Filed with the Securities and Exchange Commission on December 11, 1997
Registration Nos.: 33-43446
811-6444
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. ___
Post-Effective Amendment No. 15 X
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 15 X
SMITH BARNEY INVESTMENT 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
(212) 816-6474
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as possible after this Post-Effective Amendment becomes effective
It is proposed that this filing will becomes effective:
immediately upon filing pursuant to Rule 485(b)
X on December 30, 1997 pursuant to Rule 485(b)
Registrant previously registered an indefinite number of its shares pursuant
to Rule 24f-2 of the Investment Company Act of 1940. The Registrants Rule
24f-2 Notice for the fiscal year ended November 30, 1996 was filed on January
28, 1997 as Accession No. 000091155-97-000045.<R/>
CONTENTS OF REGISTRATION STATEMENT
Front Cover
Contents Page
Cross Reference Sheet
Part A: Prospectus dated December 30, 1997 for
Smith Barney S& P 500 Index Fund
<PAGE>
SMITH BARNEY
S&P 500 Index Fund
PROSPECTUS DECEMBER 30, 1997
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388 Greenwich Street
New York, New York 10013
1-800-451-2010
The Smith Barney S&P 500 Index Fund (the "Fund") seeks to provide investment
results that correspond to the price and yield performance of the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500 Index"), which is representa-
tive of the U.S. stock market. The Fund will hold a broadly diversified portfo-
lio of common stocks that is comparable to the S&P 500 Index in terms of eco-
nomic sector weightings, market capitalization and liquidity.
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 1-800-451-2010.
Additional information about the Fund is contained in a Statement of Addi-
tional Information (the "SAI") dated December 30, 1997, as amended or supple-
mented from time to time, that is available upon request and without charge by
calling or writing the Fund at the telephone number or address set forth above
or by contacting a Smith Barney Financial Consultant. The SAI has been filed
with the Securities and Exchange Commission (the "SEC") and is incorporated by
reference into this Prospectus in its entirety.
SMITH BARNEY INC.
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>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY 3
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INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES 6
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VALUATION OF SHARES 9
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DIVIDENDS, DISTRIBUTIONS AND TAXES 10
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PURCHASE OF SHARES 11
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REDEMPTION OF SHARES 12
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MINIMUM ACCOUNT SIZE 15
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PERFORMANCE 15
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MANAGEMENT OF THE FUND 16
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DISTRIBUTOR 17
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ADDITIONAL INFORMATION 17
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</TABLE>
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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.
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2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by detailed information
appearing elsewhere in this Prospectus and in the SAI. Cross references in this
summary are to headings in the Prospectus. 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 500
Index. The Fund will hold a broadly diversified portfolio of common stocks that
is comparable to the S&P 500 Index in terms of economic sector weightings, mar-
ket capitalization and liquidity. See "Investment Objective and Management Pol-
icies."
PURCHASE ARRANGEMENTS The Fund offers two classes of shares: Class A and Class
D. Both Class A and D shares are sold at net asset value without a sales
charge. Class D Shares are offered to a limited group of investors who partici-
pate in certain investment programs which charge a fee for participation. In
addition, Class D Shares are offered to Travelers Group Inc. ("Travelers") and
its subsidiaries and their directors and employees and the Board of SBMFM-
advised investment companies. Class A shares are subject to an annual service
fee of 0.20% of the average daily net assets of this Class. Class D Shares are
not subject to any service fees.
See "Purchase of Shares," "Management of the Fund," "Valuation of Shares,"
and "Dividends, Distributions and Taxes" for other information.
PURCHASE OF SHARES Shares may be purchased through the Fund's distributor,
Smith Barney, a broker that clears securities transactions through Smith Barney
on a fully disclosed basis (an "Introducing Broker") or an investment dealer in
the selling group. In addition, certain investors, including qualified retire-
ment plans and certain other institutional investors may purchase shares
directly from the Fund through the Fund's transfer agent, First Data Investor
Services Group, Inc. ("First Data"). See "Purchase of Shares."
INVESTMENT MINIMUMS Investors may open an account by making an initial invest-
ment of at least $1,000 for each account, or $250 for an individual retirement
account ("IRA") or a Self-Employed Retirement Plan. Subsequent investments of
at least $50 may be made. The minimum investment requirements for purchases of
Shares through the Systematic Investment Plan are described below. See "Pur-
chase 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. The minimum initial investment require-
ment and the subsequent investment requirement for share -
3
<PAGE>
PROSPECTUS SUMMARY (CONTINUED)
holders purchasing shares through the Systematic Investment Plan on a monthly
basis is $25 and on a quarterly basis is $50. See "Purchase 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
("TIMCO") or
(the "Manager") serves as the Fund's investment adviser. The Manager provides
investment advisory and management services to certain investment companies
affiliated with Smith Barney Inc. ("Smith Barney") The Manager is a wholly
owned subsidiary of Smith Barney Holdings Inc. ("Holdings"). Holdings is a
wholly owned subsidiary of Travelers, a diversified financial services holding
company engaged, through its subsidiaries, principally in four business seg-
ments: 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. SBMFM provides
investment advisory and administration services to investment companies affili-
ated with Smith Barney. See "Management of the Fund."
EXCHANGE PRIVILEGE Shareholders of certain fee based programs and/or employee-
sponsored retirement plans are allowed to exchange Class D shares for other
classes of another Smith Barney Mutual Fund.
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 a Smith Barney Financial Consultant. See "Valuation of Shares."
DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income, if any, are
paid annually. Distributions of net realized long and short-term capital gains,
if any, are declared and paid annually. See "Dividends, Distributions and
Taxes."
REINVESTMENT OF DIVIDENDS Dividends and distributions paid on shares will be
reinvested automatically in additional shares at current net asset value unless
otherwise specified by an investor.
RISK FACTORS AND SPECIAL CONSIDERATIONS An investment in the Fund should be
considered a long-term holding and subject to all the risks associated with
investing in equity securities. The market value of the Fund's portfolio
securities and, therefore, the Fund's net asset value per share, will increase
or decrease due to a variety of economic, market or political factors which
cannot be predicted. The Fund operates as a "pure" index fund and will
therefore not
4
<PAGE>
PROSPECTUS SUMMARY (CONTINUED)
be actively managed; as such, the adverse performance of a portfolio security
will ordinarily not result in the elimination of the security from the Fund's
portfolio. The Fund may enter into repurchase agreements, may lend its
portfolio securities and may utilize transactions involving stock index futures
which may be considered speculative in nature and may involve greater risks
than those customarily assumed by other investment companies which do not
invest in such instruments. An investment in shares of the Fund should not be
considered a complete investment program and is not appropriate for all
investors. Investors should carefully consider their ability to assume these
risks before making an investment in the Fund. There can be no assurance that
the Fund's investment objective will be achieved. The value of the Fund's
investments, and thus the net asset value of the Fund's shares, 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.
