================================================================================
Managed Municipals
Portfolio Inc.
================================================================================
Quarterly Report
February 28, 1997
================================================================================
================================================================================
<PAGE>
[graphic]
Managed Municipals
Portfolio Inc.
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February 28, 1997
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Dear Shareholder:
We are pleased to provide you with the quarterly report for the Managed
Municipals Portfolio Inc. ("Portfolio") for the nine months ended February 28,
1997. During the past nine months, the Portfolio distributed income dividends
totaling $0.48 per share and a capital gain dividend of $0.295 per share. The
table below shows the annualized distribution rates and nine-month total returns
based on the Portfolio's February 28, 1997 net asset value (NAV) per share and
New York Stock Exchange (NYSE)closing price:
<TABLE>
<CAPTION>
Price Annualized Nine-Month
Per Share Distribution Rate* Total Return
- ------------- ----------------- ------------
<S> <C> <C>
$11.99 (NAV) 6.01% 5.75%
$11.75 (NYSE) 6.13% 7.36%
</TABLE>
In comparison, closed end municipal bond funds posted an average total
return of 8.05% on NAV for the same time period, as reported by Lipper
Analytical Services, Inc. (Lipper Analytical Services, Inc. is a major fund
tracking organization.) The Fund's underperformance on NAV was primarily due to
the drop in value of certain pulp recycling facility bonds held by the
Portfolio. The decline in the value of these bonds was caused by the decline in
the market price of pulp.
Market Update and Portfolio Strategy
The year ended February 28, 1997 proved to be a volatile one for both the
municipal and the U.S. government bond markets. In early 1996, a significant
bond market sell-off was precipitated by a pick-up in inflationary fears that
was caused by unexpected strength in the U.S. economy and concerns that the
Federal Reserve Board ("Fed") would
- ---------
* This distribution rate assumes monthly dividends at the current rate of
$0.06 per share for twelve months.
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<PAGE>
tighten rates in response. In retrospect, those concerns were unfounded because
Fed monetary policy did not change throughout 1996. In fact, as U.S. economic
growth moderated and concerns about Fed tightening eased, bond prices improved
significantly.
This bond market rally was in full swing in early December when Fed
Chairman Alan Greenspan made his now infamous comments concerning "irrational
exuberance" in the financial markets. In our view, Greenspan's comments caused a
rise in U.S. interest rates that persists to this day.
In the early part of 1996, we were extremely cautious about the municipal
bond market and the Portfolio's holdings reflected that caution. During that
time, we concentrated on municipal bonds with longer coupons and shorter
maturities and we maintained a moderate cash position, quite a defensive
strategy.
However, as the year unfolded and high-grade municipal bonds became
available with yields as high as 6.25%, we redeployed the Portfolio's cash and
moved to build a more interest-rate sensitive portfolio. Our primary focus was
to purchase high grade, discount coupon bonds with somewhat longer maturities
that could enhance the Portfolio's performance as rates moved lower. We continue
to maintain that same focus in the Portfolio today because of our belief that
the rise in rates caused by Greenspan's comments and the concurrent rise in bond
rates should take a little froth off the economic numbers. This in turn should
enable municipal bonds to rally from today's attractive rate levels.
Portfolio's Investment Strategy
During the past quarter, the Managed Municipals Portfolio Inc. focused on
the transportation, utility, and water and sewer sectors because we believe they
offered good relative values. At the end of February, the Portfolio's weighted
average maturity was approximately 23 years. In addition, as of February 28,
1997, approximately 86% of the Portfolio's holdings were rated investment grade
by either Standard & Poor's Corporation or Moody's Investors Services Inc., with
43% of the Portfolio invested in AAA bonds, the highest possible rating.
(Standard & Poor's and Moody's are two major credit reporting and bond rating
agencies.)
Market Outlook
We believe that low inflation and some moderation of recent economic
activity should be positive for interest rates for the balance of
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<PAGE>
1997. Notwithstanding any increase by the Fed in short-term rates, the prices of
long bonds today relative to the rate of inflation bodes well for municipal
bonds as the year progresses. Until we see a significant increase in inflation
fundamentals, we remain positive about the municipal bond market's prospects.
In closing, thank you for investing in Managed Municipals Portfolio Inc. We
look forward to continuing to help you achieve your financial goals.
Sincerely,
/s/ Heath B. McLendon /s/ Joseph P. Deane
--------------------- ---------------------
Heath B. McLendon Joseph P. Deane
Chairman and Vice President and
Chief Executive Officer Investment Officer
April 2, 1997
- --------------------------------------------------------------------------------
Congratulations to Joe Deane -- Morningstar, Inc.'s
Top-Rated Fixed Income Manager of the Year
We are pleased to report that Joe Deane, your Portfolio's manager, has been
named the top-rated fixed income manager of 1996 by Morningstar, Inc., a major
fund ranking organization. Joe manages in excess of $3.5 billion of Smith Barney
assets in both open-end and closed-end municipal bond funds. In addition, the
firm recently ran an ad honoring Joe's achievement both nationally and in select
California media.
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[GRAPHIC]
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
February 28, 1997 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
=================================================================================================
====================================
MUNICIPAL BONDS AND NOTES -- 100.0%
====================================
Alaska -- 3.0%
<C> <C> <S> <C>
Valdez, AK Marine Terminal Revenue,
BP Pipelines Inc. Project:
$ 12,000,000 AA Series A, 5.850% due 8/1/25 $ 11,685,000
1,000,000 AA Series C, 5.650% due 12/1/28 958,750
- -------------------------------------------------------------------------------------------------
12,643,750
- -------------------------------------------------------------------------------------------------
California -- 9.8%
4,000,000 AAA Anaheim, CA Public Finance Authority,
Lease Revenue, (Public Improvements
Project), Series A, FSA-Insured,
5.000% due 3/1/37 3,555,000
8,000,000 AAA California State Department Water Center,
Series Q, MBIA-Insured, 5.375%
due 12/1/27 7,670,000
California State GO:
3,000,000 AAA FGIC-Insured, 5.375% due 6/1/26 2,898,750
200,000 VMIG 1* Series C, 3.300% due 6/30/97(a) 200,000
California State Public Works,
Lease Revenue, AMBAC-Insured:
1,000,000 AAA Department of Corrections,
CA Prison, 5.250% due 1/1/21 946,250
1,000,000 AAA University of California, Series B,
5.375% due 12/1/19 963,750
3,300,000 BBB Los Angeles, CA Regional Airport
Improvement Corp., Los Angeles
International Airport Lease Revenue,
6.500% due 1/1/32(b) 3,316,500
2,000,000 AAA Los Angeles County, CA Metropolitan,
Transportation Authority, Sales
Tax Revenue, AMBAC-Insured,
5.250% due 7/1/23 1,875,000
3,140,000 AAA Rancho Mirage, CA Redevelopment
Agency Tax Allocation, (Redevelopment
Plan-1984 Project), Series M,
MBIA-Insured, 5.000% due 4/1/24 2,853,475
7,500,000 AAA San Diego, CA Public Finance Authority,
Sewer Revenue, FGIC-Insured,
5.000% due 5/15/20 6,909,375
</TABLE>
See Notes to
Financial Statements.
