UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-8985
Citigroup Investments Corporate Loan Fund Inc.
(Exact name of registrant as specified in charter)
125 Broad Street, New York, NY 10004
(Address of principal executive offices) (Zip code)
Robert I. Frenkel, Esq.
Smith Barney Fund Management LLC
300 First Stamford Place
Stamford, CT 06902
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 451-2010
Date of fiscal year end: September 30
Date of reporting period: September 30, 2003
ITEM 1. REPORT TO STOCKHOLDERS.
The Annual Report to Stockholders is filed herewith.
Citigroup
Investments
Corporate
Loan Fund Inc.
Annual Report September 30, 2003 Ticker Symbol: TLI
[GRAPHIC]
WHAT'S INSIDE
Letter from the Chairman.......................... 1
Schedule of Investments........................... 4
Statement of Assets and Liabilities............... 10
Statement of Operations........................... 11
Statements of Changes in Net Assets............... 12
Notes to Financial Statements..................... 13
Financial Highlights.............................. 19
Independent Auditors' Report...................... 21
Additional Information............................ 22
Dividend Reinvestment Plan........................ 26
LETTER FROM THE CHAIRMAN
R. JAY GERKEN, CFA
Chairman, President and Chief Executive Officer
Dear Shareholder,
I am pleased to report that your fund, the Citigroup Investments Corporate Loan
Fund Inc., performed well during the year ended September 30, 2003. The total
return based on the market price of the fund was 29.61%. The fund gained
11.64% based on its net asset value ("NAV")/i/ versus 11.24% for the fund's
principal benchmark, the Lipper peer group of closed-end loan participation
funds,/ii/ and distributed dividends to shareholders totaling $0.75 per common
share. The performance table below shows the annualized distribution yield and
12-month total return based on the fund's September 30, 2003 NAV per share and
its New York Stock Exchange ("NYSE") closing price. Past performance is not
indicative of future results.
Annualized 12-Month
Price Per Share Distribution Yield/iii/ Total Return/iii/
--------------- ---------------------- ----------------
$13.93 (NAV) 5.17% 11.64%
$14.45 (NYSE) 4.98% 29.61%
The rise in the fund's NAV was primarily due to a broad-based increase for
prices in the loan market that resulted from continued strengthening in the
economy and the financial markets, improving confidence, and additions of
investment capital flowing into the loan market.
The fund's share price has climbed steadily since it hit its 52-week low of
$11.20 on November 8, 2002. Since the beginning of August 2003, the fund has
traded at an increasing premium to its NAV. In our opinion, the recent
improvement in the premium to NAV of the fund reflects a higher level of
investor confidence and resulting lower risk premiums in the market.
The loosening of constraints on investment capital across the financial
markets, has led to an increase in demand for assets in the credit markets, and
investment managers taking on a higher level of risk at lower risk premiums. In
the loan
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
1
market, as investment capital continues to enter the market and loans are
repaid ahead of schedule, cash levels in loan portfolios have grown. The
improved economic climate has continued to drive a reasonably steady supply of
loans. However, issuance has not kept pace with investor demand.
While the demand for assets in the loan market has exceeded supply, we have
been able to increase holdings in the portfolio since May -- while maintaining
our high credit standards. Consistent with our original investment mandate, the
fund's portfolio is made up largely of floating- or variable-rate senior
secured corporate loans. As of September 30, 2003, the fund had total net
assets of approximately $136 million that had an average equivalent rating of
Ba3. The portfolio was invested in 28 industry sectors, with the largest
industry concentration being 14.7% of total investments in the media/non-cable
industry. The fund held interests in loans made to 122 issuers.
For a more detailed overview of your fund, please read the accompanying letter
from your fund's manager. As always, thank you for your continued confidence in
our stewardship of your assets.
Sincerely,
/s/ R Jay Gerken
R. Jay Gerken, CFA
Chairman, President and Chief Executive Officer
October 19, 2003
Portfolio holdings and breakdowns are as of September 30, 2003 and are subject
to change. Please refer to pages 4 through 9 for a list and percentage
breakdown of the fund's holdings.
The information provided in this letter by the Investment Adviser is not
intended to be a forecast of future events, a guarantee of future results or
investment advice. Views expressed may differ from those of the firm as a whole.
/i/ NAV is a price that reflects the value of the fund's underlying portfolio.
However, the price at which an investor may buy or sell common shares of
the fund is at the fund's market price as determined by supply of and
demand for the fund's common shares.
/ii/ Lipper is a major independent mutual-fund tracking organization. Returns
are based on the 12-month period ended September 30, 2003, calculated
among 35 funds in the closed-end loan participation funds category with
reinvestment of dividends and capital gains.
/iii/ Total returns are based on changes in NAV or the market price,
respectively. Total returns assume the reinvestment of all dividends
and/or capital gains distributions in additional common shares.
Annualized distribution yield is the common shareholders' current monthly
income dividend rate, annualized, and then divided by the NAV or the
market price noted in this report. The annualized distribution yield
assumes a current monthly income dividend rate of $0.060 for 12 months.
This rate is as of September 30, 2003 and is subject to change.
--------------------------------------------------------------------------------
2003 Annual Report
2
Take Advantage of the Fund's Dividend Reinvestment Plan!
As an investor in the Fund, you can participate in its Dividend Reinvestment
Plan ("Plan") which is a convenient, simple and efficient way to reinvest your
dividends and capital gains, if any, in additional shares of the Fund. Below is
a summary of how the Plan works.
Plan Summary
If you participate in the Dividend Reinvestment Plan, your dividends and
capital gains 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 higher than the net asset value ("NAV") per share
as of the determination date (defined as the fourth New York Stock Exchange
trading day preceding the payment for the dividend or distribution), plan
participants will be issued new shares of common stock at a price per share
equal to the greater of: (a) the NAV per share on the valuation date or (b) 95%
of the market price per share on the valuation date.
If the market price is less than the NAV per share as of the determination
date, PFPC Inc. ("Plan Agent") will buy common stock for your account in the
open market. If the Plan Agent begins to purchase additional shares in the open
market and the market price of the shares subsequently exceeds the NAV per
share, before the purchases are completed, the Plan Agent will cease making
open-market purchases and have the Fund issue the remaining dividend or
distribution in shares at a price per share equal to the greater of either the
NAV per share on the valuation date or 95% of the market price at which the
Fund issues the remaining shares.
