<PAGE>
- ---------------------------------------------------------------------------
GREENWICH STREET MUNICIPAL
FUND INC.
Quarterly Report
May 31, 1995
[LOGO]
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Large box below fund name showing cash/stock certificates and a list of
financial statements as well as a box in the center of picture showing
buildings in New York.
<PAGE>
GREENWICH STREET MUNICIPAL
FUND INC.
MAY 31, 1995
DEAR SHAREHOLDER:
We are pleased to provide the annual report for Greenwich Street
Municipal Fund Inc. for the fiscal period ended May 31, 1995. During the
past fiscal period, ended May 31, 1995, the Fund distributed dividends
totaling $0.54 per share.
The Fund generated a positive total return on net asset value (the
actual worth of the securities owned by the Fund) of 5.68% for the past
three months and 11.19% since inception; in comparison, the average
closed-end municipal fund provided returns of 4.71% and 9.78% as reported
by Lipper Analytical Services Inc., an independent performance tracking
organization. Despite this performance the Fund traded at a discount to its
net asset value, as did most other closed-end funds.
Economic and Market Update
The increases last year in short-term rates by the Federal Reserve Board
are clearly slowing the economy's expansion from its faster pace of last
fall. The question now on the minds of economists and investors is whether
this is merely a pause in economic activity or indicative of longer-term
economic weakness. We don't believe that forthcoming economic data will
show conclusive evidence of a recession, and instead are working under the
assumption that the economy will experience a small pause and then steady
growth with moderate inflation.
After the tumultuous market environment of 1994, the municipal market
had a spectacular first five months of 1995, and Greenwich Street Municipal
Fund was positioned to take full advantage of it. A significant percentage
of the Fund's holdings were high quality, discount coupons, which allowed
the Fund to maximize its net asset value during the rapidly declining
interest rate environment. The net asset value increased by $0.84 per
share, to $12.84 on May 31, 1995, from $12.00
CONTINUED
- ------------------------------ 1
------------------------------
<PAGE>
on June 24, 1994, which is the Fund's inception date. Our goal is to use
market strength to gradually increase coupons, shorten maturities and take
a more conservative approach to the market until these interest rate levels
prove they can hold. This is consistent with our long-term strategy of
providing investors in the Fund with a competitive stream of tax-exempt
income with long-term preservation of capital.
The many flat tax proposals being championed by members of both
political parties are creating uncertainty for the tax-exempt market. Real
egislative action is several years away and must be REVENUE NEUTRAL to make
any economic sense -- a very difficult balancing act to accomplish. These
discussions have caused periodic weakness in the municipal market during the
past months and will no doubt continue to cause periodic weakness over the
next few years, which we will view as an opportunity to invest at levels
that represent real value to our shareholders. A general rise in interest
rates would be another story, and we clearly would react differently to that
economic circumstance.
Fund Update
At the end of this quarter, 86% of the Fund was rated investment grade
(BBB/Baa and higher) by either Standard & Poor's Corporation or Moody's
Investors Service, Inc. The remainder, though not rated by either agency,
was deemed to be of comparable investment grade quality. The majority of
assets were invested in general obligation (19%), utility (13%),
transportation (10%), and water and sewer (11%) issues. The average maturity
of the Fund was approximately 23 years. As we stated earlier, in light of
our belief that the economy will experience a small pause and then steady
growth with moderate inflation, we intend to gradually increase coupons,
shorten the average maturity of the holdings and assume a more conservative
stance.
We look forward to reporting to you in the Fund's next quarterly report
to investors. Should you have any questions about your investment in the
Fund, please call The Shareholder Services Group at (800) 331-1710.
