As filed with the Securities and Exchange Commission
on December 19, 1997
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. 5  x
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 6  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)
(800) 451-2010
(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;
                                                 Portfolio 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          Table of Contents

16.  General Information
      and History                   The Portfolio; Description
                                          of Common Stock (see Prospectus)

17.  Investment Objective
       and Policies                   Investment Objective and Policies;
                                            Investment 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       Investment Objectives and Policies;
                                           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.

Part A:


================================================================================

================================================================================

--------------------------------------------------------------------------------
Prospectus                                                     December 26, 1997
--------------------------------------------------------------------------------

388 Greenwich Street
New York, New York 10013
(800) 451-2010

      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."

      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 26, 1997 (the "SAI") containing additional information about the
Portfolio has been filed with the Securities and Exchange Commission (the "SEC")
and is hereby incorporated by reference in its entirety into this Prospectus. A
copy of the SAI 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.

   
      Smith Barney Inc. ("Smith Barney" or the "Distributor") 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.
    

      All dealers effecting transactions in the registered securities, whether
or not participating in this distribution, may be required to deliver a
prospectus.

SMITH BARNEY INC.
Distributor

   
SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Investment Manager and Administrator
    

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 ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.


                                                                               1
<PAGE>

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

   
Prospectus Summary                                                             3
--------------------------------------------------------------------------------
Portfolio Expenses                                                             5
--------------------------------------------------------------------------------
Financial Highlights                                                           7
--------------------------------------------------------------------------------
The Portfolio                                                                  8
--------------------------------------------------------------------------------
The Offering                                                                   8
--------------------------------------------------------------------------------
Use of Proceeds                                                                8
--------------------------------------------------------------------------------
Investment Objective and Policies                                              8
--------------------------------------------------------------------------------
Net Asset Value                                                               15
--------------------------------------------------------------------------------
Share Price Data                                                              16
--------------------------------------------------------------------------------
Taxation                                                                      17
--------------------------------------------------------------------------------
Management of the Portfolio                                                   18
--------------------------------------------------------------------------------
Dividends and Distributions; Dividend Reinvestment Plan                       19
--------------------------------------------------------------------------------
Certain Provisions of the Articles of Incorporation                           21
--------------------------------------------------------------------------------
Description of Common Stock                                                   22
--------------------------------------------------------------------------------
Custodian and Transfer Agent                                                  23
--------------------------------------------------------------------------------
Independent Auditors                                                          23
--------------------------------------------------------------------------------
Further Information                                                           23
--------------------------------------------------------------------------------
    
Appendix A                                                                   A-1
--------------------------------------------------------------------------------


================================================================================
      No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus and, if given or made, such other information or representations
must not be relied upon as having been authorized by the Portfolio or the
Distributor. This Prospectus does not constitute an offer by the Portfolio or
the Distributor to sell or a solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction.
================================================================================


2
<PAGE>

--------------------------------------------------------------------------------
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 regular Federal income tax purposes. See "Investment
Objective and Policies" and "Taxation." 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."
    

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 Investor Services L.P. ("Moody's"), Standard & Poor's Ratings Group
("S&P"), Fitch Investor Services, Inc. ("Fitch") or another
nationally-recognized rating agency (that is, rated no lower than Baa, MIG3 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 investment 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 Smith Barney Mutual Funds Management Inc.
("SBMFM" or the "Investment Manager"), 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 Salomon Smith Barney Holdings Inc.
    


                                                                               3
<PAGE>

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

("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 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 Portfolio'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; Dividend Reinvestment Plan."
    

INVESTMENT OBJECTIVES AND POLICIES 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. See "Investment
Objectives and Policies."

   
      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.
    


4
<PAGE>

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

RISK FACTORS AND SPECIAL CONSIDERATIONS 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 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."

   
MANAGEMENT OF THE PORTFOLIO 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."

--------------------------------------------------------------------------------
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*..................................................    0.20%
--------------------------------------------------------------------------------
Total Annual Operating Expenses*.......................................    1.10%
================================================================================

* "Other Expenses," as shown above, are based upon amounts of expenses for
  the fiscal period ended August 31, 1997.


                                                                               5
<PAGE>

--------------------------------------------------------------------------------
Portfolio Expenses (continued)
--------------------------------------------------------------------------------

      EXAMPLE

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

   
              One Year         Three Years      Five Years         Ten Years
--------------------------------------------------------------------------------
                 $11               $35              $61              $134
--------------------------------------------------------------------------------
    

      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." 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.


