<PAGE>
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MANAGED MUNICIPALS
PORTFOLIO INC.
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
November 30, 1998
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<PAGE>
Managed Municipals
Portfolio Inc.
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November 30, 1998
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to provide the semi-annual report for the Managed Municipals
Portfolio Inc. ("Fund") for the period ended November 30, 1998. Over the period
covered by this report, the Fund distributed income dividends totaling $0.29 per
share. The table below shows the annualized distribution rate and six-month
total return based on the Fund's November 30, 1998 net asset value ("NAV") per
share and its New York Stock Exchange ("NYSE") closing price.
Price Annualized Six-Month
Per Share Distribution Rate(*) Total Return
--------- -------------------- ------------
$12.44 (NAV) 4.73% 3.20%
$11.75 (NYSE) 5.00% 9.61%
In comparison, general closed-end municipal bond funds posted an average total
return on NAV of 3.89% for the same time period, as reported by Lipper
Analytical Services, Inc. (Lipper is a major fund-tracking organization.)
Municipal Bond Market Update
In general, the bond market has had quite a full plate to deal with for the past
several months. The tremendous economic weakness in Asia combined with a hint of
deflation, default on sovereign Russian debt, the debacle of a large hedge fund,
and, finally, three very swift drops in short-term rates from the Federal
Reserve Board ("Fed") gave bond managers more than enough events to ponder.
- ----------
(*) This distribution assumes a current monthly income dividend rate of $0.049
per share for twelve months.
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Municipal bonds generally were less volatile than U.S. Treasurys with record new
issue volume coming into the marketplace. This heavy supply caused municipal
bonds to lag U.S. Treasurys in the rally but has created unusual relative values
in municipal bonds versus taxable bonds. As of November 30, 1998, the yields at
which long-term municipal bonds were trading were, on average, 99% of the yields
for comparable U.S. government bonds. In many years of experience in the
financial markets, this is only the second time we have seen such high
attractive relative values for municipal bonds. As today's yield spreads,
municipal bonds make sense for investors in almost any tax bracket. And while
interest rates are as low as they have been in 30 years, so too is inflation. In
our view, these conditions should be with us for the foreseeable future,
providing a benign backdrop for bonds.
Fund's Investment Strategy
During the reporting period, the municipal bond market put very little premium
on interest rate and credit risk. Intermediate- and long-term municipal bonds
yielded nearly the same, and the spreads between high-quality issuers and less
economically stable ones were at all-time narrow levels. Our investment strategy
during the period was quite simple: buy high-quality municipal bonds with
maturities a bit shorter and stay there until the interest-rate environment
changes. In times of economic uncertainty, if we are going to err with respect
to our investment strategy, we think that it should be on the side of prudence
and conservatism.
The Fund focused on hospital bonds (15.8%), general obligation bonds (12.8%) and
utility bonds (12.5%) because we believe they offered good relative values. At
the end of November, the Fund's weighted-average maturity was about 20 years. In
addition, as of November 30, 1998, approximately 88% of the Fund's holdings were
rated investment grade by either Standard & Poor's Ratings Group or Moody's
Investors Service Inc., with roughly 55% of the Portfolio invested in AAA-rated
bonds, the highest rating.
Municipal Bond Market Outlook
Over the next few months, we believe that interest rates should go down a bit
more. Moreover, we expect a gradual rise in rates later on in 1999 from the
level set early in the year. And, if interest rates do gradually rise, we
believe our current investment strategy should result in less volatility
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2
<PAGE>
in the municipal bond market while still offering our shareholders great
relative values.
In closing, thank you for investing in the Managed Municipals Portfolio Inc. We
look forward to continuing to help you pursue your financial goals.
Sincerely,
/s/ Heath B. McLendon /s/ J.P. Deane
Heath B. McLendon Joseph P. Deane
Chairman Vice President and
Investment Officer
December 17, 1998
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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)
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 27. 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 Mutual Management Corp.
To find out more detailed information about the Plan and about how you can
participate, please call First Data Investors Services Group Inc. at (800)
331-1710.