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, unless otherwise noted, on the Fund's estimated
operating expenses.
<TABLE>
<CAPTION>
SMITH BARNEY
S&P 500 INDEX FUND CLASS A CLASS D
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<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases (as a percentage of
offering price) None None
Maximum CDSC (as a percentage of redemption proceeds) None None
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ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 0.25% 0.25%
12b-1 Fees 0.20 0
Other Expenses 0.14 0.14
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TOTAL FUND OPERATING EXPENSES 0.59% 0.39%
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</TABLE>
The sales charge and CDSC set forth in the above table are the maximum
charges imposed on purchases or redemptions of Fund shares. See "Purchase of
Shares" and "Redemption of Shares." Smith Barney receives an annual 12b-1 serv-
ice fee of 0.20% of the value of average daily net assets of the Class A shares
which it has sold. "Other expenses" in the above table include fees for share-
holder services, custodial fees, legal and accounting fees, printing costs and
registration fees.
5
<PAGE>
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>
SMITH BARNEY S&P 500 INDEX FUND 1 YEAR 3 YEARS
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<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 shares $6 $19
Class D shares 4 13
An investor would pay the following expenses on the same
investment, assuming the same annual return and no redemption:
Class A shares $6 $19
Class D shares 4 13
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</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
REPRESENTA-
TION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN
THOSE SHOWN ABOVE.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The Fund seeks to provide investment results that, before expenses, corre-
spond to the price and yield performance of the S&P 500 Index, which is repre-
sentative of the U.S. stock market. The Fund will hold a broadly diversified
portfolio of common stocks that is comparable to the S&P 500 Index in terms of
economic sector weightings, market capitalization and liquidity.
The Fund seeks to achieve its objective by investing, under normal circum-
stances, at least 80% of its total assets in common stocks included in the S&P
500 Index in approximately the same weightings as the S&P 500 Index. The Fund
intends to invest in substantially all of the stocks that comprise the S&P 500
Index in approximately the same weightings as they are represented in the S&P
500 Index. The Fund operates as a "pure" index fund and will not be actively
managed; as such, adverse performance of a security will ordinarily not result
in the elimination of the security from the Fund's portfolio. The Fund will
remain invested in common stocks even when stock prices are generally falling.
Ordinarily, portfolio securities will not be sold except to reflect additions
or deletions of the stocks that comprise the S&P 500 Index, including mergers,
reorganizations and similar transactions, or as may be necessary to satisfy
redemption requests.
6
<PAGE>
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
The Fund will be reviewed daily and adjusted, when necessary, to maintain
security weightings as close to those of the S&P 500 Index as possible, given
the amount of assets in the Fund at that time.
No attempt will be made to manage the Fund in the traditional sense using
economic, financial and market analysis, nor will the adverse financial situa-
tion of an issuer necessarily result in the elimination of its securities from
the Fund, unless the securities are removed from the S&P 500. From time to
time, administrative adjustments may be made in the Fund because of changes in
the composition of the S&P 500 Index.
The S&P 500 Index is a market capitalization index composed of 500 widely
held common stocks listed on the NYSE, American Stock Exchange and the over-
the-counter market. The S&P 500 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
subject 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 500 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
500 Index.
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
The ability of the Fund to meet its investment objective depends to some
extent on the Manager's ability to manage cash flows (primarily from purchases
and redemptions and distributions from the Fund's portfolio investments). Gen-
erally, the Manager will employ stock index futures to provide liquidity neces-
sary to meet anticipated redemptions or for day-to-day operating purposes. In
addition, a portion of the Fund's assets not exceeding 20% of its total assets
may be invested in money market instruments. The Manager will also make invest-
ment changes to the Fund's portfolio to accommodate cash flows while continuing
to seek to replicate the total return of the S&P 500 Index. Investors should
also be aware that the investment performance of the S&P 500 Index is a hypo-
thetical number which does not take into account brokerage commission and other
transaction costs, custody and other costs of investing, which will be borned
by the Fund, and any incremental operating costs borne by the Fund. Finally,
since the Fund seeks to provide investment results that, before expenses, cor-
respond to the total return of the S&P 500 Index, the Manager will generally
not attempt to judge the merits of any particular security as an investment.
7
<PAGE>
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
Money Market Instruments. A portion of the Fund's assets, not exceeding 20%
of its total assets, may be invested temporarily in money market instruments
under any one or more of the following circumstances: (a) pending investment of
proceeds of sale of shares of the Fund; (b) pending settlement of purchases of
portfolio securities; or (c) to maintain liquidity for the purpose of meeting
anticipated redemptions. 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 (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 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 SAI.
Stock Index Futures Contracts. The Fund may purchase or sell stock index
futures contracts ("futures contracts") that are traded on U.S. commodity
exchanges on the S&P 500 Index ("stock index" futures). As a futures contract
purchaser, the Fund incurs an obligation to take delivery of a specified amount
of the obligation underlying the contract at a specified time in the future for
a specified price. As a seller of a futures contract, the Fund incurs an obli-
gation to deliver the specified amount of the underlying to deliver the speci-
fied amount of the underlying obligation at a specified time in return for an
agreed upon price. The Fund will purchase or sell stock index futures for the
following reasons: to simulate full investment in the S&P 500 Index while
retaining a cash balance for fund management purposes, to facilitate trading,
to reduce transaction costs or to seek higher investment returns when a futures
contract is priced more attractively than stocks comprising the S&P 500 Index.
The Fund may enter into such instruments provided that not more than 5% of its
assets are required as an initial margin deposit and provided that the contract
prices of the stock index futures contracts do not exceed 20% of its total
assets. While such instruments can be used as leveraged investments, the Fund
may not use them to leverage its assets.
8
<PAGE>
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
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. For a more detailed discussion of finan-
cial futures contracts and associated risks, please see the SAI.
Lending Securities. Consistent with applicable regulation requirements, the
Fund may lend securities it holds to brokers, dealers and other financial orga-
nizations. The Fund's loans of securities will be collateralized by cash, let-
ters of credit or government securities that are maintained at all times in a
segregated account with the Fund's custodian in an amount at least equal to the
current market value of the loaned securities. By lending its portfolio securi-
ties, the Fund will seek to generate income by continuing to receive interest
on the loaned securities, by investing the cash collateral in short-term
instruments or by obtaining yield in the form of interest paid by the borrower
when government securities are used as collateral. The risks in lending portfo-
lio securities, as with other extensions of secured credit, consist of possible
delays in receiving additional collateral or in the recovery of the securities
or possible loss of rights in the collateral should the borrower fail finan-
cially. Loans will be made to firms deemed by the Manager to be of good stand-
ing and will not be made unless, in the judgment of the Manager, the considera-
tion to be earned from such loans would justify the risk.
