<PAGE>
- --------------------------------------------------------------------------------
MANAGED MUNICIPALS
PORTFOLIO INC.
SEMI-ANNUAL REPORT
November 30, 1994
[LOGO]
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Front cover showing a crest/emblem on the bottom of page with an eagle and two
cupids at the top of the page the fund name is centered.
<PAGE>
MANAGED MUNICIPALS
PORTFOLIO INC.
NOVEMBER 30, 1994
DEAR SHAREHOLDER:
The end of the past quarter saw increased volatility in the bond market. Both
the taxable and tax-exempt markets came under price pressure because of strong
tax-related selling by mutual funds during late October 1994. This generally
resulted in a decrease in prices for fixed-income securities, which was
reflected in the decline in the net asset value per share of Managed Municipals
Portfolio Inc. (the "Portfolio"). Many other closed-end funds -- particularly
those that are leveraged -- experienced additional selling pressure during this
period. Unlike those funds, the Portfolio is not leveraged, and we think that
over time this should allow for a lower volatility of net asset value per share
which should be reflected in its market value.
The Portfolio paid tax-exempt dividends of $0.183 per share during the past
quarter. This equates to an annualized yield of 6.50% based on its November 30,
1994 net asset value per share of $11.27 and 7.05% based on the New York Stock
Exchange closing price of $10.38 per share on that same date. The Portfolio
continues to trade on the New York Stock Exchange at a discount to its net asset
value, providing investors with an opportunity to purchase a portfolio of
high-quality, tax-exempt, income-producing securities at an attractive price.
Despite the volatility of the municipal bond market over the past months, our
outlook for the future is much more positive. We believe that the Federal
Reserve has done a credible job of fighting inflation, and this should translate
into lower long-term interest rates as well as lower volatility in the bond
market.
For the near future, our investment strategy will be to add to the Portfolio
AA- and AAA-rated securities with coupons that are at a reasonable market
discount to current rates. We believe that this strategy should provide the
Portfolio with an opportunity to see an increase in the value of its holdings
during a better market environment, yet at the same time minimize its exposure
to the risk that higher-coupon bonds could be prematurely called.
CONTINUED
- --------------------------- 1
------------------------------
<PAGE>
At the end of this reporting period, nearly half of the Portfolio's assets
were invested in municipal bonds rated AAA/Aaa and AA/Aa by Standard & Poor's
Corporation or Moody's Investors Service, Inc. The Portfolio's weighted average
maturity was 25.0 years. The majority of the holdings were in hospital, water/
sewer and transportation issues.
We are pleased to be able to tell you that the Portfolio continues to be
recognized by various closed-end fund publications as an attractive investment
opportunity. Most recently, THE CLOSED-END FUND DIGEST has rated the Portfolio a
"Buy" and included it in its 1995 tax-free model portfolio.
Please remember that The Shareholder Services Group, Inc., the Portfolio's
transfer agent, can be reached at (800) 331-1710 should you have any questions
about your investment in the Portfolio. We appreciated your confidence during
the difficult investment environment of 1994, and join you in looking forward to
a more benign 1995.
Sincerely,
Heath B. McLendon Joseph P. Deane
CHAIRMAN OF THE BOARD VICE PRESIDENT AND
INVESTMENT OFFICER
January 16, 1995
- ------------------------------ 2
------------------------------
<PAGE>
UNAUDITED FINANCIAL DATA
PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
CAPITAL
NYSE NET GAINS DIVIDEND
CLOSING ASSET DIVIDEND DIVIDEND REINVESTMENT
PRICE VALUE PAID PAID PRICE
-------- ------- --------- --------- -------------
<S> <C> <C> <C> <C> <C>
December 31, 1993...... $12.500 $13.08 -- $0.510 $12.93
January 31, 1994....... 12.625 13.07 $0.061 -- 12.78
February 28, 1994...... 12.125 12.84 0.061 -- 12.26
March 31, 1994......... 11.375 12.23 0.061 -- 11.91
April 30, 1994......... 11.250 12.23 0.061 -- 11.98
May 31, 1994........... 11.500 12.26 0.061 -- 11.82
June 30, 1994.......... 11.500 12.11 0.061 -- 11.86
July 31, 1994.......... 11.625 12.32 0.061 -- 11.90
August 31, 1994........ 11.500 12.29 0.061 -- 11.64
September 30, 1994..... 11.000+ 11.98+ 0.061 -- 11.43
October 31, 1994....... 11.125+ 11.79+ 0.061 -- 10.81
November 30, 1994...... 10.375+ 10.99+ 0.061 -- 10.58
</TABLE>
DIVIDEND DATA*
FOR THE PERIOD ENDED NOVEMBER 30, 1994
<TABLE>
<CAPTION>
EQUIVALENT TAXABLE DISTRIBUTION RATE
--------------------------------------------------------------------
ASSUMING
PER SHARE ANNUALIZED ASSUMING ASSUMING ASSUMING 39.6%
DIVIDEND DISTRIBUTION 28% FEDERAL 31% FEDERAL 36% FEDERAL FEDERAL
DISTRIBUTIONS RATE TAX BRACKET TAX BRACKET TAX BRACKET TAX BRACKET
------------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$0.061 6.50% 9.03% 9.42% 10.16% 10.76%
<FN>
- -------------
* Based on November 30, 1994 net asset value of $11.27 per share.
