SMITH BARNEY SHEARSON TELECOMMUNICATIONS TRUST
CONSISTING OF SMITH BARNEY SHEARSON TELECOMMUNICATIONS GROWTH FUND AND
SMITH BARNEY SHEARSON TELECOMMUNICATIONS INCOME FUND
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on June 15, 1994
To the Shareholders:
Notice is hereby given that a special meeting of Shareholders of Smith
Barney Shearson Telecommunications Trust (the "Trust"), consisting of Smith
Barney Shearson Telecommunications Income Fund (the "Income Fund") and Smith
Barney Shearson Telecommunications Growth Fund (the "Growth Fund' and
collectively with the Income Fund, the "Funds") will be held at Two World
Trade Center, 100th Floor, New York, New York on June 15, 1994 commencing at
___ p.m. for the Income Fund and ___ p.m. for the Growth Fund for the
following purposes:
1. To approve or disapprove for each Fund a new investment advisory
agreement between the Trust, on behalf of the Fund, and Smith Barney Shearson
Strategy Advisers, Inc. ("SBSSA"), containing substantially the same terms and
conditions as the Fund's current advisory agreement (Proposal 1).
2. To approve or disapprove for each Fund a sub-investment advisory
agreement between the Trust, on behalf of the Fund, SBSSA, as adviser, and The
Boston Company Advisors, Inc. ("Boston Advisors"), the Fund's current adviser
(Proposal 2).
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
These items are discussed in greater detail in the attached Proxy
Statement. The close of business on May 2, 1994 has been fixed as the record
date for the determination of shareholders of the Fund entitled to notice of
and to vote at the meeting and any adjournment thereof.
By Order of the Board of Trustees
Francis J. McNamara, III
Secretary
May __, 1994
SHAREHOLDERS OF THE FUND WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING
ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE
ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE CONTINENTAL UNITED
STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXY CARDS ARE SET FORTH ON
THE FOLLOWING PAGE. IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and avoid the time and expense to the Funds involved
in validating your vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in
the registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the
party signing should conform exactly to the name shown in the
registration on the proxy card
1. All Other Accounts: The capacity of the individual signing
the proxy card should be indicated unless it is reflected in the form of
registration. For example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp.
ABC Corp.
(2) ABC Corp.
John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer
John Doe
(4) ABC Corp. Profit Sharing Plan
John Doe, Trustee
Trust Accounts
(1) ABC Trust
Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78
Jane B. Doe
Custodian or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA
John B. Smith, Jr.
(2) John B. Smith
John B. Smith, Jr.,
Executor
SMITH BARNEY SHEARSON TELECOMMUNICATIONS TRUST
CONSISTING OF SMITH BARNEY SHEARSON TELECOMMUNICATIONS GROWTH FUND AND
SMITH BARNEY
SHEARSON TELECOMMUNICATIONS INCOME FUND
Two World Trade Center
New York, New York 10048
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on June 15, 1994
PROXY STATEMENT
This Proxy Statement is being solicited by the Board of Trustees
(the "Board") of Smith Barney Shearson Telecommunications Trust (the
"Trust"), for use at the special meetings of Shareholders (the
"Meetings") of its sub-trusts, Smith Barney Shearson Telecommunications
Growth Fund (the "Growth Fund") and Smith Barney Shearson
Telecommunications Income Fund (the "Income Fund" and collectively with
the Growth Fund, the "Funds"), to be held on June 2, 1994, or any
adjournment or adjournment thereof. The Meetings will be held at Two
World Trade Center, 100th Floor, New York, New York at the times
specified in the Notice of Meeting of Shareholders and proxy cards that
accompany this Proxy Statement. Proxy solicitations will be made
primarily by mail, but proxy solicitations also may be made by
telephone, telegraph or personal interviews conducted by officers and
employees of: the Trust; Smith Barney Shearson Inc. ("Smith Barney
Shearson"), the distributor of shares of the Funds; Boston Company
Advisors, Inc., the current investment adviser and administrator for the
Fund; and/or The Shareholder Services Group Inc. ("TSSG"), a subsidiary
of First Data Corporation and the transfer agent of the Funds. The
costs of the proxy solicitation and expenses incurred in connection with
the preparation of this Proxy Statement and its enclosures will be paid
by Smith Barney Shearson. Smith Barney Shearson also will reimburse
expenses of forwarding solicitation material to beneficial owners of
shares of the Funds.
The Trust currently issues two classes of shares of beneficial
interest ("Shares") in respect of the Growth Fund and a single class of
shares in respect of the Income Fund. For purposes of the matters to be
considered at the Meeting, all Shares of a Fund will be voted as a
single class. Each Share is entitled to one vote and any fractional
Share is entitled to a fractional vote. If the enclosed proxy is
properly executed and returned in time to be voted at the Meetings, the
Shares represented thereby will be voted in accordance with the
instructions marked thereon. Unless instructions to the contrary are
marked on the proxy, it will be voted FOR the matters listed in the
accompanying Notice of Special Meeting of Shareholders. Any shareholder
who has given a proxy has the right to revoke it at any time prior to
its exercise either by attending the Meeting and voting his or her
shares in person or by submitting a letter of revocation or a later-
dated proxy to the Trust at the above address prior to the date of the
Meetings. For purposes of determining the presence of a quorum for
transacting business at the Meetings, abstentions and broker "non-votes"
(i.e., proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owner or other
persons entitled to vote Shares on a particular matter with respect to
which the brokers or nominees do not have discretionary power) will be
traded as Shares that are present but which have not been voted. For
this reason, abstentions and broker "non-votes" will have the effect of
a "no" vote for purposes of obtaining the requisite approval of the
proposal.
In the event that a quorum is not present at a Meeting or in the
event that a quorum is present but sufficient votes to approve any of
the proposals are not received, the persons named as proxies may propose
one or more adjournments of that Meeting to permit further solicitation
of proxies. In determining whether to adjourn a Meeting, the following
factors may be considered: the nature of the proposals that are the
subject of the Meeting, the percentage of votes actually cast, the
percentage of negative votes actually cast, the nature of any further
solicitation and the information to be provided to shareholders with
respect to the reasons for the solicitation. Any adjournment will
require the affirmative vote of a majority of those Shares represented
at the Meeting in person or by proxy. A shareholder vote may be taken
on one or more of the proposals in this Proxy Statement prior to any
adjournment if sufficient votes have been received for approval. Under
the Trust's Master Trust Agreement, a quorum is constituted by the
presence in person or by proxy of the holders of a majority of the
outstanding Shares of a Fund entitled to vote at the Meeting.
The Board has fixed the close of business on May 2, 1994 as the
record date (the "Record Date") for the determination of shareholders of
each Fund entitled to notice of and to vote at the Meetings. On the
Record Date, ____ Shares of the Growth Fund and ___ shares of the Income
Fund were outstanding. As of the Record Date, to the knowledge of the
Trust and the Board, no single shareholder or "group" (as that term is
used in Section 13 (d) of the Securities Exchange Act of 1934),
beneficially owned more than 5% of the outstanding Shares of either
Fund. As of the Record Date, the officers and Board members of the
Trust beneficially owned less than 1% of the Shares of each Fund.
As of the Record Date, no shares of SBSSA or its ultimate parent
corporation, The Travelers Inc. ("Travelers"), were held by Board
members who are not "interested persons" of the Trust (as that term is
used in the Investment Company Act of 1940, as amended (the "1940
Act")).
Although the proposals described herein relate to both of the
Funds, shareholders of each Fund will vote separately on the proposals
and separate proxy cards are enclosed for each Fund in which a
shareholder is a record owner of Shares. Thus, if a proposal is
approved by shareholders on one Fund and disapproved by shareholders of
the other Fund, the proposal will be implemented for the Fund that
approved the proposal and will not be implemented for the Fund that did
not approve the proposal. It is therefore essential that shareholders
complete, date and sign each enclosed proxy card.
In order that your Shares may be represented at the Meetings, you are
requested to:
- indicate your instructions on the enclosed proxy card;
- date and sign the proxy card;
- mail the proxy card promptly in the enclosed envelope, which
requires no postage if mailed in the United States; and
- allow sufficient time for the proxy card to be received on or
before 10:00 a.m., June 14 1994.
