[PHOTO OMITTED]
Smith Barney
California
Municipals
Fund Inc.
[PHOTO OMITTED]
-------------
ANNUAL REPORT
-------------
February 28, 1999
[LOGO] Smith Barney Mutual Funds
Investing for your future.
Every day.(R)
<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 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. (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
February 28, 1999
Without Sales Charges(1)
---------------------------------
Class A Class B Class L(2)
================================================================================
One-Year 5.02% 4.56% 4.45%
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Five-Year 7.45 6.90 N/A
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Ten-Year 8.28 N/A N/A
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Since Inception+ 8.95 7.81 10.35
================================================================================
With Sales Charges(3)
---------------------------------
Class A Class B Class L(2)
================================================================================
One-Year 0.81% 0.07% 2.42%
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Five-Year 6.58 6.74 N/A
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Ten-Year 7.84 N/A N/A
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Since Inception+ 8.65 7.81 10.10
================================================================================
(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) On June 12, 1998, Class C shares were renamed Class L shares.
(3) 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 charge of 4.00% and 1.00%,
respectively; and 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.
+ 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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FUND HIGHLIGHT
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We are very optimistic about the prospects for California's economy. Throughout
1998, we saw solid employment growth led primarily by high tech manufacturing
and construction. These gains in turn caused personal income levels to rise in
the Golden State as well as higher commercial and residential real estate
prices. Even as severe recessions wreaked havoc on many Asian economies
(California's largest export destinations) during the reporting period, overall
exports remained strong.
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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........................................................ 3
Smith Barney California Municipals Fund Inc.
at a Glance................................................................... 5
Schedule of Investments....................................................... 6
Statement of Assets and Liabilities.......................................... 20
Statement of Operations...................................................... 21
Statements of Changes in Net Assets.......................................... 22
Notes to Financial Statements................................................ 23
Financial Highlights......................................................... 27
Independent Auditors' Report................................................. 30
Additional Shareholder Information........................................... 31
Tax Information.............................................................. 32
<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 annual report for the Smith Barney California
Municipals Fund Inc. ("Fund") for the year ended February 28, 1999. In this
report, we summarize the period's prevailing economic and market conditions and
outline our portfolio strategy. Detailed summaries of performance and current
holdings can be found in the appropriate sections that follow. We hope you find
this report to be useful and informative.
A Special Discipline Series Fund
The Smith Barney California Municipals Fund is part of the Special Discipline
Series of Smith Barney Mutual Funds. The Special Discipline Series Funds are
mutual funds that explore opportunities in a narrower sector of the market or by
using a narrower investment focus.
Performance Update and Investment Strategy
For the year ended February 28, 1999, the Fund had a total return of 5.02%,
4.56% and 4.45% for its Class A, B and L shares, respectively, excluding sales
charges. In comparison, the Fund's Lipper Inc. peer group average posted a total
return of 6.43% over the same period. (Lipper Inc. is a major fund-tracking
organization.) Over the year covered by this report, the Fund distributed income
dividends totaling $0.80 per Class A share. Based on its net asset value (NAV)
of $16.93 as of February 28, 1999, and the current income dividend rate of
$0.063 for Class A shares, this equates to an annualized distribution rate of
4.47%. For a California resident in the combined federal and state income tax
bracket of 45.3%, the Fund's tax-free yield of 4.47% is equivalent to a taxable
yield of 8.17%.
As noted, the Fund seeks to provide California investors with as high a level of
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 February 28, 1999, the Fund's average weighted maturity was
approximately 19.3 years. At the end of February, 98% 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 roughly 68% of the Fund
invested in AAA-rated bonds, the highest possible rating.
California Economic Highlights
We are very optimistic about the prospects for California's economy. Throughout
1998, we saw solid employment growth led primarily by high tech manufacturing
and construction. These gains in turn caused personal income levels to rise in
the Golden State as well as higher commercial and residential real estate
prices. Even as severe recessions wreaked havoc on many Asian economies
(California's largest export destinations) during the reporting period, overall
exports remained strong.
We think that all of these positive factors should exert a favorable influence
on California's future growth potential. California's economy is currently
robust and well diversified and good economic conditions should enable the
Golden State to maintain its leadership role in the U.S. economy for many years
to come.
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Smith Barney California Municipals Fund Inc. 1
<PAGE>
Municipal Bond Market Update and Outlook
During the Fund's reporting period, the bond markets have not been dull.
Beginning with the Asian crisis, Russia's default and the problems with a major
hedge fund we have certainly seen some turbulence. The bottom line though is
that inflation is near historic lows, the U.S. economy is quite solid and the
Federal Reserve Board ("Fed") has adopted a more accommodative stance for
short-term rates. It all adds up to a positive backdrop for bonds.
In our view, the large drop in rates last year in the U.S. government bond
market was not caused by economic fundamentals but primarily the unwinding of
huge short positions by major hedge funds. In fact, 1998 was the first year in
recent memory where the economic fundamentals seemed to mean so little to the
bond market.
Over the short term, we do not think that Fed monetary policy will be influenced
by conditions in the financial markets. We think that any future Fed decisions
on rates will be driven by the state of the U.S. economy. Unless there are any
signs of inflationary pressures, we do not anticipate any Fed tightening in the
coming months. However, if the U.S. economy begins to re-accelerate and labor
markets continue to tighten, the Fed may raise rates in the second half of 1999.
As we have noted, the fundamentals -- low inflation and a benign Fed monetary
policy are favorable for the bond markets. We think these positive conditions
should be with us in the coming months. As you get closer to a presidential
election year, the economy may pick-up. At that point we may take a more
conservative stance in the Fund than we currently follow. We believe that the
economy should be our guide, because it will be the key factor affecting future
Fed monetary policy.
We think that the pattern established in 1998 between municipal bonds and
taxable bonds should hold true for the rest of 1999. In rallies, municipal bonds
generally underperform versus U.S. government bonds and corporate bonds. That
happened in July, August, September and October of last year. However, with
long-term municipal bonds yielding roughly 94% of long-term U.S. Treasury bonds,
we think that municipal bonds are very attractive on a relative basis. If rates
do rise, the volume of new issues and refunding deals in the municipal bond
market will decrease, causing more favorable supply and demand conditions,
providing support for municipal bond prices thus outperforming long-term U.S.
Treasuries.
In closing, thank you for your investment in Smith Barney California Municipals
Fund. We encourage you to visit our Web site at www.smithbarney.com. We look
forward to continuing to help you pursue your financial goals.
Sincerely,
/s/ Heath B. McLendon /s/ Joseph P. Deane
Heath B. McLendon Joseph P. Deane
Chairman Vice President and
Investment Officer
April 6, 1999
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2 1999 Annual Report to Shareholders
<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
Year Ended of Year of Year Dividends Distributions of Capital Returns(1)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
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
- ------------------------------------------------------------------------------------------------------------------------------------
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
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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
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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 $9.22 $2.08 $0.04
====================================================================================================================================
</TABLE>
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Historical Performance -- Class B Shares
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
-------------------------
Beginning End Income Capital Gain Return Total
Year Ended of Year of Year Dividends Distributions of Capital Returns(1)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
2/28/99 $16.98 $16.93 $0.71 $0.10 $0.00 4.56%
- ------------------------------------------------------------------------------------------------------------------------------------
2/28/98 16.25 16.98 0.76 0.23 0.00 10.88
- ------------------------------------------------------------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------------------------------------------------------------
Inception* -- 2/28/93 15.84 16.70 0.28 0.29 0.01 9.27+
====================================================================================================================================
Total $4.84 $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
Year Ended of Year of Year Dividends Distributions of Capital Returns(1)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
2/28/99 $16.97 $16.91 $0.70 $0.10 $0.00 4.45%
- ------------------------------------------------------------------------------------------------------------------------------------
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 $3.21 $0.75 $0.00
====================================================================================================================================
</TABLE>
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Smith Barney California Municipals Fund Inc. 3
<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
Year Ended of Period of Period Dividends Distributions of Capital Returns(1)
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Inception* -- 2/28/99 $17.19 $16.93 $0.39 $0.10 $0.00 1.34%+
====================================================================================================================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
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Average Annual Total Returns
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<TABLE>
<CAPTION>
Without Sales Charges(1)
-------------------------------------------------------------
Class A Class B Class L Class Y
=====================================================================================================
<S> <C> <C> <C> <C>
Year Ended 2/28/99 5.02% 4.56% 4.45% N/A
- -----------------------------------------------------------------------------------------------------
Five Years Ended 2/28/99 7.45 6.90 N/A N/A
- -----------------------------------------------------------------------------------------------------
Ten Years Ended 2/28/99 8.28 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------
Inception* through 2/28/99 8.95 7.81 10.35 1.34%+
=====================================================================================================
<CAPTION>
Without Sales Charges(2)
-------------------------------------------------------------
Class A Class B Class L Class Y
=====================================================================================================
<S> <C> <C> <C> <C>
Year Ended 2/28/99 0.81% 0.07% 2.42% N/A
- -----------------------------------------------------------------------------------------------------
Five Years Ended 2/28/99 6.58 6.74 N/A N/A
- -----------------------------------------------------------------------------------------------------
Ten Years Ended 2/28/99 7.84 N/A N/A N/A
- -----------------------------------------------------------------------------------------------------
Inception* through 2/28/99 8.65 7.81 10.10 1.34%+
=====================================================================================================
</TABLE>
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Cumulative Total Returns
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Without Sales Charges(1)
================================================================================
Class A (2/28/89 through 2/28/99) 121.64%
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Class B (Inception* through 2/28/99) 60.75
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Class L (Inception* through 2/28/99) 52.64
- --------------------------------------------------------------------------------
Class Y (Inception* through 2/28/99) 1.34%+
================================================================================
(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.