6
<PAGE>

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

   
The following information for the three years ended August 31, 1997 has been
audited by KPMG Peat Marwick LLP, independent auditors, whose report thereon
appears in the Portfolio's Annual Report dated August 31, 1997. The information
for the two years ended 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.
    

<TABLE>
<CAPTION>
                  For a Share of Capital Stock Outstanding Throughout Each Year:
=================================================================================================================
                                                1997          1996          1995          1994         1993(1)
-----------------------------------------------------------------------------------------------------------------
<S>                                           <C>           <C>           <C>           <C>           <C>     
Net Asset Value,
  Beginning of Year                             $11.98        $12.36        $12.15        $13.37        $12.00
-----------------------------------------------------------------------------------------------------------------
Income From Operations:
  Net investment income                           0.63          0.66          0.69          0.64          0.62
  Net realized and unrealized gain (loss)         0.48         (0.21)         0.32         (0.61)         1.34
-----------------------------------------------------------------------------------------------------------------
Total Income From Operations                      1.11          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                          (0.66)        (0.67)        (0.68)        (0.67)        (0.55)
  Net realized gains                             (0.28)        (0.16)        (0.12)        (0.59)           --
-----------------------------------------------------------------------------------------------------------------
Total Distributions                              (0.94)        (0.83)        (0.80)        (1.26)        (0.55)
-----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year                    $12.15        $11.98        $12.36        $12.15        $13.37
-----------------------------------------------------------------------------------------------------------------
Total Return, Based on
  Market Value                                    7.75%         7.35%         8.86%         0.72%         9.97%++
-----------------------------------------------------------------------------------------------------------------
Total Return, Based on
  Net Asset Value                                 9.86%         4.01%         9.20%         0.48%        16.46%++
=================================================================================================================
Net Assets, End of Year
  (in 000's)                                  $136,517      $134,429      $138,649      $136,248      $149,970
=================================================================================================================
Ratios to Average Net Assets:
  Expenses                                        1.10%         1.09%         1.14%         1.12%         1.10%+
  Net investment income                           5.23          5.31          5.80          5.08          5.21+
-----------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate                             97%           63%           95%           85%          163%
-----------------------------------------------------------------------------------------------------------------
Market Value, End of Period                    $11.688       $11.750       $11.625       $11.500       $12.625
=================================================================================================================
</TABLE>

(1) For the period from September 24, 1992 (commencement of operations) to
    August 31, 1993.

++  Total return is not annualized, as it may not be representative of the
    total return for the year.

+   Annualized.


                                                                               7
<PAGE>

--------------------------------------------------------------------------------
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 (800)
451-2010.

--------------------------------------------------------------------------------
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 of the Portfolio's
outstanding voting securities" (as defined in the 1940 Act). 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 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


8
<PAGE>

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

   
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 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 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 


                                                                               9
<PAGE>

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

   
full faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable from the revenue derived from a particular 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 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:


10
<PAGE>

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

      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, debt securities of any grade or equity securities, having a
value equal to or greater than the Portfolio's purchase commitments, provided
such securities have been determined by SBMFM to be liquid and unencumbered, and
are marked to market daily, pursuant to guidelines established by the Directors.
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 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 


                                                                              11
<PAGE>

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

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 1/43 % 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 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 


12
<PAGE>

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

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 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 


                                                                              13
<PAGE>

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

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 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 subject 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.


14
<PAGE>

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

      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
-- 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.

--------------------------------------------------------------------------------
Net Asset Value
--------------------------------------------------------------------------------

      The Portfolio's net asset value will be calculated as of the close of
regular trading on the NYSE, currently 4:00 p.m., New York time, on the last day
on which the NYSE is open for trading of each week and month. Net asset value is
calculated by dividing the value of the Portfolio's net assets (the value of its
assets less its liabilities, exclusive of capital stock and surplus) by the
total number of shares of Common Stock outstanding. Investments in U.S.
Government securities having a maturity of 60 days or less are valued at
amortized cost. All other securities and assets are taken at fair value as
determined in good faith by or under the direction of the Board of Directors.

