811-5678
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
X
Pre-Effective Amendment No. _____
Post-Effective Amendment No. 13
X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 X
Amendment No. 14
X
SMITH BARNEY SHEARSON PRINCIPAL RETURN FUND
(formerly Shearson Lehman Brothers Principal Return Fund)
(Exact name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code:
(212) 720-9218
Francis J. McNamara, III, Esq.
Secretary
Shearson Lehman Brothers Principal Return Fund
One Boston Place
Boston, Massachusetts 02108
(Name and Address of Agent of Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to Rule 485(b)
on _____________ pursuant to Rule 485(b)
60 days after filing pursuant to Rule 485(a)
X on April 1, 1994 pursuant to Rule 485(a)
____________________________________________________________________________
The Registrant has previously filed a declaration of indefinite registration
of its shares pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended. No Rule 24f-2 notice was filed for Zeros and Appreciation Series
1996, Zeros and Appreciation Series 1998 and Zeros Plus Emerging Growth Series
2000 for the fiscal year ended November 30, 1993 due to the fact that no
shares were sold during that period.
SMITH BARNEY SHEARSON PRINCIPAL RETURN FUND
FORM N-IA
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
Part A.
Item No.
Prospectus Caption
1. Cover Page
Cover Page
2. Synopsis
The Series' Expenses
3. Condensed Financial
Information
Financial Highlights
The Series' Performance
4. General Description of
Registrant
Cover Page; Investment Objective
and Management Policies;
Distributor; Additional
Information
5. Management of the Fund
The Series' Expenses;
Management of the Trust;
Distributor; Additional
Information; Annual Report
6. Capital Stock and Other
Securities
Investment Objectives and
Management Policies; Dividends,
Distributions and Taxes;
Additional Information
7. Purchase of Securities Being
Offered
Purchase of Shares; Valuation of
Shares; Redemption of
Shares ; Exchange Privilege
8. Redemption or Repurchase
Purchase of Shares;
Redemption of Shares; Exchange
Privilege
9. Legal Proceedings
Not Applicable
Part B
Item No.
Statement of
Additional Information Caption
10. Cover Page
Cover Page
11. Table of Contents
Contents
12. General Information and
History
Investment Objectives and
Management Policies;
Distributor Organization of
the Trust
13. Investment Objectives and
Policies
Investment Objective and
Management Policies
14. Management of the Fund
Management of the Trust;
and Distributor
15. Control Persons and Principal
Holders of Securities
Management of the Trust;
and Distributor
16. Investment Advisory and Other
Services
Management of the Trust; Custodian
and Transfer Agent; and
Distributor
17. Brokerage Allocation and
other Practices
Investment Objectives and
Management Policies
18. Capital Stock and Other
Securities
Investment Objectives and
Management Policies; Taxes;
Management of the Trust
19. Purchase, Redemption and
Pricing of
Securities Being Offered
Management of the Trust;
Redemption of Shares;
Valuation of Shares; Exchange
Privilege
20. Tax Status
Taxes
21. Underwriters
see Prospectus "Purchase of
Shares"
22. Calculations of Performance
Data
Determination of Performance
23. Financial Statements
Financial Statements
SMITH BARNEY SHEARSON PRINCIPAL RETURN FUND
Two World Trade Center
New York, New York 10048
(212) 720-9218
April 1, 1994
PROSPECTUS
This Prospectus describes Smith Barney Shearson Principal Return Fund
(the "Trust") and the following series (each, a "Series" and collectively, the
"Series").
Zeros and Appreciation Series 1996 ("Series 1996") seeks (a) to return
to each shareholder on March 1, 1996 (the "Series 1996 Maturity Date") the
principal amount of the shareholder's original investment (including any
sales charge paid) through investment of a portion of its assets in zero
coupon securities and (b) to the extent consistent with that objective, to
provide long-term appreciation of capital through investment of the balance of
its assets primarily in equity securities. There can be no assurance that
Series 1996's investment objectives will be achieved.
Zeros and Appreciation Series 1998 ("Series 1998") seeks (a) to return
to each shareholder on August 31, 1998 (the "Series 1998 Maturity Date") the
principal amount of the shareholder's original investment (including any
sales charge paid) through investment of a portion of its assets in zero
coupon securities and (b) to the extent consistent with that objective, to
provide long-term appreciation of capital through investment of the balance of
its assets primarily in equity securities. There can be no assurance that
Series 1998's investment objectives will be achieved.
Zeros Plus Emerging Growth Series 2000 ("Series 2000") seeks (a) to
return to each shareholder on February 28, 2000 (the "Series 2000 Maturity
Date") the principal amount of the shareholder's original investment
(including any sales charge paid) through investment of a portion of its
assets in zero coupon securities and (b) to the extent consistent with that
objective, to provide long-term appreciation of capital through investment of
the balance of its assets primarily in equity securities issued by "emerging
growth companies," which are small-to medium-sized companies that are believed
by the Series' investment adviser to show a prospect of achieving significant
profit and gain in a relatively short period of time. There can be no
assurance that Series 2000's investment objectives will be achieved .
When used herein, the term Maturity Date shall refer to the "Series 1996
Maturity Date," the "Series 1998 Maturity Date," and the "Series 2000 Maturity
Date," as applicable.
SHARES OF SERIES 1996, SERIES 1998, AND SERIES 2000 ARE NOT CURRENTLY
BEING OFFERED FOR SALE TO NEW INVESTORS. THE NET ASSET VALUE PER SHARE OF EACH
SERIES PRIOR TO THE MATURITY DATE CAN BE EXPECTED TO FLUCTUATE SUBSTANTIALLY
OWING TO CHANGES IN PREVAILING INTEREST RATES THAT WILL AFFECT THE CURRENT
VALUE OF EACH SERIES' HOLDINGS OF ZERO COUPON SECURITIES, AS WELL AS CHANGES
IN THE VALUE OF EACH SERIES' OTHER HOLDINGS. BECAUSE THE SERIES ARE NOT
CURRENTLY ENGAGED IN A CONTINUOUS OFFERING OF SHARES, THEY ARE NOT BENEFITING
FROM AN INFLOW OF NEW CAPITAL. IN ADDITION, EACH SERIES MAY EXPERIENCE
REDEMPTIONS AND CAPITAL LOSSES PRIOR TO THE MATURITY DATE (OR IN PREPARATION
FOR EACH SERIES' LIQUIDATION AT THE MATURITY DATE) AND WILL PAY DIVIDENDS AND
DISTRIBUTIONS IN CASH TO SHAREHOLDERS WHO SO ELECT. A DIMINUTION OF ITS
ASSETS RESULTING FROM LOSSES, REDEMPTIONS AND DIVIDENDS AND DISTRIBUTIONS PAID
IN CASH COULD MAKE EACH SERIES' INVESTMENT OBJECTIVES UNACHIEVABLE; THUS THE
ACCOMPLISHMENT OF EACH SERIES' INVESTMENT OBJECTIVES IN RESPECT TO REMAINING
SHAREHOLDERS THAT REINVEST DIVIDENDS AND DISTRIBUTIONS COULD DEPEND IN PART ON
THE INVESTMENT DECISIONS OF OTHER SHAREHOLDERS. SEE "INVESTMENT OBJECTIVES
AND MANAGEMENT POLICIES."
This Prospectus sets forth concisely information about the Trust and
each Series, including sales charges, shareholder servicing fees and expenses.
Investors are encouraged to read this Prospectus carefully and retain it for
future reference.
Additional information about the Trust and each Series is contained in a
Statement of Additional Information dated April 1, 1994, as amended or
supplemented from time to time, which is available upon request and without
charge by calling or writing the Trust at the telephone number or address set
forth above or by contacting your Smith Barney Shearson Financial
Consultant. The Statement of Additional Information has been filed with
the Securities and Exchange Commission (the "SEC") and is incorporated by
reference into this Prospectus in its entirety.
SMITH BARNEY SHEARSON INC.
Distributor
SMITH BARNEY SHEARSON ASSET MANAGEMENT
Investment Adviser
THE BOSTON COMPANY ADVISORS, INC.
Administrator
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
INTRODUCTION
The investment objectives of Series 1996 are (a) to return to each
shareholder on the Maturity Date the principal amount of the shareholder's
original investment (including any sales charge paid) through investment of a
portion of its assets in zero coupon securities and (b) to the extent
consistent with that objective, to provide long-term appreciation of capital
through investment of the balance of its assets primarily in equity
securities. There can be no assurance that Series 1996's investment
objectives will be achieved.
The investment objectives of Series 1998 are (a) to return to each
shareholder on the Maturity Date the principal amount of the shareholder's
original investment (including any sales charge paid) through investment of a
portion of its assets in zero coupon securities and (b) to the extent
consistent with that objective, to provide long-term appreciation of capital
through investment of the balance of its assets primarily in equity
securities. There can be no assurance that Series 1998's investment
objectives will be achieved.
The investment objectives of Series 2000 are (a) to return to each
shareholder on the Maturity Date the principal amount of the shareholder's
original investment (including any sales charge paid) through investment of a
portion of its assets in zero coupon securities and (b) to the extent
consistent with that objective, to provide long-term appreciation of capital
through investment of the balance of its assets primarily in equity securities
issued by "emerging growth companies," which are small-to medium-sized
companies that are believed by the Series' investment adviser to show a
prospect of achieving significant profit and gain in a relatively short period
of time. There can be no assurance that Series 2000's investment objectives
will be achieved.
As with most mutual funds, the Series employ various organizations to
perform necessary functions and to provide services to their shareholders.
These organizations are carefully selected on behalf of each Series by the
Trust's Board of Trustees, which regularly reviews the quality and scope of
their performance. The names of the organizations and the services that they
perform on behalf of each Series and its shareholders are listed below:
Smith Barney Shearson Inc.
("Smith Barney Shearson") Distributor
Smith Barney Shearson Asset Management
("Asset Management") Investment Adviser
The Boston Company Advisors, Inc.
("Boston Advisors") Administrator
Boston Safe Deposit and Trust Company
("Boston Safe") Custodian
The Shareholder Services Group, Inc.
("TSSG"), a subsidiary of First Data
Corporation Transfer Agent
More detailed information regarding these organizations and the
functions they perform is provided in this Prospectus as well as in the
Statement of Additional Information.
TABLE OF CONTENTS
Introduction..................................... .3
The Series'Expenses..................................4
Financial Highlights ..........................5
Investment Objectives and Management Policies........9
Management of the Trust....................17
Purchase of Shares.. .....18
Redemption of Shares........ 18
Valuation of Shares......... .20
Exchange Privilege.. .......20
Dividends, Distributions and Taxes.......... ...24
The Series' Performance..... 25
Custodian and Transfer Agent........... ... ......26
Distributor..............................................26
Additional Information.................................27
THE SERIES' EXPENSES
The following expense table lists the costs and expenses that an
investor will incur, either directly or indirectly, as a shareholder of each
Series, based upon the maximum sales charge that was incurred at the time of
purchase and upon each Series' operating expenses for its most recent fiscal
year:
Series.....Series.....Series
1996......1998.......2000
Shareholder Transaction Expenses
Sales charge imposed on purchases
(as a percentage of offering
price)....... ......5.00%.....5.00%.....5.00%
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management
fees....................................0.50%......0.50%.....0.60%
Shareholder servicing
fees....................... N/A.........0.25%.....0.25%
Other
expens.................................0.27%......0.22%.....0.25%
Total Fund Operating
Expenses................... .0.77%......0.97%.....1.10%
Management fees paid by the Trust include investment advisory fees paid
monthly to Smith Barney Shearson on behalf of Asset Management at an
annual rate equal to a percentage of the value of the relevant Series' average
daily net assets, as follows: Series 1996 - .30%; Series 1998 - .30%; and
Series 2000 - .40%, and administration fees paid monthly to Boston Advisors at
the annual rate of .20% of the value of each Series' average daily net
assets. Series 1998 and Series 2000 also pay Smith Barney Shearson an
annual shareholder servicing fee equal to .25% of the value of their
respective daily net assets.
The nature of the services for which each Series pays management fees is
described under "Management of the Trust." "Other expenses" in the above
table include fees for transfer agent services, custodial fees, legal and
accounting fees, printing costs and registration fees.
Example*
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect
to a hypothetical investment in each Series. These amounts are based upon (a)
payment by an investor of the initial 5% sales charge, (b) payment by the
Series of operating expenses at the levels set forth in the table above and
(c) the following assumptions:
............................1 YEAR...3 YEARS..5 YEARS MATURITY
A shareholder would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and (2) redemption at the end of each
time period
Series 1996.......$.57.....$.73 $.91......$.110
Series 1998..... .$.59.....$.79 $.101.....$.137
Series 2000...... $.61.. $.83..$.108. ...$.162
*..This example should not be considered a representation of past or
future expenses and actual expenses may be greater or less than those shown.
Moreover, while this table assumes a 5% annual return, each Series' actual
performance will vary and may result in an actual return greater or less than
5%.
FINANCIAL HIGHLIGHTS
The following information has been audited by Coopers & Lybrand,
independent accountants, whose report thereon appears in each Series' Annual
Report for the fiscal year ended November 30, 1993. The table should be read
in conjunction with the financial statements and related notes appearing in
each Series' Annual Report, which is incorporated by reference into the
Statement of Additional Information.
For a Series 1996 share outstanding throughout each year:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
11/30/93++ 11/30/92++ 11/30/91 11/30/90++ 11/30/89*
<S> <C>.............<C>...............<C>...............<C>...............<C>
Net asset value, beginning
of year $11.75 $11.42 $10.77 $11.38 $9.50
Income From Investment
Operations:
Net investment income 0.53 0.54 0.62 0.55 0.63
Net realized and unrealized
gains and losses on
investments 0.31 0.95 0.84 (0.30) 1.25
Total from Investment
operations 0.84 1.49 1.46 0.25 1.88
Less Distributions:
Distribution from net ..
investment income (0.72) (0.65) (0.69) (0.63) -----
Distributions from net
realized capital gains (0.42) (0.51) (0.12) (0.23) -----
Total distributions (1.14) (1.16) (0.81) (0.86) 0.00
Net asset value, end of
year $11.45 $11.75 $11.42 $10.77 $11.38
Total Return+++ 7.85% 13.64% 14.56% 2.29% 19.79%
Ratios/Supplemental Data:
Net assets, end of year
(in 000's) $91,153 $109,011 $115,356 $121,493 $162,867
Ratios of expenses to
average net assets 0.77%+ 0.77% 0.81% 0.85% 0.84%**
Ratios of net investment
income to average net ..
assets 4.76% 4.85% 5.26% 5.21% 5.79% **
Portfolio turnover rate 20% 11% 17% 3% 32%
<FN>
* Series 1996 commenced operations on January 16, 1989.
** Annualized
+ The operating expenses ratio excludes interest expenses. The annualized ratio
including interest expense is .78%.
The per share amounts have been calculated using the monthly average share
method, which more appropriately presents the per share data for this year
since use of the undistributed method does not accord with results of
operations.
+++ Total return represents aggregate total return for the periods indicated.
</TABLE>
For a Series 1998 share outstanding throughout each year:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
11/30/93+ 11/30/92+ 11/30/91 *
<S> <C> <C> <C>
Net asset value, beginning $9.02 $8.40 $7.60
Income From Investment
Operations:
Net investment income 0.38 0.37 0.39
Net realized and unrealized
gains and losses on
investments 0.48 0.68 0.41
Total from Investment
operations 0.86 1.05 0.80
Less Distributions:
Distribution from net investment
income (0.41) (0.43) --------
Distributions from net
realized capital gains (0.09) -------- --------
Total distributions (0.50) (0.43) 0.00
Net asset value, end of year $9.38 $9.02 $8.40
Total Return+++ 9.99% 12.86% 10.53%
Ratios/Supplemental Data:
Net assets, end of year (in 000's) $136,576 $166,077 $195,956
Ratios of expenses to average
net assets 0.97% 1.01% 1.05%**
Ratios of net investment income to
average net assets 4.15% 4.39% 5.04%**
Portfolio turnover rate 17% 4% 20%
<FN>
* Series 1998 commenced operations on January 25, 1991.
** Annualized
+ Per share amounts have been calculated using the monthly average share method,
which more appropriately presents the per share data for this year since use
of the undistributed method does not accord with results of operations.
++ Total return represents aggregate total return for the periods indicated.
</TABLE>
For a Series 2000 share outstanding throughout each year:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
11/30/93++ 11/30/92+ 11/30/91 *
<S>.................................<C>...................<C>...............<C>
Net asset value, beginning $8.16 $7.57 $7.60
Income From Investment Operations:
Net investment income 0.26 0.26 0.07
Net realized and unrealized gains
and losses on investments 0.96 0.43 (0.10)
Total from Investment operations 1.22 0.69 (0.03)
Less Distributions:
Distribution from net investment
income (0.29) 0.10) -----
Distributions from net realized
capital gains (0.09) -------- -----
Total distributions (0.38) (0.10) 0.00
Net asset value, end of year $9.00 $8.16 $7.57
Total Return+++ 15.72% 9.15% (0.39)%
Ratios/Supplemental Data:
Net assets, end of year (in 000's) $96,865 $125,327 $157,425
Ratios of expenses to average
net assets 1.10% 1.15% 1.18%
Ratios of net investment income to
average net assets 3.12% 3.31% 3.56%
Portfolio turnover rate 0% 0% 2%
<FN>
* Series 2000 commenced operations on August 30, 1991.
** Annualized
+ The operating expenses ratio excludes interest expenses. The annualized ratio
including interest expense is 1.16%.
++ The per share amounts have been calculated using the monthly average share method,
which more appropriately presents the per share data for this year since use of
the undistributed method does not accord with results of operations.
+++ Total return represents aggregate total return for the periods indicated.
</TABLE>
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
Set forth below is a description of the investment objectives and
policies of each Series. The investment objectives of a Series are
fundamental and may not be changed without the approval of the holders of a
majority of the outstanding voting securities of that Series, as defined under
the Investment Company Act of 1940, as amended (the "1940 Act"). There can be
no assurance that a Series will achieve its investment objectives. Additional
information about the Series' investment strategies and investment policies
appears in the Statement of Additional Information.
In General
The investment objectives of each Series is (a) to return to each
shareholder on the Maturity Date the principal amount of the shareholder's
original investment (including any sales charge paid) through investment of a
portion of its assets in zero coupon securities (the "Repayment Objective")
and (b) to the extent consistent with that objective, to provide long-term
appreciation of capital through investment of the balance of its assets
primarily in equity securities (Series 2000 - equity securities issued by
"emerging growth companies").
Although Asset Management believes that the Series' investment
strategies should be sufficient to accomplish their investment objectives,
there can be no assurance that they will be achieved. Moreover, although the
Trust is structured as an open-end investment company and shareholders may
redeem their shares at any time and may elect to receive dividends and
distributions in cash, in order to help assure the return of the full amount
of an original investment, shareholders should plan to hold their shares until
the Maturity Date and to reinvest all dividends and distributions in
additional shares. In addition, while the amount sought to be returned on the
Maturity Date to shareholders may equal or exceed the amount originally
invested, the present value of that amount may be substantially less.
Shareholders also should be aware that the amount returned as taxable on the
Maturity Date represents accretion of interest on each Series' zero coupon
securities and will have been taxable as ordinary income over the term of the
Series.
Operations of the Series
As of Feburary 28, 1994 , zero coupon securities represented
approximately ___%, ___% and ____% of Series 1996's, Series 1998's and Series
2000's net assets, respectively, with the balance of each Series' net assets
invested in equity (Series 2000 - equity securities of emerging growth
companies) and other securities as described below. The Series' zero coupon
securities will mature within one year before the Maturity Date and their
aggregate stated principal amount is expected to be sufficient to meet the
Repayment Objective; the Series will not receive any payments with respect to
a zero coupon security prior to the maturity of that security. The Series may
hold zero coupon securities in excess of those required to meet the Repayment
Objective to the extent Asset Management deems appropriate. As each Series'
zero coupon securities mature, the proceeds will be invested in direct
obligations of the United States government with remaining maturities of one
year or less and, in any case, maturing on or prior to the Maturity Date. On
the Maturity Date, each Series' remaining equity investments will be sold and
other investments will mature, the liabilities of each Series will be
discharged or provision made therefor, each Series' shares will be mandatory
redeemed and, within seven days thereafter, the proceeds will be distributed
to shareholders and each Series' thereafter will be terminated. These
arrangements may require the disposition of the Series' equity securities at a
time when it is otherwise disadvantageous to do so and may involve selling
securities at a substantial loss. The liquidation and termination of each
Series is conditioned on the Trust's receipt of an opinion of its counsel that
all actions have been taken that are necessary to effect these transactions in
accordance with the then current position of the SEC regarding a change in the
nature of the business of a registered investment company, including (as is
required under current SEC policy) the approval by the holders of a majority
of the Trust's outstanding voting securities, as defined in the 1940 Act. If
shareholder approval is solicited but not obtained, the Board of Trustees
would consider and, if necessary, propose for shareholder approval, such other
action as it deems appropriate and in the best interests of the Trust and its
shareholders. The estimated expenses of liquidation and termination of each
Series will be accrued ratably over the entire term of the Series and will be
charged to income. These expenses are not expected to affect materially the
ordinary annual operating expenses of the Series and, accordingly, should have
no effect on the Series' ability to meet the Repayment Objective.
Each Series may satisfy redemption requests and cash payments of
dividends and distributions by liquidating a portion of its holdings of zero
coupon securities, as well as other investments, provided that the Series
would have sufficient zero coupon securities remaining to meet the Repayment
Objective.
Thus, each Series' portfolio may be visualized as consisting of two
portions: one, its zero coupon securities, is expected to increase in value,
by reason of accretion of interest, to equal at maturity an amount sufficient
to meet the Repayment Objective; the other, its equity securities and all
other investments (Series 2000 - holdings of emerging growth securities),
represent a variable portion of the Series' assets depending on the
performance of those investments, the Series' expenses, the level of dividend
reinvestment and the level of redemptions over time. In order to facilitate
the management of the Series' portfolios, shareholders are urged to reinvest
dividends and distributions in additional shares; these amounts will be paid
in cash only at the specific election of a shareholder.
Zero Coupon Securities
A zero coupon security is a debt obligation that does not entitle the
holder to any periodic payments of interest prior to maturity and therefore is
issued and traded at a discount from its face amount. Zero coupon securities
may be created by separating the interest and principal components of
securities issued or guaranteed by the United States government or one of its
agencies or instrumentalities ("U.S. government securities") or issued
by private corporate issuers. The Series, however, invest only in zero coupon
securities that are direct obligations of the United States Treasury. The
discount from face value at which zero coupon securities are purchased varies
depending on the time remaining until maturity, prevailing interest rates and
the liquidity of the security. Because the discount from face value is known
at the time of investment, investors holding zero coupon securities until
maturity know the total amount of their investment return at the time of
investment. In contrast, a portion of the total realized return from
conventional interest-paying obligations comes from the reinvestment of
periodic interest. Because the rate to be earned on these reinvestments may
be higher or lower than the rate quoted on the interest-paying obligations at
the time of the original purchase, the investor's return on reinvestments is
uncertain even if the securities are held to maturity. This uncertainty is
commonly referred to as reinvestment risk. With zero coupon securities,
however, there are no cash distributions to reinvest, so investors bear no
reinvestment risk if they hold the zero coupon securities to maturity; holders
of zero coupon securities, however, forego the possibility of reinvesting at a
higher yield than the rate paid on the originally issued security. With both
zero coupon and interest-paying securities there is no reinvestment risk on
the principal amount of the investment.
Emerging Growth Securities (Series 2000)
Series 2000 attempts to achieve its investment objective of long-term
capital appreciation by investing the portion of its assets not invested in
zero coupon securities primarily in equity securities issued by "emerging
growth companies" based in the United States, which are small - to medium-
sized companies that are believed by Asset Management to show a prospect of
achieving significant profit and gains within two to three years after their
securities are acquired by Series 2000. Although Series 2000 is not subject
to a limitation on the market capitalization of the companies in which it will
invest, the emerging growth companies in which Series 2000 will typically
invest, will have market capitalizations of less than $1 billion. A company's
stock market capitalization is calculated by multiplying the total number of
shares of its common stock outstanding by the market price per share of its
stock.
In selecting investments on behalf of Series 2000, Asset Management will
seek to identify emerging growth companies that it believes are undervalued in
the marketplace or have earnings that may be expected to grow faster than the
U.S. economy in general. These companies typically would possess one or more
of a variety of characteristics, including high quality management, new
technologies, techniques, products or services or cost-reducing measures that
give them a leading or dominant position in a major product line, a sound
financial position and a relatively high rate of return on invested capital so
that future growth can be financed from internal sources. Series 2000 also
may invest in companies, typically called "special situation companies," that
offer the possibility of accelerating earnings growth because of management
changes, capitalization or asset deployment, governmental regulations or other
external circumstances. Although Asset Management anticipates that Series
2000's non-zero coupon security portfolio primarily will be invested in
smaller companies, it may also be invested to a lesser degree in the equity
securities of medium or larger, established companies, including those
involved in special situations, that Asset Management determines present
particular opportunities for capital growth.
Series 2000's non-zero coupon security portfolio has been designed to
provide investors with significant opportunities for long-term capital
appreciation that Asset Management believes are presented by the equity
securities of small capitalization companies. Asset Management believes that
these securities are undervalued as compared, on a relative historical basis,
with equity securities of larger capitalization companies, and have tended
over time to outperform securities of larger capitalization companies.
Statistical studies have been published recently indicating that the
historical long-term returns on investments in common stocks of companies with
smaller capitalizations have been higher than the returns on those companies
with larger capitalizations. One such study, for example, compared the
performance of the 2,500 largest companies, as measured by market
capitalization, whose securities are traded on the New York Stock Exchange,
Inc. (the "NYSE"), the American Stock Exchange and on the U.S. over-the-
counter market. The study, which divided these 2,500 companies into five
groups on the basis of market capitalization, measured their performance for
the 17-year period from December 31, 1973 to December 31, 1990 and concluded
that the companies with smaller capitalizations had greater total returns for
the period than did larger capitalization companies, although acknowledging
that larger company securities had outperformed smaller company securities
over the past five years.
Additional Investments and Investment Techniques (Series 2000)
Although under normal circumstances Series 2000's non-zero coupon
security portfolio will consist primarily of common stocks of emerging growth
companies based in the United States, Series 2000 may also invest in warrants
to purchase common stocks, convertible bonds, preferred stocks and securities
of foreign issuers. When Asset Management believes that a temporary defensive
investment posture is warranted, Series 2000 may invest in corporate and
government bonds and notes and money market instruments, and from time to time
may invest in repurchase agreements and lend its portfolio securities as
discussed below.
Warrants; Convertible Securities. (Series 2000) A warrant is a security
that gives the holder the right, but not the obligation, to subscribe for
newly created securities of the issuer or a related company at a fixed price
either at a certain date or during a set period. A convertible security is a
security that may be converted either at a stated price or rate within a
specified period of time into a specified number of shares of common stock.
In investing in convertible securities, Series 2000 seeks the opportunity,
through the conversion feature, to participate in the capital appreciation of
the common stock into which the securities are convertible.
Foreign Securities. (Series 2000) Series 2000 may invest up to 10% of
its net assets in securities of foreign issuers. Investing in foreign
securities involves certain risks, including those resulting from fluctuations
in currency exchange rates, revaluation of currencies, future political or
economic developments and the possible imposition of restrictions or
prohibitions on the repatriation of foreign currencies or other foreign
governmental laws or restrictions, reduced availability of public information
concerning issuers, and, typically, the lack of uniform accounting, auditing
and financial reporting standards or other regulatory practices and
requirements comparable to those applicable to domestic companies. Moreover,
securities of many foreign companies may be less liquid and their prices more
volatile than those of securities of comparable domestic companies. In
addition, with respect to certain foreign countries, the possibility exists of
expropriation, confiscatory taxation and limitations on the use or removal of
funds or other assets of Series 2000, including the withholding of dividends.
Risk Factors and Other Special Considerations
Zero coupon securities of the type held by each Series can be sold prior
to their due date in the secondary market at their then prevailing market
value which, depending on prevailing levels of interest rates and the time
remaining to maturity, may be more or less than the securities' "accreted
value;" that is, their value based solely on the amount due at maturity and
accretion of interest to date. The market prices of zero coupon securities are
generally more volatile than the market prices of securities that pay interest
periodically and, accordingly, are likely to respond to a greater degree to
changes in interest rates than do non-zero coupon securities having similar
maturities and yields. As a result, the net asset value of shares of each
Series may fluctuate over a greater range than shares of other mutual funds
that invest in U.S. government securities having similar maturities and
yields but that make current distributions of interest. The current net asset
value of each Series attributable to zero coupon securities and other debt
instruments held by each Series generally will vary inversely with changes in
prevailing interest rates.
As a series of an open-end investment company, each Series is required
to redeem its shares upon the request of any shareholder at the net asset
value next determined after receipt of the request. However, because of the
price volatility of zero coupon securities prior to maturity, a shareholder
who redeems shares prior to the Maturity Date may realize an amount that is
greater or less than the purchase price of those shares, including any sales
charge paid. Although shares redeemed prior to the Maturity Date would no
longer be subject to the possible achievement of the Repayment Objective, the
amount originally invested in the shares not redeemed would remain subject to
the possible achievement of the Repayment Objective, provided dividends and
distributions with respect to these shares are reinvested. Thus, if each
Series is successful in achieving the Repayment Objective, the holder of those
remaining shares plus shares acquired through reinvestment of dividends and
distributions thereon ("Remaining Shares") would receive at the Maturity Date
an amount that equals or exceeds the purchase price of those shares.
Nonetheless, the amount received on the Maturity Date in respect of Remaining
Shares, when combined with the amount received in respect of shares redeemed
prior to the Maturity Date, may be more or less than the aggregate purchase
price of all shares purchased in this offering.
Each year the Series will be required to accrue an increasing amount of
income on their zero coupon securities utilizing the effective interest
method. To maintain its tax status as a pass-through entity and also to avoid
imposition of excise taxes, however, each Series will be required to
distribute dividends equal to substantially all of its net investment income,
including the accrued income on its zero coupon securities for which it
receives no payments in cash prior to their maturity. Dividen
Series' net investment income and distributions of its short-term capital
gains will be taxable to shareholders as ordinary income for Federal income
tax purposes, whether received in cash or reinvested in additional shares. See
"Dividends, Distributions and Taxes." However, a shareholder who elects to
receive dividends and distributions in cash, instead of reinvesting these
amounts in additional shares of the Series, may realize an amount that is less
or greater than the entire amount originally invested. ACCORDINGLY, THE
SERIES MAY NOT BE APPROPRIATE FOR TAXABLE INVESTORS THAT WOULD REQUIRE CASH
DISTRIBUTIONS FROM THE SERIES IN ORDER TO MEET THEIR CURRENT TAX OBLIGATIONS
RESULTING FROM THEIR INVESTMENT.
Emerging Growth Securities (Series 2000). Securities of the kinds of
companies in which Series 2000 will invest may be subject to significant price
fluctuation and above-average risk. In addition, companies achieving a high
earnings growth rate tend to reinvest their earnings rather than distribute
them. As a result, Series 2000 is not likely to receive significant dividend
income on its portfolio of equity securities; an investment in Series 2000
should, thus, not be considered as a complete investment program and may not
be appropriate for all investors.
Other Considerations. In order to generate sufficient cash to meet
distribution requirements and other operational needs and to redeem its shares
on request, the Series may be required to limit reinvestment of capital on the
disposition of its non-zero coupon securities and may be required to liquidate
some or all of its non-zero coupon securities over time. The Series may be
required to effect these liquidations at a time when it is otherwise
disadvantageous to do so. If a Series realizes capital losses on dispositions
of non-zero coupon securities that are not offset by capital gains on the
disposition of other such securities, the Series may be required to liquidate
a disproportionate amount of its zero coupon securities or borrow money, in an
amount not exceeding 33-1/3% of the Series' total assets, to satisfy the
distribution and redemption requirements described above. The liquidation of
zero coupon securities and the expenses associated with borrowing money in
these circumstances could render the Series unable to meet the Repayment
Objective.
Equity Securities (Series 1996 and Series 1998)
Series 1996 and Series 1998 attempt to achieve their investment
objective of long-term appreciation of capital by investing the portion of
their assets not invested in zero coupon securities primarily in equity
securities, as described in the following paragraph, that are believed to
afford attractive opportunities for investment appreciation. It is expected
that Series 1996 and Series 1998's equity investments will be in domestic
companies, generally with market capitalizations in excess of $100 million.
Most of Series 1996 and Series 1998's equity investments will be listed for
trading on stock exchanges, although Series 1996 and Series 1998 may purchase
securities traded in the over-the-counter market. Asset Management will cause
Series 1996 and Series 1998 to invest in the securities of companies whose
earnings they expect to increase, companies whose securities prices are lower
than they believe justified in relation to their underlying assets or earning
power or companies in which changes that it anticipates would result in
improved operations or profitability. Series 1996 and Series 1998's equity
holdings are broadly invested among different industries. In analyzing
securities for investment, Asset Management considers many different factors,
including past growth records, management capability, future earnings
prospects and technological innovation, as well as general market and economic
factors that can influence the price of securities.
Under normal market conditions, the bulk of Series 1996 and Series
1998's non-zero coupon security portfolios consists of common stocks, but they
also may contain other equity securities, limited to preferred stocks and debt
securities convertible into common stocks. However, when Asset Management
believes that a temporary defensive investment posture is warranted, Series
1996 and Series 1998 may invest in debt obligations, preferred securities or
short-term money market instruments and may engage in repurchase agreement
transactions with respect to money market instruments. Series 1996 and Series
1998 do not intend to purchase warrants or rights but may receive these
securities as part of a unit distributed to holders of a class of securities
held by Series 1996 and Series 1998. Preferred securities and convertible
securities will be selected on the basis of their equity characteristics, and
ratings by statistical rating organizations generally will not be a factor in
the selection process.
Lending Securities
Each Series is authorized to lend securities it holds to brokers,
dealers and other financial organizations. These loans, if and when made, may
not exceed 33-1/3% of each Series' assets taken at value. A Series' loans of
securities will be collateralized by cash, letters of credit or U.S
government securities that are maintained at all times in a segregated
account with the Trust's custodian in an amount at least equal to the current
market value of the loaned securities. By lending its portfolio securities, a
Series will seek to generate income by continuing to receive interest on the
loaned securities, by investing the cash collateral in short-term instruments
or by obtaining yield in the form of interest paid by the borrower when U.
S. government securities are used as collateral. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in the recovery of the
securities or possible loss of rights in the collateral should the borrower
fail financially. Loans will be made to firms deemed by Asset Management to
be of good standing and will not be made unless, in the judgment of Asset
Management, the consideration to be earned from such loans would justify the
risk.
