[GRAPHIC OMITTED]
Smith Barney
------------------------------------------
Intermediate Municipal Fund, Inc.
Semi-Annual Report
June 30, 1999
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Smith Barney
Intermediate Municipal
Fund, Inc.
[PHOTO OMITTED] [PHOTO OMITTED]
Heath B. McLendon Peter M. Coffey
Chairman Vice President
Dear Shareholder:
We are pleased to provide the semi-annual report for the Smith Barney
Intermediate Municipal Fund, Inc. ("Fund") for the period ended June 30, 1999.
We hope you find this report to be useful and informative. During the past six
months, the Fund distributed income dividends totaling $0.26 per share. The
table below shows the annualized distribution rates based on the Fund's net
asset value ("NAV") per share and its American Stock Exchange ("AMEX") closing
price.
Price Annualized Six-Month
Per Share Distribution Rates* Total Returns
--------------- ------------------- -------------
$10.23 (NAV) 5.16% (0.94)%
$ 9.50 (AMEX) 5.56% (8.68)%
The Fund had a negative total return of a 0.94%, based on NAV for the six months
ended June 30, 1999, versus the average total return of a negative 2.39% for
closed-end municipal bond funds based on NAV for the same period, according to
Lipper, Inc. (Lipper is a major fund tracking organization.)
Investment Strategy
The Intermediate Municipal Fund seeks as high a level of current income exempt
from regular Federal income tax as is consistent with prudent investing. In line
with this objective, the Fund follows an investment strategy with emphasis on
high quality, high coupon issues. As an intermediate-term municipal bond fund,
the weighted average maturity of the Fund's portfolio will not be more than ten
years.
During the past six months, we slightly shortened the Fund's average weighted
maturity to 9.7 years. As of June 30, 1999, approximately 91% of the Fund's
holdings were rated investment grade and roughly 45% of the Fund's investments
were rated triple-A. As of June 30, 1999, a major portion of the
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* The annualized distribution rate assumes a current monthly dividend rate
of $0.044 per share for twelve months.
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Smith Barney Intermediate Municipal Fund, Inc. 1
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Fund's assets were allocated among the following types of municipal bonds:
hospital bonds (17.6%), multi-family housing bonds (13.7%) and education bonds
(13.6%).
Municipal Bond Market Update
The last six months witnessed a period of economic growth at home and recovery
abroad. Following the events surrounding the Russian debt default in August of
1998 -- which included a sharp drop in bond yields and a 0.75% decrease in
long-term interest rates -- yields have markedly increased with greater
volatility in recent months. Throughout this period of volatility, municipal
bond yields were relatively stable in comparison to U.S. Treasury bonds, and we
expect this trend to continue despite rising inflation fears and probable
interest rate hikes.
During the first half of 1999, U.S. economic growth continued at a robust pace,
posting a 4.3% annualized GDP growth rate for the first quarter. Furthermore,
the labor market continued to be extremely tight, as the unemployment rate fell
to a 29-year low of 4.2% in March. Defying the expectations of many economists,
inflation -- as measured by the Consumer Price Index ("CPI") --was virtually
absent. Many economists have credited productivity gains in the form of
increased use of technology and sagging global demand with keeping inflation
under control. However, in the month of April, the CPI rose by 0.7% -- its
largest monthly increase in nine years. This, coupled with signs that many world
economies were in the nascent stages of growth and recovery, deepened fears that
inflationary pressures were reaching a breaking point. In response, the Federal
Reserve Board ("Fed") announced an intention towards a tightening monetary
policy, signaling that interest rates may be increased at the Fed's next Federal
Open Market Committee meeting on June 29, 1999 and June 30, 1999. (Indeed,
following the meeting, the Fed did raise short-term interest rates 0.25%.)
The impact of these economic conditions on the bond market has been an increase
in yields, especially after inflation fears rose in the second quarter. Between
April 8, 1999 and June 24, 1999 municipal bond yields--as measured by the Bond
Buyer's 25 Revenue Index--grew 0.33% to 5.62%. In the same period, 30-year U.S.
Treasury bond yields rose 0.71% to 6.16%. These rising yields reflect that the
expectation of higher inflation is already being priced into the market.
Municipal bond yields, as expected, have not risen as dramatically as Treasury
bond yields. In our opinion, although municipal bonds may exhibit a somewhat
greater degree of volatility if interest rates continue to rise, the relative
stability of municipal bonds versus many other types of bonds may make it an
attractive option for many risk-averse investors.
Over the long term, the real rate of returns (i.e., after subtracting the
effects of inflation) is what matters most for fixed-income investors. We
believe that on
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2 1999 Semi-Annual Report to Shareholders
<PAGE>
this basis, municipal bonds still represent excellent values. A
diligent Fed monetary policy with the effects of global competition and the high
productivity of our economy should serve to keep inflation at historically low
levels. Moreover, long-term municipal bonds are currently providing
approximately 90% of long-term U.S. Treasury yields. Typically, municipal bonds
are considered a good value when they yield about 85% of comparable-maturity
U.S. Treasury bonds.
Municipal Bond Market Outlook
We remain cautiously optimistic on the municipal bond market in the coming
months. In our view, U.S. economic growth should remain healthy with
productivity gains helping to contain higher inflationary pressures. Clearly,
the Fed's monetary policy bias has changed from the latter part of 1998. After
raising short-term interest rates on June 30, 1999, it is possible that the Fed
will continue to take back the interest rate cuts initiated last year. However,
until more substantial evidence of rising inflation appears, we do not believe
that the Fed will embark on an extended campaign of raising interest rates. We
remain positive on the prospects for municipal bonds and believe the
Intermediate Municipal Fund is well positioned for the immediate future.
