-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VAKM3qfQH9cr7xpvbHcYuWL4rtt59ujaOzXJd1Tru5H5i9Abu51b33/jCTsOMolN fzjVUyUqx7jorOOvkpnT6Q== 0001193125-03-057775.txt : 20031003 0001193125-03-057775.hdr.sgml : 20031003 20031003143617 ACCESSION NUMBER: 0001193125-03-057775 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030731 FILED AS OF DATE: 20031003 EFFECTIVENESS DATE: 20031003 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMITH BARNEY SHEARSON MANAGED GOVERNMENTS FUND INC CENTRAL INDEX KEY: 0000748826 IRS NUMBER: 133227583 STATE OF INCORPORATION: MD FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-04061 FILM NUMBER: 03927535 BUSINESS ADDRESS: STREET 1: 125 BROAD STREET STREET 2: 10 FLOOR, MF-2 CITY: NEW YORK STATE: NY ZIP: 10004 BUSINESS PHONE: 800-451-2010 MAIL ADDRESS: STREET 1: 125 BROAD STREET STREET 2: 10TH FLOOR, MF-2 CITY: NEW YORK STATE: NY ZIP: 10004 FORMER COMPANY: FORMER CONFORMED NAME: SHEARSON LEHMAN BROTHERS MANAGED GOVERNMENTS FUND INC DATE OF NAME CHANGE: 19930331 FORMER COMPANY: FORMER CONFORMED NAME: SHEARSON LEHMAN MANAGED GOVERNMENTS INC /MD/ DATE OF NAME CHANGE: 19930326 FORMER COMPANY: FORMER CONFORMED NAME: SHEARSON LEHMAN BROTHERS MANAGED GOVERNMENTS FUND DATE OF NAME CHANGE: 19921112 N-CSR 1 dncsr.txt SMITH BARNEY MANAGED GOVERNMENTS FUND INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-4061 Smith Barney Managed Governments Fund Inc. (Exact name of registrant as specified in charter) 125 Broad Street, New York, NY 10004 (Address of principal executive offices) (Zip code) Christina T. Sydor, Esq. Smith Barney Fund Management LLC 300 First Stamford Place Stamford, CT 06902 (Name and address of agent for service) Registrant's telephone number, including area code: (800) 451-2010 Date of fiscal year end: July 31 Date of reporting period: July 31, 2003 ITEM 1. REPORT TO STOCKHOLDERS. The Annual Report to Stockholders is filed herewith. - -------------------------------------------------------------------------------- SMITH BARNEY MANAGED GOVERNMENTS FUND INC. - -------------------------------------------------------------------------------- CLASSIC SERIES | ANNUAL REPORT | JULY 31, 2003 [LOGO] Smith Barney Mutual Funds Your Serious Money. Professionally Managed./R/ Your Serious Money. Professionally Managed./R/ is a registered service mark of Citigroup Global Markets Inc. ----------------------------------------------------------------- NOT FDIC INSURED . NOT BANK GUARANTEED . MAY LOSE VALUE ----------------------------------------------------------------- [PHOTO] [PHOTO] [LOGO] Classic Series ROGER M. LAVAN, CFA DAVID TORCHIA PORTFOLIO MANAGER PORTFOLIO MANAGER Annual Report . July 31, 2003 SMITH BARNEY MANAGED GOVERNMENTS FUND INC. [GRAPHIC] ROGER M. LAVAN Roger M. Lavan, CFA, has more than 18 years of securities business experience. Mr. Lavan holds a BS in Management from the State University of New York and an MBA from Fordham University. DAVID TORCHIA David Torchia has more than 18 years of securities business experience. Mr. Torchia holds a BS from the University of Pittsburgh and an MBA in Finance from Lehigh University. FUND OBJECTIVE Seeks high current income consistent with liquidity and preservation of capital by investing at least 80% of its assets in debt obligations issued by the U.S. government, its agencies or instrumentalities. FUND FACTS FUND INCEPTION - ----------------- September 4, 1984 MANAGER INVESTMENT INDUSTRY EXPERIENCE - ----------------- 18 years (Roger M. Lavan, CFA) 18 years (David Torchia) What's Inside Letter from the Chairman.............................................. 1 Manager Overview...................................................... 2 Fund Performance...................................................... 4 Historical Performance................................................ 5 Schedule of Investments............................................... 6 Statement of Assets and Liabilities................................... 7 Statement of Operations............................................... 8 Statements of Changes in Net Assets................................... 9 Notes to Financial Statements......................................... 10 Financial Highlights.................................................. 16 Independent Auditors' Report.......................................... 18 Additional Information................................................ 19 Tax Information....................................................... 20
LETTER FROM THE CHAIRMAN [PHOTO] R. JAY GERKEN, CFA Chairman, President and Chief Executive Officer Dear Shareholder, The philosopher Bertrand Russell famously remarked that, "Change is one thing, progress is another." You will notice in the following pages that we have begun to implement some changes to your shareholder report and we will be reflecting other changes in future reports. Our aim is to make meaningful improvements in reporting on the management of your Fund and its performance, not just to enact change for change's sake. Please bear with us during this transition period. We know that you have questions about fund managers' decisions and plans, and we want to be sure that you have easy access to the information you need. Keeping investors informed is, and always will be, one of my top priorities as Chairman of your Fund. To that end, we encourage you to go to our website: www.smithbarneymutualfunds.com where you can find additional insight on your Fund. In terms of your Fund's stewardship, it is with great sadness that we bring to your attention the passing of Alfred J. Bianchetti, Director Emeritus and James J. Crisona, Director Emeritus, of the Fund. Messrs. Bianchetti and Crisona, who both passed away on September 4/th/, lived accomplished lives to the ages of 80 and 97, respectively. We will sorely miss their presence and will remember the dedicated service they provided to the Fund's shareholders through their outstanding contributions as long-term members of the Board. We invite you to read this report in full. Please take the opportunity to talk to your financial adviser about this report or any other questions or concerns you have about your Fund and your financial future. As always, thank you for entrusting your assets to us. We look forward to helping you continue to meet your financial goals. Please read on to learn more about your Fund's performance and the Manager's strategy. Sincerely, /s/ R. Jay Gerken R. Jay Gerken, CFA Chairman, President and Chief Executive Officer August 13, 2003 1 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report MANAGER OVERVIEW Performance Review For the 12 months ended July 31, 2003, Class A shares of the Smith Barney Managed Governments Fund Inc. ("Fund"), without sales charges, returned 1.15%. The Fund underperformed its unmanaged benchmark, the Lehman Brothers Government Bond Index ("Lehman Index"),/i/ which returned 4.44% for the same period. The Fund's Lipper peer group of U.S. mortgage funds returned 2.32% for the same period./1/ What Affected Fund Performance? Although the Fund's holdings included a position in U.S. Treasury securities and cash, and a small allocation to U.S. government agency issues, it was essentially concentrated in mortgage-backed securities. Over the year, mortgage-backed securities underperformed comparable-maturity U.S. Treasuries, which advanced as expectations mounted that interest rates would drop. The Lehman Index includes all public debt issued by the U.S. government and its agencies, whereas the Fund's portfolio consisted chiefly of mortgage-backed securities. This heavy weighting in mortgage-backed securities relative to the Lehman Index contributed to the Fund's underperformance relative to the benchmark. Note, however, that while prices and yields will fluctuate, the Fund's concentration in mortgage-backed securities continued to provide favorable yields over comparable-maturity U.S. Treasuries. Considering that interest rates are at historic lows, we reduced the Fund's susceptibility to rising interest rates, commonly known as duration, to help prepare for a rising rate environment. This more conservative approach contributed to the Fund's lower total return versus the Lehman Index. However, if rates were to eventually rise, we expect the portfolio will be more prudently positioned for the long term. Market Overview -- Swings in Sentiment While the markets for U.S. government securities collectively generated positive total returns over the 12 months ended July 31, 2003, they vacillated during the period due to changing tides of sentiment. Last summer, corporate integrity concerns and doubts about the strength of an economic recovery prompted many investors to seek relative safety in higher-rated fixed-income investments --specifically U.S. Treasury securities. In November, however, when the Fed cut the federal funds rate/ii/ by half a percentage point and expectations rose that the economy may improve in 2003, many investors shifted their money into riskier assets to seek potentially higher returns. Concerns about the prospects of war with Iraq subsequently intensified, North Korea joined Iraq as a headline risk and unemployment levels remained high, during which time the Treasury markets continued to fluctuate into early 2003. After the major battles in Iraq subsided, bond prices proceeded to rise as a post-war rebound in business activity failed to materialize. Yields on shorter- and longer-term issues converged as the Fed reiterated its intention to provide the monetary stimulus needed to get economic growth back on track. Although comments from the Fed suggested that it believed growth was likely to resume in due course, it also signaled its determination to use all the tools at its disposal to avoid deflation. /1/ Lipper is a major independent mutual-fund tracking organization. Average annual returns are based on the 12-month period ended July 31, 2003, calculated among 79 funds in the U.S. mortgage funds category with reinvestment of dividends and capital gains excluding sales charges. 