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SMITH BARNEY
CALIFORNIA MUNICIPALS
FUND INC.
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CLASSIC SERIES | SEMI-ANNUAL REPORT | AUGUST 31, 2000
[GRAPHIC OMITTED]
[LOGO] Smith Barney
Mutual Funds
Your Serious Money. Professionally Managed.(SM)
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NOT FDIC INSURED o NOT BANK GUARANTEED o MAY LOSE VALUE
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<PAGE>
[LOGO] Classic Series
JOSEPH P. DEANE [PHOTO OMITTED]
PORTFOLIO MANAGER
Semi-Annual Report o August 31, 2000
SMITH BARNEY CALIFORNIA
MUNICIPALS FUND INC.
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JOSEPH P. DEANE
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Joseph P. Deane has more than 30 years of securities business experience and has
managed the Fund since its inception.
Education: BA in History from Iona College
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FUND OBJECTIVE
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The Fund seeks to provide California investors with as high a level of current
income exempt from federal income taxes and California state personal income
taxes as is consistent with prudent investment management and the preservation
of capital.* The Fund invests at least 80% of its net assets in California
municipal securities. California municipal securities include securities issued
by the state of California and certain other municipal issuers, political
subdivisions, agencies and public authorities that pay interest that is exempt
from California personal income taxes.
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* Please note a portion of the income from the Fund may be subject to the
Alternative Minimum Tax ("AMT").
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FUND FACTS
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FUND INCEPTION
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April 9, 1984
MANAGER TENURE
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16 Years
MANAGER INVESTMENT
INDUSTRY EXPERIENCE
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30 Years
CLASS A CLASS B CLASS L
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NASDAQ SHRCX SCABX SCACX
INCEPTION 4/9/84 11/6/92 11/14/94
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Average Annual Total Returns as of August 31, 2000
Without Sales Charges(1)
Class A Class B Class L
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Six Months+ 9.47% 9.12% 9.17%
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One-Year 8.08 7.50 7.46
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Five-Year 6.61 6.07 6.01
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Ten-Year 7.56 N/A N/A
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Since Inception++ 8.33 6.62 8.06
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With Sales Charges(2)
Class A Class B Class L
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Six Months+ 5.07% 4.62% 7.11%
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One-Year 3.77 3.00 5.38
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Five-Year 5.73 5.91 5.79
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Ten-Year 7.12 N/A N/A
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Since Inception++ 8.06 6.62 7.88
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(1) Assumes reinvestment of all dividends and capital gain distributions, if
any, at net asset value and does not reflect deduction of all applicable
sales charges with respect to Class A and L shares of the applicable
contingent deferred sales charges ("CDSC") with respect to Class B and L
shares.
(2) Assumes reinvestment of all dividends and capital gain distributions, if
any at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum 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 initial 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 classes of shares are not available through
all investment professionals, you should contact your investment
professionals for further information.
All figures represent past performance and are not a guarantee of future
results. Investment returns and principal value will fluctuate, and
redemption value may be more or less than the original cost.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
++ Inception dates for Class A, B and L shares are April 9, 1984, November 6,
1992 and November 14, 1994, respectively.
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What's Inside
A Message from the Chairman ............................................. 1
Letter from the Portfolio Manager ....................................... 2
Historical Performance .................................................. 5
Smith Barney California Municipals Fund Inc. at a Glance ................ 8
Schedule of Investments ................................................. 9
Bond Ratings ............................................................ 19
Statement of Assets and Liabilities ..................................... 21
Statement of Operations ................................................. 22
Statements of Changes in Net Assets ..................................... 23
Notes to Financial Statements ........................................... 24
Financial Highlights .................................................... 28
[LOGO] Smith Barney
Mutual Funds
Your Serious Money. Professionally Managed.(SM)
----------------------------------------------------------------------------
Investment Products: Not FDIC Insured o Not Bank Guaranteed o May Lose Value
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<PAGE>
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A Message from the Chairman
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[PHOTO OMITTED]
HEATH B. MCLENDON
Chairman
Dear Shareholder:
The new millennium, so far, has been marked by higher volatility and concerns
that the bull market in stocks may be running out of steam. At SSB Citi Fund
Management LLC ("SSB Citi"), we have instituted many positive changes, with the
ultimate goal of offering our investors a well-rounded menu of stock and bond
funds that can be tailored to a wide range of investment objectives. Through the
course of the year, we have announced plans to rebrand and merge our Citi Funds
and Concert offerings to bring these funds under one recognized fund family
brand--Smith Barney Mutual Funds.
We believe that your serious money demands professional management. Since 1937,
Smith Barney has managed the serious money of individuals, their families and
their businesses. Today, with over $399 billion in assets under management,(1)
SSB Citi offers choices and solutions, uniting the distinguished history of
Smith Barney with the global reach of its parent, Citigroup.
The Smith Barney family of funds is a complex with a 60-year history of
investment expertise. In addition, Smith Barney is currently conducting an
extensive advertising campaign, highlighting a selection of the most popular
Smith Barney Mutual Funds and the investment professionals who manage them.
With economic growth robust, interest rates stable and inflationary pressures
apparently in check, many investors may not feel compelled to alter their
portfolio mixes. Yet, when times are good, it may be prudent for investors to
consider adding a bond fund to their investment plan to cushion the effects of
stock market volatility and gain additional income potential.
For those of you who are new shareholders, I would like to extend a warm welcome
to you on behalf of everyone here at SSB Citi. The Smith Barney California
Municipals Fund Inc. ("Fund") seeks to provide California investors with as high
a level of tax-exempt income(2) consistent with prudent investment management
and the preservation of capital. Portfolio manager Joe P. Deane and his
investment team carefully select securities for the Fund's portfolio by
identifying undervalued sectors and individual securities, while also selecting
securities they believe may benefit from changes in market conditions. Joe and
his investment team aim to preserve the Fund's assets when the markets are down
and generate gains in the Fund's portfolio during rising markets.
When you invest with SSB Citi you can do so with the confidence that your
interests come first, your investment success is paramount and that the ultimate
in resources is being committed to your financial success.
Thank you for your confidence in our investment management approach.
Sincerely,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman
September 12, 2000
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(1) As of August 31, 2000. This figure represents retail, institutional money
and separate accounts.
(2) Please note a portion of the income from the Fund may be subject to the
Alternative Minimum Tax ("AMT").
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Smith Barney California Municipals Fund Inc. 1
<PAGE>
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Shareholder Letter
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Dear Shareholder:
We are pleased to provide the semi-annual report for the Smith Barney California
Municipals Fund Inc. ("Fund") for the period ended August 31, 2000. In this
report we have summarized the period's prevailing economic and market conditions
and outlined our investment strategy. The information provided in this letter
represents the opinion of the manager and is not intended to be a forecast of
future events, a guarantee of future results nor investment advice.
Further, there is no assurance that certain securities will remain in or out of
the Fund. Please refer to pages 9 through 18 for a complete list and percentage
breakdown of the Fund's holdings. A detailed summary of the Fund's performance
can be found in the appropriate sections that follow. Also, please note any
discussion of the Fund's holdings is as of August 31, 2000 and is subject to
change. We hope you find this report to be useful and informative.
Performance Update
For the six months ended August 31, 2000, the Fund's Class A shares, without and
with sales charges, returned 9.47% and 5.07%, respectively. In comparison, the
Lehman Brothers Municipal Bond Index ("Lehman Index")(1) returned 6.79% for the
same period.
Municipal Bond Market Update
The municipal bond market had little reaction to the Federal Reserve Board's
("Fed's") decision to keep interest rates steady or to its view that risk in the
economy is weighted toward inflation. In our opinion, the bond market is still
pricing in anticipation of any possible Fed tightening by the end of the year.
However, we expect monetary policy to remain steady throughout 2000 and we would
not be surprised if the Fed were to shift to a more neutral stance before
year-end.
We also believe the Fed is likely to remain apolitical as the 2000 presidential
election nears. A critical point, which is often overlooked by many investors,
is that Fed monetary policy adjustments often take time to be absorbed into the
general economy. The Fed has tightened 175 basis points(2) since June 1999 and
the recent rallies we have seen in the bond market are a result of changes
enacted since the Fed began raising interest rates.
Since the last Fed tightening on May 16, 2000, most sectors of the bond market
have begun to improve relative to U.S. Treasuries, following the recent rise of
their yields to high relative levels. While the decline in yields may mean that
bargains in the market may be more difficult to find, the good news is that bond
performance for the most part has improved. And with improved performance, we
have seen improved market psychology, which, in turn, may reduce risks going
forward. (Of course, no guarantees can be given that our expectations will be
met.)
After accelerating sharply through the early months of 2000, global economic
growth appears to be peaking. Interest rate increases by the Fed have moderated
the U.S. expansion, but the tightening cycle may not be complete. Fed Chairman
Alan Greenspan has stated openly that he doubts whether economic growth needs to
slow markedly below potential in order to keep inflation low, but the matter
remains a key subject of debate at the Fed. In any case, among bond market
pundits, news of an economic slowdown typically calms fears of rising inflation
and fosters positive feelings regarding the future direction of bond prices.
In addition, a vibrant national economy has produced large cash surpluses in
many states and municipalities, causing general improvement in the credit
quality of
----------
(1) The Lehman Index is a broad-based unmanaged index of municipal bonds.
Please note that an investor cannot invest directly in an index.
(2) A basis point is 0.01% or one one-hundredth of a percent.
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2 2000 Semi-Annual Report to Shareholders
<PAGE>
municipal securities and giving some additional comfort to investors regarding
the creditworthiness of the securities they own.
