Proxy Statement Pursuant to Section 14(a)
of the Securities
Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a party other than the Registrant
[X]
Check the appropriate box:
[ ] Preliminary proxy statement
[X ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-
11(c)
or
Rule 14a-12
Smith Barney Precious Metals and Minerals
Fund Inc. (Name of Registrant as Specified
in its Charter)
Caren Cunningham
Name of Person Filing Proxy Statement
Payment of Filing Fee (Check appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii),
14a 6(i)(1), or 14a-6(i)(2).
[ ] $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
14a6(i)(4) and 0-11.
(1) Title of each class of securities to which the
transaction applies:
(2) Aggregate number of securities to which
transactions applies:
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
0 11:1
(4) Proposed maximum aggregate value of
transaction: [ ] 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:
1 Set forth the amount on which the filing
fee
is calculated and state how it was
determined.
SMITH BARNEY MUTUAL FUNDS
November 6, 1995
Dear Valued Shareholder:
An Important Notice About the Smith Barney
Precious Metals and Minerals Fund Inc.
We would like to inform you of two proposals
that have recently been reviewed and
unanimously endorsed by the Board of Directors
concerning the Smith Barney Precious Metals
and Minerals Fund Inc.
First, the Board has proposed that the Fund
enter into a new management agreement with
Smith Barney Mutual Funds Management Inc. in
place of the Fund's existing investment
advisory, subinvestment advisory and
administration agreements. Currently, the Fund
has separate agreements with Smith Barney
Strategy Advisers Inc., Lehman Brothers Global
Asset Management Limited, and Smith Barney
Mutual Funds Management Inc. ("SBMFM"),
respectively.
At the time of the Fund's inception, Lehman
Brothers Global Asset Management Limited was
the Fund's investment adviser and was an
integral part of Shearson Lehman Brothers Inc.
("Shearson Lehman"). However, since Lehman
Brothers separated from Shearson Lehman in
July, 1993, the Fund has become an integral
part of the Smith Barney Mutual Fund family
and as such, we believe the Fund would benefit
by being advised by Smith Barney's asset
management team.
It is important to note that, if the proposed
agreement is approved, SBMFM would provide all
necessary investment advisory and
administration services to the Fund at a
single fee which is significantly less than
the aggregate fees incurred under the current
agreements.
Second, the Board has proposed that the Fund's
investment objective be broadened to permit
investments in natural resource companies.
These are companies that own or process
natural resources such as precious metals,
other minerals, water, timberland, etc., or
sources of energy such as oil, natural gas,
coal, uranium, etc. Currently, the Fund is
restricted to investments in precious metal
and mineral securities, gold and gold bullion.
While these investments usually do well in
weak securities markets, they often
underperform during stock market rallies.
Therefore, while we would continue to invest a
significant percentage of the Fund's assets in
gold and other precious metals, expanding the
Fund's investment objective to permit
investments in natural resources would present
considerable opportunities. By broadening the
sectors in which it can invest, the Board
believes the Fund should be able to diversify
its risks to a
greater extent and offer better overall
performance.
If the change in the Fund's investment
objective is approved, the name of the Fund
will be changed to the "Smith Barney Natural
Resources Fund Inc." and it is anticipated
that the Fund will be reclassified as a
"natural resources" fund rather than as a
"gold oriented" fund by Lipper Analytical
Services, Inc., or similar independent
entities that monitor the mutual fund
industry.
A Special Meeting of Shareholders will be held
on December 18, 1995 to consider these
proposals. We strongly urge you to participate
by reviewing, completing and returning your
proxy by December 17, 1995 in the postage-paid
envelope provided. For more details about the
proposed transaction, please refer to the
enclosed proxy statement. If you sign and date
your proxy card, but do not provide voting
instructions, your shares will be voted FOR
the proposals.
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 PRECIOUS METALS
AND MINERALS FUND INC. 388
Greenwich Street
New York, New York 10013
NOTICE OF A SPECIAL MEETING OF
SHAREHOLDERS To Be Held on December
18, 1995
To the Shareholders of:
SMITH BARNEY PRECIOUS METALS AND MINERALS FUND
INC. :
Notice is hereby given that a Special
Meeting of Shareholders of Smith Barney Precious
Metals and Minerals Fund Inc. (the "Fund") will
be held at the offices of the Fund, 388
Greenwich Street, 22nd Floor, New York, New York
10013, at 9:30 p.m. on Monday, December 18,
1995 for the following purposes:
1. To approve or disapprove a new
management
agreement between the Fund and Smith
Barney Mutual Funds Management Inc.
("SBMFM") in place of the Fund's
existing investment advisory,
subinvestment advisory and
administration agreements (Proposal 1);
and
2. To approve or disapprove a proposal to
amend
the
investment objective of the Fund
to permit investments in natural
resources securities (Proposal
2); and
3. To transact such other business as may
properly
come before the Special Meeting
or any
adjournment(s) thereof.
The Board of Directors has fixed the close of
business on September 27, 1995 as the record
date for the
determination of shareholders of the Fund entitled
to vote at the Special Meeting.
By Order of
the Board of Directors,
Christina T.
Sydor Secretary
November 6, 1995
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND
THE SPECIAL MEETING ARE REQUESTED TO COMPLETE,
SIGN, DATE AND RETURN THE ACCOMPANYING PROXY
CARD IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO
POSTAGE IF MAILED IN THE UNITED STATES.