Money Market Instruments
Each Series may hold at any time up to 10% of the value of its assets in
cash and money market instruments in order to cover the Series' expenses,
anticipated redemptions and cash payments of dividends and distributions and
to meet settlement requirements for securities. In addition, when Asset
Management believes that, with respect to its equity portfolio, a temporary
defensive investment posture is warranted, a Series may invest without
limitation in cash and money market instruments. To the extent that it holds
cash or invests in money market instruments, a Series will not achieve its
investment objective of long-term appreciation of capital. Money market
instruments in which the Series may invest are: U.S. government
securities ; bank obligations (including certificates of deposit, time
deposits and bankers' acceptances of domestic or foreign banks, domestic
savings and loan associations and other banking institutions having total
assets in excess of $500 million); commercial paper rated no lower than A-2 by
Standard & Poor's Corporation or Prime-2 by Moody's Investors Service, Inc. or
the equivalent from another major rating service or, if unrated, of an issuer
having an outstanding, unsecured debt issue then rated within the three
highest rating categories; and repurchase agreements. At no time will a
Series' investments in bank obligations, including time deposits, exceed 25%
of its assets. In addition, a Series will not invest in time deposits maturing
in more than seven days if, as a result, its holdings of those time deposits
would exceed 10% of the Series' net assets.
A Series will invest in an obligation of a foreign bank or foreign
branch of a United States bank only if Asset Management determines
that the obligation presents minimal credit risks. Obligations of foreign
banks or foreign branches of United States banks in which a Series will invest
may be traded in the United States or outside the United States, but will be
denominated in U.S. dollars. These obligations entail risks that are
different from those of investments in obligations of United States
banks. These risks include foreign economic and political developments,
foreign governmental restrictions that may adversely affect payment of
principal and interest on the obligations, foreign exchange controls and
foreign withholding or other taxes on income. Foreign branches of domestic
banks are not necessarily subject to the same or similar regulatory
requirements that apply to domestic banks, such as mandatory reserve
requirements, loan limitations and accounting, auditing and financial
recordkeeping requirements. In addition, less information may be publicly
available about a foreign branch of a domestic bank than about a domestic
bank.
U.S. government securities in which a Series may invest include:
direct obligations of the United States Treasury, and obligations issued or
guaranteed by United States government, its agencies and instrumentalities,
including instruments that are supported by the full faith and credit of the
United States; instruments that are supported by the right of the issuer to
borrow from the United States Treasury; and instruments that are supported
solely by the credit of the instrumentality.
Repurchase Agreements
Each Series may engage in repurchase agreement transactions with
certain banks which are the issuers of instruments acceptable for purchase
by the Fund and with certain dealers on the Federal Reserve Bank of New
York's list of reporting dealers. Under the terms of a typical repurchase
agreement, a Series would acquire an underlying debt obligation for a
relatively short period (usually not more than seven days) subject to an
obligation of the seller to repurchase, and the Series to resell, the
obligation at an agreed price and time, thereby determining the yield during
the Series' holding period. This arrangement results in a fixed rate of
return that is not subject to market fluctuations during the Series' holding
period. The value of the underlying securities will be monitored on an
ongoing basis by Asset Management or Boston Advisors to ensure that the value
is at least equal at all times to the total amount of the repurchase
obligation, including interest. Boston Advisors or Asset Management also will
review on an ongoing basis the creditworthiness of those banks and dealers
with which the Series may enter into repurchase agreements to evaluate the
potential risks. The Series bear a risk of loss in the event that the other
party to a repurchase agreement defaults on its obligations and the Series is
delayed or prevented from exercising its rights to dispose of the underlying
securities, including the risk of a possible decline in the value of the
underlying securities during the period in which the Series seeks to assert
its rights to them, the risk of incurring expenses associated with asserting
those rights and the risk of losing all or a part of the income from the
agreement. At any one time, Series 2000's aggregate holdings of repurchase
agreements having a duration of more than five business days and securities
lacking readily available market quotations will not exceed 10% of Series
2000's total assets.
Investment Restrictions
The Trust has adopted certain fundamental investment restrictions that
may not be changed without approval of a majority of the Trust's outstanding
voting securities. Included among those fundamental restrictions are the
following:
1. A Series will not purchase securities (other than U.S. government
securities ) of any issuer if, as a result of the purchase, more than 5% of
the value of the Series' total assets would be invested in the securities of
the issuer, except that up to 25% of the value of the Series' total assets may
be invested without regard to this 5% limitation.
2. A Series will not purchase more than 10% of the voting securities of
any one issuer, or more than 10% of the securities of any class of any one
issuer, except that this limitation is not applicable to a Series' investments
in U.S. government securities , and up to .25% of a Series' assets may
be invested without regard to these 10% limitations.
3. A Series will not borrow money, except that a Series may borrow from
banks for temporary or emergency (not leveraging) purposes, including the
meeting of redemption requests and cash payments of dividends and
distributions that might otherwise require the untimely disposition of
securities, in an amount not to exceed 33-1/3% of the value of the Series'
total assets (including the amount borrowed) valued at market less liabilities
(not including the amount borrowed) at the time the borrowing is made.
Whenever borrowings exceed 5% of the value of the total assets of the Series,
the Series will not make any additional investments.
4. A Series will not lend money to other persons, except through
purchasing debt obligations, lending portfolio securities and entering into
repurchase agreements.
5. A Series will invest no more than 25% of the value of its total
assets in securities of issuers in any one industry, except that this
restriction does not apply to investments in U.S. government
securities.
Certain other investment restrictions adopted by the Series are
described in the Statement of Additional Information.
Portfolio Transactions and Turnover
Securities transactions on behalf of the Series will be executed by a
number of brokers and dealers, including Smith Barney Shearson and certain of
its affiliated brokers, that are selected by Asset Management. The Series may
use Smith Barney Shearson or a Smith Barney Shearson affiliated broker in
connection with a purchase or sale of securities when Asset Management
believes that the charge for the transaction does not exceed usual and
customary levels.
The Trust cannot accurately predict any Series' portfolio turnover rate,
but anticipates that its annual turnover will not exceed 50%.
MANAGEMENT OF THE TRUST
Board of Trustees
Overall responsibility for management and supervision of the Trust and
the Series rests with the Board of Trustees. The Trustees approve all
significant agreements between the Trust and the persons or companies that
furnish services to the Trust and the Series, including agreements with its
investment adviser, administrator, custodian and transfer agent. The day-to-
day operations of the Series are delegated to the Series' investment adviser
and administrator. The Statement of Additional Information contains general
background information regarding each of the Trust's Trustees and the
executive officers of each Series.
Investment Adviser--Asset Management
Asset Management, located at Two World Trade Center, New York, New York
10048, serves as the Fund's investment adviser. Asset Management (through its
predecessors) has been in the investment counseling business since 1940 and
renders investment advice to a wide variety of individual, institutional and
investment company clients and has aggregate assets under management as of
February 28, 1994, in excess of $____ billion.
Subject to the supervision and direction of the Trust's Board of
Trustees, Asset Management manages each Series' portfolio in accordance with
the Series' stated investment objectives and policies, makes investment
decisions for the Series, places orders to purchase and sell securities, and
employs professional portfolio managers and securities analysts who provide
research services to the Series.
Portfolio Management
Harold L. Williamson, Jr., Vice Chairman of Asset Management, has served
as Vice President and Investment Officer of Series 1996 and Series 1998 since
the Series' commencement of operations, and manages the day-to-day operations
of Series 1996 and Series 1998, including making all investment decisions.
Richard Freeman, Executive Vice President of Asset Management, has
served as Vice President and Investment Officer of Series 2000 since the
Series' commencement of operations, and manages the day-to-day operations of
Series 2000, including making all investment decisions.
Mr. Williamson's and Mr. Freeman's management discussion and analysis,
and additional performance information regarding each Series during the fiscal
year ended November 30, 1993, are included in the Series' Annual Report dated
November 30, 1993. A copy of each Series' Annual Report may be obtained upon
request without charge from your Smith Barney Shearson Financial Consultant or
by writing or calling the Fund at the address or phone number listed on page
one of this Prospectus.
Administrator--Boston Advisors
Boston Advisors, located at One Boston Place, Boston, Massachusetts
02108, serves as the Fund's administrator. Boston Advisors provides
investment management, investment advisory and/or administrative services to
investment companies which had aggregate assets under management as of
February 28, 1994 in excess of $__ billion.
Boston Advisors calculates the net asset value of the Series' shares and
generally assists in all aspects of the Series' administration and
operation.
PURCHASE OF SHARES
Shares of the Series are not currently being offered for sale to new
investors, although each Series, upon at least 30 days' notice to
shareholders, may commence a continuous offering if the Board of Trustees
determines it to be in the best interests of that Series and its shareholders.
REDEMPTION OF SHARES
Shareholders may redeem their shares without charge on any day that the
Series calculates its net asset value. See "Net Asset Value." Redemption
requests received in proper form prior to the close of regular trading on the
NYSE are priced at the net asset value per share determined on that day.
Redemption requests received after the close of regular trading on the NYSE
are priced at the net asset value as next determined.
The Series normally transmit redemption proceeds for credit to the
shareholder's account at Smith Barney Shearson or to a broker that clears
securities transactions through Smith Barney Shearson on a fully disclosed
basis (an "Introducing Broker") at no charge within seven days after receipt
of a redemption request. Generally, these funds will not be invested for the
shareholder's benefit without specific instruction and Smith Barney Shearson
will benefit from the use of temporarily uninvested funds.
Although shares of the Series may be redeemed as described above, a
shareholder who redeems prior to the Maturity Date may realize an amount that
is less or greater than the entire amount of his or her investment. See
"Investment Objectives and Management Policies."
If the Fund's Board of Trustees determines that it would be detrimental
to the best interests of remaining shareholders to make a redemption payment
wholly in cash, a Series may pay any portion of a redemption in excess of the
lesser of $250,000 or 1% of the Series' net assets by distribution in kind of
securities from a Series' portfolio in lieu of cash in conformity with SEC
rules. Portfolio securities issued in a redemption in kind will be readily
marketable, although a shareholder that receives a distribution in kind of
securities may incur transaction costs in the disposition of those securities
and could experience a loss on the securities between the time of such
distribution and such disposition.
A Series' account that is reduced by a shareholder to a value of $500 or
less is subject to involuntary redemption by that Series.
A Series' shares may be redeemed in one of the following ways:
Redemption Through Smith Barney Shearson
Redemption requests may be made through Smith Barney Shearson or an
Introducing Broker. A shareholder desiring to redeem Series shares
represented by certificates must present the certificates to Smith Barney
Shearson or an Introducing Broker endorsed for transfer (or accompanied by an
endorsed stock power), signed exactly as the shares are registered.
Redemption By Mail
Shares may be redeemed by submitting a written request for redemption
to:
Smith Barney Shearson Principal Return Fund
(specify the Series)
c/o The Shareholder Services Group, Inc.
P.O. Box 9134
Boston, Massachusetts 02205-9134
A written redemption request to the Trust's transfer agent must (a)
state the number of shares to be redeemed, (b) identify the Series from which
the shares are to be redeemed (c) identify the shareholder's account number
and (d) be signed by each registered owner exactly as the shares are
registered. If the shares to be redeemed were issued in certificate form, the
certificates must be endorsed for transfer (or be accompanied by an endorsed
stock power) and must be submitted to the Trust's transfer agent together with
a redemption request. Any signature appearing on a redemption request, share
certificate or stock power must be guaranteed by a domestic bank, savings and
loan institution, domestic credit union, member bank of the Federal Reserve
System or a member firm of a national securities exchange. The Trust's
transfer agent may require additional supporting documents for redemptions
made by corporations, executors, administrators, trustees or guardians. A
redemption request will not be deemed to be properly received until the
Trust's transfer agent receives all required documents in proper form.
VALUATION OF SHARES
The Series' net asset value per share is calculated on each day, Monday
through Friday, except on days on which the NYSE is closed. The NYSE currently
is scheduled to be closed on New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas, and on
the preceding Friday or subsequent Monday when one of these holidays falls on
a Saturday or Sunday, respectively.
A Series' net asset value per share is determined as of the close of
regular trading on the NYSE and is computed by dividing the value of the
Series' net assets by the total number of its shares outstanding. Generally,
the Series' investments are valued at market value or, in the absence of a
market value, at fair value as determined by or under the direction of the
Trust's Board of Trustees. Securities that are primarily traded on non-U.S.
exchanges are generally valued at the preceding closing values of the
securities on their respective exchanges, except that when an occurrence
subsequent to the time that a non-U.S. security is valued is likely to have
changed the value, then the fair value of those securities will be determined
by consideration of other factors by or under the direction of the Board of
Trustees. A security that is primarily traded on a U.S. or non-U.S. stock
exchange is valued at the last sale price on that exchange or, if there were
no sales during the day, at the current quoted bid price. In cases in which
securities are traded on more than one exchange, the securities are valued on
the exchange designated by or under the authority of the Board of Trustees as
the primary market. Unlisted non-U.S. securities are valued at the mean
between the last available bid and offer price prior to the time of valuation.
U.S. over-the-counter securities will be valued on the basis of the bid price
at the close of business on each day. Any assets or liabilities initially
expressed in terms of non-U.S. currencies will be converted into U.S. dollar
values based on a formula prescribed by the Trust or, if the information
required by the formula is unavailable, as determined in good faith by the
Board of Trustees. Investments in U. S. government securities (other
than short-term securities) are valued at the quoted bid price in the over-
the-counter market. Short-term investments that mature in 60 days or less are
valued at amortized cost (which involves valuing an investment at its cost
initially and, thereafter, assuming a constant amortization to maturity of any
discount or premium, regardless of the effect of fluctuating interest rates on
the market value of the investment) when the Board of Trustees determines that
amortized cost reflects fair value of the investment. In carrying out the
Board's valuation policies, Boston Advisors, as administrator, may consult
with an independent pricing service retained by the Trust. Further
information regarding the Series' valuation policies is contained in the
Statement of Additional Information.
EXCHANGE PRIVILEGE
Shareholders in the Trust may exchange their shares for Class A
shares of certain other mutual funds in the Smith Barney Shearson Group of
Funds then offering shares for sale in the shareholder's state of residence.
Exchanges of shares may be made at any time without payment of any exchange
fee. Shares of the Trust acquired through the exchange of Class A shares of
other funds will have the same class designations as the shares from which the
exchange was made. Based on these class designations, shares of the Trust may
be subsequently exchanged for Class A shares of the following funds in the
Smith Barney Shearson Group of Funds.
Municipal Bond Funds
SMITH BARNEY SHEARSON LIMITED MATURITY MUNICIPALS
FUND , an intermediate-term municipal bond fund investing
in investment grade obligations;
SMITH BARNEY SHEARSON MANAGED MUNICIPALS FUND INC. , an
intermediate- and long-term municipal bond fund;
SMITH BARNEY SHEARSON TAX-EXEMPT INCOME FUND , an
intermediate- and long-term municipal bond fund investing in medium and lower
rated securities;
SMITH BARNEY SHEARSON ARIZONA MUNICIPALS FUND INC. , an
intermediate- and long-term municipal bond fund designed for Arizona
investors;
SMITH BARNEY SHEARSON INTERMEDIATE MATURITY CALIFORNIA
MUNICIPALS FUND , an intermediate-term municipal bond fund designed for
California investors;
SMITH BARNEY SHEARSON CALIFORNIA MUNICIPALS FUND INC. , an
intermediate- and long-term municipal bond fund designed for California
investors;
SMITH BARNEY SHEARSON FLORIDA MUNICIPALS FUND , an
intermediate- and long-term municipal bond fund designed for Florida
investors;
SMITH BARNEY SHEARSON MASSACHUSETTS MUNICIPALS FUND , an
intermediate and long-term municipal bond fund designed for Massachusetts
investors;
SMITH BARNEY SHEARSON NEW JERSEY MUNICIPALS FUND INC. , an
intermediate- and long-term municipal bond fund designed for New Jersey
investors;
SMITH BARNEY SHEARSON LIMITED MATURITY NEW YORK MUNICIPALS
FUND , an intermediate-term municipal bond fund designed for New York
investors;
SMITH BARNEY SHEARSON NEW YORK MUNICIPALS FUND INC. , an
intermediate- and long-term municipal bond fund designed for New York
investors;
Income Funds
SMITH BARNEY SHEARSON ADJUSTABLE RATE GOVERNMENT INCOME
FUND , seeks high current income while limiting the degree of fluctuation
in net asset value resulting from movement in interest rates;
SMITH BARNEY SHEARSON WORLDWIDE PRIME ASSETS FUND , invests
in a portfolio of high quality debt securities that may be denominated in U.S.
dollars or selected foreign currencies and that have remaining maturities of
not more than one year;
SMITH BARNEY SHEARSON SHORT-TERM WORLD INCOME FUND , an
income fund investing in high quality, short-term debt securities denominated
in U.S. dollars as well as a range of foreign currencies;
SMITH BARNEY SHEARSON LIMITED MATURITY TREASURY FUND , invests
exclusively in securities issued by the United States Treasury and other U.S.
government securities;
SMITH BARNEY SHEARSON DIVERSIFIED STRATEGIC INCOME FUND , seeks
high current income primarily by allocating and reallocating its assets among
various types of fixed-income securities;
SMITH BARNEY SHEARSON MANAGED GOVERNMENTS FUND INC. , an income
fund investing in obligations issued or guaranteed by the U.S. government and
its agencies and instrumentalities with emphasis on mortgage-backed government
securities;
SMITH BARNEY SHEARSON GOVERNMENT SECURITIES FUND , seeks a high
current return by investing in U.S. government securities;
SMITH BARNEY SHEARSON INVESTMENT GRADE BOND FUND , seeks
maximum current income consistent with prudent investment management and
preservation of capital by investing in corporate bonds;
SMITH BARNEY SHEARSON HIGH INCOME FUND , seeks high current
income by investing in high-yielding corporate bonds, debentures and notes;
SMITH BARNEY SHEARSON GLOBAL BOND FUND , seeks current income
and capital appreciation by investing in bonds, debentures and notes of
foreign and domestic issuers;
Growth and Income Funds
SMITH BARNEY SHEARSON CONVERTIBLE FUND , seeks current income
and capital appreciation by investing in convertible securities;
SMITH BARNEY SHEARSON UTILITIES FUND , seeks total return by
investing in equity and debt securities of utilities companies;
SMITH BARNEY SHEARSON STRATEGIC INVESTORS FUND , seeks high
total return consisting of current income and capital appreciation by
investing in a combination of equity, fixed-income and money market
securities;
SMITH BARNEY SHEARSON PREMIUM TOTAL RETURN FUND , seeks total
return by investing in dividend-paying common stocks;
SMITH BARNEY SHEARSON GROWTH AND INCOME FUND , seeks income and
long-term capital growth by investing in income producing equity securities;
Growth Funds
SMITH BARNEY SHEARSON APPRECIATION FUND INC., an equity fund
seeking long-term appreciation of capital;
SMITH BARNEY SHEARSON FUNDAMENTAL VALUE FUND INC. , an equity
fund seeking long-term capital growth with current income as a secondary
objective;
* SMITH BARNEY SHEARSON SECTOR ANALYSIS FUND, seeks captial
appreciation by following a sector strategy;
SMITH BARNEY SHEARSON TELECOMMUNICATIONS GROWTH FUND , an
equity fund seeking capital appreciation, with income as a secondary
consideration;
SMITH BARNEY SHEARSON AGGRESSIVE GROWTH FUND INC. , an equity
fund seeking above-average capital growth;
SMITH BARNEY SHEARSON SPECIAL EQUITIES FUND , seeks long-term
capital appreciation by investing in equity securities primarily of emerging
growth companies;
SMITH BARNEY SHEARSON GLOBAL OPPORTUNITIES FUND , an equity
fund seeking long-term capital growth by investing principally in common
stocks of United States and foreign issuers;
SMITH BARNEY SHEARSON EUROPEAN FUND , seeks long-term capital
appreciation by investing primarily in securities of issuers based in European
countries;
SMITH BARNEY SHEARSON PRECIOUS METALS AND MINERALS FUND INC. ,
a long-term, capital appreciation fund investing primarily in precious metal
and mineral-related companies and gold bullion;
Money Market Funds
SMITH BARNEY SHEARSON DAILY DIVIDEND FUND INC., invests in a
diversified portfolio of high quality money market instruments;
SMITH BARNEY SHEARSON GOVERNMENT AND AGENCIES FUND INC. ,
invests in short-term U.S. government and agency securities;
SMITH BARNEY SHEARSON MUNICIPAL MONEY MARKET FUND INC. ,
invests in short-term, high quality municipal obligations;
SMITH BARNEY SHEARSON CALIFORNIA MUNICIPAL MONEY MARKET FUND ,
invests in short-term, high quality California municipal obligations;
SMITH BARNEY SHEARSON NEW YORK MUNICIPAL MONEY MARKET FUND ,
invests in short-term, high quality New York municipal obligations;
Shareholders of a Series may exchange their shares for Class A shares of
those funds listed above without payment of an exchange fee. In addition,
Smith Barney Shearson receives an annual service fee ranging from .15%
to .25% of the value of average daily net assets attributable to the Class A
shares of each fund described above except those listed under money market
funds.
The exchange of shares of one fund for shares of another fund is treated
for Federal income tax purposes as a sale of the shares given in exchange by
the shareholder. Therefore, an exchanging shareholder may realize a taxable
gain or loss in connection with an exchange.
Shareholders exercising the exchange privilege with any other fund in
the Smith Barney Shearson Group of Funds should review the prospectus
of that fund carefully prior to making an exchange. Smith Barney Shearson
reserves the right to reject any exchange requested. The exchange
privilege may be modified or terminated at any time after notification. For
further information regarding the exchange privilege, or to obtain current
prospectuses for funds in the Smith Barney Shearson Group of Funds,
shareholders should contact their Smith Barney Shearson Financial
Consultants.
A SHAREHOLDER WHO EXCHANGES SHARES PRIOR TO THE MATURITY DATE MAY REALIZE AN
AMOUNT THAT IS LESS OR GREATER THAN THE ENTIRE AMOUNT OF HIS OR HER
INVESTMENT. SEE "INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES." MOREOVER,
BECAUSE EACH SERIES IS NOT ENGAGING IN A CONTINUOUS OFFERING OF SHARES, A
SHAREHOLDER WHO EXCHANGES HIS OR HER SERIES SHARES WILL NOT BE ABLE TO EFFECT
A FURTHER EXCHANGE BACK INTO THAT SERIES.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions
Dividends from net investment income of each Series and distributions of
net realized capital gains of each Series, if any, will be distributed
annually after the close of the fiscal year in which they are earned.
Dividends and distributions will be reinvested automatically for each
shareholder's account at net asset value in additional shares of a Series,
unless the shareholder instructs the Series to pay all dividends and
distributions in cash and to credit the amounts to his or her Smith Barney
Shearson brokerage account.
A SHAREHOLDER WHO ELECTS TO RECEIVE DIVIDENDS AND DISTRIBUTIONS IN CASH MAY
REALIZE AN AMOUNT THAT IS GREATER OR LESS THAN THE ENTIRE AMOUNT OF HIS OR HER
INVESTMENT.
Taxes
Each Series of the Trust has qualified and intends to continue to
qualify each year as a regulated investment company for Federal income tax
purposes. The requirements for qualification may cause a Series to
restrict the extent of its short-term trading. If a Series so
qualifies, it will not be subject to Federal income tax on its net investment
income and net realized capital gains that it distributes to shareholders, so
long as it meets certain distribution requirements. See "Investment Objectives
and Management Policies." In addition, each Series is subject to a
nondeductible excise tax of 4% of the amount by which the Series fails to
distribute specified percentages of its investment income and capital gains.
The Series intend to pay dividends and distributions more frequently than
stated above in order to avoid application of the excise tax, if the
additional distributions are otherwise determined to be in the best interests
of the Series' shareholders. Dividends declared by a Series in October,
November or December of any calendar year and payable to shareholders of
record on a specified date in such a month are deemed to have been
received by each shareholder on December 31 of such calendar year and to have
been paid by a Series not later than such December 31, provided that such
dividend is actually paid by the Series during January of the following year.
Dividends of each Series' investment income and distributions of its
short-term capital gains will be taxable to shareholders as ordinary income
for Federal income tax purposes, whether received in cash or reinvested in
additional shares. Distributions of long-term capital gains will be taxable to
shareholders as such, whether received in cash or reinvested, and regardless
of how long a shareholder has held shares of the Series. In general, only
dividends that represent the dividends received from U.S. corporations may,
subject to certain limitations, qualify for the Federal dividends-received
deduction for corporate shareholders.
Statements as to the tax status of each shareholder's dividends and
distributions will be mailed annually. These statements will set out the
amount of each Series' dividends eligible for the dividends-received deduction
for corporate shareholders. Furthermore, shareholders will receive, as
appropriate, various written notices after the close of the Series' taxable
year regarding the tax status of certain dividends and distributions that were
paid (or that are treated as having been paid) by the Series to its
shareholders during the preceding taxable year, including the amount of
dividends that represent interest derived from U.S. government
securities.
Shareholders should consult their own tax advisors as to the state and
local tax consequences of investing in a Series and should be aware that some
jurisdictions may not treat income derived from a Series' holdings of U.S.
government securities as exempt from state and local income taxes.
THE SERIES' PERFORMANCE
From time to time, the Trust may advertise each Series' "average annual
total return" over various periods of time. Such total return figures show
the average percentage change in value of an investment in a Series from the
beginning date of the measuring period to the end of the measuring period.
These figures reflect changes in the price of the Series' shares and assume
that any income dividends and/or capital gains distributions made by a Series
during the period were reinvested in shares of the Series. Figures will be
given for the recent one-, and five-year periods, or for the life of the
Series to the extent that it has not been in existence for any such periods,
and may be given for other periods as well, such as on a year-by-year basis.
When considering average annual total return figures for periods longer than
one year, it is important to note that the Series' average annual total return
for any one year in the period might have been greater or less than the
average for the entire period. A Series also may use "aggregate" total return
figures for various periods, representing the cumulative change in value of an
investment in a Series for the specific period (again reflecting changes
in the Series' share prices and assuming reinvestment of dividends and
distributions). Aggregate total return may be calculated either with or
without the effect of the maximum 5% sales charge and may be shown by means of
schedules, charts or graphs, and may indicate subtotals of the various
components of total return (i.e., change in value of initial investment,
income dividends and capital gains distributions).
In reports or other communications to shareholders or in advertising
material, the Trust may compare the Series' performance with the Standard &
Poor's Index of 500 Common Stocks, the Russell 2000 Index, the Dow Jones
Industrial Average, the Value-Line Composite Geometric Index; or with that of
other mutual funds as listed in the rankings prepared by Lipper Analytical
Services, Inc., with studies prepared by independent organizations such as
Ibbotson Associates or Wilshire Associates Incorporated, or similar
independent services which monitor the performance of mutual funds or other
industry or financial publications such as Barron's, Business Week, Forbes,
Fortune, Institutional Investor, Investors Daily, Kiplinger's Personal
Finance, Money, Morningstar Mutual Fund Values, The New York Times,
The Wall Street Journal, or USA Today. Any given performance comparison
should not be considered as representative of the Series' performance for any
future period. The Statement of Additional Information contains a description
of the methods used to determine total return. Shareholders may make
inquiries regarding the Series, including total return figures, to their Smith
Barney Shearson Financial Consultant.
CUSTODIAN AND TRANSFER AGENT
Boston Safe, located at One Boston Place, Boston, Massachusetts 02108,
serves as custodian of the Trust's investments. Boston Safe is an indirect
wholly owned subsidiary of Mellon Bank Corporation.
TSSG serves as the Trust's transfer agent and is located at Exchange
Place, Boston, Massachusetts, 02109.
DISTRIBUTOR
Distributor and Shareholder Servicing Agent--Smith Barney Shearson
Smith Barney Shearson, which serves as the Trust's distributor and
shareholder servicing agent for Series 1998 and Series 2000, is located at 388
Greenwich Street, New York, New York 10013, and is one of the leading full-
line investment firms serving the U.S. and foreign securities and commodities
markets. Pursuant to a Shareholder Services Plan (the "Plan") adopted with
respect to the Series 1998 and Series 2000, by vote of a majority of the
Trust's Board of Trustees, including a majority of the Trustees who are not
interested persons of the Trust as defined in the 1940 Act and who have no
direct or indirect financial interest in the operation of the Plan or any
agreement relating to it, as well as by the Series' sole shareholder prior to
Series 1998 and Series 2000's initial public offering, Smith Barney Shearson,
as shareholder servicing agent, is paid an annual fee by the respective
Series. The annual fee will be calculated at the annual rate of .25% of the
value of the average daily net assets of the respective Series and is used by
Smith Barney Shearson to cover payments to Smith Barney Shearson Financial
Consultants who provide support services to shareholders of the Series,
including, but not limited to, office space and equipment, telephone
facilities, responding to routine inquiries regarding the Series and its
operations, processing shareholder transactions, forwarding and collecting
proxy materials, dividend payment elections and providing any other
shareholder services not otherwise provided by the Trust's transfer agent. The
Board of Trustees evaluates the appropriateness of the Plan and its payment
terms on a continuing basis and in doing so considers all relevant factors,
including the nature, extent and quality of services generally provided to
shareholders.
ADDITIONAL INFORMATION
The Trust was organized on October 18, 1988 under the laws of the
Commonwealth of Massachusetts and is an entity commonly known as a
"Massachusetts business trust." On November 18, 1988, August 27, 1990 and July
30, 1993, the Trust changed its name from SLH Secured Capital Fund to SLH
Principal Return Fund, Shearson Lehman Brothers Principal Return Fund and
Smith Barney Shearson Principal Return Fund, respectively. The Trust offers
shares of beneficial interest of each Series having a $.001 per share par
value. When matters are submitted for shareholder vote, shareholders of each
Series will have one vote for each full share owned and a proportionate,
fractional vote for any fractional share held. Generally shares of the Trust
vote by individual Series on all matters except (a) matters affecting only the
interests of one or more of the Series, in which case only shares of the
affected Series would be entitled to vote or (b) when the 1940 Act requires
that shares of the Series be voted in the aggregate. There normally will be
no annual meetings of shareholders for the purpose of electing Trustees unless
and until such time as less than a majority of the Trustees holding office
have been elected by shareholders. Shareholders of record of no less than
two-thirds of the outstanding shares of the Trust may remove a Trustee through
a declaration in writing or by vote cast in person or by proxy at a meeting
called for that purpose. A meeting will be called for the purpose of voting
on the removal of a Trustee at the written request of holders of 10% of the
Trust's outstanding shares.
The Trust sends its shareholders a semi-annual report and an audited
annual report, each of which includes a listing of the investment securities
held by the Series at the end of the period covered. In an effort to reduce
each Series' printing and mailing costs, each Series plans to consolidate the
mailing of its semi-annual and annual reports by household. This
consolidation means that a household having mulitiple accounts with the
identical address of record will receive a single copy of each report. In
addition, each Series also plans to consolidate the mailing of its Prospectus
so that a shareholder having multiple accounts will receive a single
Prospectus annually. Any shareholder who does not want this consolidation to
apply to his or her account should contact his or her Financial Consultant or
the Trust's transfer agent. Shareholders may make inquiries regarding the
Trust to their Smith Barney Shearson Financial Consultant.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE
TRUST'S OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFERING OF THE
TRUST'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
TRUST. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR
TO ANY PERSON TO WHOM, THE OFFER MAY NOT LAWFULLY BE MADE.
FD0266
SMITH BARNEY SHEARSON PRINCIPAL RETURN FUND
Two World Trade Center
New York, New York 10048
(212) 720-9218
Statement of Additional Information
April 1, 1994
This Statement of Additional Information supplements the information
contained in the current Prospectus dated April 1, 1994, as amended or
supplemented from time to time, of the Zeros and Appreciation Series 1996
("Series 1996"), Zeros and Appreciation Series 1998 ("Series 1998") and Zeros
Plus Emerging Growth Series 2000 ("Series 2000"), (collectively the "Series"),
of Shearson Lehman Brothers Principal Return Fund (the "Trust"), and should be
read in conjunction with that Prospectus. The Prospectus may be obtained from
your Smith Barney Shearson Financial Consultant or by writing or
calling the Trust at the address or telephone number set forth above. This
Statement of Additional Information, although not in itself a prospectus, is
incorporated by reference into the Prospectus in its entirety.
- ------------------------------------------------------------------
CONTENTS
For ease of reference, the same section headings are used in both the
Prospectus and the Statement of Additional Information, except where noted
below.
Management of the
Trust............................................. 2
Investment Objectives and Management
Policies............. ......5
Redemption of
Shares..............................................13
Valuation of
Shares..............................................14
Exchange
Privilege...........................................14
Determination of
Performance........................................15
(See in the Prospectus "The Series' Performance")
Taxes............................................ 16
(See in the Prospectus "Dividends, Distributions and Taxes")
Distributor........................................18
Custodian and Transfer Agent (See in the Prospectus "Additional
Information").................. 19
Organization of the
Trust..............................................19
Financial
Statements....................................... .20
MANAGEMENT OF THE TRUST
The executive officers of the Trust are employees of certain of the
organizations that provide services to the Series. These organizations are as
follows:
Name....................................................Service
Smith Barney Shearson Inc.
("Smith Barney Shearson")...............................Distributor
Smith Barney Shearson Asset Management
("Asset Management")................... ......Investment Adviser
The Boston Company Advisors, Inc.
("Boston Advisors")................... .....Administrator
Boston Safe Deposit and Trust Company
("Boston
Safe")..................................... ......Custodian
The Shareholder Services Group, Inc.("TSSG"), a
subsidiary of First Data Corporation................Transfer Agent
These organizations and the functions that they perform for the Series
are discussed in the Prospectus and in this Statement of Additional
Information.
Trustees and Executive Officers of the Trust
The names of the Trustees and executive officers of the Trust, together
with information as to their principal business occupations for the past five
years, are set forth below. Each Trustee who is an "interested person" of the
Trust, as defined in the Investment Company Act of 1940, as amended (the "1940
Act"), is indicated by an asterisk.
Trustees
Paul R. Ades, Trustee. Partner in the law firm of Murov & Ades. His address
is 272 South Wellwood Avenue, P.O. Box 504, Lindenhurst, New York 11757.
Herbert Barg, Trustee. Private investor. His address is 273 Montgomery
Avenue, Bala Cynwyd, Pennsylvania 19004.
Allan R. Johnson, Trustee. Retired. former Chairman, Retail Division of
BATUS, Inc., and Chairman and Chief Executive Officer of Saks Fifth Avenue,
Inc. His address is 2 Sutton Place South, New York, New York 10022.
* Heath B. McLendon, Chairman of the Board and Investment Officer.
Executive Vice President of Smith Barney Shearson; Chairman of Smith
Barney Shearson Strategy Advisers Inc.; prior to July 1993, Senior
Executive Vice President of Shearson Lehman Brothers Inc. ("Shearson
Lehman Brothers"); Vice Chairman of Shearson Asset Management, a member
of the Asset Management Group of Shearson Lehman Brothers; a Director of
PanAgora Asset Management, Inc. and PanAgora Asset Management Limited.
His address is Two World Trade Center, New York, New York 10048.
Ken Miller, Trustee. President of Young Stuff Apparel Group, Inc. His
address is 1407 Broadway, 6th Floor, New York, New York 10018.