Under current market conditions, demand for bonds is fairly constant, so reduced
supply provides support to market prices. As a result, during these times of
rapid interest rate movements, much of the price volatility experienced in other
areas of the bond market and which many investors find so unsettling, is
smoothed in the municipal bond market.
Municipal bond prices in general have been very firm lately: since late May, a
triple "A" 10-year municipal index has experienced price improvement (and yield
decline) of 50 basis points or more. Demand in the municipal bond market has
been steadily increasing as recent volatility in the stock market has
undoubtedly led some investors to rethink their portfolio mix and to establish
or augment their bond positions.
California Economic Highlights(3)
California, the seventh largest economy in the world, continues to expand. The
Golden State's economy, previously dominated by defense-related companies, is
now a leader in many global industry growth sectors of the 21st century, such as
high technology.
California's financial resources are extensive, as shown by the fact that
approximately 40% of all U.S. venture capital is found in California. In
addition, California presently receives more foreign direct investment than any
other U.S. state and is also the largest exporting state in the nation,
generating nearly $107 billion in export sales in 1999.
We think the growth of new technologies, particularly in e-commerce, is largely
responsible for the rapid expansion of California's economy during the last few
years. Although it is home to several well-known technology companies, there are
also many small companies based in California that have contributed
significantly to the state's economic boom.
California's economic resurgence, driven mainly by the growth of new, more
diversified industries, should continue to effectively put it on a more solid
financial footing. In our view, California should remain a competitive economic
force for many years to come due in large part to its strong employment growth,
rising real estate values and an annual state Gross Domestic Product ("GDP")(4)
of more than $1 trillion.
Investment Strategy
As previously noted, the Fund seeks to provide California investors with as high
a level of current income exempt from federal income taxes and California state
personal income tax as is consistent with conservative investment management and
preservation of capital.(5)
During the past year, the Fund focused on water and sewer bonds (20.2%),
hospital bonds (15.3%) and escrowed to maturity bonds (7.7%) because we believe
they offered good relative values. In addition, as of August 31, 2000, 98.6% of
the Fund's holdings were rated investment-grade,(6) with 65.4% of the Fund
invested in AAA bonds, the highest possible rating.
The Fund's investment strategy going forward will be three-fold:
o To lengthen maturities in the portfolio to take advantage of the
inexpensive valuations of municipal bonds relative to U.S.
Treasuries;
o To focus on investing in high-grade issues; and
o To invest in discount paper, as this is where we believe we can
obtain the best values.
----------
(3) Sources: Fitch IBCA, Inc., Duff & Phelps Securities LLC and the State of
California.
(4) GDP is the market value of the goods and services produced by labor and
property in the U.S. GDP is comprised of consumer and government
purchases, private domestic investments and net exports of goods and
services.
(5) Please note that a portion of the Fund's income may be subject to the
Alternative Minimum Tax ("AMT").
(6) Investment-grade bonds are those rated Aaa, Aa, A and Baa by Moody's
Investors Service, Inc. or AAA, AA, A and BBB by Standard & Poor's Ratings
Service, or that have an equivalent rating by any nationally recognized
statistical rating organization, or are determined by the manager to be of
equivalent quality.
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Smith Barney California Municipals Fund Inc. 3
<PAGE>
Another goal is to sell off some of our shorter-term maturities that were
defensive and stretch out longer on the yield curve.(7) We see the best
opportunity for potential reward right now at the long end of the yield curve.
Municipal Bond Market Outlook
We believe that demand for municipal bonds may remain strong based on economic
issues related to the political campaign. One of the main topics is how the
various candidates would spend the significant federal government surplus. The
Congressional Budget Office's baseline projections show surpluses rising from
$232 billion in 2000 to $685 billion in 2010. The total budget surplus over ten
years is projected to be about $4.6 trillion.
In our opinion, a number of factors bode well for the municipal bond market. The
new issue market is expected to shrink this year, boosting demand for bonds
currently outstanding and enhancing interest for the roughly $175 billion of new
municipal bonds expected to be issued in 2000. Given the thinly traded market
and lack of liquidity that currently exist, we believe that any positive
catalyst, such as an increase in issue volume, may give the market much needed
momentum.
Fiscal trends are another major plus. During past economic downturns, some
municipal issuers facing declining tax receipts were hard-pressed to repay their
bond obligations. Today, many state and local governments boast budget
surpluses. We believe these surpluses indicate that some investors may feel more
comfortable owning municipal bonds, even in a downturn. Lastly, recent narrowing
of spreads in the taxable market has made other fixed-income alternatives less
attractive. All of these trends help to explain why we remain optimistic about
the prospects for the municipal bond market in the months ahead.
Thank you for investing in the Smith Barney California Municipals Fund Inc. We
look forward to continuing to help you pursue your financial goals in the
future.
Sincerely,
/s/ Joseph P. Deane
Joseph P. Deane
Vice President and
Investment Officer
September 12, 2000
----------
(7) The yield curve is the graphical depiction of the relationship between the
yield on bonds of the same credit quality but different maturities.
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4 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Historical Performance -- Class A Shares
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
--------------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
8/31/00 $15.28 $16.32 $0.39 $0.00 $0.00 9.47%+
----------------------------------------------------------------------------------------------------------------------
2/29/00 16.93 15.28 0.76 0.00 0.00 (5.36)
----------------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------------
2/28/94 16.70 16.15 0.84 0.65 0.00 5.92
----------------------------------------------------------------------------------------------------------------------
2/28/93 15.78 16.70 0.97 0.29 0.04 14.76
----------------------------------------------------------------------------------------------------------------------
2/29/92 15.66 15.78 1.05 0.27 0.00 9.50
----------------------------------------------------------------------------------------------------------------------
2/28/91 15.61 15.66 1.07 0.12 0.00 8.29
======================================================================================================================
Total $9.30 $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
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
8/31/00 $15.28 $16.31 $0.35 $0.00 $0.00 9.12%+
---------------------------------------------------------------------------------------------------------------------
2/29/00 16.93 15.28 0.67 0.00 0.00 (5.87)
----------------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------------
2/29/96 15.40 16.32 0.76 0.03 0.00 11.39
----------------------------------------------------------------------------------------------------------------------
2/28/95 16.15 15.40 0.80 0.19 0.00 1.89
----------------------------------------------------------------------------------------------------------------------
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 $5.86 $1.69 $0.01
======================================================================================================================
</TABLE>
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Smith Barney California Municipals Fund Inc. 5
<PAGE>
--------------------------------------------------------------------------------
Historical Performance -- Class L Shares
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Asset Value
--------------------------
Beginning End Income Capital Gain Return Total
Period Ended of Period of Period Dividends Distributions of Capital Returns(1)
======================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
8/31/00 $15.26 $16.30 $0.34 $0.00 $0.00 9.17%+
----------------------------------------------------------------------------------------------------------------------
2/29/00 16.91 15.26 0.66 0.00 0.00 (5.92)
----------------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------------
2/28/97 16.31 16.24 0.77 0.20 0.00 5.68
----------------------------------------------------------------------------------------------------------------------
2/29/96 15.40 16.31 0.76 0.03 0.00 11.30
----------------------------------------------------------------------------------------------------------------------
Inception* -- 2/28/95 14.19 15.40 0.23 0.19 0.00 11.72+
======================================================================================================================
Total $4.21 $0.75 $0.00
======================================================================================================================
</TABLE>
It is the Fund's policy to distribute dividends monthly and capital gains, if
any, annually.
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Average Annual Total Returns
--------------------------------------------------------------------------------
Without Sales Charges(1)
----------------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 8/31/00+ 9.47% 9.12% 9.17%
--------------------------------------------------------------------------------
Year Ended 8/31/00 8.08 7.50 7.46
--------------------------------------------------------------------------------
Five Years Ended 8/31/00 6.61 6.07 6.01
--------------------------------------------------------------------------------
Ten Years Ended 8/31/00 7.56 N/A N/A
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Inception* through 8/31/00 8.33 6.62 8.06
================================================================================
With Sales Charges(2)
----------------------------------------
Class A Class B Class L
================================================================================
Six Months Ended 8/31/00+ 5.07% 4.62% 7.11%
--------------------------------------------------------------------------------
Year Ended 8/31/00 3.77 3.00 5.38
--------------------------------------------------------------------------------
Five Years Ended 8/31/00 5.73 5.91 5.79
--------------------------------------------------------------------------------
Ten Years Ended 8/31/00 7.12 N/A N/A
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Inception* through 8/31/00 8.06 6.62 7.88
================================================================================
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6 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Cumulative Total Returns
--------------------------------------------------------------------------------
Without Sales Charges(1)
================================================================================
Class A (8/31/90 through 8/31/00) 107.25%
--------------------------------------------------------------------------------
Class B (Inception* through 8/31/00) 65.10
--------------------------------------------------------------------------------
Class L (Inception* through 8/31/00) 56.76
================================================================================
(1) Assumes reinvestment of all dividend and capital gain distributions, if
any, at net asset value and does not reflect the deduction of the
applicable sales charges with respect to Class A and L shares or the
applicable contingent deferred sales charges ("CDSC") with respect to
Class B and L shares.
(2) Assumes reinvestment of all dividend and capital gain distributions, if
any, at net asset value. In addition, Class A and L shares reflect the
deduction of the maximum initial sales charge of 4.00% and 1.00%,
respectively; Class B shares reflect the deduction of a 4.50% CDSC, which
applies if shares are redeemed within one year from purchase, this CDSC
declines by 0.50% the first year after purchase and thereafter by 1.00%
per year until no CDSC is incurred. Class L shares also reflect the
deduction of a 1.00% CDSC, which applies if shares are redeemed within the
first year of purchase.
