Managed Municipals
Portfolio Inc.
Semi-Annual Report
November 30, 1999
[GRAPHIC]
Managed Municipals
Portfolio Inc.
November 30, 1999
Dear Shareholder:
We are pleased to provide the semi-annual report for the Managed Municipals
Portfolio Inc. ("Fund") for the period ended November 30, 1999. During the six
months covered by this report, the Fund distributed income dividends totaling
$0.30 per share. The table below shows the annualized distribution rate and six-
month total return based on the Fund's November 30, 1999 net asset value ("NAV")
per share and its New York Stock Exchange ("NYSE") closing price.1
Price Annualized Six-Month
Per Share Distribution Rate2 Total Return
------------- ------------------ ------------
$11.06 (NAV) 5.42% (4.75)%
$9.063 (NYSE) 6.62% (9.99)%
Special Shareholder Notice
In an effort to reduce the Fund's discount to NAV, the Board of Directors
authorized a stock repurchase program. The Fund intends to purchase shares of
its stock in the open market at such times, prices and amounts deemed advisable.
As of November 30, 1999, the Fund repurchased 648,700 shares in the open market
with an average buyback price of $9.70.
- -------------
1 The NAV is calculated by taking the closing value of all securities held by
the Fund, plus all other assets less total liabilities and dividing the
results (total net assets) by the total number of shares outstanding. The NAV
fluctuates with the changes in the market price of the securities in which
the Fund had invested. However, the price at which the investor buys or sells
shares of the Fund is its market (NYSE) price as determined by supply and
demand.
2 The distribution rate assumes a current monthly income dividend rate of $0.05
per share for twelve months.
1
The Board of Directors believes that this share repurchase program is an
opportunity to take advantage of market price fluctuations with the objective of
offering long-term value to the Fund's shareholders. There can be no assurance
that the Board of Directors will continue this program.
Municipal Bond Market Update and Outlook
The yield on the 30-year Treasury bond has stayed within a narrow 40 basis point
trading range since the beginning of June, currently trading just above 6%,
while select long-term municipal bonds are yielding approximately 95%-100% of
long-term U.S. Treasury bonds. Under typical market conditions, municipal bonds
yield roughly 85% of similar-maturity U.S. Treasury bonds.
We do not expect long-term rates to move appreciably higher. Municipal bond
yields have moved up relative to U.S. Treasury yields because institutional
demand has virtually disappeared. With long-term municipal yields close to 6%
and the yield curve steep, extending maturity may be a prudent strategy.
In our judgement, a number of factors bode well for the municipal market. Yields
are at their highest levels since early 1999, new issue supply is likely to be
modest in the period ahead and recent narrowing of spreads in the taxable market
has made alternatives less attractive. We remain optimistic about the prospects
for the municipal market as a whole.
The municipal bond market is providing some intriguing opportunities as a result
of reticent dealers and year-end tax swapping. In our opinion, investors who
have been waiting on the sidelines out of fears related to Y2K should move some
cash into these sectors now. We have also observed an increased dominance of
retail investors in the municipal bond market.
Investment Strategy
The Fund seeks as high a level of current income exempt from Federal income tax
as is consistent with preservation of principal.3
Our investment strategy for the Fund has been 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 gone up to higher levels,
we have been able to invest our excess cash at higher yields.
- -------------
3 Please note that a portion of the Portfolio's income may be subject to the
Alternative Minimum Tax ("AMT").
2
During the past year and at year end, the Fund had focused on hospital bonds
(17.1%), transportation bonds (15.3%) and general obligations bonds (13.3%)
because we believe they offered good relative values. At the end of November,
the Fund's weighted average maturity was approximately 17.6 years. In addition,
as of November 30, 1999, 88.3% of the Portfolio's holdings were rated investment
grade4 by either Standard & Poor's Ratings Service or Moody's Investors Service
Inc., with 51.8% of the Fund invested in AAA bonds, the highest rating.
The slope of the municipal yield curve has remained extremely steep, reflecting
individual investors' aversion to market risk. In our opinion, the "extra" slope
resulting from risk aversion makes longer municipals a particularly attractive
fixed income alternative.
Our strategy going forward is three-fold:
. We are lengthening maturities in the portfolio to take advantage of the
inexpensive valuations of municipal bonds relative to U.S. Treasuries.
. We are focusing on investing in very high grade issues.
. We are investing in discount paper for the first time since the fall of
1998, as this is where we believe we can obtain the best value.
Our goal in the Fund is to sell off some of our intermediate-term maturities
that were defensive and stretch out longer on the yield curve to lock in today's
higher rates.
- -------------
4 Investment-grade bonds are those rated Aaa, Aa, A and Baa by Moody's
Investors Service, Inc. or AAA, AA, A and BBB by Standard & Poor's Ratings
Service, or that have an equivalent rating by any nationally recognized
statistical rating organization, are determined by the manager to be of
equivalent quality.