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Schedule of Investments
November 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
Face
Amount Rating(a) Security Value
================================================================================
MUNICIPAL BONDS AND NOTES -- 100.0%
California -- 11.1%
$ 4,540,000 Baa3* California Educational Facilities Authority
Revenue, (Pooled College & University
Projects), Series A, 5.625% due 7/1/23 $4,749,975
California Health Facilities Finance Authority
Revenue, Series A, FSA-Insured:
2,000,000 AAA Kaiser Permanente, 5.500% due 6/1/22 2,132,500
4,000,000 AAA Stanford Health Care, 5.000% due 11/15/18 4,005,000
1,000,000 AAA California State Public Works Board, Lease
Revenue, Department of Corrections,
California Prison, AMBAC-Insured,
5.250% due 1/1/21 1,021,250
2,755,000 AA California Statewide Community Development
Authority, COP, (St. Joseph Health System),
5.250% due 7/1/21 2,782,550
1,000,000 AAA Campbell, CA Unified School District, GO,
FGIC-Insured, 5.000% due 8/1/17 1,015,000
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 2,032,500
3,300,000 A- Los Angeles, CA Regional Airport Improvement
Corp., Los Angeles International Airport
Lease Revenue, 6.500% due 1/1/32 (b) 3,427,875
Los Angeles County, CA Metropolitan,
Transportation Authority, Sales
Tax Revenue, MBIA-Insured:
7,700,000 AAA 5.250% due 7/1/17 7,931,000
3,000,000 AAA 5.250% due 7/1/18 3,082,500
Metropolitan Water District, Southern
California Waterworks Revenue Refunding,
Series A:
3,000,000 AA 5.000% due 7/1/16 3,041,250
1,500,000 AA 5.000% due 7/1/18 1,509,375
3,140,000 AAA Rancho Mirage, CA Redevelopment Agency,
Tax Allocation Refunding, (1984 Project),
Series A, MBIA-Insured, 5.000% due 4/1/24 3,140,000
See Notes to Financial Statements.
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5
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Schedule of Investments
November 30, 1998 (unaudited) (continued)
- --------------------------------------------------------------------------------
Face
Amount Rating(a) Security Value
================================================================================
California -- 11.1% (continued)
$ 4,250,000 AAA Riverside County, CA COP, (1997 Lease
Refunding Project), MBIA-Insured,
5.125% due 11/1/17 $4,335,000
2,750,000 AAA Sacramento County, CA COP, (Public
Facilities Project), MBIA-Insured,
5.375% due 2/1/19 2,853,124
- --------------------------------------------------------------------------------
47,058,899
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Colorado -- 14.4%
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 5,256,825
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)(d) 3,607,500
Colorado Health Facilities Authority Revenue:
3,555,000 AA Catholic Health Initiatives, Series A,
5.000% due 12/1/18 3,510,563
3,000,000 A Series B, 5.350% due 8/1/15 3,078,750
2,500,000 AAA Sisters of Charity Leavenworth,
MBIA-Insured, 5.125% due 12/1/18 2,531,250
2,000,000 BBB+ Colorado Springs, CO Airport Revenue,
Series A, 7.000% due 1/1/22 (b) 2,195,000
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 16,500,000
Denver, CO City & County Airport Revenue,
Series C:
3,155,000 BBB+ 6.750% due 11/15/22 (b)(c) 3,427,119
10,165,000 BBB+ 6.125% due 11/15/25 (b) 10,813,018
8,160,000 AAA Escrowed to maturity with U.S. government
securities, 6.125% due 11/15/25 (b)(d) 9,302,400
845,000 AAA Pre-Refunded-- Escrowed with U.S.
government securities to 11/15/02,
Call @ 102, 6.750% due 11/15/22 (b)(d) 948,513
- --------------------------------------------------------------------------------
61,170,938
- --------------------------------------------------------------------------------
Connecticut -- 0.3%
1,200,000 AA Connecticut State Community Development
Authority, Special Obligation, Series A,
5.550% due 12/15/15 1,258,500
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See Notes to
Financial Statements.
