MANAGED MUNICIPALS PORTFOLIO II INC, DEF 14A, 1994-01-18

MANAGED MUNICIPALS PORTFOLIO II INC
DEF 14A, 1994-01-18

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<PAGE>

MANAGED MUNICIPALS PORTFOLIO II INC.

TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048

------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 2, 1994
------------------------------------------------------

To the Shareholders:

Notice is hereby given that the Annual Meeting of Shareholders of Managed
Municipals Portfolio II Inc. (the "Portfolio"), will be held at Two World
Trade
Center, 100th Floor, New York, New York on March 2, 1994, commencing at 10:00
a.m.

The Annual Meeting is being held for the purposes of:

1. electing two (2) Directors of the Portfolio (Proposal 1);

2. ratifying the selection of Coopers & Lybrand as the independent
accountants for the Portfolio for the current fiscal year of the Portfolio
(Proposal 2); and

3. transacting such other business as may properly come before the Annual
Meeting and any adjournments thereof.

The close of business on December 20, 1993 has been fixed as the record
date for the determination of shareholders of the Portfolio entitled to notice
of and to vote at the Annual Meeting and any adjournments thereof.

By Order of the Directors,

FRANCIS J. MCNAMARA, III
SECRETARY
January 14, 1994
New York, New York

<PAGE>

SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING ARE REQUESTED TO
COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE ENCLOSED ENVELOPE, WHICH
NEEDS NO POSTAGE IF MAILED IN THE CONTINENTAL UNITED STATES. INSTRUCTIONS FOR
THE PROPER EXECUTION OF PROXY CARDS ARE SET FORTH BELOW. IT IS IMPORTANT THAT
PROXIES BE RETURNED PROMPTLY.

<TABLE>
INSTRUCTIONS FOR SIGNING PROXY CARDS

The following general rules for signing proxy cards may be of assistance
to
you and avoid the time and expense to the Portfolio involved in validating
your
vote if you fail to sign your proxy card properly.

1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears in the
registration on the proxy card.

2. JOINT ACCOUNTS: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration on the
proxy card.

3. ALL OTHER ACCOUNTS: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration.
For
example:

<CAPTION>
REGISTRATION VALID SIGNATURE
------------ ---------------
<S> <C>
CORPORATE ACCOUNTS
- ------------------
(1) ABC Corp....................... ABC Corp.
(2) ABC Corp....................... John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer...... John Doe
(4) ABC Corp. Profit Sharing Plan . John Doe, Trustee

TRUST ACCOUNTS
- --------------
(1) ABC Trust...................... Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78............... Jane B. Doe

CUSTODIAL OR ESTATE ACCOUNTS
- ----------------------------
(1) John B. Smith, Cust.
f/b/o John B. Smith,
Jr. UGMA.................... John B. Smith
(2) Estate of John B. Smith........ John B. Smith, Jr., Executor
</TABLE>

<PAGE>

ANNUAL MEETING OF SHAREHOLDERS

MARCH 2, 1994

---------------------------------------------

MANAGED MUNICIPALS PORTFOLIO II INC.

TWO WORLD TRADE CENTER
NEW YORK, NEW YORK 10048

---------------------------------------------

PROXY STATEMENT

INTRODUCTION

This proxy statement is being furnished in connection with the
solicitation
of proxies by the Board of Directors of Managed Municipals Portfolio II Inc.
(the "Portfolio") for use at the Annual Meeting of Shareholders of the
Portfolio, to be held on March 2, 1994, or any adjournment or adjournments
thereof (collectively, the "Meeting"). The Meeting will be held at Two World
Trade Center, 100th Floor, New York, New York, at 10:00 a.m. This proxy
statement and accompanying proxy card are first being mailed on or about
January
19, 1994. Proxy solicitations will be made primarily by mail, but proxy
solicitations also may be made by telephone, telegraph or personal interviews
conducted by officers and employees of the Portfolio; the Greenwich Street
Advisors Division of Mutual Management Corp. (the "Adviser"), the adviser for
the Portfolio; The Boston Company Advisors, Inc., administrator for the
Portfolio ("Boston Advisors"); and/or The Shareholder Services Group, Inc.
("TSSG"), a subsidiary of First Data Corporation, the transfer agent for the
Portfolio. The costs of proxy solicitation and expenses incurred in connection
with the preparation of this proxy statement and its enclosures will be paid
by
the Portfolio. The Portfolio will also reimburse brokerage firms and others
for
their expenses in forwarding solicitation material to the beneficial owners of
Portfolio shares. The Annual Report of the Portfolio, including audited
financial statements for the fiscal year ended August 31, 1993, has previously
been or is being furnished to all shareholders of the Portfolio.

If an enclosed proxy is properly executed and returned in time to be
voted
at the Meeting, the shares represented thereby will be voted in accordance
with
the instructions marked thereon. Unless instructions to the contrary are
marked
thereon, a proxy will be voted FOR each of the nominees for director and FOR
the
other matters listed in the accompanying Notice of Annual Meeting of
Shareholders. For purposes of determining the presence of a quorum for
transacting business at the Meeting, abstentions and broker "non-votes"(that
is,
proxies from brokers or nominees indicating that such persons have not
received
instructions from the beneficial owner or other persons entitled to vote
shares
on

<PAGE>

a particular matter with respect to which the brokers or nominees do not have
discretionary power) will be treated as shares that are present but which have
not been voted. Approval of Proposals 1 and 2 require the affirmative vote of
a
plurality of shares voted. Because abstentions and broker non-votes are not
treated as shares voted, abstentions and broker non-votes would have no impact
on such Proposals. Any shareholder who has given a proxy has the right to
revoke
it at any time prior to its exercise either by attending the Meeting and
voting
his or her shares in person or by submitting a letter of revocation or a
later-dated proxy to the Portfolio at the above address prior to the date of
the
Meeting.

In the event that a quorum is not present at a Meeting, or in the event
that a quorum is present but sufficient votes to approve any of the proposals
are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. In
determining whether to adjourn the Meeting, the following factors may be
considered: the nature of the proposals that are the subject of the Meeting,
the
percentage of votes actually cast, the percentage of negative votes actually
cast, the nature of any further solicitation and the information to be
provided
to shareholders with respect to the reasons for the solicitation. Any
adjournment will require the affirmative vote of a majority of those shares
represented at the Meeting in person or by proxy. A shareholder vote may be
taken on any one of the proposals in this proxy statement prior to any
adjournment if sufficient votes have been received for approval. Under the
By-laws of the Portfolio, as applicable, a quorum is constituted by the
presence
in person or by proxy of the holders of a majority of the outstanding shares
entitled to vote on the particular matter at the Meeting.

The Board has fixed the close of business on December 20, 1993 as the
record date (the "Record Date") for the determination of shareholders of the
Portfolio entitled to notice of and to vote at the Meeting. The Portfolio has
one class of common stock, which has a par value of $.001 per share. At the
close of business on the Record Date there were 11,216,681 shares of common
stock outstanding (the "Shares"). Each shareholder is entitled to one vote for
each Share held and a proportionate fraction of a vote for any fractional
share
held.

As of the Record Date, to the knowledge of the Portfolio and its Board,
no
single shareholder or "group" (as that term is used in Section 13(d) of the
Securities Exchange Act of 1934 (the "Exchange Act")), except as set forth
below, beneficially owned more than 5% of the outstanding Shares of the
Portfolio. As of the Record Date, Cede & Co., a nominee partnership of the
Depository Trust Company, held 10,932,821 Shares, or 97.47% of the Portfolio's
Shares. Of the Shares held by Cede & Co., Smith Barney Shearson Inc. ("Smith
Barney Shearson") held of record 10,176,070 Shares, or 90.72% of the
Portfolio's
Shares, for which it has discretionary and non-discretionary authority. As of
the Record Date, the officers and Board Members of the Portfolio as a group
beneficially owned less than 1% of the shares of that Portfolio.

<PAGE>

In order that a shareholder's Shares may be represented at the Meeting,
shareholders are required to allow sufficient time for their proxies to be
received on or before 10:00 a.m. on March 2, 1994.

<TABLE>
The following table shows certain information about the executive
officers
of the Portfolio, other than Heath B. McLendon, for whom comparable
information
is provided in the discussion of Proposal 1 below. Each officer of the
Portfolio
serves at the discretion of the Board.

<CAPTION>
AMOUNT (AND
PERCENTAGE) OF
OUTSTANDING
SHARES OF
COMMON STOCK
BENEFICIALLY PRINCIPAL
OCCUPATION
OFFICE OWNED* AS OF DURING THE PAST
FIVE
NAME (AGE) AND ADDRESS HELD THE RECORD DATE YEARS
---------------------- ------ --------------- ---------------
- -----
<S> <C> <C> <C>
Stephen J. Treadway (46) President None Executive Vice
1345 Avenue of the Americas President and
New York, NY 10105 Director of
Smith
Barney Shearson;
Director and
President of
Mutual
Management
Corp., Smith
Barney Advisors
Inc. and other
investment
companies
associated with
Smith Barney
Shearson; and
Trustee of
Corporate Realty
Income Trust I

Richard P. Roelofs (40) Executive None Managing
Director
Two World Trade Center Vice of Smith Barney
New York, NY 10048 President Shearson and
President of
Smith Barney
Shearson
Investment
Strategy
Advisors
Inc., an
investment
advisory
affiliate of
Shearson; prior
to July 1993,
Senior Vice
President of
Shearson Lehman
Brothers Inc.
and
Vice President
of
Shearson Lehman
Strategy
Advisors
Inc.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
AMOUNT (AND
PERCENTAGE) OF
OUTSTANDING
SHARES OF
COMMON STOCK
BENEFICIALLY PRINCIPAL
OCCUPATION
OFFICE OWNED* AS OF DURING THE PAST
FIVE
NAME (AGE) AND ADDRESS HELD THE RECORD DATE YEARS
---------------------- ------ --------------- ----------------
- ----
<S> <C> <C> <C>
Vincent Nave (48) Chief None Senior Vice
Exchange Place Financial President of
Boston, MA 02109 and Boston Advisors
Accounting and Boston Safe
Officer and Deposit and
Trust
Treasurer Company

Francis J. McNamara, III (38) Secretary None Senior Vice
Exchange Place President and
Boston, MA 02109 General Counsel
of Boston
Advisors; prior
to June 1989,
Vice President
and Associate
Counsel of
Boston
Advisors

Joseph P. Deane (45) Vice None Senior Vice
Two World Trade Center President President and
New York, NY 10048 and Managing
Director
Investment of the Adviser;
Officer prior to July
1993, Senior
Vice
President and
Managing
Director
of Shearson
Lehman Advisors

David Fare (30) Investment None Vice President
of
Two World Trade Center Officer the Adviser;
New York, NY 10048 prior to July
1993, Vice
President of
Shearson Lehman
Advisors; prior
to March 1989, a
senior portfolio
accountant with
the firm of
Merrill Lynch
Pierce, Fenner &
Smith Inc., New
York, New York
<FN>
- ---------------
* For this purpose "beneficial ownership" is defined under Section 13(d) of
the
Exchange Act. The information as to beneficial ownership is based solely
upon
information furnished to the Portfolio by the officers.
</TABLE>

PROPOSAL 1: TO ELECT TWO (2) DIRECTORS OF THE PORTFOLIO

The first proposal to be considered at the Meeting is the election of two
(2) Directors of the Portfolio.

The Board of Directors of the Portfolio is divided into three classes
with
the terms of office of one class expiring each year. At the forthcoming
Meeting,
it is proposed that Martin Brody and Allan J. Bloostein, who have previously
been

<PAGE>

elected by the shareholders and are currently serving as Class I Directors,
each
be elected for a term of three years (until the Annual Meeting in 1997) and
until their respective successors are duly elected and qualified.

Messrs. Brody and Bloostein have consented to serve as Directors if
elected
at the Meeting. If a designated nominee declines or otherwise becomes
unavailable for election, however, the proxy confers discretionary power on
the
persons named therein to vote in favor of a substitute nominee or nominees.

Section 16(a) of the Exchange Act requires the Portfolio's officers and
Directors, and persons who beneficially own more than ten percent of a
registered class of the Portfolio's equity securities, to file reports of
ownership with the Securities and Exchange Commission (the "SEC"), the New
York
Stock Exchange and the Portfolio. Based solely upon its review of the copies
of
such forms received by it and written representations from such persons, the
Portfolio believes that, during fiscal year 1993, all filing requirements
applicable to such persons were complied with.

