<PAGE>
DESCRIPTION OF ART WORK ON REPORT COVER
-----------------------------------
Small box above fund name showing a
palm tree overlooking Hollywood,
Mullholland Drive.
-----------------------------------
SMITH BARNEY
CALIFORNIA
MUNICIPALS
FUND INC.
FEBRUARY 28, 1995
[LOGO] Smith Barney Mutual Funds
INVESTING FOR YOUR FUTURE.
EVERY DAY.
<PAGE>
[GRAPHIC: CALIFORNIA MUNICIPALS FUND]
DEAR SHAREHOLDER:
We are pleased to provide the annual report for Smith Barney California
Municipals Fund Inc. for the fiscal year ended February 28, 1995. Despite the
difficult investment environment of the past year, the Fund performed well,
providing investors in Class A shares with a total return of 2.46% and Class B
shares with a total return of 1.89%. These return numbers resulted in a first
quarter ranking for both Class A (#2 of 83 funds) and Class B (#6 of 83 funds)
shares by Lipper Analytical Services, Inc., an independent mutual fund
performance tracking organization, for the twelve months ended February 28,
1995. Reflecting the improvement in the municipal market that began late in
1994, Class C shares, a newly-available class of shares, earned a total return
of 11.72% for the period between November 14, 1994 and February 28, 1995.
Additional information about the performance of each class of shares during
this and previous fiscal years is available in the performance section of this
report which follows this letter.
MARKET AND ECONOMIC OVERVIEW
The past fiscal year demonstrated that volatility is becoming a permanent
feature of the fixed income landscape. We believe this is largely attributable
to the development of new technologies, the speed of communications, and the
freer movement of capital around the globe. The municipal market has also been
affected by these changes. During most of the past fiscal year the municipal
market experienced a significant rise in interest rates which negatively
impacted performance only to finish the year with one of the most powerful bond
rallies in recent memory.
We believe the volatility of the municipal market over the period was the result
of a marketplace that initially assumed that the superior economic growth in
both the U.S. and overseas would create inflationary problems for all the bond
markets. Anticipation proved much worse than reality, however, as the Federal
Reserve moved both aggressively and early to stave off this threat, thereby
producing an inflation index below 3 percent for 1994. As the market gradually
came to the conclusion that an elusive "soft landing" was economically possible,
its reaction was swift and forceful, producing a powerful bond rally during the
last several months of 1994.
In early December 1994, Orange County, California filed for bankruptcy
protection under Chapter 9 of the Federal bankruptcy code because of losses
sustained by its investment pool. The investment pool consists of deposits from
Orange County itself, agencies within Orange County (such as Orange County
Sanitation District Authority and Orange County Transportation Authority) and
various local communi-
1
<PAGE>
ties. The pool suffered substantial losses through the use of leverage and
derivative investments.
At the end of this fiscal reporting period, approximately 8% of the portfolio
was invested in securities issued by various agencies located within Orange
County. However, none of these holdings are direct obligations of the county
itself, and more than half are either insured (AMBAC, MBIA, or FGIC) or backed
by guaranteed investment contracts. In addition, another 5% of the portfolio was
invested in a San Joaquin Transportation corridor bond, whose issuer is a
participant in Orange County's investment pool.
Orange County is currently trying to negotiate a settlement with its pool
participants, and the Fund anticipates that one will be reached by early June.
The Fund believes that the bankruptcy proceedings will not have a material
impact on the ability of these issuers to make scheduled interest and principal
payments and therefore will have little, if any, effect on the Fund.
Nevertheless, we are actively monitoring the Orange County proceedings.
INVESTMENT STRATEGY AND PORTFOLIO STRUCTURE
Our long-term investment strategy is to provide investors with a very
competitive yield and then produce the best total return we can, whatever the
market conditions. Our current strategy has been to take advantage of last
autumn's bond decline by extending the average life of the portfolio and
purchasing more discount securities (bonds that are selling below their
redemption value). Discount securities typically have a dual advantage in rising
markets. First, they tend to be one of the best-performing asset classes as
rates decline. Second, they tend to provide much better call protection, which
lowers the risk of having bonds prematurely called away. This strategy greatly
enhanced the performance of the Fund in the recent bond rally, and it will
continue to be our strategy until we see inflation re-emerge (although this does
not appear to be an imminent possibility).
In terms of credit quality, we have focused primarily on increasing the
percentage of the Fund's AA- and AAA-rated holdings, the two highest rating
categories available. At the end of this fiscal year, nearly 70% of the
portfolio was invested in AA- and AAA-rated securities. We believe these
securities offer our shareholders the best value. We concentrated the portfolio
in essential service revenue bonds and debt issued by local communities for
redevelopment projects and various civic improvements. These types of bonds
provide the Fund with competitive yields and a high degree of liquidity, which
makes it easier to navigate the Fund through turbulent market periods.
2
<PAGE>
As we have since the Fund's inception in 1984, we will continue to strive to
provide you with superior investment management results. We look forward to
reporting to you in the Fund's semiannual report to shareholders.
Sincerely,
<TABLE>
<S> <C>
/s/ Heath B. McLendon /s/ Joseph P. Deane
- --------------------------- -------------------------
Heath B. McLendon Joseph P. Deane
Chairman of the Board Vice President and
and Investment Officer Investment Officer
April 7, 1995
</TABLE>
- -------------------------------------------------------------------------------
Joe Deane will be appearing as a special guest on
WALL $TREET WEEK WITH LOUIS RUKEYSER
on May 5th, on the PBS Television Network.
Check your local listings for time and channel.
- -------------------------------------------------------------------------------
3
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
HISTORICAL PERFORMANCE - CLASS A (UNAUDITED)
<TABLE>
<CAPTION>
Year Ended Net Asset Value Capital Dividends Return of Total
February 28 Beginning Ending Gains Paid Paid Capital Return*
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
1986 $ 13.94 $16.16 -- $ 1.21 -- 25.80%
- -------------------------------------------------------------------------------------------
1987 $ 16.16 $16.54 $ 0.33 $ 1.14 -- 12.13%
- -------------------------------------------------------------------------------------------
1988 $ 16.54 $15.49 $ 0.07 $ 1.09 -- 1.09%
- -------------------------------------------------------------------------------------------
1989 $ 15.49 $15.33 $ 0.03 $ 1.12 -- 6.67%
- -------------------------------------------------------------------------------------------
1990 $ 15.33 $15.61 -- $ 1.07 -- 9.02%
- -------------------------------------------------------------------------------------------
1991 $ 15.61 $15.66 $ 0.12 $ 1.07 -- 8.29%
- -------------------------------------------------------------------------------------------
1992 $ 15.66 $15.78 $ 0.27 $ 1.05 -- 9.50%
- -------------------------------------------------------------------------------------------
1993 $ 15.78 $16.70 $ 0.29 $ 0.97 $0.04 14.76%
- -------------------------------------------------------------------------------------------
1994 $ 16.70 $16.15 $ 0.65 $ 0.84 -- 5.92%
- -------------------------------------------------------------------------------------------
1995 $ 16.15 $15.40 $ 0.19 $ 0.89 -- 2.46%
===========================================================================================
Total $ 1.95 $ 10.45 $0.04
===========================================================================================
Cumulative Total Return -- (3/1/85 through 2/28/95) 144.89%
===========================================================================================
<FN>
* Figures assume reinvestment of all dividends and capital gains
distributions at net asset value and do not assume deduction of the
sales charge (maximum 4.00%).
</TABLE>
THE FUND'S POLICY IS TO DISTRIBUTE DIVIDENDS MONTHLY
AND CAPITAL GAINS, IF ANY, ANNUALLY.
<TABLE>
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN** - CLASS A SHARES
<CAPTION>
Without Sales Charge With Sales Charge***
With Without With Without
Fee Waiver Fee Waiver Fee Waiver Fee Waiver
and Expense and Expense and Expense and Expense
Reimbursement Reimbursement Reimbursement Reimbursement
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Year Ended 2/28/95 N/A 2.46% N/A (1.64)%
- -------------------------------------------------------------------------------------
Five Years Ended 2/28/95 N/A 8.11% N/A 7.23%
- -------------------------------------------------------------------------------------
Ten Years Ended 2/28/95 9.37% 8.56% 8.92% 8.16%
=====================================================================================
<FN>
** All average annual total return figures shown reflect reinvestment of
dividends and capital gains at net asset value. The Fund waived investment
advisory and sub-investment advisory and administration fees from April
1984 to February 1986 and reimbursed expenses from April 1984 to February
1985. A shareholder's actual return for the period during which waivers
and reimbursements were in effect would be the higher of the two numbers
shown.
*** Average annual total return figures shown assume the deduction of the
maximum 4.00% sales charge at the
time of investment.
</TABLE>
NOTE: On November 6, 1992, existing shares of the Fund were designated Class A
shares. Class A shares are subject to a maximum 4.00% front-end sales charge and
an annual service fee of 0.15% of the value of the average daily net assets
attributable to that class. The Fund's average annual rates of return would have
been lower had service fees been in effect prior to November 6, 1992.
