Registration No. 811-3097
2-69308
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 28
X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 X
Amendment No. 28
X
SMITH BARNEY MANAGED MUNICIPALS FUND INC.
(Exact name of Registrant as Specified in Charter)
388 Greenwich Street, New York, New York 10013
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code:
(212) 723-9218
Christina T. Sydor
Secretary
Smith Barney Managed Municipals Fund Inc.
388 Greenwich Street
New York, New York 10113
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as possible after this Post-Effective
Amendment Becomes effective
It is proposed that this filing will become effective:
immediately upon filing pursuant to
Rule 485(b)
X on April 28, 1995 pursuant to
Rule
485(b)
60 days after filing pursuant to Rule
485(a) on __________________ pursuant to Rule
485(a)
The Registrant has previously filed a declaration
of indefinite
registration of its shares pursuant to Rule 24f-2 under
the Investment
Company Act of 1940, as amended. Registrant's Rule 24f-
2 Notice for the
fiscal year ended February 28, 1995 was filed on April
26, 1995.
SMITH BARNEY MANAGED MUNICIPALS FUND
INC. FORM N-1A
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
Part A
Item No.
Prospectus Caption
1. Cover Page
Cover Page
2. Synopsis
Prospectus Summary
3. Financial Information
Financial Highlights
4. General Description of
Registrant
Cover Page; Prospectus
Summary; Investment
Objective and Management Policies;
Additional Information
5. Management of the Fund
Management of the Fund; Annual
Report; Distributor; Additional
Information
6. Capital Stock and Other
Securities
Investment Objective and
Management Policies;
Dividends, Distributions and
Taxes; Additional Information
7. Purchase of Securities Being
Offered
Purchase of Shares;
Redemption of Shares; Valuation of
Shares; Shareholder
Services;
Distributor; Minimum Account
Size and Additional Information
8. Redemption of Repurchase
Purchase of Shares;
Redemption of Shares;
9. Legal Proceedings
Not Applicable
Part B
Item No.
Statement of Additional
Information Caption
10. Cover Page
Cover page
11. Table of Contents
Table of Contents
12. General Information and
History
Distributor; Additional
Information
13. Investment Objectives and
Policies
Investment Objective and
Management Policies
14. Management of the Fund
Management of the Fund;
Distributor
15. Control Persons and Principal
Holders of
Securities
Management of the Fund
16. Investment Advisory and Other
Services
Management of the Fund;
Distributor
17. Brokerage Allocation
Investment Objective and
Management Policies;
Distributor
18. Capital Stock and Other
Securities
Purchase of Shares; Redemption
of Shares; Taxes
19. Purchase, Redemption and
Pricing of
Securities Being Offered
Purchase of Shares; Redemption of
Shares; Distributor; Valuation of
Shares; Shareholder Services
20. Tax Status
Taxes
21. Underwriters
Distributor
22. Calculation of Performance
Data
Performance Data
23. Financial Statements
Financial Statements
PROSPECTUS
SMITH BARNEY
MANAGED
MUNICIPALS
FUND INC.
APRIL 29,1995
Prospectus begins on page one
[LOGO OF SMITH BARNEY MUTUAL FUNDS APPEARS HERE]
SMITH BARNEY
Managed Municipals Fund Inc.
PROSPECTUS
APRIL
29, 1995
388 Greenwich Street
New York, New York 10013
(212) 723-9218
Smith Barney Managed Municipals Fund Inc. (the "Fund") is
a diversified
municipal bond fund that seeks to maximize current
interest income exempt from
Federal income taxes to the extent consistent with
prudent investment manage-
ment and preservation of capital.
This Prospectus sets forth concisely certain information
about the Fund,
including sales charges, distribution and service fees
and expenses, that pro-
spective investors will find helpful in making an
investment decision. Invest-
ors are encouraged to read this Prospectus carefully
and retain it for future
reference.
Additional information about the Fund is contained in a
Statement of Addi-
tional Information dated April 29, 1995, as amended
or supplemented from time
to time, that is available upon request and without
charge by calling or writ-
ing the Fund at the telephone number or address set
forth above or by contact-
ing a Smith Barney Financial Consultant. The Statement
of Additional Informa-
tion has been filed with the Securities and
Exchange Commission (the "SEC") and
is incorporated by reference into this Prospectus in
its entirety.
SMITH BARNEY INC.
Distributor
SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Investment Adviser and Administrator
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
1
SMITH BARNEY
Managed Municipals Fund Inc.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY 3
-------------------------------------------------
FINANCIAL HIGHLIGHTS 10
-------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES 14
-------------------------------------------------
MUNICIPAL BONDS 20
-------------------------------------------------
VALUATION OF SHARES 21
-------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES 22
-------------------------------------------------PURCHASE
OF SHARES 24
-------------------------------------------------EXCHANGE
PRIVILEGE 32
-------------------------------------------------
REDEMPTION OF SHARES 36
-------------------------------------------------MINIMUM
ACCOUNT SIZE 37
-------------------------------------------------
PERFORMANCE 38
-------------------------------------------------
MANAGEMENT OF THE FUND 39
-------------------------------------------------
DISTRIBUTOR 41
-------------------------------------------------
ADDITIONAL INFORMATION 42
-------------------------------------------------
</TABLE>
No person has been authorized to give any information
or to
make any representations in connection with this offering
other
than those contained in this Prospectus and, if given or
made,
such other information or representations must not be
relied
upon as having been authorized by the Fund or the
distributor.
This Prospectus does not constitute an offer by the Fund
or
the
distributor to sell or a solicitation of an offer to buy
any of
the securities offered hereby in any jurisdiction to any
person
to whom it is unlawful to make such an offer or
solicitation in
any such jurisdiction.
2
SMITH BARNEY
Managed Municipals Fund Inc.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety
by detailed information
appearing elsewhere in this Prospectus and in the
Statement of Additional
Information. Cross references in this summary are
to headings in the
Prospectus. See "Table of Contents."
INVESTMENT OBJECTIVE The Fund is an open-end,
diversified, management invest-
ment company whose investment objective is to
maximize current interest income
which is excluded from gross income for Federal income
tax purposes to the
extent consistent with prudent investment management
and preservation of capi-
tal. The Fund seeks to achieve its objective by investing
in a
professionally
managed portfolio consisting principally of
intermediateand long-term munici-
pal securities issued by state or municipal governments
and by public authori-
ties ("Municipal Bonds"). Intermediate- and long-
term municipal securities have
remaining maturities at the time of purchase of
between three and twenty years.
Under normal market conditions, the Fund will invest
at least 80% of its total
assets in such obligations. See "Investment Objective
and Management Policies."
ALTERNATIVE PURCHASE ARRANGEMENTSThe Fund offers
several classes of shares
("Classes") to investors designed to provide them with
the flexibility of
selecting an investment best suited to their needs.
The general public is
offered three Classes of shares: Class A shares, Class
B shares and Class C
shares, which differ principally in terms of sales
charges and rates of
expenses to which they are subject. A fourth Class
of shares, Class Y shares,
is offered only to investors meeting an initial
investment minimum of
$5,000,000. See "Purchase of Shares" and "Redemption
of Shares."
Class A Shares. Class A shares are sold at net asset value
plus an initial
sales charge of up to 4.00% and are subject to an
annual service fee of 0.15%
of the average daily net assets of the Class. The
initial sales charge may be
reduced or waived for certain purchases. Purchases of
Class A shares,
which
when combined with current holdings of Class A
shares offered with a sales
charge equal or exceed $500,000 in the aggregate, will
be made at net asset
value with no initial sales charge, but will be subject to
a contingent
deferred sales charge ("CDSC") of 1.00% on redemptions
made within 12 months of
purchase. See "Prospectus Summary--Reduced or No
Initial Sales Charge."
Class B Shares. Class B shares are offered at net asset
value subject to a
maximum CDSC of 4.50% of redemption proceeds, declining
by 0.50% the first year
after purchase and by 1.00% each year thereafter to
zero. This CDSC may be
waived for certain redemptions. Class B shares are
subject to an
3
SMITH BARNEY
Managed Municipals Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
annual service fee of 0.15% and an annual distribution
fee of 0.50% of the
average daily net assets of the Class. The Class B
shares' distribution fee may
cause that Class to have higher expenses and pay
lower dividends than Class A
shares.
Class B Shares Conversion Feature. Class B shares will
convert automatically
to Class A shares, based on relative net asset value,
eight years after the
date of the original purchase. Upon conversion, these
shares will no longer be
subject to an annual distribution fee. In addition,
a certain portion of Class
B shares that have been acquired through the reinvestment
of
dividends and dis-
tributions ("Class B Dividend Shares") will be converted
at that time. See
"Purchase of Shares--Deferred Sales Charge Alternatives."
Class C Shares. Class C shares are sold at net asset value
with no initial
sales charge. They are subject to an annual service fee
of 0.15% and an annual
distribution fee of 0.55% of the average daily net assets
of the Class, and
investors pay a CDSC of 1.00% if they redeem Class C
shares within 12 months of
purchase. The CDSC may be waived for certain
redemptions. The Class C shares'
distribution fee may cause that Class to have
higher expenses and pay lower
dividends than Class A shares. Purchases of Class C
shares, which when combined
with current holdings of Class C shares of the Fund equal
or exceed $500,000 in
the aggregate, should be made in Class A shares at net
asset
value with no
sales charge, and will be subject to a CDSC of 1.00%
on redemptions made within
12 months of purchase.
Class Y Shares. Class Y shares are available only to
investors meeting an
initial investment minimum of $5,000,000. Class Y shares
are sold at net asset
value with no initial sales charge or CDSC. They are
not subject to any service
or distribution fees.
In deciding which Class of Fund shares to purchase,
investors should consider
the following factors, as well as any other relevant
facts and circumstances:
Intended Holding Period. The decision as to which Class of
shares is more
beneficial to an investor depends on the amount and
intended length of his or
her investment. Shareholders who are planning to establish
a program of regular
investment may wish to consider Class A shares; as
the investment accumulates
shareholders may qualify for reduced sales charges and
the shares are subject
to lower ongoing expenses over the term of the
investment. As an alternative,
Class B and Class C shares are sold without any
initial sales charge so the
entire purchase price is immediately invested in the
Fund. Any investment
4
SMITH BARNEY
Managed Municipals Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
return on these additional invested amounts may partially
or wholly offset the
higher annual expenses of these Classes. Because the
Fund's future return can-
not be predicted, however, there can be no assurance
that this would be the
case.
Finally, investors should consider the effect of the CDSC
period and any con-
version rights of the Classes in the context of their
own investment time
frame. For example, while Class C shares have a shorter
CDSC period than Class
B shares, they do not have a conversion feature,
and
therefore, are subject to
an ongoing distribution fee. Thus, Class B shares may
be more attractive than
Class C shares to investors with longer term
investment outlooks.
Investors investing a minimum of $5,000,000 must purchase
Class Y shares,
which are not subject to any initial sales charge, CDSC
or service or distribu-
tion fees. The maximum purchase amount for Class A shares
is $4,999,999, Class
B shares is $249,999 and Class C shares is $499,999.
There
is no maximum pur-
chase amount for Class Y shares.
Reduced or No Initial Sales Charge. The initial sales
charge on Class A
shares may be waived for certain eligible purchasers,
and the entire purchase
price would be immediately invested in the Fund.
In addition, Class A share
purchases, which when combined with current holdings
of Class A shares offered
with a sales charge equal or exceed $500,000 in
the aggregate, will be made at
net asset value with no initial sales charge, but will
be subject to a CDSC of
1.00% on redemptions made within 12 months of purchase.
The $500,000 aggregate
investment may be met by adding the purchase to the
net asset value of all
Class A shares held in certain funds sponsored by
Smith Barney Inc. ("Smith
Barney") listed under "Exchange Privilege." Class A
share purchases may also be
eligible for a reduced initial sales charge. See
"Purchase of Shares." Because
the ongoing expenses of Class A shares may be lower
than those for Class B and
Class C shares, purchasers eligible to purchase Class
A shares at net asset
value or at a reduced sales charge should consider doing
so.
Smith Barney Financial Consultants may receive different
compensation for
selling each Class of shares. Investors should
understand that the purpose of
the CDSC on the Class B and Class C shares is the same
as that of the initial
sales charge on the Class A shares.
See "Purchase of Shares" and "Management of the Fund" for
a complete descrip-
tion of the sales charges and service and distribution
fees for each Class of
shares and "Valuation of Shares," "Dividends,
Distributions and Taxes" and "Ex-
change Privilege" for other differences between the
Classes of shares.
5
SMITH BARNEY
Managed Municipals Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
PURCHASE OF SHARES Shares may be purchased through
the Fund's distributor,
Smith Barney, a broker that clears securities
transactions through Smith Barney
on a fully disclosed basis (an "Introducing Broker") or
an investment dealer in
the selling group. See "Purchase of Shares."
INVESTMENT MINIMUMS Investors in Class A, Class B and
Class C shares may open
an account by making an initial investment of at
least $1,000. Investors in
Class Y shares may open an account for an initial
investment of $5,000,000.
Subsequent investments of at least $50 may be made for
all Classes. The minimum
initial investment requirement for Class A, Class B
and Class C shares and the
subsequent investment requirement for all Classes
through the Systematic
Investment Plan described below is $50. There is no
minimum investment require-
ment in Class A for unitholders who invest
distributions from a unit investment
trust ("UIT") sponsored by Smith Barney. See "Purchase of
Shares."
SYSTEMATIC INVESTMENT PLAN The Fund offers shareholders
a Systematic Investment
Plan under which they may authorize the automatic
placement of a purchase order
each month or quarter for Fund shares in an amount of
at least $50. See "Pur-
chase of Shares."
REDEMPTION OF SHARES Shares may be redeemed on each day
the New York Stock
Exchange, Inc. ("NYSE") is open for business. See
"Purchase of Shares" and "Re-
demption of Shares."
MANAGEMENT OF THE FUND Smith Barney Mutual Funds
Management Inc. ("SBMFM"),
serves as the Fund's investment adviser. SBMFM
(formerly known as Smith, Barney
Advisers, Inc.), provides investment advisory and
management services to
investment companies affiliated with Smith Barney. SBMFM
is a wholly-owned sub-
sidiary of Smith Barney Holdings Inc. ("Holdings"),
which, in turn, is a whol-
ly-owned subsidiary of The Travelers Inc. ("Travelers"),
a diversified finan-
cial services holding company engaged, through
its subsidiaries, principally in
four business segments: Investment Services,
Consumer Finance Services, Life
Insurance Services and Property & Casualty
Insurance Services.
SBMFM also serves as the Fund's administrator and The
Boston Company Advi-
sors, Inc. ("Boston Advisors") serves as the Fund's
subadministrator. Boston
Advisors is a wholly owned subsidiary of The Boston
Company, Inc. ("TBC"),
which in turn is an indirect wholly owned subsidiary
of Mellon Bank Corporation
("Mellon"). See "Management of the Fund."
6
SMITH BARNEY
Managed Municipals Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
EXCHANGE PRIVILEGE Shares of a Class may be exchanged
for shares of the same
class of certain other funds of the Smith Barney
Mutual Funds at the respective
net asset values next determined, plus any applicable
sales charge differen-
tial. See "Exchange Privilege."
VALUATION OF SHARES Net asset value of the Fund for
the prior day generally is
quoted daily in the financial section of most newspapers
and is also available
from Smith Barney Financial Consultants. See "Valuation
of Shares."
DIVIDENDS AND DISTRIBUTIONS Dividends from net
investment income are declared
daily and paid on the last business day of the Smith
Barney statement month.
Distributions of net realized long- and short-term
capital gains, if any, are
declared and paid annually after the end of the fiscal
year in which they were
earned. See "Dividends, Distributions and Taxes."
REINVESTMENT OF DIVIDENDS Dividends and distributions
paid on shares of any
Class will be reinvested automatically, unless
otherwise specified by an
investor, in additional shares of the same Class at
current net asset value.
Shares acquired by dividend and distribution
reinvestments will not be subject
to any sales charge or CDSC. Class B shares acquired
through dividend and dis-
tribution reinvestments will become eligible for
conversion to Class A shares
on a pro rata basis. See "Dividends, Distributions
and Taxes."
RISK FACTORS AND SPECIAL CONSIDERATIONS There can be
no assurance that the Fund
will achieve its investment objective. The Fund has
the right to invest, with-
out limit, in "private activity bonds," the income
from which may be taxable as
a specific preference item for purposes of the
Federal alternative minimum tax.
See "Investment Objective and Management Policies"
and "Dividends, Distribu-
tions and Taxes." The Fund generally will invest at
least 80% of its assets in
investment grade securities and may invest the remainder
of its assets in secu-
rities rated as low as C by Moody's Investors Service,
Inc.
("Moody's") or D by
Standard & Poor's Corporation ("S&P"), or in
unrated obligations of comparable
quality. Securities in the fourth highest rating
category, though considered to
be investment grade, have speculative
characteristics.
Securities rated as low
as D are extremely speculative and are in actual default
of
interest and/or
principal payments. There are risks connected with the
use of certain portfolio
strategies by the Fund, such as the use of when-
issued securities, municipal
bond index futures contracts and put and call options
on interest rate futures
as hedging devices, and municipal leases. See
"Investment
Objective and Manage-
ment Policies--Certain Portfolio Strategies."
7
SMITH BARNEY
Managed Municipals Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
THE FUND'S EXPENSESThe following expense table lists
the costs and expenses an
investor will incur either directly or indirectly as
a shareholder of the Fund,
based upon the maximum sales charge or maximum CDSC that
may be incurred at the
time of purchase or redemption and, unless otherwise
noted, the Fund's operat-
ing expenses for its most recent fiscal year:
<TABLE>
<CAPTION>
CLASS
A CLASS B CLASS C CLASS Y --------------------------------
- ------------------------------------------------
<S>
<C>
<C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases
(as a percentage of offering price)
4.00%
None None None
Maximum CDSC
(as a percentage of original cost or redemption
proceeds, whichever is lower)
None*
4.50% 1.00% None
- ----------------------------------------------------------
- ----------------------
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management fees
0.50
0.50 0.50 0.50
12b-1 fees**
0.15
0.65 0.70 None
Other expenses***
0.06
0.08 0.09 0.06
- ----------------------------------------------------------
- --
- ---------------------
TOTAL FUND OPERATING EXPENSES
0.71% 1.23% 1.29% 0.56% ------------------------------
- --------------------------------------------------
</TABLE>
* Purchases of Class A shares which when combined with
current holdings of
Class A shares offered with a sales charge, equal
or exceed $500,000 in the
aggregate, will be made at net asset value with no
sales charge, but will be
subject to a CDSC of 1.00% on redemptions made within
12 months.
** Upon conversion of Class B shares to Class A shares,
such shares will no
longer be subject to a distribution fee. Class C
shares do not have a
conversion feature and, therefore, are subject to
an ongoing distribution
fee. As a result, long-term shareholders of Class
C shares may pay more than
the economic equivalent of the maximum front-end
sales charge permitted by
the National Association of Securities Dealers, Inc.
*** For Class Y shares, "Other expenses" have been
estimated based on expenses
incurred by Class A shares because no Class Y
shares were sold as of
February 28, 1995.
The sales charge and CDSC set forth in the above table are
the maximum
charges imposed on purchases or redemptions of Fund
shares and investors may
actually pay lower or no charges depending on the
amount purchased and, in the
case of Class B, Class C and certain Class A shares,
the length of time the
shares are held. See "Purchase of Shares" and "Redemption
of Shares." Smith
Barney receives an annual 12b-1 service fee of 0.15% of
the value of average
daily net assets of Class A shares. Smith Barney
also receives, with respect to
Class B shares, an annual 12b-1 fee of 0.65% of the value
of average daily net
assets of that Class, consisting of a 0.50% distribution
fee and a 0.15% serv-
ice
8
SMITH BARNEY
Managed Municipals Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
fee and with respect to Class C shares, Smith
Barney
receives an annual 12b-1
fee of 0.70% of the value of average daily net assets of
the Class, consisting
of a 0.55% distribution fee and a 0.15% service fee.
"Other
expenses" in the
above table include fees for shareholder services,
custodial fees, legal and
accounting fees, printing costs and registration fees.
EXAMPLEThe following example is intended to assist
an investor in understanding
the various costs that an investor in the Fund will
bear directly or indirect-
ly. The example assumes payment by the Fund of
operating expenses at the levels
set forth in the table above. See "Purchase of
Shares," "Redemption of Shares"
and "Management of the Fund."
<TABLE>
<CAPTION>
1 YEAR 3
YEARS 5 YEARS 10 YEARS*
- ----------------------------------------------------------
- -------------------
<S> <C>
<C>
<C> <C>
An investor would pay the following expenses
on a $1,000 investment, assuming (1) 5.00% annual return
and (2) redemption at the end of each time period:
Class A $47
$62
$78 $125
Class B 58
69
78 139
Class C 23
41
71 156
Class Y 6
18
31 70
An investor would pay the following expenses
on the same investment, assuming the same
annual return and
no redemption:
Class A 47
62
78 125
Class B 13
39
68 139
Class C 13
41
71 156
Class Y 6
18
31 70
- ----------------------------------------------------------
- -------------------
</TABLE>
*Ten-year figures assume conversion of Class B shares
to Class A shares at the
end of the eighth year following the date of purchase.
The example also provides a means for the investor to
compare expense levels
of funds with different fee structures over
varying investment periods. To
facilitate such comparison, all funds are required
to utilize a 5.00% annual
return assumption. However, the Fund's actual return
will vary and may be
greater or less than 5.00%. THIS EXAMPLE SHOULD NOT
BE CONSIDERED A REPRESENTA-
TION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE
GREATER OR LESS THAN
THOSE SHOWN.
9
SMITH BARNEY
Managed Municipals Fund Inc.
FINANCIAL HIGHLIGHTS
Except where otherwise noted, the following information
has been audited by
Coopers & Lybrand L.L.P., independent accountants,
whose report thereon appears
in the Fund's Annual Report dated February 28, 1995.