Each Director who is not an "interested person" of the Portfolio (an
"Independent Board Member") receives a fee of $5,000 per annum plus $500 per
meeting attended, and reimbursement for travel and out-of-pocket expenses. The
aggregate remuneration paid to Directors by the Portfolio for the fiscal year
ended August 31, 1993 amounted to $41,649 (including reimbursement for travel
and out-of-pocket expenses). The Board of Directors held nine meetings during
the fiscal year ended August 31, 1993, four of which were regular meetings.

The Board has an Audit Committee consisting of all Independent Board
Members. The Audit Committee reviews the scope and results of the Portfolio's
annual audit with the Portfolio's independent accountants and recommends the
engagement of accountants. The Audit Committee met twice during the fiscal
year
ended August 31, 1993. Each incumbent Director attended at least 75% of the
meetings of the Board and committees of which he is a member that were held in
the last fiscal year.

Each of the nominees for Director of the Portfolio currently serves as a
Director of the Portfolio. Any Director may resign and any Director may be
removed at any meeting of shareholders called for that purpose by a vote of a
majority of the votes entitled to be cast for election of Directors. In case a
vacancy shall exist for any reason, the remaining Directors may fill the
vacancy
by appointing another Director. If at any time less than a majority of the
Directors holding office have been elected by shareholders, the Directors then
in office will call a shareholders meeting for the purpose of electing
Directors.

<PAGE>

<TABLE>
Set forth in the following table are the existing Directors and nominees
for election to the Board of Directors of the Portfolio, together with certain
other information:

<CAPTION>
AMOUNT (AND
PERCENTAGE) OF
OUTSTANDING
SHARES OF PRINCIPAL
COMMON STOCK OCCUPATION
BENEFICIALLY AND OTHER
BOARD MEMBER OWNED** DIRECTORSHIPS***
OF PORTFOLIO AS OF THE DURING THE
NAME (AGE) AND ADDRESS SINCE RECORD DATE PAST FIVE YEARS
---------------------- ------------ -------------- ----------------
<S> <C> <C> <C>
NOMINEES TO SERVE UNTIL
THE 1997 MEETING OF
SHAREHOLDERS:

Martin Brody (71) 1992 None Vice Chairman of the
Board of
Three ADP Boulevard Directors of
Restaurant
Roseland, NJ 07068 Associates Corp.;
Director of
Jaclyn, Inc., an
apparel
manufacturer

Allan J. Bloostein (63) 1992 None Consultant; formerly
Vice
27 West 67th Street, Chairman of the Board
of May
Apt. 5FW Department Stores
Company;
New York, NY 10023 Director of Crystal
Brands,
Inc., Melville Corp.,
R.G.
Barry Corp. and
Hechinger Co.
DIRECTORS TO SERVE UNTIL
THE 1996 MEETING OF
SHAREHOLDERS:

Dwight B. Crane (55) 1992 None Professor, Graduate
School of
Harvard Business School Business
Administration,
Soldiers Field Road Harvard University;
Director
Boston, MA 02163 of Peer Review
Analysis, Inc.

Charles Barber (75) 1992 None Consultant; formerly
Chairman
66 Glenwood Drive of the Board, ASARCO
Greenwich, CT 06830 Incorporated

DIRECTOR TO SERVE UNTIL
THE 1995 MEETING OF
SHAREHOLDERS:

Heath B. McLendon* (60) 1992 (.01%) Executive Vice
President of
Two World Trade Center Smith Barney Shearson;
New York, NY 10048 Chairman of the Board
of
Smith Barney Shearson
Strategy Advisers
Inc.; prior
to July 1993, Senior
Executive Vice
President of
Shearson Lehman
Brothers,
Vice Chairman of
Shearson
Asset Management, a
member of
the SLB Asset
Management
Division of Shearson
Lehman
Brothers; Director of
PanAgora Asset
Management,
Inc. and PanAgora
Asset
Management Limited,
investment advisory
affiliates of Shearson
Lehman
Brothers
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
AMOUNT (AND
PERCENTAGE) OF
OUTSTANDING
SHARES OF PRINCIPAL
COMMON STOCK OCCUPATION
BENEFICIALLY AND OTHER
BOARD MEMBER OWNED** DIRECTORSHIPS***
OF PORTFOLIO AS OF THE DURING THE
NAME (AGE) AND ADDRESS SINCE RECORD DATE PAST FIVE YEARS
---------------------- ------------ -------------- ----------------
<S> <C> <C> <C>
All directors and (.01%)
officers as a group
(11 persons including
the foregoing)
<FN>
- ---------------
* "Interested person" of the Portfolio, as defined in the 1940 Act, by
virtue
of his position as an officer or director of the Adviser or one of its
affiliates.

** For this purpose "beneficial ownership" is defined under Section 13(d) of
the Exchange Act. The information as to beneficial ownership is based
solely
upon information furnished to the Portfolio by the nominees/directors.

*** Directorships, general partnerships or trusteeships of companies that are
required to report to the SEC, other than open-end registered investment
companies.
</TABLE>

REQUIRED VOTE

Election of the listed nominees for Director will require the affirmative
vote of a plurality of the votes cast at the Meeting in person or by proxy.

THE BOARD OF THE PORTFOLIO, INCLUDING ALL THE INDEPENDENT BOARD
MEMBERS, RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ELECTION OF
NOMINEES TO THE BOARD.

PROPOSAL 2: TO RATIFY THE SELECTION OF COOPERS & LYBRAND AS THE INDEPENDENT
ACCOUNTANTS FOR THE PORTFOLIO FOR THE CURRENT FISCAL YEAR

The second proposal to be considered at the Meeting is the ratification
of
the selection of Coopers & Lybrand as the independent public accountants for
the
Portfolio.

Coopers & Lybrand, One Post Office Square, Boston, Massachusetts 02109,
has
served as independent accountants for the Portfolio for the fiscal year ended
August 31, 1993, and has been selected to serve in this capacity for the
Portfolio's current fiscal year by at least a majority of the Independent
Board
Members. Coopers & Lybrand has informed the Portfolio that it has no direct or
indirect financial interest in the Portfolio, Smith Barney Shearson, or any of
their affiliates. Representatives of Coopers & Lybrand are expected to be
present at the Meeting and will be given the opportunity to make a statement
if
they so desire and will respond to appropriate questions.

<PAGE>

REQUIRED VOTE

Ratification of the selection of Coopers & Lybrand as independent
accountants for the Portfolio requires the affirmative vote of the holders of
a
plurality of the votes cast at the Meeting in person or by proxy.

THE BOARD OF THE PORTFOLIO, INCLUDING ALL OF THE INDEPENDENT BOARD
MEMBERS, RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" RATIFICATION OF
THE SELECTION OF COOPERS & LYBRAND.

ADDITIONAL INFORMATION

INVESTMENT ADVISER

Greenwich Street Advisors (the "Adviser"), located at Two World Trade
Center, New York, New York 10048, has served as the investment adviser to the
Portfolio since July 31, 1993 pursuant to an investment advisory agreement
dated
July 31, 1993 (the "Advisory Agreement"). The Adviser (through its
predecessors)
has been in the investment counseling business since 1934 and is a division of
Mutual Management Corp. ("MMC") which was incorporated in 1978. The Adviser
renders investment advice to investment companies that had assets under
management as of November 30, 1993 in excess of $43.2 billion. MMC is a wholly
owned subsidiary of Smith Barney Shearson Inc. ("Smith Barney Shearson") which
in turn is a wholly owned subsidiary of Travelers Inc. ("Travelers"). The
principal executive offices of Smith Barney Shearson and Travelers are 1345
Avenue of the Americas, New York, New York 10105, and 65 East 55th Street, New
York, New York 10022, respectively.

Prior to July 31, 1993, Shearson Lehman Advisors, a member of the
investment management group of the SLB Asset Management Division of Shearson
Lehman Brothers Inc., served as investment adviser to the Portfolio. As of the
close of business on July 30, 1993, Travelers (which at the time was known as
Primerica Corporation) and Smith Barney, Harris Upham & Co. Incorporated
completed the acquisition of substantially all of the domestic retail
brokerage
and asset management businesses of Shearson Lehman Brothers Inc. and Smith
Barney, Harris Upham & Co. Incorporated was renamed Smith Barney Shearson Inc.
As of the close of business on July 30, 1993, the Adviser succeeded Shearson
Lehman Advisors as the Portfolio's investment adviser. The new investment
advisory agreement with the Adviser contains terms and conditions
substantially
similar to the investment advisory agreement with the predecessor investment
adviser and provides for payment of fees at the same rate as was paid to such
predecessor investment adviser.

As of the Record Date, the Directors and/or executive officers of the
Portfolio beneficially owned (or were deemed to beneficially own pursuant to
the
rules of the SEC) less than 1% of the shares of common stock of Primerica. The

<PAGE>

name, principal occupation and address of each director and principal
executive
officer of the Adviser are set forth in Exhibit A hereto. An audited balance
sheet for MMC as of December 31, 1992 is set forth as Exhibit B hereto.

THE ADVISORY AGREEMENT

The Advisory Agreement was most recently approved by the Portfolio's
Board
of Directors, including a majority of the Independent Board Members on April
7,
1993, and by the Portfolio's shareholders on June 9, 1993, pursuant to an
undertaking to the SEC to submit the Advisory Agreement to shareholders for
their approval at the first meeting of shareholders. Under the terms of the
Agreement, the Adviser is required, subject to the supervision and approval of
the Board of the Portfolio, to manage the Portfolio's investments in
accordance
with the investment objectives and policies as stated in the Portfolio's
Prospectus. The Adviser is responsible for making investment decisions,
supplying investment research and portfolio management services and placing
orders to purchase and sell securities on behalf of the Portfolio.

In consideration of services rendered by the Adviser pursuant to the
Advisory Agreement, the Portfolio pays a monthly fee at the annual rate of
.70%
of the Portfolio's average monthly net assets. Pursuant to the Advisory
Agreement, the Portfolio paid a total of $925,705 in advisory fees for the
fiscal year ended August 31, 1993.

The Adviser bears all expenses in connection with the performance of its
services under the Advisory Agreement. Other expenses incurred in the
operation
of the Portfolio are borne by the Portfolio, including taxes, interest,
brokerage fees and commissions, if any; fees of the Board Members who are not
officers, directors, shareholders or employees of the Adviser, the Portfolio's
administrator and its affiliates; SEC fees and state blue sky qualification
fees; charges of custodian and transfer and dividend disbursing agents;
certain
insurance premiums; outside auditing and legal expenses; cost of investor
services (including allocable telephone and personnel expenses); costs of
preparation and printing of shareholders' reports; costs incurred in
connection
with meetings of the Board and of the shareholders of the Portfolio; listing
fees; and any extraordinary expenses.

If in any fiscal year the aggregate expenses of the Portfolio (including
fees pursuant to the Advisory Agreement (and the administration agreement) but
excluding interest, taxes, brokerage and, if permitted by state securities
commissions, extraordinary expenses) exceed the expense limitation of any
state
having jurisdiction over the Portfolio, the Adviser will reduce its advisory
fees to the Portfolio for the excess expense to the extent required by state
law
in the same proportion as its advisory fee bears to the Portfolio's aggregate
fees for investment advice and administration. Proportionate reductions would
also be

<PAGE>

made by the Portfolio's administrator. This expense reimbursement, if any,
will
be estimated, reconciled and paid on a monthly basis.

The Advisory Agreement provides that in the absence of willful
misfeasance,
bad faith, gross negligence or reckless disregard of its obligations
thereunder,
the Adviser shall not be liable for any act or omission in the course of, or
in
connection with, the rendering of its services thereunder.

Pursuant to its terms, the Advisory Agreement will remain in effect for
an
initial two-year term and will continue in effect for successive periods if
and
so long as such continuance is specifically approved annually by (a) the
Portfolio's Board or (b) a Majority Vote of the Portfolio's shareholders,
provided that in either event, the continuance also is approved by a majority
of
the Independent Board Members by vote cast in person at a meeting called for
the
purpose of voting on approval. The Advisory Agreement is terminable, without
penalty, on 60 days' written notice by the Board of the Portfolio or by a
Majority Vote of the Portfolio's shareholders, or on 90 days' written notice
by
the Adviser. The Advisory Agreement will terminate automatically in the event
of
its assignment (as defined in the Investment Company Act of 1940, as amended).

