Greenwich Street
[GRAPHIC]
CALIFORNIA
MUNICIPAL FUND INC.
Annual Report
August 31, 2000
<PAGE>
Greenwich
Street California
Municipal
Fund Inc.
[PHOTO OMITTED] [PHOTO OMITTED]
HEATH B. JOSEPH P.
MCLENDON DEANE
Chairman Vice President
Dear Shareholder:
We are pleased to provide the annual report for the Greenwich Street California
Municipal Fund Inc. ("Fund") for the year ended August 31, 2000. Over the year
covered by this report, the Fund distributed income dividends totaling $0.59 per
share. The table below details the annualized distribution rate and the
twelve-month total return based on the Fund's August 31, 2000 net asset value
("NAV") per share and its American Stock Exchange ("AMEX") closing price.(1)
Price Annualized Twelve-Month
Per Share Distribution Rate(2) Total Return(2)
--------- -------------------- ---------------
$13.73 (NAV) 4.37% 7.21%
$11.875 (AMEX) 5.05% 4.28%
In comparison, the Lipper Inc. ("Lipper")(3) peer group of closed-end California
municipal debt funds based on NAV returned 7.88% for the same period.
----------
(1) The NAV is calculated by subtracting total liabilities from the closing
value of all securities held by the Fund (plus all other assets) and
dividing the result (total net assets) by the total number of shares
outstanding. The NAV fluctuates with changes in the value of the
securities in which the Fund has invested. However, the price at which the
investor may buy or sell shares of the Fund is at their market (AMEX)
price as determined by supply and demand.
(2) Total returns are based on changes in NAV or 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 $0.05 for 12 months. This rate is as of September 30,
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.
(3) Lipper is an independent mutual fund-tracking organization.
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Greenwich Street California Municipal Fund Inc. 1
<PAGE>
Special Shareholder Notice
On June 22, 2000, the Board of Directors of the Fund unanimously approved a
share buyback program designed to enhance shareholder value. The Board of
Directors believes that the share repurchase program is an opportunity to take
advantage of market price fluctuations with the objective of offering increased
value to the Fund's shareholders. The Fund intends to continue to purchase (and
then retire) shares of its stock in the open market at such times, prices and
amounts deemed advisable.
The Fund's share repurchase program has also added liquidity to the market for
the benefit of investors who wish to sell their shares, while also seeking to
benefit current shareholders by increasing the Fund's shares' NAV. Since the
program began on July 17, 2000, the Fund has repurchased (and retired) 1,500
shares with an average buyback price of $11.73. As of August 31, 2000, this
repurchase program has increased the Fund's shares' NAV by $0.0007.
Municipal Bond Market Update
During the period, the municipal bond market had little reaction to the Federal
Reserve Board's ("Fed") decision to keep interest rates steady or to its view
that risk in the economy is weighted toward inflation. In our view, the bond
market is still pricing in anticipation of any possible Fed tightening by the
end of the year. However, we expect monetary policy to remain steady through
2000, and we would not be surprised if the Fed were to shift to a more neutral
stance before the end of the year.
We also believe the Fed is likely to remain apolitical as the 2000 Presidential
election nears, especially since we are approaching an election involving a
change in administration. A critical point, which is often overlooked by many
investors, is that Fed monetary policy adjustments often take time to be
absorbed into the general economy. The Fed has tightened 175 basis points(4)
since June 1999, and the recent rallies we have seen in the bond market are a
result of changes enacted since the Fed began raising interest rates.
Since the last Fed tightening on May 16, 2000, most sectors of the bond market
have begun to improve relative to U.S. Treasuries, following the recent ascent
of their yields to historical levels. While the decline in yields may mean that
bargains in the market may be more difficult to find, the good news is that bond
performance for the most part has improved--and with improved performance, we
have seen better market psychology, which in turn may reduce risks going
forward. (Of course, no guarantees can be given that our expectations will be
met.)
----------
(4) A basis point is 0.01% or one one-hundredth of a percent.
