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)
Christina T. Sydor, Esq.
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: June 30, 2003
ITEM 1. REPORT TO STOCKHOLDERS.
The Semi-Annual Report to Stockholders is filed herewith.
INTERMEDIATE
MUNI FUND, INC.
Semi-Annual Report
June 30, 2003
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WHAT'S INSIDE
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Letter from the Chairman .................................................. 1
Schedule of Investments ................................................... 3
Statement of Assets and Liabilities ....................................... 14
Statement of Operations ................................................... 15
Statements of Changes in Net Assets ....................................... 16
Notes to Financial Statements ............................................. 17
Financial Highlights ...................................................... 21
Financial Data ............................................................ 23
Additional Shareholder Information ........................................ 24
Dividend Reinvestment Plan ................................................ 25
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LETTER FROM THE CHAIRMAN
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[PHOTO OMITTED]
R. JAY GERKEN, CFA
Chairman, President and
Chief Executive Officer
Dear Shareholder,
The philosopher Bertrand Russell famously remarked that, "Change is one thing,
progress is another." You will notice in the following pages that we have begun
to implement some changes to your shareholder report and we will be reflecting
other changes in future reports. Our aim is to make meaningful improvements in
reporting on the management of your Fund and its performance, not just to enact
change for change's sake. Please bear with us during this transition period.
We know that you have questions about fund managers' decisions and plans, and we
want to be sure that you have easy access to the information you need. Keeping
investors informed is, and always will be, one of my top priorities as Chairman
of your Fund. To that end, we encourage you to contact Investor Relations at
1-888-735-6507. We have also included a separate Manager Commentary along with
this report, which we hope will give you a better understanding of your Fund and
its management.
As always, thank you for entrusting your assets to us. We look forward to
helping you continue to meet your financial goals.
Sincerely,
/s/ R. Jay Gerken
R. Jay Gerken, CFA
Chairman, President and Chief Executive Officer
July 24, 2003
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Intermediate Muni Fund, Inc. 1
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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 Global Fund Services ("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 25. To find out more detailed information about the
Plan and about how you can participate, please call PFPC Global Fund Services at
(800) 331-1710.
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2 2003 Semi-Annual Report to Shareholders
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Schedule of Investments (unaudited) June 30, 2003
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FACE
AMOUNT RATING(a) SECURITY VALUE
==========================================================================================================
Education -- 12.4%
$ 1,000,000 A2* Arizona Educational Loan Marketing Corp. Educational Loan
Revenue, Sub-Series, 6.625% due 9/1/05 (b) $ 1,006,980
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 1,080,890
800,000 AAA Ball State University of Indiana, University Revenue, Series K,
FGIC-Insured, 5.750% due 7/1/20 912,976
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 1,051,350
500,000 Baa2* University Lab School Project, 6.125% due 6/1/21 513,670
1,065,000 AAA Conneaut, PA School District, AMBAC-Insured,
9.500% due 5/1/12 1,394,341
Greenville County, SC School District, Installment Purchase
Revenue, (Building Equity Sooner for Tomorrow Project):
2,000,000 AA- 5.875% due 12/1/19 2,273,320
2,000,000 AA- 6.000% due 12/1/21 2,284,220
500,000 BBB Illinois Development Finance Authority Revenue, (Chicago
Charter School Foundation Project A), 5.250% due 12/1/12 532,045
1,000,000 AAA Jenison, MI Public Schools, FGIC-Insured, 5.500% due 5/1/20 1,121,650
500,000 NR Los Angeles, CA School District, MBIA-Insured,
9.478% due 7/1/18 622,880
500,000 A Massachusetts State Development Finance Agency Revenue,
Curry College, Series A, ACA-Insured, 6.000% due 3/1/20 553,640
1,450,000 AAA Morgan Hill, CA School District, FGIC-Insured,
5.750% due 8/1/17 1,681,072
NebHELP Inc. Revenue, NE, MBIA-Insured:
1,000,000 Aaa* Jr. Sub-Series A-6, 6.450% due 6/1/18 (b) 1,154,510
2,000,000 Aaa* Sr. Sub-Series A-5A, 6.200% due 6/1/13 (b) 2,174,260
500,000 A3* New England Education Loan Marketing Corp., MA Student
Loan Revenue, Sub-Issue H, 6.900% due 11/1/09 (b) 587,955
960,000 A++ New Mexico Educational Assistance Foundation, Student Loan
Revenue, First Sub-Series A-2, 5.950% due 11/1/07 (b) 1,019,107
1,000,000 AAA Philadelphia, PA School District, Series A, FSA-Insured,
5.500% due 2/1/23 1,102,630
1,350,000 AAA Pittsburgh, PA School District, FSA-Insured,
5.375% due 9/1/16 1,597,806
1,000,000 AAA Southwest Higher Education Authority Inc., TX, (Southern
Methodist University Project), AMBAC-Insured,
5.500% due 10/1/19 1,127,260
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23,792,562
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See Notes to Financial Statements.
