As filed with the Securities and Exchange Commission on December 6, 1996
	Securities Act Registration	No. 33-49982
	Investment Company Act Registration	No. 811-7046
	
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C.  20549
	
	FORM N-2
	REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
	Pre-Effective Amendment No.___
	Post-Effective Amendment No. 4	x
   		
	and/or	
	REGISTRATION STATEMENT UNDER
	THE INVESTMENT COMPANY ACT OF 1940
	AMENDMENT NO. 5	x
	__________________
	Managed Municipals Portfolio II Inc.
	(a Maryland Corporation)
	(Exact Name of Registrant as Specified in Charter)
	388 Greenwich Street 
	New York, New York  10013
	(Address of Principal Executive Offices)
	(212) 723-9218
	(Registrant's Telephone Number, including Area Code)
	Christina T. Sydor, Secretary
	Managed Municipals Portfolio Inc.
	388 Greenwich Street
	New York, New York  10013
	(Name and Address of Agent for Service)
	_____________________
	Copies to:
	Burton M. Leibert, Esq.
	Willkie Farr & Gallagher
	One Citicorp Center
	153 East 53rd Street	
	New York, New York  10022
	_______________
	Approximate Date of Proposed Public Offering:  As soon as practicable after
	the effective date of this Registration Statement.

	If any securities being registered on this form will be offered on a 
delayed or continuous basis in reliance on Rule 415 under the Securities Act 
of 1933, other than securities offered in connection with a dividend 
reinvestment plan, check the following box.  x_______________
	This Registration Statement relates to the registration of an 
indeterminate number of shares solely for market-making transactions.  
Pursuant to Rule 429, this Registration Statement relates to shares previously 
registered on Form N-2. (Registration No. 33-47116).

	It is proposed that this filing will become effective: x when declared 
effective pursuant to section 8(c).

	Registrant amends this Registration Statement under the Securities Act 
of 1933, as amended, on such date as may be necessary to delay its effective 
date until Registrant files a further amendment that specifically states that 
this Registration Statement will thereafter become effective in accordance 
with the provisions of Section 8(a) of the Securities Act of 1933, as amended, 
or until the Registration Statement becomes effective on such date as the 
Securities and Exchange Commission, acting pursuant to Section 8(a), may 
determine.





	MANAGED MUNICIPALS PORTFOLIO II INC.

	Form N-2
	Cross Reference Sheet

Part A
Item No.	Caption	Prospectus Caption

1.	Outside Front Cover		Outside Front Cover of 
Prospectus
2.	Inside Front and Outside Back Cover Page		Inside Front and Outside Back 
Cover Page
		of Prospectus
3.	Fee Table and Synopsis		Prospectus Summary; Fund 
Expenses
4.	Financial Highlights		Financial Highlights
5.	Plan of Distribution		Prospectus Summary; The 
Offering;
6.	Selling Shareholders		Not Applicable
7.	Use of Proceeds..	Use of Proceeds 
8.	General Description of the 
Registrant.........................................	Prospectus Summary;  The 
Portfolio; 			Investment 
Objectives and Policies;  			Description of 
Common Stock; Share Price 			Data; Certain 
Provisions of the Articles of 			Incorporation;  
Appendix.
9.	Management		Management of the Portfolio; 
Description of 
		Common Stock; Custodian and 
Transfer 			Agent
10.	Capital Stock, Long-Term Debt, and Other
	Securities 		Taxation; Dividend 
Reinvestment Plan;
		Dividends and Distributions; 
Description of 		Common Stock; Share 
Price Data
11.	Defaults and Arrears on Senior Securities		Not Applicable
12.	Legal Proceedings		Not Applicable
13.	Table of Contents of the Statement of
	Additional Information		Further Information

Part B		Statement of Additional
Item No.		Information Caption     

14.	Cover Page		Cover Page
15.	Table of Contents		Cover Page
16.	General Information and 
History................................................	The Portfolio; 
Description of Common 			Stock (see 
Prospectus) 
17.	Investment Objective and Policies		Investment Objective and 
Policies; Invest-
		ment Restrictions
18.
	Management.................................................................
 ..............	Management of the Portfolio; 
Directors and 		Executive Officers of 
the Portfolio
19.	Control Persons and Principal Holders of
	 Securities		Not Applicable
20.	Investment Advisory and Other Services		Management of the Portfolio
21.	Brokerage Allocation and Other Practices		Portfolio Transactions
22.	Tax Status		Taxes; Taxation (see 
Prospectus)
23.	Financial Statements		Financial Statements






Part C
Item No.

	Information required to be included in Part C is set forth, under 
the appropriate item so numbered, in Part C of this Registration 
Statement.


                            SMITH BARNEY
                            ------------

       A Member of TravelersGroup [Logo]


                            Managed 
                            Municipals 
                            Portfolio II 
                            Inc.

                            Common Stock             
                                                     
                            388 Greenwich Street     
                            New York, New York 10013 
                                                     
                            FD0505                   
                            
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
   
Prospectus                                                     December 9, 1996
    
--------------------------------------------------------------------------------

388 Greenwich Street
New York, New York 10013
(212) 723-9218

     Managed Municipals Portfolio II Inc. (the "Portfolio") is a
non-diversified, closed-end management investment company that seeks as high a
level of current income exempt from Federal income tax as is consistent with the
preservation of principal. Under normal conditions, the Portfolio will, in
seeking its investment objective, invest substantially all of its assets in
long-term, investment grade obligations issued by state and local governments,
political subdivisions, agencies and public authorities ("Municipal
Obligations"). For a discussion of the risks associated with certain of the
Portfolio's investments, see "Investment Objective and Policies."

     The Portfolio seeks to invest substantially all of its assets in Municipal
Obligations and, under normal conditions, at least 80% of the Portfolio's assets
will be invested in Municipal Obligations rated investment grade by Moody's
Investors Service Inc. ("Moody's"), Standard & Poor's Ratings Group ("S&P"), 
Fitch Investors Service, Inc. ("Fitch") or another nationally-recognized 
statistical rating agency (that is, no lower than Baa, MIG or Prime-I by 
Moody's, BBB, Sp-2
or A-1 by S&P or BBB or F-1 by Fitch). The Portfolio is intended to operate in
such a manner that dividends paid by the Portfolio may be excluded by the
Portfolio's shareholders from their gross incomes for Federal income tax
purposes. See "Investment Objective and Policies" and "Taxation."

   
     This Prospectus sets forth concisely the information about the Portfolio
that a prospective investor ought to know before investing and should be
retained for future reference. A Statement of Additional Information dated
December 9, 1996 (the "SAI") containing additional information about the
Portfolio has been filed with the Securities and Exchange Commission and is
hereby incorporated by reference in its entirety into this Prospectus. A copy of
the Statement of Additional Information may be obtained without charge by
calling or writing to the Portfolio at the telephone number or address set forth
above or by contacting a Smith Barney Financial Consultant.
    

                                                           (Continued on page 2)

SMITH BARNEY INC.
Distributor

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEOUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.


                                                                               1
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
   
Prospectus (continued)                                         December 9, 1996
    
--------------------------------------------------------------------------------

     Smith Barney Inc. ("Smith Barney") intends to make a market in the
Portfolio's Common Stock, although it is not obligated to conduct market-making
activities and any such activities may be discontinued at any time without
notice, at the sole discretion of Smith Barney. The shares of Common Stock that
may be offered from time to time pursuant to this Prospectus were issued and
sold by the Portfolio in a public offering which commenced September 24, 1992,
at a price of $12.00 per share. No assurance can be given as to the liquidity
of, or the trading market for, the Common Stock as a result of any market-making
activities undertaken by Smith Barney. The Portfolio will not receive any
proceeds from the sale of any Common Stock offered pursuant to this Prospectus.


2 
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Table of Contents
--------------------------------------------------------------------------------

Prospectus Summary                                                             4
--------------------------------------------------------------------------------
Portfolio Expenses                                                             8
--------------------------------------------------------------------------------
Financial Highlights                                                           9
--------------------------------------------------------------------------------
The Portfolio                                                                 10
--------------------------------------------------------------------------------
The Offering                                                                  10
--------------------------------------------------------------------------------
Use of Proceeds                                                               10
--------------------------------------------------------------------------------
Investment Objective and Policies                                             10
--------------------------------------------------------------------------------
   
Share Price Data                                                              18
--------------------------------------------------------------------------------
Management of the Portfolio                                                   18
--------------------------------------------------------------------------------
Dividends and Distributions; Dividend Reinvestment Plan                       20
--------------------------------------------------------------------------------
Taxation                                                                      22
    
--------------------------------------------------------------------------------
Description of Common Stock                                                   24
--------------------------------------------------------------------------------
Certain Provisions of the Articles of Incorporation                           25
--------------------------------------------------------------------------------
Custodian and Transfer Agent                                                  25
--------------------------------------------------------------------------------
Experts                                                                       26
--------------------------------------------------------------------------------
Further Information                                                           26
--------------------------------------------------------------------------------
Appendix A                                                                   A-1
--------------------------------------------------------------------------------


                                                                               3
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Prospectus Summary
--------------------------------------------------------------------------------

     The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus and in the SAI. Cross
references in this summary are to headings in the Prospectus.

THE PORTFOLIO The Portfolio is a non-diversified, closed-end management
investment company. See "The Portfolio."

INVESTMENT OBJECTIVE The Portfolio seeks as high a level of current income
exempt from Federal income tax as is consistent with the preservation of
principal. See "Investment Objective and  Policies."

TAX-EXEMPT INCOME The Portfolio is intended to operate in such a manner that
dividends paid by the Portfolio may be excluded by the Portfolio's shareholders
from their gross income for Federal income tax purposes. See "Investment
Objective and Policies" and "Taxation."

QUALITY INVESTMENTS The Portfolio will invest substantially all of its assets in
long-term investment grade Municipal Obligations. At least 80% of the
Portfolio's total assets will be invested in securities rated investment grade
by Moody's, S&P, Fitch or another nationally-recognized rating agency (that is,
rated no lower than Baa, MIG or Prime-1 by Moody's, BBB, SP-2 or A-1 by S&P or
BBB or F-1 by Fitch). Up to 20% of the Portfolio's total assets may be invested
in unrated securities that are deemed by the Portfolio's inves tment manager to
be of a quality comparable to investment grade. See "Investment Objective and
Policies."

   
THE OFFERING The Common Stock is listed for trading on the New York Stock
Exchange, Inc. ("NYSE"). In addition, Smith Barney intends to make a market in
the Common Stock. Smith Barney, however, is not obligated to conduct
market-making activities and any such activities may be discontinued at any time
without notice, at the sole discretion of Smith Barney.
    

LISTING NYSE 

SYMBOL MTU

   
INVESTMENT MANAGER AND ADMINISTRATOR Greenwich Street Advisors (the "Investment
Manager"), a division of Smith Barney Mutual Funds Management Inc. ("SBMFM"),
serves as the Portfolio's investment manager. The Investment Manager provides
investment advisory and management services to investment companies affiliated
with Smith Barney. SBMFM is a wholly owned subsidiary of Smith Barney Holdings
Inc. ("Holdings"), which is in turn a wholly owned subsidiary of Travelers Group
Inc. ("Travelers"). Subject to the supervision and direction of the Portfolio's
Board of Directors, the Investment Manager manages the securities held by the
Portfolio in accordance with the Portfolio's stated investment objective and
policies, makes investment decisions for the Portfolio, places orders to
purchase and sell securities on behalf of the Portfolio and employs professional
portfolio
    


4
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Prospectus Summary (continued)
--------------------------------------------------------------------------------

managers. SBMFM acts as administrator of the Portfolio and in that
capacity provides certain administrative services, including overseeing the
Portfolio's non-investment operations and its relations with other service
providers and providing executive and other officers to the Portfolio. The
Portfolio pays the Investment Manager a fee ("Management Fee") for services
provided to the Portfolio that is computed daily and paid monthly at the annual
rate of 0.70% of the value of the Portfolio's average daily net assets. The
Portfolio will bear other expenses and costs in connection with its operation in
addition to the costs of investment management services. See "Management of the
Portfolio -- Investment Manager." 

CUSTODIAN PNCBank, National Association ("PNCBank") serves as the Fund's
custodian. See "Custodian and Transfer Agent."

TRANSFER AGENT First Data Investor Services Group, Inc. ("First Data") serves as
the Portfolio's transfer agent, dividend-paying agent and registrar. See 
"Custodian and Transfer Agent."

   
DIVIDENDS AND DISTRIBUTIONS The Portfolio expects to pay monthly dividends of
net investment income (income other than net realized capital gains) and to
distribute net realized capital gains, if any, annually. All dividends or
distributions with respect to shares of common stock are reinvested
automatically in additional shares through participation in the Portfolio's
Dividend Reinvestment Plan (the "Plan"), unless a shareholder elects to receive
cash. See "Dividends and Distributions" and "Dividend Reinvestment Plan."

DISCOUNT FROM NET ASSET VALUE The shares of closed-end companies often,
although not always, trade at a discount from their net asset value. Whether
investors will realize gains or losses upon the sale of Common Stock will not
depend upon the Portfolio's net asset value, but will depend entirely on whether
the market price of the Common Stock at the time of the sale is above or below
the original purchase price of the shares. Since the market price of the Common
Stock will be determined by factors such as relative demand for and supply of
such shares in the market, general market and economic conditions and other
factors beyond the control of the Portfolio, the Portfolio cannot predict
whether the Common Stock will continue to trade at, below or above net asset
value. For that reason, shares of the Portfolio's Common Stock are designed
primarily for long-term investors, and investors in the Portfolio's Common Stock
should not view the Portfolio as a vehicle for trading purposes. See "Investment
Objective and Policies -- Risk Factors and Special Considerations" and "Share
Price Data."

     Shares of common stock of closed-end investment companies frequently trade
at a discount from net asset value, or in some cases trade at a premium. Shares
of closed-end investment companies investing primarily in fixed income
securities tend to trade on the basis of income yield on the market price of the
shares and the 
    


                                                                               5
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Prospectus Summary (continued)
--------------------------------------------------------------------------------

   
market price may also be affected by trading volume, general market conditions
and economic conditions and other factors beyond the control of the Portfolio.
As a result, the market price of the Portfolio's shares may be greater or less 
than the net asset value. Since the commencement of the Portfolio's 
operations, the
Portfolio's shares have traded in the market at prices that were equal to, but
generally were below net asset value.

     Some closed-end companies have taken certain actions, including the
repurchase of common stock in the market at market prices and the making of one
or more tender offers for common stock at net asset value, in an effort to
reduce or mitigate the discount, and others have converted to an open-end
investment company, the shares of which are redeemable at net asset value. The
Portfolio's Board of Directors has seen no reason to adopt any of the steps,
which some other closed-end funds have used to address the discount. In
addition, the experience of many closed-end funds suggests that the effect of
many of these steps (other than open-ending) on the discount may be temporary or
insignificant. Accordingly, there can be no assurance that any of these actions
will be taken or, if undertaken, will cause the Portfolio's shares to trade at a
price equal to their net asset value. 

RISK FACTORS AND SPECIAL CONSIDERATIONS The Portfolio will not purchase
securities that are rated lower than Baa by Moody's, BBB by S&P or BBB by Fitch
at the time of purchase. Although obligations rated Baa by Moody's, BBB by S&P
or BBB by Fitch are considered to be investment grade, they may be subject to
greater risks than other higher-rated investment grade securities.
    

     The Portfolio may invest up to 20% of its total assets in unrated
securities that the Investment Manager determines to be of comparable quality to
the securities rated investment grade in which the Portfolio may invest. Dealers
may not maintain daily markets in unrated securities and retail secondary
markets for many of them may not exist; this lack of markets may affect the
Portfolio's ability to sell these securities when the Investment Manager deems
it appropriate. The Portfolio has the right to invest without limitation in
state and local obligations that are "private activity bonds," the income from
which may be taxable as a specific preference item for purposes of the Federal
alternative minimum tax. Thus, the Portfolio may not be a suitable investment
for investors who are subject to the alternative minimum tax. See "Investment
Objective and Policies" and "Taxation."

     Certain of the instruments held by the Portfolio, and certain of the
investment techniques that the Portfolio may employ, might expose the Portfolio
to special risks. The instruments presenting the Portfolio with risks are
municipal leases, zero coupon securities, custodial receipts, municipal
obligation components, floating and variable rate demand notes and bonds, and
participation interests. Entering into 


6
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Prospectus Summary (continued)
--------------------------------------------------------------------------------

securities transactions on a when-issued or delayed delivery basis, entering
into repurchase agreements, lending portfolio securities, and engaging in
financial futures and options transactions are investment techniques involving
risks to the Portfolio. As a non-diversified fund within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act"), the Portfolio may
invest a greater proportion of its assets in the obligations of a smaller number
of issuers and, as a result, may be subject to greater risk than a diversified
fund with respect to its holdings of securities. See "Investment Objective and
Policies -- Risk Factors and Special Considerations."

     The combined annual rate of fees paid by the Portfolio for advisory and
administrative services, 0.90% of the value of the Portfolio's average daily net
assets, is higher than the rates for similar services paid by other publicly
offered, closed-end, management investment companies that have investment
objectives and policies similar to those of the Portfolio. The Portfolio will
bear, in addition to the costs of advisory and administrative services, other
expenses and costs in connection with its operation. See "Management of the
Portfolio."

     The Portfolio's Articles of Incorporation include provisions that could
have the effect of limiting the ability of other entities or persons to acquire
control of the Portfolio and of depriving shareholders of an opportunity to sell
their shares of Common Stock at a premium over prevailing market prices. See
"Certain Provisions of the Articles of Incorporation." 


                                                                               7
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Portfolio Expenses
--------------------------------------------------------------------------------

The following tables are intended to assist investors in understanding the
various costs and expenses associated with investing in the Portfolio.

   
================================================================================
Annual Expenses
    (as a percentage of net assets attributable to Common Stock)
    Management Fees .....................................................  0.90%
    Other Expenses* .....................................................  0.19%
================================================================================
Total Annual Operating Expenses* ........................................  1.09%
================================================================================

* "Other Expenses," as shown above, are based upon amounts of expenses for the
fiscal period ended August 31, 1996.
    

     EXAMPLE

     The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect to
a hypothetical investment in the Portfolio. These amounts are based upon payment
by the Portfolio of operating expenses at the levels set forth in the table
above.

     An investor would pay the following expenses on a $1,000 investment,
assuming (1) a 5% annual return and (2) reinvestment of all dividends and
distributions at net asset value:

       One Year       Three Years         Five Years          Ten Years
================================================================================
   
          $11             $35                $60                 $133
    
================================================================================

     This example should not be considered a representation of future expenses
of the Portfolio and actual expenses may be greater or less than those shown.
Moreover, while the example assumes a 5% annual return, the Portfolio's
performance will vary and may result in a return greater or less than 5%. In
addition, while the example assumes reinvestment of all dividends and
distributions at net asset value, participants in the Portfolio's Dividend
Reinvestment Plan may receive shares purchased or issued at a price or value
different from net asset value. See "Dividends and Distributions; Dividend
Reinvestment Plan."


