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: March 31, 2004
ITEM 1. REPORT TO STOCKHOLDERS.
The Semi-Annual Report to Stockholders is filed herewith.
Citigroup
Investments
Corporate
Loan Fund Inc.
Semi-Annual Report March 31, 2004 Ticker Symbol: TLI
[GRAPHIC]
WHAT'S INSIDE
Letter from the Chairman........... 1
Schedule of Investments............ 5
Statement of Assets and Liabilities 12
Statement of Operations............ 13
Statements of Changes in Net Assets 14
Notes to Financial Statements...... 15
Financial Highlights............... 20
Additional Information............. 22
Dividend Reinvestment Plan......... 23
LETTER FROM THE CHAIRMAN
[PHOTO]
R. JAY GERKEN, CFA
Chairman, President and
Chief Executive Officer
Dear Shareholder,
We are pleased to announce that, during the six months ended March 31, 2004,
the Citigroup Investments Corporate Loan Fund Inc. returned 8.35%, based on its
New York Stock Exchange ("NYSE") market price and 5.33% based on its net asset
value ("NAV")/i/ per share. The fund outperformed its Lipper loan participation
closed end funds category average, which returned 5.26% over the same time
frame./ii/ Please note that Lipper performance returns are based on each fund's
NAV.
During this six-month period, the fund distributed dividends to shareholders
totaling $0.3475 per share. The performance table shows the fund's 30-day SEC
yield as well as its six-month total return based on its NAV and market price
as of March 31, 2004. Past performance is no guarantee of future results. The
fund's yields will vary.
FUND PERFORMANCE
AS OF MARCH 31, 2004
30-Day Six-Month
Price Per Share SEC Yield Total Return
$14.32 (NAV) 4.97% 5.33%
$15.28 (NYSE) 4.66% 8.35%
All figures represent past performance and are not a guarantee of future
results. The fund's yields will vary.
Total returns are based on changes in NAV or market price, respectively.
Total returns assume the reinvestment of all dividends and/or capital gains
distributions, if any, in additional shares. The "SEC yield" is a return
figure often quoted by bond and other fixed income mutual funds. This
quotation is based on the most recent 30-day (or one month) period covered by
the fund's filings with the SEC. The yield figure reflects the dividends and
interest earned during the period after deduction of the fund's expenses for
the period. These yields are as of March 31, 2004 and are subject to change.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
1
Loan Market Overview
During the period, the U.S. economy's quarterly pace of growth continued to
advance at a more robust rate than it did earlier last year./iii/ Although
recent employment data showed that the unemployment rate rose to 5.7% in March,
versus 5.6% in February, the U.S. economy added 308,000 non-farm payroll jobs
in March./iv/ The result marked the largest increase in jobs since April
2000./v/ The strength of the economy contributed to corporate earnings, which
in turn, favorably supported the credit climate for many corporate loan
issuers. Default rates in the corporate loan market continued to drop, and
demand for these issues remains strong. Although the prices of corporate loan
instruments have reached loftier levels amid this demand, the portfolio manager
continued to uncover opportunities with competitive yields, maintaining a focus
on investment in high-quality issues in a wide array of sectors for
diversification./vi/
Information About Your Fund
In recent months several issues in the mutual fund industry have come under the
scrutiny of federal and state regulators. The fund's Adviser and some of its
affiliates have received requests for information from various government
regulators regarding market timing, late trading, fees and other mutual fund
issues in connection with various investigations. The fund has been informed
that the Adviser and its affiliates are responding to those information
requests, but are not in a position to predict the outcome of these requests
and investigations.
Looking for Additional Information?
The fund is traded under the symbol "TLI" and its closing market price is
available in most newspapers under the NYSE listings. The daily NAV is
available online under symbol XTLIX. Barron's and The Wall Street Journal's
Monday editions carry closed-end fund tables that will provide additional
information. In addition, the fund issues a quarterly press release that can be
found on most major financial web sites as well as
www.citigroupassetmanagement.com.
In a continuing effort to provide information concerning the fund, shareholders
may call 1-888-735-6507, Monday through Friday from 8:00 a.m. to 6:00 p.m.
Eastern Time, for the fund's current net asset value, market price and other
information regarding the fund's portfolio holdings and allocations.
--------------------------------------------------------------------------------
2004 Semi-Annual Report
2
Thank you for your investment in the Citigroup Investments Corporate Loan Fund
Inc. We appreciate that you have entrusted us to manage your money and value
our relationship with you.
Sincerely,
/s/ R Jay Gerken
R. Jay Gerken, CFA
Chairman, President and Chief Executive Officer
April 16, 2004
The information provided is not intended to be a forecast of future events, a
guarantee of future results or investment advice. Views expressed may differ
from those of the firm as a whole.
Portfolio holdings and breakdowns are as of March 31, 2004 and are subject to
change. Please refer to pages 5 through 11 for a list and percentage breakdown
of the fund's holdings.