2 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report Economic data were mixed, which disappointed optimists who had been expecting more of a rebound in demand and economic activity following the end of the war. To the delight of many bond bulls, the end of military action in Iraq initially did little to boost employment, as anemic manufacturing and corporate capital spending persisted and inflation remained benign. Rally Triggered By Rate Cut Expectations As the year advanced, yields on shorter-term U.S. Treasuries dropped to levels near the lows they had reached prior to the Fed's meeting in late June. Before the meeting, many market participants anticipated that the federal funds rate would drop again, although the expectation of the size of a cut was split between 0.50% or 0.25%. During its meeting, the Fed reduced its target by 0.25% to 1.00% -- a level not seen in 45-years. Paradoxically, Treasury yields rose in the aftermath of the cut as the bond market, based on the Fed's post-meeting statement, anticipated an improving economy and lower chance of further interest rate reductions. By the end of July, U.S. Treasuries with longer maturities outperformed those with shorter maturities over the 12 months because the prices of longer-term issues are generally more sensitive to interest rate movements than shorter-term issues (bond prices move inversely to interest rates). The expectation of falling rates in June therefore gave more of a boost to longer-term bonds. Mortgage-backed securities underperformed comparable-maturity U.S. Treasuries over the past year. However, due to a sell-off in the Treasury market in July when both fixed-income classes retreated in price, mortgage-backed securities held up better for the final month. Thank you for your investment in the Smith Barney Managed Governments Fund Inc. We appreciate that you have entrusted us to manage your money and value our relationship with you. Sincerely, /s/ Roger M. Lavan /s/ David Torchia Roger M. Lavan, CFA David Torchia Vice President and Vice President and Investment Officer Investment Officer
August 13, 2003 The information provided in this letter by the Manager is not intended to be a forecast of future events, a guarantee of future results or investment advice. Views expressed may differ from those of the firm as a whole. Portfolio holdings and breakdowns are as of July 31, 2003 and are subject to change. Please refer to page 6 for a list and percentage breakdown of the Fund's holdings. /i/ The Lehman Index is a broad-based index of all public debt obligations of the U.S. government and its agencies that have an average maturity of roughly nine years. Please note that an investor cannot invest directly in an index. /ii/ The federal funds rate is the interest rate that banks with excess reserves at a Federal Reserve district bank charge other banks that need overnight loans. The federal funds rate often points to the direction of U.S. interest rates. 3 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report AVERAGE ANNUAL TOTAL RETURNS+ (UNAUDITED)
Without Sales Charges/(1)/ ------------------------------- Class A Class B Class L Class Y ----------------------------------------------------------- Twelve Months Ended 7/31/03 1.15% 0.62% 0.71% 1.49% ----------------------------------------------------------- Five Years Ended 7/31/03 4.95 4.40 4.49 5.30 ----------------------------------------------------------- Ten Years Ended 7/31/03 5.32 4.77 4.83 N/A ----------------------------------------------------------- Inception* through 7/31/03 7.76 5.36 4.92 5.77 -----------------------------------------------------------
With Sales Charges/(2)/ ---------------------------------- Class A Class B Class L Class Y -------------------------------------------------------------- Twelve Months Ended 7/31/03 (3.43)% (3.75)% (1.26)% 1.49% -------------------------------------------------------------- Five Years Ended 7/31/03 3.98 4.24 4.28 5.30 -------------------------------------------------------------- Ten Years Ended 7/31/03 4.83 4.77 4.73 N/A -------------------------------------------------------------- Inception* through 7/31/03 7.50 5.36 4.81 5.77 --------------------------------------------------------------
CUMULATIVE TOTAL RETURNS+ (UNAUDITED)
Without Sales Charges/(1)/ --------------------------------------------------------------- Class A (7/31/93 through 7/31/03) 67.94% --------------------------------------------------------------- Class B (Inception* through 7/31/03) 59.35 --------------------------------------------------------------- Class L (Inception* through 7/31/03) 60.27 --------------------------------------------------------------- Class Y (Inception* through 7/31/03) 52.13 ---------------------------------------------------------------
(1) Assumes reinvestment of all dividends and capital gain distributions, if any, at net asset value and does not reflect the deduction of the applicable sales charges with respect to Class A and L shares or the applicable contingent deferred sales charges ("CDSC") with respect to Class B and L shares. (2) Assumes reinvestment of all dividends and capital gain distributions, if any, at net asset value. In addition, Class A and L shares reflect the deduction of the maximum initial sales charges of 4.50% and 1.00%, respectively; Class B shares reflect the deduction of a 4.50% CDSC, which applies if shares are redeemed within one year from purchase payment. This CDSC declines by 0.50% the first year after purchase payment and thereafter by 1.00% per year until no CDSC is incurred. Class L shares also reflect the deduction of a 1.00% CDSC, which applies if shares are redeemed within one year from purchase payment. + The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. * Inception dates for Class A, B, L and Y shares are September 4, 1984, November 6, 1992, June 29, 1993 and February 7, 1996, respectively. 4 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report HISTORICAL PERFORMANCE (UNAUDITED) Value of $10,000 Invested in Class A Shares of the Smith Barney Managed Governments Fund Inc. vs. Lehman Brothers Government Bond Index and Lipper U.S. Mortgage Funds Average+ - -------------------------------------------------------------------------------- July 1993 -- July 2003 [CHART] Smith Barney Managed Lehman Brothers Lipper Governments Fund Inc.-- Government U.S. Mortgage Class A Shares Bond Index Funds Average ---------------------- --------------- --------------- 7/1993 9,547 10,000 10,000 7/1994 9,555 9,987 9,801 7/1995 10,288 11,731 10,658 7/1996 10,674 12,337 11,185 7/1997 11,938 13,592 12,309 7/1998 12,596 14,727 13,080 7/1999 12,669 15,131 13,291 7/2000 13,364 16,066 14,011 7/2001 14,792 17,978 15,643 7/2002 15,852 19,523 16,867 7/2003 16,034 20,390 17,258 +Hypothetical illustration of $10,000 invested in Class A shares on July 31, 1993, assuming deduction of the maximum 4.50% initial sales charge at the time of investment and reinvestment of dividends and capital gains, if any, at net asset value through July 31, 2003. The Lehman Brothers Government Bond Index is a broad-based index of all public debt obligations of the U.S. government and its agencies and has an average maturity of approximately nine years. The Index is unmanaged and is not subject to the same management and trading expenses as a mutual fund. The Lipper U.S. Mortgage Funds Average is composed of the Fund's peer group of mutual funds (79 funds as of July 31, 2003) investing in U.S. mortgage-backed securities. Lipper Inc. is a widely-recognized mutual fund information service. The performance of the Fund's other classes may be greater or less than the Class A shares' performance indicated on this chart, depending on whether greater or lesser sales charges and fees were incurred by shareholders investing in other classes. The returns shown do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. All figures represent past performance and are not a guarantee of future results. The performance data represents past performance including the investment return and principal value of an investment, which will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. 5 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report SCHEDULE OF INVESTMENTS JULY 31, 2003
