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Managed Municipals
Portfolio Inc.
Semi-Annual Report
November 30, 1997
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Managed Municipals
Portfolio Inc.
November 30, 1997
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Dear Shareholder:
We are pleased to provide the semi-annual report for the Managed Municipals
Portfolio Inc. ("Portfolio") for the period ended November 30, 1997. Over the
six-month period covered by this report, the Portfolio distributed income
dividends totaling $0.348 per share. The table below shows the annualized
distribution rate and six-month total return based on the Portfolio's November
30, 1997 net asset value ("NAV") per share and its New York Stock Exchange
("NYSE") closing price:
<TABLE>
<CAPTION>
Price Annualized Six-Month
Per Share Distribution Rate* Total Return
-------------- ------------------ ------------
<S> <C> <C>
$12.45 (NAV) 5.40% 7.73%
$11.625 (NYSE) 5.78% 2.97%
</TABLE>
In comparison, general closed-end municipal bond funds posted an average
total return based on NAV of 6.28% for the same time period, as reported by
Lipper Analytical Services, Inc. (Lipper is a major fund-tracking organization.)
Municipal Bond Market Update
The municipal bond market is in the midst of a powerful rally that began in
early spring. Yet municipal bonds have not rallied quite as much as government
bonds because this fall has seen a prolific issuance of refunding issues. All of
this simply means that municipals are very attractive on an after-tax basis
compared to government bonds at this time. We have therefore been fully invested
with an emphasis on high-quality issues because of the little yield pick-up
available from lower-rated issues. We tend to be value-oriented investors.
Quality in our view is coming at a small premium over BAA and lower-rated
credits.
- ----------
* This distribution assumes monthly dividends at the current rate of $0.056
per share for twelve months.
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1
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The powerful rally in municipals has created some very interesting
investment opportunities. The long maturities in our marketplace are priced
almost even with maturities that are considerably shorter. If we can maintain
our coupon income yet take much less interest rate risk, we are delighted to do
so. As long as the yield curve stays this "flat," we will continue to maintain a
high grade profile, and also seek to lessen our interest rate volatility in
today's lower interest-rate environment. We have been waiting for this market
opportunity for a while. Consistent with one of our key investment strategies
after large rallies, we tend to shorten up maturities a lot; after large
declines, we usually become more aggressive.
Fund's Investment Strategy
As of November 30, 1997, approximately 89.6% of the Portfolio's holdings
were rated investment grade (BBB/Baa and higher) by either Standard & Poor's
Corporation or Moody's Investor Service Inc., with approximately 59% of the
Portfolio invested in AAA/Aaa bonds, the highest possible rating.
(Investment-grade bonds are those rated Aaa, Aa, A and Baa by Moody's Investors
Service, Inc. or AAA, AA, A and BBB by Standard & Poor's Ratings Services, or
have an equivalent rating by any nationally recognized statistical rating
organization, or determined by the manager to be of equivalent quality.) The
Portfolio's largest holdings are concentrated in hospital bonds (about 18% of
the Portfolio), transportation bonds (16% of the Portfolio) and water and sewer
bonds (roughly 12% of the Portfolio) because we believe they offer good relative
values.
Municipal Bond Market Outlook
The fundamental outlook for bonds is quite good. The U.S. economy continues
to produce healthy results without fanning the flames of inflation. And while
inflation remains extremely low, with economic uncertainty prevalent in
Southeast Asia, we expect it to stay that way for the next several quarters.
Federal Reserve Board monetary policy appears to be on hold for the moment, and
tax-exempt bonds are in decent supply and are attractively priced. All of those
factors should add up to a municipal bond investor-friendly climate over the
next quarter or two. While we remain committed to our conservative investment
strategy, discipline will continue to be the main determinant of your Fund's
maturity structure.
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In closing, thank you for investing in the Managed Municipals Portfolio
Inc. We look forward to continuing to help you pursue your financial goals.
Sincerely,
/s/ Heath B. McLendon /s/ J. P. Deane
- --------------------- ---------------
Heath B. McLendon Joseph P. Deane
Chairman Vice President and
Investment Officer
December 19, 1997
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================================================================================
Schedule of Investments
November 30, 1997 (unaudited)
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<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
===================================================================================
====================================
MUNICIPAL BONDS AND NOTES -- 100.0%
====================================
<S> <C> <C> <C>
California -- 10.9%
$ 3,000,000 AAA Anaheim, CA Public Finance Authority,
Lease Revenue, (Public Improvements
Project), Series A, FSA-Insured,
5.000% due 3/1/37 $ 2,846,250
2,000,000 AAA California State Department of Water
Resource, (Center Valley Project
Revenue Water System), MBIA-Insured,
4.750% due 12/1/29 1,812,500
1,000,000 AAA California State Public Works Board, Lease
Revenue, AMBAC-Insured, Department
of Corrections, CA Prison,
5.250% due 1/1/21 991,250
2,755,000 AA California Statewide Community Development
Authority COP, (St. Joseph Health System),
5.250% due 7/1/21 2,720,562
Los Angeles, CA Public Works, Financing
Authority Lease Revenue, Series A:
2,000,000 AAA Multiple Capital Projects,
AMBAC-Insured, 5.125% due 6/1/17 1,967,500
3,000,000 AA Regional Park & Open Space District,
5.000% due 10/1/16 2,925,000
3,300,000 A- Los Angeles, CA Regional Airport
Improvement Corp., Los Angeles
International Airport Lease Revenue,
6.500% due 1/1/32(a) 3,427,875
Los Angeles County, CA Metropolitan,
Transportation Authority, Sales Tax
Revenue, MBIA-Insured:
7,700,000 AAA 5.250% due 7/1/17 7,709,625
3,000,000 AAA 5.250% due 7/1/18 2,992,500
Metropolitan Water District, Southern
California Waterworks Revenue Refunding:
Series A:
3,000,000 AA 5.000% due 7/1/16 2,940,000
1,500,000 AA 5.000% due 7/1/18 1,460,625
7,500,000 AAA Series B, MBIA-Insured, 4.750% due 7/1/21 6,946,875
3,140,000 AAA Rancho Mirage, CA Redevelopment Agency,
Tax Allocation Refunding, 1984 Project,
Series A, MBIA-Insured, 5.000% due 4/1/24 3,014,400
</TABLE>
See Notes to
Financial Statements.
