Greenwich Street
----------------
CALIFORNIA
MUNICIPAL FUND INC.
Annual Report
August 31, 1998
<PAGE>
Greenwich
Street California
Municipal Fund
Inc.
[PHOTO OMITTED] [PHOTO OMITTED]
Heath B. McLendon Joseph P. Deane
Chairman Vice President
Dear Shareholder:
We are pleased to provide the annual report for the Greenwich Street California
Municipal Fund Inc. ("Fund") for the year ended August 31, 1998. Over the period
covered by this report, the Fund distributed income dividends totaling $0.59 and
capital gain distributions of $0.10 per share. The table below details the
annualized distribution rate and the twelve-month total return based on the
Fund's August 31, 1998, net asset value ("NAV") per share and its American Stock
Exchange ("AMEX") closing price:
Annualized Twelve-Month
Price Per Share Distribution Rate* Total Return
-------------- ------------------ ------------
$14.37 (NAV) 4.51% 10.98%
$13.00 (AMEX) 4.98% 7.56%
In comparison, the Fund's Lipper Analytical Services, Inc. California municipal
peer group average posted a total return on NAV of 9.97% for the same time
period. (Lipper is a major fund-tracking organization.)
Municipal Bond Market Update
The municipal bond market has been in a positive state of mind for quite a while
now. Recent events in Asia and Russia have accelerated the flow of capital
specifically into U.S. government bonds. These factors have created a very
positive interest rate backdrop for the tax-exempt market with increased capital
flows into the U.S., very modest inflation and a potential slowing of the U.S.
economy due to the economic slowdown of several of our trading partners. This is
the lowest long-term interest rate we have seen since the 1960's.
The rates for municipal bonds have also moved lower, but not to the same degree
as U.S. government bonds. The municipal bond market doesn't benefit from foreign
money flows, because the benefits of tax-exemption are only valuable to U.S.
taxpayers.
- ----------
* This distribution rate assumes a current monthly income dividend rate of
$0.054 per share for twelve months.
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Greenwich Street California Municipal Fund Inc. 1
<PAGE>
New-issue supply of municipal bonds in 1998 has been quite heavy. The municipal
bond market is on pace to surpass the record volume underwritten in 1993. These
two factors pressure toward lower rates and heavy municipal bond issuance - have
led to a market that we believe is very attractively priced versus taxable
bonds, and has led to a flatter yield curve than we've seen in many years. The
difference in yields between intermediate municipal bonds maturity and very
long-term bonds is minimal. In our view, the yield differential between very
high-grade paper and much weaker credits has never been lower.
California Economic Highlights
Prior to 1990, the structural underpinnings of California's economy were
buttressed by its strong economic growth due in large part to its aerospace and
defense industries and a continually appreciating real estate market. However,
during the past several years, the Golden State's economic recovery has been
mainly driven by the growth of new, more diversified industries without the
benefit of rising real estate values that has changed recently. The nation's
largest state economy now appears to be running on all cylinders as real estate
prices throughout the state have shown marked improvements. Existing home sales
in California through June have increased roughly 19%, while the median price of
a home in California has risen approximately 11% so far this year. Furthermore,
California's office vacancy rate is among the lowest in the U.S.
We think these gains, coupled with California's lowest unemployment levels in
eight years and an annual state gross domestic product ("GDP") of more than $1
trillion, should allow California to remain a competitive economic force for
many years to come.
Investment Strategy
The Fund focused on hospital bonds (20.0%), water and sewer bonds (19.7%) and
transportation bonds (18.0%) because we believe they offered good relative
values. At the end of August, the Fund's weighted average maturity was roughly
24 years. In addition, as of August 31, 1998, about 96% of the Fund's holdings
were rated investment grade by either Standard & Poor's Corporation or Moody's
Investors Services Inc., with approximately 52% of the Fund invested in AAA
bonds, the highest possible rating. (Investment-grade bonds are those rated Aaa,
Aa, A and Baa by Moody's Investors Service, Inc. or AAA, AA, A and BBB by
Standard & Poor's Ratings Services, or have an equivalent rating by any other
nationally recognized statistical rating organization, or determined by the
manager to be of equivalent quality.)