As a business trust formed under the laws of the Commonwealth of
Massachusetts, the Trust is not required to hold annual shareholder
meetings but may hold special meetings as required or deemed desirable.
As indicated above, the Meeting is being called to consider new advisory
and sub-investment advisory contracts for the Funds.
The Board recommends affirmative votes on Proposals 1 and 2.
PROPOSAL 1
APPROVAL OR DISAPPROVAL OF NEW INVESTMENT ADVISORY ARRANGEMENTS
WITH SMITH BARNEY SHEARSON STRATEGY ADVISERS, INC. ("SBSSA").
For the reasons described below under the caption, "Evaluation by
the Board and Reasons for the Proposals," the Board of the Trust is
proposing that shareholders of each Fund approve a new investment
advisory agreement (the "New Advisory Agreement") between each Fund and
SBSSA, an affiliate of Smith Barney Shearson. Each Fund currently is
advised by Boston Advisors under an agreement dated [May 22, 1993] (the
"Current Advisory Agreements"). Boston Advisors and the Trust have
agreed to terminate the Current Advisory Agreements, waiving any
applicable notice provisions, upon the shareholders' approval of the New
Advisory Agreements. The New Agreement for each Fund contains the same
advisory fee found in the Current Advisory Agreements. In conjunction
with this proposal, the Trustees of the Trust have determined, subject
to the approval of the shareholders of the Funds, to enter into a sub-
investment advisory agreement ("Sub-Advisory Agreement" and collectively
with the New Advisory Agreements, the "Agreements") between each Fund,
SBSSA, as adviser, and Boston Advisors.
If approved by shareholders, each New Advisory Agreement will
commence on June 3, 1994, and continue thereafter for a two-year period
and automatically for successive annual periods, provided such
continuance is approved at least annually by (a) a majority of the Board
who are not interested persons of the Trust (as the term is used in the
1940 Act) and (b) a majority of the full Board of Trustees or a majority
of the outstanding voting securities of the Fund, as defined in the 1940
Act.
PROPOSAL 2
APPROVAL OR DISAPPROVAL OF SUB-INVESTMENT ADVISORY ARRANGEMENT
WITH THE BOSTON COMPANY ADVISORS, INC.
In conjunction with Proposal 1, the Board of the Trust is
proposing that shareholders of each Fund approve a sub-investment
advisory agreement between each Fund, SBSSA, as adviser, and Boston
Advisors, the current investment adviser to the Funds. Under the
proposed arrangement, SBSSA would provide oversight and coordination
with the other components of the Smith Barney Shearson group of funds
while Boston Advisors would continue to provide day-to-day support and
personnel. Under each Sub-Advisory Agreement, Boston Advisors would
receive a portion of the advisory fee payable to SBSSA under the New
Advisory Agreement. The aggregate cost to each Fund for advisory
services under the Fund's Agreements would be the same as the fee
currently paid to Boston Advisors under the Current Advisory Agreement.
THE CURRENT ADVISER AND PROPOSED SUB-ADVISER
Each Fund is presently advised by Boston Advisors, an adviser
registered under the Investment Advisers Act of 1940, as amended.
Boston Advisors is located at One Boston Place, Boston, Massachusetts
02108 and also serves as the Fund's administrator. The names of the
investment companies for which Boston Advisors currently provides
investment services, the amount of their net assets as of December 31,
1993, and the annual rate of its fees for services to those companies
are set forth at Exhibit A to this Proxy Statement. The Current
Advisory Agreements were last approved by shareholders on
[______________] for the Income Fund and for [_________] of the Growth
Fund on [_______]. During the fiscal year ended December 31, 1993, the
Income Fund paid Boston Advisers $_____ and the Growth Fund paid $ _____
in investment advisory fees.
An audited balance sheet of Boston Advisors as of December 31,
1993 is set forth as Exhibit B to this Proxy Statement. The name,
position with Boston Advisors and principal occupation of each executive
officer and director of Boston Advisors are set forth in the following
table.
Name
Position with Boston
Advisors
Principal Occupation
Lawrence S. Kash
Director; Chairman of the
Board, Chief Executive
Officer and President
President of TBCA;
Executive Vice President
of Boston Safe Deposit
and Trust Company
W. Keith Smith
Director
Vice Chairman of Mellon
Trust; Chairman and Chief
Executive Officer of The
Boston Company, Inc.
Desmond J.
Heathwood
Executive Vice President
Chief Executive Officer
of The Boston Company
Institutional Investors,
Inc.; Executive Vice
President and Chief
Investment Officer of The
Boston Company, Inc.
Vincent T. Molloy
Executive Vice President
Executive Vice President
of Custody Administration
and Support of Boston
Advisors
THE PROPOSED ADVISER
SBSSA is a wholly owned subsidiary of Smith, Barney Advisers, Inc.
SBSSA is located at Two World Trade Center, New York, New York 10048.
The names of the investment companies for which SBSSA currently provides
services, the amounts of their net assets as of February 3, 1994 and the
annual rate of its fees for services to those companies are set forth at
Exhibit C to this Proxy Statement.
An audited balance sheet of SBSSA as of December 31, 1993 is set
forth as Exhibit D to this Proxy Statement. The name, position with
SBSSA and principal occupation of each executive officer and director of
SBSSA are set forth in the following table.
Name
Position with SBSSA
Principal Occupation
Heath B. McLendon
Chairman of the Board
of Directors
Executive Vice
President of Smith
Barney Shearson;
Chairman of the Smith
Barney Shearson mutual
funds
Richard P. Roelofs
President and Director
Managing Director of
Smith Barney Shearson
Robert I. Schulman
Director
Executive Vice
President of Smith
Barney Shearson
Stephen J. Treadway
Director
Executive Vice
President of Smith
Barney Shearson
Michael J. Day
Treasurer
Managing Director of
Smith Barney Shearson
Christina T. Sydor
Secretary
Managing Director of
Smith Barney Shearson
EVALUATION BY THE BOARD AND REASONS FOR THE PROPOSALS
On April 4, 1994, the Trustees of the Trust met in person at a
meeting called for the purpose of considering, among other things, the
New Advisory Agreements with SBSSA and the Sub-Advisory Agreements with
Boston Advisors. Although SBSSA and Boston Advisors jointly recommended
the Trustees' approval of these proposals, the Trustees also
considered, at that time, continuation of the Funds' Current Advisory
Agreements with Boston Advisors and various other possible alternatives.
The Board reviewed various materials furnished by Smith Barney Shearson,
SBSSA and Boston Advisors. The materials described, among other
matters, SBSSA and Boston Advisors and their affiliates, senior
personnel, portfolio managers, analysts, economists and others, methods
of operation and financial conditions. Representatives of SBSSA and
Boston Advisors met with the Board to discuss in depth the written
materials and to respond to questions from the Board and its independent
counsel.
The Trustees have determined that if the investment advisory
agreement of each Fund were moved to SBSSA, the asset management
function could be more easily coordinated with the marketing and
distribution functions of Smith Barney Shearson. As a result, the
interaction between marketing personnel and financial consultants with
the portfolio managers would be facilitated because the marketing and
advisory functions would be managed, to a greater extent, within one
company. This, in turn, should strengthen support from the marketing
arm of Smith Barney Shearson and enhance the support and services
received by the Funds' shareholders. The Board also considered the
ability of Smith Barney Shearson to arrange opportunities for Smith
Barney Shearson financial consultants to meet SBSSA managers in person,
by telephone and otherwise to become familiar with the management style,
philosophy and investment outlook of the Funds' investment adviser.
At the same time, the Board reviewed the past performance records
of Boston Advisors over relevant periods of time as well as the
background and experience of the various officers and managers employed
by that company. The Board recognized the high quality advisory and
management services provided by Boston Advisors to the Funds in the past
and expressed a desire to retain Boston Advisors in an advisory
capacity. Thus, it was determined that each Fund enter into a sub-
investment advisory agreement under which Boston Advisors would provide
the day-to-day support and personnel while, pursuant to a New Advisory
Agreement, SBSSA would provide the necessary executive oversight and
coordination to ensure consistency within the Smith Barney Shearson
group of funds.
