44
GROWSAI. 4/29/96 3:34 PM
As filed with the Securities and Exchange Commission on
April 29, 1996
Registration No. 2-86519 811-3763
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. [X]
Post-Effective Amendment No. 20
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940, as amended
Amendment No. 21 [X]
SMITH BARNEY TELECOMMUNICATIONS TRUST
(Exact name of Registrant as Specified in Charter)
Area Code and Telephone Number: (212) 723-9218
388 Greenwich Street, New York, New York 10013
(Address of Principal Executive Offices) (Zip Code)
Christina T. Sydor
Secretary
388 Greenwich Street New York, New York 10013
(Name and Address of Agent for Service)
copies to:
Burton M. Leibert, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Approximate Date of Proposed Public Offering:
As soon as possible after this Post-Effective Amendment
becomes effective.
It is proposed that this filing become effective:
__X___ Immediately upon filing pursuant to Rule 485(b)
_____ on [ ], 1996 pursuant to Rule 485(b)
60 days after filing pursuant to Rule 485(a)
_____ on -------------- pursuant to Rule 485(a)
The Registrant has previously filed a declaration of
indefinite registration of its shares pursuant to Rule 24f-2
under the Investment Company Act of 1940, as amended.
Registrant's Rule 24f-2. Notice of the fiscal year ended
December 31, 1995 was filed on February 29, 1996, as
accession number 0000721648-96-000001.
To Register Additional Securities under Reg. 270.24e-2
CALCULATION OF REGISTRATION FEE
Title of Share
Proposed Proposed
securities Amount
Maximum Maximum Amount of
being being
offering aggregate
registration
registered registered price
per offering* fee
share
Growth Fund 20,893 $13.88
$290,000 $100
Income Fund 17,825 $114.28
$290,000 $100
The fee for the shares to be registered by this filing has
been computed on the basis of the market value per share in
effect on April 23, 1996.
*Calculation of the proposed maximum offering price has been
made pursuant to Rule 24e-2.
During its fiscal year ended December 31, 1995, the fund
redeemed 6,975,079 shares of the Growth Fund. During
its current fiscal year, the fund used 2,248,879 shares of
the Growth Fund it redeemed during its fiscal year ended
December 31, 1995, for a reduction pursuant to Rule 24f-
2(c).
The fund currently is registering 4,747,093 shares for the
Growth Fund, which is equal to the remaining 4,726,200
shares redeemed during its fiscal year ended December 31,
1995, plus 20,893 shares.
During its current fiscal year, the fund filed no other post-
effective amendments for the purpose of reduction
pursuant to Rule 24e-2(a).
During its fiscal year ended December 31, 1995, the fund
redeemed 45,522 shares of the Income Fund. During its
current fiscal year, the fund used 30,235 shares of the
Income Fund it redeemed during its fiscal year ended
December 31, 1995, for a reduction pursuant to Rule 24f-
2(c).
The fund currently is registering 17,825 shares for the
Income Fund, which is equal to the remaining 15,287 shares
redeemed during its fiscal year ended December 31, 1995,
plus 2,538 shares.
During its current fiscal year, the fund filed no other post-
effective amendments for the purpose of reduction
pursuant to Rule 24e-2(a).
SMITH BARNEY TELECOMMUNICATIONS TRUST
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following pages
and documents:
Front Cover
Contents Page
Cross-Reference Sheet
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
SMITH BARNEY TELECOMMUNICATIONS TRUST
FORM N-1A CROSS REFERENCE SHEET
Pursuant to Rule 495(b) Under the Securities Act of 1933, as
amended
Part A
Item No. and Caption Prospectus
Caption
1. Cover Page Cover Page
2. Synopsis Prospectus
Summary
3. Condensed Financial Information
Financial Highlights;
4. General Description of Registrant
Cover Page; Prospectus Summary;
Investment
Objective and
Policies;
Distributor; Additional
Information
5 Management of the Fund
Prospectus Summary; Management
of the Trust and
the Fund;
Distributor;
Additional
Information
5A Management's Discussion of
Management of the Trust and the
Fund Performance Fund
6. Capital Stock and Other Securities
Investment Objective and Policies;
Dividends,
Distributions and
Taxes; Additional
Information
7. Purchase of Securities Being Offered
Valuation of Shares; Purchase of
Shares; Exchange
Privilege;
Redemption of
Shares; Minimum
Account Size;
Distributor
8. Redemption or Repurchase of Shares
Purchase of Shares; Redemption of
Shares; Exchange
Privilege
9. Pending Legal Proceedings Not
Applicable
Part B
Item No. and Caption Statement
of Additional
Information Caption
10. Cover Page Cover page
11. Table of Contents Contents
12. General Information and History
Distributor; Additional
Information
13. Investment Objectives and Policies
Investment Objectives and
Management Policies
14. Management of the Fund Management
of the Trust and the
Funds; Distributor
15. Control Persons and Principal
Management of the Trust and the
Funds Holders of
Securities
16 Investment Advisory and Other Services
Management of the Trust and the
Funds; Distributor
17 Brokerage Allocation
Investment Objectives and
Management Policies;
Distributor
18. Capital Stock and Other Securities
Investment Objectives and
Management Policies;
Purchase of
Shares; Redemption
of Shares;
Taxes
19. Purchase, Redemption and Pricing
Purchase of Shares; Redemption of
Securities Being Offered
Shares; Valuation of Shares;
Distributor;
Exchange Privilege
20. Tax Status Taxes
21. Underwriters Distributor
22. Calculation of Performance Data
Performance Data
23. Financial Statements
Financial Statements
PROSPECTUS
SMITH BARNEY
Telecommunications
Growth
Fund
April 29, 1996
Prospectus begins on page one
[Logo] Smith Barney Mutual Funds
Investing for your future.
Every day.
<PAGE>
Smith Barney Telecommunications Growth Fund
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Prospectus
April 29, 1996
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388 Greenwich Street
New York, New York 10013
(212) 723-9218
Smith Barney Telecommunications Growth Fund (the
"Growth Fund") of Smith
Barney Telecommunications Trust (the "Trust") is a mutual
fund which seeks
capital appreciation, with income as a secondary
consideration. The Growth Fund
seeks to achieve this objective primarily by investing in
common stocks and
other securities of companies in the telecommunications
industry. The Trust is a
non-diversified, open-end management investment company
consisting of two
portfolios, the Growth Fund and Smith Barney
Telecommunications Income Fund (the
"Income Fund").
This Prospectus sets forth concisely certain
information about the Growth
Fund and the Trust, including sales charges, distribution
and service fees and
expenses which prospective investors will find helpful in
making an investment
decision. Investors are encouraged to read this Prospectus
carefully and retain
it for future reference.
Additional information about the Trust and the Growth
Fund is contained in
a Statement of Additional Information dated April 29,1996 as
amended or
supplemented from time to time, that is available upon
request and without
charge by calling or writing the Growth Fund at the
telephone number or address
set forth above, or by contacting a Smith Barney Financial
Consultant. The
Statement of Additional Information has been filed with the
Securities and
Exchange Commission (the "SEC") and is incorporated by
reference into this
Prospectus in its entirety.
Smith Barney Inc.
Distributor
Smith Barney Strategy Advisers Inc.
Investment Adviser
Smith Barney Mutual Funds Management Inc.
Administrator
The Boston Company Asset Management, Inc.
Sub-Investment Adviser
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A
CRIMINAL OFFENSE.
1
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Smith Barney Telecommunications Growth Fund
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Table of Contents
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Prospectus Summary
3
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Financial Highlights
10
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Investment Objective and Management Policies
14
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Valuation of Shares
18
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Dividends, Distributions and Taxes
19
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Purchase of Shares
21
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Exchange Privilege
30
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Redemption of Shares
34
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Minimum Account Size
37
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Performance
37
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Management of the Trust and the Fund
38
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Distributor
40
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Additional Information
41
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No person has been authorized to give any information
or to make any
representations in connection with this offering other than
those contained in
this Prospectus and, if given or made, such other
information or representations
must not be relied upon as having been authorized by the
Trust or the
distributor. This Prospectus does not constitute an offer by
the Fund or the
distributor to sell or a solicitation of an offer to buy any
of the securities
offered hereby in any jurisdiction to any person to whom it
is unlawful to make
such an offer or solicitation in such jurisdiction.
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2
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Smith Barney Telecommunications Growth Fund
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Prospectus Summary
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The following summary is qualified in its entirety by
detailed information
appearing elsewhere in this Prospectus and in the Statement
of Additional
Information. Cross references in this summary are to
headings in the Prospectus.
See "Table of Contents."
Investment Objective The Growth Fund is one of two
portfolios of the Trust, a
non-diversified open-end management investment company that
was created in
response to the reorganization of American Telephone and
Telegraph Company
("AT&T") and provided stockholders of AT&T with the
opportunity to exchange
their shares of AT&T for shares of the Trust (the
"Exchange"). The Exchange took
place and the Trust commenced operations on January 1, 1984.
For information
about the Income Fund, which currently is not selling
additional shares, please
contact a Smith Barney Financial Consultant. The Growth Fund
seeks capital
appreciation, with income as a secondary consideration,
primarily by investing
in common stocks and other securities of companies in the
telecommunications
industry. See "Investment Objective and Management
Policies."
Alternative Purchase Arrangements The Growth Fund offers
several classes of
shares ("Classes") to investors designed to provide them
with the flexibility of
selecting an investment best suited to their needs. The
general public is
offered three classes of shares: Class A shares, Class B
shares and Class C
shares, which differ principally in terms of the sales
charges and rates of
expenses to which they are subject. A fourth Class of
shares, Class Y shares, is
offered only to investors meeting an initial investment
minimum of $5,000,000.
See "Purchase of Shares" and "Redemption of Shares."
Class A Shares. Class A shares are sold at net asset value
plus an initial sales
charge of up to 5.00% and are subject to an annual service
fee of 0.25% of the
average daily net assets of the Class. The initial sales
charge may be reduced
or waived for certain purchases. Purchases of Class A
shares, which when
combined with current holdings of Class A shares offered
with a sales charge
equal or exceed $500,000 in the aggregate, will be made at
net asset value with
no initial sales charge, but will be subject to a contingent
deferred sales
charge ("CDSC") of 1.00% on redemptions made within 12
months of purchase. See
"Prospectus Summary Reduced or No Initial Sales Charge."
Class B Shares. Class B shares are offered at net asset
value subject to a
maximum CDSC of 5.00% of redemption proceeds, declining by
1.00% each year after
the date of purchase to zero. This CDSC may be waived for
certain redemptions.
Class B shares are subject to an annual service fee of 0.25%
and an annual
distribution fee of 0.75% of the average daily net assets of
the Class. The
3
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Smith Barney Telecommunications Growth Fund
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Prospectus Summary (continued)
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Class B shares' distribution fee may cause that Class to
have higher expenses
and pay lower dividends than Class A shares.
Class B Shares Conversion Feature. Class B shares will
convert
automatically to Class A shares, based on relative net asset
value, eight years
after the date of the original purchase. Upon conversion,
these shares will no
longer be subject to an annual distribution fee. In
addition, a certain portion
of Class B shares that have been acquired through the
reinvestment of dividends
and distributions ("Class B Dividend Shares") will be
converted at that time.
See "Purchase of Shares -- Deferred Sales Charge
Alternatives."
Class C Shares. Class C shares are sold at net asset
value with no initial
sales charge. They are subject to an annual service fee of
0.25% and an annual
distribution fee of 0.75% of the average daily net assets of
the Class, and
investors pay a CDSC of 1.00% if they redeem Class C shares
within 12 months of
purchase. The CDSC may be waived for certain redemptions.
The Class C shares'
distribution fee may cause that Class to have higher
expenses and pay lower
dividends than Class A shares. Purchases of Class C shares,
which when combined
with current holdings of Class C shares of the Fund equal or
exceed $500,000 in
the aggregate, should be made in Class A shares at net asset
value with no sales
charge, and will be subject to a CDSC of 1.00% on
redemptions made within 12
months of purchase.
Class Y Shares. Class Y shares are available only to
investors meeting an
initial investment minimum of $5,000,000. Class Y shares are
sold at net asset
value with no initial sales charge or CDSC. They are not
subject to any service
or distribution fees.
In deciding which Class of Growth Fund shares to
purchase, investors should
consider the following factors, as well as any other
relevant facts and
circumstances:
Intended Holding Period. The decision as to which Class
of shares is more
beneficial to an investor depends on the amount and intended
holding period of
his or her investment. Shareholders who are planning to
establish a program of
regular investment may wish to consider Class A shares; as
the investment
accumulates shareholders may qualify for reduced sales
charges and the shares
are subject to lower ongoing expenses over the term of the
investment. As an
investment alternative, Class B and Class C shares are sold
without any initial
sales charge so the entire purchase price is immediately
invested in the Growth
Fund. Any investment return on these additional invested
amounts may partially
or wholly offset the higher annual expenses of these
Classes. Because the Growth
Fund's future return cannot be predicted, however, there can
be no assurance
that this would be the case.
4
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Smith Barney Telecommunications Growth Fund
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Prospectus Summary (continued)
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Finally, investors should consider the effect of the
CDSC period and any
conversion rights of the Classes in the context of their own
investment time
frame. For example, while Class C shares have a shorter CDSC
period than Class B
shares, they do not have a conversion feature, and
therefore, are subject to an
ongoing distribution fee. Thus, Class B shares may be more
attractive than Class
C shares to investors with longer term investment outlooks.
Investors investing a minimum of $5,000,000 must
purchase Class Y shares,
which are not subject to an initial sales charge, CDSC or
service or
distribution fee. The maximum purchase amount for Class A
shares is $4,999,999,
Class B shares is $249,999 and Class C shares is $499,999.
There is no maximum
purchase amount for Class Y shares.
Reduced or No Initial Sales Charge. The initial sales
charge on Class A
shares may be waived for certain eligible purchasers, and
the entire purchase
price will be immediately invested in the Growth Fund. In
addition, Class A
share purchases, which when combined with current holdings
of Class A shares
offered with a sales charge equal or exceed $500,000 in the
aggregate, will be
made at net asset value with no initial sales charge, but
will be subject to a
CDSC of 1.00% on redemptions made within 12 months of
purchase. The $500,000
aggregate investment may be met by adding the purchase to
the net asset value of
all Class A shares held in funds sponsored by Smith Barney
Inc. ("Smith Barney")
listed under "Exchange Privilege." Class A share purchases
may also be eligible
for a reduced initial sales charge. See "Purchase of
Shares." Because the
ongoing expenses of Class A shares may be lower than those
for Class B and Class
C shares, purchasers eligible to purchase Class A shares at
net asset value or
at a reduced sales charge should consider doing so.
Smith Barney Financial Consultants may receive
different compensation for
selling different Classes of shares. Investors should
understand that the
purpose of the CDSC on the Class B and Class C shares is the
same as that of the
initial sales charge on the Class A shares.
See "Purchase of Shares" and "Management of the Trust
and the Growth Fund"
for a complete description of the sales charges and service
and distribution
fees for each Class of shares and "Valuation of Shares,"
"Dividends,
Distributions and Taxes" and "Exchange Privilege" for other
differences between
the Classes of shares.
Smith Barney 401(k) Program Investors may be eligible to
participate in the
Smith Barney 401(k) Program, which is generally designed to
assist plan sponsors
in the creation and operation of retirement plans under
Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), as
well as other types
of participant directed, tax-qualified employee benefit
plans (collectively,
5
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Smith Barney Telecommunications Growth Fund
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Prospectus Summary (continued)
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"Participating Plans"). Class A, Class B, Class C and Class
Y shares are
available as investment alternatives for Participating
Plans. See "Purchase of
Shares -- Smith Barney 401(k) Program."
Purchase of Shares Shares may be purchased through the
Growth Fund's
distributor, Smith Barney, a broker that clears securities
transactions through
Smith Barney on a fully disclosed basis (an "Introducing
Broker") or an
investment dealer in the selling group. Direct purchases by
certain retirement
plans may be made through the Trust's transfer agent, First
Data Investor
Services Group, Inc. ("FDISG"). See "Purchase of Shares."
Investment Minimums Investors in Class A, Class B and Class
C shares
may open an account by making an initial investment of at
least $1,000 for each
account, or $250 for an individual retirement account
("IRA") or a Self-Employed
Retirement Plan. Investors in Class Y shares may open an
account for an initial
investment of $5,000,000. Subsequent investments of at least
$50 may be made for
all Classes. For participants in retirement plans qualified
under Section
403(b)(7) or Section 401(a) of the Code, the minimum initial
investment
requirement for Class A, Class B and Class C shares and the
subsequent
investment requirement for all Classes is $25. The minimum
initial investment
requirement for Class A, Class B and Class C shares and the
subsequent
investment requirement for all Classes through the
Systematic Investment Plan
described below is $50. See "Purchase of Shares."
