<PAGE>
Managed Municipals
Portfolio Inc.
Annual Report
May 31, 1999
[GRAPHIC]
<PAGE>
Managed Municipals
Portfolio Inc.
May 31, 1999
[GRAPHIC]
Dear Shareholder:
We are pleased to present the annual report for the Managed Municipal
Portfolio Inc. ("Fund") for the year ended May 31, 1999. During the past year
covered by this report, the Fund distributed income dividends totaling $0.54 per
share. The table below shows the annualized distribution rate and twelve-month
total return based on the Fund's May 31, 1999 net asset value ("NAV") per share
and its New York Stock Exchange ("NYSE") closing price.
Price Annualized Twelve-Month
Per Share Distribution Rate* Total Return
-------------- ------------------ ------------
$11.97 (NAV) 5.01% 2.66%
$10.375 (NYSE) 5.78% 0.11%
In comparison, general closed-end municipal bond funds posted an average
total return on NAV of a negative 6.41% for the same time period, as reported by
Lipper Inc. (Lipper is a major fund-tracking organization.)
Municipal Bond Market Update and Outlook
Through May 1999, the municipal bond market was less volatile compared
with to U.S. Treasuries. In our opinion, municipal bonds, which are relatively
inexpensive, currently offer significant downside protection. In addition, new
issuance of municipal bonds has slowed down from 1998 levels. With inflation
relatively low, conditions are still favorable for municipal bonds.
- ----------
* This distribution assumes a current monthly income dividend rate of $0.05
per share for twelve months.
=============================== 1 ================================
<PAGE>
In April, the Consumer Price Index ("CPI") increased 0.7% -- its largest
monthly increase in nine years. With global economic growth picking up,
inflationary fears surfaced. The Federal Reserve Board ("Fed") raised short-term
rates 0.25% on June 30, 1999 and yields in the bond market went up.
Looking forward and as we near the end of the millennium and the onset of
Y2K, we believe that fixed-income securities in the U.S. should experience solid
demand. That in turn should provide a positive environment for municipal bonds
for the remainder of 1999. We are positioning ourselves for modestly lower rates
over the next six months, and if there is no repeat of a higher CPI number, we
stand an excellent chance of seeing a modest decline in rates as we move toward
the fall.
Investment Strategy
The Fund seeks as high a level of current income exempt from Federal
income tax as is consistent with preservation of principal.
Our investment strategy for the Fund is to seek to maximize our dividend
yield. In our view, the municipal bond market has provided us with excellent
opportunities during the reporting period. Since interest rates have risen, we
have been able to invest our excess cash at higher yields. In addition, we have
also been focusing on adding high-grade bonds to the Fund's portfolio.
(Currently the credit spread between AAA-rated and BBB-rated bonds are near
their narrowest spread levels ever.) At these narrow spread levels, we do not
think it makes sense to buy low-grade bonds and assume additional credit risk.
Because our interest-rate forecast remains positive, we believe our current
investment strategy should allow us to maximize dividend yields going forward.
During the reporting period, we have pared down our exposure to paper
recycling facilities. Our goal will be to eliminate our holdings in that area
completely before 2000. As noted above, spreads between high-grade credits and
lower ones have never been more narrower. We will upgrade the Portfolio at every
opportunity until these spreads widen out to more historic norms.
=============================== 2 ================================
<PAGE>
During the past year, the Fund focused on hospital bonds (15.1%),
transportation bonds (13.6%) and general obligation bonds (12.6%) because we
believe they offered good relative values. At the end of May, the Portfolio's
weighted average maturity was approximately 19.5 years. In addition, as of May
31, 1999, roughly 88% of the Portfolio's holdings were rated investment grade by
either Standard & Poor's Ratings Service or Moody's Investors Service, Inc.,
with approximately 50% of the Portfolio invested in AAA bonds, the highest
rating.
At its June 2 meeting, the Board of Directors of the Fund authorized a
repurchase of shares when deemed appropriate. 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/ Joseph P. Deane
Heath B. McLendon Joseph P. Deane
Chairman Vice President and
Investment Officer
July 9, 1999
=============================== 3 ================================
<PAGE>
- --------------------------------------------------------------------------------
Take Advantage of the Fund's Dividend Reinvestment Plan!
Did you know that Fund investors who reinvest their dividends are taking
advantage of one of the most effective wealth-building tools available today?
Systematic investments put time to work for you through the strength of
compounding.
As an investor in the Fund, you can participate in its Dividend Reinvestment
Plan ("Plan"), a convenient, simple and efficient way to reinvest your dividends
and capital gains, if any, in additional shares of the Fund. Below is a short
summary of how the Plan works.
Plan Summary
If you are a Plan participant who has not elected to receive your dividends in
the form of a cash payment, then your dividend and capital gain distributions
will be reinvested automatically in additional shares of the Fund.
The number of common stock shares in the Fund you will receive in lieu of a cash
dividend is determined in the following manner. If the market price of the
common stock is equal to or exceeds the net asset value per share ("NAV") on the
determination date, you will be issued shares by the Fund at a price reflecting
the NAV, or 95% of the market price, whichever is greater.
