<PAGE>
Managed Municipals
Portfolio Inc.
QUARTERLY REPORT
August 31, 1998
[GRAPHIC]
<PAGE>
[GRAPHIC]
Managed Municipals
Portfolio Inc.
- --------------------------------------------------------------------------------
AUGUST 31, 1998
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Dear Shareholder:
We are pleased to provide the first quarter report for the Managed
Municipal Portfolio Inc. ("Portfolio") for the three months ended August
31, 1998. During the past three months, the Portfolio distributed income
dividends totaling $0.15 per share. The table below shows the annualized
distribution rate and three-month total return based on the Portfolio's
August 31, 1998 net asset value ("NAV") per share and its New York
Stock Exchange ("NYSE") closing price:
Price Annualized Three-Month
Per Share Distribution Rate* Total Return
--------- ------------------ ------------
$12.47 (NAV) 4.62% 2.15%
$10.875 (NYSE) 5.30% 0.18%
In comparison, general closed-end municipal bond funds posted an
average total return on NAV of a negative 2.37% for the same time
period, as reported by Lipper Analytical Services, Inc. (Lipper is a major
fund-tracking organization.)
In an attempt to reduce the difference between the market price and the
Fund's NAV, the Fund's investment adviser, Mutual Management Corp.,
instituted a voluntary waiver of a portion of its investment advisory fees
as of September 1, 1998. This waiver is a temporary measure, which may
be discontinued at any time without notice. This waiver has the effect of
increasing the Fund's dividend yield.
- ------------
* This distribution rate assumes a current monthly income dividend rate of
$0.048 per share for twelve months.
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1
<PAGE>
Municipal Bond Market Update
The municipal bond market has been in a positive state for quite a while
now. Recent events in Asia and Russia have accelerated the flow of investments
into U.S. government bonds. These factors have created a very positive interest
rate backdrop for the tax-exempt market, with investment flows into the U.S.,
very modest inflation and a potential slowing of the U.S. economy due to the
economic slowdown of several foreign trading partners. This is the lowest long-
term interest rate we have seen since the 1960's.
The rates for municipal bonds have also moved lower, but not to the same
degree as U.S. government bonds. Municipal bonds do not benefit from foreign
money flows, because the benefits of tax-exemption are only valuable to U.S.
taxpayers.
The new issue supply of municipal bonds in 1998 has been quite heavy.
The municipal bond market is on pace to surpass the record volume underwritten
in 1993. These two factors -- pressure toward lower rates and heavy municipal
bond issuance -- have led to a market that we believe is very attractively
priced versus taxable bonds, and has led to a flatter yield curve than we've
seen it in many years. (A flat yield curve is when there is little difference
between short- and long-term yields.) The difference in the maturity of yields
between intermediate municipal bonds and very long-term bonds is minimal. In our
view, the yield differential between very high-grade paper and much weaker
credits has never been lower. Because of this narrow difference in yields, we
believe that investors are not being adequately compensated for the added risk
of investing in longer-maturity issues.
Fund's Investment Strategy
As of August 31, 1998, about 89% of the Portfolio's holdings were rated
investment grade**, with approximately 56% of the Portfolio invested in AAA/Aaa-
rated bonds, the highest possible rating. The Portfolio's largest holdings are
concentrated in hospital bonds (15.7%), utility bonds (13.1%) and transportation
bonds (12.5%) because we believe they offer good relative values.
- ------------
** 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 Rating
Group, or have an equivalent rating by any other nationally recognized
statistical rating organization, or determined by the manager to be of
equivalent quality.
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2
<PAGE>
Recently, we have avoided very long-term debt and lower-rated issues. We
have been concentrating our purchases in very high-grade bonds with maturities
between 12 and 20 years. Our coupon structure has also become somewhat higher.
Quite simply, at today's record low interest rates, we are taking a more
conservative approach to the market. Our experience indicates conditions are
near perfect for bonds at the moment and prudence suggests we take advantage of
these conditions.
Municipal Bond Market Outlook
Our outlook for the municipal bond market for the next six months
carries a caveat. If economic conditions around the world do not get much worse,
then interest rates have fallen to levels that seem appropriate. If things
continue to deteriorate beyond today's levels, then there could be more downward
pressure on interest rates in the U.S. We will be monitoring these events very
closely for our shareholders.