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2 2000 Annual Report to Shareholders
<PAGE>
After accelerating sharply through the early months of 2000, global economic
growth appears to be peaking. Interest rate increases by the Fed have moderated
the U.S. expansion, but the tightening cycle may not be complete. Fed Chairman
Alan Greenspan has stated openly that he doubts whether economic growth needs to
slow markedly below potential in order to keep inflation low, but the matter
remains a key subject of debate at the Fed. In any case, among bond market
pundits, news of an economic slowdown typically calms fears of rising inflation
and fosters positive feelings regarding the future direction of bond prices.
In addition, a vibrant national economy has produced large cash surpluses in
many states and municipalities, causing general improvement in the credit
quality of municipal securities and giving some additional comfort to investors
regarding the creditworthiness of the securities they own.
Under current market conditions, demand for bonds is fairly constant, so reduced
supply provides support to market prices. As a result, during these times of
rapid interest rate movements, much of the price volatility experienced in other
areas of the bond market, and which many investors find so unsettling, is
smoothed in the municipal bond market.
Municipal bond prices in general have been very firm lately: since late May, a
triple 'A' ten-year municipal index has experienced price improvement (and yield
decline) of 50 basis points or more. Demand in the municipal bond market has
been steady to increasing as recent volatility in the stock market has
undoubtedly led some investors to rethink their portfolio mix, and to establish
or augment their bond positions.
California Economic Highlights(5)
California's economic strength continued during the period, boosting revenues
across many industries. The state's May 2000 budgetary revision reforecasting
anticipates that revenues for year 2000 should increase significantly from last
year. Over half of the excess balances are expected to be applied to one-time
spending in this and the next fiscal year, including increasing the rainy day
reserves.
California's record rate of employment growth since 1996 has exceeded the rest
of the U.S. In addition, the trend of personal income growth has improved during
the year. Presently, the state's per capita growth is 13th in the U.S.
----------
(5) Source: Fitch IBCA, Inc., an internationally recognized rating agency.
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Greenwich Street California Municipal Fund Inc. 3
<PAGE>
California's economic resurgence, driven mainly by the growth of new, more
diversified industries, may effectively put the state on a more solid financial
footing. In our view, California should remain a competitive economic force for
many years to come due in large part to its strong employment growth, rising
real estate values and an annual state Gross Domestic Product ("GDP")(6) of more
than $1 trillion.
Investment Strategy
The Fund seeks as high a level of current income exempt from federal income tax
and California personal income tax as is consistent with preservation of
capital.(7) The Fund invests primarily in long-term, investment-grade(8)
municipal debt securities issued by, or on behalf of, the State of California,
its agencies, instrumentalities or political subdivisions or multistate agencies
or authorities.
During the past year, the Fund focused on hospital bonds (24.1%), water and
sewer bonds (19.7%) and transportation bonds (18.4%), because we believe they
offered good relative values. In addition, as of August 31, 2000, approximately
95.7% of the Fund's holdings were rated investment-grade, with 43.5% of the Fund
invested in AAA/Aaa bonds, the highest possible rating.
The Fund's investment strategy going forward will be threefold:
o To lengthen maturities in the Fund to take advantage of the
inexpensive valuations of municipal bonds relative to U.S.
Treasuries;
o To focus on investing in high-grade issues; and
o To invest in discount paper, as this is where we believe we can
obtain the best values.
Another goal is to sell off some of our shorter-term maturities that were
defensive and stretch out longer on the yield curve.We see the best opportunity
for potential reward right now at the long end of the yield curve.
----------
(6) GDP is the market value of the goods and services produced by labor and
property in the U.S. GDP is comprised of consumer and government
purchases, private domestic investments and net exports of goods and
services.
(7) Please note that a portion of the Fund's income may be subject to the
Alternative Minimum Tax ("AMT").
(8) 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
Service, or that have an equivalent rating by any nationally recognized
statistical rating organization, or are determined by the manager to be of
equivalent quality.
