DIVERSIFIED STRATEGIC INCOME PORTFOLIO
A SUB-TRUST OF SMITH BARNEY SHEARSON SERIES FUND
Two World Trade Center
New York, New York 10048
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be Held on April 29, 1994
To the Shareholders of
Diversified Strategic Income Portfolio:
Notice is hereby given that a Special Meeting of Shareholders of
Diversified Strategic Income Portfolio (the "Fund"), an investment series
organized as a sub-trust of Smith Barney Shearson Series Fund (the "Trust"),
will be held at the offices of the Fund, Two World Trade Center, 100th floor,
New York, New York 10048, at 2:00 p.m., on April 29, 1994, for the following
purposes:
1. To approve or disapprove a new sub-investment advisory agreement between
the Trust, on behalf of the Fund, and Smith Barney Global Capital Management,
Inc. ("SBGCM"), containing substantially the same terms and conditions as the
Fund's current sub-investment advisory agreement (Proposal 1).
2. To transact such other business as may properly come before the Special
Meeting or any adjournment thereof.
The Board of Trustees of the Trust has fixed the close of business on
March 16, 1994 as the record date for the determination of shareholders of the
Fund entitled to notice of and to vote at the Special Meeting.
By Order of the Board of Trustees
Francis J. McNamara, III
March 18, 1994 Secretary
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE
REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD IN
THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES.
INSTRUCTIONS FOR THE PROPER EXECUTION OF THE PROXY CARD ARE SET FORTH ON THE
INSIDE COVER OF THIS NOTICE. IT IS IMPORTANT THAT PROXIES BE RETURNED
PROMPTLY.
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance
to you and avoid the time and expense to the Fund involved in validating your
vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration on the
proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of registration.
For example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp ABC Corp.
(2) ABC Corp John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
Trust Accounts
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr.UGMA John B. Smith
(2) Estate of John B. Smith John B. Smith, Jr.,
Executor
DIVERSIFIED STRATEGIC INCOME PORTFOLIO
A SUB-TRUST OF SMITH BARNEY SHEARSON SERIES FUND
Two World Trade Center
New York, New York 10048
SPECIAL MEETING OF SHAREHOLDERS
To Be Held on April 29, 1994
PROXY STATEMENT
This Proxy Statement is being furnished in
connection with the solicitation of proxies by the
Board of Trustees (the "Board") of Smith Barney
Shearson Series Fund with respect to the Diversified
Strategic Income Portfolio, for use at a Special
Meeting of Shareholders of the Fund to be held at 2:00
p.m. on April 29, 1994, at the offices of the Fund,
Two World Trade Center, 100th floor, New York, New
York 10048, and at any adjournments thereof
(collectively, the "Special Meeting"). A Notice of
Special Meeting of Shareholders and a proxy card
accompany this Proxy Statement. Proxy solicitations
will be made primarily by mail, but proxy
solicitations may also be made by telephone, telegraph
or personal interviews conducted by: officers and
employees of the Fund; Smith Barney Shearson Inc.
("Smith Barney Shearson"), the distributor of the
shares of the Fund; The Shareholder Services Group,
Inc. ("TSSG"), a subsidiary of First Data Corporation,
the transfer agent of the Fund; and/or The Boston
Company Advisors, Inc. ("Boston Advisors"), the
administrator of the Fund. The costs of proxy
solicitation and expenses incurred in connection with
the preparation of this Proxy Statement and its
enclosures will be paid by Smith Barney Shearson.
Smith Barney Shearson will also reimburse brokerage
firms and others for their expenses in forwarding
solicitation material to the beneficial owners of Fund
shares.
The Trust currently issues one class of shares
of beneficial interest (the "Shares") in respect of
the Fund at par value of $.001 per Share. If the
enclosed proxy is properly executed and returned in
time to be voted at the Special Meeting, the Shares
represented by the proxy will be voted in accordance
with the instructions marked thereon. Unless
instructions to the contrary are marked on the proxy,
it will be voted FOR the matters listed in the
accompanying Notice of Special Meeting of
Shareholders. Any shareholder who has given a proxy
has the right to revoke it at any time prior to its
exercise either by attending the Special Meeting and
voting his or her Shares in person, or by submitting a
letter of revocation or a later-dated proxy to the
Fund at the above address prior to the date of the
Special Meeting. For purposes of determining the
presence of a quorum for transacting business at the
Special Meeting, abstentions and broker "non-votes"
(i.e., proxies from brokers or nominees indicating
that such persons have not received instructions from
the beneficial owner or other persons entitled to vote
Shares on a particular matter with respect to which
the brokers or nominees do not have discretionary
power) will be treated as Shares that are present but
which have not been voted. For this reason,
abstention and broker "non-votes" will have the effect
of a "no" vote for purposes of obtaining the requisite
approval of the proposal.
In the event that a quorum is not present at the
Special Meeting, or in the event that a quorum is
present but sufficient votes to approve any of the
proposals are not received, the persons named as
proxies on the enclosed proxy card may propose one or
more adjournments of the Special Meeting to permit
further solicitation of proxies. In determining
whether to adjourn the Special Meeting, the following
factors may be considered: the nature of the proposal
that is the subject of the Special Meeting, the
percentage of votes actually cast, the percentage of
negative votes actually cast, the nature of any
further solicitation and the information to be
provided to shareholders with respect to the reasons
for the solicitation. Any adjournment will require
the affirmative vote of a majority of those Shares
represented at the Special Meeting in person or by
proxy. A shareholder vote may be taken on one or more
of the proposals in this Proxy Statement prior to any
such adjournment if sufficient votes have been
received for approval. Under the Trust's Master Trust
Agreement dated May 13, 1991, as amended (the "Master
Trust Agreement"), a quorum of shareholders is
constituted by the presence in person or by proxy of
the holders of a majority of the outstanding Shares of
the Fund entitled to vote at the Special Meeting.