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[GRAPHIC]
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
February 28, 1997 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
=================================================================================================
<C> <C> <S> <C>
California -- 9.8% (continued)
San Francisco Building Authority Lease
Revenue, AMBAC-Insured:
$ 7,000,000 AAA 5.250% due 12/1/16 $ 6,737,500
1,000,000 AAA 5.250% due 12/1/21 953,750
2,000,000 AAA University of California Revenue,
Multiple Purpose Projects, Series C,
AMBAC-Insured, 5.000% due 9/1/23 1,795,000
- -------------------------------------------------------------------------------------------------
40,674,350
- -------------------------------------------------------------------------------------------------
Colorado -- 12.5%
1,000,000 AAA Adams County, CO School District
No. 014, FSA-Insured, 5.500%
due 12/1/16 993,750
3,000,000 Baa* Arapahoe County, CO Capital
Improvement, Public Highway Authority,
7.000% due 8/31/26(c) 3,300,000
2,000,000 BBB+ Colorado Springs, CO Airport Revenue,
Series A, 7.000% due 1/1/22(b) 2,105,000
5,000,000 AA Colorado Springs, CO Utilities Revenue
Refunding & Improvement, Series A,
5.125% due 11/15/23 4,693,750
100,000,000 Aaa* Dawson Ridge, CO Metropolitan District
No.1, Series B, (Escrowed to Maturity
with U.S. Government Securities), zero
coupon due 10/1/22 18,000,000
Denver, CO City & County Airport
Revenue, Series C:
4,000,000 BBB 6.750% due 11/15/22(b) 4,225,000
18,325,000 BBB 6.125% due 11/15/25(b) 18,576,969
- -------------------------------------------------------------------------------------------------
51,894,469
- -------------------------------------------------------------------------------------------------
Connecticut -- 0.7%
1,200,000 AA- Connecticut State Community
Development Authority,
Special Obligation, Series A,
5.550% due 12/15/15 1,189,500
1,750,000 AAA Connecticut State Health & Education
Facility Authority Revenue,
Connecticut College, Series C-1,
MBIA-Insured, 5.500% due 7/1/27 1,704,062
- -------------------------------------------------------------------------------------------------
2,893,562
- -------------------------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
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[GRAPHIC]
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
February 28, 1997 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
=================================================================================================
<C> <C> <S> <C>
District of Columbia -- 0.7%
$ 3,000,000 AAA District of Columbia Revenue,
The American University,
AMBAC-Insured,
5.625% due 10/1/26 $ 2,940,000
- -------------------------------------------------------------------------------------------------
Florida -- 9.5%
2,000,000 AAA Broward County, FL Professional Sports
Facility, (Civic Arena Project), Series A,
MBIA-Insured, 5.625% due 9/1/28 1,985,000
10,000,000 AAA Dade County, FL Water & Sewer Systems
Revenue, FGIC-Insured, 5.250%
due 10/1/26 9,437,500
2,000,000 AAA Escambia County, FL School Board COP,
Series 1, MBIA-Insured, 5.500%
due 2/1/16 1,990,000
Florida Board of Education, Capital Outlay
Refunding:
2,000,000 AA Series A, 5.250% due 6/1/22 1,887,500
Series D:
10,800,000 AA 5.125% due 6/1/18 10,206,000
2,500,000 AA 5.200% due 6/1/23 2,340,625
5,000,000 BBB- Martin County, FL IDA, (Indiantown
Cogeneration Project), Series A,
7.875% due 12/15/25(b) 5,775,000
Tampa, FL Revenue Bonds,
(Florida Aquarium Inc. Project):
3,000,000 NR 7.550% due 5/1/12 3,457,500
2,000,000 NR 7.750% due 5/1/27(c) 2,322,500
- -------------------------------------------------------------------------------------------------
39,401,625
- -------------------------------------------------------------------------------------------------
Illinois -- 2.8%
3,000,000 AAA Chicago, IL Midway Airport Revenue,
MBIA-Insured, 5.500% due 1/1/29 2,876,250
8,000,000 AAA Chicago, IL Skyway Toll Bridge Revenue,
Series 1996, MBIA-Insured, 5.500%
due 1/1/23 7,720,000
1,000,000 AAA Metropolitan Pier & Exposition Authority,
(McCormick Plan Exposition Project),
Series A, AMBAC-Insured, 5.250%
due 6/15/27 931,250
- -------------------------------------------------------------------------------------------------
11,527,500
- -------------------------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
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[GRAPHIC]
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
February 28, 1997 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
=================================================================================================
<C> <C> <S> <C>
Indiana -- 4.4%
$ 5,000,000 Aa3* Indiana Port Commission Revenue
Refunding Project, (Cargill Inc. Project),
6.875% due 5/1/12(c) $ 5,437,500
13,305,000 AAA Indiana Transportation Finance Authority,
Airport Facilities Lease Revenue,
Series A, AMBAC-Insured,
5.000% due 11/1/12 12,822,694
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18,260,194
- -------------------------------------------------------------------------------------------------
Louisiana -- 1.4%
5,500,000 Aa3* Saint Martin Parish, LA Industrial Project,
(Cargill Inc. Project), 6.625%
due 10/1/12 5,912,500
- -------------------------------------------------------------------------------------------------
Maryland -- 1.1%
10,000,000 NR Maryland State Energy Financing
Administration, Solid Waste Disposal
Revenue, Limited Obligation,
(Hagerstown Project), 9.000%
due 10/15/16(c) 4,400,000
- -------------------------------------------------------------------------------------------------
Massachusetts -- 3.2%
Massachusetts Bay Transportation
Authority, Series B:
2,000,000 AAA AMBAC-Insured, 5.375% due 3/1/20 1,927,500
4,760,000 AAA FSA-Insured, 5.250% due 3/1/26 4,450,600
10,000,000 NR Massachusetts State IDA, Solid Waste
Disposal Revenue, Massachusetts
Recycling Association, Series A,
9.000% due 8/1/16(c) 5,000,000
2,000,000 AAA Massachusetts State Water Resource
Authority, Series C, MBIA-Insured,
5.250% due 12/1/20 1,882,500
- -------------------------------------------------------------------------------------------------
13,260,600
- -------------------------------------------------------------------------------------------------
Michigan -- 5.4%
1,440,000 AA Michigan Municipal Bond Authority
Pooled, Project Revenue, 5.625%
due 10/1/19 1,427,400
2,000,000 AA- Michigan State Public Power Agency
Revenue, (Bell River Project), Series B,
5.000% due 1/1/19 1,822,500
</TABLE>
See Notes to
Financial Statements.