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
September 15, 1998
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3
<PAGE>
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SCHEDULE OF INVESTMENTS
August 31, 1998 (unaudited)
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<TABLE>
<CAPTION>
Face Ratings Security Value
=========================================================================================================
<S> <C> <C> <C>
Arizona -- 0.1%
$ 600,000 A-1+ Maricopa County, AZ PCR, Arizona Public
Services, Series A, LOC-Morgan Guaranty
Trust, 3.200% due 5/1/29(a) $ 600,000
- ---------------------------------------------------------------------------------------------------------
California -- 10.9%
4,540,000 Baa3* California Educational Facilities Authority
Revenue, (Pooled College & University
Projects), Series A, 5.625% due 7/1/23 4,693,225
California Health Facilities Finance
Authority Revenue:
2,000,000 AAA Kaiser-Permenante, Series A, FSA-Insured,
5.500% due 6/1/22 2,097,500
4,000,000 AAA Stanford Health Care, Series A,
5.000% due 11/15/18 3,970,000
1,000,000 AAA California State Public Works Board, Lease
Revenue, Department of Corrections,
California Prison, AMBAC-Insured,
5.250% due 1/1/21 1,015,000
2,755,000 AA California Statewide Community Development
Authority, COP, (St. Joseph Health System),
5.250% due 7/1/21 2,789,437
1,000,000 AAA Campbell, CA Unified School District, GO,
FGIC-Insured, 5.000% due 8/1/17 1,005,000
2,000,000 AAA Los Angeles, CA Public Works, Financing
Authority Lease Revenue, (Multiple Capital
Projects), Series A, AMBAC-Insured,
5.125% due 6/1/17 2,025,000
3,300,000 A- Los Angeles, CA Regional Airport Improvement
Corp., Los Angeles International Airport Lease
Revenue, 6.500% due 1/1/32(b) 3,444,375
Los Angeles County, CA Metropolitan
Transportation Authority, Sales Tax Revenue,
MBIA-Insured:
7,700,000 AAA 5.250% due 7/1/17 7,873,250
3,000,000 AAA 5.250% due 7/1/18 3,056,250
Metropolitan Water District, Southern California
Waterworks Revenue Refunding, Series A:
3,000,000 AA 5.000% due 7/1/16 3,026,250
1,500,000 AA 5.000% due 7/1/18 1,498,125
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
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4
<PAGE>
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SCHEDULE OF INVESTMENTS
August 31, 1998 (unaudited) (continued)
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<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
====================================================================================================================
<S> <C> <C> <C>
California -- 10.9% (continued)
$ 3,140,000 AAA Rancho Mirage, CA Redevelopment Agency,
Tax Allocation Refunding, (1984 Project),
Series A, MBIA-Insured, 5.000% due 4/1/24 $ 3,112,525
4,250,000 AAA Riverside County, CA COP, (1997 Lease
Refunding Project), MBIA-Insured,
5.125% due 11/1/17 4,313,750
2,750,000 AAA Sacramento County, CA COP, (Public
Facilities Project), MBIA-Insured,
5.375% due 2/1/19 2,832,500
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46,752,187
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Colorado -- 14.3%
Arapahoe County, CO Capital Improvement,
Public Highway Authority:
5,270,000 AAA E-470 Public Highway Authority, Series A,
MBIA-Insured, 5.000% due 9/1/21 5,263,412
3,000,000 AAA Pre-Refunded -- Escrowed with U.S.
government securities to 8/31/05
Call @ 103, 7.000% due 8/31/26(c) 3,592,500
Colorado Health Facilities Authority Revenue:
3,555,000 AA Catholic Health Initiatives, Series A,
5.000% due 12/1/18 3,528,337
3,000,000 A Series B, 5.350% due 8/1/15 3,056,250
2,500,000 AAA Sisters of Charity Leavenworth,
MBIA-Insured, 5.125% due 12/1/18 2,528,125
2,000,000 BBB+ Colorado Springs, CO Airport Revenue,
Series A, 7.000% due 1/1/22(b) 2,205,000
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 16,425,000
Denver, CO City & County Airport Revenue,
Series C:
3,155,000 BBB 6.750% due 11/15/22(b)(c) 3,423,175
10,165,000 BBB 6.125% due 11/15/25(b) 10,647,837
8,160,000 NR Escrowed to Maturity with U.S. government
securities, 6.125% due 11/15/25(b)(d) 9,394,200
845,000 BBB Pre-Refunded -- Escrowed with U.S.
