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Previous: MANAGED MUNICIPAL FUND INC, N-30D, 2000-01-05 |
Next: DEWEY SQUARE INVESTORS CORP, 13F-HR, 2000-01-05 |
ISI
Managed
Municipal
Fund Shares
Directors and Officers
Edward S. Hyman Carrie L. Butler
Chairman Vice President
R. Alan Medaugh Margaret M. Beeler
President Assistant Vice President
Joseph R. Hardiman Keith C. Reilly
Director Assistant Vice President
Louis E. Levy Charles A. Rizzo
Director Treasurer
Carl W. Vogt, Esq. Amy M. Olmert
Director Secretary
Nancy Lazar Daniel O. Hirsch
Vice President Assistant Secretary
Investment Objective
A mutual fund designed to provide a high level of total return with relative
stability of principal as well as the secondary objective of high current income
through investment in a portfolio consisting primarily of municipal obligations,
the interest on which is exempt from federal income tax.
Investment Advisor
ISI Inc.
717 Fifth Avenue
New York, NY 10022
(800) 955-7175
Shareholder Servicing Agent
Investment Company Capital Corp.
P.O. Box 219426
Kansas City, MO 64121-9426
(800) 882-8585
Distributor
ISI Group Inc.
717 Fifth Avenue
New York, NY 10022
(800) 955-7175
ISI
International Strategy & Investment
ISI
MANAGED MUNICIPAL
FUND SHARES
(A Class of Managed Municipal Fund, Inc.)
(GRAPHIC APPEARS HERE)
ANNUAL REPORT
October 31, 1999
<PAGE>
Investment Advisor's Report
During a year of rising interest rates, the Fund recorded a total
return of -3.61%. From the Fund's inception on February 26, 1990 through October
31, 1999, the Fund has posted a cumulative total return of 75.52%, which
translates into an average annual total return of 5.98%. These figures assume
the reinvestment of dividends and capital gains distributions and exclude the
impact of any sales charge. Please review Additional Performance Information on
page 6.
Review of Rates and Portfolio Management
Long term Municipal interest rates rose 106 basis points, slightly
more than 1% over the last year.
30-YEAR MUNICIPAL AAA GENERAL OBLIGATIONS YIELDS
(GRAPHIC APPEARS HERE)
Date Yield
10/30/98 4.8
11/6/98 4.88
11/13/98 4.87
11/20/98 4.84
11/27/98 4.84
12/4/98 4.82
12/11/98 4.8
12/18/98 4.82
12/25/98 4.88
1/1/99 4.86
1/8/99 4.92
1/15/99 4.89
1/22/99 4.84
1/29/99 4.81
2/5/99 4.86
2/12/99 4.87
2/19/99 4.88
2/26/99 4.94
3/5/99 4.99
3/12/99 4.97
3/19/99 4.94
3/26/99 4.97
4/2/99 4.99
4/9/99 4.96
4/16/99 4.96
4/23/99 4.98
4/30/99 4.97
5/7/99 5.02
5/14/99 5.07
5/21/99 5.06
5/28/99 5.08
6/4/99 5.11
6/11/99 5.2
6/18/99 5.2
6/25/99 5.28
7/2/99 5.27
7/9/99 5.27
7/16/99 5.2
7/23/99 5.22
7/30/99 5.28
8/6/99 5.4
8/13/99 5.49
8/20/99 5.59
8/27/99 5.51
9/3/99 5.51
9/10/99 5.54
9/17/99 5.58
9/24/99 5.59
10/1/99 5.67
10/8/99 5.71
10/15/99 5.79
10/22/99 5.84
10/29/99 5.86
Source: Bloomberg, Inc.
Early in the year, the Fund's short maturities were increased as a way
to moderate the adverse effects of rising rates. For example, holdings of five
years and less maturities were increased from 13.1% of the portfolio in October,
1998 to 22.1% by February, 1999. Since February, as rates climbed, the amount in
short maturities was reduced so that at the end of the fiscal year, five year
and less maturities represented only 11.2% of the portfolio.
The municipal market has good value when compared to the Treasury bond
market. Tax free yields on AAA quality long term General Obligations are near
their highest levels versus Treasuries, at a time when rates themselves are
high. Please see the table below.
YIELD ON AAA MUNICIPAL GO'S
AS A % OF U.S. TREASURY YIELDS
(YEAR ENDING OCTOBER)*
Municipal
Maturity % of Comparable Treasury
1993 1994 1995 1996 1997 1998 1999
5 Year 76.1 67.9 72.4 72.4 72.3 85.6 77.1
10 Year 78.3 71.5 78.3 77.3 78.2 90.3 84.4
30 Year 80.0 78.4 88.3 83.4 83.1 93.4 93.2
*Source: Bloomberg, Inc.
Value in Top Quality Municipals
At the same time rates are relatively high, the yield spread between
top quality and medium grade municipals is narrow. Please see graph below
comparing BAA and AAA quality long term municipals.
30 YEAR AAA MUNI VS. BAA 30 YEAR MUNI
[GRAPHIC APPEARS HERE]
Date Yield Spread
10/96 62.00
11/96 67.00
12/96 70.00
1/97 66.00
2/97 59.00
3/97 60.00
4/97 59.00
5/97 58.00
6/97 59.00
7/97 61.00
8/97 55.00
9/97 52.00
10/97 50.00
11/97 46.00
12/97 45.00
1/98 33.00
2/98 32.00
3/98 32.00
4/98 39.00
5/98 33.00
6/98 32.00
7/98 34.00
8/98 30.00
9/98 40.00
10/98 41.00
11/98 41.00
12/98 34.00
1/99 37.00
2/99 31.00
3/99 35.00
4/99 37.00
5/99 41.00
6/99 42.00
7/99 45.00
8/99 43.00
9/99 36.00
10/99 32.00
1
<PAGE>
Investment Advisor's Report
The Managed Municipal Fund does not invest in medium grade municipals,
believing that a top quality approach will pay dividends in terms of bond safety
and higher liquidity.
ISI expects the level of interest rates to trend lower, after the
typical early year seasonal burst of economic growth. Please see ISI's Economic
Outlook that follows this letter for more details.
We would like to welcome our new investors to the Fund and thank those
who have been with us for some time. We appreciate your confidence.
Sincerely,
/s/ R. ALAN MEDAUGH
R. Alan Medaugh
President
November 22, 1999
Economic Outlook for 2000
Overview
The strong economic performance in the U.S. and a tight labor market
caused the Federal Reserve to raise rates at their November Open Market
Committee Meeting. A surging stock market which added $1 trillion to the U.S.
stock market's value in the three weeks preceding the meeting probably also
played a role in the decision. The Federal Reserve is unlikely to raise rates at
their late December meeting because of Y2K concerns. The U.S. economy appears to
be slowing but much of the quarter's performance depends on Christmas. To gauge
the market's direction, we are watching five fundamental indicators:
1) Money Growth
2) Unemployment Claims
3) Stock Prices
4) ISI Company Surveys
5) Commodity Prices
Conveniently, the first letter of each of the above spell out MUSIC.
The global economies are growing briskly in large part due to
expanding world trade. In reaction to stronger growth the Central banks around
the world are reversing their year ago financial crisis driven easings. In
November, 1999 we counted 20 Central Bank interest rate increases contrasted to
18 easings October, 1998. We expect the Federal Reserve to raise short term
rates again during the first quarter of 2000. The tightening will counter the
seasonal strength in the U.S. economy. During this quarter and next we expect
long term rates to stay at these high levels as the market assesses
2
<PAGE>
Economic Outlook for 2000 (continued)
the impact of worldwide central bank tightening action. Please see the forecast
table below.
ISI ECONOMIC FORECAST
99:1Q 99:2Q 99:3Q 99:4Q* 00:1Q* 00:2Q*
Nominal GDP 5.7% 3.3% 5.8% 4.5% 5.5% 4.5%
GDP Deflator** 1.9% 1.4% 0.9% 1.5% 1.5% 1.5%
Real GDP 3.7% 1.9% 4.8% 3.0% 4.0% 3.0%
30 Year Bond Yields*** 5.6% 6.0% 6.1% 6.2% 6.2% 5.8%
Fed Funds Rate*** 4.7% 5.0% 5.3% 5.5% 5.7% 5.7%
*Estimated.
**A more accurate cost of living barometer than the CPI.
***End of quarter.
The U.S. Economy
Over the past six weeks, our company surveys of front-end activity
have posted another downleg. For example, our retailers survey, which rolled
over in July, now has weekly readings below 40 for the past six weeks (very
soft). Another front-end activity, our auto dealers survey, which peaked in
September, declined in October and declined further in the first half of
November. In contrast, back-end (mfg) activity has continued to firm. As the
chart below indicates, on balance so far the economy overall hasn't slowed
enough to take pressure off labor markets, but overall it is slowing.
