Registration No. 2-63807
811-2914
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
X
Pre-Effective Amendment No. _____
Post-Effective Amendment No. 24
X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 X
Amendment No. 25
X
SMITH BARNEY SHEARSON DAILY DIVIDEND FUND INC .
(Exact name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code:
(212) 720-9218
Christina T. Sydor
Secretary
1345 Avenue of the Americas
New York, New York 10105
(Name and Address of Agent of Service)
Approximate Date of Proposed Public Offering:
As soon as possible after this Post-Effective Amendment
becomes effective.
It is proposed that this filing will become effective:
immediately upon filing pursuant to Rule 485(b)
X on May 30, 1994 pursuant to Rule 485(b)
60 days after filing pursuant to Rule 485(a)
on pursuant to Rule 485(a)
______________________________________________________________________________
___
The Registrant has previously filed a declaration of indefinite registration
of its shares pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Registrant's Rule 24f-2 Notice for the fiscal year ended March 31, 1994 was
filed with the Securities and Exchange Commission on May 25, 1994.
CALCULATION OF REGISTRATION FEE UNDER
THE SECURITIES ACT OF 1933(1)
..............................................................................
............................................................
Proposed Proposed
Title of Maximum
Maximum
Securities Amount Offering
Aggregate Amount of
Being Being Price Per
Offering Registration Registered Registered
Unit (2) Price (3) Fee
Shares of
Common Stock 1,384,900,184 $1.00 $289,998
$100
par value $.01
per
share
(1) The shares being registered as set forth in this table are in addition
to the indefinite number of shares of beneficial interest which
Registrant has registered under the Securities Act of 1933, as amended
(the "1933 Act"), pursuant to Rule 24f-2 under the Investment Company Act of
1940, (the "1940 Act"). The Registrant's Rule 24f-2 Notice for its
fiscal year ended March 31, 1994, was filed on May 25, 1994.
(2) Based on the Registrant's closing price of $1.00 on May 23, 1994
pursuant to Rule 457(d) under the 1933 Act and Rule 24e-2(a) under the 1940
Act.
(3) In response to Rule 24e-2(b) under the 1940 Act: (1) the calculation of
the maximum aggregate offering price is made pursuant to Rule 24e-2; (2)
74,485,085,775 shares of common stock were redeemed by the Registrant
during the fiscal year ended March 31, 1994; (3) 1,384,900,184 of such
shares have been used for reductions pursuant to Rule 24f-2 during the
current fiscal; and (4) 73,097,475,489 shares are being used for
reduction in this amendment pursuant to Rule 24e-2(a).
SMITH BARNEY SHEARSON DAILY DIVIDEND FUND INC.
FORM N-IA
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
Part A.
Item No.
Prospectus Caption
1. Cover Page
Cover Page
2. Synopsis
The Fund's Expenses
3. Condensed Financial
Information
Financial Highlights;
The Fund's Performance
4. General Description of
Registrant
Cover Page; Introduction;
Investment Objective and
Management Policies; Additional
Information
5. Management of the Fund
Introduction; The Fund's
Expenses; Annual Report ;
Management of the Fund
6. Capital Stock and Other
Securities
Dividends, Distributions and
Taxes; Additional Information
7. Purchase of Securities Being
Offered
Purchase of Shares; Valuation of
Shares; Exchange Privilege
8. Redemption or Repurchase
Redemption of Shares
9. Legal Proceedings
Not Applicable
Part B
Item No.
Statement of
Additional Information Caption
10. Cover Page
Cover Page
11. Table of Contents
Contents
12. General Information and
History
See Prospectus - "Additional
Information"
13. Investment Objectives and
Policies
Investment Objective and
Management Policies
14. Management of the Fund
Management of the Fund
15. Control Persons and Principal
Holders of Securities
Management of the Fund
16. Investment Advisory and Other
Services
Management of the Fund; Custodian
and
Transfer Agent
17. Brokerage Allocation
Investment Objective and
Management Policies
18. Capital Stock and Other
Securities
Investment Objective and
Policies;
Taxes
19. Purchase, Redemption and
Pricing of
Securities Being Offered
Purchase of Shares; Redemption of
Shares; Valuation of Shares;
Exchange Privilege
20. Tax Status
Taxes
21. Underwriters
Purchase of Shares
22. Calculation of Performance
Data
Performance Data
23. Financial Statements
Financial Statements
- ------------------------------------------------------------------------------
- --
May 30, 1994
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
Prospectus
begins on page one.
(LOGO OF SMITH BARNEY SHEARSON APPEARS HERE)
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
PROSPECTUS
MAY 30, 1994
Two World Trade Center
New York, New York 10048
(212) 720-9218
Smith Barney Shearson Daily Dividend Fund Inc. (the "Fund") is a no-load
money market fund which seeks to maximize current income to the extent consis-
tent with the preservation of capital and the maintenance of liquidity by
investing in a diversified portfolio of high quality money market instruments.
Although the Fund seeks to maintain a constant net asset value of $1.00 per
share, there can be no assurance that it can do so on a continuing basis. The
Fund is neither insured nor guaranteed by the United States government.
This Prospectus sets forth concisely certain information about the Fund,
including expenses, which prospective investors will find helpful in making an
investment decision. Investors are encouraged to read this Prospectus
carefully
and retain it for future reference.
Additional information about the Fund is contained in a Statement of Addi-
tional Information dated May 30, 1994, as amended or supplemented from time to
time, which is available upon request and without charge by calling or writing
the Fund at the telephone number or address set forth above or by contacting
your Smith Barney Shearson Financial Consultant. The Statement of Additional
Information has been filed with the Securities and Exchange Commission (the
"SEC") and is incorporated by reference into this Prospectus in its entirety.
SMITH BARNEY SHEARSON INC.
Distributor
GREENWICH STREET ADVISORS
Investment Adviser
SMITH, BARNEY ADVISERS, INC.
Administrator
THE BOSTON COMPANY ADVISORS, INC.
Sub-Administrator
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
1
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION 3
--------------------------------------------------
BENEFITS TO INVESTORS 4
--------------------------------------------------
THE FUND'S EXPENSES 4
--------------------------------------------------
FINANCIAL HIGHLIGHTS 6
--------------------------------------------------
MANAGEMENT OF THE FUND 8
--------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES 9
--------------------------------------------------
PURCHASE OF SHARES 14
--------------------------------------------------
REDEMPTION OF SHARES 16
--------------------------------------------------
VALUATION OF SHARES 18
--------------------------------------------------
EXCHANGE PRIVILEGE 18
--------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES 24
--------------------------------------------------
THE FUND'S PERFORMANCE 25
--------------------------------------------------
ADDITIONAL INFORMATION 26
--------------------------------------------------
</TABLE>
2
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
INTRODUCTION
The Fund is a no-load money market fund designed to provide investors with a
convenient means of investing in a managed pool of high quality money market
instruments which, because of their large denominations, are generally
unavail-
able to the smaller investor. The Fund invests in a diversified portfolio of
money market instruments, such as: securities issued or guaranteed by the
United States government, its agencies or instrumentalities ("U.S. government
securities"); repurchase agreements; bank certificates of deposit, time depos-
its and bankers' acceptances; and high grade commercial paper. An investment
in
the Fund permits participation in these types of instruments while affording
the advantages of diversification and a high degree of liquidity.
As with most mutual funds, the Fund employs various organizations to perform
necessary functions and to provide services to its shareholders. These organi-
zations are carefully selected by the Fund's Board of Directors, which regu-
larly reviews the quality and scope of their performance. The names of the
organizations and the services they perform on behalf of the Fund and its
shareholders are listed below:
<TABLE>
<CAPTION>
NAME SERVICE
-----------------------------------------------------------------------------
- --
<S> <C>
Smith Barney Shearson Inc.
("Smith Barney Shearson")................................ Distributor
Greenwich Street Advisors.................................. Investment
Adviser
Smith, Barney Advisers, Inc.
("Smith Barney Advisers")................................ Administrator
The Boston Company Advisors, Inc.
("Boston Advisors")...................................... Sub-
Administrator
Boston Safe Deposit and Trust Company
("Boston Safe").......................................... Custodian
The Shareholder Services Group, Inc. ("TSSG"),
a subsidiary of First Data Corporation................... Transfer Agent
-----------------------------------------------------------------------------
- --
</TABLE>
More detailed information regarding these organizations and the functions
they perform is provided in this Prospectus as well as in the Statement of
Additional Information.
3
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
BENEFITS TO INVESTORS
The Fund offers investors several important benefits:
. Ownership of a professionally managed portfolio of high quality money market
instruments, providing investment diversification that is otherwise beyond
the means of many individual investors.
. Investment liquidity through convenient purchase and redemption procedures.
. A convenient way to invest without the administrative and recordkeeping
burdens normally associated with the direct ownership of securities.
. Exchange privilege with other mutual funds in the Smith Barney Shearson
Group
of Funds.
THE FUND'S EXPENSES
The following expense table lists the costs and expenses that an investor
will incur either directly or indirectly as a shareholder of the Fund, based
on
its operating expenses for its most recent fiscal year:
- ------------------------------------------------------------------------------
- --
<TABLE>
<S> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management fees (net of fee waivers totalling .03%) .47%
Other expenses .23%
- ----------------------------------------------------------
TOTAL FUND OPERATING EXPENSES .70%
- ----------------------------------------------------------
</TABLE>
Management fees paid by the Fund include investment advisory fees payable
monthly to Greenwich Street Advisors at the following annual rates: .25% of
the
value of the Fund's average daily net assets up to $50 million and .30% of the
value of its average daily net assets in excess of $50 million; and
administra-
tion fees payable monthly to Smith Barney Advisers at the following annual
rates: .25% of the value of the Fund's average daily net assets up to $50 mil-
lion and .20% of the value of its average daily net assets in excess of $50
million. Out of its administration fee, Smith Barney Advisers pays Boston
Advi-
sors a fee for sub-administration services at a rate agreed upon from time to
time between Smith Barney Advisers and Boston Advisors. Greenwich Street Advi-
sors and Smith Barney Advisers have undertaken to waive fees in an amount suf-
ficient to ensure that the total investment advisory and administrative fees
4
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
THE FUND'S EXPENSES (CONTINUED)
paid by the Fund will be .475% of the value of its average daily net assets
between $5 billion and $10 billion, and .45% of the value of its average daily
net assets in excess of $10 billion. The nature of the services for which the
Fund pays management fees is described under "Management of the Fund." "Other
expenses" in the above table include fees for shareholder services, custodial
fees, legal and accounting fees, printing costs and registration fees.
EXAMPLE*
The following example demonstrates the projected dollar amount of total
cumu-
lative expenses that would be incurred over various periods with respect to a
hypothetical investment in the Fund. These amounts are based upon (a) payment
by the Fund of operating expenses at the levels set forth in the table above
and (b) the following assumptions:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10
YEARS
- ------------------------------------------------------------------------------
- -
<S> <C> <C> <C> <C>
A shareholder would pay the following expenses
on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end
of each time period: $ 7 $22 $39 $87
- ------------------------------------------------------------------------------
- -
</TABLE>
* This example should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown.
Moreover, while this example assumes a 5% annual return, the Fund's actual
performance will vary and may result in an actual return greater or less
than 5%.
5
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
FINANCIAL HIGHLIGHTS
The following information for the ten years ended March 31, 1994, has been
audited by Coopers & Lybrand, independent accountants, whose report thereon is
incorporated by reference into the Statement of Additional Information. This
information should be read in conjunction with the financial statements and
related notes that also appear in the Fund's Annual Report, which is incorpo-
rated by reference into the Statement of Additional Information.
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
YEAR
ENDED ENDED ENDED ENDED
ENDED
3/31/94 3/31/93 3/31/92 3/31/91
3/31/90
<S> <C> <C> <C> <C>
<C>
Net asset value,
beginning of year $1.0000 $1.0000 $1.0000
$1.0000 $1.0000
- ------------------------------------------------------------------------------
- -----------------
Income from investment
operations:
Net investment income* 0.0271 0.0314 0.0514
0.0736 0.0844
Net realized gain/(loss)
on investments -- -- -- --
- --
- ------------------------------------------------------------------------------
- -----------------
Total from investment
operations 0.0271 0.0314 0.0514
0.0736 0.0844
- ------------------------------------------------------------------------------
- -----------------
Less distributions:
Distributions from net
investment income (0.0271) (0.0314) (0.0514)
(0.0736) (0.0844)
Distributions from net
realized capital gains -- -- -- --
- --
- ------------------------------------------------------------------------------
- -----------------
Total Distributions (0.0271) (0.0314) (0.0514)
(0.0736) (0.0844)
- ------------------------------------------------------------------------------
- -----------------
Net asset value, end of
year $1.0000 $1.0000 $1.0000
$1.0000 $1.0000
- ------------------------------------------------------------------------------
- -----------------
Total return++ 2.74% 3.19% 5.26%
7.61% 8.77%
- ------------------------------------------------------------------------------
- -----------------
Ratios to average net
assets/supplemental
data:
Net assets, end of year
(000's) $15,657,543 $16,619,429 $17,807,393
$16,663,387 $17,410,711
Ratio of operating
expenses to average
net assets 0.70%+ 0.67%+ 0.67%+
0.69%+ 0.70%+
Ratio of net investment
income to average net
assets 2.71% 3.14% 5.11%
7.35% 8.38%
- ------------------------------------------------------------------------------
- -----------------
</TABLE>
+ Expense ratios before waiver of fees and certain other payments by
investment adviser and sub-investment adviser and administrator for the
years ended March 31, 1994, 1993, 1992, 1991 and 1990 were .72%, .70%,
.70%,
.70% and .72%, respectively.
++ Total return represents aggregate total return for the year indicated.
* Net investment income before waiver of fees by investment adviser, sub-
investment adviser, and administrator for the years ended March 31, 1994,
1993, 1992, 1991 and 1990 were $0.0268, $0.0311, $0.0512, $0.0735 and
$0.0842, respectively.
6
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
YEAR
ENDED ENDED ENDED ENDED
ENDED
3/31/89 3/31/88 3/31/87 3/31/86
3/31/85
<S> <C> <C> <C> <C>
<C>
Net asset value,
beginning of year $1.0002 $1.0002 $1.0002 $1.0002
$1.0002
- ------------------------------------------------------------------------------
- ---------
Income from investment
operations:
Net investment income 0.0739 0.0612 0.0571 0.0735
0.0955
Net realized gain/(loss)
on investments (0.0001) -- -- --
0.0001
- ------------------------------------------------------------------------------
- ---------
Total from investment
operations 0.0738 0.0612 0.0571 0.0735
0.0956
- ------------------------------------------------------------------------------
- ---------
Less distributions:
Distributions from net
investment income (0.0739) (0.0612) (0.0571) (0.0735)
(0.0955)
Distributions from net
realized capital gains (0.0001) -- -- --
(0.0001)
- ------------------------------------------------------------------------------
- ---------
Total Distributions (0.0740) (0.0612) (0.0571) (0.0735)
(0.0956)
- ------------------------------------------------------------------------------
- ---------
Net asset value, end of
year $1.0000 $1.0002 $1.0002 $1.0002
$1.0002
- ------------------------------------------------------------------------------
- ---------
Total return++ 7.66% 6.29% 5.86% 7.60%
9.99%
- ------------------------------------------------------------------------------
- ---------
Ratios to average net
assets/supplemental
data:
Net assets, end of year
(000's) $13,153,813 $4,054,441 $3,543,527 $3,730,128
$3,681,621
Ratio of operating
expenses to average
net assets 0.80%+ 0.80% 0.76% 0.74%
0.69%
Ratio of net investment
income to average net
assets 7.41% 6.12% 5.73% 7.35%
9.55%
- ------------------------------------------------------------------------------
- ---------
</TABLE>
+ Expense ratio before waiver of fees and certain other payments by
investment
adviser and sub-investment adviser and administrator for the year ended
March 31, 1989 was .81%.
++ Total return represents aggregate total return for the year indicated.
7
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
MANAGEMENT OF THE FUND
Overall responsibility for management and supervision of the Fund rests with
the Fund's Board of Directors. The Directors approve all significant
agreements
between the Fund and the persons or companies that furnish services to the
Fund, including agreements with its distributor, investment adviser, adminis-
trator, sub-administrator, custodian and transfer agent. The day-to-day opera-
tions of the Fund are delegated to the Fund's investment adviser,
administrator
and sub-administrator. The Statement of Additional Information contains
general
background information regarding each Director and executive officer of the
Fund.
INVESTMENT ADVISER--GREENWICH STREET ADVISORS
Greenwich Street Advisors, located at Two World Trade Center, New York, New
York, 10048, serves as the Fund's investment adviser. Greenwich Street
Advisors
(through predecessor entities) has been in the investment counselling business
since 1934 and is a division of Mutual Management Corp. which was incorporated
in 1978. Greenwich Street Advisors renders investment advice to investment
com-
panies that, as of April 30, 1994, had aggregate assets under management in
excess of $42 billion. Mutual Management Corp. is controlled by Smith Barney
Shearson Holdings Inc. ("Holdings"). Holdings is a wholly owned subsidiary of
The Travelers Inc. ("Travelers"), a diversified financial services holding
com-
pany principally engaged in the businesses of providing investment, consumer
finance and insurance services.
Subject to the supervision and direction of the Fund's Board of Directors,
Greenwich Street Advisors manages the Fund's portfolio in accordance with the
Fund's investment objective and policies, makes investment decisions for the
Fund, places orders to purchase and sell securities and employs professional
portfolio managers and securities analysts who provide research services to
the
Fund. For the fiscal year ended March 31, 1994, the Fund paid investment advi-
sory fees to Greenwich Street Advisors in an amount equal to .28% of the value
of the Fund's average daily net assets, and Greenwich Street Advisors waived
investment advisory fees payable to it in an amount equal to .02% of the value
of its average daily net assets.
PORTFOLIO MANAGEMENT
Phyllis M. Zahorodny, Managing Director of Greenwich Street Advisors, has
served as Vice President and Investment Officer of the Fund since
8
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
MANAGEMENT OF THE FUND (CONTINUED)
October 1987, and manages the day to day operations of the Fund, including
mak-
ing all investment decisions.
ADMINISTRATOR--SMITH BARNEY ADVISERS
Smith Barney Advisers, located at 1345 Avenue of the Americas, New York, New
York, 10105, serves as the Fund's administrator. Smith Barney Advisers is a
wholly owned subsidiary of Holdings and provides investment management and
investment administration services to investment companies which had aggregate
assets under management as of April 30, 1994 of $8.9 billion.
Smith Barney Advisers generally assists in all aspects of the Fund's
adminis-
tration and operation.
SUB-ADMINISTRATOR--BOSTON ADVISORS
Boston Advisors is located at One Boston Place, Boston, Massachusetts 02108
and serves as the Fund's sub-administrator. Boston Advisors is a wholly owned
subsidiary of The Boston Company, Inc. ("TBC"), which in turn is a wholly
owned
subsidiary of Mellon Bank Corporation ("Mellon"). Boston Advisors provides
advisory, investment management, administrative and/or sub-administrative
serv-
ices to investment companies, which had aggregate assets under management as
of
April 30, 1994, in excess of $91 billion.
Boston Advisors calculates the net asset value of the Fund's shares and gen-
erally assists Smith Barney Advisers in all aspects of the Fund's administra-
tion and operation. For the fiscal year ended March 31, 1994, Boston Advisors
was sub-investment adviser and/or administrator to the Fund and received sub-
investment advisory and/or administration fees in an amount equal to .19% of
the value of the Fund's average daily net assets. For the same period, Boston
Advisors waived sub-investment advisory and/or administration fees payable to
it in an amount equal to .01% of the value of the Fund's average daily net
assets.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The Fund seeks to maximize current income for its shareholders to the extent
consistent with the preservation of capital and the maintenance of liquidity.
This investment objective may not be changed without the approval of the
9
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
holders of a majority of the Fund's outstanding shares. There can be no assur-
ance that the Fund's investment objective will be achieved.
The Fund attempts to achieve its investment objective by investing in short-
term money market instruments, including: U.S. government securities; repur-
chase agreements; bank time deposits, certificates of deposit; bankers'
accept-
ances; and high grade commercial paper.
Price and Portfolio Maturity. The Fund invests only in securities which are
purchased with and payable in U.S. dollars and which have (or, pursuant to
reg-
ulations adopted by the SEC, will be deemed to have) remaining maturities of
13
months or less at the date of purchase by the Fund. For this purpose, variable
rate master demand notes (as described below under "Commercial Paper"), which
are payable on demand or, under certain conditions, at specified periodic
intervals not exceeding 13 months, in either case on not more than 30 days'
notice, will be deemed to have remaining maturities of 13 months or less. The
Fund maintains a dollar-weighted average portfolio maturity of 90 days or
less.
The Fund follows these policies to maintain a constant net asset value of
$1.00
per share, although there is no assurance that it can do so on a continuing
basis.
Fund Quality and Diversification. The Fund will limit its investments to
securities that its Board of Directors determines present minimal credit risks
and which are "Eligible Securities" at the time of acquisition by the Fund.
The
term Eligible Securities includes securities rated by the "Requisite NRSROs"
in
one of the two highest short-term rating categories, securities of issuers
that
have received such ratings with respect to other short-term debt securities
and
comparable unrated securities. "Requisite NRSROs" means (a) any two nationally
recognized statistical rating organizations ("NRSROs") that have issued a rat-
ing with respect to a security or class of debt obligations of an issuer, or
(b) one NRSRO, if only one NRSRO has issued such a rating at the time that the
Fund acquires the security. The NRSROs currently designated as such by the SEC
are Standard & Poor's Corporation, Moody's Investors Service, Inc., Fitch
Investors Services, Inc., Duff and Phelps Inc., IBCA Limited and its
affiliate,
IBCA, Inc. and Thomson BankWatch. A discussion of the ratings categories of
the
NRSROs is contained in the Appendix to the Statement of Additional
Information.
The Fund generally may not invest more than 5% of its total assets in the
securities of any one issuer, except for U.S. government securities. In addi-
tion, the Fund may not invest more than 5% of its total assets in Eligible
Securities that have not received the highest rating from the Requisite NRSROs
and comparable unrated securities ("Second Tier Securities") and may not
invest
more
10
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
than 1% of its total assets in the Second Tier Securities of any one issuer.
The Fund may invest more than 5% (but no more than 25%) of the then-current
value of the Fund's total assets in the securities of a single issuer for a
period of up to three business days, provided that (a) the securities are
rated
by the Requisite NRSROs in the highest short-term rating category, are securi-
ties of issuers that have received such rating with respect to other short-
term
debt securities or are comparable unrated securities, and (b) the Fund does
not
make more than one such investment at any one time.
The following is a brief description of the kinds of instruments in which
the
Fund invests:
U.S. Government Securities in which the Fund may invest include: direct
obli-
gations of the United States Treasury, such as Treasury Bills, Treasury Notes
and Treasury Bonds; obligations which are supported by the full faith and
credit of the United States, such as Government National Mortgage Association
pass-through certificates; obligations which are supported by the right of the
issuer to borrow from the United States Treasury, such as securities of
Federal
Home Loan Banks; and obligations which are supported by the credit of the
instrumentality, such as Federal National Mortgage Association and Federal
Home
Loan Mortgage Association bonds.
Certificates of Deposit, Time Deposits and Bankers' Acceptances in which the
Fund may invest are generally limited to those instruments issued by domestic
or foreign banks, savings and loan associations and other banking institutions
having total assets in excess of $1 billion. The Fund may invest only in
instruments denominated in U.S. dollars. Certificates of deposit ("CDs") are
short-term negotiable obligations of commercial banks; time deposits ("TDs")
are non-negotiable deposits maintained in banking institutions for specified
periods of time at stated interest rates; and bankers' acceptances are time
drafts drawn on commercial banks by borrowers, usually in connection with
international transactions. The Fund may invest in instruments issued by
domes-
tic banks, including those issued by their branches outside the United States
and subsidiaries located in Canada, and in instruments issued by foreign banks
through their branches located in the United States and the United Kingdom. In
addition, the Fund may invest in TDs of foreign banks issued through their
branches located in Grand Cayman Island, Nassau, Tokyo and Toronto. The Fund
will not purchase TDs maturing in more than seven calendar days, and will
limit
its investment in TDs maturing from two business days through seven calendar
days to 10% of its total assets.
11
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
Commercial Paper is a short-term, unsecured, negotiable promissory note of a
domestic or foreign company. The Fund's purchase of commercial paper is
limited
to direct obligations of issuers that at the time of purchase are Eligible
Securities that are rated by at least one NRSRO in the highest rating category
for short-term debt securities or comparable unrated securities. The Fund may
invest without limit in the commercial paper of foreign issuers. The Fund also
may invest in variable rate master demand notes, which are unsecured demand
notes typically purchased directly from large corporate issuers providing for
variable amounts of principal indebtedness and periodic adjustments in the
interest rate according to the terms of the instrument. Demand notes are not
traded in a secondary market. However, the Fund may demand payment of
principal
and accrued interest in full at any time without penalty. In addition, while
demand notes generally are not rated, their issuers must satisfy the same cri-
teria as those set forth above for issuers of commercial paper. Greenwich
Street Advisors will consider the earning power, cash flow and other liquidity
ratios of issuers of demand notes and continually will monitor their financial
ability to meet payment on demand.
Further information about the Fund's investment policies, including a list
of
those restrictions on its investment activities which cannot be changed
without
shareholder approval, appears in the Statement of Additional Information.
CERTAIN PORTFOLIO STRATEGIES
Repurchase Agreements. The Fund may enter into repurchase agreements with
banks which are the issuers of instruments acceptable for purchase by the Fund
and with certain dealers on the Federal Reserve Bank of New York's list of
reporting dealers. Under the terms of a typical repurchase agreement, the Fund
would acquire an underlying debt obligation for a relatively short period
(usu-
ally not more than one week) subject to an obligation of the seller to repur-
chase, and the Fund to resell, the obligation at an agreed-upon price and
time,
thereby determining the yield during the Fund's holding period. This arrange-
ment results in a fixed rate of return that is not subject to market fluctua-
tions during the Fund's holding period. Under each repurchase agreement, the
selling institution will be required to maintain the value of the securities
subject to the repurchase agreement at not less than their repurchase price.
Repurchase agreements could involve certain risks in the event of default or
insolvency of the other party, including possible delays or restrictions upon
the Fund's ability to dispose of the underlying securities, the risk of a pos-
sible decline in the value of the underlying securities during the period in
which the Fund seeks to assert its
12
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
right to them, the risk of incurring expenses associated with asserting those
rights and the risk of losing all or part of the income from the agreement.
Greenwich Street Advisors, Smith Barney Advisers and/or Boston Advisors,
acting
under the supervision of the Fund's Board of Directors, reviews on an ongoing
basis the value of the collateral and the creditworthiness of those banks and
dealers with which the Fund enters into repurchase agreements to evaluate
potential risks. The Fund will not invest in a repurchase agreement maturing
in
more than seven days if such investment, together with illiquid securities
held
by the Fund, exceeds 10% of the Fund's total assets.
Borrowing. The Fund is authorized to borrow up to 10% of its total assets in
order to meet anticipated redemptions and to pledge its assets to the same
extent in connection with such borrowings.
Lending of Portfolio Securities. The Fund has the ability to lend securities
from its portfolio to brokers, dealers and other financial organizations. Such
loans, if and when made, may not exceed 20% of the Fund's total assets, taken
at value. Loans of portfolio securities will be collateralized by cash,
letters
of credit or U.S. government securities which are maintained at all times in a
segregated account with Boston Safe in an amount equal to at least 100% of the
current market value of the loaned securities. Loans will be made to firms
deemed by Greenwich Street Advisors to be of good standing and will not be
made
unless, in the judgement of Greenwich Street Advisors the consideration to be
earned from such loans would justify the risk. The risks associated with lend-
ing portfolio securities, as with other extensions of credit, consist of
possi-
ble loss of rights in the collateral should the borrower fail financially.
CERTAIN RISK CONSIDERATIONS
The Fund's portfolio will be affected by general changes in interest rates
which will result in increases or decreases in the value of the obligations
held by the Fund. The market value of the obligations in the Fund's portfolio
can be expected to vary inversely to changes in prevailing interest rates.
Investors also should recognize that, in periods of declining interest rates,
the Fund's yield will tend to be somewhat higher than prevailing market rates,
and in periods of rising interest rates, the Fund's yield will tend to be
some-
what lower. Also, when interest rates are falling, the inflow of net new money
to the Fund from the continuous sale of its shares will likely be invested in
portfolio instruments producing lower yields than the balance of its
portfolio,
thereby reducing the
13
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
Fund's current yield. In periods of rising interest rates, the opposite can be
expected to occur. In addition, securities in which the Fund may invest may
not
yield as high a level of current income as might be achieved by investing in
securities with less liquidity and safety and longer maturities.