government securities to 11/15/02
Call @ 102, 6.750% due 11/15/22(b)(d) 947,456
- --------------------------------------------------------------------------------------------------------------------
61,011,292
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</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
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5
<PAGE>
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Schedule of Investments
August 31, 1998 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
=====================================================================================
<S> <C> <C> <C>
Connecticut -- 0.3%
$ 1,200,000 AA- Connecticut State Community Development
Authority, Special Obligation, Series A,
5.550% due 12/15/15 $ 1,264,500
- -------------------------------------------------------------------------------------
Florida -- 3.2%
2,480,000 AAA Florida State Turnpike Authority Revenue
Refunding, FGIC-Insured, 5.000% due 7/1/16 2,501,700
5,000,000 BBB- Martin County, FL IDA, (Indiantown
Cogeneration Project), Series A,
7.875% due 12/15/25(b) 5,837,500
Tampa, FL Revenue Bonds, (Florida
Aquarium Inc. Project):
2,800,000 NR 7.550% due 5/1/12(e) 3,195,500
2,000,000 NR 7.750% due 5/1/27(c) 2,297,500
- -------------------------------------------------------------------------------------
13,832,200
- -------------------------------------------------------------------------------------
Hawaii -- 1.0%
4,010,000 AAA Hawaii State GO, Series CP, FGIC-Insured,
5.000% due 10/1/15 4,035,062
- -------------------------------------------------------------------------------------
Illinois -- 1.4%
2,000,000 Aaa* Illinois Health Facilities Authority Revenue,
Memorial Health Systems, MBIA-Insured,
5.250% due 10/1/18 2,037,500
4,000,000 AAA Illinois State GO, FGIC-Insured,
5.250% due 12/1/20 4,070,000
- -------------------------------------------------------------------------------------
6,107,500
- -------------------------------------------------------------------------------------
Indiana -- 1.5%
5,000,000 Aa3* Indiana Port Commission Revenue
Refunding, (Cargill Inc. Project),
6.875% due 5/1/12(c) 5,506,250
1,000,000 A-1+ Rockport, IN PCR, (AEP Generating Project),
Series B, 3.300% due 7/1/25(a) 1,000,000
- -------------------------------------------------------------------------------------
6,506,250
- -------------------------------------------------------------------------------------
Kansas -- 0.1%
500,000 A+ Kansas Development Finance Authority,
Health Facilities Revenue, Children's Mercy
Hospital, Series N, 5.250% due 5/15/18 506,250
- -------------------------------------------------------------------------------------
Louisiana -- 1.4%
5,500,000 Aa3* Saint Martin Parish, LA Industrial Revenue,
(Cargill Inc. Project), 6.625% due 10/1/12 6,029,375
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</TABLE>
See Notes to
Financial Statements.
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6
<PAGE>
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Schedule of Investments
August 31, 1998 (unaudited) (continued)
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<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
=====================================================================================
<S> <C> <C> <C>
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(c)(f) $ 3,100,000
- -------------------------------------------------------------------------------------
Massachusetts -- 2.8%
2,000,000 AAA Massachusetts State Housing Finance Agency,
Housing Development, Series B,
MBIA-Insured, 5.300% due 12/1/17 2,032,500
10,000,000 NR Massachusetts State Industrial Finance
Authority, Solid Waste Disposal Revenue,
Massachusetts Recycling Association,
Series A, 9.000% due 8/1/16(c)(f) 3,750,000
Massachusetts State Water Resource Authority,
MBIA-Insured:
4,000,000 AAA Series B, 5.000% due 12/1/25 3,975,000
2,000,000 AAA Series C, 5.250% due 12/1/20 2,027,500
- -------------------------------------------------------------------------------------
11,785,000
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Michigan -- 6.7%
1,675,000 AA+ Michigan Municipal Bond Authority Revenue,
State Revolving Fund, 5.125% due 10/1/20 1,693,844
1,000,000 AAA Michigan State Hospital Finance Authority
Revenue Refunding, Oakwood Obligation
Group, Series A, FSA-Insured,
5.000% due 8/15/18 996,250
8,000,000 NR Michigan State Strategic Fund Resources
Recovery, Limited Obligation Revenue,
Central Wayne Energy Recovery,
Series A, 7.000% due 7/1/27(b) 8,150,000
16,375,000 NR Midland County, MI Education Development
Corp., PCR, Limited Obligation, Series B,
9.500% due 7/23/09(b)(c) 17,889,688
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28,729,782
- -------------------------------------------------------------------------------------
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 2,737,500
525,000 A2* Minnesota State Higher Education Facilities
Authority Revenue, University St. Thomas
Education, Series 3, 5.375% due 4/1/18 535,500
- -------------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
- -----------------------------------[GRAPHIC]-----------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
August 31, 1998 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
=====================================================================================
<S> <C> <C> <C>
Minnesota -- 1.1% (continued)
$ 1,250,000 AA+ Minnesota State Housing Financing Agency,
Single-Family Mortgage, Series I,
5.500% due 1/1/17 $ 1,293,750
- -------------------------------------------------------------------------------------
4,566,750
- -------------------------------------------------------------------------------------
Missouri -- 0.8%
1,000,000 AAA Fenton, MO COP, (Capital Improvement
Projects), MBIA-Insured, 5.125% due 9/1/17 1,013,750
750,000 A+ Missouri Health & Educational Facilities
Authority Revenue, Children's Mercy Hospital,
5.250% due 5/15/18 755,625
1,575,000 AAA St. Louis, MO Board of Education, GO,
Missouri Direct Deposit Program, Series B,
FGIC-Insured, 5.000% due 4/1/16 1,584,844