As a secondary consideration, the Board also recognized that,
currently, most Shares of the Growth Fund are sold under an arrangement
pursuant to which the Fund's distributor, Smith Barney Shearson,
advances the cost of distribution and seeks to recover that cost through
a combination of contingent deferred sales charges and distribution fees
paid under a plan of distribution adopted pursuant to Rule 12b-1 under
the 1940 Act. Smith Barney Shearson informed the Trustees that this
method of distribution, while preferred by investors, was expensive to
the distributor on a current basis and a distributor would rarely agree
to offer its services under these circumstances to a fund to which it or
its affiliates did not serve as investment adviser. Prior to July 30,
1993, Shearson Lehman Brothers Inc., served as the Fund's distributor
and Boston Advisors, its affiliate at the time, served as the Fund's
investment adviser. As of that date, however, the retail brokerage and
investment advisory businesses (other than Lehman Brothers Global Asset
Management) of Shearson Lehman Brothers Inc. were transferred to Smith
Barney Shearson (known at the time as Smith Barney, Harris Upham & Co.,
Inc.) and Smith Barney Shearson was selected by the Trustees to serve as
the Fund's distributor. Smith Barney Shearson is not affiliated with
Boston Advisors.
After carefully evaluating the foregoing materials and factors,
the Trustees of the Trust who were not interested persons of the Trust
approved, and the Board as a whole approve for each Fund, subject to
shareholder approval, a New Advisory Agreement with SBSSA containing the
substantially identical fee as the Current Advisory Agreement and a Sub-
Advisory Agreement substantially in the form of Exhibit E to this Proxy
Statement.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities are made by each Fund's
investment adviser, and under the proposed Agreements, would be made by
the Fund's sub-investment adviser subject to the supervision of the
Fund's investment adviser and the overall review of the Board (both the
investment adviser and sub-investment adviser are referred to
collectively herein as the "Adviser"). Although investment decisions
for each Fund are made independently from those of the other accounts
managed by the Adviser, investments of the type the Fund may make also
may be made by those other accounts. When a Fund and one or more other
accounts managed by the Adviser are prepared to invest in, or desire to
dispose of, the same security, available investments or opportunities
for sales will be allocated in a manner believed by the Adviser to be
equitable to each. In some cases, this procedure may adversely affect
the price paid or received by the Fund or the size of the position
obtained or disposed of by the Fund.
Transactions on stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges where commissions are negotiated,
the cost of transactions may vary among different brokers. No stated
commission is generally applicable to securities traded in over-the
counter markets, but the prices of those securities include undisclosed
commissions or mark-ups. The cost of securities purchased from
underwriters includes an underwriting commission or concession and the
prices at which securities are repurchased from and sold to dealers
include a dealer's mark-up or mark-down.
In selecting brokers or dealers to execute portfolio transactions
on behalf of a Fund, the Adviser seeks the best overall terms available.
In assessing the best overall terms available for any transaction, the
Adviser will consider the factors it deems relevant, including the
breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer and
the reasonableness of the commission, if any, for the specific
transaction and on a continuing basis. In addition, the Adviser is
authorized, in selecting brokers or dealers to execute a particular
transaction and in evaluating the best overall terms available, to
consider the brokerage and research services ( as those terms are
defined in Section 28(e) of the Securities and Exchange Act of 1934)
provided to a Fund and/or other accounts over which the Adviser or its
affiliates exercises investment discretion. The fees under each Fund's
advisory agreements are not reduced by reason of the Fund's or the
Adviser's receiving brokerage and research services. The Board of
Trustees periodically will review the commissions paid by the Funds to
determine if the commissions paid over representative periods of time
were reasonable in relation to the benefits inuring to the Funds. Over-
the-counter purchases and sales by the Fund are transacted directly with
principal market makers except in those cases in which better prices and
executions may be obtained elsewhere.
To the extent consistent with applicable provisions of the 1940
Act and the rules and exemptions adopted by the Securities and Exchange
Commission (the "SEC") under the 1940 Act, subject to the approval of
the Board, transactions for the Funds may be executed through Smith
Barney Shearson and other affiliated broker-dealers if, in the judgment
of the Funds' Adviser, the use of an affiliated broker-dealer is likely
to result in price and execution at least as favorable as those of other
qualified broker-dealers. Under rules adopted by the SEC, Smith Barney
Shearson may not directly execute transactions for the Funds on the
floor of any national securities exchange unless: (i) the Board of
Trustees has expressly authorized Smith Barney Shearson to effect such
transactions; and (ii) Smith Barney Shearson annually advises the Funds
of the aggregate compensation it earned on such transactions.
The Funds will not purchase any security, including U.S.
government securities, during the existence of any underwriting or
selling group relating to the security of which Smith Barney Shearson is
a member, except to the extent permitted by the SEC.
During the fiscal year ended July 31, 1993, the Income Fund [not]
pay [any] brokerage commissions and the Growth Fund did [not] pay [any]
brokerage commission.
PROPOSED AGREEMENTS
A copy of the form of New Advisory Agreement is set forth as
Exhibit F to this Proxy Statement. Under its terms, SBSSA, subject to
the supervision and approval of the Board, would manage a Fund's
investments in accordance with the investment objectives and policies
stated in the Fund's Prospectus and Statement of Additional Information.
As adviser, SBSSA would supervise the sub-investment advisory services
rendered by Boston Advisors, evaluate and make final determinations with
respect to investment strategies for the Fund and provide the Fund with
the benefits of research capabilities of the Smith Barney Shearson
organization and provide executive management for the Fund. SBSSA would
receive a fee that is computed daily and paid monthly at the annual rate
of .55% of the value of the Fund's average daily net assets.
Under the terms of the New Advisory Agreements, SBSSA would bear
all expenses in connection with its performance, including the sub-
investment advisory fee payable to Boston Advisors under the Sub-
Advisory Agreements. Other expenses incurred in the operation of the
Funds would continue to be borne by the respective Fund, including:
taxes, interest, brokerage fees and commissions, if any; distribution
and shareholder service fees; fees of the Board members who are not
officers, directors, shareholders or employees of Smith Barney Shearson,
or any of its affiliates; SEC fees and state blue sky qualification
fees; charges of custodian and transfer and dividend disbursing agents;
certain insurance premiums; outside auditing and legal expenses; costs
of investor services (including allocable telephone and personnel
expenses); costs of preparation and printing of prospectuses and
statements of additional information for regulatory purposes and for
distribution to shareholders; costs of preparation and printing of
shareholders' reports; costs incurred in connection with meetings of the
shareholders of the Funds and of the officers or Board of the Trust; and
any extraordinary expenses.
Under the terms of the Sub-Advisory Agreements, Boston Advisors,
subject to the supervision and approval of the Board and SBSSA as
investment adviser, would continue to make investment decisions for each
Fund, place purchase and sale orders for portfolio transactions and
provide analytical and research services to the Funds Under each
Agreement, SBSSA would pay Boston Advisors a sub-investment advisory fee
of .275 of 1.00% of the value of the respective Fund's average daily net
assets.
If in any fiscal year the aggregate expenses of a Fund (including
fees pursuant to the New Advisory Agreement and the Sub-Advisory
Agreement but excluding distribution and shareholder service fees,
interest, taxes, brokerage and, if permitted by state securities
commissions, extraordinary expenses) exceed the expense limitation of
any state having jurisdiction over the Fund, SBSSA will reduce its
advisory fee and Boston Advisors will reduce its sub-advisory fee to
that Fund for the excess expense to the extent required by state law in
the same proportion as the respective advisory fees bear to the Fund's
aggregate fees for investment advice and administration. This expense
reimbursement, if any, will be estimated, reconciled and paid on a
monthly basis.
Each Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard for its
obligations thereunder, the investment adviser or sub-investment
adviser, as the case may be, shall be liable for any act or omission in
the course of or in connection with the rendering of its services
thereunder.
