FILE NO. 2-69938
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 30
To The
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
AND
THE INVESTMENT COMPANY ACT OF 1940
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
(Exact name of Registrant as specified
in the Articles of Incorporation)
388 Greenwich Street, New York, New York l0013
(Address of principal executive offices)
(212) 816-6474
(Registrant's telephone number)
Christina T. Sydor
388 Greenwich Street, New York, New York l0013 (22nd Floor)
(Name and address of agent for service)
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
XXX on July 29, 1999 pursuant to paragraph (b) of Rule 485
______60 days after filing pursuant to paragraph (a)(i)
on (date) pursuant to paragraph (a)(i)
______75 days after filing pursuant to paragraph (a)(ii)
______on (date) pursuant to paragraph (a)( ii) of Rule 485.
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective
Amendment.
PART A PROSPECTUS
[SMITH BARNEY MUTUAL FUNDS LOGO]
PROSPECTUS
MUNICIPAL MONEY MARKET FUND, INC.
CLASS A AND Y SHARES
- ---------------------------------------
JULY 29, 1999
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is accurate or complete. Any
statement to the contrary is a crime.
<PAGE>
<PAGE>
(This page intentionally left blank)
<PAGE>
MUNICIPAL MONEY MARKET FUND, INC.
CONTENTS
<TABLE>
<S> <C>
Investments, risks and performance......................... 2
More on the fund's investments............................. 6
Management................................................. 7
Choosing a class of shares to buy.......................... 8
Salomon Smith Barney brokerage accounts.................... 9
Letter of intent: Class Y shares........................... 9
Deferred sales charges..................................... 10
Buying shares.............................................. 11
Exchanging shares.......................................... 12
Redeeming shares........................................... 14
Other things to know about share transactions.............. 16
Distributions, dividends and taxes......................... 18
Share price................................................ 19
Financial highlights....................................... 20
</TABLE>
YOU SHOULD KNOW: An investment in the fund is not a bank deposit and is not
insured or guaranteed by the FDIC or any other government agency. There is no
assurance that the fund will be able to maintain a stable net asset value of
$1.00 per share.
Smith Barney Mutual Funds 1
<PAGE>
INVESTMENTS, RISKS AND PERFORMANCE
INVESTMENT OBJECTIVE
The fund seeks to provide income exempt from federal income tax from a portfolio
of high quality short-term municipal obligations selected for liquidity and
stability of principal.
PRINCIPAL INVESTMENT STRATEGIES
KEY INVESTMENTS The fund invests at least 80% of its assets in short-term high
quality "municipal securities," which are debt obligations issued by any of the
50 states and their political subdivisions, agencies and public authorities
(together with certain other governmental issuers such as Puerto Rico, the
Virgin Islands and Guam). The interest on these securities is exempt from
federal income tax. As a result, the interest rate on these securities normally
is lower than it would be if the securities were subject to federal taxation.
All of the securities in which the fund invests are rated in one of the two
highest short-term rating categories, or if unrated, of equivalent quality. All
of these securities have remaining maturities of 397 days or less. The fund
maintains a dollar-weighted average portfolio maturity of 90 days or less.
SELECTION PROCESS The manager selects securities primarily by identifying
undervalued sectors and individual securities. The manager only selects
securities of issuers which it believes present minimal credit risk. In
selecting individual securities, the manager:
- - Uses fundamental credit analysis to estimate the relative value and
attractiveness of various securities and sectors
- - Measures the potential impact of supply/demand imbalances for fixed versus
variable rate securities and for obligations of different states
- - Measures the yields available for securities with different maturities and a
security's maturity in light of the outlook for interest rates to identify
individual securities that offer return advantages at similar risk levels
- - May trade between general obligation and revenue bonds and among various
revenue bond sectors, such as housing, hospital and industrial development,
based on their apparent relative values
2 Municipal Money Market Fund, Inc.
<PAGE>
PRINCIPAL RISKS OF INVESTING IN THE FUND
Although the fund seeks to preserve the value of your investment at $1 per
share, it is possible to lose money by investing in the fund, or the fund could
underperform other short-term municipal debt instruments or money market funds,
if:
- - Interest rates rise, causing the value of the fund's portfolio to decline
- - The issuer of a security owned by the fund defaults on its obligation to pay
principal and/or interest or the security's credit rating is downgraded
- - Municipal securities fall out of favor with investors
- - Unfavorable legislation affects the tax-exempt status of municipal securities
- - The manager's judgment about the attractiveness, value or income potential of
a particular security proves to be incorrect
It is possible that some of the fund's income distributions may be, and
distributions of any gains generally will be, subject to federal taxation. Some
of the fund's income may be subject to the federal alternative minimum tax. In
addition, distributions of the fund's income and gains will be subject to state
personal income taxation. While not expected, the fund may occasionally realize
taxable gains on the sale of its securities.
WHO MAY WANT TO INVEST The fund may be an appropriate investment if you are a
taxpayer:
- - In a high federal tax bracket seeking current income exempt from federal
taxation
- - Seeking exposure to short-term municipal securities at a minimum level of
additional risk
- - Are looking to allocate a portion of your assets to money market securities
Smith Barney Mutual Funds 3
<PAGE>
RISK RETURN BAR CHART
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. Past performance does not
necessarily indicate how the fund will perform in the future. The bar chart
shows the performance of the fund's Class A shares for each of the past 10 full
calendar years. Class Y shares would have different performance because of its
different expenses.
TOTAL RETURN: CLASS A SHARES
Risk bar chart
<TABLE>
<S> <C>
1989 6.00
1990 5.64
1991 4.14
1992 2.50
1993 1.90
1994 2.35
1995 3.43
1996 2.97
1997 3.13
1998 2.96
</TABLE>
CALENDAR YEARS ENDED DECEMBER 31
QUARTERLY RETURNS (past 10 years):
Highest: 1.58% in 4th quarter 1989; Lowest: 0.44% in 1st quarter 1994
Year to date: 1.28% through 6/30/99.
RISK RETURN TABLE
This table indicates the risks of investing in the fund by comparing the average
annual total return of each class for the periods shown with that of the 90-day
Treasury bill. This table assumes redemption of shares at the end of the period,
and reinvestment of distributions and dividends.
AVERAGE ANNUAL TOTAL RETURNS
CALENDAR YEARS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
CLASS INCEPTION DATE 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
<S> <C> <C> <C> <C> <C>
A 4/3/81 2.96% 2.97% 3.50% --
Y 2/12/96 2.84% n/a n/a 3.02%
90 day T-bill * 4.88% 5.02% 5.32% 6.65%
</TABLE>
*Index Comparison begins on April 30, 1981.
7 day yield: As of December 31, 1998:
Class A -- 3.09%; Class Y -- 3.15%.
4 Municipal Money Market Fund, Inc.
<PAGE>
FEE TABLE
This table sets forth the fees and expenses you will pay if you invest in fund
shares.
SHAREHOLDER FEES
<TABLE>
<CAPTION>
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) CLASS A CLASS Y
<S> <C> <C>
Maximum sales charge (load) imposed on purchases None None
(as a % of offering price)
Maximum deferred sales charge (load) (as a % of the
lower of net asset value at purchase or redemption) None* None
</TABLE>
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A CLASS Y
<S> <C> <C>
Management fees 0.48% 0.48%
Distribution and service (12b-1) fees 0.10% None
Other expenses 0.04% 0.01%
Total annual fund operating expenses 0.62% 0.49%
</TABLE>
*Class A Shares acquired through an exchange for shares of another Smith Barney
Mutual Fund which were originally acquired at net asset value subject to a
contingent deferred sales charge ("CDSC") remain subject to the original fund's
CDSC.
EXAMPLE
This example helps you compare the costs of investing in the fund with the costs
of investing in other mutual funds. Your actual costs may be higher or lower.
The example assumes:
- - You invest $10,000 in the fund for the period shown
- - Your investment has a 5% return each year
- - You reinvest all distributions and dividends without a sales charge
- - The fund's operating expenses remain the same
- - Redemption of your shares at the end of the period
NUMBER OF YEARS YOU OWN YOUR SHARES
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $63 $199 $346 $774
Class Y $50 $157 $274 $616
</TABLE>
Smith Barney Mutual Funds 5
<PAGE>
MORE ON THE FUND'S INVESTMENTS
MUNICIPAL SECURITIES The municipal securities in which the fund invests include
general obligation and revenue bonds and notes and tax-exempt commercial paper.
The fund may invest in floating or variable rate municipal securities. Some of
these securities may have stated final maturities of more than 397 days but have
demand features that entitle the fund to receive the principal amount of the
securities either at any time or at specified intervals.
STRUCTURED SECURITIES The fund may invest up to 20% of its assets in three
types of structured securities: tender option bonds, partnership interests and
swap-based securities. These securities represent participation interests in a
special purpose trust or partnership holding one or more municipal bonds and/or
municipal bond interest rate swaps. A typical swap enables the trust or
partnership to exchange a municipal bond interest rate for a floating or
variable, short-term municipal interest rate.
These structured securities are a type of derivative instrument. Unlike some
derivatives, these securities are not designed to leverage the fund's portfolio
or increase its exposure to interest rate risk.
Investments in structured securities raise certain tax, legal, regulatory and
accounting issues which may not be presented by investments in other municipal
bonds. These issues could be resolved in a manner that could hurt the
performance of the fund.
DEFENSIVE INVESTING The fund may depart from its principal investment
strategies in response to adverse market, economic or political conditions by
taking temporary defensive positions in all types of taxable money market and
short-term debt securities. If the fund takes a temporary defensive position, it
may be unable to achieve its investment goal.
6 Municipal Money Market Fund, Inc.
<PAGE>
MANAGEMENT
MANAGER The fund's investment manager is SSBC Fund Management Inc., an
affiliate of Salomon Smith Barney Inc. The manager's address is 388 Greenwich
Street, New York, New York 10013. The manager selects the fund's investments and
oversees its operations. The manager and Salomon Smith Barney are subsidiaries
of Citigroup Inc. Citigroup businesses produce a broad range of financial
services -- asset management, banking and consumer finance, credit and charge
cards, insurance, investments, investment banking and trading -- and use diverse
channels to make them available to consumer and corporate customers around the
world.
MANAGEMENT FEES During the fiscal year ended March 31, 1999, the manager
received an advisory fee equal to 0.48% of the fund's average daily net assets.
DISTRIBUTOR The fund has entered into an agreement with CFBDS, Inc. to
distribute the fund's shares. A selling group consisting of Salomon Smith Barney
and other broker-dealers sells fund shares to the public.
DISTRIBUTION PLAN The fund has adopted a Rule 12b-1 distribution plan for its
Class A shares. Under the plan, Class A shares pay a service fee. The fee in
Class A shares is an ongoing expense and, over time, it increases the cost of
your investment and may cost you more than other types of sales charges.
YEAR 2000 ISSUE Information technology experts are concerned about computer
systems' ability to process date-related information on and after January 1,
2000. This situation, commonly known as the "Year 2000" issue, could have an
adverse impact on the fund. The cost of addressing the Year 2000 issue, if
substantial, could adversely affect companies and governments that issue
securities held by the fund. The manager and Salomon Smith Barney are addressing
the Year 2000 issue for their systems. The fund has been informed by other
service providers that they are taking similar measures. Although the fund does
not expect the Year 2000 issue to adversely affect it, the fund cannot guarantee
the efforts of the fund, which are limited to requesting and receiving reports
from its service providers, or its service providers to correct the problem will
be successful.
Smith Barney Mutual Funds 7
<PAGE>
CHOOSING A CLASS OF SHARES TO BUY
You may purchase Class A shares which are sold at net asset value with no
initial or deferred sales charge. Class A shares are subject to ongoing
distribution and service fees.
You may purchase Class Y shares only if you are making an initial investment of
at least $15,000,000. Class Y shares are sold at net asset value
You may buy shares from:
- - A Salomon Smith Barney Financial Consultant
- - An investment dealer in the selling group or a broker that clears through
Salomon Smith Barney -- a dealer representative
INVESTMENT MINIMUMS Minimum initial and additional investment amounts vary
depending on the class of shares you buy and the nature of your investment
account.
<TABLE>
<CAPTION>
INITIAL ADDITIONAL
CLASS A CLASS Y ALL CLASSES
<S> <C> <C> <C>
General $1,000 $15 million $50
Uniform Gift to Minors Accounts $50 $15 million $50
</TABLE>
8 Municipal Money Market Fund, Inc.
<PAGE>
SALOMON SMITH BARNEY BROKERAGE ACCOUNTS
If you maintain certain types of securities brokerage accounts with Salomon
Smith Barney, you may request that your free credit balances (i.e., immediately
available funds) be invested automatically in Class A shares of a designated
money market fund either daily or weekly. A complete record of fund dividends,
purchases and redemptions will be included on your regular Salomon Smith Barney
brokerage statement. In addition to this sweep service, shareholders of Salomon
Smith Barney FMA PLUS(SM) accounts may also take advantage of: free dividend
reinvestment, unlimited checking, 100 free ATM withdrawals each year, gain/loss
analysis and online computer access to account information. Contact your Salomon
Smith Barney Financial Consultant for more complete information.
LETTER OF INTENT: CLASS Y SHARES
You may buy Class Y shares of the fund at net asset value with no initial sales
charge. To purchase Class Y shares, you must meet the $15,000,000 initial
investment requirement. You can use a letter of intent to meet this requirement
by buying Class Y shares of a fund over a 13-month period. To qualify, you must
initially invest $5,000,000.
Smith Barney Mutual Funds 9
<PAGE>
DEFERRED SALES CHARGES
If Class A shares of the fund are acquired by exchange from another Smith Barney
fund subject to a deferred sales charge the original deferred sales charge will
apply to these shares. If you redeem these shares within 12 months of the date
you purchased shares of the original fund, the fund's shares may be subject to a
deferred sales charge of 1.00%.
The deferred sales charge is based on the net asset value at the time of
purchase or redemption, whichever is less, and therefore you do not pay a sales
charge on amounts representing appreciation or depreciation.
You do not pay a deferred sales charge on:
- - Shares exchanged for shares of another Smith Barney fund
- - Shares that represent reinvested distributions and dividends
- - Shares that are no longer subject to the deferred sales charge
If you redeemed shares of a Smith Barney fund in the past 60 days and paid a
deferred sales charge, you may buy shares of the fund at the current net asset
value and be credited with the amount of the deferred sales charge, if you
notify your Salomon Smith Barney Financial Consultant or dealer representative.
Salomon Smith Barney receives deferred sales charges as partial compensation for
its expenses in selling shares, including the payment of compensation to your
Salomon Smith Barney Financial Consultant or dealer representative.
DEFERRED SALES CHARGE WAIVERS
The deferred sales charge for Class A shares will generally be waived:
- - For involuntary redemptions of small account balances
- - For 12 months following the death or disability of a shareholder
If you want to learn more about additional waivers of deferred sales charges,
contact your Salomon Smith Barney Financial Consultant or dealer representative
or consult the Statement of Additional Information ("SAI").
10 Municipal Money Market Fund, Inc.
<PAGE>
BUYING SHARES
<TABLE>
<S> <C>
Through a You should contact your Salomon Smith Barney
Salomon Smith Financial Consultant or dealer representative to
Barney Financial open a brokerage account and make arrangements
Consultant to buy shares.
or dealer
representative If you do not provide the following information,
your order will be rejected:
- Class of shares being bought
- Dollar amount or number of shares being bought
You should pay for your shares through your
brokerage account no later than the third
business day after you place your order. Salomon
Smith Barney or your dealer representative may
charge an annual account maintenance fee.
- -----------------------------------------------------------------------
Through the Certain investors who are clients of the selling
fund's transfer group are eligible to buy shares directly from
agent the fund.
- Write the transfer agent at the following
address:
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
(SPECIFY CLASS OF SHARES)
C/O FIRST DATA INVESTOR SERVICES GROUP, INC.
P.O. BOX 5128
WESTBOROUGH, MASSACHUSETTS 01581-5128
- Enclose a check to pay for the shares. For
initial purchases, complete and send an account
application.
- For more information, call the transfer agent
at 1-800-451-2010.
For more information, contact your Salomon Smith
Barney Financial Consultant, dealer
representative or the transfer agent or consult
the SAI.
</TABLE>
Smith Barney Mutual Funds 11
<PAGE>
EXCHANGING SHARES
<TABLE>
<S> <C>
Smith Barney offers You should contact your Salomon Smith Barney
a distinctive Financial Consultant or dealer representative
family of funds to exchange into other Smith Barney funds. Be
tailored to help sure to read the prospectus of the Smith
meet the varying Barney fund you are exchanging into.
needs of both
large and small - You may exchange shares only for shares of
investors the same class of another Smith Barney fund.
Not all Smith Barney funds offer all
classes.
- Not all Smith Barney funds may be offered
in your state of residence. Contact your
Salomon Smith Barney Financial Consultant,
dealer representative or the transfer
agent.
- You must meet the minimum investment amount
for each fund.
- If you hold share certificates, the
transfer agent must receive the certificates
endorsed for transfer or with signed stock
powers (documents transferring ownership of
certificates) before the exchange is
effective.
- The fund may suspend or terminate your
exchange privilege if you engage in an
excessive pattern of exchanges.
- --------------------------------------------------------------------
Sales charges Your shares may be subject to an initial
sales charge at the time of the exchange. For
more information, contact your Salomon Smith
Barney Financial Consultant, dealer
representative or the transfer agent.
Your deferred sales charge (if any) will
continue to be measured from the date of your
original purchase of another fund's shares
subject to a deferred sales charge.
- --------------------------------------------------------------------
</TABLE>
12 Municipal Money Market Fund, Inc.
<PAGE>
<TABLE>
<C> <S>
By telephone If you do not have a brokerage account, you
may be eligible to exchange shares through
the transfer agent. You must complete an
authorization form to authorize telephone
transfers. If eligible, you may make
telephone exchanges on any day the New York
Stock Exchange is open. Call the transfer
agent at 1-800-451-2010 between 9:00 a.m. and
5:00 p.m. (Eastern time). Requests received
after the close of regular trading on the
Exchange are priced at the net asset value
next determined.
You can make telephone exchanges only between
accounts that have identical registrations.
- --------------------------------------------------------------------
By mail If you do not have a Salomon Smith Barney
brokerage account, contact your dealer
representative or write to the transfer agent
at the address on the following page.