PORTFOLIO TRANSACTIONS

Decisions to buy and sell securities for the Portfolio are made by the
Adviser, subject to the overall review of the Portfolio's Board. Although
investment decisions for the Portfolio are made independently from those of
the
other accounts managed by the Adviser, investments of the type the Portfolio
may
make also may be made by those other accounts. When the Portfolio and one or
more other accounts managed by the Adviser are prepared to invest in, or
desire
to dispose of, the same security, available investments or opportunities for
sales will be allocated in a manner believed by the Adviser to be equitable to
each. In some cases, this procedure may adversely affect the price paid or
received by the Portfolio or the size of the position obtained or disposed of
by
the Portfolio.

Transactions on U.S. stock exchanges and many foreign stock exchanges
involve the payment of negotiated brokerage commissions. On exchanges on which
commissions are negotiated, the cost of transactions may vary among different
brokers. No stated commission is generally applicable to securities traded in
U.S. over-the-counter markets, but the prices of those securities include
undisclosed commissions or mark-ups. The cost of securities purchased from
underwriters includes an underwriting commission or concession and the prices
at
which securities are repurchased from and sold to dealers include a dealer's
mark-up or mark-down. U.S. government securities are generally purchased from
underwriters or dealers, although certain newly-issued U.S. government
securities may be purchased directly from the United States Treasury or from
the
issuing agency or instrumentality.

<PAGE>

In selecting brokers or dealers to execute portfolio transactions on
behalf
of the Portfolio, the Adviser seeks the best overall terms available. In
assessing the best overall terms available for any transaction, the Adviser
will
consider the factors it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of the commission,
if
any, for the specific transaction and on a continuing basis. In addition, the
Adviser is authorized, in selecting brokers or dealers to execute a particular
transaction and in evaluating the best overall terms available, to consider
the
brokerage and research services (as those terms are defined in Section 28(e)
of
the Exchange Act) provided to the Portfolio and/or other accounts over which
the
Adviser or its affiliates exercise investment discretion. The fees under an
Agreement are not reduced by reason of the Portfolio's or the Adviser's
receiving brokerage and research services. Research and investment services
are
those which brokerage houses customarily provide to institutional investors
and
include statistical and economic data and research reports on particular
issues
and industries. These services are used by the Adviser in connection with all
of
its investment activities, and some of the services obtained in connection
with
the execution of transactions for the Portfolio may be used in managing other
investment accounts. Conversely, brokers furnishing these services may be
selected for the execution of transactions for these other accounts, whose
aggregate assets may exceed those of the Portfolio, and the services furnished
by the brokers may be used by the Adviser in providing investment management
for
the Portfolio. During the last fiscal year of the Portfolio, neither the
Portfolio nor its Adviser, pursuant to any agreement or understanding with a
broker or otherwise through an internal allocation procedure, directed the
Portfolio's brokerage transactions to a broker or brokers because of research
services provided. The Board of the Portfolio periodically will review the
commissions paid by the Portfolio to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits
inuring to the Portfolio. Over-the-counter purchases and sales by the
Portfolio
are transacted directly with principal market makers except in those cases in
which better prices and executions may be obtained elsewhere.

To the extent consistent with applicable provisions of the 1940 Act and
the
rules and exemptions adopted by the SEC under the 1940 Act, subject to the
approval of the Board of the Portfolio, transactions for the Portfolio may be
executed through Smith Barney Shearson and other affiliated broker-dealers if,
in the judgment of the Adviser, the use of an affiliated broker-dealer is
likely
to result in price and execution at least as favorable as those of other
qualified broker-dealers.

The Portfolio will not purchase any security, including U.S. government
securities, during the existence of any underwriting or selling group relating
to the security of which Smith Barney Shearson is a member, except to the
extent
permitted by the SEC.

<PAGE>

For the fiscal year ended August 31, 1993, the Portfolio did not incur
any
brokerage commissions.

SUBMISSION OF SHAREHOLDER PROPOSALS

Shareholders wishing to submit proposals for inclusion in a proxy
statement
for the 1995 annual meeting of shareholders must submit their proposals for
inclusion in the proxy materials relating to the next annual meeting in
writing
to the Secretary of the Portfolio, c/o The Boston Company Advisors, Inc.,
Exchange Place, Boston, MA 02109, no later than August 31, 1994.

SHAREHOLDERS' REQUEST FOR SPECIAL MEETING

Shareholders entitled to cast at least 25% of all votes entitled to be
cast
at a meeting may require the calling of a meeting of shareholders for the
purpose of voting on the removal of any Board Member of the Portfolio.
Meetings
of shareholders for any other purpose also shall be called by the Secretary of
the Portfolio when requested in writing by shareholders entitled to cast at
least 25% of all votes entitled to be cast at a meeting.

OTHER MATTERS TO COME BEFORE THE MEETING

The Portfolio does not intend to present any other business at the
Meeting,
nor is it aware that any shareholder intends to do so. If, however, any other
matters are properly brought before the Meeting, the persons named in the
accompanying proxy card(s) will vote thereon in accordance with their
judgment.

January 14, 1994

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE, SIGN, DATE AND
RETURN THE PROXY AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.

EXHIBIT LIST

<S> <C>
EXHIBIT A Name, Position with, Principal Occupation and Address of each
Director and Principal Executive Officer of the Adviser.

EXHIBIT B Audited balance sheet of MMC.
</TABLE>

EXHIBIT
A

NAME, OCCUPATION AND ADDRESS OF
EXECUTIVE OFFICERS OF
GREENWICH STREET ADVISORS

The name, position with Greenwich Street Advisors and principal
occupation
of each executive officer and director of Greenwich Street Advisors are set
forth in the following table. The business address of each such person is Two
World Trade Center, New York, New York 10048.

<CAPTION>
POSITION WITH GREENWICH
NAME STREET ADVISORS PRINCIPAL OCCUPATION
- ---- ----------------------- --------------------

<S> <C> <C>
Thomas B. Stiles II... Chairman and Chief Senior Executive Vice
Executive Officer President of Smith Barney
Shearson

Jeffrey Applegate..... Managing Director Same

John C. Bianchi....... Managing Director Same

Robert Brady.......... Managing Director Same

Ellen S. Cammer....... Managing Director Same

James Conroy.......... Managing Director Same

Joseph P. Deane....... Managing Director Same

Kenneth Egan.......... Managing Director Same

Peter Frazier......... Managing Director Same

Jay Gerken............ Managing Director Same

Jack Levande.......... Managing Director Same

Lawrence T. McDermott. Managing Director Same

Ronald Perry.......... Managing Director Same

Kevin Reed............ Managing Director Same

Phyllis M. Zahorodny.. Managing Director Same

</TABLE>

A-1

<PAGE>

EXHIBIT
B

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholder of
Mutual Management Corp.:

We have audited the accompanying consolidated balance sheet of Mutual
Management Corp. (a wholly-owned subsidiary of Smith Barney Inc.) and its
Subsidiary as of December 31, 1992. This consolidated financial statement is
the
responsibility of the Company's management. Our responsibility is to express
an
opinion on this consolidated financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit of a balance sheet includes examining, on a test basis,
evidence supporting the amounts and disclosures in the balance sheet. An audit
also includes assessing the accounting principles used and significant
estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit of the balance sheet provides a
reasonable basis for our opinion.

In our opinion, the consolidated balance sheet referred to above presents
fairly, in all material respects, the financial position of Mutual Management
Corp. and its Subsidiary as of December 31, 1992 in conformity with generally
accepted accounting principles.

As discussed in Note 3 to the consolidated balance sheet, the Company
changed its method of accounting for income taxes in 1992 to adopt the
provisions of the Financial Accounting Standards Board's Statement of
Financial
Accounting Standards No. 109, ACCOUNTING FOR INCOME TAXES.

KPMG Peat Marwick

New York, New York
March 31, 1993

B-1

<PAGE>

<TABLE>
MUTUAL MANAGEMENT CORP. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF SMITH BARNEY INC.)

CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1992

ASSETS

<S> <C> <C>
Cash................................... $ 68,835
Management fees receivable............. 152,689
Deposits with clearing organization.... 50,120
Investments in mutual funds, at cost... 1,812,400
Furniture and fixtures, net of
accumulated depreciation............. 97,305
Investment advisory contracts, net of
accumulated amortization............. 93,321,671
Due from affiliates, net............... 1,034,223
Other assets........................... 5,624
-----------
$96,542,867
-----------
-----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Note payable........................... $ 3,925,449
Deferred tax liability................. 37,766,422
Stockholder's equity:
Common shares, $1 par value.......... 500
Additional paid-in capital........... 48,644,986
Retained earnings.................... 6,148,490
Cumulative translation adjustment.... 57,020 54,850,996
---------- -----------
$96,542,867
-----------
-----------
</TABLE>

NOTES:

(1) ORGANIZATION -- Mutual Management Corp. ("MMC"), a registered investment
adviser, acts pursuant to management agreements as investment manager to
the following investment companies: Smith Barney Money Funds, Inc.
("SBM"),
Smith Barney Tax Free Money Fund, Inc. ("TFM"), Smith Barney Muni Bond
Funds ("MBF"), Smith Barney Municipal Fund, Inc. ("SBT"), Smith Barney
Intermediate Municipal Fund, Inc. ("SBI") and Smith Barney U.S. Dollar
Reserve Fund ("SBDR") and administrator of The Inefficient-Market Fund,
Inc. MMC provides each company with personnel, investment advice, office
space and administrative services at fees based on the net assets of each
fund. The consolidated balance sheet includes the accounts of Smith
Barney
Asset Management Co., Ltd. All significant intercompany transactions and
accounts have been eliminated in consolidation.

B-2

<PAGE>

(2) RELATED PARTY TRANSACTIONS -- Smith Barney, Harris Upham & Co.
Incorporated
("SBHU"), another subsidiary of Smith Barney Inc., provides MMC with
executive and administrative services (e.g. accounting, legal, personnel,
facilities, mail and other support services) and order processing support
on a basis mutually agreed upon. Receivables from or payables to SBHU are
non-interest bearing. Investments in Mutual Funds represent shares of
SBM,
TFM and MBF. Such investments are carried at cost, which approximates
market value. Substantially all cash collected by MMC relating to
management fees is remitted to Smith Barney Inc. in the form of
intercompany dividends.

In October 1990, SBHU transferred its rights under the terms of the
management contract for the Vantage Money Market Funds ("VMM") to MMC, at
its recorded value, in exchange for an $11,776,346 promissory note which
bears interest at 10% per annum and is payable in three equal annual
installments commencing November 1, 1991. The net assets of VMM were
transferred to SBM under a tax-free reorganization during 1992. The third
and final installment payment of $3,925,449 is due on November 1, 1993.

(3) INCOME TAXES -- In February 1992, the Financial Accounting Standards
Board
issued Statement of Financial Accounting Standards No. 109, Accounting
for
Income Taxes. Statement 109 requires a change from the deferred method of
accounting for income taxes of APB Opinion 11 to the asset and liability
method of accounting for income taxes. Under the asset and liability
method
of Statement 109, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in
the
years in which those temporary differences are expected to be recovered
or
settled.

The Company adopted Statement 109 on January 1, 1992. The adoption of
this
Statement resulted in an increase to the balance of Investment Advisory
Contracts and the establishment of a corresponding Deferred Tax Liability
of $37,766,422.

MMC is included in the consolidated federal, state and local tax returns
filed by Smith Barney Inc. Income taxes payable of approximately
$6,967,003
are included in the net balance of Due from Affiliates at December 31,
1992.

(4) INVESTMENT ADVISORY CONTRACTS -- The balance of Investment Advisory
Contracts is stated at the amortized cost assigned to those contracts in
connection with the acquisition of Smith Barney Inc.'s parent by
Commercial
Credit Group, Inc. in December 1988. The combined successor firm
subsequently changed its name to Primerica Corporation. The cost of the

B-3

<PAGE>

Investment Advisory Contracts is being amortized over thirty years on a
straight-line basis. See Note 3.

(5) STOCKHOLDER'S EQUITY -- Common shares authorized consist of 5,000 shares
of
Class A (non-voting) and 5,000 shares of Class B (voting). At December
31,
1992, 449 Class A shares and 51 Class B shares were issued and
outstanding.
In connection with the acquisition of Smith Barney Inc. by Primerica
Corporation on June 19, 1987 and the subsequent acquisition of Primerica
Corporation by Commercial Credit Group, Inc. in December 1988, MMC was
recapitalized and its retained earnings on both dates were transferred to
additional paid-in capital.