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<PAGE>
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Schedule of Investments
November 30, 1997 (unaudited)(continued)
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<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
===================================================================================
<S> <C> <C> <C>
California -- 10.9% (continued)
$ 4,250,000 AAA Riverside County, CA COP (1997 Lease
Refunding Project), MBIA-Insured,
5.125% due 11/1/17 $ 4,170,313
2,750,000 AAA Sacramento County, CA Public Facilities
Project, MBIA-Insured, 5.375% due 2/1/19 2,767,187
- -----------------------------------------------------------------------------------
48,692,462
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Colorado -- 13.4%
Arapahoe County, CO Capital Improvement,
Public Highway Authority:
14,770,000 AAA E-470 Public Highway Authority, Series A,
MBIA-Insured, 5.000% due 9/1/21 14,234,588
3,000,000 Aaa* Pre-Refunded -- Escrowed with U.S.
government securities to 8/31/05
Call @ 103, 7.000% due 8/31/26(b)(c) 3,540,000
2,000,000 BBB+ Colorado Springs, CO Airport Revenue,
Series A, 7.000% due 1/1/22(a) 2,180,000
1,000,000 AA Colorado Springs, CO Utilities Revenue
Refunding & Improvement, Series A,
5.125% due 11/15/23 978,750
60,000,000 Aaa* Dawson Ridge, CO Metropolitan District
No. 1, Series B, (Escrowed to Maturity
with Refco Strips), zero coupon due 10/1/22 15,525,000
Denver, CO City & County Airport Revenue,
Series C:
10,165,000 Baa1* 6.125% due 11/15/25(a) 10,546,187
8,160,000 AAA Escrowed to Maturity with U.S.
government securities, 6.125% due
11/15/25(a)(c) 8,955,600
3,155,000 Baa1* 6.750% due 11/15/22(a) 3,415,288
845,000 AAA Pre-Refunded-- Escrowed with U.S.
government securities to 11/15/02
Call @ 102, 6.750% due 11/15/22(a)(c) 940,063
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60,315,476
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Connecticut -- 0.3%
1,200,000 AA- Connecticut State Community Development
Authority, Special Obligation, Series A,
5.550% due 12/15/15 1,228,500
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</TABLE>
See Notes to
Financial Statements.
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Schedule of Investments
November 30, 1997 (unaudited)(continued)
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<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
===================================================================================
<S> <C> <C> <C>
Florida -- 2.5%
$ 5,000,000 BBB- Martin County, FL IDA, (Indiantown
Cogeneration Project), Series A,
7.875% due 12/15/25(a) $ 5,806,250
Tampa, FL Revenue Bonds, (Florida
Aquarium Inc. Project):
2,900,000 NR 7.550% due 5/1/12(d) 3,309,625
2,000,000 NR 7.750% due 5/1/27(b) 2,300,000
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11,415,875
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Georgia -- 0.0%
200,000 VMIG 1* Burke County, GA Development
Authority PCR, GA Power Company,
3.750% due 4/1/32(e) 200,000
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Hawaii -- 0.9%
4,010,000 AAA Hawaii State GO, Series CP, FGIC-Insured,
5.000% due 10/1/15 3,914,763
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Illinois -- 2.7%
Illinois Health Facilities Authority Revenue:
1,000,000 AAA Edward Obligation Group, Series A,
AMBAC-Insured, 5.250% due 2/15/27 967,500
2,000,000 AAA Memorial Health Systems, MBIA-Insured,
5.250% due 10/1/18 1,957,500
1,500,000 AAA Sherman Health Systems, AMBAC-Insured,
5.250% due 8/1/27 1,451,250
4,000,000 AAA Illinois State GO, FGIC-Insured,
5.250% due 12/1/20 3,970,000
4,000,000 AAA Metropolitan Pier & Exposition
Authority, IL (McCormick Plan Exposition
Project), Series A, AMBAC-Insured,
5.250% due 6/15/27 3,955,000
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12,301,250
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Indiana -- 2.3%
5,000,000 AAA Indiana Health Facilities Financing
Authority, Hospital Revenue, (Sisters of
St. Francis Health), MBIA-Insured,
5.375% due 11/1/27 4,918,750
5,000,000 Aa3* Indiana Port Commission Revenue Refunding
Project, (Cargill Inc. Project),
6.875% due 5/1/12(b) 5,506,250
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10,425,000
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</TABLE>
See Notes to
Financial Statements.