</TABLE>
Smith Barney Mutual Funds 13
<PAGE>
REDEEMING SHARES
<TABLE>
<C> <S>
Generally Contact your Salomon Smith Barney Financial
Consultant or dealer representative to redeem
shares of the fund.
If you hold share certificates, the transfer
agent must receive the certificates endorsed
for transfer or with signed stock powers
before the redemption is effective.
If the shares are held by a fiduciary or
corporation, other documents may be required.
Your redemption proceeds will be sent within
three business days after your request is
received in good order. However, if you
recently purchased your shares by check, your
redemption proceeds will not be sent to you
until your original check clears, which may
take up to 15 days.
If you have a Salomon Smith Barney brokerage
account, your redemption proceeds will be
placed in your account and not reinvested
without your specific instruction. In other
cases, unless you direct otherwise, your
redemption proceeds will be paid by check
mailed to your address of record.
- --------------------------------------------------------------------
By mail For accounts held directly at the fund, send
written requests to the transfer agent at the
following address:
SMITH BARNEY MUNICIPAL MONEY MARKET FUND,
INC.
(SPECIFY CLASS OF SHARES)
C/O FIRST DATA INVESTOR SERVICES GROUP,
INC.
P.O. BOX 5128
WESTBOROUGH, MASSACHUSETTS 01581-5128
Your written request must provide the
following:
- Your account number
- The class of shares and the dollar amount
or number of shares to be redeemed
- Signatures of each owner exactly as the
account is registered
- --------------------------------------------------------------------
</TABLE>
14 Municipal Money Market Fund, Inc.
<PAGE>
<TABLE>
<C> <S>
By telephone If you do not have a brokerage account, you
may be eligible to redeem shares in amounts
up to $10,000 per day through the transfer
agent. You must complete an authorization
form to authorize telephone redemptions. If
eligible, you may request redemptions by
telephone on any day the New York Stock
Exchange is open. Call the transfer agent at
1-800-451-2010 between 9:00 a.m. and 5:00
p.m. (Eastern time). Requests received after
the close of regular trading on the Exchange
are priced at the net asset value next
determined.
Your redemption proceeds can be sent by check
to your address of record or by wire transfer
to a bank account designated on your
authorization form. You must submit a new
authorization form to change the bank account
designated to receive wire transfers and you
may be asked to provide certain other
documents.
- --------------------------------------------------------------------
For more information, contact your Salomon
Smith Barney Financial Consultant or dealer
representative or consult the SAI.
</TABLE>
Smith Barney Mutual Funds 15
<PAGE>
OTHER THINGS TO KNOW ABOUT SHARE TRANSACTIONS
When you buy, exchange or redeem shares, your request must be in good order.
This means you have provided the following information, without which your
request will not be processed:
- - Name of the fund
- - Account number
- - Class of shares being bought, exchanged or redeemed
- - Dollar amount or number of shares being bought, exchanged or redeemed
- - Signature of each owner exactly as the account is registered
A request to purchase becomes effective only when Salomon Smith Barney, a
selling group member or the transfer agent receives, or converts the purchase
amount into, federal funds. The transfer agent will try to confirm that any
telephone exchange or redemption request is genuine by recording calls, asking
the caller to provide a personal identification number for the account, sending
you a written confirmation or requiring other confirmation procedures from time
to time.
SIGNATURE GUARANTEES To be in good order, your redemption request must include
a signature guarantee if you:
- - Are redeeming over $10,000 of shares
- - Are sending signed share certificates or stock powers to the transfer agent
- - Instruct the transfer agent to mail the check to an address different from the
one on your account
- - Changed your account registration
- - Want the check paid to someone other than the account owner(s)
- - Are transferring the redemption proceeds to an account with a different
registration
You can obtain a signature guarantee from most banks, dealers, brokers, credit
unions and federal savings and loan institutions, but not from a notary public.
The fund has the right to:
- - Suspend the offering of shares
- - Waive or change minimum and additional investment amounts
- - Reject any purchase or exchange order
- - Change, revoke or suspend the exchange privilege
- - Suspend telephone transactions
16 Municipal Money Market Fund, Inc.
<PAGE>
- - Suspend or postpone redemptions of shares on any day when trading on the New
York Stock Exchange is restricted, or as otherwise permitted by the Securities
and Exchange Commission
- - Pay redemption proceeds by giving you securities. You may pay transaction
costs to dispose of the securities.
SMALL ACCOUNT BALANCES If your account falls below $500 because of a redemption
of fund shares, the fund may ask you to bring your account up to $500. If your
account is still below $500 after 60 days, the fund may close your account and
send you the redemption proceeds.
EXCESSIVE EXCHANGE TRANSACTIONS The manager may determine that a pattern of
frequent exchanges is detrimental to the fund's performance and other
shareholders. If so, the fund may limit additional purchases and/or exchanges by
the shareholder.
SHARE CERTIFICATES The fund does not issue share certificates unless a written
request signed by all registered owners is made to the transfer agent. If you
hold share certificates it will take longer to exchange or redeem shares.
Smith Barney Mutual Funds 17
<PAGE>
DISTRIBUTIONS, DIVIDENDS AND TAXES
DIVIDENDS The fund declares a dividend of substantially all of its net
investment income on each day the New York Stock Exchange (NYSE) is open. Income
dividends are paid monthly. The fund generally makes capital gain distributions,
if any, once a year, typically in December. The fund may pay additional
distributions and dividends at other times if necessary for the fund to avoid a
federal tax. Capital gain distributions and dividends are reinvested in
additional fund shares of the same class you hold. The fund expects
distributions to be primarily from income. The fund intends to satisfy
conditions that will enable it to pay "exempt-interest dividends" to its
shareholders. Exempt-interest dividends are generally not subject to regular
federal income taxes, although, may be considered taxable for certain state and
local income (or intangible) tax purposes. You do not pay a sales charge on
reinvested distributions or dividends. Alternatively, you can instruct your
Salomon Smith Barney Financial Consultant, dealer representative or the transfer
agent to have your distributions and/or dividends paid in cash. You can change
your choice at any time to be effective as of the next distribution or dividend,
except that any change given to the transfer agent less than five days before
the payment date will not be effective until the next distribution or dividend
is paid.
TAXES In general, redeeming shares, exchanging shares and receiving
distributions (whether in cash or additional shares) are all taxable events.
<TABLE>
<CAPTION>
TRANSACTION FEDERAL TAX STATUS
<S> <C>
Redemption or exchange of shares Usually no gain or loss; loss may
result to extent of any deferred
sales charge
Long-term capital gain distributions Long-term capital gain
Short-term capital gain distributions Ordinary income
Dividends Exempt if from interest on tax-exempt
securities, otherwise ordinary income
</TABLE>
The fund anticipates that it will normally not earn or distribute any long-term
capital gains.
After the end of each year, the fund will provide you with information about the
distributions and dividends you received and any redemptions of shares during
the previous year. If you do not provide the fund with your correct taxpayer
identification number and any required certifications, you may be subject to
back-up withholding of 31% of your distributions and dividends. Because each
shareholder's circumstances are different and special tax rules may apply, you
should consult your tax adviser about your investment in the fund.
18 Municipal Money Market Fund, Inc.
<PAGE>
SHARE PRICE
You may buy, exchange or redeem shares at their net asset value, plus any
applicable sales charge, next determined after receipt of your request in good
order. The fund's net asset value is the value of its assets minus its
liabilities. Net asset value is calculated separately for each class of shares.
The fund calculates its net asset value every day the New York Stock Exchange is
open. The Exchange is closed on certain holidays listed in the SAI. This
calculation is done when regular trading closes on the Exchange (normally 4:00
p.m., Eastern time).
The fund uses the amortized cost method to value its portfolio securities. Using
this method, the fund constantly amortizes over the remaining life of a security
the difference between the principal amount due at maturity and the cost of the
security to the fund. The fund intends to use its best efforts to continue to
maintain a constant net asset value of $1.00.
<TABLE>
<CAPTION>
FORM OF PURCHASE IS EFFECTIVE
PURCHASE PAYMENT AND DIVIDENDS BEGIN
<S> <C> <C>
-- Payment in federal If received before At the close of
funds the close of regular regular trading on
trading on the the Exchange on that
Exchange: day
-- Having a If received after the At the close of
sufficient cash close of regular regular trading on
balance in your trading on the the Exchange on the
account with Exchange: next business day
Salomon Smith
Barney or a
selling group
member
-------------------------------------------------------------------
-- Other forms of At the close of
payment, with regular trading on
conversion into, the Exchange on the
or advance of, next business day
federal funds by
Salomon Smith
Barney or a
selling group
member
-- Other forms of
payment received
by the transfer
agent
</TABLE>
Salomon Smith Barney or members of the selling group must transmit all orders to
buy, exchange or redeem shares to the fund's agent before the agent's close of
business.
Smith Barney Mutual Funds 19
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand the
performance of each class for the past 5 years (or since inception if less than
5 years). Certain information reflects financial results for a single share.
Total return represents the rate that a shareholder would have earned (or lost)
on a fund share assuming reinvestment of all dividends and distributions. The
information in the following tables was audited by KPMG LLP, independent
accountants, whose report, along with the fund's financial statements, is
included in the annual report (available upon request).
FOR A CLASS A SHARE OF CAPITAL STOCK OUTSTANDING
THROUGHOUT EACH YEAR ENDED MARCH 31:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
Net asset value, beginning of
year $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------
Net investment income(1) 0.028 0.031 0.029 0.033 0.027
Dividends from net investment
income (0.028) (0.031) (0.029) (0.033) (0.027)
- -----------------------------------------------------------------------------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------
Total return 2.84% 3.15% 2.94% 3.34% 2.71%
- -----------------------------------------------------------------------------
Net assets, end of year
(millions) $7,104 $6,336 $5,562 $5,395 $4,651
- -----------------------------------------------------------------------------
Ratios to average net assets:
Expenses(1)(2) 0.62% 0.61% 0.67% 0.63% 0.61%
Net investment income 2.79 3.10 2.90 3.28 3.01
- -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(1) The manager has waived a part of its fees for the years
ended March 31, 1996 and March 31, 1995. If such fees were
not waived, the per share effect on net investment income
and expense ratios would have been as follows:
</TABLE>
<TABLE>
<CAPTION>
PER SHARE DECREASES
OF NET INVESTMENT EXPENSE RATIOS
INCOME WITHOUT FEE WAIVERS
1996 1995 1996 1995
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $0.0001 $0.0002 $0.64% 0.63%
----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(2) As a result of voluntary expense limitations, expense ratios
will not exceed 0.70% of any class of the fund.
</TABLE>
20 Municipal Money Market Fund, Inc.
<PAGE>
FOR A CLASS Y SHARE OF CAPITAL STOCK OUTSTANDING
THROUGHOUT EACH YEAR ENDED MARCH 31:
<TABLE>
<CAPTION>
1999 1998 1997 1996(1)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------
Net investment income 0.029 0.032 0.030 0.004
Dividends from net investment
income (0.029) (0.032) (0.030) (0.004)
- ---------------------------------------------------------------------------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00
- ---------------------------------------------------------------------------
Total return 2.95% 3.25% 3.04% 0.39%(2)
- ---------------------------------------------------------------------------
Net assets, end of year (millions) $24.0 $0.5 $5.0 $18.0
- ---------------------------------------------------------------------------
Ratio to average net assets:
Expenses(4) 0.49% 0.52% 0.57% 0.55(3)
Net investment income 2.90 3.23 3.00 2.81(3)
- ---------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(1) For the period from February 12, 1996 (inception date) to
March 31, 1996.
(2) Total return is not annualized, as it may not be
representative of the total return for the year.
(3) Annualized.
(4) As a result of the voluntary expense limitations, expense
ratios will not exceed 0.70% of any class of the fund.
</TABLE>
Smith Barney Mutual Funds 21
<PAGE>
[SALOMON SMITH BARNEY LOGO]
MUNICIPAL MONEY MARKET FUND, INC.
SHAREHOLDER REPORTS Annual and semiannual reports to shareholders provide
additional information about the fund's investments. These reports discuss the
market conditions and investment strategies that affected the fund's
performance.
The fund sends only one report to a household if more than one account has the
same address. Contact your Salomon Smith Barney Financial Consultant, dealer
representative or the transfer agent if you do not want this policy to apply to
you.
STATEMENT OF ADDITIONAL INFORMATION The statement of additional information
provides more detailed information about the fund and is incorporated by
reference into (is legally part of) this prospectus.
You can make inquiries about the fund or obtain shareholder reports or the
statement of additional information (without charge) by contacting your Salomon
Smith Barney Financial Consultant or dealer representative, by calling the fund
at 1-800-451-2010, or by writing to the fund at Smith Barney Mutual Funds, 388
Greenwich Street, MF2, New York, New York 10013.
Visit our web site. Our web site is located at WWW.SMITHBARNEY.COM
You can also review and copy the fund's shareholder reports, prospectus and
statement of additional information at the Securities and Exchange Commission's
Public Reference Room in Washington, D.C. You can get copies of these materials
for a duplicating fee by writing to the Public Reference Section of the
Commission, Washington, D.C. 20549-6009. Information about the public reference
room may be obtained by calling 1-800-SEC-0330. You can get the same information
free from the Commission's Internet web site at HTTP:WWW.SEC.GOV
If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. Neither the fund nor the distributor is
offering to sell shares of the fund to any person to whom the fund may not
lawfully sell its shares.
Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
(Investment Company Act
file no. 811-03112)
[FD2310 7/99]
<PAGE>
PART B STATEMENT OF ADDITIONAL INFORMATION
Smith Barney
MUNICIPAL MONEY MARKET FUND, INC.
388 Greenwich Street
New York, New York 10013
(800) 451-2010
Statement Of Additional
Information
July 29, 1999
This Statement of Additional Information (the "SAI") expands upon and
supplements the information contained in the current prospectus of Smith
Barney Municipal Money Market Fund Inc. (the "fund") dated July 29, 1999,
as amended or supplemented from time to time, and should be read in
conjunction with the fund's prospectus. Additional information about the
fund's investments is available in the fund's annual and semi-annual
reports to shareholders. The fund's prospectus may be obtained free of
charge from your Salomon Smith Barney Financial Consultant or by writing
or calling the fund at the address or telephone number set forth above.
This SAI, although not in itself a prospectus, is incorporated by
reference into the prospectus in its entirety.
TABLE OF CONTENTS
DIRECTORS AND EXECUTIVE OFFICERS OF THE FUND 2
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES 9
INVESTMENT MANAGEMENT 12
PURCHASE OF SHARES 12
REDEMPTION OF SHARES 12
DISTRIBUTOR 15
PERFORMANCE DATA AND COMPUTATION OF YIELD 17
VALUATION tc "VALUATION" OF SHARES AND AMORTIZED COST VALUATION 17
EXCHANGE PRIVILEGE 18
TAXES 19
ADDITIONAL INFORMATION 20
FINANCIAL STATEMENTS 21
APPENDIX A - RATINGS OF MUNICIPAL OBLIGATIONS A-1
DIRECTORS AND EXECUTIVE OFFICERS OF THE FUND tc "DIRECTORS AND EXECUTIVE
OFFICERS OF THE FUND"
The names of the Directors and executive officers of the fund,
together with information as to their principal business occupations
during the past five years, are set forth 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.
Lee Abraham, Director (Age 71). Retired; formerly Chairman and
Chief Executive Officer of Associated Merchandising Corporation, a major
retail merchandising and sourcing organization. His address is 106 Barnes
Road, Stamford, Connecticut 06902.
Allan J. Bloostein, Director (Age 69). President of Allan J.
Bloostein Associates, a consulting firm; Director of CVS Corporation, a
drug store chain, and Taubman Centers Inc., a real estate development
company; Retired Vice Chairman and Director of The May Department Stores
Company; His address is 27 West 67th Street, New York, New York 10023.
Richard E. Hanson, Jr., Director (Age 57). Head of School, The New
Atlanta Jewish Community High School, Atlanta Georgia; formerly
Headmaster, The Peck School, Morristown, New Jersey; prior to July 1,
1994, Headmaster, Lawrence Country Day School-Woodmere Academy, Woodmere,
New York. His address is 58 Ivy Chase, Atlanta, Georgia 30342.
Jane Dasher, Director (Age 49). Investment Officer of Korsant
Partners, a family investment company; Prior to 1997, an Independent
Financial Consultant; From 1975 to 1987 held various positions with Philip
Morris Companies, Inc. including Director of Financial Services,
Treasurers Department; Her address is 283 Greenwich Avenue, Greenwich
Connecticut 06830.
Donald R. Foley, Director (Age 76). Retired; 3668 Freshwater Drive,
Jupiter, Florida 33477; Formerly Vice President of Edwin Bird Wilson,
Incorporated (an advertising agency).
Paul Hardin, Director (Age 67). Professor of Law at University of
North Carolina at Chapel Hill; 12083 Morehead, Chapel Hill, North Carolina
27514; Director of The Summit Bancorporation; Formerly, Chancellor of the
University of North Carolina at Chapel Hill.
*Heath B. McLendon, Chairman of the Board, President and Chief
Executive Officer (Age 65). Managing Director of Salomon Smith Barney
Inc. ("Salomon Smith Barney"), Chairman of the Board and President of SSBC
Fund Management Inc. ("SSBC" or the "manager") (formerly known as Mutual
Management Corp.) and Travelers Investment Adviser, Inc. ("TIA"); Chairman
or Co-Chairman of the Board of 64 investment companies managed by
affiliates of Citigroup Inc. ("Citigroup"); and former Chairman of the
Board of Smith Barney Strategy Advisers Inc.
Roderick C. Rasmussen, Director (Age 72). Investment Counselor; 9
Cadence Court, Morristown, New Jersey 07960; Formerly Vice President of
Dresdner and Company Inc. (investment counselors).
John P. Toolan, Director (Age 68). Retired; 13 Chadwell Place,
Morristown, New Jersey 07960; Trustee of John Hancock Funds; Formerly,
Director and Chairman of Salomon Smith Barney Trust Company, Director of
Smith Barney Holdings Inc. and various subsidiaries, Senior Executive Vice
President, Director and Member of the Executive Committee of Smith Barney.
*Lewis E. Daidone (Age 41). Senior Vice President and Treasurer (Age
41).Managing Director of Salomon Smith Barney; Director and Senior Vice
President of SSBC and TIA; Senior Vice President and Treasurer of 59
investment companies associated with Citigroup.
*Joseph Deane, Vice President, (Age 51 ). Managing Director of
Salomon Smith Barney and Vice President of three investment companies
associated with Salomon, Smith Barney and the manager.