Thank you for investing in the Smith Barney Intermediate Municipal Fund, Inc.
We look forward to continuing to help you pursue your financial goals in the
years ahead.
Sincerely,
/s/ Heath B. McLendon /s/ Peter M. Coffey
Heath B. McLendon Peter M. Coffey
Chairman Vice President
July 16, 1999
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Smith Barney Intermediate Municipal Fund, Inc. 3
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Take Advantage of the Fund's Dividend Reinvestment Plan!
Did you know that Fund investors who reinvest their dividends are taking
advantage of one of the most effective wealth-building tools available today?
Systematic investments put time to work for you through the strength of
compounding.
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. The
Fund's complete Plan begins on page 23. 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), or if the Fund declares a dividend or
capital gains distribution payable only in cash, First Data Investor Services
Group, Inc. (the "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.
Restated Plan Adopted
The descriptions herein are based on a restated version of the Plan, which was
recently adopted to reflect current practices of the Plan agent and for the
purpose of standardizing the terms among all closed-end mutual funds managed by
SSBC Fund Management Inc.
To find out more detailed information about the Plan and about how you can
participate, please call First Data Investors Services Group, Inc. at (800)
331-1710.
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4 1999 Semi-Annual Report to Shareholders
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Schedule of Investments (unaudited) June 30, 1999
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FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Education -- 13.6%
$1,700,000 Aa2* Arizona Education Loan Marketing Corp.,
7.000% due 3/1/02(b) $ 1,787,125
1,805,000 AAA Bastrop, TX ISD, PSFG, zero coupon due 2/15/18 636,263
2,500,000 AAA Chicago, IL Board of Education, Capital
Appreciation, Chicago School Reform,
Series A, AMBAC-Insured, zero coupon
due 12/1/16 965,625
1,000,000 AAA Franklin, TN Special School District, Capital
Appreciation, FSA-Insured, zero coupon
due 6/1/19 320,790
1,000,000 A- Hempstead, NY IDA, Civic Facility Revenue,
Adelphi University Civic Facility, 5.250%
due 2/1/13 1,000,000
395,000 NR Idaho Student Loan Fund Refunding Marketing
Association Inc., Student Loan Refunding,
6.400% due 10/1/99, Sinking Fund Average
Life 10/1/99 396,138
400,000 Aaa* Joshua, TX Independent School Board, Capital
Appreciation, Series C, PSFG, zero coupon
due 2/15/12 204,500
270,000 AAA Massachusetts Education Loan Authority Issue
E, Series A, AMBAC-Insured, 6.850%
due 1/1/04(b) 283,500
520,000 A* Montana Higher Education Student Assistance Corp.,
Student Loan Revenue, 7.050% due 6/1/04,
Sinking Fund Average Life 4/9/03(b) 542,100
1,000,000 Aaa* Nebraska, Income Revenue, Junior Subordinate,
Series A-6, MBIA-Insured, 6.450% due 6/1/18,
Sinking Fund Average Life 8/8/17(b) 1,030,000
500,000 A3* New England Education Loan Marketing Corp.,
Massachusetts Refunding Student Loan Revenue,
6.900% due 11/1/09(b) 561,875
1,000,000 Aaa* Northwest, TX ISD, Capital Appreciation, PSFG,
zero coupon due 8/15/13 448,750
1,475,000 AAA Pennsylvania State Higher Educational Facilities
Authority, Health Services Revenue, Allegheny
Delaware Valley Obligation, Series A, 5.600%
due 11/15/09 1,475,000
1,000,000 AAA Redford Michigan Unified School District,
AMBAC-Insured, 5.000% due 5/1/12 990,000
Vermont State Colleges Revenue, Capital Appreciation:
500,000 A Zero coupon due 7/1/09 290,000
500,000 A Zero coupon due 7/1/10 273,125
500,000 A Zero coupon due 7/1/11 255,000
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11,459,791
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Electric -- 2.5%
Washington Public Power Supply System Nuclear
Power:
1,000,000 Aa1* Project 1, 7.750% due 7/1/03 1,117,500
1,000,000 Aa1* Series A, Project 2, 5.000% due 7/1/12 975,000
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2,092,500
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Escrowed to Maturity (c) -- 10.8%
990,000 AAA Houston, TX Airport Systems Revenue, 5.500% due
7/1/12, Sinking Fund Average Life 4/24/07 988,763
See Notes to Financial Statements.