Sincerely,
Heath B. McLendon Joseph P. Deane
CHAIRMAN OF THE BOARD VICE PRESIDENT AND
INVESTMENT OFFICER
July 14, 1995
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<PAGE>
Unaudited Financial Data
Per Share of Common Stock
<TABLE>
<CAPTION>
NYSE NET DIVIDEND
RECORD PAY CLOSING ASSET DIVIDEND REINVESTMENT
DATE DATE PRICE* VALUE* PAID PRICE
-------- ---------- ------- ------- -------- ------------
<C> <S> <C> <C> <C> <C>
9/23/94 9/30/94 $11.250 $11.93 $0.060 $11.50
10/24/94 10/31/94 11.125 11.63 0.060 10.91
11/22/94 11/30/94 10.375 10.81 0.060 10.57
12/22/94 12/30/94 10.125 11.33 0.060 10.47
1/24/95 1/31/95 10.875 11.63 0.060 11.15
2/21/95 2/28/95 11.500 12.19 0.060 11.60
3/24/95 3/31/95 11.500 12.40 0.060 11.49
4/21/95 4/30/95 11.375 12.57 0.060 11.47
5/23/95 5/31/95 11.375 12.72 0.060 11.69
</TABLE>
Dividend Data**
For the Period Ended May 31, 1995
<TABLE>
<CAPTION>
EQUIVALENT TAXABLE DISTRIBUTION RATE
--------------------------------------------------
ASSUMING
PER SHARE ANNUALIZED ASSUMING ASSUMING ASSUMING 39.6%
DIVIDEND DISTRIBUTION 28% FEDERAL 31% FEDERAL 36% FEDERAL
FEDERAL
DISTRIBUTIONS RATE TAX BRACKET TAX BRACKET TAX BRACKET TAX
BRACKET
------------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$0.060 5.61% 7.79% 8.13% 8.77% 9.29%
<FN>
- ---------------
* As of record date.
** Based on May 31, 1995 net asset value of $12.84 per share.
</TABLE>
Each registered shareholder is considered a participant in the Portfolio's
Dividend Reinvestment Plan, unless the shareholder elects to receive all
dividends and distributions in cash, or unless the shareholder's shares are
registered in the name of a broker, bank or nominee (other than Smith Barney
Inc.) which does not provide the service. Questions and correspondence
concerning the Dividend Reinvestment Plan should be directed to The Shareholder
Services Group, Inc., P.O. Box 1376, Boston, Massachusetts 02104.
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<PAGE>
PORTFOLIO OF INVESTMENTS
MAY 31, 1995
<TABLE>
<S> <C> <C> <C>
KEY TO INSURANCE ABBREVIATIONS
AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Federal Guaranty Insurance Corporation
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
</TABLE>
<TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P (Note 1)
<C> <S> <C> <C> <C>
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MUNICIPAL BONDS AND NOTES -- 86.6%
ALASKA -- 1.7%
$ 4,400,000 Valdez, Alaska, Marine Terminal Revenue,
Series A, (BP Pipeline Project),
5.850% due 8/1/25 A1 AA- $ 4,356,000
CALIFORNIA -- 16.0%
2,000,000 California State, General Obligation Bonds, (AMBAC
insured),
5.900% due 3/1/25 Aaa AAA 2,017,500
9,000,000 California State, Department of Water Resources, (Central
Valley Project), Series L,
5.750% due 12/1/19 Aa AA 8,910,000
4,055,000 Concord, California, Redevelopment Agency, (Concord
Redevelopment Project), (AMBAC insured),
5.250% due 7/1/19 Aaa AAA 3,766,081
5,000,000 Los Angeles, California, Wastewater Systems Revenue,
(MBIA insured),
5.875% due 6/1/24 Aaa AAA 5,031,250
Los Angeles County, California, Transportation Authority
Revenue:
3,000,000 (MBIA insured),
5.625% due 7/1/18 Aaa AAA 2,951,250
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
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<PAGE>
PORTFOLIO OF INVESTMENTS
MAY 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P (Note 1)
- --------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
Los Angeles County, California, Transportation Authority
Revenue: (continued)
$ 4,000,000 Sales Tax Revenue, (MBIA insured),
6.000% due 7/1/23 Aaa AAA $ 4,040,000
San Francisco, California, City and County Sewer Revenue,
(FGIC insured):
5,000,000 5.375% due 10/1/16 Aaa AAA 4,768,750
3,000,000 5.375% due 10/1/22 Aaa AAA 2,827,500
2,000,000 San Pablo, California, Redevelopment Agency Subtax