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[GRAPHIC]
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
February 28, 1997 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
=================================================================================================
<C> <C> <S> <C>
Michigan -- 5.4% (continued)
$ 2,000,000 NR Michigan State Strategic Funding, Limited
Obligation Revenue, (Blue Water Fiber
Project), 8.000% due 1/1/12(b)(c) $ 1,450,000
16,375,000 NR Midland County, MI Education
Development Corporation, PCR,
Limited Obligation, Series B,
9.500% due 7/23/09(b) 17,889,688
- -------------------------------------------------------------------------------------------------
22,589,588
- -------------------------------------------------------------------------------------------------
Minnesota -- 4.5%
2,500,000 Aa3* Duluth, MN Seaway Port Authority, IDA,
Dock & Wharf Revenue, (Cargill Inc.
Project), 6.800% due 5/1/12 2,700,000
15,085,000 Baa* St. Paul, MN Housing & Redevelopment
Authority, (Health East Project), Series D,
9.750% due 11/1/17(c) 15,882,242
- -------------------------------------------------------------------------------------------------
18,582,242
- -------------------------------------------------------------------------------------------------
Missouri -- 1.1%
2,000,000 AAA Kansas City, MO Municipal Assistance
Refunding Corp., Series A, MBIA-Insured,
5.000% due 4/15/20 1,840,000
2,650,000 AAA Missouri State Health & Education
Facilities Authority, St. Lukes/Shawnee
Mission, Series A, MBIA-Insured,
5.375% due 11/15/21 2,563,875
- -------------------------------------------------------------------------------------------------
4,403,875
- -------------------------------------------------------------------------------------------------
Montana -- 1.9%
8,000,000 NR Montana State Board Investment
Resources Recovery, (Yellowstone
Energy Project), 7.000% due 12/31/19(b) 7,850,000
- -------------------------------------------------------------------------------------------------
Nebraska -- 0.9%
4,000,000 AAA Nebraska Public Power District
Revenue, Series A, MBIA-Insured,
5.250% due 1/1/28 3,760,000
- -------------------------------------------------------------------------------------------------
New Hampshire -- 0.7%
3,000,000 Aa* New Hampshire State Housing Finance
Authority, Single-Family Mortgage
Revenue, 6.300% due 1/1/26(b) 3,052,500
- -------------------------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
====================================== 8 =======================================
[GRAPHIC]
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
February 28, 1997 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
=================================================================================================
<C> <C> <S> <C>
New Jersey -- 1.3%
$ 5,200,000 A+ Hudson County, NJ Improvement
Authority, 6.625% due 8/1/25 $ 5,557,500
- -------------------------------------------------------------------------------------------------
New York -- 7.8%
New York City Municipal Water
Financing Authority, Water & Sewer
System Revenue:
2,000,000 AAA Series A, FSA-Insured,
5.500% due 6/15/26 1,900,000
3,500,000 AAA Series B, MBIA-Insured,
5.500% due 6/15/19 3,403,750
1,090,000 AAA New York State Dormitory Authority
Lease Revenue, Health Facilities
Improvement Program, Series A,
FSA-Insured, 5.500% due 5/15/16 1,083,187
New York State Dormitory Authority
Revenue, AMBAC-Insured:
2,620,000 AAA Barnard College, 5.250% due 7/1/26 2,479,175
7,000,000 AAA Montefiore Medical Center,
5.250% due 2/1/15 6,755,000
6,000,000 A New York State Local Government
Assistance Corp, Series D,
5.000% due 4/1/23 5,407,500
4,300,000 AAA New York State Medcare
Mental Health Services, FSA-Insured,
5.250% due 2/15/21 4,009,750
8,000,000 Aa* New York Triborough Bridge & Tunnel
Authority, 5.000% due 1/1/24 7,210,000
- -------------------------------------------------------------------------------------------------
32,248,362
- -------------------------------------------------------------------------------------------------
Ohio -- 0.9%
1,000,000 AAA Cleveland-Cuyahoga County, OH
Port Authority Revenue, Rock &
Roll Hall of Fame, AMBAC-Insured,
5.400% due 12/1/15 978,750
2,600,000 VMIG 1* Ohio Air Quality, Gas & Electric,
3.550% due 9/1/30(a) 2,600,000
- -------------------------------------------------------------------------------------------------
3,578,750
- -------------------------------------------------------------------------------------------------
Pennsylvania -- 0.7%
2,000,000 AAA Northeastern, PA Hospital & Education
Authority, Healthcare Revenue,
Wyoming Healthcare, Series A,
AMBAC-Insured, 5.250% due 1/1/26 1,865,000
</TABLE>
See Notes to
Financial Statements.
