[GRAPHIC]
Greenwich Street
CALIFORNIA
MUNICIPAL FUND INC.
Quarterly Report
May 31, 2000
<PAGE>
Greenwich
Street California
Municipal
Fund Inc.
[PHOTO] [PHOTO]
HEATH B. JOSEPH P.
MCLENDON DEANE
Chairman Vice President
Dear Shareholder:
We are pleased to provide the quarterly report for the Greenwich Street
California Municipal Fund Inc. ("Fund") for the nine months ended May 31, 2000.
Over the nine months covered by this report, the Fund distributed income
dividends totaling $0.44 per share.
The table below details the annualized distribution rate and the nine-month
total return based on the Fund's May 31, 2000, net asset value ("NAV") per share
and its American Stock Exchange ("AMEX") closing price:(1)
Price Annualized Nine-Month
Per Share Distribution Rate(2) Total Return(2)
--------- -------------------- ---------------
$13.03 (NAV) 4.60% 0.46%
$11.125 (AMEX) 5.39% (3.58)%
In comparison, the Fund's Lipper, Inc. peer group average posted a total return
based on NAV of negative 1.32% for the same period (Lipper Inc. is a major fund
tracking organization).
--------------
(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 market price 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 twelve months. This rate is as of June 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.
--------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 1
<PAGE>
Market Update
On May 16, 2000, the Federal Reserve Board ("Fed") enacted the sixth in a series
of interest rate increases that began last June 30, 1999 when the federal funds
rate was at 4.75%. (The federal funds rate is the interest rate charged by banks
with excess reserves at a Federal Reserve district bank to banks needing
overnight loans to meet reserve requirements.) With the federal funds rate
presently at 6.50%, the cumulative effect of the interest rate increases so far,
in our view, may begin to have a more pronounced effect in reducing inflationary
pressures.
In our opinion, changes in the Fed's monetary policy generally take time to be
absorbed into the economy. We believe that the recent market rallies are a
result of monetary changes enacted six to nine months ago. In addition, we think
that, barring a major change in the economy or the rate of inflation, it is
likely that the Fed's monetary policy may be relatively benign for the remainder
of 2000.
Over the past several weeks, the performance of the bond market has shown signs
of improvement amid a series of economic reports that suggest the economy is
slowing and that the Fed may be close to completing its series of interest rate
hikes. However, we think that any further Fed policy actions may have already
been comfortably priced into the bond market.
The inversion of the yield curve, which has made us somewhat cautious, in our
view also shows that the market believes inflation is under control. (The yield
curve is the graphical depiction of the relationship between the yield on bonds
of the same credit quality but different maturities. An inverted yield curve
represents a unique situation whereby short-term interest rates are higher than
long-term rates.)
While the fundamentals in the higher-quality tier securities are still sound and
valuations have improved, poor technical conditions, most notably large pent-up
issuance needs, have created concern among many investors about the future
prospects for municipal bonds. Yet, as we discuss later in this report, we are
optimistic about current municipal bond opportunities.
The prospect of further Fed tightening may result in modest further increases in
interest rates on securities with shorter maturities. In contrast, long-term
rates should not likely rise much. Our favorable outlook for inflation, plus the
ongoing reduction in the supply of U.S. Treasuries, may help to contain the rise
in long-term rates and further invert the Treasury yield curve (that is,
long-term yields could fall even further below short-term yields).
--------------------------------------------------------------------------------
2 2000 Quarterly Report to Shareholders
<PAGE>
In our opinion, modestly higher U.S. Treasury yields and a further increase in
the inversion of the yield curve are likely as the Fed continues to push up
short-term rates. A decrease in the amount of new issuance and more buybacks of
currently outstanding debt, while already largely discounted by the market, may
reinforce the inversion of the yield curve. In addition, we are presently
witnessing general market sentiment favoring bonds of higher credit quality. We
think that the short-end of the curve is racing to stay ahead of short-term
rates. The inversion is not just a factor of the U.S. Treasury Department's
buyback program, but rather, it indicates that inflation may be under control
and rates on longer-term paper still represent fair value.
California Economic Highlights(3)
California's economic strength during the reporting period continued, boosting
revenues across many industries. The Golden State's retail and housing
industries continued their record rate expansion, due in large part to the
state's per capita growth, which continues to outpace the U.S. average. Job
growth remains strong, and the unemployment rate in California is presently at
4.6%, well below earlier levels and reportedly at its lowest level in almost 30
years.
