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:
[X] Preliminary proxy statement
[ ] 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 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:
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 4:30 p.m. on Wednesday,
November 22, 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 and to change the name of the Fund to
reflect the amended investment objective
(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., a subsidiary of First Data Corporation ("TSSG")
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, 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 any class of the Fund except as set
forth in Appendix A to this Proxy Statement.
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.
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
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
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 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.
Lehman Brothers Global Asset Management
Limited ("LBGAM") currently serves as the Fund's sub-
investment adviser pursuant to a sub-investment
advisory agreement dated June 23, 1994 which was last
approved by shareholders of the Fund on 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 wholly-
owned subsidiary of Lehman Brothers U.K. Holdings
Limited, 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 American Express Tower, World Financial Center,
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 sub-
advisory 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.
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 and
Asset Management Division of
Lehman Brothers
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.
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 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 Sub-Advisory 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 and/or Shearson Lehman
Brothers. 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 names of the
investment companies with an investment objective similar
to that of the Fund for which SBMFM currently provides
services, the amounts of their net assets as of August
31, 1995 and the annual rate of its fees for services to
those companies are set forth in Exhibit A to this Proxy
Statement.
The name, address, position with SBMFM and
principal occupation of each executive officer and
director of SBMFM are set forth in the following table.
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
Management
Division of Smith
Barney Inc.
Lewis E. Daidone* Director Managing Director
of Smith Barney
Inc. Chief
Financial Officer
of Smith Barney
Mutual Funds.
Heath B. McLendon* President Managing Director
of Smith Barney
Inc. Chairman of
the Board of
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
Smith Barney
Mutual Funds.
John G. Goode** Portfolio Manager President and
Chief
Executive Officer
of Davis Skaggs
Investment
Management.
* 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.
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 Sub-Advisory Agreement with LBGAM
was approved). Under the Current Sub-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 15, 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 B 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. Other expenses incurred in the operation
of the Fund would continue to be 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.
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 by the proportion
of such excess expense equal to the proportion that
its fee thereunder bears to the aggregate of fees paid by
the Fund for investment management, advice and
administration in that year, 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 Lehman
Brothers from Shearson Lehman in July, 1993, when the
latter's 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 actively participate in decisions
regarding its management and investment philosophies.
Lehman Brothers, however, is now
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 SBMFM 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 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 also 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, LBGAM and SBSA 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 in
natural resource investments, (iv) the history,
reputation, qualification and background of SBMFM, as
well as the qualifications of its personnel and
financial conditions, (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 issuers
which (a) own or process natural resources, such as
precious metals, other minerals, water, timberland,
agricultural commodities and forest products, (b) own or
produce sources of
energy such as oil, natural gas, coal, uranium,
geothermal, oil shale and biomass, (c) participate in
the exploration and development, transportation,
distribution and/or processing of natural resources, (d)
own or control oil, gas, or other mineral leases, rights
or royalties, (e) provide related services or supplies,
such as drilling, well servicing, chemicals, parts and
equipment, (f) develop or participate in energy-
efficient technologies and (g) are involved in the
upgrading or processing of raw commodities into
intermediate products; and (2) gold bullion and gold
coins.
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." or another name
determined by the Board to reflect the Fund's new
investment objective.
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 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 fixed-income
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"
which are defined as equity and debt securities of
issuers which: (1) own or process natural resources,
such as precious metals, other minerals, water,
timberland, agricultural commodities and forest
products; (2) own or produce sources of energy such as
oil, natural gas, coal, uranium, geothermal, oil shale
and biomass; (3) participate in the exploration
and development, transportation, distribution and/or
processing of natural resources; (4) own or control
oil, gas, or other mineral leases, rights or royalties;
(5) provide related services or supplies, such as
drilling, well servicing, chemicals, parts or equipment;
(6) develop or participate in energy-efficient
technologies; and (7) are involved in the upgrading
or processing of raw commodities into intermediate
products. The Fund is also permitted to invest in gold
bullion and gold coins.
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.
In seeking the investment objective of long
term capital appreciation, 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. Under the Board's proposal, the Fund would
continue to have the same investment objective;
however, the range of
permissible investments would be broadened from just
MetalsRelated Investments to Natural Resources
Investments. In addition, the Fund's investment in gold
bullion and gold coins will no longer be restricted to
10% of its assets.
The Board anticipates that the implementation of
the proposed changes in the Fund's investment
objectives, 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 metal 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 Smith
Barney and SBMFM believe 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 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-a-
vis 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 of the same
date. 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. Smith
Barney and SBMFM believe that the Fund would
attract additional investments by broadening 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
Shareholders Beneficially Owning More Than 5%
Of Outstanding Shares Of Smith Barney
Precious Metals and Minerals Fund Inc.
Name Class % of
Outstanding
Shares
Elizabeth Heyer Class C 33.3387%
32 Church Street
Newport, Rhode Island
02840
B. Picker, A. Hankin, M. Class C
11.3807%
Blaskey, Trustees
Bolger, Picker,
Hankin, & Tannebaum
Prft Sh 401K Trustee
12th Floor, 1800 JFK
Blvd.
Philadelphia,
Pennsylvannia
19103
The Clark Trust, Class C
6.7041%
John E. Clark and
Estelle Clark Co-
Executors
10523 Prairie Hills
Sun City, Arizona
85351
Ida R. Null Class C
6.022%
Rd 3 Box 194
Oneonta, New York
13820
APPENDIX
B
FORM OF MANAGEMENT AGREEMENT
___________,
1995
Smith Barney Mutual Funds Management Inc.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Smith Barney ______________ 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 Managermanager of
the Company. 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 wishall: (a)
maintain compliance procedures for the Company that it
reasonably believes are ad manage the Company's holdings
in accordance with the Company's investment objective(s)
and policies as stated in the Articles ofequate to
ensure the Company's compliance with (i) the Investment
Company Act of 1940, as amended (the "1940 Act") and
the rules and Incorporation, the Prospectus and
theregulations 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; and (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. The Manager may, with the approval of the Board
and the shareholders of the Company (to the extent
required by applicable law), from time to time, sub-
contract with one or more sub-investment
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 wishall keep the Company informed
of developments materially affecting the Company's
holdings, and wishall, 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 .75 of
1.000.75% 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) Company
in connection with the performance of its services under
this Agreement and will pay to any sub-investment
Manager or Managers retained by the Manager to provide
advisory services to the Company (each a "Sub-Manager"),
the fees required to be paid to each Sub-Manager. . The
Fund will bear certain other expenses to be incurred in
its operation, including, but not limited to, investment
advisory and administration fees, other than those
payable to a Sub-Manager or any additional or substitute
investment Manager, any sub-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 sub-investment advisory and
administration agreements, 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 Mmanager to fiduciary and other managed
accounts, and as
investment Managmanager 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
_________________ 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.