INSTRUCTIONS FOR THE PROPER EXECUTION OF THE PROXY
CARD ARE SET FORTH ON THE INSIDE COVER OF THIS
NOTICE. IT IS IMPORTANT THAT THE PROXIES BE
RETURNED PROMPTLY.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy
cards may be of assistance to you and avoid the
added 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 John Doe, Trustee
Sharing Plan ...........
Trust Accounts
(1) ABC Trust Jane B.
Doe,
Trustee
.............................
.............
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 Jane B.
Doe
.............................
..
Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. John B. Smith
UGMA ....
(2) Estate of John B. John B. Smith, Jr.,
Executor
Smith.......................
SMITH BARNEY PRECIOUS METALS AND MINERALS
FUND INC. 388 Greenwich Street
New York, New York 10013 SPECIAL
MEETING OF SHAREHOLDERS To Be Held
on December 18, 1995
PROXY STATEMENT
This Proxy Statement is being solicited by
the Board of Directors (the "Board") of Smith
Barney Precious Metals and Minerals Fund Inc. (the
"Fund") for use at a special meeting of
shareholders (the "Meeting") to be held on
December 18, 1995 or any adjournment or
adjournments thereof. The
Meeting will be held at 388 Greenwich Street, 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 may be made by
telephone, telegraph or personal interviews
conducted by officers and employees of: the Fund;
Smith Barney Inc. ("Smith Barney"),
the distributor of shares of the Fund; Smith
Barney Mutual Funds Management Inc. ("SBMFM"),
the administrator of the Fund; and/or The
Shareholder Services Group,
Inc. ("TSSG") , a subsidiary of First
Data Corporation and the transfer agent
of the Fund. 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. A copy of
the Fund's current annual and semi-annual reports
are available upon request and without charge
by writing to the Fund at the address set forth
above or by calling toll-free 1-800-224-7523.
The Fund currently issues four classes of
shares of beneficial interest ("Shares"), but for
the 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
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 laterdated proxy to the Fund 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
which 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 a
proposal.
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 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. A shareholder vote may be taken on a
proposal prior to any adjournment if sufficient
votes have been received
for approval of that proposal. Under the
Fund's By laws, 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
September 27, 1995 as the record date
("Record Date") for the determination of
shareholders of the Fund entitled to notice
of and to vote at the Meeting. On the
Record
Date, 3,406,966.072 Shares of the Fund were
outstanding. As of the Record Date, to the
knowledge of the Fund and the Board, no single
shareholder or "group" (as that term is used in
Section 13(d) of the Securities Exchange
Act of 1934) beneficially
owned more than 5% of the outstanding Shares of
the Fund.
As of the Record Date, the officers and Board
members of the Fund beneficially owned less
than 1% of the
outstanding Shares of any class of the Fund.
As of the Record Date, no shares of Smith Barney
or
its ultimate parent corporation, Travelers Group
Inc., were held by Board members who are not
"interested persons" of the Fund (as that term is
used in the Investment Company Act of 1940, as
amended (the "1940 Act ")).
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;
-- allow sufficient time for the proxy
card to be received on or before 5:00 p.m.,
December 15, 1995
As a corporation formed under the laws of the
State of Maryland, the Fund 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 approve or
disapprove a new investment advisory agreement
and to amend
the
investment objective of the Fund.
The Board recommends an affirmative vote on
Proposals 1 and 2.
PROPOSAL 1:TO APPROVE OR DISAPPROVE A SINGLE
MANAGEMENT AGREEMENT BETWEEN SMITH
BARNEY
MUTUAL FUNDS MANAGEMENT INC. AND THE FUND, IN
PLACE OF THE FUND'S CURRENT ADVISORY, SUB
ADVISORY
AND
ADMINISTRATION AGREEMENTS.
For the reasons described below under the
caption, "Evaluation by the Board and Reasons for
the Proposal," the Board has determined,
subject to approval by
the
shareholders of the Fund, to enter into a single
management agreement (the "Proposed Agreement")
between the Fund and SBMFM in place of the
Fund's current investment advisory, sub-
investment advisory and administration
agreements
(collectively, the "Current Agreements").
Under the
Proposed Agreement, the Fund would pay a single
fee at the annual rate of 0.75% of the Fund's
average daily net assets. Under the Current
Agreements, the
Fund pays fees
totaling an aggregate annual rate of 0.95% of the
Fund's average daily net assets. Accordingly,
under the Proposed Agreement the Fund would pay
0.20% less per annum for the same level of
services.
If approved by shareholders, the Proposed
Agreement would commence on December 18, 1995,
and continue initially for a two-year period.
Thereafter, the Proposed Agreement would
automatically continue for successive annual
periods, provided such continuance is approved at
least annually by (a) a majority of the Board
members who are not "interested persons" of the
Fund and (b) a majority of the full Board or a
majority of the outstanding voting securities of
the Fund, as defined in the 1940 Act.
The Current Investment Adviser, Sub-Investment
Adviser and Administrator
The Fund is currently advised by Smith Barney
Strategy Advisers Inc. ("SBSA"), pursuant to an
investment advisory agreement dated June 20,
1994 (the "Current Advisory
Agreement"). SBSA, located at 388 Greenwich
Street, New York, New York 10013, is a wholly
owned subsidiary of Smith Barney Holdings Inc.
("Holdings"). Holdings, in turn, is a wholly
owned subsidiary of Travelers Group Inc.
("Travelers"), a diversified financial services
holding company engaged, through its subsidiaries
in four business segments: Investment
Services,
Consumer Finance Services, Life Insurance
Services and Property & Casualty
Insurance Services. SBSA, through predecessor
entities, has been in the investment counseling
business since 1968 and is a registered
investment adviser. SBSA renders investment
advice to investment companies that had aggregate
assets under management as of August 31, 1995 in
excess of $3.1 billion.
