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) 725-6666

Date of fiscal year end: December 31
Date of reporting period: December 31, 2004

ITEM 1. REPORT TO STOCKHOLDERS.

        The Annual Report to Stockholders is filed herewith.


 


 

 

WHAT’S INSIDE

 

Letter from the Chairman

1

Manager Overview

3

Fund at a Glance

8

Schedule of Investments

9

Statement of Assets and Liabilities

21

Statement of Operations

22

Statements of Changes in Net Assets

23

Financial Highlights

24

Notes to Financial Statements

26

Report of Independent Registered Public Accounting Firm

32

Financial Data

33

Additional Information

34

Important Tax Information

38

Dividend Reinvestment Plan

39

 



LETTER FROM THE CHAIRMAN

 

R. JAY GERKEN, CFA

Chairman, President and
Chief Executive Officer

 

Dear Shareholder,

 

We are pleased to present the annual report of the Intermediate Muni Fund, Inc. for the 12-month period ended December 31, 2004.

 

Despite sharply rising oil prices, threats of terrorism, geopolitical concerns and uncertainties surrounding the Presidential election, the U.S. economy continued to expand during the reporting period. Following a robust 4.5% gain in the first quarter of 2004, gross domestic product (“GDP”)i growth was 3.3% in the second quarter of the year. This decline was largely attributed to higher energy prices. However, third quarter 2004 GDP growth rose to a solid 4.0%. While fourth quarter GDP figures have not yet been released, continued growth is expected.

 

Given the overall strength of the economy, Federal Reserve Board (“Fed”)ii monetary policy was seen as highly accommodative and expectations were that it would start raising rates to ward off the threat of inflation. As expected, the Fed raised its target for the federal funds rateiii by 0.25% to 1.25% at the end of June 2004 — the first rate increase in four years. The Fed again raised rates in 0.25% increments during August, September, November, and December, bringing the target for the federal funds rate to 2.25%. After the end of the fund’s reporting period, at their February meeting, the Fed once again raised the target rate by 0.25% to 2.50%. Regardless of the economic expansion and higher interest rates, the overall bond market generated positive returns during the fiscal year.

 

Please read on for a more detailed look at prevailing economic and market conditions during the fund’s fiscal year and to learn how those conditions have affected fund performance.

 

Information About Your Fund

 

As you may be aware, several issues in the mutual fund industry have recently 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.



Intermediate Muni Fund, Inc.

1



 

As previously disclosed by Citigroup, the Staff of the Securities and Exchange Commission (“SEC”) has notified Citigroup Asset Management (“CAM”) and Citicorp Trust Bank (“CTB”), an affiliate of CAM, that the Staff is considering recommending a civil injunctive action and/or an administrative proceeding against CAM, CTB, the former CEO of CAM, two former employees and a current employee of CAM, relating to the creation, operation and fees of an internal transfer agent unit that serves various CAM-managed funds. Citigroup is cooperating with the SEC and will seek to resolve this matter in discussion with the SEC Staff. Although there can be no assurance, Citigroup does not believe that this matter will have a material adverse effect on the fund. For further information, please see the “Additional Information” note in the Notes to the Financial Statements included in this report.

 

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,

R. Jay Gerken, CFA
Chairman, President and Chief Executive Officer

 

February 3, 2005



2

2004 Annual Report



 

MANAGER OVERVIEW

 

PETER M. COFFEY

Vice President
and Investment Officer

 

Performance Review

 

For the 12 months ended December 31, 2004, the Intermediate Muni Fund, Inc. returned -2.19%, based on its American Stock Exchange (“AMEX”) market price and 3.99% based on its net asset value (“NAV”)iv per share. In comparison, the Lehman Brothers Municipal Bond Index returned 4.48% and its Lipper General Muni Debt closed-end funds category averagev was 6.63% over the same time frame. Please note that Lipper performance returns are based on each fund’s NAV.

 

During the 12-month period, the fund distributed dividends to shareholders totaling $0.612 per share. The performance table shows the fund’s 30-day SEC yield as well as its 12-month total return based on its NAV and market price as of December 31, 2004. Past performance is no guarantee of future results. The fund’s yields will vary.

 

FUND PERFORMANCE

AS OF DECEMBER 31, 2004

(unaudited)

 

Price

30-Day

 

12 Month

 

Per Share

SEC Yield

 

Total Return

 

$

10.02 (NAV)

5.09%

  3.99%

$

    9.36 (AMEX)

5.40%

–2.19%

 

All figures represent past performance and are not a guarantee of future results. The fund’s yields will vary.

 

Market Overview

Municipal bonds traded in a fairly narrow range during the first two months of 2004. During this time, the economy grew at a more robust pace versus early 2003.vi Although labor market growthviilanguished throughout 2003 into the first quarter of this year, it rose significantly and remained strong in the early spring, and inflation picked up as well.viii

 

Total returns are based on changes in NAV or market price, respectively. Total returns assume the reinvestment of all dividends and/or capital gains distributions, if any, in additional shares. The “SEC yield” is a return figure often quoted by bond and other fixed-income mutual funds. This quotation is based on the most recent 30-day (or one-month) period covered by the fund’s filings with the SEC. The yield figure reflects the dividends and interest earned during the period after deduction of the fund’s expenses for the period. These yields are as of December 31, 2004 and are subject to change.



Intermediate Muni Fund, Inc.

3




After an extended period of monetary easing, the Federal Reserve’s monetary policymaking committee raised its federal funds rate target from a four-decade low of 1.00% to 1.25% at the end of June — the Fed’ s first hike in four years. The increase marked a significant reversal from the Fed’s monetary policy position from June 2003, when it last slashed its rate target following a long series of accommodative rate cuts. The rate hike was widely anticipated due to comments from the Fed regarding the momentum behind the economy and signals that it was prepared to push rates higher from their near-historic lows. As a result, bond prices declined and yields rose sharply in April before prices stabilized somewhat in the early summer.

 

The Fed again raised its fed funds target by 0.25% in August and to 1.75% in September. Given that bond prices had already factored in rate hikes to a significant extent, and coupling this with a lack of inflationary pressures, bond prices held up and actually rose over the third quarter. In September and October, the bond market benefited from falling stock and rising oil prices, which encouraged investors to reallocate capital into fixed-income securities.

 

Yields on bonds rose as their prices dropped in reaction to an employment report issued in November that yielded surprisingly robust labor market results.vii The Fed subsequently raised its fed funds rate target to 2.00% on November 10th and then again to 2.25% on December 14th. After the end of the fund’s reporting period, at their February meeting, the Fed once again raised the target rate by 0.25% to 2.50%.

 

Factors that Influenced Fund Performance

 

During the reporting period, yields on shorter-term municipal securities with maturities from one to seven years rose substantially, with the largest increase in issues with one to three year maturities. At the same time, yields on municipal securities in the 10-year area and those with maturities of 25 to 30 years were up only slightly. Surprisingly, yields on municipals with 15-20 year maturities declined slightly during the year.

 

Looking at the fiscal year as a whole, the fund’s results were enhanced by the strong performance of its exposure to the hospital sector. In this area, certain securities appreciated after their advance refunding. Generally speaking, an existing bond cannot be prematurely retired, or called, except on specific dates. However, through advance refunding, a security can be refinanced as long as the proceeds of the new bonds are held in reserve to pay the interest and principal on the old bonds until they become callable. In the case of the fund’s holdings in this area, the proceeds of the advance refunding are being held in escrow in high quality U.S. government securities. Another of the fund’s hospital securities also aided returns, as market perceptions of its underlying balance sheet improved.



4

2004 Annual Report



 

Other areas contributing to performance were select fund holdings in the transportation sector and its toll road zero coupon bonds.

 

Conversely, several of the fund’s holdings in lifecare and multi-family housing (low income) sectors detracted from results. Our escrow-to-maturity bonds with very short average lives due to operating sinking funds, were a drag on performance as short-term interest rates rose, even as longer-term rates declined. Finally a short-position in U.S.Treasury futures, designed to hedge against a possible rise in rates, hurt results as yields on intermediate- and long-term bonds declined.

 

Looking for Additional Information?

 

The fund is traded under the symbol “SBI” and its closing market price is available in most newspapers under the AMEX listings. The daily NAV is available on-line 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 press release that can be found on most major financial websites 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.

 

Thank you for your investment in the Intermediate Muni Fund, Inc. As ever, we appreciate that you have chosen us to manage your assets and we remain focused on achieving the fund’s investment goals.

 

Sincerely.

Peter M. Coffey
Vice President
and Investment Officer

 

February 3, 2005



Intermediate Muni Fund, Inc.

5



 

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.

 

RISKS: Keep in mind the fund’s investments are subject to interest rate and credit risks. As interest rates rise, bond prices fall, reducing the value of the Fund’s share price. Lower-rated, higher yielding bonds, known as “junk bonds”, are subject to greater credit risk, including the risk of default, than higher-rated obligations. The fund may use derivatives, such as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially large impact on fund performance.

 

All index performance reflects no deduction for fees, expenses or taxes. Please note that an investor cannot invest directly in an index.

 

i Gross domestic product is the market value of goods and services produced by labor and property in a given country.
ii The Fed is responsible for the formulation of a policy designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments.
iii 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.
iv NAV is calculated by subtracting total liabilities and outstanding preferred stock from the closing value of all securities held by the fund (plus all other assets) and dividing the result (total net assets) by the total number of the common shares outstanding. The NAV fluctuates with changes in the market prices of securities in which the fund has invested. However, the price at which an investor may buy or sell shares of the fund is at the fund’s market price as determined by supply of and demand for the fund’s shares.
v Lipper, Inc. is a major independent mutual-fund tracking organization. Returns are based on the 12-month period ended December 31, 2004, including the reinvestment of dividends and capital gains, if any, calculated among the 65 funds in the fund’s Lipper category, and excluding sales charges.
vi Source: Commerce Department (Bureau of Economic Analysis). Refers to quarterly growth of GDP.
vii Source: Bureau of Labor Statistics based upon the growth of non-farm payroll jobs.
viii Sources: Lehman Brothers. Inflation data based upon Consumer Price Index/deflation data.


6

2004 Annual Report



 

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 39. To find out more detailed information about the Plan and about how you can participate, please call PFPC Inc. at (800) 331-1710.



