[PHOTO OMITTED]
Smith Barney
California
Municipals
Fund Inc.
[PHOTO OMITTED]
------------------
SEMI-ANNUAL REPORT
------------------
August 31, 1999
[LOGO] Smith Barney Mutual Funds
NOT FDIC INSURED o NOT BANK GUARANTEED o MAY LOSE VALUE
<PAGE>
Smith Barney California
Municipals Fund Inc.
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The Smith Barney California Municipals Fund Inc. ("Fund") seeks to provide
California investors with as high a level of current income exempt from Federal
income taxes and California state personal income tax as is consistent with
prudent investment management and the preservation of capital. (Please note that
a portion of the income from this Fund may be subject to the Alternative Minimum
Tax.)
Smith Barney California Municipals Fund Inc.
Average Annual Total Returns
August 31, 1999
Without Sales Charges(1)
----------------------------------
Class A Class B Class L
================================================================================
Six Months+ (4.15)% (4.46)% (4.43)%
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One-Year (2.07) (2.58) (2.62)
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Five-Year 6.73 6.17 N/A
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Ten-Year 7.22 N/A N/A
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Since Inception++ 8.35 6.49 8.19
================================================================================
With Sales Charges(2)
---------------------------------
Class A Class B Class L
================================================================================
Six Months+ (8.00)% (8.67)% (6.30)%
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One-Year (5.99) (6.76) (4.51)
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Five-Year 5.86 6.01 N/A
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Ten-Year 6.79 N/A N/A
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Since Inception++ 8.06 6.49 7.97
================================================================================
(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charges of 4.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 4.50% CDSC, which
applies if shares are redeemed within one year from purchase. This CDSC
declines by 0.50% the first year after purchase and thereafter by 1.00%
per year until no CDSC is incurred. Class L shares also reflect the
deduction of a 1.00% CDSC, which applies if shares are redeemed within the
first year of purchase.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
++ Inception dates for Class A, B and L shares are April 9, 1984, November 6,
1992 and November 14, 1994, respectively.
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MARKET HIGHLIGHT
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California is currently experiencing a meaningful economic resurgence, as it
enjoys its best financial position of the last eight to ten years. In our view,
the Golden State's economic recovery has been driven mainly by the growth of
new, more diversified industries, which has effectively provided the state with
a broader economic base. The nation's largest state economy, and the seventh
largest economy in the world, now appears to be running on all cylinders as real
estate prices have shown marked improvements.
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NASDAQ SYMBOL
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Class A SHRCX
Class B SCABX
Class L SCACX
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WHAT'S INSIDE
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Shareholder Letter ........................................................ 1
Historical Performance .................................................... 4
Smith Barney California Municipals Fund Inc.
at a Glance ............................................................... 6
Schedule of Investments ................................................... 7
Statement of Assets and Liabilities ....................................... 21
Statement of Operations ................................................... 22
Statements of Changes in Net Assets ....................................... 23
Notes to Financial Statements ............................................. 24
Financial Highlights ...................................................... 27
<PAGE>
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Shareholder Letter
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[PHOTO OMITTED] [PHOTO OMITTED]
HEATH B. MCLENDON JOSEPH P. DEANE
Chairman Vice President and
Investment Officer
Dear Shareholder:
We are pleased to provide the semi-annual report for the Smith Barney California
Municipals Fund Inc. ("Fund") for the period ending August 31, 1999. In this
report, we summarize the period's prevailing economic and market conditions and
outline our portfolio strategy. A detailed summary of the Fund's performance can
be found in the appropriate sections that follow.
Performance Update
For the six-month period ended August 31, 1999, the California Municipals Fund
posted total returns of a negative 4.15%, 4.46% and 4.43% for its Class A, B and
L shares, respectively, without sales charges. In comparison, the Fund's Lipper,
Inc. peer group average posted a total return of a negative 3.60% for the same
period. (Lipper is a major fund-tracking organization.) Over the six-month
period covered by this report, the Fund distributed income dividends totaling
$0.38 per Class A share. (Please note that a portion of the income may be
subject to the Alternative Minimum Tax.)
Municipal Bond Market Update
We believe that the municipal bond market is approaching a temporary bottom. The
Federal Reserve Board ("Fed") has implemented two monetary policy adjustments --
a 25 basis point increase in June and a 25 basis point increase in August -- and
those actions should remain unchanged for the foreseeable future. We believe
that fixed income markets are returning to "normal" in the aftermath of forced
liquidations by major hedge funds and negatively impacted global markets in late
1998. In our opinion, long U.S. Treasury yields represent good value and
municipal bonds are trading at roughly 95%-96% of governments. This comparison
substantiates the fact that municipal securities are trading at low valuations
relative to governments since, under normal market conditions, municipal
securities have historically yielded roughly 85% of similar maturity Treasuries.
The recent upward pressure on municipal yields appears to result largely from
two factors: 1) the lack of demand for municipal bonds by the traditional
institutional sectors that have supported the municipal market; and 2)
additional pressures resulting from the pre-Y2K avalanche of issues in the
taxable market, which has attracted institutional investors who would otherwise
buy municipals.
Yields have rebounded sharply, up nearly three quarters of 1% since the
beginning of 1999. The slope of the municipal yield curve has remained extremely
steep, with 20-year municipals yielding roughly 120 basis points more than
one-year paper. (The yield curve measures the difference between short- and
long-term rates.) In the U.S. Treasury market, the difference between one-year
and 30-year bond yields is only 80 basis points.
California Economic Highlights
California is currently experiencing a meaningful economic resurgence, as it
enjoys its best financial position of the last eight to ten years. Prior to
1990, the structural underpinnings of California's economy were supported by its
strong economic growth due in large part to its aerospace
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Smith Barney California Municipals Fund Inc. 1
<PAGE>
and defense industries and a continually appreciating real estate market.
However, during the past several years, the Golden State's economic recovery has
been driven mainly by the growth of new, more diversified industries, which has
effectively provided a broader economic base. The nation's largest state
economy, and the seventh largest economy in the world, now appears to be running
on all cylinders as real estate prices throughout the state have shown marked
improvements. Building activity posted impressive gains in June. Total building
value was up 18.4% from June 1998, primarily from an almost 27% growth in the
value of residential permits. Existing home sales in California through June
have increased roughly 9.5%, while the median price of a home in California has
increased approximately 8.2% over June 1998. Furthermore, California's office
vacancy rate is among the lowest in the U.S.
We think these gains, coupled with California's lowest unemployment levels in
eight years and an annual state GDP of more than $1 trillion, should allow
California to remain a competitive economic force for many years to come.
Investment Strategy
As noted, the Fund seeks to provide California investors with as high a level of
dividend income exempt from federal income taxes and California state personal
income tax as is consistent with conservative investment management and the
preservation of capital. As of August 31, 1999, the Fund's average weighted
maturity is approximately 19.3 years.
Also, as of August 31, 1999, approximately 99% of the Fund's holdings were rated
investment grade (BBB/Baa and higher) by either Standard & Poor's Corporation or
Moody's Investors Service Inc., with 74.3% of the Fund invested in AAA bonds,
the highest possible rating. (Investment-grade bonds are those rated Aaa, Aa, A
and Baa by Moody's Investors Service, Inc. or AAA, AA, A and BBB by Standard &
Poor's Ratings Services, or that have an equivalent rating by any nationally
recognized statistical rating organization, or determined by the manager to be
of equivalent quality.)
The Fund's largest holdings are concentrated in water/sewer bonds (20.4%),
hospital bonds (12.8%) and education bonds (7.0%).
We are positive on California municipal bonds. Additionally, we believe that
buying bonds with relatively longer maturities (20 to 30 years) and lower
coupons (5% and a bit lower) will enable us to be more aggressively positioned
for what should be a drop in long-term interest rates later this year.
Until recently, our investment strategy had been focused primarily on buying
high-grade, short-maturity bonds in anticipation of the ensuing increase in
interest rates. Currently, with recent interest rate increases behind us, we are
aggressive buyers of longer, high-grade discount bonds. We believe that investor
sentiment has weakened and the market has taken on a negative psychology.
Municipal Bond Market Outlook
Our outlook for the municipal bond market is optimistic. We think that the
actions of the Fed were preemptively conservative. Inflation should remain in
check, at least in the near term. A possible easing of economic activity as a
result of Y2K ramifications could prove positive for fixed income markets.
Looking ahead, we believe that the U.S. economy should remain strong in the
coming months with muted inflationary pressures. Recent economic conditions have
created opportunities for municipal securities to catch up with Treasuries, and
we continue to see good value at the long end of the market.
With long-term municipal bond yields in the 5.75% range and inflation under
control, "real," inflation-adjusted yields on longer intermediate- and long-term
municipals are competitive.
Following the Fed's August 24, 1999 short-term interest rate increase of 0.25%,
we do not anticipate
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2 1999 Semi-Annual Report to Shareholders
<PAGE>
further policy change for the remainder of 1999 amid optimism that the Fed has
acted sufficiently to curb inflationary pressures.
As always, we will be monitoring these events closely. Thank you for investing
in the Smith Barney California Municipals Fund.