*Joseph Benevento, Vice President (Age 30). Director of Salomon
Smith Barney and Vice President of Smith Barney Muni Funds.
*Irving David, Controller and Assistant Secretary (Age 38). Director
of Salomon Smith Barney. Controller or Assistant Treasurer of 43
investment companies associated with Citigroup.
*Christina T. Sydor, Secretary (Age 48). Managing Director of
Salomon Smith Barney; General Counsel and Secretary of SSBC and TIA. Ms.
Sydor serves as Secretary of 59 Salomon Smith Barney Mutual Funds.
The business address of each of the officers of the Company listed
above is 388 Greenwich Street, New York, NY 10013. Such persons are
compensated by Salomon Smith Barney Inc. ("Salomon Smith Barney") and are
not separately compensated by the Company.
As of July 16, 1999, the Directors and officers of the fund as a
group owned less than 1% of the outstanding common stock of the fund. As
of July 16, 1999, to the knowledge of the fund and the Board, the
following shareholders or "groups" (as that term is used in Section 13(d)
of the Securities Act of 1934) beneficially owned more than 5% of the
outstanding shares of the fund:
Class Y Shares
Stephen W. Bisson
P.O. Box 313
East Walpole, MA 02032-0313
owned 6,176,996.640 (92.11%) shares
Steven Meyer, Trustee
Marybeth Bisson, Irrevocable TR
P.O. Box 313
East Walpole, MA 02032-0313
owned 374,663.790 (5.59%) shares
The following table shows the compensation paid by the Company to
each director during the Company's last fiscal year. None of the officers
of the Company received any compensation from the Company for such period.
Fees for directors who are not "interested persons" of the Company and who
are directors of a group of funds sponsored by Salomon Smith Barney are
set at $42,000 per annum and are allocated based on relative net assets of
each fund in the group. In addition, these directors received $100 per
fund or portfolio for each meeting attended and plus travel and out-of-
pocket expenses incurred in connection with board meetings. The board
meeting fees and out-of-pocket expenses are borne equally by each
individual fund or portfolio in the group. During the fiscal year ended
March 31, 1999, the fund incurred expenses which totaled $13,711.
Officers and interested directors of the Company are compensated by
Salomon Smith Barney.
COMPENSATION TABLE
Name of Director
Aggregate
Compensation
from the
fund
For Fiscal
Year Ended
3/31/99
Pension or
Retirement
Benefits
Accrued as
Part of
fund's
expenses
Total
Compensation
from Fund
Complex for
Calendar
Year as of
12/31/98
Total Number
of Funds for
Which Director
Serves within
Fund Complex
Lee Abraham+
$0
$0
$47,750
12
Allen J.
Bloostein+
0
0
90,500
19
Richard E. Hanson,
Jr .+
0
0
47,950
12
Jane Dasher++
0
0
0
9
Donald R. Foley**
4,506
0
57,100
12
Paul Hardin
4,073
0
71,400
14
Heath B. McLendon*
0
0
0
64
Roderick C.
Rasmussen
4,253
0
57,100
12
John P. Toolan**
4,073
0
54,700
12
* Designates a director who is an "interested person" of the Company.
** Pursuant to the Company's deferred compensation plan, the indicated
directors have elected to defer the following amounts of their
compensation from the Company: Donald R Foley: $1,893, and John P.
Toolan: $4,073, and the following amounts of their total compensation
from the Fund Complex: Donald R. Foley: $21,000 and John P. Toolan:
$54,700.
+ Elected by the fund's board of directors on May 14, 1999.
++ Elected by the fund's board of directors on March 19, 1999.
Note: Upon attainment of age 72 the Company's current directors may elect
to change to emeritus status. Any directors elected or appointed to
the Board of Directors in the future will be required to change to
emeritus status upon attainment of age 80. Directors Emeritus are
entitled to serve in emeritus status for a maximum of 10 years during
which time they are paid 50% of the annual retainer fee and meeting
fees otherwise applicable to the Company's directors, together with
reasonable out-of-pocket expenses for each meeting attended. During
the Company's last fiscal year, aggregate compensation from the Company
to Emeritus Directors totaled $1,976.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The prospectus discusses the fund's investment objective and the
policies. The following discussion supplements the description of the
fund's investment policies in the prospectus. The fund will pursue its
objective by investing in a diversified portfolio of municipal
obligations, the interest on which is exempt from federal income tax in
the opinion of counsel to the various issuers. The fund operates as a
money market fund, and utilizes certain investment policies so that, to
the extent reasonably possible, its price per share will not change from
$1.00, although no assurance can be given that this goal will be achieved
on a continuous basis. For example, the fund will not purchase a
security which, after giving effect to any demand features, has a
remaining maturity of greater than 13 months, or maintain a dollar-
weighted average portfolio maturity in excess of 90 days.
In general, municipal obligations are debt obligations (bonds or
notes) issued by or on behalf of states, territories and possessions of
the United States and their political subdivisions, agencies and
instrumentalities the interest on which is exempt from Federal income tax
in the opinion of bond counsel to the issuer. Municipal obligations are
issued to obtain funds for various public purposes, many of which may
enhance the quality of life, including the construction of a wide range of
public facilities, such as airports, bridges, highways, housing,
hospitals, mass transportation, schools, streets, water and sewer works,
gas, and electric utilities. They may also be issued to refund
outstanding obligations, to obtain funds for general operating expenses,
or to obtain funds to loan to other public institutions and facilities and
in anticipation of the receipt of revenue or the issuance of other
obligations. In addition, the term "municipal obligations" includes
certain types of industrial development bonds ("IDBs") issued by public
authorities to obtain funds to provide various privately-operated
facilities for business and manufacturing, housing, sports, convention or
trade show facilities, airport, mass transit, port and parking facilities,
air or water pollution control facilities, and certain facilities for
water supply, gas, electricity or sewerage or solid waste disposal.
Opinions relating to the validity of municipal obligations and to
the exemption of interest thereon from federal income tax are rendered by
bond counsel to the respective issuers at the time of issuance. Neither
the fund nor SSBC will review the proceedings relating to the issuance of
municipal obligations or the bases for such opinions.
Except for temporary defensive purposes, at least 80% of the fund's
assets will be invested in municipal obligations that produce income that
is exempt from federal income tax (other than the alternative minimum
tax). In each of the fund's prior fiscal years, 100% of its income has
been exempt from federal income tax and the fund's shares have had a
stable $1.00 price.
The fund's investments are limited to United States dollar-
denominated instruments that, at the time of acquisition (including any
related credit enhancement features) have received a rating in one of the
two highest categories for short-term debt obligations from the "Requisite
NRSROs," securities of issuers that have received such a rating with
respect to other comparable securities, and comparable unrated securities.
"Requisite NRSROs" means (a) any two nationally recognized statistical
rating organizations ("NRSROs") that have issued a rating with respect to
a security or class of debt obligations of an issuer, or (b) one NRSRO, if
only one NRSRO has issued such rating at the time that the fund acquires
the security. The NRSROs currently designated as such by the SEC are
Standard & Poor's Ratings Group (S&P"), Moody's Investors Service, Inc.
("Moody's"), Duff and Phelps Inc., Fitch IBCA, Inc. ("Fitch") and Thomson
BankWatch.
The yields on municipal obligations are dependent on a variety of
factors, including general market conditions, supply and demand, general
conditions of the municipal market, size of a particular offering, the
maturity of the obligation and the rating of the issue. The ratings of
NRSROs such as Moody's and S&P represent their opinions as to the quality
to the municipal obligations that they undertake to rate. It should be
emphasized, however, that such ratings are general and are not absolute
standards of quality. Consequently, municipal obligations with the same
maturity, coupon and rating may have different yields when purchased in
the open market, while municipal obligations of the same maturity and
coupon with different ratings may have the same yield.
Municipal obligations, which are issued by states, municipalities
and their agencies, may include municipal notes and bonds. The two
principal classifications of municipal obligations are "general
obligation" and "revenue." General obligations are secured by a municipal
issuer's pledge of its full faith, credit, and taxing power for the
payment of principal and interest. Revenue obligations are payable only
from the revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise tax or
other specific revenue source. Although "IDBs" are issued by municipal
authorities, they are generally secured by the revenues derived from
payments of the industrial user. The payment of the principal and
interest on IDBs is dependent solely on the ability of the user of the
facilities financed by the bonds to meet its financial obligations and the
pledge, if any, of real and personal property so financed as security for
such payment.
For purposes of diversification and concentration under the
Investment Company Act of 1940, as amended (the "1940 Act"), the
identification of the issuer of municipal obligations depends on the terms
and conditions of the obligation. If the assets and revenues of an
agency, authority, instrumentality or other political subdivision are
separate from those of the government creating the subdivision and the
obligation is backed only by the assets and revenues of the subdivision,
such subdivision is regarded as the sole issuer. Similarly, in the case
of an IDB or a pollution control revenue bond, if the bond is backed only
by the assets and revenues of the non-governmental user, the non-
governmental user is regarded as the sole issuer. If in either case the
creating government or another entity guarantees an obligation, the
guaranty is regarded as a separate security and treated as an issue of
such guarantor. Similar criteria apply for purposes of the
diversification requirements under Subchapter M of the Internal Revenue
Code (the "Code").
Among the types of obligations in which the fund may invest are
floating or variable rate instruments subject to demand features ("demand
instruments"); tax-exempt commercial paper; and notes such as Tax
Anticipation Notes, Revenue Anticipation Notes, Tax and Revenue
Anticipation Notes and Bond Anticipation Notes. Demand instruments
usually have an indicated maturity of more than 13 months but have a
demand feature (or "put") that entitles the holder to receive the
principal amount of the underlying security and may be exercised either
(a) at any time on no more than 30 days' notice; or (b) at specified
intervals not exceeding one year and upon no more than 30 days' notice.
Demand features generally consist of a letter of credit issued by a
domestic or foreign bank. A variable rate instrument provides for
adjustment of its interest rate on set dates and upon such adjustment can
reasonably be expected to have a market value that approximates its
amortized cost; a floating rate instrument provides for adjustment of its
interest rate whenever a specified interest rate (e.g., the prime rate)
changes and at any time can reasonably be expected to have a market value
that approximates its amortized cost.
The fund may purchase participation interests in variable-rate tax-
exempt securities (such as Industrial Development Bonds) owned by banks.
Participations are frequently backed by an irrevocable letter of credit or
guarantee of a bank that the manager has determined meets the prescribed
quality standards for the fund. Participation interests will be purchased
only; if management believes interest income on such interests will be
tax-exempt when distributed as dividends to shareholders.
Investments in participation interests in variable-rate tax-exempt
securities (such as IDBs) purchased from banks give the purchaser an
undivided interest in the tax-exempt security in the proportion that the
fund participation interest bears to the total principal amount of the
tax-exempt security with a demand repurchase feature. Participation
interests are frequently backed by an irrevocable letter of credit or
guarantee of a bank that the manager, under the supervision of the Board
of Directors (the "Board"), has determined meets the prescribed quality
standards for the fund. The fund has the right to sell the instrument
back to the bank and draw on the letter of credit on demand on seven days'
notice or less, for all or any part of its participation interest in the
tax-exempt security, plus accrued interest. The fund intends to exercise
the demand under the letter of credit only (1) upon a default under the
terms of the documents of the tax-exempt security, (2) as needed to
provide liquidity in order to meet redemptions, or (3) to maintain a high
quality investment portfolio. Banks will retain a service and letter of
credit fee and a fee for issuing repurchase commitments in an amount equal
to the excess of the interest paid on the tax-exempt securities over the
negotiated yield at which the instruments were purchased by the fund. The
manager will monitor the pricing, quality and liquidity of the variable-
rate demand instruments held by the fund, including the IDBs supported by
bank letters of credit or guarantees, on the basis of published financial
information, reports of rating agencies and other bank analytical services
to which the manager may subscribe.
Private Activity Bonds. The fund may invest without limits in
private activity bonds. Interest income on certain types of private
activity bonds issued after August 7, 1986 to finance non-governmental
activities is a specific tax preference item for purposes of the federal
individual and corporate alternative minimum taxes. Individual and
corporate shareholders may be subject to a federal alternative minimum tax
to the extent that the fund's dividends are derived from interest on those
bonds. These private activity bonds are included in the term "municipal
obligations" for purposes of determining compliance with the 80% test
described above. Dividends derived from interest on any tax-exempt
municipal obligations are a component of the "current earnings" adjustment
for purposes of the federal corporate alternative minimum tax.
Structured Securities. The fund may invest up to 20% of the value
of its assets in one or more of the three principal types of derivative
product structures described below. Derivative products are typically
structured by a bank, broker-dealer or other financial institution. A
derivative product generally consists of a trust or partnership through
which the fund holds an interest in one or more underlying bonds coupled
with a conditional right to sell ("put") the fund's interest in the
underlying bonds at par plus accrued interest to a financial institution
(a "Liquidity Provider"). Typically, a derivative product is structured as
a trust or partnership which provides for pass-through tax-exempt income.
There are currently three principal types of derivative structures: (1)
"Tender Option Bonds", which are instruments which grant the holder
thereof the right to put an underlying bond at par plus accrued interest
at specified intervals to a Liquidity Provider; (2) "Swap Products", in
which the trust or partnership swaps the payments due on an underlying
bond with a swap counterparty who agrees to pay a floating municipal money
market interest rate:; and (3) "Partnerships", which allocate to the
partners income, expenses, capital gains and losses in accordance with a
governing partnership agreement.
Investments in derivative products raise certain tax, legal,
regulatory and accounting issues which may not be presented by investments
in other municipal bonds. There is some risk that certain issues could be
resolved in a manner that could adversely impact the performance of the
fund. For example, the tax-exempt treatment of the interest paid to
holders of derivative products is premised on the legal conclusion that
the holders of such derivative products have an ownership interest in the
underlying bonds. While the fund receives an opinion of legal counsel to
the effect that the income from each derivative product is tax-exempt to
the same extent as the underlying bond, the Internal Revenue Service (the
"IRS") has not issued a ruling on this subject. Were the IRS to issue an
adverse ruling, there is a risk that the interest paid on such derivative
products would be deemed taxable.
The fund intends to limit the risk of derivative products by
purchasing only those derivative products that are consistent with the
fund's investment objective and policies. The fund will not use such
instruments to leverage securities. Hence, derivative products'
contributions to the overall market risk characteristics of a fund will
not materially alter its risk profile and will be fully representative of
the fund's maturity guidelines.
The fund will not invest more than 10% of the value of its assets in
illiquid securities, which may include certain derivative products and
will include any repurchase transactions that do not mature within seven
days.
When-Issued Securities. The fund may purchase municipal obligations
on a "when-issued" basis (i.e., for delivery beyond the normal settlement
date at a stated price and yield). The payment obligation and the
interest rate that will be received on the municipal obligations purchased
on a when-issued basis are each fixed at the time the buyer enters into
the commitment. Although the fund will purchase municipal obligations on a
when-issued basis only with the intention of actually acquiring the
securities, the fund may sell these securities before the settlement date
if it is deemed advisable as a matter of investment strategy.
Municipal obligations are subject to changes in value based upon the
public's perception of the creditworthiness of the issuers and changes,
real or anticipated, in the level of interest rates. In general, municipal
obligations tend to appreciate when interest rates decline and depreciate
when interest rates rise. Purchasing municipal obligations on a when-
issued basis, therefore, can involve the risk that the yields available in
the market when the delivery takes place may actually be higher than those
obtained in the transaction itself. To account for this risk, a separate
account of the fund consisting of cash or liquid debt securities equal to
the amount of the when-issued commitments will be established at the
fund's custodian bank or in the fund's records. For the purpose of
determining the adequacy of the securities in the account, the deposited
securities will be valued at market or fair value. If the market or fair
value of such securities declines, additional cash or securities will be
placed in the account on a daily basis so the value of the account will
equal the amount of such commitments by the fund. Placing securities
rather than cash in the segregated account may have a leveraging effect on
the fund's net assets. That is, to the extent the fund remains
substantially fully invested in securities at the same time it has
committed to purchase securities on a when-issued basis, there will be
greater fluctuations in its net assets than if it had set aside cash to
satisfy its purchase commitments. Upon the settlement date of the when-
issued securities, the fund will meet obligations from then-available cash
flow, sale of securities held in the segregated account, sale of other
securities or, although it normally would not expect to do so, from the
sale of the when-issued securities themselves (which may have a value
greater or less than the fund's
payment obligations). Sales of securities to meet such obligations may
involve the realization of capital gains, which are not exempt from
federal income taxes.
When the fund engages in when-issued transactions, it relies on the
seller to consummate the trade. Failure of the seller to do so may result
in the fund's incurring a loss or missing an opportunity to obtain a price
considered to be advantageous.
Stand-By Commitments. The fund may acquire "stand-by commitments"
with respect to municipal obligations held in its portfolio. Under a
stand-by commitment a dealer agrees to purchase, at the fund's option,
specified municipal obligations at a specified price. The fund intends to
enter into stand-by commitments only with dealers, banks and broker-
dealers that, in the opinion of the manager, present minimal credit risks.
In evaluating the creditworthiness of the issuer of a stand-by commitment,
the manager will review periodically the issuer's assets, liabilities,
contingent claims and other relevant financial information. Because the
fund invests in securities backed by banks and other financial
institutions, change in the credit quality of these institutions could
cause losses to the fund and affect its share price. The fund will
acquire stand-by commitments solely to facilitate portfolio liquidity and
does not intend to exercise its rights thereunder for trading purposes.
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. A repurchase agreement is a
contract under which the buyer of a security simultaneously commits to
resell the security to the seller at an agreed-upon price on an agreed-
upon date. Under the terms of a typical repurchase agreement, the fund
would acquire an underlying debt obligation for a relatively short period
of time (usually not more than seven days) subject to an obligation of the
seller to repurchase, 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 arrangement results in a fixed rate of return that is
not subject to market fluctuations 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 possible decline in
the value of the underlying securities during the period in which the fund
seeks to assert its rights 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. In evaluating these potential risks, the
manager, 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.
Derivatives. The fund may invest in municipal bond index futures
contracts or in listed contracts based on U.S. government securities.
Such investments will be made solely for the purpose of hedging against
changes in the value of portfolio securities due to anticipated changes in
interest rates and market conditions and not for purposes of speculation.