Each Agreement will remain in effect pursuant to its terms for an
initial term of two years from its date of execution and thereafter for
successive periods if and so long as such continuance is specifically
approved annually by (a) the Trust's Board or (b) a majority vote of the
Fund's shareholders, provided that in either event the continuance also
is approved by a majority of the board members who are not "interested
persons" (as defined in the 1940 Act) of any party of the Agreement by
vote cast in person at a meeting called for the purpose of voting on
approval. Each Agreement is terminable, without penalty, on 60 days'
written notice by the Board of the Trust or by a majority vote of the
Fund's shareholders, or on 90 days' written notice by the investment
adviser in the case of the New Advisory Agreement and sub-investment
adviser in the case of the Sub-Advisory Agreement. Each Agreement would
terminate automatically in the event of its assignment (as defined in
the 1940 Act).
SUBMISSION OF SHAREHOLDER PROPOSALS
The Trust is not generally required to hold annual or special
shareholders' meetings. Shareholders wishing to submit proposals for
inclusion in a proxy statement for a subsequent shareholders' meeting
should send their written proposals to the Secretary of the Trust at the
address set forth on the cover of this proxy statement. Shareholder
proposals for inclusion in the Trust's proxy statement for any
subsequent meeting must be received by the Trust a reasonable period of
time prior to any such meeting.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board does not intend to present any other business at the
Meetings nor is it aware that any shareholder intends to do so. If,
however, any other matters are properly brought before the Meetings, the
persons named in the accompanying proxy card (s) will vote thereon in
accordance with their judgment.
May 7, 1994.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO
NOT EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE, SIGN,
DATE AND RETURN THE PROXY AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
EXHIBIT A
Names of Investment Companies Serviced by Boston Advisors
Fund
Net Asset
as of
12/31/93
Annual Rate of Fee
Expressed
as a Percentage of
Average
Daily Net
Assets
The Laurel Funds Trust:
Cash Management Fund
205,000,000
.50%
Managed Income Fund
99,000,00
0
.60%
Government Money Fund
53,000,00
0
.50%
Capital Appreciation Fund
443,000,000
.75%
Special Growth Fund
118,000,000
1.00%
Int. Term Government Sec.
Fund
23,000,00
0
.65%
Asset Manager's Fund
17,000,00
0
.75%
The Laurel Investment Series:
Asset Allocation Fund
33,000,00
0
.70%
International Fund
5,000,0
00
.95%
Contrarian Fund
4,000,0
00
1.00%
Equity Income Fund
-
.75%
Short-Term Bond Fund
3,000,0
00
.50%
The Laurel Tax-Free Municipal
Funds:
Tax-Free Money Fund
37,000,00
0
.50%
Mass. Tax-Free Money Fund
123,000,00
0
.50%
Tax-Free Bond Fund
39,000,00
0
.50%
Mass. Tax-Free Bond Fund
37,000,00
0
.50%
California Tax-Free Money
Fund
27,000,00
0
.50%
California Tax-Free Bond
Fund
22,000,00
0
.50%
New York Tax-Free Money
Fund
16,000,00
0
.50%
New York Tax-Free Bond
Fund
7,000,00
0
.50%
Smith Barney Shearson
Telecommunications Trust:
Income Fund
71,000,
000
.75%
Growth Fund
229,000,0
00
.75%
Smith Barney Shearson Income
Funds:
Premium Total Return Fund
1,509,000,0
00
.55%
Smith Barney Shearson Equity
Funds:
Strategic Investors Fund
298,000,000
.55%
The USA High Yield Fund N.V.
124,000,000
.21%
The Latin American Bond Fund
N.V. (1)
109,000,000
.20%
International Currency
Portfolios N.V.:
Deutsche Mark Portfolio
N.V (1)
2,000,000
.30%
Japanese Yen Portfolio
N.V. (1)
2,000,000
.30%
US Money Market Fund N.V.
(1)
394,000,000
.30%
Offshore Portfolios:
U.S. Government Securities
Instruments N.V. (1)
20,000,000
.45%
U.S. Appreciation Fund
N.V. (1)
13,00,000
.60%
Pacific Equity Fund N.V.
(1)
8,000,000
.70%
European Equity Fund N.V.
(1)
11,000,00
0
.70%
Global Bond Investments
N.V. (1)
23,000,00
0
.30%
U.S. Money Market
Investments N.V. (1)
12,000,00
0
.30%
ECU Fixed - Income
Investments N.V. (1)
2,000,000
.30%
Offshore Diversified Strategic
Income
Fund N.V. (1)
214,000,000
.45%
Lehman Brothers Series I
Mortgage-Related
Securities Portfolio
N.V. (2)
10,000,00
0
.25%
TBC Portfolio of Fixed Income
Securities N.V. (2)
25,000,00
0
.50%
Atlas Assets:
California Double
Municipal Money Fund
46,000,000
.15%
National Municipal Money
Fund
9,000,000
.15%
California Municipal Bond
Fund
178,000,000
.25% up to $100
million,
.20% on excess
National Municipal Bond
Fund
.25% up to $100
million,
.20% on excess
National Insured
Intermediate Municipal
15,000,00
0
California Insured
Intermediate
Municipal
23,000,00
0
___________________________
(1) The Boston Company Advisers (Bermuda) Ltd.
(2) The Boston Company Institutional Investors
A portion of this fee is paid to Lehman Brothers Global Asset
Management Limited
EXHIBIT B
THE BOSTON COMPANY ADVISORS, INC.
Consolidated Balance Sheet
December 31, 1993
(With Independent Auditors' Report Thereon)
Independent Auditors' Report
To the Board of Directors
The Boston Company Advisors, Inc. and subsidiaries:
We have audited the accompanying consolidated balance sheet
of The Boston Company Advisors, Inc. and subsidiaries, a
wholly-owned subsidiary of The Boston Company, Inc., as of
December 31, 1993. This consolidated balance sheet is the
responsibility of the Company's management. Our
responsibility is to express an opinion on this consolidated
balance sheet based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether the consolidated balance sheet is free of material
misstatement. An audit of a consolidated balance sheet
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the consolidated balance sheet.
An audit of a consolidated balance sheet also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall consolidated balance sheet presentation. We believe
that our audit of the consolidated balance sheet provides a
reasonable basis for our opinion.
In our opinion, the consolidated balance sheet referred to
above presents fairly, in all material respects, the
financial position of The Boston Company Advisors, Inc. and
subsidiaries at December 31, 1993, in conformity with
generally accepted accounting principles.
February 25, 1994
/s/ KPMG Peat Marwick
KPMG Peat Marwick
THE BOSTON COMPANY ADVISORS, INC.
Consolidated Balance Sheet
December 31,1993
Assets
Cash $ 65,830
Investments in mutual funds, at lower of aggregate cost
or market (market value $308,706) 280,874
Fees receivable (note 8) 13,705,819
Other receivables 1,423,778
Due from affiliates, net (note 6) 143,843
Fixed assets, net (note 3) 8,369,293
Net deferred tax asset (note 4) 2,215,704
Total assets $ 26,205,141
Liabilities and Stockholder's Equity
Liabilities:
Accrued compensation $ 2,782,951
Accrued expenses and other liabilities (note 1)
7,009,704
Current tax payable (note 4) 7,331,939
Due to Parent (note 6) 474,556
Total liabilities 17,599,150
Commitments and contingencies (note 7)
Stockholder's equity:
Common stock, par value $1 per share; l,000 shares
authorized, issued and outstanding 1,000
Capital surplus 22,100
Retained earnings 8,582,891
Total stockholder's equity 8,605,991
Total liabilities and stockholder's equity $
26,205,141
See accompanying notes to consolidated balance sheet.
THE BOSTON COMPANY ADVISORS, INC.
Notes to Consolidated Balance Sheet
December 31, 1993
(1) Organization
The consolidated balance sheet includes the accounts of
The Boston Company Advisors, Inc. and subsidiaries (the
"Company"). The Company, a Massachusetts corporation and a
wholly owned subsidiary of The Boston Company, Inc. (the
"Parent"), is an investment advisor registered under the
Investment Advisers Act of 1940. The Company is an
investment advisory and administrative services firm serving
regulated investment companies. The Parent is a wholly owned
subsidiary of Mellon Bank Corporation ("Mellon").
