-----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, JkX6ZXROfxjUKcUg2eamnyb0cY211YvYY8qARdqR57JpYV/3gsLO+nQLhJ/aH7Ph ctJ7Vc60KK8GwklEjXUB1Q== 0001133228-04-000083.txt : 20040311 0001133228-04-000083.hdr.sgml : 20040311 20040311131623 ACCESSION NUMBER: 0001133228-04-000083 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040311 EFFECTIVENESS DATE: 20040311 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERMEDIATE MUNI FUND INC CENTRAL INDEX KEY: 0000882300 IRS NUMBER: 133643581 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-06506 FILM NUMBER: 04662388 BUSINESS ADDRESS: STREET 1: 1345 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2126985344 MAIL ADDRESS: STREET 1: 388 GREENWICH ST CITY: NEW YORK STATE: NY ZIP: 10013 FORMER COMPANY: FORMER CONFORMED NAME: SMITH BARNEY INTERMEDIATE MUNICIPAL FUND INC DATE OF NAME CHANGE: 19920909 FORMER COMPANY: FORMER CONFORMED NAME: SMITH BARNEY INTERMEDIATE QUALITY MUNICIPAL FUND INC DATE OF NAME CHANGE: 19600201 N-CSR 1 sb137403.txt ANNUAL REPORT 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 811-6506 Intermediate Muni Fund, Inc. (Exact name of registrant as specified in charter) 125 Broad Street, New York, NY 10004 (Address of principal executive offices) (Zip code) Robert I. Frenkel, 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: December 31 Date of reporting period: December 31, 2003 ITEM 1. REPORT TO STOCKHOLDERS. The Annual Report to Stockholders is filed herewith. - -------------------------------------------------------------------------------- INTERMEDIATE MUNI FUND, INC. [GRAPHIC OMITTED] Annual Report December 31, 2003 - -------------------------------------------------------------------------------- ================================================================================ WHAT'S INSIDE ================================================================================ Letter from the Chairman .................................................. 1 Manager Overview .......................................................... 2 Schedule of Investments ................................................... 7 Statement of Assets and Liabilities ....................................... 18 Statement of Operations ................................................... 19 Statements of Changes in Net Assets ....................................... 20 Notes to Financial Statements ............................................. 21 Financial Highlights ...................................................... 26 Independent Auditors' Report .............................................. 28 Financial Data ............................................................ 29 Additional Information .................................................... 30 Tax Information ........................................................... 33 Dividend Reinvestment Plan ................................................ 34 ================================================================================ LETTER FROM THE CHAIRMAN ================================================================================ [PHOTO OMITTED] R. JAY GERKEN, CFA Chairman, President and Chief Executive Officer Dear Shareholder, I am pleased to provide you with the shareholder letter for the Intermediate Muni Fund, Inc. for the 12 months ended December 31, 2003. After a formidable run, municipal bonds lost some of the gains they had generated earlier in the year as signs of a sharp pick-up in the pace of economic growth exerted pressure on U.S. Treasuries and other fixed-income markets. Although many municipalities grappled with budgetary pressures brought on by the weak economy, tax revenues reportedly grew during the third quarter of 2003. Please read on for a more detailed look at prevailing economic and market conditions during the fund's fiscal year and to see how those conditions may have affected fund performance. Information About Your Fund In recent months several issues in the mutual fund industry have come under the scrutiny of federal and state regulators. The fund's Adviser and some of its affiliates have received requests for information from various government regulators regarding market timing, late trading, fees and other mutual fund issues in connection with various investigations. The fund has been informed that the Adviser and its affiliates are responding to those information requests, but are not in a position to predict the outcome of these requests and investigations. As always, thank you for your confidence in our stewardship of your assets. We look forward to helping you continue to meet your financial goals. Sincerely, /s/ R. Jay Gerkin R. Jay Gerken, CFA Chairman, President and Chief Executive Officer January 12, 2004 - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 1 ================================================================================ MANAGER OVERVIEW ================================================================================ [PHOTO OMITTED] PETER M. COFFEY Vice President Performance Review During the 12 months ended December 31, 2003, the fund returned 13.33%, based on its American Stock Exchange ("AMEX") market price and 6.22% based on its net asset value ("NAV")(i) per share. In comparison, the Lehman Brothers Municipal Bond Index(ii) returned 5.31%, and the fund's Lipper general municipal debt (leveraged) closed-end funds category average was 8.53% over the same time frame.(iii) Please note that Lipper performance returns are based on each fund's NAV. During the period we structured the fund to be less susceptible to rising interest rates by placing an emphasis on bonds with higher coupons, maintaining a lower average life, and selling U.S. Treasury futures to hedge the portfolio against interest rate risk.(iv) This lower-duration strategy at times limited the fund's full participation in market rallies such as during the first half of the year, which detracted from the fund's performance versus many of its peers. However, it helped reduce its volatility during the period, which favorably contributed to its performance during periods when long-term bond yields were rising, particularly during the sharp spike in yields the market experienced from mid-June through the end of July. Sector- and security-specific factors also impacted the fund's relative performance. The effect of leveraging positively impacted the fund's performance over the period. - -------------------------------------------------------------------------------- FUND PERFORMANCE AS OF DECEMBER 31, 2003 - -------------------------------------------------------------------------------- Annualized 12 Month Price Per Share Distribution Yield Total Return - -------------------------------------------------------------------------------- $10.26 (NAV) 5.96% 6.22% - -------------------------------------------------------------------------------- $10.19 (AMEX) 6.01% 13.33% - -------------------------------------------------------------------------------- Total returns are based on changes in NAV or the market price, respectively. Total returns assume the reinvestment of all dividends and/or capital gains distributions, if any, in additional common shares. Annualized distribution yield is the common shareholders' current monthly income dividend rate, annualized, and then divided by the NAV or the market price noted in this report. The annualized distribution yield assumes a current monthly income dividend rate of $0.051 for 12 months. This rate is as of December 31, 2003 and is subject to change. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 2003 Annual Report During the 12-month period, the fund distributed dividends to shareholders totaling $0.61 per common share. The performance table shows the fund's 12-month total return based on its NAV and market price as of December 31, 2003. Certain investors may be subject to the federal Alternative Minimum Tax, and state and local taxes will apply. Capital gains, if any, are fully taxable. Please consult your personal tax adviser. Past performance is not indicative of future results. Market Overview During the spring many states continued to wrestle with addressing budgetary challenges stemming from a faltering economy. In an effort to jumpstart the economy, the Fed cut its target for the federal funds rate,(v) which dropped to its lowest level since the Eisenhower Administration. U.S. Treasury bonds subsequently sold off, particularly in July, as signs emerged that economic growth was more robust than previously thought, which triggered concerns that inflation could pick up. Bond prices have typically performed less favorably during times when inflation concerns arise. However, municipal bonds collectively held up better than Treasury bonds during this tumultuous time. Although the U.S. Treasury bond market regained some of its footing in September, bonds collectively vacillated during the fall as third-quarter economic indicators showed stronger-than-expected results. Despite an improving economy and vibrant stock market, investors' interest in tax-exempt municipal bonds held firm over 2003 as the Fed signaled that it was is no hurry to raise short-term interest rates. Consequently, investors gravitated to the municipal bond market as higher-rated issues offered favorable taxable equivalent yields(vi) compared to comparable-maturity U.S. Treasuries and Agencies.(vii) Additionally, 2003 was a banner year for municipalities in terms of bond issuance. Municipalities collectively issued over $380 billion of debt to fund new projects and refinance outstanding bonds.(viii) Tax-exempt new issue volume exceeded last year's previous record of approximately $358 billion.(viii) Despite historically low nominal yields, demand was strong as property and casualty insurance companies, institutions and individual investors combined to absorb the massive supply. - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 3 Selection of Municipal Bonds The fund has invested primarily in revenue bonds, which generally provide higher yields than general obligation ("GO") bonds. While the creditworthiness of revenue bonds is less correlated to tax receipts than GOs because revenue issues are backed by revenue streams of specific projects, GOs are considered safer because they are backed by the full faith and credit of the issuing state or municipality. At the end of the year, the portfolio's heaviest exposure was to revenue bonds in the hospital, education, water and sewer, and transportation sectors. While a few holdings suffered substantial price declines due to credit-quality deterioration since our last report at mid-year 2003, the impact on NAV was offset by significant appreciation in other holdings that have benefited from improving economic conditions. We remain fairly defensive in terms of interest rate risk. Even though recent employment results have been lackluster and inflation has so far remained contained, interest rates have remained quite low by historical standards and the economy has continued to exhibit strong growth. Looking for Additional Information? The fund is traded under the symbol "SBI" and its closing market price is available in most newspapers under the American Stock Exchange listings. The daily NAV is available online under symbol XSBIX. Barron's and The Wall Street Journal's Monday editions carry closed-end fund tables that will provide additional information. In addition, the fund issues a quarterly allocation press release that can be found on most major financial web sites as well as www.citigroupassetmanagement.com. In a continuing effort to provide information concerning the fund, shareholders may call 1-888-735-6507, Monday through Friday from 8:00 a.m. to 6:00 p.m. Eastern Time, for the fund's current net asset value, market price and other information. - -------------------------------------------------------------------------------- 4 2003 Annual Report Thank you for your investment in the Intermediate Muni Fund, Inc. We appreciate that you have entrusted us to manage your money and value our relationship with you. Sincerely, /s/ Peter M. Coffey Peter M. Coffey Vice President January 12, 2004 The information provided 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 December 31, 2003 and are subject to change and may not be representative of the portfolio manager's current or future investments. Please refer to pages 7 through 15 for a list and percentage breakdown of the fund's holdings. All index performance reflects no deduction for fees, expenses or taxes. i NAV is a price that reflects the value of the fund's underlying portfolio plus other assets, less the fund's liabilities. However, the price at which an investor may buy or sell common shares of the fund is at the fund's market price as determined by supply