Intermediate Muni Fund, Inc.

7



 



8

2004 Annual Report



 

Schedule of Investments

December 31, 2004

 

FACE

 

 

 

 

 

 

 

AMOUNT     RATING(a)

SECURITY

 

VALUE

Alabama — 2.8%

 

 

 

 

 

$

3,000,000

AAA

 

Alabama State Public School & College Authority Revenue,

 

 

 

 

 

 

5.125% due 11/1/15 (c)

$

3,216,720

 

334,127

AAA

 

Birmingham, AL Medical Clinic Board Revenue, Baptist

 

 

 

 

 

 

Medical Centers, 8.300% due 7/1/08 (d)

 

371,315

 

1,000,000

NR

 

Rainbow City, AL Special Health Care Facilities Financing

 

 

 

 

 

 

Authority, (Regency Pointe Inc.), Series B, 7.250% due 1/1/06

 

628,720

 

1,000,000

AAA

 

Saraland, AL GO, MBIA-Insured, 5.250% due 1/1/15

 

1,093,990

 

 

 

 

 

 

 

5,310,745

Alaska — 0.9%

 

 

 

 

 

 

1,000,000

NR

 

Alaska Industrial Development & Export Authority Revenue,

 

 

 

 

 

 

Williams Lynxs Alaska Cargoport, 8.000% due 5/1/23 (b)

 

1,054,880

 

500,000

AAA

 

Anchorage, AK GO, Refunding, FGIC-Insured,

 

 

 

 

 

 

6.000% due 10/1/14

 

593,740

 

 

 

 

 

 

 

1,648,620

Arizona — 1.2%

 

 

 

 

 

 

1,000,000

A2*

 

Arizona Educational Loan Marketing Corp., Educational Loan

 

 

 

 

 

 

Revenue, Sub-Series, 6.625% due 9/1/05 (b)

 

1,006,470

 

 

 

 

Maricopa County, AZ Hospital Revenue:

 

 

 

130,000

AAA

 

Samaritan Health Service, 7.625% due 1/1/08 (d)

 

137,587

 

794,000

AAA

 

St. Lukes Hospital Medical Center Project,

 

 

 

 

 

 

8.750% due 2/1/10 (d)

 

913,473

 

120,000

AAA

 

Pima County, AZ IDA, Single-Family Mortgage Revenue,

 

 

 

 

 

 

Series A, GNMA/FNMA/FHLMC-Collateralized,

 

 

 

 

 

 

7.100% due 11/1/29 (b)

 

125,206

 

 

 

 

 

 

 

2,182,736

Arkansas — 1.5%

 

 

 

 

 

 

1,500,000

BBB-

 

Arkansas State Development Finance Authority, Hospital

 

 

 

 

 

 

Revenue, Washington Regional Medical Center,

 

 

 

 

 

 

7.000% due 2/1/15

 

1,661,145

 

1,000,000

BB+

 

Warren, AR Solid Waste Disposal Revenue, (Potlatch Corp.

 

 

 

 

 

 

Project), 7.000% due 4/1/12 (b)

 

1,056,100

 

 

 

 

 

 

 

2,717,245

California — 5.4%

 

 

 

 

 

 

1,500,000

NR

 

Barona Band of Mission Indians, CA, 8.250% due 1/1/20

 

1,613,610

 

3,000,000

AA-

 

California State Economic Recovery, Series A,

 

 

 

 

 

 

5.000% due 7/1/17 (c)

 

3,192,870

 

795,000

NR

 

California Statewide COP, Community Development Authority

 

 

 

 

 

 

Revenue Refunding, Hospital Triad Healthcare,

 

 

 

 

 

 

6.250% due 8/1/06 (d)

 

826,736

 

15,000

NR

 

Loma Linda, CA Community Hospital Corporation Revenue,

 

 

 

 

 

 

8.000% due 12/1/08 (d)

 

17,928

 

1,200,000

NR

 

Los Angeles, CA COP, Hollywood Presbyterian Medical Center,

 

 

 

 

 

 

9.625% due 7/1/13 (d)

 

1,545,360

 

500,000

NR

 

Los Angeles, CA School District, MBIA-Insured,

 

 

 

 

 

 

8.184% due 1/1/11 (e)

 

622,620

 

1,450,000

AAA

 

Morgan Hill, CA School District, FGIC-Insured,

 

 

 

 

 

 

5.750% due 8/1/17

 

 

1,667,877


See Notes to Financial Statements.



Intermediate Muni Fund, Inc.

9



 

Schedule of Investments (continued)

December 31, 2004

 

FACE

 

 

 

 

 

 

 

AMOUNT     RATING(a)

SECURITY

 

VALUE

California — 5.4% (continued)

 

 

 

$

395,000

AAA

San Francisco, CA Airport Improvement Corp. Lease Revenue,

 

 

 

 

 

 

United Airlines Inc., 8.000% due 7/1/13 (d)

 

$

483,279

 

130,000

AAA

San Leandro, CA Hospital Revenue, Vesper Memorial Hospital,

 

 

 

 

 

 

AMBAC-Insured, 11.500% due 5/1/11 (d)

 

 

168,151

 

 

 

 

 

 

 

10,138,431

Colorado — 4.2%

 

 

 

 

 

 

1,860,000

Aaa*

Broomfield, CO COP, Open Space Park & Recreational

 

 

 

 

 

 

Facilities, AMBAC-Insured, 5.500% due 12/1/20 (c)

 

2,051,635

 

 

 

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

 

 

1,041,500

 

500,000

Baa2*

 

    University Lab School Project, (Call 6/1/11 @ 100),

 

 

 

 

 

 

       6.125% due 6/1/21 (f)

 

 

586,925

 

1,350,000

AAA

 

University Lab School Project, 5.250% due 6/1/24

 

1,453,720

 

710,000

BBB

Denver, CO Health & Hospital Authority Healthcare Revenue,

 

 

 

 

 

 

Series A, 6.250% due 12/1/16

 

 

747,282

 

1,765,000

AAA

Pueblo, CO Bridge Waterworks, Water Revenue Improvement,

 

 

 

 

 

 

Series A, FSA-Insured, 6.000% due 11/1/14 (c)

 

2,038,716

 

 

 

 

 

 

 

7,919,778

Connecticut — 3.3%

 

 

 

 

 

 

2,000,000

AA

Connecticut State Health & Educational Facilities Authority

 

 

 

 

 

 

Revenue, Bristol Hospital, Series B, 5.500% due 7/1/21 (c)

 

2,212,820

 

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)

 

 

2,056,101

 

1,500,000

AAA

Connecticut State Special Tax Obligation Revenue,

 

 

 

 

 

 

FSA-Insured, FLAIRS, 8.184% due 10/1/09 (e)

 

1,842,540

 

 

 

 

 

 

 

6,111,461

District of Columbia — 0.7%

 

 

 

 

1,260,000

BBB

District of Columbia, Tobacco Settlement Financing Corp.,

 

 

 

 

 

 

6.250% due 5/15/24

 

 

1,252,881

Florida — 5.2%

 

 

 

 

 

 

235,000

AAA

Lee County, FL Southwest Florida Regional Airport Revenue,

 

 

 

 

 

 

MBIA-Insured, 8.625% due 10/1/09 (d)

 

 

271,973

 

1,625,000

NR

Lee Memorial Health System Board of Directors, FL Hospital

 

 

 

 

 

 

Revenue, FSA-Insured, FLAIRS, 8.888% due 4/1/10 (c)(e)

 

2,082,145

 

2,000,000

NR

Old Palm Community Development District FL, Palm Beach

 

 

 

 

 

 

Gardens, Series B, 5.375% due 5/1/14 (c)

 

 

2,009,600

 

 

 

Orange County, FL Health Facilities Authority Revenue:

 

 

 

 

 

 

Adventist Health Care:

 

 

 

 

1,500,000

A

 

6.250% due 11/15/24

 

 

1,672,095

 

545,000

AAA

 

  Southern Adventist Hospital Project,

 

 

 

 

 

 

 

8.750% due 10/1/09 (d)

 

 

632,707

 

785,000

NR

 

First Mortgage, Health Care Facilities, 8.750% due 7/1/11

 

789,592


See Notes to Financial Statements.



10

2004 Annual Report



 

Schedule of Investments (continued)

December 31, 2004

 

FACE

 

 

 

 

 

 

 

AMOUNT     RATING(a)

SECURITY

 

VALUE

Florida — 5.2% (continued)

 

 

 

 

$

595,000

NR

Sanford, FL Airport Authority IDR, (Central Florida

 

 

 

 

 

 

 

Terminals Inc. Project A), 7.500% due 5/1/06 (b)

$

491,934

 

 

1,800,000

Aaa*

Sarasota County Florida Public Hospital Board Revenue,

 

 

 

 

 

 

 

Sarasota Memorial Hospital, 2.250% due 7/1/37 (e)

 

1,800,000

 

 

 

 

 

 

 

 

9,750,046

 

Georgia — 5.5%

 

 

 

 

 

 

 

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

 

 

1,078,340

 

 

2,120,000

AAA

Atlanta, GA Metropolitan Rapid Transit Authority, Sales Tax

 

 

 

 

 

 

 

Revenue, Series E, 7.000% due 7/1/11 (c)(d)

 

 

2,525,747

 

 

650,000

A-

Chatham County, GA Hospital Authority Revenue, Memorial

 

 

 

 

 

 

 

Health Medical Center, Series A, 6.000% due 1/1/17

 

710,358

 

 

2,895,000

AAA

Fulton County, GA Development Authority Revenue, Georgia

 

 

 

 

 

 

 

Tech Athletic Association, 5.500% due 10/1/17 (c)

 

3,250,448

 

 

1,000,000

AAA

Gainesville, GA Water & Sewer Revenue, FSA-Insured,

 

 

 

 

 

 

 

5.375% due 11/15/20

 

 

1,089,880

 

 

500,000

A

Georgia Municipal Electric Authority, Power System Revenue,

 

 

 

 

 

 

 

Series X, 6.500% due 1/1/12

 

 

575,210

 

 

1,000,000

AAA

Griffin, GA Combined Public Utility Revenue, AMBAC-Insured,

 

 

 

 

 

 

 

5.000% due 1/1/21

 

 

1,069,770

 

 

 

 

 

