As filed with the Securities and Exchange Commission on April 29, 1999
Securities Act Registration No. 2 -86519
Investment Company Act Registration No. 811-3763
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 25 [X]
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 26
__________________ [ ]
Smith Barney Telecommunications Trust
(a Massachusetts Business Trust)
(Exact Name of Registrant as Specified in Charter)
388 Greenwich Street
New York, New York 10013
(Address of Principal Executive Offices)
(212) 816-6474
(Registrants Telephone Number, including Area Code)
Christina T. Sydor, Secretary
Smith Barney Telecommunications Trust
388 Greenwich Street
New York, New York 10013
(Name and Address of Agent for Service)
_____________________
Approximate Date of Proposed Public Offering:
Continuous.
It is proposed that this filing will become effective
(check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b) of Rule 485
[x] On April 30, 1999 pursuant to paragraph (b)
of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
On (date) pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
of rule 485
[ ] On (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates
a new effective date for a previously filed
post effective amendment.
Part A-Prospectus
SMITH BARNEY TELECOMMUNICATIONS TRUST
Prospectus
April 30, 1999
Existing shareholders may purchase new shares through the reinvestment of
dividends and distributions. Except for reinvestment of dividends and
distributions, shares of the fund are not currently being offered to
investors. Consequently, the fund's assets may be reduced by market
fluctuations, a redemption of shares and payment of cash dividends
and distributions. A reduction in the fund's net assets may increase
the fund's expenses on a per share basis and make it more difficult for
the fund to achieve its investment objective.
The Securities and Exchange Commission has not approved or disapproved
these securities or determined whether this prospectus is accurate or
complete. Any statement to the contrary is a crime.
Contents
Page
Fund goals, strategies and risks 3
Management 5
Reinvestment of dividends 6
Exchanging shares 6
Redeeming shares 7
Other things to know about share transactions 8
Distributions, dividends and taxes 9
Share price 9
Financial highlights 10
You should know:
An investment in the fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
Fund goals, strategies and risks
Investment objective
The fund seeks current income, with long-term growth of capital as a
secondary objective.
Key investments
The fund invests primarily in income producing common stocks of
companies in the telecommunications industry.
The fund defines the telecommunications industry as companies engaged
in the communication, display, reproduction, storage and retrieval
of information, generally in the forms of: voice, data or print facsimile.
Investment strategy
The manager holds stocks in the telecommunication industry it believes
have potential to produce high current income.
For tax efficiency purposes and because the Fund does not currently
offer shares to the public, the manager generally does not buy
additional stocks for the fund's portfolio and does not sell shares
of stocks held by the fund except to satisfy redemption requests
and other fund expenses.
Principal risks of investing in the fund
The fund concentrates its assets in the telecommunications industry
and, as a result, is more susceptible to events affecting this
industry than is a fund that does not concentrate its assets.
For this reason, the fund should not be considered as a complete
investment program. Investors could lose money on their investment
in the fund, or the fund may not perform as well as other investments, if:
The telecommunications industry underperforms the market
Telecommunications companies fall out of favor with investors
The stock market declines
Government action adversely impacts existing federal or state
regulation relating to rates of return and services in the
telecommunications industry
The manager's judgment about the relative yield, value or potential
appreciation of particular securities proves to be incorrect
The fund is not diversified, which means it may concentrate a high
percentage of its assets in the securities of one or more companies.
To the extent the fund concentrates its investments, the fund will be
subject to greater risks than if its assets were not so concentrated.
Total return
This bar chart indicates the risks of investing in the fund by showing
changes in the fund's performance from year to year. Past performance
does not necessarily indicate how the fund will perform in the future.
The bar chart shows the performance of a share of the fund for each of
the past 10 calendar years. The performance information in the chart
does not reflect sales charges, which would reduce your return.
[Graphic Omitted]
[The following table was depicted as a bar graph in the printed material.]
Total Return
1989 52.11
1990 (1.80)
1991 3.30
1992 10.89
1993 16.00
1994 (1.83)
1995 42.93
1996 (1.45)
1997 45.11
1998 53.72
Quarterly returns: Highest: 25.88% in 4th quarter 1998; Lowest: (9.01)%
in 1st quarter 1990.
Comparative performance
This table indicates the risk of investing in the fund by comparing
the average annual total return for the periods shown with that
of the return of the Standard and Poor's 500 Index, a broad-based
index of widely held common stock listed on the New York or
American Stock Exchanges and the over the counter markets.
Unlike the fund, the S&P 500 Index is unmanaged and does not incur
expenses.
Average Annual Total Return
Calendar Years Ended December 31, 1998
1 Year
5
Years
10
Years
Since
Inception
Inception
Date
Telecommunications Trust
53.72%
25.27%
19.87%
19.60%
1/1/84
S&P 500 Index
28.60%
24.05%
18.03%
18.03%
*
This table assumes imposition of the maximum sales charge, redemption
of shares at the end of the period, and
reinvestment of distributions and dividends.
* Index comparison begins on January 31, 1984.
Fees and Expenses
This table sets forth the fees and expenses you will pay if you
invest in the fund's shares .
Annual fund operating expenses (expenses deducted from fund assets)
Management fees
0.75%
Other expenses
0.14
Total annual fund operating expenses
0.89%
Example
This example helps you compare the costs of investing in the fund with
other mutual funds. Your actual costs may be higher or lower.
The example assumes:
You invest $10,000 in the fund for the time periods shown
Your investment has a 5% return each year
You reinvest all distributions and dividends without a sales charge
The fund's operating expenses remain the same
Number of years you own your shares
1 year
3 years
5 years
10 Years
Telecommunications Trust
$91
$284
$493
$1,096
Management
Manager The fund's investment manager is SSBC Fund Management Inc., an
affiliate of Salomon Smith Barney Inc. The manager's address is
388 Greenwich Street, New York, New York 10013. The manager
selects the fund's investments and oversees its operations. The
manager and Salomon Smith Barney are subsidiaries of Citigroup Inc.
Citigroup businesses produce a broad range of financial services --
asset management, banking and consumer finance, credit and charge
cards, insurance, investments, investment bank and trading- and
use diverse channels to make them available to consumer and corporate
customers around the world.
Robert E. Swab, investment officer of the manager and managing director
of Salomon Smith Barney, has been responsible for the day-to-day
management of the fund since November 1998. Prior to that time he
served as a Portfolio Manager to other Smith Barney Funds.
Management fees During the fiscal year ended December 31, 1998,
the adviser received an advisory fee equal to 0.55% of the fund's
average daily net assets. In addition, the manager received a fee for
its administrative services to the fund equal to 0.20% of the fund's
average daily net assets.
Distributor CFBDS, Inc. serves as the fund's distributor.
Year 2000 issue Information technology experts are concerned about
computer systems' ability to process date-related information on and after
January 1, 2000. This situation, commonly known as the "Year 2000"
issue, could have an adverse impact on the fund. The cost of addressing
the Year 2000 issue, if substantial, could adversely affect companies
and governments that issue securities held by the fund. The manager,
the administrator and Salomon Smith Barney are addressing the Year 2000
issue for their systems. The fund has been
informed by other service providers that they are taking similar
measures. Although the fund does not expect the Year 2000 issue to
adversely affect it, the fund cannot guarantee that the efforts of the
fund, which are limited to requesting and receiving reports from its
service providers, or the efforts of its service providers to correct
the problem will be successful.
Reinvestment of dividends
The fund currently is closed to investors except through reinvestment of
dividends or distributions from the fund. The trustees may reopen
the fund if they determine the reopening to be in the best interests of
the fund and its shareholders.
Exchanging shares
In general
Smith Barney offers a distinctive family of funds tailored to help
meet the varying needs of both large and small investors
Because the fund is closed to new investments other than reinvestment
of dividends or distributions, an investor who exchanges shares of the
fund for shares of another fund will not be able to effect an exchange
back into the fund. You should contact your Salomon Smith Barney
Financial Consultant or dealer representative to exchange into other
Smith Barney funds. Be sure to read the prospectus of the Smith Barney
fund you are exchanging into. An exchange is a taxable transaction.
* You may exchange shares only for Class A shares of most Smith Barney funds.
* Not all Smith Barney funds may be offered in your state of residence.
Contact your Salomon Smith Barney Financial Consultant, dealer
representative or the transfer agent.
* You must meet the minimum investment amount for the fund.
* If you hold share certificates, the transfer agent must receive the
certificates endorsed for transfer or with signed stock powers (documents
transferring ownership of certificates) before the exchange is effective.
* The fund may suspend or terminate your exchange privilege if you engage
in an excessive pattern of exchanges.
Waiver of additional sales charges
Shares acquired in the exchange will not be subject to an initial sales
charge at the time of the exchange.
By telephone
If you do not have a brokerage account, you may be eligible to exchange
shares through the transfer agent. To find out, call the transfer agent.
You must complete an authorization form to authorize telephone transfers.
If eligible, you may make telephone exchanges on any day the New York
Stock Exchange is open. Call the transfer agent at 1-800-451-2010
between 9:00 a.m. and 5:00 p.m. (Eastern time). Requests received
after the close of regular trading on the Exchange are priced at the
net asset value next determined.
You can make telephone exchanges only between accounts that have identical
registrations.
By mail
If you do not have a Salomon Smith Barney brokerage account, contact your
dealer representative or write to the transfer agent at the address on
the next page.
Redeeming shares
Generally
Contact your Salomon Smith Barney Financial Consultant or an investment
dealer in the selling group or a broker that clears through Salomon
Smith Barney as a dealer representative to redeem shares of the fund.
If you hold share certificates, the transfer agent must receive
the certificates endorsed for transfer or with signed stock powers
before the redemption is effective.
If the shares are held by a fiduciary or corporation, other documents
may be required.
Your redemption proceeds will be sent within three business days after
your request is received in good order. However, if you recently
purchased your shares by check, your redemption proceeds will not
be sent to you until your original check clears, which may take up to 15 days.
If you have a Salomon Smith Barney brokerage account, your redemption
proceeds will be placed in your account and not reinvested without your
specific instruction. In other cases, unless you direct otherwise,
your redemption proceeds will be paid by check mailed to your address
of record.
By mail
For accounts held directly at the fund, send written requests to the
transfer agent at the following address:
Smith Barney Telecommunications Trust
c/o First Data Investor Services Group, Inc.