* 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.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
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4 1999 Annual Report to Shareholders
<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+
- --------------------------------------------------------------------------------
February 1989 -- February 1999
[The following table was depicted as a line graph in the printed material.]
SB Cal Muni Lehman Muni Bond Lipper Cal
2/89 9599 10000 10000
2/90 10465 11026 10896
2/91 11333 12044 11775
2/92 12221 13246 12897
2/93 14025 15070 14701
2/94 14853 15905 15511
2/95 15217 16204 15550
2/96 17091 17994 17164
2/97 18180 18986 17992
2/98 20260 20722 19679
2/99 21276 22093 20091
- --------------------------------------------------------------------------------
+ Hypothetical illustration of $10,000 invested in Class A shares on
February 28, 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 February 28, 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 108 mutual funds investing in California municipal bonds as of February
28, 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*
- --------------------------------------------------------------------------------
[The following table was depicted as a bar graph in the printed material.]
7.5% Education
5.3% Escrowed to Maturity
6.0% General Obligation
13.3% Hospitals
3.9% Housing: Multi-Family
2.4% Housing: Single-Family
3.2% Pre-Refunded
6.1% Tax Allocation
3.8% Transportation
4.5% Utilities
21.9% Water & Sewer
22.1% Other
* As a percentage of total investments.
Summary of Investments by Combined Ratings
- --------------------------------------------------------------------------------
Standard Percentage
Moody's & Poor's of Total Investments
- --------------------------------------------------------------------------------
Aaa AAA 67.7%
Aa AA 12.5
A A 13.2
Baa BBB 5.0
Ba BB 0.3
VMIG 1 A-1 0.5
NR NR 0.8
--------
100.0%
========
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Smith Barney California Municipals Fund Inc. 5
<PAGE>
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Schedule of Investments February 28, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================================================
<S> <C> <C> <C>
Education -- 7.5%
$2,000,000 AAA Adelanto School District, Series B, FGIC-Insured,
zero coupon due 9/1/18 $ 747,500
California Educational Facilities Authority Revenue:
6,125,000 Baa3* Pooled College & University Project, Series A, 5.500% due 7/1/15 6,408,280
Southwestern University Project:
2,635,000 A3* 6.600% due 11/1/14 2,980,844
4,505,000 A3* 6.700% due 11/1/24 5,079,388
2,500,000 A3* University of San Diego, 6.500% due 10/1/22 2,790,625
California State Public Works Board, Lease Revenue:
1,000,000 A High Technology Facility, San Jose Facilities, Series A, 7.750% due 8/1/06 1,155,000
Various California State University Projects:
Series B:
3,085,000 A1* 5.400% due 9/1/13 3,308,661
3,245,000 A1* 5.450% due 9/1/14 3,464,038
2,425,000 A1* 5.500% due 9/1/15 2,582,625
1,400,000 A1* 5.550% due 9/1/16 1,487,500
Series C, AMBAC-Insured:
6,590,000 AAA 5.000% due 9/1/13 6,787,700
6,000,000 AAA 5.000% due 9/1/14 6,135,000
6,000,000 AAA Campbell Unified School District, FGIC-Insured, 5.000% due 8/1/17 6,060,000
1,400,000 AAA Eastside Unified High School District, Santa Clara County, Series B,
FGIC-Insured, 5.000% due 9/1/18 1,401,750
1,750,000 AAA Escondido Unified School District, Series A, FGIC-Insured, 5.125% due 9/1/15 1,802,500
2,545,000 AAA King City, CA Joint Unified High School District, FGIC-Insured,
5.000% due 8/1/15 2,586,355
1,250,000 AAA Lake Elsinore, CA Unified School District COP, MBIA-Insured,
4.750% due 2/1/20 1,210,937
2,000,000 AAA Lancaster School District COP, FSA-Insured, 5.125% due 4/1/14 2,075,000
2,300,000 AAA Rio Linda Unified School District, FSA-Insured, 5.250% due 8/1/17 2,363,250
San Diego Community College District, Lease Revenue, MBIA-Insured:
1,250,000 AAA 6.125% due 12/1/16 1,457,813
3,460,000 AAA 5.250% due 12/1/21 3,831,950
1,530,000 AAA Santa Rosa High School District, FGIC-Insured, 5.900% due 5/1/14 1,679,175
Standard School District COP, (Capital Improvement Project), Series A:
320,000 A- 6.200% due 3/1/10 348,000
340,000 A- 6.250% due 3/1/11 368,900
4,500,000 A3* Ukiah Unified School District COP, (Measure A Capital Projects),
6.000% due 9/1/10 4,860,000
2,600,000 AAA Victor Valley Unified High School District, MBIA-Insured, 5.750% due 11/1/17 2,843,750
1,000,000 AAA Windsor, CA Unified School District COP, (Capital Projects), FSA-Insured,
5.200% due 6/1/18 1,022,500
2,500,000 Baa1* Yuba City Unified School District COP, (Andors Karperos
School Construction Project), 6.700% due 2/1/13 2,703,125
- ----------------------------------------------------------------------------------------------------------------------------------
79,542,166
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
6 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) February 28, 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 $ 2,054,250
1,800,000 BBB- 6.500% due 7/1/08 2,043,000
2,200,000 BBB- 6.500% due 7/1/09 2,477,750
- ----------------------------------------------------------------------------------------------------------------------------------
6,575,000
- ----------------------------------------------------------------------------------------------------------------------------------
Escrowed to Maturity(b) -- 5.3%
270,000 AAA Contra Costa County Home Mortgage Revenue, Mortgage Backed Securities
Program, GNMA-Collateralized, 7.750% due 5/1/22 349,650
100,000 AAA Kern High School District, Series C, MBIA-Insured, 8.750% due 8/1/03 120,875
San Joaquin Hills California Transportation Corridor Agency Toll Road Revenue:
5,000,000 AAA Zero coupon due 1/1/14(c) 2,443,750
60,000,000 AAA Zero coupon due 1/1/16(c) 26,100,000
17,500,000 AAA Zero coupon due 1/1/17(c) 7,218,750
25,000,000 AAA Zero coupon due 1/1/18(c) 9,656,250
20,000,000 AAA Zero coupon due 1/1/19(c) 7,350,000
810,000 AAA Santa Rosa Hospital Revenue, (Santa Rosa Hospital Memorial Project),
10.300% due 3/1/11 1,075,275
1,250,000 BBB Sequoia Hospital District Revenue, 5.375% due 8/15/23 1,292,188
- ----------------------------------------------------------------------------------------------------------------------------------
55,606,738
- ----------------------------------------------------------------------------------------------------------------------------------
General Obligation -- 6.0%
California State GO:
30,000,000 AAA AMBAC-Insured, 5.000% due 10/1/18 30,112,500
Veterans Series:
455,000 AA- Series AL, 9.700% due 4/1/02 534,625
725,000 AA- Series AM, 9.000% due 10/1/02 855,500
Series AT:
4,000,000 AA- 9.700% due 2/1/01(c) 4,460,000
1,000,000 AA- 9.500% due 2/1/10 1,438,750
2,000,000 AA- Series AU, 8.400% due 10/1/06 2,562,500
1,000,000 Aa1* San Diego Public Safety Communication Project, 6.650% due 7/15/11 1,216,250
Santa Margarita/Dana Point Authority Revenue GO:
20,000,000 AAA Series A, AMBAC-Insured, 5.125% due 8/1/18 20,325,000
1,500,000 AAA Water Improvement Districts 3-3A-4 & 4A, Series B, MBIA-Insured,
7.250% due 8/1/14 1,931,250