 

 

 

10,299,753

 

Illinois — 5.5%

 

 

 

 

 

 

 

535,000

C*

Bourbonnais, IL IDR Refunding, (Kmart Corp. Project),

 

 

 

 

 

 

 

6.600% due 10/1/06 (g)

 

 

107,000

 

 

1,500,000

AAA

Chicago, IL O’Hare International Airport Revenue, Lien A-2,

 

 

 

 

 

 

 

5.750% due 1/1/19 (b)

 

 

1,671,390

 

 

1,080,000

AAA

Glendale Heights Illinois Hospital Revenue, (Glendale Heights

 

 

 

 

 

 

 

Project), Series B, 7.100% due 12/1/15 (d)

 

 

1,310,764

 

 

1,000,000

AA

Harvey, IL GO, Refunding, 6.700% due 2/1/09

 

 

1,012,880

 

 

 

 

Illinois Development Finance Authority Revenue:

 

 

 

 

 

500,000

BBB

 

Chicago Charter School Foundation Project A,

 

 

 

 

 

 

 

 

5.250% due 12/1/12

 

 

520,640

 

 

380,000

A

 

East St. Louis, 6.875% due 11/15/05

 

 

392,396

 

 

 

 

Illinois Health Facilities Authority Revenue:

 

 

 

 

 

530,000

AAA

 

Methodist Medical Center Project, 9.000% due 10/1/10 (d)

 

628,135

 

 

515,000

AAA

 

Ravenswood Hospital Medical Center Project,

 

 

 

 

 

 

 

 

7.250% due 8/1/06 (d)

 

 

540,807

 

 

1,300,000

BB+

Illinois Health Facilities Authority Revenue Refunding,

 

 

 

 

 

 

 

Friendship Village of Schaumburg, 6.650% due 12/1/06

 

1,308,255

 

 

1,310,000

AAA

Kane County, IL GO, FGIC-Insured, 5.500% due 1/1/14

 

1,499,269

 

 

 

 

Mount Vernon, IL Elderly Housing Corp., First Lien Revenue:

 

 

 

 

215,000

Ba3*

 

7.875% due 4/1/05

 

 

215,260

 

 

235,000

Ba3*

 

7.875% due 4/1/06

 

 

235,132

 

 

250,000

Ba3*

 

7.875% due 4/1/07

 

 

250,303

 

 

270,000

Ba3*

 

7.875% due 4/1/08

 

 

270,300

 


See Notes to Financial Statements.



Intermediate Muni Fund, Inc.

11



 

 

Schedule of Investments (continued)

December 31, 2004

 

FACE

 

 

 

 

 

 

 

AMOUNT     RATING(a)

SECURITY

 

VALUE

Illinois — 5.5% (continued)

 

 

 

 

$

1,000,000

Aaa*

 

Will County, IL School District No 122, New Lenox Series D,

 

 

 

 

 

 

 

 

zero coupon bond to yield 5.049% due 11/1/24

$

372,100

 

 

 

 

 

 

 

 

 

10,334,631

 

Indiana — 1.9%

 

 

 

 

 

 

 

 

800,000

AAA

 

Ball State, University of Indiana, University Revenue, Series K,

 

 

 

 

 

 

 

 

FGIC-Insured, 5.750% due 7/1/20

 

 

900,184

 

 

 

 

 

De Kalb County, IN Industrial Redevelopment Authority

 

 

 

 

 

 

 

 

Revenue, (Mini-Mill Local Public Improvement Project)

 

 

 

 

 

 

 

 

Series A:

 

 

 

 

 

1,000,000

A-

 

 

    (Call 1/15/05 @ 102), 6.250% due 1/15/08 (f)

 

1,021,200

 

 

1,350,000

A-

 

 

    (Call 1/15/05 @ 102), 6.250% due 1/15/09 (f)

 

1,378,620

 

 

285,000

AAA

 

Madison County, IN Industrial Hospital Authority Facilities

 

 

 

 

 

 

 

 

Revenue, (Community Hospital of Anderson Project),

 

 

 

 

 

 

 

 

9.250% due 1/1/10 (d)

 

 

330,135

 

 

 

 

 

 

 

 

 

3,630,139

 

Iowa — 1.2%

 

 

 

 

 

 

 

 

1,000,000

A1*

 

Iowa Finance Authority Health Care Facilities Revenue,

 

 

 

 

 

 

 

 

Genesis Medical Center, 6.250% due 7/1/20

 

 

1,083,770

 

 

935,000

AAA

 

Muscatine, IA Electric Revenue, 9.700% due 1/1/13 (d)

 

1,191,246

 

 

 

 

 

 

 

 

 

2,275,016

 

Kansas — 0.6%

 

 

 

 

 

 

 

 

1,000,000

BBB

 

Burlington, KS Environmental Improvement Revenue,

 

 

 

 

 

 

 

 

(Kansas City Power & Light Project), 4.750% due 9/1/15

 

1,046,450

 

Louisiana — 1.5%

 

 

 

 

 

 

 

 

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

 

678,542

 

 

150,000

AAA

 

Louisiana Public Facilities Authority Hospital Revenue

 

 

 

 

 

 

 

 

Refunding, (Southern Baptist Hospital Inc. Project),

 

 

 

 

 

 

 

 

8.000% due 5/15/12 (d)

 

 

177,407

 

 

1,690,000

AAA

 

Monroe, LA Sales & Use Tax Revenue, FGIC-Insured,

 

 

 

 

 

 

 

 

5.625% due 7/1/25

 

 

1,872,740

 

 

 

 

 

 

 

 

 

2,728,689

 

Maryland — 1.8%

 

 

 

 

 

 

 

 

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

 

 

1,181,600

 

 

2,000,000

AAA

 

Montgomery County, MD GO, Refunding,

 

 

 

 

 

 

 

 

 

5.250% due 10/1/14 (c)

 

 

2,230,600

 

 

 

 

 

 

 

 

 

3,412,200

 

Massachusetts — 6.6%

 

 

 

 

 

 

875,000

AAA

 

Boston, MA Water & Sewer Community Revenue, (Escrowed

 

 

 

 

 

 

 

 

to maturity with state and local government securities),

 

 

 

 

 

 

 

 

10.875% due 1/1/09 (d)

 

 

1,021,659

 

 

1,130,000

Aaa*

 

Lancaster, MA GO, AMBAC-Insured, 5.375% due 4/15/17

 

1,252,277

 

 

 

 

 

 

See Notes to Financial Statements.

 

 

 



12

2004 Annual Report



 

Schedule of Investments (continued)

December 31, 2004

 

FACE

 

 

 

 

 

 

 

AMOUNT     RATING(a)

SECURITY

 

VALUE

Massachusetts — 6.6% (continued)

 

 

 

 

 

 

 

 

Massachusetts State Development Finance Agency Revenue:

 

 

 

$

500,000

A

 

 

Curry College, Series A, ACA-Insured, 6.000% due 3/1/20

$

528,750

 

 

370,000

AAA

 

 

Series A, GNMA-Collateralized, 6.700% due 10/20/21

 

427,246

 

 

1,500,000

AAA

 

Massachusetts State GO, MBIA-Insured, FLAIRS,

 

 

 

 

 

 

 

 

8.411% due 5/1/09 (e)

 

 

1,937,550

 

 

 

 

 

Massachusetts State Health & Educational Facilities Authority

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

  Caritas Christi Obligation, Series B:

 

 

 

 

 

2,000,000

BBB

 

 

     6.500% due 7/1/12 (c)

 

 

2,237,080

 

 

835,000

BBB

 

 

     6.750% due 7/1/16

 

 

944,519

 

 

1,000,000

BBB-

 

 

  Milford-Whitinsville Regional Hospital, Series D,

 

 

 

 

 

 

 

 

     6.500% due 7/15/23

 

 

1,071,420

 

 

1,000,000

BBB

 

 

  Winchester Hospital, Series E, (Call 7/1/10 @ 101),

 

 

 

 

 

 

 

 

     6.750% due 7/1/30 (f)

 

 

1,186,190

 

 

1,160,000

AAA

 

Massachusetts State Industrial Finance Agency, Assisted

 

 

 

 

 

 

 

 

Living Facility Revenue, (Arbors at Amherst Project),

 

 

 

 

 

 

 

 

GNMA-Collateralized, 5.750% due 6/20/17 (b)

 

1,270,188

 

 

500,000

A3*

 

New England Education Loan Marketing Corp., MA Student

 

 

 

 

 

 

 

 

Loan Revenue, Sub-Issue H, 6.900% due 11/1/09 (b)

 

563,215

 

 

 

 

 

 

 

 

 

12,440,094

 

Michigan — 1.7%

 

 

 

 

 

 

 

 

1,000,000

AAA

 

Jenison, MI Public Schools, FGIC-Insured, 5.500% due 5/1/20

 

1,112,440

 

 

1,000,000

Aaa*

 

Memphis, MI GO, FGIC-Insured, 5.150% due 5/1/19

 

1,051,250

 

 

1,000,000

A

 

Michigan State Hospital Finance Authority Revenue, Oakwood

 

 

 

 

 

 

 

 

Obligated Group, 5.500% due 11/1/18

 

 

1,073,220

 

 

 

 

 

 

 

 

 

3,236,910

 

Missouri — 0.5%

 

 

 

 

 

 

 

 

405,000

NR

 

Lees Summit, MO IDA, Health Facilities Revenue, (John Knox

 

 

 

 

 

 

 

 

Village Project), 5.750% due 8/15/11

 

 

443,827

 

 

65,000

AAA

 

Missouri State Housing Development Community Mortgage

 

 

 

 

 

 

 

 

Revenue, Series C, GNMA/FNMA-Collateralized,

 

 

 

 

 

 

 

 

7.450% due 9/1/27 (b)

 

 

66,667

 

 

395,000

AAA

 

Nevada, MO, Waterworks System Revenue,

 

 

 

 

 

 

 

 

 

10.000% due 10/1/10 (d)

 

 

489,974

 

 

25,000

AAA

 

St. Louis County, MO Single-Family Mortgage Revenue,

 

 

 

 

 

 

 

 

MBIA-Insured, 6.750% due 4/1/10

 

 

25,998

 

 

 

 

 

 

 

 

 

1,026,466

 

Nebraska — 1.5%

 

 

 

 

 

 

 

 

 

 

 

NebHELP Inc. Revenue, NE, MBIA-Insured:

 

 

 

 

 

1,000,000

Aaa*

 

 

Jr. Sub.-Series A-6, 6.450% due 6/1/18 (b)

 

 

1,082,280

 

 

1,700,000

Aaa*

 

 

Sr. Sub.-Series A-5A, 6.200% due 6/1/13 (b)

 

 

1,817,606

 

 

 

 

 

 

 

 

 

2,899,886

 

Nevada — 0.7%

 

 

 

 

 

 

 

 

1,220,000

BBB+

 

Henderson, NV Health Care Facility Revenue, Catholic

 

 

 

 

 

 

 

 

Healthcare West, Series A, 6.200% due 7/1/09

 

1,356,799

 

 

 

 

 

 

See Notes to Financial Statements.