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Intermediate Muni Fund, Inc. 3
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Schedule of Investments (unaudited) (continued) June 30, 2003
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FACE
AMOUNT RATING(a) SECURITY VALUE
==========================================================================================================
General Obligation -- 10.7%
$ 500,000 AAA Anchorage, AK GO, Refunding, FGIC-Insured,
6.000% due 10/1/14 $ 614,815
1,000,000 AA Central Falls, RI GO, 5.875% due 5/15/15 1,159,190
2,000,000 AAA Delaware State GO, Series A, 5.000% due 7/1/13 2,249,340
1,000,000 AA Harvey, IL GO, Refunding, 6.700% due 2/1/09 (c) 1,081,000
1,310,000 AAA Kane County, IL GO, FGIC-Insured, 5.500% due 1/1/14 1,501,758
1,130,000 Aaa* Lancaster, MA GO, AMBAC-Insured, 5.375% due 4/15/17 1,273,521
1,500,000 AAA Massachusetts State GO, MBIA-Insured, FLAIRS,
9.807% due 5/1/09 (d) 2,061,060
1,000,000 Aaa* Memphis, MI GO, FGIC-Insured, 5.150% due 5/1/19 1,065,620
2,400,000 Aa2* Minnehaha County, SD GO, Limited Tax Certificates,
5.625% due 12/1/20 2,705,280
2,000,000 AAA Montgomery County, MD GO, Refunding, 5.250% due 10/1/14 2,304,060
3,010,000 AA+ Ohio State GO, (Conservation Projects), Series A,
5.250% due 9/1/13 (c) 3,417,404
1,000,000 AAA Saraland, AL GO, MBIA-Insured, 5.250% due 1/1/15 1,121,490
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20,554,538
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Hospital -- 24.4%
115,000 Baa3* Allentown, PA Area Hospital Authority Revenue, Sacred Heart
Hospital of Allentown, Series A, 6.200% due 11/15/03 115,208
205,000 AAA Anderson County, SC Hospital Facilities Revenue,
7.125% due 8/1/07 227,983
1,500,000 BBB++ Arkansas State Development Finance Authority, Hospital
Revenue, Washington Regional Medical Center,
7.000% due 2/1/15 1,649,580
95,000 AAA Birmingham, AL Medical Clinic Board Revenue, Baptist
Medical Centers, 8.300% due 7/1/08 110,213
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 12/1/05 738,511
1,500,000 NR California Statewide COP, Community Development Authority
Revenue Refunding, Hospital Triad Healthcare, (Escrowed
with state and local government securities),
6.250% due 8/1/06 (e) 1,613,610
650,000 A- Chatham County, GA Hospital Authority Revenue, Memorial
Health Medical Center, Series A, 6.000% due 1/1/17 712,530
305,000 A- Colorado Health Facilities Authority Revenue, Rocky Mountain
Adventist Health Center, 6.250% due 2/1/04 312,832
2,000,000 AA Connecticut State Health & Educational Facilities Authority
Revenue, Bristol Hospital, Series B, 5.500% due 7/1/21 (c) 2,195,800
2,000,000 BBB Cuyahoga County, OH Hospital Facility Revenue, (Canton Inc.
Project), 6.750% due 1/1/10 2,273,880
710,000 BBB+ Denver, CO Health & Hospital Authority Healthcare Revenue,
Series A, 6.250% due 12/1/16 781,554
1,000,000 AAA Harris County, TX Hospital District Revenue Refunding,
MBIA-Insured, 6.000% due 2/15/15 (c) 1,177,600
See Notes to Financial Statements.
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4 2003 Semi-Annual Report to Shareholders
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Schedule of Investments (unaudited) (continued) June 30, 2003
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FACE
AMOUNT RATING(a) SECURITY VALUE
==========================================================================================================
Hospital -- 24.4% (continued)
$ 2,000,000 BBB+ Hawaii State Department of Budget & Finance, Special
Purpose Revenue, Kapiolani Health Care System,
6.400% due 7/1/13 (c) $ 2,068,300
1,420,000 BBB+++ Henderson, NV Health Care Facility Revenue, Catholic
Healthcare West, Series A, 6.200% due 7/1/09 (c) 1,593,084
Illinois Health Facilities Authority Revenue:
705,000 AAA Methodist Medical Center Project, 9.000% due 10/1/10 868,927
965,000 AAA Ravenswood Hospital Medical Center Project,
7.250% due 8/1/06 (d) 1,050,460
1,300,000 BBB Illinois Health Facilities Authority Revenue Refunding,
Friendship Village of Schaumburg, 6.650% due 12/1/06 (c) 1,307,644
1,000,000 A1* Iowa Finance Authority Health Care Facilities Revenue,
Genesis Medical Center, 6.250% due 7/1/20 1,071,800
1,200,000 BBB+++ Klamath Falls, OR Intercommunity Hospital Authority Revenue,
(Merle West Medical Center Project), 8.000% due 9/1/08 (e) 1,437,972
330,000 AAA Lake County, OH Hospital Improvement Revenue, (Lake
County Memorial Hospital Project), 8.625% due 11/1/09 399,795
1,625,000 NR Lee Memorial Health System Board of Directors, FL Hospital
Revenue, FSA-Insured, FLAIRS, 10.238% due 4/1/10 (d) 2,160,925
405,000 A-++ Lees Summit, MO IDA, Health Facilities Revenue, (John Knox
Village Project), 5.750% due 8/15/11 453,393
345,000 AAA Lima, OH Hospital Revenue, St. Rita Hospital of Lima,
7.500% due 11/1/06 381,463
1,230,000 NR Los Angeles, CA COP, Hollywood Presbyterian Medical Center,
9.625% due 7/1/13 (e) 1,673,747
165,000 AAA Louisiana Public Facilities Authority Hospital Revenue
Refunding, (Southern Baptist Hospital Inc. Project),
8.000% due 5/15/12 208,641
25,000 BBB- Louisiana Public Facilities Authority Revenue, (General Health
Systems Project), 6.800% due 11/1/16 25,174
370,000 AAA Madison County, IN Industrial Hospital Authority Facilities
Revenue, (Community Hospital of Anderson Project),
9.250% due 1/1/10 464,635
Maricopa County, AZ Hospital Revenue:
210,000 AAA Samaritan Health Service, 7.625% due 1/1/08 238,491
840,000 AAA St. Luke's Hospital Medical Center Project,
8.750% due 2/1/10 1,041,020
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 1,232,970
370,000 AAA Massachusetts State Development Finance Agency Revenue,
Series A, GNMA-Collateralized, 6.700% due 10/20/21 440,907
Massachusetts State Health & Educational Facilities
Authority Revenue:
Caritas Christi Obligation, Series B:
2,000,000 BBB 6.500% due 7/1/12 2,097,040
750,000 BBB 6.750% due 7/1/16 780,953
1,000,000 Baa2* Milford-Whitinsville Regional Hospital,
6.500% due 7/15/23 1,063,610
See Notes to Financial Statements.