Subject to the supervision and direction of
the Fund's Board of Directors, SBSA manages the
Fund's portfolio in accordance with the Fund's
stated investment objective and policies. For
investment services rendered pursuant to the
Current Advisory Agreement, the Fund pays SBSA a
monthly fee at the annual rate of 0.75% of the
value of the Fund's average daily net assets.
During the period from November 31, 1993 until
June 20, 1994, the Fund paid LBGAM, the Fund's
previous investment adviser, $376,967 in
investment advisory fees. For the
period from June 21, 1994 through October 31,
1994, the Fund paid SBSA $216,106 in investment
advisory fees. In addition, the
Fund pays the travel and outof-pocket expenses
incurred by SBSA personnel to attend meetings
of the Fund's Board of Directors.
The name, address, position with SBSA and
principal occupation of each executive officer
and director of SBSA are set forth below in the
following table.
<TABLE>
<S> <C> <C>
Name and Address* Position with SBSA Principal
Occupation
Heath B. Chairman of the Managing
Director
McLendon** Board of Directors of Smith
Barney
and President Inc.
Chairman
of
the Board
of the
Smith
Barney
Mutual
Funds.
Lewis E. Daidone** Director and Managing
Director
Senior Vice of Smith
Barney
President Inc.
Senior
Vice
President
and Chief
Financial
Officer of
the Smith
Barney
Mutual
Funds.
Michael J. Day Treasurer Managing
Director
of Smith
Barney Christina T. Secretary Managing
Director
Sydor** of Smith
Barney
Inc.
Secretary
of the
Smith
Barney
Mutual
Funds.
___________________________
* The business address of each person listed
above is 388 Greenwich Street, New York, New York
10013. ** Also an officer of the Fund.
</TABLE>
Lehman Brothers Global Asset
Management Limited ("LBGAM") currently serves as
the Fund's subinvestment adviser pursuant to a
subinvestment advisory agreement dated June 23,
1994 (the "Current Sub-Advisory
Agreement"). LBGAM is an investment adviser
registered under the Investment Advisers Act of
1940, as amended, and is a whollyowned subsidiary
of Lehman Brothers Holdings Plc. , which is
in turn a wholly-owned
subsidiary of Lehman Brothers U.K. Holdings
(Delaware) Inc., a wholly owned subsidiary of
Lehman Brothers Holdings Inc. ("Lehman Brothers").
Prior to May 31, 1994, LBGAM was an indirect
subsidiary of American Express Company through
American Express Company's ownership of a
majority of the voting stock of Lehman
Brothers. LBGAM is located at Two Broadgate,
London, EC2M 7HA,
United Kingdom and Lehman Brothers is located
at 3 World Financial Center, 200 Vesey
Street , New York, New York 10285. LBGAM
renders investment advice to investment companies
with total assets under management, as of August
31, 1995, in excess of $ 3.2 billion. Pursuant
to the Current Sub-Advisory Agreement, LBGAM
receives a fee from SBSA paid monthly at the
annual rate of 0.375% of the value of the Fund's
average daily net assets.
In addition, the Fund pays the travel and out
ofpocket expenses incurred by LBGAM personnel
to attend meetings of the Fund's Board of
Directors. During the fiscal year ended October
31, 1994, SBSA paid LBGAM $108,058 in
subadvisory fees.
The name, address, position with LBGAM and
principal occupation of each executive officer and
director of LBGAM are set forth in the following
table.
<TABLE>
<S> <C>
Name Position with
Global
Management and
Principal Occupation
Peter Barbieri Director of
LBGAM;
Senior
Vice President
and Chief Financial
Officer
of the Financial Services Division and Asset
Management Division
Pauline Barrett Director and Chief
Investment
Officer of LBGAM
Philip Howard Director of LBGAM
Laura Panayotou Company Secretary
and
Chief
Administrative
Officer of
LBGAM
Aisling O'Duffy* Portfolio Manager;
Investment
Manager of LBGAM
_______________________
* Also an officer of the Fund.
</TABLE>
The principal business address of Lehman
Brothers Holdings Plc., Lehman Brothers U.K.
Holdings Limited and Mr. Howard is One
Broadgate, London, EC2M 7HA England. The
principal business address of
Global Management, Ms. Barrett and Ms. Panayotou
is Two Broadgate, London EC2M 7HA England. The
principal address of Lehman Brothers U.K.
Holdings (Delaware) Inc., Lehman and Mr.
Barbieri is 3 World Financial Center, 200 Vesey
Street, New York, New York 10285.
SBMFM currently serves as the Fund's
administrator and oversees all aspects of the
Fund's administration pursuant to an
administration agreement dated April 20, 1994
(the "Current Administration Agreement"). SBMFM,
located
at 388 Greenwich Street, New York, New York
10013, is also a wholly-owned subsidiary of
Holdings. For administration services
rendered under the Current
Administration
Agreement, the Fund pays SBMFM a monthly fee at
the annual rate of 0.20% of the
value of the
Fund's average daily net
assets. In addition, the Fund pays the travel
and out ofpocket expenses incurred by SBMFM
personnel to attend meetings of the Fund's Board
of Directors. For
the fiscal year ended October 31, 1994, the
Fund paid The Boston Company Advisors, its
previous administrator, and SBMFM an aggregate
administration fee of $158,152.
Brokerage Arrangements
In selecting brokers or dealers to execute
portfolio transactions on behalf of the Fund, SBSA
and LBGAM seek the best overall terms available.
