-----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, WUFazsfLYyZvE1sGkDs1GfZD/Ihj6jbi0bjFDwjZKD2UCdsRToekcvrlWAumsKzR N4b5by26+BdK1Tf6Ubf+Sg== 0000091155-96-000347.txt : 19960826 0000091155-96-000347.hdr.sgml : 19960826 ACCESSION NUMBER: 0000091155-96-000347 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960823 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMITH BARNEY INTERMEDIATE MUNICIPAL FUND INC CENTRAL INDEX KEY: 0000882300 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133643581 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-06506 FILM NUMBER: 96619590 BUSINESS ADDRESS: STREET 1: 1345 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2126985344 MAIL ADDRESS: STREET 2: 388 GREENWICH ST CITY: NEW YORK STATE: NY ZIP: 10013 FORMER COMPANY: FORMER CONFORMED NAME: SMITH BARNEY INTERMEDIATE QUALITY MUNICIPAL FUND INC DATE OF NAME CHANGE: 19600201 N-30D 1 SEMI-ANNUAL REPORT ================================================================================ Smith Barney Intermediate Municipal Fund, Inc. ---------------------------------------- June 30, 1996 [Logo] Smith Barney Mutual Funds Investing for your future. Every day. - ---------------------------------------------- Smith Barney Intermediate Municipal Fund, Inc. - ---------------------------------------------- Dear Shareholder: We are pleased to provide you with the semi-annual report for the Smith Barney Intermediate Municipal Fund, Inc. for the period ended June 30, 1996. For your convenience, we have summarized the prevailing economic and market conditions and outlined the investment strategy employed by the Fund during this time. A detailed summary of performance and current holdings for the Fund can be found in the appropriate sections that follow in the semi-annual report. Fund Performance Summary For the six months ended June 30, 1996, the Smith Barney Intermediate Municipal Fund produced a total return on net asset value of 0.17%, which is slightly better than its Lipper peer group average total return of -0.03% for the same period. During the past six months, the Fund distributed dividends totaling $0.30 per share. The table below shows the annualized distribution rates based on the Fund's June 30, 1996 net asset value (NAV) per share and its American Stock Exchange closing price. Price Annualized Per Share Distribution Rate --------- ----------------- $10.37 (NAV) 5.79% $10.00 (AMEX) 6.00% Market and Economic Overview Interest rates declined steadily over the latter part of 1995 in response to low inflation and very sluggish economic growth. During the first six months of 1996, however, interest rates rose sharply as economic reports pointed to much stronger growth than was expected by most market participants and as concerns over the stalemated federal budget negotiations continued. In recent months, the volatility of the municipal bond market has increased and municipal bond yields have recently reached their highest levels in over a year. However, despite continued uncertainty over the direction of short-term interest rates, there have been some signs of a possible municipal bond market turnaround as the higher yields offered by municipal bonds have begun to attract a growing number of individual and institutional investors. 1 Fund's Investment Strategy Unlike longer-term municipal bonds, intermediate-term municipal bonds tend to be fairly expensive relative to U.S. Treasury securities. Therefore, the Intermediate Municipal Fund continues to place a strong emphasis on high-quality coupon issues trading at a premium to face value for added protection. In addition, we are carefully balancing the interest-rate sensitivity of the Fund by investing in a strategically diversified combination of maturities. During the period covered by this report, the Fund maintained its high credit quality. As of June 30, 1996, approximately 93% of the Fund's holdings were rated investment grade (BBB/Baa and higher) by either Standard and Poor's Corporation or Moody's Investors Service, Inc., with approximately 33% of the Fund's investments rated triple-A. (Standard & Poor's and Moody's are two major credit reporting and bond rating agencies.) The Fund's assets are currently allocated among the following top sectors: hospital bonds (14.3%), education bonds (11.8%) and multi-family housing bonds (10.8%). The average weighted maturity of the Fund as of June 30, 1996 was just over 8.5 years. Outlook While day-to-day volatility in the fixed income markets is likely to remain, the recent sharp increase in interest rates has made intermediate-term municipal bonds more attractive on a relative basis than many other fixed-income vehicles. In our view, competitive pressures in the global economy and changing demographics, such as increasing population growth, should help to keep inflation in check and keep wages from going up. (Labor costs constitute roughly two-thirds of the total cost of all finished goods.) With intermediate-term municipal bonds providing roughly 90% of the yield available on comparable maturity Treasury securities, we believe investors are well compensated for the potential risks. While it has recently receded from the Presidential political debate, it was not too long ago that the "flat tax" issue was touted as potentially the biggest issue of the upcoming Presidential election in November. However, between now and November, tax reform again could move into the political spotlight as the campaign intensifies. Nevertheless, we believe there is little chance that radical tax reforms will be enacted. Therefore, in our view, the municipal bond market remains quite attractive and the Smith Barney Intermediate Municipal Fund is well positioned to meet the challenges presented by the current environment. 2 Thank you for investing in the Smith Barney Intermediate Municipal Fund. We look forward to continuing to help you achieve your financial goals. Sincerely, /s/ Heath B. McLendon /s/ Peter M. Coffey - --------------------- ------------------- Heath B. McLendon Peter M. Coffey Chairman and Vice President Chief Executive Officer July 12, 1996 3 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Schedule of Investments (unaudited) June 30, 1996 - --------------------------------------------------------------------------------