This information should be
read in conjunction with the financial statements
and
related notes that also
appear in the Fund's Annual Report, which is incorporated
by reference into the
Statement of Additional Information.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR YEAR
YEAR YEAR YEAR YEAR
ENDED ENDED
ENDED ENDED ENDED ENDED
2/28/95 2/28/94**
2/28/93* 2/28/92 2/28/91 2/28/90
- ----------------------------------------------------------
- --------------------------------------
<S> <C> <C>
<C>
<C> <C> <C>
Operating performance:
Net asset value,
beginning of year $16.13 $16.71
$15.62
$14.98 $15.00 $14.83
- ----------------------------------------------------------
- --------------------------------------
Income from investment
operations:
Net investment income 0.95 0.90
1.00
1.05 1.06 1.12
Net realized and
unrealized gain/ (loss)
on investments (0.37) 0.30
1.64
0.66 0.04 0.15
- ----------------------------------------------------------
- --------------------------------------
Total from investment
operations 0.58 1.20
2.64
1.71 1.10 1.27
- ----------------------------------------------------------
- --------------------------------------
Less distributions:
Distributions from net
investment income (0.95)
(0.87)
(1.00) (1.05) (1.09) (1.10)
Distributions in excess
of net investment
income (0.00)@ (0.01) -
-
- -- -- --
Distributions from net
realized gains (0.29)
(0.90) (0.52) -- -- --
Return of capital
- -(0.03) (0.02) (0.03) ------------------
- ----------------------------------------------------------
- ---------------------
Total distributions (1.24)
(1.78) (1.55) (1.07) (1.12) (1.10) --------
- ----------------------------------------------------------
- ------------------------------
Net asset value, end of
year $15.47 $16.13
$16.71 $15.62 $14.98 $15.00 --------------------
- ----------------------------------------------------------
- ------------------
Total return+ 4.11%
7.41% 17.92% 11.79% 7.65% 8.78% ---------
- ----------------------------------------------------------
- -----------------------------
Ratios to average net
assets/supplemental
data:
Net assets, end of
period
(in 000's) $1,771,967 $1,847,184
$1,795,160
$1,597,606 $1,461,345 $1,478,202
Ratio of operating
expenses to average net
assets 0.71%
0.72% 0.64% 0.59% 0.58% 0.58%
Ratio of net investment
income to average net
assets 6.25%
5.43% 6.30% 6.83% 7.15% 7.43%
Portfolio turnover rate 100%
131% 206% 173% 83% 115% ------------
- ----------------------------------------------------------
- --------------------------
</TABLE>
* On November 6, 1992, the Fund commenced selling Class B
shares. Shares
issued prior to November 6, 1992 were designated Class
A shares.
** Per share amounts have been calculated using the
monthly
average shares
method, which more appropriately presents the per
share data for the period
since the use of the undistributed net investment
income method does not
accord with results of operations.
+ Total return represents aggregate total return for
the
period indicated and
does not reflect any applicable sales charges.
@ Amount represents less than $0.01 per share.
10
SMITH BARNEY
Managed Municipals Fund Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR
YEAR YEAR YEAR
ENDED
ENDED ENDED ENDED
2/28/89
2/28/88 2/28/87 2/28/86
- ----------------------------------------------------------
- -------------------
<S> <C>
<C>
<C> <C>
Operating performance:
Net asset value, beginning of year $15.05
$15.88
$15.67 $13.39
- ----------------------------------------------------------
- -------------------
Income from investment operations:
Net investment income 1.11
1.13
1.16 1.22
Net realized and unrealized
gain/(loss) on investments (0.06)
(0.83)
0.64 2.36
- ----------------------------------------------------------
- -------------------
Total from investment operations 1.05
0.30
1.80 3.58
- ----------------------------------------------------------
- -------------------
Less distributions:
Distributions from net investment
income (1.11)
(1.12)
(1.16) (1.22)
Distributions in excess of net
investment income --
- --
- -- --
Distributions from net realized
gains (0.16)
(0.01)
(0.43) (0.08)
Return of capital --
- --
- -- --
- ----------------------------------------------------------
- -------------------
Total distributions (1.27)
(1.13)
(1.59) (1.30)
- ----------------------------------------------------------
- -------------------
Net asset value, end of year $14.83
$15.05
$15.88 $15.67
- ----------------------------------------------------------
- -------------------
Total return+ 7.31%
2.33%
12.35% 28.25%
- ----------------------------------------------------------
- -------------------
Ratios to average net
assets/supplemental data:
Net assets, end of year (in 000's) $1,519,508 $601,172
$788,557 $516,352
Ratio of operating expenses to
average net assets 0.66%
0.57%
0.59% 0.66%
Ratio of net investment income to
average net assets 7.48%
7.59%
7.42% 8.48%
Portfolio turnover rate 37%
20%
15% 53%
- ----------------------------------------------------------
- -------------------
</TABLE>
+ Total return represents aggregate total return for
the
period indicated and
does not reflect any applicable sales charges.
11
SMITH BARNEY
Managed Municipals Fund Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
2/28/95 2/28/94*** 2/28/93* ------------------------------
- -----------------------------------------------
<S> <C>
<C>
<C>
Operating performance:
Net asset value, beginning of period
$16.13
$16.71 $15.81 ------------------------------------------
- -----------------------------------
Income from investment operations:
Net investment income
0.86
0.81 0.32
Net realized and unrealized gain/(loss) on
investments
(0.37)
0.31 1.42
- ----------------------------------------------------------
- -------------------
Total from investment operations
0.49
1.12 1.74
- ----------------------------------------------------------
- -------------------
Less distributions:
Distributions from net investment income
(0.86)
(0.79) (0.31)
Distributions in excess of net investment
income
(0.00)@
(0.01) --
Distributions from net realized gains
(0.29)
(0.90) (0.52)
Return of capital
- --
- -- (0.01)
- ----------------------------------------------------------
- -------------------
Total distributions
(1.15) (1.70) (0.84) -----------------------------------
- ------------------------------------------
Net asset value, end of period
$15.47
$16.13 $16.71 ------------------------------------------
- -----------------------------------
Total Return+
3.54% 6.86% 11.26% -------------------------------------
- ----------------------------------------
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) 514,675
$349,633 61,355
Ratio of operating expenses to average net
assets
1.23% 1.25% 1.24%**
Ratio of net investment income to average net
assets
5.73% 4.90% 5.70%**
Portfolio turnover rate 100%
131% 206% --------------------------------------------
- ---------------------------------
</TABLE>
* On November 6, 1992, the Fund commenced selling Class B
shares.
** Annualized.
*** Per share amounts have been calculated using the
monthly average shares
method, which more appropriately presents the per
share data for the period
since the use of the undistributed net investment
income method does not
accord with results of operations.
+Total return represents aggregate total return for the
period indicated and
does not reflect any applicable sales charges.
@Amount represents less than $0.01 per share.
12
SMITH BARNEY
Managed Municipals Fund Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A CLASS C SHARE OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
PERIOD
ENDED
2/28/95* -------------------------------------------------
- -----------------------
<S>
<C>
<C> <C>
Operating performance:
Net asset value, beginning of
period
$14.30 ---------------------------------------------------
- ---------------------
Income from investment operations:
Net investment
income
0.27
Net realized and unrealized gain on investments
1.46++ ---------------------------------------------------
- ---------------------
Total from investment
operations
1.73 -----------------------------------------------------
- -------------------
Less distributions:
Distributions from net investment
income
(0.27)
Distributions in excess of net investment
income
(0.00)(@)
Distributions from net realized
gains
(0.29) ---------------------------------------------------
- ---------------------
Total
distributions
(0.56) ---------------------------------------------------
- ---------------------
Net asset value, end of
period
$15.47 ---------------------------------------------------
- ---------------------
Total
return+
12.36% ---------------------------------------------------
- ---------------------
Ratios to average net assets/supplemental data:
Net assets, end of period (in
000's)
$5,395
Ratio of operating expenses to average net assets
1.29%**
Ratio of net investment income to average net assets
5.67%**
Portfolio turnover
rate
100% -----------------------------------------------------
- -------------------
</TABLE>
* On November 9, 1994 the Fund commenced selling Class C
shares.
** Annualized.
+Total return represents aggregate total return for the
period indicated and
does not reflect any applicable sales charges.
++The amount shown may not accord with the change in
aggregate gains and
losses of portfolio securities due to the timing of
sales
and redemptions of
Fund shares.
(@)Amount represents less than $0.01 per share.
13
SMITH BARNEY
Managed Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The Fund seeks to maximize current interest income exempt
from Federal income
taxes to the extent consistent with prudent
investment management and the pres-
ervation of capital by investing in a
professionally managed, diversified port-
folio consisting of municipal securities that pay
interest which is excluded
from gross income for Federal income tax purposes and
that are issued by or on
behalf of the states, territories and possessions of
the United States and the
District of Columbia and their political
subdivisions, agencies and
instrumentalities, or multi-state agencies or
authorities, generally known as
"Municipal Bonds." This investment objective may not
be changed without the
approval of the holders of a majority of the
Fund's outstanding shares. There
is no guarantee that the Fund's investment objective will
be achieved.
The Fund will operate subject to a fundamental investment
policy providing
that, under normal market conditions, the Fund will
invest at least 80% of its
net assets in Municipal Bonds. For temporary
defensive purposes, the Fund may
invest without limit in "Temporary Investments" as
described below. The Fund's
average weighted maturity will vary from time to time
based on the judgment of
SBMFM. The Fund intends to focus on intermediate- and
longterm obligations;
that is, obligations with remaining maturities at the
time of purchase of
between three and twenty years.
The Fund generally will invest at least 80% 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 in unrated obligations
of comparable quality.
Unrated obligations will be considered to be of
investment grade if deemed by
SBMFM to be of comparable quality to instruments so
rated, or if other out-
standing 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 comparable unrated
securities. (These securities are sometimes referred to
as "junk bonds.") Secu-
rities in the fourth higher 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. It should be emphasized that ratings are
relative and subjective and
are not absolute standards of quality. Although
these ratings are initial cri-
teria for selection of portfolio investments, the Fund
also will make its own
evaluation of these securities. Among the factors that
will be considered are
the long-term ability of the issuers to pay principal
and interest and general
economic trends.
The value of debt securities varies inversely to changes
in the direction of
interest rates. When interest rates rise the value of
debt securities generally
falls, and when interest rates fall, the value of
debt securities generally
rises. While
14
SMITH BARNEY
Managed Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
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 securi-
ties 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 pay-
ment 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 the payment
of principal or inter-
est on its portfolio holdings.
While the market for municipal securities is considered to
be generally ade-
quate, the existence of limited markets for particular
lowrated and comparable
unrated securities may diminish the Fund's ability to
(a) obtain accurate mar-
ket quotations for purposes of valuing such securities
and calculating its net
asset value and (b) sell the securities at fair value
either to meet redemption
requests 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 these 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 securi-
ty, thus resulting in a decreased return to the Fund.
A description of the rating systems of Moody's and S&P is
contained in the
Statement of Additional Information.
The Fund may invest without limit in "municipal leases,"
which are obliga-
tions issued by state and local governments or
authorities to finance the
acquisi-
15
SMITH BARNEY
Managed Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
tion of equipment or facilities. The interest on
such obligations is, in the
opinion of counsel to the issuers, excluded from
gross income for Federal
income tax purposes. Although lease obligations do
not
constitute general obli-
gations 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 obliga-
tion. However, certain lease obligations contain
"nonappropriation" clauses
which provide that the municipality has no obligation
to make lease or install-
ment purchase payments in future years unless money
is appropriated for such
purpose on a yearly basis. In addition to the
"nonappropriation" risk, these
securities represent a relatively new type of financing
that has not yet devel-
oped the depth of marketability associated with
more
conventional bonds.
Although "non-appropriation" lease obligations are
often secured by the under-
lying 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, SBMFM will consider such factors as
it deems appropriate
which may include: (a) whether the lease can be
canceled; (b) the ability of
the lease obligee to direct the sale of the
underlying assets; (c) the general
creditworthiness of the lease obligor; (d) the
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 appropri-
ate 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.
The Fund may invest without limit in private activity
bonds. Interest income
on certain types of private activity bonds issued
after August 7, 1986 to
finance nongovernmental activities is a specific
tax preference item for pur-
poses of the Federal individual and corporate
alternative minimum taxes. Indi-
vidual and corporate shareholders may be subject to
a Federal alternative mini-
mum tax to the extent that the Fund's dividends are
derived from interest on
these bonds. Dividends derived from interest income on
all Municipal Bonds are
a component of the "current earnings" adjustment item
for
purposes of the Fed-
eral 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
invest-
16
SMITH BARNEY
Managed Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
ments in such obligations could involve an increased risk
to the Fund should
any of such related projects or facilities
experience financial difficulties.
In addition, 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. The Fund also is authorized
to borrow up to 10% of
its total assets (including the amount borrowed) valued
at market less liabili-
ties (not including the amount borrowed) to meet
anticipated redemptions and to
pledge its assets to the same extent in connection with
such borrowings.
Further information about the Fund's investment policies,
including a list of
those restrictions on the Fund's investment activities
that cannot be changed
without shareholder approval, appears in the Statement
of Additional Informa-
tion.
CERTAIN PORTFOLIO STRATEGIES
In attempting to achieve its investment objective, the
Fund may employ, among
others, the following portfolio strategies.
When-Issued Securities.New issues of Municipal Bonds
frequently are offered
on a when-issued basis, which means that delivery
and payment for such securi-
ties normally take place within 45 days after the date
of the commitment to
purchase. The payment obligation and the interest rate
that will be received on
when-issued securities are fixed at the time the
buyer enters into the commit-
ment. As a result, the yields obtained on such
securities may be higher or
lower than the yields available in the market on the
dates when the instruments
actually are delivered to the buyers. In addition,
during the period before
delivery and payment, there is no accrual of interest
and there may be fluctua-
tions in the price of the securities. The Fund
will establish a segregated
account with the Fund's custodian consisting of
cash, obligations issued or
guaranteed by the United States government or its
agencies or instrumentalities
("U.S. government securities") or other high grade
debt obligations in an
amount equal to the purchase price of the Fund's when-
issued commitments. Plac-
ing securities rather than cash in the segregated
account may have a leveraging
effect on the Fund's net assets. The Fund generally
will make commitments to
purchase such Municipal Bonds on a when-issued basis
only with the intention of
actually acquiring the securities, but the Fund may sell
the securities before
the settlement date if it is deemed advisable.
Temporary Investments.Under normal market conditions, the
Fund may hold up to
20% of its total assets in cash or money market
instruments, including taxable
money market instruments ("Temporary Investments").
In addition,
17
SMITH BARNEY
Managed Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
when SBMFM believes that market conditions
warrant, including when acceptable
Municipal Bonds are unavailable, the Fund may take
a temporary defensive pos-
ture and invest without limitation in Temporary
Investments. Securities eligi-
ble for short-term investment by the Fund are tax-
exempt notes of municipal
issuers having, at the time of purchase, a rating within
the three highest
grades of Moody's or S&P or, if not rated, having an
issue of outstanding
Municipal Bonds rated within the three highest grades
of Moody's or S&P, and
certain taxable short-term instruments having
quality characteristics compara-
ble to those for Municipal Bonds. To the extent the
Fund holds Temporary
Investments, it may not achieve its investment
objective. Since its commence-
ment of operations, the Fund has not found it necessary
to make taxable Tempo-
rary Investments, and it is not expected that such
action will be necessary.
Financial Futures and Options Transactions.To
hedge against a decline in the
value of Municipal Bonds it owns or an increase in the
price of Municipal Bonds
it proposes to purchase, the Fund may enter into
financial futures contracts
and invest in options on financial futures contracts
that are traded on a
domestic exchange or board of trade. The futures
contracts or options on
futures contracts that may be entered into by the Fund
will be restricted to
those that are either based on an index of Municipal
Bonds or relate to debt
securities the prices of which are anticipated by SBMFM
to correlate with the
prices of the Municipal Bonds owned or to be purchased
by the Fund.
In entering into a financial futures contract, the Fund
will be required to
deposit with the broker through which it undertakes
the transaction an amount
of cash or cash equivalents equal to approximately 5% of
the contract amount.
This amount, which is known as "initial margin," is
subject to change by the
exchange or board of trade on which the contract is
traded, and members of the
exchange or board of trade may charge a higher
amount. Initial margin is in the
nature of a performance bond or good faith deposit on
the contract that is
returned to the Fund upon termination of the
futures contract, assuming all
contractual obligations have been satisfied. In
accordance with a process known
as "marking-to-market," subsequent payments, known
as "variation margin," to
and from the broker will be made daily as the price of
the index or securities
underlying the futures contract fluctuates, making the
long and short positions
in the futures contract more or less valuable. At any
time prior to the expira-
tion of a futures contract, the Fund may elect to close
the position by taking
an opposite position, which will operate to terminate
the Fund's existing posi-
tion in the contract.
18
SMITH BARNEY
Managed Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
A financial futures contract provides for the future sale
by one party and
the purchase by the other party of a certain amount of
a specified property at
a specified price, date, time and place. Unlike the
direct
investment in a
futures contract, an option on a financial futures
contract gives the purchaser
the right, in return for the premium paid, to assume
a position in the finan-
cial futures contract at a specified exercise price at
any time prior to the
expiration date of the option. Upon exercise of an
option, the delivery of the
futures position by the writer of the option to the
holder of the option will
be accompanied by delivery of the accumulated balance in
the writer's futures
margin account, which represents the amount by which
the market price of the
futures contract exceeds, in the case of a call, or is
less than, in the case
of a put, the exercise price of the option on the
futures contract. The poten-
tial loss related to the purchase of an option on
financial futures contracts
is limited to the premium paid for the option
(plus transaction costs). The
value of the option may change daily and that change
would be reflected in the
net asset value of the Fund.
Regulations of the Commodity Futures Trading Commission
applicable to the
Fund require that its transactions in financial
futures contracts and options
on financial futures contracts be engaged in for bona
fide hedging purposes, or
if the Fund enters into futures contracts for
speculative purposes, that the
aggregate initial margin deposits and premiums paid by
the Fund will not exceed
5% of the market value of its assets. In addition, the
Fund will, with respect
to its purchases of financial futures contracts, establish
a segregated account
consisting of cash or cash equivalents in an amount equal
to the total market
value of the futures contracts, less the amount of
initial margin on deposit
for the contracts. The Fund's ability to trade in
financial futures contracts
and options on financial futures contracts may be limited
to some extent by the
requirements of the Internal Revenue Code of 1986,
as amended (the "Code"),
applicable to a regulated investment company that
are described below under
"Dividends, Distributions and Taxes."
Although the Fund intends to enter into financial futures
contracts and
options on financial futures contracts that are traded on
a domestic exchange
or board of trade only if an active market exists for
those instruments, no
assurance can be given that an active market will exist
for them at any partic-
ular time. If closing a futures position in anticipation
of adverse price move-
ments is not possible, the Fund would be required to
make daily cash payments
of variation margin. In those circumstances, an increase
in the value of the
portion of the Fund's investments being hedged, if any,
may offset partially or
completely
19
SMITH BARNEY
Managed Municipals Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
losses on the futures contract. No assurance can be
given, however, that the
price of the securities being hedged will correlate with
the price movements in
a futures contract and, thus, provide an offset to losses
on the futures con-
tract or option on the futures contract. In addition,
in light of the risk of
an imperfect correlation between securities held by the
Fund that are the sub-
ject of a hedging transaction and the futures or
options used as a hedging
device, the hedge may not be fully effective because,
for example, losses on
the securities held by the Fund may be in excess of gains
on the futures con-
tract or losses on the futures contract may be in excess
of gains on the secu-
rities held by the Fund that were the subject of the
hedge. In an effort to
compensate for the imperfect correlation of movements in
the price of the secu-
rities being hedged and movements in the price of
futures contracts, the Fund
may enter into financial futures contracts or options
on financial futures con-
tracts in a greater or lesser dollar amount than the
dollar amount of the secu-
rities being hedged if the historical volatility of
the futures contract has
been less or greater than that of the securities. This
"over hedging" or "under
hedging" may adversely affect the Fund's net
investment results if market move-
ments are not as anticipated when the hedge is
established.
If the Fund has hedged against the possibility of an
increase in interest
rates adversely affecting the value of securities it
holds and rates decrease
instead, the Fund will lose part or all of the benefit
of the increased value
of securities that it has hedged because it will
have offsetting losses in its
futures or options positions. In addition, in
those situations, if the Fund has
insufficient cash, it may have to sell securities to
meet daily variation mar-
gin requirements on the futures contracts at a time when
it may be disadvanta-
geous to do so. These sales of securities may, but will
not necessarily, be at
increased prices that reflect the decline in interest
rates.
MUNICIPAL BONDS
The term "Municipal Bonds" generally is understood to
include debt obliga-
tions issued to obtain funds for various public
purposes, the interest on which
qualifies, in the opinion of bond counsel to the issuer,
as excluded from gross
income for Federal income tax purposes. In
addition, Municipal Bonds may
include "private activity bonds" if the proceeds from
such bonds are used for
the construction, equipment, repair or improvement
of
privately operated indus-
20
SMITH BARNEY
Managed Municipals Fund Inc.
MUNICIPAL BONDS (CONTINUED)
trial or commercial facilities, and the interest paid
on such bonds may be
excluded from gross income for Federal income tax
purposes. Current Federal tax
laws place substantial limitations on the aggregate
amount of such bonds that
any given state may issue.
CLASSIFICATIONS
The two principal classifications of Municipal Bonds are
"general obligation"
and "revenue" bonds. General obligation bonds are secured
by the issuer's
pledge of its full faith, credit and taxing power for
the payment of principal
and interest. Revenue bonds are payable from the
revenues derived from a par-
ticular facility or class of facilities or, in some
cases, from the proceeds of
a special excise or other specific revenue source, but
not
from the general
taxing power. Sizeable investments in such obligations
could involve an
increased risk to the Fund should any of such
related facilities experience
financial difficulties. Private activity bonds are in
most cases revenue bonds
and generally do not carry the pledge of the credit of
the issuing municipali-
ty. There are, of course, variations in the security
of Municipal Bonds, both
within a particular classification and
between classifications.
VALUATION OF SHARES
The Fund's net asset value per share is determined as of
the close of regular
trading on the NYSE, on each day that the NYSE is open,
by dividing the value
of the Fund's net assets attributable to each Class by
the total number of
shares of that Class outstanding.
Generally, the Fund's investments are valued at market
value or, in the
absence of a market value with respect to any securities,
at fair value as
determined by or under the direction of the Fund's Board
of Directors. Short-
term investments that mature in 60 days or less are
valued at amortized cost
whenever the Directors determine 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 matu-
rity of any discount or premium, regardless of the impact
of fluctuating inter-
est rates on the market value of the instrument.
Further information regarding
the Fund's valuation policies is contained in the
Statement of Additional
Information.
21
SMITH BARNEY
Managed Municipals Fund Inc.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Fund declares dividends from its net investment income
(that is, income
other than its net realized long- and short-term
capital gains) on each day
that the Fund is open for business and pays dividends on
the last business day
of the Smith Barney statement month. The Fund's earnings
for Saturdays, Sundays
and holidays are declared as dividends on the next
business day. Shares
redeemed during the month are entitled to dividends
declared up to and includ-
ing the date of redemption. Beginning June 1, 1995, the
Fund will declare divi-
dends on the Tuesday preceding the last Friday of
each calendar month and pay
dividends on the last Friday of each calendar
month. Distributions of net real-
ized long- and short-term capital gains, if any,
are declared and paid annually
after the end of the fiscal year in which they have
been earned.
If a shareholder does not otherwise instruct, dividends
and capital gains
distributions will be reinvested automatically in
additional shares of the same
Class at net asset value, subject to no sales charge
or
CDSC. In addition, in
order to avoid the application of a 4% nondeductible
excise tax on certain
undistributed amounts of ordinary income and capital
gains, the Fund may make
an additional distribution shortly before December 31
of each year of any
undistributed ordinary income or capital gains and
expects to make any other
distributions as are necessary to avoid the application
of this tax.