A more complete description of the current Plan appears in the section of this
report beginning on page 26. To find out more detailed information about the
Plan and about how you can participate, please call PFPC Inc. at (800) 331-1710.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
3
Schedule of Investments September 30, 2003
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE*
--------------------------------------------------------------------------------
SENIOR COLLATERALIZED LOANS -- 97.3%
Aerospace/ Defense -- 2.2%
$ 771,580 Decrane Aircraft Holdings, Inc. Term B 9/30/05 $ 690,564
1,250,797 Decrane Aircraft Holdings, Inc. Term D 12/17/06 1,119,463
2,414,947 Raytheon Aerospace Co. Term B 12/17/07 2,416,457
600,000 Transdigm Holding Corp. Term B 5/15/06 606,750
-------------------------------------------------------------------------------
4,833,234
-------------------------------------------------------------------------------
Automotive -- 2.3%
1,278,897 Collins & Aikman Corp. Term B 12/31/05 1,268,026
800,000 CSK Auto, Inc. Term B 2/15/06 808,000
966,948 Dayco Products, LLC Term B 5/31/07 966,948
1,678,750 Dura Operating Corp. Term C 12/31/08 1,690,817
456,000 Stoneridge, Inc. Term B 4/30/08 456,000
-------------------------------------------------------------------------------
5,189,791
-------------------------------------------------------------------------------
Building Materials -- 5.6%
1,676,634 Hanley-Wood, Inc. Term B 9/21/07 1,626,336
1,287,777 Magnatrax Corp.+ Term B 11/15/05 360,578
3,695,892 Masonite International Corp. Term C 8/31/08 3,709,751
989,796 National Waterworks, Inc. Term B 11/22/09 998,085
2,805,846 Panolam Industries International, Inc. Term B 11/24/06 2,763,758
1,400,000 Therma-Tru Corp. Term B 2/21/10 1,406,125
2,282,561 Trussway Holdings Inc. Term B 12/31/06 1,540,729
-------------------------------------------------------------------------------
12,405,362
-------------------------------------------------------------------------------
Chemicals -- 3.3%
1,599,829 Georgia Gulf Corp. Term C 5/12/09 1,615,827
1,369,798 Huntsman International LLC Term B 6/30/07 1,376,133
1,369,798 Huntsman International LLC Term C 6/30/08 1,376,362
1,643,673 Noveon, Inc. Term B 12/31/09 1,661,137
1,000,000 Rockwood Specialties Group Inc. Term B 7/23/10 1,010,417
399,000 Westlake Chemical Corp. Term B 7/23/10 403,364
-------------------------------------------------------------------------------
7,443,240
-------------------------------------------------------------------------------
Conglomerates -- 2.1%
1,453,662 Gentek, Inc. Term C 10/31/07 1,003,027
3,545,750 SPX Corp. Term B 9/30/09 3,572,343
-------------------------------------------------------------------------------
4,575,370
-------------------------------------------------------------------------------
Consumer Products -- 2.6%
734,488 Armkel, LLC Term B 3/28/09 741,439
1,681,496 Holmes Products Corp. Term B 2/5/07 1,675,891
1,000,000 Jostens, Inc. Term B 7/29/10 1,008,563
832,500 Meow Mix Inc. Term 1/31/08 835,622
498,750 NBTY, Inc. Term B 7/25/09 502,387
997,500 Tempur World Inc. Term B 8/18/09 1,001,864
-------------------------------------------------------------------------------
5,765,766
-------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
2003 Annual Report
4
Schedule of Investments (continued) September 30, 2003
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE*
----------------------------------------------------------------------------------
Electric -- 3.3%
$ 600,000 Aquila, Inc. Facility 7/30/04 $ 603,750
2,000,000 Calpine Corp. Term 7/15/07 2,017,500
1,000,000 Centerpoint Energy Houston Electric, LLC Term 11/12/05 1,145,000
823,529 Pike Electric Inc. Term 4/18/10 829,449
2,760,344 Westar Energy, Inc. Term B 6/6/05 2,774,146
----------------------------------------------------------------------------------
7,369,845
----------------------------------------------------------------------------------
Entertainment -- 1.5%
1,900,161 Regal Cinemas, Inc. Term D 6/30/09 1,919,758
1,473,684 Six Flags Theme Parks Inc. Term B 6/30/09 1,471,447
----------------------------------------------------------------------------------
3,391,205
----------------------------------------------------------------------------------
Environmental -- 1.8%
4,000,000 Casella Waste Systems, Inc. Term B 5/11/07 4,025,500
----------------------------------------------------------------------------------
Food -- 5.2%
887,880 American Seafoods Group LLC Term B 3/31/09 890,470
3,142,122 Dean Foods Co. Term B 7/15/08 3,167,953
926,425 Del Monte Corp. Term B 12/20/10 938,777
2,190,890 Fleming Cos., Inc. Term B 6/18/08 2,120,372
553,167 Merisant Co. Term B 1/11/10 558,353
835,915 Michael Foods Inc. Term B 4/10/08 840,791
985,000 National Dairy Holdings L.P. Term B 4/30/09 986,847
512,272 NSC Operating Co. Term B 6/30/06 511,631
468,000 NSC Operating Co. 2nd Lien 5/25/09 436,410
300,000 Reddy Ice Group Inc. Term 8/17/09 303,437
795,613 Weight Watchers International, Inc. Term B 12/31/09 802,276
102,137 Weight Watchers International, Inc. Term C 12/31/09 103,015
----------------------------------------------------------------------------------
11,660,332
----------------------------------------------------------------------------------
Gaming -- 5.1%
2,200,000 Alliance Gaming Corp. Term B 9/4/09 2,218,218
2,152,498 Ameristar Casinos, Inc. Term B 12/20/06 2,162,722
326,217 Greektown Casino, LLC Term B 9/30/04 327,236
1,095,885 Greektown Casino, LLC Term C 9/30/04 1,097,254
985,000 Isle of Capri Casinos, Inc. Term 4/26/08 990,464
1,591,873 Isle of Capri Casinos BlackHawk, LLC Term B 11/15/06 1,596,847
1,592,000 Penn National Gaming, Inc. Term B 9/1/07 1,603,343
1,323,333 Scientific Games Corp. Term B 12/31/08 1,329,288
----------------------------------------------------------------------------------
11,325,372
----------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
5
Schedule of Investments (continued) September 30, 2003
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE*
-----------------------------------------------------------------------------------
Healthcare -- 6.0%
$1,083,500 Caremark Rx, Inc. Term 3/31/06 $ 1,088,917
2,984,962 Community Health Systems Inc. Term B 7/16/10 2,998,487
900,000 Conmed Corp. Tranche B 12/15/09 911,063
1,994,613 Davita, Inc. Term B 3/31/09 2,005,583
918,151 Fisher Scientific International, Inc. Term 3/31/10 927,103
1,257,959 Fisher Scientific International, Inc. Term B 3/31/10 1,270,224
1,346,625 Fresenius Medical Care Holding, Inc. Term B 2/21/10 1,356,725
698,250 Kinetic Concepts, Inc. Term B 8/11/10 703,269
1,967,255 Rotech Healthcare Inc. Term B 3/31/08 1,970,329
----------------------------------------------------------------------------------
13,231,700
----------------------------------------------------------------------------------
Industrial - Other -- 7.0%
693,866 Buffets, Inc. Term 6/30/09 692,651
1,302,216 Flowserve Corp. Term C 6/30/09 1,312,681
3,706,493 General Cable Corp. Term B 5/28/07 3,586,032
997,500 Global Imaging Systems, Inc. Term B 6/25/09 1,007,475
600,000 Jarden Corp. Term B 4/24/08 603,938
897,750 Moran Transportation Co. Term 12/31/03 904,483
3,685,058 Mueller Group, Inc. Term E 5/31/08 3,690,652
766,731 Norcross Safety Products LLC Term 3/20/09 770,085
872,191 TriMas Corp. Term B 12/31/09 873,154
500,000 Unifrax Corp. Term 9/4/09 504,688
2,295,088 Western Industries Inc. Term 6/23/06 1,549,184
----------------------------------------------------------------------------------
15,495,023
----------------------------------------------------------------------------------
