<PAGE>
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MANAGED MUNICIPALS
PORTFOLIO II INC.
QUARTERLY REPORT
November 30, 1994
[LOGO]
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Front cover showing a crest/emblem on the bottom of page with an eagle and two
cupids at the top of the page the fund name is centered.
<PAGE>
MANAGED MUNICIPALS
PORTFOLIO II INC.
NOVEMBER 30, 1994
DEAR SHAREHOLDER:
The end of the past quarter saw increased volatility in the bond market.
Both the taxable and tax-exempt markets came under price pressure because of
strong tax-related selling by mutual funds during late October 1994. This
generally resulted in a decrease in prices for fixed-income securities,
which was reflected in the decline in the net asset value per share of
Managed Municipals Portfolio II Inc. (the "Portfolio"). Many other
closed-end funds -- particularly those that are leveraged -- experienced
additional selling pressure during this period. Unlike those funds, the
Portfolio is not leveraged, and we think that over time this should allow
for a lower volatility of net asset value per share which should be
reflected in its market value.
The Portfolio paid tax-exempt dividends totaling $0.183 per share during
the past quarter. This equates to an annualized yield of 6.61% based on its
November 30, 1994 net asset value per share of $11.07 and 7.14% based on the
New York Stock Exchange closing price of $10.25 per share on that same date.
The Portfolio continues to trade on the New York Stock Exchange at a
discount to its net asset value, offering investors an opportunity to
purchase a portfolio of high-quality, tax-exempt, income-producing
securities at an attractive price.
Despite the volatility of the municipal bond market over the past
months, our outlook for the future is much more positive. We believe that
the Federal Reserve has done a credible job of fighting inflation, and this
should translate into lower long-term interest rates as well as lower
volatility in the bond market.
For the near future, our investment strategy will be to add to the
Portfolio AA- and AAA-rated securities with coupons that are at a reasonable
market discount to current rates. We believe that this strategy should
provide the Portfolio with an opportunity to see an increase in the value of
CONTINUED
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its holdings during a better market environment, yet at the same time
minimize its exposure to the risk that higher-coupon bonds could be
prematurely called.
At the end of this reporting period, nearly half of the Portfolio's
assets were invested in municipal bonds rated AAA/Aaa and AA/Aa by Standard
& Poor's Corporation or Moody's Investors Service, Inc. The Portfolio's
weighted average maturity was 25.4 years. The majority of the holdings were
in water/sewer, transportation and general obligation issues.
Please remember that The Shareholder Services Group, Inc., the
Portfolio's transfer agent, can be reached at (800) 331-1710 should you have
any questions about your investment in the Portfolio. We appreciated your
confidence during the difficult investment environment of 1994, and join you
in looking forward to a more benign 1995.
Sincerely,
Heath B. McLendon Joseph P. Deane
CHAIRMAN OF THE BOARD VICE PRESIDENT AND
INVESTMENT OFFICER
January 16, 1995
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<PAGE>
UNAUDITED FINANCIAL DATA
PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
CAPITAL
GAINS DIVIDEND
NYSE NET ASSET DIVIDEND DIVIDEND REINVESTMENT
CLOSING PRICE VALUE PAID PAID PRICE
-------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
December 31, 1993...... $12.125 $12.95 $ -- $0.590 $12.76
January 31, 1994....... 12.375 12.95 0.061 -- 12.70
February 28, 1994...... 12.000 12.71 0.061 -- 12.12
March 31, 1994......... 11.375 12.08 0.061 -- 11.81
April 30, 1994......... 11.375 12.08 0.061 -- 11.80
May 31, 1994........... 11.500 12.07 0.061 -- 11.77
June 30, 1994.......... 11.250 11.95 0.061 -- 11.53
July 31, 1994.......... 11.625 12.17 0.061 -- 12.00
August 31, 1994........ 11.500 12.15 0.061 -- 11.66
September 30, 1994..... 11.125+ 11.84+ 0.061 -- 11.26
October 31, 1994....... 11.125+ 11.61+ 0.061 -- 10.98
November 30, 1994...... 10.250+ 10.81+ 0.061 -- 10.52
</TABLE>
DIVIDEND DATA*
FOR THE PERIOD ENDED NOVEMBER 30, 1994
<TABLE>
<CAPTION>
EQUIVALENT TAXABLE DISTRIBUTION RATE
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ASSUMING
PER SHARE ANNUALIZED ASSUMING ASSUMING ASSUMING 39.6%
DIVIDEND DISTRIBUTION 28% FEDERAL 31% FEDERAL 36% FEDERAL FEDERAL
DISTRIBUTIONS RATE TAX BRACKET TAX BRACKET TAX BRACKET TAX BRACKET
------------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$0.061 6.61% 9.18% 9.58% 10.33% 10.94%
<FN>
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* Based on November 30, 1994 net asset value of $11.07 per share.