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4 2000 Annual Report to Shareholders
<PAGE>
Municipal Bond Market Outlook
We believe that demand for municipal bonds may remain strong based on economic
issues related to the political campaign. One of the main topics is how the
various candidates would spend the significant federal government surplus. The
Congressional Budget Office's baseline projections show surpluses rising from
$232 billion in 2000 to $685 billion in 2010. The total budget surplus over ten
years is projected to be about $4.6 trillion.
In our opinion, a number of factors bode well for the municipal bond market. The
new issue market is expected to shrink this year, boosting demand for bonds
currently outstanding and enhancing interest for the roughly $175 billion of new
municipal bonds expected to be issued in 2000. Given the thinly traded market
and lack of liquidity that currently exist, we believe that any positive
catalyst, such as an increase in issue volume, could give the market much-needed
momentum.
Fiscal trends are another major plus. 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 boast budget
surpluses. We believe these surpluses indicate that some investors may feel more
comfortable owning municipal bonds, even in a downturn. And lastly, recent
narrowing of spreads in the taxable market has made other bonds less attractive.
All of these trends help to explain why we remain optimistic about the prospects
for the municipal bond market in the months ahead.
Thank you for investing in the Greenwich Street California Municipal Fund Inc.
We look forward to continuing to help you pursue your financial goals in the
future.
Sincerely,
/s/ Heath B. McLendon /s/ Joseph P. Deane
Heath B. McLendon Joseph P. Deane
Chairman Vice President
September 11, 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"), 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.
A more complete description of the current Plan appears in this report beginning
on page 21.
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 Annual Report to Shareholders
<PAGE>
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Schedule of Investments August 31, 2000
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<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===============================================================================================
<C> <C> <S> <C>
Education -- 8.5%
California Educational Facility Authority:
$ 2,100,000 A2* Loyola Marymount University, 5.750% due 10/1/24 $ 2,123,625
2,000,000 A3* Southwestern University, 6.700% due 11/1/24 2,130,000
-----------------------------------------------------------------------------------------------
4,253,625
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Hospital -- 24.1%
California Health Facility Financing Authority:
2,000,000 A2* Cedars-Sinai Medical Center, Series A,
6.125% due 12/1/30 2,030,000
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) 2,154,363
2,000,000 A3* Kaiser Permanente Hospital, 5.550% due 8/15/25 1,895,000
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 2,215,000
2,000,000 AA Fresno Health Facility Revenue, Holy Cross Health
System, 5.625% due 12/1/15 2,017,500
1,560,000 A Torrance Hospital Revenue, Little Co. of Mary
Hospital, (Escrowed to maturity with U.S.
government securities), 6.875% due 7/1/15 (b) 1,653,600
-----------------------------------------------------------------------------------------------
11,965,463
-----------------------------------------------------------------------------------------------
Housing -- 11.3%
1,400,000 AA- California HFA Home Mortgage, Series E, FHA-Insured,
6.375% due 8/1/27 (c) 1,450,750
2,000,000 AA Santa Rosa Mortgage Revenue, Village Square
Apartments, FHA-Insured, 6.875% due 9/1/27 2,115,000
2,000,000 BBB- Virgin Islands Public Financial Authority Revenue, Series A,
6.500% due 10/1/24 2,077,500
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5,643,250
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Miscellaneous -- 7.5%
2,000,000 AAA Los Angeles Convention and Exhibition Center Authority
Lease Revenue, Series A, MBIA-Insured,
5.375% due 8/15/18 2,015,000
1,675,000 AAA Orange County 1996 Recovery, COP, Series A,
MBIA-Insured, 6.000% due 7/1/26 1,739,905
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3,754,905
