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GREENWICH STREET MUNICIPAL
FUND INC.
QUARTERLY REPORT
AUGUST 31, 1994
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GREENWICH STREET MUNICIPAL
FUND INC.
AUGUST 31, 1994
DEAR SHAREHOLDER:
We are pleased to welcome you as an investor in the Greenwich Street
Municipal Fund Inc. with this report on the Fund's first quarter of
operation. The Fund seeks to provide investors with as high a level of
current income exempt from Federal income taxes as is consistent with the
preservation of principal. It invests in municipal securities issued by
municipalities and local governments throughout the nation -- a strategy
that allows the Fund to select from a wide variety of individual bonds. The
majority of the Fund's investments are long-term municipal bonds rated as
investment grade -- the four highest rating categories as defined by
Standard & Poor's Ratings Group or Moody's Investors Service, Inc. -- or of
comparable quality. Unlike many other closed-end funds, Greenwich Street
Municipal Fund Inc. does not employ leverage in the form of borrowing to
purchase additional securities. We believe that this policy should help to
reduce the wide price fluctuations leverage adds to an investment.
The Fund commenced operations with a net asset value of $12.00 per share
and began trading on the New York Stock Exchange, Inc. under the symbol GSI
on July 11, with a stock price of $12.00 per share. It declared its first
dividend from investment income of $0.06 per share on August 25, payable
September 30. This equates to an annualized yield of 6.00% based on the
Fund's net asset value of $12.29 per share on August 31, 1994, and 5.86%
based on its New York Stock Exchange closing price on that date of $12.00.
ECONOMIC OVERVIEW
The economy has continued to experience steady, healthy growth during
the past three months. The continued strength in the economy
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and some very early signs of an increase in inflation caused the Federal
Reserve Board to raise the Federal funds rate to 4.75% in two separate moves
between May and August of this year. Long-term interest rates also rose,
causing a decline in the price of bonds because of the inverse relationship
between yield and price. This decline in municipal bond prices speaks to the
emotional reaction of many investors to rising interest rates.
Between now and the end of the year, we would not be surprised to see
the Federal Reserve Board raise the Federal funds rate to 5%. Looking out
from where we are right now, we would expect the economy to slow somewhat
over the next three to four months as the effect of this significant rise in
interest rates works its way through the economy. Interest rates, both
taxable and tax-exempt, now appear to represent very fair values. Long-term
rates will probably move lower from where they are right now as the economy
begins to slow.
THE MUNICIPAL MARKET AND FUND STRATEGY
In our opinion, the worst of the market volatility is now behind us, and
we believe that volatility will continue to decline as municipal new
issuance declines and investor demand for tax-exempt income continues to
increase. In 1993, there was $300 billion in municipal issuance; in
contrast, new issuance in 1994 is likely to be approximately $140 to $170
billion -- a reduction of nearly 50 percent. Once interest rates began to
rise, issuance virtually disappeared.
Based on our belief that the municipal market is unlikely to encounter
significant market volatility and that municipal bonds are now attractively
valued, we have invested the Fund's assets in longer-term issues with an
average maturity of approximately 26 years. We are not holding a large cash
position in the Fund, and instead have invested its assets in high-quality
municipal bonds. As of August 31, nearly half of the Fund's assets were
invested in municipal bonds rated Aaa/AAA and Aa/AA. The majority of the
Fund is invested in hospital, utility, water/sewer, and transportation
issues.
We welcome you as an investor in the Fund, and assure you that we will
strive to manage the Fund with the goal of providing investors with a
competitive level of tax-free income consistent with a prudent, conservative
approach to credit quality, and preservation of capital based on a
total-return philosophy of managing assets. We are pleased to tell you that
Joseph Deane, your portfolio manager, continues to be recognized in the
national press as one of the leading municipal bond
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portfolio managers in the country. In addition to his frequent appearances
in The Wall Street Journal and The Bond Buyer, Joe recently was profiled in
the October 3rd issue of Barron's. If you have any questions or comments
about your investment in the Fund, please do not hesitate to contact either
us or The Shareholder Services Group, Inc. at (800) 331-1710.