ISI CO. SURVEYS OVERALL AVERAGE
(GRAPHIC APPEARS HERE)
(GROWTH IS SLOWING - hand written)
7-Nov-97 49.68
14-Nov-97 49.58
21-Nov-97 49.64
28-Nov-97 48.61
5-Dec-97 48.16
12-Dec-97 47.27
19-Dec-97 45.76
26-Dec-97 45.48
2-Jan-98 45.11
9-Jan-98 46.04
16-Jan-98 47.60
23-Jan-98 48.25
30-Jan-98 49.34
6-Feb-98 50.47
13-Feb-98 50.83
20-Feb-98 51.65
27-Feb-98 52.39
6-Mar-98 52.91
13-Mar-98 52.82
20-Mar-98 52.89
27-Mar-98 52.83
3-Apr-98 53.01
10-Apr-98 53.99
17-Apr-98 54.76
24-Apr-98 55.72
1-May-98 55.39
8-May-98 55.77
15-May-98 55.51
22-May-98 55.50
29-May-98 55.76
5-Jun-98 55.61
12-Jun-98 55.14
19-Jun-98 53.79
26-Jun-98 52.58
3-Jul-98 51.87
10-Jul-98 51.17
17-Jul-98 51.08
24-Jul-98 50.94
31-Jul-98 50.30
7-Aug-98 51.35
14-Aug-98 50.99
21-Aug-98 50.60
28-Aug-98 50.41
4-Sep-98 49.79
11-Sep-98 50.69
18-Sep-98 50.98
25-Sep-98 50.73
2-Oct-98 49.63
9-Oct-98 49.46
16-Oct-98 49.69
23-Oct-98 48.91
30-Oct-98 48.70
6-Nov-98 47.20
13-Nov-98 46.27
20-Nov-98 46.61
27-Nov-98 46.76
4-Dec-98 47.11
11-Dec-98 47.33
18-Dec-98 47.25
25-Dec-98 47.29
1-Jan-99 47.92
8-Jan-99 48.91
15-Jan-99 50.07
22-Jan-99 50.85
29-Jan-99 51.41
5-Feb-99 51.97
12-Feb-99 51.98
19-Feb-99 52.65
26-Feb-99 52.58
5-Mar-99 51.87
12-Mar-99 52.09
19-Mar-99 52.28
26-Mar-99 52.90
2-Apr-99 53.80
9-Apr-99 54.46
16-Apr-99 54.21
23-Apr-99 53.78
30-Apr-99 53.97
7-May-99 54.15
14-May-99 54.74
21-May-99 55.00
28-May-99 55.05
4-Jun-99 54.98
11-Jun-99 54.98
18-Jun-99 55.19
25-Jun-99 54.18
2-Jul-99 53.51
9-Jul-99 53.18
16-Jul-99 52.38
23-Jul-99 52.13
30-Jul-99 52.52
6-Aug-99 52.52
13-Aug-99 52.30
20-Aug-99 52.44
27-Aug-99 51.33
3-Sep-99 50.52
10-Sep-99 50.78
17-Sep-99 50.84
24-Sep-99 51.61
1-Oct-99 51.81
8-Oct-99 51.58
15-Oct-99 50.79
22-Oct-99 50.03
29-Oct-99 49.17
5-Nov-99 48.23
12-Nov-99 48.06
The U.S. economy has performed well at the start of the last four
years due to tax refunds, increased bonus payments and home mortgage
refinancing. Good wage gains (larger tax refunds) and corporate earnings (bonus
payments) will likely power another first quarter spurt. In anticipation of
that, lumber prices have reaccelerated. The extent of the seasonal strength will
influence the Federal Reserve and the bond market early next year. ISI's Company
Surveys are likely to be a good early indicator of the extent of this strength.
The Global Economy
Outside the U.S., the recovery since the height of the financial
crisis last Fall has been dramatic. Recently, the growth surge has decelerated
but growth remains at a high rate. Please see South Korea Real Gross Domestic
Product (GDP) below for reference.
SOUTH KOREA REAL GDP Q/Q % A.R. 99: 3RD QUARTER 9.6%
(GRAPHIC APPEARS HERE)
Q/Q % A.R.
3/31/94 8.1
6/30/94 6
9/30/94 7.6
12/31/94 14.6
3/31/95 10.1
6/30/95 6.9
9/30/95 7
12/31/95 3.8
3/31/96 11.1
6/30/96 5.7
9/30/96 4.7
12/31/96 5.4
3/31/97 4.3
6/30/97 10.7
9/30/97 0.8
12/31/97 -1
3/31/98 -21.4
6/30/98 -5.7
9/30/98 1
12/31/98 7.3
3/31/99 16.7
6/30/99 15.4
9/30/99 9.6
The developed world has also experienced a growth recovery since last
Fall as can be seen by the OECD (Organization of Economically Developed
Countries) leading indicator.
3
<PAGE>
Economic Outlook for 2000 (concluded)
OECD LEADING INDICATOR 3 MONTH % A.R. SEPTEMBER 5.6%
(GRAPHIC APPEARS HERE)
OECD LEADING INDICATOR
3 Mo.% A.R.
Jan-93 4.93
Feb-93 4.04
Mar-93 2.88
Apr-93 1.61
May-93 1.83
Jun-93 1.18
Jul-93 2.02
Aug-93 2.89
Sep-93 5.89
Oct-93 7.12
Nov-93 8.67
Dec-93 9.29
Jan-94 10.34
Feb-94 9.88
Mar-94 7.88
Apr-94 5.62
May-94 3.35
Jun-94 3.09
Jul-94 4.09
Aug-94 5.43
Sep-94 6.20
Oct-94 5.61
Nov-94 5.20
Dec-94 3.52
Jan-95 1.80
Feb-95 -1.73
Mar-95 -3.89
Apr-95 -4.46
May-95 -2.09
Jun-95 1.04
Jul-95 3.42
Aug-95 3.88
Sep-95 2.81
Oct-95 1.10
Nov-95 1.52
Dec-95 2.13
Jan-96 2.96
Feb-96 1.99
Mar-96 2.05
Apr-96 2.19
May-96 3.86
Jun-96 3.87
Jul-96 4.16
Aug-96 4.24
Sep-96 4.90
Oct-96 5.05
Nov-96 4.36
Dec-96 4.45
Jan-97 5.29
Feb-97 6.98
Mar-97 6.29
Apr-97 4.01
May-97 3.42
Jun-97 4.95
Jul-97 7.11
Aug-97 7.16
Sep-97 6.12
Oct-97 4.53
Nov-97 1.69
Dec-97 -0.45
Jan-98 -0.55
Feb-98 0.43
Mar-98 2.57
Apr-98 1.69
May-98 0.69
Jun-98 -1.07
Jul-98 -0.80
Aug-98 -1.57
Sep-98 -3.58
Oct-98 -3.51
Nov-98 -0.96
Dec-98 4.40
Jan-99 7.17
Feb-99 7.53
Mar-99 5.02
Apr-99 3.94
May-99 3.01
Jun-99 5.08
Jul-99 6.05
Aug-99 7.61
Sep-99 5.61
This recent deceleration seen on the last two charts may be extended
but because of the strength in the world stock markets the level of growth is
apt to remain fairly high.