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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) 2,212,875
1,000,000 AAA Rancho Cucamonga Redevelopment Agency, Tax
Allocation, MBIA-Insured, 5.250% due 9/1/26 973,750
</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 (continued) August 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
===============================================================================================
<C> <C> <S> <C>
Tax Allocation -- 10.5% (continued)
$ 2,000,000 AAA San Jose Redevelopment Agency, Tax Allocation,
MBIA-Insured, 5.250% due 8/1/16 $ 2,022,500
-----------------------------------------------------------------------------------------------
5,209,125
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Transportation -- 18.4%
2,000,000 AAA Foothill Eastern Transportation, California Toll Revenue,
Series A, 6.000% due 1/1/34 2,200,000
2,000,000 AAA Los Angeles County Metropolitan Transportation Authority,
Sales Tax Allocation, Series A, MBIA-Insured,
5.625% due 7/1/18 2,040,000
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 4,900,000
-----------------------------------------------------------------------------------------------
9,140,000
-----------------------------------------------------------------------------------------------
Water & Sewer -- 19.7%
1,240,000 AAA Anaheim Public Finance Authority, Water Utility,
(Lenain Filtration Project), FGIC-Insured,
5.250% due 10/1/19 1,243,100
2,000,000 AA California State Department of Water Revenue,
Series L, 5.500% due 12/1/23 2,007,500
2,140,000 AAA East Bay Municipal Wastewater System, FGIC-Insured,
5.000% due 6/1/26 2,024,975
1,875,000 BBB Kings County Waste Management Authority, Solid
Waste Revenue, 7.200% due 10/1/14 (c) 2,036,719
1,000,000 AAA Redding Joint Powers Financing Authority, Wastewater
Revenue, Series A, FGIC-Insured, 5.500% due 12/1/18 1,012,500
1,500,000 AAA San Diego PCFA, Sewer Revenue, FGIC-Insured,
5.000% due 5/15/20 1,451,250
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9,776,044
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TOTAL INVESTMENTS -- 100%
(Cost -- $43,187,670**) $49,742,412
===============================================================================================
</TABLE>
(a) All ratings are by Standard & Poor's Ratings Service, except for those
which are identified by an asterisk (*), are rated by Moody's Investors
Service, Inc.
(b) Pre-Refunded bonds escrowed by U.S. government securities and bonds
escrowed to maturity by 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 pages 10 and 11 for bond ratings and certain security descriptions.
See Notes to Financial Statements.
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8 2000 Annual Report to Shareholders
<PAGE>
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Summary of Investments by Combined Ratings (unaudited)
--------------------------------------------------------------------------------
Standard & Percentage of
Moody's and/or Poor's Total Investments
--------------------------------------------------------------------------------
Aaa AAA 43.5%
Aa AA 19.7
A A 19.8
Baa BBB 12.7
NR NR 4.3
-----
100.0%
=====
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Greenwich Street California Municipal Fund Inc. 9
<PAGE>
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Bond Ratings (unaudited)
--------------------------------------------------------------------------------
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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10 2000 Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Short-Term Security Ratings (unaudited)
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SP-1 -- Standard & Poor's highest rating indicating very strong or strong
capacity to pay principal and interest; those issues determined to
possess overwhelming safety characteristics are denoted with a plus
(+) sign.
A-1 -- Standard & Poor's highest commercial paper and variable-rate demand
obligation ("VRDO") rating indicating that the degree of safety
regarding timely payment is either overwhelming or very strong; those
issues determined to possess overwhelming safety characteristics are
denoted with a plus (+) sign.
VMIG 1 -- Moody's highest rating for issues having a demand feature -- VRDO.
P-1 -- Moody's highest rating for commercial paper and for VRDO prior to the
advent of the VMIG 1 rating.