Portfolio Transactions and Turnover. The Manager arranges for the purchase
and sale of the Fund's securities and selects brokers and dealers (including
Smith Barney), which in its best judgment provide prompt and reliable execution
at favorable prices and reasonable commission rates. The Manager may select
brokers and dealers which provide it with research services and may cause the
Fund to pay such brokers and dealers commissions which exceed those other bro-
kers and dealers may have charged, if it views the commissions as reasonable in
relation to the value of the brokerage and/or research services. In selecting a
broker, including Smith Barney, for a transaction, the primary consideration is
prompt and effective execution of orders at the most favorable prices. Subject
to that primary consideration, dealers may be selected for research, statisti-
cal or other services to enable the Manager to supplement its own research and
analysis. Portfolio turnover is expected to be lower than for most other
investment companies.
The Fund intends generally to purchase securities for long-term capital
appreciation. 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.
9
<PAGE>
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 by the total number of shares 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
determined 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
whenever the Trust's Board of Trustees determines that amortized cost is the
fair value of those instruments. Further information regarding the Fund's valu-
ation policies is contained in the SAI.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Fund's policy is to distribute substantially all 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 at net
asset value.
Income dividends and capital gain distributions that are invested are
credited to shareholders' accounts in additional shares at the net asset value
as of the close of business on the payment date. A shareholder may change the
option at any time by notifying a Smith Barney Financial Consultant. Accounts
held directly by First Data should notify First Data in writing at least five
business days prior to the payment date to permit the change to be entered in
the shareholder's account. If a shareholder redeems in full an account between
payment dates, all dividends accrued to the date of liquidation will be paid
with the proceeds from the redemption of shares.
TAXES
The Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Code to be relieved of Federal income tax on that part of
its net investment income and realized capital gains which it pays out to its
shareholders. To qualify, the Fund must meet certain tests, including distrib-
uting at least 90% of its investment company taxable income.
10
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)
Dividends paid from net investment income and distributions of net realized
short-term capital gains on the sale of securities, whether paid in cash or
automatically invested in additional shares of the Fund, are taxable to share-
holders of the Fund as ordinary income. Distributions out of net long-term cap-
ital gains (i.e. net long-term capital gains in excess of net short-term capi-
tal losses) are taxable to shareholders as long-term capital gains. Information
as to the tax status of dividends paid or deemed paid in each calendar year
including eligibility of long-term capital gains dividends for a reduced maxi-
mum 20% tax rate, will be mailed to shareholders as early in the succeeding
year as practical but not later than January 31.
The Fund is required to withhold and remit to the U.S. Treasury 31% of divi-
dends, distributions and redemption proceeds to shareholders who fail to pro-
vide a correct taxpayer identification number (the Social Security number in
the case of an individual) or to make the required certifications, or who have
been notified by the Internal Revenue Service that they are subject to backup
withholding and who are not otherwise exempt. The 31% withholding tax is not an
additional tax, but is creditable against a shareholder's Federal income tax
liability.
Prior to investing in shares of the Fund, investors should consult their tax
advisors concerning the Federal, state and local tax consequences of such an
investment.
PURCHASE OF SHARES
GENERAL
Class A and Class D shares are sold to investors at net asset value with no
initial sales charge. Class A shares are subject to ongoing service fee.
Purchases of Fund shares must be made through a brokerage account maintained
with Smith Barney, with an Introducing Broker or with an investment dealer in
the selling group. In addition, certain investors may purchase shares directly
from the Fund through First Data. Smith Barney and other broker/dealers may
charge their customers an annual account maintenance fee in connection with a
brokerage account through which an investor purchases or holds shares. Accounts
held directly at First Data are not subject to a maintenance fee.
Investors may open an account in the Fund by making an initial investment of
at least $1,000 for each account, or $250 for an IRA or a Self-employed Retire-
ment Plan. Subsequent investments of at least $50 may be made. For
11
<PAGE>
PURCHASE OF SHARES (CONTINUED)
shareholders purchasing shares of the Fund through the Systematic Investment
Plan, the minimum initial investment requirement is $25 for monthly purchases
and $50 for quarterly purchases. There are no minimum investment requirements
for employees of Travelers and its subsidiaries, including Smith Barney, and
Directors or Trustees of any of the Smith Barney Mutual Funds 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. Employees of members of the National Association of
Securities Dealers, Inc. may purchase shares of the Fund at net asset value.
Shares purchased will be held in the shareholder's account by the Fund's
transfer agent, First Data. Share certificates are issued only upon a share-
holder's written request to First Data.
The minimum initial and subsequent investment requirements in the Fund for
an account established under the Uniform Gift to Minors Act is $250 and the
subsequent investment requirement is $50.
Purchase orders received by the Fund or Smith Barney prior to the close of
regular trading on the NYSE, on any day the Fund calculates its net asset val-
ue, are priced according to the net asset value determined on that day (the
"trade date"). Orders received by dealers or Introducing Brokers prior to the
close of regular 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, provided the order is received by the Fund or Smith Barney prior to Smith
Barney's close of business (the "trade date"). For shares purchased through
Smith Barney or Introducing Brokers purchasing through Smith Barney, payment
for Fund shares is due on the third business day (the "settlement date") after
the trade date. In all other cases, payment must be made with the purchase
order.
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, Smith Barney or First Data is authorized through
preauthorized transfers of at least $25 on a monthly basis or at least $50 on
a quarterly basis to charge the regular bank account or other financial insti-
tution indicated by the shareholder, to provide systematic additions to the
shareholder's Fund account. A shareholder who has insufficient funds to com-
plete the transfer will be charged a fee of up to $25 by Smith Barney or First
Data. The Systematic Investment Plan also authorizes Smith Barney to apply
cash held in the shareholder's Smith Barney brokerage account or redeem the
shareholder's shares of a Smith Barney money market fund to make additions to
the account. Additional information is available from the Fund or a Smith Bar-
ney Financial Consultant.
12
<PAGE>
REDEMPTION OF SHARES
The Fund is required to redeem the shares of the Fund tendered to it, as
described below, at a redemption price equal to their net asset value per
share next determined after receipt of a written request in proper form at no
charge. Redemption requests received after the close of regular trading on the
NYSE are priced at the net asset value next determined.