Insurance -- 3.2%
1,975,000 Hilb, Rogal and Hamilton Co. Term B 6/30/07 1,995,984
1,087,625 Infinity Property & Casualty Corp. Term 6/30/10 1,097,142
2,793,000 Oxford Health Plans, Inc. Term 4/25/09 2,805,683
1,300,000 USI Holdings Corp. Term B 8/11/08 1,309,750
----------------------------------------------------------------------------------
7,208,559
----------------------------------------------------------------------------------
Media/Cable -- 9.8%
939,887 Block Communications Inc. Term B 11/15/09 946,936
2,500,000 Century Cable Holdings Term 12/31/09 2,123,750
6,895,000 Charter Communications Operating LLC Term B 3/18/08 6,536,706
1,965,000 Charter Communications VIII Term B 2/2/08 1,882,716
1,560,471 Classic Cable, Inc. Term A 7/31/07 1,482,448
1,079,996 Classic Cable, Inc. Term B 1/16/09 1,025,996
4,000,000 Insight Midwest LLC Term B 12/31/09 4,009,688
3,674,149 Videotron Ltee Term B 12/1/09 3,686,781
----------------------------------------------------------------------------------
21,695,021
----------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
2003 Annual Report
6
Schedule of Investments (continued) September 30, 2003
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE*
------------------------------------------------------------------------------------
Media/Non-Cable -- 14.7%
$ 158,730 Advanstar Communications Inc. Term B 10/11/07 $ 158,400
5,322,785 American Media Operation Inc. Term C 4/1/07 5,366,909
2,792,337 Canwest Media Inc. Term D 5/15/09 2,818,515
995,000 Cumulus Media Inc. Term C 3/28/10 1,005,261
2,546,341 Dex Media East LLC Term B 5/8/09 2,587,493
3,900,000 Dex Media West LLC Term B 5/8/09 3,963,028
846,478 Emmis Communications Corp. Term C 1/5/10 852,474
2,000,000 Gray Television, Inc. Term 12/31/10 2,017,500
1,485,000 Hollinger International Publishing Inc. Term B 9/30/09 1,509,131
1,500,000 Lamar Media Corp. Term B 6/30/10 1,512,344
2,600,000 PanAmSat Corp. Term B 12/31/08 2,614,160
2,764,688 The Reader's Digest Association, Inc. Term B 5/20/08 2,757,035
1,440,326 Sun Media Corp. Term B 2/7/09 1,445,503
1,477,500 Susquehanna Media Co. Term B 6/30/08 1,492,275
2,600,000 Vivendi Universal Entertainment LLP Term B 6/30/08 2,619,825
------------------------------------------------------------------------------------
32,719,853
------------------------------------------------------------------------------------
Metals -- 0.2%
524,348 Compass Minerals Group, Inc. Term B 11/28/09 528,827
------------------------------------------------------------------------------------
Other - Energy -- 1.2%
1,293,500 Peabody Energy Corp. Term B 3/21/10 1,305,358
1,396,500 Williams Production RMT Co. Term 5/30/07 1,411,338
------------------------------------------------------------------------------------
2,716,696
------------------------------------------------------------------------------------
Other - Financial Institutions -- 0.1%
552,109 Bridge Information Systems, Inc.+ Multi-Draw 12/31/03 60,732
1,023,935 Bridge Information Systems, Inc.+ Term B 5/29/05 112,633
------------------------------------------------------------------------------------
173,365
------------------------------------------------------------------------------------
Packaging -- 3.7%
4,000,000 Graphic Packaging Corp. Term B 8/9/10 4,026,500
1,000,000 Kerr Group, Inc. Term 8/13/10 1,009,375
1,979,949 Printpack Holdings Inc. Term B 3/31/09 1,989,849
158,902 Smurfit-Stone Container Corp. Term C 6/30/09 160,154
937,848 Stone Container Corp. Term B 6/30/09 945,233
------------------------------------------------------------------------------------
8,131,111
------------------------------------------------------------------------------------
Pharmaceuticals -- 0.5%
1,011,157 Alpharma Corp. Term B 10/5/08 1,014,002
------------------------------------------------------------------------------------
Railroads -- 0.3%
777,067 RailAmerica, Inc. Term B 5/22/09 780,369
------------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
7
Schedule of Investments (continued) September 30, 2003
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE*
--------------------------------------------------------------------------------
Refining -- 2.2%
$1,747,733 Dresser Inc. Term B 4/10/09 $ 1,761,621
3,092,250 Tesoro Petroleum Corp. Term 4/15/08 3,139,738
--------------------------------------------------------------------------------
4,901,359
--------------------------------------------------------------------------------
Retailers -- 0.7%
1,200,000 Kmart Corp. Term B 5/6/06 1,207,500
405,882 Shoppers Drug Mart Corp. Term F 2/4/09 407,042
--------------------------------------------------------------------------------
1,614,542
--------------------------------------------------------------------------------
Technology -- 3.6%
3,634,400 Amphenol Corp. Term B 5/6/10 3,665,216
299,250 Fairchild Semiconductor Corp. Term 6/19/08 301,681
2,828,628 Seagate Technology HDD Holdings,
Inc. (INT) Term B 5/13/07 2,844,318
1,131,372 Seagate Technology Holdings, Inc. (U.S.) Term B 5/13/07 1,137,648
--------------------------------------------------------------------------------
7,948,863
--------------------------------------------------------------------------------
Telecommunications -- 7.0%
1,049,178 Centennial Cellular Operating Co. Term B 5/31/07 1,037,375
1,049,027 Centennial Cellular Operating Co. Term C 11/30/07 1,038,045
995,000 Crown Castle Operating Co. Term B 3/15/08 997,931
3,462,427 FairPoint Communications, Inc. Term C 3/31/07 3,479,740
1,980,000 Nextel Finance Co. Term B 6/30/08 1,990,607
1,980,000 Nextel Finance Co. Term C 12/31/08 1,990,607
2,300,000 Qwest Corp. Term A 6/30/07 2,354,050
503,257 Rural Cellular Corp. Term B 10/3/08 498,629
503,257 Rural Cellular Corp. Term C 4/3/09 498,629
1,656,667 Western Wireless Corp. Term B 9/30/08 1,645,105
--------------------------------------------------------------------------------
15,530,718
--------------------------------------------------------------------------------
Tobacco -- 1.0%
2,222,000 Commonwealth Brands, Inc. Term 8/28/07 2,228,944
--------------------------------------------------------------------------------
Transportation Services -- 1.1%
2,376,484 TravelCenters of America, Inc. Term 11/14/08 2,391,337
--------------------------------------------------------------------------------
TOTAL SENIOR COLLATERALIZED
LOANS (Cost -- $219,639,861) 216,295,306
--------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
2003 Annual Report
8
Schedule of Investments (continued) September 30, 2003
FACE
AMOUNT SECURITY VALUE
---------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 2.7%
Commercial Paper -- 2.7%
$6,064,000 UBS Financial Services Inc., Years 3+4,
1.110% due 10/1/03
(Cost -- $6,064,000) $ 6,064,000
---------------------------------------------------------------------------------------------------------
TOTAL
INVESTMENTS -- 100.0% (Cost -- $225,703,861**) $222,359,306
---------------------------------------------------------------------------------------------------------
*Market value is determined using current market prices which are supplied
weekly by an independent third party pricing service.
+ Security is currently in default.
**Aggregate cost for Federal income tax purposes is $226,195,288.
Abbreviations used in this schedule:
------------------------------------
2nd Lien -- Subordinate Loan to 1st Lien
Facility -- Facility Loan
Multi-Draw -- Multi-Draw Term Loan
Term -- Term Loan
Certain term loans have different letter designations which may generally
indicate differences in maturities, pricing, and other terms and conditions.