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Security Descriptions (unaudited)
--------------------------------------------------------------------------------
AMBAC -- AMBAC Indemnity Corporation
COP -- Certificate of Participation
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
GO -- General Obligation
HFA -- Housing Finance Agency
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance Corporation
PCFA -- Pollution Control Financing Authority
PCR -- Pollution Control Revenue
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Greenwich Street California Municipal Fund Inc. 11
<PAGE>
--------------------------------------------------------------------------------
Statement of Assets and Liabilities August 31, 2000
--------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $43,187,670) $ 49,742,412
Interest receivable 713,149
--------------------------------------------------------------------------------
Total Assets 50,455,561
--------------------------------------------------------------------------------
LIABILITIES:
Payable to bank 116,268
Dividends payable 42,885
Management fees payable 36,407
Accrued expenses 63,230
--------------------------------------------------------------------------------
Total Liabilities 258,790
--------------------------------------------------------------------------------
Total Net Assets $ 50,196,771
================================================================================
NET ASSETS:
Par value of capital shares $ 3,657
Capital paid in excess of par value 43,813,728
Undistributed net investment income 55,065
Accumulated net realized loss from security transactions (230,421)
Net unrealized appreciation of investments 6,554,742
--------------------------------------------------------------------------------
Total Net Assets
(Equivalent to $13.73 a share on 3,656,834 shares of $0.001
par value outstanding; 500,000,000 shares authorized) $ 50,196,771
================================================================================
See Notes to Financial Statements.
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12 2000 Annual Report to Shareholders
<PAGE>
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Statement of Operations For the Year Ended August 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 2,839,795
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EXPENSES:
Management fees (Note 3) 435,467
Audit and legal 53,024
Shareholder communications 48,452
Shareholder and system servicing fees 37,510
Directors' fees 5,391
Pricing service fees 4,692
Custody 2,419
Organization costs 1,845
Other 14,651
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Total Expenses 603,451
--------------------------------------------------------------------------------
Net Investment Income 2,236,344
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 4):
Realized Loss From Security Transactions
(excluding short-term securities):
Proceeds from sales 3,880,611
Cost of securities sold 4,111,032
--------------------------------------------------------------------------------
Net Realized Loss (230,421)
--------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of year 5,541,533
End of year 6,554,742
--------------------------------------------------------------------------------
Increase in Net Unrealized Appreciation 1,013,209
--------------------------------------------------------------------------------
Net Gain on Investments 782,788
--------------------------------------------------------------------------------
Increase in Net Assets From Operations $ 3,019,132
================================================================================
See Notes to Financial Statements.
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Greenwich Street California Municipal Fund Inc. 13
<PAGE>
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended August 31,
2000 1999
====================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 2,236,344 $ 2,167,117
Net realized gain (loss) (230,421) 6,712
Increase (decrease) in net unrealized appreciation 1,013,209 (3,073,828)
------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets From Operations 3,019,132 (899,999)
------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income (2,162,709) (2,224,120)
Net realized gains (6,567) (85,021)
------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (2,169,276) (2,309,141)
------------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 7):
Treasury stock acquired (17,623) --
------------------------------------------------------------------------------------
Decrease in Net Assets From
Fund Share Transactions (17,623) --
------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets 832,233 (3,209,140)
NET ASSETS:
Beginning of year 49,364,538 52,573,678
------------------------------------------------------------------------------------
End of year* $ 50,196,771 $ 49,364,538
====================================================================================
* Includes undistributed (overdistributed) net
investment income of: $ 55,065 $ (18,570)
====================================================================================
</TABLE>
See Notes to Financial Statements.
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14 2000 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.
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.
--------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 15
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (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 year ended August 31, 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 3,880,611
================================================================================
At August 31, 2000, the aggregate gross unrealized appreciation and depreciation
of investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $6,554,742
Gross unrealized depreciation --
--------------------------------------------------------------------------------
Net unrealized appreciation $6,554,742
================================================================================
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.
--------------------------------------------------------------------------------
16 2000 Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (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 August 31, 2000, the Fund had no open futures contracts.
7. Capital Shares
At August 31, 2000, the Fund had 500,000,000 shares of common stock authorized
with a par value of $0.001.
On July 17, 2000, the Fund commenced a share repurchase plan. For the year ended
August 31, 2000, the Fund repurchased (and retired) 1,500 shares with a total
cost of $17,623.
