<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x]Preliminary Proxy Statement
[ ]Confidential for Use of the Commission Only (as permitted by Rule 14-a-
6(e)(2))
[ ]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
SMITH BARNEY EQUITY FUNDS
(Name of Registrant as Specified In Charter)
Payment of Filing Fee (Check the appropriate box):
[x]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2), or
Item 22(a)(2) of Schedule 14A.
[ ]$500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ]Fee computed on table below per Exchange Act Rules 14-a-6(i)(4) and 0-11.
1)Title of each class of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2)Aggregate number of securities to which transaction applies:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3)Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and state how
it was determined):
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4)Proposed maximum aggregate value of transaction:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5)Total fee paid:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[ ] Fee previously paid with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1)Amount Previously Paid:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2)Form, Schedule or Registration Statement No.:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3)Filing Party:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4)Date Filed:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
PRELIMINARY COPY
July , 1995
Dear Shareholder:
An Important Notice About Smith Barney Strategic Investors Fund
We would like to inform you of a proposal concerning Smith Barney
Strategic Investors Fund (the Fund). The Board of Trustees of Smith Barney
Equity Funds (the Trust) has recently unanimously endorsed this proposal.
The Fund's current adviser is Smith Barney Strategy Advisers Inc. (SBSA),
a wholly owned subsidiary of Smith Barney Mutual Funds Management Inc. The
Board has recommended that the Trust begin a new investment advisory agreement
for the Fund with SBSA. The Board has also recommended that the Trust
terminate the Fund's current sub-advisory agreement with The Boston Company
Advisors, Inc. (Boston Advisors).
Under the terms of the new investment advisory agreement, SBSA would
become the Fund's sole investment adviser. SBSA, which is already serving as
asset allocation consultant to the Fund through its affiliate, Smith Barney
Inc., would provide increased services to the Fund in the areas of setting
overall strategy, security selection and trading.
The Board recommended this action in response to the resignation of
William W. Carter, the Fund's former portfolio manager. Mr. Carter resigned
from Boston Advisors in April 1995. The Board determined that consolidating
all investment functions under one adviser, SBSA, would maintain the
continuity of investment style and significantly simplify the Fund's
management. It would also allow the Fund to operate more efficiently and
provide investment management beneficial to the Fund's performance. Subject
to shareholder approval, the Board has approved the appointment of a new
management team for the Fund headed by Robert J. Brady, CFA, and Ellen S.
Cammer. Together the new team has nearly 50 years of investment experience,
the majority of it at Smith Barney or its predecessor firms.
We will hold a special meeting of shareholders of the Fund on August ,
1995 to consider this proposal and to transact other Fund business. We
strongly urge you to participate by reviewing, completing and returning your
proxy by August , 1995 in the postage-paid envelope provided. For more
details about the proposed transaction, please refer to the enclosed proxy
statement.
<PAGE>
We thank you for your timely participation and look forward to serving
your investment needs with Smith Barney Mutual Funds. If you have any
questions, please call your Financial Consultant who will be pleased to assist
you.
Sincerely,
Heath B. McLendon
Chairman of the Board
Smith Barney Equity Funds
<PAGE>
PRELIMINARY COPY
SMITH BARNEY STRATEGIC INVESTORS FUND
A SUB-TRUST OF SMITH BARNEY EQUITY FUNDS
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held on [August __, 1995]
To the Shareholders of Smith Barney Strategic
Investors Fund:
Notice is hereby given that a special meeting of shareholders of Smith
Barney Strategic Investors Fund (the "Fund"), a mutual fund organized as a
sub-trust of Smith Barney Equity Funds (the "Trust"), will be held at 388
Greenwich Street, 26th Floor, New York, New York on [August __, 1995]
commencing at _____ _.m. for the following purposes:
1. To approve or disapprove a new investment advisory agreement between
the Trust, on behalf of the Fund, and Smith Barney Strategy Advisers Inc.
("SBSA") (Proposal 1).
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
These items are discussed in greater detail in the attached Proxy
Statement. The close of business on [June __, 1995] has been fixed as the
record date for the determination of shareholders of the Fund entitled to
notice of and to vote at the meeting and any adjournment thereof.
By Order of the Board of Trustees
Christina T. Sydor
[July __, 1995] Secretary
SHAREHOLDERS OF THE FUND WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING
ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE PROXY CARD IN THE
ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE CONTINENTAL
UNITED STATES. INSTRUCTIONS FOR THE PROPER EXECUTION OF PROXY CARDS ARE
SET FORTH ON THE FOLLOWING PAGE. IT IS IMPORTANT THAT PROXIES BE RETURNED
PROMPTLY.
<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and avoid the time and expense to the Fund involved in
validating your vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in
the registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the
party signing should conform exactly to the name shown in the registration on
the proxy card.
