Securities Act Registration No. 33-43446
Investment Company Act Registration No. 811-6444
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933
Pre-Effective Amendment No.
[ ]
Post-Effective Amendment No. 27
[X]
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 27
[X]
__________________
Smith Barney Investment Trust
(a Massachusetts Business Trust)
(Exact Name of Registrant as Specified in Charter)
388 Greenwich Street
New York, New York 10013
(Address of Principal Executive Offices)
(212) 816-6474
(Registrants Telephone Number, including Area Code)
Christina T. Sydor, Secretary
Smith Barney Investment Trust
388 Greenwich Street
New York, New York 10013
(Name and Address of Agent for Service)
_____________________
Approximate Date of Proposed Public Offering:
Continuous.
It is proposed that this filing will become effective
(check appropriate box):
[ ] Immediately upon filing pursuant to paragraph
(b) of Rule 485
[ X ] on March 31, 2000 pursuant to paragraph (b)
of Rule 485
[ ] 60 days after filing pursuant to paragraph
(a)(1) of Rule 485
[ ] On (date) pursuant to paragraph (a)(1) of Rule
485
[ ] 75 days after filing pursuant to paragraph
(a)(2)
of rule 485
[ ] On (date) pursuant to paragraph (a)(2) of Rule
485
If appropriate, check the following box:
[ ] This post-effective amendment designates
a new effective date for a previously filed
post effective amendment.
Title of Securities Being Registered: Shares of
Beneficial
PART A - PROSPECTUS
For SMITH BARNEY S&P 500 INDEX FUND only
Prospectus Supplement, dated March 31, 2000,
<PAGE>
SMITH BARNEY INVESTMENT TRUST
on behalf of the
Smith Barney S&P 500 Index Fund
Supplement dated March 31, 2000
to the Prospectus dated March 30, 1999
The following information supplements, and to the extent inconsistent there-
with, supersedes, the information in the Prospectus:
Effective October 13, 1999, the Board of Trustees has voted to change the
fiscal year end of the fund from November 30, to December 31.
The date of the prospectus is April 1, 2000.
Annual fund operating expenses*
<TABLE>
<CAPTION>
(expenses deducted from fund assets) Class A Class D
<S> <C> <C>
Management fee 0.25% 0.25%
Service (12b-1) fees 0.20% None
Other expenses 0.23% 0.18%
------ ------
Total annual fund operating expenses 0.68% 0.43%
Expense reimbursement** (0.09%) (0.09%)
------ ------
Net annual operating expenses 0.59% 0.34%
====== ======
</TABLE>
*For the final year ended November 30, 1999.
**Management has agreed to cap the fund's net annual operating expenses at
0.59% for Class A shares and 0.39% for Class D shares. Management may not dis-
continue or modify this cap without the approval of the fund's trustees.
Example
This example helps you compare the costs of investing in the fund with the
costs of investing in other mutual funds. Your actual costs may be higher or
lower. The example assumes:
.You invest $10,000 in the fund for the period shown
.You redeem all shares at the end of the period
.Your investment has a 5% return each year
.The fund's operating expenses remain the same
Number of years you own your shares
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $69 $218 $379 $847
Class D $44 $138 $241 $542
</TABLE>
<PAGE>
Risk return bar chart
This bar chart shows the performance of the fund's common shares since
inception through December 31, 1999, and, in the future, will show changes in
the fund's performance from year to year. Past performance does not necessarily
indicate how the fund will perform in the future.
Total Return for Class A Shares
99
----
20.03%
Calendar year ended December 31
This bar chart shows the performance of the fund's Class A shares since incep-
tion. Class D shares have different performance because of different expenses.
Quarterly returns:
Highest: 14.62% in 4th quarter 1999; Lowest: -6.27% in 3rd quarter 1999
Risk return table
This table compares the average annual total return of each class for the
periods shown with that of the S&P 500 Index, a broad-based unmanaged market
capitalization-weighted measure of 500 widely held common stocks. This table
assumes the redemption of shares at the end of the period and the reinvestment
of distributions and dividends.
Average Annual Total Returns
Calendar Years Ended December 31, 1999
<TABLE>
<CAPTION>
Inception Date 1 Year Since Inception
<S> <C> <C> <C>
Class A January 5, 1998 20.03% 23.53%
S&P 500 Index * 21.03% 25.24%
</TABLE>
*Index Comparison begins on January 31, 1998
<PAGE>
Financial highlights
The financial highlights table is intended to help you understand the perfor-
mance of each class for the past 5 years (or since inception if less than 5
years). Certain information reflects financial results for a single share. To-
tal return represents the rate that a shareholder would have earned (or lost)
on a fund share assuming reinvestment of all dividends and distributions. The
information in the following tables was audited by KPMG LLP, independent ac-
countants, whose report, along with the fund's financial statements, are in-
cluded in the annual report (available upon request).
For a share of each class of beneficial interest outstanding throughout each
year ended November 30, except where noted:
<TABLE>
<CAPTION>
Class A
-----------------------------------
1999(/1/)(/2/) 1999(/2/) 1998(/3/)
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 14.24 $ 11.98 $ 10.00
- ---------------------------------------------------------------------------
Income From Operations:
Net investment income(/4/) 0.01 0.12 0.05
Net realized and unrealized gain 0.83 2.27 1.93
- ---------------------------------------------------------------------------
Total Income From Operations 0.84 2.39 1.98
- ---------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.08) (0.06) --
Net realized gains -- (0.07) --
- ---------------------------------------------------------------------------
Total Distributions (0.08) (0.13) --
- ---------------------------------------------------------------------------
Net Asset Value, End of Period $ 15.00 $ 14.24 $ 11.98
- ---------------------------------------------------------------------------
Total Return 5.88%++ 19.96% 19.80%++
- ---------------------------------------------------------------------------
Net Assets, End of Period (000s) $252,435 $223,787 $55,187
- ---------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(/4/)(/5/) 0.60%+ 0.59% 0.59%+
Net investment income 0.67+ 0.83 1.05+
- ---------------------------------------------------------------------------
Portfolio Turnover Rate 0% 6% 4%
- ---------------------------------------------------------------------------
</TABLE>
(/1/) For the period from December 1, 1999 to December 31, 1999, which reflects
a change in the fiscal year end of the Fund.
(/2/) Per share amounts have been calculated using the monthly average shares
method.
(/3/) For the period from January 5, 1998 (inception date) to November 30, 1998.
(/4/) The administrator agreed to waive all or a portion of its fees for the
period ended December 31, 1999, the year ended November 30, 1999 and for
the period ended November 30, 1998. In addition, the administrator agreed
to reimburse expenses of $15,109 and $177,520 for the periods ended
December 31, 1999 and November 30, 1998, respectively. If these fees were
not waived and expenses not reimbursed, the per share effect on net
investment income and the expense ratio would have been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases to Without Waiver and
Net Investment Income Reimbursement
- -------------------------------------------------------------------------------------------
<S> <C> <C>
1999(/1/) $0.00 0.77%+
- -------------------------------------------------------------------------------------------
1999 0.01 0.68
- -------------------------------------------------------------------------------------------
1998 0.04 1.42+
- -------------------------------------------------------------------------------------------
</TABLE>
(/5/) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.60%.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
<PAGE>
Financial highlights
For a share of each class of beneficial interest outstanding throughout each
year ended November 30, except where noted:
<TABLE>
<CAPTION>
Class D
----------------------------------
1999(/1/)(/2/) 1999(/2/) 1998(/3/)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $ 14.28 $ 11.99 $11.00
- -------------------------------------------------------------------------------
Income From Operations:
Net investment income(/4/) 0.01 0.17 0.03
Net realized and unrealized gain 0.83 2.26 0.96
- -------------------------------------------------------------------------------
Total Income From Operations 0.84 2.43 0.99
- -------------------------------------------------------------------------------
Less Distributions From:
Net investment income (0.11) (0.07) --
Net realized gains -- (0.07) --
- -------------------------------------------------------------------------------
Total Distributions (0.11) (0.14) --
- -------------------------------------------------------------------------------
Net Asset Value, End of Period $ 15.01 $ 14.28 $11.99
- -------------------------------------------------------------------------------
Total Return 5.91%++ 20.29% 9.00%++
- -------------------------------------------------------------------------------
Net Assets, End of Period (000s) $20,626 $14,068 $1,810
- -------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses(/4/)(/5/) 0.36%+ 0.34% 0.36%+
Net investment income 0.90+ 1.08 1.33+
- -------------------------------------------------------------------------------
Portfolio Turnover Rate 0% 6% 4%
- -------------------------------------------------------------------------------
</TABLE>
(/1/) For the period from December 1, 1999 to December 31, 1999, which reflects
a change in the fiscal year end of the Fund.
(/2/) Per share amounts have been calculated using the monthly average shares
method.
(/3/) For the period from August 4, 1998 (inception date) to November 30, 1998.
(/4/) The administrator agreed to waive all or a portion of its fees for the
period ended December 31, 1999, the year ended November 30, 1999 and for
the period ended November 30, 1998. In addition, the administrator agreed
to reimburse expenses of $15,109 and $177,520 for the periods ended
December 31, 1999 and November 30, 1998, respectively. If these fees were
not waived and expenses not reimbursed, the per share effect on net
investment income and the expense ratio would have been as follows:
<TABLE>
<CAPTION>
Expense Ratios
Per Share Decreases to Without Waiver and
Net Investment Income Reimbursement
- -------------------------------------------------------------------------------------------
<S> <C> <C>
1999(/1/) $0.00 0.53%+
- -------------------------------------------------------------------------------------------
1999 0.01 0.43
- -------------------------------------------------------------------------------------------
1998 0.02 1.18+
- -------------------------------------------------------------------------------------------
</TABLE>
(/5/) As a result of voluntary expense limitations, the ratio of expenses to
average net assets will not exceed 0.40%.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
FD 01863
Prospectus Supplement, dated October 13, 1999,
and
SMITH BARNEY INVESTMENT TRUST
On behalf of the
Smith Barney S&P 500 Index Fund
Supplement dated October 13, 1999
to the Prospectus dated March 30, 1999
The following information supplements, and to the extent inconsistent there-
with, supersedes, the information in the Prospectus under:
Annual fund operating expenses
<TABLE>
<CAPTION>
(expenses deducted from fund assets) Class A Class D
<S> <C> <C>
Management fee 0.25% 0.25%
Service (12b-1) fees 0.20% None
Other expenses 0.97% 0.93%
------ ------
Total annual fund operating expenses 1.42% 1.18%
Expense reimbursement* (0.83%) (0.79%)
------ ------
Net annual operating expenses 0.59% 0.39%
====== ======
</TABLE>
*Management has agreed to cap the fund's other expenses to 0.14% for both Class
A and Class D shares. Management may not discontinue or modify this cap without
the approval of the fund's trustees. As a result of this expense cap, the net
annual operating expenses of the fund will not exceed 0.59% for Class A shares
and 0.39% for Class D shares.