Sincerely,
/s/ Heath B. McLendon /s/ Joseph P. Deane
Heath B. McLendon Joseph P. Deane
Chairman Vice President and
Investment Officer
September 22, 1999
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Smith Barney California Municipals Fund Inc. 3
<PAGE>
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Historical Performance -- Class A Shares
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<TABLE>
<CAPTION>
Net Asset Value
---------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
8/31/99 $16.93 $15.86 $0.38 $0.00 $0.00 (4.15)%+
- -------------------------------------------------------------------------------------------------------
2/28/99 16.99 16.93 0.80 0.10 0.00 5.02
- -------------------------------------------------------------------------------------------------------
2/28/98 16.26 16.99 0.84 0.23 0.00 11.44
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2/28/97 16.31 16.26 0.85 0.20 0.00 6.37
- -------------------------------------------------------------------------------------------------------
2/29/96 15.40 16.31 0.84 0.03 0.00 11.93
- -------------------------------------------------------------------------------------------------------
2/28/95 16.15 15.40 0.89 0.19 0.00 2.46
- -------------------------------------------------------------------------------------------------------
2/28/94 16.70 16.15 0.84 0.65 0.00 5.92
- -------------------------------------------------------------------------------------------------------
2/28/93 15.78 16.70 0.97 0.29 0.04 14.76
- -------------------------------------------------------------------------------------------------------
2/29/92 15.66 15.78 1.05 0.27 0.00 9.50
- -------------------------------------------------------------------------------------------------------
2/28/91 15.61 15.66 1.07 0.12 0.00 8.29
- -------------------------------------------------------------------------------------------------------
2/28/90 15.33 15.61 1.07 0.00 0.00 9.02
=======================================================================================================
Total $9.60 $2.08 $0.04
=======================================================================================================
</TABLE>
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Historical Performance -- Class B Shares
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<TABLE>
<CAPTION>
Net Asset Value
---------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
8/31/99 $16.93 $15.85 $0.33 $0.00 $0.00 (4.46)%+
- -------------------------------------------------------------------------------------------------------
2/28/99 16.98 16.93 0.71 0.10 0.00 4.56
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2/28/98 16.25 16.98 0.76 0.23 0.00 10.88
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2/28/97 16.32 16.25 0.77 0.20 0.00 5.73
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2/29/96 15.40 16.32 0.76 0.03 0.00 11.39
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2/28/95 16.15 15.40 0.80 0.19 0.00 1.89
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2/28/94 16.70 16.15 0.76 0.65 0.00 5.40
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Inception* -- 2/28/93 15.84 16.70 0.28 0.29 0.01 9.27+
=======================================================================================================
Total $5.17 $1.69 $0.01
=======================================================================================================
</TABLE>
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Historical Performance -- Class L Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
---------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
8/31/99 $16.91 $15.84 $0.33 $0.00 $0.00 (4.43)%+
- -------------------------------------------------------------------------------------------------------
2/28/99 16.97 16.91 0.70 0.10 0.00 4.45
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2/28/98 16.24 16.97 0.75 0.23 0.00 10.83
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2/28/97 16.31 16.24 0.77 0.20 0.00 5.68
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2/29/96 15.40 16.31 0.76 0.03 0.00 11.30
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Inception* -- 2/28/95 14.19 15.40 0.23 0.19 0.00 11.72+
=======================================================================================================
Total $3.54 $0.75 $0.00
=======================================================================================================
</TABLE>
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4 1999 Semi-Annual Report to Shareholders
<PAGE>
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Historical Performance -- Class Y Shares
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<TABLE>
<CAPTION>
Net Asset Value
---------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
8/31/99 $16.93 $15.84 $0.39 $0.00 $0.00 (4.19)%+
- -------------------------------------------------------------------------------------------------------
Inception* -- 2/28/99 17.19 16.93 0.39 0.10 0.00 1.34+
=======================================================================================================
Total $0.78 $0.10 $0.00
=======================================================================================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
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Average Annual Total Return
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<TABLE>
<CAPTION>
Without Sales Charges(1)
---------------------------------------------------------
Class A Class B Class L Class Y
========================================================================================================
<S> <C> <C> <C> <C>
Six Months Ended 8/31/99+ (4.15)% (4.46)% (4.43)% (4.19)%
- -------------------------------------------------------------------------------------------------------
Year Ended 8/31/99 (2.07) (2.58) (2.62) N/A
- -------------------------------------------------------------------------------------------------------
Five Years Ended 8/31/99 6.73 6.17 N/A N/A
- -------------------------------------------------------------------------------------------------------
Ten Years Ended 8/31/99 7.22 N/A N/A N/A
- -------------------------------------------------------------------------------------------------------
Inception* through 8/31/99 8.35 6.49 8.19 (2.90)
=======================================================================================================
</TABLE>
<TABLE>
<CAPTION>
With Sales Charges(2)
---------------------------------------------------------
Class A Class B Class L Class Y
========================================================================================================
<S> <C> <C> <C> <C>
Six Months Ended 8/31/99+ (8.00)% (8.67)% (6.30)% (4.19)%
- -------------------------------------------------------------------------------------------------------
Year Ended 8/31/99 (5.99) (6.76) (4.51) N/A
- -------------------------------------------------------------------------------------------------------
Five Years Ended 8/31/99 5.86 6.01 N/A N/A
- -------------------------------------------------------------------------------------------------------
Ten Years Ended 8/31/99 6.79 N/A N/A N/A
- -------------------------------------------------------------------------------------------------------
Inception* through 8/31/99 8.06 6.49 7.97 (2.90)
=======================================================================================================
</TABLE>
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Cumulative Total Return
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Without Sales Charges(1)
=======================================================================================================
<S> <C>
Class A (8/31/89 through 8/31/99) 100.81%
- -------------------------------------------------------------------------------------------------------
Class B (Inception* through 8/31/99) 53.58
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Class L (Inception* through 8/31/99) 45.88
- -------------------------------------------------------------------------------------------------------
Class Y (Inception* through 8/31/99) (2.87)
=======================================================================================================
</TABLE>
(1) Assumes reinvestment of all dividend and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) Assumes reinvestment of all dividend and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charge of 4.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 4.50% CDSC, which
applies if shares are redeemed within one year from purchase, this CDSC
declines by 0.50% the first year after purchase and thereafter by 1.00%
per year until no CDSC is incurred. Class L shares also reflect the
deduction of a 1.00% CDSC, which applies if shares are redeemed within the
first year of purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* Inception dates for Class A, B, L and Y shares are April 9, 1984, November
6, 1992, November 14, 1994 and September 22, 1998, respectively.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 5
<PAGE>
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Smith Barney California Municipals Fund Inc. at a Glance (unaudited)
- --------------------------------------------------------------------------------
Growth of $10,000 Invested in Class A Shares of the Smith Barney California
Municipals Fund Inc. vs. the Lehman Brothers Municipal Bond Index and the Lipper
California Municipal Fund Average+
[GRAPHIC OMITTED]
+ Hypothetical illustration of $10,000 invested in Class A shares on August
31, 1989, assuming deduction of the maximum 4.00% sales charge at the time
of investment and reinvestment of dividends and capital gains, if any, at
net asset value through August 31, 1999. 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.
The index is unmanaged and is not subject to the same management and
trading expenses of a mutual fund. The Lipper California Municipal Fund
Average is composed of an average of the Fund's peer group of 109 mutual
funds investing in California municipal bonds as of August 31, 1999. The
performance of the Fund's other classes may be greater or less than the
Class A shares' performance indicated on this chart, depending on whether
greater or lesser sales charges and fees were incurred by shareholders
investing in the other classes.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption values may be more or less than the original cost. No
adjustment has been made for shareholder tax liability on dividends or
capital gains.
Industry Diversification*
- --------------------------------------------------------------------------------
7.0% Education
6.4% Escrowed to Maturity
6.9% General Obligation
12.8% Hospitals
2.2% Housing: Multi-Family
2.8% Housing: Single-Family
3.4% Pre-Refunded
4.5% Tax Allocation
6.5% Transportation
4.8% Utilities
20.4% Water and Sewer
22.3% Other
* As a percentage of total investments.