If the market price is less than the NAV at the time of valuation (the close of
business on the determination date), or if the Fund declares a dividend or
capital gains distribution payable only in cash, the Plan Agent (First Data
Investor Services Group, Inc.) will buy common stock for your account in the
open market.
If the Plan Agent begins to purchase additional shares in the open market and
the market price of the shares subsequently rises above the previously
determined NAV before the purchases are completed, the Plan Agent will attempt
to terminate purchases and have the Fund issue the remaining dividend or
distribution in shares at the greater of the previously determined NAV or 95% of
the market price. In that case, the number of Fund shares you receive 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.
Restated Plan Adopted
A more complete description of the current Plan appears in the section of this
report beginning on page 28. The descriptions herein are based on a restated
version of the Plan, which was recently adopted to reflect current practices of
the Plan Agent and for the purpose of standardizing the terms among all
closed-end Mutual Funds managed by SSBC Fund Management Inc.
To find out more detailed information about the Plan and about how you can
participate, please call First Data Investor Services Group, Inc. at (800)
331-1710.
- --------------------------------------------------------------------------------
=============================== 4 ================================
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
May 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
===================================================================================
<S> <C> <C> <C>
- ------------------------------------
MUNICIPAL BONDS AND NOTES -- 100.0%
- ------------------------------------
California -- 9.7%
$ 4,540,000 Baa3* California Educational Facilities Authority
Revenue, (Pooled College & University
Projects), Series A, 5.625% due 7/1/23 $4,500,275
2,000,000 AAA California Health Facilities Finance Authority
Revenue, Series A, FSA-Insured,
Kaiser Permanente, 5.500% due 6/1/22 2,077,500
1,000,000 AAA California State Public Works Board, Lease
Revenue, Department of Corrections,
California Prison, AMBAC-Insured,
5.250% due 1/1/21 1,005,000
2,755,000 AA California Statewide Community Development
Authority, COP, (St. Joseph Health System),
5.250% due 7/1/21 2,720,562
1,000,000 AAA Campbell, CA Unified School District, GO,
FGIC-Insured, 5.000% due 8/1/17 990,000
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 2,000,000
3,300,000 A- Los Angeles, CA Regional Airport
Improvement Corp., Los Angeles
International Airport Lease Revenue,
6.500% due 1/1/32(b) 3,394,875
Los Angeles County, CA Metropolitan,
Transportation Authority, Sales Tax
Revenue, MBIA-Insured:
7,700,000 AAA 5.250% due 7/1/17 7,796,250
3,000,000 AAA 5.250% due 7/1/18 3,033,750
3,000,000 AA Metropolitan Water District, Southern
California Waterworks Revenue Refunding,
Series A, 5.000% due 7/1/16 2,973,750
3,140,000 AAA Rancho Mirage, CA Redevelopment Agency,
Tax Allocation Refunding, (1984 Project),
Series A, MBIA-Insured, 5.000% due 4/1/24 3,034,025
4,250,000 AAA Riverside County, CA COP, (1997 Lease
Refunding Project), MBIA-Insured,
5.125% due 11/1/17 4,223,438
</TABLE>
See Notes to
Financial Statements.
=============================== 5 ================================
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
May 31, 1999 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
===================================================================================
<S> <C> <C> <C>
California -- 9.7% (continued)
$ 2,750,000 AAA Sacramento County, CA COP, (Public
Facilities Project), MBIA-Insured,
5.375% due 2/1/19 $ 2,801,563
- -----------------------------------------------------------------------------------
40,550,988
- -----------------------------------------------------------------------------------
Colorado -- 12.1%
3,000,000 AAA Arapahoe County, CO Capital Improvement,
Public Highway Authority, (Pre-Refunded --
Escrowed with U.S government
securities to 8/31/05 Call @ 103),
7.000% due 8/31/26(c) 3,521,250
Colorado Health Facilities Authority Revenue:
3,000,000 A Series B, 5.350% due 8/1/15 3,018,750
2,500,000 AAA Sisters of Charity Leavenworth,
MBIA-Insured, 5.125% due 12/1/18 2,465,625
2,000,000 BBB+ Colorado Springs, CO Airport Revenue,
Series A, 7.000% due 1/1/22(b) 2,155,000
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 15,750,000
Denver, CO City & County Airport Revenue,
Series C:
3,155,000 BBB+ 6.750% due 11/15/22(b)(c) 3,387,680
10,165,000 BBB+ 6.125% due 11/15/25(b) 10,660,544
8,160,000 BBB+ Escrowed to maturity with U.S.
government securities,
6.125% due 11/15/25(b)(d) 8,884,200
845,000 AAA Pre-Refunded -- Escrowed with U.S.
government securities to 11/15/02
Call @ 102, 6.750% due 11/15/22(b) 933,725
- -----------------------------------------------------------------------------------
50,776,774
- -----------------------------------------------------------------------------------
Connecticut -- 0.3%
1,200,000 AA Connecticut State Community Development
Authority, Special Obligation, Series A,
5.550% due 12/15/15 1,240,500
- -----------------------------------------------------------------------------------
Florida -- 4.3%
2,000,000 AAA Broward County, FL Airport System Revenue,
Passenger Facility, Series H-2,
AMBAC-Insured, 4.750% due 10/1/23 1,857,500
</TABLE>
See Notes to
Financial Statements.
