the date on which they were
purchased and thereafter will no longer be subject to
any distribution fees. There will also be converted at
that time such proportion of Class B Dividend Shares
owned by the shareholder as the total number of his or
her Class B shares converting at the time bears to the
total number of outstanding Class B shares (other than
Class B Dividend Shares) owned by the shareholder.

In determining the applicability of any deferred sales
charge, it will be assumed that a redemption is made
first of shares representing capital appreciation,
next of shares representing the reinvestment of
dividends and capital gains distributions and finally
of other shares held by the shareholder for the
longest period of time.  The length of time Deferred
Sales Charge Shares acquired through an exchange have
been held will be calculated from the date the shares
exchanged were initially acquired in one of the other
Smith Barney mutual funds, and fund shares being
redeemed will be considered to represent, as
applicable, capital appreciation or dividend and
capital gain distribution reinvestments in such other
funds. For federal income tax purposes, the amount of
the deferred sales charge will reduce the gain or
increase the loss, as the case may be, on the amount
realized on redemption. The amount of any deferred
sales charge will be paid to Salomon Smith Barney.

To provide an example, assume an investor purchased
100 Class B shares of the fund at $10 per share for a
cost of $1,000.  Subsequently, the investor acquired 5
additional shares of the fund through dividend
reinvestment.  During the fifteenth month after the
purchase, the investor decided to redeem $500 of his
or her investment.  Assuming at the time of the
redemption the net asset value had appreciated to $12
per share, the value of the investor's shares would be
$1,260 (105 shares at $12 per share). The deferred
sales charge would not be applied to the amount which
represents appreciation ($200) and the value of the
reinvested dividend shares ($60).  Therefore, $240 of
the $500 redemption proceeds ($500 minus $260) would
be charged at a rate of 4.00% (the applicable rate for
Class B shares) for a total deferred sales charge of
$9.60.

Waivers of Deferred Sales Charge

The deferred sales charge will be waived on: (a)
exchanges (see ''Exchange Privilege''); (b) automatic
cash withdrawals in amounts equal to or less than
1.00% per month of the value of the shareholder's
shares at the time the withdrawal plan commences (see
''Automatic Cash Withdrawal Plan'') (however,
automatic cash withdrawals in amounts equal to or less
than 2.00% per month of the value of the shareholder's
shares will be permitted for withdrawal plans
established prior to November 7, 1994); (c)
redemptions of shares within 12 months following the
death or disability of the shareholder; (d)
involuntary redemptions; and (e) redemptions of shares
to effect a combination of the fund with any
investment company by merger, acquisition of assets or
otherwise. In addition, a shareholder who has redeemed
shares from other Smith Barney mutual funds may, under
certain circumstances, reinvest all or part of the
redemption proceeds within 60 days and receive pro
rata credit for any deferred sales charge imposed on
the prior redemption.

Deferred sales charge waivers will be granted subject
to confirmation (by Salomon Smith Barney in the case
of shareholders who are also Salomon Smith Barney
clients or by the transfer agent in the case of all
other shareholders) of the shareholder's status or
holdings, as the case may be.

Volume Discounts

The schedule of sales charges on Class A shares
described in the prospectus applies to purchases made
by any "purchaser," which is defined to include the
following: (a) an individual; (b) an individual's
spouse and his or her children purchasing shares for
their own account; (c) a trustee or other fiduciary
purchasing shares for a single trust estate or single
fiduciary account; and (d) a trustee or other
professional fiduciary (including a bank, or an
investment adviser registered with the SEC under the
Investment Advisers Act of 1940 purchasing shares of
the fund for one or more trust estates or fiduciary
accounts.  Purchasers who wish to combine purchase
orders to take advantage of volume discounts on Class
A shares should contact a Service Agent.

DETERMINATION OF NET ASSET VALUE

Each class' net asset value per share is calculated on
each day, Monday through Friday, except days on which
the NYSE is closed.  The NYSE currently is scheduled
to be closed on New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and
Christmas, and on the preceding Friday or subsequent
Monday when one of these holidays falls on a Saturday
or Sunday, respectively.  Because of the differences
in distribution fees and class-specific expenses, the
per share net asset value of each class may differ.

Generally, the fund's investments are valued at market
value or, in the absence of a market value with
respect to any securities, at fair value as determined
by or under the direction of the board of directors. A
security that is primarily traded on a domestic or
foreign exchange is valued at the last sale price on
that exchange or, if there were no sales during the
day, at the mean between the bid and asked price.
Over-the-counter securities are valued at the mean
between the bid and asked price.  If market quotations
for those securities are not readily available, they
are valued at fair value, as determined in good faith
by the fund's board of directors.  An option is
generally valued at the last sale price or, in the
absence of a last sale price, the last offer price.

U.S. government securities will be valued at the mean
between the closing bid and asked prices on each day,
or, if market quotations for those securities are not
readily available, at fair value, as determined in
good faith by the fund's board of directors.

Short-term investments maturing in 60 days or less are
valued at amortized cost whenever the board of
directors determines that amortized cost reflects fair
value of those investments. Amortized cost valuation
involves valuing an instrument at its cost initially
and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the
effect of fluctuating interest rates on the market
value of the instrument.

All other securities and other assets of the fund will
be valued at fair value as determined in good faith by
the fund's board of directors.

Determination of Public Offering Price

The fund offers its shares to the public on a
continuous basis. The public offering price per Class
A and Class Y share of the fund is equal to the net
asset value per share at the time of purchase plus,
for Class A shares, an initial sales charge based on
the aggregate amount of the investment. The public
offering price per Class B and Class L share (and
Class A share purchases, including applicable rights
of accumulation, equaling or exceeding $500,000) is
equal to the net asset value per share at the time of
purchase and no sales charge is imposed at the time of
purchase.  The method of computing the public offering
price is shown in the fund's financial statements,
incorporated by reference in their entirety into this
SAI.

REDEMPTION OF SHARES

The fund is required to redeem the shares of the fund
tendered to it, as described below, at a redemption
price equal to their net asset value per share next
determined after receipt of a written request in
proper form at no charge other than any applicable
deferred sales charge. Redemption requests received
after the close of regular trading on the NYSE are
priced at the net asset value next determined.

If a shareholder holds shares in more than one Class,
any request for redemption must specify the Class
being redeemed.  In the event of a failure to specify
which Class, or if the investor owns fewer shares of
the Class than specified, the redemption request will
be delayed until the transfer agent receives further
instructions from Salomon Smith Barney, or if the
shareholder's account is not with Salomon Smith
Barney, from the shareholder directly.  The redemption
proceeds will be remitted on or before the third
business day following receipt of proper tender,
except on any days on which the NYSE is closed or as
permitted under the 1940 Act in extraordinary
circumstances. Generally, if the redemption proceeds
are remitted to a Salomon Smith Barney brokerage
account, these funds will not be invested for the
shareholder's benefit without specific instruction and
Salomon Smith Barney will benefit from the use of
temporarily uninvested funds. Redemption proceeds for
shares purchased by check, other than a certified or
official bank check, will be remitted upon clearance
of the check, which may take up to fifteen days or
more.

