<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 16, 1994.
SECURITIES ACT FILE NO. 33-58610
INVESTMENT COMPANY ACT FILE NO. 811-7524
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. 3 /X/
Post-Effective Amendment No. / /
and/or
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 3 /X/
(check appropriate box or boxes)
------------------------
GREENWICH STREET MUNICIPAL
FUND INC.
(formerly, Municipal Opportunity Fund Inc.)
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048
(Address of Principal Executive Offices) (zip code)
Registrant's Telephone Number, including Area Code: (212) 720-9218
MR. HEATH B. McLENDON
Smith Barney Inc.
Two World Trade Center, 100th Floor
New York, New York 10048
(Name and Address of Agent for Service of Process)
------------------------
COPY TO:
JON S. RAND, ESQ,
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
------------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any of the securities being registered on this Form N-2 are to be offered
on a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. /X/
------------------------
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF OFFERING AMOUNT MAXIMUM MAXIMUM
SECURITIES BEING BEING OFFERING PRICE AMOUNT OF REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Common Stock, par value 19,550,000
$.001 per share........ shares $12.00 $234,600,000 $79,666.35(3)
<FN>
(1) Includes 2,550,000 shares of Common Stock which the Underwriters may
purchase to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Of the total amount of the registration fee, $22,562.50 has been previously
paid and $57,103.85 is being paid on the date of filing of this
Pre-Effective Amendment No. 3.
</TABLE>
------------------------
REGISTRANT AMENDS THIS REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, ON SUCH DATE AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE
UNTIL REGISTRANT FILES A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT WILL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL
THE REGISTRATION STATEMENT BECOMES EFFECTIVE ON SUCH DATE AS THE SECURITIES AND
EXCHANGE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
CROSS-REFERENCE SHEET
PARTS A AND B OF PROSPECTUS*
<TABLE>
<CAPTION>
ITEMS IN PARTS A AND B OF FORM N-2 LOCATION
- -------------------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
1. Outside Front Cover................................ Outside Front Cover
2. Inside Front and Outside Back Cover Page........... Inside Front and Outside Back Cover Page
3. Fee Table and Synopsis............................. Prospectus Summary; Fee Table
4. Financial Highlights............................... Not Applicable
5. Plan of Distribution............................... Outside Front Cover; Purchase of Shares --
Underwriting
6. Selling Shareholders............................... Not Applicable
7. Use of Proceeds.................................... Use of Proceeds; Investment Objective and
Management Policies
8. General Description of Registrant.................. The Portfolio; Investment Objective and Management
Policies; Investment Restrictions; Net Asset
Value; Securities Transactions and Turnover;
Description of Capital Stock
9. Management......................................... Management of the Portfolio; Custodian, Transfer
Agent, Dividend-Paying Agent, Registrar and Plan
Agent; Greenwich Street Municipal Fund Inc.
Statement of Assets and Liabilities
10. Capital Stock, Long-Term Debt, and Other
Securities........................................ Dividends and Distributions; Dividend Reinvestment
Plan; Description of Capital Stock; Taxation;
Stock Purchases and Tenders
11. Defaults and Arrears on Senior Securities.......... Not Applicable
12. Legal Proceedings.................................. Not Applicable
13. Table of Contents of Statement of Additional
Information....................................... Not Applicable
14. Cover Page......................................... Not Applicable
15. Table of Contents.................................. Not Applicable
16. General Information and History.................... The Portfolio; Investment Objective and Management
Policies
17. Investment Objective and Policies.................. Investment Objective and Management Policies;
Investment Restrictions; Securities Transactions
and Turnover
18. Management......................................... Management of the Portfolio; Custodian, Transfer
Agent, Dividend-Paying Agent, Registrar and Plan
Agent
19. Control Persons and Principal Holders of
Securities........................................ Description of Capital Stock; Greenwich Street
Municipal Fund Inc. Statement of Assets and
Liabilities
</TABLE>
- ------------------------
* Pursuant to General Instruction H of Form N-2, all information required to be
set forth in Part B: Statement of Additional Information has been included in
Part A: The Prospectus.
<PAGE>
<TABLE>
<CAPTION>
ITEMS IN PARTS A AND B OF FORM N-2 LOCATION
- -------------------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
20. Investment Advisory and Other Services... Management of the Portfolio
21. Brokerage Allocation and Other
Practices............................... Securities Transactions and Turnover
22. Tax Status............................... Dividends and Distributions; Dividend
Reinvestment Plan; Taxation
23. Financial Statements..................... Experts; Report of Independent
Accountants; Greenwich Street Municipal
Fund Inc. Statement of Assets and
Liabilities
</TABLE>
PART C
Items 24-32 have been answered in order in Part C.
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- ---------------------------------------------------------------------------
PROSPECTUS June 16, 1994
Greenwich Street Municipal Fund Inc. (the "Portfolio") is a newly organized,
non-diversified, closed-end management investment company that seeks as high a
level of current income exempt from federal income tax as is consistent with the
preservation of principal. Under normal conditions, the Portfolio will, in
seeking its investment objective, invest substantially all of its assets in
long-term, investment grade obligations issued by state and local governments,
political subdivisions, agencies and public authorities. The Portfolio's address
is Two World Trade Center, New York, New York 10048 and the Portfolio's
telephone number is (212) 720-9218.
Shares of the Portfolio's Common Stock, par value $.001 per share ("Common
Stock"), will be offered through Smith Barney Inc. and certain of its affiliates
("Smith Barney"), including The Robinson-Humphrey Company, Inc. The minimum
purchase during the offering described in this Prospectus (the "Offering") is
100 shares of Common Stock ($1,200).
Investors are advised to read this Prospectus and to retain it for future
reference.
No market has existed for the Common Stock prior to the Offering. The
Portfolio anticipates applying to list the Common Stock for trading on the New
York Stock Exchange, Inc. (the "NYSE"). Trading in the Common Stock will not
begin, however, until a date within 30 days of the date of this Prospectus.
Smith Barney does not intend to make a market in the Common
(CONTINUED ON PAGE 2)
<TABLE>
<CAPTION>
PRICE TO PROCEEDS TO
PUBLIC SALES LOAD(1)(2) THE PORTFOLIO(3)
<S> <C> <C> <C>
Per
Share... $12.00 $0.00 $12.00
Total(4).. $204,000,000 $0.00 $204,000,000
</TABLE>
(FOOTNOTES ON PAGE 2)
The shares of Common Stock offered by this Prospectus during the Offering are
offered by Smith Barney subject to prior sale, withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by Smith
Barney, and to certain other conditions. It is expected that delivery of shares
of Common Stock will be made at the offices of Smith Barney, New York, New York,
on or about June 23, 1994.
Smith Barney Inc.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
1
<PAGE>
(CONTINUED FROM PAGE 1)
Stock during the period in which the Common Stock is not traded on the NYSE. As
a result, during that period, an investment in the Common Stock should be
considered illiquid. The shares of closed-end investment companies have in the
past frequently traded at discounts from their net asset values or initial
offering prices.
Smith Barney intends to make a market in the Common Stock after trading in the
Common Stock has commenced on the NYSE. Smith Barney, however, is not obligated
to conduct market-making activities and any such activities may be discontinued
at any time without notice, at the sole discretion of Smith Barney. No assurance
can be given as to the liquidity of, or the trading market for, the Common Stock
as a result of any market-making activities undertaken by Smith Barney. This
Prospectus is to be used by Smith Barney in connection with the Offering and
with offers and sales of the Common Stock in market-making transactions in the
over-the-counter market at negotiated prices related to prevailing market prices
at the time of the sale.
- ----------------
(FOOTNOTES FROM PAGE 1)
(1) The Portfolio's shares of Common Stock will be sold during the offering
without any sales load. Smith Barney will compensate sales personnel out of
its own funds.
(2) The Portfolio has agreed to indemnify Smith Barney against certain
liabilities under the Securities Act of 1933, as amended.
(3) Before deducting organizational and offering expenses payable by the
Portfolio, estimated to be approximately $449,420.00.
(4) The Portfolio has granted Smith Barney an option to purchase up to an
additional 2,550,000 shares of Common Stock to cover over-allotments. If the
option is exercised in full, the Total Price to Public, Sales Load and
Proceeds to the Portfolio will be $234,600,000, $0.00 and $234,600,000,
respectively. See "Purchase of Shares."
UNTIL SEPTEMBER 14, 1994, ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON
STOCK, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
IN CONNECTION WITH THE OFFERING, SMITH BARNEY MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NYSE, IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- ---------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Summary 4
-----------------------------------------------------------------
The Portfolio 10
-----------------------------------------------------------------
Use of Proceeds 11
-----------------------------------------------------------------
Investment Objective and Management Policies 11
-----------------------------------------------------------------
Investment Restrictions 31
-----------------------------------------------------------------
Management of the Portfolio 32
-----------------------------------------------------------------
Securities Transactions and Turnover 37
-----------------------------------------------------------------
Dividends and Distributions; Dividend Reinvestment Plan 38
-----------------------------------------------------------------
Net Asset Value 41
-----------------------------------------------------------------
Taxation 42
-----------------------------------------------------------------
Description of Capital Stock 47
-----------------------------------------------------------------
Purchase of Shares 47
-----------------------------------------------------------------
Certain Provisions of the Articles of Incorporation 49
-----------------------------------------------------------------
Custodian, Transfer, and Dividend-Paying Agent,
Registrar and Plan Agent 52
-----------------------------------------------------------------
Legal Matters 52
-----------------------------------------------------------------
Reports to Shareholders 53
-----------------------------------------------------------------
Experts 53
-----------------------------------------------------------------
Further Information 53
-----------------------------------------------------------------
Report of Independent Accountants 55
-----------------------------------------------------------------
Greenwich Street Municipal Fund Inc.
Statement of Assets and Liabilities 56
-----------------------------------------------------------------
Appendix A A-1
-----------------------------------------------------------------
Appendix B B-1
-----------------------------------------------------------------
</TABLE>
3
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- ---------------------------------------------------------------------------
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING IN THE BODY OF THIS PROSPECTUS. CROSS REFERENCES IN THIS
SUMMARY ARE TO HEADINGS IN THE BODY OF THE PROSPECTUS.
THE PORTFOLIO The Portfolio is a newly organized, non-diversified, closed-end
management investment company. See "The Portfolio."
INVESTMENT OBJECTIVE The Portfolio seeks as high a level of current income
exempt from federal income tax as is consistent with the preservation of
principal. See "Investment Objective and Management Policies."
TAX-EXEMPT INCOME The Portfolio is intended to operate in such a manner that
dividends paid by the Portfolio may be excluded by the Portfolio's shareholders
from their gross incomes for federal income tax purposes. See "Investment
Objective and Management Policies" and "Taxation."
QUALITY INVESTMENTS The Portfolio will invest substantially all of its assets in
long-term, investment grade obligations issued by state and local governments,
political subdivisions, agencies and public authorities. The Portfolio will
operate subject to a fundamental investment policy providing that, under normal
conditions, the Portfolio will invest at least 80% of its net assets in federal
tax-exempt obligations issued by state and local governments, political
subdivisions, agencies and public authorities. At least 80% of the Portfolio's
total assets will be invested in securities rated investment grade by Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group ("S&P"),
Fitch Investors Service, Inc. ("Fitch") or another nationally-recognized rating
agency (that is, rated no lower than Baa, MIG or Prime-1 by Moody's, BBB, SP-2
or A-1 by S&P or BBB or F-1 by Fitch). Up to 20% of the Portfolio's total assets
may be invested in unrated securities that are deemed by the Portfolio's
investment adviser to be of a quality comparable to investment grade. See
"Investment Objective and Management Policies" and "Appendix A."
PURCHASE OF SHARES Common Stock may be purchased through Smith Barney. See
"Purchase of Shares."
THE OFFERING Shares of Common Stock will be offered at a price of $12.00 during
the Offering. See "Purchase of Shares."
The Portfolio anticipates applying to list the Common Stock on the NYSE.
Trading in the Common Stock will not begin, however, until a date
4
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
within 30 days of the date of this Prospectus. Smith Barney does not intend to
make a market in the Common Stock during the period in which the Common Stock is
not traded on the NYSE. As a result, during that period, an investment in the
Common Stock should be considered illiquid. Smith Barney intends to make a
market in the Common Stock after trading in the Common Stock has commenced on
the NYSE. Smith Barney, however, is not obligated to conduct market-making
activities and any such activities may be discontinued at any time without
notice, at the sole discretion of Smith Barney. No assurance can be given as to
the liquidity of, or the trading market for, the Common Stock as a result of any
market-making activities undertaken by Smith Barney. See "Purchase of Shares."
NO SALES CHARGES The Common Stock will be sold during the Offering subject to no
sales charges or underwriting discounts, but Smith Barney Financial Consultants
will receive compensation from Smith Barney in connection with sales of Common
Stock. See "Purchase of Shares."
MINIMUM PURCHASE The minimum purchase during the Offering is 100 shares
($1,200). See "Purchase of Shares."
INVESTMENT MANAGER Greenwich Street Advisors, a division of Mutual Management
Corp., serves as the Portfolio's investment manager (the "Investment Manager").
The Investment Manager provides investment advisory and management services to
investment companies affiliated with Smith Barney. Smith Barney is a wholly
owned subsidiary of Smith Barney Holdings Inc., which is in turn a wholly owned
subsidiary of The Travelers Inc. ("Travelers"). Subject to the supervision and
direction of the Portfolio's Board of Directors, the Investment Manager manages
the securities held by the Portfolio in accordance with the Portfolio's stated
investment objectives and policies, makes investment decisions for the
Portfolio, places orders to purchase and sell securities on behalf of the
Portfolio and employs professional portfolio managers. Mutual Management Corp.
acts as administrator of the Portfolio and in that capacity provides certain
administrative services, including overseeing the Portfolio's non-investment
operations and its relations with other service providers and providing
executive and other officers to the Portfolio. The Portfolio pays the Investment
Manager a fee ("Management Fee") for services provided to the Portfolio that is
computed daily and paid monthly at the annual rate of 0.90% of the value of the
Portfolio's average daily net assets. This Management Fee is higher than the
5
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
rates for similar services paid by other recently organized, publicly offered,
closed-end, management investment companies that have investment objectives and
policies similar to those of the Fund. The Portfolio will bear other expenses
and costs in connection with its operation in addition to the costs of
investment management services. See "Management of the Portfolio -- Investment
Manager."
SUB-ADMINISTRATOR The Boston Company Advisors, Inc. ("Boston Advisors") serves
as the Portfolio's sub-administrator pursuant to an agreement with Mutual
Management Corp. Boston Advisors is a wholly owned subsidiary of The Boston
Company, Inc. ("TBC"), a financial services holding company, which is a wholly
owned subsidiary of Mellon Bank Corporation ("Mellon"). See "Management of the
Portfolio -- Sub-Administrator."
CUSTODIAN Boston Safe Deposit and Trust Company ("Boston Safe") serves as the
Portfolio's custodian. See "Custodian, Transfer Agent, Dividend-Paying Agent,
Registrar and Plan Agent."
TRANSFER AGENT, DIVIDEND-PAYING AGENT, REGISTRAR AND PLAN AGENT The Shareholder
Services Group, Inc. ("TSSG") serves as the Portfolio's transfer agent,
dividend-paying agent and registrar. See "Custodian, Transfer Agent,
Dividend-Paying Agent, Registrar and Plan Agent."
DIVIDENDS AND DISTRIBUTIONS The Portfolio expects to pay monthly dividends of
net investment income (that is, income other than net realized capital gains)
and to distribute net realized capital gains, if any, annually. All dividends or
distributions with respect to shares of Common Stock will be reinvested
automatically in additional shares through participation in the Portfolio's
Dividend Reinvestment Plan, unless a shareholder elects to receive cash. When
the market price of the Common Stock is equal to or exceeds net asset value,
participants in the Portfolio's Dividend Reinvestment Plan will receive
distributions through issuance of additional shares of Common Stock valued at
net asset value or, if the net asset value is less than 95% of the then current
market price of the Common Stock, then at 95% of the market price. Whenever
market price is less than net asset value, participants will receive
distributions through purchases of shares on the open market. See "Dividends and
Distributions; Dividend Reinvestment Plan."
6
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
Initial dividends to Common Stock shareholders are expected to be declared
approximately 60 days, and paid approximately 90 days, from the completion of
the Offering. See "Dividends and Distributions; Dividend Reinvestment Plan" and
"Taxation."
RISK FACTORS AND SPECIAL CONSIDERATIONS The Portfolio is a closed-end investment
company with no history of operations that is designed primarily for long-term
investors and not as a trading vehicle. The net asset value of the Common Stock
will change with changes in the value of the securities held by the Portfolio.
Because the Portfolio will invest primarily in fixed-income securities, the net
asset value of the Common Stock can be expected to change as levels of interest
rates fluctuate; generally, when prevailing interest rates increase, the value
of fixed-income securities held by the Portfolio can be expected to decrease and
when prevailing interest rates decrease, the value of the fixed-income
securities held by the Portfolio can be expected to increase. The value of the
fixed-income securities held by the Portfolio, and thus the Portfolio's net
asset value, may also be affected by other economic, market and credit factors.
The net asset value of the Portfolio may be subject to greater fluctuation to
the extent that the Portfolio invests in zero coupon securities. See "Investment
Objective and Management Policies -- Risk Factors and Special Considerations."
The Portfolio will not purchase securities that are rated lower than Baa by
Moody's, BBB by S&P or BBB by Fitch at the time of purchase. Although
obligations rated Baa by Moody's, BBB by S&P or BBB by Fitch are considered to
be investment grade, they may be subject to greater risks than other higher
rated investment grade securities. Obligations rated Baa by Moody's, for
example, are considered medium grade obligations that lack outstanding
investment characteristics and have speculative characteristics as well;
obligations rated BBB by S&P are regarded as having an adequate capacity to pay
principal and interest, and obligations rated BBB by Fitch are deemed to be
subject to an increased likelihood that their rating will fall below investment
grade than higher rated bonds. See "Investment Objective and Management Policies
- -- Quality Standards" and "-- Risk Factors and Special Considerations."
The Portfolio may invest up to 20% of its total assets in unrated securities
that the Investment Manager determines to be of comparable quality to the
securities rated investment grade in which the Portfolio may
7
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
invest. Dealers may not maintain daily markets in unrated securities and retail
secondary markets for many of them may not exist; this lack of markets may
affect the Portfolio's ability to sell these securities when the Investment
Manager deems it appropriate. The Portfolio has the right to invest without
limitation in state and local obligations that are "private activity bonds," the
income from which may be taxable as a specific preference item for purposes of
the federal alternative minimum tax. Thus, the Portfolio may not be a suitable
investment for investors who are subject to the alternative minimum tax. See
"Investment Objective and Management Policies" and "Taxation."
Certain of the instruments held by the Portfolio, and certain of the
investment techniques that the Portfolio may employ, might expose the Portfolio
to special risks. The instruments presenting the Portfolio with risks are
municipal leases, zero coupon securities, custodial receipts, municipal
obligation components, floating and variable rate demand notes and bonds, and
participation interests. Entering into securities transactions on a when-issued
or delayed delivery basis, entering into repurchase agreements, lending
portfolio securities, and engaging in financial futures and options
transactions, are investment techniques involving risks to the Portfolio. As a
non-diversified fund within the meaning of the Investment Company Act of 1940,
as amended (the "1940 Act"), the Portfolio may invest a greater proportion of
its assets in the obligations of a smaller number of issuers and, as a result,
may be subject to greater risk than a diversified fund with respect to its
holdings of securities. See "Investment Objective and Management Policies --
Risk Factors and Special Considerations."
The Portfolio's Articles of Incorporation include provisions that could have
the effect of limiting the ability of other entities or persons to acquire
control of the Portfolio and of depriving shareholders of an opportunity to sell
their shares of Common Stock at a premium over prevailing market prices. See
"Certain Provisions of the Articles of Incorporation."
During the period in which Smith Barney will be soliciting indications of
interest with respect to the Common Stock, the Portfolio and Smith Barney will
evaluate the market for the Common Stock as well as the market for the
Portfolio's contemplated investments. If changes in existing market and other
conditions make it impractical or inadvisable to proceed with the Offering, the
Offering will not be made. See "Purchase of Shares."
8
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
DISCOUNT FROM NET ASSET VALUE The shares of closed-end investment companies,
when listed for trading on a securities exchange, often, although not always,
trade at a discount from their net asset value. The Common Stock, when traded on
the NYSE, may likewise trade at a discount from net asset value. In addition,
the trading price of the Common Stock when listed may be less than the public
offering price per share of Common Stock applicable to the Offering. The
Portfolio's market price risk may be greater for investors who intend to sell
their shares of Common Stock within a relatively short period after completion
of the Offering. See "Investment Objective and Management Policies -- Risk
Factors and Special Considerations" and "Purchase of Shares."
FEE TABLE
The following tables are intended to assist investors in understanding the
various costs and expenses directly or indirectly associated with investing in
the Portfolio.
<TABLE>
<CAPTION>
------------------------------------------------------------------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load (as a percentage of offering price) 0%
Dividend Reinvestment Plan Fees and Cash Purchase
Plan Fees 0%
------------------------------------------------------------------
ANNUAL EXPENSES
(as a percentage of net assets attributable to
Common Stock)
Management Fees 0.90%
------------------------------------------------------------------
Other Expenses (estimated) 0.20%
------------------------------------------------------------------
TOTAL ANNUAL EXPENSES (ESTIMATED) 1.10%
------------------------------------------------------------------
</TABLE>
"Management Fees" as shown above, is for the initial fiscal year of the
Portfolio. See "Use of Proceeds" and "Management of the Portfolio" for
additional information. "Other Expenses", as shown above, is based upon
estimated amounts of expenses for the initial fiscal year.
EXAMPLE
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with
9
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
respect to a hypothetical investment in the Portfolio. These amounts are based
upon payment by the Portfolio of operating expenses at the levels set forth in
the table above.
An investor would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return and (2) reinvestment of all dividends and distributions
at net asset value:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------
$ 11 $ 35 $ 61 $ 134
--------------------------------------------------------------------------------
</TABLE>
This example should not be considered a representation of future expenses of
the Portfolio and actual expenses may be greater or less than those shown.
Moreover, while the example assumes a 5% annual return, the Portfolio's
performance will vary and may result in a return greater or less than 5%. In
addition, while the example assumes reinvestment of all dividends and
distributions at net asset value, participants in the Portfolio's Dividend
Reinvestment Plan may receive shares purchased or issued at a price or value
different from net asset value. See "Dividends and Distributions; Dividend
Reinvestment Plan."