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Smith Barney Intermediate Municipal Fund, Inc. 5
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Schedule of Investments (unaudited) (continued) June 30, 1999
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FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Escrowed to Maturity (c) -- 10.8% (continued)
$ 305,000 NR Lafayette, LA Public Financing Authority,
Single-Family Mortgage Revenue, FHA-Insured,
7.200% due 4/1/10, Sinking Fund Average
Life 9/13/05 $ 343,915
220,000 NR Los Angeles Hollywood, CA Presbyterian
Single-Family Mortgage, 9.625% due 7/1/13,
Sinking Fund Average Life 6/13/08 283,800
775,000 AAA Metropolitan Nashville, TN Airport Authority
Revenue, 7.500% due 7/1/05, Sinking Fund
Average Life 3/17/03 832,156
199,000 AAA New Jersey State Turnpike Authority Revenue
Refunding, 10.375% due 1/1/03, Sinking Fund
Average Life 8/16/01 222,133
1,355,000 A3* New York, NY GO, Series D, 7.300% due 2/1/01 1,421,056
1,855,000 BBB+ New York State Urban Development Corp. Revenue,
7.300% due 4/1/01 1,957,025
205,000 AAA Ohio State Water Development Authority Revenue,
Armco Steel Corp., 7.875% due 11/1/00,
Sinking Fund Average Life 5/2/00 211,406
1,430,000 AAA Ohio State Water Development Authority Safe
Water, Series 2, 9.375% due 12/1/10, Sinking
Fund Average Life 5/5/05 1,744,600
80,000 AAA Salt Lake City, UT Water Conservancy Distribution
Revenue, Series A, MBIA-Insured, 10.875% due
10/1/02, Sinking Fund Average Life 5/17/01 88,800
1,000,000 NR Southwestern Illinios, Development Authority Hospital
Revenue, (Wood River Hospital Project),
6.875% due 8/1/03, Sinking Fund Average Life
9/19/01 1,065,000
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9,158,654
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Finance -- 1.0%
765,000 A- Tulsa, OK Housing Assistance Corp. Multi-Family
Revenue, HUD-Insured, 7.250% due 10/1/07
Sinking Fund Average Life 9/17/04(b) 808,988
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General Obligation -- 7.3%
1,000,000 AAA Chicago, IL GO, AMBAC-Insured, 6.100% due 1/1/03 1,052,500
885,000 AAA District of Columbia GO, MBIA-Insured, 6.750%
due 6/1/01 901,196
Harris County, TX GO, Capital Appreciation,
MBIA-Insured:
875,000 AAA Zero coupon due 8/15/12 435,313
1,250,000 AAA Zero coupon due 8/15/13 585,938
1,000,000 AA Harvey, IL GO Refunding, Asset Guaranty-Insured,
6.700% due 2/1/09, Sinking Fund Average Life
2/26/08 1,095,000
750,000 AAA New Haven, CT GO, Series 1992A, 9.250% due 3/1/02,
Sinking Fund Average Life 3/1/01 807,188
145,000 A- New York, NY GO, Series D, 7.300% due 2/1/01 151,706
1,075,000 AAA Oneida County, NY GO, FGIC-Insured,
5.250% due 3/15/10 1,101,875
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6,130,716
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Government Facilities -- 1.8%
1,490,000 AAA Chicago, IL Public Buildings Committee Building
Revenue, Series A, MBIA-Insured, 5.250% due
12/1/11, Sinking Fund Average Life 6/6/11 1,506,763
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See Notes to Financial Statements.
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6 1999 Semi-Annual Report to Shareholders
<PAGE>
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Schedule of Investments (unaudited) (continued) June 30, 1999
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FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Hospital -- 17.6%
$1,000,000 AA Clackamas County Hospital Facility, Legacy Health Systems,
5.500% due 2/15/14 $ 1,029,354
1,290,000 Baa3* Colorado Health Facilities Authority Revenue,
Rocky Mountain Adventist, 6.250% due 2/1/04,
Sinking Fund Average Life 3/20/02 1,262,587
945,000 NR Coweta County, GA Development Authority Revenue,
Senior Care Group Inc., 6.750% due 7/1/10,
Sinking Fund Average Life 7/6/06 945,000
620,000 A Defiance, OH Hospital Revenue Refunding, Defiance
Hospital, 7.625% due 11/1/03, Sinking Fund
Average Life 11/16/01 628,680
2,000,000 AA Harris County, TX Health Facilities Development
Corp., Hospital Revenue, (Texas Childrens
Hospital Project), Series A, 5.375% due
10/1/16 1,960,000
1,000,000 A2* Indiana Health Facilities Authority Hospital
Revenue Refunding Bonds, St. Anthony Medical
Center, 7.000% due 10/1/06, Sinking Fund
Average Life 10/17/05 1,056,250
1,000,000 AAA Maryland Health & Higher Education Facility Authority
Revenue, (Mercy Medical Center Project),
FSA-Insured, 6.500% due 7/1/13, Sinking Fund
Average Life 3/7/11 1,137,500
Orange County, FL Health Facilities Authority Hospital
Revenue Bonds, Adventist Health Systems/Sunbelt:
1,180,000 AAA AMBAC-Insured, 6.875% due 11/15/04,
Sinking Fund Average Life 12/01/03 1,215,648
500,000 AAA FSA-Insured, FLAIRS, 6.810% due 11/15/07(d) 529,375
210,000 AAA Oshkosh, WI Hospital Facility Revenue, Mercy Medical
Center, 7.375% due 7/1/09, Sinking Fund Average
Life 1/22/04 232,946
1,045,000 BBB+ Rhode Island State Health & Educational Building,
Corporation Revenue, Roger Williams Hospital
Financing, 5.400% due 7/1/13,
Sinking Fund Average Life 1/23/12 997,975
215,000 AA Taos County, NM Gross Receipts Tax Revenue,
Asset Guaranty-Insured, 6.125% due 12/1/01,
Sinking Fund Average Life 3/13/01 220,106
2,000,000 AAA Tarrant County, TX Health Facilities Development
Corp., Health System Revenue, Series A,
MBIA-Insured, 5.750% due 2/15/12 2,102,499
1,000,000 Baa2* Tomball, TX Hospital Authority Revenue, Tomball
Regional Hospital, 5.750% due 7/1/14, Sinking
Fund Average Life 8/8/12 985,203
500,000 AAA Wisconsin State Health & Educational Facilities,
Authority Revenue, Children's Hospital of
Wisconsin, AMBAC-Insured, 5.625% due 2/15/16 516,875
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14,819,998
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Housing: Multi-Family -- 13.7%
905,000 AAA Beaumont, TX Multi-Family Housing Finance, Regency
Place Apartments, Asset Guaranty-Insured,
7.000% mandatory tender 10/1/03,
Sinking Fund Average Life 7/21/03 916,113
See Notes to Financial Statements.