+ As of record date: September 23, 1994, October 24, 1994 and November 22, 1994,
respectively.
</TABLE>
Each registered shareholder is considered a participant in the Fund's Dividend
Reinvestment Plan, unless the shareholder elects to receive all dividends and
distributions in cash, or unless the shareholder's shares are registered in the
name of a broker, bank or nominee (other than Smith Barney Inc.) which does not
provide the service. Questions and correspondence concerning the Dividend
Reinvestment Plan should be directed to The Shareholder Services Group, Inc.,
P.O. Box 1376, Boston, Massachusetts 02104.
- --------------------------- 3
------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
KEY TO INSURANCE ABBREVIATIONS
AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Federal Guaranty Insurance Corporation
MBIA -- Municipal Bond Investors Assurance
</TABLE>
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
<C> <S> <C> <C> <C>
- ---------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--103.1%
ALASKA -- 4.9%
Valdez, Alaska, Marine Terminal Revenue:
$ 14,000,000 5.650% due 12/1/28 A1 AA- $ 10,920,000
10,000,000 Series A,
5.850% due 8/1/25 A1 AA- 8,087,500
CALIFORNIA -- 15.4%
2,000,000 California Housing Financing Agency Revenue, Series B,
5.700% due 2/1/25 Aa AA 1,612,500
5,000,000 California State Water Reservoir Resource Revenue,
5.500% due 12/1/23 Aa AA 4,068,750
3,500,000 Contra Costa, California, Water District, Series F,
(FGIC insured),
5.000% due 10/1/20 Aaa AAA 2,638,125
16,000,000 Los Angeles, California, Convention & Exhibition Center
Authority Lease Revenue, (MBIA insured),
5.125% due 8/15/21 Aaa AAA 12,280,000
Los Angeles, California, Regional Airport Improvement
Corporation:
3,300,000 (Los Angeles International Airport), Lease Revenue,
6.500% due 1/1/32 NR A- 2,833,875
2,500,000 Regional Airport Improvement, Lease Revenue,
6.800% due 1/1/27 NR A- 2,256,250
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 4
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
Los Angeles, California, Waste Water System Revenue:
$ 13,000,000 Series A, (MBIA Insured),
5.700% due 6/1/20 Aaa AAA $ 10,985,000
Series B, (MBIA Insured):
6,205,000 5.200% due 11/1/21 Aaa AAA 4,808,875
1,500,000 5.700% due 6/1/23 Aaa AAA 1,258,125
8,000,000 Los Angeles County, California, Metropolitan District
Revenue, (AMBAC insured),
5.250% due 7/1/23 Aaa AAA 6,220,000
San Joaquin Hills, California, Transportation
Authority, Corridor Agency Toll Road, Sr. Lien Revenue:
16,000,000 Zero Coupon due 1/1/17 NR NR 2,840,000
25,000,000 Zero Coupon due 1/1/18 NR NR 4,093,750
10,000,000 Zero Coupon due 1/1/20 NR NR 1,400,000
15,000,000 Zero Coupon due 1/1/25 NR NR 1,425,000
1,700,000 Sonoma County, California, Detention Facilities
Improvement Program, Certificates of Participation,
5.000% due 11/15/13 A1 A+ 1,315,375
COLORADO -- 8.4%
2,000,000 Colorado Springs, Colorado, Airport Revenue, Series A,
7.000% due 1/1/22 NR BBB 1,885,000
100,000,000 Dawson Ridge Metropolitan District #1, Series B,
Zero Coupon due 10/1/22 Aaa NR 13,250,000
Denver, Colorado, Airport Revenue, Series C:
4,000,000 6.750% due 11/15/22 Baa BB 3,385,000
18,325,000 6.125% due 11/15/25 Baa BB 14,156,063
FLORIDA -- 4.5%
8,550,000 Florida State, Board of Education, Capital Outlay,
5.200% due 6/1/19 Aa AA 6,754,500
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 5
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
FLORIDA (CONTINUED)
$ 6,000,000 Martin County Florida, Industrial Development Project,
7.875% due 12/15/25 Baa3 BBB- $ 5,940,000
Tampa, Florida, Revenue Bonds, (Aquarium Project):
3,000,000 7.550% due 5/1/12 NR NR 2,985,000
2,000,000 7.750% due 5/1/27 NR NR 1,965,000
INDIANA -- 5.1%
18,305,00 Indiana Bond Bank, Revenue Guarantee, State Revolving
Fund, Series A,
6.000% due 2/1/15 NR A 16,039,756
4,000,000 Indiana Port Commission Revenue Refunding Project,
(Cargill Inc. Project),
6.875% due 5/1/12 Aa3 NR 3,950,000
LOUISIANA -- 2.1%
4,500,000 Saint Martin Parish, Louisiana, Industrial Project,
(Cargill Inc. Project),
6.625% due 10/1/12 Aa3 NR 4,331,250
4,500,000 Tangipahoa Parish, Louisiana, District #1, Hospital
Revenue, (AMBAC insured),
6.250% due 2/1/24 Aaa AAA 4,044,375
MARYLAND -- 2.6%
10,000,000 Maryland State Energy Financing Administration,
9.000% due 10/15/16 NR NR 9,987,500
MASSACHUSETTS -- 6.8%