The acquisition or sale of a futures contract could enable the fund to
protect its assets from fluctuations in rates on tax-exempt securities
without actually buying or selling securities. The municipal bond index
futures contract is based on an index of long-term, tax-exempt municipal
bonds. The contract obligates the buyer or seller to take or make
delivery, respectively, of an amount of cash equal to the difference
between the value of the index upon liquidation of the contract and the
price at which the index contract was originally purchased or sold. In
connection with the use of futures contracts as a hedging device, there
can be no assurance that there will be a precise or even a positive
correlation between price movement in the futures contracts with that of
the municipal bonds that are the subject of the hedge, consequently, the
fund may realize a profit on a futures contract that is less than the loss
in the price of the municipal bonds being hedged or may even incur a loss.
The fund also may not be able to close a futures position in the event of
adverse price movements or in the event an active market does not exist
for the hedging contract on the exchange or board of trade on which the
contract is traded. The successful use of these investments is dependent
on the ability of the manager to predict price or interest rate movements
or the correlation of futures and cash markets, or both.
Puts. Among the types of securities that the fund may purchase are
municipal obligations having put features. A "put" is a right to sell a
specified underlying security or securities within a specified period of
time and at a specified exercise price that may be sold, transferred or
assigned only with the underlying security or securities. The types of
puts that the fund may purchase include "demand features" (see "Risk and
Portfolio Management" in the Prospectus) and "standby commitments." A
"standby commitment" entitles the holder to achieve same day settlement
and to receive an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of
exercise. Although it is permissible for the fund to purchase securities
with standby commitments, as a practical matter, it is unlikely that the
fund would have the need or the opportunity to do so because such puts are
not commonly available.
Other Factors to be Considered. The fund anticipates being as fully
invested as practicable in tax-exempt securities. The fund may invest in
taxable investments due to market conditions or pending investment of
proceeds from sales of shares or proceeds from the sale of portfolio
securities or in anticipation of redemptions. However, the fund generally
expects to invest the proceeds received from the sale of shares in
municipal obligations as soon as reasonably possible, which is generally
within one day. At no time will more than 20% of the fund's net assets be
invested in taxable investments except when the manager has determined
that market conditions warrant the fund adopting a temporary defensive
investment posture. To the extent the fund's assets are invested for
temporary defensive purposes, such assets will not be invested in a manner
designed to achieve the l.c. fund's investment objective.
The fund may invest in securities the disposition of which is
subject to legal or contractual restrictions. The sale of restricted
securities often requires more time and results in higher dealer discounts
or other selling expenses than does the sale of securities that are not
subject to restrictions on resale. Restricted securities may sell at a
price lower than similar securities that are not subject to restrictions
on resale.
Securities may be sold in anticipation of a market decline (a rise
in interest rates) or purchased in anticipation of a market rise (a
decline in interest rates). In addition, a security may be sold and
another purchased at approximately the same time to take advantage of what
the manager believes to be a temporary disparity in the normal yield
relationship between the two securities. The fund believes that, in
general, the secondary market for tax-exempt securities in the fund's
portfolio may be less liquid than that for taxable fixed-income
securities. Accordingly, the ability to make purchases and sales of
securities in the foregoing manner may be limited. Yield disparities may
occur for reasons not directly related to the investment quality of
particular issues or the general movement of interest rates, but instead
due to such factors as changes in the overall demand for or supply of
various types of tax-exempt securities or changes in the investment
objectives of investors.
The fund may engage in short-term trading to attempt to take
advantage of short-term market variations or may dispose of a portfolio
security prior to its maturity if it believes such disposition advisable
or it needs to generate cash to satisfy redemptions. In such cases, the
fund may realize a gain or loss. From its commencement of operations, the
fund has not realized any significant gain or loss during any fiscal year.
From time to time, proposals have been introduced before Congress
for the purpose of restricting or eliminating the federal income tax
exemption for interest on municipal obligations, and similar proposals may
be introduced in the future. If one of these proposals were enacted, the
availability of tax exempt obligations for investment by the fund and the
value of the fund's portfolio would be affected. The fund's Board of
Directors would then reevaluate the fund's investment objective and
policies.
INVESTMENT RESTRICTIONS
The fund is subject to certain restrictions and policies that are
"fundamental," which means that they may not be changed without a "vote of
a majority of the outstanding voting securities" of the fund, as defined
under the Investment Company Act of 1940, as amended (the "Act"). The
fund is subject to other restrictions and policies that are "non-
fundamental" and which may be changed by the fund's Board of Directors
without shareholder approval, subject to any applicable disclosure
requirements.
Fundamental Policies. Without the approval of a majority of its
outstanding voting securities, the fund may not:
1. issue "senior securities" as defined in the Act and the rules,
regulations and orders thereunder, except as permitted under the Act
and the rules, regulations and orders thereunder.
2. invest more than 25% of its total assets in securities, the
issuers of which conduct their principal business activities in the
same industry. For purposes of this limitation, securities of the
U.S. government (including its agencies and instrumentalities) and
securities of state or municipal governments and their political
subdivisions are not considered to be issued by members of any
industry.
3. borrow money, except that (a) the fund may borrow from banks
for temporary or emergency (not leveraging) purposes, including the
meeting of redemption requests which might otherwise require the
untimely disposition of securities, and (b) the fund may, to the
extent consistent with its investment policies, enter into reverse
repurchase agreements, forward roll transactions and similar
investment strategies and techniques. To the extent that it engages
in transactions described in (a) and (b), the fund will be limited
so that no more than 33 -1/3% of the value of its total assets
(including the amount borrowed), valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) valued
at the time the borrowing is made, is derived from such
transactions.
4. make loans. This restriction does not apply to: (a) the
purchase of debt obligations in which the fund may invest consistent
with its investment objectives and policies; (b) repurchase
agreements; and (c) loans of its portfolio securities, to the
fullest extent permitted under the Act.
5. engage in the business of underwriting securities issued by
other persons, except to the extent that the fund may technically be
deemed to be an underwriter under the Securities Act of 1933, as
amended, in disposing of portfolio securities.
6. purchase or sell real estate, real estate mortgages,
commodities or commodity contracts, but this restriction shall not
prevent the fund from (a) investing in securities of issuers engaged
in the real estate business or the business of investing in real
estate (including interests in limited partnerships owning or
otherwise engaging in the real estate business or the business of
investing in real estate) and securities which are secured by real
estate or interests therein; (b) holding or selling real estate
received in connection with securities it holds or held; (c) trading
in futures contracts and options on futures contracts (including
options on currencies to the extent consistent with the funds'
investment objective and policies); or (d) investing in real estate
investment trust securities.
7. invest in a manner that would cause the fund to fail to be a
"diversified company" under the Act and the rules, regulations and
orders thereunder.
Nonfundamental Policies. As nonfundamental policies, the fund may not:
1. purchase any securities on margin (except for such short-term
credits as are necessary for the clearance of purchases and sales
of portfolio securities) or sell any securities short (except
"against the box"). For purposes of this restriction, the
deposit or payment by the fund of underlying securities and other
assets in escrow and collateral agreements with respect to
initial or maintenance margin in connection with futures
contracts and related options and options on securities, indexes
or similar items is not considered to be the purchase of a
security on margin.
2. purchase or otherwise acquire any security if, as a result, more
than 10% of its net assets would be invested in securities that
are illiquid.
All of the foregoing restrictions which are stated in terms of
percentages will apply at the time an investment is made; a subsequent
increase or decrease in the percentage that may result from changes in
values or net assets will not result in a violation of the restriction.
INVESTMENT MANAGEMENT
SSBC serves as investment adviser to the fund pursuant to a written
agreement (the "Management Agreement"), which was approved by the fund's
Board of directors, including a majority of the directors who are not
interested persons of the fund or Salomon Smith Barney (the "independent
directors"). Subject to the supervision and direction of the fund's board
of directors, the manager manages the fund's portfolio in accordance with
the fund's stated 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. The manager pays the salary of any
officer and employee who is employed by both it and the trust. The
manager bears all expenses in connection with the performance of its
services. SSBC is a wholly owned subsidiary of Salomon Smith Barney
Holdings Inc. ("Holdings"), which in turn is a wholly owned subsidiary of
Citigroup Inc. ("Citigroup"). SSBC (through predecessor entities) has been
in the investment counseling business since 1968 and renders investment
advice to a wide variety of individual, institutional and investment
company clients that had aggregate assets under management as of March 31,
1999 in excess of $114 billion.
The fund's Management Agreement with the manager was approved by
shareholders on September 16, 1994, became effective on November 7, 1994,
and was amended as of September 3, 1997. The Management Agreement provides
that the fund's management fee will be calculated as follows: 0.50% of the
first $2.5 billion of average daily net assets; 0.475% of the next $2.5
billion of average daily net assets; 0.45% of the next $2.5 billion of
average daily net assets; and 0.40% of average daily net assets over $7.5
billion.
For the fiscal years ended March 31, 1997, 1998 and 1999, the
management fees were $26,073,153, $27,985,733 and $32,200,646 respectively,
and there were no expense limitation reimbursements (see "Management " in
the Prospectus).
The Management Agreement further provides that all other expenses not
specifically assumed by the manager are borne by the fund. Expenses
payable by the fund include, but are not limited to, charges of custodians
(including sums as custodian and sums for keeping books and for rendering
other services to the fund), transfer agents and registrars, expenses of
registering or qualifying shares for sale (including the printing of the
fund's registration statements and prospectuses), out-of-pocket expenses of
directors and fees of directors who are not "interested persons" of the
fund as defined in the Act, association membership dues, charges of
auditors and legal counsel, expenses of preparing, printing and
distributing all proxy material, reports and notices to shareholders,
insurance expense, costs of performing portfolio valuations, interest,
taxes, fees and commissions of every kind, expenses of issue, repurchase or
redemption of shares, and all other costs incident to the fund's corporate
existence. No sales or promotion expenses are incurred by the fund, but
expenses incurred in complying with laws regulating the issue or sale of
the fund's shares, which are paid by the fund, are not deemed sales or
promotion expenses.
The Management Agreement will continue in effect if specifically
approved annually by a majority of the directors of the fund who are not
parties to such contract or "interested persons" of any such party. The
Management Agreement may be terminated without penalty by either of the
parties on 60 days' written notice and must terminate in the event of its
assignment. It may be amended or modified only if approved by vote of the
holders of a majority of the fund's outstanding shares as defined in the
Act.
The Management Agreement provides that the manager is not liable for
any act or omission in the course of or in connection with rendering
services under the Management Agreement in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligation or duties. The Management Agreement permits the manager to
render services to others and to engage in other activities.
Auditors
KPMG LLP, 757 Third Avenue, New York, New York 10017, has been
selected as the fund's independent auditor to examine and report on the
fund's financial statements and highlights for the fiscal year ended March
31, 2000.
Transfer Agent and Custodian
PNC Bank, National Association, located at 17th and Chestnut
Streets, Philadelphia, Pennsylvania 19103, serves as the fund's custodian.
Under the custody agreement, PNC holds the fund's portfolio securities and
keeps all necessary accounts and records. For its services, PNC 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 compliance with the 1940
Act.
First Data Investor Services Group, Inc.("First Data" or "transfer
agent"), located at Federal Street, Boston, Massachusetts 02110, serves as
the fund's transfer agent. Under the transfer agency agreement, First
Data 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,
First Data 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.
PURCHASE OF SHARES
The minimum initial investment for Class A is $1,000 and the
minimum subsequent investment is $50. There are no minimum investment
requirements in Class A shares for employees of Citigroup and its
subsidiaries, including Salomon Smith Barney, and Directors or Trustees of
any Travelers-affiliated funds, including the Smith Barney Mutual Funds,
and their spouses and children. The minimum initial investment for Class
Y is $15,000,000. Subsequent investments of at least $50 may be made for
either class. There are no minimum investment requirements in Class A for
employees of Citigroup, Inc. ("Citigroup") and its subsidiaries, including
Salomon Smith Barney, and Directors or Trustees of any Citigroup-affiliated
Funds, including the Smith Barney Mutual Funds, and their spouses and
children. The fund reserves the right to waive or change minimums, to
decline any order to purchase its shares and to suspend the offering of
shares from time to time. Shares purchased will be held in the
shareholder's account by the fund's transfer agent. Share Certificates are
issued only upon a shareholder's written request to First Data.
Letter of Intent - Class Y Shares. A Letter of Intent may be used
as a way for investors to meet the minimum investment requirement for
Class Y shares. Such investors must make an initial minimum purchase of
$5,000,000 in Class Y shares of the fund and agree to purchase a total of
$15,000,000 of Class Y Shares of the fund within 13 months from the date
of the Letter. If a total investment of $15,000,000 is not made within
the 13-month period, all Class Y shares purchased during such period will
be transferred to Class A shares, where they will be subject to all fees
(including a service fee of 0.25%) and expenses applicable to the fund's
Class A shares, which may include a CDSC of 1.00%. Please contact a
Salomon Smith Barney Financial Consultant or the Transfer Agent for
further information.
REDEMPTION OF SHARES
Shareholders may redeem their shares without charge on any day a
fund calculates its net asset value. See "Valuation of Shares and
Amortized Cost Valuation." Redemption requests received in proper form
before 12 noon, Eastern time, are priced at the net asset value as next
determined on that day. Redemption requests received after 12 noon,
Eastern time, are priced at the net asset value next determined.
Redemption requests must be made through a Salomon Smith Barney Financial
Consultant, or a dealer representative through whom the shares were
purchased, except that shareholders who purchased shares of the fund from
First Data may also redeem shares directly through First Data. A
shareholder desiring to redeem shares represented by certificates also
must present the certificates to a Salomon Smith Barney Financial
Consultant, dealer representative or First Data 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 the certificates are
received by First Data in proper form.
The fund normally transmits redemption proceeds on the business day
following receipt of a redemption request but, in any event, payment will
be made within three days thereafter, exclusive of days on which the NYSE
is closed and the settlement of securities does not otherwise occur, or as
permitted under the 1940 Act in extraordinary circumstances. Generally,
if the redemption proceeds are remitted to a Salomon Smith Barney
brokerage account, these funds will not be invested for the shareholder's
benefit without specific instruction and Salomon Smith Barney 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 a Salomon Smith
Barney Financial Consultant or dealer representative may take advantage of
special redemption procedures under which Class A shares of the fund will
be redeemed automatically to the extent necessary to satisfy debit
balances arising in the shareholder's account with a Salomon Smith Barney
Financial Consultant or dealer representative. One example of how an
automatic redemption may occur involves the purchase of securities. If a
shareholder purchases securities but does not pay for them by the
settlement date, the number of fund shares necessary to cover the debit
will be redeemed automatically as of the settlement date, which usually
occurs three business days after the trade date. Class A shares that are
subject to a CDSC (see "Redemption of Shares-Contingent Deferred Sales
Charge") are not eligible for such automatic redemption and will only be
redeemed upon specific request. If the shareholder does not request
redemption of such shares, the shareholder's account with a Salomon Smith
Barney Financial Consultant or dealer representative may be margined to
satisfy debit balances if sufficient fund shares that are not subject to
any applicable CDSC are unavailable. No fee is currently charged with
respect to these automatic transactions. Shareholders not wishing to
participate in these arrangements should notify their Salomon Smith Barney
Financial Consultant or dealer representative.
A written redemption request must (a) state the class and number or
dollar amount 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 registered. If the shares to be redeemed were issued in
certificate form, the certificates must be endorsed for transfer (or be
accompanied by an endorsed stock power) and must be submitted to First
Data together with the redemption request. Any signature appearing on a
written redemption request in excess of $10,000, share certificate or
stock power must be guaranteed by an eligible guarantor institution such
as a domestic bank, savings and loan institution, domestic credit union,
member bank of the Federal Reserve System or member firm of a national
securities exchange. Written redemption requests of $10,000 or less do
not require a signature guarantee unless more than one such redemption
request is made in any 10-day period. Redemption proceeds will be mailed
to an investor's address of record. First Data may require additional
supporting documents for redemptions made by corporations, executors,
administrators, trustees or guardians. A redemption request will not be
deemed properly received until First Data receives all required documents
in proper form.
Telephone Redemption and Exchange Program. To determine if a
shareholder is entitled to participate in this program, he or she should
contact First Data at 1-800-451-2010. Once eligibility is confirmed, the
shareholder must complete and return a Telephone/Wire Authorization Form,
along with a signature guarantee, that will be provided by First Data upon
request. (Alternatively, an investor may authorize telephone redemptions
on the new account application with the applicant's signature guarantee
when making his/her initial investment in the fund.)
Redemptions. Redemption requests of up to $10,000 of any class or
classes of a fund's shares may be made by eligible shareholders by calling
First Data at 1-800-451-2010. Such requests may be made between 9:00 a.m.
and 5:00 p.m. (Eastern time) on any day the NYSE is open. Requests
received after the close of regular trading on the NYSE are priced at the
net asset value next determined. Redemptions of shares (i) by retirement
plans or (ii) for which certificates have been issued are not permitted
under this program.
A shareholder will have the option of having the redemption proceeds
mailed to his/her address of record or wired to a bank account
predesignated by the shareholder. Generally, redemption proceeds will be
mailed or wired, as the case may be, on the next business day following
the redemption request. In order to use the wire procedures, the bank
receiving the proceeds must be a member of the Federal Reserve System or
have a correspondent relationship with a member bank. The fund reserves
the right to charge shareholders a nominal fee for each wire redemption.
Such charges, if any, will be assessed against the shareholder's account
from which shares were redeemed. In order to change the bank account
designated to receive redemption proceeds, a shareholder must complete a
new Telephone/Wire Authorization Form and, for the protection of the
shareholder's assets, will be required to provide a signature guarantee
and certain other documentation.
Exchanges. Eligible shareholders may make exchanges by telephone if
the account registration of the shares of the fund being acquired is
identical to the registration of the shares of the fund exchanged. Such
exchange requests may be made by calling First Data at 1-800-451-2010
between 9:00 a.m. and 5:00 p.m. (Eastern time) on any day on which the
NYSE is open. See "Exchange Privilege" for more information.
Additional information regarding Telephone Redemption and Exchange
Program. Neither the funds nor their agents will be liable for following
instructions communicated by telephone that are reasonably believed to be
genuine. Each fund and its agents will employ procedures designed to
verify the identity of the caller and legitimacy of instructions (for
example, a shareholder's name and account number will be required and
phone calls may be recorded). Each fund reserves the right to suspend,
modify or discontinue the telephone redemption and exchange program or to
impose a charge for this service at any time following at least seven (7)
days prior notice to shareholders.