Systematic Investment Plan The Growth Fund offers
shareholders a Systematic
Investment Plan under which they may authorize the automatic
placement of a
purchase order each month or quarter for Growth Fund shares
in an amount not
less than $50. See "Purchase of Shares."
Redemption of Shares Shares may be redeemed on each day the
New York Stock
Exchange, Inc. ("NYSE") is open for business. See "Purchase
of Shares" and
"Redemption of Shares."
Management of the Fund Smith Barney Strategy Advisers Inc.
("SBSA") serves as
the Growth Fund's investment adviser. SBSA is a wholly owned
subsidiary of Smith
Barney Holdings Inc. ("Holdings"). Holdings is a wholly
owned subsidiary of
Travelers Group Inc. ("Travelers"), a diversified financial
services holding
company engaged, through its subsidiaries, principally in
four business
segments: Investment Services, Consumer Finance Services,
Life Insurance
Services and Property & Casualty Insurance Services.
Smith Barney Mutual Funds Management Inc. ("SBMFM")
serves as the Growth
Fund's administrator. SBMFM is a wholly owned subsidiary of
Holdings. The Boston
6
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Smith Barney Telecommunications Growth Fund
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Prospectus Summary (continued)
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Company Asset Management Inc. ("TBCAM") serves as the Growth
Fund's sub-
investment adviser. TBCAM is a wholly owned subsidiary of
The Boston Company,
Inc. ("TBC") which in turn is a wholly owned subsidiary of
Mellon Bank
Corporation ("Mellon"). See "Management of the Trust and the
Growth Fund."
Exchange Privilege Shares of a Class may be exchanged for
shares of the same
Class of certain other funds of the Smith Barney Mutual
Funds at the respective
net asset values next determined, plus any applicable sales
charge differential.
See "Exchange Privilege."
Valuation of Shares Net asset value of the Growth Fund for
the prior day
generally is quoted daily in the financial section of most
newspapers and is
also available from Smith Barney Financial Consultants. See
"Valuation of
Shares."
Dividends and Distributions Dividends from net investment
income and
distributions of net realized capital gains, if any, are
declared and paid
annually. See "Dividends, Distributions and Taxes."
Reinvestment of Dividends Dividends and distributions paid
on shares of a Class
will be reinvested automatically in additional shares of the
same Class at
current net asset value unless otherwise specified by an
investor. Shares
acquired by dividend and distribution reinvestments will not
be subject to any
sales charge or CDSC. Class B shares acquired through
dividend and distribution
reinvestments will become eligible for conversion to Class A
shares on a pro
rata basis. See "Dividends, Distributions and Taxes."
Risk Factors and Special Considerations No assurance can be
given that the
Growth Fund will achieve its investment objective. The
Growth Fund seeks to
achieve its investment objective primarily through
investments in common stocks
and other securities of companies engaged in the
telecommunications industry. As
a result, the Growth Fund will be subject to market and
economic developments
affecting that industry to a greater degree than if its
investments were not
concentrated in that industry. Therefore, the Growth Fund
should not be
considered a complete investment program. The Trust is
classified as a non
diversified investment company under the Investment Company
Act of 1940, as
amended (the "1940 Act"), which means that the Growth Fund
is not limited by the
1940 Act in the proportion of its assets that it may invest
in the obligations
of a single issuer. The Growth Fund's assumption of large
positions in the
securities of a small number of issuers may cause its share
price to fluctuate
to a greater extent than that of a diversified investment
company as a result of
changes in the financial condition or in the market's
assessment of the issuers.
See "Investment Objective and Management Policies."
7
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Smith Barney Telecommunications Growth Fund
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Prospectus Summary (continued)
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The Growth Fund's Expenses The following expense table lists
the costs and
expenses that an investor will incur, either directly or
indirectly, as a
shareholder of the Growth Fund, based on the maximum sales
charge or maximum
CDSC that may be incurred at the time of purchase or
redemption and, unless
otherwise noted, the Growth Fund's operating expenses for
its most recent fiscal
year:
Class A Class
B Class C Class Y
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Shareholder Transaction Expenses
Maximum sales charge imposed on purchases
(as a percentage of offering price) 5.00%
None None None
Maximum CDSC
(as a percentage of original cost or
redemption proceeds, whichever is lower) None*
5.00% 1.00% None
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Annual Fund Operating Expenses
(as a percentage of average net assets)
Management fees 0.75%
0.75% 0.75% 0.75%
12b-1 fees** 0.25%
1.00% 1.00% None
Other expenses*** 0.27%
0.27% 0.27% 0.27%
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TOTAL FUND OPERATING EXPENSES 1.27%
2.02% 2.02% 1.02%
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* Purchases of Class A shares, which when combined with
current holdings of
Class A shares offered with a sales charge equal or
exceed $500,000 in the
aggregate, will be made at net asset value with no
sales charge, but will
be subject to a CDSC of 1.00% on redemptions made
within 12 months.
** Upon conversion of Class B shares to Class A shares,
such shares will no
longer be subject to a distribution fee. Class C shares
do not have a
conversion feature and, therefore, are subject to an
ongoing distribution
fee. As a result, long-term shareholders of Class C
shares may pay more
than the economic equivalent of the maximum front-end
sales charge
permitted by the National Association of Securities
Dealers, Inc.
*** For Class Y shares "other expenses" have been estimated
based on expenses
incurred by the Class A shares because there were no
Class Y shares
outstanding during the fiscal year ended December 31,
1995.
The sales charge and CDSC set forth in the above table
are the maximum
charges imposed on purchases or redemptions of Growth Fund
shares and investors
may actually pay lower or no charges, depending on the
amount purchased and, in
the case of Class B, Class C and certain Class A shares, the
length of time the
shares are held and whether the shares are held through the
Smith Barney 401(k)
Program. See "Purchase of Shares" and "Redemption of
Shares." Smith Barney
receives an annual 12b-1 service fee of 0.25% of the value
of average daily net
assets of Class A shares. Smith Barney also receives, with
respect to Class B
shares, an annual 12b-1 fee of 1.00% of the value of average
daily net assets of
this Class, consisting of a 0.75% distribution fee and a
0.25% service fee. For
Class C shares, Smith Barney receives an annual 12b-1 fee of
1.00% of the value
of average daily net assets of this Class, consisting of a
0.75% distribution
fee and a 0.25% service fee. "Other expenses" in the above
table includes fees
for shareholder services, custodial fees, legal and
accounting fees, printing
costs and registration fees.
8
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Smith Barney Telecommunications Growth Fund
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Prospectus Summary (continued)
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Example The following example is intended to assist an
investor in understanding
the various costs that an investor in the Growth Fund will
bear directly or
indirectly. The example assumes payment by the Growth Fund
of operating expenses
at the levels set forth in the table above. See "Purchase of
Shares,"
"Redemption of Shares" and "Management of the Trust and the
Growth Fund."
1 year 3 years
5 years 10 years*
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An investor would pay the following
expenses on a $1,000 investment,
assuming (1) 5.00% annual return and (2)
redemption at the end of each time
period:
Class A $62 $88
$116 $196
Class B 71 93
119 216
Class C 31 63
109 235
Class Y 10 32
56 125
An investor would pay the following
expenses on the same investment,
assuming the same annual return and no
redemption:
Class A $62 $88
$116 $196
Class B 21 63
109 216
Class C 21 63
109 235
Class Y 10 32
56 125
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* Ten-year figures assume conversion of Class B shares to
Class A shares at
the end of the eighth year following the date of
purchase.
The example also provides a means for the investor to
compare expense
levels of funds with different fee structures over varying
investment periods.
To facilitate such comparison, all funds are required to
utilize a 5.00% annual
return assumption. However, the Fund's actual return will
vary and may result in
an actual return greater or less than 5.00%. This example
should not be
considered a representation of past or future expenses and
actual expenses may
be greater or less than those shown.
9
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Financial Highlights
- ------------------------------------------------------------
- --------------------
The following information for the fiscal year ended December
31, 1995, has been
audited by KPMG Peat Marwick LLP, independent auditors,
whose report thereon
appears in the Growth Fund's Annual Report dated December
31, 1995. The
following information for the fiscal years ended December
31, 1986 through
December 31, 1994 has been audited by Coopers & Lybrand
L.L.P. The information
set out below should be read in conjunction with the
financial statements and
related notes that also appear in the Fund's Annual Report,
which is
incorporated by reference into the Statement of Additional
Information. No
information is presented for Class Y shares, because no
Class Y shares were
outstanding for the periods shown.
For a Class A share of beneficial interest outstanding
throughout each year:
<TABLE>
<CAPTION>
1995 1994(1)
1993(1) 1992 1991 1990 1989+ 1988+
1987+ 1986+
============================================================
============================================================
============
<S> <C> <C>
<C> <C> <C> <C> <C> <C> <C>
<C>
Net Asset Value, Beginning of Year $ 11.91 $ 12.86 $
9.63 $ 8.68 $ 7.36 $ 8.78 $ 7.08 $ 6.10 $ 11.05
$ 12.64
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Income (Loss) From Operations:
Net investment income (loss) (0.03) (0.04)
(0.04) 0.05 0.06 0.14 0.17 0.12 0.31
0.26
Net realized and unrealized (loss) 1.04 (0.78)
3.44 1.63 1.47 (1.32) 2.51 0.96 (0.61)
1.86
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Total Income (Loss) From Operations 1.01 (0.82)
3.40 1.68 1.53 (1.18) 2.68 1.08 (0.30)
2.12
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Less Distribution From:
Net investment income -- (0.13)
- -- (0.02) (0.06) (0.14) (0.16) (0.10) (0.69)
(0.32)
Net realized gains (0.21) --
(0.17) (0.71) (0.14) (0.10) (0.82) --
(3.96) (3.39)
Capital -- --
- -- -- (0.01) -- -- -- --
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Total Distributions (0.21) (0.13)
(0.17) (0.73) (0.21) (0.24) (0.98) (0.10)
(4.65) (3.71)
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Net Asset Value, End of Year $ 12.71 $ 11.91 $
12.86 $ 9.63 $ 8.68 $ 7.36 $ 8.78 $ 7.08 $ 6.10
$ 11.05
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Total Return++ 8.54% (6.37)%
35.27% 19.41% 20.94% (13.46)% 37.85% 17.69%
(3.53)% 18.84%
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Net Assets, End of Period (000s) $71,059 $83,918
$77,564 $36,947 $36,643 $33,130 $40,595 $30,253
$30,160 $38,840
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Ratios to Average Net Assets:
Expenses 1.27% 1.24%
1.34% 1.31% 1.19% 1.20% 1.17% 1.21% 1.06%
1.08%
Net investment income (loss) (0.23) (0.29)
(0.32) 0.55 0.67 1.77 1.93 1.72 2.63
2.14
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------
Portfolio Turnover Rate .27% .19%
.25% .64% 1.11% 1.07% .94% .49% 115%
.71%
============================================================
============================================================
============
Average commissions paid on
equity security transactions(2) $ 0.05 --
- -- -- -- -- -- -- --
- --
============================================================
============================================================
============
</TABLE>
(1) Per share amounts have been calculated using the
monthly average shares
method, which more appropriately presents per share
data for this period
since use of the undistributed net investment income
method does not accord
with results of operations.
(2) New SEC disclosure guidelines require that average
commissions per share be
calculated and presented for the current year only.
+ Per share data and the number of shares outstanding
reflect a 7-for-1 stock
dividend issued on August 7, 1989 to shareholders of
record at the close of
business on August 4, 1989.
++ Total return represents the aggregate total return for
the period indicated
and does not reflect any applicable sales charges.
10
11
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Financial Highlights (continued)
- ------------------------------------------------------------
- --------------------
For a Class B share of beneficial interest outstanding
throughout each year:
<TABLE>
<CAPTION>
1995
1994(1) 1993(1) 1992(2)
============================================================
================================
<S> <C> <C>
<C> <C>
Net Asset Value, Beginning of Year $ 11.82 $
12.77 $ 9.63 $ 9.33
- ------------------------------------------------------------
- --------------------------------
Income (Loss) From Operations:
Net investment loss (0.12)
(0.14) (0.14) (0.00)*
Net realized and unrealized gain (loss) 1.02
(0.78) 3.45 1.02
- ------------------------------------------------------------
- --------------------------------
Total Income (Loss) From Operations 0.90
(0.92) 3.31 1.02
- ------------------------------------------------------------
- --------------------------------
Less Distribution From:
Net investment income --
(0.03) -- (0.01)
Net realized gains (0.21) -
- - (0.17) (0.71)
- ------------------------------------------------------------
- --------------------------------
Total Distributions (0.21)
(0.03) (0.17) (0.72)
- ------------------------------------------------------------
- --------------------------------
Net Asset Value, End of Year $ 12.51 $
11.82 $ 12.77 $ 9.63
- ------------------------------------------------------------
- --------------------------------
Total Return++ 7.67%
(7.17)% 34.34% 10.98%##
- ------------------------------------------------------------
- --------------------------------
Net Assets, End of Year (000s) $155,222
$185,980 $156,781 $ 586
- ------------------------------------------------------------
- --------------------------------
Ratios to Average Net Assets:
Expenses 2.02%
2.07% 2.18% 2.21%+
Net investment loss (0.98)
(1.11) (1.16) (0.38)+
- ------------------------------------------------------------
- --------------------------------
Portfolio Turnover Rate 27%
19% 25% 64%
============================================================
================================
Average commissions paid on
equity security transactions(3) $ 0.05 -
- - -- --
============================================================
================================
</TABLE>
(1) Per share amounts have been calculated using the
monthly average shares
method, which more appropriately presents per share
data for this period
since use of the undistributed net investment income
method does not accord
with results of operations.
(2) For the period from November 6, 1992 (inception date)
to January 31, 1992.
(3) New SEC disclosure guidelines require that average
commissions per share be
calculated and presented for the current year only.
* Amount represents less than $0.01 per share.
## Total return is not annualized, as it may not be
representative of the
total return for the year.
+ Annualized.
++ Total return represents the aggregate total return for
the period indicated
and does not reflect any applicable sales charges.
12
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Financial Highlights (continued)
- ------------------------------------------------------------
- --------------------
For a Class C share of beneficial interest outstanding
throughout each year:
1995 1994(1)(2)
============================================================
===================
Net Asset Value, Beginning of Year
$12.00 $12.70
- ------------------------------------------------------------
- -------------------
Income (Loss) From Operations:
Net investment income
(0.13) (0.01)
Net realized and unrealized gain (loss)
1.05 (0.66)
- ------------------------------------------------------------
- -------------------
Total Income (Loss) From Operations
0.92 (0.67)
- ------------------------------------------------------------
- -------------------
Less Distribution From:
Net investment income -
- - (0.03)
Net realized gains
(0.21) --
- ------------------------------------------------------------
- -------------------
Total Distributions
(0.21) (0.03)
- ------------------------------------------------------------
- -------------------
Net Asset Value, End of Year
$12.71 $12.00
- ------------------------------------------------------------
- -------------------
Total Return++
7.73% (5.24)%##
- ------------------------------------------------------------
- -------------------
Net Assets, End of Year (000s) $
955 $ 151
- ------------------------------------------------------------
- -------------------
Ratios to Average Net Assets:
Expenses
2.02% 2.08%+
Net investment income
(0.98) (1.13)
- ------------------------------------------------------------
- -------------------
Portfolio Turnover Rate
27% 19%
============================================================
===================
Average commissions paid on
equity security transactions(3)
$0.05 --
============================================================
===================
(1) Per share amounts have been calculated using the
monthly average shares
method, which more appropriately presents per share
data for this period
since use of the undistributed net investment income
method does not accord
with results of operations.
(2) For the period from November 7, 1994 (inception date)
to December 31, 1994.
(3) New SEC disclosure guidelines require that average
commissions per share be
calculated and presented for the current year only.
* Amount represents less than $0.01 per share.
## Total return is not annualized, as it may not be
representative of the
total return for the year.
+ Annualized.
++ Total return represents the aggregate total return for
the period
indicated and does not reflect any applicable sales
charges.
13
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Investment Objective and Management Policies
- ------------------------------------------------------------
- --------------------
The investment objective of the Growth Fund is capital
appreciation, with
income as a secondary consideration. This investment
objective may not be
changed without the approval of the holders of a majority of
the Growth Fund's
outstanding shares. There is no assurance that the Growth
Fund's investment
objective will be achieved.
The Growth Fund seeks to achieve its investment
objective primarily through
investments in common stocks and other securities of
companies engaged in the
telecommunications industry. The Growth Fund defines the
telecommunications
industry as including companies engaged in the
communication, display,
reproduction, storage and retrieval of information,
generally in one or more of
the following forms: voice, data or print facsimile. Under
normal market
conditions, at least 65% of the value of the total assets of
the Growth Fund
will be invested in securities of issuers engaged in the
telecommunications
industry. When SBSA and/or TBCAM believes that market
conditions warrant
adoption of a defensive investment posture, the Growth Fund
temporarily may have
less than 65% of the value of its total assets invested in
that industry.
