SEMI-ANNUAL REPORT
[GRAPHIC]
SMITH BARNEY
MANAGED
MUNICIPALS
FUND INC.
- ---------------
August 31, 1996
[LOGO] SMITH BARNEY MUTUAL FUNDS
Investing for your future.
Every day.
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Smith Barney Managed Municipals Fund Inc.
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Dear Shareholder:
We are pleased to provide you with the semi-annual report for the Smith Barney
Managed Municipals Fund Inc. for the period ended August 31, 1996. In this
report, we summarize the period's prevailing economic and market conditions and
outline our portfolio strategy. A detailed summary of the Fund's performance can
be found in the appropriate sections that follow in the semi-annual report.
Fund Performance Update
For the six months ended August 31, 1996, the Class A shares of the Managed
Municipals Fund had a total return of -0.63%. In comparison, the Fund's Lipper
Analytical Services, Inc. peer group average posted a total return of -0.29% for
the same time period. (Lipper is an independent fund tracking organization.)
Over the six-month period covered by this report, the Fund distributed dividends
totaling $0.456 per share; based on its net asset value of $15.64 as of August
31, 1996, this equates to an annualized distribution rate of 5.83%. For an
individual in the federal income tax bracket of 36%, the tax free yield of 5.83%
is equivalent to a taxable yield of 9.11%.
Municipal Bond Market Update
Although this has been a challenging period for the fixed income markets, the
municipal bond market has outperformed the U.S. government bond market. In our
view, this can be attributed to the modest supply of municipal bonds that have
been issued. In recent months, investors have been seeking to reinvest proceeds
of municipal bonds that have either matured or been called, back into the
municipal bond market. However, at the same time, the supply of new issues has
been far below recent averages, and is very close to the low for the year. This
increased demand combined with light supply has caused municipal bond prices to
stay higher, and yields to remain conversely lower, relative to those of U.S.
Treasury securities.
Fund's Investment Strategy
The Smith Barney Managed Municipals Fund had maintained a more defensive
investment strategy from the end of 1995 up until May of 1996. We purchased
higher coupon issues and shortened maturities so that at the beginning of 1996
we were in a position to protect the Fund's net asset value (NAV) in a rather
hostile market environment. We maintained this conservative position through the
middle of May until the yield on the 30-year U.S. Treasury bond rose above 7.10%
and yields on high grade long-term municipal
1
bonds rose above 6.20%. At this point we changed the Fund's investment strategy
because we believed it was time to lock in those yields as we became more
positive on the market. Since May, every time municipal bond yields have risen
even close to those levels, we have added to our existing high grade discount
coupon positions because we feel the market at these rates is quite attractive.
In addition, we have added issues with longer maturities. As of August 31, 1996,
the Fund's average weighted maturity was 23.6 years versus 20.6 years on
February 29, 1996.
As of August 31, 1996, approximately 92% of the Fund's holdings were rated
investment grade (BBB/Baa and higher) by either Standard and Poor's Corporation
or Moody's Investors Service Inc., with 51% of the Fund invested in AAA bonds,
the highest possible rating. (Standard and Poor's and Moody's are two major
credit reporting and bond rating agencies.) The Fund's largest holdings are
concentrated in utility bonds (15.3%), transportation bonds (14.2%), general
obligation bonds (11.8%), and hospital bonds (10.0%).
Municipal Bond Market Outlook
Going forward, we expect the municipal bond market should benefit from a
comfortably low inflation rate, a Federal Reserve that seems content with short-
term rates right where they are, an economy that is not overly robust, and
municipalities that are issuing new debt sparingly. For these reasons, we
continue our positive view of the market for the balance of 1996.
As stated in our municipal bond market update, supply has been light, which has
allowed municipal bonds to outperform government bonds for all of 1996, and
should do so going forward. We believe the rate of U.S. economic growth will
moderate somewhat in the next quarter or two, and allow long-term rates to ease
from their current levels. In our view, the market at today's levels is
attractively priced and, with limited supply, provides investors with attractive
after-tax yields. Furthermore, municipal bonds may offer capital appreciation
possibilities if the economic numbers ease at all.
In closing, thank you for investing in the Smith Barney Managed Municipals Fund.
We look forward to continuing to help you achieve your financial goals.
Sincerely,
/s/ Heath B. McLendon /s/ Joseph P. Deane
Heath B. McLendon Joseph P. Deane
Chairman and Vice President and
Chief Executive Officer Investment Officer
September 24, 1996
2
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Historical Performance -- Class A Shares
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<TABLE>
<CAPTION>
Net Asset Value
--------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
8/31/96 $16.20 $15.63 $0.46 $0.00 $0.00 (0.63)%+
- ---------------------------------------------------------------------------------------------------------------------
2/29/96 15.47 16.20 0.90 0.08 0.00 11.34
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2/28/95 16.13 15.47 0.95 0.29 0.00 4.11
- ---------------------------------------------------------------------------------------------------------------------
2/28/94 16.71 16.13 0.88 0.90 0.00 7.41
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2/28/93 15.62 16.71 1.00 0.52 0.03 17.92
- ---------------------------------------------------------------------------------------------------------------------
2/28/92 14.98 15.62 1.05 0.00 0.02 11.79
- ---------------------------------------------------------------------------------------------------------------------
2/28/91 15.00 14.98 1.09 0.00 0.03 7.65
- ---------------------------------------------------------------------------------------------------------------------
2/28/90 14.83 15.00 1.10 0.00 0.00 8.78
- ---------------------------------------------------------------------------------------------------------------------
2/28/89 15.05 14.83 1.11 0.16 0.00 7.31
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2/28/88 15.88 15.05 1.12 0.01 0.00 2.33
- ---------------------------------------------------------------------------------------------------------------------
2/28/87 15.67 15.88 1.16 0.43 0.00 12.35
=====================================================================================================================
Total $10.82 $2.39 $0.08
=====================================================================================================================
</TABLE>
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Historical Performance -- Class B Shares
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<TABLE>
<CAPTION>
Net Asset Value
--------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
8/31/96 $16.20 $15.63 $0.42 $0.00 $0.00 (0.94)%+
- ---------------------------------------------------------------------------------------------------------------------
2/29/96 15.47 16.20 0.82 0.08 0.00 10.78
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2/28/95 16.13 15.47 0.86 0.29 0.00 3.54
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2/28/94 16.71 16.13 0.80 0.90 0.00 6.86
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Inception*
- 2/28/93 15.81 16.71 0.31 0.52 0.01 11.26+
=====================================================================================================================
Total $3.21 $1.79 $0.01
=====================================================================================================================
</TABLE>
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Historical Performance -- Class C Shares
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<TABLE>
<CAPTION>
Net Asset Value
--------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
8/31/96 $16.20 $15.63 $0.41 $0.00 $0.00 (0.96)%+
- ---------------------------------------------------------------------------------------------------------------------
2/29/96 15.47 16.20 0.82 0.08 0.00 10.76
- ---------------------------------------------------------------------------------------------------------------------
Inception*
- 2/28/95 14.30 15.47 0.27 0.29 0.00 12.36+
=====================================================================================================================
Total $1.50 $0.37 $0.00
=====================================================================================================================
</TABLE>
3
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Historical Performance -- Class Y Shares
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<TABLE>
<CAPTION>
Net Asset Value
--------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
===================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
8/31/96 $16.20 $15.63 $0.47 $0.00 $0.00 (0.61)%+
- -------------------------------------------------------------------------------------------------------------------
Inception*
- 2/29/96 15.63 16.20 0.85 0.08 0.00 9.84+
===================================================================================================================
Total $1.32 $0.08 $0.00
===================================================================================================================
</TABLE>
IT IS THE FUND'S POLICY TO DISTRIBUTE DIVIDENDS MONTHLY AND CAPITAL GAINS, IF
ANY, ANNUALLY.
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Average Annual Total Return
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<TABLE>
<CAPTION>
Without Sales Charge(1)
--------------------------------------------
Class A Class B Class C Class Y
=================================================================================================================
<S> <C> <C> <C> <C>
Six Months Ended 8/31/96+ (0.63)% (0.94)% (0.96)% (0.61)%
- -----------------------------------------------------------------------------------------------------------------
Year Ended 8/31/96 4.72 4.13 4.16 4.87
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Five Years Ended 8/31/96 8.95 N/A N/A N/A
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Ten Years Ended 8/31/96 8.40 N/A N/A N/A
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Inception* through 8/31/96 11.07 8.19 12.24 6.41
=================================================================================================================
<CAPTION>
With Sales Charge(2)
--------------------------------------------
Class A Class B Class C Class Y
=================================================================================================================
<S> <C> <C> <C> <C>
Six Months Ended 8/31/96+ (4.63)% (5.40)% (1.93)% (0.61)%
- -----------------------------------------------------------------------------------------------------------------
Year Ended 8/31/96 0.54 (0.37) 3.16 4.87
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Five Years Ended 8/31/96 8.95 N/A N/A N/A
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Ten Years Ended 8/31/96 8.40 N/A N/A N/A
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Inception* through 8/31/96 11.07 8.19 12.24 6.41
=================================================================================================================
</TABLE>
4
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Cumulative Total Return
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Without Sales Charge(1)
================================================================================
Class A (8/31/86 through 8/31/96) 123.96%
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Class B (Inception* through 8/31/96) 35.09
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Class C (Inception* through 8/31/96) 23.26
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Class Y (Inception* through 8/31/96) 9.17
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A shares or the applicable
contingent deferred sales charges ("CDSC") with respect to Class B and C
shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A shares reflect the deduction
of the maximum initial sales charge of 4.00% and Class B shares reflect the
deduction of a 4.50% CDSC which applies if shares are redeemed less than
one year from initial purchase. This CDSC declines by 0.50% the first year
after purchase and thereafter by 1.00% per year until no CDSC is incurred.
Class C shares reflect the deduction of a 1.00% CDSC which applies if
shares are redeemed within the first year of purchase.
* Inception dates for Class A, B, C and Y shares are March 4, 1981, November
6, 1992, November 9, 1994 and April 4, 1995, respectively.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
5
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Historical Performance (unaudited)
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Growth of $10,000 Invested in Class A Shares of
Smith Barney Managed Municipals Fund Inc. vs.
Lehman Brothers Municipal Bond Fund Index and the
Lipper Peer Group Average+
- --------------------------------------------------------------------------------
August 1986 - August 1996
[GRAPHIC]
<TABLE>
<CAPTION>
Smith Barney Managed Lehman Brothers Municipal Lipper Peer Group Average
Municipal Funds Inc. Bond Index
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
8/86 $ 9,599 $10,000 $10,000
2/87 10,254 10,736 10,696
9,928 10,463 10,228
2/88 10,492 11,018 10,774
10,682 11,183 10,932
2/89 11,259 11,703 11,519
11,913 12,412 12,163
2/90 12,248 12,904 12,536
12,411 13,210 12,743
2/91 13,185 14,095 13,551
14,002 14,768 14,241
2/92 14,739 15,502 14,927
15,611 16,417 15,854
2/93 17,381 17,637 17,042
18,288 18,420 17,809
2/94 18,665 18,613 17,942
18,669 18,446 17,605
2/95 19,429 18,964 18,059
20,529 20,081 18,897
2/96 21,633 21,059 19,838
8/96 21,497 21,135 19,781
</TABLE>
+ Hypothetical illustration of $10,000 invested in Class A shares on August 31,
1986, assuming deduction of the maximum 4.00% sales charge at the time of
investment and reinvestment of dividends and capital gains, if any, at net
asset value through August 31, 1996. The Lehman Brothers Municipal Bond Fund
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. The index is
unmanaged and is not subject to the same management and trading expenses of a
mutual fund. The Lipper Analytical Services, Inc. Peer Group Average ("Lipper
Peer Group Average") is composed of an average of the Fund's peer group of
243 mutual funds investing in municipal securities as of August 31, 1996. The
performance of the Fund's other classes may be greater or less than the Class
A shares' performance indicated on this chart, depending on whether greater
or lesser sales charges and fees were incurred by shareholders investing in
the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No adjustment
has been made for shareholder tax liability on dividends or capital gains.