 

 

 



Intermediate Muni Fund, Inc.

13



 

Schedule of Investments (continued)

December 31, 2004

 

FACE

 

 

 

 

 

 

 

AMOUNT     RATING(a)

SECURITY

 

VALUE

New Hampshire — 0.6%

 

 

 

 

 

$

915,000

A-

New Hampshire Health & Educational Facilities Authority

 

 

 

 

 

 

 

Revenue, Covenant Healthcare System, 6.500% due 7/1/17

$

1,030,400

 

New Jersey — 0.1%

 

 

 

 

 

 

 

190,000

AAA

Ringwood Borough, NJ Sewer Authority Special Obligation,

 

 

 

 

 

 

 

9.875% due 7/1/13 (d)

 

 

244,272

 

New Mexico — 0.2%

 

 

 

 

 

 

 

335,000

NR

New Mexico Educational Assistance Foundation, Student

 

 

 

 

 

 

 

Loan Revenue, First Sub-Series A-2, 5.950% due 11/1/07 (b)

 

346,142

 

New York — 2.4%

 

 

 

 

 

 

 

1,015,000

NR

New York City, NY IDA, Civic Facilities Revenue Refunding,

 

 

 

 

 

 

 

(New York Community Hospital Brooklyn),

 

 

 

 

 

 

 

 

6.875% due 11/1/10

 

 

1,043,065

 

 

1,270,000

NR

Suffolk County, NY IDA, Civic Facility Revenue, (Eastern Long

 

 

 

 

 

 

 

Island Hospital Association Project A), 7.750% due 1/1/22

 

1,315,758

 

 

2,000,000

AA-

Tobacco Settlement Financing Corp., NY, Series C-1,

 

 

 

 

 

 

 

5.500% due 6/1/14 (c)

 

 

2,169,580

 

 

 

 

 

 

 

 

4,528,403

 

North Carolina — 1.6%

 

 

 

 

 

 

245,000

AAA

Charlotte, NC Mortgage Revenue Refunding, Double Oaks

 

 

 

 

 

 

 

Apartments, Series A, FHA-Insured, 7.300% due 11/15/07

 

261,104

 

 

1,000,000

BBB

North Carolina Eastern Municipal Power Agency, Power

 

 

 

 

 

 

 

Systems Revenue, Series D, 6.450% due 1/1/14

 

1,115,130

 

 

1,350,000

AAA

North Carolina Municipal Power Agency No. 1, Catawba

 

 

 

 

 

 

 

Electricity Revenue, 10.500% due 1/1/10 (d)

 

 

1,626,372

 

 

 

 

 

 

 

 

3,002,606

 

Ohio — 7.5%

 

 

 

 

 

 

 

1,370,000

AAA

Cleveland, OH Waterworks Revenue, Series K, FGIC-Insured,

 

 

 

 

 

 

 

(Call 1/1/12 @ 100), 5.250% due 1/1/21 (f)

 

 

1,540,975

 

 

1,520,000

BBB

Cuyahoga County, OH Hospital Facility Revenue, (Canton Inc.

 

 

 

 

 

 

 

Project), 6.750% due 1/1/10

 

 

1,683,446

 

 

1,855,000

Aaa*

Highland OH Local School District, FSA-Insured,

 

 

 

 

 

 

 

 

5.750% due 12/1/19 (c)

 

 

2,127,370

 

 

 

 

Lake County, OH Hospital Improvement Revenue:

 

 

 

 

255,000

AAA

 

Lake County Memorial Hospital Project,

 

 

 

 

 

 

 

 

8.625% due 11/1/09 (d)

 

 

295,777

 

 

135,000

   NR

 

Ridgecliff Hospital Project, 8.000% due 10/1/09 (d)

 

153,855

 

 

180,000

AAA

Lima, OH Hospital Revenue, St. Rita Hospital of Lima,

 

 

 

 

 

 

 

7.500% due 11/1/06 (d)

 

 

191,376

 

 

1,500,000

BB+

Ohio State Air Quality Development Authority Revenue,

 

 

 

 

 

 

 

Pollution Control, (Cleveland Electric Illuminating Co.

 

 

 

 

 

 

 

Project), 6.000% due 12/1/13

 

 

1,595,670

 

 

3,010,000

AA+

Ohio State GO, (Conservation Projects), Series A,

 

 

 

 

 

 

 

5.250% due 9/1/13 (c)

 

 

3,322,077

 

 

 

 

Ohio State Water Development Authority Revenue:

 

 

 

 

2,315,000

AAA

 

9.375% due 12/1/10 (d)(h)

 

 

2,725,357

 

 

290,000

AAA

 

Safe Water, Series III, 9.000% due 12/1/10 (d)

 

340,660

 

 

 

 

 

 

 

 

13,976,563

 

 

 

 

 

See Notes to Financial Statements.

 

 

 



14

2004 Annual Report



 

Schedule of Investments (continued)

December 31, 2004

 

FACE

 

 

 

 

 

 

 

AMOUNT     RATING(a)

SECURITY

 

VALUE

Oklahoma — 0.8%

 

 

 

 

 

 

$

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 (f)

 

$

61,767

 

 

390,000

BBB‡

Tulsa, OK Housing Assistance Corp., Multi-Family Revenue,

 

 

 

 

 

 

 

7.250% due 10/1/07 (b)

 

 

390,694

 

 

 

 

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)

 

481,975

 

 

500,000

B-

 

     5.650% due 12/1/35, mandatory tender 12/1/08 (b)

 

476,095

 

 

 

 

 

 

 

 

1,410,531

 

Oregon — 1.6%

 

 

 

 

 

 

 

1,200,000

BBB

Klamath Falls, OR Intercommunity Hospital Authority Revenue,

 

 

 

 

 

 

 

(Merle West Medical Center Project), 8.000% due 9/1/08 (d)

 

1,322,064

 

 

1,500,000

NR

Wasco County, OR Solid Waste Disposal Revenue, (Waste

 

 

 

 

 

 

 

Connections Inc. Project), 7.000% due 3/1/12 (b)

 

1,614,030

 

 

 

 

 

 

 

 

2,936,094

 

Pennsylvania — 6.9%

 

 

 

 

 

 

 

970,000

AAA

Conneaut, PA School District, AMBAC-Insured,

 

 

 

 

 

 

 

 

9.500% due 5/1/12 (d)

 

 

1,183,885

 

 

1,855,000

AAA

Delaware River, Port Authority of Pennsylvania & New Jersey,

 

 

 

 

 

 

 

FSA-Insured, FLAIRS, 8.398% due 1/1/10 (c)(e)

 

2,321,273

 

 

1,000,000

Aaa*

Harrisburg, PA Parking Authority, Parking Revenue,

 

 

 

 

 

 

 

FSA-Insured, 5.500% due 5/15/20

 

 

1,110,930

 

 

1,365,000

AA

Northampton County, PA IDA Revenue, (Moravian Hall

 

 

 

 

 

 

 

Square Project), 5.500% due 7/1/19

 

 

1,489,270

 

 

1,000,000

AAA

Pennsylvania State IDR, Economic Development Revenue,

 

 

 

 

 

 

 

AMBAC-Insured, 5.500% due 7/1/21

 

 

1,114,670

 

 

 

 

Philadelphia, PA Hospitals Authority Revenue:

 

 

 

 

 

125,000

AAA

 

Thomas Jefferson University Hospital, 7.000% due 7/1/08 (d)

 

135,705

 

 

535,000

Aaa*

 

United Hospital Inc. Project, (Call 7/1/05 @ 100),

 

 

 

 

 

 

 

10.875% due 7/1/08 (f)

 

 

557,903

 

 

1,000,000

AAA

Philadelphia, PA School District, Series A, FSA-Insured,

 

 

 

 

 

 

 

(Call 2/1/12 @ 100), 5.500% due 2/1/23 (f)

 

 

1,141,800

 

 

2,000,000

AAA

Philadelphia, PA Water & Wastewater Revenue, Series B,

 

 

 

 

 

 

 

FGIC-Insured, 5.250% due 11/1/14 (c)

 

 

2,236,140

 

 

1,350,000

AAA

Pittsburgh, PA School District, FSA-Insured,

 

 

 

 

 

 

 

 

5.375% due 9/1/16

 

 

1,551,407

 

 

 

 

 

 

 

 

12,842,983

 

Puerto Rico — 0.9%

 

 

 

 

 

 

 

1,500,000

BBB+

Puerto Rico Housing Bank & Finance Agency,

 

 

 

 

 

 

 

 

7.500% due 12/1/06

 

 

1,591,560

 

Rhode Island — 0.6%

 

 

 

 

 

 

 

1,000,000

AA

Central Falls, RI GO, 5.875% due 5/15/15

 

 

1,126,760

 


See Notes to Financial Statements.



Intermediate Muni Fund, Inc.