- ----------------------------------------------------------------------------------------------------------------------------------
63,436,375
- ----------------------------------------------------------------------------------------------------------------------------------
Hospitals -- 13.3%
1,500,000 A+ ABAG Finance Authority for Nonprofit Corps., COP,
(Rehabilitation Mental Health Services Inc. Project),
California Mortgage Insured, 6.550% due 6/1/22 1,625,625
235,000 A+ California Health Facilities Authority Revenue, Victory Valley
Community Hospital, Series 84-A, 9.875% due 7/1/12 236,010
California Health Facilities Financing Authority Revenue:
AMBAC-Insured:
2,500,000 AAA Catholic Health Facilities, 5.750% due 7/1/15 2,706,250
5,620,000 AAA Catholic Healthcare West, Series E, 5.250% due 7/1/16 5,774,550
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 7
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) February 28, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================================================
<S> <C> <C> <C>
Hospitals -- 13.3% (continued)
Industrial Health Facilities:
$ 705,000 A+ Casa De Las Campanas, Series A, 5.500% due 8/1/12 $ 742,894
2,500,000 A+ Marshall Hospital, Series A, 5.250% due 11/1/18 2,534,375
1,000,000 AAA Scripps Health, Series C, MBIA-Insured, 5.000% due 10/1/14 1,018,750
Kaiser Permanente, Series A, FSA-Insured:
3,500,000 AAA 5.000% due 6/1/18 3,486,875
3,500,000 AAA 5.500% due 6/1/22 3,696,875
Series B:
5,000,000 A 5.250% due 10/1/14 5,106,250
5,000,000 A 5.250% due 10/1/16 5,050,000
17,500,000 A 5.000% due 10/1/18 17,128,125
Series A, MBIA-Insured:
Catholic Healthcare West:
2,000,000 AAA 5.000% due 7/1/17 2,002,500
3,000,000 AAA 5.125% due 7/1/24 3,007,500
2,000,000 AAA Cedars-Sinai Center, 5.125% due 8/1/17 2,032,500
5,145,000 AAA Stanford Health Care, Series A, 5.000% due 11/15/18 5,125,706
Sutter Health:
Series A, FSA-Insured:
1,470,000 AAA 5.125% due 8/15/17 1,493,888
1,500,000 AAA 5.250% due 8/15/27 1,522,500
Series A, MBIA-Insured:
3,000,000 AAA 5.000% due 8/15/18 2,988,750
2,000,000 AAA 5.000% due 8/15/19 1,987,500
10,000 VMIG 1* Series B, 3.100% due 3/01/20(d) 10,000
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(c) 4,881,844
19,000,000 A Kaiser Permanente, 5.300% due 12/1/15 19,498,750
1,100,000 A+ Solheim Lutheran Home, 6.500% due 11/1/17 1,218,250
St. Joseph's Health System:
4,825,000 AA 5.500% due 7/1/14 4,987,844
4,000,000 AA 5.250% due 7/1/21 4,015,000
6,000,000 AA 6.625% due 7/1/21 6,937,500
Sutter Health Obligated Group:
MBIA-Insured:
3,500,000 AAA 5.500% due 8/15/09 3,766,875
500,000 AAA 6.000% due 8/15/25 548,750
1,030,000 A+ Villaview Community, 7.000% due 9/1/09 1,125,275
Fresno Health Facilities Revenue, Holy Cross Health System Corp.:
2,200,000 AA 5.200% due 12/1/04 2,348,500
2,435,000 AA 5.375% due 12/1/06 2,608,494
1,000,000 AA St. Agnes, 6.625% due 6/1/21 1,112,500
1,000,000 AAA Modesto Health Facilities Revenue, Memorial Hospital Association, Series B,
MBIA-Insured, 5.125% due 6/1/17 1,015,000
2,000,000 A+ Riverside County Asset Leasing Corp., (Riverside County Hospital Project),
Series A, 6.375% due 6/1/09 2,190,000
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
8 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) February 28, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================================================
<S> <C> <C> <C>
Hospitals -- 13.3% (continued)
$2,750,000 A- San Joaquin County COP, (General Hospital Project 1993),
6.250% due 9/1/13 $ 2,949,375
9,550,000 A Torrance Hospital Revenue Bonds, Little County of Mary Hospital,
6.875% due 7/1/15 10,290,125
1,500,000 NR Valley Health System, COP, 6.875% due 5/15/23 1,614,375
- ----------------------------------------------------------------------------------------------------------------------------------
140,385,880
- ----------------------------------------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 3.9%
1,250,000 AAA ABAG County, Series 96A, FNMA-Collateralized, 5.700% due 11/1/26(c) 1,321,875
California HFA:
Home Mortgage Revenue:
Series B:
3,000,000 AAA AMBAC-Insured, 5.150% due 2/1/18(e) 3,018,750
350,000 Aa2* Project 1983, zero coupon due 8/1/15 66,500
205,000 Aa2* Series C, 8.300% due 8/1/19(e) 208,075
5,225,000 Aa2* Series E, 6.375% due 8/1/27(e) 5,551,562
870,000 Aa2* Series F-1, 7.000% due 8/1/26(e) 923,288
6,000,000 AAA Series Q, AMBAC-Insured, 5.050% due 8/1/17 6,007,500
1,595,000 Aa2* Series A, 6.625% due 2/1/24(e) 1,692,694
480,000 AAA Series C, MBIA-Insured, 7.000% due 8/1/23(b) 507,000
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)(e) 6,420,000
2,250,000 AA- California State Department of Veterans Affairs, Series B,
5.500% due 12/1/18(e) 2,314,688
1,660,000 NR Hayward Housing Authority Revenue, FNMA-Collateralized, Family Revenue,
Cypress Gardens, Series C, 9.375% due 12/1/18 1,850,900
6,000,000 AAA Pleasanton-Suisun City HFA, Home Mortgage, Series A, MBIA-Insured,
(Escrowed to maturity with U.S. government securities),
zero coupon due 10/1/16(b) 2,370,000
1,750,000 AAA Riverside County Housing Authority, Multi-Family Housing Revenue,
Brandon Place Apartments, Series B, FNMA-Collateralized,
5.625% due 7/1/29(e) 1,852,812
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(e) 670,819
1,500,000 Aa2* San Jose Multi-Family Timberwood Apartments, Series A,
LOC - Wells Fargo Bank, 7.500% due 2/1/20 1,530,000
1,320,000 AAA Santa Rosa Mortgage Revenue, (Village Square Apartments Project),
Series A, FHA-Insured, 6.875% due 9/1/27 1,438,800
2,755,000 AAA Victorville Multi-Family Housing Revenue, Wimbledon Apartments, Series A,
GNMA-Collateralized, 6.300% due 4/20/31(c) 2,930,630
- ----------------------------------------------------------------------------------------------------------------------------------
40,675,893
- ----------------------------------------------------------------------------------------------------------------------------------
Housing: Single-Family -- 2.4%
California HFA Revenue Bonds, Home Mortgage:
10,000 Aa2* 10.250% due 2/1/14 10,022
310,000 Aa2* Capital Appreciation, Series 1984-B, zero coupon due 8/1/16 44,175
Single-Family Mortgage:
8,000,000 A+ Issue A-2, FHA-Insured, 6.350% due 8/1/15(c)(e) 8,480,000
3,650,000 AAA Series B-3, Class II, MBIA-Insured, 5.375% due 8/1/21 3,695,625
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 9
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) February 28, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================================================
<S> <C> <C> <C>
Housing: Single-Family -- 2.4% (continued)
Los Angeles Home Mortgage Revenue Bonds, GNMA-Collateralized:
$ 745,000 Aaa* Second Mortgage Project, 8.100% due 5/1/17 $ 805,531
375,000 AAA Single-Family Mortgage Revenue, Mortgage Backed Securities Program,
Issue A, 7.550% due 12/1/23(e) 388,594
125,000 AAA Martinez, CA Home Mortgage Revenue Bonds, 10.750% due 2/1/16 197,344
3,325,000 AAA Perris County, Single-Family Mortgage, GNMA-Collateralized,
(Escrowed to maturity with U.S. government securities),
8.300% due 6/1/13(b)(e) 4,397,312
Riverside County Housing Authority Revenue Bonds, Single-Family Mortgage
Revenue, GNMA-Collateralized, Series A, (Escrowed to maturity
with U.S. government securities):
2,620,000 AAA 8.300% due 11/1/12(b)(e) 3,497,700