of and demand for the fund's common shares, which may be more or less than the fund's NAV. ii The Lehman Brothers Municipal Bond Index is a broad measure of the municipal bond market with maturities of at least one year. Please note that an investor cannot invest directly in an index. iii Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the 12-month period ended December 31, 2003, calculated among the 64 funds in the fund's Lipper category including the reinvestment of dividends and capital gains, if any. iv Derivatives, such as options and futures, can be illiquid and harder to value, especially in declining markets. A small investment in certain derivatives may have a potentially large impact on the fund's performance. Derivatives can disproportionately increase losses as stated in the prospectus. v 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. vi The taxable equivalent yield applies to income taxation on a federal (not state and local) level. This yield would be slightly lower for an investor below the federal income tax bracket of 31% and slightly higher for an investor in a higher tax bracket. vii The face-value principal and coupon payments of U.S. Government bonds, in contrast to municipals, are guaranteed by full faith and credit of the U.S. Government. viii Source: Lehman Brothers - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 5 - -------------------------------------------------------------------------------- Take Advantage of the Fund's Dividend Reinvestment Plan! As an investor in the Fund, you can participate in its Dividend Reinvestment Plan ("Plan"), a convenient, simple and efficient way to reinvest your dividends and capital gains distributions, if any, in additional shares of the Fund. Below is a short summary of how the Plan works. Plan Summary If you are a Plan participant who has not elected to receive your dividends in the form of a cash payment, then your dividend and capital gain distributions will be reinvested automatically in additional shares of the Fund. The number of common stock shares in the Fund you will receive in lieu of a cash dividend is determined in the following manner. If the market price of the common stock is equal to or exceeds the net asset value per share ("NAV") on the determination date, you will be issued shares by the Fund at a price reflecting the NAV, or 95% of the market price, whichever is greater. If the market price is less than the NAV at the time of valuation (the close of business on the determination date), PFPC Inc. ("Plan Agent") will buy common stock for your account in the open market. If the Plan Agent begins to purchase additional shares in the open market and the market price of the shares subsequently rises above the previously determined NAV before the purchases are completed, the Plan Agent will attempt to terminate purchases and have the Fund issue the remaining dividend or distribution in shares at the greater of the previously determined NAV or 95% of the market price. In that case, the number of Fund shares you receive will be based on the weighted average of prices paid for shares purchased in the open market and the price at which the Fund issues the remaining shares. A more complete description of the current Plan appears in the section of this report beginning on page 34. To find out more detailed information about the Plan and about how you can participate, please call PFPC Inc. at (800) 331-1710. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6 2003 Annual Report ================================================================================ Schedule of Investments December 31, 2003 ================================================================================
FACE AMOUNT RATING(a) SECURITY VALUE ========================================================================================================== Education -- 13.9% $3,000,000 AAA Alabama State Public School & College Authority Revenue, 5.125% due 11/1/15 $ 3,274,770 1,000,000 A2* Arizona Educational Loan Marketing Corp., Educational Loan Revenue, Sub-Series, 6.625% due 9/1/05 (b) 1,006,500 1,000,000 Aaa* Athens, GA Housing Authority, Student Housing Lease Revenue, (University of Georgia - East Campus Project), AMBAC-Insured, 5.250% due 12/1/23 1,063,530 800,000 AAA Ball State University of Indiana, University Revenue, Series K, FGIC-Insured, 5.750% due 7/1/20 898,384 Colorado Educational and Cultural Facilities Authority Revenue, Charter School: 1,000,000 Baa3* Community Education Center, (Bromley East Project A), 7.000% due 9/15/20 (c) 1,042,030 500,000 Baa2* University Lab School Project, 6.125% due 6/1/21 509,635 1,065,000 AAA Conneaut, PA School District, AMBAC-Insured, 9.500% due 5/1/12 (c)+ 1,353,232 Greenville County, SC School District, Installment Purchase Revenue, (Building Equity Sooner for Tomorrow Project): 2,000,000 AA- 5.875% due 12/1/19 (c) 2,271,600 2,000,000 AA- 6.000% due 12/1/21 (c) 2,212,800 500,000 BBB Illinois Development Finance Authority Revenue, (Chicago Charter School Foundation Project A), 5.250% due 12/1/12 522,755 1,000,000 AAA Jenison, MI Public Schools, FGIC-Insured, 5.500% due 5/1/20 1,106,700 500,000 NR Los Angeles, CA School District, MBIA-Insured, 9.058% due 7/1/18 612,660 500,000 A Massachusetts State Development Finance Agency Revenue, Curry College, Series A, ACA-Insured, 6.000% due 3/1/20 550,685 1,450,000 AAA Morgan Hill, CA School District, FGIC-Insured, 5.750% due 8/1/17 1,652,420 NebHELP Inc. Revenue, NE, MBIA-Insured: 1,000,000 Aaa* Jr. Sub-Series A-6, 6.450% due 6/1/18 (b) 1,114,770 1,900,000 Aaa* Sr. Sub-Series A-5A, 6.200% due 6/1/13 (b) 2,093,249 500,000 A3* New England Education Loan Marketing Corp., MA Student Loan Revenue, Sub-Issue H, 6.900% due 11/1/09 (b) 575,700 630,000 A++ New Mexico Educational Assistance Foundation, Student Loan Revenue, First Sub-Series A-2, 5.950% due 11/1/07 (b) 660,530 1,000,000 AAA Philadelphia, PA School District, Series A, FSA-Insured, 5.500% due 2/1/23 1,083,890 1,350,000 AAA Pittsburgh, PA School District, FSA-Insured, 5.375% due 9/1/16 1,566,377 1,000,000 AAA Southwest Higher Education Authority Inc., TX, (Southern Methodist University Project), AMBAC-Insured, 5.500% due 10/1/19 1,117,430 - ---------------------------------------------------------------------------------------------------------- 26,289,647 - ---------------------------------------------------------------------------------------------------------- General Obligation -- 9.5% 500,000 AAA Anchorage, AK GO, Refunding, FGIC-Insured, 6.000% due 10/1/14 601,590 1,000,000 AA Central Falls, RI GO, 5.875% due 5/15/15 1,147,050
See Notes to Financial Statements. - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 7 ================================================================================ Schedule of Investments (continued) December 31, 2003 ================================================================================
FACE AMOUNT RATING(a) SECURITY VALUE ========================================================================================================== General Obligation -- 9.5% (continued) $ 1,000,000 AA Harvey, IL GO, Refunding, 6.700% due 2/1/09 $ 1,060,030 1,310,000 AAA Kane County, IL GO, FGIC-Insured, 5.500% due 1/1/14 1,482,278 1,130,000 Aaa* Lancaster, MA GO, AMBAC-Insured, 5.375% due 4/15/17 1,259,295 1,500,000 AAA Massachusetts State GO, MBIA-Insured, FLAIRS, 9.285% due 5/1/09 (d) 2,007,780 1,000,000 Aaa* Memphis, MI GO, FGIC-Insured, 5.150% due 5/1/19 (c) 1,061,940 2,400,000 Aa2* Minnehaha County, SD GO, Limited Tax Certificates, 5.625% due 12/1/20 (c) 2,672,904 2,000,000 AAA Montgomery County, MD GO, Refunding, 5.250% due 10/1/14 2,260,760 3,010,000 AA+ Ohio State GO, (Conservation Projects), Series A, 5.250% due 9/1/13 3,360,785 1,000,000 AAA Saraland, AL GO, MBIA-Insured, 5.250% due 1/1/15 1,108,250 - ---------------------------------------------------------------------------------------------------------- 18,022,662 - ---------------------------------------------------------------------------------------------------------- Hospital -- 24.7% 170,000 AAA Anderson County, SC Hospital Facilities Revenue, 7.125% due 8/1/07+ 187,692 1,500,000 BBB++ Arkansas State Development Finance Authority, Hospital Revenue, Washington Regional Medical Center, 7.000% due 2/1/15 1,636,485 402,500 AAA Birmingham, AL Medical Clinic Board Revenue, Baptist Medical Centers, 8.300% due 7/1/08+ 463,137 650,000 AAA Calcasieu Parish, LA Memorial Hospital Service District Hospital Revenue, (Lake Charles Memorial Hospital Project), Series A, CONNIE LEE-Insured, 7.500% due 12/1/05 718,855 1,160,000 NR California Statewide COP, Community Development Authority Revenue Refunding, Hospital Triad Healthcare, (Pre-Refunded -- Escrowed with state and local government securities to 8/1/04 Call @ 100), 6.250% due 8/1/06 1,238,381 650,000 A- Chatham County, GA Hospital Authority Revenue, Memorial Health Medical Center, Series A, 6.000% due 1/1/17 703,118 305,000 A- Colorado Health Facilities Authority Revenue, Rocky Mountain Adventist Health Center, 6.250% due 2/1/04+ 305,912 2,000,000 AA Connecticut State Health & Educational Facilities Authority Revenue, Bristol Hospital, Series B, 5.500% due 7/1/21 (c) 2,177,100 1,770,000 BBB Cuyahoga County, OH Hospital Facility Revenue, (Canton Inc. Project), 6.750% due 1/1/10 1,976,948 710,000 BBB Denver, CO Health & Hospital Authority Healthcare Revenue, Series A, 6.250% due 12/1/16 758,713 1,200,000 AA Harris County, TX Health Facilities Developmental Corp. Revenue, Methodist Hospital, 0.780% due 12/1/32 1,200,000 1,000,000 AAA Harris County, TX Hospital District Revenue Refunding, MBIA-Insured, 6.000% due 2/15/15 1,171,400 2,000,000 BBB+ Hawaii State Department of Budget & Finance, Special Purpose Revenue, Kapiolani Health Care System, 6.400% due 7/1/13 2,049,560 1,420,000 Baa1* Henderson, NV Health Care Facility Revenue, Catholic Healthcare West, Series A, 6.200% due 7/1/09 1,590,315
See Notes to Financial Statements. - -------------------------------------------------------------------------------- 8 2003 Annual Report ================================================================================ Schedule of Investments (continued) December 31, 2003 ================================================================================
FACE AMOUNT RATING(a) SECURITY VALUE ========================================================================================================== Hospital -- 24.7% (continued) Illinois Health Facilities Authority Revenue: $ 625,000 AAA Methodist Medical Center Project, 9.000% due 10/1/10+ $ 745,112 750,000 AAA Ravenswood Hospital Medical Center Project, 7.250% due 8/1/06 (d)+ 813,330 1,300,000 BBB Illinois Health Facilities Authority Revenue Refunding, Friendship Village of Schaumburg, 6.650% due 12/1/06 1,307,215 1,000,000 A1* Iowa Finance Authority Health Care Facilities Revenue, Genesis Medical Center, 6.250% due 7/1/20 1,058,300 1,200,000 BBB+++ Klamath Falls, OR Intercommunity Hospital Authority Revenue, (Merle West Medical Center Project), 8.000% due 9/1/08+ 1,395,168 290,000 AAA Lake County, OH Hospital Improvement Revenue, (Lake County Memorial Hospital Project), 8.625% due 11/1/09+ 349,401 1,625,000 NR Lee Memorial Health System Board of Directors, FL Hospital Revenue, FSA-Insured, FLAIRS, 10.238% due 4/1/10 (d) 2,069,372 405,000 A-++ Lees Summit, MO IDA, Health Facilities Revenue, (John Knox Village Project), 5.750% due 8/15/11 445,225 270,000 AAA Lima, OH Hospital Revenue, St. Rita Hospital of Lima, 7.500% due 11/1/06+ 297,707 15,000 NR Loma Linda, CA Community Hospital Corporation Revenue, 8.000% due 12/1/08 18,721 1,230,000 NR Los Angeles, CA COP, Hollywood Presbyterian Medical Center, 9.625% due 7/1/13+ 1,656,958 165,000 AAA Louisiana Public Facilities Authority Hospital Revenue Refunding, (Southern Baptist Hospital Inc. Project), 8.000% due 5/15/12+ 203,331 330,000 AAA Madison County, IN Industrial Hospital Authority Facilities Revenue, (Community Hospital of Anderson Project), 9.250% due 1/1/10+ 400,204 Maricopa County, AZ Hospital Revenue: 180,000 AAA Samaritan Health Service, 7.625% due 1/1/08+ 198,317 860,000 AAA St. Luke's Hospital Medical Center Project, 8.750% due 2/1/10+ 1,031,011 1,000,000 AAA Maryland State Health & Higher Education Facilities Authority Revenue Refunding, (Mercy Medical Center Project), FSA-Insured, 6.500% due 7/1/13 1,210,580 370,000 AAA Massachusetts State Development Finance Agency Revenue, Series A, GNMA-Collateralized, 6.700% due 10/20/21 426,136 Massachusetts State Health & Educational Facilities Authority Revenue: Caritas Christi Obligation, Series B: 2,000,000 BBB 6.500% due 7/1/12 (c) 2,076,480 835,000 BBB 6.750% due 7/1/16 (c) 862,121 1,000,000 Baa2* Milford-Whitinsville Regional Hospital, Series D, 6.500% due 7/15/23 1,038,060 1,000,000 BBB+++ Winchester Hospital, Series E, 6.750% due 7/1/30 1,067,120 1,220,000 AAA Massachusetts State Industrial Finance Agency, Assisted Living Facility Revenue, (Arbors at Amherst Project), GNMA-Collateralized, 5.750% due 6/20/17 (b)(c) 1,360,581
