Greenwich Street

--------------------------------------------------------------------------------

                                   CALIFORNIA
                               MUNICIPAL FUND INC.

                                                                   Annual Report
                                                                 August 31, 1997

<PAGE>

                -----------------------------------------------
                Greenwich Street California Municipal Fund Inc.
                -----------------------------------------------

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, 1997. Over the year
covered by this report, the Fund distributed income dividends totaling $0.63 per
share and capital gain dividends of $0.33 per share. The table below details the
annualized distribution rate and twelve-month total return based on the Fund's
August 31, 1997 net asset value (NAV) per share and its American Stock Exchange
(AMEX) closing price:
 
           Price                  Annualized              Twelve-Month
         Per Share             Distribution Rate*         Total Return
         ---------             ------------------         ------------
        $13.66 (NAV)                   4.74%                 12.19%
        $12.75 (AMEX)                  5.08%                 13.39%

In comparison, closed-end California municipal bond funds posted an average
total return on NAV of 11.06% for the same time period, as reported by Lipper
Analytical Services, Inc. (Lipper is a major fund-tracking organization.)

Municipal Bond Market Update

The past fiscal year in the municipal bond market can be described in three
phases. The first phase was a meaningful rally that began late summer 1996 and
culminated in Federal Reserve Board ("Fed") Chairman Alan Greenspan's
"irrational exuberance" speech in early December. The second phase was a notable
increase in rates because of subsequent fears of a major Fed rate action. The
final phase, culminating in today's market, is one in which rates are back to
the levels present before the Fed Chairman's speech. We believe that today's
municipal bond prices are quite appropriate, given the low inflation that
continues to be evident.

California Economic Highlights

California is continuing to improve and even to surprise on the economic front.
The Golden State has quite properly repositioned itself as a major beneficiary
of the growth in foreign trade, the entertainment field and interestingly
enough, in manufacturing. This approach has led to a more broad-based economy
and a

----------
* This distribution assumes monthly dividends at the current rate of $0.054 per
  share for twelve months.


                                                                               1
<PAGE>

healthy environment for select California issues. In fact, California issues are
in somewhat short supply, due to the state's solid economy and the great demand
created by today's growth in personal incomes. California is clearly back in the
economic forefront and should stay there for the balance of the 1990s.

Investment Strategy

As noted, the Fund seeks to provide California investors with as high a level of
dividend income exempt from Federal income taxes and California state personal
income tax as is consistent with conservative investment management and the
preservation of capital. The Fund's average weighted maturity is approximately
24 years. In addition, in every market downturn, we have sought out bonds with
coupons that would benefit from further drops in interest rates.

As of this report, the 30-year U.S. Treasury bond yield is approximately 6.7%,
and it could decline to 6% in the near future if inflation remains at today's
low levels. Given our expectations for a continued moderate U.S. economy, we
continue to emphasize longer-term, deeper-discount bonds with very high credit
quality.

As of August 31, 1997, approximately 89.1% of the Fund's holdings were rated
investment grade (BBB/Baa and higher) by either Standard & Poor's Corporation or
Moody's Investors Service Inc., with about 39.6% of the Fund invested in AAA
bonds, the highest possible rating. (Standard & Poor's and Moody's are two major
credit-reporting and bond-rating agencies.) The Greenwich Street California
Municipals Fund's largest holdings are concentrated in hospital bonds (20.4%),
water/sewer bonds (20.6%), transportation bonds (16.0%) and tax allocation bonds
(12.4%).

Municipal Bond Market Outlook

Going forward, we expect a drop in long-term rates, probably sooner rather than
later. The inflation rate is still key for us, and until we begin to see that
deteriorate we will continue to maintain our positive outlook on municipal
bonds. 

Municipal bonds have continued to be in tight supply, and there is little reason
to believe there is a major supply spike on the horizon. Municipals have
outperformed the taxable market in the past year and will likely continue to in
the near future. In our view, the municipal bond market at today's levels is
very


2
<PAGE>

competitively priced and will provide investors with attractive after-tax
yields. Furthermore, municipal bonds may have some capital appreciation
possibilities if the inflation numbers continue on today's steady path. 