Effective October 13, 1999, the Board of Trustees has voted to change the fiscal
year end of the fund from November 30 to December 31.
<PAGE>
Exchanging shares
The fund is exchangeable into the following Smith Barney
funds:
Smith Barney U.S. 5000 Index Fund
Smith Barney EAFE Index Fund
Smith Barney You should contact your Salomon Smith Barney Financial Con-
offers a sultant or dealer representative to exchange into these Smith
distinctive Barney mutual funds. Be sure to read the prospectus of the
family of Smith Barney mutual fund you are exchanging into. An exchange
Funds is a taxable transaction.
tailored to
help meet the
needs of both
large and
small
investors
.You may exchange shares only for shares of the same class.
.You must meet the minimum investment amount for each fund.
.If you hold share certificates, the transfer agent must
receive the certificates endorsed for transfer or with
signed stock powers (documents transferring ownership of
certificates) before the exchange is effective.
.The fund may suspend or terminate your exchange privilege if
you engage in an excessive pattern of exchanges.
- --------------------------------------------------------------------------------
By telephone If you do not have a brokerage account, you may be eligible
to exchange shares through the transfer agent. You must com-
plete an authorization form to authorize telephone transfers.
If eligible, you may make telephone exchanges on any day the
New York Stock Exchange is open. Call the transfer agent at
1-800-451-2010 between 9:00 a.m. and 5:00 p.m. (Eastern
time). Requests received after the close of regular trading
on the Exchange are priced at the net asset value next deter-
mined.
You can make telephone exchanges only between accounts that
have identical registrations.
- --------------------------------------------------------------------------------
By mail If you do not have a Salomon Smith Barney brokerage account,
contact your dealer representative or write to the transfer
agent at the address in the prospectus.
FD 01710
Prospectus, dated March 30, 1999
PROSPECTUS
S&P 500 Index Fund
Class A and D Shares
_____________________________________________________
___________________________
March 30, 1999
The Securities and Exchange Commission has not
approved or disapproved these securities or deter-
mined whether this prospectus is accurate or com-
plete. Any statement to the contrary is a crime.
<PAGE>
S&P 500 Index Fund
Contents
<TABLE>
<S>
<C>
Fund goal and
strategies...........................................
......... 2
Risks, performance and
expenses.............................................
3
More on the fund's
investments..........................................
.... 6
Management...........................................
....................... 8
Choosing a class of shares to
buy........................................... 10
Buying
shares...............................................
................ 11
Exchanging
shares...............................................
............ 12
Redeeming
shares...............................................
............. 13
Other things to know
about share
transactions.........................................
........... 15
Smith Barney 401(k) and
ExecChoiceTM
programs.............................................
.......... 17
Dividends, distributions and
taxes.......................................... 18
Share
price................................................
................. 19
Financial
highlights...........................................
............. 20
</TABLE>
You should know: An investment in the fund is not a
bank deposit and is not
insured or guaranteed by the FDIC or any other
government agency.
Smith Barney Mutual Funds 1
<PAGE>
Fund goal and strategies
Investment objective
The fund seeks to provide investment results that,
before expenses, correspond
to the price and yield performance of 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,
market capitalization and
liquidity.
Key investments
The fund invests at least 80% of its assets in common
stocks included in the
S&P 500 Index. The fund holds stocks of substantially
all of the companies
which comprise the S&P 500 Index, including those
companies which are headquar-
tered outside the U.S. The fund also enters into
repurchase agreements, lends
portfolio securities and uses certain types of
derivative instruments to help
implement its objective.
Selection process
The manager manages the fund as a "pure" index fund.
This means that the man-
ager does not evaluate individual companies to
identify attractive investment
candidates. Instead, the manager attempts to mirror
the composition of the S&P
500 Index as closely as possible by adjusting the
fund's portfolio daily to
reflect the companies included in the index and their
weightings. The fund does
not mirror the index exactly because, unlike the
index, the fund must maintain
a portion of its assets in cash and liquid securities
to meet redemption
requests and pay the fund's expenses.
The S&P 500 Index is one of the mostly widely used
benchmarks of U.S. equity
performance. The index consists of 500 stocks chosen
for market capitalization,
liquidity and industry group representation. The
index is market-value-
weighted, so the larger of the 500 companies have a
bigger impact on the per-
formance of the index. The index is unmanaged and
does not have to maintain
liquidity to meet redemption requests or pay
expenses.
2 S&P 500 Index Fund
<PAGE>
Risks, performance and expenses
Principal risks of investing in the fund
Investors could lose money on their investments in
the fund, or the fund may
not perform as well as other investments, if:
. The S&P 500 Index goes down, or performs poorly
relative to other U.S. equity
indexes or individual stocks
. An adverse company specific event, such as an
unfavorable earnings report,
negatively affects the stock price of one of the
larger companies in the S&P
500 Index
. The stocks of companies which comprise the S&P 500
Index fall out of favor
with investors
Because the fund is managed as an index fund, it will
not ordinarily sell a
portfolio security because of the security's poor
performance. The fund nor-
mally buys or sells a portfolio security only to
reflect additions or deletions
of stocks that comprise the S&P 500 Index or to
adjust their relative
weightings. Although the manager seeks to replicate
the performance of the S&P
500 Index, the fund may underperform the index even
before deducting expenses
because the fund must maintain a portion of its
assets in liquid short-term
debt securities which historically have generated
significantly lower returns
than common stocks.
Who may want to invest
The fund may be an appropriate investment if you:
. Are seeking to participate in the long term growth
potential of U.S. large
capitalization stocks
. Are seeking an investment which tracks the
performance of the S&P 500 Index
. Are looking for an investment with potentially
greater return but higher risk
than a fund investing primarily in fixed income
securities
. Are willing to accept the risks of the stock market
Performance
Because this fund commenced operations on January 5,
1998, the fund does not
yet have a sufficient operating history to generate
the performance information
which other Smith Barney funds show in bar and table
form in this location of
the prospectus.
Smith Barney Mutual Funds 3
<PAGE>
Fees and expenses
This table sets forth the fees and expenses you will
pay if you invest in fund
shares.
Shareholder fees
<TABLE>
<CAPTION>
(paid directly from your investment) Class A
Class D
<S> <C>
<C>
Maximum sales charge on purchases None
None
Maximum deferred sales charge on redemptions None
None
Annual fund operating
expenses
<CAPTION>
(paid by the fund as a % of fund net assets) Class A
Class D
<S> <C>
<C>
Management fees* 0.25%
0.25%
Distribution and service (12b-1) fee 0.20
None
Other expenses 0.97
0.93
Total annual fund operating expenses 1.42%
1.18%
</TABLE>
*Management fee rates shown above include a
management fee of 0.15% and an
administration fee of 0.10% and have not been reduced
to reflect waivers cur-
rently in effect. The combined actual management fee
and administration fee
rate for the fiscal period ended November 30, 1998
was 0.15% of each class'
average daily net assets and the fund's total annual
operating expenses
were 0.59% for Class A shares and 0.36% for Class D
shares.
Example
This example helps you compare the costs of investing
in the fund with the
costs of investing in other mutual funds. Your actual
costs may be higher or
lower. The example assumes:
. You invest $10,000 in the fund for the period shown
. You redeem all shares at the end of the period
. Your investment has a 5% return each year
. The fund's operating expenses remain the same
Number of years you own your
shares
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A $145 $449 $776 $1,702
Class D $ 95 $296 $515 $1,143
</TABLE>
4 S&P 500 Index Fund
<PAGE>
More on the fund's investments
Derivatives. The fund may, but is not required to,
use futures and options on
securities and securities indexes, and options on
these futures, for any of the
following purposes:
. to simulate full investment in the S&P 500 Index
while maintaining sufficient
liquidity to satisfy daily redemption requests and
operating expenses
. to facilitate trading in the securities of
companies that comprise the index
. to reduce transaction costs
. to seek higher investment returns when a contract
is priced more attractively
than the stocks comprising the index
The fund may not invest more than 20% of its assets
in derivative contracts or
more than 5% of its assets in open purchased put
options.
A derivative contract will obligate or entitle the
fund to deliver or receive
an asset or cash payment based on the change in value
of one or more securities
or indexes. Even a small investment in derivative
contracts can have a big
impact on the fund's stock market exposure.
Therefore, using derivatives can
disproportionately increase losses and reduce
opportunities for gains when
stock prices are changing. The fund may not fully
benefit from or may lose
money on derivatives if changes in their value do not
correspond accurately to
changes in the value of the fund's holdings.
The other parties to certain derivative contracts
present the same types of
credit risk as issuers of fixed income securities.
Derivatives can also make
the fund less liquid and harder to value, especially
in declining markets.
Money market instruments. The fund may temporarily
maintain up to 20% of its
assets in money market instruments. The fund invests
in money market instru-
ments under the following circumstances:
. pending investment of proceeds of the sale of
shares of the fund
. pending settlement of purchases of securities by
the fund
. to maintain liquidity to meet anticipated
redemptions
Foreign investments. The fund may purchase common
stocks and American Deposi-
tary Receipts (ADRs) of the foreign companies
included in the S&P 500 Index.
These securities are publicly traded on U.S.
securities exchanges or over-the-
counter markets. ADRs are U.S. dollar denominated
securities which represent an
interest in an underlying foreign security.
Smith Barney Mutual Funds 5
<PAGE>
Foreign countries generally have markets that are
less liquid and more volatile
than markets in the U.S. In some foreign countries,
there is also less informa-
tion available about foreign issuers and markets
because of less rigorous
accounting and regulatory standards than in the U.S.