3
In closing, thank you for investing in the Managed Municipals Portfolio Inc. We
look forward to continuing to help you pursue your financial goals in the new
century.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman
/s/ Joseph P. Deane
Joseph P. Deane
Vice President and
Investment Officer
December 13, 1999
4
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, PFPC Global Fund Services (the
"Plan Agent"), formerly known as 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 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 SSB Citi Fund Management LLC.
To find out more detailed information about the Plan and about how you can
participate, please call PFPC Global Fund Services at (800) 331-1710.
5
Schedule of Investments
November 30, 1999 (unaudited)
Face
Amount Ratings(a) Security Value
- --------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES -- 100.0%
Alaska -- 0.3%
$ 1,000,000 AA+ Valdez Alaska Marine Term Revenue Refunding,
BP Pipelines Inc. Project, Series A,
5.850% due 8/1/25 $ 956,250
- --------------------------------------------------------------------------------
Arizona -- 1.0%
4,000,000 AAA Mesa Arizona IDA, Discovery Health Systems,
Series A, MBIA-Insured, 5.625% due 1/1/29 3,805,000
- --------------------------------------------------------------------------------
California -- 9.8%
4,540,000 Baa3* California Educational Facilities Authority
Revenue, (Pooled College & University
Projects), Series A, 5.625% due 7/1/23 4,165,450
4,000,000 A2* California Health Facilities Authority Revenue,
(Cedars-Sinai Medical Center), Series A,
6.250% due 12/1/34 3,940,000
1,000,000 AAA California State Public Works Board, Lease
Revenue, Department of Corrections,
California Prison, AMBAC-Insured,
5.250% due 1/1/21 927,500
2,000,000 AAA California Statewide Communities Development
Authority, 5.500% due 8/15/31 1,870,000
1,000,000 AAA Campbell, CA Unified School District, GO,
FGIC-Insured, 5.000% due 8/1/17 922,500
3,300,000 A- Los Angeles, CA Regional Airport Improvement
Corp., Los Angeles International Airport
Lease Revenue, 6.500% due 1/1/32(b) 3,324,750
Los Angeles County, CA Metropolitan,
Transportation Authority, Sales Tax Revenue,
MBIA-Insured:
7,700,000 AAA 5.250% due 7/1/17 7,363,125
3,000,000 AAA 5.250% due 7/1/18 2,838,750
2,000,000 AA Metropolitan Water District, Southern California
Waterworks, Series A, 5.000% due 7/1/17 1,845,000
3,140,000 AAA Rancho Mirage, CA Redevelopment Agency,
Tax Allocation Refunding, (1984 Project),
Series A, MBIA-Insured, 5.000% due 4/1/24 2,751,425
4,250,000 AAA Riverside County, CA COP, (1997 Lease
Refunding Project), MBIA-Insured,
5.125% due 11/1/17 3,984,375
See Notes to Financial Statements.
6
Schedule of Investments
November 30, 1999 (unaudited) (continued)
Face
Amount Ratings(a) Security Value
- --------------------------------------------------------------------------------
California -- 9.8% (continued)
$ 2,750,000 AAA Sacramento County, CA COP, (Public
Facilities Project), MBIA-Insured,
5.375% due 2/1/19 $ 2,626,250
- --------------------------------------------------------------------------------
36,559,125
- --------------------------------------------------------------------------------
Colorado -- 12.6%
3,000,000 AAA* Arapahoe County, CO Capital Improvement
Trust Fund, E-470 Public Highway Authority
Revenue, (Pre-Refunded -- Escrowed
with U.S. government securities to 8/31/05
Call @ 103), 7.000% due 8/31/26 3,408,750
Colorado Health Facilities Authority Revenue:
1,000,000 AA- Catholic Health Initiatives, Series A,
5.000% due 12/1/28 813,750
3,000,000 A Series B, Remarketed 7/8/98,
5.350% due 8/1/15 2,793,750
2,500,000 AAA Sisters of Charity Leavenworth,
MBIA-Insured, 5.125% due 12/1/18 2,250,000
2,000,000 BBB+ Colorado Springs, CO Airport Revenue,
Series A, 7.000% due 1/1/22(b) 2,095,000
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 12,750,000
Denver, CO City & County Airport Revenue,
Series C:
8,160,000 BBB+ Escrowed to maturity with U.S. government
securities, 6.125% due 11/15/25(b)(c) 8,680,200
845,000 AAA Pre-Refunded -- Escrowed with U.S.
government securities to 11/15/02
Call @ 102, 6.750% due 11/15/22(b) 910,487
3,155,000 BBB+ 6.750% due 11/15/22(b) 3,261,481
10,165,000 BBB+ 6.125% due 11/15/25(b) 10,063,350
- --------------------------------------------------------------------------------
47,026,768
- --------------------------------------------------------------------------------
Connecticut -- 0.3%
1,000,000 AAA Connecticut State Health & Education
Child Care Facilities Project, Series C,
AMBAC-Insured, 5.625% due 7/1/29 958,750
- --------------------------------------------------------------------------------
Florida -- 3.5%
5,000,000 BBB- Martin County, FL IDA, (Indiantown
Cogeneration Project), Series A,
7.875% due 12/15/25(b) 5,168,750
See Notes to Financial Statements.