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2 1998 Annual Report to Shareholders
<PAGE>
Our investment strategy has recently been quite simple: we have avoided very
long-term debt and lower-rated issues. We have been concentrating our purchases
in very high-grade bonds with maturities between 12 and 20 years. Our coupon
structure has also become somewhat higher. At today's record low interest rates,
we are taking a more conservative approach to the market. Our experience
indicates conditions are near perfect for bonds at the moment and prudence
suggests we take advantage of these conditions.
Municipal Bond Market Outlook
Our outlook for the municipal bond market for the next six months carries a
caveat. If economic conditions around the world do not get much worse, then
interest rates have fallen to levels that seem appropriate. If things continue
to deteriorate beyond today's levels, then there could be more downward pressure
on interest rates in the U.S. We will be monitoring these events very closely
for our shareholders.
On a more somber note, we report with much sadness the passing of Emeritus
Director C. Richard Youngdahl. Dick made many valuable contributions to the
Board and the Fund during his tenure and he will be missed.
In closing, thank you for investing in the Greenwich Street California Municipal
Fund Inc. We look forward to continuing to help you pursue your financial goals.
Sincerely,
/s/ Heath B. McLendon /s/ Joseph P. Deane
Heath B. McLendon Joseph P. Deane
Chairman Vice President
September 15, 1998
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Greenwich Street California Municipal Fund Inc. 3
<PAGE>
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Take Advantage of the Fund's Dividend Reinvestment Plan!
Did you know that Fund investors who reinvest their dividends are taking
advantage of one of the most effective wealth-building tools available today?
Systematic investments put time to work for you through the strength of
compounding.
As an investor in the Fund, you can participate in its Dividend Reinvestment
Plan ("Plan"), a convenient, simple and efficient way to reinvest your dividends
and capital gains, if any, in additional shares of the Fund. The Fund's complete
Plan begins on page 18. Below is a short summary of how the Plan works.
Plan Summary
If you are a Plan participant who has not elected to receive your dividends in
the form of a cash payment, then your dividend and capital gain distributions
will be reinvested automatically in additional shares of the Fund.
The number of common stock shares in the Fund you will receive in lieu of a cash
dividend is determined in the following manner. If the market price of the
common stock is equal to or exceeds the net asset value ("NAV") per share on the
date of valuation, you will be issued shares for the equivalent of the most
recently determined NAV per share or 95% of the market price, whichever is
greater.
If the NAV per share at the time of valuation is greater than the market price
of the common stock, or if the Fund declares a dividend or capital gains
distribution payable only in cash, the Fund will buy common stock for your
account in the open market or on the New York Stock Exchange.
If the Fund begins to purchase additional shares in the open market and the
market price of the shares subsequently rises above the NAV before the purchases
are completed, the Fund will attempt to cancel any remaining orders and issue
the remaining dividend or distribution in shares at the Fund's NAV per share. In
that case, the number of Fund shares you receive will be based on the weighted
average of prices paid for shares purchased in the open market and the price at
which the Fund issues the remaining shares.
To find out more detailed information about the Plan and about how you can
participate, please call First Data Investors Services Group, Inc. at (800)
331-1710.
