<PAGE>
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.
NOVEMBER 30, 1994
DEAR SHAREHOLDER:
The end of the past quarter saw increased volatility in the bond market.
Both the taxable and tax-exempt markets came under price pressure because of
large tax-related selling by mutual funds during late October 1994. This
generally resulted in a decrease in prices for fixed-income securities,
which was reflected in the decline in the net asset value per share of
Greenwich Street Municipal Fund Inc. (the "Fund"). Many other closed-end
funds -- particularly those that are leveraged -- experienced additional
selling pressure during this period. Unlike those funds, the Fund is not
leveraged, and we think that over time this should allow for a lower
volatility of net asset value per share which should be reflected in its
market value.
The Fund paid tax-exempt dividends totaling $0.18 per share during the
past quarter. This equates to an annualized distribution rate of 6.47% based
on its November 30, 1994 net asset value per share of $11.12 and 6.86% based
on the New York Stock Exchange closing price of $10.50 on that same date.
The Fund continues to trade on the New York Stock Exchange at a discount to
its net asset value, offering investors an opportunity to purchase a
portfolio of high-quality, tax-exempt, income-producing securities at an
attractive price.
Despite the volatility of the municipal bond market over the past
months, our outlook for the future is much more positive. We believe that
the Federal Reserve has done a credible job of fighting inflation, and this
should translate into lower long-term interest rates as well as lower
volatility in the bond market.
For the near future, our investment strategy will be to add to the
Fund's portfolio AA- and AAA-rated securities with coupons that are at a
reasonable market discount to current rates. We believe that this
CONTINUED
- --------------------------- 1
------------------------------
<PAGE>
strategy should provide the Fund with an opportunity to see an increase in
the value of its holdings during a better market environment, yet at the
same time minimize its exposure to risk that higher-coupon bonds could be
prematurely called.
At the end of this reporting period, nearly three-quarters of the Fund's
assets were invested in municipal bonds rated AAA/Aaa and AA/Aa by Standard
& Poor's Corporation or Moody's Investors Service, Inc. The Fund's weighted
average maturity was 26.5 years. The majority of the holdings were in
hospital, utility, and water/sewer issues.
Please remember that The Shareholder Services Group, Inc., the Fund's
transfer agent, can be reached at (800) 331-1710 should you have any
questions about your investment in the Fund. We appreciated your confidence
during the difficult investment environment of 1994, and join you in looking
forward to a more benign 1995.
Sincerely,
Heath B. McLendon Joseph P. Deane
CHAIRMAN OF THE BOARD VICE PRESIDENT AND
INVESTMENT OFFICER
January 16, 1995
- ------------------------------ 2
------------------------------
<PAGE>
UNAUDITED FINANCIAL DATA
PER SHARE OF COMMON STOCK
<TABLE>
<CAPTION>
CAPITAL
NYSE NET GAINS DIVIDEND
RECORD PAY CLOSING ASSET DIVIDEND DIVIDEND REINVESTMENT
DATE DATE PRICE* VALUE* PAID PAID PRICE
--------------- ---------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
6/23/94............................... 6/30/94*** N/A N/A -- -- --
7/22/94............................... 7/31/94 $11.875 $12.11 -- -- --
8/24/94............................... 8/31/94 12.125 12.22 -- -- --
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
</TABLE>
DIVIDEND DATA**
FOR THE PERIOD ENDED NOVEMBER 30, 1994
<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 6.47% 8.99% 9.38% 10.11% 10.71%
<FN>
- -------------
* As of record date.
** Based on November 30, 1994 net asset value of $11.12 per share.
*** The Portfolio commenced operations on June 24, 1994.
</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.
- --------------------------- 3
------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
KEY TO INSURANCE ABBREVIATIONS
AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Federal Guaranty Insurance Corporation
MBIA -- Municipal Bond Investors Assurance
</TABLE>
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
<C> <S> <C> <C> <C>
- ---------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--103.9%
ALASKA -- 4.1%
Valdez, Alaska, Marine Terminal Revenue:
$ 4,400,000 Series A, (BP Pipeline Project),
5.850% due 8/1/25 A1 AA- $ 3,558,500
7,000,000 Series C,
5.650% due 12/1/28 A1 AA- 5,460,000
CALIFORNIA -- 24.7%
9,000,000 California State, Department of Water Revenue, Series L,
5.750% due 12/1/19 Aa AA 7,638,750
2,000,000 California Statewide Community Development Revenue, (St.