Currency fluctuations
could erase investment gains or add to investment
losses. Because the value of
an ADR is dependent upon the market price of an
underlying foreign security,
ADRs are subject to most of the risks associated with
foreign investing.
6 S&P 500 Index Fund
<PAGE>
Management
The manager and administrator. The fund's investment
adviser (the manager) is
The Travelers Investment Management Company (TIMCO).
The manager selects the
fund's investments and oversees its operations. The
manager's address is One
Tower Square, Hartford, Connecticut 06183-2030. The
fund's administrator is
SSBC Fund Management Inc. SSBC's address is 388
Greenwich Street, New York, New
York 10013. TIMCO and SSBC are affiliates of Salomon
Smith Barney Inc. The man-
ager, administrator and Salomon Smith Barney are
subsidiaries of Citigroup Inc.
Citigroup businesses produce a broad range of
financial services--asset manage-
ment, banking and consumer finance, credit and charge
cards, insurance, invest-
ments, investment banking and trading--and use
diverse channels to make them
available to consumer and corporate customers around
the world.
Sandip Bhagat, president and chief investment officer
of TIMCO, and John Lau,
portfolio manager for TIMCO, have been responsible
for the day-to-day manage-
ment of the fund's portfolio since its inception.
Messrs. Bhagat and Lau have
more than 11 and 4 years, respectively, of securities
business experience.
Management and administration fees. For its services,
the manager received a
fee during the fund's last fiscal year equal on an
annual basis to 0.15%, of
the fund's average daily net assets. The
administrator waived all of its fees
during the Fund's last fiscal year.
Distributor. The fund has entered into an agreement
with CFBDS, Inc. to dis-
tribute the fund's shares. A selling group consisting
of Salomon Smith Barney
and other broker dealers sells fund shares to the
public.
Distribution plans. The fund has adopted a Rule 12b-1
distribution plan for its
Class A shares. Under the plan, Class A shares pay a
service fee. The fee for
Class A shares is an ongoing expense and, over time,
may cost you more than
other types of sales charges.
Year 2000 issue. Information technology experts are
concerned about computer
systems' ability to process date-related information
on and after January 1,
2000. This situation, commonly known as the "Year
2000" issue, could have an
adverse impact on the fund. The cost of addressing
the Year 2000 issue, if sub-
stantial, could adversely affect companies and
governments that issue securi-
ties held by the fund. The manager, SSBC and Salomon
Smith Barney are
addressing the Year 2000 issue for their systems. The
fund has been informed by
other service providers that they are taking
Smith Barney Mutual Funds 7
<PAGE>
similar measures. Although the fund does not expect
the Year 2000 issue to
adversely affect it, the fund cannot guarantee the
efforts of the fund, which
are limited to requesting and receiving reports from
its service providers, or
the efforts of its service providers to correct the
problem will be successful.
8 S&P 500 Index Fund
<PAGE>
Choosing a class of shares to buy
You may purchase Class A shares which are sold at net
asset value with no ini-
tial or deferred sales charge. Class A shares are
subject to an ongoing service
fee.
You may purchase Class D shares only if you are
participating in certain
investment programs which charge a fee for
participation, including the Smith
Barney 401(k) Platform program. Class D shares are
also offered to tax-exempt
employee benefit and retirement plans of Salomon
Smith Barney and its affili-
ates. For more information about these programs,
please contact a Salomon Smith
Barney Financial Consultant.
You may buy shares from:
. A Salomon Smith Barney Financial Consultant
. An investment dealer in the selling group or a
broker that clears through Sal-
omon Smith Barney--a dealer representative
. The fund, but only if you are investing through
certain qualified plans or
certain dealer representatives
Investment minimums. Minimum initial and additional
investment amounts vary
depending on the nature of your investment account.
<TABLE>
<CAPTION>
Initial
Additional
<S> <C> <C>
General $1,000 $50
IRAs, Self Employed Retirement Plans,
Uniform Gift to Minor Accounts $ 250 $50
Qualified Retirement Plans* $ 25 $25
Simple IRAs $ 1 $ 1
Monthly Systematic Investment Plans $ 25 $25
Quarterly Systematic Investment Plans $ 50 $50
</TABLE>
* Qualified Retirement Plans are retirement plans
qualified under Section
403(b)(7) or Section 401(a) of the Internal
Revenue Code, including 401(k)
plans
Smith Barney Mutual Funds 9
<PAGE>
Buying shares
Through a You should contact your Salomon
Smith Barney Financial Con-
Salomon Smith sultant or dealer representative to
open a brokerage account
Barney and make arrangements to buy shares.
Financial
Consultant or . Class of shares being bought
dealer . Dollar amount or number of shares
being bought
representative
You should pay for your shares
through your brokerage account
no later than the third business day
after you place your
order. Salomon Smith Barney or your
dealer representative may
charge an annual account maintenance
fee.
- -----------------------------------------------------
- ---------------------------
Qualified retirement plans and
certain other investors who
Through the are clients of the selling group are
eligible to buy shares
fund's directly from the fund.
transfer
agent . Write the transfer agent at the
following address:
Smith Barney Investment Trust
S&P 500 Index Fund
(Specify class of shares)
c/o First Data Investor
Services Group, Inc.
P.O. Box 5128
Westborough, Massachusetts
01581-5128
. Enclose a check to pay for the
shares. For initial pur-
chases, complete and send an
account application
. For more information, call the
transfer agent at 1-800-451-
2010
- -----------------------------------------------------
- ---------------------------
You may authorize Salomon Smith
Barney, the dealer represen-
Through a tative or the transfer agent to
transfer funds automatically
systematic from a regular bank account, cash
held in a Salomon Smith
investment Barney brokerage account or Smith
Barney money market fund to
plan buy shares on a regular basis.
. Amounts transferred should be at
least: $25 monthly or $50
quarterly
. If you do not have sufficient
funds in your account on a
transfer date, Salomon Smith
Barney, your dealer represen-
tative or the transfer agent may
charge you a fee
10 S&P 500 Index Fund
<PAGE>
For more information, contact your
Salomon Smith Barney
Financial Consultant, dealer
representative or the transfer
agent or consult the Statement of
Additional Information
("SAI").
Exchanging shares
You may exchange fund shares only
for shares of other classes
of another Smith Barney Mutual Fund
if you are participating
in certain fee based advisory
programs or employer-sponsored
retirement plans. Please contact
Salomon Smith Barney or your
dealer for more information.
Smith Barney Mutual Funds 11
<PAGE>
Redeeming shares
Generally
Contact your Salomon Smith Barney or
your dealer representa-
tive to redeem shares of the fund.
If you hold share certificates, the
transfer agent must
receive the certificates endorsed
for transfer or with signed
stock powers (documents transferring
ownership of certifi-
cates) before the redemption is
effective.
If the shares are held by a
fiduciary or corporation, other
documents may be required.
Your redemption proceeds will be
sent within three business
days after your request is received
in good order. However,
if you recently purchased your
shares by check, your redemp-
tion proceeds will not be sent to
you until your original
check clears, which may take up to
15 days.
If you have a Salomon Smith Barney
brokerage account, your
redemption proceeds will be placed
in your account and not
reinvested without your specific
instruction. In other cases,
unless you direct otherwise, your
redemption proceeds will be
paid by check mailed to your address
of record.
- -----------------------------------------------------
- ---------------------------
By mail For accounts held directly at the
fund, send written requests
to the transfer agent at the
following address:
Smith Barney Investment Trust
S&P 500 Index Fund
(Specify class of shares)
c/o First Data Investor
Services Group, Inc.
P.O. Box 5128
Westborough, Massachusetts
01581-5128
Your written request must provide
the following:
. The account number
. The class of shares and the dollar
amount or number of
shares to be redeemed
. Signatures of each owner exactly
as the account is regis-
tered
- -----------------------------------------------------
- ---------------------------
12 S&P 500 Index Fund
<PAGE>
By telephone
If you do not have a brokerage
account, you may be eligible
to redeem shares (except those held
in retirement plans) in
amounts up to $10,000 per day
through the transfer agent. You
must complete an authorization form
to authorize telephone
redemptions. If eligible, you may
request redemptions by tel-
ephone on any day the New York Stock
Exchange is open. Call
the transfer agent at 1-800-451-2010
between 9:00 a.m. and
5:00 p.m. (Eastern time). Requests
received after the close
of regular trading on the Exchange
are priced at the net
asset value next determined.
Your redemption proceeds can be sent
by check to your address
of record or by wire transfer to a
bank account designated on
your authorization form. You may be
charged a fee for wire
transfers. You must submit a new
authorization form to change
the bank account designated to
receive wire transfers and you
may be asked to provide certain
other documents.
- -----------------------------------------------------
- ---------------------------
Automatic
cash
withdrawal
plans
You can arrange for the automatic
redemption of a portion of
your shares on a monthly or
quarterly basis. To qualify you
must own shares of the fund with a
value of at least $10,000
and each automatic redemption must
be at least $50.
The following conditions apply:
. Your shares must not be
represented by certificates
. All dividends and distributions
must be reinvested
For more information, contact your
Salomon Smith Barney
Financial Consultant or dealer
representative or consult the
SAI.
Smith Barney Mutual Funds 13
<PAGE>
Other things to know about share transactions
When you buy, exchange or redeem shares, your request
must be in good order.
This means you have provided the following
information without which your
request will not be processed:
. Name of the fund
. Account number
. Class of shares being bought, exchanged or redeemed
. Dollar amount or number of shares being bought,
exchanged or redeemed
. Signature of each owner exactly as the account is
registered
The transfer agent will try to confirm that any
telephone exchange or redemp-
tion request is genuine by recording calls, asking
the caller to provide a per-
sonal identification number for your account, sending
you a written
confirmation or requiring other confirmation
procedures from time to time.
Signature guarantees To be in good order, your
redemption request must include
a signature guarantee if you:
. Are redeeming (together with other requests
submitted in the previous 10 days)
over $10,000 of shares
. Are sending signed share certificates or stock
powers to the transfer agent
. Instruct the transfer agent to mail the check to an
address different from the
one on your account
. Changed your account registration
. Want the check paid to someone other than the
account owner(s)
. Are transferring the redemption proceeds to an
account with a different regis-
tration
You can obtain a signature guarantee from most banks,
dealers, brokers, credit
unions and federal savings and loan, institutions,
but not from a notary pub-
lic.