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<PAGE>
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Schedule of Investments
November 30, 1998 (unaudited) (continued)
- --------------------------------------------------------------------------------
Face
Amount Rating(a) Security Value
================================================================================
Florida -- 3.6%
$ 2,480,000 AAA Florida State Turnpike Authority Revenue
Refunding, FGIC-Insured,
5.000% due 7/1/16 $ 2,511,000
5,000,000 BBB- Martin County, FL IDA, (Indiantown
Cogeneration Project), Series A,
7.875% due 12/15/25 (b) 5,756,250
Tampa, FL Revenue Bonds:
Florida Aquarium Inc. Project:
2,800,000 NR 7.550% due 5/1/12 (e) 3,192,000
2,000,000 NR 7.750% due 5/1/27 (c) 2,292,500
1,500,000 AAA Health Systems, Catholic Health,
Series A-1, MBIA-Insured,
4.875% due 11/15/18 1,481,250
- --------------------------------------------------------------------------------
15,233,000
- --------------------------------------------------------------------------------
Hawaii -- 1.0%
4,010,000 AAA Hawaii State GO, Series CP, FGIC-Insured,
5.000% due 10/1/15 4,055,112
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Illinois -- 1.4%
2,000,000 Aaa* Illinois Health Facilities Authority Revenue,
Memorial Health Systems, MBIA-Insured,
5.250% due 10/1/18 (b) 2,047,500
4,000,000 AAA Illinois State GO, FGIC-Insured,
5.250% due 12/1/20 4,050,000
- --------------------------------------------------------------------------------
6,097,500
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Indiana -- 1.3%
5,000,000 Aa3* Indiana Port Commission Revenue Refunding,
(Cargill Inc. Project), 6.875% due 5/1/12 (c) 5,468,750
- --------------------------------------------------------------------------------
Kansas -- 0.1%
500,000 A+ Kansas Development Financing Authority,
Health Facilities Revenue, Children's Mercy
Hospital, Series N, 5.250% due 5/15/18 503,750
- --------------------------------------------------------------------------------
Louisiana -- 1.4%
5,500,000 Aa3* Saint Martin Parish, LA Industrial Revenue,
(Cargill Inc. Project), 6.625% due 10/1/12 5,995,000
- --------------------------------------------------------------------------------
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 (f) 3,100,000
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See Notes to
Financial Statements.
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7
<PAGE>
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Schedule of Investments
November 30, 1998 (unaudited) (continued)
- --------------------------------------------------------------------------------
Face
Amount Rating(a) Security Value
================================================================================
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 (f) 3,750,000
Massachusetts State Water Resource
Authority, MBIA-Insured:
4,000,000 AAA Series B, 5.000% due 12/1/25 3,965,000
2,000,000 AAA Series C, 5.250% due 12/1/20 2,032,500
- --------------------------------------------------------------------------------
11,780,000
- --------------------------------------------------------------------------------
Michigan -- 6.7%
1,675,000 AA+ Michigan Municipal Bond Authority Revenue,
State Revolving Fund, 5.125% due 10/1/20 1,685,469
1,000,000 AAA Michigan State Hospital Finance
Authority Revenue Refunding, Oakwood
Obligation Group, Series A, FSA-Insured,
5.000% due 8/15/18 992,500
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) 8,100,000
16,375,000 NR Midland County, MI Education Development
Corp., PCR, Limited Obligation, Series B,
9.500% due 7/23/09 (b)(c) 17,705,469
- --------------------------------------------------------------------------------
28,483,438
- --------------------------------------------------------------------------------
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 2,721,875
525,000 A2* Minnesota State Higher Education Facilities
Authority Revenue, University St. Thomas
Education, Series 3, 5.375% due 4/1/18 534,188
1,250,000 AA+ Minnesota State Housing Financing Agency,
Single-Family Mortgage, Series I,
5.500% due 1/1/17 1,289,063
- --------------------------------------------------------------------------------
4,545,126
- --------------------------------------------------------------------------------
See Notes to
Financial Statements.
