Greenwich Street
CALIFORNIA
MUNICIPAL FUND INC.
Semi-Annual Report
February 29, 2000
<PAGE>
Greenwich Street California Municipal Fund Inc.
[Photo of Joseph P. Deane]
Vice President
[Photo of Heath B. McLendon]
Chairman
Dear Shareholder:
We are pleased to provide the semi-annual report for the Greenwich Street
California Municipal Fund Inc. ("Fund") for the period ended February 29, 2000.
We are pleased to report that on Tuesday, March 21, 2000, the Fund announced a
dividend from ordinary income of $0.050 for the months of April, May and June
2000. This represents a slight increase from the previous dividend of $0.049 per
share. Also, over the six months covered by this report, the Fund distributed
income dividends totaling $0.29 per share.
The table below details the annualized distribution rates and the six-month
total return based on the Fund's February 29, 2000, net asset value ("NAV") per
share and its American Stock Exchange ("AMEX") closing price:1
Annualized Six-Month
Price Per Share Distribution Rate(2) Total Return(2)
--------------- -------------------- ---------------
$12.98 (NAV) 4.53% (1.24)%
$10.938 (AMEX) 5.38% (6.44)%
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(1) The NAV is calculated by subtracting total liabilities from the closing
value of all securities held by the Fund, plus all other assets. This
result (net assets) is divided by the total number of shares outstanding.
The NAV fluctuates with changes in the market price of the securities in
which the Fund has invested. However, the price at which the investor buys
or sells shares of the Fund is its market (AMEX) price as determined by
supply and demand.
(2) Total returns are based on changes in NAV and the market value,
respectively. Total returns assume the reinvestment of all dividends
and/or capital gains distributions in additional shares. The annualized
distribution rate is the Fund's current monthly income dividend rate,
annualized, and then divided by the NAV or the market value noted in the
report. This annualized distribution rate assumes a current monthly income
dividend rate of $0.049 for twelve months. This rate is as of March 31,
2000 and is subject to change. The important difference between a total
return and an annualized distribution rate is that the total return takes
into consideration a number of factors including the fluctuation of the
NAV or the market value during the period reported. The NAV fluctuation
includes the effects of unrealized appreciation or depreciation in the
Fund. Accordingly, since an annualized distribution rate only reflects the
current monthly income dividend rate annualized, it should not be used as
the sole indicator to judge the return you receive from your Fund
investment. Past performance is not indicative of future results.
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Greenwich Street California Municipal Fund Inc. 1
<PAGE>
In comparison, the Fund's Lipper, Inc. peer group average posted a total return
based on NAV of negative 2.54% for the same time period.(3)
Market Update
In our view, bond yields are high enough to adequately reflect the risk of
slightly higher inflation. The period covered by this report was marked by
continued robust U.S. economic growth, historically low inflation and low
unemployment.
On February 2, 2000, the Federal Reserve Board ("Fed") raised interest rates for
a fourth time in less than eight months, seeking to help reduce inflationary
pressure and slow down the nation's rapidly growing economy.(4) Perhaps more
significant than the Fed's recent policy decisions was its accompanying
statement that rapid growth could foster inflationary imbalances that might
undermine the U.S. economy's record economic expansion. We believe that this
vigilance may hint at a slightly more aggressive approach by the Fed in the
months ahead. However, in our view, bond yields are high enough to adequately
reflect the risk of slightly higher inflation. Indeed, we think that bond yields
may be near their peak.
We believe performance in the bond market during the period has been a direct
result of Fed decisions. While presumably aimed at the bull market in stocks, it
is the bond market that has been negatively impacted on fears of further Fed
rate increases. We think the current lack of inflationary data defies a
historically tight labor market and shows the incredible influence of technology
and the power of global pricing constraints.
The bond market had a tough time in 1999. Tax-loss selling and asset allocation
shifts out of municipal securities precipitated massive outflows in the fourth
quarter, prompting bond funds to sell their municipal bond holdings. This drove
yields even higher and sent the net asset values of many funds lower,
accelerating outflows and leaving bond dealers reluctant to hold municipal
securities. Additionally, the bond market has suffered in recent months from
uncertainty over the outlook for future Fed monetary policy, given the rise of
the stock market and the higher consumer demand at the end of 1999. Also, we
have noted that supply in the new-issue market is down substantially from last
year.