/i/ NAV is a price that reflects the value of the fund's underlying portfolio
plus other assets, less the fund's liabilities. However, the price at which
an investor may buy or sell shares of the fund is at the fund's market
price as determined by supply of and demand for the fund's common shares,
which may be more or less than the fund's NAV.
/ii/ Lipper, Inc. is a major independent mutual-fund tracking organization.
Returns are based on the 12-month period ended March 31, 2004, calculated
among the 38 funds in the fund's Lipper category including the
reinvestment of dividends and capital gains, if any.
/iii/ Source: Based upon gross domestic product data from the Bureau of
Economic Analysis (January 30, 2004). Gross domestic product is a market
value of goods and services produced by labor and property in a given
country.
/iv/ Source: U.S. Department of Labor (April 1, 2004).
/v/ Source: Lehman Brothers.
/vi/ Diversification does not assure against market loss.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
3
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 23. To find out more detailed information about the
Plan and about how you can participate, please call the Plan Agent at
1-800-331-1710.
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2004 Semi-Annual Report
4
Schedule of Investments (unaudited) March 31, 2004
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE(a)
-----------------------------------------------------------------------------------------
SENIOR COLLATERALIZED LOANS -- 93.9%
Aerospace/ Defense -- 0.7%
$ 71,120 Communications & Power Industries
Holding Corp. Term 1/29/10 $ 72,187
460,466 DeCrane Aircraft Holdings, Inc. Term B 9/30/05 443,198
745,575 DeCrane Aircraft Holdings, Inc. Term D 12/17/06 717,616
598,500 TransDigm Holding Corp. Term 5/15/06 604,672
----------------------------------------------------------------------------------------
1,837,673
----------------------------------------------------------------------------------------
Automotive -- 2.4%
1,333,333 CSK Auto, Inc. Term B 1/16/10 1,350,000
966,948 Dayco Products, LLC Term B 9/11/08 972,992
1,670,250 Dura Operating Corp. Term C 12/31/08 1,684,081
812,211 Gentek, Inc. Senior Secured 11/10/08 818,099
500,000 Keystone Automotive Industries, Inc. Term 11/5/09 508,125
712,442 Plastech, Inc. Term B 2/17/11 723,352
----------------------------------------------------------------------------------------
6,056,649
----------------------------------------------------------------------------------------
Banking & Finance -- 0.3%
829,282 Crescent Real Estate Equities LP Term 3/2/06 838,093
----------------------------------------------------------------------------------------
Building Materials -- 5.9%
206,916 Atrium Cos., Inc. Term 12/10/08 209,891
1,670,932 Hanley-Wood, Inc. Term B 9/21/07 1,620,804
1,287,777 Magnatrax Corp. (b) Term B 11/15/05 676,083
3,676,386 Masonite International Corp. Term C 8/31/08 3,704,878
1,745,430 Masonite International Corp. Term C2 6/20/09 1,763,975
964,286 National Waterworks, Inc. Tranche B 11/22/09 977,143
967,767 Newkirk Master LP Term B 12/31/04 987,727
1,987,892 Panolam Industries International, Inc. Term B 11/24/06 1,987,892
391,685 Panolam Industries International, Inc. Tranche C 10/20/10 389,727
284,710 PGT Industries, Inc. Term A 1/29/10 287,557
142,355 PGT Industries, Inc. Term B 1/29/10 143,601
2,227,388 Trussway Holdings Inc. Term B 12/31/06 1,804,184
----------------------------------------------------------------------------------------
14,553,462
----------------------------------------------------------------------------------------
Chemicals -- 4.2%
1,125,000 Alon USA, Inc. Term 11/21/08 1,130,625
2,420,021 Georgia Gulf Corp. Term D 12/2/10 2,451,784
1,069,730 Huntsman International LLC Term B 6/30/07 1,083,168
1,069,866 Huntsman International LLC Term C 6/30/08 1,082,570
489,596 Huntsman LLC Term A 3/31/07 474,296
481,972 Huntsman LLC Term B 3/31/07 466,509
498,709 Ionics, Inc. Term 2/13/11 504,787
139,416 Kraton Polymers Term 12/17/10 141,885
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
5
Schedule of Investments (unaudited) (continued) March 31, 2004
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE(a)
-----------------------------------------------------------------------------------
Chemicals -- 4.2% (continued)
$1,635,455 Noveon, Inc. Term B 12/31/09 $ 1,653,853
995,000 Rockwood Specialties Group Inc. Term C 7/23/10 1,003,084
398,000 Westlake Chemical Corp. Term B 7/23/10 403,473
-----------------------------------------------------------------------------------
10,396,034
-----------------------------------------------------------------------------------
Conglomerates -- 1.4%
404,397 Atkins Nutritionals, Inc. 1st Lien 10/29/09 405,913
137,100 Atkins Nutritionals, Inc. 2nd Lien 10/29/09 138,128
2,895,750 SPX Corp. Term B1 9/30/09 2,935,868
-----------------------------------------------------------------------------------
3,479,909
-----------------------------------------------------------------------------------