The fund has the right to:
. Suspend the offering of shares
. Waive or change minimum and additional investment
amounts
. Reject any purchase or exchange order
. Change, revoke or suspend the exchange privilege
. Suspend telephone transactions
14 S&P 500 Index Fund
<PAGE>
. Suspend or postpone redemptions of shares on any
day when trading on the New
York Stock Exchange is restricted, or as otherwise
permitted by the Securi-
ties and Exchange Commission
. Pay redemption proceeds by giving you securities.
You may pay transaction
costs to dispose of the securities.
Small account balances If your account falls below
$500 because of a redemption
of fund shares, the fund may ask you to bring your
account up to $500. If your
account is still below $500 after 60 days, the fund
may close your account and
send you the redemption proceeds.
Excessive exchange transactions The manager may
determine that a pattern of
frequent exchanges is detrimental to the fund's
performance and other share-
holders. If so, the fund may limit additional
purchases and/or exchanges by a
shareholder.
Share certificates The fund does not issue share
certificates unless a written
request is made to the transfer agent. If you hold
share certificates it will
take longer to exchange or redeem shares.
Smith Barney Mutual Funds 15
<PAGE>
Smith Barney 401(k) and ExecChoiceTM programs
You may be eligible to participate in the Smith
Barney 401(k) program or the
Smith Barney ExecChoiceTM program. The fund offers
Class A shares to partici-
pating plans as an investment alternative under the
programs. You can meet min-
imum investment and exchange amounts by combining the
plan's investments in any
of the Smith Barney funds.
There are no sales charges when you buy or sell
shares.
Class A Shares may be purchased by Plans investing at
least $1 million.
For more information, call your Salomon Smith Barney
Financial Consultant or
the transfer agent, or consult the SAI.
16 S&P 500 Index Fundl Funds
<PAGE>
Dividends, distributions, and taxes
Dividends The fund generally makes capital gain
distributions and pays divi-
dends, if any, once a year, typically in December.
The fund may pay additional
distributions and dividends at other times if
necessary for the fund to avoid a
federal tax. Capital gain distributions and dividends
are reinvested in addi-
tional fund shares of the same class you hold. The
fund expects distributions
to be primarily from capital gains. Alternatively,
you can instruct your Salo-
mon Smith Barney Financial Consultant, dealer
representative or the transfer
agent to have your distributions and/or dividends
paid in cash. You can change
your choice at any time to be effective as of the
next distribution or divi-
dend, except that any change given to the transfer
agent less than five days
before the payment date will not be effective until
the next distribution or
dividend is paid.
Taxes In general, redeeming shares, exchanging shares
and receiving distribu-
tions (whether in cash or additional shares) are all
taxable events.
<TABLE>
<CAPTION>
Transaction Federal tax
status
<S> <C>
Redemption or exchange of shares Usually
capital gain or loss;
long-term only
if shares owned
more than one
year
Long-term capital gain distributions Long-term
capital gain
Short-term capital gain distributions Ordinary
income
Dividends Ordinary
income
</TABLE>
Long-term capital gain distributions are taxable to
you as long-term capital
gain regardless of how long you have owned your
shares. You may want to avoid
buying shares when the fund is about to declare a
long-term capital gain dis-
tribution or a dividend, because it will be taxable
to you even though it may
actually be a return of a portion of your investment.
After the end of each year, the fund will provide you
with information about
the distributions and dividends you received and any
redemptions of shares dur-
ing the previous year. If you do not provide the fund
with your correct tax-
payer identification number and any required
certifications, you may be subject
to back-up withholding of 31% of your distributions,
dividends, and redemption
proceeds. Because each shareholder's circumstances
are different and special
tax rules may apply, you should consult your tax
adviser about your investment
in the fund.
Smith Barney Mutual Funds 17
<PAGE>
Share price
You may buy, exchange or redeem shares at their net
asset value next determined
after receipt of your request in good order. The
fund's net asset value is the
value of its assets minus its liabilities. Net asset
value is calculated sepa-
rately for each class of shares. The fund calculates
its net asset value every
day the New York Stock Exchange is open. The Exchange
is closed on certain hol-
idays listed in the SAI. This calculation is done
when regular trading closes
on the Exchange (normally 4:00 p.m., Eastern time).
The fund generally values its portfolio securities
based on market prices or
quotations. When reliable market prices or quotations
are not readily avail-
able, the fund may price those securities at fair
value. Fair value is deter-
mined in accordance with procedures approved by the
fund's board. A fund that
uses fair value to price securities may value those
securities higher or lower
than another fund using market quotations to price
the same securities.
In order to buy, redeem or exchange shares at that
day's price, you must place
your order with your Salomon Smith Barney Financial
Consultant or dealer repre-
sentative before the New York Stock Exchange closes.
If the Exchange closes
early, you must place your order prior to the actual
closing time. Otherwise,
you will receive the next business day's price.
Salomon Smith Barney or members of the selling group
must transmit all orders
to buy, exchange or redeem shares to the fund's agent
before the agent's close
of business.
"S&P 500(R)" is a trademark of The McGraw-Hill
Companies, Inc. and has been
licensed for use by SSBC. The fund is not sponsored,
endorsed, sold or promoted
by Standard & Poor's and Standard & Poor's makes no
representation regarding
the advisability of investing in the fund. Please see
the SAI for further dis-
closure.
18 S&P 500 Index Fund
<PAGE>
Financial highlights
The financial highlights tables are intended to help
you understand the perfor-
mance of each class for the past 5 years (or since
inception if less than 5
years). Certain information reflects financial
results for a single share.
Total return represents the rate that a shareholder
would have earned (or lost)
on a fund share assuming reinvestment of all
dividends and distributions. The
information in the following tables was audited by
KPMG LLP, independent
accountants, whose report, along with the fund's
financial statements, are
included in the annual report (available upon
request).
For a Class A share of capital stock outstanding
throughout the period ended
November 30:
<TABLE>
<CAPTION>
1998(1)
- ----------------------------------------------------
<S> <C>
Net asset value, beginning of period $10.00
- ----------------------------------------------------
Income from operations:
Net investment income(/2/) 0.05
Net realized and unrealized gain 1.93
- ----------------------------------------------------
Total income from operations 1.98
- ----------------------------------------------------
Less distributions from:
Net investment income --
- ----------------------------------------------------
Total distributions --
- ----------------------------------------------------
Net asset value, end of period $11.98
- ----------------------------------------------------
Total return++ 19.80%
- ----------------------------------------------------
Net assets, end of period (000)'s $55,187
- ----------------------------------------------------
Ratios to average net assets:+
Expenses(/2/)(/3/) 0.59%
Net investment income 1.05
- ----------------------------------------------------
Portfolio turnover rate 4%
- ----------------------------------------------------
</TABLE>
(/1/) For the period from January 5, 1998
(commencement of operations) to
November 30, 1998.
(/2/) The administrator agreed to waive all of its
administrative fees for the
period ended November 30, 1998, and agreed to
reimburse expenses of
$177,520. If these expenses were not
reimbursed, the per share effect on
net investment income and the expense ratio
would have been as follows:
<TABLE>
<CAPTION>
Per Share Decreases to
Expense Ratios
Net Investment Income
Without Reimbursement
Class A
Class A
- -----------------------------------------------------
- --------------------------------------
<S> <C>
<C>
$0.04
$1.42%+
- -----------------------------------------------------
- --------------------------------------
</TABLE>
(/3/) As a result of voluntary expense limitations,
the ratio of expenses to
average net assets will not exceed 0.60%.
++ Total return is not annualized, as it may not be
representative of the
total return for the year.
+ Annualized.
Smith Barney Mutual Funds 19
<PAGE>
For a Class D share of capital stock outstanding
throughout the period ended
November 30:
<TABLE>
<CAPTION>
1998(1)
- ---------------------------------------------------
<S> <C>
Net asset value, beginning of period $11.00
- ---------------------------------------------------
Income from operations:
Net investment income(/2/) 0.03
Net realized and unrealized gain 0.96
- ---------------------------------------------------
Total income from operations 0.99
- ---------------------------------------------------
Less distributions from:
Net investment income --
- ---------------------------------------------------
Total distributions --
- ---------------------------------------------------
Net asset value, end of period $11.99
- ---------------------------------------------------
Total return++ 9.00%
- ---------------------------------------------------
Net assets, end of period (000)'s $1,810
- ---------------------------------------------------
Ratios to average net assets:
Expenses(/2/)(/3/) 0.36
Net investment income 1.33
- ---------------------------------------------------
Portfolio turnover rate 4%
- ---------------------------------------------------
</TABLE>
(/1/) For the period from August 4, 1998 (inception
date) to November 30, 1998.
(/2/) The administrator agreed to waive all of its
administrative fees for the
period ended November 30, 1998, and agreed to
reimburse expenses of
$177,520. If these expenses were not
reimbursed, the per share effect on
net investment income and the expense ratio
would have been as follows:
<TABLE>
<CAPTION>
Per Share Decreases to Expense Ratios
Net Investment Income Without
Reimbursements
<S> <C>
Class D Class D
- -----------------------------------------------------
- ---------------------------
$0.02 1.18%+
- -----------------------------------------------------
- ---------------------------
</TABLE>
(/3/) As a result of voluntary expense limitations,
the ratio of expenses to
average net assets will not exceed 0.60%.
++Total return is not annualized, as it may not be
representative of the total
return for the year.
+ Annualized
20 S&P 500 Index Fund
<PAGE>
SalomonSmithBarney
--
- --------------------------
A
member of citigroup [LOGO]
S&P 500 Index Fund
An investment portfolio of Smith Barney Investment
Trust
Shareholder reports Annual and semiannual reports to
shareholders provide
additional information about the fund's investments.
These reports discuss the
market conditions and investment strategies that
affected the fund's perfor-
mance.
The fund sends only one report to a household if more
than one account has the
same address. Contact your Salomon Smith Barney
Financial Consultant, dealer
representative or the transfer agent if you do not
want this policy to apply
to you.
Statement of additional information The statement of
additional information
provides more detailed information about the fund and
is incorporated by ref-
erence into (is a legally part of) this prospectus.