=============================== 6 ================================
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
May 31, 1999 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
===================================================================================
<S> <C> <C> <C>
Florida -- 4.3% (continued)
$ 2,480,000 AAA Florida State Turnpike Authority Revenue
Refunding, FGIC-Insured,
5.000% due 7/1/16 $ 2,455,200
5,000,000 BBB- Martin County, FL IDA, (Indiantown
Cogeneration Project), Series A,
7.875% due 12/15/25(b) 5,225,000
3,500,000 AAA Orange County, FL Tourist Development
Tax Revenue, Series A, AMBAC-Insured,
4.750% due 10/1/24 3,241,875
Tampa, FL Revenue Bonds, (Florida
Aquarium Inc. Project):
2,650,000 NR 7.550% due 5/1/12(c) 2,958,063
2,000,000 NR 7.750% due 5/1/27(c) 2,242,500
- -----------------------------------------------------------------------------------
17,980,138
- -----------------------------------------------------------------------------------
Georgia -- 0.5%
2,000,000 A3* Private Colleges & Universities Authority
Revenue, (Mercer University Project),
Series A, 5.250% due 10/1/25 1,940,000
- -----------------------------------------------------------------------------------
Hawaii -- 1.4%
2,000,000 A Hawaii State Department of Budget & Finance,
Special Purpose Revenue, Kaiser Permanente,
Series A, 5.100% due 3/1/14 1,952,500
4,010,000 AAA Hawaii State GO, Series CP, FGIC-Insured,
5.000% due 10/1/15 3,969,900
- -----------------------------------------------------------------------------------
5,922,400
- -----------------------------------------------------------------------------------
Illinois -- 1.4%
2,000,000 Aaa* Illinois Health Facilities Authority Revenue,
Memorial Health Systems, MBIA-Insured,
5.250% due 10/1/18 1,982,500
4,000,000 AAA Illinois State GO, FGIC-Insured,
5.250% due 12/1/20 3,980,000
- -----------------------------------------------------------------------------------
5,962,500
- -----------------------------------------------------------------------------------
Indiana -- 1.3%
5,000,000 A1* Indiana Port Commission Revenue Refunding,
(Cargill Inc. Project), 6.875% due 5/1/12(c) 5,450,000
- -----------------------------------------------------------------------------------
Kansas -- 0.1%
500,000 A+ Kansas Development Financing Authority,
Health Facilities Revenue, Children's Mercy
Hospital, Series N, 5.250% due 5/15/18 491,875
- -----------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
=============================== 7 ================================
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
May 31, 1999 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
===================================================================================
<S> <C> <C> <C>
Louisiana -- 2.3%
$ 4,000,000 AAA Louisiana Local Government, Environment
Facilities, Community Development
Authority Revenue, (Capital Projects &
Equipment Acquisition), AMBAC-Insured,
4.500% due 12/1/18 $ 3,670,000
5,500,000 Aa3* Saint Martin Parish, LA Industrial Revenue,
(Cargill Inc. Project), 6.625% due 10/1/12 6,015,625
- -----------------------------------------------------------------------------------
9,685,625
- -----------------------------------------------------------------------------------
Maryland -- 0.5%
10,000,000 NR Maryland State Energy Financing
Administration, Solid Waste Disposal
Revenue, Limited Obligation, (Hagerstown
Project), 9.000% due 10/15/16(b)(e) 2,200,000
- -----------------------------------------------------------------------------------
Massachusetts -- 3.7%
1,000,000 AAA Massachusetts State Health & Educational
Facilities Authority Revenue, (Northeastern
University Project), Series I, MBIA-Insured,
5.000% due 10/1/29 950,000
2,000,000 AAA Massachusetts State Housing Finance
Agency, Housing Development, Series B,
MBIA-Insured, 5.300% due 12/1/17 2,017,500
3,339,445 NR Massachusetts State Industrial Finance
Agency, Solid Waste Disposal Revenue,
Sr. Lien, (Massachusetts Paper Co.
Project), 8.500% due 11/1/12 3,272,657
5,000,000 AAA Massachusetts State Turnpike Authority,
Metropolitan Highway System Revenue,
Series A, AMBAC-Insured,
4.750% due 1/1/34 4,531,250
Massachusetts State Water Resource
Authority, MBIA-Insured:
3,000,000 AAA Series B, 5.000% due 12/1/25 2,865,000
Series C:
1,025,000 AAA 5.250% due 12/1/20 1,021,156
975,000 AAA Pre-Refunded -- Escrowed with U.S.
government securities to 12/1/04
Call @ 102, 5.250% due 12/1/20 1,045,688
- -----------------------------------------------------------------------------------
15,703,251
- -----------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
=============================== 8 ================================
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
May 31, 1999 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
===================================================================================
<S> <C> <C> <C>
Michigan -- 6.1%
$ 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) $ 8,020,000
16,375,000 NR Midland County, MI Education Development
Corp., PCR, Limited Obligation, Series B,
9.500% due 7/23/09(b)(c) 17,407,280
- -----------------------------------------------------------------------------------
25,427,280
- -----------------------------------------------------------------------------------
Minnesota -- 1.1%
2,500,000 A1* Duluth, MN Seaway Port Authority, IDA,
Dock & Wharf Revenue, (Cargill Inc.