7
Schedule of Investments
November 30, 1999 (unaudited)
Face
Amount Ratings(a) Security Value
- --------------------------------------------------------------------------------
Florida -- 3.5% (continued)
$ 3,500,000 AAA Orange County, FL Tourist Development
Tax Revenue, Series A, AMBAC-Insured,
4.750% due 10/1/24 $ 2,944,375
Tampa, FL Revenue, (Florida
Aquarium Inc. Project):
2,650,000 NR 7.550% due 5/1/12(c) 2,881,875
2,000,000 NR Pre-Refunded -- Escrowed with
U.S. government securities to 5/1/02
Call @ 102, 7.750% due 5/1/27(c) 2,185,000
- --------------------------------------------------------------------------------
13,180,000
- --------------------------------------------------------------------------------
Georgia -- 0.5%
2,000,000 A3* Private Colleges & Universities Authority
Revenue, (Mercer University Project),
Series A, 5.250% due 10/1/25 1,782,500
- --------------------------------------------------------------------------------
Hawaii -- 1.3%
2,000,000 A Hawaii State Department of Budget & Finance,
Special Purpose Revenue, Kaiser Permanente,
Series A, 5.100% due 3/1/14 1,815,000
3,510,000 AAA Hawaii State GO, Series CP, FGIC-Insured,
5.000% due 10/1/15 3,229,200
- --------------------------------------------------------------------------------
5,044,200
- --------------------------------------------------------------------------------
Illinois -- 3.5%
Illinois Health Facilities Authority Revenue:
2,000,000 Aaa* Memorial Health Systems, MBIA-Insured,
5.250% due 10/1/18 1,847,500
8,000,000 A OSF Healthcare Systems,
6.250% due 11/15/29 7,720,000
4,000,000 AAA Illinois State GO, FGIC-Insured,
5.250% due 12/1/20 3,655,000
- --------------------------------------------------------------------------------
13,222,500
- --------------------------------------------------------------------------------
Indiana -- 1.4%
5,000,000 A1* Indiana Port Commission Revenue Refunding,
(Cargill Inc. Project), 6.875% due 5/1/12 5,312,500
- --------------------------------------------------------------------------------
Kansas -- 0.1%
500,000 A+ Kansas Development Financing Authority,
Health Facilities Revenue, Children's Mercy
Hospital, Series N, 5.250% due 5/15/18 453,125
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
8
Schedule of Investments
November 30, 1999 (unaudited)
Face
Amount Ratings(a) Security Value
- --------------------------------------------------------------------------------
Louisiana -- 2.5%
$ 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 $ 3,315,000
5,500,000 Aa3* Saint Martin Parish, LA Industrial Revenue,
(Cargill Inc. Project), 6.625% due 10/1/12 5,857,500
- --------------------------------------------------------------------------------
9,172,500
- --------------------------------------------------------------------------------
Maryland -- 1.4%
10,000,000 NR Maryland State Energy Financing Administration,
Solid Waste Disposal Revenue,
(Hagerstown Recycling Project),
9.000% due 10/15/16(b)(d) 2,200,000
3,500,000 A Maryland State Health & Higher Educational
Facilities Authority Revenue, Loyola College
Issue, 5.000% due 10/1/39 2,891,875
- --------------------------------------------------------------------------------
5,091,875
- --------------------------------------------------------------------------------
Massachusetts -- 3.8%
2,000,000 Aaa* Massachusetts State College Building Authority
Revenue, Series 1, MBIA-Insured
5.375% due 5/1/39 1,802,500
1,000,000 AAA Massachusetts State Health & Educational
Facilities Authority Revenue, (Northeastern
University Project), Series I, MBIA-Insured,
5.000% due 10/1/29 855,000
2,000,000 AAA Massachusetts State HFA, Housing Development,
Series B, MBIA-Insured, 5.300% due 12/1/17 1,892,500
5,000,000 AAA Massachusetts State Turnpike Authority,
Metropolitan Highway System Revenue,
Subseries A, AMBAC-Insured,
4.750% due 1/1/34 4,025,000
1,000,000 Aaa* Massachusetts State Water Pollution Abatement,
New Bedford Project, Series A, FGIC-Insured,
4.750% due 2/1/26 825,000
Massachusetts State Water Resource Authority:
1,380,000 AAA Series A, FSA-Insured, 4.750% due 8/1/27 1,135,050
3,000,000 AAA Series B, MBIA-Insured, 5.000% due 12/1/25 2,598,750
1,025,000 AAA Series C, MBIA-Insured, 5.250% due 12/1/20 943,000
- --------------------------------------------------------------------------------
14,076,800
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
9
Schedule of Investments
November 30, 1999 (unaudited)
Face
Amount Ratings(a) Security Value
- --------------------------------------------------------------------------------
Michigan -- 6.5%
$ 8,000,000 NR Michigan State Strategic Fund Resources
Recovery, Limited Obligation Revenue,
Central Wayne Energy Recovery L.P.,
Series A, 7.000% due 7/1/27(b) $ 7,440,000
16,375,000 NR Midland County, MI Economic Development
Corp., PCR, Limited Obligation, Series B,
9.500% due 7/23/09(b) 17,032,456
- --------------------------------------------------------------------------------
24,472,456
- --------------------------------------------------------------------------------
Minnesota -- 1.4%
2,500,000 A1* Duluth, MN Seaway Port Authority, IDA,
Dock & Wharf Revenue, (Cargill Inc.