Sincerely,
Heath B. McLendon Joseph P. Deane
CHAIRMAN OF THE BOARD VICE PRESIDENT AND
INVESTMENT OFFICER
October 24, 1994
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PORTFOLIO OF INVESTMENTS
AUGUST 31, 1994 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
KEY TO INSURANCE ABBREVIATIONS
AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Federal Guaranty Insurance Corporation
MBIA -- Municipal Bond Investors Assurance
</TABLE>
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
<C> <S> <C> <C> <C>
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MUNICIPAL BONDS AND NOTES -- 100.6%
ALASKA -- 3.8%
Valdez, Alaska, Marine Terminal Revenue:
$ 4,400,000 Series A, (BP Pipeline Project), 5.850% due 8/1/25 A1 AA- $ 3,932,500
6,000,000 Series C, 5.650% due 12/1/28 A1 AA- 5,257,500
CALIFORNIA -- 17.1%
4,000,000 Los Angeles, California, Transportation Authority
Revenue, (MBIA insured), 6.000% due 7/1/23 Aaa AAA 3,890,000
10,000,000 Los Angeles, California, Wastewater Systems Revenue,
(MBIA insured), 5.875% due 6/1/24 Aaa AAA 9,537,500
1,850,000 Pittsburg, California, Redevelopment Agency, Series A,
(AMBAC insured), 5.000% due 8/1/17 Aaa AAA 1,563,250
2,985,000 Placer County, California, Water Agency Revenue, (MBIA
insured), 5.600% due 7/1/21 Aaa AAA 2,731,275
10,000,000 Poway, California, Redevelopment Agency Tax Revenue,
(FGIC insured), 5.500% due 12/15/23 Aaa AAA 9,012,500
</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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PORTFOLIO OF INVESTMENTS
AUGUST 31, 1994 (UNAUDITED)(CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
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<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$ 3,975,000 Sacramento, California, Municipal Utilities District,
Series D, (MBIA insured), 5.250% due 11/15/20 Aaa AAA $ 3,433,406
3,000,000 San Francisco, California, City and County Sewer Revenue,
(FGIC insured), 5.375% due 10/1/22 Aaa AAA 2,651,250
45,045,000 San Joaquin Hills, California, Transportation Authority,
Corridor Agency Toll Road, Sr. Lien Revenue, Zero Coupon
due 1/1/23 NR NR 5,461,706
2,000,000 San Pablo, California, Redevelopment Agency Tax
Allocation, (FGIC insured), 5.250% due 12/1/23 Aaa AAA 1,715,000
3,000,000 Santa Margarita, California, Dana Point Improvement
Authority, Series B, (MBIA insured), 5.750% due 8/1/20 Aaa AAA 2,831,250
2,500,000 West & Central Basin, California, Financing Authority,
(AMBAC insured), 5.000% due 8/1/16 Aaa AAA 2,131,250
DISTRICT OF COLUMBIA -- 3.7%
10,000,000 Metropolitan Washington D.C., Airport Authority Revenue,
(MBIA insured), 5.500% due 10/1/24 Aaa AAA 8,862,500
FLORIDA -- 5.4%
3,000,000 Florida Housing Finance Agency Revenue, Single Family
Mortgage, Series B, 6.650% due 7/1/26 Aa AA 3,022,500
</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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PORTFOLIO OF INVESTMENTS
AUGUST 31, 1994 (UNAUDITED)(CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
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<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
FLORIDA (CONTINUED)
$ 11,650,000 Florida State Board of Education Revenue, Series D,
5.200% due 6/1/23 Aa AA $ 10,004,438
GEORGIA -- 0.2%
2,500,000 Colquitt County, Georgia, Development Authority Revenue,