In assessing the best overall terms available for
any transaction, SBSA and LBGAM consider the
factors they deem 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 Current Advisory and Sub-Advisory
Agreements authorize SBSA and LBGAM, respectively,
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 and/or
other accounts over which SBSA, LBGAM or their
affiliates exercise investment discretion. The
Fund's Board of Directors periodically reviews
the commissions paid by the Fund to determine if
the commissions paid over representative periods
of time are 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 SBSA, LBGAM or their
affiliates exercise investment discretion.
Conversely, the Fund may be the primary
beneficiary of services received as a result
of portfolio transactions effected for other
accounts. The fees under the Current Advisory
and SubAdvisory Agreements are not reduced by
reason of the receipt by SBSA and LBGAM of such
brokerage
and research services.
During the fiscal year ended October 31,
1994, the Fund paid $287,617 in brokerage
commissions, of which $2,800 was paid to Smith
Barney . For the 1994 fiscal year, Smith
Barney received 1.0% of the brokerage commissions
paid by the Fund and effected 0.004% of the
total dollar amount of transactions for the Fund
involving the payment of brokerage commissions.
The Proposed Manager
It is proposed that the Fund terminate each of
the Current Agreements, and in lieu thereof, enter
into a single agreement with SBMFM. Under the
Proposed Agreement, SBMFM would provide all
necessary investment advisory and
administration services to the
Fund at a single fee which is significantly less
than the aggregate fees incurred under the
Current Advisory, Sub-Advisory and
Administration Agreements. SBMFM, through
predecessor entities, has been in the investment
counseling business since 1934 and is a
registered investment adviser.
The name, address, position with SBMFM and
principal occupation of each executive officer and
director of SBMFM are set forth in the following
table.
<TABLE>
<S> <C> <C>
Name Position with SBMFM Principal
Occupation Jessica Bibliowicz* Chief Executive
Executive
Vice
Officer President
of
Smith
Barney
Inc. A. George Saks* Director
Executive
Vice
President
,
Secretary
and Chief
Legal
Officer
of Smith
Barney
Inc.
Bruce D. Sargent* Director and Vice Managing
Director
President of Smith
Barney
Inc.
Director
of
Capital
Managemen
t
Division
of Smith
Barney
Inc.
Lewis E. Daidone* Director Managing
Director
of Smith
Barney
Inc.
Chief
Financial
Officer
of
the Smith
Barney
Mutual
Funds.
Heath B. McLendon* President Managing
Director
of Smith
Barney
Inc.
Chairman
of the
Board of
the Smith
Barney
Mutual
Funds.
Michael J. Day* Treasurer Managing
Director
of Smith
Barney
Inc.
Christina T. Sydor* General Counsel and Managing
Director Secretary of Smith
Barney
Inc.
Secretary
of the
Smith
Barney
Mutual
Funds.
John G. Goode** Portfolio Manager President
and
Chief
Executive
Officer
of Davis
Skaggs
Investmen
t
Managemen
t
Divisi
on of
SBMFM.</R
>
* The business address of the officers listed
above is
388 Greenwich Street, New York, New York 10013.
** John G. Goode's business address is 1 Sansome
Streeet, San Francisco, California 94104.
Also an officer of the Fund.
</TABLE>
Current Investment Advisory Agreement with SBSA
SBSA currently serves as investment adviser to
the Fund pursuant to the Current Advisory
Agreement which was last submitted to a vote of
shareholders of the Fund on June 15, 1994 in
connection with terminating the then existing
investment advisory agreement with LBGAM and
approving the Current Agreement with SBSA (at the
same time, the Current SubAdvisory Agreement with
LBGAM was approved). Under the Current
Advisory Agreement's terms, SBSA, subject
to the supervision of the Fund's Board of
Directors, manages the Fund's investments in
accordance with the
investment
objectives and policies stated in the Fund's
Prospectus and Statement of Additional
Information. As adviser, SBSA supervises the sub
investment advisory services currently rendered
by LBGAM, evaluates and makes final determinations
with respect to investment strategies for the
Fund and 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 0.75% 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 LBGAM 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 the Board of the Fund; and
any extraordinary expenses.
Current Sub-Investment Advisory Agreement with
LBGAM LBGAM currently serves as sub-
investment adviser to
the Fund pursuant to the Current Sub-Advisory
Agreement which was last submitted to a vote of
shareholders of the Fund on June 23,
1994 in connection with terminating the then
existing investment advisory agreement with
LBGAM and approving the Current Advisory Agreement
with SBSA.
Under the Current Sub-Advisory
Agreement,
LBGAM, subject to the supervision of the
Board and SBSA as investment adviser, makes
investment decisions for the Fund, places
purchase and sale orders for the portfolio
transactions and provides analytical and research
services to the Fund. Pursuant to the Current Sub
Advisory Agreement, SBSA pays LBGAM a sub
investment advisory fee of 0.375% of
the value of the Fund's average daily net assets.
Proposed Management Agreement with SBMFM
A copy of the form of the Proposed Agreement is
set forth as Appendix A to this Proxy
Statement. Under the terms of the Proposed
Agreement, SBMFM, subject to the supervision and
approval of the Board, would provide the Fund with
all the services rendered under the Current
Advisory and SubAdvisory Agreements, as well as
continuing to provide the services it presently
provides under the Administration Agreement.
Pursuant
to the Proposed Agreement, SBMFM would receive a
management fee of 0.75% of the value of the Fund's
average daily net assets, a decrease of 0.20%
from
the aggregate fee of 0.95% that the Fund pays
SBSA, LBGAM and SBMFM under the Current
Agreements.