FACE AMOUNT SECURITY VALUE - ------------------------------------------------------------------------------------------------------------------ U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 59.8% U.S. Treasury Notes: $ 13,500,000 3.000% due 2/29/04 (a) $ 13,652,941 11,000,000 5.875% due 11/15/04 (a) 11,625,196 7,000,000 4.375% due 5/15/07 (a)+ 7,390,201 10,000,000 3.625% due 5/15/13 (a) 9,332,820 7,200,000 Federal Home Loan Bank, 3.375% due 5/14/04 (a) 7,319,858 Federal Home Loan Mortgage Corp. (FHLMC): 1,284 5.500% due 5/1/13 (a) 1,313 3,185,423 7.000% due 2/1/16 (a)(b) 3,384,368 10,896,437 6.000% due 3/1/17 (a) 11,258,327 7,051,086 6.500% due 6/1/19 (a)(b) 7,361,524 2,831,013 6.500% due 1/1/32 (a)(b) 2,907,298 25,000,000 5.000% due 7/1/33 (c)(d) 23,898,500 40,000,000 5.500% due 7/7/33 (c)(d) 39,524,800 20,000,000 6.000% due 7/8/33 (c)(d) 20,225,000 49,000,000 6.500% due 7/8/33 (c)(d) 50,439,620 Federal National Mortgage Association (FNMA): 86,527 7.500% due 4/1/09 (a) 89,894 72,942 6.500% due 6/1/15 (a)(b) 76,554 56,317 7.000% due 1/1/16 (a) 59,835 4,144,823 5.500% due 12/1/16 (a)(b) 4,227,938 3,565,668 6.000% due 5/1/17 (a) 3,689,229 826,350 6.500% due 3/1/32 (a) 848,635 11,241,355 7.500% due 3/1/32 (a)(b) 11,914,874 7,565,442 7.000% due 5/1/32 (a)(b) 7,919,318 29,578,527 6.000% due 6/1/32 (a)(b) 29,924,876 30,000,000 5.000% due 5/15/33 (c)(d) 28,687,500 13,000,000 6.000% due 7/7/33 (c)(d) 13,150,280 31,000,000 7.000% due 7/7/33 (c)(d) 32,501,578 25,000,000 6.500% due 7/8/33 (c)(d) 25,734,500 Government National Mortgage Association (GNMA): 98,357 8.500% due 11/15/27 (a) 106,242 24,409,322 6.500% due 3/15/32 (a)(b) 25,259,927 15,472,481 7.000% due 3/15/32 (a)(b) 16,246,303 5,322,705 7.500% due 5/15/32 (a)(b) 5,642,319 - ------------------------------------------------------------------------------------------------------------------ TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS (Cost -- $413,551,538) 414,401,568 - ------------------------------------------------------------------------------------------------------------------ REPURCHASE AGREEMENTS (a) -- 40.2% 104,991,000 CIBC Oppenheimer, 1.000% due 8/1/03; Proceeds at maturity -- $104,993,916; (Fully collateralized by U.S. Treasury Notes, 3.625% to 4.625% due 3/31/04 to 5/15/06; Market value -- $107,091,168) 104,991,000 173,422,000 Goldman Sachs & Co., 1.050% due 8/1/03; Proceeds at maturity -- $173,427,058; (Fully collateralized by various U.S. government agency obligations, 0.000% to 13.750% due 9/18/03 to 11/15/27; Market value -- $176,890,696) 173,422,000 - ------------------------------------------------------------------------------------------------------------------ TOTAL REPURCHASE AGREEMENTS (Cost -- $278,413,000) 278,413,000 - ------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENTS -- 100.0% (Cost -- $691,964,538*) $692,814,568 - ------------------------------------------------------------------------------------------------------------------
(a) All or a portion of this security is segregated for open futures contracts commitments and/or "to-be-announced" securities. (b) Date shown represents the last in range of maturity dates of mortgage certificates owned. (c) Security acquired under mortgage dollar roll agreement (See Note 7). (d) Security is traded on a "to-be-announced" basis (See Note 6). + All or a portion of this security is held as collateral for open futures contracts commitments. * Aggregate cost for Federal income tax purposes is $691,964,703. See Notes to Financial Statements. 6 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report STATEMENT OF ASSETS AND LIABILITIES JULY 31, 2003 ASSETS: Investments, at value (Cost -- $413,551,538) $414,401,568 Repurchase agreements, at value (Cost -- $278,413,000) 278,413,000 Cash 506 Interest receivable 1,659,236 Receivable for Fund shares sold 458,430 - ----------------------------------------------------------------------------------------------- Total Assets 694,932,740 - ----------------------------------------------------------------------------------------------- LIABILITIES: Payable for securities purchased 240,858,667 Payable for Fund shares reacquired 398,730 Payable to broker -- variation margin 207,656 Investment advisory fee payable 178,102 Administration fee payable 79,084 Distribution plan fees payable 41,142 Accrued expenses 89,799 - ----------------------------------------------------------------------------------------------- Total Liabilities 241,853,180 - ----------------------------------------------------------------------------------------------- Total Net Assets $453,079,560 - ----------------------------------------------------------------------------------------------- NET ASSETS: Par value of capital shares $ 36,235 Capital paid in excess of par value 472,682,255 Overdistributed net investment income (10,458) Accumulated net realized loss from investment transactions and futures contracts (19,959,295) Net unrealized appreciation of investments and futures contracts 330,823 - ----------------------------------------------------------------------------------------------- Total Net Assets $453,079,560 - ----------------------------------------------------------------------------------------------- Shares Outstanding: Class A 20,178,855 ------------------------------------------------------------------------------------------- Class B 2,898,917 ------------------------------------------------------------------------------------------- Class L 1,662,762 ------------------------------------------------------------------------------------------- Class Y 11,494,728 ------------------------------------------------------------------------------------------- Net Asset Value: Class A (and redemption price) $12.50 ------------------------------------------------------------------------------------------- Class B * $12.51 ------------------------------------------------------------------------------------------- Class L * $12.51 ------------------------------------------------------------------------------------------- Class Y (and redemption price) $12.50 ------------------------------------------------------------------------------------------- Maximum Public Offering Price Per Share: Class A (net asset value plus 4.71% of net asset value per share) $13.09 ------------------------------------------------------------------------------------------- Class L (net asset value plus 1.01% of net asset value per share) $12.64 - -----------------------------------------------------------------------------------------------
* Redemption price is NAV of Class B and L shares reduced by a 4.50% and 1.00% CDSC, respectively, if shares are redeemed within one year from purchase payment (See Note 2). See Notes to Financial Statements. 7 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report STATEMENT OF OPERATIONS FOR THE YEAR ENDED JULY 31, 2003 INVESTMENT INCOME: Interest $18,129,755 - ------------------------------------------------------------------------ EXPENSES: Investment advisory fee (Note 2) 2,105,927 Distribution plan fees (Note 8) 1,135,596 Administration fee (Note 2) 935,967 Shareholder servicing fees (Note 8) 262,514 Directors' fees 46,179 Registration fees 43,887 Audit and legal 40,325 Custody 38,327 Shareholder communications (Note 8) 30,151 Other 10,865 - ------------------------------------------------------------------------ Total Expenses 4,649,738 - ------------------------------------------------------------------------ Net Investment Income 13,480,017 - ------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FUTURES CONTRACTS (NOTES 3 AND 5): Realized Gain (Loss) From: Investment transactions 795,450 Futures contracts (428,181) - ------------------------------------------------------------------------ Net Realized Gain 367,269 - ------------------------------------------------------------------------ Change in Net Unrealized Appreciation of Investments and Futures Contracts: Beginning of year 8,487,184 End of year 330,823 - ------------------------------------------------------------------------ Decrease in Net Unrealized Appreciation (8,156,361) - ------------------------------------------------------------------------ Net Loss on Investments and Futures Contracts (7,789,092) - ------------------------------------------------------------------------ Increase in Net Assets From Operations $ 5,690,925 - ------------------------------------------------------------------------
See Notes to Financial Statements. 8 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED JULY 31,