8
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------

   
The following information for the two year period ended 8/31/96
has been audited by KMPG Peat Marwick LLP, independent
auditors, whose report thereon appears in the Fund's Annual Report dated August
31, 1996. The information for the fiscal years ended August 31, 1993 and August
31, 1994 has been audited by  other independent auditors.
The following information should be read in conjunction with the financial
statements and related notes that also appear in the Portfolio's Annual Report,
which is incorporated by reference into this Prospectus.

               Per Share Operating Performance For a Share of the
           Portfolio's Common Stock Outstanding Throughout each Year
    

<TABLE>
<CAPTION>
   
=================================================================================================
                                            Year          Year             Year          Period
                                           Ended         Ended             Ended          Ended
                                         8/31/96(1)      8/31/95          8/31/94        8/31/93*
-------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>             <C>             <C>   
Net Asset Value,
  Beginning of Year                       $12.36          $12.15          $13.37          $12.00
-------------------------------------------------------------------------------------------------
Net investment income                       0.66            0.69            0.64            0.62
Net realized and unrealized
  gains (loss) on investments              (0.21)           0.32           (0.61)           1.34
-------------------------------------------------------------------------------------------------
Total Income From Operations                0.45            1.01            0.03            1.96
-------------------------------------------------------------------------------------------------
Offering Cost Credited/
  (Charged) to Paid-in Capital                --              --            0.01           (0.04)
Less distributions from:
  Net investment income                    (0.67)          (0.68)          (0.67)          (0.55)
  Net realized gains                       (0.16)          (0.12)          (0.59)             --
------------------------------------------------------------------------------------------------
Total Distributions                           (0.83)        (0.80)           (1.26)           (0.55)
-------------------------------------------------------------------------------------------------
Net Asset Value, End of Year              $11.98          $12.36          $12.15          $13.37
-------------------------------------------------------------------------------------------------
Total Return                              4.01%           8.86%        0.72%**      9.97%+**
=================================================================================================
Market value, End of Year              $11.750         $11.625         $11.500         $12.625
-------------------------------------------------------------------------------------------------
Net Assets, End of Year
  (in 000's)                            $134,429        $138,649        $136,248        $149,970
=================================================================================================
Ratios/supplemental data
  Ratios to Average Net Assets:
    Expenses                                1.09%           1.14%           1.12%           1.10%+
    Net Investment Income                   5.31%           5.80%           5.08%          5.21%(1)
Portfolio Turnover Rate                       63%             95%             85%            163%
=================================================================================================
    
</TABLE>

   
*    For the period from September 24, 1992 (commencement of operations) to
     August 31, 1993.
    
**   Total return represents aggregate total returns based on market value for
     the periods indicated and does not reflect any sales load. The total return
     figures assume reinvestment of dividends and distributions at prices
     obtained under the Portfolio's Dividend Reinvestment Plan.
   
+    Total return is not annualized, as it may not be representative of the
     total return for the year.
(1) Annualized
    


                                                                               9
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
The Portfolio
--------------------------------------------------------------------------------

     The Portfolio is a non-diversified, closed-end management investment
company that seeks as high a level of current income exempt from Federal income
tax as is consistent with the preservation of principal. The Portfolio, which
was incorporated under the laws of the State of Maryland on July 23, 1992, is
registered under the 1940 Act, and has its principal office at 388 Greenwich
Street, New York, New York 10013. The Portfolio's telephone number is (212)
723-9218. 

--------------------------------------------------------------------------------
The Offering
--------------------------------------------------------------------------------

     Smith Barney intends to make a market in the Portfolio's Common Stock,
although it is not obligated to conduct market-making activities and any such
activities may be discontinued at any time without notice at the sole discretion
of Smith Barney. No assurance can be given as to the liquidity of, or the
trading market for, the Common Stock as a result of any market-making activities
undertaken by Smith Barney. This Prospectus is to be used by Smith Barney in
connection with offers and sales of the Common Stock in market-making
transactions in the over-the-counter market at negotiated prices related to
prevailing market prices at the time of sale. 

--------------------------------------------------------------------------------
Use of Proceeds
--------------------------------------------------------------------------------

     The Portfolio will not receive any proceeds from the sale of Common Stock
offered pursuant to this Prospectus. Proceeds received by Smith Barney as a
result of its market-making in Common Stock will be utilized by Smith Barney in
connection with its secondary market operations and for general corporate
purposes. 

--------------------------------------------------------------------------------
Investment Objective and Policies
--------------------------------------------------------------------------------

     The Portfolio's investment objective is to seek as high a level of current
income exempt from Federal income taxes as is consistent with the preservation
of principal. The Portfolio's investment objective may not be changed without
the affirmative vote of the holders of a majority (as defined in the 1940 Act)
of the Portfolio's outstanding shares. In seeking its objective, the Portfolio
will invest in long-term Municipal Obligations. The Portfolio will operate
subject to a fundamental investment policy providing that, under normal
conditions, the Portfolio will invest at least 80% of its net assets in
Municipal Obligations. No assurance can be given that the Portfolio's investment
objective will be achieved.

     The Portfolio will invest at least 80% of its total assets in Municipal
Obligations 


10
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Investment Objective and Policies (continued)
--------------------------------------------------------------------------------

rated investment grade, that is, rated no lower than Baa, MIG-3 or Prime-1 by
Moody's, BBB, SP-2 or A-1 by S&P or BBB or F-1 by Fitch. Up to 20% of the
Portfolio's total assets may be invested in unrated securities that are deemed
by the Investment Manager to be of a quality comparable to investment grade. The
Portfolio will not invest in Municipal Obligations that are rated lower than Baa
by Moody's, BBB by S&P or BBB by Fitch, at the time of purchase. A description
of the relevant Moody's, S&P and Fitch ratings is set forth in the Appendix to
the SAI. Although Municipal Obligations rated Baa by Moody's, BBB by S&P or BBB
by Fitch are considered to be investment-grade, they may be subject to greater
risks than other higher -rated investment-grade securities. Municipal
Obligations rated Baa by Moody's, for example, are considered medium-grade
obligations that lack outstanding investment characteristics and have
speculative characteristics as well. Municipal Obligations rated BBB by S&P are
regarded as having an adequate capacity to pay principal and interest. Municipal
Obligations rated BBB by Fitch are deemed to be subject to a higher likelihood
that their rating will fall below investment grade than higher-rated bonds.

     The Portfolio is classified as a non-diversified fund under the 1940 Act,
which means that the Portfolio is not limited by the 1940 Act in the proportion
of its assets that it may invest in the obligations of a single issuer. The
Portfolio intends to conduct its operations, however, so as to qualify as a
"regulated investment company" for purposes of the Internal Revenue Code of
1986, as amended (the "Code"), which will relieve the Portfolio of any liability
for Federal income tax to the extent that its earnings are distributed to
shareholders. To qualify as a regulated investment company, the Portfolio will,
among other things, limit its investments so that, at the close of each quarter
of its taxable year (1) not more than 25% of the market value of the Portfolio's
total assets will be invested in the securities of a single issuer and (2) with
respect to 50% of the market value of its total assets, not more than 5% of the
market value of its total assets will be invested in the securities of a single
issuer. See "Taxation."

     The Portfolio generally will not invest more than 25% of its total assets
in any industry. Governmental issuers of Municipal Obligations are not
considered part of any "industry." Municipal Obligations backed only by the
assets and revenues of non-governmental users may be deemed to be issued by the
non-governmental users, and would be subject to the Portfolio's 25% industry
limitation. The Portfolio may invest more than 25% of its total assets in a
broad segment of the Municipal Obligations market if the Investment Manager
determines that the yields available from obligations in a particular segment of
the market justify the additional risks associated with a large investment in
the segment. The Portfolio reserves the right to invest more than 25% of its
assets in industrial development bonds or in issuers located in the same state,
although it has no current intention of investing more than 25% of its assets in
issuers located in the same state. If the Portfolio were to invest 


                                                                              11
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Investment Objective and Policies (continued)
--------------------------------------------------------------------------------

more than 25% of its total assets in issuers located in the same state, it would
be more susceptible to adverse economic, business or regulatory conditions in
that state.

     Municipal Obligations are classified as general obligation bonds, revenue
bonds and notes. General obligation bonds are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and
interest. Revenue bonds are payable from the revenue derived from a particularly
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source, but not from the general
taxing power. Notes are short-term obligations of issuing municipalities or
agencies and are sold in anticipation of a bond sale, collection of taxes or
receipt of other revenues. Municipal Obligations bear fixed, floating and
variable rates of interest, and variations exist in the security of Municipal
Obligations, both within a particular classification and between
classifications. The types of Municipal Obligations in which the Portfolio may
invest are described in Appendix A to this Prospectus.

     The yields on, and values of, Municipal Obligations are dependent on a
variety of factors, including general economic and monetary conditions, money
market factors, conditions in the Municipal Obligations markets, size of a
particular offering, maturity of the obligation and rating of the issue.
Consequently, Municipal Obligations with the same maturity, coupon and rating
may have different yields or values, whereas obligations of the same maturity
and coupon with different ratings may have the same yield or value.

     Opinions relating to the validity of Municipal Obligations and to the
exemption of interest on them from Federal taxes are rendered by bond counsel to
the respective issuers at the time of issuance. Neither the Portfolio nor the
Investment Manager will review the procedures relating to the issuance of
Municipal Obligations or the basis for opinions of counsel. Issuers of Municipal
Obligations may be subject to the provisions of bankruptcy, insolvency and other
laws, such as the Federal Bankruptcy Reform Act of 1978, affecting the rights
and remedies of creditors. In addition, the obligations of those issuers may
become subject to laws enacted in the future by Congress, state legislatures or
referenda extending the time for payment of principal and/or interest, or
imposing other constraints upon enforcement of the obligations or upon the
ability of municipalities to levy taxes. The possibility also exists that, as a
result of litigation or other conditions, the power or ability of any issuer to
pay, when due, the principal of, and interest on, its obligations may be
materially affected.

     Under normal conditions, the Portfolio may hold up to 20% of its total
assets in cash or money market instruments, including taxable money market
instruments (collectively, "Taxable Investments"). In addition, the Portfolio
may take a temporary defensive posture and invest without limitation in
short-term Municipal Obligations and Taxable Investments, upon a determination
by the Investment Manager that market conditions warrant such a posture. To the
extent the Portfolio 


12
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Investment Objective and Policies (continued)
--------------------------------------------------------------------------------

holds Taxable Investments, the Portfolio may not be fully achieving its
investment objective.

     INVESTMENT TECHNIQUES

     The Portfolio may employ, among others, the investment techniques described
below, which may give rise to taxable income:

     When-Issued and Delayed Delivery Securities. The Portfolio may purchase
securities on a when-issued basis, or may purchase or sell securities for
delayed delivery. In when-issued or delayed delivery transactions, delivery of
the securities occurs beyond normal settlement periods, but no payment or
delivery will be made by the Portfolio prior to the actual delivery or payment
by the other party to the transaction. The Portfolio will not accrue income with
respect to a when-issued or delayed delivery security prior to its stated
delivery date. The Portfolio will establish with PNC Bank a segregated account
consisting of cash, U.S. Government securities, or other liquid high grade debt
obligations, in an amount equal to the amount of the Portfolio's when-issued and
delayed delivery purchase commitments. Placing securities rather than cash in
the segregated account may have a leveraging effect on the Portfolio's net asset
value per share; that is, to the extent that the Portfolio remains substantially
fully invested in securities at the same time that it has committed to purchase
securities on a when-issued or delayed delivery basis, greater fluctuations in
its net asset value per share may occur than if it had set aside cash to satisfy
its purchase commitments.

     Stand-By Commitments. The Portfolio may acquire "stand-by commitments" with
respect to Municipal Obligations it holds. Under a stand-by commitment, which
resembles a put option, a broker, dealer or bank is obligated to repurchase at
the Portfolio's option specified securities at a specified price. Each exercise
of a stand-by commitment, therefore, is subject to the ability of the seller to
make payment on demand. The Portfolio will acquire stand-by commitments solely
to facilitate liquidity and does not intend to exercise the rights afforded by
the commitments for trading purposes.

     Financial Futures and Options Transactions. To hedge against a decline in
the value of Municipal Obligations it owns or an increase in the price of
Municipal Obligations it proposes to purchase, the Portfolio may enter into
financial futures contracts and invest in options on financial futures contracts
that are traded on a U.S. exchange or board of trade. The futures contracts or
options on futures contracts that may be entered into by the Portfolio will be
restricted to those that are either based on an index of Municipal Obligations
or relate to debt securities the prices of which are anticipated by the
Investment Manager to correlate with the prices of the Municipal Obligations
owned or to be purchased by the Portfolio. Regulations of the Commodity Futures
Trading Commission ("CFTC") applicable 


                                                                              13
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Investment Objective and Policies (continued)
--------------------------------------------------------------------------------

to the Portfolio require that its transactions in futures and options be engaged
in for "bona fide hedging" purposes or other permitted purposes, provided that
aggregate initial margin deposits and premiums required to establish positions
other than those considered by the CFTC to be "bona fide hedging" will not
exceed 5% of the Portfolio's net asset value, after taking into account
unrealized profits and unrealized losses on such contracts.

     A financial futures contract provides for the future sale by one party and
the purchase by the other party of a certain amount of a specified property at a
specified price, date, time and place. Unlike the direct investment in a futures
contract, an option on a financial futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in the financial
futures contract at a specified exercise price at any time prior to the
expiration date of the option. Upon exercise of an option, the delivery of the
futures position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's futures
margin account, which represents the amount by which the market price of the
futures contract exceeds, in the case of a call, or is less than, in the case of
a put, the exercise price of the option on the futures contract. The potential
loss related to the purchase of an option on financial futures contracts is
limited to the premium paid for the option (plus transaction costs). The value
of the option may change daily and that change would be reflected in the net
asset value of the Portfolio.

     Lending Securities. The Portfolio is authorized to lend securities it holds
to brokers, dealers and other financial organizations, but it will not lend
securities to any affiliate of the Investment Manager unless the Portfolio
applies for and receives specific authority to do so from the SEC. Loans of the
Portfolio's securities, if and when made, may not exceed 331\3 % of the value of
the Portfolio's total assets taken at value. The Portfolio's loans of securities
will be collateralized by cash, letters of credit or U.S. government securities
that will be maintained at all times in a segregated account with PNC Bank in an
amount equal to the current market value of the loaned securities.

     Repurchase Agreements. The Portfolio may enter into repurchase agreement
transactions with banks which are the issuers of instruments acceptable for
purchase by the Portfolio and with certain dealers on the Federal Reserve Bank
of New York's list of reporting dealers. A repurchase agreement is a contract
under which the buyer of a security simultaneously commits to resell the
security to the seller at an agreed-upon price on an agreed-upon date. Under the
terms of a typical repurchase agreement, the Portfolio would acquire an
underlying debt obligation for a relatively short period subject to an
obligation of the seller to repurchase, and the Portfolio to resell, the
obligation at an agreed-upon price and time, thereby determining the yield
during the Portfolio's holding period. This arrangement results in 


14
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Investment Objective and Policies (continued)
--------------------------------------------------------------------------------

a fixed rate of return that is not subject to market fluctuations during the
Portfolio's holding period. Under each repurchase agreement, the selling
institution will be required to maintain the value of the securities subject to
the repurchase agreement at not less than their repurchase price.

     RISK FACTORS AND SPECIAL CONSIDERATIONS

     Investment in the Portfolio involves risk factors and special
considerations, such as those described below:

     Municipal Obligations. Market rates of interest available with respect to
Municipal Obligations generally may be lower than those available with respect
to taxable securities, although the differences may be wholly or partially
offset by the effects of Federal income tax on income derived from taxable
securities. The amount of available information about the financial condition of
issuers of Municipal Obligations may be less extensive than that for corporate
issuers with publicly traded securities, and the market for Municipal
Obligations may be less liquid than the market for corporate debt obligations.
Although the Portfolio's policy will generally be to hold Municipal Obligations
until their maturity, the relative illiquidity of some of the Portfolio's
securities may adversely affect the ability of the Portfolio to dispose of the
securities in a timely manner and at a fair price. The market for less liquid
securities tends to be more volatile than the market for more liquid securities,
and market values of relatively illiquid securities may be more susceptible to
change as a result of adverse publicity and investor perceptions than are the
market values of more liquid securities. Although the issuer of certain
Municipal Obligations may be obligated to redeem the obligations at face value,
redemption could result in capital losses to the Portfolio to the extent that
the Municipal Obligations were purchased by the Portfolio at a premium to face
value.

     Although the Municipal Obligations in which the Portfolio may invest will
be rated, at the time of investment, investment grade, municipal securities,
like other debt obligations, are subject to the risk of non-payment by their
issuers. The ability of issuers of Municipal Obligations to make timely payments
of interest and principal may be adversely affected in general economic
downturns and as relative governmental cost burdens are allocated and
reallocated among Federal, state and local governmental units. Non-payment by an
issuer would result in a reduction of income to the Portfolio, and could result
in a reduction in the value of the Municipal Obligations experiencing
non-payment and a potential decrease in the net asset value of the Portfolio.

     Unrated Securities. The Portfolio may invest in unrated securities that the
Investment Manager determines to be of comparable quality to the rated
securities in which the Portfolio may invest. Dealers may not maintain daily
markets in unrated securities, and retail secondary markets for many of them may
not exist. As a result, the Portfolio's ability to sell these securities when
the Investment 


                                                                              15

<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Investment Objective and Policies (continued)
--------------------------------------------------------------------------------

Manager deems it appropriate may be diminished.

     Municipal Leases. Municipal leases in which the Portfolio may invest have
special risks not normally associated with Municipal Obligations. Municipal
leases frequently contain non-appropriation clauses that provide that the
governmental issuer of the obligation need not make future payments under the
lease or contract unless money is appropriated for that purpose by a legislative
body annually or on another periodic basis. Moreover, although a municipal lease
typically will be secured by financed equipment or facilities, the disposition
of the equipment or facilities in the event of foreclosure might prove
difficult.

     Non-Publicly Traded Securities. As suggested above, the Portfolio may, from
time to time, invest a portion of its assets in non-publicly traded Municipal
Obligations. Non-publicly traded securities may be less liquid than publicly
traded securities. Although non-publicly traded securities may be resold in
privately negotiated transactions, the prices realized from these sales could be
less than those originally paid by the Portfolio.

     When-Issued and Delayed Delivery Transactions. Securities purchased on a
when-issued or delayed delivery basis may expose the Portfolio to risk because
the securities may experience fluctuations in value prior to their delivery.
Purchasing securities on a when-issued or delayed delivery basis can involve the
additional risk that the yield available in the market when the delivery takes
place may be higher than that obtained in the transaction itself.