Summary of Investments by Combined Ratings
- --------------------------------------------------------------------------------
Standard Percentage
Moody's & Poor's of Total Investments
- --------------------------------------------------------------------------------
Aaa AAA 74.3%
Aa AA 8.9
A A 10.5
Baa BBB 5.1
NR NR 1.2
-----
100.0%
=====
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6 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited) August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
<S> <C> <C> <C>
Education -- 7.0%
$ 2,000,000 AAA Adelanto School District, Series B, FGIC-Insured,
zero coupon due 9/1/18 $ 677,500
California Educational Facilities Authority Revenue:
2,980,000 Aa3* Claremont University Center, Series B, 5.000% due 3/1/24 2,715,525
Pepperdine University, Series A:
1,775,000 A1* 5.000% due 11/1/18 1,637,437
1,500,000 A1* 5.000% due 11/1/29 1,338,750
6,125,000 Baa3* Pooled College & University Project, Series A, 5.500% due 7/1/15 5,956,562
Southwestern University Project:
2,635,000 A3* 6.600% due 11/1/14 2,849,094
4,505,000 A3* 6.700% due 11/1/24 4,848,506
2,500,000 A3* University of San Diego, 6.500% due 10/1/22 2,709,375
California State Public Works Board, Lease Revenue:
905,000 A+ High Technology Facility, San Jose Facilities,
Series A, 7.750% due 8/1/06 1,006,812
Various California State University Projects,
Series B:
3,085,000 A+ 5.400% due 9/1/13 3,100,425
3,245,000 A+ 5.450% due 9/1/14 3,253,112
2,425,000 A+ 5.500% due 9/1/15 2,431,062
1,400,000 A+ 5.550% due 9/1/16 1,401,750
1,400,000 AAA Eastside Unified High School District, Santa Clara County,
Series B, FGIC-Insured, 5.000% due 9/1/18 1,307,250
1,750,000 AAA Escondito Unified School District, Series A, FGIC-Insured,
5.125% due 9/1/15 1,704,062
10,000,000 AAA Fremont Unified School District, Alameda County, Series A,
FGIC-Insured, 4.750% due 8/1/20 8,800,000
1,250,000 AAA Lake Elsinore Unified School District, COP, MBIA-Insured,
4.750% due 2/1/20 1,101,562
2,300,000 AAA Rio Linda Unified School District, FSA-Insured, 5.250% due 8/1/17 2,242,500
1,250,000 AAA San Diego Community College District, Lease Revenue,
MBIA-Insured 6.125% due 12/1/16 1,389,063
1,530,000 AAA Santa Rosa High School District, FGIC-Insured, 5.900% due 5/1/14 1,591,200
5,580,000 AAA South Orange County Community College District, COP,
(Capital Improvement Refining Project), MBIA-Insured,
5.000% due 8/1/19 5,189,400
Standard School District, COP, (Capital Improvement Project), Series A:
320,000 A- 6.200% due 3/1/10 334,400
340,000 A- 6.250% due 3/1/11 354,450
4,500,000 A3* Ukiah Unified School District, COP, (Measure A Capital Projects),
6.000% due 9/1/10 4,719,375
2,600,000 AAA Victor Valley Unified High School District, MBIA-Insured,
5.750% due 11/1/17 2,648,750
1,000,000 AAA Windsor Unified School District, COP, (Capital Projects),
FSA-Insured, 5.200% due 6/1/18 960,000
2,500,000 Baa1* Yuba City Unified School District, COP, (Andors Karperos
School Construction Project), 6.700% due 2/1/13 2,637,500
- ------------------------------------------------------------------------------------------------------------------------------------
68,905,422
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 7
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
<S> <C> <C> <C>
Electric -- 0.6%
Sacramento Power Authority, Cogeneration Project Revenue:
$ 1,800,000 BBB- 6.500% due 7/1/07 $ 1,955,250
1,800,000 BBB- 6.500% due 7/1/08 1,953,000
2,200,000 BBB- 6.500% due 7/1/09 2,370,500
- ------------------------------------------------------------------------------------------------------------------------------------
6,278,750
- ------------------------------------------------------------------------------------------------------------------------------------
Escrowed to Maturity(b) -- 6.4%
270,000 AAA Contra Costa County Home Mortgage Revenue,
Mortgage Backed Securities Program,
GNMA-Collateralized, 7.750% due 5/1/22 337,500
100,000 AAA Kern High School District, Series C, MBIA-Insured, 8.750% due 8/1/03 116,125
125,000 AAA Martinez Home Mortgage Revenue Bonds, 10.750% due 2/1/16 186,250
3,325,000 AAA Perris Single-Family Mortgage Revenue, Series A,
Mortgage Backed Securities Program,
GNMA-Collateralized, 8.300% due 6/1/13(c) 4,152,094
6,000,000 AAA Pleasanton-Suisun City HFA, Home Mortgage, Series A,
MBIA-Insured, zero coupon due 10/1/16 2,287,500
Riverside County, Single-Family Mortgage Revenue,
Series A, Mortgage Backed Securities Program,
GNMA-Collateralized:
2,620,000 AAA 8.300% due 11/1/12(c) 3,291,375
1,000,000 AAA 7.800% due 5/1/21(c) 1,288,750
San Joaquin Hills California Transportation Corridor
Agency Toll Road Revenue:
5,000,000 AAA Zero coupon due 1/1/14(d) 2,293,750
60,000,000 AAA Zero coupon due 1/1/16(d) 24,300,000
17,500,000 AAA Zero coupon due 1/1/17(d) 6,671,875
25,000,000 AAA Zero coupon due 1/1/18(d) 8,968,750
20,000,000 AAA Zero coupon due 1/1/19(d) 6,775,000
810,000 AAA Santa Rosa Hospital Revenue, (Santa Rosa Hospital
Memorial Project), 10.300% due 3/1/11 1,068,188
1,250,000 BBB Sequoia Hospital District Revenue, 5.375% due 8/15/23 1,210,938
- ------------------------------------------------------------------------------------------------------------------------------------
62,948,095
- ------------------------------------------------------------------------------------------------------------------------------------
General Obligation -- 6.9%
California State GO:
30,000,000 AAA AMBAC-Insured, 5.000% due 10/1/18 28,012,500
Veterans Series:
455,000 AA- Series AL, 9.700% due 4/1/02 515,856
725,000 AA- Series AM, 9.000% due 10/1/02 825,594
Series AT:
4,000,000 AA- 9.700% due 2/1/01(d) 4,310,000
1,000,000 AA- 9.500% due 2/1/10 1,356,250
2,000,000 AA- Series AU, 8.400% due 10/1/06 2,455,000
5,000,000 AAA 4.750% due 2/1/29 4,256,250
4,720,000 AAA Pasadena Unified School District, Series A, FGIC-Insured,
5.000% due 5/1/20 4,360,100
1,000,000 Aa1* San Diego Public Safety Communication Project, 6.650% due 7/15/11 1,140,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
<S> <C> <C> <C>
General Obligation -- 6.9% (continued)
Santa Margarita/Dana Point Authority Revenue, GO:
$20,000,000 AAA Series A, AMBAC-Insured, 5.125% due 8/1/18 $19,025,000
1,500,000 AAA Water Improvement Districts 3-3A-4 & 4A, Series B,
MBIA-Insured, 7.250% due 8/1/14 1,803,750
- ------------------------------------------------------------------------------------------------------------------------------------
68,060,300
- ------------------------------------------------------------------------------------------------------------------------------------
Hospitals -- 12.8%
1,500,000 AA- ABAG Finance Authority for Nonprofit Corps., COP,
(Rehabilitation Mental Health Services Inc. Project),
California Mortgage Insured, 6.550% due 6/1/22 1,576,875
225,000 AA- California Health Facilities Authority Revenue, Victory Valley
Community Hospital, Series 84-A, 9.875% due 7/1/12 225,900
California Health Facilities Financing Authority Revenue:
AMBAC-Insured:
2,500,000 AAA Catholic Health Facilties, 5.750% due 7/1/15 2,559,375
5,620,000 AAA Catholic Healthcare West, Series E, 5.250% due 7/1/16 5,479,500
Industrial Health Facilities:
705,000 AA- Casa De Las Campanas, Series A, 5.500% due 8/1/12 704,119
2,500,000 AA- Marshall Hospital, Series A, 5.250% due 11/1/18 2,371,875
1,000,000 AAA Scripps Health, Series C, MBIA-Insured, 5.000% due 10/1/14 962,500
Kaiser Permanente:
3,500,000 AAA Series A, FSA-Insured, 5.000% due 6/1/18 3,250,625
Series B:
5,000,000 A 5.250% due 10/1/14 4,775,000
5,000,000 A 5.250% due 10/1/16 4,700,000
17,500,000 A 5.000% due 10/1/18 15,618,750
Series A, MBIA-Insured:
Catholic Healthcare West:
2,000,000 AAA 5.000% due 7/1/17 1,872,500
3,000,000 AAA 5.125% due 7/1/24 2,763,750
2,000,000 AAA Cedars-Sinai Center, 5.125% due 8/1/17 1,910,000
5,145,000 AAA Stanford Health Care, Series A, 5.000% due 11/15/18 4,771,987
Sutter Health:
Series A, FSA-Insured:
1,470,000 AAA 5.125% due 8/15/17 1,403,850
1,500,000 AAA 5.250% due 8/15/27 1,402,500
Series A, MBIA-Insured:
3,000,000 AAA 5.000% due 8/15/18 2,786,250
2,000,000 AAA 5.000% due 8/15/19 1,847,500
California Statewide Community Development Authority Revenue, COP:
4,515,000 AAA Industrial Health Facilities, Unihealth, Series A,
AMBAC-Insured, 5.500% due 10/1/07(d) 4,746,394
19,000,000 A Kaiser Permanente, 5.300% due 12/1/15 18,073,750
1,100,000 AA- Solheim Lutheran Home, 6.500% due 11/1/17 1,170,125
St. Joseph's Health System:
4,825,000 AA 5.500% due 7/1/14 4,825,000
4,000,000 AA 5.250% due 7/1/21 3,710,000
6,000,000 AA 6.625% due 7/1/21 6,690,000
Sutter Health Obligated Group, MBIA-Insured:
3,500,000 AAA 5.500% due 8/15/09 3,618,125
500,000 AAA 6.000% due 8/15/25 515,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 9
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
<S> <C> <C> <C>
Hospitals -- 12.8% (continued)
Fresno Health Facilities Revenue, Holy Cross Health System Corp.:
$ 2,200,000 AA 5.200% due 12/1/04 $ 2,241,250
2,435,000 AA 5.375% due 12/1/06 2,486,744
1,000,000 AAA Modesto Health Facilities Revenue, Memorial Hospital
Association, Series B, MBIA-Insured, 5.125% due 6/1/17 955,000
2,000,000 A Riverside County Asset Leasing Corp., (Riverside County
Hospital Project), Series A, 6.375% due 6/1/09 2,115,000
2,750,000 A2* San Joaquin County COP, (General Hospital Project 1993),
6.250% due 9/1/13 2,994,063
9,260,000 A Torrance Hospital Revenue Bonds, Little County of Mary Hospital,
6.875% due 7/1/15(d) 9,989,225
1,500,000 NR Valley Health System, COP, 6.875% due 5/15/23 1,539,375
- ------------------------------------------------------------------------------------------------------------------------------------
126,651,907
- ------------------------------------------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 2.2%
1,250,000 AAA ABAG, Series 96A, FNMA-Collateralized,
5.700% due 11/1/26(d) 1,273,437
California HFA:
570,000 Aa2* Home Mortgage Revenue, Series F-1, 7.000% due 8/1/26(c) 588,525
1,595,000 Aa2* Series A, 6.625% due 2/1/24(c) 1,648,831
480,000 AAA Series C, MBIA-Insured, 7.000% due 8/1/23(c) 499,200
6,000,000 AAA California Statewide Community Development Authority, COP,
St. Joseph's Health System Group, Series E, FNMA-Collateralized,
6.400% due 6/1/28(c)(d) 6,195,000
2,250,000 AA- California State Department of Veterans Affairs, Series B,
5.500% due 12/1/18(c) 2,210,625
1,645,000 NR Hayward Housing Authority Revenue, FNMA-Collateralized,
Family Revenue, Cypress Gardens, Series C, 9.375% due 12/1/18 1,758,094
1,740,000 AAA Riverside County Housing Authority, Multi-Family Housing Revenue,
Brandon Place Apartments, Series B, FNMA-Collateralized,
5.625% due 7/1/29(c) 1,763,925
665,000 AAA San Francisco City & County Redevelopment, Multi-Family Housing
Revenue, 1045 Mission Apartments, Series C, GNMA- Collateralized,
5.200% due 12/20/17(c) 635,075
1,500,000 Aa2* San Jose Multi-Family Timberwood Apartments, Series A, LOC -
Wells Fargo Bank, 7.500% due 2/1/20 1,507,500
1,320,000 AAA Santa Rosa Mortgage Revenue, (Village Square Apartments Project),
Series A, FHA-Insured, 6.875% due 9/1/27 1,399,200
2,755,000 AAA Victorville Multi-Family Housing Revenue, Wimbledon Apartments,
Series A, GNMA-Collateralized, 6.300% due 4/20/31(d) 2,823,875
- ------------------------------------------------------------------------------------------------------------------------------------
22,303,287
- ------------------------------------------------------------------------------------------------------------------------------------
Housing: Single-Family -- 2.8%
California HFA Revenue Bonds, Home Mortgage:
Capital Appreciation:
350,000 Aa2* Series 1983-B, zero coupon due 8/1/15 69,562
310,000 Aa2* Series 1984-B, zero coupon due 8/1/16 46,832
5,225,000 Aa2* Remarketed 10/16/96, Series E, 6.375% due 8/1/27(c) 5,381,750
3,000,000 AAA Series B, AMBAC-Insured, 5.150% due 2/1/18(c) 2,827,500
6,000,000 AAA Series Q, AMBAC-Insured, 5.050% due 8/1/17 5,685,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
<S> <C> <C> <C>
Housing: Single-Family -- 2.8% (continued)
Single-Family Mortgage:
$ 7,260,000 AAA Issue A-2, FHA-Insured, 6.350% due 8/1/15(c)(d) $ 7,486,875
3,590,000 AAA Series B-3, Class II, MBIA-Insured, 5.375% due 8/1/21 3,414,987
10,000 Aa2* 10.250% due 2/1/14 10,011
Los Angeles Home Mortgage Revenue Bonds, GNMA-Collateralized:
585,000 Aaa* Second Mortgage Project, 8.100% due 5/1/17 610,594
375,000 AAA Single-Family Mortgage Revenue, Mortgage Backed Securities
Program, Issue A, 7.550% due 12/1/23(c) 385,133
1,500,000 AAA Sacramento County Single-Family Mortgage Revenue, Issue A,
GNMA-Collateralized, (Escrowed to maturity with U.S.