Although the state's economic strength can be attributed to the growth of
several industries, California's dominant position in high technology has
certainly been a significant factor in recent years. Fueled by booming
Internet-related companies, venture capital investments in Northern California
for the first quarter of 2000 were approximately $7.9 billion, representing 47%
of total venture capital investment for the entire U.S. In fact, the state as a
whole accounted for 57% of the nation's total venture capital investments, based
on estimates from National Venture Capital Association/Venture Economics.
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 may likely 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 of roughly $1
trillion.
--------------
(3) Source: Fitch IBCA, Inc., an internationally recognized rating agency
--------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 3
<PAGE>
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 prudent investing.(4)
At the end of May, the Fund's weighted average maturity was approximately 20
years. In addition, as of May 31, 2000, approximately 95.6% of the Fund's
holdings were rated investment grade(5) by either Standard & Poor's Ratings
Service or Moody's Investors Service, Inc., with approximately 33.4% of the Fund
invested in AAA/Aaa bonds, the highest possible rating.
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 high-grade issues; and
o We are investing in discount paper because this is where we believe
we can obtain the best value.
Our goal is to sell off some of our shorter-term maturities that were defensive
and stretch out at the longer end on the yield curve to lock in today's higher
rates. We see the best opportunity for potential reward right now at the long
end of the yield curve.
Under "normal" market conditions, municipal investors pay for the tax-free
income benefits by receiving a lower return on their investment. 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.
In our view, the municipal bond market has provided us with excellent
opportunities during the reporting period. Since interest rates have increased,
we have been able to invest our cash at higher yields.
--------------
(4) A portion of the income from the Fund may be subject to the Alternative
Minimum Tax ("AMT").
(5) 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 have an equivalent rating by any nationally recognized
statistical ratings organization, or are determined by the manager to be
of equivalent quality.
--------------------------------------------------------------------------------
4 2000 Quarterly Report to Shareholders
<PAGE>
Municipal Bond Market Outlook
In our judgment, a number of influences remain favorable for the municipal bond
market. The new-issue municipals were expected to decline this year, boosting
demand for bonds currently outstanding and enhancing interest for new municipals
expected in 2000.
Fiscal trends are another major positive. During past economic downturns, some
municipal issuers faced declining tax receipts and were hard-pressed to repay
their bond obligations. Today, many state and local governments have budget
surpluses. We believe these surpluses may make investors more comfortable
holding municipals, even in a downturn. Lastly, recent narrowing of spreads in
the taxable market has made other fixed-income alternatives less attractive on a
relative basis. 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 Municipal
Fund Inc. We look forward to continuing to help you pursue your financial goals.
Sincerely,
/s/ Heath B. McLendon /s/ Joseph P. Deane
Heath B. McLendon Joseph P. Deane
Chairman Vice President
June 15, 2000
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Greenwich Street California Municipal Fund Inc. 5
<PAGE>
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 19.
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 Quarterly Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) May 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE
AMOUNT RATING(a) SECURITY VALUE
====================================================================================================
<S> <C> <C> <C>
Education -- 8.6%
California Educational Facility Authority:
$2,100,000 A1* Loyola Marymount University, 5.750% due 10/1/24 $ 1,984,500
2,000,000 A3* Southwestern University, 6.700% due 11/1/24 2,065,000
----------------------------------------------------------------------------------------------------
4,049,500
----------------------------------------------------------------------------------------------------
Hospital -- 24.6%
California Health Facility Financing Authority:
2,000,000 A2* Cedars-Sinai Medical Center, Series A,
6.125% due 12/1/30 1,942,500
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) 2,096,463
2,000,000 A2* Kaiser Permanente Hospital, 5.550% due 8/15/25 1,775,000
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 2,167,500
2,000,000 AA Fresno Health Facility Revenue, Holy Cross Health
System, 5.625% due 12/1/15 1,925,000
1,615,000 A Torrence Hospital Revenue, Little Company of Mary
Hospital, (Escrowed to maturity with U.S.