A letter designation could also result from the consolidation of two or more
previously issued term loans.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
9
Statement of Assets and Liabilities September 30, 2003
ASSETS:
Investments, at value (Cost -- $225,703,861) $222,359,306
Interest receivable 1,030,634
Paydown receivable 386,760
--------------------------------------------------------------------------------------------
Total Assets 223,776,700
--------------------------------------------------------------------------------------------
LIABILITIES:
Bank overdraft 1,907,083
Management fee payable 190,368
Dividends payable to Auction Rate Cumulative Preferred Stockholders 31,603
Accrued expenses 171,965
--------------------------------------------------------------------------------------------
Total Liabilities 2,301,019
--------------------------------------------------------------------------------------------
Series A and B Auction Rate Cumulative Preferred Stock (1,700 shares authorized
and issued at $25,000 per share for each Series) (Note 5) 85,000,000
---------------------------------------------------------------------------------------------
Total Net Assets $136,475,681
--------------------------------------------------------------------------------------------
NET ASSETS:
Par value of capital shares $ 9,800
Capital paid in excess of par value 145,185,837
Undistributed net investment income 131,889
Accumulated net realized loss from investment transactions (5,507,290)
Net unrealized depreciation of investments (3,344,555)
--------------------------------------------------------------------------------------------
Total Net Assets
(Equivalent to $13.93 a share on 9,800,174 common shares of $0.001 par value
outstanding; 150,000,000 common shares authorized) $136,475,681
--------------------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
2003 Annual Report
10
Statement of Operations For the Year Ended September 30, 2003
INVESTMENT INCOME:
Interest $ 10,520,641
----------------------------------------------------------------------------------------------
EXPENSES:
Management fee (Note 2) 2,270,614
Auction participation fees (Note 5) 215,402
Audit and legal 187,840
Shareholder communications 109,685
Shareholder servicing fees 74,978
Directors' fees 55,200
Commitment fees (Note 4) 39,007
Custody 27,029
Stock exchange listing fees 25,585
Rating agency fees 16,460
Auction agency fees 16,000
Other 109,980
----------------------------------------------------------------------------------------------
Total Expenses 3,147,780
----------------------------------------------------------------------------------------------
Net Investment Income 7,372,861
----------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3):
Realized Loss From Investment Transactions (excluding short-term investments):
Proceeds from sales 108,245,081
Cost of securities sold 113,158,937
----------------------------------------------------------------------------------------------
Net Realized Loss (4,913,856)
----------------------------------------------------------------------------------------------
Change in Net Unrealized Depreciation of Investments:
Beginning of year (16,124,723)
End of year (3,344,555)
----------------------------------------------------------------------------------------------
Decrease in Net Unrealized Depreciation 12,780,168
----------------------------------------------------------------------------------------------
Net Gain on Investments 7,866,312
----------------------------------------------------------------------------------------------
Dividends Paid to Auction Rate Cumulative Preferred Stockholders From
Net Investment Income (1,201,497)
----------------------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 14,037,676
----------------------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
11
Statements of Changes in Net Assets
For the Years Ended September 30,
2003 2002
-------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 7,372,861 $ 8,851,025
Net realized gain (loss) (4,913,856) 224,702
(Increase) decrease in net unrealized depreciation 12,780,168 (7,915,466)
Dividends Paid to Auction Rate Cumulative Preferred
Stockholders from net investment income (1,201,497) (911,398)
------------------------------------------------------------------------------------
Increase in Net Assets From Operations 14,037,676 248,863
------------------------------------------------------------------------------------
DISTRIBUTIONS PAID TO COMMON STOCK
SHAREHOLDERS FROM:
Net investment income (7,376,019) (7,893,805)
------------------------------------------------------------------------------------
Decrease in Net Assets From Distributions
Paid to Common Stock Shareholders (7,376,019) (7,893,805)
------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS:
Net asset value of shares issued for reinvestment of
dividends (Note 6) 255,910 --
Underwriting commissions and expenses for the issuance
of Auction Rate Cumulative Preferred Stock (Note 5) -- (1,190,782)
------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From
Fund Share Transactions 255,910 (1,190,782)
------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 6,917,567 (8,835,724)
NET ASSETS:
Beginning of year 129,558,114 138,393,838
------------------------------------------------------------------------------------
End of year* $136,475,681 $129,558,114
------------------------------------------------------------------------------------
* Includes undistributed net investment income of: $ 131,889 $ 960,832
------------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
2003 Annual Report
12
Notes to Financial Statements
1. Significant Accounting Policies
The Citigroup Investments Corporate Loan Fund Inc. ("Fund"), a Maryland
corporation, is registered under the Investment Company Act of 1940, as
amended, as a non-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) U.S. government
agencies and obligations are valued at the mean between the bid and asked
prices; (c) securities, excluding senior collateralized loans, for which market
quotations are not available will be valued in good faith at fair value by or
under the direction of the Board of Directors. In fair valuing a loan, Smith
Barney Fund Management LLC ("SBFM"), an indirect wholly-owned subsidiary of
Citigroup Inc. ("Citigroup"), the Fund's investment adviser, with the
assistance of the Travelers Asset Management International Company LLC
("TAMIC"), another indirect wholly-owned subsidiary of Citigroup, the
sub-adviser, will consider among other factors: (1) the creditworthiness of the
borrower and any party interpositioned between the Fund and the borrower; (2)
the current interest rate, period until next interest rate reset and maturity
date of the collateralized senior loan; (3) recent market prices for similar
loans, if any; and (4) recent prices in the market for instruments with similar
quality, rate, period until next interest rate reset, maturity, terms and
conditions; SBFM may also consider prices or quotations, if any, provided by
banks, dealers or pricing services which may represent the prices at which
secondary market transactions in the collateralized senior loans held by the
Fund have or could have occurred; (d) securities maturing within 60 days are
valued at cost plus accreted discount, or minus amortized premium, which
approximates value; (e) gains or losses on the sale of securities are
calculated by using the specific identification method; (f ) interest income,
adjusted for amortization of premium and accretion of discount, is recorded on
an accrual basis; (g) the Fund intends to comply with the applicable provisions
of the Internal Revenue Code of 1986, as amended, pertaining to regulated
investment companies to make distributions of taxable income sufficient to
relieve it from substantially all Federal income and excise taxes; (h) in
accordance with Statement of Position 93-2 Determination, Disclosure, and
Financial Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies, book and tax basis differences relating
to shareholder distributions and other permanent book and tax differences are
reclassified to paid-in capital. In addition, the character of income and gains
to be distributed is determined in accordance with income tax regulations which
may differ from accounting principles generally accepted in the United States
of America. At September 30, 2003, reclassifications were made to the Fund's
capital accounts to reflect permanent book/tax differences and income and gains
available for distributions under income tax regulations. Accordingly, a
portion of undistributed net investment income amounting to
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
13
Notes to Financial Statements (continued)
$50,297 was reclassified to paid-in capital. Net investment income, net
realized gains and net assets were not affected by this change; (i) dividends
to shareholders are recorded monthly by the Fund on the ex-dividend date for
the shareholders of Common Stock. The holders of the Auction Rate Cumulative
Preferred Stock shall be entitled to receive dividends in accordance with an
auction that will normally be held monthly and out of funds legally available
to shareholders; (j) the Fund distributes capital gains, if any, at least
annually; (k) the net asset value of the Fund's Common Stock is determined by
dividing the value of the net assets available to Common Stock by the total
number of shares of common stock outstanding. For the purpose of determining
the net asset value per share of the common stock, the value of the Fund's net
assets shall be deemed to equal the value of the Fund's assets less (1) the
Fund's liabilities, (2) the aggregate liquidation value (i.e., $25,000 per
outstanding share) of the Auction Rate Cumulative Preferred Stock and (3)
accumulated and unpaid dividends on the outstanding Auction Rate Cumulative
Preferred Stock; and (l) 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.
Facility fees and upfront fees, incurred by the Fund on loan agreements, are
amortized over the remaining term of the loan.
2. Management Agreement and Transactions with Affiliated Persons
SBFM acts as investment adviser to the Fund. The Fund pays SBFM a management
fee for its investment advisory and administration services calculated at an
annual rate of 1.05% of the Fund's average daily net assets. For purposes of
calculating the advisory fee, the liquidation value of any preferred stock of
the Fund is not deducted in determining the Fund's average daily net assets.
This fee is calculated daily and paid monthly.
SBFM has entered into a sub-investment advisory agreement with TAMIC. Pursuant
to a sub-advisory agreement, TAMIC is responsible for certain investment
decisions related to the Fund. SBFM pays TAMIC a fee of 0.50% of the value of
the Fund's average daily net assets for the services TAMIC provides as
sub-adviser. For purposes of calculating the sub-advisory fee, the liquidation
value of any preferred stock of the Fund is not deducted in determining the
Fund's average daily net assets.
All officers and one Director of the Fund are employees of Citigroup or its
affiliates.