DJ WORLD STOCKS NOVEMBER 12, 231.5
(GRAPHIC APPEARS HERE)
(UPSIDE BREAKOUT FOR WORLD STOCKS-hand written)
DJ WORLD
STOCKS
1-Jan-97 147.57
2-Jan-97 146.37
3-Jan-97 147.19
6-Jan-97 147.92
7-Jan-97 147.98
8-Jan-97 147.24
9-Jan-97 147.01
10-Jan-97 146.22
13-Jan-97 147.39
14-Jan-97 148.4
15-Jan-97 148.77
16-Jan-97 149.31
17-Jan-97 149.43
20-Jan-97 148.68
21-Jan-97 148.71
22-Jan-97 149.35
23-Jan-97 148.71
24-Jan-97 147.36
27-Jan-97 145.82
28-Jan-97 146.13
29-Jan-97 146.59
30-Jan-97 147.63
31-Jan-97 148.67
3-Feb-97 148.71
4-Feb-97 148.85
5-Feb-97 147.99
6-Feb-97 147.84
7-Feb-97 148.87
10-Feb-97 149.12
11-Feb-97 149.02
12-Feb-97 150.34
13-Feb-97 151.64
14-Feb-97 151.48
17-Feb-97 151.31
18-Feb-97 151.82
19-Feb-97 151.41
20-Feb-97 151.6
21-Feb-97 151.47
24-Feb-97 152.63
25-Feb-97 153.41
26-Feb-97 152.05
27-Feb-97 151.38
28-Feb-97 150.22
3-Mar-97 150.01
4-Mar-97 149.98
5-Mar-97 150.95
6-Mar-97 150.85
7-Mar-97 151.35
10-Mar-97 152.63
11-Mar-97 152.69
12-Mar-97 151.59
13-Mar-97 149.23
14-Mar-97 149.81
17-Mar-97 149.43
18-Mar-97 149.31
19-Mar-97 148.95
20-Mar-97 147.6
21-Mar-97 148.56
24-Mar-97 148.74
25-Mar-97 149.29
26-Mar-97 149.93
27-Mar-97 148.65
28-Mar-97 148.31
31-Mar-97 146.71
1-Apr-97 146.15
2-Apr-97 144.97
3-Apr-97 144.88
4-Apr-97 144.97
7-Apr-97 145.17
8-Apr-97 145.62
9-Apr-97 144.86
10-Apr-97 144.5
11-Apr-97 142.65
14-Apr-97 142.28
15-Apr-97 144.17
16-Apr-97 145.31
17-Apr-97 145.57
18-Apr-97 146.36
21-Apr-97 146.53
22-Apr-97 147.32
23-Apr-97 147.98
24-Apr-97 147.78
25-Apr-97 146.49
28-Apr-97 146.88
29-Apr-97 149.34
30-Apr-97 150.7
1-May-97 151.04
2-May-97 152.76
5-May-97 154.64
6-May-97 155.93
7-May-97 154.71
8-May-97 155.63
9-May-97 157.12
12-May-97 158.73
13-May-97 159.13
14-May-97 160.02
15-May-97 160.45
16-May-97 159.84
19-May-97 159.92
20-May-97 161.41
21-May-97 160.77
22-May-97 159.68
23-May-97 161.42
26-May-97 161.55
27-May-97 161.17
28-May-97 161.33
29-May-97 160.82
30-May-97 160.26
2-Jun-97 160.5
3-Jun-97 160.81
4-Jun-97 160.54
5-Jun-97 161.14
6-Jun-97 162.98
9-Jun-97 163.92
10-Jun-97 164.42
11-Jun-97 164.99
12-Jun-97 165.95
13-Jun-97 167.11
16-Jun-97 167.89
17-Jun-97 167.5
18-Jun-97 166.76
19-Jun-97 167.88
20-Jun-97 168
23-Jun-97 166.69
24-Jun-97 168.04
25-Jun-97 168.77
26-Jun-97 168.68
27-Jun-97 167.98
30-Jun-97 167.53
1-Jul-97 168.18
2-Jul-97 169.82
3-Jul-97 171.88
4-Jul-97 171.44
7-Jul-97 171.45
8-Jul-97 171.68
9-Jul-97 170.93
10-Jul-97 171.28
11-Jul-97 171.42
14-Jul-97 172.36
15-Jul-97 172.31
16-Jul-97 174.5
17-Jul-97 174.15
18-Jul-97 172.01
21-Jul-97 170.87
22-Jul-97 173.18
23-Jul-97 174.17
24-Jul-97 174.05
25-Jul-97 173.77
28-Jul-97 173.36
29-Jul-97 173.55
30-Jul-97 174.87
31-Jul-97 175.17
1-Aug-97 173.4
4-Aug-97 172.84
5-Aug-97 172.54
6-Aug-97 174.26
7-Aug-97 173.87
8-Aug-97 173.1
11-Aug-97 171.45
12-Aug-97 170.86
13-Aug-97 170.28
14-Aug-97 170.05
15-Aug-97 167.94
18-Aug-97 167.67
19-Aug-97 169.2
20-Aug-97 171.18
21-Aug-97 170.21
22-Aug-97 168.44
25-Aug-97 168.11
26-Aug-97 167.61
27-Aug-97 167.06
28-Aug-97 166.38
29-Aug-97 164.56
1-Sep-97 164.15
2-Sep-97 167.1
3-Sep-97 168.67
4-Sep-97 168.64
5-Sep-97 169.41
8-Sep-97 169.54
9-Sep-97 170.24
10-Sep-97 168.42
11-Sep-97 166.78
12-Sep-97 167.18
15-Sep-97 167.65
16-Sep-97 169.84
17-Sep-97 169.93
18-Sep-97 170.62
19-Sep-97 171.06
22-Sep-97 172.06
23-Sep-97 171.64
24-Sep-97 172.43
25-Sep-97 171.92
26-Sep-97 172.39
29-Sep-97 173.06
30-Sep-97 173.18
1-Oct-97 173.94
2-Oct-97 173.98
3-Oct-97 175.17
6-Oct-97 175.82
7-Oct-97 176.46
8-Oct-97 175.99
9-Oct-97 174.51
10-Oct-97 174.18
13-Oct-97 174.31
14-Oct-97 174.42
15-Oct-97 173.86
16-Oct-97 173.49
17-Oct-97 171.16
20-Oct-97 171.44
21-Oct-97 173.04
22-Oct-97 172.68
23-Oct-97 168.6
24-Oct-97 167.74
27-Oct-97 160
28-Oct-97 160.86
29-Oct-97 164.22
30-Oct-97 161.64
31-Oct-97 162.9
3-Nov-97 166.16
4-Nov-97 166.4
5-Nov-97 166.66
6-Nov-97 165.69
7-Nov-97 162.64
10-Nov-97 162.09
11-Nov-97 162.22
12-Nov-97 159.02
13-Nov-97 160
14-Nov-97 160.71
17-Nov-97 164.78
18-Nov-97 164.41
19-Nov-97 163.42
20-Nov-97 165.57
21-Nov-97 167.36
24-Nov-97 165.04
25-Nov-97 163.61
26-Nov-97 164.01
27-Nov-97 164.69
28-Nov-97 165.18
1-Dec-97 167.8
2-Dec-97 167.83
3-Dec-97 168.07
4-Dec-97 167.82
5-Dec-97 168.9
8-Dec-97 168.9
9-Dec-97 168.61
10-Dec-97 167.38
11-Dec-97 164.72
12-Dec-97 163.91
15-Dec-97 164.48
16-Dec-97 165.69
17-Dec-97 167.24
18-Dec-97 165.9
19-Dec-97 163.08
22-Dec-97 162.72
23-Dec-97 161.97
24-Dec-97 161.46
25-Dec-97 161.46
26-Dec-97 161.92
29-Dec-97 164.33
30-Dec-97 166.76
31-Dec-97 166.63
1-Jan-98 166.63
2-Jan-98 166.98
5-Jan-98 166.96
6-Jan-98 165.06
7-Jan-98 164.97
8-Jan-98 163.44
9-Jan-98 159.73
12-Jan-98 158.51
13-Jan-98 160.95
14-Jan-98 162.5
15-Jan-98 161.94
16-Jan-98 164.63
19-Jan-98 165.93
20-Jan-98 167.57
21-Jan-98 167.38
22-Jan-98 166.31
23-Jan-98 166.78
26-Jan-98 167.07
27-Jan-98 169.01
28-Jan-98 169.95
29-Jan-98 170.47
30-Jan-98 170
2-Feb-98 173.6
3-Feb-98 174.78
4-Feb-98 175.19
5-Feb-98 175.59
6-Feb-98 176.13
9-Feb-98 176.11
10-Feb-98 177.43
11-Feb-98 177.63
12-Feb-98 177.29
13-Feb-98 176.36
16-Feb-98 176.21
17-Feb-98 176.95
18-Feb-98 177.98
19-Feb-98 177.76
20-Feb-98 177.89
23-Feb-98 178.72
24-Feb-98 177.64
25-Feb-98 179.3
26-Feb-98 180.78
27-Feb-98 181.64
2-Mar-98 182.87
3-Mar-98 182.93
4-Mar-98 181.55
5-Mar-98 179
6-Mar-98 182.1
9-Mar-98 182.15
10-Mar-98 183.54
11-Mar-98 183.79
12-Mar-98 183.79
13-Mar-98 185.23
16-Mar-98 185.87
17-Mar-98 186.7
18-Mar-98 186.37
19-Mar-98 186.95
20-Mar-98 188.36
23-Mar-98 188.53
24-Mar-98 189.63
25-Mar-98 190.05
26-Mar-98 190.1
27-Mar-98 189.53
