As filed with the Securities and Exchange
Commission on April 26, 2000
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. 26
[X]
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 27
__________________ [ ]
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 28, 2000 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 28, 2000
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
Investments, risks and performance 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.
Investments, risks and performance
Investment
objective
The fund seeks current income, with long-term growth of capital as a secondary
objective.
Principal
investment
strategies
Key
investment
s
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.
Risk return bar chart
This bar chart indicates the risks of investing in the fund by
showing changes in the fund's performance from year to year.
Past performance does not necessarily indicate how the fund
will perform in the future. The bar chart shows the
performance of 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
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
1999 12.18
Quarterly returns: Highest: 25.88% in 4th quarter 1998;
Lowest: (9.01)% in 1st quarter 1990.
Risk return table
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, 1999
1 Year
5
Years
10
Years
Since
Inception
Inception
Date
Telecommunicatio
ns Trust
12.18%
28.66%
16.27%
19.12%
1/1/84
S&P 500 Index
21.03%
28.54%
18.19%
18.22%
*
This table assumes redemption of shares at the end of
the period, and reinvestment of distributions
and dividends, but does not assume imposition of the
maximum sales charge except at inception where
a sales charge was imposed.
* Index comparison begins on January 31, 1984.
Fee table
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 and administrative 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
You redeem all of your shares at the
end of the period
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 SSB Citi Fund
Management LLC (successor to SSBC Fund Management Inc.), an
affiliate of Salomon Smith Barney Inc. The manager's address
is 388 Greenwich Street, New York, New York 10013. The
manager selects the fund's investments and oversees its
operations. The manager and Salomon Smith Barney are
subsidiaries of Citigroup Inc. Citigroup businesses produce
a broad range of financial services -- asset management,
banking and consumer finance, credit and charge cards,
insurance, investments, investment banking and trading -- and
use diverse channels to make them available to consumer and
corporate customers around the world.
Robert E. Swab, investment officer of the manager and a
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,
1999, 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.
Transfer agent and shareholder servicing agent Citi Fiduciary
Trust Company, an affiliate of Salomon Smith Barney Inc.,
serves as the fund's transfer agent and shareholder servicing
agent (the "transfer agent"). Pursuant to a sub-transfer
agency and services agreement with the transfer agent, PFPC
Global Fund Services serves as the fund's sub-transfer agent
(the "sub-transfer agent") to render certain shareholder
record keeping and accounting services and functions.
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
Smith
Barney
offers a
distinct
ive
family
of
funds
tailored
to help
meet the
varying
needs of
both
large
and
small
investor
s
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
addition
al
sales
charges
Shares acquired in the exchange will not be subject to an initial sales
charge at the time of the exchange.
By
telephon
e
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 4:00 p.m.
(Eastern time).
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 sub-transfer agent at the address on the next
page.
Redeeming shares
Generall
y
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 sub-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 sub-
transfer agent at the following address:
Smith Barney Telecommunications Trust
c/o PFPC Global Fund Services
P.O. Box 9699
Providence, R.I. 02940-9699
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
telephon
e
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 4:00 p.m. (Eastern time).
Your redemption proceeds can be sent by check to your address of record or by
wire transfer to a bank account designated on your authorization form. You
must
submit a new authorization form to change the bank account designated to
receive
wire transfers and you may be asked to provide certain other documents.
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 sub-transfer agent
? Instruct the sub-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
Share certificates The fund does not issue share certificates
unless a written request signed by all registered owners is
made to the sub-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 "Investments, risks and performance" 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
Statement of Additional Information (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).
For a share of beneficial interest outstanding throughout
each year ended December 31:.
1999
1998
1997
1996
1995
Net asset value, beginning
of year
$176.20
$134.06
$104.62
$119.69
$95.62
Income (loss) from
operations:
Net investment income
Net realized and unrealized
gain (loss)
1.74
19.24
2.26
64.18
2.83
43.05
3.12
(5.35)
3.58
35.57
Total income (loss) from
Operations
20.98
66.44
45.88
(2.23)
39.15
Less distributions from:
Net investment income
Net realized gains
(1.78)
(18.13)
(2.22)
(22.08)
(2.83)
(13.61)
(3.12)
(9.72)
(3.58)
(11.50)
Total distributions
(19.91)
(24.30)
(16.44)
(12.84)
(15.08)
Net asset value, end of year
$177.27
$176.20
$134.06
$104.62
$119.69
Total return
12.18%
53.72%
45.11%
(1.45)%
42.93%
Net assets, end of year
(millions)
$97
$96
$73
$63
$75
Ratios to average net assets:
Expenses
Net investment income
0.89%
0.92
0.89%
1.51
0.92%
2.35
0.90%
2.80
0.95%
3.23
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
Information about the Fund (including the SAI) can be reviewed
and copied at the Securities and Exchange Commission's (the
"Commission") Public Reference Room in Washington, D.C. In
addition, information on the operation of the Public Reference
Room may be obtained by calling the Commission at 1-202-942-
8090. Reports and other information about the Fund are
available on the EDGAR Database on the Commission's Internet
site at http://www.sec.gov. Copies of this information may be
obtained for a duplicating fee by electronic request at the
following E-mail address: [email protected], or by writing
the Commission's Public Reference Section, Washington, D.C.
20549-0102.
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)
FD01120 4/00
Telecommunications Trust -6-
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 28, 2000
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 28,
2000, 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...........5
Redemption and Exchange of
Shares..............12
Valuation of
Shares.............14
Performance
Data.............15
Taxes...........16
Additional
Information......18
Financial
Statements......19
Other
Information.....19
Appendix.........20
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
Partner in the law firm of Paul R. Ades, PLLC; 181 West
Main Street, Suite C, P.O. Box 790, Babylon, New York
11702; Director or Trustee of five investment companies
associated with Citigroup Inc. ("Citigroup"); 59.
HERBERT BARG, TRUSTEE
Private Investor; 273 Montgomery Avenue, Bala Cynwyd,
Pennsylvania 19004; Director or Trustee of 16 investment
companies associated with Citigroup; 76.
DWIGHT B. CRANE, TRUSTEE
Professor, Harvard Business School; Soldiers Field Road,
Boston, Massachusetts 02163; Director or Trustee of 24
investment companies associated with Citigroup; 62.
FRANK HUBBARD, TRUSTEE
Vice President of S & S Industries; Former Corporate
Vice President, Materials Management and Marketing
Services of Huls American, Inc.; 80 Centennial Avenue
P.O. Box 456, Piscataway; New Jersey 08855-0456;
Director or Trustee of five investment companies
associated with Citigroup; 62.