+ Total return is not annualized, as it may not be representative of the
total return for the year.
* Inception dates for Class A, B and L shares are April 9, 1984, November 6,
1992 and November 14, 1994, respectively.
--------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 7
<PAGE>
--------------------------------------------------------------------------------
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 Debt Fund Average+
--------------------------------------------------------------------------------
August 1990 -- August 2000
[The following table was depicted as a mountain graph in the printed material.]
Smith Barney Lehman Brothers Lipper California
California Municipals Municipal Municipal Debt
Fund Inc. Bond Index Fund Average
--------------------- --------------- -----------------
Aug\1990 10000 10000 10000
Feb\1991 10229 10670 10624
Feb\1992 11211 11736 11636
Feb\1993 12866 13351 13264
Feb\1994 13406 14091 13995
Feb\1995 13735 14356 14029
Feb\1996 15426 15942 15486
Feb\1997 16409 16820 16233
Feb\1998 18286 18359 17757
Feb\1999 19204 19573 18726
Feb\2000 18175 19166 17186
Aug\2000 19896 20468 18560
+ Hypothetical illustration of $10,000 invested in Class A shares on August
31, 1990, assuming deduction of the maximum 4.00% sales charge at the time
of investment and reinvestment of dividends and capital gains, if any, at
net asset value through August 31, 2000. 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 Debt
Fund Average is composed of an average of the Fund's peer group of 113
mutual funds investing in California municipal bonds as of August 31,
2000. The per formance 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.]
Education 5.5%
Escrowed to Maturity 7.7%
General Obligation 5.2%
Hospitals 15.3%
Housing: Single-Family 2.5%
Miscellaneous 19.4%
Pre-Refunded 2.8%
Tax Allocation 3.2%
Transportation 6.5%
Utilities 4.5%
Water & Sewer 20.2%
Other 7.2%
Summary of Investments by Combined Ratings
--------------------------------------------------------------------------------
Standard Percentage
Moody's & Poor's of Total Investments
---------------------------------------------------------------
Aaa AAA 65.4%
Aa AA 13.7
A A 13.9
Baa BBB 5.6
Ba BB 0.8
NR NR 0.6
-----
100.0%
=====
* As a percentage of total investments. Holdings are as of August 31, 2000
and are subject to change.
--------------------------------------------------------------------------------
8 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
============================================================================================================================
<S> <C> <C> <C>
Education -- 5.5%
$ 2,000,000 AAA Adelanto School District, Series B, FGIC-Insured,
zero coupon due 9/1/18 $ 752,500
California Educational Facilities Authority Revenue:
2,980,000 Aa3* Claremont University Center, Series B, 5.000% due 3/1/24 2,831,000
Pepperdine University, Series A:
1,775,000 A1* 5.000% due 11/1/18 1,721,750
1,500,000 A1* 5.000% due 11/1/29 1,389,375
6,125,000 Ba1* Pooled College & University Project, Series A, 5.500% due 7/1/15 6,063,750
Southwestern University Project:
2,635,000 A3* 6.600% due 11/1/14 2,858,975
4,505,000 A3* 6.700% due 11/1/24 4,797,825
2,500,000 A3* University of San Diego, 6.500% due 10/1/22 2,668,750
800,000 A+ California State Public Works Board, Lease Revenue, High Technology
Facility, San Jose Facilities, Series A, 7.750% due 8/1/06 898,000
10,000,000 AAA Fremont Unified School District, Alameda County, Series A, FGIC-Insured,
4.750% due 8/1/20 9,325,000
1,000,000 AAA Fullerton University Foundation, Auxiliary Organization Revenue,
Series A, MBIA-Insured, 5.750% due 7/1/30 1,032,500
1,250,000 AAA San Diego Community College District, Lease Revenue, MBIA-Insured,
6.125% due 12/1/16 1,404,688
1,530,000 AAA Santa Rosa High School District, FGIC-Insured, 5.900% due 5/1/14 1,619,888
Standard School District COP, (Capital Improvement Project), Series A:
320,000 A- 6.200% due 3/1/10 339,600
340,000 A- 6.250% due 3/1/11 360,825
4,500,000 BBB Ukiah Unified School District COP, (Measure A Capital Projects),
6.000% due 9/1/10 4,713,750
2,600,000 AAA Victor Valley Unified High School District, MBIA-Insured,
5.750% due 11/1/17 2,710,500
2,500,000 Baa1* Yuba City Unified School District COP, (Andors Karperos School
Construction Project), 6.700% due 2/1/13 2,575,700
----------------------------------------------------------------------------------------------------------------------------
48,064,376
----------------------------------------------------------------------------------------------------------------------------
Electric -- 0.7%
Sacramento Power Authority, Cogeneration Project Revenue:
1,800,000 BBB- 6.500% due 7/1/07 1,982,250
1,800,000 BBB- 6.500% due 7/1/08 1,986,750
2,200,000 BBB- 6.500% due 7/1/09 2,395,250
----------------------------------------------------------------------------------------------------------------------------
6,364,250
----------------------------------------------------------------------------------------------------------------------------
Escrowed to Maturity(b) -- 7.7%
270,000 AAA Contra Costa County Home Mortgage Revenue, Mortgage Backed
Securities Program, GNMA-Collateralized, 7.750% due 5/1/22 341,550
100,000 AAA Kern High School District, Series C, MBIA-Insured, 8.750% due 8/1/03 112,750
125,000 AAA Martinez Home Mortgage Revenue Bonds, 10.750% due 2/1/16 186,250
3,325,000 AAA Perris Single-Family Mortgage Revenue, Series A, Mortgage Backed
Securities Program, GNMA-Collateralized, 8.300% due 6/1/13 (c) 4,222,750
6,000,000 AAA Pleasanton-Suisun City HFA, Home Mortgage, Series A, MBIA-Insured,
zero coupon due 10/1/16 2,475,000
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 9
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
============================================================================================================================
<S> <C> <C> <C>
Escrowed to Maturity(b) -- 7.7% (continued)
Riverside County Single-Family Mortgage Revenue, Series A,
Mortgage-Backed Securities Program, GNMA-Collateralized:
$ 2,620,000 AAA 8.300% due 11/1/12 (c) $ 3,327,400
1,000,000 AAA 7.800% due 5/1/21 (c) 1,278,750
San Joaquin Hills California Transportation Corridor Agency
Toll Road Revenue:
5,000,000 AAA Zero coupon due 1/1/14 2,512,500
60,000,000 AAA Zero coupon due 1/1/16 26,550,000
17,500,000 AAA Zero coupon due 1/1/17 7,284,375
25,000,000 AAA Zero coupon due 1/1/18 9,781,250
20,000,000 AAA Zero coupon due 1/1/19 7,325,000
775,000 AAA Santa Rosa Hospital Revenue, (Santa Rosa Hospital Memorial Project),
10.300% due 3/1/11 1,022,031
1,250,000 BBB Sequoia Hospital District Revenue, 5.375% due 8/15/23 1,212,500
----------------------------------------------------------------------------------------------------------------------------
67,632,106
----------------------------------------------------------------------------------------------------------------------------
General Obligation -- 5.2%
California State GO:
5,000,000 AAA 4.750% due 2/1/29 4,481,250
Veterans Series:
455,000 AA- Series AL, 9.700% due 4/1/02 493,675
725,000 AA- Series AM, 9.000% due 10/1/02 795,687
Series AT:
4,000,000 AA- 9.700% due 2/1/01 4,090,600
1,000,000 AA- 9.500% due 2/1/10 1,378,750
2,000,000 AA- Series AU, 8.400% due 10/1/06 2,372,500
4,720,000 AAA Pasadena Unified School District, Series A, FGIC-Insured,
5.000% due 5/1/20 4,566,600
1,000,000 Aa1* San Diego Public Safety Communication Project, 6.650% due 7/15/11 1,190,000
Santa Margarita/Dana Point Authority Revenue GO:
20,000,000 AAA Series A, AMBAC-Insured, 5.125% due 8/1/18 19,950,000
1,500,000 AAA Water Improvement Districts 3, 3A, 4 & 4A, Series B, MBIA-Insured,
7.250% due 8/1/14 1,876,875
4,000,000 AAA Tahoe Truckee Unified School District Improvement, District No. 1,
Series A, FGIC-Insured, 5.750% due 8/1/20 4,160,000
----------------------------------------------------------------------------------------------------------------------------
45,355,937
----------------------------------------------------------------------------------------------------------------------------
Hospitals -- 15.3%
1,500,000 A+ ABAG Finance Authority for Nonprofit Corp. COP, (Rehabilitation Mental
Health Services Inc. Project), California Mortgage Insured,
6.550% due 6/1/22 1,556,250
California Health Facilities Financing Authority Revenue:
AMBAC-Insured:
2,500,000 AAA Catholic Health Facilities, 5.750% due 7/1/15 2,621,875