+ As of record date, September 23, 1994, October 24, 1994 and November 22,
1994, respectively.
</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
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.
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<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
KEY TO INSURANCE ABBREVIATIONS
AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Federal Guaranty Insurance Corporation
MBIA -- Municipal Bond Investors Assurance
</TABLE>
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
<C> <S> <C> <C> <C>
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MUNICIPAL BONDS AND NOTES--106.8%
ALASKA -- 6.7%
$ 3,145,000 Alaska Industrial Development & Export
Authority, Series A,
6.500% due 4/1/14 A A- $ 2,877,675
7,000,000 Valdez, Alaska, Marine Terminal Revenue, (B.P. Pipelines
Project), Series C,
5.650% due 12/1/28 A1 AA- 5,460,000
CALIFORNIA -- 13.7%
4,240,000 California State, Department of Water Resources, Central
Valley Project,
5.750% due 12/1/19 Aa AA 3,598,700
Los Angeles, California:
6,000,000 Convention & Exhibition Center, Authority Lease Revenue,
(MBIA insured),
5.125% due 8/15/21 Aaa AAA 4,605,000
5,500,000 Waste Water System Revenue, Series D, (FGIC insured),
5.200% due 11/1/21 Aaa AAA 4,262,500
2,000,000 Los Angeles County, California, Metropolitan
Transportation Authority, Sales Tax Revenue, Series B,
(AMBAC insured),
5.250% due 7/1/23 Aaa AAA 1,555,000
835,000 Redding, California, Joint Powers Authority, Solid Waste
and Corp. Yard, Series A,
5.000% due 1/1/05 A BBB+ 721,231
</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
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<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$10,000,000 San Joaquin Hills, California, Transportation Corridor
Agency, Toll Road Revenue, Senior Lien,
Zero Coupon due 1/1/20 NR NR $ 1,400,000
1,000,000 San Jose, California, Redevelopment Agency,
Tax Revenue Project,
(MBIA insured),
5.250% due 8/1/16 Aaa AAA 802,500
COLORADO -- 10.2%
4,000,000 Colorado Springs, Colorado, Airport Revenue, Series A,
7.000% due 1/1/22 NR BBB 3,770,000
30,000,000 Dawson Ridge, Colorado, Metropolitan District #1, Series
A, Escrow to Maturity,
Zero Coupon due 10/1/22 Aaa NR 3,975,000
6,250,000 Denver, Colorado, Airport Revenue, Series C,
6.125% due 11/15/25 Baa BB 4,828,125
FLORIDA -- 9.0%
6,000,000 Florida State, Board of Education, Capital Outlay, Series
E,
5.250% due 6/1/23 Aa AA 4,672,500
2,500,000 Martin County, Florida, Industrial Development Project,
Indiantown Cogeneration, Series A,
7.875% due 12/15/25 Baa3 BBB- 2,475,000
4,000,000 Tampa, Florida, Revenue Bonds, (Aquarium Project),
7.750% due 5/1/27 NR NR 3,930,000
ILLINOIS -- 1.3%
2,000,000 Illinois Educational Facilities
Authority Revenue,
(University of Chicago),
5.700% due 12/1/25 Aaa AA 1,650,000
</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
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<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
IOWA -- 1.2%
$ 1,500,000 Dawson City, Iowa, Industrial
Development Revenue,
(Cargill Inc., Project),
6.500% due 7/15/12 NR AA- $ 1,421,250
MARYLAND -- 6.1%
2,720,000 Anne Arundel County, Maryland, Water and Sewer Revenue,
General Obligation,
5.250% due 4/15/11 Aa1 AA+ 2,301,800
4,000,000 Maryland State Energy Financing Administration, Solid
Waste Disposal, Hagerstown Recycling,
9.000% due 10/15/16 NR NR 3,995,000
1,650,000 Prince George's County, Maryland, Refunding Revenue,