15



 

Schedule of Investments (continued)

December 31, 2004

 

 

FACE

 

 

 

 

 

 

 

 

AMOUNT     RATING(a)

SECURITY

 

VALUE

 

South Carolina — 4.3%

 

 

 

 

 

 

$

135,000

AAA

 

Anderson County, SC Hospital Facilities Revenue,

 

 

 

 

 

 

 

 

7.125% due 8/1/07 (d)

 

$

144,472

 

 

1,445,000

AA-

 

Charleston, SC Waterworks & Sewer Revenue, 

 

 

 

 

 

 

 

 

5.250% due 1/1/16

 

 

1,574,298

 

 

5,000,000

B-

 

Connector 2000 Association, SC Toll Road Revenue, Capital

 

 

 

 

 

 

 

 

Appreciation, Series B, zero coupon bond to yield 8.581%

 

 

 

 

 

 

 

 

due 1/1/15

 

 

1,824,750

 

 

 

 

 

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)

 

 

2,266,560

 

 

2,000,000

AA-

 

 

  6.000% due 12/1/21 (c)

 

 

2,286,280

 

  

8,096,360

South Dakota — 1.9%

 

 

 

 

 

 

 

 

2,400,000

Aa2*

 

Minnehaha County, SD GO, Limited Tax Certificates,

 

 

 

 

 

 

 

 

5.625% due 12/1/20 (c)

 

 

2,663,136

 

 

795,000

A

 

South Dakota Economic Development Finance Authority,

 

 

 

 

 

 

 

 

Economic Development Revenue APA Optics, Series A,

 

 

 

 

 

 

 

 

6.750% due 4/1/16 (b)

 

 

839,830

 

  

3,502,966

Tennessee — 0.7%

 

 

 

 

 

 

 

 

600,000

AAA

 

Jackson, TN Water and Sewer Revenue, 7.200% due 7/1/12 (d)

 

694,248

 

 

490,000

A2*

 

McMinnville, TN Housing Authority Revenue Refunding,

 

 

 

 

 

 

 

 

First Mortgage, Beersheba Heights, 6.000% due 10/1/09

 

519,611

 

 

145,000

AAA

 

Metropolitan Nashville, TN Airport Authority Tennessee

 

 

 

 

 

 

 

 

Airport Revenue, MBIA-Insured, 7.500% due 7/1/05 (d)

 

148,911

 

  

1,362,770

Texas — 10.2%

 

 

 

 

 

 

 

 

1,000,000

Baa1*

 

Bexar County, TX Housing Finance Corp., Multi-Family

 

 

 

 

 

 

 

 

Housing Revenue Refunding, Nob Hill Apartments,

 

 

 

 

 

 

 

 

Series A, 6.000% due 6/1/21

 

 

1,005,830

 

 

2,000,000

Aa3*

 

Brazos River, TX Harbor Navigation District, Brazoria County,

 

 

 

 

 

 

 

 

PCR, (BASF Corp. Project), 6.750% due 2/1/10 (c)

 

2,335,020

 

 

2,000,000

AAA

 

Dallas, TX Area Rapid Transit Sales Tax Revenue, Sr. Lien,

 

 

 

 

 

 

 

 

AMBAC-Insured, 5.375% due 12/1/16 (c)

 

 

2,207,560

 

 

 

 

 

Dallas/Fort Worth, TX International Airport Facility,

 

 

 

 

 

 

 

 

Improvement Corp. Revenue Refunding:

 

 

 

 

 

1,500,000

CCC

 

 

American Airlines Inc., Series C, 6.150% due 5/1/29,

 

 

 

 

 

 

 

 

 

mandatory tender 11/1/07 (b)

 

 

1,414,410  

 

1,000,000

AAA

 

 

Series B, FSA-Insured, 5.500% due 11/1/20 (b)

 

1,097,770

 

 

1,000,000

AAA

 

El Paso, TX Water and Sewer Revenue Refunding and

 

 

 

 

 

 

 

 

Improvement, Series A, FSA-Insured, 6.000% due 3/1/15

 

1,169,400

 

 

 

 

 

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

370,822

 

280,000

Baa3*

 

 

  La Plaza Apartments, Sub-Series C, 8.000% due 7/1/30

 

285,743

 

 

 

 

 

 

See Notes to Financial Statements.

 

 

 



16

2004 Annual Report



 

Schedule of Investments (continued)

December 31, 2004

 

FACE

 

 

 

 

 

 

 

AMOUNT     RATING(a)

SECURITY

 

VALUE

Texas — 10.2% (continued)

 

 

 

 

$

2,000,000

AA

 

Fort Worth, TX Water and Sewer Revenue,

 

 

 

 

 

 

 

 

 

5.625% due 2/15/17 (c)

 

$

2,249,340

 

 

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

 

 

654,147

 

 

1,000,000

AAA

 

Harris County, TX Hospital District Revenue Refunding,

 

 

 

 

 

 

 

 

MBIA-Insured, 6.000% due 2/15/15

 

 

1,138,880

 

 

1,900,000

NR

 

IAH Public Facilities Corp Project Revenue, 7.000% due 5/1/15

 

1,876,459

 

 

1,175,000

A3*

 

Lubbock, TX Housing Finance Corp., Multi-Family Housing

 

 

 

 

 

 

 

 

Revenue, (Las Colinas Quality Creek Apartments),

 

 

 

 

 

 

 

 

6.000% due 7/1/22

 

 

1,207,759

 

 

1,000,000

AAA

 

Southwest Higher Education Authority Inc., TX, (Southern

 

 

 

 

 

 

 

 

Methodist University Project), AMBAC-Insured,

 

 

 

 

 

 

 

 

5.500% due 10/1/19

 

 

1,122,970

 

 

315,000

Aaa*

 

Tarrant County, TX Hospital Authority Revenue, Adventist

 

 

 

 

 

 

 

 

Health System-Sunbelt, 10.250% due 10/1/10 (d)

 

390,140

 

 

470,000

C*

 

Tarrant County, TX Housing Finance Corp. Revenue,

 

 

 

 

 

 

 

 

Multi-Family Housing, Westridge, Sub-Series C,

 

 

 

 

 

 

 

 

8.500% due 6/1/31 (g)

 

 

23,500

 

 

325,000

AAA

 

Texas State Department of Housing and Community Affairs,

 

 

 

 

 

 

 

 

Home Mortgage Revenue, RIBS, Series C-2, GMNA/FNMA/

 

 

 

 

 

 

 

 

FHLMC-Collateralized, 11.691% due 7/2/24 (b)(e)

 

325,200

 

 

255,000

NR

 

Tom Green County, TX Hospital Authority,

 

 

 

 

 

 

 

 

 

7.875% due 2/1/06 (d)

 

 

262,960

 

 

 

 

 

 

 

 

 

19,137,910

 

Utah — 0.9%

 

 

 

 

 

 

 

 

 

 

 

Spanish Fork City, UT Water Revenue, FSA-Insured:

 

 

 

 

350,000

Aaa*

 

 

Call 6/1/12 @ 100, 5.500% due 6/1/16 (f)

 

 

401,450

 

 

1,135,000

Aaa*

 

 

Unrefunded, 5.500% due 6/1/16

 

 

1,269,361

 

 

 

 

 

 

 

 

 

1,670,811

 

Virginia — 1.5%

 

 

 

 

 

 

 

 

4,560,000

BB

 

Pocahontas Parkway Association, VA Toll Road Revenue,

 

 

 

 

 

 

 

 

Capital Appreciation, Series B, zero coupon bond to yield

 

 

 

 

 

 

 

 

6.136% due 8/15/19

 

 

1,798,510

 

 

1,000,000

B2*

 

Rockbridge County, VA IDA Revenue, Virginia Horse Center,

 

 

 

 

 

 

 

 

Series C, 6.850% due 7/15/21

 

 

939,060

 

 

 

 

 

 

 

 

 

2,737,570

 

Washington — 1.9%

 

 

 

 

 

 

 

 

1,250,000

Aaa*

 

Cowlitz County Washington School District, No. 122 Longview,

 

 

 

 

 

 

 

 

5.500% due 12/1/19

 

 

1,386,762

 

 

2,000,000

AAA

 

Energy Northwest Washington Electric Revenue, (Project

 

 

 

 

 

 

 

 

No. 3), Series A, FSA-Insured, 5.500% due 7/1/18 (c)

 

2,208,340

 

 

 

 

 

 

 

 

 

3,595,102

 

Wisconsin — 1.1%

 

 

 

 

 

 

 

 

2,000,000

BBB

 

LaCrosse, WI Resource Recovery Revenue Refunding,

 

 

 

 

 

 

 

 

(Northern States Power Co. Project),

 

 

 

 

 

 

 

 

 

6.000% due 11/1/21 (b)(c)

 

 

2,113,160

 

 

 

 

 

 

See Notes to Financial Statements.

 

 

 



Intermediate Muni Fund, Inc.

17



 

Schedule of Investments (continued)

December 31, 2004

 

FACE

 

 

 

 

 

 

 

AMOUNT     RATING(a)

SECURITY

 

VALUE

West Virginia — 0.1%

 

 

 

 

 

$

135,000       AAA

Cabell, Putnam & Wayne Counties, WV Single-Family

 

 

 

 

Residence Mortgage Revenue, FGIC-Insured,

 

 

 

 

                7.375% due 4/1/10 (d)

              $

          150,679

 

TOTAL INVESTMENTS — 100%

 

 

 

 

 

(Cost — $178,591,187**)

 

                                  $187,122,618

 

 

(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 which are 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)

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 the new ratings.

 

(e)

Inverse floating rate security - coupon varies inversely with level of short-term tax-exempt interest rates.

 

(f)

Pre-Refunded bonds are escrowed with 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 in default.

 

(h)

All or a portion of this security is held as collateral for open futures contracts.

 

 

**

Aggregate cost for federal income tax purposes is $178,286,339.

 

See pages 19 and 20 for definitions of ratings and certain abbreviations.

 

 

Summary of Investments by Sector*

Education

16.1

%

Hospitals

14.7

Escrowed to Maturity

12.6

Transportation

10.0

General Obligation

8.7

Water & Sewer

6.2

Pre-Refunded

5.2

Pollution Control

3.8

Lifecare Systems

3.3

Utilities

3.2

Multi-Family Housing

2.7

Industrial Development

2.4

Other

11.1

100.0

%

 

*

As a percentage of total investments. Please note that Fund holdings are as of December 31, 2004 and are subject to change.

 

See Notes to Financial Statements.



18

2004 Annual Report



 

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 predominantly

CCC and CC

      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.

 



Intermediate Muni Fund, Inc.