2003 2002 - ------------------------------------------------------------------------------ OPERATIONS: Net investment income $ 13,480,017 $ 20,718,621 Net realized gain 367,269 6,058,484 Increase (decrease) in net unrealized appreciation (8,156,361) 3,928,338 - ----------------------------------------------------------------------------- Increase in Net Assets From Operations 5,690,925 30,705,443 - ----------------------------------------------------------------------------- DISTRIBUTION TO SHAREHOLDERS FROM (NOTE 9): Net investment income (16,679,006) (19,907,185) Capital (2,432,286) -- - ----------------------------------------------------------------------------- Decrease in Net Assets From Distributions to Shareholders (19,111,292) (19,907,185) - ----------------------------------------------------------------------------- FUND SHARE TRANSACTIONS (NOTE 10): Net proceeds from sale of shares 89,057,904 98,525,959 Net asset value of shares issued for reinvestment of dividends 9,029,310 9,509,066 Cost of shares reacquired (94,368,143) (77,263,994) - ----------------------------------------------------------------------------- Increase in Net Assets From Fund Share Transactions 3,719,071 30,771,031 - ----------------------------------------------------------------------------- Increase (Decrease) in Net Assets (9,701,296) 41,569,289 NET ASSETS: Beginning of year 462,780,856 421,211,567 - ----------------------------------------------------------------------------- End of year* $453,079,560 $462,780,856 - ----------------------------------------------------------------------------- * Includes undistributed (overdistributed) net investment income of: $(10,458) $1,521,707 - -----------------------------------------------------------------------------
See Notes to Financial Statements. 9 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report NOTES TO FINANCIAL STATEMENTS 1. Significant Accounting Policies Smith Barney Managed Governments Fund Inc. ("Fund"), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The significant accounting policies consistently followed by the Fund are: (a) security transactions are accounted for on trade date; (b) securities listed on a national securities exchange will be valued on the basis of the last sale on the date on which the valuation is made or, in the absence of sales, at the mean between the closing bid and asked prices. Over-the-counter securities will be valued at the mean between the closing bid and asked prices on each day; (c) securities for which market quotations are not available will be valued in good faith at fair value by or under the direction of the Board of Directors; (d) securities maturing within 60 days are valued at cost plus accreted discount, or minus amortized premium, which approximates value; (e) other securities that have a maturity of more than 60 days are valued at prices based on market quotations for securities of similar type, yield and maturity; (f ) interest income, adjusted for amortization of premium and accretion of discount is recorded on an accrual basis; (g) gains or losses on the sale of securities are calculated by using the specific identification method; (h) dividends and distributions to shareholders are recorded on the ex-dividend date; the Fund distributes dividends monthly and capital gains, if any, at least annually; (i) class specific expenses are charged to each class; management fees and general fund expenses are allocated on the basis of the relative net assets of each class or on another reasonable basis; (j) the Fund intends to comply with the applicable provisions of the Internal Revenue Code of 1986, as amended, pertaining to regulated investment companies and to make distributions of taxable income sufficient to relieve it from substantially all Federal income and excise taxes; (k) the character of income and gains to be distributed is determined in accordance with income tax regulations which may differ from accounting principles generally accepted in the United States of America. At July 31, 2003, reclassifications were made to the capital accounts of the Fund to reflect permanent book/tax differences and income and gains available for distributions under income tax regulations. Accordingly a portion of accumulated net realized loss of $4,867,104 was reclassed to paid-in capital. Net investment income, net realized gains and net assets were not affected by this change; and (l) estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets resulting from operations when financial statements are prepared. Changes in the economic environment, financial markets and any other parameters used in determining these estimates could cause actual results to differ. 2. Investment Advisory Agreement, Administration Agreement and Other Transactions Smith Barney Fund Management LLC ("SBFM"), an indirect wholly-owned subsidiary of Citigroup Inc. ("Citigroup"), acts as investment adviser to the Fund. The Fund pays SBFM an investment advisory fee calculated at an annual rate of 0.45% of the Fund's average daily net assets up to $1 billion and 0.415% of the Fund's average daily net assets in excess of $1 billion. This fee is calculated daily and paid monthly. SBFM also acts as the Fund's administrator for which the Fund pays a fee calculated at an annual rate of 0.20% of the Fund's average daily net assets up to $1 billion and 0.185% of the Fund's average daily net assets in excess of $1 billion. This fee is calculated daily and paid monthly. Citicorp Trust Bank, fsb. ("CTB"), another subsidiary of Citigroup, acts as the Fund's transfer agent. PFPC Global Fund Services ("PFPC") acts as the Fund's sub-transfer agent. CTB receives account fees and asset-based fees that vary according to the size and type of account. PFPC is responsible for shareholder recordkeeping and financial processing for all shareholder accounts and is paid by CTB. During the year ended July 31, 2003, the Fund paid transfer agent fees of $222,523 to CTB. 10 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report NOTES TO FINANCIAL STATEMENTS (CONTINUED) Citigroup Global Markets Inc. ("CGM"), formerly known as Salomon Smith Barney Inc., another subsidiary of Citigroup, acts as the Fund's distributor. There are maximum initial sales charges of 4.50% and 1.00% for Class A and L shares, respectively. There is a contingent deferred sales charge ("CDSC") of 4.50% on Class B shares, which applies if redemption occurs within one year from purchase payment. This CDSC declines by 0.50% the first year after purchase payment and thereafter by 1.00% per year until no CDSC is incurred. Class L shares also have a 1.00% CDSC, which applies if redemption occurs within the one year from purchase payment. In addition, Class A shares have a 1.00% CDSC, which applies if redemption occurs within the one year from purchase payment. This CDSC only applies to those purchases of Class A shares which, when combined with current holdings of Class A shares, equal or exceed $500,000 in the aggregate. These purchases do not incur an initial sales charge. For the year ended July 31, 2003, CGM and its affiliates received sales charges of approximately $168,000 and $61,000 on sales of the Fund's Class A and L shares, respectively. In addition, for the year ended July 31, 2003, CDSCs paid to CGM and its affiliates were approximately $109,000 and $9,000 for Class B and L shares, respectively. All officers and one Director of the Fund are employees of Citigroup or its affiliates. 3. Investments During the year ended July 31, 2003, the aggregate cost of purchases and proceeds from sales of investments (including maturities of long-term investments, but excluding short-term investments) were as follows: - ----------------------------------------------------------------------------- Purchases $2,032,187,244 - ----------------------------------------------------------------------------- Sales 1,938,122,538 - -----------------------------------------------------------------------------
At July 31, 2003, the aggregate gross unrealized appreciation and depreciation of investments for Federal income tax purposes were as follows: - --------------------------------------------------------------------------- Gross unrealized appreciation $ 5,622,531 Gross unrealized depreciation (4,772,666) - --------------------------------------------------------------------------- Net unrealized appreciation $ 849,865 - ---------------------------------------------------------------------------
4. Repurchase Agreements The Fund purchases (and the custodian takes possession of ) U.S. government securities from securities dealers subject to agreements to resell the securities to the sellers at a future date (generally, the next business day) at an agreed-upon higher repurchase price. The Fund requires continual maintenance of the market value (plus accrued interest) of the collateral in amounts at least equal to the repurchase price. 11 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report NOTES TO FINANCIAL STATEMENTS (CONTINUED) 5. Futures Contracts Securities or cash equal to the initial margin amount are either deposited with the broker or segregated by the custodian upon entering into the futures contract. During the period the futures contract is open, changes in the value of the contract are recognized as unrealized gains or losses by "marking-to market" on a daily basis to reflect the market value of the contract at the end of each day's trading. Variation margin payments are made or received and recognized as assets due from or liabilities due to broker, depending upon whether unrealized gains or losses are incurred. When the contract is closed, the Fund records a realized gain or loss equal to the difference between the proceeds from (or cost of ) the closing transactions and the Fund's basis in the contract. The Fund enters into such contracts typically to hedge a portion of its portfolio. The Fund bears the market risk that arises from changes in the value of the financial instruments and securities indices. At July 31, 2003, the Fund had the following open futures contracts:
# of Market Unrealized To Buy: Contracts Expiration Basis Value Value Loss - ---------------------------------------------------------------------------- U.S. Treasury 2 Year Notes 160 9/03 $34,713,450 $34,342,500 $(370,950) U.S. Treasury 5 Year Notes 50 9/03 5,629,207 5,566,406 (62,801) U.S. Treasury 10 Year Notes 50 9/03 5,616,706 5,531,250 (85,456) - --------------------------------------------------------------------------- Net Unrealized Loss on Open Futures Contracts $(519,207) - ---------------------------------------------------------------------------
6. Securities Traded on a To-Be-Announced Basis The Fund may trade portfolio securities on a "to-be-announced" ("TBA") basis. In a TBA transaction, the Fund commits to purchasing or selling securities for which all specific information is not yet known at the time of the trade, particularly the face amount and maturity date of the underlying security transactions. Securities purchased on a TBA basis are not settled until they are delivered to the Fund, normally 15 to 45 days later. These transactions are subject to market fluctuation and their current value is determined in the same manner as for other portfolio securities. At July 31, 2003, the Fund held TBA securities with a total cost of $236,777,578. 7. Mortgage Dollar Roll Transactions The Fund may enter into mortgage dollar roll transactions. A mortgage dollar roll transaction involves a sale by the Fund of mortgage related securities that it holds with an agreement by the Fund to repurchase similar securities at an agreed upon price and date. The securities repurchased will bear the same interest rate as those sold, but generally will be collateralized by pools of mortgages with different prepayment histories than those securities sold. Proceeds from the sale will be invested and the income from these investments, together with any additional income received on the sale, will generate income for the Fund. At July 31, 2003, the Fund had outstanding mortgage dollar rolls with a total cost of $236,777,578. 12 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report NOTES TO FINANCIAL STATEMENTS (CONTINUED) 8. Class Specific Expenses Pursuant to a Distribution Plan, the Fund pays a service fee with respect to Class A, B and L shares calculated at an annual rate of 0.25% of the average daily net assets of each respective class. In addition, the Fund pays a distribution fee with respect to Class B and L shares calculated at an annual rate of 0.50% and 0.45% of the average daily net assets for each class, respectively. For the year ended July 31, 2003, total Distribution Plan fees, which are accrued daily and paid monthly, were as follows:
Class A Class B Class L - ----------------------------------------------------------------------------------------- Distribution Plan Fees $682,059 $302,509 $151,028 - ----------------------------------------------------------------------------------------
For the year ended July 31, 2003, total Shareholder Servicing fees were as follows:
Class A Class B Class L Class Y - ----------------------------------------------------------------------------------------- Shareholder Servicing Fees $207,807 $35,185 $19,421 $101 - ----------------------------------------------------------------------------------------
For the year ended July 31, 2003, total Shareholder Communication expenses were as follows:
Class A Class B Class L Class Y - ---------------------------------------------------------------------------------------- Shareholder Communication Expenses $21,595 $3,620 $4,438 $498 - ---------------------------------------------------------------------------------------
9. Distributions Paid to Shareholders by Class
Year Ended Year Ended July 31, 2003 July 31, 2002 - ---------------------------------------------------------------------------------------- Class A Net investment income $ 9,628,285 $12,301,354 Capital 1,413,886 -- - --------------------------------------------------------------------------------------- Total $11,042,171 $12,301,354 - --------------------------------------------------------------------------------------- Class B Net investment income $ 1,220,179 $ 1,315,971 Capital 209,786 -- - --------------------------------------------------------------------------------------- Total $ 1,429,965 $ 1,315,971 - --------------------------------------------------------------------------------------- Class L Net investment income $ 660,422 $ 536,000 Capital 112,833 -- - --------------------------------------------------------------------------------------- Total $ 773,255 $ 536,000 - --------------------------------------------------------------------------------------- Class Y Net investment income $ 5,170,120 $ 5,753,860 Capital 695,781 -- - --------------------------------------------------------------------------------------- Total $ 5,865,901 $ 5,753,860 - ---------------------------------------------------------------------------------------
13 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report NOTES TO FINANCIAL STATEMENTS (CONTINUED) 10. Capital Shares At July 31, 2003, the Fund had 500 million shares of capital stock authorized with a par value of $0.001 per share. The Fund has the ability to issue multiple classes of shares. Each share of a class represents an identical interest in the Fund and has the same rights, except that each class bears certain expenses specifically related to the distribution of its shares. Transactions in shares of each class were as follows:
Year Ended Year Ended July 31, 2003 July 31, 2002 ------------------------ ------------------------ Shares Amount Shares Amount - --------------------------------------------------------------------------------- Class A Shares sold 1,753,101 $ 22,641,545 2,724,945 $ 34,574,491 Shares issued on reinvestment 583,002 7,518,566 653,525 8,268,742 Shares reacquired (3,691,238) (47,593,956) (3,409,301) (43,181,126) - --------------------------------------------------------------------------------- Net Decrease (1,355,135) $(17,433,845) (30,831) $ (337,893) - --------------------------------------------------------------------------------- Class B Shares sold 997,599 $ 12,911,999 1,686,887 $ 21,450,529 Shares issued on reinvestment 73,867 953,292 65,542 829,922 Shares reacquired (1,157,463) (14,939,361) (1,179,625) (14,906,978) - --------------------------------------------------------------------------------- Net Increase (Decrease) (85,997) $ (1,074,070) 572,804 $ 7,373,473 - --------------------------------------------------------------------------------- Class L Shares sold 1,306,633 $ 16,886,750 1,467,223 $ 18,605,132 Shares issued on reinvestment 43,217 557,452 32,393 410,402 Shares reacquired (1,375,397) (17,723,938) (325,590) (4,117,675) - --------------------------------------------------------------------------------- Net Increase (Decrease) (25,547) $ (279,736) 1,174,026 $ 14,897,859 - --------------------------------------------------------------------------------- Class Y Shares sold 2,834,601 $ 36,617,610 1,892,887 $ 23,895,807 Shares reacquired (1,089,837) (14,110,888) (1,182,924) (15,058,215) - --------------------------------------------------------------------------------- Net Increase 1,744,764 $ 22,506,722 709,963 $ 8,837,592 - ---------------------------------------------------------------------------------
11.Capital Loss Carryforward At July 31, 2003, the Fund had, for Federal income tax purposes, capital loss carryforwards of approximately $19,370,000 available, subject to certain limitations, to offset future capital gains. To the extent that these capital carryforward losses are used to offset capital gains, it is probable that the gains so offset will not be distributed. The amount and expiration of the carryforwards are indicated below. Expiration occurs on July 31 of the year indicated:
2004 2008 2009 2011 - --------------------------------------------------------------------------------- Carryforward amounts $3,598,000 $14,114,000 $941,000 $717,000 - --------------------------------------------------------------------------------
In addition the Fund had $1,107,924 of capital losses realized after October 31, 2002, which were deferred for tax purposes to the first day of the following fiscal year. 14 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report NOTES TO FINANCIAL STATEMENTS (CONTINUED) 12.Income Tax Information and Distributions to Shareholders At July 31, 2003, the tax basis components of distributable earnings were: - ------------------------------------------------ Accumulated capital losses $(19,370,412) - ------------------------------------------------ Unrealized appreciation 849,865 - ------------------------------------------------
The difference between book basis and tax basis unrealized appreciation is attributable primarily to mark to market of derivative securities. The tax character of distributions paid during the year ended July 31, 2003 was: - ---------------------------------------------- Ordinary income $16,679,006 Capital 2,432,286 - ---------------------------------------------- Total $19,111,292 - ----------------------------------------------