Shares held by Salomon Smith Barney as custodian must
be redeemed by submitting a written request to a
Salomon Smith Barney Financial Consultant. Shares
other than those held by Salomon Smith Barney as
custodian may be redeemed through an investor's
Service Agent or by submitting a written request for
redemption to:

Smith Barney New Jersey Municipals Fund Inc.
Class A, B, L or Y (please specify)
c/o PFPC Global Fund Services
	P.O. Box 9699
	Providence, RI 02940-9699

A written redemption request must (a) state the Class
and number or dollar amount of shares to be redeemed,
(b) identify the shareholder's account number and (c)
be signed by each registered owner exactly as the
shares are registered. If the shares to be redeemed
were issued in certificate form, the certificates must
be endorsed for transfer (or be accompanied by an
endorsed stock power) and must be submitted to the
transfer agent together with the redemption request.
Any signature appearing on a share certificate, stock
power or written redemption request in excess of
$50,000 must be guaranteed by an eligible guarantor
institution, such as a domestic bank, savings and loan
institution, domestic credit union, member bank of the
Federal Reserve System or member firm of a national
securities exchange. Written redemption requests of
$50,000 or less do not require a signature guarantee
unless more than one such redemption request is made
in any 10-day period. Redemption proceeds will be
mailed to an investor's address of record. The
transfer agent may require additional supporting
documents for redemptions made by corporations,
executors, administrators, directors or guardians. A
redemption request will not be deemed properly
received until the transfer agent receives all
required documents in proper form.

Telephone Redemption and Exchange Program.
Shareholders who do not have a brokerage account may
be eligible to redeem and exchange shares by
telephone. To determine if a shareholder is entitled
to participate in this program, he or she should
contact the transfer agent at 1-800-451-2010.  Once
eligibility is confirmed, the shareholder must
complete and return a Telephone/Wire Authorization
Form, along with a signature guarantee, that will be
provided by the sub-transfer agent upon request.
(Alternatively, an investor may authorize telephone
redemptions on the new account application with the
applicant's signature guarantee when making his/her
initial investment in a fund.)

Redemptions.   Redemption requests of up to $50,000 of
any class or classes of shares of a fund may be made
by eligible shareholders by calling the transfer agent
at 1-800-451-2010. Such requests may be made between
9:00 a.m. and 4:00 p.m. (Eastern time) on any day the
NYSE is open.  Redemptions of shares (i) by retirement
plans or (ii) for which certificates have been issued
are not permitted under this program.

A shareholder will have the option of having the
redemption proceeds mailed to his/her address of
record or wired to a bank account predesignated by the
shareholder.  Generally, redemption proceeds will be
mailed or wired, as the case may be, on the next
business day following the redemption request.  In
order to use the wire procedures, the bank receiving
the proceeds must be a member of the Federal Reserve
System or have a correspondent relationship with a
member bank.  The fund reserves the right to charge
shareholders a nominal fee for each wire redemption.
Such charges, if any, will be assessed against the
shareholder's account from which shares were redeemed.
 In order to change the bank account designated to
receive redemption proceeds, a shareholder must
complete a new Telephone/Wire Authorization Form and,
for the protection of the shareholder's assets, will
be required to provide a signature guarantee and
certain other documentation.

Exchanges.  Eligible shareholders may make exchanges
by telephone if the account registration of the shares
of the fund being acquired is identical to the
registration of the shares of the fund exchanged.
Such exchange requests may be made by calling the
transfer agent at 1-800-451-2010 between 9:00 a.m. and
4:00 p.m. (Eastern time) on any day on which the NYSE
is open.

Additional Information Regarding Telephone Redemption
and Exchange Program.   Neither the fund nor its
agents will be liable for following instructions
communicated by telephone that are reasonably believed
to be genuine.  The fund and its agents will employ
procedures designed to verify the identity of the
caller and legitimacy of instructions (for example, a
shareholder's name and account number will be required
and phone calls may be recorded).  The fund reserves
the right to suspend, modify or discontinue the
telephone redemption and exchange program or to impose
a charge for this service at any time following at
least seven (7) days' prior notice to shareholders.

Redemptions in Kind.  In conformity with applicable
rules of the SEC, redemptions may be paid in portfolio
securities, in cash or any combination of both, as the
board of directors may deem advisable; however,
payments shall be made wholly in cash unless the board
of directors believes economic conditions exist that
would make such a practice detrimental to the best
interests of the fund and its remaining shareholders.
 If a redemption is paid in portfolio securities, such
securities will be valued in accordance with the
procedures described under "Determination of Net Asset
Value" in the Prospectus and a shareholder would incur
brokerage expenses if these securities were then
converted to cash.

Distributions in Kind

If the fund's board of directors determines that it
would be detrimental to the best interests of the
remaining shareholders of the fund to make a
redemption payment wholly in cash, the fund may pay,
in accordance with SEC rules, any portion of a
redemption in excess of the lesser of $250,000 or
1.00% of the fund's net assets by a distribution in
kind of portfolio securities in lieu of cash.
Securities issued as a distribution in kind may incur
brokerage commissions when shareholders subsequently
sell those securities.

Automatic Cash Withdrawal Plan

An automatic cash withdrawal plan (the "Withdrawal
Plan") is available to shareholders who own shares
with a value of at least $10,000 and who wish to
receive specific amounts of cash monthly or quarterly.
Withdrawals of at least $50 may be made under the
Withdrawal Plan by redeeming as many shares of the
fund as may be necessary to cover the stipulated
withdrawal payment. Any applicable deferred sales
charge will not be waived on amounts withdrawn by
shareholders that exceed 1.00% per month of the value
of a shareholder's shares at the time the Withdrawal
Plan commences. (With respect to Withdrawal Plans in
effect prior to November 7, 1994, any applicable
deferred sales charge will be waived on amounts
withdrawn that do not exceed 2.00% per month of the
value of a shareholder's shares at the time the
Withdrawal Plan commences.) To the extent withdrawals
exceed dividends, distributions and appreciation of a
shareholder's investment in the fund, there will be a
reduction in the value of the shareholder's
investment, and continued withdrawal payments will
reduce the shareholder's investment and may ultimately
exhaust it. Withdrawal payments should not be
considered as income from investment in the fund.
Furthermore, as it generally would not be advantageous
to a shareholder to make additional investments in the
fund at the same time he or she is participating in
the Withdrawal Plan, purchases by such shareholder in
amounts of less than $5,000 ordinarily will not be
permitted.

Shareholders who wish to participate in the Withdrawal
Plan and who hold their shares in certificate form
must deposit their share certificates with the sub-
transfer agent as agent for Withdrawal Plan members.
All dividends and distributions on shares in the
Withdrawal Plan are reinvested automatically at net
asset value in additional shares of the fund. For
additional information, shareholders should contact a
Service Agent or the sub-transfer agent.  A
shareholder who purchases shares directly through the
sub-transfer agent may continue to do so and
applications for participation in the Withdrawal Plan
must be received by the sub-transfer agent no later
than the eighth day of the month to be eligible for
participation beginning with that month's withdrawals.
 For additional information, shareholders should
contact a Service Agent or the sub-transfer agent.

The fund offers shareholders an automatic cash
withdrawal plan, under which shareholders who own
shares with a value of at least $10,000 may elect to
receive cash payments of at least $50 monthly or
quarterly.  The withdrawal plan will be carried over
on exchanges between Classes of a fund.  Any
applicable deferred sales charge will not be waived on
amounts withdrawn by a shareholder that exceed 1.00%
per month of the value of the shareholder's shares
subject to the deferred sales charge at the time the
withdrawal plan commences. (With respect to withdrawal
plans in effect prior to November 7, 1994, any
applicable deferred sales charge will be waived on
amounts withdrawn that do not exceed 2.00% per month
of the value of the shareholder's shares subject to
the deferred sales charge.)  For further information
regarding the automatic cash withdrawal plan,
shareholders should contact a Service Agent or the
sub-transfer agent.