These factors, in addition to the considerable momentum going into 2000, may
mean that there is less financial restraint in the economy than previously
believed. The pace of demand is surpassing even the rosiest
- ----------
(3) Lipper, Inc. is a nationally recognized organization that reports on
mutual fund total return performance and calculates fund rankings. Peer
averages are based on universes of funds with similar investment
objectives. Lipper, Inc. peer group averages include reinvested dividends
and capital gains, if any, and exclude sales charges.
(4) On Tuesday, March 21, 2000 after this letter was written, the Fed raised
interest rates 0.25%.
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2 2000 Semi-Annual Report to Shareholders
<PAGE>
assessments of the economy's speed limit, threatening to bring inflation back
and underscoring the need for Fed vigilance and restraint.
Under "normal" market conditions, municipal investors pay for the tax-free
income benefits by getting a lower return. Today, however, investors are saving
on taxes without sacrificing returns. It is possible to buy double- and triple-
A-rated bonds yielding nearly 100% or more of similar maturity U.S. Treasury
bonds, well above the historical average of roughly 80%. We think these yields
represent extraordinarily good value for municipal securities.
California Economic Highlights
The end of 1999 saw a flourish of holiday sales, which contributed to a burst of
year-end job creation in California. Rising home prices and mortgage rates may
have slowed home sales, but home and business construction continued to grow. An
important sign of the Golden State's current economic strength and future
prospects is the explosion of capital investment in emerging businesses. Fueled
by booming Internet-related companies, venture capital investments in Northern
California tripled in 1999 to $16.2 billion - over 33% of total venture capital
investment for the entire U.S. The state as a whole accounted for over 42% of
the nation's total venture capital investments, based on estimates from National
Venture Capital Association/Venture Economics.
California's economy passed several important milestones over the period,
reaching a 30-year low in unemployment and passing the 14 million job mark in
nonfarm wage and salary employment. Moreover, California's unemployment rate
dropped to 4.9% - the lowest level since 1969. The Golden State accounts for
approximately 40% of the entire nation's job growth, with the service sector,
particularly business services, adding the greatest number of jobs. We believe
strong building activity and swelling personal consumption are driving the
distribution of employment gains.
California is currently experiencing a meaningful economic resurgence, as it
enjoys its best finances of the last eight to ten years. In our view, the Golden
State's economic recovery has been driven mainly by the growth of new, more
diversified industries, which has effectively provided the state with a broader
economic base. The nation's largest state economy, and the seventh largest
economy in the world, now appears to be running on all cylinders as evidenced by
rising real estate prices.
We think these gains, combined with factors such as strong employment growth,
high real estate values, a more broadly diversified state economy and an annual
state GDP of more than $1 trillion, should allow California to remain a
competitive economic force for many years to come.
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Greenwich Street California Municipal Fund Inc. 3
<PAGE>
Investment Strategy
The Greenwich Street California Municipal Fund seeks as high a level of current
income exempt from Federal income tax and California personal income tax as is
consistent with prudent investing.(5)
At the end of February, the Fund's weighted average maturity was approximately
20.2 years. In addition, as of February 29, 2000, approximately 95.5% of the
Fund's holdings were rated investment grade by either Standard & Poor's
Corporation or Moody's Investors Services Inc., with approximately 42.4% 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 are
determined by the manager to be of equivalent quality.)
The Fund's investment strategy going forward will be three-fold:
o We are lengthening maturities in the portfolio to take advantage of
the inexpensive valuations of municipal bonds relative to U.S.
Treasuries
o We are focusing on investing in very high-grade issues
o We are investing in discount paper because this is where we believe
we can obtain the best value
Our aim is to sell off some of our intermediate-term maturities that were
defensive and stretch out longer on the yield curve to lock in today's higher
rates. (The yield curve is the graphical depiction of the relationship between
the yield on bonds of the same credit quality but different maturities.) We see
the best opportunity for reward right now at the long end of the curve.