- --------------------------------------------------------------------
THE PORTFOLIO
The Portfolio is a newly organized, non-diversified, closed-end management
investment company that seeks as high a level of current income exempt from
federal income tax as is consistent with the preservation of principal. The
Portfolio was incorporated 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 Portfolio is registered under the 1940 Act,
and has its principal office at Two World Trade Center, New York, New York
10048. The Portfolio's telephone number is (212) 298-7315.
10
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- --------------------------------------------------------------------
USE OF PROCEEDS
The net proceeds from the sale of shares of Common Stock in the Offering will
be approximately $203,550,580 ($234,150,580 if Smith Barney exercises the
over-allotment option in full) after deducting offering expenses of the
Portfolio, estimated to be approximately $449,420.
The net proceeds of the Offering will be invested in accordance with the
Portfolio's investment objective and management policies (as stated below) as
soon as practicable after completion of the Offering; the Portfolio currently
anticipates being able to be fully invested within 90 days of the completion of
the Offering. Pending investment of the net proceeds in accordance with the
Portfolio's investment objective and management policies, the Portfolio will
invest in high quality, short-term, tax-exempt money market securities or in
high quality obligations issued by state or local governments, political
subdivisions, agencies and public authorities with relatively low volatility
(such as pre-funded and intermediate-term securities), to the extent those types
of securities are available. Investors should expect that, before the Portfolio
has fully invested the proceeds of the Offering in accordance with the
Portfolio's investment objective and management policies, the Portfolio's yield
would be somewhat less, but that its net asset value would be subject to less
fluctuation, than would be the case at such time as the Portfolio is fully
invested. If necessary to invest fully the net proceeds of the Offering
immediately, the Portfolio may purchase short-term taxable investments of the
type described under "Investment Objective and Management Policies -- Taxable
Investments."
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
Set out below is a description of the investment objective and principal
investment policies of the Portfolio. No assurance can be given that the
Portfolio will be able to achieve its investment objective, which may be changed
only with the approval of a majority of the Portfolio's outstanding voting
securities as defined in the 1940 Act. Such a majority is defined in the 1940
Act as the lesser of (1) 67% or more of the shares present at a meeting of the
Portfolio, if the holders of more than 50% of the outstanding shares of the
Portfolio are present or represented by proxy or (2) more than 50% of the
outstanding shares of the Portfolio.
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
GENERAL
The Portfolio's investment objective is to seek as high a level of current
income exempt from federal income taxes as is consistent with the preservation
of principal. In seeking its objective, the Portfolio will invest in investment
grade debt obligations issued by, or on behalf of, states, territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities or multistate agencies or
authorities, the interest from which debt obligations is, in the opinion of bond
counsel to their issuer, excluded from gross income for federal income tax
purposes ("Municipal Obligations"). The Portfolio will operate subject to a
fundamental investment policy providing that, under normal conditions, the
Portfolio will invest at least 80% of its net assets in Municipal Obligations.
The Portfolio will generally invest in long-term Municipal Obligations; under
normal market conditions, the weighted average maturity of the Portfolio's
securities is expected to be in excess of 20 years.
The Portfolio is classified as a non-diversified fund under the 1940 Act,
which means that the Portfolio is not limited by the 1940 Act in the proportion
of its assets that it may invest in the obligations of a single issuer. The
Portfolio intends to conduct its operations, however, so as to qualify as a
"regulated investment company" for purposes of the Internal Revenue Code of
1986, as amended (the "Code"), which will relieve the Portfolio of any liability
for federal income tax to the extent that its earnings are distributed to
shareholders. To qualify as a regulated investment company, the Portfolio will,
among other things, limit its investments so that, at the close of each quarter
of its taxable year (1) not more than 25% of the market value of the Portfolio's
total assets will be invested in the securities of a single issuer and (2) with
respect to 50% of the market value of its total assets, not more than 5% of the
market value of its total assets will be invested in the securities of a single
issuer. See "Taxation."
The Portfolio generally will not invest more than 25% of its total assets in
any industry. Governmental issuers of Municipal Obligations are not considered
part of any "industry." Municipal Obligations backed only by the assets and
revenues of non-governmental users may be deemed to be issued by the
non-governmental users, and would be subject to the Portfolio's 25% industry
limitation.
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
The Portfolio may invest more than 25% of its total assets in a broad segment
of the Municipal Obligations market, such as revenue obligations of hospitals
and other health care facilities, housing agency revenue obligations, or airport
revenue obligations, if the Investment Manager determines that the yields
available from obligations in a particular segment of the market justify the
additional risks associated with a large investment in the segment. Although
these Municipal Obligations could be supported by the credit of governmental
users, or by the credit of non-governmental users engaged in a number of
industries, economic, business, political and other developments generally
affecting the revenues of the users (for example, proposed legislation or
pending court decisions affecting the financing of projects and market factors
affecting the demand for their services or products) may have a general adverse
effect on all municipal securities in such a market segment. The Portfolio
reserves the right to invest more than 25% of its assets in industrial
development bonds or in issuers located in the same state, although it has no
current intention of investing more than 25% of its assets in issuers located in
the same state. If the Portfolio were to invest more than 25% of its total
assets in issuers located in the same state, it would be more susceptible to
adverse economic, business or regulatory conditions in that state.
From time to time, the Portfolio's investments may include securities as to
which the Portfolio, by itself or together with other funds or accounts managed
by the Investment Manager, holds a major portion or all of an issue of Municipal
Obligations. Because relatively few potential purchasers may be available for
these investments and, in some cases, contractual restrictions may apply on
resales, the Portfolio may find it more difficult to sell these securities at a
time when the Investment Manager believes it is advisable to do so.
MUNICIPAL OBLIGATIONS
Municipal Obligations are classified as general obligation bonds, revenue
bonds and notes. General obligation bonds are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and
interest. Revenue bonds are payable from the revenue derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source, but not from the general taxing
power. Notes are short-term obligations of issuing municipalities or
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
agencies and are sold in anticipation of a bond sale, collection of taxes or
receipt of other revenues. Municipal Obligations bear fixed, floating and
variable rates of interest, and variations exist in the security of Municipal
Obligations, both within a particular classification and between
classifications.
The yields on, and values of, Municipal Obligations are dependent on a variety
of factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligation markets, size of a particular
offering, maturity of the obligation and rating of the issue. Consequently,
Municipal Obligations with the same maturity, coupon and rating may have
different yields or values, whereas obligations of the same maturity and coupon
with different ratings may have the same yield or value. See "Risk Factors and
Special Considerations -- Municipal Obligations."
Issuers of Municipal Obligations may be subject to the provisions of
bankruptcy, insolvency and other laws, such as the Federal Bankruptcy Reform Act
of 1978, affecting the rights and remedies of creditors. In addition, the
obligations of those issuers may become subject to laws enacted in the future by
Congress, state legislatures or referenda extending the time for payment of
principal and/or interest, or imposing other constraints upon enforcement of the
obligations or upon the ability of municipalities to levy taxes. The possibility
also exists that, as a result of litigation or other conditions, the power or
ability of any issuer to pay, when due, the principal of, and interest on, its
obligations may be materially affected.
QUALITY STANDARDS
The Portfolio will typically purchase a Municipal Obligation if the Investment
Manager believes that the yield of the obligation is sufficiently attractive in
light of the risks of ownership of the obligation. In determining whether the
Portfolio should invest in particular Municipal Obligations, Greenwich Street
Advisors will consider factors such as: the price, coupon and yield to maturity
of the obligations; the Investment Manager's assessment of the credit quality of
the issuer of the obligations; the issuer's available cash flow and the related
coverage ratios; the property, if any, securing the obligations; and the terms
of the obligations, including
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
subordination, default, sinking fund and early redemption provisions. The
Investment Manager will also review the ratings, if any, assigned to the
securities by Moody's, S&P, Fitch or another nationally-recognized rating
agency.
The Portfolio will invest at least 80% of its total assets in Municipal
Obligations rated investment grade, that is, rated no lower than Baa, MIG 3 or
Prime-1 by Moody's, BBB, SP-2 or A-1 by S&P or BBB or F-1 by Fitch. Up to 20% of
the Portfolio's total assets may be invested in unrated securities that are
deemed by the Investment Manager to be of a quality comparable to investment
grade. The Portfolio will not invest in Municipal Obligations that are rated
lower than Baa by Moody's, BBB by S&P or BBB by Fitch, at the time of purchase.
Although Municipal Obligations rated Baa by Moody's, BBB by S&P or BBB by Fitch
are considered to be investment grade, they may be subject to greater risks than
other higher rated investment grade securities. Municipal Obligations rated Baa
by Moody's, for example, are considered medium grade obligations that lack
outstanding investment characteristics and have speculative characteristics as
well. Municipal Obligations rated BBB by S&P are regarded as having an adequate
capacity to pay principal and interest. Municipal Obligations rated BBB by Fitch
are deemed to be subject to a higher likelihood that their rating will fall
below investment grade than higher rated bonds.
The ratings of agencies such as Moody's, S&P and Fitch represent their
opinions as to the quality of the Municipal Obligations that they undertake to
rate; the ratings are relative and subjective and are not absolute standards of
quality. The Investment Manager's judgment as to the credit quality of a
Municipal Obligation, thus, may differ from that suggested by the ratings
published by a rating service. A description of Moody's, S&P and Fitch ratings
relevant to the Portfolio's investments is included as Appendix A to this
Prospectus. The policies of the Portfolio described above as to ratings of
investments will apply only at the time of the purchase of a security, and the
Portfolio will not be required to dispose of a security in the event Moody's,
S&P or Fitch downgrades its assessment of the credit characteristics of the
security's issuer.
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
PRIVATE ACTIVITY BONDS
The Portfolio may invest without limit in Municipal Obligations that are
tax-exempt "private activity bonds," as defined in the Code, which are in most
cases revenue bonds. Private activity bonds generally do not carry the pledge of
the credit of the issuing municipality, but are guaranteed by the corporate
entity on whose behalf they are issued. Interest income on certain types of
private activity bonds issued after August 7, 1986 to finance nongovernmental
activities is a specific tax preference item for purposes of the federal
individual and corporate alternative minimum taxes. Individual and corporate
shareholders may be subject to a federal alternative minimum tax to the extent
that the Portfolio's dividends are derived from interest on these bonds.
Dividends derived from interest income on Municipal Obligations are a "current
earnings" adjustment item for purposes of the federal corporate alternative
minimum tax. See "Taxation." Private activity bonds held by the Portfolio will
be included in the term Municipal Obligations for purposes of determining
compliance with the Portfolio's policy of investing at least 80% of its total
assets in Municipal Obligations.
TYPES OF MUNICIPAL OBLIGATIONS HELD BY THE PORTFOLIO
MUNICIPAL LEASES. Among the Municipal Obligations in which the Portfolio may
invest are municipal leases, which may take the form of a lease or an
installment purchase or conditional sales contract to acquire a wide variety of
equipment and facilities. Interest payments on qualifying municipal leases are
exempt from federal income taxes and state income taxes within the state of
issuance. The Portfolio may invest in municipal leases containing
"non-appropriation" clauses that provide that the governmental issuer has no
obligation to make future payments under the lease or contract unless money is
appropriated for the purpose by the applicable legislative body on a yearly or
other periodic basis.
Municipal leases that the Portfolio may acquire will be both rated and
unrated. Rated leases that may be held by the Portfolio include those rated
investment grade at the time of investment (that is, rated no lower than Baa by
Moody's, BBB by S&P or BBB by Fitch). The Portfolio may acquire unrated issues
that the Investment Manager deems to be comparable in quality to rated issues in
which the Portfolio is authorized to invest. A determination by the Investment
Manager that an unrated lease obligation is
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
comparable in quality to a rated lease obligation will be made on the basis of,
among other things, a consideration of whether the nature of the leased
equipment or other property is such that its ownership or use is reasonably
essential to a governmental function of the issuing municipality. In addition,
all such determinations made by the Investment Manager will be subject to
oversight and approval by the Portfolio's Board of Directors.
Municipal leases held by the Portfolio will be considered illiquid securities
unless the Portfolio's Board of Directors determines on an ongoing basis that
the leases are readily marketable. An unrated municipal lease with a non-
appropriation risk that is backed by an irrevocable bank letter of credit or an
insurance policy issued by a bank or insurer deemed by the Investment Manager to
be of high quality and minimal credit risk will not be deemed to be illiquid
solely because the underlying municipal lease is unrated, if the Investment
Manager determines that the lease is readily marketable because it is backed by
the letter of credit or insurance policy.
Municipal leases are subject to special risks described below under "Risk
Factors and Special Considerations." To limit those risks, the Portfolio will
invest no more than 5% of its total assets in lease obligations that contain
non-appropriation clauses and will only purchase a non-appropriation lease
obligation with respect to which (1) the nature of the leased equipment or other
property is such that its ownership or use is reasonably essential to a
governmental function of the issuing municipality, (2) the lease payments will
begin to amortize the principal balance due at an early date, resulting in an
average life of five years or less for the lease obligation, (3) appropriate
covenants will be obtained from the municipal obligor prohibiting the
substitution or purchase of similar equipment or other property if lease
payments are not appropriated, (4) the lease obligor has maintained good market
acceptability in the past, (5) the investment is of a size that will be
attractive to institutional investors and (6) the underlying leased equipment or
other property has elements of portability and/or use that enhance its
marketability in the event that foreclosure on the underlying equipment or other
property were ever required.
ZERO COUPON SECURITIES. The Portfolio may invest up to 10% of its assets in
zero coupon Municipal Obligations. Zero coupon Municipal Obligations are
generally divided into two categories: Pure Zero Obligations, which are those
that pay no interest for their entire life and Zero/Fixed Obligations,
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
which pay no interest for some initial period and thereafter pay interest
currently. In the case of a Pure Zero Obligation, the failure to pay interest
currently may result from the obligation's having no stated interest rate, in
which case the obligation pays only principal at maturity and is issued at a
discount from its stated principal amount. A Pure Zero Obligation may, in the
alternative, specify a stated interest rate, but provide that no interest is
payable until maturity, in which case accrued unpaid interest on the obligation
may be capitalized as incremental principal. The value to the investor of a zero
coupon Municipal Obligation consists of the economic accretion either of the
difference between the purchase price and the nominal principal amount (if no
interest is stated to accrue) or of accrued, unpaid interest during the
Municipal Obligation's life or payment deferral period.
CUSTODIAL RECEIPTS. The Portfolio may acquire custodial receipts or
certificates underwritten by securities dealers or banks that evidence ownership
of future interest payments, principal payments or both on certain Municipal
Obligations. The underwriter of these certificates or receipts typically
purchases Municipal Obligations and deposits the obligations in an irrevocable
trust or custodial account with a custodian bank, which then issues receipts or
certificates that evidence ownership of the periodic unmatured coupon payments
and the final principal payment on the obligations. Custodial receipts
evidencing specific coupon or principal payments have the same general
attributes as zero coupon Municipal Obligations described above. Although under
the terms of a custodial receipt, the Portfolio would be typically authorized to
assert its rights directly against the issuer of the underlying obligation, the
Portfolio could be required to assert through the custodian bank those rights as
may exist against the underlying issuer. Thus, in the event the underlying
issuer fails to pay principal and/or interest when due, the Portfolio may be
subject to delays, expenses and risks that are greater than those that would
have been involved if the Portfolio had purchased a direct obligation of the
issuer. In addition, in the event that the trust or custodial account in which
the underlying security has been deposited is determined to be an association
taxable as a corporation, instead of a non-taxable entity, the yield on the
underlying security would be reduced in recognition of any taxes paid.
MUNICIPAL OBLIGATION COMPONENTS. The Portfolio may invest in Municipal
Obligations, the interest rate on which has been divided by the issuer
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
into two different and variable components, which together result in a fixed
interest rate. Typically, the first of the components (the "Auction Component")
pays an interest rate that is reset periodically through an auction process,
whereas the second of the components (the "Residual Component") pays a residual
interest rate based on the difference between the total interest paid by the
issuer on the Municipal Obligation and the auction rate paid on the Auction
Component. The Portfolio may purchase both Auction and Residual Components.
Because the interest rate paid to holders of Residual Components is generally
determined by subtracting the interest rate paid to the holders of Auction
Components from a fixed amount, the interest rate paid to Residual Component
holders will decrease as the Auction Component's rate increases and increase as
the Auction Component's rate decreases. Moreover, the extent of the increases
and decreases in market value of Residual Components may be larger than
comparable changes in the market value of an equal principal amount of a fixed
rate Municipal Obligation having similar credit quality, redemption provisions
and maturity.
FLOATING AND VARIABLE RATE INSTRUMENTS. The Portfolio may purchase floating
and variable rate demand notes and bonds, which are Municipal Obligations
normally having a stated maturity in excess of one year, but which permit their
holder to demand payment of principal at any time, or at specified intervals.
The issuer of floating and variable rate demand obligations normally has a
corresponding right, after a given period, to prepay at its discretion the
outstanding principal amount of the obligations plus accrued interest upon a
specified number of days' notice to the holders of the obligations. The interest
rate on a floating rate demand obligation is based on a known lending rate, such
as a bank's prime rate, and is adjusted automatically each time that rate is
adjusted. The interest rate on a variable rate demand obligation is adjusted
automatically at specified intervals. Frequently, floating and variable rate
obligations are secured by letters of credit or other credit support
arrangements provided by banks. Use of letters of credit or other credit support
arrangements will not adversely affect the tax-exempt status of these
obligations. Because they are direct lending arrangements between the lender and
borrower, floating and variable rate obligations will generally not be traded.
In addition, no secondary market generally exists for these obligations,
although their holders may demand their payment at face value. For these
reasons, when floating and variable
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
rate obligations held by the Portfolio are not secured by letters of credit or
other credit support arrangements, the Portfolio's right to demand payment is
dependent on the ability of the borrower to pay principal and interest on
demand. The Investment Manager, on behalf of the Portfolio, will consider, on an
ongoing basis, the creditworthiness of the issuers of floating and variable rate
demand obligations held by the Portfolio. To the extent the Portfolio holds
certain floating and variable rate demand obligations or Auction Components, the
Portfolio may not, under certain market conditions, be fully achieving its
investment objective.
PARTICIPATION INTERESTS. The Portfolio may purchase from financial
institutions tax-exempt participation interests in Municipal Obligations. A
participation interest gives the Portfolio an undivided interest in the
Municipal Obligation in the proportion that the Portfolio's participation
interest bears to the total amount of the Municipal Obligation. These
instruments may have floating or variable rates of interest. If the
participation interest is unrated, it will be backed by an irrevocable letter of
credit or guarantee of a bank that the Portfolio's Board of Directors has
determined meets certain quality standards or the payment obligation otherwise
will be collateralized by obligations issued or guaranteed by the U.S.
Government or its agencies or instrumentalities ("U.S. Government securities").
The Portfolio will have the right, with respect to certain participation
interests, to demand payment, on a specified number of days' notice, for all or
any part of the Portfolio's interest in the Municipal Obligation, plus accrued
interest. The Portfolio intends to exercise its right with respect to these
instruments to demand payment only upon a default under the terms of the
Municipal Obligation or to maintain or improve the quality of the instruments it
holds. In addition, the Portfolio will invest no more than 5% of its total
assets in participation interests.
TAXABLE INVESTMENTS
Under normal conditions, the Portfolio may hold up to 20% of its total assets
in cash or money market instruments, including taxable money market instruments
(collectively, "Taxable Investments"). In addition, the Portfolio may take a
temporary defensive posture and invest without limitation in
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
short-term Municipal Obligations and Taxable Investments, upon a determination
by the Investment Manager that market conditions warrant such a posture. To the
extent the Portfolio holds Taxable Investments, the Portfolio will not be
pursuing its investment objective.
Money market instruments in which the Portfolio may invest include: U.S.
Government securities; tax-exempt notes of municipal issuers rated, at the time
of purchase, no lower than MIG 1 by Moody's, SP-1 by S&P or F-1 by Fitch or, if
not rated, by issuers having outstanding, unsecured debt then rated within the
three highest rating categories; bank obligations (including certificates of
deposit, time deposits and bankers' acceptances of domestic banks, domestic
savings and loan associations and similar institutions); commercial paper rated
no lower than P-1 by Moody's, A-1 by S&P or F-1 by Fitch or the equivalent from
another nationally-recognized rating agency or, if unrated, of an issuer having
an outstanding, unsecured debt issue then rated within the three highest rating
categories; and repurchase agreements. At no time will the Portfolio's
investments in bank obligations, including time deposits, exceed 25% of the
value of its assets.
U.S. Government securities in which the Portfolio may invest include direct
obligations of the United States and obligations issued by U.S. Government
agencies and instrumentalities. Included among direct obligations of the United
States are Treasury Bills, Treasury Notes and Treasury Bonds, which differ
principally in terms of their maturities. Included among the securities issued
by U.S. Government agencies and instrumentalities are: securities that are
supported by the full faith and credit of the United States (such as Government
National Mortgage Association certificates); securities that are supported by
the right of the issuer to borrow from the U.S. Treasury (such as securities of
Federal Home Loan Banks); and securities that are supported by the credit of the
instrumentality (such as Federal National Mortgage Association and Federal Home
Loan Mortgage Corporation bonds).
The Portfolio may enter into repurchase agreement transactions with member
banks of the Federal Reserve System or with certain dealers listed on the
Federal Reserve Bank of New York's list of reporting dealers. A repurchase
agreement is a contract under which the buyer of a security simultaneously
commits to resell the security to the seller at an agreed-upon price on an
agreed-upon date. Under the terms of a typical repurchase
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
agreement, the Portfolio would acquire an underlying debt obligation for a
relatively short period subject to an obligation of the seller to repurchase,
and the Portfolio to resell, the obligation at an agreed-upon price and time,
thereby determining the yield during the Portfolio's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Portfolio's holding period. Under each repurchase
agreement, the selling institution will be required to maintain the value of the
securities subject to the repurchase agreement at not less than their repurchase
price.
The value of the securities underlying a repurchase agreement of the Portfolio
will be monitored on an ongoing basis by the Investment Manager or Boston
Advisors to ensure that the value is at least equal at all times to the total
amount of the repurchase obligation, including interest. The Investment Manager
will also monitor, on an ongoing basis to evaluate potential risks, the
creditworthiness of the banks and dealers with which the Portfolio enters into
repurchase agreements.