*HEATH B. MCLENDON, CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Managing Director of Salomon Smith Barney Inc. ("Salomon
Smith Barney"), President and Chairman of 71 investment
companies associated with Citigroup, President and
Director of SSB Citi Fund Management LLC ("SSB Citi")
(successor to SSBC Fund Management Inc.) and Travelers
Investment Adviser, Inc. ("TIA")and former Chairman of
Smith Barney Strategy Advisors Inc.; 7 World Trade
Center, New York, New York 10048; 66.
JEROME H. MILLER, TRUSTEE
Retired, Former President, Asset Management Group of
Shearson Lehman Brothers; 27 Hemlock Road, Manhassett,
New York 11030; Director or Trustee of five investment
companies associated with Citigroup; 61.
KEN MILLER, TRUSTEE
President of Young Stuff Apparel Group, Inc.; 1407
Broadway, 6th Floor, New York, New York 10018; Director
or Trustee of five investment companies associated with
Citigroup; 58.
ROBERT E. SWAB, INVESTMENT OFFICER
A Managing Director of Salomon Smith Barney. His
address is 7 World Trade Center, New York, New York
10048; 43.
LEWIS E. DAIDONE, SENIOR VICE PRESIDENT AND TREASURER
Managing Director of Salomon Smith Barney, Senior Vice
President and Treasurer or Executive Vice President and
Treasurer of 61 investment companies associated with
Citigroup; Director and Senior Vice President of the
Manager and TIA; 388 Greenwich Street, New York, New
York 10013; 42.
CHRISTINA T. SYDOR, SECRETARY
Managing Director of Salomon Smith Barney; Secretary of
61 investment companies associated with Citigroup;
General Counsel and Secretary of the Manager and TIA;
388 Greenwich Street, New York, New York 10013; 49.
PAUL A. BROOK, CONTROLLER
Managing Director of Salomon Smith Barney; Controller or
Assistant Treasurer of 43 investment companies
affiliated with Citigroup; Prior to 1998, Managing
Director of AMT Capital Services Inc.; Prior to 1997,
Partner with Ernst & Young LLP; 388 Greenwich Street,
New York, New York 10013; 46.
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 4, 2000, the Trustees and officers of the
trust, as a group, owned less than 1% of the fund's
outstanding shares. As of April 4, 2000, 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, 1999, such out of pocket expenses totaled
$18,574.
For the calendar year ended December 31, 1999, 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)
$2,875
$56,238
$0
Herbert Barg (16)
2,.875
114,288
0
Dwight B. Crane
(24)
2,750
155,363
0
Frank G. Hubbard
(5)
2,875
56,138
0
Heath B. McLendon
(71)
0
0
0
Jerome Miller (5)
2,750
51,613
0
Ken Miller (5)
2,625
47,188
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 $416.
Investment Adviser - SSB Citi
SSB Citi serves as investment adviser to the fund
pursuant to a written agreement dated October 22, 1998
(the Advisory Agreement), which was last approved by the
trust's Board of Trustees, including a majority of the
Trustees who are not interested persons of the trust or
SSB Citi, on July 22, 1999. Subject to the supervision
and direction of the fund's Board of Trustees, SSB Citi
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. SSB Citi 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. SSB Citi is an affiliate
of Salomon Smith Barney Inc. and a subsidiary of
Citigroup. SSB Citi (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
February 29, 2000 in excess of $188 billion.
As compensation for investment advisory services
rendered, the fund pays SSB Citi 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, 1997, 1998 and 1999, the fund paid
SSB Citi $367,532, $441,033 and $536,983, respectively,
in investment advisory fees.
Administrator - SSB Citi
SSB Citi also serves as administrator to the fund
pursuant to a written agreement dated April 21, 1994
(the Administration Agreement), which was last approved
by the trust's Board of Trustees, including a majority
of the Trustees who are not interested persons of the
fund or SSB Citi, on July 22, 1999. SSB Citi 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, SSB Citi 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, 1997,
1998 and 1999, the fund paid SSB Citi $133,648, $160,376
and $195,267, 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.
Code of Ethics
Pursuant to Rule 17j-1 of the 1940 Act, the fund, the
investment adviser and principal underwriter have
adopted codes of ethics that permit personnel to invest
in securities for their own accounts, including
securities that may be purchased or held by the fund.
All personnel must place the interests of clients first
and avoid activities, interests and relationships that
might interfere with the duty to make decisions in the
best interests of the clients. All personal securities
transactions by employees must adhere to the
requirements of the codes and must be conducted in such
a manner as to avoid any actual or potential conflict of
interest, the appearance of such a conflict, or the
abuse of an employee's position of trust and
responsibility.
A copy of the fund's code of ethics is on file with the
Securities and Exchange Commission ("SEC").
Auditors
KPMG LLP, 757 Third Avenue, New York, New York 10017,
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,
2000.
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 33 1/3% 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. SSB Citi, 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 SSB
Citi 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,
SSB Citi 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. SSB Citi 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 SSB Citi 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 SSB Citi 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 SSB Citi 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 SSB Citi 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 SSB Citi 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. SSB Citi 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 13 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), 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.
(13) 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 1999 and 1998 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 SSB Citi, 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 SSB Citi.
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 1999, 1998, and 1997
fiscal years, the fund paid total brokerage commissions
of $8,084,$10,689, and $11,603, 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, SSB Citi
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 SSB Citi, 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 SSB Citi 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 SSB Citi under
the Advisory Agreement are not reduced by reason of SSB
Citi 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 SSB Citi, 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 1999, 1998, and 1997 fiscal years, brokerage
commissions of $0, $790, and $4,190, 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 SSB Citi, 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 SSB Citi 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 SSB Citi
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 AND EXCHANGE OF SHARES
WRITTEN REDEMPTION REQUESTS
The trust is required to redeem shares of the fund
tendered to it, as described below, at a redemption
price equal to their net asset value per share next
determined after receipt of a written request in proper
form. Redemption requests received after the close of
regular trading on the NYSE are priced at the net asset
value per share next determined.
The fund normally transmits redemption proceeds for
credit to the shareholder's account at Salomon Smith
Barney, an investment dealer in the selling group or a
broker that clears securities transactions through
Salomon Smith Barney ("Dealer Representative"), at no
charge within three days after receipt of proper tender
except on any days on which the NYSE is closed or as
permitted under the 1940 Act in extraordinary
circumstances. Generally, these funds will not be
invested for the shareholder's benefit without specific
instruction and Salomon Smith Barney will benefit from
the use of temporarily uninvested funds.