B-4

VOTE THIS VOTING INSTRUCTION CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS

(Please Detach at Perforation Before Mailing)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. .

Please indicate your vote by an "X" in the appropriate box below.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned shareholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF NOMINEES AS
DIRECTORS AND PROPOSAL 2.
Please refer to the Proxy Statement for a discussion of the Proposals.

1. ELECTION OF CLASS I DIRECTORS FOR both nominees listed
WITHHOLD AUTHORITY
(except as marked to the
to vote for both nominees
Allan J. Bloostein and Martin Brody contrary below)

(Instruction: To withhold authority for either nominee, write his name on the
line provided below.)
___________________________________________________________________________

2. To ratify the selection of Coopers & Lybrand as FOR
AGAINST ABSTAIN
independent accountants for the Portfolio

VOTE THIS VOTING INSTRUCTION CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS

(Please Detach at Perforation Before Mailing)

MANAGED MUNICIPALS PORTFOLIO II INC. PROXY SOLICITED
BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Managed Municipals Portfolio Inc.
(the "Portfolio"), a Maryland corporation, hereby appoints Heath B.
McLendon, Richard P. Roelofs, Francis J. McNamara, III and Lee D.
Augsburger attorneys and proxies for the undersigned with full powers
of substitution and revocation, to represents the undersigned and to
vote on behalf of the undersigned all shares of the Portfolio that
the undersigned is entitled to vote at the Annual Meeting of
Shareholders of Managed Municipals Portfolio II Inc. to be held at
the offices of the Portfolio, Two World Trade Center, New York, New
York on March 2, 1994 at 10:00 a.m., and any adjournment or
adjournments thereof. The undersigned hereby acknowledges receipt of
the Notice of Meeting and Proxy Statement dated January 14, 1994 and
hereby instructs said attorneys and proxies to vote said shares as
indicated herein. In their discretion, the proxies are authorized to
vote upon such other business as may properly come before the
Meeting. A majority of the proxies present and acting at the Meeting
in person or by substitute (or, if only one shall be so present, then
that one) shall have and may exercise all of the power and authority
of said proxies hereunder. The undersigned hereby revokes any proxy
previously given.
PLEASE
SIGN, DATE AND RETURN
PROMPTLY IN THE
ENCLOSED ENVELOPE

Note: Please sign exactly as your name appears on this
Proxy. If joint owners, EITHER may sign this Proxy.
When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your
full title.

DATE: _________________________________________
_______________________________________________
_______________________________________________
Signature(s) (Title(s), if applicable)

g:\shared\domestic\clients\shearson\funds\mtu\proxcrd.doc

<PAGE>
- ------------------------------------------------------------------------------
- --
MANAGED MUNICIPALS PORTFOLIO II INC.
<PAGE>
- ------------------------------------------------------------------------------
- --
MANAGED MUNICIPALS PORTFOLIO II INC.
ANNUAL REPORT August 31, 1993

[LOGO]

- ------------------------------------------------------------------------------
- -The green cover has a golden picture of an eagle sitting on top of a shield
with two warriors on either side.
<PAGE>
MANAGED MUNICIPALS
PORTFOLIO II INC.

AUGUST 31, 1993

DEAR SHAREHOLDER:

We are pleased to provide you with the Annual Report and portfolio of
investments for Managed Municipals Portfolio II Inc. for the fiscal year ended
August 31, 1993.

ECONOMIC AND POLITICAL OVERVIEW

Our first year of operation has seen major economic and political
changes. Politically, we have gone from the Bush Administration, through the
electoral process, to the Clinton Presidency. It has led to a number of
changes -- not the least of which is a large tax increase -- whose effects
have yet to be felt, and an approaching health care legislation the
ramifications of which are still unknown.

The economy, in spite of all this uncertainty and change, has pushed
into a moderate recovery; not great by historical standards but not bad. Our
guess is that when most of the uncertainties have cleared up -- and if the
health care package is not too onerous -- the economy will continue to do
better.

INTEREST RATE AND TAX-EXEMPT MARKET REVIEW

Over the past year interest rates waived before the election, and then
rallied to historic lows by the end of our fiscal year. The reasons for the
rally were two-fold. Some felt that President Clinton's tax increase would
weaken the economy, thereby dampening inflation, while others thought that a
real deficit-reduction package would be passed which would cut the federal
deficit by more than $500 billion. We think the economy will survive the tax
increase quite nicely, but are more skeptical about the deficit number. If the
economy begins to pick up momentum, then long rates in the United States have
probably seen their lows for this cycle.

CONTINUED

- ----------------------------------------- 1 ----------------
- ---------------------

<PAGE>

Within the context of interest rates, the municipal market continues to
be for most investors the best after-tax alternative in the fixed income
marketplace. The tax package makes municipals even more valuable than before
as many investors will be hit with a significant rate increase. Currently,
municipal yields are trading at 88% of long government bond yields which is
the cheapest ratio of municipal-to-taxable bond yields in several years. This
means that over the next year, regardless of market direction, municipals
should outperform Treasuries on a comparative basis.

One of the main reasons tax-exempts have been so attractive is the
record amount of new issues coming to market. Municipalities are doing what
many homeowners are doing with high interest rate mortgages: they are issuing
new, lower-rate debt to pay off the older, more expensive coupons. This
process can continue as long as markets trade to lower rates. But if rates
ever move back up, then all the new issue refunding deals will rapidly
evaporate. When that occurs we'll see tax-exempts become much more defensive
than taxable paper because the lower level of supply will not keep pace with
the higher level of demand.

INVESTMENT STRATEGY

Our investment goals are to provide you with a competitive level of tax-
free income consistent with a prudent and conservative approach to credit
quality, and preservation of capital based on a total-return philosophy of
managing assets. Both goals -- income and capital preservation -- require very
different disciplines, but they are compatible. The Portfolio's income stream
is derived from coupon interest and nothing else; we attempt to get a solid
level of income from a portfolio of primarily investment grade paper in order
to minimize our exposure to credit risk. In our first year, this has led us to
maintain our holdings of AA and AAA paper between 40% and 50% of the entire
portfolio. Since the economy was fairly weak, we felt this put our exposure to
soft economic conditions at a minimum.

The other goal of the Portfolio is preservation of capital or, as we
consider it, managing interest rate risk. We do this by positioning the
maturities of the Portfolio based on our outlook for interest rates. In broad
terms, this means the average life of the fund is longer if we are
constructive or optimistic, and shorter if we are more cautious. By moving in
on the yield curve, our shorter average maturity (currently 21 years) should
limit the volatility of our net asset value, which is a more prudent and
conservative strategy than some of our competitors. By

CONTINUED

- ------------------------------------ 2 ----------
- --------------------------

<PAGE>
combining the two strategies for tax-free income and preservation of capital,
we can provide a solid, tax-free income stream within a prudent, conservative,
interest rate framework.

OUTLOOK

The outlook for tax-free investment is extremely bright, especially
within today's new tax structure. However, with the historic post-election
rally in interest rates, we may very well have seen the bulk of the drop in
long-term U.S. interest rates. We will continue to maintain a very high-grade
portfolio and when opportunity presents itself we may very well invest a
greater portion of the Portfolio in intermediate maturity bonds. This should
allow us to continue to provide a consistent level of income, but with less
fluctuations in net asset value. We believe this position will best serve the
interests of our shareholders.

We appreciate your support and interest during the Portfolio's first
year of operations. We want to assure you that we remain committed and
sensitive to your investment needs and financial goals, which we see as our
primary responsibility. If you have any questions or comments concerning your
investment in the Portfolio, please do not hesitate to contact either us or
The Shareholder Services Group, Inc. at (800) 331-1710.

Sincerely,

Heath B. McLendon Joseph P. Deane
CHAIRMAN OF THE BOARD VICE PRESIDENT AND
INVESTMENT OFFICER

October 15, 1993

- ----------------------------------------- 3 ----------------
- ---------------------

<PAGE>
UNAUDITED FINANCIAL DATA
PER SHARE OF COMMON STOCK

<TABLE>
<CAPTION>
NYSE NET ASSET DIVIDEND
CLOSING PRICE VALUE PAID
- ------------- --------- --------
<S> <C> <C>
<C>
September 30, 1992*................ -- $12.00
--
October 31, 1992................... $11.375 11.64
--
November 30, 1992.................. 11.625 12.09
--
December 31, 1992.................. 11.375 12.25
$0.060
January 31, 1993................... 11.625 12.40
0.060
February 28, 1993.................. 12.375 13.06
0.060
March 31, 1993..................... 12.125 12.81
0.061
April 30, 1993..................... 12.375 12.93
0.061
May 31, 1993....................... 12.125 12.97
0.061
June 30, 1993...................... 12.375 13.16
0.061
July 31, 1993...................... 12.375 13.08
0.061
August 31, 1993.................... 12.625 13.37
0.061
</TABLE>

DIVIDEND DATA** FOR THE PERIOD ENDED AUGUST 31, 1993*

<TABLE>
<CAPTION>
EQUIVALENT TAXABLE DISTRIBUTION RATE
------------
- -----------------PER SHARE ANNUALIZED
ASSUMING ASSUMING
DIVIDEND DISTRIBUTION 31% FEDERAL 36% FEDERAL
DISTRIBUTION RATE TAX BRACKET TAX BRACKET
- ------------ ------------ ----------- -----------
<S> <C> <C> <C>
$0.5460 5.45% 7.90%
8.52%
<FN>
- ------------
* The Portfolio commenced operations on September 24, 1992.
** Based on August 31, 1993 net asset value of $13.37 per share. </TABLE>

Each registered shareholder is considered a participant in the Portfolio's
Dividend Reinvestment Plan, unless the shareholder elects to receive all
dividends and distributions in cash, or unless the shareholder's shares are
registered in the name of a broker, bank or nominee (other than Smith Barney
Shearson Inc.) which does not provide the service. Questions and
correspondence concerning the Dividend Reinvestment Plan should be directed to
The Shareholder Services Group, Inc., P.O. Box 1376, Boston, Massachusetts
02104.

- ------------------------------------ 4 ----------
- --------------------------

<PAGE>
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1993

<TABLE>
<S> <C>
KEY TO INSURANCE ABBREVIATIONS

AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Federal Guaranty Insurance Corporation
MBIA -- Municipal Bond Investors Assurance
</TABLE>

<TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P
(Note 1)
<C> <S> <C> <C>
<C>
- ---------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES -- 95.5%
ALASKA -- 5.6%
Alaska Industrial Development & Exploration, Series A:
$ 3,000,000 6.375% due 4/1/08 A
A- $ 3,161,250 3,145,000 6.500% due 4/1/14
A A- 3,290,456 2,000,000 Valdez, Alaska,
Marine Term A,
(B.P. Pipelines),
5.800% due 8/1/25 A1 AA- 2,032,500
ARIZONA -- 1.3%
1,875,000 Arizona State, Power Authority
Resource Recovery, Hoover
Uprating, (MBIA Insured),
5.400% due 10/1/08 Aaa AAA 1,919,531
CALIFORNIA -- 6.3%
2,230,000 Orange County, California,
Water District Authority,
Certificates of Participation,
5.500% due 8/15/10 Aa AA
2,238,363
3,555,000 Pleasanton, California, Joint
Powers Filing, Series A,
5.600% due 9/2/00 Baa1 NR 3,599,438
10,000,000 San Joaquin Hills, California,
Transportation Corridor Agency,
Toll Road Revenue, Senior Lien,
Zero Coupon due 1/1/20 NR NR 1,587,500
1,850,000 Torrance, California, (Little
Company of Mary Hospital),
6.875% due 7/1/15 NR A 2,048,875
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 5
- ------------------------------------

<PAGE>
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1993 (CONTINUED) <TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P
(Note 1)
- --------------------------------------------------------------------------<C>
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
COLORADO -- 10.3%
$ 4,000,000 Colorado Springs, Colorado,
Airport Revenue, Series A,
7.000% due 1/1/22 NR BBB $ 4,320,000
30,000,000 Dawson Ridge, Colorado,
Metropolitan District #1,
Zero Coupon due 10/1/22 Aaa NR 4,800,000
6,250,000 Denver, Colorado, Airport
Revenue, Series C,
6.125% due 11/15/25 Baa1 BBB 6,289,063
CONNECTICUT -- 4.3%
6,000,000 Connecticut State, Resource
Recovery Project, City & County
Airport Revenue, (American Fuel
Company Project), Series A,
6.450% due 11/15/22 A2 A+
6,450,000
FLORIDA -- 10.2%
4,000,000 Florida State Turnpike Authority
Revenue, Series A, (FGIC
Insured),
5.500% due 7/1/10 Aaa AAA 4,070,000
2,055,000 Hillsborough County, Florida,
Aviation Revenue,
(Tampa International Airport),
(FGIC Insured),
5.375% due 10/1/08 Aaa AAA 2,072,981
2,470,000 Hillsborough County, Florida,
Utilities Refunding Revenue,
(MBIA Insured),
5.400% due 8/1/11 Aaa AAA 2,485,438
6,000,000 Tampa, Florida, Revenue Bonds,
(Aquarium Project),
7.750% due 5/1/27 NR NR 6,697,500
HAWAII -- 1.4%
2,000,000 Honolulu, Hawaii, City &
County Refunding, Series B,
5.500% due 10/1/11 Aa AA
2,082,500
</TABLE>

SEE NOTES TO
FINANCIAL STATEMENTS.