In closing, thank you for investing in the Greenwich Street California Municipal
Fund. We look forward to continuing to help you pursue your financial goals.

Sincerely,

/s/ Heath B. McLendon                   /s/ J. P. Deane

Heath B. McLendon                       Joseph P. Deane
Chairman                                Vice President

September 24, 1997


                                                                               3
<PAGE>

--------------------------------------------------------------------------------
Schedule of Investments                                         August 31, 1997
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
   FACE
  AMOUNT            RATING                      SECURITY                                                VALUE
================================================================================================================
<C>                  <C>         <S>                                                                 <C> 
Education -- 8.6%
                                 California Education Facility Authority:
$ 2,100,000          A1*           Loyola Marymount University, 5.750% due 10/1/24                   $ 2,113,125
  2,000,000          A3*           Southwestern University, 6.700% due 11/1/24                         2,157,500
----------------------------------------------------------------------------------------------------------------
                                                                                                       4,270,625
----------------------------------------------------------------------------------------------------------------
General Obligation -- 0.2%
    100,000          A-1+        Irvine California Improvement Board Act 1915,
                                              Assessment District No. 89-10, 3.400% due 9/2/15(a)        100,000
----------------------------------------------------------------------------------------------------------------

Hospital -- 20.4%
                                 California Health Facility Financing Authority:
  1,930,000          A+            Daniel Freeman Hospital, 6.500% due 5/1/20                          2,072,338
  2,000,000          AA            Kaiser Permanente Hospital, 5.550% due 8/15/25                      1,980,000
  2,000,000          AA          California Statewide Community Development Authority,
                                   COP, St. Joseph's Hospital, 6.625% due 7/1/21(b)                    2,207,500
  2,000,000          AA          Fresno Health Facility Revenue, Holy Cross Health
                                   System, 5.625% due 12/1/15                                          2,005,000
  1,705,000          A           Torrence Hospital Revenue, Little Company of Mary
                                   Hospital, 6.875% due 7/1/15                                         1,841,400
----------------------------------------------------------------------------------------------------------------
                                                                                                      10,106,238
----------------------------------------------------------------------------------------------------------------
Housing -- 7.3%
  1,400,000          Aa2*        California HFA Home Mortgage, Series E, FHA-Insured,
                                   6.375% due 8/1/27(c)                                                1,463,000
  2,000,000          AAA         Santa Rosa Mortgage Revenue, Village Square
                                   Apartments, FHA-Insured, 6.875% due 9/1/27                          2,157,500
----------------------------------------------------------------------------------------------------------------
                                                                                                       3,620,500
----------------------------------------------------------------------------------------------------------------
Miscellaneous -- 14.5%
  2,000,000          AAA         California State Public Works Board,
                                   Department of Corrections, AMBAC-Insured,
                                   5.250% due 1/1/21                                                   1,942,500
  2,000,000          AAA         Los Angeles Convention and Exhibition Center Authority
                                   Lease Revenue, MBIA-Insured, 5.375% due 8/15/18                     1,977,500
  1,675,000          AAA         Orange County 1996 Recovery COP,
                                   Series A, MBIA-Insured, 6.000% due 7/1/26                           1,760,843
  1,500,000          AAA         Sacramento County, CA Special Tax Refinancing,
                                   Community Facilities District No. 1, 6.300% due 9/1/21              1,470,000
----------------------------------------------------------------------------------------------------------------
                                                                                                       7,150,843
----------------------------------------------------------------------------------------------------------------
Tax Allocation -- 12.4%
  2,100,000          Baa*        Hawthorne Community Redevelopment Agency,
                                   Tax Allocation, 6.700% due 9/1/20                                   2,218,125
  2,000,000          AAA         Rancho Cucamonga Redevelopment Agency, Tax
                                   Allocation, MBIA-Insured, 5.250% due 9/1/26                         1,950,000
</TABLE>

                       See Notes to Financial Statements.