6
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Portfolio Highlights (unaudited) August 31, 1996
- --------------------------------------------------------------------------------
Industry Breakdown
[GRAPHIC]
Transportation 14.2%
Housing 6.3%
Hospital 10.0%
Pollution Control 3.2%
Education 5.4%
Industrial Development 0.3%
Other Municipal
Bonds and Short-Term
Investments 20.9%
Power 4.1%
Utilities 15.3%
Water and Sewer 8.5%
General Obligation 11.8%
Top Five States Represented
<TABLE>
<CAPTION>
Percentage of
State Total Investments
=====================================================
<S> <C>
New York 13.0%
California 12.7
Colorado 9.7
Florida 8.6
Texas 8.1
</TABLE>
Summary of Investments by Combined Ratings
<TABLE>
<CAPTION>
Standard & Percentage of
Moody's and/or Poor's Total Investments
===================================================
<S> <C> <C>
Aaa AAA 51.1%
Aa AA 20.0
A A 10.1
Baa BBB 10.2
Ba BB 0.6
D D 0.0*
VMIG 1/P-1 A-1 0.3
NR NR 7.7
-----
100.0%
=====
</TABLE>
* Amount represents less than 0.1% of total investments.
7
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Schedule of Investments (unaudited) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=======================================================================================================
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES -- 99.7%
Alabama -- 0.0%
$ 1,000,000 AAA Wilsonville, AL Industrial Development Board, PCR,
Alabama Power Co., Gaston Plant, Series C,
MBIA-Insured, 5.500% due 1/1/24 $ 923,750
- -------------------------------------------------------------------------------------------------------
Alaska -- 3.6%
2,595,000 AAA Anchorage, AK Electric Utility Revenue, Series B,
MBIA-Insured, 5.500% due 2/1/26 2,403,619
Valdez, AK Marine Terminal Revenue, (British
Petroleum Pipeline Project):
70,750,000 AA- Series A, 5.850% due 8/1/25 (a) 68,185,312
19,200,000 AA- Series B, 5.500% due 10/1/28 17,664,000
14,500,000 AA- Series C, 5.650% due 12/1/28 13,648,125
- -------------------------------------------------------------------------------------------------------
101,901,056
- -------------------------------------------------------------------------------------------------------
Arizona -- 0.6%
12,170,000 A Greenlee County, AZ IDA, PCR, (Phelps Dodge
Corp. Project), 5.450% due 6/1/09 11,880,962
480,000 B* Maricopa County, AZ Hospital Revenue, Phoenix
General Hospital, Series A, 8.500% due 1/1/16 444,000
4,000,000 A Maricopa County, AZ IDA, Multi-Family Housing
Revenue, Series A, 6.500% due 10/1/25 3,955,000
- -------------------------------------------------------------------------------------------------------
16,279,962
- -------------------------------------------------------------------------------------------------------
California -- 12.6%
2,240,000 A+ ABAG Finance Authority for Nonprofit Corporations,
5.750% due 11/1/05 2,262,400
6,000,000 AAA Adelanto, CA Improvement Agency, Tax Allocation,
Series B, FGIC-Insured, 5.500% due 12/1/23 5,655,000
6,550,000 AAA Anaheim, CA Public Financing Authority Revenue,
MBIA-Insured, 5.625% due 10/1/22 6,288,000
2,250,000 A* Apple Valley, CA School District COP,
5.900% due 9/1/11 2,213,437
7,000,000 AAA Brea, CA Redevelopment Agency, (Tax Allocation
Project), MBIA-Insured, 5.750% due 8/1/23 6,833,750
California Educational Facilities Finance
Authority Revenue:
Loyola Marymount University, MBIA-Insured:
880,000 AAA 5.875% due 10/1/16 883,300
1,400,000 AAA 5.900% due 10/1/21 1,401,750
1,000,000 A* University of Redlands, 6.000% due 10/1/25 977,500
California Health Facilities Finance
Authority Revenue:
13,010,000 AAA Catholic Healthcare, MBIA-Insured,
6.000% due 7/1/25 13,140,100
16,515,000 AA Kaiser Permanente, 5.550% due 8/15/25 15,214,444
2,590,000 Aa* California HFA Revenue Bonds, Home Mortgage,
Series B, FHA-Insured, 5.700% due 2/1/25 2,441,075
</TABLE>
See Notes to Financial Statements.
8
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================================
California -- 12.6% (continued)
<S> <C> <C> <C>
$ 10,550,000 A2* California Pollution Control Financing Authority, PCR,
San Diego Gas & Electric Co., Series A,
5.900% due 6/1/14 $10,668,688
9,000,000 AAA California State Department of Water Resources,
(Central Valley Project Revenue), Series O,
MBIA-Insured, 4.750% due 12/1/29 7,470,000
3,000,000 AA California Statewide Communities Development
Authority COP, St. Joseph's Health System,
5.500% due 7/1/23 2,778,750
12,000,000 AAA Calleguas-St. Virgines, CA Public Financing Authority,
Calleguas Municipal Water District, FGIC-Insured,
5.125% due 7/1/21 10,755,000
7,000,000 AAA Chino, CA Unified School District COP, FSA-Insured,
6.125% due 9/1/26 7,140,000
5,000,000 AAA Contra Costa County, CA Multi-Family Housing
Revenue, (Crescent Park Apartments Project),
Series B, GNMA-Collateralized, 7.800% due 6/20/34 5,462,500
15,215,000 AAA Corona, CA Redevelopment Agency, Area A, Series A,
FGIC-Insured, 5.500% due 9/1/24 14,416,213
2,000,000 AAA Desert Sands, CA Unified School District COP, Capital
Projects, FSA-Insured, 5.625% due 3/1/15 1,942,500
9,500,000 AAA East Bay, CA Municipal Utility District, Special
District No. 001, Series E, FGIC-Insured,
5.000% due 4/1/15 8,514,375
6,000,000 AAA El Dorado County, CA Public Finance Agency
Revenue, FGIC-Insured, 5.600% due 2/15/12 5,917,500
5,000,000 AAA Fresno County, CA Financing Authority, Solid Waste
Revenue, (American Avenue Landfill Project),
MBIA-Insured, 5.750% due 5/15/14 4,956,250
Long Beach, CA Aquarium of the Pacific Project:
1,260,000 BBB 5.750% due 7/1/05 1,231,650
1,200,000 BBB 5.750% due 7/1/06 1,161,000
10,000,000 AAA Long Beach, CA Financing Authority, Revenue Bonds,
AMBAC-Insured, 5.500% due 11/1/22 9,500,000
20,775,000 AAA Los Angeles, CA Convention & Exhibition Center Authority
Lease Revenue, MBIA-Insured, 5.375% due 8/15/18 19,372,687
30,000,000 AAA Los Angeles, CA Wastewater Systems, Revenue Bonds,
Series B, MBIA-Insured, 5.700% due 6/1/23 28,875,000
Los Angeles County, CA Metropolitan Transportation
Sales Tax Revenue, Series A:
7,500,000 AAA FGIC-Insured, 5.000% due 7/1/21 6,600,000
21,500,000 AAA MBIA-Insured, 5.625% due 7/1/18 20,828,125
</TABLE>
See Notes to Financial Statements.
9
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================================
California -- 12.6% (continued)
<S> <C> <C> <C>
Los Angeles County, CA Sanitation Districts Finance
Authority Revenue, Capital Projects, Series A,
MBIA-Insured:
$ 1,300,000 AAA 5.250% due 10/1/19 $ 1,189,500
14,300,000 AAA 5.000% due 10/1/23 12,423,125
5,000,000 AAA Oakland, CA Joint Powers Financing Authority
Lease Revenue, Oakland Administration Buildings,
AMBAC-Insured, 5.750% due 8/1/26 4,806,250
4,500,000 AAA Oceanside, CA COP, AMBAC-Insured,
5.800% due 5/1/21 4,426,875
4,975,000 AAA Ontario, CA Redevelopment Financing Authority,
(Project No. 1), MBIA-Insured, 5.500% due 8/1/18 4,763,562
Orange County, CA Recovery COP, Series A, MBIA-Insured:
4,000,000 AAA 5.800% due 7/1/16 3,940,000
17,750,000 AAA 5.875% due 7/1/19 17,528,125
6,500,000 AAA Orange County, CA Redevelopment Agency, Series A,
AMBAC-Insured, 5.700% due 10/1/23 6,256,250
8,380,000 AAA Palmdale, CA Civic Authority Revenue, Series A,
MBIA-Insured, 5.500% due 7/1/23 8,065,750
5,000,000 AAA Pittsburgh, CA Redevelopment Agency, Tax Allocation,
(Los Medanos Project Area), Series B, FSA-Insured,
5.700% due 8/1/32 4,793,750
3,725,000 AAA Saddleback Community College, CA COP, (Capital
Improvement Financing Project), MBIA-Insured,
5.500% due 6/1/15 3,585,313
5,000,000 AAA San Bernadino County, CA COP, (Medical Center
Financing Project), MBIA-Insured,
5.000% due 8/1/28 4,275,000
2,000,000 AAA San Buenaventura, CA COP, (Capital Improvement
Project), AMBAC-Insured, 5.500% due 1/1/17 1,922,500
San Francisco, CA City and County, Sewer Revenue,
FGIC-Insured:
4,365,000 AAA 5.375% due 10/1/16 4,108,556
6,700,000 AAA 5.375% due 10/1/22 6,164,000
5,000,000 AAA San Jose, CA Redevelopment Agency, Tax Allocation,
(Merged Area Redevelopment Project), MBIA-Insured,
5.000% due 8/1/20 4,437,500
4,680,000 AAA San Pablo, CA Redevelopment Agency, Tax Allocation,
(Merged Project Area), FGIC-Insured, 5.250% due
12/1/23 4,252,950
Santa Clara County, CA Finance Authority, AMBAC-Insured:
5,500,000 AAA 6.750% due 11/15/20 5,967,500
2,000,000 AAA 6.250% due 11/15/22 2,055,000
6,000,000 AAA Southern California Public Power Authority, (Power
Project Revenue), San Juan Unit No. 3, Series A,
MBIA-Insured, 5.000% due 1/1/20 5,302,500
</TABLE>
See Notes to Financial Statements.
10
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================================
California -- 12.6% (continued)
<S> <C> <C> <C>
$ 4,000,000 AAA Southern California Public Power Authority, (Transmission
Project Revenue), Series A, MBIA-Insured,
5.000% due 7/1/22 $ 3,510,000
University of California Revenue, (Multipurpose Projects),
Series C, AMBAC-Insured:
5,000,000 AAA 5.125% due 9/1/18 4,506,250
6,350,000 AAA 5.000% due 9/1/23 5,524,500
6,500,000 AAA Vallejo, CA Revenue, (Water Improvement Project),
Series A, FSA-Insured, 5.875% due 5/1/26 6,491,875
1,515,000 Aaa* Victorville, CA Multi-Family Revenue, Wimbledon
Apartments, Series A, GNMA-Collateralized,
6.150% due 4/20/16 1,509,319
- --------------------------------------------------------------------------------------------------------------
356,706,944
- --------------------------------------------------------------------------------------------------------------
Colorado -- 9.7%
Arapahoe County, CO Capital Improvement
Transportation Highway Revenue:
275,000,000 Baa* Zero coupon due 8/31/26 30,593,750
36,250,000 Baa* 7.000% due 8/31/26 38,243,750
12,765,000 BBB+ Colorado Springs, CO Airport Revenue, Series A,
7.000% due 1/1/22 (a)(b) 13,211,775
2,000,000 AA Colorado Springs, CO Utilities Revenue, Series A,
5.125% due 11/15/23 1,772,500
Dawson Ridge, CO Metropolitan District No. 1,
(Escrowed to Maturity with U.S. Government Securities):
364,000,000 AAA Series A, zero coupon due 10/1/22 58,240,000
67,785,000 AAA Series B, zero coupon due 10/1/22 (a) 10,845,600
Denver, CO City & County Airport Revenue,
Series A, MBIA Insured:
15,740,000 AAA 5.500% due 11/15/25 14,736,575
9,250,000 AAA 5.700% due 11/15/25 8,914,687
Series A:
26,500,000 Baa* 14.000% due 11/15/08 (b) 43,526,250
13,500,000 Baa* 8.000% due 11/15/25 (b) 15,018,750
Series C:
3,500,000 Baa* 6.750% due 11/15/13 (a)(b) 3,548,125
12,035,000 Baa* 6.750% due 11/15/22 (a)(b) 12,170,394
22,425,000 Baa* Series D, 7.000% due 11/15/25 (b) 22,845,469
1,600,000 A- East Cherry Creek Valley, CO Water & Sanitation
District Revenue Bonds, 10.125% due 12/1/00 1,621,008
1,700,000 A Larimer & Weld Counties, CO School District GO,
5.750% due 11/15/20 1,612,875
- --------------------------------------------------------------------------------------------------------------
276,901,508
- --------------------------------------------------------------------------------------------------------------
Connecticut -- 2.1%
Connecticut Health & Educational Facilities Authority Revenue:
3,800,000 AAA Loomis Chaffee School Issue, MBIA-Insured,
5.500% due 7/1/26 3,595,750
</TABLE>
See Notes to Financial Statements.