- ---------------------------------------- 6
- ------------------------------------

<PAGE>
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1993 (CONTINUED) <TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P
(Note 1)
- --------------------------------------------------------------------------<C>
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
IOWA -- 1.1%
$ 1,500,000 Dawson City, Iowa, Industrial
Development Revenue,
(Cargill Inc. Project),
6.500% due 7/15/12 NR AA- $
1,633,125
MAINE -- 3.3%
5,000,000 Maine Municipal Bond Bank,
Refunding Revenue, Series A,
5.500% due 11/1/09 Aa A+
5,043,750
MASSACHUSETTS -- 1.4%
2,000,000 Commonwealth of Massachusetts,
Conservation Loan, Series D,
5.750% due 5/1/12 A A 2,047,500
MICHIGAN -- 6.4%
5,600,000 Midland County, Michigan,
Economic Development
Corporation, Pollution
Control Revenue,
LTD Obligation, Series B,
9.500% due 7/23/09 NR NR
6,475,000
3,000,000 University of Michigan, Hospital
Revenue, Series A,
5.750% due 12/1/12 Aa AA
3,071,250
MONTANA -- 1.3%
2,000,000 Montana State Board
Investment Resources,
(Recovery Yellowstone Energy),
7.000% due 12/31/19 NR NR
2,020,000
NEVADA -- 3.4%
4,650,000 Clark County, Nevada, Industrial
Development Revenue,
(Southwest Gas Corporation),
7.500% due 9/1/32 Ba2 BBB- 5,138,250
NEW JERSEY -- 4.1%
4,000,000 New Jersey, Economic Development
Authority, Electric Energy
Facility Revenue, (Vineland
Cogeneration Project),
7.875% due 6/1/19 NR NR 4,475,000
</TABLE>

SEE NOTES TO
FINANCIAL STATEMENTS.

- ---------------------------------------- 7
- ------------------------------------

<PAGE>
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1993 (CONTINUED) <TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P
(Note 1)
- --------------------------------------------------------------------------<C>
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
NEW JERSEY (CONTINUED)
$ 1,500,000 Union County, New Jersey,
Utilities Authority, Solid Waste
Revenue, Series A,
7.200% due 6/15/14 NR A- $
1,655,625
NEW YORK -- 4.6%
New York State Dormitory Authority Revenue:
1,880,000 (City University),
5.750% due 7/1/06 Baa1 BBB 1,929,350
5,000,000 (State University Educational
Facilities), Series A,
5.500% due 5/15/06 Baa1 BBB+ 5,037,500
NORTH CAROLINA -- 2.4%
2,000,000 Charlotte, North Carolina,
Certificates of Participation,
(Convention Facilities Project),
Series C, (AMBAC Insured),
5.250% due 12/1/13 Aaa AAA 1,972,500
1,500,000 Coastal Regional Solid Waste
Management Disposal Authority,
North Carolina, Solid Waste
Revenue,
6.500% due 6/1/08 A BBB 1,610,625
OHIO -- 3.3%
1,000,000 Franklin County, Ohio, Tax &
Leasing Revenue, Convention
Facilities, (MBIA Insured),
5.850% due 12/1/19 Aaa AAA 1,042,500
3,800,000 Montgomery County, Ohio, General
Obligation,
5.300% due 9/1/07 Aa AA 3,880,750
OKLAHOMA -- 2.8%
4,000,000 Grand River Dam Authority,
Oklahoma, Refunding Revenue,
5.500% due 6/1/10 A A- 4,125,000
PENNSYLVANIA -- 4.0%
6,000,000 Pennsylvania State, Certificates
of Participation,
5.250% due 7/1/11 Aaa AAA 5,932,500
</TABLE>

SEE NOTES TO
FINANCIAL STATEMENTS.

- ---------------------------------------- 8
- ------------------------------------

<PAGE>
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1993 (CONTINUED) <TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P
(Note 1)
- --------------------------------------------------------------------------<C>
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
RHODE ISLAND -- 6.9%
$ 2,000,000 Rhode Island Depositors,
Economic Special Obligation,
Refunding, Series B, (MBIA
Insured),
5.250% due 8/1/21 Aaa AAA $ 1,965,000
3,000,000 Rhode Island Housing &
Mortgage Finance Agency,
Home Ownership Revenue,
6.750% due 10/1/25 Aa AA+
3,195,000
5,250,000 Rhode Island State, Public
Buildings Authority,
(AMBAC Insured),
5.250% due 2/1/09 Aaa AAA 5,217,188
SOUTH CAROLINA -- 4.3%
Myrtle Beach, South Carolina, (Myrtle Beach Convention
Center):
Certificates of Participation:
2,120,000 6.875% due 7/1/07 Baa1 BBB+ 2,292,250
4,000,000 6.875% due 7/1/17 Baa1 BBB+ 4,220,000
TEXAS -- 5.6%
5,000,000 Sam Rayburn, Texas, Municipal
Power Authority, Series A,
6.750% due 10/1/14 Baa1 BBB 5,356,250
3,000,000 Texas State, General Obligation,
Refunding, Series B,
5.500% due 10/1/10 Aa Aa
3,045,000
VIRGINIA -- 1.2%
500,000 University of Virginia, Series
B,
5.250% due 6/1/07 Aa AA+ 505,000
1,265,000 Virginia State, Resource
Authority, Solid Waste Disposal,
Series B,
5.500% due 5/1/06 NR AA 1,296,623
- ----------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS AND NOTES
(COST $134,748,052) 143,327,931
- ----------------------------------------------------------------------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 9
- ------------------------------------

<PAGE>
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1993 (CONTINUED) <TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P
(Note 1)
- --------------------------------------------------------------------------<C>
<S> <C> <C> <C>
SHORT-TERM TAX-EXEMPT INVESTMENTS -- 3.5%
MICHIGAN -- 2.0%
$ 2,900,000 Detroit, Michigan, Tax
Increment Authority,
2.250% due 10/1/10++ NR A-1 $ 2,900,000
NEW YORK -- 1.1%
1,700,000 New York City, New York,
Adjustable Rate General
Obligation Bonds, Sub-Series
A-4,
2.450% due 8/1/21+ Vm1 A-1 1,700,000
WYOMING -- 0.4%
600,000 Sublette County, Wyoming,
Pollution Control Revenue,
2.500% due 7/1/17+ P-1 A-1+ 600,000
- ----------------------------------------------------------------------------
TOTAL SHORT-TERM TAX-EXEMPT INVESTMENTS
(COST $5,200,000) 5,200,000
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $139,948,052*) 99.0% 148,527,931 OTHER ASSETS
AND
LIABILITIES (NET) 1.0 1,478,571
- ---------------------------------------------------------------------------NET
ASSETS 100.0% $150,006,502
- ----------------------------------------------------------------------------
<FN>
* Aggregate cost for Federal tax purposes.
+ Variable rate municipal bonds and notes are payable upon not more than one
business day's notice.
++ Variable rate municipal bonds and notes are payable upon not more than
seven
business days' notice. </TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 10
- ------------------------------------

<PAGE>
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1993 (CONTINUED)

SUMMARY OF MUNICIPAL BONDS BY COMBINED RATINGS

(UNAUDITED)

<TABLE>
<CAPTION>
STANDARD
& PERCENT
MOODY'S POOR'S OF VALUE
<S> <C> <C> <C>
Aaa or AAA 21.2%
Aa AA 18.9
A A 19.9
Baa BBB 25.7
NR NR 14.3
- ----------
100.0%
- -------------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 11
- ------------------------------------

<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1993

<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------
ASSETS:
Investments, at value (Cost $139,948,052) (Note 1)
See accompanying schedule $148,527,931
Cash 28,189
Interest receivable 2,162,649
- ---------------------------------------------------------------------------TOTAL ASSETS
150,718,769
- ---------------------------------------------------------------------------LIABILITIES:
Dividends payable $394,981
Investment advisory fee payable (Note 2) 88,382
Administration fee payable (Note 2) 25,252
Transfer agent fees payable (Note 2) 12,217
Custodian fees payable (Note 2) 7,000
Accrued expenses and other payables 184,435
- ---------------------------------------------------------------------------TOTAL LIABILITIES
712,267
- ---------------------------------------------------------------------------NET ASSETS
$150,006,502
- ---------------------------------------------------------------------------NET ASSETS consist of:
Undistributed net investment income $ 768,994
Accumulated net realized gain on investments sold 6,501,430
Unrealized appreciation of investments 8,579,879
Par value 11,217
Paid-in capital in excess of par value 134,144,982
- ---------------------------------------------------------------------------TOTAL NET ASSETS
$150,006,502
- ---------------------------------------------------------------------------NET ASSET VALUE per share
($150,006,502 DIVIDED BY 11,216,668 shares of
common stock outstanding) $13.37
- ----------------------------------------------------------------------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 12
- ------------------------------------

<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED AUGUST 31, 1993*

<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------INVESTMENT INCOME:
Interest $
8,348,037
- ---------------------------------------------------------------------------EXPENSES:
Investment advisory fee (Note 2) $925,705
Administration fee (Note 2) 264,487
Legal and audit fees 89,555
Directors' fees and expenses (Note 2) 41,649
Custodian fees (Note 2) 35,290
Transfer agent fees (Note 2) 28,966
Other 69,090
- ---------------------------------------------------------------------------TOTAL EXPENSES
1,454,742
- ----------------------------------------------------------------------------

NET INVESTMENT INCOME 6,893,295
- ---------------------------------------------------------------------------REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (Notes 1 and 3):
Net realized gain on investments sold during
the period 6,501,430
Net unrealized appreciation of investments
during the period 8,579,879
- ---------------------------------------------------------------------------NET REALIZED AND UNREALIZED
GAIN ON
INVESTMENTS 15,081,309
- ---------------------------------------------------------------------------NET INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS $21,974,604
- ---------------------------------------------------------------------------<FN>
* The Portfolio commenced operations on September 24, 1992.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 13
- ------------------------------------

<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED AUGUST 31, 1993*

<TABLE>
<CAPTION>
PERIOD ENDED 8/31/93*
<S> <C> ---------------------
- ------------------------------------------------------Net investment income
$ 6,893,295
Net realized gain on investments sold during the period 6,501,430
Net unrealized appreciation of investments during the period 8,579,879
- ---------------------------------------------------------------------------Net increase in net assets
resulting from operations 21,974,604
Distributions to shareholders from net investment income (6,124,301)
Net increase in net assets from Portfolio share transactions
(Note 4) 134,500,008
Offering costs charged to paid-in capital (Note 4) (443,817)
- ---------------------------------------------------------------------------Net increase in net assets
149,906,494
NET ASSETS:
Beginning of period 100,008
- ---------------------------------------------------------------------------End of period (including
undistributed net investment income
of $768,994) $150,006,502
- ---------------------------------------------------------------------------<FN>
* The Portfolio commenced operations on September 24, 1992.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 14
- ------------------------------------

<PAGE>
FINANCIAL HIGHLIGHTS

FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT THE PERIOD.