P.O. Box 5128
Westborough, Massachusetts 01581-5128
Your written request must provide the following:
* Your account number
* The specific fund and the dollar amount or number of shares to be redeemed
* Signatures of each owner exactly as the account is registered
By telephone
If you do not have a brokerage account, you may be eligible to redeem shares
(except those held in retirement plans) in amounts up to $10,000 per day
through the transfer agent. You must complete an authorization form to
authorize telephone redemptions. If eligible, you may request
redemptions by telephone on any day the New York Stock Exchange is open.
Call the transfer agent at 1-800-451-2010 between 9:00 a.m. and 5:00 p.m.
(Eastern time). Requests received after the close of regular trading on the Ex
net asset value next determined.
Your redemption proceeds can be sent by check to your address of record
or by wire transfer to a bank account designated on your authorization form.
You may be charged a fee for wire transfers. You must submit a new
authorization form to change the bank account designated to receive
wire transfers and you may be asked to provide certain other documents.
Other things to know about share transactions
When you exchange or redeem shares, your request must be in good order.
This means you have provided the following information without which
your request will not be processed. These same requirements would apply
if a fund reopened to new investment purchases.
* Name of the fund
* Account number
* Dollar amount or number of shares being exchanged or redeemed
* Signature of each owner exactly as the account is registered
The transfer agent will try to confirm that any telephone exchange
or redemption request is genuine by recording calls, asking the
caller to provide a personal identification number for the account,
sending you a written confirmation or requiring other confirmation
procedures from time to time.
Signature guarantees To be in good order, your redemption request
must include a signature guarantee if you:
* Are redeeming over $10,000 of shares
* Are sending signed share certificates or stock powers to the transfer agent
* Instruct the transfer agent to mail the check to an address different
from the one on your account
* Changed your account registration
* Want the check paid to someone other than the account owner(s)
* Are transferring the redemption proceeds to an account with a different
registration
You can obtain a signature guarantee from most banks, dealers,
brokers, credit unions and federal savings and loan institutions,
but not from a notary public.
The fund has the right to:
* Suspend the issuance of shares completely, even through reinvestment
of dividends, or reopen the fund to new investors
* Waive or change the minimum account balance required by the fund
* Reject any exchange order
* Change, revoke or suspend the exchange privilege
* Suspend telephone transactions
* Suspend or postpone redemptions of shares on any day when trading
on the New York Stock Exchange is restricted, or as otherwise permitted
by the Securities and Exchange Commission
* Pay redemption proceeds by giving you securities. You may pay
transaction costs to dispose of the securities
Small account balances If your account falls below $500 because of
redemption of fund shares, the fund may close your account and
send you the redemption proceeds.
Excessive exchange transactions The manager may determine that a pattern
of frequent exchanges is detrimental to the fund's performance and other
shareholders. If so, the fund may limit additional exchanges by the
shareholder.
Share certificates The fund does not issue share certificates unless
a written request signed by all registered owners is made to the
transfer agent. If you hold share certificates it will take longer to
exchange or redeem shares.
Distributions, dividends and taxes
Dividends The fund generally pays quarterly income dividends and makes
capital gain distributions, if any, once a year, typically in December.
The fund may pay additional distributions and dividends at other times if
necessary for the fund to avoid a federal tax. Capital gain distributions
and dividends are reinvested in additional fund shares. The fund expects
distributions to be primarily from capital gains. You do not pay a sales
charge on reinvested distributions or dividends. Alternatively, you can
instruct your Salomon
Smith Barney Financial Consultant, dealer representative or the transfer
agent to have your distributions and/or dividends paid in cash.
You can change your choice at any time to be effective as of the next
distribution or dividend, except that any change given to the transfer
agent less than five days before the payment date will not be
effective until the next distribution or dividend is paid.
Taxes In general, redeeming shares, exchanging shares and receiving
distributions (whether in cash or additional shares) are all taxable events.
Transaction
Federal tax status
Redemption or exchange of shares
Usually capital gain or loss; long-term only if shares owned more than
one year
Long-term capital gain distributions
Long-term capital gain
Short-term capital gain distributions
Ordinary income
Dividends
Ordinary income
As stated in "Funds goals, strategies and risks" above, for tax
efficiency purposes and because the fund does not currently offer shares
to the public, the manager generally does not buy additional stocks for
the fund's portfolio or sell shares of stocks held by the fund except to
satisfy redemption requests and other fund expenses. Therefore, the
securities held by the fund have appreciated over time and have
substantial unrealized appreciation, which would be treated as long-term
capital gains if the securities were sold. In the
event of significant shareholder redemptions or for portfolio management
reasons, the fund may be required to sell some of these securities and
distribute any net long-term taxable gains realized in these sales.
Long-term capital gain distributions are taxable to you as long-term
capital gain regardless of how long you have owned your shares.
After the end of each year, the fund will provide you with information
about the distributions and dividends you received and any redemptions
of shares during the previous year. If you do not provide the fund with
your correct taxpayer identification number and any required certifications,
you may be subject to back-up withholding of 31% of your distributions,
dividends, and redemption proceeds. Because each shareholder's
circumstances are different and special tax rules may apply, you should
consult your tax adviser about your
investment in the fund.
Share price
You may exchange or redeem shares at their net asset value next determined
after receipt of your request in good order. Shares acquired through
reinvestment of dividends and distributions will be purchased at the
net asset value calculated on the reinvestment date established by
the trustees. The fund's net asset value is the value of its assets
minus its liabilities. The fund calculates its net asset value every day
the New York Stock Exchange is open. The Exchange is closed on certain
holidays listed in the SAI. This calculation
is done when regular trading closes on the Exchange (normally 4:00
p.m., Eastern time).
The fund generally values its portfolio securities based on market prices
or quotations. When reliable market prices or quotations are not
readily available, the fund may price those securities at fair value.
Fair value is determined in accordance with procedures approved by the
fund's board. A fund that uses fair value to price securities may value
those securities higher or lower than another fund that uses market
quotations to price the same securities.
Investments in U.S. government securities (other than short-term securities)
are valued at the quoted bid price in the over-the-counter market.
Short-term investments maturing in 60 days or less are valued at
amortized cost. Under the amortized cost method, assets are valued by
constantly amortizing over the remaining life of an instrument
the difference between the principal amount due at maturity and the
cost of the instrument to the fund.
In order to redeem or exchange shares at that day's price, you must
place your order with your Salomon Smith Barney Financial Consultant
or dealer representative before the New York Stock Exchange closes.
If the New York Stock Exchange closes early, you must place your order
prior to the actual closing time. Otherwise, you will receive the
next business day's price.
Salomon Smith Barney or members of the selling group must transmit
all orders to exchange or redeem shares to the fund's agent before
the agent's close of business.
Financial Highlights
The financial highlights table is intended to help you understand the
performance of a share for the past five years. Certain information
reflects financial results for a single share. Total return represents
the rate that a shareholder would have earned (or lost) on a fund share
assuming reinvestment of all dividends and distributions. The information
in the following tables was audited by KPMG LLP, independent accountants,
whose report, along with the fund's financial statements, is included
in the annual report (available upon
request). The information for the year ended December 31, 1994
was audited by other auditors.
For a share of beneficial interest outstanding throughout each year
ended December 31:.
1998
1997
1996
1995
1994
Net asset value, beginning
of year
$134.06
$104.62
$119.69
$95.62
$107.62
Income (loss) from operations:
Net investment income(loss)
Net realized and unrealized gain (loss)
2.26
64.18
2.83
43.05
3.12
(5.35)
3.58
35.57
4.02
(5.91)
Total income (loss) from
operations
66.44
45.88
(2.23)
39.15
(1.89)
Less distributions from:
Net investment income
Net realized gains
(2.22)
(22.08)
(2.83)
(13.61)
(3.12)
(9.72)
(3.58)
(11.50)
(4.05)
(6.06)
Total distributions
(24.30)
(16.44)
(12.84)
(15.08)
(10.11)
Net asset value, end of year
$176.20
$134.06
$104.62
$119.69
$95.62
Total return
53.72%
45.11%
(1.45)%
42.93%
(1.83)%
Net assets, end of year (000's)
$96,453
$73,273
$62,982
$74,841
$61,256
Ratios to average net assets:
Expenses
Net investment income
0.89%
1.51
0.92%
2.35
0.90%
2.80
0.95%
3.23
0.95%
3.80
Portfolio turnover rate
0%
0%
0%
0%
0%
SALOMON SMITH BARNEY_
a member of citigroup [Symbol]
SMITH BARNEY TELECOMMUNICATIONS TRUST
ADDITIONAL INFORMATION
Shareholder reports Annual and semiannual reports to shareholders
provide additional information about the fund's investments. These
reports discuss the market conditions and investment strategies that
affected the fund's performance.
The fund sends only one report to a household if more than one account
has the same address. Contact your Salomon Smith Barney Financial
Consultant, dealer representative or the transfer agent if you do not
want this policy to apply to you.
Statement of additional information The statement of additional
information provides more detailed information about the fund and is
incorporated by reference into (is legally part of) this prospectus.
You can make inquiries about the fund or obtain shareholder reports
or the statement of additional information (without charge) by
contacting your Salomon Smith Barney Financial Consultant or dealer
representative by calling the fund at 1-800-451-2010 or by writing to
the fund at Smith Barney Mutual Funds, 388 Greenwich Street, MF2,
New York, New York 10013.
Visit our web site. Our web site is located at www.smithbarney.com
You can also review and copy the fund's shareholder reports,
prospectus and statement of additional information at the Securities
and Exchange Commission's Public Reference Room in Washington, D.C.
You can get copies of these materials for a duplicating fee by
writing to the Public Reference Section of the Commission, Washington,
D.C. 20549-6009. Information about the public reference room may be
obtained by calling 1-800-SEC-0330. You can get the same reports and
information free from the Commission's Internet web site at http:
www.sec.gov
If someone makes a statement about the fund that is not in this prospectus,
you should not rely upon that information. The fund is not offering to
sell their shares to any person to whom the fund may not lawfully sell its
shares.
