SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-effective Amendment No. ___
Post-Effective Amendment No. _10
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
Amendment No. _10
SMITH BARNEY INVESTMENT TRUST (formerly known as Smith
Barney Income
Trust)
(Exact name of Registrant as specified in Charter)
388 Greenwich Street, New York, New York 10013
(Address of Principal Executive Offices) (Zip Code)
Christina T. Sydor
Secretary
Smith Barney Investment Trust
388 Greenwich Street
New York, New York 10013
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
It is proposed that this filing will becomes effective:
___ immediately upon filing pursuant to Rule 485(b)
_X_ on November 13, 1995 pursuant to Rule 485(b)
_ 75 days after filing pursuant to
Rule 485(a)(2)
___ on _______ pursuant to Rule 485(a)
Registrant previously registered an indefinite number of its
shares pursuant to Rule 24f-2 of the Investment Company Act
of 1940. The Registrant's Rule 24f-2 Notice of the fiscal
year ended
November 30, 1994 was filed on January 27, 1995.
SMITH BARNEY INVESTMENT TRUST
FORM N-1A
CROSS-REFERENCE SHEET*
PURSUANT TO RULE 495(a)
Part A Item No. Prospectus Caption
1. Cover Page Cover Page
2. Synopsis Prospectus Summary
3. Condensed Financial Financial
Highlights
Information
4. General Description of Cover Page; Prospectus
Registrant Summary; Investment
Objective and Management
Policies; Additional
Information
5. Management of the Fund Management of the Trust
and
the Fund; Distributor;
Additional Information;
Annual Report
6. Capital Stock and Other Investment Objective and
Securities Management Policies;
Dividends, Distributions
and Taxes; Additional
Information
7. Purchase of Securities Purchase of Shares;
Being Offered Valuation of Shares;
Exchange Privilege;
Redemption of Shares;
Minimum Account Size;
Distributor; Additional
Information
8. Redemption or Repurchase Purchase of Shares;
Redemption of Shares;
Exchange Privilege
9. Pending Legal Not applicable
Proceedings
Part B Item No. Statement of Additional
Information Caption
10. Cover Page Cover Page
11. Table of Contents Contents
12. General Information and Distributor; Additional
History Information
13. Investment Objectives Investment Objectives
and
and Policies Management Policies
14. Management of the Fund Management of the
Trust;
Distributor
15. Control Persons and Management of the Trust
Principal Holders of
Securities
16. Investment Advisory and Management of the
Trust;
Other Services Distributor
17. Brokerage Allocation and Investment Objective and
Other Services Management Policies;
Distributor
18. Capital Stock and Other Investment Objective and
Securities Management Policies;
Purchase of Shares;
Redemptions of Shares;
Taxes
19. Purchase, Redemption and Purchase of Shares;
Pricing of Redemption of Shares;
Securities Being Valuation of Shares;
Offered Distributor; Exchange
Privilege
20. Tax Status Taxes
21. Underwriters Distributor
22. Calculation of Performance Data
Performance Data
23. Financial Statements Financial Statements
* Parts A and B (Prospectus and
Statement of Additional Information)
for Smith Barney Limited Maturity
Municipals Fund, Smith Barney
Intermediate Maturity California
Municipals Fund and Smith Barney
Intermediate Maturity New York
Municipals Fund are incorporated by
reference to Post-Effective Amendment
No. 6 as filed with the Securities and
Exchange Commission (the "SEC") on
January 30, 1995 as Accession No.
53798-95-62 ("Post-Effective Amendment
No. 6"). A form of Prospectus and
Statement of Additional Information
for Smith Barney S&P 500 Advantage
Fund was filed pursuant to Rule 485(a)
on August 29, 1995 ("Post-Effective
Amendment No. 9"). It is intended that
the Prospectus filed as Part A of Post-
Effective Amendment No. 9 will be used
exclusively in connection with sales
of fund shares by PFS Distributors.
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
PROSPECTUS
NOVEMBER 13, 1995
- ---------------------------------------------------------
- ------------------
- ----
3100 Breckenridge Blvd., Bldg 200
Duluth, Georgia 30199-0062
(800) 544-5445
Smith Barney S&P 500 Advantage Fund
(the "Fund") is a mutual fund which
seeks
a total return that is consistent with
the return of the aggregate U.S. stock
market, as measured by the Standard &
Poor's 500 Composite Stock Price Index
(the "S&P Index"). The Fund will hold
a broadly diversified portfolio of
common
stocks that is comparable to the S&P
Index in terms of economic sector
weightings, market capitalization and
liquidity. However, the Fund is not an
index fund and will not be limited to
investing in the 500 stocks that
comprise
the S&P Index.
The Fund is one of a number of
funds, each having distinct investment
objec-
tives and policies making up the Smith
Barney Investment Trust (the "Trust").
The Trust is an open-end management
investment company commonly referred
to as
a mutual fund.
This Prospectus sets forth concisely
certain information about the Fund,
including sales charges, distribution
and service fees and expenses, that
pro-
spective investors will find helpful
in making an investment decision.
Invest-
ors are encouraged to read this
Prospectus carefully and retain it for
future
reference.
Shares of the other Funds offered by
the Trust are described in separate
pro-
spectuses that may be obtained by
calling the Trust at (212) 723-9218.
Additional information about the
Fund is contained in a Statement of
Addi-
tional Information dated November
13, 1995, as amended or
supplemented from time
to time, that is available upon
request and without charge by calling
or writ-
ing the Fund at the telephone number
or address set forth above or by
contact-
ing an Investments Representative of
PFS Investments Inc. ("PFS
Investments").
The Statement of Additional
Information has been filed with the
Securities and
Exchange Commission (the "SEC") and is
incorporated by reference into this
Pro-
spectus in its entirety.
PFS DISTRIBUTORS
Distributor
THE TRAVELERS INVESTMENT MANAGEMENT
COMPANY
Investment Adviser
SMITH BARNEY MUTUAL FUNDS MANAGEMENT
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.
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
TABLE OF CONTENTS
<TABLE>
<S>
<C>
PROSPECTUS SUMMARY
3 ------------------------------------
- ------------
INVESTMENT OBJECTIVE AND MANAGEMENT
POLICIES 9 ------------------------
- ------------------------
VALUATION OF SHARES
11 -----------------------------------
- -------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
12 -----------------------------------
- -------------
PURCHASE OF SHARES
13 -----------------------------------
- -------------
EXCHANGE PRIVILEGE
19 -----------------------------------
- -------------
REDEMPTION OF SHARES
21 -----------------------------------
- -------------
MINIMUM ACCOUNT SIZE
23 -----------------------------------
- -------------
PERFORMANCE
23 -----------------------------------
- -------------
MANAGEMENT OF THE FUND
24 -----------------------------------
- -------------
DISTRIBUTOR
25 -----------------------------------
- -------------
ADDITIONAL INFORMATION
27 -----------------------------------
- -------------
</TABLE>
No person has been authorized to
give any information or to
make any representations in
connection with this offering other
than those contained in this
Prospectus and, if given or made,
such other information or
representations must not be relied
upon
as having been authorized by the Fund
or the distributor. This
Prospectus does not constitute an
offer by the Fund or the
distributor to sell or a solicitation
of an offer to buy any of
the securities offered hereby in any
jurisdiction to any person
to whom it is unlawful to make such
offer or solicitation in such
jurisdiction.
2
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
PROSPECTUS SUMMARY
The following summary is qualified in
its entirety by detailed information
appearing elsewhere in this Prospectus
and in the Statement of Additional
Information. Cross references in this
summary are to headings in the Prospec
tus. See "Table of Contents."
INVESTMENT OBJECTIVE The Fund is an
open-end, diversified management
investment
company whose investment objective is
to seek a total return that is
consistent
with the return of the aggregate U.S.
stock market, as measured by the S&P
Index. The Fund will hold a broadly
diversified portfolio of common stocks
that
is comparable to the S&P Index in
terms of economic sector weightings,
market
capitalization and liquidity. However,
the Fund will not be limited to invest
ing in the 500 stocks that comprise
the S&P Index. See "Investment
Objective
and Management Policies."
ALTERNATIVE PURCHASE ARRANGEMENTS The
Fund offers two classes of shares
("Clas-
ses") to investors designed to provide
them with the flexibility of selecting
an investment best suited to their
needs. The two classes of shares
available
are: Class A shares and Class B
shares.
Class A Shares. Class A shares are
sold at net asset value plus an
initial
sales charge of up to 5.00% and are
subject to an annual service fee of
0.25%
of the average daily net assets of the
Class. The initial sales charge may be
reduced or waived for certain
purchases. Purchases of Class A
shares, which
when combined with current holdings of
Class A shares equal or exceed
$500,000
in the aggregate, will be made at net
asset value with no initial sales
charge,
but will be subject to a contingent
deferred sales charge ("CDSC") of
1.00% on
redemptions made within 12 months of
purchase. See "Prospectus Summary-
Reduced
or No Initial Sales Charge."
Class B Shares. Class B shares are
offered at net asset value subject to
a
maximum CDSC of 5.00% of redemption
proceeds, declining by 1.00% each year
after the date of purchase to zero.
This CDSC may be waived for certain
redemp-
tions. Class B shares bear an annual
service fee of 0.25% and an annual
distri-
bution fee of 0.75% of the average
daily net assets of the Class. The
Class B
shares' distribution fee may cause
that Class to have higher expenses and
pay
lower dividends than Class A shares.
Class B Shares Conversion Feature.
Class B shares will convert
automatically
to Class A shares, based on relative
net asset value, eight years after the
date of the original purchase. Upon
conversion, these shares will no
longer be
subject to an annual distribution fee.
In addition, a certain portion of
Class
B
3
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
PROSPECTUS SUMMARY (CONTINUED)
shares that have been acquired through
the reinvestment of dividends and dis
tributions ("Class B Dividend Shares")
will be converted at that time. See
"Purchase of Shares--Deferred Sales
Charge Alternatives."
In deciding which Class of Fund
shares to purchase, investors should
consider
the following factors, as well as any
other relevant facts and
circumstances:
Intended Holding Period. The
decision as to which Class of shares
is more
beneficial to an investor depends on
the amount and intended length of his
or
her investment. Shareholders who are
planning to establish a program of
regular
investment may wish to consider Class
A shares; as the investment
accumulates
shareholders may qualify for reduced
sales charges and the shares are
subject
to lower ongoing expenses over the
term of the investment. As an
alternative,
Class B shares are sold without any
initial sales charge so the entire
purchase
price is immediately invested in the
Fund. Any investment return on these
addi-
tional invested amounts may partially
or wholly offset the higher annual
expenses of this Class. Because the
Fund's future return cannot be
predicted,
however, there can be no assurance
that this would be the case.
Reduced or No Initial Sales Charge.
The initial sales charge on Class A
shares may be waived for certain
eligible purchasers, and the entire
purchase
price will be immediately invested in
the Fund. In addition, Class A share
pur-
chases, which when combined with
current holdings of Class A shares
equal or
exceed $500,000 in the aggregate, will
be made at net asset value with no ini
tial sales charge, but will be subject
to a CDSC of 1.00% on redemptions made
within 12 months of purchase. The
$500,000 aggregate investment may be
met by
adding the purchase to the net asset
value of all Class A shares held in
funds
sponsored by Smith Barney listed under
"Exchange Privilege." Class A share
pur-
chases may also be eligible for a
reduced initial sales charge. See
"Purchase
of Shares." Because the ongoing
expenses of Class A shares may be
lower than
those for Class B shares, purchasers
eligible to purchase Class A shares at
net
asset value or at a reduced sales
charge should consider doing so.
PFS Investments Representatives may
receive different compensation for
sell-
ing each Class of shares. Investors
should understand that the purpose of
the
CDSC on the Class B shares is the same
as that of the initial sales charge on
the Class A shares.
See "Purchase of Shares" and
"Management of the Fund" for a
complete descrip-
tion of the sales charges and service
and distribution fees for each Class
4
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
PROSPECTUS SUMMARY (CONTINUED)
of shares and "Valuation of Shares,"
"Dividends, Distributions and Taxes"
and
"Exchange Privilege" for other
differences between the Classes of
shares.
PURCHASE OF SHARES Shares may be
purchased through PFS Distributors
("PFS"), a
distributor of the Fund. See "Purchase
of Shares."
INVESTMENT MINIMUMS Investors in Class
A and Class B shares may open an
account
by making an initial investment of at
least $1,000 for each account, or $250
for an individual retirement account
("IRA") or a Self-Employed Retirement
Plan. The initial investment amount
will be waived for accounts
establishing a
Systematic Investment Plan. Subsequent
investments of at least $50 may be
made
for both Classes. For participants in
retirement plans qualified under
Section
403(b)(7) of the Internal Revenue Code
of 1986, as amended (the "Code"), the
minimum initial and subsequent
investment requirement for both
Classes is $25.
The minimum initial and subsequent
investment requirement for both
Classes
through the Systematic Investment Plan
described below is $50. See "Purchase
of
Shares."
SYSTEMATIC INVESTMENT PLAN The Fund
offers shareholders a Systematic
Investment
Plan under which they may authorize
the automatic placement of a purchase
order
each month or quarter for Fund shares
in an amount of at least $50. See "Pur
chase of Shares."
REDEMPTION OF SHARES Shares may be
redeemed on each day the New York
Stock
Exchange, Inc. ("NYSE") is open for
business. See "Purchase of Shares" and
"Re-
demption of Shares."
MANAGEMENT OF THE FUND The Travelers
Investment Management Company (the
"Manag-
er") serves as the Fund's investment
adviser. The Manager provides
investment
advisory and management services to
certain investment companies
affiliated
with Smith Barney. The Manager is a
wholly owned subsidiary of Smith
Barney
Holdings Inc. ("Holdings"). Holdings
is a wholly owned subsidiary of
Travelers
Group Inc. ("Travelers"), a
diversified financial services holding
company
engaged, through its subsidiaries,
principally in four business segments:
Investment Services, Consumer Finance
Services, Life Insurance Services and
Property & Casualty Insurance
Services.
Smith Barney Mutual Funds Management
Inc. ("SBMFM") serves as the Fund's
administrator. SBMFM is a wholly owned
subsidiary of Holdings.
5
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
PROSPECTUS SUMMARY (CONTINUED)
SBMFM provides investment advisory and
administration services to investment
companies affiliated with Smith
Barney. See "Management of the Fund."
EXCHANGE PRIVILEGE Shares of a Class
may be exchanged for shares of the
same
Class of certain other funds of the
Smith Barney Mutual Funds at the
respective
net asset values next determined, plus
any applicable sales charge differen
tial. See "Exchange Privilege."
VALUATION OF SHARES Net asset value of
the Fund for the prior day generally
is
quoted daily in the financial section
of most newspapers and is also
available
from PFS Shareholder Services (the
"Sub-Transfer Agent"). See "Valuation
of
Shares."
DIVIDENDS AND DISTRIBUTIONS Dividends
from net investment income and
distributions of net realized capital
gains, if any, are declared and paid
annually. See "Dividends,
Distributions and Taxes."
REINVESTMENT OF DIVIDENDS Dividends
and distributions paid on shares of a
Class
will be reinvested automatically,
unless otherwise specified by an
investor, in
additional shares of the same Class at
current net asset value. Shares
acquired
by dividend and distribution
reinvestments will not be subject to
any sales
charge or CDSC. Class B shares
acquired through dividend and
distribution
reinvestments will become eligible for
conversion to Class A shares on a pro
rata basis. See "Dividends,
Distributions and Taxes."
RISK FACTORS AND SPECIAL
CONSIDERATIONS There can be no
assurance that the
Fund's investment objective will be
achieved. The value of the Fund's
investments will fluctuate in response
to changes in market and economic
conditions, as well as the financial
condition and prospects of issuers in
which the Fund invests. Because the
Fund will incur operating expenses and
the
S&P Index does not, in order to
achieve performance consistent with
the Index,
the Fund's portfolio must diverge from
time to time from the securities
included in the Index. Accordingly,
the Fund's performance will differ
from
that of the S&P Index--either below or
above--during particular short periods
and market cycles. See "Investment
Objective and Management Policies."
6
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
PROSPECTUS SUMMARY (CONTINUED)
THE FUND'S EXPENSES The following
expense table lists the costs and
estimated
expenses that an investor will incur
either directly or indirectly as a
shareholder of the Fund, based on the
maximum sales charge or maximum CDSC
that
may be incurred at the time of
purchase or redemption:
<TABLE>
<CAPTION>
CLASS A CLASS B ----------------------
- --------------------------------------
- ---------------
<S>
<C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on
purchases
(as a percentage of offering price)
5.00% None
Maximum CDSC (as a percentage of
original cost or redemption
proceeds, whichever is lower)
None* 5.00% ------------------------
- --------------------------------------
- -------------
ANNUAL FUND OPERATING EXPENSES
(as a percentage of offering price)
Management Fees
0.60% 0.60%
12b-1 Fees**
0.25 1.00
Other Expenses***
0.25 0.25 -------------------------
- --------------------------------------
- ------------
TOTAL FUND OPERATING EXPENSES
1.10% 1.85% ------------------------
- --------------------------------------
- -------------
</TABLE>
* Purchases of Class A shares, which
when combined with current holdings of
Class A shares offered with a
sales charge, equal or exceed $500,000
in the
aggregate, will be made at net
asset value with no sales charge, but
will
be subject to a CDSC of 1.00% on
redemptions made within 12 months.
** Upon conversion of Class B shares
to Class A shares, such shares will no
longer be subject to a
distribution fee.
*** "Other Expenses" have been based
on estimated expenses of the Fund for
the
fiscal year ending November 30,
1996.
The sales charge and CDSC set forth
in the above table are the maximum
charges imposed on purchases or
redemptions of Fund shares and
investors may
actually pay lower or no charges,
depending on the amount purchased and,
in the
case of Class B and certain Class A
shares, the length of time the shares
are
held. See "Purchase of Shares" and
"Redemption of Shares." PFS receives
an
annual 12b-1 service fee of 0.25% of
the value of average daily net assets
of
the Class A shares which it has sold.
With respect to Class B shares which
it
has sold, PFS receives an annual 12b-1
fee of 1.00% of the value of average
daily net assets of that Class,
consisting of a 0.25% service fee and
a 0.75%
distribution fee. "Other expenses" in
the above table include fees for share
holder services, custodial fees, legal
and accounting fees, printing costs
and
registration fees.
7
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
PROSPECTUS SUMMARY (CONTINUED)
EXAMPLE
The following example is intended to
assist an investor in understanding
the
various costs that an investor in the
Fund will bear directly or indirectly.
The example assumes payment by the
Fund of operating expenses at the
levels set
forth in the table above. See
"Purchase of Shares," "Redemption of
Shares" and
"Management of the Fund."
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- --------------------------------------
- --------------------------------------
- -
<S>
<C> <C>
An investor would pay the following
expenses on a $1,000
investment, assuming (1) 5.00% annual
return and (2) redemption
at the end of each time period:
Class A
$61 $83
Class B
69 88 ---------------------------
- --------------------------------------
- ------------
An investor would pay the following
expenses on the same
investment, assuming the same annual
return and no redemption:
Class A
$61 $83
Class B
19 58 ---------------------------
- --------------------------------------
- ------------
</TABLE>
The example also provides a means
for the investor to compare expense
levels
of funds with different fee structures
over varying investment periods. To
facilitate such comparison, all funds
are required to utilize a 5.00% annual
return assumption. However, the Fund's
actual return will vary and may be
greater or less than 5.00%. THIS
EXAMPLE SHOULD NOT BE CONSIDERED
A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN
THOSE SHOWN ABOVE.
8
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
INVESTMENT OBJECTIVE AND MANAGEMENT
POLICIES
The S&P 500 Advantage Fund is a
mutual fund which seeks a total return
that
is consistent with the return of the
aggregate U.S. stock market, as
measured
by the Standard & Poor's 500 Composite
Stock Price Index (the "S&P Index").
The
Fund invests in a broadly diversified
portfolio of common stocks that is
compa-
rable to the S&P Index in terms of
economic sector weightings, market
capital-
ization and liquidity. However, the
Fund is not an index fund and is not
lim-
ited to investing in the 500 stocks
that comprise the S&P Index. The S&P
Index
is a market capitalization index
composed of 500 widely held common
stocks
listed on the New York Stock Exchange,
American Stock Exchange and the over
the-counter market. The S&P Index is
used as the performance benchmark
because
it represents approximately 70% of the
total market value of all U.S. common
stocks and is well known to investors;
because it is unmanaged it is not sub
ject to the same management and
trading expenses as a mutual fund.
Over time,
the Fund is expected to exhibit
performance volatility that is similar
to that
of the S&P Index. Of course, there can
be no assurance that the Fund's total
return, before or after expenses, will
match or exceed that of the S&P Index.