Shares held by Salomon Smith Barney as custodian must be
redeemed by submitting a written request to a Salomon
Smith Barney Financial Consultant. Shares other than
those held by Salomon Smith Barney as a custodian may be
redeemed through an investor's financial consultant, by
submitting a written request for redemption to:
Smith Barney Telecommunications Trust
Smith Barney Telecommuncations Income Fund
c/o PFPC Global Fund Services
P.O. Box 9699
Providence, RI 02940-9699
A written redemption request must (a) state the number
or dollar amount of shares to be redeemed, (b) identity
the fund from which the shares are to be redeemed, (c)
identify the shareholder's account number and (d) be
signed by each registered owner exactly as the shares
are registered. If the shares to be redeemed were
issued in certificate form, the certificates must be
endorsed for transfer (or be accompanied by an endorsed
stock power) and must be submitted to PFPC Global Fund
Services (the "sub-transfer agent") together with a
redemption request. Any signature appearing on a
redemption request in excess of $10,000, share
certificate or stock power must be guaranteed by an
eligible guarantor institution such as a domestic bank,
savings and loan institution, domestic credit union,
member bank of the Federal Reserve System or a member
firm of a national securities exchange. Written
requests of $10,000 or less do not require a signature
guarantee unless more than one such redemption request
is made in any 10-day period or the redemption proceeds
are to be sent to an address other than the address of
record. Unless otherwise directed, redemption proceeds
will be mailed to an investor's address of record. Citi
Fiduciary Trust Company (the "transfer agent") may
require additional supporting documents for redemptions
made by corporations, executors, administrators,
trustees or guardians. A redemption request will not be
deemed to be properly received until the trust's
transfer agent receives all required documents in proper
form.
The right of redemption may be suspended or the date of
payment postponed (a) for any period during which the
NYSE is closed (other than for customary weekend and
holiday closings), (b) when trading in markets the fund
normally utilizes is restricted, or an emergency as
determined by the SEC exists, so that the disposal of
the fund's investments or determination of its 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.
EXCHANGE PRIVILEGE
The exchange privilege enables shareholders to acquire
shares of the same class in the fund with different
investment objectives when they believe that a shift
between funds is an appropriate investment decision.
This privilege is available to shareholders resident in
any state in which the fund shares being acquired may be
legally sold. Prior to any exchange, the investor
should obtain and review a copy of the then current
prospectus of the fund into which an exchange is being
made. Prospectuses may be obtained from a Salomon Smith
Barney Financial Consultant. A shareholder who has
redeemed shares of the fund, through the exchange
privilege or otherwise, will not be able to purchase new
shares of the fund.
Upon receipt of proper instructions and all necessary
supporting documents in proper form, 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 with such shares being subject to any
applicable contingent deferred sales charge. If the
account registration of the shares of the fund being
acquired is identical to the registration of shares of
the fund exchanged, no signature guarantee is required.
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. The trust reserves the right to modify
or discontinue exchange privileges upon 60 days' prior
notice to shareholders.
Except as otherwise noted below, shares of the fund may
be exchanged at the net asset value next determined for
Class A shares in any of the Smith Barney Mutual Funds,
to the extent shares are offered for sale in the
shareholder's state of residence. Exchanges of fund
shares are subject to minimum investment requirements
and to the other requirements of the Smith Barney fund
into which exchanges are made. Shareholders of the fund
who wish to exchange all or a portion of their shares
for Class A shares in any of the Smith Barney funds may
do so without imposition of any charge. Certain
shareholders may be able to exchange shares by
telephone. See "Telephone Redemption and Exchange
Program."
Additional information regarding the exchange privilege
An exchange is a taxable transaction. Before
exchanging shares, investors should read the current
prospectus describing the shares to be acquired.
A shareholder who exchanges shares prior to the maturity
date may realize an amount that is less or greater than
the entire amount of his or her investment. Moreover,
because the fund is not engaging in a continuous
offering of shares, a shareholder who exchanges his or
her fund shares will not be able to effect a further
exchange back into that fund.
Excessive transactions Although the exchange privilege
is an important benefit, excessive exchange transactions
can be detrimental to the fund's performance and its
shareholders. The Manager may determine that a pattern
of frequent exchanges is excessive and contrary to the
best interests of the fund's other shareholders. In
this event, the fund may, in its discretion, decide to
limit additional purchases and/or exchanges by a
shareholder. Upon such a determination, the fund will
provide notice in writing or by telephone to the
shareholder at least 15 days prior to suspending the
exchange privilege and during the 15 day period the
shareholder will be required to (a) redeem his or her
shares in the fund or (b) remain invested in the fund or
exchange into any of the funds of the Smith Barney
Mutual Funds ordinarily available, which position the
shareholder would be expected to maintain for a
significant period of time. All relevant factors will
be considered in determining what constitutes an abusive
pattern of exchanges.
TELEPHONE REDEMPTION AND EXCHANGE PROGRAM
General Shareholders who do not have a Salomon Smith
Barney brokerage account may be eligible to redeem and
exchange fund shares by telephone. To determine if a
shareholder is entitled to participate in this program,
he or she should contact the transfer agent at
1-800-451-2010. Once eligibility is confirmed, the
shareholder must complete and return a Telephone/Wire
Authorization Form, along with a signature guarantee
that will be provided by the transfer agent upon
request.
Redemptions Redemption requests of up to $10,000 of the
fund's shares may be made by eligible shareholders by
calling the transfer agent at 1-800-451-2010. Such
requests may be made between 9:00 a.m. and 4:00 p.m.
(Eastern time) on any day the NYSE is open. Redemptions
of shares (i) by retirement plans or (ii) for which
certificates have been issued are not permitted under
this program.
A shareholder will have the option of having the
redemption proceeds mailed to his/her address of record
or wired to a bank account predesignated by the
shareholder. Generally, redemption proceeds will be
mailed or wired, as the case may be, on the next
business day following the redemption request. In order
to use the wire procedures, the bank receiving the
proceeds must be a member of the Federal Reserve System
or have a correspondent relationship with a member bank.
The fund reserves the right to charge shareholders a
nominal fee for each wire redemption. Such charges, if
any, will be assessed against the shareholder's account
from which shares were redeemed. In order to change the
bank account designated to receive redemption proceeds,
a shareholder must complete a new Telephone/Wire
Authorization Form and, for the protection of the
shareholder's assets, will be required to provide a
signature guarantee and certain other documentation.