(Investment Company Act file no. 811-03763)
(FD-01120 4/99)
Telecommunications Trust -7-
Part B-Statement of Additional Information
Smith Barney
Telecommunications Trust
388 Greenwich Street
New York, New York 10013
(800)-451-2010
STATEMENT OF ADDITIONAL INFORMATION April 30, 1999
This Statement of Additional Information (SAI) expands upon and
supplements the information contained in the current Prospectus of Smith
Barney Telecommunications Income Fund (the fund) of Smith Barney
Telecommunications Trust (the trust), dated April 30, 1999, as amended or
supplemented from time to time, and should be read in conjunction with the
fund's Prospectus. The Prospectus may be obtained from a Salomon Smith
Barney Financial Consultant or by writing or calling the address or
telephone number set forth above. This SAI, although not in itself a
prospectus, is incorporated by reference into the Prospectus in its
entirety.
CONTENTS
Trustees and Executive Officers of the
Fund..............................................................2
Investment Objective and Management
Policies.........................................................4
Redemption of Shares...............................................12
Valuation of Shares..............................................12
Exchange Privilege..............................................12
Performance Data..................................................13
Taxes...........................................................13
Additional Information.............................................15
Financial Statements........................................16
Appendix......................................................17
The fund is 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 fund. This
exchange of shares took place and the fund commenced operations on January
1, 1984. The fund's investments are primarily concentrated in the
securities of issuers engaged in the telecommunications industry.
The fund currently is closed to investors except through reinvestment of
dividends or distributions from the fund. The Trustees may reopen the
fund if they determine the reopening to be in the best interests of the
fund and its shareholders.
TRUSTEES AND EXECUTIVE OFFICERS OF THE FUND
The Trustees of the fund and executive officers of the fund, together with
information as to their principal business occupations during the past
five years, are set forth below. Each 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 59). Partner in the law firm of Murov & Ades.
His address is 272 South Wellwood Avenue, Lindenhurst, New York 11757.
Herbert Barg, Trustee (Age 76). Private investor. His address is 273
Montgomery Avenue, Bala Cynwyd, Pennsylvania 19004.
Dwight B. Crane, Trustee (Age 61). 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 61). 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, President and Chief Executive
Officer (Age 65). Managing Director of Salomon Smith Barney Inc. (Salomon
Smith Barney);President of SSBC Fund Management Inc. (SSBC) (formerly
known as Mutual Management Corp.) and Travelers Investment Adviser, Inc.
("TIA"); Chairman or Co-Chairman of the Board of 64 investment companies
managed by affiliates of Citigroup Inc. (Citigroup) and former Chairman of
Smith Barney Strategy Advisers Inc. His address is 388 Greenwich Street,
New York, New York 10013.
Ken Miller, Trustee (Age 57). President of Young Stuff Apparel Group, Inc.
His address is 1407 Broadway, 6th Floor, New York, New York 10018.
Jerome Miller, Trustee (Age 61). Retired, Former President, Asset
Management Group of Shearson Lehman Brothers. His address is 27 Hemlock
Road, Manhasset, New York, NY 11030.
John White. President Emeritus of the Cooper Union for the Advancement of
Science and Art; Special Assistant to the President of the Aspen
Institute. His address is 97 Sunset Drive, Apt. 402, Sarasota, Florida
34236.
Robert E. Swab, Investment Officer (Age 43). Managing Director of Salomon
Smith Barney. His address is 388 Greenwich Street, New York, New York
10013.
Lewis E. Daidone, Senior Vice President and Treasurer (age 41). Managing
Director of Salomon Smith Barney; Senior Vice President and Treasurer of
59 investment companies associated with Citigroup; Director and Senior
Vice President of SSBC and TIA. His address is 388 Greenwich Street, New
York, New York 10013.
Paul Brook, Controller (Age 45). Director of Salomon Smith Barney;
Controller or Assistant Treasurer of 43 investment companies associated
with Citigroup; from 1997-1998 Managing Director of AMT Capital Services
Inc.; prior to 1997 Partner at Ernst & Young LLP. His address is 388
Greenwich Street, New York, New York 10013.
Christina T. Sydor, Secretary (age 49). Managing Director of Salomon
Smith Barney; Secretary of 59 investment companies associated with
Citigroup; General Counsel and Secretary of SSBC and TIA. Her address is
388 Greenwich Street, New York, New York 10013.
Each Trustee also serves as a director, trustee and/or individual general
partner of certain other mutual funds for which Salomon Smith Barney
serves as distributor. As of April 15, 1999, the Trustees and officers of
the trust, as a group, owned less than 1% of the fund's outstanding
shares. As of April 15, 1999, to the best knowledge of the trust and the
Board no single shareholder or "group" (as that term is used in Section 13
(d) of the Securities Act of 1934) beneficially owned more than 5% of the
outstanding shares of trust.
No officer, director or employee of Salomon Smith Barney or any parent or
subsidiary, receives any compensation from the trust for serving as an
officer or Trustee of the trust. The trust pays each Trustee who is not an
officer, director or employee of Salomon Smith Barney or any of its
affiliates a fee of $2,250 per annum plus $125 per meeting attended and
reimburses them for travel and out-of-pocket expenses. For the fiscal year
ended December 31, 1998, such out of pocket expenses totaled $9,443.
For the calendar year ended December 31, 1998, the Trustees of the trust
were paid the following compensation:
Trustee(#)
Aggregate
Compensation
from the Trust
Aggregate
Compensation
from the Smith
Barney Mutual
Funds
Total Pension or
Retirement
Benefits Accrued
from the Trust
Paul R. Ades (5)
$5,425
$54,225
$0
Herbert Barg (20)
5,425
105,425
0
Dwight B. Crane
(26)
5,425
139,975
0
Frank G. Hubbard
(5)
5,425
54,125
0
Heath B. McLendon
(59)
0
0
0
Jerome Miller (5)
4,175
44,925
0
Ken Miller (5)
5,325
53,625
0
John White (5)
1,250
144,789
0
(#) Number of director/trusteeships held with mutual funds in the Smith
Barney Mutual Funds family.
Upon attainment of age 80, Trustees are required to change to emeritus
status. Trustees Emeritus are entitled to serve in emeritus status for a
maximum of 10 years during which time they are paid 50% of the annual
retainer fee and meeting fees otherwise applicable to the fund Trustees,
together with reasonable out-of-pocket expenses for each meeting attended.
During the trust's last fiscal year aggregate compensation paid by the
trust to Trustees Emeritus totaled $7,806. Effective February 6, 1998,
Mr. White became a Trustee Emeritus.
Investment Adviser -- SSBC
SSBC serves as investment adviser to the fund pursuant to a written
agreement dated July 23, 1998 (the Advisory Agreement), which was first
approved by the trust's Board of Trustees, including a majority of the
Trustees who are not interested persons of the trust or SSBC, on April 21,
1994 and by shareholders on June 15, 1994. Subject to the supervision and
direction of the fund's Board of Trustees, SSBC manages the fund's
portfolio in accordance with the fund's stated objective and policies,
makes investment decisions for the fund, places orders to purchase and
sell securities and employs professional portfolio managers and securities
analysts who provide research services to the fund. SSBC pays the salary
of any officer or employee who is employed by both it and the fund and
bears all expenses in connection with the performance of its services.
SSBC is an affiliate of Salomon Smith Barney Inc. and a subsidiary of
Citigroup. SSBC (through its predecessor entities) has been in the
investment counseling business since 1968 and renders investment advice to
a wide variety of individual, institutional and investment company clients
that had aggregate assets under management as of March 31, 1999 in excess
of $114 billion.
As compensation for investment advisory services rendered, the fund pays
SSBC a fee computed daily and paid monthly at the annual rate of 0.55% of
the fund's average daily net assets. For the fiscal years ended December
31, 1996, 1997 and 1998, the fund paid SSBC $369,448, $367,532 and
$441,033, respectively, in investment advisory fees.
Administrator -- SSBC
SSBC also serves as administrator to the fund pursuant to a written
agreement dated April 21, 1994 (the Administration Agreement), which was
first approved by the trust's Board of Trustees, including a majority of
the Trustees who are not interested persons of the fund or SSBC, on April
21, 1994. SSBC pays the salary of any officer or employee who is employed
by both it and the fund and bears all expenses in connection with the
performance of its services.
As compensation for administrative services rendered to the fund, SSBC
receives a fee at the annual rate of 0.20% of the value of the fund's
average daily net assets. For the fiscal years ended December 31, 1996,
1997 and 1998, the fund paid SSBC $134,345, $133,648, and $160,376,
respectively, in administration fees.
The fund bears expenses incurred in its operation, including taxes,
interest, brokerage fees and commissions, if any; fees of Trustees who are
not officers, directors, shareholders or employees of Citigroup; SEC fees
and state Blue Sky qualification fees; charges of custodians; transfer and
dividend disbursing agents fees; certain insurance premiums; outside
auditing and legal expenses; investor services (including allocated
telephone and personnel expenses); and costs of preparation and printing
of prospectuses for regulatory purposes and for distribution to existing
shareholders, shareholders reports and meetings.
Auditors
KPMG LLP, 345 Park Avenue, New York, New York 10154, has been selected as
the trust's independent auditors to examine and report on the trust's
financial statements and highlights for the fiscal year ending December
31, 1999.
Distributor. CFBDS, Inc. located at 20 Milk Street, Boston, Massachusetts
02109-5408 serves as the fund's distributor pursuant to a written
agreement dated October 8, 1998 (the "Distribution Agreement") which was
approved by the trust's Board of Trustees, including a majority of the
Independent Trustees on July 15, 1998. Prior to the merger of Travelers
Group, Inc. and Citicorp Inc. on October 8, 1998, Salomon Smith Barney
served as the fund's distributor.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The Prospectus discusses the fund's investment objective and the policies
it employs to achieve that objective. The following discussion supplements
the description of the fund's investment objective and policies in the
Prospectus.
Lending of Portfolio Securities. Consistent with applicable regulations,
the fund has the ability to lend its portfolio securities to brokers,
dealers and other financial organizations. The fund may not lend
portfolio securities to Salomon Smith Barney or its affiliates without
specific authority to do so from the SEC.