Examples of companies in the telecommunications industry in
which the Growth
Fund may invest include issuers engaged in providing the
following products and
services:
Communications equipment and services, including
equipment and services for
both data and voice transmission.
Electronic components and equipment, including
semiconductors and other
electronic components used in the manufacture of
communications equipment, as
well as electronic testing instruments, and companies
providing component parts
and services to companies engaged in these activities.
Broadcasting, including television and radio
broadcasting and cable
television.
Computer equipment, including mainframe computers,
minicomputers,
microcomputers, peripheral devices and software.
Mobile communications and cellular radio/paging.
Electronic mail.
Local networking and linkage of word and data
processing systems.
Publishing and information systems, including news
production and
dissemination and data base information services.
Videotext and teletext.
This list is illustrative only as the
telecommunications industry is
changing rapidly due to technological and other
developments.
14
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Investment Objective and Management Policies (continued)
- ------------------------------------------------------------
- --------------------
Securities for the Growth Fund are selected primarily
on the basis of their
potential for capital appreciation and, as a result, the
Growth Fund invests
principally in common stocks. The Growth Fund also may
invest in other types of
securities, including convertible bonds, convertible
preferred stocks, warrants,
preferred stocks and debt securities, when SBSA and/or TBCAM
determines that
their purchase would further the Growth Fund's investment
objective.
The Trust is classified as a non-diversified investment
company under the
1940 Act, which means that the Growth Fund is not limited by
the 1940 Act in the
proportion of its assets that it may invest in the
obligations of a single
issuer. The Growth Fund intends to conduct its operations,
however, so as to
qualify as a "regulated investment company" for purposes of
the Code, which will
relieve the Growth Fund of any liability for Federal income
tax to the extent
its earnings are distributed to shareholders. To so qualify,
among other
requirements, the Growth Fund will limit its investments so
that, at the close
of each quarter of the taxable year, (a) not more than 25%
of the market value
of the Growth Fund's total assets will be invested in the
securities of a single
issuer and (b) with respect to 50% of the market value of
its total assets, not
more than 5% of the market value of its total assets will be
invested in the
securities of a single issuer and the Growth Fund will not
own more than 10% of
the outstanding voting securities of a single issuer. These
25% and 5% limits
will not be deemed to be exceeded to the extent that any
excess results from
fluctuations in market value or sales of other securities,
as opposed to
purchases of securities. The Growth Fund's assumption of
large positions in the
securities of a small number of issuers may cause its share
price to fluctuate
to a greater extent than that of a diversified investment
company as a result of
changes in the financial condition or in the market's
assessment of the issuers.
Further information about the Growth Fund's investment
policies, including
a list of those restrictions on the Growth Fund's investment
activities that
cannot be changed without shareholder approval, appears in
the Statement of
Additional Information.
INVESTMENT POLICIES AND STRATEGIES
Foreign Securities. The Growth Fund may invest up to
10% of its net assets
in the securities of foreign issuers. There are certain
risks involved in
investing in foreign securities, including those resulting
from fluctuations in
currency exchange rates, revaluation of currencies, future
political and
economic developments and the possible imposition of
currency exchange blockages
or other foreign governmental laws or restrictions, reduced
availability of
public information concerning issuers
15
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Investment Objective and Management Policies (continued)
- ------------------------------------------------------------
- --------------------
and the fact that foreign companies are not generally
subject to uniform
accounting, auditing and financial reporting standards or to
other regulatory
practices and requirements comparable to those applicable to
domestic companies.
Moreover, securities of many foreign companies may be less
liquid and their
prices more volatile than those of securities of comparable
domestic companies.
In addition, with respect to certain foreign countries,
there is the possibility
of expropriation, confiscatory taxation and limitations on
the use or removal of
funds or other assets of the Growth Fund, including the
withholding of
dividends.
Lending of Portfolio Securities. From time to time, the
Growth Fund may
lend its portfolio securities to brokers, dealers and other
financial
organizations. Such loans will not exceed 33 1/3% of the
Growth Fund's total
assets, taken at value. Loans of portfolio securities by the
Growth Fund will be
collateralized by cash, letters of credit or obligations of
the United States
government, its agencies and instrumentalities ("U.S.
government securities")
which are maintained at all times in a segregated account
with the Growth Fund's
custodian in an amount at least equal to the current market
value of the loaned
securities. By lending its portfolio securities, the Growth
Fund will seek to
generate income by continuing to receive interest on the
loaned securities, by
investing the cash collateral in short-term instruments or
by obtaining yield in
the form of interest paid by the borrower when U.S.
government securities are
used as collateral. The risks in lending portfolio
securities, as with other
extensions of secured credit, consist of possible delays in
receiving additional
collateral or in the recovery of the securities or possible
loss of rights in
the collateral should the borrower fail financially. Loans
will be made to firms
deemed by SBSA and/or TBCAM to be of good standing and will
not be made unless,
in the judgment of SBSA and/or TBCAM, the consideration to
be earned from such
loans would justify the risk.
Borrowing. The Growth Fund is authorized to borrow
money in an amount up to
10% of its total assets (including the amount borrowed)
valued at the market
less liabilities (not including the amount borrowed) for
extraordinary or
emergency purposes (such as meeting unanticipated
redemptions). Whenever
borrowings exceed 5% of the value of the Growth Fund's total
assets, the Growth
Fund will not purchase securities for investment.
Short-Term Investments. The Growth Fund may hold a
limited amount of money
market instruments (no more than 35% of the value of its
assets) under normal
market conditions but, when market conditions dictate a
defensive investment
strategy, the Growth Fund may invest without limitation
(except for applicable
Investment Restrictions as described in the Statement of
Additional Information)
in short-term money market instruments, such as: U.S.
government
16
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Investment Objective and Management Policies (continued)
- ------------------------------------------------------------
- --------------------
securities; certificates of deposit, time deposits and
bankers' acceptances
issued by domestic banks (including their branches located
outside the United
States and subsidiaries located in Canada), domestic
branches of foreign banks,
savings and loan associations and similar institutions; high
grade commercial
paper; and repurchase agreements with respect to such
instruments.
Repurchase Agreements. The Growth Fund may enter into
repurchase agreements
with banks which are the issuers of instruments acceptable
for purchase by the
Fund and with certain dealers on the Federal Reserve Bank of
New York's list of
reporting dealers. Under the terms of a typical repurchase
agreement, the Growth
Fund would acquire an underlying debt obligation for a
relatively short period
(usually not more than one week) subject to an obligation of
the seller to
repurchase, and the Growth Fund to resell, the obligation at
an agreed-upon
price and time, thereby determining the yield during the
Growth Fund's holding
period. This arrangement results in a fixed rate of return
that is not subject
to market fluctuations during the Growth Fund's holding
period. The value of the
underlying securities at all times will be at least equal to
the total amount of
the repurchase obligation, including interest. Repurchase
agreements could
involve certain risks in the event of default or insolvency
of the other party,
including possible delays or restrictions upon the Growth
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 Growth 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. SBSA and/or TBCAM, acting under the
supervision of the
Trust's Board of Trustees, reviews on an ongoing basis the
value of the
collateral and the creditworthiness of those banks and
dealers with which the
Growth Fund enters into repurchase agreements to evaluate
potential risks.
Covered Call Options. In order to earn additional
income, and as a means of
seeking to partially protect its assets against market
declines, the Growth Fund
may, to a limited extent, write covered call option
contracts on certain
securities and purchase call option contracts for the
purpose of terminating its
outstanding obligations with respect to securities upon
which call option
contracts have been written ("closing purchase
transactions"). Only call option
contracts that are traded on a domestic exchange will be
written. The Growth
Fund's ability to engage in closing purchase transactions
depends on the
existence of a liquid secondary market; for some options, no
such secondary
market may exist or the market may cease to exist.
The Growth Fund may write option contracts on its
securities up to an
amount not in excess of 20% of the value of its net assets
at the time that such
options are written. The Growth Fund may not sell (uncover)
the securities
against which an
17
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Investment Objective and Management Policies (continued)
- ------------------------------------------------------------
- --------------------
option contract has been written until after the option
period has expired, the
option contract has been exercised or a closing purchase
transaction has been
executed. Successful use of options by the Growth Fund will
depend on the
ability of SBSA and/or TBCAM to correctly predict movements
in the prices of the
securities underlying the options.
Portfolio Transactions. Portfolio securities
transactions on behalf of the
Growth Fund will be executed by a number of brokers and
dealers, including Smith
Barney and certain of its affiliated brokers that are
selected by SBSA and/or
TBCAM. The Growth Fund may use Smith Barney or a broker
affiliated with Smith
Barney in connection with a purchase or sale of securities
when SBSA and/or
TBCAM believes that such broker's charge for the transaction
does not exceed
usual and customary levels.
CERTAIN RISK CONSIDERATIONS
Shareholders should be aware that the Growth Fund
concentrates its assets
in the telecommunications industry and, as a result, the
Growth Fund should not
be considered as a complete investment program. Many of the
companies
represented in the Fund are engaged in fierce competition
for market share.
Although telephone companies usually pay an above average
dividend, the Fund's
investment decisions are primarily based on growth potential
and not on income.
Moreover, the investment flexibility of the Growth Fund may
be restricted by the
necessity of satisfying certain diversification requirements
in order to
maintain the qualification of the Growth Fund as a regulated
investment company
within the meaning of the Code. See "Dividends,
Distributions and Taxes." The
Growth Fund's assumption of large positions in the
securities of a small number
of issuers may cause its share price to fluctuate to a
greater extent than that
of a diversified investment company as a result of changes
in the financial
condition or in the market's assessment of the issuers.
- ------------------------------------------------------------
- --------------------
Valuation of Shares
- ------------------------------------------------------------
- --------------------
The Growth Fund's net asset value per share is
determined as of the close
of regular trading on the NYSE on each day that the NYSE is
open, by dividing
the value of the Growth Fund's net assets attributable to
each Class by the
total number of shares of the Class outstanding.
18
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Valuation of Shares (continued)
- ------------------------------------------------------------
- --------------------
Generally, the Growth Fund's investments are valued at
market value, or in
the absence thereof with respect to any securities, at fair
value as determined
by SBSA and/or TBCAM after consultation with or under the
direction of an
independent pricing service approved by the Trust's Board of
Trustees.
Short-term investments that mature in 60 days or less are
valued at amortized
cost whenever the Trust's Board of Trustees determines that
amortized cost
reflects fair value for those investments. Amortized cost
involves valuing an
instrument at its original cost to the Growth Fund 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.
Further information regarding the Growth Fund's valuation
policies is contained
in the Statement of Additional Information.
- ------------------------------------------------------------
- --------------------
Dividends, Distributions and Taxes
- ------------------------------------------------------------
- --------------------
The Growth Fund's policy is to distribute its net
investment income (that
is, its income other than its net realized capital gains)
and net realized
capital gains, if any, once a year, normally at the end of
the year in which
earned or at the beginning of the next year.
If a shareholder does not otherwise instruct, dividends
and capital gains
distributions will be reinvested automatically in additional
shares of the same
Class at net asset value, subject to no sales charge or
CDSC. In order to avoid
the application of a 4% nondeductible excise tax on certain
undistributed
amounts of ordinary income and capital gains, the Growth
Fund may make an
additional distribution shortly before December 31 in each
year of any
undistributed ordinary income or capital gains and expects
to pay any other
dividends and distributions necessary to avoid the
application of this tax.
The per share dividends on Class B and Class C shares
of the Growth Fund
may be lower than the per share dividends on Class A and
Class Y shares
principally as a result of the service fee applicable to
Class A shares.
Distributions of capital gains, if any, will be in the same
amount for Class A,
Class B, Class C and Class Y shares.
TAXES
The Growth Fund will be treated as a separate taxpayer
with the result
that, for Federal tax purposes, the amount of investment
income and capital
gains earned will be determined on a fund-by-fund basis,
rather than on a
Trust-wide basis. The Growth Fund has qualified and intends
to continue to
qualify as a "regulated investment
19
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Dividends, Distributions and Taxes (continued)
- ------------------------------------------------------------
- --------------------
company" under the Code. In any taxable year in which the
Growth Fund so
qualifies and distributes at least 90% of its investment
company taxable income
(which includes, among other items, dividends, interest and
the excess of any
net short-term capital gains over net long-term capital
losses), the Growth Fund
(but not its shareholders) generally will be relieved of
Federal income tax on
the investment company taxable income and net realized
capital gains (the excess
of net long-term capital gains over net short-term capital
losses), if any,
distributed to shareholders. In order to qualify as a
regulated investment
company, the Growth Fund will be required to meet various
Code requirements.
Distributions of any investment company taxable income
are taxable to
shareholders as ordinary income. Distributions of any net
capital gains
designated by the Growth Fund as capital gains dividends are
taxable to
shareholders as long-term capital gains regardless of the
length of time a
shareholder may have held shares of the Growth Fund.
Generally, dividends of investment income (but not net
capital gain) from
the Growth Fund will qualify for the Federal dividends-
received deduction for
corporate shareholders. Each shareholder will receive a
statement annually from
the Growth Fund, which will set forth separately the
aggregate dollar amount of
dividends and capital gains distributed to the shareholder
by the Growth Fund
with respect to the prior calendar year and the amount of
the distributions that
qualify for the dividends-received deduction.
Upon the disposition of shares of the Growth Fund
(whether by redemption,
sale or exchange), a shareholder generally will realize a
taxable gain or loss.
Such gain or loss generally will be a capital gain or loss
if the shares are
capital assets in the shareholder's hands, and generally
will be long-term or
short-term depending upon the shareholder's holding period
for the shares. Any
loss realized by a shareholder for six months or less will
be treated as
long-term capital loss to the extent of any distributions of
capital gain
dividends received by the shareholder with respect to such
shares.
Shareholders will be notified annually about the
amounts of dividends and
distributions, including the amounts (if any) for that year
which have been
designated as capital gain dividends. Dividends and
distributions and gains
realized upon a disposition of Growth Fund shares may also
be subject to state,
local or foreign taxes depending on each shareholder's
particular situation.
Dividends consisting of interest from U.S. government
securities may be exempt
from all state and local income taxes. Shareholders should
consult their tax
advisors for specific information on the tax consequences of
particular types of
distributions.
20
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Purchase of Shares
- ------------------------------------------------------------
- --------------------
GENERAL
The Growth Fund offers four Classes of shares. Class A
shares are sold to
investors with an initial sales charge and Class B and Class
C shares are sold
without an initial sales charge but are subject to a CDSC
payable upon certain
redemptions. Class Y shares are sold without an initial
sales charge or a CDSC
and are available only to investors investing a minimum of
$5,000,000. See
"Prospectus Summary -- Alternative Purchase Arrangements"
for a discussion of
factors to consider in selecting which Class of shares to
purchase.
Purchases of Growth Fund shares must be made through a
brokerage account
maintained with Smith Barney, an Introducing Broker or an
investment dealer in
the selling group, except for investors purchasing shares of
the Growth Fund
through a qualified retirement plan who may do so directly
through FDISG. When
purchasing shares of the Growth Fund, investors must specify
whether the
purchase is for Class A, Class B, Class C or Class Y shares.
No maintenance fee
will be charged in connection with a brokerage account
through which an investor
purchases or holds shares.
Investors in Class A, Class B and Class C shares may
open an account by
making an initial investment of at least $1,000, or $250 for
an IRA or a
Self-Employed Retirement Plan in the Fund. Investors in
Class Y shares may open
an account by making an initial investment of $5,000,000.
Subsequent investments
of at least $50 may be made for all Classes. For
participants in retirement
plans qualified under Section 403(b)(7) or Section 401(a) of
the Code, the
minimum initial investment requirement for Class A, Class B
and Class C shares
and the subsequent investment requirement for all Classes in
the Fund is $25.
For the Fund's Systematic Investment Plan, the minimum
initial investment
requirement for Class A, Class B and Class C shares and the
subsequent
investment requirement for all Classes is $50. There are no
minimum investment
requirements for Class A shares for employees of Travelers
and its subsidiaries,
including Smith Barney, Trustees of the Trust 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 Trust's
transfer agent, FDISG. Share certificates are issued only
upon a shareholder's
written request to FDISG.
Purchase orders received by Smith Barney prior to the
close of regular
trading on the NYSE, on any day the Growth Fund calculates
its net asset value,
are priced according to the net asset value determined on
that day. Orders
received by dealers or Introducing Brokers prior to the
close of regular trading
on the NYSE on any day
21
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Purchase of Shares (continued)
- ------------------------------------------------------------
- --------------------
the Growth Fund calculates its net asset value are priced
according to the net
asset value determined on that day, provided the order is
received by the Fund
or Smith Barney prior to Smith Barney's close of business
(the "trade date").