See Notes to Financial Statements. - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 9 ================================================================================ Schedule of Investments (continued) December 31, 2003 ================================================================================
FACE AMOUNT RATING(a) SECURITY VALUE ========================================================================================================== Hospital -- 24.7% (continued) $ 1,000,000 A Michigan State Hospital Finance Authority Revenue, Oakwood Obligated Group, 5.500% due 11/1/18 (c) $ 1,033,640 60,000 Aaa* Nacogdoches County, TX Hospital District Revenue, 9.000% due 5/15/04+ 60,000 960,000 A- New Hampshire Health & Educational Facilities Authority Revenue, Covenant Healthcare System, 6.500% due 7/1/17 1,069,718 1,135,000 NR New York City, NY IDA, Civic Facilities Revenue Refunding, (New York Community Hospital Brooklyn), 6.875% due 11/1/10 1,157,961 2,000,000 B1* Oklahoma Developmental Finance Authority Revenue Refunding, Hillcrest Healthcare System, Series A, 5.625% due 8/15/19 1,588,140 Orange County, FL Health Facilities Authority Revenue: Adventist Health Care: 1,500,000 A 6.250% due 11/15/24 1,636,125 510,000 AAA Southern Adventist Hospital Project, 8.750% due 10/1/09+ 616,187 865,000 NR First Mortgage, Health Care Facilities, 8.750% due 7/1/11 871,090 Philadelphia, PA Hospitals Authority Revenue: 155,000 AAA Thomas Jefferson University Hospital, 7.000% due 7/1/08+ 173,285 640,000 Aaa* United Hospital Inc. Project, (Call 7/1/05 @ 100), 10.875% due 7/1/08 (e) 712,787 1,000,000 NR Rainbow City, AL Special Health Care Facilities Financing Authority, (Regency Pointe Inc.), Series B, 7.250% due 1/1/06 1,009,790 120,000 AAA San Leandro, CA Hospital Revenue, Vesper Memorial Hospital, AMBAC-Insured, 11.500% due 5/1/11+ 163,762 145,000 Aaa* Tarrant County, TX Hospital Authority Revenue, Adventist Health System-Sunbelt, 10.250% due 10/1/10 186,587 365,000 NR Tom Green County, TX Hospital Authority, 7.875% due 2/1/06+ 388,778 - ---------------------------------------------------------------------------------------------------------- 46,875,916 - ---------------------------------------------------------------------------------------------------------- Housing: Multi-Family -- 4.6% 1,000,000 A3* Bexar County, TX Housing Finance Corp., Multi-Family Housing Revenue Refunding, Nob Hill Apartments, Series A, 6.000% due 6/1/21 1,032,560 320,000 AAA Charlotte, NC Mortgage Revenue Refunding, Double Oaks Apartments, Series A, FHA-Insured, 7.300% due 11/15/07 349,728 490,000 Baa1* Dallas, TX Housing Corp., Capital Projects Refunding, 7.700% due 8/1/05 490,200 El Paso County, TX Housing Finance Corp., Multi-Family Housing Revenue: 360,000 A3* American Village Communities, Series A, 6.250% due 12/1/24 370,361 280,000 Baa3* La Plaza Apartments, Sub-Series C, 8.000% due 7/1/30 285,592 585,000 AAA Grand Prairie, TX Housing Finance Corp., Multi-Family Housing Revenue, (Landings of Carrier Project A), GNMA-Collateralized, 6.650% due 9/20/22 658,236 100,000 AA- Hudson County, NJ Improvement Authority, Multi-Family Housing Revenue, (Observer Park Project), Series A, FNMA-Collateralized, 6.600% due 6/1/04 (b) 101,430
See Notes to Financial Statements. - -------------------------------------------------------------------------------- 10 2003 Annual Report ================================================================================ Schedule of Investments (continued) December 31, 2003 ================================================================================
FACE AMOUNT RATING(a) SECURITY VALUE ========================================================================================================== Housing: Multi-Family -- 4.6% (continued) $ 1,175,000 A3* Lubbock, TX Housing Finance Corp., Multi-Family Housing Revenue, (Las Colinas Quality Creek Apartments), 6.000% due 7/1/22 $ 1,206,396 500,000 Aaa* Maricopa County, AZ IDA, Multi-Family Housing Revenue, (Bay Club at Mesa Cove Project), Series A, MBIA-Insured, 5.700% due 9/1/20 500,635 570,000 A2* McMinnville, TN Housing Authority Revenue Refunding, First Mortgage, Beersheba Heights, 6.000% due 10/1/09 (c) 614,996 Mount Vernon, IL Elderly Housing Corp., First Lien Revenue: 200,000 Ba3* 7.875% due 4/1/04 200,622 215,000 Ba3* 7.875% due 4/1/05 215,426 235,000 Ba3* 7.875% due 4/1/06 235,404 250,000 Ba3* 7.875% due 4/1/07 250,418 270,000 Ba3* 7.875% due 4/1/08 270,405 Tarrant County, TX Housing Finance Corp. Revenue, Multi-Family Housing, Westridge: 100,000 Ba3* Sr. Series A, 6.000% due 6/1/21 84,917 470,000 Caa1* Sub-Series C, 8.500% due 6/1/31 352,486 470,000 BBB++ Tulsa, OK Housing Assistance Corp., Multi-Family Revenue, 7.250% due 10/1/07 (b) 470,578 1,000,000 NR Village Community Development, District No. 5, FL Special Assessment Revenue, 6.000% due 5/1/22 1,011,400 - ---------------------------------------------------------------------------------------------------------- 8,701,790 - ---------------------------------------------------------------------------------------------------------- Housing: Single-Family -- 1.1% 155,000 AAA Cabell, Putnam & Wayne Counties, WV Single-Family Residence Mortgage Revenue, FGIC-Insured, 7.375% due 4/1/10+ 177,988 20,000 AA Juneau, AK City & Borough Home Mortgage Revenue Refunding, Mortgage-Backed Securities Program, FNMA-Collateralized, 8.000% due 2/1/09 20,013 470,000 AA Massachusetts State Housing Finance Agency, Single-Family Housing Revenue, Series 38, 7.200% due 12/1/26 (b) 485,660 120,000 AAA Missouri State Housing Development Community Mortgage Revenue, Series C, GNMA/FNMA-Collateralized, 7.450% due 9/1/27 (b) 126,006 210,000 AAA Pima County, AZ IDA, Single-Family Mortgage Revenue, Series A, GNMA/FNMA/FHLMC-Collateralized, 7.100% due 11/1/29 (b) 225,664 315,000 NR San Leandro, CA Redevelopment Agency, Residential Mortgage Revenue, (Call 10/1/04 @ 100), 11.250% due 4/1/13 (e) 337,384 85,000 AAA St. Louis County, MO Single-Family Mortgage Revenue, MBIA-Insured, 6.750% due 4/1/10 88,800 525,000 AAA Texas State Department of Housing and Community Affairs, Home Mortgage Revenue, RIBS, Series C-2, GMNA/FNMA/ FHLMC-Collateralized, 11.822% due 7/2/24 (b)(d) 571,557 - ---------------------------------------------------------------------------------------------------------- 2,033,072 - ----------------------------------------------------------------------------------------------------------
See Notes to Financial Statements. - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 11 ================================================================================ Schedule of Investments (continued) December 31, 2003 ================================================================================
FACE AMOUNT RATING(a) SECURITY VALUE ========================================================================================================== Industrial Development -- 7.1% $ 1,000,000 NR Alaska Industrial Development & Export Authority Revenue, Williams Lynxs Alaska Cargoport, 8.000% due 5/1/23 (b) $ 1,041,880 535,000 C* Bourbonnais, IL IDR Refunding, (Kmart Corp. Project), 6.600% due 10/1/06 (f) 107,000 1,500,000 AAA Des Moines, IA IDR Refunding, (The Printer Inc. Project), LOC-Mercantile Bank/FHLB, 6.375% due 9/1/09 (c) 1,512,255 2,000,000 A-++ LaCrosse, WI Resource Recovery Revenue Refunding, (Northern States Power Co. Project), 6.000% due 11/1/21 (b) 2,059,600 1,300,000 AA Massachusetts State Development Finance Agency Revenue, Worcester Redevelopment Authority Issue, 6.000% due 6/1/24, mandatory tender 6/1/04 1,446,367 1,365,000 AA Northampton County, PA IDA Revenue, (Moravian Hall Square Project), 5.500% due 7/1/19 1,474,787 55,000 AAA Oklahoma State Industrial Authority Revenue, Oklahoma Health Care Corp., Series A, FGIC-Insured, (Call 5/1/07 @ 100), 9.125% due 11/1/08 (e) 64,885 1,000,000 AAA Pennsylvania State IDR, Economic Development Revenue, AMBAC-Insured, 5.500% due 7/1/21 1,105,050 1,000,000 B2* Rockbridge County, VA IDA Revenue, Virginia Horse Center, Series C, 6.850% due 7/15/21 937,150 795,000 A South Dakota Economic Development Finance Authority, Economic Development Revenue, APA Optics, Series A, 6.750% due 4/1/16 (b) 862,249 1,280,000 NR Suffolk County, NY IDA, Civic Facility Revenue, (Eastern Long Island Hospital Association Project A), 7.750% due 1/1/22 1,306,483 1,500,000 NR Wasco County, OR Solid Waste Disposal Revenue, (Waste Connections Inc. Project), 7.000% due 3/1/12 (b) 1,588,515 - ---------------------------------------------------------------------------------------------------------- 13,506,221 - ---------------------------------------------------------------------------------------------------------- Miscellaneous -- 6.7% 1,500,000 NR Barona Band of Mission Indians, CA, 8.250% due 1/1/20 1,618,440 1,860,000 Aaa* Broomfield, CO COP, Open Space Park & Recreational Facilites, AMBAC-Insured, 5.500% due 12/1/20 2,051,525 1,310,000 BBB District of Columbia, Tobacco Settlement Financing Corp., 6.250% due 5/15/24 (c) 1,251,875 745,000 A Illinois Development Finance Authority Revenue, East St. Louis, 6.875% due 11/15/05 790,676 645,000 Ca* Indianapolis, IN Economic Development Refunding & Improvement Revenue, National Benevolent Association, 6.900% due 10/1/04 322,500 1,690,000 AAA Monroe, LA Sales & Use Tax Revenue, FGIC-Insured, 5.625% due 7/1/25 1,838,534 1,000,000 NR Oglala Sioux Tribe, SD Essential Government Revenue, 5.500% due 7/1/13 1,022,230 1,500,000 BBB+ Puerto Rico Housing Bank & Finance Agency, 7.500% due 12/1/06 1,635,540 2,000,000 AA- Tobacco Settlement Financing Corp., NY, Series C-1, 5.500% due 6/1/14 2,161,540 - ---------------------------------------------------------------------------------------------------------- 12,692,860 - ----------------------------------------------------------------------------------------------------------
See Notes to Financial Statements. - -------------------------------------------------------------------------------- 12 2003 Annual Report ================================================================================ Schedule of Investments (continued) December 31, 2003 ================================================================================
FACE AMOUNT RATING(a) SECURITY VALUE ========================================================================================================== Pollution Control -- 3.4% $ 2,000,000 Aa3* Brazos River, TX Harbor Navigation District, Brazoria County, PCR, (BASF Corp. Project), 6.750% due 2/1/10 $ 2,377,860 1,000,000 AAA Monroe County, MI PCR, (Detroit Edison Co. Project), Series A, AMBAC-Insured, 6.350% due 12/1/04 (b) 1,043,960 2,000,000 Baa3* Ohio State Air Quality Development Authority Revenue, Pollution Control, (Cleveland Electric Illuminating Co. Project), 6.000% due 12/1/13 2,069,960 1,000,000 BB+ Warren, AR Solid Waste Disposal Revenue, (Potlatch Corp. Project), 7.000% due 4/1/12 1,032,650 - ---------------------------------------------------------------------------------------------------------- 6,524,430 - ---------------------------------------------------------------------------------------------------------- Public Facilities -- 1.3% De Kalb County, IN Industrial Redevelopment Authority Revenue, (Mini-Mill Local Public Improvement Project), Series A: 1,000,000 A- 6.250% due 1/15/08 (c) 1,063,770 1,350,000 A- 6.250% due 1/15/09 (c) 1,432,080 - ---------------------------------------------------------------------------------------------------------- 2,495,850 - ---------------------------------------------------------------------------------------------------------- Transportation -- 10.2% 2,000,000 AAA Atlanta, GA Metropolitan Rapid Transit Authority, Sales Tax Revenue, Series E, 7.000% due 7/1/11 (c)+ 2,448,360 1,500,000 AAA Chicago, IL O'Hare International Airport Revenue, Lien A-2, 5.750% due 1/1/19 (c) 1,654,560 1,855,000 A Connecticut State Special Obligation, Parking Revenue, Bradley International Airport, Series A, ACA-Insured, 6.375% due 7/1/12 (b)(c) 2,045,063 1,500,000 AAA Connecticut State Special Tax Obligation Revenue, FSA-Insured, FLAIRS, 9.576% due 10/1/09 (c)(d) 1,899,900 5,000,000 B- Connector 2000 Association, SC Toll Road Revenue, Capital Appreciation, Series B, zero coupon due 1/1/15 910,600 2,000,000 AAA Dallas, TX Area Rapid Transit Sales Tax Revenue, Sr. Lien, AMBAC-Insured, 5.375% due 12/1/16 (c) 2,217,540 1,500,000 CCC Dallas/Fort Worth, TX International Airport Facility, Improvement Corp. Revenue Refunding, American Airlines Inc., Series C, 6.150% due 5/1/29, mandatory tender 11/1/07 (b)(c) 1,195,845 1,855,000 AAA Delaware River Port Authority of Pennsylvania & New Jersey, FSA-Insured, FLAIRS, 9.775% due 1/1/10 (c)(d) 2,348,727 1,000,000 Aaa* Harrisburg, PA Parking Authority, Parking Revenue, FSA-Insured, 5.500% due 5/15/20 1,103,390 250,000 AAA Lee County, FL Southwest Florida Regional Airport Revenue, MBIA-Insured, 8.625% due 10/1/09+ 301,307 290,000 AAA Metropolitan Nashville, TN Airport Authority Tennessee Airport Revenue, MBIA-Insured, 7.500% due 7/1/05 (c)+ 306,054 4,595,000 BBB-++ Pocahontas Parkway Association, VA Toll Road Revenue, Capital Appreciation, Series B, zero coupon due 8/15/19 1,387,690 170,000 AAA San Francisco, CA Airport Improvement Corp. Lease Revenue, United Airlines Inc., 8.000% due 7/1/13+ 213,569