15 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report FINANCIAL HIGHLIGHTS For a share of each class of capital stock outstanding throughout each year ended July 31, unless otherwise noted: Class A Shares 2003/(1)/ 2002/(1)/ 2001/(1)/ 2000/(1)/ 1999/(1)/ - ------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Year $12.87 $12.56 $12.03 $12.09 $12.73 - ------------------------------------------------------------------------------------------------------------- Income (Loss) From Operations: Net investment income 0.37 0.59 0.69 0.73 0.65 Net realized and unrealized gain (0.22) 0.29 (loss) 0.56 (0.09) (0.57) - ------------------------------------------------------------------------------------------------------------- Total Income From Operations 0.15 0.88 1.25 0.64 0.08 - ------------------------------------------------------------------------------------------------------------- Less Distributions From: Net investment income (0.45) (0.57) (0.70) (0.70) (0.72) Capital (0.07) -- (0.02) -- -- - ------------------------------------------------------------------------------------------------------------- Total Distributions (0.52) (0.57) (0.72) (0.70) (0.72) - ------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Year $12.50 $12.87 $12.56 $12.03 $12.09 - ------------------------------------------------------------------------------------------------------------- Total Return 1.15% 7.17% 10.68% 5.49% 0.58% - ------------------------------------------------------------------------------------------------------------- Net Assets, End of Year (000s) $252,312 $277,136 $ 270,884 $270,599 $321,860 - ------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets: Expenses 1.02% 1.05% 1.04% 1.05% 1.04% Net investment income 2.87 4.67 5.58 6.05 5.18 - ------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 457% 335% 275% 173% 205% - ------------------------------------------------------------------------------------------------------------- Class B Shares 2003/(1)/ 2002/(1)/ 2001/(1)/ 2000/(1)/ 1999/(1)/ - ------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Year $12.88 $12.57 $12.03 $12.09 $12.73 - ------------------------------------------------------------------------------------------------------------- Income (Loss) From Operations: Net investment income 0.30 0.52 0.62 0.66 0.59 Net realized and unrealized gain (0.21) 0.29 (loss) 0.57 (0.08) (0.57) - ------------------------------------------------------------------------------------------------------------- Total Income From Operations 0.09 0.81 1.19 0.58 0.02 - ------------------------------------------------------------------------------------------------------------- Less Distributions From: Net investment income (0.39) (0.50) (0.63) (0.64) (0.66) Capital (0.07) -- (0.02) -- -- - ------------------------------------------------------------------------------------------------------------- Total Distributions (0.46) (0.50) (0.65) (0.64) (0.66) - ------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Year $12.51 $12.88 $12.57 $12.03 $12.09 - ------------------------------------------------------------------------------------------------------------- Total Return 0.62% 6.60% 10.17% 4.91% 0.06% - ------------------------------------------------------------------------------------------------------------- Net Assets, End of Year (000s) $ 36,266 $ 38,431 $30,310 $39,499 $61,391 - ------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets: Expenses 1.53% 1.56% 1.54% 1.58% 1.57% Net investment income 2.35 4.13 5.11 5.52 4.64 - ------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 457% 335% 275% 173% 205% - -------------------------------------------------------------------------------------------------------------
(1)Per share amounts have been calculated using the monthly average shares method. 16 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report FINANCIAL HIGHLIGHTS (CONTINUED) For a share of each class of capital stock outstanding throughout each year ended July 31, unless otherwise noted: Class L Shares 2003/(1)/ 2002/(1)/ 2001/(1)/ 2000/(1)/ 1999/(1)/ - -------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Year $12.88 $12.57 $12.03 $12.09 $12.73 - -------------------------------------------------------------------------------------------------------------- Income (Loss) From Operations: Net investment income 0.30 0.53 0.62 0.67 0.61 Net realized and unrealized gain (loss) (0.20) 0.29 0.58 (0.08) (0.58) - -------------------------------------------------------------------------------------------------------------- Total Income From Operations 0.10 0.82 1.20 0.59 0.03 - -------------------------------------------------------------------------------------------------------------- Less Distributions From: Net investment income (0.40) (0.51) (0.64) (0.65) (0.67) Capital (0.07) -- (0.02) -- -- - -------------------------------------------------------------------------------------------------------------- Total Distributions (0.47) (0.51) (0.66) (0.65) (0.67) - -------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Year $12.51 $12.88 $12.57 $12.03 $12.09 - -------------------------------------------------------------------------------------------------------------- Total Return 0.71% 6.69% 10.26% 5.00% 0.15% - -------------------------------------------------------------------------------------------------------------- Net Assets, End of Year (000s) $20,796 $21,740 $6,463 $3,879 $4,505 - -------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets: Expenses 1.50% 1.46% 1.46% 1.51% 1.48% Net investment income 2.35 4.17 5.08 5.60 4.76 - -------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 457% 335% 275% 173% 205% - -------------------------------------------------------------------------------------------------------------- Class Y Shares 2003/(1)/ 2002/(1)/ 2001/(1)/ 2000/(1)/ 1999/(1)/ - -------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Year $12.87 $12.56 $12.03 $12.10 $12.74 - -------------------------------------------------------------------------------------------------------------- Income (Loss) From Operations: Net investment income 0.41 0.63 0.73 0.77 0.70 Net realized and unrealized gain (loss) (0.21) 0.29 0.57 (0.09) (0.57) - -------------------------------------------------------------------------------------------------------------- Total Income From Operations 0.20 0.92 1.30 0.68 0.13 - -------------------------------------------------------------------------------------------------------------- Less Distributions From: Net investment income (0.50) (0.61) (0.75) (0.75) (0.77) Capital (0.07) -- (0.02) -- -- - -------------------------------------------------------------------------------------------------------------- Total Distributions (0.57) (0.61) (0.77) (0.75) (0.77) - -------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Year $12.50 $12.87 $12.56 $12.03 $12.10 - -------------------------------------------------------------------------------------------------------------- Total Return 1.49% 7.55% 11.08% 5.79% 0.92% - -------------------------------------------------------------------------------------------------------------- Net Assets, End of Year (000s) $143,706 $125,474 $113,555 $120,270 $118,007 - -------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets: Expenses 0.69% 0.70% 0.70% 0.71% 0.70% Net investment income 3.15 5.01 5.91 6.40 5.54 - -------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 457% 335% 275% 173% 205% - --------------------------------------------------------------------------------------------------------------
(1) Per share amounts have been calculated using the monthly average shares method. 17 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report INDEPENDENT AUDITORS' REPORT The Shareholders and Board of Directors of Smith Barney Managed Governments Fund Inc.: We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Smith Barney Managed Governments Fund Inc. ("Fund") as of July 31, 2003, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of July 31, 2003, by correspondence with the custodian. As to securities purchased but not yet received, we performed other appropriate auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of July 31, 2003, and the results of its operations for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended, in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG LLP New York, New York September 12, 2003 18 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report ADDITIONAL INFORMATION (UNAUDITED) Information about Directors and Officers The business and affairs of the Smith Barney Managed Governments Fund Inc. ("Fund") are managed under the direction of the Board of Directors. Information pertaining to the Directors and Officers of the Fund is set forth below. The Statement of Additional Information includes additional information about Fund directors and is available, without charge, upon request by calling the Fund's transfer agent (Citicorp Trust Bank, fsb. at 1-800-451-2010).