3. All Other Accounts: The capacity of the individual signing the
proxy card should be indicated unless it is reflected in the form of
registration. For example:
Registration Valid Signature
------------ ---------------
Corporate Accounts
(1) ABC Corp. . . . . . . . . . . . . ABC Corp.
(2) ABC Corp. . . . . . . . . . . . . John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer . . . . . John Doe
(4) ABC Corp. Profit Sharing
Plan . . . . . . . . . . . . . . John Doe, Trustee
Trust Accounts
(1) ABC Trust . . . . . . . . . . . . Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 . . . . . . . . . Jane B. Doe
Custodian or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr.
UGMA . . . . . . . . . . . . . . John B. Smith, Jr.
(2) John B. Smith . . . . . . . . . . John B. Smith, Jr., Executor
<PAGE>1
SMITH BARNEY STRATEGIC INVESTORS FUND
A SUB-TRUST OF SMITH BARNEY EQUITY FUNDS
388 Greenwich Street
New York, New York 10013
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on [August __, 1995]
PROXY STATEMENT
This Proxy Statement is being solicited by the Board of Trustees
(the "Board") of Smith Barney Equity Funds (the "Trust"), for use at the
Special Meeting of Shareholders (the "Meeting") of its sub-trust, Smith Barney
Strategic Investors Fund (the "Fund"), to be held on [August __, 1995] or any
adjournment or adjournments thereof. The Meeting will be held at 388
Greenwich Street, 26th Floor, New York, New York at the time specified in the
Notice of Special Meeting of Shareholders and proxy card that accompany this
Proxy Statement. Proxy solicitations will be made primarily by mail, but
proxy solicitations also may be made by telephone, telegraph or personal
interviews conducted by officers and employees of: the Trust; Smith Barney
Inc. ("Smith Barney"), the distributor of shares of the Fund; and/or The
Shareholder Services Group, Inc. ("TSSG"), a subsidiary of First Data
Corporation and the transfer agent of the Fund. Arrangements may also be made
to have shareholder votes recorded by telephone. The Fund has retained
Applied Mailing Systems, Inc. to assist in the solicitation of proxies, at an
estimated cost in the range of $________ to $________ (depending on the extent
of the services provided). The costs of the proxy solicitation and expenses
incurred in connection with the preparation of this Proxy Statement and its
enclosures will be paid by the Fund.
The Trust currently issues four classes of shares of beneficial
interest ("Shares") in respect of the Fund, but for purposes of the matters to
be considered at the Meeting, all Shares will be voted as a single class.
Each Share is entitled to one vote and any fractional Share is entitled to a
fractional vote. If the enclosed proxy is properly executed and returned in
time to be voted at the Meeting, the Shares represented thereby will be voted
in accordance with the instructions marked thereon. Unless instructions to
the contrary are marked on the proxy, it will be voted FOR the matters listed
in the accompanying Notice of Special Meeting of Shareholders. Any
shareholder who has given a proxy has the right to revoke it at any time prior
to its exercise either by attending the Meeting and voting his or her Shares
in person or by submitting a letter of revocation or a later-dated proxy to
the
<PAGE>2
Trust at the above address prior to the date of the Meeting. For purposes of
determining the presence of a quorum for transacting business at the Meeting,
abstentions and broker "non-votes" (i.e., proxies from brokers or nominees
indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote Shares on a particular
matter with respect to which the brokers or nominees do not have discretionary
power) will be treated as Shares that are present but which have not been
voted. For this reason, abstentions and broker "non-votes" will have the
effect of a "no" vote for purposes of obtaining the requisite approval of the
proposals.
In the event that a quorum is not present at the Meeting, or in the
event that a quorum is present but sufficient votes to approve any of the
proposals are not received, the persons named as proxies may propose one or
more adjournments of the Meeting to permit further solicitation of proxies.
In determining whether to adjourn the Meeting, the following factors may be
considered: the nature of the proposals that are the subject of the Meeting,
the percentage of votes actually cast, the percentage of negative votes
actually cast, the nature of any further solicitation and the information to
be provided to shareholders with respect to the reasons for the solicitation.
Any adjournment will require the affirmative vote of a majority of those
Shares represented at the Meeting in person or by proxy. Under the Trust's
Master Trust Agreement, a quorum is constituted by the presence in person or
by proxy of the holders of a majority of the outstanding Shares of the Fund
entitled to vote at the Meeting.
The Board has fixed the close of business on [June __, 1995] as the
record date (the "Record Date") for the determination of shareholders of the
Fund entitled to notice of and to vote at the Meeting. On the Record Date,
_________ Shares of the Fund were outstanding. [Except as set forth in
Exhibit A, to the knowledge of the Trust and the Board, no single shareholder
or "group" (as that term is used in Section 13(d) of the Securities Exchange
Act of 1934), beneficially owned, as of the Record Date, more than 5% of any
class of the outstanding Shares of the Fund. As of the Record Date, the
officers and Board members of the Trust beneficially owned less than 1% of
each class of Shares of the Fund.]
