1995
ANNUAL
REPORT
DESCRIPTION OF ART WORK ON REPORT COVER
Small box above fund name showing a huge bridge.
SMITH BARNEY
MANAGED
MUNICIPALS
FUND INC.
FEBRUARY 28, 1995
Smith Barney Mutual Funds
INVESTING FOR YOUR FUTURE.
EVERYDAY.
MANAGED MUNICIPALS FUND INC.
DEAR SHAREHOLDER:
We are pleased to provide the annual report for Smith Barney
Managed Mu-
nicipals Fund Inc. for the fiscal year ended February 28,
1995. Despite
the difficult investment environment of the past year, the
Fund performed
well, providing investors in Class A shares and Class B
shares with a
total return of 4.11% and 3.54%, respectively. These return
numbers re-
sulted in a first quartile ranking for both Class A (#5 of
190 funds) and
Class B (#9 of 190 funds) shares by Lipper Analytical
Services, Inc., an
independent mutual fund performance tracking organization,
for the twelve
months ended February 28, 1995. Reflecting the improvement
in the munici-
pal market that began late in 1994, Class C shares, a newly-
available
class of shares, earned a total return of 12.36% for the
period between
November 9, 1994 and February 28, 1995. Additional
information about the
performance of each class of shares
during this and previous fiscal years is available on the
pages immedi-
ately following this letter.
MARKET AND ECONOMIC OVERVIEW
The past fiscal year demonstrated that volatility is
becoming a permanent
feature of the fixed income landscape. We believe this is
largely attrib-
utable to the development of new technologies, the speed of
communica-
tions, and the freer movement of capital around the globe.
The municipal
market has also been affected by these changes. During most
of the past
fiscal year the municipal market witnessed a significant
rise in interest
rates which negatively impacted performance only to finish
the year with
one of the most powerful bond rallies in recent memory.
We believe the volatility of the municipal market over the
period was the
result of a marketplace that initially assumed that the
superior economic
growth in both the U.S. and overseas would create
inflationary problems
for all the bond markets. Anticipation proved much worse
than reality,
however, as the Federal Reserve moved both aggressively and
early to stave
off this threat, thereby producing an inflation index below
3 percent for
1994. As the market gradually came to the conclusion that an
elusive "soft
landing" was economically possible, its reaction was swift
and
forceful, producing a powerful bond rally during the last
several months
of 1994.
INVESTMENT STRATEGY AND PORTFOLIO STRUCTURE
Our long-term investment strategy is to provide investors
with very
competitive yields and then produce the best total return we
can, whatever
the market conditions. Our present strategy has been to
take advantage of last autumn's bond decline by extending
the average life
of the portfolio and purchasing more discount securities
(bonds that are
selling below their redemption value). Discount securities
typically have
a dual advantage in rising markets. First, they tend to be
one of the
best-performing asset classes as rates decline. Second, they
generally
provide much better call protection, which lowers the risk
of
having bonds prematurely called away. This strategy greatly
enhanced the
performance of the Fund in the recent bond rally, and it
will continue to
be our strategy until we see inflation re-emerge (although
this does not appear to be an imminent possibility).
In terms of credit quality, we have focused primarily on
increasing
the percentage of the Fund's AA- and AAA-rated holdings, the
two highest
rating categories available. At the end of this fiscal year,
67% of the portfolio was invested in AA- and AAA-rated
securities.
We believe these securities offer our shareholders the best
value. We con-
centrated the portfolio in essential service revenue bonds,
and
to a lesser extent in general obligation bonds. These types
of bonds
provide the Fund with competitive yields and a high degree
of liquidity,
which makes it easier to navigate the Fund through turbulent
market peri-
ods.
D I V I D E N D P O L I C Y
Although not explicitly stated in the Prospectus, the Fund's
policy is to
pay a level monthly dividend based on our projections for
the municipal
bond market and the general direction of interest rates.
This policy has
no appreciable affect on the Fund's investment strategies or
net asset
value per share since it is guided by market conditions. It
means that we
do not invest in more speculative securities that may
undermine the Fund's
net asset value per share in order to maintain an
unrealistically high
dividend policy. We continually monitor both the market and
the Fund's in-
come stream to see that our dividend projections are
realistic.
As we have done since the Fund's inception in 1981, we will
continue to
strive to provide you with superior investment management
results. We look
forward to reporting to you in the Fund's semi-annual report
to
shareholders.
Sincerely,
Heath B. McLendon Joseph P. Deane
Heath B. McLendon Joseph P. Deane
Chairman of the Board Vice President and
and Investment Officer Investment Officer
April 7, 1995
Joe Deane will be appearing as a special guest
on
WALL $TREET WEEK WITH LOUIS RUKEYSER
on May 5th, on the PBS Television Network.
Check your local listings for time and
channel.
HISTORICAL PERFORMANCE -- CLASS A SHARES (UNAUDITED)
<TABLE>
<CAPTION>
Net Asset Value
Year Ended Capital
Dividends Return of Total
February 28 Beginning Ending Gains Paid Paid
Capital Return*
<S> <C> <C> <C> <C>
<C> <C>
1986 $ 13.39 $15.67 $0.08 $ 1.22
- -- 28.25%
1987 15.67 15.88 0.43 1.16
- -- 12.35
1988 15.88 15.05 0.01 1.12
- -- 2.33
1989 15.05 14.83 0.16 1.11
- -- 7.31
1990 14.83 15.00 -- 1.10
- -- 8.78
1991 15.00 14.98 -- 1.09
$0.03 7.65
1992 14.98 15.62 -- 1.05
0.02 11.79
1993 15.62 16.71 0.52 1.00
0.03 17.92
1994 16.71 16.13 0.90 0.88
- -- 7.41
1995 16.13 15.47 0.29 0.95
- -- 4.11
Total $2.39 $10.68
$0.08
Cumulative Total Return -- (2/28/86 through 2/28/95)
173.12%
<FN>
* Figures assume reinvestment of all dividends and capital
gains distri-
butions at net asset value and do not assume deduction of
the sales
charge (maximum 4.00%).
</TABLE>
THE FUND'S POLICY IS TO DISTRIBUTE DIVIDENDS
MONTHLY AND CAPITAL GAINS, IF ANY, ANNUALLY.
AVERAGE ANNUAL TOTAL RETURN** -- CLASS A SHARES (UNAUDITED)
<TABLE>
<CAPTION>
Without Sales Charge
With Sales Charge***
<S> <C>
<C>
Year Ended 2/28/95 4.11%
(0.06)%
Five Years Ended 2/28/95 9.67%
8.78%
Ten Years Ended 2/28/95 10.57%
10.12%
<FN>
** All average annual total return figures shown reflect
reinvestment of
dividends and capital gains at net asset value.
*** Average annual total return figures shown assume the
deduction of the
maximum 4.00% sales charge.
NOTE: As of November 6, 1992, existing shares of the
Fund were desig-
nated Class A shares. Class A shares are subject to a
maximum 4.00%
front-end sales charge and an annual service fee of
0.15% of the value
of the average daily net assets attributable to that
class. The Fund's
average annual rates of return would have been lower had
service fees
been in effect prior to November 6, 1992.
</TABLE>
GROWTH OF $10,000 INVESTED IN CLASS A SHARES
OF
SMITH BARNEY MANAGED MUNICIPALS FUND INC.+
February 28, 1985 -- February 28, 1995
DESCRIPTION OF MOUNTAIN CHART IN SHEARSON COVERS (CLASS A)
A line graph depicting the total growth (including
reinvestment of divi-
dends and capital gains) of a hypothetical investment of
$10,000 in Man-
aged Municipals Fund's Class A shares on February 28, 1985
through Febru-
ary 28, 1995 as compared with the growth of a $10,000
investment in the
Lipper Peer Group Average and the Lehman Brothers Municipal
Bond Index.
The plot points used to draw the line graph were as follows:
<TABLE>
<CAPTION>
GROWTH OF $10,000
GROWTH OF $10,000
INVESTMENT IN THE
GROWTH OF $10,000 INVESTED IN THE
LEHMAN BROTHERS
INVESTED IN CLASS A LIPPER PEER
MUNICIPAL
MONTH ENDED SHARES OF THE FUND GROUP AVERAGE
BOND INDEX
<S> <C> <C>
<C>
1/85 $10,000 --
- --
2/85 $ 9,600 $10,000
$10,000
03/85 $ 9,733 $10,100
$10,086
06/85 $10,427 $10,888
$10,932
09/85 $10,398 $10,792
$10,768
12/85 $11,302 $11,696
$11,639
03/86 $12,375 $12,831
$12,817
06/86 $12,279 $12,727
$12,738
09/86 $12,874 $13,339
$13,422
12/86 $13,418 $13,892
$13,886
03/87 $13,768 $14,428
$14,222
06/87 $13,179 $13,531
$13,835
09/87 $12,833 $13,116
$13,492
12/87 $13,479 $13,752
$14,095
03/88 $13,895 $14,165
$14,579
06/88 $14,256 $14,510
$14,861
09/88 $14,685 $14,928
$15,421
12/88 $15,041 $15,326
$15,524
03/89 $15,181 $15,421
$15,627
06/89 $15,999 $16,295
$16,553
09/89 $16,048 $16,235
$16,564
12/89 $16,567 $16,802
$17,201
03/90 $16,515 $16,781
$17,277
06/90 $16,892 $17,161
$17,681
09/90 $16,753 $17,090
$17,691
12/90 $17,423 $17,820
$18,455
03/91 $17,782 $18,182
$18,870
06/91 $18,266 $18,557
$19,274
09/91 $19,140 $19,311
$20,024
12/91 $19,912 $19,971
$20,696
03/92 $19,878 $19,993
$20,758
06/92 $20,827 $20,828
$21,546
09/92 $21,243 $21,303
$22,120
12/92 $21,783 $21,714
$22,523
03/93 $23,112 $22,556
$23,358
06/93 $24,164 $23,324
$24,123
09/93 $24,893 $24,123
$24,938
12/93 $25,253 $24,393
$25,288
03/94 $24,631 $22,965
$23,899
06/94 $24,496 $23,104
$24,164
09/94 $24,688 $23,190
$24,329
12/94 $24,121 $22,813
$23,980
2/95 $26,219 $24,183
$25,384
<FN>
+ Illustration of $10,000 invested in Class A shares on
February 28, 1985
assuming deduction of the maximum 4.00% sales charge at
the time of in-
vestment and reinvestment of dividends and capital gains
at net asset
value through February 28, 1995.
LIPPER PEER GROUP AVERAGE -- The Lipper Analytical
Services, Inc. Peer
Group Average is composed of an average of the Fund's peer
group of mu-
tual funds (190 as of February 28, 1995) investing in
municipal securi-
ties.