You can make inquiries about the fund or obtain
shareholder reports or the
statement of additional information (without charge)
by contacting your Salo-
mon Smith Barney Financial Consultant or dealer
representative, by calling the
fund at 1-800-451-2010, or by writing to the fund at
Smith Barney Mutual
Funds, 388 Greenwich Street, MF2, New York, New York
10013.
Visit our web site. Our web site is located at
www.smithbarney.com.
You can also review the fund's shareholder reports,
prospectus and statement
of additional information at the Securities and
Exchange Commission's Public
Reference Room in Washington, D.C. You can get copies
of these materials for a
fee by writing to the Public Reference Section of the
Commission, Washington,
D.C. 20549-6009. Information about the public
reference room may be obtained
by calling 1-800-SEC-0330. You can get the same
reports and information free
from the Commission's Internet web site--www.sec.gov
If someone makes a statement about the fund that is
not in this prospectus,
you should not rely upon that information. Neither
the fund nor the distribu-
tor is offering to sell shares of the fund to any
person to whom the fund may
not lawfully sell its shares.
/TM/Salomon Smith Barney is a service mark of Salomon
Smith Barney Inc.
(Investment Company Act
file no. 811-06444)
FD 01362 3/99
PART B - STATEMENT OF ADDITIONAL INFORMATION
For SMITH BARNEY S&P 500 INDEX FUND only
Statement of Additional Information, dated
March 30, 1999
March 30, 1999
STATEMENT OF ADDITIONAL INFORMATION
SMITH BARNEY INVESTMENT TRUST
Smith Barney S&P 500 Index Fund
388 Greenwich Street
New York, New York 10013
(800) 451-2010
This Statement of Additional Information ("SAI") is meant to be read in
conjunction with the prospectus of the Smith Barney S&P 500 Index Fund
(the "fund") dated March 30, 1999, as amended or supplemented from time to
time (the "prospectus"), and is incorporated by reference in its entirety
into the prospectus. Additional information about the fund's investments
is available in the fund's annual and semi-annual reports to shareholders
which are incorporated herein by reference. The prospectus and copies of
the reports may be obtained free of charge by contacting a Salomon Smith
Barney Financial Consultant, or by writing or calling Salomon Smith Barney
at the address or telephone number above. The fund is a separate
investment series of Smith Barney Investment Trust (the "trust").
TABLE OF CONTENTS
Investment Objective and Management Policies 2
Investment Restrictions...... .................................... 8
Trustees of the Trust and Executive Officers of the Fund.......... 9
Investment Management and Other Services 12
Portfolio Transactions... .......................................15
Portfolio Turnover.................. ...........................17
Purchase of Shares .............................................18
Redemption of Shares 19
Valuation of Shares 21
Performance Data 21
Dividends, Distributions and Taxes 23
Additional Information 29
Financial Statements ...................................................30
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The prospectus discusses the fund's investment objective and policies.
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 the fund may utilize and
certain risks associated with these investments, policies and strategies.
Travelers Investment Management Company ("TIMCO" or the "manager") serves
as investment manager to the fund. SSBC Fund Management Inc. ("SSBC" or
the "administrator"), formerly known as Mutual Management Corp, serves as
the fund's administrator.
The fund seeks to achieve its objective by investing, under normal
circumstances, 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. 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 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.
Repurchase Agreements. The fund may agree to purchase securities from a
bank or recognized securities dealer and simultaneously commit to resell
the securities to the bank or dealer at an agreed-upon date and price
reflecting a market rate of interest unrelated to the coupon rate or
maturity of the purchased securities ("repurchase agreements"). The fund
would maintain custody of the underlying securities prior to their
repurchase; thus, the obligation of the bank or dealer to pay the
repurchase price on the date agreed to would be, in effect, secured by
such securities. If the value of such securities were less than the
repurchase price, plus interest, the other party to the agreement would be
required to provide additional collateral so that at all times the
collateral is at least 102% of the repurchase price plus accrued interest.
Default by or bankruptcy of a seller would expose the fund to possible
loss because of adverse market action, expenses and/or delays in
connection with the disposition of the underlying obligations. The
financial institutions with which the fund may enter into repurchase
agreements will be banks and non-bank dealers of U.S. Government
securities on the Federal Reserve Bank of New York's list of reporting
dealers, if such banks and non-bank dealers are deemed creditworthy by the
fund's manager. The manager will continue to monitor creditworthiness of
the seller under a repurchase agreement, and will require the seller to
maintain during the term of the agreement the value of the securities
subject to the agreement to equal at least 102% of the repurchase price
(including accrued interest). In addition, the manager will require that
the value of this collateral, after transaction costs (including loss of
interest) reasonably expected to be incurred on a default, be equal to
102% or greater than the repurchase price (including accrued premium)
provided in the repurchase agreement or the daily amortization of the
difference between the purchase price and the repurchase price specified
in the repurchase agreement. The manager will mark-to-market daily the
value of the securities. Repurchase agreements are considered to be loans
by the fund under the 1940 Act.
Lending of Portfolio Securities. Consistent with applicable regulatory
requirements, the fund may lend portfolio securities to brokers, dealers
and other financial organizations that meet capital and other credit
requirements or other criteria established by the Board. The fund will
not lend portfolio securities to affiliates of the manager unless they
have applied for and received specific authority to do so from the
Securities and Exchange Commission ("SEC"). Loans of portfolio securities
will be collateralized by cash, letters of credit or U.S. Government
Securities, which are maintained at all times in an amount equal to at
least 102% of the current market value of the loaned securities. Any gain
or loss in the market price of the securities loaned that might occur
during the term of the loan would be for the account of the fund. From
time to time, the fund may return a part of the interest earned from the
investment of collateral received for securities loaned to the borrower
and/or a third party that is unaffiliated with the fund and that is acting
as a "finder."
By lending its securities, the fund can increase its income by continuing
to receive interest and any dividends on the loaned securities as well as
by either investing the collateral received for securities loaned 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.
Although the generation of income is not the primary investment goal of
the fund, income received could be used to pay the fund's expenses and
would increase an investor's total return. The fund will adhere to the
following conditions whenever its portfolio securities are loaned:
(i) the fund must receive at least 102% cash collateral or equivalent
securities of the type discussed in the preceding paragraph from the
borrower; (ii) the borrower must increase such collateral whenever the
market value of the securities rises above the level of such collateral;
(iii) the fund must be able to terminate the loan at any time; (iv) the
fund must receive reasonable interest on the loan, as well as any
dividends, interest or other distributions on the loaned securities and
any increase in market value; (v) the fund may pay only reasonable
custodian fees in connection with the loan; and (vi) voting rights on the
loaned securities may pass to the borrower, provided, however, that if a
material event adversely affecting the investment occurs, the Board must
terminate the loan and regain the right to vote the securities. Loan
agreements involve certain risks in the event of default or insolvency of
the other party including possible delays or restrictions upon a Fund's
ability to recover the loaned securities or dispose of the collateral for
the loan.
Foreign Securities. The fund may purchase common stocks of foreign
corporations represented in the S&P 500 Index (such securities are
publicly traded on securities exchanges or over-the-counter in the United
States). The fund's investment in common stock of foreign corporations
represented in the S&P 500 Index may also be in the form of American
Depository Receipts (ADRs). ADRs are receipts typically issued by a United
States bank or trust company evidencing ownership of the underlying
securities and are designated for use in the U.S. Securities markets.
Investing in the securities of foreign companies involves special risks
and considerations not typically associated with investing in U.S.
companies. These include differences in accounting, auditing and
financial reporting standards, the possibility of expropriation or
confiscatory taxation, adverse changes in investment or exchange control
regulations, political instability which could affect U.S. investments in
foreign countries, and potential restrictions on the flow of international
capital. Investments in foreign securities may be affected by changes in
governmental administration or economic policy (in the United Stated and
abroad) or changed circumstances in dealings between nations. Foreign
companies may be subject to less governmental regulation than U.S.
companies. Securities of foreign companies may be more volatile than
securities of U.S. companies. Moreover, individual foreign economies may
differ favorably or unfavorably from the U.S. economy in such respects as
growth of gross domestic product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payment positions.
Money Market Instruments. The fund may invest up to 20% of its assets in
corporate and government bonds and notes and money market instruments.
Money market instruments 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.
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.
Futures and Options. The fund may enter into futures contracts, options,
and options on futures contracts, subject to the limitation that the value
of these futures contracts and options will not exceed 20% of the fund's
total assets. Also, the fund will not purchase options to the extent that
more than 5% of the value of the fund's total assets would be invested in
premiums on open put option positions. These futures contracts and
options will be used 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 will only
enter into futures contracts and options on futures contracts that are
traded on a domestic exchange and board of trade. The fund will not use
futures or options for speculative purposes.
A call option gives a holder the right to purchase a specific security at
a specified price referred to as the "exercise price," within a specified
period of time. A put option gives a holder the right to sell a specific
security at a specified price within a specified period of time. The
initial purchaser of a call option pays the "writer" a premium, which is
paid at the time of purchase and is retained by the writer whether or not
such option is exercised. Institutions, such as the fund, that sell (or
"write") call options against securities held in their investment
portfolios retain the premium. The fund may purchase put options to hedge
its portfolio against the risk of a decline in the market value of
securities held, and may purchase call options to hedge against an
increase in the price of securities it is committed to purchase. The fund
may write put and call options along with a long position in options to
increase its ability to hedge against a change in the market value of the
securities it holds or is committed to purchase.
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified
future time and at a specified price. Stock index futures contracts are
based on indices that reflect the market value of common stock of the
firms included in the indices. The fund may enter into futures contracts
to purchase securities when the manager anticipates purchasing the
underlying securities and believes prices will rise before the purchase
will be made. Assets committed to futures contracts will be segregated at
the fund's custodian to the extent required by law.
There are several risks accompanying the utilization of futures contracts
and options on futures contracts. First, positions in futures contracts
and options on futures contracts may be closed only on an exchange or
board of trade that furnishes a secondary market for such contracts.