Any request for redemption must specify the Class being redeemed. In the
event of a failure to specify which Class, or if the investor owns fewer
shares of the Class than specified, the redemption request will be delayed
until the transfer agent receives further instructions from Smith Barney, or
if the shareholder's account is not with Smith Barney, from the shareholder
directly. The redemption proceeds will be remitted on or before the third
business day following receipt of proper tender, except on any days on which
the NYSE is closed or as permitted under the Investment Company Act of 1940,
as amended, (the "1940 Act"), in extraordinary circumstances. Generally, if
the redemption proceeds are remitted to a Smith Barney brokerage account,
these funds will not be invested for the shareholder's benefit without spe-
cific instruction and Smith Barney will benefit from the use of temporarily
uninvested funds. Redemption proceeds for shares purchased by check, other
than a certified or official bank check, will be remitted upon clearance of
the check, which may take up to ten days or more.
Shares held by Smith Barney as custodian must be redeemed by submitting a
written request to a Smith Barney Financial Consultant. Shares other than
those held by Smith Barney as custodian may be redeemed through an investor's
Financial Consultant, Introducing Broker or dealer in the selling group or by
submitting a written request for redemption to:
Smith Barney S&P 500 Index Fund
c/o First Data Investor Services Group, Inc.
P.O. Box 5128
Westborough, Massachusetts 01581-5128
A written redemption request must (a) state the Class and number or dollar
amount of shares to be redeemed, (b) identify the shareholder's account number
and (c) be signed by each registered owner exactly as the shares are regis-
tered. If the shares to be redeemed were issued in certificate form, the cer-
tificates must be endorsed for transfer (or be accompanied by an endorsed
stock power) and must be submitted to First Data together with the redemption
request. Any signature appearing on a written redemption request in excess of
$2,000, or share certificate stock power must be guaranteed by an eligible
guarantor institution, such as a domestic bank, savings and loan institution,
domestic credit union, member bank of the Federal Reserve System or member
firm of a national secu -
13
<PAGE>
REDEMPTION OF SHARES (CONTINUED)
rities exchange. Written redemption requests of $2,000 or less do not require a
signature guarantee unless more than one such redemption request is made in any
10-day period. Redemption proceeds will be mailed to an investor's address of
record. First Data may require additional supporting documents for redemptions
made by corporations, executors, administrators, trustees or guardians. A
redemption request will not be deemed properly received until First Data
receives all required documents in proper form.
TELEPHONE REDEMPTION AND EXCHANGE PROGRAM
Shareholders who do not have a Smith Barney brokerage account may be eligible
to redeem Fund shares by telephone. To determine if a shareholder is entitled
to participate in this program, he or she should contact First Data at 1-800-
451-2010. Once eligibility is confirmed, the shareholder must complete and
return a Telephone/Wire Authorization Form, along with a signature guarantee
that will be provided by First Data upon request. (Alternatively, an investor
may authorize telephone redemptions on the new account application with the
applicant's signature guarantee when making his/her initial investment to the
Fund.)
Redemptions. Redemption requests of up to $10,000 of the Fund's shares may be
made by eligible shareholders by calling First Data at 1-800-451-2010. Such
requests may be made between 9:00 a.m. and 5:00 p.m. (New York City time) on
any day the NYSE is open. Redemption requests received after the close of regu-
lar trading on the NYSE are priced at the net asset value next determined.
Redemption of shares (i) by retirement plans or (ii) for which certificates
have been issued are not permitted under this program.
A shareholder will have the option of having the redemption proceeds mailed
to his/her address of record or wired to a bank account predesignated by the
shareholder. Generally, redemption proceeds will be mailed or wired, as the
case may be, on the next business day following the redemption request. In
order to use the wire procedures, the bank receiving the proceeds must be a
member of the Federal Reserve System or have a correspondent relationship with
a member bank. The Fund reserves the right to charge shareholders a nominal fee
for each wire redemption. Such charges, if any, will be assessed against the
shareholder's account from which were redeemed. In order to change the bank
account designated to receive redemption proceeds, a shareholder must complete
a new Telephone/Wire Authorization Form and, for the protection of the share-
holder's assets, will be required to provide a signature guarantee and certain
other documentation.
Additional Information regarding Telephone Redemption Program. Neither the
Fund nor its agents will be liable for following instructions communicated
14
<PAGE>
REDEMPTION OF SHARES (CONTINUED)
by telephone that are reasonably believed to be genuine. The Fund and its
agents will employ procedures designed to verify the identity of the caller and
legitimacy of instructions (for example, a shareholder's name and account num-
ber will be required and phone calls may be recorded). The Fund reserves the
right to suspend, modify or discontinue the telephone redemption program or
impose a charge for this service at any time following at least seven (7) days'
prior notice to shareholders.
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. For further information regarding the automatic cash withdrawal
plan, shareholders should contact their Smith Barney Financial Consultants.
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 involuntary liquidation.
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 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
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
15
<PAGE>
PERFORMANCE (CONTINUED)
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 stan-
dard total return information may also be accompanied with nonstandard total
return information for differing periods computed in the same manner but with-
out annualizing the total return or taking sales charges into account. The
Fund calculates current dividend return by annualizing the most recent monthly
distribution and dividing by the net asset value on the last day of the period
for which current dividend return is presented. The current dividend return
may vary from time to time depending on market conditions, the composition of
the Fund's investment portfolio and operating expenses. These factors and pos-
sible differences in the methods used in calculating current dividend return
should be considered when comparing current return to yields published for
other investment companies and other investment vehicles. The Fund may also
include comparative performance information when advertising or marketing its
shares. Such performance information may include data from Lipper Analytical
Services, Inc. and other financial publications.
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 SAI contains
background information regarding each Trustee of the Trust and the executive
officers of the Fund.
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 renders investment advice to
investment companies that had aggregate assets under management as of October
31, 1997, in excess of $1.6 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
16
<PAGE>
MANAGEMENT OF THE FUND (CONTINUED)
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 0.15% of the Fund's average daily net assets.
PORTFOLIO MANAGEMENT
The investment management team of the Fund's Manager is headed by Sandip
Bhagat, president and chief investment officer, of the Manager. Messrs. Bhagat
and John Lau, a portfolio manager at the Manager, are primarily responsible
for the day-to-day operations of the Fund, including making all investment
decisions.
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
Smith Barney distributes shares of the Fund as a principal underwriter and
as such conducts a continuous offering pursuant to a "best efforts" arrange-
ment requiring Smith Barney 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"), Smith Barney is paid an
annual service fee with respect to Class A shares of the Fund at the annual
rate of 0.20% of the average daily net assets of that Class. The fees are used
by Smith Barney to pay its Financial Consultants for servicing shareholder
accounts.
The payments to Smith Barney Financial Consultants for selling shares
include a commission or fee paid by the investor or Smith Barney at the time
of sale and a continuing fee for servicing shareholder accounts for as long as
a shareholder remains a shareholder.