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Smith Barney Intermediate Municipal Fund, Inc. 7
<PAGE>
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Schedule of Investments (unaudited) (continued) June 30, 1999
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FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Housing: Multi-Family -- 13.7% (continued)
$ 585,000 AAA Charlotte, NC Mortgage Revenue Refunding,
Double Oaks Apartment, Series A, FHA-Insured,
7.300% due 11/15/07, Sinking Fund Average
Life 5/5/04 $ 628,144
850,000 AA+ Hudson County, NJ Improvement Authority, Multi-Family
Housing Revenue Bonds, 6.600% due 6/1/04
Sinking Fund Average Life 7/14/02(b) 898,875
Maricopa County, AZ IDA, Multi-Family Housing
Revenue:
1,770,000 AAA National Health Facilities II Project,
Series A, FSA-Insured 5.500% due 1/1/18,
Sinking Fund Average Life 11/10/15 1,807,612
895,000 AAA Metro Gardens-Mesa Ridge Project, Series A,
MBIA-Insured, 5.650% due 7/1/19,
Sinking Fund Average Life 2/27/17 914,019
885,000 A2* McMinnville, TN Housing Authority Revenue Refunding,
First Mortgage, Beersheba Heights, 6.000%
due 10/1/09, Sinking Fund Average Life 4/14/05 920,400
420,000 AAA Missouri State Housing Development Community
Mortgage Revenue, Series C, GNMA/FNMA-
Collateralized, 7.450% due 9/1/27, Sinking
Fund Average Life 12/9/22 467,775
MountVernon, IL Elderly Housing Corp., First Lien
Revenue Bonds, Section 8 Assisted, Series 1979:
160,000 Ba3* 7.875% due 4/1/01 160,026
170,000 Ba3* 7.875% due 4/1/02 170,027
185,000 Ba3* 7.875% due 4/1/03 185,030
200,000 Ba3* 7.875% due 4/1/04 200,032
215,000 Ba3* 7.875% due 4/1/05 215,034
235,000 Ba3* 7.875% due 4/1/06 235,038
250,000 Ba3* 7.875% due 4/1/07 250,040
270,000 Ba3* 7.875% due 4/1/08 270,043
480,000 AAA Nevada Housing Division, Multi-Unit Housing,
(Austin Crest Project), FNMA-Collateralized,
5.500% due 10/1/09, Sinking Fund Average
Life 2/15/06 478,200
730,000 AAA San Jose, CA Multi-Family Housing, (Country Brook
Project), FNMA-Collateralized, 6.500% mandatory
tender 4/1/02, Sinking Fund Average Life
1/21/01 757,375
825,000 Aa* Streamwood, IL Multi-Family Housing Revenue,
(Southgate Project), FHA-Insured, 6.200% due
11/1/07 862,125
1,000,000 AAA Texas State Department Housing and Community
Affairs, Home Mortgage Revenue, Series C-2,
GNMA, FNMA & FHLMC-Insured, 5.000% due
7/2/24(d) 1,177,500
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11,513,408
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Housing: Single-Family -- 2.8%
305,000 AAA St. Louis County, MO Single-Family Mortgage Revenue,
MBIA-Insured, 6.750% due 4/1/10,
Sinking Fund Average Life 5/20/07 305,110
See Notes to Financial Statements.
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8 1999 Semi-Annual Report to Shareholders
<PAGE>
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Schedule of Investments (unaudited) (continued) June 30, 1999
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FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Housing: Single-Family -- 2.8% (continued)
$1,000,000 AA+ Virginia State Housing Development Authority
Commonwealth Mortgage, Series H, 6.100%
due 7/1/03 $ 1,035,000
1,060,000 AA Wisconsin Housing & Education Development
Authority, Home Ownership Revenue, 6.350%
due 3/1/01 1,083,850
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2,423,960
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Industrial Development -- 3.4%
1,000,000 A Kanawha, WV Commercial Development Revenue,
(May Department Store Project), 6.500%
due 6/1/03 1,070,000
1,000,000 NR Newbern, TN Industrial Development Ltd.