LEHMAN BROTHERS MUNICIPAL BOND INDEX -- The Lehman
Brothers Municipal
Bond Index is a weighted composite which is comprised of
more than
15,000 bonds issued within the last 5 years, having a
minimum credit
rating of at least Baa and a maturity of at least 2 years,
excluding all
bonds subject to the Alternative Minimum Tax and bonds
with floating or
zero coupons.
NOTE: All figures cited here represent past performance of
the Fund and
do not guarantee future results of Class A shares.
</TABLE>
HISTORICAL PERFORMANCE -- CLASS B SHARES (UNAUDITED)
<TABLE>
<CAPTION>
Net Asset Value
Year Ended Capital
Dividends Return of Total
February 28 Beginning Ending Gains Paid Paid
Capital Return*
<S> <C> <C> <C> <C>
<C> <C>
11/6/92-
2/28/93 $ 15.81 $16.71 $0.52 $0.31
$0.01 11.26%
1994 16.71 16.13 0.90 0.80
- -- 6.86
1995 16.13 15.47 0.29 0.86
- -- 3.54
Total $1.71 $1.97
$0.01
Cumulative Total Return -- (11/6/92 through 2/28/95)
23.10%
<FN>
* Figures assume reinvestment of all dividends and capital
gains distri-
butions at net asset value and do not assume deduction of
the contin-
gent deferred sales charge ("CDSC").
</TABLE>
AVERAGE ANNUAL TOTAL RETURN** -- CLASS B SHARES
<TABLE>
<CAPTION>
Without Sales Charge
With Sales Charge***
<S> <C>
<C>
Year Ended 2/28/95 3.54%
(0.78)%
Inception 11/6/92
through 2/28/95 9.39%
8.25%
<FN>
** All average annual total return figures shown reflect
reinvestment of
dividends and capital gains distributions at net asset
value.
*** Average annual total return figures shown assume the
deduction of the
applicable CDSC.
NOTE: The Fund began offering Class B shares on November
6, 1992.
Class B shares are subject to a maximum 4.50% CDSC, and
annual service
and distribution fees of 0.15% and 0.50%, respectively,
of the value
of the average daily net assets attributable to that
class.
</TABLE>
GROWTH OF $10,000 INVESTED IN CLASS B SHARES
OF
SMITH BARNEY MANAGED MUNICIPALS FUND INC.+
November 6, 1992 -- February 28, 1995
DESCRIPTION OF MOUNTAIN CHART IN SHEARSON COVERS (CLASS B)
A line graph depicting the total growth (including
reinvestment of divi-
dends and capital gains) of a hypothetical investment of
$10,000 in Man-
aged Municipals Fund's Class B shares on November 6, 1992
through February
28, 1995 as compared with the growth of a $10,000 investment
in the Lipper
Peer Group Average and the Lehman Brothers Municipal Bond
Index. The plot
points used to draw the line graph were as follows:
<TABLE>
<CAPTION>
GROWTH OF $10,000
GROWTH OF $10,000
INVESTED IN CLASS B
GROWTH OF $10,000 INVESTMENT IN THE
GROWTH OF $10,000 SHARES OF THE
INVESTED IN THE LEHMAN BROTHERS
INVESTED IN CLASS B FUND WITH 3.00%
LIPPER PEER MUNICIPAL
MONTH ENDED SHARES OF THE FUND BACK-END LOAD
GROUP AVERAGE BOND INDEX
<S> <C> <C>
<C> <C>
10/31/92 -- --
$10,000 $10,000
11/06/92 $10,000 $10,000
- -- --
11/92 $10,175 $10,175
$10,254 $10,179
12/92 $10,346 $10,346
$10,380 $10,283
03/93 $10,962 $10,962
$10,782 $10,664
06/93 $11,446 $11,446
$11,149 $11,013
09/93 $11,776 $11,776
$11,531 $11,385
12/93 $11,932 $11,932
$11,661 $11,545
03/94 $11,495 $11,495
$10,978 $10,911
06/94 $11,543 $11,543
$11,045 $11,032
09/94 $11,619 $11,619
$11,086 $11,108
12/94 $11,335 $11,335
$10,905 $10,948
2/95 $12,310 $12,016
$11,560 $11,589
<FN>
+ Illustration of $10,000 invested in Class B shares on
November 6, 1992
(commencement of operations) assuming deduction of the
maximum appli-
cable CDSC at the time of redemption and reinvestment of
dividends and
capital gains at net asset value through February 28,
1995.
++ Value does not assume deduction of applicable CDSC.
+++ Value assumes deduction of applicable CDSC (assuming
deduction on Feb-
ruary 28, 1995).
LIPPER PEER GROUP AVERAGE -- The Lipper Analytical
Services, Inc. Peer
Group Average is composed of an average of the Fund's
peer group of
mutual funds (190 as of February 28, 1995) investing in
municipal se-
curities.
LEHMAN BROTHERS MUNICIPAL BOND INDEX -- The Lehman
Brothers Municipal
Bond Index is a weighted composite which is comprised of
more than
15,000 bonds issued within the last 5 years, having a
minimum credit
rating of at least Baa and a maturity of at least 2
years, excluding
all bonds subject to the Alternative Minimum Tax and
bonds with float-
ing or zero coupons.
Index information is available at month-end only;
therefore, the clos-
est month-end to the inception date of the Fund has been
used.
NOTE: All figures cited here represent past performance
of the Fund
and do not guarantee future results of Class B shares.
</TABLE>
HISTORICAL PERFORMANCE -- CLASS C SHARES (UNAUDITED)
<TABLE>
<CAPTION>
Net Asset Value
Year Ended Capital
Dividends Total
February 28 Beginning Ending Gains Paid
Paid Return*
<S> <C> <C> <C>
<C> <C>
11/9/94-
2/28/95 $14.30 $15.47 $0.29
$0.27 12.36%
Cumulative Total Return -- (11/9/94 through 2/28/95)
12.36%
<FN>
* Figures assume reinvestment of all dividends and capital
gains distri-
butions at net asset value and do not assume deduction of
the CDSC.
</TABLE>
CUMULATIVE TOTAL RETURN** -- CLASS C SHARES
<TABLE>
<CAPTION>
Without Sales Charge
With Sales Charge***
<S> <C>
<C>
Inception 11/9/94
through 2/28/95 12.36%
11.36%
<FN>
** All average annual total return figures shown reflect
reinvestment of
dividends and capital gains distributions at net asset
value.
*** Average annual total return figures shown assume the
deduction of the
applicable CDSC.
NOTE: The Fund began offering Class C shares on November
7, 1994.
Class C shares may be subject to a maximum 1.00% CDSC if
redeemed
within 12 months of purchase and are subject to annual
service and
distribution fees of 0.15% and 0.55%, respectively, of
the value of
the average daily net assets attributable to that class.
</TABLE>
PORTFOLIO HIGHLIGHTS (UNAUDITED)
FEBRUARY 28, 1995
INDUSTRY BREAKDOWN
DESCRIPTION OF PIE CHARTS IN SHAREHOLDER REPORT
Pie chart depicting the allocation of the Managed Municipals
Fund's in-
vestment securities held at February 28, 1995 by industry
classification.
The pie is broken in pieces representing industries in the
following per-
centages:
<TABLE>
<CAPTION>
INDUSTRY
PERCENTAGE
<S>
<C>
Transportation
9.4%
General Obligation
13.2%
Utilities
26.3%
Other Municipal Bond, Short-Term Investments, and Net Other
Assets 19.4%
Education
6.5%
Pollution Control Revenue
10.5%
Hospital
7.2%
Housing
7.5%
</TABLE>
TOP FIVE STATES REPRESENTED
<TABLE>
<CAPTION>
Percentage of
State
Market Value
<S>
<C>
California
21.3%
New York
11.5
Colorado
8.9
Texas
7.7
Florida
6.2
</TABLE>
SUMMARY OF MUNICIPAL BONDS AND SHORT-TERM
TAX EXEMPT INVESTMENTS BY COMBINED RATINGS
<TABLE>
<CAPTION>
Standard &
Percentage of
Moody's Poor's
Market Value
<S> <C> <C>
<C>
Aaa or AAA
41%
Aa AA
26
A A
11
Baa BBB
8
Ba BB
2
VMG1/P1 A1
1
NR NR
11
100%
</TABLE>
AVERAGE MATURITY 25.1 years
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1995
KEY TO INSURANCE ABBREVIATIONS
AMBAC -- American Municipal Bond Assurance Corporation
BIGI -- Bond Investors Guaranty Insurance
FGIC -- Federal Guaranty Insurance Corporation
FHA -- Federal Housing Administration
MBIA -- Municipal Bond Investors Assurance
PSF -- Permanent School Fund
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED)
MARKET VALUE
FACE VALUE
MOODY'S S&P (NOTE 1)
<S> <C>
<C> <C> <C>
MUNICIPAL BONDS AND NOTES -- 102.4%
ALABAMA -- 0.2%
$ 5,450,000 Fairfield, Alabama, Special Care Facilities
Financing Authority, Health Revenue Bonds,
(Lloyd Nolan Health Care Facility),
9.625% due 10/1/05
NR NR $ 5,722,500
ALASKA -- 5.6%
Valdez, Alaska, Marine Terminal Revenue:
92,490,000 Series A,
5.850% due 8/1/25
A1 AA- 84,281,513
17,000,000 Series B,
5.750% due 11/1/28
Aa2 AA 15,533,750
33,350,000 Series C,
5.650% due 12/1/28
A1 AA- 29,389,688
ARIZONA -- 0.8%
18,250,000 Greenlee County, Arizona, Industrial Devel-
opment Authority, Pollution
Control Revenue, (Phelps Dodge
Corporation Project),
5.450% due 6/1/09
A3 A 17,040,938
485,000 Maricopa County, Arizona, Hospital Revenue,
(Phoenix General Hospital), Series A,
8.500% due 1/1/16
Caa NR 437,713
CALIFORNIA -- 21.3%
6,000,000 Adelanto, California, Improvement Agency,
Tax Allocation, Series B, (FGIC Insured),
5.500% due 12/1/23
Aaa AAA 5,482,500
$ 4,900,000 Antioch Area Public Facilities Finance
Agency, California, Special Tax Revenue,
District #1989-1, (FGIC Insured),
5.000% due 8/1/18
Aaa AAA $ 4,195,625
7,000,000 Brea, California, Redevelopment Agency,
(Tax Allocation Project), (MBIA Insured),
5.750% due 8/1/23
Aaa AAA 6,588,750
California Health Facilities Financing Au-
thority, (AMBAC Insured):
6,420,000 (Catholic Health Center)
5.000% due 7/1/01
Aaa AAA 5,408,850
(Kaiser Permanente),
29,100,000 5.550% due 8/15/25