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4 1998 Annual Report to Shareholders
<PAGE>
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Schedule of Investments August 31, 1998
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<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=========================================================================================
<S> <C> <C> <C>
Education -- 8.5%
California Education Facility Authority:
$2,100,000 A1* Loyola Marymount University, 5.750% due 10/1/24 $ 2,191,875
2,000,000 A3* Southwestern University, 6.700% due 11/1/24 2,232,500
- -----------------------------------------------------------------------------------------
4,424,375
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General Obligation -- 3.3%
1,715,000 AAA California State GO, AMBAC-Insured, 5.000% due 10/1/18 1,712,856
- -----------------------------------------------------------------------------------------
Hospital -- 20.0%
California Health Facility Financing Authority:
1,930,000 NR Daniel Freeman Hospital, (Pre-Refunded --
Escrowed with U.S. government securities
to 5/1/05 Call @ 102), 6.500% due 5/1/20(a) 2,226,737
2,000,000 A Kaiser Permanente Hospital, 5.550% due 8/15/25 2,027,500
2,000,000 AA California Statewide Community Development Authority,
COP, St. Joseph's Hospital, (Pre-Refunded --
Escrowed with state & local government securities
to 7/1/04 Call @ 102), 6.625% due 7/1/21(b) 2,302,500
2,000,000 AA Fresno Health Facility Revenue, Holy Cross Health
System, 5.625% due 12/1/15 2,092,500
1,665,000 A Torrence Hospital Revenue, Little Company of Mary
Hospital, 6.875% due 7/1/15 1,814,850
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10,464,087
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Housing -- 7.1%
1,400,000 Aa2* California HFA Home Mortgage, Series E, FHA-Insured,
6.375% due 8/1/27(c) 1,520,750
2,000,000 AAA Santa Rosa Mortgage Revenue, Village Square
Apartments, FHA-Insured, 6.875% due 9/1/27 2,192,500
- -----------------------------------------------------------------------------------------
3,713,250
- -----------------------------------------------------------------------------------------
Miscellaneous -- 11.3%
2,000,000 AAA Los Angeles Convention and Exhibition Center
Authority Lease Revenue, MBIA-Insured, 5.375%
due 8/15/18 2,042,500
1,675,000 AAA Orange County 1996 Recovery COP, Series A,
MBIA-Insured, 6.000% due 7/1/26 1,834,125
2,005,000 AAA Pomona California, Public Financing Authority
Revenue, (Pomona Redevelopment Project),
5.000% due 2/1/18 2,002,494
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5,879,119
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Tax Allocation -- 12.1%
2,100,000 Baa* Hawthorne Community Redevelopment Agency,
Tax Allocation, 6.700% due 9/1/20 2,270,625
</TABLE>
See Notes to Financial Statements.
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Greenwich Street California Municipal Fund Inc. 5
<PAGE>
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Schedule of Investments (continued) August 31, 1998
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<TABLE>
<CAPTION>
FACE
AMOUNT RATING SECURITY VALUE
=========================================================================================
<S> <C> <C> <C>
Tax Allocation -- 12.1% (continued)
$2,000,000 AAA Rancho Cucamonga Redevelopment Agency,
Tax Allocation, MBIA-Insured, 5.250%
due 9/1/26 $ 2,030,000
2,000,000 AAA San Jose Redevelopment Agency, Tax Allocation,
MBIA-Insured, 5.250% due 8/1/16 2,042,500
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6,343,125
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Transportation -- 18.0%
2,000,000 Baa* Foothill Eastern Transportation, California
Toll Revenue, 6.000% due 1/1/34(b) 2,137,500
2,000,000 AAA Los Angeles County Metropolitan Transportation
Authority, Sales Tax Allocation, MBIA-Insured,
5.625% due 7/1/18 2,082,500
20,000,000 AAA San Joaquin Hills Transportation Corridor Agency,
Senior Lien Toll, (Escrowed to maturity with
state & local government securities), zero coupon
bond to yield 7.723% due 1/1/26 5,175,000
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9,395,000
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Water & Sewer -- 19.7%
1,240,000 AAA Anaheim Public Finance Authority, Water Utility,
(Lenain Filtration Project), FGIC-Insured,
5.250% due 10/1/19 1,258,600
2,000,000 AA California State Department of Water Revenue,
Series L, 5.500% due 12/1/23 2,065,000
2,140,000 AAA East Bay Mud Wastewater System, FGIC-Insured,
5.000% due 6/1/26 2,121,275
2,000,000 BBB+ Kings County Waste Management Authority,
Solid Waste Revenue, 7.200% due 10/1/14(c) 2,305,000
1,000,000 AAA Redding Joint Powers Financing Authority,
Waste Water Revenue, FGIC-Insured, 5.500% due
12/1/18 1,031,250
1,500,000 AAA San Diego PCFA Sewer Revenue, FGIC-Insured,
5.000% due 5/15/20 1,488,750
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10,269,875
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TOTAL INVESTMENTS -- 100%
(Cost -- $43,586,326**) $52,201,687
=========================================================================================
</TABLE>
(a) Pre-Refunded bond is escrowed with U.S. government securities and is
considered by the Manager to be triple-A rated even if the issuer has not
applied for new ratings.