In selecting individual holdings for
the Fund's portfolio, the investment
adviser will employ a number of
computerized investment models to
identify
stocks that have a high probability of
outperforming their respective
industry/sector peer groups within the
S&P Index. These investment models uti
lize a diverse set of valuation,
earnings and relative price variables
to pro-
duce a comprehensive appraisal profile
on every stock in a selection universe
of roughly 1,000 securities. Stocks
that are determined to be attractive
based
on a combination of quantitative and
fundamental criteria will be
overweighed
relative to the benchmark S&P Index.
In general, this discipline will favor
stocks that demonstrate an improving
trend of earnings and also appear
under-
valued relative to historical
patterns. While these securities have
the poten-
tial to outperform the securities
represented by the S&P 500, they may
in fact
be more volatile and/or have a lower
return than the Index. Although equity
securities have historically
demonstrated long-term growth in
value, their
prices fluctuate based on changes in a
company's financial condition and gen
eral economic conditions. This is
especially true in the case of smaller
compa-
nies.
Once the Fund has reached sufficient
asset size, it will seek to remain
fully
invested in common stocks. The Fund
may invest in certain short-term money
mar-
ket instruments for cash management
purposes and in S&P 500 stock index
futures
contracts for the purpose of gaining
short-term equity exposure.
9
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
INVESTMENT OBJECTIVE AND MANAGEMENT
POLICIES (CONTINUED)
The Fund can use various techniques
to meet changing securities prices,
interest rates, commodity prices and
other factors that affect securities
val-
ues. If the Fund incorrectly judges
the market conditions, these
techniques
could result in a loss and the Fund
could underperform the S&P Index. In
addi-
tion, these techniques may increase
the volatility of the Fund relative to
the
S&P 500.
Further information about the Fund's
investment policies, including a list
of
those restrictions on its investment
activities that cannot be changed
without
shareholder approval, appears in the
Statement of Additional Information.
INVESTMENTS AND STRATEGIES
Short-Term Investments. As noted
above, the Fund may invest in short
term
money market instruments, such as:
U.S. government securities;
certificates of
deposit, time deposits and bankers'
acceptances issued by domestic banks
(in-
cluding their branches located outside
the United States and subsidiaries
located in Canada), domestic branches
of foreign banks, savings and loan
asso-
ciations and similar institutions;
high grade commercial paper; and
repurchase
agreements with respect to such
instruments.
Repurchase Agreements. The Fund may
enter into repurchase agreements with
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, the
Fund
would acquire an underlying obligation
for a relatively short period (usually
not more than one week) subject to an
obligation of the seller to
repurchase,
and the Fund to resell, the obligation
at an agreed-upon price and time,
thereby determining the yield during
the Fund's holding period. This
arrange-
ment results in a fixed rate of return
that is not subject to market fluctua
tions during the Fund's holding
period. Further information on
repurchase
agreements and the risks associated
with such investments appears in the
State-
ment of Additional Information.
Stock Index Futures Contracts. The
Fund will use exchange-traded stock
index
futures contracts as a hedge to
protect against changes in stock
prices. A
stock index futures contract is a
contractual obligation to buy or sell
a spec-
ified index of stocks at a future date
for a fixed price. Stock index futures
may also be used to hedge cash inflows
to gain market exposure until the cash
is invested in specific common stocks.
The Fund will not purchase or sell
futures contracts for which the
aggregate initial margin exceeds five
percent
(5%) of the fair mar-
10
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
INVESTMENT OBJECTIVE AND MANAGEMENT
POLICIES (CONTINUED)
ket value of its assets, after taking
into account unrealized profits and
losses on any such contracts which it
has entered into. When a futures
contract
is purchased, the Fund will set aside,
in an identifiable manner, an amount
of
cash and cash equivalents equal to the
total market value of the futures con
tract, less the amount of the initial
margin.
All stock index futures will be
traded on exchanges that are licensed
and
regulated by the Commodity Futures
Trading Commission ("CFTC"). To ensure
that
its futures transactions meet CFTC
standards, the Fund will enter into
futures
contracts for hedging purposes only.
The Fund expects that risk management
transactions involving futures
contracts will not impact more than
twenty per-
cent (20%) of its assets at any one
time. For a more detailed discussion
of
financial futures contracts and
associated risks, please see the
Statement of
Additional Information.
Portfolio Transactions and Turnover.
Portfolio securities transactions on
behalf of the Fund may be placed by
the Manager with a number of brokers
and
dealers, including Smith Barney. Smith
Barney has advised the Fund that in
transactions with the Fund, Smith
Barney will charge a commission rate
at least
as favorable as the rate that Smith
Barney charges its comparable
unaffiliated
customers in similar transactions.
The Fund intends generally to
purchase securities for long-term
capital
appreciation. The Fund's annual
portfolio turnover rate is not
expected to
exceed 150%. The Fund's portfolio
turnover rate will vary from year to
year.
High turnover rates increase
transaction costs and may increase
taxable capital
gains. The Manager considers these
effects when evaluating the
anticipated ben-
efits of short-term investing.
VALUATION OF SHARES
The Fund's net asset value per share
is determined as of the close of
regular
trading on the NYSE, on each day that
the NYSE is open, by dividing the
value
of the Fund's net assets attributable
to each Class by the total number of
shares of the Class outstanding.
Generally, the Fund's investments
are valued at market value or, in the
absence of a market value with respect
to any securities, at fair value as
deter-
11
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
VALUATION OF SHARES (CONTINUED)
mined by or under the direction of the
Trust's Board of Trustees. Short-term
investments that mature in 60 days or
less are valued at amortized cost when
ever the Trust's Board of Trustees
determines that amortized cost is the
fair
value of those instruments. Further
information regarding the Fund's
valuation
policies is contained in the Statement
of Additional Information.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Fund's policy is to distribute
substantially all of its net
investment
income (that is, its income other than
its net realized capital gains) and
net
realized capital gains, if any, once a
year, normally at the end of the year
in
which earned or at the beginning of
the next year.
If a shareholder does not otherwise
instruct, dividends and capital gains
distributions will be reinvested
automatically in additional shares of
the same
Class at net asset value, subject to
no sales charge or CDSC. In order to
avoid
the application of a 4.00%
nondeductible excise tax on certain
undistributed
amounts of ordinary income and capital
gains, the Fund may make an additional
distribution, shortly before December
31 in each year, of any undistributed
ordinary income or capital gains and
expects to pay any other dividends and
distributions necessary to avoid the
application of this tax.
The per share dividends on Class B
shares of the Fund may be lower than
the
per share dividends on Class A shares
principally as a result of the
distribu-
tion fee applicable with respect to
Class B shares. Distributions of
capital
gains, if any, will be in the same
amount for Class A and Class B shares.
TAXES
The Fund intends to qualify as a
"regulated investment company" under
the
Code. To qualify, the Fund must first
meet certain tests, including the
distri-
bution of at least 90% of its
investment company taxable income
(which
includes, among other items,
dividends, interest and the excess of
any net
short-term capital gains over net long
term capital losses).
Dividends paid from net investment
income and distributions of net
realized
short-term capital gains are taxable
to shareholders as ordinary income,
regardless of how long shareholders
have held their Fund shares and
whether
such
12
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
DIVIDENDS, DISTRIBUTIONS AND TAXES
(CONTINUED)
dividends and distributions are
received in cash or reinvested in
additional
Fund shares. Distributions of net
realized long-term capital gains will
be tax-
able to shareholders as long-term
capital gains, regardless of how long
share-
holders have held Fund shares and
whether such distributions are
received in
cash or are reinvested in additional
Fund shares. Furthermore, as a general
rule, a shareholder's gain or loss on
a sale or redemption of Fund shares
will
be a long-term capital gain or loss if
the shareholder has held the shares
for
more than one year and will be a short
term capital gain or loss if the share
holder has held the shares for one
year or less. Some of the Fund's
dividends
declared from net investment income
may qualify for the Federal dividends
received deduction for corporations.
Statements as to the tax status of
each shareholder's dividends and
distribu-
tions are mailed annually. Each
shareholder also will receive, if
appropriate,
various written notices after the
close of the Fund's prior taxable year
as to
the Federal income tax status of his
or her dividends and distributions
which
were received from the Fund during the
Fund's prior taxable year.
Shareholders
should consult their own tax advisors
about the status of the Fund's
dividends
and distributions for state and local
tax liabilities.
PURCHASE OF SHARES
GENERAL
The Fund offers two Classes of
shares to investors purchasing through
PFS
Investments Representatives. Class A
shares are sold to investors with an
ini-
tial sales charge and Class B shares
are sold without an initial sales
charge
but are subject to a CDSC payable upon
certain redemptions. See "Prospectus
Summary--Alternative Purchase
Arrangements" for a discussion of
factors to con-
sider in selecting which Class of
shares to purchase.
Investors making their initial
purchases of Fund shares through a PFS
Invest-
ments Representative must complete the
appropriate application found in this
Prospectus. The completed application
should be forwarded to the SubTransfer
Agent, 3100 Breckenridge Blvd., Bldg.
200, Duluth, Georgia 30199-0062.
Checks
drawn on foreign banks must be payable
in U.S. dollars and have the routing
number of the U.S. bank encoded on the
check. Subsequent investments may be
sent directly to the Sub-Transfer
Agent.
13
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
PURCHASE OF SHARES (CONTINUED)
Investors may open an account by
making an initial investment of at
least
$1,000 for each account, or $250 for
an IRA or a Self-Employed Retirement
Plan
in the Fund. Subsequent investments of
at least $50 may be made for both Clas
ses. For participants in retirement
plans qualified under Section
403(b)(7) of
the Code, the minimum initial and
subsequent investment requirement for
both
Classes is $25. The initial investment
amount will be waived for accounts
establishing a Systematic Investment
Plan. The minimum initial and
subsequent
investment requirement under the
Systematic Investment Plan for both
Classes is
$50. There are no minimum investment
requirements for Class A shares for
employees of Travelers and its
subsidiaries, including Smith Barney,
Trustees
of the Trust and their spouses and
children. The Fund reserves the right
to
waive or change minimums, to decline
any order to purchase its shares and
to
suspend the offering of shares from
time to time. Shares purchased will be
held
in the shareholder's account by the
Sub-Transfer Agent. Share certificates
are
issued only upon a shareholder's
written request to the Sub-Transfer
Agent.
Purchase orders received by the Sub
Transfer Agent prior to the close of
reg-
ular trading on the NYSE, on any day
the Fund calculates its net asset
value,
are priced according to the net asset
value determined on that day (the
"trade
date").
SYSTEMATIC INVESTMENT PLAN
Shareholders may make additions to
their accounts at any time by
purchasing
shares through a service known as the
Systematic Investment Plan. Under the
Systematic Investment Plan, the Sub
Transfer Agent is authorized through
preau-
thorized transfers of $50 or more to
charge the regular bank account or
other
financial institution indicated by the
shareholder on a monthly or quarterly
basis to provide systematic additions
to the shareholder's Fund account. A
shareholder who has insufficient funds
to complete the transfer will be
charged
a fee of up to $25 by PFS or the Sub-
Transfer Agent.
14
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
PURCHASE OF SHARES (CONTINUED)
INITIAL SALES CHARGE ALTERNATIVE --
CLASS A SHARES
The sales charges applicable to
purchases of Class A shares of the
Fund are
as follows:
<TABLE>
<CAPTION>
SALES
CHARGE AS
-------------
- ---------------- DEALERS'
% OF
% OF REALLOWANCE AS % OF
AMOUNT OF INVESTMENT OFFERING
PRICE AMOUNT INVESTED OFFERING PRICE
- --------------------------------------
- -----------------------------------
<S> <C>
<C> <C>
Less than $ 25,000 5.00%
5.26% 4.50%
$ 25,000 - 49,999 4.00
4.17 3.60
50,000 - 99,999 3.50
3.63 3.15
100,000 - 249,999 3.00
3.09 2.70
250,000 - 499,999 2.00
2.04 1.80
500,000 - and over *
* *
- --------------------------------------
- -----------------------------------
</TABLE>
* Purchases of Class A shares, which
when combined with current holdings of
Class A shares offered with a sales
charge equal or exceed $500,000 in the
aggregate, will be made at net asset
value without any initial sales
charge,
but will be subject to a CDSC of
1.00% on redemptions made within 12
months
of purchase. The CDSC on Class A
shares is payable to PFS, which, in
turn,
pays PFS Investments to compensate
its Investments Representatives whose
clients make purchases of $500,000
or more. The CDSC is waived in the
same
circumstances in which the CDSC
applicable to Class B shares is
waived. See
"Deferred Sales Charge Alternatives"
and "Waivers of CDSC."
The reduced sales charges shown
above apply to the aggregate of
purchases of
Class A shares of the Fund made at one
time by "any person," which includes
an
individual, his or her spouse and
children, or a trustee or other
fiduciary of
a single trust estate or single
fiduciary account. The reduced sales
charge
minimums may also be met by
aggregating the purchase with the net
asset value
of all Class A shares offered with a
sales charge held in funds sponsored
by
Smith Barney that are offered with a
sales charge listed under "Exchange
Privi-
lege."
INITIAL SALES CHARGE WAIVERS
Purchases of Class A shares may be
made at net asset value without a
sales
charge in the following circumstances:
(a) sales of Class A shares to
Trustees
of the Trust and employees of
Travelers and its subsidiaries and
employees of
members of the National Association of
Securities Dealers, Inc., or the
spouses
and children of such persons
(including the surviving spouse of a
deceased
Director or employee, and retired
Directors or employees), or sales to
any
trust, pension, profit-sharing or
other benefit plan for such persons
provided
such sales are made upon the assurance
of the purchaser that the purchase is
made for investment purposes and that
the securities will not be resold
except
through redemption or repurchase; (b)
offers of Class A shares to any other
investment com-
15
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
PURCHASE OF SHARES (CONTINUED)
pany in connection with the
combination of such company with the
Fund by merg-
er, acquisition of assets or
otherwise; (c) shareholders who have
redeemed
Class A shares in the Fund (or Class A
shares of another fund in the Smith
Bar-
ney Mutual Funds that are offered with
a sales charge equal to or greater
than
the maximum sales charge of the Fund)
and who wish to reinvest their
redemption
proceeds in the Fund, provided the
reinvestment is made within 60
calendar days
of the redemption; (d) accounts
managed by registered investment
advisory sub-
sidiaries of Travelers; and (e) sales
through PFS Investments
Representatives
where the amounts invested represent
the redemption proceeds from
investment
companies distributed by an entity
other than PFS, on the condition that
(i)
the redemption has occurred no more
than 60 days prior to the purchase of
the
shares, (ii) the shareholder paid an
initial sales charge on such redeemed
shares and (iii) the shares redeemed
were not subject to a deferred sales
charge. PFS Investments may pay its
Investments Representatives an amount
equal
to 0.40% of the amount invested if the
purchase represents redemption
proceeds
from an investment company distributed
by an entity other than PFS. In order
to
obtain such discounts, the purchaser
must provide sufficient information at
the
time of purchase to permit
verification that the purchase would
qualify for the
elimination of the sales charge.
VOLUME DISCOUNTS
The "Amount of Investment" referred
to in the sales charge table set forth
above under "Initial Sales Charge
Alternative--Class A Shares" includes
the
purchase of Class A shares in the Fund
and of other funds sponsored by Smith
Barney that are offered with a sales
charge listed under "Exchange
Privilege."A
person eligible for a volume discount
includes: an individual; members of a
family unit comprising a husband, wife
and minor children; a trustee or other
fiduciary purchasing for a single
fiduciary account including pension,
profit-
sharing and other employee benefit
trusts qualified under Section 401(a)
of the
Code, or multiple custodial accounts
where more than one beneficiary is
involved if purchases are made by
salary reduction and/or payroll
deductionfor
qualified and nonqualified accounts
and transmitted by a common employer
enti-
ty. Employer entities for payroll
deduction accounts may include trade
and
craft associations and any other
similar organizations.
LETTER OF INTENT
A Letter of Intent for amounts of
$50,000 or more provides an
opportunity for
an investor to obtain a reduced sales
charge by aggregating the investments
16
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
PURCHASE OF SHARES (CONTINUED)
over a 13 month period, provided the
investor refers to such Letter when
plac-
ing orders. For purposes of a Letter
of Intent, the "Amount of Investment"
as
referred to in the preceding sales
charge table includes (i) all Class A
shares
of the Fund and other funds of the
Smith Barney Mutual Funds offered with
a
sales charge acquired during the term
of the Letter plus (ii) the value of
all
Class A shares previously purchased
and still owned. Each investment made
dur-
ing the period receives the reduced
sales charge applicable to the total
amount
of the investment goal. If the goal is
not achieved within the period, the
investor must pay the difference
between the sales charges applicable
to the
purchases made and the charges
previously paid, or an appropriate
number of
escrowed shares will be redeemed. The
term of the Letter will commence upon
the
date the Letter is signed, or at the
option of the investor, up to 90 days
before such date. Please contact an
Investments Representative.
DEFERRED SALES CHARGE ALTERNATIVES
"CDSC Shares" are sold at net asset
value next determined without an
initial
sales charge so that the full amount
of an investor's purchase payment may
be
immediately invested in the Fund. A
CDSC, however, may be imposed on
certain
redemptions of these shares. "CDSC
Shares" are: (a) Class B shares, and
(b)
Class A shares which, when combined
with Class A shares offered with a
sales
charge currently held by an investor,
equal or exceed $500,000 in the
aggregate.
Any applicable CDSC will be assessed
on an amount equal to the lesser of
the
original cost of the shares being
redeemed or their net asset value at
the time
of redemption. CDSC Shares that are
redeemed will not be subject to a CDSC
to
the extent that the value of such
shares represents: (a) capital
appreciation
of Fund assets; (b) reinvestment of
dividends or capital gain
distributions;
(c) with respect to Class B shares,
shares redeemed more than five years
after
their purchase; or (d) with respect to
Class A shares that are CDSC Shares,
shares redeemed more than 12 months
after their purchase.
Class A shares that are CDSC Shares
are subject to a 1.00% CDSC if
redeemed
within 12 months of purchase. In
circumstances in which the CDSC is
imposed on
Class B shares, the amount of the
charge will depend on the number of
years
since the shareholder made the
purchase payment from which the amount
is being
redeemed. Solely for purposes of
determining the number of years since
a pur-
chase payment, all purchase payments
made during a month will be aggregated
and
deemed to have been made on the last
day of the preced-
17
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
PURCHASE OF SHARES (CONTINUED)
ing Fund's statement month. The
following table sets forth the rates
of the
charge for redemptions of Class B
shares by shareholders.
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE
PAYMENT WAS MADE CDSC
- --------------------------------
<S> <C>
First 5.00%
Second 4.00
Third 3.00
Fourth 2.00
Fifth 1.00
Sixth 0.00
Seventh 0.00
Eighth 0.00
- -------------------------------
</TABLE>
Class B shares will convert
automatically to Class A shares eight
years after
the date on which they were purchased
and thereafter will no longer be
subject
to any distribution fee. There will
also be converted at that time such
propor-
tion of Class B Dividend Shares owned
by the shareholder as the total number
of
his or her Class B shares converting
at the time bears to the total number
of
outstanding Class B shares (other than
Class B Dividend Shares) owned by the
shareholder.
In determining the applicability of
any CDSC, it will be assumed that a
redemption is made first of shares
representing capital appreciation,
next of
shares representing the reinvestment
of dividends and capital gains
distribu-
tions and finally of other shares held
by the shareholder for the longest
period of time. The length of time
that CDSC Shares acquired through an
exchange have been held will be
calculated from the date that the
shares
exchanged were initially acquired in
one of the other Smith Barney Mutual
Funds, and Fund shares being redeemed
will be considered to represent, as
applicable, capital appreciation or
dividend and capital gain distribution
reinvestments in such other funds. For
Federal income tax purposes, the
amount
of the CDSC will reduce the gain or
increase the loss, as the case may be,
on
the amount realized on redemption. The
amount of any CDSC will be paid to
PFS.
To provide an example, assume an
investor purchased 100 Class B shares
at $10
per share for a cost of $1,000.
Subsequently the investor acquired 5
additional
shares through dividend reinvestment.
During the fifteenth month after the
pur-
chase, the investor decided to redeem
$500 of his or her investment.
Assuming
at the time of the redemption the net
asset value had appreciated to $12 per
share, the value of the investor's
shares would be $1,260 (105 shares at
18
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
PURCHASE OF SHARES (CONTINUED)
$12 per share). The CDSC would not be
applied to the amount which represents
appreciation ($200) and the value of
the reinvested dividend shares ($60).
Therefore, $240 of the $500 redemption
proceeds ($500-$260) would be charged
at
a rate of 4% (the applicable rate for
Class B shares) for a total deferred
sales charge of $9.60.