--------------------------------------------------------------------------------
2003 Annual Report
14
Notes to Financial Statements (continued)
3. Investments
During the year ended September 30, 2003, the aggregate cost of purchases and
proceeds from sales of investments (including maturities of long-term
investments, but excluding short-term investments) were as follows:
------------------------------------------------------------------------
Purchases $122,780,653
------------------------------------------------------------------------
Sales 108,245,081
------------------------------------------------------------------------
At September 30, 2003, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were as follows:
-------------------------------------------------------------------------------
Gross unrealized appreciation $ 1,780,212
Gross unrealized depreciation (5,616,194)
-------------------------------------------------------------------------------
Net unrealized depreciation $(3,835,982)
-------------------------------------------------------------------------------
4. Commitments
On May 24, 2002, the Fund entered into a three year revolving credit agreement
to borrow up to an aggregate of $25 million from National Australia Bank
Limited. This agreement terminates on May 31, 2005. The Fund pays a facility
fee quarterly at 0.15% per annum for the three year revolving credit agreement.
5. Auction Rate Cumulative Preferred Stock
On March 14, 2002, the Fund issued 1,700 shares of Series A and 1,700 shares of
Series B, respectively, of Auction Rate Cumulative Preferred Stock ("ARCPS").
The underwriting discount of $850,000 and offering expenses of $340,782
associated with the ARCPS offering were recorded as a reduction of the capital
paid in excess of par value of common stock for the year ended September 30,
2002. The ARCPS' dividends are cumulative at a rate determined at an auction
and the dividend period will typically be 28 days. The dividend rates ranged
from 1.09% to 2.05% during the year ended September 30, 2003. At September 30,
2003, the current dividend rates were as follows:
Series A Series B
-------------------------------------------------------------------------------
Current Dividend Rates 1.14% 1.20%
-------------------------------------------------------------------------------
The ARCPS are redeemable under certain conditions by the Fund, or subject to
mandatory redemption (if the Fund is in default of certain asset coverage
requirements) at a redemption price equal to the liquidation preference, which
is the sum of $25,000 per share plus accumulated and unpaid dividends.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
15
Notes to Financial Statements (continued)
The Fund is required to maintain certain asset coverages with respect to the
ARCPS. If the Fund fails to maintain these asset coverages and does not cure
any such failure within the required time period, the Fund is required to
redeem a requisite number of the ARCPS in order to meet the applicable
requirement. Additionally, failure to meet the foregoing asset coverage
requirements would restrict the Fund's ability to pay dividends to common
shareholders.
Citigroup Global Markets Inc. ("CGM"), formerly known as Salomon Smith Barney
Inc., another indirect wholly-owned subsidiary of Citigroup, also currently
acts as a broker/dealer in connection with the auction of ARCPS. After each
auction, the auction agent will pay to each broker/dealer, from monies the Fund
provides, a participation fee at the annual rate of 0.25% of the purchase price
of the ARCPS that the broker/dealer places at the auction. For the year ended
September 30, 2003, CGM earned $215,402 as a participating broker/dealer.
6. Capital Shares
Capital stock transactions were as follows:
Year Ended Year Ended
September 30, 2003 September 30, 2002
------------------ ------------------
Shares Amount Shares Amount
-------------------------------------------------------------------
Shares issued on reinvestment 18,507 $255,910 -- --
-------------------------------------------------------------------
7. Capital Loss Carryforward
At September 30, 2003, the Fund had, for Federal income tax purposes,
approximately $490,000 of unused capital loss carryforwards available to offset
future capital gains. To the extent that these carryforward losses are used to
offset capital gains, it is probable that the gains so offset will not be
distributed. The amount and year of expiration for each carryforward loss is
indicated below:
2009 2010 2011
------------------------------------------------------------------------------------------------
Carryforward Amounts $44,000 $224,000 $222,000
-----------------------------------------------------------------------------------------------
In addition, the Fund had $5,016,329 of capital losses realized after October
31, 2002, which were deferred for tax purposes to the first day of the following
fiscal year.
--------------------------------------------------------------------------------
2003 Annual Report
16
Notes to Financial Statements (continued)
8. Income Tax Information and Distributions to Shareholders
The tax character of distributions paid during the year ended September 30,
2003 was:
-------------------------------------------------------------------------------
Ordinary income $ 8,577,516
-------------------------------------------------------------------------------
At September 30, 2003, the tax basis components of distributable earnings were:
-------------------------------------------------------------------------------
Undistributed ordinary income $ 655,523
-------------------------------------------------------------------------------
Accumulated capital losses (489,594)
-------------------------------------------------------------------------------
Unrealized depreciation (3,835,982)
-------------------------------------------------------------------------------
The difference between book basis and tax basis unrealized appreciation and
depreciation is attributable primarily to wash sale loss deferrals and consent
fees.
9. Subsequent Event
The Fund has received the following information from Citigroup Asset Management
("CAM"), the Citigroup business unit which includes the Fund's Investment
Manager and other investment advisory companies, all of which are indirect,
wholly-owned subsidiaries of Citigroup. CAM is reviewing its entry, through an
affiliate, into the transfer agent business in the period 1997-1999. As CAM
currently understands the facts, at the time CAM decided to enter the transfer
agent business, CAM sub-contracted for a period of five years certain of the
transfer agency services to a third party and also concluded a revenue
guarantee agreement with this sub-contractor providing that the sub-contractor
would guarantee certain benefits to CAM or its affiliates (the "Revenue
Guarantee Agreement"). In connection with the subsequent purchase of the
sub-contractor's business by an affiliate of the current sub-transfer agent
(PFPC Inc.) used by CAM on many of the funds it manages, this Revenue Guarantee
Agreement was amended eliminating those benefits in exchange for arrangements
that included a one-time payment from the sub-contractor.
The Boards of CAM-managed funds (the "Boards") were not informed of the Revenue
Guarantee Agreement with the sub-contractor at the time the Boards considered
and approved the transfer agent arrangements. Nor were the Boards informed of
the subsequent amendment to the Revenue Guarantee Agreement when that occurred.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
17
Notes to Financial Statements (continued)
CAM has begun to take corrective actions. CAM will pay to the applicable funds
$16 million (plus interest) that CAM and its affiliates received from the
Revenue Guarantee Agreement and its amendment. CAM also plans an independent
review to verify that the transfer agency fees charged by CAM were fairly
priced as compared to competitive alternatives. CAM is instituting new
procedures and making changes designed to ensure no similar arrangements are
entered into in the future.
CAM has briefed the SEC, the New York State Attorney General and other
regulators with respect to this matter, as well as the U.S. Attorney who is
investigating the matter. CAM is cooperating with governmental authorities on
this matter, the ultimate outcome of which is not yet determinable.
The Fund's transfer agent is PFPC Inc., which is not affiliated with CAM.