Project), 6.800% due 5/1/12 2,646,875
1,000,000 AAA Minneapolis & St. Paul, MN Community
Airport Revenue, Series A, FGIC-Insured,
5.125% due 1/1/25 893,750
525,000 A2* Minnesota State Higher Education Facilities
Authority Revenue, University St. Thomas
Education, Series 3, 5.375% due 4/1/18 494,812
1,225,000 AA+ Minnesota State Housing Financing Agency,
Single-Family Mortgage, Series I,
5.500% due 1/1/17 1,174,469
- --------------------------------------------------------------------------------
5,209,906
- --------------------------------------------------------------------------------
Missouri -- 0.2%
1,000,000 AAA Fenton, MO COP, (Capital Improvement
Projects), MBIA-Insured, 5.125% due 9/1/17 921,250
- --------------------------------------------------------------------------------
Montana -- 2.1%
8,000,000 NR Montana State Board Investment Resource
Recovery Revenue, (Yellowstone Energy L.P.
Project), 7.000% due 12/31/19(b) 7,720,000
- --------------------------------------------------------------------------------
Nevada -- 0.8%
3,000,000 AAA Las Vegas New Convention & Visitors
Authority Revenue, AMBAC-Insured,
6.000% due 7/1/19 3,003,750
- --------------------------------------------------------------------------------
New Jersey -- 1.5%
5,200,000 A+ Hudson County, NJ Improvement Authority,
6.625% due 8/1/25 5,440,500
- --------------------------------------------------------------------------------
New Mexico -- 0.5%
2,000,000 AAA New Mexico Mortgage Financing Authority,
Single Family Mortgages, Series D-3,
5.625% due 9/1/28 1,902,500
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
10
Schedule of Investments
November 30, 1999 (unaudited) (continued)
Face
Amount Ratings(a) Security Value
- --------------------------------------------------------------------------------
New York -- 6.1%
$ 2,600,000 A- Long Island Power Authority, Electric System
Revenue, Series A, 5.500% due 12/1/29 $ 2,385,500
3,000,000 AAA Metropolitan Transit Authority,
NY Transportation Facilities Revenue,
Series B, FGIC-Insured, 4.750% due 7/1/26 2,482,500
3,000,000 AAA Nassau Health Care Corporation, NY Health
Systems Revenue, Nassau County Guaranteed,
FSA-Insured, 5.750% due 8/1/29 2,898,750
New York City, NY Transitional Finance
Authority Revenue, Future Tax Secured:
1,000,000 AA Series B, 4.750% due 11/1/17 868,750
2,000,000 AAA Series C, FGIC-Insured, 5.000% due 5/1/17 1,830,000
New York State Dormitory Authority Revenue:
1,000,000 AAA City University System, Series A,
FGIC-Insured, 5.000% due 7/1/16 922,500
1,500,000 AAA Montefiore Medical Center,
AMBAC-Insured, 5.250% due 2/1/15 1,436,250
1,000,000 AAA New York State Medicare Mental Health
Services, FGIC-Insured, 5.250% due 2/15/19 927,500
5,000,000 AAA New York State Thruway Authority, Highway
& Bridge Fund, Series B, FGIC-Insured,
5.000% due 4/1/17 4,575,000
5,000,000 Aa3* Triborough Bridge & Tunnel Authority of NY,
General Purpose, Series A, 5.000% due 1/1/24 4,318,750
- --------------------------------------------------------------------------------
22,645,500
- --------------------------------------------------------------------------------
Ohio -- 6.6%
2,000,000 AAA Akron, OH Economic Development,
MBIA-Insured, 5.000% due 12/1/18 1,797,500
1,000,000 AAA Cleveland-Cuyahoga County, OH Port
Authority Revenue, Rock & Roll Hall of
Fame, AMBAC-Insured,
5.400% due 12/1/15 983,750
Cuyahoga County, OH Hospital
Revenue Refunding:
5,750,000 AAA Metrohealth System, Series A,
MBIA-Insured, 5.125% due 2/15/14 5,455,313
2,000,000 AAA University Hospitals Health System Inc.,
AMBAC-Insured, 5.500% due 1/15/30 1,865,000
1,000,000 AAA Lorain County, OH Health Facilities Revenue,
Catholic Healthcare Partners, Series A,
5.500% due 9/1/19 937,500
See Notes to Financial Statements.