Allocation, (FGIC insured),
5.250% due 12/1/23 Aaa AAA 1,860,000
2,000,000 Southern California, Public Power Authority Revenue,
Transmission Project Revenue, Subseries A, (MBIA
insured),
5.000% due 7/1/22 Aaa AAA 1,795,000
2,500,000 West & Central Basin, California, Financing Authority,
(AMBAC insured),
5.000% due 8/1/16 Aaa AAA 2,259,375
CONNECTICUT -- 2.6%
Connecticut State, General Obligation Bonds,
Series A:
2,500,000 5.700% due 3/15/10 Aa AA- 2,525,000
2,000,000 5.800% due 3/15/12 Aa AA- 2,027,500
2,000,000 5.800% due 3/15/13 Aa AA- 2,020,000
FLORIDA -- 8.4%
8,000,000 Dade County, Florida, Aviation Agency Revenue, Series B,
(MBIA insured),
6.000% due 10/1/24 Aaa AAA 8,030,000
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 5
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<PAGE>
PORTFOLIO OF INVESTMENTS
MAY 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P (Note 1)
- --------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
FLORIDA (CONTINUED)
$ 10,000,000 Florida State Board of Education, Unlimited Tax General
Obligation Bonds, Series D,
5.200% due 6/1/23 Aa AA $ 9,187,500
3,500,000 Martin County, Florida, Industrial Development Revenue,
(Indiantown Cogeneration), Series A,
7.875% due 12/15/25 Baa3 BBB- 3,854,375
GEORGIA -- 0.2%
2,500,000 Colquitt County, Georgia, Development Authority Revenue,
Escrowed in 100% Treasuries,
Zero Coupon due 12/1/21 Aaa NR 409,375
ILLINOIS -- 7.7%
Illinois Health Facilities Authority:
7,000,000 (Ingalls Health System Project), (MBIA insured),
6.250% due 5/15/24 Aaa AAA 7,140,000
2,575,000 (Rush Presbyterian Project), (MBIA insured),
5.500% due 11/15/25 Aaa AAA 2,394,750
10,000,000 Illinois Municipal Electric Agency, (AMBAC insured),
5.750% due 2/1/21 Aaa AAA 9,837,500
INDIANA -- 1.1%
2,500,000 Petersburg, Indiana, Industrial Pollution Control
Revenue, Indianapolis Power & Light Corporation,
6.625% due 12/1/24 Aa2 AA- 2,640,625
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 6
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
MAY 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P (Note 1)
- --------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
MARYLAND -- 4.5%
$ 11,000,000 Maryland State, Energy Financing Administration Revenue,
Solid Waste Disposal Revenue, (Hagerstown Project),
9.000% due 10/15/16 NR NR $11,206,250
MASSACHUSETTS -- 7.7%
4,680,000 Massachusetts Bay Transportation Authority,
Series B,
5.875% due 3/1/14 A1 A+ 4,709,250
2,000,000 Massachusetts State Health & Education Revenue, (MBIA
insured),
5.375% due 7/1/24 Aaa AAA 1,892,500
2,000,000 Massachusetts State Housing Finance Revenue, Series A,
(MBIA insured),
6.100% due 7/1/15 Aaa AAA 2,015,000
10,000,000 Massachusetts State Industrial Financing Agency Revenue,
(Massachusetts Recycling Association),
9.000% due 8/1/16 NR NR 10,625,000
MICHIGAN -- 0.9%
2,000,000 Midland County, Michigan, Economic Development
Corporation, Pollution Control Revenue, Limited
Obligation, Series B,
9.500% due 7/23/09 NR NR 2,162,500
MINNESOTA -- 1.9%
5,000,000 St. Paul, Minnesota, Housing & Redevelopment Authority
Revenue, (Civic Center Project), (MBIA insured),
5.550% due 11/1/23 Aaa AAA 4,881,250
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 7
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
MAY 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P (Note 1)
- --------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
NEBRASKA -- 0.4%
$ 1,000,000 Nebraska Investment Financing Authority Single Family
Housing Revenue, Series A, (GNMA insured),
6.700% due 9/1/26 NR AAA $ 1,028,750
NEVADA -- 1.6%
4,000,000 Clark County, Nevada, School District, Series A, (MBIA
insured),
5.875% due 6/15/14 Aaa AAA 4,030,000
NEW YORK -- 7.5%
4,000,000 Battery Park, New York, Revenue Authority, Series A, Sr.