- -------------------------------------------------------------------------------------
3,354,219
- -------------------------------------------------------------------------------------
Montana -- 1.9%
8,000,000 NR Montana State Board Investment Resource
Recovery, (Yellowstone Energy Project),
7.000% due 12/31/19 8,150,000
- -------------------------------------------------------------------------------------
New Jersey -- 2.0%
5,200,000 A+ Hudson County, NJ Improvement Authority,
6.625% due 8/1/25 5,681,000
2,830,000 AAA Middlesex County, NJ COP, MBIA-Insured,
5.200% due 6/15/18 2,897,212
- -------------------------------------------------------------------------------------
8,578,212
- -------------------------------------------------------------------------------------
New York -- 6.9%
3,000,000 A- Long Island Power Authority, NY Electric
Systems Revenue, Series A,
5.500% due 12/1/29 3,078,750
2,000,000 AAA New York City Transitional Finance Authority
Revenue, Future Tax Secured, Series C,
FGIC-Insured, 5.000% due 5/1/17 2,012,500
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 1,152,675
New York State Dormitory Authority Revenue:
1,000,000 AAA City University Systems, Series A,
FGIC-Insured, 5.000% due 7/1/16 1,007,500
4,000,000 AAA Mental Health Services Facilities Improvement,
Series D, FSA-Insured, 5.125% due 8/15/17 4,040,000
- -------------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
- -----------------------------------[GRAPHIC]-----------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
August 31, 1998 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
===================================================================================
<S> <C> <C> <C>
New York -- 6.9% (continued)
$ 6,000,000 AAA Montefiore Medical Center,
AMBAC-Insured, 5.250% due 2/1/15 $ 6,112,500
5,000,000 A- State University Educational Facilities,
5.000% due 5/15/14 5,081,250
1,000,000 AAA New York State Local Government Assistance
Corp. Refunding, Series B, MBIA-Insured,
4.875% due 4/1/20 981,250
1,000,000 AAA New York State Medcare Mental Health Services,
FGIC-Insured, 5.250% due 2/15/19 1,011,250
5,000,000 Aa3* Triborough Bridge & Tunnel Authority of NY,
General Purpose, Series A, 5.000% due 1/1/24 4,925,000
- -----------------------------------------------------------------------------------
29,402,675
- -----------------------------------------------------------------------------------
Ohio -- 4.4%
2,000,000 AAA Akron, OH Economic Development Revenue,
MBIA-Insured, 5.000% due 12/1/18 2,007,500
1,000,000 AAA Cleveland-Cuyahoga County, OH Port Authority
Revenue, Rock & Roll Hall of Fame,
AMBAC-Insured, 5.400% due 12/1/15 1,043,750
6,360,000 AAA Cuyahoga County, OH Hospital Revenue
Refunding, (Metrohealth System), Series A,
MBIA-Insured, 5.125% due 2/15/14 6,503,100
2,000,000 AAA Ohio State Higher Educational Facilities
Community Revenue, (University Dayton
Project), AMBAC-Insured,
5.350% due 12/1/17 2,095,000
1,645,000 AAA Ohio State Water Development Authority
Revenue, Fresh Water Series A, FSA-Insured,
5.000% due 6/1/16 1,659,394
5,320,000 AAA Portage County, OH GO, MBIA-Insured,
5.250% due 12/1/17 5,459,650
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18,768,394
- -----------------------------------------------------------------------------------
Pennsylvania -- 3.4%
1,000,000 AAA Allegheny County, PA Airport Revenue,
Pittsburgh International Airport, Series B,
MBIA-Insured, 5.000% due 1/1/19 997,500
6,000,000 AAA Altoona, PA City Authority, Water Revenue,
FGIC-Insured, 5.000% due 11/1/19 5,985,000
2,865,000 Aaa* Delaware County, PA Authority Revenue,
Villanova University, Series A,
MBIA-Insured, 5.000% due 12/1/18 2,868,581
</TABLE>
See Notes to
Financial Statements.
- -----------------------------------[GRAPHIC]-----------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
August 31, 1998 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
===================================================================================
<S> <C> <C> <C>
Pennsylvania -- 3.4% (Continued)
$ 3,500,000 AAA Montgomery County, PA Higher Education &
Health Authority Revenue, Holy Redeemer
Health, Series A, AMBAC-Insured,
5.250% due 10/1/17 $ 3,570,000
1,000,000 AAA Pittsburgh, PA Water & Sewer Authority
Revenue, Series C, FSA-Insured,
5.000% due 9/1/17 1,002,500
- -----------------------------------------------------------------------------------
14,423,581
- -----------------------------------------------------------------------------------
Puerto Rico -- 0.5%
2,000,000 AAA Puerto Rico Commonwealth Infrastructure
Financing Authority, AMBAC-Insured,
5.000% due 7/1/16 2,017,500
- -----------------------------------------------------------------------------------
South Carolina -- 2.4%
4,000,000 AAA Lexington County, SC Health Services District Inc.,
Hospital Revenue Refunding & Improvement,
FSA-Insured, 5.250% due 11/1/17 4,085,000
2,000,000 A3* Myrtle Beach, SC COP, Myrtle Beach
Convention Center, 6.875% due 7/1/07 2,242,500
4,140,000 AAA Piedmont, SC Municipal Power Agency,
Electric Revenue Refunding, Series A,
MBIA-Insured, 4.875% due 1/1/16 4,108,950
- -----------------------------------------------------------------------------------
10,436,450
- -----------------------------------------------------------------------------------
Tennessee -- 0.3%
1,150,000 NR Hardeman County, TN Correctional Facilities
Corp., 7.750% due 8/1/17 1,290,875
- -----------------------------------------------------------------------------------
Texas -- 16.1%
1,000,000 Aaa* Amarillo, TX Health Facilities Corp.,
Baptist St. Anthony's Hospital Corp.,
FSA-Insured, 5.000% due 1/1/22 986,250
3,990,000 Aaa* Azle, TX ISD, GO, PSFG, Series C,
5.000% due 2/15/22 3,970,050
2,000,000 AAA Bexar County, TX Health Facilities Development
Corp. Revenue, Baptist Health Systems,
Series A, MBIA-Insured, 5.250% due 11/15/27 2,017,500
4,000,000 BBB Brazos River Authority, PCR, Utilities
Electric Co., Series C, 5.550% due 6/1/30(b) 4,030,000
7,500,000 AAA Brazos River Authority Revenue, (Houston
Industrial Project), Series A, AMBAC-Insured,
5.125% due 5/1/19 7,537,500
</TABLE>
See Notes to
Financial Statements.