Exchanges Eligible shareholders may make exchanges by
telephone if the account registration of the shares of
the fund being acquired is identical to the registration
of the shares of the fund exchanged. Such exchange
requests may be made by calling the transfer agent at
1-800-451-2010 between 9:00 a.m. and 4:00 p.m. (Eastern
time) on any day on which the NYSE is open.
Additional information regarding the telephone
redemption and exchange program Neither the trust nor
its agents will be liable for following instructions
communicated by telephone that are reasonably believed
to be genuine. The trust and its agents will employ
procedures designed to verify the identity of the caller
and legitimacy of instructions (for example, a
shareholder's name and account number will be required
and phone calls may be recorded). The trust reserves
the right to suspend, modify or discontinue the
telephone redemption and exchange program or to impose
a change for this service at any time following at least
seven (7) days' prior notice to 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.
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 Business
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
12/31/99
One Year
Five Year
Ten Year
Since Inception
12.18%*
28.66%*
16.27%*
19.12%
* No sales charge applicable since only reinvestments
were permitted.
Aggregate Total Return
The aggregate total return for the fund represents the
cumulative change in the value of an investment in the
Class for the specified period and is computed by the
following formula:
ERV - P
P
Where:
P = a hypothetical initial payment
of $10,000.
ERV = Ending Redeemable Value of a
hypothetical $10,000 investment made
at the beginning of the 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.
Period Ended
12/31/99
One Year
Five Year
Ten Year
Since Inception
12.18%*
252.49%*
351.54%*
1545.43%
* No sales charge applicable since only reinvestments
were permitted.
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 Internal
Revenue Code of 1986, as amended (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.
Citi Fiduciary Trust Company, located at 388 Greenwich
Street, New York, New York 10013, serves as the transfer
agent and shareholder services agent of the fund.
PFPC Global Fund Services, located at P.O. Box 9699,
Providence Rhode Island 02940-9699, serves as the fund's
sub-transfer agent to render certain shareholder record-
keeping and accounting services functions.
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, 1999 was filed on March 24, 2000 and is
incorporated in its entirety by reference, Accession No.
91155-00-000265.
OTHER INFORMATION
In an industry where the average portfolio manager has
seven years of experience (source: ICI, 1998), the
portfolio managers of Smith Barney mutual funds average
21 years in the industry and 15 years with the firm.
Smith Barney mutual funds offers more than 60 mutual
funds. We understand that many investors prefer an
active role in allocating the mix of funds in their
portfolio, while others want the asset allocation
decisions to be made by experienced managers.
That's why we offer four "styles" of fund management
that can be tailored to suit each investor's unique
financial goals.
Style Pure Series
Our Style Pure Series funds stay fully invested
within their asset class and investment style,
enabling investors to make asset allocation
decisions in conjunction with their Salomon Smith
Barney Financial Consultant.
Classic Investor Series
Our Classic Investor Series funds offer a range
of equity and fixed income strategies that seek
to capture opportunities across asset classes and
investment styles using disciplined investment
approaches.
The Concert Allocation Series
As a fund of funds, investors can select a
Concert Portfolio that may help their investment
needs. As needs change, investors can easily
choose another long-term, diversified investment
from our Concert family.
Special Discipline Series
Our Special Discipline Series funds are designed
for investors who are looking beyond more
traditional market categories: from natural
resources to a roster of state-specific municipal
funds.
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.
g:\fundac\legal\funds\sbtt\2000\secdocs\sai
2
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.
(p) Code of Ethics is filed herein.
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 - SSB Citi
Fund
Management LLC ("SSB Citi") (successor to SSBC
Fund Management Inc.), was incorporated in
December 1968 under the laws of the State of
Delaware. SSB Citi 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"). SSB Citi 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. SSB
Citi
serves as the Investment Adviser and Administrator
the Telecommunications Income Fund.
The list required by this Item 26 of the officers
and
directors of SSB Citi 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
SSB Citi 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) SSB Citi Fund Management LLC
388 Greenwich Street
New York, New York 10013
(3) PNC Bank, National Association
17th and Chestnut Streets
Philadelphia, PA
(4) Citi Fiduciary Trust Company
388 Greenwich Street
New York, New York 10013
(5) PFPC Global Fund Services
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 26th day of April, 2000.
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
4/26/00
Heath B. McLendon (Chief Executive Officer)
and President
/s/Lewis E. Daidone Treasurer
4/26/00
Lewis E. Daidone (Chief Financial and
Accounting Officer)
/s/Paul Ades* Trustee
4/26/00
Paul Ades
/s/Herbert Barg* Trustee
4/26/00
Herbert Barg
/s/Dwight B. Crane* Trustee
4/26/00
Dwight B. Crane
/s/Frank G. Hubbard* Trustee
4/26/00
Frank G. Hubbard
/s/Ken Miller* Trustee
4/26/00
Ken Miller
/s/Jerome Miller* Trustee
4/26/00
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
(p) Code of Ethics
cover
Independent Auditors' Consent
To the Shareholders and Board of Trustees of
Smith Barney Telecommunications Trust:
We consent to the incorporation by reference, in
this Prospectus and Statement of Additional
Information, of our report dated February 11, 2000,
on the statement of assets and liabilities for the
Smith Barney Telecommunications Trust as of December
31, 1999, and the related statement of operations
for the year then ended, the statements of changes
in net assets for each of the years in the two-year
period then ended and the financial highlights for
each of the years in the five-year period then
ended. These financial statements and financial
highlights and our report thereon are included in
the Annual Report of the Fund as filed on Form N-
30D.
We also consent to the references to our firm under
the headings "Financial Highlights" in the
Prospectus and "Auditors" in the Statement of
Additional Information.