Aa2 AA 25,535,250
12,500,000 5.600% due 5/1/33
Aa2 AA 10,906,250
2,770,000 California Housing Financing Agency,
Revenue Bonds, Home Mortgage,
Series B, (FHA Insured),
5.700% due 2/1/25
Aa AA- 2,510,313
California Statewide Communities,
(St. Joseph's Health):
1,000,000 5.500% due 7/1/14
Aa AA 905,000
3,000,000 5.500% due 7/1/23
Aa AA 2,628,750
California Statewide Water Department Re-
sources:
Series L:
19,000,000 5.750% due 12/1/19
Aa AA 18,002,500
13,265,000 5.500% due 12/1/23
Aa AA 11,988,244
Series M:
5,015,000 5.000% due 12/1/11
Aa AA 4,419,468
5,305,000 5.000% due 12/1/12
Aa AA 4,628,612
5,415,000 5.000% due 12/1/14
Aa AA 4,650,130
8,125,000 Calleguas-Las Virginies, California,
Water Revenue Bonds, Public Financing Au-
thority, Municipal Water District,
(FGIC Insured),
5.125% due 7/1/21
Aaa AAA 7,007,812
$ 1,500,000 Contra Costa, California, Water District,
Series F, (FGIC Insured),
5.000% due 10/1/20
Aaa AAA $ 1,275,000
15,215,000 Corona, California, Redevelopment Agency,
Area A, Series A, (FGIC Insured),
5.500% due 9/1/24
Aaa AAA 13,845,650
5,000,000 East Bay, California, Utility District,
Water System, Revenue Bonds,
6.00% due 6/1/20
A1 AA- 4,943,750
10,000,000 Long Beach, California, Financing Author-
ity, Revenue Bonds, (AMBAC Insured)
5.500% due 11/1/22
Aaa AAA 9,187,500
Los Angeles, California, Convention & Ex-
hibit Center, Lease Revenue, Series A,
(MBIA Insured):
17,850,000 5.375% due 8/15/18
Aaa AAA 16,154,250
39,435,000 5.125% due 8/15/21
Aaa AAA 34,111,275
3,000,000 Los Angeles, California, Water &
Power Revenue,
5.875% due 9/1/30
Aa AA 2,831,250
Los Angeles, California, Wastewater
Systems, Revenue Bonds, (FGIC Insured):
Series A, (MBIA Insured):
16,190,000 5.800% due 6/1/21
Aaa AAA 15,501,925
21,500,000 5.875% due 6/1/24
Aaa AAA 20,801,250
Series B, (MBIA Insured):
4,375,000 5.600% due 6/1/20
Aaa AAA 4,079,687
54,800,000 5.700% due 6/1/23
Aaa AAA 51,649,000
7,250,000 Series D, (FGIC Insured),
5.200% due 11/1/21
Aaa AAA 6,334,687
Los Angeles County, California,
Metropolitan Transportation Authority,
Sales Tax Revenue:
Series A:
17,500,000 (MBIA Insured)
5.625% due 7/1/18
Aaa AAA 16,340,625
37,320,000 (FGIC Insured),
5.000% due 7/1/21
Aaa AAA 31,675,350
$ 15,030,000 Series B, (AMBAC Insured),
5.250% due 7/1/23
Aaa AAA $ 13,188,825
50,000 Northern California Power Agency,
Public Power Revenue Bonds,
(Geothermal Project No. 3),
Series 1984A, Prerefunded 7/1/95,
11.500% due 7/1/10
Aaa AAA 51,500
2,000,000 Northern California Transmission,
California Ore Transmission,
Series A, (MBIA Insured),
5.250% due 5/1/20
Aaa AAA 1,767,500
4,500,000 Oceanside, California, Certificates of Par-
ticipation, (AMBAC Insured),
5.800% due 5/1/21
Aaa AAA 4,314,375
4,975,000 Ontario, California, Redevelopment
Financing Authority, (Project #1),
(MBIA Insured),
5.500% due 8/1/18
Aaa AAA 4,570,780
6,500,000 Orange, California, Redevelopment Agency,
Series A, (AMBAC Insured),
5.700% due 10/1/23++
Aaa AAA 6,069,375
3,000,000 Oxnard, California, Financing Authority,
(FGIC Insured),
5.500% due 1/6/14
Aaa AAA 2,793,750
8,380,000 Palmdale, California, Civic Authority Reve-
nue, Series A, (MBIA Insured),
5.500% due 7/1/23
Aaa AAA 7,646,750
4,100,000 Palmdale, California, Water District,
Certificates of Participation, Littlerock
Dam Project, Series A, (MBIA Insured),
5.600% due 10/1/17
Aaa AAA 3,833,500
$ 3,030,000 Redding, California, Joint Powers
Financing, Series A,
5.500% due 1/1/13
A BBB+ $ 2,636,100
4,000,000 Sacramento, California, Municipal Utility
District, Series D,(MBIA Insured),
5.250% due 11/15/20
Aaa AAA 3,530,000
2,000,000 San Buenaventura, California, Certificates
of Participation, (Capital Improvement
Project), (AMBAC Insured),
5.500% due 1/1/17
Aaa AAA 1,855,000
San Francisco, California, City and County,
Sewer Revenue, (FGIC Insured):
4,365,000 5.375% due 10/1/16
Aaa AAA 3,950,325
6,700,000 5.375% due 10/1/22
Aaa AAA 5,988,125
San Joaquin Hills, California,
Transportation Authority:
43,330,000 Zero Coupon due 1/1/14
NR NR 11,428,288
10,435,000 Zero Coupon due 1/1/16
NR NR 2,373,963
18,000,000 Zero Coupon due 1/1/17
NR NR 3,802,500
Santa Clara County, California, Finance Au-
thority, (AMBAC Insured):
5,500,000 6.750% due 11/15/20
Aaa AAA 5,788,750
2,000,000 6.250% due 11/15/22
Aaa AAA 2,012,500
Sierra, California, Unified School Dis-
trict, Certificates of Participation:
395,000 5.450% due 3/1/02
Baa NR 376,237
405,000 5.550% due 3/1/03
Baa NR 383,737
3,000,000 South Coast, California, Air Quality Man-
agement District Building Corporation, In-
stallment Sale Headquarters,
(MBIA Insured),
5.500% due 8/1/14
Aaa AAA 2,805,000
5,500,000 South Orange County, California, Special
Tax Revenue, Series A, (MBIA Insured),
6.000% due 9/1/18++
Aaa AAA 5,451,875
Southern California Public Power Authority,
Power Project Revenue, Series A:
(Palo Verde Project),
$ 13,500,000 5.000% due 7/1/15
Aa AA $ 11,491,875
7,000,000 (San Juan Project),
5.000% due 1/1/20
Aaa AAA 5,967,500
13,430,000 (Transmission Project), (MBIA Insured),
5.000% due 7/1/22
Aaa AAA 11,365,137
2,200,000 Stockton, California, Health Facilities,
Revenue Bonds, (St. Joseph Medical
Center), (MBIA Insured),
5.500% due 6/1/23
Aaa AAA 1,985,500
21,500,000 University of California, (Multipurpose
Projects), Series C, (AMBAC Insured),
5.000% due 9/1/23
Aaa AAA 18,140,625
COLORADO -- 8.9%
12,765,000 Colorado Springs, Colorado,
Airport Revenue, Series A,
7.000% due 1/1/22
NR BBB 13,052,212
Dawson Ridge, Colorado,
Metropolitan District No. 1,
(Escrowed in U.S. Treasury Securities):
624,000,000 Series A,
Zero Coupon due 10/1/22
Aaa NR 95,160,000
2,000,000 Series B,
Zero Coupon due 10/1/22
Aaa NR 305,000
Denver, Colorado, City & County Airport
Revenue:
Series A:
26,500,000 14.000% due 11/15/08
Baa BB 42,101,875
13,500,000 8.000% due 11/15/25
Baa BB 14,158,125
Series C:
3,500,000 6.750% due 11/15/13
Baa BB 3,390,625
12,035,000 6.750% due 11/15/22
Baa BB 11,463,337
Series D,
22,425,000 7.000% due 11/15/25
Baa BB 21,724,218
$ 1,600,000 East Cherry Creek Valley, Colorado,
Water & Sanitation District, Revenue Bonds,
(Arapahoe County),
10.125% due 12/1/00
Baa1 A- $ 1,728,000
FLORIDA -- 6.2%
Broward County, Florida,
Public Improvement Revenue,
General Obligation Bonds:
1,000,000 12.500% due 1/1/02
Aa AA 1,402,500
1,250,000 12.500% due 1/1/03
Aa AA 1,806,250
1,500,000 12.500% due 1/1/04
Aa AA 2,231,250
1,750,000 12.500% due 1/1/05
Aa AA 2,664,375
2,000,000 12.500% due 1/1/06
Aa AA 3,102,500
3,000,000 Florida Housing Finance Agency,
Single Family Mortgage,
Series A,
6.650% due 1/1/24
Aa AAA 3,030,000
Florida State Board of Education,
General Obligation Bonds, Capital Outlay:
1,400,000 Series B,
6.000% due 6/1/22
Aa AA 1,394,750
Series C:
9,000,000 5.850% due 6/1/18
Aa AA 8,797,500
7,000,000 5.875% due 6/1/23
Aa AA 6,807,500
Series D:
13,500,000 5.125% due 6/1/18
Aa AA 11,913,750
8,160,000 5.125% due 6/1/22
Aa AA 7,078,800
2,500,000 5.200% due 6/1/23
Aa AA 2,190,625
4,900,000 Series E,
5.250% due 6/1/23
Aa AA 4,354,875
Series F:
10,000,000 6.000% due 6/1/20
Aa AA 9,962,500
28,030,000 6.100% due 6/1/24
Aa AA 28,065,037
11,710,000 Florida State Municipal Power Agency Reve-
nue, (AMBAC Insured),
5.100% due 10/1/25
Aaa AAA 10,173,062
$ 10,755,000 Jacksonville, Florida, Electric
Authority Revenue,
5.250% due 10/1/21
Aa1 AA $ 9,585,393
Martin County, Florida, Industrial Develop-
ment Authority:
10,000,000 7.875% due 12/15/25
Baa3 BBB- 10,612,500
6,010,000 8.050% due 12/15/25
Baa3 BBB- 6,460,750
3,500,000 St. Lucie County, Florida, Pollution
Control Revenue, (Florida Power &
Light Company Project),
10.000% due 4/1/20 (Prerefunded 4/1/95)
A2 A 3,583,125
Tampa, Florida, Revenue Bonds,
(Florida Aquarium Inc., Project):
3,000,000 7.550% due 5/1/12
NR NR 3,101,250
3,000,000 7.750% due 5/1/27
NR NR 3,078,750
GEORGIA -- 3.1%
8,000,000 Atlanta, Georgia, Airport Facilities,
Revenue Bonds, Series B,
(AMBAC Insured),
6.000% due 1/1/21
Aaa AAA 7,690,000
580,000 Brunswick, Georgia, Housing Authority, Mul-
tifamily Housing Revenue,
(Cypress Mill), (FHA Insured),
9.750% due 8/1/26
NR A+ 613,350
47,700,000 Colquitt County, Georgia, Development Au-
thority Revenue, (Escrowed 100% in
U.S. Treasury Securities),
Zero Coupon due 12/1/21
Aaa NR 7,095,374
20,865,000 Metropolitan Atlanta Pier and Exposition
Authority, (MBIA Insured),
6.000% due 6/15/27
Aaa AAA 20,004,318
Metropolitan Atlanta Rapid Transit
Authority, Sales Tax Revenue, Series A,
(AMBAC Insured):
7,420,000 5.125% due 7/1/17
Aaa AAA 6,640,900
6,075,000 5.125% due 7/1/18
Aaa AAA 5,421,937
$ 59,390,000 Richmond County, Georgia,
Development Authority Revenue,
(Escrowed to Maturity in U.S.