government securities), 8.125% due 7/1/16(b)(c) 1,897,500
95,000 AA+ San Francisco City & County Single-Family Mortgage Revenue,
GNMA/FNMA-Collateralized, 7.450% due 1/1/24(b)(c) 97,723
110,000 AAA Southern California HFA, Single-Family Mortgage Revenue,
GNMA/FNMA-Collateralized, Series B, 7.750% due 3/1/24(c) 113,609
- ------------------------------------------------------------------------------------------------------------------------------------
28,027,076
- ------------------------------------------------------------------------------------------------------------------------------------
Miscellaneous -- 18.9%
500,000 A3* ABAG Finance Authority Nonprofit Corps., COP, Peninsula Family,
YMCA, Series A, 6.800% due 10/1/11 536,875
2,500,000 NR Alhambra, Arcadia, Azusa Counties, Independent Cities
Risk Management Authority, COP, 7.250% due 3/1/07 2,522,850
2,000,000 AAA Anaheim COP, Regular Fixed Option Bonds, MBIA-Insured,
6.200% due 7/16/23 2,110,000
1,025,000 Baa* Azusa COP, (Capital Improvements Refinancing Project),
6.625% due 8/1/13 1,076,250
California Public Capital Improvements Finance Authority
Revenue, (Pooled Project):
750,000 NR Series A, 8.500% due 3/1/18 770,310
555,000 AAA Series B, BIG-Insured, 8.100% due 3/1/18 562,354
5,000,000 AAA California State University Headquarters Building Authority,
Series B, MBIA-Insured, 5.125% due 9/1/17 4,806,250
2,500,000 AAA California State Public Works Board, Lease Revenue,
Department of Corrections, Series B, MBIA-Insured,
5.000% due 9/1/21
Contra Costa County COP, (Capital Projects), AMBAC-Insured: 2,296,875
4,630,000 AAA 5.250% due 2/1/17 4,514,250
3,000,000 AAA 5.250% due 2/1/21 2,861,250
Corona, PFA Revenue, Superior Lien, Series A, FSA-Insured:
830,000 AAA 4.900% due 9/1/14 787,462
2,500,000 AAA 5.000% due 9/1/20 2,306,250
3,680,000 AAA Fontana COP, AMBAC-Insured, 5.000% due 9/1/21 3,381,000
Fresno Joint Powers Financing Authority, Local Agency
Revenue, Series A:
1,300,000 BBB 6.000% due 9/2/01 1,326,000
1,000,000 BBB 6.200% due 9/2/03 1,040,000
1,500,000 BBB 6.550% due 9/2/12 1,582,500
Inglewood, PFA Revenue, Series A, AMBAC-Insured:
1,845,000 AAA 5.625% due 8/1/16 1,877,287
1,940,000 AAA 5.625% due 8/1/17 1,966,675
2,055,000 AAA 5.625% due 8/1/18 2,075,550
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
<S> <C> <C> <C>
Miscellaneous -- 18.9% (continued)
Long Beach Board Finance Authority Lease Revenue:
$ 5,000,000 AAA Civic Center Project, Series A, MBIA-Insured,
5.000% due 10/1/17 $ 4,706,250
3,000,000 AAA Rainbow Harbor Refining Project, Series A, AMBAC-
Insured, 5.250% due 5/1/24 2,842,500
14,900,000 AAA Los Angeles California Parking Revenue, Series A,
4.750% due 5/1/24 12,869,875
3,250,000 AAA Los Angeles County Community Facilities, District No. 3,
Special Tax Refunding, Series A, FSA-Insured, 5.500% due 9/1/14 3,294,688
Los Angeles County COP:
2,000,000 Baa1* Special Linked SAVRS & RIBS, 6.708% due 6/1/15 2,120,000
1,000,000 BBB Structured Yield Curve Note, 6.600% due 11/1/11 1,070,000
Los Angeles County Public Works Financing Authority Revenue:
7,500,000 AA Regional Park & Open Space District, Series A,
5.000% due 10/1/19 6,937,500
3,500,000 AAA Multiple Capital Facilities Project, Series B, AMBAC-
Insured, 5.125% due 12/1/29 3,215,625
Marin Emergency Radio & Public Safety Revenue Authority,
AMBAC-Insured:
1,750,000 AAA 4.750% due 8/15/18 1,564,063
2,000,000 AAA 4.750% due 8/15/21 1,750,000
Oakland:
735,000 AAA Lease Revenue, COP, AMBAC-Insured, 4.750% due 6/1/19 653,231
State Building Authority Lease Revenue, Elihu M Harris,
Series A, AMBAC-Insured:
6,715,000 AAA 5.000% due 4/1/16 6,387,644
2,725,000 AAA 5.000% due 4/1/17 2,568,313
2,670,000 AAA Ontario Redevelopment Finance Authority Revenue,
(Project No. 1), MBIA-Insured, (Escrowed to maturity with
U.S. government securities), 5.800% due 8/1/23 (b) 2,776,800
1,455,000 AAA Placer County, CA Juvenile Detention Facilities, MBIA-Insured,
5.000% due 7/1/18 1,358,606
895,000 Baa1* Pleasanton Joint Powers Financing Authority Revenue,
Series A, 6.150% due 9/2/12 936,394
Sacramento County COP, (Public Facilities Project):
14,495,000 AAA AMBAC-Insured, 4.750% due 10/1/17 13,081,738
4,700,000 AAA Solid Waste Facilities, MBIA-Insured, 5.250% due 12/1/16 4,606,000
2,800,000 AAA Salida Area Public Financing Agency Community Facilities District,
Special Tax No. 1988-1, FSA-Insured, 5.250% due 9/1/18 2,705,500
2,000,000 AAA San Bernadino COP, (Capital Facilities Project), Series B,
(Escrowed to maturity with U.S. government securities),
6.875% due 8/1/24 (b) 2,377,500
5,000,000 AAA San Diego Special Tax Facilities, Community District No. 1,
MBIA-Insured, 4.750% due 9/1/20 4,400,000
San Diego County COP:
9,000,000 AAA Central Jail Refunding, AMBAC-Insured, 5.000% due 10/1/25 8,156,250
1,000,000 AAA Regular Fixed Option Certificates, MBIA-Insured,
6.363% due 11/18/19 1,042,500
135,000 A3* San Francisco Downtown Parking, Corporate Parking
Revenue Bonds, 6.250% due 4/1/04 145,125
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
<S> <C> <C> <C>
Miscellaneous -- 18.9% (continued)
$13,015,000 AAA San Francisco City & County Redevelopment Agency,
Hotel Tax Revenue, FSA-Insured, 5.000% due 7/1/18 $ 12,152,756
4,310,000 Aaa* San Marcos Public Facilities Authority, Public Facilities Revenue,
(Escrowed to maturity with U.S. government securities),
zero coupon due 1/1/19 (b) 1,449,238
5,995,000 AAA San Ramone COP, (Central Park Project), FSA-Insured,
5.000% due 8/1/24 5,455,450
2,875,000 AAA Santa Ana Financing Authority Lease Revenue, Police
Administrattion & Holding Facility, Series A, MBIA-Insured,
6.250% due 7/1/24 3,151,719
3,460,000 A+ Santa Barbara County COP, 5.700% due 3/1/11 3,559,475
7,180,000 AAA Santa Maria Redevelopment Agency, Town Center Package,
FSA-Insured, 5.000% due 6/1/16 6,829,975
2,795,000 AAA Solano County COP, (Capital Improvement Project),
5.000% due 11/15/19 2,595,856
Sonoma County COP, Detention Facilities Improvement Project:
4,200,000 A+ 5.000% due 11/15/13 4,058,250
3,000,000 A+ 5.000% due 11/15/17 2,790,000
2,000,000 AAA South Orange County Public Finance Authority, Special Tax
Revenue, Series A, MBIA-Insured, 7.000% due 9/1/10 2,332,500
1,100,000 AAA Sunnyvale COP, Parking Facilities, Series A,
AMBAC-Insured, 5.000% due 10/1/17 1,035,375
10,000,000 BBB- Virgin Islands Public Financing Authority Revenue, Series A,
5.500% due 10/1/18 9,575,000
2,000,000 AAA Vista Community Development, Tax Allocation Revenue,
Vista Redevelopment Project Area, MBIA-Insured,
5.250% due 9/1/15 1,975,000
- ------------------------------------------------------------------------------------------------------------------------------------
186,926,684
- ------------------------------------------------------------------------------------------------------------------------------------
Pollution Control Revenue -- 1.1%
California Financing Authority:
2,500,000 AA- Pacific Gas & Electric Co., Series B, 6.350% due 6/1/09(c) 2,662,500
500,000 BBB Resource Recovery Revenue, Waste Management Income,
Series A, 7.150% due 2/1/11(c) 521,250
San Diego Gas & Electric, Series A:
5,800,000 A+ 5.900% due 6/1/14(d) 6,148,000
1,500,000 AA- 6.800% due 6/1/15(c) 1,708,125
- ------------------------------------------------------------------------------------------------------------------------------------
11,039,875
- ------------------------------------------------------------------------------------------------------------------------------------
Pre-Refunded(e) -- 3.4%
California Health Facilities Financing Authority Revenue:
115,000 Aa1* Community Provider Pooled Loan Project, Series A,
(Call 6/1/00 @ 102), 7.350% due 6/1/20 120,441
1,250,000 NR South Coast Medical Center, (Call 7/1/00 @ 102),
7.250% due 7/1/15 1,311,387
1,450,000 NR St. Elizabeth Hospital, (Call 11/15/02 @ 102),
6.200% due 11/15/09 1,562,375
California Public Works Board Lease Revenue, Series A:
2,000,000 AAA California State University Project, (Call 10/1/02 @ 102),
6.700% due 10/1/17 2,182,500
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 13