<TABLE>
<CAPTION>
PERIOD ENDED 8/31/93*
<S> <C> ---------------------
- ------------------------------------------------------Operating performance:
Net asset value, beginning of period $12.00
- ---------------------------------------------------------------------------Net investment income
0.62
Net realized and unrealized gain on investments 1.34
- ---------------------------------------------------------------------------Net increase in net assets
resulting from operations 1.96
- ---------------------------------------------------------------------------Offering costs charged to
paid-in capital (0.04)
Dividends from net investment income (0.55)
- ---------------------------------------------------------------------------Net asset value, end of
period $13.37
- ---------------------------------------------------------------------------Market value, end of period
$12.625
- ---------------------------------------------------------------------------Total investment return**
12.14%
- ---------------------------------------------------------------------------Ratios to average net
assets/supplemental data:
Net assets, end of period (in 000's) $149,970
Ratio of operating expenses to average net assets 1.10%+
Ratio of net investment income to average net assets 5.21%+
Portfolio turnover rate 163%
- ---------------------------------------------------------------------------<FN>
* The Portfolio commenced operations on September 24, 1992.
** Total return represents aggregate return based on market value for the
period.
+ Annualized.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 15
- ------------------------------------

<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1993

1. SIGNIFICANT ACCOUNTING POLICIES.
Managed Municipals Portfolio II Inc. (the "Portfolio") was organized as a
corporation under the laws of the State of Maryland on July 23, 1992 and is
registered with the Securities and Exchange Commission as
a non-diversified, closed-end management investment company under
the Investment Company Act of 1940, as amended. The policies descri
by the Portfolio in the preparation of its financial statements i
accounting principles.

PORTFOLIO VALUATION: Investments are valued by The Boston
Company Advisors, Inc. ("Boston Advisors")
after consultation with an independent pricing
service (the "Service") approved by the P
Board of Directors. When, in the judgment of the Service,
quoted bid prices for investments
available and are representative of the bid side of the market,
these investments are valued at the
mean between the quoted bid prices and asked prices.
Investments for which, in the judgment of the
Service, no readily obtainable market quotations are available,
are carried at fair value as determined
by the Service, based on methods that include consideration of:
yields or prices of Municipal
Obligations of comparable quality, coupon, maturity and type;
indications as to values from dealers;
and general market conditions. The Service may use electronic data
processing techniques and/or a
matrix system to determine valuations.
Short-term investments that mature in fewer than 60 days are
valued at amortized cost.

SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade
date. Securities purchased or sold on a when-issued
or delayed-delivery basis may be settled a month or
more after trade date. Realized gains and losses on
investments sold are recorded on the basis of
identified cost. Interest income is recorded on the accrual basis.

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
It is the policy of the Portfolio to make monthly
distributions of substantially all its net investment
income to shareholders. Net realized capital
gains, if any, will be distributed to shareholders at
least once a year. In addition, in order to avoid
the application of a 4% nondeductible excise tax on
certain undistributed amounts of ordinary income
and capital gains, the Portfolio may make an
additional distribution shortly before December 31 in each
year of any undistributed ordinary income
or capital gains and expects to make any other distributions
as are necessary to avoid the application of this tax.
To the extent that net realized capital gains
can be offset by capital losses and loss

- ------------------------------------ 16 ----------------------------------
- --

<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1993 (CONTINUED)

carryforwards, it is the policy of the Portfolio
not to distribute such gains. Income distributions and
capital gain distributions are determined in
accordance with income tax regulations which may differ
from generally accepted accounting principles.
These differences are primarily due to differing
treatments of income and gains on various investment
securities held by the Portfolio, timing
differences and differing characterization of
distributions made by the Portfolio as a whole.

FEDERAL INCOME TAXES: It is the policy of the Portfolio
to qualify as a regulated investment
company, if such qualification is in the best
interest of its shareholders, by complying with the
requirements of the Internal Revenue Code of 1986,
as amended, applicable to regulated investment
companies and by distributing substantially all of
its earnings to its shareholders. Therefore, no
Federal income tax provision is required.

2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND
OTHER RELATED PARTY TRANSACTIONS.

Prior to July 31, 1993, the Portfolio had entered into an investment advisory
agreement (the "Advisory Agreement") with Shearson Lehman Brothers Inc.
("Shearson Lehman Brothers") on
behalf of Shearson Lehman Advisors, a member of
the Asset Management Group of Shearson Lehman Brothers.
Under the Advisory Agreement, the Portfolio pays a
monthly fee at the annual rate of 0.70% of the value
of its average daily net assets.

As of the close of business on July 30, 1993, Primerica Corporation
("Primerica") and Smith Barney, Harris Upham & Co.
Incorporated completed the acquisition of
substantially all of the domestic retail brokerage and
asset management businesses of Shearson Lehman
Brothers and Smith Barney, Harris Upham & Co.
Incorporated was renamed Smith Barney Shearson Inc.
("Smith Barney Shearson").

As of the close of business on July 30, 1993, Greenwich Street Advisors, a
division of Mutual Management Corp.,
which is controlled by Smith Barney Shearson Holdings Inc.
("Holdings"), succeeded Shearson Lehman Advisors
as the Portfolio's investment adviser. Holdings is a
wholly owned subsidiary of Primerica.
The new investment advisory agreement with Greenwich Street
Advisors contains terms and conditions substantially
similar to the investment advisory agreement with
the predecessor investment adviser and provides
for payment of fees at the same rate as was paid to
such predecessor investment adviser.

The Portfolio has entered into an administration agreement (the
"Administration Agreement") with Boston Advisors, an indirect wholly owned

- ----------------------------------------- 17
- -------------------------------------

<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1993 (CONTINUED)

subsidiary of Mellon Bank Corporation ("Mellon").
Under the Administration Agreement, the Fund pays a
monthly fee at the annual rate of 0.20% of the value of
its average daily net assets. Prior to the
close of business on May 21, 1993, Boston Advisors
served as sub-investment adviser and administrator
to the Fund and received fees equal to
the current rate for its services.

No officer, director, or employee of Smith Barney Shearson,
Boston Advisors or of any parent or
subsidiary of those corporations receives any
compensation from the Portfolio for serving as a Director
or officer of the Portfolio. The Portfolio pays each Director,
who is not an officer, director or
employee of Smith Barney Shearson, Boston Advisors
or any of their affiliates, $5,000 per annum plus
$500 per meeting attended and reimburses each
such Director for travel and out-of-pocket expenses.

Boston Safe Deposit and Trust Company, an indirect wholly owned subsidiary of
Mellon, serves as the Portfolio's custodian.
The Shareholder Services Group, Inc., a subsidiary of
First Data Corporation, serves as the Portfolio's transfer agent.

3. SECURITIES TRANSACTIONS.
For the period ended August 31, 1993, cost of purchases and proceeds from
sales of investment securities
(excluding short-term investments) aggregated $342,354,531 and
$214,362,611, respectively.

At August 31, 1993, aggregate gross unrealized
appreciation for all securities in which there was an
excess of value over tax cost amounted to $8,579,879.

4. PORTFOLIO SHARES.
At August 31, 1993, 500 million shares of common stock, with a par value of
$.001 per share were authorized.

Common stock transactions were as follows:

<TABLE>
<CAPTION>
PERIOD ENDED 8/31/93*
<S> <C> <C>
- -------------------------------------------------------------------<CAPTION>
SHARES AMOUNT
<S> <C> <C>
- ------------------------------------INITIAL PUBLIC OFFERING - 9/25/92)
10,500,000 $126,000,000
SUBSEQUENT OFFERING - (10/7/92) 708,334
8,500,008
- ------------------------------------------TOTAL INCREASE
11,208,334 $134,500,008+
- -------------------------------------------------------------------<FN>
* The Portfolio commenced operations on September 25, 1992.
+ Before offering costs charged to paid-in capital of $443,817. </TABLE>

- ------------------------------------ 18 ----------------------------------
- --

<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1993 (CONTINUED)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

NET REALIZED AND
UNREALIZED GAIN/ NET INCREASE IN NET
INVESTMENT NET INVESTMENT (LOSS) ON ASSETS
RESULTING FROM
INCOME INCOME INVESTMENTS
OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
- ----------------------------------------------------------------------------
<CAPTION>
PER PER PER PER
QUARTER ENDED TOTAL SHARE TOTAL SHARE
TOTAL SHARE TOTAL SHARE
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
- ----------------------------------------------------------------------------
November 30,
1992* $1,569,794 $ .14 $1,322,744 $.12 $
136,467 $.01 $ 1,459,211 $.13
February 28,
1993 2,224,608 .20 1,853,650 .17
11,113,679 .99 12,967,329 1.16
May 31,
1993 2,293,737 .20 1,954,811 .17
(896,302) (.08) 1,058,509 .09
August 31,
1993 2,259,898 .20 1,762,090 .16
4,727,465 .42 6,489,555 .58
- ----------------------------------------------------------------------------
<FN>
* The Portfolio commenced operations on September 24, 1992.
</TABLE>

- ----------------------------------------- 19 ---------------
- ----------------------

<PAGE>
ADDITIONAL INFORMATION
(UNAUDITED)

PORTFOLIO MANAGEMENT

Joseph P. Deane, Vice President and Investment Officer of the Portfolio, is
primarily responsible for management of the Portfolio's assets. Mr. Deane has
served the Portfolio in these capacities since its commencement of operations.

DIVIDEND REINVESTMENT PLAN

Under the Portfolio's Dividend Reinvestment (the "Plan"), a shareholder whose
Common Stock is registered in his own name will have all distributions
reinvested automatically by The Shareholder Services Group, Inc. ("TSSG"), as
agent under the Plan, unless the shareholder elects to receive cash.
Distributions with respect to shares registered in the name of a broker-dealer
or other nominee (that is, in "street name") will be reinvested by the broker
or nominee in additional Common Stock under the Plan, but only if the service
is provided by the broker or nominee, and the broker or nominee makes an
election on behalf of the shareholder to participate in the Plan.
Distributions with respect to Common Stock registered in the name of Smith
Barney Shearson will automatically be reinvested by Smith Barney Shearson in
additional shares under the Plan unless the shareholder elects to receive
distributions in cash. A shareholder who holds Common Stock registered in the
name of a broker or other nominee may not be able to transfer the Common Stock
to another broker or nominee and continue to participate in the Plan.
Investors who own Common Stock registered in street name should consult their
broker or nominee for details regarding reinvestment.

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.
Whenever the market price of the Portfolio's Common Stock is equal to or
exceeds the net asset value per share, participants will be issued shares of
Common Stock valued at the greater of (i) net asset value per share or (ii)
95% of the then current market price. If the net asset value per share of
Common Stock at the time of valuation exceeds the market price of the Common
Stock, TSSG will buy shares of the Portfolio's Common Stock on the open
market, on the New York Stock Exchange, Inc. or elsewhere, beginning on the
payment date of the dividend or distribution, until it has expended for such
purchases all of the cash that would otherwise be payable to the participants.
The number of purchased shares that will then be credited to the participants'
accounts will be based on the average per share

- ------------------------------------ 20 ---------
- ---------------------------

<PAGE>
ADDITIONAL INFORMATION
(UNAUDITED) (CONTINUED)

purchase price of the shares so purchased, including brokerage commissions. If
TSSG commences purchases in the open market and the market price of the shares
subsequently exceeds net asset value before the completion of the purchases,
TSSG will attempt to terminate purchases in the open market and cause the
Portfolio to issue the remaining dividend or distribution in shares at net
asset value per share. In this case, the number of shares of Common Stock
received by the participant will be based on the weighted average of prices
paid for shares purchased in the open market and the price at which the
Portfolio issues the remaining shares.

Plan participants are not subject to any charge for reinvesting dividends
or capital gains distributions. Each Plan participant will, however, bear a
proportionate share of brokerage commissions incurred with respect to TSSG's
open market purchases of shares of Common Stock in connection with the
reinvestment of dividends or capital gains distributions. For the fiscal
period ending August 31, 1993, no such brokerage commissions were incurred.

A participant in the Plan will be treated for Federal income tax purposes
as having received, on the dividend payment date, a dividend or distribution
in an amount equal to the cash that the participant could have received
instead of shares of Common Stock.

A shareholder may terminate participation in the Plan at any time by
notifying TSSG in writing. A termination will be effective immediately if
notice is received by TSSG not less than 10 days before any dividend or
distribution record date. Otherwise, the termination will be effective, but
only with respect to any subsequent dividends or distributions. Upon
termination according to a participant's instructions, TSSG will either (a)
issue certificates for the whole shares credited to a Plan account and a check
representing any fractional shares or (b) sell the shares in the market. There
will be a $5.00 fee assessed for liquidation service, plus brokerage
commissions, and TSSG is authorized to sell a sufficient number of a
participant's shares to cover such amounts.