7,000,000 Commonwealth of Massachusetts, General Obligation,
Series D,
5.750% due 5/1/12 A1 A+ 6,046,250
5,000,000 Commonwealth of Massachusetts, Turnpike Authority,
Turnpike Revenue,
5.000% due 1/1/20 A1 A+ 3,762,500
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 6
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
MASSACHUSETTS (CONTINUED)
$ 4,115,000 Massachusetts Bay Transportation Authority, Series B,
5.500% due 3/1/21 A1 A+ $ 3,338,294
Massachusetts State Health & Education:
3,000,000 5.375% due 7/1/24 Aaa AAA 2,358,750
1,000,000 6.300% due 8/15/24 Aaa AAA 907,500
10,000,000 Massachusetts State Industrial Financing Agency,
9.000% due 8/1/16 NR NR 9,987,500
MICHIGAN -- 4.9%
2,000,000 Michigan State Strategic Funding, Ltd., (Blue Water
Fiber Project),
8.000% due 1/1/12 NR NR 1,870,000
16,375,000 Midland County, Michigan, Economic Development
Corporation, Pollution Control Revenue, Series B,
9.500% due 7/23/09 NR NR 17,152,813
MINNESOTA -- 7.2%
2,500,000 Duluth, Minnesota, Seaway Port Authority, Industrial
Development, Dock & Wharf Revenue, (Cargill Inc.
Project),
6.800% due 5/1/12 Aa3 AA- 2,456,250
15,505,000 St. Paul, Minnesota, Housing Redevelopment Agency,
Hospital Revenue, Series D, (Health East Project),
9.750% due 11/1/17 Baa BBB- 16,919,831
10,325,000 St. Paul, Minnesota, Housing Redevelopment Authority,
(MBIA Insured),
5.550% due 11/1/23 Aaa AAA 8,505,219
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 7
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
MONTANA -- 1.2%
$ 5,000,000 Montana State Board Investment Resources Recovery,
Yellowstone Energy LP Project,
7.000% due 12/31/19 NR NR $ 4,475,000
NEW HAMPSHIRE -- 2.3%
New Hampshire Higher Education & Health Revenue, (Mary
Hitchcock Memorial Hospital Project), (FGIC insured):
7,000,000 5.250% due 8/15/21 Aaa AAA 5,512,500
3,500,000 New Hampshire State Business Project, (Manchester
Airport Project),
6.500% due 1/1/19 Aa AA 3,333,750
NEW JERSEY -- 2.3%
5,200,000 Hudson County, New Jersey, Improvement Authority,
Essential Purpose -- Remarketed,
6.625% due 8/1/25 NR A+ 5,063,500
1,500,000 Middlesex County, New Jersey, Certificates of
Participation, (MBIA insured),
6.000% due 8/15/14 Aaa AAA 1,357,500
2,910,000 South Jersey, New Jersey, Marine Port Terminal Revenue,
Series G,
5.600% due 1/1/23 NR A+ 2,400,750
NEW YORK -- 5.9%
3,000,000 Battery Park City Authority Revenue, Series A,
5.700% due 11/1/20 NR NR 2,505,000
New York, New York, City Municipal Water Financing
Authority:
2,000,000 6.375% due 6/15/22 A A- 1,785,000
10,000,000 Series A,
5.500% due 6/15/20 A A- 8,000,000
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 8
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
NEW YORK (CONTINUED)
New York State, Local Government Assistance:
$ 8,225,000 Series B,
5.500% due 4/1/21 A A $ 6,497,750
5,300,000 Series C,
5.500% due 4/1/18 A A 4,259,875
NORTH CAROLINA -- 1.8%
8,325,000 North Carolina Municipal Power Agency 1, (Catawba
Electric), Revenue Bonds,
5.750% due 10/1/15 A A 6,888,938
OKLAHOMA -- 1.1%
5,000,000 McGee Creek Authority, Water Revenue, (MBIA insured),
6.000% due 1/1/23 Aaa AAA 4,381,250
PENNSYLVANIA -- 0.8%
3,900,000 Doylestown, Pennsylvania, Hospital Authority Revenue,
Series A, (AMBAC insured),
5.000% due 7/1/23 Aaa AAA 2,978,625
RHODE ISLAND -- 2.8%
9,090,000 Rhode Island State Health & Higher Education
Facilities, Educational Building Corporation Revenue,
(Roger Williams College),
6.500% due 11/15/24 NR AAA 8,226,450
3,000,000 Rhode Island State, Public Building Authority, Series
A, (AMBAC insured),
5.250% due 2/1/10 Aaa AAA 2,542,500
SOUTH CAROLINA -- 2.2%
Myrtle Beach, South Carolina, Certificates of
Participation, (Myrtle Beach Convention Center
Project):
2,000,000 6.875% due 7/1/07 Baa1 BBB+ 1,917,500
7,315,000 6.875% due 7/1/17 Baa1 BBB+ 6,802,950
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 9
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
SOUTH DAKOTA -- 0.7%
$ 3,000,000 South Dakota State Housing Authority, (Homeowners
Mortgage Project),
5.800% due 5/1/14 Aa1 AA+ $ 2,568,750
TEXAS -- 4.1%
4,000,000 Burleson, Texas, Independent School District,
6.750% due 10/1/24 Aaa NR 3,875,000
12,250,000 Sam Rayburn, Texas, Municipal Power Agency, Supply
Systems, Revenue Refunding, Series A,
6.750% due 10/1/14 Baa BB 11,070,937
1,000,000 Texas State Veterans Housing Assistance,
6.450% due 6/1/23 Aa AA 905,000