If, for any full fiscal year, the Fund's
total distributions exceed net
investment income and net realized capital gains, the
excess distributions may
be treated as a taxable dividend or as a tax-free return
of capital (up to the
amount of the shareholder's tax basis in his or her
shares). The amount treated
as a tax-free return of capital will reduce a
shareholder's adjusted basis in
his or her shares. Pursuant to the requirements of
the Investment Company Act
of 1940, as amended ("1940 Act"), and other applicable
laws, a notice will
accompany any distribution paid from sources other than
net investment income.
In the event the Fund distributes amounts in excess of
its net investment
income and net realized capital gains, such
distributions may have the effect
of decreasing the Fund's total assets, which may
increase the Fund's expense
ratio.
The per share dividends on Class B shares and Class C
shares may be lower
than the per share dividends on Class A and Class Y
shares principally as a
result of the distribution fee applicable with respect
to Class B and Class C
shares. The per share dividends on Class A shares of
the Fund may be lower than
the per share dividends on Class Y principally as a
result of the service fee
22
SMITH BARNEY
Managed Municipals Fund Inc.
DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)
applicable to Class A shares. Distributions of
capital gains, if any, will be
in the same amount for Class A, Class B, Class C and Class
Y shares.
TAXES
The Fund has qualified and intends to continue to qualify
each year as a reg-
ulated investment company under the Code and will
designate and pay exempt-
interest dividends derived from interest earned
on qualifying tax-exempt obli-
gations. Such exempt-interest dividends may be excluded
by shareholders from
their gross incomes for Federal income tax purposes
although (a) all or a por-
tion of such exempt-interest dividends will be a
specific preference item for
purposes of the Federal individual and corporate
alternative minimum taxes to
the extent they are derived from certain types of
private activity bonds issued
after August 7, 1986 and (b) all exempt-interest
dividends will be a component
of the "current earnings" adjustment item for purposes
of the Federal corporate
alternative minimum tax. In addition, corporate
shareholders may incur a
greater Federal "environmental" tax liability through
the receipt of Fund divi-
dends and distributions.
On April 6, 1995, the House of Representatives passed H.R.
1215, which would,
among other things, alter the corporate alternative
minimum tax by repealing
the preference relating to tax-exempt interest on
private activity bonds for
interest accruing after December 31, 1995 and
would otherwise repeal the corpo-
rate alternative minimum tax for taxable years
beginning after December 31,
2000. There can be no assurance that this
proposed legislation will be enacted
or, if enacted, will include the provisions
described herein.
Dividends paid from taxable net investment income, if any,
and distributions
of any net realized short-term capital gains (whether
from tax-exempt or tax-
able obligations) are taxable to shareholders as
ordinary income regardless of
how long they have held their Fund shares and whether
such dividends or distri-
butions are received in cash or reinvested in
additional Fund shares. Distribu-
tions of net realized long-term capital gains will
be taxable to shareholders
as long-term capital gains, regardless of how long they
have held their Fund
shares and whether such distributions are received in
cash or reinvested in
Fund shares. Furthermore, as a general rule, a
shareholder's gain or loss on a
sale or redemption of his or her shares will be a long-
term capital gain or
loss if the shareholder has held the shares for more
than one year and will be
a short-term capital gain or loss if the shareholder
has
held the shares for
one year or less. The Fund's dividends and
distributions will not qualify for
the dividends-received deduction for corporations.
23
SMITH BARNEY
Managed Municipals Fund Inc.
DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)
Statements as to the tax status of each shareholder's
dividends and distribu-
tions are mailed annually. Each shareholder will
also receive, if appropriate,
various written notices after the close of the Fund's
prior taxable year as to
the Federal income tax status of his or her dividends
and
distributions which
were received from the Fund during the Fund's prior
taxable year. These state-
ments set forth the dollar amount of income excluded
from Federal income taxes
and the dollar amount, if any, subject to Federal
income
taxes. Moreover, these
statements will designate the amount of exempt-
interest dividends which are a
specific preference item for purposes of the
Federal individual and corporate
alternative minimum taxes. The Fund notifies
shareholders annually as to the
interest excluded from Federal income taxes earned by
the Fund with respect to
those states and possessions where the Fund has or
had investments. Sharehold-
ers should consult their tax advisors about the status
of
the Fund's dividends
and distributions for state and local tax liabilities.
TAX-EXEMPT INCOME VS. TAXABLE INCOME
The table below shows individual taxpayers how
to translate the tax savings
from investments such as the Fund into an equivalent
return from a taxable
investment. The yields used below are for illustration
only and are not
intended to represent current or future yields for the
Fund, which may be
higher or lower than those shown.
<TABLE>
<CAPTION>
FEDERAL
MARGINAL
TAXEXEMPT RATE
TAXABLE INCOME RATE* 2.0% 3.0%
4.0%
5.0% 6.0% 7.0% ----------------------------------------
- ---------------------------------------
SINGLE JOINT
EQUIVALENT
TAXABLE YIELD
<S> <C> <C> <C> <C>
<C>
<C> <C> <C>
$ 0-23,350 $ 0-39,000 15.00% 2.35%
3.63%
4.71% 5.88% 7.06% 8.24%
23,351-56,550 39,001-94,250 28.00% 2.78%
4.17% 5.56% 6.94% 8.33% 9.72%
56,551-117,950 94,251-143,600 31.00% 2.90% 4.35%
5.80% 7.25% 8.70% 10.14%
117,951-256,500 143,601-256,500 36.00% 3.13% 4.69%
6.25% 7.81% 9.38% 10.94%
256,501 and more 256,501 and more 39.60% 3.31%
4.97% 6.62% 8.28% 9.93% 11.59%
- ----------------------------------------------------------
- ---------------------
</TABLE>
* The Federal tax rates shown are those currently in
effect
for 1995. The
calculations assume that no income will be subject to the
Federal alternative
minimum tax.
PURCHASE OF SHARES
GENERAL
The Fund offers four Classes of shares. Class A shares are
sold to investors
with an initial sales charge and Class B and Class C
shares are sold without an
24
SMITH BARNEY
Managed Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
initial sales charge but are subject to a CDSC payable
upon certain redemp-
tions. Class Y shares are sold without an initial
sales charge or a CDSC and
are available only to investors investing a minimum
of $5,000,000. See "Pro-
spectus Summary--Alternative Purchase Arrangements" for
a discussion of factors
to consider in selecting which Class of shares to
purchase.
Purchases of Fund shares must be made through a brokerage
account maintained
with Smith Barney, with an Introducing Broker or with
an investment dealer in
the selling group. When purchasing shares of the
Fund, investors must specify
whether the purchase is for Class A, Class B, Class C
or Class Y shares. No
maintenance fee will be charged by the Fund in
connection with a brokerage
account through which an investor purchases or holds
shares.
Investors in Class A, Class B and Class C shares may open
an account in the
Fund by making an initial investment of at least
$1,000. Investors in Class Y
shares may open an account by making an initial
investment of $5,000,000. Sub-
sequent investments of at least $50 may be made for
all Classes. For the Fund's
Systematic Investment Plan, the minimum initial
investment requirement for
Class A, Class B and Class C shares and the
subsequent investment requirement
for all Classes is $50. There are no minimum
investment requirements for Class
A shares for employees of Travelers and its
subsidiaries,
including Smith Bar-
ney, unitholders who invest distributions from a
UIT sponsored by Smith Barney,
and Directors of the Fund and their spouses and
children. The Fund reserves the
right to waive or change minimums, to decline any order
to purchase its shares
and to suspend the offering of shares from time to
time. Shares purchased will
be held in the shareholder's account by the Fund's
transfer agent, The Share-
holder Services Group, Inc., a subsidiary of First
Data Corporation ("TSSG").
Share certificates are issued only upon a
shareholder's written request to
TSSG.
rPurchase orders received by the Fund or Smith Barney
prior to the close of
regular trading on the NYSE, on any day the Fund
calculates its net asset val-
ue, are priced according to the net asset value
determined on that day (the
"trade date"). Orders received by dealers or
Introducing Brokers 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
Smith Barney prior to Smith
Barney's close of business. Currently, payment for
Fund shares is due on the
fifth business day (the "settlement date") after the
trade date. The Fund
anticipates that, in accordance with regulatory
changes, beginning on or about
June 1, 1995, the settlement date will be the third
business day after the
trade date.
25
SMITH BARNEY
Managed Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
SYSTEMATIC INVESTMENT PLAN
Shareholders may make additions to their accounts at any
time by purchasing
shares through a service known as the Systematic
Investment Plan. Under the
Systematic Investment Plan, Smith Barney or TSSG
is authorized through preau-
thorized transfers of $50 or more to charge the regular
bank account or other
financial institution indicated by the shareholder on
a monthly or quarterly
basis to provide 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 Smith Barney or TSSG. The
Systematic
Investment Plan also
authorizes Smith Barney to apply cash held in
the shareholder's Smith Barney
brokerage account or redeem the shareholder's shares of
a Smith Barney money
market fund to make additions to the account.
Additional information is avail-
able from the Fund or a Smith Barney Financial
Consultant.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The sales charges applicable to purchases of Class A
shares of the Fund are
as follows:
<TABLE>
<CAPTION>
SALES CHARGE SALES
CHARGE DEALERS REALLOWANCE
AS % OF AS %
OF AS % OF
AMOUNT OF INVESTMENT OFFERING PRICE AMOUNT
INVESTED
OFFERING PRICE
- ----------------------------------------------------------
-
- ---------------
<S> <C> <C>
<C>
Less than $25,000 4.00%
4.17%
3.60%
$25,000--$49,999 3.50%
3.63%
3.15%
$50,000--$99,999 3.00%
3.09%
2.70%
$100,000--$249,999 2.50%
2.56%
2.25%
$250,000--$499,999 1.50%
1.52%
1.35%
$500,000 and over *
*
*
- ----------------------------------------------------------
-
- ---------------
</TABLE>
* Purchases of Class A shares, which when combined
with
current
holdings of Class A shares offered with a sales
charge equal
or exceed $500,000 in the aggregate, will be made at
net asset
value without any initial sales charge, but will
be subject to
a CDSC of 1.00% on redemptions made within 12 months of
purchase. The CDSC on Class A shares is payable to
Smith
Barney, which compensates Smith Barney
Financial
Consultants
and other dealers whose clients make purchases
of $500,000 or
more. The CDSC is waived in the same circumstances
in which
the CDSC applicable to Class B and Class C shares
is
waived.
See "Deferred Sales Charge Alternatives" and "Waivers of
CDSC."
Members of the selling group may receive up to 90% of the
sales charge and
may be deemed to be underwriters of the Fund as defined
in the Securities Act
of 1933.
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, his or her spouse and children, or a trustee
or other fidu-
26
SMITH BARNEY
Managed Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
ciary of a single trust estate or single fiduciary
account. The reduced sales
charge minimums may also be met by aggregating the
purchase with the net asset
value of all Class A shares held in funds sponsored by
Smith Barney that are
offered with a sales charge listed under
"Exchange Privilege."
INITIAL SALES CHARGE WAIVERS
Purchases of Class A shares may be made at net asset value
without a sales
charge in the following circumstances: (a) sales of Class
A shares to Directors
of the Fund and employees of Travelers and its
subsidiaries, or to the spouses
and children of such persons (including the surviving
spouse of a deceased
Director or employee, and retired Directors or
employees); (b) offers of Class
A shares to any other investment company in connection
with
the combination of
such company with the Fund by merger, acquisition of
assets or otherwise; (c)
purchases of Class A shares by any client of a
newly employed Smith Barney
Financial Consultant (for a period up to 90 days from
the commencement of the
Financial Consultant's employment with Smith Barney), on
the condition the pur-
chase of Class A shares is made with the proceeds of
the redemption of shares
of a mutual fund which (i) was sponsored by the
Financial Consultant's prior
employer, (ii) was sold to the client by the
Financial Consultant and (iii) was
subject to a sales charge; (d) shareholders who
have redeemed Class A shares in
the Fund (or Class A shares of another fund of the
Smith Barney Mutual Funds
that are offered with a sales charge equal to or
greater than the maximum sales
charge of the Fund) and who wish to reinvest
their redemption proceeds in the
Fund, provided the reinvestment is made within 60
calendar days of the redemp-
tion; (e) accounts managed by registered investment
advisory subsidiaries of
Travelers; and (f) investments of distributions from a
UIT sponsored by Smith
Barney. In order to obtain such discounts, the
purchaser must provide suffi-
cient information at the time of purchase to
permit verification that the pur-
chase would qualify for the elimination of the sales
charge.
RIGHT OF ACCUMULATION
Class A shares of the Fund may be purchased by "any
person" (as defined
above) at a reduced sales charge or at net asset
value determined by aggregat-
ing the dollar amount of the new purchase and the total
net asset value of all
Class A shares of the Fund and of funds sponsored by
Smith Barney which are
offered with a sales charge listed under
"Exchange Privilege" then held by such
person and applying the sales charge applicable to
such aggregate. In order to
obtain such discount, the purchaser must provide
sufficient information at the
27
SMITH BARNEY
Managed Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
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.
GROUP PURCHASES
Upon completion of certain automated systems, a reduced
sales charge or pur-
chase at net asset value will also be available to
employees (and partners) of
the same employer purchasing as a group, provided
each participant makes the
minimum initial investment required. The sales
charge applicable to purchases
by each member of such a group will be determined by
the table set forth above
under "Initial Sales Charge Alternative--Class A
Shares," and will be based
upon the aggregate sales of Class A shares of Smith
Barney Mutual Funds offered
with a charge to, and share holdings of, all members of
the
group. To be eligi-
ble for such reduced sales charges or to purchase at
net asset value, all pur-
chases must be pursuant to an employer or
partnershipsanctioned plan meeting
certain requirements. One such requirement is that the
plan must be open to
specified partners or employees of the employer and
its subsidiaries, if any.
Such plan may, but is not required to, provide for
payroll deductions. Smith
Barney may also offer a reduced sales charge or net
asset value purchase for
aggregating related fiduciary accounts under such
conditions that Smith Barney
will realize economies of sales efforts and sales
related expenses. An individ-
ual who is a member of a qualified group may also
purchase Class A shares at
the reduced sales charge applicable to the group as a
whole. The sales charge
is based upon the aggregate dollar value of Class A
shares offered with a sales
charge that have been previously purchased and are
still owned by the group,
plus the amount of the current purchase. A "qualified
group" is one which (a)
has been in existence for more than six months, (b) has
a purpose other than
acquiring Fund shares at a discount and (c)
satisfies uniform criteria which
enable Smith Barney to realize economies of scale in
its costs of distributing
shares. A qualified group must have more than 10
members, must be available to
arrange for group meetings between representatives of
the Fund and the members,
and must agree to include sales and other materials
related to the Fund in its
publications and mailings to members at no cost to
Smith Barney. In order to
obtain such reduced sales charge or to purchase at net
asset value, the pur-
chaser must provide sufficient information at the time
of purchase to permit
verification that the purchase qualifies for the
reduced sales charge. Approval
of group purchase reduced sales charge plans is subject
to the discretion of
Smith Barney.
28
SMITH BARNEY
Managed Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
LETTER OF INTENT
Class A Shares. A Letter of Intent for amounts of $50,000
or more provides an
opportunity for an investor to obtain a reduced sales
charge by aggregating
investments over a 13 month period, provided that
the investor refers to such
Letter when placing orders. For purposes of a Letter
of Intent, the "Amount of
Investment" as referred to in the preceding sales
charge table includes (i) all
Class A shares of the Fund and other funds of the
Smith Barney Mutual Funds
offered with a sales charge acquired during the term of
the Letter plus (ii)
the value of all Class A shares previously purchased
and still owned. Each
investment made during the period receives the reduced
sales charge applicable
to the total amount of the investment goal. If the goal
is not achieved within
the period, the investor must pay the difference between
the sales charges
applicable to the purchases made and the charges
actually paid, or an appropri-
ate number of escrowed shares will be redeemed. The term
of the Letter will
commence upon the date the Letter is signed, or at
the option of the investor,
up to 90 days before such date. Please contact a
Smith Barney Financial Consul-
tant or TSSG to obtain a Letter of Intent application.
Class Y Shares. A Letter of Intent may also be used as a
way for investors to
meet the minimum investment requirement for Class Y
shares. Such investors must
make an initial minimum purchase of $1,000,000 in Class
Y shares of the Fund
and agree to purchase a total of $5,000,000 of Class
Y shares of the Fund
within six months from the date of the Letter. If a
total investment of
$5,000,000 is not made within the six-month period,
all Class Y shares pur-
chased to date will be transferred to Class A shares,
where they will be sub-
ject to all fees (including a service fee of 0.25%)
and expenses applicable to
the Fund's Class A shares, which may include a CDSC
of 1.00%. Please contact a
Smith Barney Financial Consultant or TSSG for
further information.
DEFERRED SALES CHARGE ALTERNATIVES
"CDSC Shares" are sold at net asset value next determined
without an initial
sales charge so that the full amount of an
investor's purchase payment may be
immediately invested in the Fund. A CDSC, however, may
be imposed on certain
redemptions of these shares. "CDSC Shares" are : (a) Class
B shares; (b) Class
C shares; and (c) Class A shares which when combined
with
Class A shares
offered with a sales charge currently held by an
investor equal or exceed
$500,000 in the aggregate.
29
SMITH BARNEY
Managed Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
Any applicable CDSC will be assessed on an amount equal to
the lesser of the
cost of the shares being redeemed or their net asset
value at the time of
redemption. CDSC Shares that are redeemed will not
be subject to a CDSC to the
extent that the value of such shares represents: (a)
capital appreciation of
Fund assets; (b) reinvestment of dividends or capital
gain distributions; (c)
with respect to Class B shares, shares redeemed more
than five years after
their purchase; or (d) with respect to Class C shares
and Class A shares that
are CDSC Shares, shares redeemed more than 12 months
after their purchase.
Class C and Class A shares that are CDSC Shares are
subject to a 1.00% CDSC
if redeemed within 12 months of purchase. In
circumstances in which the CDSC is
imposed on Class B shares, the amount of the charge
will depend on the number
of years since the shareholder made the purchase
payment from which the amount
is being redeemed. Solely for purposes of determining
the number of years since
a purchase payment, all purchase payments made during
a
month will be aggre-
gated and deemed to have been made on the last day of
the preceding Smith Bar-
ney statement month. The following table sets forth
the rates of the charge for
redemptions of Class B shares by shareholders.
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE
PAYMENT WAS MADE CDSC -------------------------
- --------
<S> <C>
First 4.50%
Second 4.00%
Third 3.00%
Fourth 2.00%
Fifth 1.00%
Sixth 0.00%
Seventh 0.00%
Eighth 0.00%
- ---------------------------------
</TABLE>
Class B shares will convert automatically to Class A
shares eight years after
the date on which they were purchased and thereafter will
no longer be subject
to any distribution fees. There will also be converted
at
that time such
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. Shareholders who held Class B shares
of Smith Barney
Shearson Short-Term World Income Fund (the "Short-Term
World Income Fund") on
July 15, 1994 and who subsequently exchange those shares
for Class B shares of
the Fund will be offered the opportunity to exchange
all such Class B shares
for Class A shares of the Fund four years after
30
SMITH BARNEY
Managed Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
the date on which those shares were deemed to have
been purchased. Holders of
such Class B shares will be notified of the pending
exchange in writing approx-
imately 30 days before the fourth anniversary of
the purchase date and, unless
the exchange has been rejected in writing, the exchange
will occur on or about
the fourth anniversary date. See "Prospectus Summary-
Alternative Purchase
Arrangements--Class B Shares Conversion Feature."
The length of time that CDSC Shares acquired through an
exchange have been
held will be calculated from the date that the
shares exchanged were initially
acquired in one of the other Smith Barney Mutual Funds,
and Fund shares being
redeemed will be considered to represent, as
applicable, capital appreciation
or dividend and capital gain distribution reinvestments
in such other funds.
For Federal income tax purposes, the amount of the CDSC
will reduce the gain or
increase the loss, as the case may be, on the
amount realized on redemption.
The amount of any CDSC will be paid to Smith Barney.
To provide an example, assume an investor purchased 100
Class B shares at $10
per share for a cost of $1,000. Subsequently, the
investor acquired 5 addi-
tional shares through dividend reinvestment. During
the fifteenth month after
the purchase, the investor decided to redeem $500 of his
or her investment.
Assuming at the time of the redemption the net asset
value had appreciated to
$12 per share, the value of the investor's shares would
be $1,260 (105 shares
at $12 per share). The CDSC would not be applied to
the
amount which represents
appreciation ($200) and the value of the reinvested
dividend shares ($60).
Therefore, $240 of the $500 redemption proceeds ($500
minus $260) would be
charged at a rate of 4.00% (the applicable rate for Class
B shares) for a total
deferred sales charge of $9.60.
WAIVERS OF CDSC
The CDSC will be waived on: (a) exchanges (see "Exchange
Privilege");(b)
automatic cash withdrawals in amounts equal to or less
than 1.00% per month of
the value of the shareholder's shares at the time
the withdrawal plan commences
(see "Automatic Cash Withdrawal Plan") (provided,
however, that 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 that were
established prior to November 7, 1994); (c) redemptions
of shares within 12
months following the death or disability of the
shareholder; (d) involuntary
redemptions; and (e) redemptions of shares in
connection with a combination of
the Fund with any investment company by merger,
acquisition of
31
SMITH BARNEY
Managed Municipals Fund Inc.
PURCHASE OF SHARES (CONTINUED)
assets or otherwise. In addition, a shareholder who
has redeemed shares from
other funds of the Smith Barney Mutual Funds may,
under certain circumstances,
reinvest all or part of the redemption proceeds within
60 days and receive pro
rata credit for any CDSC imposed on the prior redemption.
CDSC waivers will be granted subject to confirmation (by
Smith Barney in the
case of shareholders who are also Smith Barney clients or
by TSSG in the case
of all other shareholders) of the shareholder's status
or holdings, as the case
may be.
EXCHANGE PRIVILEGE
Except as otherwise noted below, shares of each Class may
be exchanged at the
net asset value next determined for shares of the same
Class in the following
funds of the Smith Barney Mutual Funds, to the extent
shares are offered for
sale in the shareholder's state of residence. Exchanges
of Class A, Class B and
Class C shares are subject to minimum
investment requirements and all shares
are subject to the other requirements of the fund into
which exchanges are
made, and a sales charge differential may apply.
FUND NAME
Growth Funds
Smith Barney Aggressive Growth Fund Inc.
Smith Barney Appreciation Fund Inc.
Smith Barney Fundamental Value Fund Inc.
Smith Barney Growth Opportunity Fund Inc.
Smith Barney Managed Growth Fund
Smith Barney Special Equities Fund
Smith Barney Telecommunications Growth Fund
Growth and Income Funds
Smith Barney Convertible Fund
Smith Barney Funds, Inc.--Income and Growth Portfolio
Smith Barney Funds, Inc.--Utility Portfolio
Smith Barney Growth and Income Fund
Smith Barney Premium Total Return
Fund Smith Barney Strategic
Investors Fund Smith Barney
Utilities Fund
32
SMITH BARNEY
Managed Municipals Fund Inc.