Payments under the Plan are not tied exclusively to the shareholder service
expenses actually incurred by Smith Barney and the payments may exceed
expenses actually incurred. The Trust's Board of Trustees will evaluate the
appropriateness of the Plan and its payment terms on a continuing basis and in
so doing will consider all relevant factors, including expenses borne by Smith
Barney and amounts received under the Plan.
17
<PAGE>
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 "Massa-
chusetts business trust."
PNC Bank, National Association, located at 17th and Chestnut Streets, Phila-
delphia, Pennsylvania 19103, serves as custodian of the Fund's investments.
First Data, located at Exchange Place, Boston, Massachusetts 02109, serves
as the Fund's transfer agent.
The Trust 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 out-
standing shares and the Fund will assist shareholders in calling such a meet-
ing as required by the 1940 Act. When matters are submitted for shareholder
vote, shareholders will have one vote for each full share owned and a propor-
tionate, fractional vote for any fractional share held. Generally, shares of
the Fund will be voted on a Fund-wide basis on all matters.
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
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 (that is, individual, IRA and/or Self-Employed Retirement Plan
accounts) will receive a single Prospectus annually. When the Fund's annual
report is combined with the Prospectus into a single document, the Fund will
mail the combined document to each shareholder to comply with legal require-
ments. Shareholders who do not want this consolidation to apply to their
accounts should contact their Smith Barney Financial Consultant or the Fund's
transfer agent.
"S&P 500" is a trademark of McGraw-Hill, Inc. and has been licensed for use
by Smith Barney. The Fund is not sponsored, endorsed, sold or promoted by S&P.
S&P makes no representation or warranty, express or implied, to the sharehold-
ers 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, is the licensing of certain trademarks and trade
names
18
<PAGE>
ADDITIONAL INFORMATION (CONTINUED)
of S&P and the S& P 500 Index which is determined, composed and calculated by
S&P without regard to Smith Barney, or the Fund. S&P has no obligation to take
the needs of Smith Barney, or the shareholders of the Fund into consideration
in determining, composing or calculating the S&P 500 Index. S&P is not respon-
sible for and has not participated in the determination of the prices and
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
Fund shares are to be converted into cash. S&P has no obligation or liability
in connection with the administration, marketing or trading of Fund shares.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF
THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY
FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY,
EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE FUND, OWNERS OF SUCH
FUNDS, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY
DATA
INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PUR-
POSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED
THEREIN.
WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE
ANY LIABIL-
ITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING
LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
19
<PAGE>
- ---------------------------------------------------------------
Smith Barney
S&P 500
Index
Fund
388 Greenwich Street
New York, NY 10013
FD01362
Part B: Statement of Additional Information
dated December 30, 1997, for Smith Barney
S&P 500 Index Fund
Smith Barney
S&P 500 Index Fund
3100 Breckenridge Blvd., Bldg. 200
Duluth, Georgia 30199-0062
(800)544-544588 Greenwich Street
New York, New York 10013
1-800-451-2010
Statement of Additional
Information
December 30, 1997
This Statement of Additional Information (SAI") expands upon and supplements
the information contained in the current Prospectus of Smith Barney S&P 500
Index Fund (the "Fund") dated December 30, 1997, 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""Trust"). The Fund's Prospectus may be obtained from a Smith Barney
Financial Consultant PFS Investments"or by writing or calling the Fund at the
address or telephone number set forth above. This SAI, 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 SAI, except where shown below:
Management of the Fund
.........................................................
..............................
1
Investment Objective and Management Policies
...................................................
44
Purchase of Shares
........................................................
........................................
9
0
Redemption of Shares
........................................................
...................................
19
Distributor
........................................................
.....................................................
1
20
Valuation of Shares
........................................................
.......................................
1
21
Performance Data (See in the Prospectus
Performance""Performance")
...................................
11
3
Taxes (See in the Prospectus
"Dividends, Distributions and Taxes
"") ..................
1
42
Additional Information
.........................................................
.................................
13
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:
Name
Service
Smith Barney Inc. (Smith
Barney")...................................
Distributor
Travelers Investment Management Company (
TIMCO""TIMCO")
Investment Adviser
Smith Barney Mutual Funds Management Inc.
(
SBMFM""SBMFM")
............................................
...................
Administrator
PNC Bank, National Association (
PNC Bank""PNC Bank") ..........
Custodian
First Data Investor Services Group, Inc. (
TSSG""First Data"),
Transfer Agent
These organizations and the functions they perform for the Fund are discussed
in the Prospectus and in this SAI.
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 74). Private Investor. His address is 273
Montgomery Avenue, Bala Cynwyd, Pennsylvania 19004.
*Alfred J. Bianchetti, Trustee (Age 74). Retired; formerly Senior
Consultant to Dean Witter Reynolds Inc. His address is 19 Circle End Drive,
Ramsey, New Jersey 07466.
Martin Brody, Trustee (Age 76). Consultant, HMK Associates; Retired
Vice Chairman of the Board of Restaurant Associates Corp. His address is c/o
HMK Associates, 30 Columbia Turnpike, Florham Park, New Jersey 07932.
Dwight B. Crane, Trustee (Age 59). Professor, Harvard Business School.
His address is c/o Harvard Business School, Soldiers Field Road, Boston,
Massachusetts 02163.
Burt N. Dorsett, Trustee (Age 66). Managing Partner of Dorsett McCabe
Management. Inc., an investment counseling firm; Director of Research
Corporation Technologies, Inc., a nonprofit patent clearing and licensing
firm. His address is 201 East 62nd Street, New York, New York 10021.
Elliot S. Jaffe, Trustee (Age 71). 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 65). Attorney. His address is 277
Park Avenue, New York, New York 10172.
Joseph J. McCann, Trustee (Age 67). Financial Consultant; Retired
Financial Executive, Ryan Homes, Inc. His address is 200 Oak Park Place,
Pittsburgh, Pennsylvania 15243.
*Heath B. McLendon, Chairman of the Board and Investment Officer (Age
64). Managing Director of Smith Barney, Chairman of the Board of Smith Barney
Strategy Advisers Inc. and President of SBMFM and Travelers Investment
Adviser, Inc. ("TIA"); prior to July 1993, Senior Executive Vice President of
Shearson Lehman Brothers Inc., Vice Chairman of Shearson Asset Management.
Mr. McLendon is Chairman of the Board of 42 Smith Barney Mutual Funds. His
address is 388 Greenwich Street, New York, New York 10013.
Cornelius C. Rose, Jr., Trustee (Age 63). 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.
James J. Crisona, Director Emeritus. Attorney; formerly Justice of the
Supreme Court of the State of New York. His address is 118 East 60th Street,
New York, New York 10022
Lewis E. Daidone, Senior Vice President and Treasurer (Age 40).