      The valuation of the Portfolio's assets is made by the Investment Manager
after consultation with an independent pricing service (the "Service") approved
by the Board of Directors. When, in the judgment of the Service, quoted bid
prices for investments are readily available and are representative of the bid
side of the market, these investments are valued at the mean between the quoted
bid prices and asked prices. Investments for which, in the judgment of the
Service, no readily obtainable market quotation is available (which may
constitute a majority of the 


                                                                              15
<PAGE>

--------------------------------------------------------------------------------
Net Asset Value (continued)
--------------------------------------------------------------------------------

Portfolio's portfolio securities), are carried at fair value as determined by
the Service. The Service may use electronic data processing techniques and/or a
matrix system to determine valuations. The procedures of the Service are
reviewed periodically by the officers of the Portfolio under the general
supervision and responsibility of the Board of Directors, which may replace the
Service at any time if it determines it to be in the best interests of the
Portfolio to do so.

--------------------------------------------------------------------------------
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 for the two most recent fiscal years and each full fiscal quarter since
the beginning of the current fiscal year.
    

                     Quarterly High Price                Quarterly Low Price
                     --------------------                -------------------
                                     Premium                            Premium
                 Net Asset   NYSE  (Discount)       Net Asset   NYSE  (Discount)
                   Value     Price   to NAV           Value     Price   to NAV
================================================================================
   
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)

11/30/96          12.49     11.188   (10.42)        11.99    11.313    (6.20)

2/28/97           12.36       11.750   (4.94)         11.86     11.125    (6.20)

5/31/97           11.87       11.625   (2.06)         11.53    11.188     (2.97)

8/31/97           12.35       12.125   (1.82)         11.95    11.375     (4.81)

11/30/97         12.36       11.750   (4.94)         12.18     11.375     (6.61)
================================================================================

      As of November 28, 1997, the price of Common Stock as quoted on the NYSE
was $11.50, representing a 6.96% 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.


16
<PAGE>

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

      The following is a summary of the material federal tax considerations
affecting the Portfolio and Portfolio shareholders; please refer to the SAI for
further discussion. In addition to the considerations described below and in the
SAI, there may be other federal, state, local or foreign tax applications to
consider. Because taxes are a complex matter, prospective shareholders are urged
to consult their tax advisors for more detailed information with respect to the
tax consequences of any investment.

   
      The Portfolio has qualified and intends to qualify, so long as such
qualification is in the best interests of its shareholders, under Subchapter M
of the Internal Revenue Code (the "Code") for tax treatment as a regulated
investment company. In each taxable year that the Portfolio qualifies, the
Portfolio will pay no federal income tax on its net investment income and
long-term capital gains that are distributed to shareholders. The Portfolio also
intends to satisfy conditions that will enable it to pay "exempt-interest
dividends" to shareholders. Exempt-interest dividends are generally not subject
to regular federal income taxs but may be considered taxable for state and local
income (or intangible)tax purposes.

      Exempt-interest dividends attributable to interest received by the
Portfolio on certain "private-activity" bonds will be treated as a specific tax
preference item to be included in a shareholder's federal alternative minimum
tax computation. In addition to the alternative minimum tax, corporate
shareholders must include 75% of the interest as an adjustment ("the current
earnings adjustment") in computing corporate minimum taxable income.
Exempt-interest dividends derived from the interest earned on private activity
bonds will not be exempt from federal income tax for those shareholders who are
"substantial users" (or persons related to "substantial users") of the
facilities financed by these bonds.
    

      Shareholders who receive social security or equivalent railroad retirement
benefits should note that exempt-interest dividends are one of the items taken
into consideration in determining the amount of these benefits that may be
subject to federal income tax.

   
      The interest expense incurred by a shareholder on borrowings made to
purchase or carry Portfolio shares are not deductible for federal income tax
purposes to the extent related to the exempt-interest dividends received on such
shares.

      Dividends paid by the Portfolio from interest income on taxable
investments, net realized short-term securities gains, and all or a portion of,
any gains realized from the sale or other disposition of certain market discount
bonds are subject to federal income tax as ordinary income.
    

      Distributions, if any, from net realized long-term securities gains are
taxable as long-term capital gains, regardless of the length of time a share
holder has owned Portfolio shares. The recently enacted Tax Payer Relief Act of
1997 provides that net capital gains, for taxpayers other than corporations,
generally will not be subject


                                                                              17
<PAGE>

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

to federal income taxes at a rate in excess of 28% for assets held for more than
one year but not more than 18 months, with a reduced maximum rate of 20% for
assets held more than 18 months.