In May 1993, Mellon completed its acquisition of the
Parent and certain subsidiaries from Shearson Lehman
Brothers Inc., which was a wholly owned subsidiary of the
American Express Company. The acquisition was accounted for
as a purchase in accordance with Accounting Principles Board
Opinion No. 16, "Business Combinations." Retained earnings
includes the results of operations since the acquisition
date.
Restructuring expenses and related reserve accounts
were recorded incident to the acquisition reflecting
management's estimate of the costs to restructure the
Company. These costs relate to various expenses associated
with the acquisition and amounted to $2,254,000. The
restructuring reserve at December 31, 1993, amounted to
$2,220,465 and is included in accrued expenses and other
liabilities in the accompanying consolidated balance sheet.
(2) Summary of Significant Accounting Policies
The accompanying consolidated balance sheet was
prepared in accordance with generally accepted accounting
principles. All material intercompany transactions and
balances have been eliminated in consolidation. A
description of significant accounting policies follows.
Intercompany Cost Allocation
In addition to specific operating expenses incurred by
the Company and charged directly to operations, certain
management, accounting and other costs are incurred in
common for the Company by Mellon and its other subsidiaries.
The Company is allocated a share of these costs
proportionately based on an appropriate methodology for each
type of expense. Occupancy, data processing and certain
office support costs are allocated to the Company based on
actual usage.
Management believes the allocation methods used are
reasonable and appropriate in the circumstances; however,
the Company's consolidated balance sheet may not necessarily
be indicative of the financial condition that would have
existed if the Company had been operated as an unaffiliated
entity.
Fixed Assets
Fixed assets are stated at cost, less accumulated
depreciation. Depreciation is computed on the straight-line
method over the estimated useful lives of the assets which
range from 3 to l0 years.
(Continued)
THE BOSTON COMPANY ADVISORS, INC.
Notes to Consolidated Balance Sheet
December 31, 1993
Income Taxes
The Company will participate in a consolidated federal
and a combined state income tax return through the Company's
Parent with the Parent's former owner, The American Express
Company, for the period ended May 21, 1993, the date of the
Mellon acquisition. The Company's results for the period
from the acquisition through December 31, 1993, will be
included in the consolidated Mellon tax return.
Pursuant to a tax-sharing agreement with the Parent,
the current tax liability is determined on a separate return
basis with benefits for net losses and credits recorded when
realized in the consolidated Mellon tax return. Deferred
income taxes are computed on a separate entity basis.
Fair Value of Financial Instruments
Financial Accounting Standards Board Statement No. 107
(SFAS No. l07), "Disclosures About Fair Value of Financial
Instruments," requires disclosure of fair value information
about financial instruments, whether or not recognized in
the balance sheet, for which it is practicable to estimate
that value. A financial instrument is defined as cash,
evidence of an ownership interest and certain contracts to
exchange cash or other financial instruments. Generally, for
financial instruments due within three months of the
reporting date, carrying amount approximates fair value.
Since the Company has less than $150 million in assets, SFAS
No. l07 is not effective until the fiscal year ended
December 31, 1995. Management does not believe SFAS No. 107
will have a material effect on the financial statements.
(3) Fixed Assets
Fixed assets at December 31, 1993, were as follows:
Accumulated Net
Cost depreciation book value
Leasehold improvements $ 1,878,964 $ 179,824
$ 1,699,140
Furniture 2,596,956 229,542 2,367,414
Equipment and workstations 5,459,850 1,157,111
4,302,739
$ 9,935,770 $ 1,566,477 $ 8,369,293
(4) Income Taxes
Intercompany taxes are remitted to the Parent if the
Parent is required to make payment to Mellon. At
December 31, 1993, the Company has a current income tax
payable to the Parent of $7,331,939.
(Continued)
THE BOSTON COMPANY ADVISORS, INC.
Notes to Consolidated Balance Sheet
December 31, 1993
Deferred income taxes reflect the tax effects of
temporary differences between the financial reporting basis
and tax basis of the Company's assets and liabilities.
Temporary differences resulting in deferred tax assets
consist of nondeductible reserves, and temporary differences
resulting in deferred tax liabilities consist of book versus
tax basis of mutual fund investments and fixed assets.
Included in the accompanying consolidated balance sheet are
the following deferred tax balances:
Deferred tax assets $ 2,320,078
Valuation allowance for deferred
tax assets
2,320,078
Deferred tax liabilities (l04,374)
Net deferred tax asset $ 2,215,704
The Company believes that it is more likely than not
that the Company will realize the benefits of the total
deferred tax assets and, accordingly, believes that a
valuation allowance with respect to the realization of the
total deferred tax assets is not necessary. While there are
no assurances that this benefit will be realized, the
Company expects that the deductible amount will be
recoverable through future expectations of taxable income
and tax planning strategies.
(5) Employees' Retirement Plans
The Company participates in a noncontributory defined
benefit pension plan, sponsored by its Parent, which covers
substantially all employees. As a result of the acquisition
by Mellon, the Plan was amended to conform to the provisions
of the Mellon Bank Retirement Plan effective May 31,1993.
Because the Company participates in the Mellon plan with
other subsidiaries of its Parent, an analysis setting forth
the plan's funded status at December 31, 1993, cannot be
separately determined for the Company.
Prior to the Mellon acquisition, the Company
participated in a defined contribution retirement savings
plan sponsored by the Parent. As of May 31, 1993, the
effective date, all future contributions to the Parent's
plan were prohibited, but all participants with account
balances were granted full vesting in the plan. After the
effective date, participants in the Plan could invest in the
Mellon Bank Retirement Savings Plan (the "Mellon plan"). The
Mellon plan is a defined contribution retirement savings
plan, sponsored by Mellon, covering substantially all U.S.
employees. Employees become eligible to participate after
one full year of service. If a participant decides to
contribute, a portion of the contribution is matched by
Mellon.
The Company participates in defined benefit health care
plans, sponsored by its Parent, that provide health care,
life insurance and other post-retirement benefits covering
substantially all retired U.S. employees. The plans include
participant contributions, deductibles, co-insurance
provisions and service-related eligibility requirements.
Since the Company participates in the plans with other
subsidiaries of its Parent, an analysis setting forth the
funded status of the plans at December 31,1993 cannot be
separately determined for the Company.
(Continued)
THE BOSTON COMPANY ADVISORS, INC.
Notes to Consolidated Balance Sheet
December 31, 1993
(6) Related Party Transactions
The Company routinely engages in various financial
transactions with affiliated companies. The nature of these
transactions and their related effect on the Company's
consolidated balance sheet at December 31,1993, were as
follows:
Cash
Cash reflected on the Company's consolidated balance
sheet of $65,830 at December 31, 1993, is held on deposit at
Boston Safe Deposit and Trust Company, which is also a
wholly owned subsidiary of the Parent. Generally, the
Company advances to its Parent on a noninterest-bearing
basis cash that is not required for its direct operational
needs. These amounts are reduced over time through the
payment of expenses by the Parent on the Company's behalf
and dividend payments by the Company to the Parent.
Due from Affiliates
Due from affiliates reflected on the balance sheet of
$143,845 represents the net aggregate amounts due from
affiliated companies, other than the Parent, for cash
advances in excess of operational expenses paid on behalf of
the Company.
Due to Parent
Due to Parent reflected in the consolidated balance
sheet of $474,556 represents the aggregate unsettled balance
of various amounts, mainly operational expenses, paid on
behalf of the Company by the Parent.
(7) Commitments and Contingencies
As of December 31, 1993, the Company is contingently
liable for certain excess expenses incurred by regulated
investment companies serviced under administration
contracts. In the opinion of management, the accrual that
has been established in the consolidated balance sheet in
accrued expenses and other liabilities is sufficient to meet
these contingent payments.