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Schedule of Investments
November 30, 1997 (unaudited)(continued)
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<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
===================================================================================
<S> <C> <C> <C>
Louisiana -- 1.3%
$ 5,500,000 Aa3* Saint Martin Parish, LA Industrial Revenue,
(Cargill Inc. Project), 6.625% due 10/1/12 $ 6,008,750
- -----------------------------------------------------------------------------------
Maryland -- 0.7%
10,000,000 NR Maryland State Energy Financing Administration,
Solid Waste Disposal Revenue, Limited
Obligation, (Hagerstown Project),
9.000% due 10/15/16(b)(f) 3,100,000
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Massachusetts -- 6.4%
4,260,000 AAA Massachusetts Bay Transportation Authority,
Series B, FSA-Insured, 5.250% due 3/1/26 4,190,775
10,000,000 NR Massachusetts State Industrial Finance Authority,
Solid Waste Disposal Revenue, Massachusetts
Recycling Association, Series A, 9.000%
due 8/1/16(b)(f) 3,750,000
3,000,000 AA- Massachusetts State Port Authority Revenue,
Series A, 5.000% due 7/1/27 2,865,000
Massachusetts State Turnpike Authority,
Highway System Revenue, Sub-Series B,
MBIA-Insured:
2,000,000 AAA 5.250% due 1/1/29 1,977,500
2,500,000 AAA 5.125% due 1/1/37 2,400,000
Massachusetts State Water Resource Authority,
MBIA-Insured:
4,000,000 AAA Series B, 5.000% due 12/1/25 3,815,000
2,000,000 AAA Series C, 5.250% due 12/1/20 1,997,500
8,000,000 AAA Series D, 5.000% due 8/1/24 7,740,000
- -----------------------------------------------------------------------------------
28,735,775
- -----------------------------------------------------------------------------------
Michigan -- 5.9%
1,675,000 AA+ Michigan Municipal Bond Authority Revenue,
State Revolving Fund, 5.125% due 10/1/20 1,656,156
2,000,000 AA- Michigan State Building Authority Revenue,
Facilities Program, Series II,
4.750% due 10/15/13 1,905,000
5,000,000 AAA Michigan State Hospital Finance Authority
Revenue Refunding, Detriot Medical Group,
Series A, MBIA-Insured, 5.250% due 8/15/27 4,875,000
16,375,000 NR Midland County, MI Education Development
Corp., PCR, Limited Obligation, Series B,
9.500% due 7/23/09(a)(b) 18,217,188
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26,653,344
- -----------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
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<PAGE>
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Schedule of Investments
November 30, 1997 (unaudited)(continued)
================================================================================
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
===================================================================================
<S> <C> <C> <C>
Minnesota -- 1.1%
$ 2,500,000 Aa3* Duluth, MN Seaway Port Authority, IDA,
Dock & Wharf Revenue, (Cargill Inc.
Project), 6.800% due 5/1/12 $ 2,734,375
Minnesota State Higher Education Facilities
Authority Revenue, University St. Thomas
Education:
525,000 A2* Series 3, 5.375% due 4/1/18 520,406
615,000 A2* Series 4, 5.400% due 4/1/23 607,313
1,250,000 AA+ Minnesota State Housing Financing Agency,
Single-Family Mortgage, Series I,
5.500% due 1/1/17 1,267,187
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5,129,281
- -----------------------------------------------------------------------------------
Missouri -- 0.2%
1,000,000 AAA Fenton, MO COP, Capital Improvement Projects,
MBIA-Insured, 5.125% due 9/1/17 998,750
- -----------------------------------------------------------------------------------
Mississippi -- 0.3%
1,100,000 A-1+ Harrison County, MS PCR, (du Pont De Nemours
Project), 3.900% due 9/1/10(e) 1,100,000
- -----------------------------------------------------------------------------------
Montana -- 1.8%
8,000,000 NR Montana State Board Investment Resource
Recovery, (Yellowstone Energy Project),
7.000% due 12/31/19 7,870,000
- -----------------------------------------------------------------------------------
Nebraska -- 0.9%
4,000,000 AAA Nebraska Public Power District Revenue,
Series A, MBIA-Insured, 5.250% due 1/1/28 3,960,000
- -----------------------------------------------------------------------------------
New Jersey -- 1.3%
5,200,000 A+ Hudson County, NJ Improvement Authority,
6.625% due 8/1/25 5,635,500
- -----------------------------------------------------------------------------------
New York -- 7.1%
New York City Municipal Water Financing
Authority, Water & Sewer System Revenue,
Series A:
3,000,000 A- 5.125% due 6/15/17 2,936,250
1,500,000 A- 5.125% due 6/15/21 1,451,250
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 1,104,987
</TABLE>
See Notes to
Financial Statements.