John F. White, Trustee. President Emeritus of The Cooper Union for
the Advancement of Science and Art; Special Assistant to the President
of the Aspen Institute. His address is Crows Nest Road, P. O. Box 754,
Tuxedo Park, New York, New York 10987 .
Stephen J. Treadway, President. Executive Vice President and
Director of Smith Barney Shearson; Director and President of Mutual
Management Corp.and Smith, Barney Advisors, Inc. and Trustee of
Corporate Realty Income Trust I. His address is 1345 Avenue of the
Americas New York, New York 10105.
Richard P. Roelofs, Executive Vice President. Managing Director of
Smith Barney Shearson and President of Smith Barney Shearson Strategy
Adivsers Inc.; prior to July 1993, Senior Vice President of Shearson
Lehman Brothers; Vice President of Shearson Lehman Investment Strategy
Advisors Inc., an investment advisory affiliate of Shearson Lehman
Brothers. His address is Two World Trade Center, New York, New York
10048.
Harry D. Cohen, Vice President and Investment Officer. President and
Director of Asset Management; prior to July 1993, Executive Vice
President of Shearson Lehman Brothers. His address is Two World Trade
Center, New York, New York 10048.
Harold L. Williamson, Jr., Vice President and Investment Officer.
Vice Chairman and a Director of Asset Management; prior to July 1993,
Vice Chairman and a Director of Shearson Asset Management. His address
is Two World Trade Center, New York, New York 10048.
Susan C. Fulenwider, Vice President and Investment Officer. Vice
President of Asset Management; prior to July 1993, Vice President of
Shearson Asset Management. Her address is Two World Trade Center, New
York, New York 10048 .
Richard A. Freeman, Vice President and Investment Officer. Executive
Vice President of Asset Management; prior to July 1993, Executive Vice
President of Shearson Asset Management. His address is Two World Trade
Center, New York, New York 10048 .
Vincent Nave, Treasurer. Senior Vice President of Boston Advisors and
Boston Safe. His address is One Exchange Place, Boston, Massachusetts
02109.
Francis J. McNamara, III, Secretary. Senior Vice President and General
Counsel of Boston Advisors; prior to June 1989, Vice President and
Associate Counsel of Boston Advisors. His address is One Exchange
Place, Boston, Massachusetts 02109.
Each of the Trustees serves as a trustee, general partner and/or
director of other mutual funds for which Smith Barney Shearson
serves as distributor. As of February 28, 1994, Trustees and officers
of the Series, as a group, owned less than 1% of the outstanding shares
of beneficial interest of each Series.
No director, officer or employee of Smith Barney Shearson ,
Asset Management, Boston Advisors or any of their affiliates will
receive any compensation from the Trust for serving as an officer or
Trustee. The Trust pays each Trustee who is not a director, officer or
employee of Smith Barney Shearson , Boston Advisors or any of
their affiliates a fee of $2,000 per annum plus $500 per meeting
attended and reimburses them for travel and out-of-pocket expenses.
For the fiscal year ended November 30, 1993, such fees and expenses
for the Trust totalled $24,835 .
Investment Adviser and Administrator
Asset Management serves as the Series' investment adviser under
the terms of a written agreement for each Series (the "Advisory
Agreement"). Asset Management is a division of Smith Barney Advisers,
Inc. Smith Barney Advisers, Inc., is a wholly owned subsidiary of Smith
Barney Shearson Holdings Inc. ("Holdings"), which is in turn a wholly
owned subsidiary of The Travelers Inc. (formerly known as Primerica
Corporation) ("Travelers"). The Advisory Agreements for all Series were
first approved by the Board of Trustees, including a majority of the
Trustees who are not "interested persons" of the Trust or Smith Barney
Shearson on April 7, 1993. Certain of the services provided to, and fees
paid by, the Series under the Advisory and Administration Agreements are
described in the Prospectus. Asset Management pays the salaries of all
officers and employees who are employed by both it and the Trust and
maintains office facilities for the Trust. Asset Management bears all
expenses in connection with the performance of its services under the
Advisory Agreements. Boston Advisors serves as the administrator of the
Series pursuant to a written agreement for each Series (the
"Administration Agreements"). Boston Advisors is a wholly owned
subsidiary of The Boston Company, Inc., which is in turn an indirect
wholly owned subsidiary of Mellon Bank Corporation ("Mellon"). The
Administration Agreements were most recently approved for all Series by
the Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Series or Smith Barney Shearson, on July 15,
1993. As administrator, Boston Advisors pays the salaries of all
officers and employees who are employed by both it and the Trust and
maintains office facilities for the Trust. Boston Advisors also
furnishes the Series with statistical and research data, clerical help
and accounting, data processing, bookkeeping, internal auditing and
legal services and certain other services required by the Series;
prepares reports to the Series' shareholders; and prepares tax returns
and reports to and filings with the Securities and Exchange Commission
(the "SEC") and state Blue Sky authorities. Boston Advisors bears all
expenses in connection with the performance of its services under the
Administration Agreements.
For the fiscal years ended November 30, 1993, 1992 and 1991, the
Series paid investment advisory and sub-investment advisory and
administration fees to Asset Management and Boston Advisors as follows:
Series 1996.........Series 1998*........Series 2000**
Fiscal Year Ended.. Fiscal Year Ended.. Fiscal Year Ended
1993..1992..1991... 1993..1992..1991. 1993 1992 1991
Advisory
Fees.
$305,538.$341,700.$360,028..$461,542.$544,508.$451,534.
.$436,813.$572,017.$166,427
Sub-Investment
Advisory and
Administration
Fees
$203,692.$227,800.$240,019..$307,695.$363,010.$361,023.
.$218,406.$286,008$ 83,218
* Series 1998 commenced operations on January 25, 1991.
** Series 2000 commenced operations on August 30, 1991.
Asset Management and Boston Advisors have agreed that if in any
fiscal year the aggregate expenses of a Series (including fees payable
pursuant to the Advisory Agreements, but excluding interest,
taxes, brokerage and extraordinary expenses) exceed the expense
limitation of any state having jurisdiction over the Series, Asset
Management and Boston Advisors will reduce their fees from the Series by
the proportion of the excess expense equal to the proportion that their
respective fees bear to the aggregate of fees paid by the Series for
investment advice and administration, to the extent required by state
law. A fee reduction, if any, will be estimated and reconciled on a
monthly basis. The most restrictive state expense limitation applicable
to each Series would require a reduction of fees in any year in which
expenses subject to the limitation exceed 2.5% of a Series' first $30
million of average daily net assets, 2.0% of the next $70 million of
average daily net assets and 1.5% of the remaining average daily net
assets. No such fee reductions were required for the 1993, 1992 and
1991 fiscal years.
Counsel and Auditors
Willkie Farr & Gallagher serves as counsel to the Trust.
Stroock & Stroock & Lavan serves as counsel to the Trustees who are not
"interested persons" of the Trust.
Coopers & Lybrand, independent accountants, One Post Office
Square, Boston, Massachusetts 02109, have been selected as auditors of
the Trust and render an opinion on the Trust's financial statements
annually.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The Prospectus discusses the investment objectives of each Series
and the policies to be employed to achieve those objectives. Set forth
below is supplemental information concerning certain of the securities
and other instruments in which the Series may invest, the investment
policies and portfolio strategies that the Series may utilize and
certain risks involved with those investments, policies and strategies.
Zero Coupon Securities
There are currently two basic types of zero coupon securities,
those created by separating the interest and principal components of a
previously issued interest-paying security and those originally issued
in the form of a face amount only security paying no interest. Zero
coupon securities of the United States government and certain of its
agencies and instrumentalities and of private corporate issuers are
currently available, although the Series will purchase only those that
represent direct obligations of the United States government.
Zero coupon securities of the United States government that are
currently available are called Separate Trading of Registered Interest
and Principal of Securities ("STRIPS") or Coupon Under Book-Entry
Safekeeping ("CUBES"). STRIPS and CUBES are issued under programs
introduced by the United States Treasury and are direct obligations of
the United States government. The United States government does not
issue zero coupon securities directly. The STRIPS program, which is
ongoing, is designed to facilitate the secondary market stripping of
selected treasury notes and bonds into individual interest and principal
components. Under the program, the United States Treasury continues to
sell its notes and bonds through its customary auction process. However,
a purchaser of those notes and bonds who has access to a book-entry
account at a Federal Reserve Bank (the "Federal Reserve") may separate
the specified treasury notes and bonds into individual interest and
principal components. The selected treasury securities may thereafter be
maintained in the book-entry system operated by the Federal Reserve in a
manner that permits the separate trading and ownership of the interest
and principal payments. The Federal Reserve does not charge a fee for
this service; however, the book-entry transfer of interest or principal
components is subject to the same fee schedule generally applicable to
the transfer of treasury securities.
Under the program, in order for a book-entry treasury security to
be separated into its component parts, the face amount of the security
must be an amount which, based on the stated interest rate of the
security, will produce a semi-annual interest payment of $1,000 or a
multiple of $1,000. Once a book-entry security has been separated, each
interest and principal component may be maintained and transferred in
multiples of $1,000 regardless of the face amount initially required for
separation of the resulting amount required for each interest payment.
CUBES, like STRIPS, are direct obligations of the United States
government. CUBES are coupons that have previously been physically
stripped from treasury notes and bonds, but which were deposited with
the Federal Reserve and are now carried and transferable in book-entry
form only. Only stripped treasury coupons maturing on or after January
15, 1988, that were stripped prior to January 5, 1987, were eligible for
conversion to book-entry form under the CUBES program. Investment banks
may also strip treasury securities and sell them under proprietary
names. These securities may not be as liquid as STRIPS and CUBES and
the Series have no present intention of investing in these instruments.
STRIPS and CUBES are purchased at a discount from $1,000. Absent
a default by the United States government, a purchaser will receive face
value for each of the STRIPS and CUBES provided that the STRIPS and
CUBES are held to their due date. While STRIPS and CUBES can be
purchased on any business day, they all currently come due on February
15, May 15, August 15 or November 15 in any given year.
Money Market Instruments
As noted in the Prospectus, each Series may hold at any time up to
10% of the value of its assets in cash and money market instruments. In
addition, when Asset Management believes that opportunities for capital
appreciation do not appear attractive, each Series may, notwithstanding
its investment objective, take a temporary defensive posture with
respect to its equity securities and invest without limitation in cash
and money market instruments. Among the money market instruments in
which the Series may invest are obligations of the United States
government and its agencies and instrumentalities ("U.S. government
securities"); certain bank obligations; commercial paper; and
repurchase agreements involving U.S. government securities.
U. S. government securities. U.S. government securities
include debt obligations of varying maturities issued or guaranteed by
the United States government or its agencies or instrumentalities.
Direct obligations of the United States Treasury include a variety of
securities that differ in their interest rates, maturities and dates of
issuance.
U.S government securities include not only direct
obligations of the United States Treasury, but also include securities
issued or guaranteed by the Federal Housing Administration, Federal
Financing Bank, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, General
Services Administration, Federal Home Loan Banks, Federal Home Loan
Mortgage Corporation, Federal National Mortgage Association, Maritime
Administration, Tennessee Valley Authority, Resolution Trust
Corporation, District of Columbia Armory Board, Student Loan Marketing
Association and various institutions that previously were or currently
are part of the Farm Credit System (which has been undergoing a
reorganization since 1987). Because the United States government is not
obligated by law to provide support to an instrumentality that it
sponsors, the Series will invest in obligations issued by such an
instrumentality only if Asset Management determines that the
credit risk with respect to the instrumentality does not make its
securities unsuitable for investment by the Series.
Repurchase Agreements. Each Series may enter into repurchase
agreements with certain banks which are the issuers of instruments
acceptable for purchase by the Fund and with certain dealers on the
Federal Reserve Bank of New York's list of reporting dealers. A
repurchase agreement is a contract under which the buyer of a security
simultaneously commits to resell the security to the seller at an agreed
price on an agreed date. Under each repurchase agreement, the selling
institution will be required to maintain the value of the securities
subject to the repurchase agreement at not less than their repurchase
price. Repurchase agreements could involve certain risks in the event
of default or insolvency of the seller, including possible delays or
restrictions on a Series' ability to dispose of the underlying
securities, the risk of a possible decline in the value of the
underlying securities during the period in which a Series seeks to
assert its rights to them, the risk of incurring expenses associated
with asserting these rights and the risk of losing all or part of the
income from the agreement. In evaluating these potential risks, Asset
Management or Boston Advisors, acting under the supervision of the Board
of Trustees, and on an ongoing basis, monitors (a) the value of the
collateral underlying each repurchase agreement to ensure that the value
is at least equal to the total amount of the purchase obligation,
including interest, and (b) the creditworthiness of the banks and
dealers with which the Series enters into repurchase agreements.
Warrants (Series 2000)
Because a warrant does not carry with it the right to dividends or
voting rights with respect to securities that the warrant holder is
entitled to purchase, and because it does not represent any rights to
the assets of the issuer, a warrant may be considered more speculative
than certain other types of investments. In addition, the value of a
warrant does not necessarily change with the value of the underlying
securities and a warrant ceases to have value if it is not exercised by
its expiration date.
Convertible Securities
Convertible securities are fixed-income securities that may be
converted at either a stated price or stated rate into underlying shares
of common stock. Convertible securities have general characteristics
similar to both fixed-income and equity securities. Although to a
lesser extent than with fixed-income securities generally, the market
value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline.
In addition, because of the conversion feature, the market value of
convertible securities tends to vary with fluctuations in the market
value of the underlying common stocks and, therefore, also will react to
variations in the general market for equity securities. A unique
feature of convertible securities is that as the market price of the
underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis, and so may not experience market value
declines to the same extent as the underlying common stock. When the
market price of the underlying common stock increases, the prices of the
convertible securities tend to rise as a reflection of the value of the
underlying common stock. While no securities investments are without
risk, investments in convertible securities generally entail less risk
than investments in common stock of the same issuer.
As fixed-income securities, convertible securities are investments
that provide for a stable stream of income with generally higher yields
than common stocks. Of course, like all fixed-income securities, there
can be no assurance of current income because the issuers of the
convertible securities may default on their obligations. Convertible
securities, however, generally offer lower interest or dividend yields
than non-convertible securities of similar quality because of the
potential for capital appreciation. A convertible security, in addition
to providing fixed income, offers the potential for capital appreciation
through the conversion feature, which enables the holder to benefit from
increases in the market price of the underlying common stock. There can
be no assurance of capital appreciation, however, because securities
prices fluctuate.
Convertible securities generally are subordinated to other similar
but non-convertible securities of the same issuer, although convertible
bonds, as corporate debt obligations, enjoy seniority in right of
payment to all equity securities, and convertible preferred stock is
senior to common stock, of the same issuer. Because of the
subordination feature, however, convertible securities typically have
lower ratings than similar non-convertible securities.
Preferred Stock
Preferred stocks, like debt obligations, are generally fixed-
income securities. Shareholders of preferred stocks normally have the
right to receive dividends at a fixed rate when and as declared by the
issuer's board of directors, but do not participate in other amounts
available for distribution by the issuing corporation. Dividends on the
preferred stock may be cumulative, and all cumulative dividends usually
must be paid prior to common shareholders receiving any dividends.
Preferred stock dividends must be paid before common stock dividends
and, for that reason, preferred stocks generally entail less risk than
common stocks. Upon liquidation, preferred stocks are entitled to a
specified liquidation preference, which is generally the same as the par
or stated value, and are senior in right of payment to common stock.
Preferred stocks are, however, equity securities in the sense that they
do not represent a liability of the issuer and, therefore, do not offer
as great a degree of protection of capital or assurance of continued
income as investments in corporate debt securities. In addition,
preferred stocks are subordinated in right of payment to all debt
obligations and creditors of the issuer, and convertible preferred
stocks may be subordinated to other preferred stock of the same issuer.
Lending Portfolio Securities
Although the Series are authorized to lend their securities to
brokers, dealers and other financial organizations, they will not lend
securities to their distributor, Smith Barney Shearson, or its
affiliates unless the Series apply for and receive specific authority to
do so from the SEC. These loans, if and when made, may not exceed 33-
1/3% of a Series' assets taken at value. The Series' loans of
securities will be collateralized by cash, letters of credit or U.S
government securities that will be maintained at all times in an
amount at least equal to the current market value of the loaned
securities. From time to time, a Series may pay a part of the interest
earned from the investment of collateral received for securities loaned
to : (a) the borrower and/or (b) a third party that is
unaffiliated with that Series and that is acting as a "finder."
By lending its securities, a Series can increase its income by
continuing to receive interest on the loaned securities as well as by
either investing the cash collateral in short-term instruments or
obtaining yield in the form of interest paid by the borrower when
U.S. government securities are used as collateral. Requirements
of the SEC, which may be subject to future modifications, currently
provide that the following conditions must be met whenever a Series'
portfolio securities are loaned: (a) the Series must receive at least
100% cash collateral or equivalent securities from the borrower; (b) the
borrower must increase such collateral whenever the market value of the
securities rises above the level of such collateral; (c) the Series must
be able to terminate the loan at any time; (d) the Series must receive
reasonable interest on the loan, as well as an amount equal to any
dividends, interest or other distributions on the loaned securities and
any increase in market value; (e) the Series may pay only reasonable
custodian fees in connection with the loan; and (f) voting rights on the
loaned securities may pass to the borrower; however, if a material event
adversely affecting the investment in the loaned securities occurs, the
Board of Trustees must terminate the loan and regain the Series' right
to vote the securities.
Investment Restrictions
The investment restrictions recited in the Prospectus and those
numbered 1 through 8 below have been adopted by the Trust as fundamental
policies. Under the 1940 Act, a fundamental policy may not be changed
without the vote of a majority of the outstanding voting securities of
the Series, as defined in the 1940 Act. "Majority" means the lesser of
(a) 67% or more of the shares present at a meeting, if the holders of
more than 50% of the outstanding shares of the Series are present or
represented by proxy, or (b) more than 50% of the outstanding shares.
Investment restrictions 9 through 19 may be changed by vote of a
majority of the Board of Trustees at any time.
Under the investment restrictions adopted by the Series:
1. A Series will not purchase securities (other than U. S.
government securities) of any issuer if, as a result of the
purchase, more than 5% of the value of a Series' total assets would be
invested in the securities of the issuer, except that up to 25% of the
value of a Series' total assets may be invested without regard to this
5% limitation.
2. A Series will not purchase more than 10% of the voting
securities of any one issuer, or more than 10% of the securities of any
class of any one issuer, except that this limitation is not applicable
to a Series' investments in U. S. government securities, and up
to 25% of a Series' assets may be invested without regard to these 10%
limitations.
3. A Series will not borrow money, except that a Series may
borrow from banks for temporary or emergency (not leveraging) purposes,
including the meeting of redemption requests and cash payments of
dividends and distributions that might otherwise require the untimely
disposition of securities, in an amount not to exceed 33-1/3% of the
value of a Series' total assets (including the amount borrowed) at the
time the borrowing is made. Whenever borrowings exceed 5% of the value
of the total assets of a Series, a Series will not make any additional
investments.
4. A Series will not lend money to other persons, except
through purchasing debt obligations, lending portfolio securities and
entering into repurchase agreements.
5. A Series will invest no more than 25% of the value of its
total assets in securities of issuers in any one industry, except that
this restriction does not apply to investments in U. S. government
securities.
6. A Series will not underwrite the securities of other
issuers, except insofar as a Series may be deemed to be an underwriter
under the Securities Act of 1933, as amended, (the "1933 Act") in
disposing of its portfolio securities.
7. A Series will not purchase or sell real estate, interests in
real estate limited partnerships or interests in real estate, except
that a Series may purchase and sell securities that are secured by real
estate and may purchase securities issued by companies that invest or
deal in real estate.
8. A Series will not purchase or sell commodities or
commodities futures contracts.
9. A Series will not sell securities short.
10. A Series will not purchase securities on margin, except that
a Series may obtain any short-term credits necessary for the clearance
of purchases and sales of securities.
11. A Series will not pledge, hypothecate, mortgage or encumber
in any other way more than 10% of its assets.
12. A Series will not invest in oil, gas, mineral leases or
other mineral exploration or development programs, except that a Series
may invest in the securities of companies that invest in or sponsor
those programs.
13. A Series will not invest in securities of other investment
companies registered or required to be registered under the 1940 Act,
except as the securities may be acquired as part of a merger,
consolidation, reorganization, acquisition of assets or an offer of
exchange.
14. A Series will not write or sell put options, call options,
straddles or combinations of those options.
15. A Series will not purchase any security, except U.S.
government securities, if as a result of the purchase, the Series would
then have more than 5% of its total assets invested in securities of
companies (including predecessor companies) that have been in continuous
operation for fewer than three years. (For purposes of this limitation,
issuers include predecessors, sponsors, controlling persons, general
partners, guarantors and originators of underlying assets which may have
less than three years of continuous operation or relevant business
experience.)
16. A Series will not make investments for the purpose of
exercising control or management of any other issuer.
17. A Series will not purchase or retain securities of any
company, if to the knowledge of the Trust, any of the Trust's officers
or Trustees, or any officer or director of Asset Management or of Boston
Advisors, individually owns more than .5% of the outstanding securities
of the company and together they own beneficially more than 5% of the
securities.
18. A Series will not invest in warrants, if as a result, more
than 2% of the value of a Series' net assets would be invested in
warrants that are not listed on a recognized United States stock
exchange, or more than 5% of a Series' net assets would be invested in
warrants regardless of whether they are listed on such an exchange.
19. A Series will not invest in time deposits maturing in more
than seven days, enter into repurchase agreements having a duration of
more than seven days, purchase securities that may not be sold without
first being registered under the 1933 Act, as amended ("restricted
securities"), or purchase instruments lacking readily available market
quotations ("illiquid instruments"), if as a result of the purchase a
Series' aggregate holdings of time deposits maturing in more than seven
days, repurchase agreements having a duration of more than seven days,
restricted securities and illiquid instruments exceed 5% of Series
1996's or Series 1998's net assets, or 10% of Series 2000's net assets.
The Trust may make commitments more restrictive than the
restrictions listed above so as to permit the sale of its shares in
certain states. Should the Trust determine that any commitment is no
longer in the best interests of the Trust and its shareholders, the
Trust will revoke the commitment by terminating the sale of shares in
the relevant state. The percentage limitations set forth above apply at
the time of purchase of securities.
Portfolio Turnover
The Series intend not to seek profits through short-term trading
of their securities. Nevertheless, a Series will not consider portfolio
turnover rate a limiting factor in making investment decisions. The
Series cannot accurately predict their portfolio turnover rate, but
anticipate that their annual turnover rates will not exceed 50%. The
turnover rates would be 100% if all of a Series' securities that are
included in the computation of turnover were replaced once during a
period of one year. The Series' turnover rate is calculated by dividing
the lesser of purchases or sales of portfolio securities for the year by
the monthly average value of portfolio securities. Securities with
remaining maturities of one year or less on the date of acquisition are
excluded from the calculation. For the fiscal years ended November 30,
1993and 1992, the Series' portfolio turnover rates were as
follows:
1993........................1992
Series
1996.................20%...................... .. 11%
Series
1998.................17%........................ 4%
Series
2000..................0 %........................ 0%
Portfolio Transactions
Decisions to buy and sell securities for the Series are made by
Asset Management, subject to the overall review of the Trust's Board of
Trustees. Although investment decisions for a Series are made
independently from those of the other accounts managed by Asset
Management, investments of the type made by a Series also may be made by
those accounts. When a Series and one or more other accounts managed by
Asset Management are prepared to invest in, or desire to dispose of, the
same security, available investments or opportunities for sales will be
allocated in a manner believed by Asset Management to be equitable to
each. In some cases, this procedure may adversely affect the price paid
or received by a Series or the size of the position obtained or disposed
of by the Series.
Transactions on United States stock exchanges involve the payment
of negotiated brokerage commissions. On exchanges on which commissions
are negotiated, the cost of transactions may vary among different
brokers. No stated commission is generally applicable to securities
traded in over-the-counter markets, but the prices of those securities
include undisclosed commissions or mark-ups. Over-the-counter
purchases and sales are transacted directly with principal market makers
except in those cases in which better prices and executions may be
obtained elsewhere. The cost of securities purchased from
underwriters includes an underwriting commission or concession, and the
prices at which securities are purchased from and sold to dealers
include a dealer's mark-up or mark-down. U. S. government securities
are generally purchased from underwriters or dealers, although
certain newly issued U. S government securities may be purchased
directly from the United States Treasury or from the issuing agency or
instrumentality. The following table sets forth certain information
regarding the Series' payment of brokerage commissions:
Fiscal
Year Ended... ..Series.............Series............Series
November ... ..1996 ............. 1998..............2000
Total Brokerage
Commissions.....1991...$46,989..........$114,450..........$76,908
................1992..$36,372...........$ 43,412..........$22,080
................1993..$56,490...........$ 82,248..........$30,396
Commissions Paid to
Smith Barney
Shearson.......1991...$24,645. ......$64,284............$11,700
.............. 1992....$ 7,650...........$ 8,004............$ 3,480
............. .1993....$ 6,510...........$ 8,880............$ 9,636
% of Total Brokerage
Commissions paid to Smith
Barney Shearson1993..12%.................11%...................32%
Fiscal
Year Ended... ..Series.............Series................Series
November .............1996 ............... 1998.................2000
% of Total Transactions involving
Commissions paid to Smith
Barney Shearson..1993....12%.............11%..................17%
Series 1998 paid a larger dollar amount of brokerage commissions during
the 1991 fiscal period in comparison to the 1992 fiscal year primarily
as a result of its purchase of securities involving the payment of
commissions with the proceeds of its initial offering of shares, which
ended in early 1991. Since that time, primarily because it has not
engaged in a continuous offering of its shares, Series 1998 has
effected fewer transactions involving the payment of commissions.
Asset Management seeks the best overall terms available in
selecting brokers or dealers to execute transactions on behalf of the
Series. In assessing the best overall terms available for any
transaction, Asset Management will consider factors it deems relevant,
including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker
or dealer and the reasonableness of the commission, if any, for the
specific transaction and on a continuing basis. In addition, Asset
Management is authorized 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 Series and/or other accounts over which Asset
Management or its affiliates exercise investment discretion. The fees
under the Series' Advisory Agreements are not reduced by reason
of Asset Management receiving brokerage and research services.
The Fund's Board of Trustees will periodically review the
commissions paid by the Series to determine if the commissions paid over
representative periods of time were reasonable in relation to the
benefits inuring to the Series.
In accordance with Section 17(e) of the 1940 Act and Rule 17e-1
under the 1940 Act, the Trust's Board of Trustees has determined that
transactions for the Series may be executed through Smith Barney
Shearson and other affiliated broker-dealers if, in the judgment of
Asset Management, the use of an affiliated broker-dealer is likely to
result in price and execution at least as favorable as those of other
qualified broker-dealers and if, in the transaction, the affiliated
broker-dealer charges the Series a rate consistent with that charged to
comparable unaffiliated customers in similar transactions. In
addition, under the rules recently adopted by the SEC, Smith Barney
Shearson may directly execute such transactions for the Fund on the
floor of any national securities exchange, provided: (a) the Board of
Trustees has expressly authorized Smith Barney Shearson to effect such
transactions; and (b) Smith Barney Shearson annually advises the Fund of
the aggregate compensation it earned on such transactions.
REDEMPTION OF SHARES
The right of redemption may be suspended or the date of payment
postponed (a) for any period during which the New York Stock Exchange,
Inc. (the "NYSE") is closed (other than for customary weekend and
holiday closings), (b) when trading in markets the Series normally
utilizes is restricted, or an emergency as determined by the SEC exists,
so that disposal of the Series' investments or determination of its net
asset value is not reasonably practicable or (c) for such other periods
as the SEC by order may permit for protection of the Series'
shareholders.
VALUATION OF SHARES
As noted in the Prospectus, the Series' net asset value will not
be calculated on certain holidays. On those days, securities held by the
Series may nevertheless be actively traded, and the value of the Series'
shares could be significantly affected.
EXCHANGE PRIVILEGE
Shareholders of the Fund may exchange their shares for Class A
shares of certain other funds in the Smith Barney Shearson Group
of Funds, as indicated in the Prospectus, to the extent such shares are
offered for sale in the shareholder's state of residence.
Except as noted below, shareholders of any fund in the Smith
Barney Shearson Group of Funds may exchange all or part of their
shares for shares of the same class of other funds in the Smith
Barney Shearson Group of Funds, as listed in the Prospectus, on the
basis of relative net asset value per share at the time of exchange as
follows:
A. Class A shares of any fund purchased with a sales charge may be
exchanged for shares of any of the other funds and the sales charge
differential, if any, will be applied. Class A shares of any fund may be
exchanged without a sales charge for shares of the funds that are
offered without a sales charge. Class A shares of any fund purchased
without a sales charge may be exchanged for shares sold with a sales
charge, and the appropriate sales charge differential will be applied.
B. Class A shares of any fund acquired by a previous exchange
of shares purchased with a sales charge may be exchanged for
Class A shares of any of the funds, and the sales charge
differential, if any, will be applied.
A shareholder who has redeemed shares of the Series, through the
exchange privilege or otherwise, will not be able to purchase new shares
in the Series. Dealers other than Smith Barney Shearson must
notify TSSG, the Trust's transfer agent, of the investor's prior
ownership of shares of High Income Fund, a series of Smith Barney
Shearson Income Funds and the account number in order to accomplish
an exchange of shares of High Income Fund under paragraph B above.
The exchange privilege enables shareholders in any of the funds in
the Smith Barney Shearson Group of Funds to acquire shares in a
fund with a different investment objective when they believe that a
shift between funds is an appropriate investment decision. This
privilege is available to shareholders residing in any state in which
the fund's shares being acquired may legally be sold. Prior to any
exchange, the investor should obtain and review a copy of the current
prospectus of each fund into which an exchange is to be made.
Prospectuses may be obtained from your Smith Barney Shearson
Financial Consultant.
Upon receipt of proper instructions and all necessary supporting
documents, shares submitted for exchange are redeemed at the then-
current net asset value and the proceeds are immediately invested, at
a price as described above, in shares of the fund being acquired.
Smith Barney Shearson reserves the right to reject any exchange
request. The exchange privilege may be modified or terminated at any
time after notice to shareholders.
DETERMINATION OF PERFORMANCE
From time to time, the Trust may quote a Series' performance in
terms of its total return in reports or other communications to
shareholders. The Series' performance will vary from time to time
depending upon market conditions, the composition of its portfolio and
its operating expenses.
Average Total Return
The Series' "average annual total return" figures are computed
according to a formula prescribed by the SEC. The formula can be
expressed as follows:
P(1 + T)n = ERV
Where:
P.....a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV= Ending Redeemable Value of a hypothetical $1,000 investment made
at the beginning of a 1-, 5- or 10-year period at the end of the 1-, 5-
or 10-year period (or fractional portion thereof), assuming reinvestment
of all dividends and distributions
The Series' average annual total returns were as follows for the
periods indicated:
Per Annum for Period
One Year from Commencement of
Period Ended Operations through
Name of Series.............. 11/30/93 .... 11/30/93
Series 1996
(1).........................2.46%................10.61%
Series 1998
(2).........................4.49%................9.74%
Series 2000
(3).........................9.93%................8.23%
______________________________
(1) Series 1996 commenced operations on January 16, 1989.
(2) Series 1998 commenced operations on January 25, 1991.
(3) Series 2000 commenced operations on August 30, 1991.
These total return figures assume that the maximum 5% sales charge has
been deducted from the investment at the time of purchase.
Aggregate Total Return
The Series' aggregate total return figures shown below represent
the cumulative change in the value of an investment in a Series for the
specified period and are computed by the following formula:
ERV-P
P
Where:....P= a hypothetical initial payment of $10,000.
................ERV = Ending Redeemable Value of a hypothetical
.............. $10,000 investmentmade at the beginning of the
1-, 5- or 10-year period at the end of
the 1-, 5- or 10 year period (or fractional
portion thereof), assuming reinvestment of
all dividends and distributions.
The Series' aggregate total returns were as follows for the
periods indicated:
......... One Year......Period From.....One Year...... Period From
.........Period Ended....Commencementof..Period Ended...Commencement of
.........11/30/93*.. Operations.........11/30/93**......Operations
. .through.11/30/93...........through 11/30/93**
Name of Portfolio
Series 1996 (1)..
7.85%.... ....72.05%.........2.46%...........63.45%
Series 1998 (2).
9.99%.......... ..37.19%. .......4.49%...........30.33%
Series 2000
(3)......15.72%...... .......25.81%.... ...9.93%.............19.51%
*....Figures do not include the effect of the maximum 5% sales charge.
**....Figures include the effect of the maximum 5% sales charge.
(1)....Series 1996 commenced operations on January 16, 1989.
(2)....Series 1998 commenced operations on January 25, 1991.
(3) ....Series 2000 commenced operations on August 30, 1991.
......These total return figures assume that the maximum 5% sales charge
has been deducted from the investment at the time of purchase.
A Series' performance will vary from time to time depending upon
market conditions, the composition of its portfolio and its operating
expenses. Consequently, any given performance quotation should not be
considered representative of the Series' performance for any specified
period in the future. In addition, because performance will fluctuate,
it may not provide a basis for comparing an investment in the Series
with certain bank deposits or other investments that pay a fixed yield
for a stated period of time. Investors comparing the Series' performance
with that of other mutual funds should give consideration to the quality
and maturity of the respective investment companies' portfolio
securities.
TAXES
The following is a summary of certain Federal income tax
considerations that may affect the Trust and its shareholders. The
summary is not intended as a substitute for individual tax planning, and
investors are urged to consult their own tax advisors as to the Federal,
state and local income tax consequences of an investment in a
Series.
Tax Status of the Trust and its Shareholders
Each of the Series has qualified and intends to continue to
qualify each year as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code"). To qualify as a
regulated investment company, the Series must meet certain requirements
set forth in the Code. Each Series is required to earn at least 90% of
its gross income from (a) interest, (b) dividends, (c) payments with
respect to securities loans, (d) gains from the sale or other
disposition of stock or securities and (e) other income derived with
respect to the Series' business of investing in stock or securities.
Each Series also must earn less than 30% of its gross income from the
sale or other disposition of stock or securities held for less than
three months. Legislation currently pending before the U.S. Congress
would repeal the requirement that a regulated investment company must
derive less than 30% of its gross income from the sale or other
disposition of assets described in (b) above that are held for less than
three months. However, it is impossible to predict whether this
legislation will become law and, if it is so enacted, what form it will
eventually take.
Dividends of net investment income and distributions of net
realized short-term capital gains will be taxable to shareholders as
ordinary income for Federal income tax purposes, whether received in
cash or reinvested in additional shares of the Series. Distributions of
long-term capital gains will be taxable to shareholders as long-term
gain, whether paid in cash or reinvested in additional shares, and
regardless of the length of time that the shareholder has held his or
her shares of the Series.
Dividends of investment income (but not distributions of capital
gain) from the Series generally will qualify for the Federal dividends-
received deduction for corporate shareholders to the extent that the
dividends do not exceed the aggregate amount of dividends received by
the Series from domestic corporations. If securities held by the Series
are considered to be "debt-financed" (generally, acquired with borrowed
funds) or are held by the Series for less than 46 days (91 days in the
case of certain preferred stock), the portion of the dividends paid by
the Series that corresponds to the dividends paid with respect to the
debt-financed securities or securities that have not been held for the
requisite period will not be eligible for the corporate dividends-
received deduction.