The Board has fixed the close of business on
March 16, 1994 as the record date (the "Record Date")
for the determination of shareholders of the Fund
entitled to notice of and to vote at the Special
Meeting. At the close of business on the Record Date,
there were 4,809,210.597 Shares of the Fund
outstanding. At the Record Date, to the knowledge of
the Fund and the Board, no single shareholder or
"group" (as that term is used in Section 13(d) of the
Securities Exchange Act of 1934), beneficially owned
more than 5% of the outstanding Shares of the Fund.
As of the Record Date, the officers and Board Members
beneficially owned less than 1% of the Shares of the
Fund. At the Record Date, no shares of SBGCM or its
ultimate parent corporation, The Travelers Inc.
("Travelers"), were held by Board Members.
All of the outstanding Shares are held of record
by IDS Life Insurance Company ("IDS Life") or IDS Life
Insurance Company of New York ("IDS Life of New
York"), a wholly owned subsidiary of IDS Life, for the
benefit of owners of annuity contracts ("Contract
Owners") issued by IDS Life and IDS Life of New York.
IDS Life's address is IDS Tower 10, Minneapolis,
Minnesota 55440-0010. IDS Life of New York's address
is 20 Madison Avenue Extension, Albany, New York
12203. Each Share is entitled to one vote, and any
fractional Share is entitled to a fractional vote.
IDS Life and IDS Life of New York will vote the Shares
as directed by the Contract Owners who have allocated
purchase payments to annuity contract sub-accounts
investing in the Fund. Each Contract Owner has the
right to direct the votes of that number of Shares of
the Fund determined by multiplying the total number of
the Fund's outstanding Shares by a fraction, the
numerator of which is the number of units held by such
Contract Owner in the Fund on the Record Date and the
denominator of which is the total number of units of
the Fund outstanding on the Record Date. Units
reflect client ownership in the separate account,
while Shares reflect ownership in the Fund. The value
of units is based on the net asset value of the
underlying portfolio adjusted for separate account
fees. If proper instructions are not received from a
Contract Owner, the Shares with respect to which the
Contract Owner has the right to direct votes will be
voted by IDS Life and IDS Life of New York in the same
ratio as those Shares for which proper instructions
were received from other Contract Owners. In
addition, IDS Life and IDS Life of New York will vote
the Shares for which they have voting rights in the
same proportion as the votes for which they have
received proper instructions.
In order that your Shares may be represented at
the Special Meeting, you are requested to:
- - indicate your instructions on the enclosed proxy
card;
- - date and sign the proxy card;
- - mail the proxy card promptly in the enclosed
envelope, which requires no postage if mailed in the
United States; and
- - allow sufficient time for the proxy card to be
received on or before 1:30 p.m., April 29, 1994.
As a business trust formed under the laws of the
Commonwealth of Massachusetts, the Trust is not
required to hold annual shareholder meetings but may
hold special meetings as required or deemed desirable.
As indicated above, the Special Meeting is being
called to consider a new sub-investment advisory
contract for the Fund.
The Board recommends an affirmative vote on
Proposal 1.
PROPOSAL 1
TO APPROVE OR DISAPPROVE A NEW SUB-
INVESTMENT ADVISORY AGREEMENT BETWEEN SMITH BARNEY
GLOBAL CAPITAL MANAGEMENT, INC. AND THE TRUST ON
BEHALF OF THE FUND, CONTAINING SUBSTANTIALLY THE SAME
TERMS AND CONDITIONS AS THE FUND'S CURRENT SUB-
INVESTMENT ADVISORY AGREEMENT.
SUMMARY OF PROPOSAL
For the reasons and based on an extensive
analysis of factors described below, the Trustees of
the Trust unanimously determined, subject to approval
by the shareholders of the Fund, to enter into a new
sub-investment advisory agreement (the "New
Agreement") between the Fund and SBGCM, a subsidiary
of Smith Barney Shearson, which in turn is a wholly
owned subsidiary of Travelers. Lehman Brothers Global
Asset Management, Ltd. ("LBGAM") is currently the
Fund's sub-investment adviser under an agreement (the
"Current Agreement") that will terminate on March 21,
1994, pursuant to notice duly given by the Board of
Trustees of the Trust. The New Agreement contains
substantially the same terms and conditions, including
the same sub-investment advisory fee, found in the
Current Agreement. The New Agreement will commence on
March 21, 1994 and, if approved by shareholders, will
continue initially for a two-year period and would
continue automatically for successive annual periods
thereafter; provided such continuance is approved at
least annually by: (a) a majority of the Board who are
not interested persons of the Trust (as the term is
used in the Investment Company Act of 1940, as amended
(the "1940 Act")) and (b) a majority of the full Board
of Trustees or a majority of the outstanding voting
securities of the Fund, as defined in the 1940 Act.
THE CURRENT SUB-INVESTMENT ADVISER
LBGAM, an adviser registered under the
Investment Advisers Act of 1940, as amended (the
"Advisers Act"), presently acts as sub-investment
adviser to the Fund. LBGAM is located at Two
Broadgate, London, EC2M 7HA, United Kingdom. LBGAM
renders investment advice to institutional clients
(including other investment companies) with total
assets under management, as of December 31, 1993, in
excess of $8.1 billion. The Current Agreement dated
July 30, 1993, was last approved by shareholders on
June 1, 1993. During the fiscal year ended December
31, 1993, the Fund paid LBGAM $59,406 in sub-
investment advisory fees.