Zero Coupon due 12/1/21 Aaa NR 375,000
ILLINOIS -- 8.8%
Illinois Health Facilities Authority Revenue:
2,575,000 (Ingalls Health System Project), (MBIA insured), 5.500%
due 11/15/25 Aaa AAA 2,262,781
10,000,000 (Rush Presbyterian Project), (MBIA insured), 6.250% due
5/15/24 Aaa AAA 9,887,500
10,000,000 Illinois Municipal Electric Agency Revenue, (AMBAC
insured), 5.750% due 2/1/21 Aaa AAA 9,337,500
LOUISIANA -- 6.3%
10,000,000 Port New Orleans, Louisiana, Industrial Development
Agency Revenue, (Avondale Industrial Project), 8.500% due
6/1/14 NR NR 10,212,500
5,000,000 Tangipahoa Parish, Louisiana, Hospital Revenue, (AMBAC
insured), 6.250% due 2/1/24 Aaa AAA 4,943,750
MASSACHUSETTS -- 1.7%
4,000,000 Massachusetts State Housing Finance Agency Revenue,
(AMBAC insured), 6.600% due 7/1/14 Aaa AAA 4,020,000
</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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PORTFOLIO OF INVESTMENTS
AUGUST 31, 1994 (UNAUDITED)(CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
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<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
MICHIGAN -- 2.2%
$ 2,115,000 Michigan State Housing Revenue, Series D, 6.850% due
6/1/26 NR AA+ $ 2,125,575
1,000,000 Michigan State Strategic Funding, Ltd., (Detroit Edison
Company Project), (AMBAC insured), 6.450% due 6/15/24 Aaa AAA 1,017,500
2,000,000 Midland County, Michigan, Economic Development
Corporation, Pollution Control Revenue, Ltd. Obligation,
Series B, 9.500% due 7/23/09 NR NR 2,200,000
MINNESOTA -- 6.6%
10,000,000 Minnesota State Housing Authority, Single Family, Series
L, 6.700% due 7/1/20 Aa AA+ 10,137,500
6,500,000 St. Cloud, Minnesota, Hospital Facilities Revenue, Series
C, (AMBAC insured), 5.300% due 10/1/20 Aaa AAA 5,711,875
NEW JERSEY -- 1.9%
5,190,000 New Jersey Sports & Exposition, Series A, 5.200% due
1/1/20 Aa NR 4,515,300
NEW YORK -- 13.4%
4,650,000 Battery Park City, New York, Revenue Authority, Series A,
5.800% due 11/1/22 A A 4,278,000
9,440,000 New York City Municipal Water Financing Authority
Revenue, 5.500% due 6/15/19 A A- 8,460,600
</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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PORTFOLIO OF INVESTMENTS
AUGUST 31, 1994 (UNAUDITED)(CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
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<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
NEW YORK (CONTINUED)
$ 2,500,000 New York State Energy, Research and Development Revenue,
(Con Edison),
5.250% due 8/15/20 Aa3 A+ $ 2,153,125
New York State Local Government Assistance:
5,000,000 5.250% due 4/1/19 A A 4,343,750
4,500,000 5.500% due 4/1/23 A A 4,021,875
4,690,000 New York State Medical Care Facilities, Series A, 5.850%
due 2/15/33 Aa NR 4,326,525
5,000,000 New York State Thruway Authority, (Local Highway & Bridge
Project), (MBIA insured), 5.750% due 4/1/13 Aaa AAA 4,812,550
NORTH CAROLINA -- 5.0%
2,000,000 North Carolina Housing Finance Agency Revenue, Series Z,
6.600% due 9/1/26 Aa A+ 2,002,500
10,720,000 North Carolina Municipal Power Agency, Refunding Revenue,
Catawba Electrical Revenue, 5.750% due 1/1/15 A A 10,023,200
OKLAHOMA -- 1.4%
3,455,000 Pottawatomie County, Oklahoma, Development Authority,