11
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Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
======================================================================================================
<S> <C> <C> <C>
Connecticut -- 2.1% (continued)
$ 38,600,000 AAA Yale-New Haven Hospital Issue, MBIA-Insured,
5.700% due 7/1/25 $37,152,500
Connecticut State GO, Series A:
5,000,000 Aa* 5.625% due 5/15/13 4,950,000
13,940,000 Aa* 5.800% due 3/15/13 14,009,700
- ------------------------------------------------------------------------------------------------------
59,707,950
- ------------------------------------------------------------------------------------------------------
Florida -- 8.6%
Boynton Beach, FL Multi-Family Housing Revenue,
Clipper Cove Apartments:
750,000 A+ 6.350% due 7/1/16 746,250
1,325,000 A+ 6.400% due 7/1/21 1,318,375
1,625,000 AAA Brevard County, FL School Board COP, Series B,
AMBAC-Insured, 5.500% due 7/1/21 1,543,750
Broward County, FL GO, Public Improvement Revenue:
1,000,000 AA 12.500% due 1/1/02 1,353,750
1,250,000 AA 12.500% due 1/1/03 1,759,375
1,500,000 AA 12.500% due 1/1/04 2,180,625
1,750,000 AA 12.500% due 1/1/05 2,616,250
2,000,000 AA 12.500% due 1/1/06 3,062,500
13,490,000 AAA Collier County, FL School Board COP, FSA-Insured,
5.000% due 2/15/16 12,141,000
10,450,000 AAA Dade County, FL Aviation Revenue, Series B, MBIA-Insured,
5.600% due 10/1/26 10,071,188
2,240,000 AAA Dade County, FL GO, MBIA-Insured, 5.125% due 10/1/21 2,038,400
Dade County, FL School Board COP, AMBAC-Insured:
11,000,000 AAA Series A, 5.500% due 5/1/25 10,367,500
47,500,000 AAA Series B, 5.600% due 8/1/26 45,362,500
6,980,000 AAA Dade County, FL School District, MBIA-Insured,
5.500% due 8/1/14 6,857,850
6,000,000 AAA Escambia County, FL School Board COP, Series 1,
MBIA-Insured, 5.500% due 2/1/16 5,790,000
1,000,000 AAA First Florida Governmental Financing Commission Revenue,
AMBAC-Insured, 5.750% due 7/1/16 995,000
3,400,000 AAA Florida State Correctional Privatization Commission COP,
Youth Detention Facility, Series C, AMBAC-Insured,
5.000% due 8/1/17 3,047,250
Florida State Board of Education GO, Capital Outlay,
Public Education:
23,700,000 AA Series B, 5.250% due 6/1/17 22,070,625
Series D:
12,720,000 AA 5.200% due 6/1/23 11,400,300
1,500,000 AA 5.250% due 6/1/23 1,353,750
8,500,000 AA Series E, 5.250% due 6/1/23 7,671,250
10,000,000 AA Florida State GO, Dade County Road, 5.125% due 7/1/17 9,212,500
</TABLE>
See Notes to Financial Statements.
12
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Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
===============================================================================================================================
<S> <C> <C> <C>
Florida -- 8.6% (continued)
Florida State GO, Department of Transportation, Right of Way:
$ 12,310,000 AA 5.500% due 7/1/21 $ 11,694,500
5,380,000 AA 5.375% due 7/1/26 4,963,050
6,190,000 AAA Hillsborough County, FL Capital Improvement Program
Revenue, Series A, MBIA-Insured, 5.125% due 7/1/22 5,617,425
Martin County, FL IDA, Indiantown Cogeneration:
10,000,000 BBB- Project A, 7.875% due 12/15/25 (a)(b) 11,212,500
6,010,000 BBB- Project B, 8.050% due 12/15/25 (b) 6,806,325
18,225,000 AAA Orange County, FL Sales Tax Revenue, Series B, FGIC-Insured,
5.375% due 1/1/24 16,858,125
4,840,000 Aa* Orlando, FL Utilities Commission, Water & Electric Revenue,
Series A, 5.000% due 10/1/20 4,277,350
3,330,000 AAA St. Lucie County, FL Sales Tax Revenue, FGIC-Insured,
5.000% due 10/1/23 2,955,375
Tampa, FL Revenue Bonds, (Florida Aquarium Inc. Project):
3,000,000 NR 7.550% due 5/1/12 3,236,250
3,000,000 NR 7.750% due 5/1/27 3,251,250
8,000,000 Aaa* Venice, FL Health Care Revenue, (Bon Secours Health
System Project), MBIA-Insured, 5.625% due 8/15/26 7,600,000
2,180,000 AAA Village Center, FL Community Development District Recreational
Revenue, Series A, MBIA-Insured, 5.850% due 11/1/16 2,190,900
- -------------------------------------------------------------------------------------------------------------------------------
243,623,038
- -------------------------------------------------------------------------------------------------------------------------------
Georgia -- 0.7%
580,000 A+ Brunswick, GA Housing Authority, Multi-Family
Housing Revenue, Cypress Mill, FHA-Insured,
9.750% due 8/1/26 646,700
Richmond County, GA Development Authority Revenue,
(Escrowed to Maturity with U.S. Government Securities):
46,590,000 Aaa* Series A, 1st Mortgage, zero coupon due 12/1/21 8,036,775
12,800,000 Aaa* Subseries C, zero coupon due 12/1/21 2,208,000
19,705,000 Aaa* Savannah, GA EDA Revenue, (Escrowed to Maturity
with U.S. Government Securities), zero coupon
due 12/1/21 3,349,850
Washington, GA EDA, Wilkes Payroll Company, (Escrowed
to Maturity with U.S. Government Securities):
16,625,000 AAA Zero coupon due 12/1/21 2,826,250
8,800,000 AAA Zero coupon due 12/1/21 1,496,000
- -------------------------------------------------------------------------------------------------------------------------------
18,563,575
- -------------------------------------------------------------------------------------------------------------------------------
Hawaii -- 0.2%
6,000,000 A Hawaii State Department of Budget & Finance, Special Purpose
Revenue, 6.250% due 7/1/21 6,007,500
- -------------------------------------------------------------------------------------------------------------------------------
Illinois -- 2.0%
14,000,000 AAA Chicago, IL O'Hare International Airport Revenue,
Series C, MBIA-Insured, 5.000% due 1/1/18 12,320,000
</TABLE>
See Notes to Financial Statements.
13
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Schedule of Investments (unaudited)(continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=================================================================================================================
<S> <C> <C> <C>
Illinois -- 2.0% (continued)
$ 5,000,000 AAA Chicago, IL Water Revenue, FGIC-Insured,
5.000% due 11/1/25 $ 4,268,750
Illinois Health Facilities Authority Revenue:
21,000,000 AAA Sinai Health System, AMBAC-Insured,
6.000% due 2/15/24 20,475,000
Trinity Medical Center, FSA-Insured:
4,125,000 AAA 5.875% due 7/1/16 4,057,969
3,700,000 AAA 6.000% due 7/1/28 3,663,000
3,000,000 AAA Illinois State COP Department of Central Management
Services, Public Aid Building, MBIA-Insured,
5.650% due 7/1/17 2,838,750
5,600,000 AA- Illinois State GO, 5.750% due 4/1/14 5,509,000
3,160,000 Aaa* Lansing, IL Multi-Family Housing Revenue, GNMA-
Collateralized, Salem Cross Apartments, Series A,
6.100% due 3/1/20 3,077,050
1,000,000 AAA University of Illinois Revenue Bonds, Auxiliary Facilities
Systems, MBIA-Insured, 5.375% due 10/1/13 947,500
- ----------------------------------------------------------------------------------------------------------------
57,157,019
- ----------------------------------------------------------------------------------------------------------------
Indiana -- 1.8%
3,000,000 AAA Avon, IN Community School Building Corp., First Mortgage,
AMBAC-Insured, 5.250% due 1/1/22 2,718,750
3,005,000 A Indiana Bond Bank, State Revenue, Guarantee-State
Revolving Fund, (Project A), 6.250% due 2/1/09 3,065,100
Indiana Health Facilities Authority Revenue:
Riverview Hospital:
245,000 Baa1* 5.800% due 8/1/97 245,561
240,000 Baa1* 6.000% due 8/1/98 240,900
255,000 Baa1* 6.200% due 8/1/99 256,594
305,000 Baa1* 6.500% due 8/1/01 308,812
200,000 Baa1* 6.600% due 8/1/02 203,000
3,700,000 A* St. Anthony Medical/Home Inc., Series H,
9.250% due 10/1/17 3,969,730
8,500,000 Aaa* Indiana State HFA, Single Family Mortgage Revenue, Series A-1,
GNMA & FNMA-Collateralized, 6.250% due 7/1/28 8,553,125
16,000,000 Aa2* Petersburg, IN PCR, Indianapolis Power & Light Co., Series C,
5.500% due 10/1/23 14,820,000
15,000,000 AAA Rockport, IN PCR, Series A, AMBAC-Insured,
6.550% due 6/1/25 15,525,000
- ----------------------------------------------------------------------------------------------------------------
49,906,572
- ----------------------------------------------------------------------------------------------------------------
Maine -- 0.3%
8,100,000 AA- Maine State Housing Authority, Mortgage Power
Revenue, Series A, 5.650% due 11/15/20 7,725,375
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
14
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Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
===================================================================================================================
<S> <C> <C> <C>
Maryland -- 2.4%
Baltimore County, MD Mortgage Revenue,
GNMA-Collateralized:
$ 2,500,000 AAA Day Village Apartments Project, Series A,
5.625% due 1/20/14 $ 2,434,375
2,000,000 AAA Northbrooke Apartments Project, Series A,
6.350% due 1/20/21 2,020,000
Baltimore, MD GO, Series A, FGIC-Insured:
2,160,000 AAA 5.500% due 10/15/11 2,138,400
2,435,000 AAA 5.625% due 10/15/13 2,419,781
2,585,000 AAA 5.625% due 10/15/14 2,539,763
2,745,000 AAA 5.750% due 10/15/15 2,720,981
1,165,000 AAA 5.750% due 10/15/16 1,153,350
1,500,000 AAA Charles County, MD Mortgage Revenue, (Holly
Station Project), Series A, FHA-Insured,
6.450% due 5/1/26 1,518,750
5,000,000 Aa* Maryland State Community Development Administration,
Department of Housing & Community Development,
Single-Family Program, Fifth Series, 5.950% due 4/1/16 4,918,750
56,000,000 NR Maryland State Energy Financing Administration,
Solid Waste Disposal Revenue, Limited Obligation,
(Hagerstown Project), 9.000% due 10/15/16 (a)(b)(e) 46,410,000
- -------------------------------------------------------------------------------------------------------------------
68,274,150
- -------------------------------------------------------------------------------------------------------------------
Massachusetts -- 5.9%
5,350,000 AAA Boston, MA Housing Development Corp. Mortgage
Revenue, Section 8 Assisted Programs, Series A,
FHA & MBIA-Insured, 5.500% due 7/1/24 5,089,188
2,200,000 AAA Holyoke, MA GO, Series A, FSA-Insured, 5.500% due 6/15/16 2,134,000
Massachusetts Bay Transportation Authority:
Series A:
7,000,000 A+ General Transportation System, 5.625% due 3/1/26 6,606,250
15,785,000 AAA MBIA-Insured, 5.500% due 3/1/22 14,857,631
3,420,000 AAA Series B, General Transportation System, AMBAC-Insured,
5.375% due 3/1/25 3,154,950
Massachusetts Municipal Wholesale Electric Co., Power Supply
System Revenue:
Series A, AMBAC-Insured:
10,900,000 AAA 5.000% due 7/1/14 9,864,500
2,950,000 AAA 5.000% due 7/1/17 2,614,437
7,000,000 AAA Series B, MBIA-Insured, 5.000% due 7/1/17 6,203,750
Massachusetts State Health and Educational Facilities
Authority Revenue:
3,000,000 AAA Baystate Medical Center, Series D, FGIC-Insured,
5.000% due 7/1/12 2,763,750
14,500,000 AAA Harvard University, Series P, 5.375% due 11/1/32 13,358,125
7,870,000 AAA Lahey Clinic Medical Center, MBIA-Insured,
5.375% due 7/1/23 7,181,375
</TABLE>
See Notes to Financial Statements.