government securities), 6.875% due 7/1/15 (b) 1,701,806
----------------------------------------------------------------------------------------------------
11,608,269
----------------------------------------------------------------------------------------------------
Housing -- 11.6%
2,000,000 BBB- Virgin Islands Public Finance Authority Revenue, Series A,
6.500% due 10/1/24 1,975,000
1,400,000 AA- California HFA Home Mortgage, Series E, FHA-Insured,
6.375% due 8/1/27 (c) 1,414,000
2,000,000 AAA Santa Rosa Mortgage Revenue, Village Square
Apartments, FHA-Insured, 6.875% due 9/1/27 2,065,000
----------------------------------------------------------------------------------------------------
5,454,000
----------------------------------------------------------------------------------------------------
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 1,912,500
1,675,000 AAA Orange County 1996 Recovery, COP, Series A,
MBIA-Insured, 6.000% due 7/1/26 1,679,187
----------------------------------------------------------------------------------------------------
3,591,687
----------------------------------------------------------------------------------------------------
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) 2,139,375
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 7
<PAGE>
--------------------------------------------------------------------------------
Schedule of Investments (unaudited) (continued) May 31, 2000
--------------------------------------------------------------------------------
<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 $ 897,500
2,000,000 AAA San Jose Redevelopment Agency, Tax Allocation,
MBIA-Insured, 5.250% due 8/1/16 1,917,500
----------------------------------------------------------------------------------------------------
4,954,375
----------------------------------------------------------------------------------------------------
Transportation -- 17.6%
2,000,000 BBB- Foothill Eastern Transportation, California Toll Revenue,
Series A, 6.000% due 1/1/34 2,117,500
2,000,000 AAA Los Angeles County Metropolitan Transportation Authority,
Sales Tax Allocation, Series A, MBIA-Insured,
5.625% due 7/1/18 1,970,000
20,000,000 Baa3* San Joaquin Hills Transportation Corridor Agency,
Sr. Lien Toll, (Escrowed to maturity with state &
local government securities), zero coupon due 1/1/26 4,225,000
----------------------------------------------------------------------------------------------------
8,312,500
----------------------------------------------------------------------------------------------------
Water & Sewer -- 19.5%
1,240,000 AAA Anaheim Public Finance Authority, Water Utility,
(Lenain Filtration Project), FGIC-Insured,
5.250% due 10/1/19 1,148,550
2,000,000 AA California State Department of Water Revenue,
Series L, 5.500% due 12/1/23 1,892,500
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) 2,015,625
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 1,331,250
----------------------------------------------------------------------------------------------------
9,204,925
----------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-- 100%
(Cost-- $43,182,678**) $47,175,256
====================================================================================================
</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 pages 9 and 10 for bond ratings and certain security descriptions.
See Notes to Financial Statements.
--------------------------------------------------------------------------------
8 2000 Quarterly Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 9
<PAGE>
--------------------------------------------------------------------------------
Short-Term Security Ratings (unaudited)
--------------------------------------------------------------------------------
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.
================================================================================
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
--------------------------------------------------------------------------------
10 2000 Quarterly Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statement of Assets and Liabilities (unaudited) May 31, 2000
--------------------------------------------------------------------------------
ASSETS:
Investments, at value (Cost -- $43,182,678) $ 47,175,256
Interest receivable 826,382
--------------------------------------------------------------------------------
Total Assets 48,001,638
--------------------------------------------------------------------------------
LIABILITIES:
Payable to bank 211,516
Dividends payable 53,736
Management fees payable 36,831
Accrued expenses 47,518
--------------------------------------------------------------------------------
Total Liabilities 349,601
--------------------------------------------------------------------------------
Total Net Assets $ 47,652,037
================================================================================
NET ASSETS:
Par value of capital shares $ 3,658
Capital paid in excess of par value 43,831,350
Undistributed net investment income 48,464
Accumulated net realized loss from security transactions (224,013)
Net unrealized appreciation of investments 3,992,578
--------------------------------------------------------------------------------
Total Net Assets
(Equivalent to $13.03 a share on 3,658,334 shares of $0.001
par value outstanding; 500,000,000 shares authorized) $ 47,652,037
================================================================================
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 11
<PAGE>
--------------------------------------------------------------------------------
Statement of Operations (unaudited)
--------------------------------------------------------------------------------
For the Nine Months Ended May 31, 2000
INVESTMENT INCOME:
Interest $ 2,124,861
--------------------------------------------------------------------------------
EXPENSES:
Management fees (Note 3) 324,007
Audit and legal 40,160
Shareholder and system servicing fees 29,428
Shareholder communications 28,151
Pricing service fees 2,628
Deferred organization costs 1,845
Custody 1,800
Directors' fees 1,726
Other 7,430
--------------------------------------------------------------------------------
Total Expenses 437,175
--------------------------------------------------------------------------------
Net Investment Income 1,687,686
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
Net Realized Loss (230,580)
--------------------------------------------------------------------------------
Change in Net Unrealized Appreciation of Investments:
Beginning of period 5,541,533
End of period 3,992,578
--------------------------------------------------------------------------------
Decrease in Net Unrealized Appreciation (1,548,955)
--------------------------------------------------------------------------------
Net Loss on Investments (1,779,535)
--------------------------------------------------------------------------------
Decrease in Net Assets From Operations $ (91,849)
================================================================================
See Notes to Financial Statements.
