[GRAPHIC OMITTED]
Smith Barney
------------------------------------------
Intermediate Municipal Fund, Inc.
Annual Report
December 31, 1999
<PAGE>
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 annual report for the Smith Barney Intermediate
Municipal Fund, Inc. ("Fund") for the period ended December 31, 1999. We hope
you find this report to be useful and informative. During the past year, the
Fund distributed income dividends totaling $0.53 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.(1)
Price Annualized Twelve-Month
Per Share Distribution Rate(2) Total Returns
--------------- ------------------- -------------
$ 9.89 (NAV) 5.34% (1.39)%
$ 8.375 (AMEX) 6.30% (17.10)%
The Fund had a total return based on NAV of a negative 1.39% for the twelve
months ended December 31, 1999, versus the average total return of a negative
2.32% for closed-end municipal bond funds based on NAV for the same period,
according to Lipper, Inc. (Lipper is a major fund tracking organization.)
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1 The NAV is calculated by subtracting total liabilities from the closing
value of all securities held by the Fund, plus all other assets. This
result (net assets) is divided by the total number of shares outstanding.
The NAV fluctuates with changes in the market price of the securities in
which the Fund has invested. However, the price at which the investor buys
or sells shares of the Fund is its market price as determined by supply
and demand.
2 Total returns are based on changes in NAV or the market value and assume
the reinvestment of all dividends and/or capital gains distributions in
additional shares. The annualized distribution rate is the Funds's current
monthly income dividend rate, annualized, and then divided by the the NAV
or the market value noted in the report. This annualized distribution rate
assumes a current monthly income dividend rate of 0.044 for twelve months.
This rate is as of January 31, 2000 and is subject to change. The
important difference between a total return and an annualized distribution
rate is that the total return takes into consideration a number of factors
including the fluctuation of the NAV or the market value during the period
reported. The NAV fluctuation includes the effects of unrealized
appreciation or depreciation in the Fund. Accordingly, since an annualized
distribution rate only reflects the current monthly income dividend rate
annualized, it should not be used as the sole indicator to judge the
return you receive from your fund investment. Past performance is not
indicative of future results.
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Smith Barney Intermediate Municipal Fund, Inc. 1
<PAGE>
Special Shareholder Notice
The weakness in the price of bonds and closed-end bond funds over the past year
is of particular concern to shareholders and management alike of the Smith
Barney Intermediate Municipal Fund, Inc. Even as the Fund continued to provide
investors with a consistent monthly income, the market price suffered
considerably. This resulted, in our opinion, from a combination of several
factors. During this period, the prices of bonds moved lower as interest rates
rose amid concern over potential Federal Reserve Board ("Fed") action to slow
the nation's surprisingly robust economic growth. In addition, the excitement
surrounding the returns being generated in some sectors of the stock market drew
investor interest and money away from fixed income securities. Finally, heavy
tax-loss selling that began in the second half of the year and accelerated in
the final months of 1999 led to a significant decline in the market price of the
Fund.
The Fund's Board of Directors, concerned about this price weakness and its
impact on investors, is taking steps to improve the stock price. Subsequent to
the close of the Fund's reporting period, the Board of Directors approved a plan
for which the Fund began to repurchase its common stock shares on Tuesday,
January 4, 2000. These shares are purchased on the American Stock Exchange at
market prices and then retired. Over time, a share repurchase program will
reduce the number of shares outstanding and may increase both stock price and
the net asset value per share of the Fund. As of January 31, 2000, the Fund
repurchased 73,500 number of shares totalling $631,526 at an average price of
$8.572 per share. At the same time, as you will read later in this letter, we
continue to seek to provide investors with a strong and consistent income stream
earned from portfolio operations.
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. (Please
note that a portion of the Fund's income may be subject to the Alternative
Minimum Tax ("AMT").) In line with this objective, the Fund follows an
investment strategy that emphasizes high quality, high coupon issues. The Fund
pursues this objective by investing in a diversified portfolio of municipal
securities which we believe do not involve undue risk to income or principal.
In accordance with the Fund's investment policy, the Fund's portfolio is
primarily invested in intermediate-term municipal bonds. At least 80% of its
total assets must be invested in municipal bonds that have remaining maturities
of less than 15 years. Investing in intermediate-term municipal bonds enables
the Fund's portfolio to potentially benefit from higher yields with only
slightly higher price volatility than short-term municipal securities.