15
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Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
===============================================================================================================
<S> <C> <C> <C>
Massachusetts -- 5.9% (continued)
New England Medical Center, MBIA-Insured:
$ 3,000,000 AAA 3.100% due 7/1/13 $ 2,242,500
6,325,000 AAA 5.375% due 7/1/24 5,716,219
15,250,000 AAA Newton Wellesley Hospital, Series E, MBIA-Insured,
6.000% due 7/1/25 15,250,000
13,250,000 AAA Massachusetts State HFA, Multi-Family Housing, Series A,
MBIA-Insured, 6.150% due 7/1/18 13,399,063
31,700,000 NR Massachusetts State Industrial Finance Agency,
Solid Waste Disposal Revenue, Massachusetts Recycling
Association, Series A, 9.000% due 8/1/16 (a)(b)(e) 15,850,000
Massachusetts State Turnpike Authority, Turnpike
Revenue, Series A:
9,050,000 A+ 5.000% due 1/1/20 7,805,625
6,680,000 AAA FGIC-Insured, 5/125% due 1/1/23 5,886,750
Massachusetts State Water Resources Authority:
19,405,000 AAA Series A, MBIA-Insured, 6.000% due 8/1/20 19,526,281
Series B:
3,000,000 A 5.500% due 3/1/17 2,793,750
4,255,000 AAA MBIA-Insured, 5.000% due 3/1/22 3,728,444
1,250,000 AAA Southeastern Massachusetts University Building
Refunding, Series A, AMBAC-Insured,
5.750% due 5/1/16 1,232,812
- ---------------------------------------------------------------------------------------------------------------
167,259,400
- ---------------------------------------------------------------------------------------------------------------
Michigan -- 4.6%
2,140,000 AAA Ingham County, MI Building Authority, AMBAC-Insured,
5.000% due 11/1/16 1,896,575
6,000,000 AAA Jackson County, MI Hospital Finance Authority, Hospital
Revenue, W.A. Foote Memorial Hospital, Series A,
FGIC-Insured, 5.250% due 6/1/23 5,392,500
Lakeshore, MI Public Schools, MBIA-Insured:
2,500,000 AAA 5.750% due 5/1/15 2,465,625
2,500,000 AAA 5.700% due 5/1/22 2,412,500
Michigan Public Power Agency Revenue, (Belle River Project):
36,250,000 AAA Series A, MBIA-Insured, 5.250% due 1/1/18 33,078,125
2,830,000 AA- Series B, 5.000% due 1/1/19 2,433,800
8,000,000 AAA Michigan State Hospital Finance Authority Revenue,
Oakwood Hospital Group, Series A, FGIC-Insured,
5.500% due 11/1/13 7,710,000
2,250,000 AAA Michigan State Housing Development Authority, Rental Housing
Revenue, Series A, AMBAC-Insured, 5.875% due
10/1/17 2,199,375
17,000,000 NR Michigan State Strategic Funding, Limited Obligation Revenue,
(Blue Water Fiber Project), 8.000% due 1/1/12 (b)(e) 12,750,000
</TABLE>
See Notes to Financial Statements.
16
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Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==================================================================================================================
<S> <C> <C> <C>
Michigan -- 4.6% (continued)
$ 56,625,000 NR Midland County, MI Economic Development Corporation,
PCR Bonds, Subordinated Limited Obligation, Series B,
9.500% due 7/23/09 (b) $ 61,721,250
- ------------------------------------------------------------------------------------------------------------------
132,059,750
- ------------------------------------------------------------------------------------------------------------------
Minnesota -- 1.5%
2,855,000 NR Dakota County, MN Housing Redevelopment Authority,
Multi-Family Mortgage Revenue, Series 1985A,
9.500% due 6/1/08 2,790,763
Minnesota State HFA:
3,500,000 AAA Rental Housing Revenue, Series D, MBIA-Insured,
5.950% due 2/1/18 3,465,000
3,830,000 AA+ Single Family Mortgage Revenue, Series D,
6.000% due 1/1/16 3,777,337
21,405,000 Baa1* St. Paul, MN Housing & Redevelopment Authority,
Hospital Revenue Bonds, (Healtheast Project),
Series D, 9.750% due 11/1/17 (a) 22,769,569
Western Minnesota Municipal Power Agency, Series A,
AMBAC-Insured:
2,000,000 AAA 5.500% due 1/1/10 1,975,000
3,120,000 AAA 5.500% due 1/1/11 3,065,400
2,000,000 AAA 5.500% due 1/1/12 1,952,500
3,000,000 AAA 5.500% due 1/1/13 2,913,750
- ------------------------------------------------------------------------------------------------------------------
42,709,319
- ------------------------------------------------------------------------------------------------------------------
Montana -- 1.1%
33,400,000 NR Montana State Board, Resource Recovery Revenue,
(Yellowstone Energy LP Project),
7.000% due 12/31/19 (a)(b) 30,936,750
- ------------------------------------------------------------------------------------------------------------------
Nebraska -- 0.3%
Nebraska Public Power District Revenue, Power Supply System:
5,000,000 AAA Series C, 5.000% due 1/1/17 4,425,000
5,000,000 AAA Series A, 5.250% due 1/1/28 4,487,500
- ------------------------------------------------------------------------------------------------------------------
8,912,500
- ------------------------------------------------------------------------------------------------------------------
Nevada -- 0.3%
9,275,000 AAA Clark County, NV School District, Series A, MBIA-Insured,
5.875% due 6/15/13 9,263,406
- ------------------------------------------------------------------------------------------------------------------
New Hampshire -- 1.9%
17,955,000 AAA New Hampshire Higher Education & Health Facilities
Authority Revenue, Mary Hitchcock Memorial Hospital,
FGIC-Insured, 5.750% due 8/15/23 17,259,244
23,500,000 BBB- New Hampshire IDA, PCR Bonds, UTD Illuminating,
Series B, 10.750% due 10/1/12 (a)(b) 25,474,705
12,240,000 Aa* New Hampshire State HFA, Single Family Mortgage Revenue,
Mortgage Acquisition, Series G, 6.300% due 1/1/26 (b) 12,071,700
- ------------------------------------------------------------------------------------------------------------------
54,805,649
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
17
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Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
===============================================================================================================
<S> <C> <C> <C>
New Jersey -- 0.5%
$ 3,000,000 AAA Essex County, NJ Utilities Authority, Solid Waste Revenue,
Series A, FSA-Insured, 5.600% due 4/1/16 $ 2,928,750
3,375,000 AAA Monmouth County, NJ Improvement Authority Revenue,
FSA-Insured, 5.450% due 7/15/13 3,265,312
3,400,000 AAA Salem County, NJ Industrial Pollution Control,
Financing Authority Revenue Bonds, (Public Service
Electric & Gas Project), Series A, MBIA-Insured,
5.700% due 5/1/28 3,238,500
5,320,000 A+ South Jersey Port Corp., New Jersey Revenue, Marine
Terminal, Series G, 5.600% due 1/1/23 4,901,050
- ---------------------------------------------------------------------------------------------------------------
14,333,612
- ---------------------------------------------------------------------------------------------------------------
New Mexico -- 0.6%
11,500,000 AA Bernalillo County, NM Gross Receipts Tax Revenue,
Series A, 5.750% due 4/1/26 11,140,625
New Mexico Mortgage Finance Authority, Single-Family
Mortgage Revenue, GNMA, FNMA & FHLMC-
Collateralized:
1,000,000 AAA 5.550% due 7/1/17 940,000
2,000,000 AAA 5.650% due 7/1/27 1,872,500
3,550,000 Aaa* Santa Fe, NM Single Family Mortgage Revenue,
FNMA & GNMA-Collateralized, 6.300% due 11/1/28 (b) 3,514,500
- ---------------------------------------------------------------------------------------------------------------
17,467,625
- ---------------------------------------------------------------------------------------------------------------
New York -- 13.0%
4,000,000 AAA Battery Park City, NY Revenue, Series A, MBIA-Insured,
5.250% due 11/1/17 3,670,000
14,315,000 BBB City University Of New York COP, John Jay College,
5.750% due 8/15/05 14,171,850
2,960,000 AA Housing Corp. of New York Revenue, 5.500% due 11/1/20 2,712,100
16,860,000 AAA Metropolitan Transportation Authority of New York,
Commuter Facilities Revenue, Series A, FGIC-Insured,
6.100% due 7/1/26 17,007,525
6,750,000 AAA Metropolitan Transportation Authority of New York,
Transit Facilities Revenue, Series 96A, FSA-Insured,
6.100% due 7/1/26 6,809,063
New York City, NY GO:
7,500,000 BBB+ Series A, 6.250% due 8/1/12 7,368,750
11,500,000 BBB+ Series G, 5.750% due 2/1/14 10,680,625
New York City, NY Municipal Water Finance Authority,
Water & Sewer Revenue:
Series A:
11,000,000 A* 5.500% due 6/15/20 10,147,500
47,780,000 A* 5.500% due 6/15/23 44,017,325
52,900,000 AAA Series B, 5.750% due 6/15/26 51,114,625
</TABLE>
See Notes to Financial Statements.