FACE AMOUNT RATING SECURITY VALUE ================================================================================================================= Education -- 11.8% $1,700,000 A* Arizona Education Loan Marketing Corp., 7.000% due 3/1/02(a) $ 1,799,875 1,030,000 A* Brazos, TX Higher Education Authority Student Loan Revenue, 6.300% due 9/1/98(a) 1,050,600 3,035,000 AAA Cook & Du Page Countys IL High School District 210, FSA-Insured, zero coupon due 12/1/11 1,210,206 1,090,000 AAA Goose Creek, TX Independent School District, PSFG, 7.750% due 2/15/04 1,278,025 1,130,000 NR Idaho Student Loan Fund Refunding Marketing Association Inc., Student Loan Refunding, 6.400% due 10/1/99, Sinking Fund Average Life 8/11/98 1,135,650 320,000 AAA Massachusetts Education Loan Authority Issue E, Series A, AMBAC-Insured, 6.850% due 1/1/04(a) 341,200 655,000 A Montana Higher Education Student Assistance Corp., Student Loan Revenue, 7.050% due 6/1/04(a) 700,031 500,000 A1* New England Education Loan Marketing Corp., Massachusetts Refunding Student Loan Revenue, 6.900% due 11/1/09 (a) 531,875 1,830,000 A1* Southwest Allen, IN Multi-School Building Corp., 6.700% due 7/15/04 1,992,413 - ----------------------------------------------------------------------------------------------------------------- 10,039,875 - ----------------------------------------------------------------------------------------------------------------- Electric -- 2.9% 1,000,000 AAA Metropolitan Government Nashville & Davidson County, TN Electric Revenue, Series A, MBIA-Insured, zero coupon due 5/15/10 452,500 1,750,000 AA Washington Public Power Supply System Nuclear Power Project #1, 7.750% due 7/1/03 1,984,062 - ----------------------------------------------------------------------------------------------------------------- 2,436,562 - ----------------------------------------------------------------------------------------------------------------- Escrowed to Maturity(b) -- 7.9% 1,050,000 AAA Metropolitan Nashville, TN Airport Authority Revenue, (Escrowed to maturity with U.S. Government Securities) 7.500% due 7/1/05, Sinking Fund Average Life 8/2/01 1,157,625 624,000 AAA New Jersey State Turnpike Authority Revenue Refunding, (Escrowed to maturity with U.S. Government Securities) 10.375% due 1/1/03, Sinking Fund Average Life 5/23/00 744,120 375,000 AAA Ohio State Water Development Authority Revenue, Armco Steel Corp., (Escrowed to maturity with U.S. Government Securities) 7.875% due 11/1/00, Sinking Fund Average Life 11/1/98 407,813 1,685,000 AAA Ohio State Water Development Authority Safe Water, Series 2, (Escrowed to maturity with U.S. Government Securities) 9.375% due 12/1/10, Sinking Fund Average Life 3/28/04 2,068,336
See Notes to Financial Statements. 4 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Schedule of Investments (unaudited) (continued) June 30, 1996 - --------------------------------------------------------------------------------
FACE AMOUNT RATING SECURITY VALUE ================================================================================================================= Escrowed to Maturity(b) -- 7.9% (continued) $ 5,000 AAA Pennsylvania State Public School Building Authority Lease Revenue, (Escrowed to maturity with U.S. Government Securities) 10.375% due 11/1/06, Sinking Fund Average Life 3/5/01 $ 5,063 125,000 AAA Salt Lake City, UT Water Conservancy Distribution Revenue, Series A, (Escrowed to maturity with U.S. Government Securities) 10.875% due 10/1/02, MBIA-Insured Sinking Fund Average Life 2/26/00 148,438 1,000,000 AAA Southwestern Illinois Development Authority Hospital Revenue Refunding, Wood River Hospital, (Escrowed to maturity with U.S. Government Securities) 6.875% due 8/1/03, Sinking Fund Average Life 9/19/01 1,110,000 930,000 AAA Tom Green County, TX Hospital Authority, (Escrowed to maturity with U.S. Government Securities) 7.875% due 2/1/06, Sinking Fund Average Life 3/30/02 1,045,087 - ----------------------------------------------------------------------------------------------------------------- 6,686,482 - ----------------------------------------------------------------------------------------------------------------- Finance -- 3.1% 1,000,000 A New York Local Government Assistance Corp., Series 1992A, 6.400% due 4/1/02 1,078,750 1,500,000 A Pennsylvania State Finance Authority Beaver County, Revenue Refunding Bonds, Municipal Capital Improvement Program, Series 1993, 6.600% due 11/1/09 1,578,750 - ----------------------------------------------------------------------------------------------------------------- 2,657,500 - ----------------------------------------------------------------------------------------------------------------- General Obligation -- 7.3% 1,000,000 AAA Chicago, IL GO, AMBAC-Insured, 6.100% due 1/1/03 1,062,500 1,000,000 AAA District of Columbia GO Refunding, Series B, MBIA-Insured, 6.750% due 6/1/01 1,047,500 1,000,000 AA Harvey, IL GO Refunding, Asset Guaranty-Insured, 6.700% due 2/1/09 1,030,000 1,250,000 BBB New Haven, CT GO, Series 1992A, 9.250% due 3/1/02, Sinking Fund Average Life 3/1/00 1,464,063 1,500,000 BBB+ New York City GO, Series 1992D, 7.300% due 2/1/01 1,610,625 - ----------------------------------------------------------------------------------------------------------------- 6,214,688 - ----------------------------------------------------------------------------------------------------------------- Hospital -- 14.3% Colorado Health Facilities Authority Revenue, Rocky Mountain Adventist: 1,500,000 BBB 6.250% due 2/1/04 1,516,875 1,500,000 BBB 6.625% due 2/1/13 1,505,625 915,000 BBB Defiance, OH Hospital Revenue Refunding, Defiance Hospital, 7.625% due 11/1/03 936,054 1,040,000 AAA Delaware State Health Facilities Authority Refunding, Medical Center of Delaware, MBIA-Insured, 6.250% due 10/1/03 1,128,400