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Intermediate Muni Fund, Inc. 5
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Schedule of Investments (unaudited) (continued) June 30, 2003
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FACE
AMOUNT RATING(a) SECURITY VALUE
==========================================================================================================
Hospital -- 24.4% (continued)
$ 1,250,000 AAA Massachusetts State Industrial Finance Agency, Assisted
Living Facility Revenue, (Arbors at Amherst Project),
GNMA-Collateralized, 5.750% due 6/20/17 (b) $ 1,417,300
60,000 Aaa* Nacogdoches County, TX Hospital District Revenue,
9.000% due 5/15/04 62,123
1,000,000 A- New Hampshire Health & Educational Facilities Authority
Revenue, Covenant Healthcare System, 6.500% due 7/1/17 1,130,860
1,268,000 NR New York City, NY IDA, Civic Facilities Revenue Refunding, (New
York Community Hospital Brooklyn), 6.875% due 11/1/10 1,298,128
2,000,000 B1* Oklahoma Developmental Finance Authority Revenue Refunding,
Hillcrest Healthcare System, Series A, 5.625% due 8/15/19 1,455,560
Orange County, FL Health Facilities Authority Revenue:
Adventist Health Care:
1,500,000 A 6.250% due 11/15/24 1,643,460
485,000 AAA Southern Adventist Hospital Project, 8.750% due 10/1/09 589,784
865,000 NR First Mortgage, Health Care Facilities, 8.750% due 7/1/11 884,886
Philadelphia, PA Hospital Authority Revenue:
155,000 AAA Thomas Jefferson University Hospital, 7.000% due 7/1/08 175,457
640,000 Aaa* United Hospital Inc. Project, (Call 7/1/05 @ 100),
10.875% due 7/1/08 731,347
1,000,000 NR Rainbow City, AL Special Health Care Facilities Financing
Authority, (Regency Pointe Inc.), Series B, 7.250% due 1/1/06 1,014,920
30,000 AAA San Leandro, CA Hospital Revenue, Vesper Memorial Hospital,
AMBAC-Insured, 11.500% due 5/1/11 42,418
1,490,000 A- Sayre, PA Health Care Facilities Authority Revenue, Guthrie
Healthcare System, Series A, 6.250% due 12/1/18 1,638,225
225,000 NR Southwestern, IL Development Authority Hospital Revenue
Refunding, (Wood River Township Hospital Project),
6.875% due 8/1/03 (e) 226,040
160,000 Aaa* Tarrant County, TX Hospital Authority Revenue,
10.250% due 10/1/10 208,650
365,000 NR Tom Green County, TX Hospital Authority,
7.875% due 2/1/06 (e) 401,146
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46,890,556
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Housing: Multi-Family -- 4.4%
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 1,040,850
355,000 AAA Charlotte, NC Mortgage Revenue Refunding, Double Oaks
Apartments, Series A, FHA-Insured, 7.300% due 11/15/07 393,684
710,000 Baa1* Dallas, TX Housing Corp., Capital Projects Refunding,
7.700% due 8/1/05 710,234
El Paso County, TX Housing Finance Corp., Multi-Family
Housing Revenue:
360,000 A3* American Village Communities, Series A,
6.250% due 12/1/24 372,391
280,000 Baa3* La Plaza Apartments, Sub-Series C, 8.000% due 7/1/30 298,071
See Notes to Financial Statements.
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6 2003 Semi-Annual Report to Shareholders
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Schedule of Investments (unaudited) (continued) June 30, 2003
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FACE
AMOUNT RATING(a) SECURITY VALUE
==========================================================================================================
Housing: Multi-Family -- 4.4% (continued)
$ 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 $ 664,478
215,000 AA- Hudson County, NJ Improvement Authority, Multi-Family
Housing Revenue, (Observer Park Project), Series A,
FNMA-Collateralized, 6.600% due 6/1/04 (b) 222,138
1,175,000 A3* Lubbock, TX Housing Finance Corp., Multi-Family Housing
Revenue, (Las Colinas Quality Creek Apartments),
6.000% due 7/1/22 1,215,397
500,000 Aaa* Maricopa County, AZ IDA, Multi-Family Housing Revenue,
(Bay Club at Mesa Cove Project), Series A, MBIA-Insured,
5.700% due 9/1/20 537,225
610,000 A2* McMinnville, TN Housing Authority Revenue Refunding,
First Mortgage, Beersheba Heights, 6.000% due 10/1/09 665,864
Mount Vernon, IL Elderly Housing Corp., First Lien Revenue:
200,000 Ba3* 7.875% due 4/1/04 200,720
215,000 Ba3* 7.875% due 4/1/05 215,454
235,000 Ba3* 7.875% due 4/1/06 235,501
250,000 Ba3* 7.875% due 4/1/07 250,520
270,000 Ba3* 7.875% due 4/1/08 270,537
Tarrant County, TX Housing Finance Corp. Revenue,
Multi-Family Housing, Westridge:
125,000 Baa1* Sr. Series A, 6.000% due 6/1/21 128,374
470,000 Ba1* Sub-Series C, 8.500% due 6/1/31 478,427
510,000 BBB++ Tulsa, OK Housing Assistance Corp., Multi-Family Revenue,
7.250% due 10/1/07 (b) 510,806
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8,410,671
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Housing: Single-Family -- 1.5%
155,000 AAA Cabell, Putnam & Wayne Counties, WV Single-Family
Residence Mortgage Revenue, FGIC-Insured,
7.375% due 4/1/10 183,244
30,000 AA Juneau, AK City & Borough Home Mortgage Revenue
Refunding, Mortgage-Backed Securities Program,
FNMA-Collateralized, 8.000% due 2/1/09 30,189
785,000 AA Massachusetts State Housing Finance Agency, Single-Family
Housing Revenue, Series 38, 7.200% due 12/1/26 (b) 817,515
155,000 AAA Missouri State Housing Development Community Mortgage
Revenue, Series C, GNMA/FNMA-Collateralized,
7.450% due 9/1/27 (b) 163,849
360,000 AAA Pima County, AZ IDA, Single-Family Mortgage Revenue,
Series A, GNMA/FNMA/FHLMC-Collateralized,
7.100% due 11/1/29 (b) 393,260
315,000 NR San Leandro, CA Redevelopment Agency, Residential Mortgage
Revenue, (Call 10/1/04 @ 100), 11.250% due 4/1/13 (f) 353,342
105,000 AAA St. Louis County, MO Single-Family Mortgage Revenue,
MBIA-Insured, 6.750% due 4/1/10 109,889
See Notes to Financial Statements.