Lien,
5.700% due 11/1/20 A1 AA 3,855,000
New York State Local Government Assistance:
5,000,000 5.250% due 4/1/19 A A 4,631,250
4,500,000 5.500% due 4/1/23 A A 4,297,500
4,690,000 New York State Medical
Care Facilities, Healthcare
Project A,
5.850% due 2/15/33 Aa NR 4,643,100
1,545,000 New York State Thruway Authority, General Revenue, Series
B, (MBIA insured),
5.000% due 1/1/20 Aaa AAA 1,388,569
OHIO -- 0.8%
2,000,000 Ohio State, Water Development Authority Revenue, Fresh
Water Services, (AMBAC insured),
5.900% due 12/1/21 Aaa AAA 2,035,000
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 8
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
MAY 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P (Note 1)
- --------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
PENNSYLVANIA -- 1.9%
$ 5,000,000 Allegheny County, Pennsylvania, Hospital Development
Revenue, (FGIC insured),
5.625% due 10/1/20 Aaa AAA $ 4,881,250
TENNESSEE -- 0.8%
2,000,000 Loudon County, Tennessee, Industrial Development Board,
Solid Waste Disposal Revenue, (Kimberly Clark),
6.200% due 2/1/23 Aa2 AA 2,022,500
TEXAS -- 8.2%
5,000,000 Arlington, Texas, Independent School District,
5.750% due 2/15/21 Aaa NR 5,006,250
2,500,000 Burleson, Texas, Independent School District,
6.750% due 8/1/24 Aaa NR 2,696,875
3,650,000 El Paso, Texas, Independent School District,
5.900% due 2/15/13 Aaa AAA 3,686,500
9,035,000 Texas State Veterans Housing, General Obligation, Series
B-4,
6.700% due 12/1/24 Aa AA 9,328,638
VIRGINIA -- 2.2%
Chesapeake Bay, Virginia, Bridge & Tunnel Revenue, (FGIC
insured):
2,000,000 5.700% due 7/1/08 Aaa AAA 2,042,500
2,000,000 5.875% due 7/1/10 Aaa AAA 2,045,000
1,250,000 Virginia College Building Authority,
5.750% due 4/1/14 NR A+ 1,218,750
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 9
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
MAY 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P (Note 1)
- --------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
WASHINGTON -- 6.9%
$ 3,000,000 Clark County, Washington, School District No. 037,
5.900% due 12/1/12 Aa NR $ 3,026,250
Washington State Public Power, (Nuclear Project No. 3),
Series B:
6,000,000 5.625% due 7/1/12 Aa AA 5,730,000
5,000,000 (MBIA insured),
5.600% due 7/1/15 Aaa AAA 4,806,250
4,250,000 5.500% due 7/1/18 Aa AA 3,910,000
WEST VIRGINIA -- 3.6%
10,000,000 Marion County, West Virginia, Community Solid Waste
Disposal Facilities Revenue, (American Paper Recycling
Project),
7.750% due 12/1/11 NR NR 9,150,000
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TOTAL MUNICIPAL BONDS AND NOTES
(COST $205,779,650) 217,601,013
- --------------------------------------------------------------------------
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 10
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
MAY 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Rating Market
(unaudited) Value
Face Value Moody's S&P (Note 1)
- --------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM TAX-EXEMPT INVESTMENTS -- 5.7%
ALASKA -- 0.2%
$ 375,000 Valdez, Alaska, Marine Terminal Revenue, (Exxon Pipeline
Company Project),
4.000% due 12/1/33+ NR AAA $ 375,000
LOUISIANA -- 1.1%
2,700,000 Ascension Parish, Louisiana, Revenue,
4.250% due 3/1/25+ Aa3 NR 2,700,000
MISSOURI -- 2.6%
Kansas City, Missouri, Industrial Development Authority,
Hospital Revenue, (MBIA Insured):
3,700,000 4.100% due 10/15/14+ Aaa AAA 3,700,000
2,900,000 4.100% due 4/15/15+ Aaa AAA 2,900,000
NEW YORK -- 1.4%
1,100,000 New York City, New York, General Obligation Bonds,
Subseries A4,
4.200% due 8/1/21+ Aa3 A+ 1,100,000
2,400,000 New York City, New York, Municipal Water Financing
Revenue, Series G, (FGIC insured),
4.000% due 6/15/24+ Aaa AAA 2,400,000
TEXAS -- 0.4%
1,000,000 Gulf Coast Waste Disposal Authority, Texas, Pollution
Control Revenue, (Amoco Oil Company Project),
4.000% due 10/1/17+ Aa1 AAA 1,000,000
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TOTAL SHORT-TERM
TAX-EXEMPT INVESTMENTS
(COST $14,175,000) 14,175,000
- --------------------------------------------------------------------------
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 11
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
MAY 31, 1995 (CONTINUED)
<TABLE>
<CAPTION>
Market
Value
(Note 1)
- --------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TOTAL INVESTMENTS
(COST $219,954,650*) 92.3% $231,776,013
OTHER ASSETS AND
LIABILITIES (NET) 7.7 19,443,449
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NET ASSETS 100.0% $251,219,462
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<FN>
* Aggregate cost for Federal tax purposes.
+ Variable rate municipal notes are payable upon not more than one business
day's notice.
