Greenwich Street
-------------------
CALIFORNIA
MUNICIPAL FUND INC.
Annual Report
August 31, 1999
<PAGE>
Greenwich [PHOTO OMITTED] [PHOTO OMITTED]
Street California
Municipal Fund HEATH B. JOSEPH P.
Inc. MCLENDON DEANE
Chairman Vice President and
Investment Officer
Dear Shareholder:
We are pleased to provide the annual report for the Greenwich Street
California Municipal Fund, Inc. ("Fund") for the period ended August 31, 1999.
Over the twelve months covered by this report, the Fund distributed income
dividends totaling $0.61 per share. The table below details the annualized
distribution rates and the twelve-month total returns based on the Fund's August
31, 1999, net asset value ("NAV") per share and its American Stock Exchange
("AMEX") closing price:
Annualized Twelve-Month
Price Per Share Distribution Rate* Total Return
--------------- ------------------ ------------
$13.49 (NAV) 4.36% (1.43)%
$12.00 (AMEX) 4.90% (3.07)%
In comparison, the Fund's Lipper, Inc. peer group average posted a total return
on NAV of a negative 1.73% for the same time period. (Lipper is a major
fund-tracking organization.)
Municipal Bond Market Update
We believe that the municipal bond market is approaching a temporary bottom. The
Federal Reserve Board ("Fed") has implemented two monetary policy adjustments -
a 25 basis point increase in June and a 25 basis point increase in August - and
those adjustments should remain unchanged for the foreseeable future. It is our
view that the fixed income markets are returning to `normal' in the aftermath of
forced liquidations by major hedge funds and negatively impacted global markets
in late 1998. In our opinion, long U.S. Treasury yields represent good value and
municipal bonds are trading at roughly 95%-96% of governments. This comparison
illustrates that municipal securities are trading at low valuations relative to
governments since, under normal market
- ----------
* This distribution rate assumes a current monthly income dividend rate of
$0.049 per share for twelve months.
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Greenwich Street California Municipal Fund Inc. 1
<PAGE>
conditions, municipal securities have historically yielded roughly 85% of
similar maturity Treasuries.
The recent upward pressure on municipal yields appears to result largely from
two factors: 1) the lack of demand for municipal bonds by the traditional
institutional sectors that have supported the municipal market; and 2)
additional pressures resulting from the pre-Y2K avalanche of issues in the
taxable market, which has attracted institutional investors who would otherwise
buy municipals.
Yields have rebounded sharply, up nearly 3/4 of 1% since the beginning of 1999.
The slope of the municipal yield curve has remained extremely steep, with
20-year municipals yielding roughly 120 basis points more than 1-year paper (The
yield curve measures the difference between short- and long-term rates). In the
U.S. Treasury market, the difference between 1-year and 30-year bond yields is
only 80 basis points.
California Economic Highlights
California's unemployment rate dropped 0.2% in August to 5.1%. This is the
state's lowest reported unemployment rate since February 1990. The Golden State
accounted for almost 40% of the nation's non-farm job growth in August. During
the month, employment grew in all industry sectors led by trade and services,
and on a year-over-year basis, construction continues to be the fastest growing
major industry sector. A notable aspect of California's current economic
expansion is that existing home sales growth has consistently outstripped new
home construction growth.
Prior to 1990, the structural underpinnings of California's economy were
supported 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 high-tech industries which has provided the
state with a broader and more diversified economy.
We believe these statistics lend credence to our view that California is
currently experiencing a meaningful economic resurgence. Factors such as strong
employment growth, high real estate values and a state economy with many
different types of businesses should allow California to remain a competitive
economic force for many years to come.
Investment Strategy
The Fund focused on hospital bonds (20.5%), water & sewer bonds
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2 1999 Annual Report to Shareholders
<PAGE>
(19.8%) and transportation bonds (17.6%) because we believe they offered good
relative values. In addition, as of August 31, 1999, approximately 95.6% of the
Fund's holdings were rated investment grade by either Standard & Poor's
Corporation or Moody's Investors Services Inc., with approximately 50.4% 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 nationally recognized statistical rating organization, or
determined by the manager to be of equivalent quality.)
Our view on California municipal securities remains guardedly optimistic. We
think our current investment strategy of buying bonds with relatively longer
maturities (20 to 30 years), and lower coupons, (5% and slightly lower) should
put us in a strategic position for the decline in long term interest rates that
we anticipate later on this year.