THE PROPOSED SUB-INVESTMENT ADVISER
As of April 29, 1988, SBGCM commenced managing
portfolios of clients in the international securities
markets, particularly in the fixed income area. Prior
to April 29, 1988, international bond portfolio
management services were conducted through Smith
Barney, Harris Upham International, Inc., a London
based brokerage affiliate. In particular, SBGCM
offers three broad types of international bond
portfolio management: global; non-base currency (e.g.,
non-dollar, non-Franc, etc.); and international dollar
(i.e., Eurodollar and "Yankee") bonds.
As of June 17, 1991, pursuant to a sub-
investment advisory agreement with Smith, Barney
Advisers, Inc., SBGCM commenced managing a portfolio
of Smith Barney World Funds, Inc., an open-end
management investment company registered under the
1940 Act, which had aggregate assets as of December
31,1993 in excess of $112,758,000. Under this sub-
investment advisory agreement, SBGCM provides
portfolio advice and assistance with respect to the
selection, acquisition, holding and disposal of
securities and receives compensation based on direct
and indirect costs it incurs in performing such
services.
An audited balance sheet of SBGCM as of December
31, 1992 is set forth as Exhibit A to this Proxy
Statement. In addition, an unaudited balance sheet of
SBGCM as of December 31, 1993, is set forth as Exhibit
B to this Proxy Statement. SBGCM has represented that
since December 31, 1993 there has been no material
adverse change in its financial condition.
The name, position with SBGCM and principal
occupation of each executive officer and director of
SBGCM are set forth in the following table. The
business address of SBGCM and each officer and
director is 10 Piccadilly, London, W1V 9LA United
Kingdom.
Name Position with SBGCM Principal Occupation
Jill B. Jordan Director Director, SBGCM
Bruce D. Sargent Chairman and Director; Director and
Senior Vice
President President, Smith Barney
Shearson
J. Paul Horne Director Director, SBGCM;
International Economist,
Smith Barney Shearson
Gabriel J. Irwin Director; Director, Senior Vice
Senior Vice President President and Compliance
Compliance Director, SBGCM
Robert Druskin Director Director, Vice Chairman
and Chief Administrative
Officer of Smith Barney
Shearson
Jeffrey B. Lane Director Director and Vice
Chairman of Smith
Barney Shearson
A. George Saks Director; Secretary Executive
Vice President,
Secretary and General
Counsel, Smith Barney
Shearson
J. Simon Wells Director; Senior Director and
Senior Vice
Vice President President, SBGCM
EVALUATION BY THE BOARD AND REASONS FOR THE PROPOSAL
On January 19, 1994, the Trustees of the Trust
met in person at a meeting called for the purpose of
considering, among other things, the New Agreement
with SBGCM. It also considered, at that time,
continuation of the Fund's Current Agreement with
LBGAM and various other possible alternatives. The
Board reviewed materials furnished by Smith Barney
Shearson and SBGCM and information regarding LBGAM.
The written material described, among other matters,
each of SBGCM and LBGAM and their affiliates, senior
personnel, portfolio managers, analysts, economists
and others, their methods of operation, investment
philosophies, performance records and financial
conditions. Representatives of LBGAM and SBGCM met
separately with the Board to discuss in depth the
written materials and to respond to questions from the
Board and its independent counsel. The Board reviewed
and considered LBGAM's investment performance on
behalf of the Fund and the past investment performance
of SBGCM in managing portfolios of global bonds with
objectives and policies similar to those of the Fund.
The Board of Trustees of the Trust determined to
terminate the Fund's agreement with LBGAM and to enter
into the New Agreement with SBGCM, subject to the
approval of shareholders. In so doing, a variety of
factors were evaluated. It was asserted that
management of the Fund requires a close relationship
between the Fund's officers and its sub-investment
adviser. To realize its investment objective, the
Fund utilizes a complex asset allocation strategy that
is highly dependent upon the coordination of the
various portfolio components. As economic factors
fluctuate, the proportion of the Fund's portfolio
invested in each of these sectors changes and
frequently requires immediate adjustment. At the time
of the Fund's inception, LBGAM was an integrated part
of Shearson Lehman Brothers Inc.'s asset management
structure and Mr. Heath B. McLendon, the Fund's Chief
Executive Officer, worked closely with LBGAM.
However, Mr. McLendon no longer is associated with
LBGAM. He now has a close association with SBGCM and
is involved directly in the management of the Smith
Barney Shearson-distributed mutual funds. It was also
noted that LBGAM and its affiliates are currently
advising and sponsoring a series of mutual funds that
are being offered, and will continue to be offered, to
retail and other investors through it own distribution
network, and that the availability of these LBGAM-
advised funds could be confusing to investors in the
Fund and other mutual funds sponsored by Smith Barney
Shearson.
The Board reviewed the past performance records
of LBGAM and SBGCM over relevant periods of time as
well as the background and experience of the various
officers and managers employed by those companies.
The Board compared their past performance and
evaluated those records against various indices and
industry standards. The Board was satisfied that both
LBGAM and SBGCM could provide high quality advisory
and management services to the Fund.
The Board noted that prior to July 30, 1993,
Shearson Lehman Brothers Inc., served as the Fund's
distributor and its affiliate, LBGAM, served as the
Fund's investment adviser. As of that date, however,
the retail brokerage and investment advisory
businesses (other than LBGAM) of Shearson Lehman
Brothers Inc. were transferred to Smith Barney
Shearson (known at the time as "Smith Barney, Harris
Upham & Co., Inc.") and Smith Barney Shearson was
selected by the Trustees to serve as the Fund's
distributor. Smith Barney Shearson is not affiliated
with LBGAM. The Board considered whether SBGCM, if
serving as the Fund's sub-investment adviser, could
facilitate the Fund's integration with other
components of the Smith Barney Shearson group of funds
and would enhance the support and services received by
the Fund's shareholders. The Board considered the
ability of Smith Barney Shearson to arrange
opportunities for Smith Barney Shearson Financial
Consultants to meet SBGCM portfolio mangers in person,
by telephone and otherwise to become familiar with the
management style, philosophy and investment outlook of
the Fund's sub-investment adviser.