VIRGINIA -- 1.5%
4,700,000 Harrisonburg, Virginia, Redevelopment and Housing
Authority, Public Facility Lease Revenue, (Jail &
Courthouse Project),
6.500% due 9/1/14 A NR 4,447,375
1,755,000 Virginia Beach, Virginia, General Obligation Refunding,
5.450% due 7/15/11 Aa AA 1,526,850
WASHINGTON -- 8.9%
4,750,000 Chelan County, Washington, Public Utilities District,
General Obligation, Series 1993A, District 4, --
Remarketed, (mandatory put 7/1/19),
6.750% due 7/1/62 A1 A+ 4,423,437
4,000,000 Washington State, General Obligation Bond, Series A,
5.750% due 9/1/19 Aa AA 3,375,000
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 10
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
WASHINGTON (CONTINUED)
$ 15,700,000 Washington State Health Care Facilities, (Sisters of
Providence Hospital),
7.875% due 10/1/10 A1 AA- $ 16,328,000
Washington State Public Power:
6,250,000 Series B,
5.625% due 7/1/12 Aa AA 5,218,750
Series C:
5.375% due 7/1/13 Aa AA 2,830,668
3,555,000
3,000,000 5.375% due 7/1/15 Aa- AA 2,376,360
WEST VIRGINIA -- 2.1%
9,000,000 Marion County, West Virginia, Solid Waste Disposal,
County Commission,
7.750% due 12/1/11 NR NR 8,055,000
WISCONSIN -- 3.5%
4,070,000 Wisconsin State, General Obligation, Series B,
6.600% due 1/1/22 Aa AA 3,917,375
Wisconsin State Health and Educational Facilities
Authority:
2,000,000 (Aurora), Health Care Obligated Credit, (MBIA insured),
5.250% due 8/15/23 Aaa AAA 1,517,500
6,770,000 (Marquette University Project), (MBIA insured),
5.500% due 12/1/11 Aaa AAA 5,737,575
3,215,000 Wisconsin State Transportation Revenue, Series A,
5.500% due 7/1/22 A1 AA- 2,596,173
- ---------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS AND NOTES
(COST $430,682,136) 400,720,064
- ---------------------------------------------------------------------------
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 11
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM TAX-EXEMPT INVESTMENTS -- 1.7%
ARIZONA -- 0.8%
$ 3,100,000 Coconino County, Arizona, Pollution Control Revenue,
Series A,
3.600% due 10/1/29+ P1 A+ $ 3,100,000
100,000 Pinal County, Arizona, Industrial Development
Authority,
3.650% due 12/1/09+ Aa2 AA 100,000
CALIFORNIA -- 0.9%
200,000 California Pollution Control Financing Authority,
Pollution Control Revenue, (Exxon),
3.300% due 12/1/12+ Aaa AAA 200,000
1,300,000 California Pollution Control Financing Revenue,
(Burney),
3.450% due 9/1/20+ NR NR 1,300,000
600,000 California Pollution Control, (Shell Oil), Series A,
3.450% due 10/1/24+ Aa2 NR 600,000
500,000 Irvine, California,
3.400% due 9/2/20+ A1 A+ 500,000
Irvine Ranch, California, Water District:
900,000 3.400% due 5/1/09+ NR NR 900,000
100,000 3.400% due 4/1/33+ Aa3 A+ 100,000
- ---------------------------------------------------------------------------
TOTAL SHORT-TERM
TAX-EXEMPT INVESTMENTS
(COST $6,800,000) 6,800,000
- ---------------------------------------------------------------------------
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 12
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Value
Contracts (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TOTAL INVESTMENTS
(COST $437,482,136*) 104.8% $407,520,064
- ---------------------------------------------------------------------------
FUTURES CONTRACTS -- LONG POSITIONS -- 2.2% (COST $8,395,312)
100 Morgan Stanley Municipal Index Futures, December 1994 2.2% $ 8,412,499
FUTURES CONTRACTS -- SHORT POSITIONS -- (2.5%) (COST $9,871,875)
(100) Morgan Stanley 30 Year Treasury Bond Futures, December
1994++ (2.5%) (9,868,750)
OTHER ASSETS AND LIABILITIES (NET) (4.5%) (17,286,789)
- ---------------------------------------------------------------------------
NET ASSETS 100.0% $388,777,024
- ---------------------------------------------------------------------------
<FN>
* Aggregate cost for Federal tax purposes.
+ Variable rate demand bonds are payable upon not more than one day's notice.
++ In case of exercise, settlement is made in cash.
</TABLE>
SUMMARY OF MUNICIPAL BONDS AND NOTES AND SHORT-TERM
TAX-EXEMPT INVESTMENTS BY COMBINED RATINGS
<TABLE>
<CAPTION>
STANDARD
& PERCENT
MOODY'S POOR'S OF VALUE
<S> <C> <C> <C>
Aaa or AAA 25.4%
Aa AA 21.6
A A 20.4
Baa BBB 15.2
NR NR 17.4
----------
100.0%
----------
----------
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 13
- ------------------------------
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994 (UNAUDITED)