INVESTMENT MANAGEMENT AND OTHER SERVICES

Investment Adviser and Administrator - SBFM

SBFM serves as investment adviser to the fund pursuant
to an investment advisory agreement (the "Investment
Advisory Agreement") with the fund which was approved
by the board of directors, including a majority of
directors who are not "interested persons" of the fund
or of SBFM.  SBFM is a wholly owned subsidiary of
Salomon Smith Barney Holdings Inc. ("Holdings"), which
in turn, is a wholly owned subsidiary of Citigroup.
Subject to the supervision and direction of the fund's
board of directors, SBFM manages the fund's portfolio
in accordance with the fund's stated investment
objective and policies, makes investment decisions for
the fund, places orders to purchase and sell
securities, and employs professional portfolio
managers and securities analysts who provide research
services to the fund. SBFM pays the salary of any
officer and employee who is employed by both it and
the fund. SBFM bears all expenses in connection with
the performance of its services.  SBFM (through its
predecessor entities) has been in the investment
counseling business since 1968 and renders investment
advice to investment company clients that had
aggregate assets under management as of  June 1, 2001
of approximately $195 billion.

As compensation for investment advisory services, the
fund pays the manager a fee computed daily and payable
monthly at 0.30% of the value of the fund's average
daily net assets.  For the fiscal years ended March
31, 1999, 2000 and 2001, the fund paid the manager net
of fee waivers and expense reimbursements, $722,522,
$672,124 and $604,870, respectively, in investment
advisory fees.

SBFM also serves as administrator to the fund pursuant
to a written agreement (the "Administration
Agreement").  SBFM pays the salary of all officers and
employees who are employed by both it and the fund and
bears all expenses in connection with the performance
of its services.  As administrator SBFM: (a) assists
in supervising all aspects of the fund's operations;
b) supplies the fund with office facilities (which may
be in SBFM's own offices), statistical and research
data, data processing services, clerical, accounting
and bookkeeping services, including, but not limited
to, the calculation of (i) the net asset value of
shares of the fund, (ii) applicable deferred sales
charges and similar fees and charges and (iii)
distribution fees, internal auditing and legal
services, internal executive and administrative
services, and stationary and office supplies; and (c)
prepares reports to shareholders of the fund, tax
returns and reports to and filings with the SEC and
state Blue Sky authorities.

As compensation for administrative services rendered
to the fund, the manager receives a fee computed daily
and payable monthly at the following annual rates of
average daily net assets: 0.20% up to $500 million;
and 0.18% in excess of $500 million.  For the fiscal
years ended March 31,  1999, 2000 and 2001 the fund
paid the manager in administration fees $481,681,
$448,083 and $403,247, respectively.

The fund bears expenses incurred in its operations
including: taxes, interest, brokerage fees and
commissions, if any; fees of directors of the fund who
are not officers, directors, shareholders or employees
of Salomon Smith Barney or the manager; SEC fees and
state Blue Sky notice fees; charges of custodians;
transfer and dividend disbursing agent's fees; certain
insurance premiums; outside auditing and legal
expenses; costs of maintaining corporate existence;
costs of investor services (including allocated
telephone and personnel expenses); costs of preparing
and printing of prospectuses for regulatory purposes
and for distribution to existing shareholders; costs
of shareholders' reports and shareholder meetings; and
meetings of the officers or board of directors of the
fund.

Code of Ethics

Pursuant to Rule 17j-1 of the 1940 Act, the fund, its
investment adviser and principal underwriter have
adopted a code of ethics that permits personnel to
invest in securities for their own accounts, including
securities that may be purchased or held by the fund.
 All personnel must place the interests of clients
first and avoid activities, interests and
relationships that might interfere with the duty to
make decisions in the best interests of the clients.
All personal securities transactions by employees must
adhere to the requirements of the code and must be
conducted in such a manner as to avoid any actual or
potential conflict of interest, the appearance of such
a conflict, or the abuse of an employee's position of
trust and responsibility.  A copy of the fund's Code
of Ethics is on file with the SEC.

Counsel

Willkie Farr & Gallagher, 787 Seventh Avenue, New
York, New York 10019, serves as counsel to the fund.

Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New
York, New York 10038, serves as counsel to the
directors who are not "interested persons" of the
fund.

Auditors

KPMG LLP, independent auditors, 757 Third Avenue, New
York, New York 10017, has been selected as the fund's
independent auditor to examine and report on the
fund's financial statements for the fiscal year ending
March 31, 2002.

Custodian, Transfer Agent and Sub-Transfer Agent

PFPC Trust Company, ("PFPC" or the "custodian")
located at 8800 Tinicum Boulevard, Philadelphia,
Pennsylvania 19153, serves as the custodian of the
fund. Under the custody agreement, the custodian holds
the fund's portfolio securities and keeps all
necessary accounts and records.  For its services, the
custodian receives a monthly fee based upon the month-
end market value of securities held in custody and
also receives securities transaction charges.  The
assets of the fund are held under bank custodianship
in compliance with the 1940 Act.

Citi Fiduciary Trust Company, (the "transfer agent")
located at 125 Broad Street, New York, New York 10004,
serves as the fund's transfer and dividend-paying
agent.  Under the transfer agency agreement, the
transfer agent maintains the shareholder account
records for the fund, handles certain communications
between shareholders and the fund, distributes
dividends and distributions payable by the fund and
produces statements with respect to account activity
for the fund and its shareholders.  For these
services, the transfer agent receives fees from the
fund computed on the basis of the number of
shareholder accounts that the transfer agent maintains
for the fund during the month and is reimbursed for
out-of-pocket expenses.

PFPC Global Fund Services, located at Exchange Place,
Boston, Massachusetts 02109, serves as the fund's sub-
transfer agent.  Under the transfer agency agreement,
the sub-transfer agent maintains the shareholder
account records for the fund, handles certain
communications between shareholders and the fund, and
distributes dividends and distributions payable by the
fund.  For these services, the sub-transfer agent
receives a monthly fee computed on the basis of the
number of shareholder accounts it maintains for the
fund during the month, and is reimbursed for out-of-
pocket expenses.

Distributor

Salomon Smith Barney, Inc. located at 388 Greenwich
Street, New York, New York 10013 serves as the fund's
distributor pursuant to a written agreement dated June
5, 2000 (the "Distribution Agreement") which was
approved by the fund's board of directors, including a
majority of the independent directors, on April 17,
2000 and July 12, 2000.  Prior to June 5, 2000, CFBDS,
Inc. ("CFBDS") served as the fund's distributor.

For the period October 8, 1998 through March 31, 1999
the aggregate dollar amount of sales charges on Class
A shares was $172,000, $154,800 of which was paid to
Salomon Smith Barney.  For the 2000 fiscal year, the
aggregate dollar amount of sales charges on Class A
shares was $144,000, of which $129,600 was paid to
Salomon Smith Barney.  For the 2001 fiscal year, the
aggregate dollar amount of sales charges on Class A
shares was $222,000, of which a portion was paid to
Salomon Smith Barney and CFBDS.

For the period October 8, 1998 through March 31, 1999
the aggregate dollar amount of sales charges on Class
L shares was $14,000, $12,600 of which was paid to
Salomon Smith Barney.  For the 2000 fiscal year, the
aggregate dollar amount of sales charges on Class L
shares was $25,000, of which $22,500 was paid to
Salomon Smith Barney.  For the 2001 fiscal year, the
aggregate dollar amount of sales charges on Class L
was $33,000, of which a portion was paid to Salomon
Smith Barney and CFBDS.

For the fiscal years ended March 31, 1999, 2000 and
2001, Salomon Smith Barney or its predecessor received
from shareholders $51,000, $93,000 and $43,000,
respectively, in deferred sales charges on the
redemption of Class B shares.  For the fiscal years
ended March 31, 1999, 2000 and 2001, Salomon Smith
Barney or its predecessor received from shareholders
$2,000, $2,000 and $2,000, respectively, in deferred
sales charges on redemption of Class L shares.