See Notes to Financial Statements. - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 13 ================================================================================ Schedule of Investments (continued) December 31, 2003 ================================================================================
FACE AMOUNT RATING(a) SECURITY VALUE ========================================================================================================== Transportation -- 10.2% (continued) $ 595,000 NR Sanford, FL Airport Authority IDR, (Central Florida Terminals Inc. Project A), 7.500% due 5/1/06 (b)(c) $ 541,515 Tulsa, OK Municipal Airport Revenue Refunding, American Airlines, Series B: 500,000 B- 6.000% due 6/1/35, mandatory tender 12/1/08 (b) 426,590 500,000 B- 5.650% due 12/1/35, mandatory tender 12/1/08 (b) 426,625 - ---------------------------------------------------------------------------------------------------------- 19,427,335 - ---------------------------------------------------------------------------------------------------------- Utilities -- 4.1% 1,000,000 A3* Burlington, KS Environmental Improvement Revenue, (Kansas City Power & Light Project), 4.750% due 9/1/15 1,068,310 2,000,000 AAA Energy Northwest Washington Electric Revenue, (Project No. 3), Series A, FSA-Insured, 5.500% due 7/1/18 (c) 2,197,760 500,000 A Georgia Municipal Electric Authority, Power System Revenue, Series X, 6.500% due 1/1/12 588,780 1,000,000 AAA Griffin, GA Combined Public Utility Revenue, AMBAC-Insured, 5.000% due 1/1/21 1,057,180 1,000,000 BBB+++ North Carolina Eastern Municipal Power Agency, Power System Revenue, Series D, 6.450% due 1/1/14+ 1,133,170 1,355,000 AAA North Carolina Municipal Power Agency No. 1, Catawba Electricity Revenue, 10.500% due 1/1/10 1,735,999 - ---------------------------------------------------------------------------------------------------------- 7,781,199 - ---------------------------------------------------------------------------------------------------------- Water and Sewer -- 13.4% 1,045,000 AAA Boston, MA Water & Sewer Community Revenue, (Escrowed to maturity with state and local government securities), 10.875% due 1/1/09 1,283,584 1,445,000 AA- Charleston, SC Waterworks & Sewer Revenue, 5.250% due 1/1/16 1,586,408 2,000,000 Aaa* Chicago, IL Metropolitan Water Reclamation District, Capital Improvement, Series A, (Escrowed with state and local government securities to 12/1/12 Call @ 101), 5.500% due 12/1/14 (c) 2,350,220 1,370,000 AAA Cleveland, OH Waterworks Revenue, Series K, FGIC-Insured, 5.250% due 1/1/21 (c) 1,474,435 1,000,000 AAA El Paso, TX Water and Sewer Revenue Refunding and Improvement, Series A, FSA-Insured, 6.000% due 3/1/15 (c) 1,189,210 2,000,000 AA+++ Fort Worth, TX Water and Sewer Revenue, 5.625% due 2/15/17 (c) 2,254,060 1,000,000 AAA Gainesville, GA Water & Sewer Revenue, FSA-Insured, 5.375% due 11/15/20 (c) 1,084,170 660,000 AAA Jackson, TN Water and Sewer Revenue, 7.200% due 7/1/12+ 786,812 Ohio State Water Development Authority Revenue: 2,660,000 AAA 9.375% due 12/1/10 (g)+ 3,266,799 465,000 AAA Safe Water, Series III, 9.000% due 12/1/10+ 550,825 2,000,000 AAA Philadelphia, PA Water & Wastewater Revenue, Series B, FGIC-Insured, 5.250% due 11/1/14 2,253,820 2,750,000 AAA Phoeniz, AZ Water Revenue, FGIC-Insured, 5.500% due 7/1/14 3,183,565 1,765,000 AAA Pueblo, CO Bridge Waterworks, Water Revenue Improvement, Series A, FSA-Insured, 6.000% due 11/1/14 2,086,883
See Notes to Financial Statements. - -------------------------------------------------------------------------------- 14 2003 Annual Report ================================================================================ Schedule of Investments (continued) December 31, 2003 ================================================================================
FACE AMOUNT RATING(a) SECURITY VALUE ========================================================================================================== Water and Sewer -- 13.4% (continued) $ 210,000 AAA Ringwood Borough, NJ Sewer Authority Special Obligation, 9.875% due 7/1/13+ $ 277,460 Spanish Fork City, UT Water Revenue, FSA Insured: 350,000 Aaa* Call 6/1/12 @ 100, 5.500% due 6/1/16 (e) 408,608 1,135,000 Aaa* Unrefunded, 5.500% due 6/1/16 1,275,252 - ---------------------------------------------------------------------------------------------------------- 25,312,111 - ---------------------------------------------------------------------------------------------------------- TOTAL INVESTMENTS -- 100.0% (Cost -- $181,387,724**) $189,663,093 ==========================================================================================================
(a) All ratings are by Standard & Poor's Ratings Service, except for those which are identified by an asterisk (*), are rated by Moody's Investors Service and those identified by a double dagger (++), are rated by Fitch Ratings. (b) Income from this issue is considered a preference item for purposes of calculating the alternative minimum tax. (c) All or a portion of this security is segregated for open futures contracts. (d) Inverse floating rate security -- coupon varies inversely with level of short-term tax-exempt interest rates. (e) Pre-Refunded bonds are escrowed with U.S. government securities and are considered by the Manager to be triple-A rated even if the issuer has not applied for new ratings. (f) Security is currently in default. (g) All or a portion of this security is held as collateral for open futures contracts. + Bonds are escrowed to maturity with U.S. government securities and are considered by the Manager to be triple-A rated even if the issuer has not applied for new ratings. ** Aggregate cost for Federal income tax purposes is $181,111,888. See pages 16 and 17 for definitions of ratings and certain abbreviations. See Notes to Financial Statements. - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 15 ================================================================================ Bond Ratings (unaudited) ================================================================================ The definitions of the applicable rating symbols are set forth below: Standard & Poor's Ratings Service ("Standard & Poor's") -- Ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or a minus (-) sign to show relative standings within the major rating categories. AAA -- Bonds rated "AAA" have the highest rating assigned by Standard & Poor's. Capacity to pay interest and repay principal is extremely strong. AA -- Bonds rated "AA" have a very strong capacity to pay interest and repay principal and differs from the highest rated issue only in a small degree. A -- Bonds rated "A" have 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 -- Bonds rated "BBB" are 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. BB, B -- Bonds rated "BB", "B", "CCC" and "CC" are regarded, on CCC and CC balance, as predominantly speculative and with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. "BB" represents a lower degree of speculation than "B", and "CC" the highest degree of speculation. While such bonds will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. Moody's Investors Service ("Moody's") -- Numerical modifiers 1, 2, and 3 may be applied to each generic rating from "Aa" to "Caa", where 1 is the highest and 3 the lowest rating within its generic category. Aaa -- Bonds 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 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 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 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. Ba -- Bonds rated "Ba" are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate, and therefore not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B -- Bonds rated "B" generally lack characteristics of the desirable investments. Assurance of interest and principal payments or maintenance of other terms of the contract over any long period of time may be small. Caa -- Bonds rated "Caa" are of poor standing. These issues may be in default, or there may be present elements of danger with respect to principal or interest. - -------------------------------------------------------------------------------- 16 2003 Annual Report ================================================================================ Bond Ratings (unaudited) (continued) ================================================================================ Ca -- Bonds rated "Ca" represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings. C -- Bonds rated "C" are the lowest rated class of bonds, and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. Fitch Ratings ("Fitch") -- Ratings from "AA" to "BBB" may be modified by the addition of a plus (+) sign or minus (-) sign to show relative standings within the major ratings categories. AA -- Bonds rated "AA" are considered to be investment-grade and of very high credit quality. The obligor's ability to pay interest and/or dividends and repay principal is very strong. A -- Bonds and preferred stock considered to be investment-grade and of high credit quality. The obligor's ability to pay interest and/or dividends and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than debt or preferred securities with higher ratings. BBB -- Bonds rated "BBB" are considered to be investment-grade and of satisfactory credit quality. The obligor's ability to pay interest or dividends and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances, however, are more likely to have adverse impact on these securities and, therefore, impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for securities with higher ratings. NR -- Indicates that the bond is not rated by Standard & Poor's, Moody's or Fitch. ================================================================================ Short-Term Security Ratings (unaudited) ================================================================================ SP-1 -- Standard & Poor's highest 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. A-1 -- Standard & Poor's highest commercial paper and variable-rate demand obligation ("VRDO") rating indicating that the degree of safety regarding timely payment is either overwhelming or very strong; those issues determined to possess overwhelming safety characteristics are denoted with a plus (+) sign. VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO. ================================================================================ Abbreviations* (unaudited) ================================================================================ ACA -- American Capital Assurance AMBAC -- American Municipal Bond Assurance Corporation CGIC -- Capital Guaranty Insurance Company CONNIE LEE -- College Construction Loan Insurance Association COP -- Certificate of Participation FGIC -- Financial Guaranty Insurance Company FHA -- Federal Housing Administration FHLB -- Federal Home Loan Bank 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 HFA -- Housing Finance Authority IDA -- Industrial Development Agency IDR -- Industrial Development Revenue INDLC -- Industrial Indemnity Company ISD -- Independent School District 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 VRDD -- Variable Rate Daily Demand - -------------- * Abbreviations may or may not appear in the schedule of investments. - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 17 ================================================================================ Statement of Assets and Liabilities December 31, 2003 ================================================================================