K
PMG
LLP
New York, New York
April 17, 2000
Page
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000721648
<NAME> TELECOMMUNICATIONS INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 9,280,353
<INVESTMENTS-AT-VALUE> 96,674,822
<RECEIVABLES> 194,798
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 96,869,620
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 274,443
<TOTAL-LIABILITIES> 274,443
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,629,823
<SHARES-COMMON-STOCK> 544,910
<SHARES-COMMON-PRIOR> 547,397
<ACCUMULATED-NII-CURRENT> (2,181)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,573,066
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 87,394,469
<NET-ASSETS> 96,595,177
<DIVIDEND-INCOME> 1,758,485
<INTEREST-INCOME> 5,210
<OTHER-INCOME> 0
<EXPENSES-NET> 866,248
<NET-INVESTMENT-INCOME> 897,447
<REALIZED-GAINS-CURRENT> 8,794,542
<APPREC-INCREASE-CURRENT> 1,605,103
<NET-CHANGE-FROM-OPS> 11,297,092
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 920,534
<DISTRIBUTIONS-OF-GAINS> 9,707,861
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 26,863
<NUMBER-OF-SHARES-REDEEMED> 29,350
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 141,966
<ACCUMULATED-NII-PRIOR> 20,906
<ACCUMULATED-GAINS-PRIOR> 3,486,385
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 732,250
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 866,248
<AVERAGE-NET-ASSETS> 97,633,782
<PER-SHARE-NAV-BEGIN> 176.20
<PER-SHARE-NII> 1.74
<PER-SHARE-GAIN-APPREC> 19.24
<PER-SHARE-DIVIDEND> 1.78
<PER-SHARE-DISTRIBUTIONS> 18.13
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 177.27
<EXPENSE-RATIO> 0.89
</TABLE>
PERSONAL INVESTMENT POLICY
FOR
SSB CITI ASSET MANAGEMENT GROUP - NORTH AMERICA
AND CERTAIN REGISTERED INVESTMENT COMPANIES
SSB Citi Asset Management Group ("SSB Citi") , and
those U.S.?registered investment companies advised or
managed by SSB Citi that have adopted this policy
("Funds"), have adopted this policy on securities
transactions in order to accomplish two goals: first,
to minimize conflicts and potential conflicts of
interest between employees of SSB Citi and SSB Citi's
clients (including the Funds), and between Fund
directors or trustees and their Funds, and second, to
provide policies and procedures consistent with
applicable law, including Rule 17j-1 under the
Investment Company Act of 1940, to prevent fraudulent
or manipulative practices with respect to purchases
or sales of securities held or to be acquired by
client accounts. All U.S. employees of SSB Citi,
including employees who serve as Fund officers or
directors, and all directors or trustees
("directors") of each Fund, are Covered Persons under
this policy. Other Covered Persons are described in
Section II below.
I. Statement of Principles - All SSB Citi
employees owe a fiduciary duty to SSB Citi's clients
when conducting their personal investment
transactions. Employees must place the interests of
clients first and avoid activities, interests and
relationships that might interfere with the duty to
make decisions in the best interests of the clients.
All Fund directors owe a fiduciary duty to each Fund
of which they are a director and to that Fund's
shareholders when conducting their personal
investment transactions. At all times and in all
matters Fund directors shall place the interests of
their Funds before their personal interests. The
fundamental standard to be followed in personal
securities transactions is that Covered Persons may
not take inappropriate advantage of their positions.
All personal securities transactions by Covered
Persons shall adhere to the requirements of this
policy and shall be conducted in such a manner as to
avoid any actual or potential conflict of interest,
the appearance of such a conflict, or the abuse of
the person's position of trust and responsibility.
While this policy is designed to address both
identified conflicts and potential conflicts, it
cannot possibly be written broadly enough to cover
all potential situations. In this regard, Covered
Persons are expected to adhere not only to the
letter, but also the spirit of the policies contained
herein.
Employees are reminded that they also are subject to
other Citigroup policies, including policies on
insider trading, the purchase and sale of securities
listed on any applicable SSB Citi restricted list,
the receipt of gifts and service as a director of a
publicly traded company. Employees must never trade
in a security or commodity while in possession of
material, non-public information about the issuer or
the market for those securities or commodities, even
if the employee has satisfied all other requirements
of this policy.
The reputation of SSB Citi and its employees for
straightforward practices and integrity is a
priceless asset, and all employees have the duty and
obligation to support and maintain it when conducting
their personal securities transactions.
II. Applicability - SSB Citi Employees - This
policy applies to all U.S. employees of SSB Citi,
including part-time employees. Each employee,
including employees who serve as Fund officers or
directors, must comply with all of the provisions of
the policy applicable to SSB Citi employees unless
otherwise indicated. Certain employees are considered
to be "investment personnel" (i.e., portfolio
managers, traders and research analysts (and each of
their assistants)), and as such, are subject to
certain additional restrictions outlined in the
policy. All other employees of SSB Citi are
considered to be "advisory personnel."
Generally, temporary personnel and consultants
working in any SSB Citi business are subject to the
same provisions of the policy as full-time employees,
and their adherence to specific requirements will be
addressed on a case-by-case basis.
The personal investment policies, procedures and
restrictions referred to herein also apply to an
employee's spouse and minor children. The policies
also apply to any other account over which the
employee is deemed to have beneficial ownership. This
includes: accounts of any immediate family members
sharing the same household as the employee; accounts
of persons or other third parties for whom the
employee exercises investment discretion or gives
investment advice; a legal vehicle in which the
employee has a direct or indirect beneficial interest
and has power over investment decisions; accounts for
the benefit of a third party (e.g., a charity) which
may be directed by the employee (other than in the
capacity of an employee); and any account over which
the employee may be deemed to have control. For a
more detailed description of beneficial ownership,
see Exhibit A attached hereto.
These policies place certain restrictions on the
ability of an employee to purchase or sell securities
that are being or have been purchased or sold by an
SSB Citi managed fund or client account. The
restrictions also apply to securities that are
"related" to a security being purchased or sold by an
SSB Citi managed fund or client account. A "related
security" is one whose value is derived from the
value of another security (e.g., a warrant, option or
an indexed instrument).
Fund Directors - This policy applies to all directors
of Funds that have adopted this policy. The personal
investment policies, procedures and restrictions that
specifically apply to Fund directors apply to all
accounts and securities in which the director has
direct or indirect beneficial ownership. See Exhibit
A attached hereto for a more detailed description of
beneficial ownership.
Securities are defined as stocks, notes, bonds,
closed-end mutual funds, debentures, and other
evidences of indebtedness, including senior debt,
subordinated debt, investment contracts, commodity
contracts, futures and all derivative instruments
such as options, warrants and indexed instruments,
or, in general, any interest or instrument commonly
known as a "security."
III. Enforcement - It is the responsibility of each
Covered Person to act in accordance with a high
standard of conduct and to comply with the policies
and procedures set forth in this document. SSB Citi
takes seriously its obligation to monitor the
personal investment activities of its employees. Any
violation of this policy by employees will be
considered serious, and may result in disciplinary
action, which may include the unwinding of trades,
disgorgement of profits, monetary fine or censure,
and suspension or termination of employment. Any
violation of this policy by a Fund director will be
reported to the Board of Directors of the applicable
Fund, which may impose such sanctions as it deems
appropriate.