      Shareholders are required to pay tax on all taxable distributions even if
those distributions are automatically reinvested in additional Portfolio shares.
None of the dividends paid by the Portfolio will qualify for the corporate
dividends received deduction. The Portfolio will inform shareholders of the
source and tax status of all distributions, including their eligibility for the
reduced maximum 20% capital gains tax rate, promptly after the close of each
calendar year.

      The Portfolio is required to withhold ("backup withholding") 31% of all
taxable dividends, capital gain distributions, and the proceeds of any
redemption, regardless of whether gain or loss is realized upon the redemption,
for shareholders who do not provide the Portfolio with a correct taxpayer
identification number (social security or employer identification number).
Withholding from taxable dividends and capital gain distributions also is
required for shareholders who otherwise are subject to backup withholding. Any
tax withheld as a result of backup withholding does not constitute an additional
tax, and may be claimed as a credit on the shareholders' federal income tax
return.

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

      BOARD OF DIRECTORS

   
      Overall responsibility for management and supervision of the Portfolio
rests with the Portfolio's Board of Directors. The Directors approve all
significant agreements with the Portfolio's investment manager, administrator,
custodian and transfer agent. The day-to-day operations of the Portfolio are
delegated to SBMFM 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, 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 September 30, 1997 in excess of $85 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


18
<PAGE>

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

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 primarily 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.
    

--------------------------------------------------------------------------------
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,


                                                                              19
<PAGE>

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

unless the shareholder elects to receive cash. Distributions with respect to
shares registered in the name of a broker-dealer or other nominee (that is, in
"street name") will be reinvested by the broker or nominee in additional shares
under the Plan, unless the service is not provided by the broker or nominee or
the shareholder elects to receive distributions in cash. Investors who own
Common Stock registered in street name should consult their broker-dealers for
details regarding reinvestment. All distributions to 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.
    

      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 a price equal to the greater of (a) net asset value or (b) 95% of the
then-current market price. 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 


20
<PAGE>

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

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 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 Investor Services
Group, P.O. Box 5128, Westborough, Massachusetts 01581-5128 or by telephone at
(617) 573-9300.

--------------------------------------------------------------------------------
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 entity; or 
    


                                                                              21
<PAGE>

--------------------------------------------------------------------------------
Certain Provisions of the Articles of Incorporation (continued)
--------------------------------------------------------------------------------

(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 affirmative 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 Portfolio 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.

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

   
                                                           Amount Outstanding
                                                           Exclusive of Shares
                                          Amount Held     Held by Portfolio for
                                       by Portfolio for    its Own Account as of
Title of Class     Amount Authorized    its Own Account     December 12, 1997
================================================================================
 Common Stock      500,000,000 Shares          --             11,239,705.413
================================================================================
    

      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.

      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 


22
<PAGE>

--------------------------------------------------------------------------------
Description of Common Stock (continued)
--------------------------------------------------------------------------------

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.

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

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

--------------------------------------------------------------------------------
Independent Auditors
--------------------------------------------------------------------------------

      The audited financial statements have been incorporated by reference in
the SAI 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.


                                                                              23
<PAGE>

--------------------------------------------------------------------------------
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 damage or destruction of
the leased property, there is substantial interference with


                                                                             A-1
<PAGE>

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

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 components 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
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 obliga-


A-2
<PAGE>

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

tions 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 possible 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 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, 


                                                                             A-3
<PAGE>

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

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 certain 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
<PAGE>

================================================================================

================================================================================


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

                                              A Member of TravelersGroup[LOGO]


                                              Managed
                                              Municipals
                                              Portfolio II
                                              Inc.

                                              Common Stock

                                              388 Greenwich Street
                                              New York, New York 10013

                                              FD0505  12/97

Part B:

Managed Municipals Portfolio II Inc.
   
388 Greenwich Street
New York, New York  10013
(800) 451-2010

STATEMENT OF ADDITIONAL INFORMATION

December 26, 1997

	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 26, 1997, 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")


22




Certain Provisions of the Articles of 
Incorporation (see in the Prospectus 
"Certain Provisions of the Articles of 
Incorporation")
22




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

24




Financial Statements
25




Appendix Description of Moody's Investor 
Service, Inc. (Moody's), Standard & 
Poors Ratings Group (S&P) and Fitch 
Investors Service, L.P. (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, S&P and 
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 a 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's 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's 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"), 
including Rule 10f-3 under the 1940 Act.  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 because they are not affilated with Smith 
Barney.