While the fund plans to utilize future contracts only if there exists an
active market for such contracts, there is no guarantee that a liquid
market will exist for the contracts at a specified time. Furthermore,
because, by definition, futures contracts look to projected price levels
in the future and not to current levels of valuation, market circumstances
may result in there being a discrepancy between the price of the stock
index future and the movement in the stock index. The absence of a
perfect price correlation between the futures contract and its underlying
stock index could stem from investors choosing to close futures contracts
by offsetting transactions, rather than satisfying additional margin
requirements. This could result in a distortion of the relationship
between the index and futures market. In addition, because the futures
market imposes less burdensome margin requirements than the securities
market, an increased amount of participation by speculators in the futures
market could result in price fluctuations.
In view of these considerations, the fund will comply with the following
restrictions when purchasing and selling futures contracts. First, the
fund will not participate in futures transactions if the sum of its
initial margin deposits on open contracts will exceed 5% of the market
value of the fund's total assets, after taking into account the unrealized
profits and losses on those contracts which it has entered. Second, the
fund will not enter into these contracts for speculative purposes. Third,
the fund will limit transactions in futures and options on futures to the
extent necessary to prevent the fund from being deemed a "commodity pool"
under regulations of the Commodity Futures Trading Commission.
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.
Although the fund intends to enter into futures contracts only if there is
an active market for such contracts, there is no assurance that an active
market will exist for the contracts at any particular time. Most U.S.
futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once
the daily limit has been reached in a particular contract, no trades may
be made that day at a price beyond that limit. It is possible that
futures contract prices could move to the daily limit for several
consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and subjecting some futures
traders to substantial losses. In such event, and in the event of adverse
price movements, the fund would be required to make daily cash payments of
variation margin, and an increase in the value of the portion of the fund
being hedged, if any, may partially or completely offset losses on the
futures contract. As described above, however, there is no guarantee that
the price of the securities being hedged will, in fact, correlate with the
price movements in a futures contract and thus provide an offset to losses
on the futures contract.
If the fund hedges against the possibility of a change in market
conditions adversely affecting the value of securities held in its
portfolio and market conditions move in a direction opposite to that which
has been anticipated, the fund will lose part or all of the benefit of the
increased value of securities that it has hedged because it will have
offsetting losses in its futures positions. In addition, in such
situations, if the fund had insufficient cash, it may have to sell
securities to meet daily variation margin requirements at a time when it
may be disadvantageous to do so. These sales of securities may, but will
not necessarily, be at increased prices that reflect the change in
interest rates, market conditions or currency values, as the case may be.
Options on Futures Contracts. An option on a futures contract, as
contrasted with the direct investment in such a contract, gives the
purchaser the right, in return for the premium paid, to assume a position
in the underlying futures contract at a specified exercise price at any
time prior to the expiration date of the option. Upon exercise of an
option, the delivery of the futures position by the writer of the option
to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account, which
represents the amount by which the market price of the futures contract
exceeds, in the case of a call, or is less than, in the case of put, the
exercise price of the option on the futures contract. The potential for
loss related to the purchase of an option on a futures contract is limited
to the premium paid for the option plus transaction costs. Because the
value of the option is fixed at the point of sale, there are no daily cash
payments to reflect changes in the value of the underlying contract;
however, the value of the option does change daily and that change would
be reflected in the net asset value of the fund.
The fund may purchase and write put and call options on futures contracts
that are traded on a U.S. exchange or board of trade as a hedge against
changes in the value of its portfolio securities, or in anticipation of
the purchase of securities, and may enter into closing transactions with
respect to such options to terminate existing positions. There is no
guarantee that such closing transactions can be effected.
Several risks are associated with options on futures contracts. The
ability to establish and close out positions on such options will be
subject to the existence of a liquid market. In addition, the purchase of
put or call options will be based upon predictions by the manager as to
anticipated trends, which predictions could prove to be incorrect. Even
if the expectations of the manager are correct, there may be an imperfect
correlation between the change in the value of the options and of the
portfolio securities being hedged.
Stock Index Options. As described generally above, the fund may purchase
put and call options and write call options on domestic stock indexes
listed on domestic exchanges in order to realize its investment objective
of capital appreciation or for the purpose of hedging its portfolio. A
stock index fluctuates with changes in the market values of the stocks
included in the index. Some stock index options are based on a broad
market index such as the New York Stock Exchange Composite Index or the
Canadian Market Portfolio Index, or a narrower market index such as the
Standard & Poor's 100.
Options on stock indexes are generally similar to options on stock except
that the delivery requirements are different. Instead of giving the right
to take or make delivery of stock at a specified price, an option on a
stock index gives the holder the right to receive a cash "exercise
settlement amount" equal to (a) the amount, if any, by which the fixed
exercise price of the option exceeds (in the case of a put) or is less
than (in the case of a call) the closing value of the underlying index on
the date of exercise, multiplied by (b) a fixed "index multiplier."
Receipt of this cash amount will depend upon the closing level of the
stock index upon which the option is based being greater than, in the case
of a call, or less than, in the case of a put, the exercise price of the
option. The amount of cash received will be equal to such difference
between the closing price of the index and the exercise price of the
option expressed in dollars or a foreign currency, as the case may be,
times a specified multiple. The writer of the option is obligated, in
return for the premium received, to make delivery of this amount. The
writer may offset its position in stock index options prior to expiration
by entering into a closing transaction on an exchange or it may let the
option expire unexercised.
The effectiveness of purchasing or writing stock index options as a
hedging technique will depend upon the extent to which price movements in
the portion of the securities portfolio of the fund correlate with price
movements of the stock index selected. Because the value of an index
option depends upon movements in the level of the index rather than the
price of a particular stock, whether the fund will realize a gain or loss
from the purchase or writing of options on an index depends upon movements
in the level of stock prices in the stock market generally or, in the case
of certain indexes, in an industry or market segment, rather than
movements in the price of a particular stock. Accordingly, successful use
by the fund of options on stock indexes will be subject to the manager's
ability to predict correctly movements in the direction of the stock
market generally or of a particular industry. This requires different
skills and techniques than predicting changes in the price of individual
stocks.
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. Invest in a manner that would cause it to fail to be a
"diversified company" under the 1940 Act and the rules, regulations and
orders thereunder.
2. Issue "senior securities" as defined in the 1940 Act, and the
rules, regulations and orders thereunder, except as permitted under the
1940 Act and the rules, regulations and orders thereunder.
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, securities of the U.S.
government (including its agencies and instrumentalities) 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, 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. To the extent that it engages in transactions described in
(a) and (b), the fund will be limited so that no more than 33 1/3% of the
value of its total assets (including the amount borrowed), valued at the
lesser of cost or market, less liabilities (not including the amount
borrowed) valued at the time the borrowing is made, is derived from such
transactions.
5. Make loans. This restriction does not apply to: (a) the
purchase of debt obligations in which the fund may invest consistent with
its investment objective and policies; (b) repurchase agreements; and (c)
loans of its portfolio securities, to the fullest extent permitted under
the 1940 Act.
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 or the business of investing in real estate (including
interests in limited partnerships owning or otherwise engaging in the real
estate business or the business of investing in real estate) 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 held; (c) trading in futures contracts and options on futures
contracts (including options on currencies to the extent consistent with
the funds' investment objective and policies); or (d) investing in 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.
11. Invest for the purpose of exercising control of management.
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.
TRUSTEES OF THE TRUST AND EXECUTIVE OFFICERS OF THE FUND
The names of the trustees of the trust and executive officers of the fund,
together with information as to their principal business occupations, are
set forth below. The executive officers of the fund are employees of
organizations that provide services to the fund. Each trustee who is an
"interested person" of the trust, as defined in the 1940 Act, is indicated
by an asterisk. The address of the "non-interested" trustees and the
executive officers of the fund is 388 Greenwich Street, New York, New York
10013.
Herbert Barg (Age 75). Private Investor. His address is 273 Montgomery
Avenue, Bala Cynwyd, Pennsylvania 19004.
Alfred J. Bianchetti (Age 76). Retired; formerly Senior Consultant to
Dean Witter Reynolds Inc. His address is 19 Circle End Drive, Ramsey, New
Jersey 07466.
Martin Brody (Age 77). 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 (Age 61). Professor, Harvard Business School. His
address is c/o Harvard Business School, Soldiers Field Road, Boston,
Massachusetts 02163.
Burt N. Dorsett (Age 68). Managing Partner of Dorsett McCabe Management.
Inc., an investment counseling firm; Trustee 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 (Age 72). Chairman of the Board and President of The
Dress Barn, Inc. His address is 30 Dunnigan Drive, Suffern, New York
10901.
Stephen E. Kaufman (Age 67). Attorney. His address is 277 Park Avenue,
New York, New York 10172.
Joseph J. McCann (Age 68). Financial Consultant; Retired Financial
Executive, Ryan Homes, Inc. His address is 200 Oak Park Place,
Pittsburgh, Pennsylvania 15243.
*Heath B. McLendon (Age 65). Chairman of the Board and Investment Officer;
Managing Director of Salomon Smith Barney, Inc.; President of SSBC and
Travelers Investment Adviser, Inc. ("TIA"); Chairman or Co-Chariman of the
Board of 59 investment companies associated with Salomon Smith Barney.
Cornelius C. Rose, Jr. (Age 65). President, Cornelius C. Rose Associates,
Inc., financial consultants, and Chairman and Trustee of Performance
Learning Systems, an educational consultant. His address is Meadowbrook
Village, Building 4, Apt 6, West Lebanon, New Hampshire 03784.
Lewis E. Daidone (Age 41). Senior Vice President and Treasurer; Managing
Director of Salomon Smith Barney; Chief Financial Officer of the Smith
Barney Mutual funds; Director and Senior Vice President of SSBC and TIA.
Sandip Bhagat, (Age 37). Vice President and Investment Officer President
of TIMCO; prior to 1995, Senior Portfolio Manager of TIMCO; Managing
Director of Salomon Smith Barney. His address is One Tower Square,
Hartford, Connecticut, 06183-2030.
John Lau (Age 32). Vice President and Investment Officer; Portfolio
Manager of TIMCO; prior to 1995, Lead Engineer of knowledge-based
engineering projects at United Technologies, Pratt and Whitney Aircraft
Engine Division. His address is One Tower Square, Hartford, Connecticut,
06183-2030.