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<PAGE>
================================================================================
Schedule of Investments
November 30, 1997 (unaudited)(continued)
================================================================================
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
===================================================================================
<S> <C> <C> <C>
New York -- 7.1% (continued)
New York State Dormitory Authority Revenue:
AMBAC-Insured:
$ 2,620,000 AAA Barnard College, 5.250% due 7/1/26 $ 2,593,800
6,000,000 AAA Montefiore Medical Center,
5.250% due 2/1/15 6,007,500
4,000,000 AAA Mental Health Services Facilities
Improvement, Series D, FSA-Insured,
5.125% due 8/15/17 3,910,000
5,000,000 A- State University Educational Facilities,
5.000% due 5/15/14 4,856,250
New York State Medcare Mental Health
Services:
3,000,000 AAA FGIC-Insured, 5.250% due 2/15/19 2,958,750
1,300,000 AAA FSA-Insured, 5.250% due 2/15/21 1,272,375
5,000,000 Aa* Triborough Bridge & Tunnel Authority
of NY, General Purpose, Series A,
5.000% due 1/1/24 4,762,500
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31,853,662
- -----------------------------------------------------------------------------------
Ohio -- 3.7%
2,000,000 AAA Akron, OH Economic Development,
MBIA-Insured, 5.000% due 12/1/18 1,932,500
1,000,000 AAA Cleveland-Cuyahoga County, OH Port
Authority Revenue, Rock & Roll
Hall of Fame, AMBAC-Insured,
5.400% due 12/1/15 1,008,750
6,360,000 AAA Cuyahoga County, OH Hospital Revenue
Refunding, (Metrohealth System), Series A,
MBIA-Insured, 5.125% due 2/15/14 6,304,350
2,000,000 AAA Ohio State Higher Educational Facilities
Community Revenue, (Union Dayton
Project), AMBAC-Insured,
5.350% due 12/1/17 2,027,500
5,320,000 AAA Portage County, OH GO, MBIA-Insured,
5.250% due 12/1/17 5,339,950
- -----------------------------------------------------------------------------------
16,613,050
- -----------------------------------------------------------------------------------
Pennsylvania -- 2.3%
1,000,000 AAA Allegheny County, PA Airport Revenue,
Pittsburgh International Airport,
Series B, MBIA-Insured, 5.000% due 1/1/19 967,500
6,000,000 AAA Altoona, PA City Authority, Water Revenue,
FGIC-Insured, 5.000% due 11/1/19 5,835,000
</TABLE>
See Notes to
Financial Statements.
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9
<PAGE>
================================================================================
Schedule of Investments
November 30, 1997 (unaudited)(continued)
================================================================================
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
===================================================================================
<S> <C> <C> <C>
Pennsylvania -- 2.3% (continued)
$ 3,500,000 Aaa* Montgomery County, PA Higher Education
& Health Authority Revenue, Holy
Redeemer Health, Series A,
AMBAC-Insured, 5.250% due 12/1/17 $ 3,460,625
- -----------------------------------------------------------------------------------
10,263,125
- -----------------------------------------------------------------------------------
Puerto Rico -- 0.4%
2,000,000 AAA Puerto Rico Commonweatlh Infrastructure
Financing Authority, AMBAC-Insured,
5.000% due 7/1/16 1,967,500
- -----------------------------------------------------------------------------------
South Carolina -- 1.4%
4,000,000 AAA Lexington County, SC Health Services
District Inc., Hospital Revenue Refunding
& Improvement, FSA-Insured,
5.250% due 11/1/17 3,965,000
2,000,000 BBB+ Myrtle Beach, SC COP, Myrtle Beach
Convention Center, 6.875% due 7/1/07 2,147,500
- -----------------------------------------------------------------------------------
6,112,500
- -----------------------------------------------------------------------------------
Tennessee -- 0.3%
1,150,000 NR Hardeman County, TN Correctional Facilities
Corp., 7.750% due 8/1/17 1,273,625
- -----------------------------------------------------------------------------------
Texas -- 13.0%
3,990,000 Aaa* Azle, TX ISD, PSFG, Series C,
5.000% due 2/15/22 3,830,400
4,000,000 AAA Bexar County, TX Health Facilities
Development Corp. Revenue, Baptist Health
Systems, Series A, MBIA-Insured,
5.250% due 11/15/27 3,910,000
4,190,000 AAA Brazos County, TX Health Facilities,
Obligation Group, Series B, MBIA-Insured,
5.375% due 1/1/22 4,184,763
2,000,000 AAA Brownsville, TX Utility Systems Revenue,
AMBAC-Insured, 5.250% due 9/1/20 1,982,500
Burleson, TX ISD, PSFG:
1,160,000 Aaa* 6.750% due 8/1/24 1,291,950
2,840,000 Aaa* Pre-Refunded -- Escrowed with U.S.
government securities to 8/1/06
Call @ 100, 6.750% due 8/1/24(c) 3,273,100
</TABLE>
See Notes to
Financial Statements.