Construction Machinery -- 0.3%
624,695 D&E Communications, Inc. Term B 3/5/12 631,723
-----------------------------------------------------------------------------------
Consumer Cyclical Services -- 0.5%
524,478 Alderwoods Group, Inc. Term B 9/17/08 532,181
805,882 Pike Electric Inc. Term 4/18/10 813,312
-----------------------------------------------------------------------------------
1,345,493
-----------------------------------------------------------------------------------
Consumer Products -- 2.3%
166,667 American Achievement Corp. Term B 3/31/11 166,667
610,908 Armkel, LLC Term B 3/28/09 618,654
1,665,667 Holmes Products Corp. Term B 2/5/07 1,670,177
947,776 Jostens, Inc. Term B 7/29/10 959,149
388,614 NBTY, Inc. Term C 7/25/09 392,257
139,723 Simmons Co. Term B 12/19/11 139,839
684,535 Simmons Co. Tranche B 12/19/11 694,019
992,500 Tempur-Pedic International Inc. Term B 8/18/09 1,001,184
-----------------------------------------------------------------------------------
5,641,946
-----------------------------------------------------------------------------------
Electric -- 4.6%
695,752 Anteon Corp. Term 12/3/10 703,870
600,000 Aquila, Inc. Facility 7/30/04 600,750
1,990,000 Calpine Corp. 1st Lien 7/16/07 2,010,149
1,500,000 Calpine Generating Co. LLC 1st Lien 11/16/04 1,501,758
1,000,000 Centerpoint Energy Houston Electric, LLC Term 11/12/05 1,148,750
137,876 Cogentrix Deleware Holdings, Inc. Term B 2/25/09 138,680
318,959 NRG Energy, Inc. Term B 5/23/10 329,027
569,661 NRG Energy, Inc. Term B 5/23/10 587,641
3,190,639 Orion Power Midwest, LP Term 10/25/05 3,174,686
1,168,983 Orion Power New York, LP Term 10/25/05 1,163,138
-----------------------------------------------------------------------------------
11,358,449
-----------------------------------------------------------------------------------
Entertainment -- 2.8%
961,838 Detroit Red Wings, Inc. Term A 8/30/06 963,040
1,277,522 New Jersey Basketball LLC Term A 12/31/08 1,280,716
See Notes to Financial Statements.
--------------------------------------------------------------------------------
2004 Semi-Annual Report
6
Schedule of Investments (unaudited) (continued) March 31, 2004
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE(a)
-----------------------------------------------------------------------------------
Entertainment -- 2.8% (continued)
$1,850,484 Regal Cinemas, Inc. Term D 6/30/09 $ 1,878,704
2,746,411 Six Flags Theme Parks, Inc. Term B 6/30/09 2,776,163
----------------------------------------------------------------------------------
6,898,623
----------------------------------------------------------------------------------
Environmental -- 1.7%
3,168,000 Casella Waste Systems, Inc. Term B 5/11/07 3,212,748
1,000,000 Waste Connections, Inc. Term 10/22/10 1,006,563
----------------------------------------------------------------------------------
4,219,311
----------------------------------------------------------------------------------
Food -- 4.2%
1,094,400 AGCO Corp. Term 12/12/08 1,106,712
862,097 American Seafoods Group LLC Term B 3/31/09 866,048
3,126,372 Dean Foods Co. Term B 7/15/08 3,178,154
775,586 Del Monte Corp. Term B 12/20/10 789,401
657,602 Fleming Cos., Inc. Term B 6/18/08 655,136
347,955 Jack In The Box, Inc. Term B 1/8/11 353,609
502,734 Merisant Co. Term B 1/11/10 508,075
997,500 Michael Foods, Inc. Term 11/21/10 1,013,709
982,500 National Dairy Holdings L.P. Term B 4/30/09 984,752
277,305 NSC Operating Co. Term B 5/27/07 277,998
447,500 NSC Operating Co. 2nd Lien 5/25/09 442,466
348,250 Reddy Ice Group Inc. Term 8/17/09 352,095
----------------------------------------------------------------------------------
10,528,155
----------------------------------------------------------------------------------
Gaming -- 5.5%
2,828,571 Alliance Gaming Corp. Term B 9/4/09 2,861,278
2,045,401 Ameristar Casinos, Inc. Term B1 12/20/06 2,059,144
1,500,000 Greektown Casino, LLC Term D 9/30/04 1,516,875
1,587,809 Isle of Capri Casinos BlackHawk, LLC Term C 11/15/06 1,604,680
1,011,164 Penn National Gaming, Inc. Term D 9/1/07 1,024,752
4,562,565 Scientific Games Corp. Term C 12/31/09 4,631,003
----------------------------------------------------------------------------------
13,697,732
----------------------------------------------------------------------------------
Healthcare -- 6.4%
264,395 aaiPharma, Inc. Term 12/1/09 255,692
400,000 AMN Healthcare Inc. Term 10/2/08 407,000
985,000 Community Health Systems Inc. Tranche B 7/16/10 1,003,099
1,990,000 Community Health Systems Inc. Term 1/16/11 2,019,850
776,879 Conmed Corp. Term C 12/15/09 786,590
647,500 Connecticare, Inc. Term 10/31/09 655,189
1,983,838 Davita, Inc. Term B 3/31/09 2,007,397
2,925,000 DJ Orthopedics LLC Term 12/30/08 2,964,306
1,000,000 EMPI Corp. Term 11/24/09 1,013,125
1,311,404 Fisher Scientific International, Inc. Tranche C 3/31/10 1,323,151
1,339,875 Fresenius Medical Care Holdings, Inc. Term C 2/21/10 1,361,020
696,500 Hanger Orthopedic Group, Inc. Term B 9/30/09 706,077
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
7