Investments in securities issued by foreign banks or foreign issuers present
certain risks, including those resulting from fluctuations in currency
exchange
rates, revaluation of currencies, future political and economic developments
and the possible imposition of currency exchange blockages or other foreign
governmental laws or restrictions and reduced availability of public informa-
tion. Foreign issuers generally are not subject to uniform accounting,
auditing
and financial reporting standards or to other regulatory practices and
require-
ments applicable to domestic issuers. In addition, there may be less publicly
available information about a foreign bank than about a domestic bank.
PURCHASE OF SHARES
Purchases of Fund shares must be made through a brokerage account maintained
with Smith Barney Shearson or with a broker that clears securities
transactions
through Smith Barney Shearson on a fully disclosed basis (an "Introducing Bro-
ker"). Investors purchasing shares of the Fund through a qualified retirement
plan may do so directly through the Fund's transfer agent. No maintenance fee
will be charged in connection with a brokerage account through which an
investor purchases or holds shares. The Fund reserves the right to reject any
purchase order and to suspend the offering of shares for a period of time.
The minimum initial investment in the Fund is $2,500 and the minimum subse-
quent investment is $1,000, except for purchases through (a) Individual
Retire-
ment Accounts ("IRAs") and Self-Employed Retirement Plans, for which the mini-
mum initial and subsequent investments are $250 and $100, respectively, and
(b)
retirement plans qualified under Section 403(b)(7) of the Internal Revenue
Code
of 1986, as amended (the "Code"), for which the minimum and subsequent invest-
ments are $25. In addition, for participants with an automatic purchase
arrangement in connection with their brokerage accounts, the initial and
subse-
quent minimum investments are $100. There are no minimum investment require-
ments for shareholders in Smith Barney Shearson Investor Managed IRAs and
Self-
Employed Retirement Plans or employees of Travelers and its subsidiaries,
including Smith Barney Shearson. The Fund reserves the right at any
14
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
PURCHASE OF SHARES (CONTINUED)
time to vary the initial and subsequent investment minimums. Certificates for
Fund shares are issued upon request to the Fund's transfer agent.
The Fund's shares are sold continuously at their net asset value next deter-
mined after a purchase order is received and becomes effective. A purchase
order becomes effective when Smith Barney Shearson or an Introducing Broker
receives, or converts the purchase amount into, Federal funds (i.e., monies of
member banks within the Federal Reserve System held on deposit at a Federal
Reserve Bank). When orders for the purchase of Fund shares are paid for in
Fed-
eral funds, or are placed by an investor with sufficient Federal funds or cash
balance in the investor's brokerage account with Smith Barney Shearson or the
Introducing Broker, the order becomes effective on the day of receipt if
received prior to the close of regular trading on the New York Stock Exchange,
Inc. (the "NYSE"), currently 4:00 p.m., New York time, on any day the Fund
cal-
culates its net asset value. See "Valuation of Shares." Purchase orders
received after the close of regular trading on the NYSE are effective as of
the
time the net asset value is next determined. When orders for the purchase of
Fund shares are paid for other than in Federal funds, Smith Barney Shearson or
the Introducing Broker, acting on behalf of the investor, will complete the
conversion into, or itself advance, Federal funds, and the order will become
effective on the day following its receipt by Smith Barney Shearson or the
Introducing Broker. Shares purchased begin to accrue income dividends on the
next business day following the day that the purchase order becomes effective.
SMITH BARNEY SHEARSON 401(K) PROGRAM
Investors may be eligible to participate in the Smith Barney Shearson 401(k)
Program (the "401(k) Program"), which is generally designed to assist
employers
or plan sponsors in the creation and operation of retirement plans qualified
under Section 401(a) of the Code. To the extent possible, the same terms and
conditions are offered to all participating plans in the 401(k) Program which
include both 401(k) plans and other types of participant directed, tax-
qualified employee benefit plans (collectively, "Participating Plans").
Participating Plans eligible to purchase Class B shares of other funds in
the
Smith Barney Shearson Group of Funds may not acquire shares of the Fund. Under
the 401(k) Program, Class B shares are offered to Participating Plans that:
(a)
purchase less than $250,000 of Class B shares of one or more funds in the
Smith
Barney Shearson Group of Funds that offer one or more classes sold
15
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
PURCHASE OF SHARES (CONTINUED)
subject to either an initial sales charge or CDSC; and (b) have less than 100
employees eligible to participate in the Participating Plan.
Participating Plans wishing to acquire shares of the Fund through the 401(k)
Program must purchase such shares directly from the transfer agent. For
further
information regarding the 401(k) Program investors should contact their Smith
Barney Shearson Financial Consultants.
DISTRIBUTOR--SMITH BARNEY SHEARSON
Smith Barney Shearson is located at 388 Greenwich Street, New York, New York
10013, and serves as the Fund's distributor.
REDEMPTION OF SHARES
Shareholders may redeem their shares without charge on any day the Fund cal-
culates its net asset value. See "Valuation of Shares." Redemption requests
received in proper form prior to the close of regular trading on the NYSE are
priced at the net asset value per share determined on that day. Redemption
requests received after the close of regular trading on the NYSE are priced at
the net asset value as next determined. The Fund normally transmits redemption
proceeds for credit to the shareholder's account at Smith Barney Shearson or
the Introducing Broker at no charge within seven days following receipt of a
redemption request. Generally, these funds will not be invested for the share-
holder's benefit without specific instruction, and Smith Barney Shearson will
benefit from the use of temporarily uninvested funds. A shareholder who pays
for Fund shares by personal check will be credited with the proceeds of a
redemption of those shares only after the purchase check has been collected,
which may take up to ten days or more. A shareholder who anticipates the need
for more immediate access to his or her investment should purchase shares with
Federal funds, by bank wire or with a certified or cashier's check.
Fund shareholders who purchase securities through Smith Barney Shearson or
the Introducing Broker may take advantage of special redemption procedures
under which Fund shares will be redeemed automatically to the extent necessary
to satisfy debit balances arising in the shareholder's account with Smith Bar-
ney Shearson or the Introducing Broker. One example of how an automatic
redemp-
tion may occur involves the purchase of securities. If a shareholder
16
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
REDEMPTION OF SHARES (CONTINUED)
purchases securities but does not pay for them by settlement date, the number
of Fund shares necessary to cover the debit will be redeemed automatically as
of the settlement date, which usually occurs five business days after the
trade
date. No fee is currently charged with respect to these automatic
transactions.
Shareholders not wishing to participate in these arrangements should notify
their Smith Barney Shearson Financial Consultants.
A Fund account that is reduced by a shareholder to a value of $1,000 or less
($250 for IRAs and Self-Employed Retirement Plans) may be subject to
redemption
by the Fund, but only after the shareholder has been given at least 30 days in
which to increase the account balance to more than $1,000 ($250 for IRAs and
Self-Employed Retirement Plans).
Shares may be redeemed in one of the following ways:
REDEMPTION THROUGH SMITH BARNEY SHEARSON
Redemption requests may be made through Smith Barney Shearson or an
Introduc-
ing Broker. A shareholder desiring to redeem Fund shares represented by
certif-
icates also must present such certificates to Smith Barney Shearson or the
Introducing Broker endorsed for transfer (or accompanied by an endorsed stock
power), signed exactly as the shares are registered. Redemption requests
involving shares represented by certificates will not be deemed received until
such certificates are received by the Fund's transfer agent in proper form.
REDEMPTION BY MAIL
Shares may be redeemed by submitting a written request for redemption to:
Smith Barney Shearson Daily Dividend Fund Inc.
c/o The Shareholder Services Group, Inc.
P.O. Box 9134
Boston, Massachusetts 02205-9134
A written redemption request to the Fund's transfer agent must (a) state the
number of shares to be redeemed, (b) identify the shareholder's account number
and (c) be signed by each registered owner exactly as the shares are regis-
tered. If the shares to be redeemed are represented by certificates, the cer-
tificates must be submitted to the Fund's transfer agent endorsed for transfer
or accompanied by a stock power signed exactly as the shares are registered.
Any signature appearing on a redemption request, share certificate or stock
power must be
17
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
REDEMPTION OF SHARES (CONTINUED)
guaranteed by a domestic bank, a savings and loan institution, a domestic
credit union, a member bank of the Federal Reserve System or a member firm of
a
national securities exchange. The Fund's transfer agent may require additional
supporting documents for redemptions made by corporations, executors, adminis-
trators, trustees and guardians. A redemption request will not be deemed to be
properly received until the Fund's transfer agent receives all required docu-
ments in proper form.
VALUATION OF SHARES
The Fund's net asset value per share is calculated on each day, Monday
through Friday, except on days on which the NYSE is closed. The NYSE currently
is scheduled to be closed on New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas and on
the preceding Friday or subsequent Monday when one of these holidays falls on
a
Saturday or Sunday, respectively.
The Fund's net asset value per share is determined as of the close of
regular
trading on the NYSE and is computed by dividing the value of the net assets of
the Fund by the total number of Fund shares outstanding. The Fund's assets are
valued on the basis of amortized cost, which involves valuing a portfolio
instrument at its cost initially and thereafter assuming a constant amortiza-
tion to maturity of any discount or premium, regardless of the impact of fluc-
tuating interest rates on the market value of the instrument. The Fund seeks
to
maintain a constant net asset value of $1.00 per share, although there can be
no assurance that it can do so on a continuing basis. Further information
regarding the Fund's valuation policies is contained in the Statement of Addi-
tional Information.
EXCHANGE PRIVILEGE
Shareholders in the Fund may exchange their shares for Class A or Class D
shares of certain other mutual funds in the Smith Barney Shearson Group of
Funds then offering shares for sale in the shareholder's state of residence.
Exchanges of shares may be made at any time without payment of any exchange
fee. Shares of the Fund acquired through the exchange of Class A or Class D
shares of other funds will have the same class designations as the
18
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
EXCHANGE PRIVILEGE (CONTINUED)
shares from which the exchange was made. Based on these class designations,
shares of the Fund may be subsequently exchanged for shares of the same class
of the following funds in the Smith Barney Shearson Group of Funds:
<TABLE>
<CAPTION>
EXCHANGEABLE
WITH SHARES
OF THE
FOLLOWING
CLASSES: FUND NAME AND INVESTMENT OBJECTIVE:
- ------------------------------------------------------------------------------
- ------
<C> <S>
Municipal Bond Funds
A SMITH BARNEY SHEARSON LIMITED MATURITY MUNICIPALS FUND, an
intermediate-term municipal bond fund investing in investment
grade
obligations.
A SMITH BARNEY SHEARSON MANAGED MUNICIPALS FUND INC., an
intermediate-
and long-term municipal bond fund.
A SMITH BARNEY SHEARSON TAX-EXEMPT INCOME FUND, an intermediate-
and
long-term municipal bond fund investing in medium- and lower-
rated
securities.
A SMITH BARNEY SHEARSON ARIZONA MUNICIPALS FUND INC., an
intermediate-
and long-term municipal bond fund designed for Arizona
investors.
A SMITH BARNEY SHEARSON INTERMEDIATE MATURITY CALIFORNIA
MUNICIPALS
FUND, an intermediate-term municipal bond fund designed for
California
investors.
A SMITH BARNEY SHEARSON CALIFORNIA MUNICIPALS FUND INC., an
intermediate- and long-term municipal bond fund designed for
California investors.
A SMITH BARNEY SHEARSON FLORIDA MUNICIPALS FUND, an intermediate-
and
long-term municipal bond fund designed for Florida investors.
A SMITH BARNEY SHEARSON MASSACHUSETTS MUNICIPALS FUND, an
intermediate-
and long-term municipal bond fund designed for Massachusetts
investors.
A SMITH BARNEY SHEARSON NEW JERSEY MUNICIPALS FUND INC., an
intermediate- and long-term municipal bond fund designed for New
Jersey investors.
</TABLE>
19
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
EXCHANGE PRIVILEGE (CONTINUED)
<TABLE>
<CAPTION>
EXCHANGEABLE
WITH SHARES
OF THE
FOLLOWING
CLASSES: FUND NAME AND INVESTMENT OBJECTIVE:
- ------------------------------------------------------------------------------
- ------
<C> <S>
A SMITH BARNEY SHEARSON INTERMEDIATE MATURITY NEW YORK MUNICIPALS
FUND,
an intermediate-term municipal bond fund designed for New York
investors.
A SMITH BARNEY SHEARSON NEW YORK MUNICIPALS FUND INC., an
intermediate-
and long-term municipal bond fund designed for New York
investors.
A SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND, an intermediate-
and
long-term municipal bond fund designed for Oregon investors.
Income Funds
A, D* SMITH BARNEY SHEARSON ADJUSTABLE RATE GOVERNMENT INCOME FUND,
seeks
high current income while limiting the degree of fluctuation in
net
asset value resulting from movement in interest rates.
A SMITH BARNEY SHEARSON LIMITED MATURITY TREASURY FUND, invests
exclusively in securities issued by the United States Treasury
and
other U.S. government securities.
A, D* SMITH BARNEY SHEARSON DIVERSIFIED STRATEGIC INCOME FUND, seeks
high
current income primarily by allocating and reallocating its
assets
among various types of fixed-income securities.
A, D* SMITH BARNEY SHEARSON MANAGED GOVERNMENTS FUND INC., invests in
obligations issued or guaranteed by the United States government
and
its agencies and instrumentalities with emphasis on mortgage-
backed
government securities.
A, D* SMITH BARNEY SHEARSON GOVERNMENT SECURITIES FUND, seeks a high
current
return by investing in U.S. government securities.
A, D* SMITH BARNEY SHEARSON INVESTMENT GRADE BOND FUND, seeks maximum
current income consistent with prudent investment management and
preservation of capital by investing in corporate bonds.
</TABLE>
20
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
EXCHANGE PRIVILEGE (CONTINUED)
<TABLE>
<CAPTION>
EXCHANGEABLE
WITH SHARES
OF THE
FOLLOWING
CLASSES: FUND NAME AND INVESTMENT OBJECTIVE:
- ------------------------------------------------------------------------------
- ------
<C> <S>
A, D* SMITH BARNEY SHEARSON HIGH INCOME FUND, seeks high current
income by
investing in high-yielding corporate bonds, debentures and
notes.
A, D* SMITH BARNEY SHEARSON GLOBAL BOND FUND, seeks current income and
capital appreciation by investing in bonds, debentures and notes
of
foreign and domestic issuers.
Growth and Income Funds
A, D* SMITH BARNEY SHEARSON CONVERTIBLE FUND, seeks current income and
capital appreciation by investing in convertible securities.
A, D* SMITH BARNEY SHEARSON UTILITIES FUND, seeks total return by
investing
in equity and debt securities of utilities companies.
A, D* SMITH BARNEY SHEARSON STRATEGIC INVESTORS FUND, seeks high total
return consisting of current income and capital appreciation by
investing in a combination of equity, fixed-income and money
market
securities.
A, D* SMITH BARNEY SHEARSON PREMIUM TOTAL RETURN FUND, seeks total
return by
investing in dividend-paying common stocks.
A, D* SMITH BARNEY SHEARSON GROWTH AND INCOME FUND, seeks income and
long-
term capital growth by investing in income producing equity
securities.
Growth Funds
A, D* SMITH BARNEY SHEARSON APPRECIATION FUND INC., seeks long-term
appreciation of capital.
A, D* SMITH BARNEY SHEARSON FUNDAMENTAL VALUE FUND INC., seeks long-
term
capital growth and current income as a secondary objective.
A SMITH BARNEY SHEARSON TELECOMMUNICATIONS GROWTH FUND, seeks
capital
appreciation, with income as a secondary consideration.
A, D* SMITH BARNEY SHEARSON AGGRESSIVE GROWTH FUND INC., seeks above-
average
capital growth.
</TABLE>
21
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
EXCHANGE PRIVILEGE (CONTINUED)
<TABLE>
<CAPTION>
EXCHANGEABLE
WITH SHARES
OF THE
FOLLOWING
CLASSES: FUND NAME AND INVESTMENT OBJECTIVE:
- ------------------------------------------------------------------------------
- ------
<C> <S>
A, D* SMITH BARNEY SHEARSON SPECIAL EQUITIES FUND, seeks long-term
capital
appreciation by investing in equity securities primarily of
emerging
growth companies.
A, D* SMITH BARNEY SHEARSON GLOBAL OPPORTUNITIES FUND, seeks long-term
capital growth by investing principally in the common stocks of
foreign and domestic issuers.
A, D* SMITH BARNEY SHEARSON EUROPEAN FUND, seeks long-term capital
appreciation by investing primarily in securities of issuers
based in
European countries.
A, D* SMITH BARNEY SHEARSON PRECIOUS METALS AND MINERALS FUND INC.,
seeks
long-term capital appreciation by investing primarily in
precious
metal- and mineral-related companies and gold bullion.
Money Market Funds
** SMITH BARNEY SHEARSON GOVERNMENT AND AGENCIES FUND INC., invests
in
short-term United States government and agency securities.
*** SMITH BARNEY SHEARSON MUNICIPAL MONEY MARKET FUND INC., invests
in
short-term, high quality municipal obligations.
*** SMITH BARNEY SHEARSON CALIFORNIA MUNICIPAL MONEY MARKET FUND,
invests
in short-term, high quality California municipal obligations.
*** SMITH BARNEY SHEARSON NEW YORK MUNICIPAL MONEY MARKET FUND,
invests in
short-term, high quality New York municipal obligations.
- ------------------------------------------------------------------------------
- ------
</TABLE>
* Class D shares of this fund may be acquired only by Participating Plans
in
the 401(k) Program.
** Shares of this money market fund may be exchanged for shares of the Fund
that are designated Class A or Class D.
*** Shares of this money market fund may be exchanged for shares of the Fund
that are designated Class A.
22
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
EXCHANGE PRIVILEGE (CONTINUED)
Tax Effect. The exchange of shares of one fund for shares of another fund is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder. Therefore, an exchanging shareholder may realize
a
taxable gain or loss in connection with an exchange.
Exchanges. Shareholders of the Fund or Class A shareholders of the funds in
the Smith Barney Shearson Group of Funds sold without a sales charge or with a
maximum sales charge of less than 5% will be subject to the appropriate "sales
charge differential" upon the exchange of their shares for shares of other
funds sold with a sales charge. The "sales charge differential" is limited to
a
percentage rate no greater than the excess of the sales charge rate applicable
to purchases of shares of the mutual fund being acquired in the exchange over
the sales charge rate(s) actually paid on the mutual fund shares relinquished
in the exchange and on any predecessor of those shares. For purposes of the
exchange privilege, shares obtained through automatic reinvestment of divi-
dends, as described below, are treated as having paid the same sales charge
applicable to the shares on which the dividends were paid.
Shareholders of the Fund may exchange their shares for shares of the same
designation of any of the funds listed above without payment of an exchange
fee. However, a sales charge differential may apply in connection with
exchanges to Class A shares of certain funds in the Smith Barney Shearson
Group
of Funds listed above. Smith Barney Shearson receives an annual service fee
ranging from .15% to .25% of the value of average daily net assets
attributable
to the Class A shares of each fund, and annual service and distribution fees
of
.25% and .75%, respectively, of the value of average daily net assets
attribut-
able to the Class D shares of each fund, except the money market funds listed
above.
Additional Information Regarding the Exchange Privilege. Shareholders exer-
cising the exchange privilege with any of the other funds in the Smith Barney
Shearson Group of Funds should review the prospectus of that fund carefully
prior to making an exchange. Smith Barney Shearson reserves the right to
reject
any exchange request. The exchange privilege may be modified or terminated at
any time after written notice to shareholders. For further information regard-
ing this exchange privilege, or to obtain current prospectuses for the funds
in
the Smith Barney Shearson Group of Funds, shareholders should contact their
Smith Barney Shearson Financial Consultants.
23
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund declares dividends from its net investment income (that is, its
income other than net realized long- and short-term capital gains) on each day
the Fund is open for business and pays dividends on the second Friday of each
calendar month. Distributions of net realized long- and short-term capital
gains, if any, are declared and paid annually after the close of the Fund's
fiscal year in which they have been earned. Unless a shareholder instructs the
Fund to pay dividends or capital gains distributions in cash and credit them
to
the shareholder's account at Smith Barney Shearson, dividends and
distributions
will be reinvested automatically in additional shares of the Fund at net asset
value. Shares redeemed during the month are entitled to dividends and
distribu-
tions declared up to and including the date of redemption. In addition, in
order to avoid the application of a 4% nondeductible excise tax on certain
undistributed amounts of ordinary income and capital gains, the Fund may make
an additional distribution shortly before December 31 in each year of any
undistributed ordinary income or capital gains and expects to make any other
distributions as are necessary to avoid the application of this tax.
The Fund has qualified and intends to continue to qualify as a regulated
investment company under the Code. Dividends paid from interest and distribu-
tions of any net realized short-term capital gains are taxable to shareholders
as ordinary income, whether received in cash or reinvested in additional
shares
of the Fund. The Fund does not expect to realize long-term capital gains and
thus does not contemplate making distributions taxable to shareholders as
long-
term capital gains. The Fund's dividends and distributions will not qualify
for
the dividends-received deduction for corporations.
Statements as to the tax status of each shareholder's dividends and
distribu-
tions are mailed annually. Each shareholder also will receive, if appropriate,
various written notices after the close of the Fund's prior taxable year as to
the Federal income tax status of his or her dividends and distributions which
were received from the Fund during the Fund's prior taxable year. Shareholders
should consult their tax advisors to assess the consequences of investing in
the Fund under state and local laws generally and to determine whether divi-
dends paid by the Fund that represent interest derived from U.S. government
securities are exempt from any applicable state or local income taxes.
24
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
THE FUND'S PERFORMANCE
From time to time the Fund may quote its "yield" and "effective yield" in
advertisements or in reports or other communications to shareholders. The
Fund's yield refers to the income generated by an investment in the Fund over
a
seven-day period (which period will be stated in the advertisement). This
income is then "annualized." That is, the amount of income generated by the
investment during that week is assumed to be generated each week over a 52-
week
period and is shown as a percentage of the investment.
In reports or other communications to shareholders or in advertising materi-
al, the Fund may compare its performance with that of other mutual funds as
listed in the rankings prepared by Lipper Analytical Services, Inc. or similar
independent services which monitor the performance of mutual funds, or other
industry or financial publications such as Barron's, Business Week, Forbes,
Fortune, Institutional Investor, Kiplinger's Personal Finance, Money, Morning-
star Mutual Fund Values, The New York Times, USA Today and The Wall Street
Journal, or other industry or financial publications. Any given performance
comparison should not be considered as representative of the Fund's
performance
for any future period.
On occasion, the Fund may compare its yield to the Donoghue's Money Fund
Average, an average compiled by IBC/Donoghue's Money Fund Reports(R) a widely
recognized independent publication that monitors the performance of money mar-
ket mutual funds, or to the average yield reported by The Bank Rate Monitor
for
money market deposit accounts offered by the 50 leading banks and thrift
insti-
tutions in the five largest standard metropolitan statistical areas. As with
yield quotations, yield comparisons should not be considered as representative
of the Fund's yield for any future period. It is important to note that the
Fund's yield is based on historical earnings and its net investment income
changes in response to fluctuations in interest rates and its expenses and,
therefore, yield is not intended to indicate the Fund's future performance.
The
Statement of Additional Information further describes the method used to
deter-
mine the yield. Current yield quotations may be obtained from your Smith
Barney
Shearson Financial Consultant.
25
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
ADDITIONAL INFORMATION
The Fund was incorporated under the laws of the State of Maryland on March
16, 1979, and is registered with the SEC as a diversified, open-end management
investment company. Prior to July 30, 1993, the Fund's corporate name was
Shearson Lehman Daily Dividend Inc. and did business under the name of
American
Express(R) Daily Dividend Fund. On July 30, 1993, the Fund changed its name to
Smith Barney Shearson Daily Dividend Fund Inc.
The Fund offers shares of common stock, par value $.01 per share, for sale
to
the public. When matters are submitted for shareholder vote, each shareholder
will have one vote for each share owned and a proportionate, fractional vote
for any fractional share held. There normally will be no meetings of share-
holders for the purpose of electing Directors unless and until such time as
less than a majority of Directors holding office have been elected by share-
holders. The Directors will call a meeting for any purpose upon the written
request of shareholders holding at least 10% of the Fund's outstanding shares.
Boston Safe is located at One Boston Place, Boston, Massachusetts 02108, and
serves as custodian of the Fund's investments.
TSSG is located at Exchange Place, Boston, Massachusetts 02109, and serves
as
the Fund's transfer agent.
The Fund sends to each shareholder a semi-annual report and an audited
annual
report, which includes a list of the investment securities held by the Fund.
In
an effort to reduce the Fund's printing and mailing costs, the Fund plans to
consolidate the mailing of its semi-annual and annual reports by household.
This consolidation means that a household having multiple accounts with the
identical address of record will receive a single copy of each report. In
addi-
tion, the Fund also plans to consolidate the mailing of its Prospectus so that
a shareholder having multiple accounts will receive a single Prospectus
annual-
ly. Any shareholder who does not want this consolidation to apply to his or
her
account should contact his or her Financial Consultant or the Fund's transfer
agent. Shareholders may seek information regarding the Fund, including the
cur-
rent performance of the Fund, from their Smith Barney Shearson Financial
Consultants.
26
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
ADDITIONAL INFORMATION (CONTINUED)
-------------------
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus, the Statement
of
Additional Information and in the Fund's official sales literature in
connection with the offering of the Fund's shares, and, if given or made, such
other information or representations must not be relied upon as having been
authorized by the Fund. This Prospectus does not constitute an offer in any
state in which, or to any person to whom, such offer may not lawfully be made.
27
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
DIRECTORS
Martin Brody
Dwight B. Crane
James J. Crisona
Robert A. Frankel
Dr. Paul Hardin
Stephen E. Kaufman
Joseph J. McCann
Heath B. McLendon
OFFICERS
Heath B. McLendon
Chairman of the Board and
Investment Officer
Stephen J. Treadway
President
Richard P. Roelofs
Executive Vice President
Phyllis M. Zahorodny
Vice President and
Investment Officer
Lewis E. Daidone
Treasurer
Christina T. Sydor
Secretary
DISTRIBUTOR
Smith Barney Shearson Inc.
388 Greenwich Street
New York, New York 10013
INVESTMENT ADVISER
Greenwich Street Advisors
Two World Trade Center
New York, New York 10048
ADMINISTRATOR
Smith, Barney Advisers, Inc.
1345 Avenue of the Americas
New York, New York 10105
SUB-ADMINISTRATOR
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
CUSTODIAN
Boston Safe Deposit and Trust Company
One Boston Place
Boston, Massachusetts 02108
TRANSFER AGENT
The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
COUNSEL
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
28
- ------------------------------------------------------------------------------
- --
SMITH BARNEY SHEARSON
Daily Dividend Fund Inc.
Two World Trade Center
New York, New York 10048
Fund 1
FD0198 E4
Smith Barney Shearson
DAILY DIVIDEND FUND INC.
Two World Trade Center
New York, New York 10048
(212) 720-9218
STATEMENT OF ADDITIONAL INFORMATION MAY 30, 1994
This Statement of Additional Information expands upon and supplements the
information contained in the current Prospectus of Smith Barney Shearson
Daily Dividend Fund Inc. (the "Fund") dated May 30, 1994, as amended or
supplemented from time to time, and should be read in conjunction with the
Fund's Prospectus. The Fund's Prospectus may be obtained from your Smith
Barney Shearson Financial Consultant or by writing or calling the Fund at
the address or telephone number set forth above. This Statement of Addi-
tional Information, although not in itself a prospectus, is incorporated
by reference into the Prospectus in its entirety.
CONTENTS
For ease of reference, the same section headings are used in both the Pro-
spectus and this Statement of Additional Information, except where shown
below:
<TABLE>
<S>
<C>
Management of the Fund
1
Investment Objective and Management Policies
5
Purchase of Shares
10
Redemption of Shares
10
Valuation of Shares
11
Exchange Privilege
11
Performance Data (See in the Prospectus "The Fund's Performance")
12
Taxes (See in the Prospectus "Dividends, Distributions and Taxes")
13
Custodian and Transfer Agent (See in the Prospectus "Additional Information")
13
Financial Statements
14
Appendix
15
</TABLE>
MANAGEMENT OF THE FUND
The executive officers of the Fund are employees of certain of the organi-
zations that provide services to the Fund. These organizations are as fol-
lows:
<TABLE>
<CAPTION>
NAME SERVICE
<S> <C>
Smith Barney Shearson Inc.