Municipal Bond Market Outlook
We think the U.S. economy should remain stable this year, as low unemployment
and strong consumer confidence should likely support demand for goods. Moreover,
we expect that the Fed has engineered a good balance between strong economic
growth and an "acceptable" rate of inflation.
Regarding further Fed monetary policy tightenings, we think that such actions
would not be detrimental to the bond market, particularly as the U.S. Treasury
continues to pay down debt and inflation appears to be under control. We think
that any further Fed policy actions have already been comfortably priced into
the bond market. We believe the good news
- ----------
(5) A portion of the income from the Fund may be subject to the Alternative
Minimum Income Tax ("AMT").
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4 2000 Semi-Annual Report to Shareholders
<PAGE>
is that the economy's "soft landing" is likely to be at a higher annual growth
rate than was previously thought possible due to the possible emergence of a
"New Economy," where technological advances can spur economic growth without
inflationary pressures because of higher production.
In our judgment, a number of influences remain favorable for the municipal bond
market. The new issue market is expected to decline this year, boosting demand
for bonds currently outstanding and enhancing interest for the roughly $175
billion of new munis expected in 2000. Fiscal trends are another major positive.
During past economic downturns, some municipal issuers facing declining tax
receipts were hard-pressed to repay their bond obligations. Today, many state
and local governments have budget surpluses. We believe these surpluses indicate
that investors will feel more comfortable holding munis, even in a downturn.
Lastly, recent narrowing of spreads in the taxable market has made alternatives
less attractive. All of these trends help to explain why we remain optimistic
about the long-term prospects for the municipal bond market.
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 in the new century.
Sincerely,
/s/ Heath B. McLendon /s/ Joseph P. Deane
Heath B. McLendon Joseph P. Deane
Chairman Vice President
March 16, 2000
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Greenwich Street California Municipal Fund Inc. 5
<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 PFPC Global Fund Services
("Plan Agent"), formerly known as 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.
To find out more detailed information about the Plan and about how you can
participate, please call PFPC Global Fund Services at (800) 331-1710.
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6 2000 Semi-Annual Report to Shareholders
<PAGE>
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Schedule of Investments (unaudited) February 29, 2000
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<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
===========================================================================================
<S> <C> <C> <C>
Education -- 8.7%
California Educational Facility Authority:
$ 2,100,000 A1* Loyola Marymount University, 5.750% due 10/1/24 $1,953,000
2,000,000 A3* Southwestern University, 6.700% due 11/1/24 2,072,500
- -------------------------------------------------------------------------------------------
4,025,500
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Hospital -- 24.5%
California Health Facility Financing Authority:
2,000,000 A2* Cedars-Sinai Medical Center, Series A,
6.125% due 12/1/30 1,905,000
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) 2,103,700
2,000,000 A Kaiser Permanente Hospital, 5.550% due 8/15/25 1,690,000
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 2,182,500
2,000,000 AA Fresno Health Facility Revenue, Holy Cross Health
System, 5.625% due 12/1/15 1,900,000
1,615,000 A Torrence Hospital Revenue, Little Co. of Mary
Hospital, (Escrowed to maturity with U.S.
government securities), 6.875% due 7/1/15 (b) 1,709,881
- -------------------------------------------------------------------------------------------
11,491,081
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Housing -- 11.5%
2,000,000 BBB- Virgin Islands Public Financial Authority Revenue,
Series A, 6.500% due 10/1/24 1,972,500
1,400,000 Aa2* California HFA Home Mortgage, Series E, FHA-Insured,
6.375% due 8/1/27 (c) 1,410,500
2,000,000 AAA Santa Rosa Mortgage Revenue, Village Square
Apartments, FHA-Insured, 6.875% due 9/1/27 2,077,500
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5,460,500
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Miscellaneous -- 7.6%
2,000,000 AAA Los Angeles Convention and Exhibition Center
Authority Lease Revenue, Series A, MBIA-Insured,
5.375% due 8/15/18 1,905,000
1,675,000 AAA Orange County 1996 Recovery, COP, Series A,
MBIA-Insured, 6.000% due 7/1/26 1,683,375
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3,588,375
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Tax Allocation -- 10.5%
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) 2,142,000
</TABLE>
See Notes to Financial Statements.