Project), 6.800% due 5/1/12 2,712,500
525,000 A2* Minnesota State Higher Education Facilities
Authority Revenue, University St. Thomas
Education, Series 3, 5.375% due 4/1/18 524,344
1,250,000 AA+ Minnesota State Housing Financing Agency,
Single-Family Mortgage, Series I,
5.500% due 1/1/17 1,270,313
- -----------------------------------------------------------------------------------
4,507,157
- -----------------------------------------------------------------------------------
Missouri -- 0.8%
1,000,000 AAA Fenton, MO COP, (Capital Improvement
Projects), MBIA-Insured, 5.125% due 9/1/17 995,000
750,000 A+ Missouri Health & Educational Facilities
Authority Revenue, Children's Mercy
Hospital 5.250% due 5/15/18 735,938
1,575,000 AAA St. Louis, MO Board of Education, Missouri
Direct Deposit Program, Series B,
FGIC-Insured, 5.000% due 4/1/16 1,551,375
- -----------------------------------------------------------------------------------
3,282,313
- -----------------------------------------------------------------------------------
Montana -- 1.9%
8,000,000 NR Montana State Board Investment Resource
Recovery, (Yellowstone Energy Project),
7.000% due 12/31/19(b) 7,970,000
- -----------------------------------------------------------------------------------
New Jersey -- 2.0%
5,200,000 A+ Hudson County, NJ Improvement Authority,
6.625% due 8/1/25 5,674,500
2,830,000 AAA Middlesex County, NJ COP, MBIA-Insured,
5.200% due 6/15/18 2,840,612
- -----------------------------------------------------------------------------------
8,515,112
- -----------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
=============================== 9 ================================
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
May 31, 1999 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
===================================================================================
<S> <C> <C> <C>
New York -- 10.1%
$ 3,000,000 A- Long Island Power Authority, Electric
System Revenue, Series A,
5.500% due 12/1/29 $ 3,037,500
New York City Transitional Finance
Authority Revenue, Future Tax Secured:
Series B:
1,000,000 AA 4.750% due 11/1/17 948,750
4,250,000 AA 4.750% due 11/1/19 3,984,375
Series C:
5,000,000 AA 5.000% due 5/1/29 4,737,500
2,000,000 AAA FGIC-Insured, 5.000% due 5/1/17 1,960,000
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 1,124,063
New York State Dormitory Authority Revenue:
1,000,000 AAA City University Systems, Series A,
FGIC-Insured, 5.000% due 7/1/16 986,250
4,000,000 AAA Mental Health Services Facilities
Improvement, Series D, FSA-Insured,
5.125% due 8/15/17 3,955,000
6,000,000 AAA Montefiore Medical Center,
AMBAC-Insured, 5.250% due 2/1/15 6,082,500
5,000,000 A- State University Educational Facilities,
5.000% due 5/15/14 4,931,250
1,000,000 AAA New York State Medcare Mental Health
Services, FGIC-Insured, 5.250% due 2/15/19 1,000,000
5,000,000 AAA New York State Thruway Authority,
Highway & Bridge Fund, Series B,
FGIC-Insured, 5.000% due 4/1/17 4,881,250
5,000,000 Aa3* Triborough Bridge & Tunnel Authority of NY,
General Purpose, Series A,
5.000% due 1/1/24 4,806,250
- -----------------------------------------------------------------------------------
42,434,688
- -----------------------------------------------------------------------------------
Ohio -- 4.4%
2,000,000 AAA Akron, OH Economic Development,
MBIA-Insured, 5.000% due 12/1/18 1,962,500
1,000,000 AAA Cleveland-Cuyahoga County, OH Port
Authority Revenue, Rock & Roll Hall of
Fame, AMBAC-Insured,
5.400% due 12/1/15 1,032,500
</TABLE>
See Notes to
Financial Statements.