Schedule of Investments (unaudited) (continued) March 31, 2004
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE(a)
------------------------------------------------------------------------------------
Healthcare -- 6.4% (continued)
$ 623,583 Kinetic Concepts, Inc. Term B1 8/11/10 $ 632,255
863,183 Rotech Healthcare Inc. Term B 3/31/08 875,591
-----------------------------------------------------------------------------------
16,010,342
-----------------------------------------------------------------------------------
Home Construction -- 0.6%
1,419,724 Landsource Communities Development, LLC Term B 1/9/10 1,443,682
-----------------------------------------------------------------------------------
Industrial - Other -- 6.9%
214,249 Buffets, Inc. Term 6/28/09 215,588
1,571,162 Buffets, Inc. Term 6/30/09 1,577,446
694,171 Buhrmann U.S., Inc. Tranche B1 12/31/10 704,237
276,448 Compression Polymers Corp. 1st Lien 3/6/10 277,139
1,230,822 Flowserve Corp. Term C 6/30/09 1,245,745
340,000 Goodman Global Holdings, Inc. Tranche B 11/21/09 344,463
2,012,614 IESI Corp. Term 9/30/10 2,045,319
597,004 Jarden Corp. Term B 4/24/08 601,730
213,533 Metokote Corp. 2nd Lien 2/9/11 215,401
893,250 Moran Transportation Term 8/8/09 901,624
3,666,399 Mueller Group, Inc. Term E 5/31/08 3,687,023
828,726 Multiplan, Inc. Term 3/19/09 839,085
759,231 Norcross Safety Products LLC Term 3/20/09 766,349
687,211 Roper Industries Inc. Term 12/19/08 696,446
867,886 TriMas Corp. Term B 12/31/09 873,490
495,000 Unifrax Corp. Term 9/4/09 501,033
2,333,913 Western Industries Inc. Term B 6/23/06 1,575,391
-----------------------------------------------------------------------------------
17,067,509
-----------------------------------------------------------------------------------
Insurance -- 2.5%
1,965,000 Hilb, Rogal and Hamilton Co. Term B 6/30/07 1,994,475
2,779,000 Oxford Health Plans, Inc. Term 4/25/09 2,794,054
1,293,500 USI Holdings Corp. Term B 8/11/08 1,312,094
-----------------------------------------------------------------------------------
6,100,623
-----------------------------------------------------------------------------------
Lodging -- 0.1%
272,318 Green Valley Ranch Gaming, LLC Term B 12/31/10 276,743
-----------------------------------------------------------------------------------
Media/Cable -- 7.2%
426,722 Atlantic Broadband Finance LLC Term B 8/6/11 432,189
934,924 Block Communications Inc. Term B 11/15/09 943,689
2,500,000 Century Cable Holdings LLC Term 12/31/09 2,371,250
1,955,000 Charter Communications VIII Term B 2/2/08 1,947,495
1,960,000 Charter Communications Operating LLC Term B 3/18/08 1,951,950
4,900,000 Charter Communications Operating LLC Term B 3/18/08 4,884,687
3,990,000 Insight Midwest LLC Term B 12/31/09 4,018,261
1,387,187 Rainbow Media Group Term C 3/31/09 1,405,394
-----------------------------------------------------------------------------------
17,954,915
-----------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
2004 Semi-Annual Report
8
Schedule of Investments (unaudited) (continued) March 31, 2004
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE(a)
------------------------------------------------------------------------------------
Media/Non-Cable -- 12.7%
$4,118,389 American Media Operation Inc. Term C 4/1/07 $ 4,186,602
946,754 American Media Operation Inc. Term C1 4/1/07 958,588
2,778,017 Canwest Media Inc. Term D2 11/15/08 2,812,743
990,000 Cumulus Media Inc. Term D 3/28/10 1,004,108
2,229,547 Dex Media East LLC Term B 5/4/09 2,265,976
3,625,555 Dex Media West LLC Term B 3/10/10 3,689,974
842,246 Emmis Communications Corp. Term B 1/5/10 854,002
1,995,000 Gray Television, Inc. Term 6/6/11 2,018,691
1,224,394 Hollinger International Publishing Inc. Term B 9/30/09 1,232,047
284,977 ILC Industries, Inc. 2nd Lien 2/5/11 289,964
157,895 Lamar Media Corp. Term A 6/30/09 158,454
1,222,222 Lamar Media Corp. Term C 6/30/09 1,240,556
417,208 MediaNews Group, Inc. Term B 12/12/10 422,423
1,396,500 PanAmSat Corp. Term B1 10/31/10 1,413,738
138,301 R.H. Donnelley, Inc. Term B2 6/30/10 140,643
2,058,980 The Reader's Digest Association, Inc. Term B 5/20/08 2,076,191
284,928 SGL Carbon LLC Term 2/13/10 285,996
1,432,826 Sun Media Corp. Term B 2/7/09 1,447,154
2,428,414 Susquehanna Media Co. Term B 3/24/12 2,458,011
2,600,000 Vivendi Universal Entertainment LLP Term B 6/30/08 2,621,531
-----------------------------------------------------------------------------------
31,577,392
-----------------------------------------------------------------------------------
Metals -- 0.6%
455,027 Compass Minerals Group, Inc. Term B 11/28/09 461,473
984,407 The Techs Term 1/9/10 986,868
-----------------------------------------------------------------------------------
1,448,341
-----------------------------------------------------------------------------------
Other - Energy -- 1.0%
827,254 Enersys, Inc. 1st Lien 3/17/11 840,180
413,627 Enersys, Inc. 2nd Lien 3/17/11 420,521
1,287,000 Peabody Energy Corp. Term B 3/21/10 1,294,373
-----------------------------------------------------------------------------------