Treasury Securities),
Zero Coupon due 12/1/21
Aaa NR $ 9,014,737
78,675,000 Savannah, Georgia, Economic
Development Authority, (Escrowed to Matu-
rity in U.S. Treasury Securities),
Zero Coupon due 12/1/21
Aaa NR 11,702,907
20,425,000 Washington, Georgia, Economic
Development Authority,
(Wilkes Payroll Company),
(Escrowed to Maturity in U.S.
Treasury Securities),
Zero Coupon due 12/1/21
Aaa NR 3,114,813
ILLINOIS -- 2.6%
13,000,000 Chicago, Illinois, (O'Hare International
Airport), Series C, (MBIA Insured),
5.000% due 1/1/18
Aaa AAA 11,033,750
1,890,000 Grayslake, Illinois, Multifamily Housing
Authority, (Country Squire Apartments),
(FHA Insured),
9.500% due 12/1/25
NR A 1,925,438
Illinois Educational Facilities Authority
Revenue:
3,500,000 (Chicago Osteopathic College),
9.625% due 7/1/05
NR BBB+ 3,596,250
10,000,000 (University of Chicago),
5.700% due 12/1/25
Aaa AA 9,237,500
Illinois Health Facilities Authority Reve-
nue:
2,500,000 (Evanston Hospital Corporation), Series A,
9.750% due 9/1/15
Aa AA 2,612,500
990,000 (St. Elizabeth's Hospital, Chicago),
10.125% due 7/1/16
NR NR 1,038,114
$ 4,590,000 Illinois Municipal Electric Agency, Power
Supply System Revenue, Series A,
(AMBAC Insured),
5.750% due 2/1/21
Aaa AAA $ 4,303,125
Illinois State, General Obligation:
12,900,000 5.875% due 8/1/15
Aa AA- 12,577,500
12,900,000 5.875% due 8/1/16
Aa AA- 12,577,500
INDIANA -- 1.2%
Indiana Bond Bank, State Revenue,
Guarantee-State Revolving Fund,
Project A:
2,500,000 6.000% due 2/1/15
NR A 2,403,125
2,205,000 6.000% due 2/1/16
NR A 2,103,019
2,220,000 Special Program, Series A-2,
5.550% due 11/1/10
A NR 2,059,050
Indiana Health Facilities Authority
Revenue, (Riverview Hospital):
245,000 5.800% due 8/1/97
Baa1 NR 243,163
240,000 6.000% due 8/1/98
Baa1 NR 236,700
255,000 6.200% due 8/1/99
Baa1 NR 251,175
305,000 6.500% due 8/1/01
Baa1 NR 301,569
200,000 6.600% due 8/1/02
Baa1 NR 197,500
3,700,000 (St. Anthony Medical and Home Inc.),
Series H,
9.250% due 10/1/17
A NR 4,139,375
15,000,000 Rockport, Indiana, Pollution Control
Revenue, Series A, (AMBAC Insured),
6.550% due 6/1/25***
Aaa AAA 15,187,500
IOWA -- 0.0%
145,000 Iowa Housing Finance Authority, Single Fam-
ily Housing Revenue, Series 1984A,
10.750% due 9/1/04
Aaa AA 150,075
KANSAS -- 0.1%
2,500,000 Kansas State Turnpike Authority,
Turnpike Revenue, (AMBAC Insured),
5.250% due 9/1/17
Aaa AAA 2,228,125
KENTUCKY -- 0.6%
Louisville & Jefferson County,
Kentucky, Metropolitan Sewer District
Revenue, (MBIA Insured):
$ 3,495,000 5.300% due 5/15/19
Aaa AAA $ 3,101,813
4,250,000 Series B,
5.500% due 5/15/23
Aaa AAA 3,856,875
7,250,000 Louisville & Jefferson County, Kentucky,
Airport Authority Revenue, (MBIA Insured),
Series C,
5.500% due 7/1/23
Aaa AAA 6,488,750
MAINE -- 0.2%
2,500,000 Maine Municipal Bond Bank,
Revenue Refunding, Series A,
5.700% due 11/1/12
Aa A+ 2,378,125
2,000,000 Maine State Housing Authority,
Mortgage Purchase Revenue,
5.650% due 11/15/20
A1 AA- 1,825,000
MARYLAND -- 3.2%
Baltimore County, Maryland,
Mortgage Revenue:
1,005,000 (Kingswood Common III), Series A,
(FHA Insured),
5.850% due 5/1/26
NR AAA 933,394
3,710,000 (Kingswood Common IV), Series A,
(FHA Insured),
5.850% due 9/1/28
NR AA 3,413,200
5,000,000 Baltimore County, Maryland, Waste Water
Revenue, Series A, (MBIA Insured),
5.600% due 7/1/13
Aaa AAA 4,775,000
56,000,000 Maryland State Energy, Solid Waste Disposal
Revenue, (Recycling Hagerstown),
9.000% due 10/15/16
NR NR 57,890,000
Maryland State Health & Higher Education:
2,020,000 (Francis Scott Key Medical), (FGIC In-
sured),
5.000% due 7/1/18
Aaa AAA 1,739,725
$ 4,400,000 (University of Maryland), Medical System
Certificates, (FGIC Insured),
5.000% due 7/1/20
Aaa AAA $ 3,745,500
MASSACHUSETTS -- 4.7%
4,785,000 Massachusetts Bay Transportation Authority,
Series A, (MBIA Insured),
5.500% due 3/1/22
Aaa AAA 4,372,294
Massachusetts State, Health and
Educational Facilities Authority Revenue:
2,120,000 (Baystate Medical Center), Series D,
(FGIC Insured),
5.000% due 7/1/20
Aaa AAA 1,772,850
3,475,000 (Boston College), Series K,
5.250% due 6/1/23
A1 A+ 3,010,219
7,870,000 (Massachusetts General Hospital),
(AMBAC Insured),
5.375% due 7/1/23
Aaa AAA 6,984,625
7,535,000 (Massachusetts General Hospital),
Series G, (AMBAC Insured),
5.250% due 7/1/23
Aaa AAA 6,564,869
3,000,000 (New England Medical Center),
(MBIA Insured),
3.100% due 7/1/13
Aaa AAA 2,186,250
2,000,000 Series G,
5.375% due 7/1/24
Aaa AAA 1,765,000
6,500,000 (Tufts University), Series F,
(FGIC Insured),
5.950% due 8/15/18
Aaa AAA 6,410,625
31,700,000 Massachusetts State, Industrial Finance
Agency, Solid Waste Disposal
Revenue, Series A,
9.000% due 8/1/16
NR NR 33,007,625
5,000,000 Massachusetts State Turnpike Authority,
Revenue Bonds, Series A,
(FGIC Insured),
5.125% due 1/1/23
Aaa AAA 4,312,500
Massachusetts State Water Resources Author-
ity:
Series A, (MBIA Insured):
$ 29,405,000 6.000% due 8/1/20
Aaa AAA $ 28,963,925
5,340,000 6.000% due 8/1/24
Aaa AAA 5,219,850
Series B,
3,000,000 5.500% due 3/1/17
A A 2,752,500
MICHIGAN -- 3.2%
12,000,000 Michigan State Strategic Funding
Limited Obligation, Water Revenue,
(Blue Water Fiber Project),
8.000% due 1/1/12
NR NR 11,820,000
56,625,000 Midland County, Michigan, Economic Develop-
ment Corporation, Pollution
Control Revenue Bonds, Subordinated Limited
Obligation, Series B,
9.500% due 7/23/09
NR NR 60,517,969
MINNESOTA -- 1.3%
4,400,000 Dakota County, Minnesota, Housing Redevel-
opment Authority Series, Multifamily Mort-
gage Revenue,
Series 1985A,
9.500% due 6/1/08
NR NR 4,290,000
21,690,000 St. Paul, Minnesota, Housing and Redevelop-
ment Authority, Hospital Revenue Bonds,
(Healtheast Project), Series D,
9.750% due 11/1/17
Baa1 BBB- 23,940,338
1,430,000 St. Paul, Minnesota, Port Authority, Indus-
trial Development Revenue,
Series 1984B,
11.000% due 12/1/13
NR CCC 1,431,788
MONTANA -- 1.3%
33,400,000 Montana State Board of Investments, Re-
source Recovery Revenue,
(Yellowstone Energy LP Project),
7.000% due 12/31/19
NR NR 30,561,000
NEBRASKA -- 0.2%
$ 5,520,000 Nebraska Investment Finance Authority, Sin-
gle Family Housing Revenue,
(FHA Insured),
6.700% due 9/1/26***
NR AAA $ 5,575,200
NEW HAMPSHIRE -- 2.2%
New Hampshire Higher Education &
Health Facilities Authority, Hospital Reve-
nue,
(Mary Hitchcock Memorial Hospital),
(FGIC Insured):
5,000,000 5.250% due 8/15/21
Aaa AAA 4,381,250
19,655,000 5.750% due 8/15/23
Aaa AAA 18,328,288
23,500,000 New Hampshire Industrial Development Au-
thority, Pollution Control Revenue Bonds,
(United Illuminating Company), Series B,
10.750% due 10/1/12
Ba1 BBB- 26,760,625
NEW JERSEY -- 1.5%
Salem County, New Jersey, Industrial Pollu-
tion Control, Financing Authority Revenue
Bonds, (Public Service Electric & Gas
Project), (MBIA Insured):
24,250,000 Series A,
5.700% due 5/1/28
Aaa AAA 22,522,188
10,500,000 Series C,
5.550% due 11/1/33
Aaa AAA 9,489,375
3,500,000 South Jersey Port Corporation, New Jersey,
Water Revenue, Marine Terminal, Series G,
5.600% due 1/1/23
NR A+ 3,241,875
NEW MEXICO -- 0.1%
1,500,000 Farmington, New Mexico, Utility Systems
Revenue Bonds, (FGIC Insured),
9.750% due 5/15/13
Aaa AAA 1,618,125
NEW YORK -- 11.5%
78,470,000 Battery Park City Authority, New York, Rev-
enue Bond, Series A,
5.800% due 11/1/22
A A 71,015,350
$ 9,640,000 Battery Park City, New York, New York Hous-
ing Corporation, Revenue Bond,
5.000% due 11/1/18
A1 AA $ 8,230,150
New York, New York City Municipal Water Fi-
nance, Water & Sewer Revenue:
Series A, (AMBAC Insured):
3,300,000 5.750% due 6/15/18
Aaa AAA 3,155,625
25,175,000 5.500% due 6/15/20
A A- 22,720,438
4,250,000 Series A, (FGIC Insured),
5.750% due 6/15/18
Aaa AAA 4,064,063
Series B, (AMBAC Insured):
3,000,000 5.375% due 6/15/19
Aaa AAA 2,715,000
17,800,000 5.500% due 6/15/19
A A- 16,220,250
4,000,000 Series F, (MBIA Insured),
5.500% due 6/15/23
Aaa AAA 3,665,000
New York State Dorm Authority:
5,000,000 (City University), (MBIA Insured),
6.250% due 7/1/19
Aaa AAA 5,050,000
(Iona College), (MBIA Insured):
485,000 6.600% due 7/1/07
Aaa AAA 514,100
420,000 6.600% due 7/1/08
Aaa AAA 443,625
555,000 6.600% due 7/1/09
Aaa AAA 584,138
540,000 6.700% due 7/1/10
Aaa AAA 569,700
New York State, Local Government Assistance
Corporation:
3,420,000 5.500% due 4/1/23
NR A 3,099,375
Series B,
8,060,000 5.500% due 4/1/21
A A 7,324,525
Series C:
12,800,000 5.500% due 4/1/18