=============================== 10 =================================
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
May 31, 1999 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
===================================================================================
<S> <C> <C> <C>
Ohio -- 4.4% (continued)
$ 6,360,000 AAA Cuyahoga County, OH Hospital Revenue
Refunding, (Metrohealth System), Series A,
MBIA-Insured, 5.125% due 2/15/14 $ 6,455,400
2,000,000 AAA Ohio State Higher Educational Facilities
Community Revenue, (Union Dayton Project),
AMBAC-Insured, 5.350% due 12/1/17 2,055,000
1,645,000 AAA Ohio State Water Development Authority
Revenue, Fresh Water, Series A,
FSA-Insured, 5.000% due 6/1/16 1,632,663
5,320,000 AAA Portage County, OH GO, MBIA-Insured,
5.250% due 12/1/17 5,346,600
- -----------------------------------------------------------------------------------
18,484,663
- -----------------------------------------------------------------------------------
Pennsylvania -- 2.1%
1,800,000 AAA Altoona, PA City Authority, Water Revenue,
FGIC-Insured, 5.000% due 11/1/19 1,748,250
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 3,517,500
1,000,000 AAA Pittsburgh, PA Water & Sewer Authority
Revenue, Series C, FSA-Insured,
5.000% due 9/1/17 978,750
2,500,000 AA Saint Mary Hospital Authority, Bucks
County Catholic Health Initiatives,
Series A, 5.000% due 12/1/18 2,393,750
- -----------------------------------------------------------------------------------
8,638,250
- -----------------------------------------------------------------------------------
Puerto Rico -- 0.5%
2,000,000 AAA Puerto Rico Commonwealth Infrastructure
Financing Authority, AMBAC-Insured,
5.000% due 7/1/16 2,002,500
- -----------------------------------------------------------------------------------
South Carolina -- 1.7%
4,000,000 AAA Lexington County, SC Health Services
District Inc., Hospital Revenue Refunding &
Improvement, FSA-Insured,
5.250% due 11/1/17 4,010,000
2,000,000 A3* Myrtle Beach, SC COP, Myrtle Beach
Convention Center, (Pre-Refunded --
Escrowed with U.S. government securities to
7/1/02 Call @ 102), 6.875% due 7/1/07(d) 2,207,500
</TABLE>
See Notes to
Financial Statements.
=============================== 11 =================================
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
May 31, 1999 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
===================================================================================
<S> <C> <C> <C>
South Carolina -- 1.7% (continued)
$ 1,140,000 AAA Piedmont, SC Municipal Power Agency,
Electric Revenue Refunding, Series A,
MBIA-Insured, 4.875% due 1/1/16 $1,100,100
- -----------------------------------------------------------------------------------
7,317,600
- -----------------------------------------------------------------------------------
Tennessee -- 0.3%
1,150,000 NR Hardeman County, TN Correctional
Facilities Corp., 7.750% due 8/1/17 1,269,312
- -----------------------------------------------------------------------------------
Texas -- 16.5%
2,000,000 Aaa* Arlington, TX ISD, GO, PSFG,
5.000% due 2/15/24 1,915,000
3,990,000 Aaa* Azle, TX ISD, GO, PSFG, Series C,
5.000% due 2/15/22 3,860,325
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 1,965,000
Brazos River Authority:
7,500,000 AAA Houston Industrial Income Project, Series A,
5.125% due 5/1/19 7,368,750
4,000,000 Baa1* PCR, Utilities Electric Co., Series C,
5.550% due 6/1/30(b) 3,815,000
2,000,000 AAA Brownsville, TX Utility Systems Revenue,
AMBAC-Insured, 5.250% due 9/1/20 1,997,500
Burleson, TX ISD, GO, PSFG:
1,160,000 Aaa* 6.750% due 8/1/24 1,305,000
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) 3,258,900
2,960,000 AA- Fort Worth, TX Higher Education Financing
Corp. Revenue, Texas Christian University
Project, 5.000% due 3/15/14 2,934,100
Harris County, TX Health Facilities,
Development Corp. Revenue:
3,000,000 AA Childrens Hospital Project, Series A,
5.250% due 10/1/19 2,955,000
1,000,000 AA School Health Care Systems, Series B,
5.750% due 7/1/27 1,035,000
Harris County, TX Toll Road, GO:
8,000,000 AAA Sr. Lien, FGIC-Insured, 5.375% due 8/15/20 8,050,000
5,185,000 AA Sub. Lien, 5.125% due 8/15/16 5,185,000
</TABLE>
See Notes to
Financial Statements.
=============================== 12 =================================
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
May 31, 1999 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
===================================================================================
<S> <C> <C> <C>
Texas -- 16.5% (continued)
$ 1,000,000 AAA Houston, TX ISD, GO, Series A, PSFG,
4.750% due 2/15/22 $ 930,000
2,670,000 AAA Manor, TX ISD, GO, Refunding, PSFG,
5.000% due 8/1/17 2,596,575
2,000,000 AAA Nueces River Authority, Texas Water Supply
Facilities, FSA-Insured, 5.500% due 3/1/27 2,065,000
Texas Water Development Board Revenue,
State Revolving Fund, Sr. Lien, Series B:
3,000,000 AAA 5.000% due 7/15/14 2,996,250
1,000,000 AAA 5.000% due 7/15/15 988,750
5,000,000 AAA 5.000% due 7/15/16 4,906,250
8,000,000 AAA 5.000% due 7/15/19 7,740,000
1,520,000 AAA West Texas Municipal Power Agency
Revenue, MBIA-Insured,
5.000% due 2/15/15 1,504,800
- -----------------------------------------------------------------------------------
69,372,200
- -----------------------------------------------------------------------------------
Utah -- 0.9%
4,000,000 A+ Intermountain Power Agency, Utah Power
Supply Revenue Refunding, Series D,
5.000% due 7/1/21 3,845,000
- -----------------------------------------------------------------------------------
Virgin Islands -- 0.2%
1,000,000 BBB- Virgin Islands, PFA Revenue, Sr. Lien,
Series A, 5.500% due 10/1/22 1,003,750
- -----------------------------------------------------------------------------------
Virginia -- 3.9%
4,700,000 A2* Harrisonburg, VA Redevelopment &
Housing Authority, (Jail & Courthouse
Project), Public Facilities Lease Revenue,
6.500% due 9/1/14 4,970,250
Virginia College Building Authority,
Virginia Educational Facilities Revenue,
21st Century College Program:
3,590,000 AA 5.250% due 8/1/13 3,684,237
3,805,000 AA 5.250% due 8/1/14 3,890,612
Virginia State HDA, Multi-Family Housing:
1,655,000 AA+ Series D, 6.250% due 1/1/15 1,735,681
1,235,000 AAA Series H, AMBAC-Insured,
6.300% due 11/1/15 1,319,906
600,000 AA+ Series K, 5.800% due 11/1/10 639,750
- -----------------------------------------------------------------------------------
16,240,436
- -----------------------------------------------------------------------------------
</TABLE>
See Notes to
Financial Statements.