4
<PAGE>
GROWTH OF $10,000 INVESTED IN CLASS A SHARES OF SMITH BARNEY CALIFORNIA
MUNICIPALS FUND INC. VS. LIPPER CALIFORNIA MUNICIPAL FUND AVERAGE AND
LEHMAN BROTHERS MUNICIPAL BOND INDEX+
- --------------------------------------------------------------------------------
February 28, 1985 - February 28, 1995
<TABLE>
EDGAR DESCRIPTIONS
DESCRIPTION OF MOUNTAIN CHART IN COVERS (CLASS A)(CONTINUED)
<CAPTION>
GROWTH OF $10,000 GROWTH OF $10,000
GROWTH OF $10,000 INVESTED IN THE INVESTMENT IN THE
INVESTED IN CLASS A LIPPER CALIFORNIA LEHMAN BROTHERS
MONTH SHARES OF THE MUNICIPAL FUND MUNICIPAL
ENDED FUND AVERAGE BOND INDEX
<S> <C> <C> <C>
02/85 $ 9,600 $10,000 $10,000
03/85 $ 9,688 $10,066 $10,086
06/85 $10,413 $10,846 $10,932
09/85 $10,331 $10,713 $10,768
12/85 $11,104 $11,497 $11,639
03/86 $12,158 $12,531 $12,817
06/86 $12,022 $12,462 $12,738
09/86 $12,545 $13,056 $13,422
12/86 $13,108 $13,599 $13,886
03/87 $13,464 $13,957 $14,222
06/87 $12,701 $13,145 $13,835
09/87 $12,311 $12,690 $13,492
12/87 $12,973 $13,340 $14,095
03/88 $13,377 $13,731 $14,579
06/88 $13,681 $14,016 $14,861
09/88 $14,088 $14,413 $15,241
12/88 $14,533 $14,806 $15,524
03/89 $14,607 $14,919 $15,627
06/89 $15,431 $15,775 $16,553
09/89 $15,444 $15,729 $16,564
12/89 $15,918 $16,256 $17,201
03/90 $15,950 $16,301 $17,277
06/90 $16,304 $16,672 $17,681
09/90 $16,248 $16,562 $17,691
12/90 $17,007 $17,316 $18,455
03/91 $17,233 $17,620 $18,870
06/91 $17,551 $17,988 $19,274
09/91 $18,311 $18,702 $20,024
12/91 $18,962 $19,256 $20,696
03/92 $18,882 $19,306 $20,758
06/92 $19,699 $20,058 $21,546
09/92 $20,025 $20,485 $22,120
12/92 $20,480 $20,877 $22,523
03/93 $21,258 $21,735 $23,358
06/93 $22,001 $22,468 $24,123
09/93 $22,672 $23,275 $24,938
12/93 $23,066 $23,500 $25,288
03/94 $22,004 $22,113 $23,899
06/94 $22,220 $22,175 $24,164
09/94 $22,346 $22,282 $24,329
12/94 $21,528 $21,735 $23,980
02/95 $23,510 $23,203 $25,384
<FN>
+ Illustration of $10,000 invested in Class A shares on February 28, 1985
assuming deduction of the maximum 4.00% sales charge at the time of
investment and reinvestment of dividends and capital gains at net asset
value through February 28, 1995.
LIPPER CALIFORNIA MUNICIPAL FUND AVERAGE -- The Lipper California
Municipal Fund Average is composed of an average of the Fund's peer group
of mutual funds (83 as of February 28, 1995) investing in California
municipal bonds.
LEHMAN BROTHERS MUNICIPAL BOND INDEX -- The Lehman Brothers Municipal
Bond Index is a weighted composite which is comprised of more than 15,000
bonds issued within the last 5 years, having a minimum credit rating of
at least Baa and a maturity of at least 2 years, excluding all bonds
subject to the Alternative Minimum Tax and bonds with floating or zero
coupons.
Index information is available at month-end only; therefore the closest
month-end to inception date of the Fund has been used.
NOTE: All figures cited here represent past performance and do not
guarantee future results.
</TABLE>
5
<PAGE>
Smith Barney
California Municipals Fund Inc.
<TABLE>
- --------------------------------------------------------------------------------
HISTORICAL PERFORMANCE - CLASS B (UNAUDITED)
<CAPTION>
Year Ended Net Asset Value Capital Dividends Return of Total
February 28 Beginning Ending Gains Paid Paid Capital Return*
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
11/6/92 -
2/28/93 $ 15.84 $16.70 $ 0.29 $0.28 $0.01 9.27%
- -------------------------------------------------------------------------------------------
1994 $ 16.70 $16.15 $ 0.65 $0.76 -- 5.40%
- -------------------------------------------------------------------------------------------
1995 $ 16.15 $15.40 $ 0.19 $0.80 -- 1.89%
===========================================================================================
Total $ 1.13 $1.84 $0.01
===========================================================================================
Cumulative Total Return -- (11/6/92 through 2/28/95) 17.35%
===========================================================================================
<FN>
* Figures assume reinvestment of all dividends and capital gains
distributions at net asset value and do not assume deduction of the
contingent deferred sales charge ("CDSC").
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN** - CLASS B SHARES
<CAPTION>
Without CDSC With CDSC***
<S> <C> <C>
- ---------------------------------------------------------------------------------
Year Ended 2/28/95 1.89% (2.40)%
- ---------------------------------------------------------------------------------
Inception 11/6/92 through 2/28/95 7.15% 5.99%
- ---------------------------------------------------------------------------------
<FN>
** All average annual total return figures shown reflect reinvestment of
dividends and capital gains distributions at net asset value.
*** Average annual total return figures shown assume the deduction of the
maximum applicable CDSC which is described in the prospectus.
</TABLE>
NOTE: The Fund began offering Class B shares on November 6, 1992. Class B
shares are subject to a maximum 4.50% CDSC and annual service and
distribution fees of 0.15% and 0.50%, respectively, of the value of the
average daily net assets attributable to that class.
6
<PAGE>
GROWTH OF $10,000 INVESTED IN CLASS B SHARES OF SMITH BARNEY CALIFORNIA
MUNICIPALS FUND INC. VS. LIPPER CALIFORNIA MUNICIPAL FUND AVERAGE AND LEHMAN
BROTHERS MUNICIPAL BOND INDEX+
- --------------------------------------------------------------------------------
November 6, 1992 - February 28, 1995
<TABLE>
EDGAR DESCRIPTIONS
DESCRIPTION OF MOUNTAIN CHART IN SHEARSON COVERS (CLASS B)
A line graph depicting the total growth (including reinvestment of dividends
and capital gains) of a hypothetical investment of $10,000 in California
Municipals Fund's Class B shares on November 6, 1992 through February 28, 1995
as compared with the growth of a $10,000 investment in the Lipper California
Municipal Fund Average and the Lehman Brothers Municipal Bond Index. The plot
points used to draw the line graph were as follows:
<CAPTION>
GROWTH OF $10,000 GROWTH OF $10,000
GROWTH OF $10,000 INVESTED IN THE INVESTMENT IN THE
INVESTED IN CLASS B LIPPER CALIFORNIA LEHMAN BROTHERS
MONTH SHARES OF THE MUNICIPAL FUND MUNICIPAL
ENDED FUND AVERAGE BOND INDEX
<S> <C> <C> <C>
10/31/92 - $10,000 $10,000
11/06/92 $10,000 - -
11/92 $10,174 $10,270 $10,179
12/92 $10,338 $10,406 $10,283
03/93 $10,718 $10,833 $10,664
06/93 $11,080 $11,199 $11,013
09/93 $11,403 $11,601 $11,385
12/93 $11,588 $11,713 $11,545
03/94 $11,039 $11,022 $10,911
06/94 $11,133 $11,053 $11,032
09/94 $11,181 $11,106 $11,108
12/94 $10,757 $10,834 $10,948
02/95 $11,735 $11,565 $11,589
<FN>
+ Illustration of $10,000 invested in Class B shares on November 6, 1992
assuming deduction of the maximum applicable CDSC at the time of
redemption and reinvestment of dividends and capital gains at net asset
value through February 28, 1995.
++ Value does not assume deduction of applicable CDSC.
+++ Value assumes deduction of applicable CDSC (assuming deduction on
February 28, 1995).
LIPPER CALIFORNIA MUNICIPAL FUND AVERAGE -- The Lipper California
Municipal Fund Average is composed of an average of the Fund's peer
group of mutual funds (83 as of February 28, 1995) investing in
California municipal bonds.
LEHMAN BROTHERS MUNICIPAL BOND INDEX -- The Lehman Brothers Municipal
Bond Index is a weighted composite which is comprised of more than
15,000 bonds issued within the last 5 years, having a minimum credit
rating of at least Baa and a maturity of at least 2 years, excluding all
bonds subject to the Alternative Minimum Tax and bonds with floating or
zero coupons.
Index information is available at month-end only; therefore, the closest
month-end to inception date of the Fund has been used.
NOTE: All figures cited here represent past performance and do not
guarantee future results of Class B shares.
</TABLE>
7
<PAGE>
Smith Barney
California Municipals Fund Inc.
<TABLE>
- --------------------------------------------------------------------------------
HISTORICAL PERFORMANCE - CLASS C SHARES (UNAUDITED)
<CAPTION>
Year Ended Net Asset Value Capital Dividends Total
February 28 Beginning Ending Gains Paid Paid Return*
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------
11/14/94 -
2/28/95 $ 14.19 $15.40 $0.19 $0.23 11.72%
==============================================================================
Total $0.19 $0.23
==============================================================================
Cumulative Total Return -- (11/14/94 through 2/28/95) 11.72%
==============================================================================
<FN>
* Figures assume reinvestment of all dividends and capital gains
distributions at net asset value and do not assume deduction of the CDSC.
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
AGGREGATE TOTAL RETURN** - CLASS C SHARES
<CAPTION>
Without CDSC With CDSC
Actual Actual***
<S> <C> <C>
- ---------------------------------------------------------------------------------
Inception 11/14/94 through 2/28/95 11.72% 10.72%
- ---------------------------------------------------------------------------------
<FN>
** All average annual total return figures shown reflect reinvestment of
dividends and capital gains distributions at net asset value.
*** Average annual total return figures shown assume the deduction of the
maximum applicable CDSC which is described in the prospectus.
</TABLE>
NOTE: The Fund began offering Class C shares on November 14, 1994.
Class C shares are subject to a maximum 1.00% CDSC and annual service and
distribution fees of 0.15% and 0.55%, respectively, of the value of the
average daily net assets attributable to that class.