WAIVERS OF CDSC
The CDSC will be waived on: (a)
exchanges (see "Exchange Privilege");
(b)
automatic cash withdrawals in amounts
equal to or less than 1.00% per month
of
the value of the shareholder's shares
at the time the withdrawal plan
commences
(see "Automatic Cash Withdrawal
Plan"); (c) redemption of shares
within 12
months following the death or
disability of the shareholder; (d)
redemption of
shares made in connection with
qualified distributions from
retirement plans or
IRAs upon the attainment of age 59
1/2; (e) involuntary redemptions; and
(f)
redemption of shares in connection
with a combination of the Fund with
any
investment company by merger,
acquisition of assets or otherwise. In
addition,
a shareholder who has redeemed shares
from other funds of the Smith Barney
Mutual Funds may, under certain
circumstances, reinvest all or part of
the
redemption proceeds within 60 days and
receive pro rata credit for any CDSC
imposed on the prior redemption.
CDSC waivers will be granted subject
to confirmation by PFS of the
sharehold-
er's status or holdings, as the case
may be.
EXCHANGE PRIVILEGE
Except as otherwise noted below,
shares of each Class may be exchanged
at the
net asset value next determined for
shares of the same Class in the
following
funds of the Smith Barney Mutual
Funds, to the extent shares are
offered for
sale in the shareholder's state of
residence. Exchanges of shares are
subject
to minimum investment requirements and
all shares are subject to the other
requirements of the fund into which
exchanges are made and a sales charge
dif-
ferential may apply.
FUND NAME:
Smith Barney Appreciation Fund Inc.
Smith Barney Growth Opportunity Fund
Smith Barney Investment Grade Bond
Fund
19
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
EXCHANGE PRIVILEGE (CONTINUED)
Class A Exchanges. Class A shares of
Smith Barney Mutual Funds sold without
a
sales charge or with a maximum sales
charge of less than the maximum
charged by
other Smith Barney Mutual Funds will
be subject to the appropriate "sales
charge differential" upon the exchange
of their shares for Class A shares of
a
fund sold with a higher sales charge.
The "sales charge differential" is lim
ited to a percentage rate no greater
than the excess of the sales charge
rate
applicable to purchases of shares of
the mutual fund being acquired in the
exchange over the sales charge rate(s)
actually paid on the mutual fund
shares
relinquished in the exchange and on
any predecessor of those shares. For
pur-
poses of the exchange privilege,
shares obtained through automatic
reinvestment
of dividends and capital gains
distributions are treated as having
paid the
same sales charges applicable to the
shares on which the dividends or
distribu-
tions were paid; however, if no sales
charge was imposed upon the initial
pur-
chase of the shares, any shares
obtained through automatic
reinvestment will be
subject to a sales charge differential
upon exchange.
Class B Exchanges. In the event a
Class B shareholder wishes to exchange
all
or a portion of his or her shares in
any of the funds imposing a higher
CDSC
than that imposed by the Fund, the
exchanged Class B shares will be
subject to
the higher applicable CDSC. Upon an
exchange, the new Class B shares will
be
deemed to have been purchased on the
same date as the Class B shares of the
Fund that have been exchanged.
Additional Information Regarding the
Exchange Privilege. Although the
exchange privilege is an important
benefit, excessive exchange
transactions can
be detrimental to the Fund's
performance and its shareholders. The
Manager may
determine that a pattern of frequent
exchanges is excessive and contrary to
the
best interests of the Fund's other
shareholders. In this event, the
Manager
will notify PFS that the Fund may, at
its discretion, decide to limit addi
tional purchases and/or exchanges by
the shareholder. Upon such a determina
tion, the Fund will provide notice in
writing or by telephone to the share
holder at least 15 days prior to
suspending the exchange privilege and
during
the 15-day period the shareholder will
be required to (a) redeem his or her
shares in the Fund or (b) remain
invested in the Fund or exchange into
any of
the Smith Barney Mutual Funds listed
under "Exchange Privilege," which
position
the shareholder would be expected to
maintain for a significant period of
time.
All relevant factors will be
considered in determining what
constitutes an abu-
sive pattern of exchanges.
20
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
EXCHANGE PRIVILEGE (CONTINUED)
Exchanges will be processed at the
net asset value next determined, plus
any
applicable sales charge differential.
Redemption procedures discussed below
are
also applicable for exchanging shares,
and exchanges will be made upon
receipt
of all supporting documents in proper
form. If the account registration of
the
shares of the fund being acquired is
identical to the registration of the
shares of the fund exchanged, no
signature guarantee is required. A
capital
gain or loss for tax purposes will be
realized upon the exchange, depending
upon the cost or other basis of shares
redeemed. Before exchanging shares,
investors should read the current
prospectus describing the shares to be
acquired. The Fund reserves the right
to modify or discontinue exchange
privi-
leges upon 60 days' prior notice to
shareholders.
REDEMPTION OF SHARES
Shareholders may redeem for cash
some or all of their shares of the
Fund at
any time by sending a written request
in proper form directly to the Sub
Trans-
fer Agent, PFS Shareholder Services,
at 3100 Breckinridge Blvd., Bldg. 200,
Duluth, Georgia 30199-0062.
Shareholders who, after reviewing the
information
below, have questions on how to redeem
their accounts should contact the Sub
Transfer Agent at: (800) 544-5445
(English speaking representatives);
(800)
544-7278 (Spanish speaking
representatives); or (800) 824-1721
(TDD Line for
the Hearing Impaired).
As described under "Purchase of
Shares," redemptions of Class B shares
are
subject to a CDSC.
The request for redemption must be
signed by all persons in whose names
the
shares are registered. Signatures must
conform exactly to the account
registra-
tion. If the proceeds of the
redemption exceed $50,000, or if the
proceeds are
not to be paid to the record owner(s)
at the record address, if the
sharehold-
er(s) has had an address change in the
past 45 days, or if the shareholder(s)
is a corporation, sole proprietor,
partnership, trust or fiduciary, signa
ture(s) must be guaranteed by one of
the following: a bank or trust
company; a
broker-dealer; a credit union; a
national securities exchange,
registered secu-
rities association or clearing agency;
a savings and loan association; or a
federal savings bank.
Generally, a properly completed
Redemption Form with any required
signature
guarantee is all that is required for
a redemption. In some cases, however,
other documents may be necessary. For
example, in the case of shareholders
21
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
REDEMPTION OF SHARES (CONTINUED)
holding certificates, the certificates
for the shares being redeemed must
accompany the redemption request.
Additional documentary evidence of
authority
is required by the Sub-Transfer Agent
in the event redemption is requested
by a
corporation, partnership, trust,
fiduciary, executor or administrator.
Addi-
tionally, if a shareholder requests a
redemption from a Retirement Plan
account
(IRA, SEP or 403(b)(7) ), such request
must state whether or not federal
income
tax is to be withheld from the
proceeds of the redemption check.
A shareholder may utilize the Sub
Transfer Agent's FAX to redeem his or
her
account as long as a signature
guarantee or other documentary
evidence is not
required. Redemption requests should
be properly signed by all owners of
the
account and faxed to the Sub-Transfer
Agent at (800) 554-2374. Facsimile
redemptions may not be available if
the shareholder cannot reach the Sub
Trans-
fer Agent by FAX, whether because all
telephone lines are busy or for any
other
reason; in such case, a shareholder
would have to use the Fund's regular
redemption procedure described above.
Facsimile redemptions received by the
Sub-Transfer Agent prior to 4:00 p.m.
Eastern time on a regular business day
will be processed at the net asset
value per share determined that day.
In all cases, the redemption price
is the net asset value per share of
the
Fund next determined after the request
for redemption is received in proper
form by the Sub-Transfer Agent.
Payment for shares redeemed will be
made by
check mailed within three days after
acceptance by the Sub-Transfer Agent
of
the request and any other necessary
documents in proper order. Such
payment may
be postponed or the right of
redemption suspended as provided by
the rules of
the SEC. If the shares to be redeemed
have been recently purchased by check
or
draft, the Sub-Transfer Agent may hold
the payment of the proceeds until the
purchase check or draft has cleared,
usually a period of up to 15 days. Any
taxable gain or loss will be
recognized by the shareholder upon
redemption of
shares.
After following the above-stated
redemption guidelines, a shareholder
may
elect to have the redemption proceeds
wire-transferred directly to the share
holder' bank account of record
(defined as a currently established
pre-autho-
rized draft on the shareholder's
account with no changes within the
previous 45
days), as long as the bank account is
registered in the same name(s) as the
account with the Fund. If the proceeds
are not to be wired to the bank
account
of record, or mailed to the registered
owner, a signature guarantee will be
required from all shareholders. A $25
service fee will be charged by the Sub
Transfer
22
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
REDEMPTION OF SHARES (CONTINUED)
Agent to help defray the
administrative expense of executing a
wire redemption.
Redemption proceeds will normally be
wired to the designated bank account
on
the next business day following the
redemption, and should ordinarily be
cred-
ited to the shareholder's bank account
by his/her bank within 48 to 72 hours.
AUTOMATIC CASH WITHDRAWAL PLAN
The Fund offers shareholders an
automatic cash withdrawal plan, under
which
shareholders who own shares with a
value of at least $10,000 may elect to
receive periodic cash payments of at
least $50 monthly or quarterly.
Retirement
plan accounts are eligible for
automatic cash withdrawal plans only
where the
shareholder is eligible to receive
qualified distributions and has an
account
value of at least $5,000. The
withdrawal plan will be carried over
on exchanges
between funds or Classes of the Fund.
Any applicable CDSC will not be waived
on
amounts withdrawn by a shareholder
that exceed 1.00% per month of the
value of
the shareholder's shares subject to
the CDSC at the time the withdrawal
plan
commences. For further information
regarding the automatic cash
withdrawal
plan, shareholders should contact the
Sub-Transfer Agent.
MINIMUM ACCOUNT SIZE
The Fund reserves the right to
involuntarily liquidate any
shareholder's
account in the Fund if the aggregate
net asset value of the shares held in
the
Fund account is less than $500. (If a
shareholder has more than one account
in
this Fund, each account must satisfy
the minimum account size). The Fund,
how-
ever, will not redeem shares based
solely on market reductions in net
asset
value. Before the Fund exercises such
right, shareholders will receive
written
notice and will be permitted 60 days
to bring accounts up to the minimum to
avoid automatic redemption.
PERFORMANCE
From time to time the Fund may
include its total return, average
annual total
return and current dividend return in
advertisements and/or other types of
sales literature. These figures are
computed separately for Class A and
Class B
shares of the Fund. These figures will
be based on historical earnings and
will
not be intended to indicate future
performance. Total return is computed
for a
specified period of time assuming
deduction of the maximum sales charge,
if
23
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
PERFORMANCE (CONTINUED)
any, from the initial amount invested
and reinvestment of all income
dividends
and capital gain distributions on the
reinvestment dates at prices
calculated
as stated in this Prospectus, then
dividing the value of the investment
at the
end of the period so calculated by the
initial amount invested and
subtracting
100%. The standard average annual
total return, as prescribed by the
SEC, is
derived from this total return, which
provides the ending redeemable value.
Such standard total return information
may also be accompanied with
nonstandard
total return information for differing
periods computed in the same manner
but
without annualizing the total return
or taking sales charges into account.
The
Fund calculates current dividend
return for each Class by annualizing
the most
recent monthly distribution and
dividing by the net asset value or the
maximum
public offering price (including sales
charge) on the last day of the period
for which current dividend return is
presented. The current dividend return
for
each Class may vary from time to time
depending on market conditions, the
com-
position of its investment portfolio
and operating expenses. These factors
and
possible differences in the methods
used in calculating current dividend
return
should be considered when comparing a
Class' current return to yields
published
for other investment companies and
other investment vehicles. The Fund
may also
include comparative performance
information in advertising or
marketing its
shares. Such performance information
may include data from Lipper
Analytical
Services, Inc. and other financial
publications. The Fund may from time
to time
illustrate the benefits of taxdeferral
by comparing taxable
investments to
investments made through tax-deferred
retirement plans, and the Fund may
illus-
trate in graph or chart form, or
otherwise, the benefits of the
systematic
investment plan to investments made in
a rising market.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
Overall responsibility for
management and supervision of the Fund
rests with
the Trust's Board of Trustees. The
Trustees approve all significant
agreements
between the Trust, on behalf of the
Fund, and the companies that furnish
serv-
ices to the Fund, including agreements
with its distributor, investment advis
er, custodian and transfer agent. The
day-to-day operations of the Fund are
delegated to the Fund's investment
adviser and administrator. The
Statement of
Additional Information contains
background information regarding each
Trustee
of the Trust and the executive
officers of the Fund.
24
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
MANAGEMENT OF THE FUND (CONTINUED)
MANAGER -- TIMCO
The Manager, located at One Tower
Square, Hartford, Connecticut 06183
203,
serves as the Fund's investment
adviser and manages the day-to-day
operations
of the Fund pursuant to a management
agreement entered into by the Manager
and
the Fund. The Manager, which is a
registered investment adviser, has
been in
the investment counseling business
since 1967 and has aggregate assets
under
management as of October 31, 1995, in
excess of $1.1 billion.
Subject to the supervision and
direction of the Fund's Board of
Trustees, the
Manager manages the Fund's portfolio
in accordance with the Fund's stated
investment objective and policies,
makes investment decisions for the
Fund,
places orders to purchase and sell
securities and employs professional
portfo-
lio managers and securities analysts
who provide research services to the
Fund.
Investment advisory fees are
computed daily and paid monthly at the
annual
rate of 0.50% of the Fund's average
daily net assets.
PORTFOLIO MANAGEMENT
The investment management team of
the Fund's Manager is headed by Sandip
Bhagat and Kent Kelley, president and
chief executive officer, respectively,
of
TIMCO. Messrs. Bhagat and Kelley are
primarily responsible for the day-to
day
operations of the Fund, including
making all investment decisions.
Management's discussion and
analysis, and additional performance
information
regarding the Fund during the fiscal
year ended November 30, 1996 will be
included in the Annual Report dated
November 30, 1996. A copy of the
Annual
Report may be obtained upon request
and without charge from the Sub
Transfer
Agent or by writing or calling the
Fund at the address or phone number
listed
on page one of this Prospectus.
ADMINISTRATOR
SBMFM, located at 388 Greenwich
Street, New York, New York 10013,
serves as
the Fund's administrator and oversees
all aspects of the Fund's
administration
and operation. Administration fees are
computed daily and paid monthly at the
annual rate of 0.10% of the Fund's
average daily net assets.
DISTRIBUTOR
PFS is located at 3100 Breckenridge
Boulevard, Duluth, Georgia 30199-0001.
PFS distributes shares of the Fund as
a principal underwriter and as such
25
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
DISTRIBUTOR (CONTINUED)
conducts a continuous offering
pursuant to a "best efforts"
arrangement requir-
ing PFS to take and pay for only such
securities as may be sold to the
public.
Pursuant to a plan of distribution
adopted by the Fund under Rule 12b-1
under
the 1940 Act (the "Plan"), PFS is paid
an annual service fee with respect to
Class A and Class B shares of the Fund
at the annual rate of 0.25% of the
aver-
age daily net assets of the respective
Class. PFS is also paid an annual dis
tribution fee with respect to Class B
shares at the annual rate of 0.75% of
the
average daily net assets attributable
to that Class. Class B shares that
auto-
matically convert to Class A shares
eight years after the date of original
pur-
chase will no longer be subject to
distribution fees. PFS, in turn, pays
PFS
Investments to compensate its
Investments Representatives for
servicing share-
holder accounts and, in the case of
Class B shares, to cover expenses
primarily
intended to result in the sale of
those shares. These expenses include:
adver-
tising expenses; the cost of printing
and mailing prospectuses to potential
investors; payments to and expenses of
Investments Representatives and other
persons who provide support services
in connection with the distribution of
shares; interest and/or carrying
charges; and indirect and overhead
costs of
PFS Investments associated with the
sale of Fund shares, including lease,
util-
ity, communications and sales
promotion expenses.
The payments to PFS Investments
Representatives for selling shares of
a Class
include a commission or fee paid by
the investor or PFS at the time of
sale and
a continuing fee for servicing
shareholder accounts for as long as a
share-
holder remains a holder of that Class.
PFS Investments Representatives may
receive different levels of
compensation for selling different
Classes.
PFS Investments may be deemed to be
an underwriter for purposes of the
Secu-
rities Act of 1933. From time to time,
PFS or its affiliates may also pay for
certain non-cash sales incentives
provided to PFS Investments
Representatives.
Such incentives do not have any effect
on the net amount invested. In
addition
to the reallowances from the
applicable public offering price
described above,
PFS may, from time to time, pay or
allow additional reallowances or
promotional
incentives, in the form of cash or
other compensation to PFS Investments
Repre-
sentatives that sell shares of the
Fund.
Payments under the Plan are not tied
exclusively to the distribution and
shareholder service expenses actually
incurred by PFS and the payments may
exceed distribution expenses actually
incurred. The Trust's Board of
Trustees
will evaluate the appropriateness of
the Plan and its payment terms on a
con-
tinuing basis and in so doing will
consider all relevant factors,
including
expenses borne by PFS, amounts
received under the Plan and proceeds
of the
CDSC.
26
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
ADDITIONAL INFORMATION
The Trust was organized on October
17, 1991 under the laws of the Common-
wealth of Massachusetts and is a
business entity commonly known as a
"Massachu-
setts business trust."
The Fund offers to investors making
investments through PFS Investments
Rep-
resentatives shares of common stock
classified into two Classes, A and B.
Each
Class represents an identical interest
in the Fund's investment portfolio. As
a
result, the Classes have the same
rights, privileges and preferences,
except
with respect to: (a) the designation
of each Class; (b) the effect of the
respective sales charges for each
Class; (c) the distribution and/or
service
fees borne by each Class pursuant to
the Plan; (d) the expenses allocable
exclusively to each Class; (e) voting
rights on matters exclusively
affecting a
single Class; (f) the exchange
privilege of each Class; and (g) the
conversion
feature of the Class B shares. The
Trust's Board of Trustees does not
antici-
pate that there will be any conflicts
among the interests of the holders of
the
two Classes. The Trustees, on an
ongoing basis, will consider whether
any such
conflicts exists and, if so, take
appropriate action.
PNC Bank, National Association,
located at 17th and Chestnut Streets,
Phila-
delphia, Pennsylvania 19103, serves as
custodian of the Fund's investments.
The Shareholder Services Group,
Inc., located at Exchange Place,
Boston, Mas-
sachusetts 02109, serves as the Fund's
transfer agent.
PFS Shareholder Services, located at
3100 Breckenridge Blvd., Bldg. 200,
Duluth, Georgia 30199-0062, serves as
the Fund's Sub-Transfer Agent.
The Fund does not hold annual
shareholder meetings. There normally
will be no
meeting 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. The Trustees
will call a meeting for any purpose
upon
written request of shareholders
holding at least 10% of the Fund's
outstanding
shares and the Fund will assist
shareholders in calling such a meeting
as
required by the 1940 Act. When matters
are submitted for shareholder vote,
shareholders of each Class will have
one vote for each full share owned and
a
proportionate, fractional vote for any
fractional share held of that Class.
Generally, shares of the Fund will be
voted on a Fund-wide basis on all
matters
except matters affecting only the
interests of one Class of shares.
The Fund sends its shareholders a
semi-annual report and an audited
annual
report, each of which includes a list
of the investment securities held by
the
27
<PAGE>
SMITH BARNEY
S&P 500 Advantage Fund
ADDITIONAL INFORMATION (CONTINUED)
Fund at the end of the reporting
period. In an effort to reduce the
Fund's
printing and mailing costs, the Fund
plans to consolidate the mailing of
its
semi-annual and annual reports by
household. This consolidation means
that a
household having multiple accounts
with the identical address of record
will
receive a single copy of each report.
In addition, the Fund plans to consoli
date the mailing of its Prospectuses
so that a shareholder having multiple
accounts (i.e., individual, IRA and/or
Self-Employed Retirement Plan
accounts)
will receive a single Prospectus
annually. Shareholders who do not want
this
consolidation to apply to their
accounts should contact the Fund's Sub
Transfer
Agent.
"S&P 500" is a trademark of
McGraw-Hill, Inc. and has been
licensed
for use by Smith Barney, Inc. The Fund
is not sponsored, endorsed, sold or
promoted by S&P. S&P makes no
representation or warranty, express or
implied,
to the shareholders of the Fund or
any member of the public regarding the
advisability of investing in
securities generally or in the Fund
particularly or the
ability of the S&P 500 Index to track
general stock market performance.