=============================== 13 =================================
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
May 31, 1999 (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
===================================================================================
<S> <C> <C> <C>
Washington -- 7.2%
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 $ 6,386,494
22,685,000 AAA Zero coupon due 6/1/22 6,635,362
4,750,000 AA Series B, Remarketed 7/1/92,
Mandatory put 7/1/19,
6.750% due 7/1/62(b)(c) 4,993,437
10,060,000 AA- Washington State Health Care Facilities,
Authority Revenue, Sisters of Providence
Hospital, (Pre-Refunded -- Escrowed with
U.S. government securities to 10/1/99
Call @ 102), 7.875% due 10/1/10(c)(d) 10,369,345
2,000,000 AAA Washington State Public Power Supply
System, (Project No. 2), Series A,
FSA-Insured, 5.125% due 7/1/11 2,055,000
- -----------------------------------------------------------------------------------
30,439,638
- -----------------------------------------------------------------------------------
West Virginia -- 0.7%
Marion County, WV Community Solid
Waste Disposal Facilities Revenue,
Adirondack Recycling:
4,832,730 NR Series A, 8.000% due 12/1/25(e) 2,416,365
653,688 NR Series B, 10.000% due 12/1/25(e) 326,844
- -----------------------------------------------------------------------------------
2,743,209
- -----------------------------------------------------------------------------------
Wisconsin -- 2.0%
4,070,000 AA Wisconsin State GO, Series B,
6.600% due 1/1/22(b) 4,354,900
Wisconsin State Health & Educational
Facilities Authority Revenue, MBIA-Insured:
3,000,000 AAA Aurora Health Care Inc.,
5.250% due 8/15/17 3,003,750
1,000,000 AAA The Medical College of Wisconsin Inc.
Project, 5.400% due 12/1/16 1,015,000
- -----------------------------------------------------------------------------------
8,373,650
- -----------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100% ------------
(COST -- $411,540,798**) $419,770,809
------------
===================================================================================
</TABLE>
See pages 15, 16 and 17 for footnote disclosure, definition of ratings and
certain security descriptions.
See Notes to
Financial Statements.
=============================== 14 ================================
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
May 31, 1999 (continued)
- --------------------------------------------------------------------------------
(a) All ratings are by Standard & Poor's Ratings Service, except that those
identified by an asterisk (*) which are rated by Moody's Investors
Service, Inc.
(b) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(c) Security is 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 is in default.
** Aggregate cost for Federal income tax purposes is substantially the same.
- --------------------------------------------------------------------------------
Summary of Investments by Combined Ratings
May 31, 1999 (unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Percentage of
Moody's and/or Standard & Poor's Total Investments
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Aaa AAA 50.3%
Aa AA 17.4
A A 10.7
Baa BBB 9.4
NR NR 12.2
-----
100.0%
=====
- --------------------------------------------------------------------------------
See Notes to
Financial Statements.
=============================== 15 ================================
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings
(unaudited)
- --------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Ratings Service ("Standard and 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 Investors Service, Inc. ("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.
See Notes to
Financial Statements.
=============================== 16 ================================
<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)
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governments
AIG -- American International Guaranty
AMBAC -- AMBAC Indemnity 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
VAN -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday Demand
See Notes to
Financial Statements.
=============================== 17 ================================
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
May 31, 1999
================================================================================
ASSETS:
Investments, at value (Cost -- $411,540,798) $419,770,809
Interest receivable 6,331,669
- --------------------------------------------------------------------------------
Total Assets 426,102,478
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 9,833,051
Dividends payable 721,913
Payable to bank 685,411
Investment advisory fees payable 301,569
Accrued expenses 147,210
- --------------------------------------------------------------------------------
Total Liabilities 11,689,154
- --------------------------------------------------------------------------------
Total Net Assets $414,413,324
================================================================================
NET ASSETS:
Par value of capital shares $ 34,607
Capital paid in excess of par value 413,576,918
Undistributed net investment income 709,187
Accumulated net realized loss from security
transactions and futures contracts (8,137,399)
Net unrealized appreciation of investments 8,230,011
- --------------------------------------------------------------------------------
TOTAL NET ASSETS
(Equivalent to $11.97 a share on 34,606,944 shares of
$0.001 par value outstanding; 500,000,000 shares authorized) $414,413,324
================================================================================
See Notes to
Financial Statements.