Water Revenue, (AMBAC insured), 5.900% due 7/1/26 Aaa AAA 3,273,613
SOUTH CAROLINA -- 3.0%
8,750,000 South Carolina State Public Service Authority Revenue,
Series C, (FGIC insured), 5.000% due 1/1/25 Aaa AAA 7,153,125
</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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PORTFOLIO OF INVESTMENTS
AUGUST 31, 1994 (UNAUDITED)(CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
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<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
TEXAS -- 6.9%
$ 7,300,000 Rio Grande Valley, Texas, Health Facilities Development
Revenue, (MBIA insured), 6.400% due 8/1/12 Aaa AAA $ 7,464,250
9,035,000 Texas State Veterans Housing, General Obligation, Series
B-4, 6.700% due 12/1/24 Aa AA 9,057,587
WASHINGTON -- 3.9%
Washington State Public Power, Series B:
6,000,000 5.625% due 7/1/12 Aa AA 5,527,500
4,250,000 5.500% due 7/1/18 Aa AA 3,729,375
WEST VIRGINIA -- 4.1%
10,000,000 Marion County, West Virginia, Community Solid Waste
Disposal Facilities Revenue, (American Paper Recycling
Project), 7.750% due 12/1/11 NR NR 9,825,000
WISCONSIN -- 3.6%
10,000,000 Wisconsin State Health and Educational Facilities,
Aurora, Healthcare Obligation Revenue, (MBIA insured),
5.250% due 8/15/23 Aaa AAA 8,537,500
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TOTAL MUNICIPAL BONDS AND NOTES
(COST $237,719,823) $241,774,681
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</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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PORTFOLIO OF INVESTMENTS
AUGUST 31, 1994 (UNAUDITED)(CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
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<C> <S> <C> <C> <C>
SHORT-TERM TAX-EXEMPT INVESTMENTS -- 2.0%
ARIZONA -- 0.1%
$ 300,000 Pinal County Arizona, Industrial Development Agency,
Pollution Control Revenue,
(Magma Copper Project), 3.250% due 12/1/09+ P-1 AA $ 300,000
CALIFORNIA -- 0.1%
200,000 California Pollution Control Agency Revenue, Series A,
(Shell Oil Company Project), 3.050% due 10/1/08+ VMIG-1 A-1+ 200,000
NEW YORK -- 0.0%
70,000 New York State Job Development Authority, 3.150% due
3/1/07+ VMIG-1 NR 70,000
TEXAS -- 1.8%
400,000 Gulf Coast Industrial Development Authority, (Amoco Oil
Company Project),
3.250% due 4/1/28+ VMIG-1 A-1+ 400,000
3,800,000 Gulf Coast Waste Disposal Authority, (Amoco Oil Company
Project),
3.050% due 10/1/17+ VMIG-1 AAA 3,800,000
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TOTAL SHORT-TERM TAX-EXEMPT INVESTMENTS
(COST $4,770,000) $ 4,770,000
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</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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PORTFOLIO OF INVESTMENTS
AUGUST 31, 1994 (UNAUDITED)(CONTINUED)
<TABLE>
<CAPTION>
Market
Value
(Note 1)
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<C> <S> <C> <C> <C>
TOTAL INVESTMENTS
(COST $242,489,823*) 102.6% $246,544,681
OTHER ASSETS AND
LIABILITIES (NET) (2.6) (6,160,321)
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NET ASSETS 100.0% $240,384,360
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<FN>
* Aggregate cost for Federal tax purposes.
+ Variable rate municipal bonds and notes are payable upon not more than one business day's notice.