As of the Record Date, no shares of Smith Barney Strategy Advisers
Inc. ("SBSA") or its ultimate parent corporation, Travelers Group Inc.
("Travelers"), were held by Board members who are not interested persons of
the Trust (as that term is used in the Investment Company Act of 1940, as
amended (the "1940 Act")).
<PAGE>3
In order that your Shares may be represented at the Meeting, you are requested
to:
- indicate your instructions on the enclosed proxy card;
- date and sign the proxy card;
- mail the proxy card promptly in the enclosed envelope, which
requires no postage if mailed in the United States; and
- allow sufficient time for the proxy card to be received on or
before [5:00 p.m., August __, 1995].
As a business trust formed under the laws of the Commonwealth of
Massachusetts, the Trust is not required to hold annual shareholder meetings
but may hold special meetings as required or deemed desirable. As indicated
above, the Meeting is being called to consider a new advisory contract for the
Fund.
The Board recommends affirmative votes on Proposal 1.
PROPOSAL 1
TO APPROVE OR DISAPPROVE A NEW INVESTMENT ADVISORY AGREEMENT BETWEEN
SMITH BARNEY STRATEGY ADVISERS INC. AND THE TRUST, ON BEHALF OF THE
FUND.
The Fund currently is advised by SBSA under an agreement dated July
15, 1994 (the "Current Advisory Agreement"). The Boston Company Advisors,
Inc. ("Boston Advisors") currently acts as sub-adviser to the Fund pursuant to
an agreement with the Fund and SBSA dated July 15, 1994 (the "Current Sub-
Advisory Agreement," and together with the Current Advisory Agreement, the
"Current Agreements"). For the reasons described below under the caption
"Evaluation by the Board and Reasons for the Proposals," the Board has
unanimously determined to terminate the Current Sub-Advisory Agreement with
Boston Advisors. In conjunction with the termination of Boston Advisors as
sub-adviser, the Board has unanimously determined, subject to approval by the
shareholders of the Fund, to enter into a new investment advisory agreement
between the Fund and SBSA (the "New Advisory Agreement"). SBSA and the Trust
have agreed to terminate the Current Advisory Agreement, waiving any
applicable notice provisions, upon the shareholders' approval of the New
Advisory Agreement. Under the New Advisory Agreement, the Fund would pay
advisory fees in an amount equal, in the aggregate, to the fees paid under the
Current Agreements. It
<PAGE>4
is contemplated, however, that under the New Advisory Agreement (1) SBSA, as
the Fund's sole investment adviser, will render increased services to the Fund
in the areas of setting overall strategy, security selection and trading and
will retain the entire advisory fee paid by the Fund and (2) no payment of a
sub-advisory fee will be paid to Boston Advisors. In addition, the New
Advisory Agreement provides for a term different from that of the Current
Advisory the Agreement.
Under the Current Advisory Agreement, the Fund pays SBSA a monthly
fee at the annual rate of 0.55 of 1.00% of the Fund's average daily net
assets. In turn, under the Current Sub-Advisory Agreement, SBSA pays Boston
Advisors a monthly fee at the annual rate of 0.275 of 1.00% of the Fund's
average daily net assets. The Fund pays no fee to Boston Advisors directly.
Under the proposed fee arrangements, the Fund would continue to pay SBSA a
monthly fee at the annual rate of 0.55 of 1.00% of the Fund's average daily
net assets, however, SBSA would retain the entire fee since no sub-advisory
fee will be paid. The aggregate cost to the Fund for advisory services under
the New Advisory Agreement would be the same as the fees currently paid under
the Current Agreements.
If approved by shareholders, the New Advisory Agreement will
commence upon obtaining shareholder approval and continue for a two-year
period and automatically thereafter for successive annual periods, provided
such continuance is approved at least annually by (a) a majority of the Board
who are not interested persons of the Trust (as the term is used in the 1940
Act) and (b) a majority of the full Board of Trustees or a majority of the
outstanding voting securities of the Fund, as defined in the 1940 Act.
SMITH BARNEY STRATEGY ADVISERS INC.
SBSA is a wholly owned subsidiary of Smith Barney Mutual Funds
Management Inc. ("SBMFM"). SBMFM is a wholly owned subsidiary of Smith Barney
Holdings Inc. ("Holdings") which in turn is a wholly owned subsidiary of
Travelers. SBMFM serves as the Fund's administrator and Smith Barney serves
as the Fund's distributor. SBSA, SBMFM, Smith Barney and Travelers are
located at 388 Greenwich Street, New York, New York 10013.