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Intermediate Muni Fund, Inc. 7
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Schedule of Investments (unaudited) (continued) June 30, 2003
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FACE
AMOUNT RATING(a) SECURITY VALUE
==========================================================================================================
Housing: Single-Family -- 1.5% (continued)
$ 675,000 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) $ 768,332
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2,819,620
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Industrial Development -- 7.2%
1,000,000 NR Alaska Industrial Development & Export Authority Revenue,
Williams Lynxs Alaska Cargoport, 8.000% due 5/1/23 (b) 1,051,610
535,000 C* Bourbonnais, IL IDR Refunding, (Kmart Corp. Project),
6.600% due 10/1/06 (g) 107,712
1,500,000 AAA Des Moines, IA IDR Refunding, (The Printer Inc. Project),
LOC-Mercantile Bank/FHLB, 6.375% due 9/1/09 1,521,900
2,000,000 Baa1* LaCrosse, WI Resource Recovery Revenue Refunding,
(Northern States Power Co. Project), 6.000% due 11/1/21 (b) 2,081,400
1,300,000 AA Massachusetts State Development Finance Agency Revenue,
Worcester Redevelopment Authority Issue,
6.000% due 6/1/24 1,458,301
1,365,000 AA Northampton County, PA IDA Revenue, (Moravian Hall Square
Project), 5.500% due 7/1/19 1,500,613
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 66,228
1,000,000 AAA Pennsylvania State IDR, Economic Development Revenue,
AMBAC-Insured, 5.500% due 7/1/21 1,118,580
1,000,000 B2* Rockbridge County, VA IDA Revenue, Virginia Horse Center,
Series C, 6.850% due 7/15/21 1,026,630
795,000 A South Dakota Economic Development Finance Authority,
Economic Development Revenue, APA Optics, Series A,
6.750% due 4/1/16 (b) 872,043
1,290,000 NR Suffolk County, NY IDA, Civic Facility Revenue, (Eastern Long
Island Hospital Association Project A), 7.750% due 1/1/22 1,321,282
1,500,000 NR Wasco County, OR Solid Waste Disposal Revenue, (Waste
Connections Inc. Project), 7.000% due 3/1/12 (b) 1,589,625
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13,715,924
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Miscellaneous -- 4.7%
1,500,000 NR Barona Band of Mission Indians, CA, 8.250% due 1/1/20 (c) 1,630,665
1,310,000 A- District of Columbia, Tobacco Settlement Financing Corp.,
6.250% due 5/15/24 1,251,194
1,065,000 A Illinois Development Finance Authority Revenue, East St. Louis,
6.875% due 11/15/05 1,148,390
645,000 Ba2* Indianapolis, IN Economic Development Refunding &
Improvement Revenue, National Benevolent Association,
6.900% due 10/1/04 619,916
1,690,000 AAA Monroe, LA Sales & Use Tax Revenue, FGIC-Insured,
5.625% due 7/1/25 1,894,811
60,000 NR Orlando, FL Special Assessment Revenue, (Conroy Road
Interchange Project), Series B, 5.250% due 5/1/05 60,650
See Notes to Financial Statements.
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8 2003 Semi-Annual Report to Shareholders
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Schedule of Investments (unaudited) (continued) June 30, 2003
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FACE
AMOUNT RATING(a) SECURITY VALUE
==========================================================================================================
Miscellaneous -- 4.7% (continued)
$ 805,000 NR Orlando, FL Urban Community Development District, Capital
Improvement, Series B, 6.400% due 5/1/10 $ 834,584
1,500,000 BBB+ Puerto Rico Housing Bank & Finance Agency,
7.500% due 12/1/06 1,656,510
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9,096,720
- ----------------------------------------------------------------------------------------------------------
Pollution Control -- 3.5%
2,000,000 Aa3* Brazos River, TX Harbor Navigation District, Brazoria County,
PCR, (BASF Corp. Project), 6.750% due 2/1/10 (c) 2,420,720
1,000,000 AAA Monroe County, MI PCR, (Detroit Edison Co. Project),
Series A, AMBAC-Insured, 6.350% due 12/1/04 (b) 1,071,980
2,000,000 BBB- Ohio State Air Quality Development Authority Revenue,
Pollution Control, (Cleveland Electric Illuminating Co.
Project), 6.000% due 12/1/13 (c) 2,100,760
1,000,000 BB+ Warren, AR Solid Waste Disposal Revenue, (Potlatch Corp.