30-Mar-98 187.99
31-Mar-98 188.95
1-Apr-98 189.39
2-Apr-98 190.04
3-Apr-98 190.33
6-Apr-98 191.56
7-Apr-98 190.44
8-Apr-98 190.77
9-Apr-98 191.67
10-Apr-98 192.17
13-Apr-98 191.86
14-Apr-98 193.47
15-Apr-98 193.8
16-Apr-98 191.45
17-Apr-98 192.26
20-Apr-98 192.85
21-Apr-98 193.41
22-Apr-98 193.33
23-Apr-98 191.68
24-Apr-98 190.23
27-Apr-98 185.82
28-Apr-98 186.52
29-Apr-98 187.12
30-Apr-98 190.29
1-May-98 191.67
4-May-98 192.71
5-May-98 191.81
6-May-98 190.28
7-May-98 188.28
8-May-98 189.75
11-May-98 190.51
12-May-98 190.5
13-May-98 190.58
14-May-98 190.37
15-May-98 189.24
18-May-98 187.72
19-May-98 188.98
20-May-98 190.72
21-May-98 193.53
22-May-98 193.07
25-May-98 193.2
26-May-98 191.61
27-May-98 189.37
28-May-98 189.78
29-May-98 189.26
1-Jun-98 188.36
2-Jun-98 189.28
3-Jun-98 188.92
4-Jun-98 189.63
5-Jun-98 191.55
8-Jun-98 191.99
9-Jun-98 192.2
10-Jun-98 190.3
11-Jun-98 186.95
12-Jun-98 186.06
15-Jun-98 182.42
16-Jun-98 184.21
17-Jun-98 188.69
18-Jun-98 188.72
19-Jun-98 188.07
22-Jun-98 187.44
23-Jun-98 188.95
24-Jun-98 190.35
25-Jun-98 190.89
26-Jun-98 190.83
29-Jun-98 192.04
30-Jun-98 192.34
1-Jul-98 195
2-Jul-98 194.77
3-Jul-98 194.77
6-Jul-98 196.2
7-Jul-98 196.62
8-Jul-98 197.88
9-Jul-98 196.29
10-Jul-98 196.18
13-Jul-98 197.28
14-Jul-98 199.35
15-Jul-98 199.78
16-Jul-98 201.11
17-Jul-98 202.28
20-Jul-98 202.37
21-Jul-98 199.86
22-Jul-98 197.94
23-Jul-98 195.35
24-Jul-98 195.17
27-Jul-98 193.89
28-Jul-98 192.81
29-Jul-98 191.86
30-Jul-98 193.93
31-Jul-98 191.48
3-Aug-98 189.21
4-Aug-98 185.55
5-Aug-98 184.99
6-Aug-98 184.73
7-Aug-98 185.09
10-Aug-98 183.05
11-Aug-98 179.07
12-Aug-98 181.36
13-Aug-98 180.06
14-Aug-98 179.15
17-Aug-98 180.55
18-Aug-98 184.15
19-Aug-98 184.7
20-Aug-98 183.54
21-Aug-98 179.95
24-Aug-98 180.38
25-Aug-98 181.82
26-Aug-98 178.91
27-Aug-98 172.75
28-Aug-98 171
31-Aug-98 164.75
1-Sep-98 167.6
2-Sep-98 168.75
3-Sep-98 167.49
4-Sep-98 167.14
7-Sep-98 169.57
8-Sep-98 174.57
9-Sep-98 171.68
10-Sep-98 167.88
11-Sep-98 169.61
14-Sep-98 173.21
15-Sep-98 173.68
16-Sep-98 175.05
17-Sep-98 170.23
18-Sep-98 169.72
21-Sep-98 167.54
22-Sep-98 169.48
23-Sep-98 174.36
24-Sep-98 172.62
25-Sep-98 171.27
28-Sep-98 172.89
29-Sep-98 172.86
30-Sep-98 168.06
1-Oct-98 162.65
2-Oct-98 162.94
5-Oct-98 160.37
6-Oct-98 162.95
7-Oct-98 163.87
8-Oct-98 160.36
9-Oct-98 163.52
12-Oct-98 167.88
13-Oct-98 167.56
14-Oct-98 169.22
15-Oct-98 174.44
16-Oct-98 177.14
19-Oct-98 177.58
20-Oct-98 179.45
21-Oct-98 179.27
22-Oct-98 180.16
23-Oct-98 179.26
26-Oct-98 178.65
27-Oct-98 179.83
28-Oct-98 178.89
29-Oct-98 181.16
30-Oct-98 183.65
2-Nov-98 186.9
3-Nov-98 186.42
4-Nov-98 188.98
5-Nov-98 189.15
6-Nov-98 189.26
9-Nov-98 186.93
10-Nov-98 185.92
11-Nov-98 186.36
12-Nov-98 185.16
13-Nov-98 185.99
16-Nov-98 188.95
17-Nov-98 189.02
18-Nov-98 189.36
19-Nov-98 191.18
20-Nov-98 193.61
23-Nov-98 196.67
24-Nov-98 196.24
25-Nov-98 196.21
26-Nov-98 197.47
27-Nov-98 197.69
30-Nov-98 193.81
1-Dec-98 192.94
2-Dec-98 193.05
3-Dec-98 191.72
4-Dec-98 193.68
7-Dec-98 194.62
8-Dec-98 194.82
9-Dec-98 195.61
10-Dec-98 194.27
11-Dec-98 193.23
14-Dec-98 190.47
15-Dec-98 191.97
16-Dec-98 192.37
17-Dec-98 194.83
18-Dec-98 195.91
21-Dec-98 198.76
22-Dec-98 198.39
23-Dec-98 201.53
24-Dec-98 200.85
25-Dec-98 200.85
28-Dec-98 201.69
29-Dec-98 203.6
30-Dec-98 202.23
31-Dec-98 202.79
1-Jan-99 202.79
4-Jan-99 204.61
5-Jan-99 206.31
6-Jan-99 209.81
7-Jan-99 209.96
8-Jan-99 209.8
11-Jan-99 208.08
12-Jan-99 204.46
13-Jan-99 201.43
14-Jan-99 199.74
15-Jan-99 203.01
18-Jan-99 204.96
19-Jan-99 205.37
20-Jan-99 206.95
21-Jan-99 204.27
22-Jan-99 201.22
25-Jan-99 201.98
26-Jan-99 204.09
27-Jan-99 203.14
28-Jan-99 204.93
29-Jan-99 206.68
1-Feb-99 206.81
2-Feb-99 206.09
3-Feb-99 205.77
4-Feb-99 203.99
5-Feb-99 202.2
8-Feb-99 202.19
9-Feb-99 198.29
10-Feb-99 198.39
11-Feb-99 201.51
12-Feb-99 200.56
15-Feb-99 200.38
16-Feb-99 200.93
17-Feb-99 198.88
18-Feb-99 200.01
19-Feb-99 199.43
22-Feb-99 203.05
23-Feb-99 203.76
24-Feb-99 202.72
25-Feb-99 201.46
26-Feb-99 200.54
1-Mar-99 198.9
2-Mar-99 197.82
3-Mar-99 197.22
4-Mar-99 198.99
5-Mar-99 203.67
8-Mar-99 204.73
9-Mar-99 205.2
10-Mar-99 206.9
11-Mar-99 209.16
12-Mar-99 208.65
15-Mar-99 210.09
16-Mar-99 211.77
17-Mar-99 210.26
18-Mar-99 210.95
19-Mar-99 210.71
22-Mar-99 209.88
23-Mar-99 205.73
24-Mar-99 204.97
25-Mar-99 208.07
26-Mar-99 206.76
29-Mar-99 209.74
30-Mar-99 208.84
31-Mar-99 208.48
1-Apr-99 209.71
2-Apr-99 209.87
5-Apr-99 211.79
6-Apr-99 213.35
7-Apr-99 214.18
8-Apr-99 216.23
9-Apr-99 217.01
12-Apr-99 217.54
13-Apr-99 217.8
14-Apr-99 216.38
15-Apr-99 215.16
16-Apr-99 215.46
19-Apr-99 213.54
20-Apr-99 212.87
21-Apr-99 215.16
22-Apr-99 218.26
23-Apr-99 218.34
26-Apr-99 219.14
27-Apr-99 220.75
28-Apr-99 219.62
29-Apr-99 218.39
30-Apr-99 217.8
3-May-99 219.57
4-May-99 218.02
5-May-99 218.94
6-May-99 218.46
7-May-99 218.64
10-May-99 218.62
11-May-99 219.32
12-May-99 219.54
13-May-99 219.99
14-May-99 215.96
17-May-99 214.25
18-May-99 214.51
19-May-99 215.39
20-May-99 215.19
21-May-99 214.3
24-May-99 212.28
25-May-99 209.26
26-May-99 210.25
27-May-99 208
28-May-99 209.45
31-May-99 209.74
1-Jun-99 209.67
2-Jun-99 209.77
3-Jun-99 210.38
4-Jun-99 213.25
7-Jun-99 214.9
8-Jun-99 214.69
9-Jun-99 215.03
10-Jun-99 213.69
11-Jun-99 214.21
14-Jun-99 212.64
15-Jun-99 213.41
16-Jun-99 216.16
17-Jun-99 218.01
18-Jun-99 218.55
21-Jun-99 219.86
22-Jun-99 218.64
23-Jun-99 217.39
24-Jun-99 215.51
25-Jun-99 215.23
28-Jun-99 216.47
29-Jun-99 218.27
30-Jun-99 220.02
1-Jul-99 222.04
2-Jul-99 223.8