11
Schedule of Investments
November 30, 1999 (unaudited)
Face
Amount Ratings(a) Security Value
- --------------------------------------------------------------------------------
Ohio -- 6.6% (continued)
$ 4,000,000 AAA Lucas County, OH Hospital Revenue,
Promedia Healthcare Obligation Group,
AMBAC-Insured, 5.375% due 11/15/29 $ 3,670,000
2,000,000 AAA Ohio State Higher Educational Facility
Commission Revenue, University of Dayton,
AMBAC-Insured, 5.350% due 12/1/17 1,947,500
1,645,000 AAA Ohio State Water Development Authority
Revenue, Fresh Water Series A, FSA-Insured,
5.000% due 6/1/16 1,515,456
5,320,000 AAA Portage County, OH GO, MBIA-Insured,
5.250% due 12/1/17 5,007,450
1,500,000 AAA University Akron, OH General Receipts,
FGIC-Insured 5.500% due 1/1/17 1,455,000
24,634,469
Pennsylvania -- 1.5%
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 3,276,875
2,500,000 AA Saint Mary Hospital Authority, Bucks County
Catholic Health Initiatives, Series A,
5.000% due 12/1/18 2,171,875
5,448,750
South Carolina -- 3.1%
4,000,000 AAA Lexington County, SC Health Services
District Inc., Hospital Revenue Refunding
& Improvement, FSA-Insured,
5.250% due 11/1/17 3,750,000
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(c) 2,152,500
1,140,000 AAA Piedmont, SC Municipal Power Agency,
Electric Revenue Refunding, Series A,
MBIA-Insured, 4.875% due 1/1/16 1,014,600
5,000,000 Aaa* South Carolina Transportation Infrastructure
Bank Revenue, Series A, AMBAC-Insured,
5.250% due 10/1/21 4,606,250
11,523,350
See Notes to Financial Statements.
12
Schedule of Investments
November 30, 1999 (unaudited) (continued)
Face
Amount Ratings(a) Security Value
- --------------------------------------------------------------------------------
Tennessee -- 1.3%
$ 1,150,000 NR Hardeman County, TN Correctional Facilities
Corp., 7.750% due 8/1/17 $1,219,000
4,100,000 AA+ Shelby County, TN GO, Refunding, Series A,
5.000% due 3/1/20 3,654,125
- --------------------------------------------------------------------------------
4,873,125
- --------------------------------------------------------------------------------
Texas -- 16.5%
500,000 Aaa* Arlington, TX ISD, GO, PSFG,
5.000% due 2/15/24 433,750
2,000,000 AAA Austin, TX ISD, GO, PSFG, 5.125% due 8/1/16 1,862,500
3,990,000 Aaa* Azle, TX ISD, GO, PSFG, Series C,
5.000% due 2/15/22 3,491,250
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 1,767,500
Brazos River Authority:
7,500,000 AAA Houston Industrial Income Project, Series A,
5.125% due 5/1/19 6,693,750
4,000,000 Baa1* PCR, Utility Electric Co., Series C,
5.550% due 6/1/30(b) 3,455,000
2,000,000 AAA Brownsville, TX Utility Systems Revenue,
AMBAC-Insured, 5.250% due 9/1/20 1,812,500
Burleson, TX ISD, GO, PSFG:
1,160,000 Aaa* 6.750% due 8/1/24 1,239,750
2,840,000 NR Pre-Refunded -- Escrowed with
U.S. government securities to 8/1/06,
Call @ 100, 6.750% due 8/1/24(c) 3,148,850
2,960,000 AA- Fort Worth, TX Higher Education Financing
Corp. Revenue, Texas Christian University
Project, 5.000% due 3/15/14 2,771,300
4,000,000 Baa1* Fort Worth, TX International Airport Facility
Improvement Corp. Revenue, American
Airlines Inc. Project, 6.375% due 5/1/35 3,865,000
2,480,000 Aaa* Frisco, TX ISD, 5.375% due 8/15/18 2,362,200
Harris County, TX GO, Toll Road:
3,900,000 AAA Sr. Lien, FGIC-Insured, 5.375% due 8/15/20 3,661,125
3,000,000 AA Sub. Lien, 5.125% due 8/15/16 2,797,500
Harris County, TX Health Facilities,
Development Corp., Hospital Revenue:
1,000,000 AA School Health Care Systems, Series B,
5.750% due 7/1/27 976,250
See Notes to Financial Statements.