For the Fund's fiscal year ended January 31, 1995, the aggregate
amount of advisory fees paid to SBSA by the Fund was $2,013,080, of which
$________ was paid to Boston Advisors by SBSA. If the proposed fee structure
had been in effect during the last fiscal year, SBSA would have retained
aggregate advisory fees equal to $2,013,080 (__% more than the actual advisory
fees retained).
<PAGE>5
In addition, for the Fund's fiscal year ended January 31, 1995, the
Fund paid (1) administration fees to SBMFM in the aggregate amount of
$732,029, of which sub-administration fees in the amount of $________ were
paid to Boston Advisors by SBMFM, and (2) service and distribution fees to
Smith Barney in the aggregate amount of $3,215,966.
The name, address, position with SBSA and principal occupation of
each executive officer and director of SBSA are set forth in the following
table.
<TABLE>
<CAPTION>
Name and Address* Position with SBSA Principal Occupation
----------------- ------------------ --------------------
<S> <C> <C>
Heath B. McLendon** Chairman of the Managing Director
Board of Directors of Smith Barney;
and President Chairman of the funds of the Smith Barney
Group of Funds
Lewis E. Daidone** Director Managing Director of Smith Barney; Senior
Vice President and Treasurer of the funds
of the Smith Barney Group of Funds
Michael J. Day Treasurer Managing Director of Smith Barney
Christina T. Sydor** Secretary Managing Director of Smith Barney;
Secretary of the funds of the Smith Barney
Group of Funds
</TABLE>
______________________
* The business address of each person listed above is 388 Greenwich Street,
New York, New York 10013.
** Also an officer of the Fund.
<PAGE>6
EVALUATION BY THE BOARD AND REASONS FOR THE
PROPOSALS
In April 1995, the Board was informed that fourteen members of the
professional staff of Boston Advisors, including the Fund's former Portfolio
Manager and Investment Officer, William W. Carter, who was responsible for
managing the equity portion of the Fund's portfolio, resigned from Boston
Advisors and formed a new investment management firm, Boston Partners Asset
Management, L.P. In light of these events and as soon thereafter as
practicable, the Board held a meeting via telephone conference on April 28,
1995 to discuss the status of the Fund's management. At that time, the Board
was informed that, on the next business day, several executive personnel of
SBSA would meet with Boston Advisors in Boston to discuss the future
management of the Fund and that, in the interim, SBSA would closely supervise
all portfolio transactions made by Boston Advisors on behalf of the Fund.
Shortly thereafter at a Board meeting held on May 9, 1995, SBSA reported its
findings to the Board for its consideration.
On June 15, 1995, the Board met in person at a meeting called for
the purpose of considering, among other things, (1) the termination of the
Current Advisory Agreement and the approval of the New Advisory Agreement with
SBSA and (2) termination of the Current Sub-Advisory Agreement with Boston
Advisors. Although SBSA recommended that the Board approve these proposals,
the Board also considered various other possible alternatives, including (1)
continuation of the Current Sub-Advisory Agreement with Boston Advisors and
(2) solicitation of interest by other possible sub-advisers. The Board
received and reviewed materials or discussed various matters regarding one or
both of SBSA and Boston Advisors, including their personnel, portfolio
managers, analysts, economists and others, methods of operation, past
performance and profitability. After reviewing different options, the Board
has determined that the termination of the Current Agreements and the approval
of the New Advisory Agreement, pursuant to which SBSA would act as sole
investment adviser for the Fund, are appropriate courses of action at this
time in order to provide the Fund with management by investment professionals
who are well suited to address the Fund's particular needs and to implement
its asset allocation strategy.
The Board considered, among other factors, that SBSA currently
oversees Boston Advisors' management of the Fund's portfolio. The Board
further considered that Smith Barney, an affiliate of SBSA, serves without
compensation as asset allocation consultant to the Fund. The Board was
advised that the asset allocation mix has been a primary determinant of the
Fund's investment performance. The Board concluded that having all of the
<PAGE>7
investment functions performed by a single entity would significantly simplify
the Fund's management and permit it to operate more efficiently.
The Board considered the fact that, although the aggregate cost to
the Fund for advisory services under the proposed New Advisory Agreement would
be the same as the fees paid under the Current Agreements, SBSA would be
retaining the entire amount of its advisory fee. The Board determined that
the additional fees retained by SBSA would compensate SBSA for assuming
responsibility for all of the investment management functions of the Fund.
The Board concluded that the New Advisory Agreement and the increased
involvement of SBSA should provide investment management which will be
beneficial to the overall performance of the Fund, while not affecting the
investment advisory fee currently charged to the Fund.