- -----------------------------------[GRAPHIC]-----------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
August 31, 1998 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
===================================================================================
<S> <C> <C> <C>
Texas -- 16.1% (continued)
$ 2,000,000 AAA Brownsville, TX Utility Systems Revenue,
AMBAC-Insured, 5.250% due 9/1/20 $ 2,027,500
Burleson, TX ISD, GO, PSFG:
1,160,000 Aaa* 6.750% due 8/1/24 1,312,250
2,840,000 NR Pre-Refunded -- Escrowed with U.S.
government securities to 8/1/06
Call @ 100, 6.750% due 8/1/24(d) 3,312,150
2,960,000 AA- Fort Worth, TX Higher Education Financing
Corp. Revenue, (Texas Christian University
Project), 5.000% due 3/15/14 2,978,500
1,000,000 AA Harris County, TX Health Facilities
Development Corp. Revenue, School Health
Care Systems, Series B, 5.750% due 7/1/27 1,060,000
Harris County, TX Toll Road, GO:
8,000,000 AAA Sr. Lien, FGIC-Insured,
5.375% due 8/15/20 8,180,000
5,185,000 AA Sub. Lien, 5.125% due 8/15/16 5,236,850
2,670,000 AAA Manor, TX ISD, GO, Refunding, PSFG,
5.000% due 8/1/17 2,680,012
2,000,000 AAA Nueces River Authority, Texas Water Supply
Facilities, FSA-Insured, 5.500% due 3/1/27 2,092,500
2,975,000 AAA Springtown, TX ISD, GO, Refunding, PSFG,
5.000% due 2/15/18 2,967,563
Texas Water Development Board Revenue,
State Revolving Fund, Sr. Lien, Series B:
3,000,000 AAA 5.000% due 7/15/14 3,052,500
1,000,000 AAA 5.000% due 7/15/15 1,013,750
5,000,000 AAA 5.000% due 7/15/16 5,056,250
8,000,000 AAA 5.000% due 7/15/19 8,040,000
1,520,000 AAA West Texas Municipal Power Agency Revenue,
MBIA-Insured, 5.000% due 2/15/15 1,529,500
- -----------------------------------------------------------------------------------
69,080,625
- -----------------------------------------------------------------------------------
UTAH -- 1.2%
Intermountain Power Agency, Utah Power
Supply Revenue Refunding:
1,000,000 AAA Series A, MBIA-Insured, 5.250% due 7/1/15 1,021,250
4,000,000 A+ Series D, 5.000% due 7/1/21 3,955,000
- -----------------------------------------------------------------------------------
4,976,250
- -----------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
- -----------------------------------[GRAPHIC]-----------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
August 31, 1998 (unaudited)(continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
===================================================================================
<S> <C> <C> <C>
Virginia -- 3.8%
$ 4,700,000 A2* Harrisonburg, VA Redevelopment & Housing
Authority, (Jail & Courthouse Project),
Public Facilities Lease Revenue,
6.500% due 9/1/14 $ 4,935,000
Virginia College Building Authority, Virginia
Educational Facilities Revenue, 21st Century
College Program:
3,590,000 AA 5.250% due 8/1/13 3,729,113
3,805,000 AA 5.250% due 8/1/14 3,933,419
Virginia State HDA, Multi-Family Housing:
1,655,000 AA+ Series D, 6.250% due 1/1/15 1,787,400
1,235,000 AAA Series H, AMBAC-Insured,
6.300% due 11/1/15 1,336,887
600,000 AA+ Series K, 5.800% due 11/1/10 648,750
- -----------------------------------------------------------------------------------
16,370,569
- -----------------------------------------------------------------------------------
Virgin Islands -- 0.2%
1,000,000 BBB- Virgin Islands PFA Revenue, Sr. Lien, Series A,
5.500% due 10/1/22 1,013,750
- -----------------------------------------------------------------------------------
Washington -- 7.4%
Chelan County, WA GO, Public Utilities,
District No. 1:
Columbia River Rock, MBIA-Insured,
Series A:
20,685,000 AAA Zero coupon due 6/1/21 6,593,344
22,685,000 AAA Zero coupon due 6/1/22 6,890,569
4,750,000 AA Series B, Remarketed 7/1/92, Mandatory
put 7/1/19, 6.750% due 7/1/62(b)(c) 5,070,625
10,550,000 AA- Washington State Health Care Facilities
Authority Revenue, Sisters of Providence
Hospital, 7.875% due 10/1/10(c) 11,175,299
2,000,000 AAA Washington State Public Power Supply System,
(Project Number 2), Series A, FSA-Insured,
5.125% due 7/1/11 2,082,500
- -----------------------------------------------------------------------------------
31,812,337
- -----------------------------------------------------------------------------------
West Virginia -- 1.2%
Marion County, WV Community Solid
Waste Disposal Facilities Revenue,
Adirondack Recycling:
4,646,856 NR Series A, 8.000% due 12/1/25(b) 4,646,856
653,688 NR Series B, 10.000% due 12/1/25(b) 653,688
- -----------------------------------------------------------------------------------
5,300,544
- -----------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
- -----------------------------------[GRAPHIC]-----------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
August 31, 1998 (unaudited)(continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Ratings Security Value
=============================================================================================
<S> <C> <C> <C>
Wisconsin -- 2.0%
$ 4,070,000 AA Wisconsin State GO, Series B,
6.600% due 1/1/22(b) $ 4,359,988
Wisconsin State Health & Educational Facilities
Authority Revenue, MBIA-Insured:
3,000,000 AAA Aurora Health Care Inc.,
5.250% due 8/15/17 3,045,000
1,000,000 AAA The Medical College of Wisconsin Inc.