EXCHANGE PRIVILEGE (CONTINUED)
Taxable Fixed--Income Funds
**Smith Barney Adjustable Rate Government Income Fund
Smith Barney Diversified Strategic Income Fund
* Smith Barney Funds, Inc.--Income Return
Account Portfolio
Smith Barney Funds, Inc.--Monthly Payment
Government Portfolio
++ Smith Barney Funds, Inc.--Short-Term U.S. Treasury
Securities Portfolio
Smith Barney Funds, Inc.--U.S. Government
Securities Portfolio
Smith Barney Government Securities Fund
Smith Barney High Income Fund
Smith Barney Investment Grade Bond Fund
Smith Barney Managed Governments Fund Inc.
Tax-Exempt Funds
Smith Barney Arizona Municipals Fund Inc.
Smith Barney California Municipals Fund
Inc. Smith Barney Florida Municipals Fund
* Smith Barney Intermediate Maturity California Municipals
Fund
* Smith Barney Intermediate Maturity New York
Municipals
Fund
* Smith Barney Limited Maturity Municipals Fund
Smith Barney Massachusetts Municipals Fund
Smith Barney Muni Funds--California Portfolio
* Smith Barney Muni Funds--Florida Limited Term Portfolio
Smith Barney Muni Funds--Florida Portfolio
Smith Barney Muni Funds--Georgia Portfolio
* Smith Barney Muni Funds--Limited Term Portfolio
Smith Barney Muni Funds--National Portfolio
Smith Barney Muni Funds--New Jersey Portfolio
Smith Barney Muni Funds--New York Portfolio
Smith Barney Muni Funds--Ohio Portfolio
Smith Barney Muni Funds--Pennsylvania
Portfolio Smith Barney New Jersey Municipals
Fund Inc. Smith Barney New York Municipals
Fund Inc. Smith Barney Oregon Municipals Fund
Smith Barney Tax-Exempt Income Fund
International Funds
Smith Barney World Funds, Inc.--Emerging
Markets Portfolio
Smith Barney World Funds, Inc.--European Portfolio
33
SMITH BARNEY
Managed Municipals Fund Inc.
EXCHANGE PRIVILEGE (CONTINUED)
Smith Barney World Funds, Inc.--Global Government
Bond Portfolio
Smith Barney World Funds, Inc.--International
Balanced Portfolio
Smith Barney World Funds, Inc.--International
Equity Portfolio
Smith Barney World Funds, Inc.--Pacific Portfolio
Smith Barney Precious Metals and Minerals Fund Inc.
Money Market Funds
+Smith Barney Exchange Reserve Fund
++Smith Barney Money Funds, Inc.--Cash Portfolio
++Smith Barney Money Funds, Inc.--Government Portfolio
***Smith Barney Money Funds, Inc.--Retirement Portfolio
++Smith Barney Municipal Money Market Fund, Inc.
++Smith Barney Muni Funds--California Money
Market
Portfolio
++Smith Barney Muni Funds--New York Money
Market Portfolio. ----------------------------------------
- ---------------------------------------
* Available for exchange with Class A, Class C and Class Y
shares of the Fund.
** Available for exchange with Class A, Class B and Class
Y
shares of the
Fund.
*** Available for exchange with Class A shares of the
Fund. + Available for exchange with Class B and Class
C shares
of the Fund.
++ Available for exchange with Class A and Class Y shares
of the Fund.
Class A Exchanges. Class A shares of Smith Barney Mutual
Funds sold without a
sales charge or with a maximum sales charge of less than
the maximum charged by
other Smith Barney Mutual Funds will be subject to
the appropriate "sales
charge differential" upon the exchange of such shares
for Class A shares of a
fund sold with a higher sales charge. The "sales
charge differential" is lim-
ited to a percentage rate no greater than the excess of
the sales charge rate
applicable to purchases of shares of the mutual fund
being acquired in the
exchange over the sales charge rate(s) actually paid on
the mutual fund shares
relinquished in the exchange and on any predecessor of
those shares. For pur-
poses of the exchange privilege, shares obtained
through automatic reinvestment
of dividends and capital gains distributions are treated
as
having paid the
same sales charges applicable to the shares on which
the dividends or distribu-
tions were paid; however, if no sales charge was
imposed upon the initial pur-
chase of shares, any shares obtained through
automatic reinvestment will be
subject to a sales charge differential upon exchange.
Class B Exchanges. In the event a Class B shareholder
(unless such share-
holder was a Class B shareholder of the Short-Term
World Income Fund on July
15, 1994) wishes to exchange all or a portion of his or
her
shares in any of
the funds imposing a higher CDSC than that imposed by
the
Fund, the
34
SMITH BARNEY
Managed Municipals Fund Inc.
EXCHANGE PRIVILEGE (CONTINUED)
exchanged Class B shares will be subject to the
higher applicable CDSC. Upon an
exchange, the new Class B shares will be deemed to have
been purchased on the
same date as the Class B shares of the Fund that have
been exchanged.
Class C Exchanges. Upon an exchange, the new Class C
shares will be deemed to
have been purchased on the same date as the Class C
shares of the Fund that
have been exchanged.
Class Y Exchanges. Class Y shareholders of the Fund who
wish to exchange all
or a portion of their Class Y shares for Class Y shares
in any of the funds
identified above may do so without imposition of any
charge.
Additional Information Regarding the Exchange Privilege.
Although the
exchange privilege is an important benefit,
excessive exchange transactions can
be detrimental to the Fund's performance and
its shareholders. SBMFM may deter-
mine that a pattern of frequent exchanges is excessive
and contrary to the best
interests of the Fund's other shareholders. In this
event, SBMFM will notify
Smith Barney and Smith Barney may, at its discretion,
decide to limit addi-
tional purchases and/or exchanges by a shareholder.
Upon such a determination,
Smith Barney will provide notice in writing or by
telephone to the shareholder
at least 15 days prior to suspending the exchange
privilege and during the 15
day period the shareholder will be required to (a)
redeem his or her shares in
the Fund or (b) remain invested in the Fund or exchange
into any of the funds
of the Smith Barney Mutual Funds ordinarily available,
which position the
shareholder would be expected to maintain for a
significant period of time. All
relevant factors will be considered in determining
what constitutes an abusive
pattern of exchanges.
Exchanges will be processed at the net asset value next
determined, plus any
applicable sales charge differential. Redemption
procedures discussed below are
also applicable for exchanging shares, and exchanges will
be made upon receipt
of all supporting documents in proper form. If the
account registration of the
shares of the fund being acquired is identical to
the registration of the
shares of the fund exchanged, no signature guarantee
is required. A capital
gain or loss for tax purposes will be realized upon
the exchange, depending
upon the cost or other basis of shares redeemed.
Before exchanging shares,
investors should read the current prospectus describing
the shares to be
acquired. The Fund reserves the right to modify
or discontinue exchange privi-
leges upon 60 days' prior notice to shareholders.
35
SMITH BARNEY
Managed Municipals Fund Inc.
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 CDSC. Redemption requests
received after the close of
regular trading on the NYSE are priced at the net
asset value next determined.
If a shareholder holds shares in more than one Class, any
request for redemp-
tion must specify the Class being redeemed. In the event
of a failure to spec-
ify which Class, or if the investor owns fewer shares of
the Class than speci-
fied, the redemption request will be delayed until
the Fund's transfer agent
receives further instructions from Smith Barney, or if
the shareholder's
account is not with Smith Barney, from the
shareholder directly. The redemption
proceeds will be remitted on or before the seventh
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. The
Fund anticipates that,
in accordance with regulatory changes, beginning on or
about June 1, 1995, pay-
ment will be made on the third business day after receipt
of proper tender.
Generally, if the redemption proceeds are remitted to
a Smith Barney brokerage
account, these funds will not be invested for
the
shareholder's benefit without
specific instruction and Smith Barney will benefit from
the use of temporarily
uninvested funds. Redemption proceeds for shares
purchased by check, other than
a certified or official bank check, will be remitted
upon
clearance of the
check, which may take up to ten days or more.
Shares held by Smith Barney as custodian must be redeemed
by submitting a
written request to a Smith Barney Financial
Consultant. Shares other than those
held by Smith Barney as custodian may be redeemed through
an investor's Finan-
cial Consultant, Introducing Broker or a dealer in
the selling group or by sub-
mitting a written request for redemption to:
Smith Barney Managed Municipals Fund Inc.
Class A, B, C or Y (please specify)
c/o The Shareholder Services Group, Inc.
P.O. Box 9134
Boston, Massachusetts 02205-9134
A written redemption request must (a) state the Class and
number or dollar
amount of shares to be redeemed, (b) identify
the shareholder's account number
and (c) be signed by each registered owner exactly as
the shares are regis-
tered. If the shares to be redeemed were issued
in certificate form, the cer-
tificates must
36
SMITH BARNEY
Managed Municipals Fund Inc.
REDEMPTION OF SHARES (CONTINUED)
be endorsed for transfer (or be accompanied by an
endorsed stock power) and
must be submitted to TSSG together with the
redemption request. Any signature
appearing on a redemption request, share certificate
or stock power must be
guaranteed by an eligible guarantor institution such as
a domestic bank, sav-
ings and loan institution, domestic credit union,
member bank of the Federal
Reserve System or member firm of a national
securities exchange. TSSG may
require additional supporting documents for redemptions
made by corporations,
executors, administrators, trustees or guardians.
A redemption request will not
be deemed properly received until TSSG receives all
required documents in
proper form.
AUTOMATIC CASH WITHDRAWAL PLAN
The Fund offers shareholders an automatic cash withdrawal
plan, under which
shareholders who own shares with a value of at least
$10,000 may elect to
receive cash payments of at least $50 monthly or
quarterly. The withdrawal plan
will be carried over on exchanges between funds or
Classes of the Fund. Any
applicable CDSC will not be waived on amounts withdrawn by
a shareholder that
exceed 1.00% per month of the value of the
shareholder's shares subject to the
CDSC at the time the withdrawal plan commences.
(With respect to withdrawal
plans in effect prior to November 7, 1994, any
applicable CDSC will be waived
on amounts withdrawn that do not exceed 2.00% per month
of the shareholder's
shares subject to the CDSC.) For further
information regarding the automatic
cash withdrawal plan, shareholders should contact a
Smith
Barney Financial Con-
sultant.
MINIMUM ACCOUNT SIZE
The Fund reserves the right to involuntarily liquidate any
shareholder's
account in the Fund if the aggregate net asset value of
the shares held in the
Fund account is less than $500. (If a shareholder has
more than one account in
this Fund, each account must satisfy the minimum
account size.) The Fund, how-
ever, will not redeem shares based solely on
market reductions in net asset
value. Before the Fund exercises such right,
shareholders will receive written
notice and will be permitted 60 days to bring accounts up
to the minimum to
avoid automatic redemption.
37
SMITH BARNEY
Managed Municipals Fund Inc.
PERFORMANCE
YIELD
From time to time, the Fund may advertise the 30-day
"yield" and "equivalent
taxable yield" of each Class of shares. The yield refers
to the income gener-
ated by an investment in those shares over the 30-day
period identified in the
advertisement and is computed by dividing the net
investment income per share
earned by the Class during the period by the maximum
public offering price per
share on the last day of the period. This income
is "annualized" by assuming
the amount of income is generated each month over a one-
year period and is com-
pounded semi-annually. The annualized income is then
shown as a percentage of
the net asset value.
The equivalent taxable yield demonstrates the yield on a
taxable investment
necessary to produce an after-tax yield equal to the
Fund's tax-exempt yield
for each Class. It is calculated by increasing the
yield shown for the Class to
the extent necessary to reflect the payment of taxes
at specified tax rates.
Thus, the equivalent taxable yield always will exceed
the Fund's yield. For
more information on equivalent taxable yields, refer to
the table under "Divi-
dends, Distributions and Taxes."
TOTAL RETURN
From time to time the Fund may include its total return,
average annual total
return and current dividend return in advertisements
and/or other types of
sales literature. These figures are computed separately
for Class A, Class B,
Class C and Class Y shares of the Fund. These figures
are based on historical
earnings and are not intended to indicate
future performance. Total return is
computed for a specified period of time assuming
deduction of the maximum sales
charge, if any, from the initial amount invested
and reinvestment of all income
dividends and capital gain distributions on the
reinvestment dates at prices
calculated as stated in this Prospectus, then dividing
the value of the invest-
ment at the end of the period so calculated by the
initial amount invested and
subtracting 100%. The standard average annual total
return, as prescribed by
the SEC, is derived from this total return, which
provides the ending redeem-
able value. Such standard total return information may
also be accompanied with
nonstandard total return information for differing
periods computed in the same
manner but without annualizing the total return or
taking sales charges into
account. The Fund calculates current dividend return
for each Class by
annualizing the most recent monthly distribution
and
dividing by the net asset
value or the maximum public offering price (including
sales charge) on the last
38
SMITH BARNEY
Managed Municipals Fund Inc.
PERFORMANCE (CONTINUED)
day of the period for which current dividend return
is presented. The current
dividend return for each Class may vary from time to
time depending on market
conditions, the composition of its investment portfolio
and operating expenses.
These factors and possible differences in the methods
used in calculating cur-
rent dividend return should be considered when comparing
a Class' current
return to yields published for other investment
companies and other investment
vehicles. The Fund may also include comparative
performance information in
advertising or marketing its shares. Such
performance information may include
data from Lipper Analytical Services, Inc. or
similar independent services that
monitor the performance of mutual funds, or other
industry publications. The
Fund will include performance data for Class A, Class
B, Class C and Class Y
shares in any advertisement or information
including performance data of the
Fund.
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
Overall responsibility for management and supervision of
the Fund rests with
the Fund's Board of Directors. The Directors approve
all significant agreements
between the Fund and the companies that furnish services
to the Fund, including
agreements with the Fund's distributor, investment
adviser, administrator, sub-
administrator, custodian and transfer agent. The day-to-
day operations of the
Fund are delegated to the Fund's investment
adviser, administrator and sub-
administrator. The Statement of Additional
Information contains background
information regarding each Director and executive officer
of the Fund.
INVESTMENT ADVISER--SBMFM
The Fund's investment adviser, SBMFM, is a registered
investment adviser
whose principal executive offices are located at
388 Greenwich Street, New
York, New York 10013. SBMFM (through predecessor
entities) has been in the
investment counseling business since 1940 and
renders investment advice to a
wide variety of individual, institutional and
investment company clients that
had aggregate assets under management as of March 31,
1995, in excess of $53
billion.
39
SMITH BARNEY
Managed Municipals Fund Inc.
MANAGEMENT OF THE FUND (CONTINUED)
Subject to the supervision and direction of the Fund's
Board of Directors,
SBMFM manages the Fund's portfolio in accordance with
the Fund's stated invest-
ment objective and policies, makes investment decisions
for the Fund, places
orders to purchase and sell securities and
employs professional portfolio man-
agers and securities analysts who provide research
services to the Fund. For
investment advisory services rendered, the Fund pays SBMFM
a fee at the follow-
ing annual rates of average daily net assets: 0.35% up
to
$500 million; 0.32%
of the next $1 billion; and 0.29% in excess of $1.5
billion. For the fiscal
year ended February 28, 1995, SBMFM was paid
investment advisory fees equal to
0.32% of the value of the average daily net assets of
the Fund.
PORTFOLIO MANAGEMENT
Joseph P. Deane, Vice President and Investment Officer of
the Fund since
November 1, 1988 and Managing Director of SBMFM,
is responsible for managing
the day-to-day operations of the Fund, including the
making of investment deci-
sions.
Management's discussion and analysis, and additional
performance information
regarding the Fund during the fiscal year ended February
28, 1995 is included
in the Annual Report dated February 28, 1995. A copy of
the Annual Report may
be obtained upon request and without charge from a
Smith Barney Financial Con-
sultant or by writing or calling the Fund at the address
or phone number listed
on page one of this Prospectus.
ADMINISTRATOR--SBMFM
SBMFM also serves as the Fund's administrator and oversees
all aspects of the
Fund's administration and operation. For
administration services rendered, the
Fund pays SBMFM a fee at the following annual rates
of average daily net
assets: 0.20% up to $500 million; 0.18% of the next
$1 billion; and 0.16% of
net assets in excess of $1.5 billion.
SUB-ADMINISTRATOR--BOSTON ADVISORS
Boston Advisors, located at One Boston Place, Boston,
Massachusetts 02108,
serves as the Fund's sub-administrator. Boston
Advisors provides investment
40
SMITH BARNEY
Managed Municipals Fund Inc.
MANAGEMENT OF THE FUND (CONTINUED)
management, investment advisory and/or
administrative services to investment
companies that had aggregate assets under management as
of March 31, 1995, in
excess of $16 billion.
Boston Advisors calculates the net asset value of the
Fund's shares and gen-
erally assists SBMFM in all aspects of the
Fund's
administration and operation.
Under a sub-administration agreement dated July 20,
1994, Boston Advisors is
paid a portion of the administration fee paid by the Fund
to SBMFM at a rate
agreed upon from time to time between Boston Advisors
and SBMFM. Prior to July
20, 1994, Boston Advisors served as the
Fund's
administrator.
DISTRIBUTOR
Smith Barney is located at 388 Greenwich Street, New York,
New York 10013.
Smith Barney distributes shares of the Fund as
principal underwriter and as
such conducts a continuous offering pursuant to a
"best efforts" arrangement
requiring Smith Barney to take and pay for only
such securities as may be sold
to the public. Pursuant to a plan of distribution adopted
by the Fund under
Rule 12b-1 under the 1940 Act (the "Plan"), Smith Barney
is paid a service fee
with respect to Class A, Class B and Class C shares of
the Fund at the annual
rate of 0.15% of the average daily net assets of
the respective Class. Smith
Barney is also paid a distribution fee with respect to
Class B and Class C
shares at the annual rate of 0.50% and 0.55%,
respectively, of the average
daily net assets attributable to those Classes. Class
B shares which automati-
cally convert to Class A shares eight years after the
date of original purchase
will no longer be subject to a distribution fee. The
fees are used by
Smith Barney to pay its Financial Consultants for
servicing shareholder
accounts and, in the case of Class B and Class C shares,
to cover expenses pri-
marily intended to result in the sale of those shares.
These expenses include:
advertising expenses; the cost of printing and
mailing prospectuses to poten-
tial investors; payments to and expenses of Smith
Barney Financial Consultants
and other persons who provide support services in
connection with the distribu-
tion of shares; interest and/or carrying charges;
and indirect and overhead
costs of Smith Barney associated with the sale of
Fund shares, including lease,
utility, communications and sales promotion expenses.
41
SMITH BARNEY
Managed Municipals Fund Inc.
DISTRIBUTOR (CONTINUED)
The payments to Smith Barney Financial Consultants for
selling shares of a
Class include a commission or fee paid by the investor
or Smith Barney at the
time of sale and, with respect to Class A, Class B and
Class C shares, a con-
tinuing fee for servicing shareholder accounts for as
long as a shareholder
remains a holder of that Class. Smith Barney
Financial Consultants may receive
different levels of compensation for selling
different Classes of shares.
Payments under the Plan are not tied exclusively to the
distribution and
shareholder service expenses actually incurred by
Smith Barney and the payments
may exceed distribution expenses actually incurred.
The Fund's Board of Direc-
tors will evaluate the appropriateness of the Plan and
its payment terms on a
continuing basis and in so doing will consider all
relevant factors, including
expenses borne by Smith Barney, amounts received under
the Plan and proceeds of
the CDSC.
ADDITIONAL INFORMATION
The Fund was incorporated under the laws of the State of
Maryland on
September 16, 1980, and is registered with the SEC as
a diversified, open-end
management investment company. 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 desig-
nation 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 con-
sider 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
42
SMITH BARNEY
Managed Municipals Fund Inc.
ADDITIONAL INFORMATION (CONTINUED)
shares and the Fund will assist shareholders in calling
such a meeting as
required by the 1940 Act. When matters are submitted
for shareholder vote,
shareholders of each Class will have one vote for each
full share owned and a
proportionate, fractional vote for any fractional share
held of that Class.
Generally, shares of the Fund will be voted on a Fund-
wide basis on all matters
except matters affecting only the interests of one Class.
Boston Safe Deposit and Trust Company, an indirect wholly
owned subsidiary of
Mellon, is located at One Boston Place,
Boston, Massachusetts 02108, and serves
as custodian of the Fund's investments.
TSSG, is located at Exchange Place, Boston, Massachusetts
02109, and serves
as the Fund's transfer agent.
The Fund sends to each of its shareholders a semi-annual
report and an
audited annual report, which include listings of
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 consol-
idation to apply to their account should contact
their Financial Consultants or
the Fund's transfer agent.
----------------------
43
SMITH BARNEY
Managed Municipals Fund Inc.
PARTICIPANTS
DATE
DISTRIBUTOR
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
INVESTMENT ADVISOR AND ADMINISTRATOR
Smith Barney Mutual Funds Management
Inc. 388 Greenwich Street
New York, New York 10013
SUB-ADMINISTRATOR
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
AUDITORS AND COUNSEL
KPMG Peat Marwick LLP
345 Park Avenue
New York, New York 10154
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
TRANSFER AGENT
The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
CUSTODIAN
Boston Safe Deposit and Trust Company
One Boston Place
Boston, Massachusetts 02108
44
[LOGO OF SMITH BARNEY A MEMBER OF
TRAVELERS GROUP APPEARS HERE]
Smith Barney
Managed
Municipals
Fund Inc.
388 Greenwich Street
New York, New York 10013
Fund 5 179,465,483
FD0261D5
[RECYCLING LOGO APPEARS HERE]
Smith Barney
MANAGED MUNICIPALS FUND INC.
388 Greenwich Street
New York, New York 10013
(212) 723-9218
STATEMENT OF ADDITIONAL
INFORMATION
APRIL 29, 1995
This Statement of Additional Information expands upon
and supplements the
information contained in the current Prospectus of
Smith Barney Managed
Municipals Fund Inc. (the "Fund") dated April 29, 1995,
as amended or sup-
plemented from time to time, and should be read
in
conjunction with the
Fund's Prospectus. The Fund's Prospectus may be
obtained from a Smith Bar-
ney Financial Consultant or by writing or calling the
Fund at the address
or telephone number set forth above. This Statement
of
Additional Informa-
tion, although not in itself a prospectus, is
incorporated by reference
into the Prospectus in its entirety.
TABLE OF CONTENTS
For ease of reference, the same section headings are used
in both the Pro-
spectus and this Statement of Additional Information,
except where shown
below.
<TABLE>
<CAPTION>
<S> <C>
Management of the
Fund
1
Investment Objective and Management
Policies 5
Municipal
Bonds
10
Purchase of
Shares
12
Redemption of
Shares
13
Distributor 14
Valuation of
Shares
15
Exchange
Privilege
15
Performance Data (See in the Prospectus "The
Fund's Performance") 16
Taxes (See in the Prospectus "Dividends,
Distributions and Taxes")
19
Additional
Information
22
Financial
Statements
22
Appendix A-1
</TABLE>
MANAGEMENT OF THE FUND
The executive officers of the Fund are employees of
certain of the organi-
zations that provide services to the Fund.
These organizations are the
following:
<TABLE>
<CAPTION>
NAME SERVICE
<S> <C>
Smith Barney Inc.