INVESTMENT TECHNIQUES
The Portfolio may employ, among others, the investment techniques described
below, which may give rise to taxable income:
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Portfolio may purchase
securities on a when-issued basis, or may purchase or sell securities for
delayed delivery. In when-issued or delayed delivery transactions, delivery of
the securities occurs beyond normal settlement periods, but no payment or
delivery will be made by the Portfolio prior to the actual delivery or payment
by the other party to the transaction. The Portfolio will not accrue income with
respect to a when-issued or delayed delivery security prior to its stated
delivery date. The Portfolio will establish with Boston Safe a segregated
account consisting of cash, U.S. Government securities, or other liquid high
grade debt obligations, in an amount equal to the amount of the Portfolio's
when-issued and delayed delivery purchase commitments. Placing securities rather
than cash in the segregated account may have a leveraging effect on the
Portfolio's net asset value per share; that is, to the extent that the Portfolio
remains substantially fully invested in securities at the same
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
time that it has committed to purchase securities on a when-issued or delayed
delivery basis, greater fluctuations in its net asset value per share may occur
than if it had set aside cash to satisfy its purchase commitments.
STAND-BY COMMITMENTS. The Portfolio may acquire "stand-by commitments" with
respect to Municipal Obligations it holds. Under a stand-by commitment, which
resembles a put option, a broker, dealer or bank is obligated to repurchase at
the Portfolio's option specified securities at a specified price. Each exercise
of a stand-by commitment, therefore, is subject to the ability of the seller to
make payment on demand. The Portfolio will acquire stand-by commitments solely
to facilitate liquidity and does not intend to exercise the rights afforded by
the commitments for trading purposes. The Portfolio anticipates that stand-by
commitments will be available from brokers, dealers and banks without the
payment of any direct or indirect consideration. The Portfolio may pay for
stand-by commitments if payment is deemed necessary, thus increasing to a degree
the cost of the underlying Municipal Obligation and similarly decreasing the
obligation's yield to investors.
FINANCIAL FUTURES AND OPTIONS TRANSACTIONS. To hedge against a decline in the
value of Municipal Obligations it owns or an increase in the price of Municipal
Obligations it proposes to purchase, the Portfolio may enter into financial
futures contracts and invest in options on financial futures contracts that are
traded on a U.S. exchange or board of trade. The futures contracts or options on
futures contracts that may be entered into by the Portfolio will be restricted
to those that are either based on an index of Municipal Obligations or relate to
debt securities the prices of which are anticipated by the Investment Manager to
correlate with the prices of the Municipal Obligations owned or to be purchased
by the Portfolio.
In entering into a financial futures contract, the Portfolio will be required
to deposit with the broker through which it undertakes the transaction an amount
of cash or cash equivalents equal to approximately 5% of the contract amount.
This amount, which is known as "initial margin," is subject to change by the
exchange or board of trade on which the contract is traded, and members of the
exchange or board of trade may charge a higher amount. Initial margin is in the
nature of a performance bond or good faith deposit on the contract that is
returned to the Portfolio upon termination of the futures contract, assuming all
contractual obligations have
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
been satisfied. In accordance with a process known as "marking-to-market,"
subsequent payments, known as "variation margin," to and from the broker will be
made daily as the price of the index or securities underlying the futures
contract fluctuates, making the long and short positions in the futures contract
more or less valuable. At any time prior to the expiration of a futures
contract, the Portfolio may elect to close the position by taking an opposite
position, which will operate to terminate the Portfolio's existing position in
the contract.
A financial futures contract provides for the future sale by one party and the
purchase by the other party of a certain amount of a specified property at a
specified price, date, time and place. Unlike the direct investment in a futures
contract, an option on a financial futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in the financial
futures contract at a specified exercise price at any time prior to the
expiration date of the option. Upon exercise of an option, the delivery of the
futures position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's futures
margin account, which represents the amount by which the market price of the
futures contract exceeds, in the case of a call, or is less than, in the case of
a put, the exercise price of the option on the futures contract. The potential
loss related to the purchase of an option on financial futures contracts is
limited to the premium paid for the option (plus transaction costs). The value
of the option may change daily and that change would be reflected in the net
asset value of the Portfolio.
Regulations of the Commodity Futures Trading Commission applicable to the
Portfolio require that its transactions in financial futures contracts and
options on financial futures contracts be engaged in for bona fide hedging
purposes or other permitted purposes, and that no such transactions may be
entered into by the Portfolio if the aggregate initial margin deposits and
premiums paid by the Portfolio exceed 5% of the market value of its assets. In
addition, the Portfolio will, with respect to its purchases of financial futures
contracts, establish a segregated account consisting of cash or cash equivalents
in an amount equal to the total market value of the futures contracts, less the
amount of initial margin on deposit for the contracts. The Portfolio's ability
to trade in financial futures contracts and options on
24
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
financial futures contracts may be limited to some extent by the requirements of
the Code applicable to a regulated investment company that are described below
under "Taxation."
LENDING SECURITIES. The Portfolio is authorized to lend securities it holds to
brokers, dealers and other financial organizations, but it will not lend
securities to any affiliate of the Investment Manager, including Smith Barney,
unless the Portfolio applies for and receives specific authority to do so from
the Securities and Exchange Commission (the "SEC"). Loans of the Portfolio's
securities, if and when made, may not exceed 33 1/3% of the Portfolio's assets
taken at value. The Portfolio's loans of securities will be collateralized by
cash, letters of credit or U.S. Government securities that will be maintained at
all times in a segregated account with Boston Safe in an amount equal to the
current market value of the loaned securities. From time to time, the Portfolio
may pay a part of the interest earned from the investment of collateral received
for securities loaned to the borrower and/or a third party that is unaffiliated
with the Portfolio and that is acting as a "finder."
By lending its securities, the Portfolio can increase its income by continuing
to receive interest on the loaned securities, by investing the cash collateral
in short-term instruments or by obtaining yield in the form of interest paid by
the borrower when U.S. Government securities are used as collateral. The
Portfolio will adhere to the following conditions whenever it lends its
securities: (1) the Portfolio must receive at least 100% cash collateral or
equivalent securities from the borrower, which amount of collateral will be
maintained by daily marking to market; (2) the borrower must increase the
collateral whenever the market value of the securities loaned rises above the
level of the collateral; (3) the Portfolio must be able to terminate the loan at
any time; (4) the Portfolio must receive reasonable interest on the loan, as
well as any dividends, interest or other distributions on the loaned securities,
and any increase in market value; (5) the Portfolio may pay only reasonable
custodian fees in connection with the loan; and (6) voting rights on the loaned
securities may pass to the borrower, except that, if a material event adversely
affecting the investment in the loaned securities occurs, the Portfolio's Board
of Directors must terminate the loan and retain the Portfolio's right to vote
the securities.
25
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
RISK FACTORS AND SPECIAL CONSIDERATIONS
Investment in the Portfolio involves risk factors and special considerations,
such as those described below:
MUNICIPAL OBLIGATIONS. Substantially all of the Portfolio's total assets will
be invested, under normal market conditions, in Municipal Obligations rated
investment grade at the time of investment. Market rates of interest available
with respect to Municipal Obligations generally may be lower than those
available with respect to taxable securities, although the differences may be
wholly or partially offset by the effects of federal income tax on income
derived from taxable securities. The amount of available information about the
financial condition of issuers of Municipal Obligations may be less extensive
than that for corporate issuers with publicly traded securities, and the market
for Municipal Obligations may be less liquid than the market for corporate debt
obligations. Municipal Obligations in which the Portfolio may invest include
special obligation bonds, lease obligations, participation certificates and
variable rate instruments. The market for these Municipal Obligations may be
less liquid than the market for general obligation Municipal Obligations.
Although the Portfolio's policy will generally be to hold Municipal Obligations
until their maturity, the relative illiquidity of some of the Portfolio's
securities may adversely affect the ability of the Portfolio to dispose of the
securities in a timely manner and at a fair price. The market for less liquid
securities tends to be more volatile than the market for more liquid securities
and market values of relatively illiquid securities may be more susceptible to
change as a result of adverse publicity and investor perceptions than are the
market values of more liquid securities. Although the issuer of certain
Municipal Obligations may be obligated to redeem the obligations at face value,
redemption could result in capital losses to the Portfolio to the extent that
the Municipal Obligations were purchased by the Portfolio at a premium to face
value.
Although the Municipal Obligations in which the Portfolio may invest will be,
at the time of investment, rated investment grade, municipal securities, like
other debt obligations, are subject to the risk of non-payment by their issuers.
The ability of issuers of Municipal Obligations to make timely payments of
interest and principal may be adversely affected in general economic downturns
and as relative governmental cost burdens are allocated and reallocated among
federal, state and local governmental units.
26
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
Non-payment by an issuer would result in a reduction of income to the Portfolio,
and could result in a reduction in the value of the Municipal Obligations
experiencing non-payment and a potential decrease in the net asset value of the
Portfolio.
Issuers of Municipal Obligations may from time to time seek protection under
federal bankruptcy laws. In the event of bankruptcy of an issuer of a Municipal
Obligation it holds, the Portfolio could experience delays and limitations with
respect to the collection of principal and interest on the obligation, and the
Portfolio may not, in all circumstances, be able to collect all principal and
interest to which it is entitled. To enforce its rights in the event of a
default in the payment of interest or repayment of principal, or both, the
Portfolio may take possession of and manage the assets securing the issuer's
obligations on the securities, which may increase the Portfolio's operating
expenses and adversely affect the net asset value of the Portfolio. Any income
derived from the Portfolio's ownership or operation of these assets may not be
tax-exempt. In addition, the Portfolio's intention to qualify as a regulated
investment company under the Code may limit the extent to which the Portfolio
may exercise its rights by taking possession of the assets, because as a
regulated investment company the Portfolio is subject to certain limitations on
its investments and on the nature of its income. See "Taxation."
Opinions relating to the validity of Municipal Obligations and to the
exemption of interest on them from federal income taxes are rendered by bond
counsel to the respective issuers at the time of issuance. Neither the Portfolio
nor the Investment Manager will review the procedures relating to the issuance
of Municipal Obligations or the basis for opinions of counsel.
Boston Advisors values the Portfolio's investments pursuant to guidelines
adopted and periodically reviewed by the Portfolio's Board of Directors. To the
extent that no established retail market exists for some of the securities in
which the Portfolio may invest, trading in the securities may be relatively
inactive and the ability of Boston Advisors to value the securities accurately
may be adversely affected. During periods of reduced market liquidity and in the
absence of readily available market quotations for Municipal Obligations held by
the Portfolio, the responsibility of Boston Advisors to value the Portfolio's
securities will become more difficult. Boston Advisors' judgment may play a
greater role in the valuation of the Portfolio's securities as a
27
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
result of the reduced availability of reliable objective data. To the extent
that the Portfolio invests in illiquid securities and securities that are
restricted as to resale, the Portfolio may incur additional risks and costs. The
sale of illiquid and restricted securities is particularly difficult.
The net asset value of the Common Stock will change with changes in the value
of the Portfolio's securities. Because the Portfolio will invest primarily in
fixed-income securities, the net asset value of the Common Stock can be expected
to change as levels of interest rates fluctuate; generally, when prevailing
interest rates increase, the value of fixed-income securities held by the
Portfolio can be expected to decrease and when prevailing interest rates
decrease, the value of the fixed-income securities held by the Portfolio can be
expected to increase. The value of the fixed-income securities held by the
Portfolio, and thus the Portfolio's net asset value, may also be affected by
other economic, market and credit factors.
POTENTIAL LEGISLATION. In past years, the U.S. Government has enacted various
laws that have restricted or diminished the income tax exemption on various
types of Municipal Obligations and may enact other similar laws in the future.
If any such laws are enacted that would reduce the availability of Municipal
Obligations for investment by the Portfolio so as to affect the Portfolio's
shareholders adversely, the Portfolio's Board of Directors will reevaluate the
Portfolio's investment objective and management policies and might submit
possible changes in the Portfolio's structure to the shareholders for their
consideration. If legislation was enacted that would treat a type of Municipal
Obligation as taxable for federal income tax purposes, the Portfolio would treat
the security as a permissible Taxable Investment within the applicable limits
described in this Prospectus.
UNRATED SECURITIES. The Portfolio may invest in unrated securities that the
Investment Manager determines to be of comparable quality to the rated
securities in which the Portfolio may invest. Dealers may not maintain daily
markets in unrated securities and retail secondary markets for many of them may
not exist. As a result, the Portfolio's ability to sell these securities when
the Investment Manager deems it appropriate may be diminished.
28
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GREENWICH STREET MUNICIPAL FUND INC.
- ---------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
MUNICIPAL LEASES. Municipal leases in which the Portfolio may invest have
special risks not normally associated with Municipal Obligations. These
obligations frequently contain non-appropriation clauses that provide that the
governmental issuer of the obligation need not make future payments under the
lease or contract unless money is appropriated for that purpose by a legislative
body annually or on another periodic basis. Municipal leases have additional
risks because they represent a type of financing that has not yet developed the
depth of marketability generally associated with other Municipal Obligations.
Moreover, although a municipal lease typically will be secured by financed
equipment or facilities, the disposition of the equipment or facilities in the
event of foreclosure might prove difficult. In addition, in certain instances
the tax-exempt status of the municipal lease will not be subject to the legal
opinion of a nationally-recognized bond counsel, although in all cases the
Investment Manager will require that a municipal lease purchased by the
Portfolio be covered by a legal opinion to the effect that, as of the effective
date of the municipal lease, the lease is the valid and binding obligation of
the governmental issuer.
NON-PUBLICLY TRADED SECURITIES. As suggested above, the Portfolio may, from
time to time, invest a portion of its assets in non-publicly traded Municipal
Obligations. Non-publicly traded securities may be less liquid than publicly
traded securities. Although non-publicly traded securities may be resold in
privately negotiated transactions, the prices realized from these sales could be
less than those originally paid by the Portfolio.
REPURCHASE AGREEMENTS. In entering into a repurchase agreement, the Portfolio
will bear a risk of loss in the event that the other party to the transaction
defaults on its obligations and the Portfolio is delayed or prevented from
exercising its rights to dispose of the underlying securities, including the
risk of a possible decline in the value of the underlying securities during the
period in which the Portfolio seeks to assert its rights to them, the risk of
incurring expenses associated with asserting those rights and the risk of losing
all or a part of the income from the agreement.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. Securities purchased on a
when-issued or delayed delivery basis may expose the Portfolio to risk because
the securities may experience fluctuations in value prior to their delivery.
Purchasing securities on a when-issued or delayed delivery basis can
29
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GREENWICH STREET MUNICIPAL FUND INC.
- --------------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
involve the additional risk that the yield available in the market when the
delivery takes place may be higher than that obtained in the transaction itself.
FINANCIAL FUTURES AND OPTIONS. Although the Portfolio intends to enter into
financial futures contracts and options on financial futures contracts that are
traded on a U.S. exchange or board of trade only if an active market exists for
those instruments, no assurance can be given that an active market will exist
for them at any particular time. If closing a futures position in anticipation
of adverse price movements is not possible, the
Portfolio would be required to make daily cash payments of variation margin. In
those circumstances, an increase in the value of the portion of the Portfolio's
investments being hedged, if any, may offset partially or completely losses on
the futures contract. No assurance can be given, however, that the price of the
securities being hedged will correlate with the price movements in a futures
contract and, thus, provide an offset to losses on the futures contract or
option on the futures contract. In addition, in light of the risk of an
imperfect correlation between securities held by the Portfolio that are the
subject of a hedging transaction and the futures or options used as a hedging
device, the hedge may not be fully effective because, for example, losses on the
securities held by the Portfolio may be in excess of gains on the futures
contract or losses on the futures contract may be in excess of gains on the
securities held by the Portfolio that were the subject of the hedge. In an
effort to compensate for the imperfect correlation of movement in the price of
the securities being hedged and movements in the price of futures contracts, the
Portfolio may enter into financial futures contracts or options on financial
futures contracts in a greater or lesser dollar amount than the dollar amount of
the securities being hedged if the historical volatility of the futures contract
has been less or greater than that of the securities. This "over hedging" or
"under hedging" may adversely affect the Portfolio's net investment results if
market movements are not as anticipated when the hedge is established.
If the Portfolio has hedged against the possibility of an increase in interest
rates adversely affecting the value of securities it holds and rates decrease
instead, the Portfolio will lose part or all of the benefit of the increased
value of securities that it has hedged because it will have offsetting losses in
its futures or options positions. In addition, in those situations, if the
Portfolio has insufficient cash, it may have to sell securities to meet daily
30
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GREENWICH STREET MUNICIPAL FUND INC.
- --------------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
variation margin requirements on the futures contracts at a time when it may be
disadvantageous to do so. These sales of securities may, but will not
necessarily, be at increased prices that reflect the decline in interest rates.
NON-DIVERSIFIED CLASSIFICATION. Investment in the Portfolio, which is
classified as a non-diversified fund under the 1940 Act, may present greater
risks to investors than an investment in a diversified fund. The investment
return on a non-diversified fund typically is dependent upon the performance of
a smaller number of securities relative to the number of securities held in a
diversified fund. The Portfolio's assumption of large positions in the
obligations of a small number of issuers will affect the value of the securities
it holds to a greater extent than that of a diversified fund in the event of
changes in the financial condition, or in the market's assessment, of the
issuers.
- --------------------------------------------------------------------
INVESTMENT RESTRICTIONS
The Portfolio has adopted certain fundamental investment restrictions that may
not be changed without the prior approval of the holders of a majority of the
Portfolio's outstanding shares of Common Stock as defined in the 1940 Act. All
percentage limitations included in the investment restrictions below apply
immediately after a purchase or initial investment, and any subsequent change in
any applicable percentage resulting from market fluctuations will not require
the Portfolio to dispose of any security that it holds. Under its fundamental
restrictions, the Portfolio may not:
1. Borrow money, except for temporary or emergency purposes, or for
clearance of transactions, and then only in amounts not exceeding 15% of its
total assets (not including the amount borrowed) and as otherwise described
in this Prospectus. When the Portfolio's borrowings exceed 5% of the value of
its total assets, the Portfolio will not make any additional investments.
2. Sell securities short or purchase securities on margin, except for
short-term credits as are necessary for the clearance of transactions, but
the Portfolio may make margin deposits in connection with transactions in
options, futures and options on futures.
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
INVESTMENT RESTRICTIONS (CONTINUED)
3. Underwrite any issue of securities, except to the extent that the
purchase of Municipal Obligations may be deemed to be an underwriting.
4. Purchase, hold or deal in real estate or oil and gas interests, except
that the Portfolio may invest in Municipal Obligations secured by real estate
or interests in real estate.
5. Invest in commodities, except that the Portfolio may enter into
futures contracts, including those relating to indexes, and options on
futures contracts or indexes, as described in this Prospectus.
6. Lend any funds or other assets, except through purchasing Municipal
Obligations or Taxable Investments, lending securities and entering into
repurchase agreements consistent with the Portfolio's investment objective.
7. Issue senior securities.
8. Invest more than 25% of its total assets in the securities of issuers
in any single industry, except that this limitation will not be applicable to
the purchase of U.S. Government securities.
9. Make any investments for the purpose of exercising control or
management of any company.
- --------------------------------------------------------------------
MANAGEMENT OF THE PORTFOLIO
DIRECTORS AND OFFICERS
The business and affairs of the Portfolio, including the general supervision
of the duties performed by the Investment Manager under the Investment
32
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
MANAGEMENT OF THE PORTFOLIO (CONTINUED)
Management Agreement, are the responsibility of the Portfolio's Board of
Directors. The Directors and officers of the Portfolio, their addresses and
their principal occupations for at least the past five years are set forth
below:
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME AND ADDRESS WITH THE PORTFOLIO DURING PAST FIVE YEARS
<S> <C> <C>
- -------------------------------------------------------------------------------
*+Heath B. McLendon Chairman of the Board Executive Vice President of
Two World Trade Center of Directors, Chief Smith Barney; Chairman of the
New York, NY 10048 Executive Officer and Board of Smith Barney
Director Investment Strategy Advisers
Inc.
Stephen J. Treadway President Executive Vice President of
1345 Ave. of the Smith Barney; Chairman of the
Americas Board, President and Chief
New York, NY 10105 Executive Officer of Mutual
Management Corp., and Smith,
Barney Advisers, Inc.,
investment advisory affiliates
of Smith Barney.
+Charles F. Barber Director Consultant; formerly Chairman
66 Glenwood Drive of the Board, ASARCO
Greenwich, CT 06830 Incorporated.
+Allan J. Bloostein Director Consultant; formerly Vice
27 West 67th Street Chairman of the Board of The
New York, NY 10023 May Department Stores Company;
Director of Crystal Brands,
Inc., Melville Corp., R.G.
Barry Corp. and Hechinger Co.
+Martin Brody Director Vice Chairman of the Board of
Three ADP Boulevard Directors of Restaurant
Roseland, NJ 07068 Associates Industries, Inc.; a
Director of Jaclyn, Inc.
+Dwight B. Crane Director Professor, Graduate School of
Harvard Business Business Administration,
School Harvard University.
Soldiers Field Road
Boston, MA 02163
</TABLE>
33
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
MANAGEMENT OF THE PORTFOLIO (CONTINUED)
<TABLE>
<CAPTION>
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME AND ADDRESS WITH THE PORTFOLIO DURING PAST FIVE YEARS
- -------------------------------------------------------------------------------
<S> <C> <C>
Richard P. Roelofs Executive Vice President of Smith Barney
Two World Trade Center President Investment Strategy Advisers
New York, NY 10048 Inc. and a Managing Director of
Smith Barney.
Lewis E. Daidone Chief Financial and Managing Director of Smith
1345 Ave. of the Accounting Officer and Barney, Senior Vice President
Americas Treasurer and/or Treasurer of investment
New York, NY 10105 companies associated with Smith
Barney, Director and Senior
Vice President of Mutual
Management Corp. and Smith,
Barney Advisers, Inc., and
Senior Vice President of Smith
Barney Strategy Advisers
Inc.Prior to January 1990,
Senior Vice President and Chief
Financial Officer of Cortland
Financial Group, Inc. and Vice
President and Treasurer of its
associated investment com-
panies and subsidiary broker.
Joseph P. Deane Vice President and Managing Director of Greenwich
Two World Trade Center Investment Officer Street Advisors.
New York, NY 10048
David Fare Investment Officer Vice President of Greenwich
Two World Trade Center Street Advisors. Prior to March
New York, NY 10048 1989, a senior portfolio
accountant with the firm of
Merrill Lynch, Pierce, Fenner &
Smith Inc., New York, New York.