("Smith Barney Shearson") Distributor
Greenwich Street Advisors Investment Adviser
Smith, Barney Advisers, Inc.
("Smith Barney Advisers") Administrator
The Boston Company Advisors, Inc.
("Boston Advisors") Sub-Administrator
Boston Safe Deposit and Trust Company
("Boston Safe") Custodian
The Shareholder Services Group, Inc. ("TSSG"),
a subsidiary of First Data Corporation Transfer Agent
</TABLE>
These organizations and the functions they perform for the Fund are dis-
cussed in the Prospectus and in this Statement of Additional Information.
DIRECTORS AND EXECUTIVE OFFICERS OF THE FUND
The Directors and executive officers of the Fund, together with informa-
tion as to their principal business occupations during the past five
years, are shown below. Each Director who is an "interested person" of the
Fund, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"), is indicated by an asterisk.
Martin Brody, Director. Vice Chairman of the Board of Restaurant Associ-
ates Corp.; a Director of Jaclyn, Inc. His address is HMK Associates,
Three ADP Boulevard, Roseland, New Jersey 07068.
Dwight B. Crane, Director. Professor, Graduate School of Business Adminis-
tration, Harvard University; a Director of Peer Review Analysis, Inc. His
address is Graduate School of Business Administration, Harvard University,
Boston, Massachusetts 02163.
James J. Crisona, Director. Attorney; formerly Justice of the Supreme
Court of the State of New York. His address is 118 East 60th Street, New
York, New York 10022.
Robert A. Frankel, Director. Management Consultant; retired Vice President
of The Reader's Digest Association, Inc. His address is 102 Grand Street,
Croton-On-Hudson, New York 10520.
Dr. Paul Hardin, Director. Chancellor of the University of North Carolina
at Chapel Hill; a Director of The Summit Bancorporation. His address is
University of North Carolina, 103 S. Building, Chapel Hill, North Carolina
27599.
Stephen E. Kaufman, Director. Attorney. His address is 277 Park Avenue,
New York, New York 10172.
Joseph J. McCann, Director. Financial Consultant; formerly Vice President
of Ryan Homes, Inc. His address is 200 Oak Park Place, Pittsburgh, Penn-
sylvania 15243.
*Heath B. McLendon, Chairman of the Board and Investment Officer. Execu-
tive Vice President of Smith Barney Shearson and Chairman of the Board of
Smith Barney Shearson Strategy Advisers Inc.; prior to July 1993, Senior
Executive Vice President of Shearson Lehman Brothers Inc. ("Shearson Leh-
man Brothers"); Vice Chairman of Shearson Asset Management; a Director of
PanAgora Asset Management, Inc. and PanAgora Asset Management Limited. His
address is Two World Trade Center, New York, New York 10048.
Stephen J. Treadway, President. Executive Vice President and Director of
Smith Barney Shearson; Director and President of Mutual Management Corp.
and Smith Barney Advisers; and Trustee of Corporate Realty Income Trust I.
His address is 1345 Avenue of the Americas, New York, New York 10105.
Richard P. Roelofs, Executive Vice President. Managing Director of Smith
Barney Shearson and President of Smith Barney Shearson Strategy Advisers
Inc.; prior to July 1993, Senior Vice President of Shearson Lehman Broth-
ers; Vice President of Shearson Lehman Investment Strategy Advisors Inc.
His address is Two World Trade Center, New York, New York 10048.
Phyllis M. Zahorodny, Vice President and Investment Officer. Managing Di-
rector of Greenwich Street Advisors; prior to July 1993, Managing Director
of Shearson Lehman Advisors. Her address is Two World Trade Center, New
York, New York 10048.
Lewis E. Daidone, Treasurer. Managing Director of Smith Barney Shearson
and Greenwich Street Advisors; Director and Senior Vice President of Mu-
tual Management Corp. and Smith Barney Advisors. Prior to January, 1990
Senior Vice President and Chief Financial Officer of Cortland Financial
Group, Inc. His address 1345 Avenue of the Americas, New York, New York
10105.
Christina T. Sydor, Secretary. Managing Director of Smith Barney Shearson
and Secretary of Mutual Management Corp. and Smith Barney Advisors. Her
address is 1345 Avenue of the Americas, New York, New York 10105.
Each Director also serves as a director, trustee or general partner of
certain other mutual funds for which Smith Barney Shearson serves as dis-
tributor. As of May 15, 1994, the Directors and officers of the Fund as a
group owned less than 1% of the outstanding common stock of the Fund.
No officer, director or employee of Smith Barney Shearson or of any parent
or subsidiary of Smith Barney Shearson receives any compensation from the
Fund for serving as an officer or Director of the Fund. The Fund pays each
Director who is not an officer or employee of Smith Barney Shearson or any
of its affiliates a fee of $7,000 per annum plus $500 per meeting attended
and reimburses travel and out-of-pocket expenses. For the fiscal year
ended March 31, 1994, such fees and expenses totalled $84,162.
INVESTMENT ADVISER -- GREENWICH STREET ADVISORS
ADMINISTRATOR -- SMITH BARNEY ADVISERS
SUB-ADMINISTRATOR -- BOSTON ADVISORS
Greenwich Street Advisors serves as investment adviser to the Fund pursu-
ant to a written agreement (the "Advisory Agreement") dated July 30, 1993,
which was first approved by the Fund's Board of Directors, including a ma-
jority of Directors who are not "interested persons" of the Fund or Green-
wich Street Advisors, on April 7, 1993. The services provided by Greenwich
Street Advisors under the Advisory Agreement are described in the Prospec-
tus. Greenwich Street Advisors bears all expenses in connection with the
performance of its services and pays the salaries of all officers or em-
ployees who are employed by both it and the Fund.
Greenwich Street Advisors is a division of Mutual Management Corp. which
provides investment advisory and management services to investment compa-
nies affiliated with Smith Barney Shearson. Mutual Management Corp. is
controlled by Smith Barney Shearson Holdings Inc. ("Holdings"). Holdings
is a wholly owned subsidiary of The Travelers Inc. ("Travelers").
As compensation for Greenwich Street Advisors' services rendered to the
Fund, the Fund pays a fee computed daily and payable monthly at the fol-
lowing annual rates: .25% of the value of the Fund's average daily net as-
sets up to $50 million and .30% of the value of its average daily net as-
sets in excess of $50 million. Greenwich Street Advisors has undertaken to
waive its investment advisory fee in an amount sufficient to ensure that
such fee will be .285% of the value of the Fund's average daily net assets
between $5 billion and $10 billion, and .27% of the value of its average
daily net assets exceeding $10 billion. For the 1992, 1993 and 1994 fiscal
years, the Fund paid $50,568,855, $50,845,356 and $48,342,802, respec-
tively, in investment advisory fees. For the 1992, 1993 and 1994 fiscal
years, Shearson Lehman Advisors, the Fund's investment adviser prior to
Greenwich Street Advisors, and/or Greenwich Street Advisors waived
$1,737,164, $2,477,036 and $2,586,780, respectively, in investment advi-
sory fees.
Smith Barney Advisers serves as administrator to the Fund pursuant to a
written agreement (the "Administration Agreement") dated April 20, 1994,
which was first approved by the Fund's Board of Directors, including a ma-
jority of Directors who are not "interested persons" of the Fund or Smith
Barney Shearson, on April 20, 1994. Smith Barney Advisers is a wholly
owned subsidiary of Holdings.
Prior to April 20, 1994, Boston Advisors served as administrator to the
Fund. Boston Advisors currently serves as sub-administrator to the Fund
under a written agreement (the "Administration Agreement") dated April 20,
1994, which was most recently approved by the Fund's Board of Directors,
including a majority of Directors who are not "interested persons" of the
Fund or Boston Advisors, on April 20, 1994. Boston Advisors is a wholly
owned subsidiary of The Boston Company, Inc. ("TBC"), a financial services
holding company, which is in turn a wholly owned subsidiary of Mellon Bank
Corporation ("Mellon").
Certain of the services provided to the Fund by Smith Barney Advisers and
Boston Advisors are described in the Prospectus under "Management of the
Fund." In addition to those services, Smith Barney Advisers and Boston Ad-
visors pay the salaries of all officers and employees who are employed by
either of them and the Fund, maintains office facilities for the Fund,
furnishes the Fund with statistical and research data, clerical help and
accounting, data processing, bookkeeping, internal auditing and legal ser-
vices and certain other services required by the Fund, prepares reports to
the Fund's shareholders, and prepares tax returns, reports to and filings
with the Securities and Exchange Commission (the "SEC") and state blue sky
authorities. Smith Barney Advisers and Boston Advisors bears all expenses
in connection with the performance of their services.
As compensation for Boston Advisors' services rendered to the Fund, the
Fund paid a fee computed daily and payable monthly at the following annual
rates: .25% of the value of the Fund's average daily net assets up to $50
million and .20% of the value of its average daily net assets in excess of
$50 million. However, Boston Advisors had undertaken to waive its adminis-
tration fee in an amount sufficient to ensure that such fee would be .19%
of the value of the Fund's average daily net assets between $5 billion and
$10 billion, and .18% of the value of its average daily net assets exceed-
ing $10 billion. For the 1992, 1993 and 1994 fiscal years, Boston Advisors
received $33,754,237, $33,938,570 and $32,270,201, respectively, in sub-
investment advisory and/or administrative fees. For the 1992, 1993 and
1994 fiscal years, Boston Advisors waived $1,158,109, $1,651,356 and
$1,724,520, respectively, in sub-investment advisory and/or administration
fees.
The Fund bears expenses incurred in its operation, including taxes, inter-
est, brokerage fees and commissions, if any; fees of Directors who are not
officers, directors, shareholders or employees of Smith Barney Shearson;
SEC fees and state blue sky qualification fees; charges of custodians;
transfer and dividend disbursing agents' fees, including a portion of the
charges associated with check processing for Fund shareholders participat-
ing in certain Smith Barney Shearson central asset account programs; cer-
tain insurance premiums; outside auditing and legal expenses; costs of
maintenance of corporate existence; investor services (including allocated
telephone and personnel expenses); costs of preparation and printing of
prospectuses for regulatory purposes and for distribution to shareholders,
shareholder reports and corporate meetings.
Greenwich Street Advisors and Smith Barney Advisers have agreed that if in
any fiscal year the aggregate expenses of the Fund (including fees pursu-
ant to the Advisory Agreement and Administration Agreement but excluding
interest, taxes, brokerage and, with the prior written consent of the nec-
essary state securities commissions, extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over the Fund, Green-
wich Street Advisors and Smith Barney Advisers will each reduce their man-
agement fees by 50% of such excess expense if the Fund's average daily net
assets do not exceed $50 million, or, if average daily net assets exceed
$50 million, Greenwich Street Advisors and Smith Barney Advisers will each
reduce their management fees by 50% of such excess expense as $50 million
bears to the average daily value of the Fund's net assets and by 60% and
40%, respectively, of the remaining portion of such excess. The most re-
strictive state expense limitation applicable to the Fund currently re-
quires a reduction in fees in any year that such expenses exceed 2.5% of
the first $30 million of the average net assets, 2.0% of the next $70 mil-
lion of the average net assets and 1.5% of the remaining average net as-
sets. A number of factors, including the size of the Fund, will determine
which of these restrictions will be applicable to the Fund at any one
time. No fee reductions were required for the Fund's 1992, 1993 and 1994
fiscal years.
COUNSEL AND AUDITORS
Willkie Farr & Gallagher serves as legal counsel to the Fund. The Direc-
tors who are not "interested persons" of the Fund have selected Stroock &
Stroock & Lavan as their counsel.
Coopers & Lybrand, independent accountants, One Post Office Square, Bos-
ton, Massachusetts 02109, serve as auditors of the Fund and render an
opinion on the Fund's financial statements annually.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The Prospectus discusses the Fund's investment objective and the policies
it employs to achieve that objective. The following discussion supplements
the description of the Fund's investment objective and management policies
in the Prospectus.
U.S. GOVERNMENT AGENCY AND INSTRUMENTALITY SECURITIES
The Fund has the ability to invest in obligations which are supported only
by the credit of the instrumentality, such as Federal National Mortgage
Association bonds. Because the United States government is not obligated
by law to provide support to an instrumentality that it sponsors, the Fund
will invest in obligations issued by such an instrumentality only when
Greenwich Street Advisors determines that the credit risk with respect to
the instrumentality does not make its securities unsuitable for investment
by the Fund.
BANK OBLIGATIONS
Domestic commercial banks organized under Federal law are supervised and
examined by the United States Comptroller of the Currency and are required
to be members of the Federal Reserve System and to be insured by the Fed-
eral Deposit Insurance Corporation (the "FDIC"). Domestic banks organized
under state law are supervised and examined by state banking authorities
but are members of the Federal Reserve System only if they elect to join.
Most state banks are insured by the FDIC (although such insurance may not
be of material benefit to the Fund, depending upon the principal amount of
the certificates of deposit ("CDs") of each bank held by the Fund) and are
subject to Federal examination and to a substantial body of Federal law
and regulation. As a result of government regulations, domestic branches
of domestic banks are, among other things, generally required to maintain
specified levels of reserves, and are subject to other supervision and
regulation designed to promote financial soundness.
Obligations of foreign branches of domestic banks and of foreign branches
of foreign banks, such as CDs and time deposits ("TDs"), may be general
obligations of the parent bank in addition to the issuing branch, or may
be limited by the terms of a specific obligation and governmental regula-
tion. Such obligations are subject to different risks than are those of
domestic banks or domestic branches of foreign banks. These risks include
foreign economic and political developments, foreign governmental restric-
tions that may adversely affect payment of principal and interest on the
obligations, foreign exchange controls and foreign withholding and other
taxes on interest income. Foreign branches of domestic banks and foreign
branches of foreign banks are not necessarily subject to the same or simi-
lar regulatory requirements that apply to domestic banks, such as manda-
tory reserve requirements, loan limitations, and accounting, auditing and
financial recordkeeping requirements. In addition, less information may be
publicly available about a foreign branch of a domestic bank or about a
foreign bank than about a domestic bank. CDs issued by wholly owned Cana-
dian subsidiaries of domestic banks are guaranteed as to repayment of
principal and interest (but not as to sovereign risk) by the domestic par-
ent bank.
Obligations of domestic branches of foreign banks may be general obliga-
tions of the parent bank in addition to the issuing branch, or may be lim-
ited by the terms of a specific obligation and by governmental regulation
as well as governmental action in the country in which the foreign bank
has its head office. A domestic branch of a foreign bank with assets in
excess of $1 billion may or may not be subject to reserve requirements im-
posed by the Federal Reserve System or by the state in which the branch is
located if the branch is licensed in that state. In addition, branches li-
censed by the Comptroller of the Currency and branches licensed by certain
states ("State Branches") may or may not be required to: (a) pledge to the
regulator by depositing assets with a designated bank within the state, an
amount of its assets equal to 5% of its total liabilities; and (b) main-
tain assets within the state in an amount equal to a specified percentage
of the aggregate amount of liabilities of the foreign bank payable at or
through all of its agencies or branches within the state. The deposits of
State Branches may not necessarily be insured by the FDIC. In addition,
there may be less publicly available information about a domestic branch
of a foreign bank than about a domestic bank.
In view of the foregoing factors associated with the purchase of CDs and
TDs issued by foreign branches of domestic banks, by domestic branches of
foreign banks or by foreign branches of foreign banks, Greenwich Street
Advisors will carefully evaluate such investments on a case-by-case basis.
The Fund may purchase a CD issued by a bank, savings and loan association
or similar institution with less than $1 billion in assets (a "Small Is-
suer CD") so long as (a) the issuer is a member of the FDIC or Office of
Thrift Supervision and is insured by the Savings Association Insurance
Fund ("SAIF") which is administered by the FDIC and is backed by the full
faith and credit of the United States government and (b) the principal
amount of the Small Issuer CD is fully insured and is no more than
$100,000. The Fund will at any one time hold only one Small Issuer CD from
any one issuer.
Savings and loan associations whose CDs may be purchased by the Fund are
supervised by the Office of Thrift Supervision and are insured by SAIF. As
a result, such savings and loan associations are subject to regulation and
examination.
RATINGS AS INVESTMENT CRITERIA
In general, the ratings of nationally recognized statistical ratings orga-
nizations ("NRSROs") represent the opinions of those organizations as to
the quality of the securities they rate. It should be emphasized, however,
that such ratings are relative and subjective, are not absolute standards
of quality and do not evaluate the market risk of securities. These rat-
ings will be used by the Fund as initial criteria for the selection of
portfolio securities, but the Fund also will rely upon the independent ad-
vice of Greenwich Street Advisors to evaluate potential investments. The
Appendix contains further information concerning the two highest ratings
of NRSROs and their significance.
Subsequent to the purchase of a particular security by the Fund, its rat-
ing may be reduced below the minimum required for purchase by the Fund or
the issuer of the security may default on its obligations with respect to
the security. In either event, the Fund will dispose of the security as
soon as practicable, consistent with achieving an orderly disposition of
the security, unless the Fund's Board of Directors determines that dis-
posal of the security would not be in the best interest of the Fund. In
addition, it is possible that a security may cease to be rated or an NRSRO
might not timely change its rating of a particular security to reflect
subsequent events. Neither of these events will necessarily require the
sale of the security by the Fund, but Greenwich Street Advisors and/or the
Fund's Board of Directors will promptly consider such event in its deter-
mination of whether the Fund should continue to hold the security. In ad-
dition, to the extent that the ratings change as a result of changes in
such organizations or their rating systems, the Fund will attempt to use
comparable ratings as standards for its investments in accordance with its
investment objective and policies.
LENDING OF PORTFOLIO SECURITIES
The Fund has the ability to lend securities from its portfolio to brokers,
dealers and other financial organizations. Such loans, if and when made,
will not exceed 20% of the Fund's total assets, taken at value. The Fund
may not lend its portfolio securities to Smith Barney Shearson or its af-
filiates without specific authorization from the SEC. Loans of portfolio
securities by the Fund will be collateralized by cash, letters of credit
or securities issued or guaranteed by the United States government or its
agencies which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. From time
to time, the Fund may return a part of the interest earned from the in-
vestment of collateral received for securities loaned to: (a) the bor-
rower; and/or (b) a third party, which is unaffiliated with the Fund or
with Smith Barney Shearson, and which is acting as a "finder."
By lending portfolio securities, the Fund can increase its income by con-
tinuing to receive interest on the loaned securities as well as by either
investing the cash collateral in short-term instruments or obtaining yield
in the form of interest paid by the borrower when government securities
are used as collateral. The Fund will comply with the following conditions
whenever it loans securities: (a) the Fund must receive at least 100% cash
collateral or equivalent securities or letters of credit from the bor-
rower; (b) the borrower must increase such collateral whenever the market
value of the loaned securities rises above the level of the collateral;
(c) the Fund must be able to terminate the loan at any time; (d) the Fund
must receive reasonable interest on the loan, as well as an amount equal
to any dividends, interest or other distributions on the loaned securities
and any increase in market value; (e) the Fund may pay only reasonable
custodian fees in connection with the loan; and (f) voting rights on the
loaned securities may pass to the borrower; however, if a material event
adversely affecting the investment occurs, the Fund's Board of Directors
must terminate the loan and regain the right to vote the securities.
The limit of 20% of the Fund's total assets to be committed to securities
lending and its compliance with SEC requirements are fundamental policies
of the Fund, which means that they cannot be changed without the approval
of a majority of the Fund's outstanding shares. See "Investment Restric-
tions" below.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions for the protec-
tion of shareholders. These restrictions cannot be changed without the ap-
proval of the holders of a majority of the outstanding shares of the Fund,
defined as the lesser of (a) 67% or more of the Fund's shares present at a
meeting, if the holders of more than 50% of the outstanding shares are
present in person or by proxy or (b) more than 50% of the Fund's outstand-
ing shares. The Fund may not:
1. Purchase common stocks, preferred stocks, warrants, other equity secu-
rities, corporate bonds or debentures, state bonds, municipal bonds or
private activity bonds.
2. Borrow money except from banks for temporary or emergency purposes,
including the meeting of redemption requests which might otherwise require
the untimely disposition of securities. Borrowing in the aggregate may not
exceed 10%, and borrowing for purposes other than meeting redemptions may
not exceed 5%, of the value of the Fund's total assets (including the
amount borrowed) valued at the lesser of cost or value less liabilities
(not including the amount borrowed) at the time the borrowing is made. The
borrowings will be repaid before any additional investments are made.
3. Pledge, hypothecate, mortgage or otherwise encumber its assets, except
in an amount up to 10% of the value of its net assets but only to secure
borrowings for temporary or emergency purposes.
4. Sell securities short or purchase securities on margin.
5. Write or purchase put or call options.
6. Underwrite the securities of other issuers or purchase securities with
contractual or other restrictions on resale.
7. Purchase or sell real estate, real estate investment trust securities,
commodities, commodity contracts or oil and gas interests.
8. Make loans to others, except through the purchase of qualified debt
obligations, loans of portfolio securities (see "Lending of Portfolio Se-
curities" above) and entry into repurchase agreements described in the
Prospectus under "Investment Objective and Management Policies."
9. Subject to the diversification requirements of Section 5 of the 1940
Act, invest more than 15% of its assets in the obligations of any one
bank, or invest more than 5% of its assets in the commercial paper of any
one issuer.
10. Invest more than 25% of its assets in the securities of issuers in
any single industry; provided that there shall be no limitation on the
purchase of obligations issued or guaranteed by the United States govern-
ment, its agencies or instrumentalities, or of certificates of deposit,
time deposits, bankers' acceptances or other short-term bank obligations.
11. Invest in companies for the purpose of exercising control.
12. Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of as-
sets.
13. Lend its portfolio securities in excess of 20% of its total assets,
taken at value. Any loans of portfolio securities will be made according
to guidelines established by the SEC and the Fund's Board of Directors,
including maintenance of collateral of the borrower equal at all times to
the current value of the securities loaned.
If a percentage restriction is complied with at the time of an investment,
a later increase or decrease in percentage resulting from a change in val-
ues or assets will not constitute a violation of that restriction. In
order to permit the sale of Fund shares in certain states, the Fund may
make commitments more restrictive than the fundamental restrictions de-
scribed above. Should the Fund determine that any such commitment is no
longer in the best interest of the Fund and its shareholders, it will re-
voke the commitment by terminating sales of its shares in the state in-
volved.
PORTFOLIO TURNOVER
The Fund attempts to increase yields by trading to take advantage of
short-term market variations, which results in high portfolio turnover.
This policy does not result in high brokerage commissions to the Fund,
however, as purchases and sales of portfolio securities usually are ef-
fected as principal transactions. See "Portfolio Transactions" below.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for the Fund are made by Greenwich
Street Advisors, subject to the overall supervision and review of the
Fund's Board of Directors. Portfolio securities transactions for the Fund
are effected by or under the supervision of Greenwich Street Advisors.
Purchases and sales of portfolio securities on behalf of the Fund usually
are principal transactions. Portfolio securities normally are purchased
directly from the issuer or from an underwriter or market maker for the
securities. Accordingly, there usually are no brokerage commissions paid
by the Fund for such purchases. Purchases from underwriters of portfolio
securities include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers serving as market makers may in-
clude the spread between the bid and asked price. While Greenwich Street
Advisors generally seeks competitive spreads or commissions, the Fund may
not necessarily pay the lowest spread or commission available on each
transaction. Since it commenced operations, the Fund has not paid any bro-
kerage commissions.
Allocation of transactions, including their frequency, to various dealers
is determined by Greenwich Street Advisors in its best judgment and in a
manner deemed fair and reasonable to shareholders. The primary consider-
ation is prompt execution of orders in an effective manner at the most fa-
vorable price. Subject to this consideration, dealers who provide supple-
mental investment research to Greenwich Street Advisors may receive orders
for transactions by the Fund. Information so received is in addition to,
and not in lieu of, services required to be performed by Greenwich Street
Advisors, and the fees of Greenwich Street Advisors are not reduced as a
consequence of their receipt of such supplemental information. Such infor-
mation may be useful to Greenwich Street Advisors in serving both the Fund
and other clients and, conversely, supplemental information obtained by
the placement of business of other clients may be useful to Greenwich
Street Advisors in carrying out their obligations to the Fund. The Fund
does not execute portfolio transactions through or with Smith Barney
Shearson or any of its affiliates, except pursuant to the terms and condi-
tions of exemptive rules or orders promulgated by the SEC.
Even though investment decisions for the Fund are made independently from
those of the other accounts managed by Greenwich Street Advisors, invest-
ments of the kind made by the Fund also may be made by those other ac-
counts. When the Fund and one or more accounts managed by Greenwich Street
Advisors are prepared to invest in, or desire to dispose of, the same se-
curity, available investments or opportunities for sales will be allocated
in a manner believed by Greenwich Street Advisors to be equitable. In some
cases, this procedure may adversely affect the price paid or received by
the Fund or the size of the position obtained for or disposed of by the
Fund.
PURCHASE OF SHARES
Smith Barney Shearson serves as the Fund's distributor on a best efforts
basis pursuant to a distribution agreement dated July 30, 1993 which was
first approved by the Fund's Board of Directors on April 7, 1993. The Fund
offers its shares to the public on a continuous basis. Shares of the Fund
are sold without a sales charge. Purchases of Fund shares must be made
through a brokerage account maintained with Smith Barney Shearson or with
a broker that clears securities transactions through Smith Barney Shearson
on a fully disclosed basis (an "Introducing Broker").
REDEMPTION OF SHARES
The right of redemption may be suspended or the date of payment postponed
(a) for any period during which the New York Stock Exchange, Inc. is
closed (other than for customary weekend or holiday closings); (b) when
trading in markets the Fund normally utilizes is restricted, or an emer-
gency exists as determined by the SEC so that disposal of the Fund's in-
vestments or determination of net asset value is not reasonably practica-
ble; or (c) for such other periods as the SEC by order may permit for the
protection of the Fund's shareholders.
The Prospectus describes special redemption procedures for shareholders
who engage in purchases of securities through Smith Barney Shearson or an
Introducing Broker, under which Fund shares are redeemed automatically to
satisfy debit balances arising in the shareholder's account on the settle-
ment date of other securities transactions. A shareholder may choose not
to redeem Fund shares automatically by notifying Smith Barney Shearson or
the Introducing Broker, and by making payment for securities purchased by
the settlement date, which is usually five business days after the trade
date. While no fee is currently charged for such automatic redemptions,
Smith Barney Shearson reserves the right, upon notice, to impose a fee for
automatic transactions in the future.
VALUATION OF SHARES
The Prospectus discusses the time at which the net asset value of the Fund
is determined for purposes of sales and redemptions. The following is a
description of the procedures used by the Fund in valuing its assets.
The valuation of the Fund's portfolio securities is based upon their amor-
tized cost, which does not take into account unrealized capital gains or
losses. Amortized cost valuation involves initially valuing an instrument
at its cost and, thereafter, assuming a constant amortization to maturity
of any discount or premium, regardless of the impact of fluctuating inter-
est rates on the market value of the instrument. While this method pro-
vides certainty in valuation, it may result in periods during which value,
as determined by amortized cost, is higher or lower than the price the
Fund would receive if it sold the instrument.
Pursuant to the 1940 Act, the Fund must maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only instruments having
remaining maturities of thirteen months or less and invest only in securi-
ties determined by Greenwich Street Advisors to be of eligible quality
with minimal credit risks.
Pursuant to the rule, the Fund's Board of Directors also has established
procedures designed to stabilize, to the extent reasonably possible, the
Fund's price per share as computed for the purpose of sales and redemp-
tions at $1.00. Such procedures include review of the Fund's portfolio
holdings by the Board of Directors, at such intervals as it may deem ap-
propriate, to determine whether the Fund's net asset value calculated by
using available market quotations or market equivalents deviates from
$1.00 per share based on amortized cost.
The rule also provides that the extent of any deviation between the Fund's
net asset value based upon available market quotations or market equiva-
lents and the $1.00 per share net asset value based on amortized cost must
be examined by the Fund's Board of Directors. In the event the Fund's
Board of Directors determines that a deviation exists which may result in
material dilution or other unfair results to investors or existing share-
holders, pursuant to the rule the Fund's Board of Directors must cause the
Fund to take such corrective action as the Fund's Board of Directors re-
gards as necessary and appropriate, including: selling portfolio instru-
ments prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity; withholding dividends or paying distributions
from capital or capital gains; redeeming shares in kind; or establishing a
net asset value per share by using available market quotations.