See Notes to Financial Statements. 5 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Schedule of Investments (unaudited) (continued) June 30, 1996 - --------------------------------------------------------------------------------
FACE AMOUNT RATING SECURITY VALUE ================================================================================================================= Hospital -- 14.3% (continued) $1,250,000 A- Harris County, TX Health Facilities Development Corp. Hospital Revenue, Memorial Hospital Systems, 7.000% due 6/1/03 $ 1,351,563 1,000,000 A* Indiana Health Facilities Authority Hospital Revenue Refunding Bonds, St. Anthony Medical Center, 7.000% due 10/1/06 1,062,500 1,000,000 AAA Maryland Health & Higher Education Facility Authority Revenue, (Mercy Medical Center Project), FSA-Insured, 6.500% due 7/1/13 1,075,000 Orange County, FL Health Facilities Authority Hospital Revenue Bonds, Adventist Health Systems/Sunbelt: 1,180,000 AAA AMBAC-Insured, 6.875% due 11/15/04 1,271,450 500,000 AAA CGIC-Insured, FLAIRS, 6.050% due 11/15/07(c) 517,500 420,000 AA Taos County, NM Gross Receipts Tax Revenue, Asset Guaranty-Insured, 6.125% due 12/1/01 438,375 1,250,000 AA- Washington State Health Care Facilities Authority Revenue, Sacred Heart Medical Center, 6.750% due 2/15/06 1,339,062 - ----------------------------------------------------------------------------------------------------------------- 12,142,404 - ----------------------------------------------------------------------------------------------------------------- Housing:Multi-Family -- 10.8% 950,000 AA Beaumont, TX Multi-Family Housing Finance, Regency Place Apartments, Asset Guaranty-Insured, 7.000% mandatory tender 10/1/03 977,313 610,000 AAA Charlotte, NC Mortgage Revenue Refunding Double, Oaks APT-A, FHA-Insured, 7.300% due 11/15/07 648,125 990,000 AAA Hudson County, NJ Improvement Authority Multi-Family Housing Revenue Bonds, 6.600% due 6/1/04(a) 1,039,500 2,000,000 AA- Lombard, IL Multi-Family Housing Clover Creek Apartments, Surety Bond Continental Casualty, Series 1985, 6.500% mandatory tender 12/15/96 2,010,080 Mount Vernon, IL Elderly Housing Corp., First Lien Revenue Bonds, Section 8 Assisted, Series 1979: 160,000 Baa1* 7.875% due 4/1/01 160,235 170,000 Baa1* 7.875% due 4/1/02 170,250 185,000 Baa1* 7.875% due 4/1/03 185,272 200,000 Baa1* 7.875% due 4/1/04 200,294 215,000 Baa1* 7.875% due 4/1/05 215,316 235,000 Baa1* 7.875% due 4/1/06 235,345 250,000 Baa1* 7.875% due 4/1/07 250,368 270,000 Baa1* 7.875% due 4/1/08 270,397 750,000 AAA San Jose, CA Multi-Family Housing, (Country Brook Project), FNMA-Insured, 6.500% mandatory tender 4/1/02 776,250 1,035,000 Aa* Streamwood, IL Multi-Family Housing Revenue, (Southgate Project), FHA-Insured, 6.200% due 11/1/07 1,075,106
See Notes to Financial Statements. 6 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Schedule of Investments (unaudited) (continued) June 30, 1996 - --------------------------------------------------------------------------------
FACE AMOUNT RATING SECURITY VALUE ================================================================================================================= Housing:Multi-Family -- 10.8% (continued) $ 915,000 A+ Tulsa, OK Housing Assistance Corp., 7.250% due 10/1/07, Sinking Fund Average Life 8/12/03(a) $ 923,006 - ----------------------------------------------------------------------------------------------------------------- 9,136,857 - ----------------------------------------------------------------------------------------------------------------- Housing:Single-Family -- 5.3% 570,000 AA- Maine State Housing Authority, Mortgage Purchase, Series D3, 7.600% due 11/15/01, Sinking Fund Average Life 8/4/99(a) 589,237 110,000 AAA Nebraska Investment Finance Authority, Single-Family Mortgage Revenue, FGIC-Insured, Series 1985A, 8.500% due 11/15/96 110,831 545,000 AAA St. Louis County, Single-Family Mortgage Revenue, MBIA-Insured, 6.750% due 4/1/10 548,831 1,000,000 AAA Texas Department of Housing and Community Affairs, Collateralized Home Mortgage Revenue Bonds, Series C, GNMA/FNMA-Insured, RIBS, 10.272% due 7/2/24(a)(c) 1,068,750 1,000,000 AA+ Virginia State Housing Development Authority Commonwealth Mortgage, Series H, 6.100% due 7/1/03 1,046,250 1,060,000 AA Wisconsin Housing and Education Development Authority, Home Ownership Revenue, 6.350% due 3/1/01 1,094,450 - ----------------------------------------------------------------------------------------------------------------- 4,458,349 - ----------------------------------------------------------------------------------------------------------------- Industrial Development -- 7.3% 1,000,000 A- Alaska Individual Development Export Authority, Series A, 6.200% due 4/1/07(a) 1,043,750 1,000,000 A Kanawha, WV Commercial Development Revenue, (May Department Store Project), 6.500% due 6/1/03 1,080,000 1,000,000 NR Newbern, TN Industrial Development Ltd. Obligation, Newbern Rubber Inc., 7.900% due 3/1/00 1,060,000 1,855,000 BBB New York State Urban Development Corp. Revenue, 7.300% due 4/1/01 2,054,413 900,000 A++ Sussex County, DE Economic Development Revenue Refunding Bonds, (Rehoboth Mall Project), Series 1992, 7.250% due 10/15/12 967,500 - ----------------------------------------------------------------------------------------------------------------- 6,205,663 - ----------------------------------------------------------------------------------------------------------------- Miscellaneous -- 4.7% 1,000,000 BBB- Clarksville, TN Natural Gas Acquis Corp. Gas Revenue, Series A, 7.500% due 11/1/04 1,037,500 1,000,000 A- Hoffman Estates, IL Tax Increment Revenue, Junior Lien Hoffman Estates Unconditional Guarantee, Sears Roebuck & Co., 6.600% due 5/15/02 1,056,250 1,000,000 A- Illinois Development Finance Authority, City East of St. Louis, 6.875% due 11/15/05, Sinking Fund Average Life 7/26/03 1,047,500