During the period, we maintained an average weighted maturity of 9.76 years. As
of December 31, 1999, 94.1% of the Fund's holdings were rated investment
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2 1999 Annual Report to Shareholders
<PAGE>
grade(3) and 45.3% of the Fund's investments were rated triple-A. As of December
31, 1999, a major portion of the Fund's assets were allocated among the
following types of municipal bonds: education bonds (19.7%), hospital bonds
(11.4%) and escrowed to maturity bonds (10.8%).
Municipal Bond Market Update
A robust U.S. economy and three Fed interest-rate hikes negatively affected many
bond investors in 1999, the worst year for bond investing since 1994. Last year
was especially challenging for U.S. Treasury securities, which suffered their
worst decline in total return on record. This poor performance of U.S.
Treasuries reflects the reversal of the "flight to quality" that developed
during the global financial turmoil at the end of 1998. The best performing
sector of the bond market in 1999 was municipal securities.
In our view, bond yields are high enough to adequately reflect the risk of
slightly higher inflation. Indeed, we think that bond yields may be near their
peak.
U.S. Treasuries have remained in a narrow trading range just above 6%, while
select long-term municipal bonds are yielding approximately 95% to 100% of
long-term U.S. Treasury bonds. Under typical market conditions, municipal bonds
yield roughly 85% of similar-maturity U.S. Treasury bonds.
Presently, the U.S economy appears to be battling opposing forces. On the one
hand, inflation appears to be well contained. On the other hand, most economic
observers--including most Fed officials--want the economy to slow from its
current 4% annual growth rate in order to forestall a possible rebound in
inflation. We believe that a modest amount of additional restraint could put the
U.S. economy on a path toward sustainable, noninflationary growth.
In our view, performance in bond markets has been a direct result of Fed
monetary policy actions. While presumably aimed at stock market exuberance, it
is the bond market that has taken the brunt of any correction on fears of
further Fed interest rate increases. We believe the current lack of inflationary
evidence defies a historically tight labor market and reinforces the influence
of technology and the power of global pricing constraints.
Municipal Bond Market Outlook
A few weeks into 2000, we think that the worst may be over. Many bond experts
expect that yields on 30-year U.S. Treasuries may trade between 6% and 6.7% over
the next 12 months. These yields can provide investors with a comfortable
cushion against declines in the bonds' prices.
Inflation is what really drives bond market returns. Concerns persist over the
acceleration in inflation in the Consumer Price Index ("CPI"), which climbed in
- ----------
3 Investment-grade bonds are those rated Aaa, Aa, A and Baa by Moody's
Investors Services, Inc, or AAA, AA, A and BBB by Standard and Poor's
Rating Service, or have an equivalent rating by any nationally recognized
statistical rating organization as determined by the manager to be of
equivalent quality.
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Smith Barney Intermediate Municipal Fund, Inc. 3
<PAGE>
1999 as oil prices doubled. The bond market is likely to remain unsettled until
worries about future Fed monetary tightenings and the rapid pace of economic
growth subside. It is a possibility that the Fed may raise rates again in the
first half of the year.(4) Nevertheless, we doubt that yields will rise much
above recent levels, and we tend to use periods of market weakness to add to our
positions.
We are still confident that municipal bonds will continue to do well on a
relative basis in 2000. The new issue calendar seems quite manageable and the
artificial pressures created by tax swapping have abated to a significant
degree.
Our outlook for new issue volume is for a continuation of a steady supply for
2000, likely remaining in 1999's $225.9 billion range. We also expect new money
financings to increase as a result of rebounds in transportation issues and
education financing.
Given the higher yields and tighter conditions that already prevail in many
sectors of the bond market, the Fed's recent actions may be sufficient to slow
the economy without triggering higher inflation. We believe that the good news
is that the economy's "soft landing" is likely to be at a higher annual growth
rate than was previously thought possible due to the possible emergence of a new
economy where technological advances can spur growth without inflationary
pressures.
In our opinion, the recent rise in interest rates has created several buying
opportunities. We believe that we can maintain a competitive level of tax-exempt
income consistent with prudent investing and careful assessment of credit
quality. Yields on municipal securities have risen quite substantially and the
long end of the yield curve continues to favor municipal bonds.
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
January 18, 2000
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4 On Wednesday, February 2, 2000 after this letter was written the Fed
raised interest rates by 0.25% to 5.75%.
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4 1999 Annual Report to Shareholders
<PAGE>
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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 26. 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, PFPC Global Fund Services
("Plan Agent") formerly known as First Data Investor Services Inc., 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 PFPC Global Fund Services at (800) 331-1710.