8
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO HIGHLIGHTS (UNAUDITED) FEBRUARY 28, 1995
INDUSTRY BREAKDOWN
EDGAR DESCRIPTIONS
DESCRIPTION OF PIE CHARTS IN SHAREHOLDER REPORT
Industry Breakdown
Pie chart depicting the allocation of the California Municipals Fund Inc.
securities held at February 28, 1994 by industry classification. The pie is
broken in pieces representing industries in the following percentages:
<TABLE>
<CAPTION>
INDUSTRY PERCENTAGE
<S> <C>
Hospital 9.4%
Transportation 7.5%
Utility 17.5%
Housing 5.0%
Education 5.5%
Other Municipal Bonds and Notes and
Net Other Assets and Liabilities 33.0%
Pollution Control 8.8%
General Obligations 13.3%
</TABLE>
SUMMARY OF MUNICIPAL BONDS AND SHORT-TERM
TAX-EXEMPT INVESTMENTS BY COMBINED RATINGS
<TABLE>
<CAPTION>
Standard & Percentage of
Moody's Poor's Market Value
<S> <C> <C>
- ---------------------------------------------
Aaa AAA 60.6%
Aa AA 9.2
A A 16.2
Baa BBB 5.3
B B 0.1
VMIG1/P-1 A1 1.6
NR NR 7.0
------
100.0%
------
</TABLE>
AVERAGE MATURITY: 22 years
9
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1995
- --------------------------------------------------------------------------------
KEY TO INSURANCE ABBREVIATIONS
- --------------------------------------------------------------------------------
AMBAC -- American Municipal Bond Assurance Corporation
BIGI -- Bond Investors Guaranty Insurance
FGIC -- Federal Guaranty Insurance Corporation
FHA -- Federal Housing Administration
MBIA -- Municipal Bond Investors Assurance
STINS -- State Insurance
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES - 98.8%
CALIFORNIA - 97.4%
$ 3,000,000 Adelanto, California, Improvement Agency,
Tax Allocation, (Adelanto Improvement
Project),
Series B, (FGIC Insured),
5.500% due 12/1/23 Aaa AAA $ 2,741,250
2,500,000 Alhambra Arcadia Azush County, California,
Independent Cities Authority, Risk
Management, Certificates of Participation,
7.250% due 3/1/07 NR NR 2,559,375
4,500,000 Alhambra, California, Redevelopment Agency,
Tax Allocation, (AMBAC Insured),
5.850% due 5/1/23 Aaa AAA 4,325,625
200,000 Anaheim, California, Certificates of
Participation, (Convention Center,
Refunding Project),
(MBIA Insured),
5.700% due 8/1/02++ Aaa AAA 205,000
Association of Bay Area Governments (ABAG),
Financing for Nonprofit Corporations,
California, Certificates of Participation,
(Stanford University Hospital):
2,100,000 5.250% due 11/1/06 A1 AA- 1,911,000
3,305,000 5.250% due 11/1/07 A1 AA- 2,974,500
5,120,000 5.250% due 11/1/08 A1 AA- 4,563,200
8,955,000 5.500% due 11/1/13 A1 AA- 8,025,919
5,935,000 5.250% due 11/1/20 A1 AA- 4,940,888
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
Banning, California, Certificates of
Participation, (Banning Wastewater
Facilities Corporation),
(Pre-refunded):
$ 115,000 11.500% due 11/1/03 NR AAA $ 135,412
125,000 11.500% due 11/1/04 NR AAA 147,500
140,000 11.600% due 11/1/05 NR AAA 165,900
155,000 11.650% due 11/1/06 NR AAA 184,256
175,000 11.700% due 11/1/07 NR AAA 208,469
195,000 11.750% due 11/1/08 NR AAA 233,025
220,000 11.750% due 11/1/09 NR AAA 263,450
2,695,000 Bay Area Government Association, California,
Water Revenue Bond, Napa Water Systems
Project,
(MBIA Insured),
5.375% due 5/1/10 Aaa AAA 2,546,775
3,000,000 Brea, California, Redevelopment Agency
Refunding Revenue, (Project AB),
Tax Allocation Bonds, (MBIA Insured),
5.750% due 8/1/23++ Aaa AAA 2,823,750
3,510,000 Brea, California, Redevelopment Agency
Revenue, (Project AB), Tax Allocation
Revenue Bonds,
(MBIA Insured),
5.500% due 8/1/08++ Aaa AAA 3,404,700
Brisbane, California, Brisbane Redevelopment
Agency, Tax Allocation for Brisbane Community
Redevelopment, General Obligations:
200,000 9.400% due 5/1/05 NR A+ 206,000
220,000 9.400% due 5/1/06 NR A+ 226,600
1,000,000 California Alternative Energy Source,
Financing Authority Revenue, (SRI
International Project), Cogeneration Revenue,
9.750% due 12/1/05 (in default) NR NR 500,000
California Educational Facilities,
Revenue Bonds:
5,450,000 (Pepperdine University), Series A, (MBIA
Insured),
5.500% due 6/1/19 Aaa AAA 5,000,375
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
California Educational Facilities, Revenue Bonds
(continued):
(Southwestern University Project):
$ 1,000,000 6.600% due 11/1/14 A NR $ 1,021,250
4,505,000 6.700% due 11/1/24 A NR 4,600,731
2,500,000 (University of San Diego),
6.500% due 10/1/22 A NR 2,518,750
California Health Facilities Financing
Authority Revenue Bonds:
5,000,000 (Kaiser Permanente),
5.550% due 8/15/25 Aa2 AA 4,387,500
1,000,000 (Adventist Health-West), Series A, (MBIA
Insured),
10.000% due 3/1/14 Aaa AAA 1,020,160
250,000 (St. Joseph's Health System), Series 1,
9.750% due 7/1/99 Aa AAA 257,085
250,000 (Victory Valley Community Hospital),
Series 1984A, (STINS Insured),
9.875% due 7/1/12 NR A+ 256,563
California Housing Finance Agency,
(Home Ownership Mortgage),
Series A:
15,000 9.200% due 8/1/15 Aa AA 15,450
4,750,000 (MBIA Insured),
5.500% due 2/1/14 Aaa AAA 4,340,312
10,000 Series 1984,
10.250% due 2/1/14 Aa AA- 10,200
310,000 Series 1984B,
Zero Coupon due 8/1/16 Aa AA- 29,063
605,000 California Public Capital Improvement
Finance Authority, Pooled Project, Series B,
(BIGI Insured),
8.100% due 3/1/18 Aaa AAA 641,300
2,000,000 California Special Districts Finance
Authority, Certificates of Participation,
Series A,
8.500% due 7/1/18 Baa NR 2,165,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
California State, General Obligation Bonds,
Veteran Series:
$ 455,000 Series AL,
9.700% due 4/1/02 A1 A+ $ 569,319
725,000 Series AM,
9.000% due 10/1/02 A1 A+ 876,344
Series AT:
4,000,000 9.700% due 2/1/01 A1 A+ 4,885,000
1,000,000 9.500% due 2/1/10 A1 A+ 1,368,750
2,000,000 Series AU,
8.400% due 10/1/06 A1 A+ 2,440,000
California Statewide Communities Development
Authority, Lease Revenue, Certificates of
Participation:
2,680,000 5.000% due 10/1/14 Aaa AAA 2,334,950
(St. Joseph's Health Facilities):
4,825,000 5.500% due 7/1/14 Aa AA 4,366,625
5,000,000 6.625% due 7/1/21 Aa AA 5,081,250
(Sutter Health Facilities), (MBIA Insured):
3,145,000 5.400% due 8/15/07 Aaa AAA 3,038,856
3,500,000 5.500% due 8/15/09 Aaa AAA 3,333,750
12,100,000 5.500% due 8/15/23 Aaa AAA 10,920,250
(Unihealth Facilities Corporation), Series A,
(AMBAC Insured),
4,515,000 5.500% due 10/1/07 Aaa AAA 4,424,700
2,000,000 Calleguas - Las Virgines, California, Water
Revenue, (Calleguas Municipal Water District
Project), (FGIC Insured),
5.125% due 7/1/21 Aaa AAA 1,725,000
6,000,000 Concord, California, Redevelopment Agency,
Tax Allocation, Central Concord Redevelopment
Project, (AMBAC Insured),
5.250% due 7/1/19 Aaa AAA 5,310,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$ 6,000,000 Corona, California, Redevelopment Agency,
Tax Allocation, (Redevelopment Project
Area A), Series A, (FGIC Insured),
5.500% due 9/1/24 Aaa AAA $ 5,460,000
11,135,000 Culver City, California, Redevelopment
Finance Authority Revenue,
Tax Allocation, (AMBAC Insured),
5.000% due 11/1/23 Aaa AAA 9,395,156
Dublin, California, Certificates of
Participation, (Civic Center Project),
(AMBAC Insured):
1,305,000 5.600% due 2/1/06 Aaa AAA 1,301,738
1,380,000 5.625% due 2/1/07 Aaa AAA 1,367,925
4,615,000 5.625% due 2/1/10 Aaa AAA 4,499,625
2,000,000 East Bay, California, Municipal Utility
Distribution, Water System Revenue,
(MBIA Insured),
5.000% due 6/1/21 Aaa AAA 1,697,500
1,400,000 Eastside, California, Unified High School,
Santa Clara County District Revenue,
Series B, (FGIC Insured),
5.000% due 9/1/18 Aaa AAA 1,198,750
Eastern Municipal Water District, California,
Water and Sewer Revenue, Series A,
(FGIC Insured):
1,000,000 5.375% due 7/1/13 Aaa AAA 918,750
1,000,000 5.250% due 7/1/23 Aaa AAA 880,000
2,150,000 Fairfield, California, Public Finance
Authority, Revenue, (MBIA Insured),
5.800% due 4/1/23 Aaa AAA 2,050,562
2,250,000 Fontana, California, Public Financing
Authority, Tax Allocation Revenue Bonds,
Series A, (MBIA Insured),
5.000% due 9/1/20 Aaa AAA 1,912,500
455,000 Fresno, California, Airport Revenue Bonds,
10.900% due 7/1/14 A NR 472,631
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
Fresno, California, Health Facilities
Revenue,
(Holy Cross Health System):
$ 2,200,000 5.200% due 12/1/04 A1 AA- $ 2,095,500
2,435,000 5.375% due 12/1/06 A1 AA- 2,307,163
Fresno, California, Joint Powers Financing
Authority, Lease Revenue,
(Street Light Acquisition Project),
Series A:
200,000 5.375% due 8/1/03 A A+ 191,000
3,860,000 5.500% due 8/1/12 A A+ 3,411,275