Joseph Health System Group),
6.500% due 7/1/15 Aa AA 1,857,500
4,000,000 Los Angeles, California, Convention & Exhibition Center
Authority, Lease Revenue, (MBIA insured),
5.125% due 8/15/21 Aaa AAA 3,070,000
4,000,000 Los Angeles, California, Transportation Authority Revenue,
(MBIA insured),
6.000% due 7/1/23 Aaa AAA 3,495,000
10,000,000 Los Angeles, California, Wastewater Systems Revenue, (MBIA
insured),
5.875% due 6/1/24 Aaa AAA 8,575,000
1,850,000 Pittsburg, California, Redevelopment Agency, Series A,
(AMBAC insured),
5.000% due 8/1/17 Aaa AAA 1,417,562
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 4
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
CALIFORNIA (CONTINUED)
$ 2,985,000 Placer County, California,
Water Agency Revenue,
(MBIA insured),
5.600% due 7/1/21 Aaa AAA $ 2,458,894
10,000,000 Poway, California, Redevelopment Agency Tax Revenue, (FGIC
insured),
5.500% due 12/15/23 Aaa AAA 8,087,500
2,000,000 Rancho Cucamonga, California, (MBIA insured),
5.500% due 9/1/23 Aaa AAA 1,615,000
3,975,000 Sacramento, California, Municipal Utilities District,
Series D, (MBIA insured),
5.250% due 11/15/20 Aaa AAA 3,115,406
3,000,000 San Francisco, California, City and County Sewer Revenue,
(FGIC insured),
5.375% due 10/1/22 Aaa AAA 2,381,250
45,045,000 San Joaquin Hills, California,
Transportation Authority,
Corridor Agency Toll Road,
Sr. Lien Revenue,
Zero Coupon due 1/1/23 NR NR 4,954,950
2,000,000 San Pablo, California, Redevelopment Agency, Subtax
Allocation, (FGIC insured),
5.250% due 12/1/23 Aaa AAA 1,552,500
2,000,000 Southern California, Public Power Authority Revenue,
Transmission Project Revenue, (MBIA insured),
5.000% due 7/1/22 Aaa AAA 1,497,500
2,500,000 West & Central Basin, California, Financing Authority,
(AMBAC insured),
5.000% due 8/1/16 Aaa AAA 1,925,000
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 5
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
FLORIDA -- 6.3%
Florida State Board of Education Revenue, Series D:
$ 1,915,000 5.125% due 6/1/22 Aa AA $ 1,467,369
11,650,000 5.200% due 6/1/23 Aa AA 8,999,625
3,500,000 Martin County, Florida, Industrial Development Revenue,
7.875% due 12/15/25 Baa3 BBB- 3,465,000
GEORGIA -- 0.2%
2,500,000 Colquitt County, Georgia, Development Authority Revenue,
Zero Coupon due 12/1/21 Aaa NR 353,125
ILLINOIS -- 8.9%
Illinois Health Facilities Authority Revenue:
2,575,000 (Ingalls Health System Project), (MBIA insured),
5.500% due 11/15/25 Aaa AAA 2,047,125
10,000,000 (Rush Presbyterian Project), (MBIA insured),
6.250% due 5/15/24 Aaa AAA 8,950,000
10,000,000 Illinois Municipal Electric
Agency Revenue,
(AMBAC insured),
5.750% due 2/1/21 Aaa AAA 8,450,000
KENTUCKY -- 0.5%
1,445,000 Boone County, Kentucky,
Pollution Control Revenue,
Gas & Electrical,
(MBIA insured),
5.500% due 1/1/24 Aaa AAA 1,170,450
LOUISIANA -- 3.7%
6,650,000 Port New Orleans, Louisiana,
Industrial Development
Agency Revenue, (Avondale
Industrial Project),
8.500% due 6/1/14 Aaa AAA 6,608,438
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 6
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
LOUISIANA (CONTINUED)
$ 1,600,000 Tangipahoa Parish, Louisiana,
Hospital Revenue,
(AMBAC insured),
6.250% due 2/1/24 Aaa AAA $ 1,438,000
MARYLAND -- 2.8%
6,000,000 Maryland State, Energy Financing Administration Revenue,
Solidwaste Disposal Revenue,
9.000% due 10/15/16 NR NR 5,992,500
MASSACHUSETTS -- 3.9%
2,000,000 Massachusetts State Health &
Education Revenue,
(MBIA insured),
5.375% due 7/1/24 Aaa AAA 1,572,500
7,000,000 Massachusetts State Industrial Financing Agency Revenue,
Massachusetts Recycling Association,
9.000% due 8/1/16 NR NR 6,991,250
MICHIGAN -- 1.0%
2,000,000 Midland County, Michigan, Economic Development
Corporation, Pollution Control Revenue, Ltd. Obligation,
Series B,
9.500% due 7/23/09 NR NR 2,095,000
MINNESOTA -- 6.2%
6,500,000 St. Cloud, Minnesota, Hospital Facilities Revenue, Series
C, (AMBAC insured),
5.300% due 10/1/20 Aaa AAA 5,175,625
10,000,000 St. Paul, Minnesota, Housing & Redevelopment Authority
Revenue, (Civic Center Project), (MBIA insured),