After carefully evaluating the foregoing
materials and factors, and after meeting in executive
session with independent counsel, the Trustees of the
Trust who were not interested persons of the Trust
approved, subject to shareholder approval, the New
Agreement with SBGCM containing substantially
identical terms and conditions to the Current
Agreement. The Board then reconvened and approved the
New Agreement and recommended its approval by the
Fund's shareholders.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell foreign securities for
the Fund are made by the Fund's sub-investment
adviser, subject to the supervision of the Fund's
investment adviser and the overall review of the
Board. Although foreign investment decisions for the
Fund are made independently from those of the other
accounts managed by the sub-investment adviser,
investments of the type the Fund may make also may be
made by those other accounts. When the Fund and one
or more other accounts managed by the sub-investment
adviser 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 the sub-investment adviser to be
equitable to each. In some cases, this procedure may
adversely affect the price paid or received by the
Fund or the size of the position obtained or disposed
of by the Fund.
Transactions on many foreign stock exchanges
involve the payment of negotiated brokerage
commissions. On exchanges where commissions are
negotiated, the cost of transactions may vary among
different brokers. The cost of securities purchased
from underwriters includes an underwriting commission
or concession and the prices at which securities are
repurchased from and sold to dealers include a
dealer's mark-up or mark-down.
In selecting brokers or dealers to execute
portfolio transactions on behalf of the Fund, the sub-
investment adviser seeks the best overall terms
available. In assessing the best overall terms
available for any transaction, the sub-investment
adviser will consider the 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, the sub-investment adviser 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 and Exchange Act of 1934) provided
to the Fund and/or other accounts over which the sub-
investment adviser or its affiliates exercises
investment discretion. The fees under the Fund's sub-
investment advisory agreement are not reduced by
reason of the Fund's or the sub-investment adviser's
receiving brokerage and research services. Research
and investment services are those which brokerage
houses customarily provide to institutional investors
and include statistical and economic data and research
reports on particular issues and industries. These
services are used by the sub-investment adviser in
connection with all of its investment activities, and
some of the services obtained in connection with the
execution of transactions for the Fund may be used in
managing other investment accounts. Conversely,
brokers furnishing these services may be selected for
the execution of transactions for these other
accounts, whose aggregate assets may exceed those of
the Fund, and the services furnished by the brokers
may be used by the sub-investment adviser in providing
investment management for the Fund. The Board of
Trustees periodically will review the commissions paid
by the Fund to determine if the commissions paid over
representative periods of time were reasonable in
relation to the benefits inuring to the Fund.
To the extent consistent with applicable
provisions of the 1940 Act and the rules and
exemptions adopted by the Securities and Exchange
Commission (the "SEC") under the 1940 Act, subject to
the approval of the Board, transactions for the Fund
may be executed through Smith Barney Shearson and
other affiliated broker-dealers if, in the judgment of
the Fund's sub-investment adviser, 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.
The Fund will not purchase any security, during
the existence of any underwriting or selling group
relating to the security of which Smith Barney
Shearson is a member, except to the extent permitted
by the SEC.
During the fiscal year ended December 31, 1993,
the Fund did not pay any brokerage commissions.
THE PROPOSED AGREEMENT
A copy of the form of New Agreement is set forth
as Exhibit C to this Proxy Statement. Under its
terms, SBGCM, subject to the supervision and approval
of the Fund's investment adviser and Board, would
manage the Fund's foreign investments in accordance
with the investment objectives and policies stated in
the Fund's Prospectus and Statement of Additional
Information. As sub-investment adviser, SBGCM would
be responsible for making investment decisions
concerning foreign assets, supplying investment
research and portfolio management services and placing
orders to purchase and sell foreign assets on behalf
of the Fund. SBGCM would receive a fee that is
computed daily and paid monthly at the annual rate of
.15% of the value of the Fund's average daily net
assets. With the exception of the identity of the
sub-investment adviser and the commencement and
termination dates, the provisions of the New Agreement
and the Current Agreement with LBGAM are virtually
identical.
Under the terms of the New Agreement, SBGCM
bears all expenses in connection with its performance.
Other expenses incurred in the operation of the Fund
will continue to be borne by the Fund, including:
taxes, interest, brokerage fees and commissions, if
any; distribution and shareholder service fees; fees
of the Board members who are not officers, directors,
shareholders or employees of Smith Barney Shearson, or
any of its affiliates; SEC fees and state blue sky
qualification fees; charges of custodian and transfer
and dividend disbursing agents; certain insurance
premiums; outside auditing and legal expenses; costs
of investor services (including allocable telephone
and personnel expenses); costs of preparation and
printing of prospectuses and statements of additional
information for regulatory purposes and for
distribution to shareholders; costs of preparation and
printing of shareholders' reports; costs incurred in
connection with meetings of the shareholders of the
Fund and of the officers of the Fund or Board and any
extraordinary expenses.
If, in any fiscal year, the aggregate expenses
of the Fund (including fees pursuant to the New
Agreement (and the Fund's investment advisory and
administration agreements) but excluding distribution
and shareholder service fees, interest, taxes,
brokerage and, if permitted by state securities
commissions, extraordinary expenses) exceed the
expense limitation of any state having jurisdiction
over the Fund, SBGCM will reduce its fee to the Fund
for the excess expense to the extent required by state
law in the same proportion as its fee bears to the
Fund's aggregate fees for investment advice and
administration. This expense reimbursement, if any,
will be estimated, reconciled and paid on a monthly
basis.