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Greenwich Street California Municipal Fund Inc. 7
<PAGE>
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Schedule of Investments (unaudited) (continued) February 29, 2000
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<TABLE>
<CAPTION>
FACE
AMOUNT RATING(A) SECURITY VALUE
===========================================================================================
<S> <C> <C> <C>
Tax Allocation -- 10.5% (continued)
$ 1,000,000 AAA Rancho Cucamonga Redevelopment Agency, Tax
Allocation, MBIA-Insured, 5.250% due 9/1/26 $ 898,750
2,000,000 AAA San Jose Redevelopment Agency, Tax Allocation,
MBIA-Insured, 5.250% due 8/1/16 1,907,500
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4,948,250
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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 2,122,500
2,000,000 AAA Los Angeles County Metropolitan Transportation
Authority, Sales Tax Allocation, Series A,
MBIA-Insured, 5.625% due 7/1/18 1,972,500
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 4,175,000
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8,270,000
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Water & Sewer -- 19.6%
1,240,000 AAA Anaheim Public Finance Authority, Water Utility,
(Lenain Filtration Project), FGIC-Insured,
5.250% due 10/1/19 1,143,900
2,000,000 AA California State Department of Water Revenue,
Series L, 5.500% due 12/1/23 1,885,000
2,140,000 AAA East Bay Municipal Wastewater System, FGIC-Insured,
5.000% due 6/1/26 1,845,750
1,875,000 BBB Kings County Waste Management Authority, Solid
Waste Revenue, 7.200% due 10/1/14 (c) 2,022,656
1,000,000 AAA Redding Joint Powers Financing Authority, Wastewater
Revenue, Series A, FGIC-Insured, 5.500% due 12/1/18 971,250
1,500,000 AAA San Diego PCFA Sewer Revenue, FGIC-Insured,
5.000% due 5/15/20 1,325,626
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9,194,182
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TOTAL INVESTMENTS -- 100%
(Cost -- $43,123,554**) $46,977,888
===========================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service except those
identified by an asterisk (*), which are rated by Moody's Investors
Service 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.
** Aggregate cost for Federal income tax purposes is substantially the same.
See Notes to Financial Statements.
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8 2000 Semi-Annual Report to Shareholders
<PAGE>
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Notes to Financial Statements (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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Greenwich Street California Municipal Fund Inc. 9
<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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10 2000 Semi-Annual Report to Shareholders
<PAGE>
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Statement of Assets and Liabilities (unaudited) February 29, 2000
- --------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $43,123,554) $ 46,977,888
Interest receivable 715,725
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Total Assets 47,693,613
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LIABILITIES:
Payable to bank 65,922
Dividends payable 55,008
Management fees payable 31,973
Accrued expenses 52,691
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Total Liabilities 205,594
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Total Net Assets $ 47,488,019
================================================================================
NET ASSETS:
Par value of capital shares $ 3,658
Capital paid in excess of par value 43,831,350
Undistributed net investment income 22,690
Accumulated net realized loss from security transactions (224,013)
Net unrealized appreciation of investments 3,854,334
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Total Net Assets
(Equivalent to $12.98 a share on 3,658,334 shares of $0.001
par value outstanding; 500,000,000 shares authorized) $ 47,488,019
================================================================================
See Notes to Financial Statements.
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Greenwich Street California Municipal Fund Inc. 11
<PAGE>
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Statement of Operations (unaudited)
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For the Six Months Ended February 29, 2000
INVESTMENT INCOME:
Interest $ 1,407,913
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EXPENSES:
Management fees (Note 3) 215,302
Audit and legal 26,676
Shareholder and system servicing fees 19,547
Shareholder communications 18,699
Deferred organization costs 1,845
Pricing service fees 1,745
Custody 1,196
Directors' fees 1,147
Other 4,936
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Total Expenses 291,093
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Net Investment Income 1,116,820
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 4):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 3,825,611
Cost of securities sold 4,056,191
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Net Realized Loss (230,580)
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Change in Net Unrealized Appreciation of investments:
Beginning of period 5,541,533
End of period 3,854,334
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Decrease in Net Unrealized Appreciation (1,687,199)
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Net Loss on Investments (1,917,779)
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Decrease in Net Assets From Operations $ (800,959)
================================================================================
See Notes to Financial Statements.