     Lending Securities. The risks associated with lending portfolio securities,
as with other extensions of credit, consist of possible loss of rights in the
collateral should the borrower fail financially.

     Financial Futures and Options. Although the Portfolio intends to enter into
financial futures contracts and options on financial futures contracts that are
traded on a U.S. exchange or board of trade only if an active market exists for
those instruments, no assurance can be given that an active market will exist
for them at any particular time. If closing a futures position in anticipation
of adverse price movements is not possible, the Portfolio would be required to
make daily cash payments of variation margin. In those circumstances, an
increase in the value of the portion of the Portfolio's investments being
hedged, if any, may offset partially or completely losses on the futures
contract. No assurance can be given, however, that the price of the securities
being hedged will correlate with the price movements in a futures contract and,
thus, provide an offset to losses on the futures contract or option on the
futures contract. In addition, in light of the risk of an imperfect correlation
between securities held by the Portfolio that are the subject of a hedging
transaction and the futures or options used as a hedging device, the hedge may
not be fully effective because, for example, losses on the securities held by
the Portfolio may be in excess of gains on the futures contract or losses on the
futures contract may be in excess of gains on the securities held by the
Portfolio that were the sub-


16
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Investment Objective and Policies (continued)
--------------------------------------------------------------------------------

ject of the hedge. If the Portfolio has hedged against the possibility of an
increase in interest rates adversely affecting the value of securities it holds
and rates decrease instead, the Portfolio will lose part or all of the benefit
of the increased value of securities that it has hedged because it will have
offsetting losses in its futures or options positions.

     Non-Diversified Classification. Investment in the Portfolio, which is
classified as a non-diversified fund under the 1940 Act, may present greater
risks to investors than an investment in a diversified fund. The investment
return on a non-diversified fund typically is dependent upon the performance of
a smaller number of securities relative to the number of securities held in a
diversified fund. The Portfolio's assumption of large positions in the
obligations of a small number of issuers will affect the value of the securities
it holds to a greater extent than that of a diversified fund in the event of
changes in the financial condition, or in the market's assessment, of the
issuers.

     INVESTMENT RESTRICTIONS

     The Portfolio has adopted certain fundamental investment restrictions that
may not be changed without the prior approval of the holders of a majority of
the Portfolio's outstanding voting securities. A "majority of the Portfolio's
outstanding voting securities" for this purpose means the lesser of (1) 67% or
more of the shares of the Portfolio's Common Stock present at a meeting of
shareholders, if the holders of 50% of the outstanding shares are present or
represented by proxy at the meeting or (2) more than 50% of the outstanding
shares. Among the investment restrictions applicable to the Portfolio is that
the Portfolio is prohibited from borrowing money, except for temporary or
emergency purposes, or for clearance of transactions, and then only in amounts
not exceeding 15% of its total assets (not including the amount borrowed) and as
otherwise described in this Prospectus. When the Portfolio's borrowings exceed
5% of the value of its total assets, the Portfolio will not make any additional
investments. In addition, the Portfolio will not invest more than 25% of its
total assets in the securities of issuers in any single industry, except that
this limitation will not be applicable to the purchase of U.S. government
securities. Also, the Portfolio may not purchase securities other than Municipal
Obligations and Taxable Investments. For a complete listing of the investment
restrictions applicable to the Portfolio, see "Investment Objective and Policies
N Investment Restrictions" in the SAI. All percentage limitations included in
the investment restrictions apply immediately after a purchase or initial
investment, and any subsequent change in any applicable percentage resulting
from market fluctuations will not require the Portfolio to dispose of any
security that it holds.


                                                                              17
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Share Price Data
--------------------------------------------------------------------------------

     The Portfolio's Common Stock is listed on the NYSE under the symbol "MTU."
Smith Barney also intends to make a market in the Portfolio's Common Stock.

     The following table sets forth the high and low sales prices for the
Portfolio's Common Stock, the net asset value per share and the discount or
premium to net asset value represented by the quotation for each quarterly
period since the Portfolio's commencement of operations.

<TABLE>
<CAPTION>
                          Quarterly High Price                 Quarterly Low Price
                          --------------------                 -------------------
                                            Premium                             Premium
                   Net Asset      NYSE     (Discount)    Net Asset    NYSE    (Discount)
                     Value        Price     to NAV         Value      Price     to NAV
========================================================================================
<S>                 <C>          <C>          <C>         <C>        <C>         <C>    
11/30/92            $11.62       11.875       2.19%       $11.61     11.125      (4.18)%
2/28/93              13.06       12.375      (5.25)        12.20     11.250      (7.79)
5/31/93              13.11       12.750      (2.75)        12.81     12.000      (6.32)
8/31/93              13.37       12.750      (4.64)        13.03     12.125      (6.95)
11/30/93             13.50       12.875      (4.63)        13.26     12.250      (7.62)
2/28/94              12.96       13.000       0.31         12.05     11.875      (1.45)
5/31/94              12.33       12.250      (0.65)        11.94     11.125      (6.83)
8/31/94              12.16       12.000      (1.32)        11.45     11.250      (1.75)
11/30/94             12.16       11.750      (3.37)        10.85      9.875      (8.99)
2/28/95              12.18       11.625      (4.55)        11.35     10.250      (9.69)
5/31/95              12.61       11.560      (8.32)        12.07     11.125      (7.82)
8/31/95              12.50       12.000      (4.00)        12.10     11.250      (7.02)
11/30/95             12.72       11.875      (6.64)        12.28     11.375      (7.37)
2/29/96              12.84       12.500      (2.65)        12.59     11.750      (6.67)
5/31/96              12.75       12.125      (0.62)        12.15     11.625      (0.525)
   
8/31/96              12.37       11.875      (4.00)        11.98     11.250      (6.09)
    
==================================================================
</TABLE>
                                                                        
     As of  November  29, 1996, the price of Common Stock as quoted on the 
NYSE was $11.50, representing a 7.93% discount from the Common Stock's net 
asset value calculated on that day. 

Since the commencement of the Portfolio's operations, the Portfolio's 
Common Stock has traded in the market at prices that were at times above, 
but generally below, net  asset value.
    

--------------------------------------------------------------------------------
Management of the Portfolio
--------------------------------------------------------------------------------

     BOARD OF DIRECTORS

     Overall responsibility for management and supervision of the Portfolio
rests 


18
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Management of the Portfolio (continued)
--------------------------------------------------------------------------------

with the Portfolio's Board of Directors. The Directors approve all significant
agreements with the Portfolio's investment adviser, administrator, custodian and
transfer agent. The day-to-day operations of the Portfolio are delegated to the
Portfolio's investment adviser and administrator. The SAI contains background
information regarding each Director and executive officer of the Portfolio.

   
     INVESTMENT MANAGER AND ADMINISTRATOR

     SBMFM, through its Greenwich Street Advisors division, located at 388
Greenwich Street, New York, New York 10013, serves as the Portfolio's investment
manager. SBMFM (through its predecessor entities) has been in the investment
counseling business since 1934 and is a registered investment adviser. SBMFM
renders investment advice to a wide variety of individuals and institutional
clients that had aggregate assets under management as of Septemb er 30, 1996 in
excess of $77 billion.
    

     Subject to the supervision and direction of the Portfolio's Board of
Directors, the Investment Manager manages the securities held by the Portfolio
in accordance with the Portfolio's stated investment objective and policies,
makes investment decisions for the Portfolio, places orders to purchase and sell
securities on behalf of the Portfolio and employs managers and securities
analysts who provide research services to the Portfolio. The Portfolio pays the
Investment Manager a fee for investment advisory services provided to the
Portfolio that is computed daily and paid monthly at the annual rate of 0.70% of
the value of the Portfolio's average daily net assets. In addition, SBMFM serves
as the Portfolio's administrator and is paid a fee by the Portfolio that is
computed daily and paid monthly at a rate of 0.20% of the value of its average
daily net assets.

     Transactions on behalf of the Portfolio are allocated to various dealers by
the Investment Manager in its best judgment. The primary consideration is prompt
and effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for their research, statistical
or other services to enable the Investment Manager to supplement its own
research and analysis with the views and information of other securities firms.
The Portfolio may use Smith Barney in connection with the purchase or sale of
securities when the Investment Manager believes that the broker's charge for the
transaction does not exceed usual and customary levels. The same standard
applies to the use of Smith Barney as a broker in connection with entering into
options and futures contracts. The Portfolio paid no brokerage commissions in
the last fiscal year.

     PORTFOLIO MANAGEMENT

     Joseph P. Deane, Vice President and Investment Officer of the Portfolio, is
pri-


                                                                              19
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Management of the Portfolio (continued)
--------------------------------------------------------------------------------

marily responsible for the management of the Portfolio's assets. Mr. Deane has
served the Portfolio in this capacity since the Portfolio commenced operations
in 1992 and manages the day-to-day operations of the Portfolio, including making
all investment decisions. Mr. Deane is an Investment Officer of SBMFM and is the
senior asset manager for a number of investment companies and other accounts
investing in tax-exempt securities. 

--------------------------------------------------------------------------------
Dividends and Distributions; Dividend Reinvestment Plan
--------------------------------------------------------------------------------

   
     The Portfolio expects to pay monthly dividends of net investment income 
(income other than net realized capital gains) and to distribute net 
realized capital gains, if any annually. All dividends or distributions 
with respect to shares of
Common Stock are reinvested automatically in additional shares through
participation in the Portfolio's Dividend Reinvestment Plan (the "Plan"), unless
a shareholder elects to receive cash.
    

     Under the Portfolio's Dividend Reinvestment Plan, a shareholder whose
shares of Common Stock are registered in his or her own name will have all
distributions from the Portfolio reinvested automatically by First Data 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 shares under the Plan, unless the servi ce is not provided by the
broker or nominee or the shareholder elects to receive distributions in cash.
Investors who own Common Stock registered in street name should consult their
broker-dealers for details regarding reinvestment. All distributions to
Portfolio shareholders who do not participate in the Plan will be paid by check
mailed directly to the record holder by or under the direction of First Data as
dividend-paying agent.

     The number of shares of Common Stock distributed to participants in the
Plan in lieu of a cash dividend is determined in the following manner. Whenever
the market price of the Common Stock is equal to or exceeds the net asset value
per share at the time shares are valued for purposes of determining the number
of shares equivalent to the cash dividend or capital gains distribution, Plan
participants will be issued shares of Common Stock valued at the greater of (1)
the net asset value per share most recently determined as described under "Net
Asset Value" or (2) 95% of the market value. To the extent the Portfolio issues
shares to participants in the Plan at a discount to net asset value, the
remaining shareholders' interests in the Portfolio's net assets will be
proportionately diluted.


20

<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Dividends and Distributions; Dividend Reinvestment Plan (continued)
--------------------------------------------------------------------------------

     If the net asset value per share of Common Stock at the time of valuation
exceeds the market price of the Common Stock, or if the Portfolio declares a
dividend or capital gains distribution payable only in cash, First Data will buy
Common Stock in the open market, on the NYSE or elsewhere, for the participants'
accounts. If, following the commencement of the purchases and before First Data
has completed its purchases, the market price exceeds the net asset value of the
Common Stock, First Data 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 a Plan participant will be based on the weighted
average of prices paid for shares purchased in the open market and the price at
which the Portfolio issues the remaining shares. To the extent First Data is
unable to stop open market purchases and cause the Portfolio to issue the
remaining shares, the average per share purchase price paid by First Data may
exceed the net asset value of the Common Stock, resulting in the acquisition of
fewer shares than if the dividend or capital gains distribution had been paid in
Common Stock issued by the Portfolio at net asset value. First Data will begin
to purchase Common Stock on the open market as soon as practicable after the
record date of the dividend or capital gains distribution, but in no event shall
such purchases continue later than 30 days after the payment date thereof,
except when necessary to comply with applicable provisions of the Federal
securities laws.

     First Data maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in each account, including information
needed by a shareholder for personal and tax records. The automatic reinvestment
of dividends and capital gains distributions will not relieve Plan participants
of any income tax that may be payable on the dividends or capital gains
distributions. Common Stock in the account of each Plan participant will be held
by First Data in uncertificated form in the name of each Plan participant, and
each shareholder's proxy will include those shares purchased pursuant to the
Plan.

     Plan participants are subject to no charge for reinvesting dividends and
capital gains distributions. First Data's fees for handling the reinvestment of
dividends and capital gains distributions will be paid by the Portfolio. No
brokerage charges apply with respect to shares of Common Stock issued directly
by the Portfolio as a result of dividends or capital gains distributions payable
either in Common Stock or in cash. Each Plan participant will, however, bear a
proportionate share of brokerage commissions incurred with respect to open
market purchases made in connection with the reinvestment of dividends or
capital gains distributions.

     Experience under the Plan may indicate that changes to it are desirable.
The Portfolio reserves the right to amend or terminate the Plan as applied to
any dividend or capital gains distribution paid subsequent to written notice of
the change sent to participants at least 30 days before the record date for the
dividend or capital 


                                                                              21
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Dividends and Distributions; Dividend Reinvestment Plan (continued)
--------------------------------------------------------------------------------

gains distribution. The Plan also may be amended or terminated by First Data,
with the Portfolio's prior written consent, on at least 30 days' written notice
to Plan participants. All correspondence concerning the Plan should be directed
by mail to First Data, P.O. Box 9134, Boston, Massachusetts 02205-9134 or by
telephone at (800) 331-1710. 

--------------------------------------------------------------------------------
Taxation
--------------------------------------------------------------------------------

   
     The following is a summary of the material Federal tax considerations
affecting the Portfolio and its shareholders; see the SAI for a further
discussion. In addition to the considerations described below and in the SAI,
which are applicable to any investment in the Portfolio, there may be other
Federal, state, local or foreign tax considerations applicable to particular
investors. Prospective shareholders are therefore urged to consult their tax
adivsors with respect to the consequences to them of an inve stment in the
Portfolio.

     The Portfolio has qualified and intends to qualify each year as a
"regulated investment company" under Subchapter M of the Code. In each taxable
year that the Portfolio so qualifies, the Portfolio will be relieved of Federal
income tax on that part of its investment company taxable income (consisting
generally of taxable net investment income, net short-term capital gain and net
realized gains from certain hedging transactions) and long-term capital gain
that is distributed to its shareholders. In addition, the Portfolio intends to
satisfy conditions contained in the Code that will enable interest from
Municipal Obligations, excluded from gross income for Federal income tax
purposes with respect to the Portfolio, to retain that tax-exempt status when
distributed to the shareholders of the Portfolio (that is, to be classified as
"exempt-interest" dividends of the Portfolio).

     Interest on indebtedness incurred by a shareholder to purchase or carry
shares of Common Stock is not deductible for Federal income tax purposes.
Although the Portfolio's exempt-interest dividends may be excluded by
shareholders from their gross income for Federal income tax purposes (1) some or
all of the Portfolio's exempt-interest dividends may be a specific preference
item, or a component of an adjustment item, for purposes of the Federal
individual and corporate alternative minimum taxes and (2) the receipt of
dividends and distributions from the Portfolio may affect a corporate
shareholder's Federal "environmental" tax liability. The receipt of dividends
and distributions from the Portfolio may affect a foreign corporate
shareholder's Federal "branch profits" tax liability and a corporate
shareholder's Federal "excess net passive income" tax liability.
    


22
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Taxation (continued)
--------------------------------------------------------------------------------

   
     The portion of any exempt-interest dividend paid by the Portfolio that
represents income derived from private activity bonds held by the Portfolio may
not retain its tax-exempt status in the hands of a shareholder who is a
"substantial user" of a facility financed by the bonds, or a "related person" of
the substantial user. Shareholders should consult their own tax advisors to
determine whether they are (1) "substantial users" with respect to a facility or
"related" to those users within the meaning of the Code or (2) subject to a
Federal alternative minimum tax, the Federal "environmental" tax, the Federal
"branch profits" tax, or the Federal "excess net passive income" tax.

     A shareholder of the Portfolio receiving dividends or distributions in
additional shares pursuant to the Plan should be treated for Federal income tax
purposes as receiving a distribution in an amount equal to the amount of money
that a shareholder receiving cash dividends or distributions receives, and
should have a cost basis in the shares received equal to that amount. The
Portfolio will notify its shareholders following the end of each calendar year
of the amounts of exempt-interest dividends, taxable dividends and capital gains
distributions paid (or deemed paid) that year and of any portion thereof that is
subject to the alternative minimum tax for individuals.

     Upon a sale or exchange of shares of Common Stock, a shareholder will
realize a taxable gain or loss equal to the difference between his or her
adjusted basis for the shares and the amount realized. Any such gain or loss
will be treated as a capital gain or loss if the shares are capital assets in
the shareholder's hands and will be a long-term capital gain or loss if the
shares have been held for more than one year. Any loss realized on a sale or
exchange of shares of Common Stock that were held for six months or less will be
disallowed to the extent of any exempt-interest dividends received on those
shares and (to the extent not so allowed) will be treated as a long-term, rather
than as a short-term, capital loss to the extent of any capital gain
distributions received thereon. A loss realized on a sale or exchange of shares
of Common Stock also will be disallowed to the extent those shares are replaced
by other shares of Common Stock within a period of 61 days beginning 30 days
before and ending 30 days after the date of the disposition of shares (which
could occur, for example, as a result of participation in the Plan). In that
event, the basis for the replacement shares will be adjusted to reflect the
disallowed loss.

     Investors also should be aware that if shares of Common Stock are purchased
shortly before the record date for any distribution, the investor will pay full
price for the shares and could receive some portion of the price back as an
exempt-interest dividend, a taxable dividend or capital gains distribution.

     If a shareholder fails to furnish a correct taxpayer identification number,
fails to report fully dividend or interest income, or fails to certify that he
or she has pro-
    


                                                                              23
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Taxation (continued)
--------------------------------------------------------------------------------

   
vided a correct taxpayer identification number and that he or she is not subject
to "backup withholding," the shareholder may be subject to a 31% "backup
withholding" tax with respect to (1) taxable dividends and distributions and (2)
the proceeds of any sales or repurchases of shares of Common Stock. An
individual's taxpayer identification number is his or her social security
number. 
    

--------------------------------------------------------------------------------
Description of Common Stock
--------------------------------------------------------------------------------

     The Portfolio has 500,000,000 authorized shares of Common Stock, par value
$.001 per share. At the close of business on December 4, 1996, there were
11,216,668 shares of Common Stock outstanding. The Portfolio does not hold any
shares for its own account.

     No shares, other than those currently outstanding, are offered for sale
pursuant to this Prospectus. All shares of Common Stock have equal
non-cumulative voting rights and equal rights with respect to dividends, assets
and liquidation. Shares of Common Stock will be fully paid and non-assessable
when issued and have no preemptive, conversion or exchange rights. A majority of
the votes cast at any meeting of the shareholders is sufficient to take or
authorize action, except for election of Directors or as otherwise provided in
the Portfolio's Articles of Incorporation as described under "Certain Provisions
of the Articles of Incorporation."