5,620,000 AAA Catholic Healthcare West, Series E, 5.250% due 7/1/16 5,676,200
10,000,000 A2* Cedars-Sinai Medical Center, Series A, 6.125% due 12/1/30 10,150,000
Industrial Health Facilities:
705,000 AA- Casa de las Campanas, Series A, 5.500% due 8/1/12 732,319
2,500,000 AA- Marshall Hospital, Series A, 5.250% due 11/1/18 2,484,375
1,000,000 AAA Scripps Health, Series C, MBIA-Insured, 5.000% due 10/1/14 1,007,500
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
10 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
============================================================================================================================
<S> <C> <C> <C>
Hospitals -- 15.3% (continued)
Kaiser Permanente:
Series A:
Catholic Healthcare West, MBIA-Insured:
$ 2,000,000 AAA 5.000% due 7/1/17 $ 1,960,000
3,000,000 AAA 5.125% due 7/1/24 2,861,250
3,500,000 AAA FSA-Insured, 5.000% due 6/1/18 3,399,375
Series B:
1,750,000 AAA 5.250% due 10/1/14 1,710,625
5,000,000 A 5.250% due 10/1/16 4,812,500
17,500,000 A 5.000% due 10/1/18 15,903,125
5,145,000 AAA Stanford Health Care, Series A, 5.000% due 11/15/18 4,997,081
Sutter Health, Series A:
FSA-Insured:
1,470,000 AAA 5.125% due 8/15/17 1,470,000
1,500,000 AAA 5.250% due 8/15/27 1,447,500
MBIA-Insured:
3,000,000 A 5.000% due 8/15/18 2,913,750
2,000,000 A 5.000% due 8/15/19 1,952,500
California Statewide Community Development Authority Revenue COP:
4,515,000 AAA Industrial Health Facilities, Unihealth, Series A, AMBAC-Insured,
5.500% due 10/1/07 4,876,200
19,000,000 A Kaiser Permanente, 5.300% due 12/1/15 18,525,000
1,100,000 AA- Solheim Lutheran Home, 6.500% due 11/1/17 1,167,375
St. Joseph's Health System:
4,825,000 Aa* 5.500% due 7/1/14 4,861,187
4,000,000 AA- 5.250% due 7/1/21 3,790,000
6,000,000 AA- 6.625% due 7/1/21 6,645,000
Sutter Health Obligated Group, MBIA-Insured:
3,500,000 Aa* 5.500% due 8/15/09 3,670,625
500,000 AAA 6.000% due 8/15/25 516,250
Fresno Health Facilities Revenue, Holy Cross Health System Corp.:
2,200,000 AA- 5.200% due 12/1/04 2,233,000
2,435,000 AA- 5.375% due 12/1/06 2,489,788
1,000,000 AAA Modesto Health Facilities Revenue, Memorial Hospital Association,
Series B, MBIA-Insured, 5.125% due 6/1/17 998,750
2,000,000 A Riverside County Asset Leasing Corp., (Riverside County Hospital Project),
Series A, 6.375% due 6/1/09 2,095,000
2,750,000 A2* San Joaquin County COP, (General Hospital Project 1993),
6.250% due 9/1/13 2,963,125
8,940,000 A Torrance Hospital Revenue Bonds, Little County of Mary Hospital,
6.875% due 7/1/15 9,476,400
1,475,000 BBB- Valley Health System COP, 6.875% due 5/15/23 1,449,188
----------------------------------------------------------------------------------------------------------------------------
133,413,113
----------------------------------------------------------------------------------------------------------------------------
Housing: Multi-Family -- 2.1%
1,250,000 AAA ABAG County, Series 96A, FNMA-Collateralized, 5.700% due 11/1/26 1,295,312
California HFA:
305,000 Aa2* Home Mortgage Revenue, Series F-1, 7.000% due 8/1/26 (c) 320,631
1,595,000 Aa2* Series A, 6.625% due 2/1/24 (c) 1,652,819
480,000 AAA Series C, MBIA-Insured, 7.000% due 8/1/23 (b) 496,800
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 11
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
============================================================================================================================
<S> <C> <C> <C>
Housing: Multi-Family -- 2.1% (continued)
$ 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) $ 6,270,000
1,740,000 AAA Riverside County Housing Authority, Multi-Family Housing Revenue,
Brandon Place Apartments, Series B, FNMA-Collateralized,
5.625% due 7/1/29 (c) 1,833,525
665,000 AAA San Francisco City & County Redevelopment, Multi-Family
Housing Revenue, 1045 Mission Apartments, Series C,
GNMA-Collateralized, 5.200% due 12/20/17 (c) 651,700
1,500,000 Aa1* San Jose Multi-Family Timberwood Apartments, Series A,
LOC-Wells Fargo Bank, 7.500% due 2/1/20 1,515,000
1,320,000 AA Santa Rosa Mortgage Revenue, (Village Square Apartments Project),
Series A, FHA-Insured, 6.875% due 9/1/27 1,395,900
2,755,000 AAA Victorville Multi-Family Housing Revenue, Wimbledon Apartments,
Series A, GNMA-Collateralized, 6.300% due 4/20/31 2,858,313
----------------------------------------------------------------------------------------------------------------------------
18,290,000
----------------------------------------------------------------------------------------------------------------------------
Housing: Single-Family -- 2.5%
California HFA Revenue Bonds, Home Mortgage:
10,000 Aa2* 10.250% due 2/1/14 10,016
Capital Appreciation:
350,000 Aa2* Series 1983-B, zero coupon due 8/1/15 106,312
310,000 Aa2* Series 1984-B, zero coupon due 8/1/16 52,312
5,225,000 Aa2* Series E, Remarketed 10/16/96, 6.375% due 8/1/27 (c) 5,414,406
Single-Family Mortgage:
6,100,000 AAA Issue A-2, FHA-Insured, 6.350% due 8/1/15 (c) 6,412,625
3,450,000 AAA Series B-3, Class II, MBIA-Insured, 5.375% due 8/1/21 3,355,125
4,155,000 AAA California Rural Home Mortgage Fiancing Authority, Single-Family
Mortgage Revenue, Mortgage Backed Security, Series D,
GNMA/FNMA-Collateralized, 6.000% due 12/1/31 4,248,487
455,000 Aaa* Los Angeles Home Mortgage Revenue Bonds, GNMA-Collateralized,
(Second Mortgage Project), 8.100% due 5/1/17 471,494
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 (c) 1,912,500
----------------------------------------------------------------------------------------------------------------------------
21,983,277
----------------------------------------------------------------------------------------------------------------------------
Miscellaneous -- 19.4%
500,000 A3* ABAG Finance Authority Nonprofit Corp. COP, Peninsula Family, YMCA,
Series A, 6.800% due 10/1/11 524,350
2,000,000 AAA Anaheim COP, Regular Fixed Option Bonds, MBIA-Insured,
6.200% due 7/16/23 2,105,000
1,025,000 Baa2* Azusa COP, (Capital Improvements Refinancing Project),
6.625% due 8/1/13 1,092,906
10,000,000 AA- Beverly Hills Public Financing Authority, Lease Revenue,
(Capital Improvement Project), Series A, 5.250% due 6/1/28 9,775,000
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
12 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
============================================================================================================================
<S> <C> <C> <C>
Miscellaneous-- 19.4% (continued)
California Public Capital Improvements Finance Authority Revenue,
(Pooled Project):
$ 750,000 NR Series A, 8.500% due 3/1/18 $ 760,035
540,000 AAA Series B, BIG-Insured, 8.100% due 3/1/18 544,871
California State Public Works Board, Lease Revenue:
2,500,000 AAA Department of Corrections, Series B, MBIA-Insured,
5.000% due 9/1/21 2,400,000
5,000,000 AAA Department of Health Services, Series A, 5.750% due 11/1/24 5,137,500
3,000,000 AAA Contra Costa County COP, (Capital Projects), AMBAC-Insured,
5.250% due 2/1/21 2,973,750
2,500,000 AAA Corona, PFA Revenue, Superior Lien, Series A, FSA-Insured,
5.000% due 9/1/20 2,415,625
3,680,000 AAA Fontana COP, AMBAC-Insured, 5.000% due 9/1/21 3,532,800
Fresno Joint Powers Financing Authority, Local Agency Revenue, Series A:
600,000 BBB 6.000% due 9/2/01 606,582
1,000,000 BBB 6.200% due 9/2/03 1,023,750
1,500,000 BBB 6.550% due 9/2/12 1,595,625
3,000,000 AAA Long Beach Board Finance Authority Lease Revenue, (Rainbow Harbor
Refining Project), Series A, AMBAC-Insured, 5.250% due 5/1/24 2,947,500
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 3,412,500
Los Angeles County COP:
2,000,000 NR Special Linked SAVRS & RIBS, 6.708% due 6/1/15 2,067,360
1,000,000 BBB+ Structured Yield Curve Note, 6.600% due 11/1/11 1,047,500
Los Angeles County Public Works Financing Authority Revenue:
3,500,000 AAA Multiple Capital Facilities Project, Series B, AMBAC-Insured,
5.125% due 12/1/29 3,351,250
6,500,000 AA Regional Park & Open Space District, Series A, 5.000% due 10/1/19 6,329,375
1,750,000 AAA Marin Emergency Radio & Public Safety Revenue Authority,
AMBAC-Insured, 4.750% due 8/15/18 1,669,063
735,000 AAA Oakland Lease Revenue COP, AMBAC-Insured, 4.750% due 6/1/19 689,981
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 2,710,050
895,000 Baa1* Pleasanton Joint Powers Financing Authority Revenue, Series A,
6.150% due 9/2/12 940,869
Sacramento City Financing Authority Revenue, Capital Improvement,