5-Jul-99 225.16
6-Jul-99 224.53
7-Jul-99 224.54
8-Jul-99 224.05
9-Jul-99 224.62
12-Jul-99 224.43
13-Jul-99 223.22
14-Jul-99 224.31
15-Jul-99 226.2
16-Jul-99 226.59
19-Jul-99 226.81
20-Jul-99 223.25
21-Jul-99 223.16
22-Jul-99 220.46
23-Jul-99 218.74
26-Jul-99 217.61
27-Jul-99 219.42
28-Jul-99 220.65
29-Jul-99 218.05
30-Jul-99 218.34
2-Aug-99 217.98
3-Aug-99 217.33
4-Aug-99 215.95
5-Aug-99 214.43
6-Aug-99 213.09
9-Aug-99 212.92
10-Aug-99 210.51
11-Aug-99 212.16
12-Aug-99 213.73
13-Aug-99 216.67
16-Aug-99 218.07
17-Aug-99 219.05
18-Aug-99 218.82
19-Aug-99 217.97
20-Aug-99 220.48
23-Aug-99 223.06
24-Aug-99 223.47
25-Aug-99 224.89
26-Aug-99 222.93
27-Aug-99 221.77
30-Aug-99 220.21
31-Aug-99 218.52
1-Sep-99 220.95
2-Sep-99 219.31
3-Sep-99 223.41
6-Sep-99 224.26
7-Sep-99 222.93
8-Sep-99 222.14
9-Sep-99 223.94
10-Sep-99 223.47
13-Sep-99 223.32
14-Sep-99 221.97
15-Sep-99 220.43
16-Sep-99 219.11
17-Sep-99 220.58
20-Sep-99 220.61
21-Sep-99 218.76
22-Sep-99 217.38
23-Sep-99 215.76
24-Sep-99 213.49
27-Sep-99 214.36
28-Sep-99 214.45
29-Sep-99 213.12
30-Sep-99 215.46
1-Oct-99 215.79
4-Oct-99 218.45
5-Oct-99 218.55
6-Oct-99 220.53
7-Oct-99 221.01
8-Oct-99 222.16
11-Oct-99 222.52
12-Oct-99 221
13-Oct-99 217.47
14-Oct-99 216.73
15-Oct-99 212.92
18-Oct-99 211.29
19-Oct-99 213.57
20-Oct-99 216.06
21-Oct-99 215.66
22-Oct-99 217.98
25-Oct-99 217.55
26-Oct-99 216.97
27-Oct-99 217.09
28-Oct-99 221.82
29-Oct-99 226.02
1-Nov-99 225.32
2-Nov-99 225.09
3-Nov-99 225.72
4-Nov-99 226.87
5-Nov-99 227.8
8-Nov-99 228.17
9-Nov-99 227.74
10-Nov-99 229.58
11-Nov-99 230.64
12-Nov-99 231.51
Inflation
The bond market is concerned about high growth because it opens the
door to inflation. So far, as was sighted by the Federal Reserve in the press
release accompanying their rate increase, productivity has held off price
increases. The price competitive environment facing most companies has required
them to hold down costs. Technology investment and cost cutting mergers have
been at the heart of the company response. Manufacturers' Productivity is at a
record level having increased for most of the 1990's.
U.S. MFG. PRODUCTIVITY 4 YEAR % A.R. 99: 3RD QUARTER 4.5%
(GRAPHIC APPEARS HERE)
Mar-55 3.2
Jun-55 3.5
Sep-55 3.8
Dec-55 3.4
Mar-56 2.7
Jun-56 2.7
Sep-56 2.2
Dec-56 1.8
Mar-57 2.1
Jun-57 2.0
Sep-57 2.1
Dec-57 1.9
Mar-58 1.6
Jun-58 1.6
Sep-58 2.0
Dec-58 2.0
Mar-59 2.1
Jun-59 2.2
Sep-59 1.3
Dec-59 1.5
Mar-60 2.8
Jun-60 2.5
Sep-60 2.5
Dec-60 2.3
Mar-61 1.9
Jun-61 2.5
Sep-61 2.6
Dec-61 3.4
Mar-62 3.9
Jun-62 3.2
Sep-62 2.7
Dec-62 2.6
Mar-63 2.3
Jun-63 2.4
Sep-63 3.2
Dec-63 3.4
Mar-64 2.7
Jun-64 3.2
Sep-64 3.3
Dec-64 3.4
Mar-65 3.8
Jun-65 3.4
Sep-65 3.0
Dec-65 2.5
Mar-66 2.4
Jun-66 2.7
Sep-66 2.6
Dec-66 2.7
Mar-67 2.6
Jun-67 2.5
Sep-67 2.7
Dec-67 2.9
Mar-68 2.7
Jun-68 2.6
Sep-68 2.5
Dec-68 2.6
Mar-69 2.7
Jun-69 2.3
Sep-69 2.4
Dec-69 2.5
Mar-70 2.1
Jun-70 2.4
Sep-70 2.7
Dec-70 2.8
Mar-71 3.2
Jun-71 3.3
Sep-71 3.4
Dec-71 3.2
Mar-72 3.4
Jun-72 3.3
Sep-72 3.6
Dec-72 3.7
Mar-73 3.5
Jun-73 3.6
Sep-73 3.7
Dec-73 3.4
Mar-74 3.3
Jun-74 3.3
Sep-74 3.1
Dec-74 3.0
Mar-75 2.4
Jun-75 2.6
Sep-75 3.0
Dec-75 2.7
Mar-76 2.5
Jun-76 2.6
Sep-76 2.8
Dec-76 2.7
Mar-77 3.0
Jun-77 3.2
Sep-77 3.1
Dec-77 3.3
Mar-78 3.7
Jun-78 3.5
Sep-78 3.4
Dec-78 3.2
Mar-79 2.9
Jun-79 2.4
Sep-79 1.5
Dec-79 1.4
Mar-80 1.4
Jun-80 1.1
Sep-80 0.9
Dec-80 0.9
Mar-81 0.4
Jun-81 0.3
Sep-81 0.3
Dec-81 0.3
Mar-82 1.0
Jun-82 1.4
Sep-82 1.6
Dec-82 1.5
Mar-83 2.0
Jun-83 2.1
Sep-83 2.7
Dec-83 2.6
Mar-84 2.9
Jun-84 3.2
Sep-84 3.5
Dec-84 3.2
Mar-85 3.5
Jun-85 3.9
Sep-85 4.0
Dec-85 4.2
Mar-86 4.1
Jun-86 3.6
Sep-86 3.4
Dec-86 3.8
Mar-87 3.6
Jun-87 3.7
Sep-87 3.5
Dec-87 3.6
Mar-88 3.3
Jun-88 3.3
Sep-88 3.1
Dec-88 3.2
Mar-89 2.9
Jun-89 2.4
Sep-89 2.0
Dec-89 2.0
Mar-90 1.9
Jun-90 1.7
Sep-90 2.0
Dec-90 1.7
Mar-91 1.6
Jun-91 1.5
Sep-91 1.9
Dec-91 2.0
Mar-92 2.3
Jun-92 2.5
Sep-92 2.6
Dec-92 2.7
Mar-93 2.9
Jun-93 2.9
Sep-93 3.1
Dec-93 3.2
Mar-94 3.1
Jun-94 3.3
Sep-94 3.0
Dec-94 3.2
Mar-95 3.7
Jun-95 3.7
Sep-95 3.4
Dec-95 3.4
Mar-96 3.3
Jun-96 3.3
Sep-96 3.3
Dec-96 3.3
Mar-97 3.4
Jun-97 3.7
Sep-97 4.3
Dec-97 4.3
Mar-98 4.1
Jun-98 4.0
Sep-98 4.2
Dec-98 4.3
Mar-99 4.4
Jun-99 4.4
Sep-99 4.5
The recent increase in oil prices will test the pricing restraint of
companies. The weekly ISI pricing power surveys for retail and manufacturing
companies should help detect any change in this market sensitive indicator.
4
<PAGE>
Portfolio Diversification by State
(GRAPHIC APPEARS HERE)
State Allocation
% of % of
Municipal Municipal
Bonds Bonds
Texas 20.2% Maryland 3.1%
North Carolina 11.6 Illinois 2.7
Washington 10.1 Ohio 2.6
Minnesota 9.1 Delaware 2.0
South Carolina 6.8 Utah 2.0
Florida 6.5 Missouri 1.8
Wisconsin 5.1 Indiana 1.6
Kansas 4.6 Oregon 1.5
Tennessee 4.5 Hawaii 0.8
Virginia 3.4 --------
Total 100.0%
Average Maturity 13.1 years
Average Duration 8.7 years
Quality Breakdown:
AAA 60.2%
AA 39.8%
5
<PAGE>
Additional Performance Information
The shareholder letter included in this report contains statistics
designed to help you evaluate the performance of your Fund's management. To
further assist in this evaluation, the Securities and Exchange Commission (SEC)
requires that we include the Fund's total return, according to a standardized
formula, for various time periods through the end of the most recent calendar
quarter.
The SEC standardized total return figures include the impact of the
Fund's maximum initial sales charge. Returns would be higher for investors who
qualified for a lower initial sales charge.