     Under the rules of the NYSE applicable to listed companies, the Portfolio
will be required to hold an annual meeting of shareholders in each year. If the
Portfolio's shares are no longer listed on the NYSE (or any other national
securities exchange the rules of which require annual meetings of shareholders),
the Portfolio may decide not to hold annual meetings of shareholders. See "Stock
Purchases and Tenders."

     The Portfolio has no current intention of offering additional shares,
except that additional shares may be issued under the Plan. See "Dividends and
Distributions; Dividend Reinvestment Plan." Other offerings of shares, if made,
will require approval of the Portfolio's Board of Directors and will be subject
to the requirement of the 1940 Act that shares may not be sold at a price below
the then current net asset value (exclusive of underwriting discounts and
commissions) except in connection with an offering to existing shareholders or
with the consent of holders of a majority of the Portfolio's outstanding shares.


24
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Certain Provisions of the Articles of Incorporation
--------------------------------------------------------------------------------

     The Portfolio presently has provisions in its Articles of Incorporation and
Bylaws (commonly referred to as "anti-takeover" provisions) which may have the
effect of limiting the ability of other entities or persons to acquire control
of the Portfolio, to cause it to engage in certain transactions or to modify its
structure.

     The Board of Directors is classified into three classes, each with a term
of three years with only one class of directors standing for election in any
year. Such classification may prevent replacement of a majority of the directors
for up to a two-year period. Directors may be removed from office only for cause
by vote of at least 75% of the shares entitled to be voted on the matter. If
approved by two-thirds of the Portfolio's Board Members, a majority of the
shares entitled to vote may approve the conversion of the Portfolio from a
closed-end to an open-end investment company. If fewer than two-thirds of the
Board Members approve such conversion, the affirmative vote of shareholders
holding at least two-thirds of the outstanding shares will be required to
approve such action. If approved by three-fourths of the Portfolio's Board
Members, a majority of the shares entitled to vote may approve: (i) the
dissolution or liquidation of the Portfolio; (ii) the merger, consolidation or
share exchange of the Portfolio with or into any other person; or (iii) any
sale, lease, exchange or other disposition by the Portfolio of any assets of the
Portfolio having an aggregate market value of $1,000,000, except for
transactions in securities in the ordinary course of business. If fewer than
three-fourths of the Board Members approve the actions described in (i) through
(iii) above, or in the case of any business combination described above, the
affirmative vote of shareholders holding at least three-fourths of the
outstanding shares will be required. The affirmativ e vote of at least 75% of
the shares will be required to amend the Articles of Incorporation or Bylaws to
change any of the foregoing provisions.

     The percentage votes required under these provisions, which are greater
than the minimum requirements under Maryland law or the 1940 Act, will make more
difficult a change in the Portfolio's business or management and may have the
effect of depriving shareholders of an opportunity to sell shares at a premium
over prevailing market prices by discouraging a third party from seeking to
obtain control of the Fund in a tender offer or similar transaction. The
Portfolio's Board of Directors, however, has considered these anti-takeover
provisions and believes they are in the best interests of shareholders.

--------------------------------------------------------------------------------
Custodian and Transfer Agent
--------------------------------------------------------------------------------

     PNC Bank, 17th and Chestnut Streets, Philadelphia, Pennsylvania 19103 acts
as custodian of the Portfolio's investments. First Data, 53 State Street,
Boston, Massachusetts 02109, serves as agent in connection with the Plan and
serves as the Portfolio's transfer agent, dividend-paying agent and registrar.


                                                                              25
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Experts
--------------------------------------------------------------------------------

     The audited financial statements have been incorporated by reference in the
Statement of Additional Information in reliance upon the report of KPMG Peat
Marwick LLP, independent auditors, and upon the authority of said firm as
experts in accounting and auditing.

--------------------------------------------------------------------------------
Further Information
--------------------------------------------------------------------------------

     This Prospectus does not contain all of the information set forth in the
Registration Statement filed with the SEC. The complete Registration Statement
may be obtained from the SEC upon payment of the fee prescribed by its Rules and
Regulations.

     No person has been authorized to give any information or make any
representations not contained in this Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Portfolio, the Investment Manager, or Smith Barney. This Prospectus does
not constitute an offer to sell or a solicitation of any offer to buy any
security other than the shares of Common Stock, nor does it constitute an offer
to sell or a solicitation of any offer to buy the shares of Common Stock by
anyone in any jurisdiction in which the offer or solicitation would be unlawful.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs of the Portfolio since the date hereof. If any material change occurs
while this Prospectus is required by law to be delivered, however, this
Prospectus will be supplemented or amended accordingly.


26
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Appendix A
--------------------------------------------------------------------------------


                         TYPES OF MUNICIPAL OBLIGATIONS
   
     The Portfolio may invest in the following types of Municipal Obligations
and in such other types of Municipal Obligations as become available on the
market from time to time.
    

     MUNICIPAL BONDS

     Municipal bonds are debt obligations issued to obtain funds for various
public purposes. The two principal classifications of municipal bonds are
"general obligation" and "revenue" bonds. General obligation bonds are secured
by the issuer's pledge of its full faith, credit and taxing power for the
payment of principal and interest. Revenue bonds are payable only from the
revenues derived from a particular facility or class of facilities or, in some
cases, from the proceeds of a special excise tax or from another specific
source, such as the user of the facility being financed. Certain municipal bonds
are "moral obligation" issues, which normally are issued by special purpose
public authorities. In the case of such issues, an express or implied "moral
obligation" of a stated government unit is pledged to the payment of the debt
service but is usually subject to annual budget appropriations.

     INDUSTRIAL DEVELOPMENT BONDS AND PRIVATE ACTIVITY BONDS

     Industrial development bonds ("IDBs") and private activity bonds ("PABs")
are municipal bonds issued by or on behalf of public authorities to finance
various privately operated facilities, such as airports or pollution control
facilities. IDBs and PABs generally do not carry the pledge of the credit of the
issuing municipality, but are guaranteed by the corporate entity on whose behalf
they are issued. IDBs and PABs are generally revenue bonds and thus are not
payable from the unrestricted revenue of the issuer. The credit quality of IDBs
and PABs is usually directly related to the credit standing of the user of the
facilities being financed.

     MUNICIPAL LEASE OBLIGATIONS

     Municipal lease obligations are Municipal Obligations that may take the
form of leases, installment purchase contracts or conditional sales contracts,
or certificates of participation with respect to such contracts or leases.
Municipal lease obligations are issued by state and local governments and
authorities to purchase land or various types of equipment and facilities.
Although municipal lease obligations do not constitute general obligations of
the municipality for which the municipality's taxing authority is pledged, they
ordinarily are backed by the municipality's covenant to budget for, appropriate
and make the payments due under the lease obligation. The leases underlying
certain Municipal Obligations, however, provide that lease payments are subject
to partial or full abatement if, because of material 


A-1
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Appendix A (continued)
--------------------------------------------------------------------------------

damage or destruction of the leased property, there is substantial interference
with the lessee's use or occupancy of such property. This "abatement risk" may
be reduced by the existence of insurance covering the leased property, the
maintenance by the lessee of reserve funds or the provision of credit
enhancements such as letters of credit.

     The liquidity of municipal lease obligations varies. Municipal leases held
by the Portfolio will be considered illiquid securities unless the Portfolio's
Board of Directors determines on an on-going basis that the leases are readily
marketable. Certain municipal lease obligations contain "non-appropriation"
clauses which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated for
such purpose on a yearly basis. In the case of a "non-appropriation" lease, the
Portfolio's ability to recover under the lease in the event of non-appropriation
or default will be limited solely to the repossession of the leased property,
without recourse to the general credit of the lessee, and disposition of the
property in the event of foreclosure might be difficult. The Portfolio will not
invest more than 5% of its assets in such "non-appropriation" municipal lease
obligations.

     ZERO COUPON OBLIGATIONS

     The Portfolio may invest up to 10% of its total assets in zero coupon
Municipal Obligations. Such obligations include "pure zero" obligations, which
pay no interest for their entire life (either because they bear no stated rate
of interest or because their stated rate of interest is not payable until
maturity), and "zero/fixed" obligations, which pay no interest for an initial
period and thereafter pay interest currently. Zero coupon obligations also
include securities representing the principal-only com ponents of Municipal
Obligations from which the interest components have been stripped and sold
separately by the holders of the underlying Municipal Obligations. Zero coupon
securities usually trade at a deep discount from their face or par value and
will be subject to greater fluctuations in market value in response to changing
rates than obligations of comparable maturity that make current distributions of
interest. While zero coupon Municipal Obligations will not contribute to the
cash available to the Portfolio, SBMFM believes that limited investments in such
securities may facilitate the Portfolio's ability to preserve capital while
generating tax-exempt income through the accrual of original interest discount.
Zero coupon Municipal Obligations generally are liquid, although such liquidity
may be reduced from time to time due to interest rate volatility and other
factors.

     FLOATING RATE OBLIGATIONS

     The Portfolio may purchase floating and variable rate municipal notes and 


                                                                             A-2
<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Appendix A (continued)
--------------------------------------------------------------------------------

bonds, which frequently permit the holder to demand payment of principal at any
time, or at specified intervals, and permit the issuer to prepay principal, plus
accrued interest, at its discretion after a specified notice period. The
issuer's obligations under the demand feature of such notes and bonds generally
are secured by bank letters of credit or other credit support arrangements.
There frequently will be no secondary market for variable and floating rate
obligations held by the Portfolio, although the Portfolio may be able to obtain
payment of principal at face value by exercising the demand feature of the
obligation.

     PARTICIPATION INTERESTS

     The Portfolio may invest up to 5% of its total assets in participation
interests in municipal bonds, including IDBs, PABs and floating and variable
rate securities. A participation interest gives the Portfolio an undivided
interest in a municipal bond owned by a bank. The Portfolio has the right to
sell the instrument back to the bank. If the participation interest is unrated,
it will be backed by an irrevocable letter of credit or guarantee of a bank that
the Portfolio's Board of Directors has determined meets certain credit quality
standards or the payment obligation will otherwise be collateralized by U.S.
government securities. The Portfolio will have the right, with respect to
certain participation interests, to draw on the letter of credit on demand,
after specified notice for all or any part of the principal amount of the
Portfolio's participation interest, plus accrued interest. Generally, the
Portfolio intends to exercise the demand under the letters of credit or other
guarantees only upon a default under the terms of the underlying bond, or to
maintain the Portfolio's assets in accordance with its investment objective and
policies. The ability of a bank to fulfill its obligations under a letter of
credit or guarantee might be affected by possibl e financial difficulties of its
borrowers, adverse interest rate or economic conditions, regulatory limitations
or other factors. SBMFM will monitor the pricing, quality and liquidity of the
participation interests held by the Portfolio and the credit standing of the
banks issuing letters of credit or guarantees supporting such participation
interests on the basis of published financial information reports of rating
services and bank analytical services.

     CUSTODIAL RECEIPTS

     The Portfolio may acquire custodial receipts or certificates underwritten
by securities dealers or banks that evidence ownership of future interest
payments, principal payments or both on certain Municipal Obligations. The
underwriter of these certificates or receipts typically purchases Municipal
Obligations and deposits the obligations in an irrevocable trust or custodial
account with a custodian bank, which then issues receipts or certificates that
evidence ownership of the periodic 


<PAGE>

Managed Municipals Portfolio II Inc.

--------------------------------------------------------------------------------
Appendix A (continued)
--------------------------------------------------------------------------------

unmatured coupon payments and the final principal payment on the obligations.
Custodial receipts evidencing specific coupon or principal payments have the
same economic attributes as zero coupon Municipal Obligations described above.
Although under the terms of the custodial receipt the Portfolio would be
typically authorized to assert its rights directly against the issuer of the
underlying obligation, the Portfolio could be required to assert through the
custodian bank those rights that may exist against the underlying issuer. Thus,
in the event the underlying issuer fails to pay principal or interest when due,
the Portfolio may be subject to delays, expenses and risks that are greater than
those that would have been involved if the Portfolio had purchased a direct
obligation of the issuer. In addition, in the event that the trust or custodial
account in which the underlying security has been deposited is determined to be
an association taxable as a corporation, instead of a non-taxable entity, the
yield on the underlying security would be reduced in recognition of any taxes
paid.

     MUNICIPAL OBLIGATION COMPONENTS

     The Portfolio may invest in Municipal Obligations, the interest rate on
which has been divided by the issuer into two different and variable components,
which together result in a fixed interest rate. Typically, the first of the
components (the "Auction Component") pays an interest rate that is reset
periodically through an auction process, whereas the second of the components
(the "Residual Component") pays a residual interest rate based on the difference
between the total interest paid by the issuer on the Municipal Obligation and
the auction rate paid on the Auction Component. The Portfolio may purchase both
Auction and Residual Components.

     Because the interest rate paid to holders of Residual Components is
generally determined by subtracting the interest rate paid to the holders of
Auction Components from a fixed amount, the interest rate paid to Residual
component holders will decrease as the Auction Component's rate increases and
increase as the Auction Component's rate decreases. Moreover, the extent of the
increases and decreases in market value of Residual Components may be larger
than comparable changes in the market value of an equal principal amount of a
fixed rate Municipal Obligation having similar credit quality, redemption
provisions and maturity.


                                                                             A-4

Managed Municipals Portfolio II Inc.

388 Greenwich Street
New York, New York  10013
(212) 720-9218

STATEMENT OF ADDITIONAL INFORMATION

December 9, 1996

	Managed Municipals Portfolio II Inc. (the "Portfolio") is a non-
diversified, closed-end management investment company that seeks as high a 
level of current income exempt from Federal income tax as is consistent with 
the preservation of principal.  Under normal conditions, the Portfolio will, 
in seeking its investment objective, invest substantially all of its assets in 
long-term, investment grade obligations issued by state and local governments, 
political subdivisions, agencies and public authorities ("Municipal 
Obligations").  No assurance can be given that the Portfolio will be able to 
achieve its investment objective.

	This Statement of Additional Information ("SAI") expands upon and 
supplements the information contained in the current Prospectus of the 
Portfolio, dated December 9, 1996, as amended or supplemented from time to 
time (the "Prospectus"), and should be read in conjunction with the 
Prospectus.  The Prospectus may be obtained from any Smith Barney Financial 
Consultant or by writing or calling the Portfolio at the address or telephone 
number set forth above.  This SAI, although not itself a prospectus, is 
incorporated by reference into the Prospectus in its entirety.

	No person has been authorized to give any information or to make any 
representations not contained in the Prospectus or this SAI and, if given or 
made, such information must not be relied upon as having been authorized by 
the Portfolio or the Portfolio's investment adviser.  The Prospectus and this 
SAI do not constitute an offer to sell or a solicitation of any offer to buy 
any security other than the shares of Common Stock.  The Prospectus and this 
SAI do not constitute an offer to sell or a solicitation of an offer to buy 
the shares of the Portfolio's common stock (the "Common Stock") by anyone in 
any jurisdiction in which such offer or solicitation would be unlawful.  
Neither the delivery of the Prospectus nor any sale made hereunder shall, 
under any circumstances, create any implication that there has been no change 
in the affairs of the Portfolio since the date hereof.  If any material change 
occurs while the Prospectus is required by law to be delivered, however, the 
Prospectus or this SAI will be supplemented or amended accordingly.




TABLE OF CONTENTS
								


PAGE

Investment Objective and Policies (see 
in the Prospectus "Investment Objective 
and Policies" and "Appendix A")


2




Management of the Portfolio (see in the  
Prospectus "Management of the 
Portfolio")

13




Taxes (see in Prospectus "Taxation")
18


Stock Purchases and Tenders (see in the 
Prospectus "Description of Common Stock"


21




Certain Provisions of the Articles of 
Incorporation
22




Additional Information (see in the 
Prospectus "Custodian and Transfer 
Agent")

24




Appendix-- Description of Moody's, S&P 
and Fitch Ratings

A-1






INVESTMENT OBJECTIVE AND POLICIES

	The Prospectus discusses the Portfolio's investment objective and the 
policies it employs to achieve that objective.  The following discussion 
supplements the description of the Portfolio's investment policies in the 
Prospectus.  The Portfolio's investment objective is to seek as high a level 
of current income exempt from Federal income taxes as is consistent with the 
preservation of principal by investing substantially all of its assets in a 
variety of Municipal Obligations.  The Portfolio's investment objective may 
not be changed without the affirmative vote of the holders of a majority (as 
defined in the Investment Company Act of 1940, as amended (the "1940 Act")) of 
the Portfolio's outstanding voting shares.  No assurance can be given that the 
Portfolio's investment objective will be achieved.

Use of Ratings as Investment Criteria

	In general, the ratings of Moody's Investors Service, Inc. ("Moody's"), 
Standard & Poor's Ratings Group ("S&P") and Fitch Investors Service, Inc. 
("Fitch") represent the opinions of those agencies as to the quality of the 
Municipal Obligations and long-term investments which they rate.  It should be 
emphasized, however, that such ratings are relative and subjective, are not 
absolute standards of quality and do not evaluate the market risk of 
securities.  These ratings will be used as initial criteria for the selection 
of securities, but the Portfolio also will rely upon the independent advice of 
its investment adviser,  Smith Barney Mutual Funds Management Inc. ("SBMFM" or 
the "Investment Manager").  Among the factors that will also be considered by 
the Investment Manager in evaluating potential Municipal Obligations to be 
held by the Portfolio are the price, coupon and yield to maturity of the 
obligations, the Investment Manager's assessment of the credit quality of the 
issuer of the obligations, the issuer's available cash flow and the related 
coverage ratios, the property, if any, securing the obligations, and the terms 
of the obligations, including subordination, default, sinking fund and early 
redemption provisions.  To the extent the Portfolio invests in lower-rated and 
comparable unrated securities, the Portfolio's achievement of its investment 
objective may be more dependent on the Investment Manager's credit analysis of 
such securities than would be the case for a portfolio consisting entirely of 
higher-rated securities.  The Appendix to this SAI contains information 
concerning the ratings of Moody's, S&P and Fitch and their significance.

	Subsequent to its purchase by the Portfolio, an issue of Municipal 
Obligations may cease to be rated or its rating may be reduced below the 
rating given at the time the securities were acquired by the Portfolio.  
Neither event will require the sale of such Municipal Obligations by the 
Portfolio, but the Investment Manager will consider such event in its 
determination of whether the Portfolio should continue to hold the Municipal 
Obligations.  In addition, to the extent the ratings change as a result of 
changes in the rating systems or due to a corporate restructuring of Moody's, 
S&P or Fitch, the Portfolio will attempt to use comparable ratings as 
standards for its investments in accordance with its investment objectives and 
policies.