EXCHANGE PRIVILEGE
Except as noted below, shareholders of any fund in the Smith Barney Shear-
son Group of Funds may exchange all or part of their shares for shares of
Class A and, where available, Class D shares of certain other funds in the
Smith Barney Shearson Group of Funds, to the extent such shares are of-
fered for sale in the shareholder's state of residence, on the basis of
relative net asset value per share at the time of exchange as follows:
A. Class A shares of any fund purchased with a sales charge may be ex-
changed for Class A shares of any of the other funds, and the sales charge
differential, if any, will be applied. Class A shares of any fund may be
exchanged without a sales charge for shares of the funds that are offered
without a sales charge. Class A shares of any fund purchased without a
sales charge may be exchanged for shares sold with a sales charge, and the
appropriate sales charge differential will be applied.
B. Class A shares of any fund acquired by a previous exchange of shares
purchased with a sales charge may be exchanged for Class A shares of any
of the other funds, and the sales charge differential, if any, will be ap-
plied.
Dealers other than Smith Barney Shearson must notify the Fund's transfer
agent of an investor's prior ownership of Class A shares of Smith Barney
Shearson High Income Fund and the account number in order to accomplish an
exchange of shares of Smith Barney Shearson High Income Fund under para-
graph B above.
The exchange privilege enables shareholders in any of the funds in the
Smith Barney Shearson Group of Funds to acquire shares in a fund with dif-
ferent investment objectives when they believe a shift between funds is an
appropriate investment decision. This privilege is available to sharehold-
ers residing in any state in which the fund shares being acquired may le-
gally be sold. Prior to any exchange, the shareholder should obtain and
review a copy of the current prospectus of each fund into which an ex-
change is being made. Prospectuses may be obtained from your Smith Barney
Shearson Financial Consultant.
Upon receipt of proper instructions and all necessary supporting docu-
ments, shares submitted for exchange are redeemed at the then-current net
asset value and the proceeds are immediately invested, at a price as de-
scribed above, in shares of the fund being acquired. Smith Barney Shearson
reserves the right to reject any exchange request. The exchange privilege
may be modified or terminated at any time after written notice to share-
holders.
PERFORMANCE DATA
From time to time, the Fund may quote its yield and effective yield in ad-
vertisements or in reports and other communications to shareholders. Yield
quotations are expressed in annualized terms and may be quoted on a com-
pounded basis.
The current yield for the Fund is computed by (a) determining the net
change in the value of a hypothetical pre-existing account in the Fund
having a balance of one share at the beginning of a seven- calendar-day
period for which yield is to be quoted, (b) dividing the net change by the
value of the account at the beginning of the period to obtain the base pe-
riod return and (c) annualizing the results (i.e., multiplying the base
period return by 365/7). The net change in the value of the account re-
flects the value of additional shares purchased with dividends declared on
the original share and any such additional shares, but does not include
realized gains and losses or unrealized appreciation and depreciation. In
addition, the Fund may calculate a compound effective annualized yield by
adding 1 to the base period return (calculated as described above), rais-
ing the sum to a power equal to 365/7 and subtracting 1.
For the seven-day period ended March 31, 1994, the annualized yield was
2.91%, and the compound effective yield was 2.95%. At March 31, 1994, the
Fund's average portfolio maturity was 71 days.
Current yield information is useful in reviewing the Fund's performance,
but because current yield will fluctuate, such information may not provide
a basis for comparing an investment in the Fund with bank deposits, sav-
ings accounts or similar investment alternatives that pay a fixed return
for a stated period of time. Investors should recognize that in periods of
declining interest rates the Fund's yield will tend to be somewhat higher
than prevailing market rates on short-term obligations, and in periods of
rising interest rates, the Fund's yield will tend to be somewhat lower.
Also, when interest rates are falling, the inflow of net new money to the
Fund from the continuous sale of its shares will likely be invested in
portfolio instruments producing lower yields than the balance of the
Fund's portfolio, thereby reducing the Fund's current yield. In periods of
rising interest rates, the opposite can be expected to occur. An inves-
tor's principal is not guaranteed by the Fund.
TAXES
The Fund has qualified, and intends to qualify each year, as "a regulated
investment company" under the Internal Revenue Code of 1986, as amended.
Provided the Fund (a) is a regulated investment company and (b) distrib-
utes at least 90% of its net investment income and net realized short-term
capital gains, the Fund will not be liable for Federal income taxes to the
extent its net investment income and its net realized long- and short-term
capital gains are distributed to its shareholders. Although the Fund ex-
pects to be relieved of all or substantially all Federal, state and local
income or franchise taxes, depending upon the extent of its activities in
states and localities in which its offices are maintained, in which its
agents or independent contractors are located or in which it is otherwise
deemed to be conducting business, that portion of the Fund's income which
is treated as earned in any such state or locality could be subject to
state and local tax. Any such taxes paid by the Fund would reduce the
amount of income and gains available for distribution to shareholders.
While the Fund does not expect to realize net long-term capital gains, any
such realized gains will be distributed as described in the Fund's Pro-
spectus. Such distributions ("capital gain dividends"), if any, will be
taxable to shareholders as long-term capital gains, regardless of how long
a shareholder has held Fund shares and will be designated as capital gain
dividends in a written notice mailed by the Fund to its shareholders after
the close of the Fund's prior taxable year.
If a shareholder fails to furnish a correct taxpayer identification num-
ber, fails to report dividend and interest income or fails to certify that
he or she has provided a correct taxpayer identification number and that
he or she is not subject to "backup withholding," then the shareholder may
be subject to a 31% backup withholding tax with respect to (a) dividends
and distributions and (b) any proceeds of any redemption of Fund shares.
An individual's taxpayer identification number is his or her social secu-
rity number. The backup withholding tax is not an additional tax and may
be credited against a shareholder's regular Federal income tax liability.
The foregoing is only a summary of certain tax considerations generally
affecting the Fund and its shareholders, and is not intended as a substi-
tute for careful tax planning. Shareholders are urged to consult their tax
advisors with specific reference to their own tax situations, including
their state and local tax liabilities.
CUSTODIAN AND TRANSFER AGENT
Boston Safe, a wholly owned subsidiary of TBC, is located at One Boston
Place, Boston, Massachusetts 02108, and serves as the custodian of the
Fund. Under the custody agreement, Boston Safe holds the Fund's portfolio
securities and keeps all necessary accounts and records. For its services,
Boston Safe receives a monthly fee based upon the month-end market value
of securities held in custody and also receives securities transaction
charges. The assets of the Fund are held under bank custodianship in com-
pliance with the 1940 Act.
TSSG is located at Exchange Place, Boston, Massachusetts 02109 and serves
as the Fund's transfer agent. Under the transfer agency agreement, TSSG
maintains the shareholder account records for the Fund, handles certain
communications between shareholders and the Fund and distributes dividends
and distributions payable by the Fund. For these services, TSSG receives a
monthly fee computed on the basis of the number of shareholder accounts it
maintains for the Fund during the month and is reimbursed for out-of-
pocket expenses.
FINANCIAL STATEMENTS
The Fund's Annual Report for the fiscal year ended March 31, 1994 accompa-
nies this Statement of Additional Information and is incorporated herein
by reference in its entirety.
APPENDIX
The following is a description of the ratings categories of NRSROs for
commercial paper:
Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P") indi-
cates that the degree of safety regarding timely payment is either over-
whelming or very strong. Those issues determined to possess overwhelming
safety characteristics are denoted A-1+. Paper rated A-1 must have either
the direct credit support of an issuer or guarantor that possesses excel-
lent long-term operating and financial strength combined with strong li-
quidity characteristics (typically, such issuers or guarantors would dis-
play credit quality characteristics which would warrant a senior bond rat-
ing of AA- or higher), or the direct credit support of an issuer or
guarantor that possesses above average long-term fundamental operating and
financing capabilities combined with ongoing excellent liquidity charac-
teristics. Paper rated A-1 must have the following characteristics: li-
quidity ratios are adequate to meet cash requirements; long-term senior
debt is rated A or better; the issuer has access to at least two addi-
tional channels of borrowing; basic earnings and cash flow have an upward
trend with allowance made for unusual circumstances; typically, the issu-
er's industry is well established and the issuer has a strong position
within the industry; and the reliability and quality of management are un-
questioned.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's Investors Service, Inc. ("Moody's"). Among the factors considered
by Moody's in assigning ratings are the following: (a) evaluation of the
management of the issuer; (b) economic evaluation of the issuer's industry
or industries and an appraisal of speculative-type risks which may be in-
herent in certain areas; (c) evaluation of the issuer's products in rela-
tion to competition and customer acceptance; (d) liquidity; (e) amount and
quality of long-term debt; (f) trend of earnings over a period of ten
years; (g) financial strength of a parent company and the relationships
which exist with the issuer; and (h) recognition by the management of ob-
ligations which may be present or may arise as a result of public interest
questions and preparations to meet such obligations.
Short-term obligations, including commercial paper, rated A-1+ by IBCA
Limited or its affiliate IBCA Inc. are obligations supported by the high-
est capacity for timely repayment. Obligations rated A-1 have a very
strong capacity for timely repayment. Obligations rated A-2 have a strong
capacity for timely repayment, although such capacity may be susceptible
to adverse changes in business, economic or financial conditions.
Fitch Investors Services, Inc. employs the rating F-1+ to indicate issues
regarded as having the strongest degree of assurance for timely payment.
The rating F-1 reflects an assurance of timely payment only slightly less
in degree than issues rated F-1+, while the rating F-2 indicates a satis-
factory degree of assurance for timely payment, although the margin of
safety is not as great as indicated by the F-1+ and F-1 categories.
Duff & Phelps Inc. employs the designation of Duff 1 with respect to top
grade commercial paper and bank money instruments. Duff 1+ indicates the
highest certainty of timely payment: short-term liquidity is clearly out-
standing, and safety is just below risk-free United States Treasury short-
term obligations. Duff 1- indicates high certainty of timely payment. Duff
2 indicates good certainty of timely payment: liquidity factors and com-
pany fundamentals are sound.
The Thomson BankWatch ("TBW") Short-Term Ratings apply to commercial
paper, other senior short-term obligations and deposit obligations of the
entities to which the rating has been assigned, and apply only to unse-
cured instruments that have a maturity of one year or less.
The TBW Short-Term Ratings specifically assess the likelihood of an un-
timely payment of principal or interest.
TBW-1 The highest category; indicates a very high degree of likelihood
that principal and interest will be paid on a timely basis.
TBW-2 The second highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1."
Various of the NRSROs utilize rankings within rating categories indicated
by a + or -. The Fund, in accordance with industry practice, recognizes
such rankings within categories as gradations, viewing for example S&P's
rating of A-1+ and A-1 as being in S&P's highest rating category.
SMITH BARNEY SHEARSON
DAILY DIVIDEND FUND INC.
Two World Trade Center
New York, New York 10048 Fund 1
Smith Barney Shearson
DAILY DIVIDEND
FUND INC.
STATEMENT OF
ADDITIONAL INFORMATION
MAY 30, 1994
SMITH BARNEY SHEARSON
SMITH BARNEY SHEARSON DAILY DIVIDEND FUND INC.
PART C
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Financial Highlights
Included in Part B:
The Registrants Annual report for the fiscal year ended March
3, 2994, and the Report of Independent Accountants dated May 10,
1994 are incorporated by reference to the Definitive 3062 filed on
May 26, 1994, as Accession # 0000053798-94-000264.
Included in Part C:
Consent of Independent Accountants
(b) Exhibits
Exhibit No. Description of Exhibit
All references are to the Registrant's registration statement on either Forms
N-1 or N-1A (the "Registration Statement") as filed with the Securities and
Exchange Commission ("SEC") (File Nos. 811-2914 and 2-63807).
(1) Registrants Articles of Incorporation dated March 15, 1979, and the
Articles of Amendment, Articles Supplementary and Articles of Transfer dated
April 4, 1979, May 9, 1979, April 30, 1980, May 20, 1988, December 2, 1988 and
July 30, 1993, respectively, are filed herein.
(2) (a) Registrant's By-Laws are incorporated by reference to the
Registration Statement.
(b) Registrant's Amended By-Laws are incorporated by reference to
Post-Effective Amendment No. 16 filed on May 31, 1988 ("Post-Effective
Amendment No. 16").
(3) Not Applicable.
(4) Form of stock certificate is incorporated by reference to Pre-Effective
Amendment No. 1.
(5) Investment Advisory Agreement with Greenwich Street Advisors is filed
herein.
(6) Distribution Agreement with Smith Barney, Harris Upham and Co.
Incorporated is filed herein.
(7) Not Applicable.
(8) Custodian Agreement with Boston Safe Deposit and Trust Company dated
June 25, 1983 is incorporated by reference to definitive proxy materials dated
September 14, 1983.
(9) (a) Transfer Agency Agreement between the Registrant, Boston Safe
Deposit and Trust Company and the Shareholders Services Group, Inc., dated
August 2, 1993, is filed herein.
(b) Form of Administration Agreement with Smith, Barney Advisers, Inc.
is filed herein.
(c) Form of Sub-Administration Agreement with The Boston Company
Advisors, Inc., is filed herein.
(10) Opinion of Counsel is filed herein.
(11) Consent of Independent Accountants is filed herein.
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
(15) Not Applicable.
(16) Performance Data is incorporated by reference to Post-Effective
Amendment No. 16.
Item 25. Persons Controlled by or under Common Control with Registrant
None
Item 26. Number of Holders of Securities
(1) (2)
Number of Record Holders
Title of Class as of March 25, 1994
Shares of Common
stock, par value 1,912,931
$.01 per share
Item 27. Indemnification
Under Section 2-418 of the Maryland General Corporation Law, the
Registrant is authorized to indemnify any past or present director, officer,
agent or employee against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by him in connection with any proceeding
in which he is a party by reason of having served as a director, officer,
agent or employee, if he acted in good faith and reasonably believed that, (i)
in the case of conduct in his official capacity with the Registrant, that his
conduct was in the best interests of the Registrant, or (ii) in all other
cases, that his conduct was at least not opposed to the best interests of the
Registrant. In the case of any criminal proceedings, said director, officer,
agent or employee must in addition have had no reasonable cause to believe
that his conduct was unlawful. In the case of a proceeding by or in the right
of the Registrant, indemnification may only be made against reasonable
expenses and may not be made in respect of any proceeding in which the
director, officer, agent or employee shall have been adjudged to be liable to
the Registrant. The termination of any proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere, or its equivalent
creates a rebuttable presumption that the director, officer, agent or employee
did not meet the requisite standard of conduct for indemnification. No
indemnification may be made in respect of any proceeding charging improper
personal benefit to the director, officer, agent or employee whether or not
involving action in such person's official capacity, if such person was
adjudged to be liable on the basis that improper personal benefit was
received. If such director, officer, agent or employee is successful, on the
merits or otherwise, in defense of any such proceeding against him, he shall
be indemnified against the reasonable expenses incurred by him (except to the
extent such indemnification is limited by the Registrant's charter, as
described below). Additionally, a court of appropriate jurisdiction may order
indemnification in certain circumstances, even if the appropriate standard of
conduct set forth above was not met. Notwithstanding the above, the
Registrant's Articles of Incorporation provides that no officer or director of
the Registrant may be indemnified for any liability to the Registrant or its
security holders to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such person's office.
Item 28(a). Business and Other Connections of Investment Adviser
Investment Adviser - - Greenwich Street Advisors
Greenwich Street Advisors, through its predecessors, has been in the
investment counseling business since 1934 and is a division of Mutual
Management Corp. ("MMC"). MMC was incorporated in 1978 and is a wholly owned
subsidiary of Smith Barney Shearson Holdings Inc. ("Holdings"), which is in
turn a wholly owned subsidiary of The Travelers Inc. (formerly known as
Primerica Corporation) ("Travelers").
The list required by this Item 28 of officers and directors of MMC and
Greenwich Street Advisors, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by such
officers and directors during the past two fiscal years, is incorporated by
reference to Schedules A and D of FORM ADV filed by MMC on behalf of Greenwich
Street Advisors pursuant to the Advisers Act (SEC File No. 801-14437).
Prior to the close of business on July 30, 1993 (the "Closing"), Shearson
Lehman Advisors, a member of the Asset Management Group of Shearson Lehman
Brothers Inc. ("Shearson Lehman Brothers"), served as the Registrant's
investment adviser. On the Closing, Travelers and Smith Barney Shearson Inc.
acquired the domestic retail brokerage and asset management business of
Shearson Lehman Brothers, which included the business of the Registrant's
prior investment adviser. Shearson Lehman Brothers was a wholly owned
subsidiary of Shearson Lehman Brothers Holdings Inc. ("Shearson Holdings").
All of the issued and outstanding common stock of Shearson Holdings
(representing 92% of the voting stock) was held by American Express Company.
Information as to any past business vocation or employment of a substantial
nature engaged in by officers and directors of Shearson Lehman Advisors can be
located in Schedules A and D of FORM ADV filed by Shearson Lehman Brothers on
behalf of Shearson Lehman Advisors prior to July 30, 1993. (SEC FILE NO. 801-
3701)
3/15/94
</R
Item 29. Principal Underwriters
Smith Barney Shearson Inc. ("Smith Barney Shearson") currently acts as
distributor for Smith Barney Shearson Managed Municipals Fund Inc., Smith
Barney Shearson New York Municipals Fund Inc., Smith Barney Shearson
California Municipals Fund Inc., Smith Barney Shearson Massachusetts
Municipals Fund, Smith Barney Shearson Global Opportunities Fund, Smith Barney
Shearson Aggressive Growth Fund Inc., Smith Barney Shearson Appreciation Fund
Inc., Smith Barney Shearson Worldwide Prime Assets Fund, Smith Barney
Shearson Short-Term World Income Fund, Smith Barney Shearson Principal Return
Fund, Smith Barney Shearson Municipal Money Market Fund Inc., Smith Barney
Shearson Daily Dividend Fund Inc., Smith Barney Shearson Government and
Agencies Fund Inc., Smith Barney Shearson Managed Governments Fund Inc., Smith
Barney Shearson New York Municipal Money Market Fund, Smith Barney Shearson
California Municipal Money Market Fund, Smith Barney Shearson Income Funds,
Smith Barney Shearson Equity Funds, Smith Barney Shearson Investment Funds
Inc., Smith Barney Shearson Precious Metals and Minerals Fund Inc., Smith
Barney Shearson Telecommunications Trust, Smith Barney Shearson Arizona
Municipals Fund Inc., Smith Barney Shearson New Jersey Municipals Fund Inc.,
The USA High Yield Fund N.V., Garzarelli Sector Analysis Portfolio N.V., The
Advisors Fund L.P., Smith Barney Shearson Fundamental Value Fund Inc., Smith
Barney Shearson Series Fund, The Trust for TRAK Investments, Smith Barney
Shearson Income Trust, Smith Barney Shearson FMA R Trust, Smith Barney
Shearson Adjustable Rate Government Income Fund, Smith Barney Shearson Florida
Municipals Fund, Smith Barney Funds, Inc., Smith Barney Muni Funds, Smith
Barney World Funds, Inc., Smith Barney Money Funds, Inc., Smith Barney Tax
Free Money Fund, Inc., Smith Barney Variable Account Funds, Smith Barney U.S.
Dollar Reserve Fund (Cayman), Worldwide Special Fund, N.V., Worldwide
Securities Limited, (Bermuda), Smith Barney International Fund (Luxembourg)
and various series of unit investment trusts.
Smith Barney Shearson is a wholly owned subsidiary of Smith Barney
Shearson Holdings Inc., which in turn is a wholly owned subsidiary of The
Travelers Inc. (formerly known as Primerica Corporation) ("Travelers"). The
information required by this Item 29 with respect to each director, officer
and partner of Smith Barney Shearson is incorporated by reference to Schedule
A of FORM BD filed by Smith Barney Shearson pursuant to the Securities
Exchange Act of 1934 (SEC File No. 812-8510).
3/15/94
Item 30. Location of Accounts and Records
(1) Smith Barney Shearson Daily Dividend Fund Inc.
Two World Trade Center
New York, New York 10048
(2) Greenwich Street Advisors
Two World Trade Center
New York, New York 10048
(3) Smith, Barney Advisers, Inc.
1345 Avenue of Americas
New York, NY 10105
(4) The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02109
(5) Boston Safe Deposit and Trust Company
Wellington Business Center
One Cabot Road
Medford, Massachusetts 02155
(6) The Shareholders Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
None
485 (b) Certification
The Registrant hereby certifies that it meets all requirements
for effectiveness pursuant to Rule 485(b) under the Securities Act of 1933, as
amended.
The Registrant further represents pursuant to Rule 485(b)(2)
(iv) that the resignations of Alfred Bianchetti, Robert Borgesen, William
Nutt, and Richard P. Roelofs, as Directors of the Registrant were not due to
any disagreement with the Registrant on any matter relating to its operations,
policies or practices. Mr. Bianchetti and Mr. Roelofs resigned their
positions with the Fund because there were too many interested directors on
the Board. Mr. Borgesen resigned his position because he has gone into
retirement. Mr. Nutt resigned his position because he is no longer an employee
of The Boston Company, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant, SMITH
BARNEY SHEARSON DAILY DIVIDEND FUND INC., has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, State of New York on
the 23th day of May, 1994.
SMITH BARNEY SHEARSON
DAILY DIVIDEND FUND INC.
By: /s/ Heath B. McLendon
Heath B. McLendon
Chief Executive Officer
Witness our hands on the date set forth below.
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement have been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Heath B. McLendon Chairman of the Board
Heath B. McLendon (Chief Executive Officer)
5/23/94
/s/ Lewis E. Daidone Treasurer (Chief Financial
Lewis E. Daidone & Accounting Officer)
5/23/94
Signature Title Date
/s/ Martin Brody* Director
5/23/94
Martin Brody
/s/ Dwight B. Crane* Director
5/23/94
Dwight B. Crane
/s/ James J. Crisona* Director
5/23/94
James J. Crisona
/s/ Robert A. Frankel* Director
5/23/94
Robert A. Frankel
/s/ Paul Hardin* Director
5/23/94
Paul Hardin
/s/ Stephen E. Kaufman* Director
5/23/94
Stephen E. Kaufman
/s/ Joseph J. McCann* Director
5/23/94
Joseph J. McCann
* Signed by Heath B. McLendon,
their duly authorized attorney-in-fact,
pursuant to power of attorney
dated April 20, 1994.
/s/ Heath B. McLendon
Heath B. McLendon
g/shared/domestic/clients/shearson/funds/sddi/pea24.doc
ARTICLES OF INCORPORATION
OF
SHEARSON DAILY DIVIDEND, INC.
For the purposes of forming a stock corporation for one or more
lawful purposes under the provisions of Title 2 of the General Corporation Law
of Maryland (hereinafter sometimes referred to as the "General Corporation
Law"), the natural person hereinafter named as the person acting as the
incorporator of the said corporation does hereby adopt and sign the following
Articles of Incorporation of the corporation and does hereby acknowledge that
his adoption and signing thereof are his act:
FIRST: (1) The name, including the full given name and surname,
of the incorporator is Thomas E. Heftler.
(2) The said incorporator's post office address, including the
street and number, if any, including the city or county, and including the
state or country, is 61 Broadway, New York, New York 10006.
(3) The said incorporator is at least eighteen years of age.
(4) The said incorporator is forming the corporation named in
these Articles of Incorporation under the General Corporation Law of Maryland.
SECOND: The name of the corporation (hereinafter called the
"corporation") is Shearson Daily Dividend, Inc.
THIRD: The corporation is formed for the following purpose or
purposes:
(a) to conduct, operate and carry on the business of an
investment company;
(b) to subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange, distribute
or otherwise dispose of and deal in and with certificates of deposit, bankers
acceptances, commercial paper, bonds, debentures, notes, bills and other
negotiable or non-negotiable instruments, obligations and evidence of
indebtedness; to pay for same in cash or by the issue of stock, including
treasury stock, bonds or notes of the corporation or otherwise; and to
exercise any and all rights, powers and privileges of ownership or interest in
respect of any and all such investments of every kind and description,
including without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more persons, firms,
associations or corporations to exercise any of said rights, powers and
privileges in respect of any said instruments;
(c) to borrow money or otherwise obtain credit and to secure the
same by mortgaging, pledging or otherwise subjecting as security the assets of
the corporation;
(d) to issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in, shares of
Common Stock of the corporation, including shares of Common Stock of the
corporation in fractional denominations, and to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of shares of Common Stock
of the corporation any funds or property of the corporation whether capital or
surplus or otherwise, to the full extent now or hereafter permitted by the
laws of the State of Maryland.
(e) to conduct its business, promote its purposes and carry on
its operations in any and all of its branches and maintain offices both within
and without the State of Maryland, in any States of the United States of
America, in the District of Columbia and in any other parts of the world; and
(f) to do all and everything necessary, suitable, convenient, or
proper for the conduct, promotion, and attainment of any of the businesses and
purposes herein specified or which at any time may be incidental thereto or
may appear conducive to or expedient for the accomplishment of any of such
businesses and purposes and which might be engaged in or carried on by a
corporation incorporated or organized under the General Corporation Law, and
to have and exercise all of the powers conferred by the laws of the State of
Maryland upon corporations incorporated or organized under the General
Corporation Law.
The foregoing provisions of this Article THIRD shall be construed
both as purposes and powers and each as an independent purpose and power. The
foregoing enumeration of specific purposes and powers shall not be held to
limit or restrict in any manner the purposes and powers of the corporation,
and the purposes and powers herein specified shall, except when otherwise
provided in this Article THIRD, be in no way limited or restricted by
reference to, or inference from, the terms of any provision of this or any
other Articles of these Articles of Incorporation; provided, that the
corporation shall not conduct any business, promote any purpose, or exercise
any power or privilege within or without the State of Maryland which, under
the laws thereof, the corporation may not lawfully conduct, promote, or
exercise.
FOURTH: The post office address, including street and number, if
any, and the city or county of the principal office of the corporation within
the State of Maryland, and of the resident agent of the corporation within the
State of Maryland, is The Corporation Trust Incorporated, First Maryland
Building, 25 South Charles Street, Baltimore, Maryland 21201. The words
"principal office" and "resident agent" as used herein shall have the meaning
ascribed to them by the General Corporation Law.
FIFTH: (1) The total number of shares of stock which the
corporation has authority to issue is 1 billion (1,000,000,000), all of which
are of a par value of one cent ($.01) each and are designed as Common Stock.
(2) The aggregated par value of all the authorized shares of
stock is ten million dollars ($10,000,000).
(3) The Board of Directors of the corporation is authorized,
from time to time, to fix the price or the minimum price or the consideration
or minimum consideration for, and to issue, the shares of stock of the
corporation.
(4) The Board of Directors of the corporation is authorized,
from time to time, to classify or to reclassify, as the case may be, any
unissued shares of stock of the corporation.
(5) Notwithstanding any provisions of the General Corporation
Law requiring a greater proportion than a majority of the votes entitled to be
cast in order to take or authorized any action, any such action may be taken
or authorized upon the concurrence of at least a majority of the aggregate
number of votes entitled to be cast thereon.
(6) The corporation may issue shares of its Common Stock in
fractional denomination to the same extent as its whole shares, and shares in
fractional denominations shall be shares of Common Stock having
proportionately to the respective fractions represented thereby all the rights
of whole shares, including, without limitation, the right to vote, the right
to receive dividends and distributions and the right to participate upon
liquidation of the corporation.
(7) All shares of the Common Stock of the corporation now or
hereafter authorized shall be "subject to redemption" and "redeemable", in the
sense used in the General Corporation Law authorizing the formation of
corporations. At the redemption or purchase price for any such shares,
determined in the manner set out in these Articles of Incorporation or in any
amendment thereto; provided, however, that the corporation shall have the
right, at its option, to refuse to redeem the shares of stock at less than the
par value thereof. In the absence of any specification as to the purpose for
which shares of the Common Stock of the corporation are redeemed, shares so
redeemed shall be deemed to be "purchased for retirement" in the sense
contemplated by the laws of the State of Maryland and the number of the
authorized shares of the Common Stock of the corporation shall not be reduced
by the number of any shares repurchased by it.
(8) No holder of any of the shares of any class of the
corporation shall be entitled as of right to subscribe for, purchase, or
otherwise acquire any shares of any class of the corporation which the
corporation proposes to grant for the purchase of any shares, bonds,
securities, or obligations of the corporation which are convertible into or
exchangeable for, or which carry any rights to subscribe for, purchase, or
otherwise acquire shares of any class of the corporation; and any and all of
such shares, bonds, securities or obligations of the corporation, whether now
or hereafter authorized or created, may be issued, or may be reissued or
transferred if the same have been reacquired and have treasury status, and any
and all of such rights and options may be granted by the Board of Directors to
such persons, firms, corporations and associations, and for such lawful
consideration, and on such terms, as the Board of Directors in its discretion
may determine, without first offering the same, or any thereof, to any said
holder.