While the total return figures are required by SEC rules, such
comparisons are of limited utility since the Fund's total return is adjusted for
sales charges and expenses while the total return of the indices are not. In
fact, if you wished to replicate the total return of these indices, you would
have to purchase the securities they represent, an effort that would require a
considerable amount of money and would incur expenses that are not reflected in
the index results.
The SEC total return figures may differ from total return figures in
the shareholder letter because the time periods may be different and because the
SEC figures include the impact of sales charges while the total return figures
in the shareholder letter do not. Any performance figures shown are for the full
period indicated. Since investment return and principal value will fluctuate,
and investor's shares may be worth more or less than their original cost when
redeemed. Past performance is not an indicator of future results.
AVERAGE ANNUAL TOTAL RETURN(1)
% Return with
Periods ended 10/31/99: Sales Charge
One Year (7.90)%
Five Years 5.15%
Since Inception (2/26/90) 5.49%
CHANGE IN VALUE OF A $10,000 INVESTMENT(1)
(GRAPHIC APPEARS HERE)
ISI Managed Municipal Fund - $16,024
Lehman Brothers General Obligation Index (G.O.) - $18,910
Lehman Brothers Prerefunded Municipal Index - $17,825
Consumer Price Index (CPI) - $13,141
Lehman Lehman Consumer
ISI Managed G.O. Prerefunded Price
Municipal Fund Index Muni Index Index
2/90 9,555 10,000 10,000 10,000
10/90 9,916 10,346 10,413 10,420
10/91 10,992 11,510 11,462 10,722
10/92 11,658 12,448 12,380 11,065
10/93 13,332 14,126 13,658 11,375
10/94 12,466 13,627 13,453 11,671
10/95 14,388 15,513 14,872 11,998
10/96 15,060 16,372 15,555 12,358
10/97 16,178 17,733 16,535 12,618
10/98 16,625 19,150 17,578 12,805
10/99 16,024 18,910 17,825 13,141
(1) Past performance is not an indicator of future results. Investment return
and principal value will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. These figures assume the
reinvestment of dividends and capital gain distributions and include the
Fund's 4.45% maximum sales charge. The Lehman Brothers indices listed above
are unmanaged. Although the G.O. Index reflects general municipal market
performance, the Prerefunded Index is a better indicator of the Fund due to
its higher quality characteristics. The Fund is invested entirely in
AA-rated or better issues. Management is not aware of any single index that
contains securities with substantially the same characteristics as those of
the Fund. The CPI is a widely used measure of inflation. The CPI performance
is based on data released on 10/31/99.
6
<PAGE>
Managed Municipal Fund, Inc.
Statement of Net Assets October 31, 1999
<TABLE>
<CAPTION>
Rating*
(Moody's/ Par Market
Issuer S&P) (000) Value
- -------------------------------------------------------------------------------------------
<S><C>
Municipal Bonds-93.5%
General Obligations--72.8%
Arlington County, VA
5.00%, 10/1/14 Aaa/AAA $2,000 $ 1,875,760
Arlington, TX, School District
5.75%, 2/15/21 Aa2/AAA 1,465 1,424,566
Charlotte, NC
5.30%, 4/1/11 Aaa/AAA 1,590 1,596,694
5.30%, 4/1/12 Aaa/AAA 1,120 1,114,310
5.30%, 4/1/12 Aaa/AAA 2,325 2,313,189
5.00%, 2/1/19 Aaa/AAA 2,300 2,063,470
Dallas, TX
5.00%, 2/15/10 Aaa/AAA 1,750 1,769,338
5.00%, 2/15/13 Aaa/AAA 1,755 1,652,332
Delaware State, Series A
5.125%, 4/1/16 Aa1/AA+ 2,150 1,991,549
Dupage County, IL, Jail Project
5.60%, 1/1/21 Aaa/AAA 1,600 1,536,656
Florida Board of Education
6.125%, 6/1/12 Aa2/AA+ 2,250 2,322,720
Florida State Board Cap. Outlay, Series C
5.50%, 6/1/21 Aa2/AA+ 2,000 1,898,261
Franklin County, OH
5.45%, 12/1/09 Aaa/AAA 1,500 1,525,545
5.50%, 12/1/13 Aaa/AAA 1,000 999,950
Grand Prairie, TX, School District
5.20%, 2/15/18 Aaa/AAA 2,000 1,820,464
King County, WA
5.20%, 12/1/15 Aa1/AA+ 2,500 2,319,877
5.00%, 12/1/17 Aa1/AA+ 2,565 2,273,723
Maryland State & Local Facilities,
Second Series
5.125%, 10/15/10 Aaa/AAA 3,000 2,998,698
</TABLE>
7
<PAGE>
Managed Municipal Fund, Inc.
Statement of Net Assets October 31, 1999
<TABLE>
<CAPTION>
Rating*
(Moody's/ Par Market
Issuer S&P) (000) Value
- -------------------------------------------------------------------------------------------
<S><C>
Municipal Bonds--(Continued)
General Obligations--(Continued)
Metropolitan Government Nashville &
Davidson County, TN
5.125%, 11/15/19 Aa2/AA $2,000 $1,776,548
Minneapolis, MN Ref - Ser B
5.20%, 3/1/13 Aaa/AAA 3,200 3,084,946
Minneapolis, MN Sports Arena Project
5.00%, 10/1/12 Aaa/AAA 1,920 1,849,141
5.00%, 10/1/11 Aaa/AAA 1,710 1,666,486
Minnesota State
5.00%, 11/1/14 Aaa/AAA 2,500 2,339,427
Missouri State Series A
5.00%, 6/1/23 Aaa/AAA 2,000 1,772,201
North Carolina Public School Building
4.60%, 4/1/17 Aaa/AAA 5,000 4,296,179
Plano, TX Independent School District
5.00%, 2/15/11 Aaa/AAA 3,000 2,872,350
Portland, OR, Metro Regional
Government
5.25%, 9/1/07 Aa/AA+ 1,500 1,522,470
Salt Lake County, UT
5.25%, 12/15/10 Aaa/AAA 2,000 2,006,103
South Carolina Capital Improvement
5.00%, 3/1/09 Aaa/AAA 2,700 2,689,911
5.625%, 7/1/14 Aaa/AAA 2,700 2,709,890
5.65%, 7/1/21 Aaa/AAA 1,260 1,221,633
Tennessee State
5.50%, 3/1/09 Aaa/AAA 1,535 1,589,354
5.55%, 3/1/10 Aaa/AAA 1,000 1,037,740
Washington State, Series A
5.60%, 7/1/10 Aa1/AA+ 1,500 1,522,369
Washington State, Series E
5.00%, 7/1/22 Aa1/AA+ 2,000 1,720,570
</TABLE>
8
<PAGE>
Managed Municipal Fund, Inc.
Statement of Net Assets (continued) October 31, 1999
<TABLE>
<CAPTION>
Rating*
(Moody's/ Par Market
Issuer S&P) (000) Value
- -------------------------------------------------------------------------------------------
<S><C>
Municipal Bonds--(Continued)
General Obligations--(Concluded)
Washington State, Series R
5.00%, 7/1/14 Aa1/AA+ $2,250 $2,067,351
Wisconsin State, Series 1
5.00%, 5/1/15 Aa2/AA 1,000 910,323
Wisconsin State, Series B
5.00%, 5/1/16 Aa2/AA 3,500 3,153,473
5.00%, 5/1/18 Aa2/AA 1,000 885,063
----------
76,190,630
----------
Other Revenue--2.4%
Texas Water Development Board Revenue
4.75%, 7/15/20 Aa1/AAA 3,000 2,517,784
----------
Prerefunded Issues--10.6%
Arlington, TX, School District
5.75%, 2/15/21 Aaa/NR 3,535 3,696,797
Chicago, IL, Metropolitan Water
Reclamation District-Greater Chicago
6.30%, 12/1/09 Aa2/AA 1,000 1,077,763
Indianapolis, IN, Public Improvement
Board Revenue
6.00%, 1/10/18 Aaa/AAA 1,500 1,547,700
Lower Colorado River Authority, Jr. Lien
5.25%, 1/1/15 #AAA/AAA 2,000 1,917,080
State of Hawaii Prerefunded
7.00%, 6/1/06 #AAA/++ 750 763,635
Texas State
6.00%, 10/1/14 Aa2/AA 2,000 2,113,292
----------
11,116,267
----------
</TABLE>
9
<PAGE>
Managed Municipal Fund, Inc.