(b) Security segregated by Custodian for open market purchase commitment.
(c) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
** Aggregate cost for Federal income tax purposes is substantially the same.
See pages 7 and 8 for definition of ratings and certain security
descriptions.
See Notes to Financial Statements.
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6 1998 Annual Report to Shareholders
<PAGE>
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Bond Ratings (unaudited)
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All ratings are by Standard & Poor's Ratings Group ("Standard & Poor's"), except
those identified by an asterisk (*) are rated by Moody's Investors Service, Inc.
("Moody's"). The definitions of the applicable rating symbols are set forth
below:
Standard & Poor's -- Ratings from "AA" to "BBB" may be modified by the addition
of a plus (+) or minus (-) sign to show relative standings within the major
rating categories.
AAA -- Bonds rated "AAA" have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay
principal is extremely strong.
AA -- Bonds rated "AA" have a very strong capacity to pay interest and
repay principal and differ from the highest rated issue only in a
small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
bonds in higher rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for bonds in this
category than in higher rated categories.
Moody's -- Numerical modifiers 1, 2, and 3 may be applied to each generic rating
from "Aa" to "Baa", where 1 is the highest and 3 the lowest rating within its
generic category.
Aaa -- Bonds rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa -- Bonds rated "Aa" are judged to be of high quality by all
standards. Together with the "Aaa" group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
"Aaa" securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in "Aaa" securities.
A -- Bonds rated "A" possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to
impairment some time in the future.
Baa -- Bonds rated "Baa" are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
NR -- Indicates that the bond is not rated by Standard & Poor's or
Moody's.
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Greenwich Street California Municipal Fund Inc. 7
<PAGE>
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Short-Term Security Ratings (unaudited)
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SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate
demand obligation (VRDO) rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong;
those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to
the advent of the VMIG 1 rating.
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Security Descriptions (unaudited)
- --------------------------------------------------------------------------------
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
GO -- General Obligation
HFA -- Housing Finance Agency
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
PCFA -- Pollution Control Financing Authority
PCR -- Pollution Control Revenue
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8 1998 Annual Report to Shareholders
<PAGE>
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Statement of Assets and Liabilities August 31, 1998
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $43,586,326) $ 52,201,687
Interest receivable 703,532
Deferred organization costs 22,033
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Total Assets 52,927,252
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LIABILITIES:
Payable to bank 179,496
Dividends payable 83,368
Management fees payable 38,192
Accrued expenses 52,518
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Total Liabilities 353,574
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Total Net Assets $ 52,573,678
================================================================================
NET ASSETS:
Par value of shares $ 3,658
Capital paid in excess of par value 43,831,350
Undistributed net investment income 38,433
Accumulated net realized gain from security transactions 84,876
Net unrealized appreciation of investments 8,615,361
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Total Net Assets
(Equivalent to $14.37 per share on 3,658,334 shares
of $0.001 par value outstanding; 500,000,000 shares
authorized) $ 52,573,678
================================================================================
See Notes to Financial Statements.