In anticipation of the Fed's recent increases in short-term interest rates, our
investment strategy involved seeking high grade, short maturity bonds.
Currently, with recent interest rate increases behind us, we have been
aggressive buyers of longer, high-grade discount bonds. Investor sentiment has
weakened, in our view, and many bond investors are cautious due to the
possibility of further Fed actions.
Municipal Bond Market Outlook
Our outlook for the municipal bond market is optimistic. We think that the
actions of the Fed were pre-emptively conservative. Inflation should remain in
check, at least in the near-term. A possible easing of economic activity as a
result of Y2K ramifications could prove positive for fixed income markets.
Looking ahead, we believe that the U.S. economy should remain strong in the
coming months with muted inflationary pressures. Recent economic conditions have
created opportunities for municipal securities to catch up with Treasuries, and
we continue to see good value at the long end of the market.
With long-term municipal bond yields in the 5.75% range and inflation under
control, "real," inflation-adjusted yields on longer intermediate and long-term
municipals are competitive. Following the Fed's August 24, 1999 short-term
interest rate increase of 0.25%, we do not anticipate further policy change for
the remainder of 1999 amid optimism that the Fed has acted sufficiently to curb
inflationary pressures.
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Greenwich Street California Municipal Fund Inc. 3
<PAGE>
In closing, thank you for investing in the Greenwich Street California
Municipals 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 and
Investment Officer
September 23, 1999
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4 1999 Annual Report to Shareholders
<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. 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 per share ("NAV") on the
determination date, you will be issued shares by the Fund at a price reflecting
the NAV, or 95% of the market price, whichever is greater.
If the market price is less than the NAV at the time of valuation (the close of
business on the determination date), or if the Fund declares a dividend or
capital gains distribution payable only in cash, the Plan Agent (First Data
Investors Services Group Inc.) will buy common stock for your account in the
open market.
If the Plan Agent begins to purchase additional shares in the open market and
the market price of the shares subsequently rises above the previously
determined NAV before the purchases are completed, the Plan Agent will attempt
to terminate purchases and have the Fund issue the remaining dividend or
distribution in shares at the greater of the previously determined NAV or 95% of
the market price. 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.
Restated Plan Adopted
A more complete description of the current Plan appears in this report beginning
on page 19. The descriptions herein are based on a restated version of the Plan,
which was recently adopted to reflect current practices of the Plan Agent and
for the purpose of standardizing the terms among all closed-end mutual funds
managed by SSB Citi Fund Management LLC, formerly known as SSBC Fund Management
Inc.
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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Greenwich Street California Municipal Fund Inc. 5
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Schedule of Investments August 31, 1999
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<TABLE>
<CAPTION>
FACE
AMOUNT RATING (a) SECURITY VALUE
===================================================================================================
<S> <C> <C>
Education -- 8.7%
California Educational Facility Authority:
$2,100,000 A1* Loyola Marymount University, 5.750% due 10/1/24 $ 2,107,875
2,000,000 A3* Southwestern University, 6.700% due 11/1/24 2,152,500
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4,260,375
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General Obligation -- 3.3%
1,715,000 AAA California State GO, AMBAC-Insured, 5.000% due 10/1/18 1,601,381
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Hospital -- 20.5%
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 (b) 2,149,538
2,000,000 A Kaiser Permanente Hospital, 5.550% due 8/15/25 1,887,500
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 2,230,000
2,000,000 AA Fresno Health Facility Revenue, Holy Cross Health
System, 5.625% due 12/1/15 2,015,000
1,615,000 A Torrence Hospital Revenue, Little Company of Mary
Hospital, (Escrowed to maturity with U.S.
government securities), 6.875% due 7/1/15 (b) 1,742,181
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10,024,219
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Housing -- 7.3%
1,400,000 Aa2* California HFA Home Mortgage, Series E, FHA-Insured,
6.375% due 8/1/27(c) 1,442,000
2,000,000 AAA Santa Rosa Mortgage Revenue, Village Square
Apartments, FHA-Insured, 6.875% due 9/1/27 2,120,000
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3,562,000
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Miscellaneous -- 10.5%
2,000,000 AAA Los Angeles Convention and Exhibition Center
Authority, Lease Revenue, Series A, MBIA-Insured,
5.375% due 8/15/18 1,967,500
1,675,000 AAA Orange County 1996 Recovery, COP, Series A,
MBIA-Insured, 6.000% due 7/1/26 1,727,344
1,505,000 AAA Pomona Public Financing Authority Revenue,
(Pomona Redevelopment Project), MBIA-Insured,
5.000% due 2/1/18 1,407,175
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5,102,019
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Tax Allocation -- 12.3%
2,100,000 Baa* Hawthorne Community Redevelopment Agency,
Tax Allocation, (Pre-Refunded -- Escrowed with
U.S. government securities to 9/1/04 Call @ 102),
6.700% due 9/1/20 (b) 2,191,875
</TABLE>
See Notes to Financial Statements.