Foreign countries may impose withholding and other taxes on
dividends and interest paid to a Series with respect to
investments in foreign securities. Certain foreign countries, however,
have entered into tax conventions with the United States to reduce or
eliminate such taxes.
If a Series is the holder of record of any stock on the record
date for any dividends payable with respect to the stock, the dividends
are included in the Series' gross income not as of the date received but
as of the later of (a) the date on which the stock became ex-dividend
with respect to the dividends (that is the date on which a buyer of the
stock would not be entitled to receive the declared, but unpaid,
dividends) or (b) the date on which the Series acquired the stock.
Capital Gains. In general, a shareholder who redeems or exchanges
his or her Series shares will recognize long-term capital gain or loss
if the shares have been held for more than one year, and will recognize
short-term capital gain or loss if the shares have been held for one
year or less. If a shareholder receives a distribution taxable as long-
term capital gain with respect to shares of a Series and redeems
or exchanges the shares before he or she has held them for more than six
months, however, any loss on the redemption or exchange that is less
than or equal to the amount of the distribution will be treated as a
long-term capital loss.
Backup Withholding. If a shareholder fails to furnish a correct
taxpayer identification number, fails to report fully dividend or
interest income, or fails to certify that he or she has provided a
correct taxpayer identification number and that he or she is not subject
to "backup withholding," then the shareholder may be subject to a 31%
backup withholding tax with respect to (a) dividends and distributions
and (b) the proceeds of any redemptions of a Series' shares. An
individual's taxpayer identification number is his or her social
security number. The backup withholding tax is not an additional tax
and may be credited against a shareholder's regular Federal income tax
liability.
Taxation of the Series' Investments
Zero Coupon Securities. The Series will invest in zero coupon
securities having an original issue discount (that is, the discount
represented by the excess of the stated redemption price at maturity
over the issue price). Each year, the Series will be required to accrue
as income a portion of this original issue discount even though the
Series will receive no cash payment of interest with respect to these
securities. In addition, if the Series acquires a security at a
discount that resulted from fluctuations in prevailing interest rates
("market discount"), the Series may elect to include in income each year
a portion of this market discount.
The Series will be required to distribute substantially all of its
income (including accrued original issue and market discount) in order
to qualify for "pass-through" Federal income tax treatment and also in
order to avoid the imposition of the 4% excise tax described in the
Prospectus. Therefore, a Series may be required in some years to
distribute an amount greater than the total cash income the Series
actually receives. In order to make the required distribution in such a
year, a Series may be required to borrow or to liquidate
securities. The amount of actual cash that a Series would have
to distribute, and thus the degree to which securities would need to be
liquidated, would depend upon the number of shareholders who chose not
to have their dividends reinvested. Capital losses resulting from the
liquidation of securities can only be used to offset capital gains and
cannot be used to reduce the Series' ordinary income. These capital
losses may be carried forward for eight years.
Capital Gains Distributions. Gain or loss on the sale of a
security by a Series will generally be long-term capital gain or
loss if the Series has held the security for more than one year. Gain
or loss on the sale of a security held for one year or less will
generally be short-term capital gain or loss. Generally, if a
Series acquires a debt security at a discount, any gain on the sale or
redemption of the security will be taxable as ordinary income to the
extent that the gain reflects accrued market discount.
DISTRIBUTOR AND SHAREHOLDER DISTRIBUTOR SERVICING AGENT -
SMITH BARNEY SHEARSON
Smith Barney Shearson serves as the Series' distributor pursuant
to a written agreement (the "Distribution Agreement") with the Trust.
To compensate Smith Barney Shearson for the services it provides and for
the expenses it bears, the Trust has adopted a Shareholder Services Plan
(the "Plan"). Under the Plan, the Trust pays Smith Barney Shearson,
with respect to Series 1998 and Series 2000, a fee, accrued daily and
paid monthly, calculated at the annual rate of .25% of the value of the
respective Series' average daily net assets. Under its terms, the Plan
continues from year to year, provided that its continuance is approved
annually by vote of the Trust's Board of Trustees, including a majority
of the Trustees who are not interested persons of the Trust and who have
no direct or indirect financial interest in the operation of the Plan
(the "Independent Trustees"). The Plan may not be amended to increase
materially the amount to be spent for the services provided by Smith
Barney Shearson without shareholder approval, and all material
amendments of the Plan also must be approved by the Trustees in the
manner described above. The Plan may be terminated at any time, without
penalty, by vote of a majority of the Independent Trustees or by a vote
of a majority of the outstanding voting securities (as defined in the
1940 Act) of the relevant Series on not more than 30 days' written
notice to any other party to the Plan. Pursuant to the Plan, Smith
Barney Shearson will provide the Board of Trustees periodic reports of
amounts expended under the Plan and the purpose for which such
expenditures were made. For the fiscal year ended November 30, 1993,
Shearson Lehman Brothers, the Trust's distributor prior to Smith Barney
Shearson, was paid $384,618 and $273,008 in shareholder servicing fees
for Series 1998 and Series 2000, respectively. For the fiscal period
from commencement of operations on * through
November 30, 1993, Shearson Lehman Brothers, accrued $1,289,669 and
$734,535 in Series 1998 and Series 2000, respectively, for shareholder
servicing fees.
_____________________
* Series 1998 - January 25, 1991
Series 2000 - August 30, 1991
CUSTODIAN AND TRANSFER AGENT
Boston Safe, a wholly owned subsidiary of The Boston Company,
Inc., is located at One Boston Place, Boston, Massachusetts 02108, and
serves as the custodian of the Trust pursuant to a custodian agreement.
Under the custodian agreement, Boston Safe holds the Trust's portfolio
securities and keeps all necessary accounts and records. For its
services, Boston Safe receives a monthly fee based upon the month-end
market value of securities held in custody and also receives securities
transaction charges. The assets of the Trust are held under bank
custodianship in compliance with the 1940 Act.
TSSG is located at Exchange Place, Boston, Massachusetts
02109, and serves as the Trust's transfer agent. Under the transfer
agency agreement, TSSG maintains the shareholder account records for the
Trust, handles certain communications between shareholders and the
Trust, distributes dividends and distributions payable by the Trust and
produces statements with respect to account activity for the Trust and
its shareholders. For these services, TSSG receives a monthly fee
computed on the basis of the number of shareholder accounts TSSG
maintains for the Trust during the month and is reimbursed for out-of-
pocket expenses.
ORGANIZATION OF THE TRUST
The Trust is organized as an unincorporated business trust under
the laws of the Commonwealth of Massachusetts pursuant to a Master Trust
Agreement dated October 18, 1988, as amended (the "Trust Agreement").
Under the Trust Agreement, the Trustees have authority to issue an
unlimited number of shares of beneficial interest with a par value of
$.001 per share.
Massachusetts law provides that shareholders could, under certain
circumstances, be held personally liable for the obligations of the
Trust. The Trust has been structured, and will be operated in such a
way, so as to ensure as much as possible, that shareholders will not be
liable for obligations of the Series. The Trust Agreement disclaims
shareholder liability for acts or obligations of the Trust, and requires
that notice of the disclaimer be given in each agreement, obligation or
instrument entered into or executed by the Trust or a Trustee. The Trust
Agreement also provides for indemnification from the Trust's property
for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a shareholder's
incurring financial loss on account of shareholder liability is limited
to circumstances in which the Trust would be unable to meet its
obligations, a possibility that the Trust's management believes is
remote. Upon payment of any liability incurred by the Trust, the
shareholder paying the liability will be entitled to reimbursement from
the general assets of the Trust. The Trustees intend to conduct the
operations of the Trust and each of its series in such a way so as
to avoid, as far as possible, ultimate liability of the shareholders
for liabilities of the Trust.
FINANCIAL STATEMENTS
An Annual Report for each Series for the fiscal year ended
November 30, 1993 accompanies this Statement of Additional
Information and is incorporated herein by reference in their entirety.
SMITH BARNEY SHEARSON PRINCIPAL RETURN FUND
PART C
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Financial Highlights
Included in Part B:
The Registrant's Annual Report for the fiscal year ended
November 30, 1993 and the Report of Independent
Accountants dated January 7, 1994 are incorporated by reference
to the Definitive 30b2-1 filed on January 25, 1994 as
Accession # 00000 53798-94-000031.R>
Included in Part C:
Consent of Independent Accountants
(b) Exhibits
Exhibit No. Description of Exhibit
All references are to the Registrant's registration Statement on Form N-
1A as filed with the Securities Exchange Commission (the "SEC"). (File
Nos. 33-25087 and 811-5678).
1
Registrant's Master Trust Agreement and Amendments to the
Master Trust Agreement dated October 18, 1988, November 18, 1988, August
24, 1990, October 5, 1990, February 26, 1991, May 1, 1991, and July 30,
1993, respectively are filed herein.
2 By-Laws are incorporated by reference to Registrant's
Registration Statement filed with the SEC on October 19, 1988 (the
"Registration Statement")
3 Not Applicable.
4 Not Applicable.
5 Investment Advisory Agreement between the Registrant and Smith
Barney Shearson Asset Management ("Asset Management") relating to Series
1996, Series 1998 and Series 2000 are filed herein.
6 Distribution Agreement between the Registrant and Smith Barney
Shearson Inc. ("Smith Barney Shearson") is filed herein.
7 Not Applicable.
8(a) Form of Custodian Agreement is incorporated by reference to Pre-
Effective Amendment No. 1.
(b) Supplement to Custody Agreement relating to Series 1998 is
incorporated by reference to Post-Effective Amendment No. 9.
(c) Form of Supplement to Custodian Agreement relating to Series 1999
is incorporated by reference to Post-Effective Amendment No. 6.
(d) Supplement to Custodian Agreement relating to Series 2000 is
incorporated by reference to Post-Effective Amendment No. 10.
9(a) Administration Agreement dated May 21, 1993 between the
Registrant and The Boston Company Advisors Inc. relating to Series 1996,
Series 1998 and Series 2000 are filed herein.
(b) Transfer Agency Agreement between the Registrant and The
Shareholder Services Group, Inc. dated August 2, 1993 is filed
herein.
(c) Shareholder Services Plan between the Registrant and Smith
Barney Shearson relating to Series 1998 is filed herein.
(d) Shareholder Services Plan between the Registrant and Smith
Barney Shearson relating to Series 2000 is filed herein.
10 Not Applicable
11 Consent of Independent Accountants is filed herein.
12 Not Applicable.
13(a) Purchase Agreement relating to Series 1996 Incorporated by
reference to Post-Effective Amendment No. 7.
(b) Purchase Agreement relating to Series 1998 is incorporated
by reference to Post-Effective Amendment No. 9.
(c) Form of Purchase Agreement relating to Series 1999 is
incorporated by reference to Post-Effective Amendment No. 6.
(d) Form of Purchase Agreement relating to Series 2000 is
incorporated by reference to Post-Effective Amendment No. 8.
14 Not Applicable.
15 Not Applicable.
16 Performance Data is incorporated by reference to Post-Effective
Amendment No. 2 filed with the SEC on April 2, 1990.
Item 25. Persons Controlled by or under Common Control with
Registrant
(i) Zeros and Appreciation Series 1996
None
(ii) Zeros and Appreciation Series 1998
None
(iii) Zeros Plus European Equities Series 1999
All of the outstanding shares of beneficial interest
relating to Series 1999 on the date Registrant's Post-Effective
Amendment No. 6 became effective were owned by Shearson Lehman Brothers
Inc. (now known as Lehman Brothers Inc.), a corporation formed under
Delaware law. Lehman Brothers Inc. is a wholly owned subsidiary of
Lehman Brothers Holdings Inc. ("Holdings"). All of the issued and
outstanding common stock (representing of 92% of the voting stock) of
Holdings is held by American Express Company.
(iv) Zeros Plus Emerging Growth Series 2000
None
Item 26. Number of Holders of Securities
(1) (2)
Number of Record Holders by Class
Title of Class as of December 31, 1993
Shares representing
beneficial interests,
par value .001 per share
(i) Zeros and Appreciation
Series 1996 10,374
(ii) Zeros and Appreciation
Series 1998 16,195
(iii) Zeros Plus European
Equities Series 1999 1
(iv) Zeros Plus Emerging
Growth Series 2000 11,980
Item 27. Indemnification
The response to this item is incorporated by reference to
Registrant's Pre-Effective Amendment No. 1.
Item 28(a). Business and Other Connections of Investment Adviser
Investment Adviser - - Smith Barney Shearson Asset Management.
Smith Barney Shearson Asset Management, through its predecessors, has
been in the investment counseling business since 1940 and is a division
of Smith, Barney Advisers, Inc. ("SBA"). SBA was incorporated in 1968
under the laws of the state of Delaware. SBA is a wholly owned
subsidiary of Smith Barney Shearson Holdings Inc., which is in turn a
wholly owned subsidiary of The Travelers Inc. (formerly known as
Primerica Corporation) ("Travelers")
The list required by this Item 28 of officers and directors of SBA and
Shearson Asset Management, together with information as to any other
business, profession, vocation or employment of a substantial nature
engaged in by such officers and directors during the past two fiscal
years, is incorporated by reference to Schedules A and D of FORM ADV
filed by SBA on behalf of Smith Barney Shearson Asset Management
pursuant to the Advisers Act (SEC File No. 801-8314).
Prior to the close of business on July 30, 1993 (the "Closing"),
Shearson Asset Management, a member of the Asset Management Group of
Shearson Lehman Brothers Inc. ("Shearson Lehman Brothers"), served as
the Registrant's investment adviser. On the Closing, Travelers and
Smith Barney, Harris Upham & Co. Incorporated acquired the domestic
retail brokerage and asset management business of Shearson Lehman
Brothers which included the business of the Registrant's prior
investment adviser. Shearson Lehman Brothers was a wholly owned
subsidiary of Shearson Lehman Brothers Holdings Inc. ("Shearson
Holdings"). All of the issued and outstanding common stock of Shearson
Holdings (representing 92% of the voting stock) was held by American
Express Company. Information as to any past business vocation or
employment of a substantial nature engaged in by officers and directors
of Shearson Asset Management can be located in Schedules A and D of FORM
ADV filed by Shearson Lehman Brothers on behalf of Shearson Asset
Management prior to July 30, 1993. (SEC FILE NO. 801-3701)
8/23/93
Item 29. Principal Underwriters
Smith Barney Shearson Inc. ("Smith Barney Shearson") currently acts as
distributor for Smith Barney Shearson Managed Municipals Fund Inc.,
Smith Barney Shearson New York Municipals Fund Inc., Smith Barney
Shearson California Municipals Fund Inc., Smith Barney Shearson
Massachusetts Municipals Fund, Smith Barney Shearson Global
Opportunities Fund, Smith Barney Shearson Aggressive Growth Fund Inc.,
Smith Barney Shearson Appreciation Fund Inc., Smith Barney Shearson
Small Capitalization Fund, Smith Barney Shearson Worldwide Prime Assets
Fund, Smith Barney Shearson Short-Term World Income Fund, Smith Barney
Shearson Principal Return Fund, Smith Barney Shearson Municipal Money
Market Fund Inc., Smith Barney Shearson Daily Dividend Fund Inc., Smith
Barney Shearson Government and Agencies Fund Inc., Smith Barney Shearson
Managed Governments Fund Inc., Smith Barney Shearson New York Municipal
Money Market Fund, Smith Barney Shearson California Municipal Money
Market Fund, Smith Barney Shearson Income Funds, Smith Barney Shearson
Equity Funds, Smith Barney Shearson Investment Funds Inc., Smith Barney
Shearson Precious Metals and Minerals Fund Inc., Smith Barney Shearson
Telecommunications Trust, Smith Barney Shearson Arizona Municipals Fund
Inc., Smith Barney Shearson New Jersey Municipals Fund Inc., The USA
High Yield Fund N.V., Garzarelli Sector Analysis Portfolio N.V., The
Advisors Fund L.P., Smith Barney Shearson Fundamental Value Fund Inc.,
Smith Barney Shearson Series Fund, The Trust for TRAK Investments, Smith
Barney Shearson Income Trust, Smith Barney Shearson FMA R Trust, Smith
Barney Shearson Adjustable Rate Government Income Fund, Smith Barney
Shearson Florida Municipals Fund, Smith Barney Funds, Inc., Smith Barney
Equity Funds, Inc., Smith Barney Muni Funds, Smith Barney World Funds,
Inc., Smith Barney Money Funds, Inc., Smith Barney Tax Free Money Fund,
Inc., Smith Barney Variable Account Funds, Smith Barney U.S. Dollar
Reserve Fund (Cayman), Worldwide Special Fund, N.V., Worldwide
Securities Limited, (Bermuda), and various series of unit investment
trusts.
Smith Barney Shearson is a wholly owned subsidiary of Smith Barney
Shearson Holdings Inc., which in turn is a wholly owned subsidiary of
The Travelers Inc. The information required by this Item 29 with
respect to each director, officer and partner of Smith Barney Shearson
is incorporated by reference to Schedule A of FORM BD filed by Smith
Barney Shearson pursuant to the Securities Exchange Act of 1934 (SEC
File No. 812-8510).
8/24/93
Item 30. Location of Accountants and Record
(1) Smith Barney Shearson Principal Return Fund
Two World Trade Center, 100th Floor
New York, New York 10048
(2) Smith Barney Shearson Asset Management
Two World Trade Center
New York, New York 10048
(3) The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
(4) Boston Safe Deposit and Trust Company
One Cabot Road
Medford, Massachusetts 02155
(5) The Shareholders Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Registrant undertakes to call a meeting of the
shareholders for the purpose of voting upon the question of removal of
trustee or trustees when requested in writing to do so by the holders of
at least 10% of Registrant's outstanding Shares and, in connection worth
such meeting, to comply with the provisions of Section 16(c) of the
Investment Company Act of 1940, as amended, relating to communications
with the shareholders of certain common-law trusts.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and
the Investment Company Act of 1940, the Registrant, SMITH BARNEY
SHEARSON PRINCIPAL RETURN FUND, has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, State of New
York on the 24th day of January, 1994.
SHEARSON LEHMAN BROTHERS
PRINCIPAL RETURN FUND
By:/s/ Heath B.
McLendon *
Heath B. McLendon, Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to the Registration Statement has been signed
below by the following persons in the capacities and on the dates
indicated.
Signature Title Date
/s/ Heath B. McLendon* Chairman of the Board 1/24/94
Heath B. McLendon (Chief Executive Officer)
/s/ Vincent Nave* Treasurer (Chief Financial
1/24/94
Vincent Nave and Accounting Officer)
Signature Title Date
/s/ Paul R. Ades* Trustee
1/24/94
Paul R. Ades
Herbert Barg* Trustee
1/24/94
Herbert Barg
/s/ Allan R. Johnson* Trustee
1/24/94
Allan R. Johnson
/s/ Ken Miller* Trustee
1/24/94
Ken Miller
/s/ John F. White* Trustee
1/24/94
John F. White
*Signed by Lee D. Augsburger, their
duly authorized attorney-in-fact, pursuant
to power of attorney dated January 27, 1993.
/s/ Lee D. Augsburger
Lee D. Augsburger
20
g/shared/domestic/clients/shearson/funds/prtn/sai
EXHIBIT 1
SLH SECURED CAPITAL FUND
MASTER TRUST AGREEMENT
OCTOBER 18, 1988
SLH SECURED CAPITAL FUND
CROSS-REFERENCE SHEET
Pursuant to CMR 116.00:
116.03 (a) Name of organization or trust:
SLH Secured Capital Fund
(b) Date of organization:
October 18, 1988
(c) Names and address of the trustees:
William J. Nutt
One Boston Place
Boston, MA 02108
Stephen E. Cavan
One Boston Place
Boston MA 02108
(d) Original signatures of all trustees:
See page 27.
(e) Principal place of business:
31 West 52nd Street
New York, New York 10019
(f) Statement that beneficial interest is divided into
transferable certificates of participation or
shares; See Section 4.1, pages 11-12.
(g) Ability to merge:
See Section 7.2, page 25.
SLH SECURED CAPITAL FUND
MASTER TRUST AGREEMENT
PAGE
ARTICLE I. NAME AND DEFINITIONS 2
Section 1.1 Name 2
Section 1.2 Definitions 2
a) "Trust" 2
b) "Trustees" 2
c) "Shares" 2
d) "Series" 2
e) "Shareholder" 2
f) "1940 Act" 2
g) "Commission" 2
h) "Declaration of Trust" 2
i) "By-Laws" 2
ARTICLE II. PURPOSE OF THE TRUST 2
ARTICLE III. THE TRUSTEES 3
Section 3.1 Number, Designation, Election, Term, etc. 3
a) Initial Trustees 3
b) Number 3
c) Election and Term 3
d) Resignation and Retirement 3
e) Removal 3
f) Vacancies 4
g) Effect of Death, Resignation, etc 4
h) No Accounting 4
i) Retirement Policy 4
j) Trustees Emeritus 5
Section 3.2 Powers of Trustees 5
a) Investments 6
b) Disposition of Assets 6
c) Ownership Powers 6
d) Subscription 6
e) Form of Holding 6
f) Reorganization, etc. 6
g) Voting Trusts, etc. 7
h) Compromise 7
i) Partnerships, etc. 7
j) Borrowing and Security 7
k) Guarantees, etc. 7
1) Insurance 7
m) Pensions, etc. 8
Section 3.3 Certain Contracts 8
a) Advisory 8
b) Administration 9
c) Distribution 9
d) Custodian and Depository 9
e) Transfer and Dividend 9
Disbursing agency
f) Shareholder Servicing 9
g) Accounting 9
Section 3.4 Payment of Trust Expenses and
Compensation of Trustees 10
Section 3.5 Ownership of Assets of the Trust 11
ARTICLE IV. SHARES 11
Section 4.1 Description of Shares 11
Section 4.2 Establishment and Designation of
Sub-Trusts 12
a) Assets Belonging to Sub-Trusts 12
b) Liabilities Belonging to 13
Sub-Trusts
c) Dividends 13
d) Liquidation 14
e) Voting 14
f) Redemption by Shareholder 14
g) Redemption by Trust 15
h) Net Asset Value 15
i) Transfer 16
j) Equality 16
k) Fractions 16
1) Conversion of Rights 16
m) Mandatory Redemption 16
Section 4.3 Ownership of Shares 17
Section 4.4 Investment in the Trust 17
Section 4.5 No Pre-emptive Rights 17
Section 4.6 Status of Shares and Limitation of 17
Personal Liability
ARTICLE V. SHAREHOLDER'S VOTING POWERS AND MEETINGS 18
Section 5.1 Voting Powers 18
Section 5.2 Meetings 18
Section 5.3 Record Dates 19
Section 5.4 Quorum and Required Vote 19
Section 5.5 Action by Written Consent 19
Section 5.6 Inspection of Records 20
Section 5.7 Additional Provisions 20
Section 5.8 Shareholder Communications 20
ARTICLE VI. LIMITATION OF LIABILITY: INDEMNIFICATION 21
Section 6.1 Trustees, Shareholders, etc. Not
Personally Liable; Notice 21
Section 6.2 Trustee's Good Faith Action; Expert
Advice; No Bond of Surety 21
Section 6.3 Indemnification of Shareholders 22
Section 6.4 Indemnification of Trustees, Officers, etc. 22
Section 6.5 Compromise Payment 23
Section 6.6 Indemnification Not Exclusive, etc. 24
Section 6.7 Liability of Third Persons Dealing with
Trustees 24
ARTICLE VII. MISCELLANEOUS 24
Section 7.1 Duration and Termination of Trust 24
Section 7.2 Reorganization 25
Section 7.3 Amendments 25
Section 7.4 Resident Agent 26
Section 7.5 Filing of Copies; References; Headings 26
Section 7.6 Applicable Law 26
SLH SECURED CAPITAL FUND
MASTER TRUST AGREEMENT
AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts this
18th day of October, 1988, by the Trustees hereunder, and by the holders of
shares of beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH
WHEREAS this Trust has been formed to carry on the business of an
investment company; and
WHEREAS this Trust is authorized to issue its shares of beneficial
interest in separate series, each separate series to be a Sub-Trust hereunder,
all in accordance with the provisions hereinafter set forth; and
WHEREAS the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts business trust in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the benefit of the holders from time to
time of shares of beneficial interest in this Trust or Sub-Trusts created
hereunder as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as "SLH Secured Capital
Fund" and the Trustees shall conduct the business of the Trust under that name
or any other name or names as they may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise
required by the context or specifically Provided:
(a) The "Trust" refers to the Massachusetts business trust established
by this Trust Agreement, as amended from time to time, inclusive of each and
every Sub-Trust established hereunder;
(b) "Trustees" refers to the Trustees of the Trust and of each
Sub-Trust hereunder named herein or elected in accordance with Article III;
(c) "Shares" refers to the transferable units of interest into which
the beneficial interest in the Trust and each Sub-Trust of the Trust (as the
context may require) shall be divided from time to time;
(d) "Series" refers to Series of Shares established and designated
under or in accordance with the provisions of Article IV, each of which Series
shall be a Sub-Trust of the Trust:
(e) "Shareholder" means a record owner of Shares;
(f) The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;
(g) The term "Commission" shall have the meaning given it in the 1940
Act;
(h) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust as amended or restated from time to time; and
(i) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company and to
offer Shareholders of the Trust and each Sub-Trust of the Trust one or more
investment programs primarily in securities and debt instruments.
ARTICLE III
THE TRUSTEES
Section 3.1 Number. Designation, Election, Term, etc.
(a) Initial Trustees. Upon his execution of this Declaration of Trust or
a counterpart hereof or some other writing in which he accepts such
Trusteeship and agrees to the provisions hereof, each of William J. Nutt and
Stephen E. Cavan, shall become a Trustee hereof and of each Sub-Trust
hereunder.
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming a Trustee, may increase or decrease (to not less than two)
the number of Trustees to a number other than the number theretofore
determined. No decrease in the number of Trustees shall have the effect of
removing any Trustee from office prior to the expiration of his term, but the
number of Trustees may be decreased in conjunction with the removal of a
Trustee pursuant to subsection (e) of this Section 3.1.
(c) Election and Term. The Trustees shall be elected by the Shareholders
of the Trust at the first meeting of Shareholders following the initial public
offering of shares of the Trust. Each Trustee, whether named above or
hereafter becoming a Trustee, shall serve as a Trustee of the Trust and of
each Sub-Trust hereunder during the lifetime of this Trust and until its
termination as hereinafter provided except as such Trustee sooner dies,
resigns or is removed. Subject to Section 16(a) of the 1940 Act, the Trustees
may elect their own successors and may, pursuant to Section 3.1(f) hereof,
appoint Trustees to fill vacancies.
(d) Resignation and Retirement. Any Trustee may resign his trust or
retire as a Trustee, by written instrument signed by him and delivered to the
other Trustees or to any officer of the Trust, and such resignation or
retirement shall take effect upon such delivery or upon such later date as is
specified in such instrument and shall be effective as to the Trust and each
Sub-Trust hereunder.
(e) Removal. Any Trustee may be removed with or without cause at any
time: (i) by written instrument, signed by at least two-thirds of the number
of Trustees prior to such removal, specifying the date upon which such removal
shall become effective; or (ii) by vote of Shareholders holding not less than
two-thirds of the Shares then outstanding, cast in person or by proxy at any
meeting called for the purpose; or (iii) by a written declaration signed by
Shareholders holding not less than two-thirds of the Shares then outstanding
and filed with the Trust's Custodian. Any such removal shall be effective as
to the Trust and each Sub-Trust hereunder.
(f) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement,
removal or incapacity of any of the Trustees, or resulting from an increase in
the number of Trustees by the other Trustees may (but so long as there are at
least two remaining Trustees, need not unless required by the 1940 Act) be
filled by a majority of the remaining Trustees, subject to the provisions of
Section 16(a) of the 1940 Act, through the appointment in writing of such
other person as such remaining Trustees in their discretion shall determine
and such appointment shall be effective upon the written acceptance of the
person named therein to serve as a Trustee and agreement by such person to be
bound by the provisions of this Declaration of Trust, except that any such
appointment in anticipation of a vacancy to occur by reason of retirement,
resignation, or increase in number of Trustees to be effective at a later date
shall become effective only at or after the effective date of said retirement,
resignation, or increase in number of Trustees. As soon as any Trustee so
appointed shall have accepted such appointment and shall have agreed in
writing to be bound by this Declaration of Trust and the appointment is
effective, the Trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal, or incapacity of the Trustees, or any one of them, shall
not operate to annul or terminate the Trust or any Sub-Trust hereunder or to
revoke or terminate any existing agency or contract created or entered into
pursuant to the terms of this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940 Act or under
circumstances which would justify his removal for cause, no person ceasing to
be a Trustee as a result of his death, resignation, retirement, removal or
incapacity (nor the estate of any such person) shall be required to make an
accounting to the Shareholders or remaining Trustees upon such cessation.
(i) Retirement Policy. Except for (a) those individuals who are Trustees
on January 22, 1987, and (b) those individuals who were members of the Board
of Directors or Trustees of an investment company having an investment adviser
or principal underwriter under common control with the Fund's investment
adviser or principal underwriter immediately prior to such investment
company's combination with the Fund by merger, acquisition of assets or
similar transaction, any of which Trustees may continue to be nominated as
Trustees and to serve as Trustees if elected or appointed in accordance with
Section 3.1 (c) of this Article III, an individual who has reached the age of
seventy-two (72) years may not be elected, re-elected, or appointed to serve
as a Trustee.
(j) Trustees Emeritus. An individual who has served as a Trustee for
minimum of five years (5) and who retires voluntarily or who may not stand for
re-election because of age may be designated by the remaining Trustees as a
Trustee Emeritus.
An individual designated as a Trustee Emeritus may, upon his or her
request, be permitted to attend meetings of the Trustees and to receive all
materials sent to active Trustees. A Trustee Emeritus shall not have voting
rights at meetings of the Trustees and shall not be under a duty to manage or
direct the business and affairs of the Trust. A Trustee Emeritus shall not be
deemed to stand in a fiduciary relation to the Trust, and shall not be
responsible to discharge the duties of a Trustee or to exercise that
diligence, care or skill which a Trustee would ordinarily be required to
exercise under the laws of the Commonwealth of Massachusetts; provided
however, that a Trustee Emeritus may be held liable to the Trust for any
action amounting to bad faith, willful misconduct or gross negligence,
disclosure of any confidential information of the Trust, or appropriation of
any opportunity of the Trust.
A stipend, the amount to be determined by the Trustees from time to time,
which shall not exceed the basis upon which Trustees of the Trust are
compensated, shall be paid to each Trustee Emeritus. A Trustee Emeritus shall
be indemnified to the full extent that an Officer or Trustee of the Trust may
be indemnified under any Provision of this Declaration of Trust or the
By-Laws.
Section 3.2. Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this
Declaration of Trust providing for the conduct of the business and affairs of
the Trust and may amend and repeal them to the extent that such By-Laws do not
reserve that right to the Shareholders; they may from time to time in
accordance with the provisions of Section 4.1 hereof establish Sub-Trusts,
each such Sub-Trust to operate as a separate and distinct investment medium
and with separately defined investment objectives and policies and distinct
investment purpose; they may as they consider appropriate elect and remove
officers and appoint and terminate agents and consultants and hire and
terminate employees, any one or more of the foregoing of whom may be a
Trustee, and may provide for the compensation of all of the foregoing; they
may appoint from their own number, and terminate, any one or more committees
consisting of two or more Trustees, including without implied limitation an
executive committee, which may, when the Trustees are not in session and
subject to the 1940 Act, exercise some or all of the power and authority of
the Trustees as the Trustees may determine; in accordance with Section 3.3
they may employ one or more Advisers, Administrators, Depositories and
Custodians and may authorize any Depository or Custodian to employ
subcustodians or agents and to deposit all or any part of such assets in a
system or systems for the central handling of securities and debt instruments,
retain transfer, dividend, accounting or Shareholder servicing agents or any
of the foregoing, provide for the
distribution of Shares by the Trust through one or more distributors,
principal underwriters or otherwise, set record dates or times for the
determination of Shareholders or various of them with respect to various
matters; they may compensate or provide for the compensation of the Trustees,
officers, advisers, administrators, custodians, other agents, consultants and
employees of the Trust or the Trustees on such terms as they deem appropriate;
and in general they may delegate to any officer of the Trust, to any committee
of the Trustees and to any employee, adviser, administrator, distributor,
depository, custodian, transfer and dividend disbursing agent, or any other
agent or consultant of the Trust such authority, powers, functions and duties
as they consider desirable or appropriate for the conduct of the business and
affairs of the Trust, including without implied limitation the power and
authority to act in the name of the Trust and of the Trustees, to sign
documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority for and on behalf of the Trust and each separate Sub-Trust
established hereunder:
(a) Investments. To invest and reinvest cash and other property, and to
hold cash or other property uninvested without in any event being bound or
limited by any present or future law or custom in regard to investments by
trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities, debt instruments or
property; and to execute and deliver proxies or powers of attorney to such
person or persons as the Trustees shall deem proper, granting to such person
or persons such power and discretion with relation to securities, debt
instruments or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities or debt
instruments;
(e) Form of Holding. To hold any security, debt instrument or property in
a form not indicating any trust, whether in bearer, unregistered or other
negotiable form, or in the name of the Trustees or of the Trust or of any
Sub-Trust or in the name of a custodian, subcustodian or other depository or a
nominee or nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer, any
security or debt instrument of which is or was held in the Trust; to consent
to any contract, lease, mortgage, purchase or sale of property by such
corporation or issuer, and to pay calls or subscriptions with respect to any
security or debt instrument held in the Trust;
(g) Voting Trusts. etc. To join with other holders of any securities or
debt instruments in acting through a committee, depository, voting trustee or
otherwise, and in that connection to deposit any security or debt instrument
with, or transfer any security or debt instrument to, any committee,
depository or trustee, and to delegate to them such power and authority with
relation to any security or debt instrument (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to
pay, such portion of the expenses and compensation of such committee,
depository or trustee as the Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any Sub-Trust of any matter in controversy,
including but not limited to claims for taxes;
(i) Partnerships. etc. To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage and pledge
the assets of the Trust or any part thereof to secure obligations arising in
connection with such borrowing;
(k) Guarantees. etc. To endorse or guarantee the payment of any notes or
other obligations of any person; to make contracts of guaranty or suretyship,
or otherwise assume liability for payment thereof; and to mortgage and pledge
the Trust property or any part thereof to secure any of or all such
obligations;
(1) Insurance. To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the conduct of
the business, including, without limitation, insurance policies insuring the
assets of the Trust and payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, consultants, investment advisers,
managers, administrators, distributors, principal underwriters, or independent
contractors, or any thereof (or any person connected therewith), of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such person
in any such capacity, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would have the
power to indemnify such person against such liability; and
(m) Pensions. etc. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trust and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing
such retirement and other benefits, for any or all of the Trustees, officers,
employees and agents of the Trust.
Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the
Trustees on behalf of the Trust or any Sub-Trust may be taken by a majority of
the Trustees present at a meeting of Trustees (a quorum, consisting of at
least a majority of the Trustees then in office, being present), within or
without Massachusetts, including any meeting held by means of a conference
telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting,
or by written consents of a majority of the Trustees then in office (or such
larger or different number as may be required by the 1940 Act or other
applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the provisions
of the 1940 Act, but notwithstanding any limitations of present and future law
or custom in regard to delegation of powers by trustees generally, the
Trustees may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter
into one or more contracts with any one or more corporations, trusts,
associations, partnerships, limited partnerships, other types of
organizations, or individuals ("Contracting Party"), to provide for the
performance and assumption of some or all of the following services, duties
and responsibilities to, for or on behalf of the Trust and/or any Sub-Trust,
and/or the Trustees, and to provide for the performance and assumption of such
other services, duties and responsibilities in addition to those set forth
below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the Trustees and in
conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Sub-Trust of the
Trust (as that phrase is defined in subsection (a) of Section 4.2), to manage
such investments and assets, make investment decisions with respect thereto,
and to place purchase and sale orders for portfolio transactions relating to
such investments and assets;
(b) Administration. Subject to the general supervision of the Trustees
and in conformity with any policies of the Trustees with respect to the
operations of the Trust and each Sub-Trust, to supervise all or any part of
the operations of the Trust and each Sub-Trust, and to provide all or any part
of the administrative and clerical personnel, office space and office
equipment and services appropriate for the efficient administration and
operations of the Trust and each Sub-Trust;
(c) Distribution. To distribute the Shares of the Trust and each
Sub-Trust, to be principal underwriter of such Shares, and/or to act as agent
of the Trust and each Sub-Trust in the sale of Shares and the acceptance or
rejection of orders for the purchase of Shares;
(d) Custodian and depository. To act as depository for and to maintain
custody of the property of the Trust and each Sub-Trust and accounting records
in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain records of the
ownership of outstanding Shares, the issuance and redemption and the transfer
thereof, and to disburse any dividends declared by the Trustees and in
accordance with the policies of the Trustees and/or the instructions of any
particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares, and similar matters; and
(g) Accounting. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties, Shareholders
or otherwise.
The same person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust and/or the
Trustees, and the contracts with respect thereto may contain such terms
interpretive of or in addition to the delineation of the services, duties and
responsibilities provided for, including provisions that are not inconsistent
with the 1940 Act relating to the standard of duty of and the rights to
indemnification of the Contracting Party and others, as the Trustees may
determine. Nothing herein shall preclude, prevent or limit the Trust or a
Contracting Party from entering into sub-contractual arrangements relative to
any of the matters referred to in Sections 3.3(a) through (g) hereof.
The fact that:
(i) any of the Shareholders, Trustees, or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager, adviser,
principal underwriter or distributor or agent of or for any Contracting Party,
or of or for any parent or affiliate of any Contracting Party or that the
Contracting Party or any parent or affiliate thereof is a Shareholder or has
an interest in the Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations, trusts,
associations, partnerships, limited partnerships or other organizations, or
have other business or interests, shall not affect the validity of any
contract for the performance and assumption of services, duties and
responsibilities to, for or of the Trust or any Sub-Trust and/or the Trustees
or disqualify any Shareholder, Trustee or officer of the Trust from voting
upon or executing the same or create any liability or accountability to the
Trust, any Sub-Trust or its Shareholders, provided that in the case of any
relationship or interest referred to in the preceding clause (i) on the part
of any Trustee or officer of the Trust either (x) the material facts as to
such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract
involved is approved in good faith by a majority of such Trustees not having
any such relationship or interest (even though such unrelated or disinterested
Trustees are less than a quorum of all of the Trustees), (y) the material
facts as to such relationship or interest and as to the contract have been
disclosed to or are known by the Shareholders entitled to vote thereon and the
contract involved is specifically approved in good faith by vote of the
Shareholders, or (z) the specific contract involved is fair to the Trust as of
the time it is authorized, approved or ratified by the Trustees or by the
Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust or any Sub-Trust, or partly out of principal and partly
out of income, and to charge or allocate the same to, between or among such
one or more of the Sub-Trusts that may be established and designated pursuant
to article IV, as the Trustees deem fair, all expenses, fees, charges, taxes
and liabilities incurred or arising in connection with the Trust or any
Sub-Trust, or in connection with the management thereof, including, but not
limited to, the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, investment adviser,
administrator, distributor, principal underwriter, auditor, counsel,
depository, custodian, transfer agent, dividend disbursing agent, accounting
agent, Shareholder servicing agent, and such other agents, consultants, and
independent contractors and such other expenses and charges as the Trustees
may deem necessary or proper to incur. Without limiting the generality of any
other provision hereof, the Trustees shall be entitled to reasonable
compensation from the Trust for their services as Trustees and may fix the
amount of such compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of the assets
of the Trust shall at all times be considered as vested in the Trustees.
ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the Trust
shall be divided into Shares, all with a par value of $.001 per share and of
one class, but the Trustees shall have the authority from time to time to
divide the class of Shares into two or more Series of Shares (each of which
Series of Shares shall be a separate and distinct Sub-Trust of the Trust,
including without limitation that Sub-Trust specifically established and
designated in section 4.2), as they deem necessary or desirable. Each
Sub-Trust shall be deemed to be a separate trust established under, and
subject to the terms of, this Declaration of Trust. The Trustees shall have
exclusive power without the requirement of shareholder approval to establish
and designate such separate and distinct Sub-Trusts, and to fix and determine
the relative rights and preferences as between the shares of the separate
Sub-Trusts as to right of redemption and the price, terms and manner of
redemption, special and relative rights as to dividends and other
distributions and on liquidation, sinking or purchase fund provisions,
conversion rights, and conditions under which the several Sub-Trusts shall
have separate voting rights or no voting rights.
The number of authorized Shares and the number of Shares of each
Sub-Trust that may be issued is unlimited, and the Trustees may issue Shares
of any Sub-Trust for such consideration and on such terms as they may
determine (or for no consideration if pursuant to a Share dividend or
split-up), all without action or approval of the Shareholders. All Shares when
so issued on the terms determined by the Trustees shall be fully paid and
non-assessable (but may be subject to mandatory contribution back to the Trust
as provided in subsection (h) of Section 4.2). The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired
of any Sub-Trust into one or more Sub-Trusts that may be established and
designated from time to time. The Trustees may hold as treasury Shares,
reissue for such consideration and on such terms as they may determine, or
cancel, at their discretion from time to time, any Shares of any Sub-Trust as
reacquired by the Trust.
The Trustees may from time to time close the transfer books or establish
record dates and times for the purposes of determining the holders of Shares
entitled to be treated as such, to the extent provided or referred to in
Section 5.3.
The establishment and designation of any Sub-Trust in addition to that
established and designated in Section 4.2 shall be effective upon the
execution by a majority of the then Trustees of an instrument setting forth
such establishment and designation and the relative rights and preferences of
the Shares of such Sub-Trust, or as otherwise provided in such instrument. At
any time that there are no Shares outstanding of any particular Sub-Trust
previously established and designated the Trustees may by an instrument
executed by a majority of their number abolish that Sub-Trust and the
establishment and designation thereof. Each instrument referred to in this
paragraph shall have the status of an amendment to this Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any organization in
which any such person is interested may acquire, own, hold and dispose of
Shares of any Sub-Trust of the Trust to the same extent as if such person were
not a Trustee, officer or other agent of the Trust; and the Trust may issue
and sell or cause to be issued and sold and may purchase Shares of any
Sub-Trust from any such person or any such organization subject only to the
general limitations, restrictions or other provisions applicable to the sale
or purchase of Shares of such Sub-Trust generally.
Section 4.2 Establishment and Designation of Sub-Trusts. Without limiting
the authority of the Trustees set forth in Section 4.1 to establish and
designate any further Sub-Trusts, the Trustees hereby establish and designate
one Sub-Trust: "Appreciation Series 1996". The Appreciation Series 1996 Shares
and any Shares of any further Sub-Trusts that may from time to time be
established and designated by the Trustees shall (unless the Trustees
otherwise determine with respect to some further Sub-Trust at the time of
establishing and designating the same) have the following relative rights and
preferences:
(a) Assets Belonging to Sub-Trusts. All consideration received by the
Trust for the issue or sale of Shares of a particular Sub-Trust, together with
all assets in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof t including any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds or payments
derived from any investment of such proceeds in whatever form the same may be,
shall be held by the Trustees in trust for the benefit of the holders of
Shares of that Sub-Trust and shall irrevocably belong to that Sub-Trust for
all purposes, and shall be so recorded upon the books of account of the Trust.
Such consideration, assets, income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever from the same may be, together with any General Items
allocated to that Sub-Trust as provided in the following sentence, are herein
referred to as "assets belonging to" that Sub-Trust. In the event that there
are any assets, income, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to any particular
Sub-Trust (collectively general Items"), the Trustees shall allocate such
General Items to and among any one or more of the Sub-Trusts established and
designated from time to time in such manner and on such basis as they, in
their sole discretion, deem fair and equitable; and any General Items so
allocated to a particular Sub-Trust shall belong to that Sub-Trust. Each such
allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Sub-Trusts for all purposes.
(b) Liabilities Belonging to Sub-Trusts. The assets belonging to each
particular Sub-Trust shall be charged with the liabilities in respect of that
Sub-Trust and all expenses, costs, charges and reserves attributable to that
Sub-Trust, and any general liabilities, expenses, costs, charges or reserves
of the Trust which are not readily identifiable as belonging to any particular
Sub-Trust shall be allocated and charged by the Trustees to and among any one
or more of the Sub-Trusts established and designated from time to time in such
manner and on such basis as the Trustees in their sole discretion deem fair
and equitable. The liabilities, expenses, costs, charges and reserves
allocated and so charged to a Sub-Trust are herein referred to as "liabilities
belonging to" that Sub-Trust. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive and binding upon the
Shareholders of all Sub-Trusts for all purposes. Any creditor of any Sub-Trust
may look only to the assets of that Sub-Trust to satisfy such creditor's debt.
The Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act, to determine which items shall be treated as income and
which items as capital; and each such determination and allocation shall be
conclusive and binding upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a particular
Sub-Trust may be paid with such frequency as the Trustees may determine, which
may be daily or otherwise pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Trustees may determine, to the
holders of Shares of that Sub-Trust, from such of the income and capital
gains, accrued or realized, from the assets belonging to that Sub-Trust, as
the Trustees may determine, after providing for actual and accrued liabilities
belonging to that Sub-Trust. All dividends and distributions on Shares of a
particular Sub-Trust shall be distributed pro rata to the holders of Shares of
that Sub-Trust in proportion to the number of Shares of that Sub-Trust held by
such holders at the date and time of record established for the payment of
such dividends or distributions, except that in connection with any dividend
or distribution program or procedure the Trustees may determine that no
dividend or distribution shall be payable on Shares as to which the
Shareholder's purchase order and/or payment have not been received by the time
or times established by the Trustees under such program or procedure. Such
dividends and distributions may be made in cash or Shares of that Sub-Trust or
a combination thereof as determined by the Trustees or pursuant to any program
that the Trustees may have in effect at the time for the election by each
Shareholder of the mode of the making of such dividend or distribution to that
Shareholder. Any such dividend or distribution paid in Shares will be paid at
the net asset value thereof as determined in accordance with subsection (h) of
Section 4.2.
(d) Liquidation. In the event of the liquidation or dissolution of the
Trust, the Shareholders of each Sub-Trust that has been established and
designated shall be entitled to receive, when and as declared by the Trustees,
the excess of the assets belonging to that Sub-Trust over the liabilities
belonging to that Sub-Trust. The assets so distributable to the Shareholders
of any particular Sub-Trust shall be distributed among such Shareholders in
proportion to the number of Shares of that Sub-Trust held by them and recorded
on the books of the Trust. The liquidation of any particular Sub-Trust may be
authorized by vote of a majority of the Trustees then in office subject to the
approval of a majority of the outstanding voting Shares of that Sub-Trust, as
defined in the 1940 Act.
(e) Voting. On each matter submitted to a vote of the Shareholders, each
holder of a Share of each Sub-Trust shall be entitled to one vote for each
whole Share and to a proportionate fractional vote for each fractional Share
standing in his name on the books of the Trust and all Shares of each
Sub-Trust shall vote as a separate class except as to voting for Trustees and
as otherwise required by the 1940 Act. As to any matter which does not affect
the interest of a particular Sub-Trust, only the holders of Shares of the one
or more affected Sub-Trusts shall be entitled to vote.
(f) Redemption by Shareholder. Each holder of Shares of a particular
Sub-Trust shall have the right at such times as may be permitted by the Trust,
but no less frequently than once each week, to require the Trust to redeem all
or any part of his Shares of that Sub-Trust at a redemption price equal to the
net asset value per Share of that Sub-Trust next determined in accordance with
subsection (h) of this Section 4.2 after the Shares are properly tendered for
redemption. Payment of the redemption price shall be in cash; provided,
however, that if the Trustees determine, which determination shall be
conclusive, that conditions exist which make payment wholly in cash unwise or
undesirable, the Trust may make payment wholly or partly in securities or
other assets belonging to the Sub-Trust of which the Shares being redeemed are
part at the value of such securities or assets used in such determination of
net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust to require the Trust to redeem Shares of that Sub-Trust during any
period or at any time when and to the extent permissible under the 1940 Act.
(g) Redemption by Trust. Each Share of each Sub-Trust that has been
established and designated is subject to redemption by the Trust at the
redemption price which would be applicable if such Share was then being
redeemed by the Shareholder pursuant to subsection (f) of this Section 4.2:
(a) at any time, if the Trustees determine in their sole discretion that
failure to so redeem may have materially adverse consequences to the holders
of the Shares of the Trust or any Sub-Trust thereof, or (b) upon such other
conditions as may from time to time be determined by the Trustees and set
forth in the then current Prospectus of the Trust with respect to maintenance
of Shareholder accounts of a minimum amount. Upon such redemption the holders
of the Shares so redeemed shall have no further right with respect thereto
other than to receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any Sub-Trust shall
be the quotient obtained by dividing the value of the net assets of that
Sub-Trust (being the value of the assets belonging to that Sub-Trust less the
liabilities belonging to that Sub-Trust) by the total number of Shares of that
Sub-Trust outstanding, all determined in accordance with the methods and
procedures, including without limitation those with respect to rounding,
established by the Trustees from time to time.
The Trustees may determine to maintain the net asset value per Share of
any Sub-Trust at a designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent with the 1940 Act for the
continuing declarations of income attributable to that Sub-Trust as dividends
payable in additional Shares of that Sub-Trust at the designated constant
dollar amount and for the handling of any losses attributable to that
Sub-Trust. Such procedures may provide that in the event of any loss each
Shareholder shall be deemed to have contributed to the capital of the Trust
attributable to that Sub-Trust his pro rata portion of the total number of
Shares required to be canceled in order to permit the net asset value per
Share of that Sub-Trust to be maintained, after reflecting such loss, at the
designated constant dollar amount. Each Shareholder of the Trust shall be
deemed to have agreed, by his investment in any Sub-Trust with respect to
which the Trustees shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of any such
loss.
(i) Transfer. All Shares of each particular Sub-Trust shall be
transferable, but transfers of Shares of a particular Sub-Trust will be
recorded on the Share transfer records of the Trust applicable to that
Sub-Trust only at such times as Shareholders shall have the right to require
the Trust to redeem Shares of that Sub-Trust and at such other times as may be
permitted by the Trustees.
(j) Equality. All Shares of each particular Sub-Trust shall represent an
equal proportionate interest in the assets belonging to that Sub-Trust
(subject to the liabilities belonging to that Sub-Trust), and each Share of
any particular Sub-Trust shall be equal to each other Share of that Sub-Trust;
but the provisions of this sentence shall not restrict any distinctions
permissible under subsection (c) of this Section 4.2 that may exist with
respect to dividends and distributions on Shares of the same Sub-Trust. The
Trustees may from time to time divide or combine the Shares of any particular
Sub-Trust into a greater or lesser number of Shares of that Sub-Trust without
thereby changing the proportionate beneficial interest in the assets belonging
to that Sub-Trust or in any way affecting the rights of Shares of any other
Sub-Trust.
(k) Fractions. Any fractional Share of any Sub-Trust, if any such
fractional Share is outstanding, shall carry proportionately all the rights
and obligations of a whole Share of that Sub-Trust, including rights and
obligations with respect to voting, receipt of dividends and distributions,
redemption of Shares, and liquidation of the Trust.
(1) Conversion Rights. Subject to compliance with the requirements of the
1940 Act, the Trustees shall have the authority to provide that holders of
Shares of any Sub-Trust shall have the right to convert said Shares into
Shares of one or more other Sub-Trust in accordance with such requirements and
procedures as may be established by the Trustees.
(m) Mandatory Redemption. Each share of the Sub-Trust established and
designated in the first sentence of this Section 4.2 shall be redeemed by the
Trust on the first Friday in March, 1996 at the redemption price which would
be applicable if such share was being redeemed pursuant to subsection (f) of
this Section 4.2. Each share of any further Sub-Trusts that may from time to
time be established and designated by the Trustees may be entitled and subject
to such mandatory redemption on such date and in such manner as the Trustees
shall determine. Upon any redemption under this subsection (m) the holders of
the Shares so redeemed shall have no further right with respect thereto other
than to receive payment of such redemption price.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust to require the Trust to redeem Shares of that Sub-Trust during any
period or at any time when and to the extent permissible under the 1940 Act.
Section 4.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each
Sub-Trust that has been established and designated. No certificates certifying
the ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Shares certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record books of
the Trust as kept by the Trust or any transfer or similar agent, as the case
may be, shall be conclusive as to who are the Shareholders and as to the
number of Shares of each Sub-Trust held from time to time by each such
Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept investments
in the Trust and each Sub-Trust thereof from such persons and on such terms
and for such consideration, not inconsistent with the provisions of the 1940
Act, as they from time to time authorize. The Trustees may authorize any
distributor, principal underwriter, custodian, transfer agent or other person
to accept orders for the purchase of Shares that conform to such authorized
terms and to reject any purchase orders for Shares whether or not conforming
to such authorized terms.
Section 4.5 No Pre-emptive Rights. Shareholders shall have no pre-emptive
or other right to subscribe to any additional Shares or other securities
issued by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving only the rights provided in
this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance
of the Trust shall not operate to terminate the Trust or any Sub-Trust thereof
nor entitle the representative of any deceased Shareholder to an accounting or
to take any action in court or elsewhere against the Trust or the Trustees,
but only to the rights of said decedent under this Trust. Ownership of Shares
shall not entitle the Shareholder to any title in or to the whole or any part
of the Trust property or right to call for a partition or division of the same
or for an accounting, nor shall the ownership of Shares constitute the
Shareholders partners. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind personally any
Shareholder, nor except as specifically provided herein to call upon any
Shareholder for the payment of any sum of money or assessment whatsoever other
than such as the Shareholder may at any time personally agree to pay.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power to vote only
(i) for the election or removal of Trustees as provided in Section 3.1, (ii)
with respect to any contract with a Contracting Party as provided in Section
3.3 as to which Shareholder approval is required by the 1940 Act, (iii) with
respect to any termination or reorganization of the Trust or any Sub-Trust to
the extent and as provided in Sections 7.1 and 7.2, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in
Section 7.3, (v) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a class
action on behalf of the Trust or any Sub-Trust thereof or the Shareholders
(provided, however, that a shareholder of a particular Sub-Trust shall not be
entitled to a derivative or class action on behalf of any other Sub-Trust (or
shareholder of any other Sub-Trust) of the Trust) and (vi) with respect to
such additional matters relating to the Trust as may be required by the 1940
Act, this Declaration of Trust, the by-laws or any registration of the Trust
with the Commission (or any successor agency) or any state, or as the Trustees
may consider necessary or desirable. There shall be no cumulative voting in
the election of Trustees. Shares may be voted in person or by proxy. A proxy
with respect to Shares held in the name of two or more persons shall be valid
if executed by any one of them unless at or prior to exercise of the proxy the
Trust receives a specific written notice to the contrary from any one of them.
A proxy purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
required by law, this Declaration of Trust or the By-Laws to be taken by
Shareholders.
Section 5.2 Meetinqs. Meetings of Shareholders may be called by the
Trustees from time to time for the purpose of taking action upon any matter
requiring the vote or authority of the Shareholders as herein provided or upon
any other matter deemed by the Trustees to be necessary or desirable. Written
notice of any meeting of Shareholders shall be given or caused to be given by
the Trustees by mailing such notice at least seven days before such meeting,
postage prepaid, stating the time, place and purpose of the meeting, to each
Shareholder at the Shareholder's address as it appears on the records of the
Trust.
The Trustees shall promptly call and give notice of a meeting of
Shareholders for the purpose of voting upon removal of any Trustee of the
Trust when requested to do so in writing by Shareholders holding not less than
10% of the Shares then outstanding. If the Trustees fail to call or give
notice of any meeting of Shareholders for a period of 30 days after written
application by Shareholders holding at least 10% of the Shares then
outstanding requesting a meeting be called for any other purpose requiring
action by the Shareholders as provided herein or in the By-Laws, then
Shareholders holding at least 10~ of the Shares then outstanding may call and
give notice of such meeting, and thereupon the meeting shall be held in the
manner provided for herein in case of call thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the Shareholders
who are entitled to vote or act at any meeting or any adjournment thereof, or
who are entitled to participate in any dividend or distribution, or for the
purpose of any other action, the Trustees may from time to time close the
transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine;
or without closing the transfer books the Trustees may fix a date and time not
more than 60 days prior to the date of any meeting of Shareholders or other
action as the date and time of record for the determination of Shareholders
entitled to vote at such meeting or any adjournment thereof or to be treated
as Shareholders of record for purposes of such other action, and any
shareholder who was a Shareholder at the date and time so fixed shall be
entitled to vote at such meeting or any adjournment thereof or to be treated
as a Shareholder of record for purposes of such other action, even though he
has since that date and time disposed of his Shares, and no Shareholder
becoming such after that date and time shall be so entitled to vote at such
meeting or any adjournment thereof or to be treated as a Shareholder of record
for purposes of such other action.
Section 5.4 Quorum and Required Vote. A majority of the Shares entitled
to vote shall be a quorum for the transaction of business at a Shareholders'
meeting, but any lesser number shall be sufficient for adjournments. Any
adjourned session or sessions may be held, within a reasonable time after the
date set for the original meeting without the necessity of further notice. A
majority of the Shares voted, at a meeting of which a quorum is present shall
decide any questions and a plurality shall elect a Trustee, except when a
different vote is required or permitted by any provision of the 1940 Act or
other applicable law or by this Declaration of Trust or the By-Laws.
Section 5.5 Action by Written Consent. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger proportion thereof as shall be required by the 1940 Act
or by any express provision of this Declaration of Trust or the By-Laws)
consent to the action in writing and such written consents are filed with the
records of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is permitted stockholders
of a Massachusetts business corporation under the Massachusetts Business
Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
Section 5.8 Shareholder Communications. Whenever ten or more Shareholders
of record who have been such for at least six months preceding the date of
application, and who hold in the aggregate either Shares having a net asset
value of at least $25,000 or at least 1% of the outstanding Shares, whichever
is less, shall apply to the Trustees in writing, stating that they wish to
communicate with other Shareholders with a view to obtaining signatures to a
request for a Shareholder meeting and accompanied by a form of communication
and request which they wish to transmit, the Trustees shall within five
business days after receipt of such application either (i) afford to such
applicants access to a list of the names and addresses of all Shareholders as
recorded on the books of the Trust, or (ii) inform such applicants as to the
approximate number of Shareholders of record, and the approximate cost of
mailing to them the proposed communication and form of request.
If the Trustees elect to follow the course specified in item (ii) above,
the Trustees, upon the written request of such applicants, accompanied by a
tender of the material to be mailed and of the reasonable expense of mailing,
shall, with reasonable promptness, mail such material to all Shareholder of
record at their addresses as recorded on the books unless within five business
days after such tender the Trustees shall mail to such applicants and file
with the Commission, together with a copy of the material to be mailed,
written statement signed by at least a majority of the Trustees to the effect
that in their opinion either such material contains untrue statements of fact
or omits to state facts necessary to make the statements contained therein not
misleading, or would be in violation of applicable law, and specifying the
basis of such opinion. The Trustees shall thereafter comply with the
requirements of the 1940 Act.
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 Trustees, Shareholders. etc. Not Personally Liable; Notice.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Sub-Trust with which such
person dealt for payment under such credit, contract or claim; and neither the
Shareholders of any Sub-Trust nor the Trustees nor any of the Trust's
officers, employees or agents, whether past, present or future, nor any other
Sub-Trust shall be personally liable therefor. Every note, bond, contract,
instrument, certificate or undertaking and every other act or thins whatsoever
executed or done by or on behalf of the Trust, any Sub-Trust or the Trustees
or any of them in connection with the Trust shall be conclusively deemed to
have been executed or done only by or for the Trust (or the Sub-Trust) or the
Trustees and not personally. Nothing in this Declaration of Trust shall
protect any Trustee or officer against any liability to the Trust or the
Shareholders to which such Trustee or officer would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee or of
such officer.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of the Commonwealth of
Massachusetts and shall recite to the effect that the same was executed or
made by or on behalf of the Trust or by them as Trustees or Trustee or as
officers or officer and not individually and that the obligations of such
instrument are not binding upon any of them or the Shareholders individually
but are binding only upon the assets and property of the Trust, or the
particular Sub-Trust in question, as the case may be, but the omission thereof
shall not operate to bind any Trustees or Trustee or officers or officer or
Shareholders or Shareholder individually.
Section 6.2 Trustee's Good Faith Action: expert Advice: No Bond or
Surety. The exercise by the Trustees of their powers and discretion's
hereunder shall be binding upon everyone interested. A Trustee shall be liable
for his own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee, and
for nothing else, and shall not be liable for errors of judgment or mistakes
of fact or law. Subject to the foregoing, (a) the Trustees shall not be
responsible or liable in any event for any neglect or wrongdoing of any
officer, agent, employee, consultant, adviser, administrator, distributor or
principal underwriter, custodian or transfer, dividend disbursing, Shareholder
servicing or accounting agent of the Trust, nor shall any Trustee be
responsible for the act or omission of any other Trustee; (b) the Trustees may
take advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust and their duties as Trustees, and shall
be under no liability for any act or omission in accordance with such advice
or for failing to follow such advice; and (c) in discharging their duties, the
Trustees, when acting in good faith, shall be entitled to rely upon the books
of account of the Trust and upon written reports made to the Trustees by any
officer appointed by them, any independent public accountant, and (with
respect to the subject matter of the contract involved) any officer, partner
or responsible employee of a Contracting Party appointed by the Trustees
pursuant to Section 3.3. The Trustees as such shall not be required to give
any bond or surety or any other security for the performance of their duties.
Section 6.3 Indemnification of Shareholders. In case any Shareholder (or
former Shareholder) of any Sub-Trust of the Trust shall be charged or held to
be personally liable for any obligation or liability of the Trust solely by
reason of being or having been a Shareholder and not because of such
Shareholder's acts or omissions or for some other reason, said Sub-Trust (upon
proper and timely request by the Shareholder) shall assume the defense against
such charge and satisfy any judgment thereon, and the Shareholder or former
Shareholder (or his heirs, executors, administrators or other legal
representatives or in the case of a corporation or other entity, its corporate
or other general successor) shall be entitled out of the assets of said
Sub-Trust estate to be held harmless from and indemnified against all loss and
expense arising from such liability.
Section 6.4 Indemnification of Trustees, Officers, etc. The Trust shall
indemnify (from the assets of the Sub-Trust or Sub-Trusts in question) each of
its Trustees and officers (including persons who serve at the Trust's request
as directors, officers or trustees of another organization in which the Trust
has any interest as a shareholder, creditor or otherwise [hereinafter referred
to as a "Covered Person"]) against all liabilities, including but not limited
to amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and expenses, including reasonable accountants' and counsel fees,
incurred by any Covered Person in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, in which such Covered Person may
be or may have been involved as a party or otherwise or with which such person
may be or may have been threatened, while in office or thereafter, by reason
of being or having been such a Trustee or officer, director or trustee, except
with respect to any matter as to which it has been determined that such
Covered Person (i) did not act in good faith in the reasonable belief that
such Covered Person's action was in or not opposed to the best interests of
the Trust or (ii) had acted with willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
Covered Person's office (either and both of the conduct described in (i) and
(ii) being referred to hereafter as "Disabling Conduct"). A determination that
the Covered Person is entitled to indemnification may be made by (i) a final
decision on the merits by a court or other body before whom the proceeding was
brought that the person to be indemnified was not liable by reason of
Disabling Conduct, (ii) dismissal of a court action or an administrative
proceeding against a Covered Person for insufficiency of evidence of Disabling
Conduct, or (iii) a reasonable determination, based upon a review of the
facts, that the indemnity was not liable by reason of Disabling Conduct by (a)
a vote of a majority of a quorum of Trustees who are neither "interested
persons" of the Trust as defined in section 2(a)(19) of the 1940 Act nor
parties to the proceeding, or (b) an independent legal counsel in a written
opinion. Expenses, including accountants' and counsel fees so incurred by any
such Covered Person (but excluding amounts paid in satisfaction of judgments,
in compromise or as fines or penalties), may be paid from time to time by the
Sub-Trust in question in advance of the final disposition of any such action,
suit or proceeding, provided that the Covered Person shall have undertaken to
repay the amounts so paid to the Sub-Trust in question if it is ultimately
determined that indemnification of such expenses is not authorized under this
Article VI and (i) the Covered Person shall have provided security for such
undertaking, (ii) the Trust shall be insured against losses arising by reason
of any lawful advances, or (iii) a majority of a quorum of the disinterested
Trustees who are not a party to the proceeding, or an independent legal
counsel in a written opinion, shall have determined, based on a review of
readily available facts (as opposed to a full trial-type inquiry), that there
is reason to believe that the Covered Person ultimately will be found entitled
to indemnification.
Section 6.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (a) by a majority of the disinterested
Trustees who are not a party to the proceeding or (b) by an independent legal
counsel in a written opinion. Approval by the Trustees pursuant to clause (a)
or by independent legal counsel pursuant to clause (b) shall not prevent the
recovery from any Covered Person of any amount paid to such Covered Person in
accordance with any of such clauses as indemnification if such Covered Person
is subsequently adjudicated by a court of competent jurisdiction not to have
acted in good faith in the reasonable belief that such Covered Person's action
was in or not opposed to the best interests of the Trust or to have been
liable to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.
Section 6.6 Indemnification Not Exclusive. etc. The right of
indemnification provided by this Article VI shall not be exclusive of or
affect any other rights to which any such Covered Person may be entitled. As
used in this Article VI, "Covered Person" shall include such person's heirs,
executors and administrators, an "interested Covered Person" is one against
whom the action, suit or other proceeding in question or another action, suit
or other proceeding on the same or similar grounds is then or has been pending
or threatened, and a "disinterested" person is a person against whom none of
such actions, suits or other proceedings or another action, suit or other
proceeding on the same or similar grounds is then or has been pending or
threatened. Nothing contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under
law, nor the power of the Trust to purchase and maintain liability insurance
on behalf of any such Person.
Section 6.7 Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to
the application of any payments made or property transferred to the Trust or
upon its order.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Sub-Trust shall operate to terminate the
Trust. The Trust may be terminated at any time by a majority of the Trustees
then in office subject to a favorable vote of a majority of the outstanding
voting securities, as defined in the 1940 Act, Shares of each Sub-Trust voting
separately by Sub-Trust.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may
be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with
the provisions of subsection (d) of Section 4.2.
Section 7.2 Reorganization. The Trust may merge or consolidate with any
other corporation, partnership, association, trust or other organization and
the Trustees may sell, convey, and transfer the assets of the Trust, or the
assets belonging to any one or more Sub-Trusts, to another trust, partnership,
association or corporation organized under the laws of any state of the United
States, or to the Trust to be held as assets belonging to another Sub-Trust,
in exchange for cash, shares or other securities (including, in the case of a
transfer to another Sub-Trust of the Trust, Shares of such other Sub-Trust)
with such transfer being made subject to, or with the assumption by the
transferee of, the liabilities belonging to each Sub-Trust the assets of which
are so transferred; provided, however, that no assets belonging to any
particular Sub-Trust shall be so transferred unless the terms of such transfer
shall have first been approved at a meeting called for the purpose by the
affirmative vote of the holders of a majority of the outstanding voting
Shares, as defined in the 1940 Act, of that Sub-Trust. any such consolidation
or merger shall require approval by the affirmative vote of the holders of a
majority of the outstanding voting Shares, as defined in the 1940 Act, of the
Trust (or each Sub-Trust affected thereby, as the case may be), except that
such affirmative vote of the holders of Shares shall not be required if the
Trust (or Sub-Trust affected thereby, as the case may be) shall be the
survivor of such consolidation or merger.
Section 7.3 Amendments. All rights granted to the Shareholders under this
Declaration of Trust are granted subject to the reservation of the right to
amend this Declaration of Trust as herein provided, except that no amendment
shall repeal the limitations on personal liability of any Shareholder or
Trustee or repeal the prohibition of assessment upon the Shareholders without
the express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time, so long as such
amendment does not adversely affect the rights of any Shareholder with respect
to which such amendment is or purports to be applicable and so long as such
amendment is not in contravention of applicable law, including the 1940 Act,
by an instrument in writing signed by a majority of the then Trustees (or by
an officer of the Trust pursuant to the vote of a majority of such Trustees).
Any amendment to this Declaration of Trust that adversely affects the rights
of Shareholders may be adopted at any time by an instrument in writing signed
by a majority of the then Trustees (or by an officer of the Trust pursuant to
a vote of a majority of such Trustees) when authorized to do so by the vote in
accordance with subsection (e) of Section 4.2 of Shareholders holding a
majority of the Shares entitled to vote. Subject to the foregoing, any such
amendment shall be effective as provided in the instrument containing the
terms of such amendment or, if there is no provision therein with respect to
effectiveness, upon the execution of such instrument and of a certificate
(which may be a part of such instrument) executed by a Trustee or officer of
the Trust to the effect that such amendment has been duly adopted.
Section 7.4 Resident Agent. The Trust may appoint and maintain a resident
agent in the Commonwealth of Massachusetts.
Section 7.5 Filing of Copies; References: Headings. The original or a
copy of this instrument and of each amendment hereto shall be kept at the
office of the Trust where it may be inspected by any Shareholder. A copy of
this instrument and of each amendment hereto shall be filed by the Trust with
the Secretary of the Commonwealth of Massachusetts and with the Boston City
Clerk, as well as any other governmental office where such filing may from
time to time be required, but the failure to make any such filing shall not
impair the effectiveness of this instrument or any such amendment. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such amendments have been made, as to the identities of
the Trustees and officers, and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or
of any such amendments. In this instrument and in any such amendment,
references to this instrument, and all expressions like "herein", "hereof" and
"hereunder" shall be deemed to refer to this instrument as a whole as the same
may be amended or affected by any such amendments. The masculine gender shall
include the feminine and neuter genders. Headings are placed herein for
convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of which shall
be deemed an original.