Paul Brook (Age 45). Controller; Director of Salomon Smith Barney; from
1997-1998 Managing Director of AMT Capital Services Inc.; prior to 1997
Partner with Ernst & Young LLP
Christina T. Sydor (Age 48). Secretary; Managing Director of Salomon Smith
Barney; General Counsel and Secretary of SSBC and TIA.
As of March 19, 1999, the trustees and officers owned, in the aggregate,
less than 1% of the outstanding shares of each of the funds. No officer,
director or employee of Salomon Smith Barney or any of its affiliates
receives any compensation from the trust for serving as an officer of the
funds or trustee of the trust. The trust pays each trustee who is not an
officer, director or employee of Salomon Smith Barney or any of its
affiliates a fee of $10,000 per annum plus $1000 per in-person meeting and
$100 per telephonic meeting. Each trustee emeritus who is not an officer,
director or employee of Salomon Smith Barney or its affiliates receives a
fee of $5,000 per annum plus $500 per in-person meeting and $50 per
telephonic meeting. All trustees are reimbursed for travel and out-of-
pocket expenses incurred to attend such meetings and for the last fiscal
year it was $13,594.
The following table contains a list of shareholders of record or who
beneficially owned at least 5% of the outstanding shares of a particular
class of shares of the fund as of March 19, 1999.
CLASS A
PERCENTAGE OF SHARES
Travelers Insurance Company
Separate Account QPN 401(k)-TIC
Travelers Insurance Company
Atn: Roger Ferland
One Tower Square
Hartford, CT 06183
Owned 634,707.216(7.18%) shares
CLASS D
PERCENTAGE OF SHARES
Smith Barney 401(k)Advisor Group
Smith Barney Corporate Trust
Two Tower Square
P.O. Box 1063
East Brunswick, NJ 08816
Owned 312,984.310(100%) shares
For the fiscal year ended November 30, 1998, the Trustees of the trust
were paid the following compensation:
Name of Person
Aggregate
Compensat
ion
from
Trust
Total
Pension or
Retirement
Benefits
Accrued
As part of
Trust
Expenses
Compensation
from Trust
and Fund
Complex
Paid to
Trustees
Number of
Funds for Which DirecD
Trustee Serves Within
Fund Complex
Herbert Barg**
Alfred
Bianchetti* **
Martin Brody**
Dwight B.
Crane**
Burt N.
Dorsett**
Elliot S.
Jaffe**
Stephen E.
Kaufman**
Joseph J.
McCann**
Heath B.
McLendon*
Cornelius C.
Rose, Jr.**
$11,600
11,600
11,600
11,600
11,600
11,600
11,600
11,600
- -----
11,600
$0
0
0
0
0
0
0
0
0
0
$105,425
51,200
132,500
139,975
51,200
47,550
96,400
51,200
- -----
51,200
18
13
21
24
13
13
15
13
59
13
_________________
* Designated an "interested" trustee.
** Designates member of Audit Committee.
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.
INVESTMENT MANAGEMENT AND OTHER SERVICES
Investment Manager - TIMCO
TIMCO serves as investment adviser to the fund pursuant to an investment
advisory agreement (the "Investment Advisory Agreement") with the trust
which was approved by the board of trustees, including a majority of
trustees who are not "interested persons" of the trust or the manager. The
manager is a wholly owned subsidiary of Citigroup Inc. ("Citigroup").
Subject to the supervision and direction of the board of trustees, the
manager manages the fund's portfolio in accordance with the fund's stated
investment objective and policies, makes investment decisions for the
fund, places orders to purchase and sell securities, and employs
professional portfolio managers and securities analysts who provide
research services to the fund. The manager pays the salary of any officer
and employee who is employed by both it and the trust. The manager bears
all expenses in connection with the performance of its services. TIMCO has
been in the investment counseling business since 1967 and renders
investment advice to a wide variety of individual, institutional and
investment company clients that had aggregate assets under management as
of March 1999 in excess of $400 million.
As compensation for investment advisory services, the fund pays the
manager a fee computed daily and payable monthly at the annual rate of
0.15% of the value of the fund's average daily net assets. The management
fee paid by the fund in fiscal period ended November 30, 1998 was $36,394.
Administrator - SSBC
SSBC serves as administrator to the fund pursuant to a written agreement
(the "Administration Agreement"). SSBC is a wholly owned subsidiary of
Salomon Smith Barney Holdings Inc. ("Holdings"), which in turn, is a
wholly owned subsidiary of Citigroup Inc. ("Citigroup"). The administrator
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 administrator SSBC: (a) assists in supervising all aspects of the
Fund's operations except those performed by the fund's investment manager
under its investment advisory agreement; b) supplies the fund with office
facilities (which may be in SSBC'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)
prepares reports to shareholders of the fund, tax returns and reports to
and filings with the SEC and state blue sky authorities.
As compensation for administrative services rendered to the fund, the
administrator 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 administration fee was waived by the administrator in the fiscal
period ended November 30, 1998.
The fund bears expenses incurred in its operation, including: taxes,
interest, brokerage fees and commissions, if any; fees of Trustees who are
not officers, Trustees, shareholders or employees of the manager or the
administrator 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.
Auditors
KPMG LLP, independent auditors, 345 Park Avenue, New York, New York 10154,
have been selected to serve as auditors of the trust and to render
opinions on the fund's financial statements for the fiscal year ending
November 30, 1999.
Custodian and Transfer Agent
PNC Bank, National Association ("PNC" or "custodian"), located at 17th and
Chestnut Streets, Philadelphia, Pennsylvania, 19103, serves as the
custodian of the fund. Under its custody agreement with the fund, PNC
holds the fund's securities and keeps all necessary accounts and records.
For its services, PNC receives a monthly fee based upon the month-end
market value of securities held in custody and also receives securities
transactions charges. The assets of the fund are held under bank
custodianship in compliance with the 1940 Act.
First Data Investor Services Group, Inc, ("First Data" or "transfer
agent") located at Exchange Place, Boston, Massachusetts 02109, serves as
the trust's transfer agent. Under the transfer agency agreement, the
transfer agent 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, the transfer agent 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.
Distributor
CFBDS, Inc. serves as the fund's distributor pursuant to a written
agreement dated October 8, 1998 (the "Distribution Agreement") which was
approved by the fund's Board of Trustees, including a majority of the
Independent Trustees on July 15, 1998. Prior to the merger of Travelers
Group, Inc. and Citicorp Inc. on October 8, 1998, Salomon Smith Barney
served as the fund's distributor.
When payment is made by the investor before the settlement date, unless
otherwise noted by the investor, the funds will be held as a free credit
balance in the investor's brokerage account and Salomon Smith Barney may
benefit from the temporary use of the funds. The fund's board of trustees
has been advised of the benefits to Salomon Smith Barney resulting from
these settlement procedures and will take such benefits into consideration
when reviewing the Investment Advisory, Administration and Distribution
Agreements for continuance.
For the fiscal period ended November 30, 1998, Salomon Smith Barney
incurred distribution expenses totaling approximately $65,086 consisting
of approximately $4,280 for advertising, $0 for printing and mailing of
prospectuses, $32,998 for support services, $27,808 to Salomon Smith
Barney Financial Consultants.
Shareholding Servicing Arrangements
To compensate Salomon Smith Barney's Financial Consultants for the
services they provide to fund shareholders, the fund has adopted a
services plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act.
Under the Plan, the fund pays a service fee with respect to Class A shares
that is 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 shares. Class D shares are not subject to a service fee.
For the fiscal period ended November 30, 1998, the distributor reimbursed
Plan fees totaling $47,919.
Under its terms, the Plan continues from year to year, provided such
continuance is approved annually by vote of the board of trustees,
including a majority of the trustees who are not interested persons of the
trust and who have no direct or indirect financial interest in the
operation of the Plan (the "independent trustees"). The Plan may not be
amended to increase the amount of the service and distribution fees
without shareholder approval, and all amendments of the Plan also must be
approved by the trustees including all of the independent trustees in the
manner described above. The Plan may be terminated with respect to the
Class at any time, without penalty, by vote of a majority of the
independent trustees or, with respect to any fund, by vote of a majority
of the outstanding voting securities of a fund (as defined in the 1940
Act). Pursuant to the Plan, Salomon Smith Barney will provide the board
of trustees with periodic reports of amounts expended under the Plan and
the purpose for which such expenditures were made.
PORTFOLIO TRANSACTIONS
The manager arranges for the purchase and sale of the fund's securities
and selects brokers and dealers (including Salomon 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 that provide it with research services and may cause the fund
to pay such brokers and dealers commissions which exceed those other
brokers 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 Salomon 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 statistical or other
services to enable the manager to supplement its own research and
analysis.
Decisions to buy and sell securities for the fund are made by the manager,
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 the manager.
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. The
manager, 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. The manager 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 the manager exercises investment discretion. Conversely, the fund
may be the primary beneficiary of services received as a result of
portfolio transactions effected for other accounts. The manager'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 the manager to cause the fund to pay a
broker that provides brokerage and research services to the manager a
commission in excess of that which another qualified broker would have
charged for effecting the same transaction. Salomon Smith Barney will not
participate in commissions from brokerage given by the fund to other
brokers or dealers and will not receive any reciprocal brokerage business
resulting therefrom.
In accordance with Section 17(e) of the 1940 Act and Rule 17e-1
thereunder, the trust's Board of Trustees has determined that any
portfolio transaction for the fund may be executed through Salomon Smith
Barney or an affiliate of Salomon Smith Barney if, in the manager's
judgment, the use of Salomon 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, Salomon Smith Barney or the
affiliate charges the fund a commission rate consistent with those charged
by Salomon Smith Barney or an affiliate to comparable unaffiliated
customers in similar transactions. In addition, under SEC rules Salomon
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 Salomon Smith Barney to effect such
transactions; and (b) Salomon 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 the manager, 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 the manager are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the manager 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.
The fund will not purchase securities during the existence of any
underwriting or selling group relating to the securities, of which the
manager is a member, except to the extent permitted by the SEC. Under
certain circumstances, the fund may be at a disadvantage because of this
limitation in comparison with other funds that have similar investment
objectives but that are not subject to a similar limitation.