(Dimension Health Corporation),
5.300% due 7/1/24 A NR 1,206,563
MASSACHUSETTS -- 7.7%
2,000,000 Commonwealth of Massachusetts, Conservation Loan, Series
D,
5.750% due 5/1/12 A1 A+ 1,727,500
2,000,000 Commonwealth of Massachusetts, Health and Education
Revenue, Series G, (MBIA insured),
5.375% due 7/1/24 Aaa AAA 1,572,500
4,000,000 Commonwealth of Massachusetts, Industrial Financing
Agency,
9.000% due 8/1/16 NR NR 3,995,000
3,000,000 Commonwealth of Massachusetts, Turnpike Authority,
Turnpike Revenue,
5.000% due 1/1/20 A1 A+ 2,257,500
</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
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<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
MICHIGAN -- 6.9%
$ 1,000,000 Michigan State Strategic
Funding, Limited Obligation
Revenue, (Blue Water
Fiber Project),
8.000% due 1/1/12 NR NR $ 935,000
5,600,000 Midland County, Michigan, Economic Development
Corporation, Pollution Control Revenue, Series B,
9.500% due 7/23/09 NR NR 5,866,000
2,000,000 University of Michigan, Hospital Revenue, Series A,
5.750% due 12/1/12 Aa AA 1,755,000
MONTANA -- 1.4%
2,000,000 Montana State Board Investment Resources Recovery Revenue,
(Yellowstone Energy Project),
7.000% due 12/31/19 NR NR 1,790,000
NEVADA -- 3.5%
4,650,000 Clark County, Nevada, Industrial Development Revenue,
(Southwest Gas Corporation),
7.500% due 9/1/32 Baa3 BBB- 4,266,375
NEW HAMPSHIRE -- 1.9%
3,000,000 New Hampshire Higher Education & Health Revenue, (Mary
Hitchcock Memorial Hospital), (FGIC insured),
5.250% due 8/15/21 Aaa AAA 2,362,500
NEW JERSEY -- 1.2%
1,500,000 Union County, New Jersey, Utilities Authority, Solid Waste
Revenue, Series A,
7.200% due 6/15/14 NR A- 1,434,375
</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
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<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
NEW YORK -- 10.0%
$ 2,000,000 New York City, New York, Municipal Water Financing
Revenue,
6.375% due 6/15/22 A A- $ 1,785,000
1,000,000 New York State Housing Finance Authority, Mortgage
Revenue, Multifamily Housing, Series A,
6.250% due 8/15/25 Aa NR 843,750
6,555,000 New York State Local Government Assistance, Series C,
5.500% due 4/1/22 A A 5,162,063
3,500,000 New York State Thruway
Authority, Local Highway &
Bridge Transportation,
(MBIA insured),
5.750% due 4/1/13 Aaa AAA 3,080,000
2,000,000 New York State Triborough Bridge & Tunnel Authority,
General Purpose Revenue,
5.000% due 1/1/24 Aa A+ 1,455,000
NORTH CAROLINA -- 1.2%
1,500,000 Coastal Regional Solid Waste Management Disposal
Authority, North Carolina, Solid Waste Revenue,
6.500% due 6/1/08 A BBB 1,428,750
OKLAHOMA -- 3.5%
5,000,000 McGee Creek, Oklahoma, Water Revenue Authority, (MBIA
insured),
6.000% due 1/1/23 Aaa AAA 4,381,250
RHODE ISLAND -- 0.6%
850,000 Rhode Island Housing & Mortgage Finance Agency, Home
Ownership Revenue,
5.850% due 4/1/13 Aa AA+ 721,437
</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
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<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
SOUTH CAROLINA -- 6.4%
Myrtle Beach, South Carolina, (Myrtle Beach Convention
Center), Certificates of Participation:
$ 2,120,000 6.875% due 7/1/07 Baa1 BBB+ $ 2,032,550
4,000,000 6.875% due 7/1/17 Baa1 BBB+ 3,720,000
3,000,000 South Carolina State Public
Services Authority,
(FGIC insured),
5.000% due 1/1/25 Aaa AAA 2,205,000
TEXAS -- 4.8%