ASSETS: Investments, at value (Cost -- $181,387,724) $ 189,663,093 Cash 23,915 Interest receivable 3,402,423 Receivable for securities sold 821,444 Prepaid assets 7,877 - ------------------------------------------------------------------------------------------- Total Assets 193,918,752 - ------------------------------------------------------------------------------------------- LIABILITIES: Management fee payable 98,624 Payable to broker -- variation margin 56,250 Distributions payable to Municipal Auction Rate Cumulative Preferred Stockholders 3,170 Accrued expenses 80,542 - ------------------------------------------------------------------------------------------- Total Liabilities 238,586 - ------------------------------------------------------------------------------------------- Series M Municipal Auction Rate Cumulative Preferred Stock (2,000 shares authorized and issued at $25,000 per share) (Note 6) 50,000,000 - ------------------------------------------------------------------------------------------- Total Net Assets $ 143,680,166 - ------------------------------------------------------------------------------------------- NET ASSETS: Par value of capital shares $ 14,005 Capital paid in excess of par value 141,233,797 Undistributed net investment income 1,284,893 Accumulated net realized loss from investment transactions and futures contracts (6,285,710) Net unrealized appreciation of investments and futures contracts 7,433,181 - ------------------------------------------------------------------------------------------- Total Net Assets (Equivalent to $10.26 per share on 14,004,750 capital shares of $0.001 par value outstanding; 100,000,000 capital shares authorized) $ 143,680,166 - -------------------------------------------------------------------------------------------
See Notes to Financial Statements. - -------------------------------------------------------------------------------- 18 2003 Annual Report ================================================================================ Statement of Operations For the Year Ended December 31, 2003 ================================================================================ INVESTMENT INCOME: Interest $ 10,936,074 - -------------------------------------------------------------------------------- EXPENSES: Management fee (Note 3) 1,160,750 Auction participation fees (Note 6) 125,095 Audit and legal 87,000 Shareholder servicing fees 60,460 Custody 30,846 Shareholder communications 22,432 Rating agency fees 16,500 Stock exchange listing fees 13,612 Auction agency fees 8,000 Directors' fees 4,905 Other 4,581 - -------------------------------------------------------------------------------- Total Expenses 1,534,181 - -------------------------------------------------------------------------------- Net Investment Income 9,401,893 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND FUTURES CONTRACTS (NOTES 4 AND 5): Realized Loss From: Investment transactions (429,714) Futures contracts (32,906) - -------------------------------------------------------------------------------- Net Realized Loss (462,620) - -------------------------------------------------------------------------------- Change in Net Unrealized Appreciation of Investments and Futures Contracts: Beginning of year 7,503,524 End of year 7,433,181 - -------------------------------------------------------------------------------- Decrease in Net Unrealized Appreciation (70,343) - -------------------------------------------------------------------------------- Net Loss on Investments and Futures Contracts (532,963) - -------------------------------------------------------------------------------- Distributions Paid to Municipal Auction Rate Cumulative Preferred Stockholders From Net Investment Income (501,981) - -------------------------------------------------------------------------------- Increase in Net Assets From Operations $ 8,366,949 ================================================================================ See Notes to Financial Statements. - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 19 ================================================================================ Statements of Changes in Net Assets ================================================================================
For the Years Ended December 31, 2003 2002 ==================================================================================================== OPERATIONS: Net investment income $ 9,401,893 $ 9,469,970 Net realized loss (462,620) (3,311,384) Increase (decrease) in net unrealized appreciation (70,343) 4,296,851 Dividends paid to Municipal Auction Rate Cumulative Preferred Stockholders from net investment income (501,981) (664,828) - ---------------------------------------------------------------------------------------------------- Increase in Net Assets From Operations 8,366,949 9,790,609 - ---------------------------------------------------------------------------------------------------- DISTRIBUTIONS PAID TO COMMON STOCK SHAREHOLDERS FROM (NOTE 2): Net investment income (8,570,907) (8,087,762) - ---------------------------------------------------------------------------------------------------- Decrease in Net Assets From Distributions Paid to Common Stock Shareholders (8,570,907) (8,087,762) - ---------------------------------------------------------------------------------------------------- FUND SHARE TRANSACTIONS: Underwriting commissions and expenses from the issuance of Municipal Auction Rate Cumulative Preferred Stock (Note 6) -- (778,731) - ---------------------------------------------------------------------------------------------------- Decrease in Net Assets From Fund Share Transactions -- (778,731) - ---------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets (203,958) 924,116 NET ASSETS: Beginning of year 143,884,124 142,960,008 - ---------------------------------------------------------------------------------------------------- End of year* $ 143,680,166 $ 143,884,124 ==================================================================================================== * Includes undistributed net investment income of: $ 1,284,893 $ 959,915 ====================================================================================================
See Notes to Financial Statements. - -------------------------------------------------------------------------------- 20 2003 Annual Report ================================================================================ Notes to Financial Statements ================================================================================ 1. Significant Accounting Policies The Intermediate Muni 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 trade date;(b) securities are valued at the mean between the bid and asked 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 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) gains or losses on the sale of securities are calculated by using the specific identification method; (f) interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis; (g) dividends and distributions to shareholders are recorded monthly by the Fund on the ex-dividend date for the shareholders of Common Stock based on net investment income. The holders of the Municipal Auction Rate Cumulative Preferred Stock shall be entitled to receive dividends in accordance with an auction that will normally be held weekly and out of funds legally available to shareholders; (h) 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 December 31, 2003, reclassifications were made to the Fund's capital accounts to reflect permanent book/tax differences and income and gains available for distributions under income tax regulations. Net investment income, net realized gains and net assets were not affected by this change; (i) 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; (j) the net asset value of the Fund's Common Stock is determined by dividing the value of the net assets available to Common Stock by the total number of shares of common stock outstanding. For the purpose of determining the net asset value per share of the common stock, the value of the Fund's net assets shall be deemed to equal the value of the Fund's assets less (1) the Fund's liabilities, (2) the aggregate liquidation value (i.e., $25,000 per outstanding share) of the Municipal Auction Rate Cumulative Preferred Stock and (3) accumulated and unpaid dividends on the outstanding Municipal Auction Rate Cumulative Preferred Stock issue; and (k) estimates and assumptions are required to be made regarding assets, liabilities and changes in net assets result- - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 21 ================================================================================ Notes to Financial Statements (continued) ================================================================================ ing 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. 3. Management Agreement and Transactions with Affiliated Persons Smith Barney Fund Management LLC ("SBFM"), an indirect wholly-owned subsidiary of Citigroup Inc. ("Citigroup"), acts as investment manager to the Fund. As compensation for its services, the Fund pays SBFM a management fee calculated at an annual rate of 0.60% of the Fund's average daily net assets. For purposes of calculating the management fee, the liquidation value of any preferred stock of the Fund is not deducted in determining the Fund's average daily net assets. This fee is calculated daily and paid monthly. All officers and one Director of the Fund are employees of Citigroup or its affiliates. 4. Investments During the year ended December 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 $40,258,291 - -------------------------------------------------------------------------------- Sales 40,889,194 ================================================================================ At December 31, 2003, the aggregate gross unrealized appreciation and depreciation of investments for Federal income tax purposes were as follows: ================================================================================ Gross unrealized appreciation $11,359,098 Gross unrealized depreciation (2,807,893) - -------------------------------------------------------------------------------- Net unrealized appreciation $ 8,551,205 ================================================================================ - -------------------------------------------------------------------------------- 22 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. Additional securities are also segregated up to the current market value of the futures contracts. 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 received or made 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 December 31, 2003, the Fund had the following open futures contracts:
Number of Basis Market Unrealized Contracts Expiration Value Value Loss ====================================================================================================== Contracts to Sell: U.S. 10 Year Treasury Note 450 3/04 $48,348,437 $49,190,625 $(842,188) ======================================================================================================
6. Municipal Auction Rate Cumulative Preferred Stock On January 28, 2002, the Fund issued 2,000 shares of Series M Municipal Auction Rate Cumulative Preferred Stock ("ARCPS"). The underwriting discount of $500,000 and offering expenses of $278,731 associated with the ARCPS offering were recorded as a reduction of the capital paid in excess of par value of common stock for the year ended December 31, 2002. The ARCPS' dividends are cumulative at a rate determined at an auction and the dividend period is typically 7 days. The dividend rates ranged from 0.61% to 1.30% during the year ended December 31, 2003. At December 31, 2003, the dividend rate was 1.05%. The ARCPS are redeemable under certain conditions by the Fund, or subject to mandatory redemption (if the Fund is in default of certain coverage requirements) at a redemption price equal to the liquidation preference, which is the sum of $25,000 per share plus accumulated and unpaid dividends. The Fund is required to maintain certain asset coverages with respect to the ARCPS. If the Fund fails to maintain these coverages and does not cure any such failure within the required time period, the Fund is required to redeem a requisite number of the ARCPS in order to meet the applicable requirement. - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 23 ================================================================================ Notes to Financial Statements (continued) ================================================================================ Additionally, failure to meet the foregoing asset coverage requirements would restrict the Fund's ability to pay dividends to common shareholders. Citigroup Global Markets Inc. ("CGM") (formerly known as Salomon Smith Barney Inc.), another indirect wholly-owned subsidiary of Citigroup, also currently acts as a broker/dealer in connection with the auction of ARCPS. After each auction, the auction agent will pay to each broker/dealer, from monies the Fund provides, a participation fee at the annual rate of 0.25% of the purchase price of the ARCPS that the broker/dealer places at the auction. For the year ended December 31, 2003, CGM earned $125,095 as a participating broker/dealer. 