13
Schedule of Investments
November 30, 1999 (unaudited) (continued)
<TABLE>
<CAPTION>
Face
Amount Ratings(a) Security Value
=========================================================================================================
<S> <C> <C> <C>
Texas -- 16.5% (continued)
$ 3,000,000 AA Texas Children's Hospital Project, Series A,
5.250% due 10/1/19 $ 2,685,000
1,000,000 AAA Houston, TX ISD, GO, Series A, PSFG,4.750% due 2/15/22 837,500
4,135,000 AAA Lower Colorado River Authority, Texas Revenue,
Series A, 5.500% due 5/15/21 3,907,575
2,670,000 AAA Manor, TX ISD, GO, Refunding, PSFG, 5.000% due 8/1/17 2,429,700
2,000,000 AAA Nueces River Authority, Texas Water Supply
Facilities, FSA-Insured, 5.500% due 3/1/27 1,870,000
Texas Water Development Board Revenue,
State Revolving Fund, Sr. Lien, Series B:
5,000,000 AAA 5.000% due 7/15/16 4,550,000
6,000,000 AAA 5.000% due 7/15/19 5,325,000
- ---------------------------------------------------------------------------------------------------------
61,943,000
- ---------------------------------------------------------------------------------------------------------
Utah -- 0.9%
4,000,000 A+ Intermountain Power Agency, Utah Power
Supply Revenue Refunding, Series D,
5.000% due 7/1/21 3,520,000
- ---------------------------------------------------------------------------------------------------------
Virgin Islands -- 0.2%
1,000,000 BBB- Virgin Islands, PFA Revenue, Sr. Lien, Series A,
5.500% due 10/1/22 882,500
- ---------------------------------------------------------------------------------------------------------
Virginia -- 2.2%
4,700,000 A2* Harrisonburg, VA Redevelopment & Housing
Authority, (Jail & Courthouse Project),
Public Facilities Lease Revenue,
6.500% due 9/1/14 4,864,500
Virginia State HDA, Multi-Family Housing:
1,655,000 AA+ Series D, 6.250% due 1/1/15 1,679,825
1,235,000 AAA Series H, AMBAC-Insured,
6.300% due 11/1/15 1,273,594
600,000 AA+ Series K, 5.800% due 11/1/10 616,500
- ---------------------------------------------------------------------------------------------------------
8,434,419
- ---------------------------------------------------------------------------------------------------------
Washington -- 4.4%
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 5,688,375
22,685,000 AAA Zero coupon due 6/1/22 5,869,744
</TABLE>
See Notes to Financial Statements.
14
Schedule of Investments
November 30, 1999 (unaudited) (continued)
<TABLE>
<CAPTION>
Face
Amount Ratings(a) Security Value
=========================================================================================================
<S> <C> <C> <C>
Washington -- 4.4% (continued)
$ 4,750,000 AA Series B, Remarketed 7/1/92, Mandatory
put 7/1/19, 6.750% due 7/1/62(b) $ 4,833,125
- ---------------------------------------------------------------------------------------------------------
16,391,244
- ---------------------------------------------------------------------------------------------------------
Wisconsin -- 2.2%
4,070,000 AA Wisconsin State GO, Series B,
6.600% due 1/1/22(b) 4,166,662
Wisconsin State Health & Educational
Facilities Authority Revenue, MBIA-Insured:
3,000,000 AAA Aurora Health Care Inc.,
5.250% due 8/15/17 2,782,500
1,100,000 A Kenosha Hospital & Medical Center Project,
5.700% due 5/15/20 1,007,875
250,000 AAA The Medical College of Wisconsin Inc.
Project, MBIA-Insured,
5.400% due 12/1/16 239,688
- ---------------------------------------------------------------------------------------------------------
8,196,725
- ---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(COST -- $388,908,998**) $373,805,337
=========================================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service with the exception of
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) Pre-Refunded bonds escrowed by U.S. government securities and bonds
escrowed to maturity by U.S. government securities are considered by
manager to be triple-A rated even if issuer has not applied for new
ratings.
(d) Security is in default.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 17 and 18 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
15
Summary of Investments by Combined Ratings
November 30, 1999 (unaudited)
Percentage of
Moody's and/or Standard & Poor's Total Investments
Aaa AAA 51.8%
Aa AA 11.3
A A 14.1
Baa BBB 11.1
NR NR 11.7
-----
100.0%
=====
16
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.