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6 1999 Annual Report to Shareholders
<PAGE>
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Schedule of Investments (continued) August 31, 1999
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<TABLE>
<CAPTION>
FACE
AMOUNT RATING (a) SECURITY VALUE
===================================================================================================
<S> <C> <C>
Tax Allocation -- 12.3% (continued)
$ 2,000,000 AAA Rancho Cucamonga Redevelopment Agency, Tax
Allocation, MBIA-Insured, 5.250% due 9/1/26 $ 1,872,500
2,000,000 AAA San Jose Redevelopment Agency, Tax Allocation,
MBIA-Insured, 5.250% due 8/1/16 1,960,000
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6,024,375
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Transportation -- 17.6%
2,000,000 BBB- Foothill Eastern Transportation, California Toll
Revenue, Series A, 6.000% due 1/1/34 2,152,500
2,000,000 AAA Los Angeles County Metropolitan Transportation Authority,
Sales Tax Allocation, Series A, MBIA-Insured,
5.625% due 7/1/18 2,010,000
20,000,000 AAA San Joaquin Hills Transportation Corridor Agency,
Sr. Lien Toll, (Escrowed to maturity with state &
local government securities), zero coupon due 1/1/26 4,400,000
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8,562,500
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Water and Sewer -- 19.8%
1,240,000 AAA Anaheim Public Finance Authority, Water Utility,
(Lenain Filtration Project), FGIC-Insured,
5.250% due 10/1/19 1,193,500
100,000 VMIG1* California Pollution Control Financing Authority,
Solid Waste Disposal Revenue, Series A, 100,000
2.500% due 10/1/31 (c) (d)
2,000,000 AA California State Department of Water Revenue,
Series L, 5.500% due 12/1/23 1,970,000
2,140,000 AAA East Bay Municipal Wastewater System, FGIC-Insured,
5.000% due 6/1/26 1,936,700
1,875,000 BBB Kings County Waste Management Authority, Solid
Waste Revenue, 7.200% due 10/1/14(c) 2,060,156
1,000,000 AAA Redding Joint Powers Financing Authority, Wastewater
Revenue, Series A, FGIC-Insured, 5.500% due 12/1/18 998,750
1,500,000 AAA San Diego PCFA, Sewer Revenue, FGIC-Insured,
5.000% due 5/15/20 1,385,625
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9,644,731
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TOTAL INVESTMENTS -- 100%
(Cost -- $43,240,067**) $48,781,600
===================================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Services with the exception
of those identified by an asterisk (*), which are rated by Moody's
Investors Services Inc.
(b) Pre-Refunded bonds escrowed with U.S. government securities and bonds
escrowed to maturity with U.S. government securities are considered by the
Manager to be triple-A rated even if the issuer has not applied for new
ratings.
(c) Income from this issue is considered a preference item for purposes of
calculating the alternative minimum tax.
(d) Variable rate obligation payable at par on demand at any time on no more
than seven days notice.
** Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
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Greenwich Street California Municipal Fund Inc. 7
<PAGE>
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Bond Ratings (unaudited)
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The definitions of the applicable rating symbols are set forth below:
Standard & Poor's Ratings Service ("Standard & Poor's") -- Ratings from "AA" to
"BBB" may be modified by the addition of a plus (+) or minus (-) sign which is
used 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 Investors Service Inc. ("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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8 1999 Annual Report to Shareholders
<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)
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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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Greenwich Street California Municipal Fund Inc. 9
<PAGE>
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Statement of Assets and Liabilities August 31, 1999
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $43,240,067) $48,781,600
Cash 57,813
Interest receivable 697,318
Deferred organization costs 1,623
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Total Assets 49,538,354
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LIABILITIES:
Dividends payable 65,729
Management fees payable 37,512
Accrued expenses 70,575
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Total Liabilities 173,816
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Total Net Assets $49,364,538
================================================================================
NET ASSETS:
Par value of capital shares $ 3,658
Capital paid in excess of par value 43,831,350
Overdistributed net investment income (18,570)
Accumulated net realized gain from security transactions 6,567
Net unrealized appreciation of investments 5,541,533
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Total Net Assets
(Equivalent to $13.49 a share on 3,658,334 shares of $0.001
par value outstanding; 500,000,000 shares authorized) $49,364,538
================================================================================
See Notes to Financial Statements.