SIXTH: (1) The number of directors of the corporation, until
such number shall be increased or decreased pursuant to the by-laws of the
corporation, is two. The number of directors shall never be less than the
number prescribed by the General Corporation Law.
(2) The names of the persons who shall act as directors of the
corporation until the first annual meeting or until their successors are duly
chosen and qualify are as follows:
Jeffery B. Lane Joseph S. DiMartino
(3) The initial by-laws of the corporation shall be adopted by
the directors at their organizational meeting or by their informal written
action, as the case may be. Thereafter, the power to make, alter, and repeal
the by-laws of the corporation shall be vested in the Board of Directors of
the corporation.
(4) Any determination made in good faith and, so far as
accounting matters are involved, in accordance with generally accepted
accounting principles, by or pursuant to the direction of the Board of
Directors, as to; the amount of the assets, debts, obligations, or liabilities
of the corporation; the amount of any reserves or charges set up and the
propriety thereof; the time of or purpose for creating such reserves or
charges; the use, alteration or cancellation of any reserves or charges
(whether or not any debt; obligation or liability for which such reserves or
charges shall have been created shall have been paid or discharged or shall be
then or thereafter required to be paid or discharged); the price or closing
bid or asked price of any investment owned or held by the corporation; the
market value or any investment or fair value of any other asset of the
corporation; the number of shares of the corporation outstanding; the
estimated expense to the corporation in connection with purchases of its
shares; the ability to liquidate investments in orderly fashion; the extent to
which it is practicable to deliver a cross-section of the portfolio of the
corporation in payment for any such shares, or as to any other matters
relating to the issue, sale, purchase and/or other acquisition or disposition
of investments or shares of the corporation shall be final and conclusive, and
shall be binding upon the corporation and all holders of its shares, past,
present and future, and shares of the corporation are issued and sold on the
condition and understanding that any and all such determinations shall be
binding as aforesaid.
SEVENTH: (1) To the maximum extent permitted by the General
Corporation Law as from time to time amended, the corporation shall indemnify
its currently acting and its former directors, officers, and employees and
those persons who, at the request of the corporation serve or have served
another corporation, partnership, joint venture, trust or other enterprise in
one or more of such capacities. The indemnification provided for herein shall
not be deemed exclusive of any others rights to which those seeking
indemnification may be entitled under any by-laws, agreement, vote of
stockholders or disinterested directors or otherwise.
(2) Anything herein contained to the contrary notwithstanding,
no officer or director of the corporation shall be indemnified for any
liability to the corporation or its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
EIGHTH: Any holder of shares of Common Stock of the corporation
shall be entitled to require the corporation to repurchase and the corporation
shall be obligated to repurchase at the option of such holder all or any part
of the shares of Common Stock of the corporation owned by said holder, at the
purchase price, pursuant to the method, upon the terms and subject to the
conditions hereinafter set forth:
(a) Certificates (if issued) for the shares of Common
Stock shall be presented for repurchase in proper form for transfer to
the corporation or the agent of the corporation appointed for such
purpose and there shall be presented a written request that the corporation
repurchase all or any part of the shares represented thereby;
(b) The repurchase price per share shall be the net asset
value per share as determined by the corporation at such time or times as
the Board of Directors of the corporation shall designate, but not later
than as at the close of the New York Stock Exchange on the bank business day
next succeeding the time of presentation of certificate for shares, if
issued, and an appropriate request for repurchase, or such later time as
the Board of Directors may designate in accordance with any provision of the
Investment Company Act of 1940, any rule or regulation thereunder, or any
rule or regulation made or adopted by any securities association registered
under the Securities Exchange Act of 1934, as determined by the Board of
Directors of the corporation.
(c) Net asset value shall be determined by dividing:
(i) The total value of the assets of the corporation
determined as provided in Subsection (d) below less, to the extent
determined by or pursuant to the direction of the Board of Directors in
accordance with generally accepted accounting principles, all debts,
obligations and liabilities of the corporation (which debts obligations
and liabilities shall include without limitation of the generality of
the foregoing, any and all debts, obligations, liabilities, or claims, of
any and every kind and nature, fixed, accrued, unmatured or contingent,
including the estimated accrued expenses of management and supervision,
administration and distribution and any reserves or charges for any or
all of the foregoing, whether for taxes, expenses, contingencies, or
otherwise, and the price of Common Stock redeemed but not paid for) but
excluding the corporation's liability upon its shares and its surplus
by:
(ii) The total number of shares of the corporation
outstanding. (Shares sold by the corporation whether or not paid for
shall be treated as outstanding and shares purchased or redeemed by the
corporation whether or not paid for and treasury shares shall be treated as
not outstanding, provided, that the Board of Directors may determine whether
shares sold or redeemed on the date of computation shall be included.)
The Board of Directors is empowered, in its absolute discretion,
to establish other methods for determining such net asset value whenever such
other methods are deemed by it to be necessary in order to enable the
corporation to comply with, or are deemed by it to be desirable provided they
are not inconsistent with, any provision of the Investment Company Act of 1940
or any rule or regulation thereunder including any rule or regulation made or
adopted pursuant to Section 22 of the Investment Company Act of 1940 by the
Securities and Exchange Commission of any securities association registered
under the Securities Exchange Act of 1934.
(d) In determining for the purposes of these Articles of
Incorporation the total value of the assets of the corporation at any time,
investments and any other assets of the corporation shall be valued in such
manner as may be determined from time to time by the Board of Directors.
(e) Payment of the repurchase price by the corporation may be
made either in cash or in securities or other assets at the time owned by the
corporation or partly in cash and partly in securities or other assets at the
time owned by the corporation. The value of any part of such payment to be
made in securities or other assets of the corporation shall be the value
employed in determining the repurchase price. Payment of the repurchase price
shall be made on or before the seventh day following the day of which the
shares are properly presented for repurchase hereunder, except that delivery
of any securities included in any such payment shall be made as promptly as
any necessary transfers on the books of the issuers whose securities are to be
delivered may be made, and, except as postponement of the date of payment may
be permissible under the Investment Company Act of 1940 and the Rules and
Regulations thereunder.
The corporation, pursuant to resolution of the Board of Directors,
may deduct from the payment made for any shares repurchased a liquidating
charge not in excess of one percent (1%) of the repurchase price of the shares
so repurchased, and the Board of Directors may alter or suspend any such
liquidating charge from time to time.
(f) The right of any holder of shares of Common Stock
repurchased by the corporation as provided in this Article EIGHTH to receive
dividends or distributions thereon and all other rights of such holder with
respect to such shares shall terminate at the time as of which the repurchase
price of such shares is determined, except the right of such holder to receive
(i) the repurchase price of such shares from the corporation in accordance
with the provisions hereof, and (ii) any dividend or distribution to which
such holder had previously become entitled as the record holder of such shares
on the record date for such dividend or distribution.
(g) Repurchase of shares of Common Stock by the corporation is
conditional upon the corporation having funds or property legally available
therefor.
(h) The corporation, either directly or through an agent, may
repurchase its shares, out of funds legally available therefor, upon such
terms and conditions and for such consideration as the Board of Directors
shall deem advisable, by agreement with the owner at a price not exceeding the
net asset value per share as determined by the corporation at such time or
times as the Board of Directors of the corporation shall designate, but not
later than as at the close of the New York Stock Exchange on the bank business
day next succeeding the time when the purchase or contract to purchase is
made, less a charge not to exceed one per cent (1%) of such net asset value,
if and as fixed by resolution of the Board of Directors of the corporation
from time to time, and take all other steps deemed necessary or advisable in
connection therewith.
(i) The corporation, pursuant to resolution of the Board of
Directions, may cause the repurchase, upon the terms set forth in such
resolution and in subsections (b) through (g) and subsection (j) of this
Article EIGHTH, of shares of Common Stock owned by stockholders whose shares
have an aggregate net asset value of five hundred dollars or less.
Notwithstanding any other provision of this Article EIGHTH, if certificates
representing such shares have been issued, the repurchase price need not be
paid by the corporation until such certificates are presented in proper form
for transfer to the corporation or the agent of the corporation appointed of
or such purpose; however, the repurchase shall be effective, in accordance
with the resolution of the Board of Directors, regardless of whether or not
such presentation has been made.
(j) The obligations set forth in this Article EIGHTH may be
suspended or postponed, (1) for any period (a) during which the New York Stock
Exchange is closed other than customary week-end and holiday closings or (b)
during which trading on the New York Stock Exchange is restricted, (2) for any
period during which an emergency exists as a result of which (a) the disposal
by the corporation of investments owned by it is not reasonably practicable,
or (b) it is not reasonably practicable for the corporation fairly to
determine the value of its net assets or (3) for such other periods as the
Federal Securities and Exchange Commission or any successor governmental
authority may by order permit for the protection of security holders of the
corporation.
NINTH: From time to time any of the provisions of these Articles
of Incorporation may be amended, altered or repealed, and other provisions
authorized by the General Corporation Law at the time in force may be added or
inserted in the manner and at the time prescribed by said Law, and all rights
at anytime conferred upon the stockholders of the corporation by these
Articles of Incorporation are granted subject to the provisions of this
Article.
IN WITNESS WHEREOF, I have adopted and signed these Articles of
Incorporation and do hereby, acknowledge that the adoption and signing are my
act.
Dated: March 15, 1979
/s/ Thomas E. Heftler
Thomas E. Heftler, Incorporator
SHEARSON DAILY DIVIDEND, INC.
ARTICLES OF AMENDMENT
SHEARSON DAILY DIVIDEND, INC., a Maryland corporation having its
principal office in the State of Maryland at First Maryland Building, 25 South
Charles Street, Baltimore, Maryland (hereinafter called the Corporation),
hereby certifies to the State Department of Assessments and Taxation of
Maryland (hereinafter called the Department), that:
FIRST: The Articles of Incorporation of the Corporation are
hereby amended by striking out Article SECOND of the Articles of Incorporation
and inserting in lieu thereof a new Article SECOND, which shall be as follows:
"SECOND: The name of the corporation (hereinafter called
the "corporation") is Shearson Daily Dividend Inc."
SECOND: The amendment to the charter of the Corporation herein
made was duly approved by the entire Board of Directors by unanimous written
consent dated March 26, 1979 pursuant to Section 2-408 of the Corporations and
Associations Article of the Annotated Code of Maryland, and at the time of the
approval by the Directors there were no shares of stock of the Corporation
entitled to vote on the matter either outstanding or subscribed for.
THIRD: These Articles of Amendment shall become effective at the
time and on the date of acceptance of these Articles for record by the
Department.
IN WITNESS WHEREOF, Shearson Daily Dividend, Inc., has caused
these Articles to be signed in its name and on its behalf by its President and
witnessed by its Secretary on April 4, 1979.
SHEARSON DAILY DIVIDEND, INC.
By: /s/ Heath B. McLendon
Heath B. McLendon,
President
Witness:
/s/ Daniel C. Maclean
Daniel C. Maclean, Secretary
THE UNDERSIGNED, President of SHEARSON DAILY DIVIDEND, INC., who
executed on behalf of said Corporation the foregoing Articles of Amendment, of
which this certificate is made a part, hereby acknowledges, in the name and on
behalf of said corporation, the foregoing Articles of Amendment to be the
corporate act of said corporation and further certifies that, to the best of
his knowledge, information and belief, the matters and facts set forth therein
with respect to the approval thereof are true in all material respects, under
penalties of perjury.
/s/ Heath B. McLendon
Heath B. McLendon, President
Sworn to before me this
4th day of April, 1979
/s/ Annette Salzhauer
Annette Sazheuer, Notary Public
Commission Expires: March 20, 1980
SHEARSON DAILY DIVIDEND, INC.
ARTICLES OF AMENDMENT
SHEARSON DAILY DIVIDEND INC., a Maryland corporation having its
principal office in the State of Maryland, at First Maryland
Building, 25 South Charles Street, Baltimore, Maryland (hereinafter
called the Corporation), hereby certifies to the State Department of
Assessments and Taxation of Maryland (thereinafter called the
Department), that:
FIRST: The Articles of Incorporation of the Corporation are
hereby amended by striking out sections one and two of Article FIFTH
of the Articles of Incorporation and inserting in lieu thereof new
sections, one and two of Article FIFTH, which shall be as follows:
"FIFTH: (1) The total number of shares of stock
which the corporation has authority to issue is 3 billion
(3,000,000,000.00), all of which are a par value of one cent ($ .01)
each and are designated as common stock.
(2) The aggregate par value of all the
authorized shares of stock is thirty million dollars
($30,000,000.00)."
SECOND: The amendment to the charter of the Corporation
herein made was duly approved by the entire Board of Directors at a
meeting held after due notice on May 9, 1979; and at the time of the
approval by the Directors there were no shares of stock of the
Corporation entitled to vote on the matter either outstanding or
subscribed for.
THIRD: These Articles of Amendment shall be effective at the
time and on the date of acceptance of these Articles for record by
the Department.
FOURTH: The total number of shares of stock which the
Corporation was heretofore authorized to issue is one billion
(1,000,000,000) shares all of one class, of the par value of $.01
each and of the aggregate par value of ten million dollars
($10,000,000).
(b) The total number of shares of stock is increased
by this amendment to 3 billion (3,000,000,000) shares all of one
class, of the par value of $.01 and of the aggregate par value of 30
million dollars ($30,000,000).
IN WITNESS WHEREOF, Shearson Daily Dividend, Inc., has
caused these Articles to be signed in its name and on its behalf by
its President and witnessed by its Secretary on May 9, 1979.
SHEARSON DAILY DIVIDEND INC.
BY Heath B. McLendon
/s/ Heath B. McLendon,
President
WITNESS:
/s/ Daniel C. Maclean
Daniel C. Maclean
Secretary
THE UNDERSIGNED, President of SHEARSON DAILY DIVIDEND INC., who
executed on behalf of said Corporation the foregoing Articles of
Amendment, of which this certificate is made a part, hereby
acknowledges, in the name and on behalf of said Corporation, the
foregoing Articles of Amendment to be the Corporate act of said
Corporation and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects,
under penalties of perjury.
/s/ Heath B.
McLendon
Heath B. McLendon,
President
Sworn to before me this 9th day of May, 1979.
/s/ Annette Salzhauer
Notary Public
My Commission Expires: 3/20/80
ARTICLES OF AMENDMENT
OF
SHEARSON DAILY DIVIDEND INC
*****
SHEARSON DAILY DIVIDEND INC. a Maryland corporation having its principal
office in Baltimore City, Maryland (hereinafter called Corporation), hereby
certifies to the State Department of Assessments and Taxation of Maryland,
that:
FIRST: The Articles of Incorporation of the Corporation are hereby
amended to increase the authorized capital of the Corporation from Three
Billion (3,000,000,000) shares with a par value of One Cent ($.01) each,
amounting in aggregate to Thirty Million Dollars ($30,000,000.00) to Ten
Billion (10,000,000,000) shares with a par value of One Cent ($.01) each,
amounting in aggregate to One Hundred Million Dollars ($100,000,000.00) by
striking out paragraphs (1) and (2) of Article Fifth and inserting in lieu
thereof the following:
"FIFTH: (1) The total number of shares of stock which the
Corporation has authority to issue is ten billion (10,000,000,000), all of
which are a par value of One Cent ($.01) each and are designated as Common
Stock.
(2) The aggregate par value of all the authorized shares of stock
is One Hundred Million Dollars ($100,000,000)".
SECOND: The Board of Directors of the Corporation at its meeting
duly convened and held on February 5, 1980 adopted a resolution in which was
set forth the foregoing amendments to the Articles of Incorporation, declaring
that the said amendments of the Articles of Incorporation proposed were
advisable and directing that they be submitted for action thereon by the
stockholders of the Corporation at a Special Meeting to be held on April 8,
1980.
THIRD: Notice setting forth the said amendments of the Articles of
Incorporation and stating that a purpose of the meeting of the stockholders
would be to take action thereon, was given, as required by law, to all
stockholders entitled to vote thereon. The amendment of the Articles of
Incorporation of the Corporation as herein above set forth was approved by the
stockholders of the Corporation at the Adjourned Special Meeting held on April
18, 1980 by the affirmative vote of a majority of all the votes entitled to be
cast thereon.
FOURTH: The amendment of the Articles of Incorporation of the
Corporation as herein above set forth has been duly advised by the Board of
Directors and approved by the stockholders of the Corporation.
FIFTH: The Articles of Amendment, as stated above, shall become
effective on the 1st of May, 1980.
IN WITNESS WHEREOF, SHEARSON DAILY DIVIDEND INC, has caused these
presents to be signed in its name on its behalf by its President, and
witnessed by its Secretary on April 30, 1980.
SHEARSON DAILY DIVIDEND INC.
BY /s/ Heath B. McLendon
Heath B. McLendon,
President
WITNESS:
/s/ Daniel C. Maclean
Daniel C. Maclean, Secretary
THE UNDERSIGNED, President of SHEARSON DAILY DIVIDEND INC., who executed
on behalf of said Corporation the foregoing Articles of Amendment, of which
this certificate is made a part, hereby acknowledges, in the name and on
behalf of said Corporation, the foregoing Articles of Amendment to be the
corporate act of said Corporation and further certifies that, to the best of
his knowledge, information and belief, the matters and facts set forth therein
with respect to the approval thereof are true in all material respects, under
the penalties of perjury.
/s/ Heath B. McLendon
Heath B. McLendon, President
SHEARSON DAILY DIVIDEND INC.
ARTICLES OF AMENDMENT
Shearson Daily Dividend Inc., a Maryland corporation having its
principal office in the state of Maryland in Baltimore City, (hereinafter
called the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland, that:
FIRST: The Charter of the Corporation is hereby amended by striking out
Article SECOND and inserting in lieu thereof the following:
ARTICLE SECOND
NAME
The name of the Corporation is Shearson Lehman Daily Dividend Inc.
SECOND: The foregoing amendment to the Charter of the Corporation has
been advised by a majority of the entire Board of Directors of the Corporation
and approved by vote of the holders of a majority of the outstanding shares of
stock of the Corporation.
IN WITNESS WHEREOF, Shearson Daily Dividend Inc. has caused these
present to be signed in its name and on its behalf by its President, Heath B.
McLendon, attested by its Secretary, Peter Meenan, on January 20, 1988.
The Secretary acknowledges these Articles of Amendment to be the
corporate act of the Corporation and states that to the best of his knowledge,
information and belief the matters and facts set forth in these Articles with
respect to the authorization and approval of the amendment of the
Corporation's Charter are true in all material respects and that this
statement is made under the penalties of perjury.
SHEARSON DAILY DIVIDEND INC.
By: /s/ Heath B. McLendon
Heath B. McLendon, President
Attest:
/s/ Peter Meenan
Peter Meenan, Secretary
ARTICLES SUPPLEMENTARY
SHEARSON LEHMAN DAILY DIVIDEND INC.
Shearson Lehman Daily Dividend Inc., a Maryland corporation (the
"corporation"), hereby certifies:
FIRST: The total number of shares of capital stock that the
Corporation has authority to issue has been increased by the Board of
Directors in accordance with Section 2-105(c) of the Maryland General
Corporation Law.
SECOND: Immediately prior to the increase, the total number of
shares of stock of all classes the Corporation has authority to issue was
10,000,000,000 shares, per value $.01 per shares, were Classified as Common
Stock. The agregate per value of all shares of all classes of the Corporation
having per balue was $100,000,000.
THIRD: As increased, the total number of shares of stock the
Corporation has authority to issue is 20,000,000,000 shares, per value $ .01
per share, all of which shares, are classified as Common Stock. The aggregate
per value of all shares of all classes of the Corporation having per value is
$200,000,000.
FOURTH: The Corporation is registered as an open-end company under
the Investment Company Act of 1940.
IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be executed on its behaf by its President and attested by its
Secretary this 2nd day of December, 1988, adn the undersigned officers
acknowledge that these Articles Supplementary are the act of the Corporation
and certify, under penalties of perjury, that to the best of their knowledge,
infomration and belief all matters and facts set forth herein relating to the
authorization and approval of these Articles Supplementary are true is all
material respects.
ATTEST: SHEARSON LEHMAN DAILY DIVIDEND
INC.
/s/ Stephen E. Cavan By:/s/ Thomas A. Belshe*
Stephen E. Cavan, Secretary Thomas A. Belshe, President
ARTICLES OF TRANSFER
Lehman Management Money Market Funds, Inc. (the "Transferor"), a
Maryland corporation having its principal office in Baltimore City, Maryland,
on behalf of Lehman Management Cash Reserves Fund (the "Portfolio"), and
Shearson Lehman Daily Dividend Inc. (the "Transferee"), a Maryland corporation
having its principal place of business at Two World Trade Center, New York,
New York 10048, hereby certify to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Transferor hereby agrees to sell , lease,
exchange, or transfer all or hereby agrees to sell, lease, exchange, or
transfer all or substantially all of the Portfolio's property and assets to
the Transferee.
SECOND: The name of the Transferor is Lehman Management Money Market
Funds, Inc., a Maryland corporation, and the name of the Transferee is
Shearson Lehman Daily Dividend Inc., a Maryland corporation.
THIRD: The principal office of the Transferor in Maryland is Baltimore
City, Maryland and the principal office of the Transferee in Maryland is
Baltimore City, Maryland.
FOURTH: Said transaction shall consist of the following: (i) the
transfer by the Transferor to the Transferee of all or substantially all of
the Portfolio's assets in exchange solely for consideration consisting of
shares of the Transferee's common stock, par value $.01 per share; (ii) the
assumption by the Transferee of certain identified liabilities of the
Portfolio; (iii) the pro rata distribution of shares of the Transferee's
common stock to the Transferor's shareholders, holding shares classified as
shares of the Portfolio; (iv) the cancellation of the Tranferor's outstanding
shares of common stock, classified as shares of the Portfolio, and (v) the
subsequent termination of the Transferor.
FIFTH: The number of full and fractional shares of the Transferee's
common stock to be issued to the Transferor's shareholders will be determined
by dividing the value of the Portfolio's net assets as of the close of
business on the New York Stock Exchange on December 2, 1988 (the "Closing
Date") by the net asset value of one share of the Transferee's shares of
common stock as of the close of business of the New York Stock Exchange on the
Closing Date.
SIXTH: The assets of the Portfolio to be acquired by the Transferee
pursuant to the transaction shall consist of all property owned by the
Portfolio including, without limitation, all cash, securities, commodities and
future interests and dividends or interest receivable which are owned by the
Portfolio and any deferred or prepaid expenses shown as an asset on the books
of the Portfolio as of the close of business on the Closing Date. Neither the
Portfolio nor the Transferee own any interest in land in the State of
Maryland.
SEVENTH: The terms and conditions of the subject transaction have been
advised, authorized and approved by the board of directors of Lehman
Management Money Market Funds, Inc. on behalf of the Lehman Management Cash
Reserves Fund and by the board of directors of Shearson Lehman Daily Dividend
Inc. in the manner required by their respective charters and in accordance
with the laws of the State of Maryland. In addition, a majority of the
shareholders of the Portfolio have voted in approval of the transaction as
required by the Transferor's Articles of Incorporation and applicable Maryland
law.
EIGHTH: Upon acceptance for record of these Articles, the transfer is
to be effective at 5:00 p.m. on December 2, 1988.
IN WITNESS WHEREOF, Lehman Management Money Market Funds, Inc., on
behalf of Lehman Management Cash Reserves Fund, has caused these presents to
be signed in its name and on its behalf by its President or Vice President and
attested to by its Secretary or Assistant Secretary on December 2, 1988, and
Shearson Lehman Daily Dividend Inc. has caused these presents to be signed in
its name and on its behalf by its President or Vice President and attested to
by its Secretary or Assistant Secretary on December 2, 1988.
IN WITNESS WHEREOF, these Articles of Transfer have been executed by or
on behalf of each party on December 2, 1988. Each person executing these
Articles of Transfer on behalf of the Transferor and Transferee acknowledges
them to be the act of the entity on behalf of which he has executed them and
certifies, under the penalties of perjury, that to the best of his or her
knowledge, information and belief, all matters and facts set forth herein with
respect to the authorization and approval of these Articles are true in all
material respects.
ATTEST: LEHMAN MANAGEMENT MONEY MARKET FUNDS, INC.
on behalf of LEHMAN MANAGEMENT CASH RESERVES
FUND
/s/ Mary R. Stone By: /s/
Secretary President
ATTEST: SHEARSON LEHMAN DAILY DIVIDEND INC.
/s/ Stephen E. Cavan By: /s/ Heath B. McLendon
Secretary Chairman of the Board
ARTICLES OF TRANSFER
Cash Reserve Management, Inc. (the "Transferor"), a Maryland corporation
having its principal office in Baltimore City, Maryland and Shearson Lehman
Daily Dividend Inc. (the "Transferee"), a Maryland corporation having its
principal place of business at Two World Trade Center, New York, New York
10048, hereby certify to the State Department of Assessments and Taxation of
Maryland that:
FIRST: The Transferor hereby agrees to sell, lease, exchange, or
transfer all or substantially all of its property and assets to the
Transferee.
SECOND: The name of the Transferor is Cash Reserve Management, Inc., a
Maryland corporation, and the name of the Transferee is Shearson Lehman Daily
Dividend Inc., a Maryland corporation.
THIRD: The principal office of the Transferor into Maryland is
Baltimore City, Maryland and the principal office of the Transferee in
Maryland is Baltimore City, Maryland.
FOURTH: Said transaction shall consist of the following: (i) the
transfer by the Transferor to the Transferee of all or substantially all of
the Transferor's assets in exchange solely for consideration consisting of
shares of the Transferee's common stock, par value $.01 per share; (ii) the
assumption by the Transferee of certain identified liabilities of the
Tranferor; (iii) the pro rata distribution of shares of the Transferee's
common stock to the Transferor's shareholders; (iv) the cancellation of the
Tranferor's outstanding shares of common stock; and (v) the subsequent
termination of the Transferor.
FIFTH: The number of full and fractional shares of the Transferee's
common stock to be issued to the Transferor's shareholders will be determined
by dividing the value of the Transferor's net assets as of the close of
business on the New York Stock Exchange on December 2, 1988 (the "Closing
Date") by the net asset value of one share of the Transferee's shares of
common stock as of the close of business of the New York Stock Exchange on the
Closing Date.
SIXTH: The assets of the Transferor to be acquired by the Transferee
pursuant to the transaction shall consist of all property owned by the
Transferor including, without limitation, all cash, securities, commodities
and future interests and dividends or interest receivable which are owned by
the Transferor and any deferred or prepaid expenses shown as an asset on the
books of the Transferor as of the close of business on the Closing Date.
Neither the Transferor nor the Transferee own any interest in land in the
State of Maryland.
SEVENTH: The terms and conditions of the subject transaction have been
advised, authorized and approved by the board of directors of each of the
Transferor and Transferee in the manner required by their respective charters
and in accordance with the laws of the State of Maryland. In addition, a
majority of the shareholders of the Transferor have voted in approval of the
transaction as required by the Transferor's Articles of Incorporation and
applicable Maryland law.
EIGHTH: Upon acceptance for record of these Articles, the transfer is
to be effective at 5:00 p.m. on December 2, 1988.
IN WITNESS WHEREOF, Cash Reserve Management, Inc. has caused these
presents to be signed in its name and on its behalf by its President or Vice
President and attested to by its Secretary or Assistant Secretary on December
2, 1988, and Shearson Lehman Daily Dividend Inc. has caused these presents to
be signed in its name and on its behalf by its President or Vice President and
attested to by its Secretary or Assistant Secretary on December 2, 1988.
IN WITNESS WHEREOF, these Articles of Transfer have been executed by or
on behalf of each party on December 2, 1988. Each person executing these
Articles of Transfer on behalf of the Transferor and Transferee acknowledges
them to be the act of the entity on behalf of which he has executed them and
certifies, under the penalties of perjury, that to the best of his or here
knowledge, information and belief, all matters and facts set forth herein with
respect to the authorization and approval of these Articles are true in all
material respects.
ATTEST: LEHMAN MANAGEMENT MONEY MARKET FUNDS, INC.
on behalf of LEHMAN MANAGEMENT CASH RESERVES
FUND
/s/ Mary R. Stone By: /s/ Thomas A. Belshe
Secretary President
ATTEST: SHEARSON LEHMAN DAILY DIVIDEND INC.