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<PAGE>
================================================================================
Schedule of Investments
November 30, 1997 (unaudited)(continued)
================================================================================
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
===================================================================================
<S> <C> <C> <C>
Texas -- 13.0% (continued)
$ 1,000,000 AA Harris County, TX Health Facilities
Development Corp. Revenue, School Health
Care Systems, Series B, 5.750% due 7/1/27 $ 1,031,250
Harris County, TX Toll Road Refunding:
8,000,000 AAA Sr. Lien, FGIC-Insured, 5.375% due 8/15/20 8,010,000
5,185,000 AA Sub Lien, 5.125% due 8/15/16 5,120,187
2,000,000 AAA Leander, TX ISD, PSFG, 5.625% due 8/15/18 2,032,500
2,000,000 AAA Nueces River Authority, TX Water Supply
Facilities, FSA-Insured, 5.500% due 3/1/27 2,012,500
2,000,000 AAA Plano, TX Facilities Health Development Corp.
Revenue, Texas Health Resources System,
Series C, MBIA-Insured, 5.250% due 2/15/26 1,955,000
3,000,000 AAA San Antonio, TX ISD, PSFG,
5.125% due 8/15/22 2,932,500
Texas Water Development Board Revenue,
State Revolving Fund, Sr. Lien, Series B:
3,000,000 AAA 5.000% due 7/15/14 2,985,000
1,000,000 AAA 5.000% due 7/15/15 990,000
5,000,000 AAA 5.000% due 7/15/16 4,918,750
8,000,000 AAA 5.000% due 7/15/19 7,730,000
- -----------------------------------------------------------------------------------
58,190,400
- -----------------------------------------------------------------------------------
Utah -- 1.7%
8,000,000 A+ Intermountain Power Agency, Utah Power
Supply Revenue Refunding, Series D,
5.000% due 7/1/21 7,640,000
- -----------------------------------------------------------------------------------
Virginia -- 4.5%
4,700,000 A* Harrisonburg, VA Redevelopment & Housing
Authority, (Jail & Courthouse Project),
Public Facilities Lease Revenue,
6.500% due 9/1/14 4,917,375
2,000,000 AAA Upper Occoquan, VA Sewer Authority, Regional
Sewer Revenue, Series A, MBIA-Insured,
5.000% due 7/1/25 1,920,000
Virginia College Building Authority, Virginia
Educational Facilities Revenue, 21st Century
College Program:
3,590,000 AA 5.250% due 8/1/13 3,679,750
3,805,000 AA 5.250% due 8/1/14 3,890,612
</TABLE>
See Notes to
Financial Statements.
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11
<PAGE>
================================================================================
Schedule of Investments
November 30, 1997 (unaudited)(continued)
================================================================================
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
===================================================================================
<S> <C> <C> <C>
Virginia -- 4.5% (continued)
Virginia State HDA, Multi-Family Housing:
$ 1,655,000 AA+ Series D, 6.250% due 1/1/15 $ 1,768,781
1,235,000 AAA Series H, AMBAC-Insured,
6.300% due 11/1/15 1,322,994
600,000 AA+ Series K, 5.800% due 11/1/10 640,500
2,000,000 AA Virginia State Transportation Board,
Transportation Contract Revenue,
Series A, 5.125% due 5/15/21 1,970,000
- -----------------------------------------------------------------------------------
20,110,012
- -----------------------------------------------------------------------------------
Washington -- 7.5%
Chelan County, WA GO Public Utilities,
District No. 1:
Columbus River Rock, MBIA-Insured,
Series A:
20,685,000 AAA Zero coupon due 6/1/21 5,998,650
22,685,000 AAA Zero coupon due 6/1/22 6,266,731
4,750,000 A+ Series B, Remarked 7/1/92, Mandatory
put 7/1/19, 6.750% due 7/1/62(a)(b) 5,017,188
3,000,000 AA+ Washington State GO, Series E,
5.000% due 7/1/22 2,891,250
10,550,000 AA- Washington State Health Care Facilities,
Authority Revenue, Sisters of Providence
Hospital, 7.875% due 10/1/10(b) 11,420,375
2,000,000 AAA Washington State Public Power Supply
System Project Number 2, Series A,
FSA-Insured, 5.125% due 7/1/11 2,002,500
- -----------------------------------------------------------------------------------
33,596,694
- -----------------------------------------------------------------------------------
West Virginia -- 1.2%
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(a)(b)(f) 500,000
10,000,000 NR American Paper Recycling Project,
7.750% due 12/1/11(a)(b)(f) 5,000,000
- -----------------------------------------------------------------------------------
5,500,000
- -----------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
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12
<PAGE>
================================================================================
Schedule of Investments
November 30, 1997 (unaudited)(continued)
================================================================================
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
===================================================================================
<S> <C> <C> <C>
Wisconsin -- 4.0%
$ 4,070,000 A2* Wisconsin State GO, Series B,
6.600% due 1/1/22(a) $ 4,329,462
Wisconsin State Health & Educational
Facilities Authority Revenue,
MBIA-Insured:
Aurora Health Care Inc.:
3,000,000 AAA 5.250% due 8/15/17 2,970,000
10,000,000 AAA 5.250% due 8/15/27 9,725,000
1,000,000 AAA The Medical College of Wisconsin Inc.
Project, 5.400% due 12/1/16 1,001,250
- -----------------------------------------------------------------------------------
18,025,712
- -----------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(COST -- $442,586,414**) $448,831,006
===================================================================================
</TABLE>
(a) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(b) Security segregated by Custodian for open purchase commitments.