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 12
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
MAY 31, 1995 (CONTINUED)
SUMMARY OF MUNICIPAL BONDS BY COMBINED RATINGS
<TABLE>
<CAPTION>
STANDARD
& PERCENT
MOODY'S POOR'S OF VALUE
<S> <C> <C> <C>
Aaa or AAA 48.3%
Aa AA 29.3
A A 6.4
Baa BBB 1.7
NR NR 14.3
--------
100.0%
--------
--------
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 13
- ------------------------------
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------
ASSETS:
Investments, at value (Cost $219,954,650) (Note 1)
See accompanying schedule $231,776,013
Cash 6,953
Receivable for investment securities sold 15,979,925
Interest receivable 4,419,286
- ---------------------------------------------------------------------------
TOTAL ASSETS 252,182,177
- ---------------------------------------------------------------------------
LIABILITIES:
Dividends payable $622,319
Investment advisory fee payable (Note 2) 189,199
Transfer agent fees payable (Note 2) 15,644
Custodian fees payable (Note 2) 8,800
Accrued expenses and other payables 126,753
- ---------------------------------------------------------------------------
TOTAL LIABILITIES 962,715
- ---------------------------------------------------------------------------
NET ASSETS $251,219,462
- ---------------------------------------------------------------------------
NET ASSETS consist of:
Undistributed net investment income $ 1,683,484
Accumulated net realized gain on investments sold 3,394,031
Unrealized appreciation of investments 11,821,363
Par value 19,558
Paid-in capital in excess of par value 234,301,026
- ---------------------------------------------------------------------------
TOTAL NET ASSETS $251,219,462
- ---------------------------------------------------------------------------
NET ASSET VALUE per share
($251,219,462 DIVIDED BY 19,558,334 shares of common
stock outstanding) $12.84
- ---------------------------------------------------------------------------
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 14
- ------------------------------
<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED MAY 31, 1995*
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------
INVESTMENT INCOME:
Interest $14,520,901
- ---------------------------------------------------------------------------
EXPENSES:
Investment advisory fee (Note 2) $1,955,747
Legal and audit fees 83,107
Transfer agent fees (Note 2) 55,638
Custodian fees (Note 2) 48,799
Directors' fees and expenses (Note 2) 39,890
Other 92,736
- ---------------------------------------------------------------------------
TOTAL EXPENSES 2,275,917
- ---------------------------------------------------------------------------
NET INVESTMENT INCOME 12,244,984
- ---------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS (Notes 1 and 3):
Net realized gain on investments during the
period 3,394,031
Net unrealized appreciation of investments
during the period 11,821,363
- ---------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS 15,215,394
- ---------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $27,460,378
- ---------------------------------------------------------------------------
<FN>
* The Portfolio commenced operations on June 24, 1994.
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 15
- ------------------------------
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD ENDED
5/31/95*
<S> <C>
- ----------------------------------------------------------------
Net investment income $ 12,244,984
Net realized gain on investments during the
period 3,394,031
Net unrealized appreciation of investments
during the period 11,821,363
- ----------------------------------------------------------------
Net increase in net assets resulting from
operations 27,460,378
Offering costs charged to paid-in-capital
(Note 4) (379,424)
Distributions to shareholders from net
investment income (10,561,500)
Net increase in net assets from Fund share
transactions (Note 4) 234,600,000
- ----------------------------------------------------------------
Net increase in net assets 251,119,454
NET ASSETS
Beginning of period 100,008
- ----------------------------------------------------------------
End of period (including undistributed net
investment income of $1,683,484) $251,219,462
- ----------------------------------------------------------------
<FN>
* The Portfolio commenced operations on June 24, 1994.
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 16
- ------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
PERIOD
ENDED
5/31/95*
<S> <C>
- -------------------------------------------------------------------
Operating performance:
Net asset value, beginning of period $12.00
- -------------------------------------------------------------------
Net investment income 0.63
Net realized and unrealized gain on
investments 0.77
- -------------------------------------------------------------------
Net increase in net assets resulting from
operations 1.40
- -------------------------------------------------------------------
Offering costs charged to paid-in capital (0.02)
Less distributions:
Dividends from net investment income (0.54)
- -------------------------------------------------------------------
Net asset value, end of period $12.84
- -------------------------------------------------------------------
Market value, end of period $11.625
- -------------------------------------------------------------------
Total return** 1.65%
- -------------------------------------------------------------------
Ratios to average net assets/supplemental
data:
Net assets, end of period (in 000's) $251,219
Ratio of operating expenses to average net
assets 1.05%+
Ratio of net investment income to average
net assets 5.63%+
Portfolio turnover rate 115%
- -------------------------------------------------------------------
<FN>
* The Portfolio commenced operations on June 24, 1994.
** Total return represents aggregate total return based on market value for the
period.
+ Annualized.