4
<PAGE>

--------------------------------------------------------------------------------
Schedule of Investments (continued)                             August 31, 1997
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
   FACE
  AMOUNT            RATING                      SECURITY                                                VALUE
================================================================================================================
<C>                  <C>         <S>                                                                 <C> 
Tax Allocation -- 12.4% (continued)
$ 2,000,000          AAA         San Jose Redevelopment Agency, Tax Allocation,
                                   MBIA-Insured, 5.250% due 8/1/16                                   $ 1,972,500
----------------------------------------------------------------------------------------------------------------
                                                                                                       6,140,625
----------------------------------------------------------------------------------------------------------------
Transportation -- 16.0%
  2,000,000          BBB-        Foothill Eastern Transportation, California Toll Revenue,
                                   6.000% due 1/1/34(b)                                                2,040,000
  2,000,000          AAA         Los Angeles County Metropolitan Transportation Authority,
                                   Sales Tax Allocation, MBIA-Insured, 5.625% due 7/1/18               2,025,000
 20,000,000          NR          San Joaquin Hills Transportation Corridor Agency,
                                   Senior Lien Toll, zero coupon due 1/1/26                            3,850,000
----------------------------------------------------------------------------------------------------------------
                                                                                                       7,915,000
----------------------------------------------------------------------------------------------------------------
Water & Sewer -- 20.6%
  1,240,000          AAA         Anaheim Public Finance Authority, Water Utility,
                                   (Lenain Filtration Project), FGIC-Insured,
                                   5.250% due 10/1/19                                                  1,205,900
  2,000,000          AA          California State Department of Water Revenue,
                                   Series L, 5.500% due 12/1/23                                        2,000,000
  2,140,000          AAA         East Bay Mud Wastewater System, FGIC-Insured,
                                   5.000% due 6/1/26                                                   2,000,900
    400,000          A-1+        Irvine Ranch California Water District, Refunding,
                                   3.400% due 9/1/06(a)                                                  400,000
  2,000,000          BBB+        Kings County Waste Management Authority, Solid
                                   Waste Revenue, 7.200% due 10/1/14(c)                                2,177,500
  1,000,000          AAA         Redding Joint Powers Financing Authority, Waste Water
                                   Revenue, FGIC-Insured, 5.500% due 12/1/18                           1,001,250
  1,500,000          AAA         San Diego PCFA Sewer Revenue, FGIC-Insured,
                                   5.000% due 5/15/20                                                  1,408,125
----------------------------------------------------------------------------------------------------------------
                                                                                                      10,193,675
----------------------------------------------------------------------------------------------------------------
                                 TOTAL INVESTMENTS -- 100%
                                   (Cost -- $43,673,638**)                                           $49,497,506
================================================================================================================
</TABLE>

(a)   Variable rate obligation payable at par on demand at any time on no more
      than seven days notice.
(b)   Security segregated by Custodian for open market purchase commitment.
(c)   Income from this issue is considered a preference item for purposes of
      calculating the alternative minimum tax.
**    Aggregate cost for Federal income tax purposes is substantially the same.

      See pages 6 and 7 for definition of ratings and certain security
      descriptions.

                       See Notes to Financial Statements.


                                                                               5
<PAGE>

--------------------------------------------------------------------------------
Bond Ratings
--------------------------------------------------------------------------------

All ratings are by Standard & Poor's Rating Service ("Standard & Poor's"),
except that those identified by an asterisk (*) are rated by Moody's Investors
Service, Inc. ("Moody's"). The definitions of the applicable rating symbols are
set forth below: 

Standard & Poor's -- Ratings from "AA" to "BBB" may be modified by the addition
of a plus (+) or minus (-) sign to show relative standings within the major
rating categories.