1,000,000 AAA 7.800% due 5/1/21(b)(e) 1,328,750
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)(e) 2,017,500
110,000 AA+ San Francisco City & County Single-Family Mortgage Revenue,
GNMA/FNMA-Collateralized, 7.450% due 1/1/24(b)(e) 114,263
135,000 AAA Southern California HFA, Single-Family Mortgage Revenue, GNMA/FNMA-
Collateralized, Series B, 7.750% due 3/1/24(e) 141,075
- ----------------------------------------------------------------------------------------------------------------------------------
25,117,891
- ----------------------------------------------------------------------------------------------------------------------------------
Miscellaneous -- 18.7%
500,000 A3* ABAG Finance Authority Nonprofit Corps., COP, Peninsula Family,
YMCA, Series A, 6.800% due 10/1/11 551,250
2,445,000 AAA Alameda County COP, (Refunding & Capital Projects), AMBAC-Insured,
5.000% due 6/1/12 2,527,519
2,500,000 NR Alhambra, Arcadia, Azusa Counties, Independent Cities,
Risk Management Authority, COP, 7.250% due 3/1/07 2,531,400
2,000,000 AAA Anaheim, COP, Regular Fixed Option Bonds, MBIA-Insured, 6.200% due 7/16/23 2,240,000
1,025,000 Baa* Azusa, COP, (Capital Improvements Refinancing Project), 6.625% due 8/1/13 1,114,688
Brisbane Redevelopment Agency, Brisbane Community Redevelopment Bonds:
200,000 AA 9.400% due 5/1/05 202,832
220,000 AA 9.400% due 5/1/06 223,060
California Public Capital Improvements Finance Authority Revenue, (Pooled Project):
750,000 Baa* Series A, 8.500% due 3/1/18 776,108
555,000 AAA Series B, BIG-Insured, 8.100% due 3/1/18 565,756
5,000,000 AAA California State Department of Transportation, COP, Series A, MBIA-Insured,
5.250% due 3/1/16 5,162,500
5,000,000 AAA California State University Headquarters Building Authority, Series B,
MBIA-Insured, 5.125% due 9/1/17 5,100,000
Contra Costa County COP, (Capital Projects), AMBAC-Insured:
4,630,000 AAA 5.250% due 2/1/17 4,763,113
3,000,000 AAA 5.250% due 2/1/21 3,063,750
Fresno Joint Powers Financing Authority, Local Agency Revenue, Series A:
2,000,000 BBB 6.000% due 9/2/01 2,057,500
1,000,000 BBB 6.200% due 9/2/03 1,052,500
1,500,000 BBB 6.550% due 9/2/12 1,648,125
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
10 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) February 28, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================================================
<S> <C> <C> <C>
Miscellaneous -- 18.7% (continued)
Irvine Import Board Act 1915:
$2,100,000 VMIG 1* Updates Assessment District No. 87-8, 3.100% due 9/2/24(d) $ 2,100,000
1,000,000 VMIG 1* Updates Assessment District No. 97-16, 3.100% due 9/2/22(d) 1,000,000
5,000,000 AAA Long Beach Board Finance Authority Lease Revenue, (Civic Center Project),
Series A, MBIA-Insured, 5.000% due 10/1/17 5,031,250
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 3,510,000
Los Angeles County COP:
2,000,000 Baa1* Special Linked SAVRS & RIBS, 6.708% due 6/1/15 2,172,500
1,000,000 Baa1* Structured Yield Curve Note, 6.600% due 11/1/11 1,100,000
7,500,000 AA Los Angeles County Public Works Financing Authority Revenue,
Regional Park & Open Space District, Series A,
5.000% due 10/1/19 7,500,000
Marin, CA Emergency Radio & Public Safety Revenue Authority,
AMBAC-Insured:
1,750,000 AAA 4.750% due 8/15/18 1,699,688
2,000,000 AAA 4.750% due 8/15/21 1,932,500
Oakland, CA:
735,000 AAA Lease Revenue, COP, AMBAC-Insured, 4.750% due 6/1/19 707,438
State Buliding Authority Lease Revenue, Elihu M Harris,
Series A, AMBAC-Insured:
6,715,000 AAA 5.000% due 4/1/16 6,782,150
2,725,000 AAA 5.000% due 4/1/17 2,742,031
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) 2,863,575
1,500,000 AAA Orange County Community Facility District 86-1, FSA-Insured,
7.125% due 8/15/17 1,553,685
6,000,000 AAA Orange County Recovery, COP, Series A, MBIA-Insured, 5.875% due 7/1/19 6,577,500
1,455,000 AAA Placer County, CA Juvenile Detention Facilities, MBIA-Insured,
5.000% due 7/1/18 1,456,818
900,000 Baa1* Pleasanton Joint Powers Financing Authority Revenue, Series A,
6.150% due 9/2/12 976,500
7,000,000 AAA Puerto Rico Commonwealth Infrastructure Financing Authority, Series A,
AMBAC-Insured, 5.000% due 7/1/16 7,122,500
Sacramento County COP, (Public Facilities Project):
AMBAC-Insured:
14,495,000 AAA 4.750% due 10/1/17 14,186,980
3,750,000 AAA 4.750% due 10/1/27 3,590,624
4,700,000 AAA Solid Waste Facilities, MBIA-Insured, 5.250% due 12/1/16 4,852,750
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 2,873,500
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) 2,535,000
San Diego County COP:
9,000,000 AAA Central Jail Refunding, AMBAC-Insured, 5.000% due 10/1/25 8,921,250
1,000,000 AAA Regular Fixed Option Certificates, MBIA-Insured, 6.363% due 11/18/19 1,063,750
135,000 A3* San Francisco Downtown Parking, Corporate Parking
Revenue Bonds, 6.250% due 4/1/04 150,019
13,015,000 AAA San Francisco, CA City & County Redevelopment Agency Hotel Tax Revenue,
FSA-Insured, 5.000% due 7/1/18 13,031,269
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 11
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) February 28, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================================================
<S> <C> <C> <C>
Miscellaneous -- 18.7% (continued)
$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) $ 1,530,050
12,750,000 AAA San Mateo County, CA Joint Powers Lease Revenue Authority,
(Capital Projects), Series A, FSA-Insured, 4.750% due 7/15/23 12,271,875
5,995,000 AAA San Ramone COP, (Central Park Project), FSA-Insured, 5.000% due 8/1/24 5,950,038
2,875,000 AAA Santa Ana Financing Authority Lease Revenue, Police Administration &
Holding Facility, Series A, MBIA-Insured, 6.250% due 7/1/24 3,428,438
3,460,000 A+ Santa Barbara County COP, 5.700% due 3/1/11 3,719,500
7,180,000 AAA Santa Maria Redevelopment Agency, Town Center Package, FSA-Insured,
5.000% due 6/1/16 7,224,875
Sonoma County COP, Detention Facilities Improvement Project:
4,200,000 A+ 5.000% due 11/15/13 4,263,000
3,000,000 A+ 5.000% due 11/15/17 2,988,750
2,000,000 A+ South Orange County Public Finance Authority, Special Tax Revenue,
Series A, MBIA-Insured, 7.000% due 9/1/10 2,477,500
1,100,000 AAA Sunnyvale, CA COP, Parking Facilities, Series A, AMBAC-Insured,
5.000% due 10/1/17 1,106,875
10,000,000 BBB- Virgin Islands Public Financing Authority Revenue, Series A,
5.500% due 10/1/18 10,112,500
- ----------------------------------------------------------------------------------------------------------------------------------
196,686,779
- ----------------------------------------------------------------------------------------------------------------------------------
Pollution Control Revenue -- 1.1%
California Financing Authority:
2,500,000 AA- Pacific Gas & Electric Co., Series B, 6.350% due 6/1/09(e) 2,737,500
San Diego Gas & Electric, Series A:
5,800,000 A+ 5.900% due 6/1/14(c) 6,575,750
1,500,000 AA- 6.800% due 6/1/15(e) 1,833,750
300,000 VMIG 1* Solid Waste Disposal, (Shell Martinez Refining Project),
Series A, 3.000% due 10/1/31(d) 300,000
500,000 BBB+ Resource Recovery Revenue, Series A, Waste Management,
7.150% due 2/1/11(e) 535,625
- ----------------------------------------------------------------------------------------------------------------------------------