=============================== 18 ================================
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
Year
Ended
5/31/99
================================================================================
INVESTMENT INCOME:
Interest $ 24,137,875
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 2,981,709
Administration fees (Note 3) 851,917
Shareholder communications 254,025
Audit and legal 147,543
Directors' fees 32,423
Shareholder and system servicing fees 27,673
Pricing service fees 21,061
Custody 17,504
Other 13,827
- --------------------------------------------------------------------------------
Total Expenses 4,347,682
Less: Investment advisory and administration fee waivers (Note 3) (345,976)
- --------------------------------------------------------------------------------
Net Expenses 4,001,706
- --------------------------------------------------------------------------------
Net Investment Income 20,136,169
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FUTURES CONTRACTS (NOTES 4 AND 5):
Realized Loss From:
Security transactions (excluding short-term securities) (4,777,237)
Futures contracts (109,469)
- --------------------------------------------------------------------------------
Net Realized Loss (4,886,706)
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 14,515,623
End of year 8,230,011
- --------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (6,285,612)
- --------------------------------------------------------------------------------
Net Loss on Investments and Futures Contracts (11,172,318)
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 8,963,851
================================================================================
See Notes to
Financial Statements.
=============================== 19 ================================
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
Year Year
Ended Ended
5/31/99 5/31/98
================================================================================
OPERATIONS:
Net investment income $ 20,136,169 $ 18,508,971
Net realized gain (loss) (4,886,706) 7,547,057
Increase (decrease) in net
unrealized appreciation (6,285,612) 21,394,525
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 8,963,851 47,450,553
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 2):
Net investment income (18,626,947) (20,844,655)
Net realized gains (4,075,207) (10,411,885)
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (22,702,154) (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 (Decrease) in Net Assets (13,738,303) 16,865,834
NET ASSETS:
Beginning of year 428,151,627 411,285,793
- --------------------------------------------------------------------------------
End of year* $414,413,324 $428,151,627
================================================================================
* Includes undistributed (overdistributed)
net investment income of: $709,187 $(800,035)
================================================================================
See Notes to
Financial Statements.
=============================== 20 ================================
<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, 1999, reclassifications were made to the Fund's capital
accounts to reflect permanent book/tax differences and income and gains
available for distributions under income tax regulations. Net investment income,
net realized gains and net assets were not affected by this change; and (i)
estimates and assumptions are required to be made regarding assets, liabilities
and changes in net assets resulting from operations when financial statements
are prepared. Changes in the economic environment, financial markets and any
other parameters used in determining these estimates could cause actual results
to differ.
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.
=============================== 21 ================================
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
(continued)
- --------------------------------------------------------------------------------
3. Investment Advisory Agreement, Administration Agreement and Other
Transactions
SSBC Fund Management Inc. ("SSBC"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), acts as investment adviser to the Fund. The Fund pays
SSBC 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. For the year ended
May 31, 1999, SSBC waived $269,093 of its investment advisory fee.
SSBC 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. For the year ended May 31, 1999, SSBC
waived $76,883 of its administration fee.
All officers and one Director of the Fund are employees of Salomon Smith
Barney Inc., another subsidiary of SSBH.
4. Investments
For the year ended May 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $95,816,589
- --------------------------------------------------------------------------------
Sales 96,534,635
================================================================================
At May 31, 1999, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
================================================================================
Gross unrealized appreciation $ 19,750,245
Gross unrealized depreciation (11,520,234)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 8,230,011
================================================================================
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
=============================== 22 ================================
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
(continued)
- --------------------------------------------------------------------------------
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, 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 May 31, 1999, the Fund had no open futures contracts.
6. Capital Shares
Capital stock transactions were as follows:
Year Ended Year Ended
May 31, 1999 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 May 31, 1999, the Fund did not hold any when-issued securities.
8. Capital Loss Carryforward
At May 31, 1999, the Fund had, for Federal income tax purposes,
approximately $2,565,000 of unused capital loss carryforwards available to
offset future capital gains expiring May 31, 2007. To the extent that these
carryforward losses are used to offset capital gains, it is probable that the
gains so offset will not be distributed.
=============================== 23 ================================
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year ended May 31:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
=========================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $12.37 $11.90 $12.11 $12.55 $12.26
- ---------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income(1) 0.58 0.54 0.67 0.67 0.72
Net realized and unrealized gain (loss) (0.32) 0.83 0.08 (0.35) 0.49
- ---------------------------------------------------------------------------------------------------------
Total Income From Operations 0.26 1.37 0.75 0.32 1.21
- ---------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.54) (0.61) (0.66) (0.75) (0.67)
Net realized gains (0.12) (0.29) (0.30) (0.01) (0.25)
- ---------------------------------------------------------------------------------------------------------
Total Distributions (0.66) (0.90) (0.96) (0.76) (0.92)
- ---------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $11.97 $12.37 $11.90 $12.11 $12.55
- ---------------------------------------------------------------------------------------------------------
Total Return,
Based on Market Value(2) 0.11% 2.08% 7.89% 8.26% 8.40%
- ---------------------------------------------------------------------------------------------------------
Total Return,
Based on Net Asset Value(2) 2.66% 12.14% 6.59% 2.79% 10.96%
- ---------------------------------------------------------------------------------------------------------
Net Assets, End of Year (millions) $414 $428 $411 $418 $433
- ---------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(1) 0.94% 0.99% 1.00% 1.00% 1.02%
Net investment income 4.72 4.35 5.56 5.35 5.97
- ---------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 23% 87% 113% 45% 93%
- ---------------------------------------------------------------------------------------------------------
Market Value, End of Year $10.375 $11.000 $11.625 $11.690 $11.500
=========================================================================================================
</TABLE>
(1) The investment advisor and administrator waived a portion of their fees
for the year ended May 31, 1999. If such fees were not waived, the per
share decrease in net investment income would have been $0.01. In
addition, the ratio of expenses to average net assets would have been
1.02%.