	The Portfolio will seek to invest substantially all of its assets in 
Municipal Obligations, and under normal conditions at least 80% of the 
Portfolio's total assets will be invested in investment grade Municipal 
Obligations.

	The Portfolio may invest in Municipal Obligations rated as low as Baa by 
Moody's, BBB by S&P or BBB by Fitch or in unrated Municipal Obligations deemed 
to be of comparable quality.  Although such securities are considered 
investment grade, they may be subject to greater risks than other higher-rated 
investment grade securities.

	While the market for Municipal Obligations is considered to be generally 
adequate, the existence of limited markets for particular lower-rated and 
comparable unrated securities may diminish the Portfolio's ability to (1) 
obtain accurate market quotations for purposes of valuing such securities and 
calculating its net asset value and (2) sell the securities at fair value to 
respond to changes in the economy or in the financial markets.  The market for 
certain lower-rated and comparable unrated securities is relatively new and 
has not fully weathered a major economic recession.  Any such economic 
downturn could adversely affect the ability of the issuers of such securities 
to repay principal and pay interest thereon.


Taxable Investments

	Under normal conditions the Portfolio may hold up to 20% of its assets 
in cash or money market instruments, including taxable money market 
instruments (collectively, "Taxable Investments").

	Money market instruments in which the Portfolio may invest include: U.S. 
government securities; tax-exempt notes of municipal issuers rated, at the 
time of purchase no lower than MIG1 by Moody's, SP-1 by S&P or F-1 by Fitch 
or, if not rated, by issuers having outstanding unsecured debt then rated 
within the three highest rating categories; bank obligations (including 
certificates of deposit, time deposits and bankers' acceptances of domestic 
banks, domestic savings and loan associations and similar institutions); 
commercial paper rated no lower than P-1 by Moody's, A-1 by S&P or F-l by 
Fitch or the equivalent from another nationally recognized rating service or, 
if unrated, of an issuer having an outstanding, unsecured debt issue then 
rated within the three highest rating categories; and repurchase agreements.  
At no time will the Portfolio's investments in bank obligations, including 
time deposits, exceed 25% of the value of its assets.

	U.S. government securities in which the Portfolio may invest include 
direct obligations of the United States and obligations issued by U.S. 
government agencies and instrumentalities.  Included among direct obligations 
of the United States are Treasury bills, Treasury notes and Treasury bonds, 
which differ principally in terms of their maturities.  Included among the 
securities issued by U.S. government agencies and instrumentalities are: 
securities that are supported by the full faith and credit of the United 
States (such as Government National Mortgage Association certificates); 
securities that are supported by the right of the issuer to borrow from the 
U.S. Treasury (such as securities of Federal Home Loan Banks); and securities 
that are supported by the credit of the instrumentality (such as Federal 
National Mortgage Association and Federal Home Loan Mortgage Corporation 
bonds).

Lending Securities

	By lending its securities, the Portfolio can increase its income by 
continuing to receive interest on the loaned securities, by investing the cash 
collateral in short-term instruments or by obtaining yield in the form of 
interest paid by the borrower when U.S. government securities are used as 
collateral.  The Portfolio will adhere to the following conditions whenever it 
lends its securities: (1) the Portfolio must receive at least 100% cash 
collateral or equivalent securities from the borrower, which will be 
maintained by daily marking-to-market; (2) the borrower must increase the 
collateral whenever the market value of the securities loaned rises above the 
level of the collateral; (3) the Portfolio must be able to terminate the loan 
at any time; (4) the Portfolio must receive reasonable interest on the loan, 
as well as any dividends, interest or other distributions on the loaned 
securities, and any increase in market value; (5) the Portfolio may pay only 
reasonable custodian fees in connection with the loan; and (6) voting rights 
on the loaned securities may pass to the borrower, except that, if a material 
event adversely affecting the investment in the loaned securities occurs, the 
Portfolio's Board of Directors must terminate the loan and regain the 
Portfolio's right to vote the securities.  From time to time, the Portfolio 
may pay a part of the interest earned from the investment of collateral 
received for securities loaned to the borrower and/or a third party that is 
unaffiliated with the Portfolio and that is acting as a "finder."

Repurchase Agreements

	The Portfolio may enter into repurchase agreements with certain member 
banks of the Federal Reserve System and certain dealers on the Federal Reserve 
Bank of New York's list of reporting dealers.  Under the terms of a typical 
repurchase agreement, the Portfolio would acquire an underlying debt 
obligation for a relatively short period (usually not more than one week) 
subject to an obligation of the seller to repurchase and the Portfolio to 
resell the obligation at an agreed-upon price and time, thereby determining 
the yield during the Portfolio's holding period.  Under each repurchase 
agreement, the selling institution will be required to maintain the value of 
the securities subject to the repurchase agreement at not less than their 
repurchase price.  The Investment Manager, acting under the supervision of the 
Portfolio's Board of Directors, reviews on an ongoing basis the value of the 
collateral and the creditworthiness of those banks and dealers with which the 
Portfolio enters into such transactions, the Portfolio will bear a risk of 
loss in the event that the other party to the transaction defaults on its 
obligations and the Portfolio is delayed or prevented from exercising its 
rights to dispose of the underlying securities, including the risk of a 
possible decline in the value of the underlying securities during the period 
in which the Portfolio seeks to assert its rights to them, the risk of 
incurring expenses associated with asserting those rights and the risk of 
losing all or a part of the income from the agreement.

Investments in Municipal Obligation Index and Interest Rate Futures Contracts 
and Options on Interest Rate Futures Contracts

	The Portfolio may invest in Municipal Obligation index and interest rate 
futures contracts and options on interest rate futures contracts that are 
traded on a domestic exchange or board of trade.  Such investments may be made 
by the Portfolio solely for the purpose of hedging against changes in the 
value of its portfolio securities due to anticipated changes in interest rates 
and market conditions, and not for purposes of speculation.  Further, such 
investments will be made only in unusual circumstances such as when the 
Investment Manager anticipates an extreme change in interest rates or market 
conditions.

	Municipal Obligation Index and Interest Rate Futures Contracts.  A 
Municipal Obligation index futures contract is an agreement to take or make 
delivery of an amount of cash equal to a specific dollar amount times the 
difference between the value of the index at the close of the last trading day 
of the contract and the price at which the index contract is originally 
written.  No physical delivery of the underlying Municipal Obligations in the 
index is made.  Interest rate futures contracts are contracts for the future 
purchase or sale of specified interest rate sensitive debt securities of the 
U.S. Treasury, such as U.S. Treasury bills, bonds and notes, obligations of 
the Government National Mortgage Association and bank certificates of deposit.  
Although most interest rate futures contracts require the delivery of the 
underlying securities, some settle in cash.  Each contract designates the 
price date, time and place of delivery.

	The purpose of the Portfolio's entering into a Municipal Obligation 
index or interest rate futures contract, as the holder of long-term Municipal 
Obligations, is to protect the Portfolio from fluctuation in interest rates on 
tax-exempt securities without actually buying or selling Municipal 
Obligations.  The Portfolio will, with respect to its purchases of financial 
futures contracts establish a segregated account consisting of cash or cash 
equivalents in an amount equal to the total market value of the futures 
contracts less the amount of initial margin on deposit for the contracts.

	Unlike the purchase or sale of a Municipal Obligation, no consideration 
is paid or received by the Portfolio upon the purchase or sale of a futures 
contract.  Initially, the Portfolio will be required to deposit with the 
futures commission merchant an amount of cash or cash equivalents equal to 
approximately 5% of the contract amount (this amount is subject to change by 
the board of trade on which the contract is traded and members of such board 
of trade may charge a higher amount).  This amount is known as "initial 
margin" and is in the nature of a performance bond or good faith deposit on 
the contract which is returned to the Portfolio upon termination of the 
futures contract, assuming that all contractual obligations have been 
satisfied.  Subsequent payments known as "variation margin," to and from the 
futures commission merchant, will be made on a daily basis as the price of the 
index or securities fluctuates making the long and short positions in the 
futures contract more or less valuable, a process known as marking-to-market.  
At any time prior to the expiration of the contract, the Portfolio may elect 
to close the position by taking an opposite position, which will operate to 
terminate the Portfolio's existing position in the futures contract.

	There are several risks in connection with the use of Municipal 
Obligation index and interest rate futures contracts as a hedging device.  
Successful use of these futures contracts by the Portfolio is subject to the 
Investment Manager' ability to predict correctly movements in the direction of 
interest rates.  Such predictions involve skills and techniques which may be 
different from those involved in the management of a long-term Municipal 
Obligation portfolio.  In addition, there can be no assurance that a 
correlation would exist between movements in the price of the Municipal 
Obligation index or the debt security underlying the futures contract and 
movement in the price of the Municipal Obligations which are the subject of 
the hedge.  The degree of imperfection of correlation depends upon various 
circumstances, such as variations in speculative market demand for futures 
contracts and Municipal Obligations and technical influences on futures 
trading. The Portfolio's Municipal Obligations and the Municipal Obligations 
in the index may also differ in such respects as interest rate levels, 
maturities and creditworthiness of issuers. A decision of whether, when and 
how to hedge involves the exercise of skill and judgment and even a well-
conceived hedge may be unsuccessful to some degree because of market behavior 
or unexpected trends in interest rates.

	Although the Portfolio intends to enter into futures contracts only if 
an active market exists for such contracts, there can be no assurance that an 
active market will exist for a contract at any particular time. Most domestic 
futures exchanges and boards of trade limit the amount of fluctuation 
permitted in futures contract prices during a single trading day.  The daily 
limit establishes the maximum amount the price of a futures contract may vary 
either up or down from the previous day's settlement price at the end of a 
trading session.  Once the daily limit has been reached in a particular 
contract, no trades may be made that day at a price beyond that limit.  The 
daily limit governs only price movement during a particular trading day and 
therefore does not limit potential losses because the limit may prevent the 
liquidation of unfavorable positions.  It is possible that futures contract 
prices could move to the daily limit for several consecutive trading days with 
little or no trading, thereby preventing prompt liquidation of futures 
positions and subjecting some futures traders to substantial losses.  In such 
event it will not be possible to close a futures position and in the event of 
adverse price movements, the Portfolio would be required to make daily cash 
payments of variation margin.  In such circumstances, an increase in the value 
of the portion of the portfolio being hedged, if any, may partially or 
completely offset losses on the futures contract.  As described above, 
however, there is no guarantee the price of Municipal Obligations will, in 
fact, correlate with the price movements in a futures contract and thus 
provide an offset to losses on a futures contract.  

	If the Portfolio has hedged against the possibility of an increase in 
interest rates adversely affecting the value of Municipal Obligations it holds 
and rates decrease instead, the Portfolio will lose part or all of the benefit 
of the increased value of the Municipal Obligations it has hedged because it 
will have offsetting losses in its futures positions.  In addition, in such 
situations, if the Portfolio has insufficient cash, it may have to sell 
securities to meet daily variation margin requirements.  Such sales of 
securities may, but will not necessarily, be at increased prices which reflect 
the decline in interest rates.  The Portfolio may have to sell securities at a 
time when it may be disadvantageous to do so.  

	Options on Interest Rate Futures Contracts.  The Portfolio may purchase 
put and call options on interest rate futures contracts which are traded on a 
domestic exchange or board of trade as a hedge against changes in interest 
rates, and may enter into closing transactions with respect to such options to 
terminate existing positions.  The Portfolio will sell put and call options on 
interest rate futures contracts only as part of closing sale transactions to 
terminate its options positions.  There is no guarantee such closing 
transactions can be effected.

	Options on interest rate futures contracts, as contrasted with the 
direct investment in such contracts, give the purchaser the right, in return 
for the premium paid, to assume a position in interest rate futures contracts 
at a specified exercise price at any time prior to the expiration date of the 
options.  Upon exercise of an option, the delivery of the futures position by 
the writer of the option to the holder of the option will be accompanied by 
delivery of the accumulated balance in the writer's futures margin account, 
which represents the amount by which the market price of the futures contract 
exceeds, in the case of a call, or is less than, in the case of a put, the 
exercise price of the option on the futures contract.  The potential loss 
related to the purchase of an option on interest rate futures contracts is 
limited to the premium paid for the option (plus transaction costs).  Because 
the value of the option is fixed at the point of sale, there are no daily cash 
payments to reflect changes in the value of the underlying contract; however, 
the value of the option does change daily and that change would be reflected 
in the net asset value of the Portfolio.

	There are several risks relating to options on interest rate futures 
contracts.  The ability to establish and close out positions on such options 
will be subject to the existence of a liquid market.  In addition, the 
Portfolio's purchase of put or call options will be based upon predictions as 
to anticipated interest rate trends by the Investment Manager, which could 
prove to be inaccurate.  Even if the Investment Manager' expectations are 
correct, there may be an imperfect correlation between the change in the value 
of the options and of the Portfolio's securities.

Municipal Obligations

	General Information.  Municipal Obligations generally are understood to 
include debt obligations issued to obtain funds for various public purposes, 
including the construction of a wide range of public facilities, refunding of 
outstanding obligations, payment of general operating expenses and extensions 
of loans to public institutions and facilities.  Private activity bonds that 
are issued by or on behalf of public authorities to obtain funds to provide 
privately operated facilities are included within the term Municipal 
Obligations if the interest paid thereon qualifies as excludable from gross 
income (but not necessarily from alternative minimum taxable income) for 
Federal income tax purposes in the opinion of bond counsel to the issuer.  

	The yields on Municipal Obligations are dependent upon a variety of 
factors, including general economic and monetary conditions, general money 
market conditions, general conditions of the Municipal Obligations market, the 
financial condition of the issuer, the size of a particular offering, the 
maturity of the obligation offered and the rating of the issue.  Municipal 
Obligations are also subject to the provisions of bankruptcy, insolvency and 
other laws affecting the rights and remedies of creditors, such as the Federal 
Bankruptcy Code, and laws, if any, that may be enacted by Congress or state 
legislatures extending the time for payment of principal or interest, or both, 
or imposing other constraints upon enforcement of the obligations or upon the 
ability of municipalities to levy taxes.   There is also the possibility that 
as a result of litigation or other conditions the power or ability of any one 
or more issuer to pay, when due, principal of and interest on its, or their, 
Municipal Obligations may be materially affected.  

	The net asset value of the Common Stock will change with changes in the 
value of the Portfolio's securities.  Because the Portfolio will invest 
primarily in fixed-income securities, the net asset value of the Common Stock 
can be expected to change as levels of interest rates fluctuate; generally, 
when prevailing interest rates increase, the value of fixed-income securities 
held by the Portfolio can be expected to decrease and when prevailing interest 
rates decrease, the value of the fixed-income securities held by the Portfolio 
can be expected to increase.  The value of the fixed-income securities held by 
the Portfolio and thus the Portfolio's net asset value, may also be affected 
by other economic, market and credit factors.

	From time to time, the Portfolio's investments may include securities as 
to which the Portfolio, by itself or together with other funds or accounts 
managed by the Investment Manager, holds a major portion or all of an issue of 
Municipal Obligations.  Because relatively few potential purchasers may be 
available for these investments and, in some cases, contractual restrictions 
may apply on resales, the Portfolio may find it more difficult  to sell these 
securities at a time when the Investment Manager believes it is advisable to 
do so.

	When-Issued Securities.  The Portfolio may purchase Municipal 
Obligations on a "when-issued" basis (i.e., for delivery beyond the normal 
settlement date at a stated price and yield).  The payment obligation and the 
interest rate that will be received on the Municipal Obligations purchased on 
a when-issued basis are each fixed at the time the buyer enters into the 
commitment.  Although the Portfolio will purchase Municipal Obligations on a 
when-issued basis only with the intention of actually acquiring the 
securities, the Portfolio may sell these securities before the settlement date 
if it is deemed advisable as a matter of investment strategy. 

	Municipal Obligations are subject to changes in value based upon the 
public's perception of the creditworthiness of the issuers and changes, real 
or anticipated, in the level of interest rates.  In general, Municipal 
Obligations tend to appreciate when interest rates decline and depreciate when 
interest rates rise.  Purchasing Municipal Obligations on a when-issued basis, 
therefore, can involve the risk that the yields available in the market when 
the delivery takes place actually may be higher than those obtained in the 
transaction itself.  To account for this risk, a separate account of the 
Portfolio consisting of cash or liquid debt securities equal to the amount of 
the when-issued commitments will be established at the Portfolio's custodian 
bank.  For the purpose of determining the adequacy of the securities in the 
account, the deposited securities will be valued at market or fair value.  If 
the market or fair value of such securities declines, additional cash or 
securities will be placed in the account on a daily basis so that the value of 
the account will equal the amount of such commitments by the Portfolio.  
Placing securities rather than cash in the segregated account may have a 
leveraging effect on the Portfolio's net assets.  That is, to the extent the 
Portfolio remains substantially fully invested in securities at the same time 
it has committed to purchase securities on a when-issued basis, there will be 
greater fluctuations in its net assets than if it had set aside cash to 
satisfy its purchase commitment.  Upon the settlement date of the when-issued 
securities, the Portfolio will meet its obligations from then-available cash 
flow, sale of securities held in the segregated account, sale of other 
securities or, although it would not normally expect to do so, from the sale 
of the when-issued securities themselves (which may have a value greater or 
less than the Portfolio's payment obligations).  Sales of securities to meet 
such obligations may involve the realization of capital gains, which are not 
exempt from Federal income taxes.

	When the Portfolio engages in when-issued transactions, it relies on the 
seller to consummate the trade.  Failure of the seller to do so may result in 
the Portfolio's incurring a loss or missing an opportunity to obtain a price 
considered to be advantageous.

	Municipal Leases.  Municipal leases may take the form of a lease or an 
installment purchase contract issued by state and local government authorities 
to obtain funds to acquire a wide variety of equipment and facilities such as 
fire and sanitation vehicles, computer equipment and other capital assets.  
These obligations have evolved to make it possible for state and local 
government authorities to acquire property and equipment without meeting 
constitutional and statutory requirements for the issuance of debt.  Thus, 
municipal leases have special risks not normally associated with Municipal 
Obligations.  These obligations frequently contain "non-appropriation" clauses 
providing that the governmental issuer of the obligation has no obligation to 
make future payments under the lease or contract unless money is appropriated 
for such purposes by the legislative body on a yearly or other periodic basis.  
In addition to the "non-appropriation" risk, municipal leases represent a type 
of financing that has not yet developed the depth of marketability associated 
with Municipal Obligations; moreover, although the obligations will be secured 
by the leased equipment, the disposition of the equipment in the event of 
foreclosure might prove difficult.