(c) Pre-Refunded bonds escrowed by U.S. government securities and bonds
escrowed to maturity by U.S. government securities are considered by
manager to be triple-A rated even if issuer has not applied for new
ratings.
(d) Security partially segregated by Custodian for futures contracts
commitments.
(e) Variable rate municipal bonds and notes are payable upon not more than one
business day's notice.
(f) Security in default.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 14 and 15 for definition of ratings and certain security
descriptions.
================================================================================
Summary of Investments by Combined Ratings
November 30, 1997 (unaudited)
================================================================================
<TABLE>
<CAPTION>
================================================================================
Percent of
Moody's and/or Standard & Poor's Total Investments
================================================================================
<S> <C> <C>
Aaa AAA 59.1%
Aa AA 16.9
A A 8.2
Baa BBB 5.4
VMIG 1 A-1 0.3
NR NR 10.1
-----
100.0%
=====
</TABLE>
See Notes to
Financial Statements.
- -------------------------------------[LOGO]-------------------------------------
13
<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.
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.
- -------------------------------------[LOGO]-------------------------------------
14
<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
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
- -------------------------------------[LOGO]-------------------------------------
15
<PAGE>
================================================================================
Statement of Assets and Liabilities
(unaudited)
================================================================================
<TABLE>
<CAPTION>
November 30, 1997
================================================================================
ASSETS:
<S> <C>
Investments, at value (Cost -- $442,586,414) $ 448,831,006
Cash 21,703
Receivable for securities sold 13,328,750
Interest receivable 5,931,737
- -------------------------------------------------------------------------------
Total Assets 468,113,196
- -------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 36,627,120
Dividends payable 901,583
Investment advisory fees payable 237,406
Administration fees payable 68,767
Payable to broker 6,250
Accrued expenses 27,927
- -------------------------------------------------------------------------------
Total Liabilities 37,869,053
- -------------------------------------------------------------------------------
Total Net Assets $ 430,244,143
===============================================================================
NET ASSETS:
Par value of capital shares $ 34,564
Capital paid in excess of par value 413,048,256
Overdistributed net investment income (1,199,369)
Accumulated net realized gain from
security transactions 12,172,350
Net unrealized appreciation of investments
and futures contracts 6,188,342
- -------------------------------------------------------------------------------
TOTAL NET ASSETS
(Equivalent to $12.45 a share on 34,564,281 shares of $0.001
par value outstanding: 500,000,000 shares authorized) $ 430,244,143
===============================================================================
</TABLE>
See Notes to
Financial Statements.
- -------------------------------------[LOGO]-------------------------------------
16
<PAGE>
================================================================================
Statement of Operations
(unaudited)
================================================================================
<TABLE>
<CAPTION>
Six Months
Ended
11/30/97
===============================================================================
<S> <C>
INVESTMENT INCOME:
Interest $ 11,381,076
- -------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 1,472,403
Administration fees (Note 3) 420,687
Shareholder communications 102,864
Audit and legal 25,203
Directors' fees 24,232
Registration fees 14,469
Custody 9,495
Shareholder and system servicing fees 9,454
Pricing service fees 5,935
Other 3,694
- -------------------------------------------------------------------------------
Total Expenses 2,088,436
- -------------------------------------------------------------------------------
Net Investment Income 9,292,640
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FUTURES CONTRACTS (NOTES 4 AND 5):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 262,744,440
Cost of securities sold 254,261,432
- -------------------------------------------------------------------------------
Net Realized Gain 8,483,008
- -------------------------------------------------------------------------------
Change in Net Unrealized Appreciation (Depreciation)
of Investments and Futures Contracts:
Beginning of period (6,878,902)
End of period 6,188,342
- -------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 13,067,244
- -------------------------------------------------------------------------------
Net Gain on Investments and Futures Contracts 21,550,252
- -------------------------------------------------------------------------------
Increase Net Assets From Operations $ 30,842,892
===============================================================================
</TABLE>
See Notes to
Financial Statements.
- -------------------------------------[LOGO]-------------------------------------
17
<PAGE>
================================================================================
Statements of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
Six Months
Ended 11/30/97 Year Ended
(unaudited) 5/31/97
===============================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 9,292,640 $ 23,131,200
Net realized gain 8,483,008 8,491,422
Increase (decrease) in net
unrealized appreciation 13,067,244 (5,938,398)
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations 30,842,892 25,684,224
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 2):
Net investment income (12,027,658) (22,772,196)
Net realized gains -- (10,177,035)
- -------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (12,027,658) (32,949,231)
- -------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net asset value of shares issued
for reinvestment of dividends 143,116 626,322
- -------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions 143,116 626,322
- -------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 18,958,350 (6,638,685)
NET ASSETS:
Beginning of period 411,285,793 417,924,478
- -------------------------------------------------------------------------------
End of period* $ 430,244,143 $ 411,285,793
===============================================================================
* Includes undistributed (overdistributed) net
investment income of: $ (1,199,369) $ 1,535,649
===============================================================================
</TABLE>
See Notes to
Financial Statements.
- -------------------------------------[LOGO]-------------------------------------
18
<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, 1997, reclassifications were made to the Portfolio's
capital accounts to reflect permanent book/tax differences and income and gains
available for distributions under income tax regulations; 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.