--------------------------------------------------------------------------------
12 2000 Quarterly Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
For the Nine Months Ended May 31, 2000 (unaudited) and the Year Ended August 31,
1999
<TABLE>
<CAPTION>
2000 1999
===================================================================================================
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,687,686 $ 2,167,117
Net realized gain (loss) (230,580) 6,712
Decrease in net unrealized appreciation (1,548,955) (3,073,828)
----------------------------------------------------------------------------------------------------
Decrease in Net Assets From Operations (91,849) (899,999)
----------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income (1,620,652) (2,224,120)
Net realized gains -- (85,021)
----------------------------------------------------------------------------------------------------
Decrease in Net Assets From
Distributions to Shareholders (1,620,652) (2,309,141)
----------------------------------------------------------------------------------------------------
Decrease in Net Assets (1,712,501) (3,209,140)
NET ASSETS:
Beginning of period 49,364,538 52,573,678
----------------------------------------------------------------------------------------------------
End of period* $ 47,652,037 $ 49,364,538
====================================================================================================
* Includes undistributed (overdistributed) net investment income of: $ 48,464 $ (18,570)
====================================================================================================
</TABLE>
See Notes to Financial Statements.
--------------------------------------------------------------------------------
Greenwich Street California Municipal Fund Inc. 13
<PAGE>
--------------------------------------------------------------------------------
Notes to Financial Statements (unaudited)
--------------------------------------------------------------------------------
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 Quarterly 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 nine months ended May 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 3,825,611
================================================================================
At May 31, 2000, the aggregate gross unrealized appreciation and depreciation of
investments for Federal income tax purposes were substantially as follows:
================================================================================
Gross unrealized appreciation $4,040,093
Gross unrealized depreciation (47,515)
--------------------------------------------------------------------------------
Net unrealized appreciation $3,992,578
================================================================================
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 May 31, 2000, the Fund had no open futures contracts.
--------------------------------------------------------------------------------
16 2000 Quarterly Report to Shareholders
<PAGE>
--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------
For a share of capital stock outstanding throughout each year ended August 31,
except where noted:
<TABLE>
<CAPTION>
2000(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) 0.46 0.59 0.60 0.62 0.63 0.60
Net realized and
unrealized gain (loss) (0.48) (0.84) 0.80 0.87 0.30 0.84
----------------------------------------------------------------------------------------------------------
Total Income (Loss)
From Operations (0.02) (0.25) 1.40 1.49 0.93 1.44
----------------------------------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.44) (0.61) (0.59) (0.63) (0.70) (0.52)
Net realized gains -- (0.02) (0.10) (0.33) (0.02) --
----------------------------------------------------------------------------------------------------------
Total Distributions (0.44) (0.63) (0.69) (0.96) (0.72) (0.52)
----------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $ 13.03 $ 13.49 $ 14.37 $ 13.66 $ 13.13 $ 12.92
----------------------------------------------------------------------------------------------------------
Total Return, Based on
Market Value* (3.58)%++ (3.07)% 7.56% 13.39% 11.92% 0.25%++
----------------------------------------------------------------------------------------------------------
Total Return, Based on
Net Asset Value* 0.46%++ (1.43)% 10.98% 12.19% 7.96% 12.24%++
----------------------------------------------------------------------------------------------------------
Net Assets,
End of Period (millions) $ 48 $ 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 4.69+ 4.16 4.25 4.64 4.75 5.16+
----------------------------------------------------------------------------------------------------------
Portfolio Turnover Rate 8% 0% 7% 28% 42% 7%
----------------------------------------------------------------------------------------------------------
Market Value, End of Period $11.125 $12.000 $13.000 $12.750 $12.125 $11.500
==========================================================================================================
</TABLE>
(1) For the nine months ended May 31, 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>
--------------------------------------------------------------------------------
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
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
================================================================================
+ As of record date.
* Capital gain distribution.
--------------------------------------------------------------------------------
18 2000 Quarterly 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
--------------------------------------------------------------------------------
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 Quarterly Report to Shareholders
<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
FD0950 7/99