AAA --      Bonds rated "AAA" have the highest rating assigned by Standard &
            Poor's. Capacity to pay interest and repay principal is extremely
            strong.
AA --       Bonds rated "AA" have a very strong capacity to pay interest and
            repay principal and differ from the highest rated issue only in a
            small degree.
A --        Bonds rated "A" have a strong capacity to pay interest and repay
            principal although it is somewhat more susceptible to the adverse
            effects of changes in circumstances and economic conditions than
            bonds in higher rated categories.
BBB --      Bonds rated "BBB" are regarded as having an adequate capacity to pay
            interest and repay principal. Whereas they normally exhibit adequate
            protection parameters, adverse economic conditions or changing
            circumstances are more likely to lead to a weakened capacity to pay
            interest and repay principal for bonds in this category than in
            higher rated categories.

Moody's --  Numerical modifiers 1, 2, and 3 may be applied to each generic
rating from "Aa" to "Baa", where 1 is the highest and 3 the lowest rating within
its generic category.

Aaa --      Bonds that are 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 that are 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 that are 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 that are 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.


6
<PAGE>

--------------------------------------------------------------------------------
Short-Term Securities Ratings
--------------------------------------------------------------------------------

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
--------------------------------------------------------------------------------

AMBAC    --  AMBAC Indemnity Corporation
COP      --  Certificate of Participation
FGIC     --  Financial Guaranty Insurance Company
FHA      --  Federal Housing Administration
GO       --  General Obligation
HFA      --  Housing Finance Agency
MBIA     --  Municipal Bond Investors Assurance Corporation
PCFA     --  Pollution Control Financing Authority*


                                                                               7
<PAGE>

--------------------------------------------------------------------------------
Statement of Assets and Liabilities                             August 31, 1997
--------------------------------------------------------------------------------

ASSETS:
  Investments, at value (Cost -- $43,673,638)                     $49,497,506
  Interest receivable                                                 686,814
  Deferred organization costs                                          42,444
-----------------------------------------------------------------------------
  Total Assets                                                     50,226,764
-----------------------------------------------------------------------------
LIABILITIES:
  Dividends payable                                                    95,263
  Payable to bank                                                      54,305
  Management fees payable                                              37,585
  Accrued expenses                                                     54,421
-----------------------------------------------------------------------------
  Total Liabilities                                                   241,574
-----------------------------------------------------------------------------
Total Net Assets                                                  $49,985,190
=============================================================================
NET ASSETS:
  Par value of capital shares                                     $     3,658
  Capital paid in excess of par value                              43,831,350
  Undistributed net investment income                                  16,524
  Accumulated net realized gain from security transactions            309,790
  Net unrealized appreciation of investments                        5,823,868
-----------------------------------------------------------------------------
Total Net Assets
  (Equivalent to $13.66 a share on 3,658,334 shares of $0.001
par value outstanding; 500,000,000 shares authorized)             $49,985,190
=============================================================================

                       See Notes to Financial Statements.


8
<PAGE>


--------------------------------------------------------------------------------
Statement of Operations                      For the Year Ended August 31, 1997
--------------------------------------------------------------------------------

INVESTMENT INCOME:
 Interest                                                      $2,860,317
-------------------------------------------------------------------------
EXPENSES:
  Management fees (Note 3)                                        438,661
  Audit and legal                                                  48,936
  Shareholder and system servicing fees                            36,058
  Shareholder communications                                       27,999
  Amortization of deferred organization costs                      20,411
  Directors' fees                                                   4,000
  Pricing service fees                                              3,599
  Registration fees                                                 3,000
  Custody                                                           2,437
  Other                                                             5,290
-------------------------------------------------------------------------
  Total Expenses                                                  590,391
-------------------------------------------------------------------------
Net Investment Income                                           2,269,926
-------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 4):
  Realized Gain From Security Transactions 
  (excluding short-term securities):
    Proceeds from sales                                        16,967,666
    Cost of securities sold                                    16,365,082
-------------------------------------------------------------------------
  Net Realized Gain                                               602,584
-------------------------------------------------------------------------
  Changes in Net Unrealized Appreciation of Investments:
    Beginning of year                                           3,228,979
    End of year                                                 5,823,868
-------------------------------------------------------------------------
  Increase in Net Unrealized Appreciation                       2,594,889
-------------------------------------------------------------------------
Net Gain on Investments                                         3,197,473
-------------------------------------------------------------------------
Increase in Net Assets From Operations                         $5,467,399
=========================================================================

                       See Notes to Financial Statements.