19



 

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 con-

 

 

sidered 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

GIC

— Guaranteed Investment Contract

AMBAC

— Ambac Assurance Corporation

GNMA

— Government National Mortgage

CGIC

— Capital Guaranty Insurance Company

 

  Association

CONNIE

— College Construction Loan

GO

— General Obligation

LEE

  Insurance Association

HFA

— Housing Finance Authority

COP

— Certificate of Participation

IDA

— Industrial Development Agency

FGIC

— Financial Guaranty Insurance

IDR

— Industrial Development Revenue

 

  Company

INDLC

— Industrial Indemnity Company

FHA

— Federal Housing Administration

ISD

— Independent School District

FHLB

— Federal Home Loan Bank

LOC

— Letter of Credit

FHLMC

— Federal Home Loan Mortgage

MBIA

— Municipal Bond Investors Assurance

 

  Corporation

 

  Corporation

FLAIRS

— Floating Adjustable Interest Rate

PCFA

— Pollution Control Financing Authority

 

  Securities

PCR

— Pollution Control Revenue

FNMA

— Federal National Mortgage

PSFG

— Permanent School Fund Guaranty

 

  Association

RIBS

— Residual Interest Bonds

FSA

— Financial Security Assurance

VRDD

— Variable Rate Daily Demand

 

_____________

* Abbreviations may or may not appear in the Schedule of Investments.



20

2004 Annual Report



 

Statement of Assets and Liabilities

December 31, 2004 

 

 

ASSETS:

 

 

 

Investments, at value (Cost — $178,591,187)

$

187,122,618

 

Cash

 

34,263

 

Interest receivable

 

3,270,266

 

Receivable for securities sold

 

805,124

 

Prepaid expenses

 

9,607

 

Total Assets

 

191,241,878

 

LIABILITIES:

 

 

 

Payable to broker — variation margin on open futures contracts

 

375,000

 

Dividends payable

 

130,308

 

Management fee payable

 

96,994

 

Distributions payable to Municipal Auction Rate Cumulative

 

 

 

Preferred Stockholders

 

10,490

 

Directors’ fees payable

 

8,362

 

Accrued expenses

 

77,339

 

Total Liabilities

 

698,493

 

Series M Municipal Auction Rate Cumulative Preferred Stock

 

 

 

(2,000 shares authorized and issued at $25,000 per share) (Note 4)

 

50,000,000

 

Total Net Assets

$

140,543,385

 

NET ASSETS:

 

 

 

Par value of capital shares

$

14,033

 

Capital paid in excess of par value

 

141,521,690

 

Undistributed net investment income

 

1,132,007

 

Accumulated net realized loss from investment transactions and

 

 

 

futures contracts

 

(9,155,776

)

Net unrealized appreciation of investments and futures contracts

 

7,031,431

 

Total Net Assets

 

 

 

(Equivalent to $10.02 per share on 14,032,784 capital shares of

 

 

 

    $

0.001 par value outstanding; 100,000,000 capital shares authorized)

$

140,543,385

 

 

See Notes to Financial Statements.

 



Intermediate Muni Fund, Inc.

21



 

Statement of Operations     For the Year Ended December 31, 2004

 

INVESTMENT INCOME:

 

 

 

Interest

$

10,542,400

 

EXPENSES:

 

 

 

Management fee (Note 2)

 

1,153,582

 

Auction participation fees (Note 4)

 

125,000

 

Audit and legal

 

62,311

 

Transfer agency services

 

50,950

 

Custody

 

38,450

 

Shareholder communications

 

30,378

 

Stock exchange listing fees

 

21,808

 

Rating agency fees

 

16,500

 

Auction agency fees

 

6,500

 

Directors’ fees

 

5,490

 

Insurance fees

 

5,102

 

Other

 

6,000

 

Total Expenses

 

1,522,071

 

Net Investment Income

 

9,020,329

 

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

 

 

 

AND FUTURES CONTRACTS (NOTES 1 AND 3):

 

 

 

Realized Gain (Loss) From:

 

 

 

Investment transactions

 

419,974

 

Futures contracts

 

(3,291,918

)

Net Realized Loss

 

(2,871,944

)

Net Change in Unrealized Appreciation/Depreciation of

 

 

 

Investments and Futures Contracts

 

(401,750

)

Net Loss on Investments and Futures Contracts

 

(3,273,694

)

Dividends Paid to Municipal Auction Rate Cumulative Preferred

 

 

 

Stockholders From Net Investment Income

 

(586,119

)

Increase in Net Assets From Operations

$

5,160,516

 

 

See Notes to Financial Statements.



22

2004 Annual Report



 

Statements of Changes in Net Assets

 

For the Years Ended December 31,

 

 

2004

 

 

2003

 

OPERATIONS:

 

 

 

 

 

 

Net investment income

$

9,020,329

 

$

9,401,893

 

Net realized loss

 

(2,871,944

)

 

(462,620

)

Net change in unrealized appreciation/depreciation

 

(401,750

)

 

(70,343

)

Dividends paid to Municipal Auction Rate Cumulative

 

 

 

 

 

 

Preferred Stockholders from net investment income

 

(586,119

)

 

(501,981

)

Increase in Net Assets From Operations

 

5,160,516

 

 

8,366,949

 

DIVIDENDS PAID TO COMMON STOCK

 

 

 

 

 

 

SHAREHOLDERS FROM (NOTE 1):

 

 

 

 

 

 

Net investment income

 

(8,585,218

)

 

(8,570,907

)

Decrease in Net Assets From Dividends

 

 

 

 

 

 

Paid to Common Stock Shareholders

 

(8,585,218

)

 

(8,570,907

)

FUND SHARE TRANSACTIONS (NOTE 5):

 

 

 

 

 

 

Net asset value of shares issued for reinvestment of dividends

 

287,921

 

 

 

Increase in Net Assets From Fund Share Transactions

 

287,921

 

 

 

Decrease in Net Assets

 

(3,136,781

)

 

(203,958

)

NET ASSETS:

 

 

 

 

 

 

Beginning of year

 

143,680,166

 

 

143,884,124

 

End of year*

$

140,543,385

 

$

143,680,166

 

* Includes undistributed net investment income of:

$

1,132,007

 

$

1,284,893

 

 

See Notes to Financial Statements.



Intermediate Muni Fund, Inc.

23



 

Financial Highlights

 

For a share of capital stock outstanding throughout each year ended December 31:

 

2004

2003

2002

2001

2000

Net Asset Value, Beginning of Year

$

10.26

$

10.27

$

10.21

$

10.20

$

9.89

Income (Loss) From Operations:

Net investment income

0.64

0.68

0.68

0.56

(1)

0.55

Net realized and unrealized gain (loss)

(0.23

)

(0.03

)

0.07

0.00

*(1)

0.28

Dividends paid to Municipal Auction

           Rate Cumulative Preferred

       Stockholders from net

       investment income

(0.04

)

(0.05

)

(0.05

)

Total Income (Loss) From Operations

0.37

0.60

0.70

0.56

0.83

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

)

Dividends Paid To Common Stock

Shareholders From:

Net investment income

(0.61

)

(0.61

)

(0.58

)

(0.55

)

(0.54

)

Net Asset Value, End of Year

$

10.02

$

10.26

$

10.27

$

10.21

$

10.20

Total Return, Based on Market Price(2)

(2.19

)%

13.33

%

4.03

%

17.17

%

11.90

%

Total Return, Based on Net Asset Value(2)

3.99

%

6.22

%

6.73

%

6.01

%

9.68

%

Net Assets, End of Year (millions)

$

141

$

144

$

144

$

143

$

143

Ratios to Average Net Assets Based on

Common Shares Outstanding(3):

Expenses

1.07

%

1.07

%

1.08

%

0.80

%

0.78

%

Net investment income

6.34

6.55

6.59

5.35

(1)

5.47

Portfolio Turnover Rate

32

%

21

%

49

%

36

%

45

%

Market Price, End of Year

$

9.36

$

10.19

$

9.56

$

9.75

$

8.81

 

See Notes to Financial Statements.



24

2004 Annual Report



 

Financial Highlights (continued)

 

 

 

 

 

 

 

 

 

 

 

2004

 

2003

 

2002

2001

2000

Municipal Auction Rate

 

 

 

 

 

 

 

 

Cumulative Preferred Stock(4):

 

 

 

 

 

 

 

 

Total Amount Outstanding (000s)

$

50,000

$

50,000

$

50,000

Asset Coverage Per Share

 

95,272

 

96,840

 

96,942

Involuntary Liquidating

 

 

 

 

 

 

 

 

Preference Per Share(5)

 

25,000

 

25,000

 

25,000

Average Market Value Per Share(5)

 

25,000

 

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.


See Notes to Financial Statements.


Intermediate Muni Fund, Inc.

25



 

Notes to Financial Statements

1. Organization and 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 following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting principles (“GAAP”). 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.

 

(a) Investment Valuation. 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. Securities for which market quotations are not readily available or where market quotations are determined not to reflect fair value, will be valued in good faith by or under the direction of the Fund’s Board of Directors. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates value.

 

(b) Futures Contracts. The Fund may enter into futures contracts to the extent permitted by its investment policies and objectives. Upon entering into a futures contract, the Fund is required to deposit cash or pledge securities as initial margin. Additional securities are also segregated up to the current market value of the futures contracts.Subsequent payments, which are dependent on the daily fluctuations in the value of the underlying financial instrument, are made or received by the Fund each day (daily variation margin) and are recorded as unrealized gains or losses until the contracts are closed. When the contracts are 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 contracts. The Fund enters into such contracts typically to hedge a portion of the portfolio. The risks associat ed with entering into futures contracts include the possibility that a change in the value of the contract may not correlate with the changes in the value of the underlying instruments. In addition, investing in futures contracts involves the risk that the Fund could lose more than the original margin deposit and subsequent payments required for a futures transaction.

 

(c) Security Transactions and Investment Income. Security transactions are accounted for on trade date. Interest income, adjusted for amortization of premium or accretion of discount, is recorded on the accrual basis. The cost of



26

2004 Annual Report



 

Notes to Financial Statements (continued)

investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes.

 

(d) Dividends and Distributions to Shareholders. Dividends from net investment income for the Fund, if any, are declared and paid on a monthly basis. 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. Distributions of net realized gains to shareholders of the Fund, if any, are taxable and are declared at least annually. Dividends and distributions to shareholders of the Fund are recorded on the ex-dividend date for the shareholders of Common Stock and are determined in accordance with income tax regulations, which may differ from GAAP. In addition, 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 the funds legally available to shareholders.