	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, 1996 and 1997 the Portfolio's portfolio 
turnover rate was 95%, 63% and 97%, 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 manager, 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 (Age) and Address
Positions Held 
With the Fund
Principal Occupations 
During Past 5 Years





*+Heath B. McLendon 
(64)
	388 Greenwich Street
	New York NY 10013


Chairman of the 
Board, 
Chief Executive 
Officer 

Managing Director of Smith 
Barney Inc.; President and 
Director of SBMFM; President 
and Director of Travelers 
Advisers, Inc. ("TIA"); 
Chairman of Smith Barney 
Strategy Advisers Inc. Prior 
to July 1993, Senior 
Executive Vice President of 
Shearson Lehman Brothers Inc. 
; Vice Chairman of Shearson 
Asset Management.


+Martin Brody (76)
	c/o HMK Associates
	30 Columbia Turnpike
	Florham Park, NJ 
07932
Director
Consultant, HMK Associates; 
Retired Vice Chairman of the 
Board of Restaurant 
Associates Corp.; Director of 
Jaclyn, Inc.


+Allan J. Bloostein 
(68)
	717 Fifth Avenue
	21st Floor
	New York, NY 10022

Director
President, Allan J. Bloostein 
Associates, Consultant and 
retired Vice Chairman of the 
Board of May Department 
Stores Company; Director of 
Taubman Centers, Inc. and CVS 
Corporation.


+Dwight B. Crane (59)
	Harvard Business 
School
	Soldiers Field Road
	Boston, MA 02163

Director
Professor, Harvard Business 
School.


 +Robert A. Frankel 
(69)
	102 Grand Street
	Croton-on-Hudson,
	New York, NY 10520

Director
Managing Partner of Robert A. 
Frankel Management 
Consultants; formerly 
Corporate Vice President of 
The Reader's Digest 
Association, Inc.



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





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


 +William R. 
Hutchinson (54)
	Amoco Corp.
	200 East Randolph 
Drive
	Chicago, IL  60601

Director
Vice President, Financial 
Operations of Amoco Corp.; 
Director of Associated Banks 
and Associated Bank Corp.

  Joseph P. Deane (49)
	388 Greenwich Street
	New York. NY 10013


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


  Lewis E. Daidone 
(40)
	388 Greenwich Street
	New York, NY 10105


Senior Vice 
President
and Treasurer
Managing Director of Smith 
Barney; Director and Senior 
Vice President of SBMFM and 
TIA.

  Christina T. Sydor 
(46)
	388 Greenwich Street
	New York, NY 10013

Secretary
Managing Director of Smith 
Barney; General Counsel and 
Secretary of SBMFM and TIA.



________________________________
*	Director who is an "interested person" 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, 1997 such fees and 
expenses totaled $46,082








Director




Aggregate 
Compensation from 
Fund
Pension or 
Retirement 
Benefits 
Accrued as 
part of 
Fund 
Expenses

Total 
Compensati
on from 
Fund and 
Fund 
Complex

Total 
Number of 
Funds for 
which 
Director 
Serves 
Within Fund 
Complex

Charles Barber*@
$5,750
$0
$38,700
6

Martin Brody
7,000
0
124,286
19

Dwight Crane
7,500
0
140,375
22

Allan Bloostein
7,500
0
83,150
8

Robert Frankel
7,500
0
66,100
8

William R. 
Hutchinson
7,000
0
38,600
6

Heath B. McLendon
------
0
-----
41


	Pursuant to the Fund's deferred compensation plan, 
Mr. Barber elected, effective January 2, 1996, to 
defer the payment of some or all of the compensation 
due to him from the Fund.
@Upon attainment of age 80, Fund Directors are 
required to change to emeritus status.  Directors 
Emeritus are entitled to serve in emeritus status 
for a maximum of 10 years, during which time they 
are paid 50% of the annual retainer fee and meeting 
fees otherwise applicable to Fund Directors, 
together with reasonable out-of-pocket expenses for 
each meeting attended.  Effective February 26, 1997, 
Mr. Barber became a Director Emeritus.