(Solid Waste & Redevelopment Project), AMBAC-Insured:
1,600,000 AAA 5.875% due 12/1/29 1,668,000
2,000,000 Aa3* 5.625% due 6/1/30 2,032,500
4,600,000 AAA Sacramento County COP, (Public Facilities Project), Solid Waste Facilities,
MBIA-Insured, 5.250% due 12/1/16 4,674,750
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 2,821,000
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 2,415,000
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 13
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
============================================================================================================================
<S> <C> <C> <C>
Miscellaneous -- 19.4% (continued)
$ 1,000,000 AAA San Diego County COP, Regular Fixed Option Certificates, MBIA-Insured,
6.363% due 11/18/19 $ 1,029,610
5,000,000 AAA San Diego Special Tax Facilities, Community District No. 1, MBIA-Insured,
4.750% due 9/1/20 4,650,000
25,000,000 AAA San Francisco California State Building Authority, Lease Revenue,
San Francisco Civic Center, Complex-A, AMBAC-Insured,
5.250% due 12/1/21 24,781,250
San Francisco City & County COP, San Bruno Jail No. 3, AMBAC-Insured:
14,000,000 AAA 5.250% due 10/1/26 13,720,000
5,000,000 AAA 5.250% due 10/1/33 4,850,000
135,000 A3* San Francisco Downtown Parking, Corporate Parking Revenue Bonds,
6.250% due 4/1/04 143,775
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 1,492,338
5,995,000 AAA San Ramone COP, (Central Park Project), FSA-Insured,
5.000% due 8/1/24 5,695,250
2,875,000 AAA Santa Ana Financing Authority Lease Revenue, Police Administration &
Holding Facility, Series A, MBIA-Insured, 6.250% due 7/1/24 3,259,531
3,460,000 A+ Santa Barbara County COP, 5.700% due 3/1/11 3,641,650
5,680,000 AAA Santa Maria Redevelopment Agency, Town Center Package, FSA-Insured,
5.000% due 6/1/16 5,680,000
2,795,000 AAA Solano County COP, (Capital Improvement Project),
5.000% due 11/15/19 2,711,150
Sonoma COP, Detention Facilities Improvement Project:
4,200,000 A+ 5.000% due 11/15/13 4,236,750
3,000,000 A+ 5.000% due 11/15/17 2,940,000
2,000,000 AAA South Orange County Public Finance Authority, Special Tax Revenue,
Series A, MBIA-Insured, 7.000% due 9/1/10 2,405,000
Virgin Islands Public Finance Authority Revenue, Series A:
10,000,000 BBB- 5.500% due 10/1/18 9,512,500
3,000,000 BBB- Gross Receipts Taxes, Loan Note, 6.500% due 10/1/24 3,116,250
2,000,000 AAA Vista Community Development, Tax Allocation Revenue,
Vista Redevelopment Project Area, MBIA-Insured, 5.250% due 9/1/15 2,030,000
----------------------------------------------------------------------------------------------------------------------------
169,159,546
----------------------------------------------------------------------------------------------------------------------------
Pollution Control Revenue -- 2.4%
California Financing Authority:
2,500,000 AA- Pacific Gas & Electric Co., Series B, 6.350% due 6/1/09 (c) 2,637,500
500,000 BBB Resource Recovery Revenue, Waste Management Income, Series A,
7.150% due 2/1/11 (c) 512,500
San Diego Gas & Electric, Series A:
5,000,000 A+ 5.900% due 6/1/14 5,456,250
1,500,000 AA- 6.800% due 6/1/15 (c) 1,747,500
9,900,000 A+ Southern California Edison Co., Series B, 6.400% due 12/1/24 10,320,750
----------------------------------------------------------------------------------------------------------------------------
20,674,500
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
14 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
============================================================================================================================
<S> <C> <C> <C>
Pre-Refunded(e) -- 2.8%
$ 1,450,000 NR California Health Facilities Financing Authority Revenue,
St. Elizabeth Hospital, (Call 11/15/02 @ 102),
6.200% due 11/15/09 $ 1,542,437
2,000,000 AAA California Public Works Board Lease Revenue, Series A,
(California State University Project), (Call 10/1/02 @ 102),
6.700% due 10/1/17 2,145,000
1,405,000 AAA Contra Costa County COP, Merrithew Memorial Hospital,
(Call 11/1/02 @ 102), 6.500% due 11/1/06 1,503,350
1,000,000 AA Fresno Health Facilities Revenue, Holy Cross Health System, St. Agnes,
(Call 6/1/02 @ 102), 6.625% due 6/1/21 1,062,500
1,000,000 NR Inglewood Insured Hospital Revenue Bonds, Daniel Freeman Hospital Inc.,
(Call 5/1/01 @ 102), 6.750% due 5/1/13 1,037,630
450,000 AAA Los Angeles Convention & Exhibition Center Authority,
(Call 12/1/05 @ 100), 9.000% due 12/1/20 551,250
1,950,000 Aa3* Los Angeles Department of Water & Power, Electric Plantation Revenue,
(Call 1/15/01 @ 102), 7.100% due 1/15/31 2,007,525
Mojave Water Agency, Improvement District, Morongo Basin,
(Call 9/1/02 @ 102):
1,500,000 AAA 6.600% due 9/1/13 1,601,250
5,510,000 AAA 6.600% due 9/1/22 (d) 5,881,925
750,000 A- Northern California Power Agency, Public Power Revenue,
(Geothermal Project No. 3), Series A, (Call 7/1/08 @ 100),
5.000% due 7/1/09 785,625
500,000 AAA Oceanside COP, AMBAC-Insured, (Call 8/1/02 @ 102),
7.300% due 8/1/21 539,375
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 1,061,250
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 2,086,580
1,000,000 AAA San Buenaventura COP, AMBAC-Insured, (Call 10/1/00 @ 102),
7.500% due 10/1/20 1,022,350
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 1,408,875
----------------------------------------------------------------------------------------------------------------------------
24,236,922
----------------------------------------------------------------------------------------------------------------------------
Solid Waste -- 2.0%
2,770,000 AAA Fresno County Finance Authority, Solid Waste Revenue Bonds,
American Avenue Landfill, MBIA-Insured, 5.750% due 5/15/14 2,936,200
Inland Empire Solid Waste Authority Revenue, FSA-Insured:
5,000,000 AAA 6.250% due 8/1/11 (c) 5,506,250
2,500,000 AAA 6.000% due 8/1/16 (c) 2,762,500
470,000 BBB Kings County Waste Management Authority, Solid Waste Revenue,
7.200% due 10/1/14 (c) 510,538
1,000,000 BB Nevada County COP, 7.500% due 6/1/21 1,033,920
4,135,000 Baa2* South Napa Waste Management Authority Revenue, (Solid Waste
Transfer Facilities Project), 6.500% due 2/15/14 (c) 4,372,763
----------------------------------------------------------------------------------------------------------------------------
17,122,171
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 15
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
============================================================================================================================
<S> <C> <C> <C>
Tax Allocation -- 3.2%
$ 2,000,000 AAA Anaheim Public Finance Authority, Tax Allocation Revenue,
Regular Fixed Option Bonds, MBIA-Insured, 6.450% due 12/28/18 $ 2,162,500
1,000,000 Baa3* Azusa Redevelopment Agency, Tax Allocation, (Merged Project Area),
Series A, 6.750% due 8/1/23 1,047,500
295,000 AAA Brea Public Finance Authority, Tax Allocation, MBIA-Insured,
7.000% due 8/1/15 308,313
Brisbane Redevelopment Agency, Tax Allocation, (Brisbane Community
Redevelopment Project):
200,000 AA 9.400% due 5/1/05 201,584
220,000 AA 9.400% due 5/1/06 221,707
30,000 AAA Concord Redevelopment Agency, Tax Allocation, Series 3, MBIA-Insured,
8.000% due 7/1/18 30,383
6,000,000 AAA Corona Redevelopment Agency, Tax Allocation, Redevelopment
(Project Area A), Series A, FGIC-Insured, 5.500% due 9/1/24 6,037,500
1,000,000 AAA El Centro Redevelopment Tax Allocation, MBIA-Insured,
6.375% due 11/1/17 1,098,750
3,160,000 AAA Fontana Public Finance Authority, Tax Allocation, MBIA-Insured, Series A,
5.000% due 9/1/20 3,053,350
3,275,000 BBB+ Garden Grove Community Development Agency, Tax Allocation,
(Garden Grove Community Project), 5.700% due 10/1/08 3,406,000
2,000,000 Baa2* Hawthorne Community Redevelopment, Tax Allocation, (Project Area 2),
6.625% due 9/1/14 2,152,500
Rancho Cucamonga Redevelopment, Tax Allocation,
(Rancho Redevelopment Project):
2,500,000 AAA FSA-Insured, 5.250% due 9/1/20 2,487,500
2,445,000 AAA MBIA-Insured, 5.250% due 9/1/16 2,484,731
San Diego, CA Redevelopment, Tax Allocation, (Centre City Redevelopment
Project), AMBAC-Insured:
2,220,000 AAA Series A, 4.750% due 9/1/18 2,117,325
1,000,000 AAA Series C, 4.750% due 9/1/18 953,750
----------------------------------------------------------------------------------------------------------------------------
27,763,393