Requirements of the SEC, which may be subject to future modifications,
currently provide that the following conditions must be met whenever the
fund's securities are loaned: (a) the fund must receive at least 100% cash
collateral or equivalent securities from the borrower; (b) the borrower
must increase such collateral whenever the market value of the securities
rises above the level of such collateral; (c) the fund must be able to
terminate the loan at any time; (d) the fund must receive reasonable
interest on the loan, as well as an amount equal to any dividends,
interest or other distributions on the loaned securities and any increase
in market value; (e) the fund may pay only reasonable custodian fees in
connection with the loan; and (f) voting rights on the loaned securities
may pass to the borrower; provided, however, that if a material event
adversely affecting the investment in the loaned securities occurs, the
trust's Board of Trustees must terminate the loan and regain the right to
vote the securities. From time to time, the fund may return a part of the
interest earned from the investment of collateral received for securities
loaned to the borrower and/or a third party, which is unaffiliated with
the fund or with Salomon Smith Barney, and which is acting as a finder.
Borrowing. The 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
fund's total assets, the fund will not purchase securities for investment.
Repurchase Agreements. The fund may enter into repurchase agreements with
banks which are the issuers of instruments acceptable for purchase by the
fund and with certain dealers on the Federal Reserve Bank of New York's
list of reporting dealers. Under the terms of a typical repurchase
agreement, the fund would acquire an underlying debt obligation for a
relatively short period (usually not more than one week) subject to an
obligation of the seller to repurchase, and the fund to resell, the
obligation at an agreed-upon price and time, thereby determining the yield
during the fund's holding period. This arrangement results in a fixed
rate of return that is not subject to market fluctuations during the
fund's holding period. 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 fund's ability to
dispose of the underlying securities, the risk of a possible decline in
the value of the underlying securities during the period in which the fund
seeks to assert its rights to them, the risk of incurring expenses
associated with asserting those rights and the risk of losing all or part
of the income from the agreement. SSBC, 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 fund enters into repurchase agreements to evaluate potential
risks.
Short-Term Instruments. The fund may invest without limit in short-term
money market instruments when SSBC believes that a defensive investment
posture is advisable due to market or economic conditions. Money market
instruments in which the fund may invest include obligations issued or
guaranteed by the United States government, its agencies or
instrumentalities (U.S. government securities); certificates of deposit
(CDs), time deposits (TDs) 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 the foregoing
types of instruments. The following is a more detailed description of such
money market instruments.
Bank Obligations. CDs are short-term negotiable obligations of commercial
banks; TDs are non-negotiable deposits maintained in banking institutions
for specified periods of time at stated interest rates; and bankers'
acceptances are time drafts drawn on commercial banks by borrowers,
usually in connection with international transactions.
Domestic commercial banks organized under Federal law are supervised and
examined by the Comptroller of the Currency and are required to be members
of the Federal Reserve System and to be insured by the Federal Deposit
Insurance Corporation (the FDIC). Domestic banks organized under state law
are supervised and examined by state banking authorities but are members
of the Federal Reserve System only if they elect to join. Most state banks
are insured by the FDIC (although such insurance may not be of material
benefit to the fund, depending upon the principal amount of CDs of each
bank held by the fund) and are subject to Federal examination and to a
substantial body of Federal law and regulation. As a result of
governmental regulations, domestic branches of domestic banks, among other
things, generally are required to maintain specified levels of reserves,
and are subject to other supervision and regulation designed to promote
financial soundness.
Obligations of foreign branches of domestic banks, such as CDs and TDs,
may be general obligations of the parent bank in addition to the issuing
branch, or may be limited by the terms of a specific obligation and
governmental regulations. Such obligations are subject to different risks
than are those of domestic banks or domestic branches of foreign banks.
These risks include foreign economic and political developments, foreign
governmental restrictions that may adversely affect payment of principal
and interest on the obligations, foreign exchange controls and foreign
withholding and other taxes on interest income. Foreign branches of
domestic banks are not necessarily subject to the same or similar
regulatory requirements that apply to domestic banks, such as mandatory
reserve requirements, loan limitations, and accounting, auditing and
financial recordkeeping requirements. In addition, less information may be
publicly available about a foreign branch of a domestic bank than about a
domestic bank. CDs issued by wholly owned Canadian subsidiaries of
domestic banks are guaranteed as to repayment of principal and interest
(but not as to sovereign risk) by the domestic parent bank.
Obligations of domestic branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may
be limited by the terms of a specific obligation and by Federal and state
regulation, as well as governmental action in the country in which the
foreign bank has its head office. A domestic branch of a foreign bank with
assets in excess of $1 billion may or may not be subject to reserve
requirements imposed by the Federal Reserve System or by the state in
which the branch is located if the branch is licensed in that state. In
addition, branches licensed by the Comptroller of the Currency and
branches licensed by certain states (State Branches) may or may not be
required to: (a) pledge to the regulator by depositing assets with a
designated bank within the state, an amount of its assets equal to 5% of
its total liabilities; and (b) maintain assets within the state in an
amount equal to a specified percentage of the aggregate amount of
liabilities of the foreign bank payable at or through all of its agencies
or branches within the state. The deposits of State Branches may not
necessarily be insured by the FDIC. In addition, there may be less
publicly available information about a domestic branch of a foreign bank
than about a domestic bank.
In view of the foregoing factors associated with the purchase of CDs and
TDs issued by foreign branches of domestic banks or by domestic branches
of foreign banks, SSBC will carefully evaluate such investments on a
case-by-case basis.
Savings and loan associations, the CDs of which may be purchased by the
fund, are supervised by the Office of Thrift Supervision and are insured
by the Savings Association Insurance Fund which is administered by the
FDIC and is backed by the full faith and credit of the United States
government. As a result, such savings and loan associations are subject to
regulation and examination.
Commercial Paper. Commercial paper is a short-term, unsecured negotiable
promissory note of a domestic or foreign company. When investing for
defensive purposes, the fund may invest in short-term debt obligations of
issuers that at the time of purchase are rated in the top two ratings
categories for short-term debt securities by a nationally recognized
statistical rating organization (NRSRO) (such as A-2, A-1 or A-1+ by
Standard & Poor's Ratings Group (S&P) or Prime-2 or Prime-l by Moody's
Investors Service, Inc, (Moody's)) or, if unrated, are issued by companies
having an outstanding unsecured debt issue currently rated within the two
highest ratings of by an NRSRO. A discussion of S&P and Moody's rating
categories appears in the Appendix to this SAI. The fund also may invest
in variable rate master demand notes, which typically are issued by large
corporate borrowers providing for variable amounts of principal
indebtedness and periodic adjustments in the interest rate according to
the terms of the instrument. Demand notes are direct lending arrangements
between the fund and an issuer, and are not normally traded in a secondary
market. The fund, however, may demand payment of principal and accrued
interest at any time. In addition, while demand notes generally are not
rated, their issuers must satisfy the same criteria as those set forth
above for issuers of commercial paper. SSBC will consider the earning
power, cash flow and other liquidity ratios of issuers of demand notes and
continually will monitor their financial ability to meet payment on
demand.
Convertible Securities. Convertible securities are fixed-income
securities that may be converted at either a stated price or stated rate
into underlying shares of common stock. Convertible securities have
general characteristics similar to both fixed-income and equity
securities. Although to a lesser extent than with fixed-income securities,
generally the market value of convertible securities tends to decline as
interest rates increase and, conversely, tends to increase as interest
rates decline. In addition, because of the conversion feature, the market
value of convertible securities tends to vary with fluctuations in the
market value of the underlying common stocks and, therefore, also will
react to variations in the general market for equity securities. A unique
feature of convertible securities is that as the market price of the
underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis, and so may not experience market value
declines to the same extent as the underlying common stock. When the
market price of the underlying common stock increases, the prices of the
convertible securities tend to rise as a reflection of the value of the
underlying common stock. While no securities investments are without risk,
investments in convertible securities generally entail less risk than
investments in common stock of the same issuer.
As fixed-income securities, convertible securities are investments that
provide for a stable stream of income with generally higher yields than
common stocks. Of course, like all fixed-income securities, there can be
no assurance of current income because the issuers of the convertible
securities may default on their obligations. Convertible securities,
however, generally offer lower interest or dividend yields than
non-convertible securities of similar quality because of the potential for
capital appreciation. A convertible security, in addition to providing
fixed income, offers the potential for capital appreciation through the
conversion feature, which enables the holder to benefit from increases in
the market price of the underlying common stock. There can be no assurance
of capital appreciation, however, because securities prices fluctuate.
Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible bonds,
as corporate debt obligations, enjoy seniority in right of payment to all
equity securities, and convertible preferred stock is senior to common
stock, of the same issuer. Because of the subordination feature, however,
convertible securities typically have lower ratings than similar
non-convertible securities.
Preferred Stock. Preferred stocks, like debt obligations, are generally
fixed-income securities. Shareholders of preferred stocks normally have
the right to receive dividends at a fixed rate when and as declared by the
issuer's board of directors, but do not participate in other amounts
available for distribution by the issuing corporation. Dividends on
preferred stock may be cumulative, and all cumulative dividends usually
must be paid prior to common shareholders receiving any dividends.
Preferred stock dividends must be paid before common stock dividends and
for that reason, preferred stocks generally entail less risk than common
stocks. Upon liquidation, preferred stocks are entitled to a specified
liquidation preference, which is generally the same as the par or stated
value, and are senior in right of payment to common stock. Preferred
stocks are, however, equity securities in the sense that they do not
represent a liability of the issuer and therefore do not offer as great a
degree of protection of capital or assurance of continued income as
investments in corporate debt securities. In addition, preferred stocks
are subordinated in right of payment to all debt obligations and creditors
of the issuer, and convertible preferred stocks may be subordinated to
other preferred stock of the same issuer.
Covered Call Options. The fund may, to a limited extent, write covered
call option contracts on certain securities and purchase call options for
the purpose of terminating their outstanding obligations with respect to
securities upon which call option contracts have been written.
The principal reason for writing covered call options on securities is to
attempt to realize, through the receipt of premiums, a greater return than
would be realized on the securities alone. In return for a premium, the
writer of a covered call option forfeits the right to any appreciation in
the value of the underlying security above the strike price for the life
of the option (or until a closing purchase transaction can be effected).
Nevertheless, the call writer retains the risk of a decline in the price
of the underlying security. The size of the premiums the fund may receive
may be adversely affected as new or existing institutions, including other
investment companies, engage in or increase their option-writing
activities.