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8
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
November 30, 1998 (unaudited) (continued)
- --------------------------------------------------------------------------------
Face
Amount Rating(a) Security Value
================================================================================
Missouri -- 0.8%
$ 1,000,000 AAA Fenton, MO COP, (Capital Improvement
Projects), MBIA-Insured,
5.125% due 9/1/17 $ 1,015,000
750,000 A+ Missouri Health & Educational Facilities
Authority Revenue, Children's Mercy
Hospital, 5.250% due 5/15/18 752,813
1,575,000 AAA St. Louis, MO Board of Education,
Missouri Direct Deposit Program,
Series B, FGIC-Insured, 5.000% due 4/1/16 1,588,780
- --------------------------------------------------------------------------------
3,356,593
- --------------------------------------------------------------------------------
Montana -- 1.8%
8,000,000 NR Montana State Board Investment Resource
Recovery, (Yellowstone Energy Project),
7.000% due 12/31/19 (b) 7,740,000
- --------------------------------------------------------------------------------
New Jersey -- 2.0%
5,200,000 A+ Hudson County, NJ Improvement Authority,
6.625% due 8/1/25 5,687,500
2,830,000 AAA Middlesex County, NJ COP, MBIA-Insured,
5.200% due 6/15/18 2,911,363
- --------------------------------------------------------------------------------
8,598,863
- --------------------------------------------------------------------------------
New York -- 7.4%
3,000,000 A- Long Island Power Authority, NY
Electric System Revenue Series A,
5.500% due 12/1/29 3,093,750
2,000,000 AAA New York City Transitional Finance
Authority Revenue, Future Tax Secured,
Series C, FGIC-Insured, 5.000% due 5/1/17 2,015,000
1,090,000 AAA New York State Dormitory Authority
Lease Revenue, Health Facilities
Improvement Program, Series A,
FSA-Insured, 5.000% due 5/15/16 1,155,400
New York State Dormitory Authority Revenue:
1,000,000 AAA City University Systems, Series A,
FGIC-Insured, 5.500% due 7/1/16 1,008,750
4,000,000 AAA Mental Health Services Facilities
Improvement, Series D, FSA-Insured,
5.125% due 8/15/17 4,050,000
6,000,000 AAA Montefiore Medical Center, AMBAC-Insured,
5.250% due 2/1/15 6,187,500
See Notes to
Financial Statements.
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9
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
November 30, 1998 (unaudited) (continued)
- --------------------------------------------------------------------------------
Face
Amount Rating(a) Security Value
================================================================================
New York -- 7.4% (continued)
$ 2,000,000 AAA St. John's University, MBIA-Insured,
5.250% due 7/1/25 $ 2,050,000
5,000,000 A- State University Educational Facilities,
5.000% due 5/15/14 5,031,250
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 1,017,500
5,000,000 Aa3* Triborough Bridge & Tunnel Authority
of NY, General Purpose, Series A,
5.000% due 1/1/24 5,000,000
- --------------------------------------------------------------------------------
31,590,400
- --------------------------------------------------------------------------------
Ohio -- 4.4%
2,000,000 AAA Akron, OH Economic Development,
MBIA-Insured, 5.000% due 12/1/18 2,002,500
1,000,000 AAA Cleveland-Cuyahoga County, OH Port
Authority Revenue, Rock & Roll
Hall of Fame, AMBAC-Insured,
5.400% due 12/1/15 1,048,750
6,360,000 AAA Cuyahoga County, OH Hospital Revenue
Refunding, (Metrohealth System), Series A,
MBIA-Insured, 5.125% due 2/15/14 6,511,050
2,000,000 AAA Ohio State Higher Educational Facilities
Community Revenue, (Union Dayton
Project), AMBAC-Insured,
5.350% due 12/1/17 2,105,000
1,645,000 AAA Ohio State Water Development Authority
Revenue, Fresh Water, FSA-Insured,
5.000% due 6/1/16 1,655,281
5,320,000 AAA Portage County, OH GO, MBIA-Insured,
5.250% due 12/1/17 5,466,300
- --------------------------------------------------------------------------------
18,788,881
- --------------------------------------------------------------------------------
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 1,000,000
6,000,000 AAA Altoona, PA City Authority, Water Revenue,
FGIC-Insured, 5.000% due 11/1/19 6,000,000
See Notes to
Financial Statements.