Project, 5.400% due 12/1/16 1,038,750
- ---------------------------------------------------------------------------------------------
8,443,738
- ---------------------------------------------------------------------------------------------
Total Investments -- 100%
(Cost--$411,520,586**) $428,245,867
=============================================================================================
</TABLE>
(a) Variable rate obligation payable at par on demand at anytime on no more than
seven days 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.
(d) 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.
(e) Security partially segregated by Custodian for futures contracts
commitments.
(f) Security is 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
August 31, 1998 (unaudited)
- -------------------------------------------------------------------------------
Percentage of
Moody's and/or Standard & Poor's Total Investments
Aaa AAA 55.8%
Aa AA 17.2
A A 9.0
Baa BBB 6.6
NR NR 9.8
VMIG 1 A-1 1.6
-----
100.0%
=====
See Notes to
Financial Statements.
- -----------------------------------[GRAPHIC]-----------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
BOND RATINGS
(unaudited)
- --------------------------------------------------------------------------------
All ratings are by Standard & Poor's Ratings Service ("Standard & Poor's"),
except those identified by an asterisk (*) which 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 "BBB" may be modified by the addition
of a plus (+) or minus () sign to show relative standings within the major
rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and
repay principal and differs from the highest rated issue only in a
small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although they are 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 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 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 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 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.
- -----------------------------------[GRAPHIC]-----------------------------------
14
<PAGE>
- -------------------------------------------------------------------------------
Short-Term Security Ratings
(unaudited)
- -------------------------------------------------------------------------------
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
(unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
ABAG -- Association of Bay Area HDA -- Housing Development Authority
Governments HFA -- Housing Finance Authority
AIG -- American International Guaranty IDA -- Industrial Development
AMBAC -- AMBAC Indemnity Corporation Authority
BAN -- Bond Anticipation Notes IDB -- Industrial Development Board
BIG -- Bond Investors Guaranty IDR -- Industrial Development Revenue
CDA -- Community Development INFLOS -- Inverse Floaters
Administration ISD -- Independent School District
CGIC -- Capital Guaranty Insurance LOC -- Letter of Credit
Company MBIA -- Municipal Bond Investors
CHFCLI -- California Health Facility Assurance Corporation
Construction Loan Insurance MVRICS -- Municipal Variable Rate Inverse
COP -- Certificate of Participation Coupon Security
EDA -- Economic Development PCR -- Pollution Control Revenue
Authority PFA -- Public Finance Authority
ETM -- Escrowed To Maturity PSFG -- Permanent School Fund
FAIRS -- Floating Adjustable Interest Rate Guaranty
Securities RAN -- Revenue Anticipation Notes
FGIC -- Financial Guaranty Insurance RIBS -- Residual Interest Bonds
Company RITES -- Residual Interest Tax-Exempt
FHA -- Federal Housing Administration Securities
FHLMC -- Federal Home Loan Mortgage TAN -- Tax Anticipation Notes
Corporation TECP -- Tax Exempt Commercial Paper
FNMA -- Federal National Mortgage TOB -- Tender Option Bonds
Association TRAN -- Tax and Revenue Anticipation
FRTC -- Floating Rate Trust Certificates Notes
FSA -- Federal Savings Association SYCC -- Structured Yield Curve
GIC -- Guaranteed Investment Contract Certificate
GNMA -- Government National Mortgage VAN -- Veterans Administration
Association VRDD -- Variable Rate Daily Demand
GO -- General Obligation VRWE -- Variable Rate Wednesday
HDC -- Housing Development Demand
Corporation
</TABLE>
- -----------------------------------[GRAPHIC]-----------------------------------
15
<PAGE>
- ------------------------------------------------------------------------------
Statement of Assets and Liabilities
(unaudited)
- ------------------------------------------------------------------------------
August 31, 1998
==============================================================================
ASSETS:
Investments, at value (Cost -- $411,520,586) $428,245,867
Cash 18,423
Interest receivable 5,394,415
- ------------------------------------------------------------------------------
TOTAL ASSETS 433,658,705
- ------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 1,021,782
Dividends payable 697,091
Investment advisory fees payable 262,130
Administration fees payable 75,831
Accrued expenses 76,032
- ------------------------------------------------------------------------------
TOTAL LIABILITIES 2,132,866
- ------------------------------------------------------------------------------
TOTAL NET ASSETS $431,525,839
==============================================================================
NET ASSETS:
Par value of capital shares $ 34,607
Capital paid in excess of par value 413,576,918
Overdistributed net investment income (233,750)
Accumulated net realized gain from security transactions 1,422,783
Net unrealized appreciation of investments 16,725,281
- ------------------------------------------------------------------------------
TOTAL NET ASSETS
(Equivalent to $12.47 per share on 34,606,944 shares of $0.001
par value outstanding: 500,000,000 shares authorized) $431,525,839
==============================================================================
See Notes to
Financial Statements.