("Smith
Barney")
Distributor
Smith Barney Mutual Funds Management
Inc.
Investment Adviser and Administrator
("SBMFM")
The Boston Company Advisors, Inc.
("Boston
Advisors") Sub-Administrator
Boston Safe Deposit and Trust Company
("Boston
Safe")
Custodian
The Shareholder Services Group, Inc. ("TSSG"),
a subsidiary of First Data
Corporation
Transfer Agent
</TABLE>
These organizations and the functions they perform for
the Fund are dis-
cussed in the Prospectus and in this Statement of
Additional Information.
DIRECTORS AND EXECUTIVE OFFICERS OF THE FUND
The names of the Directors and executive officers of
the Fund, together
with information as to their principal business
occupations during the
past five years, are shown below. Each Director who is
an "interested per-
son" of the Fund, as defined in the Investment Company
Act of 1940, as
amended (the "1940 Act"), is indicated by an asterisk.
Herbert Barg, Director (Age 73). Private investor.
His address is 273
Montgomery Avenue, Bala Cynwyd, Pennsylvania 19004.
*Alfred J. Bianchetti, Director (Age 72). Retired;
formerly Senior Con-
sultant to Dean Witter Reynolds Inc. His address is
19 Circle End Drive,
Ramsey, New Jersey 17466.
Martin Brody, Director (Age 73). Vice Chairman of the
Board of Restaurant
Associates Industries, Corp.; a Director of Jaclyn, Inc.
His address is
HMK Associates, Three ADP Boulevard, Roseland, New
Jersey
07068.
Dwight B. Crane, Director (Age 57). Professor,
Graduate School of Business
Administration, Harvard University; a Director of
Peer Review Analysis,
Inc. His address is Graduate School of
Business Administration, Harvard
University, Boston, Massachusetts 02163.
Burt N. Dorsett, Director (Age 69). Managing Partner
of Dorsett, McCabe
Management, Inc., an investment counselling firm;
Director of Research
Corporation Technologies Inc., a non-profit patent-
clearing and licensing
firm. His address is 201 East 62nd Street, New York,
New York 10021.
Elliot S. Jaffe, Director (Age 68). Chairman of the
Board and President of
The Dress Barn, Inc. His address is 30 Dunnigan
Drive, Suffern, New York
10901.
Stephen E. Kaufman, Director (Age 63). Attorney. His
address is 277 Park
Avenue, New York, New York 10172.
Joseph J. McCann, Director (Age 64). Financial
Consultant; formerly, Vice
President of Ryan Homes, Inc., Pittsburgh, Pennsylvania.
His address is
200 Oak Park Place, Pittsburgh, Pennsylvania 15243.
*Heath B. McLendon, Chairman of the Board and
Investment Officer (Age 61).
Managing Director of Smith Barney, Chairman of the Board
of Smith Barney
Strategy Advisers Inc. and President of SBMFM; prior to
July 1993, Senior
Executive Vice President of Shearson Lehman Brothers
Inc. ("Shearson Leh-
man Brothers"); Vice Chairman of Asset Management
Division of Shearson Le-
hman Brothers; a Director of PanAgora Asset Management,
Inc. and PanAgora
Asset Management Limited. His address is 388
Greenwich Street, New York,
New York 10013.
Cornelius C. Rose, Jr., Director (Age 61).
President, Cornelius C. Rose
Associates, Inc., financial consultants, and Chairman
and Director of Per-
formance Learning Systems, an educational consultant.
His address is P.O.
Box 355, Fair Oaks, Enfield, New Hampshire 03748.
James J. Crisona, Director emeritus (Age 87).
Attorney; formerly Justice
of the Supreme Court of the State of New York. His
address is 118 East
60th Street, New York, New York 10022.
Jessica M. Bibliowicz, President (Age 35). Executive
Vice
President of
Smith Barney; prior to 1994, Director of Sales and
Marketing for Pruden-
tial Mutual Funds; prior to 1990, First Vice
President, Asset Management
Division of Shearson Lehman Brothers. Ms. Bibliowicz
also serves as Presi-
dent of 25 other mutual funds of the Smith Barney
Mutual Funds. Her ad-
dress is 388 Greenwich Street, New York, New York 10013.
Joseph P. Deane, Vice President and Investment Officer
(Age 47). Invest-
ment Officer of SBMFM; prior to July 1993, Managing
Director of Shearson
Lehman Advisors. Mr. Deane also serves as Investment
Officer of 5 other
mutual funds of the Smith Barney Mutual Funds. His
address is 388 Green-
wich Street, New York, New York 10013.
David Fare, Investment Officer (Age 32). Investment
Officer of SBMFM;
prior to July 1993, Vice President of Shearson
Lehman Advisors. Mr. Fare
also serves as Investment Officer of 4 other mutual funds
of the Smith
Barney Mutual Funds. His address is 388 Greenwich
Street, New York, New
York 10013.
Lewis E. Daidone, Senior Vice President and Treasurer
(Age 37). Managing
Director of Smith Barney; Director and Senior Vice
President of SBMFM. Mr.
Daidone also serves as Senior Vice President and
Treasurer of 41 other mu-
tual funds of the Smith Barney Mutual Funds. His address
is 388 Greenwich
Street, New York, New York 10013.
Christina T. Sydor, Secretary (Age 44). Managing Director
of Smith Barney;
General Counsel and Secretary of SBMFM. Ms. Sydor
also serves as Secretary
of 41 other mutual funds of the Smith Barney Mutual
Funds. Her address is
388 Greenwich Street, New York, New York 10013.
As of March 31, 1995, the Directors and officers of
the Fund, as a group,
owned less than 1.00% of the outstanding common stock of
the Fund.
No officer, director or employee of Smith Barney or any
of its parent or
subsidiary receives any compensation from the Fund
for serving as an of-
ficer or Director of the Fund. The Fund pays each
Director who is not an
officer, director or employee of Smith Barney or any of
its affiliates a
fee of $2,000 per annum plus $500 per meeting attended
and each Director
emeritus who is not an officer, director or employee
of Smith Barney or
any of its affiliates, a fee of $1,000 per annum plus
$250 per meeting at-
tended. All Directors are reimbursed for travel and out-
ofpocket expenses
incurred to attend such meetings. For the fiscal year
ended February 28,
1995, such fees and expenses totalled $64,871.
For the fiscal year ended February 28, 1995, the
Directors of the Fund
were paid the following compensation:
<TABLE>
<CAPTION>
AGGREGATE COMPENSATION
AGGREGATE
COMPENSATION FROM THE SMITH BARNEY
DIRECTOR* FROM THE
FUND
MUTUAL FUNDS
<S>
<C>
<C>
Herbert Barg (13)
6,500
77,850
Alfred J. Bianchetti (8)
6,500
33,850
Martin Brody (15)
5,000
111,675
Dwight B. Crane (18)
6,500
129,975
Burt N. Dorsett (12)
1,500
34,300
Robert Frankel (7) 5,000 79,100
Paul Hardin (25) 5,000 46,400
Elliot S. Jaffe (12)
1,500
23,300
Stephen E. Kaufman (10)
6,500
83,600
Joseph J. McCann (18)
6,500
51,100
Heath B. McLendon (29)
- --
- --
Cornelius C. Rose (12)
1,500
33,300
James J. Crisona** (10)
6,500
67,350
<FN>
* Number of directorships/trusteeships held with other
mutual funds in
the Smith Barney Mutual Funds.
** Director Emeritus. A Director emeritus may
attend
meetings of the
Fund's Board of Directors but has no voting rights
at such meetings.
</TABLE>
INVESTMENT ADVISER AND ADMINISTRATOR -- SBMFM
SBMFM serves as investment adviser to the Fund pursuant to
a transfer of
the investment advisory agreement effective November 7,
1994 from its af-
filiate, Mutual Management Corp. (Mutual Management
Corp. and SBMFM are
both wholly owned subsidiaries of Smith Barney Holdings
Inc. ("Hold-
ings").) Holdings is a wholly owned subsidiary of
The Travelers Inc.
("Travelers"). The advisory agreement is dated July 30,
1993 (the "Advi-
sory Agreement"), and was first approved by the Board
of Directors, in-
cluding a majority of those Directors who are
not "interested persons" of
the Fund or Smith Barney, on April 7, 1993. The
services provided by SBMFM
under the Advisory Agreement are described in the
Prospectus under "Man-
agement of the Fund." SBMFM pays the salary of any
officer and employee
who is employed by both it and the Fund. SBMFM bears
all expenses in con-
nection with the performance of its services.
As compensation for investment advisory services, the
Fund pays SBMFM a
fee computed daily and paid monthly at the following
annual rates of the
Fund's average daily net assets: 0.35% up to $500
million; 0.32% of the
next $1 billion; and 0.29% in excess of $1.5 billion.
For the 1995, 1994
and 1993 fiscal years, the Fund incurred
$6,881,477, $6,502,360 and
$5,458,117, respectively, in investment advisory fees.
SBMFM also serves as administrator to the Fund pursuant to
a written
agreement dated April 20, 1994 (the
"Administration Agreement"), which was
most recently approved by the Fund's Board of
Directors, including a ma-
jority of Directors who are not "interested persons" of
the Fund or SBMFM,
on July 20, 1994. The services provided by SBMFM under
the Administration
Agreement are described in the Prospectus under
"Management of the Fund."
SBMFM pays the salary of any officer and employee who
is employed by both
it and the Fund and bears all expenses in connection
with the performance
of its services.
As compensation for administrative services rendered to
the Fund, SBMFM
receives a fee paid at the following annual rates of
average daily net as-
sets: 0.20% up to $500 million; 0.18% of the next
$1 billion; and 0.16% in
excess of $1.5 billion.
SUB-ADMINISTRATOR -- BOSTON ADVISORS
Boston Advisors serves as sub-administrator to the
Fund pursuant to a
written agreement (the "Sub- Administration
Agreement") dated April 20,
1994, which was most recently approved by the Fund's
Board of Directors,
including a majority of Directors who are not
"interested persons" of the
Fund or Boston Advisors, on July 20, 1994. Under the
SubAdministration
Agreement, Boston Advisors is paid a portion of
the
administration fee
paid by the Fund to SBMFM at a rate agreed upon from time
to time between
Boston Advisors and SBMFM. Boston Advisors is a wholly
owned subsidiary of
The Boston Company, Inc. ("TBC"), a financial
services holding company,
which is in turn a wholly owned subsidiary of Mellon
Bank Corporation
("Mellon").
Prior to April 20, 1994, Boston Advisors served as
the Fund's sub-
investment adviser and/or administrator. For the 1995,
1994 and 1993 fis-
cal years, the Fund paid Boston Advisors,
$3,865,642, $3,656,475 and
$3,083,709, respectively, in sub-investment advisory
and/or administration
fees.
Certain of the services provided to the Fund by
Boston Advisors pursuant
to the Sub-Administration Agreement are described in
the Prospectus under
"Management of the Fund." In addition to those
services, Boston Advisors
pays the salaries of all officers and employees who
are employed by both
it and the Fund, maintains office facilities for the
Fund, furnishes the
Fund with statistical and research data, clerical help
and accounting,
data processing, bookkeeping, internal auditing and
legal services and
certain other services required by the Fund,
prepares reports to the
Fund's shareholders and prepares tax returns and reports
to and filings
with the Securities and Exchange Commission (the "SEC")
and state Blue Sky
authorities. Boston Advisors bears all expenses
in connection with the
performance of its services.
The Fund bears expenses incurred in its
operation, including: taxes, in-
terest, brokerage fees and commissions, if any; fees
of Directors who are
not officers, directors, shareholders or employees of
Smith Barney, SBMFM
or Boston Advisors; SEC fees and state Blue
Sky
qualification fees;
charges of custodians; transfer and dividend
disbursing agent fees; cer-
tain insurance premiums; outside auditing and
legal expenses; costs of
maintaining corporate existence; costs of investor
services (including al-
located 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.
SBMFM and Boston Advisors have agreed that if in any
fiscal year the ag-
gregate expenses of the Fund (including fees pursuant to
the Advisory
Agreement, Administration and Sub-Administration
Agreements, but excluding
interest, taxes, brokerage fees paid pursuant to the
Fund's services and
distribution plan, and, with the prior written consent
of the necessary
state securities commissions, extraordinary expenses)
exceed the expense
limitation of any state having jurisdiction over the
Fund, SBMFM and Bos-
ton Advisors will, to the extent required by state
law, reduce their fees
by the amount of such excess expenses, such amount to
be allocated between
them in the proportion that their respective fees bear
to the aggregate of
such fees paid by the Fund. Such fee reductions, if
any, will be recon-
ciled on a monthly basis. The most restrictive
state limitation currently
applicable to the Fund would require SBMFM and
Boston Advisors to reduce
their fees in any year that such expenses exceed 2.50%
of the first $30
million of average daily net assets, 2.00% of the next
$70 million of av-
erage daily net assets and 1.50% of the remaining
average daily net as-
sets. No fee reduction was required for the 1995, 1994
and 1993 fiscal
years.
COUNSEL AND AUDITORS
Willkie Farr & Gallagher serves as legal counsel to
the Fund. The Direc-
tors who are not "interested persons" of the Fund
have selected Stroock &
Stroock & Lavan as their legal counsel.
KPMG Peat Marwick LLP, independent accountants, 345
Park Avenue, New York,
New York 10154, serve as auditors of the Fund and
will render an opinion
on the Fund's financial statements annually, beginning
with the fiscal
year ending February 28, 1996. Coopers & Lybrand
L.L.P., independent audi-
tors, served as auditors of the Fund and rendered an
opinion on the finan-
cial statements for the fiscal year ended February 28,
1995.
INVESTMENT OBJECTIVE AND MANAGEMENT
POLICIES
The Prospectus discusses the Fund's investment objective
and the policies
it employs to achieve its objective. The
following
discussion supplements
the description of the Fund's investment objective
and management policies
in the Prospectus. For purposes of this Statement
of Additional Informa-
tion, intermediate- and long-term debt obligations issued
by or on behalf
of states, territories and possessions of the United
States and the Dis-
trict of Columbia and their political subdivisions,
agencies or instrumen-
talities, or multistate agencies or authorities,
are collectively referred
to as "Municipal Bonds."
RATINGS AS INVESTMENT CRITERIA
In general, the ratings of Moody's Investors Service,
Inc. ("Moody's") and
Standard & Poor's Corporation ("S&P") represent the
opinions of those
agencies as to the quality of the Municipal Bonds and
shortterm invest-
ments which they rate. It should be emphasized,
however, that such ratings
are relative and subjective, are not absolute standards
of quality and do
not evaluate the market risk of securities. These
ratings will be used by
the Fund as initial criteria for the selection of
portfolio securities,
but the Fund also will rely upon the independent advice
of SBMFM to evalu-
ate potential investments. Among the factors that will
be considered are
the long-term ability of the issuer to pay principal
and interest and gen-
eral economic trends. To the extent the Fund invests
in lower-rated and
comparable unrated securities, the Fund's achievement of
its investment
objective may be more dependent on SBMFM's credit
analysis of such securi-
ties than would be the case for a portfolio
consisting entirely of higher-
rated securities. The Appendix contains further
information concerning the
ratings of Moody's and S&P and their significance.
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 re-
quire the sale of such Municipal Bonds by the Fund,
but SBMFM will con-
sider such event in its determination of whether the
Fund should continue
to hold such Municipal Bonds. In addition, to the extent
the ratings
change as a result of changes in such organizations in
their rating sys-
tems or due to a corporate restructuring of Moody's or
S&P, the Fund will
attempt to use comparable ratings as standards for
its investments in ac-
cordance with its investment objective and policies.
The Fund may invest up to 25% of its total assets
in securities rated
below A, MIG 3 or Prime-1 (P-1) by Moody's or A, SP-2 or A-
3 by S&P, or in
unrated securities of comparable quality. Such
securities (a) will likely
have some quality and protective characteristics that,
in the judgment of
rating organizations, are outweighed by large
uncertainties or major risk
exposures to adverse conditions and (b) are
predominantly speculative with
respect to the issuer's capacity to pay interest and
repay principal in
accordance with the terms of the obligation.
Notwithstanding the foregoing, the Fund shall 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 determined
to be liquid by SBMFM.
TEMPORARY INVESTMENTS
When the Fund is maintaining a defensive position, the
Fund may invest in
short-term investments ("Temporary Investments")
consisting of (a) the
following tax-exempt securities: notes of municipal
issuers having, at the
time of purchase, a rating within the three highest
grades of Moody's or
S&P or, if not rated, having an issue of
outstanding Municipal Bonds rated
within the three highest grades by Moody's or S&P and
(b) the following
taxable securities: obligations of the United
States government, its agen-
cies or instrumentalities ("U.S. government
securities"), repurchase
agreements, other debt securities rated within the
three highest grades by
Moody's and S&P, commercial paper rated in the highest
grade by either of
such rating services, and certificates of deposit
of domestic banks with
assets of $1 billion or more. The Fund 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 Invest-
ments 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. Since
the commencement of its
operations, the Fund has not found it necessary to
purchase taxable Tempo-
rary Investments.
Repurchase Agreements. The Fund may engage in
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 secu-
rity 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 un-
derlying debt obligation for a relatively short
period (usually not more
than one week) 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 ar-
rangement results in a fixed rate of return that is
not subject to market
fluctuations during the Fund's holding period. The value
of the underlying
securities will be at least equal at all times to the
total amount of the
repurchase obligation, including interest.
Repurchase agreements could in-
volve 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 associ-
ated with asserting those rights and the risk of losing
all or part of the
income from the agreement. SBMFM or Boston Advisors,
acting under the su-
pervision 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 to evaluate
potential risks.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment
restrictions for the protec-
tion of shareholders. Restrictions 1 through 8 cannot
be changed without
approval by 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 of the
Fund are present or represented by proxy or (b) more
than
50% of the
Fund's outstanding shares. The remaining restrictions may
be changed by
the Board of Directors at any time. The Fund may not:
1. With respect to 75% of the value of its total
assets, invest more
than 5% of its total assets in securities of any
one issuer, except
securities issued or guaranteed by the United
States government, or
purchase more than 10% of the outstanding
voting securities of such
issuer.
2. Issue senior securities as defined in the 1940
Act and any rules
and orders thereunder, except insofar as the Fund may
be deemed to
have issued senior securities by reason of:
(a) borrowing money or
purchasing securities on a when-issued or
delayeddelivery basis; (b)
purchasing or selling futures contracts and options
on futures con-
tracts and other similar instruments; and (c)
issuing separate classes
of shares.
3. Invest more than 25% of its total assets
in securities, the issu-
ers of which are in the same industry. For purposes
of this limita-
tion, 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.
4. Borrow money, except that the Fund may borrow
from banks for tem-
porary or emergency (not leveraging) purposes,
including the meeting
of redemption requests which might otherwise require
the untimely dis-
position of securities, in an amount not exceeding
10% of the value of
the Fund's total assets (including the amount
borrowed) valued at mar-
ket less liabilities (not including the amount
borrowed) at the time
the borrowing is made. Whenever borrowings exceed 5%
of the value of
the Fund's total assets, the Fund will not
make additional invest-
ments.
5. 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.
6. Engage in the business of underwriting
securities issued by other
persons, except to the extent that the Fund
may technically be deemed
to be an underwriter under the Securities Act of
1933, as amended, in
disposing of portfolio securities.
7. Purchase or sell real estate, real estate
mortgages, real estate
investment trust securities, commodities or
commodity contracts, but
this shall not prevent the Fund from: (a) investing
in securities of
issuers engaged in the real estate business
and securities which are
secured by real estate or interests therein; (b)
holding or selling
real estate received in connection with securities
it holds; or (c)
trading in futures contracts and options on
futures contracts.
8. Purchase any securities on margin (except for
such short-term cred-
its as are necessary for the clearance of purchases
and sales of port-
folio securities) or sell any securities short
(except against the
box). For purposes of this restriction, the deposit
or payment by the
Fund of initial or maintenance margin in connection
with futures con-
tracts and related options and options on securities
is not considered
to be the purchase of a security on margin.
9. 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.
10. Invest more than 5% of the value of its total
assets in the secu-
rities of issuers having a record,
including predecessors, of less
than three years of continuous operation, except
U.S. government secu-
rities. (For purposes of this restriction,
issuers include predeces-
sors, sponsors, controlling persons, general
guarantors and origina-
tors 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 for the purchase, to the
extent permitted by Section
12 of the 1940 Act, of shares of registered
unit investment trusts
whose assets consist substantially of Municipal Bonds.
13. Purchase or sell oil and gas interests.
14. Engage in the purchase and sale of put,
call, straddle or spread
options or in writing of such options, except that
the Fund may pur-
chase and sell options on interest rate
futures contracts.
Certain restrictions listed above permit the Fund
without shareholder ap-
proval to engage in investment practices that the Fund
does not currently
pursue. The Fund has no present intention of altering
its current invest-
ment practices as otherwise described in the Prospectus
and this Statement
of Additional Information and any future change in
those practices would
require Board approval and appropriate disclosure
to investors.
For the purposes of Investment Restriction 3,
private activity bonds,
where the payment of principal and interest is the
ultimate responsibility
of companies within the same industry, are grouped
together as an "indus-
try."
If any percentage restriction described above is
complied with at the time
of investment, a later increase or decrease in
percentage resulting from a
change in the value of the assets will not constitute
a violation of such
restriction. In order to permit the sale of the
Fund's shares in certain
states, the Fund may make commitments more restrictive
than the restric-
tions listed above. Should the Fund determine that any
such commitment is
no longer in the best interests of the Fund and
its shareholders, it will
revoke the commitment by terminating sales of its shares
in the state in-
volved.
PORTFOLIO TRANSACTIONS
Newly issued securities normally are purchased directly
from the issuer or
from an underwriter acting as a principal. Other
purchases
and sales usu-
ally 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 is-
suer 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 fiscal years ended February 28, 1995 and 1994,
the Fund paid
$306,677 and $167,464, respectively, in
brokerage commissions. For the
fiscal year ended February 28, 1993, the Fund paid
no brokerage commis-
sions.
Allocation of transactions, including their frequency,
to various dealers
is determined by SBMFM in its best judgment and in a
manner deemed fair
and reasonable to shareholders. The primary
considerations are the avail-
ability of the desired security and the prompt execution
of orders in an
effective manner at the most favorable prices. Subject
to these consider-
ations, dealers which provide supplemental
investment research and statis-
tical or other services to SBMFM may receive orders
for transactions by
the Fund. Information so received enables SBMFM
to supplement its own re-
search and analysis with the views and information of
other securities
firms. Such information may be useful to SBMFM in
serving both the Fund
and its other clients, and, conversely,
supplemental information obtained
by the placement of business of other clients may be
useful to SBMFM in
carrying out its obligations to the Fund.
The Fund will not purchase Municipal Bonds during
the existence of any un-
derwriting or selling group relating thereto of which
SBMFM is a member,
except to the extent permitted by the SEC. Under
certain circumstances,
the Fund may be at a disadvantage because of this
limitation in comparison
with other investment companies which have a
similar investment objective
but which are not subject to this limitation.