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Smith Barney Intermediate Municipal Fund, Inc. 5
<PAGE>
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Schedule of Investments (continued) December 31, 1999
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FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Education-- 19.7%
$1,200,000 AAA Alta Loma CA, School District, FGIC-Insured,
zero coupon due 8/1/19 $ 363,000
1,700,000 Aa2* Arizona Education Loan Marketing Corp.,
7.000% due 3/1/02 (b) 1,765,865
1,805,000 AAA Bastrop, TX ISD, PSFG, zero coupon due 2/15/18 597,906
2,500,000 AAA Chicago, IL Board of Education, Capital
Appreciation, Chicago School Reform, Series
A, AMBAC-Insured, zero coupon due 12/1/16 890,625
1,000,000 AAA El Paso County, CO School District 49 Falcon,
Series A, FSA-Insured, 5.500% due 12/1/13 991,250
1,000,000 AAA Franklin, TN Special School District, Capital
Appreciation, FSA-Insured, zero coupon due
6/1/19 305,000
400,000 Aaa* Joshua, TX Independent School Board, Capital
Appreciation, Series C, PSFG, zero coupon
due 2/15/12 202,000
255,000 AAA Massachusetts Education Loan Authority Issue E,
Series A, AMBAC-Insured, 6.850% due 1/1/04 (b) 265,519
2,820,000 AAA McKeesport, PA Area School District, Capital
Appreciation, Series C, AMBAC-Insured, zero
coupon, due 10/1/19 842,475
1,000,000 AAA Metropolitan Government Nashville & Davidson,
TN Health & Education Facilities Board
Revenue, Meharry Medical College, AMBAC-
Insured, 6.000% due 12/1/19 1,005,000
510,000 A* Montana Higher Education Student Assistance
Corp., Student Loan Revenue, 7.050% due
6/1/04, Sinking Fund Average Life 3/1/03 (b) 523,388
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) 996,250
500,000 A3* New England Education Loan Marketing Corp.,
Massachusetts Refunding Student Loan
Revenue, 6.900% due 11/1/09 (b) 546,875
1,870,000 A* New Mexico Educational Assistance Foundation,
Student Loan Revenue, Series A-2, 5.950%
due 11/1/07 (b) 1,867,663
2,000,000 AAA New York State Dormitory Authority Revenue,
State University Educational Facilities,
MBIA-Insured, 6.000% due 5/15/13 2,075,000
1,000,000 Aaa* Northwest, TX ISD, Capital Appreciation, PSFG,
zero coupon due 8/15/13 448,750
1,500,000 AAA University of Alabama Birmingham, FGIC-Insured,
5.375% due 10/1/11 1,490,625
665,000 A University of Virgin Islands, Series A,
ACA-Insured, 6.000% due 12/1/19 640,894
Vermont State Colleges Revenue, Capital Appreciation:
500,000 A Zero coupon due 7/1/09 288,750
500,000 A Zero coupon due 7/1/10 270,625
500,000 A Zero coupon due 7/1/11 252,500
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16,629,960
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See Notes to Financial Statements.
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6 1999 Annual Report to Shareholders
<PAGE>
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Schedule of Investments (continued) December 31, 1999
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FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Electric -- 2.4%
Washington Public Power Supply System Nuclear Power:
$1,000,000 Aa1* Project 1, 7.750% due 7/1/03 $ 1,091,250
1,000,000 Aa1* Series A, Project 2, 5.000%, due 7/1/12 930,000
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2,021,250
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Escrowed to Maturity (c) -- 10.8%
305,000 NR Lafayette, LA Public Financing Authority,
Single-Family Mortgage Revenue, FHA-Insured,
7.200% due 4/1/10, Sinking Fund Average
Life 9/13/05 331,688
245,000 NR Los Angeles Hollywood, CA Presbyterian Single-
Family Mortgage, 9.625% due 7/1/13, Sinking
Fund Average Life 2/28/08 308,700
775,000 AAA Metropolitan Nashville, TN Airport Authority
Revenue, 7.500% due 7/1/05, Sinking Fund
Average Life 10/14/02 815,688
750,000 AAA New Haven, CT GO, Series 1992A, 9.250% due 3/1/02,
Sinking Fund Average Life 8/30/00 792,188
194,000 AAA New Jersey State Turnpike Authority Revenue
Refunding, 10.375% due 1/1/03, Sinking Fund
Average Life 8/16/01 212,188
1,355,000 A- New York, NY GO, Series D, 7.300% due 2/1/01 1,395,365
1,855,000 A- New York State Urban Development Corp. Revenue,