Christina T. Sydor Secretary Managing Director of Smith
1345 Ave. of the Barney and Secretary of
Americas investment companies as-
New York, NY 10105 sociated with Smith Barney and
of Mutual Management Corp.,
Smith, Barney Advisers, Inc.
and Smith Barney Strategy
Advisers Inc.
- -------------------------------------------------------------------------------
<FN>
*"Interested person" of the Portfolio as defined in the 1940 Act.
+Director, trustee and/or general partner of other investment companies
registered under the 1940 Act with which Smith Barney is affiliated.
</TABLE>
34
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
MANAGEMENT OF THE PORTFOLIO (CONTINUED)
The Portfolio intends to pay each of its Directors who is not a director,
officer or employee of the Investment Manager or Boston Advisors, or any of
their affiliates, an annual fee of $5,000 plus $500 for each Board of Directors
meeting attended. In addition, the Portfolio will reimburse those Directors for
travel and out-of-pocket expenses incurred in connection with Board of Directors
meetings.
INVESTMENT MANAGER
Greenwich Street Advisors, a division of Mutual Management Corp., serves as
the Portfolio's investment manager. The Investment Manager provides investment
advisory and management services to investment companies affiliated with Smith
Barney. Mutual Management Corp. was incorporated in 1978 and currently manages
investment companies that had total assets of approximately $50 billion at March
31, 1994, of which $7.5 billion consisted of municipal bond portfolios. Mutual
Management Corp. is controlled by Smith Barney Holdings Inc., the parent company
of Smith Barney. Smith Barney Holdings Inc. is a wholly-owned subsidiary of
Travelers. Greenwich Street Advisors is located at 388 Greenwich Street, New
York, New York 10013. Mutual Management Corp. is located at 1345 Avenue of the
Americas, New York, New York 10105.
Subject to the supervision and direction of the Portfolio's Board of
Directors, the Investment Manager manages the securities held by the Portfolio
in accordance with the Portfolio's stated investment objectives and policies,
makes investment decisions for the Portfolio, places orders to purchase and sell
securities on behalf of the Portfolio and employs managers and securities
analysts who provide research services to the Portfolio. Mutual Management Corp.
provides certain administration services to the Portfolio, including overseeing
the Portfolio's non-investment operations and its relations with other service
providers and providing executive and other officers to the Portfolio. The
Portfolio pays the Investment Manager a management fee for the services provided
to the Fund that is computed daily and paid monthly at the annual rate of 0.90%
of the value of the Fund's average daily net assets, which is higher than the
rates for similar services paid by other recently organized publicly offered,
closed-end, management investment companies that have investment objectives and
policies similar to those of the Portfolio.
35
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
MANAGEMENT OF THE PORTFOLIO (CONTINUED)
Joseph P. Deane, who is Vice President and Investment Officer of the
Portfolio, is primarily responsible for management of the Portfolio's assets.
Mr. Deane is a Managing Director of the Investment Manager and is the senior
asset manager for five other investment companies and other accounts investing
in tax-exempt securities with aggregate assets of $3.2 billion as of March 31,
1994.
SUB-ADMINISTRATOR
Boston Advisors, located at One Boston Place, Boston, Massachusetts 02108,
serves as the Portfolio's sub-administrator pursuant to an agreement with Mutual
Management Corp. Boston Advisors is a wholly owned subsidiary of TBC, which is
in turn a wholly owned subsidiary of Mellon. Boston Advisors provides investment
management, investment advisory and/ or administrative services to investment
companies that had aggregate assets under management as of June 9, 1994, in
excess of $50 billion.
Boston Advisors generally assists Mutual Management Corp. and it has primary
responsibility for statistical, accounting, bookkeeping and internal auditing
aspects of the Portfolio's administration and operation. For its services to the
Portfolio, the Investment Manager pays Boston Advisors a fee from its Management
Fee. Boston Advisors bears all expenses in connection with the performance of
its services.
The Investment Manager and Boston Advisors each bears all expenses in
connection with the performance of the services it provides to the Portfolio.
The Portfolio will bear all other expenses to be incurred in its operation,
including, but not limited to: the costs incurred in connection with the
Portfolio's organization; management fees; fees for necessary professional and
brokerage services; fees for any pricing service; the costs of regulatory
compliance; the costs associated with maintaining the Portfolio's corporate
existence; and costs of corresponding with the Portfolio's shareholders.
36
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GREENWICH STREET MUNICIPAL FUND INC.
- --------------------------------------------------------------------
SECURITIES TRANSACTIONS AND TURNOVER
GENERAL
The Portfolio's securities ordinarily are purchased from and sold to parties
acting as either principal or agent. Newly issued securities ordinarily are
purchased directly from the issuer or from an underwriter; other purchases and
sales usually are placed with those dealers from which the Investment Manager
determines that the best price or execution will be obtained. Usually no
brokerage commissions, as such, are paid by the Portfolio for purchases and
sales undertaken through principal transactions, although the price paid usually
includes an undisclosed compensation to the dealer acting as agent. The prices
paid to underwriters of newly issued securities typically include a concession
paid by the issuer to the underwriter, and purchases of after-market securities
from dealers ordinarily are executed at a price between the bid and asked price.
Transactions on behalf of the Portfolio are allocated to various dealers by
the Investment Manager in its best judgment. The primary consideration is prompt
and effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected for research, statistical or
other services to enable the Investment Manager to supplement its own research
and analysis with the views and information of other securities firms.
Research services furnished by broker-dealers through which the Portfolio
effects securities transactions may be used by the Investment Manager in
managing other investment funds and accounts and, conversely, research services
furnished to the Investment Manager by broker-dealers in connection with other
funds and accounts the Investment Manager advises may be used by the Investment
Manager in advising the Portfolio. Although it is not possible to place a dollar
value on these services, the Investment Manager is of the view that the receipt
of the services should not reduce the overall costs of its research services.
Investment decisions for the Portfolio are made independently from those of
other investment companies or accounts managed by the Investment Manager. If
those investment companies or accounts are prepared to invest in, or desire to
dispose of, Municipal Obligations or Taxable Investments at the same time as the
Portfolio, however, available investments or opportunities for sales will be
allocated equitably to each client of the Investment
37
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GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
SECURITIES TRANSACTIONS AND TURNOVER (CONTINUED)
Manager. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by the Portfolio or the price paid or
received by the Portfolio.
The Portfolio's Board of Directors will review periodically the commissions
paid by the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits inuring to the
Portfolio. The Portfolio may seek an exemptive order from the SEC permitting it
to enter into principal transactions involving certain money market instruments
with Smith Barney and certain Smith Barney-affiliated dealers; no assurance can
be given that such an order will be sought or granted.
TURNOVER
The Portfolio cannot accurately predict its turnover rate, but anticipates
that its annual turnover rate will not exceed 100%. The Portfolio's turnover
rate is calculated by dividing the lesser of the Portfolio's sales or purchases
of securities during a year (excluding any security the maturity of which at the
time of acquisition is one year or less) by the average monthly value of the
Portfolio's securities for the year. Higher turnover rates can result in
corresponding increases in the Portfolio's transaction costs. The Portfolio will
not consider turnover rate a limiting factor in making investment decisions
consistent with its investment objective and policies.
- --------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS; DIVIDEND REINVESTMENT PLAN
The Portfolio expects to pay monthly dividends of net investment income (that
is, income (including its tax-exempt income and its accrued original issue
discount income) other than net realized capital gains) to the holders of the
Common Stock. Under the Portfolio's current policy, which may be changed at any
time by its Board of Directors, the Portfolio's monthly dividends will be made
at a level that reflects the past and projected performance of the Portfolio,
which policy over time will result in the distribution of all net investment
income of the Portfolio. Initial dividends to Common Stock shareholders are
expected to be declared approximately 60 days, and paid approximately 90 days,
from the completion of the
38
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
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DIVIDENDS AND DISTRIBUTIONS; DIVIDEND REINVESTMENT PLAN (CONTINUED)
Offering. Net income of the Portfolio consists of all interest income accrued on
the Portfolio's assets less all expenses of the Portfolio. Expenses of the
Portfolio are accrued each day. Net realized capital gains, if any, will be
distributed to the shareholders at least once a year.
Under the Portfolio's Dividend Reinvestment Plan (the "Plan"), a shareholder
whose shares of Common Stock are registered in his own name will have all
distributions from the Portfolio reinvested automatically by TSSG as agent under
the Plan, unless the shareholder elects to receive cash. Distributions with
respect to shares registered in the name of a broker-dealer or other nominee
(that is, in "Street Name") will be reinvested by the broker or nominee in
additional shares under the Plan, unless the service is not provided by the
broker or nominee or the shareholder elects to receive distributions in cash.
Investors who own Common Stock registered in Street Name should consult their
broker-dealers for details regarding reinvestment. All distributions to
Portfolio shareholders who do not participate in the Plan will be paid by check
mailed directly to the record holder by or under the direction of TSSG as
dividend-paying agent.
If the Portfolio declares a dividend or capital gains distribution payable
either in shares of Common Stock or in cash, shareholders who are not Plan
participants will receive cash, and Plan participants will receive the
equivalent amount in shares of Common Stock. When the market price of the Common
Stock is equal to or exceeds the net asset value per share of the Common Stock
on the date of valuation, Plan participants will be issued shares of Common
Stock valued at the net asset value most recently determined as described below
under "Net Asset Value" or, if net asset value is less than 95% of the then
current market price of the Common Stock, then at 95% of the market value.
If the market price of the Common Stock is less than the net asset value of
the Common Stock, or if the Portfolio declares a dividend or capital gains
distribution payable only in cash, a broker-dealer not affiliated with Smith
Barney, as purchasing agent for Plan participants (the "Purchasing Agent"), will
buy Common Stock in the open market, on the NYSE or elsewhere, for the
participants' accounts. If, following the commencement of the purchases and
before the Purchasing Agent has completed its purchases, the market price
exceeds the net asset value of the Common Stock, the average per share purchase
price paid by the Purchasing Agent may exceed the net asset
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DIVIDENDS AND DISTRIBUTIONS; DIVIDEND REINVESTMENT PLAN (CONTINUED)
value of the Common Stock, resulting in the acquisition of fewer shares than if
the dividend or capital gains distribution had been paid in Common Stock issued
by the Portfolio at net asset value. TSSG will apply all cash received as a
dividend or capital gains distribution to purchase Common Stock on the open
market as soon as practicable after the payment date of the dividend or capital
gains distribution, but in no event later than 30 days after that date, except
when necessary to comply with applicable provisions of the federal securities
laws.
TSSG will maintain all shareholder accounts in the Plan and will furnish
written confirmations of all transactions in each account, including information
needed by a shareholder for personal and tax records. The automatic reinvestment
of dividends and capital gains distributions will not relieve Plan participants
of any income tax that may be payable on the dividends or capital gains
distributions. Common Stock in the account of each Plan participant will be held
by TSSG in uncertificated form in the name of the Plan participant, and each
shareholder's proxy will include those shares purchased pursuant to the Plan.
Plan participants are subject to no charge for reinvesting dividends and
capital gains distributions. TSSG's fees for handling the reinvestment of
dividends and capital gains distributions will be paid by the Portfolio. No
brokerage charges apply with respect to shares of Common Stock issued directly
by the Portfolio as a result of dividends or capital gains distributions payable
either in Common Stock or in cash. Each Plan participant will, however, bear a
proportionate share of brokerage commissions incurred with respect to open
market purchases made in connection with the reinvestment of dividends or
capital gains distributions.
Experience under the Plan may indicate that changes to it are desirable. The
Portfolio reserves the right to amend or terminate the Plan as applied to any
dividend or capital gains distribution paid subsequent to written notice of the
change sent to participants at least 30 days before the record date for the
dividend or capital gains distribution. The Plan also may be amended or
terminated by TSSG, with the Portfolio's prior written consent, on at least 30
days' written notice to Plan participants. All correspondence concerning the
Plan should be directed by mail to The Shareholders Services Group, Inc., One
Exchange Place, Boston, Massachusetts 02109 or by telephone at (617) 573-9300.
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GREENWICH STREET MUNICIPAL FUND INC.
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NET ASSET VALUE
The net asset value of shares of the Common Stock will be calculated as of the
close of regular trading on the NYSE, currently 4:00 p.m., New York time, on
each day on which the NYSE is open for trading. The Portfolio reserves the right
to cause its net asset value to be calculated on a less frequent basis as
determined by the Portfolio's Board of Directors. For purposes of determining
net asset value, futures contracts and options on futures contracts will be
valued 15 minutes after the close of regular trading on the NYSE.
Net asset value per share of Common Stock is calculated by dividing the value
of the Portfolio's total assets less liabilities. In general, the Portfolio's
investments will be valued at market value, or in the absence of market value,
at fair value as determined by or under the direction of the Portfolio's Board
of Directors. Short-term investments that mature in 60 days or less are valued
on the basis of amortized cost (which involves valuing an investment at its cost
and, thereafter, assuming a constant amortization to maturity of any discount or
premium, regardless of the effect of fluctuating interest rates on the market
value of the investment) when the Board of Directors has determined that
amortized cost represents fair value.
The valuation of the Portfolio's assets is made by Boston Advisors after
consultation with an independent pricing service (the "Service") approved by the
Portfolio'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 quotation is 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. The procedures of the
Service are reviewed periodically by the officers of the Portfolio under the
general supervision and responsibility of the Board of Directors, which may
replace the Service at any time if it determines it to be in the best interests
of the Portfolio to do so.
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GREENWICH STREET MUNICIPAL FUND INC.
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TAXATION
The discussion set out below of tax considerations generally affecting the
Portfolio and its shareholders is intended to be only a summary and is not
intended as a substitute for careful tax planning by prospective shareholders.
TAXATION OF THE PORTFOLIO AND ITS INVESTMENTS
The Portfolio intends to qualify as a "regulated investment company" under
Subchapter M of the Code. In addition, the Portfolio intends to satisfy
conditions contained in the Code that will enable interest from Municipal
Obligations, excluded from gross income for federal income tax purposes with
respect to the Portfolio, to retain that tax-exempt status when distributed to
the shareholders of the Portfolio (that is, to be classified as
"exempt-interest" dividends of the Portfolio).
If it qualifies as a regulated investment company, the Portfolio will pay no
federal income taxes on its taxable net investment income (that is, taxable
income other than net realized capital gains) and its net realized capital gains
that are distributed to shareholders. To qualify under Subchapter M of the Code,
the Portfolio must, among other things: (1) distribute to its shareholders at
least 90% of its taxable net investment income (for this purpose consisting of
taxable net investment income and net realized short-term capital gains) and 90%
of its tax-exempt net investment income (reduced by certain expenses); (2)
derive at least 90% of its gross income from dividends, interest, payments with
respect to loans of securities, gains from the sale or other disposition of
securities, or other income (including, but not limited to, gains from options,
futures, and forward contracts) derived with respect to the Portfolio's business
of investing in securities; (3) derive less than 30% of its annual gross income
from the sale or other disposition of securities, options, futures or forward
contracts held for less than three months; and (4) diversify its holdings so
that, at the end of each fiscal quarter of the Portfolio (a) at least 50% of the
market value of the Portfolio's assets is represented by cash, U.S. Government
securities and securities of other regulated investment companies, and other
securities, with those other securities limited, with respect to any one issuer,
to an amount no greater than 5% of the Portfolio's assets and (b) not more than
25% of the market value of the Portfolio's assets is invested in the securities
of any one issuer (other than U.S. Government securities or securities of other
regulated investment companies) or of two or more issuers that the Portfolio
controls and that are determined to be in the same or similar trades or
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GREENWICH STREET MUNICIPAL FUND INC.
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TAXATION (CONTINUED)
businesses or related trades or businesses. In meeting these requirements, the
Portfolio may be restricted in the selling of securities held by the Portfolio
for less than three months and in the utilization of certain of the investment
techniques described above under "Investment Objective and Management Policies
- -- Investment Techniques." As a regulated investment company, the Portfolio will
be subject to a 4% non-deductible excise tax measured with respect to certain
undistributed amounts of ordinary income and capital gain. The Portfolio expects
to pay dividends and distributions necessary to avoid the application of this
excise tax.
Legislation currently pending before the U.S. Congress would repeal the
requirement contained in Subchapter M of the Code that a regulated investment
company must derive less than 30% of its gross income from the sale or other
disposition of assets described above that are held for less than three months.
It is unclear at this time whether this legislation will become law and, if it
is so enacted, the form it will take.
As described above, the Portfolio may invest in financial futures contracts
and options on financial futures contracts that are traded on a U.S. exchange or
board of trade. The Portfolio anticipates that these investment activities will
not prevent the Portfolio from qualifying as a regulated investment company. As
a general rule, these investment activities will increase or decrease the amount
of long-term and short-term capital gains or losses realized by the Portfolio
and, thus, will affect the amount of capital gains distributed to the
Portfolio's shareholders.
For federal income tax purposes, gain or loss on the futures and options
described above (collectively referred to as "Section 1256 Contracts") would, as
a general rule, be taxed pursuant to a special "mark-to-market system." Under
the mark-to-market system, the Portfolio may be treated as realizing a greater
or lesser amount of gains or losses than actually realized. As a general rule,
gain or loss on Section 1256 Contracts is treated as 60% long-term capital gain
or loss and 40% short-term capital gain or loss, and as a result, the
mark-to-market system will generally affect the amount of capital gains or
losses taxable to the Portfolio and the amount of distributions taxable to a
shareholder. Moreover, if the Portfolio invests in both Section 1256 Contracts
and offsetting positions in those contracts, then the Portfolio might not be
able to receive the benefit of certain realized losses for an indeterminate
period of time. The Portfolio expects that its activities
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TAXATION (CONTINUED)
with respect to Section 1256 Contracts and offsetting positions in those
Contracts (1) will not cause it or its shareholders to be treated as receiving a
materially greater amount of capital gains or distributions than actually
realized or received and (2) will permit it to use substantially all of its
losses for the fiscal years in which the losses actually occur.
TAXATION OF THE PORTFOLIO'S SHAREHOLDERS
The Portfolio anticipates that all dividends it pays, other than dividends
from Taxable Investments and from income or gain derived from securities
transactions and from the use of certain of the investment techniques described
under "Investment Objective and Management Policies -- Investment Techniques,"
will be derived from interest on Municipal Obligations and thus will be
exempt-interest dividends that may be excluded by shareholders from their gross
income for federal income tax purposes if the Portfolio satisfies certain asset
percentage requirements. Dividends paid from the Portfolio's net investment
income and distributions of the Portfolio's net realized short-term capital
gains are taxable to shareholders of the Portfolio as ordinary income,
regardless of the length of time shareholders have held shares of Common Stock
and whether the dividends or distributions are received in cash or reinvested in
additional shares. As a general rule, a shareholder's gain or loss on a sale of
his shares of Common Stock will be a long-term gain or loss if he has held his
shares for more than one year and will be a short-term capital gain or loss if
he has held his shares for one year or less. Dividends and distributions paid by
the Portfolio will not qualify for the federal dividends-received deduction for
corporations.
EXEMPT-INTEREST DIVIDENDS
Interest on indebtedness incurred by a shareholder to purchase or carry shares
of Common Stock is not deductible for federal income tax purposes. If a
shareholder receives exempt-interest dividends with respect to any share of
Common Stock and if the share is held by the shareholder for six months or less,
then any loss on the sale of the share may, to the extent of the exempt-interest
dividends, be disallowed. The Code may also require a shareholder, if he
receives exempt-interest dividends, to treat as taxable income a portion of
certain otherwise non-taxable social security and railroad retirement benefit
payments. In addition, the portion of any exempt-interest dividend paid by the
Portfolio that represents income derived from
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TAXATION (CONTINUED)
private activity bonds held by the Portfolio may not retain its tax-exempt
status in the hands of a shareholder who is a "substantial user" of a facility
financed by the bonds, or a "related person" of the substantial user. Although
the Portfolio's exempt-interest dividends may be excluded by shareholders from
their gross income for federal income tax purposes (1) some or all of the
Portfolio's exempt-interest dividends may be a specific preference item, or a
component of an adjustment item, for purposes of the federal individual and
corporate alternative minimum taxes and (2) the receipt of dividends and
distributions from the Portfolio may affect a corporate shareholder's federal
"environmental" tax liability. The receipt of dividends and distributions from
the Portfolio may affect a foreign corporate shareholder's federal "branch
profits" tax liability and the federal "excess net passive income" tax liability
of a shareholder of an S corporation. Shareholders should consult their own tax
advisors to determine whether they are (1) "substantial users" with respect to a
facility or "related" to those users within the meaning of the Code or (2)
subject to a federal alternative minimum tax, the federal "environmental" tax,
the federal "branch profits" tax, or the federal "excess net passive income"
tax.
TAX-EXEMPT INCOME VS. TAXABLE INCOME
The tables set out in Appendix B to this Prospectus show individual taxpayers
how to translate the tax savings from investments such as the Portfolio into an
equivalent return from a taxable investment. The yields used in the tables are
for illustration only and are not intended to represent current or future yields
for the Portfolio, which may be higher or lower than those shown.
DIVIDEND REINVESTMENT PLAN
A shareholder of the Portfolio receiving dividends or distributions in
additional shares pursuant to the Plan should be treated for federal income tax
purposes as receiving a distribution in an amount equal to the amount of money
that a shareholder receiving cash dividends or distributions receives, and
should have a cost basis in the shares received equal to that amount.
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TAXATION (CONTINUED)
STATEMENTS AND NOTICES
Statements as to the tax status of the dividends and distributions received by
shareholders of the Portfolio are mailed annually. These statements show the
dollar amount of income excluded from federal income taxes and the dollar
amount, if any, subject to federal income taxes. The statements will also
designate the amount of exempt-interest dividends that are a specific preference
item for purposes of the federal individual and corporate alternative minimum
taxes and will indicate the shareholder's share of the investment expense of the
Portfolio. The Portfolio will notify shareholders annually as to the interest
excluded from federal income taxes earned by the Portfolio with respect to those
states and possessions in which the Portfolio has or had investments. The dollar
amount of dividends paid by the Portfolio that is excluded from federal income
taxation and the dollar amount of dividends paid by the Portfolio that is
subject to federal income taxation, if any, will vary for each shareholder
depending upon the size and duration of the shareholder's investment in the
Portfolio. To the extent that the Portfolio earns taxable net investment income,
it intends to designate as taxable dividends the same percentage of each day's
dividend as its taxable net investment income bears to its total net investment
income earned on that date. Therefore, the percentage of each day's dividend
designated as taxable, if any, may vary from day to day.