 

(e) Net Asset Value. The net asset value of the Fund’s Common Stock is determined no less frequently than the close of business on the Fund’s last business day of each week (generally Friday) and on the last business day of the month. It 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, and (2) the aggregate liquidation value (i.e., $25,000 per outstanding share) of the Municipal Auction Rate Cumulative Preferred Stock.

 

(f) Federal and Other Taxes. It is the Fund’s policy to comply with the federal income and excise tax requirements of the Internal Revenue Code of 1986, as amended, applicable to regulated investment companies. Accordingly, the Fund intends to distribute substantially all of its taxable income and net realized gains on investments, if any, to shareholders each year. Therefore, no federal income tax provision is required.

 

(g) Reclassifications. GAAP requires that certain components of net assets be adjusted to reflect permanent differences between financial and tax reporting. Accordingly, during the current year, $1,878 has been reclassified between undistributed net investment income and accumulated net realized loss from investment transactions and futures contracts as a result of permanent differences attributable to differences between book and tax amortization of premium on fixed income securities. These reclassifications have no effect on net assets or net asset values per share.



Intermediate Muni Fund, Inc.

27



 

Notes to Financial Statements (continued)

 

2. Management Agreement and Other Transactions with Affiliates

 

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 and do not receive compensation from the Fund.

 

3. Investments

 

During the year ended December 31, 2004, the aggregate cost of purchases and proceeds from sales of investments (but excluding short-term investments) were as follows:

 

Purchases

$

59,598,122

Sales

 

62,332,186

 

At December 31, 2004, the aggregate gross unrealized appreciation and depreciation of investments for federal income tax purposes were as follows:

 

Gross unrealized appreciation

$

10,777,383

 

Gross unrealized depreciation

 

(1,941,104

)

Net unrealized appreciation

$

8,836,279

 

 

At December 31, 2004, the Fund had the following open futures contracts:

 

 

Number of

Expiration

 

Basis

 

Market

 

Unrealized

 

 

Contracts

Date

 

Value

 

Value

 

Loss

 

Contracts to Sell:

 

 

 

 

 

 

 

 

 

U.S. 20 Year Treasury Note

500

3/05

$

54,750,000

$

56,250,000

$

(1,500,000

)

 



28

2004 Annual Report



 

Notes to Financial Statements (continued)

4. 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 0.80% to 1.90% during the year ended December 31, 2004. At December 31, 2004, the dividend rate was 1.86%.

 

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. 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”) 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, 2004, CGM earned $125,000 as a participating broker/dealer.

 

5. Capital Shares

 

Capital stock transactions were as follows:

 

 

Year Ended

Year Ended

 

December 31, 2004

December 31, 2003

 

        Shares

 

Amount

Shares

Amount

Shares issued on reinvestment

28,034

$

287,921

 



Intermediate Muni Fund, Inc.

29




Notes to Financial Statements (continued)

 

6. Income Tax Information and Distribution to Shareholders

 

The tax character of distributions paid during the fiscal years ended December 31, was as follows:

 

 

 

2004

 

2003

Distributions paid from:

 

 

 

 

Tax-exempt income

$

9,102,913

$

9,072,888

Ordinary income

 

68,424

 

Total distributions paid

$

9,171,337

$

9,072,888

 

As of December 31, 2004, the components of accumulated earnings/losses on a tax basis were as follows:

 

Undistributed tax exempt

$

771,683

 

Total undistributed earnings

 

771,683

 

Capital loss carryforward

 

(10,593,613

)*

Other book/tax temporary differences

 

1,493,313

**

Unrealized appreciation

 

7,336,279

***

Total Accumulated Losses

$

(992,338

)

 

*

On December 31, 2004, the Fund had a net capital loss carryforward of $10,593,613, of which $37,946 expires in 2006, $1,896,634 expires in 2007, $513,580 expires in 2008, $4,046,539 expires in 2010, $569,469 expires in 2011, and $3,529,445 expires in 2012. This amount will be available to offset any future taxable gains.

**

Other book/tax temporary differences are attributable primarily to the realization for tax purposes of unrealized losses on certain futures contracts and differences in the book/tax treatment of various items.

***

The difference between book-basis and tax-basis unrealized/depreciation is attributable primarily to the tax deferral of losses on wash sales and the difference between book and tax amortization methods for premiums and discounts on fixed income securities.

 

7. Additional Information

 

In connection with an investigation previously disclosed by Citigroup, the Staff of the Securities and Exchange Commission (“SEC”) has notified Citigroup Asset Management (“CAM”), the Citigroup business unit that includes the funds’ investment manager and other investment advisory companies; Citicorp Trust Bank (“CTB”), an affiliate of CAM; Thomas W. Jones, the former CEO of CAM; and three other individuals, one of whom is an employee and two of whom are former employees of CAM, that the SEC Staff is considering recommending a civil injunctive action and/or an administrative proceeding against each of them relating to the creation and operation of an internal transfer agent unit to serve various CAM-managed funds.

 

In 1999, CTB entered the transfer agent business. CTB hired an unaffiliated subcontractor to perform some of the transfer agent services. The subcontractor, in exchange, had signed a separate agreement with CAM in 1998 that guaranteed investment management revenue to CAM and investment banking revenue to a


30

2004 Annual Report



 

Notes to Financial Statements (continued)

 

CAM affiliate. The subcontractor’s business was later taken over by PFPC Inc., and at that time the revenue guarantee was eliminated and a one-time payment was made by the subcontractor to a CAM affiliate.

 

CAM did not disclose the revenue guarantee when the boards of various CAM-managed funds hired CTB as transfer agent. Nor did CAM disclose to the boards of the various CAM-managed funds the one-time payment received by the CAM affiliate when it was made. As previously disclosed, CAM has already paid the applicable funds, primarily through voluntary fee waivers, a total of approximately $17 million (plus interest), which is the amount of the revenue received by Citigroup relating to the revenue guarantee.

 

In addition, the SEC Staff has indicated that it is considering recommending action based on the adequacy of the disclosures made to the fund boards that approved the transfer agency arrangement, CAM’s initiation and operation of, and compensation for, the transfer agent business and CAM’s retention of, and agreements with, the subcontractor.

 

Citigroup is cooperating fully in the SEC’s investigation and is seeking to resolve the matter in discussions with the SEC Staff. On January 20, 2005, Citigroup stated that it had established an aggregate reserve of $196 million ($25 million in the third quarter of 2004 and $171 million in the fourth quarter of 2004) related to its discussions with the SEC Staff. Settlement negotiations are ongoing and any settlement of this matter with the SEC will require approval by the Citigroup Board and acceptance by the Commission.

 

Unless and until any settlement is consummated, there can be no assurance that any amount reserved by Citigroup will be distributed. Nor is there at this time any certainty as to how the proceeds of any settlement would be distributed, to whom any such distribution would be made, the methodology by which such distribution would be allocated, and when such distribution would be made.

 

Although there can be no assurance, Citigroup does not believe that this matter will have a material adverse effect on the funds. The Fund did not implement the contractual arrangement described above and therefore will not receive any portion of such payment.

 



Intermediate Muni Fund, Inc.

31



 

Report of Independent Registered Public Accounting Firm

 

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, 2004, 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 the standards of the Public Company Accounting Oversight Board (United States). 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, 2004, by correspondence with the custodian and brokers. 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 Intermediate Muni Fund, Inc. as of December 31, 2004, 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 the U.S. generally accepted accounting principles.

 

                                                                           

 

New York, New York

February 18, 2005



32

2004 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

Fiscal Year 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      

 

9.70      

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      

Fiscal Year 2004

 

 

 

 

 

 

 

January

 

10.41      

 

10.27      

 

0.051      

 

10.29      

February

 

10.49      

 

10.36      

 

0.051      

 

10.41      

March

 

10.49      

 

10.19      

 

0.051      

 

10.25      

April

 

9.20      

 

10.08      

 

0.051      

 

9.24      

May

 

9.57      

 

10.02      

 

0.051      

 

9.60      

June

 

9.23      

 

9.99      

 

0.051      

 

9.39      

July

 

9.65      

 

10.06      

 

0.051      

 

9.61      

August

 

9.64      

 

10.12      

 

0.051      

 

9.59      

September

 

9.37      

 

10.10      

 

0.051      

 

9.67      

October

 

9.55      

 

10.09      

 

0.051      

 

9.69      

November

 

9.40      

 

10.02      

 

0.051      

 

9.65      

December

 

9.36      

 

10.02      

 

0.051      

 

9.45      

 

  * On the last business day of the month.

 



Intermediate Muni Fund, Inc.

33



 

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 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

Other Board

Position(s)

and Length

Occupation(s)

Complex

Memberships

Name, Address

Held with

of Time

During Past

Overseen

Held by

and Birth Year

Fund

Served

Five Years

by Director

Director

Non-Interested Directors:

 

 

 

 

 

Lee Abraham

Director

Since

Retired; Former Director

27

None

13732 LeHavre Drive

 

1999

of Signet Group PLC

 

 

Frenchman’s Creek

 

 

 

 

 

Palm Beach Gardens,

 

 

 

 

 

FL 33410

 

 

 

 

 

Birth Year: 1927

 

 

 

 

 

 

 

 

 

 

 

Jane F. Dasher

Director

Since

Controller of PBK

27

None

Korsant Partners

 

1999

Holdings Inc., a family

 

 

283 Greenwich Avenue

 

 

investment company

 

 

Greenwich, CT 06830

 

 

 

 

 

Birth Year: 1949

 

 

 

 

 

 

 

 

 

 

 

Donald R. Foley

Director

Since

Retired

27

None

3668 Freshwater Drive

 

1993

 

 

 

Jupiter, FL 33477

 

 

 

 

 

Birth Year: 1922

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Birth Year: 1941

 

 

 

 

 

 

 

 

 

 

 

Paul Hardin

Director

Since

Professor of Law &

34

None

12083 Morehead

 

1996

Chancellor Emeritus at

 

 

Chapel Hill, NC

 

 

the University of

 

 

27514-8426

 

 

North Carolina

 

 

Birth Year: 1931

 

 

 

 

 

 

 

 

 

 

 

Roderick C. Rasmussen

Director

Since

Investment Counselor

27

None

9 Cadence Court

 