Obligation, Newburn Rubber Inc., 7.900%
due 3/1/00 1,024,410
800,000 NR Sussex County, DE Economic Development Revenue
Refunding Bonds, (Rehoboth Mall Project),
Series 1992, 7.250% due 10/15/12, Sinking
Fund Average Life 5/30/07 745,000
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2,839,410
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Miscellaneous -- 7.0%
1,250,000 AA Bernalillo County, NM Gross Receipts, Tax Revenue,
5.125% due 4/1/16 1,231,250
670,000 AAA Cibola County, NM Gross Receipts, Tax Revenue,
AMBAC-Insured, 5.000% due 11/1/16 643,200
1,000,000 BBB- Clarksville, TN Natural Gas Acquisition Corp. Gas
Revenue, Series A, 7.500% due 11/1/04,
Sinking Fund Average Life 9/7/04 1,033,850
1,000,000 A Illinois Development Finance Authority, City
East of St. Louis, 6.875% due 11/15/05,
Sinking Fund Average Life 7/26/03 1,080,000
800,000 A South Dakota Economic Development Finance Authority,
APA Optics, Series A, 6.750% due 4/1/16,
Sinking Fund Average Life 7/7/13(b) 865,000
2,000,000 AAA Southern Illinois University Revenue Capital
Appreciation, Housing & Auxiliary Facilities,
MBIA-Insured, zero coupon due 4/1/12 1,022,500
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5,875,800
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Pollution Control -- 5.2%
1,000,000 Aa3* Brazos River, TX Navigation District Brazoria
County PCR, 6.750% due 2/1/10 1,140,000
1,200,000 A3* Erie County, PA Pollution Control (International
Paper Company Project), Series A, 5.300%
due 4/1/12 1,191,000
1,000,000 AAA Monroe County, MI PCR, (Detroit Edison Co. Project),
AMBAC-Insured, 6.350% due 12/1/04(b) 1,085,000
1,000,000 A3* Port Umpqua, OR Pollution Control (International
Paper Company Project), 5.200% due 6/1/11 988,750
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4,404,750
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See Notes to Financial Statements.
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Smith Barney Intermediate Municipal Fund, Inc. 9
<PAGE>
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Schedule of Investments (unaudited) (continued) June 30, 1999
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FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Pre-Refunded(c) -- 0.2%
$ 70,000 AAA Indiana University Revenue, Series 1983N, (Call
7/1/01 @ 100), 10.000% due 7/1/03, Sinking
Fund Average Life 4/10/01 $ 75,775
55,000 AAA Oklahoma State IDA Oklahoma Health Care Corp.,
Series A, FGIC-Insured, (Various Call Dates),
9.125% due 11/1/08, Sinking Fund Average
Life 5/7/06 67,444
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143,219
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Public Facilities -- 3.0%
1,350,000 A- Dekalb County, IN Redevelopment Authority Revenue,
Mini-Mill Public Improvement, 6.250% due
1/15/09 1,427,625
1,000,000 AA- La Crosse, WI Resource Recovery Revenue, (Northern
States Power Co. Project), 6.000% due
11/1/21(b) 1,063,750
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2,491,375
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Solid Waste -- 1.5%
1,285,000 B1* Atlantic City, NJ Utility Authority Solid Waste
Revenue, 7.000% due 3/1/02, Sinking Fund
Average Life 3/18/01 1,297,850
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Transportation -- 7.4%
1,400,000 AAA Chicago, IL Midway Airport Revenue, Series C,
MBIA-Insured, 5.500% due 1/1/16 1,428,000
2,035,000 AAA Dallas Fort Worth, TX Regional Airport Revenue
Refunding, Series 1992A, FGIC-Insured, 7.750%
due 11/1/03 2,302,093
1,920,000 Baa1* Denver, CO City and County Airport Revenue, Series
1990A, 8.250% due 11/15/02(b) 2,049,600
500,000 A- Pittsfield Township, MI Economic Development Corp.
Revenue Refunding, (Airport Association
Project), Unconditional Guaranty-Lincoln
National, 6.400% due 12/1/02 515,000
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6,294,693
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Utilities -- 1.2%
1,735,000 AAA Palo Duro River Authority, TX Refunding,
CGIC-Insured, zero coupon due 8/1/09 1,036,662
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TOTAL INVESTMENTS -- 100%
(Cost -- $82,227,040**) $84,298,537
================================================================================
(a) All ratings are by Standard & Poor's Ratings Service, except those which
are identified by an asterisk (*) are rated by Moody's Investors Service,
Inc.
(b) Income from these issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(c) Bonds are escrowed to maturity with U.S. Government Securities and are
considered by the Manager to be triple-A rated even if issuer has not
applied for new ratings.
(d) Inverse floating rate security - coupon varies inversely with level of
short-term tax-exempt interest rates.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 11 and 12 for definition of ratings and certain security
descriptions.
See Notes to Financial Statements.