The New Agreement provides that in the absence
of willful misfeasance, bad faith, gross negligence or
reckless disregard for its obligations thereunder,
SBGCM shall not be liable for any act or omission in
the course of or in connection with the rendering of
its services thereunder.
REQUIRED VOTE
Approval of the New Agreement requires the
affirmative vote of a "majority of the outstanding
voting securities" of the Fund. The term "majority of
the outstanding voting securities" of the Fund, as
defined in the 1940 Act, means the affirmative vote of
the lesser of: (a) 67% of the voting securities of
the Fund present at the Special Meeting if more than
50% of the outstanding Shares are present in person or
by proxy at the Special Meeting; and (b) more than 50%
of the outstanding voting securities of the Fund.
If the New Agreement is not approved by the
shareholders of the Fund, SBGCM will serve as sub-
investment adviser to the Fund for a period of time
pending approval of such agreement or a different sub-
investment advisory agreement or other definitive
action by the shareholders, provided that the
compensation received by SBGCM during that period is
not greater than the amount that would have been
received under the Fund's agreement with LBGAM.
Proxies solicited by the Board for the Special
Meeting will not be voted for approval of the New
Agreement, or any other matter to be voted on by the
shareholders, unless: (a) (i) in the judgment of the
Board there has been no material adverse change in the
financial condition of SBGCM between the date of the
uncertified balance sheet and the most recently
completed quarter and (ii) the Fund shall have
received a certificate of the Chairman, President or a
Senior Vice President of SBGCM, dated the day on which
such vote is to be taken, that, to the knowledge of
that officer, since the date of the most recently
completed quarter there has been no material adverse
change in the financial condition of SBGCM unless such
material adverse change has been disclosed to
shareholders in additional proxy solicitation
materials; or (b) the Fund shall have mailed to all
shareholders of record a certified balance sheet of
SBGCM and given the shareholders an opportunity to
revoke any proxies previously furnished.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Fund is not generally required to hold
annual or special meetings of the shareholders.
Shareholders wishing to submit proposals for inclusion
in a proxy statement for a subsequent shareholders'
meeting should send their written proposals to the
Secretary of the Fund, c/o The Boston Company
Advisors, Inc., Exchange Place, Boston, MA 02109.
SHAREHOLDERS' REQUEST FOR SPECIAL MEETING
Shareholders holding at least 10% of the Fund's
outstanding voting securities (as defined in the 1940
Act) may require the calling of a meeting of the
Fund's shareholders for the purpose of voting on the
removal of any Board member. Meetings of the Fund's
shareholders for any other purpose will also be called
by the Board when requested in writing by shareholders
holding at least 10% of the shares then outstanding
or, if the Board members shall fail to call or give
notice of any meeting of shareholders for a period of
30 days after such application, shareholders holding
at least 10% of the shares then outstanding may call
and give notice of such meeting.
OTHER MATTERS TO COME BEFORE THE MEETING
The Board does not intend to present any other
business at the Special Meeting other than as
described in this Proxy Statement, nor is the Board
aware that any shareholder intends to do so. If,
however, any other matters are properly brought before
the Special Meeting, the persons named in the
accompanying proxy card will vote thereon in
accordance with their judgment.
March 18, 1994
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING
ARE THEREFORE URGED TO COMPLETE, SIGN, DATE AND RETURN
THE PROXY AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
shared\domestic\clients\shearson\funds\ssf\proxy2.doc
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shared\domestic\clients\shearson\funds\ssf\proxy2.doc
VOTE THIS PROXY CARD TODAY!
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THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Please indicate your vote by an "X" in the appropriate box below.
This proxy, if properly executed, will be voted in the manner directed by the
undersigned shareholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL.
Please refer to the Proxy Statement for a discussion of the Proposal.
1. To approve a new sub-investment advisory FOR *
AGAINST * ABSTAIN *
agreement between Smith Barney Shearson Series Fund, on behalf of its
Diversified Strategic Income Portfolio the("Portfolio"), and Smith Barney
Global Capital Management, Inc., containing substantially the same terms and
conditions as the Portfolio's current sub-investment advisory agreement
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DIVERSIFIED STRATEGIC INCOME PORTFOLIO PROXY SOLICITED BY THE BOARD OF
TRUSTEES
The undersigned holder of shares of the Diversified Strategic Income Portfolio
("the Portfolio"), a subtrust of Smith Barney Shearson Series Fund, a
Massachusetts business trust, hereby appoints Heath B. McLendon, Richard P.
Roelofs, Francis J. McNamara, III and Lee D. Augsburger attorney and proxies
for the undersigned with full powers of substitution and revocation, to
represent the undersigned and to vote on behalf of the undersigned all shares
of the Portfolio that the undersigned is entitled to vote at the Special
Meeting of Shareholders of the Portfolio to be held at the offices of the
Portfolio, Two World Trade Center, New York, New York, on April 29, 1994 at
2:00 p.m. and any adjournment or adjournments thereof. The undersigned hereby
acknowledges receipt of the Notice of Special Meeting and Proxy Statement
dated March 18, 1994 and hereby instructs said attorney and proxies to vote
said shares as indicated hereon. In their discretion, the proxies are
authorized to vote upon such other business as may properly come before the
Special Meeting. A majority of the proxies present and acting at the Special
Meeting in person or by substitute (or, if only one shall be so present, then
that one,) shall have and may exercise all the power and authority of said
proxies hereunder. The undersigned hereby revokes any proxy previously given.