9
<PAGE>

--------------------------------------------------------------------------------
Statements of Changes in Net Assets               For the Years Ended August 31,
--------------------------------------------------------------------------------

                                                        1997            1996
================================================================================
OPERATIONS:
  Net investment income                             $ 2,269,926   $   2,318,811
  Net realized gain                                     602,584         914,456
  Increase in net unrealized appreciation             2,594,889         179,466
-------------------------------------------------------------------------------
  Increase in Net Assets From Operations              5,467,399       3,412,733
-------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 2):
  Net investment income                             (2,304,816)     (2,546,193)
  Net realized gains                                (1,207,250)        (86,528)
-------------------------------------------------------------------------------
  Decrease in Net Assets From
  Distributions to Shareholders                     (3,512,066)     (2,632,721)
-------------------------------------------------------------------------------
Increase in Net Assets                                1,955,333         780,012
NET ASSETS:
  Beginning of year                                  48,029,857      47,249,845
-------------------------------------------------------------------------------
  End of year*                                      $49,985,190     $48,029,857
================================================================================
* Includes undistributed net investment income of:      $16,524         $51,414
================================================================================

                       See Notes to Financial Statements.


10
<PAGE>

--------------------------------------------------------------------------------
Notes to Financial Statements
--------------------------------------------------------------------------------

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 bid and asked prices provided by an independent
pricing service that are based on transactions in municipal obligations,
quotations from municipal bond dealers, market transactions in comparable
securities and various relationships between securities; (c) securities maturing
within 60 days are valued at cost plus accreted discount, or minus amortized
premium, which approximates value; (d) gains or losses on the sale of securities
are calculated by using the specific identification method; (e) interest income,
adjusted for amortization of premium and accretion of original issue discount,
is recorded on an accrual basis; market discount is recognized upon the
disposition of the security; (f) dividends and distributions to shareholders are
recorded on the ex-dividend date; (g) the Fund intends to comply with the
applicable provisions of the Internal Revenue Code of 1986, as amended,
pertaining to regulated investment companies and to make distributions of
taxable income sufficient to relieve it from substantially all Federal income
and excise taxes; and (h) estimates and assumptions are required to be made
regarding assets, liabilities and changes in net assets resulting from
operations when financial statements are prepared. Changes in the economic
environment, financial markets and any other parameters used in determining
these estimates could cause actual results to differ. 

      In addition, organization costs have been deferred and are being amortized
on a straight-line basis over a five year period, beginning at the commencement
of the Fund's operations in September 1994.

      2. EXEMPT-INTEREST DIVIDENDS AND OTHER DISTRIBUTIONS

      The Fund intends to satisfy conditions that will enable interest from
municipal securities, which is exempt from regular Federal income tax and from
designated state income taxes, to retain such tax-exempt status when distributed
to the shareholders of the Fund.

      Capital gains distributions, if any, are taxable to shareholders, and are
declared and paid at least annually.


                                                                              11
<PAGE>

--------------------------------------------------------------------------------
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------

      3. MANAGEMENT AGREEMENT AND AFFILIATED TRANSACTIONS

      Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith
Barney Holdings Inc., acts as investment manager to the Fund. The Fund pays
SBMFM a fee calculated at an annual rate of 0.90% of the Fund's average daily
net assets. This fee is calculated daily and paid monthly.

      All officers and one director of the Fund are employees of Smith Barney
Inc.

      4. INVESTMENTS

      For the year ended August 31, 1997, the aggregate cost of purchases and
proceeds from sales of investments (including maturities, but excluding
short-term securities) were as follows:

--------------------------------------------------------------------------------
Purchases                                                         $13,591,169
--------------------------------------------------------------------------------
Sales                                                              16,967,666
--------------------------------------------------------------------------------

      At August 31, 1997, the aggregate gross unrealized appreciation and
depreciation of investments for Federal income tax purposes were substantially
as follows:

--------------------------------------------------------------------------------
Gross unrealized appreciation                                      $5,835,534
Gross unrealized depreciation                                         (11,666)
--------------------------------------------------------------------------------
Net unrealized appreciation                                        $5,823,868
--------------------------------------------------------------------------------

      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.