7.300% due 4/1/01 1,917,606
115,000 AAA Ohio State Water Development Authority Revenue,
Armco Steel Corp., 7.875% due 11/1/00,
Sinking Fund Average Life 5/2/00 116,755
1,330,000 AAA Ohio State Water Development Authority Safe
Water, Series 2, 9.375% due 12/1/10, Sinking
Fund Average Life 5/5/05 1,596,000
60,000 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 65,175
505,000 AAA Sikeston, MO Electric Revenue, 6.250% due 6/1/08 527,094
825,000 NR Southwestern Illinios, Development Authority
Hospital Revenue, (Wood River Hospital
Project), 6.875% due 8/1/03, Sinking Fund
Average Life 9/19/01 865,219
170,000 AA Taos County, NM Gross Receipts Tax Revenue,
Asset Guaranty-Insured, 6.125% due 12/1/01,
Sinking Fund Average Life 12/25/00 171,913
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9,115,579
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Finance -- 0.9%
735,000 NR Tulsa, OK Housing Assistance Corp. Multi-Family
Revenue, HUD-Insured, 7.250% due 10/1/07
Sinking Fund Average Life 7/16/04 764,400
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General Obligation -- 6.2%
Central Falls, RI GO, Asset Guaranty-Insured:
610,000 AA 5.700% due 5/15/12 612,288
1,000,000 AA 5.875% due 5/15/15 992,500
1,000,000 AAA Chicago, IL GO, AMBAC-Insured, 6.100% due 1/1/03 1,038,750
675,000 AAA Harris County, TX GO, Capital Appreciation,
MBIA-Insured, zero coupon due 8/15/12 330,750
See Notes to Financial Statements.
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Smith Barney Intermediate Municipal Fund, Inc. 7
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<PAGE>
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Schedule of Investments (continued) December 31, 1999
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FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
General Obligation -- 6.2% (continued)
$1,000,000 AA Harvey, IL GO Refunding, Asset Guaranty-Insured,
6.700% due 2/1/09, Sinking Fund Average
Life 2/26/08 $ 1,075,000
145,000 A- New York, NY GO, Series D, 7.300% due 2/1/01 149,012
1,735,000 AAA Palo Duro River Authority, TX Refunding, CGIC-
Insured, zero coupon due 8/1/09 1,034,494
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5,232,794
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Government Facilities -- 1.7%
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 1,454,613
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Hospital-- 11.4%
1,290,000 Ba1* Colorado Health Facilities Authority Revenue,
Rocky Mountain Adventist, 6.250% due 2/1/04,
Sinking Fund Average Life 10/13/01 1,235,175
1,515,000 AA Harris County, TX Health Facilities Development
Corp. Hospital Revenue, (Texas Children's
Hospital Project), Series A, 5.375%
due 10/1/11 1,473,338
1,000,000 BBB+ Henderson, NV Health Care Facility Revenue,
(Catholic Healthcare West Project), Series A,
6.200%, due 7/1/09 978,750
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 1,066,250
1,500,000 BBB+ Maricopa County, AZ Industrial Development
Authority, Health Facilities Revenue,
(Catholic Healthcare West Project), Series A,
5.250% due 7/1/06 1,426,875
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 1,090,000
500,000 AAA Orange County, FL Health Facilities Authority
Hospital Revenue Bonds, Adventist Health
Systems/Sunbelt, FSA-Insured, FLAIRS, 6.050%
due 11/15/07 514,375
1,045,000 BBB+ Rhode Island State Health & Educational Building
Corp. Revenue, Roger Williams Hospital
Financing, 5.400% due 7/1/13, Sinking Fund
Average Life 1/23/12 920,906
1,000,000 Baa2 Tomball, TX Hospital Authority Revenue, Tomball
Regional Hospital, 5.750% due 7/1/14 903,750
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9,609,419
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Housing: Multi-Family -- 10.7%
885,000 AA Beaumont, TX Multi-Family Housing Finance, Regency
Place Apartments, Asset Guaranty-Insured,
7.000% mandatory tender 10/1/03, Sinking
Fund Average Life 7/21/03 893,284
565,000 AAA Charlotte, NC Mortgage Revenue Refunding, Double
Oaks Apartment, Series A, FHA-Insured, 7.300%
due 11/15/07, Sinking Fund Average Life
2/24/04 591,838
See Notes to Financial Statements.