2,555,074
-----------------------------------------------------------------------------------
Other - Financial Institutions -- 0.5%
543,689 Bridge Information Systems, Inc. (b) Multi-Draw 5/29/05 224,272
1,008,320 Bridge Information Systems, Inc. (b) Term B 5/29/05 415,932
552,896 Global Cash Access, L.L.C. Term 3/10/10 561,535
-----------------------------------------------------------------------------------
1,201,739
-----------------------------------------------------------------------------------
Packaging -- 3.7%
142,241 Baker Tanks Inc. Term 2/4/11 143,219
684,638 DR Pepper Bottling Co. of Texas Term B 12/22/10 697,047
3,980,000 Graphic Packaging Corp. Term B 8/9/10 4,039,286
1,480,026 Kerr Group, Inc. Term 8/13/10 1,492,359
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
9
Schedule of Investments (unaudited) (continued) March 31, 2004
FACE LOAN STATED
AMOUNT SECURITY TYPE MATURITY VALUE(a)
-----------------------------------------------------------------------------------
Packaging -- 3.7% (continued)
$1,764,069 Printpack Holdings Inc. Term C 3/31/09 $ 1,775,647
120,411 Smurfit-Stone Container Corp. Term C 6/30/09 121,088
929,046 Stone Container Corp. Term B 6/30/09 935,143
----------------------------------------------------------------------------------
9,203,789
----------------------------------------------------------------------------------
Pharmaceuticals -- 0.4%
869,695 Alpharma Corp. Term B 10/5/08 874,452
----------------------------------------------------------------------------------
Railroads -- 0.3%
767,156 RailAmerica, Inc. Term 10/14/07 776,650
----------------------------------------------------------------------------------
Refining -- 1.7%
1,035,562 Dresser Inc. Term C 4/10/09 1,053,362
3,076,750 Tesoro Petroleum Corp. Term 4/14/08 3,175,646
----------------------------------------------------------------------------------
4,229,008
----------------------------------------------------------------------------------
Retailers -- 1.5%
426,784 Alimentation Couche-Tard, Inc. Term 12/17/10 432,030
1,962,951 General Nutrition Centers Inc. Tranche B 12/5/09 1,977,673
1,200,000 Kmart Corp. Term B 5/2/06 1,206,750
----------------------------------------------------------------------------------
3,616,453
----------------------------------------------------------------------------------
Technology -- 1.6%
3,599,200 Amphenol Corp. Term B 5/6/10 3,637,442
297,750 Fairchild Semiconductor Corp. Term 6/19/08 302,588
----------------------------------------------------------------------------------
3,940,030
----------------------------------------------------------------------------------
Telecommunications -- 7.0%
2,090,000 Centennial Cellular Operating Co. Term B 2/9/11 2,088,042
3,477,525 Crown Castle Operating Co. Term B 9/15/07 3,537,022
3,327,753 FairPoint Communications, Inc. Term C 3/1/07 3,344,392
3,950,100 Nextel Finance Co. Term E 12/15/10 3,995,107
2,300,000 Qwest Corp. Term A 6/9/07 2,383,614
446,148 SBA Senior Finance, Inc. Term 1/29/09 446,985
1,656,667 Western Wireless Corp. Term B 9/30/08 1,664,302
----------------------------------------------------------------------------------
17,459,464
----------------------------------------------------------------------------------
Tobacco -- 0.8%
1,892,000 Commonwealth Brands, Inc. Term 8/28/07 1,919,198
----------------------------------------------------------------------------------
Transportation Services -- 1.3%
2,358,388 TravelCenters of America, Inc. Term 11/14/08 2,388,852
907,102 Yellow Roadway Corp. Term 7/11/08 913,055
----------------------------------------------------------------------------------
3,301,907
----------------------------------------------------------------------------------
Utility - Other -- 0.3%
820,800 NUI Corp. Term 11/10/04 831,060
----------------------------------------------------------------------------------
TOTAL SENIOR COLLATERALIZED LOANS (Cost -- $233,146,106) 233,271,623
----------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
2004 Semi-Annual Report
10
Schedule of Investments (unaudited) (continued) March 31, 2004
SHARES SECURITY VALUE
-----------------------------------------------------------------------
COMMON STOCK (c) -- 0.3%
17,356 Gentek, Inc. (Cost -- $607,460) $ 728,952
-----------------------------------------------------------------------
WARRANTS SECURITY VALUE
-----------------------------------------------------------------------
WARRANTS (c) -- 0.0%
36 Gentek, Inc., Expires 10/31/06 180
19 Gentek, Inc., Expires 10/31/08 149
9 Gentek, Inc., Expires 10/31/10 92
-----------------------------------------------------------------------
TOTAL WARRANTS (Cost -- $0) 421
-----------------------------------------------------------------------
FACE
AMOUNT SECURITY VALUE
-----------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 5.8%
Commercial Paper -- 5.8%
$ 2,427,000 Falcon Asset Securitization, 1.050% due
4/1/04 2,427,000
12,000,000 UBS Financial Services Inc., 1.060% due
4/1/04 12,000,000