----------------------------------------------------------------------------------------------------------------------------
Transportation -- 6.5%
Alameda Corridor Transportation Authority Revenue,
Series A, MBIA-Insured:
8,000,000 AAA 4.750% due 10/1/19 7,500,000
4,000,000 AAA 4.750% due 10/1/25 3,605,000
1,250,000 AAA Fresno Airport Revenue, Series A, FSA-Insured, 5.250% due 7/1/30 1,256,250
13,420,000 AAA Los Angeles County Metropolitan Transportation Authority, Sales Tax Revenue,
Proposal A, First Tier, Series B, FSA-Insured, 4.750% due 7/1/24 12,262,525
2,000,000 A3* Port of Oakland Special Facilities Revenue, Series A,
6.750% due 1/1/12 (c) 2,077,500
9,000,000 AAA Sacramento County Airport System Revenue, Series A, MBIA-Insured,
5.900% due 7/1/24 (c) 9,225,000
400,000 A1* Sacramento Regional Transportation District COP, Series A,
6.400% due 3/1/03 421,000
3,000,000 AAA San Francisco Airport Community International Corp., Lease Revenue,
FGIC-Insured, 6.500% due 5/1/19 (c) 3,187,500
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
16 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
============================================================================================================================
<S> <C> <C> <C>
Transportation -- 6.5% (continued)
$ 170,000 AAA San Francisco Airport Improvement Corp., Lease Revenue,
(Escrowed to maturity with U.S. government securities),
8.000% due 7/1/13 $ 205,700
15,270,000 AAA San Francisco Bay Area Rapid Transportation District Sales Tax,
AMBAC-Insured, 5.000% due 7/1/28 14,372,888
San Jose Airport Revenue Bonds, FGIC-Insured:
200,000 AAA 5.400% due 3/1/04 (c) 207,500
1,500,000 AAA 5.500% due 3/1/07 (c) 1,565,625
1,250,000 A2* Santa Barbara COP, (Harbor Reference Project), 6.750% due 10/1/27 1,309,375
----------------------------------------------------------------------------------------------------------------------------
57,195,863
----------------------------------------------------------------------------------------------------------------------------
Utilities -- 4.5%
360,000 A- Northern California Power Agency, Public Power Refunding,
Geothermal Project No. 3, Series A, 5.000% due 7/1/09 360,565
12,500,000 AAA Puerto Rico Electric Power Authority, Power Revenue, Series HH,
FSA-Insured, 5.250% due 7/1/29 12,171,875
2,000,000 AAA Redding Electric System Revenue COP, Regular Linked SAVRS & RIBS,
MBIA-Insured, 6.368% due 7/8/22 2,212,500
5,000,000 AAA Riverside Electrical Revenue, AMBAC-Insured, 5.000% due 10/1/22 4,775,000
Sacramento Municipal Utility District Electric Revenue:
4,500,000 AAA Series D, MBIA-Insured, 5.250% due 11/15/20 4,477,500
3,000,000 AAA Series E, 5.700% due 5/15/12 3,116,250
5,425,000 AAA Series I, MBIA-Insured, 5.700% due 1/11/15 5,648,781
5,000,000 AAA Southern California Public Power Authority, Power Project Revenue,
(Mead Adelanto Project), Series A, AMBAC-Insured, 5.000% due 7/1/17 4,956,250
1,960,000 BBB- Trinity County Public Utility District COP, Electric District Facilities,
6.750% due 4/1/23 (c) 2,006,550
----------------------------------------------------------------------------------------------------------------------------
39,725,271
----------------------------------------------------------------------------------------------------------------------------
Water & Sewer -- 20.2%
900,000 AAA California Pollution Control Financing Authority, Solid Waste
Disposal Revenue, Shell Martinez Refining, Series A,
3.300% due 10/1/31 900,000
California State Department of Water, Central Valley Project Revenue:
Series O:
1,000,000 AA 5.000% due 12/1/22 948,750
2,235,000 AA 4.750% due 12/1/25 2,019,881
5,000,000 AA Series S, 5.000% due 12/1/19 4,881,250
11,000,000 AA Series U, 5.000% due 12/1/29 10,243,750
Castaic Lake Water Revenue COP, (Water System Improvement Project),
AMBAC-Insured:
7,270,000 AAA 5.250% due 8/1/19 7,297,262
7,115,000 AAA 5.125% due 8/1/30 6,803,719
6,000,000 AAA Clovis Sewer Revenue Refunding, MBIA-Insured, 5.200% due 8/1/28 5,820,000
East Bay Municipal Utility District, FGIC-Insured:
9,300,000 AAA Wastewater Treatment Systems Revenue, 5.000% due 6/1/26 8,800,125
Water Systems Revenue:
1,750,000 AAA 5.000% due 6/1/16 1,750,000
5,000,000 AAA 4.750% due 6/1/21 4,600,000
8,400,000 AAA 5.000% due 6/1/26 7,948,500
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 17
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
============================================================================================================================
<S> <C> <C> <C>
Water & Sewer -- 20.2% (continued)
Eastern Municipal Water District COP, Water & Sewer Revenue,
Series A:
FGIC-Insured:
$ 1,000,000 AAA 6.750% due 7/1/12 $ 1,203,750
1,000,000 AAA 5.375% due 7/1/13 1,035,000
17,750,000 AAA MBIA-Insured, 5.250% due 7/1/23 17,483,750
1,900,000 AAA El Centro Financing Authority, Water & Wastewater Revenue,
Series A, AMBAC-Insured, 5.125% due 10/1/27 1,826,375
2,430,000 AAA Los Angeles Wastewater System Revenue, Series A, MBIA-Insured,
5.700% due 6/1/09 2,563,650
Metropolitan Water District, Southern California Waterworks Revenue:
Series A:
1,000,000 AA 5.000% due 7/1/18 976,250
13,900,000 AA 4.750% due 7/1/22 12,596,875
6,000,000 AA 5.000% due 7/1/26 5,617,500
12,430,000 AAA MBIA-Insured, 5.000% due 7/1/30 11,668,663
4,500,000 AA Series C, 5.250% due 7/1/16 4,573,125
Modesto Irrigation District Financing Authority Revenue COP,
Capital Improvement:
3,000,000 AAA Series A, AMBAC-Insured, 4.750% due 7/1/26 2,715,000
2,350,000 A+ Series B, 5.300% due 7/1/22 2,291,250
1,925,000 AAA Morgan Hill COP, FSA-Insured, 5.125% due 6/1/21 1,876,875
4,560,000 AAA Pittsburg Public Finance Authority, Wastewater Revenue, Series A,
FGIC-Insured, 5.375% due 6/1/22 4,565,700
6,575,000 AAA Placer County Water Revenue COP, (Capital Improvement Projects),
AMBAC-Insured, 5.500% due 7/1/29 6,616,094
Pomona Public Financing Authority:
2,500,000 AAA Series AA, (Water Facilities Project), 5.000% due 5/1/29 2,346,875
2,855,000 AAA Series Q, MBIA-Insured, 5.750% due 12/1/15 3,008,456
San Diego PFA Sewer Revenue, FGIC-Insured:
28,875,000 AAA 5.000% due 5/15/20 27,936,563
3,885,000 AAA Series B, 4.750% due 5/15/17 3,739,313
----------------------------------------------------------------------------------------------------------------------------
176,654,301
----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS -- 100%
(Cost -- $823,076,899**) $873,635,026
============================================================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service, except those
identified by an asterisk (*), which are rated by Moody's Investors
Service, Inc.
(b) Bond is escrowed to maturity with U.S. government securities and is
considered by the Manager to be triple-A rated even if issuer has not
applied for new ratings.
(c) Income from this issues is considered a preference item for purposes of
calculating the alternative minimum tax.
(d) Security is partially segregated by Custodian for open purchase
commitments.
(e) Bond is escrowed with U.S government securities and is considered by the
Manager to be triple-A rated even if issuer had not applied for new
ratings.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 19 and 20 for definition of ratings and certain security
descriptions.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
18 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Bond Ratings (unaudited)
--------------------------------------------------------------------------------
The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Ratings Service ("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 Service, Inc. ("Moody's") -- Numerical modifiers 1, 2 and 3
may be applied to each generic rating from "Aa" to "Ba", 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.
Ba -- Bonds rated "Ba" are judged to have speculative elements; their future
cannot be considerd as well assured. Often the protection of interest and
principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
NR -- Indicates that the bond is not rated by Standard & Poor's or Moody's.
--------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 19
<PAGE>
Short-Term Security Ratings (unaudited)
--------------------------------------------------------------------------------
SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation ("VRDO") rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong; those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG 1 rating.