Fresno, California, Joint Powers Financing
Authority, Local Agency Revenue, Series A:
2,000,000 6.000% due 9/2/01 NR BBB 1,980,000
1,000,000 6.200% due 9/2/03 NR BBB 988,750
1,500,000 6.550% due 9/2/12 NR BBB 1,436,250
15,000 Fresno County, California, Housing Finance
Revenue, Series A, (FHA Insured),
12.500% due 9/15/12 NR NR 15,225
Garden Grove, California, Community Agency,
Tax Allocation Revenue:
500,000 5.375% due 10/1/03++ NR A 473,125
3,275,000 5.700% due 10/1/08++ NR A 3,013,000
2,550,000 Garden Grove, California, Public Financing
Authority, Revenue, (Water Services Capital
Improvement Project), (FGIC Insured),
5.500% due 12/15/23++ Aaa AAA 2,323,687
2,000,000 Hawthorne, California, Community
Redevelopment, Tax Allocation,
(Project Area 2),
6.625% due 9/1/14 Baa NR 1,895,000
1,740,000 Hayward, California, Housing Authority
Revenue, FNMA, Multifamily Revenue,
(Cypress Garden Project),
Revenue Bonds, Series C,
9.375% due 12/1/18 NR NR 1,844,400
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$ 1,500,000 Intercommunity Hospital, California,
Financing Authority, Certificates of
Participation, (North Bay Health Care),
9.750% due 8/1/15 NR AAA $ 1,576,875
Irvine Ranch, California, Water District,
Joint Powers Agency,
Local Pool Revenue, Issue II:
9,000,000 7.800% due 2/15/08++ NR A+ 9,393,750
8,500,000 8.250% due 8/15/23++ NR A+ 9,041,875
100,000 Kern, California, High School District,
Series C, (MBIA Insured),
8.750% due 8/1/03 Aaa AAA 120,875
500,000 Kings County, California, Waste Management
Authority, Solid Waste Revenue,
7.200% due 10/1/14 NR BBB+ 514,375
1,500,000 Kings River Conservation District,
California, Pine Flat Power Revenue,
Series D,
5.500% due 1/1/20 Aa AA 1,368,750
Lancaster, California, Redevelopment Agency,
Tax Allocation Bond:
2,000,000 Multifamily Housing Revenue, (High Valley
Apartment Project), (FHA Insured),
9.125% due 11/1/13 NR A- 2,060,000
7,000,000 Sheriffs Combined Redevelopment Project
Areas, (MBIA Insured),
5.700% due 8/1/23 Aaa AAA 6,545,000
465,000 Local Government Finance, Joint Powers
Authority, California Revenue,
(Anaheim Redevelopment Agency),
Series A, (Pre-refunded),
8.200% due 9/1/15++ NR NR 520,219
2,000,000 Loma Linda, California, Hospital Revenue
Bonds, (Loma Linda University Medical Center
Project), Series B,
9.000% due 12/1/12 NR BBB 2,105,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$ 3,000,000 Long Beach, California, Financing Authority
Revenue, (AMBAC Insured),
5.500% due 11/1/22 Aaa AAA $ 2,756,250
200,000 Los Angeles, California, Certificates of
Participation, Revenue Bonds,
Waste Water Revenue,
6.600% due 11/1/99 A1 AA 209,000
1,000,000 Los Angeles, California, Community
Redevelopment Agency, Tax Allocation Bond,
(Central Business District), Series F,
(Pre-refunded),
8.500% due 7/1/02 NR A- 1,031,250
Los Angeles, California, Convention and
Exhibition Center Authority,
Lease Revenue,
Series A,
(MBIA Insured):
6,000,000 5.375% due 8/15/18 Aaa AAA 5,430,000
12,000,000 5.125% due 8/15/21 Aaa AAA 10,380,000
1,375,000 Los Angeles, California, Home Mortgage
Revenue Bonds, GNMA, Second Mortgage Program,
8.100% due 5/1/17 Aaa NR 1,498,750
Los Angeles, California, Wastewater Systems
Revenue, Series A, (MBIA Insured):
2,930,000 5.700% due 6/1/09 Aaa AAA 2,864,075
7,960,000 5.750% due 6/1/11 Aaa AAA 7,731,150
1,000,000 5.700% due 6/1/20 Aaa AAA 945,000
2,500,000 5.875% due 6/1/24 Aaa AAA 2,418,750
1,000,000 Series D, (FGIC Insured),
5.200% due 11/1/21 Aaa AAA 873,750
1,500,000 Los Angeles County, California, Certificates
of Participation, (Van Nuys Courthouse
Project), (Pre-refunded),
9.000% due 6/1/15 NR AAA 1,608,750
2,000,000 Los Angeles County, California, Financing
Authority Revenue, Capital Projects,
Series A,
5.250% due 10/1/19 Aa AA 1,757,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$15,075,000 Los Angeles County, California,
Transportation Authority Sales Tax Revenue,
(Project A), Series A, (FGIC Insured),
5.000% due 7/1/21 Aaa AAA $12,794,906
125,000 Martinez, California, Home Mortgage, Housing
Revenue, (Escrowed to Maturity),
10.750% due 2/1/16 Aaa AAA 131,250
375,000 Marysville, California, Hospital Revenue,
(Freemont Rideout Health Group), Series A,
(AMBAC Insured),
6.000% due 1/1/04 Aaa AAA 388,594
4,890,000 Metropolitan Water District of Southern
California, Series G,
5.750% due 3/1/14 Aaa AAA 4,706,625
1,070,000 Modesto, California, Certificates of
Participation,
(Golf Course Refining Project), Series B,
(FGIC Insured),
5.000% due 11/1/23 Aaa AAA 902,813
Mojave, California, Water Agency, Improvement
District, Series M, (Morongo Basin):
1,500,000 6.600% due 9/1/13 Baa BBB+ 1,503,750
5,510,000 6.600% due 9/1/22 Baa BBB+ 5,461,787
3,000,000 New Haven, California, Unified School
District, School Building Corporation,
Certificates of Participation,
Refunding Bonds, (Pre-refunded),
9.600% due 7/1/01 NR NR 3,112,590
45,000 Northern California Power Agency, Public
Power Revenue Bonds, (Geothermal Project
No. 3), Series 1984A, (Pre-refunded),
11.500% due 7/1/10 Aaa AAA 46,350
4,750,000 Oceanside, California, Certificates of
Participation, (Water Systems Refunding
Project), (AMBAC Insured),
5.800% due 8/1/21 Aaa AAA 4,554,063
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$ 6,025,000 Orange County, California, Housing Finance
Agency, Single Family Residential Mortgage,
Revenue Bonds, Tax-Exempt Interest
Accumulator,
Zero Coupon due 7/1/17++ NR BBB+ $ 707,938
2,000,000 Orange County, California, Redevelopment
Agency, Tax Allocation Revenue,
(Southwest Redevelopment Project),
Series A, (AMBAC Insured),
5.700% due 10/1/23++ Aaa AAA 1,867,500
2,800,000 Orange County, California, Sanitation
Districts No. 1, 2 & 3,
Certificates of Participation,
(Joint Facility Report), (Escrowed to
Maturity),
12.000% due 8/1/96++ Aaa A 3,083,500
2,330,000 Oxnard, California, Public Facilities
Corporation, Certificates of Participation,
(Oxnard Public Facility Corporation),
Wastewater Treatment Plant Project,
(AMBAC Insured), (Pre-refunded),
7.500% due 9/1/06 Aaa AAA 2,565,912
180,000 Palm Springs, California, Financing
Authority, (Palm Springs Regional Airport
Revenue), (MBIA Insured),
5.400% due 1/1/03 Aaa AAA 179,100
2,250,000 Palmdale, California, Certificates of
Participation, Water District Revenue,
(Littlerock Dam Project),
Series A, (MBIA Insured),
5.750% due 10/1/23 Aaa AAA 2,123,437
4,390,000 Pasadena, California, Certificates of
Participation, Refunding and Capital
Projects, (AMBAC Insured),
5.000% due 2/1/16 Aaa AAA 3,791,863
4,560,000 Pittsburg, California, Public Financing
Authority, Wastewater Revenue, Series A,
(FGIC Insured),
5.375% due 6/1/22 Aaa AAA 4,086,900
Pittsburg, California, Redevelopment Agency,
Tax Allocation:
6,750,000 (Los Medenos Community Development Project),
(FGIC Insured),
5.500% due 8/1/15 Aaa AAA 6,269,062
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
Pittsburg, California, Redevelopment Agency,
Tax Allocation (continued):
$ 1,240,000 Series A, (AMBAC Insured),
5.000% due 8/1/17 Aaa AAA $ 1,061,750
2,985,000 Placer County, California, Certificates of
Participation, Water Agency Revenue,
(MBIA Insured),
5.600% due 7/1/21 Aaa AAA 2,761,125
2,000,000 Port Oakland, California, Special Facilities
Revenue, Series A,
6.750% due 1/1/12 Aa3 A+ 2,060,000
6,000,000 Poway, California, Redevelopment Agency,
(Paraguay Redevelopment Project),
(FGIC Insured),
5.500% due 12/15/23 Aaa AAA 5,467,500
15,750,000 Rancho Cucamonga, California, (Rancho
Redevelopment Project), (MBIA Insured),
5.500% due 9/1/23 Aaa AAA 14,352,188
Redding, California, Joint Powers Finance
Authority, (Solid Waste and Corporate Yard),
Series A:
2,000,000 5.500% due 1/1/13 A BBB+ 1,740,000
3,200,000 (FGIC Insured),
5.500% due 12/1/18 Aaa AAA 2,944,000
Rialto, California, Certificates of
Participation, Wastewater Systems Revenue,
(MBIA Insured):
1,005,000 5.400% due 11/1/06 Aaa AAA 984,900
1,000,000 5.500% due 11/1/07 Aaa AAA 980,000
1,000,000 5.500% due 11/1/08 Aaa AAA 968,750
1,500,000 Riverside, California, Redevelopment Agency,
Tax Allocation, Merged Redevelopment Project,
Series A, (MBIA Insured),
5.625% due 8/1/23 Aaa AAA 1,393,125
955,000 Riverside, California, Unified School
District, Certificates of Participation, (Air
Conditioning Equipment Facilities Project),
9.000% due 7/15/00 NR A- 975,294
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$ 1,470,000 Riverside County, California, Housing
Authority Revenue Bonds, Series A,
7.900% due 10/1/18 Baa NR $ 1,537,987
15,000 Riverside County, California, Single Family