See Notes to Financial Statements. 7 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Schedule of Investments (unaudited) (continued) June 30, 1996 - --------------------------------------------------------------------------------
FACE AMOUNT RATING SECURITY VALUE ================================================================================================================= Miscellaneous -- 4.7% (continued) $ 800,000 A SD Economic Development Finance Authority, APA Optics, Series A, 6.750% due 4/1/16 (a) $ 839,000 - ----------------------------------------------------------------------------------------------------------------- 3,980,250 - ----------------------------------------------------------------------------------------------------------------- Pollution Control -- 5.1% 1,000,000 Aa3* Brazos River, TX Navigation District Brazoria County PCR, 6.750% due 2/1/10 1,116,250 965,000 A- Broward County, FL (Resource South Project), 7.950% due 12/1/08 1,062,706 1,000,000 A Indianapolis, IN Reserve Recovery, Ogden Martin Systems Inc., 7.700% due 12/1/00 1,042,710 1,000,000 AAA Monroe County, MI PCR, (Detroit Edison Co. Project), AMBAC-Insured, 6.350% due 12/1/04(a) 1,070,000 - ----------------------------------------------------------------------------------------------------------------- 4,291,666 - ----------------------------------------------------------------------------------------------------------------- Pre-Refunded(b) -- 4.5% 825,000 AAA Gila County, AZ Individual Development Authority Revenue, Series 1981, 11.250% due 4/1/01, (Pre-Refunded with U.S. Government Securities to 4/1/01 Call @ 100), Sinking Fund Average Life 12/1/01 895,125 125,000 AAA Indiana University Revenue, Series 1983N, 10.000% due 7/1/03, (Pre-Refunded with U.S. Government Securities to 7/1/01 Call @ 100), Sinking Fund Average Life 12/22/99 148,750 900,000 AAA Nassau County, NY IDA (Hofstra University Project), Series 1987, 8.000% due 7/1/00, (Pre-Refunded with U.S. Government Securities to 7/1/98 Call @ 100) 965,250 155,000 AAA New York State Medical Care Facilities Finance Agency Revenue Hospital and Nursing Home Mortgage, Series A, St. Vincent's Medical Center, FHA-Insured, 7.750% due 2/15/02, (Pre-Refunded with U.S. Government Securities to 8/15/97 Call @ 102), Sinking Fund Average Life 1/2/95 164,494 500,000 AAA Oklahoma State IDA Oklahoma Health Care Corp., Series A, 9.125% due 11/1/08, (Pre-Refunded with U.S. Government Securities to Various Call Dates), Sinking Fund Average Life 5/7/06 506,875 1,000,000 AAA Texas National Research Lab Community Financing Corp. Lease Revenue, (Superconducting Supercollider Project), 6.750% due 12/1/04, (Pre-Refunded with U.S. Government Securities to 12/1/01 Call @ 102) 1,107,500 - ----------------------------------------------------------------------------------------------------------------- 3,787,994 - -----------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements. 8 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Schedule of Investments (unaudited) (continued) June 30, 1996 - --------------------------------------------------------------------------------
FACE AMOUNT RATING SECURITY VALUE ================================================================================================================= Public Facilities -- 2.9% $1,350,000 A Dekalb County, IN Redevelopment Authority Revenue, Mini-Mill Public Improvement, 6.250% due 1/15/09 $ 1,393,875 1,000,000 AAA Harrisburg, PA Lease Revenue, (Green County Prison Project), CGIC-Insured, 6.500% due 6/1/04 1,077,500 - ----------------------------------------------------------------------------------------------------------------- 2,471,375 - ----------------------------------------------------------------------------------------------------------------- Solid Waste -- 4.7% 2,000,000 Ba* Atlantic City, NJ Utility Authority Solid Waste Revenue, 7.000% due 3/1/02, Sinking Fund Average Life 4/20/00 2,005,000 2,000,000 A- Union County, NJ Utility Authority Solid Waste Revenue, 6.850% due 6/15/02(a) 2,020,000 - ----------------------------------------------------------------------------------------------------------------- 4,025,000 - ----------------------------------------------------------------------------------------------------------------- Transportation -- 5.9% 2,035,000 AAA Dallas Fort Worth, TX Regional Airport Revenue Refunding, FGIC-Insured, Series 1992A, 7.750% due 11/1/03 2,363,144 1,920,000 BBB Denver, CO City and County Airport Revenue, Series 1990A, 8.250% due 11/15/02(a) 2,167,200 500,000 A Pittsfield Township, MI Economic Development Corp. Revenue Refunding, (Airport Association Project), Unconditional Guaranty-Lincoln National, 6.400% due 12/1/02 503,125 - ----------------------------------------------------------------------------------------------------------------- 5,033,469 - ----------------------------------------------------------------------------------------------------------------- Utilities -- 1.5% 465,000 AA Hogansville, GA Combined Public Utility Revenue, Asset Guaranty Insured, 5.850% due 10/1/15 457,444 1,735,000 AAA Palo Duro River Authority, TX Refunding, CGIC-Insured, zero coupon due 8/1/09 813,281 - ----------------------------------------------------------------------------------------------------------------- 1,270,725 - ----------------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS -- 100% (Cost -- $81,217,965**) $84,838,859 ================================================================================================================= (a) Income from these issues is considered a preference item for purposes of calculating the alternative minimum tax. (b) Pre-Refunded bonds escrowed by U.S. Government Securities and bonds escrowed to maturity by U.S. Government Securities are considered by manager to be triple-A rated even if issuer has not applied for new ratings. (c) Inverse floating rate security -- coupon varies inversely with level of short-term tax-exempt interest rates. + Fitch Investors Services, Inc. ++ Duff & Phelps Credit Rating Co. ** Aggregate cost for Federal income tax purposes is substantially the same. See Notes to Financial Statements. 