A A 11,696,000
9,000,000 5.500% due 4/1/22
A A 8,167,500
31,200,000 Series D,
5.000% due 4/1/23
A A 26,208,000
1,500,000 New York State Medical Care Facilities, Fi-
nancing Agency Revenue Bonds,
(FHA Insured),
6.200% due 2/15/28
NR AAA 1,492,500
$ 2,000,000 New York State Refunding Revenue,
General Obligation Bonds,
12.000% due 11/15/03
A A- $ 2,890,000
New York State Thruway Authority
Revenue, Series C, (FGIC Insured):
3,250,000 6.000% due 1/1/15
Aaa AAA 3,250,000
23,375,000 6.000% due 1/1/25
Aaa AAA 23,053,594
4,000,000 New York State, Urban Development Revenue,
Correctional Facilities,
(AMBAC Insured),
5.250% due 1/1/18
Aaa AAA 3,560,000
2,000,000 Port Authority New York & New Jersey,
87th Series,
5.250% due 7/15/21
A1 AA- 1,750,000
23,000,000 Triborough Bridge & Tunnel Authority,
New York, Revenue Bonds, General Purpose,
Series A,
5.000% due 1/1/24
Aa A+ 19,233,750
14,215,000 Series Y,
5.500% due 1/1/17
Aa A+ 13,184,413
NORTH CAROLINA -- 0.9%
4,500,000 Carteret County, North Carolina,
Certificates of Participation,
(Elementary School Project),
6.500% due 2/1/07
Baa1 BBB+ 4,505,625
8,420,000 Charlotte, North Carolina, Certificates
of Participation, Revenue Refunding,
(AMBAC Insured),
5.250% due 12/1/20
Aaa AAA 7,525,375
10,000,000 North Carolina, Municipal Power Agency Rev-
enue, (MBIA Insured),
5.000% due 1/1/18
Aaa AAA 8,500,000
NORTH DAKOTA -- 0.0%
1,000,000 Grand Forks, North Dakota, Housing
Facilities Revenue, (Senior United
Health Resources),
9.250% due 12/1/10
NR NR 1,125,000
OHIO -- 1.2%
$ 3,000,000 Akron, Bath and Copley, Ohio, Joint Town-
ship, Hospital Revenue Bonds,
(Akron City Hospital Project),
8.875% due 11/15/07
Aaa NR $ 3,356,250
2,000,000 Cuyahoga County, Ohio, Hospital Facility
Authority, (Brentwood Hospital Project),
Revenue Bond,
9.625% due 11/1/14
Baa1 NR 2,105,000
2,790,000 Franklin County, Ohio, General
Obligation Bonds,
5.375% due 12/1/20
Aaa AAA 2,517,975
State of Ohio, Air Quality Development Au-
thority, Pollution Control Revenue:
3,000,000 (Cincinnati Gas & Electric),
10.125% due 12/1/15
Baa1 BBB+ 3,183,750
18,800,000 (Ohio Edison), Series B, (AMBAC Insured),
5.625% due 11/15/29
Aaa AAA 17,413,500
OKLAHOMA -- 0.2%
Tulsa, Oklahoma, Industrial Authority, Hos-
pital Revenue, (St. John Medical Center):
2,000,000 6.250% due 2/15/14
Aa AA 1,967,500
1,975,000 6.250% due 2/15/17
Aa AA 1,935,500
OREGON -- 0.4%
1,750,000 Clackamas County, Oregon,
Hospital Facility Authority, Revenue Bonds,
(Kaiser Permanente),
9.375% due 11/1/15
Aa2 AA 1,833,125
6,950,000 Oregon State, General Obligation Bonds, Se-
ries B,
6.375% due 8/1/24
Aa AA- 7,097,688
1,500,000 Oregon Veterans Welfare, General Obligation
Bonds, Series L,
12.500% due 9/1/06
Aaa AAA 1,698,750
PENNSYLVANIA -- 1.7%
2,500,000 Abington Heights School District, Pennsyl-
vania, General Obligation,
(FGIC Insured),
5.100% due 3/15/18
Aaa AAA 2,181,250
$ 10,500,000 Beaver County, Pennsylvania,
Industrial Development Authority,
Pollution Control Revenue,
(Cleveland Electric Illumination Company),
10.500% due 9/1/15
NR BB $ 10,841,250
2,000,000 Berks County, Pennsylvania, Municipal Au-
thority Hospital Revenue, (Franciscan
Health System, St. Joseph's Hospital),
(BIGI Insured),
9.625% due 6/15/15
Aaa AAA 2,070,520
2,000,000 Bucks County, Pennsylvania, Industrial De-
velopment Authority, Series A,
(AMBAC Insured),
5.250% due 7/1/21
Aaa AAA 1,755,000
165,667 Delaware County, Pennsylvania,
Hospital Authority Revenue Bonds,
(Sacred Heart Medical Center),
(in default),
9.750% due 9/1/11**
NR D 99,400
2,760,000 Lancaster County, Pennsylvania,
Hospital Authority Revenue Bonds,
(AMBAC Insured)
5.000% due 11/15/20
Aaa AAA 2,346,000
Pennsylvania Economic Development Financing
Authority Revenue, (Northhampton Generating
Project),
Series C:
2,000,000 6.875% due 1/1/11
NR NR 1,765,000
12,000,000 6.950% due 1/1/21
NR NR 10,380,000
4,000,000 Pennsylvania State, Industrial Authority,
Revenue Bonds, (AMBAC Insured),
5.500% due 1/1/14
Aaa AAA 3,765,000
3,500,000 Pennsylvania State, Certificates of Partic-
ipation, Series A,
(AMBAC Insured),
5.000% due 7/1/15
Aaa AAA 3,018,750
SOUTH CAROLINA -- 1.6%
$ 1,000,000 Berkeley County, South Carolina, School
District Certificates of Participation,
(AMBAC Insured),
6.250% due 2/1/12
Aaa AAA $ 1,020,000
South Carolina State, Public
Service Revenue:
5,750,000 Series A, (MBIA Insured),
5.500% due 7/1/21
Aaa AAA 5,254,063
6,900,000 Series B, (FGIC Insured),
5.875% due 1/1/23***
Aaa AAA 6,744,749
18,420,000 Series C, (FGIC Insured),
5.000% due 1/1/25
Aaa AAA 15,380,700
9,535,000 York County, South Carolina,
Industrial Development Revenue,
(Hoechst Celanese),
5.700% due 1/1/24
A2 AA- 8,462,313
TENNESSEE -- 0.4%
Chattanooga, Tennessee, Health,
Educational & Housing Facility Board, Mort-
gage Revenue, (Red Bank
Healthcare), (FHA Insured):
90,000 11.250% due 2/1/00
NR A 110,250
90,000 11.250% due 8/1/00
NR A 112,050
100,000 11.250% due 2/1/01
NR A 125,750
105,000 11.250% due 8/1/01
NR A 134,006
110,000 11.250% due 2/1/02
NR A 141,625
115,000 11.250% due 8/1/02
NR A 149,931
120,000 11.250% due 2/1/03
NR A 157,200
130,000 11.250% due 8/1/03
NR A 172,250
135,000 11.250% due 2/1/04
NR A 178,875
145,000 11.250% due 8/1/04
NR A 194,119
150,000 11.250% due 2/1/05
NR A 202,688
180,000 11.250% due 8/1/05
NR A 245,475
7,000,000 Loudon County, Tennessee, Industrial Devel-
opment Revenue,
6.200% due 2/1/23
Aa2 AA 6,895,000
TEXAS -- 7.7%
$ 21,595,000 Arlington, Texas, Independent School Dis-
trict, (PSF Insured),
5.750% due 2/15/21***
Aaa NR $ 20,677,213
5,150,000 Austin, Texas, Utility System Revenue,
(MBIA Insured),
6.250% due 11/15/19
Aaa AAA 5,195,063
50,030,000 Austin, Texas, Water, Sewer & Electric Au-
thority, Revenue Bonds,
14.000% due 11/15/01
A A 68,353,488
16,535,000 Burleson, Texas, Independent
School District, (PSF Insured),
6.750% due 8/1/24
Aaa NR 17,320,413
1,120,000 Cypress-Fairbanks, Texas, Independent
School District Bonds, Permanent
School Fund Guarantee,
5.250% due 2/15/20
Aaa AAA 995,400
5,000,000 Frisco, Texas, Independent School District,
(PSF Insured),
5.400% due 8/15/23
Aaa NR 4,531,250
1,000,000 Harris County, Texas, Industrial Develop-
ment Corporation, Revenue Refunding,
(Cargill Inc.),
7.000% due 10/1/15
Aa3 NR 1,051,250
6,000,000 Harris County, Texas, Toll Road Senior
Lien, Series A, (FGIC Insured),
5.500% due 8/15/21
Aaa AAA 5,505,000
10,395,000 Port of Port Arthur, Texas, Navigation Dis-
trict, General Obligation,
(AMBAC Insured),
6.125% due 3/1/19
Aaa AAA 10,382,005
Sam Rayburn, Texas, Municipal Power Agency:
Series A:
10,000,000 6.500% due 10/1/08
Ba BB 9,162,500
12,560,000 6.750% due 10/1/14
Ba BB 11,476,700
Series B:
5,700,000 5.750% due 10/1/08
Ba BB 4,816,500
12,835,000 5.500% due 10/1/20
Ba BB 9,642,294
$ 2,700,000 Texas State, General Obligation Bonds,
Series C,
5.500% due 4/1/20
Aa AA $ 2,500,875
Texas State, Turnpike Authority Revenue:
2,000,000 (Addison Airport Toll Tunnel Project),
(FGIC Insured),
6.600% due 1/1/23
Aaa AAA 2,050,000
3,500,000 (Dallas North), (AMBAC Insured),
5.000% due 1/1/20
Aaa AAA 2,953,125
UTAH -- 0.5%
7,000,000 Intermountain Power Agency, Utah, Power
Supply Revenue, Series A,
5.500% due 7/1/20
Aa AA 6,370,000
Utah State Housing Finance Agency,
Single Family Mortgage Revenue:
5,000,000 (FHA Insured):
5.700% due 7/1/26
Aa NR 4,543,750
10,000 Private Insured Mortgage,
10.750% due 7/1/08
Aa AA 10,300
VERMONT -- 0.0%
475,000 Vermont Housing Finance Agency,
Multifamily Housing Revenue,
Series A,
12.750% due 2/15/14
A1 A+ 482,125
VIRGINIA -- 1.4%
2,250,000 Chesapeake, Virginia, Hospital Authority
Revenue, (MBIA Insured),
5.250% due 7/1/18
Aaa AAA 2,041,875
5,500,000 Fairfax County, Virginia, Economic Develop-
ment, Lease Government Center,
5.250% due 11/15/18
Aa AA 4,881,250
2,500,000 Hampton, Virginia, Museum Revenue Refund-
ing,
5.250% due 1/1/09
NR A- 2,325,000
$ 26,220,000 Roanoke, Virginia, Industrial Development
Authority, Revenue Bonds,
Series A, (Roanoke Memorial Hospital),
(MBIA Insured),
5.000% due 7/1/24
Aaa AAA $ 21,992,025
WASHINGTON -- 3.6%
Washington State, General Obligation
Bonds:
3,000,000 Series 93A,
5.750% due 10/1/17
Aa AA 2,865,000
10,000,000 Series A,
5.750% due 9/1/19
Aa AA 9,537,500
Washington State, Public Power Supply Sys-
tems:
Revenue Bonds, (Project #2), Series A:
14,965,000 5.375% due 7/1/10
Aa AA 13,618,150
5,560,000 5.375% due 7/1/11
Aa AA 5,010,950