	To limit the risks associated with municipal leases, the Portfolio will 
invest no more than 5% of its total assets in lease obligations that contain 
non-appropriation clauses and will only purchase a non-appropriation lease 
obligation with respect to which (1) the nature of the leased equipment or 
other property is such that its ownership or use is reasonably essential to a 
governmental function of the issuing municipality, (2) the lease payments will 
begin to amortize the principal balance due at an early date, resulting in an 
average life of five years or less for the lease obligation, (3) appropriate 
covenants will be obtained from the municipal obligor prohibiting the 
substitution or purchase of similar equipment or other property if lease 
payments are not appropriated, (4) the lease obligor has maintained good 
market acceptability in the past, (5) the investment is of a size that will be 
attractive to institutional investors and (6) the underlying leased equipment 
or other property has elements of portability and/or use that enhance its 
marketability in the event that foreclosure on the underlying equipment or 
other property were ever required.

	Municipal leases that the Portfolio may acquire will be both rated and 
unrated.  Rated leases that may be held by the Portfolio include those rated 
investment grade at the time of investment (that is, rated no lower than Baa 
by Moody's, BBB by S&P or BBB by Fitch).  The Portfolio may acquire unrated 
issues that the Investment Manager deems to be comparable in quality to rated 
issues in which the Portfolio is authorized to invest.  A determination by the 
Investment Manager that an unrated lease obligation is comparable in quality 
to a rated lease obligation will be made on the basis of, among other things, 
consideration of whether the nature of the leased equipment or other property 
is such that its ownership or use is reasonably essential to a governmental 
function of the issuing municipality.  In addition, all such determinations 
made by the Investment Manager will be subject to oversight and approval by 
the Portfolio's Board of Directors.

	Municipal leases held by the Portfolio will be considered illiquid 
securities unless the Portfolio's Board of Directors determines on an ongoing 
basis that the leases are readily marketable. An unrated municipal lease with 
a non-appropriation risk that is backed by an irrevocable bank letter of 
credit or an insurance policy issued by a bank or insurer deemed by the 
Investment Manager to be of high quality and minimal credit risk is not be 
deemed to be illiquid solely because the underlying municipal lease is 
unrated, if the Investment Manager determines that the lease is readily 
marketable because it is backed by the letter of credit or insurance policy.

Investment Restrictions

	The Portfolio has adopted certain fundamental investment restrictions 
that may not be changed without the prior approval of the holders of a 
majority of the Portfolio's outstanding voting securities.  A "majority of the 
Portfolio's outstanding voting securities" for this purpose means the lesser 
of (1) 67% or more of the shares of the Portfolio's Common Stock present at a 
meeting of shareholders, if the holders of 50% of the outstanding shares are 
present or represented by proxy at the meeting or (2) more than 50% of the 
outstanding shares.  For purposes of the restrictions listed below, all 
percentage limitations apply immediately after a purchase or initial 
investment, and any subsequent change in applicable percentage resulting from 
market fluctuations will not require elimination of any security from the 
portfolio.  Under its fundamental restrictions, the Portfolio may not:

1. Purchase securities other than Municipal Obligations and Taxable 
Investments as those terms are described in the Prospectus and this SAI. 
2. Borrow money, except for temporary or emergency purposes, or for 
clearance of transactions, and then only in amounts not exceeding 15% of 
its total assets (not including the amount borrowed) and as otherwise 
described in the Prospectus and this SAI.  When the Portfolio's 
borrowings exceed 5% of the value of its total assets, the Portfolio will 
not make any additional investments.
3. Sell securities short or purchase securities on margin, except for such 
short-term credits as are necessary for the clearance of transactions, 
but the Portfolio may make margin deposits in connection with 
transactions in options futures and options on futures.
4. Underwrite any issue of securities, except to the extent that the 
purchase of Municipal Obligations may be deemed to be an underwriting.
5. Purchase, hold or deal in real estate or oil and gas interests, except 
that the Portfolio may invest in Municipal Obligations secured by real 
estate or interests in real estate.
6. Invest in commodities, except that the Portfolio may enter into futures 
contracts, including those relating to indexes and options on futures 
contracts or indexes described in the Prospectus and this SAI.
7. Lend any funds or other assets except through purchasing Municipal 
Obligations or Taxable Investments, lending portfolio securities and 
entering into repurchase agreements consistent with the Portfolio's 
investment objective.
8. Issue senior securities. 
9. Invest more than 25% of its total assets in the securities of issuers in 
any single industry, except that this limitation will not be applicable 
to the purchase of Municipal Obligations and U.S. government securities.
10. Make any investments for the purpose of exercising control or management 
of any company.

Portfolio Transactions

	Newly issued securities normally are purchased directly from the issuer 
or from an underwriter acting as principal.  Other purchases and sales usually 
are placed with those dealers from which it appears the best price or 
execution will be obtained; those dealers may be acting as either agents or 
principals.  The purchase price paid by the Portfolio to underwriters of newly 
issued securities usually includes a concession paid by the issuer to the 
underwriter, and purchases of after-market securities from dealers normally 
are executed at a price between the bid and asked prices.  The Portfolio has 
paid no brokerage commissions since its commencement of operations.
	Allocation of transactions, including their frequency, to various 
dealers is determined by the Investment Manager in its best judgment and in a 
manner deemed fair and reasonable to shareholders.  The primary considerations 
are availability of the desired security and the prompt execution of orders in 
an effective manner at the most favorable prices.  Subject to these 
considerations, dealers that provide supplemental investment research and 
statistical or other services to the Investment Manager may receive orders for 
portfolio transactions by the Portfolio.  Information so received is in 
addition to, and not in lieu of, services required to be performed by the 
Investment Manager, and the fees of the Investment Manager are not reduced as 
a consequence of their receipt of such supplemental information.  Such 
information may be useful to the Investment Manager in serving both the 
Portfolio and other clients and conversely, supplemental information obtained 
by the placement of business of other clients may be useful to the Investment 
Manager in carrying out its obligations to the Portfolio.

	The Portfolio will not purchase Municipal Obligations during the 
existence of any underwriting or selling group relating thereto of which Smith 
Barney Inc. ("Smith Barney") or its affiliates are members except to the 
extent permitted by the Securities and Exchange Commission (the "SEC").  Under 
certain circumstances, the Portfolio may be at a disadvantage because of this 
limitation in comparison with other investment companies which have a similar 
investment objective but which are not subject to such limitation.

	While investment decisions for the Portfolio are made independently from 
those of the other accounts managed by the Investment Manager, 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 Investment 
Manager 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 Investment Manager 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.

	The Portfolio's Board of Directors will review periodically 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.


Portfolio Turnover

	The Portfolio's portfolio turnover rate (the lesser of purchases or 
sales of portfolio securities during the last fiscal year, excluding purchases 
or sales of short-term securities, divided by the monthly average value of 
portfolio securities) generally is not expected to exceed 100%, but the 
portfolio turnover rate will not be a limiting factor whenever the Portfolio 
deems it desirable to sell or purchase securities.  Securities may be sold in 
anticipation of a rise in interest rates (market decline) or purchased in 
anticipation of a decline in interest rates (market rise) and later sold.  In 
addition, a security may be sold and another security of comparable quality 
may be purchased at approximately the same time in order to take advantage of 
what the Portfolio believes to be a temporary disparity in the normal yield 
relationship between the two securities.  These yield disparities may occur 
for reasons not directly related to the investment quality of particular 
issues or the general movement of interest rates, such as changes in the 
overall demand for or supply of various types of tax-exempt securities.  For 
the fiscal years ended August 31, 1995 and 1996 the Portfolio's portfolio 
turnover rate was 95% and 63%, respectively.

MANAGEMENT OF THE PORTFOLIO

	The executive officers of the Portfolio are employees of certain of the 
organizations that provide services to the Portfolio. These organizations are 
as follows:

Name	Service

SBMFM 	Investment Manager and
		Administrator

Smith Barney	Distributor (Sponsor)

PNC Bank, N.A.	Custodian
("PNC Bank")	

First Data Investor Services Group, Inc.	Transfer Agent
("First Data")

	These organizations and the functions they perform for the Portfolio are 
discussed in the Prospectus and this SAI.  

Directors and Executive Officers of the Portfolio

	The overall management of the business and affairs of the Portfolio is 
vested with its Board of Directors. The Board of Directors approves all 
significant agreements between the Portfolio and persons or companies 
furnishing services to it, including the Portfolio's agreements with its 
investment adviser, administrator, custodian and transfer agent, dividend 
paying agent, registrar and plan agent. The day-to day operations of the 
Portfolio are delegated to its officers and SBMFM, subject always to the 
investment objective and policies of the Portfolio and to general supervision 
by the Portfolio's Board of Directors. 

	The Directors and executive officers of the Portfolio, their addresses 
together with information as to their principal business occupations during 
the past five years, are shown below: 




Name and Address
Positions Held 
With the Fund
Principal Occupations 
During Past 5 Years





*Heath B. McLendon
	388 Greenwich Street
	New York NY 10013
     Age 63.

Chairman of the 
Board, 
Chief Executive 
Officer 
and Director
Managing Director of Smith 
Barney Inc.; Director and 
President of SBMFM; Chairman 
of Smith Barney Strategy 
Advisers Inc. Prior to July 
1993, Senior Executive Vice 
President of Shearson Lehman 
Brothers Inc.


 Charles F. Barber
	66 Glenwood Drive
	Greenwich, CT 06830
     Age 79.
Director
Consultant; formerly Chairman 
of the Board, ASARCO 
Incorporated.


 Martin Brody
	HMK Associates
	Three ADP Boulevard
	Roseland, NJ 07068
     Age 75.
Director
Retired Vice Chairman of the 
Board of Restaurant 
Associates Corp.; Director of 
Jaclyn, Inc.


 Allan J. Bloostein
	27 West 67th Street
	Apt. 5FW
	New York, NY 10023
     Age 67.
Director
Consultant; formerly Vice 
Chairman of the Board of May 
Department Stores Company; 
Director of Crystal Brands, 
Inc., Melville Corp., R.G. 
Barry Corp. and Hechinger Co.


 Dwight B. Crane
	Graduate School of
	Business 
Administration
	Harvard University
	Soldiers Field Road
	Boston, MA 02163
     Age 58.
Director
Professor, Graduate School of 
Business Administration, 
Harvard University.






Name and Address
Positions Held 
With the Fund
Principal Occupations 
During Past 5 Years

 Robert A. Frankel
	102 Grand Street
	Croton-on-Hudson,
	New York, NY 10520
     Age 69.
Director
Managing Partner of Robert A. 
Frankel Management 
Consultants; formerly Vice 
President of The Reader's 
Digest Association, Inc.


 William R. 
Hutchinson
	Amoco Corp.
	200 East Randolph 
Drive
	Chicago, IL  60601
     Age 53.
Director
Vice President, Financial 
Operations of Amoco Corp.; 
Director of Associated Banks 
and Associated Bank Corp.

  Jessica M. 
Bibliowicz
	388 Greenwich Street
	New York. NY 10013
     Age 36.

President
Executive Vice President 
Smith Barney Inc. and 
Chairman and Chief Executive 
Officer of SBMFM; prior to 
1994, Director of Sales and 
Marketing for Prudential 
Mutual Funds;


  Joseph P. Deane
	388 Greenwich Street
	New York. NY 10013
     Age 40

Vice President and 
Investment Officer
Managing Director of Smith 
Barney;. Prior to July 1993, 
Senior Vice President and 
Managing Director of Shearson 
Lehman Advisors.


  Lewis E. Daidone
	388 Greenwich Street
	New York, NY 10105
    Age 38

Senior Vice 
President
and Treasurer
Managing Director of Smith 
Barney; Director, Chief 
Financial Officer and Senior 
Vice President of SBMFM.


  Christina T. Sydor
	388 Greenwich Street
	New York, NY 10013
    Age 45
Secretary
Managing Director of Smith 
Barney; General Counsel and 
Secretary of SBMFM.



________________________________
*	Directors who are "interested persons" of the Portfolio (as defined in the 
1940 Act).
 Director and/or trustee of other registered investment companies with which 
Smith Barney is affiliated.

	The Portfolio pays each of its directors who is not a director, officer 
or employee of SBMFM, or any of its affiliates, an annual fee of $5,000 plus 
$500 for each Board of Directors meeting attended, and $100 for each Board 
meeting held via telephone.  In addition, the Portfolio will reimburse these 
Directors for travel and out-of-pocket expenses incurred connection with Board 
of Directors meetings.  For the fiscal year ended August 31, 1996 such fees 
and expenses totaled $44,642.







Total Compensation from 
Fund
Total Compensation from entire 
Smith Barney Mutual Fund complex, 
for the year-ended August 31, 1996                              

Charles F. Barber
$7,100
$38,400

Allan J. Bloostein
7,000
82,750

Martin Brody
6,500
112,675

Dwight B. Crane
7,300
137,525

Robert A. Frankel
7,100
65,400

William Hutchinson
7,100
38,400

Heath McLendon
-
-


Investment Manager and Administrator-- SBMFM 

	The Investment Manager serves as investment adviser to the Portfolio 
pursuant to a written agreement dated July 30, 1993 (the "Advisory 
Agreement"), a form of which was most recently approved by the Board of 
Directors, including a majority of those Directors who are not "interested 
persons" of the Portfolio or the Investment Manager ("Non-Interested 
Directors") on August 21, 1996.  Unless terminated sooner, the Advisory 
Agreement will continue for successive annual periods provided that such 
continuance is specifically approved at least annually: (1) by a majority vote 
of the Non-Interested Directors cast in person at a meeting called for the 
purpose of voting on such approval; and (2) by the Board of Directors or by a 
vote of a majority of the outstanding shares of Common Stock.  The Investment 
Manager is a division of SBMFM, which is in turn a wholly owned subsidiary of 
Smith Barney Holdings Inc. ("Holdings"), which is in turn a wholly owned 
subsidiary of Travelers Group Inc.  The Investment Manager pays the salary of 
any officer or employee who is employed by both it and the Portfolio.  The 
Investment Manager bears all expenses in connection with the performance of 
its services as investment adviser. 

	For services rendered to the Portfolio, the Investment Manager receives 
from the Portfolio a fee, computed and paid monthly at the annual rate of 
0.70% of the value of the Portfolio's average daily net assets.  For the 
fiscal years ended August 31, 1994, 1995 and 1996, such fees amounted to 
$993,763, $934,964 and $979,107 respectively.

	Under the Advisory Agreement, the Investment Manager will not be liable 
for any error of judgment or mistake of law or for any loss suffered by the 
Portfolio in connection with the Advisory Agreement, except a loss resulting 
from willful misfeasance, bad faith or gross negligence on the part of the 
Investment Manager in the performance of its duties or from reckless disregard 
of its duties and obligations under the Advisory Agreement.  The Advisory 
Agreement is terminable by vote of the Board of Directors or by the holders of 
a majority of Common Stock, at any time without penalty on 60 days' written 
notice to the Investment Manager.  The Advisory Agreement may also be 
terminated by the Investment Manager on 90 days' written notice to the 
Portfolio.  The Advisory Agreement terminates automatically upon its 
assignment.

	SBMFM serves as administrator to the Portfolio pursuant to a written 
agreement dated June 1, 1994 (the "Administration Agreement").  The services 
provided by SBMFM under the Administration Agreement are described in the 
Prospects under "Management of the Portfolio."  SBMFM is a wholly owned 
subsidiary of Holdings.

	For services rendered to the Portfolio, SBMFM receives from the 
Portfolio an administration fee computed and paid monthly at the annual rate 
of 0.20% of the value of the Portfolio's average daily assets.  For the fiscal 
years ended August 31, 1994, 1995 and 1996 SBMFM or its predecessor received 
$283,932, $267,133 and $279,745, respectively, in administration fees.

	Pursuant to the Administration Agreement, SBMFM will exercise its best 
judgment in rendering its services to the Portfolio. SBMFM will not be liable 
for any error of judgment or mistake of law or for any loss suffered by the 
Portfolio in connection with the matters to which the Administration Agreement 
relates, except by reason of SBMFM's reckless disregard of its obligations and 
duties under the Administration Agreement.

	The Administration Agreement (the "Administration Agreement") will 
continue automatically for successive annual periods provided that such 
continuance is approved at least annually by the Board of Directors of the 
Portfolio including a majority of the Non-Interested Directors by vote cast in 
person at a meeting called for the purpose of voting such approval. The 
Agreement is terminable, without penalty, upon 60 days' written notice, by the 
Board of Directors of the Portfolio or by vote of holders of a majority of the 
Portfolio's shares of Common Stock, or upon 90 days' written notice, by SBMFM.

	The Portfolio bears expenses incurred in its operation including: fees 
of the investment, adviser and administrator; taxes, interest brokerage fees 
and commissions, if any; fees of Directors who are not officers, directors 
shareholders or employees of Smith Barney; SEC fees and state blue sky 
qualification fees; charges of the custodian; transfer and dividend disbursing 
agent's fees; certain insurance premiums; outside auditing and legal expenses; 
costs of any independent pricing service; costs of maintaining corporate 
existence; costs attributable to investor services (including allocated 
telephone and personnel expenses); costs of preparation and printing of 
prospectuses and statements of additional information for regulatory purposes 
and for distribution to shareholders; shareholders' reports and corporate 
meetings of the officers, Board of Directors and shareholders of the 
Portfolio.

Principal Stockholders

	There are no persons known to the Portfolio to be "control persons" of 
the Portfolio, as such term is defined in Section 2(a)(9) of the 1940 Act. 
There is no person known to the Portfolio to hold beneficially more than 5% of 
the outstanding shares of Common Stock. The following person is the only 
person holding more than 5% of the Portfolio's outstanding shares of Common 
Stock as of December 4, 1996




		Percent of
	Amount of	Common
Name and Address	Record	Stock
of Record Owner	Ownership	Outstanding
The Depository Trust Company
Cede & Co., as Nominee for	11,067,985	98.67%
P.O. Box 20
Bowling Green Station
New York, New York 10004

11,067,985 of the shares held of record by Cede & Co., representing 98.67% of 
the outstanding shares of Common Stock, were held by The Depository Trust 
Company as nominee for Smith Barney, representing accounts for which Smith 
Barney has discretionary and non-discretionary authority.

	As of December 4, 1996, the Directors and officers of the Portfolio, as 
a group, beneficially owned less than 1% of the Portfolio's outstanding shares 
of Common Stock.

TAXES

	As described above and in the Prospectus, the Portfolio is designed to 
provide investors with current income which is excluded from gross income for 
Federal income tax purposes. The Portfolio is not intended to constitute a 
balanced investment program and is not designed for investors seeking capital 
gains or maximum tax-exempt income irrespective of fluctuations in principal. 
Investment in the Portfolio would not be suitable for tax-exempt institutions, 
qualified retirement plans, H.R. 10 plans and individual retirement accounts 
because such investors would not gain any additional tax benefit from the 
receipt of tax-exempt income.

	The following is a summary of selected Federal income tax considerations 
that may affect the Portfolio and its shareholders. The summary is not 
intended as a substitute for individual tax advice and investors are urged to 
consult their own tax advisors as to the tax consequences of an investment in 
the Portfolio.