PLEASE SIGN,
DATE AND RETURN
PROMPTLY IN THE
ENCLOSED ENVELOPE
Note: Please sign exactly as your name appears on this
Proxy. If joint owners, EITHER may sign this Proxy.
When signing as attorney, executor, administrator,
trustee, guardian or corporate officer, please give your
full title.
DATE: _________________________________________
_______________________________________________
_______________________________________________
Signature(s) (Title(s), if applicable)
shared\domestic\clients\shearson\funds\ssf\prxycrd1.doc
EXHIBIT A
SMITH BARNEY GLOBAL CAPITAL
MANAGEMENT, INC.
(a wholly-owned subsidiary of
Smith Barney Inc.)
Financial Statements
as of December 31, 1992
and for the year then ended
A-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Smith Barney Global Capital Management, Inc.:
We have audited the accompanying statement of financial condition of SMITH
BARNEY GLOBAL CAPITAL MANAGEMENT, INC. (a wholly-owned subsidiary of Smith
Barney Inc.) as of December 31, 1992, and the related statements of
operations, stockholder's equity and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principals used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
of our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Smith Barney Global Capital
Management, Inc as of December 31, 1992 and the results of its operations and
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
/s/ Coopers & Lybrand
Coopers & Lybrand
New York, New York
March 1, 1993.
A-2
SMITH BARNEY GLOBAL CAPITAL MANAGEMENT, INC
STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1992
ASSETS:
Cash
$835,910
Furniture, fixtures and leasehold
improvements,
net of accumulated depreciation
and
amortization of $111,909
72,879
Receivable from affiliate
13,330
Organization costs, net of
amortization
of $11,662
1,919
$ 924,038
LIABILITIES AND STOCKHOLDER'S EQUITY:
Payable to affiliate
$172,155
Accounts payable and accrued
liabilities
12,000
184,155
Stockholder's equity:
Capital stock, par value $1.00;
3,000 shares
authorized, 1,000 shares
issued and
outstanding
1,000
Additional paid-in capital
1,335,676
Accumulated deficit
(564,920)
Cumulative translation adjustment
(31,873)
739,883
$ 924,038
The accompanying notes are an integral
part of these financial statements.
A-3
SMITH BARNEY GLOBAL CAPITAL MANAGEMENT, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1992
Revenues:
Investment advisory fees
$1,344,376
Interest
1,668
1,346,044
Expenses:
Employee compensation and
benefits
871,480
Communications, occupancy
and equipment
398,693
Other operating and
administrative expenses
228,774
1,498,947
Loss before income tax
benefit
152,903
Income tax benefit
52,795)
Net loss
$ 100,108
The accompanying notes are an integral
part of these financial statements.
A-4
SMITH BARNEY GLOBAL CAPITAL MANAGEMENT, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1992
______________________
Cash flows form operating
activities:
Net loss
$
(100,108)
Adjustments to reconcile net
loss to net
cash used in operations:
Depreciation and
amortization
39,244
Decrease in payable to
affiliates, net
(183,563)
Decrease in accounts
payable and accrued
liabilities
(2,316)
Total adjustments
(146,635)
Cash used in operating
activities
(246,743)
Cash flows from investing
activities:
Purchases of furniture, fixtures
and
leasehold improvements
(67,535)
Cash used in investing
activities
(67,535)
Effect of exchange rate changes
on cash
(5,993)
Net change in cash
(320,271)
Cash at beginning of the year
1,156,181
Cash at end of the year
$
835,910
The accompanying notes are an integral
part of these financial statements.
A-5
NOTES TO FINANCIAL STATEMENTS
__________
1. Accounting Policies:
Smith Barney Global Capital Management, Inc. (the "Company"),
incorporated in the state of Delaware, is a wholly-owned subsidiary of Smith
Barney Inc. ("SBI"). The Company is an investment advisor registered with the
Securities and Exchange Commission in the United States and with the
Investment Management Regulatory Organization Limited ("IMRO") in the United
Kingdom. The Company conducts it operations primarily in the United Kingdom.
Current rates of exchange are used in translating foreign-denominated
assets and liabilities into U.S. dollars. Average rates of exchange are used
in translating income and expense items into U.S. dollars, and translation
adjustments are generally reflected as a separate component of stockholder's
equity. Gains and losses from translating intercompany balances, for which
settlement is anticipated in the foreseeable future, are reflected in the
results of operations.
Furniture and fixtures are depreciated using an accelerated method based
on estimated economic lives ranging from five to seven years. Leasehold
improvements are amortized over the lesser of the useful lives or the
remaining term of the lease.
Investment advisory fee income is accrued when earned and organization
costs are amortized over sixty months.
2. Commitments:
In the normal course of business the Company enters into forward
currency contracts on behalf of its customers in order to facilitate the
settlement process and hedge customers' open securities position. The Company
is exposed to risk of loss from the inability of customers to settle their
forward currency commitments. Customers ultimately bear the risk of loss
unless the failure to settle is attributable to the Company. In management's
opinion, commitments outstanding will settle without a material adverse effect
on the financial position of the Company.
A-
3. Income Taxes:
Under an income tax allocation arrangement with SBI and its ultimate
parent Primerica Corporation ("Primerica"), the Company's income taxes are
recognized on a separate return basis subject to their utilization in
Primerica's consolidated income tax returns.
Income taxes have been provided in accordance with the provisions of
Financial Accounting Standards Board Statement No. 109 (FAS 109) "Accounting
for Income Taxes", which has been adopted effective January 1, 1992. The
adoption of this new accounting standard has no impact to the Company's
financial condition.