Managing Director of Smith Barney, Chief Financial Officer of the Smith Barney
Mutual Funds; Director and Senior Vice President of SBMFM and TIA. His address
is 388 Greenwich Street, New York, New York 10013.
John Lau, Assistant Vice President and Investment Officer (Age 32).
Portfolio Manager of TIMCO; prior to 1995, Lead Engineer of knowledge-based
engineering projects at United Technologies Pratt and Whitney Aircraft
Engineer Division. His address is One Tower Square, Hartford, Connecticut,
06183-2030.
Sandip Bhagat, Vice President and Investment Officer (Age 37). President
of TIMCO, prior to 1995, Senior Portfolio Manager of TIMCO. His address is
One Tower Square, Hartford, Connecticut, 06183-2030.
Christina T. Sydor, Secretary (Age 46). Managing Director of Smith
Barney; General Counsel and Secretary of SBMFM and TIA. Her address is 388
Greenwich Street, New York, New York 10013.
No officer, director or employee of Smith Barney or any parent or subsidiary
of Smith Barney 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 any of their affiliates a fee
of $4,000 per annum plus $500 per meeting attended and each Trustee Emeritus
$2,000 per annum plus $250 per meeting attended. All Trustees are reimbursed
for travel and out-of-pocket expenses incurred to attend such meetings.
For the calendar year ended November 30, 1997, the Trustees of the Fund were
paid the following compensation.
Total
Pension or Compensation Number of
Retirement from Fund Funds for
Aggregate Benefits Accrued and Fund Which
Director
Compensation as part of Complex Serves Within
Name of Person from Fund Fund Expenses Paid to Directors Fund Complex
Herbert Berg $0 $0 $97,300
18
Alfred Bianchetti 0 0 45,800
13
Martin Brody 0 0 119,100
21
Dwight B. Crane 0 0 130,050
24
Burt N. Dorsett* 0 0 45,800
13
Elliot S. Jaffe 0 0 44,700
13
Stephen E. Kaufman 0 0 85,450
15
Joseph J. McCann 0 0 45,800
13
Heath B. McLendon ** - 0 -
42
Cornelius C. Rose, Jr. 0 0 45,800
13
James J. Crisona*** 0 0 18,825
12
* Pursuant to the Fund's deferred compensation plan, Mr. Dorsett elected to
defer the compensation due to him from the Fund. As of January 1, 1997,
Mr. Dorsett elected not to defer his future compensation.
** Designates an "interested" Director.
*** Upon attainment of age 80, Fund Trustees are required to change to
emeritus status. Trustees Emeritus are entitled to serve
in emeritus status for a maximum of 10 years, during which time they are
paid 50% of the annual retainer fee and meeting fees otherwise applicable
to Fund Trustees, together with reasonable out-of-pocket expenses for each
meeting attended. Mr. Crisona is a Director Emeritus and as such may
attend meetings but has no voting rights.
Investment Adviser-TIMCO
TIMCO serves as investment adviser to the Fund pursuant to a written agreement
(the "Advisory Agreement") dated "). 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 0.15% of the Fund's average daily net assets.
Administrator-SBMFM
SBMFM serves as administrator to the Fund pursuant to a written agreement (the
"Administration Agreement"). The services provided by SBMFM under the
Administration Agreement are described in the Prospectus 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 their 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.
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
LLP to serve as their legal counsel.
KPMG Peat Marwick LLP, 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, 1998.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The Prospectus discusse discusses 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. The Fund may invest 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-by-
case basis.
Savings and loan associations whose CDs may be purchased by the Fund are
supervised by the Office of Thrift Supervision and are insured by the Savings
Association Insurance Fund which is administered by the FDIC and is backed by
the full faith and credit of the United States government. As a result, such
savings and loan associations are subject to regulation and examination.
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 itstheir affiliates unless it hasthey 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.
Investment Restrictions
The Fund has adopted the following investment restrictions for the protection
of shareholders. Restrictions 1 through 7 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. Deviate from the definition of a diversified company" as defined in the
1940 Act and rules thereunder.
2. Issue senior securities as defined in the 1940 Act, and any rules,
orders thereunder, except as permitted under the 1940 Act.
3. Invest more than 25% of its total assets in securities, the
issuers of which conduct their principal business activities 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 money, except that (a) the Fund may borrow from banks for
temporary or emergency (not leveraging) purposes, including the meeting of
redemption requests which might otherwise require the untimely disposition of
securities, in an amount not exceeding 33 1/3% of the value of the Funds
total assets (including the amount borrowed), valued at the lesser of cost or
market, less liabilities (mot including the amount borrowed) valued at the
time the borrowing is made and (b) the Fund may, to the extent consistent
with its investment policies, enter into reverse repurchase agreements,
forward roll transactions and similar investment strategies and techniques.
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 (including participation interests in such
obligations); (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, commodities or
commodity contracts, but this restriction 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 or (d) investing
in or purchasing real estate investment trust securities.
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 underlying
securities and other assets in escrow and collateral agreements with respect
to initial or maintenance margin in connection with futures contracts and
related options and options on securities, indexes or similar items is not
considered to be the purchase of a security on margin.
9. Invest in oil, gas or other mineral exploration or development
programs.
10. 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.
Securities that are not registered under the 1933 Act, as amended, and sold
in reliance on Rule 144A thereunder, but are determined to be liquid by the
Board of Trustees, will not be subject to this 15% limitation.
11. 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 over-the-
counter brokerage commission) and except as part of a merger, consolidation or
acquisition of assets.
12. Invest for the purpose of exercising control of management.
13. 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.)
14. 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.
The Fund may make commitments more restrictive than the restrictions listed
above so as to permit the sale of its shares in certain states. Should the
Fund determine that a commitment is no longer in the best interests of the
Fund and its shareholders, the Fund reserves the right to revoke the
commitment by terminating the sale of the Funds shares in the state involved.
Certain Investment Activities
While the Fund is authorized to borrow money from banks for purposes of
investment (leveraging) and to invest in securities of foreign issuers, 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 either or both of
these activities aresuch activity is in the best interests of shareholders.
Portfolio Turnover
Generally, an index fund sells securities only to respond to redemption
requests or to adjust the number of shares held to reflect a change in the
Funds target index. Because of this, the turnover rate for the Fund will be
low.
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 mark-up. Over-the-counter purchases and
sales are transacted directly with principal market makers except in those
cases in which better prices and executions may
be obtained elsewhere. The cost of securities purchased from underwriters
includes an underwriting commission or concession, and the prices at which
securities are purchased from and sold to dealers include a dealer's mark-up
or mark-down.
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 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. Portfolio turnover rate may
vary from year to year, as well as within a year.
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 SEC rules 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
Determination of Public Offering Price
The Fund offers its shares to the public on a continuous basis. The public
offering price for shares of the Fund is equal to the net asset value per
share at the time of purchase. The method of computation of the public
offering price is shown in the Fund's financial statements incorporated by
reference in their entirety into this SAI.