BACKUP WITHHOLDING
If a shareholder fails to furnish a correct taxpayer identification number,
fails to report fully dividend or interest income, or fails to certify that he
has provided a correct taxpayer identification number and that he is not subject
to "backup withholding," the shareholder may be subject to a 31% "backup
withholding" tax with respect to (1) taxable dividends and distributions and (2)
the proceeds of any sales or repurchases of shares of Common Stock. An
individual's taxpayer identification number is his social security number. The
31% backup withholding tax is not an additional tax and may be credited against
a taxpayer's federal income tax liability.
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GREENWICH STREET MUNICIPAL FUND INC.
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DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The Portfolio is authorized to issue up to 500,000,000 shares of Common Stock,
par value $.001 per share. All shares of Common Stock have equal non-cumulative
voting rights and equal rights with respect to dividends, assets and
liquidation. Shares of Common Stock will be fully paid and non-assessable when
issued and have no preemptive, conversion or exchange rights.
PRINCIPAL SHAREHOLDER
As of the date of this Prospectus, Smith Barney was the record and beneficial
owner of all of the outstanding shares of Common Stock and thus was deemed to
"control" the Portfolio as that term is defined in the 1940 Act. The shares held
by Smith Barney are intended to enable the Portfolio to meet an initial
capitalization requirement imposed under the 1940 Act. Smith Barney has
undertaken that the shares were purchased for investment purposes only and that
they will be sold only pursuant to a registration statement under the Securities
Act of 1933, as amended (the "1933 Act") or an applicable exemption from the
registration requirements of the 1933 Act.
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PURCHASE OF SHARES
GENERAL
Common Stock will be made available during the Offering through Smith Barney
as underwriter. The public offering price for the Common Stock during the
Offering is $12.00 per share, and the minimum purchase during the Offering is
100 shares of Common Stock ($1,200). The Common Stock will be sold during the
Offering subject to no sales charges or underwriting discounts, but Smith Barney
Financial Consultants will receive compensation from Smith Barney in connection
with sales of Common Stock during the Offering.
No market has existed for the Common Stock prior to the Offering. The Common
Stock has been approved for listing on the NYSE under the symbol "GSI." Trading
in the Common Stock on the NYSE will not begin, however, until a date within 30
days of the date of this Prospectus. Smith
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PURCHASE OF SHARES (CONTINUED)
Barney does not intend to make a market in the Common Stock during the period in
which the Common Stock is not traded on the NYSE. As a result, during that
period, an investment in the Common Stock should be considered illiquid.
Purchases of shares on the NYSE will be subject to payment of customary
brokerage commissions.
In order to meet the requirements for listing of shares of the Common Stock on
the NYSE, Smith Barney will undertake to sell lots of 100 or more shares to a
minimum of 2,000 beneficial owners in the United States. During the period in
which Smith Barney will be soliciting indications of interest with respect to
the Common Stock, the Portfolio and Smith Barney will evaluate the market for
the Common Stock as well as the market for the Portfolio's contemplated
investments. If changes in existing market and other conditions make it
impractical or inadvisable to proceed with the Offering, the Offering will not
be made.
Smith Barney intends to make a market in the Common Stock after trading in the
Common Stock has commenced on the NYSE. Smith Barney, however, is not obligated
to conduct market-making activities and any such activities may be discontinued
at any time without notice, at the sole discretion of Smith Barney. No assurance
can be given as to the liquidity of, or the trading market for, the Common Stock
as a result of any market-making activities undertaken by Smith Barney. This
Prospectus is to be used by Smith Barney in connection with the Offering and
with offers and sales of the Common Stock in market-making transactions in the
over-the-counter market at negotiated prices related to prevailing market prices
at the time of the sale.
Smith Barney may take certain actions to discourage short-term trading of
Common Stock during a period of time following the effectiveness of the listing
of the Common Stock for trading on the NYSE. During any such period, for
example, physical delivery of certificates representing Common Stock may be
required to transfer ownership of Common Stock.
UNDERWRITING
Under an underwriting agreement dated as of June 16, 1994 (the "Underwriting
Agreement") between the Portfolio and Smith Barney, Smith Barney will serve as
the underwriter of the Common Stock. Compensation
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PURCHASE OF SHARES (CONTINUED)
received by Smith Barney Financial Consultants in connection with the sale of
Common Stock during the Offering will be from Smith Barney's own assets and not
from the Portfolio's assets.
Smith Barney has agreed, subject to the terms and conditions of the
Underwriting Agreement, to purchase from the Portfolio, and the Portfolio has
agreed to sell to Smith Barney 17,000,000 shares of Common Stock (the "Firm
Shares"). The Portfolio has also granted Smith Barney an option, exercisable for
60 days after the date of this Prospectus, to purchase up to 2,550,000
additional shares of Common Stock to cover over-allotments, if any, at a price
equal to the public offering price for the Common Stock during the offering. The
Underwriting Agreement provides that, if any of the Firm Shares are purchased by
Smith Barney, all must be so purchased, and that the obligations of Smith Barney
under the Underwriting Agreement are subject to various conditions. Under the
terms of the Underwriting Agreement, the Portfolio has agreed to indemnify Smith
Barney against certain liabilities, including certain liabilities under the 1933
Act.
SMITH BARNEY
Smith Barney, located at 1345 Avenue of the Americas, New York, New York
10105, is a wholly owned subsidiary of Smith Barney Holdings Inc. ("Holdings").
All of the issued and outstanding common stock of Holdings is held by Travelers.
Smith Barney is one of the leading full-line investment firms serving the U.S.
and foreign securities and commodities markets.
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CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION
The Portfolio's Articles of Incorporation include provisions that could have
the effect of limiting the ability of other entities or persons to acquire
control of the Portfolio or to change the composition of its Board of Directors
and could have the effect of depriving shareholders of an opportunity to sell
their shares of Common Stock at a premium over prevailing market prices by
discouraging a third party from seeking to obtain control of the Portfolio.
Commencing with the first annual meeting of shareholders, the Board of Directors
will be divided into three classes. At the annual meeting of shareholders in
each year thereafter, the term of one class
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CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION (CONTINUED)
will expire and each Director elected to the class will hold office for a term
of three years. The classification of the Board of Directors in this manner
could delay for up to two years the replacement of a majority of the Board. The
Articles of Incorporation provide that the maximum number of Directors that may
constitute the Portfolio's entire board is 12. A Director may be removed from
office, or the maximum number of Directors increased, only by vote of the
holders of at least 75% of the shares of Common Stock entitled to be voted on
the matter.
The Portfolio's Articles of Incorporation require the favorable vote of the
holders of at least two-thirds of the shares of Common Stock then entitled to be
voted to authorize the conversion of the Portfolio from a closed-end to an
open-end investment company as defined in the 1940 Act, unless two-thirds of the
Continuing Directors (as defined below) approve such a conversion. In the latter
case, the affirmative vote of a majority of the shares outstanding will be
required to approve the amendment to the Portfolio's Articles of Incorporation
providing for the conversion of the Portfolio.
The affirmative votes of at least 75% of the Directors and the holders of at
least 75% of the shares of the Portfolio are required to authorize any of the
following transactions (referred to individually as a "Business Combination"):
(1) a merger, consolidation or share exchange of the Portfolio with or into any
other person (referred to individually as a "Reorganization Transaction"); (2)
the issuance or transfer by the Portfolio (in one or a series of transactions in
any 12-month period) of any securities of the Portfolio to any other person or
entity for cash, securities or other property (or combination thereof) having an
aggregate fair market value of $1,000,000 or more, excluding sales of securities
of the Portfolio in connection with a public offering, issuances of securities
of the Portfolio pursuant to a dividend
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CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION (CONTINUED)
reinvestment plan adopted by the Portfolio and issuances of securities of the
Portfolio upon the exercise of any stock subscription rights distributed by the
Portfolio; (3) a sale, lease, exchange, mortgage, pledge, transfer or other
disposition by the Portfolio (in one or a series of transactions in any 12-month
period) to or with any person of any assets of the Portfolio having an aggregate
fair market value of $1,000,000 or more, except for transactions in securities
effected by the Portfolio in the ordinary course of its business (each such
sale, lease, exchange, mortgage, pledge, transfer or other disposition being
referred to individually as a "Transfer Transaction"). The same affirmative
votes are required with respect to: any proposal as to the voluntary liquidation
or dissolution of the Portfolio or any amendment to the Portfolio's Articles of
Incorporation to terminate its existence (referred to individually as a
"Termination Transaction"); and any shareholder proposal as to specific
investment decisions made or to be made with respect to the Portfolio's assets.
A 75% shareholder vote will not be required with respect to a Business
Combination if the transaction is approved by a vote of at least 75% of the
Continuing Directors (as defined below) or if certain conditions regarding the
consideration paid by the person entering into, or proposing to enter into, a
Business Combination with the Portfolio and various other requirements are
satisfied. In such case, a majority of the votes entitled to be cast by
shareholders of the Portfolio will be required to approve the transaction if it
is a Reorganization Transaction or a Transfer Transaction that involves
substantially all of the Portfolio's assets and no shareholder vote will be
required to approve the transaction if it is any other Business Combination. In
addition, a 75% shareholder vote will not be required with respect to a
Termination Transaction if it is approved by a vote of at least 75% of the
Continuing Directors, in which case a majority of the votes entitled to be cast
by shareholders of the Portfolio will be required to approve the transaction.
The voting provisions described above could have the effect of depriving
shareholders of the Portfolio of an opportunity to sell their Common Stock at a
premium over prevailing market prices by discouraging a third party from seeking
to obtain control of the Portfolio in a tender offer or similar transaction. In
the view of the Portfolio's Board of Directors, however, these provisions offer
several possible advantages, including: (1) requiring persons seeking control of
the Portfolio to negotiate with its management regarding
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CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION (CONTINUED)
the price to be paid for the amount of Common Stock required to obtain control;
(2) promoting continuity and stability; and (3) enhancing the Portfolio's
ability to pursue long-term strategies that are consistent with its investment
objective and management policies. The Board of Directors has determined that
the voting requirements described above, which are generally greater than the
minimum requirements under Maryland law and the 1940 Act, are in the best
interests of shareholders generally.
A "Continuing Director," as used in the discussion above, is any member of the
Portfolio's Board of Directors (1) who is not a person or affiliate of a person
who enters or proposes to enter into a Business Combination with the Portfolio
(such a person or affiliate being referred to individually as an "Interested
Party") and (2) who has been a member of the Board of Directors for a period of
at least 12 months (or since the commencement of the Portfolio's operations, if
less than 12 months), or is a successor of a Continuing Director who is
unaffiliated with an Interested Party and is recommended to succeed a Continuing
Director by a majority of the Continuing Directors then members of the Board of
Directors.
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CUSTODIAN, TRANSFER, AND DIVIDEND-PAYING AGENT, REGISTRAR AND PLAN AGENT
Boston Safe, located at One Boston Place, Boston, Massachusetts 02108, acts as
custodian of the Portfolio's investments. TSSG, located at One Exchange Place,
Boston, Massachusetts 02109, serves as the Portfolio's transfer agent,
dividend-paying agent and registrar. TSSG also serves as agent in connection
with the Plan.
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LEGAL MATTERS
The validity of the shares of Common Stock offered by this Prospectus will be
passed on for the Portfolio by Willkie Farr & Gallagher, New York, New York.
Willkie Farr & Gallagher serves as counsel to Smith Barney.
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GREENWICH STREET MUNICIPAL FUND INC.
- --------------------------------------------------------------------
REPORTS TO SHAREHOLDERS
The Portfolio will send unaudited semi-annual and audited annual reports to
the holders of its securities, including a list of investments held.
- --------------------------------------------------------------------
EXPERTS
The financial statement of the Portfolio contained in this Prospectus has been
included in reliance on the report of Coopers & Lybrand, independent
accountants, as experts in auditing and accounting.
- --------------------------------------------------------------------
FURTHER INFORMATION
This Prospectus does not contain all of the information included in the
Registration Statement filed with the SEC under the 1933 Act and the 1940 Act
with respect to the Common Stock offered by this Prospectus, certain portions of
which Registration Statement have been omitted pursuant to the rules and
regulations of the SEC. The Registration Statement, including exhibits filed
with the Registration Statement, may be examined at the office of the SEC in
Washington, D.C.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete and, in each instance,
reference is made to the copy of the contract or other document filed as an
exhibit to the Registration Statement, of which this Prospectus forms a part,
each such statement's being qualified in all respects by the reference.
-------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, THE
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE PORTFOLIO, THE INVESTMENT MANAGER OR SMITH BARNEY. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS
PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH
53
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
FURTHER INFORMATION (CONTINUED)
THE OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER WILL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE PORTFOLIO SINCE
THE DATE OF THIS PROSPECTUS. IF ANY MATERIAL CHANGE OCCURS WHILE THIS PROSPECTUS
IS REQUIRED BY LAW TO BE DELIVERED, HOWEVER, THIS PROSPECTUS WILL BE
SUPPLEMENTED OR AMENDED ACCORDINGLY.
54
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- --------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDER AND DIRECTORS OF
GREENWICH STREET MUNICIPAL FUND INC.:
We have audited the accompanying statement of assets and liabilities of
Greenwich Street Municipal Fund Inc. (the "Portfolio") as of June 14, 1994. This
financial statement is the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of assets and liabilities is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of assets and
liabilities. Our procedures included confirmation of cash held by the
Portfolio's custodian as of June 14, 1994. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the statement of assets and
liabilities. We believe that our audit of the statement of assets and
liabilities provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Greenwich
Street Municipal Fund Inc. as of June 14, 1994 in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND
Boston, Massachusetts
June 14, 1994
55
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- --------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES As of June 14, 1994
<TABLE>
<S> <C>
ASSETS
Cash $ 100,008
Deferred offering expenses (Note 2) 449,420
- ------------------------------------------------------------------------------
TOTAL ASSETS 549,428
- ------------------------------------------------------------------------------
LIABILITIES
Accrued offering expenses (Note 2) 449,420
- ------------------------------------------------------------------------------
NET ASSETS, applicable to 8,334 shares of common stock issued and
outstanding 100,008
- ------------------------------------------------------------------------------
NET ASSET VALUE per share ($100,008 divided by 8,334 shares of
common stock outstanding) $12.00
- ------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of this statement.
NOTES TO STATEMENTS OF ASSETS AND LIABILITIES
(1) Greenwich Street Municipal Fund Inc. (the "Portfolio") was organized on
February 19, 1993 under the laws of the State of Maryland and is registered
under the Investment Company Act of 1940, as amended, as a non-diversified,
closed-end management investment company. The Portfolio has had no
operations other than organizational matters and the issuance and sale of
8,334 shares of Common Stock on June 14, 1994 to Smith Barney Inc.
(2) Costs relating to the public offering of the Portfolio's shares of Common
Stock will be payable from the proceeds of the offering and charged to
capital at the time of the issuance of the shares.
56
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- ---------------------------------------------------------------------------
APPENDIX A
DESCRIPTION OF MOODY'S, S&P AND FITCH RATINGS
DESCRIPTION OF MOODY'S MUNICIPAL BOND RATINGS:
AAA Bonds that are rated Aaa are judged to be of the best quality, carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments with respect to these bonds are protected by a large or
by an exceptionally stable margin, and principal is secure. Although the various
protective elements applicable to these bonds are likely to change, those
changes are most unlikely to impair the fundamentally strong position of these
bonds.
AA Bonds that are rated Aa are judged to be of high quality by all
standards and together with the Aaa group 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 other elements may be
present that make the long-term risks appear somewhat larger than in Aaa
securities.
A Bonds that are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest with respect to these bonds are considered adequate,
but elements may be present that suggest a susceptibility to impairment sometime
in the future.
BAA Bonds rated Baa are considered to be medium grade obligations, that is
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. These bonds lack outstanding investment characteristics and may
have speculative characteristics as well.
Moody's applies the numerical modifiers 1, 2 and 3 in each generic rating
classification from Aa through B. The modifier 1 indicates that the security
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the modifier 3 indicates that the issue ranks in the
lower end of its generic rating category.
A-1
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
APPENDIX A (CONTINUED)
DESCRIPTION OF MOODY'S MUNICIPAL NOTE RATINGS:
Moody's ratings for state and municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG) and for variable demand obligations
are designated Variable Moody's Investment Grade (VMIG). This distinction
recognizes the differences between short-term credit risk and long-term risk.
Loans bearing the designation MIG 1/VMIG 1 are of the best quality, enjoying
strong protection from established cash flows of funds for their servicing or
from established and broad-based access to the market for refinancing, or both.
Loans bearing the designation MIG 2/VMIG 2 are of high quality, with margins of
protection ample, although not as large as the preceding group. Loans bearing
the designation MIG 3/VMIG 3 are of favorable quality, with all security
elements accounted for but lacking the undeniable strength of the preceding
grades. Market access for refinancing, in particular, is likely to be less well
established.
DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS:
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) are considered to
have a strong capacity for repayment of short-term promissory obligations,
normally evidenced by many of the characteristics of issuers rated Prime-1 but
to a lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternative
liquidity is maintained.
DESCRIPTION OF S&P MUNICIPAL BOND RATINGS:
AAA These bonds are the obligations of the highest quality and have the
strongest capacity for timely payment of debt service.
GENERAL OBLIGATION BONDS RATED AAA In a period of economic stress, the issuers
of these bonds will suffer the smallest declines in income and will be least
susceptible to autonomous decline. Debt burden is moderate. A strong revenue
structure appears more than adequate to meet future expenditure requirements.
Quality of management appears superior.
A-2
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
APPENDIX A (CONTINUED)
REVENUE BONDS RATED AAA Debt service coverage with respect to these bonds has
been, and is expected to remain, substantial. Stability of the pledged revenues
is also exceptionally strong due to the competitive position of the municipal
enterprise or to the nature of the revenues. Basic security provisions
(including rate covenant, earnings test for issuance of additional bonds, debt
service reserve requirements) are rigorous. There is evidence of superior
management.
AA The investment characteristics of bonds in this group are only slightly
less marked than those of the prime quality issues. Bonds rated AA have the
second strongest capacity for payment of debt service.
A Principal and interest payments on bonds in this category are regarded as
safe although the bonds are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories. This rating describes the third strongest capacity for payment of
debt service.
GENERAL OBLIGATION BONDS RATED A -- There is some weakness, either in the local
economic base, in debt burden, in the balance between revenues and expenditures,
or in quality of management. Under certain adverse circumstances, any one such
weakness might impair the ability of the issuer to meet debt obligations at some
future date.
REVENUE BONDS RATED A -- Debt service coverage is good, but not exceptional.
Stability of the pledged revenues could show some variations because of
increased competition or economic influences on revenues. Basic security
provisions, while satisfactory, are less stringent. Management performance
appearance appears adequate.
BBB The bonds in this group are regarded as having an adequate capacity to
pay interest and repay principal. Whereas bonds in this group 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 debt in this category than in higher rated categories. Bonds
rated BBB have the fourth strongest capacity for payment of debt service.
A-3
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
APPENDIX A (CONTINUED)
S&P's letter ratings may be modified by the addition of a plus or a minus
sign, which is used to show relative standing within the major rating
categories, except in the AAA category.
DESCRIPTION OF S&P MUNICIPAL NOTE RATINGS:
Municipal notes with maturities of three years or less are usually given note
ratings (designated SP-1, -2 or -3) to distinguish more clearly the credit
quality of notes as compared to bonds. Notes rated SP-1 have a very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given the designation of SP-1+.
Notes rated SP-2 have a satisfactory capacity to pay principal and interest.
DESCRIPTION OF S&P COMMERCIAL PAPER RATINGS:
Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted A-1+.
Capacity for timely payment on commercial paper rated A-2 is strong, but the
relative degree of safety is not as high as for issues designated A-1.
DESCRIPTION OF FITCH MUNICIPAL BOND RATINGS:
AAA Bonds rated AAA by Fitch are considered to be investment grade and of
the highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA Bonds rated AA by Fitch are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated AAA.
Because bonds rated in the AAA and AA categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these issues
is generally rated F-1+ by Fitch.
A Bonds rated A by Fitch are considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
A-4
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
APPENDIX A (CONTINUED)
BBB Bonds rated BBB by Fitch are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse consequences on
these bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for bonds
with higher ratings.
Plus and minus signs are used by Fitch to indicate the relative position of a
credit within a rating category. Plus and minus signs, however, are not used in
the AAA category.
DESCRIPTION OF FITCH SHORT-TERM RATINGS:
Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.
The short-term rating places greater emphasis than a long-term rating on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.
Fitch's short-term ratings are as follows:
F-1+ Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment.
F-1 Issues assigned this rating reflect an assurance of timely payment only
slightly less in degree than issues rated F-1+.
F-2 Issues assigned this rating have a satisfactory degree of assurance for
timely payment but the margin of safety is not as great as for issues assigned
F-1+ and F-1 ratings.
F-3 Issues assigned this rating have characteristics suggesting that the
degree of assurance for timely payment is adequate, although near-term adverse
changes could cause these securities to be rated below investment grade.
LOC The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.
A-5
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- ---------------------------------------------------------------------------
APPENDIX B
TAX-EXEMPT INCOME COMPARED TO TAXABLE INCOME
In August 1993 the United States Congress passed the Revenue Reconciliation
Act of 1993 which increased the top federal income tax bracket to 36 percent.
For taxpayers with adjusted incomes in excess of $250,000 a surcharge of ten
percent was added, and thus these taxpayers have a top bracket of 39.6 percent.
For many Americans the new rates mean higher taxes at a time when the
tax-advantaged status of many investments has been eliminated. One simple and
liquid investment that has retained its tax-exempt status is municipal bonds.
Because the interest they pay is exempt from federal income taxes, and in some
cases state and local taxes, municipal bonds can allow investors to realize
higher effective yields than investments in taxable instruments having the same
stated interest rate.
The tables below show individual taxpayers how to translate the tax savings
from investments such as the Portfolio into an equivalent return from a taxable
investment. The yields used below are for illustration only and are not intended
to represent current or future yields for the Portfolio, which may be higher or
lower than those shown.