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
<S> <C> <C> <C>
Pre-Refunded(e) -- 3.4% (continued)
$ 1,000,000 AAA Department of Corrections State Prison, Series A,
(Call 9/1/00 @ 102), 7.000% due 9/1/09 $ 1,053,540
1,405,000 AAA Contra Costa County COP, Merrithew Memorial Hospital,
(Call 11/1/02 @ 102), 6.500% due 11/1/06 1,527,937
1,500,000 AAA Desert Hospital District, COP, (Call 7/1/00 @ 102),
8.100% due 7/1/20 1,585,230
1,000,000 AA Fresno Health Facilities Revenue, Holy Cross Health System,
St. Agnes, (Call 6/1/02 @ 102), 6.625% due 6/1/21 1,081,250
1,000,000 NR Inglewood Insured Hospital Revenue Bonds, Daniel Freeman
Hospital Inc., (Call 5/1/01 @ 102), 6.750% due 5/1/13 1,062,500
450,000 AAA Los Angeles Convention & Exhibition Center Authority,
(Call 12/1/05 @ 100), 9.000% due 12/1/20 558,562
1,950,000 Aa3* Los Angeles Department of Water & Power, Electric Plantation
Revenue, (Call 1/15/01 @ 102), 7.100% due 1/15/31 2,059,687
Mojave Water Agency, Improvement District, Morongo Basin,
(Call 9/1/02 @ 102):
1,500,000 AAA 6.600% due 9/1/13 1,631,250
5,510,000 AAA 6.600% due 9/1/22 5,992,125
750,000 A- Northern California Power Agency, Public Power Revenue, (Geothermal
Project No. 3), Series A, (Call 7/1/08 @ 100), 5.000% due 7/1/09 760,313
500,000 AAA Oceanside COP, AMBAC-Insured, (Call 8/1/02 @ 102),
7.300% due 8/1/21 551,875
1,000,000 NR Orange County Community Facility District, Special Tax, Series A,
(Call 8/15/00 @ 102), 7.800% due 8/15/15 1,058,960
1,000,000 A2* Rancho Mirage COP, Eisenhower Memorial Hospital, Joint Powers
Financing Authority, (Call 3/1/02 @ 102), 7.000% due 3/1/22 1,085,000
2,000,000 AAA Rancho Water District Financing Authority Revenue, Regular
Fixed Option Bonds, AMBAC-Insured, (Call 9/11/01 @ 102),
6.427% due 8/17/21 2,117,500
1,000,000 AAA San Buenaventura COP, AMBAC-Insured, (Call 10/1/00 @ 102),
7.500% due 10/1/20 1,061,500
3,460,000 AAA San Diego Community College District, Lease Revenue,
MBIA-Insured, (Call 12/1/06 @ 102), 5.250% due 12/1/21 3,658,950
1,300,000 AAA Yolo County Flood Control & Water Conservation District, COP,
FGIC-Insured, (Call 7/15/03 @ 100), 7.125% due 7/15/15 1,433,250
- ------------------------------------------------------------------------------------------------------------------------------------
33,456,132
- ------------------------------------------------------------------------------------------------------------------------------------
Solid Waste -- 1.7%
2,770,000 AAA Fresno County Finance Authority, Solid Waste Revenue Bonds,
American Avenue Landfill, MBIA-Insured, 5.750% due 5/15/14 2,853,100
Inland Empire Solid Waste Authority Revenue, FSA-Insured:
5,000,000 AAA 6.250% due 8/1/11(c) 5,400,000
2,500,000 AAA 6.000% due 8/1/16(c) 2,593,750
470,000 BBB Kings County Waste Management Authority, Solid Waste Revenue,
7.200% due 10/1/14(c) 516,412
1,000,000 BB Nevada County COP, 7.500% due 6/1/21 1,047,500
4,135,000 Baa1* South Napa Waste Management Authority Revenue, (Solid Waste
Transfer Facilities Project), 6.500% due 2/15/14(c) 4,305,569
- ------------------------------------------------------------------------------------------------------------------------------------
16,716,331
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
<S> <C> <C> <C>
Tax Allocation -- 4.5%
$ 2,000,000 AAA Anaheim Public Finance Authority, Tax Allocation Revenue,
Regular Fixed Option Bonds, MBIA-Insured,
6.450% due 12/28/18 $ 2,167,500
1,000,000 Baa3* Azusa Redevelopment Agency, Tax Allocation, Merged Project Area,
Series A, 6.750% due 8/1/23 1,047,500
1,200,000 AAA Bay Area Government Assessment, Tax Allocation,
Redevelopment Agency Pool, Series A-6, FSA-Insured,
5.250% due 12/15/17 1,170,000
295,000 AAA Brea Public Finance Authority, Tax Allocation, MBIA-Insured,
7.000% due 8/1/15 313,806
Brisbane Redevelopment Agency, Tax Allocation,
(Brisbane Community Redevelopment Project):
200,000 AA 9.400% due 5/1/05 202,598
220,000 AA 9.400% due 5/1/06 222,803
30,000 AAA Concord Redevelopment Agency, Tax Allocation, Series 3,
MBIA-Insured, 8.000% due 7/1/18 30,663
6,000,000 AAA Corona Redevelopment Agency, Tax Allocation, Redevelopment
Project Area A, Series A, FGIC-Insured, 5.500% due 9/1/24 5,902,500
1,000,000 AAA El Centro Redevelopment Tax Allocation, MBIA-Insured,
6.375% due 11/1/17 1,082,500
4,160,000 AAA Fontana Public Finance Authority, Tax Allocation, MBIA-Insured,
Series A, 5.000% due 9/1/20 3,837,600
3,275,000 BBB+ Garden Grove Community Development Agency, Tax Allocation,
(Garden Grove Community Project), 5.700% due 10/1/08 3,340,500
2,000,000 Baa* Hawthorne Community Redevelopment, Tax Allocation,
(Project Area 2), 6.625% due 9/1/14 2,107,500
1,000,000 AAA Irwindale Community Redevelopment Agency, Tax Allocation,
(City Industrial Development Project), FSA-Insured,
5.000% due 8/1/17 941,250
Rancho Cucamonga Redevelopment, Tax Allocation, (Rancho
Redevelopment Project):
2,445,000 AAA MBIA-Insured, 5.250% due 9/1/16 2,383,875
4,000,000 AAA FSA-Insured, 5.250% due 9/1/20 3,805,000
San Diego Redevelopment, Tax Allocation, (Centre City
Redevelopment Project), AMBAC-Insured:
2,220,000 AAA Series A, 4.750% due 9/1/18 1,984,125
Series C:
1,000,000 AAA 4.750% due 9/1/18 893,750
2,000,000 AAA 4.750% due 9/1/24 1,727,500
3,000,000 AAA San Jose Redevelopment Agency, Tax Allocation,
(Merged Area Redevelopment Project), AMBAC-Insured,
4.750% due 8/1/23 2,602,500
Santa Clara Redevelopment Agency, Tax Allocation,
(Bayshore North Project), AMBAC-Insured:
4,595,000 AAA Series A, 5.250% due 6/1/19 4,422,688
Series B:
2,005,000 AAA 5.375% due 6/1/16 1,992,469
2,320,000 AAA 5.500% due 6/1/17 2,328,700
- ------------------------------------------------------------------------------------------------------------------------------------
44,507,327
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 15
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
<S> <C> <C> <C>
Transportation -- 6.5%
Alameda Corridor Transportation Authority, Revenue,
Series A, MBIA-Insured:
$ 8,000,000 AAA 4.750% due 10/1/19 $ 7,110,000
17,675,000 AAA 4.750% due 10/1/25 15,200,500
6,675,000 AAA Foothill/Eastern Corridor Agency, California Toll Road
Revenue, MBIA-Insured, 5.125% due 1/15/19 6,316,219
10,105,000 AAA Los Angeles County Metropolitan Transportation Authority,
Sales Tax Revenue, Proposal A, 1st Tier, Series C,
5.000% due 7/1/23 9,220,813
2,000,000 BBB+ Port of Oakland Special Facilities Revenue, Series A,
6.750% due 1/1/12(c) 2,100,000
9,000,000 AAA Sacramento County Airport System Revenue, Series A,
MBIA-Insured, 5.900% due 7/1/24(c)(d) 9,213,750
400,000 A1* Sacramento Regional Transportation District, COP,
Series A, 6.400% due 3/1/03 427,500
3,000,000 AAA San Francisco Airport Community International Corp.,
Lease Revenue, FGIC-Insured, 6.500% due 5/1/19(c) 3,210,000
180,000 AAA San Francisco Airport Improvement Corp., Lease Revenue,
(Escrowed to maturity with U.S. government securities),
8.000% due 7/1/13 (b) 212,400
10,000,000 AAA San Francisco Bay Area Rapid Transportation District Sales Tax,
AMBAC-Insured, 4.750% due 7/1/23 8,675,000
San Jose Airport Revenue Bonds, FGIC-Insured:
200,000 AAA 5.400% due 3/1/04(c) 207,250
1,500,000 AAA 5.500% due 3/1/07(c) 1,554,375
1,250,000 A* Santa Barbara COP, (Harbor Reference Project),
6.750% due 10/1/27 1,326,563
- ------------------------------------------------------------------------------------------------------------------------------------
64,774,370
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities -- 4.8%
Northern California Power Agency, Public Power Refunding:
360,000 A- Geothermal Project No. 3, Series A, 5.000% due 7/1/09 359,100
Hydroelectric Project No. 1, Series A, MBIA-Insured:
5,000,000 AAA 5.000% due 7/1/17 4,706,250
3,920,000 AAA 5.000% due 7/1/18 3,660,300
2,000,000 AAA Redding Electric System Revenue, COP, Regular Linked
SAVRS & RIBS, MBIA-Insured, 6.368% due 7/8/22 2,167,500
2,670,000 AAA Redding Joint Powers Finance Authority, Electric System
Revenue, Series D, MBIA-Insured, 5.250% due 6/1/15 2,636,625