11,982,625
- ----------------------------------------------------------------------------------------------------------------------------------
Pre-Refunded(f) -- 3.2%
California Health Facilities Financing Authority Revenue:
115,000 Aa1* Community Provider Pooled Loan, Series A, (Call 6/1/00 @ 102),
7.350% due 6/1/20 123,050
1,250,000 AA South Coast Medical Center, (Call 7/1/00 @ 102), 7.250% due 7/1/15 1,340,625
1,450,000 NR St. Elizabeth Hospital, (Call 11/15/02 @ 102), 6.200% due 11/15/09 1,609,500
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 2,247,500
1,000,000 AAA Department of Corrections State Prison, Series A, (Call 9/1/00 @ 102),
7.000% due 9/1/09 1,076,250
1,405,000 AAA* Contra Costa County COP, Merrithew Memorial Hospital,
(Call 11/1/02 @ 102), 6.500% due 11/1/06 1,573,600
1,500,000 AAA Desert Hospital District COP, (Call 7/1/00 @ 102),
8.100% due 7/1/20 1,625,624
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
12 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) February 28, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================================================
<S> <C> <C> <C>
Pre-Refunded(f) -- 3.2% (continued)
$1,000,000 A+ Inglewood Insured Hospital Revenue Bonds, Daniel Freeman Hospital Inc.,
(Call 5/1/01 @ 102), 6.750% due 5/1/13 $ 1,090,000
450,000 AAA Los Angeles, CA Convention & Exhibition Center Authority,
(Call 12/1/05 @ 100), 9.000% due 12/1/20 586,688
1,950,000 Aa3* Los Angeles Department of Water & Power, Electric Plantation Revenue,
(Call 1/15/01 @ 102), 7.100% due 1/15/31 2,103,562
Mojave Water Agency, Improvement District, Morongo Basin,
(Call 9/1/02 @ 102):
1,500,000 AAA 6.600% due 9/1/13 1,678,125
5,510,000 AAA 6.600% due 9/1/22 6,164,313
750,000 A- Northern California Power Agency Public Power Revenue, (Geothermal
Project No. 3), Series A, (Call 7/1/08 @ 100) 5.000% due 7/1/09 801,563
500,000 AAA Oceanside COP, AMBAC-Insured, (Call 8/1/02 @ 102),
7.300% due 8/1/21 569,375
1,000,000 NR Orange County Community Facility District, Special Tax, Series A,
(Call 8/15/00 @ 102), 7.800% due 8/15/15 1,085,000
1,740,000 AAA Oxnard Public Facilities Corp., COP, Wastewater Treatment Plant Project,
AMBAC-Insured, (Call 9/1/99 @ 100), 7.500% due 9/1/06 1,779,881
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 1,116,250
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 2,170,000
2,500,000 AAA Riverside County Asset Leasing Corp., Leasehold Revenue, (Riverside County
Hospital Project), Series A, (Call 6/1/99 @ 102), 7.400% due 6/1/14 2,577,250
1,000,000 AAA San Buenaventura COP, AMBAC-Insured, (Call 10/1/00 @ 102),
7.500% due 10/1/20 1,085,000
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 1,483,625
- ----------------------------------------------------------------------------------------------------------------------------------
33,886,781
- ----------------------------------------------------------------------------------------------------------------------------------
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 3,008,913
Inland Empire Solid Waste Authority Revenue, FSA-Insured:
5,000,000 AAA 6.250% due 8/1/11(e) 5,712,500
2,500,000 AAA 6.000% due 8/1/16(e) 2,731,250
500,000 BBB Kings County Waste Management Authority, Solid Waste Revenue,
7.200% due 10/1/14(e) 578,750
1,000,000 BB Nevada County COP, 7.500% due 6/1/21 1,063,750
4,135,000 Baa1* South Napa Waste Management Authority Revenue, (Solid Waste Transfer
Facilities Project), 6.500% due 2/15/14(e) 4,470,969
- ----------------------------------------------------------------------------------------------------------------------------------
17,566,132
- ----------------------------------------------------------------------------------------------------------------------------------
Tax Allocation -- 6.1%
2,000,000 AAA Anaheim Public Finance Authority, Tax Allocation Revenue, Regular Fixed
Option Bonds, MBIA-Insured, 6.450% due 12/28/18 2,282,500
1,000,000 Baa3* Azusa Redevelopment Agency, Tax Allocation, Merged Project Area,
Series A, 6.750% due 8/1/23 1,082,500
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 13
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) February 28, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================================================
<S> <C> <C> <C>
Tax Allocation -- 6.1% (continued)
$1,200,000 AAA Bay Area Government Assessment, Tax Allocation,
Redevelopment Agency Pool, Series A-6, FSA-Insured,
5.250% due 12/15/17 $ 1,237,500
295,000 AAA Brea Public Finance Authority, Tax Allocation, MBIA-Insured,
7.000% due 8/1/15 322,656
30,000 AAA Concord Redevelopment Agency, Tax Allocation, Series 3, MBIA-Insured,
8.000% due 7/1/18 30,737
6,000,000 AAA Corona Redevelopment Agency, Tax Allocation, Redevelopment Project Area A,
Series A, FGIC-Insured, 5.500% due 9/1/24 6,277,500
1,000,000 AAA El Centro Redevelopment Tax Allocation, MBIA-Insured, 6.375% due 11/1/17 1,142,500
4,160,000 AAA Fontana Public Finance Authority, Tax Allocation, MBIA-Insured,
Series A, 5.000% due 9/1/20 4,149,600
10,000,000 AAA Fremont, CA Alameda County Union School District, Series A, FGIC-Insured,
4.750% due 8/1/20 9,687,500
3,275,000 BBB+ Garden Grove Community Development Agency, Tax Allocation,
(Garden Grove Community Project), 5.700% due 10/1/08 3,487,875
2,000,000 Baa* Hawthorne Community Redevelopment, Tax Allocation, (Project Area 2),
6.625% due 9/1/14 2,200,000
1,000,000 AAA Irwindale Community Redevelopment Agency, Tax Allocation, (City
Industrial Development Project), FSA-Insured, 5.000% due 8/1/17 1,006,250
2,275,000 AAA Los Angeles, CA Community Redevelopment Agency, Tax Allocation,
(Hollywood Redevelopment Project), Series C, MBIA-Insured,
5.050% due 7/1/15 2,323,344
2,445,000 AAA Rancho Cucamonga Redevelopment, Tax Allocation, (Rancho Redevelopment
Project), MBIA-Insured, 5.250% due 9/1/16 2,521,406
San Diego, CA Redevelopment, Tax Allocation, (Centre City
Redevelopment Project), AMBAC-Insured:
2,220,000 AAA Series A, 4.750% due 9/1/18 2,156,175
Series C:
1,000,000 AAA 4.750% due 9/1/18 971,250
2,000,000 AAA 4.750% due 9/1/24 1,922,500
5,000,000 AAA San Diego, CA Special Tax, (Community Facilities Project No. 1), MBIA-Insured,
4.750% due 9/1/20 4,843,750
15,000,000 AAA San Jose, CA Redevelopment, Tax Allocation, (Merged Area Redevelopment
Project), AMBAC-Insured, 4.750% due 8/1/29 14,287,500
2,000,000 AAA Vista Community Development, Tax Allocation Revenue, Vista Redevelopment
Project Area, MBIA-Insured, 5.250% due 9/1/15 2,055,000
- ----------------------------------------------------------------------------------------------------------------------------------
63,988,043
- ----------------------------------------------------------------------------------------------------------------------------------
Transportation -- 3.8%
6,250,000 AAA Alameda Corridor Transportation Authority, CA Revenue, Series A,
MBIA-Insured, 4.750% due 10/1/25 5,992,188
5,000,000 AA Los Angeles Harbor Department Revenue, Series B, 5.375% due 11/1/15(e) 5,175,000
2,000,000 BBB+ Port of Oakland Special Facilities Revenue, Series A,
6.750% due 1/1/12(e) 2,167,500
9,000,000 AAA Sacramento County Airport System Revenue, Series A, MBIA-Insured,
5.900% due 7/1/24(c)(e) 9,787,500