Statement of Net Assets (continued) October 31, 1999
<TABLE>
<CAPTION>
Rating*
(Moody's/ Par Market
Issuer S&P) (000) Value
- -------------------------------------------------------------------------------------------
<S><C>
Municipal Bonds--(Concluded)
Transportation Revenue--7.7%
Florida Transportation
5.80%, 7/1/18 Aa2/AA+ $2,000 $ 2,119,540
Kansas Transportation
5.40%, 3/1/09 Aa2/AA+ 2,000 2,025,720
5.40%, 3/1/09 Aa2/AA+ 2,500 2,532,120
Virginia State Transportation Board
5.125%, 5/15/21 Aa2/AA 1,600 1,421,298
------------
8,098,678
------------
Total Municipal Bonds
(Cost $100,549,265) 97,923,359
------------
Repurchase Agreement: 5.6%
Goldman Sachs & Co., 5.10%
Dated 10/29/99, to be repurchased for $5,854,487
on 11/1/99, collateralized by U.S. Treasury Bond,
5.625%, due 2/28/01 with a market value of $5,979,634
(Cost $5,852,000) $5,852 $ 5,852,000
------------
Total Investments--99.1%
(Cost $106,401,265)** 103,775,359
Other Assets in Excess of Liabilities--0.9% 983,041
------------
Net Assets--100.0% $104,758,400
------------
</TABLE>
10
<PAGE>
Managed Municipal Fund, Inc.
Statement of Net Assets (concluded) October 31, 1999
- -------------------------------------------------------------------------------
Net Asset Value and Redemption Price Per:
ISI Class Share
($70,608,799 / 6,974,447 shares outstanding) $10.12
======
Flag Investors Class A Share
($34,149,601 / 3,373,894 shares outstanding) $10.12
======
Maximum Offering Price Per:
ISI Class Share
($10.12 / 0.9555) $10.60
======
Flag Investors Class A Share
($10.12 / 0.9550) $10.60
======
- ---------
* The Moody's and Standard & Poor's ratings indicated are believed to be the
most recent ratings available as of October 31, 1999. Ratings of issues have
not been audited by PricewaterhouseCooper LLP.
** Also aggregate cost for federal tax purposes.
++ Prerefunded bonds backed by U.S. Treasury securities. Absent prerefunding,
this obligation is rated Aa3/A+.
Moody's Municipal Bond Ratings:
Aaa Judged to be of the best quality
Aa Judged to be of high quality by all standards. Issues are always rated with
a 1,2 or 3, which denote a high, medium, or low ranking within the rating.
#AAA Advance refunded issues secured by escrowed funds held in cash, held in a
trust or invested in direct non-callable U.S. government obligations or
non-callable obligations
NR Not rated.
S&P Municipal Bond Rating:
AAA Of the highest quality.
AA The second strongest capacity for payments of debt service. Those issues
determined to possess very strong safety characteristics are denoted with a
plus (+) sign.
NR Not rated.
See Notes to Financial Statements.
11
<PAGE>
Managed Municipal Fund, Inc.
Statement of Operations For the Year Ended October 31, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
<S><C>
INVESTMENT INCOME:
Interest $ 5,843,480
-----------
EXPENSES:
Investment advisory fee 455,727
Distribution fee 284,830
Administration fee 180,814
Professional fees 101,468
Accounting fee 57,092
Registration fees 44,320
Transfer agent fee 43,782
Printing and Postage 38,383
Custodian fee 25,756
Miscellaneous 19,836
-----------
Total expenses 1,252,008
Less: Fees waived (226,616)
-----------
Net expenses 1,025,392
-----------
Net investment income 4,818,088
-----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain from security transactions 547,939
Change in unrealized appreciation/depreciation of investments (9,251,142)
-----------
Net loss on investments (8,703,203)
-----------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS $(3,885,115)
===========
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
Managed Municipal Fund, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
For the Years Ended October 31,
1999 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S><C>
INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 4,818,088 $ 4,931,438
Net realized gain from
security transactions 547,939 910,737
Change in unrealized appreciation/
depreciation of investments (9,251,142) 2,598,160
------------ ------------
Net increase/(decrease) in net assets
resulting from operations (3,885,115) 8,440,335
------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income and short-term gains:
ISI Class Shares (3,369,957) (3,912,967)
Flag Investors Class A Shares (1,600,162) (1,861,540)
Net realized long-term gains:
ISI Class Shares (312,768) (218,689)
Flag Investors Class A Shares (151,301) (106,065)
------------ ------------
Total distributions (5,434,188) (6,099,261)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 8,098,100 7,880,427
Value of shares issued in reinvestment of dividends 2,739,411 3,000,727
Cost of shares repurchased (14,720,429) (12,655,343)
------------ ------------
Decrease in net assets derived from
capital share transactions (3,882,918) (1,774,189)
------------ ------------
Total increase/(decrease) in net assets (13,202,221) 566,885
NET ASSETS:
Beginning of year 117,960,621 117,393,736
------------ ------------
End of year including undistributed net investment income
(distributions in excess of net investment income) of $(10,935)
and $32,118,
respectively $104,758,400 $117,960,621
============ ============
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Managed Municipal Fund, Inc.
Financial Highlights--ISI Class
(For a share outstanding throughout each year)
<TABLE>
<CAPTION>
For the Years Ended October 31,
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S><C>
Per Share Operating Performance:
Net asset value at beginning of year $ 11.01 $ 10.79 $ 10.58 $ 10.65 $ 9.81
-------- --------- -------- -------- --------
Income from Investment Operations:
Net investment income 0.45 0.46 0.52 0.48 0.48
Net realized and unrealized
gain/(loss) on investments (0.83) 0.33 0.24 -- 0.98
-------- --------- -------- -------- --------
Total from Investment Operations (0.38) 0.79 0.76 0.48 1.46
-------- --------- -------- -------- --------
Less Distributions:
Net investment income and net realized
short-term gains (0.47) (0.54) (0.52) (0.54) (0.54)
Net realized long-term gains (0.04) (0.03) (0.03) (0.01) (0.08)
-------- --------- -------- -------- --------
Total distributions (0.51) (0.57) (0.55) (0.55) (0.62)
-------- --------- -------- -------- --------
Net asset value at end of year $ 10.12 $ 11.01 $ 10.79 $ 10.58 $ 10.65
======== ========= ======== ======== ========
Total Return(1) (3.61)% 7.51% 7.43% 4.67% 15.42%
Ratios to Average Daily Net Assets:
Expenses(2) 0.90% 0.90% 0.90% 0.90% 0.90%
Net investment income(3) 4.23% 4.24% 4.46% 4.48% 4.72%
Supplemental Data:
Net assets at end of year (000):
ISI Class Shares $ 70,609 $ 80,749 $ 79,003 $ 84,712 $ 86,292
Flag Investors Class A Shares $ 34,150 $ 37,212 $ 38,390 $ 41,193 $ 45,980
Portfolio turnover rate 8% 18% 26% 32% 55%
</TABLE>
(1) Total return excludes the effect of sales charge.
(2) Without the waiver of advisory and administration fees (Note B), the ratio
of expenses to average daily net assets would have been 1.10%, 1.13%, 1.10%,
1.13% and 1.10% for the years ended October 31, 1999, 1998, 1997, 1996 and
1995, respectively.
(3) Without the waiver of advisory and administration fees (Note B), the ratio
of net investment income to average daily net assets would have been 4.03%,
4.01%, 4.26%, 4.25% and 4.52% for the years ended October 31, 1999, 1998,
1997, 1996 and 1995, respectively.
See Notes to Financial Statements.
14
<PAGE>
Notes to Financial Statements
A. Significant Accounting Policies -- Managed Municipal Fund, Inc. (the
"Fund"), which was organized as a Maryland Corporation on January 5, 1990
and began operations February 26, 1990, is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment
company. It is designed to provide a high level of total return with
relative stability of principal as well as the secondary objective of high
current income through investment in a portfolio consisting primarily of
municipal obligations, the interest on which is exempt from federal income
tax.
The Fund consists of two share classes: ISI Managed Municipal Fund Shares
("ISI Class Shares"), which began operations February 26, 1990, and Flag
Investors Managed Municipal Fund Class A Shares ("Flag Investors Class A
Shares"), which began operations October 23, 1990.
The ISI Class Shares have a 4.45% maximum front-end sales charge and the
Flag Investors Class A Shares have a 4.50% maximum front-end sales charge.
Both classes have a 0.25% distribution fee.
When preparing the Fund's financial statements, management makes estimates
and assumptions to comply with generally accepted accounting principles.
These estimates affect 1) the assets and liabilities that we report at the
date of the financial statements; 2) the contingent assets and liabilities
that we disclose at the date of the financial statements; and 3) the
revenues and expenses that we report for the period. Our estimates could be
different from the actual results. Under certain circumstances, it is
necessary to reclassify prior year information in order to conform to the
current year's presentation. The Fund's significant accounting policies are:
Security Valuation -- Municipal obligations are usually traded in the
over-the-counter market. The Fund utilizes the services of an independent
pricing vendor to obtain prices. When there is an available market
quotation, the Fund values a municipal obligation by using the most recent
price provided by an investment dealer. When a market quotation is not
readily available, the Investment Advisor determines a fair value using
procedures that the Board of Directors establishes and monitors. The Fund
values short-term obligations with maturities of 60 days or less at
amortized cost which approximates fair market value.