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[GRAPHIC]
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
February 28, 1997 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
=================================================================================================
<C> <C> <S> <C>
Pennsylvania -- 0.7% (continued)
$ 1,000,000 AAA Pottstown Boro, PA Authority Sewer
Revenue, AMBAC-Insured, 5.500%
due 11/1/16 $ 991,250
- -------------------------------------------------------------------------------------------------
2,856,250
- -------------------------------------------------------------------------------------------------
South Carolina -- 0.5%
2,000,000 BBB+ Myrtle Beach, SC COP, Myrtle Beach
Convention Center, 6.875% due 7/1/07 2,130,000
- -------------------------------------------------------------------------------------------------
Tennessee -- 0.3%
1,150,000 NR Hardeman County, TN Correctional
Facility Corp., 7.750% due 8/1/17 1,151,438
- -------------------------------------------------------------------------------------------------
Texas -- 8.3%
2,000,000 AAA Brownsville, TX Utility Systems Revenue,
AMBAC-Insured, 5.250% due 9/1/20 1,905,000
Burleson, TX ISD, PSFG:
1,160,000 Aaa* 6.750% due 8/1/24 1,268,750
2,840,000 Aaa* Pre-Refunded-- Escrowed with U.S
Government Securities to 8/1/06
Call @ 100, 6.750% due 8/1/24 3,230,500
4,000,000 AAA Harris County, TX Toll Road,
FGIC-Insured, 5.375% due 8/15/20 3,870,000
Houston, TX Water & Sewer System
Revenue, FGIC-Insured:
5,000,000 AAA Series A, 5.375% due 12/1/27 4,756,250
1,500,000 AAA Series C, 5.375% due 12/1/27 1,426,875
2,000,000 AAA Leander, TX ISD, PSFG, 5.625%
due 8/15/18 2,005,000
4,750,000 BB Sam Rayburn, TX Municipal Power
Agency, Series A, 6.750%
due 10/1/14(c) 4,500,625
12,000,000 AAA Texas State Turnpike Authority, Dallas
North Thruway Revenue, President
George Bush Turnpike, FGIC-Insured,
5.250% due 1/1/23 11,355,000
- -------------------------------------------------------------------------------------------------
34,318,000
- -------------------------------------------------------------------------------------------------
Utah -- 3.5%
16,000,000 Aa* Intermountain Power Agency, Utah Power
Supply Revenue Refunding, Series D,
5.500% due 7/1/21 14,540,000
- -------------------------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
====================================== 10 ======================================
[GRAPHIC]
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
February 28, 1997 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
=================================================================================================
<C> <C> <S> <C>
Virginia -- 4.2%
$ 4,700,000 A* Harrisonburg, VA Redevelopment and
Housing Authority, (Jail & Courthouse
Project), Public Facility Lease Revenue,
6.500% due 9/1/14 $ 4,882,125
Virginia College Building Authority,
Virginia Educational Facilities
Revenue, 21st Century College Program:
3,590,000 AA 5.250% due 8/1/13 3,545,125
3,805,000 AA 5.250% due 8/1/14 3,738,412
Virginia State Housing Development
Authority, Multi-Family Housing:
1,655,000 AA+ Series D, 6.250% due 1/1/15 1,681,894
1,235,000 AA+ Series H, 6.300% due 11/1/15 1,273,594
600,000 AA+ Series K, 5.800% due 11/1/10 617,250
2,000,000 AA Virginia State Transportation Board,
Transportation Contract Revenue,
Series A, 5.125% due 5/15/21 1,880,000
- -------------------------------------------------------------------------------------------------
17,618,400
- -------------------------------------------------------------------------------------------------
Washington -- 5.2%
4,750,000 A+ Chelan County, WA GO Public Utilities,
District No. 001, Series 1993A,
District 4, Remarketed, mandatory
put 7/1/19, 6.750% due 7/1/62(c) 4,934,062
11,000,000 AA- Washington State Health Care Facilities,
Sisters of Providence Hospital,
7.875% due 10/1/10(c) 12,086,250
Washington State Public Power,
FSA-Insured, Series C:
3,555,000 AAA Nuclear Project No. 1,
5.375% due 7/1/15 3,363,919
1,500,000 AAA Nuclear Project No. 3,
5.375% due 7/1/15 1,419,375
21,803,606
West Virginia -- 1.3%
Marion County, WV Community Solid
Waste Disposal Facilities Revenue:
1,000,000 NR American Fiber Resource Project,
Series B, 9.250% due 12/1/11(b)(c) 500,000
10,000,000 NR American Power Paper Recycling
Project, 7.750% due 12/1/11(b)(c) 5,000,000
- -------------------------------------------------------------------------------------------------
5,500,000
- -------------------------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
====================================== 11 ======================================
[GRAPHIC]
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
February 28, 1997 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
=================================================================================================
<C> <C> <S> <C>
Wisconsin -- 2.4%
$ 4,070,000 AA Wisconsin State GO, Series B,
6.600% due 1/1/22(b) $ 4,334,550
Wisconsin State Health and Educational
Facilities Authority, MBIA-Insured:
3,000,000 AAA Aurora Health Care Project,
5.250% due 8/15/23 2,790,000
2,000,000 AAA Marquette University Project,
5.500% due 12/1/11 2,007,500
1,000,000 AAA Medical College, 5.400% due 12/1/16 956,250
- -------------------------------------------------------------------------------------------------
10,088,300
- -------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS AND NOTES ============
(COST-- $420,259,379**) $415,437,361
=================================================================================================
</TABLE>
(a) Variable rate municipal bonds and notes are payable upon not more than one
business day's notice.
(b) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(c) Security segregated by Custodian for open purchase commitments.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 14 and 15 for definition of ratings and certain security
descriptions.
See Notes to
Financial Statements.
====================================== 12 ======================================
[GRAPHIC]
<PAGE>
================================================================================
Summary of Investments by Combined Ratings
February 28, 1997 (unaudited)
================================================================================
================================================================================
<TABLE>
<CAPTION>
Percent of
Moody's and/or Standard & Poor's Total Investments
==============================================================================
<S> <C> <C>
Aaa AAA 43.0%
Aa AA 24.9
A A 5.8
Baa BBB 12.6
Ba BB 1.1
VMIG 1 A-1 0.7
NR NR 11.9
-----
100.0%
=====
</TABLE>
================================================================================
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[GRAPHIC]
<PAGE>
================================================================================
Bond Ratings
================================================================================
All ratings are by Standard & Poor's Ratings Service ("Standard & Poor's"),
except those identified by an asterisk (*) are rated by Moody's Investors
Service Inc. ("Moody's"). The definitions of the applicable rating symbols are
set forth below:
Standard & Poor's -- Ratings from "AA" to "BB" may be modified by the addition
of a plus (+) or minus (-) sign to show relative standings within the major
rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differs from the highest rated issue only in a small
degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in
higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than in higher
rated categories.