The Plan is described in more detail on pages 27-28 of the Portfolio's
current Prospectus dated September 17, 1992. Information concerning the Plan
may be obtained from TSSG at 1-(800) 331-1710.

- ----------------------------------------- 21 ---------------
- ----------------------

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS AUGUST 31, 1993

To the Shareholders and Board of Directors of Managed Municipals Portfolio II
Inc.:

We have audited the accompanying statement of assets and liabilities of
Managed Municipals Portfolio II Inc., including the schedule of portfolio
investments, as of August 31, 1993, the related statements of operations, the
statement of changes in net assets and the financial highlights for the period
from September 25, 1992 (commencement of operations) through August 31, 1993.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of investments
and cash held by the custodian as of August 31, 1993, and confirmation by
correspondence with brokers as to securities purchased but not received at
that date or other auditing procedures where confirmation from brokers were
not received. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Managed Municipals Portfolio II Inc. as of August 31, 1993, the results of
operations, the changes in its net assets and the financial highlights for the
period from September 25, 1992 (commencement of operations) through August 31,
1993, in conformity with generally accepted accounting principles.

Coopers & Lybrand

Boston, Massachusetts
October 20, 1993

- ------------------------------------ 22 ---------
- ---------------------------

<PAGE>
- ------------------------------------------------------------------------------
- --

THIS REPORT IS SENT TO THE SHAREHOLDERS OF THE MANAGED MUNICIPALS PORTFOLIO II
INC.
FOR THEIR INFORMATION. IT IS NOT A PROSPECTUS, CIRCULAR OR REPRESENTATION
INTENDED FOR USE IN THE
PURCHASE OR SALE OF SHARES OF THE PORTFOLIO OR OF ANY SECURITIES MENTIONED IN
THE REPORT.

- ------------------------------------------------------------------------------
- --
ANNUAL REPORT August 31, 1993

[LOGO]

AUGUST 31, 1993

DEAR SHAREHOLDER:

We are pleased to provide you with the Annual Report and portfolio of
investments for Managed Municipals Portfolio II Inc. for the fiscal year ended
August 31, 1993.

ECONOMIC AND POLITICAL OVERVIEW

INTEREST RATE AND TAX-EXEMPT MARKET REVIEW

CONTINUED

- ----------------------------------------- 1 ----------------
- ---------------------

<PAGE>

INVESTMENT STRATEGY

CONTINUED

- ------------------------------------ 2 ----------
- --------------------------

<PAGE>
combining the two strategies for tax-free income and preservation of capital,
we can provide a solid, tax-free income stream within a prudent, conservative,
interest rate framework.

OUTLOOK

Sincerely,

Heath B. McLendon Joseph P. Deane
CHAIRMAN OF THE BOARD VICE PRESIDENT AND
INVESTMENT OFFICER

October 15, 1993

- ----------------------------------------- 3 ----------------
- ---------------------

<PAGE>
UNAUDITED FINANCIAL DATA
PER SHARE OF COMMON STOCK

DIVIDEND DATA** FOR THE PERIOD ENDED AUGUST 31, 1993*

- ------------------------------------ 4 ----------
- --------------------------

<PAGE>
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1993

<TABLE>
<S> <C>
KEY TO INSURANCE ABBREVIATIONS

AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Federal Guaranty Insurance Corporation
MBIA -- Municipal Bond Investors Assurance
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 5
- ------------------------------------

SEE NOTES TO
FINANCIAL STATEMENTS.

- ---------------------------------------- 6
- ------------------------------------

<PAGE>
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1993 (CONTINUED) <TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P
(Note 1)
- --------------------------------------------------------------------------<C>
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
IOWA -- 1.1%
$ 1,500,000 Dawson City, Iowa, Industrial
Development Revenue,
(Cargill Inc. Project),
6.500% due 7/15/12 NR AA- $
1,633,125
MAINE -- 3.3%
5,000,000 Maine Municipal Bond Bank,
Refunding Revenue, Series A,
5.500% due 11/1/09 Aa A+
5,043,750
MASSACHUSETTS -- 1.4%
2,000,000 Commonwealth of Massachusetts,
Conservation Loan, Series D,
5.750% due 5/1/12 A A 2,047,500
MICHIGAN -- 6.4%
5,600,000 Midland County, Michigan,
Economic Development
Corporation, Pollution
Control Revenue,
LTD Obligation, Series B,
9.500% due 7/23/09 NR NR
6,475,000
3,000,000 University of Michigan, Hospital
Revenue, Series A,
5.750% due 12/1/12 Aa AA
3,071,250
MONTANA -- 1.3%
2,000,000 Montana State Board
Investment Resources,
(Recovery Yellowstone Energy),
7.000% due 12/31/19 NR NR
2,020,000
NEVADA -- 3.4%
4,650,000 Clark County, Nevada, Industrial
Development Revenue,
(Southwest Gas Corporation),
7.500% due 9/1/32 Ba2 BBB- 5,138,250
NEW JERSEY -- 4.1%
4,000,000 New Jersey, Economic Development
Authority, Electric Energy
Facility Revenue, (Vineland
Cogeneration Project),
7.875% due 6/1/19 NR NR 4,475,000
</TABLE>

SEE NOTES TO
FINANCIAL STATEMENTS.

- ---------------------------------------- 7
- ------------------------------------

<PAGE>
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1993 (CONTINUED) <TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P
(Note 1)
- --------------------------------------------------------------------------<C>
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
NEW JERSEY (CONTINUED)
$ 1,500,000 Union County, New Jersey,
Utilities Authority, Solid Waste
Revenue, Series A,
7.200% due 6/15/14 NR A- $
1,655,625
NEW YORK -- 4.6%
New York State Dormitory Authority Revenue:
1,880,000 (City University),
5.750% due 7/1/06 Baa1 BBB 1,929,350
5,000,000 (State University Educational
Facilities), Series A,
5.500% due 5/15/06 Baa1 BBB+ 5,037,500
NORTH CAROLINA -- 2.4%
2,000,000 Charlotte, North Carolina,
Certificates of Participation,
(Convention Facilities Project),
Series C, (AMBAC Insured),
5.250% due 12/1/13 Aaa AAA 1,972,500
1,500,000 Coastal Regional Solid Waste
Management Disposal Authority,
North Carolina, Solid Waste
Revenue,
6.500% due 6/1/08 A BBB 1,610,625
OHIO -- 3.3%
1,000,000 Franklin County, Ohio, Tax &
Leasing Revenue, Convention
Facilities, (MBIA Insured),
5.850% due 12/1/19 Aaa AAA 1,042,500
3,800,000 Montgomery County, Ohio, General
Obligation,
5.300% due 9/1/07 Aa AA 3,880,750
OKLAHOMA -- 2.8%
4,000,000 Grand River Dam Authority,
Oklahoma, Refunding Revenue,
5.500% due 6/1/10 A A- 4,125,000
PENNSYLVANIA -- 4.0%
6,000,000 Pennsylvania State, Certificates
of Participation,
5.250% due 7/1/11 Aaa AAA 5,932,500
</TABLE>

SEE NOTES TO
FINANCIAL STATEMENTS.

- ---------------------------------------- 8
- ------------------------------------

<PAGE>
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1993 (CONTINUED) <TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P
(Note 1)
- --------------------------------------------------------------------------<C>
<S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
RHODE ISLAND -- 6.9%
$ 2,000,000 Rhode Island Depositors,
Economic Special Obligation,
Refunding, Series B, (MBIA
Insured),
5.250% due 8/1/21 Aaa AAA $ 1,965,000
3,000,000 Rhode Island Housing &
Mortgage Finance Agency,
Home Ownership Revenue,
6.750% due 10/1/25 Aa AA+
3,195,000
5,250,000 Rhode Island State, Public
Buildings Authority,
(AMBAC Insured),
5.250% due 2/1/09 Aaa AAA 5,217,188
SOUTH CAROLINA -- 4.3%
Myrtle Beach, South Carolina, (Myrtle Beach Convention
Center):
Certificates of Participation:
2,120,000 6.875% due 7/1/07 Baa1 BBB+ 2,292,250
4,000,000 6.875% due 7/1/17 Baa1 BBB+ 4,220,000
TEXAS -- 5.6%
5,000,000 Sam Rayburn, Texas, Municipal
Power Authority, Series A,
6.750% due 10/1/14 Baa1 BBB 5,356,250
3,000,000 Texas State, General Obligation,
Refunding, Series B,
5.500% due 10/1/10 Aa Aa
3,045,000
VIRGINIA -- 1.2%
500,000 University of Virginia, Series
B,
5.250% due 6/1/07 Aa AA+ 505,000
1,265,000 Virginia State, Resource
Authority, Solid Waste Disposal,
Series B,
5.500% due 5/1/06 NR AA 1,296,623
- ----------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS AND NOTES
(COST $134,748,052) 143,327,931
- ----------------------------------------------------------------------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 9
- ------------------------------------

<PAGE>
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1993 (CONTINUED) <TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P
(Note 1)
- --------------------------------------------------------------------------<C>
<S> <C> <C> <C>
SHORT-TERM TAX-EXEMPT INVESTMENTS -- 3.5%
MICHIGAN -- 2.0%
$ 2,900,000 Detroit, Michigan, Tax
Increment Authority,
2.250% due 10/1/10++ NR A-1 $ 2,900,000
NEW YORK -- 1.1%
1,700,000 New York City, New York,
Adjustable Rate General
Obligation Bonds, Sub-Series
A-4,
2.450% due 8/1/21+ Vm1 A-1 1,700,000
WYOMING -- 0.4%
600,000 Sublette County, Wyoming,
Pollution Control Revenue,
2.500% due 7/1/17+ P-1 A-1+ 600,000
- ----------------------------------------------------------------------------
TOTAL SHORT-TERM TAX-EXEMPT INVESTMENTS
(COST $5,200,000) 5,200,000
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $139,948,052*) 99.0% 148,527,931 OTHER ASSETS
AND
LIABILITIES (NET) 1.0 1,478,571
- ---------------------------------------------------------------------------NET
ASSETS 100.0% $150,006,502
- ----------------------------------------------------------------------------
<FN>
* Aggregate cost for Federal tax purposes.
+ Variable rate municipal bonds and notes are payable upon not more than one
business day's notice.
++ Variable rate municipal bonds and notes are payable upon not more than
seven
business days' notice. </TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 10
- ------------------------------------

<PAGE>
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1993 (CONTINUED)

SUMMARY OF MUNICIPAL BONDS BY COMBINED RATINGS

(UNAUDITED)

<TABLE>
<CAPTION>
STANDARD
& PERCENT
MOODY'S POOR'S OF VALUE
<S> <C> <C> <C>
Aaa or AAA 21.2%
Aa AA 18.9
A A 19.9
Baa BBB 25.7
NR NR 14.3
- ----------
100.0%
- -------------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 11
- ------------------------------------

<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1993

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 12
- ------------------------------------

<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED AUGUST 31, 1993*

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 13
- ------------------------------------

<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
PERIOD ENDED AUGUST 31, 1993*

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 14
- ------------------------------------

<PAGE>
FINANCIAL HIGHLIGHTS

FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT THE PERIOD.

SEE NOTES TO FINANCIAL STATEMENTS.

- ---------------------------------------- 15
- ------------------------------------

<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1993

1. SIGNIFICANT ACCOUNTING POLICIES.
Managed Municipals Portfolio II Inc. (the "Portfolio") was organized as a
corporation under the laws of the State of Maryland on July 23, 1992 and is
registered with the
Securities and Exchange Commission as a non-diversified,
closed-end management investment company under
the Investment Company Act of 1940, as amended.
The policies described below are followed consistently
by the Portfolio in the preparation of its
financial statements in conformity with generally accepted
accounting principles.

PORTFOLIO VALUATION: Investments are valued by
The Boston Company Advisors, Inc. ("Boston Advisors")
after consultation with an independent pricing service
(the "Service") approved by the Portfolio's
Board of Directors. When, in the judgment of the Service,
quoted bid prices for investments are readily
available and are representative of the bid side of the market,
these investments are valued at the
mean between the quoted bid prices and asked prices.
Investments for which, in the judgment of the
Service, no readily obtainable market quotations are available,
are carried at fair value as determined
by the Service, based on methods that include consideration of:
yields or prices of Municipal
Obligations of comparable quality, coupon,
maturity and type; indications as to values from dealers;
and general market conditions.
The Service may use electronic data processing techniques and/or a
matrix system to determine valuations.
Short-term investments that mature in fewer than 60 days are
valued at amortized cost.

SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade
date. Securities purchased or sold on a when-issued or
delayed-delivery basis may be settled a month or
more after trade date. Realized gains and losses on investments
sold are recorded on the basis of
identified cost. Interest income is recorded on the accrual basis.

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
It is the policy of the Portfolio to make monthly
distributions of substantially all its net
investment income to shareholders. Net realized capital
gains, if any, will be distributed to shareholders at least once a year.
In addition, in order to avoid
the application of a 4% nondeductible excise tax on certain
undistributed amounts of ordinary income
and capital gains, the Portfolio may make an additional
distribution shortly before December 31 in each
year of any undistributed ordinary income or capital gains
and expects to make any other distributions
as are necessary to avoid the application of this tax.
To the extent that net realized capital gains
can be offset by capital losses and loss

- ------------------------------------ 16 ----------------------------------
- --

<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1993 (CONTINUED)

carryforwards, it is the policy of the Portfolio not
to distribute such gains. Income distributions and
capital gain distributions are determined in
accordance with income tax regulations which may differ
from generally accepted accounting principles.
These differences are primarily due to differing
treatments of income and gains on various investment
securities held by the Portfolio, timing
differences and differing characterization of distributions
made by the Portfolio as a whole.

FEDERAL INCOME TAXES: It is the policy of the Portfolio
to qualify as a regulated investment
company, if such qualification is in the best interest of its shareholders,
by complying with the
requirements of the Internal Revenue Code of 1986,
as amended, applicable to regulated investment
companies and by distributing substantially all of
its earnings to its shareholders. Therefore, no
Federal income tax provision is required.

2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER
RELATED PARTY TRANSACTIONS.

Prior to July 31, 1993, the Portfolio had entered into an investment advisory
agreement (the "Advisory Agreement") with Shearson Lehman Brothers Inc.
("Shearson Lehman Brothers") on
behalf of Shearson Lehman Advisors, a member of the Asset
Management Group of Shearson Lehman Brothers.
Under the Advisory Agreement, the Portfolio
pays a monthly fee at the annual rate of 0.70% of the value
of its average daily net assets.

As of the close of business on July 30, 1993, Primerica Corporation
("Primerica") and Smith Barney, Harris Upham & Co.
Incorporated completed the acquisition of
substantially all of the domestic retail brokerage
and asset management businesses of Shearson Lehman
Brothers and Smith Barney, Harris Upham & Co.
Incorporated was renamed Smith Barney Shearson Inc.
("Smith Barney Shearson").

As of the close of business on July 30, 1993, Greenwich Street Advisors, a
division of Mutual Management Corp., which is controlled
by Smith Barney Shearson Holdings Inc.
("Holdings"), succeeded Shearson Lehman Advisors
as the Portfolio's investment adviser. Holdings is a
wholly owned subsidiary of Primerica.
The new investment advisory agreement with Greenwich Street
Advisors contains terms and conditions substantially
similar to the investment advisory agreement with
the predecessor investment adviser and provides
for payment of fees at the same rate as was paid to
such predecessor investment adviser.

The Portfolio has entered into an administration agreement (the
"Administration Agreement") with Boston Advisors, an indirect wholly owned

- ----------------------------------------- 17
- -------------------------------------

<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1993 (CONTINUED)

subsidiary of Mellon Bank Corporation ("Mellon").
Under the Administration Agreement, the Fund pays a
monthly fee at the annual rate of 0.20% of the value
of its average daily net assets. Prior to the
close of business on May 21, 1993, Boston Advisors
served as sub-investment adviser and administrator
to the Fund and received fees equal to the current rate for its services.

No officer, director, or employee of Smith Barney Shearson,
Boston Advisors or of any parent or
subsidiary of those corporations receives any
compensation from the Portfolio for serving as a Director
or officer of the Portfolio. The Portfolio pays each Director,
who is not an officer, director or
employee of Smith Barney Shearson,
Boston Advisors or any of their affiliates, $5,000 per annum plus
$500 per meeting attended and reimburses each such Director
for travel and out-of-pocket expenses.

3. SECURITIES TRANSACTIONS.
For the period ended August 31, 1993, cost of purchases and proceeds from
sales of investment securities (excluding short-term investments)
aggregated $342,354,531 and
$214,362,611, respectively.

At August 31, 1993, aggregate gross unrealized
appreciation for all securities in which there was an
excess of value over tax cost amounted to $8,579,879.

4. PORTFOLIO SHARES.
At August 31, 1993, 500 million shares of common stock, with a par value of
$.001 per share were authorized.

Common stock transactions were as follows:

<TABLE>
<CAPTION>
PERIOD ENDED 8/31/93*
<S> <C> <C>
- -------------------------------------------------------------------<CAPTION>
SHARES AMOUNT
<S> <C> <C>
- ---------------------------------INITIAL PUBLIC OFFERING - 9/25/92)
10,500,000 $126,000,000
SUBSEQUENT OFFERING - (10/7/92) 708,334
8,500,008
- ---------------------------------------TOTAL INCREASE
11,208,334 $134,500,008+
- -------------------------------------------------------------------<FN>
* The Portfolio commenced operations on September 25, 1992.
+ Before offering costs charged to paid-in capital of $443,817. </TABLE>

- ------------------------------------ 18 ----------------------------------
- --

<PAGE>
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1993 (CONTINUED)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------

QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

NET REALIZED AND
UNREALIZED GAIN/ NET INCREASE IN NET
INVESTMENT NET INVESTMENT (LOSS) ON ASSETS RESULTING FROM
INCOME INCOME INVESTMENTS OPERATIONS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
<CAPTION>
PER PER PER PER
QUARTER ENDED TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL
SHARE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
November 30,
1992* $1,569,794 $ .14 $1,322,744 $.12 $ 136,467 $.01
$ 1,459,211 $.13
February 28,
1993 2,224,608 .20 1,853,650 .17 11,113,679 .99 12,967,329 1.16
May 31,
1993 2,293,737 .20 1,954,811 .17 (896,302) (.08) 1,058,509 .09
August 31,
1993 2,259,898 .20 1,762,090 .16 4,727,465 .42 6,489,555 .58
- ----------------------------------------------------------------------------
<FN>
* The Portfolio commenced operations on September 24, 1992.
</TABLE>

- ------------------- 19 -------------------------------------

<PAGE>
ADDITIONAL INFORMATION
(UNAUDITED)

PORTFOLIO MANAGEMENT

Joseph P. Deane, Vice President and Investment Officer of the Portfolio, is
primarily responsible for management of the Portfolio's assets.
Mr. Deane has served the Portfolio in these capacities
since its commencement of operations.

DIVIDEND REINVESTMENT PLAN

Under the Portfolio's Dividend Reinvestment (the "Plan"), a shareholder whose
Common Stock is registered in his own name will have
all distributions reinvested automatically by The Shareholder
Services Group, Inc. ("TSSG"), as agent under the Plan,
unless the shareholder elects to receive cash. Distributions with
respect to shares registered in the name of a broker-dealer
or other nominee (that is, in "street name") will be
reinvested by the broker or nominee in additional
Common Stock under the Plan, but only if the service is provided by the
broker or nominee, and the broker or nominee makes an
election on behalf of the shareholder to participate in the Plan.
Distributions with respect to Common Stock registered
in the name of Smith Barney Shearson will automatically be
reinvested by Smith Barney Shearson in additional shares
under the Plan unless the shareholder elects to receive
distributions in cash. A shareholder who holds
Common Stock registered in the name of a broker or other nominee may not
be able to transfer the Common Stock to another broker or nominee
and continue to participate in the Plan. Investors who
own Common Stock registered in street name should
consult their broker or nominee for details regarding reinvestment.

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. Whenever the market price of
the Portfolio's Common Stock is equal to or exceeds the net asset
value per share, participants will be issued shares of Common Stock
valued at the greater of (i) net asset value per
share or (ii) 95% of the then current market price.
If the net asset value per share of Common Stock at the time of
valuation exceeds the market price of the Common Stock,
TSSG will buy shares of the Portfolio's Common Stock on the open
market, on the New York Stock Exchange, Inc. or elsewhere,
beginning on the payment date of the dividend or distribution,
until it has expended for such purchases all of the cash
that would otherwise be payable to the participants. The number
of purchased shares that will then be credited to the participants'
accounts will be based on the average per share

- ------------------- 20 ------------------------------------

<PAGE>
ADDITIONAL INFORMATION
(UNAUDITED) (CONTINUED)

purchase price of the shares so purchased, including brokerage
commissions. If TSSG commences purchases in the open
market and the market price of the shares subsequently
exceeds net asset value before the completion of the purchases,
TSSG will attempt to terminate purchases in the open market
and cause the Portfolio to issue the remaining dividend or
distribution in shares at net asset value per share.
In this case, the number of shares of Common Stock received by the
participant will be based on the weighted average of
prices paid for shares purchased in the open market and the price at
which the Portfolio issues the remaining shares.

Plan participants are not subject to any charge for
reinvesting dividends or capital gains distributions. Each Plan
participant will, however, bear a proportionate share of
brokerage commissions incurred with respect to TSSG's open
market purchases of shares of Common Stock in connection with
the reinvestment of dividends or capital gains
distributions. For the fiscal period ending August 31, 1993,
no such brokerage commissions were incurred.

A participant in the Plan will be treated for Federal income
tax purposes as having received, on the dividend payment
date, a dividend or distribution in an amount equal to the
cash that the participant could have received instead of
shares of Common Stock.

A shareholder may terminate participation in the Plan at any time by
notifying TSSG in writing. A termination will be effective
immediately if notice is received by TSSG not less than 10
days before any dividend or distribution record date.
Otherwise, the termination will be effective, but only with respect
to any subsequent dividends or distributions.
Upon termination according to a participant's instructions, TSSG will
either (a) issue certificates for the whole shares credited to a
Plan account and a check representing any fractional
shares or (b) sell the shares in the market.
There will be a $5.00 fee assessed for liquidation service, plus brokerage
commissions, and TSSG is authorized to sell a sufficient number
of a participant's shares to cover such amounts.

The Plan is described in more detail on pages 27-28 of the Portfolio's
current Prospectus dated September 17, 1992.
Information concerning the Plan may be obtained from TSSG at 1-(800) 331-
1710.

- --------------- 21 -------------------------------------

<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS AUGUST 31, 1993

To the Shareholders and Board of Directors of
Managed Municipals Portfolio II Inc.:

We have audited the accompanying statement of assets and liabilities of
Managed Municipals Portfolio II Inc.,
including the schedule of portfolio investments,
as of August 31, 1993, the related
statements of operations, the statement of changes
in net assets and the financial highlights for the period from
September 25, 1992 (commencement of operations)
through August 31, 1993. These financial statements and financial
highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with
generally accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance
about whether the financial statements and financial highlights are
free of material misstatement.
An audit includes examining, on a test basis,
evidence supporting the amounts and
disclosures in the financial statements.
Our procedures included confirmation of investments and cash held by the
custodian as of August 31, 1993, and confirmation
by correspondence with brokers as to securities purchased but not
received at that date or other auditing procedures
where confirmation from brokers were not received. An audit also
includes assessing the accounting principles
used and significant estimates made by management,
as well as evaluating the
overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and
financial highlights referred to
above present fairly, in all material respects,
the financial position of Managed Municipals Portfolio II Inc. as of
August 31, 1993, the results of operations,
the changes in its net assets and the
financial highlights for the period
from September 25, 1992 (commencement of operations)
through August 31, 1993, in conformity with generally accepted
accounting principles.

Coopers & Lybrand

Boston, Massachusetts
October 20, 1993

- ---------- 22 ------------------------------------

<PAGE>
- -------------------------------------------------

THIS REPORT IS SENT TO THE SHAREHOLDERS OF THE
MANAGED MUNICIPALS PORTFOLIO II INC.
FOR THEIR INFORMATION. IT IS NOT A PROSPECTUS,
CIRCULAR OR REPRESENTATION INTENDED FOR USE IN THE
PURCHASE OR SALE OF SHARES OF THE PORTFOLIO OR
OF ANY SECURITIES MENTIONED IN THE REPORT.

- ----------------------------------