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------
ASSETS:
Investments, at value (Cost $437,482,136) (Note 1)
See accompanying schedule $407,520,064
Cash 22,812
Aggregate exercise cost of futures -- short position 9,871,875
Futures contracts -- long position, at value
(Cost $8,395,312) (Note 1)
See accompanying schedule 8,412,499
Interest receivable 7,787,659
Receivable for investment securities sold 1,820,880
- ----------------------------------------------------------------------------
TOTAL ASSETS 435,435,789
- ----------------------------------------------------------------------------
LIABILITIES:
Payable for investment securities purchased $26,825,873
Futures contracts -- short position, at value (Cost
$9,871,875) (Note 1)
See accompanying schedule 9,868,750
Aggregate exercise cost of futures -- long position 8,395,312
Dividends payable 1,136,400
Investment advisory fee payable (Note 2) 221,923
Administration fee payable (Note 2) 63,407
Custodian fees payable (Note 2) 16,800
Accrued Directors' fees and expenses (Note 2) 5,833
Transfer agent fees payable (Note 2) 5,426
Accrued expenses and other payables 119,041
- ----------------------------------------------------------------------------
TOTAL LIABILITIES 46,658,765
- ----------------------------------------------------------------------------
NET ASSETS $388,777,024
- ----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 14
- ------------------------------
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------
NET ASSETS consist of:
Undistributed net investment income $ 2,247,865
Accumulated net realized gain on investments and
futures contracts 2,868,943
Net unrealized depreciation of investments and futures
contracts (29,941,760)
Par value 34,498
Paid-in capital in excess of par value 413,567,478
- ----------------------------------------------------------------------------
TOTAL NET ASSETS $388,777,024
- ----------------------------------------------------------------------------
NET ASSET VALUE, per share
($388,777,024 DIVIDED BY 34,498,420 shares of
common stock outstanding) $11.27
- ----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 15
- ------------------------------
<PAGE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1994 (UNAUDITED)
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 14,271,191
- ----------------------------------------------------------------------------
EXPENSES:
Investment advisory fee (Note 2) $1,451,701
Administration fee (Note 2) 414,772
Transfer agent fees (Note 2) 84,224
Legal and audit fees 46,118
Custodian fees (Note 2) 32,152
Directors' fees and expenses (Note 2) 26,319
Other 92,098
- ----------------------------------------------------------------------------
TOTAL EXPENSES 2,147,384
- ----------------------------------------------------------------------------
NET INVESTMENT INCOME 12,123,807
- ----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN/(LOSS)
ON INVESTMENTS (Notes 1 and 3):
Net realized loss on:
Securities transactions (5,385,054)
Futures contracts (436,313)
- ----------------------------------------------------------------------------
Net realized loss on investments during
the period (5,821,367)
- ----------------------------------------------------------------------------
Net change in unrealized appreciation/
(depreciation) of:
Securities (27,712,019)
Futures contracts 20,312
- ----------------------------------------------------------------------------
Net unrealized depreciation on investments
during the period (27,691,707)
- ----------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (33,513,074)
- ----------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $(21,389,267)
- ----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 16
- ------------------------------
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
NOVEMBER 30, 1994
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
11/30/94 YEAR ENDED
(UNAUDITED) 5/31/94
<S> <C> <C>
- ----------------------------------------------------------------------------
Net investment income $ 12,123,807 $ 22,987,379
Net realized gain/(loss) on securities transactions and future
contracts (5,821,367) 13,462,750
Net unrealized depreciation of investments and future contracts (27,691,707) (21,622,471)
- ----------------------------------------------------------------------------