--------------------------------------------------------------------------------
2003 Annual Report
18
Financial Highlights
For a share of capital stock outstanding throughout each year ended September
30, unless otherwise noted:
2003 2002 2001 2000 1999/(1)/
-------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Year $13.24 $14.15 $15.14 $ 15.19 $ 15.00
------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.75 0.90 1.22 1.40 0.97
Net realized and unrealized
gain (loss) 0.81 (0.79) (0.93) 0.02 0.09
Dividends Paid to Auction Rate
Cumulative Preferred Stockholders
from net investment income (0.12) (0.09) -- -- --
------------------------------------------------------------------------------------
Total Income From Operations 1.44 0.02 0.29 1.42 1.06
------------------------------------------------------------------------------------
Offering Costs on Issuance of
Common Stock -- -- -- -- (0.02)
------------------------------------------------------------------------------------
Underwriting Commissions and
Expenses for the Issuance of
Auction Rate Cumulative
Preferred Stock -- (0.12) -- -- --
------------------------------------------------------------------------------------
Distributions Paid to Common Stock
Shareholders From:
Net investment income (0.75) (0.81) (1.26) (1.44) (0.85)
Net realized gains -- -- (0.02) (0.03) --
------------------------------------------------------------------------------------
Total Distributions (0.75) (0.81) (1.28) (1.47) (0.85)
------------------------------------------------------------------------------------
Net Asset Value, End of Year $13.93 $13.24 $14.15 $ 15.14 $ 15.19
------------------------------------------------------------------------------------
Total Return,
Based on Market Value 29.61% (1.67)% (4.33)% 13.35% 1.68%++
------------------------------------------------------------------------------------
Total Return,
Based on Net Asset Value 11.64% (0.30)% 2.44% 10.55% 7.45%++
------------------------------------------------------------------------------------
Net Assets, End of Year (millions) $ 136 $ 130 $ 138 $ 148 $ 149
------------------------------------------------------------------------------------
Ratios to Average Net Assets/(2)/:
Net investment income 5.62% 6.48% 8.31% 9.20% 7.48%+
Expenses 2.40 2.63 4.57 4.74 3.55+
------------------------------------------------------------------------------------
Portfolio Turnover Rate 55% 57% 23% 59% 53%
------------------------------------------------------------------------------------
Market Value, End of Year $14.45 $11.83 $12.82 $14.6875 $ 14.375
------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
19
Financial Highlights (continued)
2003 2002 2001 2000 1999/(1)/
----------------------------------------------------------------------------------------------------------
Auction Rate Cumulative
Preferred Stock/(3)/:
Total Amount Outstanding (000s) $85,000 $85,000 -- -- --
Asset Coverage Per Share 65,140 63,105 -- -- --
Involuntary Liquidating Preference Per Share/(4)/ 25,000 25,000 -- -- --
Average Market Value Per Share/(4)/ 25,000 25,000 -- -- --
----------------------------------------------------------------------------- ------- ---- ---- --------
(1)For the period November 20, 1998 (commencement of operations) to September
30, 1999.
(2)Calculated on the basis of average net assets of common shareholders. Ratios
do not reflect the effect of dividend payments to preferred shareholders.
(3)On March 14, 2002, the Fund issued 3,400 shares of Auction Rate Cumulative
Preferred Stock at $25,000 a share.
(4)Excludes accrued or accumulated dividends.
++Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
--------------------------------------------------------------------------------
2003 Annual Report
20
Independent Auditors' Report
To the Shareholders and Board of Directors of
Citigroup Investments Corporate Loan Fund Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Citigroup Investments Corporate Loan Fund Inc.
("Fund") as of September 30, 2003, and the related statements 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 financial highlights for each of
the years in the four-year period then ended and for the period from November
20, 1998 (commencement of operations) to September 30, 1999. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures
included confirmation of securities owned as of September 30, 2003 by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund as of September 30, 2003, and the results of its operations for the year
then ended, the changes in its net assets for each of the years in the two-year
period then ended and financial highlights for each of the years in the
four-year period then ended and for the period from November 20, 1998 to
September 30, 1999, in conformity with accounting principles generally accepted
in the United States of America.
/s/ KPMG LLP
New York, New York
November 11, 2003, except for Note 9
Subsequent Event which is dated November 28, 2003
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
21
Additional Information (unaudited)
Result of Annual Meeting of Shareholders
The Annual Meeting of Shareholders of Citigroup Investments Corporate Loan Fund
Inc. was held on January 21, 2003, and adjourned to February 5, 2003, for the
purpose of considering and voting upon the election of three Directors. The
following table provides information concerning the matter voted upon at the
Meeting:
1. Election of Directors*
Preferred Preferred % of
Common Shares Shares Shares
Nominee Shares Series A Series B Total Voted
-------------------------------------------------------------
Dwight B. Crane
Votes For 8,181,382 1,164 902 8,183,448 98.7%
Votes Withheld 110,977 0 0 110,977 1.3%
William R. Hutchinson
Votes For 8,181,184 1,164 902 8,183,250 98.7%
Votes Withheld 111,175 0 0 111,175 1.3%
Paolo M. Cucchi
Votes For N/A 1,164 902 2,066 100%
Votes Withheld N/A 0 0 0 0%
---------
* The following Directors, representing the balance of the Board of Directors,
continue to serve as Directors: Allan J. Bloostein, Robert A. Frankel, R. Jay
Gerken, Paul Hardin and George M. Pavia.
--------------------------------------------------------------------------------
2003 Annual Report
22
Additional Information (unaudited) (continued)
Information about Directors and Officers
The business and affairs of the Citigroup Investments Corporate Loan Fund
Inc. ("Fund") are managed under the direction of the Board of Directors.
Information pertaining to the Directors and Officers of the Fund is set forth
below.
Number of
Portfolios
Term of Principal in Fund Other
Position(s) Office* and Occupation(s) Complex Directorships
Held with Length of During Past Overseen by Held by
Name, Address and Age Fund Time Served Five Years Director Director
-----------------------------------------------------------------------------------------------
Non-Interested Directors:
Allan J. Bloostein Director Since President, Allan J. 35 Taubman
27 West 67th Street 1998 Bloostein Associates Centers, Inc.
New York, NY 10023
Age 73
Dwight B. Crane Director Since Professor, Harvard 49 None
Harvard Business School 1998 Business School
Soldiers Field Road
Morgan Hall #375
Boston, MA 02163
Age 65
Paolo M. Cucchi Director Since Vice President and 7 None
Drew University 2001 Dean of College of
108 Brothers College Liberal Arts at Drew
Madison, NJ 07940 University
Age 61
Robert A. Frankel Director Since Managing Partner of 23 None
1961 Deergrass Way 1998 Robert A. Frankel
Carlsbad, CA 92009 Management
Age 76 Consultants
Paul Hardin Director Since Chancellor Emeritus 35 None
12083 Morehead 2001 and Professor of Law
Chapel Hill, NC 27514 at the University of
Age 72 North Carolina at
Chapel Hill
William R. Hutchinson Director Since President, WR 21 Associated
535 N. Michigan 1998 Hutchinson & Bank and
Suite 1012 Associates, Inc.; Associated
Chicago, IL 60611 formerly Group Vice Banc-Corp
Age 60 President, Mergers &
Acquisitions BP
Amoco
George M. Pavia Director Since Senior Partner, Pavia 7 None
600 Madison Avenue 2001 & Harcourt Attorneys
New York, NY 10022
Age 75
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
23
Additional Information (unaudited) (continued)
Number of
Portfolios
Term of Principal in Fund Other
Position(s) Office* and Occupation(s) Complex Directorships
Held with Length of During Past Overseen by Held by
Name, Address and Age Fund Time Served Five Years Director Director
------------------------------------------------------------------------------------------------
Interested Director:
R. Jay Gerken, CFA** Chairman, Since Managing Director of 219 None
Citigroup Asset President and 2002 Citigroup Global
Management ("CAM") Chief Markets Inc.
399 Park Avenue Executive ("CGM"); Chairman,
4th Floor Officer President and Chief
New York, NY 10022 Executive Officer of
Age 52 Smith Barney Fund
Management LLC
("SBFM"), Travelers
Investment Adviser,
Inc. ("TIA") and Citi
Fund Management
Inc. ("CFM");
President and Chief
Executive Officer of
certain mutual funds
associated with
Citigroup Inc.;
Formerly, Portfolio
Manager of Smith
Barney Allocation
Series Inc. (from
1996-2001) and
Smith Barney Growth
and Income Fund
(from 1996-2000)
Officers:
Andrew B. Shoup*** Senior Vice Since Director of CAM; N/A N/A
CAM President and 2003 Senior Vice President
125 Broad Street Chief and Chief
10th Floor Administrative Administrative
New York, NY 10004 Officer Officer of mutual
Age 47 funds associated
with Citigroup Inc.;
Head of International
Funds Administration
of CAM from 2001 to
2003; Director of
Global Funds
Administration of
CAM from 2000 to
2001; Head of U.S.