Project), 7.000% due 4/1/12 1,022,780
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6,616,240
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Public Facilities -- 1.3%
De Kalb County, IN Industrial Redevelopment Authority
Revenue, (Mini-Mill LOC Public Improvement Project A):
1,000,000 A- 6.250% due 1/15/08 1,082,930
1,350,000 A- 6.250% due 1/15/09 1,455,948
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2,538,878
- ----------------------------------------------------------------------------------------------------------
Transportation -- 11.4%
2,000,000 AAA Atlanta, GA Metropolitan Rapid Transit Authority, Sales Tax
Revenue, Series E, 7.000% due 7/1/11 2,516,560
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) 2,070,588
1,500,000 AAA Connecticut State Special Tax Obligation Revenue,
FSA-Insured, FLAIRS, 9.576% due 10/1/09 (d) 1,948,290
5,000,000 B- Connector 2000 Association, SC Toll Road Revenue, Capital
Appreciation, Series B, zero coupon due 1/1/15 1,078,450
2,000,000 AAA Dallas, TX Area Rapid Transit Sales Tax Revenue, Sr. Lien,
AMBAC-Insured, 5.375% due 12/1/16 (c) 2,244,800
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 (b) 900,255
2,035,000 AAA Dallas/Fort Worth, TX Regional Airport Revenue Refunding,
Series A, FGIC-Insured, 7.750% due 11/1/03 (c) 2,079,790
1,855,000 AAA Delaware River Port Authority of Pennsylvania & New Jersey,
FSA-Insured, FLAIRS, 9.775% due 1/1/10 (d) 2,416,768
1,000,000 Aaa* Harrisburg, PA Parking Authority, Parking Revenue,
FSA-Insured, 5.500% due 5/15/20 (c) 1,125,300
285,000 AAA Lee County, FL Southwest Florida Regional Airport Revenue,
MBIA-Insured, 8.625% due 10/1/09 345,771
290,000 AAA Metropolitan Nashville, TN Airport Authority Tennessee Airport
Revenue, MBIA-Insured, 7.500% due 7/1/05 306,617
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Intermediate Muni Fund, Inc. 9
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 2003
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
==========================================================================================================
Transportation -- 11.4% (continued)
$ 1,000,000 AA+ Oregon State, Highway User Tax Revenue,
5.500% due 11/15/14 $ 1,175,980
4,625,000 BBB-++ Pocahontas Parkway Association, VA Toll Road Revenue,
Capital Appreciation, Series B, zero coupon due 8/15/19 1,201,621
170,000 AAA San Francisco, CA Airport Improvement Corp. Lease Revenue,
(United Airlines Inc.), 8.000% due 7/1/13 215,563
595,000 NR Sanford, FL Airport Authority IDR, (Central Florida Terminals
Inc. Project A), 7.500% due 5/1/06 (b) 598,201
875,000 AAA St. Louis, MO Airport Revenue, 5.250% due 7/1/12 992,285
Tulsa, OK Municipal Airport Revenue Refunding, Series B:
500,000 B- 6.000% due 6/1/35 (b) 340,105
500,000 B- 5.650% due 12/1/35 (b) 340,116
- ----------------------------------------------------------------------------------------------------------
21,897,060
- ----------------------------------------------------------------------------------------------------------
Utilities -- 5.0%
1,000,000 A2* Burlington, KS Environmental Improvement Revenue, (Kansas
City Power & Light Project), 4.750% due 9/1/15 (c) 1,056,130
2,000,000 AAA Energy Northwest Washington Electric Revenue, (Project
No. 3), Series A, FSA-Insured, 5.500% due 7/1/18 (c) 2,254,700
500,000 A Georgia Municipal Electric Authority, Power System Revenue,
Series X, 6.500% due 1/1/12 599,355
1,000,000 AAA Griffin, GA Combined Public Utility Revenue, AMBAC-Insured,
5.000% due 1/1/21 1,072,350
1,000,000 BB+++ Klamath Falls, OR Electric Revenue Refunding, Sr. Lien,
5.750% due 1/1/13 1,009,680
1,000,000 BBB+++ North Carolina Eastern Municipal Power Agency, Power
System Revenue, Series D, 6.450% due 1/1/14 1,139,260
1,085,000 AAA North Carolina Municipal Power Agency No. 1, Catawba
Electricity Revenue, 10.500% due 1/1/10 1,413,636
Washington State Public Power Supply System, (Nuclear
Project No. 1), Series C:
980,000 Aa1* 7.750% due 7/1/03 (e) 980,000
20,000 Aa1* Unrefunded balance, 7.750% due 7/1/03 20,000
- ----------------------------------------------------------------------------------------------------------
9,545,111
- ----------------------------------------------------------------------------------------------------------
Water and Sewer -- 13.5%
855,000 AAA Boston, MA Water & Sewer Community Revenue, (Escrowed
with state and local government securities),
10.875% due 1/1/09 1,094,562
1,445,000 AA- Charleston, SC Waterworks & Sewer Revenue,
5.250% due 1/1/16 1,611,450
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) 2,387,840
1,370,000 AAA Cleveland, OH Waterworks Revenue, Series K, FGIC-Insured,
5.250% due 1/1/21 1,488,190
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 2003 Semi-Annual Report to Shareholders
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) June 30, 2003
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
==========================================================================================================
Water and Sewer -- 13.5% (continued)
$ 1,000,000 AAA El Paso, TX Water and Sewer Revenue Refunding and
Improvement, Series A, FSA-Insured, 6.000% due 3/1/15 $ 1,190,290
2,000,000 AA+++ Fort Worth, TX Water and Sewer Revenue,
5.625% due 2/15/17 (c) 2,280,180
1,000,000 AAA Gainesville, GA Water & Sewer Revenue, FSA-Insured,
5.375% due 11/15/20 1,104,390
660,000 AAA Jackson, TN Water and Sewer Revenue, 7.200% due 7/1/12 793,558
Ohio State Water Development Authority Revenue:
2,970,000 AAA 9.375% due 12/1/10 (c)(h) 3,678,791
620,000 AAA Safe Water, Series III, 9.000% due 12/1/10 726,169
2,000,000 AAA Philadelphia, PA Water & Wastewater Revenue, Series B,
FGIC-Insured, 5.250% due 11/1/14 (c) 2,293,540
2,750,000 AAA Phoenix, AZ Water Revenue, FGIC-Insured, 5.500% due 7/1/14 3,212,853
1,765,000 AAA Pueblo, CO Bridge Waterworks, Water Revenue Improvement,
Series A, FSA-Insured, 6.000% due 11/1/14 (c) 2,101,955
210,000 AAA Ringwood Borough, NJ Sewer Authority Special Obligation,
9.875% due 7/1/13 275,276
1,485,000 Aaa* Spanish Fork City, UT Water Revenue, FSA-Insured,
5.500% due 6/1/16 1,695,974
- ----------------------------------------------------------------------------------------------------------
25,935,018
- ----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100.0%
(Cost -- $181,311,384**) $191,812,898
==========================================================================================================
(a) All ratings are by Standard & Poor's Ratings Service, except for those
identified by an asterisk (*), which are rated by Moody's Investors
Service and those identified by a double dagger (++), which are rated by
Fitch Ratings.