IV. Opening and Maintaining Employee Accounts - All
employee brokerage accounts, including spouse
accounts, accounts for which the employee is deemed
to have beneficial ownership, and any other accounts
over which the employee and/or spouse exercise
control, must be maintained either at Salomon Smith
Barney ("SSB") or at Citicorp Investment Services
("CIS"). For spouses or other persons who, by
reason of their employment, are required to conduct
their securities, commodities or other financial
transactions in a manner inconsistent with this
policy, or in other exceptional circumstances,
employees may submit a written request for an
exemption to the Compliance Department. If approval
is granted, copies of trade confirmations and monthly
statements must be sent to the Compliance Department.
In addition, all other provisions of this policy will
apply.
V. Excluded Accounts and Transactions - The
following types of accounts/transactions need not be
maintained at SSB or CIS, nor are they subject to the
other restrictions of this policy:
1. Accounts at outside mutual funds that hold only
shares of open-end funds purchased directly from that
fund company. Note: transactions relating to
closed-end funds are subject to the pre-clearance,
blackout period and other restrictions of this
policy;
2. Estate or trust accounts in which an employee
or related person has a beneficial interest, but no
power to affect investment decisions. There must be
no communication between the account(s) and the
employee with regard to investment decisions prior to
execution. The employee must direct the trustee/bank
to furnish copies of confirmations and statements to
the Compliance Department;
3. Fully discretionary accounts managed by either
an internal or external registered investment adviser
are permitted and may be custodied away from SSB and
CIS if (i) the employee receives permission from the
Regional Director of Compliance and the unit's Chief
Investment Officer, and (ii) there is no
communication between the manager and the employee
with regard to investment decisions prior to
execution. The employee must designate that copies
of trade confirmations and monthly statements be sent
to the Compliance Department;
4. Employees may participate in direct investment
programs which allow the purchase of securities
directly from the issuer without the intermediation
of a broker/dealer provided that the timing and size
of the purchases are established by a pre-arranged,
regularized schedule (e.g., dividend reinvestment
plans). Employees must pre-clear the transaction at
the time that the dividend reinvestment plan is being
set up. Employees also must provide documentation of
these arrangements and direct periodic (monthly or
quarterly) statements to the Compliance Department;
and
5. In addition to the foregoing, the following
types of securities are exempted from pre-clearance,
blackout periods, reporting and short-term trading
requirements: open-ended mutual funds; open-end unit
investment trusts; U.S. Treasury bills, bonds and
notes; mortgage pass-throughs (e.g. Ginnie Maes) that
are direct obligations of the U.S. government;
bankers acceptances; bank certificates of deposit;
commercial paper; and high quality short-term debt
instruments (meaning any instrument that has a
maturity at issuance of less than 366 days and that
is rated in one of the two highest rating categories
by a nationally recognized statistical rating
organization, such as S&P or Moody's), including
repurchase agreements.
VI. Securities Holding Period/Short-Term Trading -
Securities transactions must be for investment
purposes rather than for speculation. Consequently,
employees may not profit from the purchase and sale,
or sale and purchase, of the same or equivalent
securities within sixty (60) calendar days,
calculated on a First In, First Out (FIFO) basis
(i.e., the security may be sold on the 61st day).
Citigroup securities received as part of an
employee's compensation are not subject to the 60-day
holding period. All profits from short-term trades
are subject to disgorgement. However, with the prior
written approval of both a Chief Investment Officer
and the Regional Director of Compliance, and only in
rare and/or unusual circumstances, an employee may
execute a short-term trade that results in a
significant loss or in break-even status.
VII. Pre-Clearance - All SSB Citi employees must
pre-clear all personal securities transactions (see
Section V for a listing of accounts, transactions and
securities that do not require pre-clearance). A copy
of the pre-clearance form is attached as Exhibit B.
In addition, employees are prohibited from engaging
in more than twenty (20) transactions in any calendar
month, except with prior written approval from their
Chief Investment Officer, or designee. A transaction
must not be executed until the employee has received
the necessary approval. Pre-clearance is valid only
on the day it is given. If a transaction is not
executed on the day pre-clearance is granted, it is
required that pre-clearance be sought again on a
subsequent day (i.e., open orders, such as limit
orders, good until cancelled orders and stop-loss
orders, must be pre-cleared each day until the
transaction is effected). In connection with
obtaining approval for any personal securities
transaction, employees must describe in detail any
factors which might be relevant to an analysis of the
possibility of a conflict of interest. Any trade
that violates the pre-clearance process may be
unwound at the employee's expense, and the employee
will be required to absorb any resulting loss and to
disgorge any resulting profit.
In addition to the foregoing, the CGAM NA Director of
Global Equity Research, or his designate, must
approve all personal securities transactions for
members of the CGAM Research Department prior to pre-
clearance from the Compliance Department as set forth
in this section. Pre-approval by the Director of
Research, or his designate, is in addition to and
does not replace the requirement for the pre-
clearance of all personal securities transactions.
VIII. Blackout Periods - No Covered Person shall
purchase or sell, directly or indirectly, any
security in which he/she has, or by reason of the
transaction acquires, any direct or indirect
beneficial ownership if he/she has knowledge at the
time of such transaction that the security is being
purchased or sold, or is being considered for
purchase or sale, by a managed fund or client account
or in the case of a Fund director, by the director's
Fund. In addition, the following Blackout Periods
apply to the categories of SSB Citi employees listed
below:
1. Portfolio Managers and Portfolio Manager
Assistants - may not buy or sell any securities for
personal accounts seven (7) calendar days before or
after managed funds or client accounts he/she manages
trade in that security.
2. Traders and Trader Assistants - may not buy or
sell any securities for personal accounts three (3)
calendar days before or seven (7) calendar days after
managed funds or client accounts he/she executes
trades for trade in that security.
3. Research Analysts and Research Assistants - may
not buy or sell any securities for personal accounts:
seven (7) calendar days before or after the issuance
of or a change in any recommendation; or seven (7)
calendar days before or after any managed fund or
client account about which the employee is likely to
have trading or portfolio information (as determined
by the Compliance Department) trades in that
security.
4. Advisory Personnel (see Section II for details)
- - may not buy or sell any securities for personal
accounts on the same day that a managed fund or
client account about which the employee is likely to
have trading or portfolio information (as determined
by the Compliance Department) trades in that
security.
5. Unit Trust Personnel - all employees assigned
to the Unit Trust Department are prohibited from
transacting in any security when a SSB Citi-sponsored
Unit Trust portfolio is buying the same (or a
related) security, until seven business days after
the later of the completion of the accumulation
period or the public announcement of the trust
portfolio. Similarly, all UIT employees are
prohibited from transacting in any security held in a
UIT (or a related security) seven business days prior
to the liquidation period of the trust.