--------------------------------------------------------------------------------
Security Descriptions (unaudited)
--------------------------------------------------------------------------------
ABAG -- Association of Bay Area Governments
AIG -- American International Guaranty
AMBAC -- AMBAC Indemnity Corporation
BAN -- Bond Anticipation Notes
BIG -- Bond Investors Guaranty
CGIC -- Capital Guaranty Insurance Company
CHFCLI -- California Health Facility Construction Loan Insurance
CONNIE LEE -- College Construction Loan Insurance Association
COP -- Certificate of Participation
EDA -- Economic Development Authority
ETM -- Escrowed To Maturity
FAIRS -- Floating Adjustable Interest Rate Securities
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRTC -- Floating Rate Trust Certificates
FSA -- Financial Security Assurance
GIC -- Guaranteed Investment Contract
GNMA -- Government National Mortgage Association
GO -- General Obligation
HDC -- Housing Development Corporation
HFA -- Housing Finance Authority
IDA -- Industrial Development Agency
IDB -- Industrial Development Board
IDR -- Industrial Development Revenue
INFLOS -- Inverse Floaters
ISD -- Independent School District
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
MVRICS -- Municipal Variable Rate Inverse Coupon Security
PCR -- Pollution Control Revenue
PFA -- Public Financing Authority
PSFG -- Permanent School Fund Guaranty
RAN -- Revenue Anticipation Notes
RIBS -- Residual Interest Bonds
SAVRS -- Select Auction Variable Rate Securities
TAN -- Tax Anticipation Notes
TECP -- Tax Exempt Commercial Paper
TOB -- Tender Option Bonds
TRAN -- Tax and Revenue Anticipation Notes
SYCC -- Structured Yield Curve Certificate
VA -- Veterans Administration
VRDD -- Variable Rate Daily Demand
VRWE -- Variable Rate Wednesday Demand
--------------------------------------------------------------------------------
20 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost -- $823,076,899) $ 873,635,026
Interest receivable 11,026,612
Receivable for securities sold 1,951,900
Receivable for Fund shares sold 864,280
Other assets 10,169
-----------------------------------------------------------------------------------------------------
Total Assets 887,487,987
-----------------------------------------------------------------------------------------------------
LIABILITIES:
Payable to bank 1,595,178
Investment advisory fees payable 340,142
Administration fees payable 92,067
Distribution fees payable 40,710
Accrued expenses 231,449
-----------------------------------------------------------------------------------------------------
Total Liabilities 2,299,546
-----------------------------------------------------------------------------------------------------
Total Net Assets $ 885,188,441
=====================================================================================================
NET ASSETS:
Par value of capital shares $ 54,252
Capital paid in excess of par value 857,489,481
Undistributed net investment income 664,637
Accumulated net realized loss from security transactions and futures contracts (23,578,056)
Net unrealized appreciation of investments 50,558,127
-----------------------------------------------------------------------------------------------------
Total Net Assets $ 885,188,441
=====================================================================================================
Shares Outstanding:
Class A 39,653,087
------------------------------------------------------------------------------------------------
Class B 11,991,265
------------------------------------------------------------------------------------------------
Class L 2,607,467
------------------------------------------------------------------------------------------------
Net Asset Value:
Class A (and redemption price) $ 16.32
------------------------------------------------------------------------------------------------
Class B * $ 16.31
------------------------------------------------------------------------------------------------
Class L ** $ 16.30
------------------------------------------------------------------------------------------------
Maximum Public Offering Price Per Share:
Class A (net asset value plus 4.17% of net asset value per share) $ 17.00
------------------------------------------------------------------------------------------------
Class L (net asset value plus 1.01% of net asset value per share) $ 16.46
=====================================================================================================
</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 the first year of purchase.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 21
<PAGE>
--------------------------------------------------------------------------------
Statement of Operations (unaudited) For the Six Months Ended August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
INVESTMENT INCOME:
<S> <C>
Interest $ 24,762,692
------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 3) 1,303,096
Distribution fees (Note 3) 1,247,707
Administration fees (Note 3) 832,269
Shareholder and system servicing fees 95,917
Shareholder communications 37,350
Audit and legal 28,229
Registration fees 25,206
Directors' fees 20,669
Pricing service fees 17,644
Custody 17,392
Other 10,946
------------------------------------------------------------------------------------------
Total Expenses 3,636,425
------------------------------------------------------------------------------------------
Net Investment Income 21,126,267
------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FUTURES CONTRACTS (NOTES 4 AND 5):
Realized Loss From:
Security transactions (excluding short-term securities) (1,188,852)
Futures contracts (288,500)
------------------------------------------------------------------------------------------
Net Realized Loss (1,477,352)
------------------------------------------------------------------------------------------
Change in Net Unrealized Appreciation (Depreciation) of Investments:
Beginning of period (7,398,348)
End of period 50,558,127
------------------------------------------------------------------------------------------
Increase in Net Unrealized Apreciation 57,956,475
------------------------------------------------------------------------------------------
Net Gain on Investments and Futures Contracts 56,479,123
------------------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 77,605,390
==========================================================================================
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
22 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
For the Six Months Ended August 31, 2000 (unaudited)
and the Year Ended February 29, 2000
<TABLE>
<CAPTION>
August 31 February 29
============================================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 21,126,267 $ 46,744,665
Net realized loss (1,477,352) (18,604,213)
Increase (decrease) in net unrealized appreciation 57,956,475 (87,054,939)
------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations 77,605,390 (58,914,487)
------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income (20,586,466) (44,975,146)
------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (20,586,466) (44,975,146)
------------------------------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 6):
Net proceeds from sale of shares 35,908,565 147,999,352
Net asset value of shares issued for reinvestment of dividends 11,304,163 25,037,033
Cost of shares reacquired (82,531,572) (271,883,695)
------------------------------------------------------------------------------------------------------------
Decrease in Net Assets From Fund Share Transactions (35,318,844) (98,847,310)
------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 21,700,080 (202,736,943)
NET ASSETS:
Beginning of period 863,488,361 1,066,225,304
------------------------------------------------------------------------------------------------------------
End of period* $ 885,188,441 $ 863,488,361
============================================================================================================
* Includes undistributed net investment income of: $ 664,637 $ 124,836
============================================================================================================
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 23
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
--------------------------------------------------------------------------------
1. Significant Accounting Policies
Smith Barney California Municipals Fund Inc. ("Fund"), a Maryland corporation,
is registered under the Investment Company Act of 1940, as amended, as a
non-diversified, open-end management investment company.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) securities are valued
at the mean between the quoted bid and asked prices as provided by an
independent pricing service; (c) securities maturing within 60 days are valued
at cost plus accreted discount or minus amortized premium, which approximates
value; (d) gains or losses on the sale of securities are calculated using the
specific identification method; (e) interest income, adjusted for amortization
of premium and accretion of original issue discount, is recorded on an accrual
basis; market discount is recognized upon the disposition of the security; (f)
direct expenses are charged to each class; management fees and general fund
expenses are allocated on the basis of relative net assets; (g) dividends and
distributions to shareholders are recorded on the ex-dividend date; (h) the Fund
intends to comply with the applicable provisions of the Internal Revenue Code of
1986, as amended, pertaining to regulated investment companies and to make
distributions of taxable income sufficient to relieve it from substantially all
Federal income and excise taxes; (i) the character of income and gains to be
distributed are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. At February 29, 2000,
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. Net investment income, net realized gains and net assets
were not affected by this adjustment; and (j) estimates and assumptions are
required to be made regarding assets, liabilities and changes in net assets
resulting from operations when financial statements are prepared. Changes in the
economic environment, financial markets and any other parameters used in
determining these estimates could cause actual results to differ.
2. Exempt-Interest Dividends and Other Distributions
The Fund intends to satisfy conditions that will enable interest from municipal
securities, which is exempt from Federal income tax and from designated state
income taxes, to retain such tax-exempt status when distributed to the
shareholders of the Fund.
Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
3. Investment Advisory Agreement, Administration Agreement and Other
Transactions
SSB Citi Fund Management LLC ("SSBC"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc.
("Citigroup"), acts as investment advisor 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.
Citi Fiduciary Trust Company ("CFTC"), formerly known as Smith Barney Private
Trust Company, another subsidiary of Citigroup, acts as the Fund's transfer
agent and PFPC Global Fund Services ("PFPC") acts as the Fund's sub-transfer
agent. CFTC receives account fees and asset-based fees that vary according to
the account size and type of account. PFPC is responsible for shareholder
recordkeeping
--------------------------------------------------------------------------------
24 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
and financial processing for all shareholder accounts and is paid by CFTC. For
the six months ended August 31, 2000, the Fund paid transfer agent fees of
$76,962 to CFTC.
Effective June 5, 2000, Salomon Smith Barney Inc. ("SSB"), another subsidiary of
SSBH, became the Fund's distributor replacing CFBDS, Inc. ("CFBDS"). In
addition, SSB acts as the primary broker for the Fund's portfolio agency
transactions. Certain other broker-dealers, continue to sell Fund shares to the
public as members of the selling group.
There are maximum initial sales charges of 4.00% and 1.00% for Class A and L
shares, respectively. There is a contingent deferred sales charge ("CDSC") of
4.50% on Class B shares, which applies if redemption occurs within one year from
purchase. This CDSC declines by 0.50% the first year after purchase and
thereafter by 1.00% per year until no CDSC is incurred. Class L shares also have
a 1.00% CDSC, which applies if redemption occurs within the first year of
purchase. In addition, Class A shares also have a 1.00% CDSC, which applies if
redemption occurs within the first year of purchase. This CDSC only applies to
those purchases of Class A shares, which, when combined with current holdings of
Class A shares, equal or exceed $500,000 in the aggregate. These purchases do
not incur an initial sales charge.
For the six months ended August 31, 2000, SSB and CFBDS received sales charges
of approximately $187,000 and $26,000 on sales of the Fund's Class A and L
shares, respectively. In addition, CDSCs paid to SSB were approximately:
Class A Class B Class L
================================================================================
CDSCs $ 13,000 $185,000 $ 1,000
================================================================================
Pursuant to a Distribution Plan, the Fund pays a service fee with respect to its
Class A, B and L shares calculated at an annual rate of 0.15% of the average
daily net assets for each respective class. In addition, the Fund pays a
distribution fee with respect to its Class B and L shares calculated at an
annual rate of 0.50% and 0.55% of the average daily net assets of each class,
respectively.
For the six months ended August 31, 2000, total Distribution Plan fees incurred
were:
Class A Class B Class L
================================================================================
Distribution Plan Fees $475,329 $633,166 $139,212
================================================================================
All officers and one Director of the Fund are employees of SSB.
4. Investments
During the six months ended August 31, 2000, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $117,733,843
--------------------------------------------------------------------------------
Sales 155,376,316
================================================================================
At August 31, 2000, aggregate gross unrealized appreciation and depreciation of
investments for Federal in come tax purposes were as follows:
================================================================================
Gross unrealized appreciation $ 55,237,268
Gross unrealized depreciation (4,679,141)
--------------------------------------------------------------------------------
Net unrealized appreciation $ 50,558,127
================================================================================
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
--------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 25
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
gain or loss equal to the difference between the proceeds from (or cost of) the
closing transactions and the Fund's basis in the contract. The Fund enters into
such contracts to hedge a portion of its portfolio.