/s/ Stephen E. Cavan By: /s/ Heath B. McLendon
Secretary Chairman of the Board
ARTICLES OF TRANSFER
Hutton AMA Cash Fund, Inc. (the "Transferor"), a Maryland corporation
having its principal office in Baltimore City, Maryland and Shearson Lehman
Daily Dividend Inc. (the "Transferee"), a Maryland corporation having its
principal place of business at Two World Trade Center, New York, New York
10048, hereby certify to the State Department of Assessments and Taxation of
Maryland that:
FIRST: The Transferor hereby agrees to sell, lease, exchange, or
transfer all or substantially all of its property and assets to the
Transferee.
SECOND: The name of the Transferor is Hutton AMA Cash Fund, Inc., a
Maryland corporation, and the name of the Transferee is Shearson Lehman Daily
Dividend Inc., a Maryland corporation.
THIRD: The principal office of the Transferor into Maryland is
Baltimore City, Maryland and the principal office of the Transferee in
Maryland is Baltimore City, Maryland.
FOURTH: Said transaction shall consist of the following: (i) the
transfer by the Transferor to the Transferee of all or substantially all of
theTransferor's assets in exchange solely for consideration consisting of
shares of the Transferee's common stock, par value $.01 per share; (ii) the
assumption by the Transferee of certain identified liabilities of the
Transferor; (iii) the pro rata distribution of shares of the Transferee's
common stock to the Transferor's shareholders; (iv) the cancellation of the
Tranferor's outstanding shares of common stock and (v) the subsequent
termination of the Transferor.
FIFTH: The number of full and fractional shares of the Transferee's
common stock to be issued to the Transferor's shareholders will be determined
by dividing the value of the Transferor's net assets as of the close of
business on the New York Stock Exchange on December 2, 1988 (the "Closing
Date") by the net asset value of one share of the Transferee's shares of
common stock as of the close of business of the New York Stock Exchange on the
Closing Date.
SIXTH: The assets of the Transferor to be acquired by the Transferee
pursuant to the transaction shall consist of all property owned by the
Transferor including, without limitation, all cash, securities, commodities
and future interests and dividends or interest receivable which are owned by
the Transferor and any deferred or prepaid expenses shown as an asset on the
books of the Transferor as of the close of business on the Closing Date.
Neither the Transferor nor the Transferee own any interest in land in the
State of Maryland.
SEVENTH: The terms and conditions of the subject transaction have been
advised, authorized and approved by the board of directors of each of the
Transferor and Transferee in the manner required by their respective charters
and in accordance with the laws of the State of Maryland. In addition, a
majority of the shareholders of the Transferor have voted in approval of the
transaction as required by the Transferor's Articles of Incorporation and
applicable Maryland law.
EIGHTH: Upon acceptance for record of these Articles, the transfer is
to be effective at 5:00 p.m. on December 2, 1988.
IN WITNESS WHEREOF, Hutton AMA Cash Fund, Inc. has caused these presents
to be signed in its name and on its behalf by its President or Vice President
and attested to by its Secretary or Assistant Secretary on December 2, 1988,
and Shearson Lehman Daily Dividend Inc. has caused these presents to be signed
in its name and on its behalf by its President or Vice President and attested
to by its Secretary or Assistant Secretary on December 2, 1988.
IN WITNESS WHEREOF, these Articles of Transfer have been executed by or
on behalf of each party on December 2, 1988. Each person executing these
Articles of Transfer on behalf of the Transferor and Transferee acknowledges
them to be the act of the entity on behalf of which he has executed them and
certifies, under the penalties of perjury, that to the best of his or here
knowledge, information and belief, all matters and facts set forth herein with
respect to the authorization and approval of these Articles are true in all
material respects.
ATTEST: LEHMAN MANAGEMENT MONEY MARKET FUNDS, INC.
on behalf of LEHMAN MANAGEMENT CASH RESERVES
FUND
/s/ Stephen E. Cavan By: /s/ Thomas A Belshe
Secretary President
ATTEST: SHEARSON LEHMAN DAILY DIVIDEND INC.
/s/ Stephen E. Cavan By: /s/ Heath B. McLendon
Secretary Chairman of the Board
SHEARSON LEHMAN DAILY DIVIDEND INC.
ARTICLES OF AMENDMENT
Shearson Lehman Daily Dividend Inc., a Maryland corporation having its
principal office in the State of Maryland in Baltimore City (hereinafter
called the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The Articles of Incorporation of the Corporation are hereby
amended by deleting SECOND and inserting in lieu thereof the following:
SECOND: The name of the corporation (hereinafter called the
"Corporation") is Smith Barney Shearson Daily Dividend Fund Inc.
SECOND: The foregoing amendment to the charter was advised by the board
of directors and approved by the stockholders.
The undersigned Chairman acknowledges these Articles of Amendment to be
the corporate act of the Corporation and states to the best of his knowledge,
information and belief that the matters and facts set forth in these Articles
with respect to authorization and approval are true in all material respects
and that this statement is made under the penalties of perjury.
IN WITNESS WHEREOF, Shearson Lehman Daily Dividend Inc. has caused these
Articles of Amendment to be signed in its name and on its behalf by its
Chairman and witnessed by its Assistant Secretary on July 30, 1993.
Shearson Lehman Daily Dividend Inc.
By: /s/ Heath B. McLendon, Chairman
Heath B. McLendon,
Chairman
WITNESS:
/s/ Lee D. Augsburger
Lee D. Augsburger,
Assistant Secretary
shared/domestic/clients/shearson/funds/sddi/amend5
Exhibit 5
ADVISORY AGREEMENT
SMITH BARNEY SHEARSON DAILY DIVIDEND FUND INC.
July 30, 1993
The Greenwich Street Advisors Division of
Mutual Management Corp.
Two World Trade Center
New York, New York 10048
Dear Sirs:
Smith Barney Shearson Daily Dividend Fund Inc. (the "Company"), a
corporation organized under the laws of the state of Maryland, confirms its
agreement with the Greenwich Street Advisors Division of Mutual Management
Corp. (the "Adviser"), as follows:
1. Investment Description; Appointment
The Company desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the investment objective(s),
policies and limitations specified in its Articles of Incorporation, as
amended from time to time (the "Articles of Incorporation"), in the prospectus
(the "Prospectus") and the statement of additional information (the
"Statement") filed with the Securities and Exchange Commission as part of the
Company's Registration Statement on Form N-1A, as amended from time to time,
and in the manner and to the extent as may from time to time be approved by
the Board of Directors of the Company (the "Board"). Copies of the
Prospectus, the Statement and the Articles of Incorporation have been or will
be submitted to the Adviser. The Company agrees to provide copies of all
amendments to the Prospectus, the Statement and the Articles of Incorporation
to the Adviser on an on-going basis. The Company desires to employ and hereby
appoints the Adviser to act as the investment adviser to the Company. The
Adviser accepts the appointment and agrees to furnish the services for the
compensation set forth below.
2. Services as Investment Adviser
Subject to the supervision, direction and approval of the Board of the
Company, the Adviser will (a) manage the Company's holdings in accordance with
the Company's investment objective(s) and policies as stated in the Articles
of Incorporation, the Prospectus and the Statement; (b) make investment
decisions for the Company; (c) place purchase and sale orders for portfolio
transactions for the Company; and (d) employ professional portfolio managers
and securities analysts who provide research services to the Company. In
providing those services, the Adviser will conduct a continual program of
investment, evaluation and, if appropriate, sale and reinvestment of the
Company's assets.
3. Brokerage
In selecting brokers or dealers to execute transactions on behalf of the
Company, the Adviser will seek the best overall terms available. In assessing
the best overall terms available for any transaction, the Adviser will
consider factors it deems relevant, including, but not limited to, the breadth
of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on
a continuing basis. In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms available, the Adviser
is authorized to consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934), provided
to the Company and/or other accounts over which the Adviser or its affiliates
exercise investment discretion.
4. Information Provided to the Company
The Adviser will keep the Company informed of developments materially
affecting the Company's holdings, and will, on its own initiative, furnish the
Company from time to time with whatever information the Adviser believes is
appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the services
listed in paragraphs 2 and 3 above. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company in
connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Adviser against any liability to the Company or to its shareholders to which
the Adviser would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or by
reason of the Adviser's reckless disregard of its obligations and duties under
this Agreement.
6. Compensation
In consideration of the services rendered pursuant to this Agreement,
the Company will pay the Adviser on the first business day of each month a fee
for the previous month at the annual rate of: .25 of 1.00% of the first $50
million of the Company's average daily net assets; and .30 of 1.00% of the
Company's average daily net assets in excess of $50 million. The fee for the
period from the Effective Date (defined below) of the Agreement to the end of
the month during which the Effective Date occurs shall be prorated according
to the proportion that such period bears to the full monthly period. Upon any
termination of this Agreement before the end of a month, the fee for such part
of that month shall be prorated according to the proportion that such period
bears to the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining fees payable to
the Adviser, the value of the Company's net assets shall be computed at the
times and in the manner specified in the Prospectus and/or the Statement.
7. Expenses
The Adviser will bear all expenses in connection with the performance of
its services under this Agreement. The Company will bear certain other
expenses to be incurred in its operation, including, but not limited to,
investment advisory and administration fees; fees for necessary professional
and brokerage services; fees for any pricing service; the costs of regulatory
compliance; and costs associated with maintaining the Company's legal
existence and shareholder relations.
8. Reduction of Fee
If in any fiscal year the aggregate expenses of the Company (including
fees pursuant to this Agreement and the Company's administration agreements,
but excluding interest, taxes, brokerage and extraordinary expenses) exceed
the expense limitation of any state having jurisdiction over the Company, the
Adviser will reduce its fee to the Company by the proportion of such excess
expense equal to the proportion that its fee thereunder bears to the aggregate
of fees paid by the Company for investment advice and administration in that
year, to the extent required by state law. A fee reduction pursuant to this
paragraph 8, if any, will be estimated, reconciled and paid on a monthly
basis.
9. Services to Other Companies or Accounts
The Company understands that the Adviser now acts, will continue to act
and may act in the future as investment adviser to fiduciary and other managed
accounts, and as investment adviser to other investment companies, and the
Company has no objection to the Adviser's so acting, provided that whenever
the Company and one or more other investment companies advised by the Adviser
have available funds for investment, investments suitable and appropriate for
each will be allocated in accordance with a formula believed to be equitable
to each company. The Company recognizes that in some cases this procedure may
adversely affect the size of the position obtainable for the Company. In
addition, the Company understands that the persons employed by the Adviser to
assist in the performance of the Adviser's duties under this Agreement will
not devote their full time to such service and nothing contained in this
Agreement shall be deemed to limit or restrict the right of the Adviser or any
affiliate of the Adviser to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
10. Term of Agreement
This Agreement shall become effective as of the "Closing Date" as that
term is defined in that certain Asset Purchase Agreement executed among Smith
Barney, Harris Upham & Co. Incorporated, Primerica Corporation and Shearson
Lehman Brothers Inc., dated March 12, 1993 (the "Effective Date") and shall
continue for an initial two-year term and shall continue thereafter so long as
such continuance is specifically approved at least annually by (i) the Board
of the Company or (ii) a vote of a "majority" (as that term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act")) of the Company's
outstanding voting securities, provided that in either event the continuance
is also approved by a majority of the Board who are not "interested persons"
(as defined in the 1940 Act) of any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable, without penalty, on 60 days' written notice, by the
Board of the Company or by vote of holders of a majority of the Company's
shares, or upon 90 days' written notice, by the Adviser. This Agreement will
also terminate automatically in the event of its assignment (as defined in the
1940 Act and the rules thereunder).
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the
enclosed copy of this Agreement.
Very truly yours,
SMITH BARNEY SHEARSON
DAILY DIVIDEND FUND INC.
By: /s/ Heath B. McLendon
Name: Heath B. McLendon
Title: Chairman of the Board
Accepted:
THE GREENWICH STREET ADVISORS
DIVISION OF MUTUAL MANAGEMENT CORP.
By:/s/ Christina T. Sydor
Name: Christina T. Sydor
Title: Managing Director
4
shared/domestic/clients/shearson/funds/sddi/advis.doc
Exhibit 6
DISTRIBUTION AGREEMENT
SMITH BARNEY SHEARSON DAILY DIVIDEND FUND INC.
July 30,
1993
Smith Barney Shearson Inc.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, Smith Barney Shearson
Daily Dividend Fund Inc., a Corporation organized under the laws
of the State of Maryland has agreed that Smith Barney Shearson
Inc.("SBS") shall be, for the period of this Agreement, the
distributor of shares (the "Shares") of the Fund.
1. Services as Distributor
1.1 SBS will act as agent for the distribution of
Shares covered by the registration statement, prospectus and
statement of additional information then in effect under the
Securities Act of 1933, as amended (the "1933 Act"), and the
Investment Company Act of 1940, as amended (the "1940 Act").
1.2 SBS agrees to use its best efforts to solicit
orders for the sale of Shares and will undertake such advertising
and promotion as it believes is reasonable in connection with such
solicitation.
1.3 All activities by SBS as distributor of the
Shares shall comply with all applicable laws, rules, and
regulations, including, without limitation, all rules and
regulations made or adopted by the Securities and Exchange
Commission (the "SEC") or by any securities association registered
under the Securities Exchange Act of 1934.
1.4 SBS will provide one or more persons during
normal business hours to respond to telephone questions concerning
the Fund.
1.5 SBS will transmit any orders received by it for
purchase or redemption of Shares to The Shareholder Services
Group, Inc. ("TSSG"), the Fund's transfer and dividend agent, or
any successor to TSSG of which the Fund has notified SBS in
writing.
1.6 Whenever in their judgment such action is
warranted for any reason, including, without limitation, market,
economic or political conditions, the Fund's officers may decline
to accept any orders for, or make any sales of, the Shares until
such time as those officers deem it advisable to accept such
orders and to make such sales.
1.7 SBS will act only on its own behalf as principal
should it choose to enter into selling agreements with selected
dealers or others.
2. Duties of the Fund
2.1 The Fund agrees at its own expense to execute any
and all documents, to furnish any and all information and to take
any other actions that may be reasonably necessary in connection
with the qualification of the Shares for sale in those states that
SBS may designate.
2.2 The Fund shall furnish from time to time for use
in connection with the sale of the Shares, such information
reports with respect to the Fund and its Shares as SBS may
reasonably request, all of which shall be signed by one or more of
the Fund's duly authorized officers; and the Fund warrants that
the statements contained in any such reports, when so signed by
the Fund's officers, shall be true and correct. The Fund shall
also furnish SBS upon request with (a) annual audits of the Fund's
books and accounts made by independent certified public
accountants regularly retained by the Fund; (b) semi-annual
unaudited financial statements pertaining to the Fund; (c)
quarterly earnings statements prepared by the Fund; (d) a monthly
itemized list of the securities in the Fund's portfolio; (e)
monthly balance sheets as soon as practicable after the end of
each month; and (f) from time to time such additional information
regarding the Fund's financial condition as SBS may reasonably
request.
3. Representations and Warranties
The Fund represents to SBS that all registration statements,
prospectuses and statements of additional information filed by the
Fund with the SEC under the 1933 Act and the 1940 Act with respect
to the Shares have been carefully prepared in conformity with the
requirements of the 1933 Act, the 1940 Act and the rules and
regulations of the SEC thereunder. As used in this Agreement, the
terms "registration statement", "prospectus" and "statement of
additional information" shall mean any registration statement,
prospectus and statement of additional information filed by the
Fund with the SEC and any amendments and supplements thereto which
at any time shall have been filed with the SEC. The Fund
represents and warrants to SBS that any registration statement,
prospectus and statement of additional information, when such
registration statement becomes effective, will include all
statements required to be contained therein in conformance with
the 1933 Act, the 1940 Act and the rules and regulations of the
SEC; that all statements of fact contained in any registration
statement, prospectus or statement of additional information will
be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any
prospectus or statement of additional information when such
registration statement becomes effective will include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of the Fund's Shares. The
Fund may, but shall not be obligated to, propose from time to time
such amendment or amendments to any registration statement and
such supplement or supplements to any prospectus or statement of
additional information as, in the light of future developments,
may, in the opinion of the Fund's counsel, be necessary or
advisable. If the Fund shall not propose such amendment or
amendments and/or supplement or supplements within fifteen days
after receipt by the Fund of a written request from SBS to do so,
SBS may, at its option, terminate this Agreement. The Fund shall
not file any amendment to any registration statement or supplement
to any prospectus or statement of additional information without
giving SBS reasonable notice thereof in advance; provided,
however, that nothing contained in this Agreement shall in any way
limit the Fund's right to file at any time such amendments to any
registration statement and/or supplements to any prospectus or
statement of additional information, of whatever character, as the
Fund may deem advisable, such right being in all respects absolute
and unconditional.
4. Indemnification
4.1 The Fund authorizes SBS and dealers to use any
prospectus or statement of additional information furnished by the
Fund from time to time, in connection with the sale of the Shares.
The Fund agrees to indemnify, defend and hold SBS, its several
officers and directors, and any person who controls SBS within the
meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims,
demands or liabilities and any such counsel fees incurred in
connection therewith) which SBS, its officers and directors, or
any such controlling person, may incur under the 1933 Act or under
common law or otherwise, arising out of or based upon any untrue
statement, or alleged untrue statement, of a material fact
contained in any registration statement, any prospectus or any
statement of additional information or arising out of or based
upon any omission, or alleged omission, to state a material fact
required to be stated in any registration statement, any
prospectus or any statement of additional information or necessary
to make the statements in any thereof not misleading; provided,
however, that the Fund's agreement to indemnify SBS, its officers
or directors, and any such controlling person shall not be deemed
to cover any claims, demands, liabilities or expenses arising out
of any statements or representations made by SBS or its
representatives or agents other than such statements and
representations as are contained in any prospectus or statement of
additional information and in such financial and other statements
as are furnished to SBS pursuant to paragraph 2.2 of this
Agreement; and further provided that the Fund's agreement to
indemnify SBS and the Fund's representations and warranties herein
before set forth in paragraph 3 of this Agreement shall not be
deemed to cover any liability to the Fund or its shareholders to
which SBS would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
its duties, or by reason of SBS's reckless disregard of its
obligations and duties under this Agreement. The Fund's agreement
to indemnify SBS, its officers and directors, and any such
controlling person, as aforesaid, is expressly conditioned upon
the Fund's being notified of any action brought against SBS, its
officers or directors, or any such controlling person, such
notification to be given by letter or by telegram addressed to the
Fund at its principal office in New York, New York and sent to the
Fund by the person against whom such action is brought, within ten
days after the summons or other first legal process shall have
been served. The failure so to notify the Fund of any such action
shall not relieve the Fund from any liability that the Fund may
have to the person against whom such action is brought by reason
of any such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of the Fund's
indemnity agreement contained in this paragraph 4.1. The Fund
will be entitled to assume the defense of any suit brought to
enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing chosen
by the Fund and approved by SBS. In the event the Fund elects to
assume the defense of any such suit and retains counsel of good
standing approved by SBS, the defendant or defendants in such suit
shall bear the fees and expenses of any additional counsel
retained by any of them; but if the Fund does not elect to assume
the defense of any such suit, or if SBS does not approve of
counsel chosen by the Fund, the Fund will reimburse SBS, its
officers and directors, or the controlling person or persons named
as defendant or defendants in such suit, for the fees and expenses
of any counsel retained by SBS or them. The Fund's
indemnification agreement contained in this paragraph 4.1 and the
Fund's representations and warranties in this Agreement shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of SBS, its officers and
directors, or any controlling person, and shall survive the
delivery of any of the Fund's Shares. This agreement of indemnity
will inure exclusively to SBS's benefit, to the benefit of its
several officers and directors, and their respective estates, and
to the benefit of the controlling persons and their successors.
The Fund agrees to notify SBS promptly of the commencement of any
litigation or proceedings against the Fund or any of its officers
or trustees in connection with the issuance and sale of any of the
Fund's Shares.
4.2 SBS agrees to indemnify, defend and hold the
Fund, its several officers and Directors, and any person who
controls the Fund within the meaning of Section 15 of the 1933
Act, free and harmless from and against any and all claims,
demands, liabilities and expenses (including the costs of
investigating or defending such claims, demands or liabilities and
any counsel fees incurred in connection therewith) that the Fund,
its officers or Directors or any such controlling person may incur
under the 1933 Act, or under common law or otherwise, but only to
the extent that such liability or expense incurred by the Fund,
its officers or Directors, or such controlling person resulting
from such claims or demands shall arise out of or be based upon
any untrue, or alleged untrue, statement of a material fact
contained in information furnished in writing by SBS to the Fund
and used in the answers to any of the items of the registration
statement or in the corresponding statements made in the
prospectus or statement of additional information, or shall arise
out of or be based upon any omission, or alleged omission, to
state a material fact in connection with such information
furnished in writing by SBS to the Fund and required to be stated
in such answers or necessary to make such information not
misleading. SBS's agreement to indemnify the Fund, its officers
or Directors, and any such controlling person, as aforesaid, is
expressly conditioned upon SBS being notified of any action
brought against the Fund, its officers or Directors, or any such
controlling person, such notification to be given by letter or
telegram addressed to SBS at its principal office in New York, New
York and sent to SBS by the person against whom such action is
brought, within ten days after the summons or other first legal
process shall have been served. SBS shall have the right to
control the defense of such action, with counsel of its own
choosing, satisfactory to the Fund, if such action is based solely
upon such alleged misstatement or omission on SBS's part, and in
any other event the Fund, its officers or Directors or such
controlling person shall each have the right to participate in the
defense or preparation of the defense of any such action. The
failure to so notify SBS of any such action shall not relieve SBS
from any liability that SBS may have to the Fund, its officers or
Directors, or to such controlling person by reason of any such
untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of SBS's indemnity agreement
contained in this paragraph 4.2. SBS agrees to notify the Fund
promptly of the commencement of any litigation or proceedings
against SBS or any of its officers or directors in connection with
the issuance and sale of any of the Fund's Shares.
4.3 In case any action shall be brought against any
indemnified party under paragraph 4.1 or 4.2, and it shall notify
the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to
the extent that it shall wish to do so, to assume the defense
thereof with counsel satisfactory to such indemnified party. If
the indemnifying party opts to assume the defense of such action,
the indemnifying party will not be liable to the indemnified party
for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other
than (a) reasonable costs of investigation or the furnishing of
documents or witnesses and (b) all reasonable fees and expenses of
separate counsel to such indemnified party if (i) the indemnifying
party and the indemnified party shall have agreed to the retention
of such counsel or (ii) the indemnified party shall have concluded
reasonably that representation of the indemnifying party and the
indemnified party by the same counsel would be inappropriate due
to actual or potential differing interests between them in the
conduct of the defense of such action.
5. Effectiveness of Registration
None of the Fund's Shares shall be offered by either SBS or
the Fund under any of the provisions of this Agreement and no
orders for the purchase or sale of the Shares under this Agreement
shall be accepted by the Fund if and so long as the effectiveness
of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provision
of the 1933 Act or if and so long as a current prospectus as
required by Section 5(b) (2) of the 1933 Act is not on file with
the SEC; provided, that nothing contained in this paragraph 5
shall in any way restrict or have an application to or bearing
upon the Fund's obligation to repurchase its Shares from any
shareholder in accordance with the provisions of the Fund's
prospectus, statement of additional information or Articles of
Incorporation dated Date of Articles of Incorporation, as amended
from time to time.
6. Notice to SBS
The Fund agrees to advise SBS immediately in writing:
(a) of any request by the SEC for amendments to the
registration statement, prospectus or statement of additional
information then in effect or for additional information;
(b) In the event of the issuance by the SEC of any
stop order suspending the effectiveness of the registration
statement, prospectus or statement of additional information then
in effect or the initiation of any proceeding for that purpose;
(c) of the happening of any event that makes untrue
any statement or a material fact made in the registration
statement, prospectus or statement of additional information then
in effect or that requires the making of a change in such
registration statement, prospectus or statement of additional
information in order to make the statements therein not
misleading; and
(d) of all actions of the SEC with respect to any
amendment to any registration statement, prospectus or statement
of additional information which may from time to time be filed
with the SEC.
7. Term of the Agreement
This Agreement shall become effective as of the "Closing
Date" as that term is defined in that certain Asset Purchase
Agreement executed among SBS, Primerica Corporation and Shearson
Lehman Brothers Inc., dated March 12, 1993 and continues for
successive annual periods thereafter so long as such continuance
is specifically approved at least annually by (a) the Fund's Board
of Directors or (b) by a vote of a majority (as defined in the
1940 Act) of the Fund's outstanding voting securities, provided
that in either event the continuance is also approved by a
majority of the Directors of the Fund who are not interested
persons (as defined in the 1940 Act) of any party to this
Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable,
without penalty, on 60 days' notice by the Fund's Board of
Directors, by vote of the holders of a majority of the Fund's
Shares, or on 90 days' notice by SBS. This Agreement will also
terminate automatically in the event of its assignment (as defined
in the 1940 Act).
8. Miscellaneous
The Fund recognizes that directors, officers and employees
of SBS may from time to time serve as directors, trustees,
officers and employees of corporations and business trusts
(including other investment companies) and that such other
corporations and trusts may include the name "Smith Barney
Shearson" as part of their name, and that SBS or its affiliates
may enter into distribution or other agreements with such other
corporations and trusts. If SBS ceases to act as the distributor
of the Shares, the Fund agrees that, at SBS's request, the Fund's
license to use the word ""Smith Barney Shearson"" will terminate
and that the Fund will take all necessary action to change the
name of the Fund to a name not including the words "Smith Barney
Shearson."
If the foregoing is in accordance with your understanding,
kindly indicate your acceptance
of this Agreement by signing and returning to us the enclosed copy
of this Agreement.
Very truly yours,
SMITH BARNEY SHEARSON DAILY
DIVIDEND FUND INC.
By: /s/ Heath B. McLendon
Title Chairman of the Board
Accepted:
SMITH BARNEY SHEARSON INC.
By: /s/ Christina T. Sydor
Authorized Officer
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Page: 2
7
Exhibit 9 (a)
TRANSFER AGENCY AND REGISTRAR AGREEMENT
AGREEMENT, dated as of August 2, 1993, between Smith Barney Shearson
Daily Dividend Fund Inc. (the "Fund"), a corporation organized under the laws
of Maryland and having its principal place of business at Two World Trade
Center, New york, New York 10048 and THE SHAREHOLDER SERVICES GROUP, INC.
(MA) (the "Transfer Agent"), a Massachusetts corporation with principal
offices at One Exchange Place, 53 State Street, Boston, Massachusetts 02109.
W I T N E S S E T H
That for and in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and the Transfer Agent agree as follows:
1. Definitions. Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have the following
meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, Partnership Agreement, or similar
organizational document as the case may be, of the Fund as the same may be
amended from time to time.
(b) "Authorized Person" shall be deemed to include any person,
whether or not such person is an officer or employee of the Fund, duly
authorized to give Oral Instructions or Written Instructions on behalf of the
Fund as indicated in a certificate furnished to the Transfer Agent pursuant to
Section 4(c) hereof as may be received by the Transfer Agent from time to
time.
(c) "Board of Directors" shall mean the Board of Directors, Board
of Trustees or, if the Fund is a limited partnership, the General Partner(s)
of the Fund, as the case may be.
(d) "Commission" shall mean the Securities and Exchange
Commission.
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time deposit, or
cause to be deposited or held under the name or account of such a custodian
pursuant to a Custodian Agreement.
(f) "Fund" shall mean the entity executing this Agreement, and if
it is a series fund, as such term is used in the 1940 Act, such term shall
mean each series of the Fund hereafter created, except that appropriate
documentation with respect to each series must be presented to the Transfer
Agent before this Agreement shall become effective with respect to each such
series.
(g) "1940 Act" shall mean the Investment Company Act of 1940.
(h) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by the Transfer Agent from a person
reasonably believed by the Transfer Agent to be an Authorized Person;
(i) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any supplements
thereto if any, which has become effective under the Securities Act of 1933
and the 1940 Act.
(j) "Shares" refers collectively to such shares of capital stock,
beneficial interest or limited partnership interests, as the case may be, of
the Fund as may be issued from time to time and, if the Fund is a closed-end
or a series fund, as such terms are used in the 1940 Act any other classes or
series of stock, shares of beneficial interest or limited partnership
interests that may be issued from time to time.
(k) "Shareholder" shall mean a holder of shares of capital stock,
beneficial interest or any other class or series, and also refers to partners
of limited partnerships.
(l) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by the Transfer Agent to be an
Authorized Person and actually received by the Transfer Agent. Written
Instructions shall include manually executed originals and authorized
electronic transmissions, including telefacsimile of a manually executed
original or other process.