17
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 -- Financial Security Assurance
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
18
Statement of Assets and Liabilities
(unaudited)
<TABLE>
<CAPTION>
November 30, 1999
============================================================================================
<S> <C>
ASSETS:
Investments, at value (Cost -- $388,908,998) $ 373,805,337
Interest receivable 6,238,946
- -------------------------------------------------------------------------------------------
Total Assets 380,044,283
- -------------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 3,003,670
Payable to bank 575,616
Dividends payable 459,999
Investment advisory fees payable 317,038
Accrued expenses 116,435
- -------------------------------------------------------------------------------------------
Total Liabilities 4,472,758
- -------------------------------------------------------------------------------------------
Total Net Assets $ 375,571,525
===========================================================================================
NET ASSETS:
Par value of capital shares $ 33,958
Capital paid in excess of par value 413,577,567
Treasury stock, at cost (Note 6) (6,307,866)
Overdistributed net investment income (21,750)
Accumulated net realized loss from security transactions (16,606,723)
Net unrealized depreciation of investments (15,103,661)
- -------------------------------------------------------------------------------------------
TOTAL NET ASSETS
(Equivalent to $11.06 per share on 33,958,244 shares of $0.001
par value outstanding; 500,000,000 shares authorized) $ 375,571,525
===========================================================================================
</TABLE>
See Notes to Financial Statements.
19
Statement of Operations
(unaudited)
Six Months
Ended
11/30/99
================================================================================
INVESTMENT INCOME:
Interest $ 11,638,886
- --------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 1,396,478
Administration fees (Note 3) 398,994
Shareholder communications 129,804
Audit and legal 35,825
Registration fees 28,394
Shareholder and system servicing fees 11,828
Directors' fees 11,815
Pricing services fees 10,762
Custody 9,758
Other 14,202
- --------------------------------------------------------------------------------
Total Expenses 2,047,860
- --------------------------------------------------------------------------------
Net Investment Income 9,591,026
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 4):
Realized Gain (Loss) From Security Transactions
(excluding short-term securities):
Proceeds from sales 104,648,199
Cost of securities sold 113,117,523
- --------------------------------------------------------------------------------
Net Realized Loss (8,469,324)
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation (Depreciation)
of Investments:
Beginning of period 8,230,011
End of period (15,103,661)
- --------------------------------------------------------------------------------
Increase in Net Unrealized Depreciation (23,333,672)
- --------------------------------------------------------------------------------
Net Loss on Investments (31,802,996)
- --------------------------------------------------------------------------------
Decrease in Net Assets From Operations $ (22,211,970)
================================================================================
See Notes to Financial Statements.
20
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Year
Ended 11/30/99 Ended
(unaudited) 5/31/99
============================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 9,591,026 $ 20,136,169
Net realized loss (8,469,324) (4,886,706)
Increase in net unrealized depreciation (23,333,672) (6,285,612)
- --------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets
From Operations (22,211,970) 8,963,851
- --------------------------------------------------------------------------------------------
DISTRIBUTION TO SHAREHOLDERS
FROM (NOTE 2):
Net investment income (10,321,963) (18,626,947)
Net realized gains -- (4,075,207)
- --------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (10,321,963) (22,702,154)
- --------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Treasury stock acquired (6,307,866) --
- --------------------------------------------------------------------------------------------
Decrease in Net Assets From
Fund Share Transactions (6,307,866) --
- --------------------------------------------------------------------------------------------
Decrease in Net Assets (38,841,799) (13,738,303)
NET ASSETS:
Beginning of period 414,413,324 428,151,627
- --------------------------------------------------------------------------------------------
End of period* $ 375,571,525 $ 414,413,324
============================================================================================
* Includes undistributed (overdistributed)
net investment income of: $ (21,750) $ 709,187
============================================================================================
</TABLE>
See Notes to Financial Statements.
21
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, 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.
22
Notes to Financial Statements
(unaudited) (continued)
3. Investment Advisory Agreement, Administration Agreement and Other
Transactions
SSB Citi Fund Management LLC ("SSBC"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc., 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.
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.
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, 1999, the aggregate cost of purchases
and proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $ 81,265,718
- --------------------------------------------------------------------------------
Sales 104,648,199
================================================================================
At November 30, 1999, aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
================================================================================
Gross unrealized appreciation $ 6,462,462
Gross unrealized depreciation (21,566,123)
- --------------------------------------------------------------------------------
Net unrealized depreciation $(15,103,661)
================================================================================
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"
23
Notes to Financial Statements
(unaudited) (continued)
on a daily basis to reflect the market value of the contract at the end of each
day's trading. Variation margin payments are received or made and recognized as
assets due from or liabilities due to broker, depending upon whether unrealized
gains or losses are incurred. When the contract is closed, 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, 1999, the Fund had no open futures contracts.