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12 2000 Semi-Annual Report to Shareholders
<PAGE>
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Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
For the Six Months Ended February 29, 2000 (unaudited)
and for the Year Ended August 31, 1999
<TABLE>
<CAPTION>
February 29 August 31
===================================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,116,820 $ 2,167,117
Net realized gain (loss) (230,580) 6,712
Decrease in net unrealized appreciation (1,687,199) (3,073,828)
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Decrease in Net Assets From Operations (800,959) (899,999)
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DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income (1,075,560) (2,224,120)
Net realized gains -- (85,021)
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Decrease in Net Assets From
Distributions to Shareholders (1,075,560) (2,309,141)
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Decrease in Net Assets (1,876,519) (3,209,140)
NET ASSETS:
Beginning of period 49,364,538 52,573,678
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End of period* $ 47,488,019 $ 49,364,538
====================================================================================================
* Includes undistributed (overdistributed) net investment income of: $ 22,690 $ (18,570)
====================================================================================================
</TABLE>
See Notes to Financial Statements.
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Greenwich Street California Municipal Fund Inc. 13
<PAGE>
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Notes to Financial Statements (unaudited)
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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.
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.
Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.
- --------------------------------------------------------------------------------
14 2000 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
3. Management Agreement and Affiliated Transactions
SSB Citi Fund Management LLC ("SSBC"), a subsidiary of Salomon Smith Barney
Holdings Inc. ("SSBH"), which, in turn, is a subsidiary of Citigroup Inc., 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 six months ended February 29, 2000, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:
================================================================================
Purchases $3,926,060
- --------------------------------------------------------------------------------
Sales 3,825,611
================================================================================
At February 29, 2000, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:
================================================================================
Gross unrealized appreciation $ 3,924,119
Gross unrealized depreciation (69,785)
- --------------------------------------------------------------------------------
Net unrealized appreciation $ 3,854,334
================================================================================
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.
- --------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 15
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (unaudited) (continued)
- --------------------------------------------------------------------------------
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 February 29, 2000, the Fund had no open futures contracts.
- --------------------------------------------------------------------------------
16 2000 Semi-Annual Report to Shareholders
<PAGE>
- --------------------------------------------------------------------------------
Financial Data
- --------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year ended August 31,
except where noted:
<TABLE>
<CAPTION>
1999(1) 1999 1998 1997 1996 1995(2)(3)
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $ 13.49 $ 14.37 $ 13.66 $ 13.13 $ 12.92 $ 12.00
- -------------------------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income(4) 0.31 0.59 0.60 0.62 0.63 0.60
Net realized and
unrealized gain (loss) (0.53) (0.84) 0.80 0.87 0.30 0.84
- -------------------------------------------------------------------------------------------------------
Total Income (Loss)
From Operations (0.22) (0.25) 1.40 1.49 0.93 1.44
- -------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.29) (0.61) (0.59) (0.63) (0.70) (0.52)
Net realized gains -- (0.02) (0.10) (0.33) (0.02) --
- -------------------------------------------------------------------------------------------------------
Total Distributions (0.29) (0.63) (0.69) (0.96) (0.72) (0.52)
- -------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $ 12.98 $ 13.49 $ 14.37 $ 13.66 $ 13.13 $ 12.92
- -------------------------------------------------------------------------------------------------------
Total Return, Based on
Market Value* (6.44)%++ (3.07)% 7.56% 13.39% 11.92% 0.25%++
- -------------------------------------------------------------------------------------------------------
Total Return, Based on
Net Asset Value* (1.24)%++ (1.43)% 10.98% 12.19% 7.96% 12.24%++
- -------------------------------------------------------------------------------------------------------
Net Assets,
End of Period (millions) $ 47 $ 49 $ 53 $ 50 $ 48 $ 47
- -------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(4) 1.22%+ 1.24% 1.20% 1.21% 1.15% 1.02%+
Net investment income 4.67+ 4.16 4.25 4.64 4.75 5.16+
- -------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 8% 0% 7% 28% 42% 7%
- -------------------------------------------------------------------------------------------------------
Market Value, End of Period $10.938 $12.000 $13.000 $12.750 $12.125 $11.500
=======================================================================================================
</TABLE>
(1) For the six months ended February 29, 2000 (unaudited).