When payment is made by the investor before the
settlement date, unless otherwise noted by the
investor, the funds will be held as a free credit
balance in the investor's brokerage account and
Salomon Smith Barney may benefit from the temporary
use of the funds.  The fund's board of directors has
been advised of the benefits to Salomon Smith Barney
resulting from these settlement procedures and will
take such benefits into consideration when reviewing
the Investment Advisory Agreement for continuance.

Distribution Arrangements.  To compensate Salomon
Smith Barney for the service it provides and for the
expense it bears, the fund has adopted a services and
distribution plan (the "Plan") pursuant to Rule 12b-1
under the 1940 Act.  Under the Plan, the fund pays
Salomon Smith Barney a service fee, accrued daily and
paid monthly, calculated at the annual rate of 0.15%
of the value of the fund's average daily net assets
attributable to the Class A, Class B and Class L
shares.  In addition, the fund pays Salomon Smith
Barney a distribution fee with respect to Class B and
Class L shares primarily intended to compensate
Salomon Smith Barney for its initial expense of paying
Financial Consultants a commission upon sales of those
shares.  The Class B and Class L distribution fee is
calculated at the annual rate of 0.50% and 0.55%,
respectively, of the value of the fund's average net
assets attributable to the shares of each Class.

For the fiscal year ended March 31, 2001, Salomon
Smith Barney incurred distribution expenses totaling
$603,241, consisting of $31,553 for advertising,
$4,172 for printing and mailing of prospectuses,
$304,688 for support services, $259,405 to Salomon
Smith Barney Financial Consultants, and $3,423 in
accruals for interest on the excess of Salomon Smith
Barney expenses incurred in distributing the fund's
shares over the sum of the distribution fees and
deferred sales charge received by Salomon Smith Barney
from the fund.

The following service and distribution fees were
incurred pursuant to a Distribution Plan during the
periods indicated:





Distribution Plan Fees





Fiscal Year
Ended
3/31/01

Fiscal Year
Ended 3/31/00

Fiscal Year
Ended 3/31/99

Class A

$  209,241

$  228,500

$   248,265

Class B

$  341,798

$  404,862

$   440,192

Class L*

$    66,819

$    66,096

$     53,263

* Class L shares were called Class C shares
until June 12, 1998.

Under its terms, the Plan continues from year to year,
provided such continuance is approved annually by vote
of the board of directors, including a majority of the
independent directors.  The Plan may not be amended to
increase the amount of the service and distribution
fees without shareholder approval, and all material
amendments of the Plan also must be approved by the
directors and independent directors in the manner
described above.  The Plan may be terminated with
respect to a Class of the fund at any time, without
penalty, by vote of a majority of the independent
directors or by a vote of a majority of the
outstanding voting securities of the Class (as defined
in the 1940 Act).  Pursuant to the Plan, Salomon Smith
Barney will provide the fund's board of directors with
periodic reports of amounts expended under the Plan
and the purpose for which such expenditures were made.


VALUATION OF SHARES

The fund's net asset value per share is determined as
of the close of regular trading on the NYSE, on each
day that the NYSE is open, by dividing the value of
the fund's net assets attributable to each Class by
the total number of shares of that Class outstanding.

When, in the judgement of the pricing service, quoted
bid prices for investments are readily available and
are representative of the bid side of the market,
these investments are valued at the mean between the
quoted bid and asked prices.  Investments for which,
in the judgment of the pricing service, there is no
readily obtainable market quotation (which may
constitute a majority of the portfolio securities) are
carried at fair value based on securities of similar
type, yield and maturity.  Pricing services generally
determine value by reference to transactions in
municipal obligations, quotations from municipal bond
dealers, market transactions in comparable securities
and various relationships between securities.

EXCHANGE PRIVILEGE

Shares of each Class of the fund may be exchanged for
shares of the same Class of certain Smith Barney
mutual funds, to the extent shares are offered for
sale in the shareholder's state of residence.
Exchanges of Class A, Class B and Class L shares are
subject to minimum investment requirements and all
shares are subject to the other requirements of the
fund into which exchanges are made.

Class B Exchanges.  If a Class B shareholder wishes to
exchange all or a portion of his or her shares in any
of the funds imposing a higher deferred sales charge
than that imposed by the fund, the exchanged Class B
shares will be subject to the higher applicable
deferred sales charge. Upon an exchange, the new Class
B shares will be deemed to have been purchased on the
same date as the Class B shares of the fund that have
been exchanged.

Class L Exchanges.  Upon an exchange, the new Class L
shares will be deemed to have been purchased on the
same date as the Class L shares of the fund that have
been exchanged.

Class A and Class Y Exchanges.  Class A and Class Y
shareholders of the fund who wish to exchange all or a
portion of their shares for shares of the respective
Class in any of the funds identified above may do so
without imposition of any charge.

Additional Information Regarding Exchanges.  The Fund
is not designed to provide investors with a means of
speculation on short-term market movements.  A pattern
of frequent exchanges by investors can be disruptive
to efficient portfolio management and, consequently,
can be detrimental to the Fund and its shareholders.
Accordingly, if the Fund's management in its sole
discretion determines that an investor is engaged in
excessive trading, the Fund, with or without prior
notice, may temporarily or permanently terminate the
availability to that investor of Fund exchanges, or
reject in whole or part any purchase or exchange
request with respect to such investor's account. Such
investors also may be barred from purchases and
exchanges involving other funds in the Smith Barney
Mutual Fund family.   Accounts under common ownership
or control will be considered as one account for
purposes of determining a pattern of excessive
trading. The Fund may notify an investor of rejection
of a purchase or exchange order after the day the
order is placed.  If an exchange request is rejected,
the Fund will take no other action with respect to the
shares until it receives further instructions from the
investor.  The Fund's policy on excessive trading
applies to investors who invest in the Fund directly
or through Service Agents, but does not apply to any
systematic investment  plans described in the
prospectus.

During times of drastic economic or market conditions,
the Fund may suspend the Exchange Privilege
temporarily without notice and treat exchange requests
based on their separate components and redemption orders
with a simultaneous request to purchase the other
fund's shares.  In such a case, the redemption request
would be processed at the Fund's next determined net
asset value but the purchase order would be effective
only at the net asset value next determined after the
fund being purchased formally accepts the order, which
may result in the purchase being delayed.

PERFORMANCE DATA

From time to time, the fund may quote total return of
a class in advertisements or in reports and other
communications to shareholders.  The fund may include
comparative performance information in advertising or
marketing the fund's shares.  Such performance
information may include data from the following
industry and financial publications: Barron's,
Business Week, CDA Investment Technologies, Inc.,
Changing Times, Forbes, Fortune, Institutional
Investor, Investor's Business Daily, Money,
Morningstar Mutual Fund Values, The New York Times,
USA Today and The Wall Street Journal.

Yield and Equivalent Taxable Yield

A Class' 30-day yield figure described below is
calculated according to a formula prescribed by the
SEC. The formula can be expressed as follows:

YIELD =2 [(a-b +1)6-1]
						        cd

Where:	 a = dividends and interest earned during
the period.
		 b = expenses accrued for the period (net
of reimbursement).
c = the average daily number of shares
outstanding during the period that
were entitled to receive dividends.
	 d = the maximum offering price per share
on the last day of the period.

For the purpose of determining the interest earned
(variable "a'' in the formula) on debt obligations
that were purchased by the fund at a discount or
premium, the formula generally calls for amortization
of the discount or premium. The amortization schedule
will be adjusted monthly to reflect changes in the
market values of the debt obligations.

The fund's equivalent taxable 30-day yield for a Class
of shares is computed by dividing that portion of the
Class' 30-day yield which is tax-exempt by one minus a
stated income tax rate and adding the product to that
portion, if any, of the Class' yield that is not tax-
exempt.