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. 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 First
Data 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 First Data 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 PFS
Investments Representativefinancial consultant.
DISTRIBUTOR
Smith Barney serves as a distributor for the Fund on a best efforts basis
pursuant to a written agreement.
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 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 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 Agreementdistribution agreements for continuance.
Distributions Arrangements
To compensate PFS for the service it provides and for the expense it bears
under the Distribution AgreementSmith Barney for the services it provides and
for the expense it bears under the distribution agreement, 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, for Class A
shares accrued daily and paid monthly, calculated at the annual rate of 0.20%
of the value of the Fund's average daily net assets attributable to Class A
Bshares. Class D shares are not subject to a service fee.
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 Agreementdistribution agreement (the
"Independent Trustees"). The Plan may not be amended to increase the amount of
the service 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 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. Pursuant to
the Plan, the Fund's distributor 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
The 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, Martin Luther King, Jr. 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. 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. Over-
the-counter 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.
PERFORMANCE DATA
From time to time, the Fund may quote its total return 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.
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 Fund for the specified period and are computed by the
following formula:
ERV-P
P
Where:
P
=
a hypothetical initial payment of $10,000.
ERV
=
Ending Redeemable Value of a hypothetical $10,000
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.
Performance will vary from time to time depending on market conditions, the
composition of the Fund's portfolio and operating expenses. Consequently, any
given performance quotation should not be considered representative of the
Funds performance for any specified period in the future. Because performance
will vary, it may not provide a basis for comparing an investment in the Fund
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 intends to qualify each year as a regulated investment company under
the Code. 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 short-term 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 short-term
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 long-term
capital loss to the extent of the capital gain dividend.
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.
First Data, located at Exchange Place, Boston, Massachusetts 02109, serves as
the Trust's transfer agent. Under the transfer agency agreement, First Data
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, First Data
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-of-pocket expenses.
Smith Barney
S&P 500 Index Fund
Statement of
Additional
Information
December 30, 1997
Smith Barney
S&P 500 Index Fund
3100 Breckenridge Blvd., Bldg. 200
Duluth, Georgia 30199-006288 Greenwich Street
New York, New York 10013
SMITH BARNEY
A Member of Travelers Group
22
u:\legal\boards\wed\1997\misc\S&PSAI.3docS&PADV.doc
u:\joachim\PFSAPP.doc
Part C: Other Information
SMITH BARNEY INVESTMENT TRUST
FORM N-1A
CROSS-REFERENCE SHEET
PURSUANT TO RULE 495(b)
Part A Item No.
Prospectus Caption
1. Cover Page
Cover Page
2. Synopsis
Prospectus Summary
3. Financial Highlights
Financial Highlights
4. General Description of
Registrant
Cover Page; Prospectus 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
Securities
Investment Objective and
Management Policies; Dividends,
Distributions and Taxes;
Additional Information
7. Purchase of Securities Being
Offered
Purchase of Shares; 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 Proceedings
Not applicable
Part B Item No.
Statement of Additional
Information Caption
10. Cover Page
Cover Page
11. Table of Contents
Table of Contents
12. General Information and
History
Distributor; Additional
Information
13. Investment Objective and
Policies
Investment Objectives and
Management Policies
14. Management of the Fund
Management of the Trust and the
Funds; Distributor
15. Control Persons and Principal
Holders of
Securities
Management of the Trust and the
Funds
16. Investment Advisory and Other
Services
Management of the Trust and the
Funds; Distributor
17. Brokerage Allocation and Other
Services
Investment Objectives and
Management Policies; Distributor
18. Capital Stock and Other
Securities
Investment Objectives and
Management Policies; Purchase of
Shares; Redemption of Shares;
Taxes
19. Purchase, Redemption and
Pricing of
Securities Being Offered
Purchase of Shares; Redemption of
Shares; Valuation of Shares;
Distributor; Exchange Privilege
20. Tax Status
Taxes
21. Underwriters
Distributor
22. Calculation of Performance
Data
Performance Data
23. Financial Statements
Financial Statements
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Included in Part A:
Financial Highlights
Included in Part B:
Smith Barney Intermediate Maturity New York Municipals Fund Semi
Annual Report for the six month period ended May 31, 1997, together with Smith
Barney
Intermediate Maturity California Municipals Fund Semi Annual Report for the
six month period ended May 31, 1997 are incorporated by reference to the
Rule 30(b)2-1 filings made on July 29, 1997 as Accession No. 91155-97-000341.
Included in Part C:
Consent of Independent Accountants to be filed by
Amendment
(b) Exhibits
Unless otherwise noted, all references are to the Registrants
Registration Statement on Form N-1A (the Registration Statement") as filed
with the Securities and Exchange Commission ("SEC") on October 21,
1991 (File Nos. 33-43446 and 811-6444).
(1)(a) Registrants 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) Registrants By-Laws are incorporated by reference to the
Registration Statement.
(3) Not Applicable.
(4) (a) Registrants form of stock certificate for Smith Barney
S&P 500 Index Fund is to be filed by Amendment.
(4) (b) Registrants form of stock certificate for Smith Barney
Large Capitalization Growth Fund is to filed by Amendment.
(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 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 Index Fund and Travelers Investment
Management Company dated December 11, 1997 is filed herewith.
(e) Form of Investment Advisory Agreement between the Registrant on
behalf of Smith Barney Large Capitalization Growth Fund and Smith Barney
Mutual Funds
Management Inc. is to filed by Amendment.
(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 Index Fund and PFS Distributors is incorporated
by reference to Post-Effective Amendment No. 10.
(7) Not Applicable.
(8) Form of Custody Agreement with PNC Bank, National Association, is
incorporated by reference to Post-Effective Amendment 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 and Smith Barney Intermediate
Maturity New York Municipals 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 Index Fund and Smith Barney Mutual Funds
Management Inc. is filed herewith
(d) Transfer Agency Agreement with First Data Investor Services
Group, Inc.(formerly known as "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 Index Fund and PFS Shareholder Services is
incorporated by reference to Post-Effective Amendment No. 10.
(10) Opinion of counsel regarding legality of shares being
registered is incorporated by reference to Pre-Effective Amendment No. 1 to
the Registration Statement filed on December 6, 1991.
(11) Consent of Independent Accountants is to be filed by
Amendment.
(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 and Smith Barney Intermediate Maturity New York Municipals 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 Index Fund
is filed herewith.
(d) Form of Service and Distribution Plan pursuant to Rule 12b-1
between the Registrant on behalf of Fund and Smith Barney
Large Capitalization Growth Fund is to be filed by Amendment.