Revenue Bonds,
10.500% due 9/1/14 NR BBB+ 15,788
500,000 Sacramento, California, Municipal Utility
District, Electric Revenue, Series P,
(Pre-refunded),
8.625% due 7/1/10 NR AAA 517,160
Sacramento, California, Municipal Utilities
District, Electric Revenue:
4,000,000 Series D, (FGIC Insured),
5.250% due 11/15/12 Aaa AAA 3,675,000
4,500,000 Series D, (MBIA Insured),
5.250% due 11/15/20 Aaa AAA 3,971,250
3,000,000 Series E,
5.700% due 5/15/12 A A- 2,775,000
Sacramento, California, Regional
Transportation District, Certificates of
Participation, Series A:
200,000 6.375% due 3/1/02 A1 NR 209,250
400,000 6.400% due 3/1/03 A1 NR 418,500
1,325,000 San Bernardino County, California,
Certificates
of Participation, Refunding Bonds, (Capital
Improvement Project), (Pre-refunded),
7.800% due 7/1/16 NR NR 1,386,281
1,000,000 San Diego, California, Industrial Development
Authority, Revenue Bonds, San Diego
Gas & Electric Company, Series A,
9.250% due 9/1/20 A1 A+ 1,036,250
2,000,000 San Diego, California, Redevelopment Agency
Refunding, (Marina Redevelopment Project),
(Pre-refunded),
8.750% due 12/1/08 Aaa AAA 2,227,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$ 650,000 San Diego, California, Sewer Revenue, Series
A, (AMBAC Insured),
5.250% due 5/15/20 Aaa AAA $ 573,625
San Francisco, California, City & County
Redevelopment Financing Agency:
5,000,000 Multi-Family Housing, GNMA, (South Beach
Project),
5.700% due 3/1/29 Aaa NR 4,593,750
Sewer Revenue, (FGIC Insured),
17,000,000 5.375% due 10/1/22 Aaa AAA 15,193,750
1,500,000 (Tax Allocation Redevelopment Project),
Series C,
5.400% due 8/1/21 A A 1,290,000
San Francisco, California, Downtown Parking,
Corporate Parking Revenue:
135,000 6.250% due 4/1/04 A NR 134,325
1,800,000 6.550% due 4/1/12 A NR 1,775,250
750,000 6.650% due 4/1/18 A NR 742,500
San Joaquin Hills, California, Transportation
Authority, Sr. Lien, Toll Revenue:
5,000,000 Zero Coupon due 1/1/14++ NR NR 1,318,750
60,000,000 Zero Coupon due 1/1/16++ NR NR 13,650,000
17,500,000 Zero Coupon due 1/1/17++ NR NR 3,696,875
25,000,000 Zero Coupon due 1/1/18++ NR NR 4,937,500
20,000,000 Zero Coupon due 1/1/19++ NR NR 3,675,000
San Jose, California, Airport Revenue Bonds,
Series 93, (FGIC Insured):
200,000 5.400% due 3/1/04 Aaa AAA 196,000
1,735,000 5.500% due 3/1/05 Aaa AAA 1,698,131
1,945,000 5.500% due 3/1/07 Aaa AAA 1,874,494
2,150,000 5.625% due 3/1/13 Aaa AAA 2,010,250
10,325,000 San Jose, California, Financing Authority
Revenue, Series D,
5.250% due 10/15/23 A1 A+ 8,556,844
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$ 6,250,000 San Jose, California, Redevelopment Agency,
Merged Area Redevelopment Project,
(MBIA Insured),
5.000% due 8/1/20 Aaa AAA $ 5,320,312
530,000 San Luis Obispo, California, Multifamily
Housing Authority Revenue, FNMA, (Parkwood
Apartments Project), Series A,
5.700% due 8/1/08 NR AAA 505,488
415,000 San Pablo, California, Redevelopment Agency
Revenue, Single Family Mortgage,
10.125% due 12/1/14 B NR 444,050
5,000,000 Santa Margarita, Dana Point Authority,
California, Water Revenue Bonds, (MBIA
Insured),
5.750% due 8/1/20++ Aaa AAA 4,762,500
1,320,000 Santa Rosa, California, Mortgage Revenue,
(Village Square Apartments Project), Series
A,
(FHA Insured),
6.875% due 9/1/27 NR AAA 1,349,700
3,000,000 Signal Hill, California, Redevelopment Agency
Revenue, Tax Allocation, (Signal Hill
Redevelopment
Project), Series 1-B, (MBIA Insured),
5.250% due 10/1/23 Aaa AAA 2,632,500
Sonoma County, California, Certificates of
Participation, (Honor Farm Detention
Facilities Project):
4,200,000 (Pre-refunded),
5.000% due 11/15/13 A1 A+ 3,486,000
3,000,000 (Pre-refunded),
5.000% due 11/15/17 A1 A+ 2,426,250
290,000 9.100% due 6/1/01 NR A+ 308,125
320,000 9.100% due 6/1/02 NR A+ 340,000
345,000 9.100% due 6/1/03 NR A+ 366,562
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
Southern California Public Power Authority,
Power Project Reserve:
$ 5,455,000 (Mead Phoenix Project), Series A,
(AMBAC Insured), (Pre-refunded),
5.000% due 7/1/17 Aaa AAA $ 4,691,300
1,500,000 (Palo Verde Project), Series C,
(Prerefunded),
(AMBAC Insured),
5.750% due 7/1/17 Aaa AAA 1,554,375
11,740,000 (San Juan Project), Series A, (MBIA Insured),
5.000% due 1/1/20 Aaa AAA 10,008,350
(Southern Transmission Project):
3,000,000 5.500% due 7/1/20 Aa AA- 2,711,250
2,750,000 Subseries A, (MBIA Insured),
5.000% due 7/1/22 Aaa AAA 2,327,188
4,135,000 South Napa, California, Waste Management
Authority Revenue, Solid Waste Transfer
Facility,
6.500% due 2/15/14 Baa1 NR 3,979,937
9,195,000 South Orange County, California, (Foothill
Area Project), Financing Authority Special
Tax Revenue, Series C, (FGIC Insured),
5.750% due 8/15/18++ Aaa AAA 8,758,237
Standard, California, School District,
Certificates of Participation, Capital
Improvement Project, Series A:
320,000 6.200% due 3/1/10 NR A- 309,600
340,000 6.250% due 3/1/11 NR A- 328,525
1,500,000 Suisun City, California, Redevelopment
Agency,
Tax Allocation, (MBIA Insured),
5.500% due 10/1/23 Aaa AAA 1,368,750
3,080,000 Torrance, California, Hospital Revenue Bonds,
(Mary Greeley Hospital),
6.875% due 7/1/15 NR A 3,149,300
4,500,000 Ukiah, California, Unified School District,
Certificates of Participation,
(Measure A Capital Projects),
6.000% due 9/1/10 Baa1 BBB 4,106,250
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
University Of California, Revenue Bonds:
$ 4,750,000 Multiple Purpose Projects, Series C,
(AMBAC Insured),
5.200% due 9/1/10 Aaa AAA $ 4,364,062
Series A:
1,070,000 5.500% due 9/1/06 NR A- 1,025,863
1,125,000 5.600% due 9/1/07 NR A- 1,081,406
1,195,000 5.600% due 9/1/08 NR A- 1,141,225
1,255,000 5.700% due 9/1/09 NR A- 1,176,562
1,330,000 5.700% due 9/1/10 NR A- 1,236,900
1,700,000 Upland, California, Hospital Revenue,
Certificates
of Participation, (San Antonio Community
Hospital), (Pre-refunded),
7.800% due 1/1/18 NR A 1,891,250
West & Central Basin Finance Authority,
California, Central Basin Project,
4,490,000 (FGIC Insured),
5.000% due 8/1/16 Aaa AAA 3,872,625
12,625,000 West Basin Project, Series A, (AMBAC
Insured),
5.000% due 8/1/16 Aaa AAA 10,889,062
1,000,000 Woodland, California, Hospital Revenue,
Certificates
of Participation, (Woodland Memorial
Hospital),
8.200% due 8/1/15 NR A 1,070,000
COLORADO - 1.4%
50,000,000 Dawson Ridge, Colorado, Metropolitan District
Commission, No. 1, Series B,
Zero Coupon due 10/1/22 Aaa NR 7,625,000
- ------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS AND NOTES
(Cost $515,994,336) 524,373,669
==========================================================================================
SHORT-TERM TAX-EXEMPT INVESTMENTS - 1.5%
CALIFORNIA - 1.5%
300,000 California Health Facilities Financing
Authority
Revenue Bonds, (Sutter), Series A,
3.700% due 3/1/20+ VMIG1 A1+ 300,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (continued) FEBRUARY 28, 1995
<TABLE>
<CAPTION>
RATINGS
(UNAUDITED) MARKET VALUE
FACE VALUE MOODY'S S&P (NOTE 1)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
SHORT-TERM TAX-EXEMPT INVESTMENTS (CONTINUED)
CALIFORNIA - (CONTINUED)
California Pollution Control Financing
Authority, Pollution Control Revenue:
$ 400,000 (Atlantic Richfield Company Project), Series
A,
4.000% due 12/1/24+ VMIG1 A1 $ 400,000
2,600,000 (Burney Forest Project), Series A,
3.750% due 9/1/20+ P1 NR 2,600,000
100,000 (Delano Project),
3.900% due 8/1/19+ P1 NR 100,000
200,000 (Exxon Oil Project),
3.800% due 12/1/12+ P1 A+ 200,000
Los Angeles, California, Regional Airports,
Flexible American Airlines, Lease Revenue:
2,000,000 Series A,
3.650% due 12/1/24+ VMIG1 NR 2,000,000
1,000,000 Series G,
3.650% due 12/1/24+ VMIG1 NR 1,000,000
1,300,000 Los Angeles County, California, Metropolitan
Transportation Authority, Sales Tax Revenue,
Series A, (MBIA Insured),
3.900% due 7/1/20+ VMIG1 NR 1,300,000
- ------------------------------------------------------------------------------------------
TOTAL SHORT-TERM TAX-EXEMPT INVESTMENTS
(Cost $7,900,000) 7,900,000
- ------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (Cost $523,894,336*) 100.3% 532,273,669
==========================================================================================
OTHER ASSETS AND LIABILITIES (NET) (0.3) (1,879,842)
==========================================================================================
NET ASSETS 100.0% $530,393,827
==========================================================================================
<FN>
* Aggregate cost for Federal tax purposes.