S&P's
only relationship to Smith Barney,
Inc. is the licensing of certain
trademarks and
trade names of S&P and of the S&P 500
Index which is determined, composed
and
calculated by S&P without regard to
Smith Barney, Inc. of the Fund. S&P
has no
obligation to take the need of Smith
Barney, Inc. or the shareholders of
the fund
into consideration in determining,
composing or calculating the S&P 500
Index.
S&P is not responsible for and has not
participated in the determination of
the prices
and the amount of the Fund's shares or
the timing of the issuance or sale of
the Fund's
shares or in the determination or
calculation of the equation by which
the Fund's
shares are to be converted into cash.
S&P has no obligation or liability in
connection
with the administration, marketing or
trading of the Fund.
28
<PAGE>
- --------------------------------------
- --------------------------------------
- --
Smith Barney
S&P 500
Advantage
Fund
3100 Breckenridge Blvd, Bldg 200
Duluth, Georgia 30199-0062
FDXXXX XX
Smith Barney
S&P 500 Advantage Fund
388 Greenwich Street
New York, New York 10013
(212) 723-9218
Statement of Additional Information November 13,
1995
This Statement of Additional Information expands
upon and supplements the information contained in
the current Prospectuses of Smith Barney S&P
500 Advantage Fund (the "Fund") dated November 13,
1995, as amended or supplemented from time to time,
and should be read in conjunction with the Fund's
Prospectus. The Fund is a sub trust of Smith Barney
Investment Trust (the "Trust"). The Fund's
Prospectus may be obtained from a Smith Barney
Financial Consultant or an Investments
Representative of PFS Investments Inc.
(collectively, referred to herein as "financial
consultant") , or by writing or calling the Fund
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 this Statement of
Additional Information, except where shown below:
<TABLE>
<S>
<C> Management of the Fund
....................................................
.. .. .. .. ........................... 1
Investment Objective and Management Policies
...................................................
5 Purchase of Shares
....................................................
.. .. .. .. ....................................
11 Redemption of Shares
....................................................
.. .. .. .. ............................... 12
Distributor
....................................................
.. .. .. ..
................................................. 13
Valuation of Shares
....................................................
.. .. .. .. ...................................
14 Exchange Privilege
....................................................
.. .. .. .. ....................................
14 Performance Data (See in the Prospectus
"Performance") ...................................
15
Taxes (See in the Prospectus "Dividends,
Distributions
and Taxes") .................. 16
Additional Information
....................................................
.. .. .. .. .............................. 17
</TABLE>
MANAGEMENT OF THE FUND
The executive officers of the Fund are employees of
certain of the organizations that provide services
to the Fund. These organizations are the following:
<TABLE>
<S> <C>
Name Service
Smith Barney Inc. (Smith
Barney)...................................
Distributor PFS Distributors ("PFS")
..............................................
Distributor
Travelers Investment Management Company ("TIMCO")
Investment Adviser
Smith Barney Mutual Funds Management Inc.
("SBMFM")
....................................................
.. .. .. .. ... Administrator
PNC Bank, National Association ("PNC Bank")
.......... Custodian
The Shareholder Services Group, Inc. ("TSSG"),
a subsidiary of First Data Corporation
....................... Transfer Agent PFS
Shareholder Services
..............................................
Sub Transfer Agent
</TABLE>
These organizations and the functions they perform
for the Fund are discussed in the Prospectuses and
in this Statement of Additional Information.
Trustees and Executive Officers of the Fund
The Trustees and executive officers of the Fund,
together with information as to their principal
business occupations during the past five years, are
shown below. Each Trustee who is an "interested
person" of the Fund, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), is
indicated by an asterisk.
Herbert Barg, Trustee (Age 73). Private Investor.
His address is 273 Montgomery Avenue, Bala Cynwyd,
Pennsylvania 19004.
*Alfred J. Bianchetti, Trustee (Age 72). Retired;
formerly Senior Consultant to Dean Witter Reynolds
Inc. His address is 19 Circle End Drive, Ramsey, New
Jersey 17466.
Martin Brody, Trustee (Age 74). Vice Chairman of the
Board of Restaurant Associates Industries Corp.; a
Director of Jaclyn, Inc. His address is HMK
Associates, Three ADP Boulevard, Roseland, New
Jersey 07068.
Dwight B. Crane, Trustee (Age 57). Professor,
Graduate School of Business Administration, Harvard
University; a Director of Peer Review Analysis, Inc.
His address is Graduate School of Business
Administration, Harvard University, Boston,
Massachusetts 02163.
Burt N. Dorsett, Trustee (Age 64). Managing Partner
of Dorsett, McCabe Management, Inc., an investment
counseling firm; Director of Research Corporation
Technologies, Inc., a non-profit patent-clearing and
licensing firm. His address is 201 East 62nd Street,
New York, New York 10021.
Elliot S. Jaffe, Trustee (Age 69). Chairman of the
Board and President of The Dress Barn, Inc. His
address is 30 Dunnigan Drive, Suffern, New York
10901.
Stephen E. Kaufman, Trustee (Age 63). Attorney. His
address is 277 Park Avenue, New York, New York
10017.
Joseph J. McCann, Trustee (Age 65). Financial
Consultant; formerly Vice President of Ryan Homes,
Inc., Pittsburgh, Pennsylvania. His address is 200
Oak Park Place, Pittsburgh, Pennsylvania 15243.
*Heath B. McLendon, Chairman of the Board and
Investment Officer (Age 62). Managing Director of
Smith Barney, Chairman of the Board of Smith Barney
Strategy Advisers Inc. and President of SBMFM; prior
to July 1993, Senior Executive Vice President of
Shearson Lehman Brothers Inc. ("Shearson Lehman
Brothers"), Vice Chairman of Asset Management
Division of Shearson Lehman Brothers, a Director of
PanAgora Asset Management, Inc. and PanAgora Asset
Management Limited. Mr. McLendon also serves as
Chairman of the Board of 41 other mutual funds of
the Smith Barney Mutual Funds. His address is 388
Greenwich Street, New York, New York 10013.
Cornelius C. Rose, Jr., Trustee (Age 61). President,
Cornelius C. Rose Associates, Inc., financial
consultants, and Chairman and Director of
Performance Learning Systems, an educational
consultant. His address is Fair Oaks, Enfield, New
Hampshire 03748.
Jessica M. Bibliowicz, President (Age 35). Executive
Vice President of Smith Barney; prior to 1994,
Director of Sales and Marketing for Prudential
Mutual Funds; prior to 1990, First Vice President,
Asset Management Division of Shearson Lehman
Brothers. Ms. Bibliowicz also serves as President of
25 other mutual funds of the Smith Barney Mutual
Funds. Her address is 388 Greenwich Street, New
York, New York 10013.
Lewis E. Daidone, Senior Vice President and
Treasurer (Age 37). Managing Director of Smith
Barney; Chief Financial Officer of the Smith Barney
Mutual Funds; Director and Senior Vice President of
SBMFM. Mr. Daidone also serves as Senior Vice
President and Treasurer of 41 other mutual funds of
the Smith Barney Mutual Funds. His address is 388
Greenwich Street, New York, New York 10013.
Kent A. Kelley, Vice President and Investment
Officer (Age 45). Chief Executive Officer of TIMCO;
prior to 1992, Executive Vice President of TIMCO.
His address is One Tower Square, Hartford,
Connecticut 06183-2030.
Sandip Bhagat, Vice President and Investment Officer
(Age 35). President of TIMCO; prior to 1995, Senior
Portfolio Manager of TIMCO's quantification active
equities strategies. His address is One Tower
Square,
Hartford, Connecticut, 06183-2030.
Christina T. Sydor, Secretary (Age 44). Managing
Director of Smith Barney; General Counsel and
Secretary of SBMFM. Ms. Sydor also serves as
Secretary of 41 other mutual funds of the Smith
Barney Mutual Funds. Her address is 388 Greenwich
Street, New York, New York 10013.
No officer, director or employee of Smith Barney or
PFS or any parent or subsidiary of either of them
receives any compensation from the Fund for serving
as an officer or
Trustee of the Fund. The Trust pays each Trustee who
is not an officer, director or employee of Smith
Barney or PFS or
any of their affiliates a fee of $4,000 per annum
plus $500 per meeting attended. All Trustees are
reimbursed for travel and out-of-pocket expenses
incurred to attend such meetings.
For the calendar year ended December 31, 1994, the
Trustees of the Fund were paid the following
compensation.
<TABLE>
<S> <C> <C>
Trustee(*) Aggregate Compensationfrom
the Trust Aggregate Compensationfrom Smith
Barney Mutual Funds Herbert Barg (13)
$0** $77,850
Alfred Bianchetti (8) 0** 38,850
Martin Brody (15) 0** 111,675
Dwight B. Crane (18) 0**
125,975
Burt N. Dorsett (12) 6,500 34,300
Elliot S. Jaffe (12) 6,500 33,300
Stephen E. Kaufman (10) 0** 83,600
83,600
Joseph J. McCann (18) 0** 51,100
51,100
Heath B. McLendon (29) ------ ------
Cornelius C. Rose, Jr. (12) 6,500
33,300 </TABLE>
*Number of directorships/trusteeships held with other
mutual funds in the Smith Barney Mutual Funds
complex. **Was not elected to the Board of Trustees
of the Trust until March 30, 1995.
Investment Adviser-TIMCO
TIMCO serves as investment adviser to the Fund
pursuant to a written agreement (the "Advisory
Agreement") dated November 13 , 1995. The
services provided by
TIMCO under the Advisory Agreement are described in
the Prospectus under "Management of the Fund." TIMCO
will pay the salary of any officer and employee who
is
employed by both it and the Fund. TIMCO will bear all
expenses in connection with the performance of its
services. TIMCO is a wholly owned subsidiary of
Travelers Group Inc. ("Travelers").
As compensation for TIMCO's investment advisory
services rendered to the Fund, the Fund will pay a
fee computed daily and paid monthly at the annual
rate of 0.50% of the
Fund's average daily net assets.
Administrator-SBMFM
SBMFM serves as administrator to the Fund pursuant to
a written agreement dated November 13, 1995
(the "Administration Agreement"). The services
provided by SBMFM under the Administration Agreement
are described in the Prospectuses under
"Management of the Fund." SBMFM will pay the salary
of any officer and employee who is employed by both
it and the Fund and bears all expenses in connection
with the performance of its services.
As compensation for administrative services rendered
to the Fund, SBMFM will receive a fee computed daily
and paid monthly at the annual rate of 0.10% of the
value of the Fund's average daily net assets.
The Fund bears expenses incurred in its operation,
including: taxes, interest, brokerage fees and
commissions, if any; fees of Trustees who are not
officers, directors, shareholders or employees of
TIMCO or SBMFM or its affiliates; SEC fees and
state Blue Sky qualification fees; charges of
custodians; transfer and dividend disbursing agent's
fees; certain insurance premiums; outside auditing
and legal expenses; costs of maintaining corporate
existence; investor services (including allocated
telephone and personnel expenses); costs of
preparation and printing of prospectuses and
statements of additional information for regulatory
purposes and for distribution to existing
shareholders; costs of shareholders' reports and
shareholder meetings; and
meetings of the officers or Board of Trustees of the
Fund. TIMCO and SBMFM have agreed that if in any
fiscal year the aggregate expenses of the Fund
(including fees paid pursuant to the Advisory and
Administration Agreements, but excluding interest,
taxes, brokerage, fees paid pursuant to the Fund's
services and distribution plan, and, with the prior
written consent of the necessary state securities
commissions, extraordinary expenses) exceed the
expense limitation of any state having jurisdiction
over the Fund, TIMCO and SBMFM will, to the extent
required by state law, reduce their fees by such
excess expense, such amount to be allocated between
them in the proportion that their respective fees
bear to the aggregate of such fees paid by the Fund.
Such a fee reduction, if any, will be reconciled on a
monthly basis. The most restrictive state expense
limitation applicable to the Fund would require TIMCO
and SBMFM to reduce their fees in any year that such
excess expenses exceed 2.50% of the first $30
million of average net assets, 2.00% of the next $70
million of average net assets and 1.50% of the
remaining average net assets.
Counsel and Auditors
Willkie Farr & Gallagher serves as counsel to the
Trust. The Trustees who are not "interested persons"
of the Fund have selected Stroock & Stroock & Lavan
to serve as their legal counsel.
KPMG Peat Marwick LLP ("KPMG Peat Marwick"),
independent accountants, 345 Park Avenue, New York,
New York 10154, serve as auditors of the Trust and
will render an opinion on the Trust's financial
statements annually beginning
with the fiscal period ending November 30, 1995.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The Prospectuses discuss the Fund's investment
objective and the policies it employs to achieve its
objective. This section contains supplemental
information
concerning the types of securities and other
instruments in which the Fund may invest, the
investment policies and portfolio strategies that the
Fund may utilize and certain risks attendant to such
investments, policies and strategies.
Money Market Instruments. As stated in the
Prospectus, the Fund may invest for temporary
defensive purposes in corporate and government bonds
and notes and money market instruments. Money market
instruments in which the Fund may invest include:
obligations issued or guaranteed by the United States
government, its agencies or instrumentalities ("U.S.
government securities"); certificates of deposit,
time deposits and bankers' acceptances issued by
domestic banks (including their branches located
outside the United States and subsidiaries located in
Canada), domestic branches of foreign banks, savings
and loan associations and similar institutions; high
grade commercial paper; and repurchase agreements
with respect to the foregoing types of instruments.
The following is a more detailed description of such
money market instruments.
Certificates of deposit ("CDs") are short-term,
negotiable obligations of commercial banks. Time
deposits ("TDs") are non-negotiable deposits
maintained in banking institutions for specified
periods of time at stated interest rates. Bankers'
acceptances are time drafts drawn on commercial banks
by borrowers, usually in connection with
international transactions.
Domestic commercial banks organized under Federal law
are supervised and examined by the Comptroller of the
Currency and are required to be members of the
Federal Reserve System and to be insured by the
Federal Deposit Insurance Corporation (the "FDIC").
Domestic banks organized under state law are
supervised and examined by state banking authorities
but are members of the Federal Reserve System only if
they elect to join. Most state banks are insured by
the FDIC (although such insurance may not be of
material benefit to the Fund, depending upon the
principal amount of CDs of each bank held by the
Fund) and are subject to Federal examination and to
a substantial body of Federal law and regulation. As
a result of governmental regulations, domestic
branches of domestic banks are, among other things,
generally required to maintain specified levels of
reserves, and are subject to other supervision and
regulation designed to promote financial soundness.
Obligations of foreign branches of domestic banks,
such as CDs and TDs, may be general obligations of
the parent bank in addition to the issuing branch, or
may be limited by the terms of a specific obligation
and governmental regulation. Such obligations are
subject to different risks than are those of domestic
banks or domestic branches of foreign 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 and other
taxes on interest 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. CDs issued by
wholly owned Canadian subsidiaries of domestic banks
are guaranteed as to repayment of principal and
interest (but not as to sovereign risk) by the
domestic parent bank.
Obligations of domestic branches of foreign banks may
be general obligations of the parent bank in addition
to the issuing branch, or may be limited by the terms
of a specific obligation and by Federal and state
regulation as well as governmental action in the
country in which the foreign bank has its head
office. A domestic branch of a foreign bank with
assets in excess of $1 billion may or may not be
subject to reserve requirements imposed by the
Federal Reserve System or by the state in which the
branch is located if the branch is licensed in that
state. In addition,
branches licensed by the Comptroller of the Currency
and branches licensed by certain states ("State
Branches") may or may not be required: (a) to pledge
to the regulator by depositing assets with a
designated bank within the state, an amount of its
assets equal to 5% of its total liabilities; and (b)
to maintain assets within
the state in an amount equal to a specified
percentage of the aggregate amount of liabilities of
the foreign bank payable at or through all of its
agencies or branches within the state. The deposits
of State Branches may not necessarily be insured by
the FDIC. In addition, there may be less publicly
available information about a domestic branch of a
foreign bank than about a domestic bank.
In view of the foregoing factors associated with the
purchase of CDs and TDs issued by foreign branches of
domestic banks or by domestic branches of foreign
banks, TIMCO will carefully evaluate such investments
on a case bycase basis. Savings and loans
associations whose CDs may be purchased by the Fund
are supervised by the Office of Thrift Supervision
and are insured by the
Savings Association and Insurance Fund. As a result,
such savings and loan associations are subject to
regulation and examination.
Stock Index Options. The Fund may purchase call
options on stock indices listed on U.S. securities
exchanges for the purpose of hedging its portfolio.
A stock index fluctuates with the changes in the
market values of the stocks included in the index.
Stock index options may be based on a broad market
index such as the New York Stock Exchange Composite
Index or a narrower market index such as the S&P
Index. Indices also may be based on an industry or
market segment.
Options on stock indices are generally similar to
options on stock except that the delivery
requirements are different. Instead of giving the
right to take or make delivery of stock at a
specified price, an option on a stock index gives the
holder the right to receive a cash "exercise
settlement amount" equal to (a) the amount, if any,
by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in
the case of a call) the closing value of the
underlying index on the date of exercise, multiplied
by (b) a fixed "index multiplier." Receipt of this
cash amount will depend upon the closing level of the
stock index upon which the option is based being
greater than, in the case of a call, or less than, in
the case of a put, the exercise price of the option.
The amount of cash received will be equal to such
difference between the closing price of the index and
the exercise price of the option, expressed in
dollars, times a specified multiple. The writer of
the option is obligated, in return for the premium
received, to make delivery of this amount. The
writer may offset its position in stock index options
prior to expiration by entering into a closing
transaction on an exchange, or it may let the option
expire unexercised.
The effectiveness of purchasing stock index options
as a hedging technique will depend upon the extent to
which price movements in the portion of a securities
portfolio being hedged correlate with price movements
of the stock index selected. Because the value of an
index option depends upon movements in the level of
the index rather than the price of a particular
stock, whether the Fund will realize a gain or loss
from the purchase or writing of options on an index
depends upon movements in the level of stock prices
in the stock market generally or, in the case of
certain indices, in an industry or market segment,
rather than movements in the price of a particular
stock. Accordingly, successful use by the Fund of
options on stock indices will be subject to TIMCO's
ability to predict correctly movements in the
direction of the stock market generally or of a
particular industry. This requires different skills
and techniques than predicting changes in the price
of individual stocks.
The Fund will engage in stock index options
transactions only when determined by TIMCO to be
consistent with the Fund's efforts to control risk.
There can be no assurance that such judgment will be
accurate or that the use of these portfolio
strategies will be successful.
Lending of Portfolio Securities. The Fund has the
ability to lend securities from its portfolio to
brokers, dealers and other financial organizations.
Such loans, if and when made, may not exceed 33 1/3%
of the Fund's total assets taken at value. The Fund
may not lend its portfolio securities to TIMCO or
SBMFM or their affiliates unless they have
applied for and received specific authority from
the SEC. Loans of portfolio securities by the Fund
will be collateralized by cash, letters of credit or
U.S. government securities that are maintained at all
times in an amount equal to at least 100% of the
current market value of the loaned securities.
In lending its portfolio securities, the Fund 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 the Fund's portfolio
securities are loaned: (a) the Fund 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 Fund must
be able to terminate the loan at any time; (d) the
Fund 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 Fund 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 occurs, the
Trust's Board of Trustees must terminate the loan and
regain the right to vote the securities. The risks in
lending portfolio securities, as with other
extensions of secured credit, consist of possible
delay 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 TIMCO to be of good standing and will
not be made unless, in the judgment of TIMCO, the
consideration to be earned from such loans would
justify the risk. From time to time, the Fund may
return 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, which is unaffiliated with the Fund, TIMCO or
SBMFM and which is acting as a "finder."
Futures. The Fund may enter into stock index futures
contracts and related options that are traded
thereon. A stock index futures agreement is a
contract pursuant to which two parties agree to take
or make delivery of an amount of cash equal to the
difference between the value of the index at the
close of the last trading day of the contract and the
price at which the index contract was originally
written. No physical delivery of the underlying
securities in the index is made.
No consideration will be paid or received by the Fund
upon entering into a futures contract. Initially,
the Fund will be required to deposit with the broker
an amount of cash or cash equivalents equal to
approximately 1% to 10% of the contract amount (this
amount is subject to change by the board of trade on
which the contract is traded and members of such
board of trade may charge a higher amount). This
amount, known as "initial margin," is in the nature
of a performance bond or good faith deposit on the
contract and is returned to the Fund upon termination
of the futures contract, assuming all contractual
obligations have been satisfied. Subsequent
payments, known as "variation margin," to and from
the broker will be made daily as the price of the
index underlying the futures contract fluctuates,
making the long and short positions in the futures
contract more or less valuable, a process known as
"marking-to-market." At any time prior to expiration
of a futures contract, the Fund may elect to close
the position by taking an opposite position, which
will operate to terminate the Fund's existing
position in the contract.