The yields on municipal securities are dependent upon
a variety of factors, including general economic and
monetary conditions, conditions of the municipal
securities market, size of a particular offering,
maturity of the obligation offered and rating of the
issue. Investors should recognize that in periods of
declining interest rates the fund's yield for each
Class of shares will tend to be somewhat higher than
prevailing market rates, and in periods of rising
interest rates the fund's yield for each Class of
shares will tend to be somewhat lower. Also, when
interest rates are falling, the inflow of net new
money to the fund from the continuous sale of its
shares will likely be invested in portfolio
instruments producing lower yields than the balance of
the fund's portfolio, thereby reducing the current
yield of the fund. In periods of rising interest
rates, the opposite can be expected to occur.


The fund's yield for Class A, Class B and Class L
shares for the 30-day period ended March 31, 2001 was
4.58%, 4.18% and 4.08%, respectively.  The equivalent
taxable yield for Class A, Class B and Class L shares
for that same period was 9.32%, 8.51% and 8.31%,
respectively, assuming the payment of federal income
taxes and New Jersey taxes at a rate of 39.6% and
6.37%, respectively.  No yield information is present
for Class Y shares because no Class Y shares were
outstanding for the 30-day period ended March 31,
2001.


THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.

Average Annual Total Return

"Average annual total return," as described below, is
computed according to a formula prescribed by the SEC.
 The formula can be expressed as follows:

	P (1+T)n = ERV

Where:		 	P = 	a hypothetical initial
payment of $1,000.
T = 	average annual total return.
N =	number of years.
ERV =	Ending Redeemable Value of a
hypothetical $1,000 investment
made at the beginning of a 1-,
5-, or 10-year period at the
end of a 1-, 5-, or 10-year
period (or fractional portion
thereof), assuming
reinvestment of all dividends
and distributions.

The ERV assumes complete redemption of the
hypothetical investment at the end of the measuring
period.  A fund's net investment income changes in
response to fluctuations in interest rates and the
expenses of the fund.


Average Annual Total Return for the
fiscal year ended March 31, 2001



Class of Shares
1-Year
5-Year
10-
Year
Since
Inceptio
n1
Class A2
5.51%
4.40%
6.10%
6.97%
Class B3
4.88%
4.55%
N/A
5.27%
Class L4
7.17%
4.42%
N/A
5.93%
_______________________
	1	Class A, B,  L, and Y commenced operations on
April 22, 1988, November 6, 1992, December 13,
1994 and November 7, 1994, respectively.
	2      The average annual total return figure
assumes that the maximum 4.00% sales charge has
been deducted from the investment at the time of
purchase.  If the maximum sales charge or
deferred sales charge had not been deducted, the
average annual total return for Class A shares
for the same periods would have been 9.92%,
5.26%, 6.54% and 7.31% for one year, five year
and ten year and since inception of the fund,
respectively.
	3	The average annual total return figure assumes
that the maximum applicable deferred sales
charge has been deducted from the investment at
the time of redemption.  If the maximum deferred
sales charge or deferred sales charge had not
been deducted, the average annual total return
for Class B shares for the same periods would
have been 9.38%, 4.72% and 5.27%, for the one
year, five year and since inception of the fund,
respectively.
	4	The average annual total return figure assumes
that the maximum applicable initial and deferred
sales charges have been deducted from the
investment at the time of redemption.  If the
maximum initial and deferred sales charges had
not been deducted, the average annual total
return for Class L shares for the same periods
would have been 9.24%, 4.63% and 6.10% for one
year, five year and since inception of the fund,
respectively.

No average annual total return information is present
for Class Y shares because no Class Y shares were
outstanding for the periods presented for Class A, B
and L shares.

Aggregate Total Return

"Aggregate total return" represents the cumulative
change in the value of an investment in the Class for
the specified period and is computed by the following
formula:

	ERV-P
	P

Where: 	P =	a hypothetical initial payment of
$10,000.
ERV=	Ending Redeemable Value of a
hypothetical $10,000 investment made
at the beginning of a 1-, 5-, or 10-
year period at the end of a 1-, 5-,
or 10-year period (or fractional
portion thereof), assuming
reinvestment of all dividends and
distributions.

The ERV assumes complete redemption of the
hypothetical investment at the end of the measuring
period.



Aggregate Annual Total Return for
the fiscal year ended March 31,
2001



Class of Shares
1-Year
5-Year
10-
Year
Since
Inceptio
n1
Class A2
5.51%
24.04%
80.80%
139.16%
Class B3
4.88%
24.95%
N/A%
  53.92%
Class L4
7.17%
24.16%
N/A
  43.72%
_______________________
	1	Class A, B,  L, and Y commenced operations on
April 22, 1988, November 6, 1992, December 13,
1994 and November 7, 1994, respectively.
        2         The average annual total return figure
assumes that the maximum 4.00% sales charge has
been deducted from the investment at the time of
purchase.  If the maximum sales charge or
deferred sales charge had not been deducted, the
average annual total return for Class A shares
for the same periods would have been 9.92%,
29.24%, 88.38% and 149.23% for one year, five
year and ten year and since inception of the
fund, respectively.
	3	The average annual total return figure assumes
that the maximum applicable deferred sales
charge has been deducted from the investment at
the time of redemption.  If the maximum deferred
sales charge or deferred sales charge had not
been deducted, the average annual total return
for Class B shares for the same periods would
have been 9.32%, 25.91% and 53.92%, for the one
year, five year and since inception of the fund,
respectively.
	4	The average annual total return figure assumes
that the maximum applicable initial and deferred
sales charges have been deducted from the
investment at the time of redemption.  If the
maximum initial and deferred sales charges had
not been deducted, the average annual total
return for Class L shares for the same periods
would have been 9.24%, 25.41% and 45.17% for one
year, five year and since inception of the fund,
respectively.

No aggregate total return information is presented for
Class Y shares because no Class Y shares were
outstanding for the periods presented for Class A, B
and L shares.

Performance will vary from time to time depending on
market conditions, the composition of the fund's
portfolio and operating expenses and the expenses
exclusively attributable to the Class.  Consequently,
any given performance quotation should not be
considered as representative of the Class' performance
for any specified period in the future.  Because
performance will vary, it may not provide a basis for
comparing an investment in the Class with certain bank
deposits or other investments that pay a fixed yield
for a stated period of time.  Investors comparing a
Class' performance with that of other mutual funds
should give consideration to the quality and maturity
of the respective investment companies' portfolio
securities.

It is important to note that the total return figures
set forth above are based on historical earnings and
are not intended to indicate future performance.  Each
Class' net investment income changes in response to
fluctuations in interest rates and the expenses of the
fund.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Dividends and Distributions.  The fund's policy is to
declare and pay exempt-interest dividends monthly.
Dividends from net realized capital gains, if any,
will be distributed annually.  The fund may also pay
additional dividends shortly before December 31 from
certain amounts of undistributed ordinary income and
capital gains in order to avoid a federal excise tax
liability.  If a shareholder does not otherwise
instruct, exempt-interest dividends and capital gain
distributions will be reinvested automatically in
additional shares of the same Class at net asset
value, with no additional sales charge or deferred
sales charge.

The per share amounts of the exempt-interest dividends
on Class B and Class L shares will be lower than on
Class A and Class Y shares, mainly as a result of the
distribution fees applicable to Class B and Class L
shares.  Similarly, the per share amounts of exempt-
interest dividends on Class A shares will be lower
than on Class Y shares, as a result of the service fee
attributable to Class A shares.  Capital gain
distributions, if any, will be the same across all
Classes of fund shares (A, B, L and Y).