Contingent Deferred Sales Charge Class A shares which were
originally acquired in one of the other Smith Barney Mutual Funds at net
asset value subject to a CDSC, continue to be subject to any applicable
CDSC of the original fund. Therefore, such Class A shares that are
redeemed within 12 months of the date of purchase of the original fund may
be subject to a CDSC of 1.00%. The amount of any CDSC will be paid to and
retained by Salomon Smith Barney. The CDSC will be assessed based on an
amount equal to the account value at the time of redemption, and will not
be imposed on increases in value above the initial purchase price in the
original fund. In addition, no charge will be assessed on shares derived
from reinvestment of dividends or capital gains distributions.
In determining the applicability of any CDSC, it will be assumed
that a redemption is made first of shares representing capital
appreciation, next of shares representing the reinvestments of dividends
and capital gain distributions and finally of other shares held by the
shareholder for the longest period of time. The length of time that Class
A and shares have been held will be calculated from the date that the
shares were initially acquired in one of the other Smith Barney Mutual
Funds, and the amount of shares being redeemed will be considered to
represent, as applicable, the value of capital appreciation or dividend
and capital gain distribution reinvestments in such other funds. For
federal income tax purposes, the amount of the CDSC will reduce the gain
(if any) or increase the loss (if any), as the case may be, on redemption.
The CDSC on Class A shares, if any, will be waived on (a) exchanges
(see "Exchange Privilege" below); (b) redemptions of shares within twelve
months following the death or disability of the shareholder; (c)
redemption of shares made in connection with qualified distributions from
retirement plans or IRAs upon the attainment of age 59 1/2; (d)
involuntary redemptions; and (e) redemptions of shares to effect a
combination of a Portfolio with any investment company by merger,
acquisition of assets or otherwise. In addition, a shareholder who has
redeemed shares from other funds of the Smith Barney Mutual Funds may,
under certain circumstances, reinvest all or part of the redemption
proceeds within 60 days and receive pro rata credit for any CDSC imposed
on the prior redemption.
CDSC waivers will be granted subject to confirmation (by Salomon
Smith Barney in the case of shareholders who are also Salomon Smith Barney
clients or by First Data in the case of all other shareholders) of the
shareholder's status or holdings, as the case may be.
DISTRIBUTOR
Distributor. CFBDS, Inc., located at 20 Milk Street, Boston, MA
02109-5408, serves as the fund's distributor on a best efforts basis
pursuant to a distribution agreement dated October 8, 1998 (the
"Distribution Agreement"), which was approved by the fund's board of
directors. Prior to the merger of Travelers Group, Inc. and Citicorp on
October 8, 1998, Salomon Smith Barney served as the fund's distributor.
Brokerage. The manager places orders for the purchase and sale of
securities for the funds of the Company. All of the portfolio
transactions have been principal transactions with major dealers in money
market instruments, on which no brokerage commissions are paid. Purchases
from or sales to dealers serving as market-makers include the spread
between the bid and asked prices. No portfolio transactions are handled
by Salomon Smith Barney.
When payment is made by the investor before the settlement date,
unless otherwise noted by the investor, the funds will be held as a free
credit balance in the investor's brokerage account, and Salomon Smith
Barney may benefit from the temporary use of the funds. The investor may
designate another use for the funds prior to the settlement date, such as
an investment in a money market fund (other than the Salomon Smith Barney
Exchange Reserve Fund) of the Smith Barney Mutual Funds. If the investor
instructs Salomon Smith Barney to invest in a Smith Barney money market
fund, the amount of the investment will be included as part of the average
daily net assets of both the fund and the money market fund, and
affiliates of Smith Barney that serve the funds in an investment advisory
or administrative capacity will benefit from the fact they are receiving
fees from both such investment companies for managing these assets,
computed on the basis of their average daily net assets. The fund's Board
of Directors has been advised of the benefits to Smith Barney resulting
from these settlement procedures and will take such benefits into
consideration when reviewing the Advisory, Administration and Distribution
Agreements for continuance.
For the fiscal year ended March 31, 1999, Salomon Smith Barney
incurred distribution expenses totaling approximately $5,728,177
consisting of approximately $367,660 for Mutual Fund Marketing, $964,171
for printing of prospectuses, $2,924,628 to Salomon Smith Barney Financial
Consultants, and $126,264 in accruals for interest on the excess of
Salomon Smith Barney expenses incurred in the distribution of the fund's
shares over the sum of the distribution fees and CDSC received by Salomon
Smith Barney from the fund.
DISTRIBUTION ARRANGEMENTS
To compensate Salomon Smith Barney for the services it provides and
for the expense it bears under the Distribution Agreement, the fund has
adopted a services and distribution plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. Under the Plan, the fund pays Salomon Smith
Barney a service fee at the rate of 0.10% of the average balance of class
shares held in the accounts of the customers of financial consultants. The
fee is used by Salomon Smith Barney to pay its financial consultants for
servicing shareholder accounts for as long as shareholders remain a holder
of the class.
The following service and distribution fees were incurred during the
fiscal years ended as indicated:
Distribution Plan
Fees
03/31/99
03/31/98
03/31/97
Class
A..................
....
$6,723,338
$5,800,028
$5,356,489
Under its terms, the Plan continues from year to year, provided such
continuance is approved annually by vote of the fund's Board of Directors,
including a majority of the Independent Directors who have no direct or
indirect financial interest in the operation of the Plan or in the
Distribution Agreement. The Plan may not be amended to increase the amount
of the service and distribution fees without shareholder approval, and all
amendments of the Plan also must be approved by the Directors and
Independent Directors in the manner described above. The Plan may be
terminated with respect to a Class at any time, without penalty, by vote
of a majority of the Independent Directors or by vote of a majority of the
outstanding voting securities of the Class (as defined in the 1940 Act).
Pursuant to the Plan, Salomon Smith Barney will provide the Board of
Directors periodic reports of the amounts expended under the Plan and the
purpose for which such expenditures were made.
PERFORMANCE DATA AND COMPUTATION OF YIELD
From time to time, the fund may quote yield, effective yield and
taxable equivalent yield of its Class A and Class Y shares in
advertisements or in reports and other communications to shareholders.
The fund's yield for the seven-day period ended March 31, 1999 for
Class A shares was 2.48% (the effective yield was 2.51%) and for Class Y
shares was 2.61% (the effective yield was 2.64%) with an average dollar-
weighted portfolio maturity of 60 days. The tax-equivalent yield was
3.87% and 4.08%, for Class A and Class Y shares, respectively, assuming
the payment of Federal income taxes at a rate of 36% and the tax-
equivalent effective yield was 3.92% and 4.13%, for Class A and Class Y
shares, respectively, assuming the payment of Federal income taxes at a
rate of 36%.
To compute current yield the fund divides the net change, exclusive
of capital changes, in the value of a hypothetical pre-existing account
having a balance of one share at the beginning of a recent seven-day base
period by the value of the account at the beginning of the base period and
multiplying this base period return by 365/7. Effective yield is computed
by determining the net change, exclusive of capital changes, in the value
of a hypothetical pre-existing account having a balance of one share at
the beginning of the period and dividing such net change by the value of
the account at the beginning of the base period to obtain the base period
return, and then compounding the base period return by adding 1, raising
the sum to a power equal to 365/7, and subtracting 1 from the result. The
fund also quotes the average dollar-weighted portfolio maturity of the
corresponding seven-day period. In addition, the fund may publish a tax-
equivalent yield based on federal tax rates that demonstrates the taxable
yield necessary to produce an after-tax yield equivalent to the fund's
yield. The tax-equivalent yield does not include any element of non tax-
exempt income.
The fund's equivalent taxable 7-day yield and effective yield for a
Class of shares is computed by dividing that portion of the Class' 7-day
yield and effective yield which is tax-exempt by one minus a stated income
tax rate and adding the product to that portion, if any, of the Class'
yield that is not tax-exempt.
Although principal is not insured, it is not expected that the net
asset value of the fund's shares will fluctuate because the fund uses the
amortized cost method of valuation. (See "Valuation of Shares and
Amortized Cost Valuation" below.) The investor should remember that yield
is a function of the type, quality and maturity of the instruments in the
portfolio, and the fund's operating expenses. While current yield
information may be useful, investors should realize that current yield
will fluctuate and that the yield figures set forth above are based on
historical earnings and are not intended to indicate future performance.
Each Class' net investment income changes in response to fluctuation in
interest rates and the expenses of the fund. The yield figures may not
provide a basis for comparison with bank deposits or other investments
that pay a fixed yield for a stated period of time.
VALUATION OF SHARES AND AMORTIZED COST VALUATION
Each Class' net asset value per share is calculated on each day,
Monday through Friday, except days on which the New York Stock Exchange
(the "NYSE") is closed. The NYSE currently is scheduled to be closed on
New Year's Day, Martin Luther King Jr. 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. Because of the differences in
distribution fees and Class-specific expenses, the per share net asset
value of each Class may differ. The following is a description of the
procedures used by the fund in valuing its assets.
The fund uses the "amortized cost method" for valuing portfolio
securities pursuant to Rule 2a-7 under the Act (the "Rule"). The
amortized cost method of valuation of the fund's portfolio securities
(including any securities held in the separate account maintained for
"when-issued" securities) involves valuing a security at its cost at the
time of purchase and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the instrument. The
market value of portfolio securities will fluctuate on the basis of the
creditworthiness of the issuers of such securities and with changes in
interest rates generally. While the amortized cost method provides
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. During such periods the yield to
investors in the fund may differ somewhat from that obtained in a similar
company that uses mark-to-market values for all its portfolio securities.
For example, if the use of amortized cost resulted in a lower (higher)
aggregate portfolio value on a particular day, a prospective investor in
the fund would be able to obtain a somewhat higher (lower) yield than
would result from investment in such similar company, and existing
investors would receive less (more) investment income. The purpose of
this method of valuation is to attempt to maintain a constant net asset
value per share, and it is expected that the price of the fund's shares
will remain at $1.00; however, shareholders should be aware that despite
procedures that will be followed to have a stabilized price, including
maintaining a maximum dollar-weighted average portfolio maturity of 90
days, investing in securities that have or are deemed to have remaining
maturities of only 13 months or less and investing in only United States
dollar-denominated instruments determined by the Board of Directors to be
of high quality with minimal credit risks and which are Eligible
Securities as defined below, there is no assurance that at some future
date there will not be a rapid change in prevailing interest rates, a
default by an issuer or some other event that could cause the fund's price
per share to change from $1.00.
An Eligible Security is defined in the Rule to mean a security
which: (a) has a remaining maturity of 397 days or less; (b) (i) is rated
in the two highest short-term rating categories by any two NSROs that have
issued a short-term rating with respect to the security or class of debt
obligations of the issuer, or (ii) if only one NRSRO has issued a short-
term rating with respect to the security, then by that NRSRO; (c) was a
long-term security at the time of issuance whose issuer has outstanding a
short-term debt obligation which is comparable in priority and security
and has a rating as specified in clause (b) above; or (d) if no rating is
assigned by any NRSRO as provided in clauses (b) and (c) above, the
unrated security is determined by the Directors to be of comparable
quality to any such rated security.
EXCHANGE PRIVILEGE
Except as otherwise noted below, shares of each class may be
exchanged for shares of the same class in any of the Smith Barney Mutual
Funds, to the extent shares are offered for sale in the shareholder's
state of residence. Exchanges of Class A and Class Y shares are subject
to minimum investment requirements and all shares are subject to other
terms or requirements of the fund into which exchanges are made and a
sales charge may apply.
Class A Exchanges. Class A shares of each fund will be subject to
the applicable sales charge upon the exchange of such shares for Class A
shares of another fund of the Smith Barney Mutual Funds sold with a sales
charge.
Class Y Exchanges. Class Y shareholders of a fund who wish to
exchange all or a portion of their Class Y shares for Class Y shares in
any of the funds identified above may do so without imposition of any
charge.
Additional Information Regarding the Exchange Privilege. Excessive
exchange transactions may be detrimental to each fund's performance and
its shareholders. The investment manager may determine that a pattern of
frequent exchanges is excessive and contrary to the best interests of a
fund's other shareholders. In this event the fund may, at its discretion,
decide to limit additional purchases and/or exchanges by the shareholder.
Upon such a determination the fund will provide notice in writing or by
telephone to the shareholder at least 15 days prior to suspending the
exchange privilege and during the 15 day period the shareholder will be
required to (a) redeem his or her shares in the fund or (b) remain
invested in the Portfolio or exchange into any of the funds of the Smith
Barney Mutual Funds ordinarily available, which position the shareholder
would be expected to maintain for a significant period of time. All
relevant factors will be considered in determining what constitutes an
abusive pattern of exchanges.
Certain shareholders may be able to exchange shares by telephone.
See "Redemption of Shares - Telephone Redemption and Exchange Program."
Exchanges will be processed at the net asset value next determined, plus
any applicable sales charge. Redemption procedures discussed above are
also applicable for exchanging shares, and exchanges will be made upon
receipt of all supporting documents in proper form. If the account
registration of the shares of the fund being acquired is identical to the
registration of the shares of the fund exchanged, no signature guarantee
is required. Before exchanging shares, investors should read the current
prospectus describing the shares to be acquired. These exchange
privileges are available to shareholders resident in any state in which
the fund shares being acquired may legally be sold. The Company reserves
the right to modify or discontinue exchange privileges upon 60 days' prior
notice to shareholders.
TAXES
The following is a summary of selected federal income tax
considerations that may affect the fund and its shareholders. This summary
is not intended as a substitute for individual tax advice and investors
are urged to consult their own tax advisors as to the tax consequences of
an investment in the fund.
As described above and in the prospectus, the fund is designed to
provide shareholders with current income which is excluded from gross
income for federal income tax purposes. The fund is not intended to
constitute a balanced investment program and is not designed for investors
seeking capital gains or maximum tax-exempt income irrespective of
fluctuations in principal. Investment in the fund would not be suitable
for tax-exempt institutions, qualified retirement plans, H.R. 10 plans and
individual retirement accounts because such investors would not gain any
additional tax benefit from the receipt of tax-exempt income.
The fund has qualified and intends to continue to qualify each year
as a "regulated investment company" under the Code. Provided that the fund
(a) qualifies as a regulated investment company and (b) distributes to its
shareholders at least 90% of its taxable net investment income and net
short-term capital gains in excess of net long-term capital loss and 90%
of its tax-exempt interest income (reduced by certain expenses for its
taxable year), the fund will not be liable for federal income taxes to the
extent its taxable net investment income and its net realized short-and
long-term capital gains, if any, are distributed to its shareholders.
Because the fund will distribute exempt-interest dividends, interest
on indebtedness incurred by a shareholder to purchase or carry fund shares
is not deductible for federal income tax purposes to the extent it is
deemed related to such exempt-interest dividends. If a shareholder
receives exempt-interest dividends with respect to any share and if such
share is held by the shareholder for six months or less, then for federal
income tax purposes, any loss on the sale or exchange of such share, to
the extent of such exempt-interest dividend, may be disallowed. In
addition, the Code may require a shareholder, if he or she receives
exempt-interest dividends, to treat as taxable income a portion of certain
otherwise non-taxable social security and railroad retirement benefit
payments. Furthermore, that portion of any exempt-interest dividends paid
by the fund which represents income derived from private activity bonds
held by the fund may not retain its federal tax-exempt status in the hands
of a shareholder who is a "substantial user" of a facility financed by
such bonds or a "related person" thereof. Moreover some or all of the
fund's dividends and distributions may be a specific tax preference item,
or a component of an adjustment item, for purposes of the federal
individual and corporate alternative minimum taxes. In addition, the
receipt of fund dividends and distributions may affect a foreign corporate
shareholder's federal "branch profits" tax liability and the federal
"excess net passive income" tax liability of a shareholder of a Subchapter
S corporation. Shareholders should consult their own tax advisors as to
whether they are (a) substantial users with respect to a facility or
related to such users within the meaning of the Code and (b) subject to a
federal alternative minimum tax, the federal branch profits tax or the
federal excess net passive income tax.
Long term capital gains, if any, realized by the fund will be
distributed annually as described in the prospectus. Such distributions
("capital gain dividends") will be taxable to shareholders as long-term
capital gains, regardless of how long they have held fund shares, and will
be designated as capital gain dividends in a written notice mailed to
shareholders after the close of the fund's taxable year. If a shareholder
receives a capital gain dividend with respect to any share and redeems or
sells the share before it has been held by the shareholder for more than
six months, then any loss (to the extent not disallowed pursuant to the
other six-month rule described above relating to exempt-interest
dividends) on the sale or other disposition of such share will be treated
as a long-term capital loss to the extent of the capital gain dividend.
Each shareholder will receive after the close of the calendar year
an annual statement as to the federal income tax status of his or her
dividends and distributions from the fund for the prior calendar year. Any
dividends attributable to interest on municipal obligations generally will
be taxable as ordinary dividends for state personal income tax purposes
even if such dividends are excluded from gross income for federal income
tax purposes except, in certain states, to the extent they are
attributable to interest on obligations of those states and certain of
their agencies or instrumentalities and any other applicable requirements
are satisfied.. These statements also will designate the amount of
exempt-interest dividends that is a specific preference item for purposes
of the federal individual and corporate alternative minimum taxes. Each
shareholder also will receive, if appropriate, written notice after the
close of the fund's taxable year as to the federal income tax status of
his or her dividends and distributions. Shareholders should consult their
tax advisors as to any state and local taxes that may apply to these
dividends and distributions. The dollar amount of dividends excluded or
exempt from federal income taxation and the dollar amount subject to
federal income taxation, if any, will vary for each shareholder depending
upon the size and duration of each shareholder's investment in the fund.
At March 31, 1999, the unused capital loss carryovers of the fund
were approximately $578,000. These amounts are available to be applied
against any future realized gains. The carryovers expire as follows:
$400,000 in 2001, $37,000 in 2002, $72,000 in 2003 and $69,000 in 2004.
ADDITIONAL INFORMATION
The fund was incorporated under the laws of the State of Maryland on
April 1, 1980, and is registered with the SEC as a non-diversified, open-
end management investment company.
Class A and Class Y shares represent interests in the assets of the
fund and have identical voting, dividend, liquidation and other rights on
the same terms and conditions except that expenses related to the
distribution of each Class of shares are borne solely by each Class and
each Class of shares has exclusive voting rights with respect to
provisions of the fund's Rule 12b-1 distribution plan which pertain to a
particular Class. Fund shares do not have cumulative voting rights; are
fully paid when issued; have no preemptive, subscription or conversion
rights; and are redeemable.