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10 1999 Semi-Annual Report to Shareholders
<PAGE>
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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
"BB" 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 some what 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 -- Bonds rated "BB" are regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal
in accordance with the terms of the obligation. 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 Inc. ("Moody's") -- Numerical modifiers 1, 2, and 3
may be applied to each generic rating from "Aa" to "B", 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.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 11
<PAGE>
- --------------------------------------------------------------------------------
Short-Term Securities Ratings (unaudited)
- --------------------------------------------------------------------------------
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
- --------------------------------------------------------------------------------
Security Descriptions (unaudited)
- --------------------------------------------------------------------------------
AMBAC -- AMBAC Indemnity Corporation
CGIC -- Capital Guaranty Insurance Company
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FLAIRS -- Floating Adjustable Interest Rate Securities
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
IDA -- Industrial Development Agency
IDR -- Industrial Development Revenue
ISD -- Independent School District
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
PCFA -- Pollution Control Financing Authority
PCR -- Pollution Control Revenue
PSFG -- Permanent School Fund Guaranty
RIBS -- Residual Interest Bonds
- --------------------------------------------------------------------------------
12 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) June 30, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $82,227,040) $ 84,298,537
Receivable for securities sold 140,124
Interest receivable 1,326,817
- -------------------------------------------------------------------------------
Total Assets 85,765,478
- -------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 88,072
Management fees payable 44,794
Capital gains payable 14,748
Payable to bank 6,518
Accrued expenses 47,952
- -------------------------------------------------------------------------------
Total Liabilities 202,084
- -------------------------------------------------------------------------------
Total Net Assets $ 85,563,394
===============================================================================
NET ASSETS:
Par value of capital shares $ 8,364
Capital paid in excess of par value 83,651,965
Undistributed net investment income 7,571
Accumulated net realized loss on security transactions (176,003)
Net unrealized appreciation of investments 2,071,497
- -------------------------------------------------------------------------------
Total Net Assets
(Equivalent to $10.23 a share on 8,364,165 shares of $0.001
par value outstanding; 100,000,000 shares authorized) $ 85,563,394
===============================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 13
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 1999
INVESTMENT INCOME:
Interest $ 2,548,951
- -------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 3) 261,777
Shareholder communications 24,795
Shareholder and system servicing fees 18,448
Audit and legal 7,289
Pricing service fees 6,545
Registration fees 2,976
Custody 2,728
Director's fees 2,480
Other 3,300
- -------------------------------------------------------------------------------
Total Expenses 330,338
- -------------------------------------------------------------------------------
Net Investment Income 2,218,613
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED loss
ON INVESTMENTS (NOTE 4):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 12,291,707
Cost of securities sold 12,466,374
- -------------------------------------------------------------------------------
Net Realized Loss (174,667)
- -------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period 5,042,128
End of period 2,071,497
- -------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (2,970,631)
- -------------------------------------------------------------------------------
Net Loss on Investments (3,145,298)
- -------------------------------------------------------------------------------
Decrease in Net Assets From Operations $ (926,685)
===============================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended June 30, 1999 (unaudited)
and the Year Ended December 31, 1998
1999 1998
===============================================================================
OPERATIONS:
Net investment income $ 2,218,613 $ 4,534,704
Net realized gain (loss) (174,667) 398,584
Decrease in net unrealized appreciation (2,970,631) (281,238)
- -------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations (926,685) 4,652,050
- -------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income (2,208,140) (4,535,128)
Net realized gains (47,888) (350,696)
- -------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (2,256,028) (4,885,824)
- -------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Net asset value of shares issued
for reinvestment of dividends -- 373,399
- -------------------------------------------------------------------------------
Increase in Net Assets From
Fund Share Transactions -- 373,399
- -------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (3,182,713) 139,625
NET ASSETS:
Beginning of period 88,746,107 88,606,482
- -------------------------------------------------------------------------------
End of period* $85,563,394 $88,746,107
===============================================================================
* Includes undistributed (overdistributed) net
investment income of: $ 7,571 $ (2,902)
===============================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 15
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
The Smith Barney Intermediate Municipal Fund, Inc. ("Fund"), a Maryland
corporation, is registered under the Investment Company Act of 1940, as amended,
as a diversified, closed-end management investment company.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) securities are valued
at the mean between the bid and ask prices provided by an independent pricing
service that are based on transactions in municipal obligations, quotations from
municipal bond dealers, market transactions in comparable securities and various
relationships between securities; (c) securities for which market quotations are
not available will be valued in good faith at fair market value by or under the
direction of the Board of Directors; (d) securities maturing within 60 days are
valued at cost plus accreted discount, or minus amortized premium, which
approximates value; (e) gains or losses on the sale of securities are calculated
by using the specific identification method; (f) interest income, adjusted for
amortization of premium and accretion of original issue discount, is recorded on
the accrual basis; market discount is recognized upon the disposition of the
security; (g) the Fund intends to comply with the applicable provisions of the
Internal Revenue Code of 1986, as amended, pertaining to regulated investment
companies and to make distributions of taxable income sufficient to relieve it
from substantially all Federal income and excise taxes; (h) dividends and
distributions to shareholders are recorded on the ex-dividend date; (i) the
character of income and gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. At December 31, 1998, reclassifications were made to the Fund's
capital accounts to reflect permanent book/tax differences and income and gains
available for distributions under income tax regulation. Net investment income,
net realized gains and net assets were not affected by this change; and (j)
estimates and assumptions are required to be made regarding assets, liabilities
and changes in net assets resulting from operations when financial statements
are prepared. Changes in the economic environment, financial markets and any
other parameters used in determining these estimates could cause actual results
to differ.
2. Exempt-Interest Dividends and Other Distributions
The Fund intends to satisfy conditions that will enable interest from municipal
securities, which is exempt from Federal income tax and from designated state
- --------------------------------------------------------------------------------
16 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
income taxes, to retain such tax-exempt status when distributed to the share
holders of the Fund.
Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
3. Management Agreement
and Transactions with Affiliated Persons
SSBC Fund Management Inc. ("SSBC"), formerly known as Mutual Management Corp., a
subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), acts as investment
manager to the Fund. As compensation for its services, the Fund pays SSBC a fee
calculated at the annual rate of 0.60% of the Fund's average daily net assets.
This fee is calculated daily and paid monthly.
All officers and one Director of the Fund are employees of Salomon Smith Barney
Inc., another subsidiary of SSBH.