5,000,000 AAA Riverside Electrical Revenue, AMBAC-Insured,
5.000% due 10/1/22 4,575,000
Sacramento Municipal Utility District Electric Revenue:
Series D:
4,000,000 AAA FGIC-Insured, 5.250% due 11/15/12 4,020,000
4,500,000 AAA MBIA-Insured, 5.250% due 11/15/20 4,303,125
3,000,000 A Series E, 5.700% due 5/15/12 3,078,750
5,425,000 AAA Series I, MBIA-Insured, 5.750% due 1/1/15 5,547,063
3,000,000 AAA Series L, MBIA-Insured, 5.200% due 7/1/17 2,910,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
<S> <C> <C> <C>
Utilities -- 4.8% (continued)
Southern California Public Power Authority:
$ 5,000,000 AAA Power Project Revenue, (Mead Adelanto Project),
Series A, AMBAC-Insured, 5.000% due 7/1/17 $ 4,706,250
3,000,000 AAA Transmission Project Revenue, MBIA-Insured, 5.750% due 7/1/21 3,018,750
1,960,000 BBB- Trinity County Public Utility District, COP, Electric District Facilities,
6.750% due 4/1/23(c) 2,028,600
- ------------------------------------------------------------------------------------------------------------------------------------
47,717,313
- ------------------------------------------------------------------------------------------------------------------------------------
Water and Sewer -- 20.4%
8,000,000 AAA Arcade Water District Revenue, COP, FGIC-Insured,
5.000% due 11/1/17 7,530,000
California State Department of Water, Central Valley Project Revenue:
Series O:
1,000,000 AA 5.000% due 12/1/22 915,000
2,235,000 AA 4.750% due 12/1/25 1,919,306
5,000,000 AA Series S, 5.000% due 12/1/19 4,643,750
6,500,000 AAA Calleguas-Las Virgines Public Financing Authority, Municipal
Water District, FSA-Insured, 5.000% due 11/1/17 6,118,125
7,115,000 AAA Castaic Lake Water Revenue, COP, (Water System Improvement
Project), AMBAC-Insured, 5.125% due 8/1/30 6,510,225
East Bay Municipal Utility District, FGIC-Insured:
9,300,000 AAA Wastewater Treatment Systems Revenue, 5.000% due 6/1/26 8,416,500
Water Systems Revenue:
7,500,000 AAA 5.000% due 6/1/15 7,209,375
1,750,000 AAA 5.000% due 6/1/16 1,664,687
5,000,000 AAA 4.750% due 6/1/21 4,375,000
8,400,000 AAA 5.000% due 6/1/26 7,602,000
Eastern Municipal Water District, COP, Water & Sewer Revenue,
Series A:
FGIC-Insured:
1,000,000 AAA 6.750% due 7/1/12 1,151,250
1,000,000 AAA 5.375% due 7/1/13 1,012,500
17,750,000 AAA MBIA-Insured, 5.250% due 7/1/23 16,840,312
El Centro Financing Authority, Water & Wastewater Revenue,
Series A, AMBAC-Insured:
1,500,000 AAA 5.125% due 10/1/17 1,441,875
1,900,000 AAA 5.125% due 10/1/27 1,750,375
Fresno Sewer Revenue, Series A, MBIA-Insured:
18,150,000 AAA 5.000% due 9/1/23 16,561,875
6,400,000 AAA 4.750% due 9/1/26 5,480,000
200,000 AA Los Angeles COP, 6.600% due 11/1/99 200,984
Los Angeles Wastewater System Revenue, Series A:
10,000,000 AAA FGIC-Insured, 5.000% due 6/1/28 9,012,500
2,430,000 AAA MBIA-Insured, 5.700% due 6/1/09 2,554,538
Metropolitan Water District, Southern California Waterworks Revenue:
12,430,000 AAA Series A, MBIA-Insured, 5.000% due 7/1/30 11,171,463
4,500,000 AA Series C, 5.250% due 7/1/16 4,410,000
Modesto Irrigation District Financing Authority Revenue:
3,860,000 A+ COP, Capital Improvement, Series B, 5.300% due 7/1/22 3,686,300
5,000,000 AAA Series A, MBIA-Insured, 6.000% due 10/1/15 5,300,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 17
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (unaudited)(continued) August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================================================
<S> <C> <C> <C>
Water and Sewer -- 20.4% (continued)
$ 1,925,000 AAA Morgan Hill COP, FSA-Insured, 5.125% due 6/1/21 $ 1,802,281
6,045,000 AAA Orange Cove Irrigation District Revenue, COP, (Rehabilitation Project),
AMBAC-Insured, 5.000% due 2/1/17 5,697,413
1,875,000 AAA Palmdale Water District Revenue, COP, FGIC-Insured,
5.000% due 10/1/18 1,750,781
4,560,000 AAA Pittsburg Public Finance Authority, Wastewater Revenue,
Series A, FGIC-Insured, 5.375% due 6/1/22 4,457,400
Pomona Public Financing Authority:
2,855,000 AAA Series Q, MBIA-Insured, 5.750% due 12/1/15 2,937,081
2,900,000 AAA Water Facilities Project, Series AA, 5.000% due 5/1/29 2,610,000
1,845,000 AAA Redlands, Financing Authority, Waste Water Revenue,
Series A, FSA-Insured, 5.000% due 9/1/17 1,736,606
San Diego PFA Sewer Revenue, FGIC-Insured:
3,885,000 AAA Series B, 4.750% due 5/15/17 3,511,069
28,875,000 AAA 5.000% due 5/15/20 26,673,281
15,000,000 AA- San Francisco Public Utility, Community Water Revenue,
5.000% due 11/1/26 13,462,500
- ------------------------------------------------------------------------------------------------------------------------------------
202,116,352
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $976,369,830**) $990,429,221
====================================================================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service with the exception of
those identified by an asterisk (*), which are rated by Moody's Investors
Service, Inc.
(b) Bonds are escrowed to maturity with U.S. government securites and are
considered by the Manager to be triple-A rated even if issuer has not
applied for new ratings.
(c) Income from this issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(d) Security partially segregated by Custodian for open purchase commitments
and/or futures contracts commitments.
(e) Bonds are escrowed with U.S government securities and are considered by
the Manager to be triple-A rated even if issuer had not applied for new
ratings.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 19 and 20 for definition of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
18 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Bond Ratings (unaudited)
- --------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Rating Services ("Standard & Poor's") -- Ratings from "AA" to
"BB" may be modified by the addition of a plus (+) or minus (-) sign to show
relative standings within the major rating categories.
AAA -- Bonds rated "AAA"' have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in a
small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
bonds in higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debts in this
category than in higher rated categories.
BB -- Bonds rated "BB" have less near-term vulnerability to default
than other speculative issues. However, they face major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions which could lead to inadequate capacity to meet
timely interest and principal payments.
Moody's Investors Services, Inc. ("Moody's") -- Numerical modifiers 1, 2, and 3
may be applied to each generic rating from "Aa" to "Baa", where 1 is the highest
and 3 the lowest rating within its generic category.
Aaa -- Bonds rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin, and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of these bonds.
Aa -- Bonds rated "Aa" are judged to be of high quality by all
standards. Together with the "Aaa" group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
"Aaa" securities or fluctuation of protective elements may be of
greater amplitude, or there may be other elements present that make
the long-term risks appear somewhat larger than in "Aaa" securities.
A -- Bonds rated "A" possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present that suggest a susceptibility to
impairment some time in the future.
Baa -- Bonds rated "Baa" are considered to be medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payment and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
NR -- Indicates that the bond is not rated by Standard & Poor's or
Moody's.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 19
<PAGE>
- --------------------------------------------------------------------------------
Short-Term Security Ratings (unaudited)
- --------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate
demand obligation ("VRDO") rating indicating that the degree of
safety regarding timely payment is either overwhelming or very
strong; those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to
the advent of the VMIG 1 rating.