Net increase/(decrease) in net assets resulting from operations (21,389,267) 14,827,658
Distributions to shareholders from:
Net investment income (12,626,124) (23,021,268)
Net realized gain on investments -- (17,418,025)
Net increase in net assets from Fund share transactions (Note 4) -- 4,465,722
- ----------------------------------------------------------------------------
Net decrease in net assets (34,015,391) (21,145,913)
NET ASSETS:
Beginning of period 422,792,415 443,938,328
- ----------------------------------------------------------------------------
End of period (including undistributed net investment income of
$2,247,865 and $2,750,182, respectively) $388,777,024 $422,792,415
- ----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 17
- ------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR PERIOD
11/30/94 ENDED ENDED
(UNAUDITED) 5/31/94 5/31/93*
<S> <C> <C> <C>
- ----------------------------------------------------------------------------
Operating performance:
Net asset value, beginning of period $12.26 $13.00 $12.00
- ----------------------------------------------------------------------------
Net investment income 0.35 0.67 0.63
Net realized and unrealized gain/(loss)
on investments (0.97) (0.23) 0.97
- ----------------------------------------------------------------------------
Net increase/(decrease) in net assets
resulting from operations (0.62) 0.44 1.60
- ----------------------------------------------------------------------------
Offering cost charged to paid-in-capital -- -- (0.02)
Distributions:
Dividends from net investment income (0.37) (0.67) (0.55)
Distributions from net realized capital
gains -- (0.51) (0.03)
- ----------------------------------------------------------------------------
Total distributions (0.37) (1.18) (0.58)
- ----------------------------------------------------------------------------
Net asset value, end of period $11.27 $12.26 $13.00
- ----------------------------------------------------------------------------
Market value, end of period $10.38 $11.50 $12.25
- ----------------------------------------------------------------------------
Total investment return*** (4.60)% 2.27% 7.02%
- ----------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in 000's) $388,777 $422,792 $443,938
Ratio of operating expenses to average
net assets 1.04%** 1.00% 0.98%**
Ratio of net investment income to average
net assets 5.85%** 5.15% 5.48%**
Portfolio turnover rate 50% 72% 169%
- ----------------------------------------------------------------------------
<FN>
* The Portfolio commenced operations on June 26, 1992.
** Annualized.
*** Total return represents aggregate return based on market value for the
period indicated.
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 18
- ------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES.
Managed Municipals Portfolio Inc. (the "Portfolio") was organized as a
corporation under the laws of the State of Maryland on April 9, 1992 and is
registered with the Securities and Exchange Commission as a non-diversified,
closed-end management investment company under the Investment Company Act of
1940, as amended. The policies described below are followed consistently by the
Portfolio in the preparation of its financial statements in conformity with
generally accepted accounting principles.
PORTFOLIO VALUATION: Investments are valued by The Boston Company Advisors,
Inc. ("Boston Advisors") after consultation with an independent pricing service
(the "Service") approved by the Portfolio's Board of Directors. When, in the
judgment of the Service, quoted bid prices for investments are readily available
and are representative of the bid side of the market, these investments are
valued at the mean between the quoted bid prices and asked prices. Investments
for which, in the judgment of the Service, no readily obtainable market
quotations are available are carried at fair value as determined by the Service,
based on methods that include consideration of: yields or prices of municipal
obligations of comparable quality, coupon, maturity and type; indications as to
values from dealers; and general market conditions. The Service may use
electronic data processing techniques and/or a matrix system to determine
valuations. Short-term investments that mature in fewer than 60 days are valued
at amortized cost.