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Greenwich Street California Municipal Fund Inc. 9
<PAGE>
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Statement of Operations For the Year Ended August 31, 1998
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INVESTMENT INCOME:
Interest $ 2,814,339
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EXPENSES:
Management fees (Note 3) 463,925
Audit and legal 45,854
Shareholder and system servicing fees 37,283
Shareholder communications 35,233
Amortization of deferred organization costs 20,411
Directors' fees 4,000
Pricing service fees 3,599
Registration fees 3,000
Custody 2,577
Other 3,501
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Total Expenses 619,383
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Net Investment Income 2,194,956
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 4):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceeds from sales 3,559,810
Cost of securities sold 3,411,574
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Net Realized Gain 148,236
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Changes in Net Unrealized Appreciation of Investments:
Beginning of year 5,823,868
End of year 8,615,361
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Increase in Net Unrealized Appreciation 2,791,493
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Net Gain on Investments 2,939,729
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Increase in Net Assets From Operations $ 5,134,685
================================================================================
See Notes to Financial Statements.
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10 1998 Annual Report to Shareholders
<PAGE>
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Statements of Changes in Net Assets For the Years Ended August 31,
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1998 1997
================================================================================
OPERATIONS:
Net investment income $ 2,194,956 $ 2,269,926
Net realized gain 148,236 602,584
Increase in net unrealized appreciation 2,791,493 2,594,889
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Increase in Net Assets From Operations 5,134,685 5,467,399
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DIVIDENDS TO SHAREHOLDERS FROM(NOTE 2):
Net investment income (2,173,047) (2,304,816)
Net realized gains (373,150) (1,207,250)
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Decrease in Net Assets From
Fund Share Transactions (2,546,197) (3,512,066)
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Increase in Net Assets 2,588,488 1,955,333
NET ASSETS:
Beginning of year 49,985,190 48,029,857
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End of year* $ 52,573,678 $ 49,985,190
================================================================================
* Includes undistributed net investment
income of: $ 38,433 $ 16,524
================================================================================
See Notes to Financial Statements.
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Greenwich Street California Municipal Fund Inc. 11
<PAGE>
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Notes to Financial Statements
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1. Significant Accounting Policies
The Greenwich Street California Municipal Fund Inc. ("Fund"), a Maryland
corporation, is registered under the Investment Company Act of 1940, as amended,
as a non-diversified, closed-end management investment company.
The significant accounting policies consistently followed by the Fund are: (a)
security transactions are accounted for on trade date; (b) securities are valued
at the mean between the quoted bid and ask prices provided by an independent
pricing service that are based on transactions in municipal obligations,
quotations from municipal bond dealers, market transactions in comparable
securities and various relationships between securities; (c) securities maturing
within 60 days are valued at cost plus accreted discount, or minus amortized
premium, which approximates value; (d) gains or losses on the sale of securities
are calculated by using the specific identification method; (e) interest income,
adjusted for amortization of premium and accretion of original issue discount,
is recorded on an accrual basis; market discount is recognized upon the
disposition of the security; (f) dividends and distributions to shareholders are
recorded on the ex-dividend date; (g) the Fund intends to comply with the
applicable provisions of the Internal Revenue Code of 1986, as amended,
pertaining to regulated investment companies and to make distributions of
taxable income sufficient to relieve it from substantially all Federal income
and excise taxes; (h) the character of income and gains to be distributed are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles; and (i) estimates and assumptions are
required to be made regarding assets, liabilities and changes in net assets
resulting from operations when financial statements are prepared. Changes in the
economic environment, financial markets and any other parameters used in
determining these estimates could cause actual results to differ.
In addition, organization costs have been deferred and are being amortized on a
straight-line basis over a five year period, beginning at the commencement of
the Fund's operations in September 1994.
2. Exempt-Interest Dividends and Other Distributions
The Fund intends to satisfy conditions that will enable interest from municipal
securities, which is exempt from regular Federal income tax and from designated
state income taxes, to retain such tax-exempt status when distributed to the
shareholders of the Fund.