7. Capital Loss Carryforward At December 31, 2003, the Fund had, for Federal income tax purposes, approximately $7,064,000 of unused capital loss carryforwards 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 year of expiration for each carryforward loss is indicated below. Expiration occurs on December 31 of the year indicated: 2006 2007 2008 2010 2011 ================================================================================ Carryforward Amounts $38,000 $1,896,000 $514,000 $4,047,000 $569,000 ================================================================================ 8. Income Tax Information and Distributions to Shareholders The tax basis components of distributable earnings at December 31 were: 2003 2002 ================================================================================ Undistributed tax-exempt income $ 950,395 $ 708,351 - -------------------------------------------------------------------------------- Accumulated capital losses (7,064,168) (6,494,699) - -------------------------------------------------------------------------------- Unrealized appreciation 8,551,205 8,428,521 ================================================================================ At December 31, 2003 and 2002, the differences between book basis and tax basis unrealized appreciation and depreciation were attributable primarily to wash sale loss deferrals, the treatment of accretion of discounts and amortization of premiums and mark to market of derivative contracts. The tax character of distributions paid during the year ended December 31 was: 2003 2002 ================================================================================ Tax-exempt income $ 9,072,888 $ 8,738,103 Ordinary income -- 14,487 - -------------------------------------------------------------------------------- Total $ 9,072,888 $ 8,752,590 ================================================================================ - -------------------------------------------------------------------------------- 24 2003 Annual Report ================================================================================ Notes to Financial Statements (continued) ================================================================================ 9. Additional Information The Fund has received the following information from Citigroup Asset Management ("CAM"), the Citigroup business unit which includes the Fund's Investment Manager and other investment advisory companies, all of which are indirect, wholly-owned subsidiaries of Citigroup. CAM is reviewing its entry, through an affiliate, into the transfer agent business in the period 1997-1999. As CAM currently understands the facts, at the time CAM decided to enter the transfer agent business, CAM sub-contracted for a period of five years certain of the transfer agency services to a third party and also concluded a revenue guarantee agreement with this sub-contractor providing that the sub-contractor would guarantee certain benefits to CAM or its affiliates (the "Revenue Guarantee Agreement"). In connection with the subsequent purchase of the sub-contractor's business by an affiliate of the current sub-transfer agent (PFPC Inc.) used by CAM on many of the funds it manages, this Revenue Guarantee Agreement was amended eliminating those benefits in exchange for arrangements that included a one-time payment from the sub-contractor. The Boards of CAM-managed funds (the "Boards") were not informed of the Revenue Guarantee Agreement with the sub-contractor at the time the Boards considered and approved the transfer agent arrangements. Nor were the Boards informed of the subsequent amendment to the Revenue Guarantee Agreement when that occurred. CAM has begun to take corrective actions. CAM will pay to the applicable funds approximately $17 million (plus interest) that CAM and its affiliates received from the Revenue Guarantee Agreement and its amendment. CAM also plans an independent review to verify that the transfer agency fees charged by CAM were fairly priced as compared to competitive alternatives. CAM is instituting new procedures and making changes designed to ensure no similar arrangements are entered into in the future. CAM has briefed the SEC, the New York State Attorney General and other regulators with respect to this matter, as well as the U.S. Attorney who is investigating the matter. CAM is cooperating with governmental authorities on this matter, the ultimate outcome of which is not yet determinable. The Fund's transfer agent is PFPC Inc., which is not affiliated with CAM. - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 25 ================================================================================ Financial Highlights ================================================================================ For a share of capital stock outstanding throughout each year ended December 31, unless otherwise noted:
2003 2002 2001 2000 1999 ====================================================================================================================== Net Asset Value, Beginning of Year $ 10.27 $ 10.21 $ 10.20 $ 9.89 $ 10.61 - ---------------------------------------------------------------------------------------------------------------------- Income (Loss) From Operations: Net investment income(1) 0.68 0.68 0.56 0.55 0.53 Net realized and unrealized gain (loss)(1) (0.03) 0.07 -- 0.28 (0.71) Dividends paid to Municipal Auction Rate Cumulative Preferred Stockholders from net investment income (0.05) (0.05) -- -- -- - ---------------------------------------------------------------------------------------------------------------------- Total Income (Loss) From Operations 0.60 0.70 0.56 0.83 (0.18) - ---------------------------------------------------------------------------------------------------------------------- Gains From Repurchase of Treasury Stock -- -- 0.00* 0.02 -- - ---------------------------------------------------------------------------------------------------------------------- Underwriting Commissions and Expenses from the Issuance of Municipal Auction Rate Cumulative Preferred Stock -- (0.06) -- -- -- - ---------------------------------------------------------------------------------------------------------------------- Distributions Paid To Common Stock Shareholders From: Net investment income (0.61) (0.58) (0.55) (0.54) (0.53) Net realized gains -- -- -- -- (0.01) - ---------------------------------------------------------------------------------------------------------------------- Total Distributions Paid to Common Stock Shareholders (0.61) (0.58) (0.55) (0.54) (0.54) - ---------------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Year $ 10.26 $ 10.27 $ 10.21 $ 10.20 $ 9.89 - ---------------------------------------------------------------------------------------------------------------------- Total Return, Based on Market Price(2) 13.33% 4.03% 17.17% 11.90% (17.10)% - ---------------------------------------------------------------------------------------------------------------------- Total Return, Based on Net Asset Value(2) 6.22% 6.73% 6.01% 9.68% (1.39)% - ---------------------------------------------------------------------------------------------------------------------- Net Assets, End of Year (millions) $ 144 $ 144 $ 143 $ 143 $ 83 - ---------------------------------------------------------------------------------------------------------------------- Ratios to Average Net Assets Based on Common Shares Outstanding(3): Expenses 1.07% 1.08% 0.80% 0.78% 0.77% Net investment income(1) 6.55 6.59 5.35 5.47 5.17 - ---------------------------------------------------------------------------------------------------------------------- Portfolio Turnover Rate 21% 49% 36% 45% 54% - ---------------------------------------------------------------------------------------------------------------------- Market Price, End of Year $ 10.19 $ 9.56 $ 9.75 $ 8.81 $ 8.375 ======================================================================================================================
- -------------------------------------------------------------------------------- 26 2003 Annual Report ================================================================================ Financial Highlights (continued) ================================================================================
2003 2002 2001 2000 1999 ========================================================================================== Municipal Auction Rate Cumulative Preferred Stock(4): Total Amount Outstanding (000s) $50,000 $50,000 -- -- -- Asset Coverage Per Share 96,840 96,942 -- -- -- Involuntary Liquidating Preference Per Share(5) 25,000 25,000 -- -- -- Average Market Value Per Share(5) 25,000 25,000 -- -- -- ==========================================================================================
(1) Effective January 1, 2001, the Fund adopted a change in the accounting method that requires the Fund to amortize premiums and accrete all discounts. Without the adoption of this change, for the year ended December 31, 2001, the ratio of net investment income to average net assets would have been 5.31%. Per share information, ratios and supplemental data for the periods prior to January 1, 2001 have not been restated to reflect this change in presentation. In addition, the impact of this change to net investment income and net realized and unrealized gain was less than $0.01 per share. (2) The total return calculation assumes that dividends are reinvested in accordance with the Fund's dividend reinvestment plan. (3) Calculated on basis of average net assets of common shareholders. Ratios do not reflect the effect of dividend payments to preferred shareholders. (4) On January 28, 2002, the Fund issued 2,000 shares of Series M Municipal Auction Rate Cumulative Preferred Stock at $25,000 a share. (5) Excludes accumulated and unpaid dividends. * Amount represents less than $0.01 per share. - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 27 ================================================================================ Independent Auditors' Report ================================================================================ The Shareholders and Board of Directors of Intermediate Muni Fund, Inc.: We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Intermediate Muni Fund, Inc. ("Fund") as of December 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 December 31, 2003, by correspondence with the custodian and broker. As to securities sold but not yet delivered, 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 December 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 February 13, 2004 - -------------------------------------------------------------------------------- 28 2003 Annual Report ================================================================================ Financial Data (unaudited) ================================================================================ For a share of capital stock outstanding throughout each period: AMEX Net Asset Dividends Reinvestment Period Closing Price* Value* Paid Price ================================================================================ 2002 January $ 9.70 $10.21 $0.046 $ 9.67 February 9.69 10.29 0.046 9.67 March 9.50 10.02 0.046 9.52 April 9.59 10.16 0.048 9.58 May 9.70 10.18 0.048 9.75 June 9.87 10.27 0.048 9.95 July 9.90 10.37 0.048 9.92 August 10.05 10.44 0.048 10.07 September 10.09 10.57 0.048 10.11 October 9.75 10.24 0.051 9.50 November 9.42 10.16 0.051 9.57 December 9.56 10.27 0.051 9.48 2003 January 9.45 10.18 0.051 9.47 February 9.47 10.25 0.051 9.60 March 9.48 10.19 0.051 9.53 April 9.75 10.24 0.051 10.01 May 10.09 10.40 0.051 10.01 June 9.98 10.31 0.051 10.03 July 9.61 10.12 0.051 10.12 August 10.02 10.09 0.051 10.01 September 10.15 10.24 0.051 10.19 October 10.22 10.21 0.051 10.25 November 10.39 10.28 0.051 10.32 December 10.19 10.26 0.051 10.31 ================================================================================ * On the last business day of the month. - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 29 ================================================================================ Additional Information (unaudited) ================================================================================ Information about Directors and Officers The business and affairs of the Intermediate Muni Fund, Inc. ("Fund") are managed under the direction of the Fund's 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 Directors and is available, without charge, upon request by calling the Fund's transfer agent (PFPC Inc. at 1-800-331-1710).