- -----------------------------------[GRAPHIC]----------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
(unaudited)
- --------------------------------------------------------------------------------
Three Months
Ended
8/31/98
================================================================================
INVESTMENT INCOME:
Interest $ 6,731,153
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 770,657
Administration fees (Note 3) 220,188
Shareholder communications 65,600
Audit and legal 18,105
Registration fees 10,637
Shareholder and system servicing fees 5,977
Directors' fees 5,971
Pricing service fees 5,439
Custody 4,931
Other 4,750
- --------------------------------------------------------------------------------
TOTAL EXPENSES 1,112,255
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 5,618,898
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 4):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 25,734,320
Cost of securities sold 25,136,051
- --------------------------------------------------------------------------------
NET REALIZED GAIN 598,269
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period 14,515,623
End of period 16,725,281
- --------------------------------------------------------------------------------
INCREASE IN NET UNREALIZED APPRECIATION 2,209,658
- --------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS 2,807,927
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS $ 8,426,825
================================================================================
See Notes to
Financial Statements.
- -----------------------------------[GRAPHIC]-----------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
Three Months Year
Ended 8/31/98 Ended
(unaudited) 5/31/98
- --------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 5,618,898 $ 18,508,971
Net realized gain 598,269 7,547,057
Increase in net unrealized appreciation 2,209,658 21,394,525
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS 8,426,825 47,450,553
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 2):
Net investment income (5,052,613) (20,844,655)
Net realized gains -- (10,411,885)
- --------------------------------------------------------------------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (5,052,613) (31,256,540)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net asset value of shares issued
for reinvestment of dividends -- 671,821
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS -- 671,821
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS 3,374,212 16,865,834
NET ASSETS:
Beginning of period 428,151,627 411,285,793
- --------------------------------------------------------------------------------
END OF PERIOD* $431,525,839 $428,151,627
================================================================================
* Includes overdistributed net
investment income of: $(233,750) $(800,035)
================================================================================
See Notes to
Financial Statements.
- -----------------------------------[GRAPHIC]-----------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
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 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 an 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, 1998, 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; 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.
- -----------------------------------[GRAPHIC]-----------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
(continued)
- --------------------------------------------------------------------------------
3. Investment Advisory Agreement, Administration
Agreement and Other Transactions
Mutual Management Corp. ("MMC"), 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., another subsidiary of SSBH.
4. Investments
For the three months ended August 31, 1998, the aggregate cost of
purchases and proceeds from sales of investments (including maturities, but
excluding short-term securities) were as follows:
================================================================================
Purchases $ 18,869,461
- --------------------------------------------------------------------------------
Sales 25,734,320
================================================================================
At August 31, 1998, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
================================================================================
Gross unrealized appreciation $ 29,875,281
Gross unrealized depreciation (13,150,000)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 16,725,281
================================================================================
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 received or made 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,
- -----------------------------------[GRAPHIC]-----------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
(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 August 31, 1998, the Fund had no open futures contracts.
6. Capital Shares
During the three months ended August 31, 1998 and the year ended May 31,
1998, capital stock transactions were as follows:
August 31, 1998 May 31, 1998
--------------- -----------------
Shares Amount Shares Amount
================================================================================
Shares issued on reinvestment -- -- 54,539 $671,821
================================================================================
7. Securities Traded on a When-issued Basis
In a when issued transaction, the Fund commits to purchasing securities
for which specific information is not yet known at the time of the trade.
Securities purchased on a when-issued basis are not settled until they are
delivered to the Fund. Beginning on the date the Fund enters into the when-
issued transaction, the custodian maintains cash, U.S. government securities or
other liquid high grade debt obligations in a segregated account equal in value
to the purchase price of the when-issued security. These transactions are
subject to market fluctuations and their current value is determined in the same
manner as for other securities.