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12 1998 Annual Report to Shareholders
<PAGE>
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Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
3. Management Agreement and Affiliated Transactions
Mutual Management Corp. ("MMC"), a subsidiary of Salomon Smith Barney Holdings
Inc. ("SSBH"), acts as investment manager to the Fund. The Fund pays MMC a fee
calculated at an annual rate of 0.90% of the Fund's average daily net assets.
This fee is calculated daily and paid monthly.
All officers and one director of the Fund are employees of Smith Barney Inc.,
another subsidiary of SSBH.
4. Investments
For the year ended August 31, 1998, the aggregate cost of purchases and proceeds
from sales of investments (including maturities, but excluding short-term
securities) were as follows:
================================================================================
Purchases $3,621,623
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Sales 3,559,810
================================================================================
At August 31, 1998, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $8,615,361
Gross unrealized depreciation --
- --------------------------------------------------------------------------------
Net unrealized appreciation $8,615,361
================================================================================
5. Portfolio Concentration
Since the Fund invests primarily in obligations of issuers within California, it
is subject to possible concentration risks associated with economic, political,
or legal developments or industrial or regional matters specifically affecting
California.
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Greenwich Street California Municipal Fund Inc. 13
<PAGE>
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Notes to Financial Statements (continued)
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6. Futures Contracts
Initial margin deposits are made upon entering into futures contracts and are
recognized as assets. Securities equal to the initial margin amount are
segregated by the custodian in the name of the broker. Additional securities are
also segregated up to the current market value of the futures contracts. During
the period the futures contract is open, changes in the value of the contract
are recognized as unrealized gains or losses by "marking to market" on a daily
basis to reflect the market value of the contract at the end of each day's
trading. Variation margin payments are received or made and recognized as assets
due from or liabilities due to broker, depending upon whether unrealized gains
or losses are incurred. When the contract is closed, the Fund records a realized
gain or loss equal to the difference between the proceeds from (or cost of) the
closing transactions and the Fund's basis in the contract.
The Fund enters into such contracts to hedge a portion of its portfolio. The
Fund bears the market risk that arises from changes in the value of the
financial instruments and securities indices (futures contracts).
At August 31, 1998, the Fund had no open futures contracts.
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14 1998 Annual Report to Shareholders
<PAGE>
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Financial Data
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year:
<TABLE>
<CAPTION>
1998 1997 1996 1995(1)(2)
=======================================================================================
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $ 13.66 $ 13.13 $ 12.92 $ 12.00
- ---------------------------------------------------------------------------------------
Income From Operations:
Net investment income(3) 0.60 0.62 0.63 0.60
Net realized and unrealized gain 0.80 0.87 0.30 0.84
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Total Income From Operations 1.40 1.49 0.93 1.44
- ---------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.59) (0.63) (0.70) (0.52)
Net realized gains (0.10) (0.33) (0.02) --
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Total Distributions (0.69) (0.96) (0.72) (0.52)
- ---------------------------------------------------------------------------------------
Net Asset Value, End of Year $ 14.37 $ 13.66 $ 13.13 $ 12.92
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Total Return, Based on Market Value* 7.56% 13.39% 11.92% 0.25%++
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Total Return, Based on Net Asset Value* 10.98% 12.19% 7.96% 12.24%++
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Net Assets, End of Year (000s) $ 52,574 $ 49,985 $ 48,030 $ 47,250
- ---------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(3) 1.20% 1.21% 1.15% 1.02%+
Net investment income 4.25 4.64 4.75 5.16+
- ---------------------------------------------------------------------------------------
Portfolio Turnover Rate 7% 28% 42% 7%
- ---------------------------------------------------------------------------------------
Market Value, End of Year $ 13.000 $ 12.750 $ 12.125 $ 11.500
=======================================================================================
</TABLE>
(1) Based on the weighted average shares outstanding for the period.