Taxes. The following is a summary of the material
federal income tax considerations regarding the
purchase, ownership and disposition of shares of the
fund.  Each prospective shareholder is urged to
consult his own tax adviser with respect to the
specific federal, state and local consequences of
investing in the fund.  The summary is based on the
laws in effect on the date of this SAI, which are
subject to change.

The Fund and Its Investments

As described in the fund's prospectus, the fund is
designed to provide shareholders with current income
which is excluded from gross income for federal income
tax purposes and which is exempt from New Jersey
personal income taxes. The fund is not intended to
constitute a balanced investment program and is not
designed for investors seeking capital gains or
maximum tax-exempt income irrespective of fluctuations
in principal.  Investment in the fund would not be
suitable for tax-exempt institutions, qualified
retirement plans, H.R. 10 plans and individual
retirement accounts because such investors would not
gain any additional tax benefit from the receipt of
tax-exempt income.

The fund intends to continue to qualify to be treated
as a regulated investment company each taxable year
under the Code.  To so qualify, the fund must, among
other things: (a) derive at least 90% of its gross
income in each taxable year from dividends, interest,
payments with respect to securities loans, and gains
from the sale or other disposition of stock or
securities or foreign currencies, or other income
(including, but not limited to, gains from options,
futures or forward contracts) derived with respect to
its business of investing in such stock, securities or
currencies; and (b) diversify its holdings so that, at
the end of each quarter of the fund's taxable year,
(i) at least 50% of the market value of the fund's
assets is represented by cash, securities of other
regulated investment companies, United States
government securities and other securities, with such
other securities limited, in respect of any one
issuer, to an amount not greater than 5% of the fund's
assets and not greater than 10% of the outstanding
voting securities of such issuer and (ii) not more
than 25% of the value of its assets is invested in the
securities (other than United States government
securities or securities of other regulated investment
companies) of any one issuer or any two or more
issuers that the fund controls and which are
determined to be engaged in the same or similar trades
or businesses or related trades or businesses.

As a regulated investment company, the fund will not
be subject to federal income tax on its net investment
company income (i.e., taxable income other than any
excess of its net realized long-term capital gains
over its net realized short-term capital losses ("net
realized capital gains")) and its net realized capital
gains, if any, that it distributes to its
shareholders, provided that an amount equal to at
least 90% of its investment company taxable income,
plus or minus certain other adjustments as specified
in the Code, and 90% of its net tax-exempt income for
the taxable year is distributed in compliance with the
Code's timing and other requirements but will be
subject to tax at regular corporate rates on any
taxable income or gains that it does not distribute.

At March 31, 2001, the unused capital loss carryovers
of the fund were approximately $4,497,000. For federal
income tax purposes, these amounts are available to be
applied against future realized capital gains, if any.
 The carryovers expire as follows:


March 31,
2008
March 31,
2009
Carryforward Amount
$1,315,000
$3,182,000

The Code imposes a 4% nondeductible excise tax on the
fund to the extent it does not distribute by the end
of any calendar year at least 98% of its net
investment income for that year and 98% of the net
amount of its capital gains (both long-term and short-
term) for the one-year period ending, as a general
rule, on October 31 of that year.  For this purpose,
however, any income or gain retained by the fund that
is subject to corporate income tax will be considered
to have been distributed by year-end.  In addition,
the minimum amounts that must be distributed in any
year to avoid the excise tax will be increased or
decreased to reflect any underdistribution or
overdistribution, as the case may be, from the
previous year.  The fund anticipates that it will pay
such dividends and will make such distributions as are
necessary in order to avoid the application of this
tax.

If, in any taxable year, the fund fails to qualify as
a regulated investment company under the Code or fails
to meet the distribution requirement, it would be
taxed in the same manner as an ordinary corporation
and distributions to its shareholders would not be
deductible by the fund in computing its taxable
income.  In addition, in the event of a failure to
qualify, the fund's distributions, to the extent
derived from the fund's current or accumulated
earnings and profits, would constitute dividends
(eligible for the corporate dividends-received
deduction) which are taxable to shareholders as
ordinary income, even though those distributions might
otherwise (at least in part) have been treated in the
shareholders' hands as tax-exempt interest.  If the
fund fails to qualify as a regulated investment
company in any year, it must pay out its earnings and
profits accumulated in that year in order to qualify
again as a regulated investment company.  In addition,
if the fund failed to qualify as a regulated
investment company for a period greater than one
taxable year, the fund may be required to recognize
any net built-in gains with respect to certain of its
assets (the excess of the aggregate gains, including
items of income, over aggregate losses that would have
been realized if it had been liquidated) in order to
qualify as a regulated investment company in a
subsequent year.

The fund's transactions in municipal bond index and
interest rate futures contracts and options on these
futures contracts (collectively, "section 1256
contracts") will be subject to special provisions of
the Code (including provisions relating to "hedging
transactions" and "straddles") that, among other
things, may affect the character of gains and losses
realized by the fund (i.e., may affect whether gains
or losses are ordinary or capital), accelerate
recognition of income to the fund and defer fund
losses. These rules could therefore affect the
character, amount and timing of distributions to
shareholders. These provisions also (a) will require
the fund to mark-to-market certain types of the
positions in its portfolio (i.e., treat them as if
they were closed out) and (b) may cause the fund to
recognize income without receiving cash with which to
pay dividends or make distributions in amounts
necessary to satisfy the distribution requirements for
avoiding income and excise taxes.  The fund will
monitor its transactions, will make the appropriate
tax elections and will make the appropriate entries in
its books and records when it engages in these
transactions in order to mitigate the effect of these
rules and prevent disqualification of the fund as a
regulated investment company.

All section 1256 contracts held by the fund at the end
of its taxable year are required to be marked to their
market value, and any unrealized gain or loss on those
positions will be included in the fund's income as if
each position had been sold for its fair market value
at the end of the taxable year.  The resulting gain or
loss will be combined with any gain or loss realized
by the fund from positions in section 1256 contracts
closed during the taxable year.  Provided such
positions were held as capital assets and were not
part of a "hedging transaction" nor part of a
"straddle," 60% of the resulting net gain or loss will
be treated as long-term capital gain or loss, and 40%
of such net gain or loss will be treated as short-term
capital gain or loss, regardless of the period of time
the positions were actually held by the fund.

Taxation of Shareholders

Because the fund will distribute exempt-interest
dividends, interest on indebtedness incurred by a
shareholder to purchase or carry fund shares is not
deductible for federal income tax purposes and New
Jersey personal income tax purposes.  If a shareholder
receives exempt-interest dividends with respect to any
share and if such share is held by the shareholder for
six months or less, then, for federal income tax
purposes, any loss on the sale or exchange of such
share may, to the extent of exempt-interest dividends,
be disallowed.  In addition, the Code may require a
shareholder, if he or she receives exempt-interest
dividends, to treat as federal taxable income a
portion of certain otherwise non-taxable social
security and railroad retirement benefit payments.
Furthermore, that portion of any exempt-interest
dividend paid by the fund which represents income
derived from private activity bonds held by the fund
may not retain its federal tax-exempt status in the
hands of a shareholder who is a "substantial user" of
a facility financed by such bonds or a "related
person" thereof.  Moreover, some or all of the fund's
dividends may be a specific preference item, or a
component of an adjustment item, for purposes of the
federal individual and corporate alternative minimum
taxes.  In addition, the receipt of the fund's
dividends and distributions may affect a foreign
corporate shareholder's federal "branch profits" tax
liability and federal "excess net passive income" tax
liability of a shareholder of a Subchapter S
corporation. Shareholders should consult their own tax
advisors to determine whether they are (a) substantial
users with respect to a facility or related to such
users within the meaning of the Code or (b) subject to
a federal alternative minimum tax, the federal branch
profits tax or the federal "excess net passive income"
tax.