BB -- Bonds rated "BB" have less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which
could lead to inadequate capacity to meet timely interest and
principal payments.
Moody's-- Numerical modifiers 1, 2 and 3 may be applied to each generic rating
from "Aa" to "Baa," where 1 is the highest and 3 the lowest ranking within its
generic category.
Aaa -- Bonds that are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa -- Bonds that are rated "Aa" are judged to be of high quality by all
standards. Together with the "Aaa" group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large in "Aaa"
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in "Aaa" securities.
A -- Bonds that are rated "A" possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but
elements may be present which suggest a susceptibility to impairment
some time in the future.
Baa -- Bonds that are rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
NR -- Indicates that the bond is not rated by Standard & Poor's or Moody's.
====================================== 14 ======================================
[GRAPHIC]
<PAGE>
================================================================================
Short-Term Securities Ratings
================================================================================
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong; those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG 1 rating.
================================================================================
Security Descriptions
================================================================================
ABAG -- Association of Bay Area Governors
AIG -- American International Guaranty
AMBAC -- American Municipal Bond Assurance Corporation
BAN -- Bond Anticipation Notes
BIG -- Bond Investors Guaranty
CDA -- Community Development
Administration
CGIC -- Capital Guaranty Insurance Company
CHFCLI -- California Health Facility
Construction Loan Insurance
COP -- Certificate of Participation
EDA -- Economic Development Authority
ETM -- Escrowed To Maturity
FAIRS -- Floating Adjustable Interest Rate Securities
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRTC -- Floating Rate Trust Certificates
FSA -- Federal Savings Association
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage
Association
GO -- General Obligation
HDC -- Housing Development Corporation
HDA -- Housing Development Authority
HFA -- Housing Finance Authority
IDA -- Industrial Development Authority
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
ISD -- Independent School District
INFLOS -- Inverse Floaters
ISD -- Independent School District
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PSFG -- Permanent School Fund Guaranty
RAN -- Revenue Anticipation Notes
RIBS -- Residual Interest Bonds
RITES -- Residual Interest Tax-Exempt Securities
TAN -- Tax Anticipation Notes
TECP -- Tax Exempt Commercial Paper
TOB -- Tender Option Bonds
TRAN -- Tax and Revenue Anticipation
Notes
SYCC -- Structured Yield Curve Certificate
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday Demand
====================================== 15 ======================================
[GRAPHIC]
<PAGE>
================================================================================
Statement of Assets and Liabilities
(unaudited)
================================================================================
<TABLE>
<CAPTION>
February 28, 1997
================================================================================
ASSETS:
<S> <C>
Investments, at value (Cost-- $420,259,379) $415,437,361
Receivable for securities sold 6,311,209
Interest receivable 88,942
- --------------------------------------------------------------------------------
Total Assets 421,837,512
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 6,871,678
Dividends payable 937,833
Investment advisory fees payable 231,218
Administration fees payable 66,999
Accrued expenses 111,352
- --------------------------------------------------------------------------------
Total Liabilities 8,219,080
- --------------------------------------------------------------------------------
Total Net Assets $413,618,432
================================================================================
NET ASSETS:
Par value of capital shares $ 34,498
Capital paid in excess of par value 412,278,884
Undistributed net investment income 2,460,406
Accumulated net realized gain from
security transactions and futures contracts 3,666,662
Net unrealized depreciation of investments (4,822,018)
- --------------------------------------------------------------------------------
TOTAL NET ASSETS
(Equivalent to $11.99 a share on 34,498,420 shares of $0.001
par value outstanding: 500,000,000 shares authorized) $413,618,432
================================================================================
</TABLE>
See Notes to
Financial Statements.
====================================== 16 ======================================
[GRAPHIC]
<PAGE>
================================================================================
Statement of Operations
(unaudited)
================================================================================
<TABLE>
<CAPTION>
Nine Months
Ended
2/28/97
================================================================================
<S> <C>
INVESTMENT INCOME:
Interest $20,692,681
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 2,198,252
Administration fees (Note 3) 628,072
Shareholder communications 155,149
Audit and legal 38,539
Directors' fees 36,549
Registration fees 22,740
Shareholder and system servicing fees 15,602
Custody 14,322
Pricing service fees 8,952
Other 6,189
- --------------------------------------------------------------------------------
Total Expenses 3,124,366
- --------------------------------------------------------------------------------
Net Investment Income 17,568,315
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FUTURES CONTRACTS (NOTES
4 and 5):
Realized Gain From:
Security transactions (excluding short-term securities) 8,579,055
Futures contracts 164,375
- --------------------------------------------------------------------------------
Net Realized Gain 8,743,430
- --------------------------------------------------------------------------------
Change in Net Unrealized Depreciation of Investments:
Beginning of period (940,504)
End of period (4,822,018)
- --------------------------------------------------------------------------------
Increase in Net Unrealized Depreciation (3,881,514)
- --------------------------------------------------------------------------------
Net Gain on Investments and Futures Contracts 4,861,916
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $22,430,231
================================================================================
</TABLE>
See Notes to
Financial Statements.
====================================== 17======================================
[GRAPHIC]
<PAGE>
================================================================================
Statement of Operations
(unaudited)
================================================================================
<TABLE>
<CAPTION>
Nine Months
Ended
2/28/97 Year Ended
(unaudited) 5/31/96
===============================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $17,568,315 $23,014,251
Net realized gain 8,743,430 7,326,011
Increase in net unrealized depreciation (3,881,514) (19,254,835)
- -----------------------------------------------------------------------------------------------
Increase in Net Assets From Operations 22,430,231 11,085,427
- -----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 2):
Net investment income (16,559,242) (25,858,323)
Net realized gains (10,177,035) (222,483)
- -----------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (26,736,277) (26,080,806)
- -----------------------------------------------------------------------------------------------
Decrease in Net Assets (4,306,046) (14,995,379)
NET ASSETS:
Beginning of period 417,924,478 432,919,857
- -----------------------------------------------------------------------------------------------
End of period* $413,618,432 $417,924,478
===============================================================================================
* Includes undistributed net
investment income of: $2,460,406 $1,451,333
===============================================================================================
</TABLE>
See Notes to
Financial Statements.