(8) Significant Contractual Relationships
For the year ended December 31,1993, the Company
provided administrative services to mutual funds that are
sponsored by Smith Barney Shearson, Inc. ("SBS") and other
sponsors. Accrued fee income receivables related to funds
sponsored by SBS at December 31, 1993, were approximately
$8,879,000, which represents approximately 65% of total fees
receivable.
Effective January 1,1994, the Company formalized an
arrangement (the "agreement") with Smith Barney Shearson,
Inc. ("SBS") under which the Company and SBS will cooperate
with regard to the providing of administrative services to
mutual funds sponsored by SBS (the SBS funds). The agreement
provides for SBS to seek appointment as administrator and
for the Company to become subadministrator for the SBS
funds. Although the agreement may result in a reduction to
the level of fees received by the Company from the SBS
funds, management believes the impact of this reduction is
not material to the financial condition of the Company.
EXHIBIT C
Names Of Investment Companies Serviced By SBSSA
Fund
Net Assets as of
2/3/94
Annual Rate of Fee Expressed
as a Percentage of Average Daily
Net
Assets
Smith Barney Shearson
Sector Analysis Fund
$134,000,000
.25%
The Advisors Fund L.P.
129,000,000
.20% (to be adjusted up or down
by
a maximum of .02% based on
comparative performance to the
S&P 500, of which .10% is
retained
by adviser and remainder is
allocated
among sub-investment advisers)
Garzarelli Sector Analysis
Fund N.V.
20,000,000
.40%
E.C. Tactical Allocation
Fund
60,00,000
.80%
Smith Barney Shearson
Adjustable Rate Government
Income Fund
382,000,000
.40% (of which .20% is paid to
BlackRock Financial Management
as sub-investment adviser)
EXHIBIT E
FORM OF
SUB-INVESTMENT ADVISORY AGREEMENT
SMITH BARNEY SHEARSON TELECOMMUNICATIONS TRUST
Smith Barney Shearson Telecommunications Growth Fund
Smith Barney Shearson Telecommunications Income Fund
[June ___,
1994]
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
Dear Sirs:
Smith Barney Shearson Telecommunications Trust (the
"Company"), a trust organized under the laws of the
Commonwealth of Massachusetts and Smith Barney Shearson
Strategy Advisers Inc. (the "Adviser"), each confirms its
agreement with The Boston Company Advisors, Inc. (the "Sub-
Adviser"), as follows:
1. Investment Description; Appointment
The Company desires to employ its capital relating to
[Smith Barney Shearson Telecommunications Growth Fund/Smith
Barney Shearson Telecommunications Income Fund] (the "Fund")
by investing and reinvesting in investments of the kind and
in accordance with the investment objective(s), policies and
limitations specified in its Master Trust Agreement, as
amended from time to time (the "Master Trust Agreement"), in
the prospectus for the Fund (the "Prospectus") and the
statement of additional information of the Company (the
"Statement") filed with the Securities and Exchange
Commission as part of the Company's Registration Statement
on Form N-1A, as amended from time to time, and in the
manner and to the extent as may from time to time be
approved by the Board of Trustees of the Company (the
"Board"). Copies of the Prospectus, the Statement and the
Master Trust Agreement have been or will be submitted to the
Sub-Adviser. The Company agrees to provide copies of all
amendments to the Prospectus, the Statement and the Master
Trust Agreement to the Sub-Adviser on an on-going basis.
The Company employs the Adviser as the investment adviser to
the Fund, and the Company and the Adviser desire to employ
and hereby appoint the Sub-Adviser to act as the sub-
investment adviser to the Fund. The Sub-Adviser accepts the
appointment and agrees to furnish the services for the
compensation set forth below.
2. Services as Sub-Investment Adviser
Subject to the supervision, direction and approval of
the Board of the Company and the Adviser, the Sub-Adviser
will: (a) manage the Fund's portfolio in accordance with
the Fund's investment objective(s) and policies as stated in
the Master Trust Agreement, the Prospectus and the
Statement; (b) make investment decisions for the Fund; (c)
place purchase and sale orders for portfolio transactions
for the Fund; and (d) employ professional portfolio managers
and securities analysts who provide research services to the
Fund. In providing those services, the Sub-Adviser will
conduct a continual program of investment, evaluation and,
if appropriate, sale and reinvestment of the Fund's assets.
3. Brokerage
In selecting brokers or dealers to execute transactions
on behalf of the Fund, the Sub-Adviser will seek the best
overall terms available. In assessing the best overall
terms available for any transaction, the Sub-Adviser will
consider factors it deems relevant, including, but not
limited to, the breadth of the market in the security, the
price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of
the commission, if any, for the specific transaction and on
a continuing basis. In selecting brokers or dealers to
execute a particular transaction, and in evaluating the best
overall terms available, the Sub-Adviser is authorized to
consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act
of 1934), provided to the Fund and/or other accounts over
which the Sub-Adviser or its affiliates exercise investment
discretion.
4. Information Provided to the Company
The Sub-Adviser will keep the Adviser and the Company
informed of developments materially affecting the Fund, and
will, on its own initiative, furnish the Adviser and the
Company from time to time with whatever information the Sub-
Adviser believes is appropriate for this purpose.
5. Standard of Care
The Sub-Adviser shall exercise its best judgment in
rendering the services listed in paragraphs 2 and 3 above.
The Sub-Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the
Fund and the Adviser in connection with the matters to which
this Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to protect
the Sub-Adviser against any liability to the Adviser, the
Company or the shareholders of the Fund to which the Sub-
Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in
the performance of its duties or by reason of the Sub-
Adviser's reckless disregard of its obligations and duties
under this Agreement.
6. Compensation
In consideration of the services rendered pursuant to
this Agreement, the Adviser will pay the Sub-Adviser on the
first business day of each month a fee for the previous
month at the annual rate of .275 of 1.00% of the Fund's
average daily net assets. The fee for the period from the
Effective Date (defined below) of the Agreement to the end
of the month during which the Effective Date occurs shall be
prorated according to the proportion that such period bears
to the full monthly period. Upon any termination of this
Agreement before the end of a month, the fee for such part
of that month shall be prorated according to the proportion
that such period bears to the full monthly period and shall
be payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to the Sub-
Adviser, the value of the Fund's net assets shall be
computed at the times and in the manner specified in the
Prospectus and/or the Statement.
7. Expenses
The Sub-Adviser will bear all expenses in connection
with the performance of its services under this Agreement.
The Fund will bear certain other expenses to be incurred in
its operation, including, but not limited to, investment
advisory and administration fees; fees for necessary
professional and brokerage services; fees for any pricing
service; the costs of regulatory compliance; and costs
associated with maintaining the Company's legal existence
and shareholder relations.
8. Reduction of Fee
If in any fiscal year the aggregate expenses of the
Fund (including fees pursuant to this Agreement and the
Fund's investment advisory agreement, but excluding
interest, taxes, brokerage and extraordinary expenses)
exceed the expense limitation of any state having
jurisdiction over the Fund, the Sub-Adviser will reduce its
fee by the proportion of such excess expense equal to the
proportion that its fee thereunder bears to the aggregate of
fees paid by the Fund for investment advice and
administration in that year, to the extent required by state
law. A fee reduction pursuant to this paragraph 8, if any,
will be estimated, reconciled and paid on a monthly basis.
9. Services to Other Companies or Accounts
The Company understands that the Sub-Adviser now acts,
will continue to act and may act in the future as investment
adviser to fiduciary and other managed accounts, and as
investment adviser to other investment companies, and the
Company has no objection to the Sub-Adviser's so acting,
provided that whenever the Fund and one or more other
investment companies advised by the Sub-Adviser have
available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a
formula believed to be equitable to each company. The
Company recognizes that in some cases this procedure may
adversely affect the size of the position obtainable for the
Fund. In addition, the Company understands that the persons
employed by the Sub-Adviser to assist in the performance of
the Sub-Adviser's duties under this Agreement will not
devote their full time to such service and nothing contained
in this Agreement shall be deemed to limit or restrict the
right of the Sub-Adviser or any affiliate of the Sub-Adviser
to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
10. Term of Agreement
This Agreement shall become effective as of [June ___,
1994] (the "Effective Date") and shall continue for an
initial two-year term and shall continue thereafter so long
as such continuance is specifically approved at least
annually by (i) the Board of the Company or (ii) a vote of a
"majority" (as that term is defined in the Investment
Company Act of 1940, as amended (the "1940 Act")) of the
Fund's outstanding voting securities, provided that in
either event the continuance is also approved by a majority
of the Board who are not "interested persons" (as defined in
the 1940 Act) of any party to this Agreement, by vote cast
in person at a meeting called for the purpose of voting on
such approval. This Agreement is terminable, without
penalty, on 60 days' written notice, by the Board of the
Company or by vote of holders of a majority of the Fund's
shares, or upon 90 days' written notice, by the Sub-Adviser.