Options written by the fund normally will have expiration dates between
three and nine months from the date they are written. The exercise price
of the options may be below, equal to or above the market values of the
underlying securities at the times the options are written. In the case of
call options, these exercise prices are referred to as in-the-money,
at-the-money and out-of-the-money, respectively. The fund may write (a)
in-the-money call options when SSBC expects that the price of the
underlying security will remain flat or decline moderately during the
option period, (b) at-the-money call options when SSBC expects that the
price of the underlying security will remain flat or advance moderately
during the option period and (c) out-of-the-money call options when SSBC
expects that the premiums received from writing the call option plus the
appreciation in market price of the underlying security up to the exercise
price will be greater than the appreciation in the price of the underlying
security alone. In any of the preceding situations, if the market price of
the underlying security declines, and the security is sold at this lower
price, the amount of any realized loss will be offset wholly or in part by
the premium received.
So long as the obligation of the fund as the writer of an option
continues, the fund may be assigned an exercise notice by the
broker-dealer through which the option was sold, requiring the fund to
deliver the underlying security against payment of the exercise price.
This obligation terminates when the option expires or the fund effects a
closing purchase transaction. The fund can no longer effect a closing
purchase transaction with respect to an option once it has been assigned
an exercise notice. To secure its obligation to deliver the underlying
security when it writes a call option, the fund will be required to
deposit in escrow the underlying security or other assets in accordance
with the rules of the Options Clearing Corporation (the Clearing
Corporation) and of the national securities exchange on which the option
is written.
An option position may be closed out only where there exists a secondary
market for an option for the same series on a recognized national
securities exchange or in the over-the-counter market. The fund expects to
write options only on national securities exchanges.
The fund may realize a profit or loss upon entering into a closing
transaction. In cases where the fund has written an option, it will
realize a profit if the cost of the closing purchase transaction is less
than the premium received upon writing the original option and will incur
a loss if the cost of the closing purchase transaction exceeds the premium
received upon writing the original option.
Although the fund generally will write only those options for which SSBC
believes there is an active secondary market so as to facilitate closing
transactions, there is no assurance that sufficient trading interest to
create a liquid secondary market on a securities exchange will exist for
any particular option or at any particular time, and for some options no
such secondary market may exist. A liquid secondary market in an option
may cease to exist for a variety of reasons. In the past, for example,
higher than anticipated trading activity or order flow, or other
unforeseen events, have at times rendered certain of the facilities of the
Clearing Corporation and the national securities exchanges inadequate and
resulted in the institution of special procedures, such as trading
rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that may otherwise interfere with the timely execution
of customers orders, will not recur. In such event, it might not be
possible to effect closing transactions in particular options. If as a
covered call option writer the fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the
underlying security until the option expires or it delivers the underlying
security upon exercise.
Securities exchanges generally have established limitations governing the
maximum number of calls and puts of each class which may be held or
written, or exercised within certain time periods, by an investor or group
of investors acting in concert (regardless of whether the options are
written on the same or different national securities exchanges or are
held, written or exercised in one or more accounts or through one or more
brokers). It is possible that the fund and other clients of SSBC and
certain of their affiliates may be considered to be such a group. A
national securities exchange or the National Association of Securities
Dealers, Inc. may order the liquidation of positions found to be in
violation of these limits and it may impose certain other sanctions.
These limits may restrict the number of options which the fund will be
able to write on a particular security.
Call options may be purchased by the fund but only to terminate an
obligation as a writer of a call option. This is accomplished by making a
closing purchase transaction, (i.e., the purchase of a call option on the
same security with the same exercise price and expiration date as
specified in the call option which had previously been written). A closing
purchase transaction with respect to calls traded on a national securities
exchange has the effect of extinguishing the obligation of a writer.
Although the cost to the fund of such a transaction may be greater than
the net premium received by the fund upon writing the original option, the
trust's Board of Trustees believes that it is appropriate for the fund to
have the ability to make closing purchase transactions in order to limit
the risks involved in writing options. SSBC also may permit the call
option to be exercised.
Non-Diversification. The trust is classified as a non-diversified
investment company under the 1940 Act, which means that the 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 fund's assumption of large
positions in the obligations of a small number of issuers may cause the
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.
Investment Restrictions
The fund has adopted the following investment restrictions for the
protection of shareholders. Investment restrictions 1 through 6 below
cannot be changed without approval by the holders of a majority of the
outstanding shares of the fund, defined as the lesser of (a) 67% or more
of the voting securities present or represented by proxy at a meeting if
the holders of more than 50% of the outstanding voting securities of the
fund are present or represented by proxy or (b) more than 50% of the
outstanding shares of the fund. Investment restrictions 7 through 14 may
be changed by vote of a majority of the Trustees at any time. If any
percentage restriction described below is complied with at the time of an
investment, a later increase or decrease in the percentage resulting from
a change in the values of assets will not constitute a violation of the
restriction.
The fund may not:
(1) Purchase or sell real estate, real estate mortgages,
commodities or commodity contracts, but this restriction shall
not prevent the fund from (a) investing in securities of
issuers engaged in the real estate business or the business of
investing in real estate (including interests in limited
partnerships owning or otherwise engaging in the real estate
business or the business of investing in real estate) and
securities which are secured by real estate or interests
therein; (b) holding or selling real estate received in
connection with securities it holds or held; (c) trading in
futures contracts and options on futures contracts (including
options on currencies to the extent consistent with the fund's
investment objective and policies); or (d) investing in real
estate investment trust securities.
(2) Engage in the business of underwriting securities issued by
other persons, except to the extent that the fund may
technically be deemed to be an underwriter under the
Securities Act of 1933, as amended (the 1933 Act), in
disposing of portfolio securities.
(3) Make loans. This restriction does not apply to: (a) the
purchase of debt obligations in which the fund may invest
consistent with its investment objective and policies, (b)
repurchase agreements; and (c) loans of its portfolio
securities, to the fullest extent permitted under the 1940
Act.
(4) Borrow money, except that (a) the fund may borrow from banks
for temporary or emergency (not leveraging) purposes including
the meeting of redemption requests which might otherwise
require the untimely disposition of securities, and (b) the
fund may, to the extent consistent with its investment
policies, enter into reverse repurchase agreements, forward
roll transactions and similar investment strategies and
techniques. To the extent that it engages in transactions
described in (a) and (b), the fund will be limited so that no
more than 33 1/3% of the value of the fund's total assets
(including the amount borrowed) valued at the lesser of cost
or market, less liabilities (not including the amount
borrowed) valued at the time the borrowing is made, is derived
from such transactions.
(5) Purchase the securities of any issuer (except U.S. government
securities) if, as a result of such purchase, more than 10% of
any class of securities or of the outstanding voting
securities of such issuer would be held in the fund; for this
purpose, all securities of an issuer shall be divided into
three classes, namely, all debt securities, all preferred
stock and all common stock.
(6) Issue senior securities as defined in the 1940 Act and the
rules, regulations and orders thereunder, except as permitted
under the 1940 Act and rules, regulations and orders
thereunder.
(7) Purchase securities subject to restrictions on disposition
under the 1933 Act (restricted securities), or securities
without readily available market quotations, if the purchase
causes more than 10% of its assets to be invested in
restricted securities, securities without readily available
market quotations and repurchase agreements maturing in more
than seven days.
(8) Purchase securities of companies for the purpose of exercising
control.
(9) Purchase securities on margin (except short-term credits as
are necessary for the clearance of purchases and sales of
portfolio securities) or sell any securities short (except
against the box). For purposes of this restriction, the
deposit or payment by the fund of initial or maintenance
margin in connection with futures contracts and related
options and options on securities is not considered to be the
purchase of a security on margin.
(10) Purchase securities of any issuers which together with
predecessors have a record of less than three years'
continuous operation, if, as a result, more than 5% of such
portfolio's net assets would then be invested in such
securities. (For purposes of this restriction, issuers include
predecessors, sponsors, controlling persons, general partners,
guarantors and originators of underlying assets which have
less than three years of continuous operations or relevant
business experience.)
(11) Invest in puts, calls, straddles, spreads, and any combination
thereof (except in connection with the writing of covered call
options).
(12) Invest in oil, gas or other mineral exploration or development
programs.
(14) Purchase securities from or sell securities to any of its
officers or Trustees, except with respect to its own shares
and as is permissible under applicable statutes, rules and
regulations.
Portfolio Turnover
In seeking its objective, the fund does not generally engage in short-term
trading but may do so when circumstances warrant. Numerous factors,
including those relating to particular investments, tax considerations,
covered call option writing (see Covered Call Options), market or economic
conditions or redemptions of shares, may affect the rate at which the fund
buys or sells portfolio securities from year to year. The portfolio
turnover rate is calculated by dividing the lesser of purchases or sales
of portfolio securities during the year by the average monthly value of
the fund's portfolio securities. Securities with remaining maturities of
one year or less at the date of acquisition are excluded from the
calculation. The fund has no fixed policy with respect to portfolio
turnover; however, it is anticipated that the annual portfolio turnover
rate in the fund generally will not exceed 50%. For the 1998 and 1997
fiscal years, the portfolio turnover rates for the fund were 0%.
Portfolio Transactions
Decisions to buy and sell securities for the fund are made by SSBC,
subject to the overall supervision and review of the trust's Board of
Trustees. Portfolio securities transactions for the fund are effected by
or under the supervision of SSBC.
Transactions on stock exchanges involve the payment of negotiated
brokerage commissions. There is generally no stated commission in the case
of securities traded in the over-the-counter markets, but the price of
those securities includes an undisclosed commission or mark-up.
Over-the-counter purchases and sales are transacted directly with
principal market makers except in those cases in which better prices and
executions may be obtained elsewhere. The cost of securities purchased
from underwriters includes an underwriting commission or concession, and
the prices at which securities are purchased from and sold to dealers
include a dealers mark-up or mark-down. For the 1998, 1997 and 1996
fiscal years, the fund paid total brokerage commissions of $10,689,
$11,603 and $14,543, respectively.
In executing portfolio transactions and selecting brokers or dealers, it
is the fund's policy to seek the best overall terms available. In
assessing the best overall terms available for any transactions, SSBC
shall consider the factors it deems relevant, including the breadth of the
market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer, and the reasonableness
of the commission, if any, for the specific transaction and on a
continuing basis. In addition, the Advisory Agreement authorizes SSBC, in
selecting brokers or dealers to execute a particular transaction and in
evaluating the best overall terms available, to consider the brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) provided to the fund or other accounts
over which SSBC or an affiliate exercises investment discretion.