      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


12
<PAGE>

--------------------------------------------------------------------------------
Notes to Financial Statements (continued)
--------------------------------------------------------------------------------

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) and the
credit risk should a counterparty fail to perform under such contracts.

      At August 31, 1997, the Fund had no open futures contracts.

      7. LENDING OF PORTFOLIO SECURITIES

      The Fund has an agreement with its custodian whereby the custodian may
lend securities owned by the Fund to brokers, dealers and other financial
organizations. Fees earned by the Fund on securities lending are recorded as
interest income. Loans of securities by the Fund are collateralized by either
cash, U.S. government securities or high quality money market instruments that
are maintained at all times in an amount at least equal to the current market
value of the loaned securities, plus a margin depending on the type of
securities loaned. The custodian establishes and maintains the collateral in a
segregated account.

      At August 31, 1997, there were no securities on loan.

                                                                              13
<PAGE>

--------------------------------------------------------------------------------
Financial Highlights
--------------------------------------------------------------------------------

For a share of capital stock outstanding throughout each year:

                                             1997        1996         1995(1)(2)
================================================================================
Net Asset Value, Beginning of Year       $   13.13   $   12.92    $   12.00
--------------------------------------------------------------------------------
Income From Operations
   Net investment income (3)                  0.62        0.63         0.60
   Net realized and unrealized gain           0.87        0.30         0.84
--------------------------------------------------------------------------------
Total Income From Operations                  1.49        0.93         1.44
--------------------------------------------------------------------------------
Less Distributions From:
   Net investment income                     (0.63)      (0.70)       (0.52)
   Net realized gains                        (0.33)      (0.02)        --
--------------------------------------------------------------------------------
Total Distributions                          (0.96)      (0.72)       (0.52)
--------------------------------------------------------------------------------
Net Asset Value, End of Year             $   13.66   $   13.13    $   12.92
--------------------------------------------------------------------------------
Total Return, Based on Market Value          13.39%      11.92%        0.25%++
--------------------------------------------------------------------------------
Total Return, Based on Net Asset Value*      12.19%       7.96%       12.24%++
--------------------------------------------------------------------------------
Net Assets, End of Year (000s)           $  49,985   $  48,030    $  47,250
--------------------------------------------------------------------------------
Ratios to Average Net Assets:
   Expenses (3)                               1.21%       1.15%        1.02%+
   Net investment income                      4.64        4.75         5.16+
--------------------------------------------------------------------------------
Portfolio Turnover Rate                         28%         42%           7%
--------------------------------------------------------------------------------
Market Value, End of Year                $   12.75   $  12.125    $  11.500
================================================================================

(1)   Based on the weighted average shares outstanding for the period.
(2)   For the period from September 23, 1994 (commencement of operations) to
      August 31, 1995.
(3)   The Manager has waived a portion of its management fees for the period
      ended August 31, 1995. If such fees were not waived, the per share
      decrease on the net investment income would have been $0.01 and the
      expense ratio would have been 1.14%, annualized.
*     The total return assumes the purchase and redemption of shares using the
      Fund's net asset value rather than the market value. 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.


14
<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, 1997, 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, the financial highlights for each of the
years in the two-year period then ended and the period from September 23, 1994
(commencement of operations) to August 31, 1995. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

      We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1997, 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, 1997, the
results of its operations for the year then ended and the changes in its net
assets for each of the years in the two-year period then ended, the financial
highlights for each of the years in the two-year period then ended and the
period from September 23, 1994 to August 31, 1995, in conformity with generally
accepted accounting principles.