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8 1999 Annual Report to Shareholders
<PAGE>
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Schedule of Investments (continued) December 31, 1999
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FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Housing: Multi-Family -- 10.7% (continued)
$ 815,000 AA Hudson County, NJ Improvement Authority, Multi-
Family Housing Revenue Bonds, 6.600% due
6/1/04, Sinking Fund Average Life
6/24/02 (b) $ 845,563
855,000 A2* McMinnville, TN Housing Authority Revenue
Refunding, First Mortgage, Beersheba Heights,
6.000% due 10/1/09, Sinking Fund Average
Life 2/2/05 861,413
400,000 AAA Missouri State Housing Development Community
Mortgage Revenue, Series C, GNMA/FNMA-
Collateralized, 7.450% due 9/1/27, Sinking
Fund Average Life 12/9/22 433,500
Mount Vernon, IL Elderly Housing Corp., First Lien
Revenue Bonds, Section 8 Assisted, Series 1979:
160,000 Ba3* 7.875% due 4/1/01 159,946
170,000 Ba3* 7.875% due 4/1/02 169,949
185,000 Ba3* 7.875% due 4/1/03 184,538
200,000 Ba3* 7.875% due 4/1/04 199,250
215,000 Ba3* 7.875% due 4/1/05 214,194
235,000 Ba3* 7.875% due 4/1/06 233,825
250,000 Ba3* 7.875% due 4/1/07 248,750
270,000 Ba3* 7.875% due 4/1/08 268,313
480,000 AAA Nevada Housing Division, Multi-Unit Housing,
(Austin Crest Project), FNMA-Collateralized,
5.500% due 10/1/09, Sinking Fund Average
Life 2/15/06 463,800
720,000 AAA San Jose, CA Multi-Family Housing, (Country
Brook Project), FNMA-Collateralized, 6.500%
mandatory tender 4/1/02, Sinking Fund Average
Life 10/29/00 737,100
790,000 Aa* Streamwood, IL Multi-Family Housing Revenue,
(Southgate Project), FHA-Insured, 6.200%
due 11/1/07 818,464
1,000,000 AAA Texas State Department Housing and Community
Affairs, Home Mortgage Revenue, Series C-2,
GNMA/FNMA/FHLMC-Collateralized, 5.000% due
7/2/24 (d) 1,088,750
725,000 AAA Washington County, OR Housing Authority, Multi-
Family Housing Revenue, (Terrace View
Project), FNMA-Collateralized, 5.500% due
12/1/17 (b) 673,344
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9,085,821
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Housing: Single-Family -- 4.0%
960,000 Aa3* Massachusetts State Housing Finance Agency Housing
Revenue, Single-Family Housing, Series 38,
7.200% due 12/1/26 (b) 980,400
285,000 AAA St. Louis County, MO Single-Family Mortgage Revenue,
MBIA-Insured, 6.750% due 4/1/10, Sinking Fund
Average Life 5/20/07 285,322
1,000,000 AA+ Virginia State Housing Development Authority
Commonwealth Mortgage, Series H, 6.100%
due 7/1/03 1,027,500
1,060,000 AA Wisconsin Housing & Education Development
Authority, Home Ownership Revenue, 6.350%
due 3/1/01 1,077,225
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3,370,447
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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 (continued) December 31, 1999
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FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Industrial Development -- 2.4%
$1,000,000 A Kanawha, WV Commercial Development Revenue, (May
Department Store Project), 6.500% due 6/1/03 $ 1,047,500
1,000,000 NR Newbern, TN Industrial Development Ltd.
Obligation, Newburn Rubber Inc., 7.900% due
3/1/00 1,005,090
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2,052,590
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Life Care -- 1.0%
945,000 NR Coweta County, GA Development Authority Revenue,
(Care-Pointe Project), Series A, 6.750% due 7/1/10 882,394
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Miscellaneous -- 7.6%
1,000,000 NR Barona Band of Mission Indians, CA, 8.250%
due 1/1/20 976,250
670,000 AAA Cibola County, NM Gross Receipts Tax Revenue,
AMBAC-Insured, 5.000%, due 11/1/16 595,463
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 1,024,270
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 1,056,250
1,000,000 AAA Indiana Bond Bank Common School Fund, Series A,
AMBAC-Insured, 5.000% due 2/1/14 935,000
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) 833,000
2,000,000 AAA Southern Illinois University Revenue Capital
Appreciation, Housing & Auxiliary Facilities,
MBIA-Insured, zero coupon due 4/1/12 985,000
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6,405,233
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Pollution Control -- 7.8%
1,285,000 B1* Atlantic City, NJ Utility Authority Solid Waste
Revenue, 7.000% due 3/1/02, Sinking Fund
Average Life 10/1/00 1,276,969
1,000,000 Aa3* Brazos River, TX PCR, Navigation District Brazoria
County, 6.750% due 2/1/10 1,096,250
1,200,000 A3* Erie County, PA PCR (International Paper Company
Project), Series A, 5.300% due 4/1/12 1,132,500
2,000,000 AA+ Michigan Municipal Bond Authority Revenue, Clean
Water Revolving Fund, 5.750% due 10/1/14 2,012,500
1,000,000 AAA Monroe County, MI PCR, (Detroit Edison Co.