Under the terms of the Proposed Agreement, SBMFM
would bear all expenses in connection with its
performance. The same operational expenses
borne by the Fund pursuant to the Current Advisory
Agreement would continue to be borne by
the Fund. See "Current Investment Advisory
Agreement with SBSA."
If in any fiscal year the aggregate expenses of
the Fund (including fees pursuant to the Proposed
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, SBMFM will reduce its
management fee to the Fund to the extent
required by state law. This expense reimbursement,
if any, will be estimated, reconciled and paid on
a monthly basis.
The Proposed Agreement would remain in effect
pursuant to its terms for an initial term of two
years from its date of execution and thereafter
for successive periods if and so long as such
continuance is specifically approved annually by
(a) the Fund's Board or (b) 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 the Proposed Agreement by vote cast in
person at a meeting called for the purpose of
voting on
such approval. The Proposed Agreement is
terminable, without penalty, on 60 days' written
notice, by the Board of the Fund or by a vote
of holders of a majority of the Fund's shares,
or upon 90 days' written notice by SBMFM. The
Proposed Agreement would terminate automatically
in the event of its assignment (as defined in the
1940 Act and the rules thereunder).
Evaluation by the Board and Reasons for Proposal 1
On September 26, 1995, the Board of Directors
of
the Fund met in person at a meeting called for
the purpose of considering, among other things,
the Proposed Agreement with SBMFM. The
Directors also considered, at that time,
continuation of the Fund's Current Advisory, Sub-
Advisory and Administration Agreements as well
as other possible alternatives. After careful
deliberation, the Board
of Directors of the Fund determined to terminate
each of the Fund's Current Agreements and to
enter
into the Proposed Agreement subject to the
approval of shareholders. In so doing, the
Board evaluated a
variety of factors.
First, it considered the fact that at the
time of the Fund's inception, LBGAM (then
acting as the Fund's investment adviser) had been
an integral part of the asset management
structure of Shearson Lehman Brothers, Inc.
("Shearson Lehman") and that this relationship
was fundamentally altered upon the separation of
the asset management business from Shearson
Lehman in
July, 1993, when a substanial portion of such
business and certain other assets were acquired by
Smith Barney. Prior to that time, Heath B.
McLendon, the Fund's chief
executive officer, was in close contact with
the LBGAM management team and, as an officer of
Shearson Lehman, was able to participate actively
in decisions regarding its management and
investment philosophies. Currently, Shearson
Lehman (now Lehman Brothers Inc.) is a
completely separate company and Mr. McLendon no
longer has unrestricted access to LBGAM. The
Board noted that this would not be the case,
however, if SBMFM were appointed manager of the
Fund as Mr. McLendon is Preident of SBMFM,
which is a wholly owned subsidiary of
Holdings, the parent company of Smith Barney, of
which Mr. McLendon is a managing director.
The Board also recognized the fact that,
currently, most Shares of the Fund are sold
under an arrangement pursuant to which the
Fund's distributor, Smith Barney, advances the
cost of distribution and seeks to recover that
cost through a combination of contingent deferred
sales charges
and distribution fees paid under a plan
of
distribution adopted pursuant to Rule 12b-1 under
the 1940 Act. Smith Barney informed the Board
that this method of distribution, while
frequently preferred by investors, was
expensive to the distributor on a current basis
and a distributor would rarely agree to offer its
services under these circumstances to a fund
which it or its affiliates did not serve as
investment adviser. Prior to July 30, 1993,
Shearson Lehman served as the Fund's distributor
and LBGAM, its affiliate at the time, served as
the Fund's investment adviser. As of
that date, however, the retail brokerage and
investment advisory businesses (other than LBGAM)
of Shearson Lehman were transferred to Smith
Barney (known at the time as Smith Barney, Harris
Upham & Co. Incorporated) and Smith Barney was
selected by the Board to serve as the
Fund's distributor. Smith Barney is not
affiliated with LBGAM.
The Board took particular note
that
the
compensation payable to SBMFM under the Proposed
Agreement would be significantly less than that
paid under the Current Agreements. For the
fiscal year ended October 31, 1994, the Fund
paid $67,639 in the aggregate pursuant to the
Current Agreements. For the same services
under the Proposed Agreement, the Fund would
have paid only $53,434 during the period.
The Board of Directors also reviewed various
materials regarding SBMFM and LBGAM which
described, among other matters, their
respective affiliates, senior personnel,
portfolio managers, analysts, economists and
others, as well as their methods of operation
and financial conditions. As part of its
analysis, the Board carefully evaluated (i) the
quality of services SBMFM has provided to the
Fund as administrator and is expected to provide
as its investment adviser, (ii) the performance of
the Fund since commencement of operations, (iii)
the proposed change in the Fund's investment
objective (see Proposal 2 below) and the
experience of the Davis Skaggs Division of SBMFM
, (iv) the history, reputation,
qualification and background of SBMFM, as well
as the qualifications of its personnel and
financial condition, (v) the investment
performance record of the Davis Skaggs Division
of SBMFM, and (vi) other factors deemed by the
Board to be relevant.
SBMFM has advised the Board of Directors
that it expects there would be no dilution in the
scope and quality of advisory and administration
services provided
to the Fund under the Proposed Agreement. For the
reasons stated above, the Board of Directors
believes that the Fund would receive investment
advisory and administration services under the
Proposed Agreement equal or superior to those
the Fund currently receives under the Current
Agreements, at a significantly lower aggregate
annual fee.