Section 7.6 Applicable Law. This Declaration of Trust is made in the
Commonwealth of Massachusetts, and it is created under and is to be governed
by and construed and administered according to the laws of said Commonwealth,
including the Massachusetts Business Corporation Law as the same may be
amended from time to time, to which reference is made with the intention that
matters not specifically covered herein or as to which an ambiguity may exist
shall be resolved as if the Trust were a business corporation organized in
Massachusetts, but the reference to said Business Corporation Law is not
intended to give the Trust, the Trustees, the Shareholders or any other person
any right, power, authority or responsibility available only to or in
connection with an entity organized in corporate form. The Trust shall be of
the type referred to in Section 1 of Chapter 182 of the Massachusetts General
Laws and of the type commonly called a Massachusetts business trust, and
without limiting the provisions hereof, the Trust may exercise all powers
which are ordinarily exercised by such a trust.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals in
the City of Boston, Massachusetts for themselves and their assigns, as of the
day and year first above written.
_/s/ William H. Nutt_____
William H. Nutt, as Trustee and not
individual
_/s/ Stephen E. Cavan____
Stephen E. Cavan, as Trustee and not
individual
SLH SECURED CAPITAL FUND
AMENDMENT NO. 1 TO MASTER TRUST AGREEMENT
Change of Name of Trust from "SLH Secured Capital Fund" to "SLH Principal
Return Fund" and change of Name of Sub-Trust.)
The undersigned Secretary of SLH Secured Capital Fund (the "Trust") does
hereby certify that pursuant to Article VII, Section 7.3 of the Master Trust
Agreement of the Trust dated October 18, 1988, the following votes were duly
adopted at a meeting of the Trustees of the Trust held on November 18, 1988:
VOTED: That the name of the Trust be changed, effective
November 18, 1988, from its current name of "SLH Secured
Capital Fund" to "SLH Principal Return Fund"; and
FURTHER
VOTED: That the name of the Sub-Trust previously established and
designated pursuant to Article IV, Section 4.2 of the Trust's Master Trust
Agreement be changed, effective November 18, 1988, from "Appreciation Series
1996" to "Zeros and Appreciation Series 1996"; and
FURTHER
VOTED: That the following sentence is hereby added to Section 4.2 (m) of
Article IV of the Trust's Master Trust Agreement, immediately following the
first sentence of that section:
FURTHER
VOTED: "Such redemption is conditioned on the Trust's receipt of an
opinion of its counsel that all actions have been taken that are necessary to
effect such redemptions in accordance with the then current position of the
SEC staff regarding a change in the nature of the business of a registered
investment company, including, if appropriate, the approval of the holders of
a majority of the outstanding voting securities of such Sub-Trust."
FURTHER
VOTED: That the proper officers of the Trust be, and each of them hereby
is, authorized and empowered to execute all instruments and documents and to
take all actions as they or any one of them in his sole discretion deems
necessary and appropriate to carry out the intents and purposes of the
foregoing votes.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 18th day of
November, 1988.
_/s/ Stephen E. Cavan___
Stephen E. Cavan
SLH PRINCIPAL RETURN FUND
AMENDMENT NO. 2 TO MASTER TRUST AGREEMENT
(Change of Name of Fund)
The undersigned, Assistant Secretary of SLH Principal Return Fund (the
"Fund"), does hereby certify that pursuant to Article I, Section 1.1 and
Article VII, Section 7.3 of the Master Trust Agreement of the Fund dated
October 18, 1988, as amended, the following votes were duly adopted by the
unanimous written consent of the Board of Trustees dated August 24, 1990:
VOTED: That the name of the Fund previously established and designated
pursuant to the Fund's Master Trust Agreement be modified and amended as set
forth below:
Current Name: Name as Amended:
SLH Principal Return Fund Shearson Lehman Brothers
Principal Return Fund
; and
FURTHER
VOTED: That the appropriate officers of the Fund be, and each hereby is,
authorized to execute and file any notices required to be filed reflecting the
foregoing changes; to execute amendments to the Fund's Master Trust Agreement
and By-Laws reflecting the foregoing change; and to execute and file all
requisite certificates, documents and instruments and to take such other
actions required to cause said amendment to become effective and to pay all
requisite fees and expenses incident thereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 24th day of
August, 1990.
/s/ Douglas J. Scheidt
Douglas J. Scheidt
........................................Assistant Secretary
SHEARSON LEHMAN BROTHERS PRINCIPAL RETURN FUND
AMENDMENT NO. 3 TO MASTER TRUST AGREEMENT
The undersigned, Assistant Secretary of Shearson Lehman Brothers
Principal Return Fund (the "Trust") does hereby certify that pursuant to
Article IV, Section 4.2 and Article VII, Section 7.3 of the Trust's Master
Trust Agreement dated October 18, 1988, as amended, the following votes were
duly adopted by at least a majority of the Trustees of the Trust taken at a
meeting called and held on October 5, 1990:
VOTED: That the Master Trust Agreement is hereby amended so as to
establish and designate a new Sub-Trust of the Trust, such Sub-Trust to be
known as the "Zeroes and Appreciation Series 1998," and the number of shares
of such Sub-Trust which the Trust is authorized to issue is an unlimited
number of shares of beneficial interest, with a par value of $.001, with the
shares of such Sub-Trust having such relative rights and preferences as are
set forth in the Master Trust Agreement for separate Sub-Trusts;
FURTHER
VOTED: That the appropriate officers of the Trust be, and each hereby is,
authorized to execute and file with the Secretary of State of the Commonwealth
of Massachusetts and the Boston City Clerk an Amendment to the Trust's Master
Trust Agreement reflecting the foregoing changes, and to execute and file all
requisite certificates, documents and instruments and to take such other
actions required to cause said amendment to become effective and to pay all
requisite fees and expenses incident thereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 5th day of
October, l99O.
_/s/ Douglas J. Scheidt
Douglas J. Scheidt
Assistant Secretary
SHEARSON LEHMAN BROTHERS PRINCIPAL RETURN FUND
AMENDMENT NO. 4 TO MASTER TRUST AGREEMENT
The undersigned, Assistant Secretary of Shearson Lehman Brothers
Principal Return Fund (the "Trust") does hereby certify that pursuant to
Article IV, Section 4.2 and Article VII, Section 7.3 of the Trust's Master
Trust Agreement dated October 18, 1988, as amended, the following votes were
duly adopted by at least a majority of the Trustees of the Trust taken at a
meeting called and held on February 26, 1991:
VOTED: That the Master Trust Agreement is hereby amended so as to
establish and designate a new Sub-Trust of the Trust, such Sub-Trust to be
known as the "Zeros Plus European Equities Series 1999," and the number of
shares of such Sub-Trust which the Trust is authorized to issue is an
unlimited number of shares of beneficial interest, with a par value of $.001,
with the shares of such Sub-Trust having such relative rights and preferences
as are set forth in the Master Trust Agreement for separate Sub-Trusts;
FURTHER
VOTED: That the appropriate officers of the Trust be, and each hereby is,
authorized to execute and file with the Secretary of State of the Commonwealth
of Massachusetts and the Boston City Clerk an Amendment to the Trust ! S
Master lrust Agreement reflecting the foregoing changes, and to execute and
file all requisite certificates, documents and instruments and to take such
other actions required to cause said amendment to become effective and to pay
all requisite fees and expenses incident thereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 26th day of
February, 1991.
_/s/ Douglas J. Scheidt_________
Douglas J. Scheidt
Assistant Secretary
SHEARSON LEHMAN BROTHERS PRINCIPAL RETURN FUND
AMENDMENT NO. 5 TO MASTER TRUST AGREEMENT
The undersigned, Assistant Secretary of Shearson Lehman Brothers
Principal Return Fund (the "Trust"), does hereby certify that pursuant to
Article IV, Section 4.2 and Article VII, Section 7.3 of the Trust's Master
Trust Agreement dated October 18, 1988, as amended, the following votes were
duly adopted by at least a majority of the Trustees of the Trust taken at a
meeting called and held on April 25, 1991:
VOTED: That the Master Trust Agreement is hereby amended so as to
establish and designate a new Sub-Trust of the Trust, such Sub-Trust to be
known as the "Zeros Plus Emerging Growth Series 2000," and the number of
shares of such Sub-Trust which the Trust is authorized to issue is an
unlimited number of shares of beneficial interest, with a par value of ~.001,
with the shares of such Sub-Trust having such relative rights and preferences
as are set forth in the Master Trust Agreement for separate Sub-Trusts;
FURTHER
VOTED: That the appropriate officers of the Trust be, and each hereby is,
authorized to execute and file with the Secretary of State of the Commonwealth
of Massachusetts and the Boston City Clerk an Amendment to the Trust's Master
Trust Agreement reflecting the foregoing changes, and to execute and file all
requisite certificates, documents and instruments and to take such other
actions required to cause said amendment to become effective and to pay all
requisite fees and expenses incident thereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 1st day of
May, 1991.
_/s/ Douglas J. Scheidt___
Douglas J. Scheidt
Assistant Secretary
SHEARSON LEHMAN BROTHER PRINCIPAL RETURN FUND
AMENDMENT NO. 6 TO MASTER TRUST AGREEMENT
The undersigned, Assistant Secretary of Shearson Lehman Brothers
Principal Return Fund (the "Fund"), does hereby certify that pursuant to
Article I, Section 1.1 and Article VII, Section 7.3 of the Master Trust
Agreement dated October 18, 1988, the following votes were duly adopted by the
Board of Trustees at a Special Meeting of the Board held on April 7, 1993:
VOTED: That the name of the Fund previously established and designated
pursuant to the Fund's Master Trust Agreement be modified and amended as set
forth below:
Current Name: Name as Amended:
Shearson Lehman Brothers Smith Barney Shearson
Principal Return Fund Principal Return Fund
; and further
VOTED: That the appropriate officers of the Fund be, and each hereby is.
authorized to execute and file any notices required to be filed reflecting the
foregoing changes; to execute amendments to the Fund's Master Trust Agreement
and By-Laws reflecting the foregoing change; and to execute and file all
requisite certificates, documents and instruments and to take such other
actions required to cause said amendment to become effective and to pay all
requisite fees and expenses incident thereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 30th day of
July, 1993.
/s/ Lee D. Augsburger
Lee D. Augsburger
shared domestic general paula
EXHIBIT 5
ADVISORY AGREEMENT
SMITH BARNEY SHEARSON PRINCIPAL RETURN FUND
(Smith Barney Shearson Zeros & Appreciation Series 1996)
July 30, 1993
The Smith Barney Shearson Asset Management
Division of Smith, Barney Advisers, Inc.
Two World Trade Center
New York, New York 10048
Dear Sirs:
Smith Barney Shearson Principal Return Fund (the "Company"), a trust
organized under the laws of the Commonwealth of Massachusetts, confirms its
agreement with the Smith Barney Shearson Asset Management Division of Smith,
Barney Advisers, Inc. (the "Adviser"), 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 Master Trust Agreement, as amended
from time to time (the "Master Trust Agreement"), 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
Trustees of the Company (the "Board"). Copies of the Prospectus, the
Statement and the Master Trust Agreement have been or will be submitted to the
Adviser. The Company agrees to provide copies of all amendments to the
Prospectus, the Statement and the Master Trust Agreement to the Adviser on an
on-going basis. The Company desires to employ and hereby appoints the Adviser
to act as the investment adviser to the Smith Barney Shearson Zeros &
Appreciation Series 1996 (the "Portfolio"). The Adviser accepts the
appointment and agrees to furnish the services for the compensation set forth
below.
2. Services as Investment Adviser
Subject to the supervision, direction and approval of the Board of the
Company, the Adviser will (a) manage the Company's holdings in accordance with
the Portfolio's investment objective(s) and policies as stated in the Master
Trust Agreement, the Prospectus and the Statement; (b) make investment
decisions for the Portfolio; (c) place purchase and sale orders for portfolio
transactions for the Portfolio; and (d) employ professional portfolio managers
and securities analysts who provide research services to the Portfolio. In
providing those services, the Adviser will conduct a continual program of
investment, evaluation and, if appropriate, sale and reinvestment of the
Portfolio's assets.
3. Brokerage
In selecting brokers or dealers to execute transactions on behalf of the
Portfolio, the Adviser will seek the best overall terms available. In
assessing the best overall terms available for any transaction, the Adviser
will consider factors it deems relevant, including, but not limited to, the
breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on
a continuing basis. In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms available, the Adviser
is authorized to consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934), provided
to the Portfolio and/or other accounts over which the Adviser or its
affiliates exercise investment discretion.
4. Information Provided to the Company
The Adviser will keep the Company informed of developments materially
affecting the Portfolio's holdings, and will, on its own initiative, furnish
the Company from time to time with whatever information the Adviser believes
is appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the services
listed in paragraphs 2 and 3 above. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company in
connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Adviser against any liability to the Company or to its shareholders of the
Portfolio to which the Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or by reason of the Adviser's reckless disregard of its obligations
and duties under this Agreement.
6. Compensation
In consideration of the services rendered pursuant to this Agreement,
the Company will pay the Adviser on the first business day of each month a fee
for the previous month at the annual rate of .30 of 1.00% of the Portfolio's
average daily net assets. The fee for the period from the Effective Date
(defined below) of the Agreement to the end of the month during which the
Effective Date occurs shall be prorated according to the proportion that such
period bears to the full monthly period. Upon any termination of this
Agreement before the end of a month, the fee for such part of that month shall
be prorated according to the proportion that such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to the Adviser, the
value of the Portfolio's net assets shall be computed at the times and in the
manner specified in the Prospectus and/or the Statement.
7. Expenses
The Adviser will bear all expenses in connection with the performance of
its services under this Agreement. The Company will bear certain other
expenses to be incurred in its operation, including, but not limited to,
investment advisory and administration fees; fees for necessary professional
and brokerage services; fees for any pricing service; the costs of regulatory
compliance; and costs associated with maintaining the Company's legal
existence and shareholder relations.
8. Reduction of Fee
If in any fiscal year the aggregate expenses of the Portfolio (including
fees pursuant to this Agreement and the Portfolio's administration agreements,
but excluding interest, taxes, brokerage and extraordinary expenses) exceed
the expense limitation of any state having jurisdiction over the Portfolio,
the Adviser will reduce its fee to the Portfolio by the proportion of such
excess expense equal to the proportion that its fee thereunder bears to the
aggregate of fees paid by the Portfolio for investment advice and
administration in that year, to the extent required by state law. A fee
reduction pursuant to this paragraph 8, if any, will be estimated, reconciled
and paid on a monthly basis.
9. Services to Other Companies or Accounts
The Company understands that the Adviser now acts, will continue to act
and may act in the future as investment adviser to fiduciary and other managed
accounts, and as investment adviser to other investment companies, and the
Company has no objection to the Adviser's so acting, provided that whenever
the Portfolio and one or more other investment companies advised by the
Adviser have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a formula believed
to be equitable to each company. The Portfolio recognizes that in some cases
this procedure may adversely affect the size of the position obtainable for
the Portfolio. In addition, the Portfolio understands that the persons
employed by the Adviser to assist in the performance of the Adviser's duties
under this Agreement will not devote their full time to such service and
nothing contained in this Agreement shall be deemed to limit or restrict the
right of the Adviser or any affiliate of the Adviser to engage in and devote
time and attention to other businesses or to render services of whatever kind
or nature.
10. Term of Agreement
This Agreement shall become effective as of the "Closing Date" as that
term is defined in that certain Asset Purchase Agreement executed among Smith
Barney, Harris Upham & Co. Incorporated, Primerica Corporation and Shearson
Lehman Brothers Inc., dated March 12, 1993 (the "Effective Date") and shall
continue for an initial two-year term and shall continue thereafter so long as
such continuance is specifically approved at least annually by (i) the Board
of the Company or (ii) a vote of a "majority" (as that term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act")) of the
Portfolio'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 Portfolio's shares, or upon 90 days' written notice, by the
Adviser. This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act and the rules thereunder).
11. Representation by the Company
The Company represents that a copy of the Master Trust Agreement is on
file with the Secretary of The Commonwealth of Massachusetts.
12. Limitation of Liability
The Company and the Adviser agree that the obligations of the Company
under this Agreement shall not be binding upon any of the members of the
Board, shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Company, individually, but are binding only upon the
assets and property of the Company, as provided in the Master Trust Agreement.
The execution and delivery of this Agreement have been authorized by the Board
and a majority of the holders of the Portfolio's outstanding voting
securities, and signed by an authorized officer of the Company, acting as
such, and neither such authorization by such members of the Board and
shareholders nor such execution and delivery by such officer shall be deemed
to have been made by any of them individually or to impose any liability on
any of them personally, but shall bind only the assets and property of the
Company as provided in the Master Trust Agreement.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the
enclosed copy of this Agreement.
Very truly yours,
SMITH BARNEY SHEARSON
PRINCIPAL RETURN FUND
By:_/s/ Heath B. McLendon
Name: Heath B. McLendon
Title: Chairman of the Board
Accepted:
THE SMITH BARNEY SHEARSON ASSET MANAGEMENT
DIVISION OF SMITH, BARNEY ADVISERS, INC.
By:_/s/ Christine T. Sydor
Name: Christine T. Sydor
Title: Managing Director
ADVISORY AGREEMENT
SMITH BARNEY SHEARSON PRINCIPAL RETURN FUND
(Smith Barney Shearson Zeros & Appreciation Series 1998)
July 30, 1993
The Smith Barney Shearson Asset Management
Division of Smith, Barney Advisers, Inc.
Two World Trade Center
New York, New York 10048
Dear Sirs:
Smith Barney Shearson Principal Return Fund (the "Company"), a trust
organized under the laws of the Commonwealth of Massachusetts, confirms its
agreement with the Smith Barney Shearson Asset Management Division of Smith,
Barney Advisers, Inc. (the "Adviser"), 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 Master Trust Agreement, as amended
from time to time (the "Master Trust Agreement"), 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
Trustees of the Company (the "Board"). Copies of the Prospectus, the
Statement and the Master Trust Agreement have been or will be submitted to the
Adviser. The Company agrees to provide copies of all amendments to the
Prospectus, the Statement and the Master Trust Agreement to the Adviser on an
on-going basis. The Company desires to employ and hereby appoints the Adviser
to act as the investment adviser to the Smith Barney Shearson Zeros &
Appreciation Series 1998 (the "Portfolio"). The Adviser accepts the
appointment and agrees to furnish the services for the compensation set forth
below.
2. Services as Investment Adviser
Subject to the supervision, direction and approval of the Board of the
Company, the Adviser will (a) manage the Company's holdings in accordance with
the Portfolio's investment objective(s) and policies as stated in the Master
Trust Agreement, the Prospectus and the Statement; (b) make investment
decisions for the Portfolio; (c) place purchase and sale orders for portfolio
transactions for the Portfolio; and (d) employ professional portfolio managers
and securities analysts who provide research services to the Portfolio. In
providing those services, the Adviser will conduct a continual program of
investment, evaluation and, if appropriate, sale and reinvestment of the
Portfolio's assets.
3. Brokerage
In selecting brokers or dealers to execute transactions on behalf of the
Portfolio, the Adviser will seek the best overall terms available. In
assessing the best overall terms available for any transaction, the Adviser
will consider factors it deems relevant, including, but not limited to, the
breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on
a continuing basis. In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms available, the Adviser
is authorized to consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934), provided
to the Portfolio and/or other accounts over which the Adviser or its
affiliates exercise investment discretion.
4. Information Provided to the Company
The Adviser will keep the Company informed of developments materially
affecting the Portfolio's holdings, and will, on its own initiative, furnish
the Company from time to time with whatever information the Adviser believes
is appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the services
listed in paragraphs 2 and 3 above. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company in
connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Adviser against any liability to the Company or to its shareholders of the
Portfolio to which the Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or by reason of the Adviser's reckless disregard of its obligations
and duties under this Agreement.
6. Compensation
In consideration of the services rendered pursuant to this Agreement,
the Company will pay the Adviser on the first business day of each month a fee
for the previous month at the annual rate of .30 of 1.00% of the Portfolio's
average daily net assets. The fee for the period from the Effective Date
(defined below) of the Agreement to the end of the month during which the
Effective Date occurs shall be prorated according to the proportion that such
period bears to the full monthly period. Upon any termination of this
Agreement before the end of a month, the fee for such part of that month shall
be prorated according to the proportion that such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to the Adviser, the
value of the Portfolio's net assets shall be computed at the times and in the
manner specified in the Prospectus and/or the Statement.
7. Expenses
The Adviser will bear all expenses in connection with the performance of
its services under this Agreement. The Company will bear certain other
expenses to be incurred in its operation, including, but not limited to,
investment advisory and administration fees; fees for necessary professional
and brokerage services; fees for any pricing service; the costs of regulatory
compliance; and costs associated with maintaining the Company's legal
existence and shareholder relations.
8. Reduction of Fee
If in any fiscal year the aggregate expenses of the Portfolio (including
fees pursuant to this Agreement and the Portfolio's administration agreements,
but excluding interest, taxes, brokerage and extraordinary expenses) exceed
the expense limitation of any state having jurisdiction over the Portfolio,
the Adviser will reduce its fee to the Portfolio by the proportion of such
excess expense equal to the proportion that its fee thereunder bears to the
aggregate of fees paid by the Portfolio for investment advice and
administration in that year, to the extent required by state law. A fee
reduction pursuant to this paragraph 8, if any, will be estimated, reconciled
and paid on a monthly basis.
9. Services to Other Companies or Accounts
The Company understands that the Adviser now acts, will continue to act
and may act in the future as investment adviser to fiduciary and other managed
accounts, and as investment adviser to other investment companies, and the
Company has no objection to the Adviser's so acting, provided that whenever
the Portfolio and one or more other investment companies advised by the
Adviser have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a formula believed
to be equitable to each company. The Portfolio recognizes that in some cases
this procedure may adversely affect the size of the position obtainable for
the Portfolio. In addition, the Portfolio understands that the persons
employed by the Adviser to assist in the performance of the Adviser's duties
under this Agreement will not devote their full time to such service and
nothing contained in this Agreement shall be deemed to limit or restrict the
right of the Adviser or any affiliate of the Adviser to engage in and devote
time and attention to other businesses or to render services of whatever kind
or nature.
10. Term of Agreement
This Agreement shall become effective as of the "Closing Date" as that
term is defined in that certain Asset Purchase Agreement executed among Smith
Barney, Harris Upham & Co. Incorporated, Primerica Corporation and Shearson
Lehman Brothers Inc., dated March 12, 1993 (the "Effective Date") and shall
continue for an initial two-year term and shall continue thereafter so long as
such continuance is specifically approved at least annually by (i) the Board
of the Company or (ii) a vote of a "majority" (as that term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act")) of the
Portfolio'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 Portfolio's shares, or upon 90 days' written notice, by the
Adviser. This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act and the rules thereunder).
11. Representation by the Company
The Company represents that a copy of the Master Trust Agreement is on
file with the Secretary of The Commonwealth of Massachusetts.
12. Limitation of Liability
The Company and the Adviser agree that the obligations of the Company
under this Agreement shall not be binding upon any of the members of the
Board, shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Company, individually, but are binding only upon the
assets and property of the Company, as provided in the Master Trust Agreement.
The execution and delivery of this Agreement have been authorized by the Board
and a majority of the holders of the Portfolio's outstanding voting
securities, and signed by an authorized officer of the Company, acting as
such, and neither such authorization by such members of the Board and
shareholders nor such execution and delivery by such officer shall be deemed
to have been made by any of them individually or to impose any liability on
any of them personally, but shall bind only the assets and property of the
Company as provided in the Master Trust Agreement.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the
enclosed copy of this Agreement.
Very truly yours,
SMITH BARNEY SHEARSON
PRINCIPAL RETURN FUND
By:/s/ Heath B. McLendon
Name: Heath B. McLendon
Title: Chairman of the Board
Accepted:
THE SMITH BARNEY SHEARSON ASSET MANAGEMENT
DIVISION OF SMITH, BARNEY ADVISERS, INC.
By:/s/ Christine T. Sydor
Name: Christine T. Sydor
Title: Managing Director
ADVISORY AGREEMENT
SMITH BARNEY SHEARSON PRINCIPAL RETURN FUND
(Smith Barney Shearson Zeros & Emerging Growth Series 2000)
July 30, 1993
The Smith Barney Shearson Asset Management
Division of Smith, Barney Advisers, Inc.
Two World Trade Center
New York, New York 10048
Dear Sirs:
Smith Barney Shearson Principal Return Fund (the "Company"), a trust
organized under the laws of the Commonwealth of Massachusetts, confirms its
agreement with the Smith Barney Shearson Asset Management Division of Smith,
Barney Advisers, Inc. (the "Adviser"), 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 Master Trust Agreement, as amended
from time to time (the "Master Trust Agreement"), 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
Trustees of the Company (the "Board"). Copies of the Prospectus, the
Statement and the Master Trust Agreement have been or will be submitted to the
Adviser. The Company agrees to provide copies of all amendments to the
Prospectus, the Statement and the Master Trust Agreement to the Adviser on an
on-going basis. The Company desires to employ and hereby appoints the Adviser
to act as the investment adviser to the Smith Barney Shearson Zeros & Emerging
Growth Series 2000 (the "Portfolio"). The Adviser accepts the appointment and
agrees to furnish the services for the compensation set forth below.
2. Services as Investment Adviser
Subject to the supervision, direction and approval of the Board of the
Company, the Adviser will (a) manage the Company's holdings in accordance with
the Portfolio's investment objective(s) and policies as stated in the Master
Trust Agreement, the Prospectus and the Statement; (b) make investment
decisions for the Portfolio; (c) place purchase and sale orders for portfolio
transactions for the Portfolio; and (d) employ professional portfolio managers
and securities analysts who provide research services to the Portfolio. In
providing those services, the Adviser will conduct a continual program of
investment, evaluation and, if appropriate, sale and reinvestment of the
Portfolio's assets.
3. Brokerage
In selecting brokers or dealers to execute transactions on behalf of the
Portfolio, the Adviser will seek the best overall terms available. In
assessing the best overall terms available for any transaction, the Adviser
will consider factors it deems relevant, including, but not limited to, the
breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on
a continuing basis. In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms available, the Adviser
is authorized to consider the brokerage and research services (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934), provided
to the Portfolio and/or other accounts over which the Adviser or its
affiliates exercise investment discretion.
4. Information Provided to the Company
The Adviser will keep the Company informed of developments materially
affecting the Portfolio's holdings, and will, on its own initiative, furnish
the Company from time to time with whatever information the Adviser believes
is appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the services
listed in paragraphs 2 and 3 above. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Company in
connection with the matters to which this Agreement relates, provided that
nothing in this Agreement shall be deemed to protect or purport to protect the
Adviser against any liability to the Company or to its shareholders of the
Portfolio to which the Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or by reason of the Adviser's reckless disregard of its obligations
and duties under this Agreement.
6. Compensation
In consideration of the services rendered pursuant to this Agreement,
the Company will pay the Adviser on the first business day of each month a fee
for the previous month at the annual rate of .40 of 1.00% of the Portfolio's
average daily net assets. The fee for the period from the Effective Date
(defined below) of the Agreement to the end of the month during which the
Effective Date occurs shall be prorated according to the proportion that such
period bears to the full monthly period. Upon any termination of this
Agreement before the end of a month, the fee for such part of that month shall
be prorated according to the proportion that such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement. For the purpose of determining fees payable to the Adviser, the
value of the Portfolio's net assets shall be computed at the times and in the
manner specified in the Prospectus and/or the Statement.
7. Expenses
The Adviser will bear all expenses in connection with the performance of
its services under this Agreement. The Company will bear certain other
expenses to be incurred in its operation, including, but not limited to,
investment advisory and administration fees; fees for necessary professional
and brokerage services; fees for any pricing service; the costs of regulatory
compliance; and costs associated with maintaining the Company's legal
existence and shareholder relations.
8. Reduction of Fee
If in any fiscal year the aggregate expenses of the Portfolio (including
fees pursuant to this Agreement and the Portfolio's administration agreements,
but excluding interest, taxes, brokerage and extraordinary expenses) exceed
the expense limitation of any state having jurisdiction over the Portfolio,
the Adviser will reduce its fee to the Portfolio by the proportion of such
excess expense equal to the proportion that its fee thereunder bears to the
aggregate of fees paid by the Portfolio for investment advice and
administration in that year, to the extent required by state law. A fee
reduction pursuant to this paragraph 8, if any, will be estimated, reconciled
and paid on a monthly basis.
9. Services to Other Companies or Accounts
The Company understands that the Adviser now acts, will continue to act
and may act in the future as investment adviser to fiduciary and other managed
accounts, and as investment adviser to other investment companies, and the
Company has no objection to the Adviser's so acting, provided that whenever
the Portfolio and one or more other investment companies advised by the
Adviser have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a formula believed
to be equitable to each company. The Portfolio recognizes that in some cases
this procedure may adversely affect the size of the position obtainable for
the Portfolio. In addition, the Portfolio understands that the persons
employed by the Adviser to assist in the performance of the Adviser's duties
under this Agreement will not devote their full time to such service and
nothing contained in this Agreement shall be deemed to limit or restrict the
right of the Adviser or any affiliate of the Adviser to engage in and devote
time and attention to other businesses or to render services of whatever kind
or nature.
10. Term of Agreement
This Agreement shall become effective as of the "Closing Date" as that
term is defined in that certain Asset Purchase Agreement executed among Smith
Barney, Harris Upham & Co. Incorporated, Primerica Corporation and Shearson
Lehman Brothers Inc., dated March 12, 1993 (the "Effective Date") and shall
continue for an initial two-year term and shall continue thereafter so long as
such continuance is specifically approved at least annually by (i) the Board
of the Company or (ii) a vote of a "majority" (as that term is defined in the
Investment Company Act of 1940, as amended (the "1940 Act")) of the
Portfolio'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 Portfolio's shares, or upon 90 days' written notice, by the
Adviser. This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act and the rules thereunder).
11. Representation by the Company
The Company represents that a copy of the Master Trust Agreement is on
file with the Secretary of The Commonwealth of Massachusetts.
12. Limitation of Liability
The Company and the Adviser agree that the obligations of the Company
under this Agreement shall not be binding upon any of the members of the
Board, shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Company, individually, but are binding only upon the
assets and property of the Company, as provided in the Master Trust Agreement.
The execution and delivery of this Agreement have been authorized by the Board
and a majority of the holders of the Portfolio's outstanding voting
securities, and signed by an authorized officer of the Company, acting as
such, and neither such authorization by such members of the Board and
shareholders nor such execution and delivery by such officer shall be deemed
to have been made by any of them individually or to impose any liability on
any of them personally, but shall bind only the assets and property of the
Company as provided in the Master Trust Agreement.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the
enclosed copy of this Agreement.
Very truly yours,
SMITH BARNEY SHEARSON
PRINCIPAL RETURN FUND
By:/s/ Heath B. McLendon
Name: Heath B. McLendon
Title: Chairman of the Board
Accepted:
THE SMITH BARNEY SHEARSON ASSET MANAGEMENT
DIVISION OF SMITH, BARNEY ADVISERS, INC.
By:/s/ Christine T. Sydor
Name: Christine T. Sydor
Title: Managing Director
5
shared/domestic/clients/shearson/funds/prtn/safe/advis.doc
EXHIBIT 6
DISTRIBUTION AGREEMENT
SMITH BARNEY SHEARSON PRINCIPAL RETURN FUND
July 30, 1993
Smith Barney Shearson Inc.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, Smith Barney Shearson Principal Return Fund is a
business trust.organized under the laws of the Commonwealth of Massachusetts
has agreed that Smith Barney Shearson Inc.("SBS") shall be, for the period of
this Agreement, the distributor of shares (the "Shares") of the Fund.
1. Services as Distributor
1.1 SBS will act as agent for the distribution of Shares covered
by the registration statement, prospectus and statement of additional
information then in effect under the Securities Act of 1933, as amended (the
"1933 Act"), and the Investment Company Act of 1940, as amended (the "1940
Act").
1.2 SBS agrees to use its best efforts to solicit orders for the
sale of Shares and will undertake such advertising and promotion as it
believes is reasonable in connection with such solicitation.
1.3 All activities by SBS as distributor of the Shares shall
comply with all applicable laws, rules, and regulations, including, without
limitation, all rules and regulations made or adopted by the Securities and
Exchange Commission (the "SEC") or by any securities association registered
under the Securities Exchange Act of 1934.
1.4 SBS will provide one or more persons during normal business
hours to respond to telephone questions concerning the Fund.
1.5 SBS will transmit any orders received by it for purchase or
redemption of Shares to The Shareholder Services Group, Inc. ("TSSG"), the
Fund's transfer and dividend agent, or any successor to TSSG of which the Fund
has notified SBS in writing.
1.6 Whenever in their judgment such action is warranted for any
reason, including, without limitation, market, economic or political
conditions, the Fund's officers may decline to accept any orders for, or make
any sales of, the Shares until such time as those officers deem it advisable
to accept such orders and to make such sales.
1.7 SBS will act only on its own behalf as principal should it
choose to enter into selling agreements with selected dealers or others.
1.8 The Fund will pay to SBS an annual fee in connection with the
offering and sale of the Shares under this Agreement. The annual fee paid to
SBS, will be calculated daily and paid monthly by the Fund at an annual rate
set forth in the Shareholder Servicing Agreement (the "Plan") based on the
average daily net assets of each series of the Fund that has a Plan; provided
that payment shall be made in any month only to the extent that such payment
shall not exceed the sales charge limitations established by the National
Association of Securities Dealers, Inc.
The annual fee paid to SBS under this Section 1.8 maybe used by SBS to
cover any expenses primarily intended to result in the sale of Shares,
including, but not limited to, the following:
(a) cost of payments made to SBS Financial Consultants and other
employees of SBS or other broker-dealers that engage in the distribution of
the Fund's Shares;
(b) payments made to, and expenses of, persons who provide
support services in connection with the distribution of the Fund's Shares,
including, but not limited to, office space and equipment, telephone
facilities, answering routine inquiries regarding the Fund, processing
shareholder transactions and providing any other shareholder services;
(c) costs relating to the formulation and implementation of
marketing and promotional activities, including, but not limited to, direct
mail promotions and television, radio, newspaper, magazine and other mass
media advertising;
(d) costs of printing and distributing prospectuses and reports
of the Fund to prospective shareholders of the Fund;
(e) costs involved in preparing, printing and distributing sales
literature pertaining to the Fund; and
(f) costs involved in obtaining whatever information, analyses
and reports with respect to marketing and promotional activities that the Fund
may, from time to time, deem advisable;
except that distribution expenses shall not include any expenditures in
connection with services which SBS, any of its affiliates, or any other person
have agreed to bear without reimbursement.
1.9 SBS shall prepare and deliver reports to the Treasurer of the Fund
and to the sub-investment advisor and/or administrator of the Fund on a
regular, at least quarterly, basis, showing the distribution expenses incurred
pursuant to this Agreement and the Plan and the purposes therefor, as well as
any supplemental reports as the Trustees, from time to time, may reasonably
request.