Project), AMBAC-Insured, 6.350% due 12/1/04 (b) 1,063,750
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6,581,969
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Pre-Refunded (c) -- 0.4%
70,000 AAA Indiana University Revenue, Series 1983N, (Call
7/1/01 @ 100), 10.000% due 7/1/03, Sinking
Fund Average Life 12/22/00 73,473
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 65,175
210,000 AAA Oshkosh, WI Hospital Facility Revenue, Mercy
Medical Center, 7.375% due 7/1/09, Sinking
Fund Average Life 1/22/04 228,375
- --------------------------------------------------------------------------------
367,023
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) December 31, 1999
- --------------------------------------------------------------------------------
FACE
AMOUNT RATING(a) SECURITY VALUE
================================================================================
Public Facilities -- 2.8%
$1,350,000 A- Dekalb County, IN Redevelopment Authority Revenue,
Mini-Mill Public Improvement, 6.250% due
1/15/09 $ 1,397,250
1,000,000 AA- La Crosse, WI Resource Recovery Revenue,
(Northern States Power Co. Project), 6.000%
due 11/1/21 (b) 983,750
- --------------------------------------------------------------------------------
2,381,000
- --------------------------------------------------------------------------------
Short-Term (e) -- 0.7%
100,000 AAA Brazos River, TX PCR, Texas Utilities Electric
Co., 3.550% due 6/1/30(b) 100,000
500,000 AAA Moffat County, CO PCR, (Pacificorp Projects),
5.000% due 5/1/13 500,000
- --------------------------------------------------------------------------------
600,000
- --------------------------------------------------------------------------------
Transportation -- 7.4%
2,035,000 AAA Dallas Fort Worth, TX Regional Airport Revenue
Refunding, Series 1992A, FGIC-Insured, 7.750%
due 11/1/03 2,251,219
1,920,000 BBB+ Denver, CO City and County Airport Revenue, Series
1990A, 8.250% due 11/15/02 (b) 2,010,739
1,500,000 Aa2* New Jersey State Transportation Trust Fund
Authority, Transportation System, Series A,
5.625% due 6/15/14 1,500,000
500,000 A- Pittsfield Township, MI Economic Development Corp.
Revenue Refunding, (Airport Association
Project), Unconditional Guaranty-Lincoln
National, 6.400% due 12/1/02 507,500
- --------------------------------------------------------------------------------
6,269,458
- --------------------------------------------------------------------------------
Utilities -- 2.1%
730,000 AAA Alaska Energy Authority Power Revenue, Bradley
Lake, FSA-Insured, 6.000% due 7/1/17 742,775
1,080,000 AAA Georgia Municipal Electric Authority, Project 1,
Series-A, MBIA-Insured, 5.250% due 1/1/15 1,024,650
- --------------------------------------------------------------------------------
1,767,425
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS-- 100%
(Cost-- $84,197,510**) $84,591,375
================================================================================
(a) All ratings are by Standard & Poor's Ratings Service, except those
identified by an asterisk (*) which 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.
