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. ("SBMFM")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 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 "nonvotes" 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
Proposal 1," 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, subinvestment 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
Presiden
t and
Chief
Financia
l
Officer
of the
Smith
Barney
Mutual
Funds.
Michael J. Day Treasurer Managing
Director
of Smith
Barney Inc. Christina T. Secretary
Managing
Director
Sydor** of Smith
Barney
Inc.
Secretar
y 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
Preside
nt ,
Secreta
ry and
Chief
Legal
Officer
of
Smith
Barney
Inc.
Bruce D. Sargent* Director and Vice
Managing
Director
President of
Smith
Barney
Inc.
Directo
r of
Capital
Managem
en t
Divisio
n of
Smith
Barney
Inc.
Lewis E. Daidone* Director
Managing
Director
of
Smith
Barney
Inc.
Chief
Financi
al
Officer
of
the
Smith
Barney
Mutual
Funds.
Heath B. McLendon* President
Managing
Director
of
Smith
Barney
Inc.
Chairma
n 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.
Secreta
ry of
the
Smith
Barney
Mutual
Funds.
John G. Goode** Portfolio Manager
President
and
Chief
Executi
ve
Officer
of
Davis
Skaggs
Investm
en t
Managem
en t
Divisi
on of
SBMFM.
* 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
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
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,
SubAdvisory 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.) isa 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 A 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
TO THE FUND'S INVESTMENT
OBJECTIVES
The second proposal to be considered at the
Meeting is an amendment to 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 is
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 Resource 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)
.................................................
.. .. .. . .. ..
.................................................
.. .. .. . .. ..
.................................................
.. .. .. . .. ..
.............................................
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)
................................................
.. .. .. .. .. ..
................................................
.. .. .. .. .. ..
................................................
.. .. .. .. .. ..
.............................................
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. 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.