The fund does not hold annual shareholder meetings. There normally
will be no meetings of shareholders for the purpose of electing Directors
unless and until such time as less than a majority of the Directors
holding office have been elected by shareholders. The Directors will call
a meeting for any purpose upon written request of shareholders holding at
least 10% of the fund's outstanding shares, and the fund will assist
shareholders in calling such a meeting as required by the 1940 Act. When
matters are submitted for shareholder vote, shareholders of each Class
will have on vote for each full share owned and proportionate, fractional
vote for any fractional share held of that Class. Generally, shares of
the fund will be voted on a fund-wide basis on all matters except matters
affecting only the interests of one Class.
The fund sends to each of its shareholders a semi-annual report and
an audited annual report, which include listings of the investment
securities held by the fund at the end of the reporting period. 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. Shareholders who do not want this consolidation to apply
to their account should contact their Financial Consultants or the
Transfer Agent.
FINANCIAL STATEMENTS
The fund's financial information will be incorporated by reference
to the fund's Annual Report to shareholders for the fiscal year ended
March 31, 1999. The Annual Report was filed on July 1, 1999, accession
number 911555-99-424.
APPENDIX A
RATINGS OF MUNICIPAL OBLIGATIONS
Description of Ratings of State and Local Government Municipal Notes
Notes are assigned distinct rating symbols in recognition of the
differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower and short-term cyclical elements
are critical in short-term ratings, while other factors of major
importance in bond risk, long-term secular trends for example, may be less
important over the short run.
Moody's Investors Service, Inc. ("Moody's):
Moody's ratings for state and municipal short-term obligations will be
designated Moody's Investment Grade ("MIG"). A short-term rating may
also be assigned on an issue having a demand feature - a variable rate
demand obligation. Such ratings will be designated as VMIG. Short-term
ratings on issues with demand features are differentiated by the use of
the VMIG symbol to reflect such characteristics as payment upon periodic
demand rather than fixed maturity dates and payment relying on external
liquidity. Additionally, investors should be alert to the fact that the
source of payment may be limited to the external liquidity with no or
limited legal recourse to the issuer in the event the demand is not met.
MIG 1/VMIG 1 -- This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2 -- This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
Standard & Poor's Ratings Group:
SP-1+ -- This rating indicates a very strong or strong capacity to pay
principal and interest and the possession of overwhelming safety
characteristics.
Description of Two Highest Municipal Bond Ratings
Moody's Investors Service, Inc.:
Aaa -- Bonds that are rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa -- Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated owner than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in Aaa securities.
Standard & Poor's Ratings Group ("S&P"):
AAA -- Debt rated 'AAA' has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA -- Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
Description of Highest Commercial Paper Ratings
Moody's Investors Service, Inc.:
Prime 1 -- Issuers rated Prime-1 (or related supporting institutions)
have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics: leading market positions in well-established
industries; high rates of return on funds employed; conservative
capitalization structures with moderate reliance on debt and ample asset
protection; broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and well established access to a range
of financial markets and assured sources of alternate liquidity.
Standard & Poor's Ratings Group:
A-1 -- This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted with
a plus (+) sign designation.
* * *
After purchase by the fund, a security may cease to be rated or its rating
may be reduced below the minimum required for purchase by the fund.
Neither event will require a sale of such security by the fund; however,
the manager will consider such event in determining whether the fund
should continue to hold the security. To the extent that a rating may
change as a result of changes in rating services or their rating systems,
the fund will attempt to use comparable ratings as standards for
investments in accordance with the investment policies contained in the
Prospectus.
PART C Other Information
Item 23. Exhibits
(a)(1) Articles of Amendment dated March 31, 1981 are incorporated
by reference to Exhibit 1(a) to Post-Effective Amendment No. 14.
(a)(2) Articles of Amendment and Restatement of Articles of
Incorporation
dated October 28, 1980 are incorporated by reference to Exhibit 1(b) to
Post-Effective Amendment
No. 14.
(a)(3) Articles of Amendment dated July 22, 1991 are incorporated by
reference to Exhibit 1(c) to Post-Effective Amendment No. 15.
(a)(4) Articles of Amendment dated November 10, 1992 are
incorporated by reference to Exhibit 1(d) to Post-Effective Amendment No.
20
(a)(5) Articles Supplementary dated December 8, 1992 are
incorporated by refence to Exhibit 1(e) to Post-Effective Amendment No.
20.
(a)(6)Articles of Amendment dated October 14, 1994 are incorporated by
reference to Exhibit 1(f) to Post-Effective Amendment No. 26
(a)(7) Articles of Amendment dated November 4, 1994 are incorporated
by
reference to Exhibit 1(g) to Post-Effective Amendment No. 26
(a)(8)Articles Supplementary dated November 7, 1994 are incorporated by
reference to Exhibit 1(h) to Post-Effective Amendment No. 26
(a)(9)Articles Supplementary dated November 7, 1994 are incorporated by
reference to Exhibit 1(i) to Post-Effective Amendment No. 26
(b) Bylaws of the Fund are incorporated by reference to Exhibit 2 to
Post-Effective Amendment No. 11 to Registration Statement No. 2-
69938.
(c) Not applicable.
(d)(1) Management Agreement between Registrant and Mutual Management
Corp. is incorporated by reference to Exhibit (5) to Post-Effective
Amendment No. 23 to the
Registration Statement.
(d)(2) Transfer and Assumption of Management Agreement is
incorporated
by reference to Exhibit 5(b) to Post-Effective Amendment No. 26.
(e)(1) Underwriting Agreement between Registrant and Smith Barney,
Harris
Upham & Co. Incorporated is incorporated by reference to Exhibit 6 to Post-
Effective Amendment
No. 12.
(e)(2)Distribution Agreement between the Registrant
and CFBDS Inc. dated October 8, 1998 is
filed herewith.
(e)(3) Selling Group Agreement between Registrant and
CFBDS, Inc. is filed herewith.
(f) Not applicable.
(g) Custodian Agreement between Registrant and Provident National Bank is
incorporated by reference to Exhibit 8 to Post-Effective Amendment No. 5.
(h) Transfer Agency Agreement between Registrant and First Data Investor
Services
Group Inc. is incorporated by reference to Exhibit 9 to Post-Effective
Amendment No. 26.
(i) Not Applicable.
(j)(1) Auditors' Report (see the Annual Report to Shareholders which
is incorporated by reference in the Statement of Additional Information).
(j)(2) Auditors' Consent
(k) Not applicable.
(l) Subscription Agreement between Registrant and National Securities &
Research Corporation is incorporated by reference to Exhibit 13 to Post-
Effective Amendment
No. 14.
(m)(1) Plan of Distribution pursuant to Rule 12b-1 of Registrant is
incorporated by
reference to Exhibit 15 to Post-Effective Amendment No. 23.
(m)(1) Plan of Distribution pursuant to Rule 12b-1 of Registrant is
filed herewith.
(n) Financial Data Schedule is filed herewith.
(o) Amended and Restated Plan pursuant to Rule 18f-3 is incorporated
by reference
To Exhibit 18 to Post-Effective Amendment No.28.
Item 24. Persons Controlled by or under Common Control with Registrant
(None)
Item 25. Indemnification
Reference is made to ARTICLE Eighth of Registrant's Articles of
Incorporation for a
complete statement of its terms. Subparagraph (c) of Article EIGHTH
provides: "Notwithstanding
the foregoing provisions, no officer or director of the Corporation shall
be indemnified for or insured
against any liability to the Corporation or its shareholders 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.
Registrant is a named assured on a joint insured bond pursuant to
Rule 17g-1 of the Investment
Company Act of 1940. Other assureds include SSBC Fund Management Inc.,
(formerly known as
Mutual Management Corp.) ("SSBC") and affiliated investment companies.
Item 26. Business and other Connections of Investment Adviser
See the material under the caption "Management" included in Part A
(Prospectus) of this
Registration Statement and the material appearing under the caption
"Investment Management"
included in Part B (Statement of Additional Information) of this
Registration Statement.
Information as to the Directors and Officers of SSBC Fund Management
Inc.
is included in its Form ADV (File No. 801-8314), filed with the
Commission,
which is incorporated herein by reference thereto.
Item 27.Principal Underwriters
(a) CFBDS, Inc., ("CFBDS") the Registrant's Distributor, is also
the distributor for the following Smith Barney funds: Concert
Investment Series, Consulting Group Capital Markets Funds,
Greenwich Street Series Fund,
Smith Barney Adjustable Rate Government Income
Fund, Smith Barney Aggressive Growth Fund Inc., Smith Barney
Appreciation Fund Inc., Smith Barney Arizona Municipals Fund Inc.,
Smith Barney California Municipals Fund Inc., Smith Barney Concert
Allocation Series Inc., Smith Barney Equity Funds, Smith Barney
Fundamental Value Fund Inc., Smith Barney Funds, Inc., Smith Barney
Income Funds, Smith Barney Institutional Cash Management Fund, Inc.,
Smith Barney Investment Funds Inc., Smith Barney Investment Trust,
Smith Barney Managed Governments Fund Inc., Smith Barney Managed
Municipals Fund Inc., Smith Barney Massachusetts Municipals Fund,
Smith Barney Money Funds, Inc., Smith Barney Muni Funds, Smith Barney
Natural Resources Fund Inc., Smith Barney New Jersey Municipals
Fund Inc., Smith Barney Oregon Municipals Fund Inc., Smith Barney
Principal Return Fund, Smith Barney Small Cap Blend Fund, Inc., Smith
Barney Telecommunications Trust, Smith Barney Variable Account Funds,
Smith Barney World Funds, Inc., Travelers Series Fund Inc., and
various series of unit investment trusts.
CFBDS also serves as the distributor for the following funds: The
Travelers Fund UL for Variable Annuities, The Travelers Fund VA for
Variable Annuities, The Travelers Fund BD for Variable Annuities, The
Travelers Fund BD II for Variable Annuities, The Travelers Fund BD
III for Variable Annuities, The Travelers Fund BD IV for Variable
Annuities, The Travelers Fund ABD for Variable Annuities, The
Travelers Fund ABD II for Variable Annuities, The Travelers Separate
Account PF for Variable Annuities, The Travelers Separate Account PF
II for Variable Annuities, The Travelers Separate Account QP for
Variable Annuities, The Travelers Separate Account TM for Variable
Annuities, The Travelers Separate Account TM II for Variable
Annuities, The Travelers Separate Account Five for Variable
Annuities, The Travelers Separate Account Six for Variable Annuities,
The Travelers Separate Account Seven for Variable Annuities, The
Travelers Separate Account Eight for Variable Annuities, The
Travelers Fund UL for Variable Annuities, The Travelers Fund UL II
for Variable Annuities, The Travelers Variable Life Insurance
Separate Account One, The Travelers Variable Life Insurance Separate
Account Two, The Travelers Variable Life Insurance Separate Account
Three, The Travelers Variable Life Insurance Separate Account Four,
The Travelers Separate Account MGA, The Travelers Separate Account
MGA II, The Travelers Growth and Income Stock Account for Variable
Annuities, The Travelers Quality Bond Account for Variable Annuities,
The Travelers Money Market Account for Variable Annuities, The
Travelers Timed Growth and Income Stock Account for Variable
Annuities, The Travelers Timed Short-Term Bond Account for Variable
Annuities, The Travelers Timed Aggressive Stock Account for Variable
Annuities, The Travelers Timed Bond Account for Variable Annuities.
In addition, CFBDS, the Registrant's Distributor, is also the
distributor for CitiFunds Multi-State Tax Free Trust, CitiFunds
Premium Trust, CitiFunds Institutional Trust, CitiFunds Tax Free
Reserves, CitiFunds Trust I, CitiFunds Trust II, CitiFunds Trust III,
CitiFunds International Trust, CitiFunds Fixed Income Trust,
CitiSelect VIP Folio 200, CitiSelect VIP Folio 300, CitiSelect VIP
Folio 400, CitiSelect VIP Folio 500, CitiFunds Small Cap Growth VIP
Portfolio. CFBDS is also the placement agent for Large Cap Value
Portfolio, Small Cap Value Portfolio, International Portfolio,
Foreign Bond Portfolio, Intermediate Income Portfolio, Short-Term
Portfolio, Growth & Income Portfolio, U.S. Fixed Income Portfolio,
Large Cap Growth Portfolio, Small Cap Growth Portfolio, International
Equity Portfolio, Balanced Portfolio, Government Income Portfolio,
Tax Free Reserves Portfolio, Cash Reserves Portfolio and U.S.
Treasury Reserves Portfolio.
In addition, CFBDS is also the distributor for the following Salomon
Brothers funds: Salomon Brothers Opportunity Fund Inc., Salomon
Brothers Investors Fund Inc., Salomon Brothers Capital Fund Inc.,
Salomon Brothers Series Funds Inc., Salomon Brothers Institutional
Series Funds Inc., Salomon Brothers Variable Series Funds Inc.
In addition, CFBDS is also the distributor for the Centurion Funds,
Inc.
(b) The information required by this Item 27 with respect to each
director and officer of CFBDS is incorporated by reference to
Schedule A of Form BD filed by CFBDS pursuant to the Securities and
Exchange Act of 1934 (File No. 8-32417).
(c) Not applicable.
Item 28. Location of Accounts and Records
PNC Bank, National Association, 17th and Chestnut Streets,
Philadelphia, Pennsylvania 19103 and First Data Investor Services
Group, Inc., Exchange Place, Boston, Massachusetts 02109-2873, will
maintain the custodian and the shareholders servicing agent records,
respectively required by Section 31(a) of the Investment Company Act
of 1940, as amended (the "1940 Act").
CFBDS, Inc. 21 Milk Street, 5th Floor, Boston, MA 02109
maintains records relating to its function as Distributor.
All other records required by Section 31(a) are maintained at the
offices of the Registrant at 388 Greenwich Street, New York, New York
10013 (and preserved for the periods specified by Rule 31a-2 of the
1940 Act).
Item 29. Management Services
Not applicable.
Item 30. Undertakings
None
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the Registrant
certifies that it meets all of the requirements for effectiveness of this
Post-Effective Amendment to the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment to its Registration Statement to be signed on its
behalf by the undersigned, and where applicable, the true and lawful
attorney-in-fact, thereto duly authorized, in the City of New York and
State of New York, on the 28th day of July 1999.
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
BY/s/ Heath B. McLendon
Heath B. McLendon
Chairman of the Board, President
and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the date indicated.
Signatures Title Date
/s/ Heath B. McLendon Chairman of the Board, July 28,1999
(Heath B. McLendon) President and Chief
Executive Officer
Director
Lee Abraham
Director
Allan J. Bloostein
Director
Richard E. Hanson, Jr.
Director
Jane Dasher
/s/Donald R. Foley* Director July 28, 1999
(Donald R. Foley)
/s/Paul Hardin* Director July 28,
1999
(Paul Hardin)
/s/Roderick C. Rasmussen* Director July 28, 1999
(Roderick C. Rasmussen)
Signatures Title Date
/s/John P. Toolan* Director July 28,1999
(John P. Toolan)
/s/ Lewis E. Daidone Senior Vice President July 28,1999
(Lewis E. Daidone) and Treasurer
*By: /s/ Christina T. Sydor Secretary July 28, 1999
Christina T. Sydor
Pursuant to Power of Attorney
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
Distribution Agreement
Selling Group (Broker/Dealer) Agreement
Plan of Distribution pursuant to Rule 12b-1
Auditor's Consent
Financial Data Schedule
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
DISTRIBUTION AGREEMENT
October 8, 1998
CFBDS, Inc.
21 Milk Street
Boston, MA 02109
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, the above-named investment company (the "Fund") has
agreed that you shall be, for the period of this Agreement, the non-
exclusive principal underwriter and distributor of shares of the Fund and
each Series of the Fund set forth on Exhibit A hereto, as such Exhibit may
be revised from time to time (each, including any shares of the Fund not
designated by series, a "Series"). For purposes of this Agreement, the
term "Shares" shall mean shares of the each Series, or one or more Series,
as the context may require.
1. Services as Principal Underwriter and Distributor
1.1 You will act as agent for the distribution of Shares
covered by, and in accordance with, 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"), and will
transmit or cause to be transmitted promptly any orders received by you or
those with whom you have sales or servicing agreements for purchase or
redemption of Shares to the Transfer and Dividend Disbursing Agent for the
Fund of which the Fund has notified you in writing.
1.2 You agree to use your best efforts to solicit orders for
the sale of Shares. It is contemplated that you will enter into sales or
servicing agreements with registered securities dealers and banks and into
servicing agreements with financial institutions and other industry
professionals, such as investment advisers, accountants and estate
planning firms. In entering into such agreements, you will act only on
your own behalf as principal underwriter and distributor. You will not be
responsible for making any distribution plan or service fee payments
pursuant to any plans the Fund may adopt or agreements it may enter into.
1.3 You shall act as principal underwriter and distributor of
Shares in compliance with all applicable laws, rules, and regulations,
including, without limitation, all rules and regulations made or adopted
from time to time by the Securities and Exchange Commission (the "SEC")
pursuant to the 1933 Act or the 1940 Act or by any securities association
registered under the Securities Exchange Act of 1934, as amended.
1.4 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, any Shares until such time as those officers deem it
advisable to accept such orders and to make such sales and the Fund shall
advise you promptly of such determination.
2. Duties of the Fund
2.1 The Fund agrees to pay all costs and expenses in
connection with the registration of Shares under the 1933 Act, and all
expenses in connection with maintaining facilities for the issue and
transfer of Shares and for supplying information, prices and other data to
be furnished by the Fund hereunder, and all expenses in connection with
the preparation and printing of the Fund's prospectuses and statements of
additional information for regulatory purposes and for distribution to
shareholders; provided however, that nothing contained herein shall be
deemed to require the Fund to pay any of the costs of advertising or
marketing the sale of Shares.
2.2 The Fund agrees to execute any and all documents and to
furnish any and all information and otherwise to take any other actions
that may be reasonably necessary in the discretion of the Fund's officers
in connection with the qualification of Shares for sale in such states and
other U.S. jurisdictions as the Fund may approve and designate to you from
time to time, and the Fund agrees to pay all expenses that may be incurred
in connection with such qualification. You shall pay all expenses
connected with your own qualification as a securities broker or dealer
under state or Federal laws and, except as otherwise specifically provided
in this Agreement, all other expenses incurred by you in connection with
the sale of Shares as contemplated in this Agreement.