- --------------------------------------------------------------------------------
Security Descriptions (unaudited)
- --------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governments
AIG -- American International Guaranty
AMBAC -- AMBAC Indemnity Corporation
BAN -- Bond Anticipation Notes
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
CHFCLI -- California Health Facility Construction Loan Insurance
CONNIE LEE -- College Construction Loan Insurance Association
COP -- Certificate of Participation
EDA -- Economic Development Authority
ETM -- Escrowed To Maturity
FAIRS -- Floating Adjustable Interest Rate Securities
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRTC -- Floating Rate Trust Certificates
FSA -- Federal Savings Association
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HDC -- Housing Development Corporation
HFA -- Housing Finance Authority
IDA -- Industrial Development Agency
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
ISD -- Independent School District
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
PFA -- Public Financing Authority
PSFG -- Permanent School Fund Guaranty
RAN -- Revenue Anticipation Notes
RIBS -- Residual Interest Bonds
SAVRS -- Select Auction Variable Rate Securities
TAN -- Tax Anticipation Notes
TECP -- Tax Exempt Commercial Paper
TOB -- Tender Option Bonds
TRAN -- Tax and Revenue Anticipation Notes
SYCC -- Structured Yield Curve Certificate
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday Demand
- --------------------------------------------------------------------------------
20 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) August 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $976,369,830) $ 990,429,221
Interest receivable 14,538,540
Receivable for Fund shares sold 238,259
Receivable for securities sold 2,470,000
Other assets 10,168
- ----------------------------------------------------------------------------------------
Total Assets 1,007,686,188
- ----------------------------------------------------------------------------------------
LIABILITIES:
Payable for securities purchased 9,145,372
Payable to bank 2,883,059
Investment advisory fees payable 381,366
Administration fees payable 65,719
Distribution fees payable 64,029
Payable for Fund shares purchased 2,000
Accrued expenses 198,002
- ----------------------------------------------------------------------------------------
Total Liabilities 12,739,547
- ----------------------------------------------------------------------------------------
Total Net Assets $ 994,946,641
========================================================================================
NET ASSETS:
Par value of capital shares $ 62,739
Capital paid in excess of par value 988,605,516
Overdistributed net investment income (742,530)
Accumulated net realized loss from security transactions (7,038,475)
Net unrealized appreciation of investments 14,059,391
- ----------------------------------------------------------------------------------------
Total Net Assets $ 994,946,641
========================================================================================
Shares Outstanding:
Class A 45,303,450
- ----------------------------------------------------------------------------------------
Class B 14,402,903
- ----------------------------------------------------------------------------------------
Class L 2,941,734
- ----------------------------------------------------------------------------------------
Class Y 90,631
- ----------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $ 15.86
- ----------------------------------------------------------------------------------------
Class B * $ 15.85
- ----------------------------------------------------------------------------------------
Class L ** $ 15.84
- ----------------------------------------------------------------------------------------
Class Y (and redemption price) $ 15.84
- ----------------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.17% of net asset value per share) $ 16.52
- ----------------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $ 16.00
========================================================================================
</TABLE>
* Redemption price is NAV of Class B shares reduced by a 4.50% CDSC if
shares are redeemed within one year from initial purchase (See Note 3).
** Redemption price is NAV of Class L shares reduced by a 1.00% CDSC if
shares are redeemed within one year from initial purchase.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 21
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations (unaudited) For the Six Months Ended August 31, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 28,663,348
- -------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 1,606,609
Distribution fees (Note 3) 1,550,898
Administration fees (Note 3) 1,014,925
Shareholder and system servicing fees 115,300
Audit and legal 107,588
Custody 27,910
Registration fees 23,649
Directors' fees 21,552
Pricing fees 19,338
Shareholder communications 17,509
Other 7,603
- -------------------------------------------------------------------------------
Total Expenses 4,512,881
- -------------------------------------------------------------------------------
Net Investment Income 24,150,467
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS (NOTE 4):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 180,282,628
Cost of securities sold 183,824,612
- -------------------------------------------------------------------------------
Net Realized Loss (3,541,984)
- -------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period 79,656,591
End of period 14,059,391
- -------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (65,597,200)
- -------------------------------------------------------------------------------
Net Loss on Investments (69,139,184)
- -------------------------------------------------------------------------------
Decrease in Net Assets From Operations $ (44,988,717)
===============================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
22 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended August 31, 1999 (unaudited) and the Year Ended February
28, 1999
<TABLE>
<CAPTION>
August 31 February 28
========================================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 24,150,467 $ 43,919,316
Net realized loss (3,541,984) (3,397,658)
Increase (decrease) in net unrealized appreciation (65,597,200) 7,234,476
- --------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations (44,988,717) 47,756,134
- --------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income (23,248,314) (44,415,694)
In excess of net investment income -- (1,220,517)
Net realized gains -- (5,885,401)
- --------------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (23,248,314) (51,521,612)
- --------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 88,965,852 253,027,947
Net asset value of shares issued for reinvestment of dividends 15,202,383 29,727,113
Cost of shares reacquired (107,209,867) (125,516,529)
- --------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Fund Share Transactions (3,041,632) 157,238,531
- --------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets (71,278,663) 153,473,053
NET ASSETS:
Beginning of period 1,066,225,304 912,752,251
- --------------------------------------------------------------------------------------------------------
End of period* $ 994,946,641 $ 1,066,225,304
========================================================================================================
* Includes overdistributed net investment income of: $ (742,530) $ (1,644,683)
========================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 23
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
- --------------------------------------------------------------------------------
1. Significant Accounting Policies
Smith Barney California Municipals Fund Inc. ("Fund"), a Maryland corporation,
is registered under the Investment Company Act of 1940, as amended, as a
non-diversified, open-end management investment company.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) securities are valued
at the mean between the quoted bid and asked prices as provided by an
independent pricing service; (c) securities maturing within 60 days are valued
at cost plus accreted discount or minus amortized premium, which approximates
value; (d) gains or losses on the sale of securities are calculated using the
specific identification method; (e) interest income, adjusted for amortization
of premium and accretion of original issue discount, is recorded on an accrual
basis; market discount is recognized upon the disposition of the security; (f)
direct expenses are charged to each class; management fees and general fund
expenses are allocated on the basis of relative net assets; (g) dividends and
distributions to shareholders are recorded on the ex-dividend date; (h) the Fund
intends to comply with the applicable provisions of the Internal Revenue Code of
1986, as amended, pertaining to regulated investment companies and to make
distributions of taxable income sufficient to relieve it from substantially all
Federal income and excise taxes; (i) the character of income and gains to be
distributed are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. At February 28, 1999,
reclassifications were made to the Fund's capital accounts to reflect permanent
book/tax differences and income and gains available for distributions under
income tax regulations. Accordingly, undistributed net investment income of
$1,220,517 was reclassified to paid-in capital. Net investment income, net
realized gains and net assets were not affected by this adjustment; and (j)
estimates and assumptions are required to be made regarding assets, liabilities
and changes in net assets resulting from operations when financial statements
are prepared. Changes in the economic environment, financial markets and any
other parameters used in determining these estimates could cause actual results
to differ.
2. Exempt-Interest Dividends and Other Distributions
The Fund intends to satisfy conditions that will enable interest from municipal
securities, which is exempt from Federal income tax and from designated state
income taxes, to retain such tax-exempt status when distributed to the
shareholders of the Fund.
Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
3. Investment Advisory Agreement, Administration Agreement and Other
Transactions
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., a subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), acts as
investment adviser to the Fund. The Fund pays SSBC an advisory fee calculated at
an annual rate of 0.30% of the average daily net assets. The investment advisory
fee is calculated daily and paid monthly.
SSBC also acts as the Fund's administrator for which the Fund pays a fee
calculated at an annual rate of 0.20% of the average daily net assets up to $500
million and 0.18% of the average daily net assets in excess of $500 million.
This fee is calculated daily and paid monthly.
CFBDS, Inc. ("CFBDS") acts as the Fund's distributor. Salomon Smith Barney Inc.
("SSB"), another subsidiary of SSBH, as well as certain other broker-dealers,
continues to sell Fund shares to the public as members of the selling group.
There is a contingent deferred sales charge ("CDSC") of 4.50% on Class B shares,
which applies if redemption occurs within one year from purchase. This CDSC
declines by 0.50% the first year after purchase
- --------------------------------------------------------------------------------
24 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
and thereafter by 1.00% per year until no CDSC is incurred. Class L shares also
have a 1.00% CDSC, which applies if redemption occurs within the first year of
purchase. In addition, Class A shares also have a 1.00% CDSC, which applies if
redemption occurs within the first year of purchase. This CDSC only applies to
those purchases of Class A shares, which, when combined with current holdings of
Class A shares, equal or exceed $500,000 in the aggregate. These purchases do
not incur an initial sales charge.
For the six months ended August 31, 1999, SSB and CFBDS received sales charges
of approximately $593,000 and $49,000 on sales of the Portfolio's Class A shares
and Class L shares respectively. In addition, CDSCs paid to SSB were
approximately:
Class A Class B Class L
================================================================================
CDSCs $ 16,000 $187,000 $ 9,000
================================================================================
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to its
Class A, B and L shares calculated at an annual rate of 0.15% of the average
daily net assets for each respective class. In addition, the Fund pays a
distribution fee with respect to its Class B and L shares calculated at an
annual rate of 0.50% and 0.55% of the average daily net assets of each class,
respectively.
For the six months ended August 31, 1999, total Distribution Plan fees incurred
were:
Class A Class B Class L
================================================================================
Distribution Plan Fees $581,257 $797,052 $172,589
================================================================================
All officers and one Director of the Fund are employees of SSB.