====================================== 18 ======================================
[GRAPHIC]
<PAGE>
================================================================================
Notes to Financial Statements
(unaudited)
================================================================================
1. Significant Accounting Policies
Managed Municipals Portfolio Inc. ("Fund"), a Maryland corporation, is
registered under the Investment Company Act of 1940, as amended, as a
non-diversified, closed-end management investment company.
The significant accounting policies consistently followed by the Fund are:
(a) security transactions are accounted for on trade date; (b) securities are
valued at the mean between bid and ask prices provided by an independent pricing
service that are based on transactions in municipal obligations, quotations from
municipal bond dealers, market transactions in comparable securities and various
relationships between securities; (c) securities maturing within 60 days or less
are valued at cost plus accreted discount, or minus amortized premium, which
approximates value; (d) gains or losses on the sale of securities are calculated
by using the specific identification method; (e) interest income, adjusted for
amortization of premium and accretion of original issue discount, is recorded on
the accrual basis; market discount is recognized upon the disposition of the
security; (f) dividends and distributions to shareholders are recorded on the
ex-dividend date; (g) the Fund intends to comply with the applicable provisions
of the Internal Revenue Code of 1986, as amended, pertaining to regulated
investment companies and to make distributions of taxable income sufficient to
relieve it from substantially all Federal income and excise taxes; (h) the
character of income and gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. At May 31, 1996, reclassifications were made to the Fund's capital
accounts to reflect permanent book/tax differences and income and gains
available for distributions under income tax regulations. Net investment income,
net realized gains and net assets were not affected by this change; and (i)
estimates and assumptions are required to be made regarding assets, liabilities
and changes in net assets resulting from operations when financial statements
are prepared. Changes in the economic environment, financial markets and any
other parameters used in determining these estimates could cause actual results
to differ.
In addition, certain prior year numbers have been restated to reflect
current year's presentation. Net investment income, net realized gains and net
assets were not affected in this change.
====================================== 19 ======================================
[GRAPHIC]
<PAGE>
================================================================================
Notes to Financial Statements
(unaudited) (continued)
================================================================================
2. Exempt-Interest Dividends and Other Distributions
The Fund intends to satisfy conditions that will enable interest from
municipal securities, which is exempt from regular Federal income tax and from
designated state income taxes, to retain such tax-exempt status when distributed
to the shareholders of the Fund.
Capital gain distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
3. Investment Advisory Agreement, Administration Agreement and Other
Transactions
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc. ("SBH"), through its Greenwich Street Advisors division,
acts as investment adviser to the Fund. The Fund pays SBMFM a fee calculated at
an annual rate of 0.70% of the average daily net assets of the Fund. This fee is
calculated daily and paid monthly.
SBMFM also acts as the Fund's administrator for which the Fund pays a fee
calculated at an annual rate of 0.20% of the average daily net assets; this fee
is calculated daily and paid monthly.
All officers and one Director of the Fund are employees of Smith Barney
Inc.
4. Investments
For the nine months ended February 28, 1997, the aggregate cost of
purchases and proceeds from sales of investments (including maturities, but
excluding short-term securities) were as follows:
<TABLE>
================================================================================
<S> <C>
Purchases $380,765,202
- --------------------------------------------------------------------------------
Sales 380,783,916
================================================================================
</TABLE>
At February 28, 1997, the aggregate gross unrealized appreciation and
depreciation of investments were as follows:
<TABLE>
================================================================================
<S> <C>
Gross unrealized appreciation $ 12,935,878)*
Gross unrealized depreciation (17,757,896)*
- --------------------------------------------------------------------------------
Net unrealized depreciation $ (4,822,018)*
================================================================================
</TABLE>
* Substantially the same for Federal income tax purposes.
====================================== 20 ======================================
[GRAPHIC]
<PAGE>
================================================================================
Notes to Financial Statements
(unaudited) (continued)
================================================================================
5. Futures Contracts
Initial margin deposits made upon entering into futures contracts are
recognized as assets. The initial margin is segregated by the custodian and is
noted in the schedule of investments. During the period the futures contract is
open, changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each day's trading. Variation margin payments are
made or received and recognized as assets due from or liabilities due to broker,
depending upon whether unrealized gains or losses are incurred. When the
contract is closed, the Fund records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transactions and
the Fund's basis in the contract. The Fund enters into such contracts to hedge a
portion of its portfolio. The Fund bears the market risk that arises from
changes in the value of the financial instruments and securities indices
(futures contracts) and the credit risk should a counterparty fail to perform
under such contracts.
At February 28, 1997, there were no open futures contracts.
====================================== 21 ======================================
[GRAPHIC]
<PAGE>
================================================================================
Financial Highlights
================================================================================
For a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
1997(1) 1996 1995 1994 1993(2)
====================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $12.11 $12.55 $12.26 $13.00 $12.00
- ----------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.51 0.67 0.72 0.67 0.63
Net realized and unrealized
gain (loss) 0.15 (0.35) 0.49 (0.23) 0.97
- ----------------------------------------------------------------------------------------------------
Total Income From Operations 0.66 0.32 1.21 0.44 1.60
- ----------------------------------------------------------------------------------------------------
Offering Costs Charged
to Paid-In Capital -- -- -- -- (0.02)
- ----------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.48) (0.75) (0.67) (0.67) (0.55)
Net realized gains (0.30) (0.01) (0.25) (0.51) (0.03)
- ----------------------------------------------------------------------------------------------------
Total Distributions (0.78) (0.76) (0.92) (1.18) (0.58)
- ----------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $11.99 $12.11 $12.55 $12.26 $13.00
- ----------------------------------------------------------------------------------------------------
Total Return,
Based on Market Value 7.36%++ 12.22% 8.40% 2.27% 7.02%++
- ----------------------------------------------------------------------------------------------------
Total Return,
Based on Net Asset Value 5.75%++ 2.83% 10.96% 3.45% 13.58%++
- ----------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $413,618 $417,924 $432,920 $422,792 $443,938
- ----------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.00%+ 1.00% 1.02% 1.00% 0.98%+
Net investment income 5.59+ 5.35 5.97 5.15 5.48+
- ----------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 89% 45% 93% 72% 169%
- ----------------------------------------------------------------------------------------------------
Market Value, End of Period $11.75 $11.69 $11.50 $11.50 $12.25
====================================================================================================
</TABLE>
(1) For the nine months ended February 28, 1997 (unaudited).