+ Variable rate demand notes are payable upon not more than one day's notice.
++ See Note 9.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES FEBRUARY 28, 1995
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost $523,894,336) (Note 1)
See accompanying schedule $532,273,669
Interest receivable 7,651,867
Receivable for investment securities sold 4,139,877
Receivable for Fund shares sold 1,226,037
- -----------------------------------------------------------------------------------------
TOTAL ASSETS 545,291,450
=========================================================================================
LIABILITIES:
Payable for investment securities purchased $14,147,973
Dividends payable 283,943
Investment advisory fee payable (Note 2) 138,549
Administration fee payable (Note 2) 79,133
Service fee payable (Note 3) 59,551
Distribution fee payable (Note 3) 48,055
Payable for Fund shares redeemed 21,935
Custodian fees payable (Note 2) 14,400
Transfer agent fees payable (Note 2) 12,935
Due to custodian 5,713
Accrued expenses and other payables 85,436
- -----------------------------------------------------------------------------------------
TOTAL LIABILITIES 14,897,623
=========================================================================================
NET ASSETS $530,393,827
=========================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
Smith Barney
California Municipals Fund Inc.
<TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (continued) FEBRUARY 28, 1995
<S> <C>
NET ASSETS CONSIST OF:
Distributions in excess of net investment income $ (283,943)
Accumulated net realized loss on investments sold (9,797,114)
Unrealized appreciation of investments 8,379,333
Par value 344,453
Paid-in capital in excess of par value 531,751,098
- ----------------------------------------------------------------------------------------
TOTAL NET ASSETS $530,393,827
========================================================================================
NET ASSET VALUE:
CLASS A SHARES:
NET ASSET VALUE and redemption price per share
($401,743,321 / 26,089,810 shares of common stock
outstanding) $15.40
========================================================================================
MAXIMUM OFFERING PRICE per share ($15.40 / 0.960)
(based on maximum sales charge of 4.00% of the offering price on
February 28, 1995) $16.04
========================================================================================
CLASS B SHARES:
NET ASSET VALUE and offering price per share+
($127,888,263 / 8,305,989 shares of common stock
outstanding) $15.40
========================================================================================
CLASS C SHARES:
NET ASSET VALUE and offering price per share+
($762,243 / 49,505 shares of common stock outstanding) $15.40
========================================================================================
<FN>
+ Redemption price per share is equal to net asset value less any applicable
CDSC.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED FEBRUARY 28, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 33,395,101
EXPENSES:
Investment advisory fee (Note 2) $1,776,849
Administration fee (Note 2) 1,014,965
Service fee (Note 3) 763,202
Distribution fee (Note 3) 574,201
Transfer agent fees (Notes 2 and 4) 138,544
Custodian fees (Note 2) 87,143
Legal and audit fees 65,936
Directors' fees and expenses (Note 2) 44,641
Other 194,300
- -----------------------------------------------------------------------------------------
TOTAL EXPENSES 4,659,781
- -----------------------------------------------------------------------------------------
NET INVESTMENT INCOME 28,735,320
=========================================================================================
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(NOTES 1 AND 5):
Net realized gain/(loss) on:
Securities (15,903,746)
Futures contracts 8,387,881
- -----------------------------------------------------------------------------------------
Net realized loss on investments during the year (7,515,865)
- -----------------------------------------------------------------------------------------
Net change in unrealized appreciation/(depreciation) of:
Securities (8,483,171)
Futures contracts (2,281,250)
- -----------------------------------------------------------------------------------------
Net unrealized depreciation of investments during the year (10,764,421)
=========================================================================================
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (18,280,286)
=========================================================================================
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 10,455,034
=========================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR YEAR
ENDED ENDED
2/28/95 2/28/94
<S> <C> <C>
Net investment income $ 28,735,320 $ 25,809,861
Net realized gain/(loss) on securities and futures
contracts during the year (7,515,865) 18,390,272
Net unrealized depreciation on securities and futures
contracts during the year (10,764,421) (15,730,247)
- ------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 10,455,034 28,469,886
Distributions to shareholders from net investment
income:
Class A (22,538,852) (21,453,692)
Class B (5,932,951) (3,407,803)
Class C (7,813) --
Distributions to shareholders in excess of net
investment income:
Class A (527,007) (220,654)
Class B (138,895) (35,050)
Class C (187) --
Distributions to shareholders from capital gains:
Class A (4,752,153) (16,828,789)
Class B (1,481,373) (3,683,752)
Class C (8,107) --
Net increase/(decrease) in net assets from Fund share
transactions
(Note 6):
Class A (3,266,292) 15,790,654
Class B 24,960,081 72,861,938
Class C 711,787 --
- ------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets (2,526,728) 71,492,738
NET ASSETS:
Beginning of year 532,920,555 461,427,817
- ------------------------------------------------------------------------------------------
End of year (including distributions in excess of
net investment income of $283,943 and $255,704,
respectively) $530,393,827 $532,920,555
==========================================================================================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
Smith Barney
California Municipals Fund Inc.
<TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<CAPTION>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
2/28/95 2/28/94# 2/28/93* 2/28/92 2/28/91
<S> <C> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of year $16.15 $16.70 $15.78 $15.66 $15.61
- --------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.89 0.86 0.97 1.04 1.07
Net realized and unrealized gain/(loss)
on investments (0.56) 0.08 1.25 0.40 0.17
- --------------------------------------------------------------------------------------------------------
Total from investment operations 0.33 0.94 2.22 1.44 1.24
- --------------------------------------------------------------------------------------------------------
Less distributions:
Distributions from net investment income (0.87) (0.83) (0.97) (1.05) (1.07)
Distributions in excess of net investment
income (0.02) (0.01) -- -- --
Distributions from net realized gains (0.19) (0.65) (0.29) (0.27) (0.12)
Return of capital -- -- (0.04) -- --
- --------------------------------------------------------------------------------------------------------
Total distributions (1.08) (1.49) (1.30) (1.32) (1.19)
========================================================================================================
Net asset value, end of year $15.40 $16.15 $16.70 $15.78 $15.66
========================================================================================================
Total return++ 2.46% 5.92% 14.76% 9.50% 8.29%
========================================================================================================
Ratios/supplemental data:
Net assets, end of year (in 000's) $401,743 $425,181 $423,504 $364,809 $334,599
Ratio of operating expenses to average net
assets 0.80% 0.80% 0.70% 0.65% 0.65%
Ratio of net investment income to average
net assets 5.76% 5.20% 6.04% 6.54% 6.85%
Portfolio turnover rate 59% 76% 72% 86% 53%
========================================================================================================
<FN>
* The Fund commenced operations on April 9, 1984. On November 6, 1992, the Fund
commenced selling Class B shares. Any shares in existence prior to November
6, 1992 were designated Class A shares.
** Annualized expense ratio before waiver of fees and voluntary reimbursement of
expenses by investment adviser and sub-investment adviser and administrator
was 0.82% for the fiscal year ended February 28, 1986.
+ Net investment income per share before waiver of fees and voluntary
reimbursement of expenses by investment adviser and sub-investment adviser
and administrator was $1.20 for the fiscal year ended February 28, 1986.
++ Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charge.
# Per share amounts have been calculated using the monthly average shares
method, which more appropriately presents the per share data for the period
since the use of the undistributed net investment income method does not
accord with the results of operations.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
Smith Barney
California Municipals Fund Inc.
<TABLE>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<CAPTION>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
2/28/90 2/28/89 2/28/88 2/28/87 2/28/86
<S> <C> <C> <C> <C> <C>
Operating performance:
Net asset value, beginning of year $15.33 $15.49 $16.54 $16.16 $13.94
- -----------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 1.09 1.12 1.09 1.14 1.21+
Net realized and unrealized
gain/(loss) on investments 0.26 (0.13) (0.98) 0.71 2.22
- -----------------------------------------------------------------------------------------------------
Total from investment operations 1.35 0.99 0.11 1.85 3.43
- -----------------------------------------------------------------------------------------------------
Less distributions:
Distributions from net investment income (1.07) (1.12) (1.09) (1.14) (1.21)
Distributions in excess of net
investment income -- -- -- -- --
Distributions from net realized gains -- (0.03) (0.07) (0.33) --
Return of capital -- -- -- -- --
- -----------------------------------------------------------------------------------------------------
Total distributions (1.07) (1.15) (1.16) (1.47) (1.21)
=====================================================================================================
Net asset value, end of year $15.61 $15.33 $15.49 $16.54 $16.16
=====================================================================================================
Total return++ 9.02% 6.67% 1.09% 12.13% 25.80%
=====================================================================================================
Ratios/supplemental data:
Net assets, end of year (in 000's) $328,938 $313,059 $156,464 $207,872 $111,705
Ratio of operating expenses to average
net assets 0.72% 0.67% 0.64% 0.67% 0.73%**
Ratio of net investment income to
average net assets 6.95% 7.19% 7.26% 6.99% 8.08%
Portfolio turnover rate 35% 27% 22% 16% 14%
=====================================================================================================
<FN>
* The Fund commenced operations on April 9, 1984. On November 6, 1992, the Fund
commenced selling Class B shares. Any shares in existence prior to November
6, 1992 were designated Class A shares.
** Annualized expense ratio before waiver of fees and voluntary reimbursement of
expenses by investment adviser and sub-investment adviser and administrator
was 0.82% for the fiscal year ended February 28, 1986.
+ Net investment income per share before waiver of fees and voluntary
reimbursement of expenses by investment adviser and sub-investment adviser
and administrator was $1.20 for the fiscal year ended February 28, 1986.
++ Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charge.
# Per share amounts have been calculated using the monthly average shares
method, which more appropriately presents the per share data for the period
since the use of the undistributed net investment income method does not
accord with the results of operations.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
Smith Barney
California Municipals Fund Inc.
<TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH YEAR.
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
2/28/95 2/28/94# 2/28/93*
<S> <C> <C> <C>
Operating performance:
Net asset value, beginning of year $16.15 $16.70 $15.84
- ------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.81 0.77 0.29
Net realized and unrealized gain/(loss) on investments (0.57) 0.09 1.15
- ------------------------------------------------------------------------------------------------
Total from investment operations 0.24 0.86 1.44
- ------------------------------------------------------------------------------------------------
Less distributions:
Distributions from net investment income (0.78) (0.75) (0.28)
Distributions in excess of net investment income (0.02) (0.01) --
Distributions from net realized gains (0.19) (0.65) (0.29)
Return of capital -- -- (0.01)
- ------------------------------------------------------------------------------------------------
Total distributions (0.99) (1.41) (0.58)
================================================================================================
Net asset value, end of year $15.40 $16.15 $16.70
================================================================================================
Total return+ 1.89% 5.40% 9.27%
================================================================================================
Ratios/supplemental data:
Net assets, end of year (in 000's) $127,888 $107,740 $37,924
Ratio of operating expenses to average net assets 1.32% 1.33% 1.30%**
Ratio of net investment income to average net assets 5.25% 4.67% 5.44%**
Portfolio turnover rate 59% 76% 72%
================================================================================================
<FN>
* The Fund commenced selling Class B shares on November 6, 1992.
** Annualized.
+ Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charge.
# Per share amounts have been calculated using the monthly average shares
method, which more appropriately presents the per share data for the period
since the use of the undistributed net investment income method does not
accord with the results of operations.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
Smith Barney Shearson
California Municipals Fund Inc.
<TABLE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
FOR A CLASS C SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<CAPTION>
PERIOD
ENDED
2/28/95*
<S> <C>
Operating performance:
Net asset value, beginning of period $14.19
- --------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.24
Net realized and unrealized gain on investments 1.39#
- --------------------------------------------------------------------------------------------
Total from investment operations 1.63
- --------------------------------------------------------------------------------------------
Less distributions:
Distributions from net investment income (0.23)
Distributions in excess of net investment income (0.00)++
Distributions from net realized gains (0.19)
- --------------------------------------------------------------------------------------------
Total distributions (0.42)
============================================================================================
Net asset value, end of period $15.40
============================================================================================
Total return+ 11.72%
============================================================================================
Ratios/supplemental data:
Net assets, end of period (in 000's) $ 762
Ratio of operating expenses to average net assets 1.37%**
Ratio of net investment income to average net assets 5.19%**
Portfolio turnover rate 59%
============================================================================================
<FN>
* The Fund commenced selling Class C shares on November 14, 1994.
** Annualized.
+ Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charge.
++ Amount represents less than $0.01.
# The amount shown may not accord with the change in aggregate gains and losses
of portfolio securities due to the timing of sales and the redemptions of
Fund shares.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Smith Barney California Municipals Fund Inc. (formerly Smith Barney Shearson
California Municipals Fund Inc.) (the "Fund") was incorporated under the laws of
the State of Maryland on February 17, 1984. The Fund is a non-diversified, open-
end management investment company registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended (the "1940
Act"). Effective November 7, 1994, the Fund began offering Class C and Class Y
shares and continued to offer Class A and Class B shares. As of February 28,
1995, no Class Y shares had been sold. Class A shares are sold with a front-end
sales charge. Class B and Class C shares may be subject to a contingent deferred
sales charge ("CDSC") upon redemption. Class B shares will convert automatically
to Class A shares eight years after the date of original purchase. Class Y
shares are available to investors making an initial investment of at least $5
million and are not subject to any sales charges, service or distribution fees.
All classes of shares have identical rights and privileges except with respect
to the effect of the respective sales charges to each class, the distribution
and/or service fees borne by each class, expenses allocable exclusively to each
class, voting rights on matters affecting a single class, the exchange privilege
of each class and the conversion feature of Class B shares. The following is a
summary of significant accounting policies consistently followed by the Fund in
the preparation of its financial statements.
Portfolio valuation: Securities are valued by The Boston Company Advisors, Inc.
("Boston Advisors") after consultation with an independent pricing service (the
"Service") approved by the Board of Directors. When, in the judgment of the
Service, quoted bid prices for securities are readily available and are
representative of the bid side of the market, these investments are valued at
the mean between the quoted bid prices and asked prices (as obtained by the
Service from dealers in such securities). Securities for which, in the judgment
of the Service, there are no readily obtainable market quotations (which may
constitute a majority of the portfolio securities) are carried at fair value as
determined by the Service, based on methods which include consideration of:
yields or prices of municipal securities of comparable quality, coupon, maturity
and type; indications as to values from dealers; and general market conditions.
Short-term investments that mature in 60 days or less are valued at amortized
cost.
Futures contracts: The Fund may enter into futures contracts. The Fund's
futures transactions will be entered into for hedging purposes to protect
against a decline in
35
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
the price of securities that the Fund owns, or to protect the Fund against an
increase in the price of securities it is committed to purchase.
Upon entering into a futures contract, the Fund is required to deposit with the
broker an amount of cash or cash equivalents equal to a certain percentage of
the contract amount. This is known as the "initial margin." Subsequent payments
("variation margin") are made or received by the Fund each day, depending on the
daily fluctuation of the value of the contract.
For financial statement purposes, an amount equal to the settlement amount of
the contract is included in its Statement of Assets and Liabilities as an asset
and as an equivalent liability. For long futures positions, the asset is
marked-to-market daily; for short futures positions, the liability is
marked-to-market daily. The daily changes in the contract are recorded as
unrealized gains or losses. The Fund recognizes a realized gain or loss when the
contract is closed.
There are several risks in connection with the use of futures contracts as a
hedging device. The change in value of futures contracts primarily corresponds
with the value of their underlying instruments, which may not correlate with the
change in value of the hedged investments. In addition, there is the risk the
Fund may not be able to enter into a closing transaction because of an illiquid
secondary market.
Repurchase Agreements: The Fund may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
This arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period. The value of the collateral is at
least equal at all times to the total amount of the repurchase obligations,
including interest. In the event of counter-party default, the Fund has the
right to use the collateral to offset losses incurred. There is potential loss
to the Fund in the event the Fund is delayed or prevented from exercising its
rights to dispose of the collateral securities, including the risk of a possible
decline in the value of the underlying securities during the period while the
Fund seeks to assert its rights. The Fund's investment adviser, administrator or
sub-administrator, acting under the supervision of the Board of Directors,
reviews the value of the collateral and the creditworthiness of those banks and
dealers with which the Fund enters into repurchase agreements to evaluate
potential risks.
Securities transactions and investment income: Securities transactions are
recorded as of the trade date. Interest income is recorded on the accrual basis.
Securities purchased
36
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
or sold on a when-issued or delayed delivery basis may be settled a month or
more after the trade date. Interest income on these securities is not accrued
until settlement date. When required, the Fund instructs the custodian to
segregate assets in a separate account with a current value at least equal to
the amount of its when-issued purchase commitments. Realized gains and losses
from securities sold are recorded on the identified cost basis. Investment
income and realized and unrealized gains and losses are allocated based upon the
relative net assets of each class of shares.
Dividends and distributions to shareholders: Dividends from net investment
income are determined on a class level, declared on each day that the Fund is
open for business and paid on the last day of the Smith Barney Inc. ("Smith
Barney") statement month. Distributions from net realized capital gains are
declared and paid annually, after the end of the fiscal year in which earned. In
addition, in order to avoid the application of a 4.00% nondeductible excise tax
on certain undistributed amounts of ordinary income and capital gains, the Fund
may make an additional distribution shortly before December 31 in each year of
any undistributed ordinary income or capital gains and expects to make any other
distributions as are necessary to avoid this tax. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments of income and gains
on various investment securities held by the Fund, timing differences and
differing characterization of distributions made by the Fund as a whole.
Permanent differences incurred during the Fund's fiscal year resulting from
distributions in excess of net investment income have been reclassified to
paid-in capital at year end.
Federal taxes: It is the policy of the Fund to qualify as a regulated
investment company, which distributes tax-exempt interest dividends, by
complying with the requirements of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies and by distributing
substantially all of its earnings to its shareholders. Therefore, no Federal
income tax provision is required.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE
AND OTHER TRANSACTIONS
The Fund has entered into an investment advisory agreement (the "Advisory
Agreement") with Greenwich Street Advisors, formerly a division of Mutual
Management Corp., which was transferred effective November 7, 1994 to Smith
Barney Mutual Funds Management Inc. ("SBMFM"). Mutual Management Corp. and SBMFM
are both wholly owned subsidiaries of Smith Barney Holdings Inc.
37
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
("Holdings"). Holdings is a wholly-owned subsidiary of The Travelers Inc. Under
the Advisory Agreement, the Fund pays a monthly fee at the following annual
rates: 0.35% of the value of its average daily net assets up to $500 million and
0.32% of the value of its average daily net assets in excess of $500 million.
Prior to April 20, 1994, the Fund was party to an administration agreement (the
"Administration Agreement") with Boston Advisors, an indirect wholly owned
subsidiary of Mellon Bank Corporation ("Mellon"). Under the Administration
Agreement, the Fund paid a monthly fee at the annual rate of 0.20% of the value
of its average daily net assets up to $500 million and 0.18% of the value of its
daily net assets in excess of $500 million.
As of the close of business on April 20, 1994, SBMFM (formerly known as Smith,
Barney Advisers, Inc.) succeeded Boston Advisors as the Fund's administrator.
The new agreement contains substantially the same terms and conditions,
including the same level of fees, as the predecessor agreement.
As of the close of business on April 20, 1994, the Fund and SBMFM entered into a
sub-administration agreement (the "Sub-Administration Agreement") with Boston
Advisors. Under the Sub-Administration Agreement, SBMFM pays Boston Advisors a
portion of its administration fee at a rate agreed upon from time to time
between SBMFM and Boston Advisors.
For the year ended February 28, 1995, Smith Barney received $548,572 from
investors representing commissions (sales charges) on sales of Class A shares.