Payment for Growth Fund shares is due on the third business
day after the trade
date.
SYSTEMATIC INVESTMENT PLAN
Shareholders may make additions to their accounts at
any time by purchasing
shares through a service known as the Systematic Investment
Plan. Under the
Systematic Investment Plan, Smith Barney or FDISG is
authorized through
preauthorized transfers of $50 or more to charge the regular
bank account or
other financial institution indicated by the shareholder on
a monthly or
quarterly basis to provide systematic additions to the
shareholder's Growth Fund
account. A shareholder who has insufficient funds to
complete the transfer will
be charged a fee of up to $25 by Smith Barney or FDISG. The
Systematic
Investment Plan also authorizes Smith Barney to apply cash
held in the
shareholder's Smith Barney brokerage account or redeem the
shareholder's shares
of a Smith Barney money market fund to make additions to the
account. Additional
information is available from the Growth Fund or a Smith
Barney Financial
Consultant.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The sales charges applicable to purchases of Class A
shares of the Growth
Fund are as follows:
Sales Charge as Sales Charge as
Dealers
% of % of Amount
Reallowance as
Amount of Investment Offering Price Invested %
of Offering Price
- ------------------------------------------------------------
- -------------------
Less than $25,000 5.00C 5.26%
4.50%
$25,000-$49,999 4.00% 4.17%
3.60%
$50,000-$99,999 3.50% 3.63%
3.15%
$100,000-$249,999 3.00% 3.09%
2.70%
$250,000-$499,999 2.00% 2.04%
1.80%
$500,000 and more * *
*
============================================================
===================
* Purchases of Class A shares, which when combined with
current holdings of
Class A shares offered with a sales charge equal or
exceed $500,000 in the
aggregate, will be made at net asset value without any
initial sales
charge, but will be subject to a CDSC of 1.00% on
redemptions made within
12 months of purchase. The CDSC on Class A shares is
payable to Smith
Barney, which compensates Smith Barney Financial
Consultants and other
dealers whose clients make purchases of $500,000 or
more. The CDSC is
waived in the same circumstances in which the CDSC
applicable to Class B
and Class C shares is waived. See "Deferred Sales
Charge Alternatives" and
"Waivers of CDSC."
Members of the selling group may receive up to 90% of
the sales charge and
may be deemed to be underwriters of the Growth Fund as
defined in the Securities
Act of 1933, as amended.
22
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Purchase of Shares (continued)
- ------------------------------------------------------------
- --------------------
The reduced sales charges shown above apply to the
aggregate of purchases
of Class A shares of the Growth Fund made at one time by
"any person," which
includes an individual, his or her spouse and children, or a
trustee or other
fiduciary of a single trust estate or single fiduciary
account. The reduced
sales charge minimums may also be met by aggregating the
purchase with the net
asset value of all Class A shares held in funds sponsored by
Smith Barney that
are offered with a sales charge listed under "Exchange
Privilege."
INITIAL SALES CHARGE WAIVERS
Purchases of Class A shares may be made at net asset
value without a sales
charge in the following circumstances: (a) sales to (i)
Directors, Trustees and
employees of Travelers and its subsidiaries and any of the
Smith Barney Mutual
Funds; the immediate families of such persons; and to a
pension, profit-sharing
or other benefit plan for such persons and (ii) employees of
members of the
National Association of Securities Dealers, Inc. provided
such sales are made
upon the assurance of the purchaser that the purchase is
made for investment
purposes and that the securities will not be resold except
through redemption or
repurchase; (b) offers of Class A shares to any other
investment company in
connection with the combination of such company with the
Growth Fund by merger,
acquisition of assets or otherwise; (c) purchases of Class A
shares by any
client of a newly employed Smith Barney Financial Consultant
(for a period up to
90 days from the commencement of the Financial Consultant's
employment with
Smith Barney), on the condition that the purchase of Class A
shares is made with
the proceeds of the redemption of shares of a mutual fund
which (i) was
sponsored by the Financial Consultant's prior employer, (ii)
was sold to the
client by the Financial Consultant and (iii) was subject to
a sales charge; (d)
shareholders who have redeemed Class A shares in the Growth
Fund (or Class A
shares of another fund of the Smith Barney Mutual Funds that
are offered with a
sales charge equal to or greater than the maximum sales
charge of the Growth
Fund) and who wish to reinvest their redemption proceeds in
the Growth Fund,
provided the reinvestment is made within 60 calendar days of
the redemption; and
(e) accounts managed by registered investment advisory
subsidiaries of
Travelers. In order to obtain such discounts, the purchaser
must provide
sufficient information at the time of purchase to permit
verification that the
purchase would qualify for the elimination of the sales
charge.
23
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Purchase of Shares (continued)
- ------------------------------------------------------------
- --------------------
RIGHT OF ACCUMULATION
Class A shares of the Growth Fund may be purchased by
"any person" (as
defined above) at a reduced sales charge or at net asset
value determined by
aggregating the dollar amount of the new purchase and the
total net asset value
of all Class A shares of the Growth Fund and of funds
sponsored by Smith Barney
which are offered with a sales charge listed under "Exchange
Privilege" then
held by such person and applying the sales charge applicable
to such aggregate.
In order to obtain such discount, the purchaser must provide
sufficient
information at the time of purchase to permit verification
that the purchase
qualifies for the reduced sales charge. The right of
accumulation is subject to
modification or discontinuance at any time with respect to
all shares purchased
thereafter.
GROUP PURCHASES
Upon completion of certain automated systems, a reduced
sales charge or
purchase at net asset value will also be available to
employees (and partners)
of the same employer purchasing as a group, provided each
participant makes the
minimum initial investment required. The sales charge
applicable to purchases by
each member of such a group will be determined by the table
set forth under
"Initial Sales Charge Alternative-Class A Shares," and will
be based upon the
aggregate sales of Class A shares of Smith Barney Mutual
Funds offered with a
sales charge to, and share holdings of, all members of the
group. To be eligible
for such reduced sales charges or to purchase at net asset
value, all purchases
must be pursuant to an employer- or partnership- sanctioned
plan meeting certain
requirements. One such requirement is that the plan must be
open to specified
partners or employees of the employer and its subsidiaries,
if any. Such plan
may, but is not required to, provide for payroll deductions,
IRAs or investments
pursuant to retirement plans under Sections 401 or 408 of
the Code. Smith Barney
may also offer a reduced sales charge or net asset value
purchase for
aggregating related fiduciary accounts under such conditions
that Smith Barney
will realize economies of sales efforts and sales related
expenses. An
individual who is a member of a qualified group may also
purchase Class A shares
at the reduced sales charge applicable to the group as a
whole. The sales charge
is based upon the aggregate dollar value of Class A shares
offered with a sales
charge that have been previously purchased and are still
owned by the group,
plus the amount of the current purchase. A "qualified group"
is one which (a)
has been in existence for more than six months, (b) has a
purpose other than
acquiring Growth Fund shares at a discount and (c) satisfies
uniform criteria
which enable Smith Barney to realize economies of scale in
its costs of
distributing shares. A qualified group must have more than
10 members, must be
available to arrange for group meetings between
24
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Purchase of Shares (continued)
- ------------------------------------------------------------
- --------------------
representatives of the Growth Fund and the members, and must
agree to include
sales and other materials related to the Growth Fund in its
publications and
mailings to members at no cost to Smith Barney. In order to
obtain such reduced
sales charge or to purchase at net asset value, the
purchaser must provide
sufficient information at the time of purchase to permit
verification that the
purchase qualifies for the reduced sales charge. Approval of
group purchase
reduced sales charge plans is subject to the discretion of
Smith Barney.
LETTER OF INTENT
Class A Shares. A Letter of Intent for amounts of
$50,000 or more provides
an opportunity for an investor to obtain a reduced sales
charge by aggregating
investments over a 13 month period, provided that the
investor refers to such
Letter when placing orders. For purposes of a Letter of
Intent, the "Amount of
Investment" as referred to in the preceding sales charge
table includes
purchases of all Class A shares of the Growth Fund and other
funds of the Smith
Barney Mutual Funds offered with a sales charge over the 13
month period based
on the total amount of intended purchases plus the value of
all Class A shares
previously purchased and still owned. An alternative is to
compute the 13 month
period starting up to 90 days before the date of execution
of a Letter of
Intent. Each investment made during the period receives the
reduced sales charge
applicable to the total amount of the investment goal. If
the goal is not
achieved within the period, the investor must pay the
difference between the
sales charges applicable to the purchases made and the
charges previously paid,
or an appropriate number of escrowed shares will be
redeemed. Please contact a
Smith Barney Financial Consultant or FDISG to obtain a
Letter of Intent
application.
Class Y Shares. A Letter of Intent may also 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 $1,000,000 in Class
Y shares of the
Growth Fund and agree to purchase a total of $5,000,000 of
Class Y shares of the
Growth Fund within six months from the date of the Letter.
If a total investment
of $5,000,000 is not made within the six-month period, all
Class Y shares
purchased to date 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 Growth Fund's Class A shares, which may include a
CDSC of 1.00%. Please
contact a Smith Barney Financial Consultant or FDISG for
further information.
25
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Purchase of Shares (continued)
- ------------------------------------------------------------
- --------------------
DEFERRED SALES CHARGE ALTERNATIVES
"CDSC Shares" are sold at net asset value next
determined without an
initial sales charge so that the full amount of an
investor's purchase payment
may be immediately invested in the Growth Fund. A CDSC,
however, may be imposed
on certain redemptions of these shares. "CDSC Shares" are:
(a) Class B shares;
(b) Class C shares; and (c) Class A shares, which when
combined with Class A
shares offered with a sales charge currently held by an
investor, equal or
exceed $500,000 in the aggregate. Any applicable CDSC will
be assessed on an
amount equal to the lesser of the cost of the shares being
redeemed or their net
asset value at the time of redemption. CDSC Shares that are
redeemed will not be
subject to a CDSC to the extent that the value of such
shares represents: (a)
capital appreciation of Growth Fund assets; (b) reinvestment
of dividends or
capital gains distributions; (c) with respect to Class B
shares, shares redeemed
more than five years after their purchase; or (d) with
respect to Class C shares
and Class A shares that are CDSC Shares, shares redeemed
more than 12 months
after their purchase. Class C shares and Class A shares that
are CDSC Shares are
subject to a 1.00% CDSC if redeemed within 12 months of
purchase. In
circumstances in which the CDSC is imposed on Class B
shares, the amount of the
charge will depend on the number of years since the
shareholder made the
purchase payment from which the amount is being redeemed.
Solely for purposes of
determining the number of years since a purchase payment,
all purchase payments
made during a month will be aggregated and deemed to have
been made on the last
day of the preceding Smith Barney statement month. The
following table sets
forth the rates of the charge for redemptions of Class B
shares by shareholders,
except in the case of purchases by Participating Plans, as
described below. See
"Purchase of Shares -- Smith Barney 401(k) Program."
Year Since Purchase
Payment was Made
CDSC
- ------------------------------------------------------------
- --------------------
First
5.00%
Second
4.00%
Third
3.00%
Fourth
2.00%
Fifth
1.00%
Sixth
0.00%
Seventh
0.00%
Eighth
0.00%
============================================================
====================
Class B shares will convert automatically to Class A
shares eight years
after the date on which they were purchased and thereafter
will no longer be
subject to any distribution fee. There also will be
converted at that time such
proportion of Class B Dividend Shares owned by the
shareholder as the total
number of his or her
26
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Purchase of Shares (continued)
- ------------------------------------------------------------
- --------------------
Class B shares converting at the time bears to the total
number of Class B
shares (other than Class B Dividend Shares) owned by the
shareholder.
Shareholders who held Class B shares of Smith Barney
Shearson Short-Term World
Income Fund (the "Short-Term World Income Fund") on July 15,
1994 and who
subsequently exchanged those shares for Class B shares of
the Growth Fund will
be offered the opportunity to exchange all such Class B
shares for Class A
shares of the Growth Fund four years after the date on which
those shares were
deemed to have been purchased. Holders of such Class B
shares will be notified
of the pending exchange in writing approximately 30 days
before the fourth
anniversary of the purchase date and, unless the exchange
has been rejected in
writing, the exchange will occur on or about the fourth
anniversary date. See
"Prospectus Summary -- Alternative Purchase Arrangements --
Class B Shares
Conversion Feature."
The length of time that CDSC Shares acquired through an
exchange have been
held will be calculated from the date that the shares
exchanged were initially
acquired in one of the other applicable Smith Barney Mutual
Funds, and Growth
Fund shares being redeemed will be considered to represent,
as applicable,
capital appreciation or dividend and capital gains
distribution reinvestments in
such other funds. For Federal income tax purposes, the
amount of the CDSC will
reduce the gain or increase the loss, as the case may be, on
the amount realized
on redemption. The amount of any CDSC will be paid to Smith
Barney.
To provide an example, assume an investor purchased 100
Class B shares at
$10 per share for a cost of $1,000. Subsequently, the
investor acquired 5
additional shares through dividend reinvestment. During the
fifteenth month
after the purchase, the investor decided to redeem $500 of
his or her
investment. Assuming at the time of the redemption the net
asset value had
appreciated to $12 per share, the value of the investor's
shares would be $1,260
(105 shares at $12 per share). The CDSC would not be applied
to the amount which
represents appreciation ($200) and the value of the
reinvested dividend shares
($60). Therefore, $240 of the $500 redemption proceeds ($500
minus $260) would
be charged at a rate of 4.00% (the applicable rate for Class
B shares) for a
total deferred sales charge of $9.60.
WAIVERS OF CDSC
The CDSC will be waived on: (a) exchanges (see
"Exchange Privilege"); (b)
automatic cash withdrawals in amounts equal to or less than
1.00% per month of
the value of the shareholder's shares at the time the
withdrawal plan commences
(see below) (provided, however, that automatic cash
withdrawals in amounts equal
to or less than 2.00% per month of the value of the
shareholder's shares will be
permitted for withdrawal plans that were established prior
to November 7, 1994);
27
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Purchase of Shares (continued)
- ------------------------------------------------------------
- --------------------
(c) redemptions of shares within 12 months following the
death or disability of
the shareholder; (d) redemption of shares made in connection
with qualified
distributions from retirement plans or IRAs upon the
attainment of age 59 1/2;
(e) involuntary redemptions; and (f) redemptions of shares
in connection with a
combination of the Growth Fund 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 Smith Barney in
the case of shareholders who are also Smith Barney clients
or by FDISG in the
case of all other shareholders) of the shareholder's status
or holdings, as the
case may be.
SMITH BARNEY 401(K) PROGRAM
Investors may be eligible to participate in the Smith
Barney 401(k)
Program, which is generally designed to assist plan sponsors
in the creation and
operation of retirement plans under Section 401(a) of the
Code. To the extent
applicable, the same terms and conditions are offered to all
Participating Plans
in the Smith Barney 401(k) Program.
The Growth Fund offers to Participating Plans Class A,
Class B, Class C and
Class Y shares as investment alternatives under the Smith
Barney 401(k) Program.
Class A, Class B and Class C shares acquired through the
Smith Barney 401(k)
Program are subject to the same service and/or distribution
fees as, but
different sales charge and CDSC schedules than, the Class A,
Class B and Class C
shares acquired by other investors. Similar to those
available to other
investors, Class Y shares acquired through the Smith Barney
401(k) Program are
not subject to any initial sales charge, CDSC or service or
distribution fee.
Once a Participating Plan has made an initial investment in
the Growth Fund, all
of its subsequent investments in the Growth Fund must be in
the same Class of
shares; except as otherwise described below.
Class A Shares. Class A shares of the Growth Fund are
offered without any
initial sales charge to any Participating Plan that
purchases from $500,000 to
$4,999,999 of Class A shares of one or more funds of the
Smith Barney Mutual
Funds. Class A shares acquired through the Smith Barney
401(k) Program after
November 7, 1994 are subject to a CDSC of 1.00% of
redemption proceeds, if the
Participating Plan terminates within four years of the date
the Participating
Plan first enrolled in the Smith Barney 401(k) Program.
28
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Purchase of Shares (continued)
- ------------------------------------------------------------
- --------------------
Class B Shares. Class B shares of the Growth Fund are
offered to any
Participating Plan that purchases less than $250,000 of one
or more funds of the
Smith Barney Mutual Funds. Class B shares acquired through
the Smith Barney
401(k) Program are subject to a CDSC of 3.00% of redemption
proceeds, if the
Participating Plan terminates within eight years of the date
the Participating
Plan first enrolled in the Smith Barney 401(k) Program.