(2) For the period from June 26, 1992 (commencement of operations) to May 31,
1993.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
====================================== 22 ======================================
[GRAPHIC]
<PAGE>
================================================================================
Quarterly Results of Operations
(unaudited)
================================================================================
<TABLE>
<CAPTION>
Net Realized and Net Increase
Unrealized (Decrease) in
Investment Net Investment Gain (Loss) on Net Assets From
Income Income Investments Operations
-----------------------------------------------------------------------------------------------------
Per Per Per Per
Quarter Ended Total Share Total Share Total Share Total Share
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
August 31,
1994 $7,178,807 $0.21 $6,027,342 $0.18 $ (782,448) $(0.02) $ 5,244,894 $ 0.16
November 30,
1994 7,092,384 0.20 6,096,465 0.17 (32,730,626) (0.95) $(26,634,161) (0.78)
February 28,
1995 7,280,844 0.21 6,181,630 0.18 35,883,360 1.04 42,064,990 1.22
May 31,
1995 7,348,720 0.21 6,387,780 0.19 14,909,134 0.42 21,296,914 0.61
August 31,
1995 6,836,154 0.20 5,726,578 0.17 (4,006,671) (0.12) 1,719,907 0.05
November 30,
1995 6,832,879 0.20 5,725,758 0.17 9,842,182 0.29 15,567,940 0.45
February 29,
1996 6,815,655 0.19 5,690,615 0.16 (268,190) (0.01) 5,422,425 0.16
May 31,
1996 6,848,128 0.20 5,871,300 0.17 (17,496,145) (0.51) (11,624,845) (0.34)
August 31,
1996 7,112,514 0.21 6,061,372 0.18 (2,945,507) (0.09) 3,115,865 0.09
November 30,
1996 6,873,415 0.20 5,826,055 0.17 17,188,697 0.50 23,014,752 0.67
February 28,
1997 6,706,752 0.19 5,680,888 0.16 (9,381,274) (0.27) (3,700,386) (0.11)
======================================================================================================================
</TABLE>
====================================== 23 ======================================
[GRAPHIC]
<PAGE>
================================================================================
Financial Data
(unaudited)
================================================================================
For a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
NYSE Net Dividend
Record Payable Closing Asset Dividend Reinvestment
Date Date Price+ Value+ Paid Price
================================================================================================
<S> <C> <C> <C> <C> <C>
6/23/94 6/30/94 $11.750 $12.11 $0.061 $11.86
7/22/94 7/29/94 11.625 12.32 0.061 11.90
8/24/94 8/31/94 11.375 12.29 0.061 11.64
9/23/94 9/30/94 11.875 11.98 0.061 11.43
10/24/94 10/31/94 11.000 11.79 0.061 10.81
11/22/94 11/30/94 10.375 10.99 0.061 10.58
12/22/94* 12/30/94 10.375 11.33 0.140 10.87
1/24/95 1/31/95 11.063 11.56 0.061 11.33
2/21/95 2/28/95 11.375 12.07 0.061 11.46
3/24/95 3/31/95 11.375 12.26 0.061 11.56
4/21/95 4/28/95 11.375 12.41 0.061 11.54
5/23/95 5/31/95 11.250 12.41 0.061 11.89
5/23/95* 5/31/95 11.250 12.41 0.112 11.89
6/23/95 6/30/95 11.625 12.49 0.064 11.94
7/26/95 7/31/95 11.750 12.33 0.064 11.84
8/22/95 8/25/95 11.750 12.20 0.064 11.90
9/26/95 9/29/95 11.750 12.38 0.064 11.87
10/24/95 10/27/95 11.750 12.46 0.064 11.92
11/20/95 11/24/95 11.875 12.59 0.064 12.58
12/26/95 12/29/95 12.125 12.69 0.064 12.72
1/23/96 1/26/96 12.500 12.66 0.064 12.51
2/20/96 2/23/96 12.250 12.68 0.064 12.14
3/26/96 3/29/96 11.750 12.43 0.060 11.61
4/23/96 4/26/96 11.250 12.24 0.060 11.53
5/28/96 5/31/96 11.813 12.25 0.060 11.65
6/25/96 6/28/96 11.500 12.05 0.060 11.49
7/23/96 7/26/96 11.875 12.05 0.060 11.87
8/27/96 8/30/96 11.688 12.12 0.060 11.72
9/24/96 9/27/96 11.625 12.13 0.060 11.64
10/22/96 10/25/96 11.625 12.23 0.060 11.57
11/25/96 11/29/96 11.500 12.44 0.060 11.57
12/23/96* 12/27/96 11.375 12.12 0.295 11.73
1/28/97 1/31/97 11.625 11.88 0.060 11.75
2/25/97 2/28/97 11.750 12.07 0.060 11.78
================================================================================================
</TABLE>
+ As of record date.
* Capital gain distribution.
====================================== 24 ======================================
[GRAPHIC]
<PAGE>
================================================================================
Additional Shareholder Information
(unaudited)
================================================================================
On September 12, 1996, the annual meeting of the shareholders of the Fund
was held for the purpose of voting on the following matters:
1. To approve or disapprove for the Fund, the election of Charles F.
Barber, Allan J. Bloostein, Martin Brody, Dwight B. Crane, Robert A.
Frankel, William R. Hutchinson and Heath B. McLendon as Directors; and
2. To approve or disapprove the selection of KPMG Peat Marwick LLP as
the independent auditors for the current fiscal year of the Fund.