(16) Performance Data is incorporated by reference to Post-Effective
Amendment No. 2 to the Registration Statement as filed on April 1, 1993.
(17) Financial Data Schedule is filed herewith.
(18) Plan adopted pursuant to Rule 18f-3(d) of the Investment Company
Act of 1940, as amended, is incorporated by reference to Post-Effective
Amendment No. 10.
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 November 30, 1997
Intermediate Maturity California
Municipals Fund 550
Intermediate Maturity New York
Municipals Fund 1,192
Smith Barney S&P 500
Index Fund None
Large Capitalization Growth Fund 25,432
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. (SBMFM").
SBMFM, through its predecessors, has been in the investment counseling
business since 1934 and was incorporated in December 1968 under the laws of
the State of Delaware. SBMFM is a wholly owned subsidiary of Smith Barney
Holdings Inc. (formerly known as Smith Barney Shearson Holdings Inc.), which
in turn is a wholly owned subsidiary of Travelers Group Inc. (formerly known
as Primerica Corporation) ("Travelers"). SBMFM is registered as an investment
adviser under the Investment Advisers Act of 1940 (the "Advisers Act").
The list required by this Item 28 of the 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 Advisers Act (SEC File No.
801-8314).
Item 29. Principal Underwriters
Consulting Group Capital Markets Funds; Global Horizons Investment Series
(Cayman Islands); Greenwich Street California Municipal Fund Inc.; Greenwich
Street Municipal Fund Inc.; Greenwich Street Series Fund; High Income
Opportunity Fund Inc.; The Italy Fund Inc.; Managed High Income Portfolio
Inc.; Managed Municipals Portfolio II Inc.; Managed Municipals Portfolio Inc.;
Municipal High Income Fund Inc.; Puerto Rico Daily Liquidity Fund Inc.; 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 Inc.; Smith
Barney Concert Series Inc.; Smith Barney Disciplined Small Cap Fund, Inc.;
Smith Barney Equity Funds; Smith Barney Fundamental Value Fund Inc.; Smith
Barney Funds, Inc.; Smith Barney Income Funds; Smith Barney Income Trust;
Smith Barney Institutional Cash Management Fund, Inc.; Smith Barney
Intermediate Municipal Fund, Inc.; Smith Barney Investment Funds Inc.; Smith
Barney Investment Trust; Smith Barney Large Capitalization Growth Fund; Smith
Barney Managed Governments Fund Inc.; Smith Barney Managed Municipals Fund
Inc.; Smith Barney Massachusetts Municipals Fund; Smith Barney Money Funds,
Inc.; Smith Barney Muni Funds; Smith Barney Municipal Fund, Inc.; Smith Barney
Municipal Money Market Fund, Inc.; Smith Barney Natural Resources Fund Inc.;
Smith Barney New Jersey Municipals Fund Inc.; Smith Barney Oregon Municipals
Fund Inc.; Smith Barney Principal Return Fund; Smith Barney Telecommunications
Trust; Smith Barney Variable Account Funds; Smith Barney World Funds, Inc.;
Smith Barney Worldwide Special Fund N.V. (Netherlands Antilles); Travelers
Series Fund Inc.; The USA High Yield Fund N.V.; Worldwide Securities Limited
(Bermuda); Zenix Income Fund Inc. and various series of unit investment
trusts.
Smith Barney is a wholly owned subsidiary of Holdings . 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 Index Fund)
(4) PNC Bank, National Association
17th and Chestnut Streets
Philadelphia, PA 19103
(Records relating to its function as custodian)
(5) First Data Investor 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 Registrants 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.
485(a) Certification
The Registrant hereby certifies that it meets all of the requirements
for effectiveness pursuant to Rule 485(a) under the Securities Act of 1933.
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 11th day of December, 1997.
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.
Signature
Title
Date
/s/Heath B. McLendon
Heath B. McLendon
Chairman of the Board
(Chief Executive
Officer)
December 11, 1997
/s/Lewis E. Daidone
Lewis E. Daidone
Treasurer
(Chief Financial and
Accounting Officer)
December 11, 1997
/s/Herbert Barg
Herbert Barg
Trustee
December 11, 1997
/s/Alfred J.
Bianchetti
Alfred J. Bianchetti
Trustee
December 11, 1997
/s/Martin Brody
Martin Brody
Trustee
December 11, 1997
/s/Dwight B. Crane
Dwight B. Crane
Trustee
December 11, 1997
/s/Burt N. Dorsett
Burt N. Dorsett
Trustee
December 11, 1997
/s/Elliot S. Jaffe
Elliot S. Jaffe
Trustee
December 11, 1997
/s/Stephen E. Kaufman
Stephen E. Kaufman
Trustee
December 11, 1997
/s/Joseph J. McCann
Joseph J. McCann
Trustee
December 11, 1997
/s/Cornelius C. Rose,
Jr.
Cornelius C. Rose, Jr.
Trustee
December 11, 1997
FORM OF
INVESTMENT ADVISORY AGREEMENT
December 11, 1997
Travelers Investment Management Company
One Tower Square
Hartford, CT 06188-203
Dear Sirs:
This Investment Advisory Agreement (the "Agreement") is made on this
11th day of December, 1997, 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 Index 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 Prospectus (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, TIMCO 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 0.15% 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.
4. 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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).
11. 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.
12. 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 Index Fund.
By:
Title:
Accepted:
Travelers Investment Management Company
By: Title:
SLIT\MISC\S&PTIMCO.DOC
SMITH BARNEY INVESTMENT TRUST -
SMITH BARNEY S&P 500 INDEX FUND
ADMINISTRATION AGREEMENT
December __, 1997
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 Index 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, Statement 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 TIMCO 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 an 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 Index Fund
By: ____________________________
Name: Heath B. McLendon
Title: Chairman of the Board
Accepted:
Smith Barney Mutual Funds Management Inc.
By: __________________________
Name:
Title:
SLIT\MISC\S&PADMIN.DOC
FORM OF
SHAREHOLDER SERVICES AND DISTRIBUTION PLAN
SMITH BARNEY INVESTMENT TRUST, on behalf of the
SMITH BARNEY S&P 500 INDEX FUND
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 Index 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 (the
"Distributor"), a service fee under the Plan at an annual rate of
0.20% 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) Payment of Fee. The Service Fee will be calculated daily and paid
monthly by the Trust with respect to the foregoing class of the
Fund's Class A shares (the "Class") at the annual rates indicated
above.
Section 2. Expenses Covered by the Plan.
With respect to expenses incurred by the 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 Class A 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 Class A shares until
December 11, 1998 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 December 11,
1997.
SMITH BARNEY INVESTMENT TRUST,
on behalf of Smith Barney S&P 500 Index Fund
By:____________________________________
Heath B. McLendon
Chairman of the Board
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