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10 1999 Annual Report to Shareholders
<PAGE>
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Statement of Operations For the Year Ended August 31, 1999
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INVESTMENT INCOME:
Interest $2,812,299
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EXPENSES:
Management fees (Note 3) 468,659
Audit and legal 56,706
Shareholder and system servicing fees 42,772
Shareholder communications 37,201
Amortization of deferred organization costs 20,411
Registration fees 3,438
Pricing service fees 3,052
Directors' fees 1,441
Custody 965
Other 10,537
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Total Expenses 645,182
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Net Investment Income 2,167,117
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 4):
Realized Gain From Security Transactions
(excluding short-term securities):
Proceed from sales 671,310
Cost of securities sold 664,598
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Net Realized Gain 6,712
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Change in Net Unrealized Appreciation of investments:
Beginning of year 8,615,361
End of year 5,541,533
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Decrease in Net Unrealized Appreciation (3,073,828)
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Net Loss on Investments (3,067,116)
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Decrease in Net Assets From Operations $ (899,999)
================================================================================
See Notes to Financial Statements.
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Greenwich Street California Municipal Fund Inc. 11
<PAGE>
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Statements of Changes in Net Assets For the Years Ended August 31,
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1999 1998
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OPERATIONS:
Net investment income $ 2,167,117 $ 2,194,956
Net realized gain 6,712 148,236
Increase (decrease) in net unrealized
appreciation (3,073,828) 2,791,493
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Increase (Decrease) in Net Assets From
Operations (899,999) 5,134,685
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DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income (2,224,120) (2,173,047)
Net realized gains (85,021) (373,150)
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Decrease in Net Assets From
Distributions to Shareholders (2,309,141) (2,546,197)
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Increase (Decrease) in Net Assets (3,209,140) 2,588,488
NET ASSETS:
Beginning of year 52,573,678 49,985,190
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End of year* $49,364,538 $52,573,678
================================================================================
* Includes undistributed (overdistributed) net
investment income of: $(18,570) $38,433
================================================================================
See Notes to Financial Statements.
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12 1999 Annual Report to Shareholders
<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 for
which market quotations are not available will be valued in good faith at fair
value by or under the direction of the Board of Directors; (d) securities
maturing within 60 days are valued at cost plus accreted discount, or minus
amortized premium, which approximates value; (e) gains or losses on the sale of
securities are calculated by using the specific identification method; (f)
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; (g) dividends and distributions to
shareholders are recorded on the ex-dividend date; (h) 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; (i) 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 (j) 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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Greenwich Street California Municipal Fund Inc. 13
<PAGE>
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Notes to Financial Statements (continued)
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Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
3. Management Agreement and Affiliated Transactions
SSB Citi Fund Management LLC ("SSBC"), formerly known as SSBC Fund Management
Inc., a subsidiary of Salomon Smith Barney Holdings Inc. ("SSBH"), acts as
investment manager to the Fund. The Fund pays SSBC 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 Salomon Smith Barney
Inc., another subsidiary of SSBH.
4. Investments
For the year ended August 31, 1999, the aggregate cost of purchases and proceeds
from sales of investments (including maturities, but excluding short-term
securities) were as follows:
================================================================================
Purchases --
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Sales $671,310
================================================================================
At August 31, 1999, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $5,669,344
Gross unrealized depreciation (127,811)
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Net unrealized appreciation $5,541,533
================================================================================
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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14 1999 Annual Report to Shareholders
<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, 1999, the Fund had no open futures contracts.