(e) Variable rate obligation payable at par on demand at any time or no more
than seven day notice.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 12 and 13 for definition of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 11
<PAGE>
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
12 1999 Annual Report to Shareholders
<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
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 13
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost-- $84,197,510) $84,591,375
Receivable for securities sold 70,000
Interest receivable 1,342,509
- --------------------------------------------------------------------------------
Total Assets 86,003,884
- --------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 3,069,630
Dividends payable 110,768
Management fees payable 40,464
Payable to bank 22,248
Accrued expenses 47,060
- --------------------------------------------------------------------------------
Total Liabilities 3,290,170
- --------------------------------------------------------------------------------
Total Net Assets $82,713,714
- --------------------------------------------------------------------------------
NET ASSETS:
Par value of capital shares $ 8,364
Capital paid in excess of par value 83,651,965
Undistributed net investment income 29,616
Accumulated net realized loss on security transactions (1,370,096)
Net unrealized appreciation of investments 393,865
- --------------------------------------------------------------------------------
Total Net Assets
(Equivalent to $9.89 a share on 8,364,165 shares of $0.001
par value outstanding; 100,000,000 shares authorized) $82,713,714
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities December 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 5,110,583
- --------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 3) 516,522
Shareholder communications 38,357
Shareholder and system servicing fees 37,201
Audit and legal 30,699
Pricing service fees 13,198
Registration fees 6,001
Custody 5,501
Director's fees 5,000
Other 8,674
- --------------------------------------------------------------------------------
Total Expenses 661,153
- --------------------------------------------------------------------------------
Net Investment Income 4,449,430
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS ON
INVESTMENTS (NOTE 4):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 45,965,087
Cost of securities sold 47,333,847
- --------------------------------------------------------------------------------
Net Realized Loss (1,368,760)
- --------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 5,042,128
End of year 393,865
- --------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (4,648,263)
- --------------------------------------------------------------------------------
Net Loss on Investments (6,017,023)
- --------------------------------------------------------------------------------
Decrease in Net Assets From Operations $(1,567,593)
================================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 15
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets For the Years Ended December 31, 1999
- --------------------------------------------------------------------------------
1999 1998
===============================================================================
OPERATIONS:
Net investment income $ 2,218,613 $ 4,534,704
OPERATIONS:
Net investment income $ 4,449,430 $ 4,534,704
Net realized gain (loss) (1,368,760) 398,584
Decrease in net unrealized appreciation (4,648,263) (281,238)
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations (1,567,593) 4,652,050
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income (4,416,912) (4,535,128)
Net realized gains (47,888) (350,696)
- --------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (4,464,800) (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 (6,032,393) 139,625
NET ASSETS:
Beginning of year 88,746,107 88,606,482
- --------------------------------------------------------------------------------
End of year* $82,713,714 $88,746,107
- --------------------------------------------------------------------------------
* Includes undistributed (overdistributed) net
investment income of: $ 29,616 $ (2,902)
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
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, 1999, 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
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 17
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
income taxes, to retain such tax-exempt status when distributed to the
shareholders of the Fund.
Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
3. Management Agreement
and Transactions with Affiliated Persons
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., 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 year ended December 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $47,064,310
- --------------------------------------------------------------------------------
Sales 45,965,087
================================================================================
At December 31, 1999, aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $ 1,667,477
Gross unrealized depreciation (1,273,612)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 393,865
================================================================================
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 con-
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
tract at the end of each day's trading. Variation margin payments are made or
received and recognized as assets due from or liabilities due to broker,
depending upon whether unrealized gains or losses are incurred. When the
contract is closed, the Fund records a realized gain or loss equal to the
difference between the proceeds from (or cost of) the closing transactions and
the Fund's basis in the contract. The Fund enters into such contracts 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 December 31, 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 December 31, 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
underlying 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.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 19
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (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
increase 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 December 31, 1999, the Fund had no open written options contracts.
7. Capital Shares
During the years ended December 31, transactions in shares of the Fund were as
follows:
1999 1998
------------------ ------------------
Shares Amount Shares Amount
================================================================================
Shares issued on reinvestment -- -- 35,132 $373,399
================================================================================
8. Capital Loss Carryforward
At December 31, 1999 the Fund had, for Federal income tax purposes, a capital
loss carryforward of approximately $1,041,500, available to offset future
capital gains through December 31, 2007. To the extent that these carryforward
losses are used to offset capital gains, it is probable that any gains so offset
will not be distributed.