(2) For the period from September 23, 1994 (commencement of operations) to
August 31, 1995.
(3) The Manager has waived a portion of its management fees for the period
ended August 31, 1995. If such fees were not waived, the per share
decrease on net investment income would have been $0.01 and the expense
ratio would have been 1.14%, annualized.
* The total return calculation assumes that dividends are reinvested in
accordance with the Fund's dividend reinvestment plan.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
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Greenwich Street California Municipal Fund Inc. 15
<PAGE>
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Independent Auditors' Report
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
Greenwich Street California Municipal Fund Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Greenwich Street California Municipal Fund Inc.
as of August 31, 1998, the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the three-year period then ended and the period from September 23, 1994
(commencement of operations) to August 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 audits.
We conducted our audits 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
August 31, 1998, by correspondence with the custodian. 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 audits provide 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 California Municipal Fund Inc. as of August 31, 1998, the
results of its operations for the year then ended, the changes in its net assets
for each of the years in the two-year period then ended, and the financial
highlights for each of the years in the three-year period then ended and the
period from September 23, 1994 to August 31, 1995, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwich LLP
New York, New York
October 15, 1998
- --------------------------------------------------------------------------------
16 1998 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Data (unaudited)
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each period:
AMEX
Record Payable Closing Net Asset Income Reinvestment
Date Date Price+ Value+ Declared Price
================================================================================
9/24/96 9/27/96 $11.875 $13.25 $0.05800 $12.01
10/22/96 10/25/96 12.000 13.43 0.05800 12.14
11/25/96 11/29/96 12.500 13.73 0.05800 12.76
12/03/96* 12/13/96 12.375 13.49 0.33000 12.76
1/28/97 1/31/97 12.563 13.12 0.05800 12.75
2/25/97 2/28/97 12.500 13.42 0.05800 12.64
3/24/97 3/27/97 12.375 13.02 0.05800 12.50
4/22/97 4/25/97 12.500 12.91 0.05800 12.61
5/27/97 5/30/97 12.563 13.17 0.05800 12.72
6/24/97 6/27/97 12.750 13.48 0.05800 12.86
7/22/97 7/25/97 12.688 13.79 0.05400 12.82
8/26/97 8/29/97 12.688 13.62 0.05400 12.89
9/23/97 9/26/97 12.625 13.95 0.05400 13.03
10/28/97 10/31/97 12.688 13.97 0.05400 12.90
11/24/97 11/28/97 12.688 14.00 0.05400 13.08
12/22/97* 12/26/97 13.000 14.17 0.10200 13.26
1/27/98 1/30/98 13.000 14.25 0.05400 12.98
2/24/98 2/27/98 12.813 14.23 0.05400 12.82
3/24/98 3/27/98 12.875 14.19 0.05400 12.97
4/21/98 4/24/98 12.750 14.05 0.05400 12.70
5/26/98 5/29/98 12.625 14.14 0.05400 12.92
6/23/98 6/26/98 12.750 14.16 0.05400 12.94
7/28/98 7/31/98 12.750 14.15 0.05400 12.78
8/25/98 8/28/98 13.063 14.30 0.05400 13.25
================================================================================
+ As of record date.
* Capital gain distribution.
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Greenwich Street California Municipal Fund Inc. 17
<PAGE>
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Dividend Reinvestment Plan (unaudited)
- --------------------------------------------------------------------------------
Under the Fund's Dividend Reinvestment Plan ("Plan"), a shareholder whose shares
of Common Stock are registered in his own name will have all distributions from
the Fund reinvested automatically by First Data Investor Services Group, Inc.
("First Data") 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 (i.e., 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
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 First Data as
dividend paying agent.
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. When the market
price of the Common Stock is equal 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 at a price equal to the greater of (1) net asset value
most recently determined or (2) 95% of the then current market price of the
Common Stock.