While investment decisions for the Fund are
made independently from those
of the other accounts managed by SBMFM, investments of
the type the Fund
may make also may be made by such other accounts. When
the Fund and one or
more other accounts managed by SBMFM are prepared to
invest in, or desire
to dispose of, the same security, available investments
or opportunities
for sales will be allocated in a manner believed by SBMFM
to be equitable
to each. In some cases this procedure may adversely
affect the price paid
or received by the Fund or the size of the position
obtained or disposed
of by the Fund.
PORTFOLIO TURNOVER
While 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) is generally not expected to exceed 100%, it
has in the past
exceeded 100%. The rate of turnover will not be a
limiting factor, how-
ever, when the Fund deems it desirable to sell or
purchase securities.
This policy should not result in higher
brokerage commissions to the Fund,
as purchases and sales of portfolio securities are
usually effected as
principal transactions. Securities may be sold
in anticipation of a rise
in interest rates (market decline) or purchased
in anticipation of a de-
cline in interest rates (market rise) and later sold.
In addition, a secu-
rity may be sold and another security of comparable
quality purchased at
approximately the same time 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 re-
lated to the investment quality of particular issues or
the general move-
ment of interest rates, such as changes in the
overall demand for, or sup-
ply of, various types of tax-exempt securities. For the
1995 and 1994 fis-
cal years, the Fund's portfolio turnover rates were 100%
and 131%,
respectively. This higher level of turnover was due
to significant changes
in the portfolio in response to the unusual
volatility experienced in mu-
nicipal bond markets during this period.
MUNICIPAL BONDS
GENERAL INFORMATION
Municipal Bonds generally are understood to include
debt obligations is-
sued to obtain funds for various public purposes,
including construction
of a wide range of public facilities, refunding
of outstanding obliga-
tions, 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 oper-
ated facilities are included within the term Municipal
Bonds if the inter-
est paid thereon qualifies as excluded from gross
income (but not neces-
sarily from alternative minimum taxable income) for
Federal income tax
purposes in the opinion of bond counsel to the issuer.
In order to be classified as a diversified
investment company under the
1940 Act, the Fund may not, with respect to 75% of
its assets, invest more
than 5% of its total assets in the securities of any
one issuer (except
U.S. government securities) or own more than 10% of
the outstanding voting
securities of any one issuer. For the purposes
of diversification under
the 1940 Act, the identification of the issuer of
Municipal Bonds depends
upon the terms and conditions of the security. When
the assets and reve-
nues of an agency, authority, instrumentality or
other political subdivi-
sion 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 is 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 reve-
nues of the nongovernmental user, then such
nongovernmental user is deemed
to be the sole issuer. If, however, in either case,
the creating govern-
ment or some other entity guarantees a security, such
a guarantee would be
considered a separate security and is to be treated as
an issue of such
government or other entity.
The yield on Municipal Bonds is dependent on a variety
of factors, includ-
ing general economic and monetary conditions, general
money market fac-
tors, general conditions of the Municipal Bond market,
the financial con-
dition of the issuer, the size of a particular
offering, maturity of the
obligation offered and the rating of the issue.
Municipal Bonds also may be subject to the provisions
of bankruptcy, in-
solvency and other laws affecting the rights and remedies
of creditors,
such as the Federal Bankruptcy Code, and laws, if any,
which may be en-
acted by Congress or state legislatures extending the
time for payment of
principal or interest, or both, or imposing
other constraints upon en-
forcement of such obligations or upon the ability
of municipalities to
levy taxes. The possibility also exists that, as a result
of litigation or
other conditions, the power or ability of any one or
more issuers to pay,
when due, the principal of and interest on, its or
their Municipal Bonds
may be materially and adversely affected.
WHEN-ISSUED SECURITIES
The Fund may purchase Municipal Bonds on a "when-
issued" basis (i.e., for
delivery beyond the normal settlement date at a stated
price and yield).
The payment obligation and the interest rate that will
be received on the
Municipal Bonds purchased on a when-issued basis are
each fixed at the
time the buyer enters into the commitment. Although the
Fund will purchase
Municipal Bonds on a when-issued basis only with
the intention of actually
acquiring the securities, the Fund may sell these
securities before the
settlement date if it is deemed advisable as a matter
of investment strat-
egy.
Municipal Bonds are subject to changes in value based
upon the public's
perception of the creditworthiness of the issuers
and changes, real or an-
ticipated, in the level of interest rates. In
general, Municipal Bonds
tend to appreciate when interest rates decline
and
depreciate when inter-
est rates rise. Purchasing Municipal Bonds on a when-
issued basis, there-
fore, can involve the risk that the yields available in
the market when
the delivery takes place actually may be higher than
those obtained in the
transaction itself. To account for this risk, a
segregated account of the
Fund consisting of cash or liquid debt securities equal
to the amount of
the when-issued commitments will be established at
the Fund's custodian
bank. For the purpose of determining the adequacy of
the securities in the
account, the deposited securities will be valued at
market or fair value.
If the market or fair value of such securities
declines, additional cash
or securities will be placed in the account on a daily
basis so that the
value of the account will equal the amount of
such commitments by the
Fund. Placing securities rather than cash in the
segregated account may
have a leveraging effect on the Fund's net assets. That
is, to the extent
the Fund remains substantially fully invested in
securities at the same
time it has committed to purchase securities on a
whenissued basis, there
will be greater fluctuations in its net assets than if
it had set aside
cash to satisfy its purchase commitments. Upon
the
settlement date of the
when-issued securities, the Fund will meet its
obligations from then-
available cash flow, sale of securities held in
the
segregated account,
sale of other securities or, although it normally would
not expect to do
so, from the sale of the when-issued securities
themselves (which may have
a value greater or less than the Fund's
payment obligations). Sales of se-
curities to meet such obligations may involve
the
realization of capital
gains, which are not exempt from Federal income taxes.
When the Fund engages in when-issued transactions, it
relies on the seller
to consummate the trade. Failure of the seller to do so
may result in the
Fund's incurring a loss or missing an opportunity to
obtain a price con-
sidered to be advantageous.
MUNICIPAL LEASES
Municipal leases are municipal securities that may take
the form of a
lease or an installment purchase contract issued by
state and local gov-
ernment authorities to obtain funds to acquire a
wide variety of equipment
and facilities such as fire and sanitation
vehicles, computer equipment
and other capital assets. These obligations have evolved
to make it possi-
ble for state and local government authorities to
acquire property and
equipment without meeting constitutional and
statutory requirements for
the issuance of debt. Thus, municipal leases have
special risks not nor-
mally associated with Municipal Bonds. These
obligations frequently con-
tain "non-appropriation" clauses that provide that
the governmental issuer
of the municipal lease has no obligation to make
future payments under the
lease or contract unless money is appropriated for
such purposes by the
legislative body on a yearly or other periodic basis.
In addition to the
non-appropriation risk, municipal leases represent a type
of financing
that has not yet developed the depth of
marketability associated with Mu-
nicipal Bonds; moreover, although the obligations will
be secured by the
leased equipment, the disposition of the equipment in
the event of fore-
closure might prove difficult. In order to limit the
risks, the Fund will
purchase either (a) municipal leases that are rated in
the four highest
categories by Moody's or S&P or (b) unrated municipal
leases that are pur-
chased principally from domestic banks or other
responsible third parties
that have entered into an agreement with the Fund
providing the seller
will either remarket or repurchase the municipal
leases within a short pe-
riod after demand by the Fund.
PURCHASE OF SHARES
VOLUME DISCOUNTS
The schedule of sales charges on Class A shares described
in the Prospec-
tus applies to purchases made by any "purchaser," which is
defined to in-
clude the following: (a) an individual; (b) an
individual's spouse and his
or her children purchasing shares for his or her
own account; (c) a
trustee or other fiduciary purchasing shares for a
single trust estate or
single fiduciary account; (d) a pension, profit-sharing
or other employee
benefit plan qualified under Section 401(a) of the
Internal Revenue Code
of 1986, as amended (the "Code"), and qualified
employee benefit plans of
employers who are "affiliated persons" of each other
within the meaning of
the 1940 Act; (e) tax-exempt organizations enumerated
in Section 501(c)(3)
or (13) of the Code; and (f) a trustee or other
professional fiduciary
(including a bank, or an investment adviser registered
with the SEC under
the Investment Advisers Act of 1940, as amended)
purchasing shares of the
Fund for one or more trust estates or fiduciary
accounts. Purchasers who
wish to combine purchase orders to take advantage of
volume discounts
should contact a Smith Barney Financial Consultant.
COMBINED RIGHT OF ACCUMULATION
Reduced sales charges, in accordance with the schedule
in the Prospectus,
apply to any purchase of Class A shares if the
aggregate investment in
Class A shares of the Fund and in Class A shares of
other funds of the
Smith Barney Mutual Funds that are offered with a
sales charge, including
the purchase being made, of any purchaser is $25,000
or more. The reduced
sales charge is subject to confirmation of the
shareholder's holdings
through a check of appropriate records. The Fund
reserves the right to
terminate or amend the combined right of accumulation at
any time after
written notice to shareholders. For further
information regarding the
right of accumulation, shareholders should contact a
Smith Barney Finan-
cial Consultant.
DETERMINATION OF PUBLIC OFFERING PRICE
The Fund offers its shares to the public on a
continuous basis. The public
offering price for a Class A and Class Y share of the
Fund is equal to the
net asset value per share at the time of purchase, plus
for Class A shares
an initial sales charge based on the aggregate amount of
the investment.
The public offering price for a Class B and Class C
share (and Class A
share purchases, including applicable rights
of
accumulation, equalling or
exceeding $500,000), is equal to the net asset value
per share at the time
of purchase and no sales charge is imposed at the time
of purchase. A con-
tingent deferred sales charge ("CDSC"), however, is
imposed on certain re-
demptions of Class B and Class C shares, and Class A
shares when purchased
in amounts exceeding $500,000. The method of computation
of the public of-
fering price is shown in the Fund's financial
statements, incorporated by
reference in their entirety into this Statement
of
Additional Information.
REDEMPTION OF SHARES
The right of redemption may be suspended or the date
of payment postponed
(a) for any period during which the New York Stock
Exchange, Inc. ("NYSE")
is closed (other than for customary weekend and
holiday closings), (b)
when trading in markets the Fund normally utilizes
is restricted, or an
emergency exists, as determined by the SEC, so that
disposal of the Fund's
investments or determination of net asset value is
not reasonably practi-
cable or (c) for such other periods as the SEC by order
may permit for
protection of the Fund's shareholders.
DISTRIBUTION IN KIND
If the Board of Directors of the Fund determines that
it would be detri-
mental to the best interests of the remaining
shareholders to make a re-
demption payment wholly in cash, the Fund may pay,
in accordance with SEC
rules, any portion of a redemption in excess of the
lesser of $250,000 or
1% of the Fund's net assets by a distribution in kind
of portfolio securi-
ties in lieu of cash. Securities issued as a distribution
in kind may
incur brokerage commissions when shareholders
subsequently sell those se-
curities.
AUTOMATIC CASH WITHDRAWAL PLAN
An automatic cash withdrawal plan (the "Withdrawal Plan")
is available to
shareholders who own shares with a value of at least
$10,000 and who wish
to receive specific amounts of cash monthly or
quarterly. Withdrawals of
at least $50 may be made under the Withdrawal Plan
by redeeming as many
shares of the Fund as may be necessary to cover
the stipulated withdrawal
payment. Any applicable CDSC will not be waived on
amounts withdrawn by
shareholders that exceed 1.00% per month of the value of
a shareholder's
shares at the time the Withdrawal Plan commences.
(With respect to With-
drawal Plans in effect prior to November 7, 1994,
any applicable CDSC will
be waived on amounts withdrawn that do not exceed 2.00%
per month of the
value of a shareholder's shares at the time the
Withdrawal Plan com-
mences.) To the extent withdrawals exceed
dividends,
distributions and ap-
preciation of a shareholder's investment in the Fund,
there will be a re-
duction in the value of the shareholder's investment,
and continued with-
drawal payments will reduce the shareholder's investment
and may
ultimately exhaust it. Withdrawal payments should not
be considered as in-
come from investment in the Fund. Furthermore, as
it generally would not
be advantageous to a shareholder to make
additional
investments in the
Fund at the same time he or she is participating in
the Withdrawal Plan,
purchases by such shareholders in amounts of less
than $5,000 ordinarily
will not be permitted.
Shareholders who wish to participate in the Withdrawal
Plan and who hold
their shares in certificate form must deposit their
share certificates
with TSSG as agent for Withdrawal Plan members.
All dividends and distri-
butions on shares in the Withdrawal Plan are
reinvested automatically at
net asset value in additional shares of the Fund.
Effective November 7,
1994, Withdrawal Plans should be set up with a Smith
Barney Financial Con-
sultant. A shareholder who purchases shares directly
through TSSG may con-
tinue to do so and applications for participation in
the Withdrawal Plan
must be received by TSSG no later than the eighth day of
the month to be
eligible for participation beginning with that
month's withdrawal. For ad-
ditional information, shareholders should contact a
Smith
Barney Financial
Consultant.
DISTRIBUTOR
Smith Barney serves as the Fund's distributor on a
best efforts basis pur-
suant to a written agreement dated July 30, 1993
(the "Distribution Agree-
ment"), which was most recently approved by the Fund's
Board of Directors
on July 20, 1994. For the 1993, 1994 and 1995 fiscal
years, Smith Barney
or its predecessor Shearson Lehman Brothers
received $54,735,968,
$4,194,780 and $2,699,875, respectively, in sales
charges for the sale of
the Fund's Class A shares, and did not reallow any
portion thereof to
dealers. For the period from November 6, 1992
through February 28, 1993
and for the fiscal year ended February 28, 1995,
Smith Barney or Shearson
Lehman Brothers received $2,721 and
$1,074,440, respectively, representing
CDSC on redemption of the Fund's Class B shares.
When payment is made by the investor before settlement
date, unless other-
wise noted by the investor, the funds will be held as a
free credit bal-
ance in the investor's brokerage account and Smith
Barney may benefit from
the temporary use of the funds. The investor may
designate another use for
the funds prior to settlement date, such as an investment
in a money mar-
ket fund (other than Smith Barney Exchange Reserve Fund)
of the Smith Bar-
ney Mutual Funds. If the investor instructs Smith Barney
to invest the
funds in a Smith Barney money market fund, the amount of
the investment
will be included as part of the average daily net assets
of both the Fund
and the money market fund, and affiliates of Smith
Barney that serve the
funds in an investment advisory or administrative
capacity will benefit
from the fact that they are receiving fees from both
such investment com-
panies for managing these assets, computed on the basis
of their average
daily net assets. The Fund's Board of Directors has
been advised of the
benefits to Smith Barney resulting from these
settlement procedures and
will take such benefits into consideration when
reviewing the Advisory,
Administration and Distribution Agreements for
continuance.
DISTRIBUTION ARRANGEMENTS
To compensate Smith Barney for the services it provides
and for the ex-
pense it bears under the Distribution Agreement, the
Fund
has adopted a
services and distribution plan (the "Plan") pursuant to
Rule 12b-1 under
the 1940 Act. Under the Plan, the Fund pays Smith Barney
a service fee,
accrued daily and paid monthly, calculated at the
annual rate of 0.15% of
the value of the Fund's average daily net
assets attributable to the Class
A, Class B and Class C shares. In addition, the Fund
pays Smith Barney a
distribution fee with respect to the Class B and Class
C shares primarily
intended to compensate Smith Barney for its initial
expense of paying its
Financial Consultants a commission upon sales of
those shares. The Class B
distribution fee is calculated at the annual rate of
0.50% of the value of
the Fund's average net assets attributable to the shares
of the Class. The
Class C distribution fee is calculated at the annual rate
of 0.55% of the
value of the Fund's average net assets attributable to
the shares of the
Class.
The following service and distribution fees were
incurred during the peri-
ods indicated:
<TABLE>
<CAPTION>
SERVICE FEES
FOR PERIOD
FISCAL YEAR FISCAL
YEAR FROM 11/6/92
ENDED 2/28/95 ENDED
2/28/94 THROUGH 2/28/93
<S> <C>
<C>
<C>
Class A $2,606,445
$2,749,652
$790,591
Class B 641,353
303,293
12,635
Class C 1,242
- --
- --
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION FEES
FOR PERIOD
FISCAL YEAR FISCAL
YEAR FROM 11/6/92
ENDED 2/28/95 ENDED
2/28/94 THROUGH 2/28/93
<S> <C>
<C>
<C>
Class B $2,137,842
$1,010,976
$42,119
Class C 4,556
- --
- --
</TABLE>
Under its terms, the Plan continues from year to
year, provided such con-
tinuance is approved annually by vote of the Board
of Directors, including
a majority of the Directors who are not interested
persons of the Fund and
who have no direct or indirect financial interest in
the operation of the
Plan or in the Distribution Agreement (the
"Independent Directors"). The
Plan may not be amended to increase the amount of
the service and distri-
bution fees without shareholder approval, and all
amendments of the Plan
also must be approved by the Directors and the
Independent Directors in
the manner described above. The Plan may be terminated
with respect to a
Class at any time, without penalty, by vote of a majority
of the Indepen-
dent Directors or by vote of a majority of the
outstanding voting securi-
ties of the Class (as defined in the 1940 Act). Pursuant
to the Plan,
Smith Barney will provide the Board of Directors
with periodic reports of
amounts expended under the Plan and the purpose for
which such expendi-
tures were made.
VALUATION OF SHARES
Each Class' net asset value per share is calculated on
each day, Monday
through Friday, except days on which the NYSE is closed.
The NYSE cur-
rently is scheduled to be closed on New Year's
Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and
Christmas, and on the preceding Friday or subsequent
Monday when one of
these holidays falls on a Saturday or Sunday,
respectively. Because of the
differences in distribution fees and Class-
specific expenses, the per
share net asset value of each Class may differ.
The following is a de-
scription of the procedures used by the Fund in valuing
its assets.
The valuation of the Fund's assets is made by
Boston Advisors after con-
sultation with an independent pricing service
(the "Service") approved by
the Board of Directors. When, in the judgment of
the Service, quoted bid
prices for investments are readily available and
are representative of the
bid side of the market, these investments are valued at
the mean between
the quoted bid and asked prices. Investments for which,
in the judgment of
the Service, there is no readily obtainable market
quotation (which may
constitute a majority of the portfolio securities)
are carried at fair
value as determined by the Service. For the most part,
such investments
are liquid and may be readily sold. The Service may
employ electronic data
processing techniques and/or a matrix system to
determine valuations. The
procedures of the Service are reviewed periodically by
the officers of the
Fund under the general supervision and responsibility of
the Board of Di-
rectors, which may replace any such Service at any time
if it determines
it to be in the best interests of the Fund to do so.
EXCHANGE PRIVILEGE
Except as noted below, shareholders of any fund of the
Smith Barney Mutual
Funds may exchange all or part of their shares for shares
of the same
Class of other funds in the Smith Barney Mutual Funds,
to the extent such
shares are offered for sale in the shareholder's state
of residence, on
the basis of relative net asset value per share at the
time of exchange as
follows:
A. Class A shares of any fund purchased with a
sales charge may be
exchanged for Class A shares of any of the other
funds and the sales
charge differential, if any, will be applied. Class
A shares of any
fund may be exchanged without a sales charge for
shares of the funds
that are offered without a sales charge. Class A
shares of any fund
purchased without a sales charge may be exchanged
for shares sold with
a sales charge, and the appropriate sales
charge differential will be
applied.
B. Class A shares of any fund acquired by a
previous exchange of
shares purchased with a sales charge may be
exchanged for Class A
shares of any of the other funds, and the sales
charge differential,
if any, will be applied.
C. Class B shares of any fund may be exchanged without
a sales
charge. Class B shares of the Fund exchanged for Class
B shares of an-
other fund will be subject to the higher applicable
CDSC of the two
funds and, for purposes of calculating CDSC rates
and conversion peri-
ods, will be deemed to have been held since the date
the shares being
exchanged were deemed to be purchased.
Dealers other than Smith Barney must notify TSSG of
the investor's prior
ownership of Class A shares of Smith Barney High Income
Fund and the ac-
count number in order to accomplish an exchange of shares
of Smith Barney
High Income Fund under paragraph B above.
The exchange privilege enables shareholders to
acquire shares of the same
Class in a fund with different investment objectives
when they believe
that a shift between funds is an appropriate
investment decision. This
privilege is available to shareholders residing in any
state in which the
Fund shares being acquired may legally be sold. Prior to
any exchange, the
shareholder should obtain and review a copy of the
current prospectus of
each fund into which an exchange is being
considered. Prospectuses may be
obtained from a Smith Barney Financial Consultant.
Upon receipt of proper instructions and all
necessary supporting docu-
ments, shares submitted for exchange are redeemed at
the then-current net
asset value and, subject to any applicable CDSC,
the proceeds are immedi-
ately invested, at a price as described above, in shares
of the fund being
acquired. Smith Barney reserves the right to reject
any exchange request.
The exchange privilege may be modified or terminated at
any time after
written notice to shareholders.
PERFORMANCE DATA
From time to time, the Fund may quote yield or total
return of a Class in
advertisements or in reports and other communications
to shareholders. The
Fund may include comparative performance information
in advertising or
marketing the Fund's shares. Such performance
information may include data
from the following industry and financial
publications: Barron's, Business
Week, CDA Investment Technologies, Inc., Changing
Times, Forbes, Fortune,
Institutional Investor, Investors Daily, Money,
Morningstar Mutual Fund
Values, The New York Times, USA Today and The Wall
Street Journal. To the
extent any advertisement or sales literature of the
Fund describes the ex-
penses or performance of any Class it will also
disclose such information
for the other Classes.
YIELD
The 30-day yield figure described below is
calculated according to a for-
mula prescribed by the SEC. The formula can be expressed
as follows:
YIELD =2 [ ( a-bcd +1)6-1]
Where: a = dividends and interest earned
during
the period.
b = expenses accrued for the period (net
of reimburse-
ment).
c = the average daily number of
shares outstanding dur-
ing 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
is computed by di-
viding that portion of the Class' 30-day yield which is
taxexempt 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 yield on municipal securities is dependent upon
a variety of factors,
including general economic and monetary
conditions,
conditions of the mu-
nicipal 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. In
addition, when interest
rates are falling, the inflow of net new money to the
Fund from the con-
tinuous sale of its shares will likely be invested
in portfolio instru-
ments producing lower yields than the balance of the
Fund's portfolio,
thereby reducing the current yield of the Fund. In
periods of rising in-
terest rates, the opposite can be expected to occur.
The Fund's yield for Class A and Class B shares for the
30day period
ended February 28, 1995 was 5.25% and 5.47%,
respectively.
The equivalent
taxable yield for the same period was 8.33% and
7.93%, respectively assum-
ing the payment of Federal income taxes at a rate of 31%.