Eight years after the date the Participating Plan
enrolled in the Smith
Barney 401(k) Program, it will be offered the opportunity to
exchange all of its
Class B shares for Class A shares of the Growth Fund. Such
Plans will be
notified of the pending exchange in writing approximately 60
days before the
eighth anniversary of the enrollment date and, unless the
exchange has been
rejected in writing, the exchange will occur on or about the
eighth anniversary
date. Once the exchange has occurred, a Participating Plan
will not be eligible
to acquire additional Class B shares of the Growth Fund but
instead may acquire
Class A shares of the Growth Fund. If the Participating Plan
elects not to
exchange all of its Class B shares at that time, each Class
B share held by the
Participating Plan will have the same conversion feature as
Class B shares held
by other investors. See "Purchase of Shares -- Deferred
Sales Charge
Alternatives."
Class C Shares. Class C shares of the Growth Fund are
offered to any
Participating Plan that purchases from $250,000 to $499,999
of one or more funds
of the Smith Barney Mutual Funds. Class C shares acquired
through the Smith
Barney 401(k) Program after November 7, 1994 will be subject
to a CDSC of 1.00%
of redemption proceeds, if the Participating Plan terminates
within four years
of the date the Participating Plan first enrolled in the
Smith Barney 401(k)
Program. In any year after the date a Participating Plan
enrolled in the Smith
Barney 401(k) Program, if its total Class C holdings equal
at least $500,000 as
of the calendar year-end, the Participating Plan will be
offered the opportunity
to exchange all of its Class C shares for Class A shares of
the Growth Fund.
Such Plans will be notified in writing within 30 days after
the last business
day of the calendar year, and unless the exchange offer has
been rejected in
writing, the exchange will occur on or about the last
business day of the
following March. Once the exchange has occurred, a
Participating Plan will not
be eligible to acquire Class C shares of the Growth Fund but
instead may acquire
Class A shares of the Growth Fund. Class C shares not
converted will continue to
be subject to the distribution fee.
Class Y Shares. Class Y shares of the Growth Fund are
offered without any
service or distribution fee, sales charge or CDSC to any
Participating Plan that
purchases $5,000,000 or more of Class Y shares of one or
more funds of the Smith
Barney Mutual Funds.
29
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Purchase of Shares (continued)
- ------------------------------------------------------------
- --------------------
No CDSC is imposed on redemptions of CDSC Shares to the
extent that the net
asset value of the shares redeemed does not exceed the
current net asset value
of the shares purchased through reinvestment of dividends or
capital gains
distributions, plus (a) with respect to Class A and Class C
shares, the current
net asset value of such shares purchased more than one year
prior to redemption
and, with respect to Class B shares, the current net asset
value of Class B
shares purchased more than eight years prior to the
redemption, plus (b) with
respect to Class A and Class C shares, increases in the net
asset value of the
shareholder's Class A or Class C shares above the purchase
payments made during
the preceding year and, with respect to Class B shares,
increases in the net
asset value of the shareholder's Class B shares above the
purchase payments made
during the preceding eight years. Whether or not the CDSC
applies to a
Participating Plan depends on the number of years since the
Participating Plan
first became enrolled in the Smith Barney 401(k) Program,
unlike the
applicability of the CDSC to other shareholders, which
depends on the number of
years since those shareholders made the purchase payment
from which the amount
is being redeemed.
The CDSC will be waived on redemptions of CDSC Shares
in connection with
lump-sum or other distributions made by a Participating Plan
as a result of: (a)
the retirement of an employee in the Participating Plan; (b)
the termination of
employment of an employee in the Participating Plan; (c) the
death or disability
of an employee in the Participating Plan; (d) the attainment
of age 59 1/2 by
an employee in the Participating Plan; (e) hardship of an
employee in the
Participating Plan to the extent permitted under Section
401(k) of the Code; or
(f) redemptions of shares in connection with a loan made by
the Participating
Plan to an employee. Participating Plans wishing to acquire
shares of the Growth
Fund through the Smith Barney 401(k) Program must purchase
such shares directly
from FDISG. For further information regarding the Smith
Barney 401(k) Program,
investors should contact a Smith Barney Financial
Consultant.
- ------------------------------------------------------------
- --------------------
Exchange Privilege
- ------------------------------------------------------------
- --------------------
Except as otherwise noted below, shares of each Class
may be exchanged at
the net asset value next determined for shares of the same
Class in the
following funds 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,
Class B and Class C shares are subject to minimum investment
requirements and
all shares are subject to the other requirements of the fund
into which
exchanges are made and a sales charge differential may
apply.
30
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Exchange Privilege (continued)
- ------------------------------------------------------------
- --------------------
FUND NAME
-------------------------------------------------------
- --------------------
Growth Funds
Smith Barney Aggressive Growth Fund Inc.
Smith Barney Appreciation Fund Inc.
Smith Barney Fundamental Value Fund Inc.
Smith Barney Growth Opportunity Fund
Smith Barney Managed Growth Fund
Smith Barney Special Equities Fund
Growth and Income Funds
Smith Barney Convertible Fund
Smith Barney Funds, Inc. -- Income and Growth Portfolio
Smith Barney Growth and Income Fund
Smith Barney Premium Total Return Fund
Smith Barney Strategic Investors Fund
Smith Barney Utilities Fund
Taxable Fixed-Income Funds
** Smith Barney Adjustable Rate Government Income Fund
Smith Barney Telecommunications Growth Fund
Smith Barney Diversified Strategic Income Fund
* Smith Barney Funds, Inc. -- Income Return Account
Portfolio
Smith Barney Funds, Inc. -- Monthly Payment Government
Portfolio
+++ Smith Barney Funds, Inc. -- Short-Term U.S. Treasury
Securities Portfolio
Smith Barney Funds, Inc. -- U.S. Government Securities
Portfolio
Smith Barney Government Securities Fund
Smith Barney High Income Fund
Smith Barney Investment Grade Bond Fund
Smith Barney Managed Governments Fund Inc.
Tax-Exempt Funds
Smith Barney Arizona Municipals Fund Inc.
Smith Barney California Municipals Fund Inc.
* Smith Barney Intermediate Maturity California
Municipals Fund
* Smith Barney Intermediate Maturity New York Municipals
Fund
Smith Barney Managed Municipals Fund Inc.
Smith Barney Massachusetts Municipals Fund
Smith Barney Muni Funds -- California Limited Term
Portfolio
* Smith Barney Muni Funds -- Florida Limited Term
Portfolio
Smith Barney Muni Funds -- Florida Portfolio
Smith Barney Muni Funds -- Georgia Portfolio
* Smith Barney Muni Funds -- Limited Term Portfolio
31
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Exchange Privilege (continued)
- ------------------------------------------------------------
- --------------------
Smith Barney Muni Funds -- New York Portfolio
Smith Barney Muni Funds -- Ohio Portfolio
Smith Barney Muni Funds -- Pennsylvania Portfolio
Smith Barney New Jersey Municipals Fund Inc.
Smith Barney New York Municipals Fund Inc.
Smith Barney Oregon Municipals Fund
Smith Barney Tax-Exempt Income Fund
International Funds
Smith Barney World Funds, Inc. -- Emerging Markets
Portfolio
Smith Barney World Funds, Inc. -- European Portfolio
Smith Barney World Funds, Inc. -- Global Government
Bond Portfolio
Smith Barney World Funds, Inc. -- International
Balanced Portfolio
Smith Barney World Funds, Inc. -- International Equity
Portfolio
Smith Barney World Funds, Inc. -- Pacific Portfolio
Smith Barney Precious Metals and Minerals Fund Inc.
Smith Barney Concert Series
Smith Barney Concert Series Inc. -- High Growth
Portfolio
Smith Barney Concert Series Inc. -- Growth Portfolio
Smith Barney Concert Series Inc. -- Balanced Portfolio
Smith Barney Concert Series Inc. -- Conservative
Portfolio
Smith Barney Concert Series Inc. -- Income Portfolio
Money Market Funds
+ Smith Barney Exchange Reserve Fund
++ Smith Barney Money Funds, Inc. -- Cash Portfolio
++ Smith Barney Money Funds, Inc. -- Government Portfolio
*** Smith Barney Money Funds, Inc. -- Retirement Portfolio
+++ Smith Barney Muni Funds -- California Money Market
Portfolio
+++ Smith Barney Muni Funds -- New York Money Market
Portfolio
+++ Smith Barney Municipal Money Market Fund, Inc.
- ------------------------------------------------------------
- --------------------
* Available for exchange with Class A, Class C and Class
Y shares of the
Growth Fund.
** Available for exchange with Class A, Class B and Class
Y shares of the
Growth Fund. In addition, shareholders who own Class C
shares of the Growth
Fund through the Smith Barney 401(k) Program may
exchange those shares for
Class C shares of this fund.
*** Available for exchange with Class A shares of the
Growth Fund.
+ Available for exchange with Class B and Class C shares
of the Growth Fund.
++ Available for exchange with Class A and Class Y shares
of the Growth Fund.
In addition, shareholders who own Class C shares of the
Growth Fund through
the Smith Barney 401(k) Program may exchange those
shares for Class C
shares of this fund.
+++ Available for exchange with Class A and Class Y shares
of the Growth Fund.
32
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Exchange Privilege (continued)
- ------------------------------------------------------------
- --------------------
Class A Exchanges. Class A shares of the Smith Barney
Mutual Funds sold
without a sales charge or with a maximum sales charge of
less than the maximum
charged by other Smith Barney Mutual Funds will be subject
to the appropriate
"sales charge differential" upon the exchange of their
shares for Class A shares
of a fund sold with a higher sales charge. The "sales charge
differential" is
limited to a percentage rate no greater than the excess of
the sales charge rate
applicable to purchases of shares of the mutual fund being
acquired in the
exchange over the sales charge rate(s) actually paid on the
mutual fund shares
relinquished in the exchange and on any predecessor of those
shares. For
purposes of the exchange privilege, shares obtained through
automatic
reinvestment of dividends and capital gain distributions are
treated as having
paid the same sales charges applicable to the shares on
which the dividends or
distributions were paid; however, except in the case of the
Smith Barney 401(k)
Program, if no sales charge was imposed upon the initial
purchase of the shares,
any shares obtained through automatic reinvestment will be
subject to a sales
charge differential upon exchange.
Class B Exchanges. In the event a Class B shareholder
(unless such
shareholder was a Class B shareholder of the Short-Term
World Income Fund on
July 15, 1994) wishes to exchange all or a portion of his or
her shares in any
of the funds imposing a higher CDSC than that imposed by the
Growth Fund, the
exchanged Class B shares will be subject to the higher
applicable CDSC. Upon an
exchange, the new Class B shares will be deemed to have been
purchased on the
same date as the Class B shares of the Growth Fund that have
been exchanged.
Class C Exchanges. Upon an exchange, the new Class C
shares will be deemed
to have been purchased on the same date as the Class C
shares of the Growth Fund
that have been exchanged.
Class Y Exchanges. Class Y shareholders of the Growth
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. Although the
exchange privilege is an important benefit, excessive
exchange transactions can
be detrimental to the Growth Fund's performance and its
shareholders. SBSA
and/or TBCAM may determine that a pattern of frequent
exchanges is excessive and
contrary to the best interests of the Growth Fund's other
shareholders. In this
event, SBSA and/or TBCAM will notify Smith Barney, and Smith
Barney may, at its
discretion, decide to limit additional purchases and/or
exchanges by the
shareholder. Upon such a determination, Smith Barney will
provide notice in
writing or by telephone to the shareholder at least 15 days
prior to suspending
the
33
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Exchange Privilege (continued)
- ------------------------------------------------------------
- --------------------
exchange privilege and during the 15 day period the
shareholder will be required
to (a) redeem his or her shares in the Growth Fund or (b)
remain invested in the
Growth Fund 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 differential. Redemption procedures discussed
below 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 is required. A capital gain or
loss for tax
purposes will be realized upon the exchange, depending upon
the cost or other
basis of shares redeemed. Before exchanging shares,
investors should read the
current prospectus describing the shares to be acquired. The
Fund reserves the
right to modify or discontinue exchange privileges upon 60
days' prior notice to
shareholders.
- ------------------------------------------------------------
- --------------------
Redemption of Shares
- ------------------------------------------------------------
- --------------------
The Growth Fund is required to redeem the shares of the
Growth Fund
tendered to it, as described below, at a redemption price
equal to their net
asset value per share next determined after receipt of a
written request in
proper form at no charge other than any applicable CDSC.
Redemption requests
received after the close of regular trading on the NYSE are
priced at the net
asset value next determined.
If a shareholder holds shares in more than one Class,
any request for
redemption must specify the Class being redeemed. In the
event of a failure to
specify which Class, or if the investor owns fewer shares of
the Class than
specified, the redemption request will be delayed until the
Trust's transfer
agent receives further instructions from Smith Barney or, if
the shareholder's
account is not with Smith Barney, from the shareholder
directly. The redemption
proceeds will be remitted on or before the seventh day
following receipt of
proper tender, except on any days on which the NYSE is
closed or as permitted
under the 1940 Act in extraordinary circumstances. The
Growth Fund anticipates
that, in accordance with regulatory changes, beginning on or
about June 1, 1995,
payment will be made on
34
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Redemption of Shares (continued)
- ------------------------------------------------------------
- --------------------
the third business day after receipt of proper tender.
Generally, if the
redemption proceeds are remitted to a Smith Barney brokerage
account, these
funds will not be invested for the shareholder's benefit
without specific
instruction and Smith Barney will benefit from the use of
temporarily uninvested
funds. Redemption proceeds for shares purchased by check,
other than a certified
or official bank check, will be remitted upon clearance of
the check, which may
take up to ten days or more.
Shares held by Smith Barney as custodian must be
redeemed by submitting a
written request to a Smith Barney Financial Consultant.
Shares other than those
held by Smith Barney as custodian may be redeemed through an
investor's
Financial Consultant, Introducing Broker or dealer in the
selling group or by
submitting a written request for redemption to:
Smith Barney Telecommunications Growth Fund
Class A, B, C or Y (please specify)
c/o First Data Investor Services Group, Inc.
P.O. Box 9134 Boston,
Massachusetts 02205-9134
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 FDISG together with the redemption
request. Any signature
appearing on a redemption request, 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.
FDISG 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 FDISG receives all required
documents in proper form.
AUTOMATIC CASH WITHDRAWAL PLAN
The Growth Fund offers shareholders an automatic cash
withdrawal plan,
under which shareholders who own shares with a value of at
least $10,000 may
elect to receive cash payments of at least $50 monthly or
quarterly. Retirement
plan accounts are eligible for automatic cash withdrawal
plans only where the
shareholder is eligible to receive qualified distributions
and has an account
value of at least $5,000. The withdrawal plan will be
carried over on exchanges
between
35
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Redemption of Shares (continued)
- ------------------------------------------------------------
- --------------------
funds or Classes of the Growth Fund. Any applicable CDSC
will not be waived on
amounts withdrawn by a shareholder that exceed 1.00% per
month of the value of
the shareholder's shares subject to the CDSC at the time the
withdrawal plan
commences. For further information regarding the automatic
cash withdrawal plan,
shareholders should contact a Smith Barney Financial
Consultant.
TELEPHONE REDEMPTION AND EXCHANGE PROGRAM
Shareholders who do not have a Smith Barney brokerage
account may be
eligible to redeem and exchange Fund shares by telephone. To
determine if a
share holder is entitled to participate in this program, he
or she should
contact FDISG 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 FDISG upon
request. (Alternatively,
an investor may authorize telephone redemption 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 the Fund's shares may be made by eligible shareholders by
calling FDISG at
1-800-451-2010. Such requests may be made between 9:00 a.m.
and 5:00 p.m. (New
York City time) on any day the NYSE is open. Redemption
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
share holder. 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 FDISG at 1-800-451-2010 between 9:00 a.m.
and 5:00 p.m. (New
36
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Redemption of Shares (continued)
- ------------------------------------------------------------
- --------------------
York City time) on any day on which the NYSE is open.
Exchange requests received
after the close of regular trading on the NYSE are processed
at the net asset
value next determined.
Additional Information regarding Telephone Redemption
and Exchange Program.
Neither the Fund nor its agents will be liable for following
instructions
communicated by telephone that are reasonably believed to be
genuine. The 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). The 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.
- ------------------------------------------------------------
- --------------------
Minimum Account Size
- ------------------------------------------------------------
- --------------------
The Growth Fund reserves the right to involuntarily
liquidate any
shareholder's account in the Growth Fund if the aggregate
net asset value of the
shares held in the account is less than $500. (If a
shareholder has more than
one account in the Growth Fund, each account must satisfy
the minimum account
size.) The Growth Fund, however, will not redeem shares
based solely on market
reductions in net asset value. Before the Growth Fund
exercises such right,
shareholders will receive written notice and will be
permitted 60 days to bring
accounts up to the minimum to avoid automatic redemption.
- ------------------------------------------------------------
- --------------------
Performance
- ------------------------------------------------------------
- --------------------
TOTAL RETURN
From time to time, the Growth Fund may include its
total return, average
annual total return and current dividend return in
advertisements and/or other
types of sales literature. These figures are computed
separately for Class A,
Class B, Class C and Class Y shares of the Growth Fund.