The trust's Board of Trustees periodically will review the commissions
paid by the fund to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits inuring to the
fund. It is possible that certain of the services received will primarily
benefit one or more other accounts for which investment discretion is
exercised. Conversely, the fund may be the primary beneficiary of services
received as a result of portfolio transactions effected for other
accounts. The fees of SSBC under the Advisory Agreement are not reduced by
reason of SSBC receiving such brokerage and research services. Further,
Salomon Smith Barney will not participate in commissions from brokerage
given by the fund to other brokers or dealers and will not receive any
reciprocal brokerage business resulting therefrom.
The Trustees of the trust have determined that any portfolio transaction
for the fund may be executed through Salomon Smith Barney or an affiliate
of Salomon Smith Barney, if, in the judgment of SSBC, the use of Salomon
Smith Barney is likely to result in price and execution at least as
favorable as those of other qualified brokers, and if, in the transaction,
Salomon Smith Barney charges the fund a commission rate consistent with
that charged by Salomon Smith Barney to comparable unaffiliated customers
in similar transactions. In addition, under rules adopted by the SEC,
Salomon Smith Barney may directly execute such transactions for the fund
on the floor of any national securities exchange, provided: (a) the Board
of Trustees has expressly authorized Salomon Smith Barney to effect such
transactions; and (b) Salomon Smith Barney annually advises the fund of
the aggregate compensation it earned on such transactions. In 1998, there
were no brokerage commissions paid by the fund to Salomon Smith Barney.
For the 1998, 1997 and 1996 fiscal years, brokerage commissions of $790,
$4,190 and $5,343, respectively, were paid by the fund to Salomon Smith
Barney. The amount of brokerage commissions paid to Salomon Smith Barney
for the 1998 fiscal year represented 7.7% of the total brokerage
commissions paid by the fund and Salomon Smith Barney effected 6.9% of the
total dollar amount of transactions involving the payment of brokerage
commissions.
Even though investment decisions for the fund are made independently from
those of the other accounts managed by SSBC, investments of the kind made
by the fund also may be made by those other accounts. When the fund and
one or more accounts managed by SSBC are prepared to invest in, or desire
to dispose of, the same security, available investments or opportunities
for sales will be allocated in a manner believed by SSBC to be equitable.
In some cases, this procedure may adversely affect the price paid or
received by the fund or the size of the position obtained for or disposed
of by the fund.
REDEMPTION OF SHARES
The right of redemption may be suspended or the date of payment postponed
(a) for any period during which the New York Stock Exchange, Inc. (the
NYSE) is closed (other than for customary weekend or holiday closings),
(b) when trading in the markets the fund normally utilizes is restricted,
or an emergency exists, as determined by the SEC, so that disposal of the
fund's investments or determination of net asset value is not reasonably
practicable, or (c) for such other periods as the SEC by order may permit
for protection of the fund's shareholders.
Distributions in Kind. If the trust's Board of Trustees determines that
it would be detrimental to the best interests of the remaining
shareholders of the fund to make a redemption payment wholly in cash, the
fund may pay, in accordance with SEC rules, any portion of a redemption in
excess of the lesser of $250,000 or 1.00% of the fund's net assets by a
distribution in kind of portfolio securities in lieu of cash. Shareholders
may incur brokerage commissions when they subsequently sell those
securities.
VALUATION OF SHARES
The fund's net asset value per share is calculated on each day, Monday
through Friday, except days on which the NYSE is closed. The NYSE
currently is expected to be closed on New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas and on the preceding Friday or
subsequent Monday when one of these holidays falls on a Saturday or
Sunday, respectively. The following is a description of the procedures
used by the fund in valuing its assets.
Securities listed on a national securities exchange will be valued on the
basis of the last sale on the date on which the valuation is made or, in
the absence of such sales, at the mean between the closing bid and asked
prices. Over-the-counter securities will be valued at the most recent bid
price at the close of regular trading on the NYSE on each day, or, if
market quotations for those securities are not readily available, at fair
market value, as determined in good faith by the trust's Board of
Trustees. Short-term obligations with maturities of 60 days or less are
valued at amortized cost, which constitutes fair value as determined by
the trust's Board of Trustees. Amortized cost involves valuing an
instrument at its original cost to the 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. All other securities and other assets of the fund will be
appraised at their fair value as determined in good faith by the trust's
Board of Trustees.
EXCHANGE PRIVILEGE
Shares of the fund may be exchanged at the net asset value next determined
for Class A shares of most Smith Barney mutual funds. You may contact the
fund for information about which mutual funds are available under the
exchange privilege. Because the fund is closed to new investments other
than investment of dividends or distributions, an investor who exchanges
shares of the fund for shares of another fund will not be able to exchange
back into the fund. Prior to any exchange, the investor should obtain and
review a copy of the current prospectus of each fund into which an
exchange is being made. Prospectuses may be obtained from a Salomon Smith
Barney Financial Consultant.
Upon receipt of proper instructions and all necessary supporting
documents, shares submitted for exchange are redeemed at the then-current
net asset value and the proceeds are immediately invested, at a price as
described above, in shares of the fund being acquired. Salomon Smith
Barney reserves the right to reject any exchange request. The exchange
privilege may be modified or terminated at any time after written notice
to shareholders.
PERFORMANCE DATA
From time to time, a fund may quote its yield or total return in
advertisements or in reports and other communications to shareholders.
The fund may include comparative performance information in advertising or
marketing the fund's shares. Such performance information may include the
following industry and financial publications: Barron's, Business Week,
CDA Investment Technologies Inc., Changing Times, Forbes, Fortune,
Institutional Investor, Investors Daily, Money, Morningstar Mutual Fund
Values, The New York Times, USA Today and The Wall Street Journal.
Average Annual Total Return
Average annual total return figures, as described below, are computed
according to a formula prescribed by the SEC. The formula can be expressed
as follows:
P(1+T)n =ERV
Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical $1,000
investment made at the beginning of a 1-, 5- or 10-year
period at the end of the 1-5- or 10- year period (or
fractional portion thereof), assuming reinvestment of
all dividends and distributions. A Class' total return
figures calculated in accordance with above formula
assume that the maximum applicable sales charge, has
been deducted from the hypothetical $1,000 initial
investment at the time of purchase or redemption, as
applicable.
Period Ended 12/31/98
One Year
Five Year
Ten Year
53.72%
25.27%
19.87%
TAXES
The following is a summary of selected Federal income tax considerations
that may affect the fund and its shareholders. The summary is not intended
as a substitute for individual tax advice and investors are urged to
consult their own tax advisors as to the tax consequences of an investment
in the fund.
Taxation of the Fund
The fund has qualified and intends to qualify each year as a regulated
investment company under the Code. As a regulated investment company, the
fund will not be subject to Federal income tax on its net investment
income and capital gain net income (capital gains net of capital losses),
if any, that it distributes to shareholders provided at least 90% of its
net investment income for the taxable year is distributed. All net
investment income and capital gain net income earned by the fund will be
reinvested automatically in additional shares of the fund at net asset
value, unless the shareholder elects to receive dividends and
distributions in cash.
To qualify as a regulated investment company, the fund must meet certain
requirements set forth in the Code. One requirement is that the fund must
earn at least 90% of its gross income from (a) interest, (b) dividends,
(c) payments with respect to securities loans, (d) gains from the sale or
other disposition of stock, securities or options and (e) other income
derived with respect to its business of investing in stock or securities
(the 90% Test).
Generally, the fund's return on its investments will be considered to be
qualified income under the 90% Test.
Tax Status of the Fund's Investments
Gain or loss on the sale of a security by the fund generally will be
long-term capital gain or loss if the fund has held the security for more
than one year. Gain or loss on the sale of a security held for one year or
less generally will be short-term capital gain or loss. Generally, if the
fund acquires a debt security at a discount, any gain upon the sale or
redemption of the security will be taxable as ordinary income to the
extent that such gain reflects accrued market discount.
The tax consequences of the fund's covered call option transactions will
depend on the nature of the underlying security. In the case of a call
option on an equity or convertible debt security, the fund will receive a
premium that will be treated for tax purposes as follows: no income is
recognized upon the receipt of an option premium; if the option expires
unexercised or if the fund enters into a closing purchase transaction, it
will realize a gain (or a loss, if the cost of the closing transaction
exceeds the amount of the premium) without regard to the unrealized gain
or loss in the underlying security. Any such gain or loss will be
short-term, except that a loss will be long-term if the option exercise
price is below market and the underlying stock has been held for more than
a year. If a call option is exercised, the fund will recognize a capital
gain or loss from the underlying security, and the option premium will
constitute additional sales proceeds.
The fund also will not recognize income on the receipt of an option
premium on a debt security. Listed options on debt securities, however,
are subject to a special mark-to-market system governing the taxation of
section 1256 contracts, which include listed options on debt securities
(including U.S. government securities), options on certain stock indexes
and certain foreign currencies. In general, gain or loss on section 1256
contracts will be taken into account for tax purposes when actually
realized. In addition, any section 1256 contracts held at the end of a
taxable year (and, for purposes of the 4% excise tax, on October 31 of
each year) will be treated as sold at fair market value (that is,
marked-to-market), and the resulting gain or loss will be recognized for
tax purposes. Both the realized gain or loss and the unrealized taxable
year-end gain or loss will be treated as 60% long-term and 40% short-term
capital gain or loss, regardless of the period of time that a particular
position is actually held by the fund.
Taxation of Shareholders
Dividends of investment income and distributions of short-term gain will
be taxable to shareholders as ordinary income for Federal income tax
purposes, whether received in cash or reinvested in additional shares.
Distributions of long-term capital gain will be taxable to shareholders as
long-term capital gain, whether paid in cash or reinvested in additional
shares, and regardless of the length of time the shareholder has held
his/her shares of the fund.
Dividends of investment income (but not distributions of capital gain)
from the fund generally will qualify for the Federal dividends-received
deduction for corporate shareholders to the extent that the dividends do
not exceed the aggregate amount of dividends received by the fund from
domestic corporations. If securities held by the fund are considered to be
debt-financed (generally, acquired with borrowed funds) or are held by the
fund for less than 46 days (91 days in the case of certain preferred
stock), the portion of the dividends paid by the fund corresponding to the
dividends paid with respect to the securities will not be eligible for the
corporate dividends-received deduction.