If the market price of the Common Stock is less than the net asset value of the
Common Stock at the time of valuation, or if the Fund declares a dividend or
capital gains distribution payable only in cash, First Data will buy Common
Stock in the open market, on the American Stock Exchange or elsewhere, for the
participants' accounts. If following the commencement of purchases and before
First Data has completed its purchases, the market price exceeds the net asset
value of the Common Stock, First Data will attempt to terminate purchases in the
open market and cause the Fund to issue the remaining portion of the dividend or
distribution in shares at a price equal to the greater of (a) net asset value or
(b) 95% of the then current market price. In this case, the number of shares
received by a Plan participant will be based on the weighted average of prices
paid for shares purchased in the open market and the price at which the Fund
issues the remaining shares. To the extent First Data is unable to stop open
market purchases and cause the Fund to issue the remaining shares, the average
per share purchase price paid by First Data may exceed the net asset 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 Fund at net asset value. First Data will begin to purchase Common
- --------------------------------------------------------------------------------
18 1998 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Dividend Reinvestment Plan (unaudited) (continued)
- --------------------------------------------------------------------------------
Stock on the open market as soon as practicable after the payment date of the
dividend and capital gains distribution, but in no event shall such purchases
continue later than 30 days after that date, except when necessary to comply
with applicable provisions of the federal securities laws.
First Data maintains all shareholder accounts in the Plan and furnishes 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 First Data in uncertificated form in the name of the Plan participant.
Plan participants are subject to no charge for reinvesting dividends and capital
gains distributions under the Plan. First Data's fees for handling the
reinvestment of dividends and capital gains distributions will be paid by the
Fund. No brokerage charges apply with respect to shares of Common Stock issued
directly by the Fund under the Plan. Each Plan participant will, however, bear a
proportionate share of brokerage commissions incurred with respect to any open
market purchases made under the Plan.
Experience under the Plan may indicate that changes to it are desirable. The
Fund 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 may also be amended or
terminated by First Data, with the Fund'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 First Data Investor Services Group, Inc.,
P.O. Box 8030, Boston, Massachusetts 02266 or by telephone at 1-800-331-1710.
- --------------------------------------------------------------------------------
Additional Shareholder Information (unaudited)
- --------------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that from time to time the Fund may purchase
shares of its common stock in the open market.
- --------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 19
<PAGE>
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
August 31, 1998:
o 99.43% of the dividends paid by the Fund from net investment income
as tax-exempt for regular Federal income tax purposes.
o The Taxpayer Relief Act of 1997 enacted differing rates of tax on
various long-term capital gain transactions. As a result, the Fund
designates:
o Total long-term capital gain distributions paid of $219,166
$218,920 are considered "28 percent rate gains". $246 are
considered "20 percent rate gains".
- --------------------------------------------------------------------------------
20 1998 Annual Report to Shareholders
<PAGE>
Greenwich Street
- -------------------
California
Municipal Fund Inc.
DIRECTORS
Donald R. Foley
Paul Hardin
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
Joseph H. Fleiss, Emeritus
OFFICERS
Heath B. McLendon
President and Chief Executive Officer
Lewis E. Daidone
Senior Vice President and Treasurer
Joseph P. Deane
Vice President
Thomas M. Reynolds
Controller
Christina T. Sydor
Secretary
INVESTMENT MANAGER
Mutual Management Corp.
CUSTODIAN
PNC Bank, N.A.
SHAREHOLDER
SERVICING AGENT
First Data Investor Services Group, Inc.
P.O. Box 8030
Boston, MA 02266
This report is submitted for the general information of the shareholders of
Greenwich Street California Municipal Fund Inc. It is not authorized for
distribution to prospective investors unless accompanied or preceded by a
current Prospectus for the Fund, which contains information concerning the
Fund's investment policies and expenses as well as other pertinent information.
GREENWICH STREET
CALIFORNIA MUNICIPAL FUND INC.
388 Greenwich Street
New York, New York 10013
FD01037 10/98