The results of the vote on Proposal 1 were as follows:
<TABLE>
<CAPTION>
% of Votes % of
Directors Votes For Shares Voted Against Shares Voted
==================================================================================================
<S> <C> <C> <C> <C>
Charles F. Barber 31,911,672.550 98.523% 478,416.503 1.477%
Allan J. Bloostein 32,019,757.330 98.857 370,331.717 1.143
Martin Brody 31,960,071.550 98.672 430,017.503 1.328
Dwight B. Crane 32,034,184.330 98.901 355,904.707 1.099
Robert A. Frankel 32,000,017.330 98.796 390,071.717 1.204
William R. Hutchinson 31,987,128.220 98.756 402,960.830 1.244
Heath B. McLendon 32,037,578.330 98.912 352,510.717 1.088
==================================================================================================
</TABLE>
The results of the vote on Proposal 2 were as follows:
<TABLE>
<CAPTION>
% of Votes % of Votes % of
Votes For Shares Voted Against Shares Voted Abstained Shares Voted
==================================================================================================
<S> <C> <C> <C> <C> <C>
32,006,725.230 98.816% 117,249.000 0.362% 266,114.819 0.822%
==================================================================================================
</TABLE>
====================================== 25 ======================================
[GRAPHIC]
<PAGE>
================================================================================
Dividend Reinvestment Plan
(unaudited)
================================================================================
Under the Portfolio's Dividend Reinvestment Plan (the "Plan"), a
shareholder whose Common Stock is registered in his own name will have all
distributions reinvested automatically by First Data Investor Services Group,
Inc. ("First Data") as agent under the Plan, unless the shareholder elects to
receive cash. Distributions with respect to shares registered in the name of a
broker-dealer or other nominee (that is, in "street name") will be reinvested by
the broker or nominee in additional Common Stock under the Plan, but only if the
service is provided by the broker or nominee, and the broker or nominee makes an
election on behalf of the shareholder to participate in the Plan. Distributions
with respect to Common Stock registered in the name of Smith Barney will
automatically be reinvested by Smith Barney in additional shares under the Plan
unless the shareholder elects to receive distributions in cash. A shareholder
who holds Common Stock registered in the name of a broker or other nominee may
not be able to transfer the Common Stock to another broker or nominee and
continue to participate in the Plan. Investors who own Common Stock registered
in street name should consult their broker or nominee for details regarding
reinvestment.
The number of shares of Common Stock distributed to participants in the
Plan in lieu of a cash dividend is determined in the following manner. Whenever
the market price of the Fund's Common Stock is equal to or exceeds the net asset
value per share, participants will be issued shares of Common Stock valued at
the greater (i) the net asset value per share or (ii) 95% of the then current
market price. If the net asset value per share of Common Stock at the time of
valuation exceeds the market price of the Common Stock, First Data will buy
shares of the Fund's Common Stock on the open market, on the New York Stock
Exchange, Inc. or elsewhere, as soon as practicable after the record date of the
dividend or distribution, until it has expended for such purchases all of the
cash that would otherwise be payable to the participants.
First Data may commence purchasing shares beginning on the record date for
the dividend or distribution. The number of purchased shares that will then be
credited to the participants' accounts will be based on the average per share
purchase price of the shares so purchased, including brokerage commissions. If
First Data commences purchases in the open market and the market price of the
shares subsequently exceeds net asset value before the completion of the
purchases, First Data will attempt to terminate purchases in the open market and
cause the Fund to issue the remaining dividend or distribution in shares at net
asset value per share. In this case, the number of shares of Common Stock
received by the participant will be based on the weighted average of prices paid
for shares purchased in the open market and the price at which the Fund issues
the remaining shares.
====================================== 26 ======================================
[GRAPHIC]
<PAGE>
================================================================================
Dividend Reinvestment Plan
(unaudited) (continued)
================================================================================
Plan participants are not subject to any charge for reinvesting dividends
or capital gains distributions. Each Plan participant will, however, bear a
proportionate share of brokerage commissions incurred with respect to First
Data's open market purchases of shares of Common Stock in connection with
reinvestment of dividends or capital gains distributions.
A participant in the Plan will be treated for Federal income tax purposes
as having received, on the dividend payment date, a dividend or distribution in
an amount equal to the cash that the participant could have received instead of
shares of Common Stock.
A shareholder may terminate participation in the Plan at any time by
notifying First Data in writing. A termination will be effective immediately if
notice is received by First Data not less than 10 days before any dividend or
distribution record date. Otherwise, the termination will be effective, and only
with respect to any subsequent dividends or distributions, on the first trading
day after the dividend or distribution has been credited to the participant's
account in additional shares of Common Stock of the Fund. Upon termination
according to a participant's instructions, First Data will either (a) issue
certificates for the whole shares credited to a Plan account and a check
representing any fractional shares or (b) sell the shares in the market. There
will be $5.00 fee assessed for liquidation service, plus brokerage commissions,
and First Data is authorized to sell a sufficient number of a participant's
shares to cover such amounts.
Information concerning the Plan may be obtained from First Data at (800)
331-1710.
-----------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that from time to time the Fund may purchase
shares of its common stock in the open market.
====================================== 27 ======================================
[GRAPHIC]
<PAGE>
Managed Municipals
Portfolio Inc.
Directors Investment Adviser and
Charles F. Barber Administrator
Allan J. Bloostein Smith Barney Mutual Funds
Martin Brody Management Inc.
Dwight B. Crane 388 Greenwich Street
Robert A. Frankel New York, New York 10013
William R. Hutchinson
Heath B. McLendon, Chairman Transfer Agent
First Data Investor Services
Officers Group, Inc.
Heath B. McLendon P.O. Box 1376
Chief Executive Officer Boston, Massachusetts 02104
Jessica M. Bibliowicz Custodian
President PNC Bank, N.A.
17th & Chestnut Streets
Lewis E. Daidone Philadelphia, Pennsylvania 19103
Senior Vice President
and Treasurer
Joseph P. Deane
Vice President and
Investment Officer
David Fare
Investment Officer
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
====================================== 28 ======================================
[GRAPHIC]
<PAGE>
================================================================================
================================================================================
This report is sent to the shareholders of the
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 Fund or of any
securities mentioned in the report.
FD0879 4/97
================================================================================
================================================================================