18
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
===================================================================================================================
<S> <C> <C> <C>
New York -- 13.0% (continued)
New York State Dormitory Authority:
City University System:
$ 6,000,000 AAA 2nd Residence, Series 95A, FGIC-Insured,
5.375% due 7/1/14 $ 5,700,000
12,060,000 AAA 3rd Residence, Series 95-1, AMBAC-Insured,
5.375% due 7/1/25 11,170,575
5,000,000 AAA Series 2-1994, MBIA-Insured, 6.250% due 7/1/19 5,125,000
Iona College, MBIA-Insured:
485,000 AAA 6.600% due 7/1/07 524,406
420,000 AAA 6.600% due 7/1/08 453,075
555,000 AAA 6.600% due 7/1/09 596,625
540,000 AAA 6.700% due 7/1/10 582,525
2,000,000 AAA Mental Health Service Facilities, Series B, MBIA-Insured,
5.125% due 8/15/21 1,795,000
6,350,000 AAA Mount Sinai School of Medicine, Series A, MBIA-Insured,
5.000% due 7/1/21 5,540,375
11,500,000 AAA New York State Energy Research & Development Authority,
Gas Facilities Revenue, (Brooklyn Union Gas Co. Project),
MBIA-Insured, 5.500% due 1/1/21 10,910,625
7,420,000 Aa* New York State Environmental Facilities Corporation,
PCR, State Water Revolving Fund, NYC Muni Water,
5.875% due 6/15/14 7,401,450
New York State Local Government Assistance Corporation:
Series A:
13,750,000 A 5.250% due 4/1/19 12,375,000
3,420,000 A 5.500% due 4/1/23 3,184,875
12,255,000 A Series B, 5.500% due 4/1/21 11,443,106
28,290,000 A Series C, 5.000% due 4/1/21 24,435,488
17,125,000 A Series D, 5.000% due 4/1/23 14,727,500
1,840,000 AAA New York State Medical Care Facilities Finance Agency,
Series A, FHA-Insured, 5.375% due 2/15/25 1,669,800
2,000,000 A* New York State Refunding GO, 12.000% due 11/15/03 2,805,000
New York State Thruway Authority Revenue,
FGIC-Insured:
8,460,000 AAA Series A, 5.500% due 1/1/23 8,026,425
10,825,000 AAA Series C, 6.000% due 1/1/25 10,946,781
New York State Urban Development Corporation Revenue:
7,480,000 AAA Correctional Facilities, Series 5, MBIA-Insured,
5.500% due 1/1/25 7,012,500
5,095,000 AAA Series A, MBIA-Insured, 5.500% due 4/1/19 4,833,881
Triborough Bridge & Tunnel Authority of New York,
General Purpose Revenue Bonds:
Series A:
20,095,000 Aa* 5.200% due 1/1/20 18,010,144
27,000,000 Aa* 5.000% due 1/15/24 23,118,750
</TABLE>
See Notes to Financial Statements.
19
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
===============================================================================================================
<S> <C> <C> <C>
New York -- 13.0% (continued)
$ 10,000,000 Aa* Series P, 5.500% due 1/1/19 $ 9,300,000
- ---------------------------------------------------------------------------------------------------------------
369,388,269
- ---------------------------------------------------------------------------------------------------------------
North Carolina -- 1.6%
4,500,000 BBB+ Carteret County, NC COP, (Elementary School Project),
6.500% due 2/1/07 4,635,000
New Hanover County, NC Hospital Revenue, (New Hanover
Regional Medical Center Project), AMBAC-Insured:
4,000,000 AAA 5.750% due 10/1/16 3,925,000
6,495,000 AAA 5.750% due 10/1/26 6,259,556
North Carolina Municipal Power Agency, Catawaba
Electric Revenue:
12,505,000 AAA AMBAC-Insured, 5.375% due 1/1/20 11,614,019
12,000,000 AAA MBIA-Insured, 5.500% due 1/1/12 11,535,000
8,230,000 AAA MBIA-Insured, 5.000% due 1/1/18 7,273,262
- ---------------------------------------------------------------------------------------------------------------
45,241,837
- ---------------------------------------------------------------------------------------------------------------
North Dakota -- 0.0%
1,000,000 NR Grand Forks, ND Housing Facilities Revenue, Senior
United Health Resources, 9.250% due 12/1/10 1,081,250
- ---------------------------------------------------------------------------------------------------------------
Ohio -- 0.9%
3,000,000 Aaa* Akron, Bath and Copley, OH Joint Township, Hospital
Revenue Bonds, (Akron City Hospital Project),
8.875% due 11/15/07 3,228,750
1,000,000 AAA Brecksville-Broadview Heights, OH City School District,
FGIC-Insured, 6.500% due 12/1/16 1,075,000
Cleveland, OH Waterworks Revenue, Refunding &
Improvement, First Mortgage, Series H, MBIA-Insured:
1,000,000 AAA 5.625% due 1/1/13 987,500
1,000,000 AAA 5.700% due 1/1/14 990,000
2,500,000 AAA 5.750% due 1/1/16 2,462,500
Franklin County, OH Hospital Revenue, Holy Cross Health
System Corporation:
2,320,000 AA 5.750% due 6/1/10 2,302,600
2,615,000 AA 5.750% due 6/1/11 2,582,313
2,000,000 AA Grandview Heights, OH City School District,
6.050% due 12/1/15 2,070,000
1,500,000 NR Ohio State Solid Waste Revenue, Republic Engineered
Steels Inc., 9.000% due 6/1/21 (b) 1,560,000
5,500,000 AAA Ohio State Water Development Authority Revenue,
Fresh Water, AMBAC-Insured, 5.900% due 12/1/21 5,506,875
1,585,000 AAA Twinsburg, OH Local School District, FGIC-Insured,
5.900% due 12/1/21 1,594,906
- ---------------------------------------------------------------------------------------------------------------
24,360,444
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
20
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================================
<S> <C> <C> <C>
Oklahoma -- 0.8%
$ 3,150,000 AAA Pottawatomie County, OK Development Authority, Water
Revenue, North Deer Creek Reservoir, AMBAC-Insured,
5.900% due 7/1/26 $ 3,110,625
1,975,000 AA Tulsa, OK Industrial Authority, Hospital Revenue,
St. John Medical Center, 6.250% due 2/15/17 1,999,687
2,000,000 AAA Tulsa, OK IDA, University of Tulsa, Series A, MBIA-Insured,
5.000% due 10/1/22 1,740,000
14,405,000 AAA Tulsa, OK Metropolitan Utility Authority, Utility Revenue,
MBIA-Insured, 5.750% due 9/1/25 13,936,838
1,000,000 AA- Woods County, OK IDA, Revenue Refunding,
(Cargill Inc. Project), 6.250% due 10/1/14 1,026,250
- --------------------------------------------------------------------------------------------------------------
21,813,400
- --------------------------------------------------------------------------------------------------------------
Oregon -- 0.3%
1,000,000 A1* Multnomah County, OR School District, 5.500% due 6/1/15 976,250
6,950,000 Aa* Oregon State GO, Series B, 6.375% due 8/1/24 7,280,125
1,500,000 AAA Oregon Veterans Welfare GO, Series L,
12.500% due 9/1/06 1,530,000
- --------------------------------------------------------------------------------------------------------------
9,786,375
- --------------------------------------------------------------------------------------------------------------
Pennsylvania -- 1.0%
6,250,000 AAA Beaver County, PA IDA, PCR, Pennsylvania Power
Company, (Beaver Valley Project), AMBAC-Insured,
6.000% due 9/1/28 6,210,938
5,000,000 AAA Cambria County, PA IDA, PCR, Pennsylvania Power
Company, Series A, MBIA-Insured,
5.800% due 11/1/20 4,862,500
100,000 D Delaware County, PA Hospital Authority Revenue
Bonds, Sacred Heart Medical Center,
9.750% due 9/1/11 (e) 400,000
Pennsylvania Economic Development Financing
Authority Revenue, (Northhampton Generating
Project), Series C:
2,000,000 NR 6.875% due 1/1/11 (b) 1,927,500
12,000,000 NR 6.950% due 1/1/21 (b) 11,280,000
2,945,000 AAA Rose Tree Media, PA School District, FGIC-Insured,
5.850% due 2/15/17 2,933,956
- --------------------------------------------------------------------------------------------------------------
27,614,894
- --------------------------------------------------------------------------------------------------------------
South Carolina -- 0.8%
9,250,000 AAA Charleston County, SC COP, Charleston Public Facilities Corp.,
MBIA-Insured, 5.500% due 12/1/20 8,579,375
South Carolina State, Public Service Revenue, Series C:
10,215,000 AAA FGIC-Insured, 5.000% due 1/1/25 8,784,900
5,355,000 AAA MBIA-Insured, 5.125% due 1/1/32 4,652,156
- --------------------------------------------------------------------------------------------------------------
22,016,431
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
21
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================================
<S> <C> <C> <C>
Tennessee -- 0.2%
Chattanooga, TN Health, Educational & Housing Facility
Board, Mortgage Revenue, Red Bank Health Care,
FHA-Insured:
$ 90,000 A 11.250% due 2/1/00 $ 105,975
90,000 A 11.250% due 8/1/00 108,112
100,000 A 11.250% due 2/1/01 121,875
105,000 A 11.250% due 8/1/01 130,200
110,000 A 11.250% due 2/1/02 138,188
115,000 A 11.250% due 8/1/02 146,769
120,000 A 11.250% due 2/1/03 154,500
130,000 A 11.250% due 8/1/03 169,812
135,000 A 11.250% due 2/1/04 176,850
145,000 A 11.250% due 8/1/04 192,306
150,000 A 11.250% due 2/1/05 201,375
180,000 A 11.250% due 8/1/05 244,350
3,500,000 AAA Metropolitan Government Nashville & Davidson County, TN,
Health & Educational Facilities Board, Refunding &
Improvement, Meharry Medical College, AMBAC-Insured,
5.000% due 12/1/24 3,075,625
- --------------------------------------------------------------------------------------------------------------
4,965,937
- --------------------------------------------------------------------------------------------------------------
Texas -- 8.1%
5,000,000 BBB Alliance, TX Airport Authority Inc., (Federal Express
Corp. Project), 6.375% due 4/1/21 (b) 4,850,000
21,565,000 Aaa* Arlington, TX ISD, 5.750% due 2/15/21 21,241,525
13,655,000 AAA Austin, TX Utility Systems Revenue, MBIA-Insured,
5.600% due 5/15/25 12,921,044
Austin, TX Water, Sewer & Electric Authority
Revenue Bonds:
855,000 A* 14.000% due 5/15/99, (Pre-Refunded -- Escrowed
with U.S. Government Securities to 5/15/99
Call @ 100) (c) 1,064,475
48,215,000 A* 14.000% due 11/15/01 (a) 62,438,425
960,000 A* 14.000% due 11/15/01, (Pre-Refunded -- Escrowed
with U.S. Government Securities with various call
dates (5/15/98 to 11/15/01) Call @ 100) (c) 1,237,200
10,000,000 AAA Bexar County, TX Health Facilities Development
Revenue, Incarnate Ward, FSA-Insured,
6.100% due 11/15/23 10,150,000
Burleson, TX ISD:
4,795,000 Aaa* 6.750% due 8/1/24 5,154,625
11,740,000 Aaa* 6.750% due 8/1/24, (Pre-Refunded -- Escrowed
with U.S. Government Securities to 8/1/06 Call @ 100) 13,060,750
</TABLE>
See Notes to Financial Statements.
22
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================================
<S> <C> <C> <C>
Texas -- 8.1% (continued)
Collin County, TX Housing Finance Corporation,
Multi-Family Housing Revenue, FSA-Collateralized:
$ 6,660,000 AAA Summer Crossing Apartments, Series B-1,
6.200% due 3/1/26 $ 6,676,650
8,800,000 AAA Summer Meadows Apartments, Series A-1,
6.200% due 3/1/26 8,822,000
Copperas Cove Island, TX ISD, PSFG Refunding:
1,960,000 AAA 5.600% due 2/1/13 1,945,300
2,035,000 AAA 5.600% due 2/1/14 2,007,019
8,500,000 AAA El Paso, TX ISD, PSFG, Refunding, 6.000% due 2/15/19 8,616,875
1,215,000 AAA Fort Bend County, TX Levee Improvement District No.