A CDSC is generally payable by a shareholder in connection with the redemption
of certain Class A, Class B and Class C shares. In circumstances in which the
CDSC is imposed, the amount of the charge will vary depending on the number of
years since the date of purchase. For the year ended February 28, 1995, Smith
Barney received from shareholders $310,446 in CDSC on the redemption of Class B
shares.
No officer, director or employee of Smith Barney or any of its affiliates
receives any compensation from the Fund for serving as a Director or officer of
the Fund. The Fund pays each Director who is not an officer, director, or
employee of Smith Barney or any of its affiliates $2,000 per annum plus $500 per
meeting attended and each Director emeritus who is not an officer, director or
employee of Smith Barney or any of its affiliates $1,000 per annum plus $250 per
meeting attended. The Fund reimburses all Directors for travel and out-of-pocket
expenses incurred to attend such meetings.
38
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
Boston Safe Deposit and Trust Company, an indirect wholly owned subsidiary of
Mellon, serves as the Fund's custodian. The Shareholder Services Group, Inc., a
subsidiary of First Data Corporation, serves as the Fund's transfer agent.
3. DISTRIBUTION PLAN
Smith Barney acts as distributor of the Fund's shares pursuant to a distribution
agreement with the Fund, and sells shares of the Fund through Smith Barney or
its affiliates.
Pursuant to Rule 12b-1 under the 1940 Act, the Fund has adopted a services and
distribution plan (the "Plan"). Under this Plan, the Fund compensates Smith
Barney for servicing shareholder accounts for Class A, Class B and Class C
shareholders and covers expenses incurred in distributing Class B and Class C
shares. Smith Barney is paid an annual service fee with respect to Class A,
Class B and Class C shares of the Fund at the annual rate of 0.15% of the value
of the average daily net assets of each respective class of shares. Smith Barney
is also paid an annual distribution fee with respect to Class B and Class C
shares at the annual rate of 0.50% and 0.55%, respectively, of the value of the
average daily net assets of each class. For the year ended February 28, 1995,
the Fund incurred service fees of $590,964, $172,009 and $229 for Class A, Class
B and Class C shares, respectively. For the year ended February 28, 1995, the
Fund incurred distribution fees of $573,363 and $838 for Class B and Class C
shares, respectively.
4. EXPENSE ALLOCATION
Expenses of the Fund not directly attributable to the operations of any class of
shares are prorated among the classes based upon the relative net assets of each
class. Operating expenses directly attributable to a class of shares are charged
to that class' operations. In addition to the above service and distribution
fees, class specific operating expenses include transfer agent fees. For the
year ended February 28, 1995, transfer agent fees for Class A, Class B and Class
C shares were $90,929, $47,547 and $68, respectively.
5. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities, excluding
short-term investments for the year ended February 28, 1995 amounted to
$331,252,802 and $287,861,869, respectively.
At February 28, 1995, aggregate gross unrealized appreciation for all securities
in which there was an excess of value over tax cost amounted to $16,329,544, and
39
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
aggregate gross unrealized depreciation for all securities in which there was an
excess of tax cost over value amounted to $7,950,211.
<TABLE>
6. COMMON STOCK
As of February 28, 1995, the Fund had authorized capital of 500 million shares
of $.01 par value common stock divided into four classes: Class A, Class B,
Class C and Class Y. Changes in common stock outstanding were as follows:
<CAPTION>
YEAR ENDED YEAR ENDED
2/28/95 2/28/94
Class A Shares: Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Sold 3,394,819 $ 50,600,349 2,686,986 $ 44,513,803
Issued as reinvestment of
dividends 1,123,282 16,819,570 1,519,575 25,027,145
Redeemed (4,747,129) (70,686,211) (3,246,672) (53,750,294)
- -----------------------------------------------------------------------------------------------
Net increase/(decrease) (229,028) $ (3,266,292) 959,889 $ 15,790,654
===============================================================================================
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
2/28/95 2/28/94
Class B Shares: Shares Amount Shares Amount
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Sold 2,727,908 $ 41,326,937 4,488,473 $74,380,170
Issued as reinvestment of
dividends 294,122 4,382,356 278,568 4,584,260
Redeemed (1,386,281) (20,749,212) (367,733) (6,102,492)
- -----------------------------------------------------------------------------------------------
Net increase 1,635,749 $ 24,960,081 4,399,308 $72,861,938
===============================================================================================
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
2/28/95*
Class C Shares: Shares Amount
<S> <C> <C>
- ----------------------------------------------------------------
Sold 49,120 $706,212
Issued as reinvestment of dividends 385 5,575
- ----------------------------------------------------------------
Net increase 49,505 $711,787
================================================================
<FN>
* The Fund commenced selling Class C shares on November 14, 1994.
</TABLE>
As of February 28, 1995, no Class Y shares had been sold.
40
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
7. LINE OF CREDIT
The Fund and several affiliated entities participate in a $50 million line of
credit provided by Bank of America (formerly known as Continental Bank N.A.)
under an Amended and Restated Line of Credit Agreement (the "Agreement") dated
April 30, 1992 and renewed effective May 31, 1994, primarily for temporary or
emergency purposes, including the meeting of redemption requests that otherwise
might require the untimely disposition of securities. Under this Agreement the
Fund may borrow up to the lesser of $25 million or 25% of its net assets.
However, pursuant to the Fund's prospectus, the Fund may only borrow up to 10%
of its total assets. Under the terms of the Agreement, as amended, the Fund and
the other affiliated entities are charged an annual aggregate commitment fee of
$100,000 which is allocated equally among each of the participants. The
Agreement requires, among other provisions, each participating fund to maintain
a ratio of net assets (not including funds borrowed pursuant to the Agreement)
to the aggregate amount of indebtedness pursuant to the Agreement of no less
than 5 to 1. During the year ended February 28, 1995, the Fund had an average
outstanding daily balance of $73,717 with interest rates ranging from 4.63% to
6.13%. Interest expense totaled $4,386 for the year ended February 28, 1995. As
of February 28, 1995, the Fund had no outstanding borrowings under this
Agreement.
8. CONCENTRATION OF CREDIT
The Fund primarily invests in debt obligations issued by the State of California
and local governments in the State of California, its political subdivisions,
agencies and public authorities to obtain funds for various public purposes. The
Fund is more susceptible to factors adversely affecting issuers of California
municipal securities than is a municipal bond fund that is not concentrated in
these issuers to the same extent.
9. ORANGE COUNTY HOLDINGS
Approximately 8% of the portfolio was invested in securities issued by various
agencies located within Orange County. However, none of these holdings are
direct obligations of the county itself, and more than half are either insured
(AMBAC, MBIA, or FGIC) or backed by guaranteed investment contracts. In
addition, another 5% of the portfolio was invested in a San Joaquin
Transportation corridor bond, whose issuer is a participant in Orange County's
investment pool.
Orange County is currently trying to negotiate a settlement with its pool
participants, and Management anticipates that one will be reached by early June.
Management believes that the bankruptcy proceedings will not have a material
impact on the ability of these issuers to make scheduled interest and principal
payments and therefore will have little, if any, effect on the Fund.
41
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
10. CAPITAL LOSS CARRYFORWARD
At February 28, 1995, the Fund had capital loss carryforwards of $3,512,188
available to offset future capital gains expiring in 2003.
Under current tax law, losses arising after October 31 may be deferred and
treated as occurring on the first day of the following fiscal year. In the
fiscal year ended February 28, 1995, the Fund elected to defer capital losses
occurring between November 1, 1994 and February 28, 1995, as follows:
<TABLE>
<S> <C>
Short-Term.................... $3,046,426
Long-Term..................... $3,238,501
</TABLE>
42
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
SMITH BARNEY CALIFORNIA MUNICIPALS FUND INC.:
We have audited the accompanying statement of assets and liabilities of
Smith Barney California Municipals Fund Inc. (formerly Smith Barney Shearson
California Municipals Fund Inc.), including the schedule of portfolio
investments, as of February 28, 1995, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
ten years in the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 28, 1995 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Smith Barney California Municipals Fund Inc. as of February 28, 1995, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for each of the ten years in the period then ended, in conformity with generally
accepted accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
April 10, 1995
43
<PAGE>
Smith Barney
California Municipals Fund Inc.
- --------------------------------------------------------------------------------
TAX INFORMATION (UNAUDITED) YEAR ENDED FEBRUARY 28, 1995
Of the dividends paid by the Fund attributable to net investment income for the
year ended February 28, 1995, 98.69% is tax-exempt for regular Federal income
taxes and California income taxes.
The capital gains dividend distribution paid to shareholders for fiscal year
ended February 28, 1995, whether taken in additional shares or in cash, is as
follows:
<TABLE>
<S> <C>
Long-Term Capital Gains....... $3,793,641
</TABLE>
The above figure may differ from that cited elsewhere in this report due to
differences in the calculations of income and capital gains for Securities and
Exchange Commission (book) purposes and Internal Revenue Service (tax) purposes.
44
<PAGE>
CALIFORNIA MUNICIPALS FUND INC.
DIRECTORS
Herbert Barg
Alfred J. Bianchetti
Martin Brody
Dwight B. Crane
Burt N. Dorsett
Elliott S. Jaffe
Stephen E. Kaufman
Joseph J. McCann
Heath B. McLendon
Cornelius Rose
OFFICERS
Heath B. McLendon
Chairman of the Board
and Investment Officer
Jessica M. Bibliowicz
President
Joseph P. Deane
Vice President and
Investment Officer
David Fare
Investment Officer
Lewis E. Daidone
Senior Vice President
and Treasurer
Christina T. Sydor
Secretary
[LOGO] RECYCLED
RECYCLABLE
SMITH BARNEY
A MEMBER OF TRAVELERS GROUP[LOGO]
This report is submitted for the general information of the shareholders of
Smith Barney California Municipals Fund Inc. It is not authorized for
distribution to prospective investors unless accompanied or preceded by an
effective Prospectus for the Fund, which contains information concerning the
Fund's investment policies, fees and expenses as well as other pertinent
information.
SMITH BARNEY
MUTUAL FUNDS
388 Greenwich Street
New York, New York 10013
Fund 14, 198, 463, 478
FD 2209 D5
1995
ANNUAL
REPORT