4. Investments
During the six months ended August 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $189,498,754
- --------------------------------------------------------------------------------
Sales 180,282,628
================================================================================
At August 31, 1999, aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were as follows:
================================================================================
Gross unrealized appreciation $ 38,754,591
Gross unrealized depreciation (24,695,200)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 14,059,391
================================================================================
5. Futures Contracts
Initial margin deposits made upon entering into futures contracts are recognized
as assets. Securities equal to the initial margin amount are segregated by the
custodian in the name of the broker. Additional securities are also segregated
up to the current market value of the futures contracts. During the period the
futures contract is open, changes in the value of the contract are recognized as
unrealized gains or losses by "marking-to-market" on a daily basis to reflect
the market value of the contract at the end of each day's trading. Variation
margin payments are received or made and recognized as assets due from or
liabilities due to broker, depending upon whether unrealized gains or losses are
incurred. When the contract is closed, the Fund records a realized gain or loss
equal to the difference between the proceeds from (or cost of) the closing
transactions and the Fund's basis in the contract.
The Fund enters into such contracts to hedge a portion of its portfolio. The
Fund bears the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts).
At August 31, 1999, the Fund had no open futures contracts.
6. Capital Shares
At August 31, 1999, the Fund had 500 million shares of $0.001 par value capital
stock authorized. The Fund has the ability to establish multiple classes of
shares. Each share of a class represents an identical interest in the Fund and
has the same rights, except that each class bears certain expenses specifically
related to the distribution of its shares.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 25
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
At August 31, 1999, total paid-in capital amounted to the following for each
class:
Class A Class B Class L Class Y
================================================================================
Total Paid-in Capital $703,668,029 $234,602,980 $ 48,722,649 $ 1,674,597
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
August 31, 1999 February 28, 1999(1)
--------------------------------- --------------------------------
Shares Amount Shares Amount
===================================================================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 4,104,700 $ 66,677,749 9,597,866 $ 163,199,621
Shares issued on reinvestment 581,209 11,188,476 1,267,288 21,508,604
Shares reacquired (4,811,703) (79,160,089) (4,546,797) (77,276,081)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (125,794) $ (1,293,864) 6,318,357 $ 107,432,144
===================================================================================================================================
Class B
Shares sold 1,018,449 $ 16,486,470 3,186,068 $ 54,114,417
Shares issued on reinvestment 165,754 3,168,151 385,228 6,535,072
Shares reacquired (1,389,676) (23,023,925) (1,695,121) (28,785,369)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (205,473) $ (3,369,304) 1,876,175 $ 31,864,120
===================================================================================================================================
Class L(2)
Shares sold 334,136 $ 5,801,633 1,131,864 $ 19,213,909
Shares issued on reinvestment 63,777 810,847 79,230 1,343,281
Shares reacquired (304,329) (5,025,853) (251,417) (4,268,907)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase 93,584 $ 1,586,627 959,677 $ 16,288,283
===================================================================================================================================
Class Y
Shares sold -- -- 960,767 $ 16,500,000
Shares issued on reinvestment 2,126 $ 34,909 19,970 340,156
Shares reacquired -- -- (892,232) (15,186,172)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase 2,126 $ 34,909 88,505 $ 1,653,984
===================================================================================================================================
</TABLE>
(1) For Class Y shares, transactions are for the period from September 22,
1998 (inception date) to February 28, 1999.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
7. 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.
8. Capital Loss Carryforward
At February 28, 1999, the Fund had, for Federal income tax purposes,
approximately $2,922,924 of capital loss carryforwards, expiring of February 28,
2007, available to offset future realized gains. To the extent that these
carryforward losses can be used to offset net realized capital gains, such
gains, if any, will not be distributed.
- --------------------------------------------------------------------------------
26 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended February 28, except where noted:
<TABLE>
<CAPTION>
Class A Shares 1999(1)(2) 1999(2) 1998 1997 1996(2) 1995
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $16.93 $16.99 $16.26 $16.31 $15.40 $16.15
- ----------------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.39 0.77 0.82 0.85 0.85 0.89
Net realized and unrealized gain (loss) (1.08) 0.07 0.98 0.15 0.93 (0.56)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (0.69) 0.84 1.80 1.00 1.78 0.33
- ----------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.38) (0.78) (0.84) (0.85) (0.84) (0.89)
In excess of net investment income -- (0.02) -- -- -- --
Net realized gains -- (0.10) (0.23) (0.20) (0.03) (0.19)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.38) (0.90) (1.07) (1.05) (0.87) (1.08)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $15.86 $16.93 $16.99 $16.26 $16.31 $15.40
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (4.15)%++ 5.02% 11.44% 6.37% 11.93% 2.46%
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $718,580 $769,306 $664,471 $578,687 $582,324 $401,743
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.71%+ 0.68% 0.70% 0.71% 0.76% 0.80%
Net investment income 4.71+ 4.53 4.97 5.29 5.26 5.76
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 17% 13% 43% 60% 44% 59%
==================================================================================================================================
<CAPTION>
Class B Shares 1999(1)(2) 1999(2) 1998 1997 1996(2) 1995
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $16.93 $16.98 $16.25 $16.32 $15.40 $16.15
- ----------------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.35 0.68 0.74 0.76 0.75 0.81
Net realized and unrealized gain (loss) (1.10) 0.08 0.98 0.14 0.96 (0.57)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (0.75) 0.76 1.72 0.90 1.71 0.24
- ----------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.33) (0.69) (0.76) (0.77) (0.76) (0.80)
In excess of net investment income -- (0.02) -- -- -- --
Net realized gains -- (0.10) (0.23) (0.20) (0.03) (0.19)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.33) (0.81) (0.99) (0.97) (0.79) (0.99)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $15.85 $16.93 $16.98 $16.25 $16.32 $15.40
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (4.46)%++ 4.56% 10.88% 5.73% 11.39% 1.89%
- ----------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $228,335 $247,252 $216,234 $173,347 $153,044 $127,888
- ----------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.23%+ 1.20% 1.21% 1.23% 1.29% 1.32%
Net investment income 4.18+ 4.02 4.45 4.75 4.71 5.25
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 17% 13% 43% 60% 44% 59%
==================================================================================================================================
</TABLE>
(1) For the six months ended August 31, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 27
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended February 28, except where noted:
<TABLE>
<CAPTION>
Class L Shares 1999(1)(2) 1999(2)(3) 1998 1997 1996(2) 1995(4)
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $16.91 $16.97 $16.24 $16.31 $15.40 $14.19
- ---------------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.34 0.67 0.73 0.75 0.78 0.24
Net realized and unrealized gain (loss) (1.08) 0.07 0.98 0.15 0.92 1.39*
- ---------------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations (0.74) 0.74 1.71 0.90 1.70 1.63
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.33) (0.68) (0.75) (0.77) (0.76) (0.23)
In excess of net investment income -- (0.02) -- -- -- --
Net realized gains -- (0.10) (0.23) (0.20) (0.03) (0.19)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.33) (0.80) (0.98) (0.97) (0.79) (0.42)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $15.84 $16.91 $16.97 $16.24 $16.31 $15.40
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return (4.43)%++ 4.45% 10.83% 5.68% 11.30% 11.72%++
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (000s) $46,597 $48,169 $32,047 $16,678 $10,809 $762
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.28%+ 1.24% 1.26% 1.29% 1.39% 1.37%+
Net investment income 4.13+ 3.97 4.39 4.69 4.44 5.19+
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 17% 13% 43% 60% 44% 59%
=================================================================================================================================
</TABLE>
(1) For the six months ended August 31, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) For the period from November 14, 1994 (inception date) to February 28,
1995.
* The amount shown may not agree with the change in aggregate gains and
losses of portfolio securities due to the timing of sales and the
redemptions.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
28 1999 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended February 28, except where noted:
Class Y Shares 1999(1)(2) 1999(2)(3)
=========================================================================
Net Asset Value, Beginning of Period $16.93 $17.19
- -------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.39 0.34
Net realized and unrealized loss (1.09) (0.11)
- -------------------------------------------------------------------------
Total Income (Loss) From Operations (0.70) 0.23
- -------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.39) (0.37)
In excess of net investment income -- (0.02)
Net realized gains -- (0.10)
- -------------------------------------------------------------------------
Total Distributions (0.39) (0.49)
- -------------------------------------------------------------------------
Net Asset Value, End of Period $15.84 $16.93
- -------------------------------------------------------------------------
Total Return++ (4.19)% 1.34%
- -------------------------------------------------------------------------
Net Assets, End of Period (000s) $1,435 $1,498
- -------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses 0.77% 0.53%
Net investment income 4.65 4.56
- -------------------------------------------------------------------------
Portfolio Turnover Rate 17% 13%
=========================================================================
(1) For the six months ended August 31, 1999 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the period from September 22, 1998 (inception date) to February 28,
1999.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 29
<PAGE>
Smith Barney
California Municipals
Fund Inc.
Directors
Herbert Barg
Alfred J. Bianchetti
Martin Brody
Dwight B. Crane
Burt N. Dorsett
Elliot S. Jaffe
Stephen E. Kaufman
Joseph J. McCann
Heath B. McLendon, Chairman
Cornelius C. Rose
James J. Crisona, Emeritus
Officers
Heath B. McLendon
President and
Chief Executive Officer
Lewis E. Daidone
Senior Vice President and Treasurer
Joseph P. Deane
Vice President and Investment Officer
David Fare
Investment Officer
Paul A. Brook
Controller
Christina T. Sydor
Secretary
Investment Adviser and Administrator
SSB Citi Fund Management LLC
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Shareholder Servicing Agent
First Data Investor Services Group, Inc.
P.O. Box 9699
Providence, RI 02940-9699
This report is submitted for the general information of shareholders of Smith
Barney California Municipals Fund Inc. It is not authorized for distribution to
prospective investors unless accompanied or preceded by a current Prospectus for
the Fund, which contains information concerning the Fund's investment policies
and expenses as well as other pertinent information.
SALOMON SMITH BARNEY
- --------------------
A member of citigroup[LOGO]
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
Smith Barney California
Municipals Fund Inc.
Smith Barney Mutual Funds
388 Greenwich Street, MF-2
New York, New York 10013
www.smithbarney.com
FD0434 10/99