After a meeting of the full Board, and a meeting of the non-
interested Trustees with their counsel, at which the Trustees carefully
evaluated the foregoing issues, the Trustees of the Trust who were not
interested persons of the Trust approved, and the Board as a whole, approved
(i) the termination of the Current Agreements and (ii) subject to shareholder
approval, the New Advisory Agreement with SBSA substantially in the form of
Exhibit B to this Proxy Statement.
BROKERAGE COMMISSIONS
During the fiscal year ended January 31, 1995, the Fund incurred
$541,403 in brokerage commissions, of which $117,328 (representing 21.70% of
the total of all brokerage commissions paid) was paid to Smith Barney. Such
commissions were paid with respect to 24.67% of the total dollar value of all
transactions involving the payment of brokerage commissions effected during
the year.
CURRENT AND PROPOSED ADVISORY AGREEMENTS WITH SBSA
Current Advisory Agreement
SBSA currently serves as investment adviser to the Fund pursuant to
an advisory agreement dated July 15, 1994 between the Trust, on behalf of the
Fund, and SBSA. The Current Advisory Agreement was last submitted to a vote
of shareholders of the Fund on July 5, 1994 in connection with terminating
the then existing investment advisory agreement with Boston Advisors and
approving the Current Advisory Agreement with SBSA (at the same time, the
Current Sub-Advisory Agreement with Boston Advisors was approved). Under its
terms, SBSA, subject to the supervision of the Trust's
<PAGE>8
Board of Trustees, manages the Fund's investments in accordance with the
investment objectives and policies stated in the Fund's Prospectus and the
Trust's Statement of Additional Information. Under the Current Advisory
Agreement, SBSA supervises the sub-investment advisory services currently
rendered by Boston Advisors, determines the asset allocation of the Fund,
evaluates and makes final determinations with respect to investment strategies
for the Fund, provides the Fund with the benefits of research capabilities of
the Smith Barney organization and provides executive management for the Fund.
SBSA receives a fee that is computed daily and paid monthly at the annual rate
of 0.55 of 1.00% of the value of the Fund's average daily net assets.
Under the terms of the Current Advisory Agreement, SBSA bears all
expenses in connection with its performance, including the sub-investment
advisory fee payable to Boston Advisors under the Current Sub-Advisory
Agreement. Other expenses incurred in the operation of the Fund are borne by
the Fund, including: taxes, interest, brokerage fees and commissions, if any;
distribution and shareholder service fees; fees of the Board members who are
not officers, directors, shareholders or employees of Smith Barney, or any of
its affiliates; SEC fees and state blue sky qualification fees; charges of
custodian and transfer and dividend disbursing agents; certain insurance
premiums; outside auditing and legal expenses; costs of investor services
(including allocable telephone and personnel expenses); costs of preparation
and printing of prospectuses and statements of additional information for
regulatory purposes and for distribution to shareholders; costs of preparation
and printing of shareholders' reports; costs incurred in connection with
meetings of the shareholders of the Fund and of the officers or Board of the
Trust; and any extraordinary expenses.
If in any fiscal year the aggregate expenses of the Fund (including
fees pursuant to the Current Advisory Agreement and the Current Sub-Advisory
Agreement but excluding interest, taxes, brokerage and, if permitted by state
securities commissions, extraordinary expenses) exceed the expense limitation
of any state having jurisdiction over the Fund, SBSA will reduce its advisory
fee to the Fund by the proportion of such excess equal to the proportion that
the advisory fees bear to the Fund's aggregate fees for investment advice and
administration. This expense reimbursement, if any, is estimated, reconciled
and paid on a monthly basis.
The Current Advisory Agreement provides that in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard for its
obligations thereunder, the investment adviser shall not be liable for any act
or omission in the course of or in connection with the rendering of its
services thereunder.
<PAGE>9
The Current Advisory Agreement will remain in effect pursuant to its
terms for an initial term of two years from its date of execution and
thereafter with respect to the Fund for successive annual periods if and so
long as such continuance is specifically approved annually by (a) the Trust's
Board or (b) a majority vote of the outstanding voting securities of the Fund,
provided that in either event the continuance also is approved by a majority
of the Board members who are not "interested persons" (as defined in the 1940
Act) of any party to the Agreement, by vote cast in person at a meeting called
for the purpose of voting on approval. The Agreement is terminable, without
penalty, on 60 days' written notice by the Board or by a majority vote of the
outstanding voting securities of the Fund or on 90 days' written notice by
SBSA. The Agreement would terminate automatically in the event of its
assignment (as defined in the 1940 Act).