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<PAGE>
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Schedule of Investments
November 30, 1998 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Amount Rating(a) Security Value
====================================================================================
<S> <C> <C> <C>
Pennsylvania -- 3.4% (continued)
$ 2,865,000 Aaa* Delaware County, PA Authority Revenue,
Villanova University, Series A,
MBIA-Insured, 5.000% due 12/1/18 $ 2,875,744
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 3,583,125
1,000,000 AAA Pittsburgh, PA Water & Sewer Authority
Revenue, Series C, FSA-Insured,
5.000% due 9/1/17 1,006,250
- ------------------------------------------------------------------------------------
14,465,119
- ------------------------------------------------------------------------------------
Puerto Rico -- 0.5%
2,000,000 AAA Puerto Rico Commonwealth Infrastructure
Financing Authority, AMBAC-Insured,
5.000% due 7/1/16 2,030,000
- ------------------------------------------------------------------------------------
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 4,110,000
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) 2,242,500
1,140,000 AAA Piedmont, SC Municipal Power Agency,
Electric Revenue Refunding, Series A,
MBIA-Insured, 4.875% due 1/1/16 1,132,875
- ------------------------------------------------------------------------------------
7,485,375
- ------------------------------------------------------------------------------------
Tennessee -- 0.3%
1,150,000 NR Hardeman County, TN Correctional
Facilities Corp., 7.750% due 8/1/17 1,282,250
- ------------------------------------------------------------------------------------
Texas -- 16.0%
3,990,000 Aaa* Azle, TX ISD, GO, PSFG, Series C,
5.000% due 2/15/22 3,980,025
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 2,030,000
</TABLE>
See Notes to
Financial Statements.
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11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
November 30, 1998 (unaudited) (continued)
- --------------------------------------------------------------------------------
Face
Amount Rating(a) Security Value
================================================================================
Texas -- 16.0% (continued)
Brazos River Authority:
$ 7,500,000 AAA Houston Industrial Income Project,
Series A, 5.125% due 5/1/19 $ 7,565,625
4,000,000 BBB PCR, Utilities Electric Co., Series C,
5.550% due 6/1/30 (b) 3,925,000
2,000,000 AAA Brownsville, TX Utility Systems Revenue,
AMBAC-Insured, 5.250% due 9/1/20 2,035,000
Burleson, TX ISD, GO, PSFG:
1,160,000 Aaa* 6.750% due 8/1/24 1,313,700
2,840,000 AAA Pre-Refunded-- Escrowed with
U.S. government securities to 8/1/06,
Call @ 100, 6.750% due 8/1/24 (d) 3,340,550
2,960,000 AA- Fort Worth, TX Higher Education
Financing Corp. Revenue, Texas
Christian University Project,
5.000% due 3/15/14 2,997,000
1,000,000 AA Harris County, TX Health Facilities
Development Corp. Revenue,
School Health Care Systems, Series B,
5.750% due 7/1/27 1,055,000
Harris County, TX Toll Road GO:
8,000,000 AAA Sr. Lien, FGIC-Insured, 5.375% due 8/15/20 8,220,000
5,185,000 AA Sub. Lien, 5.125% due 8/15/16 5,269,255
2,670,000 AAA Manor, TX ISD, GO, Refunding, PSFG,
5.000% due 8/1/17 2,683,350
2,000,000 AAA Nueces River Authority, Texas Water Supply
Facilities, FSA-Insured, 5.500% due 3/1/27 2,110,000
2,975,000 AAA Springtown, TX ISD, GO, Refunding, PSFG,
5.000% due 2/15/18 2,982,438
Texas Water Development Board Revenue,
State Revolving Fund, Sr. Lien, Series B:
3,000,000 AAA 5.000% due 7/15/14 3,041,250
1,000,000 AAA 5.000% due 7/15/15 1,007,500
5,000,000 AAA 5.000% due 7/15/16 5,018,750
8,000,000 AAA 5.000% due 7/15/19 7,950,000
1,520,000 AAA West Texas Municipal Power Agency Revenue,
MBIA-Insured, 5.000% due 2/15/15 1,525,700
- --------------------------------------------------------------------------------
68,050,143
- --------------------------------------------------------------------------------
See Notes to
Financial Statements.