<TABLE>
<CAPTION>
FEDERAL
SAMPLE TAXABLE MARGINAL TAX-EXEMPT YIELDS
INCOME RATE* 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00% 8.50%
----------------- ---------- ------- ------- ------- ------- ------- -------- -------- -------- -------- --------
EQUIVALENT TAXABLE YIELD
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SINGLE RETURN
-----------------
$0-$22,750 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41% 10.00%
$22,751-$55,100 28.00% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11% 11.81%
$55,101-$115,000 31.00% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.87% 11.59% 12.32%
$115,001-$250,000 36.00% 6.25% 7.03% 7.81% 8.59% 9.38% 10.16% 10.94% 11.72% 12.50% 13.28%
over $250,000 39.60% 6.62% 7.45% 8.28% 9.11% 9.93% 10.76% 11.59% 12.42% 13.25% 14.07%
<CAPTION>
JOINT RETURN
-----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0-$38,000 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65% 8.24% 8.82% 9.41% 10.00%
$38,001-$91,850 28.00% 5.56% 6.25% 6.94% 7.64% 8.33% 9.03% 9.72% 10.42% 11.11% 11.81%
$91,851-$140,000 31.00% 5.80% 6.52% 7.25% 7.97% 8.70% 9.42% 10.14% 10.87% 11.59% 12.32%
$140,001-$250,000 36.00% 6.25% 7.03% 7.81% 8.59% 9.38% 10.16% 10.94% 11.72% 12.50% 13.28%
over $250,000 39.60% 6.62% 7.45% 8.28% 9.11% 9.93% 10.76% 11.59% 12.42% 13.25% 14.07%
<FN>
- ------------------------------
* The federal tax rates shown are those currently in effect for 1994 and are
subject to change. The calculations reflected in the table assume that
</TABLE>
B-1
<PAGE>
GREENWICH STREET MUNICIPAL FUND INC.
- -------------------------------------------------------------
APPENDIX B (CONTINUED)
no income will be subject to any federal, state or local individual
alternative minimum taxes. The rate brackets are subject to adjustment for
the Internal Revenue Service inflation indexation. Income may be subject to
state and local taxes, and a portion of the Portfolio's income may be a
preference item for purposes of the federal alternative minimum tax. Capital
gains, if any, will be subject to capital gains taxes.
B-2
<PAGE>
GREENWICH STREET
MUNICIPAL FUND INC.
COMMON STOCK
Two World Trade Center
New York, New York 10048
FD2328 E4
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(1) Financial Statements
<TABLE>
<S> <C> <C> <C>
Parts A and B
(a) -- Greenwich Street Municipal Fund Inc. Statement of
Assets and Liabilities.
(b) -- Report of Independent Accountants.
Part C -- None.
</TABLE>
(2) Exhibits
<TABLE>
<S> <C> <C> <C>
(a) (1) -- Articles of Incorporation of Registrant.*
(2) -- Articles of Amendment.**
(b) -- By-Laws of Registrant.*
(c) -- Not applicable.
(d) -- Form of Specimen certificate representing shares
of Common Stock, par value $.001 per share.
(e) -- Registrant's Dividend Reinvestment Plan.***
(f) -- Not applicable.
(g) (1) -- Form of Investment Management Agreement.
(2) -- Form of Sub-Administration Agreement.
(h) (1) -- Form of Purchase Agreement.***
(2) -- Form of Underwriting Agreement.
(i) -- Not applicable.
(j) (1) -- Form of Custody Agreement.***
(2) -- Form of Transfer Agency and Registrar
Agreement.***
(k) -- Not applicable.
(l) (1) -- Opinion and consent of Willkie Farr & Gallagher.
(2) -- Opinion and consent of Venable, Baetjer and
Howard.
(m) -- Not applicable.
(n) -- Consent of Coopers & Lybrand.
(o) -- Not applicable.
(p) -- Not applicable.
(q) -- Not applicable.
</TABLE>
ITEM 25. MARKETING ARRANGEMENTS
See the Forms of Purchase Agreement and Underwriting Agreement filed as
Exhibits (h)(1) and (2).
- ------------------------
* Incorporated by reference to Registrant's initial Registration Statement
filed with the Commission on February 19, 1993.
** Incorporated by reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement filed with the Commission on April 19, 1994.
***Incorporated by reference to Pre-Effective Amendment No. 2 to Registrant's
Registration Statement filed with the Commission on May 19, 1994.
II-1
<PAGE>
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses expected to be
incurred in connection with the offering described in this Registration
Statement:
<TABLE>
<S> <C>
SEC Registration fees............................. $ 78,080.00
National Association of Securities Dealers, Inc.
fees............................................. $ 23,500.00
New York Stock Exchange listing fee............... $ 32,340.00
Printing (other than stock certificates) and
related delivery expenses........................ $150,000.00
Engraving and printing stock certificates......... $ 15,000.00
Fees and expenses of qualification under state
securities laws (including fees of counsel)...... $ 15,000.00
Legal fees and expenses........................... $129,500.00
Travel and related out-of-pocket expenses and
miscellaneous.................................... $ 6,000.00
Total......................................... $449,420.00
-----------
-----------
</TABLE>
ITEM 27. PERSON CONTROLLED BY OR UNDER COMMON CONTROL
None.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
The number of record holders of Registrant as of June 15, 1994 is as
follows:
(1) Title of Class:
Common Stock, $.001 par value
(2) Number of Record Holders: 1
ITEM 29. INDEMNIFICATION
Under Article Seventh of Registrant's Articles of Incorporation, any past or
present director or officer of Registrant is indemnified to the fullest extent
permitted by the Maryland General Corporation Law ("MGCL") against liability and
all expenses reasonably incurred by him in connection with any action, suit or
proceeding to which he may be a party or otherwise involved by reason of his
being or having been a Director or officer of Registrant. This provision does
not authorize indemnification when it is determined that the Director or officer
would otherwise be liable to Registrant or its shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.
Expenses may be paid by Registrant to its currently acting and its former
Directors and officers, to the fullest extent that indemnification of directors
is permitted by the MGCL, the 1933 Act and the 1940 Act, in advance of the final
disposition of any action, suit or proceeding. The Board may by bylaw,
resolution or agreement make further provision for indemnification of Directors,
officers, employees and agents to the fullest extent permitted by the MGCL.
Insofar as indemnification for liabilities arising under the 1933 Act may be
permitted to directors, officers and controlling persons of Registrant pursuant
to the foregoing provisions, or otherwise, Registrant has been advised that, in
the opinion of the SEC, such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a director, officer or controlling
person of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-2
<PAGE>
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Greenwich Street Advisors, through its predecessors, has been in the
investment counseling business since 1934 and is a division of Mutual Management
Corp. ("MMC"). MMC was incorporated in 1978 and is a wholly owned subsidiary of
Smith Barney Holdings Inc. ("Holdings"), which is in turn a wholly owned
subsidiary of The Travelers Inc. ("Travelers") (formerly known as Primerica
Corporation).
The list required by this Item 30 of officers and directors of MMC and
Greenwich Street Advisors, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by such
officers and directors during the past two fiscal years, is incorporated by
reference to Schedules A and D of FORM ADV filed by MMC on behalf of Greenwich
Street Advisors pursuant to the Advisers Act (SEC File No. 801-14437).
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
Each Person maintaining physical possession of accounts, books and other
documents required to be maintained pursuant to Section 31(a) of the 1940 Act is
listed below:
(1) Greenwich Street Advisors
388 Greenwich Street
New York, New York 10013
(2) The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
(3) Boston Safe Deposit and Trust Company
One Cabot Road
Medford, Massachusetts 02155
(4) The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
ITEM 32. MANAGEMENT SERVICES
Not applicable.
ITEM 33. UNDERTAKINGS
(1) Registrant undertakes to suspend offering of the shares of Common Stock
covered by this Registration Statement until it amends the Prospectus contained
in this Registration Statement if (i) subsequent to the effective date of this
Registration Statement, its net asset value per share declines more than 10
percent from its net asset value per share as of the effective date of this
Registration Statement or (ii) its net asset value increases to an amount
greater than its net proceeds as stated in the Prospectus contained in this
Registration Statement.
(2) Registrant undertakes to file a post-effective amendment with certified
financial statements showing the initial capital received before it accepts
subscriptions from more than 25 persons if Registrant proposes to raise its
initial capital under Section 14(a)(3) of the 1940 Act.
(3) Not applicable.
(4) Not applicable.
(5) Registrant undertakes that:
(a) For purposes of determining any liability under the 1933 Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A under the 1933 Act
and contained in the form of Prospectus filed by Registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the 1933 Act shall be deemed
to be part of this Registration Statement as of the time it was
declared effective.
II-3
<PAGE>
(b) For the purpose of determining any liability under the 1933 Act,
each post-effective amendment that contains the form of Prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of the securities at
that time will be deemed to be the initial bona fide offering
thereof.
(6) Not applicable.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Registrant has duly caused this Amendment to its
Registration Statement on Form N-2 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 16th day of June, 1994.
GREENWICH STREET MUNICIPAL FUND INC.
By: /s/ HEATH B. MCLENDON
------------------------------------
Heath B. McLendon
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Registrant has
caused this Amendment to its Registration Statement to be signed below by the
following persons in the capacities and on the dates indicated:
<TABLE>
<C> <S> <C>
/s/ HEATH B. MCLENDON
------------------------------ Chairman of the Board and Chief June 16,
Heath B. McLendon Executive Officer 1994
/s/ CHARLES F. BARBER June 16,
------------------------------ Director 1994
Charles F. Barber
/s/ ALLAN J. BLOOSTEIN June 16,
------------------------------ Director 1994
Allan J. Bloostein
/s/ MARTIN BRODY June 16,
------------------------------ Director 1994
Martin Brody
/s/ DWIGHT B. CRANE June 16,
------------------------------ Director 1994
Dwight B. Crane
/s/ LEWIS E. DAIDONE
------------------------------ Treasurer (Chief Financial and June 16,
Lewis E. Daidone Accounting Officer) 1994
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- -------------------------------------------------- ------------
<S> <C> <C> <C> <C>
(a) (1) -- Articles of Incorporation of Registrant.*
(2) -- Articles of Amendment.**
(b) -- By-Laws of Registrant.*
(c) -- Not applicable.
(d) -- Form of Specimen certificate representing shares
of Common Stock, par value $.001 per share.
(e) -- Registrant's Dividend Reinvestment Plan.***
(f) -- Not applicable.
(g) (1) -- Form of Investment Management Agreement.
(2) -- Form of Sub-Administration Agreement.
(h) (1) -- Form of Purchase Agreement.***
(2) -- Form of Underwriting Agreement.
(i) -- Not applicable.
(j) (1) -- Form of Custody Agreement.***
-- Form of Transfer Agency and Registrar
(2) Agreement.***
(k) -- Not applicable.
(l) (1) -- Opinion and consent of Willkie Farr & Gallagher.
-- Opinion and consent of Venable, Baetjer and
(2) Howard.
(m) -- Not applicable.
(n) -- Consent of Coopers & Lybrand.
(o) -- Not applicable.
(p) -- Not applicable.
(q) -- Not applicable.
<FN>
- ------------------------
* Incorporated by reference to Registrant's initial Registration Statement
filed with the Commission on February 19, 1993.
** Incorporated by reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement filed with the Commission on April 19, 1994.
*** Incorporated by reference to Pre-Effective Amendment No. 2 to Registrant's
Registration Statement filed with the Commission on May 19, 1994.
</TABLE>
<PAGE>1
Exhibit (d)
[Form of Specimen Certificate of Common Stock]
Temporary Certificate - Exchangeable for Definitive Engraved Certificate When
Ready for Delivery
Common Stock Common Stock
Transferable in Boston, Massachusetts
and New York, New York
Greenwich Street Municipal Fund Inc.
Incorporated Under the Laws of the State of Maryland
______________Shares
CUSIP 39701A 10 7
See reverse for certain definitions
This Certifies That
Is the Owner and Registered Holder of
Fully paid and Non-Assessable Shares of Common Stock, $.001 Per Share, of
Greenwich Street Municipal Fund Inc. transferable on the books of the
Corporation by the holder hereof in person or by duly authorized Attorney upon
surrender of this Certificate properly endorsed. This Certificate and the
shares represented hereby are issued and shall be subject to all of the
provisions of the Articles of Incorporation of the Corporation, and the Bylaws
of the Corporation, and all amendments thereof, copies of which are on file at
the principal office of the Corporation and with the Transfer Agent.
This Certificate is not valid until countersigned and registered by the
Transfer Agent and Registrar or its designated Agent.
Witness, the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
Countersigned and registered
The Shareholder Services Group, Inc.
a Subsidiary of First Data Corporation
(Boston, Massachusetts)
Transfer Agent and Registrar
By
Authorized Signature
/s/ Heath B. McLendon
Chairman of the Board
[Signature]
Secretary
<PAGE>1
Exhibit (g)(1)
INVESTMENT MANAGEMENT AGREEMENT
GREENWICH STREET MUNICIPAL FUND INC.
June 16, 1994
Greenwich Street Advisors,
a Division of Mutual Management Corp.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Greenwich Street Municipal Fund Inc. (the "Fund"), a corporation
organized under the laws of the State of Maryland, confirms its agreement with
Greenwich Street Advisors, a division of Mutual Management Corp. (the
"Adviser"), as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the investment objective,
policies and limitations specified in its Articles of Incorporation, as
amended from time to time (the "Charter"), in the prospectus and the statement
of additional information filed with the Securities and Exchange Commission
(the "SEC") as part of the Fund's Registration Statement on Form N-2, as
amended from time to time (the "Registration Statement"), and in the manner
and to the extent as may from time to time be approved by the Board of
Directors of the Fund (the "Board"). Copies of the Prospectus, the Statement
and the Charter have been or will be submitted to the Adviser. The Fund
agrees to provide copies of all amendments to the Registration Statement and
the Charter to the Adviser on an on-going basis. The Fund desires to employ
and hereby appoints the Adviser to act as the investment manager to the Fund.
The Adviser accepts the appointment and agrees to furnish the services for the
compensation set forth below.
2. Services as Investment Adviser
Subject to the supervision, direction and approval of the Board, the
Adviser will (a) manage the Fund's holdings in accordance with the Fund's
investment objective and policies as stated in the Charter and the
Registration Statement; (b) make investment decisions for the Fund; (c) place
purchase and sale orders for portfolio transactions for the Fund; and (d)
employ professional portfolio managers and securities analysts who provide
research services to the Fund. In providing those services, the Adviser will
conduct a continual program of investment, evaluation and, if appropriate,
sale and reinvestment of the Fund's assets.
<PAGE>2
3. Services as Administrator
Subject to the supervision and direction of the Board, the Adviser
will: (a) supervise all aspects of the Fund's operations under the direction
of the Board and the Fund's officers; (b) supply the Fund with office
facilities (which may be in the Adviser's own offices), statistical and
research data, data processing services, clerical, accounting and bookkeeping
services (including, but not limited to, the calculation of the net asset
value of shares of the Fund), internal auditing and legal services, internal
executive and administrative services, and stationery and office supplies; and
(c) prepare reports to shareholders of the Fund, tax returns and reports to
and filings with the SEC and state blue sky authorities. The Adviser is
hereby authorized to retain third parties and to delegate some or all of its
duties and obligations under this paragraph 3 to such persons provided that
such persons shall remain under the general supervision of the Adviser.
4. Brokerage
In selecting brokers or dealers to execute transactions on behalf of
the Fund, the Adviser will seek the best overall terms available. In
assessing the best overall terms available for any transaction, the Adviser
will consider factors it deems relevant, including, but not limited to, the
breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on
a continuing basis. In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms available, the Adviser
is authorized to consider the brokerage and research services (as those terms
are defined in Section 28(c) of the Securities Exchange Act of 1934), provided
to the Fund and/or other accounts over which the Adviser or its affiliates
exercise investment discretion.
5. Information Provided to the Fund
The Adviser will keep the Fund informed of developments materially
affecting the Fund's holdings, and will, on its own initiative, furnish the
Fund from time to time with whatever information the Adviser believes is
appropriate for this purpose.
6. Standard of Care
The Adviser shall exercise its best judgment in rendering the
services listed in paragraphs 2, 3, 4 and 5 above. The Adviser shall not be
liable for any error of judgment or
<PAGE>3
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect the Adviser against
any liability to the Fund or to its shareholders to which the Adviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or by reason of the
Adviser's reckless disregard of its obligations and duties under this
Agreement.
7. Compensation
In consideration of the services rendered pursuant to this
Agreement, the Fund will pay the Adviser on the first business day of each
month a fee for the previous month at the annual rate of .90 of 1.00% of the
Fund's average daily net assets. The fee for the period from the Effective
Date (defined below) of this Agreement to the end of the month during which
the Effective Date occurs shall be prorated according to the proportion that
such period bears to the full monthly period. Upon any termination of this
Agreement before the end of a month, the fee for such part of that month shall
be prorated according to the proportion that such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to the Adviser, the
value of the Fund's net assets shall be computed at the times and in the
manner specified in the Registration Statement.
8. Expenses
The Adviser will bear all expenses in connection with the
performance of its services under this Agreement. The Fund will bear all
other expenses to be incurred in its operation, including, but not limited to,
the fees payable under this Agreement; taxes, interest, brokerage fees and
commissions, if any; fees of the Board members of the Fund who are not
officers, directors or employees of Smith Barney Inc., Boston Advisors or
their affiliates; SEC fees and state blue sky qualification fees; charges of
custodians and transfer and dividend disbursing agents; the Fund's and its
Board members' proportionate share of insurance premiums, professional
association dues and/or assessments; outside auditing and legal expenses;
costs of maintaining the Fund's existence; costs attributable to investor
services, including, without limitation, telephone and personnel expenses;
costs of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
shareholders; costs of shareholders,
<PAGE>4
reports and meetings of the officers or Board and any extraordinary expenses.
9. Services to Other Companies or Accounts
The Fund understands that the Adviser now acts, will continue to act
and may in the future act as investment adviser to fiduciary and other managed
accounts, and as investment adviser to other investment companies, and the
Fund has no objections to the Adviser's so acting, provided that whenever the
Fund and one or more other clients advised by the Adviser have available funds
for investment, investments suitable and appropriate for each will be
allocated in accordance with a formula believed to be equitable to each
client. The Fund recognizes that in some cases this procedure may adversely
affect the size of the position obtainable for the Fund. In addition, the
Fund understands that the persons employed by the Adviser to assist in the
performance of the Adviser's duties under this Agreement will not devote their
full time to such service and nothing contained in this Agreement shall be
deemed to limit or restrict the right of the Adviser or any affiliate of the
Adviser to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
10. Term of Agreement
This Agreement shall become effective as of June 16, 1994, (the
"Effective Date") and shall continue for an initial two-year term and shall
continue thereafter so long as such continuance is specifically approved at
least annually by (i) the Board or (ii) a vote of a majority of the Fund's
outstanding "voting securities" (as that term is defined in the Investment
Company Act of 1940, as amended (the "1940 Act")), provided that in either
event the continuance is also approved by a majority of the Board who are not
"interest persons" (as defined in the 1940 Act) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable, without penalty, on 60
days' written notice, by the Board or by vote of holders of a majority of the
Fund's shares, or upon 90 days' written notice, by the Adviser. This
Agreement will also terminate automatically in the event of its "assignment"
(as defined in the 1940 Act and the rules thereunder).
<PAGE>5
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the
enclosed copy of this Agreement.
Very truly yours,
GREENWICH STREET MUNICIPAL FUND INC.
By:_________________________________
Name:
Title:
Accepted:
GREENWICH STREET ADVISORS, a
Division of Mutual Management Corp.
By:_________________________
Name:
Title:
<PAGE>1
Exhibit (g)(2)
SUB-ADMINISTRATION AGREEMENT
June 16, 1994
The Boston Company Advisors, Inc.
One Exchange Place
Boston, MA 02210
Greenwich Street Municipal Fund Inc. (the "Fund"), a corporation
organized under the laws of the State of Maryland and Mutual Management Corp.
("MMC") confirm their agreement with The Boston Company Advisors, Inc.
("Boston Advisors") as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
its Articles of Incorporation, as amended from time to time (the "Charter"),
in the prospectus and the statement of additional information filed with the
Securities and Exchange Commission (the "SEC") as part of the Fund's
Registration Statement on Form N-2 as amended from time to time (the
"Registration Statement") and in such manner and to such extent as may from
time to time be approved by the Board of Directors of the Fund (the "Board").
Copies of the Fund's Registration Statement and Charter have been or will be
submitted to you. The Fund employs MMC as its investment manager, in which
capacity MMC serves as the Fund's investment adviser and administrator, and
the Fund and MMC desire to employ and hereby appoint Boston Advisors as the
Fund's sub-administrator. Boston Advisors accepts this appointment and agrees
to furnish the services to the Fund, for the compensation set forth below,
under the general supervision of MMC.
2. Services as Sub-Administrator
Subject to the supervision and direction of the Board and MMC,
Boston Advisors will: (a) assist in supervising all aspects of the Fund's
operations except those performed by MMC; (b) supply the Fund with office
facilities (which may be in Boston Advisor's own offices), statistical and
research data, data processing services, clerical, accounting and bookkeeping
services (including, but not limited to, the calculation of the net asset
value of shares of the Fund), internal auditing and legal services, internal
executive and administrative services, and stationery and office supplies; and
(c) prepare reports to
<PAGE>2
shareholders of the Fund, tax returns and reports to and filings with the SEC
and state blue sky authorities.
3. Compensation
In consideration of services rendered pursuant to this Agreement,
MMC will pay Boston Advisors on the first business day of each month a fee for
the previous month calculated in accordance with the terms set forth in
Appendix A, and as agreed to from time to time by the Fund, MMC and Boston
Advisors. Upon any termination of this agreement before the end of any month,
the fee for such part of a month shall be prorated according to the proportion
which such period bears to the full monthly period and shall be payable upon
the date of termination of this Agreement. For the purpose of determining
fees payable to Boston Advisors, the value of the Fund's net assets shall be
computed at the times and in the manner specified in the Fund's Registration
Statement as from time to time in effect.
4. Expenses
Boston Advisors will bear all expenses in connection with the
performance of its services under this Agreement. The Fund will bear all
other expenses to be incurred in its operation, including: taxes, interest,
brokerage fees and commissions, if any; fees of the Board members of the Fund
who are not officers, directors or employees of Smith Barney Inc., Boston
Advisors or their affiliates; SEC fees and state blue sky qualification fees;
charges of custodians and transfer and dividend disbursing agents; the Fund's
and its Board members' proportionate share of insurance premiums, professional
association dues and/or assessments; outside auditing and legal expenses;
costs of maintaining the Fund's existence; costs attributable to investor
services, including, without limitation, telephone and personnel expenses;
costs of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
shareholders; costs of shareholders, reports and meetings of the officers or
Board and any extraordinary expenses.