Under the terms of the Current Sub-Advisory Agreement, Boston
Advisors, subject to the supervision of the Board and SBSA as investment
adviser, makes investment decisions for the Fund, places purchase and sale
orders for portfolio transactions and provides analytical and research
services to the Fund. Pursuant to the Current Sub-Advisory Agreement, SBSA
pays Boston Advisors a sub-investment advisory fee of 0.275 of 1.00% of the
value of the Fund's average daily net assets. Pursuant to the New Advisory
Agreement, subject to approval by the shareholders of the Fund, SBSA would
assume the investment management responsibilities currently provided to the
Fund by Boston Advisors and would retain this additional portion of its
advisory fee. By letter dated June 15, 1995, the Board has notified Boston
Advisors of its decision to terminate the Current Sub-Advisory Agreement,
effective August 14, 1995.
Proposed New Advisory Agreement
The New Advisory Agreement contains the same advisory fee as the
Current Advisory Agreement and is identical in all other material respects
other than that it provides for a term different from that of the Current
Advisory Agreement. It is contemplated under the New Advisory Agreement that
(1) SBSA will render increased services to the Fund as the sole investment
adviser for the Fund and will retain the entire advisory fee paid by the Fund
and (2) no sub-advisory fee will be paid to Boston Advisors.
REQUIRED VOTE
Approval of the Agreement requires the affirmative vote of a
"majority of the outstanding voting securities" of the Fund. The term
"majority of the outstanding voting securities" of the
<PAGE>10
Fund, as used in this Proxy Statement and defined in the 1940 Act, means the
affirmative vote of the lesser of: (1) 67% of the voting securities of the
Fund present at the Meeting if more than 50% of the outstanding Shares are
present in person or by proxy at the Meeting; or (2) more than 50% of the
outstanding securities of the Fund.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Trust is not generally required to hold annual or special
shareholders' meetings. Shareholders wishing to submit proposals for
inclusion in a proxy statement for a subsequent shareholders' meeting should
send their written proposals to the Secretary of the Trust at the address set
forth on the cover of this proxy statement. Shareholder proposals for
inclusion in the Trust's proxy statement for any subsequent meeting must be
received by the Trust a reasonable period of time prior to any such meeting.
ANNUAL REPORT
The Fund will furnish, without charge, a copy of its most recent
Annual Report dated January 31, 1995 and its most recent Semi-Annual Report
dated July 31, 1994, upon request to the Fund at 388 Greenwich Street, New
York, New York 10013, (800) 224-7523, or by contacting a Smith Barney
Financial Consultant.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board does not intend to present any other business at the
Meeting nor is it aware that any shareholder intends to do so. If, however,
any other matters are properly brought before the Meeting, the persons named
in the accompanying proxy card(s) will vote thereon in accordance with their
judgment.
[July __, 1995]
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO
DO NOT EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE, SIGN,
DATE AND RETURN THE PROXY AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE PAID
ENVELOPE.
<PAGE>A-1
EXHIBIT A
BENEFICIAL OWNERSHIP OF CLASS C SHARES
as of the Record Date
<TABLE>
<CAPTION>
Number of Shares Percentage of Class C
Name and Address Beneficially Owned Shares Outstanding
---------------- ------------------ ---------------------
<S> <C> <C>
Frontier Trust Company as TTEE 13,111.577 [10.35]
MBS/Multimode Inc.
Attn: Camille Petrizzo
7 Horden Lane
Huntington Station, NY 11746
Frontier Trust Company as TTEE 10,962.770 [8.66]
Reynolds Brothers Inc.
Attn: Ed Snyder
1000 Airport Road
Lakewood, NJ 08701
Landmark Contract 10,723.887 [8.47]
Management Inc. 401K
Attn: Diane McGinis
930 Roosevelt Pkwy Ste 200
St. Louis, MO 63017-2053
Frontier Trust Company as TTEE 8,829.733 [6.97]
Southern Micrographix Inc.
Attn: Dale Herring
112 Walter Davis Drive
Birmingham, AL 35209
Frontier Trust Company as TTEE 8,067.839 [6.37]
Weldon Machine Tool Inc.
c/o The Barclay Group
Springhouse Corporate Center
323 Norristown Road
Ambler, PA 19002
</TABLE>
<PAGE>B-1
EXHIBIT B
FORM OF
ADVISORY AGREEMENT
SMITH BARNEY EQUITY FUNDS
(Smith Barney Strategic Investors Fund)
___________, 1995
Smith Barney Strategy Advisers Inc.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Smith Barney Equity Funds (the "Company"), a trust organized under
the laws of the Commonwealth of Massachusetts, on behalf of Smith Barney
Strategic Investors Fund (the "Fund"), confirms its agreement with Smith
Barney Strategy Advisers Inc. (the "Adviser"), as follows:
1. Investment Description; Appointment
The Company desires to employ its capital relating to the Fund by
investing and reinvesting in investments of the kind and in accordance with
the investment objective(s), policies and limitations specified in its Master
Trust Agreement, as amended from time to time (the "Master Trust Agreement"),
in the prospectus relating to the Fund (the "Prospectus") and the statement of
additional information relating to the Company (the "Statement") filed with
the Securities and Exchange Commission as part of the Company's Registration
Statement on Form N-1A, as amended from time to time, and in the manner and to
the extent as may from time to time be approved by the Board of Trustees of
the Company (the "Board"). Copies of the Prospectus, the Statement and the
Master Trust Agreement have been or will be submitted to the Adviser. The
Company agrees to provide copies of all amendments to the Prospectus, the
Statement and the Master Trust Agreement to the Adviser on an on-going basis.