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<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
November 30, 1998 (unaudited) (continued)
- --------------------------------------------------------------------------------
Face
Amount Rating(a) Security Value
================================================================================
Utah -- 1.2%
Intermountain Power Agency, Utah Power
Supply Revenue:
$ 1,000,000 AAA Series A, MBIA-Insured,
5.250% due 7/1/15 $ 1,028,750
4,000,000 A+ Series D, 5.000% due 7/1/21 3,945,000
- --------------------------------------------------------------------------------
4,973,750
- --------------------------------------------------------------------------------
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 5,046,625
Virginia College Building Authority,
Virginia Educational Facilities Revenue,
21st Century College Program:
3,590,000 AA 5.250% due 8/1/13 3,760,525
3,805,000 AA 5.250% due 8/1/14 3,966,713
Virginia State HDA, Multi-Family Housing:
1,655,000 AA+ Series D, 6.250% due 1/1/15 1,766,713
1,235,000 AAA Series H, AMBAC-Insured,
6.300% due 11/1/15 1,335,344
600,000 AA+ Series K, 5.800% due 11/1/10 648,000
- --------------------------------------------------------------------------------
16,523,920
- --------------------------------------------------------------------------------
Virgin Islands -- 0.2%
1,000,000 BBB- Virgin Islands, PFA, Sr. Lien, Series A,
5.500% due 10/1/22 1,012,500
- --------------------------------------------------------------------------------
Washington -- 7.4%
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 6,645,056
22,685,000 AAA Zero coupon due 6/1/22 6,918,925
4,750,000 AA Series B, Remarketed 7/1/92, Mandatory
put 7/1/19, 6.750% due 7/1/62 (b)(c) 5,064,688
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) 10,568,130
See Notes to
Financial Statements.
[GRAPHIC]
13
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments
November 30, 1998 (unaudited) (continued)
- --------------------------------------------------------------------------------
Face
Amount Rating(a) Security Value
================================================================================
Washington -- 7.4% (continued)
$ 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
- --------------------------------------------------------------------------------
31,279,299
- --------------------------------------------------------------------------------
West Virginia -- 1.1%
Marion County, WV Community Solid
Waste Disposal Facilities Revenue,
Adirodnack Recycling:
4,646,856 NR Series A, 8.000% due 12/1/25 (b) 4,182,170
653,688 NR Series B, 10.000% due 12/1/25 (b) 588,319
- --------------------------------------------------------------------------------
4,770,489
- --------------------------------------------------------------------------------
Wisconsin -- 2.0%
4,070,000 AA Wisconsin State GO, Series B,
6.600% due 1/1/22 (b) 4,370,163
Wisconsin State Health & Educational
Facilities Authority Revenue, MBIA-Insured:
3,000,000 AAA Aurora Health Care Inc.,
5.250% due 8/15/17 3,060,000
1,000,000 AAA The Medical College of Wisconsin Inc.
Project, 5.400% due 12/1/16 1,042,500
- --------------------------------------------------------------------------------
8,472,663
- --------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS AND NOTES
(COST -- $409,405,588**) $425,170,258
================================================================================
(a) All ratings are by Standard & Poor's Ratings Service, except 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 segregated by Custodian for open purchase commitments. (d)
(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 16 and 17 for definition of ratings and certain security
descriptions.
See Notes to
Financial Statements.
[GRAPHIC]
14
<PAGE>
- --------------------------------------------------------------------------------
Summary of Investments by Combined Ratings
November 30, 1998 (unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Percentage of
Moody's and/or Standard & Poor's Total Investments
- --------------------------------------------------------------------------------
Aaa AAA 55.1%
Aa AA 17.3
A A 7.9
Baa BBB 7.5
NR NR 12.2
-----
100.0%
=====
[GRAPHIC]
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.