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.
- -------------------------------------[LOGO]-------------------------------------
19
<PAGE>
================================================================================
Notes to Financial Statements
(unaudited) (continued)
================================================================================
3. Investment Advisory Agreement, Administration Agreement and Other
Transactions
Mutual Management Corp. ("MMC"), formerly known as Smith Barney Mutual
Funds Management Inc., a subsidiary of Salomon Smith Barney Holdings Inc.
("SSBH"), acts as investment adviser to the Fund. The Fund pays MMC 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.
MMC 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 six months ended November 30, 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 $278,687,883
- --------------------------------------------------------------------------------
Sales 262,744,440
================================================================================
</TABLE>
At November 30, 1997, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
<TABLE>
================================================================================
<S> <C>
Gross unrealized appreciation $ 24,817,836
Gross unrealized depreciation (18,573,244)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 6,244,592
================================================================================
</TABLE>
5. Futures Contracts
Initial margin deposits made upon entering into futures contracts are
recognized as assets. Securities equal to the initial margin amount are
segregated by the custodian in the name of the broker. Additional securities are
also segregated up to the current market value of the futures contracts. 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,
- -------------------------------------[LOGO]-------------------------------------
20
<PAGE>
================================================================================
Notes to Financial Statements
(unaudited) (continued)
================================================================================
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).
At November 30, 1997, the Fund had the following open futures contracts:
<TABLE>
<CAPTION>
Futures Expiration # of Basis Market Unrealized
Contracts Sold Month/Year Contracts Value Value Gain (Loss)
====================================================================================
<S> <C> <C> <C> <C> <C>
U.S. Treasury
Short Bond Index 12/97 100 $11,815,625 $11,918,750 $(103,125)
Municipal Bond Index 12/97 100 12,181,250 12,228,125 46,875
- ------------------------------------------------------------------------------------
Total $ (56,250)
====================================================================================
</TABLE>
6. Capital Shares
During the six months ended November 30, 1997, capital stock transactions
were as follows:
<TABLE>
<CAPTION>
Shares Amount
==================================================================================
<S> <C> <C>
Shares issued on reinvestment 11,867 $143,116
==================================================================================
</TABLE>
- -------------------------------------[LOGO]-------------------------------------
21
<PAGE>
================================================================================
Financial Highlights
================================================================================
For a share of capital stock outstanding throughout each period:
<TABLE>
<CAPTION>
1997(1) 1997 1996 1995 1994 1993(2)
========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $11.90 $12.11 $12.55 $12.26 $13.00 $12.00
- ------------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.27 0.67 0.67 0.72 0.67 0.63
Net realized and
unrealized gain (loss) 0.63 0.08 (0.35) 0.49 (0.23) 0.97
- ------------------------------------------------------------------------------------------------------------------------
Total Income
From Operations 0.90 0.75 0.32 1.21 0.44 1.60
- ------------------------------------------------------------------------------------------------------------------------
Offering Costs Charged
to Paid-In Capital -- -- -- -- -- (0.02)
- ------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.35) (0.66) (0.75) (0.67) (0.67) (0.55)
Net realized gains -- (0.30) (0.01) (0.25) (0.51) (0.03)
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.35) (0.96) (0.76) (0.92) (1.18) (0.58)
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $12.45 $11.90 $12.11 $12.55 $12.26 $13.00
- ------------------------------------------------------------------------------------------------------------------------
Total Return, Based on
Market Value 2.97%++ 7.89% 8.26% 8.40% 2.98% 7.02%++
- ------------------------------------------------------------------------------------------------------------------------
Total Return, Based on
Net Asset Value* 7.73%++ 6.59% 2.79% 10.96% 3.45% 13.58%++
- ------------------------------------------------------------------------------------------------------------------------
Net Assets,
End of Period (millons) $430 $411 $418 $433 $423 $444
- ------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.98%+ 1.00% 1.00% 1.02% 1.00% 0.98%+
Net investment income 4.37+ 5.56 5.35 5.97 5.15 5.48+
- ------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 60% 113% 45% 93% 72% 169%
- ------------------------------------------------------------------------------------------------------------------------
Market Value,
End of Period $11.625 $11.625 $11.690 $11.500 $11.500 $12.250
========================================================================================================================
</TABLE>
(1) For the six months ended November 30, 1997 (unaudited).
(2) For the period from June 26, 1992 (commencement of operations) to May 31,
1993.