Citibank Funds
Administration of
CAM from 1998 to
2000
--------------------------------------------------------------------------------
2003 Annual Report
24
Additional Information (unaudited) (continued)
Number of
Portfolios
Term of Principal in Fund Other
Position(s) Office* and Occupation(s) Complex Directorships
Held with Length of During Past Overseen by Held by
Name, Address and Age Fund Time Served Five Years Director Director
--------------------------------------------------------------------------------------------------
Richard L. Peteka Chief Since Director of CGM; N/A N/A
CAM Financial 2002 Chief Financial Officer
125 Broad Street Officer and Treasurer of
11th Floor and certain mutual funds
New York, NY 10004 Treasurer affiliated with
Age 42 Citigroup Inc.;
Director and Head of
Internal Control for
Citigroup Asset
Management U.S.
Mutual Fund
Administration from
1999-2002; Vice
President, Head of
Mutual Fund
Administration and
Treasurer at
Oppenheimer Capital
from 1996-1999
Glenn N. Marchak Vice Since Senior Vice President N/A N/A
388 Greenwich Street President 1998 of the Travelers Asset
34th Floor and Management
New York, NY 10013 Investment International
Age 52 Officer Company LLC;
Managing Director of
CGM from 1997 to
1998
Kaprel Ozsolak Controller Since Vice President N/A N/A
CAM 2002 of CGM; Controller of
125 Broad Street certain funds
11th Floor associated with
New York, NY 10004 Citigroup Inc.
Age 38
Robert I. Frenkel*** Secretary Since Managing Director N/A N/A
CAM and Chief 2003 and General Counsel
300 First Stamford Place Legal of Global Mutual
4th Floor Officer Funds for CAM and
Stamford, CT 06902 its predecessor
Age 48 (since 1994);
Secretary of CFM;
Secretary and Chief
Legal Officer of
mutual funds
associated with
Citigroup Inc.
---------
* Directors are elected for a term of three years.
** Mr. Gerken is a Trustee who is an "interested person" of the Trust as
defined in the Investment Company Act of 1940, as amended, because Mr.
Gerken is an officer of SBFM and certain of its affiliates.
***As of November 25, 2003.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
25
Dividend Reinvestment Plan (unaudited)
Pursuant to the Plan, shareholders whose Common Stock is registered in their
own names will be deemed to have elected to have all distributions reinvested
automatically in additional Common Stock of the Fund by PFPC Inc. ("Plan
Agent"), as agent under the Plan, unless such shareholders elect to receive
distributions in cash. Shareholders who elect to receive distributions in cash
will receive all distributions in cash paid by check in U.S. dollars mailed
directly to the shareholder by PFPC Inc., as dividend paying agent. In the case
of shareholders such as banks, brokers or nominees, which hold Common Stock for
others who are the beneficial owners, the Plan Agent will administer the Plan
on the basis of the number of shares of Common Stock certified from time to
time by the record shareholders as representing the total amount registered in
the record shareholder's name and held for the account of beneficial owners
that have not elected to receive distributions in cash. Investors that own
shares of Common Stock registered in the name of a bank, broker or other
nominee should consult with such nominee as to participation in the Plan
through such nominee, and may be required to have their shares registered in
their own names in order to participate in the Plan.
The Plan Agent serves as agent for the shareholders in administering the Plan.
Unless the Board of Directors of the Fund declares a dividend or capital gains
distribution payable only in cash, non-participants in the Plan will receive
cash and participants in the Plan will receive shares of Common Stock of the
Fund, to be issued by the Fund or purchased by the Plan Agent in the open
market as outlined below. Whenever the market price per share of Common Stock
is equal to or exceeds the net asset value per share as of the determination
date (defined as the fourth New York Stock Exchange trading day preceding the
payment date for the dividend or distribution), participants will be issued new
shares of Common Stock at a price per share equal to the greater of: (a) the
net asset value per share on the valuation date or (b) 95% of the market price
per share on the valuation date. Except as noted below, the valuation date
generally will be the dividend or distribution payment date. If net asset value
exceeds the market price of the Fund's shares of Common Stock as of the
determination date, the Plan Agent will, as agent for the participants, buy
shares in the open market, on the New York Stock Exchange or elsewhere, for the
participants' accounts as soon as practicable commencing on the trading day
following the determination date and generally terminating no later than 30
days after the dividend or distribution payment date. If, before the Plan Agent
has completed its purchases, the market price exceeds the net asset value of a
share of Common Stock, the average per share purchase price paid by the Plan
Agent may exceed the net asset value of the Fund's shares, resulting in the
acquisition of fewer shares than if the dividend or capital gains distribution
had been paid in shares of Common Stock issued by the Fund. Because of the
foregoing difficulty with respect to open-market purchases, the Plan provides
that if the
--------------------------------------------------------------------------------
2003 Annual Report
26
Dividend Reinvestment Plan (unaudited) (continued)
Plan Agent is unable to invest the full dividend amount in open-market
purchases during the permissible purchase period or if the market discount
shifts to a market premium during such purchase period, the Plan Agent will
cease making open-market purchases and will receive the uninvested portion of
the dividend amount in newly issued shares of Common Stock (in which case the
valuation date will be the date such shares are issued) at a price per share
equal to the greater of (a) the net asset value per share on the valuation date
or (b) 95% of the market price per share on the valuation date.
A shareholder may elect to withdraw from the Plan at any time upon written
notice to the Plan Agent or by calling the Plan Agent at 1-800-331-1710. When a
participant withdraws from the Plan, or upon termination of the Plan as
provided below, certificates for whole shares of Common Stock credited to his
or her account under the Plan will be issued and a cash payment will be made
for any fractional shares credited to such account. An election to withdraw
from the Plan will, until such election is changed, be deemed to be an election
by a shareholder to take all subsequent dividends and distributions in cash.
Elections will be effective immediately if notice is received by the Plan Agent
not less than ten days prior to any dividend or distribution record date;
otherwise such termination will be effective after the investment of the then
current dividend or distribution. If a withdrawing shareholder requests the
Plan Agent to sell the shareholder's shares upon withdrawal from participation
in the Plan, the withdrawing shareholder will be required to pay a $5.00 fee
plus brokerage commissions.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmation of all transactions in the accounts, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in noncertificated form in
the name of the participant, and each shareholder's proxy will include those
shares of Common Stock purchased pursuant to the Plan.
There is no charge to participants for reinvesting dividends or capital gains
distributions. The Plan Agent's fee for the handling of reinvestment of
dividends and distributions will be paid by the Fund. There will be no
brokerage charges with respect to shares of Common Stock issued directly by the
Fund as a result of dividends or capital gains distributions payable either in
shares or in cash. However, each participant will pay a pro rata share of
brokerage commissions incurred with respect to the Plan Agent's open market
purchases in connection with the reinvestment of dividends or capital gains
distributions.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
27
Dividend Reinvestment Plan (unaudited) (continued)
The automatic reinvestment of dividends and distributions will not relieve
participants of any U.S. federal income tax that may be payable on such
dividends or distributions.
Experience under the Plan may indicate that changes thereto may be desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any dividend or distribution paid: (i) subsequent to notice of the
change sent to all participants at least 30 days before the record date for
such dividend or distribution or (ii) otherwise in accordance with the terms of
the Plan. The Plan also may be amended or terminated by the Plan Agent, with
the Board of Directors' prior written consent, on at least 30 days' prior
written notice to all participants. All correspondence concerning the Plan
should be directed by mail to PFPC Inc., P.O. Box 8030, Boston, Massachusetts
02266-8030 or by telephone at (800) 331-1710.
--------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that from time to time the Fund may purchase
shares of its Common Stock in the open market.
--------------------------------------------------------------------------------
2003 Annual Report
28
Directors
Allan J. Bloostein
Dwight B. Crane
Paolo M. Cucchi
Robert A. Frankel
R. Jay Gerken, CFA
Chairman
Paul Hardin
William R. Hutchinson
George M. Pavia
Officers
R. Jay Gerken, CFA
President and Chief Executive Officer
Andrew B. Shoup*
Senior Vice President and Chief Administrative Officer
Richard L. Peteka
Chief Financial Officer and Treasurer
Glenn N. Marchak
Vice President and
Investment Officer
Kaprel Ozsolak
Controller
Robert I. Frenkel*
Secretary and
Chief Legal Officer
* As of November 25, 2003.