(2) Based on the weighted average shares outstanding for the period.
(3) For the period from September 23, 1994 (commencement of operations) to
August 31, 1995.
(4) 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.
- --------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 17
<PAGE>
18
- --------------------------------------------------------------------------------
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
================================================================================
9/23/97 9/26/97 12.625 13.95 0.0540 13.03
10/28/97 10/31/97 12.688 13.97 0.0540 12.90
11/24/97 11/28/97 12.688 14.00 0.0540 13.08
12/22/97* 12/26/97 13.000 14.17 0.1020 13.26
1/27/98 1/30/98 13.000 14.25 0.0540 12.98
2/24/98 2/27/98 12.813 14.23 0.0540 12.82
3/24/98 3/27/98 12.875 14.19 0.0540 12.97
4/21/98 4/24/98 12.750 14.05 0.0540 12.70
5/26/98 5/29/98 12.625 14.14 0.0540 12.92
6/23/98 6/26/98 12.750 14.16 0.0540 12.94
7/28/98 7/31/98 12.750 14.15 0.0540 12.78
8/25/98 8/28/98 13.063 14.30 0.0540 13.25
9/22/98 9/25/98 13.875 14.46 0.0540 13.85
10/27/98 10/30/98 13.688 14.44 0.0540 13.87
11/23/98 11/27/98 13.625 14.40 0.0540 13.83
12/21/98 12/24/98 13.438 14.39 0.0540 13.48
12/29/98* 12/31/98 13.250 14.34 0.0232 13.16
1/26/99 1/29/99 12.750 14.42 0.0490 12.94
2/23/99 2/26/99 12.938 14.38 0.0490 13.02
3/23/99 3/26/99 12.875 14.35 0.0490 12.78
4/27/99 4/30/99 12.438 14.33 0.0490 12.64
5/25/99 5/28/99 12.188 14.13 0.0490 12.27
6/22/99 6/25/99 12.063 13.89 0.0490 12.05
7/27/99 7/30/99 11.875 13.84 0.0490 12.00
8/24/99 8/27/99 12.000 13.45 0.0490 12.09
9/21/99 9/24/99 12.000 13.42 0.0490 12.17
10/26/99 10/29/99 11.875 12.96 0.0490 11.79
11/22/99 11/26/99 11.500 13.24 0.0490 11.19
12/27/99 12/30/99 10.750 12.97 0.0490 10.76
1/25/00 1/28/00 10.688 12.79 0.0490 10.79
2/22/00 2/25/00 10.938 12.98 0.0490 10.94
================================================================================
+ As of record date.
* Capital gain distribution.
- --------------------------------------------------------------------------------
18 2000 Semi-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 PFPC Global Fund Services ("PFPC"),
formerly known as First Data Investor Services Group, Inc., 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 PFPC 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, PFPC 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 PFPC has completed its
purchases, the market price exceeds the net asset value of the common stock as
of valuation time, PFPC 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 PFPC is
unable to stop open market purchases and cause the Fund to issue the remaining
shares, the average per share purchase price paid by PFPC 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. PFPC
will begin to purchase common stock on the open market as soon as practicable
after the determination date for the dividend or capital gains distribution, but
in no event shall such purchases continue later
- --------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 19
<PAGE>
- --------------------------------------------------------------------------------
Dividend Reinvestment Plan (unaudited) (continued)
- --------------------------------------------------------------------------------
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.
PFPC 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 PFPC 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. PFPC'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 PFPC, 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 PFPC Global Fund Services, P.O. Box 8030, Boston,
Massachusetts 02266-8030 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.
- --------------------------------------------------------------------------------
20 2000 Semi-Annual Report to Shareholders
<PAGE>
Greenwich Street
-------------------
CALIFORNIA
MUNICIPAL FUND INC.
DIRECTORS
Lee Abraham
Allan J. Bloostein
Jane F. Dasher
Donald R. Foley
Richard E. Hanson Jr.
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
TRANSFER AGENT
PFPC Global Fund Services
P.O. Box 8030
Boston, Massachusetts 02266-8030
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
FD01057 4/00