[GRAPHIC]
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)
- --------------------------------------------------------------------------------
<TABLE>
<S> <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]
17
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
(unaudited)
- --------------------------------------------------------------------------------
November 30, 1998
================================================================================
ASSETS:
Investments, at value (Cost-- $409,405,588) $ 425,170,258
Interest receivable 6,935,276
- --------------------------------------------------------------------------------
Total Assets 432,105,534
- --------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 692,077
Payable to bank 430,623
Investment advisory fees payable 235,559
Payable to broker - variation margin 125,000
Administration fees payable 18,576
Accrued expenses 135,298
- --------------------------------------------------------------------------------
Total Liabilities 1,637,133
- --------------------------------------------------------------------------------
Total Net Assets $ 430,468,401
================================================================================
NET ASSETS:
Par value of capital shares $ 34,607
Capital paid in excess of par value 413,576,918
Overdistributed net investment income (324,004)
Accumulated net realized gain on security transactions 1,524,179
Net unrealized appreciation of investments and futures contracts 15,656,701
- --------------------------------------------------------------------------------
Total Net Assets
(Equivalent to $12.44 a share on 34,606,944 shares of $0.001
par value outstanding: 500,000,000 shares authorized) $ 430,468,401
================================================================================
See Notes to
Financial Statements.
[GRAPHIC]
18
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
(unaudited)
- --------------------------------------------------------------------------------
Six Months
Ended
11/30/98
================================================================================
INVESTMENT INCOME:
Interest $12,556,574
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 1,524,660
Administration fees (Note 3) 435,617
Shareholder communications 129,106
Audit and legal 35,633
Registration fees 20,935
Shareholder and system servicing fees 11,764
Directors' fees 11,751
Pricing service fees 10,704
Custody 9,705
Other 9,348
- --------------------------------------------------------------------------------
Total Expenses 2,199,223
Less: Investment advisory and administration fee waivers (Note 3) (258,514)
- --------------------------------------------------------------------------------
Net Expenses 1,940,709
- --------------------------------------------------------------------------------
Net Investment Income 10,615,865
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FUTURES CONTRACTS (NOTES 4 AND 5):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 31,056,920
Cost of securities sold 30,357,255
- --------------------------------------------------------------------------------
Net Realized Gain 699,665
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation
of Investments and Futures Contracts:
Beginning of period 14,515,623
End of period 15,656,701
- --------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 1,141,078
- --------------------------------------------------------------------------------
Net Gain on Investments and Futures Contracts 1,840,743
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $12,456,608
================================================================================
See Notes to
Financial Statements.
[GRAPHIC]
19
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
Six Months Year
Ended 11/30/98 Ended
(unaudited) 5/31/98
================================================================================
OPERATIONS:
Net investment income $ 10,615,865 $ 18,508,971
Net realized gain 699,665 7,547,057
Increase in net unrealized appreciation 1,141,078 21,394,525
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations 12,456,608 47,450,553
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 2):
Net investment income (10,139,834) (20,844,655)
Net realized gains -- (10,411,885)
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (10,139,834) (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 2,316,774 16,865,834
NET ASSETS:
Beginning of period 428,151,627 411,285,793
- --------------------------------------------------------------------------------
End of period(*) $ 430,468,401 $ 428,151,627
================================================================================
*Includes overdistributed net
investment income of: $ (324,004) $ (800,035)
================================================================================
See Notes to
Financial Statements.
[GRAPHIC]
20
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
(unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Managed Municipals Portfolio Inc. ("Fund"), a Maryland corporation, is
registered under the Investment Company Act of 1940, as amended, as a non-
diversified, closed-end management investment company.