These figures are based
on historical earnings and are not intended to indicate
future performance.
Total return is computed for a specified period of time
assuming deduction of
the maximum sales charge, if any, from the initial amount
invested and
reinvestment of all income dividends and capital gain
distributions on the
reinvestment dates at prices
37
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Performance (continued)
- ------------------------------------------------------------
- --------------------
calculated as stated in this Prospectus, then dividing the
value of the
investment at the end of the period so calculated by the
initial amount invested
and subtracting 100%. The standard average annual total
return, as prescribed by
the SEC, is derived from this total return, which provides
the ending redeemable
value. Such standard total return information may also be
accompanied with
nonstandard total return information for differing periods
computed in the same
manner but without annualizing the total return or taking
sales charges into
account. The Growth Fund calculates current dividend return
for each Class by
annualizing the most recent monthly distribution and
dividing by the net asset
value or the maximum public offering price (including sales
charge) on the last
day of the period for which current dividend return is
presented. The current
dividend return for each Class may vary from time to time
depending on market
conditions, the composition of its investment portfolio and
operating expenses.
These factors and possible differences in the methods used
in calculating
current dividend return should be considered when comparing
a Class' current
return to yields published for other investment companies
and other investment
vehicles. The Growth Fund may also include comparative
performance information
in advertising or marketing its shares. Such performance
information may include
data from Lipper Analytical Services, Inc. and other
financial publications.
- ------------------------------------------------------------
- --------------------
Management of the Trust and the Growth Fund
- ------------------------------------------------------------
- --------------------
BOARD OF TRUSTEES
Overall responsibility for management and supervision
of the Growth Fund
rests with the Trust's Board of Trustees. The Trustees
approve all significant
agreements between the Growth Fund and the companies that
furnish services to
the Growth Fund, including agreements with its distributor,
investment adviser,
sub-investment adviser, administrator, custodian and
transfer agent. The
day-to-day operations of the Growth Fund are delegated by
the Board of Trustees
to the Growth Fund's investment adviser, subinvestment
adviser and
administrator. The Statement of Additional Information
contains background
information regarding the Trust's Trustees and the executive
officers of the
Growth Fund.
INVESTMENT ADVISER -- SBSA
SBSA, located at 388 Greenwich Street, New York, New
York 10013, serves as
the Growth Fund's investment adviser pursuant to an
investment advisory
38
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Management of the Trust and the Growth Fund (continued)
- ------------------------------------------------------------
- --------------------
agreement dated July 27, 1994. SBSA (through its
predecessors) has been in the
investment counseling business since 1968 and is a
registered investment
adviser. SBSA renders investment advice to investment
companies which had
aggregate assets under management as of March 31, 1996 in
excess of $3,086.9
billion.
Subject to the supervision and direction of the Trust's
Board of Trustees,
SBSA manages the Growth Fund's portfolio in accordance with
the Growth Fund's
stated investment objective and policies, makes investment
decisions for the
Growth Fund, places orders to purchase and sell securities
and employs
professional portfolio managers and securities analysts who
provide research
services to the Growth Fund. For investment advisory
services rendered, the
Growth Fund pays SBSA a monthly fee at the annual rate of
0.55% of the value of
its average daily net assets.
PORTFOLIO MANAGEMENT
Guy Scott, Senior Vice President of TBCAM, has served
as Portfolio Manager
of the Growth Fund since October 1991 and manages the day-to-
day operations of
the Growth Fund, including making all investment decisions.
Management's discussion and analysis, and additional
performance
information regarding the Growth Fund during the fiscal year
ended December 31,
1995 is included in the Annual Report dated December 31,
1995. A copy of the
Annual Report may be obtained upon request without charge
from a Smith Barney
Financial Consultant or by writing or calling the Growth
Fund at the address or
phone number listed on page one of this Prospectus.
SUB-INVESTMENT ADVISER -- TBCAM
TBCAM, located at One Boston Place, Boston,
Massachusetts 02108, serves as
the Growth Fund's sub-investment adviser. TBCAM serves as
the Growth Fund's
sub-investment adviser pursuant to a sub-investment advisory
agreement dated
July 27, 1994. For sub-investment advisory services
rendered, TBCAM receives a
fee from SBSA, paid monthly at the annual rate of 0.275% of
the value of the
Growth Fund's average daily net assets. TBCAM provides
investment management,
investment advisory and/or administrative services to
investment companies which
had aggregate assets under management as of March 31, 1996
in excess of $15
billion.
ADMINISTRATOR -- SBMFM
SBMFM, located at 388 Greenwich Street, New York, New
York 10013, serves as
the Growth Fund's administrator and oversees all aspects of
the Growth
39
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Management of the Trust and the Growth Fund (continued)
- ------------------------------------------------------------
- --------------------
Fund's administration. SBMFM provides investment management,
investment advisory
and/or administrative services to investment companies that
had aggregate assets
under management as of January 31, 1996 in excess of $74
billion. For
administration services rendered, the Growth Fund pays SBMFM
a monthly fee at
the annual rate of 0.20% of the value of the Growth Fund's
average daily net
assets.
- ------------------------------------------------------------
- --------------------
Distributor
- ------------------------------------------------------------
- --------------------
Smith Barney is located at 388 Greenwich Street, New
York, New York 10013.
Smith Barney distributes shares of the Growth Fund as
principal underwriter and
as such conducts a continuous offering pursuant to a "best
efforts" arrangement
requiring Smith Barney to take and pay for only such
securities as may be sold
to the public. Pursuant to a plan of distribution adopted by
the Growth Fund
under Rule 12b-1 under the 1940 Act (the "Plan"), Smith
Barney is paid a service
fee with respect to Class A, Class B and Class C shares at
the annual rate of
0.25% of the average daily net assets of the respective
Class. Smith Barney is
also paid an annual distribution fee with respect to Class B
and Class C shares
at the annual rate of 0.75% of the average daily net assets
attributable to
those Classes. Class B shares that automatically convert to
Class A shares eight
years after the date of original purchase will no longer be
subject to
distribution fees. The fees are used by Smith Barney to pay
its Financial
Consultants for servicing shareholder accounts and, in the
case of Class B and
Class C shares, to cover expenses primarily intended to
result in the sale of
those shares. These expenses include: advertising expenses;
the cost of printing
and mailing prospectuses to potential investors; payments to
and expenses of
Smith Barney Financial Consultants and other persons who
provide support
services in connection with the distribution of shares;
interest and/or carrying
charges; and indirect and overhead costs of Smith Barney
associated with the
sale of Growth Fund shares, including lease, utility,
communications and sales
promotion expenses.
The payments to Smith Barney Financial Consultants for
selling shares of a
Class include a commission or fee paid by the investor or
Smith Barney at the
time of sale and, with respect to Class A, Class B and Class
C shares, a
continuing fee for servicing shareholder accounts for as
long as a shareholder
remains a holder of that Class. The service fee is credited
at the rate of up to
0.25% of the value of the average daily net assets of the
Class that remain
invested in the Growth Fund. Smith Barney Financial
Consultants may receive
different levels of compensation for selling different
Classes of shares.
40
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Distributor (continued)
- ------------------------------------------------------------
- --------------------
Payments under the Plan are not tied exclusively to the
distribution and
shareholder servicing expenses actually incurred by Smith
Barney, and the
payments may exceed distribution expenses actually incurred.
The Trust's Board
of Trustees will evaluate the appropriateness of the Plan
and its payment terms
on a continuing basis and in so doing will consider all
relevant factors,
including expenses borne by Smith Barney, amounts received
under the Plan and
proceeds of the CDSC.
- ------------------------------------------------------------
- --------------------
Additional Information
- ------------------------------------------------------------
- --------------------
The Trust, organized on June 2, 1983, under the laws of
the Commonwealth of
Massachusetts, is a business entity commonly known as a
"Massachusetts business
trust" and is registered with the SEC as an open-end, non-
diversified management
investment company.
Each Class of the Growth Fund represents an identical
interest in the
Growth Fund's portfolio. As a result, the Classes have the
same rights,
privileges and preferences, except with respect to: (a) the
designation of each
Class; (b) the effect of the respective sales charges for
each Class; (c) the
distribution and/or service fees borne by each Class; (d)
the expenses allocable
exclusively to each Class; (e) voting rights on matters
exclusively affecting a
single Class; (f) the exchange privilege of each Class; and
(g) the conversion
feature of the Class B shares. The Trust's Board of Trustees
does not anticipate
that there will be any conflicts among the interests of the
holders of the
different Classes. The Trustees, on an ongoing basis, will
consider whether any
such conflict exists and, if so, take appropriate action.
The Trust does not hold annual shareholder meetings.
There normally will be
no meeting of shareholders for the purpose of electing
Trustees unless and until
such time as less than a majority of the Trustees holding
office have been
elected by shareholders. The Trustees will call a meeting
for any purpose upon
written request of shareholders holding at least 10% of the
Growth Fund's
outstanding shares and the Growth 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 one
vote for each full
share owned and a proportionate fractional vote for any
fractional share held of
that Class. Generally, shares of the Growth Fund will be
voted on a Fund-wide
basis on all matters except matters affecting only the
interests of one or more
of the Classes.
41
<PAGE>
Smith Barney Telecommunications Growth Fund
- ------------------------------------------------------------
- --------------------
Additional Information (continued)
- ------------------------------------------------------------
- --------------------
PNC Bank located at 17th and Chestnut Streets,
Philadelphia PA 19103 serves
as custodian of the Trust's investments.
FDISG located at Exchange Place, Boston, Massachusetts
02109 serves as the
Trust's transfer agent.
The Growth Fund sends shareholders a semi-annual report
and an audited
annual report, each of which includes a list of the
investment securities held
by it at the end of the period covered. In an effort to
reduce the Growth Fund's
printing and mailing costs, the Growth Fund plans to
consolidate the mailing of
its semiannual and annual reports by household. This
consolidation means that a
household having multiple accounts with the identical
address of record will
receive a single copy of each report. In addition, the
Growth Fund also plans to
consolidate the mailing of its Prospectus so that a
shareholder having multiple
accounts (that is, individual, IRA and/or Self-Employed
Retirement Plan
accounts) will receive a single Prospectus annually.
Shareholders who do not
want this consolidation to apply to their accounts should
contact their Smith
Barney Financial Consultant or the Trust's transfer agent.
42
<PAGE>
SMITH BARNEY
- ------------
A Member of
TravelersGroup [Logo]
Smith Barney
Telecommunications
Growth
Fund
388 Greenwich Street
New
York, New York 10013
FUND
FD 01119
SMITH BARNEY
TELECOMMUNICATIONS INCOME FUND
388 Greenwich Street, New York, New York 10013-(212)723-9218
PROSPECTUS April 29, 1996
The investment objective of Smith Barney Telecommunications
Income Fund ("Income Fund") of Smith Barney
Telecommunications Trust (the "Trust") is current income,
with growth of capital as a secondary consideration. The
Income Fund seeks to achieve this objective primarily by
investing in income-producing equity and debt securities of
companies in the telecommunications industry. The Trust is a
non-diversified, open-end management investment company
consisting of two portfolios, the Income Fund and Smith
Barney Telecommunications Growth Fund ("Growth Fund").
Shares of the Income Fund are not currently being offered
for sale to new investors. Current shareholders are
encouraged to read this Prospectus carefully and retain it
for future reference.
Additional information about the Trust and the Income Fund
is contained in a Statement of Additional Information dated
April 29, 1996, as amended or supplemented from time to
time, which is available upon request and without charge by
calling or writing the Income Fund at the telephone number
or address set forth above or by contacting a Smith Barney
Financial Consultant. The Statement of Additional
Information has been filed with the Securities and Exchange
Commission (the "SEC") and is incorporated by reference into
this Prospectus in its entirety.
SMITH BARNEY INC.
Distributor
SMITH BARNEY STRATEGY ADVISERS INC.
Investment Adviser
SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Administrator
THE BOSTON COMPANY ASSET MANAGEMENT, INC.
Sub-Investment Adviser
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INTRODUCTION
The Income Fund is one of two portfolios of the Trust, a non-
diversified, open-end management investment company created
in response to the reorganization of American Telephone &
Telegraph Company ("AT&T") to provide stockholders of AT&T
with the opportunity to exchange their shares of AT&T for
shares of the Trust. This exchange of shares took place and
the Trust commenced operations on January 1, 1984. Each
portfolio's investments are primarily concentrated in the
securities of issuers engaged in the telecommunications
industry.
The Income Fund does not currently offer its shares for sale
to new investors. Shares of the Growth Fund, however, are
offered for sale through a separate Prospectus that is
available by calling or writing the Trust or by contacting a
Smith Barney Financial Consultant.
As with most mutual funds, the Trust employs various
organizations to perform necessary functions and to provide
services to its shareholders. These organizations are
carefully selected by the Trust's Board of Trustees which
regularly reviews the quality and scope of their
performance. The Trust employs Smith Barney Inc. ("Smith
Barney") as its distributor, Smith Barney Strategy Advisers
Inc. ("SBSA") as its investment adviser, Smith Barney Mutual
Funds Management Inc. ("SBMFM") as its administrator, The
Boston Company Asset Management, Inc. ("TBCAM") as its sub-
investment adviser , PNC Bank, National Association ("PNC")
as its custodian and First Data Investor Shareholder
Services Group, Inc. ("FDISG"), as its transfer agent.
More detailed information regarding these organizations and
the functions they perform is provided in this Prospectus as
well as in the Statement of Additional Information.
TABLE OF CONTENTS
Introduction................................................
................................. 2
The Income Fund's
Expenses....................................................
... 3
Financial
Highlights..................................................
....................4
Management of the Income Fund and the
Trust........................... 6
Investment Objective and Management
Policies........................... 8
Redemption of
Shares......................................................
...........11
Minimum Account
Size........................................................
.......13
Valuation of
Shares......................................................
...............13
Exchange
Privilege...................................................
...................13
Dividends, Distributions and
Taxes..............................................16
Additional
Information.................................................
................17
THE INCOME FUND'S EXPENSES
The following expense table lists the costs and expenses
that an investor will incur either directly or indirectly as
a shareholder in the Income Fund, based upon the Income
Fund's expenses for its most recent fiscal year:
Annual Income Fund Operating Expenses (as a percentage of
average daily net assets)
Management fees 0.75%
Other expenses 0.20%
Total Income Fund Operating Expenses 0.95%
Management fees paid by the Income Fund include
investment advisory fees paid monthly to SBSA at the annual
rate of 0.55% and administration fees paid monthly to SBMFM
at the annual rate of 0.20%, both of which are based on the
value of the Income Fund's average daily net assets. The
nature of the services for which the Income Fund pays
management fees is described under "Management of the Income
Fund and the Trust." "Other expenses" in the above table
include fees for shareholder services, custodial fees, legal
and accounting fees, printing costs and registration fees.
Example The following example demonstrates the projected
dollar amount of total cumulative expenses that would be
incurred over various periods with respect to a hypothetical
investment in the Income Fund. These amounts are based upon
(a) payment by the Income Fund of operating expenses at the
levels set forth in the table above and (b) the following
assumptions::
1 year 3 years 5 years 10 years
A shareholder would pay
the following expenses on $10 $30 $53 $117
a $1,000 investment,
assuming (1) 5.00% annual
return and (2) redemption
at the end of each time period:
______________________
The example also provides a means for the investor to
compare expense levels of funds with different fee
structures over varying investment periods. To facilitate
such comparison, all funds are required to utilize a 5.00%
annual return assumption. However, the Fund's actual return
will vary and may be greater or less than 5.00%. This
example should not be considered a representation of past or
future expenses and actual expenses may be greater or less
than those shown.
FINANCIAL HIGHLIGHTS
The following information for the fiscal year ended December
31, 1995 has been audited by KPMG Peat Marwick LLP,
independent auditors, whose report thereon appears in the
Income Fund's Annual Report dated December 31, 1995. The
following information for the fiscal years ended August 31,
1986 through December 31, 1994 has been audited by Coopers &
Lybrand L.L.P. The information set out below should be read
in conjunction with the financial statements and related
notes that also appear in the Income Fund's Annual Report,
which is incorporated by reference into the Statement of
Additional Information.