The Company desires to employ and hereby appoints the Adviser to act as the
Fund's investment adviser. The Adviser accepts the appointment and agrees to
furnish the services for the compensation set forth below.
<PAGE>B-2
2. Services as Investment Adviser
Subject to the supervision, direction and approval of the Board of
the Company, the Adviser will: (a) manage the Fund's portfolio in accordance
with the Fund's investment objective(s) and policies as stated in the Master
Trust Agreement, the Prospectus and the Statement; (b) make investment
decisions for the Fund; (c) place purchase and sale orders for portfolio
transactions for the Fund; and (d) employ professional portfolio managers and
securities analysts who provide research services to the Fund. In providing
those services, the Adviser will conduct a continual program of investment,
evaluation and, if appropriate, sale and reinvestment of the Fund's assets.
The Adviser may, with the approval of the Board and the shareholders of the
Fund (to the extent required by applicable law), from time to time, sub-
contract with one or more sub-investment advisers to provide some or all of
the services required under this agreement.
3. Brokerage
In selecting brokers or dealers to execute transactions on behalf of
the Fund, the Adviser will seek the best overall terms available. In
assessing the best overall terms available for any transaction, the Adviser
will consider factors it deems relevant, including, but not limited to, the
breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on
a continuing basis. In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms available, the Adviser
is authorized to consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934), provided
to the Fund and/or other accounts over which the Adviser or its affiliates
exercise investment discretion.
4. Information Provided to the Company
The Adviser will keep the Company informed of developments
materially affecting the Fund's portfolio, and will, on its own initiative,
furnish the Company from time to time with whatever information the Adviser
believes is appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the
services listed in paragraphs 2 and 3 above. The Adviser shall not be liable
for any error of judgment or mistake of law or for
<PAGE>B-3
any loss suffered by the Company in connection with the matters to which this
Agreement relates, provided that nothing in this Agreement shall be deemed to
protect or purport to protect the Adviser against any liability to the Company
or the shareholders of the Fund to which the Adviser would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or by reason of the Adviser's reckless
disregard of its obligations and duties under this Agreement.
6. Compensation
In consideration of the services rendered pursuant to this
Agreement, the Fund will pay the Adviser on the first business day of each
month a fee for the previous month at the annual rate of 0.55 of 1.00% of the
Fund's average daily net assets. The fee for the period from the Effective
Date (defined below) of the Agreement to the end of the month during which the
Effective Date occurs shall be prorated according to the proportion that such
period bears to the full monthly period. Upon any termination of this
Agreement before the end of a month, the fee for such part of that month shall
be prorated according to the proportion that such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to the Adviser, the
value of the Fund's net assets shall be computed at the times and in the
manner specified in the Prospectus and/or the Statement.
7. Expenses
The Adviser will bear all expenses in connection with the
performance of its services under this Agreement and will pay to any sub-
investment adviser or advisers retained by the Adviser to provide advisory
services to the Fund (a "Sub-Adviser") the fees required to be paid to each
Sub-Adviser. The Fund will bear certain other expenses to be incurred in its
operation, including, but not limited to, investment advisory and
administration fees, other than those payable to a Sub-Adviser or any
additional or substitute sub-investment adviser; fees for necessary
professional and brokerage services; fees for any pricing service; the costs
of regulatory compliance; and costs associated with maintaining the Company's
legal existence and shareholder relations.
8. Reduction of Fee
If in any fiscal year the aggregate expenses of the Fund (including
fees pursuant to this Agreement and the Fund's sub-investment advisory and
administration agreements, but excluding interest, taxes, brokerage and
extraordinary expenses) exceed the
<PAGE>B-4
expense limitation of any state having jurisdiction over the Fund, the Adviser
will reduce its fee to the Fund by the proportion of such excess expense equal
to the proportion that its fee thereunder bears to the aggregate of fees paid
by the Fund for investment advice and administration in that year, to the
extent required by state law. A fee reduction pursuant to this paragraph 8,
if any, will be estimated, reconciled and paid on a monthly basis.