011, MBIA-Insured, 5.875% due 3/1/13 1,231,706
1,000,000 Aa3* Harris County, TX IDR Corporation Refunding, Cargill Inc.,
7.000% due 10/1/15 1,077,500
9,370,000 AAA Harris County, TX Toll Road Revenue, FGIC-Insured,
5.375% due 8/15/20 8,702,388
1,260,000 AAA Leander, TX ISD, PSFG, 5.600% due 8/15/15 1,234,800
2,250,000 A1* Milan County, TX IDR, PCR, (Alcoa Project),
5.650% due 12/1/12 2,213,438
Port Arthur, TX MBIA-Insured:
1,025,000 AAA 5.500% due 2/15/16 992,969
4,775,000 AAA 5.500% due 2/15/20 4,554,156
11,000,000 AAA Red River, TX PCR, (West Texas Utility Co. Project),
MBIA-Insured, 6.000% due 6/1/20 11,000,000
Sam Rayburn, TX Municipal Power Agency:
12,560,000 BB Series A, 6.750% due 10/1/14 11,476,700
7,835,000 BB Series B, 5.500% due 10/1/20 5,935,012
5,315,000 Aaa* Socorro, TX ISD, PSFG, 5.750% due 2/15/26 5,228,631
4,000,000 AAA Tarrant County, TX Health Facilities Development Corp.,
Harris Methodist Health Systems, Series A,
AMBAC-Insured, 5.125% due 9/1/12 3,710,000
13,460,000 AA Texas A&M University Revenue, Financing System,
5.250% due 5/15/15 12,450,500
- --------------------------------------------------------------------------------------------------------------
229,993,688
- --------------------------------------------------------------------------------------------------------------
Utah -- 3.1%
Intermountain Power Agency, UT Power Supply Revenue:
Series A:
18,875,000 Aa* 5.500% due 7/1/20 17,530,156
15,335,000 Aa* 5.000% due 7/1/23 13,168,931
7,850,000 AAA AMBAC-Insured, 5.500% due 7/1/20 7,369,188
Series D:
35,760,000 AA- 5.000% due 7/1/21 31,066,500
6,300,000 AAA MBIA-Insured, 5.000% due 7/1/21 5,425,875
5,800,000 AAA Murray City, UT Hospital Revenue, IHC Health Services Inc.,
MBIA-Insured, 5.000% due 5/15/22 4,980,750
</TABLE>
See Notes to Financial Statements.
23
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================================
<S> <C> <C> <C>
Utah -- 3.1% (continued)
Salt Lake City, UT Housing Authority, Multi-Family
Revenue Refunding, HDC, (Project A):
$ 1,160,000 A 6.000% due 4/1/12 $ 1,141,150
2,645,000 A 6.000% due 4/1/25 2,559,037
4,835,000 Aa* Utah State HFA, Single-Family Mortgage Revenue
FHA-Insured, 5.700% due 7/1/26 4,520,725
- --------------------------------------------------------------------------------------------------------------
87,762,312
- --------------------------------------------------------------------------------------------------------------
Virginia -- 4.0%
Arlington County, VA IDA Multi-Family Housing Revenue:
705,000 A 6.300% due 7/1/16 719,100
750,000 A 6.350% due 7/1/20 765,000
1,000,000 A 6.375% due 7/1/25 1,021,250
Chesapeake Bay, VA Bridge & Tunnel District Revenue
Refunding, General Resolution, MBIA-Insured:
2,000,000 AAA 5.250% due 7/1/19 1,825,000
2,000,000 AAA 5.000% due 7/1/22 1,747,500
8,500,000 AA Chesapeake, VA GO, Water & Sewer Revenue, Series A,
5.375% due 12/1/20 7,905,000
2,000,000 AAA Hampton Roads, VA Regional Jail Authority, Regional Jail
Facilities Revenue, Series A, MBIA-Insured,
5.500% due 7/1/24 1,892,500
Harrisonburg, VA Redevelopment & Housing Authority,
Multi-Family Housing Revenue, GNMA-Collateralized,
(Battery Heights Project), Series A, FHA-Insured:
1,425,000 AAA 6.100% due 4/20/16 1,421,437
2,715,000 AAA 6.150% due 4/20/26 2,708,213
3,000,000 AAA Loudoun County, VA IDA Loudoun Hospital Center,
FSA-Insured, 5.800% due 6/1/26 2,932,500
500,000 AAA Lynchburg, VA Redevelopment & Housing Authority
Revenue, Waldon Pond, Series A, GNMA-Collateralized,
6.200% due 7/20/27 505,625
2,160,000 AA Norfolk, VA Redevelopment & Housing Authority,
Educational Facilities Revenue, Tidewater Community
College Campus, 5.875% due 11/1/15 2,178,900
Riverside, VA Regulatory Jail Authority Facility Revenue,
MBIA-Insured:
14,035,000 AAA 5.875% due 7/1/14 14,070,088
13,870,000 AAA 6.000% due 7/1/25 13,956,687
2,130,000 AAA Roanoke, VA Redevelopment & Housing Authority Revenue,
Series A, Westwind III, GNMA-Collateralized,
6.200% due 7/20/26 2,116,687
Upper Occoquan, VA Sewer Authority, Sewer Revenue:
5,000,000 AAA FGIC-Insured, 5.000% due 7/1/21 4,418,750
5,000,000 AAA MBIA-Insured, 5.000% due 7/1/25 4,381,250
</TABLE>
See Notes to Financial Statements.
24
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================================
<S> <C> <C> <C>
Virginia -- 4.0% (continued)
Virginia State Housing Development Authority,
Commonwealth Mortgage Revenue:
Series D-2, MBIA-Insured:
$ 1,225,000 AAA 5.650% due 1/1/13 $ 1,217,344
6,775,000 AAA 5.750% due 1/1/19 6,681,844
9,715,000 AA Series D-3, 6.125% due 1/1/19 9,715,000
Series D-4:
1,180,000 AA+ 6.000% due 1/1/09 1,180,000
1,220,000 AA+ 6.000% due 7/1/09 1,220,000
1,255,000 AA+ 6.050% due 1/1/10 1,251,863
1,290,000 AA+ 6.050% due 7/1/10 1,290,000
1,330,000 AA+ 6.100% due 1/1/11 1,330,000
1,365,000 AA+ 6.100% due 7/1/11 1,365,000
1,400,000 AA+ 6.125% due 1/1/12 1,400,000
1,440,000 AA+ 6.125% due 7/1/12 1,440,000
1,485,000 AA+ 6.150% due 1/1/13 1,485,000
1,525,000 AA+ 6.150% due 7/1/13 1,526,906
1,565,000 AA+ 6.200% due 1/1/14 1,566,956
1,615,000 AA+ 6.200% due 7/1/14 1,617,019
11,000,000 AA+ 6.250% due 1/1/19 11,055,000
3,030,000 AA Virginia State Transportation Board, Transportation
Contract Revenue, (U.S. Route 58 Corridor Development
Project), Series B, 5.500% due 5/15/18 2,863,350
- --------------------------------------------------------------------------------------------------------------
112,770,769
- --------------------------------------------------------------------------------------------------------------
Washington -- 3.0%
6,430,000 AAA Kent, WA GO, MBIA-Insured, 5.750% due 12/1/26 6,309,437
10,650,000 AA+ Seattle, WA GO, Series A, 5.750% due 1/15/20 10,303,875
3,150,000 AAA Seattle, WA Drain & Wastewater Utility Revenue,
MBIA-Insured 5.250% due 12/1/25 2,831,062
2,455,000 AAA Spokane, WA Lease Revenue, (Multi-Purpose Arena
Project), AMBAC-Insured, 5.750% due 1/1/18 2,362,938
3,500,000 AA Washington State GO, Series B, 5.750% due 5/1/18 3,447,500
Washington State Public Power Supply Systems,
Revenue Refunding:
Nuclear Project No.1, Series B:
24,000,000 AA 5.500% due 7/1/17 21,780,000
29,220,000 AA 5.500% due 7/1/18 26,480,625
6,995,000 AAA MBIA-Insured, 5.600% due 7/1/15 6,662,738
Nuclear Project No. 3, FSA-Insured,
5,500,000 AAA 5.375% due 7/1/15 5,094,375
- --------------------------------------------------------------------------------------------------------------
85,272,550
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
25
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================================
<S> <C> <C> <C>
West Virginia -- 0.9%
Marion County, WV County Community, Solid Waste
Disposal Facilities Revenue:
$ 4,000,000 NR American Fiber Resource Project, Series B,
9.250% due 12/1/11 (b) $ 2,400,000
40,000,000 NR American Power Paper Recycling Project,
7.750% due 12/1/11 (b)(e) 24,000,000
- --------------------------------------------------------------------------------------------------------------
26,400,000
- --------------------------------------------------------------------------------------------------------------
Wisconsin -- 0.2%
2,000,000 AA Wisconsin Housing & EDA, Home Ownership Revenue,
Series A, 6.450% due 3/1/17 2,045,000
5,000,000 AAA Wisconsin Public Power Inc., Power Supply System
Revenue, Series A, MBIA-Insured, 5.750% due 7/1/23 4,806,250
- --------------------------------------------------------------------------------------------------------------
6,851,250
- --------------------------------------------------------------------------------------------------------------
Wyoming -- 0.5%
4,000,000 AAA Natrona County, WY Hospital Revenue, (Wyoming
Medical Center Project), AMBAC-Insured,
6.000% due 9/15/24 3,980,000
7,000,000 A Sweetwater County, WY PCR, (Idaho Power Co. Project),
Series A, 6.050% due 7/15/26 6,886,250
5,005,000 AA Wyoming Community Development Authority,
Housing Revenue, Series 6, 6.100% due 12/1/25 4,979,975
- --------------------------------------------------------------------------------------------------------------
15,846,225
- --------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS AND NOTES
(Cost - $2,822,612,006) 2,832,592,041
==============================================================================================================
SHORT-TERM INVESTMENTS (d) -- 0.3%
California -- 0.1%
California Health Facilities Financing Authority Revenue,
Sutter Health Systems:
3,000,000 A-1+ Series B, AMBAC-Insured, 3.300% due 7/1/12 3,000,000
200,000 A-1+ Series C, FSA-Insured, 3.200% due 7/1/22 200,000
100,000 A-1 California Pollution Control Financing Authority, PCR,
Shell Oil Co., Series B, 3.150% due 10/1/11 100,000
100,000 VMIG 1* California Statewide Communities Development
Authority Revenue, COP, St. Joseph's Health
System Group, 3.000% due 7/1/24 100,000
- --------------------------------------------------------------------------------------------------------------
3,400,000
- --------------------------------------------------------------------------------------------------------------
Colorado -- 0.0%
100,000 VMIG 1* Moffat County, CO PCR, (Pacific Corp. Project),
AMBAC-Insured, 3.400% due 5/1/13 100,000
- --------------------------------------------------------------------------------------------------------------
Illinois -- 0.1%
2,300,000 A-1+ Joliet, IL Regional Port District, (Exxon Project),
3.300% due 10/1/24 2,300,000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
26
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
==============================================================================================================
<S> <C> <C> <C>
Massachusetts -- 0.0%
$ 600,000 A-1 Massachusetts State GO, 3.200% due 12/1/97 $ 600,000
- --------------------------------------------------------------------------------------------------------------
Michigan -- 0.1%
1,000,000 VMIG 1* University of Michigan Revenue,
Series A, 3.400% due 12/1/27 1,000,000
- --------------------------------------------------------------------------------------------------------------
New York -- 0.0%
300,000 VMIG 1* New York, NY GO, Series A-7, 3.700% due 8/1/20 300,000
- --------------------------------------------------------------------------------------------------------------
Ohio -- 0.0%
900,000 VMIG 1* Cuyhoga County, OH Hospital Revenue, University
Hospital -- Cleveland, 3.500% due 1/1/16 900,000
- --------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(Cost -- $8,600,000) 8,600,000
==============================================================================================================
TOTAL INVESTMENTS -- 100%
(Cost -- $2,831,212,006**) $2,841,192,041
==============================================================================================================
</TABLE>
(a) Security segregated by Custodian for open futures contract commitments.
(b) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(c) Pre-Refunded bonds escrowed by U.S. Government securities and bonds
escrowed to maturity with U.S. Government securities are considered by the
manager to be triple-A rated even if issuer has not applied new ratings.
(d) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(e) Security valued by the Fund's Board of Directors (See Note 6).
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 28 and 29 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
27
- --------------------------------------------------------------------------------
Bond Ratings
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Corporation ("Standard & Poor's"), except
those identified by an asterisk (*) are rated by Moody's Investors Service Inc.
("Moody's"). The definitions of the applicable rating symbols are set forth
below:
Standard & Poor's -- Rating from "AA" to "BBB" may be modified by the addition
of a plus (+) or minus (-) sign to show relative standings within the major
rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and
repay principal and differs from the highest rated issue only in a
small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.