The Fund bears the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts).
At August 31, 2000, the Fund did not have any open futures contracts.
6. Capital Shares
At August 31, 2000, 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.
At August 31, 2000, total paid-in capital amounted to the following for each
class:
Class A Class B Class L
================================================================================
Total Paid-in Capital $616,579,121 $197,335,430 $ 43,629,182
================================================================================
Transactions in shares of each class were as follows:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
August 31, 2000 February 29, 2000
------------------------------- ----------------------------------
Shares Amount Shares Amount
===================================================================================================================
<S> <C> <C> <C> <C>
Class A
Shares sold 1,653,190 $ 25,988,403 6,983,346 $ 112,760,970
Shares issued on reinvestment 532,137 8,375,791 1,158,388 18,429,385
Shares reacquired (3,625,531) (56,848,714) (12,477,687) (197,363,379)
-------------------------------------------------------------------------------------------------------------------
Net Decrease (1,440,204) $(22,484,520) (4,335,953) $ (66,173,024)
===================================================================================================================
Class B
Shares sold 417,523 $ 6,548,790 1,628,698 $ 26,306,497
Shares issued on reinvestment 145,300 2,286,009 326,617 5,195,228
Shares reacquired (1,394,031) (21,796,494) (3,741,218) (59,176,884)
-------------------------------------------------------------------------------------------------------------------
Net Decrease (831,208) $(12,961,695) (1,785,903) $ (27,675,159)
===================================================================================================================
Class L
Shares sold 214,305 $ 3,371,372 551,473 $ 8,931,885
Shares issued on reinvestment 40,292 633,550 85,035 1,350,873
Shares reacquired (174,903) (2,720,951) (956,885) (15,073,569)
-------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 79,694 $ 1,283,971 (320,377) $ (4,790,811)
===================================================================================================================
Class Y*
Shares sold -- $ -- -- $ --
Shares issued on reinvestment 564 8,813 3,854 61,547
Shares reacquired (75,289) (1,165,413) (17,634) (269,863)
-------------------------------------------------------------------------------------------------------------------
Net Decrease (74,725) $ (1,156,600) (13,780) $ (208,316)
===================================================================================================================
</TABLE>
* On May 2, 2000, Class Y shares were fully redeemed.
--------------------------------------------------------------------------------
26 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
--------------------------------------------------------------------------------
7. Capital Loss Carryforward
At February 29, 2000, the Fund had, for Federal income tax purposes, capital
loss carryforwards of approximately $13,908,000 available, subject to certain
limitations, to offset future capital gains. To the extent that these capital
carryforward losses are used to offset capital gains, it is probable that the
gains so offest will not be distributed.
The amount and expiration of the carryforwards are indicated below. Expiration
occurs at the end of February of the year indicated:
2007 2008
================================================================================
Carryforward Amounts $ 2,923,000 $10,985,000
================================================================================
8. Concentration of Credit
The Fund primarily invests in debt obligations issued by the State of California
and local governments in the State of California, its political subdivisions,
agencies and public authorities to obtain funds for various public purposes. The
Fund is more susceptible to factors adversely affecting issuers of California
municipal securities than is a municipal bond fund that is not concentrated in
these issuers to the same extent.
--------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 27
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended February 28, except where noted:
<TABLE>
<CAPTION>
Class A Shares 2000(1)(2) 2000(2)(3) 1999(2) 1998 1997 1996(2)(4)
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $15.28 $16.93 $16.99 $16.26 $16.31 $15.40
-------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.40 0.78 0.77 0.82 0.85 0.85
Net realized and unrealized gain (loss) 1.03 (1.67) 0.07 0.98 0.15 0.93
-------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.43 (0.89) 0.84 1.80 1.00 1.78
-------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.39) (0.76) (0.78) (0.84) (0.85) (0.84)
In excess of net investment income -- -- (0.02) -- -- --
Net realized gains -- -- (0.10) (0.23) (0.20) (0.03)
-------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.39) (0.76) (0.90) (1.07) (1.05) (0.87)
-------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $16.32 $15.28 $16.93 $16.99 $16.26 $16.31
-------------------------------------------------------------------------------------------------------------------------
Total Return 9.47%++ (5.36)% 5.02% 11.44% 6.37% 11.93%
-------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (millions) $ 647 $ 628 $ 769 $ 664 $ 579 $ 582
-------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.70%+ 0.70% 0.68% 0.70% 0.71% 0.76%
Net investment income 5.01+ 4.99 4.53 4.97 5.29 5.26
-------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 14% 29% 13% 43% 60% 44%
=========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class B Shares 2000(1)(2) 2000(2)(3) 1999(2) 1998 1997 1996(2)(4)
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $15.28 $16.93 $16.98 $16.25 $16.32 $15.40
-------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.35 0.70 0.68 0.74 0.76 0.75
Net realized and unrealized gain (loss) 1.03 (1.68) 0.08 0.98 0.14 0.96
-------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.38 (0.98) 0.76 1.72 0.90 1.71
-------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.35) (0.67) (0.69) (0.76) (0.77) (0.76)
In excess of net investment income -- -- (0.02) -- -- --
Net realized gains -- -- (0.10) (0.23) (0.20) (0.03)
-------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.35) (0.67) (0.81) (0.99) (0.97) (0.79)
-------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $16.31 $15.28 $16.93 $16.98 $16.25 $16.32
-------------------------------------------------------------------------------------------------------------------------
Total Return 9.12%++ (5.87)% 4.56% 10.88% 5.73% 11.39%
-------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (millions) $ 196 $ 196 $ 247 $ 216 $ 173 $ 153
-------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.21%+ 1.22% 1.20% 1.21% 1.23% 1.29%
Net investment income 4.49+ 4.47 4.02 4.45 4.75 4.71
-------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 14% 29% 13% 43% 60% 44%
=========================================================================================================================
</TABLE>
(1) For the six months ended August 31, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the year ended February 29, 2000.
(4) For the year ended February 29, 1996.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
28 2000 Semi-Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights (continued)
--------------------------------------------------------------------------------
For a share of each class of capital stock outstanding throughout each year
ended February 28, except where noted:
<TABLE>
<CAPTION>
Class L Shares 2000(1)(2) 2000(2)(3) 1999(2)(4) 1998 1997 1996(2)(5)
=========================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $15.26 $16.91 $16.97 $16.24 $16.31 $15.40
-------------------------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.35 0.69 0.67 0.73 0.75 0.78
Net realized and unrealized gain (loss) 1.03 (1.68) 0.07 0.98 0.15 0.92
-------------------------------------------------------------------------------------------------------------------------
Total Income (Loss) From Operations 1.38 (0.99) 0.74 1.71 0.90 1.70
-------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.34) (0.66) (0.68) (0.75) (0.77) (0.76)
In excess of net investment income -- -- (0.02) -- -- --
Net realized gains -- -- (0.10) (0.23) (0.20) (0.03)
-------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.34) (0.66) (0.80) (0.98) (0.97) (0.79)
-------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $16.30 $15.26 $16.91 $16.97 $16.24 $16.31
-------------------------------------------------------------------------------------------------------------------------
Total Return 9.17%++ (5.92)% 4.45% 10.83% 5.68% 11.30%
-------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (millions) $ 42 $ 38 $ 48 $ 32 $ 17 $ 11
-------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.25%+ 1.28% 1.24% 1.26% 1.29% 1.39%
Net investment income 4.45+ 4.41 3.97 4.39 4.69 4.44
-------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 14% 29% 13% 43% 60% 44%
=========================================================================================================================
</TABLE>
(1) For the six months ended August 31, 2000 (unaudited).
(2) Per share amounts have been calculated using the monthly average shares
method.
(3) For the year ended February 29, 2000.
(4) On June 12, 1998, Class C shares were renamed Class L shares.
(5) For the year ended February 29, 1996.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
--------------------------------------------------------------------------------
Smith Barney California Municipals Fund Inc. 29
<PAGE>
Smith Barney California
Municipals Fund Inc.
Directors
Herbert Barg
Alfred J. Bianchetti
Martin Brody
Dwight B. Crane
Burt N. Dorsett
Elliot S. Jaffe
Stephen E. Kaufman
Joseph J. McCann
Heath B. McLendon, Chairman
Cornelius C. Rose
James J. Crisona, Emeritus
Officers
Heath B. McLendon
President and
Chief Executive Officer
Lewis E. Daidone
Senior Vice President and Treasurer
Joseph P. Deane
Vice President and Investment Officer
David Fare
Investment Officer
Paul A. Brook
Controller
Christina T. Sydor
Secretary
Investment Advisor and Administrator
SSB Citi Fund Management LLC
Distributor
Salomon Smith Barney Inc.
Custodian
PFPC Trust Company
Transfer Agent
Citi Fiduciary Trust Company
125 Broad Street, 11th Floor
New York, New York 10004
Sub-Transfer Agent
PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island 02940-9699
This report is submitted for the general information of shareholders of Smith
Barney California Munici pals Fund Inc., but it may also be used as sales
literature when proceeded or accompanied by the current Prospectus, which gives
details about charges, expenses, investment objectives and operating policies of
the Fund. If used as sales material after November 30, 2000, this report must be
accompanied by performance information for the most recently completed calendar
quarter.
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/mutualfunds
FD0434 10/00