Several risks are associated with the use of futures
contracts as a hedging device. Successful use of
futures contracts by the Fund will be subject to the
ability of TIMCO to predict correctly changes in
market conditions. These predictions involve skills
and techniques that may be different from those
involved in the management of the Fund being hedged.
In addition, there can be no assurance that there
will be a correlation between movements in the
price of the underlying index and movements in the
price of the securities that are the subject of a
hedge. A decision of whether, when and how to hedge
involves the exercise of skill and judgment, and even
a well-conceived hedge may be unsuccessful to some
degree because of market behavior or unexpected
trends in interest rates or currency values.
Although the Fund intends to enter into futures
contracts only if there is an active market for such
contracts, there is no assurance that an active
market
will exist for the contracts at any particular time.
Most U.S. futures exchanges and boards of trade limit
the amount of fluctuation permitted in futures
contract prices during a single trading day. Once
the daily limit has been reached in a particular
contract, no trades may be made that day at a
price beyond that limit. It is possible that futures
contract prices could move to the daily limit for
several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of
futures positions and subjecting some futures traders
to substantial losses. In such event, and in the
event of adverse price movements, the Fund would be
required to make daily cash payments of variation
margin, and an increase in the value of the portion
of the Fund being hedged, if any, may partially or
completely offset losses on the futures contract. As
described above, however, there is no guarantee that
the price of the securities being hedged will, in
fact, correlate with the price movements in a futures
contract and thus provide an offset to losses on the
futures contract.
If the Fund hedges against the possibility of a
change in market conditions adversely affecting the
value of securities held in its portfolio and market
conditions move in a direction opposite to that which
has been anticipated, the Fund will lose part or all
of the benefit of the increased value of securities
that it has hedged because it will have offsetting
losses in its futures positions. In addition, in
such situations, if the Fund had insufficient cash,
it may have to sell securities to meet daily
variation margin requirements at a time when it may
be disadvantageous to do so. These sales of
securities may, but will not necessarily, be at
increased prices that reflect the change in interest
rates, market conditions or currency values, as the
case may be.
Options on Futures Contracts. An option on a futures
contract, as contrasted with the direct investment in
such a contract, gives the purchaser the right, in
return for the premium paid, to assume a position in
the underlying futures contract at a specified
exercise price at any time prior to the expiration
date of the option. Upon exercise of an option, the
delivery of the futures position by the writer of the
option to the holder of the option will be
accompanied by delivery of the accumulated balance in
the writer's futures margin account, which represents
the amount by which the market price of the futures
contract exceeds, in the case of a call, or is less
than, in the case of put, the exercise price of the
option on the futures contract. The potential for
loss related to the purchase of an option on a
futures contract is limited to the premium paid for
the option plus transaction costs. Because the value
of the option is fixed at the point of sale, there
are no daily cash payments to reflect changes
in the value of the underlying contract; however, the
value of the option does change daily and that change
would be reflected in the net asset value of the
Fund.
The Fund may purchase and write put and call options
on futures contracts that are traded on a U.S.
exchange or board of trade as a hedge against changes
in the value of its portfolio securities, or in
anticipation of the
purchase of securities, and may enter into closing
transactions with respect to such options to
terminate existing positions. There is no guarantee
that such closing transactions can be effected.
Several risks are associated with options on futures
contracts. The ability to establish and close out
positions on such options will be subject to the
existence of a liquid market. In addition, the
purchase of put or call options will be based upon
predictions by TIMCO as to anticipated
trends, which predictions could prove to be
incorrect. Even if the expectations of TIMCO are
correct, there may be an imperfect correlation
between the change in the value of the options and of
the portfolio securities being hedged.
Investment Restrictions
The Fund has adopted the following investment
restrictions for the protection of shareholders.
Restrictions 1 through 8 below cannot be changed
without approval by the holders of a majority of the
outstanding shares of the Fund, defined as the lesser
of (a) 67% or more of the Fund's shares present at a
meeting, if the holders of more than 50% of the
outstanding shares are
present in person or by proxy or (b) more than 50% of
the Fund's outstanding shares. The remaining
restrictions may be changed by the Fund's Board of
Trustees at any time. In accordance with these
restrictions, the Fund will not:
1. Invest more than 5% of its total assets in
securities of any one issuer, except securities
issued or guaranteed by the United States government,
or purchase more than 10% of the outstanding voting
securities of such issuer.
2. Issue senior securities as defined in the 1940
Act and any rules and orders thereunder, except
insofar as the Fund may be deemed to have issued
senior securities by reason of: (a) borrowing money
or purchasing securities on a whenissued or delayed
delivery basis; (b) purchasing or selling futures
contracts and options on futures contracts and other
similar instruments; and (c) issuing separate classes
of shares.
3. Invest more than 25% of its total assets in
securities, the issuers of which are in the same
industry. For purposes of this limitation, U.S.
government securities and securities of state or
municipal governments and their political
subdivisions are not considered to be issued by
members of any industry.
4. Borrow in excess of 33 1/3% of the total value
of its assets (including the amount borrowed) less
its liabilities (not including such borrowings). See
the discussion of "Certain Investment Activities"
later in this Statement of Additional Information.
5. Make loans. This restriction does not apply to:
(a)
the purchase of debt obligations in which the Fund
may
invest consistent with its investment objective and
policies; (b) repurchase agreements; and (c) loans of
its portfolio securities.
6. Engage in the business of underwriting
securities
issued by other persons, except to the extent that
the Fund may technically be deemed to be an
underwriter under the Securities Act of 1933, as
amended, in disposing of portfolio securities.
7. Purchase or sell real estate, real estate
mortgages, real estate investment trust securities,
commodities or commodity contracts, but this shall
not prevent the Fund from: (a) investing in
securities of issuers engaged in the real estate
business and securities which are secured by real
estate or interests therein; (b) holding or selling
real estate received in connection with securities it
holds; or (c) trading in futures contracts and
options on futures contracts.
8. Purchase any securities on margin (except for
such short-term credits as are necessary for the
clearance of purchases and sales of portfolio
securities) or sell any securities short (except
against the box). For purposes of this restriction,
the deposit or payment by the Fund of initial or
maintenance margin in connection with futures
contracts and related options and options on
securities is not considered to be the purchase of a
security on margin.
9. Pledge, hypothecate, mortgage or otherwise
encumber
its assets in an amount in excess of 5% of its assets
to secure borrowings for investment purposes or
otherwise.
10. Invest in mineral-type programs or leases.
11. Purchase or otherwise acquire any security if,
as
a
result, more than 15% of its net assets would be
invested in securities that are illiquid.
12. Purchase or retain the securities of any issuer
if
those officers and Trustees of the Trust or TIMCO
owning individually more than 1 1/2 of 1% of the
securities of such issuer, together own more than 5%
of the securities of such issuer.
13. Purchase the securities of any other open-end
investment company, except through a purchase on the
open market involving no commission or profit to a
sponsor or dealer (other than the customary stock
exchange or overthecounter brokerage commission) and
except as part of a merger, consolidation or
acquisition of assets.
14. Invest for the purpose of exercising control of
management.
15. Purchase securities of any company with a
record of
less than three years' continuous operation if such
purchase would cause its investments in such
companies to exceed 5% of the value of its total
assets. (For purposes of this limitation, issuers
include
predecessors, sponsors, controlling persons, general
partners, guarantors and originators of underlying
assets.)
16. Purchasing, writing or selling puts, calls,
straddles,
spreads or combinations thereof, except as described
in the Fund's prospectus under "Investment Objective
and Management Policies."
If any percentage restriction described above is
complied with at the time of an investment, a later
increase or decrease in percentage resulting from a
change in values or assets will not constitute a
violation of such restriction.
Certain of these restrictions were adopted as the
result of undertakings to state securities
commissions and must be complied with only as long as
the Fund's shares are registered in the particular
state. In order to permit the sale of the Fund's
shares in certain states, the Trust may make
commitments more restrictive than the investment
restrictions described above such as those regarding
oil and mineral leases and real estate limited
partnerships.
Certain Investment Activities
While the Fund is authorized to borrow money from
banks for
purposes of investment (leveraging), it has no
current intention of engaging in these investment
activities and will do so only when the Trust's Board
of Trustees determines that such activity is
in the best interests of shareholders.
Portfolio Turnover
The Fund generally will not engage in short-term
trading but intends to purchase securities for long
term capital appreciation. The Fund's annual
portfolio turnover rate is not expected to exceed
150%. A portfolio turnover rate of 100% would occur
if all of the securities in the Fund's portfolio were
replaced once during a period of one year. The
portfolio 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 at the date of
acquisition are excluded from the calculation.
Portfolio turnover rates may vary greatly from year
to year as well as within a particular year and may
be affected by cash requirements for redemptions of
the Fund's shares as well as by requirements that
enable the Fund to receive favorable tax treatment.
Portfolio turnover rates will largely depend on the
level of purchases and redemptions of Fund shares.
Higher portfolio turnover rates can result in
corresponding increases in brokerage commissions. In
addition, to the extent that the Fund realizes short-
term gains as the result of more portfolio
transactions, such gains would be taxable to
shareholders at ordinary income tax rates.
Portfolio Transactions
Decisions to buy and sell securities for the Fund are
made by TIMCO, subject to the overall supervision and
review of the Trust's Board of Trustees. Portfolio
securities transactions for the Fund are effected by
or under the supervision of TIMCO.
Transactions on stock exchanges involve the payment
of negotiated brokerage commissions. There is
generally no stated commission in the case of
securities traded in the over-the-counter market, but
the price of those securities includes an undisclosed
commission or markup. 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 markup or markdown.
In executing portfolio transactions and selecting
brokers or dealers, it is the Fund's policy to seek
the best overall terms available. TIMCO, in seeking
the most favorable price and execution, considers all
factors it deems relevant, including, for example,
the price, the size of the transaction, the
reputation, experience and financial stability of the
broker-dealer involved and the quality of service
rendered by the broker-dealer in other transactions.
TIMCO receives research, statistical and quotation
services from several broker-dealers with which
it places the Fund's portfolio transactions. It is
possible that certain of the
services received primarily will benefit one or more
other accounts for which TIMCO exercises investment
discretion. Conversely, the Fund may be the primary
beneficiary of services received as a result of
portfolio transactions effected for other accounts.
TIMCO's fee under the Advisory Agreement is not
reduced by reason of its receiving such brokerage and
research services. The Trust's Board of Trustees, in
its discretion, may authorize TIMCO to cause the Fund
to pay a broker that provides brokerage and research
services to TIMCO a commission in excess of that
which another qualified broker would have charged for
effecting the same transaction. Smith Barney Inc.
("Smith Barney") will not participate in
commissions from brokerage given by the Fund to other
brokers or dealers and will not receive any
reciprocal brokerage business resulting therefrom.
In accordance with Section 17(e) of the 1940 Act and
Rule 17e-1 thereunder, the Fund's Board of Trustees
has determined that any portfolio transaction for the
Fund may be executed through Smith Barney or an
affiliate of Smith Barney if, in TIMCO's judgment,
the use of Smith Barney or an affiliate is likely to
result in price and execution at least as favorable
as those of other qualified brokers and if, in the
transaction, Smith Barney or the affiliate charges
the Fund a commission rate consistent with those
charged by Smith Barney or an affiliate to comparable
unaffiliated customers in similar transactions. In
addition, under rules recently adopted by the SEC,
Smith Barney 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 to
effect such transactions; and (b) Smith Barney
annually advises the Fund of the aggregate
compensation it earned on such transactions.
Even though investment decisions for the Fund are
made independently from those of the other accounts
managed by TIMCO, investments of the kind made by the
Fund also may be made by those other accounts. When
the Fund and one or more accounts managed by TIMCO
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 TIMCO to be equitable. In some cases,
this procedure may adversely affect the price paid or
received by the Fund or the size of the position
obtained for or disposed of by the Fund.
PURCHASE OF SHARES
Volume Discounts
The schedule of sales charges on Class A shares
described in the Prospectuses applies to
purchases made by any "purchaser," which is defined
to include the following: (a) an individual; (b) an
individual's spouse and his or her children
purchasing shares for their account; (c) a trustee or
other fiduciary purchasing shares for a single trust
estate or single fiduciary account; (d) a pension,
profitsharing or other employee benefit plan
qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended
(the "Code"), and qualified employee benefit plans of
employers who are "affiliated persons" of each other
within the meaning of the 1940 Act; (e) tax-exempt
organizations enumerated in Section 501(c)(3) or (13)
of the Code; and (f) a trustee or other professional
fiduciary
(including a bank, or an investment adviser
registered with the SEC under the Investment Advisers
Act of 1940, as amended) purchasing shares of the
Fund for one or more trust estates or fiduciary
accounts. Purchasers who wish to combine purchase
orders to take advantage of volume discounts should
contact a financial consultant.
Combined Right of Accumulation
Reduced sales charges, in accordance with the
schedule in the Prospectuses, apply to any
purchase of Class A shares if the aggregate
investment in Class A shares of the Fund and in Class
A shares of other funds of the Smith Barney Mutual
Funds that are offered with a sales charge, including
the purchase being made, of any purchaser is $25,000
or more. The reduced sales charge is subject to
confirmation of the shareholder's holdings through a
check of appropriate records. The Fund reserves the
right to terminate or amend the combined right of
accumulation at any time after written notice to
shareholders. For further information regarding the
combined right of accumulation, shareholders should
contact a financial consultant.
Determination of Public Offering Price
The Fund offers its shares to the public on a
continuous basis. The public offering price for a
Class A and Class Y shares of the Fund is equal to
the net asset value per share at the time of purchase
plus, for Class A shares, an initial sales charge
based on the aggregate amount of the investment. The
public offering price for Class B and Class C shares
(and Class A share purchases, including applicable
rights of accumulation, equalling or exceeding
$500,000) is equal to the net asset value per share
at the time of purchase and no sales charge is
imposed at the time of purchase. A contingent
deferred sales charge ("CDSC"), however, is imposed
on certain redemptions of Class B shares, Class C and
Class A shares when purchased in amounts equalling or
exceeding $500,000. The method of computation of the
public offering price is shown in the
Fund's financial statements incorporated by reference
in their entirety to this Statement of Additional
Information.
REDEMPTION OF SHARES
The right of redemption may be suspended or the date
of payment postponed (a) for any period during which
the NYSE is closed (other than for customary weekend
or holiday closings), (b) when trading in markets the
Fund normally utilizes is restricted, or an
emergency, as determined by the SEC, exists so that
disposal of the Fund's investments or determination
of net asset value is not reasonably practicable or
(c) for such other periods as the SEC by order may
permit for the protection of the Fund's shareholders.
Distributions in Kind
If the Board of Trustees of the Trust determines that
it would be detrimental to the best interests of the
Fund's remaining shareholders to make a redemption
payment wholly in cash, the Trust may pay in respect
of the Fund, in accordance with SEC rules, any
portion of a redemption in excess of the lesser of
$250,000 or 1% of the Fund's net assets by
distribution in kind of portfolio securities in lieu
of cash. Securities issued as a distribution in kind
may incur brokerage commissions when shareholders
subsequently sell those securities.
Automatic Cash Withdrawal Plan
An automatic cash withdrawal plan (the "Withdrawal
Plan") is available to shareholders who own shares
with a value of at least $10,000 ($5,000 for
retirement plan accounts) and who wish to receive
specific amounts of cash monthly or quarterly.
Withdrawals of at least $50 may be made under the
Withdrawal Plan by redeeming as many shares of the
Fund as may be necessary to cover the stipulated
withdrawal payment. Any applicable CDSC will not be
waived on amounts withdrawn by shareholders that
exceed 1.00% per month of the value of a
shareholder's shares at the time the Withdrawal Plan
commences. To the extent withdrawals exceed
dividends, distributions and appreciation of a
shareholder's investment in the Fund, there will be a
reduction in
the value of the shareholder's investment and
continued withdrawal payments will reduce the
shareholder's investment and ultimately may exhaust
it. Withdrawal payments should not be considered as
income from investment in the Fund. Furthermore, as
it generally would not be advantageous to a
shareholder to make additional investments in the
Fund at the same time he or she is participating in
the Withdrawal Plan, purchases by such shareholders
in amounts of less than $5,000 ordinarily will not be
permitted.
Shareholders who wish to participate in the
Withdrawal Plan and who hold their shares in
certificate form must deposit their share
certificates with TSSG as agent for Withdrawal Plan
members. All dividends and distributions on shares in
the Withdrawal Plan are reinvested automatically at
net asset value in additional shares of the Fund.
Withdrawal Plans should be set up with a Smith Barney
Financial Consultant. Applications for participation
in the Withdrawal Plan must be received by TSSG no
later than the eighth day of the month to be eligible
for participation beginning with that month's
withdrawal. For additional information, shareholders
should contact a financial consultant.
DISTRIBUTOR
Smith Barney serves as a distributor for the Fund on
a best efforts basis pursuant to a written agreement
dated November 13, 1995 which was most recently
approved by the Fund's Board of Trustees on October
18, 1995.
PFS serves as a distributor for the Fund on a best
efforts basis pursuant to a written agreement dated
November 13, 1995.
When payment is made by the investor, unless
otherwise noted by the investor, the funds will be
held as a free credit balance in the investor's
brokerage account and Smith Barney or PFS may
benefit from the temporary use of the funds. The
investor may designate another use for the funds
prior to settlement date, such as an investment in a
money market fund (other than Smith Barney Exchange
Reserve Fund) of the Smith Barney Mutual Funds. If
the investor instructs Smith Barney or PFS to
invest the funds in a Smith Barney money market fund,
the amount of the investment will be included as part
of the average daily net assets of both the Fund and
the Smith Barney money market fund, and affiliates of
Smith Barney that serve the funds in an investment
advisory or administrative capacity will benefit from
the fact they are receiving fees from both such
investment companies for managing these assets
computed on
the basis of their average daily net assets. The
Trust's Board of Trustees has been advised of the
benefits to Smith Barney resulting from these
settlement procedures and will take such benefits
into consideration when reviewing the distribution
agreements for continuance.
Distributions Arrangements
To compensate Smith Barney and PFS for the services
they provide and for the expense they bear under
their
respective distribution agreements, the Fund has
adopted a services and distribution plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act. Under the
Plan, the Fund pays a service fee, accrued daily and
paid monthly, calculated at the annual rate of 0.25%
of the value of the Fund's average daily net assets
attributable to the Class A, Class B, Class C and
Class Y shares. In addition, the Fund pays a
distribution fee with respect to Class B and Class C
shares, primarily intended to compensate the
applicable distributor for its initial expense of
paying its financial consultant a commission upon
sales of those shares. The Class B and Class C
distribution fee is calculated at the annual rate of
0.75% of the value of the Fund's average daily net
assets attributable to the shares of that Class.
Under its terms, the Plan continues from year to
year, provided such 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 Fund and who have no direct or
indirect financial interest in the operation of the
Plan or in the distribution agreements (the
"Independent Trustees"). The Plan may not be amended
to increase the amount of the service and
distribution
fees without shareholder approval, and all amendments
of the Plan also must be approved by the Trustees and
Independent Trustees in the manner described above.
The Plan may be terminated with respect to a Class of
the Fund at any time, without penalty, by vote of a
majority of the Independent Trustees or by vote of a
majority (as defined in the 1940 Act) of the
outstanding voting securities of the Class. Pursuant
to the Plan, the Fund's distributors will provide
the Board of Trustees with periodic reports of
amounts expended under the Plan and the purpose for
which such expenditures were made.
VALUATION OF SHARES
Each Class' net asset value per share is calculated
on each day, Monday through Friday, except 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. Because of the differences in
distribution fees and Classspecific expenses, the per
share net asset value of each Class may differ. The
following is a description of the procedures used by
the Fund in valuing its assets.
Securities listed on a national securities exchange
will be valued on the basis of the last sale on the
date on which the valuation is made or, in the
absence of sales, at the mean between the closing bid
and asked prices. Overthecounter securities will be
valued on the basis of the bid price at the close of
business on each day, or, if market
quotations for those securities are not readily
available, at fair value, as determined in good faith
by the Trust's Board of Trustees. Short-term
obligations with maturities of 60 days or less are
valued at amortized cost, which constitutes fair
value as determined by the Trust's Board of Trustees.
Amortized cost involves valuing an instrument at its
original cost to the Fund 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 instrument.
All other securities and other assets of the Fund
will be valued at fair value as determined in good
faith by the Trust's Board of Trustees.