Employees in the above categories may also be
considered Advisory Personnel for other accounts
about which the employee is likely to have trading or
portfolio information (as determined by the
Compliance Department).
Any violation of the foregoing provisions will
require the employee's trade to be unwound, with the
employee absorbing any resulting loss and disgorging
any resulting profit. Advisory personnel are subject
to the unwinding of the trade provision; however,
they may not be required to absorb any resulting loss
(at the discretion of the Compliance Department and
the employee's supervisor). Please be reminded that,
regardless of the provisions set forth above, all
employees are always prohibited from effecting
personal securities transactions based on material,
non-public information.
Blackout period requirements shall not apply to any
purchase or sale, or series of related transactions
involving the same or related securities, involving
500 or fewer shares in the aggregate if the issuer
has a market capitalization (outstanding shares
multiplied by the current price per share) greater
than $10 billion and is listed on a U.S. Stock
Exchange or NASDAQ. Note: Pre-clearance is still
required. Under certain circumstances, the Compliance
Department may determine that an employee may not
rely upon this "Large Cap/De Minimis" exemption. In
such a case, the employee will be notified prior to
or at the time the pre-clearance request is made.
IX. Prohibited Transactions - The following
transactions by SSB Citi employees are prohibited
without the prior written approval from the Chief
Investment Officer, or designee, and the Regional
Compliance Director:
1. The purchase of private placements; and
2. The acquisition of any securities in an initial
public offering (new issues of municipal debt
securities may be acquired subject to the other
requirements of this policy (e.g., pre-clearance).)
X. Transactions in Options and Futures - SSB Citi
employees may buy or sell derivative instruments such
as individual stock options, options and futures on
indexes and options and futures on fixed-income
securities, and may buy or sell physical commodities
and futures and forwards on such commodities. These
transactions must comply with all of the policies and
restrictions described in this policy, including pre-
clearance, blackout periods, transactions in
Citigroup securities and the 60-day holding period.
However, the 60-day holding period does not apply to
individual stock options that are part of a hedged
position where the underlying stock has been held for
more than 60 days and the entire position (including
the underlying security) is closed out.
XI. Prohibited Recommendations - No Covered Person
shall recommend or execute any securities transaction
by any managed fund or client account, or, in the
case of a Fund director, by the director's Fund,
without having disclosed, in writing, to the Chief
Investment Officer, or designee, any direct or
indirect interest in such securities or issuers,
except for those securities purchased pursuant to the
"Large Cap/De Minimis" exemption described in Section
VIII above. Prior written approval of such
recommendation or execution also must be received
from the Chief Investment Officer, or designee. The
interest in personal accounts could be in the form
of:
1. Any direct or indirect beneficial ownership of
any securities of such issuer;
2. Any contemplated transaction by the person in
such securities;
3. Any position with such issuer or its
affiliates; or
4. Any present or proposed business relationship
between such issuer or its affiliates and the person
or any party in which such person has a significant
interest.
XII. Transactions in Citigroup Securities - Unless
an SSB Citi employee is a member of a designated
group subject to more restrictive provisions, or is
otherwise notified to the contrary, the employee may
trade in Citigroup securities without restriction
(other than the pre-clearance and other requirements
of this policy), subject to the limitations set forth
below.
Employees whose jobs are such that they know about
Citigroup's quarterly earnings prior to release may
not engage in any transactions in Citigroup
securities during the "blackout periods" beginning on
the first day of a calendar quarter and ending on the
second business day following the release of earnings
for the prior quarter. Members of the SSB Citi
Executive Committee and certain other senior SSB Citi
employees are subject to these blackout periods.
Stock option exercises are permitted during a
blackout period (but the simultaneous exercise of an
option and sale of the underlying stock is
prohibited). With regard to exchange traded options,
no transactions in Citigroup options are permitted
except to close or roll an option position that
expires during a blackout period. Charitable
contributions of Citigroup securities may be made
during the blackout period, but an individual's
private foundation may not sell donated Citigroup
common stock during the blackout period. "Good 'til
cancelled" orders on Citigroup stock must be
cancelled before entering a blackout period and no
such orders may be entered during a blackout period.
No employee may engage at any time in any personal
transactions in Citigroup securities while in
possession of material non-public information.
Investments in Citigroup securities must be made with
a long-term orientation rather than for speculation
or for the generation of short-term trading profits.
In addition, please note that employees may not
engage in the following transactions:
Short sales of Citigroup securities;
Purchases or sales of options ("puts" or
"calls") on Citigroup securities, except writing a
covered call at a time when the securities could have
been sold under this policy;
Purchases or sales of futures on Citigroup
securities; or
Any transactions relating to Citigroup
securities that might reasonably appear speculative.
The number of Citigroup shares an employee is
entitled to in the Citigroup Stock Purchase Plan is
not treated as a long stock position until such time
as the employee has given instructions to purchase
the shares of Citigroup. Thus, employees are not
permitted to use options to hedge their financial
interest in the Citigroup Stock Purchase Plan.
Contributions into the firm's 401(k) Plan are not
subject to the restrictions and prohibitions
described in this policy.
XIII. Acknowledgement and Reporting Requirements -
SSB Citi Employees - All new SSB Citi employees must
certify that they have received a copy of this
policy, and have read and understood its provisions.
In addition, all SSB Citi employees must:
1. Acknowledge receipt of the policy and any
modifications thereof, in writing (see Exhibit C for
the form of Acknowledgement);
2. Within 10 days of becoming an SSB Citi
employee, disclose in writing all information with
respect to all securities beneficially owned and any
existing personal brokerage relationships (employees
must also disclose any new brokerage relationships
whenever established). Such information should be
provided on the form attached as Exhibit D;
3. Direct their brokers to supply, on a timely
basis, duplicate copies of confirmations of all
personal securities transactions (Note: this
requirement may be satisfied through the transmission
of automated feeds);
4. Within 10 days after the end of each calendar
quarter, provide information relating to securities
transactions executed during the previous quarter for
all securities accounts (Note: this requirement may
be satisfied through the transmission of automated
feeds);
5. Submit an annual holdings report containing
similar information that must be current as of a date
no more than 30 days before the report is submitted,
and confirm at least annually all brokerage
relationships and any and all outside business
affiliations (Note: this requirement may be
satisfied through the transmission of automated feeds
or the regular receipt of monthly brokerage
statements); and
6. Certify on an annual basis that he/she has read
and understood the policy, complied with the
requirements of the policy and that he/she has pre-
cleared and disclosed or reported all personal
securities transactions and securities accounts
required to be disclosed or reported pursuant to the
requirements of the policy.