If the fund is the holder of record of any stock on the record date for
any dividends payable with respect to such stock, such dividends must be
included in the fund's gross income as of the later of (a) the date such
stock became ex-dividend with respect to such dividends (i.e., the date on
which a buyer of the stock would not be entitled to receive the declared,
but unpaid, dividends) or (b) the date the fund acquired such stock.
Accordingly, in order to satisfy its income distribution requirements, the
fund may be required to pay dividends based on anticipated earnings, and
shareholders may receive dividends in an earlier year than would otherwise
be the case.
Capital Gains Distribution
In general, a shareholder who redeems or exchanges his or her shares will
recognize long-term capital gain or loss if the shares have been held for
more than one year, and will recognize short-term capital gain or loss if
the shares have been held for one year or less. If a shareholder receives
a distribution taxable as long-term capital gain with respect to shares of
the fund and redeems or exchanges the shares before he or she has held
them for more than six months, however, any loss on the redemption or
exchange that is less than or equal to the amount of the distribution will
be treated as a long-term capital loss. For individuals, the maximum rate
for long-term capital gains is 20%.
Backup Withholding
If a shareholder fails to furnish a correct taxpayer identification
number, fails fully to report dividend and interest income, or fails to
certify that he or she has provided a correct taxpayer identification
number and that he or she is not subject to backup withholding, then the
shareholder may be subject to a 31% Federal backup withholding tax with
respect to (a) dividends and distributions and (b) the proceeds of any
redemptions or exchanges of fund shares. An individual's taxpayer
identification number is his or her social security number. The backup
withholding tax is not an additional tax and may be credited against a
shareholder's regular Federal income tax liability.
ADDITIONAL INFORMATION
The trust is organized as an unincorporated business trust under the laws
of the Commonwealth of Massachusetts pursuant to an Agreement and
Declaration of Trust dated June 2, 1983 (the Trust Agreement) which was
amended and restated on November 5, 1992. On October 14, 1994, the trust
and the fund changed their names to Smith Barney Telecommunications Trust
and Smith Barney Telecommunications Fund, respectively.
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the fund. The Master
Trust Agreement disclaims shareholder liability for acts or obligations of
the fund, however, and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the
fund or a Trustee. The Master Trust Agreement provides for
indemnification from fund property for all losses and expenses of any
shareholder held personally liable for the obligations of the fund. Thus,
the risk of a shareholder's incurring financial loss on account of
shareholder liability is limited to circumstances in which the fund itself
would be unable to meet its obligations, a possibility which management of
the fund believes is remote. Upon payment of any liability incurred by
the fund, a shareholder paying such liability will be entitled to
reimbursement from the general assets of the fund. The Trustees intend to
conduct the operation of the fund in such a way so as to avoid, as far as
possible, ultimate liability of the shareholders for liabilities of the
fund.
PNC Bank, National Association (PNC) is located at 17th and Chestnut
Streets, Philadelphia, PA 19103 and serves as the custodian of the trust's
investments pursuant to a custody agreement. Under the custody agreement,
PNC holds the trust's securities and keeps all necessary accounts and
records. For its services, PNC receives a monthly fee based upon the
trust's month-end market value of securities held in custody and also
receives securities transaction charges including out-of-pocket expenses.
PNC is authorized to establish separate accounts for foreign securities
owned by the trust to be held with foreign branches of other United States
banks as well as with certain foreign banks and securities depositories.
The assets of the trust are held under bank custodianship in compliance
with the 1940 Act.
First Data Investor Services Group, Inc. (First Data) is located at
Exchange Place, Boston, Massachusetts 02109 and serves as the trust's
transfer agent. Under the transfer agency agreement, First Data maintains
the shareholder account records for the trust and handles certain
communications between shareholders and the trust. For these services,
First Data receives a monthly fee computed on the basis of the number of
shareholder accounts that it maintains for the trust during the month and
is reimbursed for out-of-pocket expenses.
Description of Shares
The Master Trust Agreement of the fund permits the Trustees of the fund to
issue an unlimited number of full and fractional shares of a single class
and to divide or combine the shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interests in
the fund. Each share in the fund represents an equal proportional
interest in the fund with each other share. Shareholders of the fund are
entitled upon its liquidation to share pro rata in its net assets
available for distribution. No shareholder of the fund has any preemptive
or conversion rights. Shares of the fund are fully paid and non-
assessable.
Pursuant to the Master Trust Agreement, the fund's Trustees may authorize
the creation of additional series of shares (the proceeds of which would
be invested in separate, independently managed portfolios) and additional
classes of shares within any series (which would be used to distinguish
among the rights of different categories of shareholders, as might be
required by future regulations or other unforeseen circumstances).
FINANCIAL STATEMENTS
The fund's annual report for the fiscal year ended December 31, 1998 was
filed on March 15, 1999 and is incorporated in its entirety by reference,
Accession No. 91155-99-000147.
APPENDIX
The following is a description of the two highest ratings categories of
NRSROs for commercial paper:
The rating A-l is the highest commercial paper rating assigned by S&P.
Paper rated A-1 must have either the direct credit support of an issuer or
guarantor that possesses excellent long-term operating and financial
strength combined with strong liquidity characteristics (typically, such
issuers or guarantors would display credit quality characteristics which
would warrant a senior bond rating of AA- or higher), or the direct credit
support of an issuer or guarantor that possesses above average long-term
fundamental operating and financing capabilities combined with ongoing
excellent liquidity characteristics. Paper rated A-1 must have the
following characteristics: liquidity ratios are adequate to meet cash
requirements; long-term senior debt is rated A or better; the issuer has
access to at least two additional channels of borrowing; basic earnings
and cash flow have an upward trend with allowance made for unusual
circumstances; typically, the issuers industry is well established and the
issuer has a strong position within the industry; and the reliability and
quality of management are unquestioned.
The rating Prime-l is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are
the following: (a) evaluation of the management of the issuer; (b)
economic evaluation of the issuers industry or industries and an appraisal
of speculative-type risks which may be inherent in certain areas; (c)
evaluation of the issuer's products in relation to competition and
customer acceptance; (d) liquidity; (e) amount and quality of long-term
debt; (f) trend of earnings over a period of ten years; (g) financial
strength of a parent company and the relationship which exists with the
issuer; and (h) recognition by the management of obligations which may be
present or may arise as a result of public interest questions and
preparations to meet such obligations.
Fitch IBCA, Inc. short term ratings apply to debt obligations that are
payable on demand or have original maturities of generally up to three
years, including commercial paper, certificates of deposit, medium-term
notes, and municipal and investment notes. The short-term rating places
greater emphasis than a long-term rating on the existence of liquidity
necessary to meet financial commitment in a timely manner. Fitch's
short-term rates are as follows: F1+ indicates issues regarded as having
the strongest capacity for timely payments of financial commitments. The
+ denotes an exceptionally strong credit feature. The rating F1 reflects
issues regarded as having the strongest capacity for timely payment of
financial commitments while the rating F-2 indicates a satisfactory
capacity for timely payment of financial commitments, but the margin of
safety is not as great as in the case of the higher ratings.
Duff & Phelps Inc. employs the designation of Duff 1 with respect to top
grade commercial paper and bank money instruments. Duff 1+ indicates the
highest certainty of timely payments: short-term liquidity is clearly
outstanding, and safety is just below risk free U.S. Treasury short-term
obligations. Duff 1- indicates high certainty of timely payment. Duff 2
indicates good certainty of timely payment: liquidity factors and company
fundamentals are sound.
The Thomson BankWatch (TBW) Short-Term Ratings apply to commercial paper,
other senior short-term obligations and deposit obligations of the
entities to which the rating has been assigned, and apply only to
unsecured instruments that have a maturity of one year or less.
TBW-1 The highest category; indicates a very high degree of
likelihood that principal and interest will be paid on a
timely basis.
TWB-2 The second highest category; while the degree of safety
regarding timely repayment of principal and interest is
strong, the relative degree of safety is not as high as for
issues rated TBW-1.
PART C
OTHER INFORMATION
Signature
Item 23. Exhibits
Unless otherwise noted, all references are to the Registrants registration
statement on Form N-1A (the Registration Statement) as filed with the
Securities and Exchange Commission (the SEC) on September 14, 1983, (
File Nos. 2-86519 and 811-3736).
(a)(1)Registrants Second Amended and Restated Master Trust Agreement
and Declaration of Trust is incorporated by reference to Post-Effective
Amendment No. 14 as filed on April 27, 1993.
(2) Amendment No. 1 to the Second Amended and Restated Master Trust
Agreement is incorporated by reference to Registrants Post-Effective
Amendment No. 18 as filed on February 28, 1995.
(3) Amendment No. 2 to the Second Amended and Restated Master Trust
Agreement is incorporated by reference to Registrants Post-Effective
Amendment No. 18 as filed on February 28, 1995
(4) Amendment No. 3 to the Second Amended and Restated Master Trust
Agreement is incorporated by reference to Registrants Post-Effective
Amendment No. 18 as filed on February 28, 1995.
(5) Amendment No. 4 to the Seconded Amended and Restated Master Trust
Agreement is incorporated by reference to Registrants Post-Effective
Amendment No. 23 as filed on February 25, 1999.
(b) Registrant's by-laws are incorporated by reference to the Registration
Statement.
(c) Specimen Share Certificate for the Fund is incorporated by
reference to the Registration Statement.
(d)(1)Investment Advisory Agreements between the Registrant and Smith
Barney Strategic Advisers, Inc. dated June 16, 1994 and July 27, 1994
are incorporated by reference to Registrants Post-Effective Amendment No.
18 as filed on February 28, 1995.
(2) Form of Transfer of Advisory Agreement between the Registrant,
Smith Barney Strategy Advisers Inc. and the Mutual Management Corp. is
incorporated by reference to Registrants Post-Effective Amendment No. 23
as filed on February 25, 1999.
(e)(1)Distribution Agreement between the Registrant and Smith Barney Inc.
is incorporated by reference to the Post-Effective Amendment No. 15 to the
Registration Statement as filed on July 30, 1993.
(2) Distribution Agreement between the Registrant and CFBDS, Inc. dated
October 8, 1998 is incorporated by reference to Registrants Post-Effective
Amendment No. 23 as filed on February 25, 1999.
(3) Selling Group Agreement is incorporated by reference to Registrants
Post-Effective Amendment No. 23 as filed on February 25, 1999.
(f) Not Applicable.