EXCHANGE PRIVILEGE
Except as noted below, shareholders of the Fund may
exchange all or part of their shares for shares of
the same Class of certain of the Smith Barney Mutual
Funds, to the extent such shares are offered for sale
in the shareholder's state of residence, on the basis
of relative net asset value per share at the time of
exchange as follows:
A. Class A shares of any such fund purchased with a
sales charge may be exchanged for Class A shares of
any of the other such funds, and the sales charge
differential, if any, will be applied. Class A shares
of any such 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 such
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 such fund acquired by a
previous exchange of shares purchased with a sales
charge may be exchanged for Class A shares of any of
the other such funds, and the sales charge
differential, if any, will be applied.
C. Class B shares of any such fund may be exchanged
without a sales charge. Class B shares of the Fund
exchanged for Class B shares of another such fund
will be subject to the higher applicable CDSC of the
two funds and, for purposes of calculating CDSC rates
and conversion periods, will be deemed to have been
held since the date the shares being exchanged were
deemed to be purchased.
The exchange privilege enables shareholders to
acquire shares of the same Class in a fund with
different investment objectives 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
shares being acquired may legally be sold. Prior to
any exchange, the shareholder should obtain and
review a copy of the current prospectus of each fund
into which an exchange is being considered.
Prospectuses may be obtained from a 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,
subject to any applicable CDSC, the proceeds are
immediately invested, at a price as described above,
in shares of the fund being acquired. The Fund
reserves the right to reject any exchange request.
The exchange privilege may be modified or terminated
at any time after written notice to shareholders.
PERFORMANCE DATA
From time to time, the Fund may quote total return
of a Class in advertisements or in reports and other
communications to shareholders. The Fund may include
comparative performance information in advertising
or marketing the Fund's shares. Such performance
information may include the following industry and
financial publications: Barron's, Business Week, CDA
Investment Technologies, Inc., Changing Times,
Forbes, Fortune, Institutional Investor, Investors
Daily, Money, Morningstar Mutual Fund Values, The
New York Times, USA Today and The Wall Street
Journal. To the extent any advertisement or sales
literature of the Fund describes the expenses or
performance of any Class, it will also disclose such
information for the other Classes. Average Annual
Total Return
"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.
Aggregate Total Return
"Aggregate total return" figures represent the
cumulative change in the value of an investment in
the Class for the specified period and are computed
by the following formula:
ERV-PP
Where: P = a hypothetical initial payment
of $10,000.
ERV = Ending Redeemable Value of a
hypothetical $10,000 investment made at the
beginning of a 1-, 5- or 10 year period at the end
of the 1-, 5or 10-year period (or fractional portion
thereof), assuming reinvestment of all dividends and
distributions.
Performance will vary from time to time depending on
market conditions, the composition of the Fund's
portfolio, operating expenses and the expenses
exclusively attributable to the Class. Consequently,
any given performance quotation should not be
considered representative of the Class' performance
for any specified period in the future. Because
performance will vary, it may not provide a basis
for comparing an investment in the Class with
certain bank deposits or other investments that pay
a fixed yield for a stated period of time.
TAXES
The following is a summary of certain Federal income
tax considerations that may affect the Fund and its
shareholders. The summary is not intended as a
substitute for individual tax advice and investors
are urged to consult their own tax advisors as to
the tax consequences of an investment in the Fund.
The Trust has qualified and intends to continue to
qualify each year as a regulated investment company
under the Code. To so qualify, the Fund must, among
other things, derive less than 30% of its gross
income in each taxable year from the sale or
disposition of stocks, securities, and certain
financial instruments held for less than three
months. This requirement may limit the extent to
which the Fund is able to sell stocks, securities,
or financial instruments held for less than three
months. If the Fund (a) qualifies as a regulated
investment company and (b) distributes to its
shareholders at least 90% of its net investment
income (including, for this purpose, its net
realized shortterm capital gains), the Fund will not
be liable for Federal income taxes to the extent
that its net investment income and its net realized
long- and short term capital gains, if any, are
distributed to its shareholders.
Gains or losses on the sales of stock or securities
by the Fund generally will be long-term capital
gains or losses
if the Fund has held the stock or securities for
more than one year. Gains or losses on sales of
stock or securities held for not more than one year
generally will be shortterm capital gains or losses.
Any net long-term capital gains realized by the Fund
will be distributed annually as described in the
Prospectus. Such distributions ("capital gain
dividends") will be taxable to shareholders as long
term capital gains, regardless of how long a
shareholder has held Fund shares, and will be
designated as capital gain dividends in a written
notice mailed by the Fund to shareholders after the
close of the Fund's prior taxable year. If a
shareholder receives a capital gain dividend with
respect to any share and if the share has been held
by the shareholder for six months or less, then any
loss on the sale or exchange of such share will be
treated as a longterm capital loss to the extent of
the capital gain dividend.
If a shareholder incurs a sales charge in acquiring
shares of the Fund, disposes of those shares within
90 days and then acquires shares in a mutual fund
for which the otherwise applicable sales charge is
reduced by reason of a reinvestment right (that is,
exchange privilege), the original sales charge will
not be taken into account in computing gain/loss on
the original shares to the extent the subsequent
sales charge is reduced. Instead, it will be added
to the tax basis in the newly acquired shares.
Furthermore, the same rule also applies to a
disposition of the newly acquired or redeemed shares
made within 90 days of the second acquisition. This
provision prevents a shareholder from immediately
deducting the sales charge by shifting his or her
investment in a family
of mutual funds.
Investors considering buying shares of the Fund on
or just prior to a record date for a taxable
dividend or capital gain distribution should be
aware that, regardless of whether the price of the
Fund shares to be purchased reflects the amount of
the forthcoming dividend or distribution payment,
any such payment will be a taxable dividend or
distribution payment.
If a shareholder fails to furnish a correct taxpayer
identification number, fails fully to report
dividend and 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) any taxable
dividends and distributions and (b) the proceeds of
any redemptions of Fund 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.
The foregoing is only a summary of certain tax
considerations generally affecting the Fund and its
shareholders and is not intended as a substitute for
careful tax planning. Shareholders are urged to
consult their tax advisors with specific reference
to their own tax situations, including their state
and local tax liabilities.
ADDITIONAL INFORMATION
PNC Bank, located at 17th and Chestnut Streets,
Philadelphia, Pennsylvania 19103, serves as the
custodian of the Fund. Under its agreement with the
Trust on behalf of the Fund, PNC Bank holds the
Fund's portfolio securities and keeps all necessary
accounts and records. For its services, PNC Bank
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 Fund are held under bank custodianship in
compliance with the 1940 Act.
TSSG, located at Exchange Place, Boston,
Massachusetts 02109, 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 and distributes dividends
and distributions payable by the Trust. For these
services, TSSG receives a monthly fee computed on
the basis of the number of shareholder accounts it
maintains for the Trust during the month and is
reimbursed for out-ofpocket expenses.
PFS Shareholder Services, located at 3100
Breckenridge Blvd., Bldg. 200, Duluth, Georgia 30199-
0062 serves as the Fund's sub-transfer agent.
Under the subtransfer agency agreement, PFS
Shareholder Services maintains the shareholder
account records for the Fund, handles certain
communications between the shareholders and the Fund
and distributes dividends and distributions payable
by the Fund. For these services. PFS Shareholder
Services receives a monthly fee computed on the
basis of the number of shareholder accounts it
maintains for the Fund during the month
and is reimbursed for out-ofpocket
expenses.
Smith Barney
S&P 500 Advantage
Fund
Statement of
Additional Information
November 13, 1995
Smith Barney
S&P 500 Advantage Fund
388 Greenwich Street
New York, New York 10013
SMITH BARNEY
A Member of
Travelers Group
SMITH BARNEY INCOME TRUST
PART C
OTHER INFORMATION
Item 24. Financial Statements and
Exhibits (a) Financial Statements
Included in Part A:
Financial Highlights
Included in Part B:
The Funds' Annual Reports for the fiscal year
ended November 30, 1994 and the Reports of Independent
Accountants dated January 6, 1995 are incorporated by
reference to the Rule 30(b)2-1 filing made on January
27, 1995.
Included in Part C:
None
(b) Exhibits
Unless otherwise noted all references are to the
Registrant's Registration Statement on Form N-1A (the
"Registration Statement") as filed with the SEC on
October 21, 1991 (File Nos. 33-43446 and 811-6444).
(1)(a) Registrant's Master Trust Agreement dated
October 17, 1991 and Amendments to the Master Trust
Agreement dated November 21, 1991 and July 30, 1993,
respectively, are incorporated by reference to Post
Effective Amendment No. 4 to the Registration Statement
filed on January 28, 1994 ("Post-Effective Amendment No.
4").
(b) Amendments to the Master Trust Agreement dated
October 14, 1994 and November 7, 1994, respectively, are
incorporated by reference to a Registration Statement
filed on Form N-14 on January 6, 1995 (the "N-14").
(c) Amendments to the Master Trust Agreement dated
July 20, 1995 and August 10, 1995 are incorporated by
reference to Post-Effective Amendment No. 9 to the
Registration Statement filed on August 29, 1995 ("Post
Effective Amendment No. 9").
(2) Registrant's By-Laws are incorporated by
reference to the Registration Statement.
(3) Not Applicable.
(4) Registrant's form of stock certificate is
incorporated by reference to Pre-Effective Amendment No. 1
to the Registration Statement filed on December 6, 1991
("Pre-Effective Amendment No. 1").
(5)(a) Investment Advisory Agreement between the
Registrant and Greenwich Street Advisors dated July 30,
1993 is incorporated by reference to Post-Effective
Amendment No. 3 to the Registration Statement filed on
December 1, 1993 ("Post-Effective Amendment No. 3").
(b) Transfer of Investment Advisory Agreement dated
November 7, 1994 between the Registrant on behalf of Smith
Barney Intermediate Maturity California Municipals Fund,
Greenwich Street Advisors and Smith Barney Mutual Funds
Management Inc. is incorporated by reference to the N-14.
(c) Form of Transfer of Investment Advisory
Agreement for Smith Barney Limited Maturity Municipals
Fund, Smith Barney Intermediate Maturity New York
Municipals Fund and Smith Barney Limited Maturity Treasury
Fund is incorporated
by reference to Post-Effective Amendment No. 6 to the
Registration Statement as filed on January 27, 1995 ("Post
Effective Amendment No. 6").
(d) Form of Investment Advisory Agreement between
the Registrant on behalf of Smith Barney S&P 500 Advantage
Fund and Travelers Investment Management Company is filed
herein.
(6)(a) Distribution Agreement between Registrant and
Smith Barney Shearson Inc. dated July 30, 1993 is
incorporated by reference to Post-Effective Amendment No.
3.
(b) Form of Distribution Agreement between the
Registrant on behalf of Smith Barney S&P 500 Advantage
Fund and PFS Distributors is filed herein.
(7) Not Applicable.
(8) A form of Custody Agreement with PNC, National
Association, is incorporated by reference to Post-
Effective No. 9.
(9)(a) Administration Agreement between the
Registrant on behalf of Smith Barney Intermediate Maturity
California Municipals Fund and Smith, Barney Advisers,
Inc. ("SBA") is incorporated by reference to the N-14.
(b) Form of Administration Agreement between the
Registrant on behalf of Smith Barney Limited Maturity
Municipals Fund, Smith Barney Intermediate Maturity New
York Municipals Fund and Smith Barney Limited Maturity
Treasury Fund and SBA is incorporated by reference to Post-
Effective Amendment No. 6.
(c) Form of Administration Agreement between the
Registrant on behalf of Smith Barney S&P 500 Advantage
Fund and Smith Barney Mutual Funds Management Inc. is
filed herein.
(d) Transfer Agency Agreement with The Shareholder
Services Group, Inc. is incorporated by reference to Post
Effective Amendment No. 3.
(e) Form of Sub-Transfer Agency Agreement between
the Registrant on behalf of Smith Barney S&P 500 Advantage
Fund and PFS Shareholder Services is filed herein.
(f) License Agreement between Registrant on behalf
of Smith Barney S&P 500 Advantage Fund and Standard and
Poor's, a division of McGraw-Hill, Inc. will be filed by
amendment.
(10) Opinion of California State Counsel for Smith
Barney Intermediate Maturity California Municipals Fund is
incorporated by reference to Post-Effective Amendment No.
6.
(11) Not Applicable.
(12) Not Applicable.
(13) Purchase Agreement between the Registrant and
Shearson Lehman Brothers Inc. is incorporated by reference
to Pre-Effective Amendment No. 1.
(14) Not Applicable.
(15)(a) Amended Service and Distribution Plan
pursuant
to Rule 12b-1 between the Registrant on behalf of Smith
Barney Intermediate Maturity California Municipals Fund
and Smith Barney Inc. is incorporated by reference to the
N-14.
(b) Form of Amended Service and Distribution Plan
pursuant to Rule 12b-1 between the Registrant on behalf of
Smith Barney Limited Maturity Municipals Fund, Smith
Barney Intermediate Maturity New York Municipals Fund and
Smith Barney Limited Maturity Treasury Fund and Smith
Barney Inc. is incorporated by reference to Post-Effective
Amendment No. 6.
(c) Form of Shareholder Services and Distribution
Plan pursuant to Rule 12b-1 between the Registrant on
behalf of Smith Barney S&P 500 Advantage Fund is filed
herein.
(16) Performance Data is incorporated by reference
to Post-Effective Amendment No. 2 to the Registration
Statement as filed on April 1, 1993.
(18) Plan adopted pursuant to Rule 18f-3(d) of the
Investment Company Act of 1940, as amended, is filed
herein.
Item 25. Persons Controlled by or under Common Control
with Registrant
None
Item 26. Number of Holders of Securities
(1) (2)
Title of Class
Beneficial Interest par value Number of
Record Holders
$0.001 per share as of
October 19, 1995
Smith Barney Limited Maturity Municipals Fund
1574
Smith Barney Intermediate Maturity California
Municipals Fund 717
Smith Barney Intermediate Maturity New York
Municipals Fund 1412
Smith Barney Limited Maturity Treasury Fund
0 Smith Barney S&P 500 Advantage Fund
None
Item 27. Indemnification
The response to this item is incorporated by
reference to Pre-Effective Amendment No. 1.
Item 28(a). Business and Other Connections of
Investment Adviser
Investment Adviser -- Smith Barney Mutual Funds
Management Inc. (formerly known as Smith Barney Advisers,
Inc. ("SBMFM")).
SBMFM was incorporated in 1968 under the laws of the
State of Delaware. SBMFM is a wholly owned subsidiary of
Smith Barney Holdings Inc., which in turn is a wholly
owned subsidiary of Travelers Group Inc. (formerly known
as Primerica Corporation) ("Travelers").
The list required by this Item 28 of officers and
directors of SBMFM, 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 SBMFM pursuant to the Investment Advisers Act of
1940 (SEC File No. 801-8314).
Prior to the close of business on July 30, 1993 (the
"Closing"), Smith Barney Asset Management ("Asset
Management") was a member of the Asset Management Division
of Shearson Lehman Brothers Inc. ("Shearson Lehman
Brothers"), and served as the Registrant's investment
adviser. On the Closing, Travelers and Smith Barney
Shearson Inc. (now known as Smith Barney Inc.) 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
Asset Management can be located in Schedules A and D of
Form ADV filed by Shearson Lehman Brothers on behalf of
the Asset Management Division prior to July 30, 1993 (SEC
File No. 801-3701).
01/01/95
Item 29. Principal Underwriters
Smith Barney Inc. ("Smith Barney") currently acts as
distributor for Smith Barney Managed Municipals Fund Inc.,
Smith Barney New York Municipals Fund Inc., Smith Barney
California Municipals Fund Inc., Smith Barney
Massachusetts Municipals Fund, Smith Barney Global
Opportunities Fund, Smith Barney Aggressive Growth Fund
Inc., Smith Barney Appreciation Fund Inc., Smith Barney
Principal Return Fund, Smith Barney Managed Governments
Fund Inc., Smith Barney Income Funds, Smith Barney Equity
Funds, Smith Barney Investment Funds Inc., Smith Barney
Precious Metals and Minerals Fund Inc., Smith Barney
Telecommunications Trust, Smith Barney Arizona Municipals
Fund Inc., Smith Barney New Jersey Municipals Fund Inc.,
Smith Barney Fundamental Value Fund Inc., Smith Barney
Series Fund, Consulting Group Capital Markets Funds, Smith
Barney Income Trust, Smith Barney Adjustable Rate
Government Income Fund, Smith Barney Florida Municipals
Fund, Smith Barney Oregon Municipals Fund, Smith Barney
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 Accounts
Funds, Smith Barney U.S. Dollar Reserve Fund (Cayman),
Worldwide Special Fund, N.V., Worldwide Securities Limited
(Bermuda), Smith Barney International Fund (Luxembourg),
Smith Barney Institutional Cash Management Fund, Inc. and
various series of unit investment trusts.
Smith Barney is a wholly owned subsidiary of Smith
Barney Holdings Inc., which in turn is a wholly owned
subsidiary of Travelers Group Inc. (formerly known as
Primerica Corporation). The information required by this
Item 29 with respect to each director, officer and
partner of Smith Barney is incorporated by reference to
Schedule A of Form BD filed by Smith Barney pursuant to
the Securities Exchange Act of 1934 (SEC File No. 812-
8510).
Item 30. Location of Accounts and Records
(1) Smith Barney Investment Trust
388 Greenwich Street
New York, New York 10013
(2) Smith Barney Mutual Funds Management Inc.
388 Greenwich Street
New York, New York 10013
(Records relating to its function as investment
adviser to certain of the funds and
administrator to all of the Funds)
(3) Travelers Investment Management Company
One Tower Square
Hartford, CT 06183-2030
(Records relating to its function as
investment adviser to Smith Barney S&P 500
Advantage Fund)
(4) PNC Bank, National Association
17th and Chestnut Streets
Philadelphia, PA 19103
(Records relating to its function as
custodian)
(5) The Shareholder Services Group, Inc.
One Exchange Place
Boston, Massachusetts 02109
(Records relating to its function as Transfer
Agent and Dividend Paying Agent)
Item 31. Management Services
Not Applicable
Item 32. Undertakings
(a) Registrant undertakes to call a meeting of its
shareholders of the Series for the purpose of voting upon
the question of removal of a trustee or trustees of
Registrant when requested in writing to do so by the
holders of at least 10% of Registrant's outstanding
shares. Registrant undertakes further, in connection with
the 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 INVESTMENT TRUST, has duly caused
this registration statement to be signed on its behalf by
the undersigned, thereto duly authorized in the City of
New York, in the State of New York on the 17th day of
October, 1995.
SMITH BARNEY
INVESTMENT TRUST
/s/Heath B.
McLendon Heath B.
McLendon,
Chief
Executive Officer
Pursuant to the requirements of the Securities Act of
1933, this registration statement has been signed below by
the following persons in the capacities and on the date
indicated.
/s/Heath B.
McLendon Chairman of the October 17, 1995
Heath B. McLendon Board
(Chief Executive
Officer)
/s/Lewis E. Daidone
Lewis E. Daidone Treasurer October 17, 1995
(Chief Financial
and Accounting
Officer)
/s/Herbert Barg
Herbert Barg Director October 17, 1995
/s/Alfred J.
Bianchetti Director October 17, 1995
Alfred J.
Bianchetti
/s/Martin Brody
Martin Brody Director October 17, 1995
/s/Dwight B. Crane
Dwight B. Crane Director October 17, 1995
/s/Burt N. Dorsett
Burt N. Dorsett Director October 17, 1995
/s/Elliot S. Jaffe
Elliot S. Jaffe Director October 17, 1995
/s/Stephen E.
Kaufman Director October 17, 1995
Stephen E. Kaufman
/s/Joseph J. McCann
Joseph J. McCann Director October 17, 1995
/s/Cornelius C.
Rose, Jr. Director October 17, 1995
Cornelius C. Rose,
Jr.
FORM OF
INVESTMENT ADVISORY AGREEMENT
November [ ], 1995
Travelers Investment Management Company
One Tower Square
Hartford, CT 06188-203
Dear Sirs:
This Investment Advisory Agreement (the "Agreement") is
made on this [ ] day of November, 1995, by and between
Smith Barney Investment Trust, a business trust organized
under the laws of the Commonwealth of Massachusetts (the
"Trust"), in respect of its sub-trust, Smith Barney S&P 500
Advantage Fund (the "Fund"), and Travelers Investment
Management Company ("TIMCO") 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: (i) the
Trust's Master Trust Agreement, as amended from time to
time (the "Master Trust Agreement"); (ii) the Fund's
Prospectuses (the "Prospectus"); and (iii) the Fund's
Statement of Additional Information (the "Statement")
filed with the Securities and Exchange Commission (the
"SEC") as part of the Fund's Registration Statement on
Form N-lA, as amended from time to time, and in such
manner and to such extent as may from time to time be
approved by the Board of Trustees of the Trust (the
"Board"). Copies of the Fund's Prospectus and the
Statement and the Trust's Master Trust Agreement have
been or will be submitted to TIMCO. The Trust desires
to employ and hereby appoints TIMCO to act as
investment adviser for the Fund. TIMCO accepts the
appointment and agrees to furnish the services for the
compensation set forth below. TIMCO is hereby
authorized to retain third parties and is hereby
authorized to delegate some or all of its duties and
obligations hereunder to such persons, provided such
persons shall remain under the general supervision of
TIMCO.