After carefully evaluating the foregoing
materials and factors, and after meeting in
executive session with independent counsel, the
Directors who were not "interested persons" of the
Fund (the "Independent Directors") approved, and
then the Board as a whole approved,
subject
to shareholder
approval, the
Proposed Agreement with SBMFM substantially in
the form of Appendix B to this Proxy
Statement.
Required Vote
Approval of the Proposed 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 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.
THE DIRECTORS OF THE FUND, INCLUDING ALL
OF THE INDEPENDENT DIRECTORS, RECOMMEND THAT
SHAREHOLDERS OF THE FUND VOTE "FOR" THE APPROVAL
OF THE PROPOSED AGREEMENT.
PROPOSAL 2: CONSIDERATION OF AN AMENDMENT OF
THE FUND'S INVESTMENT OBJECTIVES
The second proposal to be considered at the
Meeting is the amendment of the Fund's investment
objective.
Summary of Proposal 2
Smith Barney and SBMFM have recommended to
the
Board that the Fund's investment objective be
broadened to permit investment in a wide range
of natural resource companies which would
include all investments permitted under the
Fund's current objective. Under the Board's
proposal, the Fund would seek long term capital
appreciation by investing primarily in "Natural
Resource Investments" which are
defined as: (1) equity and debt securities of
Companies principally engaged in (a) owning or
processing natural resources, such as precious
metals, other minerals, water, timberland,
agricultural commodities and forest products, (b)
owning or producing sources of
energy such as oil, natural gas, coal,
uranium, geothermal, oil shale and biomass, (c)
participating in the exploration and
development, transportation, distribution and/or
processing of natural resources, (d) owning or
controlling oil, gas, or other mineral leases,
rights or royalties, (e) providing related
services or supplies, such as drilling, well
servicing, chemicals, parts and equipment, (f)
developing or participating in energy efficient
technologies or (g) upgrading or processing of
raw commodities into intermediate products; and
(2) gold bullion and gold coins. A company will
be considered to be "principally engaged" in a
business
or an activity if it derives at least 50% of its
total revenue from that business or activity.
In addition, if the change in the Fund's
investment objective is approved, the Board would
cause the name of the Fund to be changed to the
"Smith Barney Natural Resources Fund
Inc."
The Fund's Existing Investment Objective and
Principal Investment Policies
At the present time, the Fund's investment
objective is to seek long-term capital
appreciation by investing, under normal market
conditions, at least 65% of its total assets in
"Metals-Related Investments." Metals-Related
Investments are defined as (a) equity
(including common
stocks, preferred stocks, convertible securities
and warrants) and
debt (including bonds, notes and debentures of
companies and governments) securities of (i)
companies principally engaged in one or more
business relating to the exploration, mining,
processing or distribution of gold, silver,
platinum, diamonds or other precious metals and
minerals and (ii) companies principally engaged
in financing, managing, controlling or operating
companies that are so engaged and (b) gold bullion
and gold coins. A company will be
considered "principally engaged" in a business or
an activity if it derives at least 50% of its
total revenue from that business or activity. The
Fund's investments in gold bullion and gold coins
are limited to
10% of its total assets. The Fund may, for hedging
purposes, utilize up to 5% of its assets as
initial margin on futures contracts for the
purchase and sale of gold and as premium for
options on such futures contracts. The Fund may
invest in fixedincome securities that are rated
as low as B by Moody' s
Investors Services, Inc. or Standard & Poor's
Corporation or, if unrated, are deemed by the
adviser to be of comparable quality. The Fund is
currently authorized to engage in repurchase
agreement transactions, lend portfolio securities
and enter into short sales against the box.
Proposed Changes to Investment Objectives and
Policies The Board has proposed that the
Fund's
investment objective be broadened to include
natural resources and basic industry
securities. Under the modified investment
objective the Fund would be permitted to seek
long term capital appreciation by investing
primarily in "Natural Resource Investments"
as defined above.
Under normal market conditions, the Fund will
invest at least 65% of its assets in Natural
Resource Investments. In addition, the Fund may
invest up to 35% of its assets in companies not
in the natural resources area, investment grade
corporate debt securities, U.S. government
securities and, for cash management purposes,
money market instruments. For temporary defensive
purposes, the Fund may invest in excess of 35% of
its assets in money market instruments. The Fund
may utilize up to 10% of its assets to purchase
put options, traded on a regulated exchange, on
securities owned by the Fund and an additional
10% of its assets to purchase call options on
securities it may own in the future. Such
options are technically considered derivative
securities.
In seeking its investment
objective ,
the Fund would be able to use a number of
investment strategies. The Fund would be permitted
to use any one or more of a number of strategies
involving options to seek to increase its total
return or to hedge against movements in the
equity markets. The Fund would also have the
authority, as it does now, to engage in
repurchase agreements, lend portfolio securities,
make short sales against the box, purchase
put and call options on securities, purchase
stock index options,
purchase futures contracts and related options
and engage in
currency exchange transactions.
Principal Differences between Investment
Objectives and Policies.
The changes proposed by the Board to be made
to
the Fund's investment objectives, policies
and name
are
generally designed to reflect adjustments in the
elements of the Fund's investment program. At the
present, the Fund has an investment objective of
long-term capital appreciation by investing
primarily in Metals-Related Investments. Under the
Board's proposal, the Fund's objective would be to
seek long-term appreciation by investing primarily
in Natural Resources Investments as defined above
which is a broader category of investments.