1,500,000 Burleson, Texas, Independent School District,
6.750% due 8/1/24 Aaa NR 1,453,125
5,000,000 Sam Rayburn, Texas, Municipal Power Agency, Series A,
6.750% due 10/1/14 Baa BB 4,518,750
WEST VIRGINIA -- 2.2%
3,000,000 Marion County, West Virginia, Community Solid Waste
Disposal Facilities Revenue,
7.750% due 12/1/11 NR NR 2,685,000
WASHINGTON -- 3.8%
3,000,000 Washington State, General Obligation Bonds, Series A,
5.750% due 9/1/19 Aa AA 2,531,250
2,700,000 Washington State Public Power
Supply System, No. 3,
5.375% due 7/1/15 Aa AA 2,142,073
WISCONSIN -- 3.5%
Wisconsin Housing & Economic Development Authority, Home
Ownership, Series A:
2,000,000 Home Ownership Revenue,
6.450% due 3/1/17 Aa AA 1,775,000
1,370,000 Housing Revenue,
5.650% due 11/1/23 A1 A 1,058,325
</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
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<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
WISCONSIN (CONTINUED)
$ 2,000,000 Wisconsin State Health and
Educational Facilities, Aurora
Healthcare Obligation,
(MBIA insured),
5.250% due 8/15/23 Aaa AAA $ 1,517,500
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TOTAL INVESTMENTS
(COST $142,384,745*)
106.8% 131,965,417
OTHER ASSETS AND LIABILITIES (NET) (6.8) (8,363,798)
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NET ASSETS 100.0% $123,601,619
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<FN>
* Aggregate cost for Federal tax purposes.
</TABLE>
SUMMARY OF MUNICIPAL BONDS BY COMBINED RATINGS
<TABLE>
<CAPTION>
PERCENT
OF
MOODY'S S&P VALUE
<S> <C> <C> <C>
Aaa or AAA 25.3%
Aa AA 21.7
A A 14.9
Baa BBB 19.4
NR NR 18.7
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100.0%
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</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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NOTES TO PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICY
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 valuation of its portfolio.
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.
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<PAGE>
NOTES TO PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
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QUARTERLY RESULTS OF OPERATIONS
NET REALIZED AND NET INCREASE/
UNREALIZED GAIN/ (DECREASE) IN
INVESTMENT NET INVESTMENT (LOSS) ON NET ASSETS RESULTING
INCOME INCOME INVESTMENTS FROM OPERATIONS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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<CAPTION>
QUARTER PER PER PER PER
ENDED TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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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
November 30,
1993 2,192,534 .20 1,765,112 .16 2,478,339 .22 4,243,451 .38
February 28,
1994 2,185,398 .19 1,776,196 .16 (3,377,219) (.30) (1,601,023) (.14)
May 31, 1994 2,214,185 .20 1,821,700 .16 11,695,051 1.04 13,516,751 1.20
August 31,
1994 2,209,646 .20 1,844,822 .16 (17,719,998) (1.57) (15,875,176) (1.41)
November 30,
1994 2,285,035 .20 1,903,928 .17 (11,803,746) (1.05) (9,899,818) (.88)
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<FN>
* The Portfolio commenced operations on September 24, 1992.
</TABLE>
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THIS REPORT IS SENT TO THE SHAREHOLDERS OF
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.
FD 0836 A5
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