Revenue Refunding, (Nuclear Project #3),
Series B:
24,000,000 5.500% due 7/1/17
Aa AA 21,180,000
29,220,000 5.500% due 7/1/18
Aa AA 25,750,125
5,500,000 Series C,
5.375% due 7/1/15
Aa AA 4,833,125
WEST VIRGINIA -- 1.3%
32,000,000 Marion County, West Virginia, County Com-
missioner, Solid Waste Disposal Facility,
(American Power, Paper
Recycling Project),
7.750% due 12/1/11
NR NR 29,600,000
WISCONSIN -- 1.5%
2,000,000 Wisconsin Housing & Economic Development
Authority, Home Ownership Revenue,
Series A,
6.450% due 3/1/17
Aa AA 1,967,500
24,705,000 Wisconsin State Health & Educational Facil-
ities Authority, Revenue Bonds, (Aurora
Health Care), (MBIA Insured),
5.250% due 8/15/23
Aaa AAA 20,906,605
Wisconsin State Transportation Revenue:
Series A,
$ 5,500,000 5.500% due 7/1/22
A1 AA- $ 5,046,250
8,000,000 Series B,
5.500% due 7/1/22
A1 AA- 7,340,000
TOTAL MUNICIPAL BONDS AND NOTES
(Cost $2,280,030,121)
2,347,134,059
SHORT-TERM TAX-EXEMPT INVESTMENTS -- 0.9%
DELAWARE -- 0.0%
100,000 Delaware State, Economic Development Au-
thority Revenue,
4.000% due 10/1/29+
VMIG1 A-1 100,000
IOWA -- 0.1%
1,600,000 Iowa Finance Authority, Solid Waste
Disposal Revenue, (Cedar River Paper Com-
pany), (Project A),
3.850% due 6/1/24+
VMIG1 A-1+ 1,600,000
LOUISIANA -- 0.0%
800,000 East Baton Rouge, Louisiana, Parish
Pollution Control Revenue,
3.950% due 6/1/11+
VMIG1 NR 800,000
MICHIGAN -- 0.4%
9,400,000 Michigan State, Strategic Funding,
Limited Obligation Revenue, (Dow Chemical
Company Project),
3.800% due 2/1/09+
P-1 A-1 9,400,000
NEW MEXICO -- 0.1%
2,000,000 Farmington, New Mexico, Pollution Control
Revenue, Series C,
4.200% due 9/1/24+
P-1 A-1+ 2,000,000
NEW YORK -- 0.3%
1,500,000 New York, New York, Subseries A-4,
General Obligation Bonds,
3.600% due 8/1/22+
VMIG1 A-1 1,500,000
1,700,000 New York, New York, City Development Hous-
ing Development, Series A,
3.900% due 1/1/23+
NR A-1 1,700,000
$ 3,200,000 New York, New York, City Municipal Water
Authority, Series G, (FGIC Insured),
3.700% due 6/15/24+
VMIG1 AAA $ 3,200,000
TEXAS -- 0.0%
200,000 Gulf Coast, Texas, Solid Waste Disposal Au-
thority, (AMOCO Oil Company Project),
4.200% due 6/1/24+
VMIG1 A-1+ 200,000
TOTAL SHORT-TERM TAX-EXEMPT INVESTMENTS
(Cost $20,500,000)
20,500,000
TOTAL INVESTMENTS (Cost
$2,300,530,121*) 103.3% 2,367,634,059
OTHER ASSETS AND LIABILITIES
(NET) (3.3) (75,597,758)
NET ASSETS
100.0% $2,292,036,301
<FN>
* Aggregate cost for Federal tax purposes.
** Valued at fair value in good faith by the Fund's Board
of Directors.
*** When-issued security (Note 1).
+ Variable rate demand notes are payable upon not more
than one business
day's notice.
++ The Fund believes that the Orange County, California
bankruptcy pro-
ceedings, which occurred on December 6, 1994, will not
have a material
impact on the ability of these issues to make scheduled
interest and
principal payments and therefore will have little, if
any, effect on
the Fund. Nevertheless the Fund is monitoring the Orange
County pro-
ceedings.
</TABLE>
See Notes to Financial Statements.
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1995
<TABLE>
<S> <C>
<C>
ASSETS:
Investments, at value (Cost $2,300,530,121) (Note
1)
See accompanying schedule
$2,367,634,059
Cash
23,643
Receivable for investment securities sold
37,761,523
Interest receivable
35,167,342
Receivable for Fund shares sold
7,688,962
TOTAL ASSETS
2,448,275,529
LIABILITIES:
Payable for investment securities purchased
$152,471,677
Dividends payable
1,304,711
Payable for Fund shares redeemed
919,685
Investment advisory fee payable (Note 2)
544,238
Administration fee payable (Note 2)
305,560
Service fee payable (Note 3)
257,695
Distribution fee payable (Note 3)
192,996
Transfer agent fees payable (Note 2)
52,800
Custodian fees payable (Note 2)
41,600
Accrued expenses and other payables
148,266
TOTAL LIABILITIES
156,239,228
NET ASSETS
$2,292,036,301
NET ASSETS CONSIST OF:
Distributions in excess of net investment income
$(312,590)
Accumulated net investment loss on securities and
future contracts
(27,113,927)
Unrealized appreciation of investments
67,103,938
Par value
1,481,571
Paid-in capital in excess of par value
2,250,877,309
TOTAL NET ASSETS
$2,292,036,301
NET ASSET VALUE:
CLASS A SHARES:
NET ASSET VALUE and redemption price per share
($1,771,966,983 / 114,547,234 shares of common
stock outstanding)
$15.47
Maximum offering price per share ($15.47 / 0.960)
(based on sales charge of 4.00% of the offering
price on February 28, 1995)
$16.11
CLASS B SHARES:
NET ASSET VALUE and offering price per share+
($514,674,672 / 33,261,179 shares of common
stock outstanding)
$15.47
CLASS C SHARES:
NET ASSET VALUE and offering price per share+
($5,394,646 / 348,702 shares of common stock
outstanding)
$15.47
<FN>
+ Redemption price per share is equal to net asset value
less any applica-
ble contingent deferred sales charge.
</TABLE>
See Notes to Financial Statements.
STATEMENT OF OPERATIONS FOR THE YEAR ENDED
FEBRUARY 28, 1995
<TABLE>
<S> <C>
<C>
INVESTMENT INCOME:
Interest
$150,733,831
EXPENSES:
Investment advisory fee (Note 2) $
6,881,477
Administration fee (Note 2)
3,865,642
Service fee (Note 3)
3,249,040
Distribution fee (Note 3)
2,142,398
Transfer agent fees (Notes 2 and 4)
676,552
Custodian fees (Note 2)
256,544
Legal and audit fees
115,985
Directors' fees and expenses (Note 2)
64,871
Other
317,566
TOTAL EXPENSES
17,570,075
NET INVESTMENT INCOME
133,163,756
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(NOTES 1 AND 5):
Net realized gain/(loss) on:
Securities transactions
(61,297,075)
Futures contracts
48,029,992
Net realized loss on investments during the year
(13,267,083)
Net change in unrealized appreciation/(deprecia-
tion) of:
Securities
(20,026,609)
Futures contracts
(13,846,844)
Net unrealized depreciation during the year
(33,873,453)
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS
(47,140,536)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$86,023,220
</TABLE>
See Notes to Financial Statements.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
2/28/95 2/28/94
<S> <C>
<C>
Net investment income
$133,163,756 $ 109,445,423
Net realized gain/(loss) on investments and fu-
tures contracts during the year
(13,267,083) 89,982,781
Net unrealized depreciation of investments and
futures contracts
(33,873,453) (57,513,854)
Net increase in net assets resulting from oper-
ations
86,023,220 141,914,350
Distributions to shareholders from net invest-
ment income:
Class A
(107,787,545) (96,052,543)
Class B
(24,198,579) (9,216,957)
Class C
(44,264) --
Distributions to shareholders in excess of net
investment income:
Class A
(254,900) (1,050,332)
Class B
(57,578) (100,787)
Class C
(112) --
Distributions to shareholders from net realized
gain on investments:
Class A
(32,207,724) (97,964,382)
Class B
(8,852,657) (14,500,488)
Class C
(44,416) --
Net increase in net assets from Fund share
transactions (Note 6):
Class A
109,054 116,612,200
Class B
177,430,785 300,660,873
Class C
5,104,059 --
Net increase in net assets
95,219,343 340,301,934
NET ASSETS:
Beginning of year
2,196,816,958 1,856,515,024
End of year (distributions in excess of net in-
vestment income of $312,590 and $1,133,368,
respectively)
$2,292,036,301 $ 2,196,816,958
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<TABLE>
<CAPTION>
YEAR
YEAR YEAR
ENDED
ENDED ENDED
2/28/95
2/28/94** 2/28/93*
<S> <C>
<C> <C>
Operating performance:
Net asset value, beginning of year $16.13
$16.71 $15.62
Income from investment operations:
Net investment income 0.95
0.90 1.00
Net realized and unrealized gain/(loss) on
investments (0.37)
0.30 1.64
Total from investment operations 0.58
1.20 2.64
Less distributions:
Distributions from net investment income (0.95)
(0.87) (1.00)
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)
Total distributions (1.24)
(1.78) (1.55)
Net asset value, end of year $15.47
$16.13 $16.71
Total return+ 4.11%
7.41% 17.92%
Ratios to average net assets/supplemental
data:
Net assets, end of year (in 000's) $1,771,967
$1,847,184 $1,795,160
Ratio of operating expenses to average net
assets 0.71%
0.72% 0.64%
Ratio of net investment income to average
net assets 6.25%
5.43% 6.30%
Portfolio turnover rate 100%
131% 206%
<FN>
* On November 6, 1992, the Fund commenced selling Class B
shares. Any
shares in existence 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.