The fund does not expect to realize a significant
amount of capital gains.  Net realized short-term
capital gains are taxable to a United States
shareholder as ordinary income, whether paid in cash
or in shares.  Distributions of net-long-term capital
gains, if any, that the fund designates as capital
gains dividends are taxable as long-term capital
gains, whether paid in cash or in shares and
regardless of how long a shareholder has held shares
of the fund.

Upon the sale or exchange of his shares, a shareholder
will realize a taxable gain or loss equal to the
difference between the amount realized and his basis
in his shares.  Such gain or loss will be treated as
capital gain or loss, if the shares are capital assets
in the shareholder's hands, and will be long-term
capital gain or loss if the shares are held for more
than one year and short-term capital gain or loss if
the shares are held for one year or less.  Any loss
realized on a sale or exchange will be disallowed to
the extent the shares disposed of are replaced,
including replacement through the reinvesting of
dividends and capital gains distributions in the fund,
within a 61-day period beginning 30 days before and
ending 30 days after the disposition of the shares. In
such a case, the basis of the shares acquired will be
increased to reflect the disallowed loss. Any loss
realized by a shareholder on the sale of a fund share
held by the shareholder for six months or less (to the
extent not disallowed pursuant to the six-month rule
described above relating to exempt-interest dividends)
will be treated for federal income tax purposes as a
long-term capital loss to the extent of any
distributions or deemed distributions of long-term
capital gains received by the shareholder with respect
to such share.

If a shareholder incurs a sales charge in acquiring
shares of the fund, disposes of those shares within 90
days and then acquires shares in a mutual fund for
which the otherwise applicable sales charge is reduced
by reason of a reinvestment right (e.g.,an exchange
privilege), the original sales charge will not be
taken into account in computing gain or loss on the
original shares to the extent the subsequent sales
charge is reduced.  Instead, the disregarded portion
of the original sales charge will be added to the tax
basis in the newly acquired shares.  Furthermore, the
same rule also applies to a disposition of the newly
acquired shares made within 90 days of the second
acquisition.  This provision prevents a shareholder
from immediately deducting the sales charge by
shifting his or her investment in a family of mutual
funds.

Backup Withholding.  The fund may be required to
withhold, for federal income tax purposes dividends,
distributions and redemption proceeds payable to
shareholders who fail to provide the fund with their
correct taxpayer identification number or to make
required certifications, or who have been notified by
the Internal Revenue Service ("IRS") that they are
subject to backup withholding. Certain shareholders
are exempt from backup withholding.  Backup
withholding is not an additional tax and any amount
withheld may be credited against a shareholder's
federal income tax liabilities.

Notices.  Shareholders will be notified annually by
the fund as to the federal income tax and New Jersey
personal income tax status of the dividends and
distributions made by the fund to its shareholders.
These statements also will designate the amount of
exempt-interest dividends that is a preference item
for purposes of the federal individual and corporate
alternative minimum taxes.  The dollar amount of
dividends excluded or exempt from federal income
taxation and New Jersey personal income taxation and
the dollar amount of dividends subject to federal
income taxation and New Jersey personal income
taxation, if any, will vary for each shareholder
depending upon the size and duration of such
shareholder's investment in the fund.  To the extent
the fund earns taxable net investment income, it
intends to designate as taxable dividends the same
percentage of each day's dividend as its taxable net
investment income bears to its total net investment
income earned on that day.

The foregoing is only a summary of certain material
tax consequences affecting the fund and its
shareholders.  Shareholders are advised to consult
their own tax advisers with respect to the particular
tax consequences to them of an investment in the fund.

ADDITIONAL INFORMATION

The fund was incorporated under the laws of the State
of Maryland on November 12, 1987 and is registered
with the SEC as a non-diversified, open-end management
investment company.  The fund commenced operations on
April 22, 1988 under the name Shearson Lehman New
Jersey Municipals Inc.  On October 14, 1994, the fund
changed its name to Smith Barney New Jersey Municipals
Fund Inc.

Each Class of the fund represents an identical
interest in the fund's investment portfolio.  As a
result, the Classes have the same rights, privileges
and preferences, except with respect to: (a) the
designation of each Class; (b) the effect of the
respective sales charges for each Class; (c) the
distribution and/or service fees borne by each Class;
(d) the expenses allocable exclusively to each Class;
(e) voting rights on matters exclusively affecting a
single Class; (f) the exchange privilege of each
Class; and (g) the conversion feature of the Class B
shares.  The board of directors does not anticipate
that there will be any conflicts among the interests
of the holders of the different Classes. The
directors, on an ongoing basis, will consider whether
any such conflict exists and, if so, take appropriate
action.

The fund does not hold annual shareholder meetings.
There normally will be no meetings of shareholders for
the purpose of electing directors unless and until
such time as less than a majority of the directors
holding office have been elected by shareholders.  The
directors will call a meeting for any purpose upon
written request of shareholders holding at least 10%
of the fund's outstanding shares, and the fund will
assist shareholders in calling such a meeting as
required by the 1940 Act. When matters are submitted
for shareholder vote, shareholders of each Class will
have on vote for each full share owned and
proportionate, fractional vote for any fractional
share held of that Class. Generally, shares of the
fund will be voted on a fund-wide basis on all matters
except matters affecting only the interests of one
Class.

The fund sends to each of its shareholders a semi-
annual report and an audited annual report, which
include listings of the investment securities held by
the fund at the end of the reporting period.  In an
effort to reduce the fund's printing and mailing
costs, the fund plans to consolidate the mailing of
its semi-annual and annual reports by household.  This
consolidation means that a household having multiple
accounts with the identical address of record will
receive a single copy of each report.  Shareholders
who do not want this consolidation to apply to their
account should contact their Service Agent or the
transfer agent.

FINANCIAL STATEMENTS

The fund's annual report for the fiscal year ended
March 31, 2001 was filed on June 8, 2001 and is
incorporated by reference in its entirety, Accession
Number 00000950130-01-502252.

OTHER INFORMATION

In an industry where the average portfolio manager has
seven years of experience (source: ICI, 1998), the
portfolio managers of Smith Barney mutual funds
average 21 years in the industry and 15 years with the
firm.

Smith Barney mutual funds offers more than 60 mutual
funds.  We understand that many investors prefer an
active role in allocating the mix of funds in their
portfolio, while others want the asset allocation
decisions to be made by experienced managers.

That's why we offer five "styles" of fund management
that can be tailored to suit each investor's unique
financial goals.

Classic Investor Series - our portfolio manager driven
funds
The Classic Series lets investors participate in
mutual funds whose investment decisions are determined
by experienced portfolio managers, based on each
fund's investment objectives and guidelines.  Classic
Series funds invest across asset classes and sectors,
utilizing a range of strategies in order to achieve
their objectives.

Index Series - funds that track the market
Our Index funds are designed to provide investment
results that track, as closely as possible, the
performance of a stock or bond market index.  This
strategy distinguishes an index fund from an "actively
managed" mutual fund.  Instead of trying to outperform
a market or segment, a portfolio manager looks to an
index to determine which securities the fund should
own.


Premier Selections Series - our best ideas,
concentrated funds
We offer a series of Premier Selections funds managed
by several of our most experienced and proven
managers.  This series of funds is built on a unique
strategy of combining complementary investment
management styles to create broader, multiclass and
multicap products that are distinguished by a highly
concentrated focus.

Research Series - driven by exhaustive fundamental
securities analysis
Built on a foundation of substantial buy-side research
under the direction of our Citibank Global Asset
Management (CGAM) colleagues, our Research funds focus
on well-defined industries, sectors and trends.