Taxation of the Portfolio and its Investments

	The Portfolio has qualified and intends to qualify as a "regulated 
investment company" under Subchapter M of the Internal Revenue Code of 1986, 
as amended (the "Code"). In addition, the Portfolio intends to satisfy 
conditions contained in the Code that will enable interest from Municipal 
Obligations, excluded from gross income for Federal income tax purposes with 
respect to the Portfolio, to retain that tax-exempt status when distributed to 
the shareholders of the Portfolio (that is, to be classified as "exempt 
interest" dividends of the Portfolio).

	If it qualifies as a regulated investment company the Portfolio will pay 
no Federal income taxes on its taxable net investment income (that is, taxable 
income other than net realized capital gains) and its net realized capital 
gains that are distributed to shareholders. To qualify under Subchapter M of 
the Code, the Portfolio must among other things: (1) distribute to its 
shareholders at least 90% of its taxable net investment income (for this 
purpose consisting of taxable net investment income and net realized short-
term capital gains) and 90% of its tax-exempt net investment income (reduced 
by certain expenses); (2) derive at least 90% of its gross income from 
dividends, interest, payments with respect to loans of securities, gains from 
the sale or other disposition of securities, or other income (including, but 
not limited to, gains from options, futures, and forward contracts) derived 
with respect to the Portfolio's business of investing in securities; (3) 
derive less than 30% of its annual gross income from the sale or other 
disposition of securities, options, futures or forward contracts held for less 
than three months; and (4) diversify its holdings so that at the end of each 
fiscal quarter of the Portfolio (a) at least 50% of the market value of the 
Portfolio's assets is represented by cash, U.S. government securities and 
other securities, with those other securities limited with respect to any one 
issuer, to an amount no greater than 5% of the Portfolio's assets and (b) not 
more than 25% of the market value of the Portfolio's assets is invested in the 
securities of any one issuer (other than U.S. government securities or 
securities of other regulated investment companies) or of two or more issuers 
that the Portfolio controls and that are determined to be in the same or 
similar trades or businesses or related trades or businesses. In meeting these 
requirements, the Portfolio may be restricted in the selling of securities 
held by the Portfolio for less than three months and in the utilization of 
certain of the investment techniques described above under "Investment 
Objective and Policies."  As a regulated investment company, the Portfolio 
will be subject to a 4% non-deductible excise tax measured with respect to 
certain undistributed amounts of ordinary income and capital gain. The 
Portfolio expects to pay dividends and distributions necessary to avoid the 
application of this excise tax.

	As described above in this Statement of Additional Information and in 
the Prospectus, the Portfolio may invest in financial futures contracts and 
options on financial futures contracts that are traded on a U.S. exchange or 
board of trade. The Portfolio anticipates that these investment activities 
will not prevent the Portfolio from qualifying as a regulated investment 
company. As a general rule, these investment activities will increase or 
decrease the amount of long-term and short-term capital gains or losses 
realized by the Portfolio and thus, will affect the amount of capital gains 
distributed to the Portfolio shareholders.

	For Federal income tax purposes, gain or loss on the futures and options 
described above (collectively referred to as "Section 1256 Contracts") would, 
as a general rule, be taxed pursuant to a special "mark-to-market system." 
Under the mark-to-market system, the Portfolio may be treated as realizing a 
greater or lesser amount of gains or losses than actually realized. As a 
general rule gain or loss on Section 1256 Contracts is treated as 60% long 
term capital gain or loss and 4% short-term capital gain or loss, and as a 
result, the mark-to-market system will generally affect the amount of capital 
gains or losses taxable to the Portfolio and the amount of distributions 
taxable to a shareholder. Moreover, if Portfolio invests in both Section 1256 
Contracts and offsetting positions in those contracts, then the Portfolio 
might not be able to receive the benefit of certain realized losses for an 
indeterminate period of time. The Portfolio expects that its activities with 
respect to Section 1256 Contracts and offsetting positions in those Contracts 
(1) will not cause it or its shareholders to be treated as receiving a 
materially greater amount of capital gains or distributions than actually 
realized or received and (2) will permit it to use substantially all of its 
losses for the fiscal years in which the losses actually occur.



Taxation of the Portfolio's Shareholders

	The Portfolio anticipates that all dividends it pays, other than 
dividends from Taxable Investments and from income or gain derived from 
securities transactions and from the use of certain of the investment 
techniques described under "Investment Objective and Policies" will be derived 
from interest on Municipal Obligations and thus will be exempt-interest 
dividends that may be excluded by shareholders from their gross income for 
Federal income tax purposes if the Portfolio satisfies certain asset 
percentage requirements. Dividends paid from the Portfolio's net investment 
income and distributions of the Portfolio's net realized short-term capital 
gains are taxable to shareholders of the Portfolio as ordinary income, 
regardless of the length of time shareholders have held shares of Common Stock 
and whether the dividends or distributions are received in cash or reinvested 
in additional shares. As a general rule, a shareholder's gain or loss on a 
sale of his or her shares of Common Stock will be a long-term gain or loss if 
he or she has held his or her shares for more than one year and will be a 
short-term capital gain or loss if he or she has held his or her shares for 
one year or less. Dividends and distributions paid by the Portfolio will not 
qualify for the Federal dividends-received deduction for corporations.

Exempt-Interest Dividends

	Interest on indebtedness incurred by a shareholder to purchase or carry 
shares of Common Stock is not deductible for Federal income tax purposes. If a 
shareholder receives exempt-interest dividends with respect to any share of 
Common Stock and if the share is held by the shareholder for six months or 
less, then any loss on the sale of the share may, to the extent of the exempt-
interest dividends, be disallowed. The Code may also require a shareholder if 
he or she receives exempt-interest dividends to treat as taxable income a 
portion of certain otherwise non-taxable social security and railroad 
retirement benefit payments. In addition, the portion of any exempt-interest 
dividend paid by the Portfolio that represents income derived from private 
activity bonds held by the Portfolio may not retain its tax-exempt status in 
the hands of a shareholder who is a "substantial user" of a facility financed 
by the bonds, or a "related person" of the substantial user. Although the 
Portfolio's exempt-interest dividends may be excluded by shareholders from 
their gross income for Federal income tax purposes (1) some or all of the 
Portfolio's exempt-interest dividends may be a specific preference item, or a 
component of an adjustment item, for purposes of the Federal individual and 
corporate alternative minimum taxes and (2) the receipt of dividends and 
distributions from the Portfolio may affect a corporate shareholder's Federal 
"environmental" tax liability. The receipt of dividends and distributions from 
the Portfolio may affect a foreign corporate shareholder's Federal "branch 
profits" tax liability and a corporate shareholder's Federal "excess net 
passive income" tax liability. Shareholders should consult their own tax 
advisors to determine whether they are (1) "substantial users" with respect to 
a facility or "related" to those users within the meaning of the Code or (2) 
subject to a Federal alternative minimum tax, the Federal "environmental" tax, 
the Federal "branch profits" tax, or the Federal "excess net passive income" 
tax.




Dividend Reinvestment Plan

	A shareholder of the Portfolio receiving dividends or distributions in 
additional shares pursuant to the Plan should be treated for Federal income 
tax purposes as receiving a distribution in an amount equal to the amount of 
money that a shareholder receiving cash dividends or distributions receives 
and should have a cost basis in the shares received equal to that amount.

Statements and Notices

	Statements as to the tax status of the dividends and distributions 
received by shareholders of the Portfolio are mailed annually. These 
statements show the dollar amount of income excluded from Federal income taxes 
and the dollar amount, if any, subject to Federal income taxes. The statements 
will also designate the amount of exempt interest dividends that are a 
specific preference item for purposes of the Federal individual and corporate 
alternative minimum taxes and will indicate the shareholder's share of the 
investment expenses of the Portfolio. The Portfolio will notify shareholders 
annually as to the interest excluded from Federal income taxes earned by the 
Portfolio with respect to those states and possessions in which the Portfolio 
has or had investments. The dollar amount of dividends paid by the Portfolio 
that is excluded from Federal income taxation and the dollar amount of 
dividends paid by the Portfolio that is subject to Federal income taxation, if 
any, will vary for each shareholder depending upon the size and duration of 
the shareholder's investment in the Portfolio. To the extent that the 
Portfolio earns taxable net investment income, it intends to designate as 
taxable dividends the same percentage of each day's dividend as its taxable 
net investment income bears to its total net investment income earned on that 
day. Therefore, the percentage of each day's dividend designated as taxable, 
if any, may vary from day to day.

Backup Withholding

	If a shareholder fails to furnish a correct taxpayer identification 
number, fails to report fully dividend or interest income, or fails to certify 
that he has provided a correct taxpayer identification number and that he is 
not subject to "backup withholding," the shareholder may be subject to a 31% 
"backup withholding" tax with respect to (1) taxable dividends and 
distributions and (2) the proceeds of any sales or repurchases of shares of 
Common Stock. An individual's taxpayer identification number is his or her 
social security number. The 31% backup withholding tax is not an additional 
tax and may be credited against a taxpayer's Federal income tax liability

STOCK PURCHASES AND TENDERS

	The Portfolio may repurchase shares of its Common Stock in the open 
market or in privately negotiated transactions when the Portfolio can do so at 
prices below their then current net asset value per share on terms that the 
Portfolio's Board of Directors believes represent a favorable investment 
opportunity. In addition, the Board of Directors currently intends to 
consider, at least once a year, making an offer to each shareholder of record 
to purchase at net asset value shares of Common Stock owned by the 
shareholder.

	No assurance can be given that repurchases and/or tenders will result in 
the Portfolio's shares trading at a price that is equal to their net asset 
value. The market prices of the Portfolio shares will, among other things, be 
determined by the relative demand for and supply of the shares in the market, 
the Portfolio's investment performance, the Portfolio's dividends and yield 
and investor perception of the Portfolio's overall attractiveness as an 
investment as compared with other investment alternatives. The Portfolio's 
acquisition of Common Stock will decrease the total assets of the Portfolio 
and therefore have the effect of increasing the Portfolio's expense ratio. The 
Portfolio may borrow money to finance the repurchase of shares subject to the 
limitations described in the Prospectus. Any interest on the borrowings will 
reduce the Portfolio's net income. Because of the nature of the Portfolio's 
investment objective, policies and securities holdings, the Investment Manager 
does not anticipate that repurchases and tenders will have an adverse effect 
on the Portfolio's investment performance and does not anticipate any material 
difficulty in disposing of securities to consummate Common Stock repurchases 
and tenders.

	When a tender offer is authorized to be made by the Portfolio's Board of 
Directors, it will be an offer to purchase at a price equal to the net asset 
value of all (but not less than all) of the shares owned by the shareholder 
(or attributed to him or her for Federal income tax purposes under Section 38 
of the Code). A shareholder who tenders all shares owned or considered owned 
by him or her, as required, will realize a taxable gain or loss depending upon 
his or her basis in his or her shares.

	If the Portfolio liquidates securities in order to repurchase shares of 
Common Stock, the Portfolio may realize gains and losses. These gains, if any, 
may be realized on securities held for less than three months. Because the 
Portfolio must derive less than 30% of its gross income for any taxable year 
from the sale or disposition of stock and securities held less than three 
months (in order to retain the Portfolio's regulated investment company status 
under the Code), gains realized by the Portfolio due to a liquidation of 
securities held for less than three months would reduce the amount of gain on 
sale of other securities held for less than three months that the Portfolio 
could realize in the ordinary course of its portfolio management, which may 
adversely affect the Portfolio's performance. The portfolio turnover rate of 
the Portfolio may or may not be affected by the Portfolio's repurchases of 
shares of Common Stock pursuant to a tender offer.

CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION

	The Portfolio's Articles of Incorporation include provisions that could 
have the effect of limiting the ability of other entities or persons to 
acquire control of the Portfolio or to change the composition of its Board of 
Directors and could have the effective of depriving shareholders of an 
opportunity to sell their shares of Common Stock at a premium over the 
prevailing market prices by discouraging a third party from seeking to obtain 
control of the Portfolio.  Commencing with the first annual meeting of 
shareholders, the Board of Directors will be divided into three classes.  At 
the annual meeting of shareholders in each year thereafter, the term of one 
class will expire and each Director elected to the class will hold office for 
a term of three years.  The classification of the Board of Directors in this 
manner could delay for up to two years the replacement of majority of the 
Board.  The Articles of Incorporation provide that the maximum number of 
Directors that may constitute the Portfolio's entire board is 12.  A Director 
may be removed from office, or the maximum number of Directors increased, only 
by vote of the holder of at least 75% of shares of Common Stock entitled to be 
voted on the matter.

	The Portfolio's Articles of Incorporation require the favorable vote of 
the holders of at least two-thirds of the shares of Common Stock then entitled 
to be voted to authorized the conversion of the Portfolio from a closed-end to 
an open-end investment company's defined in the 1940 Act, unless two-thirds of 
the Continuing Directors (as defined below) approve such a conversion.  In the 
latter case, the affirmative vote of a majority of the shares outstanding will 
be required to approve the amendment to the Portfolio's Articles of 
Incorporation providing for the conversion of the Portfolio.

	The affirmative votes of a least 75% of the Directors and the holder of 
at least 75% of the shares of the Portfolio are required to authorize any of 
the following transactions (referred to individually as a "Business 
Combination"): (1) a merger, consolidation or share exchange of the Portfolio 
with or into any other person (referred to individually as a "Reorganization 
Transaction"): (2) the issuance or transfer by the Portfolio (in one or a 
series of transactions in any 12-month period) of any securities of the 
Portfolio to any other person or entity for cash, securities of other property 
(or combinations thereof) having an aggregate fair market value of $1,000,000 
or more, excluding sales of securities of the Portfolio in connection with a 
public offering, issuance of securities of the Portfolio pursuant to a 
dividend reinvestment plan adopted by the Portfolio and issuances of 
securities of the Portfolio upon the exercise for any stock subscriptions 
rights distributed by the Portfolio: (3) a sale, lease, exchange, mortgage, 
pledge, transfer or other disposition by the Portfolio (in one or a series of 
transactions in any 12-month period) to or with any person of any assets of 
the Portfolio having aggregate fair market value of $1,000,000 or more, except 
for transactions in securities effected by the Portfolio in the ordinary 
course of its business (each such sale, lease, exchange, mortgage, pledge, 
transfer or other disposition being referred to individually as a "Transfer 
Transaction").  The same affirmative votes are required with respect to: any 
proposal as to the voluntary liquidation or dissolution of the Portfolio or 
any amendment to the Portfolio's Articles of Incorporation to terminate its 
existence (referred to individually as a "Termination Transaction"); and any 
shareholder proposal as to specific investment decisions made or to be made 
with respect to the Portfolio's assets.

	A 75% shareholder vote will not be required with respect to a Business 
Combination of the transaction is approved by a vote of a least 75% of the 
Continuing Directors (as defined below) or it certain conditions regarding the 
consideration paid by the person entering into, or proposing to enter into, a 
Business Combination with the Portfolio and various other requirements are 
satisfied.  In such case, a majority of the votes entitled to be cast by 
shareholders of the Portfolio will be required to approve the transaction if 
its a Reorganization Transactions or a Transfer Transaction that involves 
substantially all of the Portfolio's assets and no shareholder vote will be 
required to approve the transaction if its any other Business Combination.  In 
addition, a 75% shareholder vote will not be required with respect to a 
Termination Transaction if it is approved by a vote of at least 75% of the 
Continuing Directors, in which case a majority of the votes entitled to be 
cast by shareholders of the Portfolio will be required to approve the 
transaction.

	The voting provisions described above could have the effect of depriving 
shareholders of the Portfolio of an opportunity to sell their Common Stock at 
a premium over prevailing market prices by discouraging a third party from 
seeking to obtain control of the Portfolio in a tender offer or similar 
transaction.  In the view of the Portfolio's Board of Directors, however, 
these provisions offer several possible advantages including: (1) requiring 
persons seeking control of the Portfolio to negotiate with its management 
regarding the price to be paid for the amount of Common Stock required to 
obtain control: (2) promoting continuity and stability; and (3) enhancing the 
Portfolio's ability to pursue long-term strategies that are consistent with 
its investment objective and management policies.  The Board of Directors has 
determined that the voting requirements under Maryland law and the 1940 Act, 
are in the best interests of shareholders generally.

	A "Continuing Director," as used in the discussion above, is any member 
of the Portfolio's Board of Directors (1) who is not person or affiliate of a 
person who enters or proposes to enter into a Business Combination with the 
Portfolio (such person or affiliate being referred to individually as an 
"Interested Party") and (2) who has been a member of the Board of Directors 
for a period of least 12 months, or is a successor of a Continuing Director 
who is unaffiliated with an Interested Party and is recommended to succeed a 
Continuing Director by a majority of the Continuing Directors the members of 
the Board.

ADDITIONAL INFORMATION

Legal Matters

	Willkie Farr & Gallagher serves as legal counsel to the Portfolio. The 
Directors who are not "interested persons" of the Portfolio have selected 
Stroock & Stroock & Lavan as their counsel.

Independent Public Accountants

	For the fiscal year ending August 31, 1997, KPMG Peat Marwick LLP, 345 
Park Avenue, New York, New York 10154, have been selected independent auditors 
for the Portfolio to examine and report on the Portfolio's financial 
statements.

Custodian and Transfer Agent

	PNC Bank, N.A. is located at 17 Chestnut Street, Philadelphia, 
Pennsylvania 19103 and serves as the Portfolio's custodian pursuant to a 
custody agreement. Under the custody agreement, PNC Bank holds Portfolio's 
securities and keeps all necessary accounts and records.  The assets of the 
Portfolio are held under bank custodianship in compliance with the 1940 Act.  
First Data is located at Exchange Place Boston, Massachusetts 02109, and 
pursuant to a transfer agency agreement serves as the Portfolio's transfer 
agent.  Under the transfer agency agreement, First Data maintains the 
shareholder account records for the Portfolio, handles certain communications 
between shareholders and the Portfolio, and distributes dividends and 
distributions payable by the Portfolio.

FINANCIAL STATEMENTS

	The Portfolio sends unaudited semi-annual and audited annual financial 
statements of the Portfolio to shareholders, including a list of the 
investments held by the Portfolio.

	The Portfolio's Annual Report for the fiscal year ended August 31, 1996 
is incorporated into this Statement of Additional Information by reference in 
it's entirety. A copy of these Reports may be obtained from any Smith Barney 
Financial Consultant or by calling or writing to the Portfolio at the 
telephone number or address set forth on the cover page of this Statement of 
Additional Information.