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
14 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) February 28, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================================================
<S> <C> <C> <C>
Transportation -- 3.8% (continued)
$ 400,000 A1* Sacramento Regional Transportation District COP, Series A,
6.400% due 3/1/03 $ 438,500
3,000,000 AAA San Francisco Airport Community International Corp., Lease Revenue,
FGIC-Insured, 6.500% due 5/1/19(e) 3,356,250
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) 224,550
10,000,000 AAA San Francisco, Bay Area Rapid Transportation District Sales Tax,
AMBAC-Insured, 4.750% due 7/1/23 9,662,500
San Jose Airport Revenue Bonds, FGIC-Insured:
200,000 AAA 5.400% due 3/1/04(e) 214,000
1,500,000 AAA 5.500% due 3/1/07(e) 1,605,000
1,250,000 A* Santa Barbara COP, (Harbor Reference Project), 6.750% due 10/1/27 1,368,750
- ----------------------------------------------------------------------------------------------------------------------------------
39,991,738
- ----------------------------------------------------------------------------------------------------------------------------------
Utilities -- 4.5%
1,700,000 VMIG 1* MSR Public Power Agency (San Juan, CA Project), Series F, MBIA-Insured,
3.100% due 7/1/22(d) 1,700,000
Northern California Power Agency, Public Power Refunding:
360,000 A- Geothermal Project No. 3, Series A, 5.000% due 7/1/09 360,749
Hydroelectric Project No. 1, Series A, MBIA-Insured:
5,000,000 AAA 5.000% due 7/1/17 5,031,250
3,920,000 AAA 5.000% due 7/1/18 3,924,900
2,000,000 AAA Redding Electric System Revenue COP, Regular Linked SAVRS & RIBS,
MBIA-Insured, 6.368% due 7/8/22 2,350,000
2,670,000 AAA Redding Joint Powers Finance Authority, Electric System Revenue,
Series D, MBIA-Insured, 5.250% due 6/1/15 2,766,788
Sacramento Municipal Utility District Electric Revenue:
Series D:
4,000,000 AAA FGIC-Insured, 5.250% due 11/15/12 4,225,000
4,500,000 AAA MBIA-Insured, 5.250% due 11/15/20 4,595,625
3,000,000 A Series E, 5.700% due 5/15/12 3,198,750
5,425,000 AAA Series I, MBIA-Insured, 5.750% due 1/1/15 5,838,656
3,000,000 AAA Series L, MBIA-Insured, 5.200% due 7/1/17 3,078,750
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 5,018,750
3,000,000 AAA Transmission Project Revenue, MBIA-Insured, 5.750% due 7/1/21 3,168,750
1,960,000 BBB- Trinity County, Public Utility District COP, Electric District Facilities,
6.750% due 4/1/23(e) 2,102,100
- ----------------------------------------------------------------------------------------------------------------------------------
47,360,068
- ----------------------------------------------------------------------------------------------------------------------------------
Water and Sewer -- 21.9%
8,000,000 AAA Arcade Water District Revenue, COP, FGIC-Insured, 5.000% due 11/1/17 8,050,000
California State Department of Water, Central Valley Project Revenue:
Series O:
1,000,000 AA 5.000% due 12/1/22 995,000
2,235,000 AA 4.750% due 12/1/25 2,142,806
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 15
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) February 28, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================================================
<S> <C> <C> <C>
Water and Sewer -- 21.9% (continued)
$5,000,000 AA Series S, 5.000% due 12/1/19 $ 5,000,000
Series U:
1,250,000 AA 5.125% due 12/1/16 1,281,250
1,795,000 AA 5.125% due 12/1/17 1,830,900
6,500,000 AAA Calleguas-Las Virgines, CA Public Financing Authority, Municipal
Water District, FSA-Insured, 5.000% due 11/1/17 6,540,625
East Bay Municipal Utility District, FGIC-Insured:
Wastewater Treatment Systems Revenue:
4,155,000 AAA 4.750% due 6/1/21 4,014,769
9,300,000 AAA 5.000% due 6/1/26 9,218,625
Water Systems Revenue:
7,500,000 AAA 5.000% due 6/1/15 7,603,125
1,750,000 AAA 5.000% due 6/1/16 1,765,313
5,000,000 AAA 4.750% due 6/1/21 4,831,250
8,400,000 AAA 5.000% due 6/1/26 8,326,500
Eastern Municipal Water District COP, Water & Sewer
Revenue, Series A:
FGIC-Insured:
1,000,000 AAA 6.750% due 7/1/12 1,231,250
1,000,000 AAA 5.375% due 7/1/13 1,051,250
17,750,000 AAA MBIA-Insured, 5.250% due 7/1/23 18,082,813
El Centro Financing Authority, Water & Wastewater Revenue, Series A,
AMBAC-Insured:
1,500,000 AAA 5.125% due 10/1/17 1,530,000
1,900,000 AAA 5.125% due 10/1/27 1,909,500
Fresno Sewer Revenue, Series A, MBIA-Insured:
18,150,000 AAA 5.000% due 9/1/23 18,013,875
7,400,000 AAA 4.750% due 9/1/26 7,094,750
200,000 AA Los Angeles COP, 6.600% due 11/1/99 204,868
Los Angeles Waste Water System Revenue, Series A:
7,830,000 AAA FGIC-Insured, 5.000% due 6/1/18 7,839,788
2,430,000 AAA MBIA-Insured, 5.700% due 6/1/09 2,639,588
Metropolitan Water District, Southern California Waterworks Revenue:
Series A:
3,000,000 AA 5.000% due 7/1/18 3,003,750
32,750,000 AA 4.750% due 7/1/22 31,603,750
Series C:
4,500,000 AA 5.250% due 7/1/16 4,646,250
2,500,000 AAA 4.750% due 7/1/21 2,415,624
Modesto Irrigation District Financing Authority Revenue:
5,000,000 AAA Series A, MBIA-Insured, 6.000% due 10/1/15 5,612,500
3,300,000 A+ Series B, 5.300% due 7/1/22 3,320,625
100,000 VMIG 1* Orange County California Sanitation Districts COP, No.'s 1, 2, 3, 6, 7, & 11,
Series C, FGIC-Insured, 3.050% due 8/1/17(d) 100,000
6,045,000 AAA Orange Cove Irrigation District Revenue, COP, (Rehabilitation Project),
AMBAC-Insured, 5.000% due 2/1/17 6,075,225
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Schedule of Investments (continued) February 28, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
==================================================================================================================================
<S> <C> <C> <C>
Water and Sewer -- 21.9% (continued)
$1,875,000 AAA Palmdale, CA Water District Revenue, COP, FGIC-Insured,
5.000% due 10/1/18 $ 1,877,344
4,560,000 AAA Pittsburg Public Finance Authority, Waste Water Revenue, Series A,
FGIC-Insured, 5.375% due 6/1/22 4,679,700
2,855,000 AAA Pomona Public Financing Authority, Series Q, MBIA-Insured,
5.750% due 12/1/15 3,101,242
28,875,000 AAA San Diego PFA Sewer Revenue, FGIC-Insured, 5.000% due 5/15/20 28,802,812
15,000,000 AA- San Francisco Public Utility, Community Water Revenue,
5.000% due 11/1/26 14,756,250
- ----------------------------------------------------------------------------------------------------------------------------------
231,192,917
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $974,338,435**) $1,053,995,026
==================================================================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service, except those which
are identified by an asterisk (*) are rated by Moody's Investor 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) Security partially segregated by Custodian for open purchase commitments
and/or future contract commitments.
(d) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
(e) Income from this issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(f) 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 18 and 19 for definitions of ratings and certain security
descriptions.
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 17
<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.