</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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PORTFOLIO OF INVESTMENTS
AUGUST 31, 1994 (UNAUDITED) (CONTINUED)
SUMMARY OF MUNICIPAL BONDS BY COMBINED RATINGS
<TABLE>
<CAPTION>
STANDARD
& PERCENT
MOODY'S POOR'S OF VALUE
<S> <C> <C> <C>
Aaa or AAA 49.1 %
Aa AA 26.8
A A 12.6
VMIG-1 A-1 0.3
NR NR 11.2
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100.0 %
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</TABLE>
SEE NOTES TO
PORTFOLIO OF INVESTMENTS.
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NOTES TO PORTFOLIO OF INVESTMENTS
AUGUST 31, 1994 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICY
Greenwich Street Municipal Fund Inc. (the "Fund") was organized as a
corporation under the laws of the State of Maryland on February 19, 1993, and
changed its name on April 15, 1994 from Municipal Opportunity Fund Inc. to its
present name. The Fund is registered with the Securities and Exchange Commission
as a non-diversified, closed-end management investment company under the
Investment Company Act of 1940, as amended. The policy described below is
followed consistently by the Fund in the valuation of its portfolio.
PORTFOLIO VALUATION: Investments are valued by The Boston Company Advisors,
Inc. after consultation with an independent pricing service (the "Service")
approved by the Fund's Board of Directors. When, in the judgment of the Service,
quoted bid prices for investments are readily available and are representative
of the bid side of the market, these investments are valued at the mean between
the quoted bid prices and asked prices. Investments for which, in the judgment
of the Service, no readily obtainable market quotations are available, are
carried at fair value as determined by the Service, based on methods that
include consideration of: yields or prices of municipal obligations of
comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions. The Service may use electronic data
processing techniques and/or a matrix system to determine valuations. Short-term
investments that mature in fewer than 60 days are valued at amortized cost.
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NOTES TO PORTFOLIO OF INVESTMENTS
AUGUST 31, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
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QUARTERLY RESULTS OF OPERATIONS
Net Realized Net Increase
and Unrealized in Net Assets
Investment Net Investment Gain on Resulting From
Income Income Investments Operations
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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<CAPTION>
QUARTER PER PER PER PER
ENDED TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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AUGUST 31,
1994* $2,522,206 $.13 $2,049,342 $.11 $4,076,999 $.20 $6,126,341 $.31
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<FN>
* THE FUND COMMENCED OPERATIONS ON JUNE 24, 1994.
</TABLE>
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GREENWICH STREET MUNICIPAL
FUND INC.
DIRECTORS
Charles F. Barber
Allan J. Bloostein
Martin Brody
Dwight B. Crane
Robert A. Frankel
Heath B. McLendon
OFFICERS
Heath B. McLendon
CHAIRMAN OF THE BOARD AND
INVESTMENT OFFICER
Stephen J. Treadway
PRESIDENT
Richard P. Roelofs
EXECUTIVE VICE PRESIDENT
Joseph P. Deane
VICE PRESIDENT
INVESTMENT OFFICER
David Fare
INVESTMENT OFFICER
Lewis E. Daidone
TREASURER
Christina T. Sydor
SECRETARY
INVESTMENT ADVISER AND ADMINISTRATOR
Smith Barney Mutual Funds
Management Inc.
388 Greenwich Street
New York, New York 10013
SUB-ADMINISTRATOR
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
AUDITORS AND COUNSEL
Coopers & Lybrand
One Post Office Square
Boston, Massachusetts 02109
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
TRANSFER AGENT
The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
CUSTODIAN
Boston Safe Deposit and
Trust Company
One Boston Place
Boston, Massachusetts 02108
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<PAGE>
THIS REPORT IS TO THE SHAREHOLDERS OF
GREENWICH STREET MUNICIPAL FUND INC.
FOR THEIR INFORMATION. IT IS NOT A PROSPECTUS,
CIRCULAR OR REPRESENTATION INTENDED FOR USE IN THE
PURCHASE OR SALE OF SHARES OF THE PORTFOLIO OR ANY
SECURITIES MENTIONED IN THE REPORT.
FD 0778 J4