4. Related Party Transactions:
Smith Barney Harris Upham Europe Ltd. ("SBHUE"), an affiliate, acts as
paying agent for certain expenses incurred by the Company. In the year ended
December 31, 1992 these costs amounted to $827,573. At December 31, 1992, the
Company has a receivable from SBHUE of $13,330.
Cash includes a balance of $798,976 held in a non-interest bearing
securities brokerage account maintained by Smith Barney, Harris Upham & Co.
Incorporated ("SBHU"), an affiliate. Payable to affiliate represents expenses
paid on behalf of the Company by SBHU net of tax benefits and accrued fees
receivable for which SBHU acts as collection agent.
5. Pension Plan:
The Company's employees participate in individual defined contribution
benefit plans. For the year ended December 31, 1992, pension costs were
$9,738.
6. Financial Resources Requirement:
The Company is a member of and is subject to regulation by IMRO, a
United Kingdom regulatory authority. IMRO has established certain financial
resources requirements which must be maintained by its members. Under these
requirements, as defined, the Company has financial resources of $651,755
which are $427,609 in excess of the required minimum amount.
A-7
SMITH BARNEY GLOBAL CAPITAL MANAGEMENT, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1992
_________
Capital
Stock
Addition
al
Paid-in
Capital
Accumulat
ed
Deficit
Cumulativ
e
Translati
on
Adjustmen
t
Total
Balance,
December 31,
1991
$1,000
$1,335,6
76
($464,812
)
($14,289)
$857,5
75
Translation
adjustment
(17,584)
(17,58
4)
Net loss
________
_
________
__
(100,108)
_________
(100,1
08)
Balance,
December 31,
1992
$1,000
$1,335,6
76
$(564,920
)
($31,873)
$739,8
83
The accompanying notes are an integral
part of these financial statements.
A-8
shared domestic users cac erin2.doc
EXHIBIT B
SMITH BARNEY GLOBAL CAPITAL MANAGEMENT, INC.
STATEMENT OF FINANCIAL CONDITION
December 31, 1993
- -UNAUDITED-
ASSETS:
Cash
$
950,537
Furniture, fixtures and leasehold
improvements,
net of accumlated depreciation
and
amortization of $140,630
120,547
$
1,071,084
LIABILITIES AND STOCKHOLDER'S EQUITY:
Payable to affiliate
$
165,595
Accounts payable and accrued liabilities
11,687
176,282
Stockholder's equity:
Capital stock, par value $1.00;
3,000 shares
authorized, 1,000 shares
issued and outstanding
1,000
Additional paid-in capital
1,335,676
Accumulated deficit
(410,808)
Cumulative translation
adjustment
(31,066)
894,802
$
1,071,084
The accompanying notes are an integral
part of these financial statements.
B-1
NOTES TO FINANCIAL STATEMENTS
- -UNAUDITED-
1. Accounting Policies:
Smith Barney Global Capital Management, Inc. (the "Company"),
incorporated in the state of Delaware, is a wholly-owned subsidiary of Smith
Barney Inc. ("the Parent"). The Parent is a wholly-owned subsidiary of Smith
Barney Shearson Holdings Inc. ("SBSH") formally Smith Barney Holdings Inc. (a
subsidiary of The Travelers Inc., formerly Primerica Corporation). On July
31, 1993, Smith Barney, Harris Upham & Co. Inc. ("SBHU"), an affiliate of the
Company, and The Travelers Inc. acquired the domestic retail brokerage and
asset management businesses of Shearson Lehman Brothers Inc. ("the acquired
businesses"). The acquired businesses were combined with the operations of
SBHU and the resulting firm has been named Smith Barney Shearson Inc.
("SBSI"). The Company is an investment advisor registered with the Securities
and Exchange Commission in the United States and with the Investment
Management Regulatory Organization Limited ("IMRO") in the United Kingdom.
The Company conducts its operations primarily in the United Kingdom.
Current rates of exchange are used in translating foreign-denominated
assets and liabilities into U.S. dollars. Average rates of exchange are used
in translating income and expense items into U.S. dollars, and translation
adjustments are generally reflected as a separate component of stockholder's
equity. Gains and losses from translating intercompany balances, for which
settlement is anticipated in the foreseeable future, are reflected in the
results of operations.
Furniture and fixtures are depreciated using a straight line or an accelerated
method based on estimated economic lives ranging from five to seven years.
Leasehold improvements are amortized over the lesser of the useful lives or
the remaining term of the lease.
Investment advisory fee income is accrued when earned.
B-2
2. Commitments:
In the normal course of business the Company enters into forward
currency contracts on behalf of its customers in order to facilitate the
settlement process and hedge customers' open securities positions. The
Company is exposed to risk of loss from the inability of customers to settle
their forward currency commitments. Customers ultimately bear the risk of
loss unless the failure to settle is attributable to the Company. In
management's opinion, commitments outstanding will settle without a material
adverse effect on the financial position of the Company.
3. Income Taxes:
Under an income tax allocation agreement with SBSH and The Travelers Inc., the
Company's Federal, State and Local income taxes are provided on a separate
return basis, without regard to timing items, and are subject to the
utilization of tax attributes in The Travelers Inc. consolidated income tax
provision. Under the tax sharing agreement, the Company remits taxes to SBSH.
4. Related Party Transactions:
Smith Barney Shearson Europe Ltd. ("SBSE"), an affiliate, acts as paying agent
for certain expenses incurred by the Company.
Cash includes a balance of $916,976 held in a non-interest bearing securities
brokerage account maintained by SBSI. Payable to affiliate represents
expenses paid on behalf of the Company by SBSI net of tax benefits and accrued
fees receivable for which SBSI acts as collection agent.
5. Pension Plan:
The Company's employees participate in individual defined contribution
benefit plans.