</TABLE>
See Notes to Financial Statements.
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
ENDED ENDED ENDED
2/28/92 2/28/91 2/28/90 2/28/89
2/28/88 2/28/87 2/28/86
<S> <C> <C> <C> <C>
<C> <C>
$14.98 $15.00 $14.83 $15.05
$15.88 $15.67 $13.39
1.05 1.06 1.12 1.11
1.13 1.16 1.22
0.66 0.04 0.15 (0.06)
(0.83) 0.64 2.36
1.71 1.10 1.27 1.05
0.30 1.80 3.58
(1.05) (1.09) (1.10) (1.11)
(1.12) (1.16) (1.22)
-- -- -- --
- -- -- --
-- -- -- (0.16)
(0.01) (0.43) (0.08)
(0.02) (0.03) -- --
- -- -- --
(1.07) (1.12) (1.10) (1.27)
(1.13) (1.59) (1.30)
$15.62 $14.98 $15.00 $14.83
$15.05 $15.88 $15.67
11.79% 7.65% 8.78% 7.31%
2.33% 12.35% 28.25%
$1,597,606 $1,461,345 $1,478,202 $1,519,508
$601,172 $788,557 $516,352
0.59% 0.58% 0.58% 0.66%
0.57% 0.59% 0.66%
6.83% 7.15% 7.43% 7.48%
7.59% 7.42% 8.48%
173% 83% 115% 37%
20% 15% 53%
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<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 year $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 year $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 year (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%
<FN>
* 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 indi-
cated and does not reflect any applicable sales charges.
@ Amount represents less than $0.01 per share.
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
FOR A CLASS C SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
PERIOD
ENDED
2/28/95*
<S>
<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%
<FN>
* On November 9, 1994, the Fund commenced selling Class C
shares.
** Annualized.
+ Total return represents aggregate total return for the
period indi-
cated 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 redemp-
tions of Fund shares.
@ Amount represents less than $0.01 per share.
</TABLE>
See Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Smith Barney Managed Municipals Fund Inc. (the "Fund")
(formerly known as
Smith Barney Shearson Managed Municipals Fund Inc.) was
incorporated under
the laws of the State of Maryland on September 16, 1980. The
Fund is reg-
istered with the Securities and Exchange Commission under
the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-
end manage-
ment investment company. Effective November 7, 1994, the
Fund began offer-
ing Class C and Class Y shares and continued to offer Class
A and Class B
shares. As of February 28, 1995, no Class Y shares have been
sold. Class A
shares are sold with a front-end sales charge. Class B and
Class C shares
may be subject to a contingent deferred sales charge
("CDSC") upon redemp-
tion. Class B shares will convert automatically to Class A
shares eight
years after the date of original purchase. Class Y shares
are available to
investors making an initial investment of at least $5
million and are not
subject to any sales charges, distribution or service fees.
All classes of
shares have identical rights and privileges except with
respect to the ef-
fect of the respective sales charges, the distribution
and/or service fees
borne by each class, expenses allocable exclusively to each
class, voting
rights on matters affecting a single class, the exchange
privilege of each
class and the conversion feature of Class B shares. The
following is a
summary of significant accounting policies consistently
followed by the
Fund in the preparation of its financial statements.
Portfolio valuation: Securities are valued by The Boston
Company
Advisors, Inc. ("Boston Advisors") after consultation with
an independent
pricing service (the "Service") approved by the Fund's Board
of Directors.
When, in the judgment of the Service, quoted bid prices for
securities are
readily available and are representative of the bid side of
the market,
these investments are valued at the mean between the quoted
bid prices and
asked prices (as obtained by the Service from dealers in
such securities).
Securities for which, in the judgment of the Service, there
are no readily
obtainable market quotations (which may constitute a
majority of the
portfolio securities) are carried at fair value as
determined by the Ser-
vice, based on methods which include consideration of:
yields or prices of
municipal securities of comparable quality, coupon, maturity
and type;
indications as to values from dealers; and general market
conditions.
Short- term investments that mature in 60 days or less are
valued at amor-
tized cost.
Futures contracts: The Fund may enter into futures
contracts. The Fund's
futures transactions will be entered into for hedging
purposes to protect
against a decline in the price of securities that the Fund
owns, or to
protect the Fund against an increase in the price of
securities it is com-
mitted to purchase.
Upon entering into a futures contract, the Fund is required
to deposit
with the broker an amount of cash or cash equivalents equal
to a certain
percentage of the contract amount. This is known as the
"initial margin."
Subsequent payments ("variation margin") are made or
received by the Fund
each day, depending on the daily fluctuation of the value of
the contract.
For financial statement purposes, an amount equal to the
settlement amount
of the contract is included in the Fund's Statement of
Assets and Liabili-
ties as an asset and as an equivalent liability. For long
futures posi-
tions, the asset is marked-to-market daily; for short
futures positions,
the liability is marked-to-market daily. The daily changes
in the contract
are recorded as unrealized gains or losses. The Fund
recognizes a realized
gain or loss when the contract is closed.
There are several risks in connection with the use of
futures contracts as
a hedging device. The change in value of futures contracts
primarily cor-
responds with the value of their underlying instruments,
which may not
correlate with the change in value of the hedged
investments. In addition,
there is the risk the Fund may not be able to enter into a
closing trans-
action because of an illiquid secondary market.
Repurchase Agreements: The Fund may engage in repurchase
agreement trans-
actions. Under the terms of a typical repurchase agreement,
the Fund takes
possession of an underlying debt obligation subject to an
obligation of
the seller to repurchase, and the Fund to resell, the
obligation at an
agreed- upon price and time, thereby determining the yield
during the
Fund's holding period. This arrangement results in a fixed
rate of return
that is not subject to market fluctuations during the Fund's
holding pe-
riod. The value of the collateral is at least equal at all
times to the
total amount of the repurchase obligations, including
interest. In the
event of counterparty default, the Fund has the right to use
the collat-
eral to offset losses incurred. There is potential loss to
the Fund in the
event the Fund is delayed or prevented from exercising its
rights to dis-
pose of the collateral securities, including the risk of a
possible de-
cline in the value of the underlying securities during the
period while
the Fund seeks to assert its rights. The Fund's investment
adviser, acting
under the supervision of the Board of Directors, reviews 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.
Securities transactions and investment income: Securities
transactions
are recorded as of the trade date. Interest income is
recorded on the ac-
crual basis. Securities purchased or sold on a when-issued
or delayed-
delivery basis may be settled a month or more after the
trade date. Inter-
est income on these securities is not accrued until the
settlement date.
When required, the Fund instructs the custodian to segregate
assets in a
separate account with a current value at least equal to the
amount of its
when-issued purchase commitments. Realized gains and losses
from securi-
ties sold are recorded on the identified cost basis.
Investment income and
realized and unrealized gains and losses are allocated based
upon the rel-
ative net assets of each class of shares.
Dividends and distributions to shareholders: Dividends from
net invest-
ment income are determined on a class level, are declared on
each day that
the Fund is open for business and are paid on the last day
of the Smith
Barney Inc. ("Smith Barney") statement month. Distributions
from net real-
ized capital gains are determined on a fund level and are
declared and
paid annually, after the end of the fiscal year in which
earned. In addi-
tion, 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 in
each year of any undistributed ordinary income or capital
gains and ex-
pects to make any other distributions as are necessary to
avoid this tax.
Income distributions and capital gain distributions are
determined in ac-
cordance with income tax regulations which may differ from
generally ac-
cepted accounting principles. These differences are
primarily due to dif-
fering treatments of income and gains on various investment
securities
held by the Fund, timing differences and differing
characterization of
distributions made by the Fund as a whole. Permanent
differences incurred
during the Fund's fiscal year resulting from distributions
in excess of
capital gains have been reclassified to paid-in capital at
year end.
Federal income taxes: It is the policy of the Fund to
qualify as a regu-
lated investment company, which distributes exempt-interest
dividends, by
complying with the requirements of the Internal Revenue Code
of 1986, as
amended, applicable to regulated investment companies and by
distributing
substantially all of its earnings to its shareholders.
Therefore, no Fed-
eral income tax provision is required.
2. INVESTMENT ADVISORY AGREEMENT, ADMINISTRATION AGREEMENT
AND OTHER
TRANSACTIONS
The Fund has entered into an investment advisory agreement
(the "Advisory
Agreement") with Greenwich Street Advisors, formerly a
division of Mutual
Management Corporation, which was transferred, effective
November 7, 1994,
to Smith Barney Mutual Funds Management Inc. ("SBMFM").
Mutual Management
Corporation and SBMFM, formerly known as Smith, Barney
Advisers Inc., are
both wholly owned subsidiaries of Smith Barney Holdings Inc.
("Holdings"),
which in turn is a wholly owned subsidiary of The Travelers
Inc. Under the
Advisory Agreement, the Fund pays a monthly fee at the
annual rate of
0.35% of the value of its average daily net assets up to
$500 million;
0.32% of the value of its average daily net assets on the
next $1 billion;
0.29% of the value of its average daily net assets in excess
of $1.5
billion.
Prior to April 20, 1994, the Fund was party to an
administration agreement
with Boston Advisors, an indirect wholly-owned subsidiary of
Mellon Bank
Corporation ("Mellon"). Under this agreement, the Fund paid
a monthly fee
at the annual rate of 0.20% of the value of its average
daily net assets
up to $500 million; 0.18% of the value of its average daily
net assets on
the next $1 billion; 0.16% of the value of its average daily
net assets in
excess of $1.5 billion.
As of the close of business on April 20, 1994, SBMFM
succeeded Boston Ad-
visors as the Fund's administrator. The new administration
agreement con-
tains substantially the same terms and conditions, including
the same
level of fees, as the predecessor agreement.