-----------------------------------------------------------------------
TOTAL SHORT-TERM
INVESTMENTS (Cost -- $14,427,000) 14,427,000
-----------------------------------------------------------------------
TOTAL
INVESTMENTS -- 100.0% (Cost -- $248,180,566**) $248,427,996
-----------------------------------------------------------------------
(a)Market value is determined using current market prices which are supplied
weekly by an independent third party pricing service.
(b)Security is currently in default.
(c)Non-income producing security.
**Aggregate cost for Federal income tax purposes is substantially the same.
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.
11
Statement of Assets and Liabilities (unaudited) March 31, 2004
ASSETS:
Investments, at value (Cost -- $248,180,566) $248,427,996
Interest receivable 925,724
Receivable for securities sold 2,513,386
---------------------------------------------------------------------------------------------
Total Assets 251,867,106
---------------------------------------------------------------------------------------------
LIABILITIES:
Bank loan (Note 4) 23,000,000
Bank overdraft 2,305,480
Management fee payable 200,600
Dividends payable to Auction Rate Cumulative Preferred Stockholders 78,250
Interest payable 27,626
Accrued expenses 238,612
---------------------------------------------------------------------------------------------
Total Liabilities 25,850,568
---------------------------------------------------------------------------------------------
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 $141,016,538
---------------------------------------------------------------------------------------------
NET ASSETS:
Par value of capital shares $ 9,847
Capital paid in excess of par value 145,858,712
Overdistributed net investment income (172,098)
Accumulated net realized loss from investment transactions (4,927,353)
Net unrealized appreciation of investments 247,430
---------------------------------------------------------------------------------------------
Total Net Assets
(Equivalent to $14.32 per share on 9,847,383 common shares of $0.001 par
value outstanding; 150,000,000 common shares authorized) $141,016,538
---------------------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
2004 Semi-Annual Report
12
Statement of Operations (unaudited)
For the Six Months Ended March 31, 2004
INVESTMENT INCOME:
Interest $ 5,175,381
----------------------------------------------------------------------------------------------
EXPENSES:
Management fee (Note 2) 1,174,762
Auction participation fees (Note 5) 107,996
Audit and legal 59,086
Shareholder communications 48,860
Interest expense (Note 4) 44,625
Directors' fees 28,584
Transfer agency services 23,452
Commitment fees (Note 4) 18,801
Excise tax 15,725
Stock exchange listing fees 10,440
Custody 8,440
Rating agency fees 8,225
Auction agency fees 8,000
Other 7,857
----------------------------------------------------------------------------------------------
Total Expenses 1,564,853
----------------------------------------------------------------------------------------------
Net Investment Income 3,610,528
----------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 3):
Realized Loss From Investment Transactions (excluding short-term investments):
Proceeds from sales 115,540,623
Cost of securities sold 114,960,686
----------------------------------------------------------------------------------------------
Net Realized Gain 579,937
----------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period (3,344,555)
End of period 247,430
----------------------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 3,591,985
----------------------------------------------------------------------------------------------
Net Gain on Investments 4,171,922
----------------------------------------------------------------------------------------------
Dividends Paid to Auction Rate Cumulative Preferred Stockholders From Net
Investment Income (501,895)
----------------------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 7,280,555
----------------------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
13
Statements of Changes in Net Assets
For the Six Months Ended March 31, 2004 (unaudited)
and the Year Ended September 30, 2003
2004 2003
------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 3,610,528 $ 7,372,861
Net realized gain (loss) 579,937 (4,913,856)
Increase in net unrealized appreciation 3,591,985 12,780,168
Dividends paid to Auction Rate Cumulative Preferred
Stockholders from net investment income (501,895) (1,201,497)
------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations 7,280,555 14,037,676
------------------------------------------------------------------------------------------------
DISTRIBUTIONS PAID TO COMMON STOCK
SHAREHOLDERS FROM:
Net investment income (3,412,620) (7,376,019)
------------------------------------------------------------------------------------------------
Decrease in Net Assets From Distributions
Paid to Common Stock Shareholders (3,412,620) (7,376,019)