5. Standard of Care
Boston Advisors shall exercise its best judgment in rendering the
services listed in paragraph 2 above. Boston Advisors shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates, provided that
nothing herein shall be deemed to protect or purport to protect
<PAGE>3
Boston Advisors against liability to the Fund or to its shareholders to which
Boston Advisors would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
by reason of Boston Advisor's reckless disregard of its obligations and duties
under this Agreement.
6. Term of Agreement
This agreement shall continue automatically for successive annual
periods, provided that it may be terminated by 90 days' written notice to the
other parties by any of the Fund, MMC or Boston Advisors. This Agreement
shall extend to and shall be binding upon the parties hereto, and their
respective successors and assigns, provided, however, that this agreement may
not be assigned, transferred or amended without the written consent of all the
parties hereto.
7. Service to Other Companies or Accounts
The Fund understands that Boston Advisors now acts, will continue to
act and may act in the future as administrator to one or more other investment
companies, and the Fund has no objection to Boston Advisors so acting. In
addition, the Fund understands that the persons employed by Boston Advisors to
assist in the performance of its duties hereunder may not devote their full
time to such service and nothing contained herein shall be deemed to limit or
restrict the right of Boston Advisors or its affiliates to engage in and
devote time and attention to other businesses or to render services of
whatever kind of nature.
8. Indemnification
MMC agrees to indemnify Boston Advisors and its officers, directors,
employees, affiliates, controlling persons and agents ("indemnitees") to the
extent that indemnification is available from the Fund, and Boston Advisors
agrees to indemnify MMC and its indemnitees, against any loss, claim, expenses
or cost of any kind (including reasonable attorney's fees) resulting from or
arising in connection with this Agreement or from the performance or failure
to perform any act hereunder, provided that no such indemnification shall be
available if the indemnitee violated the standard of care set forth in
paragraph 5 above. Each indemnitee shall be entitled to advancement of its
expenses in accordance with the requirements of the Investment Company Act of
1940, as amended, and the rules, regulations and interpretations thereof as in
effect from time to time.
<PAGE>4
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed
copy hereof.
Very truly yours,
Greenwich Street Municipal
Fund Inc.
By: ______________________________
Name:
Title:
Mutual Management Corp.
By: ______________________________
Name:
Title:
Accepted:
The Boston Company Advisors, Inc.
By: _____________________________
Name:
Title:
<PAGE>5
Schedule A
Fee
<PAGE>1
Exhibit (h)(2)
GREENWICH STREET MUNICIPAL FUND INC.
UNDERWRITING AGREEMENT
June 16, 1994
Smith Barney Inc.
Two World Trade Center, 100th Floor
New York, New York 10048
Gentlemen:
Greenwich Street Municipal Fund Inc., a corporation formed under the
laws of the State of Maryland (the "Portfolio"), and Smith Barney Inc., a
corporation formed under the laws of the State of Delaware ("Smith Barney"),
confirm their agreement, subject to the terms and conditions set out below,
pursuant to which Smith Barney (1) will be the underwriter of shares of the
Portfolio's Common Stock, par value $.001 per share, and (2) may engage in
market-making transactions with respect to those shares.
1. Definitions.
The following terms have the following meanings when used in this
Agreement:
(a) "Acts" means the Securities Act and the Investment Company
Act collectively.
(b) "Advisers Act" means the Investment Advisers Act of 1940,
as amended.
(c) "Advisers Act Rules" means those rules and regulations
adopted by the Commission under the Advisers Act.
(d) "Advisory Agreement" means the Investment Management
Agreement between the Portfolio and Greenwich Street Advisors, a division of
Mutual Management Corp., dated as of June 16, 1994.
(e) "Agreement" means this Underwriting Agreement as originally
executed and as amended, modified, supplemented or restated from time to time.
(f) "Business Day" means any day on which the NYSE is open for
trading.
<PAGE>2
(g) "Commission" means the Securities and Exchange Commission.
(h) "Common Stock" means the Portfolio's Common Stock, par
value $.001 per share.
(i) "Custody Agreement" means the Custody Agreement between the
Portfolio and Boston Safe Deposit and Trust Company dated as of June 16, 1994.
(j) "Effective Date" means the date on which the Registration
Statement becomes effective.
(k) "Exchange Act" means the Securities Exchange Act of 1934.
(l) "Final Amendment" means an amendment to the Registration
Statement necessary to permit the Registration Statement to become effective.
(m) "Firm Shares" means an aggregate of __________ Shares
covered by the Registration Statement.
(n) "Initial Closing Date" means the fifth Business Day
following the Effective Date or other date as determined by agreement between
Smith Barney and the Portfolio.
(o) "Investment Company Act" means the Investment Company Act
of 1940, as amended.
(p) "Investment Company Act Rules" means those rules and
regulations adopted by the Commission under the Investment Company Act.
(q) "Notification" means a notification of registration on Form
N-8A under the Investment Company Act filed on behalf of the Portfolio.
(r) "NYSE" means the New York Stock Exchange, Inc.
(s) "Offering" means the offering described in the Prospectus.
(t) "Option" means the option to purchase up to an additional
__________ Shares granted to Smith Barney under Section 4(b) of this
Agreement.
<PAGE>3
(u) "Option Shares" means those Shares covered by the
Registration Statement and purchased by Smith Barney in exercising the Option.
(v) "Preliminary Prospectus" means any preliminary prospectus
included at any time as part of the Registration Statement that has been
authorized by the Portfolio for use in connection with the public offering of
Shares.
(w) "Prospectus" means the prospectus contained in the
Registration Statement.
(x) "Registration Statement" means the Registration Statement
on Form N-2 under the Acts, as supplemented by any amendments to that
Registration Statement, filed by the Portfolio with the Commission.
(y) "Rules and Regulations" means the Investment Company Act
Rules and the Securities Act Rules.
(z) "Second Closing Date" means a date determined by Smith
Barney on which the Option Shares are to be delivered, except that the Second
Closing Date may not be earlier than the First Closing Date nor earlier than
the second Business Day after the day on which the Option is exercised nor
later than the fifth Business Day after the date on which the Option is
exercised.
(aa) "Securities Act" means the Securities Act of 1933, as
amended.
(bb) "Securities Act Rules" means the rules and regulations
adopted by the Commission under the Securities Act.
(cc) "Shares" means the Firm Shares and the Option Shares, if
purchased.
(dd) "Smith Barney" means, as the context so requires, Smith
Barney and certain of its affiliates, including The Robinson-Humphrey Company,
Inc.
(ee) "Sub-Administration Agreement" means the Sub-
Administration Agreement between the Portfolio and The Boston Company
Advisors, Inc. dated as of June 16, 1994.
(ff) "Transfer Agency Agreement" means the Transfer Agent and
Dividend-Paying Agent and Registrar Agreement between the Portfolio and TSSG
dated as of June 16, 1994.
(gg) "TSSG" means The Shareholder Services Group,
<PAGE>4
Inc., a subsidiary of First Data Corporation.
2. Appointment of Smith Barney.
Subject to the terms and conditions contained in this Agreement, the
Portfolio appoints Smith Barney to serve as the underwriter of the Shares
during the Offering. Smith Barney accepts the appointment as the underwriter
of the Shares, the appointment's becoming effective as of the commencement
date of the Offering.
3. Services of Smith Barney.
Smith Barney will offer and sell through its organization those
Shares that Smith Barney has purchased pursuant to Section 4 of this
Agreement.
4. Sale of Shares to Smith Barney.
(a) On the basis of the representations and warranties
contained in, and subject to the terms and conditions of, this Agreement, the
Portfolio agrees to sell to Smith Barney, and Smith Barney agrees to purchase,
the Firm Shares.
(b) The Portfolio grants Smith Barney, solely for the purpose
of covering over-allotments in the sale of Firm Shares, the Option. The
Option may be exercised by Smith Barney at any time on or before the sixtieth
day following the Effective Date by written notice provided to the Portfolio
specifying (i) the aggregate number of Option Shares as to which the Option is
being exercised, (ii) the Second Closing Date and (iii) the time on the Second
Closing Date at which the Option Shares are to be delivered.
(c) The Portfolio will not be obligated to deliver any of the
Firm Shares except upon payment for all of the Firm Shares to be purchased as
provided in paragraph (a) of this Section 4.
(d) Delivery of and payment for the Firm Shares purchased by
Smith Barney under the terms of this Agreement will be made at the office of
Smith Barney at 10:00 A.M. New York City time, on the First Closing Date. On
the First Closing Date, the Portfolio will deliver the Firm Shares to Smith
Barney against payment to or upon the order of the Portfolio of the purchase
price by certified or official bank check or checks payable in New York
Clearing House (next-day) funds. Time will be of the essence with respect to
the Portfolio's payment obligation, and delivery at the time and place
specified in this paragraph (d) is
<PAGE>5
a further condition of the obligation of Smith Barney to purchase the Firm
Shares. Upon delivery, the Firm Shares will be registered in such names and
in such denominations as Smith Barney requests in writing not less than two
Business Days prior to the First Closing Date.
(e) Delivery of and payment for the Option Shares purchased by
Smith Barney under the terms of this Agreement will be made at the office of
Smith Barney at 10:00 A.M. New York City time, on the Second Closing Date. On
the Second Closing Date, the Portfolio will deliver the Option Shares to Smith
Barney against payment to or upon the order of the Portfolio of the purchase
price by certified or official bank check or checks payable in New York
Clearing House (next-day) funds. Time will be of the essence with respect to
the Portfolio's payment obligation, and delivery at the time and place
specified in this paragraph (e) is a further condition of the obligation of
Smith Barney to purchase the Option Shares. Upon delivery, the Option Shares
will be registered in such names and in such denominations as Smith Barney
requests in writing not less than two Business Days prior to the Second
Closing Date.
5. Price of Shares.
The price to Smith Barney of the Firm Shares and the Option Shares
will be $12.00 per Share.
6. Payments to Smith Barney Financial Consultants.
The Portfolio acknowledges that Smith Barney Financial Consultants
will receive compensation from Smith Barney in connection with sales of
Shares. In no event, however, will the Portfolio be obligated (a) to
reimburse Smith Barney for any costs incurred in connection with so
compensating its Financial Consultants or (b) to compensate those Financial
Consultants in any other way out of its own assets.
7. Compliance with Applicable Rules.
In engaging in the activities contemplated under this Agreement,
Smith Barney will conform in all material respects with all state and federal
laws relating to the sale of Shares and with all applicable rules and
regulations of all regulatory bodies, including, without limitation, the Rules
of Fair Practice of the National Association of Securities Dealers, Inc. and
the Rules and Regulations. Neither Smith Barney nor any other person is
authorized by the Portfolio to give any information or to make any
representations in connection with the sale of Shares, other than those
contained in the Registration Statement or the
<PAGE>6
Prospectus with respect to the Shares, and in any information supplemental to
the Prospectus specifically approved by the Portfolio for use in connection
with the offer or sale of Shares, and neither Smith Barney nor any other
person is authorized, except as contemplated by this Agreement, to act as
agent for the Portfolio in connection with the offering or sale of Shares to
the public or otherwise.
8. Registration Statement and Prospectus; Public Offering.
(a) The Portfolio has filed with the Commission, pursuant to
the Acts and the Rules and Regulations, the Registration Statement, including
a Preliminary Prospectus, and those amendments to the Registration Statement
as may have been required to have been made prior to the date of this
Agreement. The Portfolio has furnished Smith Barney with copies of the
Registration Statement, each amendment to the Registration Statement filed by
the Portfolio with the Commission and the Preliminary Prospectus. If the
Registration Statement has not become effective prior to the date of this
Agreement, the Portfolio will promptly file with the Commission the Final
Amendment, including the form of final Prospectus. If the Registration
Statement has become effective and the Prospectus omits certain information at
the time of effectiveness pursuant to Rule 430A under the Securities Act, a
final prospectus containing that information will promptly be filed by the
Portfolio with the Commission in accordance with Rule 497(b) of the Securities
Act.
(b) The Portfolio understands that Smith Barney proposes to
make a public offering of the Shares, as described in the Prospectus, as soon
after the Effective Date (or, if later, after the date this Agreement is
signed) as Smith Barney deems advisable. The Portfolio confirms that Smith
Barney has been authorized to distribute the Preliminary Prospectus relating
to the Shares included in Pre-Effective Amendment No. 1 and Pre-Effective
Amendment No. 2 to the Registration Statement and is authorized to distribute
the Prospectus and any amendments or supplements to the Prospectus.
9. Representations and Warranties of the Portfolio.
The Portfolio represents and warrants to Smith Barney that:
(a) on the Effective Date and the date the Prospectus is first
filed with the Commission pursuant to Rule 497(b) or (h) under the Securities
Act and the date when any
<PAGE>7
post-effective amendment to the Registration Statement becomes effective or
any amendment or supplement to the Prospectus is filed with the Commission,
the Registration Statement, the Prospectus and any such amendment or
supplement did or will comply in all material respects with the applicable
requirements of the Acts and the Rules and Regulations, except that the
Portfolio makes no representations, warranties or agreements as to information
contained in or omitted from the Registration Statement, the Prospectus or any
such amendment or supplement in reliance upon or in conformity with written
information furnished to the Portfolio by Smith Barney specifically for
inclusion in such document;
(b) on the Effective Date and when any post-effective
amendment to the Registration Statement becomes effective, neither the
Registration Statement nor any such amendment did or will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in it or necessary to make the statements in it not misleading, except
that the Portfolio makes no representations, warranties or agreements as to
information contained in or omitted from the Registration Statement or such
amendment in reliance upon or in conformity with written information furnished
to the Portfolio by Smith Barney specifically for inclusion in such document;
(c) on the Effective Date, and the date the Prospectus or any
amendment or supplement to the Prospectus is filed with the Commission, the
Prospectus or amendment or supplement did not or will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements in it, in light of the circumstances under which they were
made, not misleading, except that the Portfolio makes no representations,
warranties or agreements as to information contained in or omitted from the
Prospectus or amendment or supplement to the Prospectus in reliance upon or in
conformity with written information furnished to the Portfolio by Smith Barney
specifically for inclusion in such document;
(d) the Notification complied, and any amendment to the
Notification will comply, in all material respects with the requirements of
the Investment Company Act;
(e) the Portfolio is not in violation of its corporate charter
or by-laws or in default under any agreement, indenture, or instrument, to
which the Portfolio is a party, by which the Portfolio may be bound, or to
which any of the properties or assets of the Portfolio is subject or, to the
best knowledge of the Portfolio, in breach or violation of any judgment,
decree, order, rule or regulation of any court or
<PAGE>8
governmental or self-regulatory agency or body, the effect of which violation
or default or breach would be material to the Portfolio;
(f) each of the Advisory Agreement, the Sub-Administration
Agreement, the Custody Agreement and the Transfer Agency Agreement has been
duly authorized, executed and delivered by the Portfolio, complies in all
material respects with all applicable provisions of the Investment Company
Act, the Advisers Act and the Advisers Act Rules, and, assuming due
authorization, execution and delivery by the other party to each such
agreement, constitutes a legal, valid and binding obligation of the Portfolio
enforceable in accordance with its terms, except as its enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights and by general equity
principles (regardless of whether enforceability is considered in a proceeding
in equity or at law);
(g) this Agreement has been duly authorized, executed and
delivered by the Portfolio, complies in all material respects with all
applicable provisions of the Investment Company Act and the Investment Company
Act Rules, and, assuming due authorization, execution and delivery by Smith
Barney, constitutes the legal, valid and binding obligation of the Portfolio,
enforceable in accordance with its terms, except to the extent that
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
and by general equity principles (regardless of whether enforceability is
considered in a proceeding in equity or at law);
(h) no consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery and
performance of this Agreement, the Advisory Agreement, the Sub-Advisory
Agreement, the Custody Agreement and the Transfer Agency Agreement by the
Portfolio, or the consummation by the Portfolio of the transactions
contemplated by each of those agreements, except those that have been obtained
and those that may be required under the Acts;
(i) the execution, delivery and performance of this Agreement,
the Sub-Administration Agreement, the Custody Agreement and the Transfer
Agency Agreement, and the consummation by the Portfolio of the transactions
contemplated by each of those agreements, will not conflict with, result in
the creation or imposition of, any lien, charge or encumbrance upon the assets
of the Portfolio pursuant to the terms of, result in a breach or violation by
the Portfolio of any of the material terms or
<PAGE>9
provisions of, or constitute a default by the Portfolio under, any material
contract, including indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which the Portfolio is a party or to which
its properties is subject, the corporate charter or by-laws of the Portfolio,
or, to the best knowledge of the Portfolio, any statute (including the Acts),
judgment, decree, order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Portfolio or any of its property;
(j) to the best of the Portfolio's knowledge, subsequent to
the dates as of which information is given in the Registration Statement or
the Prospectus, there has not been any material adverse change in, or any
adverse development that materially affects, the business, properties,
financial condition, results of operations, or prospects of the Portfolio;
(k) Coopers & Lybrand, whose report appears in the Prospectus,
are independent public accountants as required by the Acts and the Rules and
Regulations;
(l) the shares of Common Stock being sold by the Portfolio,
when issued, delivered and paid for on the First Closing Date and the Second
Closing Date in the manner described in the Prospectus, will be validly
authorized, issued and outstanding, fully paid and nonassessable;
(m) the shares of Common Stock being sold by the Portfolio
will conform in all material respects to the descriptions of them contained in
the Registration Statement and the Prospectus;
(n) the balance sheet of the Portfolio filed as part of the
Registration Statement or included in any Preliminary Prospectus or the
Prospectus, presents fairly the financial condition of the Portfolio at the
dates indicated in the balance sheet and has been prepared in accordance with
generally accepted accounting principles applied on a consistent basis;
(o) there is no litigation or proceeding pending or, to the
knowledge of the Portfolio, threatened against the Portfolio that might result
in any material adverse change in the financial condition, results of
operations, business or prospects of the Portfolio or that is required to be
disclosed in the Registration Statement;
(p) there are no material contracts or other documents that
are required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Acts or by
<PAGE>10
the Rules and Regulations that have not been described in the Prospectus or
filed as exhibits to the Registration Statement or incorporated in the
Registration Statement by reference as permitted by the Rules and Regulations;
(q) the Portfolio is registered with the Commission under the
Investment Company Act as a closed-end, non-diversified management investment
company and is, and at all times through the completion of the transactions
contemplated by this Agreement will be, in compliance in all material respects
with the terms and provisions of the Acts;
(r) no person is serving or acting or is proposed to serve or
act as an officer, director or investment adviser of the Portfolio except in
accordance with the provisions of the Investment Company Act and the Advisers
Act, the Investment Company Act Rules and the Advisers Act Rules; and
(s) the Portfolio has been duly incorporated, is validly
existing and in good standing under the laws of the State of Maryland, is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership of property or the conduct of its
business requires qualification, and has all power and authority necessary to
own or hold its property and to conduct its business as described in the
Prospectus.
10. Covenants of the Portfolio.
The Portfolio covenants and agrees:
(a) if the Registration Statement has not become effective by
the date of this Agreement, promptly to file the Final Amendment with the
Commission, to use its best efforts to cause the Registration Statement to
become effective and, as soon as the Portfolio is advised, to notify Smith
Barney when the Registration Statement or any amendment to it has become
effective and, if required, to file a Prospectus pursuant to Rule 497(b) under
the Securities Act as promptly as practicable, but no later than the fifth
Business Day following the date of the later of the Effective Date or the
commencement of the Offering;
(b) if the Registration Statement has become effective on or
before the date of this Agreement and the Prospectus contained in the
Registration Statement omits certain information at the time of effectiveness
pursuant to Rule 430A under the Securities Act, to file a prospectus pursuant
to Rule 497(h) under the Securities Act as promptly as practicable, but no
later than the second Business Day following the date of the
<PAGE>11
determination of the offering price of the Shares or the date the Prospectus
is first used after the Effective Date;
(c) not to file any Prospectus or any other amendment or
supplement to the Registration Statement or the Prospectus unless a copy has
first been submitted to Smith Barney a reasonable time before its filing and
Smith Barney has not reasonably objected to it within a reasonable time after
receiving the copy;
(d) to furnish promptly to Smith Barney a conformed copy of
the Registration Statement and the Notification as originally filed with the
Commission, and each amendment to the Registration Statement and Notification
filed with the Commission, including all consents and exhibits filed with the
Registration Statement;
(e) to deliver to Smith Barney, as soon as the Registration
Statement becomes effective and thereafter when the Prospectus is required to
be delivered under the Acts, as many copies of the Prospectus and as many
conformed copies of the Registration Statement and of each amendment to the
Registration Statement (including exhibits filed with the Registration
Statement or incorporated by reference in the Registration Statement) as Smith
Barney may reasonably request;
(f) during the period of time in which the Prospectus is
required to be delivered by Smith Barney under the Securities Act and the
Securities Act Rules (the "Delivery Period"), to deliver promptly to Smith
Barney the number of copies of the Prospectus (as amended or supplemented and
including all documents incorporated by reference in the Prospectus) as Smith
Barney may reasonably request;
(g) during the Delivery Period, to advise Smith Barney
promptly (i) when the Registration Statement and any post-effective amendment
to the Registration Statement is declared effective, (ii) of any request or
proposed request by the Commission for an amendment to the Registration
Statement, a supplement to the Prospectus or for any additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation or threat of any
proceeding for that purpose and (iv) of the happening of any event that makes
untrue any statement of a material fact made in the Registration Statement or
the Prospectus, or that requires the making of a change in the Registration
Statement or the Prospectus to make any material statement contained in either
document not misleading;
<PAGE>12
(h) if the Commission issues a stop order suspending the
effectiveness of the Registration Statement or an order pursuant to Section
8(e) of the Investment Company Act, to make every reasonable effort to obtain
the lifting of the order at the earliest possible time;
(i) as soon as practicable after the Effective Date, but in no
event later than the last day of the eighteenth full calendar month following
the calendar quarter in which the Effective Date falls, to make generally
available to its shareholders and to deliver to Smith Barney an earnings
statement, conforming to the requirements of Section 11(a) of the Securities
Act, covering a period of at least 12 months beginning after the Effective
Date;
(j) to furnish to Smith Barney copies of all public reports
and all reports and financial statements furnished by the Portfolio to the
NYSE or any other securities exchange upon which the Common Stock is listed or
admitted for trading, pursuant to requirements of or agreements with those
exchanges or to the Commission pursuant to the Exchange Act, the Investment
Company Act or any rule or regulation of the Commission under the Exchange Act
or the Investment Company Act;
(k) to take whatever actions Smith Barney reasonably requests
to qualify the Shares for offer and sale under the securities or "blue sky"
laws of those jurisdictions reasonably designated by Smith Barney, except
that, under no circumstances, will the Portfolio be required to qualify as a
foreign corporation or to file a general consent to service of process in any
jurisdiction; and
(l) to use its best efforts to list the Shares on the NYSE,
the American Stock Exchange, Inc. or other national securities exchange, or to
have the Shares traded on the NASDAQ National Market System or other national
market system, as and when contemplated by the Prospectus and to comply with
the rules and regulations of the exchange on which the Shares are listed or
the market system through which the Shares are traded.