Number of Portfolios in Term of Office* Fund Complex Other Position(s) Held and Length of Principal Occupation(s) Overseen by Directorships Name, Address and Age with Fund Time Served During Past Five Years Director Held by Director - ----------------------------------------------------------------------------------------------------------------------------- NON-INTERESTED DIRECTORS: Herbert Barg Director Since Retired 44 None 1460 Drayton Lane 1995 Wynnewood, PA 19096 Age 79 Dwight B. Crane Director Since Professor -- Harvard 51 None Harvard Business School 1995 Business School Soldiers Field Morgan Hall #375 Boston, MA 02163 Age 65 Burt N. Dorsett Director Since President -- Dorsett McCabe 28 None 201 East 62nd Street 1984 Capital Management, Inc.; Apt. 3C Chief Investment Officer -- New York, NY 10021 Leeb Capital Management, Inc. Age 72 1999-Present Elliot S. Jaffe Director Since Chairman of The Dress Barn Inc. 28 Zweig Total The Dress Barn Inc. 1985 Return Fund; Executive Office Zweig Fund, Inc. 30 Dunnigan Drive Suffern, NY 10901 Age 76 Stephen E. Kaufman Director Since Attorney 62 None Stephen E. Kaufman PC 1995 277 Park Avenue 47th Floor New York, NY 10172 Age 71 Joseph J. McCann Director Since Retired 28 None 200 Oak Park Place 1995 Suite One Pittsburgh, PA 15243 Age 72 Cornelius C. Rose, Jr. Director Since Chief Executive 28 None P.O. Box 5388 1984 Officer -- Performance West Lebanon, NH 03784 Learning Systems Age 70 INTERESTED DIRECTOR: R. Jay Gerken, CFA** Chairman, President Since Managing Director of Citigroup 219 N/A CGM and Chief Executive 2002 Global Markets Inc. ("CGM"); 399 Park Avenue, 4th Floor Officer Chairman, President and Chief New York, NY 10022 Executive Officer of Smith Age 52 Barney Fund Management LLC ("SBFM"), Travelers Investment Adviser, Inc. ("TIA") and Citi Fund Management Inc. ("CFM")
19 Smith Barney Managed Government Fund Inc. | 2003 Annual Report ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
Number of Portfolios in Term of Office* Fund Complex Other Position(s) Held and Length of Principal Occupation(s) Overseen by Directorships Name, Address and Age with Fund Time Served During Past Five Years Director Held by Director - --------------------------------------------------------------------------------------------------------------------------------- OFFICERS: Lewis E. Daidone Senior Vice Since Managing Director of CGM; N/A N/A CGM President and Chief 1995 Director and Senior Vice 125 Broad Street, 11th Floor Administrative President of SBFM and TIA; New York, NY 10004 Officer Director of CFM; Former Chief Age 45 Financial Officer and Treasurer of mutual funds affiliated with Citigroup Inc. Richard L. Peteka Chief Financial Since Director and Head of Internal N/A N/A CGM Officer and Treasurer 2002 Control for Citigroup Asset 125 Broad Street, 11th Floor Management U.S. Mutual Fund New York, NY 10004 Administration from 1999- Age 42 2002; Vice President, Head of Mutual Fund Administration and Treasurer of Oppenheimer Capital from 1996-1999 Roger M. Lavan, CFA Vice President Since Managing Director N/A N/A CGM and Investment 2002 of CGM; Investment Officer 399 Park Avenue, 4th Floor Officer of SBFM New York, NY 10022 Age 38 David Torchia Vice President Since Managing Director N/A N/A CGM and Investment 2002 of CGM; Investment Officer 399 Park Avenue, 4th Floor Officer of SBFM New York, NY 10022 Age 42 Kaprel Ozsolak Controller Since Vice President of CGM N/A N/A CGM 2002 125 Broad Street, 11th Floor New York, NY 10004 Age 37 Christina T. Sydor Secretary Since Managing Director of CGM; N/A N/A CGM 1995 General Counsel and Secretary 300 First Stamford Place of SBFM and TIA 4th Floor Stamford, CT 06902 Age 52
- -------- * Each Director and Officer serves until his or her successor has been duly elected and qualified. ** Mr. Gerken is an "interested person" of the Fund as defined in the Investment Company Act of 1940, as amended, because Mr. Gerken is an officer of SBFM and certain of its affiliates. TAX INFORMATION (UNAUDITED) For Federal tax purposes the Fund hereby designates for the fiscal year ended July 31, 2003: . A total of 5.61% of the ordinary dividends paid by the Fund from net investment income are derived from Federal obligations and may be exempt from taxation at the state level. 20 Smith Barney Managed Governments Fund Inc. | 2003 Annual Report SMITH BARNEY MANAGED GOVERNMENTS FUND INC. DIRECTORS INVESTMENT ADVISER Herbert Barg AND ADMINISTRATOR Dwight B. Crane Smith Barney Fund Burt N. Dorsett Management LLC R. Jay Gerken, CFA Chairman DISTRIBUTOR Elliot S. Jaffe Citigroup Global Markets Inc. Stephen E. Kaufman Joseph J. McCann CUSTODIAN Cornelius C. Rose, Jr. State Street Bank and Trust Company OFFICERS R. Jay Gerken, CFA TRANSFER AGENT President and Citicorp Trust Bank, fsb. Chief Executive Officer 125 Broad Street, 11th Floor New York, New York 10004 Lewis E. Daidone Senior Vice President and SUB-TRANSFER AGENT Chief Administrative Officer PFPC Global Fund Services P.O. Box 9699 Richard L. Peteka Providence, Rhode Island Chief Financial Officer 02940-9699 and Treasurer Roger M. Lavan, CFA Vice President and Investment Officer David Torchia Vice President and Investment Officer Kaprel Ozsolak Controller Christina T. Sydor Secretary Smith Barney Managed Governments Fund Inc. This report is submitted for the general information of the shareholders of Smith Barney Managed Governments Fund Inc., but it may also be used as sales literature when preceded or accompanied by the current Prospectus, which gives details about charges, expenses, investment objectives and operating policies of the Fund. If used as sales material after October 31, 2003, this report must be accompanied by performance information for the most recently completed calendar quarter. SMITH BARNEY MANAGED GOVERNMENTS FUND INC. Smith Barney Mutual Funds 125 Broad Street 10th Floor, MF-2 New York, New York 10004 For complete information on any Smith Barney Mutual Funds, including management fees and expenses, call or write your financial professional for a free prospectus. Read it carefully before you invest or send money. www.smithbarneymutualfunds.com (C)2003 Citigroup Global Markets Inc. Member NASD, SIPC FD01181 9/03 03-5406 ITEM 2. CODE OF ETHICS. The registrant has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The Board of Directors of the registrant has determined that Dwight Crane, a member of the Board's Audit Committee, possesses the technical attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as an "audit committee financial expert," and has designated Mr. Crane as the Audit Committee's financial expert. Mr. Crane is an "independent" Director pursuant to paragraph (a)(2) of Item 3 to Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the "1940 Act")) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934 (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that have materially affected, or are likely to materially affect the registrant's internal control over financial reporting. ITEM 10. EXHIBITS. (a) Code of Ethics attached hereto. (b) Attached hereto. Exhibit 99.CERT Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Exhibit 99.906CERT Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this Report to be signed on its behalf by the undersigned, there unto duly authorized. Smith Barney Managed Governments Fund Inc. By: /s/ R. Jay Gerken R. Jay Gerken Chief Executive Officer of Smith Barney Managed Governments Fund Inc. Date: October 3, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ R. Jay Gerken (R. Jay Gerken) Chief Executive Officer of Smith Barney Managed Governments Fund Inc. Date: October 3, 2003 By: /s/ Richard L. Peteka Chief Financial Officer of Smith Barney Managed Governments Fund Inc. Date: October 3, 2003 EX-99.CODE ETH 3 dex99codeeth.txt CODE OF ETHICS June, 2003 EX 99.CODE ETH SARBANES-OXLEY ACT CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS OF CAM\U.S. REGISTERED INVESTMENT COMPANIES I. Covered Officers/Purpose of the Code This code of ethics (the "Code") for Citigroup Asset Management's ("CAM's") U. S. registered proprietary investment companies (collectively, "Funds" and each a, "Company") applies to each Company's Chief Executive Officer, Chief Administrative Officer, Chief Financial Officer and Controller (the "Covered Officers") for the purpose of promoting: o honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; o full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Company; o compliance with applicable laws and governmental rules and regulations; o the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and o accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. II. Administration of Code The Regional Director of CAM Compliance, North America ("Compliance Officer") is responsible for administration of this Code, including granting pre-approvals (see Section III below) and waivers (as described in Section VI below), applying this Code in specific situations in which questions are presented under it and interpreting this Code in any particular situation. III. Covered Officers Should Ethically Handle Actual and Apparent Conflicts of Interest Overview. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his service to, the Company. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with the Company. Certain conflicts of interest arise out of the relationships between Covered Officers and the Company and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Company because of their status as "affiliated persons" of the Company. The compliance programs and procedures of the Company and its investment adviser are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code (see Section VII below). Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between a Company and the investment adviser of which the Covered Officers are also officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for a Company or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and a Company. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Company and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of a Company. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds' Boards of Directors\Trustees ("Boards") that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Company. * * * * Each Covered Officer must: o not use his personal influence or personal relationships improperly to influence investment decisions or financial reporting ( e.g. through fraudulent accounting practices) by the Company whereby the Covered Officer/1/ would benefit personally to the detriment of the Company; or o not cause the Company to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than for the benefit of the Company; and o not use material non-public knowledge of portfolio transactions made or contemplated for the Company to trade personally or cause others to trade personally in contemplation of the market affect of such transactions. o There are some potential conflict of interest situations that should always be discussed with the Compliance Officer, if material. Examples are as follows: (1) service as a director on the board of any public or private company; (2) any ownership interest in, or any consulting or employment relationship with, any of the Company's service providers, other than its investment adviser, (3) a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Company for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership; and 4) the receipt of any gifts or the conveyance of any value (including entertainment ) from any company with which the Company has current or prospective business dealings, except: (a) any non-cash gifts of nominal value (nominal value is less than $100); and (b) customary and reasonable meals and entertainment at which the giver is present, such as the occasional business meal or sporting event. IV. Disclosure and Compliance Each Covered Officer: o should be familiar with his or her responsibilities in connection with the disclosure requirements generally applicable to the Company; - ------------------------------- /1/ Any activity or relationship that would present a conflict for a Covered Officer would also present a conflict for the Covered Officer if a member of a Covered Officer's family (spouse, minor children and any account over which a Covered Officer is deemed to have beneficial interest) engages in such an activity or has such a relationship. o should not knowingly misrepresent, or knowingly cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company's directors and auditors, and to governmental regulators and self-regulatory organizations; o should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Funds and the investment adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and o is responsible to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. V. Reporting and Accountability Each Covered Officer must: o upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that the Covered Officer has received, read, and understands the Code; o annually thereafter affirm to the Board that he or she has complied with the requirements of the Code; o annually disclose affiliations and other relationships related to conflicts of interest; o not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and o notify the Compliance Officer promptly if he knows of any violation of this Code (failure to do so is itself a violation of this Code). In rendering decisions and interpretations and in conducting investigations of potential violations under the Code, the Compliance Officer may, at his discretion, consult with such persons as he determines to be appropriate, including, but not limited to, a senior legal officer of the Company or its investment adviser or its affiliates, independent auditors or other consultants, subject to any requirement to seek pre-approval from the Company's audit committee for the retention of independent auditors to perform permissible non-audit services. The Funds will follow these procedures in investigating and enforcing the Code: o the compliance Officer will take all appropriate action to investigate any potential violation of which he becomes aware; o if, after investigation the Compliance Officer believes that no violation has occurred, the Compliance Officer is not required to take any further action; o any matter that the Compliance Officer believes is a violation will be reported to the Directors of the Fund who are not "interested persons" as defined in the Investment Company Act the ("Non-interested Directors") o if the Non-interested Directors of the Board concur that a violation has occurred, it will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; and o any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules The Compliance Officer shall submit an annual report to the Board describing any waivers granted. VI. Waivers/2/ A Covered Officer may request a waiver of any of the provisions of the Code by submitting a written request for such waiver to the Compliance Officer, setting forth the basis of such request and explaining how the waiver would be consistent with the standards of conduct described herein. The Compliance Officer shall review such request and make a determination thereon in writing, which shall be binding. In determining whether to waive any provisions of this Code, the Compliance Officer shall consider whether the proposed waiver is consistent with honest and ethical conduct and other purposes of this Code. VII. Other Policies and Procedures This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, the Funds' investment advisers, principal underwriters, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The codes of ethics of the funds and the investment advisers and principal underwriters under Rule 17j-1 of the Investment Company Act and the Citigroup Code of Conduct and Citigroup Statement of Business Practices as well as other policies of the Fund's investment advisers or their affiliates are separate requirements applying to the Covered Officers and others, and are not part of this Code. - ------------------------------- /2/ For purposes of this Code, Item 2 of Form N-CSR defines "waiver" as "the approval by a Company of a material departure from a provision of the Code" and includes an"implicit waiver," which means a Company's failure to take action within a reasonable period of time regarding a material departure from a provision of the Code that has been made known to an executive officer of the Company. VIII. Amendments Any amendments to this Code, other than amendments to Exhibits A, B and C must be approved or ratified by a majority vote of the Board, including a majority of Non-interested Directors. IX. Confidentiality All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the appropriate Board and Company and their respective counsel, counsel to the non-Interested Directors or independent auditors or other consultants referred to in Section V above. X. Internal Use The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Company, as to any fact, circumstance, or legal conclusion. EX-99.CERT 4 dex99cert.txt CERTIFICATIONS PURSUANT TO SECTION 302 CERTIFICATIONS PURSUANT TO SECTION 302 EX-99.CERT CERTIFICATIONS -------------- I, R. Jay Gerken, certify that: 1. I have reviewed this report on Form N-CSR of Smith Barney Managed Governments Fund Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial data; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: October 3, 2003 /s/ R. Jay Gerken ---------------------- ---------------------------------- R. Jay Gerken Chief Executive Officer I, Richard L. Peteka, certify that: 1. I have reviewed this report on Form N-CSR of Smith Barney Managed Governments Fund Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial information included in this report, and the financial statements on which the financial information is based, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officers and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial data; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: October 3, 2003 /s/ Richard L. Peteka ---------------------- ----------------------------- Richard L. Peteka Chief Financial Officer EX-99.906CERT 5 dex99906cert.txt CERTIFICATIONS PURSUANT TO SECTION 906 CERTIFICATIONS PURSUANT TO SECTION 906 EX-99.906CERT CERTIFICATION R. Jay Gerken, Chief Executive Officer, and Richard L. Peteka, Chief Financial Officer of Smith Barney Managed Governments Fund Inc. (the "Registrant"), each certify to the best of his or her knowledge that: 1. The Registrant's periodic report on Form N-CSR for the period ended July 31, 2003 (the "Form N-CSR") fully complies with the requirements of section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Chief Executive Officer Chief Financial Officer Smith Barney Managed Governments Fund Inc. Smith Barney Managed Governments Fund Inc. /s/ R. Jay Gerken /s/ Richard L. Peteka - --------------------------- --------------------------- R. Jay Gerken Richard L. Peteka Date: October 3, 2003 Date: October 3, 2003 This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. ss. 1350 and is not being filed as part of the Form N-CSR with the Commission. -----END PRIVACY-ENHANCED MESSAGE-----