Number of Term of Portfolios Office* Principal in Fund Position(s) and Length Occupation(s) Complex Other Board Held with of Time During Past Overseen Memberships Name, Address and Age Fund Served Five Years by Director Held by Director - ------------------------------------------------------------------------------------------------------------------------------- Non-Interested Directors: Lee Abraham Director Since Former Director 27 None 13732 LeHavre Drive 1999 of Signet Group PLC Frenchman's Creek Palm Beach Gardens, FL 33410 Age 76 Allan J. Bloostein Director Since President of Allan 34 Taubman 27 West 67th Street 1999 Bloostein Associates, a Realty Corp. New York, NY 10023 consulting firm; Age 74 former Director of CVS Corp. Jane F. Dasher Director Since Controller of PBK 27 None Korsant Partners 1999 Holdings Inc., a family 283 Greenwich Avenue investment company 3rd Floor Greenwich, CT 06830 Age 54 Donald R. Foley Director Since Retired 27 None 3668 Freshwater Drive 1992 Jupiter, FL 33477 Age 81 Richard E. Hanson, Jr. Director Since Retired; Former Head of 27 None 2751 Vermont Route 140 1999 the New Atlanta Jewish Poultney, VT 05764 Community High School Age 62 Paul Hardin Director Since Professor of Law & 34 None 12083 Morehead 1994 Chancellor Emeritus at Chapel Hill, NC 27514-8426 the University of Age 72 North Carolina Roderick C. Rasmussen Director Since Investment Counselor 27 None 9 Cadence Court 1992 Morristown, NJ 07960 Age 77 John P. Toolan Director Since Retired 27 John Hancock 13 Chadwell Place 1992 Funds Morristown, NJ 07960 Age 73
- -------------------------------------------------------------------------------- 30 2003 Annual Report ================================================================================ Additional Information (unaudited) (continued) ================================================================================
Number of Term of Portfolios Office* Principal in Fund Position(s) and Length Occupation(s) Complex Other Board Held with of Time During Past Overseen Memberships Name, Address and Age Fund Served Five Years by Director Held by Director - ------------------------------------------------------------------------------------------------------------------------------- Interested Director: R. Jay Gerken, CFA** Chairman, Since Managing Director of 221 None Citigroup Asset Management President 2002 Citigroup Global Markets ("CAM") and Chief Inc. ("CGM"); Chairman, 399 Park Avenue Executive President and Chief 4th Floor Officer Executive Officer of Smith New York, NY 10022 Barney Fund Management Age 52 LLC ("SBFM"), Travelers Investment Adviser, Inc. ("TIA") and Citi Fund Management, Inc. ("CFM"); President and Chief Executive Officer of certain mutual funds associated with Citigroup Inc. ("Citigroup"); Formerly Portfolio Manager of Smith Barney Allocation Series Inc. (from 1996 to 2001) and Smith Barrney Growth and Income Fund (from 1996 to 2000) Officers: Andrew B. Shoup Senior Vice Since Director of CAM; Senior N/A N/A CAM President 2003 Vice President and Chief 125 Broad Street and Chief Administrative Officer of 10th Floor Administrative mutual funds associated New York, NY 10004 Officer with Citigroup; Treasurer of Age 47 certain mutual funds associated with Citigroup; Head of International Funds Administration of CAM (from 2001 to 2003); Director of Global Funds Administration of CAM (from 2000 to 2001); Head of U.S. Citibank Funds Administration of CAM (from 1998 to 2000) Richard L. Peteka Chief Since Director of CGM; Chief N/A N/A CAM Financial 2002 Financial Officer and 125 Broad Street Officer and Treasurer of certain mutual 11th Floor Treasurer funds associated with New York, NY 10004 Citigroup; Director and Age 42 Head of Internal Control for CAM U.S. Mutual Fund Administration (from 1999 to 2002); Vice President, Head of Mutual Fund Administration and Treasurer at Oppenheimer Capital (from 1996 to 1999)
- -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 31 ================================================================================ Additional Information (unaudited) (continued) ================================================================================
Number of Term of Portfolios Office* Principal in Fund Position(s) and Length Occupation(s) Complex Other Board Held with of Time During Past Overseen Memberships Name, Address and Age Fund Served Five Years by Director Held by Director - ------------------------------------------------------------------------------------------------------------------------------- Peter M. Coffey Vice Since Managing Director of N/A N/A CAM President 1992 CGM; Investment 399 Park Avenue Officer of SBFM 4th Floor New York, NY 10022 Age 58 Kaprel Ozsolak Controller Since Vice President of CGM; N/A N/A CAM 2002 Controller of certain 125 Broad Street mutual funds associated 11th Floor with Citigroup New York, NY 10004 Age 38 Robert I. Frenkel Secretary Since Managing Director and N/A N/A CAM and Chief 2003 General Counsel of Global 300 First Stamford Place Legal Officer Mutual Funds for CAM and 4th Floor its predecessor (since 1994); Stamford, CT 06902 Secretary of CFM; Secretary Age 48 and Chief Legal Officer of mutual funds associated with Citigoup
- --------- * 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. - -------------------------------------------------------------------------------- 32 2003 Annual Report ================================================================================ Tax Information (unaudited) ================================================================================ For Federal tax purposes, the Fund hereby designates for the fiscal year ended December 31, 2003: o 100% of the dividends paid by the Fund from net investment income as tax exempt for regular Federal income tax purposes. - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 33 ================================================================================ Dividend Reinvestment Plan (unaudited) ================================================================================ Under the Fund's Dividend Reinvestment Plan ("Plan"), a shareholder whose shares of common stock are registered in his own name will have all distributions from the fund reinvested automatically by PFPC Inc. ("PFPC"), as purchasing agent under the plan, unless the shareholder elects to receive cash. Distributions with respect to shares registered in the name of a broker-dealer or other nominee (that is, in street name) will be reinvested by the broker or nominee in additional shares under the Plan, unless the service is not provided by the broker or nominee or the shareholder elects to receive distributions in cash. Investors who own common stock registered in street name should consult their broker-dealers for details regarding reinvestment. All distributions to shareholders who do not participate in the plan will be paid by check mailed directly to the record holder by or under the direction of First Data as dividend paying agent. The number of shares of common stock distributed to participants in the plan in lieu of a cash dividend is determined in the following manner. When the market price of the common stock is equal to or exceeds the net asset value per share of the common stock on the determination date (generally, the record date for the distribution), Plan participants will be issued shares of common stock by the fund at a price equal to the greater of net asset value determined as described below under "Net Asset Value" or 95% of the market price of the common stock. If the market price of the common stock is less than the net asset value of the common stock at the time of valuation (which is the close of business on the determination date), PFPC will buy common stock in the open market, on the AMEX or elsewhere, for the participants' accounts. If following the commencement of the purchases and before PFPC has completed its purchases, the market price exceeds the net asset value of the common stock as of the valuation time, PFPC will attempt to terminate purchases in the open market and cause the fund to issue the remaining portion of the dividend or distribution in shares at a price equal to the greater of (a) net asset value as of the valuation time or (b) 95% of the then current market price. In this case, the number of shares received by a Plan participant will be based on the weighted average of prices paid for shares purchased in the open market and the price at which the fund issues the remaining shares. To the extent PFPC is unable to stop open market purchases and cause the Fund to issue the remaining shares, the average per share purchase price paid by PFPC may exceed the net asset value of the common stock as of the valuation time, resulting in the acquisition of fewer shares than if the dividend or capital gains distribution had been paid in common stock issued by the Fund at such net asset value. PFPC will begin to purchase common stock on the open market as soon as practicable after the determination date for the dividend or capital gains distribution, but in no event - -------------------------------------------------------------------------------- 34 2003 Annual Report ================================================================================ Dividend Reinvestment Plan (unaudited) (continued) ================================================================================ shall such purchases continue later than 30 days after the payment date for such dividend or distribution, or the record date for a succeeding dividend or distribution, except when necessary to comply with applicable provisions of the federal securities laws. PFPC maintains all shareholder accounts in the Plan and furnishes written confirmations of all transactions in each account, including information needed by a shareholder for personal and tax records. The automatic reinvestment of dividends and capital gains distributions will not relieve plan participants of any income tax that may be payable on the dividends or capital gains distributions. Common stock in the account of each plan participant will be held by PFPC in uncertificated form in the name of the plan participant. Plan participants are subject to no charge for reinvesting dividends and capital gains distributions under the Plan. PFPC's fees for handling the reinvestment of dividends and capital gains distributions will be paid by the fund. No brokerage charges apply with respect to shares of common stock issued directly by the fund under the Plan. Each plan participant will, however, bear a proportionate share of any brokerage commissions actually incurred with respect to any open market purchases made under the plan. Experience under the Plan may indicate that changes to it are desirable. The Fund reserves the right to amend or terminate the plan as applied to any dividend or capital gains distribution paid subsequent to written notice of the change sent to participants at least 30 days before the record date for the dividend or capital gains distribution. The plan also may be amended or terminated by PFPC, with the fund's prior written consent, on at least 30 days' written notice to plan participants. All correspondence concerning the plan should be directed by mail to PFPC Inc., P.O. Box 8030, Boston, Massachusetts 02266-8030 or by telephone at (800) 331-1710. -------------------------- A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by telephoning the Fund (toll-free) at 1-800-451-2010 and by visiting the SEC's web site at www.sec.gov. - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. 