2. Services as Investment Adviser
Subject to the supervision and direction of the Board,
TIMCO will: (a) manage the Fund's portfolio in
accordance with the Fund's investment objective and
policies as stated in the Prospectus and the Statement;
(b) make investment decisions for the Fund; (c) place
purchase and sale orders for portfolio transactions for
the Fund; and (d) employ professional portfolio
managers and securities analysts to provide research
services to the Fund. In providing those services,
SBMFM will conduct a continual program of investment,
evaluation and, if appropriate, sale and reinvestment
of the Fund's assets.
3. Compensation
In consideration of the services rendered pursuant to
this Agreement, the Trust will pay TIMCO, on the first
business day of each month, a fee for the previous
month at an annual rate of 0.50% of the Fund's average
daily net assets. The fee for the period from the date
the Fund commences its investment operations to the end
of the month during which the Fund commences its
investment operations shall be pro-rated according to
the proportion that such period bears to the full
monthly period. Upon any termination of this Agreement
before the end of any month, the fee for such part of
that month shall be pro-rated 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 TIMCO, the value of the
Fund's net assets shall be computed at the times and in
the manner specified in the Fund's Prospectus and/or
the Statement, as from time to time in effect.
5. Expenses
TIMCO 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: investment advisory and
administration fees; charges of custodians and transfer
and dividend disbursing agents; fees for necessary
professional services, such as the Fund's and Board
members' proportionate share of insurance premiums,
professional associations, dues and/or assessments; and
brokerage services, including taxes, interest and
commissions; costs of preparing and printing
prospectuses and statements of additional information
for regulatory purposes and for distribution to
existing shareholders; the costs of regulatory
compliance, such as SEC fees and state blue sky
qualifications fees; outside auditing and legal
expenses and costs associated with maintaining the
Fund's legal existence; costs of shareholders' reports
and meetings of the officers or Board; fees of the
members of the Board who are not officers, directors or
employees of Smith Barney, Inc. or its affiliates or
any person who is an affiliate of any person to whom
duties may be delegated hereunder.
6. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the
Fund (including fees pursuant to this Agreement, but
excluding distribution fees, interest, taxes, brokerage
and, if permitted by state securities commissions,
extraordinary expenses) exceed the expense limitations
of any state having jurisdiction over the Fund, TIMCO
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 TIMCO will be limited to
the amount of its fees hereunder. Such expense
reimbursement, if any, will be estimated, reconciled
and paid on a monthly basis.
7. Brokerage
In selecting brokers or dealers to execute transactions
on behalf of the Fund, TIMCO will seek the best overall
terms available. In assessing the best overall terms
available for any transaction, TIMCO 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, TIMCO 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, as amended) provided to the Fund and/or other
accounts over which TIMCO or its affiliates exercise
investment discretion.
8. Information Provided to the Fund
TIMCO will keep the Trust informed of developments
materially affecting the Fund's portfolio, and will, on
its own initiative, furnish the Trust from time to
time with whatever information TIMCO believes is
appropriate for this purpose.
9. Standard of Care
TIMCO shall exercise its best judgment in rendering the
services listed in paragraph 2 above. TIMCO 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 TIMCO against any
liability to the Trust or to the Fund's shareholders to
which TIMCO would otherwise be subject by reason of
willful malfeasance, bad faith or gross negligence on
its part in the performance of its duties or by reason
of TIMCO 's reckless disregard of its obligations and
duties under this Agreement.
10. Services to Other Companies or Accounts
The Trust understands that TIMCO now acts, will
continue to act and may act in the future as:
investment adviser to fiduciary and other managed
accounts, as well as to other investment companies; and
the Trust has no objection to TIMCO's so acting,
provided that whenever the Fund and one or more other
investment companies advised by TIMCO 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 Trust recognizes that in some cases this
procedure may adversely affect the size of the position
obtainable for the Fund. In addition, the Trust
understands that the persons employed by TIMCO to
assist in the performance of TIMCO'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 TIMCO or
any affiliate of TIMCO to engage in and devote time and
attention to other businesses or to render services of
whatever kind or nature.
l1. Term of Agreement
This Agreement shall become effective as of the date
the Fund commences its investment operations and
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 or (ii) a vote of a "majority" (as defined in the
Investment Company Act of 1940, as amended (the "1940
Act")) of the Fund's outstanding voting securities,
provided that in either event the continuance is also
approved by a majority of the Board who are not
"interested persons" (as defined in the 1940 Act) of
any party to this Agreement, by vote cast in person or
by proxy 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 or by vote of holders of a majority of the Fund's
shares, or upon 90 days' written notice, by TIMCO. This
Agreement will also terminate automatically in the
event of its assignment (as defined in the 1940 Act).
12. Representation by the Trust
The Trust represents that a copy of the Master Trust
Agreement is on file with the Secretary of the
Commonwealth of Massachusetts and with the City of
Boston.
13. Indemnification
The Trust agrees to indemnify TIMCO and its officers,
directors, employees, affiliates, controlling persons,
agents (including persons to whom responsibilities are
delegated hereunder) against any loss, claim, expense
or cost of any kind (including reasonable attorney's
fees) resulting or arising in connection with this
Agreement, or from the performance or failure to
perform any act hereunder, provided that no such
indemnification shall be available if the indemnitee
violated the standard of care in paragraph 8 above.
This indemnification shall be limited by the 1940 Act
and relevant state law. Each indemnitee shall be
entitled to advance of its expenses in accordance with
the requirements of the 1940 Act and the rules,
regulations and interpretations thereof as in effect
from time to time.
14. Limitation of Liability
The Trust and TIMCO agree that the obligations of the
Trust under this Agreement shall not be binding upon
any of the Board members, 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 duly authorized by
the Trust and TIMCO, and signed by an authorized
officer of each, acting as such. Neither the
authorization by the Board members of the Trust, nor
the Trust execution and delivery by the officer of the
Trust 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 the enclosed copy of this Agreement to
us.
Very truly yours,
Smith Barney Investment
Trust,
on behalf of
Smith Barney S&P 500
Advantage Fund.
By:
Title:
Accepted:
Travelers Investment Management Company
By:
Title:
8
DISTRIBUTION AGREEMENT
[DATE]
PFS Distributors
3100 Breckenridge Blvd., Bldg 200
Duluth, Georgia 30199-0062
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, [Name of Fund] a
[business trust/Corporation] organized under the laws of the
[Commonwealth of Massachusetts/State of Maryland] has agreed that
PFS Distributors ("PFS") shall be, for the period of this
Agreement, the distributor of shares (the "Shares") of the Fund.
1. Services as Distributor
1.1 PFS 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 PFS 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 PFS 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 PFS will provide one or more persons during normal
business hours to respond to telephone questions concerning the
Fund.
1.5 PFS will transmit any orders received by it for
purchase or redemption of Shares to PFS Shareholder Service (the
"Sub-Transfer Agent"), the Fund's sub-transfer and dividend
agent, or any successor Sub-Transfer Agent of which the Fund has
notified PFS 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 PFS will act only on its own behalf as principal
should it choose to enter into selling agreements with selected
dealers or others.
(For Funds with Plans adopted pursuant to Rule 12b-1)
1.8 The Fund will pay to PFS an annual fee in
connection with the offering and sale of the Shares under this
Agreement. The annual fee paid to PFS, will be calculated daily
and paid monthly by the Fund at an annual rate set forth in the
[Services and Distribution/Shareholder Servicing] Plan (the
"Plan") based on the average daily net assets of [each
portfolio/series of the Fund which has adopted a Plan/the Fund];
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 PFS under this Section 1.8 maybe used
by PFS 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 PFS Investments
Representatives and other employees of PFS 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 PFS, any of its
affiliates, or any other person have agreed to bear without
reimbursement.
1.9 PFS 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 PFS 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 PFS 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 PFS upon request with (a) annual audits of the
Fund's books and accounts made by independent certified public 1
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 PFS may reasonably
request.
3. Representations and Warranties
The Fund represents to PFS 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 filed with the SEC.
The Fund represents and warrants to PFS 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 PFS to do so, PFS 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
PFS 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 PFS 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 PFS, its
several officers and directors, and any person who controls PFS
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 PFS, 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 PFS, 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 PFS 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 PFS
pursuant to paragraph 2.2 of this Agreement; and further provided
that the Fund's agreement to indemnify PFS 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 PFS would
otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties, or by
reason of PFS's reckless disregard of its obligations and duties
under this Agreement. The Fund's agreement to indemnify PFS, 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 PFS, 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 PFS. In the event the Fund
elects to assume the defense of any such suit and retains counsel
of
good standing approved by PFS, 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 PFS does not
approve of counsel chosen by the Fund, the Fund will reimburse
PFS, 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 PFS 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 PFS, 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 PFS'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 PFS 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 PFS agrees to indemnify, defend and hold the Fund,
its several officers and [Directors/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 [Directors/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
[Directors/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 PFS 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
PFS to the Fund and required to be stated in such answers or
necessary to make such information not misleading. PFS's
agreement to indemnify the Fund, its officers or
[Directors/Trustees], and any such controlling person, as
aforesaid, is expressly conditioned upon PFS being notified of
any action brought against the Fund, its officers or
[Directors/Trustees], or any such controlling person, such
notification to be given by letter or telegram addressed to PFS
at its principal office in New York, New York and sent to PFS by
the person against whom such action is brought, within ten days
after the summons or other first legal process shall have been
served. PFS 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 PFS's part, and in any other event
the Fund, its officers or [Directors/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 PFS of any such action shall not relieve
PFS from any liability that PFS may have to the Fund, its
officers or [Directors/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 PFS's
indemnity agreement contained in this paragraph 4.2. PFS agrees
to notify the Fund promptly of the commencement of any litigation
or proceedings against PFS 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 PFS 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 [Master
Trust Agreement/Articles of Incorporation] dated [Date of Master
Trust Agreement/Articles of Incorporation], as amended from time
to time.
6. Notice to PFS
The Fund agrees to advise PFS 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 on the date first
written above and shall continue for successive annual periods
thereafter so long as such continuance is specifically approved
at least annually by (a) the Fund's Board of [Directors/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
[Directors/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 [Directors/Trustees],
by vote of the holders of a majority of the Fund's Shares, or on
90 days' notice by PFS. This Agreement will also terminate
automatically in the event of its assignment (as defined in the
1940 Act).
8. Limitation of Liability (Massachusetts business trusts
only)
The Fund and PFS 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,
[Name of Fund]
By: _____________________
[Title]
Accepted:
PFS DISTRIBUTORS
By: __________________________
Authorized Officer
shared\domestic\forms\distrib
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Page: 3
1
SMITH BARNEY INVESTMENT TRUST -
SMITH BARNEY S&P 500 ADVANTAGE FUND
ADMINISTRATION AGREEMENT
November __, 1995
Smith Barney Mutual Funds Management Inc.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
Smith Barney Investment Trust, a business trust
organized under the laws of the Commonwealth of
Massachusetts, confirms its agreement with Smith Barney
Mutual Funds Management Inc. ("SBMFM") and its sub-trust,
Smith Barney S&P 500 Advantage Fund (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 its Master Trust
Agreement, as amended from time to time (the "Master Trust
Agreement"), in its Prospectus(es) and Statement(s) of
Additional Information as from time to time in effect and in
such manner and to such extent as may from time to time be
approved by the Board of Trustees of the Fund (the "Board").
Copies of the Fund's Prospectus(es), Statement(s) of
Additional Information and Master Trust Agreement have been
or will be submitted to SBMFM Travelers Investment
Management Company ("TIMCO"), a wholly owned subsidiary of
Smith Barney Holdings Inc., serves as the Fund's investment
adviser, and the Fund desires to employ and hereby appoints
SBMFM to act as its administrator. SBMFM accepts this
appointment and agrees to furnish the services to the Fund
for the compensation set forth below. SBMFM is hereby
authorized to retain third parties and is hereby authorized
to delegate some or all of its duties and obligations
hereunder to such persons provided that such persons shall
remain under the general supervision of SBMFM.
2. Services as Administrator
Subject to the supervision and direction of the Board,
SBMFM will: (a) assist in supervising all aspects of the
Fund's operations except those performed by the Fund's
investment adviser under its investment advisory agreement;
(b) supply the Fund with office facilities (which may be in
SBMFM's own offices), statistical and research data, data
processing services, clerical, accounting and bookkeeping
services, including, but not limited to, the calculation of
(i) the net asset value of shares of the Fund, (ii)
applicable contingent deferred sales charges and similar
fees and charges and (iii) distribution fees, internal
auditing and legal services, internal executive and
administrative services, and stationary and office supplies;
and (c) prepare reports to shareholders of the Fund, tax
returns and reports to and filings with the Securities and
Exchange Commission (the "SEC") and state blue sky
authorities.
3. Compensation
In consideration of services rendered pursuant to this
Agreement, the Fund will pay SBMFM on the first business day
of each month a fee for the previous month at an annual rate
of 0.10 of 1.00% of the Fund's average daily net assets.
The fee for the period from the date the Fund's initial
registration statement is declared effective by the SEC to
the end of the month during which the initial registration
statement is declared effective 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 any month, the fee for such part of a 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 SBMFM, the value of the Fund's
net assets shall be computed at the times and in the manner
specified in the Fund's Prospectus and Statement of
Additional Information as from time to time in effect.
4. Expenses
SBMFM 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 the members of the Board of the
Fund who are not officers, directors or employees of SBMFM
or its affiliates or any person who is an affiliate of any
person to whom duties may be delegated hereunder; SEC fees
and state blue sky qualification fees; charges of custodians
and transfer and dividend disbursing agents; the Fund's and
Board members' proportionate share of insurance premiums,
professional association dues and/or assessments; outside
auditing and legal expenses; costs of maintaining the Fund's
existence; costs attributable to investor services,
including, without limitation, telephone and personnel
expenses; costs of preparing and printing prospectuses and
statements of additional information for regulatory purposes
and for distribution to existing shareholders; costs of
shareholders' reports and meetings of the officers or Board
and any extraordinary expenses. In addition, the Fund will
pay all distribution fees pursuant to a Distribution Plan
adopted under Rule 12b-1 of the Investment Company Act of
1940, as amended (the "1940 Act").
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 (s), but excluding
distribution fees, interest, taxes, brokerage and, if
permitted by state securities commissions, extraordinary
expenses) exceed the expense limitations of any state having
jurisdiction over the Fund, SBMFM 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 SBMFM will be limited to
the amount of its fees hereunder. Such expense
reimbursement, if any, will be estimated, reconciled and
paid on a monthly basis.
6. Standard of Care
SBMFM shall exercise its best judgment in rendering the
services listed in paragraph 2 above, and SBMFM 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
herein shall be deemed to protect or purport to protect
SBMFM against liability to the Fund or to its shareholders
to which SBMFM 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
SBMFM's reckless disregard of its obligations and duties
under this Agreement.
7. Term of Agreement
This Agreement shall continue automatically for
successive annual periods, provided such continuance is
specifically approved at least annually by the Board.
8. Service to Other Companies or Accounts
The Fund understands that SBMFM now acts, will continue
to act and may act in the future as administrator to one or
more other investment companies, and the Fund has no
objection to SBMFM so acting. In addition, the Fund
understands that the persons employed by SBMFM or its
affiliates to assist in the performance of its 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 SBMFM or its affiliates to engage in
and devote time and attention to other businesses or to
render services of whatever kind or nature.
9. Indemnification
The Fund agrees to indemnify SBMFM and its officers,
directors, employees, affiliates, controlling persons,
agents (including persons to whom responsibilities are
delegated hereunder) ("indemnitees") against any loss,
claim, expense or cost of any kind (including reasonable
attorney's fees) resulting or arising in connection with
this Agreement or from the performance or failure to perform
any act hereunder, provided that no such indemnification
shall be available if the indemnitee violated the standard
of care in paragraph 6 above. This indemnification shall be
limited by the 1940 Act, and relevant state law. Each
indemnitee shall be entitled to advancement of its expenses
in accordance with the requirements of the 1940 Act and the
rules, regulations and interpretations thereof as in effect
from time to time.
10. Limitation of Liability
The Fund, SBMFM and Boston Advisors agree that the
obligations of the Fund under this Agreement shall not be
binding upon any of the Board members, 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 has been duly authorized by the Fund and
SBMFM and signed by an authorized officer of each, acting as
such. Neither the authorization by the Board members of the
Fund, nor the execution and delivery by the officer of the
Fund 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,
Smith Barney Investment
Trust,
on behalf of
Smith Barney S&P 500
Advantage Fund
By:
____________________________
Name: Heath B.
McLendon
Title: Chairman of the
Board
Accepted:
Smith Barney Mutual Funds Management Inc.
By: __________________________
Name:
Title:
u:\joachim\sub-tr.doc
FORM OF
SUB-TRANSFER AGENCY AGREEMENT
AGREEMENT made as of the day of 1995 by
and between
and
PFS Shareholders Services (the "Sub-Transfer Agent").
WITNESSETH:
WHEREAS, the Fund desire that Sub-Transfer Agent be retained to
perform certain recordkeeping and accounting services and
functions with respect to transactions in Fund shares ("Shares")
made by shareholders of the Fund (the "Shareholders") when with
respect to Fund the Sub-Transfer Agent maintains with the
Fund's transfer agent ("Transfer Agent") a single master
shareholder account with respect to the Shareholders; and
WHEREAS, Sub-Transfer Agent desires to provide such services on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the following premises and
mutual covenants, the parties agree as follows:
1. Services Provided by Sub-Transfer Agent
When and to the extent requested by the Funds, Sub-Transfer Agent
agrees to perform recordkeeping and accounting services and
functions with respect to transactions in Shares made by the
Shareholders when with respect to each Fund the Sub-Transfer
Agent maintains with the Transfer Agent a single master
shareholder account. To the extent requested, Sub-Transfer will
provide the following services:
A.Maintain separate records for each Shareholder reflecting
Shares purchased, redeemed and exchanged on behalf of
such Shareholder and outstanding balances of Shares owned
by or for the benefit of such Shareholder.
B.Prepare and transmit to Shareholders periodic account
statements indicating the number of Shares of each Fund
owned by or for the benefit of Shareholders and
purchases, redemptions and exchanges made on behalf of
Shareholders.
C.Transmit to Shareholders copies of proxy materials,
periodic reports and other materials relating to the
Funds.
D.With respect to each Shareholder, aggregate all purchase,
redemption and exchange orders made by or on behalf of
the Shareholders and transmit instructions based on such
aggregate orders ("Instructions") to the Transfer Agent
for acceptance.
E.Transmit to the Shareholders confirmations of
transactions made in accordance with Instructions.
F.Provide to the Funds, the Transfer Agent and/or other
parties designated by them such other information
relating to transactions in an holdings of Shares by or
on behalf of the Shareholders as is reasonably requested.
G.Arrange for the delivery to the Transfer Agent of
appropriate documentation and, in the case of purchase
orders, payment, in connection with each aggregate order
transmitted to the Transfer Agent.
2. Appointment As Agent for Limited Purpose
Sub-Transfer Agent shall be deemed the be agent of each Fund for
the sole and limited purpose of receiving purchase, redemption
and exchange orders from Shareholders and transmitting
corresponding Instructions to the Transfer Agent. Except as
provided specifically herein, neither Sub-Transfer Agent nor any
person to which Sub-Transfer Agent may delegate any of its duties
hereunder shall be or hold itself out as an agent of the Transfer
Agent or any Fund.
3. Delegation by Sub-Transfer Agent
With respect to any Shareholder, Sub-Transfer Agent may delegate
some or all of its duties under this Agreement to other parties
which after reasonable inquiry Sub-Transfer Agent deems to be
competent to assume such duties. In the event of any such
delegations, Sub-Transfer Agent shall enter into a written
agreement with the delegate in which the delegatee will, among
other things:
A.agree to forward Instructions to the Transfer Agent
within such time periods as are specified by the Transfer
Agent, the Fund's prospectus and applicable law and
regulation; and
B.Represent and warrant that it is duly registered as
required under all federal and state securities laws.
4. Records and Reporting
Sub-Transfer Agent will maintain and preserve all records as
required by law in connection with its provision of services
under this Agreement. Upon the reasonable request of the funds
or the Transfer Agent, Sub-Transfer Agent will provide copies of:
historical records relating to transactions involving the Funds
and Shareholders; written communications regarding the Funds to
or from Shareholders; and other materials relating to the
provision of services by Sub-Transfer under this Agreement. Sub-
Transfer Agent will comply with any reasonable request for such
information and documents made by the board of directors of the
Funds or any governmental body or self-regulartory organization.