BB -- Bonds rated "BB" have less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions which could lead to inadequate capacity to meet timely
interest and principal payments. The "BB" rating category is also
used for debt subordinated to senior debt that is assigned an actual
or implied "BBB-" rating.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than in
higher rated categories.
CCC -- Bonds rated "CCC" have a currently identifiable vulnerability to
default, and are dependent upon favorable business, financial, and
economic conditions to meet timely payment of interest and repayment
of principal. In the event of adverse business, financial, or
economic conditions, it is not likely to have the capacity to pay
interest and repay principal. The "CCC" rating category is also used
for debt subordinated to senior debt that is assigned an actual or
implied "B" or "B-" rating.
D -- Bonds rated "D" are in default, and payment of interest and/or
repayment of principal is in arrears.
Moody's -- Numerical modifiers 1, 2 and 3 may be applied to each generic rating
from "Aa" to "Baa," where 1 is the highest and 3 the lowest ranking
within its generic category.
Aaa -- Bonds that are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- Bonds that are rated "Aa" are judged to be of high quality by all
standards. Together with the "Aaa" group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large in "Aaa"
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-
term risks appear somewhat larger than in "Aaa" securities.
A -- Bonds that are rated "A" possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa -- Bonds that are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
B -- Bonds that are rated "B" generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of
time may be small.
Caa -- Bonds that are rated "Caa" are of poor standing. These issues may be
in default, or present elements of danger may exist with respect to
principal interest.
NR -- Indicates that the bond is not rated by Standard & Poor's or Moody's.
28
- --------------------------------------------------------------------------------
Bond Short-Term Securities Ratings
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong; those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature - (VRDO).
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG 1 rating.
- --------------------------------------------------------------------------------
Security Descriptions
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governors
AIG -- American International Guaranty
AMBAC -- American Municipal Bond Assurance Corporation
BAN -- Bond Anticipation Notes
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
CHFCLI -- California Health Facility
Construction Loan Insurance
COP -- Certificate of Participation
EDA -- Economic Development Authority
ETM -- Escrowed To Maturity
FAIRS -- Floating Adjustable Interest Rate Securities
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRTC -- Floating Rate Trust Certificates
FSA -- Federal Savings Association
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HDC -- Housing Development Corporation
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
ISD -- Independent School District
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
PSFG -- Permanent School Fund Guaranty
RAN -- Revenue Anticipation Notes
RIBS -- Residual Interest Bonds
RITES -- Residual Interest Tax-Exempt Securities
SYCC -- Structured Yield Curve Certificate
TAN -- Tax Anticipation Notes
TECP -- Tax Exempt Commercial Paper
TOB -- Tender Option Bonds
TRAN -- Tax and Revenue Anticipation Notes
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday Demand
29
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) August 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value (Cost -- $2,831,212,006) $2,841,192,041
Cash 85,755
Receivable for securities sold 710,422
Receivable for Fund shares sold 5,845,642
Interest receivable 42,578,317
- ----------------------------------------------------------------------------------------------------
Total Assets 2,890,412,177
- ----------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 119,879,681
Dividends payable 13,019,604
Investment advisory fees payable 755,870
Distribution fees payable 736,461
Administration fees payable 418,108
Accrued expenses 277,176
- ----------------------------------------------------------------------------------------------------
Total Liabilities 135,086,900
- ----------------------------------------------------------------------------------------------------
Total Net Assets $2,755,325,277
====================================================================================================
NET ASSETS:
Par value of capital shares $ 176,232
Capital paid in excess of par value 2,697,152,363
Overdistributed net investment income (2,089,457)
Accumulated net realized gain on security transactions and futures contracts 50,106,104
Net unrealized appreciation of investments 9,980,035
- ----------------------------------------------------------------------------------------------------
Total Net Assets $2,755,325,277
====================================================================================================
Shares Outstanding:
Class A 121,138,149
- ----------------------------------------------------------------------------------------------------
Class B 51,422,074
- ----------------------------------------------------------------------------------------------------
Class C 3,347,961
- ----------------------------------------------------------------------------------------------------
Class Y 323,552
- ----------------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $15.63
- ----------------------------------------------------------------------------------------------------
Class B* $15.63
- ----------------------------------------------------------------------------------------------------
Class C** $15.63
- ----------------------------------------------------------------------------------------------------
Class Y (and redemption price) $15.63
- ----------------------------------------------------------------------------------------------------
Class A Maximum Public Offering Price Per Share
(net asset value plus 4.17% of net value per share) $16.28
====================================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if shares
are redeemed within one year from initial purchase (See Note 3).
** Redemption price is NAV of Class C shares reduced by a 1.00% CDSC if shares
are redeemed within the first year of purchase.
See Notes to Financial Statements.
30
- -----------------------------------------------------------------------------
Statement of Operations (unaudited)
- -----------------------------------------------------------------------------
For the Six Months Ended August 31, 1996
INVESTMENT INCOME:
Interest $ 84,747,938
- -----------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 4,218,513
Distribution fees (Note 3) 4,039,462
Administration fees (Note 3) 2,362,223
Shareholder and system servicing fees 342,111
Registration fees 67,868
Custody 54,015
Audit and legal 45,825
Shareholder communications 45,246
Directors' fees 23,185
Other 46,848
- -----------------------------------------------------------------------------
Total Expenses 11,245,296
- -----------------------------------------------------------------------------
Net Investment Income 73,502,642
- -----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FUTURES CONTRACTS (NOTES 4 AND 7):
Realized Gain From:
Security transactions (excluding short-term securities) 14,207,508
Futures contracts 31,638,877
- -----------------------------------------------------------------------------
Net Realized Gain 45,846,385
- -----------------------------------------------------------------------------
Net Change in Unrealized Appreciation of Investments:
Beginning of period 149,060,081
End of period 9,980,035
- -----------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (139,080,046)
- -----------------------------------------------------------------------------
Net Loss on Investments and Futures Contracts (93,233,661)
- -----------------------------------------------------------------------------
Decrease in Net Assets From Operations $ (19,731,019)
=============================================================================
See Notes to Financial Statements.
31
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended August 31, 1996 (unaudited)
and the Year Ended February 29, 1996
<TABLE>
<CAPTION>
August 31 February 29
===========================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 73,502,642 $ 135,726,742
Net realized gain 45,846,385 44,310,537
Increase (decrease) in net unrealized appreciation (139,080,046) 80,968,648
- -------------------------------------------------------------------------------------------
Increase (Decrease) in Net
Assets From Operations (19,731,019) 261,005,927
- -------------------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS FROM (NOTE 2):
Net investment income (75,592,099) (135,414,152)
Net realized gains -- (12,936,891)
- -------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (75,592,099) (148,351,043)
- -------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 5):
Net proceeds from sale of shares 328,861,302 540,718,904
Net asset value of shares issued for
reinvestment of dividends 38,219,544 91,398,350
Cost of shares reacquired (184,544,577) (368,696,313)
- -------------------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 182,536,269 263,420,941
- -------------------------------------------------------------------------------------------
Increase in Net Assets 87,213,151 376,075,825
NET ASSETS:
Beginning of period 2,668,112,126 2,292,036,301
- -------------------------------------------------------------------------------------------
End of period* $2,755,325,277 $2,668,112,126
===========================================================================================
*Includes overdistributed net investment income of: $ (2,089,457) --
===========================================================================================
</TABLE>
See Notes to Financial Statements.
32
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
Smith Barney Managed Municipals Fund Inc. (the "Fund"), a Maryland
corporation, is registered under the Investment Company Act of 1940, as amended,
as a diversified, open-end management investment company.
The significant accounting policies consistently followed by the Fund are:
(a) security transactions are accounted for on trade date; (b) securities are
valued at the mean between bid and ask prices provided by an independent pricing
service that are based on transactions in municipal obligations, quotations from
municipal bond dealers, market transactions in comparable securities and various
relationships between securities; (c) securities maturing within 60 days are
valued at cost plus accreted discount, or minus amortized premium, which
approximates market value; (d) gains or losses on the sale of securities are
calculated by using the specific identification method; (e) interest income,
adjusted for amortization of premiums and accretion of original issue discounts,
is recorded on the accrual basis; market discount is recognized upon the
disposition of the security; (f) dividends and distributions to shareholders are
recorded on the ex-dividend date; (g) direct expenses are charged to the Fund
and each class; investment advisory fees and general Fund expenses are allocated
on the basis of relative net assets; (h) the Fund intends to comply with the
applicable provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), pertaining to regulated investment companies and to make distributions
of taxable income sufficient to relieve it from substantially all Federal income
and excise taxes; and (i) estimates and assumptions are required to be made
regarding assets, liabilities and changes in net assets resulting from
operations when financial statements are prepared. Changes in the economic
environment, financial markets and other parameters used in determining these
estimates could cause actual results to differ.
2. EXEMPT-INTEREST DIVIDENDS AND OTHER DISTRIBUTIONS
The Fund intends to satisfy requirements that allows interest from
municipal securities, which is exempt from regular Federal income tax and from
certain states' income taxes, to retain its exempt-interest status when
distributed to the shareholders of the Fund.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually. Additional taxable distributions may be
made if necessary to avoid a Federal excise tax.
33
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
3. INVESTMENT ADVISORY AGREEMENT, ADMINISTRATION AGREEMENT AND OTHER
TRANSACTIONS
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), acts as investment adviser to the Fund. The Fund
pays SBMFM an advisory fee calculated at an annual rate of 0.35% of the average
daily net assets up to $500 million; 0.32% of the average daily net assets of
the next $1.0 billion and 0.29% in excess of $1.5 billion. This fee is
calculated daily and paid monthly.
SBMFM also acts as the Fund's administrator for which the Fund pays a fee
calculated at an annual rate of 0.20% of the average daily net assets up to $500
million; 0.18% of the average daily net assets of the next $1.0 billion and
0.16% of the average daily net assets in excess of $1.5 billion. This fee is
calculated daily and paid monthly.
Smith Barney Inc. ("SB"), another subsidiary of SBH, acts as distributor of
Fund shares. For the six months ended August 31, 1996, SB received
approximately $2,267,000 on sales of the Fund's Class A shares.
There is a contingent deferred sales charge ("CDSC") of 4.50% on Class B
shares, which applies if redemption occurs less than one year from initial
purchase. This CDSC declines by 0.50% the first year after purchase and
thereafter by 1.00% per year until no CDSC is incurred. Class C shares have a
1.00% CDSC, which applies if redemption occurs within the first year of
purchase. In addition, Class A shares also have a 1.00% CDSC, which applies if
redemption occurs within the first year of purchase. This CDSC only applies to
those purchases of Class A shares, which when combined with current holdings of
Class A shares, equal or exceed $500,000 in the aggregate. These purchases do
not incur an initial sales charge. For the six months ended August 31, 1996,
CDSCs paid to SB were:
Class A Class B Class C
================================================================================
CDSCs $61,000 $560,000 $9,000
================================================================================
Pursuant to a Distribution Plan, the Fund pays a service fee with respect
to its Class A, B and C shares, calculated at the annual rate of 0.15% of the
average daily net assets for each respective class. In addition, the Fund pays a
distribution fee with respect to its Class B and C shares calculated at the
annual rate of 0.50% and 0.55%, of the average daily net assets of each class,
respectively.
34
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
For the six months ended August 31, 1996, total Distribution Plan fees
incurred were:
Class A Class B Class C
================================================================================
Distribution Plan Fees $1,417,682 $2,474,432 $147,348
================================================================================
All officers and one Director of the Fund are employees of SB.
4. INVESTMENTS
During the six months ended August 31, 1996, the aggregate cost of
purchases and proceeds from sales of investments (including maturities, but
excluding short-term securities) were as follows:
================================================================================
Purchases $1,610,703,618
- --------------------------------------------------------------------------------
Sales 1,084,064,985
================================================================================
At August 31, 1996, the gross unrealized appreciation and depreciation of
investments were approximately:
================================================================================
Gross unrealized appreciation $ 83,274,664*
Gross unrealized depreciation (73,294,629)*
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 9,980,035*
================================================================================
*Substantially the same for Federal income tax purposes.