2. Appointment of the Transfer Agent. The Fund hereby appoints and
constitutes the Transfer Agent as transfer agent, registrar and dividend
disbursing agent for Shares of the Fund and as shareholder servicing agent for
the Fund. The Transfer Agent accepts such appointments and agrees to perform
the duties hereinafter set forth.
3. Compensation.
(a) The Fund will compensate or cause the Transfer Agent to be
compensated for the performance of its obligations hereunder in accordance
with the fees set forth in the written schedule of fees annexed hereto as
Schedule A and incorporated herein. The Transfer Agent will transmit an
invoice to the Fund as soon as practicable after the end of each calendar
month which will be detailed in accordance with Schedule A, and the Fund will
pay to the Transfer Agent the amount of such invoice within thirty (30) days
after the Fund's receipt of the invoice.
In addition, the Fund agrees to pay, and will be billed
separately for, reasonable out-of-pocket expenses incurred by the Transfer
Agent in the performance of its duties hereunder. Out-of-pocket expenses shall
include, but shall not be limited to, the items specified in the written
schedule of out-of-pocket charges annexed hereto as Schedule B and
incorporated herein. Unspecified out-of-pocket expenses shall be limited to
those out-of-pocket expenses reasonably incurred by the Transfer Agent in the
performance of its obligations hereunder. Reimbursement by the Fund for
expenses incurred by the Transfer Agent in any month shall be made as soon as
practicable but no later than 15 days after the receipt of an itemized bill
from the Transfer Agent.
(b) Any compensation agreed to hereunder may be adjusted from
time to time by attaching to Schedule A, a revised fee schedule executed and
dated by the parties hereto.
4. Documents. In connection with the appointment of the Transfer Agent
the Fund shall deliver or caused to be delivered to the Transfer Agent the
following documents on or before the date this Agreement goes into effect, but
in any case within a reasonable period of time for the Transfer Agent to
prepare to perform its duties hereunder:
(a) If applicable, specimens of the certificates for Shares of
the Fund;
(b) All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by the Fund;
(c) A signature card bearing the signatures of any officer of the
Fund or other Authorized Person who will sign Written Instructions or is
authorized to give Oral Instructions.
(d) A certified copy of the Articles of Incorporation, as
amended;
(e) A certified copy of the By-laws of the Fund, as amended;
(f) A copy of the resolution of the Board of Directors
authorizing the execution and delivery of this Agreement;
(g) A certified list of Shareholders of the Fund with the name,
address and taxpayer identification number of each Shareholder, and the number
of Shares of the Fund held by each, certificate numbers and denominations (if
any certificates have been issued), lists of any accounts against which stop
transfer orders have been placed, together with the reasons therefore, and the
number of Shares redeemed by the Fund; and
(h) An opinion of counsel for the Fund with respect to the
validity of the Shares and the status of such Shares under the Securities Act
of 1933, as amended.
5. Further Documentation. The Fund will also furnish the Transfer
Agent with copies of the following documents promptly after the same shall
become available:
(a) each resolution of the Board of Directors authorizing the
issuance of Shares;
(b) any registration statements filed on behalf of the Fund and
all pre-effective and post-effective amendments thereto filed with the
Commission;
(c) a certified copy of each amendment to the Articles of
Incorporation or the By-laws of the Fund;
(d) certified copies of each resolution of the Board of Directors
or other authorization designating Authorized Persons; and
(e) such other certificates, documents or opinions as the
Transfer Agent may reasonably request in connection with the performance of
its duties hereunder.
6. Representations of the Fund. The Fund represents to the Transfer
Agent that all outstanding Shares are validly issued, fully paid and
non-assessable. When Shares are hereafter issued in accordance with the terms
of the Fund's Articles of Incorporation and its Prospectus, such Shares shall
be validly issued, fully paid and non-assessable.
7. Distributions Payable in Shares. In the event that the Board of
Directors of the Fund shall declare a distribution payable in Shares, the Fund
shall deliver or cause to be delivered to the Transfer Agent written notice of
such declaration signed on behalf of the Fund by an officer thereof, upon
which the Transfer Agent shall be entitled to rely for all purposes,
certifying (i) the identity of the Shares involved, (ii) the number of Shares
involved, and (iii) that all appropriate action has been taken.
8. Duties of the Transfer Agent. The Transfer Agent shall be
responsible for administering and/or performing those functions typically
performed by a transfer agent; for acting as service agent in connection with
dividend and distribution functions; and for performing shareholder account
and administrative agent functions in connection with the issuance, transfer
and redemption or repurchase (including coordination with the Custodian) of
Shares in accordance with the terms of the Prospectus and applicable law. The
operating standards and procedures to be followed shall be determined from
time to time by agreement between the Fund and the Transfer Agent and shall
initially be as described in Schedule C attached hereto. In addition, the
Fund shall deliver to the Transfer Agent all notices issued by the Fund with
respect to the Shares in accordance with and pursuant to the Articles of
Incorporation or By-laws of the Fund or as required by law and shall perform
such other specific duties as are set forth in the Articles of Incorporation
including the giving of notice of any special or annual meetings of
shareholders and any other notices required thereby.
9. Record Keeping and Other Information. The Transfer Agent shall
create and maintain all records required of it pursuant to its duties
hereunder and as set forth in Schedule C in accordance with all applicable
laws, rules and regulations, including records required by Section 31(a) of
the 1940 Act. All records shall be available during regular business hours
for inspection and use by the Fund. Where applicable, such records shall be
maintained by the Transfer Agent for the periods and in the places required by
Rule 31a-2 under the 1940 Act.
Upon reasonable notice by the Fund, the Transfer Agent shall make
available during regular business hours such of its facilities and premises
employed in connection with the performance of its duties under this Agreement
for reasonable visitation by the Fund, or any person retained by the Fund as
may be necessary for the Fund to evaluate the quality of the services
performed by the Transfer Agent pursuant hereto.
10. Other Duties. In addition to the duties set forth in Schedule C,
the Transfer Agent shall perform such other duties and functions, and shall be
paid such amounts therefor, as may from time to time be agreed upon in writing
between the Fund and the Transfer Agent. The compensation for such other
duties and functions shall be reflected in a written amendment to Schedule A
or B and the duties and functions shall be reflected in an amendment to
Schedule C, both dated and signed by authorized persons of the parties hereto.
11. Reliance by Transfer Agent; Instructions
(a) The Transfer Agent will have no liability when acting upon
Written or Oral Instructions believed to have been executed or orally
communicated by an Authorized Person and will not be held to have any notice
of any change of authority of any person until receipt of a Written
Instruction thereof from the Fund pursuant to Section 4(c). The Transfer
Agent will also have no liability when processing Share certificates which it
reasonably believes to bear the proper manual or facsimile signatures of the
officers of the Fund and the proper countersignature of the Transfer Agent.
(b) At any time, the Transfer Agent may apply to any Authorized
Person of the Fund for Written Instructions and may seek advice from legal
counsel for the Fund, or its own legal counsel, with respect to any matter
arising in connection with this Agreement, and it shall not be liable for any
action taken or not taken or suffered by it in good faith in accordance with
such Written Instructions or in accordance with the opinion of counsel for the
Fund or for the Transfer Agent. Written Instructions requested by the
Transfer Agent will be provided by the Fund within a reasonable period of
time. In addition, the Transfer Agent, its officers, agents or employees,
shall accept Oral Instructions or Written Instructions given to them by any
person representing or acting on behalf of the Fund only if said
representative is an Authorized Person. The Fund agrees that all Oral
Instructions shall be followed within one business day by confirming Written
Instructions, and that the Fund's failure to so confirm shall not impair in
any respect the Transfer Agent's right to rely on Oral Instructions. The
Transfer Agent shall have no duty or obligation to inquire into, nor shall the
Transfer Agent be responsible for, the legality of any act done by it upon the
request or direction of a person reasonably believed by the Transfer Agent to
be an Authorized Person.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, the Transfer Agent shall be under no duty or obligation to inquire
into, and shall not be liable for: (i) the legality of the issuance or sale
of any Shares or the sufficiency of the amount to be received therefor; (ii)
the legality of the redemption of any Shares, or the propriety of the amount
to be paid therefor; (iii) the legality of the declaration of any dividend by
the Board of Directors, or the legality of the issuance of any Shares in
payment of any dividend; or (iv) the legality of any recapitalization or
readjustment of the Shares.
12. Acts of God, etc. The Transfer Agent will not be liable or
responsible for delays or errors by acts of God or by reason of circumstances
beyond its control, including acts of civil or military authority, national
emergencies, labor difficulties, mechanical breakdown, insurrection, war,
riots, or failure or unavailability of transportation, communication or power
supply, fire, flood or other catastrophe.
13. Duty of Care and Indemnification. Each party hereto (the
"Indemnifying Party') will indemnify the other party (the "Indemnified Party")
against and hold it harmless from any and all losses, claims, damages,
liabilities or expenses of any sort or kind (including reasonable counsel fees
and expenses) resulting from any claim, demand, action or suit or other
proceeding (a "Claim") unless such Claim has resulted from a negligent failure
to act or omission to act or bad faith of the Indemnified Party in the
performance of its duties hereunder. In addition, the Fund will indemnify the
Transfer Agent against and hold it harmless from any Claim, damages,
liabilities or expenses (including reasonable counsel fees) that is a result
of: (i) any action taken in accordance with Written or Oral Instructions, or
any other instructions, or share certificates reasonably believed by the
Transfer Agent to be genuine and to be signed, countersigned or executed, or
orally communicated by an Authorized Person; (ii) any action taken in
accordance with written or oral advice reasonably believed by the Transfer
Agent to have been given by counsel for the Fund or its own counsel; or (iii)
any action taken as a result of any error or omission in any record (including
but not limited to magnetic tapes, computer printouts, hard copies and
microfilm copies) delivered, or caused to be delivered by the Fund to the
Transfer Agent in connection with this Agreement.
In any case in which the Indemnifying Party may be asked to indemnify or
hold the Indemnified Party harmless, the Indemnifying Party shall be advised
of all pertinent facts concerning the situation in question. The Indemnified
Party will notify the Indemnifying Party promptly after identifying any
situation which it believes presents or appears likely to present a claim for
indemnification against the Indemnifying Party although the failure to do so
shall not prevent recovery by the Indemnified Party. The Indemnifying Party
shall have the option to defend the Indemnified Party against any Claim which
may be the subject of this indemnification, and, in the event that the
Indemnifying Party so elects, such defense shall be conducted by counsel
chosen by the Indemnifying Party and satisfactory to the Indemnified Party,
and thereupon the Indemnifying Party shall take over complete defense of the
Claim and the Indemnified Party shall sustain no further legal or other
expenses in respect of such Claim. The Indemnified Party will not confess any
Claim or make any compromise in any case in which the Indemnifying Party will
be asked to provide indemnification, except with the Indemnifying Party's
prior written consent. The obligations of the parties hereto under this
Section shall survive the termination of this Agreement.
14. Consequential Damages. In no event and under no circumstances
shall either party under this Agreement be liable to the other party for
indirect loss of profits, reputation or business or any other special damages
under any provision of this Agreement or for any act or failure to act
hereunder.
15. Term and Termination.
(a) This Agreement shall be effective on the date first written
above and shall continue until _____________, and thereafter shall
automatically continue for successive annual periods ending on the anniversary
of the date first written above, provided that it may be terminated by either
party upon written notice given at least 60 days prior to termination.
(b) In the event a termination notice is given by the Fund, it
shall be accompanied by a resolution of the Board of Directors, certified by
the Secretary of the Fund, designating a successor transfer agent or transfer
agents. Upon such termination and at the expense of the Fund, the Transfer
Agent will deliver to such successor a certified list of shareholders of the
Fund (with names and addresses), and all other relevant books, records,
correspondence and other Fund records or data in the possession of the
Transfer Agent, and the Transfer Agent will cooperate with the Fund and any
successor transfer agent or agents in the substitution process.
16. Confidentiality. Both parties hereto agree that any non public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other
party, except as may be required by applicable law or at the request of the
Commission or other governmental agency. The parties further agree that a
breach of this provision would irreparably damage the other party and
accordingly agree that each of them is entitled, without bond or other
security, to an injunction or injunctions to prevent breaches of this
provision.
17. Amendment. This Agreement may only be amended or modified by a
written instrument executed by both parties.
18. Subcontracting. The Fund agrees that the Transfer Agent may, in
its discretion, subcontract for certain of the services described under this
Agreement or the Schedules hereto; provided that the appointment of any such
Transfer Agent shall not relieve the Transfer Agent of its responsibilities
hereunder.
19. Miscellaneous.
(a) Notices. Any notice or other instrument authorized or
required by this Agreement to be given in writing to the Fund or the Transfer
Agent, shall be sufficiently given if addressed to that party and received by
it at its office set forth below or at such other place as it may from time to
time designate in writing.
To the Fund:
______________________________
______________________________
______________________________
Attention: __________________
To the Transfer Agent:
The Shareholder Services Group
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Robert F. Radin, President
with a copy to TSSG Counsel
(b) Successors. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors and assigns,
provided, however, that this Agreement shall not be assigned to any person
other than a person controlling, controlled by or under common control with
the assignor without the written consent of the other party, which consent
shall not be unreasonably withheld.
(c) Governing Law. This Agreement shall be governed exclusively
by the laws of the State of New York without reference to the choice of law
provisions thereof. Each party hereto hereby agrees that (i) the Supreme
Court of New York sitting in New York County shall have exclusive jurisdiction
over any and all disputes arising hereunder; (ii) hereby consents to the
personal jurisdiction of such court over the parties hereto, hereby waiving
any defense of lack of personal jurisdiction; and (iii) appoints the person to
whom notices hereunder are to be sent as agent for service of process.
(d) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original; but such
counterparts shall, together, constitute only one instrument.
(e) Captions. The captions of this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(f) Use of Transfer Agent's Name. The Fund shall not use the
name of the Transfer Agent in any Prospectus, Statement of Additional
Information, shareholders' report, sales literature or other material relating
to the Fund in a manner not approved prior thereto in writing; provided, that
the Transfer Agent need only receive notice of all reasonable uses of its name
which merely refer in accurate terms to its appointment hereunder or which are
required by any government agency or applicable law or rule. Notwithstanding
the foregoing, any reference to the Transfer Agent shall include a statement
to the effect that it is a wholly owned subsidiary of First Data Corporation.
(g) Use of Fund's Name. The Transfer Agent shall not use the
name of the Fund or material relating to the Fund on any documents or forms
for other than internal use in a manner not approved prior thereto in writing;
provided, that the Fund need only receive notice of all reasonable uses of its
name which merely refer in accurate terms to the appointment of the Transfer
Agent or which are required by any government agency or applicable law or
rule.
(h) Independent Contractors. The parties agree that they are
independent contractors and not partners or co-venturers.
(i) Entire Agreement; Severability. This Agreement and the
Schedules attached hereto constitute the entire agreement of the parties
hereto relating to the matters covered hereby and supersede any previous
agreements. If any provision is held to be illegal, unenforceable or invalid
for any reason, the remaining provisions shall not be affected or impaired
thereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers, as of the day and
year first above written.
SMITH BARNEY SHEARSON THE SHAREHOLDER SERVICES
DAILY DIVIDEND FUND INC. GROUP, INC.
By:/s/ Richard P. Roelofs By:/s/ Michael G.
McCarthy
Title:President Title:Vice
President
A-1
Transfer Agent Fee
Schedule A
Class A shares
The Fund shall pay the Transfer Agent an annualized fee of $11.00 per
shareholder account that is open during any monthly period. Such fee shall be
billed by the Transfer Agent monthly in arrears on a prorated basis of 1/12 of
the annualized fee for all accounts that are open during such a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent monthly in arrears.
Class B shares
The Fund shall pay the Transfer Agent an annualized fee of $12.50 per
shareholder account that is open during any monthly period. Such fee shall be
billed by the Transfer Agent monthly in arrears on a prorated basis of 1/12 of
the annualized fee for all accounts that are open during such a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent monthly in arrears.
Class C shares
The Fund shall pay the Transfer Agent an annualized fee of $8.50 per
shareholder account that is open during any monthly period. Such fee shall be
billed by the Transfer Agent monthly in arrears on a prorated basis of 1/12 of
the annualized fee for all accounts that are open during such a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent monthly in arrears.
Class D shares
The Fund shall pay the Transfer Agent an annualized fee of $9.50 per
shareholder account that is open during any monthly period. Such fee shall be
billed by the Transfer Agent monthly in arrears on a prorated basis of 1/12 of
the annualized fee for all accounts that are open during such a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent monthly in arrears.
B-1
Schedule B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable out-
of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including certificates, envelopes, checks and
stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first
class)
direct pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including
all lease, maintenance and line costs
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other equipment and
any
expenses incurred in connection with such terminals and
lines
- Duplicating services
- Courier services
- Incoming and outgoing wire charges
- Federal Reserve charges for check clearance
- Record retention, retrieval and destruction costs, including,
but not
limited to exit fees harged by third party record keeping
vendors
- Third party audit reviews
- Insurance
- Such other miscellaneous expenses reasonably incurred by the
Transfer
Agent in performing its duties and responsibilities under
this
Agreement.
The Fund agrees that postage and mailing expenses will be paid on the
day of or prior to mailing as agreed with the Transfer Agent. In addition,
the Fund will promptly reimburse the Transfer Agent for any other unscheduled
expenses incurred by the Transfer Agent whenever the Fund and the Transfer
Agent mutually agree that such expenses are not otherwise properly borne by
the Transfer Agent as part of its duties and obligations under the Agreement.
C-1
Schedule C
DUTIES OF THE TRANSFER AGENT
1. Shareholder Information. The Transfer Agent or its agent
shall maintain a record of the number of Shares held by each holder of record
which shall include name, address, taxpayer identification and which shall
indicate whether such Shares are held in certificates or uncertificated form.
2. Shareholder Services. The Transfer Agent or its agent will
investigate all inquiries from shareholders of the Fund relating to
Shareholder accounts and will respond to all communications from Shareholders
and others relating to its duties hereunder and such other correspondence as
may from time to time be mutually agreed upon between the Transfer Agent and
the Fund. The Transfer Agent shall provide the Fund with reports concerning
shareholder inquires and the responses thereto by the Transfer Agent, in such
form and at such times as are agreed to by the Fund and the Transfer Agent.
3. Share Certificates.
(a) At the expense of the Fund, it shall supply the Transfer
Agent or its agent with an adequate supply of blank share certificates to meet
the Transfer Agent or its agent's requirements therefor. Such Share
certificates shall be properly signed by facsimile. The Fund agrees that,
notwithstanding the death, resignation, or removal of any officer of the Fund
whose signature appears on such certificates, the Transfer Agent or its agent
may continue to countersign certificates which bear such signatures until
otherwise directed by Written Instructions.
(b) The Transfer Agent or its agent shall issue replacement Share
certificates in lieu of certificates which have been lost, stolen or
destroyed, upon receipt by the Transfer Agent or its agent of properly
executed affidavits and lost certificate bonds, in form satisfactory to the
Transfer Agent or its agent, with the Fund and the Transfer Agent or its agent
as obligees under the bond.
(c) The Transfer Agent or its agent shall also maintain a record
of each certificate issued, the number of Shares represented thereby and the
holder of record. With respect to Shares held in open accounts or
uncertificated form, i.e., no certificate being issued with respect thereto,
the Transfer Agent or its agent shall maintain comparable records of the
record holders thereof, including their names, addresses and taxpayer
identification. The Transfer Agent or its agent shall further maintain a stop
transfer record on lost and/or replaced certificates.
C-2
4. Mailing Communications to Shareholders; Proxy Materials. The
Transfer Agent or its agent will address and mail to Shareholders of the Fund,
all reports to Shareholders, dividend and distribution notices and proxy
material for the Fund's meetings of Shareholders. In connection with meetings
of Shareholders, the Transfer Agent or its Agent will prepare Shareholder
lists, mail and certify as to the mailing of proxy materials, process and
tabulate returned proxy cards, report on proxies voted prior to meetings, act
as inspector of election at meetings and certify Shares voted at meetings.
5. Sales of Shares
(a) Suspension of Sale of Shares. The Transfer Agent or its
agent shall not be required to issue any Shares of the Fund where it has
received a Written Instruction from the Fund or official notice from any
appropriate authority that the sale of the Shares of the Fund has been
suspended or discontinued. The existence of such Written Instructions or such
official notice shall be conclusive evidence of the right of the Transfer
Agent or its agent to rely on such Written Instructions or official notice.
(b) Returned Checks. In the event that any check or other order
for the payment of money is returned unpaid for any reason, the Transfer Agent
or its agent will: (i) give prompt notice of such return to the Fund or its
designee; (ii) place a stop transfer order against all Shares issued as a
result of such check or order; and (iii) take such actions as the Transfer
Agent may from time to time deem appropriate.
6. Transfer and Repurchase
(a) Requirements for Transfer or Repurchase of Shares. The
Transfer Agent or its agent shall process all requests to transfer or redeem
Shares in accordance with the transfer or repurchase procedures set forth in
the Fund's Prospectus.
The Transfer Agent or its agent will transfer or repurchase Shares
upon receipt of Oral or Written Instructions or otherwise pursuant to the
Prospectus and Share certificates, if any, properly endorsed for transfer or
redemption, accompanied by such documents as the Transfer Agent or its agent
reasonably may deem necessary.
The Transfer Agent or its agent reserves the right to refuse to
transfer or repurchase Shares until it is satisfied that the endorsement on
the instructions is valid and genuine. The Transfer Agent or its agent also
reserves the right to refuse to transfer or repurchase Shares until it is
satisfied that the requested transfer or repurchase is legally authorized, and
it shall incur no liability for the refusal, in good faith, to make transfers
or repurchases which the Transfer Agent or its agent, in its good judgement,
deems improper or unauthorized, or until it is reasonably satisfied that there
is no basis to any claims adverse to such transfer or repurchase.
C-3
(b) Notice to Custodian and Fund. When Shares are redeemed, the
Transfer Agent or its agent shall, upon receipt of the instructions and
documents in proper form, deliver to the Custodian and the Fund or its
designee a notification setting forth the number of Shares to be repurchased.
Such repurchased shares shall be reflected on appropriate accounts maintained
by the Transfer Agent or its agent reflecting outstanding Shares of the Fund
and Shares attributed to individual accounts.
(c) Payment of Repurchase Proceeds. The Transfer Agent or its
agent shall, upon receipt of the moneys paid to it by the Custodian for the
repurchase of Shares, pay such moneys as are received from the Custodian, all
in accordance with the procedures described in the written instruction
received by the Transfer Agent or its agent from the Fund.
The Transfer Agent or its agent shall not process or effect any
repurchase with respect to Shares of the Fund after receipt by the Transfer
Agent or its agent of notification of the suspension of the determination of
the net asset value of the Fund.
7. Dividends
(a) Notice to Agent and Custodian. Upon the declaration of each
dividend and each capital gains distribution by the Board of Directors of the
Fund with respect to Shares of the Fund, the Fund shall furnish or cause to be
furnished to the Transfer Agent or its agent a copy of a resolution of the
Fund's Board of Directors certified by the Secretary of the Fund setting forth
the date of the declaration of such dividend or distribution, the ex-dividend
date, the date of payment thereof, the record date as of which shareholders
entitled to payment shall be determined, the amount payable per Share to the
shareholders of record as of that date, the total amount payable to the
Transfer Agent or its agent on the payment date and whether such dividend or
distribution is to be paid in Shares of such class at net asset value.
On or before the payment date specified in such resolution of the
Board of Directors, the Custodian of the Fund will pay to the Transfer Agent
sufficient cash to make payment to the shareholders of record as of such
payment date.
(b) Insufficient Funds for Payments. If the Transfer Agent or
its agent does not receive sufficient cash from the Custodian to make total
dividend and/or distribution payments to all shareholders of the Fund as of
the record date, the Transfer Agent or its agent will, upon notifying the
Fund, withhold payment to all Shareholders of record as of the record date
until sufficient cash is provided to the Transfer Agent or its agent.
C-4
Exhibit 1 to Schedule C
Summary of Services
The services to be performed by the Transfer Agent or its agent shall be
as follows:
A. DAILY RECORDS
Maintain daily the following information with respect to each
Shareholder account as received:
o Name and Address (Zip Code)
o Class of Shares
o Taxpayer Identification Number
o Balance of Shares held by Agent
o Beneficial owner code: i.e., male, female, joint tenant,
etc.
o Dividend code (reinvestment)
o Number of Shares held in certificate form
B. OTHER DAILY ACTIVITY
o Answer written inquiries relating to Shareholder accounts
(matters relating to portfolio management, distribution of Shares and other
management policy questions will be referred to the Fund).
o Process additional payments into established Shareholder
accounts in accordance with Written Instruction from the Agent.
o Upon receipt of proper instructions and all required
documentation, process requests for repurchase of Shares.
o Identify redemption requests made with respect to accounts
in which Shares have been purchased within an agreed-upon period of time for
determining whether good funds have been collected with respect to such
purchase and process as agreed by the Agent in accordance with written
instructions set forth by the Fund.
o Examine and process all transfers of Shares, ensuring that
all transfer requirements and legal documents have been supplied.
C-5
o Issue and mail replacement checks.
o Open new accounts and maintain records of exchanges between
accounts
C. DIVIDEND ACTIVITY
o Calculate and process Share dividends and distributions as
instructed by the Fund.
o Compute, prepare and mail all necessary reports to
Shareholders or various authorities as requested by the Fund. Report to the
Fund reinvestment plan share purchases and determination of the reinvestment
price.
D. MEETINGS OF SHAREHOLDERS
o Cause to be mailed proxy and related material for all
meetings of Shareholders. Tabulate returned proxies (proxies must be
adaptable to mechanical equipment of the Agent or its agents) and supply daily
reports when sufficient proxies have been received.
o Prepare and submit to the Fund an Affidavit of Mailing.
o At the time of the meeting, furnish a certified list of
Shareholders, hard copy, microfilm or microfiche and, if requested by the
Fund, Inspection of Election.
E. PERIODIC ACTIVITIES
o Cause to be mailed reports, Prospectuses, and any other enclosures
requested by the Fund (material must be adaptable to mechanical equipment of
Agent or its agents).
o Receive all notices issued by the Fund with respect to the
Preferred Shares in accordance with and pursuant to the Articles of
Incorporation and the Indenture and perform such other specific duties as are
set forth in the Articles of Incorporation including a giving of notice of a
special meeting and notice of redemption in the circumstances and otherwise in
accordance with all relevant provisions of the Articles of Incorporation.
MASTER/TEMPLVAR -17-
Exhibit 9 (b)
ADMINISTRATION AGREEMENT
April 20, 1994
Smith, Barney Advisers, Inc.
1345 Avenue of the Americas
New York, New York 10019
Dear Sirs:
Smith Barney Shearson Daily Dividend Fund Inc. (the "Fund"), a
corporation organized under the laws of the State of Maryland, confirms its
agreement with Smith, Barney Advisers, Inc. ("SBA") as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and
reinvesting in investments of the kind and in accordance with the limitations
specified in its Charter dated March 15, 1979, as amended from time to time
(the "Charter"), in its Prospectus and Statement of Additional Information as
from time to time in effect and in such manner and to such extent as may from
time to time be approved by the Board of Directors of the Fund (the "Board").
Copies of the Fund's Prospectus, Statement of Additional Information and
Charter have been or will be submitted to SBA. Greenwich Street Advisors
("Greenwich Street Advisors") serves as the Fund's investment adviser and the
Fund desires to employ and hereby appoints SBA to act as its administrator.
SBA accepts this appointment and agrees to furnish the services to the Fund
for the compensation set forth below. SBA is hereby authorized to retain
third parties and is hereby authorized to delegate some or all of its duties
and obligations hereunder to such persons provided that such persons shall
remain under the general supervision of SBA.
2. Services as Administrator
Subject to the supervision and direction of the Board, SBA will:
(a) assist in supervising all aspects of the Fund's operations except those
performed by the Fund's investment adviser under its investment advisory
agreement; (b) supply the Fund with office facilities (which may be in SBA's
own offices), statistical and research data, data processing services,
clerical, accounting and bookkeeping services, including, but not limited to,
the calculation of (i) the net asset value of shares of the Fund, (ii)
applicable contingent deferred sales charges and similar fees and charges and
(iii) distribution fees, internal auditing and legal services, internal
executive and administrative services, and stationary and office supplies; and
(c) prepare reports to shareholders of the Fund, tax returns and reports to
and filings with the Securities and Exchange Commission (the "SEC") and state
blue sky authorities.