The Board anticipates that the implementation
of
the proposed changes in the Fund's
investment objective, policies and name would, in
turn, result in the Fund's being classified by
Lipper Analytical Services, Inc., or similar
independent entities that monitor the mutual fund
industry in the United
States, as a "natural resources" fund rather than
as a "gold oriented" fund. The Board believes
that a natural resources classification would
appropriately reflect the Fund's proposed
operations.
Evaluation by the Board and Reasons for Proposal 2
Smith Barney and SBMFM have recommended the
change
in the Fund's investment objective and policies
described above after a review of the Fund's
current holdings of securities, its
performance record since the commencement of
its investment operations, and current and
anticipated market conditions.
At present, the Fund is restricted to
investments in precious metals and mineral
securities, gold and gold bullion. These types
of investments are generally perceived as an
effective means to counteract inflation's
negative impact on one's investment portfolio.
Yet, the very factors that allow these
investments to perform well in weak markets,
preclude them from performing well in strong
markets. Management believes that under the
proposed investment objective, the Fund would be
able to invest in securities that would have
positive performance during stock market rallies.
At the same time, however, the Fund would
continue to invest a portion of its portfolio in
precious metals and minerals securities to take
advantage of down markets. SBMFM believes
that by broadening the sector in which it can
invest, the Fund should be able to diversify its
risks to a greater extent and offer better overall
performance in both weak and strong stock markets.
While Management believes a well-diversified
portfolio should contain some percentage of
precious metals securities, the Fund's
experience
shows that the percentage committed exclusively
to these types of securities is small both in
relative terms, vis-avis other securities in an
individual's portfolio, and in real terms. This
is
demonstrated by the fact that as of August 31,
1995, the average account size in the Fund was
approximately $5,524 whereas the average account
size of the other 82 open-end Smith Barney Mutual
Funds was $13,472 . In
part as a result of this, the Fund's asset level
has grown at a very slow rate, less than $3
million dollars over the 24-month period ended
September 18, 1995. SBMFM believes that
the Fund would attract additional investments by
the proposed broadening of the investment
objective, which in turn, should enable the Fund
to realize certain economies of scale.
Required Vote
Amendment of the Fund's investment objective
requires a majority vote of the outstanding
voting securities of the Fund as defined above.
If the proposal to change the Fund's investment
objective is not approved by shareholders, the
existing investment
objective and policies of the Fund would continue
unchanged. If Proposal 2 is approved by
shareholders, the proposed change in the Fund's
investment objective, policies
and name would become effective
concurrently with the effectiveness of
the Proposed Agreement described in Proposal 1.
THE DIRECTORS OF THE FUND, INCLUDING ALL
OF THE INDEPENDENT DIRECTORS, RECOMMEND THAT
THE SHAREHOLDERS OF THE FUND VOTE "FOR" THE
APPROVAL OF THE PROPOSED AMENDMENT TO THE
FUND'S INVESTMENT OBJECTIVE.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Fund 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 Fund at the address set forth
on the cover of this proxy statement. Shareholder
proposals for inclusion in the Fund's proxy
statement for any subsequent meeting must be
received by the Fund within 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 October 31,
1994 and its most recent Semi-Annual Report dated
April 30,
1995, 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.
November 6, 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.
APPENDIX A
FORM OF MANAGEMENT AGREEMENT
___________, 1995
Smith Barney Mutual Funds Management Inc.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Smith Barney Natural Resources Fund Inc.
(the "Company"), a corporation organized under the
laws of the State of Maryland, confirms its
agreement with Smith Barney Mutual Funds
Management Inc. (the "Manager"), as follows:
1. Investment Description; Appointment
The Company desires to employ its capital by
investing and reinvesting in investments of the kind
and in accordance with the investment
objective(s), policies and limitations specified in
its Articles of Incorporation, as amended from time
to time (the "Articles of Incorporation"), in
the prospectus (the "Prospectus") and the
statement of additional information (the
"Statement") filed with the
Securities and Exchange Commission as part of the
Company's Registration Statement on Form N-1A, as
amended from time to time, and in the manner and to
the extent as may from time to time be approved by
the Board of Directors of the Company (the "Board").
Copies of the Prospectus, the Statement and the
Articles of Incorporation have been or will be
submitted to the Manager. The Company agrees to
provide copies of all amendments to the Prospectus,
the Statement and the Articles of Incorporation to
the Manager on an on-going basis. The
Company desires to employ and hereby appoints the
Manager to act as the Company's investment
Manager . The Manager accepts the appointment
and agrees to furnish the services for the
compensation set forth below.
2. Services as Investment Manager
Subject to the supervision, direction and
approval of the Board of the Company, the Manager
shall: (a) maintain compliance procedures for the
Company that it reasonably believes are
adequate to ensure the Company's compliance with
(i) the Investment Company Act of 1940, as
amended (the "1940 Act") and the rules and
the regulations promulgated thereunder and (ii) the
Company's investment objective(s), policies and
restrictions as stated in the Prospectus and
Statement; (b) make investment decisions for the
Company; (c) place purchase and sale orders for
portfolio transactions for the Company; (d) employ
professional portfolio managers and securities
analysts who provide research services to the
Company; and (e) administer the Company's
corporate affairs and, in connection therewith,
furnish the Company with office facilities and with
clerical, bookkeeping and recordkeeping services
at such office facilities. In
providing those services, the Manager will
conduct a continual program of investment,
evaluation and, if
appropriate, sale and reinvestment of the Company's
assets.