FUTURES CONTRACTS: Upon entering into a futures contract, the Portfolio is
required to deposit with the broker an amount of cash or cash equivalents equal
to a certain percentage of the contract amount. This is known as the "initial
margin." Subsequent payments ("variation margin") are made or received by the
Portfolio each day, depending on the daily fluctuation of the value of the
contract.
For financial statement purposes, an amount equal to the settlement amount of
the contract is included in its Statement of Assets and Liabilities as an asset
and as an equivalent liability. For long futures positions, the asset is
marked-to-market daily. For short futures position, the liability is
marked-to-market daily. The daily changes in the contract are recorded as
unrealized gains or losses. The Portfolio recognizes a realized gain or loss
when the contract is closed.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk the
Portfolio may not be able to enter into a closing transaction because of an
illiquid secondary market.
- --------------------------- 19
------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded as of the trade date. Securities purchased or sold on a when-issued or
delayed-delivery basis may be settled a month or more after trade date. Realized
gains and losses on investments sold are recorded on the basis of identified
cost. Interest income is recorded on the accrual basis.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the
Portfolio to make monthly distributions of substantially all its net investment
income to shareholders. Net realized capital gains, if any, will be distributed
to shareholders at least once a year. In addition, in order to avoid the
application of a 4% nondeductible excise tax on certain undistributed amounts of
ordinary income and capital gains, the Portfolio may make an additional
distribution shortly before December 31 in each year of any undistributed
ordinary income or capital gains and expects to make any other distributions as
are necessary to avoid the application of this tax. To the extent that net
realized capital gains can be offset by capital losses and loss carryforwards,
it is the policy of the Portfolio not to distribute such gains. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investment securities held by the Portfolio, timing
differences and differing characterization of distributions made by the
Portfolio.
FEDERAL INCOME TAXES: It is the policy of the Portfolio to qualify as a
regulated investment company, if such qualification is in the best interest of
its shareholders, by complying with the requirements of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies and by
distributing substantially all of its earnings to its shareholders. Therefore,
no Federal income tax provision is required.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER TRANSACTIONS.
The Portfolio has entered into an investment advisory agreement (the
"Advisory Agreement") with Greenwich Street Advisors, formerly a division of
Mutual Management Corp., which agreement has been transferred effective November
7, 1994 to Smith Barney Mutual Funds Management Inc. ("SBMFM"). Mutual
Management Corp. and SBMFM are both wholly owned subsidiaries of Smith Barney
Holdings Inc. ("Holdings"). Holdings is a wholly owned subsidiary of The
Travelers Inc. Under the Advisory Agreement, the Portfolio pays a monthly fee at
the annual rate of 0.70% of the value of its average daily net assets.
- ------------------------------ 20
------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
Prior to June 1, 1994, the Portfolio was party to an administration agreement
with Boston Advisors, an indirect wholly owned subsidiary of Mellon Bank
Corporation ("Mellon"). Under this agreement, the Portfolio paid a monthly fee
at the annual rate of 0.20% of the value of the Portfolio's average daily net
assets.
As of the close of business on June 1, 1994, SBMFM (formerly known as Smith,
Barney Advisers, Inc.) succeeded Boston Advisors as the Portfolio's
administrator. The new administration agreement contains substantially the same
terms and conditions, including the level of fees, as the predecessor agreement.
As of the close of business on June 1, 1994, the Portfolio also entered into
a sub-administration agreement (the "Sub-Administration Agreement") with Boston
Advisors. Under the Sub-Administration Agreement, SBMFM pays Boston Advisors a
portion of its administration fee at a rate agreed upon from time to time
between SBMFM and Boston Advisors.
No officer, director, or employee of Smith Barney Inc. ("Smith Barney") or
any of its affiliates, receives any compensation from the Portfolio for serving
as a Director or officer of the Portfolio. The Portfolio pays each Director, who
is not an officer, director or employee of Smith Barney or any of its
affiliates, $5,000 per annum plus $500 per meeting attended and reimburses each
such Director for travel and out-of-pocket expenses.
Boston Safe Deposit and Trust Company, an indirect wholly owned subsidiary of
Mellon, serves as the Portfolio's custodian. The Shareholder Services Group,
Inc., a subsidiary of First Data Corporation, serves as the Portfolio's transfer
agent.