AVERAGE ANNUAL TOTAL RETURN
"Average annual total return" figures, as described
below, are computed
according to a formula prescribed by the SEC. The
formula can be expressed
as follows:
P (1+T)n = ERV
Where: P = a hypothetical initial payment
of
$1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of
a hypothetical $1,000
investment made at the beginning of
a 1-, 5-, or
10-year period at the end of the 1-
, 5-, or 10-
year period (or fractional
portion thereof), as-
suming reinvestment of all
dividends and distribu-
tions.
The following total return figures assume that the
maximum 4.00% sales
charge has been deducted from the investment at the time
of purchase and
have been restated to show the change in the maximum
sales charge. The
Fund's average total return for Class A shares were
as follows for the pe-
riods indicated:
(0.06)% for the one-year period beginning March 1,
1994 through February
28, 1995;
8.78% per annum during the five-year period beginning
on March 1, 1990
through February 28, 1995;
10.12% per annum during the ten-year period beginning
on March 1, 1985
through February 28, 1995; and
11.21% per annum during the period from commencement
of operations (March
4, 1981) through February 28, 1995.
The Fund's average total return for Class B shares
assuming
the maximum
applicable CDSC was as follows for the periods indicated:
(0.78)% for the one year period beginning March 1,
1994 through February
28, 1995;
8.25% per annum during the period from
commencement (November 6, 1992)
through February 28, 1995.
The Fund's average total return for Class B shares
without the CDSC was as
follows for the periods indicated:
3.54% for the one year period beginning March 1,
1994 through February 28,
1995.
9.39% per annum during the period from
commencement (November 6, 1992)
through February 28, 1995.
AGGREGATE TOTAL RETURN
Aggregate total return figures, as described
below, represent the cumula-
tive change in the value of an investment in the Class
for the specified
period and are computed by the following formula:
ERV - P P
Where: P = a hypothetical initial payment
of
$10,000.
ERV = Ending Redeemable Value of
a hypothetical $10,000
investment made at the beginning of
a 1-, 5-, or
10-year period at the end of the 1-
, 5-, or 10-
year period (or fractional
portion thereof), as-
suming reinvestment of all
dividends and distribu-
tions.
The aggregate total returns for Class A shares were
as follows for the pe-
riods indicated:
4.11% for the one-year period beginning March 1,
1994 through February 28,
1995;
58.68% for the five-year period beginning March 1,
1990 through February
28, 1995; and
173.12% for the ten-year period beginning March 1,
1985 through February
28, 1995.
These aggregate total return figures do not assume that
the maximum 4.00%
sales charge has been deducted from the investment at
the time of pur-
chase. If the sales charge had been deducted at the time
of purchase, the
aggregate total return for its Class A shares for those
same periods would
have been (0.06)%, 52.33%, and 162.19%, respectively.
The total return
figures have been restated to show the change in the
maximum sales charge.
The Fund's aggregate total return for Class B shares was
as follows for
the periods indicated:
3.54% for the one year period beginning March 1, 1994
through February
28, 1995.
23.10% for the period from November 6, 1992 through
February 28, 1995.
These figures do not assume that the maximum 4.50%
CDSC assessed by the
Fund has been deducted from the investment at the time
of purchase. If the
maximum CDSC had been deducted at the time of purchase,
the Fund's aggre-
gate total return for the same periods would have
been (0.78)% and 20.16%,
respectively.
The Fund's aggregate total return for Class C shares was
as follows for
the period indicated:
12.36% for the period beginning November 9, 1994
through February 28,
1995.
This figure does not assume that the maximum 1%
CDSC assessed by the Fund
has been deducted from the investment at the time
of purchase. If the max-
imum CDSC had been deducted at the time of purchase,
the Fund's aggregate
total return for the same period would have been 11.36%.
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 per-
formance. Each Class' net investment income changes
in response to fluctu-
ation in interest rates and the expenses of the
Fund. Performance will
vary from time to time depending upon market conditions,
the composition
of the Fund's portfolio and operating expenses and
the expenses exclu-
sively attributable to the Class. Consequently, any
given performance quo-
tation should not be considered 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 cer-
tain 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 matu-
rity of the respective investment companies'
portfolio securities.
TAXES
The following is a summary of selected Federal income
tax considerations
that may affect the Fund and its shareholders. The
summary is not intended
as a substitute for individual tax advice and investors
are urged to con-
sult their own tax advisors as to the tax consequences of
an investment in
the Fund.
As described above and in the Prospectus, the Fund
is designed to provide
shareholders with current income which is excluded
from gross income for
Federal income tax purposes. The Fund is not intended
to constitute a bal-
anced investment program and is not designed for
investors seeking capital
gains or maximum tax-exempt income irrespective
of fluctuations in princi-
pal. Investment in the Fund would not be suitable for
taxexempt institu-
tions, 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 has qualified and intends to continue to
qualify each year as a
regulated investment company under the Code. Provided
that the Fund (a) is
a regulated investment company and (b) distributes at
least 90% of its
taxable net investment income (including, for this
purpose, its net real-
ized short-term capital gains) and 90% of its tax-
exempt interest income
(reduced by certain expenses), the Fund will not be
liable for Federal in-
come taxes to the extent its taxable net investment
income and its net re-
alized long-term and short-term capital gains, if any,
are distributed to
its shareholders. Any such taxes paid by the Fund
would reduce the amount
of income and gains available for distribution
to 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. 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
any loss on the sale
or exchange of such share may, to the extent of such
exemptinterest divi-
dends, 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 tax-exempt
status in the hands of a shareholder who is a
"substantial user" of a fa-
cility financed by such bonds, or a "related
person" thereof. Moreover, as
noted in the Fund's Prospectus, (a) some or all of
the Fund's dividends
may be a specific preference item, or a component of
an adjustment item,
for purposes of the Federal individual and
corporate alternative minimum
taxes and (b) the receipt of Fund dividends
and
distributions may affect a
corporate shareholder's Federal "environmental"
tax
liability. In addi-
tion, the receipt of Fund dividends and distributions
may affect a foreign
corporate shareholder's Federal "branch profits"
tax
liability and the
Federal "excess net passive income" tax liability of
a shareholder of a
Subchapter S corporation. Shareholders should consult
their own tax advi-
sors as to whether they are (a) substantial users
with respect to a facil-
ity or related to such users within the meaning of the
Code or (b) subject
to a Federal alternative minimum tax, the
Federal environmental tax, the
Federal branch profits tax, or the Federal "excess
net passive income"
tax.
As described above and in the Fund's Prospectus, the
Fund may invest in
municipal bond index futures and financial futures
contracts and options
on interest rate futures and financial futures
contracts. The Fund antici-
pates that these investment activities will not prevent
the Fund from
qualifying as a regulated investment company; however,
in order to con-
tinue to qualify as a regulated investment company, the
Fund might have to
limit its investments in futures contracts and options
on futures con-
tracts. As a general rule, these investment activities
will increase or
decrease the amount of long- and short-term capital gains
or losses real-
ized by the Fund and, accordingly, will affect the amount
of capital gains
distributed to the Fund's shareholders.
For Federal income tax purposes, gain or loss on the
futures contracts and
options described above (collectively referred to
as "section 1256 con-
tracts") is taxed pursuant to a special "mark-to-
market system." Under the
mark-to-market system, these instruments are treated as
if sold at the
Fund's fiscal year end for their fair market value. As
a result, the Fund
will be recognizing gains or losses before they are
actually realized. As
a general rule, gain or loss on section 1256 contracts
is treated as 60%
long-term capital gain or loss and 40% short-term
capital gain or loss
and, accordingly, the mark-to-market system generally
will affect the
amount of capital gains or losses taxable to the Fund
and the amount of
distributions taxable to a shareholder. Moreover, if
the Fund invests in
both section 1256 contracts and offsetting positions in
such contracts,
which together constitute a straddle, then the Fund may
be required to
defer certain realized losses. The Fund expects that
its activities with
respect to section 1256 contracts and offsetting
positions in those con-
tracts will not cause it to be treated as recognizing
a materially greater
amount of capital gains than actually realized and
will permit it to use
substantially all of its losses in those fiscal years
in which such losses
actually occur.
While the Fund does not expect to realize a
significant amount of net
long-term capital gains, any such gains realized will
be distributed as
described in the Fund's Prospectus. Such
distributions ("capital gain div-
idends"), if any, will be taxable to shareholders as
longterm capital
gains, regardless of how long they have held Fund
shares, and will be des-
ignated as capital gain dividends in a written notice
mailed by the Fund
to the shareholders after the close of the Fund's
prior taxable year. If a
shareholder receives a capital gain dividend with respect
to any share and
if the share has been held by the shareholder for six
months or less, then
any loss (to the extent not disallowed pursuant to the
sixmonth rule de-
scribed above relating to exempt-interest dividends) on
the sale or ex-
change of such share, to the extent of the capital
gain dividend, shall be
treated as a long-term capital loss.
If a shareholder incurs a sales charge when acquiring
shares of the Fund,
disposes of those shares within 90 days and then
acquires shares in a mu-
tual fund for which the otherwise applicable sales charge
is reduced by
reason of a reinvestment right (that is,
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, it will be added to the tax basis in the
newly acquired shares.
Furthermore, the same rule also applies to a disposition
of the newly ac-
quired shares made within 90 days of the second
acquisition. This provi-
sion prevents a shareholder from immediately deducting
the sales charge by
shifting his or her investment within a family of
mutual funds.
Each shareholder will receive after the close of
the calendar year an an-
nual statement as to the Federal income tax status of his
or her dividends
and distributions from the Fund for the prior calendar
year. These state-
ments also will designate the amount of exempt-
interest dividends that is
a specific preference item for purposes of the
Federal individual and cor-
porate alternative minimum taxes. Each shareholder also
will receive, if
appropriate, various written notices after the close of
the Fund's prior
taxable year as to the Federal income tax status of his
or her dividends
and distributions which were received from the Fund
during the Fund's
prior taxable year. Shareholders should consult their
tax advisors as to
any state and local taxes that may apply to these
dividends and distribu-
tions. The dollar amount of dividends excluded from
Federal income taxa-
tion and the dollar amount subject to Federal
income taxation, if any,
will vary for each shareholder depending upon the size
and duration of
each shareholder's investment in the Fund. To the extent
the Fund earns
taxable net investment income, it intends to designate
as taxable divi-
dends the same percentage of each day's dividend as
its taxable net in-
vestment income bears to its total net investment
income earned for the
year.
Investors considering buying shares of the Fund just
prior to a record
date for a capital gain distribution should be aware
that, regardless of
whether the price of the Fund shares to be
purchased reflects the amount
of the forthcoming distribution payment, any such
payment will be a dis-
tribution payment.
If a shareholder fails to furnish a correct
taxpayer identification num-
ber, fails to fully report dividend and interest income,
or fails to cer-
tify that he or she has provided a correct
taxpayer identification number
and that he or she is not subject to such withholding,
the shareholder may
be subject to a 31% "backup withholding" tax with respect
to (a) taxable
dividends and distributions and (b) any proceeds of
any redemptions of
Fund shares. An individual's taxpayer identification
number is his or her
social security number. The backup withholding tax is not
an additional
tax and may be credited against a shareholder's
regular Federal income tax
liability.
The foregoing is only a summary of certain
tax
considerations generally
affecting the Fund and its shareholders, and is not
intended as a substi-
tute for careful tax planning. Individuals are often
exempt from state and
local personal income taxes on distributions of tax-
exempt interest income
derived from obligations of issuers located in the state
in which they re-
side when these distributions are received directly
from these issuers,
but are usually subject to such taxes on income derived
from obligations
of issuers located in other jurisdictions. Shareholders
are urged to con-
sult their tax advisors with specific reference to their
own tax situa-
tions.
ADDITIONAL INFORMATION
The Fund was incorporated on September 16, 1980 under
the name Shearson
Managed Municipals Inc. Prior to December 15, 1988,
the Fund's name was
Shearson Managed Municipals Inc. On December 15,
1988, November 6, 1992,
July 30, 1993 and October 14, 1994, the Fund's name
was changed to SLH
Managed Municipals Fund Inc., Shearson Lehman
Brothers Managed Municipals
Fund Inc., Smith Barney Shearson Managed Municipals
Fund Inc. and Smith
Barney Managed Municipals Fund Inc., respectively.
Boston Safe, an indirect wholly owned subsidiary of
Mellon, is located at
One Boston Place, Boston, Massachusetts 02108, and serves
as the custodian
of the Fund. Under the custody agreement, Boston Safe
holds the Fund's
portfolio securities and keeps all necessary accounts
and records. For its
services, Boston Safe receives a monthly fee based upon
the month-end mar-
ket value of securities held in custody and also
receives securities
transaction charges. The assets of the Fund are held
under bank custodian-
ship in compliance with the 1940 Act.
TSSG is located at Exchange Place, Boston,
Massachusetts 02109, and serves
as the Fund's transfer agent. Under its transfer
agency agreement, TSSG
maintains the shareholder account records for the
Fund, handles certain
communications between shareholders and the Fund
and distributes dividends
and distributions payable by the Fund. For these
services, TSSG receives a
monthly fee computed on the basis of the number
of shareholder accounts it
maintains for the Fund during the month, and is
reimbursed for out-of-
pocket expenses.
FINANCIAL STATEMENTS
The Fund's Annual Report for the fiscal year ended
February 28, 1995 ac-
companies this Statement of Additional Information and
is incorporated
herein by reference in its entirety.
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 defi-
nitions 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 partic-
ularly the competitive position of the municipal
enterprise under review
and the basic security covenants. Although a rating
reflects S&P's judg-
ment 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. Qual-
ity of management appears superior.
Revenue Bonds -- Debt service coverage has been, and
is expected to re-
main, 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 cov-
enant, earnings test for issuance of additional bonds,
and debt service
reserve requirements) are rigorous. There is evidence
of superior manage-
ment.
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 ca-
pacity 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 be-
cause:
General Obligation Bonds -- There is some weakness,
either in the local
economic base, in debt burden, in the balance
between revenues and expen-
ditures, 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. Sta-
bility of the pledged revenues could show some
variations because of in-
creased 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 rev-
enues 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 cat-
egories, 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 which 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 ele-
ments are likely to change, such changes as can
be visualized are most un-
likely to impair the fundamentally strong position of
such issues.
Aa
Bonds which are rated Aa are judged to be of high quality
by all stan-
dards. Together with the Aaa group they comprise what
are generally known
as high-grade bonds. They are rated lower than the
best bonds because mar-
gins 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 which are rated A possess many favorable
investment
attributes and
are to be considered as upper medium-grade
obligations. Factors giving se-
curity to principal and interest are considered
adequate, but elements may
be present which suggest a susceptibility to
impairment sometime in the
future.
Baa
Bonds which are rated Baa are considered as medium-
grade obligations,
i.e., they are neither highly protected nor poorly
secured. Interest pay-
ments 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 which are rated Ba are judged to have
speculative elements; their
future cannot be considered as well assured. Often
the protection of in-
terest 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 which 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 de-
fault 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 applies the numerical modifiers 1, 2 and 3 in
each generic rating
classification from Aa through Baa. The modifier 1
indicates that the se-
curity ranks in the higher end of its generic
rating category; the modi-
fier 2 indicates a mid-range ranking; and the modifier
3 indicates that
the issue ranks in the lower end of its generic
rating category.
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 de-
mand obligations are designated Variable Moody's
Investment Grade
("VMIG"). This distinction is in recognition of
the differences between
short-term credit risk and long-term risk. Loans bearing
the designation
MIG 1 or VMIG 1 are of the best quality, enjoying
strong protection by es-
tablished cash flows of funds for their servicing,
superior liquidity sup-
port or from established and broad-based access to
the market for refi-
nancing or both. Loans bearing the designation MIG 2 or
VMIG 2 are of high
quality, with ample margins of protection although not
as large as the
preceding group. Loans bearing the designation MIG 3 or
VMIG 3 are of fa-
vorable 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 es-
tablished.
DESCRIPTION OF S&P A-1+ AND A-1 COMMERCIAL PAPER RATING
The rating A-1+ is the highest, and A-1 the second
highest, commercial
paper rating assigned by S&P. Paper rated A-1+ must
have either the direct
credit support of an issuer or guarantor that
possesses excellent long-
term operating and financial strengths combined with
strong liquidity
characteristics (typically, such issuers or guarantors
would display
credit quality characteristics which would warrant a
senior bond rating of
"AA-" or higher), or the direct credit support of an
issuer or guarantor
that possesses above average long-term fundamental
operating and financing
capabilities combined with ongoing excellent
liquidity characteristics.
Paper rated A-1 by S&P has the following
characteristics: liquidity ratios
are adequate to meet cash requirements; long-term
senior debt is rated "A"
or better; the issuer has access to at least two
additional channels of
borrowing; basic earnings and cash flow have an upward
trend with allow-
ance made for unusual circumstances; typically, the
issuer's industry is
well established and the issuer has a strong position
within the industry;
and the reliability and quality of management
are
unquestioned.
DESCRIPTION OF MOODY'S PRIME-1 COMMERCIAL PAPER RATING
The rating Prime-1 is the highest commercial paper
rating assigned by
Moody's. Among the factors considered by Moody's
in assigning ratings are
the following: (a) evaluation of the management of
the issuer; (b) eco-
nomic evaluation of the issuer's industry or industries
and an appraisal
of speculative-type risks which may be inherent in
certain areas; (c)
evaluation of the issuer's products in relation
to competition and cus-
tomer acceptance; (d) liquidity; (e) amount and quality
of long-term debt;
(f) trend of earnings over a period of ten years;
(g) financial strength
of a parent company and the relationships which exist
with the issuer; and
(h) recognition by the management of obligations which
may be present or
may arise as a result of public interest questions
and preparations to
meet such obligations.
APPENDIX B
The following is a listing of the bonds held by the Fund
on March 1, 1995
which had ratings which were below investment grate
(i.e., junk bonds):
<TABLE>
<CAPTION>
PERCENTAGE
ISSUER DESCRIPTION RATING
SOURCE OF PORTFOLIO
<S> <C>
<C>
<C>
Midland Co Mich Econ Dev Corp Co-Gen B-
Advisor 2.79%
Del Co PA Hsp/Sacred Heart Med D
S&P
0.02
Maricopa Cnty Ariz -- Phoenix Gen Hosp A CAA
Moody's 0.02
St. Paul Minn Port Auth IDR Ser CCC
S&P
0.07
Dakota Co Minn Hsg & RDA Mult Fa B
Advisor
0.19
</TABLE>
SMITH BARNEY
MANAGED MUNICIPALS FUND INC.
388 Greenwich Street
New York, New York 10013
Smith Barney
MANAGED
MUNICIPALS
FUND INC.
STATEMENT OF
ADDITIONAL INFORMATION
APRIL 29, 1995
SMITH BARNEY MANAGED MUNICIPALS FUND INC.
PART C
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Financial Highlights
Included in Part B:
The Registrant's Annual Report for the fiscal year
ended February 28, 1995 and the report of
Independent Accountants dated April 10, 1995 are
incorporated by reference to the Definitive 30b2-1 filed
on April 26, 1995,
as Accession # 0000091155-95-000012.
The Registrant's Semi-Annual Report for the six-
month period ended August 31, 1994 is incorporated by
reference to the Definitive 30b2-1 filed on November
4, 1994, as Accession # 0000053798-94-000513.
Included in Part C:
Consent of Independent Auditors
(b) Exhibits
All references are to the Registrant's
Registration Statement on Form N-1A
(the "Registration Statement") as filed with the
Securities and Exchange
Commission on September 26, 1980 (file Nos. 2-69308 and
811-3097)
(1)(a) Articles of Amendment to the Articles
of
Incorporation dated
July 30, 1993 are incorporated by reference to
PostEffective Amendment No.
25 as filed on February 25, 1994 ("Post-Effective
Amendment No. 25").
(b) Form of Amendment to Articles of
Incorporation,
Form of
Articles Supplementary, Form of Amendment and Articles
of Correction dated
October 14, 1994, are incorporated by reference to
PostEffective Amendment No. 27 as filed on November 7,
1994 ("Post-Effective Amendment No. 27").
(2)(a) Registrant's By-Laws are incorporated by
reference to Post-
Effective Amendment No. 3 as filed on June 17, 1982
("PostEffective
Amendment No. 3").
(b) Amendments to Registrant's By-Laws
are
incorporated by reference
to Post-Effective Amendment No. 12, as filed on April
29, 1988 ("Post-
Effective Amendment No. 12").
(3) Not Applicable.
(4)Registrant's form of stock certificate for Class A and
B shares
is incorporated by reference to Post-Effective Amendment
No. 22 as filed on
October 23, 1992 ("Post-Effective Amendment No. 22").
(5)(a) Investment Advisory Agreement dated July 30, 1993
between the
Registrant and Greenwich Street Advisors is incorporated
by reference to
Post-Effective Amendment No. 25.
(b)Form of Transfer of Investment Advisory
Agreement dated as of November 7, 1994 among
Registrant, Mutual Management Corp. and Smith Barney
Mutual Funds Management Inc. ("SBMFM") is filed
herein.
(6) Distribution Agreement with Smith Barney Shearson
Inc.
dated July 30,
1993 is incorporated by reference to Post-
Effective
Amendment No. 25.
(7) Not Applicable.
(8) Custody Agreement with Boston Safe Deposit
and
Trust Company ("Boston
Safe") is incorporated by reference to Post-
Effective Amendment No. 5, as
filed on April 30, 1984 ("Post-Effective Amendment No. 5")
(9)(a) Transfer Agency Agreement dated August 2,
1993 between the
Registrant and TSSG is incorporated by reference to
PostEffective
Amendment No. 25.
(b) Administration Agreement dated April 20,
1994,
between the
Registrant and Smith, Barney Advisers, Inc. ("SBA")
is
incorporated by reference to the Post Effective
Amendment No. 27.
(c) Sub-Administration Agreement dated April 20,
1994, between the
Registrant, SBA and The Boston Company Advisors Inc.
is incorporated by reference to Post-Effective
Amendment No 27.
(10) Not applicable.
(11)(a) Consent of Independent Accountants is
filed
herein.
(11)(b) Consent of Morningstar Mutual Fund Values
is
incorporated by
reference to Post-Effective Amendment No. 22.
(12) Not Applicable.
(13) Not Applicable
(14) Not Applicable.
(15) Amended and Restated Services and Distribution
Plan pursuant to
Rule 12b-1 is incorporated by reference to Post-
Effective Amendment No. 27<R/>.
(16) Performance Data is incorporated by the
reference
to Post-Effective
Amendment No. 16 filed with the Securities and
Exchange Commission on June
28, 1989.
Item 25. Persons Controlled by or Under Common
Control
with Registrant
Not Applicable
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Title of Class Holders as
of
April 26, 1995
Common Stock,
par value of $.001 per share Class A
114,113,406.714
Class B
34,773,062.589
Class C
520,549.554
Class Y -
0
Item 27. Indemnification
The response to this item is incorporated
by reference to
Post-Effective Amendment No. 22.
Item 28(a). Business and Other Connections of
Investment Adviser
Investment Adviser - - Smith Barney Mutual Funds
Management Inc., formerly
known as Smith, Barney Advisers, Inc. ("SBMFM")
SBMFM was incorporated in December 1968 under the laws
of the State of
Delaware. SBMFM is a wholly owned subsidiary of Smith
Barney Holdings Inc.