4. Investments
During the six months ended June 30, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $10,496,645
- --------------------------------------------------------------------------------
Sales 12,291,707
================================================================================
At June 30, 1999, aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $2,607,666
Gross unrealized depreciation (536,169)
- --------------------------------------------------------------------------------
Net unrealized appreciation $2,071,497
================================================================================
5. Futures Contracts
Initial margin deposits made upon entering into futures contracts are recognized
as assets. The initial margin is segregated by the custodian and is noted in the
schedule of investments. During the period the futures contract is open, changes
in the value of the contract are recognized as unrealized gains or losses by
"marking to market" on a daily basis to reflect the market value of the contract
at the end of each day's trading. Variation margin payments are made or
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 17
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
received and recognized as assets due from or liabilities due to broker,
depending upon whether unrealized gains or losses are incurred. When the
contract is closed, the Fund records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transactions and
the Fund's basis in the contract. The Fund enters into such contracts to hedge a
portion of its portfolio. The Fund bears the market risk that arises from
changes in the value of the financial instruments and securities indices
(futures contracts).
At June 30, 1999, there were no open futures contracts.
6. Options Contracts
Premiums paid when put or call options are purchased by the Fund represent
investments, which are marked-to-market daily. When a purchased option expires,
the Fund will realize a loss in the amount of the premium paid. When the Fund
enters into a closing sales transaction, the Fund will realize a gain or loss
depending on whether the proceeds from the closing sales transaction are greater
or less than the premium paid for the option. When the Fund exercises a put
option, it will realize a gain or loss from the sale of the underlying security
and the proceeds from such sale will be decreased by the premium originally
paid. When the Fund exercises a call option, the cost of the security which the
Fund purchases upon exercise will be increased by the premium originally paid.
At June 30, 1999 there were no open purchased call or put options contracts.
When a Fund writes a covered call or put option, an amount equal to the premium
received by the Fund is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, the Fund realizes a gain
equal to the amount of the premium received. When the Fund enters into a closing
purchase transaction, the Fund realizes a gain or loss depending upon whether
the cost of the closing transaction is greater or less than the premium
originally received without regard to any unrealized gain or loss on the under
lying security, and the liability related to such option is eliminated. When a
written call option is exercised, the cost of the security sold will be
decreased by the premium originally received. When a put option is exercised,
the amount of the premium originally received will reduce the cost of the
security which the Fund purchased upon exercise. When written index options are
exercised, settlement is made in cash.
- --------------------------------------------------------------------------------
18 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
The risk associated with purchasing options is limited to the premium originally
paid. The Fund enters into options for hedging purposes. The risk in writing a
call option is that the Fund gives up the opportunity to participate in any in
crease in the price of the underlying security beyond the exercise price. The
risk in writing a put option is that the Fund is exposed to the risk of a loss
if the market price of the underlying security declines.
At June 30, 1999, the Fund had no open written options contracts.
7. Capital Shares
Transactions in shares of the Fund were as follows:
Six Months Ended Year Ended
June 30, 1999 December 31, 1998
------------------ ------------------
Shares Amount Shares Amount
================================================================================
Shares issued on reinvestment -- -- 35,132 $373,399
================================================================================
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 19
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year ended December 31,
except where noted:
<TABLE>
<CAPTION>
1999(1) 1998 1997 1996 1995 1994(2)
=======================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period $10.61 $10.64 $10.47 $10.66 $ 9.95 $10.81
- ---------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.27 0.55 0.57 0.58 0.58 0.58
Net realized and unrealized
gain (loss) (0.39) 0.01 0.28 (0.17) 0.73 (0.84)
- ---------------------------------------------------------------------------------------
Total Income (Loss) From
Operations (0.12) 0.56 0.85 0.41 1.31 (0.26)
- ---------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.26) (0.55) (0.57) (0.60) (0.60) (0.60)
In excess of net investment
income -- -- (0.01) -- -- --
Net realized gains (0.00) (0.04) (0.10) -- -- --
- ---------------------------------------------------------------------------------------
Total Distributions (0.26) (0.59) (0.68) (0.60) (0.60) (0.60)
- ---------------------------------------------------------------------------------------
Net Asset Value, End of Period $10.23 $10.61 $10.64 $10.47 $10.66 $ 9.95
- ---------------------------------------------------------------------------------------
Total Return, Based on
Market Value* (8.68)%++ 7.05% 13.42% 1.56% 15.93% (9.34)%
- ---------------------------------------------------------------------------------------
Total Return, Based on
Net Asset Value* (0.94)%++ 5.50% 8.49% 4.13% 13.72% (2.33)%
- ---------------------------------------------------------------------------------------
Net Assets,
End of Period (millions) $86 $89 $89 $87 $88 $82
- ---------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.76%+ 0.76% 0.74% 0.77% 0.72% 0.72%
Net investment income 5.09+ 5.10 5.42 5.56 5.63 5.64
- ---------------------------------------------------------------------------------------
Portfolio Turnover Rate 13% 42% 58% 21% 13% 26%
- ---------------------------------------------------------------------------------------
Market Price, End of Period $9.500 $10.688 $10.563 $9.938 $10.375 $9.500
=======================================================================================
</TABLE>
(1) For the six months ended June 30, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