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 17
- ------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995
1. SIGNIFICANT ACCOUNTING POLICIES.
Greenwich Street Municipal Fund Inc. (the "Portfolio") was organized as a
corporation under the laws of the State of Maryland on February 19, 1993, and
changed its name on April 15, 1994, from Municipal Opportunity Fund Inc. to its
present name. The Fund is registered with the Securities and Exchange
Commission
as a non-diversified, closed-end management investment company under the
Investment Company Act of 1940, as amended. The policies described below are
followed consistently by the Portfolio in the preparation of its financial
statements in conformity with generally accepted accounting principles.
PORTFOLIO VALUATION: Investments are valued by The Boston Company Advisors,
Inc. ("Boston Advisors") after consultation with an independent pricing service
(the "Service") approved by the Board of Directors. When, in the judgment of
the
Service, quoted bid prices for investments are readily available and are
representative of the bid side of the market, these investments are valued at
the mean between the quoted bid prices and asked prices. Investments for which,
in the judgment of the service, no readily obtainable market quotations are
available, are carried at fair value as determined by the Service, based on
methods that include consideration of: yields or prices of municipal
obligations
of comparable quality, coupon, maturity and type; indications as to values from
dealers; and general market conditions. The Service may use electronic data
processing techniques and/or a matrix system to determine valuations.
Short-term
investments that mature in fewer than 60 days are valued at amortized cost.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded as of the trade date. Securities purchased or sold on a when-issued or
delayed-delivery basis may be settled a month or more after trade date.
Realized
gains and losses on investments sold are recorded on the basis of identified
cost. Interest income is recorded on the accrual basis.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the
Portfolio to make monthly distributions of substantially all its net investment
income to shareholders. Net realized capital gains, if any, will be distributed
to shareholders at least once a year. In addition, in order to avoid the
application of a 4.00% nondeductible excise tax on certain undistributed
amounts
of ordinary income and capital gains, the Portfolio may make an additional
distribution shortly before December 31 in each year of any undistributed
ordinary income or capital gains and expects to
- ------------------------------ 18
------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995 (CONTINUED)
make any other distributions as are necessary to avoid the application of this
tax. To the extent that net realized capital gains can be offset by capital
losses and loss carryforwards, it is the policy of the Portfolio not to
distribute such gains.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments of income and gains on various investment securities held by the
Portfolio, timing differences and differing characterization of distributions
made by the Portfolio.
FEDERAL INCOME TAXES: It is the policy of the Portfolio to qualify as a
regulated investment company, if such qualification is in the best interest of
its shareholders, by complying with the requirements of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies and by
distributing substantially all of its earning to its shareholders. Therefore,
no
Federal income tax provision is required.
2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS.
The Portfolio has entered into an investment advisory agreement (the
"Advisory Agreement") with Greenwich Street Advisors, formerly a division of
Mutual Management Corp., which was transferred effective November 7, 1994 to
Smith Barney Mutual Funds Management Inc. ("SBMFM"). SBMFM manages the
securities held by the Portfolio and provides certain administration services
to
the Portfolio. Mutual Management Corp. and SBMFM are both wholly owned
subsidiaries of Smith Barney Holdings Inc. ("Holdings"), which in turn is a
wholly owned subsidiary of Travelers Group Inc. Under the Advisory Agreement,
the Portfolio pays a monthly fee at the annual rate of 0.90% of the value of
its
average daily net assets.
The Portfolio and SBMFM have entered into a sub-administration agreement
(the
"Sub-Administration Agreement") with Boston Advisors, an indirect wholly owned
subsidiary of Mellon Bank Corporation ("Mellon"). Under the Sub-Administration
agreement, SBMFM pays Boston Advisors a portion of its advisory fee at a rate
agreed upon from time to time between SBMFM and Boston Advisors.
No officer, director, or employee of Smith Barney Inc. ("Smith Barney") or
any of its affiliates receives any compensation from the Portfolio for serving
as a Director or officer of the Portfolio. The Portfolio pays each
- ------------------------------ 19
------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995 (CONTINUED)
Director, who is not an officer, director or employee of Smith Barney or any of
its affiliates $5,000 per annum plus $500 per meeting attended and reimburses
each such director for travel and out-of-pocket expenses.
Boston Safe Deposit and Trust Company, an indirect wholly owned subsidiary
of
Mellon, serves as the Portfolio's custodian (see Note 5). The Shareholder
Services Group, Inc., a subsidiary of First Data Corporation, serves as the
Portfolio's transfer agent.
3. SECURITIES TRANSACTIONS.
For the period ended May 31, 1995, cost of purchases and proceeds from sales
of investment securities (excluding short-term investments) aggregated
$438,825,215 and $237,307,618, respectively.