Fund Directors - Fund Directors shall deliver the
information required by Items 1 through 6 of the
immediately preceding paragraph, except that a Fund
director who is not an "interested person" of the
Fund within the meaning of Section 2(a)(19) of the
Investment Company Act of 1940, and who would be
required to make reports solely by reason of being a
Fund Director, is not required to make the initial
and annual holdings reports required by Items 2 and
5. Also, a "non-interested" Fund Director need not
supply duplicate copies of confirmations of personal
securities transactions required by Item 3, and need
only make the quarterly transactions reports required
by Item 4 as to any security if at the time of a
transaction by the Director in that security, he/she
knew or in the ordinary course of fulfilling his/her
official duties as a Fund Director should have known
that, during the 15-day period immediately preceding
or following the date of that transaction, that
security is or was purchased or sold by that
Director's Fund or was being considered for purchase
or sale by that Director's Fund.
Disclaimer of Beneficial Ownership - The reports
described in Items 4 and 5 above may contain a
statement that the reports shall not be construed as
an admission by the person making the reports that
he/she has any direct or indirect beneficial
ownership in the securities to which the reports
relate.
XIV. Handling of Disgorged Profits - Any amounts
that are paid/disgorged by an employee under this
policy shall be donated by SSB Citi to one or more
charities. Amounts donated may be aggregated by SSB
Citi and paid to such charity or charities at the end
of each year.
XV. Confidentiality - All information obtained from
any Covered Person pursuant to this policy shall be
kept in strict confidence, except that such
information will be made available to the Securities
and Exchange Commission or any other regulatory or
self-regulatory organization or to the Fund Boards of
Directors to the extent required by law, regulation
or this policy.
XVI. Other Laws, Rules and Statements of Policy -
Nothing contained in this policy shall be interpreted
as relieving any person subject to the policy from
acting in accordance with the provision of any
applicable law, rule or regulation or, in the case of
SSB Citi employees, any statement of policy or
procedure governing the conduct of such person
adopted by Citigroup, its affiliates and
subsidiaries.
XVII. Retention of Records - All records relating to
personal securities transactions hereunder and other
records meeting the requirements of applicable law,
including a copy of this policy and any other
policies covering the subject matter hereof, shall be
maintained in the manner and to the extent required
by applicable law, including Rule 17j-1 under the
1940 Act. The Compliance Department shall have the
responsibility for maintaining records created under
this policy.
XVIII. Monitoring - SSB Citi takes seriously its
obligation to monitor the personal investment
activities of its employees and to review the
periodic reports of all Covered Persons. Employee
personal investment transaction activity will be
monitored by the Compliance Department. All noted
deviations from the policy requirements will be
referred back to the employee for follow-up and
resolution (with a copy to be supplied to the
employee's supervisor). Any noted deviations by Fund
directors will be reported to the Board of Directors
of the applicable Fund for consideration and follow-
up as contemplated by Section III hereof.
XIX. Exceptions to the Policy - Any exceptions to
this policy must have the prior written approval of
both the Chief Investment Officer and the Regional
Director of Compliance. Any questions about this
policy should be directed to the Compliance
Department.
XX. Board Review - Fund management and SSB Citi
shall provide to the Board of Directors of each Fund,
on a quarterly basis, a written report of all
material violations of this policy, and at least
annually, a written report and certification meeting
the requirements of Rule 17j-1 under the 1940 Act.
XXI. Other Codes of Ethics - To the extent that any
officer of any Fund is not a Covered Person
hereunder, or an investment subadviser of or
principal underwriter for any Fund and their
respective access persons (as defined in Rule 17j-1)
are not Covered Persons hereunder, those persons must
be covered by separate codes of ethics which are
approved in accordance with applicable law.
XXII. Amendments - SSB Citi Employees - Unless
otherwise noted herein, this policy shall become
effective as to all SSB Citi employees on March 30,
2000. This policy may be amended as to SSB Citi
employees from time to time by the Compliance
Department. Any material amendment of this policy
shall be submitted to the Board of Directors of each
Fund for approval in accordance with Rule 17j-1 under
the 1940 Act.
Fund Directors - This policy shall become
effective as to a Fund upon the approval and adoption
of this policy by the Board of Directors of that Fund
in accordance with Rule 17j-1 under the 1940 Act or
at such earlier date as determined by the Secretary
of the Fund. Any material amendment of this policy
that applies to the directors of a Fund shall become
effective as to the directors of that Fund only when
the Board of Directors of that Fund has approved the
amendment in accordance with Rule 17j-1 or at such
earlier date as determined by the Secretary of the
Fund.
March 15, 2000
EXHIBIT A
EXPLANATION OF BENEFICIAL OWNERSHIP
You are considered to have "Beneficial Ownership" of
Securities if you have or share a direct or indirect
"Pecuniary Interest" in the Securities.
You have a "Pecuniary Interest" in Securities if you
have the opportunity, directly or indirectly, to
profit or share in any profit derived from a
transaction in the Securities.
The following are examples of an indirect Pecuniary
Interest in Securities:
1. Securities held by members of your immediate
family sharing the same household; however, this
presumption may be rebutted by convincing evidence
that profits derived from transactions in these
Securities will not provide you with any economic
benefit.
"Immediate family" means any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law,
and includes any adoptive relationship.
2. Your interest as a general partner in
Securities held by a general or limited partnership.
3. Your interest as a manager-member in the
Securities held by a limited liability company.
You do not have an indirect Pecuniary Interest in
Securities held by a corporation, partnership,
limited liability company or other entity in which
you hold an equity interest, unless you are a
controlling equityholder or you have or share
investment control over the Securities held by the
entity.
The following circumstances constitute Beneficial
Ownership by you of Securities held by a trust:
1. Your ownership of Securities as a trustee where
either you or members of your immediate family have a
vested interest in the principal or income of the
trust.
2. Your ownership of a vested interest in a trust.
3. Your status as a settlor of a trust, unless the
consent of all of the beneficiaries is required in
order for you to revoke the trust.
The foregoing is a summary of the meaning of
"beneficial ownership". For purposes of the attached
policy, "beneficial ownership" shall be interpreted
in the same manner as it would be in determining
whether a person is subject to the provisions of
Section 16 of the Securities Exchange Act of 1934 and
the rules and regulations thereunder