# Amount represents less than $0.01.
* The total return calculation assumes that dividends are reinvested in
accordance with the Fund's dividend reinvestment plan.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
20 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Data (unaudited)
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each period:
AMEX Net Asset Dividends Reinvestment
Period Closing Price* Value* Paid Price
================================================================================
1997
July $10.75 $10.66 $0.048 $10.62
August 10.25 10.52 0.048 10.26
September 10.31 10.61 0.048 10.46
October 10.44 10.62 0.048 10.44
November 10.38 10.63 0.048 10.46
December 10.56 10.64 0.048 10.73
December+ 10.56 10.64 0.102 10.64
1998
January 10.94 10.69 0.048 10.64
February 10.63 10.63 0.048 10.63
March 10.06 10.58 0.048 10.21
April 10.00 10.51 0.045 10.00
May 9.81 10.61 0.045 9.93
June 10.00 10.60 0.045 10.08
July 10.19 10.58 0.045 10.13
August 10.06 10.68 0.045 10.12
September 10.38 10.75 0.045 10.40
October 10.63 10.68 0.045 10.58
November 10.50 10.66 0.045 10.65
December 10.69 10.61 0.045 10.74
December+ 10.69 10.61 0.036 10.61
1999
January 9.88 10.69 0.044 10.06
February 10.25 10.58 0.044 10.31
March 10.13 10.53 0.044 10.12
April 10.13 10.52 0.044 10.02
May 13.63 10.40 0.044 9.86
June 9.50 10.23 0.044 9.53
June+ 9.50 10.23 0.006 9.53
================================================================================
* On the last business day of the month.
+ Capital gain distribution.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 21
<PAGE>
- --------------------------------------------------------------------------------
Additional Shareholder Information (unaudited)
- --------------------------------------------------------------------------------
On April 21, 1999, the annual meeting of shareholders of the Fund was held for
the purpose of voting on the following matters:
1. To vote on the election of Allan J. Bloostein and Richard E. Hanson, Jr.
to serve as Directors until the year 2000 and the election of Lee Abraham,
Jane F. Dasher and Donald R. Foley to serve as Directors until the year
2002; and
2. To approve or disapprove the selection of KPMG Peat Marwick LLP as the
independent auditors for the current fiscal year of the Fund.
The results of the vote on Proposal 1 were as follows:
Shares Percentage Shares Percentage
Voted of Shares Voted of Shares
Directors* For Voted Against Voted
================================================================================
Allan J. Bloostein 5,981,186 98.99% 60,992 1.01%
Richard E. Hanson, Jr. 5,983,098 99.02 59,090 0.98
Lee Abraham 5,981,441 98.99 60,737 1.01
Jane F. Dasher 5,987,738 99.10 54,440 0.90
Donald R. Foley 5,985,487 99.06 56,691 0.94
================================================================================
The results of the vote on Proposal 2 were as follows:
Shares Percentage Shares Percentage Percentage
Voted of Shares Voted of Shares Shares of Shares
For Voted Against Voted Abstaining Abstained
================================================================================
7,746,921 92.72% 4,600 0.06% 51,058 0.61%
================================================================================
* The following Directors, representing the balance of the Board of
Directors, continue to serve: Paul Hardin, Heath B. McLendon, Roderick C.
Rasmussen and John P. Toolan.
- --------------------------------------------------------------------------------
22 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
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 "First Data" Investor Services Inc. 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), or if the Fund declares a dividend or capital gains
distribution payable only in cash, First Data 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 First Data has completed its
purchases, the market price exceeds the net asset value of the common stock as
of the valuation time, First Data 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 First Data is
unable to stop open market purchases and cause the Fund to issue the remaining
shares, the average per share purchase price paid by First Data 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
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 23
<PAGE>
- --------------------------------------------------------------------------------
Dividend Reinvestment Plan (unaudited)
- --------------------------------------------------------------------------------
in common stock issued by the Fund at such net asset value. First Data 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.
First Data 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 First Data 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. First Data'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 First Data, 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 First Data Investor Services Group Inc., P.O.
Box 8030, Boston, Massachusetts 02266-8030 or by telephone at 1-800-451-2010.
- --------------------------------------------------------------------------------
24 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Smith Barney
Intermediate [GRAPHIC OMITTED]
Municipal Fund, Inc.
- --------------------------------------------------------------------------------
DIRECTORS
Lee Abraham
Alan J. Bloostein
Jane F. Dasher
Donald R. Foley
Richard E. Hanson, Jr.
Paul Hardin
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
Joseph H. Fleiss, Emeritus
OFFICERS
Heath B. McLendon
President and
Chief Executive Officer
Lewis E. Daidone
Senior Vice President
and Treasurer
Peter M. Coffey
Vice President
Paul A. Brook
Controller
Christina T. Sydor
Secretary
INVESTMENT MANAGER
SSBC Fund Management Inc.
CUSTODIAN
PNC Bank, N.A.
SHAREHOLDER
SERVICING AGENT
First Data Investor Services Group, Inc.
P.O. Box 8030
Boston, MA 02266-8030
This report is submitted for the general information of the shareholders of
Smith Barney Intermediate Municipal Fund, Inc. It is not authorized for
distribution to prospective investors unless accompanied or preceded by a
current Prospectus for the Fund, which contains information concerning the
Fund's investment policies and expenses as well as other pertinent information.
SMITH BARNEY
INTERMEDIATE
MUNICIPAL FUND, INC.
388 Greenwich Street
New York, New York 10013
FD0633 8/99