APPENDIX

DESCRIPTION OF MOODY'S, S&P AND FITCH RATINGS

Description of Moody's Municipal Bond Ratings:

Aaa - Bonds that are rated Aaa are judged to be of the best quality, carry the 
smallest degree of investment risk and are generally referred to as "gilt 
edge. " Interest payments with respect to these bonds are protected by a large 
or by an exceptionally stable margin, and principal is secure. Although the 
various protective elements applicable to these bonds are likely to change, 
those changes are most unlikely to impair the fundamentally strong position of 
these bonds.

Aa - Bonds that are rated Aa are judged to be of high quality by all standards 
and together with the Aaa group comprise what are generally known as high 
grade bonds. They are rated lower than the best bonds because margins of 
protection may not be as large as in Aaa securities or fluctuation of 
protective elements may be of greater amplitude, or other elements may be 
present that make the long-term risks appear somewhat larger than in Aaa 
securities

A - Bonds that are rated A possess many favorable investment attributes and 
are to be considered as upper medium grade obligations. Factors giving 
security to principal and interest with respect to these bonds are considered 
adequate, but elements may be present that suggest a susceptibility to 
impairment sometime in the fixture.

Baa - Bonds rated Baa are considered to be medium grade obligations, that is 
they are neither highly protected nor poorly secured. Interest payment and 
principal security appear adequate for the present but certain protective 
elements may be lacking or may be characteristically unreliable over any great 
length of time. These bonds lack outstanding investment characteristics and 
may have speculative characteristics as well.

	Moody's applies the numerical modifiers 1, 2 and 3 in each generic 
rating classification from Aa through B. The modifier 1 indicates that the 
security ranks in the higher end of its generic rating category; the modifier 
2 indicates a mid-range ranking; and the modifier 3 indicates that the issue 
ranks in the lower end of its generic rating category.

Description of Moody's Municipal Note Ratings:

	Moody's ratings for state and municipal notes and other short-term loans 
are designated Moody's Investment Grade (MIG) and for variable demand 
obligations are designated Variable Moody's Investment Grade (VMIG). This 
distinction recognizes the differences between short- and long-term credit 
risk. Loans bearing the designation MIG1/VMIG 1 are of the best quality, 
enjoying strong protection from established cash flows of funds for their 
servicing or from established and broad-based access to the market for 
refinancing, or both. Loans bearing the designation MIG 2/VMIG 2 are of high 
quality, with margins of protection ample, although not as large as the 
preceding group. Loans bearing the designation MIG3/VMIG 3 are of favorable 
quality, with all security elements accounted for but lacking the undeniable 
strength of the preceding grades. Market access for refinancing, in 
particular, is likely to be less well established.

Description of Moody's Commercial Paper Ratings:

	The rating Prime-1 is the highest commercial paper rating assigned by 
Moody's. Issuers rated Prime- I (or related supporting institutions) are 
considered to have a superior capacity for repayment of short-term promissory 
obligations. Issuers rated Prime-2 (or related supporting institutions) are 
considered to have a strong capacity for repayment of short-term promissory 
obligations, normally evidenced by many of the characteristics of issuers 
rated Prime-1 but to a lesser degree. Earnings trends and coverage ratios, 
while sound, will be more subject to variation. Capitalization 
characteristics, while still appropriate, may be more affected by external 
conditions. Ample alternative liquidity is maintained.


Description of S&P Municipal Bond Ratings:

AAA - These bonds are the obligations of the highest quality and have the 
strongest capacity for timely payment of debt service.

General Obligation Bonds Rated AAA - In a period of economic stress the 
issuers of these bonds will suffer the smallest declines in income and will be 
least susceptible to autonomous decline. Debt burden is moderate. A strong 
revenue structure appears more than adequate to meet fixture expenditure 
requirements. Quality of management appears superior.

Revenue Bonds Rated A - Debt service coverage with respect to these bonds has 
been, and is expected to remain, substantial. Stability of the pledged 
revenues is also exceptionally strong due to the competitive position of the 
municipal enterprise or to the nature of the revenues. Basic security 
provisions (including rate covenant, earnings test for issuance of additional 
bonds, debt service reserve requirements) are rigorous. There is evidence of 
superior management

AA - The investment characteristics of bonds in this group are only slightly 
less marked than those of the prime quality issues. Bonds rated AA have the 
second strongest capacity for payment of debt service

A - Principal and interest payments on bonds in this category are regarded as 
safe although the bonds are somewhat more susceptible to the adverse effects 
of changes in circumstances and economic conditions than bonds in high rated 
categories. This rating describes the third strongest capacity for payment of 
debt service.

General Obligation Bonds Rated A - There is some weakness either in the local 
economic base in debt burden, in the balance between revenues and expenditures 
or in quality of management. Under certain adverse circumstances, any one such 
weakness might impair the ability of the issuer to meet debt obligations at 
some fixture date.

Revenue Bonds Rated A - Debt service coverage is good but not exceptional. 
Stability of the pledged revenues could show some variations because of 
increased competition or economic influences on revenues. Basic security 
provisions, while satisfactory, are less stringent. Management performance 
appears adequate.

BBB - The bonds in this group are regarded as having an adequate capacity to 
pay interest and repay principal. Whereas bonds in this group normally exhibit 
adequate protection parameters, adverse economic conditions or changing 
circumstances are more likely to lead to a weakened capacity to pay interest 
and repay principal for debt in this category than in higher rated categories. 
Bonds rated BBB have the fourth strongest capacity for payment of debt 
service.

	S&P's letter ratings may be modified by the addition of a plus or a 
minus sign, which is used to show relative standing within the major rating 
categories except in the AAA category.

Description of S&P Municipal Note Ratings:

	Municipal notes with maturities of three years or less are usually given 
note ratings (designated SPEY 2 or -3) to distinguish more clearly the credit 
quality of notes as compared to bonds. Notes rated SP- 1 have a very strong or 
strong capacity to pay principal and interest. Those issues determined to 
possess overwhelming safety characteristics are given the designation of SP- 
1+. Notes rated SP-2 have a satisfactory capacity to pay principal and 
interest.

Description of S&P Commercial Paper Ratings:

	Commercial paper rated A- l by S&P indicates that the degree of safety 
regarding timely payment is either overwhelming or very strong. Those issues 
determined to possess overwhelming safety characteristics are denoted A-1+. 
Capacity for timely payment on commercial paper rated A-2 is stronger but the 
relative degree of safety is not as high as issues designated A-1.

Description of Fitch Municipal Bond Ratings:

AAA - Bonds rated AAA by Fitch are considered to be investment grade and of 
the highest credit quality. The obligor has an exceptionally strong ability to 
pay interest and repay principal, which is unlikely to be affected by 
reasonably foreseeable events.

AA - Bonds rated M by Fitch are considered to be investment grade and of very 
high credit quality. The obligor's ability to pay interest and repay principal 
is very strong, although not quite as strong as bonds rated AAA. Because bonds 
rated in the AAA and AA categories are not significantly vulnerable to 
foreseeable future developments short term debt of these issues is generally 
rated F1+ by Fitch ability to pay interest and repay principal, which is 
unlikely to be affected by reasonably foreseeable events.

A - Bonds rated A by Fitch are considered to be investment grade and of high 
credit quality. The obligor's ability to pay interest and repay principal is 
considered to be strong, but may be more vulnerable to adverse changes in 
economic conditions and circumstances than bonds with higher ratings

BBB - Bonds rated BBB by Fitch are considered to be investment grade and of 
satisfactory credit quality. The obligor's ability to pay interest and repay 
principal is considered to be adequate. Adverse changes in economic conditions 
and circumstances, however, are more likely to have adverse consequences on 
these bonds, and therefore impair timely payment. The likelihood that the 
ratings of these bonds will fall below investment grade is higher than for 
bonds with higher ratings.

	Plus and minus signs are used by Fitch to indicate the relative position 
of a credit within a rating category. Plus and minus signs, however, are not 
used in the AAA category.

Description of Fitch Short-Term Ratings

	Fitch's short-term ratings apply to debt obligations that are payable on 
demand or have original maturities of generally up to three years, including 
commercial paper certificates of deposit, medium-term notes, and municipal and 
investment notes.

	The short-term rating places greater emphasis than a long-term rating on 
the existence of liquidity necessary to meet the issuer's obligations in a 
timely manner.

Fitch's short-term ratings are as follows:

F-l + - Issues assigned this rating are regarded as having the strongest 
degree of assurance for timely payment.

F-1 - Issues assigned this rating reflect an assurance of timely payment only 
slightly less in degree than issues rated F-1+.

F-2 - Issues assigned this rating have a satisfactory degree of assurance for 
timely payment but the margin of safety is not as great as for issues assigned 
F- 1+ and F-1 ratings.

F-3 - Issues assigned this rating have characteristics suggesting that the 
degree of assurance for timely payment is adequate, although near-term adverse 
changes could cause these securities to be rated below investment grade.

LOC- The symbol LOC indicates that the rating is based on a letter of credit 
issued by a commercial bank.

PART C - OTHER INFORMATION

Item 24. Financial Statements and Exhibits


	(1)	Financial Statements:

		- Included in Part A:

			*     Financial Highlights

		- Included in Part B:

			*        The Registrant's Annual Report for the 
				fiscal year ended August 31, 1996 and 
				Report of Independent Accountants 
				dated  October 15, 1996 are incorporated by 
				reference to the Definitive 30(b)2-1 filed 
				on November 8, 1996, 
				Accession #  91155-96-454     

	(2)	Exhibits: All references are to the Registrant's registration 
statement on Form N-2 as filed with the Securities and Exchange Commission on 
July 24, 1992. (File Nos. 33-49982 and 811-7046) (the "Registration 
Statement")

(a)	(i)	Articles of Incorporation are 
incorporated by reference to the 
Registrant's Registration Statement

	(ii)	Articles of Amendment to Articles of 
Incorporation are incorporated by 
reference to Pre-Effective Amendment 
No. 1. to the Registration Statement 
as
		filed on September 17, 1992 
		("Pre-Effective Amendment No.1")

(b)	(i)	Bylaws of Registrant are 
incorporated by reference to the 
Registration Statement.

	(ii)	Amended Bylaws of Registrant are 
incorporated by reference to Pre-
Effective Amendment No. 1.

		(c)	Not Applicable

(d)	Specimen Certificate of Common Stock, par 
value $.001 per share is incorporated by 
reference to Pre-Effective Amendment No. 
1.

(e)	Dividend Reinvestment Plan is incorporated 
by reference to Post-Effective Amendment 
No. 2 to the Registration Statement as 
filed on November 18, 1994 ("Post-
Effective Amendment No. 2").

		(f)	Not Applicable

   		(g)(i)	Investment Advisory Agreement 
			between Registrant and Greenwich Street 
			Advisors is incorporated by reference to 
			Post-Effective Amendment No.1 to the 
			Registration Statement as filed on 
			November 17, 1993.
		
		    (ii)	Form of Transfer and Assumption of 
			Investment Advisory Agreement 
			between Registrant, Mutual Management Corp. 
			and Smith Barney Adviser, Inc is incorporated
			by reference to Post-Effective Amendment No.2. 
					

    
   		(h)	Form of Underwriting Agreement between 
			Registrant and Smith Barney Shearson is 
			incorporated by reference to Pre-Effective
			Amendment No.1.

		(i)	Not Applicable


    
   		(j)	Form of Custody Agreement between Registrant 
			and PNC Bank, National Association (filed herewith)    

		(k)	(i)	Administration Agreement between 
				Registrant and Smith Barney Advisers, Inc.,
				dated June 1, 1994, is incorporated by
				reference to Post-Effective No.2.
			       

		 (l)	Opinion and Consent of Counsel is incorporated by
			reference to Pre-Efeective Amendment No.1.

		(m)	Not Applicable

		(n)	Consent of  Independent Auditors is filed herein.

		(o)	Not Applicable

		(p)	Purchase Agreement between Registrant and Shearson 
			Lehman Brothers Inc., dated as of September 11, 1992, 
			is incorporated by reference to Pre-Effective Amendmen
			No.1.
		(q)	Not Applicable

		(r)	Financial Data Schedule for Registrant as of August 31, 1996
			is filed herein.

Item 25.	Marketing Arrangements

	None

Item 26.	Other Expenses of Issuance and Distribution

	The following table sets forth the expenses to be incurred in 
connection with the offering described in this Registration Statement:

Securities and Exchange Commission Fees       0
Printing and Engraving Expenses	  	$5000
Legal Fees		   			$0
Accounting Expenses		   		$0
Miscellaneous Expenses		   		$0    
		                

Item 27.	Persons Controlled by or Under Common Control

			None

Item 28.	Number of Holders of Securities

   Title of Class		Number of 
				Record
				Stockholders
				as of  December 4, 1996    

Shares of Common Stock, 	    11,216,668     
par value $0.01 per share

Item 29.	Indemnification

	Under Article VII of Registrant's Articles of Incorporation, any past 
or present director or officer of Registrant is indemnified to the fullest 
extent permitted by law against liability and all expenses reasonably 
incurred by him in connection with any action, suit or proceeding to which 
he may be a party or otherwise involved by reason or his being or having 
been a director or officer of Registrant.  This provision does not 
authorize indemnification when it is determined that the director or 
officer would otherwise be liable to Registrant or its shareholders by 
reason of willful misfeasance, bad faith, gross negligence or reckless 
disregard of his duties.  Expenses may be paid by Registrant in advance of 
the final disposition of any action, suit or proceeding upon receipt of an 
undertaking by a director or officer to repay those expenses to Registrant 
in the event that it is ultimately determined that indemnification of the 
expenses is not authorized under Registrant's Articles of Incorporation.

	Insofar as indemnification for liability arising under the Securities 
Act of 1933, as amended (the "Securities Act"), may be permitted to 
directors, officers and controlling persons of Registrant pursuant to the 
foregoing provisions, or otherwise, Registrant has been advised that in the 
opinion of the Securities and Exchange Commission, such indemnification is 
against policy as expressed in the Securities Act and is, therefore, 
unenforceable.  In the event that a claim for indemnification against such 
liabilities (other than the payment by Registrant of expenses incurred or 
paid by a director, officer or controlling person of Registrant in the 
successful defense of any action, suit or proceeding) is asserted by such 
director, officer or controlling person in connection with the securities 
being registered, Registrant will, unless in the opinion of its counsel the 
matter has been settled by controlling precedent, submit to a court of 
appropriate jurisdiction the question whether such indemnification by it is 
against public policy as expressed in the Securities Act and will be 
governed by the final adjudication of such issue.

Item 30.	Business and Other Connections of Investment Adviser

	See "Management of the Portfolio" in the Prospectus.
   
	Smith Barney Mutual Management Inc., ("Funds Management") 
	a New York corporation, is a registered investment adviser and is 
	wholly owned by Smith Barney Holdings Inc., which in turn is 
	wholly owned by The Travelers Group Inc.  Funds Management is 
	primarily engaged in the investment advisory business. Information 
	as to executive officers and directors of Funds Management is 
	included in its Form ADV filed with the Securities and Exchange 
	Commission (Registration number 801-3387) and is incorporated 
	herein by reference.    

Item 31.	Location of Accounts and Records

	   Smith Barney Mutual Funds Management Inc.
	388 Greenwich Street
	New York, New York 10013    
	       

	    First Data Investor Services Group, Inc.
	One Exchange Place
	Boston, Massachusetts 02109    

	   PNC Bank, N.A.
	17th & Chestnut Streets
	Philadelphia, Pennsylvania 19103    

Item 32.	Management Services

		None

Item	33.	Undertakings

	1.	Not Applicable

	2.	Not Applicable

	3.	Not Applicable

4.	The Portfolio hereby undertakes:

(a)	To file, during any period in which offers or sales are being made, a 
post-effective amendment to this Registration Statement:

(1)	to include any prospectus required by Section 10(a)(3) of the 
Securities Act of 1933 (the "Act");

(2)	to reflect in the Prospectus any facts or events arising after the 
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, 
represent a fundamental change in the information set forth in the 
Registration Statement; and

(3)	to include any material information with respect to the plan of 
distribution not previously disclosed in the Registration Statement or any 
material change to such information in the Registration Statement.

(4)(b)	For the purpose of determining any liability under the Act, each 
post-effective amendment shall be deemed to be a new Registration Statement 
relating to the securities offered therein, and the offering of such 
securities at that time shall be deemed to be the initial bona fide 
offering thereof.

(4)(c)	Not Applicable

5.	Not Applicable

6.	The Portfolio undertakes to send by first class mail or other means 
designed to ensure equally prompt delivery, within two business days of 
receipt of a written or oral request, any Statement of Additional 
Information.





SIGNATURES

	Pursuant to the requirements of the Securities Act of 1933, as 
amended, and the Investment Company Act of 1940, as amended, the 
Registrant, MANAGED MUNICIPALS PORTFOLIO II INC., has duly caused this 
Amendment to the Registration Statement on Form N-2 to be signed on its 
behalf by the undersigned, thereunto duly authorized, all in the City of 
New York, State of New York on the 4th day of December, 1996.

					MANAGED MUNICIPALS PORTFOLIO II INC.



					By: /s/ Heath B. McLendon  
					      Heath B. McLendon
					      Chief Executive Officer 

   
	We, the undersigned, hereby severally constitute and appoint Heath B. 
McLendon and Christina T. Sydor, our true and lawful attorneys, with full 
power, 
to sign for us, and in our hands and in the capacities indicated below, any 
and all 
Post-Effective Amendments to this Registration Statement and to file the 
same, with all exhibits thereto, and other documents therewith, with the 
Securities and Exchange Commission, granting unto said attorneys full power to 
do and perform each and every act and thing requisite or necessary to be done 
in the premises, as fully to all intents and purposes as he might or could do 
in 
person, hereby ratifying and confirming all that said attorneys or any of them 
may lawfully do or cause to be done by virtue thereof.

WITNESS our hands on the date set forth below.

	Pursuant to the requirements of the Securities Act of 1933, as 
amended, this Amendment to the Registration Statement and the above Power 
of Attorney has been signed below by the following persons in the 
capacities and on the dates indicated.

Signature				Title					Date




    
   
 /s/ Heath B. McLendon 
Heath B. McLendon			 Chairman of the Board			12/04/96
					 Chief Executive Officer





/s/ Lewis E. Daidone
Lewis E. Daidone			Treasurer (Chief Financial 		12/04/96
					and Accounting Officer)



/s/ Charles F. Barber* 
Charles F. Barber				Director			12/04/96




/s/ Allan J. Bloostein*
Allan J. Bloostein				Director			12/04/96



/s/ Martin Brody*
Martin Brody					Director			12/04/96



/s/ Dwight B. Crane*
Dwight B. Crane				Director			12/04/96


/s/ Robert A. Frankel*
Robert A. Frankel				Director			12/04/96



    
   /s/ William R. Hutchinson*
William Hutchinson				Director			12/04/96
    

*Signed by Heath B. McLendon, their duly authorized attorney-in-fact, pursuant 
to power-of-attorney dated September 27, 1994.


EXHIBIT INDEX


2(j)		Form of Custodian Agreement