9 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Ratings and Security Descriptions - -------------------------------------------------------------------------------- BOND RATINGS All ratings are by Standard & Poor's Corporation ("Standard & Poor's"), except that those identified by an asterisk (*) are rated by Moody's Investors Services ("Moody's"). The definitions of the applicable rating symbols are set forth below: Standard & Poor's -- Ratings from "AA" to "BBB" may be modified by the addition of a plus (+) or a minus (-) sign to show relative standings within the major rating categories. AAA -- Debt rated "AAA"' has the highest rating assigned by Standard & Poor's. Capacity to pay interest and repay principal is extremely strong. AA -- Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the highest rated issue only in a small degree. A -- Debt rated "A" has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. BBB -- Debt rated "BBB" is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits 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. Moody's -- Numerical modifiers 1, 2, and 3 may be applied to each generic rating from "Aa" to "Baa", where 1 is the highest and 3 the lowest rating within its generic category. Aaa -- Bonds that are rated "Aaa" are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa -- Bonds that are rated "Aa" are judged to be of high quality by all standards. Together with the Aaa group they 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 there may be other elements present which 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 are considered adequate but elements may be present which suggest a susceptibility to impairment some time in the future. Baa -- Bonds that are rated "Baa" are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments 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. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. NR -- Indicates that the bond is not rated by Standard & Poor's or Moody's. SHORT-TERM SECURITIES RATINGS SP-1 -- Standard & Poor's highest rate rating indicating very strong or strong capacity to pay principal and interest; those issues determined to possess overwhelming safety characteristics are denoted with a plus (+) sign. VMIG 1 -- Moody's highest rating for issues having demand feature -- variable-rate demand obligation (VRDO). SECURITY DESCRIPTIONS AMBAC -- AMBAC Indemnity Corporation CGIC -- Capital Guaranty Insurance Company COP -- Certificate of Participation FGIC -- Financial Guaranty Insurance Company FHA -- Federal Housing Administration FHLMC -- Federal Home Loan Mortgage Corporation FLAIRS -- Floating Adjustable Interest Rate Securities FNMA -- Federal National Mortgage Association FSA -- Financial Security Assurance GIC -- Guaranteed Investment Contract GNMA -- Government National Mortgage Association GO -- General Obligation IDA -- Industrial Development Agency IDR -- Industrial Development Revenue LOC -- Letter of Credit MBIA -- Municipal Bond Investors Assurance Corporation PCFA -- Pollution Control Financing Authority PCR -- Pollution Control Revenue PSFG -- Permanent School Fund Guaranty RIBS -- Residual Interest Bonds 10 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Statement of Assets and Liabilities (unaudited) June 30, 1996 - -------------------------------------------------------------------------------- ASSETS: Investments, at value (Cost -- $81,217,965) $84,838,859 Interest receivable 1,369,600 Receivable for securities sold 105,000 Other assets 15,060 - -------------------------------------------------------------------------------- Total Assets 86,328,519 - -------------------------------------------------------------------------------- LIABILITIES: Dividends payable 136,815 Payable to bank 151,019 Management fees payable 42,097 Accrued expenses 13,906 - -------------------------------------------------------------------------------- Total Liabilities 343,837 - -------------------------------------------------------------------------------- Total Net Assets $85,984,682 ================================================================================ NET ASSETS: Par value of capital shares $ 8,289 Capital paid in excess of par value 82,891,113 Undistributed net investment income 88,815 Accumulated net realized loss on investments (624,429) Net unrealized appreciation of investments 3,620,894 - -------------------------------------------------------------------------------- Total Net Assets (Equivalent to $10.37 a share on 8,288,885 shares of $0.001 par value outstanding; 100,000,000 shares authorized) $85,984,682 ================================================================================ See Notes to Financial Statements. 11 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Statement of Operations (unaudited) - -------------------------------------------------------------------------------- For the Six Months Ended June 30, 1996 INVESTMENT INCOME: Interest $2,729,059 - -------------------------------------------------------------------------------- EXPENSES: Management fees (Note 3) 259,210 Shareholder and system servicing fees 15,000 Shareholder communications 12,000 Pricing service fees 7,500 Audit and legal 6,500 Directors' fees 3,500 Registration fees 3,315 Custody 1,950 Other 1,345 - -------------------------------------------------------------------------------- Total Expenses 310,320 - -------------------------------------------------------------------------------- Net Investment Income 2,418,739 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 4): Realized Loss From Security Transactions (excluding short-term securities): Proceeds from sales 8,724,468 Cost of securities sold 8,751,278 - -------------------------------------------------------------------------------- Net Realized Loss (26,810) - -------------------------------------------------------------------------------- Change in Net Unrealized Appreciation (Depreciation) of Investments: Beginning of period 5,933,792 End of period 3,620,894 - -------------------------------------------------------------------------------- Increase in Net Unrealized Depreciation (2,312,898) - -------------------------------------------------------------------------------- Net Loss on Investments (2,339,708) - -------------------------------------------------------------------------------- Increase in Net Assets From Operations $ 79,031 ================================================================================ See Notes to Financial Statements. 