                                              /s/ KPMG Peat Marwich LLP

New York, New York
October 15, 1997

                                                                              15
<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
================================================================================
 12/14/94       12/20/94      $10.875       $11.48       $0.05800    $10.27
  1/17/95        1/24/95       11.125        11.78        0.05800     11.27
  2/14/95        2/21/95       11.625        12.46        0.05800     11.77
  3/14/95        3/21/95       11.625        12.71        0.05800     11.77
  4/11/95        4/18/95       11.500        12.92        0.05800     11.65
  5/16/95        5/23/95       11.750        13.03        0.05800     11.77
  6/20/95        6/23/95       11.750        13.08        0.05800     12.02
  7/25/95        7/28/95       11.750        12.81        0.05800     11.95
  8/22/95        8/25/95       11.625        12.70        0.05800     11.65
  9/26/95        9/29/95       11.500        12.99        0.05800     11.65
 10/24/95       10/27/95       11.625        13.27        0.05800     11.77
 11/20/95       11/24/95       11.875        13.48        0.05800     12.02
 12/26/95       12/29/95       12.000        13.80        0.05800     12.02
 12/26/95*      12/29/95       12.000        13.80        0.02365     12.02
  1/23/96        1/26/96       12.063        13.75        0.05800     12.14
  2/20/96        2/23/96       11.938        13.78        0.05800     12.05
  3/26/96        3/29/96       11.750        13.27        0.05800     12.05
  4/23/96        4/26/96       12.000        13.10        0.05800     12.10
  5/28/96        5/31/96       12.000        13.19        0.05800     12.03
  6/25/96        6/28/96       12.000        12.96        0.05800     12.09
  7/23/96        7/26/96       12.375        13.14        0.05800     12.41
  8/27/95        8/30/96       12.125        13.27        0.05800     12.14
  9/24/96        9/27/96       11.875        13.25        0.05800     12.01
 10/22/96       10/25/96       12.000        13.43        0.05800     12.14
 11/25/96       11/29/96       12.500        13.73        0.05800     12.76
 12/03/96*      12/13/96       12.375        13.49        0.33000     12.76
  1/28/97        1/31/97       12.563        13.12        0.05800     12.75
  2/25/97        2/28/97       12.500        13.42        0.05800     12.64
  3/24/97        3/27/97       12.375        13.02        0.05800     12.50
  4/22/97        4/25/97       12.500        12.91        0.05800     12.61
  5/27/97        5/30/97       12.563        13.17        0.05800     12.72
  6/24/97        6/27/97       12.750        13.48        0.05800     12.86
  7/22/97        7/25/97       12.688        13.79        0.05400     12.82
  8/26/97        8/29/97       12.688        13.62        0.05400     12.89
================================================================================
+     Effective October 24, 1995, the Fund changed its valuation date from
      payable date to record date. For the period from December 14, 1994 through
      September 26, 1995, the AMEX closing price and net asset value are as of
      payable date.
*     Capital gain distribution.

16
<PAGE>

--------------------------------------------------------------------------------
Dividend Reinvestment Plan (unaudited)
--------------------------------------------------------------------------------

      Pursuant to the Fund's Dividend Reinvestment Plan ("Plan"), all
distributions are automatically reinvested by First Data Investor Services
Group, Inc. as plan agent ("Plan Agent") in additional shares of the Fund's
Common Stock ("Common Shares") as provided below unless a shareholder elects to
receive cash.

      Distributions with respect to Common Shares registered in the name of a
broker-dealer or other nominee (i.e., in "Street Name") are reinvested by the
broker or nominee in additional Common Shares under the Plan, unless the service
is not provided by the broker or nominee. Investors who own Common Shares
registered in Street Name should consult their broker-dealer for details. All
distributions to shareholders who do not participate in the Plan are paid by
check, mailed directly to the record holder by the Plan Agent.

      If the Fund declares a distribution payable either in Common Shares or in
cash, nonparticipants in the Plan receive cash, and Plan participants receive
the equivalent in Common Shares valued in the following manner: whenever the
market price is equal to or exceeds the net asset value per share at the time
Common Shares are valued for the purpose of determining the number of Common
Shares equivalent to the cash distribution, participants are issued Common
Shares valued at the greater of (1) the net asset value most recently determined
or (2) 95% of the then current market price of the Common Shares.