5.550% due 11/1/23 Aaa AAA 8,237,500
NEW JERSEY -- 3.2%
3,750,000 New Jersey Building Authority,
5.000% due 6/15/18 Aa AA- 2,882,812
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 7
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
NEW JERSEY (CONTINUED)
$ 5,190,000 New Jersey Sports & Exposition, Series A,
5.200% due 1/1/20 Aa NR $ 4,080,637
NEW YORK -- 15.6%
Battery Park, New York, Revenue Authority, Series A:
2,000,000 5.700% due 11/1/20 A A 1,670,000
4,650,000 5.800% due 11/1/22 A A 3,783,937
9,440,000 New York City Municipal Water Financing Authority Revenue,
5.500% due 6/15/19 A A- 7,575,600
1,500,000 New York State Energy, Research and Development Revenue,
(Con Edison),
5.250% due 8/15/20 Aa3 A+ 1,121,250
New York State Local Government Assistance:
5,000,000 5.250% due 4/1/19 A A 3,837,500
4,500,000 5.500% due 4/1/23 A A 3,532,500
4,690,000 New York State Medical Care Facilities, Series A,
5.850% due 2/15/33 Aa NR 3,798,900
New York State Thruway Authority:
1,545,000 General Revenue, Series B, (MBIA insured),
5.000% due 1/1/20 Aaa AAA 1,160,681
5,000,000 (Local Highway & Bridge Project), (MBIA insured),
5.750% due 4/1/13 Aaa AAA 4,400,000
1,500,000 Niagara, New York,
Transportation Authority
Revenue, (MBIA insured),
6.000% due 4/1/24 Aaa AAA 1,314,375
2,505,000 Triborough Bridge & Tunnel Authority, New York, General
Purpose, Series A,
5.000% due 1/1/24 Aa A+ 1,822,388
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 8
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
NORTH CAROLINA -- 4.1%
$10,720,000 North Carolina Municipal Power Agency, Refunding Revenue,
Catawba Electrical Revenue,
5.750% due 1/1/15 A A $ 8,870,800
OKLAHOMA -- 2.0%
5,000,000 McGee Creek, Oklahoma, Development Authority, Water
Revenue, (MBIA insured),
6.000% due 1/1/23 Aaa AAA 4,381,250
PENNSYLVANIA -- 0.4%
1,000,000 Pennsylvania State University, Second Refunding Revenue,
5.500% due 8/15/16 A1 AA- 816,250
SOUTH CAROLINA -- 3.4%
10,000,000 South Carolina State Public Service Authority Revenue,
Series C, (FGIC insured),
5.000% due 1/1/25 Aaa AAA 7,350,000
TEXAS -- 4.9%
2,500,000 Burleson, Texas, Independent School District Revenue,
6.750% due 8/1/24 Aaa NR 2,421,875
9,035,000 Texas State Veterans Housing, General Obligation, Series
B-4,
6.700% due 12/1/24 Aa AA 8,187,969
WASHINGTON -- 3.9%
Washington State Public Power, Series B:
6,000,000 5.625% due 7/1/12 Aa AA 5,062,500
4,250,000 5.500% due 7/1/18 Aa AA 3,394,688
WEST VIRGINIA -- 4.1%
10,000,000 Marion County, West
Virginia, Community Solid
Waste Disposal Facilities
Revenue, (American Paper
Recycling Project),
7.750% due 12/1/11 NR NR 8,950,000
- ---------------------------------------------------------------------------
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 9
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
Market
Rating Value
Face Value Moody's S&P (Note 1)
- ---------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MUNICIPAL BONDS AND NOTES (CONTINUED)
TOTAL MUNICIPAL BONDS AND NOTES
(COST $243,084,230) $226,089,731
- ---------------------------------------------------------------------------
SHORT-TERM TAX-EXEMPT INVESTMENTS -- 0.4%
ALABAMA -- 0.3%
$ 400,000 Stevenson, Alabama, Industrial Development Board,
Enviromental Improvement Revenue,
3.450% due 11/1/16+ NR A-1+ 400,000
CALIFORNIA -- 0.1%
100,000 California Pollution Control
Agency Revenue, Series A,
(Shell Oil Company Project),
3.450% due 10/1/24+ VMIG-1 A-1+ 100,000
100,000 Irvine, California, Improvement Bond Revenue,
3.300% due 9/2/15+ VMIG-1 A-1 100,000
200,000 Irvine Ranch, California, Water District Revenue, Series
B,
3.400% due 6/1/15+ VMIG-1 A-1+ 200,000
TOTAL SHORT-TERM
TAX-EXEMPT INVESTMENTS
(COST $800,000) 800,000
- ---------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST $243,884,230*) 104.3% 226,889,731
OTHER ASSETS AND LIABILITIES (NET) (4.3) (9,336,250)
- ---------------------------------------------------------------------------
NET ASSETS 100.0% $217,553,481
- ---------------------------------------------------------------------------
<FN>
* Aggregate cost for Federal tax purposes.