At May 31, 1995, aggregate gross unrealized appreciation for all securities
in which there was an excess of value over tax cost amounted to $12,518,119 and
aggregate gross unrealized depreciation for all securities in which there was
an
excess of tax cost over value amounted to $696,756.
4. PORTFOLIO SHARES.
At May 31, 1995, 500 million shares of common stock, with a par value of
$0.001 per share were authorized.
Common Stock transactions were as follows:
<TABLE>
<CAPTION>
Period Ended
5/31/95*
<S> <C> <C>
--------------------------------------------------------------------
<CAPTION>
SHARES AMOUNT
<S> <C> <C>
--------------------------------------------------------------------
INITIAL PUBLIC OFFERING (6/24/94) 17,000,000 $204,000,000
SUBSEQUENT OFFERING (7/20/94) 2,550,000 30,600,000
--------------------------------------------------------------------
TOTAL INCREASE 19,550,000 $234,600,000+
--------------------------------------------------------------------
<FN>
* The Portfolio commenced operations on June 24, 1994.
+ Before offering costs charged to paid-in capital of $379,424.
</TABLE>
5. SUBSEQUENT EVENT.
The entire Smith Barney mutual fund complex is currently in the process of
transferring all of its custodian activity from Boston Safe Deposit and Trust
Company to PNC Bank. The timing of the custodian change for the Portfolio will
correspond to the timing of the change in the provider of day-to-day accounting
services from Boston Advisors to Smith Barney Mutual Funds Management, which is
scheduled to occur July, 1995.
- ------------------------------ 20
------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
QUARTERLY RESULTS OF OPERATIONS
Net Increase/
Net Realized (Decrease)
and Unrealized in Net Assets
Investment Net Investment Gain/(Loss) on Resulting From
Income Income Investments Operations
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
<CAPTION>
QUARTER PER PER PER PER
ENDED TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL
SHARE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------
August 31,
1994* $2,522,206 $.13 $2,049,342 $.11 $ 4,076,999 $ .20 $ 6,126,341 $ .31
November 30,
1994 3,946,853 .20 3,334,708 .17 (22,644,150) (1.16) (19,309,442) (.99)
February 28,
1995 3,990,277 .20 3,363,082 .17 24,095,398 1.23 27,458,480 1.40
May 31, 1995 4,061,565 .21 3,497,852 .18 9,687,147 .50 13,184,999 .68
-------------------------------------------------------------------------------------
<FN>
* The Fund commenced operations on June 24, 1994.
</TABLE>
- ------------------------------ 21
------------------------------
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
GREENWICH STREET MUNICIPAL FUND INC.:
We have audited the accompanying statement of assets and liabilities of
Greenwich Street Municipal Fund Inc., including the schedule of portfolio
investments, as of May 31, 1995, and the related statement of operations and
changes in net assets and the financial highlights for the period from June 24,
1994 (commencement of operations) to May 31, 1995. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our 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 financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of May
31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates
made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to
above present fairly, in all material respects, the financial position of
Greenwich Street Municipal Fund Inc. as of May 31, 1995, the results of its
operations, the changes in its net assets and the financial highlights for the
period from June 24, 1994 (commencement of operations) to May 31, 1995, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
July 12, 1995
- ------------------------------ 22
------------------------------
<PAGE>
TAX INFORMATION (UNAUDITED)
YEAR ENDED MAY 31, 1995
Of the dividends paid by the Fund from net investment income for the year
ended May 31, 1995, 100% is tax-exempt for regular Federal income tax purposes.
- ------------------------------ 23
------------------------------
<PAGE>
ADDITIONAL INFORMATION
(UNAUDITED)
PORTFOLIO MANAGEMENT
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
has
served the Portfolio in these capacities since the commencement of the
Portfolio's operations.
DIVIDEND REINVESTMENT PLAN
Under the Portfolio's Dividend Reinvestment Plan (the "Plan"), a shareholder
whose Common Stock is registered in his own name will have all distributions
reinvested automatically by The Shareholder Services Group, Inc. ("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 Common Stock under the Plan, but only if the service is
provided by the broker or nominee, and the broker or nominee makes an election
on behalf of the shareholder to participate in the Plan. Distributions with
respect to Common Stock registered in the name of Smith Barney will
automatically be reinvested by Smith Barney in additional shares under the Plan
unless the shareholder elects to receive distributions in cash. A shareholder
who holds Common Stock registered in the name of a broker or other nominee may
not be able to transfer the Common Stock to another broker or nominee and
continue to participate in the Plan. Investors who own Common Stock registered
in street name should consult their broker or nominee for details regarding
reinvestment.