This Agreement will also terminate automatically in the
event of its assignment (as defined in the 1940 Act and the
rules thereunder).
11. Representation by the Company
The Company represents that a copy of the Master Trust
Agreement is on file with the Secretary of The Commonwealth
of Massachusetts and with the Boston City Clerk.
12. Limitation of Liability
The Company, the Adviser and the Sub-Adviser agree that
the obligations of the Company under this Agreement shall
not be binding upon any of the members of the Board,
shareholders, nominees, officers, employees or agents,
whether past, present or future, of the Company,
individually, but are binding only upon the assets and
property of the Fund and not upon the assets and property of
any other portfolio of the Company. The execution and
delivery of this Agreement have been authorized by the Board
and a majority of the holders of the Fund's outstanding
voting securities, and signed by an authorized officer of
the Company, acting as such, and neither such authorization
by such members of the Board and shareholders 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
assets and property of the Fund as provided in the Master
Trust Agreement.
If the foregoing is in accordance with your
understanding, kindly indicate your acceptance of this
Agreement by signing and returning the enclosed copy of this
Agreement.
Very truly yours,
SMITH BARNEY SHEARSON
TELECOMMUNICATIONS TRUST FUNDS
By:__________________________________________
SMITH BARNEY SHEARSON STRATEGY
ADVISERS INC.
By:___________________________________________
Accepted:
THE BOSTON COMPANY ADVISORS, INC.
By:______________________________
shared/domestic/clients/shearson/funds/slip/prtn/subadv4.doc
EXHIBIT F
FORM OF
INVESTMENT ADVISORY AGREEMENT
SMITH BARNEY SHEARSON TELECOMMUNICATIONS TRUST
Smith Barney Shearson Telecommunications Growth Fund
Smith Barney Shearson Telecommunications Income Fund
[June __, 1994]
Smith Barney Shearson Strategy Advisers Inc.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
Smith Barney Shearson Telecommunications Trust (the
"Company"), a trust organized under the laws of the
Commonwealth of Massachusetts, confirms its agreement with
Smith Barney Shearson Strategy Advisers Inc. (the
"Adviser"), as follows:
1. Investment Description; Appointment
The Company desires to employ its capital relating to
its [Smith Barney Shearson Telecommunications Growth
Fund/Smith Barney Shearson Telecommunications Income Fund]
(the "Fund") by investing and reinvesting in investments of
the kind and in accordance with the investment objective(s),
policies and limitations specified in its Master Trust
Agreement, as amended from time to time (the "Master Trust
Agreement"), in the prospectus of the Fund (the
"Prospectus") and the Trust's statement of additional
information (the "Statement") filed with the Securities and
Exchange Commission as part of the Company's Registration
Statement on Form N-1A, as amended from time to time, and in
the manner and to the extent as may from time to time be
approved by the Board of Trustees of the Company (the
"Board"). Copies of the Prospectus, the Statement and the
Master Trust Agreement have been or will be submitted to the
Adviser. The Company agrees to provide copies of all
amendments to the Prospectus, the Statement and the Master
Trust Agreement to the Adviser on an on-going basis. The
Company desires to employ and hereby appoints the Adviser to
act as the Fund's investment adviser. The Adviser accepts
the appointment and agrees to furnish the services for the
compensation set forth below.
2. Services as Investment Adviser
Subject to the supervision, direction and approval of
the Board of the Company, the Adviser will: (a) manage the
Fund's portfolio in accordance with the Fund's investment
objective(s) and policies as stated in the Master Trust
Agreement, the Prospectus and the Statement; (b) make
investment decisions for the Fund; (c) place purchase and
sale orders for portfolio transactions for the Fund; and (d)
employ professional portfolio managers and securities
analysts who provide research services to the Fund. In
providing those services, the Adviser will conduct a
continual program of investment, evaluation and, if
appropriate, sale and reinvestment of the Fund's assets. The
Adviser may, with the approval of the Board and the
shareholders of the Fund (to the extent required by
applicable law), from time to time, sub-contract with one or
more sub-investment advisers to provide some or all of the
services required under this agreement.
3. Brokerage
In selecting brokers or dealers to execute transactions
on behalf of the Fund, the Adviser will seek the best
overall terms available. In assessing the best overall
terms available for any transaction, the Adviser will
consider factors it deems relevant, including, but not
limited to, the breadth of the market in the security, the
price of the security, the financial condition and execution
capability of the broker or dealer and the reasonableness of
the commission, if any, for the specific transaction and on
a continuing basis. In selecting brokers or dealers to
execute a particular transaction, and in evaluating the best
overall terms available, the Adviser is authorized to
consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act
of 1934), provided to the Fund and/or other accounts over
which the Adviser or its affiliates exercise investment
discretion.
4. Information Provided to the Company
The Adviser will keep the Company informed of
developments materially affecting the Fund's portfolio, and
will, on its own initiative, furnish the Company from time
to time with whatever information the Adviser believes is
appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in
rendering the services listed in paragraphs 2 and 3 above.
The Adviser shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Company in
connection with the matters to which this Agreement relates,
provided that nothing in this Agreement shall be deemed to
protect or purport to protect the Adviser against any
liability to the Company or its shareholders of the Fund to
which the Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or by reason of the
Adviser's reckless disregard of its obligations and duties
under this Agreement.
6. Compensation
In consideration of the services rendered pursuant to
this Agreement, the Fund will pay the Adviser on the first
business day of each month a fee for the previous month at
the annual rate of .55 of 1.00% of the Fund's average daily
net assets. The fee for the period from the Effective Date
(defined below) of the Agreement to the end of the month
during which the Effective Date occurs shall be prorated
according to the proportion that such period bears to the
full monthly period. Upon any termination of this Agreement
before the end of a month, the fee for such part of that
month shall be prorated according to the proportion that
such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement. For
the purpose of determining fees payable to the Adviser, the
value of the Fund's net assets shall be computed at the
times and in the manner specified in the Prospectus and/or
the Statement.
7. Expenses
The Adviser will bear all expenses in connection with
the performance of its services under this Agreement and
will pay (a) to The Boston Company Advisors, Inc. ("Boston
Advisors"), as sub-investment adviser to the Fund under the
Sub-Investment Advisory Agreement dated of even date
herewith among the Company, the Adviser and Boston Advisors,
as amended from time to time, and (b) to any additional or
substitute sub-investment adviser or advisers retained by
the Adviser to provide advisory services to the Fund
(together with Boston Advisors, each a "Sub-Adviser"), the
fees required to be paid to each Sub-Adviser. The Fund will
bear certain other expenses to be incurred in its operation,
including, but not limited to, investment advisory and
administration fees, other than those payable to a Sub-
Adviser or any additional or substitute investment adviser;
fees for necessary professional and brokerage services; fees
for any pricing service; the costs of regulatory compliance;
and costs associated with maintaining the Company's legal
existence and shareholder relations.
8. Reduction of Fee
If in any fiscal year the aggregate expenses of the
Fund (including fees pursuant to this Agreement and the
Fund's sub-investment advisory and administration
agreements, but excluding interest, taxes, brokerage and
extraordinary expenses) exceed the expense limitation of any
state having jurisdiction over the Fund, the Adviser will
reduce its fee to the Fund by the proportion of such excess
expense equal to the proportion that its fee thereunder
bears to the aggregate of fees paid by the Fund for
investment advice and administration in that year, to the
extent required by state law. A fee reduction pursuant to
this paragraph 8, if any, will be estimated, reconciled and
paid on a monthly basis.