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 20, 1997.  
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 Salomon 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, 1995, 
1996 and 1997, such fees amounted to $934,964, 
$979,107 and $946,120, 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 also 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 Prospectus under 
"Management of the Portfolio."
   
	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, 1995, 1996 and 
1997, SBMFM received $267,133, $279,745 and $270,320, 
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 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 12, 1997

Percent of
Amount of
Common
Name and Address
Record
Stock
of Record Owner
Ownership
Outstanding
Cede & Co., as Nominee for
1
0,987,216.291	   
97.75%
The Depository Trust Company
P.O. Box 20
Bowling Green Station
New York, New York 10004

10,987,216.291 of the shares held of record by Cede & 
Co., representing 97.75% 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 12, 1997, 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; and (3) 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.  
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 SAI 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 40% 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 
the 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. The Portfolio's net 
realized short-term capital gains are taxable to 
shareholders of the Portfolio as ordinary income, and 
distributions of net realized long-term capital gains 
are taxable to shareholders as long-term capital 
gains, regardless of the length of time shareholders 
have held shares of Common Stock and whether the  
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.  Gain 
on shares held for more than 18 months will be 
eligible for the reduced 20% maximum capital gains tax 
rate.  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, 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.  
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 "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, including the portion, if any, 
of long-term capital gains distributions eligible for 
the reduced 20% maximum capital gains tax rate.  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.  
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.


	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.

    
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 holders 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 of 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 if the transaction 
is approved by a vote of a least 75% of the Continuing 
Directors (as defined below) or if 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 it is 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 it is 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 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 LLP as their counsel.

Independent Public Accountants
   
	For the fiscal year ending August 31, 1998, KPMG 
Peat Marwick LLP, 345 Park Avenue, New York, New York 
10154, have been selected as 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 the 
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, 1997 is incorporated into this 
Statement of Additional Information by reference in 
its 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 
SAI.
    



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- 
1 (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 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 future expenditure requirements. 
Quality of management appears superior.

Revenue Bonds Rated AAA - 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 SP-
1 -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 of 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 AA by Fitch are considered to be 
investment grade and of high quality. The obligor's 
ability to pay interest and repay principal, while 
very strong, is somewhat less than for AAA rated 
securities or more subject to possible change over the 
term of the issue.

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-1 + - 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.














5

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, 1997 and 
Report of Independent Accountants 
dated  October 6, 1997 are incorporated by 
reference to the Definitive 30(b)2-1 filed 
on November 7, 1997, 
Accession #  0000091155-97-000497    

(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 is incorporated
By reference to Post-Effective Amendment No. 4 as filed
on December 6, 1996.    

(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 Amendment
No.1.

(q)Not Applicable

(r)Financial Data Schedule for Registrant as of August 31, 1997
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  $141.18
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 12, 1997    

Shares of Common Stock, 	    167    
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 Funds Management Inc., ("SBMFM") 
a New York corporation, is a registered investment adviser
and is wholly owned by Salomon Smith Barney Holdings Inc.,
which in turn is wholly owned by The Travelers Group Inc.
SBMFM is primarily engaged in the investment advisory
business. Information as to executive officers and directors
of SBMFM is included in Schedule A and D of its Form
ADV filed with the Securities and Exchange Commission
(Registration number 801-3387).
    

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 19th day of December, 1997.
    
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		12/19/97
                                       Chief Executive Officer





/s/ Lewis E. Daidone
Lewis E. Daidone         Treasurer (Chief Financial 		12/19/97
                                    and Accounting Officer)



/s/ Charles F. Barber* 
Charles F. Barber             Director				12/19/97




/s/ Allan J. Bloostein*
Allan J. Bloostein              Director				12/19/97



/s/ Martin Brody*
Martin Brody                   Director				12/19/97



/s/ Dwight B. Crane*
Dwight B. Crane               Director				12/19/97


/s/ Robert A. Frankel*
Robert A. Frankel              Director				12/19/97


/s/ William R. Hutchinson*
William Hutchinson           Director				12/19/97
    

*Signed by Heath B. McLendon, their duly authorized attorney-in-fact, pursuant
 to power-of-attorney dated December 27, 1994, and is incorporated by reference
 to Post-Effective Amendment No. 3 to the Registration Statement filed on
 December 28, 1994.