Sub-Transfer Agent agrees that it will permit the Funds, the
Transfer Agent or their representatives to have reasonable access
to its personnel and records in order to facilitate the
monitoring to the quality of the services provided by Sub-
Transfer Agent. Notwithstanding any thing herein to the contrary
, Sub-Transfer Agent shall not be required to provide the names
and addresses of shareholders to the Funds or the Transfer Agent,
unless applicable law or regulation otherwise requires.
5. Sub-Transfer Agent's Ability to Provide Services
Sub-Transfer Agent agrees to notify the Funds promptly if for any
reason it is unable to perform its obligations under this
Agreement.
6. Compensation
A.In consideration of performance of the services by Sub-
Transfer Agent hereunder and the costs it will incur in
providing those services, each Fund agrees to reimburse
Sub-Transfer for its costs (including payments to
delegatees) in amounts that do not exceed those indicated
in the maximum reimbursement schedule attached as
Schedule A hereto. With respect to any Shareholder, to
the extent Sub-Transfer Agent delegates any obligations
hereunder to a third party, Sub-Transfer Agent will
negotiate in good faith with such third party delegatee
regarding the fees to be paid to the delegatee. Sub-
Transfer Agent, and not the Funds, will solely
responsible for compensating such a delegatee. If as a
result of its fee negotiations with such a delegatee Sub-
Transfers Agent is required to pay the delegatee less
than would be the case if Exhibit A were the delegatee's
fee schedule, Sub-Transfer Agent will reduce the amount
of compensation it receives from the Funds hereunder by
the amount of such differential.
B.The Funds agree to reimburse Sub-Transfer Agent or its
delegatees for their reasonable out-of pocket costs
incurred in connection with mailings to Shareholders of
materials as described in Paragraph 1 hereto.
C.Sub-Transfer Agent will permit the Funds or their
representative (including counsel and independent
accountants) with reasonable access to its records to
enable the Funds to verify that Sub-Transfer Agent's
changes to the Funds hereunder comply with the provisions
of this Agreement. Such access shall include, but not be
limited to, up to four on-site inspections of Sub-
Transfer Agent's records each year.
7. Indemnification
Sub-Transfer Agent shall indemnify and hold harmless each Fund
from and against any and all losses and liabilities that any one
or more of them may incur, including without limitation
reasonable attorneys' fees, expenses and costs arising out of or
related to the performance or non-performance of Sub-Transfer
Agent or any of its delegatees of its responsibilities under this
Agreement; excluding, however, any such claims, suits, loss,
damage or costs caused by, contributed to or arising from any
noncompliance by any of the Funds with their obligations under
this Agreement, as to which the Funds shall indemnify, hod
harmless and defend Sub-Transfer Agent on the same basis as set
forth above.
8. Termination
With respect to any Fund, this Agreement may be terminated at any
time by Sub-Transfer Agent or that Fund upon 30 days written
notice. The provisions of paragraphs 4 and 7 shall continue in
full force and effect after termination of this Agreement.
9. Addition of funds
In addition to the Funds, any other mutual fund sponsored by
Smith Barney Inc. or its affiliates may become a party to this
Agreement by having this Agreement executed on its behalf.
10. Miscellaneous
This Agreement represents the entire agreement between the
parties with regard to the matters described herein, and may not
be modified or amended except by written instrument executed by
all parties. This Agreement may not assigned by any party hereto
without the prior written consent of the other parties. This
Agreement is made and shall be construed under the laws of the
State of New York. This Agreement supersedes all previous
agreements and understandings between the parties with respect to
its subject matter. If any provision of the Agreement shall be
held or made invalid by a statute, rule, regulation, decision of
a tribunal or otherwise, the remainder of the Agreement shall not
be affected thereby. No Fund shall be responsible for the
liabilities or any other Fund hereunder.
IN WITNESS HEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
SMITH BARENEY FUND PFS SHAREHOLDER SERVICES
By:______________________________ By:
___________________________
Title:_____________________________
Title:__________________________
SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
This Shareholder Services and Distribution Plan (the
"Plan") is adopted in accordance with Rule 12b-1 (the
"Rule") under the Investment Company Act of 1940, as amended
(the "1940 Act"), by Smith Barney Investment Trust, a
business trust organized under the laws of the Commonwealth
of Massachusetts (the "Trust"), in respect of the Smith
Barney S&P 500 Advantage Fund (the "Fund"), subject to the
following terms and conditions:
Section 1. Annual Fee.
(a) Class A Service Fee. The Trust will pay to the
distributor of the Fund's shares of beneficial
interest, Smith Barney, Inc., a corporation organized
under the laws of the State of Delaware or PFS
Distributors (collectively the "Distributors"), a
service fee under the Plan at an annual rate of 0.25%
of the average daily net assets of the Fund
attributable to the Class A shares sold by the
respective Distributor (the "Class A Service Fee").
(b) Service Fee for Class B shares. The Trust will
pay to the Fund's Distributors a service fee under
the Plan at the annual rate of 0.25% of the average
daily net assets of the Fund attributable to the
Class B shares sold by the respective Distributor
(the "Class B Service Fee").
(c) Distribution Fee for Class B shares. In addition
to the Class B Service Fee, the Trust will pay the
Distributors a distribution fee under the Plan at the
annual rate of 0.75% of the average daily net assets
of the Fund attributable to the Class B shares sold
by the respective Distributor (the "Class B
Distribution Fee").
(d) Service Fee for Class C shares. The Trust will
pay to the Fund's Distributors a service fee under
the plan at the annual rate of 0.25% of the average
daily net assets of the Fund attributable to the
Class C shares sold by the respective Distributor
(the "Class C Service Fee").
(e) Distribution Fee for Class C shares. In
addition to the Class C Service Fee, the Trust will
pay the Fund's Distributors a distribution fee under
the plan at the annual rate of 0.75% of the average
daily net assets of the Fund attributable to the
Class C shares sold by the respective Distributor
(the "Class C Distribution Fee").
(f) Payment of Fees. The Service Fees and
Distribution Fees will be calculated daily and paid
monthly by the Trust with respect to the foregoing
classes of the Fund's shares (each a "Class" and
together, the "Classes") at the annual rates
indicated above.
Section 2. Expenses Covered by the Plan.
With respect to expenses incurred by each Class, its
respective Service Fees and/or Distribution Fees may be used
by the Distributor for: (a) costs of printing and
distributing the Fund's prospectuses, statements of
additional information and reports to prospective investors
in the Fund; (b) costs involved in preparing, printing and
distributing sales literature pertaining to the Fund; (c) an
allocation of overhead and other branch office distribution-
related expenses of a Distributor; (d) payments made to, and
expenses of, Smith Barney financial consultants and other
persons who provide support services to Fund shareholders in
connection with the distribution of the Fund's shares,
including but not limited to, office space and equipment,
telephone facilities, answering 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; and (e) accruals for interest on the amount
of the foregoing expenses that exceed a Distribution Fee
and, in the case of Class B and Class C shares, the
contingent deferred sales charge received by the
Distributor; provided, however, that the Distribution Fees
may be used by the Distributor only to cover expenses
primarily intended to result in the sale of those shares,
including, without limitation, payments to the Distributor's
financial consultants at the time of the sale of the shares.
In addition, Service Fees are intended to be used by a
Distributor primarily to pay its financial consultants for
servicing shareholder accounts, including a continuing fee
to each such financial consultant, which fee shall begin to
accrue immediately after the sale of such shares.
Section 3. Approval by Shareholders
The Plan will not take effect, and no fees will be payable
in accordance with Section 1 of the Plan, with respect to a
Class until the Plan has been approved by a vote of at least
a majority of the outstanding voting securities of the
Class. The Plan will be deemed to have been approved with
respect to a Class, so long as a majority of the outstanding
voting securities of the Class votes for the approval of the
Plan, notwithstanding that: (a) the Plan has not been
approved by a majority of the outstanding voting securities
of any other Class; or (b) the Plan has not been approved by
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) the
Board of Trustees 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 with respect to each
Class until [ ], 1996 and thereafter for
successive twelve-month periods with respect to each Class;
provided, however, that such continuance is specifically
approved at least annually by the Trustees of the Trust and
by a majority of the Qualified Trustees.
Section 6. Termination.
The Plan may be terminated at any time with respect to a
Class (i) by the Trust without the payment of any penalty,
by the vote of a majority of the outstanding voting
securities of such Class or (ii) by a majority vote of the
Qualified Trustees. The Plan may remain in effect with
respect to a particular Class even if the Plan has been
terminated in accordance with this Section 6 with respect to
any other Class.
Section 7. Amendments.
The Plan may not be amended with respect to any Class so
as to increase materially the amounts of the fees described
in Section 1 above, unless the amendment is approved by a
vote of holders of at least a majority of the outstanding
voting securities of that Class. No material amendment to
the Plan may be made unless approved by the Trust's Board of
Trustees in the manner described in Section 3 above.
Section 8. Selection of Certain Directors.
While the Plan is in effect, the selection and nomination
of the Trust's Trustees who are not interested persons of
the Fund will be committed to the discretion of the Trustees
then in office who are not interested persons of the Fund.
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 Board of
Trustees and the Board will review, at least quarterly,
written reports complying with the requirements of the Rule,
which 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 rules and regulations under the 1940 Act, subject to any
exemption that may be granted to the Fund under the 1940
Act, by the Securities and Exchange Commission.
IN WITNESS WHEREOF, the Fund has executed the Plan as of
[ ], 1995.
SMITH BARNEY INVESTMENT TRUST,
On behalf of Smith Barney S&P 500
Advantage Fund
By:____________________________________
Heath B. McLendon
Chairman of the Board
EXHIBIT 18
Rule 18f-3 (d) Multiple Class Plan
for Smith Barney Mutual Funds
Introduction
This plan (the "Plan") is adopted pursuant to Rule 18f-3 (d)
of
the Investment Company Act of 1940, as amended (the "1940
Act").
The purpose of the Plan is to restate the existing
arrangements
previously approved by the Boards of Directors and Trustees
of
certain of the open-end investment companies set forth on
Schedule A (the "Funds" and each a "Fund") distributed by
Smith
Barney Inc. ("Smith Barney") under the Funds' existing order
of
exemption (Investment Company Act Release Nos. 20042
(January 28,
1994) (notice) and 20090 (February 23, 1994)). Shares of
the
Funds are distributed pursuant to a system (the "Multiple
Class
System") in which each class of shares (a "Class") of a Fund
represents a pro rata interest in the same portfolio of
investments of the Fund and differs only to the extent
outlined
below.
I. Distribution Arrangements and Service Fees
One or more Classes of shares of the Funds are offered for
purchase by investors with the following sales load
structure.
In addition, pursuant to Rule 12b-1 under the 1940 Act (the
"Rule"), the Funds have each adopted a plan (the "Services
and
Distribution Plan") under which shares of the Classes are
subject
to the services and distribution fees described below.
1. Class A Shares
Class A shares are offered with a front-end sales load and
under
the Services and Distribution Plan are subject to a service
fee
of up to 0.25% of average daily net assets. In addition,
the
Funds are permitted to asses a contingent deferred sales
charge
("CDSC") on certain redemptions of Class A shares sold
pursuant
to a complete waiver of front-end sales loads applicable to
large
purchases, if the shares are redeemed within one year of the
date
of purchase. This waiver applies to sales of Class A shares
where the amount of purchase is equal to or exceeds $500,000
although this amount may be changed in the future.
2. Class B Shares
Class B shares are offered without a front-end sales load,
but
are subject to a five-year declining CDSC and under the
Services
and Distribution Plan are subject to a service fee at an
annual
rate of up to 0.25% of average daily net assets and a
distribution fee at an annual rate of up to 0.75% of average
daily net assets.
3. Class C Shares
Class C shares are offered without a front-end load, but are
subject to a one-year CDSC and under the Services and
Distribution Plan are subject to a service fee at an annual
rate
of up to 0.25% of average daily net assets and a
distribution fee
at an annual rate of up to 0.75% of average daily net
assets.
Unlike Class B shares, Class C shares do not have the
conversion
feature as discussed below and accordingly, these shares are
subject to a distribution fee for an indefinite period of
time.
The Funds reserve the right to impose these fees at such
higher
rates as may be determined.
4. Class Y Shares
Class Y shares are offered without impositions of either a
sales
charge or a service or distribution fee for investments
where the
amount of purchase is equal to or exceeds $5 million.
5. Class Z Shares
Class Z shares are offered without imposition of either a
sales
charge or a service or distribution fee for purchase (i) by
employee benefit and retirement plans of Smith Barney and
its
affiliates, (ii) by certain unit investment trusts sponsored
by
Smith Barney and its affiliates, and (iii) although not
currently
authorized by the governing boards of the Funds, when and if
authorized, (x) by employees of Smith Barney and its
affiliates
and (y) by directors, general partners or trustees of any
investment company for which Smith Barney serves as a
distributor
and, for each of (x) and (y), their spouses and minor
children.
6. Additional Classes of Shares
The Boards of Directors and Trustees of the Funds have the
authority to create additional classes, or change existing
Classes, from time to time, in accordance with Rule 18f-3 of
the
1940 Act.
II. Expense Allocations
Under the Multiple Class System, all expenses incurred by a
Fund
are allocated among the various Classes of shares based on
the
net assets of the Fund attributable to each Class, except
that
each Class's net assets value and expenses reflect the
expenses
associated with that Class under the Fund's Services and
Distribution Plan, including any costs associated with
obtaining
shareholder approval of the Services and Distribution Plan
(or an
amendment thereto) and any expenses specific to that Class.
Such
expenses are limited to the following:
(I) transfer agency fees as identified by the transfer
agent as being attributable to a specific Class;
(ii) printing and postage expenses related to
preparing and
distributing materials such as shareholder reports,
prospectuses and proxies to current shareholders;
(iii) Blue Sky registration fees incurred by a Class
of
shares;
(iv) Securities and Exchange Commission registration
fees
incurred by a Class of shares;
(v) the expense of administrative personnel and
services as
required to support the shareholders of a specific Class;
(vi) litigation or other legal expenses relating
solely to
one Class of shares; and
(vii) fees of members of the governing boards of the
funds
incurred as a result of issues relating to one Class of
shares.
Pursuant to the Multiple Class System, expenses of a Fund
allocated to a particular Class of shares of that Fund are
borne
on a pro rata basis by each outstanding share of that Class.
III. Conversion Rights of Class B Shares
All Class B shares of each Fund will automatically convert
to
Class A shares after a certain holding period, expected to
be, in
most cases, approximately eight years but may be shorter.
Upon
the expiration of the holding period, Class B shares (except
those purchases through the reinvestment of dividends and
other
distributions paid in respect of Class B shares) will
automatically convert to Class A shares of the Fund at the
relative net asset value of each of the Classes, and will,
as a
result, thereafter be subject to the lower fee under the
Services
and Distribution Plan. For purposes of calculating the
holding
period required for conversion, newly created Class B shares
issued after the date of implementation of the Multiple
Class
System are deemed to have been issued on (i) the date on
which
the issuance of the Class B shares occurred or (ii) for
Class B
shares obtained through an exchange, or a series of
exchanges,
the date on which the issuance of the original Class B
shares
occurred.
Shares purchased through the reinvestment of dividends and
other
distributions paid in respect of Class B shares are also
Class B
shares. However, for purposes of conversion to Class A, all
Class B shares in a shareholder's Fund account that were
purchased through the reinvestment of dividends and other
distributions paid in respect of Class B shares (and that
have
not converted to Class A shares as provided in the following
sentence) are considered to be held in a separate sub-
account.
Each time any Class B shares in the shareholder's Fund
account
(other than those in the sub-account referred to in the
preceding
sentence) convert to Class A, a pro rata portion of the
Class B
shares then in the sub-account also converts to Class A.
The
portion is determined by the ratio that the shareholder's
Class B
shares converting to Class A bears to the shareholder's
total
Class B shares not acquired through dividends and
distributions.
The conversion of Class B shares to Class A shares is
subject to
the continuing availability of a ruling of the Internal
Revenue
Service that payment of different dividends on Class A and
Class
B shares does not result in the Fund's dividends or
distributions
constituting "preferential dividends" under the Internal
Revenue
Code of 1986, as amended (the "Code"), and the continuing
availability of an opinion of counsel to the effect that the
conversion of shares does not constitute a taxable event
under
the Code. The conversion of Class B shares to Class A
shares may
be suspended if this opinion is no longer available, In the
event that conversion of Class B shares of not occur, Class
B
shares would continue to be subject to the distribution fee
and
any incrementally higher transfer agency costs attending the
Class B shares for an indefinite period.
IV. Exchange Privileges
Shareholders of a Fund may exchange their shares at net
asset
value for shares of the same Class in certain other of the
Smith
Barney Mutual Funds as set forth in the prospectus for such
Fund.
Class A shareholders who wish to exchange all or part of
their
shares for Class A shares of a Fund sold subject to a sales
charge equal to or lower that that assessed with respect to
the
shares of the Fund being exchanged may do so without paying
a
sales charge. Class A shareholders of a Fund who wish to
exchange all or part of their shares for Class A shares of a
Fund
sold subject to a sales charge higher than that assessed
with
respect to the shares of the Fund being exchanged are
charged the
appropriate "sales charge differential." Funds only permit
exchanges into shares of money market funds having a plan
under
the Rule if, as permitted by paragraph (b) (5) of Rule 11a-3
under the 1940 Act, either (i) the time period during which
the
shares of the money market funds are held is included in the
calculations of the CDSC or (ii) the time period is not
included
but the amount of the CDSC is reduced by the amount of any
payments made under a plan adopted pursuant to the Rule by
the
money market funds with respects to those shares.
Currently, the
Funds include the time period during which shares of the
money
market fund are held in the CDSC period. The exchange
privileges
applicable to all Classes of shares must comply with Rule
11a-3
under the 1940 Act.
Smith Barney Sponsored Investment Companies
Operating under Rule 18f-3 - Schedule A
(as of August 25, 1995)
Smith Barney Adjustable Rate Government Income Fund
Smith Barney Aggressive Growth Fund Inc.
Smith Barney Appreciation Fund Inc.
Smith Barney Arizona Municipals Fund Inc.
Smith Barney California Municipals Fund
Smith Barney Equity Funds -
Smith Barney Strategic Investors Fund
Smith Barney Growth and Income Fund
Smith Barney Florida Municipals Fund
Smith Barney Fundamental Value Fund Inc.
Smith Barney Funds, Inc. -
Income and Growth Portfolio
Utilities Portfolio
Income Return Account Portfolio
Monthly Payment Government Portfolio
Short-Term U.S. Treasury Securities Portfolio
U.S. Government Securities Portfolio
Smith Barney Income Funds -
Smith Barney Premium Total Return Fund
Smith Barney Convertible Fund
Smith Barney Diversified Strategic Income Fund
Smith Barney High Income Fund
Smith Barney Tax-Exempt Income Fund
Smith Barney Exchange Reserve Fund
Smith Barney Utilities Fund
Smith Barney Income Trust -
Smith Barney Limited Maturity Municipals Fund
Smith Barney Limited Maturity Treasury Fund
Smith Barney Intermediate Maturity
California Municipals Fund
Smith Barney Intermediate Maturity
New York Municipals Fund
Smith Barney Investment Funds Inc. -
Smith Barney Special Equities Fund
Smith Barney Government Securities Fund
Smith Barney Investment Grade Bond Fund
Smith Barney Growth Opportunity Fund
Smith Barney Managed Growth Fund
Smith Barney Institutional Cash Management Fund Inc.
Smith Barney Managed Governments Fund Inc.
Smith Barney Managed Municipals Fund Inc.
Smith Barney Massachusetts Municipals Fund
Smith Barney Money Funds, Inc. -
Cash Portfolio
Government Portfolio
Retirement Portfolio
Smith Barney Municipal Money Market Fund, Inc.
Smith Barney Muni Funds -
California Portfolio
California Limited Portfolio
California Money Market Portfolio
Florida Portfolio
Florida Limited Portfolio
Georgia Portfolio
Limited Term Portfolio
National Portfolio
New Jersey Portfolio
New York Portfolio
New York Money Market Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Smith Barney New Jersey Municipals Fund Inc.
Smith Barney New York Municipals Fund Inc.
Smith Barney Oregon Municipals Fund
Smith Barney Precious Metals and Minerals Fund Inc.
Smith Barney Telecommunications Trust -
Smith Barney Telecommunications Growth Fund
Smith Barney Telecommunications Income Fund
Smith Barney World Funds, Inc. -
International Equity Portfolio
International Balanced Portfolio
European Portfolio
Pacific Portfolio
Global Government Bond Portfolio
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