For a share of beneficial interest outstanding throughout
each year:
19951994199319921991Net Asset Value, Beginning of
Year$95.62$107.62$102.67$110.75$129.06Income (Loss) From
Operations:Net investment income3.584.023.944.915.74Net
realized and unrealized
gain/(loss)35.57(5.91)12.306.79(2.20)Total Income (Loss)
From Operations39.15(1.89)16.2411.703.54Less Distributions
From:Net investment income(3.58)(4.05)(4.42)(4.55)(6.05)Net
realized gains(11.50)(6.06)
(6.87)(15.23)(14.62)Capital--------(1.18)Total
Distributions(15.08)(10.11)(11.29)(19.78)(21.85)Net Asset
Value, End of Year$119.69$95.62$107.62$102.67$110.75Total
Return*42.93%(1.83)%16.00%10.89%3.30%Net Assets, End of Year
(000's)$74,841$61,256$71,570$70,637$79,419Ratios to Average
Net Assets:Expenses0.95%0.95%0.93%0.92%0.90%Net investment
income3.233.803.474.414.57Portfolio Turnover
Rate0%0%0%2%18%Average commissions paid on equity security
transactions(1)$0.06--------(1) New SEC disclosure
guidelines require that average commissions per share be
calculated and presented for the current year only.* Total
return represents the aggregate total return for the period
indicated.
For a share of beneficial interest outstanding throughout
each year:19901989198819871986Net Asset Value, Beginning of
Year$140.93$99.10$90.28$99.20$86.19Income (Loss) From
Operations:Net investment income6.105.185.555.875.54Net
realized and unrealized
gain/loss(8.98)45.319.66(4.67)15.38Total Income (Loss) From
Operations(2.88)50.4915.211.2020.92Less Distributions
From:Net investment income(5.79)(5.85)(5.40)(7.20)(5.40)Net
realized gains(3.20)(2.65)(0.99)(2.92)(2.51)Capital---------
- -In excess of net realized gains--(0.16)------Total
Distributions(8.99)(8.66)(6.39)(10.12)(7.91)Net Asset Value,
End of Year$129.06$140.93$99.10$90.28$99.20Total
Return*(1.80)%52.11%17.12%0.91%24.99%Net Assets, End of Year
(000's)$94,854$109,970$82,546$80,349$95,439Ratios to Average
Net Assets:Expenses0.92%0.89%0.95%0.97%0.96%Net investment
income4.81%4.32%5.70%5.84%5.68%Portfolio Turnover
Rate3%5%3%6%15%*Total return represents the aggregate total
return for the period indicated.
MANAGEMENT OF THE INCOME FUND AND THE TRUSTBoard of
TrusteesOverall responsibility for management and
supervision of the Income Fund rests with the Trust's Board
of Trustees. The Trustees approve all significant agreements
between the Income Fund and the companies that furnish
services to the Income Fund, including agreements with its
distributor, investment adviser, sub-investment adviser,
administrator, sub-administrator, custodian and transfer
agent. The day-to-day operations of the Income Fund are
delegated to the Income Fund's investment adviser, sub-
investment adviser, administrator and sub-administrator. The
Statement of Additional Information contains background
information regarding the Trust's Trustees and the executive
officers of the Income Fund.
Investment Adviser -- SBSA
SBSA, located at 388 Greenwich Street, New York, New York
10013, serves as the Income Fund's investment adviser
pursuant to an investment advisory agreement dated June 16,
1994. SBSA (through its predecessors) has been in the
investment counseling business since 1968 and is a
registered investment adviser. SBSA renders investment
advice to investment companies which had aggregate assets
under management as of March 31, 1996 in excess of $ 3,086.9
billion.
Subject to the supervision and direction of the Trust's
Board of Trustees, SBSA manages the Income Fund's portfolio
in accordance with the Income Fund's stated objective and
policies, makes investment decisions for the Income Fund,
places orders to purchase and sell securities and employs
professional portfolio managers and securities analysts who
provide research services to the Income Fund. For investment
advisory services rendered, the Income Fund pays SBSA a
monthly fee at the annual rate of 0.55% of the value of its
average daily net assets.
Portfolio Management
Guy Scott, Senior Vice President of TBCAM, has served as
portfolio manager of the Income Fund since October 1991 and
manages the day-to-day operations of the Income Fund,
including making all investment decisions.
Management's discussion and analysis, and additional
performance information regarding the Income Fund during the
fiscal year ended December 31, 1995, is included in the
Annual Report dated December 31, 1995. A copy of the Annual
Report may be obtained upon request without charge from a
Smith Barney Financial Consultant or by writing or calling
the Trust at the address or phone number listed on page one
of this Prospectus.
Administrator-- SBMFM
SBMFM, located at 388 Greenwich Street, New York, New York
10013, serves as the Income Fund's administrator and
oversees all aspects of the Income Fund's administration.
SBMFM provides investment management, investment advisory
and/or administrative services to investment companies that
had aggregate assets under management as of January 31, 1996
in excess of $74 billion. For administration services
rendered, the Income Fund pays SBMFM a monthly fee at the
annual rate of 0.20% of the value of the Income Fund's
average daily net assets.
Sub-Investment Adviser -- TBCAM
TBCAM, located at One Boston Place, Boston, Massachusetts
02108, serves as the Income Fund's sub-investment adviser .
TBCAM is a wholly owned subsidiary of The Boston Company,
Inc. ("TBC"), which in turn is a wholly owned subsidiary of
Mellon Bank Corporation ("Mellon"). TBCAM serves as the
Income Fund's sub-investment adviser pursuant to a sub-
investment advisory agreement dated June 16, 1994. For sub-
investment advisory services rendered, TBCAM receives a fee
from SBSA paid monthly at the annual rate of 0.275% of the
value of the Income Fund's average daily net assets.
Subject to the supervision and direction of the Trust's
Board of Trustees and SBSA, TBCAM manages the Income Fund's
portfolio in accordance with the Income Fund's investment
objective and policies, makes investment decisions for the
Income Fund, places orders to purchase and sell securities
and employs professional portfolio managers and securities
analysts who provide research services to the Income Fund.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The investment objective of the Income Fund is current
income, with long-term growth of capital as a secondary
objective. This investment objective may not be changed
without the approval of the holders of a majority of the
Income Fund's outstanding shares. There is no guarantee the
Income Fund's investment objective will be achieved.
The Income Fund seeks to achieve its investment objective
primarily through investment in income-producing equity and
debt securities of companies engaged in the
telecommunications industry. The Income Fund defines the
telecommunications industry as companies engaged in the
communication, display, reproduction, storage and retrieval
of information, generally in one or more of the following
forms: voice, data, or print facsimile. Under normal market
conditions, at least 65% of the total assets of the Income
Fund will be invested in securities of issuers engaged in
the telecommunications industry. During certain periods when
economic conditions in that industry are adverse or when
market conditions suggest a defensive position, however, the
Income Fund may temporarily have less than 65% of the value
of its total assets invested in that industry.
Securities for the Income Fund are selected principally on
the basis of their ability to produce current income and, as
a result, the Income Fund invests principally in income-
producing common stocks, preferred stocks and debt
securities, including securities convertible into common and
preferred stocks. The Income Fund also may invest in short-
term fixed-income obligations, such as commercial paper.
Debt securities purchased by the Income Fund will be rated
within the three highest ratings by Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc.
("Moody's") or, if not so rated, of comparable quality in
the opinion of SBSA and/or TBCAM Commercial paper purchased
by the Income Fund will be rated Prime-2 or better by
Moody's or A-2 or better by S&P.
The Trust is classified as a non-diversified investment
company under the Investment Company Act of 1940, as amended
("the 1940 Act"), which means that the Income Fund is not
limited by the 1940 Act in the proportion of its assets that
it may invest in the obligations of a single issuer. The
Income Fund intends to conduct its operations, however, so
as to qualify as a "regulated investment company" for
purposes of the Internal Revenue Code of 1986, as amended
(the "Code"), which will relieve the Income Fund of any
liability for Federal income tax to the extent that its
earnings are distributed to shareholders. To so qualify,
among other requirements, the Income Fund will limit its
investments so that, at the close of each quarter of the
taxable year, (a) not more than 25% of the market value of
the Income Fund's total assets will be invested in the
securities of a single issuer, and (b) with respect to 50%
of the market value of its total assets, not more than 5% of
the market value of its total assets will be invested in the
securities of a single issuer and the Income Fund will not
own more than 10% of the outstanding voting securities of a
single issuer. These 25% and 5% limits will not be deemed
exceeded to the extent that any excess results from
fluctuations in market value or sales of other securities,
as opposed to purchases of securities. The Income Fund's
assumption of large positions in the obligations of a small
number of issuers may cause the Income Fund's yield to
fluctuate to a greater extent than that of a diversified
company as a result of changes in the financial condition or
in the market's assessment of the issuers.
Further information about the Income Fund's investment
policies, including a list of those restrictions on the
Income Fund's investment activities that cannot be changed
without shareholder approval, appears in the Statement of
Additional Information.
Investment Policies and Strategies
Lending of Portfolio Securities. The Income Fund is
authorized to lend securities that it holds to brokers,
dealers and other financial organizations. These loans, if
any, may not exceed 33 1/3% of the Income Fund's assets
taken at value. The Income Fund's loans of securities will
be collateralized by cash, letters of credit or obligations
of the United States government and its agencies and
instrumentalities ("U.S. government securities") which are
maintained at all times in a segregated account with the
Trust's custodian in an amount equal to at least 100% of the
current market value of the loaned securities. By lending
its portfolio securities, the Income Fund will seek to
generate income by continuing to receive interest on the
loaned securities, by investing the cash collateral in short-
term instruments or by obtaining yield in the form of
interest paid by the borrower when U.S. government
securities are used as collateral. The risks in lending
portfolio securities, as with other extensions of secured
credit, consist of possible delays in receiving additional
collateral or in the recovery of the securities or possible
loss of rights in the collateral should the borrower fail
financially. Loans will be made to firms deemed by SBSA
and/or TBCAM to be of good standing and will not be made
unless, in the judgment of SBSA and/or TBCAM, the
consideration to be earned from such loans would justify the
risk.
Borrowing. The Income Fund is authorized to borrow money in
an amount up to 10% of its total assets for extraordinary or
emergency purposes (such as meeting anticipated redemptions)
and to pledge its assets in connection with such borrowings.
Whenever borrowings exceed 5% of the value of the Income
Fund's total assets, the Income Fund will not purchase
securities for investment.
Short-Term Investments. The Income Fund may invest in short-
term money market instruments, such as U.S. government
securities; certificates of deposit, time deposits, and
bankers' acceptances issued by domestic banks (including
their branches located outside of the United States and
subsidiaries located in Canada), domestic branches of
foreign banks, savings and loan associations and similar
institutions; high grade commercial paper; and repurchase
agreements with respect to such instruments.
Repurchase Agreements The Income Fund may enter into
repurchase agreements with banks which are the issuers of
instruments acceptable for purchase by the Fund and with
certain dealers on the Federal Reserve Bank of New York's
list of reporting dealers. Under the terms of a typical
repurchase agreement, the Income Fund would acquire an
underlying debt obligation for a relatively short period
(usually not more than one week) subject to an obligation of
the seller to repurchase, and the Income Fund to resell, the
obligation at an agreed-upon price and time, thereby
determining the yield during the Income Fund's holding
period. This arrangement results in a fixed rate of return
that is not subject to market fluctuations during the Income
Fund's holding period. The value of the underlying
securities at all times will be at least equal to the total
amount of the repurchase obligation, including interest.
Repurchase agreements could involve certain risks in the
event of default or insolvency of the other party, including
possible delays or restrictions upon the Income 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 Income 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. SBSA
and/or TBCAM, acting under the supervision of the Trust's
Board of Trustees, reviews on an ongoing basis the value of
the collateral and the creditworthiness of those banks and
dealers with which the Income Fund enters into repurchase
agreements to evaluate potential risks.
Covered Call Options. In order to earn additional income,
and as a means of seeking to partially protect its assets
against market declines, the Income Fund may, to a limited
extent, write covered call option contracts on certain
securities and purchase call option contracts for the
purpose of terminating its outstanding obligations with
respect to securities upon which call option contracts have
been written ("closing purchase transactions"). Only call
options which are traded on a United States exchange will be
written. The Income Fund's ability to engage in closing
purchase transactions depends on the existence of a liquid
secondary market; for some options, no such secondary market
may exist or the market may cease to exist.
The Income Fund may write option contracts on its securities
up to an amount not in excess of 20% of the value of its net
assets at the time that such options are written. The Income
Fund may not sell (uncover) the securities against which an
option contract has been written until after the option
period has expired, the option contract has been exercised
or a closing purchase transaction has been executed.
Successful use of options by the Income Fund will depend on
the ability of SBSA and/or TBCAM to correctly predict
movements in the prices of the securities underlying the
option.
Portfolio Transactions. Portfolio securities transactions on
behalf of the Income Fund will be executed by a number of
brokers and dealers, including Smith Barney and certain of
its affiliated brokers, that are selected by SBSA and/or
TBCAM. The Income Fund may use Smith Barney or a broker
affiliated with Smith Barney in connection with a purchase
or sale of securities when SBSA and/or TBCAM believes that
such broker's charge for the transaction does not exceed the
usual and customary levels.
Certain Risk Considerations
Shareholders should be aware that the Income Fund
concentrates its assets in the telecommunications industry
and, as a result, the Income Fund should not be considered
as a complete investment program. Moreover, the investment
flexibility of the Income Fund may be restricted by the
necessity of satisfying certain diversification requirements
in order to maintain the qualification of the Income Fund as
a regulated investment company within the meaning of the
Code. See "Dividends, Distributions and Taxes."
REDEMPTION OF SHARES
Shareholders may redeem their shares on any day that the
Income Fund calculates its net asset value. See "Valuation
of Shares." Redemption requests received in proper form
prior to the close of regular trading on the New York Stock
Exchange, Inc. (the "NYSE"), currently 4:00 p.m., New York
time, are priced at the net asset value per share determined
on that day. Redemption requests received after the close of
regular trading on the NYSE are priced at the net asset
value as next determined.
The Income Fund normally transmits redemption proceeds for
credit to the shareholder's account at Smith Barney or to a
broker that clears securities transactions through Smith
Barney on a fully disclosed basis within three days after
receipt of a redemption request, except on any days on which
the NYSE is closed or as permitted under the 1940 Act in
extraordinary circumstances. Generally, these funds will not
be invested for the shareholder's benefit without specific
instruction, and Smith Barney will benefit from the use of
temporarily uninvested funds.
Shares may be redeemed in one of the following ways:
Redemption through Smith Barney
Redemption requests may be made through Smith Barney. A
shareholder desiring to redeem shares of the Income Fund
represented by certificates also must present such
certificates to Smith Barney endorsed for transfer (or
accompanied by an endorsed stock power), signed exactly as
the shares are registered. Redemption requests involving
shares represented by certificates will not be deemed
received until such certificates are received by FDISG in
proper form.
Redemption By Mail
Shares may be redeemed by submitting a written request
for redemption to:
Smith Barney Telecommunications Income Fund
c/o First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, Massachusetts 02205-9134
A written redemption request must (a) state the number of
shares or dollar amount 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 FDISG together with a redemption request. Any
signature appearing on a redemption request in excess of
$2,000, share certificate or stock power must be guaranteed
by an eligible guarantor institution such as a domestic
bank, savings and loan institution, a domestic credit union,
member bank of the Federal Reserve System or member firm of
a national securities exchange. Written redemption rrequests
of $2,000 or less do not require a signature guarantee
unless more than one such redemption request is made in any
10-day period or the redemption proceeds are to to sent to
an address other than the address of record. Unless
otherwise directed, redemption proceeds will be mailed to an
investor's address of record. FDISG may require additional
supporting documents for redemptions made by corporations,
executors, administrators, trustees or guardians. A
redemption request will not be deemed to be properly
received until FDISG receives all required documents in
proper form.
TELEPHONE REDEMPTION AND EXCHANGE PROGRAM
Shareholders who do not have a Smith Barney brokerage
account may be eligible to redeem and exchange Income Fund
shares by telephone. To determine if a shareholder is
entitled to participate in this program he or she should
contact FDISG 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 FDISG upon request.
Redemptions. Redemption requests of up to $10,000 of
the Income Fund's shares may be made by eligible
shareholders by calling FDISG at 1-800-451-2010. Such
requests may be made between 9:00 a.m. and 5:00 p.m. (New
York City time) on any day the NYSE is open. Redemption
requests receive 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 with a member
bank. The Income 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 FDISG at 1-800-451-2010 between 9:00 a.m.
and 5:00 p.m. (New York City time) on any day on which the
NYSE is open. Exchange requests received after the close of
regular trading on the NYSE are processed at the net asset
value next determined.
Additional Information regarding Telephone Redemption
and Exchange Program. Neither the Income Fund nor its
agents will be liable for following instructions
communicated that are reasonably believed to be genuine.
The Income 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). The Income 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.
MINIMUM ACCOUNT SIZE
The Income Fund reserves the right to involuntarily
liquidate any shareholder's account in the Income Fund if
the aggregate net asset value of the shares held in the
account is less than $500. (If a shareholder has more than
one account in the Income Fund, each account must satisfy
the minimum account size.) The Income Fund, however, will
not redeem shares based solely on market reductions in net
asset value. Before the Income Fund exercises such right,
shareholders will receive written notice and will be
permitted 60 days to bring accounts up to the minimum to
avoid automatic redemption.