------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (Note 6):
Net asset value of shares issued for reinvestment of dividends 672,922 255,910
------------------------------------------------------------------------------------------------
Increase in Net Assets From Fund Share Transactions 672,922 255,910
------------------------------------------------------------------------------------------------
Increase in Net Assets 4,540,857 6,917,567
NET ASSETS:
Beginning of period 136,475,681 129,558,114
------------------------------------------------------------------------------------------------
End of period* $141,016,538 $136,475,681
------------------------------------------------------------------------------------------------
* Includes (overdistributed) undistributed net investment income of: $(172,098) $131,889
------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
--------------------------------------------------------------------------------
2004 Semi-Annual Report
14
Notes to Financial Statements (unaudited)
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 following are significant accounting policies consistently followed by the
Fund and are in conformity with generally accepted accounting principles
("GAAP"): (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; (i) dividends to shareholders are recorded monthly by the Fund on
the ex-dividend date for the shareholders of Common
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
15
Notes to Financial Statements (unaudited) (continued)
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.
--------------------------------------------------------------------------------
2004 Semi-Annual Report
16
Notes to Financial Statements (unaudited) (continued)
3. Investments
During the six months ended March 31, 2004, 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 $125,283,025
------------------------------------------------------------------------
Sales 115,540,623
------------------------------------------------------------------------
At March 31, 2004, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
-------------------------------------------------------------------------------
Gross unrealized appreciation $ 2,772,264
Gross unrealized depreciation (2,524,834)
-------------------------------------------------------------------------------
Net unrealized appreciation $ 247,430
-------------------------------------------------------------------------------
4. Bank Loan
The Fund has a three-year revolving credit agreement with National Australia
Bank Ltd., which allows the Fund to borrow up to an aggregate amount of $25
million. This agreement terminates on May 31, 2005. The Fund pays a facility
fee quarterly at 0.15% annum for the three-year revolving credit agreement. The
interest on the loan is calculated at a variable rate based on the LIBOR, Fed
Funds or Prime Rates plus any applicable margin. At March 31, 2004 the Fund has
$23 million outstanding per this credit agreement at a rate of 1.575% per
annum. Interest expense related to the loan for the period ended March 31, 2004
was $23,144.
5. Auction Rate Cumulative Preferred Stock
As of March 31, 2004, the Fund has 3,400 outstanding shares of Auction Rate
Cumulative Preferred Stock ("ARCPS").
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 1.25% during the six months ended March 31, 2004. At March 31, 2004, the
current dividend rates were as follows:
Series A Series B
----------------------------------------
Current Dividend Rates 1.09% 1.12%
----------------------------------------
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
17
Notes to Financial Statements (unaudited) (continued)
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.
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"), another indirect wholly-owned subsidiary
of Citigroup, currently acts as a broker/dealer in connection with the auction
of ARCPS. After each auction, the auction agent will pay to each broker/dealer,
from monies the Fund provides, a participation fee at the annual rate of 0.25%
of the purchase price of the ARCPS that the broker/dealer places at the
auction. For the six months ended March 31, 2004, CGM earned $107,996 as a
participating broker/dealer.
6. Capital Shares
Capital stock transactions were as follows:
Six Months Ended Year Ended
March 31, 2004 September 30, 2003
--------------- ------------------
Shares Amount Shares Amount
-----------------------------------------------------------------
Shares issued on reinvestment 47,209 $672,922 18,507 $255,910
----------------------------------------------------------------
7. Additional Information
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
--------------------------------------------------------------------------------
2004 Semi-Annual Report
18
Notes to Financial Statements (unaudited) (continued)
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.
CAM has begun to take corrective actions. CAM will pay to the applicable funds
approximately $17 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.