9. Services to Other Companies or Accounts
The Company understands that the Adviser now acts, will
continue to act and may act in the future as investment
adviser to fiduciary and other managed accounts, and as
investment adviser to other investment companies, and the
Company has no objection to the Adviser's so acting,
provided that whenever the Fund and one or more other
investment companies advised by the Adviser have available
funds for investment, investments suitable and appropriate
for each will be allocated in accordance with a formula
believed to be equitable to each company. The Fund
recognizes that in some cases this procedure may adversely
affect the size of the position obtainable for the Fund. In
addition, the Fund understands that the persons employed by
the Adviser to assist in the performance of the Adviser's
duties under this Agreement will not devote their full time
to such service and nothing contained in this Agreement
shall be deemed to limit or restrict the right of the
Adviser or any affiliate of the Adviser to engage in and
devote time and attention to other businesses or to render
services of whatever kind or nature.
10. Term of Agreement
This Agreement shall become effective [June __, 1994]
(the "Effective Date") and shall continue for an initial
two-year term and shall continue thereafter so long as such
continuance is specifically approved at least annually by
(i) the Board of the Company or (ii) a vote of a "majority"
(as that term is defined in the Investment Company Act of
1940, as amended (the "1940 Act")) of the Fund's outstanding
voting securities, provided that in either event the
continuance is also approved by a majority of the Board who
are not "interested persons" (as defined in the 1940 Act) of
any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval.
This Agreement is terminable, without penalty, on 60 days'
written notice, by the Board of the Company or by vote of
holders of a majority of the Fund's shares, or upon 90 days'
written notice, by the Adviser. This Agreement will also
terminate automatically in the event of its assignment (as
defined in the 1940 Act and the rules thereunder).
11. Representation by the Company
The Company represents that a copy of the Master Trust
Agreement is on file with the Secretary of The Commonwealth
of Massachusetts.
12. Limitation of Liability
The Company and the Adviser agree that the obligations
of the Company under this Agreement shall not be binding
upon any of the members of the Board, shareholders,
nominees, officers, employees or agents, whether past,
present or future, of the Company, individually, but are
binding only upon the assets and property of the Company, as
provided in the Master Trust Agreement. The execution and
delivery of this Agreement have been authorized by the Board
and a majority of the holders of the Fund's outstanding
voting securities, and signed by an authorized officer of
the Company, acting as such, and neither such authorization
by such members of the Board and shareholders 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
assets and property of the Company as provided in the Master
Trust Agreement.
If the foregoing is in accordance with your
understanding, kindly indicate your acceptance of this
Agreement by signing and returning the enclosed copy of this
Agreement.
Very truly yours,
SMITH BARNEY SHEARSON
TELECOMMUNICATIONS TRUST
By:___________________________________
Name:
Title:
Accepted:
SMITH BARNEY SHEARSON STRATEGY ADVISERS INC.
By:__________________________________
Name:
Title:
shared\domestic\clients\shearson\funds\slip\prtn\advis4ds.doc
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Please indicate your vote by an "X" in the appropriate box below.
This proxy, if properly executed, will be voted in the manner directed
by the undersigned shareholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS.
Please refer to the Proxy Statement for a discussion of the Proposals.
1. To approve a new investment advisory agreement between
FOR * AGAINST * ABSTAIN *
Smith Barney Shearson Telecommunications Trust, on behalf of its
sub-trust, Smith Barney Shearson Telecommunications Income Fund (the
"Fund"), and Smith Barney Shearson Strategy Advisers, Inc. ("SBSSA").
2. To approve a sub-investment advisory agreement between the FOR *
AGAINST * ABSTAIN *
Trust, on behalf of the Fund, and The Boston Company Advisors,
Inc.
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SMITH BARNEY SHEARSON TELECOMMUNICATIONS GROWTH FUND PROXY
SOLICITED BY THE BOARD OF TRUSTEES
The undersigned holder of shares of Smith Barney Shearson
Telecommunications Growth Fund ("the Fund"), a Massachusetts business
trust, hereby appoints Heath B. McLendon, Richard P. Roelofs, Francis J.
McNamara, III and Lee D. Augsburger attorney and proxies for the
undersigned with full powers of substitution and revocation, to
represent the undersigned and to vote on behalf of the undersigned all
shares of the Fund that the undersigned is entitled to vote at the
Special Meeting of Shareholders of the Fund to be held at the offices of
the Fund, Two World Trade Center, New York, New York, on June 15, 1994
at 2:00 p.m. and any adjournment or adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Special Meeting
and Proxy Statement dated May _, 1994 and hereby instructs said attorney
and proxies to vote said shares as indicated hereon. In their
discretion, the proxies are authorized to vote upon such other business
as may properly come before the Special Meeting. A majority of the
proxies present and acting at the Special Meeting in person or by
substitute (or, if only one shall be so present, then that one,) shall
have and may exercise all the power and authority of said proxies
hereunder. The undersigned hereby revokes any proxy previously given.
PLEASE
SIGN, DATE AND RETURN
PROMPTLY IN
THE ENCLOSED ENVELOPE
NOTE: Please sign exactly as your name appears on this
Proxy. If joint owners, EITHER may sign this Proxy.
When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your
full title.
DATE: _________________________________________
_______________________________________________
_______________________________________________
Signature(s) (Title(s), if applicable)
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Please indicate your vote by an "X" in the appropriate box below.
This proxy, if properly executed, will be voted in the manner directed
by the undersigned shareholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSALS.
Please refer to the Proxy Statement for a discussion of the Proposals.
1. To approve a new investment advisory agreement between
FOR * AGAINST * ABSTAIN *
Smith Barney Shearson Telecommunications Trust, on behalf of its
sub-trust, Smith Barney Shearson Telecommunications Growth Fund (the
"Fund"), and Smith Barney Shearson Strategy Advisers, Inc. ("SBSSA").
2. To approve a sub-investment advisory agreement between the FOR *
AGAINST * ABSTAIN *
Trust, on behalf of the Fund, and The Boston Company Advisors,
Inc.
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SMITH BARNEY SHEARSON TELECOMMUNICATIONS INCOME FUND PROXY
SOLICITED BY THE BOARD OF TRUSTEES
The undersigned holder of shares of Smith Barney Shearson
Telecommunications Income Fund ("the Fund"), a Massachusetts business
trust, hereby appoints Heath B. McLendon, Richard P. Roelofs, Francis J.
McNamara, III and Lee D. Augsburger attorney and proxies for the
undersigned with full powers of substitution and revocation, to
represent the undersigned and to vote on behalf of the undersigned all
shares of the Fund that the undersigned is entitled to vote at the
Special Meeting of Shareholders of the Fund to be held at the offices of
the Fund, Two World Trade Center, New York, New York, on June 15, 1994
at 2:00 p.m. and any adjournment or adjournments thereof. The
undersigned hereby acknowledges receipt of the Notice of Special Meeting
and Proxy Statement dated May _, 1994 and hereby instructs said attorney
and proxies to vote said shares as indicated hereon. In their
discretion, the proxies are authorized to vote upon such other business
as may properly come before the Special Meeting. A majority of the
proxies present and acting at the Special Meeting in person or by
substitute (or, if only one shall be so present, then that one,) shall
have and may exercise all the power and authority of said proxies
hereunder. The undersigned hereby revokes any proxy previously given.
PLEASE
SIGN, DATE AND RETURN
PROMPTLY IN
THE ENCLOSED ENVELOPE
NOTE: Please sign exactly as your name appears on this
Proxy. If joint owners, EITHER may sign this Proxy.
When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your
full title.
DATE: _________________________________________
_______________________________________________
_______________________________________________
Signature(s) (Title(s), if applicable)
1
shared\domestic\clients\shearson\funds\slip\ptrn\proxy.doc
shared\domestic\peat.doc
shared\domestic\peat1.doc
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shared\domestic\clients\shearson\funds\slip\ptrn\proxy5.doc