- --------------------------------------------------------------------------------
20 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year ended December 31:
1999 1998 1997 1996 1995
================================================================================
Net Asset Value, Beginning
of Year $10.61 $10.64 $10.47 $10.66 $ 9.95
- --------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.53 0.55 0.57 0.58 0.58
Net realized and unrealized
gain (loss) (0.71) 0.01 0.28 (0.17) 0.73
- --------------------------------------------------------------------------------
Total Income (Loss) From
Operations (0.18) 0.56 0.85 0.41 1.31
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.53) (0.55) (0.57) (0.60) (0.60)
In excess of net investment
income -- -- (0.01) -- --
Net realized gains (0.01) (0.04) (0.10) -- --
- --------------------------------------------------------------------------------
Total Distributions (0.54) (0.59) (0.68) (0.60) (0.60)
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $9.89 $10.61 $10.64 $10.47 $10.66
- --------------------------------------------------------------------------------
Total Return, Based on
Market Value* (17.10)% 7.05% 13.42% 1.56% 15.93%
- --------------------------------------------------------------------------------
Total Return, Based on
Net Asset Value* (1.39)% 5.50% 8.49% 4.13% 13.72%
- --------------------------------------------------------------------------------
Net Assets,
End of Year (millions) $83 $89 $89 $87 $88
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.77% 0.76% 0.74% 0.77% 0.72%
Net investment income 5.17 5.10 5.42 5.56 5.63
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 54% 42% 58% 21% 13%
- --------------------------------------------------------------------------------
Market Price, End of Year $8.375 $10.688 $10.563 $9.938 $10.375
================================================================================
* The total return calculation assumes that dividends are reinvested in
accordance with the Fund's dividend reinvestment plan.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 21
<PAGE>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors
of the Smith Barney Intermediate Municipal Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of the Smith Barney Intermediate
Municipal Fund, Inc. as of December 31, 1999, 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 generally accepted auditing
standards. 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, 1999, by correspondence with the custodian. As to securities
purchased or sold but not yet received or delivered, we performed other
appropriate auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Smith Barney Intermediate Municipal Fund, Inc. as of December 31, 1999, 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 financial highlights
for each of the years in the five-year period then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
February 11, 2000
- --------------------------------------------------------------------------------
22 1999 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
================================================================================
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 9.88 10.40 0.044 9.86
June 9.50 10.23 0.044 9.53
June+ 9.50 10.23 0.006 9.53
July 9.50 10.22 0.044 9.53
August 9.38 10.11 0.044 9.37
September 9.31 10.06 0.044 9.27
October 9.00 9.94 0.044 8.94
November 8.56 9.99 0.044 8.54
December 8.38 9.89 0.044 8.47
================================================================================
* On the last business day of the month.
+ Capital gain distribution.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 23
<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 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.
- --------------------------------------------------------------------------------
24 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes, the Fund hereby designates for the fiscal year ended
December 31, 1999:
o 100% of the dividends paid by the Fund form net investment income as
tax-exempt for regular Federal income tax purposes.
o Total long-term capital gain distributions paid of $46,490.
- --------------------------------------------------------------------------------
Smith Barney Intermediate Municipal Fund, Inc. 25
<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 PFPC Global Fund Services ("PFPC"),
formerly known as 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, 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
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26 1999 Annual Report to Shareholders
<PAGE>
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Dividend Reinvestment Plan (unaudited) (continued)
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purchase common stock on the open market as soon as practicable after the
determination date for the dividend or capital gains distribution, but in no
event shall such purchases continue later than 30 days after the payment date
for such dividend or distribution, or the record date for a succeeding dividend
or distribution, except when necessary to comply with applicable provisions of
the federal securities laws.
PFPC maintains all shareholder accounts in the Plan and furnishes written
confirmations of all transactions in each account, including information needed
by a shareholder for personal and tax records. The automatic reinvestment of
dividends and capital gains distributions will not relieve plan participants of
any income tax that may be payable on the dividends or capital gains
distributions. Common stock in the account of each plan participant will be held
by PFPC in uncertificated form in the name of the plan participant.
Plan participants are subject to no charge for reinvesting dividends and capital
gains distributions under the Plan. PFPC's fees for handling the reinvestment of
dividends and capital gains distributions will be paid by the fund. No brokerage
charges apply with respect to shares of common stock issued directly by the fund
under the Plan. Each plan participant will, however, bear a proportionate share
of any brokerage commissions actually incurred with respect to any open market
purchases made under the plan.
Experience under the Plan may indicate that changes to it are desirable. The
Fund reserves the right to amend or terminate the plan as applied to any
dividend or capital gains distribution paid subsequent to written notice of the
change sent to participants at least 30 days before the record date for the
dividend or capital gains distribution. The plan also may be amended or
terminated by PFPC, with the fund's prior written consent, on at least 30 days'
written notice to plan participants. All correspondence concerning the plan
should be directed by mail to PFPC Global Fund Services, P.O. Box 8030, Boston,
Massachusetts 02266-8030 or by telephone at 1-800-451-2010.
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Smith Barney Intermediate Municipal Fund, Inc. 27
<PAGE>
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Smith Barney
Intermediate [GRAPHIC OMITTED]
Municipal Fund, Inc.
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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