At August 31, 1998, the Fund held one when-issued security with a cost
of $1,021,782.
- ----------------------------------[GRAPHIC]-------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each period:
1998(1) 1998 1997 1996 1995 1994
================================================================================
Net Asset Value,
Beginning of Period $12.37 $11.90 $12.11 $12.55 $12.26 $13.00
- --------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.16 0.54 0.67 0.67 0.72 0.67
Net realized and
unrealized gain (loss) 0.09 0.83 0.08 (0.35) 0.49 (0.23)
- --------------------------------------------------------------------------------
Total Income From Operations 0.25 1.37 0.75 0.32 1.21 0.44
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.15) (0.61) (0.66) (0.75) (0.67) (0.67)
Net realized gains -- (0.29) (0.30) (0.01) (0.25) (0.51)
- --------------------------------------------------------------------------------
Total Distributions (0.15) (0.90) (0.96) (0.76) (0.92) (1.18)
- --------------------------------------------------------------------------------
Net Asset Value,
End of Period $12.47 $12.37 $11.90 $12.11 $12.55 $12.26
- --------------------------------------------------------------------------------
Total Return,
Based on Market Value* 0.18%++ 2.08% 7.89% 8.26% 8.40% 2.98%
- --------------------------------------------------------------------------------
Total Return, Based On
Net Asset Value* 2.15%++ 12.14% 6.59% 2.79% 10.96% 3.45%
- --------------------------------------------------------------------------------
Net Assets,
End of Period (Millions) $432 $428 $411 $418 $433 $423
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.03%+ 0.99% 1.00% 1.00% 1.02% 1.00%
Net investment income 5.21+ 4.35 5.56 5.35 5.97 5.15
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 4% 87% 113% 45% 93% 72%
- --------------------------------------------------------------------------------
Market Value, End of Period $10.875 $11.000 $11.625 $11.690 $11.500 $11.500
================================================================================
(1) For the three months ended August 31, 1998 (unaudited).
* The total return calculation assumes that 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.
- ----------------------------------[GRAPHIC]-------------------------------------
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,
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
February 28,
1998 5,677,656 0.16 4,609,822 0.13 7,399,266 0.21 12,009,088 0.34
May 31,
1998 5,679,780 0.16 4,606,509 0.13 (7,936) (0.00) 4,598,573 0.13
August 31,
1998 6,731,153 0.19 5,618,898 0.16 2,807,927 0.09 8,426,825 0.25
=================================================================================================================================
</TABLE>
- ----------------------------------[GRAPHIC]-------------------------------------
23
<PAGE>
- --------------------------------------------------------------------------------
Financial Data
(unaudited)
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each period:
NYSE Net Dividend
Record Payable Closing Asset Dividend Reinvestment
Date Date Price+ Value+ Paid Price
============================================================================
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
12/22/97* 12/26/97 11.625 12.39 0.294 12.24
1/27/98 1/30/98 11.938 12.41 0.056 12.04
2/24/98 2/27/98 11.938 12.39 0.056 11.60
3/24/98 3/27/98 11.125 12.36 0.050 11.34
4/21/98 4/24/98 11.1875 12.23 0.050 11.10
5/26/98 5/29/98 10.875 12.34 0.050 11.15
6/23/98 6/26/98 11.000 12.32 0.050 11.10
7/28/98 7/31/98 10.875 12.30 0.048 10.84
8/25/98 8/28/98 10.875 12.41 0.048 11.05
================================================================================
+ As of record date.
* Capital gain distribution.
- ----------------------------------[GRAPHIC]-------------------------------------
24
<PAGE>
- --------------------------------------------------------------------------------
Dividend Reinvestment Plan
(unaudited)
- --------------------------------------------------------------------------------
Under the Fund's Dividend Reinvestment Plan ("Plan"), a shareholder
whose shares of Common Stock are registered in his own name will have all
distributions from the Fund 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 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 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 Fund 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 Fund 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 Fund
issues the remaining shares. To the extent First Data is unable to stop open
market purchases and cause the Fund 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 Fund 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.
- ----------------------------------[GRAPHIC]-------------------------------------
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
Fund. No brokerage charges apply with respect to shares of Common Stock issued
directly by the Fund 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 Fund 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 Fund'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, Inc.,
P.O. Box 8030, Boston, Massachusetts 02266 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
ADMINISTRATOR
Allan J. Bloostein
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
Charles F. Barber, Emeritus
First Data Investor Services
Group, Inc.
OFFICERS P.O. Box 8030
Boston, Massachusetts 02266
Heath B. McLendon
President and
Chief Executive Officer CUSTODIAN
Lewis E. Daidone PNC Bank, N.A.
Senior Vice President 17th & Chestnut Streets
and Treasurer Philadelphia, Pennsylvania 19103
Joseph P. Deane
Vice President and
Investment Officer
David Fare
Investment Officer
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
- -----------------------------------[GRAPHIC]------------------------------------
27
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<PAGE>
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.
FD0776 10/98