1993

 

 

 

Morristown, NJ 07960

 

 

 

 

 

Birth Year: 1926

 

 

 

 

 

 

 

 

 

 

 

John P. Toolan

Director

Since

Retired

27

John Hancock

13 Chadwell Place

 

1993

 

 

Funds

Morristown, NJ 07960

 

 

 

 

 

Birth Year: 1930

 

 

 

 

 



34

2004 Annual Report



 

Additional Information (unaudited) (continued)

 

 

 

 

 

 

 

Number of

 

 

 

Term of

 

 

Portfolios

 

 

 

Office*

 

Principal

in Fund

Other Board

 

Position(s)

and Length

 

Occupation(s)

Complex

Memberships

Name, Address

Held with

of Time

 

During Past

Overseen by

Held by

and Birth Year

Fund

Served

 

Five Years

Director

Director

Interested Director:

 

 

 

 

 

 

R. Jay Gerken, CFA**

Chairman,

Since

 

Managing Director of

219

None

Citigroup Asset

President

2002

 

Citigroup Global

 

 

Management (“CAM”)

and Chief

 

 

Markets Inc. (“CGM”);

 

 

399 Park Avenue

Executive

 

 

Chairman, President

 

 

4th Floor

Officer

 

 

and Chief Executive

 

 

New York, NY 10022

 

 

 

Officer of Smith Barney

 

 

Birth Year: 1951

 

 

 

Fund Management 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

 

 

 

 

 

 

Barney 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

 

 

125 Broad Street

and Chief

 

 

Chief Administrative

 

 

11th Floor

Administrative

 

 

Officer of mutual funds

 

 

New York, NY 10004

Officer

 

 

associated with

 

 

Birth Year: 1956

 

 

 

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)

 

 



Intermediate Muni Fund, Inc.

35




Additional Information (unaudited) (continued)


 

 

 

 

Number of

 

 

 

Term of

 

Portfolios

 

 

 

Office*

Principal

in Fund

Other Board

 

Position(s)

and Length

Occupation(s)

Complex

Memberships

Name, Address

Held with

of Time

During Past

Overseen by

Held by

and Birth Year

Fund

Served

Five Years

Director

Director

Robert J. Brault

Chief

Since

Director of CGM; Chief

N/A

N/A

CAM

Financial

2004

Financial Officer and

 

 

125 Broad Street

Officer and

 

Treasurer of certain

 

 

11th Floor

Treasurer

 

mutual funds associated

 

 

New York, NY 10004

 

 

with Citigroup;

 

 

Birth Year: 1965

 

 

Director of Internal

 

 

 

 

 

Control for CAM

 

 

 

 

 

U.S. Mutual Fund

 

 

 

 

 

Administration (from

 

 

 

 

 

2002 to 2004); Director

 

 

 

 

 

of Project Management

 

 

 

 

 

& Information Systems

 

 

 

 

 

for CAM U.S. Mutual

 

 

 

 

 

Fund Administration

 

 

 

 

 

(from 2000 to 2002);

 

 

 

 

 

Vice President, of

 

 

 

 

 

Mutual Fund Adminis-

 

 

 

 

 

tration at Investors

 

 

 

 

 

Capital Services (from

 

 

 

 

 

1999 to 2000)

 

 

 

Peter M. Coffey

Vice

Since

Managing Director

N/A

N/A

CAM

President

1992

of CGM; Investment

 

 

399 Park Avenue

and

 

Officer of SBFM

 

 

4th Floor

Investment

 

 

 

 

New York, NY 10022

Officer

 

 

 

 

Birth Year: 1944

 

 

 

 

 



36

2004 Annual Report



 

Additional Information (unaudited) (continued)

 

 

 

 

 

Number of

 

 

 

Term of

 

Portfolios

 

 

 

Office*

Principal

in Fund

Other Board

 

Position(s)

and Length

Occupation(s)

Complex

Memberships

Name, Address

Held with

of Time

During Past

Overseen by

Held by

and Birth Year

Fund

Served

Five Years

Director

Director

Andrew Beagley

Chief

Since

Director of CGM (since

N/A

N/A

CAM

Compliance

2004

2000); Director of

 

 

399 Park Avenue

Officer

 

Compliance, North

 

 

4th Floor

 

 

America, CAM (since

 

 

New York, NY 10022

 

 

2000); Chief Anti-

 

 

Birth Year: 1962

 

 

Money Laundering

 

 

 

 

 

Compliance Officer,

 

 

 

 

 

Chief Compliance

 

 

 

 

 

Officer and Vice

 

 

 

 

 

President of certain

 

 

 

 

 

mutual funds

 

 

 

 

 

associated with

 

 

 

 

 

Citigroup; Director of

 

 

 

 

 

Compliance, Europe,

 

 

 

 

 

the Middle East

 

 

 

 

 

and Africa, Citigroup

 

 

 

 

 

Asset Management

 

 

 

 

 

(from 1999 to 2000);

 

 

 

 

 

Chief Compliance Officer,

 

 

 

 

 

SBFM, CFM, TIA, Salomon

 

 

 

 

Brothers Asset

 

 

 

 

 

Management Limited,

 

 

 

 

 

Smith Barney Global

 

 

 

 

 

Capital Management

 

 

 

 

 

Inc.

 

 

 

Robert I. Frenkel

Secretary

Since

Managing Director and

N/A

N/A

CAM

and Chief

2003

General Counsel of

 

 

300 First Stamford Place

Legal Officer

 

Global Mutual Funds

 

 

4th Floor

 

 

for CAM and its

 

 

Stamford, CT 06902

 

 

predecessor (since

 

 

Birth Year: 1954

 

 

1994); Secretary and Chief

 

 

 

 

Legal Officer of mutual

 

 

 

 

 

funds associated with

 

 

 

 

 

Citigroup

 

 

 

*

Each Director and Officer serves until his or her successor has been duly elected and qualified.

 

**

Mr. Gerken is a Director who 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.



Intermediate Muni Fund, Inc.

37



 

Important Tax Information (unaudited)

 

All of the net investment income distributions paid monthly by the Fund to shareholders from January to November 2004 qualify as tax-exempt interest dividends for federal income tax purposes. Additionally, 90.89% of the net investment income distribution paid to common shareholders of record on December 28, 2004 qualifies as tax-exempt interest dividends for federal income tax purposes. Finally, 94.15% of the net investment income distributions paid to municipal auction rate cumulative preferred shareholders in December 2004 qualifies as tax-exempt interest dividends for federal income tax purposes.

 

Please retain this information for your records.



38

2004 Annual Report



 

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 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.

 



Intermediate Muni Fund, Inc.

39



 

Dividend Reinvestment Plan (unaudited) (continued)

 

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.


 

The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C., and information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. To obtain information on Form N-Q from the Fund, shareholders can call 1-800-451-2010.

 

Information on how the Fund voted proxies relating to portfolio securities during the 12-month period ended June 30, 2004 and a description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available (1) without charge, upon request, by calling 1-800-451-2010, (2) on the Fund’s website at www.citigroupAM.com and (3) on the SEC’s website at www.sec.gov.

 


40

2004 Annual Report



 

 

DIRECTORS

INVESTMENT MANAGER

Lee Abraham

Smith Barney Fund Management LLC

Jane F. Dasher

 

Donald R. Foley

CUSTODIAN

R. Jay Gerken, CFA

             State Street Bank and Trust Company

Chairman

Richard E. Hanson, Jr.

 

Paul Hardin

SHAREHOLDER

Roderick C. Rasmussen

SERVICING AGENT

John P. Toolan

PFPC Inc.

 

P.O. Box 8030

OFFICERS

Boston, Massachusetts 02266-8030

R. Jay Gerken, CFA

 

President and Chief

This report is intended only for the

Executive Officer

shareholders of Intermediate Muni

 

Fund, Inc. It is not a Prospectus,

Andrew B. Shoup

circular or representation intended

Senior Vice President and

for use in the purchase or sale of

Chief Administrative Officer

shares of the Fund or any securities

Robert J. Brault

mentioned in the report.

Chief Financial Officer

 

and Treasurer

INTERMEDIATE

 

MUNI FUND, INC.

Peter M. Coffey

            125 Broad Street 

Vice President

            10th Floor, MF-2

and Investment Officer

New York, New York 10004

 

Andrew Beagley

 

Chief Compliance Officer

 

Robert I. Frenkel

 

Secretary and

FD1067 2/05

Chief Legal Officer

05-7894

 

SBI
Listed on the American
Stock Exchange

 



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 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 the Intermediate Muni Fund, Inc. were $17,000 and $15,000 for the years ended 12/31/04 and 12/31/03.

(b) Audit-Related Fees for the Intermediate Muni Fund, Inc. were $0 and $0 for the years ended 12/31/04 and 12/31/03.

(c) Tax Fees for Intermediate Muni Fund, Inc. of $2,300 and $2,100 for the years ended 12/31/04 and 12/31/03. 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) All Other Fees for Intermediate Muni Fund, Inc. of $10,000 and $12,500 for the years ended 12/31/04 and 12/31/03. These amounts represent fees billed for agreed upon procedures performed to certify the Fund’s compliance with rating agency requirements and restrictions.

(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.

  (2) For the Intermediate Muni Fund, Inc., the percentage of fees that were approved by the audit committee, with respect to: Audit-Related Fees were 100% and 100% for the years ended 12/31/04 and 12/31/03; Tax Fees were 100% and 100% for the years ended 12/31/04 and 12/31/03; and Other Fees were 100% and 100% for the years ended 12/31/04 and 12/31/03.

(f) N/A

(g) Non-audit fees billed by the Accountant for services rendered to Intermediate Muni Fund, Inc. and CAM and any entity controlling, controlled by, or under common control with CAM that provides ongoing services to Intermediate Muni Fund, Inc. Fees billed to and paid by Citigroup Global Markets , Inc. related to the transfer agent matter as fully described in the notes to the financial statements titled “additional information” were $75,000 and $0 for the years ended 12/31/04 and 12/31/03.

(h) Yes. The 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 the 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. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

  Not applicable.

ITEM 10. 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 11. 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, 2005

        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, 2005

By: /s/ Robert J. Brault
(Robert J. Brault)
Chief Financial Officer of
Intermediate Muni Fund, Inc.

Date: March 11, 2005