(b) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(c) All or a portion of this security is held as collateral for open futures
contracts commitments (See Note 5).
(d) Inverse floating rate security-coupon varies inversely with level of
short-term tax-exempt interest rates.
(e) 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.
(f) 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.
(g) Security is currently in default.
(h) All or a portion of this security is segregated for open futures contracts
commitments (See Note 5).
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 12 and 13 for definitions of ratings and abbreviations.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Intermediate Muni Fund, Inc. 11
- --------------------------------------------------------------------------------
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 balance, as
CCC and CC -- 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.
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.
- --------------------------------------------------------------------------------
12 2003 Semi-Annual Report to Shareholders
- --------------------------------------------------------------------------------
Bond Ratings (unaudited) (continued)
- --------------------------------------------------------------------------------
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 or
Moody's.
- --------------------------------------------------------------------------------
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 -- AMBAC Indemnity Corporation
CGIC -- Capital Guaranty Insurance Company
CONNIE -- College Construction Loan
LEE -- 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 on the schedule of investments.
- --------------------------------------------------------------------------------
Intermediate Muni Fund, Inc. 13
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) June 30, 2003
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $181,311,384) $ 191,812,898
Interest receivable 3,479,154
Receivable for securities sold 720,248
- -----------------------------------------------------------------------------------------
Total Assets 196,012,300
- -----------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 1,006,924
Payable to broker - variation margin 257,813
Management fee payable 96,496
Bank overdraft 89,873
Dividends payable 37,058
Dividends payable to Municipal Auction Rate
Cumulative Preferred Stockholders 9,980
Accrued expenses 82,180
- -----------------------------------------------------------------------------------------
Total Liabilities 1,580,324
- -----------------------------------------------------------------------------------------
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 $ 144,431,976
=========================================================================================
NET ASSETS:
Par value of capital shares $ 14,005
Capital paid in excess of par value 141,233,797
Undistributed net investment income 1,086,564
Accumulated net realized loss from investment transactions
and futures contracts (8,836,912)
Net unrealized appreciation of investments and futures contracts 10,934,522
- -----------------------------------------------------------------------------------------
Total Net Assets
(Equivalent to $10.31 per share on 14,004,750 capital shares of
$0.001 par value outstanding; 100,000,000 capital shares authorized) $ 144,431,976
=========================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 2003 Semi-Annual Report to Shareholders
- --------------------------------------------------------------------------------
Statement of Operations (unaudited)
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2003
INVESTMENT INCOME:
Interest $ 5,485,458
- --------------------------------------------------------------------------------
EXPENSES:
Management fee (Note 3) 576,915
Audit and legal 60,648
Shareholder servicing fees 29,632
Custody 21,631
Shareholder communications 16,810
Directors' fees 2,145
Other 86,284
- --------------------------------------------------------------------------------
Total Expenses 794,065
- --------------------------------------------------------------------------------
Net Investment Income 4,691,393
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FUTURES CONTRACTS (NOTES 4 AND 5):
Realized Gain (Loss) From:
Investment transactions 6,233
Futures contracts (3,016,028)
- --------------------------------------------------------------------------------
Net Realized Loss (3,009,795)
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments
and Futures Contracts:
Beginning of period 7,503,524
End of period 10,934,522
- --------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 3,430,998
- --------------------------------------------------------------------------------
Net Gain on Investments and Futures Contracts 421,203
- --------------------------------------------------------------------------------
Dividends Paid to Municipal Auction Rate Cumulative Preferred
Stockholders From Net Investment Income (279,291)
- --------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 4,833,305
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Intermediate Muni Fund, Inc. 15
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 2003 (unaudited)
and the Year Ended December 31, 2002
2003 2002
=================================================================================================
OPERATIONS:
Net investment income $ 4,691,393 $ 9,469,970
Net realized loss (3,009,795) (3,311,384)
Increase in net unrealized appreciation 3,430,998 4,296,851
Dividends paid to Municipal Auction Rate Cumulative
Preferred Stockholders from net investment income (279,291) (664,828)
- -------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations 4,833,305 9,790,609
- -------------------------------------------------------------------------------------------------
DISTRIBUTIONS PAID TO SHAREHOLDERS
FROM (NOTE 2):
Net investment income (4,285,453) (8,087,762)
- -------------------------------------------------------------------------------------------------
Decrease in Net Assets From Distributions
Paid to Common Stock Shareholders (4,285,453) (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 in Net Assets 547,852 924,116
NET ASSETS:
Beginning of period 143,884,124 142,960,008
- -------------------------------------------------------------------------------------------------
End of period* $ 144,431,976 $ 143,884,124
=================================================================================================
* Includes undistributed net investment income of: $ 1,086,564 $ 959,915
=================================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 2003 Semi-Annual Report to Shareholders
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
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 market 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) 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; (h) 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 to shareholders of funds legally available to
shareholders; capital gains distributions, if any, are taxable to shareholders,
and are declared and paid at least annually; (i) the character of income and
gains to be distributed are determined in accordance with income tax regulations
which may differ from accounting principles generally accepted in the United
States of America; (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
resulting from operations when financial statements are prepared. Changes in the
economic environment, financial markets and any other parameters used in
determining these estimates could cause actual results to differ.