(g) Custodian Agreement between the Registrant and PNC Bank, National
Association (PNC Bank) is incorporated by reference to Post-Effective
Amendment No. 21 to the Registration Statement.
(h)(1)Transfer Agency Agreement dated August 2, 1993 between the
Registrant and First Data Investors Services Group (formerly the
Shareholder Services Group, Inc.) is incorporated by reference to
Post-Effective Amendment No. 15 to the Registration Statement.
(2) Administration Agreement dated April 21, 1994 between the
Registrant and Smith Barney Mutual Funds Management Inc. (formerly
Smith Barney Advisers, Inc.) is incorporated by reference to
Post-Effective Amendment No. 18 to the Registration Statement.
(i) Opinion of counsel regarding legality of
shares being registered is incorporated by reference to Pre-
Effective Amendment No. 1 to the Registration
Statement filed on October 7, 1983.
(j) Auditor's consent is filed herein.
(k) Not Applicable.
(l) Not Applicable.
(m) Not Applicable.
(n) Financial Data Schedule is filed herein.
(o)(1)Plan pursuant to Rule 18f-3 is incorporated by reference to the
Post-Effective Amendment No. 19 to the registration Statement as
filed on December 26, 1995.
(2) Rule 18f-3(d) Multiple Class Plan of the Registrant
is incorporated by reference to Registrants Post-Effective Amendment
No. 23 as filed on February 25, 1999.
Item 24. Persons Controlled by or under Common
Control with Registrant
None
Item 25. Indemnification
The response to this item is incorporated by
reference to Post-Effective Amendment No. 1.
Item 26(a). Business and Other Connections of
Investment Adviser
Investment Adviser and Administrator - SSBC Fund
Management Inc. ("SSBC") (f/k/a Mutual Management Corp.), was
incorporated in December 1968 under the laws of the State of Delaware.
SSBC is a wholly owned subsidiary of Salomon Smith Barney Holdings Inc.
("Holdings"),(formerly known as Smith Barney Holdings
Inc.), which in turn is a wholly owned subsidiary of
Citigroup Inc. ("Citigroup"). SSBC is
registered as an investment adviser under the
Investment Advisers Act of 1940 (the Advisers Act)
and has, through its predecessors, been in the
investment counseling business since 1934. SSBC
serves as the Investment Adviser and Administrator
the Telecommunications Income Fund.
The list required by this Item 26 of the officers and
directors of SSBC together with information as to any other business,
profession, vocation or employment of a substantial
nature engaged in by such officer and directors
during the past two fiscal years, is incorporated by
reference to Schedules A and D of FORM ADV filed by
SSBC pursuant to the Advisers Act (SEC File No. 801-
8314).
Item 27. Principal Underwriters
(a) CFBDS, Inc., ("CFBDS") the Registrant's Distributor, is also
the distributor for the following Smith Barney funds: Concert
Investment Series, Consulting Group Capital Markets Funds, Greenwich
Street Series Fund, Smith Barney Adjustable Rate Government Income
Fund, Smith Barney Aggressive Growth Fund Inc., Smith Barney
Appreciation Fund Inc., Smith Barney Arizona Municipals Fund Inc.,
Smith Barney California Municipals Fund Inc., Smith Barney Concert
Allocation Series Inc., Smith Barney Equity Funds, Smith Barney
Fundamental Value Fund Inc., Smith Barney Funds, Inc., Smith Barney
Income Funds, Smith Barney Institutional Cash Management Fund, Inc.,
Smith Barney Investment Funds Inc.,
Smith Barney Managed Governments Fund Inc., Smith Barney Managed
Municipals Fund Inc., Smith Barney Massachusetts Municipals Fund,
Smith Barney Money Funds, Inc., Smith Barney Muni Funds, Smith Barney
Municipal Money Market Fund, Inc., Smith Barney
Natural Resources Fund Inc., Smith Barney New Jersey Municipals
Fund Inc., Smith Barney Oregon Municipals Fund Inc., Smith Barney
Principal Return Fund, Smith Barney Small Cap Blend Fund, Inc., Smith
Barney Telecommunications Trust, Smith Barney Variable Account Funds,
Smith Barney World Funds, Inc., Travelers Series Fund Inc., and
various series of unit investment trusts.
CFBDS also serves as the distributor for the following funds: The
Travelers Fund UL for Variable Annuities, The Travelers Fund VA for
Variable Annuities, The Travelers Fund BD for Variable Annuities, The
Travelers Fund BD II for Variable Annuities, The Travelers Fund BD
III for Variable Annuities, The Travelers Fund BD IV for Variable
Annuities, The Travelers Fund ABD for Variable Annuities, The
Travelers Fund ABD II for Variable Annuities, The Travelers Separate
Account PF for Variable Annuities, The Travelers Separate Account PF
II for Variable Annuities, The Travelers Separate Account QP for
Variable Annuities, The Travelers Separate Account TM for Variable
Annuities, The Travelers Separate Account TM II for Variable
Annuities, The Travelers Separate Account Five for Variable
Annuities, The Travelers Separate Account Six for Variable Annuities,
The Travelers Separate Account Seven for Variable Annuities, The
Travelers Separate Account Eight for Variable Annuities, The
Travelers Fund UL for Variable Annuities, The Travelers Fund UL II
for Variable Annuities, The Travelers Variable Life Insurance
Separate Account One, The Travelers Variable Life Insurance Separate
Account Two, The Travelers Variable Life Insurance Separate Account
Three, The Travelers Variable Life Insurance Separate Account Four,
The Travelers Separate Account MGA, The Travelers Separate Account
MGA II, The Travelers Growth and Income Stock Account for Variable
Annuities, The Travelers Quality Bond Account for Variable Annuities,
The Travelers Money Market Account for Variable Annuities, The
Travelers Timed Growth and Income Stock Account for Variable
Annuities, The Travelers Timed Short-Term Bond Account for Variable
Annuities, The Travelers Timed Aggressive Stock Account for Variable
Annuities, The Travelers Timed Bond Account for Variable Annuities.
In addition, CFBDS, the Registrant's Distributor, is also the
distributor for CitiFunds Multi-State Tax Free Trust, CitiFunds
Premium Trust, CitiFunds Institutional Trust, CitiFunds Tax Free
Reserves, CitiFunds Trust I, CitiFunds Trust II, CitiFunds Trust III,
CitiFunds International Trust, CitiFunds Fixed Income Trust,
CitiSelect VIP Folio 200, CitiSelect VIP Folio 300, CitiSelect VIP
Folio 400, CitiSelect VIP Folio 500, CitiFunds Small Cap Growth VIP
Portfolio. CFBDS is also the placement agent for Large Cap Value
Portfolio, Small Cap Value Portfolio, International Portfolio,
Foreign Bond Portfolio, Intermediate Income Portfolio, Short-Term
Portfolio, Growth & Income Portfolio, U.S. Fixed Income Portfolio,
Large Cap Growth Portfolio, Small Cap Growth Portfolio, International
Equity Portfolio, Balanced Portfolio, Government Income Portfolio,
Tax Free Reserves Portfolio, Cash Reserves Portfolio and U.S.
Treasury Reserves Portfolio.
In addition, CFBDS is also the distributor for the following Salomon
Brothers funds: Salomon Brothers Opportunity Fund Inc., Salomon
Brothers Investors Fund Inc., Salomon Brothers Capital Fund Inc.,
Salomon Brothers Series Funds Inc., Salomon Brothers Institutional
Series Funds Inc., Salomon Brothers Variable Series Funds Inc.
In addition, CFBDS is also the distributor for the Centurion Funds,
Inc.
(b) The information required by this Item 27 with respect to each
director and officer of CFBDS is incorporated by reference to
Schedule A of Form BD filed by CFBDS pursuant to the Securities and
Exchange Act of 1934 (File No. 8-32417).
(c) Not applicable.
Item 28. Location of Accounts and Records
(1) Smith Barney Telecommunications Trust
388 Greenwich Street
New York, New York 10013
(2) SSBC Fund Management Inc.
388 Greenwich Street
New York, New York 10013
(3) PNC Bank, National Association
17th and Chestnut Streets
Philadelphia, PA
(4) First Data Investor Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
(5) CFBDS Inc.
21 Milk Street, 5th floor
Boston, Massachusetts 02109
Item 29. Management Services
Not Applicable.
Item 30. Undertakings
Not applicable
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, (the "Securities Act") and the Investment Company Act of 1940,
the Registrant, SMITH BARNEY TELECOMMUNICATIONS TRUST, certifies that it
meets all of the requirements for effectiveness of this registration
statement under rule 485(b) under the Securities Act has
duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly
authorized in the City of New York, in the State of
New York on the 29th day of April, 1999.
SMITH BARNEY TELECOMMUNICATIONS TRUST
/s/Heath B. McLendon
Heath B. McLendon,
Chief Executive Officer
Pursuant to the requirements of the Securities
Act of 1933, this registration statement has been signed
below by the following persons in the capacities and on
the date indicated.
Signature Title Date
/s/Heath B. McLendon Chairman of the Board 4/29/99
Heath B. McLendon (Chief Executive Officer)
and President
/s/Lewis E. Daidone Treasurer 4/29/99
Lewis E. Daidone (Chief Financial and
Accounting Officer)
/s/Paul Ades* Trustee 4/29/99
Paul Ades
/s/Herbert Barg* Trustee 4/29/99
Herbert Barg
/s/Dwight B. Crane* Trustee 4/29/99
Dwight B. Crane
/s/Frank G. Hubbard* Trustee 4/29/99
Frank G. Hubbard
/s/Ken Miller* Trustee 4/29/99
Ken Miller
/s/Jerome Miller* Trustee 4/29/99
Jerome Miller
_____________________________________________________________________
* Signed by Heath B. McLendon, their duly authorized
attorney-in-fact, pursuant to power
of attorney dated January 27, 1995.
/s/ Heath B. McLendon
Heath B. McLendon
Exhibit No. Exhibits
(j) Auditor's Consent
(n) Financial Data Schedule
cover
Independent Auditors' Consent
To the Shareholders and Board of Trustees of
Smith Barney Telecommunications Trust.:
We consent to the use of our report dated February 8, 1999, with
respect to Smith Barney Telecommunications Trust, incorporated herein
by reference and to the references to our Firm under the headings
"Financial Highlights" in the Prospectus and "Auditors" in the
Statement of Additional Information.
KPMG LLP
New York, New York
April 27, 1999
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