11. Conditions of Smith Barney's Obligations.
(a) The obligations of Smith Barney under this Agreement to
purchase Shares on the terms and conditions set out in this Agreement will at
all times be subject, in its discretion, to the accuracy, on the date of this
Agreement, on the First Closing Date, and on the Second Closing Date, of the
representations and warranties of the Portfolio contained in this Agreement,
to the performance by the Portfolio of its obligations
<PAGE>13
under this Agreement, to the prior receipt by Smith Barney of good funds in
payment for Shares to be purchased in accordance with the terms and conditions
of this Agreement, and to each of the following additional terms and
conditions:
(i) the Registration Statement has become effective by 5:30
p.m., New York City time, on the date of this Agreement, or later date and
time to which Smith Barney has consented in writing;
(ii) the Prospectus has been timely filed with the Commission
in accordance with the provisions of this Agreement;
(iii) on or before the First Closing Date or the Second
Closing Date, no stop order suspending the effectiveness of the Registration
Statement or order pursuant to Section 8(e) of the Investment Company Act has
been issued, and no stop order proceeding or proceeding for an order pursuant
to Section 8(e) of the Investment Company Act has been initiated or threatened
by the Commission;
(iv) any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise has
been met;
(v) the Portfolio has not filed with the Commission the
Prospectus or any amendment or supplement to the Registration Statement or the
Prospectus without the consent of Smith Barney, which consent has not been
unreasonably withheld or delayed;
(vi) Smith Barney has not discovered and disclosed to the
Portfolio, on or prior to the First Closing Date or the Second Closing Date,
that the Registration Statement or the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus contains an untrue
statement of a fact that, in the reasonable opinion of counsel to Smith
Barney, is, as a matter of law, material or omits to state a fact that, in the
reasonable opinion of that counsel, is material and is required to be stated
therein or is necessary to make the statements therein not misleading; and
(vii) all corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement and the
Shares and the form of the Registration Statement and the Prospectus, other
than financial statements and other financial data, and all other legal
matters relating to this Agreement and the transactions contemplated by this
<PAGE>14
Agreement are satisfactory in all respects to counsel to Smith Barney, and the
Portfolio has furnished to that counsel all documents and information that
counsel may reasonably request to enable counsel to pass upon those matters.
(b) All opinions, letters, evidence and certificates described
in this Section 11 or elsewhere in this Agreement will be deemed to be in
compliance with the provisions of this Agreement only if they are in form and
substance reasonably satisfactory to counsel to Smith Barney.
12. Expenses.
(a) The Portfolio will pay or cause to be paid, or reimburse
if paid by Smith Barney or others:
(i) all costs and expenses in connection with the registration
of Shares under the Acts and the Rules and Regulations;
(ii) all costs and expenses of qualifying and maintaining
qualification of the Shares for sale under the securities or "blue sky" laws
of the various states designated by Smith Barney;
(iii) all federal or state original issue taxes or transfer
taxes, payable upon the issuance, transfer or delivery of Shares from the
Portfolio to Smith Barney;
(iv) the costs of preparing and issuing any certificates that
may be issued to represent Shares;
(v) all expenses in connection with the printing of any
notices of meetings of the Portfolio's shareholders, proxy and proxy
statements and enclosures with those documents, as well as any other notice or
communication sent to shareholders in connection with any meeting of the
shareholders or otherwise, any annual, semi-annual or other report or
communications sent to the shareholders, and the expense of sending
prospectuses relating to the Shares to existing shareholders;
(vi) all expenses in connection with the printing, copying
and/or distribution of any preliminary Registration Statement (including a
Preliminary Prospectus and any exhibits attached to the Preliminary
Prospectus, and any pre-effective amendments to the Preliminary Prospectus),
the Registration Statement, the Prospectus or any post-effective amendments to
the Registration Statement or Prospectus;
<PAGE>15
(vii) all expenses in connection with obtaining listing of the
Shares on a national securities exchange or national market system; and
(viii) all expenses in connection with obtaining approval from
the National Association of Securities Dealers, Inc. for the distribution of
the Shares.
(b) Smith Barney will permit its officers and employees to
serve without compensation as directors and/or officers of the Portfolio if
those employees are duly elected to those positions.
13. Secondary Market Activity.
(a) The Portfolio and Smith Barney acknowledge and agree that
(i) during the Offering, Shares will not be repurchased by either the
Portfolio or Smith Barney, (ii) no secondary market for the Shares currently
exists or is expected to develop during the Offering, (iii) no secondary
market for the Shares is expected to develop after the First Closing Date and
prior to the date on which trading in Shares commences on the NYSE or other
national securities exchange and (iv) after the Second Closing Date, the
Portfolio will be free to repurchase Shares, subject to compliance with
applicable law.
(b) The Portfolio agrees that Smith Barney is authorized,
after trading in Shares has commenced on the NYSE or other national securities
exchange, to engage in market-making transactions with respect to Shares in
the over-the-counter market at negotiated prices related to prevailing market
prices at the time of sale of the Shares. The Portfolio acknowledges and
agrees that (i) Smith Barney may act as principal or agent in such
market-making transactions and (ii) Smith Barney is under no obligation to
engage in such market-making transactions and may at any time discontinue
those transactions at its sole discretion and without notice to the Portfolio.
14. Indemnification and Contribution.
(a) The Portfolio agrees to indemnify Smith Barney and hold
harmless Smith Barney and each person that controls Smith Barney within the
meaning of the Securities Act ("Controlling Person") from and against any
loss, claim, damage or liability, joint or several, and any action with
respect to any such loss, claim, damage or liability, to which Smith Barney or
any Controlling Person may become subject, under the Securities Act or
otherwise, insofar as the loss, claim, damage, liability or action arises out
of, is based upon, or is alleged
<PAGE>16
to arise out of or be based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectus, or the Registration Statement or the Prospectus as amended or
supplemented, or the omission or alleged omission to state in any such
document a material fact required to be stated in the document or necessary to
make the statements in the document not misleading, except that the Portfolio
will not be liable to the extent that any such loss, claim, damage, liability
or action arises out of, or is based upon, or is alleged to arise out of or be
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or the Prospectus or any
amendments or supplements to the Registration Statement or Prospectus, in
reliance upon and in conformity with written information furnished to the
Portfolio by Smith Barney specifically for inclusion in the document, (ii) any
failure of the Portfolio to issue and sell the Shares, (iii) any action taken
or omitted to be taken by Smith Barney with the consent of the Portfolio, (iv)
any action taken or omitted to be taken by the Portfolio, (v) any breach by
the Portfolio of any representation or warranty, or any failure by the
Portfolio to comply with any agreement or covenant contained in this Agreement
or (vi) any of the other transactions contemplated by Smith Barney'
performance of its obligations under this Agreement, and will reimburse Smith
Barney and each Controlling Person for any legal and other expenses reasonably
incurred by Smith Barney or the Controlling Person in investigating or
defending or preparing to defend against any such loss, claim, damage,
liability or action, except that the Portfolio will not be liable for
indemnity under paragraph (a)(vi) of this Section 14 to the extent that the
action or omission to which that indemnity relates has been determined by a
court of competent jurisdiction to have resulted directly from the willful
misfeasance, bad faith or gross negligence of Smith Barney or reckless
disregard of its obligations or duties hereunder. The indemnity agreement
contained in this Section 14(a) is in addition to any liability that the
Portfolio may otherwise have to Smith Barney or any Controlling Person.
(b) Smith Barney will indemnify and hold harmless the
Portfolio, each of its directors, each of its officers who signed the
Registration Statement and any person who controls the Portfolio within the
meaning of the Securities Act from and against any loss, claim, damage or
liability, joint or several, or any action with respect to any such loss,
claim, damage or liability, to which the Portfolio or any such director,
officer or controlling person may become subject, under the Securities Act or
otherwise, insofar as the loss, claim, damage, liability or action arises out
of, or is based upon, or is alleged to arise
<PAGE>17
out of or be based upon, any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, the Prospectus, or the
Registration Statement or the Prospectus as amended or supplemented, or arises
out of, or is based upon, or is alleged to arise out of or be based upon, the
omission or alleged omission to state in any such document a material fact
required to be stated in the document or necessary to make the statements in
the document not misleading, but in each case only to the extent that the
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Portfolio by Smith Barney specifically for inclusion in the document,
and will reimburse the Portfolio for any legal and other expenses reasonably
incurred by the Portfolio or any such director, officer or controlling person
in investigating or defending or preparing to defend against the loss, claim,
damage, liability or action. The indemnity agreement contained in this
Section 14(b) is in addition to any liability that Smith Barney may otherwise
have to the Portfolio or any of its directors, officers or controlling
persons.
(c) Promptly after receipt by an indemnified party under this
Section 14 of notice of any claim or the commencement of any action, the
indemnified party will notify the indemnifying party in writing of the claim
or the commencement of that action, except that the failure to notify the
indemnifying party will not relieve the indemnifying party from any liability
that it may have to an indemnified party under this Section 14 except to the
extent that the indemnifying party has been prejudiced in any material respect
by the failure or from any liability that it may have to an indemnified party
otherwise than under this Section 14. If any such claim or action is brought
against an indemnified party, and the indemnified party notifies the
indemnifying party of the claim or action, the indemnifying party will be
entitled to participate in the claim or action and, to the extent that the
indemnifying party wishes, jointly with any other similarly notified
indemnifying party, to assume the defense of the claim or action with counsel
satisfactory to the indemnified party. After notice from the indemnifying
party to the indemnified party of the indemnifying party's election to assume
the defense of the claim or action, the indemnifying party will not be liable
to the indemnified party under this Section 14 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
of the claim or action other than reasonable costs of investigation and
providing evidence, except that the indemnified party will have the right to
employ counsel to represent the indemnified party, its officers, directors,
employees and controlling persons who may be subject to liability arising out
of any claim or action with
<PAGE>18
respect to which indemnity may be sought by the indemnified party and any such
officers, directors, employees or controlling persons if, in the reasonable
judgment of the indemnified party, it is advisable for the indemnified party
to be represented by separate counsel, and in that event, the fees and
reasonable expenses of that counsel will be paid by the indemnifying party.
(d) If indemnification provided for in this Section 14 is
unavailable to an indemnified party with respect to any loss, claim, damage or
liability, or any action with respect to any such loss, claim, damage or
liability referred to in this Section 14, then each indemnifying party will,
in lieu of indemnifying the indemnified party, contribute to the amount paid
or payable by the indemnified party as a result of the loss, claim, damage, or
liability, or action with respect to the loss, claim, damage or liability in
the proportion that is appropriate to reflect the relative fault of the
Portfolio and Smith Barney with respect to the transaction to which the loss,
claim, damage or liability, or action with respect to the loss, claim, damage
or liability relates, as well as any other relevant equitable considerations.
The relative fault of the Portfolio and Smith Barney will be determined by
reference to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to
information supplied by the Portfolio or by Smith Barney, the intent of the
parties and their relative knowledge, access to information and opportunity
to correct or prevent the statement or omission, and other relevant equitable
considerations. The Portfolio and Smith Barney agree that it would not be
just and equitable if contributions pursuant to this Section 14 were to be
determined by a proportionate allocation or by any other method of allocation
that does not take into account the equitable considerations referred to in
this paragraph (d). The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action with respect to the
loss, claim, damage or liability referred to in this Section 14 will be deemed
to include, for purposes of this Section 14, any legal or other expenses
reasonably incurred by the indemnified party in connection with investigating
or defending any such action or claim. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
by a court of competent jurisdiction will be entitled to contribution pursuant
to this paragraph (d) from any person who was not found guilty of the
fraudulent misrepresentation.
(e) The indemnity agreements contained in this Section 14 and
the representations, warranties, agreements and covenants of the Portfolio in
Sections 9, 10 and 14 of this Agreement will survive the delivery of the
Shares and will remain
<PAGE>19
in full force and effect, regardless of any termination or amendment of this
Agreement undertaken pursuant to Section 15 of this Agreement or any
investigation made by or on behalf of any indemnified party.
15. Continuation, Amendment or Termination of Agreement.
(a) This Agreement will become effective on the Effective Date
and will continue for an initial two-year term and will continue thereafter,
so long as such continuance is specifically approved at least annually (i) by
the Board of Directors of the Portfolio or (ii) by a vote of a majority of the
outstanding voting securities of the Portfolio entitled to vote, so long as in
either case, the continuance is also approved by a majority of the directors
of the Portfolio who are not interested persons of the Portfolio or Smith
Barney by vote cast in person at a meeting called for the purpose of voting on
the approval.
(b) This Agreement (i) may be terminated by the Portfolio at
any time on written notice to Smith Barney and (ii) will terminate
automatically in the event of its assignment.
(c) The Agreement may be terminated by Smith Barney in its
absolute discretion, by notice given to and received by the Portfolio prior to
the First Closing Date or the Second Closing Date, if prior to that time
trading in securities generally on the NYSE is suspended, or limited or
minimum prices are established on the NYSE, or a banking moratorium is
declared by either Federal or New York State authorities, or there shall have
occurred any outbreak or material escalation of hostilities in which the
United States is involved, any declaration of war by Congress, or any material
adverse change in the existing financial, political or economic conditions in
the United States or elsewhere or any other substantial national or
international calamity or emergency if the effect of any such outbreak,
escalation, declaration, adverse change, calamity or emergency makes it
impracticable or inadvisable to proceed with completion of the sale of, and
payment for, the Shares.
(d) Upon termination of this Agreement, the obligations of the
Portfolio and Smith Barney under this Agreement will cease and terminate as of
the date of the termination, except for any obligation to respond with respect
to a breach of this Agreement committed prior to the termination and except as
provided in Section 14(e) of this Agreement.
(e) This Agreement may be amended at any time by mutual
consent of the Portfolio and Smith Barney except that such
<PAGE>20
consent on the part of the Portfolio must have been approved (i) by the Board
of Directors of the Portfolio, or by a vote of the majority of the outstanding
voting securities of the Portfolio entitled to vote and (ii) by vote of a
majority of the directors of the Portfolio who are not interested persons of
the Portfolio cast in person at a meeting called for the purpose of voting
upon the amendment.
(f) For purposes of this Section 15, the terms "vote of a
majority of the outstanding voting securities" of the Portfolio, "interested
persons" and "assignment" have the meanings given to them in the Investment
Company Act.
16. Notices.
Any notice by the Portfolio to Smith Barney will be sufficient if
given in writing, by telegraph or by facsimile addressed to Smith Barney at
Two World Trade Center, 100th Floor, New York, New York 10048, and any notice
by Smith Barney to the Portfolio will be sufficient if given in writing, by
telegraph or by facsimile addressed to the Portfolio at Two World Trade Center
- -- 100th Floor, New York, New York 10048, Attention: Mr. Richard P. Roelofs.
17. Parties.
This Agreement will inure to the benefit of, and be binding upon,
Smith Barney and the Portfolio and their respective successors. This
Agreement and its terms and provisions are for the sole benefit of only those
persons, except that (a) the representations, warranties, indemnities and
agreements of the Portfolio contained in this Agreement will also be deemed to
be for the benefit of the person or persons controlling Smith Barney within
the meaning of Section 15 of the Securities Act and (b) the indemnity
agreement of Smith Barney contained in Section 14(b) of this Agreement will be
deemed to be for the benefit of the directors of the Portfolio and officers of
the Portfolio who have signed the Registration Statement and any person
controlling the Portfolio. Nothing in this Agreement is intended or should be
construed in any way to give any person other than the persons referred to in
this Section 17 any legal or equitable right, remedy or claim under, or with
respect to, this Agreement or any provision contained in this Agreement.
18. Governing Law.
This Agreement will be governed by and construed in accordance with
the laws of the State of New York.
<PAGE>21
19. Counterparts.
This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts will each be
deemed to be an original but all such counterparts will together constitute
one and the same instrument.
20. Headings.
The headings used in this Agreement have been inserted for
convenience of reference only and are not intended to be a part of, or to
affect the meaning or interpretations of, this Agreement.
* * * * *
<PAGE>22
If the foregoing correctly sets forth the agreement between the
Portfolio and Smith Barney, please indicate Smith Barney' acceptance in the
space provided for that purpose below.
Very truly yours,
Greenwich Street Municipal Fund Inc.
By: ____________________________
Richard P. Roelofs
Title: Executive Vice President
Accepted:
SMITH BARNEY INC.
By: _________________________
Heath B. McLendon
Title: Executive Vice President
<PAGE>
Exhibit (l)(1)
[Letterhead of Willkie Farr & Gallagher]
June 15, 1994
Greenwich Street Municipal Fund Inc.
Two World Trade Center
New York, NY 10048
Gentlemen:
We have acted as counsel to Greenwich Street Municipal Fund Inc. (the
"Portfolio"), a corporation organized under the laws of the State of Maryland,
in connection with the preparation and filing with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, as amended, of a Registration Statement on Form N-2 (the
"Registration Statement") relating to the offer and sale of the Portfolio's
Common Stock, par value $.001 per share (the "Common Stock").
We have examined copies of the Portfolio's Charter, as amended, and By-Laws,
the Registration Statement including the Portfolio's prospectus forming a part
thereof (the "Prospectus"), all resolutions adopted by the Portfolio's Board
of Directors (the "Board") at meetings held on March 3, 1993 and June 1, 1994,
consents of the Board dated February 19, 1993 and April 15, 1994, and other
records and documents that we have deemed necessary for the purpose of
rendering the opinions expressed below. We have also examined such other
documents, papers, statutes and authorities as we have deemed necessary to
form a basis for those opinions.
In our examination of the materials described above, we have assumed the
genuineness of all signatures and the conformity to original documents of all
copies submitted to us. As to various questions of fact material to our
opinions, we have relied on statements and certificates of officers and
representatives of the Portfolio and others. As to matters governed by the
laws of the State of Maryland, we have relied on the opinion of Messrs.
Venable, Baetjer and Howard of even date herewith that is attached to this
letter.
<PAGE>2
Greenwich Street Municipal Fund Inc.
June 15, 1994
Page 2.
Based on the foregoing, we are of the opinion that:
(1) the Portfolio is duly organized and validly existing as a
corporation in good standing under the laws of the State of
Maryland;
(2) the 8,334 shares of presently issued and outstanding Common
Stock of the Portfolio have been validly and legally issued and
are fully paid and nonassessable; and
(3) the shares of Common Stock of the Portfolio to be offered for
sale pursuant to the Prospectus are duly authorized and, when
sold, issued and paid for as authorized by the Board and
contemplated by the Prospectus, will have been validly and
legally issued and will be fully paid and nonassessable.
We consent to the filing of this letter as an exhibit to the Registration
Statement and to the reference to us under the caption "Legal Matters" in the
Prospectus.
Very truly yours,
/s/ Willkie Farr & Gallagher
<PAGE>1
Exhibit (l)(2)
[Letterhead of Venable, Baetjer and Howard]
June 15, 1994
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Re: Greenwich Street Municipal Fund Inc.
Ladies and Gentlemen:
We have acted as special Maryland counsel for Greenwich Street Municipal
Fund Inc., a Maryland corporation (the "Fund"), in connection with the
organization of the Fund and the issuance of shares of its common stock, par
value $.001 per share (the "Common Stock").
As Maryland counsel for the Fund, we are familiar with its Charter and
Bylaws. We have examined the prospectus included in its Registration
Statement on Form N-2, File No. 33-58610 (the "Registration Statement"),
substantially in the form in which it is to become effective (the
"Prospectus"). We have further examined and relied upon a certificate of the
Maryland State Department of Assessments and Taxation to the effect that the
Fund is duly incorporated and existing under the laws of the State of Maryland
and is in good standing and duly authorized to transact business in the State
of Maryland.
We have also examined and relied upon such corporate records of the Fund
and other documents and certificates with respect to factual matters as we
have deemed necessary to render the opinion expressed herein. We have
assumed, without independent verification, the genuineness of all signatures
and the conformity with originals of all documents submitted to us as copies.
Based on such examination, we are of the opinion and so advise you that:
<PAGE>2
Willkie Farr & Gallagher
June 15, 1994
Page 2
1. The Fund is duly organized and validly existing as a
corporation in good standing under the laws of the State of
Maryland.
2. The 8,334 shares of presently issued and outstanding Common
Stock of the Fund have been validly and legally issued and are
fully paid and nonassessable.
3. The shares of Common Stock of the Fund to be offered for sale
pursuant to the Prospectus are duly authorized and, when sold,
issued and paid for as authorized by the Board of Directors and
contemplated by the Prospectus, will have been validly and
legally issued and will be fully paid and nonassessable.
This letter expresses our opinion with respect to the Maryland General
Corporation law governing matters such as due organization and the
authorization and issuance of stock. It does not extend to the securities or
"Blue Sky" laws of Maryland, to federal securities laws or to other laws.
You may rely on this opinion in rendering your opinion to the Fund which
is to be filed as an exhibit to the Registration Statement. We consent to the
filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/ Venable, Baetjer and Howard
<PAGE>1
Exhibit (n)
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Shareholder and Directors of Greenwich Street Municipal Fund Inc.:
We hereby consent to the following with respect to Pre-Effective
Amendment No. 3 to the Registration Statement on Form N-2 (File No. 33-58610)
under the Securities Act of 1933, as amended, of Greenwich Street Municipal
Fund Inc.:
1. The inclusion of our report dated June 14, 1994 accompanying
the statement of assets and liabilities of Greenwich Street
Municipal Fund Inc. as of June 14, 1994, in the Statement of
Additional Information.
2. The reference to our firm under the heading "Experts" in the
Prospectus.
/s/ Coopers & Lybrand
COOPERS & LYBRAND
Boston, Massachusetts
June 15, 1994