12 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Statements of Changes in Net Assets - -------------------------------------------------------------------------------- For the Six Months Ended June 30, 1996 (unaudited) and the Year Ended December 31, 1995 1996 1995 ================================================================================ OPERATIONS: Net investment income $ 2,418,739 $ 4,843,714 Net realized loss (26,810) (1,944) Increase in net unrealized appreciation (depreciation) (2,312,898) 6,029,456 - -------------------------------------------------------------------------------- Increase in Net Assets From Operations 79,031 10,871,226 - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2): Net investment income (2,486,665) (4,973,331) - -------------------------------------------------------------------------------- Decrease in Net Assets From Distributions to Shareholders (2,486,665) (4,973,331) - -------------------------------------------------------------------------------- Increase (Decrease) in Net Assets (2,407,634) 5,897,895 NET ASSETS: Beginning of period 88,392,316 82,494,421 - -------------------------------------------------------------------------------- End of period* $85,984,682 $88,392,316 ================================================================================ * Includes undistributed net investment income of: $ 88,815 $ 156,741 ================================================================================ See Notes to Financial Statements. 13 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Notes to Financial Statements (unaudited) - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES The Smith Barney Intermediate Municipal Fund, Inc. ("Fund"), a Maryland corporation, is registered under the Investment Company Act of 1940, as amended, as a diversified, closed-end management investment company. The significant accounting policies consistently followed by the Fund are:(a) security transactions are accounted for on the trade date;(b) securities are valued at the mean between the bid and ask prices provided by an independent pricing service that are based on transactions in municipal obligations, quotations from municipal bond dealers, market transactions in comparable securities and various relationships between securities; (c) securities maturing within 60 days are valued at cost plus accreted discount, or minus amortized premium, which approximates market value; (d) gains or losses on the sale of securities are calculated by using the specific identification method; (e) interest income, adjusted for amortization of premium and accretion of original issue discount, is recorded on the accrual basis; market discount is recognized upon the disposition of the security; (f) 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; (g) dividends and distributions to shareholders are recorded on the ex-dividend date; (h) the character of income and gains to be distributed are determined in accordance with income tax regulations which may differ from generally accepted accounting principles; and (i) 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. EXEMPT-INTEREST DIVIDENDS AND OTHER DISTRIBUTIONS The Fund intends to satisfy conditions that will enable interest from municipal securities, which is exempt from Federal income tax and from designated state income taxes, to retain such tax-exempt status when distributed to the shareholders of the Fund. Capital gains distributions, if any, are taxable to shareholders, and are declared and paid at least annually. 14 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Notes to Financial Statements (unaudited) (continued) - -------------------------------------------------------------------------------- 3. MANAGEMENT AGREEMENT AND TRANSACTIONS WITH AFFILIATED PERSONS Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith Barney Holdings Inc., acts as investment manager to the Fund. As compensation for its services, the Fund pays SBMFM a fee calculated at the annual rate of 0.60% of the Fund's average daily net assets. This fee is calculated daily and paid monthly. All officers and two Directors of the Fund are employees of Smith Barney Inc. 4. INVESTMENTS For the six months ended June 30, 1996, the aggregate cost of purchases and proceeds from sales of investments (including maturities, excluding short-term investments) were $8,556,276 and $8,724,468, respectively. At June 30, 1996, aggregate gross unrealized appreciation for all securities in which there is an excess of market value over tax cost amounted to $3,728,377, and aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over market value amounted to $107,483, or a net unrealized appreciation of $3,620,894. 5. CAPITAL LOSS CARRYFORWARD At December 31, 1995, the Fund had for Federal income tax purposes net capital loss carryforwards of $592,944 available to offset future capital gains. To the extent that these 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 the dates indicated: 12/31/02 12/31/03 ================================================================================ Carryforward Amounts $591,000 $1,944 ================================================================================ 15 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Financial Highlights - -------------------------------------------------------------------------------- For a share of capital stock outstanding throughout each period:
1996(1) 1995 1994(2) 1993(2) 1992(2)(3) - --------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.66 $9.95 $10.81 $10.36 $10.00 - --------------------------------------------------------------------------------------------------------------- Income (Loss) From Operations: Net investment income 0.29 0.58 0.58 0.59 0.48* Net realized and unrealized gain (loss) (0.28) 0.73 (0.84) 0.46 0.34 - --------------------------------------------------------------------------------------------------------------- Total Income (Loss) From Operations 0.01 1.31 (0.26) 1.05 0.82 - --------------------------------------------------------------------------------------------------------------- Less Distributions From: Net investment income (0.30) (0.60) (0.60) (0.57) (0.46) Net realized gains -- -- -- (0.03) -- - --------------------------------------------------------------------------------------------------------------- Total Distributions (0.30) (0.60) (0.60) (0.60) (0.46) - --------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $10.37 $10.66 $9.95 $10.81 $10.36 - --------------------------------------------------------------------------------------------------------------- Total Return 0.17%++ 13.72% (2.33)% 10.30% 8.44%++ - --------------------------------------------------------------------------------------------------------------- Net Assets, End of Period (000s) $85,985 $88,392 $82,494 $88,966 $83,499 - --------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets: Expenses 0.72%+ 0.72% 0.72% 0.73% 0.59%+* Net investment income 5.60+ 5.63 5.64 5.56 5.74+ - --------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 10.08% 12.57% 25.59% 10.46% 23.48% - --------------------------------------------------------------------------------------------------------------- Market Price at End of Period $10.00 $10.38 $9.50 $11.13 $10.13 ===============================================================================================================
(1) For the six months ended June 30, 1996 (unaudited). (2) Based on the weighted average shares outstanding for the period. (3) For the period from March 2, 1992 (commencement of operations) to December 31, 1992. * The manager waived a portion of its fees for the period from March 2, 1992 to December 31, 1992. If such fees were not waived, the per share decrease in net investment income would have been $0.01 and the ratio of expenses to average net assets would have been 0.70% (annualized). ++ Total return is not annualized, as it may not be representative of the total return for the year. + Annualized. 16 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Financial Data (unaudited) - -------------------------------------------------------------------------------- For a share of capital stock outstanding throughout each period: AMEX Net Asset Income Reinvestment Period Closing Price* Value* Declared Price - -------------------------------------------------------------------------------- 1995 January $ 9.50 $10.12 $0.05 $ 9.50 February 9.75 10.26 0.05 9.99 March 9.63 10.31 0.05 9.81 April 9.88 10.28 0.05 9.81 May 10.00 10.49 0.05 9.94 June 9.88 10.39 0.05 9.90 July 10.13 10.43 0.05 10.15 August 10.13 10.49 0.05 10.14 September 10.00 10.50 0.05 10.24 October 10.13 10.58 0.05 10.26 November 10.25 10.65 0.05 10.27 December 10.38 10.66 0.05 10.34 - -------------------------------------------------------------------------------- 1996 January 10.63 10.65 0.05 10.52 February 10.50 10.57 0.05 10.47 March 10.25 10.46 0.05 9.88 April 9.81 10.39 0.05 9.88 May 10.38 10.35 0.05 10.15 June 10.00 10.37 0.05 10.01 ================================================================================ * On the last business day of the month. 17 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Additional Shareholder Information (unaudited) - -------------------------------------------------------------------------------- On April 25, 1996 the annual meeting of the shareholders of the Fund was held for the purpose of voting on the following matters: 1. To approve or disapprove for the Fund the election of Jessica M. Bibliowicz and Donald R. Foley as Directors; and 2. To approve or disapprove the selection of KPMG Peat Marwick LLP as the independent auditors for the current fiscal year of the Fund. The results of Proposal 1 were as follows: % of Votes % of Directors Votes For Shares Voted Against Shares Voted ================================================================================ Jessica M. Bibliowicz 7,572,978.747 98.58% 109,463.000 1.42% Donald R. Foley 7,570,203.747 98.54% 112,238.000 1.46% ================================================================================ The results of Proposal 2 were as follows: % of Votes % of Votes % of Votes For Shares Voted Against Shares Voted Abstained* Shares Voted ================================================================================ 7,575,727.747 98.61% 21,297.000 0.28% 688,825.896 1.11% ================================================================================ * There are approximately 603,409 broker non-votes included in the amount abstaining. The following directors, representing the balance of the Board of Directors, continue to serve as Directors: Joseph H. Fleiss, Paul Hardin, Francis P. Martin, Heath B. McLendon, Roderick C. Rasmussen, John P. Toolan and C. Richard Youngdahl. 