--------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 17
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year ended August 31:
<TABLE>
<CAPTION>
2000 1999 1998 1997 1996
=========================================================================================
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year $ 13.49 $ 14.37 $ 13.66 $ 13.13 $ 12.92
-----------------------------------------------------------------------------------------
Income (Loss) From Operations:
Net investment income 0.61 0.59 0.60 0.62 0.63
Net realized and
unrealized gain (loss) 0.22 (0.84) 0.80 0.87 0.30
-----------------------------------------------------------------------------------------
Total Income (Loss)
From Operations 0.83 (0.25) 1.40 1.49 0.93
-----------------------------------------------------------------------------------------
Gain From Repurchase
of Treasury Stock 0.00* -- -- -- --
-----------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.59) (0.61) (0.59) (0.63) (0.70)
Net realized gains (0.00)* (0.02) (0.10) (0.33) (0.02)
-----------------------------------------------------------------------------------------
Total Distributions (0.59) (0.63) (0.69) (0.96) (0.72)
-----------------------------------------------------------------------------------------
Net Asset Value,
End of Year $ 13.73 $ 13.49 $ 14.37 $ 13.66 $ 13.13
-----------------------------------------------------------------------------------------
Total Return, Based on
Market Value(1) 4.28% (3.07)% 7.56% 13.39% 11.92%
-----------------------------------------------------------------------------------------
Total Return, Based on
Net Asset Value(1) 7.21% (1.43)% 10.98% 12.19% 7.96%
-----------------------------------------------------------------------------------------
Net Assets,
End of Year (millions) $ 50 $ 49 $ 53 $ 50 $ 48
-----------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 1.25% 1.24% 1.20% 1.21% 1.15%
Net investment income 4.63 4.16 4.25 4.64 4.75
-----------------------------------------------------------------------------------------
Portfolio Turnover Rate 8% 0% 7% 28% 42%
-----------------------------------------------------------------------------------------
Market Value, End of Year $11.875 $12.000 $13.000 $12.750 $12.125
=========================================================================================
</TABLE>
(1) The total return calculation assumes that dividends are reinvested in
accordance with the Fund's dividend reinvestment plan.
* Amount represents less than $0.01.
--------------------------------------------------------------------------------
18 2000 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, 2000, 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 five-year period then ended. 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 auditing standards generally accepted
in the United States of America. 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, 2000, 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, 2000, 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 five-year period then ended, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ KPMG LLP
New York, New York
October 13, 2000
--------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 19
<PAGE>
--------------------------------------------------------------------------------
Financial Data (unaudited)
--------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each period:
AMEX
Record Payable Closing Net Asset Dividends Reinvestment
Date Date Price+ Value+ Paid Price
================================================================================
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
3/28/00 3/31/00 11.125 13.27 0.0490 11.24
4/25/00 4/28/00 11.125 13.22 0.0500 11.18
5/23/00 5/26/00 11.188 12.89 0.0500 11.30
6/27/00 6/30/00 11.563 13.33 0.0500 11.73
7/25/00 7/28/00 11.688 13.48 0.0500 11.86
8/22/00 8/25/00 11.813 13.68 0.0500 11.89
================================================================================
+ As of record date.
* Capital gain distribution.
--------------------------------------------------------------------------------
20 2000 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"), 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 than 30 days after the payment
date for such dividend or distribution, or the record date
--------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 21
<PAGE>
--------------------------------------------------------------------------------
Dividend Reinvestment Plan (unaudited) (continued)
--------------------------------------------------------------------------------
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 (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.
--------------------------------------------------------------------------------
22 2000 Annual Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Tax Information (unaudited)
--------------------------------------------------------------------------------
For Federal tax purposes the Fund hereby designates for the fiscal year ended
August 31, 2000:
o 100.00% of the dividends paid by the Fund from net investment income
as tax-exempt for regular Federal income tax purposes.
--------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 23
<PAGE>
(This page intentionally left balnk.)
<PAGE>
Greenwich Street
[GRAPHIC]
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
PFPC Trust Company
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
FD01037 10/00