+ Variable rate municipal bonds and notes are payable upon not more than one
business day's notice.
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 10
- ------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
SUMMARY OF MUNICIPAL BONDS BY COMBINED RATINGS
<TABLE>
<CAPTION>
PERCENT
MOODY'S S & P OF VALUE
<S> <C> <C> <C>
Aaa or AAA 45.9%
Aa AA 26.5
A A 12.9
Baa BBB 1.5
VMIG-1 A-1 0.4
NR NR 12.8
----------
100.0%
----------
----------
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 11
- ------------------------------
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1994 (UNAUDITED)
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------
ASSETS:
Investments, at value (Cost $243,884,230) (Note 1)
See accompanying schedule $226,889,731
Cash 2,681
Interest receivable 5,441,939
Receivable for investment securities sold 2,607,773
- ----------------------------------------------------------------------------
TOTAL ASSETS 234,942,124
- ----------------------------------------------------------------------------
LIABILITIES:
Payable for investment securities purchased $16,183,526
Dividends payable 658,419
Investment management fee payable (Note 2) 159,160
Custodian fees payable (Note 2) 18,000
Accrued Directors' fees and expenses (Note 2) 13,750
Transfer agent fees payable (Note 2) 4,100
Accrued expenses and other payables 351,688
- ----------------------------------------------------------------------------
TOTAL LIABILITIES 17,388,643
- ----------------------------------------------------------------------------
NET ASSETS $217,553,481
- ----------------------------------------------------------------------------
NET ASSETS consist of:
Undistributed net investment income $ 1,863,550
Accumulated net realized loss on investments sold (1,572,652)
Unrealized depreciation of investments (16,994,499)
Par value 19,558
Paid-in capital in excess of par value 234,237,524
- ----------------------------------------------------------------------------
TOTAL NET ASSETS $217,553,481
- ----------------------------------------------------------------------------
NET ASSET VALUE per share
($217,553,481 DIVIDED BY 19,558,334 shares of common
stock outstanding) $11.12
- ----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 12
- ------------------------------
<PAGE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED NOVEMBER 30, 1994* (UNAUDITED)
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 6,469,059
- ----------------------------------------------------------------------------
EXPENSES:
Investment management fee (Note 2) $892,942
Legal and audit fees 53,686
Custodian fees (Note 2) 34,717
Directors' fees and expenses (Note 2) 27,146
Transfer agent fees (Note 2) 14,115
Other 62,403
- ----------------------------------------------------------------------------
TOTAL EXPENSES 1,085,009
- ----------------------------------------------------------------------------
NET INVESTMENT INCOME 5,384,050
- ----------------------------------------------------------------------------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (Notes 1 and 3):
Net realized loss on investments during the
period (1,572,652)
Net unrealized depreciation of investments
during the period (16,994,499)
- ----------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (18,567,151)
- ----------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $(13,183,101)
- ----------------------------------------------------------------------------
<FN>
* The Portfolio commenced operations on June 24, 1994.