3. Compensation
In consideration of services rendered pursuant to this Agreement,
the Fund will pay SBA on the first business day of each month a fee for the
previous month at an annual rate of .25 of the value of the Fund's average
daily net assets up to $50 million and .20% of the value of average daily net
assets in excess of $50 million. The fee for the period from the date the
Fund's initial registration statement is declared effective by the SEC to the
end of the month during which the initial registration statement is declared
effective shall be prorated according to the proportion that such period bears
to the full monthly period. Upon any termination of this Agreement before the
end of any month, the fee for such part of a month shall be prorated according
to the proportion which such period bears to the full monthly period and shall
be payable upon the date of termination of this Agreement. For the purpose of
determining fees payable to SBA, the value of the Fund's net assets shall be
computed at the times and in the manner specified in the Fund's Prospectus and
Statement of Additional Information as from time to time in effect.
4. Expenses
SBA will bear all expenses in connection with the performance of
its services under this Agreement. The Fund will bear certain other expenses
to be incurred in its operation, including: taxes, interest, brokerage fees
and commissions, if any; fees of the members of the Board of the Fund who are
not officers, directors or employees of Smith Barney Shearson Inc. or its
affiliates or any person who is an affiliate of any person to whom duties may
be delegated hereunder; SEC fees and state blue sky qualification fees;
charges of custodians and transfer and dividend disbursing agents; the Fund's
and Board members' proportionate share of insurance premiums, professional
association dues and/or assessments; outside auditing and legal expenses;
costs of maintaining the Fund's existence; costs attributable to investor
services, including, without limitation, telephone and personnel expenses;
costs of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
shareholders; costs of shareholders' reports and meetings of the officers or
Board and any extraordinary expenses. In addition, the Fund will pay all
distribution fees pursuant to a Distribution Plan adopted under Rule 12b-1 of
the Investment Company Act of 1940, as amended (the "1940 Act").
5. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund
(including fees pursuant to this Agreement and the Fund's investment advisory
agreement (s), but excluding distribution fees, interest, taxes, brokerage
and, if permitted by state securities commissions, extraordinary expenses)
exceed the expense limitations of any state having jurisdiction over the Fund,
SBA will reimburse the Fund for that excess expense to the extent required by
state law in the same proportion as its respective fees bear to the combined
fees for investment advice and administration. The expense reimbursement
obligation of SBA will be limited to the amount of its fees hereunder. Such
expense reimbursement, if any, will be estimated, reconciled and paid on a
monthly basis.
6. Standard of Care
SBA shall exercise its best judgment in rendering the services
listed in paragraph 2 above, and SBA shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, provided that nothing herein
shall be deemed to protect or purport to protect SBA against liability to the
Fund or to its shareholders to which SBA would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of SBA's reckless disregard of its
obligations and duties under this Agreement.
7. Term of Agreement
This Agreement shall continue automatically for successive annual
periods, provided such continuance is specifically approved at least annually
by the Board.
8. Service to Other Companies or Accounts
The Fund understands that SBA now acts, will continue to act and
may act in the future as administrator to one or more other investment
companies, and the Fund has no objection to SBA so acting. In addition, the
Fund understands that the persons employed by SBA or its affiliates to assist
in the performance of its duties hereunder will not devote their full time to
such service and nothing contained herein shall be deemed to limit or restrict
the right of SBA or its affiliates to engage in and devote time and attention
to other businesses or to render services of whatever kind or nature.
9. Indemnification
The Fund agrees to indemnify SBA and its officers, directors,
employees, affiliates, controlling persons, agents (including persons to whom
responsibilities are delegated hereunder) ("indemnitees") against any loss,
claim, expense or cost of any kind (including reasonable attorney's fees)
resulting or arising in connection with this Agreement or from the performance
or failure to perform any act hereunder, provided that no such indemnification
shall be available if the indemnitee violated the standard of care in
paragraph 6 above. This indemnification shall be limited by the 1940 Act, and
relevant state law. Each indemnitee shall be entitled to advancement of its
expenses in accordance with the requirements of the 1940 Act and the rules,
regulations and interpretations thereof as in effect from time to time.
10. Limitation of Liability
The Fund, SBA and Boston Advisors agree that the obligations of
the Fund under this Agreement shall not be binding upon any of the Board
members, shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Fund individually, but are
binding only upon the assets and property of the Fund, as provided in the
Charter and Bylaws. The execution and delivery of this Agreement has been
duly authorized by the Fund, SBA and Boston
Advisors, and signed by an authorized officer of each, acting as such.
Neither the authorization by the Board members of the Fund, nor the execution
and delivery by the officer of the Fund shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the assets and property of the Fund as provided in the
Charter and Bylaws.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by singing and returning to us the enclosed
copy hereof.
Very truly yours,
Smith Barney Shearson
Daily Dividend Fund Inc.
By:
Title:
Accepted:
Smith, Barney Advisers, Inc.
By: _________________________________
Title:
APPENDIX A
ADMINISTRATIVE SERVICES
Fund Accounting. Fund accounting services involve comprehensive
accrual-based recordkeeping and management information. They include
maintaining a fund's books and records in accordance with the Investment
Company Act of 1940, as amended (the "1940 Act"), net asset value
calculation, daily dividend calculation, tax accounting and portfolio
accounting.
The designated fund accountants interact with the Fund's
custodian, transfer agent and investment adviser daily. As required,
the responsibilities of each fund accountant may include:
o Cash Reconciliation - Reconcile prior day's ending cash
balance per custodian's records and the accounting system to the prior
day's ending cash balance per fund accounting's cash availability
report;
o Cash Availability - Combine all activity affecting the
Fund's cash account and produce a net cash amount available for
investment;
o Formal Reconciliations - Reconcile system generated reports
to prior day's calculations of interest, dividends, amortization,
accretion, distributions, capital stock and net assets;
o Trade Processing - Upon receipt of instructions from the
investment adviser review, record and transmit buys and sells to the
custodian;
o Journal Entries - Input entries to the accounting system
reflecting shareholder activity and Fund expense accruals;
o Reconcile and Calculate N.O.A. (net other assets) - Compile
all activity affecting asset and liability accounts other than
investment account;
o Calculate Net Income, Mil Rate and Yield for Daily
Distribution Funds - Calculate income on purchase and sales, calculate
change in income due to variable rate change, combine all daily income
less expenses to arrive at net income, calculate mil rate and yields (1
day, 7 day and 30 day);
o Mini-Cycle (except for Money Market Funds) - Review intra
day trial balance and reports, review trial balance N.O.A.;
o Holdings Reconciliation - Reconcile the portfolio holdings
per the system to custodian records;
o Pricing - Determine N.A.V. for Fund using market value of
all securities and currencies (plus N.O.A.), divided by the shares
outstanding, and investigate securities with significant price changes
(over 5%);
o Money Market Fund Pricing - Monitor valuation for compliance
with Rule 2a-7;
o System Check-Back - Verify the change in market value of
securities which saw trading activity per the system;
o Net Asset Value Reconciliation - Identify the impact of
current day's Fund activity on a per share basis;
o Reporting of Price to NASDAQ - 5:30 P.M. is the final
deadline for Fund prices being reported to the newspaper;
o Reporting of Price to Transfer Agent- N.A.V.s are reported
to transfer agent upon total completion of above activities.
In addition, fund accounting personnel: communicate corporate
actions of portfolio holdings to portfolio managers; initiate
notification to custodian procedures on outstanding income receivables;
provide information to the Fund's treasurer for reports to shareholders,
SEC, Board members, tax authorities, statistical and performance
reporting companies and the Fund's auditors; interface with the Fund's
auditors; prepare monthly reconciliation packages, including expense pro
forma; prepare amortization schedules for premium and discount bonds
based on the effective yield method; prepare vault reconciliation
reports to indicate securities currently "out-for-transfer;" and
calculate daily expenses based on expense ratios supplied by Fund's
treasurer.
Financial Administration. The financial administration services made
available to the Fund fall within three main categories: Financial
Reporting; Statistical Reporting; and Publications. The following is a
summary of the services made available to the Fund by the Financial
Administration Division:
Financial Reporting
o Coordinate the preparation and review of the annual,
semi-annual and quarterly portfolio of investments and financial
statements included in the Fund's shareholder reports.
Statistical Reporting
o Total return reporting;
o SEC 30-day yield reporting and 7-day yield reporting
(for money market funds);
o Prepare dividend summary;
o Prepare quarter-end reports;
o Communicate statistical data to the financial media
(Donoghue, Lipper, Morningstar, et al.)
Publications
o Coordinate the printing and mailing process with
outside printers for annual and semi-annual reports, prospectuses,
statements of additional information, proxy statements and special
letters or supplements;
o Provide graphics and design assistance relating to the
creation of marketing materials and shareholder reports.
Treasury. The following is a summary of the treasury services available
to the Fund:
o Provide a Treasurer and Assistant Treasurer for the
Fund;
o Determine expenses properly chargeable to the Fund;
o Authorize payment of bills for expenses of the Fund;
o Establish and monitor the rate of expense accruals;
o Prepare financial materials for review by the Fund's
Board (e.g., Rule 2a-7, 10f-3, 17a-7 and 17e-1 reports, repurchase
agreement dealer lists, securities transactions);
o Recommend dividends to be voted by the Fund's Board;
o Monitor mark-to-market comparisons for money market
funds;
o Recommend valuation to be used for securities which
are not readily saleable;
o Function as a liaison with the Fund's outside auditors
and arrange for audits;
o Provide accounting, financial and tax support relating
to portfolio management and any contemplated changes in the Fund's
structure or operations;
o Prepare and file forms with the Internal Revenue
Service
* Form 8613
* Form 1120-RIC
* Board Members' and Shareholders' 1099s
* Mailings in connection with Section 852 and
related regulations.
Legal and Regulatory Services. The legal and regulatory services made
available to the Fund fall within four main areas: SEC and Public
Disclosure Assistance; Corporate and Secretarial Services; Compliance
Services; and Blue Sky Registration. The following is a summary of the
legal and regulatory services available to the Fund:
SEC and Public Disclosure Assistance
o File annual amendments to the Fund's registration
statements, including updating the prospectus and statement of
additional information where applicable;
o File annual and semi-annual shareholder reports with
the appropriate regulatory agencies;
o Prepare and file proxy statements;
o Review marketing material for SEC and NASD clearance;
o Provide legal assistance for shareholder
communications.
Corporate and Secretarial Services
o Provide a Secretary and an Assistant Secretary for the
Fund;
o Maintain general corporate calendar;
o Prepare agenda and background materials for Fund board
meetings, make presentations where appropriate, prepare minutes and
follow-up matters raised at Board meetings;
o Organize, attend and keep minutes of shareholder
meetings;
o Maintain Articles of Incorporation and By-Laws of the
Fund.
Legal Consultation and Business Planning
o Provide general legal advice on matters relating to
portfolio management, Fund operations and any potential changes in the
Fund's investment policies, operations or structure;
o Maintain continuing awareness of significant emerging
regulatory and legislative developments which may affect the Fund,
update the Fund's Board and the investment adviser on those developments
and provide related planning assistance where requested or appropriate;
o Develop or assist in developing guidelines and
procedures to improve overall compliance by the Fund and its various
agents;
o Manage Fund litigation matters and assume full
responsibility for the handling of routine Fund examinations and
investigations by regulatory agencies.
Compliance Services
The Compliance Department is responsible for preparing
compliance manuals, conducting seminars for fund accounting and advisory
personnel and performing on-going testing of the Fund's portfolio to
assist the Fund's investment adviser in complying with prospectus
guidelines and limitations, 1940 Act requirements and Internal Revenue
Code requirements. The Department may also act as liaison to the SEC
during its routine examinations of the Fund.
State Regulation
The State Regulation Department operates in a fully
automated environment using blue sky registration software developed by
Price Waterhouse. In addition to being responsible for the initial and
on-going registration of shares in each state, the Department acts as
liaison between the Fund and state regulators, and monitors and reports
on shares sold and remaining registered shares available for sale
shared\domestic\clients\shearsonfunds\sddi\admin2.doc
A-4
shared\domestic\clients\shearson\agr.doc
shared\domestic\clients\shearson\agr.doc
Exhibit 9 (c)
SUB-ADMINISTRATION AGREEMENT
April 20, 1994
The Boston Company Advisors, Inc.
One Exchange Place
Boston, MA 02210
Dear Sirs:
Smith Barney Shearson Daily Dividend Fund Inc.(the "Fund"), a
corporation organized under the laws of the State of Maryland and Smith,
Barney Advisers, Inc. ("SBA") confirm their agreement with The Boston Company
Advisors, Inc. ("Boston Advisors") as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and
reinvesting in investments of the kind and in accordance with the limitations
specified in its Charter dated March 15, 1979, as amended from time to time
(the "Charter"), in its Prospectus and Statement of Additional Information as
from time to time in effect, and in such manner and to such extent as may from
time to time be approved by the Board of Directors of the Fund (the "Board").
Copies of the Fund's Prospectus, Statement of Additional Information and
Charter have been or will be submitted to you. The Fund employs SBA as its
administrator, and the Fund and SBA desire to employ and hereby appoint Boston
Advisors as the Fund's sub-administrator. Boston Advisors accepts this
appointment and agrees to furnish the services to the Fund, for the
compensation set forth below, under the general supervision of SBA.
2. Services as Sub-Administrator
Subject to the supervision and direction of the Board and SBA,
Boston Advisors will: (a) assist in supervising all aspects of the Fund's
operations except those performed by the Fund's investment adviser under the
Fund's investment advisory agreement; (b) supply the Fund with office
facilities (which may be in Boston Advisor's own offices), statistical and
research data, data processing services, clerical, accounting and bookkeeping
services, including, but not limited to, the calculation of (i) the net asset
value of shares of the Fund, (ii) applicable contingent deferred sales charges
and similar fees and changes and (iii) distribution fees, internal auditing
and legal services, internal executive and administrative services, and
stationery and office supplies; and (c) prepare reports to shareholders of the
Fund, tax returns and reports to and filings with the Securities and Exchange
Commission (the "SEC") and state blue sky authorities.
3. Compensation
In consideration of services rendered pursuant to this Agreement,
SBA will pay Boston Advisors on the first business day of each month a fee for
the previous month calculated in accordance with the terms set forth in
Appendix B, and as agreed to from time to time by the Fund, SBA and Boston
Advisors. Upon any termination of this Agreement before the end of any month,
the fee for such part of a month shall be prorated according to the proportion
which such period bears to the full monthly period and shall be payable upon
the date of termination of this Agreement. For the purpose of determining
fees payable to Boston Advisors, the value of the Fund's net assets shall be
computed at the times and in the manner specified in the Fund's Prospectus and
Statement of Additional Information as from time to time in effect.
4. Expenses
Boston Advisors will bear all expenses in connection with the
performance of its services under this Agreement. The Fund will bear certain
other expenses to be incurred in its operation, including: taxes, interest,
brokerage fees and commissions, if any; fees of the Board members of the Fund
who are not officers, directors or employees of Smith Barney Shearson Inc.,
Boston Advisors of their affiliates; SEC fees and state blue sky qualification
fees; charges of custodians and transfer and dividend disbursing agents; the
Fund's and its Board members' proportionate share of insurance premiums,
professional association dues and/or assessments; outside auditing and legal
expenses; costs of maintaining the Fund's existence; costs attributable to
investor services, including, without limitation, telephone and personnel
expenses; costs of preparing and printing prospectuses and statements of
additional information for regulatory purposes and for distribution to
existing shareholders; costs of shareholders' reports and meetings of the
officers or Board and any extraordinary expenses. In addition, the Fund will
pay all distribution fees pursuant to a Distribution Plan adopted under Rule
12b-1 of the Investment Company Act of 1940, as amended (the "1940 Act").
5. Reimbursement of the Fund
If in any fiscal year the aggregate expenses of the Fund
(including fees pursuant to this Agreement and the Fund's investment advisory
agreement(s) and administration agreement, but excluding distribution fees,
interest, taxes, brokerage and, if permitted by state securities commissions,
extraordinary expenses) exceed the expense limitations of any state having
jurisdiction over the Fund, Boston Advisory will reimburse the Fund for that
excess expense to the extent required by state law in the same proportion as
its respective fees bear to the combined fees for investment advice and
administration. The expense reimbursement obligation of Boston Advisors will
be limited to the amount of its fees hereunder. Such expense reimbursement,
if any, will be estimated, reconciled and paid on a monthly basis.
6. Standard of Care
Boston Advisors shall exercise its best judgment in rendering the
services listed in paragraph 2 above. Boston Advisors shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement
relates, provided that nothing herein shall be deemed to protect or purport to
protect Boston Advisors against liability to the Fund or to its shareholders
to which Boston Advisors would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or by reason of Boston Advisor's reckless disregard of its
obligations and duties under this Agreement.
7. Term of Agreement
This agreement shall continue automatically for successive annual
periods, provided that it may be terminated by 90 days' written notice to the
other parties by any of the Fund, SBA or Boston Advisors. This Agreement
shall extend to and shall be binding upon the parties hereto, and their
respective successors and assigns, provided, however, that this agreement may
not be assigned, transferred or amended without the written consent of all the
parties hereto.
8. Service to Other Companies or Accounts
The Fund understands that Boston Advisors now acts, will continue
to act and may act in the future as administrator to one or more other
investment companies, and the Fund has no objection to Boston Advisors so
acting. In addition, the Fund understands that the persons employed by Boston
Advisors to assist in the performance of its duties hereunder may or may not
devote their full time to such service and nothing contained herein shall be
deemed to limit or restrict the right of Boston Advisors or its affiliates to
engage in and devote time and attention to other businesses or to render
services of whatever kind of nature.
9. Indemnification
SBA agrees to indemnify Boston Advisors and its officers,
directors, employees, affiliates, controlling persons and agents
("indemnitees") to the extent that indemnification is available from the Fund,
and Boston Advisors agrees to indemnify SBA and its indemnitees, against any
loss, claim, expenses or cost of any kind (including reasonable attorney's
fees) resulting or arising in connection with this Agreement or from the
performance or failure to perform any act hereunder, provided that not such
indemnification shall be available if the indemnitee violated the standard of
care in paragraph 6 above. This indemnification shall be limited by the 1940
Act, and relevant state law. Each indemnitee shall be entitled to advancement
of its expenses in accordance with the requirements of the 1940 Act and the
rules, regulations and interpretations thereof as in effect from time to time.
10. Limitations of Liability
The Fund, SBA and Boston Advisors agree that the obligations of
the Fund under this Agreement shall not be binding upon any of the Board
members, shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Fund individually, but are binding only upon the
assets and property of the Fund, as provided in the Charter and Bylaws.
The execution and delivery of this Agreement has been duly authorized by the
Fund, SBA and Boston Advisors, and signed by an authorized officer of each,
acting as such. Neither the authorization by the Board Members of the Fund,
nor the execution and delivery by the officer of the Fund shall be deemed to
have been made by any of them individually or to impose any liability on any
of them personally, but shall bind only the assets and property of the Fund as
provided in the Charter.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed
copy hereof.
Very truly yours,
Smith Barney Shearson
Daily Dividend Fund Inc.
By:________________
Title:
Smith, Barney Advisers, Inc.
By:_________________
Title:
Accepted:
The Boston Company Advisors, Inc.
By:_________________
Title
Appendix A
ADMINISTRATIVE SERVICES
Fund Accounting. Fund accounting services involve comprehensive
accrual-based recordkeeping and management information. They include
maintaining a fund's books and records in accordance with the Investment
Company Act of 1940, as amended (the "1940 Act" ), net asset value
calculation, daily dividend calculation, tax accounting and portfolio
accounting.
The designated fund accountants interact with the Fund's
custodian, transfer agent and investment adviser daily. As required,
the responsibilities of each fund accountant may include:
- Cash Reconciliation - Reconcile prior day's ending cash
balance per custodian's records and the accounting system to the prior
day's ending cash balance per fund accounting's cash availability
report;
- Cash Availability - Combine all activity affecting the
Fund's cash account and produce a net cash amount available for
investment;
- Formal Reconciliation - Reconcile system generated reports
to prior day's calculations of interest, dividends, amortization,
accretion, distributions, capital stock and net assets;
- Trade Processing - Upon receipt of instructions from the
investment adviser review, record and transmit buys and sells to the
custodian;
- Journal Entries - Input entries to the accounting system
reflecting shareholder activity and Fund expense accruals;
- Reconcile and Calculate N.O.A. (net other assets) - Compile
all activity affecting asset and liability accounts other than
investment account;
- Calculate Net Income, Mil Rate and Yield for Daily
Distribution
Funds - Calculate income on purchases and sales, calculate
change in income due to variable rate change; combine all daily income
less expenses to arrive at net income; calculate mil rate and yields (1
day, 7 day and 30 day);
- Mini-Cycle (except for Money Market Funds) - Review intra
day trial balance and reports, review trial balance N.O.A.;
- Holdings Reconciliation - Reconcile the portfolio holdings
per the system to custodian reports;
- Pricing - Determine N.A.V. for the Fund using market value
of all securities and currencies (plus N.O.A.), divided by the shares
outstanding, and investigate securities with significant price changes
(over 5%);
- Money Market Fund Pricing - Monitor valuation for compliance
with Rule 2a-7;
- System Check-Back - Verify the change in market value of
securities which saw trading activity per the system;
- Net Asset Value Reconciliation - Identify the impact of
current day's Fund activity on a per share basis;
- Reporting of Price to NASDAQ - 5:30 P.M. is the final
deadline for Fund prices being reported to the newspaper;
- Reporting of Price to Transfer Agent - N.A.V.s are reported
to transfer agent upon total completion of above activities.
In addition, fund accounting personnel: communicate corporate
actions of portfolio holdings to portfolio mangers; initiate
notification to custodian procedures on outstanding income receivables;
provide information to the Fund's treasurer for reports to shareholders,
SEC, Board, tax authorities, statistical and performance reporting
companies and the Fund's auditors; interface with Fund's auditors;
prepare monthly reconciliation packages, including expense pro forma;
prepare amortization schedules for premium and discount bonds based on
the effective yield method; prepare vault reconciliation reports to
indicate securities currently "out-for-transfer;" and calculate daily
expenses based on expense ratios supplied by Fund's treasurer.
Financial Administration. The financial administration services made
available to the Fund fall within three main categories: Financial
Reporting; Statistical Reporting; and Publications. The following is a
summary of the services made available to the Fund by the Financial
Administration Division:
Financial Reporting
- Coordinate the preparation and review of the annual, semi-
annual and quarterly portfolio of investments and financial statements
included in the Fund's shareholder reports.
Statistical Reporting
- Total return reporting;
- SEC 30-day yield reporting and 7-day yield reporting (for
money market funds);
- Prepare dividend summary;
- Prepare quarter-end reports;
- Communicate statistical data to the financial media
(Donoghue, Lipper, Morningstar, et al.).
Publications
- Coordinate the printing and mailing process with outside
printers for annual and semi-annual reports, prospectuses, statements of
additional information, proxy statements and special letters or
supplements;
Treasury. The following is a summary of the treasury services available
to the Fund:
- Provide an Assistant Treasurer for the Fund;
- Authorize payment of bills for expenses of the Fund;
- Establish and monitor the rate of expense accruals;
- Prepare financial materials for review by the Fund's Board
(e.g., Rule 2a-7, 10f-3 17a-7 and 17e-1 reports, repurchase agreement
dealer lists, securities transactions);
- Monitor mark-to-market comparisons for money market funds;
- Recommend valuations to be used for securities which are not
readily saleable;
- Function as a liaison with the Fund's outside auditors and
arrange for audits;
- Provide accounting, financial and tax support relating to
portfolio management and any contemplated changes in the fund's
structure or operations;
- Prepare and file forms with the Internal Revenue Service
* Form 8613
* Form 1120-RIC
* Board Members' and Shareholders' 1099s
* Mailings in connection with Section 852 and related
regulations.
Legal and Regulatory Services. The legal and regulatory services made
available to the Fund fall within four main areas: SEC and Public
Disclosure Assistance; Corporate and Secretarial Services; Compliance
Services; and Blue Sky Registration. The following is a summary of the
legal and regulatory services available to the Fund:
SEC and Public Disclosure Assistance
- File annual amendments to the Fund's registration
statements, including updating the prospectus and statement of
additional information where applicable;
- File annual and semi-annual shareholder reports with the
appropriate regulatory agencies;
- Prepare and file proxy statements;
- Provide legal assistance for shareholder communications.
Corporate and Secretarial Services
- Provide an Assistant Secretary for the Fund;
- Maintain general corporate calendar;
- Prepare agenda and background materials for Fund board
meetings, make presentations where appropriate, prepare minutes and
follow-up matters raised at Board meetings;
- Organize, attend and keep minutes of shareholder meetings;
- Maintain Articles of Incorporation and By-Laws of the Fund.
Legal Consultation and Business Planning
- Provide general legal advice on matters relating to
portfolio management, Fund operations and any potential changes in the
Fund's investment policies, operations or structure;
- Maintain continuing awareness of significant emerging
regulatory and legislative developments which may affect the Fund,
update the Fund's Board and the investment adviser on those developments
and provide related planning assistance where requested or appropriate;
- Develop or assist in developing guidelines and procedures to
improve overall compliance by the Fund and its various agents;
- Manage Fund litigation matters and assume full
responsibility for the handling of routine fund examinations and
investigations by regulatory agencies.
Compliance Services
The Compliance Department is responsible for preparing compliance
manuals, conducting seminars for fund accounting and advisory personnel
and performing on-going testing of the Fund's portfolio to assist the
Fund's investment adviser in complying with prospectus guidelines and
limitations, 1940 Act requirements and Internal Revenue Code
requirements. The Department may also act as liaison to the SEC during
its routine examinations of the Fund.
State Regulation
The State Regulation Department operates in a fully automated
environment using blue sky registration software development by Price
Waterhouse. In addition to being responsible for the initial and on-
going registration of shares in each state, the Department acts as
liaison between the Fund and state regulators, and monitors and reports
on shares sold and remaining registered shares available for sale.
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shared\domestic\clients\shearson\agr.doc
EXHIBIT 10
May 26, 1994
Smith Barney Shearson Daily Dividend Fund Inc.
Two World Trade Center
New York, New York 10048
RE: Post-Effective Amendment No. 24 to the Registration Statement for
Smith Barney Shearson Daily Dividend Fund Inc.
File Nos: 811-2914 and 2-63807
Gentlemen:
In connection with the registration of 1,384,900,184 shares of common
stock, $.01 par value per share (the "Shares"), of Smith Barney Shearson Daily
Dividend Fund Inc. (the "Fund"), a Maryland corporation, pursuant to Post-
Effective Amendment No. 24 to the Fund's Registration Statement under the
Securities Act of 1933, as amended (the "1933 Act"), and in reliance upon Rule
24e-2 under the Investment Company Act of 1940, as amended (the "1940 Act"),
you have requested that the undersigned provide the required legal opinion.
The undersigned is Vice President and Associate General Counsel of The
Boston Company Advisors, Inc., the Fund's sub-administrator, and in such
capacity, from time to time and for certain purposes, acts as counsel to the
Fund. I have examined copies of the Fund's Articles of Incorporation, as
amended, its By-Laws, resolutions adopted by its Board of Directors, and such
other records and documents as I have deemed necessary for purposes of this
opinion.
On the basis of the foregoing, I am of the opinion that the Shares when
sold in accordance with the terms of the Fund's current Prospectus and
Statement of Additional Information will, at the time of sale, be validly
issued, fully paid and non-assessable by the Fund. This opinion is for the
limited purposes expressed above and should not be deemed to be an expression
of opinion as to compliance with the 1933 Act, the 1940 Act or applicable
State "blue sky" laws in connection with the sales of the Shares.
I consent to the filing of this opinion with and as part of the
aforementioned Post-Effective Amendment to the Fund's Registration Statement.
Very truly yours,
/s/ Lee D. Augsburger
Lee D. Augsburger
Vice President and
Associate General Counsel
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Smith Barney Shearson Daily Dividend Fund Inc.:
We hereby consent to the following with respect to
Post-Effective Amendment No. 24 to the Registration Statement on
Form N-1A (File No. 2-63807) under the Securities Act of 1933,
as amended, of Smith Barney Shearson Daily Dividend Fund Inc.:
1. The incorporation by reference of our report dated May
10, 1994 accompanying the respective Annual Report dated
March 31, 1994 of the Smith Barney Shearson Daily Dividend Fund Inc. in the
Statement of Additional Information.
2. The reference to our firm under the heading "Financial
Highlights" in the Prospectus of the Smith Barney Shearson
Daily Dividend Fund Inc.
3. The reference to our firm under the heading "Counsel and
Auditors" in the aforementioned Statement of Additional
Information.
COOPERS & LYBRAND
Boston, Massachusetts
May 27, 1994