- --------------------------------------------------------------------------------
Intermediate Muni Fund, Inc. 17
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
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.
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 fee calculated at the 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 six months ended June 30, 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 $15,270,556
- --------------------------------------------------------------------------------
Sales 15,443,080
================================================================================
At June 30, 2003, aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $ 13,238,153
Gross unrealized depreciation (2,736,639)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 10,501,514
================================================================================
- --------------------------------------------------------------------------------
18 2003 Semi-Annual Report to Shareholders
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
5. Futures Contracts
Securities or cash equal to the initial margin amount are either deposited with
the broker or segregated by the custodian upon entering into the futures
contract. During the period the futures contract is open, changes in the value
of the contract are recognized as unrealized gains or losses by "marking to
market" on a daily basis to reflect the market value of the contract at the end
of each day's trading. Variation margin payments are made or received and
recognized as assets due from or liabilities due to broker, depending upon
whether unrealized gains or losses are incurred. When the contract is closed,
the Fund records a realized gain or loss equal to the difference between the
proceeds from (or cost of) the closing transactions and the Fund's basis in the
contract. The Fund enters into such contracts typically to hedge a portion of
its portfolio. The Fund bears the market risk that arises from changes in the
value of the financial instruments and securities indices.
At June 30, 2003, the Fund had the following open futures contracts:
Number of Basis Market Unrealized
Contracts Expiration Value Value Gain
==========================================================================================================
To Sell:
U.S. 10 Year Treasury Note 375 9/03 $44,436,914 $44,003,906 $433,008
==========================================================================================================
6. Municipal Auction Rate Cumulative Preferred Stock
The underwriting discount of $500,000 and offering expenses of $278,731
associated with the Municipal Auction Rate Cumulative Preferred Stock ("ARCPS")
offering were recorded as a reduction of the capital paid in excess of par value
of common stock. 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 0.90%-1.30% for the six months ended June 30, 2003.
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 $25,000 per share plus accumulated
and unpaid dividends. ARCPS have a liquidation preference of $25,000 per share
plus accumulated and unpaid dividends.
- --------------------------------------------------------------------------------
Intermediate Muni Fund, Inc. 19
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
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.
Additionally, failure to meet the foregoing asset coverage requirements would
restrict the Fund's ability to pay dividends.
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 six months ended
June 30, 2003, CGM earned $62,058 as the broker/dealer.
- --------------------------------------------------------------------------------
20 2003 Semi-Annual Report to Shareholders
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year ended December 31,
unless otherwise noted:
2003(1) 2002 2001 2000 1999 1998
===========================================================================================================================
Net Asset Value,
Beginning of Period $ 10.27 $ 10.21 $ 10.20 $ 9.89 $ 10.61 $ 10.64
- ---------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income(2) 0.33 0.68 0.56 0.55 0.53 0.55
Net realized and unrealized
gain (loss)(2) 0.04 0.07 -- 0.28 (0.71) 0.01
Dividends paid to Municipal
Auction Rate Cumulative
Preferred Stockholders from
net investment income (0.02) (0.05) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.35 0.70 0.56 0.83 (0.18) 0.56
- ---------------------------------------------------------------------------------------------------------------------------
Gains From Repurchase of
Treasury Stock -- -- 0.00* 0.02 -- --
- ---------------------------------------------------------------------------------------------------------------------------
Underwriting Commission and
Expenses of Issuance of
Municipal Auction Rate
Cumulative Preferred Stock -- (0.06) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Distributions Paid To Common
Stock Shareholders From:
Net investment income (0.31) (0.58) (0.55) (0.54) (0.53) (0.55)
Net realized gains -- -- -- -- (0.01) (0.04)
- ---------------------------------------------------------------------------------------------------------------------------
Total Distributions Paid to
Common Stock Shareholders (0.31) (0.58) (0.55) (0.54) (0.54) (0.59)
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 10.31 $ 10.27 $ 10.21 $ 10.20 $ 9.89 $ 10.61
- ---------------------------------------------------------------------------------------------------------------------------
Total Return,
Based on Market Price(3) 7.72%++ 4.03% 17.17% 11.90% (17.10)% 7.05%
- ---------------------------------------------------------------------------------------------------------------------------
Total Return,
Based on Net Asset Value(3) 3.59%++ 6.73% 6.01% 9.68% (1.39)% 5.50%
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets,
End of Period (millions) $ 144 $ 144 $ 143 $ 143 $ 83 $ 89
- ---------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Intermediate Muni Fund, Inc. 21
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2003(1) 2002 2001 2000 1999 1998
===========================================================================================================================
Ratios to Average Net Assets
Based on Common Shares
Outstanding(4):
Net investment income(2) 6.57%+ 6.59% 5.35% 5.47% 5.17% 5.10%
Total expenses 1.11+ 1.08 0.80 0.78 0.77 0.76
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 8% 49% 36% 45% .54% .42%
- ---------------------------------------------------------------------------------------------------------------------------
Market Price, End of Period $ 9.98 $ 9.56 $ 9.75 $ 8.81 $ 8.375 $ 10.688
- ---------------------------------------------------------------------------------------------------------------------------
Municipal Auction Rate
Cumulative Preferred Stock(5):
Total Amount
Outstanding (000s) $ 50,000 $ 50,000 -- -- -- --
Asset Coverage Per Share 97,216 96,942 -- -- -- --
Involuntary Liquidating
Preference Per Share(6) 25,000 25,000 -- -- -- --
Average Market Value
Per Share(6) 25,000 25,000 -- -- -- --
===========================================================================================================================
(1) For the six months ended June 30, 2003 (unaudited).