(formerly known as Smith Barney Shearson Holdings
Inc.), which in turn is a
wholly owned subsidiary of The Travelers Inc.
(formerly known as Primerica
Corporation) ("Travelers"). SBMFM is registered as
an investment adviser
under the Investment Advisers Act of 1940 (the
"Advisers Act").
The list required by this Item 28 of officers and
directors of SBMFM
together with information as to any other
business,
profession, vocation or
employment of a substantial nature engaged in by
such officers and
directors during the past two years, is incorporated
by reference to
Schedules A and D of FORM ADV filed by SBMFM pursuant to
the Advisers Act
(SEC File No. 801-8314).
Prior to the close of business on November 7,
1994, Greenwich Street
Advisors served as investment adviser. Greenwich
Street Advisors, through
its predecessors, has been in the investment
counseling business since 1934
and is a division of Mutual Management Corp. ("MMC").
MMC was incorporated
in 1978 and is a wholly owned subsidiary of Smith
Barney Holdings Inc.
("Holdings"), which
is in turn a wholly owned subsidiary of The Travelers
Group Inc. (formerly known
as Primerica Corporation) ("Travelers"). The list
required by this Item 28
of officers and directors of MMC and Greenwich
Street Advisors, together
with information as to any other business,
profession, vocation or
employment of a substantial nature engaged in by
such officers and
directors during the past two fiscal years, is
incorporated by reference to
Schedules A and D of FORM ADV filed by MMC on behalf
of Greenwich Street
Advisors pursuant to the Advisers Act (SEC File No.
80114437).
Prior to the close of business on July 30, 1993
(the "Closing"), Shearson
Lehman Advisors, a member of the Asset Management Group
of Shearson Lehman
Brothers Inc. ("Shearson Lehman Brothers"), served as
the Registrant's
investment adviser. On the Closing, Travelers and
Smith Barney Inc.
(formerly known as Smith Barney Shearson Inc.) acquired
the domestic retail
brokerage and asset management business of Shearson
Lehman Brothers, which
included the business of the Registrant's prior
investment adviser.
Shearson Lehman Brothers was a wholly owned subsidiary
of Shearson Lehman
Brothers Holdings Inc. ("Shearson Holdings"). All of
the issued and
outstanding common stock of Shearson Holdings
(representing 92% of the
voting stock) was held by American Express
Company. Information as to any
past business vocation or employment of a substantial
nature engaged in by
officers and directors of Shearson Lehman Advisors can
be located in
Schedules A and D of FORM ADV filed by Shearson
Lehman Brothers on behalf
of Shearson Lehman Advisors prior to July 30, 1993.
(SEC FILE NO. 801-
3701)
Item 29. Principal Underwriters
Smith Barney Inc. ("Smith Barney") currently acts
as distributor for Smith
Barney Managed Municipals Fund Inc., Smith Barney New
York Municipals Fund
Inc., Smith Barney California Municipals Fund Inc.,
Smith Barney
Massachusetts Municipals Fund, Smith Barney
Global Opportunities Fund,
Smith Barney Aggressive Growth Fund Inc., Smith
Barney Appreciation Fund
Inc., Smith Barney Principal Return Fund, Smith
Barney
Income Funds, Smith
Barney Equity Funds, Smith Barney Investment Funds
Inc., Smith Barney
Precious Metals and Minerals Fund Inc., Smith
Barney Telecommunications
Trust, Smith Barney Arizona Municipals Fund Inc.,
Smith Barney New Jersey
Municipals Fund Inc., The USA High Yield Fund
N.V.,
Garzarelli Sector
Analysis Portfolio N.V., Smith Barney Fundamental
Value Fund Inc., Smith Barney Series Fund, Consulting
Group Capital Markets
Funds, Smith Barney Income Trust, Smith Barney
Adjustable Rate Government
Income Fund, Smith Barney Florida Municipals Fund,
Smith Barney Oregon
Municipals Fund, Smith Barney Funds, Inc., Smith Barney
Muni Funds, Smith
Barney World Funds, Inc., Smith Barney Money Funds,
Inc., Smith Barney Municipal
Money Market Fund., Inc., Smith Barney Variable
Account Funds, Smith Barney
U.S. Dollar Reserve Fund (Cayman), Worldwide Special
Fund, N.V., Worldwide
Securities Limited, (Bermuda), Smith Barney
International Fund (Luxembourg)
and various series of unit investment trusts.
Smith Barney is a wholly owned subsidiary of
Smith Barney Holdings
Inc. (formerly known as Smith Barney Shearson
Holdings Inc.), which in turn
is a wholly owned subsidiary of The Travelers Group
Inc. (formerly known as
Primerica Corporation) ("Travelers"). On June 1,
1994, Smith Barney
changed its name from Smith Barney Inc. to its current
name. The
information required by this Item 29 with respect to
each director, officer
and partner of Smith Barney is incorporated by reference
to Schedule A of
FORM BD filed by Smith Barney pursuant to the
Securities Exchange Act of
1934 (SEC File No. 812-8510).
Item 30. Location of Accounts and Records
(1) Smith Barney Managed Municipals Fund Inc.
388 Greenwich Street
New York, New York 10013
(2) Smith, Barney Mutual Funds Management Inc.
388 Greenwich Street
New York, New York 10013
(3) The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
(4) Boston Safe Deposit and Trust Company
One Boston Place
Boston , Massachusetts 02108
(5) The Shareholder Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
None
485 (b) Certification
The Registrant hereby certifies that it meets all
requirements for effectiveness pursuant to Rule
485 (b) under the Securities Act of 1933, as
amended.
The Registrant further represents pursuant
to
Rule
485(b)(2)(iv) that the resignations of Mr. Robert
Frankel and Dr. Paul Hardin were not due to any
disagreement with
the Registrant on any matter relating to its
operations, policies or practices. Messrs.
Frankel and Hardin resigned because of increased
board responsibilities for other investment companies
and a desire to reduce travel and minimize scheduling
conflicts with other professional obligations.
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933, as
amended, and the Investment Company Act of 1940, as
amended, the
Registrant, SMITH BARNEY MANAGED MUNICIPALS FUND INC.,
has duly caused this
Amendment to the Registration Statement to be signed on
its behalf by the
undersigned, thereunto duly authorized, all in the City
of New York, State
of New York on April 26, 1995.
SMITH BARNEY MANAGED MUNICIPALS FUND INC.
By:/s/ Heath B. McLendon*
Heath B.
McLendon,
Chairman of the
Board
We, the undersigned, hereby severally constitute
and appoint Heath B. McLendon, Christina T. Sydor and
Caren A. Cunningham and each of them singly, our true
and lawful attorneys, with full power to them and each
of them to sign for us, and in our hands and in the
capacities indicated below, any and all Amendments to
this Registration Statement and to file the same, with
all exhibits thereto, and other documents therewith,
with the Securities and Exchange Commission, granting
unto said attorneys, and each of them, acting alone,
full authority and power to do and perform each and
every act and thing requisite or necessary to be done
in the premises, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and
confirming all that said attorneys or any of them
may lawfully do or cause to be done by virtue thereof.
WITNESS our hands the date set forth below.
Pursuant to the requirements of the Securities Act
of 1933, as
amended, this Amendment to the Registration Statement
and the above Power
of Attorney has been signed below by the following
persons in the
capacities and on the dates indicated.
Signature Title
Date
/s/Heath B.McLendon*
Heath B. McLendon Director and
04/26/95
Chairman of the Board
/s/Lewis Daidone*
Lewis Daidone Treasurer (Chief
Financial
04/26/95
and Accounting Officer)
/s/Herbert Barg*
Herbert Barg Director
04/26/95
/s/Alfred J. Bianchetti*
Alfred J. Bianchetti Director
04/26/95
/s/Martin Brody*
Martin Brody Director
04/26/95<R/>
/s/Dwight B. Crane*
Dwight B. Crane Director
04/26/95
/s/James J. Crisona*
James J. Crisona
Director 04/26/95<R/>
/s/Stephen E. Kaufman*
Stephen E. Kaufman Director
04/26/95
/s/Joseph J. McCann*
Joseph J. McCann
Director
04/26/95
/s/Burt N. Dorsett* Director
Burt N.
Dorsett
04/26/95
/s/Elliott S. Jaffe*
Director 04/26/95
Elliott S. Jaffe
/s/Cornelius C. Rose*
Director
04/26/95
Cornelius C. Rose, Jr.
*Signed by Caren A. Cunningham , duly authorized
attorney-in-fact,
pursuant to power of attorney dated as of April
19, 1995
FORM OF TRANSFER AND ASSUMPTION OF
INVESTMENT ADVISORY AGREEMENT
for
SMITH BARNEY MANAGED MUNICIPALS FUND INC.
TRANSFER AND ASSUMPTION OF INVESTMENT ADVISORY
AGREEMENT,
made as of
the 7th day of November, 1994, by and among Smith Barney
Managed Municipals Fund Inc, a Maryland corporation (the
"Fund"), Mutual Management Corp., a New
York corporation ("MMC"), and Smith Barney Mutual Funds
Management Inc.
("SBMFM") a Delaware corporation.
WHEREAS, the Fund is registered with the Securities and
Exchange
Commission as an open-end management investment company
under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Fund and MMC entered into an
Investment Advisory Agreement on July 30, 1993, under which
Greenwich Street Advisors, a division of MMC serves as
the investment adviser (the "Investment Adviser") for the
Fund; and
WHEREAS, MMC desires that its interest, rights,
responsibilities and
obligations in and under the Investment Advisory Agreement
be transferred
to SBMFM and SBMFM desires to assume MMC's interest, rights,
responsibilities and obligations in and under the Investment
Advisory
Agreement; and
WHEREAS, this Agreement does not result in a change of
actual control
or management of the Investment Adviser to the Fund and,
therefore, is not
an "assignment" as defined in Section 2(a)(4) of the Act nor
an
"assignment" for the purposes of Section 15(a)(4) of the
Act.
NOW, THEREFORE, in consideration of the mutual
covenants set forth in
this Agreement and other good and valuable consideration,
the receipt and
sufficiency of which is hereby acknowledged, the parties
hereby agree as
follows:
1. Assignment. Effective as of November 7, 1994 (the
"Effective
Date"), MMC hereby transfers to SBMFM all of MMC's interest,
rights,
responsibilities and obligations in and under the Investment
Advisory
Agreement dated July 30, 1993, to which MMC is a party with
the Fund.
2. Assumption and Performance of Duties. As of the
Effective
Date, SBMFM hereby accepts all of MMC's interest and rights,
and assumes
and agrees to perform all of MMC's responsibilities and
obligations in, and
under the Investment Advisory Agreement; SBMFM agrees to
subject to all of
the terms and conditions of said Agreement; and SBMFM shall
indemnify and
hold harmless MMC from any claim or demand made thereunder
arising or
incurred after the Effective Date.
3. Representation of SBMFM. SBMFM represents and
warrants that:
(1) it is registered as an investment adviser under the
Investment Advisers
Act of 1940, as amended; and (2) Smith Barney Holdings Inc.
is its sole
shareholder.
4. Consent. The Fund hereby consents to this
transfer by MMC to
SBMFM of MMC's interest, rights, responsibilities and
obligations in and
under the Investment Advisory Agreement and to the
acceptance and
assumption by SBMFM of the same. The Fund agrees, subject
to the terms
and conditions of said Agreement, to look solely to SBMFM
for the
performance of the Investment Adviser's responsibilities and
obligations
under said Agreement from and after the Effective Date, and
to recognize as
inuring solely to SBMFM the interest and rights heretofore
held by MMC
thereunder.
5. Limitation of Liability of Directors, Officers and
Shareholders.
It is expressly agreed that the obligations of the Fund
hereunder shall
not be binding upon any of the Directors, shareholders,
nominees, officers,
agents, or employees of the Fund, personally, but shall bind
only the
corporate property of the Fund, as provided in the Articles
of Incorporation of the
Fund. The execution and delivery of this Agreement have
been authorized
by the Directors of the Fund and signed by the President of
the Fund,
acting as such, and neither such authorization by such
Directors nor such
execution and delivery by such officer shall be deemed to
have been made by
any of them individually of to impose any liability on any
of them,
personally, but shall bond only the corporate property of
the Fund as provided
in its Articles of Incorporation.
6. Counterparts. This Agreement may be signed in any
number of
counterparts, each of which shall be an original, with the
same effect as
if the signatures thereto and hereto were upon the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to
be executed by their duly authorized officers hereunto duly
attested.
Attest:
By:
Secretary Smith Barney Managed Municipals
Fund Inc.
Attest:
By:
Secretary Mutual Management Corp.
Attest:
By:
Secretary Smith Barney Mutual Funds
Management Inc.
u:\osunkwo\transf.txt
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Smith Barney Managed Municipals Fund, Inc.:
We hereby consent to the following with respect to Post-
Effective Amendment No. 28 to the Registration Statement on Form
N-1A (File No. 2-69308) under the Securities Act of 1933, as
amended, of Smith Barney Managed Municipals Fund, Inc. (formerly
Smith Barney Shearson Managed Municipals Fund, Inc.):
1. The incorporation by reference of our report dated
April 10, 1995 accompanying the Annual Report for the
fiscal year ended February 28, 1995 of Smith Barney
Managed Municipals Fund, Inc., in the Statement of
Additional Information.
2. The reference to our firm under the heading
"Financial Highlights" in the Prospectus.
3. The reference to our firm under the heading
"Counsel and Auditors" in the Statement of Additional
Information.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 26, 1995
[ARTICLE] 6
[SERIES]
[NUMBER] 0
[NAME] SMITH BARNEY MANAGED MUNI FUND INC.
CLASS A
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] FEB-28-1995
[PERIOD-END] FEB-28-1995
[INVESTMENTS-AT-COST]
2,300,530,121
[INVESTMENTS-AT-VALUE]
2,367,634,059
[RECEIVABLES]
80,641,470
[ASSETS-OTHER]
0
[OTHER-ITEMS-ASSETS]
0
[TOTAL-ASSETS]
2,448,275,529
[PAYABLE-FOR-SECURITIES]
152,471,677
[SENIOR-LONG-TERM-DEBT]
0
[OTHER-ITEMS-LIABILITIES]
3,767,551
[TOTAL-LIABILITIES]
156,239,228
[SENIOR-EQUITY]
0
[PAID-IN-CAPITAL-COMMON]
2,252,394,381
[SHARES-COMMON-STOCK]
114,547,234
[SHARES-COMMON-PRIOR]
114,538,900
[ACCUMULATED-NII-CURRENT]
0
[OVERDISTRIBUTION-NII]
(312,590)
[ACCUMULATED-NET-GAINS]
0
[OVERDISTRIBUTION-GAINS]
(27,149,428)
[ACCUM-APPREC-OR-DEPREC]
67,103,938
[NET-ASSETS]
2,292,036,301
[DIVIDEND-INCOME]
0
[INTEREST-INCOME]
150,733,831
[OTHER-INCOME]
0
[EXPENSES-NET]
17,570,075
[NET-INVESTMENT-INCOME]
133,163,756
[REALIZED-GAINS-CURRENT]
(13,267,083)
[APPREC-INCREASE-CURRENT]
(33,873,453)
[NET-CHANGE-FROM-OPS]
86,023,220
[EQUALIZATION]
0
[DISTRIBUTIONS-OF-INCOME]
107,787,545
[DISTRIBUTIONS-OF-GAINS]
32,207,724
[DISTRIBUTIONS-OTHER]
254,900
[NUMBER-OF-SHARES-SOLD]
17,117,100
[NUMBER-OF-SHARES-REDEEMED]
22,890,002
[SHARES-REINVESTED]
5,781,236
[NET-CHANGE-IN-ASSETS]
95,219,343
[ACCUMULATED-NII-PRIOR]
0
[ACCUMULATED-GAINS-PRIOR]
27,222,452
[OVERDISTRIB-NII-PRIOR]
(1,133,368)
[OVERDIST-NET-GAINS-PRIOR]
0
[GROSS-ADVISORY-FEES]
6,881,477
[INTEREST-EXPENSE]
0
[GROSS-EXPENSE]
17,570,075
[AVERAGE-NET-ASSETS]
2,166,026,269
[PER-SHARE-NAV-BEGIN]
16.13
[PER-SHARE-NII]
0.95
[PER-SHARE-GAIN-APPREC]
(0.37)
[PER-SHARE-DIVIDEND]
0.95
[PER-SHARE-DISTRIBUTIONS]
0.29
[RETURNS-OF-CAPITAL]
0.00
[PER-SHARE-NAV-END]
15.47
[EXPENSE-RATIO]
0.71
[AVG-DEBT-OUTSTANDING]
0
[AVG-DEBT-PER-SHARE]
0
</TABLE>
[ARTICLE] 6
[SERIES]
[NUMBER] 0
[NAME] SMITH BARNEY MANAGED MUNI FUND INC.
CLASS B
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] FEB-28-1995
[PERIOD-END] FEB-28-1995
[INVESTMENTS-AT-COST]
2,300,530,121
[INVESTMENTS-AT-VALUE]
2,367,634,059
[RECEIVABLES]
80,641,470
[ASSETS-OTHER]
0
[OTHER-ITEMS-ASSETS]
0
[TOTAL-ASSETS]
2,448,275,529
[PAYABLE-FOR-SECURITIES]
152,471,677
[SENIOR-LONG-TERM-DEBT]
0
[OTHER-ITEMS-LIABILITIES]
3,767,551
[TOTAL-LIABILITIES]
156,239,228
[SENIOR-EQUITY]
0
[PAID-IN-CAPITAL-COMMON]
2,252,394,381
[SHARES-COMMON-STOCK]
33,261,179
[SHARES-COMMON-PRIOR]
21,680,115
[ACCUMULATED-NII-CURRENT]
0
[OVERDISTRIBUTION-NII]
(312,590)
[ACCUMULATED-NET-GAINS]
0
[OVERDISTRIBUTION-GAINS]
(27,149,428)
[ACCUM-APPREC-OR-DEPREC]
67,103,938
[NET-ASSETS]
2,292,036,301
[DIVIDEND-INCOME]
0
[INTEREST-INCOME]
150,733,831
[OTHER-INCOME]
0
[EXPENSES-NET]
17,570,075
[NET-INVESTMENT-INCOME]
133,163,756
[REALIZED-GAINS-CURRENT]
(13,267,083)
[APPREC-INCREASE-CURRENT]
(33,873,453)
[NET-CHANGE-FROM-OPS]
86,023,220
[EQUALIZATION]
0
[DISTRIBUTIONS-OF-INCOME]
24,198,579
[DISTRIBUTIONS-OF-GAINS]
8,852,657
[DISTRIBUTIONS-OTHER]
57,578
[NUMBER-OF-SHARES-SOLD]
14,985,398
[NUMBER-OF-SHARES-REDEEMED]
4,930,470
[SHARES-REINVESTED]
1,526,136
[NET-CHANGE-IN-ASSETS]
95,219,343
[ACCUMULATED-NII-PRIOR]
0
[ACCUMULATED-GAINS-PRIOR]
27,222,452
[OVERDISTRIB-NII-PRIOR]
(1,133,368)
[OVERDIST-NET-GAINS-PRIOR]
0
[GROSS-ADVISORY-FEES]
6,881,477
[INTEREST-EXPENSE]
0
[GROSS-EXPENSE]
17,570,075
[AVERAGE-NET-ASSETS]
2,166,026,269
[PER-SHARE-NAV-BEGIN]
16.13
[PER-SHARE-NII]
0.86
[PER-SHARE-GAIN-APPREC]
(0.37)
[PER-SHARE-DIVIDEND]
0.86
[PER-SHARE-DISTRIBUTIONS]
0.29
[RETURNS-OF-CAPITAL]
0.00
[PER-SHARE-NAV-END]
15.47
[EXPENSE-RATIO]
1.23
[AVG-DEBT-OUTSTANDING]
0
[AVG-DEBT-PER-SHARE]
0
</TABLE>
[ARTICLE] 6
[SERIES]
[NUMBER] 0
[NAME] SMITH BARNEY MANAGED MUNI FUND INC.
CLASS C
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] FEB-28-1995
[PERIOD-END] FEB-28-1995
[INVESTMENTS-AT-COST]
2,300,530,121
[INVESTMENTS-AT-VALUE]
2,367,634,059
[RECEIVABLES]
80,641,470
[ASSETS-OTHER]
0
[OTHER-ITEMS-ASSETS]
0
[TOTAL-ASSETS]
2,448,275,529
[PAYABLE-FOR-SECURITIES]
152,471,677
[SENIOR-LONG-TERM-DEBT]
0
[OTHER-ITEMS-LIABILITIES]
3,767,551
[TOTAL-LIABILITIES]
156,239,228
[SENIOR-EQUITY]
0
[PAID-IN-CAPITAL-COMMON]
2,252,394,381
[SHARES-COMMON-STOCK]
348,702
[SHARES-COMMON-PRIOR]
0
[ACCUMULATED-NII-CURRENT]
0
[OVERDISTRIBUTION-NII]
(312,590)
[ACCUMULATED-NET-GAINS]
0
[OVERDISTRIBUTION-GAINS]
(27,149,428)
[ACCUM-APPREC-OR-DEPREC]
67,103,938
[NET-ASSETS]
2,292,036,301
[DIVIDEND-INCOME]
0
[INTEREST-INCOME]
150,733,831
[OTHER-INCOME]
0
[EXPENSES-NET]
17,570,075
[NET-INVESTMENT-INCOME]
133,163,756
[REALIZED-GAINS-CURRENT]
(13,267,083)
[APPREC-INCREASE-CURRENT]
(33,873,453)
[NET-CHANGE-FROM-OPS]
86,023,220
[EQUALIZATION]
0
[DISTRIBUTIONS-OF-INCOME]
44,264
[DISTRIBUTIONS-OF-GAINS]
44,416
[DISTRIBUTIONS-OTHER]
112
[NUMBER-OF-SHARES-SOLD]
357,851
[NUMBER-OF-SHARES-REDEEMED]
14,256
[SHARES-REINVESTED]
5,107
[NET-CHANGE-IN-ASSETS]
95,219,343
[ACCUMULATED-NII-PRIOR]
0
[ACCUMULATED-GAINS-PRIOR]
27,222,452
[OVERDISTRIB-NII-PRIOR]
(1,133,368)
[OVERDIST-NET-GAINS-PRIOR]
0
[GROSS-ADVISORY-FEES]
6,881,477
[INTEREST-EXPENSE]
0
[GROSS-EXPENSE]
17,570,075
[AVERAGE-NET-ASSETS]
2,166,026,269
[PER-SHARE-NAV-BEGIN]
14.30
[PER-SHARE-NII]
0.27
[PER-SHARE-GAIN-APPREC]
1.46
[PER-SHARE-DIVIDEND]
0.27
[PER-SHARE-DISTRIBUTIONS]
0.29
[RETURNS-OF-CAPITAL]
0.00
[PER-SHARE-NAV-END]
15.47
[EXPENSE-RATIO]
1.29
[AVG-DEBT-OUTSTANDING]
0
[AVG-DEBT-PER-SHARE]
0
</TABLE>