9. Services to Other Companies or Accounts
The Company understands that the Adviser now acts, will continue to
act and may act in the future as investment adviser to fiduciary and other
managed accounts, and as investment adviser to other investment companies, and
the Company has no objection to the Adviser's so acting, provided that
whenever the Fund and one or more other investment companies advised by the
Adviser have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a formula believed
to be equitable to each company. The Fund recognizes that in some cases this
procedure may adversely affect the size of the position obtainable or
disposable for the Fund. In addition, the Fund understands that the persons
employed by the Adviser to assist in the performance of the Adviser's duties
under this Agreement will not devote their full time to such service and
nothing contained in this Agreement shall be deemed to limit or restrict the
right of the Adviser or any affiliate of the Adviser to engage in and devote
time and attention to other businesses or to render services of whatever kind
or nature.
10. Term of Agreement
This Agreement shall become effective ___________, 1995 (the
"Effective Date") and shall continue for an initial two-year term and shall
continue thereafter so long as such continuance is specifically approved at
least annually by (i) the Board of the Company or (ii) a vote of a "majority"
(as that term is defined in the Investment Company Act of 1940, as amended
(the "1940 Act")) of the Fund's outstanding voting securities, provided that
in either event the continuance is also approved by a majority of the Board
who are not "interested persons" (as defined in the 1940 Act) of any party to
this Agreement, by vote cast in person at a meeting called for the purpose of
voting on such approval. This Agreement is terminable, without penalty, on 60
days' written notice, by the Board of the Company or by vote of holders of a
majority of the Fund's shares, or upon 90 days' written notice, by the
Adviser. This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act and the rules thereunder).
<PAGE>B-5
11. Representation by the Company
The Company represents that a copy of the Master Trust Agreement is
on file with the Secretary of the Commonwealth of Massachusetts and with the
Boston City Clerk.
12. Limitation of Liability
The Company and the Adviser agree that the obligations of the
Company under this Agreement shall not be binding upon any of the members of
the Board, shareholders, nominees, officers, employees or agents, whether
past, present or future, of the Company, individually, but are binding only
upon the assets and property of the Company, as provided in the Master Trust
Agreement. The execution and delivery of this Agreement have been authorized
by the Board and a majority of the holders of the Fund's outstanding voting
securities, are signed by an authorized officer of the Company, acting as
such, and neither such authorization by such members of the Board and
shareholders nor such execution and delivery by such officer shall be deemed
to have been made by any of them individually or to impose any liability on
any of them personally, but shall bind only the assets and property of the
Company as provided in the Master Trust Agreement.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the
enclosed copy of this Agreement.
Very truly yours,
SMITH BARNEY EQUITY FUNDS
on behalf of SMITH BARNEY
STRATEGIC INVESTORS FUND
By:
Name:
Title:
Accepted:
SMITH BARNEY STRATEGY ADVISERS INC.
Name:
Title:
<PAGE>
PRELIMINARY COPY
VOTE THIS VOTING INSTRUCTION CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
..............................................................................
....................................................
SMITH BARNEY STRATEGIC INVESTORS FUND
(A SUB-TRUST OF SMITH BARNEY EQUITY FUNDS)
PROXY SOLICITED BY THE BOARD OF TRUSTEES
The undersigned holder of shares of Smith Barney Strategic Investors Fund (the
"Fund"), hereby appoints Heath B. McLendon, Christina T. Sydor and Robert A.
Vegliante, attorneys and proxies for the undersigned, with full powers of
substitution and revocation, to represent the undersigned and to vote on
behalf of the undersigned all shares of the Fund that the undersigned is
entitled to vote at the Special Meeting of Shareholders of the Fund to be held
at the offices of the Fund, 388 Greenwich Street, New York, New York, on
August , 1995 at .m. and any adjournment or adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting/Proxy Statement dated June , 1995 and hereby instructs said
attorneys and proxies to vote said shares as indicated herein. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the Special Meeting. A majority of the proxies present
and voting at the Special Meeting in person or by substitute (or, if only one
shall be so present, then that one) shall have and may exercise all of the
power and authority of said proxies hereunder. The undersigned hereby revokes
any proxy previously given.
PLEASE SIGN, DATE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE
Note: Please sign exactly as your name appears on this Proxy. If joint
owners, EITHER may sign this Proxy. When signing as attorney, executor,
administrator, trustee, guardian or corporate officer, please give your
full title.
Date: ____________________________________________
____________________________________________
Signature(s) (Title(s), if applicable)
<PAGE>
PRELIMINARY COPY
VOTE THIS VOTING INSTRUCTION CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
..............................................................................
..............................................................................
Please indicate your vote by an "X" in the appropriate box below. This proxy,
if properly executed, will be voted in the manner directed by the undersigned
shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
PROPOSAL.
1. To approve a new Investment Advisory Agreement between Smith Barney
Equity Funds, on behalf of Smith Barney Strategic Investors Fund, and
Smith Barney Strategy Advisers Inc.
___FOR ___AGAINST ___ABSTAIN