Style Pure Series - our solution to funds that stray
Our Style Pure Series funds are the building blocks of
asset allocation.  The funds stay fully invested
within their asset class and investment style,
enabling you to make asset allocation decisions in
conjuction with your financial professional.



APPENDIX A

Description of S&P and Moody's ratings:

S&P Ratings for Municipal Bonds

S&P's Municipal Bond ratings cover obligations of
states and political subdivisions.  Ratings are
assigned to general obligation and revenue bonds.
General obligation bonds are usually secured by all
resources available to the municipality and the
factors outlined in the rating definitions below are
weighed in determining the rating.  Because revenue
bonds in general are payable from specifically pledged
revenues, the essential element in the security for a
revenue bond is the quantity and quality of the
pledged revenues available to pay debt service.

Although an appraisal of most of the same factors that
bear on the quality of general obligation bond credit
is usually appropriate in the rating analysis of a
revenue bond, other factors are important, including
particularly the competitive position of the municipal
enterprise under review and the basic security
covenants.  Although a rating reflects S&P's judgment
as to the issuer's capacity for the timely payment of
debt service, in certain instances it may also reflect
a mechanism or procedure for an assured and prompt
cure of a default, should one occur, i.e., an
insurance program, federal or state guarantee or the
automatic withholding and use of state aid to pay the
defaulted debt service.

	AAA

Prime - These are obligations of the highest quality.
 They have the strongest capacity for timely payment
of debt service.

General Obligation Bonds - In a period of economic
stress, the issuers will suffer the smallest declines
in income and will be least susceptible to autonomous
decline.  Debt burden is moderate. A strong revenue
structure appears more than adequate to meet future
expenditure requirements.  Quality of management
appears superior.

Revenue Bonds - Debt service coverage has been, and is
expected to remain, substantial.  Stability of the
pledged revenues is also exceptionally strong, due to
the competitive position of the municipal enterprise
or to the nature of the revenues.  Basic security
provisions (including rate covenant, earnings test for
issuance of additional bonds, and debt service reserve
requirements) are rigorous. There is evidence of
superior management.

	AA

High Grade - The investment characteristics of general
obligation and revenue bonds in this group are only
slightly less marked than those of the prime quality
issues.  Bonds rated "AA'' have the second strongest
capacity for payment of debt service.



A

Good Grade - Principal and interest payments on bonds
in this category are regarded as safe.  This rating
describes the third strongest capacity for payment of
debt service.  It differs from the two higher ratings
because:

General Obligation Bonds - There is some weakness,
either in the local economic base, in debt burden, in
the balance between revenues and expenditures, or in
quality of management.  Under certain adverse
circumstances, any one such weakness might impair the
ability of the issuer to meet debt obligations at some
future date.

Revenue Bonds - Debt service coverage is good, but not
exceptional.  Stability of the pledged revenues could
show some variations because of increased competition
or economic influences on revenues.  Basic security
provisions, while satisfactory, are less stringent.
Management performance appears adequate.

	BBB

Medium Grade - Of the investment grade ratings, this
is the lowest.

General Obligation Bonds - Under certain adverse
conditions, several of the above factors could
contribute to a lesser capacity for payment of debt
service.  The difference between "A'' and "BBB"
ratings is that the latter shows more than one
fundamental weakness, or one very substantial
fundamental weakness, whereas the former shows only
one deficiency among the factors considered.

Revenue Bonds - Debt coverage is only fair.  Stability
of the pledged revenues could show substantial
variations, with the revenue flow possibly being
subject to erosion over time.  Basic security
provisions are no more than adequate.  Management
performance could be stronger.

	BB, B, CCC and CC

Bonds rated BB, B, CCC and CC are regarded, on
balance, as predominately speculative with respect to
capacity to pay interest and repay principal in
accordance with the terms of the obligation.  BB
indicates the lowest degree of speculation and CC the
highest degree of speculation.  While such bonds will
likely have some quality and protective
characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse
conditions.

	C

The rating C is reserved for income bonds on which no
interest is being paid.





	D

Bonds rated D are in default, and payment of interest
and/or repayment of principal is in arrears.

S&P's letter ratings may be modified by the addition
of a plus or a minus sign, which is used to show
relative standing within the major rating categories,
except in the AAA-Prime Grade category.

S&P Ratings for Municipal Notes

Municipal notes with maturities of three years or less
are usually given note ratings (designated SP-1, -2 or
-3) by S&P to distinguish more clearly the credit
quality of notes as compared to bonds.  Notes rated
SP-1 have a very strong or strong capacity to pay
principal and interest.  Those issues determined to
possess overwhelming safety characteristics are given
the designation of SP-1+.  Notes rated SP-2 have a
satisfactory capacity to pay principal and interest.

Moody's Ratings for Municipal Bonds

	Aaa

Bonds that are Aaa are judged to be of the best
quality.  They carry the smallest degree of investment
risk and are generally referred to as "gilt edge.''
Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure.
While the various protective elements are likely to
change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position
of such issues.

	Aa

Bonds that are rated Aa are judged to be of high
quality by all standards.  Together with the Aaa group
they comprise what are generally known as high grade
bonds.  They are rated lower than the best bonds
because margins of protection may not be as large as
in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be
other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.

	A

Bonds that are rated A possess many favorable
investment attributes and are to be considered as
upper medium-grade obligations.  Factors giving
security to principal and interest are considered
adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.

	Baa

Bonds that are rated Baa are considered as medium-
grade obligations, i.e., they are neither highly
protected nor poorly secured; interest payments and
principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of
time.  Such bonds lack outstanding investment
characteristics and in fact have speculative
characteristics as well.

	Ba

Bonds that are rated Ba are judged to have speculative
elements; their future cannot be considered as well
assured.  Often the protection of interest and
principal payments may be very moderate and thereby
not well safeguarded during both good and bad times
over the future.  Uncertainty of position
characterizes bonds in this class.

	B

Bonds that are rated B generally lack characteristics
of the desirable investment.  Assurance of interest
and principal payments or of maintenance of other
terms of the contract over any long period of time may
be small.

	Caa

Bonds that are rated Caa are of poor standing.  These
issues may be in default or present elements of danger
may exist with respect to principal or interest.

	Ca

Bonds that are rated Ca represent obligations that are
speculative in a high degree.  These issues are often
in default or have other marked short-comings.

	C

Bonds that are rated C are the lowest rated class of
bonds, and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real
investment standing.

Moody's Ratings for Municipal Notes

Moody's ratings for state and municipal notes and
other short-term loans are designated Moody's
Investment Grade (MIG) and for variable rate demand
obligations are designated Variable Moody's Investment
Grade (VMIG).  This distinction is in recognition of
the differences between short- and long-term credit
risk.  Loans bearing the designation MIG 1 or VMIG 1
are of the best quality, enjoying strong protection by
established cash flows of funds for their servicing,
from established and broad-based access to the market
for refinancing, or both.  Loans bearing the
designation MIG 2 or VMIG 2 are of high quality, with
margins of protection ample although not as large as
the preceding group.  Loans bearing the designation
MIG 3 or VMIG 3 are of favorable quality, with all
security elements accounted for but lacking the
undeniable strength of the preceding grades.
Liquidity and cash flow may be narrow and market
access for refinancing is likely to be less well
established.



SMITH BARNEY NEW JERSEY MUNICIPALS FUND INC.



Statement of


Additional
Information























July 30, 2001




Smith Barney New Jersey Municipals Fund Inc.
7 World Trade Center
New York, NY  10048
									SALOMON
SMITH BARNEY
									A
Member of Citigroup [Symbol]
 Language taken from CAMU SAI


33
FUNDACCOUNTING\LEGAL\FUNDS\NJMU\NJMU SAI 2001


2:12 PM