2.3 The Fund shall furnish you from time to time, for use in
connection with the sale of Shares, such information reports with respect
to the Fund or any relevant Series and the Shares as you 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 also shall furnish you upon request with (a) the
reports of annual audits of the financial statements of the Fund for each
Series made by independent certified public accountants retained by
the Fund for such purpose; (b) semi-annual unaudited financial statements
pertaining to each Series; (c) quarterly earnings statements prepared by
the Fund; (d) a monthly itemized list of the securities in each Series'
portfolio; (e) monthly balance sheets as soon as practicable after the end
of each month; (f) the current net asset value and offering price per
share for each Series on each day such net asset value is computed and (g)
from time to time such additional information regarding the financial
condition of each Series of the Fund as you may reasonably request.
3. Representations and Warranties
The Fund represents to you 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 prepared in conformity with the requirements of said Acts
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 filed by the
Fund with the SEC. The Fund represents and warrants to you that any
registration statement, prospectus and statement of additional
information, when such registration statement becomes effective and as
such prospectus and statement of additional information are amended or
supplemented, will include at the time of such effectiveness, amendment or
supplement 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 material 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, 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 you to do
so, you may, at your option, terminate this Agreement or decline to make
offers of the Fund's Shares until such amendments are made. The Fund
shall not file any amendment to any registration statement or supplement
to any prospectus or statement of additional information without giving
you 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 you to use any prospectus or
statement of additional information furnished by the Fund from time to
time, in connection with the sale of Shares. The Fund agrees to
indemnify, defend and hold you, your several officers and directors, and
any person who controls you 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 you, your 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 of them not misleading; provided, however, that the
Fund's agreement to indemnify you, your 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 you or your 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 you pursuant to paragraph 2.3 of this Agreement; and further
provided that the Fund's agreement to indemnify you 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 you would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of
your duties, or by reason of your reckless disregard of your obligations
and duties under this Agreement. The Fund's agreement to indemnify you,
your officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Fund's being notified of any
action brought against you, your 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.
In the event the Fund elects to assume the defense of any such suit and
retains counsel of good standing, 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, the Fund will reimburse you, your 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 you 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 you, your 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 your
benefit, to the benefit of your several officers and directors, and their
respective estates, and to the benefit of the controlling persons and
their successors. The Fund agrees to notify you promptly of the
commencement of any litigation or proceedings against the Fund or any of
its officers or Board members in connection with the issuance and sale of
any of the Fund's Shares.
4.2 You agree to indemnify, defend and hold the Fund, its
several officers and Board members, 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 Board members 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 Board members, or such controlling person resulting from such
claims or demands shall arise out of or be based upon (a) any unauthorized
sales literature, advertisements, information, statements or
representations or (b) any untrue, or alleged untrue, statement of a
material fact contained in information furnished in writing by you 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 you to the Fund
and required to be stated in such answers or necessary to make such
information not misleading. Your agreement to indemnify the Fund, its
officers or Board members, and any such controlling person, as aforesaid,
is expressly conditioned upon your being notified of any action brought
against the Fund, its officers or Board members, or any such controlling
person, such notification to be given by letter or telegram addressed to
you at your principal office in Boston, Massachusetts and sent to you by
the person against whom such action is brought, within ten days after the
summons or other first legal process shall have been served. You shall
have the right to control the defense of such action, with counsel of your
own choosing, satisfactory to the Fund, if such action is based solely
upon such alleged misstatement or omission on your part or with the Fund's
consent, and in any event the Fund, its officers or Board members or such
controlling person shall each have the right to participate in the defense
or preparation of the defense of any such action with counsel of its own
choosing reasonably acceptable to you but shall not have the right to
settle any such action without your consent, which will not be
unreasonably withheld. The failure to so notify you of any such action
shall not relieve you from any liability that you may have to the Fund,
its officers or Board members, 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 your indemnity agreement contained
in this paragraph 4.2. You agree to notify the Fund promptly of the
commencement of any litigation or proceedings against you or any of your
officers or directors in connection with the issuance and sale of any of
the Fund's Shares.
5. Effectiveness of Registration
No Shares shall be offered by either you or the Fund under any of
the provisions of this Agreement and no orders for the purchase or sale of
such 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
provisions 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, however, 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 charter documents, as amended from time to time.
6. Offering Price
Shares of any class of any Series of the Fund offered for sale by
you shall be offered for sale at a price per share (the "offering price")
equal to (a) their net asset value (determined in the manner set forth in
the Fund's charter documents and the then-current prospectus and statement
of additional information) plus (b) a sales charge, if applicable, which
shall be the percentage of the offering price of such Shares as set forth
in the Fund's then-current prospectus relating to such Series. In
addition to or in lieu of any sales charge applicable at the time of sale,
Shares of any class of any Series of the Fund offered for sale by you may
be subject to a contingent deferred sales charge as set forth in the
Fund's then-current prospectus and statement of additional information.
You shall be entitled to receive any sales charge levied at the time of
sale in respect of the Shares without remitting any portion to the Fund.
Any payments to a broker or dealer through whom you sell Shares shall be
governed by a separate agreement between you and such broker or dealer and
the Fund's then-current prospectus and statement of additional information
7. Notice to You
The Fund agrees to advise you 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 of 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 the registration
statement, or any supplement to the prospectus
or statement of additional information which
may from time to time be filed with the SEC.
8. Term of the Agreement
This Agreement shall become effective on the date hereof, shall have
an initial term of one year from the date hereof, and shall continue for
successive annual periods thereafter so long as such continuance is
specifically approved at least annually by (a) the Fund's Board 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 Board members 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 30 days' notice by the Fund's Board or by vote of
holders of a majority of the relevant Series outstanding voting
securities, or on 90 days' notice by you. This Agreement will also
terminate automatically, as to the relevant Series, in the event of its
assignment (as defined in the 1940 Act and the rules and regulations
thereunder).
9. Arbitration
Any claim, controversy, dispute or deadlock arising under this
Agreement (collectively, a "Dispute") shall be settled by arbitration
administered under the rules of the American Arbitration Association
("AAA") in New York, New York. Any arbitration and award of the
arbitrators, or a majority of them, shall be final and the judgment upon
the award rendered may be entered in any state or federal court having
jurisdiction. No punitive damages are to be awarded.
10. Miscellaneous
So long as you act as a principal underwriter and distributor of
Shares, you shall not perform any services for any entity other than
investment companies advised or administered by Citigroup Inc. or its
subsidiaries. The Fund recognizes that the persons employed by you to
assist in the performance of your duties under this Agreement may not
devote their full time to such service and nothing contained in this
Agreement shall be deemed to limit or restrict your or any of your
affiliates right to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature. This
Agreement and the terms and conditions set forth herein shall be governed
by, and construed in accordance with, the laws of the State of New York.
11. Limitation of Liability (Massachusetts business trusts only)
The Fund and you agree that the obligations of the Fund under this
Agreement shall not be binding upon any of the Trustees, 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 Master Trust Agreement. The
execution and delivery of this Agreement have been authorized by the
Trustees and signed by an authorized officer of the Fund, acting as such,
and neither such authorization by such Trustees nor such execution and
delivery by such officer 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 trust property of the Fund as provided in its Master
Trust Agreement.
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, whereupon this Agreement will become binding on you.
Very truly yours,
SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC.
By: _____________________
Authorized Officer
Accepted:
CFBDS, INC.
By: __________________________
Authorized Officer
U:\legal\general\forms\dist12b1\SBMunicipalMoneyMarket
Page: 3
6
SMITH BARNEY MUTUAL FUNDS
BROKER DEALER CONTRACT
CFBDS, Inc.
21 Milk Street
Boston, Massachusetts 02109
Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
We, CFBDS, Inc. ("CFBDS"), have agreements
with certain investment companies for which Mutual
Management Corp. serves as investment adviser and/or
administrator (each a "Fund") pursuant to which we act
as nonexclusive principal underwriter and distributor
for the sale of shares of capital stock ("shares") of
the various series of such Funds, and as such have the
right to distribute shares for resale. Each Fund is
an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "1940
Act") and the shares being offered to the public are
registered under the Securities Act of 1933, as
amended (the "1933 Act"). Each series of each Fund
covered by a Distribution Agreement from time to time
is referred to in this agreement as a "Series" and
collectively as the "Series." The term "Prospectus",
as used herein, refers to the prospectus and related
statement of additional information (the "Statement of
Additional Information") incorporated therein by
reference (as amended or supplemented) on file with
the Securities and Exchange Commission at the time in
question. As a broker in the capacity of principal
underwriter and distributor for the Trust, we offer to
sell to you, as a broker or dealer, shares of each
Fund upon the following terms and conditions:
1. In all sales to the public
you shall act as broker for your customers or as
dealer for your own account, and in no transaction
shall you have any authority to act as agent for the
Trust, for us or for any other dealer. tc " In all
sales to the public you shall act as dealer for your
own account, and in no transaction shall you have any
authority to act as agent for the Fund, for us or for
any other dealer."
2. Orders received from you
will be accepted through us only at the public
offering price per share (i.e. the net asset value per
share plus the applicable front-end sales charge, if
any) applicable to each order, and all orders for
redemption of any shares shall be executed at the net
asset value per share less any contingent deferred
sales charge, if any, in each case as set forth in the
Prospectus. You will be entitled to receive and
retain any contingent deferred sales charge amounts in
partial consideration of your payment to financial
consultants of commission amounts at the time of sale
and we will obligate any other brokers with whom we
enter into similar agreements to pay such amounts
directly to you. The procedure relating to the
handling of orders shall be subject to paragraph 4
hereof and instructions which we or the Fund shall
forward from time to time to you. All orders are
subject to acceptance or rejection by the applicable
Fund or us in the sole discretion of either. The
minimum initial purchase and the minimum subsequent
purchase of any shares shall be as set forth in the
Prospectus pertaining to the relevant Series. tc "
Orders received from you will be accepted through us
only at the public offering price per share (i.e. the
net asset value per share plus the applicable sales
charge, if any) applicable to each order, and all
orders for redemption of any Fund shares shall be
executed at the net asset value per share less any
contingent deferred sales charge, if any, in each case
as set forth in the Prospectus. The procedure
relating to the handling of orders shall be subject to
paragraph 4 hereof and instructions which we or the
Fund shall forward from time to time to you. All
orders are subject to acceptance or rejection by
Salomon or the Fund in the sole discretion of either.
The minimum initial purchase and the minimum
subsequent purchase shall be as set forth in the
Prospectus of the Fund."
3. You shall not place orders
for any shares unless you have already received
purchase orders for those shares at the applicable
public offering price and subject to the terms hereof.
You agree that you will not offer or sell any shares
except under circumstances that will result in
compliance with the applicable Federal and state
securities laws, the applicable rules and regulations
thereunder and the rules and regulations of applicable
regulatory agencies or authorities and that in
connection with sales and offers to sell shares you
will furnish to each person to whom any such sale or
offer is made, a copy of the Prospectus and, upon
request, the Statement of Additional Information, and
will not furnish to any person any information
relating to shares which is inconsistent in any
respect with the information contained in the
Prospectus or Statement of Additional Information (as
then amended or supplemented). You shall not furnish
or cause to be furnished to any person or display or
publish any information or materials relating to the
shares (including, without limitation, promotional
materials and sales literature, advertisements, press
releases, announcements, statements, posters, signs or
other similar material), except such information and
materials as may be furnished to you by or on behalf
of us or the Funds, and such other information and
materials as may be approved in writing by or on
behalf of us or the Funds. tc " You shall not place
orders for any shares unless you have already received
purchase orders for those shares at the applicable
public offering price and subject to the terms hereof
and of the Distribution Contract. You agree that you
will not"
4. As a broker dealer, you are
hereby authorized (i) to place orders directly with
the applicable Fund or Series for shares subject to
the applicable terms and conditions governing the
placement of orders by us set forth in the Prospectus
and (ii) to tender shares directly to each Fund or its
agent for redemption subject to the applicable terms
and conditions governing the redemption of shares
applicable to us set forth in the Prospectus. tc " As
a dealer, you are hereby authorized (i) to place
orders directly with the Fund for shares to be resold
by us to you subject to the applicable terms and
conditions governing the placement of orders by us set
forth in the Prospectus and the Distribution Contract
and (ii) to tender shares directly to the Fund or its
agent for redemption subject to the applicable terms
and conditions governing the redemption of shares
applicable to us set forth in the Prospectus and the
Distribution Agreement."
5. You shall not withhold
placing orders received from your customers so as to
profit yourself as a result of such withholding, e.g.,
by a change in the "net asset value" from that used in
determining the offering price to your customers. tc "
You shall not withhold placing orders received from
your customers so as to profit yourself as a result of
such withholding, e.g., by a change in the \"net asset
value\" from that used in determining the offering
price to your customers."
6. In determining the amount
of any sales concession payable to you hereunder, we
reserve the right to exclude any sales which we
reasonably determine are not made in accordance with
the terms of the Prospectus and the provisions of this
Agreement. Unless at the time of transmitting an
order we advise you or the transfer agent to the
contrary, the shares ordered will be deemed to be the
total holdings of the specified investor. tc " In
determining the amount of any sales concession payable
to you hereunder, we reserve the right to exclude any
sales which we reasonably determine are not made in
accordance with the terms of the Prospectus and the
provisions of this Agreement. Unless at the time of
transmitting an order we advise you or the transfer
agent to the contrary, the shares ordered will be
deemed to be the total holdings of the specified
investor."
7. (a) You agree that payment
for orders from you for the purchase of shares will be
made in accordance with the terms of the Prospectus.
On or before the business day following the settlement
date of each purchase order for shares, you shall
transfer same day funds to an account designated by us
with the transfer agent in an amount equal to the
public offering price on the date of purchase of the
shares being purchased less your sales concession, if
any, with respect to such purchase order determined in
accordance with the Prospectus. If payment for any
purchase order is not received in accordance with the
terms of the Prospectus, we reserve the right, without
notice, to cancel the sale and to hold you responsible
for any loss sustained as a result thereof. tc " (a)
You agree that payment for orders from you for the
purchase of shares will be made in accordance with the
terms of the Prospectus. On or before the business
day following the settlement date of each purchase
order for shares, you shall transfer same day funds to
an account designated by us with the transfer agent an
amount equal to the public offering price on the date
of purchase of the shares being purchased less your
sales concession, if any, with respect to such
purchase order determined in accordance with the
Prospectus. If payment for any purchase order is not
received in accordance with the terms of the
Prospectus, we reserve the right, without notice, to
cancel the sale and to hold you responsible for any
loss sustained as a result thereof."
(b) If any shares sold under the
terms of this Agreement are sold with a sales charge
and are redeemed or are tendered for redemption within
seven (7) business days after confirmation of your
purchase order for such shares: (i) you shall
forthwith refund to us the full sales concession
received by you on the sale; and (ii) we shall
forthwith pay to the applicable Series our portion of
the sales charge on the sale which has been retained
by us, if any, and shall also pay to the applicable
Series the amount refunded by you. tc " If any shares
sold under the terms of this Agreement are sold with a
sales charge and are redeemed or are tendered for
redemption within seven (7) business days after
confirmation of your purchase order for such shares\:
(i) you shall forthwith refund to us the full sales
concession received by you on the sale; and (ii) we
shall forthwith pay to the applicable Series our
portion of the sales charge on the sale which has been
retained by us, if any, and shall also pay to the
Series the amount refunded by you."
(c) We will not be obligated to
pay or cause to be paid to you any ongoing trail
commission or shareholder service fees with respect to
shares of the Series purchased through you and held by
or for your customers, which you shall collect
directly from the Funds. tc " We will pay you an
ongoing trail commission with respect to holdings by
you of shares of the Funds at such rates and in such
manner as may be described in the Prospectus."
(d) Certificates evidencing
shares shall be available only upon request. Upon
payment for shares in accordance with paragraph 7(a)
above, the transfer agent will issue and transmit to
you or your customer a confirmation statement
evidencing the purchase of such shares. Any
transaction in uncertificated shares, including
purchases, transfers, redemptions and repurchases,
shall be effected and evidenced by book-entry on the
records of the transfer agent. tc " Certificates
evidencing shares shall be available only upon
request. Upon payment for shares in accordance with
paragraph 7(a) above, the transfer agent will issue
and transmit to you a confirmation statement
evidencing the purchase of such shares. Any
transaction in uncertificated shares, including
purchases, transfers, redemptions and repurchases,
shall be effected and evidenced by book-entry on the
records of the transfer agent."
8. No person is authorized to
make any representations concerning shares except
those contained in the current Prospectus and
Statement of Additional Information and in printed
information subsequently issued by us or the Funds as
information supplemental to the Prospectus and the
Statement of Additional Information. In purchasing or
offering shares pursuant to this Agreement you shall
rely solely on the representations contained in the
Prospectus, the Statement of Additional Information
and the supplemental information above mentioned. tc "
No person is authorized to make any representations
concerning shares except those contained in the
current Prospectus and Statement of Additional
Information and in printed information subsequently
issued by us or the Fund as information supplemental
to the Prospectus and the Statement of Additional
Information. In purchasing sor offering shares
pursuant to this Agreement you shall rely solely on
the representations contained in the Prospectus, the
Statement of Additional Information and the
supplemental information above mentioned."
9. PRIVATE You agree to deliver to
each purchaser making a purchase of shares from or
through you a copy of the Prospectus at or prior to
the time of offering or sale, and, upon request, the
Statement of Additional Information. You may instruct
the transfer agent to register shares purchased in
your name and account as nominee for your customers.