2. Duties of the Fund
2.1 The Fund agrees at its own expense to execute any and all
documents, to furnish any and all information and to take any other actions
that may be reasonably necessary in connection with the qualification of the
Shares for sale in those states that SBS may designate.
2.2 The Fund shall furnish from time to time for use in
connection with the sale of the Shares, such information reports with respect
to the Fund and its Shares as SBS may reasonably request, all of which shall
be signed by one or more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such reports, when so signed by
the Fund's officers, shall be true and correct. The Fund shall also furnish
SBS upon request with (a) annual audits of the Fund's books and accounts made
by independent certified public accountants regularly retained by the Fund;
(b) semi-annual unaudited financial statements pertaining to the Fund; (c)
quarterly earnings statements prepared by the Fund; (d) a monthly itemized
list of the securities in the Fund's portfolio; (e) monthly balance sheets as
soon as practicable after the end of each month; and (f) from time to time
such additional information regarding the Fund's financial condition as SBS
may reasonably request.
3. Representations and Warranties
The Fund represents to SBS that all registration statements,
prospectuses and statements of additional information filed by the Fund with
the SEC under the 1933 Act and the 1940 Act with respect to the Shares have
been carefully prepared in conformity with the requirements of the 1933 Act,
the 1940 Act and the rules and regulations of the SEC thereunder. As used in
this Agreement, the terms "registration statement", "prospectus" and
"statement of additional information" shall mean any registration statement,
prospectus and statement of additional information filed by the Fund with the
SEC and any amendments and supplements thereto which at any time shall have
been field with the SEC. The Fund represents and warrants to SBS that any
registration statement, prospectus and statement of additional information,
when such registration statement becomes effective, will include all
statements required to be contained therein in conformance with the 1933 Act,
the 1940 Act and the rules and regulations of the SEC; that all statements of
fact contained in any registration statement, prospectus or statement of
additional information will be true and correct when such registration
statement becomes effective; and that neither any registration statement nor
any prospectus or statement of additional information when such registration
statement becomes effective will include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of the
Fund's Shares. The Fund may, but shall not be obligated to, propose from time
to time such amendment or amendments to any registration statement and such
supplement or supplements to any prospectus or statement of additional
information as, in the light of future developments, may, in the opinion of
the Fund's counsel, be necessary or advisable. If the Fund shall not propose
such amendment or amendments and/or supplement or supplements within fifteen
days after receipt by the Fund of a written request from SBS to do so, SBS
may, at its option, terminate this Agreement. The Fund shall not file any
amendment to any registration statement or supplement to any prospectus or
statement of additional information without giving SBS reasonable notice
thereof in advance; provided, however, that nothing contained in this
Agreement shall in any way limit the Fund's right to file at any time such
amendments to any registration statement and/or supplements to any prospectus
or statement of additional information, of whatever character, as the Fund may
deem advisable, such right being in all respects absolute and unconditional.
4. Indemnification
4.1 The Fund authorizes SBS and dealers to use any prospectus or
statement of additional information furnished by the Fund from time to time,
in connection with the sale of the Shares. The Fund agrees to indemnify,
defend and hold SBS, its several officers and directors, and any person who
controls SBS within the meaning of Section 15 of the 1933 Act, free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims,
demands or liabilities and any such counsel fees incurred in connection
therewith) which SBS, its officers and directors, or any such controlling
person, may incur under the 1933 Act or under common law or otherwise, arising
out of or based upon any untrue statement, or alleged untrue statement, of a
material fact contained in any registration statement, any prospectus or any
statement of additional information or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated
in any registration statement, any prospectus or any statement of additional
information or necessary to make the statements in any thereof not misleading;
provided, however, that the Fund's agreement to indemnify SBS, its officers or
directors, and any such controlling person shall not be deemed to cover any
claims, demands, liabilities or expenses arising out of any statements or
representations made by SBS or its representatives or agents other than such
statements and representations as are contained in any prospectus or statement
of additional information and in such financial and other statements as are
furnished to SBS pursuant to paragraph 2.2 of this Agreement; and further
provided that the Fund's agreement to indemnify SBS and the Fund's
representations and warranties herein before set forth in paragraph 3 of this
Agreement shall not be deemed to cover any liability to the Fund or its
shareholders to which SBS would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties,
or by reason of SBS's reckless disregard of its obligations and duties under
this Agreement. The Fund's agreement to indemnify SBS, its officers and
directors, and any such controlling person, as aforesaid, is expressly
conditioned upon the Fund's being notified of any action brought against SBS,
its officers or directors, or any such controlling person, such notification
to be given by letter or by telegram addressed to the Fund at its principal
office in New York, New York and sent to the Fund by the person against whom
such action is brought, within ten days after the summons or other first legal
process shall have been served. The failure so to notify the Fund of any such
action shall not relieve the Fund from any liability that the Fund may have to
the person against whom such action is brought by reason of any such untrue,
or alleged untrue, statement or omission, or alleged omission, otherwise than
on account of the Fund's indemnity agreement contained in this paragraph 4.1.
The Fund will be entitled to assume the defense of any suit brought to enforce
any such claim, demand or liability, but, in such case, such defense shall be
conducted by counsel of good standing chosen by the Fund and approved by SBS.
In the event the Fund elects to assume the defense of any such suit and
retains counsel of
good standing approved by SBS, the defendant or defendants in such suit shall
bear the fees and expenses of any additional counsel retained by any of them;
but if the Fund does not elect to assume the defense of any such suit, or if
SBS does not approve of counsel chosen by the Fund, the Fund will reimburse
SBS, its officers and directors, or the controlling person or persons named as
defendant or defendants in such suit, for the fees and expenses of any counsel
retained by SBS or them. The Fund's indemnification agreement contained in
this paragraph 4.1 and the Fund's representations and warranties in this
Agreement shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of SBS, its officers and directors, or
any controlling person, and shall survive the delivery of any of the Fund's
Shares. This agreement of indemnity will inure exclusively to SBS's benefit,
to the benefit of its several officers and directors, and their respective
estates, and to the benefit of the controlling persons and their successors.
The Fund agrees to notify SBS promptly of the commencement of any litigation
or proceedings against the Fund or any of its officers or trustees in
connection with the issuance and sale of any of the Fund's Shares.
4.2 SBS agrees to indemnify, defend and hold the Fund, its
several officers and Trustees, and any person who controls the Fund within the
meaning of Section 15 of the 1933 Act, free and harmless from and against any
and all claims, demands, liabilities and expenses (including the costs of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) that the Fund, its officers or Trustees
or any such controlling person may incur under the 1933 Act, or under common
law or otherwise, but only to the extent that such liability or expense
incurred by the Fund, its officers or Trustees, or such controlling person
resulting from such claims or demands shall arise out of or be based upon any
untrue, or alleged untrue, statement of a material fact contained in
information furnished in writing by SBS to the Fund and used in the answers to
any of the items of the registration statement or in the corresponding
statements made in the prospectus or statement of additional information, or
shall arise out of or be based upon any omission, or alleged omission, to
state a material fact in connection with such information furnished in writing
by SBS to the Fund and required to be stated in such answers or necessary to
make such information not misleading. SBS's agreement to indemnify the Fund,
its officers or Trustees, and any such controlling person, as aforesaid, is
expressly conditioned upon SBS being notified of any action brought against
the Fund, its officers or Trustees, or any such controlling person, such
notification to be given by letter or telegram addressed to SBS at its
principal office in New York, New York and sent to SBS by the person against
whom such action is brought, within ten days after the summons or other first
legal process shall have been served. SBS shall have the right to control the
defense of such action, with counsel of its own choosing, satisfactory to the
Fund, if such action is based solely upon such alleged misstatement or
omission on SBS's part, and in any other event the Fund, its officers or
Trustees or such controlling person shall each have the right to participate
in the defense or preparation of the defense of any such action. The failure
to so notify SBS of any such action shall not relieve SBS from any liability
that SBS may have to the Fund, its officers or Trustees, or to such
controlling person by reason of any such untrue, or alleged untrue, statement
or omission, or alleged omission, otherwise than on account of SBS's indemnity
agreement contained in this paragraph 4.2. SBS agrees to notify the Fund
promptly of the commencement of any litigation or proceedings against SBS or
any of its officers or directors in connection with the issuance and sale of
any of the Fund's Shares.
4.3 In case any action shall be brought against any indemnified
party under paragraph 4.1 or 4.2, and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate in, and, to the extent that it shall wish to do so, to assume the
defense thereof with counsel satisfactory to such indemnified party. If the
indemnifying party opts to assume the defense of such action, the indemnifying
party will not be liable to the indemnified party for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than (a) reasonable costs of investigation or the
furnishing of documents or witnesses and (b) all reasonable fees and expenses
of separate counsel to such indemnified party if (i) the indemnifying party
and the indemnified party shall have agreed to the retention of such counsel
or (ii) the indemnified party shall have concluded reasonably that
representation of the indemnifying party and the indemnified party by the same
counsel would be inappropriate due to actual or potential differing interests
between them in the conduct of the defense of such action.
5. Effectiveness of Registration
None of the Fund's Shares shall be offered by either SBS or the Fund
under any of the provisions of this Agreement and no orders for the purchase
or sale of the Shares under this Agreement shall be accepted by the Fund if
and so long as the effectiveness of the registration statement then in effect
or any necessary amendments thereto shall be suspended under any of the
provision of the 1933 Act or if and so long as a current prospectus as
required by Section 5(b) (2) of the 1933 Act is not on file with the SEC;
provided, that nothing contained in this paragraph 5 shall in any way restrict
or have an application to or bearing upon the Fund's obligation to repurchase
its Shares from any shareholder in accordance with the provisions of the
Fund's prospectus, statement of additional information or the Master Trust
Agreement dated October 18, 1988, as amended from time to time.
6. Notice to SBS
The Fund agrees to advise SBS immediately in writing:
(a) of any request by the SEC for amendments to the registration
statement, prospectus or statement of additional information then in effect or
for additional information;
(b) In the event of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement, prospectus or
statement of additional information then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement
or a material fact made in the registration statement, prospectus or statement
of additional information then in effect or that requires the making of a
change in such registration statement, prospectus or statement of additional
information in order to make the statements therein not misleading; and
(d) of all actions of the SEC with respect to any amendment to
any registration statement, prospectus or statement of additional information
which may from time to time be filed with the SEC.
7. Term of the Agreement
This Agreement shall become effective as of the "Closing Date" as that
term is defined in that certain Asset Purchase Agreement executed among SBS,
Primerica Corporation and Shearson Lehman Brothers Inc., dated March 12, 1993
and continues for successive annual periods thereafter so long as such
continuance is specifically approved at least annually by (a) the Fund's Board
of Trustees or (b) by a vote of a majority (as 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 Trustees of the Fund 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' notice by the Fund's Board of Trustees, by vote of the holders of a
majority of the Fund's Shares, or on 90 days' notice by SBS. This Agreement
will also terminate automatically in the event of its assignment (as defined
in the 1940 Act).
8. Miscellaneous
The Fund recognizes that directors, officers and employees of SBS may
from time to time serve as directors, trustees, officers and employees of
corporations and business trusts (including other investment companies) and
that such other corporations and trusts may include the name "Smith Barney
Shearson" as part of their name, and that SBS or its affiliates may enter into
distribution or other agreements with such other corporations and trusts. If
SBS ceases to act as the distributor of the Shares, the Fund agrees that, at
SBS's request, the Fund's license to use the word ""Smith Barney Shearson""
will terminate and that the Fund will take all necessary action to change the
name of the Fund to a name not including the words "Smith Barney Shearson."
9. Limitation of Liability
The Fund and SBS agree that the obligations of the Fund under this
Agreement shall not be binding upon any of the Trustees, shareholders,
nominees, officers, employees or agents, whether past, present or future, of
the Fund, individually, but are binding only upon the assets and property of
the Fund, as provided in the Master Trust Agreement. The execution and
delivery of this Agreement have been authorized by the Trustees and signed by
an authorized officer of the Fund, acting as such, and neither such
authorization by such Trustees nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the trust property of
the Fund as provided in its Master Trust Agreement.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance
of this Agreement by signing and returning to us the enclosed copy of this
Agreement.
Very truly yours,
SMITH BARNEY SHEARSON PRINICIPAL
RETURN FUND
By: /s/ Heath B. McLendon
Title: Chairman of the Board
Accepted:
SMITH BARNEY SHEARSON INC.
By: /s/ Christine T. Sydor
Authorized Officer
shared\domestic\clients\shearson\funds\safe\distrib
Page: 3
8
EXHIBIT 9(a)
SHEARSON LEHMAN BROTHERS PRINCIPAL RETURN FUND
ZEROS AND APPRECIATION SERIES 1996
ADMINISTRATION AGREEMENT
May 21, 1993
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
Dear Sirs:
Shearson Lehman Brothers Prinicipal Return Fund (the "Trust") a business
trust organized under the laws of the Commonwealth of Massachusetts, confirms
its agreement with The Boston Company Advisors, Inc. ("Boston Advisors") and
its sub-trust Zeros and Appreciation Series 1996 (the "Fund") as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in
the Trust's Amended and Restated Master Trust Agreement (the "Master Trust
Agreement"), as amended from time to time, in the Fund's Prospectus and
Statement of Additional Information as from time to time in effect, and in
such manner and to the extent as may from time to time be approved by the
Board of Trustees of the Trust. Copies of the Fund's Prospectus, Statement of
Additional Information and the Master Trust Agreement have been submitted to
Boston Advisors. The Trust employs Shearson Lehman Brothers Inc. on behalf of
Shearson Asset Management (the "Adviser") as its investment adviser and
desires to employ and hereby appoints Boston Advisors as its administrator.
Boston Advisors accepts this appointment and agrees to furnish services for
the compensation set forth below.
2. Services as Administrator
Subject to the supervision and direction of the Board of Trustees of the
Trust, Boston Advisors will (a) assist in supervising all aspects of the
Fund's operations except those performed by the Fund's Adviser under its
investment advisory agreement; (b) assist in the execution of cash management
decisions made by the Fund's Adviser(s) pursuant to instructions from Fund's
Adviser(s); (c) furnish such statistical or other factual information, advice
regarding economic factors and trends and advice as to occasional transactions
in specific securities (but without generally furnishing advice or making
recommendations regarding the purchase or sale of securities) as may be
requested by the Fund's Adviser(s) in connection with the selection of cash
equivalent investments as may be requested from time to time by the Fund's
Adviser(s); (d) supply the Fund with office facilities (which may be Boston
Advisors' own offices) statistical and research data, data processing
services, clerical, accounting and bookkeeping services, including but not
limited to, the calculation of net asset value of shares of the Fund, internal
auditing and legal services, internal executive and administrative services,
and stationary and office supplies; and (e) prepare reports to the
shareholders of the Fund, tax returns and reports to and filings with the
Securities and Exchange Commission and state Blue Sky authorities.
3. Compensation
In consideration of services rendered pursuant to this Agreement, the
Fund will pay Boston Advisors on the first business day of each month a fee
for the previous month at the annual rate of .20% of the value of the Fund's
average daily net assets. Upon any termination of this Agreement before the
end of any month, the fee for such part of the month shall be prorated
according to the proportion which 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 Boston Advisors, the value of the
Fund's net assets shall be computed at the times and in the manner specified
in the Prospectus and Statement of Additional Information as from time to time
in effect.
4. Expenses
Boston Advisors will bear all expenses 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: taxes, interest,
brokerage fees and commissions, if any; fees of Trustees of the Trust who are
not officers, directors, or employees of the Adviser or Boston Advisors;
Securities and Exchange Commission fees and state Blue Sky qualification fees;
charges of custodians and transfer and dividend disbursing agents; certain
insurance premiums; outside auditing and legal expenses, costs of maintenance
of corporate existence; costs attributable to investor services, including
without limitation, telephone and personnel expenses; costs of preparing and
printing prospectuses and statement of additional information for regulatory
purposes and for distribution to existing shareholders; costs of shareholders'
reports and meetings, and meetings of the officers or Board of Trustees of the
Trust; and any extraordinary expenses.
5. Reimbursement to the Fund
If in any fiscal year, the aggregate expenses of the Fund (including
fees pursuant to this Agreement and the Fund's investment advisory agreement,
but excluding interest, taxes, brokerage and, if permitted by state securities
commissions, extraordinary expenses) exceed the expense limitations of any
state having jurisdiction over the Fund, Boston Advisors will reimburse the
Fund for that excess expense to the extent required by state law in the same
proportion as its respective fees bear to the combined fees for investment
advice and administration. The expense reimbursement obligation of Boston
Advisors will be limited to the amount of fees hereunder. Such expense
reimbursement, if any, will be estimated, reconciled and paid on a monthly
basis.
6. Standard of Care
Boston Advisors shall exercise its best judgment in rendering the
services listed in paragraph 2 above. Boston Advisors shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund
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
Boston Advisors against liability to the Fund or to its shareholders to which
Boston Advisors 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 Boston Advisors' reckless disregard of its obligations and duties
under this Agreement.
7. Term of Agreement
This Agreement shall continue automatically (unless terminated as
provided herein) for successive annual periods provided that such continuance
is specifically approved at least annually by the Board of Trustees of the
Trust including a majority of the Board of Trustees who are not "interested
persons" (as defined in the Investment Company Act of 1940, as amended) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting such approval. This Agreement is terminable, without
penalty, on 60 days' written notice, by the Board of Trustees of the Trust or
by vote of holders of a majority of the Fund's shares, or upon 90 days'
written notice, by Boston Advisors.
8. Service to Other Companies or Accounts
The Trust understands that Boston Advisors now acts, will continue to
act and may act in the future as administrator to one or more other investment
companies, and the Trust has no objection to Boston Advisors' so acting. The
Trust understands that the persons employed by Boston Advisors to assist in
the performance of Boston Advisors' duties hereunder will not devote their
full time to such service and nothing contained herein shall be deemed to
limit or restrict the right of Boston Advisors or any affiliate of Boston
Advisors to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
9. Filing of Trust Agreement
The Trust represents that a copy of its Amended and Restated Master
Trust Agreement, dated November 5, 1992, together with all amendments thereto,
is on file with the Secretary of the Commonwealth of Massachusetts and with
the Boston City Clerk.
10. Limitation of Liability
This Trust and Boston Advisors agree that the obligations of the Fund
under this Agreement shall not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past, present
or future, of the Trust individually, but are binding only upon the assets and
property of the Fund, as provided in the Master Trust Agreement. The
execution and delivery of this Agreement have been authorized by the Trustees
and the sole shareholder of the Trust, and signed by an authorized officer of
the Fund, acting as such, and neither such authorization by such Trustees and
shareholder nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any
of them personally, but shall bind only the assets and property of the Fund as
provided in the Master Trust Agreement.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed
copy hereof.
Very truly yours,
Shearson Lehman Brothers Principal Return Fund--
Zeros and Appreciation Series 1996
By:/s/ Heath B. McLendon
Title: Chairman of the Board
Accepted:
The Boston Company Advisors, Inc.
By:/s/ Alan D. Greene
Title: Executive Vice President
g\shared\domestic\clients\shearson\funds\saf1\admin
SHEARSON LEHMAN BROTHERS PRINCIPAL RETURN FUND
ZEROS AND APPRECIATION SERIES 1998
ADMINISTRATION AGREEMENT
May 21, 1993
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
Dear Sirs:
Shearson Lehman Brothers Prinicipal Return Fund (the "Trust") a business
trust organized under the laws of the Commonwealth of Massachusetts, confirms
its agreement with The Boston Company Advisors, Inc. ("Boston Advisors") and
its sub-trust Zeros and Appreciation Series 1998 (the "Fund") as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in
the Trust's Amended and Restated Master Trust Agreement (the "Master Trust
Agreement"), as amended from time to time, in the Fund's Prospectus and
Statement of Additional Information as from time to time in effect, and in
such manner and to the extent as may from time to time be approved by the
Board of Trustees of the Trust. Copies of the Fund's Prospectus, Statement of
Additional Information and the Master Trust Agreement have been submitted to
Boston Advisors. The Trust employs Shearson Lehman Brothers Inc. on behalf of
Shearson Asset Management (the "Adviser") as its investment adviser and
desires to employ and hereby appoints Boston Advisors as its administrator.
Boston Advisors accepts this appointment and agrees to furnish services for
the compensation set forth below.
2. Services as Administrator
Subject to the supervision and direction of the Board of Trustees of the
Trust, Boston Advisors will (a) assist in supervising all aspects of the
Fund's operations except those performed by the Fund's Adviser under its
investment advisory agreement; (b) assist in the execution of cash management
decisions made by the Fund's Adviser(s) pursuant to instructions from Fund's
Adviser(s); (c) furnish such statistical or other factual information, advice
regarding economic factors and trends and advice as to occasional transactions
in specific securities (but without generally furnishing advice or making
recommendations regarding the purchase or sale of securities) as may be
requested by the Fund's Adviser(s) in connection with the selection of cash
equivalent investments as may be requested from time to time by the Fund's
Adviser(s); (d) supply the Fund with office facilities (which may be Boston
Advisors' own offices) statistical and research data, data processing
services, clerical, accounting and bookkeeping services, including but not
limited to, the calculation of net asset value of shares of the Fund, internal
auditing and legal services, internal executive and administrative services,
and stationary and office supplies; and (e) prepare reports to the
shareholders of the Fund, tax returns and reports to and filings with the
Securities and Exchange Commission and state Blue Sky authorities.
3. Compensation
In consideration of services rendered pursuant to this Agreement, the
Fund will pay Boston Advisors on the first business day of each month a fee
for the previous month at the annual rate of .20% of the value of the Fund's
average daily net assets. Upon any termination of this Agreement before the
end of any month, the fee for such part of the month shall be prorated
according to the proportion which 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 Boston Advisors, the value of the
Fund's net assets shall be computed at the times and in the manner specified
in the Prospectus and Statement of Additional Information as from time to time
in effect.
4. Expenses
Boston Advisors will bear all expenses 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: taxes, interest,
brokerage fees and commissions, if any; fees of Trustees of the Trust who are
not officers, directors, or employees of the Adviser or Boston Advisors;
Securities and Exchange Commission fees and state Blue Sky qualification fees;
charges of custodians and transfer and dividend disbursing agents; certain
insurance premiums; outside auditing and legal expenses, costs of maintenance
of corporate existence; costs attributable to investor services, including
without limitation, telephone and personnel expenses; costs of preparing and
printing prospectuses and statement of additional information for regulatory
purposes and for distribution to existing shareholders; costs of shareholders'
reports and meetings, and meetings of the officers or Board of Trustees of the
Trust; and any extraordinary expenses.
5. Reimbursement to the Fund
If in any fiscal year, the aggregate expenses of the Fund (including
fees pursuant to this Agreement and the Fund's investment advisory agreement,
but excluding interest, taxes, brokerage and, if permitted by state securities
commissions, extraordinary expenses) exceed the expense limitations of any
state having jurisdiction over the Fund, Boston Advisors will reimburse the
Fund for that excess expense to the extent required by state law in the same
proportion as its respective fees bear to the combined fees for investment
advice and administration. The expense reimbursement obligation of Boston
Advisors will be limited to the amount of fees hereunder. Such expense
reimbursement, if any, will be estimated, reconciled and paid on a monthly
basis.
6. Standard of Care
Boston Advisors shall exercise its best judgment in rendering the
services listed in paragraph 2 above. Boston Advisors shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund
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
Boston Advisors against liability to the Fund or to its shareholders to which
Boston Advisors 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 Boston Advisors' reckless disregard of its obligations and duties
under this Agreement.
7. Term of Agreement
This Agreement shall continue automatically (unless terminated as
provided herein) for successive annual periods provided that such continuance
is specifically approved at least annually by the Board of Trustees of the
Trust including a majority of the Board of Trustees who are not "interested
persons" (as defined in the Investment Company Act of 1940, as amended) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting such approval. This Agreement is terminable, without
penalty, on 60 days' written notice, by the Board of Trustees of the Trust or
by vote of holders of a majority of the Fund's shares, or upon 90 days'
written notice, by Boston Advisors.
8. Service to Other Companies or Accounts
The Trust understands that Boston Advisors now acts, will continue to
act and may act in the future as administrator to one or more other investment
companies, and the Trust has no objection to Boston Advisors' so acting. The
Trust understands that the persons employed by Boston Advisors to assist in
the performance of Boston Advisors' duties hereunder will not devote their
full time to such service and nothing contained herein shall be deemed to
limit or restrict the right of Boston Advisors or any affiliate of Boston
Advisors to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
9. Filing of Trust Agreement
The Trust represents that a copy of its Amended and Restated Master
Trust Agreement, dated November 5, 1992, together with all amendments thereto,
is on file with the Secretary of the Commonwealth of Massachusetts and with
the Boston City Clerk.
10. Limitation of Liability
This Trust and Boston Advisors agree that the obligations of the Fund
under this Agreement shall not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past, present
or future, of the Trust individually, but are binding only upon the assets and
property of the Fund, as provided in the Master Trust Agreement. The
execution and delivery of this Agreement have been authorized by the Trustees
and the sole shareholder of the Trust, and signed by an authorized officer of
the Fund, acting as such, and neither such authorization by such Trustees and
shareholder nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any
of them personally, but shall bind only the assets and property of the Fund as
provided in the Master Trust Agreement.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed
copy hereof.
Very truly yours,
Shearson Lehman Brothers Principal Return Fund--
Zeros and Appreciation Series 1998
By:/s/ Heath B. McLendon
Title: Chairman of the Board
Accepted:
The Boston Company Advisors, Inc.
By:/s/ Alan D. Greene
Title: Executive Vice President
g\shared\domestic\clients\shearson\funds\saf2\admin
SHEARSON LEHMAN BROTHERS PRINCIPAL RETURN FUND
ZEROS PLUS EMERGING GROWTH SERIES 2000
ADMINISTRATION AGREEMENT
May 21, 1993
The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
Dear Sirs:
Shearson Lehman Brothers Prinicipal Return Fund (the "Trust") a business
trust organized under the laws of the Commonwealth of Massachusetts, confirms
its agreement with The Boston Company Advisors, Inc. ("Boston Advisors") and
its sub-trust Zeros Plus Emerging Growth Series 2000 (the "Fund") as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in
the Trust's Amended and Restated Master Trust Agreement (the "Master Trust
Agreement"), as amended from time to time, in the Fund's Prospectus and
Statement of Additional Information as from time to time in effect, and in
such manner and to the extent as may from time to time be approved by the
Board of Trustees of the Trust. Copies of the Fund's Prospectus, Statement of
Additional Information and the Master Trust Agreement have been submitted to
Boston Advisors. The Trust employs Shearson Lehman Brothers Inc. on behalf of
Shearson Asset Management (the "Adviser") as its investment adviser and
desires to employ and hereby appoints Boston Advisors as its administrator.
Boston Advisors accepts this appointment and agrees to furnish services for
the compensation set forth below.
2. Services as Administrator
Subject to the supervision and direction of the Board of Trustees of the
Trust, Boston Advisors will (a) assist in supervising all aspects of the
Fund's operations except those performed by the Fund's Adviser under its
investment advisory agreement; (b) assist in the execution of cash management
decisions made by the Fund's Adviser(s) pursuant to instructions from Fund's
Adviser(s); (c) furnish such statistical or other factual information, advice
regarding economic factors and trends and advice as to occasional transactions
in specific securities (but without generally furnishing advice or making
recommendations regarding the purchase or sale of securities) as may be
requested by the Fund's Adviser(s) in connection with the selection of cash
equivalent investments as may be requested from time to time by the Fund's
Adviser(s); (d) supply the Fund with office facilities (which may be Boston
Advisors' own offices) statistical and research data, data processing
services, clerical, accounting and bookkeeping services, including but not
limited to, the calculation of net asset value of shares of the Fund, internal
auditing and legal services, internal executive and administrative services,
and stationary and office supplies; and (e) prepare reports to the
shareholders of the Fund, tax returns and reports to and filings with the
Securities and Exchange Commission and state Blue Sky authorities.
3. Compensation
In consideration of services rendered pursuant to this Agreement, the
Fund will pay Boston Advisors on the first business day of each month a fee
for the previous month at the annual rate of .20% of the value of the Fund's
average daily net assets. Upon any termination of this Agreement before the
end of any month, the fee for such part of the month shall be prorated
according to the proportion which 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 Boston Advisors, the value of the
Fund's net assets shall be computed at the times and in the manner specified
in the Prospectus and Statement of Additional Information as from time to time
in effect.
4. Expenses
Boston Advisors will bear all expenses 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: taxes, interest,
brokerage fees and commissions, if any; fees of Trustees of the Trust who are
not officers, directors, or employees of the Adviser or Boston Advisors;
Securities and Exchange Commission fees and state Blue Sky qualification fees;
charges of custodians and transfer and dividend disbursing agents; certain
insurance premiums; outside auditing and legal expenses, costs of maintenance
of corporate existence; costs attributable to investor services, including
without limitation, telephone and personnel expenses; costs of preparing and
printing prospectuses and statement of additional information for regulatory
purposes and for distribution to existing shareholders; costs of shareholders'
reports and meetings, and meetings of the officers or Board of Trustees of the
Trust; and any extraordinary expenses.
5. Reimbursement to the Fund
If in any fiscal year, the aggregate expenses of the Fund (including
fees pursuant to this Agreement and the Fund's investment advisory agreement,
but excluding interest, taxes, brokerage and, if permitted by state securities
commissions, extraordinary expenses) exceed the expense limitations of any
state having jurisdiction over the Fund, Boston Advisors will reimburse the
Fund for that excess expense to the extent required by state law in the same
proportion as its respective fees bear to the combined fees for investment
advice and administration. The expense reimbursement obligation of Boston
Advisors will be limited to the amount of fees hereunder. Such expense
reimbursement, if any, will be estimated, reconciled and paid on a monthly
basis.
6. Standard of Care
Boston Advisors shall exercise its best judgment in rendering the
services listed in paragraph 2 above. Boston Advisors shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund
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
Boston Advisors against liability to the Fund or to its shareholders to which
Boston Advisors 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 Boston Advisors' reckless disregard of its obligations and duties
under this Agreement.
7. Term of Agreement
This Agreement shall continue automatically (unless terminated as
provided herein) for successive annual periods provided that such continuance
is specifically approved at least annually by the Board of Trustees of the
Trust including a majority of the Board of Trustees who are not "interested
persons" (as defined in the Investment Company Act of 1940, as amended) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting such approval. This Agreement is terminable, without
penalty, on 60 days' written notice, by the Board of Trustees of the Trust or
by vote of holders of a majority of the Fund's shares, or upon 90 days'
written notice, by Boston Advisors.
8. Service to Other Companies or Accounts
The Trust understands that Boston Advisors now acts, will continue to
act and may act in the future as administrator to one or more other investment
companies, and the Trust has no objection to Boston Advisors' so acting. The
Trust understands that the persons employed by Boston Advisors to assist in
the performance of Boston Advisors' duties hereunder will not devote their
full time to such service and nothing contained herein shall be deemed to
limit or restrict the right of Boston Advisors or any affiliate of Boston
Advisors to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
9. Filing of Trust Agreement
The Trust represents that a copy of its Amended and Restated Master
Trust Agreement, dated November 5, 1992, together with all amendments thereto,
is on file with the Secretary of the Commonwealth of Massachusetts and with
the Boston City Clerk.
10. Limitation of Liability
This Trust and Boston Advisors agree that the obligations of the Fund
under this Agreement shall not be binding upon any of the Trustees,
shareholders, nominees, officers, employees or agents, whether past, present
or future, of the Trust individually, but are binding only upon the assets and
property of the Fund, as provided in the Master Trust Agreement. The
execution and delivery of this Agreement have been authorized by the Trustees
and the sole shareholder of the Trust, and signed by an authorized officer of
the Fund, acting as such, and neither such authorization by such Trustees and
shareholder nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any
of them personally, but shall bind only the assets and property of the Fund as
provided in the Master Trust Agreement.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed
copy hereof.
Very truly yours,
Shearson Lehman Brothers Principal Return Fund--
Zeros Plus Emerging Growth Series 2000
By:/s/ Heath B. McLendon
Title: Chairman of the Board
Accepted:
The Boston Company Advisors, Inc.
By:/s/ Alan D. Greene
Title: Executive Vice President
g\shared\domestic\clients\shearson\funds\saf3\admin
Exhibit 9 (b)
TRANSFER AGENCY AND REGISTRAR AGREEMENT
AGREEMENT, dated as of August 2, 1993, between Smith Barney Shearson
Principal Return Fund (the "Fund"), a business trust organized under the laws
of Massachusetts and having its principal place of business at Two World Trade
Center, New York, New York 10048 and THE SHAREHOLDER SERVICES GROUP, INC.
(MA) (the "Transfer Agent"), a Massachusetts corporation with principal
offices at One Exchange Place, 53 State Street, Boston, Massachusetts 02109.
W I T N E S S E T H
That for and in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and the Transfer Agent agree as follows:
1. Definitions. Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have the following
meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, Partnership Agreement, or similar
organizational document as the case may be, of the Fund as the same may be
amended from time to time.
(b) "Authorized Person" shall be deemed to include any person,
whether or not such person is an officer or employee of the Fund, duly
authorized to give Oral Instructions or Written Instructions on behalf of the
Fund as indicated in a certificate furnished to the Transfer Agent pursuant to
Section 4(c) hereof as may be received by the Transfer Agent from time to
time.
(c) "Board of Directors" shall mean the Board of Directors, Board
of Trustees or, if the Fund is a limited partnership, the General Partner(s)
of the Fund, as the case may be.
(d) "Commission" shall mean the Securities and Exchange
Commission.
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time deposit, or
cause to be deposited or held under the name or account of such a custodian
pursuant to a Custodian Agreement.
(f) "Fund" shall mean the entity executing this Agreement, and if
it is a series fund, as such term is used in the 1940 Act, such term shall
mean each series of the Fund hereafter created, except that appropriate
documentation with respect to each series must be presented to the Transfer
Agent before this Agreement shall become effective with respect to each such
series.
(g) "1940 Act" shall mean the Investment Company Act of 1940.
(h) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by the Transfer Agent from a person
reasonably believed by the Transfer Agent to be an Authorized Person;
(i) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any supplements
thereto if any, which has become effective under the Securities Act of 1933
and the 1940 Act.
(j) "Shares" refers collectively to such shares of capital stock,
beneficial interest or limited partnership interests, as the case may be, of
the Fund as may be issued from time to time and, if the Fund is a closed-end
or a series fund, as such terms are used in the 1940 Act any other classes or
series of stock, shares of beneficial interest or limited partnership
interests that may be issued from time to time.
(k) "Shareholder" shall mean a holder of shares of capital stock,
beneficial interest or any other class or series, and also refers to partners
of limited partnerships.
(l) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by the Transfer Agent to be an
Authorized Person and actually received by the Transfer Agent. Written
Instructions shall include manually executed originals and authorized
electronic transmissions, including telefacsimile of a manually executed
original or other process.
2. Appointment of the Transfer Agent. The Fund hereby appoints and
constitutes the Transfer Agent as transfer agent, registrar and dividend
disbursing agent for Shares of the Fund and as shareholder servicing agent for
the Fund. The Transfer Agent accepts such appointments and agrees to perform
the duties hereinafter set forth.