As of the close of business on April 20, 1994, the Fund and
SBMFM entered
into a sub-administration agreement (the "Sub-Administration
Agreement")
with Boston Advisors. Under the Sub-Administration
Agreement, SBMFM pays Boston Advisors a portion of its
administration fee
at a rate agreed upon from time to time between SBMFM and
Boston Advisors.
For the year ended February 28, 1995, the Fund incurred
total brokerage
commissions of $306,677, none of which was paid to Smith
Barney.
For the year ended February 28, 1995, Smith Barney received
from investors
$2,699,875 representing commissions (sales charges) on Class
A shares.
A CDSC is generally payable by a shareholder in connection
with the re-
demption of certain Class A, Class B and Class C shares. In
circumstances
in which the CDSC is imposed, the amount of the charge will
vary depending
on the number of years since the date of the purchase. For
the year ended
February 28, 1995, Smith Barney received from shareholders
$1,074,440 and
$1,005 in CDSCs on the redemption of Class B and Class C
shares, respec-
tively.
No officer, director or employee of Smith Barney or any of
its affiliates,
receives any compensation from the Fund for serving as a
Director or of-
ficer of the Fund. The Fund pays each Director who is not an
officer, di-
rector, or employee of Smith Barney or any of their
affiliates $4,000 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
$1,000 per annum plus $250 per meeting attended. The Fund
reimburses all
Directors for travel and out-of-pocket expenses incurred to
attend such
meetings.
Boston Safe Deposit and Trust Company, an indirect wholly
owned subsidiary
of Mellon, serves as the Fund's custodian. The Shareholder
Services Group,
Inc., a subsidiary of First Data Corporation, serves as the
Fund's trans-
fer agent.
3. DISTRIBUTION PLAN
Smith Barney acts as distributor of the Fund's shares
pursuant to a dis-
tribution agreement with the Fund and sells shares of the
Fund through
Smith Barney or its affiliates.
Pursuant to Rule 12b-1 under the 1940 Act, the Fund has
adopted a services
and distribution plan (the "Plan"). Under this Plan, the
Fund compensates
Smith Barney for servicing shareholder accounts for Class A,
Class B and
Class C shareholders, and covers expenses incurred in
distributing Class B
and Class C shares. Smith Barney is paid an annual service
fee with re-
spect to Class A, Class B and Class C shares of the Fund at
the annual
rate of 0.15% of the value of its average daily net assets
attributable to
each respective class of shares. Smith Barney is also paid
an annual dis-
tribution fee with respect to Class B and Class C shares at
the annual
rates of 0.50% and 0.55%, respectively, of the value of the
average daily
net assets of each respective class of shares. For the year
ended February
28, 1995, the Fund incurred service fees of $2,606,445,
$641,353 and
$1,242 for Class A, Class B and Class C shares,
respectively. For the year
ended February 28, 1995, the Fund incurred a distribution
fee of
$2,137,842 and $4,556 for Class B and Class C shares,
respectively.
Under its terms, the Plan shall remain in effect from year
to year, pro-
vided that such continuance is approved annually by vote of
the Fund's
Board of Directors, including a majority of those Directors
who are not
"interested persons" of the Fund and who have no direct or
indirect finan-
cial interest in the operation of the Plan.
4. EXPENSE ALLOCATION
Expenses of the Fund not directly attributable to the
operations of any
class of shares are prorated among the classes based upon
the relative net
assets of each class. Operating expenses directly
attributable to a class
of shares are charged to that class' operations. In addition
to the above
service and distribution fees, class-specific operating
expenses include
transfer agent fees. For the year ended February 28, 1995,
transfer agent
fees for Class A, Class B and Class C shares were $464,787,
$211,315 and
$450, respectively.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment
securities,
excluding short-term investments, during the year ended
February 28, 1995
amounted to $2,626,869,095 and $2,062,780,556, respectively.
At February 28, 1995, aggregate gross unrealized
appreciation for all
securities in which there was an excess of value over tax
cost amounted to
$94,325,765, and aggregate gross unrealized depreciation for
all securi-
ties in which there was an excess of tax cost over value
amounted to
$27,221,827.
6. COMMON STOCK
At February 28, 1995, one billion shares of $.01 par value
common stock
were authorized. Changes in common stock outstanding were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED
2/28/95
2/28/94
CLASS A SHARES: SHARES AMOUNT
SHARES AMOUNT
<S> <C> <C>
<C> <C>
Sold 17,117,100 $259,346,666
13,780,448 $229,760,502
Issued as reinvestment of
dividends 5,781,236 86,678,010
7,475,694 123,446,869
Redeemed (22,890,002) (345,915,622)
(14,139,151) (236,595,171)
Net increase 8,334 $109,054
7,116,991 $116,612,200
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED
2/28/95
2/28/94
CLASS B SHARES: SHARES AMOUNT
SHARES AMOUNT
<S> <C> <C>
<C> <C>
Sold 14,985,398 $228,523,461
18,016,939 $301,196,191
Issued as reinvestment of
dividends 1,526,136 22,776,341
1,099,568 18,100,114
Redeemed (4,930,470) (73,869,017)
(1,107,913) (18,635,432)
Net increase 11,581,064 $177,430,785
18,008,594 $300,660,873
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
2/28/95*
CLASS C SHARES: SHARES AMOUNT
<S> <C> <C>
Sold 357,851 $5,242,071
Issued as reinvestment of
dividends 5,107 74,785
Redeemed (14,256) (212,797)
Net increase 348,702 $5,104,059
<FN>
* The Fund commenced selling Class C shares on November 9,
1994.
</TABLE>
7. LINE OF CREDIT
The Fund and several affiliated entities participate in a
$50 million line
of credit provided by Bank of America (formerly known as
Continental Bank
N.A.) under an Amended and Restated Line of Credit Agreement
(the "Agree-
ment") dated April 30, 1992, renewed effective May 31, 1994,
primarily for
temporary or emergency purposes, including the meeting of
redemption re-
quests that otherwise might require the untimely disposition
of securi-
ties. Under this Agreement, the Fund may borrow up to the
lesser of $25
million or 25% of its net assets. However, pursuant to the
Fund's prospec-
tus, the Fund may only borrow up to 10% of its total net
assets. Under the
terms of the Agreement, as amended, the Fund and the other
affiliated en-
tities are charged an aggregate commitment fee of $100,000
which is allo-
cated equally among each of the participants. The Agreement
requires,
among other provisions, each participating fund to maintain
a ratio of net
assets (not including funds borrowed pursuant to the
Agreement) to aggre-
gate amount of indebtedness pursuant to the Agreement of no
less than 5 to
1. During the year ended February 28, 1995, the Fund had an
average out-
standing daily balance of $313,972 with interest rates
ranging from 5.125%
to 6.313%. Interest expense totalled $18,748 for the year
ended February
28, 1995 and is offset against interest income on the Fund's
Statement of
Operations for the year ended February 28, 1995. At February
28, 1995, the
Fund had no outstanding borrowings under this agreement.
8. CAPITAL LOSS CARRYFORWARDS
At February 28, 1995, the Fund had available for Federal tax
purposes
unused capital loss carryforwards of $1,065,155 expiring in
the year 2003.
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
SMITH BARNEY MANAGED MUNICIPALS FUND INC.:
We have audited the accompanying statement of assets and
liabilities of
Smith Barney Managed Municipals Fund Inc. (formerly Smith
Barney Shearson
Managed Municipals Fund Inc.), including the schedule of
portfolio invest-
ments, as of February 28, 1995, the related statement of
operations for
the year then ended, the statement of changes in net assets
for each of
the two years in the period then ended and the financial
highlights for
each of the ten years in the period then ended. These
financial statements
and financial highlights are the responsibility of the
Fund's management.
Our responsibility is to express an opinion on these
financial statements
and financial highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing
standards. Those standards require that we plan and perform
the audit to
obtain reasonable assurance about whether the financial
statements and fi-
nancial highlights are free of material misstatement. An
audit includes
examining, on a test basis, evidence supporting the amounts
and disclo-
sures in the financial statements. Our procedures included
confirmation of
securities owned as of February 28, 1995 by correspondence
with the custo-
dian and brokers. An audit also includes assessing the
accounting princi-
ples used and significant estimates made by management, as
well as evalu-
ating the overall financial statement presentation. We
believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred
to above present fairly, in all material respects, the
financial position
of Smith Barney Managed Municipals Fund Inc. as of February
28, 1995, the
results of its operations for the year then ended, the
changes in its net
assets for each of the two years in the period then ended
and the finan-
cial highlights for each of the ten years in the period then
ended, in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
April 10, 1995
TAX INFORMATION (UNAUDITED) FISCAL YEAR ENDED
FEBRUARY 28, 1995
The following tax information represents fiscal year end
disclosures of
various tax benefits passed through to shareholders at
calendar year end.
Of the dividends paid by the Fund attributable to net
investment income
for the year ended February 28, 1995, 100% is tax-exempt for
regular
Federal income taxes.
The capital gains dividend distribution paid to shareholders
for fiscal
year ended February 28, 1995, whether taken in additional
shares or in
cash, is as follows:
Long-Term Capital Gains
$23,458,949
In accordance with the tax laws, the Fund has elected to
defer the recog-
nition of losses occurring between October 31 and February
28 until the
first day of the following fiscal year. The amount of such
deferral is
$26,048,772 of capital losses. These losses for tax purposes
will be
deemed to occur on March 1, 1995.
The above figure may differ from that cited elsewhere in
this report due
to differences in the calculations of income and capital
gains for Securi-
ties and Exchange Commission (book) purposes and Internal
Revenue Service
(tax) purposes.
PARTICIPANTS
DISTRIBUTOR
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
INVESTMENT ADVISER
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
MANAGED
MUNICIPALS
FUND INC.
DIRECTORS
Herbert Barg
Alfred J. Bianchetti
Martin Brody
Dwight B. Crane
Burt N. Dorsett
Elliot S. Jaffe
Stephen E. Kaufman
Joseph J. McCann
Heath B. McLendon
Cornelius C. Rose
OFFICERS
Heath B. McLendon
Chairman of the Board
and Investment Officer
Jessica M. Bibliowicz
President
Joseph P. Deane
Vice President and
Investment Officer
David Fare
Investment Officer
Lewis E. Daidone
Senior Vice President
and Treasurer
Christina T. Sydor
Secretary
Recycled
Recyclable
SMITH BARNEY
A Member of TravelersGroup
This report is submitted for the
general information of the
shareholders of Smith Barney
Managed Municipals Fund Inc.
It is not authorized for distribution
to prospective investors unless
accompanied or preceded by an
effective Prospectus for the Fund,
which contains information
concerning the Fund's investment
policies, fees and expenses as well
as other pertinent information.
SMITH BARNEY
MUTUAL FUNDS
388 Greenwich Street
New York, New York 10013
Fund 5, 179, 465, 483
FD2207 D5