VALUATION OF SHARES
The Income Fund's net asset value per share is determined as
of the close of regular trading on the NYSE on each day that
the NYSE is open, by dividing the value of the Income Fund's
net assets by the total number of shares outstanding.
Securities listed on an exchange are valued on the basis of
the last sale prior to the time the valuation is made. If
there has been no sale since the immediately previous
valuation, then the current bid price is used. Quotations
are taken from the exchange where the security is primarily
traded. Portfolio securities which are primarily traded on
foreign exchanges may be valued at the preceding closing
values of such securities on their respective exchange,
except that when an occurrence subsequent to the time a
foreign security is valued is likely to have changed such
value, then the fair value of those securities will be
determined by consideration of other factors by or under the
direction of the Board of Trustees. Over-the-counter
securities are valued on the basis of the bid price at the
close of business on each day. Unlisted foreign securities
are valued at the mean between the last available bid and
offer price prior to the time of valuation. Any assets or
liabilities initially expressed in terms of foreign
currencies will be converted into U.S. dollars as last
quoted by any recognized dealer. Securities for which market
quotations are not readily available are valued at fair
value. Notwithstanding the above, bonds and other fixed-
income securities are valued by using market quotations and
may be valued on the basis of prices provided by a pricing
service approved by the Board of Trustees.
EXCHANGE PRIVILEGE
Except as otherwise noted below, shares of the Income Fund
may be exchanged at the net asset value next determined for
Class A shares in the following funds of the Smith Barney
Mutual Funds, to the extent shares are offered for sale in
the shareholder's state of residence. Exhanges of Income
Fund shares are subject to minimum investment requirements
and to the other requirements of the fund into which
exchanges are made and a sales charge differential may
apply.
Fund Name
Growth Funds
Smith Barney Aggressive Growth Fund Inc.
Smith Barney Appreciation Fund Inc.
Smith Barney Fundamental Value Fund Inc.
Smith Barney Growth Opportunity Fund
Smith Barney Managed Growth Fund
Smith Barney Natural Resources Fund
Smith Barney Special Equities Fund
Smith Barney Telecommunications Growth Fund
Growth and Income Funds
Smith Barney Convertible Fund
Smith Barney Funds, Inc. -- Equity Income Portfolio
Smith Barney Growth and Income Fund
Smith Barney Premium Total Return Fund
Smith Barney Strategic Investors Fund
Smith Barney Utilities Fund
Taxable Fixed-Income Funds
Smith Barney Adjustable Rate Government Income Fund
Smith Barney Diversified Strategic Income Fund
Smith Barney Funds, Inc. -- Income Return Account Portfolio
Smith Barney Funds, Inc. -- Short-Term U.S. Treasury
Securities Portfolio
Smith Barney Funds, Inc. -- U.S. Government Securities
Portfolio
Smith Barney Government Securities Fund
Smith Barney High Income Fund
Smith Barney Investment Grade Bond Fund
Smith Barney Managed Governments Fund Inc.
Tax-Exempt Funds
Smith Barney Arizona Municipals Fund Inc.
Smith Barney California Municipals Fund Inc.
Smith Barney Intermediate Maturity California Municipals
Fund
Smith Barney Intermediate Maturity New York Municipals Fund
Smith Barney Managed Municipals Fund
Smith Barney Massachusetts Municipals Fund
Smith Barney Muni Funds -- California Limited Term Portfolio
Smith Barney Muni Funds -- Florida Limited Term Portfolio
Smith Barney Muni Funds -- Florida Portfolio
Smith Barney Muni Funds -- Georgia Portfolio
Smith Barney Muni Funds -- Limited Term Portfolio
Smith Barney Muni Funds -- New York Portfolio
Smith Barney Muni Funds -- Ohio Portfolio
Smith Barney Muni Funds -- Pennsylvania Portfolio
Smith Barney New Jersey Municipals Fund Inc.
Smith Barney Oregon Municipals Fund
Smith Barney Tax-Exempt Income Fund
International Funds
Smith Barney World Funds Inc. -- Emerging Markets Portfolio
Smith Barney World Funds, Inc. -- European Portfolio
Smith Barney World Funds, Inc. -- Global Government Bond
Portfolio
Smith Barney World Funds, Inc. -- International Balanced
Portfolio
Smith Barney World Funds, Inc. -- International Equity
Portfolio
Smith Barney World Funds, Inc. -- Pacific Portfolio
Concert Series
Smith Barney Concert Series, Inc. -- Balanced Portfolio
Smith Barney Concert Series, Inc. -- Conservative
Portfolio
Smith Barney Concert Series, Inc. -- Growth Portfolio
Smith Barney Concert Series, Inc. -- High Portfolio
Smith Barney Concert Series, Inc. -- Income Portfolio
Money Market Funds
Smith Barney Money Funds, Inc. -- Cash Portfolio
Smith Barney Money Funds, Inc. -- Government Portfolio
Smith Barney Money Funds, Inc. -- Retirement Portfolio
Smith Barney Muni Funds -- California Money Market Portfolio
Smith Barney Muni Funds -- New York Money Market Portfolio
Smith Barney Municipal Money Market Fund, Inc.
Exchanges. Class A shares of the Smith Barney Mutual Funds
sold without a sales charge or with a maximum sales charge
of less than the maximum charged by other Smith Barney
Mutual Funds will be subject to the appropriate "sales
charge differential" upon the exchange of their shares for
Class A shares of a fund sold with a higher sales charge.
The "sales charge differential" is limited to a percentage
rate no greater than the excess of the sales charge rate
applicable to purchases of shares of the mutual fund being
acquired in the exchange over the sales charge rate(s)
actually paid on the mutual fund shares relinquished in the
exchange and on any predecessor of those shares. For
purposes of the exchange privilege, shares obtained through
automatic reinvestment of dividends and capital gain
distributions, are treated as having paid the same sales
charges applicable to the shares on which the dividends or
distribution were paid; however, if no sales charge was
imposed upon the initial purchase of the shares, any shares
obtained through automatic reinvestment will be subject to a
sales charge differential upon exchange.
Additional Information Regarding the Exchange Privilege
Although the exchange privilege is an important benefit,
excessive exchange transactions can be detrimental to the
Income Fund's performance and its shareholders. SBSA may
determine that a pattern of frequent exchanges is excessive
and contrary to the best interests of the Income Fund's
other shareholders. In this event, SBSA will notify Smith
Barney and the Income Fund may, at its discretion, decide to
limit additional purchases and/or exchanges by the
shareholder. Upon such a determination, the Income 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 Income Fund
or (b) remain invested in the Income Fund or exchange into
any of the funds of the Smith Barney Mutual Funds listed
above, 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 differential. Redemption procedures discussed below
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
shares of the fund exchanged, no signature guarantee is
required. A taxable gain or loss for tax purposes will be
realized upon the exchange, depending upon the cost or other
basis of shares redeemed. Before exchanging shares,
investors should read the current prospectus describing the
shares to be acquired. The Income Fund reserves the right to
modify or discontinue exchange privileges upon 60 days'
prior notice to shareholders.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends from the Income Fund's net investment income
(i.e., its income other than its net long- and short-term
capital gains, if any) will be declared as of the last
Friday of each quarter and will be payable as of the last
Friday of the calendar quarter. Distributions of the Income
Fund's net short and long-term capital gains, if any, will
be declared and paid once a year, normally at the end of the
calendar year in which they were earned or at the beginning
of the next year. Short-Term gains also may be attributed to
the regular quarterly distributions as necessary. Unless a
shareholder instructs the Income Fund to pay dividends and
capital gains distributions in cash and credit them to the
shareholder's account at Smith Barney, dividends and capital
gains distributions will be reinvested automatically in
additional shares of the Income Fund at net asset value,
without a sales charge. The Income Fund is subject to a
4.00% non-deductible excise tax measured with respect to
certain undistributed amounts of income and capital gain. In
order to avoid the application of this tax, the Income Fund
may make an additional distribution shortly before December
31 in each year of any undistributed ordinary income or
capital gains and expects to make any other distributions
necessary to avoid the application of this tax.
Dividends paid by the Income Fund from investment income and
distributions of any net realized short-term capital gains
are taxable to shareholders as ordinary income, whether
received in cash or reinvested in additional shares of the
Income Fund. Distributions of net realized long-term capital
gains are taxable to shareholders as long-term capital gains
whether received in cash or reinvested in additional shares
of the Income Fund, regardless of the length of time that
Income Fund shares have been held by the shareholder.
Generally, dividends of investment income (but not capital
gain) from the Income Fund will qualify for the Federal
dividends-received deduction for corporate shareholders.
Each shareholder will receive a statement annually from the
Income Fund, which will set forth separately the aggregate
dollar amount of dividends and capital gains distributed to
the shareholder by the Income Fund with respect to the prior
calendar year and the amount of the distributions that
qualify for the dividends-received deduction.
Shareholders are urged to consult their tax advisors
regarding the application of Federal, state and local tax
laws to their specific situations before investing in the
Income Fund.
Statements as to the tax status of each shareholder's
dividends and distributions are mailed annually. Each
shareholder also will receive, if appropriate, various
written notices after the close of the Income Fund's prior
taxable year as to the Federal income tax status of his or
her dividends and distributions which were received from the
Income Fund during it's prior taxable year. Shareholders
should consult their tax advisors about the status of
dividends and distributions from the Income Fund in their
own states and localities and with respect to their own tax
situations.
ADDITIONAL INFORMATION
The Trust, organized on June 2, 1983 under the laws of the
Commonwealth of Massachusetts, is a business entity commonly
known as a "Massachusetts business trust" and is registered
with the SEC as a non-diversified, open-end management
investment company.
The Trustees have authority to create an unlimited number of
shares of beneficial interest of the Trust, with a par value
of $.001 per share. To date, two sub-trusts of the Trust
have been authorized, which constitute the Income Fund and
the Growth Fund. The Trustees have authority to create
additional sub-trusts at any time in the future without
shareholder approval. The Trustees from time to time may
consider whether to offer a new sub-trust to the general
public.
The Trust does not hold annual shareholder meetings. There
normally will be no meetings of shareholders held for the
purpose of electing Trustees unless and until such time as
less than a majority of the Trustees holding office have
been elected by shareholders. The Trustees will call a
meeting for any purpose upon written request of shareholders
holding at least 10% of the Income Fund's outstanding shares
and the Income Fund will assist shareholders in calling such
a meeting as required by the 1940 Act. When matters are
submitted for shareholder vote, shareholders of the Income
Fund will have one vote for each full share held and a
proportionate, fractional vote for each fractional share
held.
PNC Bank located at 17th and Chestnut Streets, PA 19103
serves as custodian of the Trust's investments.
FDISG located at Exchange Place, Boston, Massachusetts 02109
serves as the Trust's transfer agent.
The Income Fund sends shareholders a semi-annual report and
an audited annual report, which include listings of the
investment securities held by the Income Fund at the end of
the period covered. In an effort to reduce the Income Fund's
printing and mailing costs, the Income Fund plans to
consolidate the mailing of its semi-annual and annual
reports by household. This consolidation means that a
household having multiple accounts with the identical
address of record will receive a single copy of each report.
In addition, the Income Fund also plans to consolidate the
mailing of its Prospectus so that a shareholder having
multiple accounts (i.e., individual, IRA and/or Self-
Employed Retirement Plan accounts) will receive a single
Prospectus annually. Shareholders who do not want this
consolidation to apply to their accounts should contact
their Smith Barney Financial Consultants or FDISG.
No person has been authorized to give any information or to
make any representations in connection with this offering
other than those contained in this Prospectus, and, if given
or made, such other information or representations must not
be relied upon as having been authorized by the Income Fund
or the distributor. This Prospectus does not constitute an
offer by the Income Fund or the distributor to sell or a
solicitation of an offer to buy any of the securities
offered hereby in any jurisdiction to any person to whom it
is unlawful to make such an offer or solicitation in such
jurisdiction.
FD 01120
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REVISIONSDateOp. InitialAuthorExt.Description032896JKWJ.
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SMITH BARNEY
TELECOMMUNICATIONS INCOME FUND
388 Greenwich Street, New York, New York 10013 - (212) 723-
9218
STATEMENT OF ADDITIONAL INFORMATION April 29, 1996
This Statement of Additional Information expands upon and
supplements the information contained in the current
Prospectus of Smith Barney Telecommunications Income Fund
(the "Income Fund") of Smith Barney Telecommunications Trust
(the "Trust"), dated April , 1996, as amended or
supplemented from time to time, and should be read in
conjunction with the Prospectus of the Income Fund, one of
two portfolios of the Trust. The other portfolio is the
Smith Barney Telecommunications Growth Fund (the "Growth
Fund"). The Income Fund's Prospectus may be obtained from a
Smith Barney Financial Consultant or by writing or calling
the Trust at the address or telephone number set forth
above. This Statement of Additional Information, although
not in itself a prospectus, is incorporated by reference
into the Prospectus in its entirety.
CONTENTS
For ease of reference the same section headings are used in
both the Prospectus and the Statement of Additional
Information, except where shown below.
Management of the Income Fund and the Trust 2Investment
Objective and Management Policies 7Redemption of Shares
17Valuation of Shares 17Exchange Privilege
18Performance Data18Taxes (See in the Prospectus "Dividends,
Distributions and Taxes")
20Additional Information 22Financial Statements 22Appendix
24
MANAGEMENT OF THE INCOME FUND AND THE TRUSTThe executive
officers of the Trust are employees of certain of the
organizations that provide services to the Trust. These
organizations are as follows:Name ServiceNameServiceSmith
Barney Inc.("Smith Barney") DistributorSmith Barney
Strategy Advisers Inc.
("SBSA") Investment AdviserSmith Barney Mutual Funds
Management Inc.("SBMFM") AdministratorThe Boston Company
Asset Management, Inc.("TBCAM") Sub-Investment Adviser
PNC Bank, National Association("PNC") CustodianFirst Data
Investor Services Group, Inc.
("FDISG"),..................................................
.................... Transfer AgentThese organizations
and the functions they perform for the Trust are discussed
in the Prospectus and in this Statement of Additional
Information.
Trustees of the Trust and Executive Officers of the Income
Fund
The Trustees of the Trust and executive officers of the
Income Fund, together with information as to their principal
business occupations during the past five years, are set
forth below. Each Trustee who is an "interested person" of
the Trust, as defined in the Investment Company Act of 1940,
as amended (the "1940 Act"), is indicated by an asterisk.
Paul R. Ades, Trustee (Age 55). Partner in the law firm of
Murov & Ades. His address is 272 South Wellwood Avenue,
Lindenhurst, New York 11757.
Herbert Barg, Trustee (Age 72). Private investor. His
address is 273 Montgomery Avenue, Bala Cynwyd, Pennsylvania
19004.
Alger B. Chapman, Trustee (Age 64). Chairman and Chief
Operating Officer of the Chicago Board of Options Exchange.
His address is Chicago Board of Options Exchange, LaSalle at
Van Buren, Chicago, Illinois 60605.
Dwight B. Crane, Trustee (Age 58). Professor, Graduate
School of Business Administration, Harvard University;
Business Consultant. His address is Graduate School of
Business Administration, Harvard University, Boston,
Massachusetts 02163.
Frank G. Hubbard, Trustee (Age 60). Vice President, S & S
Industries; Former Corporate Vice President, Materials
Management and Marketing Services of Huls America, Inc. His
address is 80 Centennial Drive P.O. Box 456, Piscataway, New
Jersey 08855-0456.
*Heath B. McLendon, Chairman of the Board and Investment
Officer (Age 62). Managing Director of Smith Barney,
Chairman of SBSA and President of SBMFM; prior to July 1993,
Senior Executive Vice President of Shearson Lehman Brothers
Inc. ("Shearson Lehman Brothers"); Vice Chairman of Shearson
Asset Management, a Director of PanAgora Asset Management,
Inc. and PanAgora Asset Management Limited. His address is
388 Greenwich Street, New York, New York 10013.
Ken Miller, Trustee (Age 54). President of Young Stuff
Apparel Group, Inc. His address is 1407 Broadway,
Independent Auditors' Consent
To the Shareholders and Trustees of
Smith Barney Telecommunications Trust:
We consent to the use of our reports dated February 22, 1996 with respect to the
Funds listed below of
Smith
Barney Telecommunications Trust incorporated herein by reference and to the
references to our Firm
under the
headings "Financial Highlights" in the Prospectuses and "Counsel and Auditors
" in the Statements of
Additional
Information.
Fund
Smith Barney Telecommunications Income Fund
Smith Barney Telecommunications Growth Fund
KPMG PEAT MARWICK LLP
New York, New York
April 26, 1996
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<NET-CHANGE-FROM-OPS> 24,367,594
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