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
19
Financial Highlights
For a share of capital stock outstanding throughout each year ended September
30, unless otherwise noted:
2004/(1)/ 2003 2002 2001 2000 1999/(2)/
------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $13.93 $13.24 $14.15 $15.14 $15.19 $15.00
-----------------------------------------------------------------------------------------
Income (Loss) From
Operations:
Net investment income 0.37 0.75 0.90 1.22 1.40 0.97
Net realized and unrealized
gain (loss) 0.42 0.81 (0.79) (0.93) 0.02 0.09
Dividends Paid to Auction
Rate Cumulative
Preferred Stockholders
from net investment
income (0.05) (0.12) (0.09) -- -- --
-----------------------------------------------------------------------------------------
Total Income From Operations 0.74 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 (0.35) (0.75) (0.81) (1.26) (1.44) (0.85)
Net realized gains -- -- -- (0.02) (0.03) --
-----------------------------------------------------------------------------------------
Total Distributions (0.35) (0.75) (0.81) (1.28) (1.47) (0.85)
-----------------------------------------------------------------------------------------
Net Asset Value,
End of Period $14.32 $13.93 $13.24 $14.15 $15.14 $15.19
-----------------------------------------------------------------------------------------
Total Return,
Based on Market Value 8.35%++ 29.61% (1.67)% (4.33)% 13.35% 1.68%++
-----------------------------------------------------------------------------------------
Total Return,
Based on Net Asset Value 5.33%++ 11.64% (0.30)% 2.44% 10.55% 7.45%++
-----------------------------------------------------------------------------------------
Net Assets,
End of Period (millions) $141 $136 $130 $138 $148 $149
-----------------------------------------------------------------------------------------
Ratios to Average Net
Assets/(3)/:
Expenses 2.26%+ 2.40% 2.63% 4.57% 4.74% 3.55%+
Net investment income 5.20+ 5.62 6.48 8.31 9.20 7.48+
-----------------------------------------------------------------------------------------
Portfolio Turnover Rate 51% 55% 57% 23% 59% 53%
-----------------------------------------------------------------------------------------
Market Value, End of Period $15.28 $14.45 $11.83 $12.82 $14.6875 $14.375
-----------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2004 Semi-Annual Report
20
Financial Highlights (continued)
2004/(1)/ 2003 2002 2001 2000 1999/(2)/
------------------------------------------------------------------------------------
Auction Rate Cumulative
Preferred Stock/(4)/:
Total Amount Outstanding (000s) $85,000 $85,000 $85,000 -- -- --
Asset Coverage Per Share 66,475 65,140 63,105 -- -- --
Involuntary Liquidating Preference
Per Share/(5)/ 25,000 25,000 25,000 -- -- --
Average Market Value Per Share/(5)/ 25,000 25,000 25,000 -- -- --
National Australia Bank Ltd. Loan
Total Amount Outstanding (000s) 23,000 -- -- -- -- --
Asset Coverage (000s) 164,017 -- -- -- -- --
---------------------------------------------------------------------------------
(1)For the six months ended March 31, 2004 (unaudited).
(2)For the period November 20, 1998 (commencement of operations) to September
30, 1999.
(3)Calculated on the basis of average net assets of common shareholders. Ratios
do not reflect the effect of dividend payments to preferred shareholders.
(4)On March 14, 2002, the Fund issued 3,400 shares of Auction Rate Cumulative
Preferred Stock at $25,000 a share.
(5)Excludes accrued or accumulated dividends.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
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, 2004, 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:
Election of Directors*
Preferred
Common Shares
Nominee Shares Series A and B Total
-------------------------------------------------
Allan J. Bloostein
Votes For 7,947,282 3,060 7,950,882
Votes Withheld 172,837 2 172,839
R. Jay Gerken
Votes For 7,966,185 3,060 7,969,245
Votes Withheld 153,934 2 153,936
Paul Hardin
Votes For N/A 3,060 3,060
Votes Withheld N/A 2 2
---------
* The following Directors, representing the balance of the Board of Directors,
continue to serve as Directors: Dwight B. Crane, Paolo M. Cucchi, Robert A.
Frankel, William R. Hutchinson and George M. Pavia.
--------------------------------------------------------------------------------
2004 Semi-Annual Report
22
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
--------------------------------------------------------------------------------
Citigroup Investments Corporate Loan Fund Inc.
23
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.
--------------------------------------------------------------------------------
2004 Semi-Annual Report
24
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 43027, Providence, RI
02940-3027 or by telephone at 1-800-331-1710.
--------------------------------------
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.
A description of the policies and procedures that the fund uses to determine
how to vote proxies relating to portfolio securities is available without
charge, upon request, by telephoning the fund (toll-free) at 1-800-451-2010 and
by visiting the SEC's web site at www.sec.gov.
This report is intended only for the shareholders of Citigroup Investments
Corporate Loan Fund Inc. This 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.
25
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
[LOGO]
TLI
Listed
NYSE
THE NEW YORK STOCK EXCHANGE
Investment Adviser
Smith Barney Fund Management LLC
399 Park Avenue
New York, New York 10022
Custodian
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Transfer Agent
PFPC Inc.
P.O. Box 43027
Providence, RI 02940-3027
Citigroup Investments Corporate Loan Fund Inc.
125 Broad Street
10th Floor, MF-2
New York, New York 10004
FD01642 5/04 04-6629
ITEM 2. CODE OF ETHICS.
Not Applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not Applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
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) Not applicable.
(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: June 4, 2004
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: June 4, 2004
By: /s/ Richard L. Peteka]
Richard L. Peteka
Chief Financial Officer of
Citigroup Investments Corporate Loan Fund Inc.
Date: June 4, 2004