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Greenwich Street California Municipal Fund Inc. 15
<PAGE>
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Financial Highlights
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For a share of capital stock outstanding throughout each year ended August 31,
except where noted:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995(1)(2)
==========================================================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $14.37 $13.66 $13.13 $12.92 $12.00
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Income (Loss) From Operations:
Net investment income(3) 0.59 0.60 0.62 0.63 0.60
Net realized and unrealized gain (loss) (0.84) 0.80 0.87 0.30 0.84
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Total Income (Loss) From Operations (0.25) 1.40 1.49 0.93 1.44
- --------------------------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.61) (0.59) (0.63) (0.70) (0.52)
Net realized gains (0.02) (0.10) (0.33) (0.02) --
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Total Distributions (0.63) (0.69) (0.96) (0.72) (0.52)
- --------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Year $13.49 $14.37 $13.66 $13.13 $12.92
- --------------------------------------------------------------------------------------------------------------------------
Total Return, Based on Market Value* (3.07)% 7.56% 13.39% 11.92% 0.25%++
- --------------------------------------------------------------------------------------------------------------------------
Total Return, Based on Net Asset Value* (1.43)% 10.98% 12.19% 7.96% 12.24%++
- --------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Year (000s) $49,365 $52,574 $49,985 $48,030 $47,250
- --------------------------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(3) 1.24% 1.20% 1.21% 1.15% 1.02%+
Net investment income 4.16 4.25 4.64 4.75 5.16+
- --------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 0% 7% 28% 42% 7%
- --------------------------------------------------------------------------------------------------------------------------
Market Value, End of Year $12.000 $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 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.
- --------------------------------------------------------------------------------
16 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
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, 1999, 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 four-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, 1999, 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, 1999, 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 four-year period then ended and the
period from September 23, 1994 (commencment of operations) to August 31, 1995,
in conformity with generally accepted accounting principles.
/s/ KPMG LLP
New York, New York
October 15, 1999
- --------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 17
<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
9/22/98 9/25/98 13.875 14.46 0.05400 13.85
10/27/98 10/30/98 13.688 14.44 0.05400 13.87
11/23/98 11/27/98 13.625 14.40 0.05400 13.83
12/21/98 12/24/98 13.438 14.39 0.05400 13.48
12/29/98* 12/31/98 13.250 14.34 0.02320 13.16
1/26/99 1/29/99 12.750 14.42 0.04900 12.94
2/23/99 2/26/99 12.938 14.38 0.04900 13.02
3/23/99 3/26/99 12.875 14.35 0.04900 12.78
4/27/99 4/30/99 12.438 14.33 0.04900 12.64
5/25/99 5/28/99 12.188 14.13 0.04900 12.27
6/22/99 6/25/99 12.063 13.89 0.04900 12.05
7/27/99 7/30/99 11.875 13.84 0.04900 12.00
8/24/99 8/27/99 12.000 13.45 0.04900 12.09
================================================================================
+ As of record date.
* Capital gain distribution.
- --------------------------------------------------------------------------------
18 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
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 Investors Services Group Inc.
("First Data") as purchasing agent under the Plan, unless the shareholder elects
to receive cash. Distributions with respect to shares registered in the name of
a broker-dealer or other nominee (that is, in "street name") will be reinvested
by the broker or nominee in additional shares under the Plan, unless the service
is not provided by the broker or nominee or the shareholder elects to receive
distributions in cash. Investors who own common stock registered in street name
should consult their broker-dealers for details regarding reinvestment. All
distributions to 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 to or exceeds the net asset value per share
of the common stock on the determination date (generally, the record date for
the distribution), Plan participants will be issued shares of common stock by
the Fund at a price equal to the greater of net asset value determined as
described below under "Net Asset Value" or 95% of the 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 (which is the close of busines on the
determination date), 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 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 as
of valuation time, 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 as
of the valuation time 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 as of the valuation time, 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 such net asset value. First
Data will begin to purchase common stock on the open market as soon as
practicable after the determination
- --------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 19
<PAGE>
- --------------------------------------------------------------------------------
Dividend Reinvestment Plan (unaudited) (continued)
- --------------------------------------------------------------------------------
date for the dividend or capital gains distribution, but in no event shall such
purchases continue later than 30 days after the payment date for such dividend
or distribution, or the record date for a suceeding dividend or distribution,
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 any brokerage commissions actually 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, P.O. Box
9699, Providence, Rhode Island 02940-9699 or by telephone at 1-800-451-2010.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
20 1999 Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Tax Information (unaudited)
- --------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
August 31, 1999:
o 100.00% of the dividends paid by the Fund from net investment income
as tax-exempt for regular Federal income tax purposes.
o Total long-term capital gain distributions paid of $145.
- --------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 21
<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
Paul A. Brook
Controller
Christina T. Sydor
Secretary
INVESTMENT MANAGER
SSB Citi Fund Management LLC
CUSTODIAN
PNC Bank, N.A.
SHAREHOLDER
SERVICING AGENT
First Data Investor Services Group, Inc.
P.O. Box 9699
Providence, RI 02940-9699
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 10/99