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 13
- ------------------------------
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
NOVEMBER 30, 1994
<TABLE>
<CAPTION>
PERIOD ENDED
11/30/94*
(UNAUDITED)
<S> <C>
- ----------------------------------------------------------------------------
Net investment income $ 5,384,050
Net realized loss on investments during the period (1,572,652)
Net unrealized depreciation of investments during the period (16,994,499)
- ----------------------------------------------------------------------------
Net decrease in net assets resulting from operations (13,183,101)
Offering costs charged to paid-in-capital (Note 4) (442,926)
Distributions to shareholders from net investment income (3,520,500)
Net increase in net assets from Fund share transactions (Note 4) 234,600,000
- ----------------------------------------------------------------------------
Net increase in net assets 217,453,473
NET ASSETS:
Beginning of period 100,008
- ----------------------------------------------------------------------------
End of period (including undistributed net investment income of
$1,863,550) $217,553,481
- ----------------------------------------------------------------------------
<FN>
* The Portfolio commenced operations on June 24, 1994.
</TABLE>
SEE NOTES TO
FINANCIAL STATEMENTS.
- ---------------------------------- 14
- ------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
PERIOD
ENDED
11/30/94*
(UNAUDITED)
<S> <C>
- ----------------------------------------------------------------------------
Operating performance:
Net asset value, beginning of period $12.00
- ----------------------------------------------------------------------------
Net investment income 0.28
Net realized and unrealized loss on investments (0.96)
- ----------------------------------------------------------------------------
Net decrease in net assets resulting from operations (0.68)
- ----------------------------------------------------------------------------
Offering costs charged to paid-in capital (0.02)
Less distributions:
Dividends from net investment income (0.18)
- ----------------------------------------------------------------------------
Net asset value, end of period $11.12
- ----------------------------------------------------------------------------
Market value, end of period $10.500
- ----------------------------------------------------------------------------
Total return** (12.50%)
- ----------------------------------------------------------------------------
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $217,553
Ratio of operating expenses to average net assets 1.09%+
Ratio of net investment income to average net assets 5.43%+
Portfolio turnover rate 46%
- ----------------------------------------------------------------------------
<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.
- ---------------------------------- 15
- ------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994 (UNAUDITED)
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 of 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% 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 make any other
- ------------------------------ 16
------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
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 MANAGEMENT FEE AND OTHER TRANSACTIONS.
Greenwich Street Advisors, formerly a division of Mutual Management Corp.,
serves as the Portfolio's investment manager. Greenwich Street Advisors,
together with the investment management agreement, have been 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"). Holdings is a wholly owned subsidiary of The Travelers Inc. The
Portfolio pays to SBMFM a monthly fee for these services at the annual rate of
0.90% of the value of its average weekly 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 management 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
- --------------------------- 17
------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994 (UNAUDITED) (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. 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 November 30, 1994, cost of purchases and proceeds from
sales of investment securities (excluding short-term investments) aggregated
$327,591,771 and $83,352,102, respectively.
At November 30, 1994, aggregate gross unrealized appreciation and
depreciation for all securities in which there was an excess of value over tax
cost amounted to $3,125 and $16,997,624, respectively.
4. PORTFOLIO SHARES.
At November 30, 1994, 500 million shares of common stock, with a par value of
$.001 per share were authorized.
Common Stock transactions were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
11/30/94*
<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 estimated offering costs charged to paid-in capital of $442,926.
</TABLE>
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------------------------------
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1994 (UNAUDITED) (CONTINUED)
<TABLE>
<CAPTION>
--------------------------------------------------------------------
QUARTERLY RESULTS OF OPERATIONS
NET REALIZED AND NET INCREASE/
UNREALIZED GAIN/ (DECREASE) IN NET
INVESTMENT NET INVESTMENT (LOSS) ON ASSETS RESULTING
INCOME INCOME INVESTMENTS FROM OPERATIONS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------
PER PER PER PER
QUARTER ENDED TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
--------------------------------------------------------------------------------------
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)
--------------------------------------------------------------------------------------
<FN>
* The Fund commenced operations on June 24, 1994.
</TABLE>
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------------------------------
<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
Stephen J. Treadway
PRESIDENT
Joseph P. Deane
VICE PRESIDENT
INVESTMENT OFFICER
David Fare
INVESTMENT OFFICER
Lewis E. Daidone
SENIOR VICE PRESIDENT
AND TREASURER
Christina T. Sydor
SECRETARY
INVESTMENT ADVISER AND
ADMINISTRATOR
Smith Barney Mutual Funds
Management Inc.
388 Greenwich Street
New York, New York 10013
SUB-ADMINISTRATOR
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
AUDITORS AND COUNSEL
Coopers & Lybrand
One Post Office Square
Boston, Massachusetts 02109
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
TRANSFER AGENT
The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
CUSTODIAN
Boston Safe Deposit and
Trust Company
One Boston Place
Boston, Massachusetts 02108
- ------------------------------ 20
------------------------------