35 (This page intentionally left blank.) - -------------------------------------------------------------------------------- Intermediate Muni Fund, Inc. - -------------------------------------------------------------------------------- DIRECTORS Lee Abraham Alan J. Bloostein Jane F. Dasher Donald R. Foley R. Jay Gerken, CFA Chairman Richard E. Hanson, Jr. Paul Hardin Roderick C. Rasmussen John P. Toolan OFFICERS R. Jay Gerken, CFA President and Chief Executive Officer Andrew B. Shoup Senior Vice President and Chief Administrative Officer Richard L. Peteka Chief Financial Officer and Treasurer Peter M. Coffey Vice President Kaprel Ozsolak Controller Robert I. Frenkel Secretary and Chief Legal Officer SBI Listed on the American Stock Exchange INVESTMENT MANAGER Smith Barney Fund Management LLC CUSTODIAN State Street Bank and Trust Company SHAREHOLDER SERVICING AGENT PFPC Inc. P.O. Box 8030 Boston, Massachusetts 02266-8030 This report is intended only for the shareholders of Intermediate Muni Fund, Inc. It is not a Prospectus, circular or representation intended for use in the purchase or sale of shares of the Fund or any securities mentioned in the report. INTERMEDIATE MUNI FUND, INC. 125 Broad Street 10th Floor, MF-2 New York, New York 10004 FD1067 2/04 04-6110 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 Jane F. Dasher, the Chairman 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 Ms. Dasher as the Audit Committee's financial expert. Ms. Dasher is an "independent" Director pursuant to paragraph (a)(2) of Item 3 to Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Audit Fees for Intermediate Muni Fund, Inc. were $15,000 and $15,000 for the years ended 12/31/03 and 12/31/02. (b) Audit-Related Fees for Intermediate Muni Fund, Inc. were $12,500 and $7,000 for the years ended 12/31/03 and 12/31/02. These amounts represent procedures performed and prepared for agreed upon procedures letter in accordance with the terms of the Supplementary Articles. (c) Tax Fees for Intermediate Muni Fund, Inc. were $2,100 and $2,000 for the years ended 12/31/03 and 12/31/02. These amounts represent aggregate fees paid for tax compliance, tax advice and tax planning services, which include (the filing and amendment of federal, state and local income tax returns, timely RIC qualification review and tax distribution and analysis planning) rendered by the Accountant to Intermediate Muni Fund, Inc. (d) There were no all other fees for Intermediate Muni Fund, Inc. for the years ended 12/31/03 and 12/31/02. (e) (1) Audit Committee's pre-approval policies and procedures described in paragraph (c) (7) of Rule 2-01 of Regulation S-X. The Charter for the Audit Committee (the "Committee") of the Board of each registered investment company (the "Fund") advised by Smith Barney Fund Management LLC or Salomon Brothers Asset Management Inc or one of their affiliates (each, an "Adviser") requires that the Committee shall approve (a) all audit and permissible non-audit services to be provided to the Fund and (b) all permissible non-audit services to be provided by the Fund's independent auditors to the Adviser and any Covered Service Providers if the engagement relates directly to the operations and financial reporting of the Fund. The Committee may implement policies and procedures by which such services are approved other than by the full Committee. The Committee shall not approve non-audit services that the Committee believes may impair the independence of the auditors. As of the date of the approval of this Audit Committee Charter, permissible non-audit services include any professional services (including tax services), that are not prohibited services as described below, provided to the Fund by the independent auditors, other than those provided to the Fund in connection with an audit or a review of the financial statements of the Fund. Permissible non-audit services may not include: (i) bookkeeping or other services related to the accounting records or financial statements of the Fund; (ii) financial information systems design and implementation; (iii) appraisal or valuation services, fairness opinions or contribution-in-kind reports; (iv) actuarial services; (v) internal audit outsourcing services; (vi) management functions or human resources; (vii) broker or dealer, investment adviser or investment banking services; (viii) legal services and expert services unrelated to the audit; and (ix) any other service the Public Company Accounting Oversight Board determines, by regulation, is impermissible. Pre-approval by the Committee of any permissible non-audit services is not required so long as: (i) the aggregate amount of all such permissible non-audit services provided to the Fund, the Adviser and any service providers controlling, controlled by or under common control with the Adviser that provide ongoing services to the Fund ("Covered Service Providers") constitutes not more than 5% of the total amount of revenues paid to the independent auditors during the fiscal year in which the permissible non-audit services are provided to (a) the Fund, (b) the Adviser and (c) any entity controlling, controlled by or under common control with the Adviser that provides ongoing services to the Fund during the fiscal year in which the services are provided that would have to be approved by the Committee; (ii) the permissible non-audit services were not recognized by the Fund at the time of the engagement to be non-audit services; and (iii) such services are promptly brought to the attention of the Committee and approved by the Committee (or its delegate(s)) prior to the completion of the audit. (f) N/A (g) Non-audit fees billed - $100,000 and $1.2 million for the years ended 12/31/2003 and 12/31/2002. (h) Yes. Intermediate Muni Fund, Inc.'s Audit Committee has considered whether the provision of non-audit services that were rendered to Service Affiliates which were not pre-approved (not requiring pre-approval) is compatible with maintaining the Accountant's independence. All services provided by the Accountant to Intermediate Muni Fund, Inc. or to Service Affiliates which were required to be pre-approved were pre-approved as required. 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. The Board of Directors of the Fund has delegated the authority to develop policies and procedures relating to proxy voting to the Manager. The Manager is part of Citigroup Asset Management ("CAM"), a group of investment adviser affiliates of Citigroup, Inc. ("Citigroup"). Along with the other investment advisers that comprise CAM, the Manager has adopted a set of proxy voting policies and procedures (the "Policies") to ensure that the Manager votes proxies relating to equity securities in the best interest of clients. In voting proxies, the Manager is guided by general fiduciary principles and seeks to act prudently and solely in the best interest of clients. The Manager attempts to consider all factors that could affect the value of the investment and will vote proxies in the manner that it believes will be consistent with efforts to maximize shareholder values. The Manager may utilize an external service provider to provide it with information and/or a recommendation with regard to proxy votes. However, such recommendations do not relieve the Manager of its responsibility for the proxy vote. In the case of a proxy issue for which there is a stated position in the Policies, CAM generally votes in accordance with such stated position. In the case of a proxy issue for which there is a list of factors set forth in the Policies that CAM considers in voting on such issue, CAM votes on a case-by-case basis in accordance with the general principles set forth above and considering such enumerated factors. In the case of a proxy issue for which there is no stated position or list of factors that CAM considers in voting on such issue, CAM votes on a case-by-case basis in accordance with the general principles set forth above. Issues for which there is a stated position set forth in the Policies or for which there is a list of factors set forth in the Policies that CAM considers in voting on such issues fall into a variety of categories, including election of directors, ratification of auditors, proxy and tender offer defenses, capital structure issues, executive and director compensation, mergers and corporate restructurings, and social and environmental issues. The stated position on an issue set forth in the Policies can always be superseded, subject to the duty to act solely in the best interest of the beneficial owners of accounts, by the investment management professionals responsible for the account whose shares are being voted. Issues applicable to a particular industry may cause CAM to abandon a policy that would have otherwise applied to issuers generally. As a result of the independent investment advisory services provided by distinct CAM business units, there may be occasions when different business units or different portfolio managers within the same business unit vote differently on the same issue. In furtherance of the Manager's goal to vote proxies in the best interest of clients, the Manager follows procedures designed to identify and address material conflicts that may arise between the Manager's interests and those of its clients before voting proxies on behalf of such clients. To seek to identify conflicts of interest, CAM periodically notifies CAM employees (including employees of the Manager) in writing that they are under an obligation (i) to be aware of the potential for conflicts of interest with respect to voting proxies on behalf of client accounts both as a result of their personal relationships and due to special circumstances that may arise during the conduct of CAM's and the Manager's business, and (ii) to bring conflicts of interest of which they become aware to the attention of compliance personnel. The Manager also maintains and considers a list of significant relationships that could present a conflict of interest for the Manager in voting proxies. The Manager is also sensitive to the fact that a significant, publicized relationship between an issuer and a non-CAM affiliate might appear to the public to influence the manner in which the Manager decides to vote a proxy with respect to such issuer. Absent special circumstances or a significant, publicized non-CAM affiliate relationship that CAM or the Manager for prudential reasons treats as a potential conflict of interest because such relationship might appear to the public to influence the manner in which the Manager decides to vote a proxy, the Manager generally takes the position that non-CAM relationships between Citigroup and an issuer (e.g. investment banking or banking) do not present a conflict of interest for the Manager in voting proxies with respect to such issuer. Such position is based on the fact that the Manager is operated as an independent business unit from other Citigroup business units as well as on the existence of information barriers between the Manager and certain other Citigroup business units. CAM maintains a Proxy Voting Committee, of which the Manager personnel are members, to review and address conflicts of interest brought to its attention by compliance personnel. A proxy issue that will be voted in accordance with a stated position on an issue or in accordance with the recommendation of an independent third party is not brought to the attention of the Proxy Voting Committee for a conflict of interest review because the Manager's position is that to the extent a conflict of interest issue exists, it is resolved by voting in accordance with a pre-determined policy or in accordance with the recommendation of an independent third party. With respect to a conflict of interest brought to its attention, the Proxy Voting Committee first determines whether such conflict of interest is material. A conflict of interest is considered material to the extent that it is determined that such conflict is likely to influence, or appear to influence, the Manager's decision-making in voting proxies. If it is determined by the Proxy Voting Committee that a conflict of interest is not material, the Manager may vote proxies notwithstanding the existence of the conflict. If it is determined by the Proxy Voting Committee that a conflict of interest is material, the Proxy Voting Committee is responsible for determining an appropriate method to resolve such conflict of interest before the proxy affected by the conflict of interest is voted. Such determination is based on the particular facts and circumstances, including the importance of the proxy issue and the nature of the conflict of interest. Methods of resolving a material conflict of interest may include, but are not limited to, disclosing the conflict to clients and obtaining their consent before voting, or suggesting to clients that they engage another party to vote the proxy on their behalf. 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. Exhibit 99.CODE ETH (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. Intermediate Muni Fund, Inc. By: /s/ R. Jay Gerken R. Jay Gerken Chief Executive Officer of Intermediate Muni Fund, Inc. Date: March 11, 2004 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 Intermediate Muni Fund, Inc. Date: March 11, 2004 By: /s/ Richard L. Peteka Richard L. Peteka Chief Financial Officer of Intermediate Muni Fund, Inc. Date: March 11, 2004 EX-99.CODE ETH 3 ex99code.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 ex99cert.txt CERTIFICATION UNDER 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 Intermediate Muni 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: March 11, 2004 /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 Intermediate Muni 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: March 11, 2004 /s/ Richard L. Peteka ------------------------- -------------------------------------- Richard L. Peteka Chief Financial Officer EX-99.906 5 ex99906.txt CERTIFICATION UNDER 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 Intermediate Muni 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 December 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 Intermediate Muni Fund, Inc. Intermediate Muni Fund, Inc. /s/ R. Jay Gerken /s/ Richard L. Peteka - ------------------------------- --------------------------- R. Jay Gerken Richard L. Peteka Date: March 11, 2004 Date: March 11, 2004 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-----