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
<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
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
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 19
<PAGE>
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities February 28, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $974,338,435) $1,053,995,026
Interest receivable 13,412,108
Receivable for Fund shares sold 1,249,909
Receivable for securities sold 160,150
Other assets 10,169
- ----------------------------------------------------------------------------------------
Total Assets 1,068,827,362
- ----------------------------------------------------------------------------------------
LIABILITIES:
Dividends payable 1,635,694
Distribution fees payable 284,541
Investment advisory fees payable 254,602
Payable for Fund shares purchased 161,765
Administration fees payable 160,800
Payable to bank 5,024
Accrued expenses 99,632
- ----------------------------------------------------------------------------------------
Total Liabilities 2,602,058
- ----------------------------------------------------------------------------------------
Total Net Assets $1,066,225,304
========================================================================================
NET ASSETS:
Par value of capital shares $ 62,975
Capital paid in excess of par value 991,646,912
Overdistributed net investment income (1,644,683)
Accumulated net realized loss from security transactions
and futures contracts (3,496,491)
Net unrealized appreciation of investments 79,656,591
- ----------------------------------------------------------------------------------------
Total Net Assets $1,066,225,304
========================================================================================
Shares Outstanding:
Class A 45,429,244
- ----------------------------------------------------------------------------------------
Class B 14,608,376
- ----------------------------------------------------------------------------------------
Class L 2,848,150
- ----------------------------------------------------------------------------------------
Class Y 88,505
- ----------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $16.93
- ----------------------------------------------------------------------------------------
Class B * $16.93
- ----------------------------------------------------------------------------------------
Class L ** $16.91
- ----------------------------------------------------------------------------------------
Class Y (and redemption price) $16.93
- ----------------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.17% of net asset value per share) $17.64
- ----------------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $17.08
========================================================================================
</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.
- --------------------------------------------------------------------------------
20 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations For the Year Ended February 28, 1999
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $52,188,414
- -------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 2,989,089
Distribution fees (Note 3) 2,871,527
Administration fees (Note 3) 1,893,181
Shareholder and system servicing fees 217,982
Shareholder communications 74,031
Audit and legal 55,845
Registration fees 49,864
Directors' fees 40,888
Pricing fees 34,904
Custody 34,405
Other 7,382
- -------------------------------------------------------------------------------
Total Expenses 8,269,098
- -------------------------------------------------------------------------------
Net Investment Income 43,919,316
- -------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FUTURES CONTRACTS (NOTES 4 AND 5):
Realized Gain (Loss) From:
Security transactions (excluding short-term securities) 3,691,716
Futures contracts (7,089,374)
- -------------------------------------------------------------------------------
Net Realized Loss (3,397,658)
- -------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 72,422,115
End of year 79,656,591
- -------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 7,234,476
- -------------------------------------------------------------------------------
Net Gain on Investments and Futures Contracts 3,836,818
- -------------------------------------------------------------------------------
Increase in Net Assets From Operations $47,756,134
===============================================================================
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 21
<PAGE>
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets For the Years Ended February 28,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
========================================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 43,919,316 $ 39,954,481
Net realized gain (loss) (3,397,658) 16,037,222
Increase in net unrealized appreciation 7,234,476 33,262,757
- --------------------------------------------------------------------------------------------------------
Increase in Net Assets From Operations 47,756,134 89,254,460
- --------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income (44,415,694) (40,945,727)
In excess of net investment income (1,220,517) --
Net realized gains (5,885,401) (11,749,638)
- --------------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (51,521,612) (52,695,365)
- --------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 253,027,947 171,885,490
Net asset value of shares issued for reinvestment of dividends 29,727,113 29,781,914
Cost of shares reacquired (125,516,529) (94,186,514)
- --------------------------------------------------------------------------------------------------------
Increase in Net Assets From Fund Share Transactions 157,238,531 107,480,890
- --------------------------------------------------------------------------------------------------------
Increase in Net Assets 153,473,053 144,039,985
NET ASSETS:
Beginning of year 912,752,251 768,712,266
- --------------------------------------------------------------------------------------------------------
End of year* $1,066,225,304 $912,752,251
========================================================================================================
* Includes overdistributed net investment income of: $(1,644,683) $(1,148,305)
========================================================================================================
</TABLE>
See Notes to Financial Statements.
- --------------------------------------------------------------------------------
22 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
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
SSBC Fund Management Inc. ("SSBC"), formerly known as Mutual Management Corp., 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.
On October 8, 1998, CFBDS, Inc., became the Fund's distributor. Prior to that
date Salomon Smith Barney Inc. ("SSB"), another subsidiary of SSBH, was the
Fund's distributor. SSB, as well certain other broker-dealers, continues to sell
Fund shares to the public as members of the selling group.
On June 12, 1998, the Fund's Class C shares were renamed Class L shares.
Effective June 15, 1998, Class
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 23
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
L shares are being sold at net asset value plus a maximum initial sales charge
of 1.00%. Class L shares also have a 1.00% contingent deferred sales charge
("CDSC"), which applies if redemption occurs within the first year of purchase.
There is also a 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 and thereafter by 1.00% per year until no CDSC is incurred. 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 year ended February 28, 1999, SSB received sales charges of
approximately $1,818,000 and $99,000 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 $45,000 $212,000 $8,000
================================================================================
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 year ended February 28, 1999, total Distribution Plan fees incurred
were:
Class A Class B Class L
================================================================================
Distribution Plan Fees $1,077,263 $1,519,558 $274,706
================================================================================
All officers and one Director of the Fund are employees of SSB.
4. Investments
During the year ended February 28, 1999, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $284,660,500
- --------------------------------------------------------------------------------
Sales 126,100,067
================================================================================
At February 28, 1999, aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were as follows:
================================================================================
Gross unrealized appreciation $80,298,447
Gross unrealized depreciation (641,856)
- --------------------------------------------------------------------------------
Net unrealized appreciation $79,656,591
================================================================================
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 February 28, 1999, the Fund had no open futures contracts.
- --------------------------------------------------------------------------------
24 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
6. Capital Shares
At February 28, 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. Effective June 12, 1998,
the Fund adopted the renaming of existing Class C shares as Class L shares.
At February 28, 1999, total paid-in capital amounted to the following for each
class:
Class A Class B Class L Class Y
================================================================================
Total Paid-in Capital $705,835,823 $238,256,733 $47,183,864 $1,653,984
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
February 28, 1999(1) February 28, 1998(2)
--------------------------- ---------------------------
Shares Amount Shares Amount
================================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 9,597,866 $163,199,621 6,214,750 $103,679,768
Shares issued on reinvestment 1,267,288 21,508,604 1,316,448 21,906,147
Shares reacquired (4,546,797) (77,276,081) (4,019,227) (66,642,233)
- ------------------------------------------------------------------------------------------------
Net Increase 6,318,357 $107,432,144 3,511,971 $58,943,682
================================================================================================
Class B
Shares sold 3,186,068 $54,114,417 2,887,789 $48,061,691
Shares issued on reinvestment 385,228 6,535,072 413,966 6,891,397
Shares reacquired (1,695,121) (28,785,369) (1,236,051) (20,591,600)
- ------------------------------------------------------------------------------------------------
Net Increase 1,876,175 $31,864,120 2,065,704 $34,361,488
================================================================================================
Class L(3)
Shares sold 1,131,864 $19,213,909 973,664 $16,181,597
Shares issued on reinvestment 79,230 1,343,281 56,783 947,401
Shares reacquired (251,417) (4,268,907) (169,042) (2,817,702)
- ------------------------------------------------------------------------------------------------
Net Increase 959,677 $16,288,283 861,405 $14,311,296
================================================================================================
Class Y
Shares sold 960,767 $16,500,000 249,488 $3,962,434
Shares issued on reinvestment 19,970 340,156 2,241 36,969
Shares reacquired (892,232) (15,186,172) (251,729) (4,134,979)
- ------------------------------------------------------------------------------------------------
Net Increase (Decrease) 88,505 $1,653,984 -- $(135,576)
================================================================================================
</TABLE>
(1) For Class Y shares, transactions are for the period from September 22,
1998 (inception date) to February 28, 1999.