The number of shares of Common Stock distributed to participants in the Plan
in lieu of a cash dividend is determined in the following manner. Whenever the
market price of the Portfolio's Common Stock is equal to or exceeds the net
asset value per share, participants will be issued shares of Common Stock
valued
at the greater (i) net asset value per share or (ii) 95% of the then current
market price. If the net asset value per share of Common Stock at the time of
valuation exceeds the market price of the Common Stock, TSSG will buy shares of
the Portfolio's Common Stock on the open market, on the New York Stock
Exchange,
Inc. or elsewhere, beginning on the payment date of the dividend or
distribution, until it has expended for such purchases all of the cash that
would otherwise be payable to the participants.
- ------------------------------ 24
------------------------------
<PAGE>
ADDITIONAL INFORMATION
(UNAUDITED) (CONTINUED)
TSSG may commence purchasing shares beginning on the record date for the
dividend or distribution. The number of purchased shares that will then be
credited to the participants' accounts will be based on the average per share
purchase price of the shares so purchased, including brokerage commissions. If
TSSG commences purchases in the open market and the market price of the shares
subsequently exceeds net asset value before the completion of the purchases,
TSSG will attempt to terminate purchases in the open market and cause the
Portfolio to issue the remaining dividend or distribution in shares at net
asset
value per share. In this case, the number of shares of Common Stock received by
the participant will be based on the weighted average of prices paid for shares
purchased in the open market and the price at which the Portfolio issues the
remaining shares.
Plan participants are not subject to any charge for reinvesting dividends or
capital gains distributions. Each Plan participant will, however, bear a
proportionate share of brokerage commissions incurred with respect to TSSG's
open market purchases of shares of Common Stock in connection with reinvestment
of dividends or capital gains distributions. For the fiscal period ending May
31, 1995, $16,921 in brokerage commissions were incurred.
A participant in the Plan will be treated for Federal income tax purposes as
having received, on the dividend payment date, a dividend or distribution in an
amount equal to the cash that the participant could have received instead of
shares of Common Stock.
A shareholder may terminate participation in the Plan at any time by
notifying TSSG in writing. A termination will be effective immediately if
notice
is received by TSSG not less than 10 days before any dividend or distribution
record date. Otherwise, the termination will be effective, and only with
respect
to any subsequent dividends or distributions, on the first trading day after
the
dividend or distribution has been credited to the participant's account in
additional shares of Common Stock of the Portfolio. Upon termination according
to a participant's instructions, TSSG will either (a) issue certificates for
the
whole shares credited to a Plan account and a check representing any fractional
shares or (b) sell the shares in the market. There will be $5.00 fee assessed
for liquidation service, plus brokerage commissions, and TSSG is authorized to
sell a sufficient number of a participant's shares to cover such amounts.
The Plan is described in more detail on pages 38-40 of the Portfolio's
Prospectus dated June 16, 1994. Information concerning the Plan may be obtained
from TSSG at 1-(800) 331-1710.
- ------------------------------ 25
------------------------------
<PAGE>
GREENWICH STREET MUNICIPAL
FUND INC.
DIRECTORS
Charles F. Barber
Allan J. Bloostein
Martin Brody
Dwight B. Crane
Robert A. Frankel
Heath B. McLendon
OFFICERS
Heath B. McLendon
CHAIRMAN OF THE BOARD AND
INVESTMENT OFFICER
Jessica Bibliowicz
PRESIDENT
Lewis E. Daidone
SENIOR VICE PRESIDENT
AND TREASURER
Joseph P. Deane
VICE PRESIDENT
AND INVESTMENT OFFICER
David Fare
INVESTMENT OFFICER
Christina T. Sydor
SECRETARY
INVESTMENT ADVISER
Greenwich Street Advisors
388 Greenwich Street
New York, New York 10013
ADMINISTRATOR
Smith Barney Mutual Funds
Management, Inc.
388 Greenwich Street
New York, New York 10013
AUDITORS AND COUNSEL
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, Massachusetts 02109
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
TRANSFER AGENT
The Shareholder Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
CUSTODIAN
PNC Bank N.A.
17th and Chestnut Streets
Philadelphia, Pennsylvania 19103
- ------------------------------ 26
------------------------------
<PAGE>
This report is to the shareholders of
Greenwich Street Municipal Fund Inc.
for their information. It is not a Prospectus,
circular or representation intended for use in the
purchase or sale of shares of the Portfolio or any
securities mentioned in the report.
FD 0988 7/95