(2) 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 per share was less than $0.01.
(3) The total return calculation assumes that dividends are reinvested in
accordance with the Fund's dividend reinvestment plan.
(4) Calculated on basis of average net assets of common shareholders. Ratios
do not reflect the effect of dividend payments to preferred shareholders.
(5) On January 28, 2002, the Fund issued 2,000 shares of Series M, of
Municipal Auction Rate Cumulative Preferred Stock at $25,000 a share.
(6) Excludes accumulated and unpaid dividends.
* Amount represents less than $0.01 per share.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
22 2003 Semi-Annual Report to Shareholders
- --------------------------------------------------------------------------------
Financial Data (unaudited)
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each period:
AMEX Net Asset Dividends Reinvestment
Period Closing Price* Value* Paid Price
================================================================================
2001
January $ 9.69 $10.24 $0.046 $ 9.52
February 9.40 10.24 0.046 9.48
March 9.55 10.28 0.046 9.44
April 9.37 10.18 0.046 9.42
May 9.60 10.24 0.046 9.63
June 9.58 10.26 0.046 9.60
July 9.62 10.36 0.046 9.71
August 9.73 10.47 0.046 9.72
September 9.65 10.40 0.046 9.79
October 9.72 10.47 0.046 9.80
November 9.65 10.36 0.046 9.48
December 9.75 10.21 0.046 9.59
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 10.17 0.051 9.47
February 9.50 10.22 0.051 9.60
March 9.40 10.12 0.051 9.53
April 9.65 10.20 0.051 9.70
May 9.85 10.41 0.051 10.01
June 9.98 10.31 0.051 10.03
================================================================================
* On the last business day of the month.
- --------------------------------------------------------------------------------
Intermediate Muni Fund, Inc. 23
- --------------------------------------------------------------------------------
Additional Shareholder Information (unaudited)
- --------------------------------------------------------------------------------
Results of Annual Meeting of Shareholders
The Annual Meeting of Shareholders of Intermediate Muni Fund, Inc. was held on
April 23, 2003, for the purpose of considering and voting upon the election of
three Directors, each for a three year term. The following table provides
information concerning the matters voted upon at the Meeting:
1. Election of Directors*
Nominees Votes For Votes Withheld
- -------- --------- --------------
Allan J. Bloostein 13,003,041.173 29,861.045
R. Jay Gerken 12,920,209.173 112,693.045
Robert E. Hanson Jr. 13,008,938.173 23,964.045
- ----------
* The following Directors, representing the balance of the Board of
Directors, continue to serve as Directors: Lee Abraham, Jane F. Dasher,
Donald R. Foley, Paul Hardin, Roderick C. Rasmussen and John P. Toolan.
- --------------------------------------------------------------------------------
24 2003 Semi-Annual Report to Shareholders
- --------------------------------------------------------------------------------
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 Global Fund Services ("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
- --------------------------------------------------------------------------------
Intermediate Muni Fund, Inc. 25
- --------------------------------------------------------------------------------
Dividend Reinvestment Plan (unaudited) (continued)
- --------------------------------------------------------------------------------
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 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 Global Fund Services, P.O. Box 8030, Boston,
Massachusetts 02266-8030 or by telephone at (800) 331-1710.
- --------------------------------------------------------------------------------
26 2003 Semi-Annual Report to Shareholders
- --------------------------------------------------------------------------------
INTERNEDIATE
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
Lewis E. Daidone
Senior Vice President and
Chief Administrative Officer
Richard L. Peteka
Chief Financial Officer
and Treasurer
Peter M. Coffey
Vice President
Kaprel Ozsolak
Controller
Christina T. Sydor
Secretary
INVESTMENT MANAGER
Smith Barney Fund Management LLC
CUSTODIAN
State Street Bank and Trust Company
SHAREHOLDER
SERVICING AGENT
PFPC Global Fund Services
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
FD0633 8/03
03-4962
SBI
Listed on the American
Stock Exchange
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal
financial officer have concluded that the registrant's disclosure
controls and procedures (as defined in Rule 30a-2(c) under the
Investment Company Act of 1940, as amended) are effective based
on their evaluation of the disclosure controls and procedures as
of a date within 90 days of the filing date of this document.
(b) In the last 90 days, there have been no significant changes in
the Registrant's internal controls or in other factors that could
significantly affect these controls.
ITEM 10. EXHIBITS.
(a) Not applicable.
(b) Attached hereto.
Exhibit 99.CERT Certifications pursuant to section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 99.906 CERT 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: August 28, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ R. Jay Gerken
(R. Jay Gerken)
Chief Executive Officer of
Intermediate Muni Fund, Inc.
Date: August 28, 2003
By: /s/ Richard Peteka
(Richard Peteka)
Chief Financial Officer of
Intermediate Muni Fund, Inc.
Date: August 28, 2003