(2) For Class Y shares, transactions are for the period from April 16, 1997
(inception date) to October 24, 1997.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 25
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
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 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended February 28:
<TABLE>
<CAPTION>
Class A Shares 1999(1) 1998 1997 1996(1) 1995
===========================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $16.99 $16.26 $16.31 $15.40 $16.15
- ---------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.77 0.82 0.85 0.85 0.89
Net realized and unrealized gain (loss) 0.07 0.98 0.15 0.93 (0.56)
- ---------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 0.84 1.80 1.00 1.78 0.33
- ---------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (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 (0.90) (1.07) (1.05) (0.87) (1.08)
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $16.93 $16.99 $16.26 $16.31 $15.40
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 5.02% 11.44% 6.37% 11.93% 2.46%
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $769,306 $664,471 $578,687 $582,324 $401,743
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.68% 0.70% 0.71% 0.76% 0.80%
Net investment income 4.53 4.97 5.29 5.26 5.76
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 13% 43% 60% 44% 59%
===========================================================================================================================
<CAPTION>
Class B Shares 1999(1) 1998 1997 1996(1) 1995
===========================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $16.98 $16.25 $16.32 $15.40 $16.15
- ---------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.68 0.74 0.76 0.75 0.81
Net realized and unrealized gain (loss) 0.08 0.98 0.14 0.96 (0.57)
- ---------------------------------------------------------------------------------------------------------------------------
Total Income From Operations 0.76 1.72 0.90 1.71 0.24
- ---------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (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 (0.81) (0.99) (0.97) (0.79) (0.99)
- ---------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $16.93 $16.98 $16.25 $16.32 $15.40
- ---------------------------------------------------------------------------------------------------------------------------
Total Return 4.56% 10.88% 5.73% 11.39% 1.89%
- ---------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $247,252 $216,234 $173,347 $153,044 $127,888
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.20% 1.21% 1.23% 1.29% 1.32%
Net investment income 4.02 4.45 4.75 4.71 5.25
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 13% 43% 60% 44% 59%
===========================================================================================================================
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
- --------------------------------------------------------------------------------
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:
<TABLE>
<CAPTION>
Class L Shares(1) 1999(2) 1998 1997 1996(2) 1995(3)
==================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $16.97 $16.24 $16.31 $15.40 $14.19
- ------------------------------------------------------------------------------------------------------------------
Income From Operations:
Net investment income 0.67 0.73 0.75 0.78 0.24
Net realized and unrealized gain 0.07 0.98 0.15 0.92 1.39*
- ------------------------------------------------------------------------------------------------------------------
Total Income From Operations 0.74 1.71 0.90 1.70 1.63
- ------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (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 (0.80) (0.98) (0.97) (0.79) (0.42)
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $16.91 $16.97 $16.24 $16.31 $15.40
- ------------------------------------------------------------------------------------------------------------------
Total Return 4.45% 10.83% 5.68% 11.30% 11.72%++
- ------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $48,169 $32,047 $16,678 $10,809 $762
- ------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.24% 1.26% 1.29% 1.39% 1.37%+
Net investment income 3.97 4.39 4.69 4.44 5.19+
- ------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 13% 43% 60% 44% 59%
==================================================================================================================
</TABLE>
(1) On June 12, 1998, Class C shares were renamed Class L shares.
(2) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(3) 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 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights (continued)
- --------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended February 28:
Class Y Shares 1999(1)(2)
================================================================================
Net Asset Value, Beginning of Year $17.19
- --------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.34
Net realized and unrealized loss (0.11)
- --------------------------------------------------------------------------------
Total Income From Operations 0.23
- --------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.37)
In excess of net investment income (0.02)
Net realized gains (0.10)
- --------------------------------------------------------------------------------
Total Distributions (0.49)
- --------------------------------------------------------------------------------
Net Asset Value, End of Year $16.93
- --------------------------------------------------------------------------------
Total Return++ 1.34%
- --------------------------------------------------------------------------------
Net Assets, End of Year (000s) $1,498
- --------------------------------------------------------------------------------
Ratios to Average Net Assets+:
Expenses 0.53%
Net investment income 4.56
- --------------------------------------------------------------------------------
Portfolio Turnover Rate 13%
- --------------------------------------------------------------------------------
(1) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method,
because it more accurately reflects the per share data for the period.
(2) 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>
- --------------------------------------------------------------------------------
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
Smith Barney California Municipals Fund Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Smith Barney California Municipals Fund Inc. as
of February 28, 1999, the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended and financial highlights for each of the years in the
four-year period then ended. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits. The financial highlights for the year ended February 28, 1995
were audited by other auditors whose report thereon, dated April 10, 1995,
expressed an unqualified opinion on those financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
February 28, 1999, by correspondence with the custodian. As to securities sold
but not yet delivered, we performed other appropriate auditing procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Smith
Barney California Municipals Fund Inc. as of February 28, 1999, the results of
its operations for the year then ended, the changes in its net assets for each
of the years in the two-year period then ended and financial highlights for each
of the years in the four-year period then ended, in conformity with generally
accepted accounting principles.
/s/ KPMG LLP
New York, New York
April 12, 1999
- --------------------------------------------------------------------------------
30 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Additional Shareholder Information (unaudited)
- --------------------------------------------------------------------------------
On March 9, 1998, the Special Meeting of shareholders of the Fund was held for
the purpose of voting on the following matters:
1. To elect Directors of the Fund; and
2. To approve or disapprove the reclassification, modification and/or
elimination of certain fundamental investment policies.
The results of the vote on Proposal 1 were as follows:
<TABLE>
<CAPTION>
Shares Voted Percentage Shares Voted Percentage of
Name of Directors For Shares Voted Against Shares Voted
=================================================================================================
<S> <C> <C> <C> <C>
Herbert Barg 27,609,547.355 97.837% 610,436.281 2.163%
Alfred J. Bianchetti 27,596,286.096 97.790 623,697.540 2.210
Martin Brody 27,604,659.921 97.820 615,323.715 2.180
Dwight B. Crane 27,646,375.930 97.967 573,607.706 2.033
Burt N. Dorsett 27,639,835.113 97.944 580,148.523 2.056
Elliot S. Jaffe 27,620,742.983 97.877 599,240.653 2.123
Stephen E. Kaufman 27,645,342.474 97.964 574,641.162 2.036
Joseph J. McCann 27,646,097.324 97.966 573,886.312 2.034
Heath B. McLendon 27,627,254.908 97.900 592,728.728 2.100
Cornelius C. Rose, Jr. 27,644,219.497 97.960 575,764.139 2.040
=================================================================================================
</TABLE>
Proposal 2 requested that shareholders approve certain changes to the
fundamental policies of the Fund in order to modernize them in view of certain
regulatory, business or industry developments that have occurred since original
adoption of these policies by the Fund. The following chart demonstrates that
all proposals were approved by shareholders.
Please note that "M" indicates a modification of the policy; and "R" indicates
the reclassification of the policy from fundamental (which would require
shareholder approval to change) to non-fundamental (which can be changed by a
vote of the Board of Directors).
================================================================================
M Issuance of Senior Securities Approved
- --------------------------------------------------------------------------------
M Borrowing Approved
- --------------------------------------------------------------------------------
M Lending Approved
- --------------------------------------------------------------------------------
R Margin and Short-Sales Approved
- --------------------------------------------------------------------------------
M Real Estate Approved
================================================================================
The information below reports the lowest percentage of shares voting for the
proposals, the highest percentage of shares voting against and abstaining by
shareholders of the Fund on all Proposals.*
Shares Percentage Shares Percentage Percentage
Voted of Shares Voted of Shares Shares of Shares
For Voted Against Voted Abstaining Voted
================================================================================
24,870,401.116 88.304% 773,372.549 2.746% 2,520,851.971 8.950%
================================================================================
* Broker non-votes constituted less than one percent of voted shares.
- --------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 31
<PAGE>
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
February 28, 1999:
o 99.74% of the dividends paid by the Fund from net investment income
as tax-exempt for regular Federal income tax purposes.
o The Taxpayer Relief Act of 1997 enacted differing rates of tax on
various long-term capital gain transactions. As a result, the Fund
designates:
o Total long-term capital gain distributions paid of $2,629,866.
- --------------------------------------------------------------------------------
32 1999 Annual Report to Shareholders
<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
SSBC Fund Management Inc.
Distributor
CFBDS, Inc.
Custodian
PNC Bank, N.A.
Shareholder Servicing Agent
First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, MA 02205-9134
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 4/99