Repurchase Agreements -- The Fund may enter into tri-party repurchase
agreements with broker-dealers and domestic banks. A repurchase agreement is
a short-term investment in which the Fund buys a debt security that the
broker agrees to repurchase at a set time and price. The third party, which
is the broker's custodial bank, holds the collateral in a separate account
until the repurchase agreement matures. The agreement ensures that the
collateral's market value, including any accrued interest, is sufficient if
the broker defaults. The Fund's access to the collateral may be delayed or
limited if the broker defaults and the value of the collateral declines or
if the broker enters into an insolvency proceeding.
Federal Income Taxes -- The Fund determines its distributions according to
income tax regulations, which may be different from generally accepted
accounting principles. As a result, the Fund occasionally makes
reclassifications within its capital accounts to reflect income and gains
that are available for distribution under income tax regulations.
The Fund is organized as a regulated investment company. As long as it
maintains this status and distributes to its shareholders substantially all
of its taxable net investment income and net realized capital gains, it will
be exempt from most, if not all, federal income and excise taxes. As a
result, the Fund has made no provisions for federal income taxes.
15
<PAGE>
Notes to Financial Statements (continued)
Security Transactions, Investment Income, Distributions and Other -- The
Fund uses the trade date to account for security transactions and the
specific identification cost method for financial reporting and income tax
purposes to determine the gain or loss of investments sold or redeemed.
Interest income is recorded on an accrual basis and includes amortization of
premiums and accretion of discounts when appropriate. Income and common
expenses are allocated to each class based on its respective average net
assets. Class specific expenses are charged directly to each class. Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
B. Investment Advisory Fees, Transactions with Affiliates and Other Fees --
International Strategy & Investment Inc. ("ISI") is the Fund's investment
advisor and Investment Company Capital Corp. ("ICC"), an indirect subsidiary
of Deutsche Bank AG, is the Fund's administrator. As compensation for its
advisory services, the Fund pays ISI an annual fee based on the Fund's
average daily net assets. This fee is calculated daily and paid monthly at
the annual rate of 0.40%. For the year ended October 31, 1999, ISI's
advisory fee was $455,727 of which $30,221 was payable at the end of the
year. As compensation for its administrative services, the Fund pays ICC an
annual fee based on the Fund's average daily net assets. Prior to June 1,
1999, this fee was calculated daily and paid monthly at the annual rate of
0.20%. Effective June 1, 1999 the fee is based on the combined assets of ISI
Funds and is calculated daily and paid monthly at the following annual
rates: 0.20% of the first $75 million, 0.15% of the next $75 million, 0.10%
of the next $75 million, 0.05% of the next $275 million, and 0.03% of the
amount over $500 million. Concurrent with the fee change, ISI has agreed to
be solely responsible for any fee waivers necessary to cap fund expense
levels.
Prior to June 1, 1999, ISI and ICC had agreed to reduce their fees
proportionately when necessary so that the Fund's annual expenses are no
more than 0.90% of the Fund's average daily net assets. For the year ended
October 31, 1999, ISI waived fees of $166,103 and ICC waived fees of
$60,513.
Certain officers and directors of the Fund are also officers or directors of
ISI or ICC.
ICC provides accounting services, to the Fund for which the Fund pays ICC an
annual fee that is calculated daily and paid monthly based on the Fund's
average daily net assets. For the year ended October 31, 1999, ICC's fee was
$57,092 of which $4,740 was payable at the end of the year.
ICC also provides transfer agent services to the Fund for which the Fund
pays ICC a per account fee that is calculated and paid monthly. For the year
ended October 31, 1999, ICC's fee was $43,782, of which $6,719 was payable
at the end of the year.
ISI Group Inc. ("ISI Group"), which is affiliated with ISI, provides
distribution services for the ISI class of the Fund for which ISI Group is
paid an annual fee that is calculated daily and paid monthly at an annual
rate equal to 0.25% of the ISI Class' average daily net assets. ICC
Distributors, Inc. ("ICC Distributors"), a member of the Forum Financial
Group of companies, provides distribution services for the Flag Investors
Class A Shares for which ICC Distributors is paid an annual fee that is
calculated daily and paid monthly at an annual rate equal to 0.25% of the
Flag Investors Class A Shares' average daily net assets. For the year ended
October 31, 1999, distribution fees aggregated $284,830. ISI group's fee was
$192,842 of which $15,049 was payable at the end of the year. ICC
Distributor's fee was $91,988 of which $7,324 was payable at the end of the
year.
The Fund's complex offers a retirement plan for eligible Directors. The
actuarially computed pension expense allocated to the Fund for the period
ended October 31, 1999 was $5,453 and the accrued liability was $24,957.
16
<PAGE>
Notes to Financial Statements (continued)
C. Capital Share Transactions -- The Fund is authorized to issue up to 37
million shares of $.001 par value capital stock (20 million ISI Class, 15
million Flag Investors Class A, and 2 million undesignated). Transactions
in shares of the Fund are listed in the chart below:
ISI Class Shares
--------------------------------------------
For the For the
Year Ended Year Ended
Oct. 31, 1999 Oct. 31, 1998
--------------- ---------------
Shares sold 261,822 518,215
Shares issued to share-
holders on reinvest-
ment of dividends 163,148 190,021
Shares redeemed (786,574) (695,012)
----------- -----------
Net increase/(decrease)
in shares
outstanding (361,604 13,224
=========== ===========
Proceeds from sale
of shares $ 2,797,892 $ 5,635,106
Value of reinvested
dividends 1,747,918 2,057,230
Cost of shares
redeemed (8,384,868) (7,540,268)
----------- -----------
Net increase/(decrease)
from capital share
transactions $(3,839,058) $ 152,068
=========== ===========
Flag Investors Class A Shares
--------------------------------------------
For the For the
Year Ended Year Ended
Oct. 31, 1999 Oct. 31, 1998
--------------- ---------------
Shares sold 490,026 206,924
Shares issued to share-
holders on reinvest-
ment of dividends 92,630 87,142
Shares redeemed (590,052) (470,241)
----------- -----------
Net decrease in shares
outstanding (7,396) (176,175)
=========== ===========
Proceeds from sale
of shares $ 5,300,208 $ 2,245,321
Value of reinvested
dividends 991,493 943,497
Cost of shares
redeemed (6,335,561) (5,115,075)
----------- -----------
Net decrease from
capital share
transactions $ (43,860) $(1,926,257)
=========== ===========
17
<PAGE>
Notes to Financial Statements (concluded)
D. Investment Transactions-- Excluding short-term obligations, purchases of
investment securities aggregated $8,305,917 and sales of investment
securities aggregated $16,582,959 for the year ended October 31, 1999.
On October 31, 1999, aggregate net unrealized depreciation over tax cost for
portfolio securities was $2,625,906 of which $1,324,517 related to
appreciated securities and $3,950,423 related to depreciated securities.
E. Net Assets -- On October 31, 1999, net assets consisted of:
Paid-in capital:
ISI Class Shares $ 73,245,775
Flag Investors
Class A Shares 34,149,466
Distributions in excess of
net investment income (10,935)
Unrealized depreciation
of investments (2,625,906)
------------
$104,758,400
============
F. Subsequent Event -- Pursuant to the regular meetings of the Board of
Directors held on December 13, 1999, the following appointment was resolved.
Deloitte & Touche LLP were appointed as Independent Auditors for Managed
Municipal Fund, Inc., to review and report on such Fund's financial
statements for the fiscal period ending October 31, 2000, subject to
termination as provided in the Investment Company Act 1940, as amended. This
change was not the result of any disagreements or reportable events with
PricewaterhouseCoopers LLP.
18
<PAGE>
Report of Independent Accountants
To the Shareholders and Directors of
Managed Municipal Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Managed Municipal Fund, Inc. (the "Fund") at October 31, 1999, and the results
of its operations, the changes in its net assets and the financial highlights
for each of the fiscal periods presented, in conformity with accounting
principles generally accepted in the United States. These financial statements
and financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at October
31, 1999 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Baltimore, Maryland
December 14, 1999
Tax Information (unaudited) for the Tax Year Ended October 31, 1999
We are providing this information as required by the Internal Revenue
Code. The amounts shown may differ from those elsewhere in this report because
of differences between tax and financial reporting requirements.
The fund's distributions included $464,069 from long-term capital
gains which are subject to the 20% rate gains category.
The fund's distributions to shareholders included $4,740,502 from
tax-exempt income.
This report is prepared for the general information of shareholders.
It is authorized for distribution to prospective investors only when preceded or
accompanied by an effective prospectus.
For more complete information regarding any of the ISI Funds,
including charges and expenses, obtain a prospectus from your investment
representative or directly from the Fund at 1-800-955-7175. Read it carefully
before you invest.
19
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