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NYSE
THE NEW YORK STOCK EXCHANGE
Investment Adviser
Smith Barney Fund Management LLC
399 Park Avenue
New York, New York 10022
Sub-Investment Adviser
Travelers Asset Management International Company LLC
242 Trumbull Street
Hartford, Connecticut 06115
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Transfer Agent
PFPC Inc.
P.O. Box 8030
Boston, Massachusetts 02266-8030
This report is intended only for shareholders of Citigroup Investments
Corporate Loan Fund Inc. It is not a Prospectus, circular or representation
intended for use in the purchase or sale of shares of the Fund or any
securities mentioned in this report.
Citigroup Investments Corporate Loan Fund Inc.
125 Broad Street
10th Floor, MF-2
New York, New York 10004
FD01804 11/03 03-5720
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The Board of Directors of the registrant has determined that William
Hutchinson, a member of the Board's Audit Committee, possesses the
technical attributes identified in Instruction 2(b) of Item 3 to Form
N-CSR to qualify as an "audit committee financial expert," and has
designated Mr. Hutchinson as the Audit Committee's financial expert.
Mr. Hutchinson is an "independent" Director pursuant to paragraph
(a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Board of Directors of the Fund has delegated the authority to
develop policies and procedures relating to proxy voting to the
Manager. The Manager is part of Citigroup Asset Management ("CAM"), a
group of investment adviser affiliates of Citigroup, Inc.
("Citigroup"). Along with the other investment advisers that comprise
CAM, the Manager has adopted a set of proxy voting policies and
procedures (the "Policies") to ensure that the Manager votes proxies
relating to equity securities in the best interest of clients.
In voting proxies, the Manager is guided by general fiduciary
principles and seeks to act prudently and solely in the best interest
of clients. The Manager attempts to consider all factors that could
affect the value of the investment and will vote proxies in the manner
that it believes will be consistent with efforts to maximize
shareholder values. The Manager may utilize an external service
provider to provide it with information and/or a recommendation with
regard to proxy votes. However, such recommendations do not relieve the
Manager of its responsibility for the proxy vote.
In the case of a proxy issue for which there is a stated position in
the Policies, CAM generally votes in accordance with such stated
position. In the case of a proxy issue for which there is a list of
factors set forth in the Policies that CAM considers in voting on such
issue, CAM votes on a case-by-case basis in accordance with the general
principles set forth above and considering such enumerated factors. In
the case of a proxy issue for which there is no stated position or list
of factors that CAM considers in voting on such issue, CAM votes on a
case-by-case basis in accordance with the general principles set forth
above. Issues for which there is a stated position set forth in the
Policies or for which there is a list of factors set forth in the
Policies that CAM considers in voting on such issues fall into a
variety of categories, including election of directors, ratification of
auditors, proxy and tender offer defenses, capital structure issues,
executive and director compensation, mergers and corporate
restructurings, and social and environmental issues. The stated
position on an issue set forth in the Policies can always be
superseded, subject to the duty to act solely in the best interest of
the beneficial owners of accounts, by the investment management
professionals responsible for the account whose shares are being voted.
Issues applicable to a particular industry may cause CAM to abandon a
policy that would have otherwise applied to issuers generally. As a
result of the independent investment advisory services provided by
distinct CAM business units, there may be occasions when different
business units or different portfolio managers within the same business
unit vote differently on the same issue.
In furtherance of the Manager's goal to vote proxies in the best
interest of clients, the Manager follows procedures designed to
identify and address material conflicts that may arise between the
Manager's interests and those of its clients before voting proxies on
behalf of such clients. To seek to identify conflicts of interest, CAM
periodically notifies CAM employees (including employees of the
Manager) in writing that they are under an obligation (i) to be aware
of the potential for conflicts of interest with respect to voting
proxies on behalf of client accounts both as a result of their personal
relationships and due to special circumstances that may arise during
the conduct of CAM's and the Manager's business, and (ii) to bring
conflicts of interest of which they become aware to the attention of
compliance personnel. The Manager also maintains and considers a list
of significant relationships that could present a conflict of interest
for the Manager in voting proxies. The Manager is also sensitive to the
fact that a significant, publicized relationship between an issuer and
a non-CAM affiliate might appear to the public to influence the manner
in which the Manager decides to vote a proxy with respect to such
issuer. Absent special circumstances or a significant, publicized
non-CAM affiliate relationship that CAM or the Manager for prudential
reasons treats as a potential conflict of interest because such
relationship might appear to the public to influence the manner in
which the Manager decides to vote a proxy, the Manager generally takes
the position that non-CAM relationships between Citigroup and an issuer
(e.g. investment banking or banking) do not present a conflict of
interest for the Manager in voting proxies with respect to such issuer.
Such position is based on the fact that the Manager is operated as an
independent business unit from other Citigroup business units as well
as on the existence of information barriers between the Manager and
certain other Citigroup business units.
CAM maintains a Proxy Voting Committee, of which the Manager personnel
are members, to review and address conflicts of interest brought to its
attention by compliance personnel. A proxy issue that will be voted in
accordance with a stated position on an issue or in accordance with the
recommendation of an independent third party is not brought to the
attention of the Proxy Voting Committee for a conflict of interest
review because the Manager's position is that to the extent a conflict
of interest issue exists, it is resolved by voting in accordance with a
pre-determined policy or in accordance with the recommendation of an
independent third party. With respect to a conflict of interest brought
to its attention, the Proxy Voting Committee first determines whether
such conflict of interest is material. A conflict of interest is
considered material to the extent that it is determined that such
conflict is likely to influence, or appear to influence, the Manager's
decision-making in voting proxies. If it is determined by the Proxy
Voting Committee that a conflict of interest is not material, the
Manager may vote proxies notwithstanding the existence of the conflict.
If it is determined by the Proxy Voting Committee that a conflict of
interest is material, the Proxy Voting Committee is responsible for
determining an appropriate method to resolve such conflict of interest
before the proxy affected by the conflict of interest is voted. Such
determination is based on the particular facts and circumstances,
including the importance of the proxy issue and the nature of the
conflict of interest. Methods of resolving a material conflict of
interest may include, but are not limited to, disclosing the conflict
to clients and obtaining their consent before voting, or suggesting to
clients that they engage another party to vote the proxy on their
behalf.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal
financial officer have concluded that the registrant's disclosure
controls and procedures (as defined in Rule 30a- 3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act")) are
effective as of a date within 90 days of the filing date of this
report that includes the disclosure required by this paragraph,
based on their evaluation of the disclosure controls and
procedures required by Rule 30a-3(b) under the 1940 Act and
15d-15(b) under the Securities Exchange Act of 1934.
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940
Act) that occurred during the registrant's last fiscal half-year
(the registrant's second fiscal half-year in the case of an annual
report) that have materially affected, or are likely to materially
affect the registrant's internal control over financial reporting.
ITEM 10. EXHIBITS.
(a) Code of Ethics attached hereto.
Exhibit 99.CODE ETH
(b) Attached hereto.
Exhibit 99.CERT Certifications pursuant to section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 99.906CERT Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this Report to be
signed on its behalf by the undersigned, there unto duly authorized.
Citigroup Investments Corporate Loan Fund Inc.
By: /s/ R. Jay Gerken
(R. Jay Gerken)
Chief Executive Officer of
Citigroup Investments Corporate Loan Fund Inc.
Date: December 12, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ R. Jay Gerken
(R. Jay Gerken)
Chief Executive Officer of
Citigroup Investments Corporate Loan Fund Inc.
Date: December 12, 2003
By: /s/ Richard L. Peteka
(Richard L. Peteka)
Chief Financial Officer of
Citigroup Investments Corporate Loan Fund Inc.
Date: December 12, 2003