3. Compensation.
(a) The Fund will compensate or cause the Transfer Agent to be
compensated for the performance of its obligations hereunder in accordance
with the fees set forth in the written schedule of fees annexed hereto as
Schedule A and incorporated herein. The Transfer Agent will transmit an
invoice to the Fund as soon as practicable after the end of each calendar
month which will be detailed in accordance with Schedule A, and the Fund will
pay to the Transfer Agent the amount of such invoice within thirty (30) days
after the Fund's receipt of the invoice.
In addition, the Fund agrees to pay, and will be billed
separately for, reasonable out-of-pocket expenses incurred by the Transfer
Agent in the performance of its duties hereunder. Out-of-pocket expenses shall
include, but shall not be limited to, the items specified in the written
schedule of out-of-pocket charges annexed hereto as Schedule B and
incorporated herein. Unspecified out-of-pocket expenses shall be limited to
those out-of-pocket expenses reasonably incurred by the Transfer Agent in the
performance of its obligations hereunder. Reimbursement by the Fund for
expenses incurred by the Transfer Agent in any month shall be made as soon as
practicable but no later than 15 days after the receipt of an itemized bill
from the Transfer Agent.
(b) Any compensation agreed to hereunder may be adjusted from
time to time by attaching to Schedule A, a revised fee schedule executed and
dated by the parties hereto.
4. Documents. In connection with the appointment of the Transfer Agent
the Fund shall deliver or caused to be delivered to the Transfer Agent the
following documents on or before the date this Agreement goes into effect, but
in any case within a reasonable period of time for the Transfer Agent to
prepare to perform its duties hereunder:
(a) If applicable, specimens of the certificates for Shares of
the Fund;
(b) All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by the Fund;
(c) A signature card bearing the signatures of any officer of the
Fund or other Authorized Person who will sign Written Instructions or is
authorized to give Oral Instructions.
(d) A certified copy of the Articles of Incorporation, as
amended;
(e) A certified copy of the By-laws of the Fund, as amended;
(f) A copy of the resolution of the Board of Directors
authorizing the execution and delivery of this Agreement;
(g) A certified list of Shareholders of the Fund with the name,
address and taxpayer identification number of each Shareholder, and the number
of Shares of the Fund held by each, certificate numbers and denominations (if
any certificates have been issued), lists of any accounts against which stop
transfer orders have been placed, together with the reasons therefore, and the
number of Shares redeemed by the Fund; and
(h) An opinion of counsel for the Fund with respect to the
validity of the Shares and the status of such Shares under the Securities Act
of 1933, as amended.
5. Further Documentation. The Fund will also furnish the Transfer
Agent with copies of the following documents promptly after the same shall
become available:
(a) each resolution of the Board of Directors authorizing the
issuance of Shares;
(b) any registration statements filed on behalf of the Fund and
all pre-effective and post-effective amendments thereto filed with the
Commission;
(c) a certified copy of each amendment to the Articles of
Incorporation or the By-laws of the Fund;
(d) certified copies of each resolution of the Board of Directors
or other authorization designating Authorized Persons; and
(e) such other certificates, documents or opinions as the
Transfer Agent may reasonably request in connection with the performance of
its duties hereunder.
6. Representations of the Fund. The Fund represents to the Transfer
Agent that all outstanding Shares are validly issued, fully paid and
non-assessable. When Shares are hereafter issued in accordance with the terms
of the Fund's Articles of Incorporation and its Prospectus, such Shares shall
be validly issued, fully paid and non-assessable.
7. Distributions Payable in Shares. In the event that the Board of
Directors of the Fund shall declare a distribution payable in Shares, the Fund
shall deliver or cause to be delivered to the Transfer Agent written notice of
such declaration signed on behalf of the Fund by an officer thereof, upon
which the Transfer Agent shall be entitled to rely for all purposes,
certifying (i) the identity of the Shares involved, (ii) the number of Shares
involved, and (iii) that all appropriate action has been taken.
8. Duties of the Transfer Agent. The Transfer Agent shall be
responsible for administering and/or performing those functions typically
performed by a transfer agent; for acting as service agent in connection with
dividend and distribution functions; and for performing shareholder account
and administrative agent functions in connection with the issuance, transfer
and redemption or repurchase (including coordination with the Custodian) of
Shares in accordance with the terms of the Prospectus and applicable law. The
operating standards and procedures to be followed shall be determined from
time to time by agreement between the Fund and the Transfer Agent and shall
initially be as described in Schedule C attached hereto. In addition, the
Fund shall deliver to the Transfer Agent all notices issued by the Fund with
respect to the Shares in accordance with and pursuant to the Articles of
Incorporation or By-laws of the Fund or as required by law and shall perform
such other specific duties as are set forth in the Articles of Incorporation
including the giving of notice of any special or annual meetings of
shareholders and any other notices required thereby.
9. Record Keeping and Other Information. The Transfer Agent shall
create and maintain all records required of it pursuant to its duties
hereunder and as set forth in Schedule C in accordance with all applicable
laws, rules and regulations, including records required by Section 31(a) of
the 1940 Act. All records shall be available during regular business hours
for inspection and use by the Fund. Where applicable, such records shall be
maintained by the Transfer Agent for the periods and in the places required by
Rule 31a-2 under the 1940 Act.
Upon reasonable notice by the Fund, the Transfer Agent shall make
available during regular business hours such of its facilities and premises
employed in connection with the performance of its duties under this Agreement
for reasonable visitation by the Fund, or any person retained by the Fund as
may be necessary for the Fund to evaluate the quality of the services
performed by the Transfer Agent pursuant hereto.
10. Other Duties. In addition to the duties set forth in Schedule C,
the Transfer Agent shall perform such other duties and functions, and shall be
paid such amounts therefor, as may from time to time be agreed upon in writing
between the Fund and the Transfer Agent. The compensation for such other
duties and functions shall be reflected in a written amendment to Schedule A
or B and the duties and functions shall be reflected in an amendment to
Schedule C, both dated and signed by authorized persons of the parties hereto.
11. Reliance by Transfer Agent; Instructions
(a) The Transfer Agent will have no liability when acting upon
Written or Oral Instructions believed to have been executed or orally
communicated by an Authorized Person and will not be held to have any notice
of any change of authority of any person until receipt of a Written
Instruction thereof from the Fund pursuant to Section 4(c). The Transfer
Agent will also have no liability when processing Share certificates which it
reasonably believes to bear the proper manual or facsimile signatures of the
officers of the Fund and the proper countersignature of the Transfer Agent.
(b) At any time, the Transfer Agent may apply to any Authorized
Person of the Fund for Written Instructions and may seek advice from legal
counsel for the Fund, or its own legal counsel, with respect to any matter
arising in connection with this Agreement, and it shall not be liable for any
action taken or not taken or suffered by it in good faith in accordance with
such Written Instructions or in accordance with the opinion of counsel for the
Fund or for the Transfer Agent. Written Instructions requested by the
Transfer Agent will be provided by the Fund within a reasonable period of
time. In addition, the Transfer Agent, its officers, agents or employees,
shall accept Oral Instructions or Written Instructions given to them by any
person representing or acting on behalf of the Fund only if said
representative is an Authorized Person. The Fund agrees that all Oral
Instructions shall be followed within one business day by confirming Written
Instructions, and that the Fund's failure to so confirm shall not impair in
any respect the Transfer Agent's right to rely on Oral Instructions. The
Transfer Agent shall have no duty or obligation to inquire into, nor shall the
Transfer Agent be responsible for, the legality of any act done by it upon the
request or direction of a person reasonably believed by the Transfer Agent to
be an Authorized Person.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, the Transfer Agent shall be under no duty or obligation to inquire
into, and shall not be liable for: (i) the legality of the issuance or sale
of any Shares or the sufficiency of the amount to be received therefor; (ii)
the legality of the redemption of any Shares, or the propriety of the amount
to be paid therefor; (iii) the legality of the declaration of any dividend by
the Board of Directors, or the legality of the issuance of any Shares in
payment of any dividend; or (iv) the legality of any recapitalization or
readjustment of the Shares.
12. Acts of God, etc. The Transfer Agent will not be liable or
responsible for delays or errors by acts of God or by reason of circumstances
beyond its control, including acts of civil or military authority, national
emergencies, labor difficulties, mechanical breakdown, insurrection, war,
riots, or failure or unavailability of transportation, communication or power
supply, fire, flood or other catastrophe.
13. Duty of Care and Indemnification. Each party hereto (the
"Indemnifying Party') will indemnify the other party (the "Indemnified Party")
against and hold it harmless from any and all losses, claims, damages,
liabilities or expenses of any sort or kind (including reasonable counsel fees
and expenses) resulting from any claim, demand, action or suit or other
proceeding (a "Claim") unless such Claim has resulted from a negligent failure
to act or omission to act or bad faith of the Indemnified Party in the
performance of its duties hereunder. In addition, the Fund will indemnify the
Transfer Agent against and hold it harmless from any Claim, damages,
liabilities or expenses (including reasonable counsel fees) that is a result
of: (i) any action taken in accordance with Written or Oral Instructions, or
any other instructions, or share certificates reasonably believed by the
Transfer Agent to be genuine and to be signed, countersigned or executed, or
orally communicated by an Authorized Person; (ii) any action taken in
accordance with written or oral advice reasonably believed by the Transfer
Agent to have been given by counsel for the Fund or its own counsel; or (iii)
any action taken as a result of any error or omission in any record (including
but not limited to magnetic tapes, computer printouts, hard copies and
microfilm copies) delivered, or caused to be delivered by the Fund to the
Transfer Agent in connection with this Agreement.
In any case in which the Indemnifying Party may be asked to indemnify or
hold the Indemnified Party harmless, the Indemnifying Party shall be advised
of all pertinent facts concerning the situation in question. The Indemnified
Party will notify the Indemnifying Party promptly after identifying any
situation which it believes presents or appears likely to present a claim for
indemnification against the Indemnifying Party although the failure to do so
shall not prevent recovery by the Indemnified Party. The Indemnifying Party
shall have the option to defend the Indemnified Party against any Claim which
may be the subject of this indemnification, and, in the event that the
Indemnifying Party so elects, such defense shall be conducted by counsel
chosen by the Indemnifying Party and satisfactory to the Indemnified Party,
and thereupon the Indemnifying Party shall take over complete defense of the
Claim and the Indemnified Party shall sustain no further legal or other
expenses in respect of such Claim. The Indemnified Party will not confess any
Claim or make any compromise in any case in which the Indemnifying Party will
be asked to provide indemnification, except with the Indemnifying Party's
prior written consent. The obligations of the parties hereto under this
Section shall survive the termination of this Agreement.
14. Consequential Damages. In no event and under no circumstances
shall either party under this Agreement be liable to the other party for
indirect loss of profits, reputation or business or any other special damages
under any provision of this Agreement or for any act or failure to act
hereunder.
15. Term and Termination.
(a) This Agreement shall be effective on the date first written
above and shall continue until _____________, and thereafter shall
automatically continue for successive annual periods ending on the anniversary
of the date first written above, provided that it may be terminated by either
party upon written notice given at least 60 days prior to termination.
(b) In the event a termination notice is given by the Fund, it
shall be accompanied by a resolution of the Board of Directors, certified by
the Secretary of the Fund, designating a successor transfer agent or transfer
agents. Upon such termination and at the expense of the Fund, the Transfer
Agent will deliver to such successor a certified list of shareholders of the
Fund (with names and addresses), and all other relevant books, records,
correspondence and other Fund records or data in the possession of the
Transfer Agent, and the Transfer Agent will cooperate with the Fund and any
successor transfer agent or agents in the substitution process.
16. Confidentiality. Both parties hereto agree that any non public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other
party, except as may be required by applicable law or at the request of the
Commission or other governmental agency. The parties further agree that a
breach of this provision would irreparably damage the other party and
accordingly agree that each of them is entitled, without bond or other
security, to an injunction or injunctions to prevent breaches of this
provision.
17. Amendment. This Agreement may only be amended or modified by a
written instrument executed by both parties.
18. Subcontracting. The Fund agrees that the Transfer Agent may, in
its discretion, subcontract for certain of the services described under this
Agreement or the Schedules hereto; provided that the appointment of any such
Transfer Agent shall not relieve the Transfer Agent of its responsibilities
hereunder.
19. Miscellaneous.
(a) Notices. Any notice or other instrument authorized or
required by this Agreement to be given in writing to the Fund or the Transfer
Agent, shall be sufficiently given if addressed to that party and received by
it at its office set forth below or at such other place as it may from time to
time designate in writing.
To the Fund:
______________________________
______________________________
______________________________
Attention: __________________
To the Transfer Agent:
The Shareholder Services Group
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Robert F. Radin, President
with a copy to TSSG Counsel
(b) Successors. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors and assigns,
provided, however, that this Agreement shall not be assigned to any person
other than a person controlling, controlled by or under common control with
the assignor without the written consent of the other party, which consent
shall not be unreasonably withheld.
(c) Governing Law. This Agreement shall be governed exclusively
by the laws of the State of New York without reference to the choice of law
provisions thereof. Each party hereto hereby agrees that (i) the Supreme
Court of New York sitting in New York County shall have exclusive jurisdiction
over any and all disputes arising hereunder; (ii) hereby consents to the
personal jurisdiction of such court over the parties hereto, hereby waiving
any defense of lack of personal jurisdiction; and (iii) appoints the person to
whom notices hereunder are to be sent as agent for service of process.
(d) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original; but such
counterparts shall, together, constitute only one instrument.
(e) Captions. The captions of this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(f) Use of Transfer Agent's Name. The Fund shall not use the
name of the Transfer Agent in any Prospectus, Statement of Additional
Information, shareholders' report, sales literature or other material relating
to the Fund in a manner not approved prior thereto in writing; provided, that
the Transfer Agent need only receive notice of all reasonable uses of its name
which merely refer in accurate terms to its appointment hereunder or which are
required by any government agency or applicable law or rule. Notwithstanding
the foregoing, any reference to the Transfer Agent shall include a statement
to the effect that it is a wholly owned subsidiary of First Data Corporation.
(g) Use of Fund's Name. The Transfer Agent shall not use the
name of the Fund or material relating to the Fund on any documents or forms
for other than internal use in a manner not approved prior thereto in writing;
provided, that the Fund need only receive notice of all reasonable uses of its
name which merely refer in accurate terms to the appointment of the Transfer
Agent or which are required by any government agency or applicable law or
rule.
(h) Independent Contractors. The parties agree that they are
independent contractors and not partners or co-venturers.
(i) Entire Agreement; Severability. This Agreement and the
Schedules attached hereto constitute the entire agreement of the parties
hereto relating to the matters covered hereby and supersede any previous
agreements. If any provision is held to be illegal, unenforceable or invalid
for any reason, the remaining provisions shall not be affected or impaired
thereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers, as of the day and
year first above written.
SMITH BARNEY SHEARSON THE SHAREHOLDER SERVICES
WORLDWIDE PRIME ASSETS FUND GROUP, INC.
By:/s/ Richard P. Roelofs By:/s/ Michael G.
McCarthy
Title:President Title:Vice
President
A-1
Transfer Agent Fee
Schedule A
Class A shares
The Fund shall pay the Transfer Agent an annualized fee of $11.00 per
shareholder account that is open during any monthly period. Such fee shall be
billed by the Transfer Agent monthly in arrears on a prorated basis of 1/12 of
the annualized fee for all accounts that are open during such a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent monthly in arrears.
Class B shares
The Fund shall pay the Transfer Agent an annualized fee of $12.50 per
shareholder account that is open during any monthly period. Such fee shall be
billed by the Transfer Agent monthly in arrears on a prorated basis of 1/12 of
the annualized fee for all accounts that are open during such a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent monthly in arrears.
Class C shares
The Fund shall pay the Transfer Agent an annualized fee of $8.50 per
shareholder account that is open during any monthly period. Such fee shall be
billed by the Transfer Agent monthly in arrears on a prorated basis of 1/12 of
the annualized fee for all accounts that are open during such a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent monthly in arrears.
Class D shares
The Fund shall pay the Transfer Agent an annualized fee of $9.50 per
shareholder account that is open during any monthly period. Such fee shall be
billed by the Transfer Agent monthly in arrears on a prorated basis of 1/12 of
the annualized fee for all accounts that are open during such a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent monthly in arrears.
B-1
Schedule B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable out-
of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including certificates, envelopes, checks and
stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first
class)
direct pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including
all lease, maintenance and line costs
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other equipment and
any
expenses incurred in connection with such terminals and
lines
- Duplicating services
- Courier services
- Incoming and outgoing wire charges
- Federal Reserve charges for check clearance
- Record retention, retrieval and destruction costs, including,
but not
limited to exit fees harged by third party record keeping
vendors
- Third party audit reviews
- Insurance
- Such other miscellaneous expenses reasonably incurred by the
Transfer
Agent in performing its duties and responsibilities under
this
Agreement.
The Fund agrees that postage and mailing expenses will be paid on the
day of or prior to mailing as agreed with the Transfer Agent. In addition,
the Fund will promptly reimburse the Transfer Agent for any other unscheduled
expenses incurred by the Transfer Agent whenever the Fund and the Transfer
Agent mutually agree that such expenses are not otherwise properly borne by
the Transfer Agent as part of its duties and obligations under the Agreement.
C-1
Schedule C
DUTIES OF THE TRANSFER AGENT
1. Shareholder Information. The Transfer Agent or its agent
shall maintain a record of the number of Shares held by each holder of record
which shall include name, address, taxpayer identification and which shall
indicate whether such Shares are held in certificates or uncertificated form.
2. Shareholder Services. The Transfer Agent or its agent will
investigate all inquiries from shareholders of the Fund relating to
Shareholder accounts and will respond to all communications from Shareholders
and others relating to its duties hereunder and such other correspondence as
may from time to time be mutually agreed upon between the Transfer Agent and
the Fund. The Transfer Agent shall provide the Fund with reports concerning
shareholder inquires and the responses thereto by the Transfer Agent, in such
form and at such times as are agreed to by the Fund and the Transfer Agent.
3. Share Certificates.
(a) At the expense of the Fund, it shall supply the Transfer
Agent or its agent with an adequate supply of blank share certificates to meet
the Transfer Agent or its agent's requirements therefor. Such Share
certificates shall be properly signed by facsimile. The Fund agrees that,
notwithstanding the death, resignation, or removal of any officer of the Fund
whose signature appears on such certificates, the Transfer Agent or its agent
may continue to countersign certificates which bear such signatures until
otherwise directed by Written Instructions.
(b) The Transfer Agent or its agent shall issue replacement Share
certificates in lieu of certificates which have been lost, stolen or
destroyed, upon receipt by the Transfer Agent or its agent of properly
executed affidavits and lost certificate bonds, in form satisfactory to the
Transfer Agent or its agent, with the Fund and the Transfer Agent or its agent
as obligees under the bond.
(c) The Transfer Agent or its agent shall also maintain a record
of each certificate issued, the number of Shares represented thereby and the
holder of record. With respect to Shares held in open accounts or
uncertificated form, i.e., no certificate being issued with respect thereto,
the Transfer Agent or its agent shall maintain comparable records of the
record holders thereof, including their names, addresses and taxpayer
identification. The Transfer Agent or its agent shall further maintain a stop
transfer record on lost and/or replaced certificates.
C-2
4. Mailing Communications to Shareholders; Proxy Materials. The
Transfer Agent or its agent will address and mail to Shareholders of the Fund,
all reports to Shareholders, dividend and distribution notices and proxy
material for the Fund's meetings of Shareholders. In connection with meetings
of Shareholders, the Transfer Agent or its Agent will prepare Shareholder
lists, mail and certify as to the mailing of proxy materials, process and
tabulate returned proxy cards, report on proxies voted prior to meetings, act
as inspector of election at meetings and certify Shares voted at meetings.
5. Sales of Shares
(a) Suspension of Sale of Shares. The Transfer Agent or its
agent shall not be required to issue any Shares of the Fund where it has
received a Written Instruction from the Fund or official notice from any
appropriate authority that the sale of the Shares of the Fund has been
suspended or discontinued. The existence of such Written Instructions or such
official notice shall be conclusive evidence of the right of the Transfer
Agent or its agent to rely on such Written Instructions or official notice.
(b) Returned Checks. In the event that any check or other order
for the payment of money is returned unpaid for any reason, the Transfer Agent
or its agent will: (i) give prompt notice of such return to the Fund or its
designee; (ii) place a stop transfer order against all Shares issued as a
result of such check or order; and (iii) take such actions as the Transfer
Agent may from time to time deem appropriate.
6. Transfer and Repurchase
(a) Requirements for Transfer or Repurchase of Shares. The
Transfer Agent or its agent shall process all requests to transfer or redeem
Shares in accordance with the transfer or repurchase procedures set forth in
the Fund's Prospectus.
The Transfer Agent or its agent will transfer or repurchase Shares
upon receipt of Oral or Written Instructions or otherwise pursuant to the
Prospectus and Share certificates, if any, properly endorsed for transfer or
redemption, accompanied by such documents as the Transfer Agent or its agent
reasonably may deem necessary.
The Transfer Agent or its agent reserves the right to refuse to
transfer or repurchase Shares until it is satisfied that the endorsement on
the instructions is valid and genuine. The Transfer Agent or its agent also
reserves the right to refuse to transfer or repurchase Shares until it is
satisfied that the requested transfer or repurchase is legally authorized, and
it shall incur no liability for the refusal, in good faith, to make transfers
or repurchases which the Transfer Agent or its agent, in its good judgement,
deems improper or unauthorized, or until it is reasonably satisfied that there
is no basis to any claims adverse to such transfer or repurchase.
C-3
(b) Notice to Custodian and Fund. When Shares are redeemed, the
Transfer Agent or its agent shall, upon receipt of the instructions and
documents in proper form, deliver to the Custodian and the Fund or its
designee a notification setting forth the number of Shares to be repurchased.
Such repurchased shares shall be reflected on appropriate accounts maintained
by the Transfer Agent or its agent reflecting outstanding Shares of the Fund
and Shares attributed to individual accounts.
(c) Payment of Repurchase Proceeds. The Transfer Agent or its
agent shall, upon receipt of the moneys paid to it by the Custodian for the
repurchase of Shares, pay such moneys as are received from the Custodian, all
in accordance with the procedures described in the written instruction
received by the Transfer Agent or its agent from the Fund.
The Transfer Agent or its agent shall not process or effect any
repurchase with respect to Shares of the Fund after receipt by the Transfer
Agent or its agent of notification of the suspension of the determination of
the net asset value of the Fund.
7. Dividends
(a) Notice to Agent and Custodian. Upon the declaration of each
dividend and each capital gains distribution by the Board of Directors of the
Fund with respect to Shares of the Fund, the Fund shall furnish or cause to be
furnished to the Transfer Agent or its agent a copy of a resolution of the
Fund's Board of Directors certified by the Secretary of the Fund setting forth
the date of the declaration of such dividend or distribution, the ex-dividend
date, the date of payment thereof, the record date as of which shareholders
entitled to payment shall be determined, the amount payable per Share to the
shareholders of record as of that date, the total amount payable to the
Transfer Agent or its agent on the payment date and whether such dividend or
distribution is to be paid in Shares of such class at net asset value.
On or before the payment date specified in such resolution of the
Board of Directors, the Custodian of the Fund will pay to the Transfer Agent
sufficient cash to make payment to the shareholders of record as of such
payment date.
(b) Insufficient Funds for Payments. If the Transfer Agent or
its agent does not receive sufficient cash from the Custodian to make total
dividend and/or distribution payments to all shareholders of the Fund as of
the record date, the Transfer Agent or its agent will, upon notifying the
Fund, withhold payment to all Shareholders of record as of the record date
until sufficient cash is provided to the Transfer Agent or its agent.
C-4
Exhibit 1 to Schedule C
Summary of Services
The services to be performed by the Transfer Agent or its agent shall be
as follows:
A. DAILY RECORDS
Maintain daily the following information with respect to each
Shareholder account as received:
o Name and Address (Zip Code)
o Class of Shares
o Taxpayer Identification Number
o Balance of Shares held by Agent
o Beneficial owner code: i.e., male, female, joint tenant,
etc.
o Dividend code (reinvestment)
o Number of Shares held in certificate form
B. OTHER DAILY ACTIVITY
o Answer written inquiries relating to Shareholder accounts
(matters relating to portfolio management, distribution of Shares and other
management policy questions will be referred to the Fund).
o Process additional payments into established Shareholder
accounts in accordance with Written Instruction from the Agent.
o Upon receipt of proper instructions and all required
documentation, process requests for repurchase of Shares.
o Identify redemption requests made with respect to accounts
in which Shares have been purchased within an agreed-upon period of time for
determining whether good funds have been collected with respect to such
purchase and process as agreed by the Agent in accordance with written
instructions set forth by the Fund.
o Examine and process all transfers of Shares, ensuring that
all transfer requirements and legal documents have been supplied.
C-5
o Issue and mail replacement checks.
o Open new accounts and maintain records of exchanges between
accounts
C. DIVIDEND ACTIVITY
o Calculate and process Share dividends and distributions as
instructed by the Fund.
o Compute, prepare and mail all necessary reports to
Shareholders or various authorities as requested by the Fund. Report to the
Fund reinvestment plan share purchases and determination of the reinvestment
price.
D. MEETINGS OF SHAREHOLDERS
o Cause to be mailed proxy and related material for all
meetings of Shareholders. Tabulate returned proxies (proxies must be
adaptable to mechanical equipment of the Agent or its agents) and supply daily
reports when sufficient proxies have been received.
o Prepare and submit to the Fund an Affidavit of Mailing.
o At the time of the meeting, furnish a certified list of
Shareholders, hard copy, microfilm or microfiche and, if requested by the
Fund, Inspection of Election.
E. PERIODIC ACTIVITIES
o Cause to be mailed reports, Prospectuses, and any other enclosures
requested by the Fund (material must be adaptable to mechanical equipment of
Agent or its agents).
o Receive all notices issued by the Fund with respect to the
Preferred Shares in accordance with and pursuant to the Articles of
Incorporation and the Indenture and perform such other specific duties as are
set forth in the Articles of Incorporation including a giving of notice of a
special meeting and notice of redemption in the circumstances and otherwise in
accordance with all relevant provisions of the Articles of Incorporation.
MASTER/TEMPLVAR -17-
EXHIBIT 9(c)
SHAREHOLDER SERVICES PLAN
Smith Barney Shearson Principal Return Fund--Zeros and Appreciation Series
1998
This Plan (the "Plan") is adopted by Smith Barney Shearson Principal
Return Fund, a Massachusetts business trust (the "Trust") registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), in respect of its
Zeros and Appreciation Series 1998 (the "Fund"), subject to the following
terms and conditions:
Section 1. Annual Fee.
The Fund will pay to the distributor of its shares of beneficial
interest ("Shares"), Smith Barney Shearson Inc., a corporation organized under
the laws of the State of Delaware ("Smith Barney Shearson"), an annual fee for
certain expenses incurred by Smith Barney Shearson in connection with
providing certain services to Fund shareholders. The annual fee paid to Smith
Barney Shearson under the Plan will be calculated daily and paid monthly by
the Fund at the rate of .25% of the average daily net assets of the Fund.
Section 2. Expenses Covered by the Plan.
The annual fee paid to Smith Barney Shearson under Section 1 of the Plan
may be used by Smith Barney Shearson cover payments made to, and expenses of,
persons who provide support services to Fund shareholders, including, but not
limited to, office space and equipment, telephone facilities, responding to
routine inquires regarding the Fund and its operation, processing shareholder
transactions, forwarding and collecting proxy material, changing dividend
payment elections and providing any other shareholder services not otherwise
provided by the Fund's transfer agent.
Section 3. Approval by Shareholders.
The Plan will not take effect, and no fee will be payable in accordance
with Section 1 of the Plan until the Plan has been approved by a vote of at
least a majority of the outstanding voting securities of the Fund.
Section 4. Approval by Trustees.
Neither the Plan nor any related agreements will take effect until
approved by a majority vote of both (a) all the Trustees of the Trust and (b)
those Trustees who are not interested persons of the Trust and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to it (the "Qualified Trustees"), cast in person at a
meeting called for the purpose of voting on the Plan and the related
agreements.
Section 5. Continuance of the Plan.
The Plan will continue in effect for so long as its continuance is
specifically approved at least annually by the Fund's Trustees in the manner
described in Section 4 above.
Section 6. Termination.
The Plan may be terminated at any time by a majority vote of the
Qualified Trustees or by vote of a majority of the outstanding voting
securities of the Fund.
Section 7. Amendments.
The Plan may not be amended so as to increase materially the amount of
the fee described in Section 1 above, unless the amendment is approved by a
vote of at least a majority of the outstanding voting securities of the Fund.
In addition, no material amendment to the Plan may be made unless approved by
the Trust's Trustees in the manner described in Section 4 above.
Section 8. Selection of Certain Trustees.
While the Plan is in effect, the selection and nomination of the Trust's
Trustees who are not interested persons of the Trust will be committed to the
discretion of the Trustees then in office who are not interested persons of
the Trust.
Section 9. Written Reports.
In each year during which the Plan remains in effect, any person
authorized to direct the disposition of monies paid or payable by the Fund
pursuant to the Plan or any related agreement will prepare and furnish to the
Trust's Trustees, and the Trustees will review, at least quarterly, written
reports that set out the amounts expended under the Plan and the purposes for
which those expenditures were made.
Section 10. Preservation of Materials.
The trust will preserve copies of the Plan, any agreement relating to
the Plan and any report made pursuant to Section 9 above for a period of not
less than six years (the first two years in an easily accessible place) from
the date of the Plan, agreement or report.
Section 11. Meanings of Certain Terms.
As used in the Plan, the terms "interested person" and "majority of the
outstanding voting securities" will be deemed to have the same meaning that
those terms have under the act and the rules and regulations under the 1940
Act, subject to any exemption that may be granted to the trust under the 1940
Act by the Securities and Exchange Commission.
IN WITNESS WHEREOF, the Fund has executed the Plan as of July 30, 1993.
SMITH BARNEY SHEARSON
PRINCIPAL RETURN FUND
By:/s/ Heath B. McLendon
Heath B. McLendon
Chairman of the Board
g\shared\domestic\clients\shearson\funds\saf2\12b-1
2
EXHIBIT 9(d)
SHAREHOLDER SERVICES PLAN
Smith Barney Shearson Principal Return Fund--Zeros Plus Emerging Growth Series
2000
This Plan (the "Plan") is adopted by Smith Barney Shearson Principal Return
Fund, a Massachusetts business trust (the "Trust") registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), in respect of its
Zeros Plus Emerging Growth Series 2000 (the "Fund"), subject to the following
terms and conditions:
Section 1. Annual Fee.
The Fund will pay to the distributor of its shares of beneficial
interest ("Shares"), Smith Barney Shearson Inc., a corporation organized under
the laws of the State of Delaware ("Smith Barney Shearson"), an annual fee for
certain expenses incurred by Smith Barney Shearson in connection with
providing certain services to Fund shareholders. The annual fee paid to Smith
Barney Shearson under the Plan will be calculated daily and paid monthly by
the Fund at the rate of .25% of the average daily net assets of the Fund.
Section 2. Expenses Covered by the Plan.
The annual fee paid to Smith Barney Shearson under Section 1 of the Plan
may be used by Smith Barney Shearson cover payments made to, and expenses of,
persons who provide support services to Fund shareholders, including, but not
limited to, office space and equipment, telephone facilities, responding to
routine inquires regarding the Fund and its operation, processing shareholder
transactions, forwarding and collecting proxy material, changing dividend
payment elections and providing any other shareholder services not otherwise
provided by the Fund's transfer agent.
Section 3. Approval by Shareholders.
The Plan will not take effect, and no fee will be payable in accordance
with Section 1 of the Plan until the Plan has been approved by a vote of at
least a majority of the outstanding voting securities of the Fund.
Section 4. Approval by Trustees.
Neither the Plan nor any related agreements will take effect until
approved by a majority vote of both (a) all the Trustees of the Trust and (b)
those Trustees who are not interested persons of the Trust and who have no
direct or indirect financial interest in the operation of the Plan or in any
agreements related to it (the "Qualified Trustees"), cast in person at a
meeting called for the purpose of voting on the Plan and the related
agreements.
Section 5. Continuance of the Plan.
The Plan will continue in effect for so long as its continuance is
specifically approved at least annually by the Fund's Trustees in the manner
described in Section 4 above.
Section 6. Termination.
The Plan may be terminated at any time by a majority vote of the
Qualified Trustees or by vote of a majority of the outstanding voting
securities of the Fund.
Section 7. Amendments.
The Plan may not be amended so as to increase materially the amount of
the fee described in Section 1 above, unless the amendment is approved by a
vote of at least a majority of the outstanding voting securities of the Fund.
In addition, no material amendment to the Plan may be made unless approved by
the Trust's Trustees in the manner described in Section 4 above.
Section 8. Selection of Certain Trustees.
While the Plan is in effect, the selection and nomination of the Trust's
Trustees who are not interested persons of the Trust will be committed to the
discretion of the Trustees then in office who are not interested persons of
the Trust.
Section 9. Written Reports.
In each year during which the Plan remains in effect, any person
authorized to direct the disposition of monies paid or payable by the Fund
pursuant to the Plan or any related agreement will prepare and furnish to the
Trust's Trustees, and the Trustees will review, at least quarterly, written
reports that set out the amounts expended under the Plan and the purposes for
which those expenditures were made.
Section 10. Preservation of Materials.
The trust will preserve copies of the Plan, any agreement relating to
the Plan and any report made pursuant to Section 9 above for a period of not
less than six years (the first two years in an easily accessible place) from
the date of the Plan, agreement or report.
Section 11. Meanings of Certain Terms.
As used in the Plan, the terms "interested person" and "majority of the
outstanding voting securities" will be deemed to have the same meaning that
those terms have under the act and the rules and regulations under the 1940
Act, subject to any exemption that may be granted to the trust under the 1940
Act by the Securities and Exchange Commission.
IN WITNESS WHEREOF, the Fund has executed the Plan as of July 30, 1993.
SMITH BARNEY SHEARSON
PRINCIPAL RETURN FUND
By:/s/ Heath B. McLendon
Heath B. McLendon
Chairman of the Board
g\shared\domestic\clients\shearson\funds\saf2\12b-1
2
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
Smith Barney Shearson Principal Return Fund:
We hereby consent to the following with respect to Post-Effective
Amendment
No. 13 to the Registration Statement on Form N-1A (File No. 33-25087) under
the Securities
Act of 1933, as amended, of Smith Barney Shearson Principal Return Fund:
1. The incorporation by reference of our reports dated January 7,
1994
accompanying the Annual Reports for the fiscal year ended
November
30, 1993 of Smith Barney Shearson Principal Return Fund, in the
Statement of Additional Information.
2. The reference to our firm under the heading "Financial
Highlights" in the
Prospectus.
3. The reference to our firm under the heading "Counsel and
Auditors" in
the Statement of Additional Information.
COOPERS & LYBRAND
Boston, Massachusetts
January 27, 1994