3. SECURITIES TRANSACTIONS.
For the period ended November 30, 1994, cost of purchases and proceeds from
sales of investment securities (excluding short-term investments) aggregated
$217,510,830 and $210,408,919, respectively.
At November 30, 1994, gross unrealized appreciation for all securities in
which there was an excess of value over tax cost amounted to $5,000, and gross
unrealized depreciation for all securities in which there was an excess of tax
cost over value amounted to $29,967,072.
4. PORTFOLIO SHARES.
At November 30, 1994, 500,000,000 shares of common stock, with a par value of
$.001 per share were authorized.
- --------------------------- 21
------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
Common stock transactions were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
11/30/94 5/31/94*
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------
<CAPTION>
SHARES AMOUNT SHARES AMOUNT
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------
ISSUED AS REINVESTMENT OF
DIVIDENDS -- -- 345,430** $ 4,465,722
- --------------------------------------------------------------------
TOTAL INCREASE -- -- 345,430 $ 4,465,722
- --------------------------------------------------------------------
<FN>
* The Portfolio commenced operations on June 26, 1992.
** Revised to reflect issuance of an additional 2,441 shares from the December
1993 dividend reinvestment.
</TABLE>
- ------------------------------ 22
------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
--------------------------------------------------------------------
QUARTERLY RESULTS OF OPERATIONS
NET REALIZED AND NET INCREASE/
UNREALIZED GAIN/ (DECREASE) IN NET
INVESTMENT NET INVESTMENT (LOSS) ON ASSETS FROM
INCOME INCOME INVESTMENTS OPERATIONS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------
PER PER PER PER
QUARTER ENDED TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
--------------------------------------------------------------------------------------
August 31, 1992 $4,525,875 $.13 $3,784,459 $.11 $ 6,021,320 $.18 $ 9,805,779 $.29
November 30,
1992 6,700,130 .20 5,735,834 .17 (1,009,530) (.03) 4,726,304 .14
February 28,
1993 6,927,436 .20 5,789,926 .17 31,655,970 .93 37,445,896 1.10
May 31, 1993 7,247,334 .21 6,223,844 .18 (3,693,473) (.11) 2,530,371 .07
August 31, 1993 6,954,864 .20 5,796,493 .17 14,702,966 .43 20,499,459 .60
November 30,
1993 6,803,020 .17 5,731,243 .17 (1,381,672) ( .08) 4,349,571 .09
February 28,
1994 6,678,467 .19 5,549,454 .16 (4,168,370) (.12) 1,381,084 .04
May 31, 1994 7,004,102 .24 5,910,189 .17 (17,312,645) (.46) (11,402,456) (.29)
August 31, 1994 7,178,807 .21 6,027,342 .18 (782,448) (.02) 5,244,894 .16
November 30,
1994 7,092,384 .20 6,096,465 .17 (32,730,626) (.95) (26,634,161) (.78)
--------------------------------------------------------------------------------------
</TABLE>
- --------------------------- 23
------------------------------
<PAGE>
MANAGED MUNICIPALS
PORTFOLIO INC.
DIRECTORS
Charles F. Barber
Allan J. Bloostein
Martin Brody
Dwight B. Crane
Robert A. Frankel
Heath B. McLendon
OFFICERS
Heath B. McLendon
CHAIRMAN OF THE BOARD AND
INVESTMENT OFFICER
Stephen J. Treadway
PRESIDENT
Joseph P. Deane
VICE PRESIDENT
INVESTMENT OFFICER
David Fare
INVESTMENT OFFICER
Lewis E. Daidone
SENIOR VICE PRESIDENT
AND TREASURER
Christina T. Sydor
SECRETARY
INVESTMENT ADVISER AND
ADMINISTRATOR
Smith Barney Mutual Funds
Management Inc.
388 Greenwich Street
New York, New York 10013
SUB-ADMINISTRATOR
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
AUDITORS AND COUNSEL
Coopers & Lybrand
One Post Office Square
Boston, Massachusetts 02109
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
TRANSFER AGENT
The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
CUSTODIAN
Boston Safe Deposit and
Trust Company
One Boston Place
Boston, Massachusetts 02108
- ------------------------------ 24
------------------------------
<PAGE>
- --------------------------------------------------------------------------------
THIS REPORT IS SENT TO THE SHAREHOLDERS OF
MANAGED MUNICIPALS PORTFOLIO INC.
FOR THEIR INFORMATION. IT IS NOT A PROSPECTUS,
CIRCULAR OR REPRESENTATION INTENDED FOR USE IN THE
PURCHASE OR SALE OF SHARES OF THE PORTFOLIO OR OF ANY
SECURITIES MENTIONED IN THE REPORT.
FD 0837 A5
- --------------------------------------------------------------------------------