* Total return is based on the Fund's net asset value at the beginning and
end of the period rather than the market value. Dividends are reinvested in
accordance with the Fund's dividend reinvestment plan.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- -------------------------------------[LOGO]-------------------------------------
22
<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,
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)
May 31,
1997 6,582,277 0.19 5,562,885 0.16 (2,308,892) (0.06) 3,253,993 0.10
August 31,
1997 5,809,421 0.17 4,751,757 0.14 11,642,588 0.34 16,394,345 0.48
November 30,
1997 5,571,655 0.16 4,540,883 0.13 9,907,664 0.29 14,448,547 0.42
===========================================================================================================
</TABLE>
- -------------------------------------[LOGO]-------------------------------------
23
<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>
6/23/95 6/30/95 $11.625 $12.49 $0.064 $11.86
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 11.99
12/26/95 12/29/95 12.125 12.69 0.064 12.30
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
3/24/97 3/27/97 11.500 11.73 0.060 11.53
4/22/97 4/25/97 11.563 11.60 0.060 11.57
5/27/97 5/30/97 11.375 11.82 0.060 11.68
6/24/97 6/27/97 11.750 12.06 0.060 11.98
7/22/97 7/25/97 12.000 12.43 0.060 12.08
8/26/97 8/29/97 11.750 12.17 0.060 11.83
9/23/97 9/26/97 11.750 12.30 0.056 11.91
10/28/97 10/31/97 11.375 12.33 0.056 11.60
11/24/97 11/28/97 11.563 12.41 0.056 11.64
===================================================================================
</TABLE>
+ As of record date.
* Capital gain distribution.
- -------------------------------------[LOGO]-------------------------------------
24
<PAGE>
================================================================================
Dividend Reinvestment Plan
(unaudited)
================================================================================
Under the Portfolio's Dividend Reinvestment Plan ("Plan"), a shareholder
whose shares of Common Stock are registered in his own name will have all
distributions from the Portfolio reinvested automatically by 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 shares under the Plan, unless the service is not provided by the
broker or nominee or the shareholder elects to receive distributions in cash.
Investors who own Common Stock registered in Street Name should consult their
broker-dealers for details regarding reinvestment. All distributions to
shareholders who do not participate in the Plan will be paid by check mailed
directly to the record holder by or under the direction of First Data as
dividend paying agent.
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. When the
market price of the Common Stock is equal to or exceeds the net asset value per
share of the Common Stock on the date of valuation, Plan participants will be
issued shares of Common Stock at a price equal to the greater of net asset of
value most recently determined as described below under "Net Asset Value" or 95%
of the market price of the Common Stock.
If the market price of the Common Stock is less than the net asset value of
the Common Stock at the time of valuation, or if the Portfolio declares a
dividend or capital gains distribution payable only in cash, First Data will buy
Common Stock in the open market, on the New York Stock Exchange or elsewhere,
for the participant accounts. If following the commencement of the purchases and
before First Data has completed its purchases, the market price exceeds the net
asset value of the Common Stock, First Data will attempt to terminate purchases
in the open market and cause the Portfolio to issue the remaining portion of the
dividend or distribution in shares at a price equal to the greater of (a) net
asset value or (b) 95% of the then current market price. In this case, the
number of shares received by a Plan participant will be based on the weighted
average of prices paid for shares purchased in the open market and the price at
which the Portfolio issues the remaining shares. To the extent First Data is
unable to stop open market purchases and cause the Portfolio to issue the
remaining shares, the average per share purchase price paid by the Purchasing
Agent may exceed the net asset value of the Common Stock, resulting in the
acquisition of fewer shares than if the dividend or capital gains distribution
had been paid in Common Stock issued by the Portfolio at net asset value. First
Data will begin to purchase Common Stock on the open market as soon as
practicable after the payment date of the dividend or capital gains
distribution, but in no event shall such purchases continue later than 30 days
after that date, except when necessary to comply with applicable provisions of
the federal securities laws.
- -------------------------------------[LOGO]-------------------------------------
25
<PAGE>
================================================================================
Dividend Reinvestment Plan
(unaudited) (continued)
================================================================================
First Data maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in each account, including information
needed by a shareholder for personal and tax records. The automatic reinvestment
of dividends and capital gains distributions will not relieve Plan participants
of any income tax that may be payable on the dividends or capital gains
distributions. Common Stock in the account of each Plan participant will be held
by First Data in uncertificated form in the name of each Plan participant.
Plan participants are subject to no charge for reinvesting dividends and
capital gains distributions under the Plan. First Data's fees for handling the
reinvestment of dividends and capital gains distributions will be paid by the
Portfolio. No brokerage charges apply with respect to shares of Common Stock
issued directly by the Portfolio under the Plan. Each Plan participant will,
however, bear a proportionate share of brokerage commissions incurred with
respect to any open market purchases made under the Plan.
Experience under the Plan may indicate that changes to it are desirable.
The Portfolio reserves the right to amend or terminate the Plan as applied to
any dividend or capital gains distribution paid subsequent to written notice of
the change sent to participants at least 30 days before the record date for the
dividend or capital gains distribution. The Plan also may be amended or
terminated by First Data, with the Portfolio's prior written consent, on at
least 30 days' written notice to Plan participants. All correspondence
concerning the Plan should be directed by mail to First Data Investor Services
Group, P.O. Box 1376, Boston, Massachusetts 02104 or by telephone at
1-800-331-1710.
----------
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.
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26
<PAGE>
Managed Municipals
Portfolio Inc.
Directors Investment Adviser and
Allan J. Bloostein Administrator
Martin Brody Mutual Management Corp.
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
Charles F. Barber, Emeritus Group, Inc.
P.O. Box 1376
Officers Boston, Massachusetts 02104
Heath B. McLendon
President and Custodian
Chief Executive Officer 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
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27
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================================================================================
This report is only intended for shareholders of the
Managed Municipals Portfolio Inc.
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.
FD0837 1/98
================================================================================