      If the net asset value of the Common Shares at the time of valuation
exceeds the market price of the Common Shares, or if the Fund declares a
distribution payable only in cash, the Plan Agent buys Common Shares in the open
market, on the American Stock Exchange or elsewhere, for the participants'
accounts. The Plan Agent applies all cash received as a distribution to purchase
Common Shares on the open market as soon as practicable after the record date of
the distribution, but in no event later than 30 days after such date, except
when necessary to comply with applicable provisions of the Federal securities
laws. If following the commencement of purchases and before the Plan Agent has
completed its purchases the market price exceeds the net asset value of the
Common Shares, the Plan Agent is permitted to cease purchasing shares on the
open market and the Fund may issue the remaining shares at a price equal to the
greater of (a) net asset value or (b) 95% of the then current market price. In a
case where the Plan Agent has terminated open market purchases and the Fund has
issued the remaining shares, the number of shares received by the participant in
respect of the cash dividend or distribution 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.


                                                                              17
<PAGE>

--------------------------------------------------------------------------------
Dividend Reinvestment Plan (unaudited) (continued)
--------------------------------------------------------------------------------

      Participants in the Plan may withdraw from the Plan upon written notice to
the Plan Agent which must be received at least ten business days prior to the
distribution record date to become effective for that distribution. Shares in
the account of each Plan participant are held by the Plan Agent in
non-certificated form in the name of the Plan Agent or participant. When a
participant withdraws from the Plan or upon termination of the Plan as provided
below, certificates for whole Fund shares credited to his or her account under
the Plan are issued and a cash payment is made for any fraction of a Fund share
credited to such account.

      The automatic reinvestment of distributions does not relieve participants
of any Federal income tax that may be payable on such distributions.

      The Fund does not charge participants for reinvesting distributions. Any
Plan Agent's fees for the handling of reinvestment of distributions under the
Plan are paid by the Fund. There are no brokerage charges with respect to Common
Shares issued directly by the Fund as a result of distributions payable either
in stock or in cash. However, each participant pays a pro-rata share of
brokerage commissions incurred with respect to the Plan Agent's open market
purchases in connection with the reinvestment of distributions.

      Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund and the Plan Agent reserve the right to amend the Plan as
applied to any distribution paid subsequent to written notice of the change sent
to all shareholders of the Fund at least 90 days before the record date for the
distribution. The Plan also may be terminated by the Fund or the Plan Agent by
at least 30 days' written notice to all shareholders of the Fund. All
correspondence concerning the Plan should be directed to the Plan Agent at First
Data Investor Services Group, Inc., P.O. Box 1376, Boston, Massachusetts 02104.

--------------------------------------------------------------------------------
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.


18
<PAGE>

--------------------------------------------------------------------------------
Tax Information (unaudited)
--------------------------------------------------------------------------------

      For Federal tax purposes the Fund hereby designates for the fiscal year
ended August 31, 1997:

      o     long-term capital gain distributions paid of $1,207,250.

      o     99.60% of the dividends paid from net investment income are
            tax-exempt for regular Federal income tax purposes.


                                                                              19
<PAGE>



                     (This page intentionally left blank.)



<PAGE>

                                Greenwich Street
--------------------------------------------------------------------------------
                         CALIFORNIA MUNICIPAL FUND INC.

DIRECTORS

Joseph H. Fleiss
Donald R. Foley
Paul Hardin
Francis P. Martin, M.D.
Heath B. McLendon, Chairman
Roderick C. Rasmussen
John P. Toolan
C. Richard Youngdahl, Emeritus


OFFICERS

Heath B. McLendon
Chief Executive Officer

Lewis E. Daidone
Senior Vice President and Treasurer

Joseph P. Deane
Vice President and Investment Officer

Thomas M. Reynolds
Controller

Christina T. Sydor
Secretary


INVESTMENT MANAGER

Smith Barney Mutual Funds
Management Inc.

CUSTODIAN

PNC Bank, N.A.


SHAREHOLDER
SERVICING AGENT

First Data Investor Services Group, Inc.
P.O. Box 1376
Boston, MA 02104

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 10/97