5. CAPITAL SHARES
At August 31, 1996, the Fund had one billion shares of capital stock
authorized with a par value of $0.01 per share. The Fund has established
multiple classes of shares. Each share of a class represents an identical
interest in the Fund and has the same rights, except that each class bears
certain expenses specifically related to the distribution of its shares.
At August 31, 1996, total paid-in capital amounted to the following for
each class:
Class A Class B Class C Class Y
================================================================================
Total Paid-in Capital $1,811,844,881 $827,785,073 $52,821,858 $4,876,783
================================================================================
35
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
August 31, 1996 February 28, 1996*
----------------------------- ----------------------------
Shares Amount Shares Amount
========================================================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 11,120,563 $ 175,545,906 15,591,125 $ 248,495,845
Shares issued on
reinvestment 1,716,775 27,078,623 4,274,567 68,011,465
Shares redeemed (8,491,362) (134,005,585) (17,620,753) (280,733,228)
- ------------------------------------------------------------------------------------------------------------------------
Net Increase 4,345,976 $ 68,618,944 2,244,939 $ 35,774,082
========================================================================================================================
Class B
Shares sold 7,929,686 $ 125,269,445 14,787,518 $ 236,215,756
Shares issued on
reinvestment 654,834 10,322,787 1,405,224 22,387,664
Shares redeemed (2,215,696) (34,986,368) (4,400,671) (70,245,187)
- ------------------------------------------------------------------------------------------------------------------------
Net Increase 6,368,824 $ 100,605,864 11,792,071 $ 188,358,233
========================================================================================================================
Class C
Shares sold 1,460,169 $ 23,045,951 1,820,006 $ 29,125,231
Shares issued on
reinvestment 41,875 659,894 45,540 729,020
Shares redeemed (216,877) (3,404,566) (151,454) (2,433,627)
- ------------------------------------------------------------------------------------------------------------------------
Net Increase 1,285,167 $ 20,301,279 1,714,092 $ 27,420,624
========================================================================================================================
Class Y
Shares sold 320,307 $ 5,000,000 1,705,945 $ 26,882,072
Shares issued on
reinvestment 10,004 158,240 16,831 270,201
Shares redeemed (766,895) (12,148,058) (962,640) (15,284,271)
- ------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (436,584) $ (6,989,818) 760,136 $ 11,868,002
========================================================================================================================
</TABLE>
* For Class Y shares, transactions are for the period from April 4, 1995
(inception date) to February 29, 1996.
36
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
6. SECURITIES VALUED BY THE FUND'S BOARD OF DIRECTORS
Some of the Fund's investments are valued at the direction of the Fund's
Board of Directors; these securities are valued in good faith, taking into
consideration the appropriate economic, financial and other pertinent available
information pertaining to the defaulted securities. The table below shows the
securities valued by the Fund's Board of Directors:
<TABLE>
<CAPTION>
Value as of
Acquisition Par 8/31/96 Percentage
Security Date Amount Value of Net Assets Cost
========================================================================================================
<S> <C> <C> <C> <C> <C>
Delaware County,
PA Hospital Authority
Revenue Bonds, Sacred
Heart Medical Center,
9.750% due 9/1/11 8/25/92 $ 100,000 $ 400,000 0.02% $ 99,427
Maryland State Energy
Financing Administration,
Solid Waste Disposal
Revenue, Limited Obligation,
(Hagerstown Project),
9.000% due 10/15/16 10/5/94 56,000,000 46,480,000 1.69 56,000,000
Massachusetts State IFA, Solid
Waste Disposal Revenue,
Massachusetts Recycling
Association, Series A,
9.000% due 8/1/16 9/8/94 31,700,000 15,850,000 0.58 31,700,000
Michigan State Strategic
Funding, Limited Obligation
Revenue, (Blue Water Fiber
Project), 8.000% due 1/1/12 3/28/94 12,000,000 9,000,000 0.33 12,000,000
3/20/95 5,000,000 3,750,000 0.14 4,530,450
- --------------------------------------------------------------------------------------------------------
17,000,000 12,750,000 16,530,450
- --------------------------------------------------------------------------------------------------------
Marion County, WV Community
Solid Waste Disposal
Facilities Revenue:
American Fiber Resource
Project, Series B,
9.250% due 12/1/11 12/22/95 4,000,000 2,400,000 0.09 4,000,000
American Power Paper
Recycling Project,
7.750% due 12/1/11 12/16/93 25,000,000 15,000,000 0.54 25,000,000
1/25/95 7,000,000 4,200,000 0.15 6,192,410
3/8/95 9,000,000 5,400,000 0.20 7,142,880
- --------------------------------------------------------------------------------------------------------
41,000,000 24,600,000 38,335,290
- --------------------------------------------------------------------------------------------------------
</TABLE>
37
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
7. FUTURES CONTRACTS
Initial margin deposits made upon entering into futures contracts are
recognized as assets. The initial margin is segregated by the custodian and is
noted in the schedule of investments. During the period the futures contract is
open, changes in the value of the contract are recognized as unrealized gains or
losses by "marking to market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
made or received and recognized as assets due from or liabilities due to broker,
depending upon whether unrealized gains or losses are incurred. When the
contract is closed, the Fund records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transactions and
the Fund's basis in the contract. The Fund enters into such contracts to hedge a
portion of its portfolio. The Fund bears the market risk that arises from
changes in the value of the financial instruments and securities indices
(futures contracts) and the credit risk should a counterparty fail to perform
under such contracts.
At August 31, 1996, there were no open futures contracts.
38
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OF EACH CLASS OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
Class A Shares 1996(1) 1996 1995 1994(2) 1993 1992
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $16.20 $15.47 $16.13 $16.71 $15.62 $14.98
- -----------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.44 0.91 0.95 0.90 1.00 1.05
Net realized and unrealized gain (loss) (0.55) 0.80 (0.37) 0.30 1.64 0.66
- -----------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (0.11) 1.71 0.58 1.20 2.64 1.71
- -----------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.46) (0.90) (0.95) (0.87) (1.00) (1.05)
Overdistribution of net investment income -- -- (0.00)* (0.01) -- --
Net realized gains -- (0.08) (0.29) (0.90) (0.52) --
Capital -- -- -- -- (0.03) (0.02)
- -----------------------------------------------------------------------------------------------------------------
Total Distributions (0.46) (0.98) (1.24) (1.78) (1.55) (1.07)
- -----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $15.63 $16.20 $15.47 $16.13 $16.71 $15.62
- -----------------------------------------------------------------------------------------------------------------
Total Return (0.63)%+++ 11.34% 4.11% 7.41% 17.92% 11.79%
- -----------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (millions) $1,894 $1,892 $1,772 $1,847 $1,795 $1,598
- -----------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.68%+ 0.70% 0.71% 0.72% 0.64% 0.59%
Net investment income 5.60+ 5.47 6.25 5.43 6.30 6.83
- -----------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 43% 80% 100% 131% 206% 173%
=================================================================================================================
</TABLE>
(1) For the six months ended August 31, 1996 (unaudited).
(2) 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.
* Amount represents less than $0.01.
+++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
39
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
FOR A SHARE OF EACH CLASS OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
Class B Shares 1996(1) 1996 1995 1994(2) 1993(3)
==================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $16.20 $15.47 $16.13 $16.71 $15.81
- ------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.40 0.82 0.86 0.81 0.32
Net realized and unrealized gain (loss) (0.55) 0.81 (0.37) 0.31 1.42
- ------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (0.15) 1.63 0.49 1.12 1.74
- ------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.42) (0.82) (0.86) (0.79) (0.31)
Overdistribution of net investment income -- -- (0.00)* (0.01) --
Net realized gains -- (0.08) (0.29) (0.90) (0.52)
Capital -- -- -- -- (0.01)
- ------------------------------------------------------------------------------------------------------------------
Total Distributions (0.42) (0.90) (1.15) (1.70) (0.84)
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $15.63 $16.20 $15.47 $16.13 $16.71
- ------------------------------------------------------------------------------------------------------------------
Total Return (0.94)%+++ 10.78% 3.54% 6.86% 11.26%+++
- ------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $803,864 $729,953 $514,675 $349,633 $61,355
- ------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.19%+ 1.22% 1.23% 1.25% 1.24%+
Net investment income 5.09+ 4.94 5.73 4.90 5.70+
- ------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 43% 80% 100% 131% 206%
==================================================================================================================
</TABLE>
(1) For the six months ended August 31, 1996 (unaudited).
(2) 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.
(3) For the period from November 6, 1992 (inception date) to February 28, 1993.
* Amount represents less than $0.01.
+++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
40
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
FOR A SHARE OF EACH CLASS OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
<TABLE>
<CAPTION>
Class C Shares 1996(1) 1996 1995(2)
===========================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $16.20 $15.47 $14.30
- -------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.39 0.82 0.27
Net realized and unrealized gain (loss) (0.55) 0.81 1.46*
- -------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (0.16) 1.63 1.73
- -------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.41) (0.82) (0.27)
Overdistribution of net investment income -- -- (0.00)**
Net realized gains -- (0.08) (0.29)
- -------------------------------------------------------------------------------------------
Total Distributions (0.41) (0.90) (0.56)
- -------------------------------------------------------------------------------------------
Net Asset Value, End of Period $15.63 $16.20 $15.47
- -------------------------------------------------------------------------------------------
Total Return (0.96)%+++ 10.76% 12.36%+++
- -------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $52,321 $33,411 $5,395
- -------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.24%+ 1.27% 1.29%+
Net investment income 5.04+ 4.86 5.67+
- -------------------------------------------------------------------------------------------
Portfolio Turnover Rate 43% 80% 100%
===========================================================================================
Class Y Shares 1996(1) 1996(3)
===========================================================================================
Net Asset Value, Beginning of Period $16.20 $15.63
- -------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.45 0.85
Net realized and unrealized gain (loss) (0.55) 0.65
- -------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (0.10) 1.50
- -------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.47) (0.85)
Net realized gains -- (0.08)
- -------------------------------------------------------------------------------------------
Total Distributions (0.47) (0.93)
- -------------------------------------------------------------------------------------------
Net Asset Value, End of Period $15.63 $16.20
- -------------------------------------------------------------------------------------------
Total Return+++ (0.61)% 9.84%
- -------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $5,056 $12,314
Ratios to Average Net Assets+:
Expenses 0.51% 0.57%
Net investment income 5.70 5.62
- -------------------------------------------------------------------------------------------
Portfolio Turnover Rate 43% 80%
===========================================================================================
</TABLE>
(1) For the six months ended August 31, 1996 (unaudited).
(2) For the period from November 9, 1994 (inception date) to February 28, 1995.
(3) For the period from April 4, 1995 (inception date) to February 29, 1996.
* 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.
+++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
41
SMITH BARNEY
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 and Investment Officer
Jessica M. Bibliowicz
President
Lewis E. Daidone
Senior Vice President
and Treasurer
Joseph P. Deane
Vice President and
Investment Officer
David Fare
Investment Officer
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
SMITH BARNEY
- ----------------------------------
A Member of TravelersGroup [LOGO]
INVESTMENT ADVISER
AND ADMINISTRATOR
Smith Barney Mutual Funds
Management Inc.
DISTRIBUTOR
Smith Barney Inc.
CUSTODIAN
PNC Bank, N.A.
SHAREHOLDER
SERVICING AGENT
First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
This report is submitted for the general information of the shareholders of
Smith Barney Managed Municipals Fund Inc. It is not authorized for distribution
to prospective investors unless accompanied or preceded by a current Prospectus
for the Fund, which contains information concerning the Fund's investment
policies and expenses as well as other pertinent information.
SMITH BARNEY MANAGED
MUNICIPALS FUND INC.
388 Greenwich Street
New York, New York 10013
FD0435 10/96