18 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Dividend Reinvestment Plan (unaudited) - -------------------------------------------------------------------------------- Pursuant to the Fund's Dividend Reinvestment Plan (the "Plan"), all distributions are automatically reinvested by First Data Investor Services Group, Inc., (formerly known as "The Shareholder Services Group, Inc."), as plan agent (the "Plan Agent"), in additional shares of its Common Stock (the "Common Shares") as provided below unless a shareholder elects to receive cash. Distributions with respect to Common Shares registered in the name of a broker-dealer or other nominee (i.e., in "street name") are reinvested by the broker or nominee in additional Common Shares under the Plan, unless the service is not provided by the broker or nominee. Investors who own Common Shares registered in street name should consult their broker-dealer for details. All distributions to shareholders who do not participate in the Plan are paid by check mailed directly to the record holder by First Data Investor Services Group, Inc., as dividend disbursing agent. If the Fund declares a distribution payable either in Common Shares or in cash, nonparticipants in the Plan receive cash, and Plan participants receive the equivalent in Common Shares valued in the following manner: whenever the market price is equal to or exceeds the net asset value per share at the time Common Shares are valued for the purpose of determining the number of Common Shares equivalent to the cash distribution, participants are issued Common Shares valued at the greater of (1) the net asset value most recently determined or (2) 95% of the then current market price of the Common Shares. If the net asset value of the Common Shares at the time of valuation exceeds the market price of the Common Shares, or if the Fund declares a distribution payable only in cash, the Plan Agent buys Common Shares in the open market, on the American Stock Exchange or elsewhere, for the participants' accounts. If, following the commencement of purchases and before the Plan Agent has completed its purchases the market price exceeds the net asset value of the Common Shares, the average per Common Share purchase price paid by the Plan Agent may exceed the net asset value of the Common Shares, resulting in the acquisition of fewer Common Shares than if the distribution had been paid in Common Shares issued by the Fund at net asset value. The Plan Agent applies all cash received as a distribution to purchase Common Shares on the open market as soon as practicable after the payment date of the distribution, but in no event later than 30 days after such date, except when necessary to comply with applicable provisions of the Federal securities laws. 19 Smith Barney Intermediate Municipal Fund, Inc. - -------------------------------------------------------------------------------- Dividend Reinvestment Plan (unaudited) (continued) - -------------------------------------------------------------------------------- Participants in the Plan may withdraw from the Plan upon written notice to the Plan Agent which must be received at least ten business days prior to the distribution record date to become effective for that distribution. Shares in the account of each Plan participant are held by the Plan Agent in non-certificated form in the name of the Plan Agent or participant. When a participant withdraws from the Plan or upon termination of the Plan as provided below, certificates for whole Fund shares credited to his or her account under the Plan are issued and a cash payment is made for any fraction of a Fund share credited to such account. The automatic reinvestment of distributions does not relieve participants to any Federal income tax that may be payable on such distributions. The Fund does not charge participants for reinvesting distributions. Any Plan Agent's fees for the handling of reinvestment of distributions under the Plan are paid by the Fund. There are no brokerage charges with respect to Common Shares issued directly by the Fund as a result of distributions payable either in stock or in cash. However, each participant pays a pro rata share of brokerage commissions incurred with respect to the Plan Agent's open market purchases in connection with the reinvestment of distributions. Experience under the Plan may indicate that changes are desirable. Accordingly, the Fund and the Plan Agent reserve the right to amend the Plan as applied to any distribution paid subsequent to written notice of the change sent to all shareholders of the Fund at least 90 days before the record date for the distribution. The Plan also may be terminated by the Fund or the Plan Agent by at least 30 days' written notice to all shareholders of the Fund. All correspondence concerning the Plan should be directed to the Plan Agent at First Data Investor Services Group, Inc., P.O. Box 1376, Boston, Massachussetts 02104. 20 Smith Barney Intermediate Municipal Fund, Inc. Directors Jessica M. Bibliowicz Joseph H. Fleiss Donald R. Foley Paul Hardin Francis P. Martin, M.D. Heath B. McLendon, Chairman Roderick C. Rasmussen John P. Toolan C. Richard Youngdahl Officers Heath B. McLendon Chief Executive Officer Jessica M. Bibliowicz President Lewis E. Daidone Senior Vice President and Treasurer Peter M. Coffey Vice President Thomas M. Reynolds Controller Christina T. Sydor Secretary SMITH BARNEY ------------ A Member of the TravelersGroup [Logo] Investment Manager Smith Barney Mutual Funds Management Inc. Distributor Smith Barney Inc. Custodian PNC Bank, N.A. Shareholder Servicing Agent First Data Investor Services Group, Inc. P.O. Box 1376 Boston, MA 02104 This report is submitted for the general information of the shareholders of Smith Barney Intermediate Municipal Fund, Inc. It is not authorized for distribution to prospective investors unless accompanied or preceded by a current Prospectus for the Fund, which contains information concerning the Fund's investment policies and expenses as well as other pertinent information. Smith Barney Intermediate Municipal Fund, Inc. 388 Greenwich Street New York, New York 10013 FD0633 8/96 -----END PRIVACY-ENHANCED MESSAGE-----