(2) The total return calculation assumes that dividends are reinvested in
accordance with the Fund's dividend reinvestment plan.
=============================== 24 ================================
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
Managed Municipals Portfolio Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the Managed Municipals Portfolio Inc.
as of May 31, 1999, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended and financial highlights for each of the years in the
four-year period then ended. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits. The financial highlights for the year ended May 31, 1995 was
audited by other auditors whose report thereon, dated July 12, 1995, expressed
an unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1999 by correspondence with the custodian. As to securities purchased but
not yet received, we performed other appropriate auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Managed Municipals Portfolio Inc. as of May 31, 1999, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended and financial highlights for each of
the years in the four-year period then ended, in conformity with generally
accepted accounting principles.
/s/ KPMG LLP
New York, New York
July 15, 1999
=============================== 25 ================================
<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,
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
November 30,
1998 5,825,421 0.17 4,996,967 0.15 (967,184) (0.04) 4,029,783 0.11
February 28,
1999 5,747,605 0.17 4,793,284 0.14 (3,630,173) (0.10) 1,163,111 0.04
May 31,
1999 5,833,696 0.17 4,727,020 0.13 (9,382,888) (0.27) (4,655,868) (0.14)
=======================================================================================================================
</TABLE>
=============================== 26 ================================
<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
================================================================================
6/24/97 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
9/22/98 9/25/98 11.375 12.48 0.049 11.57
10/27/98 10/30/98 11.4375 12.44 0.049 11.58
11/23/98 11/27/98 11.750 12.42 0.049 11.59
12/21/98* 12/24/98 11.313 12.32 0.118 11.27
1/26/99 1/29/99 10.938 12.37 0.049 11.04
2/23/99 2/26/99 10.875 12.31 0.049 10.89
3/23/99 3/26/99 10.750 12.22 0.049 10.72
4/27/99 4/30/99 10.500 12.18 0.049 10.46
5/25/99 5/28/99 10.375 12.01 0.049 10.52
================================================================================
+ As of record date.
* Capital gain distribution.
=============================== 27 ================================
<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 purchasing 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 determination date (generally, the record date
for the distribution), Plan participants will be issued shares of common stock
by the Fund at a price equal to the greater of net asset value 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 (which is the close of business on
the determination date), 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 NYSE or elsewhere, for the participants' 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 as
of the valuation time, 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 as
of the valuation time 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 First Data may exceed the
net asset value of the common stock as of the valuation time, 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 such net asset value. First
Data will begin to purchase common stock on the open market as soon as
practicable after the determination date for the dividend or capital gains
distribution, but in no event shall such
=============================== 28 ================================
<PAGE>
- --------------------------------------------------------------------------------
Dividend Reinvestment Plan
(unaudited) (continued)
- --------------------------------------------------------------------------------
purchases continue later than 30 days after the payment date for such dividend
or distribution, or the record date for a succeeding dividend or distribution,
except when necessary to comply with applicable provisions of the federal
securities laws.
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 the 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 any brokerage commissions actually 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 02266-8030 or by telephone at
1-800-451-2010.
--------------------
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.
=============================== 29 ================================
<PAGE>
- --------------------------------------------------------------------------------
Tax Information
(unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year
ended May 31, 1999:
o 100.00% of the dividends paid by the Fund from net investment income
as tax exempt for regular Federal income tax purposes.
=============================== 30 ================================
<PAGE>
Managed Municipals
Portfolio Inc.
Directors
Allan J. Bloostein
Martin Brody
Dwight B. Crane
Robert A. Frankel
William R. Hutchinson
Heath B. McLendon, Chairman
Charles F. Barber, Emeritus
Officers
Heath B. McLendon
President and
Chief Executive Officer
Lewis E. Daidone
Senior Vice President
and Treasurer
Joseph P. Deane
Vice President and
Investment Officer
David Fare
Investment Officer
Paul A. Brook
Controller
Christina T. Sydor
Secretary
Investment Adviser and Administrator
SSBC Fund Management Inc.
388 Greenwich Street
New York, New York 10013
Transfer Agent
First Data Investor Services
Group, Inc.
P.O. Box 8030
Boston, Massachusetts 02266
Custodian
PNC Bank, N.A.
17th & Chestnut Streets
Philadelphia, Pennsylvania 19103
=============================== 31 ================================
<PAGE>
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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.
FD2246 7/99