6. Capital Shares
At November 30, 1999, the Fund had 500,000,000 shares of common stock
authorized with a par value of $0.001 per share.
On June 21, 1999, the Fund commenced a share repurchase plan. As of
November 30, 1999, repurchased shares totaled 648,700.
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, 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.
24
Financial Highlights
For a share of capital stock outstanding throughout each year ended May 31,
except where noted:
<TABLE>
<CAPTION>
1999(1) 1999 1998 1997 1996 1995
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $11.97 $12.37 $11.90 $12.11 $12.55 $12.26
- -------------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income(2) 0.28 0.58 0.54 0.67 0.67 0.72
Net realized and
unrealized gain (loss) (0.89) (0.32) 0.83 0.08 (0.35) 0.49
- -------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss)
From Operations (0.61) 0.26 1.37 0.75 0.32 1.21
- -------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.30) (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 (0.30) (0.66) (0.90) (0.96) (0.76) (0.92)
- -------------------------------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $11.06 $11.97 $12.37 $11.90 $12.11 $12.55
- -------------------------------------------------------------------------------------------------------------------------------
Total Return, Based on
Market Value(3) (9.99)%++ 0.11% 2.08% 7.89% 8.26% 8.40%
- -------------------------------------------------------------------------------------------------------------------------------
Total Return, Based on
Net Asset Value(3) (4.75)%++ 2.66% 12.14% 6.59% 2.79% 10.96%
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets,
End of Period (millions) $376 $414 $428 $411 $418 $433
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to Average
Net Assets:
Expenses(2) 1.05%+ 0.94% 0.99% 1.00% 1.00% 1.02%
Net investment income 4.90+ 4.72 4.35 5.56 5.35 5.97
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 21% 23% 87% 113% 45% 93%
- -------------------------------------------------------------------------------------------------------------------------------
Market Value,
End of Period $9.063 $10.375 $11.000 $11.625 $11.690 $11.500
===============================================================================================================================
</TABLE>
(1) For the six months ended November 30, 1999 (unaudited).
(2) The investment adviser 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%.
(3) 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.
25
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)
August 31,
1999 5,956,315 0.17 4,886,948 0.14 (21,881,042) (0.62) (16,994,094) (0.48)
November 30,
1999 5,682,571 0.17 4,704,078 0.14 (9,921,954) (0.27) (5,217,876) (0.13)
=============================================================================================================
</TABLE>
26
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
6/22/99 6/25/99 10.563 11.67 0.050 10.61
7/27/99 7/30/99 10.063 11.67 0.050 10.03
8/24/99 8/27/99 9.813 11.29 0.050 9.95
9/21/99 9/24/99 9.688 11.24 0.050 9.70
10/26/99 10/29/99 9.625 10.85 0.050 10.85
11/22/99 11/26/99 9.563 11.08 0.050 9.25
================================================================================
+ As of record date.
* Capital gain distribution.
27
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 PFPC Global Fund
Services ("PFPC"), formerly known as First Data Investor Services Group, Inc.,
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 PFPC 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, PFPC 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 PFPC has completed its purchases,
the market price exceeds the net asset value of the common stock as of the
valuation time, PFPC 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 PFPC is unable to stop
open market purchases and cause the Fund to issue the remaining shares, the
average per share purchase price paid by PFPC 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. PFPC 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 purchases continue later than
28
Dividend Reinvestment Plan
(unaudited) (continued)
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.
PFPC 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 PFPC 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. PFPC'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 PFPC, 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 PFPC Global Fund Services, P.O. Box 8030, Boston,
Massachusetts 02266-8030 or by telephone at 1-800-331-1710.
-------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that from time to time the Fund may purchase
shares of its common stock in the open market.
Managed Municipals
Portfolio Inc.
Directors Investment Adviser and Administrator
SSB Citi Fund Management LLC
Allan J. Bloostein 388 Greenwich Street
Martin Brody New York, New York 10013
Dwight B. Crane
Robert A. Frankel Transfer Agent
William R. Hutchinson PFPC Global Fund Services
Heath B. McLendon, Chairman P.O. Box 8030
Boston, Massachusetts 02266-8030
Charles F. Barber, Emeritus
Custodian
Officers PNC Bank, N.A.
Heath B. McLendon 17th & Chestnut Streets
President and Chief Executive Officer Philadelphia, Pennsylvania 19103
Lewis E. Daidone
Senior Vice President and Treasurer
Joseph P. Deane
Vice President and Investment Officer
David Fare
Investment Officer
Anthony Pace
Controller
Christina T. Sydor
Secretary
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This report is only intended for shareholders of the Managed Municipals
Portfolio Inc. It is not a Prospectus, circular or representation intended for
use in the purchase or sale of shares of the Fund or of any securities mentioned
in the report. FD0837 1/00