3. Brokerage
In selecting brokers or dealers to execute
transactions on behalf of the Company, the Manager
will seek the best overall terms available. In
assessing the best overall terms available for
any transaction, the Manager 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
Manager 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 Company and/or other accounts
over which the Manager or its affiliates exercise
investment discretion. Nothing in this paragraph
shall be deemed to prohibit the Manager from paying
an amount of commission for effecting a securities
transaction in excess of the amount of commission
another member of
an exchange, broker, or dealer would have charged
for effecting the transaction, if the Manager
determined in good faith that such amount of
commission was reasonable in relation to the value
of the brokerage and research services provided by
such member, broker, or dealer, viewed in terms of
either that particular transaction or its overall
responsibilities with respect to the Company and/or
other accounts over which the Manager or its
affiliates exercise investment discretion.
4. Information Provided to the Company
The Manager shall keep the Company
informed of developments materially affecting the
Company's
holdings, and shall, on its own initiative, furnish
the Company from time to time with whatever
information the Manager believes is appropriate for
this purpose.
5. Standard of Care
The Manager shall exercise its best judgment and
act in good faith in rendering the services listed
in paragraphs 2 and 3 above. The Manager shall
not be liable for any error of judgment or mistake
of law or for any loss suffered by the Company in
connection with the matters to which this
Agreement relates, provided that nothing in this
Agreement shall be deemed to protect or purport to
protect the Manager against any liability to the
Company or its shareholders to which the Manager
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 Manager's reckless disregard of its
obligations and duties under this Agreement.
6. Compensation
In consideration of the services rendered
pursuant to this Agreement, the Company will pay
the Manager on the first business day of each
month a fee for the previous month at the annual
rate of 0.75% of the Company'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 Manager, the value of the Company's
net assets shall be computed at the times and in
the manner specified in the Prospectus and/or the
Statement.
7. Expenses
The Manager will bear all expenses (excluding
brokerage costs, custodian fees, auditors fees
or other expenses to be borne by the Company) in
connection with the performance of its services
under this Agreement . The Fund will bear
certain other expenses
to be incurred in its operation, including, but not
limited to, investment advisory and any
administration fees ; fees for necessary
professional and brokerage services; fees for any
pricing service; the costs of regulatory compliance;
and pro rata costs associated with maintaining the
Company's legal existence and shareholder
relations. All other expenses not specifically
assumed by the Manager hereunder shall be borne by
the Company.
8. Reduction of Fee
If in any fiscal year the aggregate expenses
of the Company (including fees pursuant to this
Agreement and the Company's administration
agreement, if any, but excluding interest, taxes,
brokerage and extraordinary expenses) exceed the
expense limitation of any state having
jurisdiction over the Company, the Manager will
reduce its fee to the Company by the proportion of
such excess expense equal to the proportion that
its
fee
thereunder bears to the aggregate of fees paid
by the Company for investment management, 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. The Company confirms that, as of the date of
this Agreement,
no such expense limitation is applicable to the
Company.
9. Services to Other Companies or Accounts
The Company understands that the Manager now
acts,
will continue to act and may act in the future
as investment manager to fiduciary and other
managed accounts, and
as investment manager or adviser to other
investment companies, and the Company has no
objection to the Manager's so acting, provided
that whenever the Company and one
or more other investment companies or accounts
managed
or
advised by the Manager 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 and account. The
Company recognizes that in some cases this
procedure may adversely affect the size of the
position obtainable for the Company. In addition,
the Company understands that
the persons employed by the Manager to assist in
the performance of the Manager'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 Manager or any affiliate of the Manager 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 twoyear 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
Company'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 Company's
shares, or
upon 90 days' written notice, by the
Manager. This
Agreement will also terminate automatically in the
event of
its assignment (as defined in the 1940 Act and
the rules thereunder).
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 NATURAL RESOURCES FUND INC.
By:___________________________________
Name:
Title:
Accepted:
SMITH BARNEY MUTUAL FUNDS MANAGEMENT
INC.
By:______________________________
Name:
Title:
VOTE THIS VOTING INSTRUCTION CARD TODAY
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
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SMITH BARNEY PRECIOUS METALS AND MINERALS FUND INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Smith Barney
Precious Metals and Minerals Fund Inc. (the
"Fund"), a Maryland corporation, hereby appoints
Heath B. McLendon, Christina T. Sydor and Caren
Cunningham, 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, 22nd Floor, New York, New York on December
18, 1995 at 9:30 a.m. and any adjournment or
adjournments thereof. The undersigned hereby
acknowledges receipt of the Notice of Special
Meeting and Proxy
Statement dated November 6, 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 acting at the Special
Meeting in person or by substitute (or, if only
one shall be so present, then that one) shall
have and may exercise all 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)
VOTE THIS VOTING INSTRUCTION CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
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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 IN FAVOR OF
PROPOSALS 1 AND 2.
1. TO APPROVE OR DISAPPROVE A NEW
MANAGEMENT
AGREEMENT BETWEEN THE FUND AND SMITH BARNEY
MUTUAL FUNDS MANAGEMENT INC. ("SBMFM") IN
PLACE OF THE FUND'S
EXISTING INVESTMENT ADVISORY, SUB-INVESTMENT
ADVISORY AND
ADMINISTRATION AGREEMENTS.
2. TO APPROVE OR DISAPPROVE A PROPOSAL TO AMEND
THE
INVESTMENT OBJECTIVE OF THE FUND TO
PERMIT INVESTMENTS IN NATURAL
RESOURCE SECURITIES AND TO CHANGE THE NAME OF THE
FUND TO REFLECT THE AMENDED INVESTMENT
OBJECTIVE.