You agree thereafter to deliver to any purchaser whose
shares you or your nominee are holding as record
holder copies of the annual and interim reports and
proxy solicitation materials and any other information
and materials relating to the Trust and prepared by or
on behalf of us, the Funds or the investment adviser,
custodian, transfer agent or dividend disbursing agent
for distribution to beneficial holders of shares. The
Funds shall be responsible for the costs associated
with forwarding such reports, materials and other
information and shall reimburse you in full for such
costs. You further agree to make reasonable efforts
to endeavor to obtain proxies from such purchasers
whose shares you or your nominee are holding as record
holder. You further agree to obtain from each
customer to whom you sell shares any taxpayer
identification number certification required under
Section 3406 of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations promulgated
thereunder, and to provide us or our designee with
timely written notice of any failure to obtain such
taxpayer identification number certification in order
to enable the implementation of any required backup
withholding in accordance with Section 3406 of the
Code and the regulations thereunder. Additional
copies of the Prospectus, Statement of Additional
Information, annual or interim reports, proxy
solicitation materials and any such other information
and materials relating to the Trust will be supplied
to you in reasonable quantities upon request. tc "
You agree to deliver to each purchaser making a
purchase of shares from you a copy of the Prospectus
at or prior to the time of offering or sale, and, upon
request, the Statement of Additional Information. You
may instruct the transfer agent to register shares
purchased in your name and account as nominee for your
customers. You agree thereafter to deliver to any
purchaser whose shares you are holding as record
holder copies of the annual and interim reports and
proxy solicitation materials and any other information
and materials relating to the Fund and prepared by or
on behalf of us, the Fund or its investment adviser,
custodian, transfer agent or dividend disbursing agent
for distribution to such customer. The Fund shall be
responsible for the costs associated with forwarding
such reports, materials and other information and
shall reimburse you in full for such costs. You
further agree to make reasonable efforts to endeavor
to obtain proxies from such purchasers whose shares
you are holding as record holder. You further agree
to obtain from each customer to whom you sell shares
any taxpayer identification number certification
required under Section 3406 of the Internal Revenue
Code of 1986, as amended (the \"Code\"), and the
regulations promulgated thereunder, and to provide us
or our designee with timely written notice of any
failure to obtain such taxpayer identification number
certification in order to enable the implementation of
any required backup withholding in accordance with
Section 3406 of the Code and the regulations
thereunder. Additional copies of the Prospectus,
Statement of Additional Information, annual or interim
reports, proxy solicitation materials and any such
other information and materials relating to the Fund
will be supplied to you in reasonable quantities upon
request."
10. PRIVATE (a) In accordance with the
terms of the Prospectus, a reduced sales charge may be
available to customers, depending on the amount of the
investment or proposed investment. In each case where
a reduced sales charge is applicable, you agree to
furnish to the transfer agent sufficient information
to permit confirmation of qualification for a reduced
sales charge, and acceptance of the purchase order is
subject to such confirmation. Reduced sales charges
may be modified or terminated at any time in the sole
discretion of each Fund. tc " (a) In accordance
with the terms of the Prospectus, a reduced sales
charge may be available to customers, depending on the
amount of the investment. In each case where a
reduced sales charge is applicable, you agree to
furnish to the transfer agent sufficient information
to permit confirmation of qualification for a reduced
sales charge, and acceptance of the purchase order is
subject to such confirmation. Reduced sales charges
may be modified or terminated at any time in the sole
discretion of the Fund."
(b) You acknowledge that
certain classes of investors may be entitled to
purchase shares at net asset value without a sales
charge as provided in the Prospectus and Statement of
Additional Information. tc " You acknowledge that
certain classes of investors may be entitled to
purchase shares at net asset value without a sales
charge as provided in the Prospectus and Statement of
Additional Information."
(c) You agree to advise us
promptly as to the amount of any and all sales by you
qualifying for a reduced sales charge or no sales
charge. tc " You agree to advise us promptly as to
the amount of any and all sales by you qualifying for
a reduced sales charge or no sales charge."
(d) Exchanges (i.e., the
investment of the proceeds from the liquidation of
shares of one Series in the shares of another Series,
each of which is managed by the same or an affiliated
investment adviser) shall, where available, be made in
accordance with the terms of each Prospectus. tc "
Exchanges (i.e., the investment of the proceeds from
the liquidation of shares of one fund in the shares of
another fund, each of which is managed by the Fund's
investment adviser) shall, where available, be made in
accordance with the terms of each Prospectus."
11. We and each Fund reserve
the right in our discretion, without notice, to
suspend sales or withdraw the offering of any shares
entirely. Each party hereto has the right to cancel
the portions of this Agreement to which it is party
upon notice to the other parties; provided, however,
that no cancellation shall affect any party's
obligations hereunder with respect to any transactions
or activities occurring prior to the effective time of
cancellation. We reserve the right to amend this
Agreement in any respect effective on notice to
you. tc " We reserve the right in our discretion,
without notice, to suspend sales or withdraw the
offering of shares entirely. Each party hereto has
the right to cancel this agreement upon notice to the
other part parties; provided; however, that no
cancellation shall affect any party's obligations
hereunder with respect to any transactions or
activities occurring prior to the effective time of
cancellation. We reserve the right to amend this
Agreement in any respect effective on notice to you."
12. We shall have full authority
to take such action as we may deem advisable in respect
of all matters pertaining to the continuous offering of
shares. We shall be under no liability to you except for
lack of good faith and for obligations expressly assumed
by us herein. Nothing contained in this paragraph 12 is
intended to operate as, and the provisions of this
paragraph 12 shall not in any way whatsoever constitute a
waiver by you of compliance with, any provisions of the
1933 Act or of the rules and regulations of the
Securities and Exchange Commission issued thereunder.
tc " We shall have full authority to take such action
as we may deem advisable in respect of all matters
pertaining to the continuous offering of shares. We
shall be under no liability to you except for lack of
good faith and for obligations expressly assumed by us
herein. Nothing contained in this paragraph 12 is
intended to operate as, and the provisions of this
paragraph 12 shall not in any way whatsoever constitute a
waiver by you of compliance with, any provisions of the
1933 Act or of the rules and regulations of the
Securities and Exchange Commission issued thereunder."
13. You agree that: (a) you
shall not effect any transactions (including, without
limitation, any purchases and tc " You agree that\:
(a) you shall not effect any transactions (including,
without limitation, any purchases and" redemptions)
in any shares registered in the name of, or
beneficially owned by, any customer unless such
customer has granted you full right, power and
authority to effect such transactions on his behalf,
(b) we shall have full authority to act upon your
express instructions to sell, repurchase or exchange
shares through us on behalf of your customers under
the terms and conditions provided in the Prospectus
and (c) we, the Funds, the investment adviser, the
administrator, the transfer agent and our and their
respective officers, directors or trustees, agents,
employees and affiliates shall not be liable for, and
shall be fully indemnified and held harmless by you
from and against, any and all claims, demands,
liabilities and expenses (including, without
limitation, reasonable attorneys' fees) which may be
incurred by us or any of the foregoing persons
entitled to indemnification from you hereunder arising
out of or in connection with (i) the execution of any
transactions in shares registered in the name of, or
beneficially owned by, any customer in reliance upon
any oral or written instructions believed to be
genuine and to have been given by or on behalf of you,
(ii) any statements or representations that you or
your employees or representatives make concerning the
Funds that are inconsistent with the applicable Fund's
Prospectus, (iii) any written materials used by you or
your employees or representatives in connection with
making offers or sales of shares that were not
furnished by us, the Funds or the investment adviser
or an affiliate thereof and (iv) any sale of shares of
a Fund where the Fund or its shares were not properly
registered or qualified for sale in any state, any
U.S. territory or the District of Columbia, when we
have indicated to you that the Fund or its shares were
not properly registered or qualified. The
indemnification agreement contained in this Paragraph
13 shall survive the termination of this Agreement.
14. You represent that: (a) you
are a member in good standing of the National
Association of Securities Dealers, Inc. (the "NASD"),
or, if a foreign dealer who is not eligible for
membership in the NASD, that (i) you will not make any
sales of shares in, or to nationals of, the United
States of America, its territories or its possessions,
and (ii) in making any sales of shares you will comply
with the NASD's Conduct Rules and (b) you are a member
in good standing of the Securities Investor Protection
Corporation ("SIPC"). You agree that you will provide
us with timely written notice of any change in your
NASD or SIPC status. tc " You represent that you are
a member in good standing of the National Association
of Securities Dealers, Inc. (the \"NASD\"), or, if a
foreign dealer who is not eligible for membership in
the NASD, that (a) you will not make any sales of
shares in, or to nationals of, the United States of
America, its territories or its possessions, and (b)
in making any sales of shares you will comply with the
NASD's Rules of Fair Practice."
15. We shall inform you as to
the states or other jurisdictions in which the Fund has
advised us that shares have been qualified for sale
under, or are exempt from the requirements of, the
respective securities laws of such states, but we
assume no responsibility or obligation as to your
qualification to sell shares in any jurisdiction.
16. Any claim, controversy, dispute or
deadlock arising under this Agreement (collectively, a
"Dispute") shall be settled by arbitration administered
under the rules of the American Arbitration Association
("AAA") in New York, New York. Any arbitration and
award of the arbitrators, or a majority of them, shall
be final and the judgment upon the award rendered may
be entered in any state or federal court having
jurisdiction. No punitive damages are to be awarded.
17. All communications to us
should be sent, postage prepaid, to 21 Milk Street,
Boston, Massachusetts 02109 Attention: Philip
Coolidge. Any notice to you shall be duly given if
mailed, telegraphed or telecopied to you at the
address specified by you below. Communications
regarding placement of orders for shares should be
sent, postage prepaid, to First Data Investor Services
Group, Inc., P.O. Box 5128, Westborough, Massachusetts
01581-5128. tc " All communications to us should be
sent, postage prepaid, to 7 World Trade Center, New
York, New York 10048. Attention\: Robert J. Leonard.
Any notice to you shall be duly given if mailed,
telegraphed or telecopied to you at the address
specified by you below. Communications regarding
placement of orders for shares should be sent, postage
prepaid, to The Shareholder Services Group, Inc., P.O.
Box 9109, Boston, Massachusetts 02205-9109."
18. This Agreement shall be
binding upon both parties hereto when signed by us and
accepted by you in the space provided below tc " This
Agreement shall be binding upon both parties hereto
when signed by us and accepted by you in the space
provided below until July 14, 1995 or such earlier
date upon negotiation of section 3 and 12 of this
agreement. " .
19. This Agreement and the
terms and conditions set forth herein shall be
governed by, and construed in accordance with, the
laws of the State of New York. tc " This Agreement and
the terms and conditions set forth herein shall be
governed by, and construed in accordance with, the
laws of the State of New York."
CFBDS, INC.
By:/s/(Authorized Signature)
Accepted:
Firm Name:
Address:
FORM OF
AMENDED AND RESTATED
SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
This Amended and Restated Shareholder Services and Distribution Plan
(the "Plan") is adopted in accordance with Rule 12b-1 (the "Rule")
under the Investment Company Act of 1940, as amended (the "1940 Act"),
by [Name of Fund], a [business trust organized under the laws of the
Commonwealth of Massachusetts (the "Trust") on behalf of its sub-trust]
/ [a corporation organized under the laws of the State of Maryland (the
"Fund")], subject to the following terms and conditions:
Section 1. Annual Fee.
(a) Service Fee for Class A shares. The [Trust/Fund] will pay to
Salomon Smith Barney Inc., a corporation organized under the
laws of the State of Delaware ("Salomon Smith Barney"), a
service fee under the Plan at an annual rate of [ %] of the
average daily net assets of the Fund attributable to the Class
A shares sold and not redeemed (the "Class A Service Fee").
(b) Payment of Fees. The Service Fees will be calculated daily and
paid monthly by the [Trust/Fund] with respect to the foregoing
classes of the Fund's shares (each a "Class" and together, the
"Classes") at the annual rates indicated above.
Section 2. Expenses Covered by the Plan.
With respect to expenses incurred by each Class, its respective
Service Fee may be used by Salomon Smith Barney for: (a) costs of
printing and distributing the [Trust's/Fund's] prospectuses, statements
of additional information and reports to prospective investors in the
[Trust/Fund]; (b) costs involved in preparing, printing and
distributing sales literature pertaining to the [Trust/Fund]; (c) an
allocation of overhead and other branch office distribution-related
expenses of Salomon Smith Barney; (d) payments made to, and expenses
of, Salomon Smith Barney's financial consultants and other persons who
provide support services to [Trust/Fund] shareholders in connection
with the distribution of the [Trust's/Fund's] shares, including but not
limited to, office space and equipment, telephone facilities, answering
routine inquires regarding the [Trust/Fund] and its operation,
processing shareholder transactions, forwarding and collecting proxy
material, changing dividend payment elections and providing any other
shareholder services not otherwise provided by the [Trust's/Fund's]
transfer agent; and (e) the Service Fees are intended to be used by
Salomon Smith Barney primarily to pay its financial consultants for
servicing shareholder accounts, including a continuing fee to each such
financial consultant, which fee shall begin to accrue immediately after
the sale of such shares.
Section 3. Approval by Shareholders
The Plan will not take effect, and no fees will be payable in
accordance with Section 1 of
the Plan, with respect to a Class until the Plan has been approved by a
vote of at least a majority
of the outstanding voting securities of the Class. The Plan will be
deemed to have been approved
with respect to a Class so long as a majority of the outstanding voting
securities of the Class votes
for the approval of the Plan, notwithstanding that: (a) the Plan has
not been approved by a majority of the outstanding voting securities of
any other Class, or (b) the Plan has not been
approved by a majority of the outstanding voting securities of the
[Trust/Fund].
Section 4. Approval by [Trustees/Directors.]
Neither the Plan nor any related agreements will take effect until
approved by a majority vote of both (a) the Board of
[Trustees/Directors] and (b) those [Trustees/Directors] who are not
interested persons of the [Trust/Fund] and who have no direct or
indirect financial interest in the operation of the Plan or in any
agreements related to it (the "Qualified [Trustees/Directors]"), cast
in person at a meeting called for the purpose of voting on the Plan and
the related agreements.
Section 5. Continuance of the Plan.
The Plan will continue in effect with respect to each Class until [
, 1999] and thereafter for successive twelve-month periods with respect
to each Class; provided, however, that such continuance is specifically
approved at least annually by the [Trustees/Directors] of the
[Trust/Fund] and by a majority of the Qualified [Trustees/Directors].
Section 6. Termination.
The Plan may be terminated at any time with respect to a Class (i) by
the [Trust/Fund] without the payment of any penalty, by the vote of a
majority of the outstanding voting securities of such Class or (ii) by
a majority vote of the Qualified [Trustees/Directors]. The Plan may
remain in effect with respect to a particular Class even if the Plan
has been terminated in accordance with this Section 6 with respect to
any other Class.
Section 7. Amendments.
The Plan may not be amended with respect to any Class so as to
increase materially the amounts of the fees described in Section 1
above, unless the amendment is approved by a vote of holders of at
least a majority of the outstanding voting securities of that Class. No
material amendment to the Plan may be made unless approved by the
[Trust's/Fund's] Board of [Trustees/Directors] in the manner described
in Section 4 above.
Section 8. Selection of Certain [Trustees/Directors].
While the Plan is in effect, the selection and nomination of the
[Trust's/Fund's] [Trustees/Directors] who are not interested persons of
the [Trust/Fund] will be committed to the discretion of the
[Trustees/Directors] then in office who are not interested persons of
the [Trust/Fund].
Section 9. Written Reports
In each year during which the Plan remains in effect, any person
authorized to direct the disposition of monies paid or payable by the
Fund pursuant to the Plan or any related agreement will prepare and
furnish to the [Trust's/Fund's] Board of [Trustees/Directors] and the
Board will review, at least quarterly, written reports complying with
the requirements of the Rule, which set out the amounts expended under
the Plan and the purposes for which those expenditures were made.
Section 10. Preservation of Materials.
The [Trust/Fund] will preserve copies of the Plan, any agreement
relating to the Plan and any report made pursuant to Section 9 above,
for a period of not less than six years (the first two years in an
easily accessible place) from the date of the Plan, agreement or
report.
Section 11. Meanings of Certain Terms.
As used in the Plan, the terms "interested person" and "majority of
the outstanding voting securities" will be deemed to have the same
meaning that those terms have under the rules and regulations under the
1940 Act, subject to any exemption that may be granted to the
[Trust/Fund] under the 1940 Act, by the Securities and Exchange
Commission.
Section 12. Limitation of Liability. (Massachusetts business trusts
only)
The obligations of the Trust under this Agreement shall not be
binding upon any of the Trustees, shareholders, nominees, officers,
employees or agents, whether past, present or future, of the Trust,
individually, but are binding only upon the assets and property of the
Trust, as provided in the Master Trust Agreement. The execution of
this Plan has been authorized by the Trustees and signed by an
authorized officer of the Trust, acting as such, and neither such
authorization by such Trustees nor such execution by such officer 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 trust
property of the Trust as provided in its Master Trust Agreement.
IN WITNESS WHEREOF, the Fund has executed the Plan as of July _____,
1998.
[NAME OF TRUST/FUND] On behalf of
By:
____________________________________
Heath B. McLendon
Chairman of the Board
g:\legal\general\forms\agreemts\dist12b1\12b1Plan
Independent Auditors' Consent
To the Shareholders and Board of Directors of
Municipal Money Market Fund, Inc.:
We consent to the use of our report dated May 12, 1999 for the
Municipal Money Market Fund Inc. included herein by reference and
to the references to our Firm under the headings "Financial Highlights"
in the Prospectus and "Auditors" in the Statement of Additional
Information.
KPMG LLP
New York, New York
July 23, 1999
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 6
<CIK> 0000320282
<NAME> SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC. CLASS A
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<PERIOD-END> MAR-31-1999
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<NET-INVESTMENT-INCOME> 188,051,702
<REALIZED-GAINS-CURRENT> 469,190
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<DISTRIBUTIONS-OF-INCOME> 187,418,788
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<NUMBER-OF-SHARES-SOLD> 29,150,652,716
<NUMBER-OF-SHARES-REDEEMED> 28,566,310,554
<SHARES-REINVESTED> 183,074,353
<NET-CHANGE-IN-ASSETS> 790,913,920
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 32,200,646
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 42,082,398
<AVERAGE-NET-ASSETS> 6,726,157,535
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.028
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.028
<PER-SHARE-DISTRIBUTIONS> 0
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<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.620
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000320282
<NAME> SMITH BARNEY MUNICIPAL MONEY MARKET FUND, INC. CLASS Y
<SERIES>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 7,110,939,917
<INVESTMENTS-AT-VALUE> 7,110,939,917
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<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 869,950
<TOTAL-ASSETS> 7,163,699,612
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<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,986,382
<TOTAL-LIABILITIES> 35,593,027
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,057,401,607
<SHARES-COMMON-STOCK> 23,991,378
<SHARES-COMMON-PRIOR> 489,251
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<NET-CHANGE-FROM-OPS> 188,520,892
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 632,914
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 120,903,944
<NUMBER-OF-SHARES-REDEEMED> 97,709,608
<SHARES-REINVESTED> 307,791
<NET-CHANGE-IN-ASSETS> 790,913,920
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 32,200,646
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 42,082,398
<AVERAGE-NET-ASSETS> 13,099,767
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.029
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.029
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.620
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