B-3
6. Financial Resources Requirements:
The Company is a member of and is subject to regulation by IMRO, a United
Kingdom regulatory authority. IMRO has established certain financial
resources requirements which must be maintained by its members. Under these
requirements, as defined, the Company has financial resources of $774,255
which are $332,888 in excess of the required minimum amount.
B-4
shared\domestic\clients\shearson\general//balance.doc
EXHIBIT C
SUB-INVESTMENT ADVISORY AGREEMENT
SMITH BARNEY SHEARSON SERIES FUND
(Diversified Strategic Income Portfolio)
[March 21, 1994]
Smith Barney Global Capital Management, Inc.
388 Greenwich Street
New York, New York 10048
Dear Sirs:
Smith Barney Shearson Series Fund (the "Company"), a trust organized
under the laws of the Commonwealth of Massachusetts and the Greenwich Street
Advisors Division of Mutual Management Corp. (the "Adviser"), each confirms
its agreement with Smith Barney Global Capital Management, Inc. (the "Sub-
Adviser"), as follows:
1. Investment Description; Appointment
The Company desires to employ its capital relating to its Diversified
Strategic Income Portfolio (the "Portfolio") 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
Sub-Adviser. The Company agrees to provide copies of all amendments to the
Prospectus, the Statement and the Master Trust Agreement to the Sub-Adviser on
an on-going basis. The Company employs the Adviser as the investment adviser
to the Portfolio, and the Company and the Adviser desire to employ and hereby
appoint the Sub-Adviser to act as the sub-investment adviser to the Portfolio.
The adviser accepts the appointment and agrees to furnish the services for the
compensation set forth below.
2. Services as Sub-Investment Adviser
Subject to the supervision, direction and approval of the Board of the
Company and the Adviser, the Sub-Adviser will: (a) manage the Portfolio'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 concerning foreign assets for the
Portfolio; (c) place purchase and sale orders for portfolio transactions for
foreign assets on behalf of the Portfolio; and (d) employ professional
portfolio managers and securities analysts who provide research services to
the Portfolio. In providing those services, the Sub-Adviser will conduct a
continual program of investment, evaluation and, if appropriate, sale and
reinvestment of the Portfolio's foreign assets.
3. Brokerage
In selecting brokers or dealers to execute transactions on behalf of the
Portfolio, the Sub-Adviser will seek the best overall terms available. In
assessing the best overall terms available for any transaction, the Sub-
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 Sub-
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 Sub-
Adviser or its affiliates exercise investment discretion.
4. Information Provided to the Company
The Sub-Adviser will keep the Company informed of developments
materially affecting the Portfolio, and will, on its own initiative, furnish
the Company from time to time with whatever information the Sub-Adviser
believes is appropriate for this purpose.
5. Compensation
In consideration of the services rendered pursuant to this Agreement,
the Adviser will pay the Sub-Adviser on the first business day of each month a
fee for the previous month at the annual rate of .15 of 1.00% of the
Portfolio's average daily net assets. The Sub-Adviser shall have no right to
obtain compensation directly from the Company for services provided hereunder
and agrees to look solely to the Adviser for payment of fees due. 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 Sub-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.
6. Expenses
The Sub-Adviser will bear all expenses in connection with the
performance of its services under this Agreement. The Portfolio will bear
certain other expenses to be incurred in its operation, including, but not
limited to, investment advisory, sub-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.
7. Reduction of Fee
If in any fiscal year the aggregate expenses of the Portfolio (including
fees pursuant to this Agreement and the Portfolio's investment advisory
agreement, but excluding interest, taxes, brokerage and extraordinary
expenses) exceed the expense limitation of any state having jurisdiction over
the Portfolio, the Sub-Adviser will reduce its fee 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 7, if any, will be estimated, reconciled
and paid on a monthly basis.
8. Standard of Care
The Sub-Adviser shall exercise its best judgment in rendering the
services listed in paragraphs 2 and 3 above. The Sub-Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Portfolio and the Adviser 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 Sub-Adviser against any liability to the
Adviser, the Company or to the shareholders of the Portfolio to which the Sub-
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 Sub-Adviser's reckless disregard of its obligations and duties under
this Agreement.
9. Term of Agreement
This Agreement shall become effective as of March 21, 1994 (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 Sub-Adviser. This Agreement will also terminate automatically
in the event of its assignment (as defined in the 1940 Act and the rules
thereunder).
10. Services to Other Companies or Accounts
The Company understands that the Sub-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 Sub-Adviser's so acting, provided that
whenever the Portfolio and one or more other investment companies advised by
the Sub-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 Company recognizes that in some cases
this procedure may adversely affect the size of the position obtainable for
the Portfolio. In addition, the Company understands that the persons employed
by the Sub-Adviser to assist in the performance of the Sub-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 Sub-Adviser or any affiliate of the Sub-Adviser to engage in and
devote time and attention to other businesses or to render services of
whatever kind or nature.
11. Representation by the Company
The Company represents that a copy of the Master Trust Agreement is on
file with the Secretary of The Commonwealth of Massachusetts and with the
Boston City Clerk.
12. Limitation of Liability
The Company, the Adviser and the Sub-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 Portfolio and not upon the assets and
property of any other portfolio of the Company. 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 Portfolio 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
SERIES FUND
By:______________________
THE GREENWICH STREET
ADVISORS DIVISION OF MUTUAL MANAGEMENT
CORP.
By:_______________________
Accepted:
SMITH BARNEY GLOBAL
CAPITAL MANAGEMENT, INC.
By:______________________________
C-6
shared domestic clients shearson funds ssf subadv3.
shared/domestic/clients/shearson/funds/ssf/subadv3.doc