The significant accounting policies consistently followed by the Fund are:
(a) security transactions are accounted for on trade date; (b) securities are
valued at the mean between bid and ask prices provided by an independent pricing
service that are based on transactions in municipal obligations, quotations from
municipal bond dealers, market transactions in comparable securities and various
relationships between securities; (c) securities maturing within 60 days or less
are valued at cost plus accreted discount, or minus amortized premium, which
approximates value; (d) gains or losses on 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]
21
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
(unaudited) (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. For the six months
ended November 30, 1998, MMC waived $201,066 of its investment advisory fee.
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. For the six months ended November 30,
1998, MMC waived $57,448 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 six months ended November 30, 1998, the aggregate cost of purchases
and proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $23,330,156
- --------------------------------------------------------------------------------
Sales 31,056,920
================================================================================
At November 30, 1998, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
================================================================================
Gross unrealized appreciation $ 29,539,461
Gross unrealized depreciation (13,774,791)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 15,764,670
================================================================================
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
[GRAPHIC]
22
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
(unaudited) (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 November 30, 1998, the Fund had the following open futures contracts:
<TABLE>
<CAPTION>
Expiration # of Basis Market Unrealized
Month/Year Contracts Value Value Loss
==================================================================================
<S> <C> <C> <C> <C> <C>
Futures contracts to sell:
U.S. Government
Long Bond Index 12/98 100 $12,876,406 $12,984,375 $(107,969)
==================================================================================
</TABLE>
6. Capital Shares
Capital stock transactions were as follows:
Six Months Ended Year Ended
November 30, 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 November 30, 1998, the Fund did not hold any when-issued securities.
[GRAPHIC]
23
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year ended May 31,
except where noted:
<TABLE>
<CAPTION>
1998(1) 1998 1997 1996 1995 1994
======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $12.37 $11.90 $12.11 $12.55 $12.26 $13.00
- ------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income(2) 0.31 0.54 0.67 0.67 0.72 0.67
Net realized and
unrealized gain (loss) 0.05 0.83 0.08 (0.35) 0.49 (0.23)
- ------------------------------------------------------------------------------------------------------
Total Income
From Operations 0.36 1.37 0.75 0.32 1.21 0.44
- ------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.29) (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 (0.29) (0.90) (0.96) (0.76) (0.92) (1.18)
- ------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $12.44 $12.37 $11.90 $12.11 $12.55 $12.26
- ------------------------------------------------------------------------------------------------------
Total Return,
Based on Market Value* 9.61%++ 2.08% 7.89% 8.26% 8.40% 2.98%
- ------------------------------------------------------------------------------------------------------
Total Return, Based on
Net Asset Value* 3.20%++ 12.14% 6.59% 2.79% 10.96% 3.45%
- ------------------------------------------------------------------------------------------------------
Net Assets,
End of Period (millions) $430 $428 $411 $418 $433 $423
- ------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(2) 0.90%+ 0.99% 1.00% 1.00% 1.02% 1.00%
Net investment income 4.93+ 4.35 5.56 5.35 5.97 5.15
- ------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 5% 87% 113% 45% 93% 72%
- ------------------------------------------------------------------------------------------------------
Market Value, End of Period $11.750 $11.000 $11.625 $11.690 $11.500 $11.500
======================================================================================================
</TABLE>
(1) For the six months ended November 30, 1998 (unaudited).
(2) The investment advisor and administrator waived a portion of their fees for
the six months ended November 30, 1998. If such fees were not waived, the
per share decrease in net investment income would have been $0.01 and the
annualized ratio of expenses to average net assets would have been 1.02%.
* 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]
24
<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
November 30,
1998 5,825,421 0.17 4,996,967 0.15 (967,184) (0.04) 4,029,783 0.11
========================================================================================================
</TABLE>
[GRAPHIC]
25
<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 11.187 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 11.437 12.44 0.049 11.58
11/23/98 11/27/98 11.750 12.42 0.049 11.59
================================================================================
+ As of record date.
* Capital gain distribution.
[GRAPHIC]
26
<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 a t 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
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27
<PAGE>
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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, 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.
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28
<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
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
Investment Adviser and
Administrator
Mutual Management Corp.
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
<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.
FD0837 1/99