The fund has paid the following in brokerage commissions for portfolio
transactions :
Fiscal Period Ended
11/30/98
Total Brokerage Commissions $24,665
Total Brokerage Commissions
paid to Salomon Smith Barney $0
% of Total Brokerage Commissions
paid to Salomon Smith Barney 0%
% of Total Transactions involving
Commissions paid to Salomon
Smith Barney 0%
During the fiscal period ended November 30, 1998, the total amount of
commissionable transactions was $50,746,574.
PORTFOLIO TURNOVER
Although the fund generally seeks to invest for the long term, the fund
retains the right to sell securities irrespective of how long they have
been held. However, because of the "passive" investment management
approach of the fund, the portfolio turnover rate is expected to be under
50%, a generally lower turnover rate than for most other investment
companies. A portfolio turnover rate of 50% would occur if one-half of
the fund's securities were sold within one year. Ordinarily, securities
will be sold from the fund only to reflect certain administrative changes
in the S&P 500 Index (including mergers or changes in the composition of
the Index) or to accommodate cash flows into and out of the fund while
maintaining the similarity of the fund to the index. 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 fund's target index.
Because of this, the turnover rate for the fund will be relatively low.
The fund's portfolio turnover rate for the fiscal period ended November
30, 1998 was 4%.
PURCHASE OF SHARES
Detailed information about the purchase, redemption and exchange of fund
shares appears in the prospectus.
General
Investors may purchase shares from a Salomon Smith Barney Financial
Consultant or a broker that clears through Salomon Smith Barney ("Dealer
Representative"). In addition, certain investors, including qualified
retirement plans purchasing through certain Dealer Representatives, may
purchase shares directly from the fund. When purchasing shares of the
fund, investors must specify whether the purchase is for Class A or Class
D shares. Salomon Smith Barney and Dealer Representatives 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 the transfer agent are not subject to a
maintenance fee.
Investors in 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 Retirement Plan, in the fund. Subsequent investments of at
least $50 may be made for all Classes. For shareholders purchasing shares
of the fund through the Systematic Investment Plan on a monthly basis, the
minimum initial investment requirement and subsequent investment
requirement for all Classes is $25. For shareholders purchasing shares of
the fund through the Systematic Investment Plan on a quarterly basis, the
minimum initial investment required for and the subsequent investment
requirement for all Classes is $50. There are no minimum investment
requirements for employees of Citigroup and its subsidiaries, including
Salomon Smith Barney, unitholders who invest distributions from a Unit
Investment Trust ("UIT") sponsored by Salomon Smith Barney, and
Trustees/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. Shares purchased will be held in the
shareholder's account by First Data. Share certificates are issued only
upon a shareholder's written request to First Data.
Purchase orders received by the fund or a Salomon Smith Barney Financial
Consultant 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 (the ''trade date''). Orders received
by a Dealer Representative 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 the fund's agent prior to its close of
business. For shares purchased through Salomon Smith Barney or a Dealer
Representative purchasing through Salomon Smith Barney, payment for shares
of the fund is due on the third business day 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, Salomon
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 shareholder's account held with a bank or other financial
institution on a monthly or quarterly basis as indicated by the
shareholder, to provide for systematic additions to the shareholder's fund
account. A shareholder who has insufficient funds to complete the
transfer will be charged a fee of up to $25 by Salomon Smith Barney or
First Data. The Systematic Investment Plan also authorizes Salomon Smith
Barney to apply cash held in the shareholder's Salomon 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 Salomon Smith Barney Financial Consultant
or a Dealer Representative.
Class D shares are offered to a limited group of investors who participate
in certain investment programs which charge a fee for participation,
including the Smith Barney 401(k) Platform program. In addition, Class D
shares are offered to tax-exempt employee benefit and retirement plans of
Salomon Smith Barney and its affiliates. For more information about these
programs, contact a Salomon Smith Barney Financial Consultant.
REDEMPTION OF SHARES
The right of redemption of shares of the fund may be suspended or the date
of payment postponed (a) for any periods during which the New York Stock
Exchange, Inc. (the "NYSE") is closed (other than for customary weekend
and holiday closings), (b) when trading in the markets the fund normally
utilizes is restricted, or an emergency exists, as determined by the SEC,
so that disposal of the fund's investments or determination of its net
asset value is not reasonably practicable or (c) for any other periods as
the SEC by order may permit for the protection of the fund's shareholders.
If the shares to be redeemed were issued in certificate form, the
certificates must be endorsed for transfer (or be accompanied by an
endorsed stock power) and must be submitted to First Data together with
the redemption request. Any signature appearing on a share certificate,
stock power or written redemption request in excess of $10,000 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 securities exchange.
Written redemption requests of $10,000 or less do not require a signature
guarantee unless more than one such redemption request is made in any
10-day period or the redemption proceeds are to be sent to an address
other than the address of record. Unless otherwise directed, 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.
If a shareholder holds shares in more than one Class, 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 Salomon Smith Barney, or
if the shareholder's account is not with Salomon 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 1940
Act, in extraordinary circumstances. Generally, if the redemption
proceeds are remitted to a Salomon Smith Barney brokerage account, these
funds will not be invested for the shareholder's benefit without specific
instruction and Salomon 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.
Distribution in Kind
If the board of trustees of the trust determines that it would be
detrimental to the best interests of the remaining shareholders to make a
redemption payment wholly in cash, the fund may pay, in accordance with
SEC rules, any portion of a redemption in excess of the lesser of $250,000
or 1.00% of the fund's net assets by a distribution in kind of portfolio
securities in lieu of cash. Shareholders may incur brokerage commissions
when they subsequently sell those securities.
Automatic Cash Withdrawal Plan
An automatic cash withdrawal plan (the "Withdrawal Plan") is available to
shareholders of the fund who own shares of the fund with a value of at
least $10,000 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
a fund, continued withdrawal payments will reduce the shareholder's
investment, and may ultimately exhaust it. Withdrawal payments should not
be considered as income from investment in a 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 of the fund who wish to participate in the Withdrawal Plan
and who hold their shares in certificate form must deposit their share
certificates with the transfer agent 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 involved. A shareholder who purchases shares directly through the
transfer agent may continue to do so and applications for participation in
the Withdrawal Plan must be received by the transfer agent 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 Salomon Smith Barney Financial Consultant.
Additional Information Regarding Telephone Redemption And Exchange Program
Neither the fund nor its agents will be liable for following instructions
communicated 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 number will be required and phone calls may be recorded).
The fund reserves the right to suspend, modify or discontinue the
telephone redemption and exchange program or to impose a charge for this
service at any time following at least seven (7) days' prior notice to
shareholders.
VALUATION OF SHARES
The net asset value per share of the fund's Classes 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. Because of the differences in distribution fees and
Class-specific expenses, the per share net asset value of each Class may
differ. The following is a description of the procedures used by the
trust 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 at the mean between
the closing bid and asked prices on each day, or, if market quotations for
those securities are not readily available, at fair value, as determined
in good faith by the fund'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 fund'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 fund'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
A fund's "average annual total return," as described below, is 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 a 1-, 5- or 10-
year period (or fractional portion
thereof), assuming reinvestment of all
dividends and distributions.
The ERV assumes complete redemption of the hypothetical investment at the
end of the measuring period. A fund's net investment income changes in
response to fluctuations in interest rates and the expenses of the fund.
Aggregate Annual Total Return
Class of Shares
1-Year
5-Year
10-
Year
Life
of
fund1
Class A
N/A
N/A
N/A
19.80%
Class D
N/A
N/A
N/A
9.00%
1 Class A and D commenced operations on January 5, 1998 and August 4,
1998, respectively.
Aggregate Total Return
The fund's "aggregate total return," as described below, represents the
cumulative change in the value of an investment in the fund for the
specified period and is 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
the 1-, 5- or 10-year period at the end of
the 1-, 5- or 10-year period (or fractional
portion thereof), assuming reinvestment of
all dividends and distributions.
The ERV assumes complete redemption of the hypothetical investment at the
end of the measuring period.
Average Annual Total Return
Class of Shares
1-Year
5-Year
10-
Year
Life
of
fund1
Class A
N/A
N/A
N/A
19.80%
Class D
N/A
N/A
N/A
9.00%
1 Class A and D commenced operations on January 5, 1998 and August 4,
1998, respectively.
Performance will vary from time to time depending upon market conditions,
the composition of the fund's portfolio and operating expenses and the
expenses exclusively attributable to the Class. Consequently, any given
performance quotation should not be considered representative of the
Class' performance for any specified period in the future. Because
performance will vary, it may not provide a basis for comparing an
investment in the Class with certain bank deposits or other investments
that pay a fixed yield for a stated period of time. Investors comparing a
Class' performance with that of other mutual funds should give
consideration to the quality and maturity of the respective investment
companies' portfolio securities.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Taxes
The following is a summary of the material United States federal income
tax considerations regarding the purchase, ownership and disposition of
shares of a fund. Each prospective shareholder is urged to consult his
own tax adviser with respect to the specific federal, state, local and
foreign tax consequences of investing in a fund. The summary is based on
the laws in effect on the date of this SAI, which are subject to change.
The Fund and Its Investments
The fund intends to continue to qualify to be treated as a regulated
investment company each taxable year under the Internal Revenue Code of
1986, as amended (the "Code"). To so qualify, the fund must, among other
things: (a) derive at least 90% of its gross income in each taxable year
from dividends, interest, payments with respect to securities loans and
gains from the sale or other disposition of stock or securities or foreign
currencies, or other income (including, but not limited to, gains from
options, futures or forward contracts) derived with respect to its
business of investing in such stock, securities or currencies; and (b)
diversify its holdings so that, at the end of each quarter of the fund's
taxable year, (i) at least 50% of the market value of the fund's assets is
represented by cash, securities of other regulated investment companies,
United States government securities and other securities, with such other
securities limited, in respect of any one issuer, to an amount not greater
than 5% of the fund's assets and not greater than 10% of the outstanding
voting securities of such issuer and (ii) not more than 25% of the value
of its assets is invested in the securities (other than United States
government securities or securities of other regulated investment
companies) of any one issuer or any two or more issuers that the fund
controls and are determined to be engaged in the same or similar trades or
businesses or related trades or businesses.
As a regulated investment company, the fund will not be subject to United
States federal income tax on its net investment income (i.e., income other
than its net realized long- and short-term capital gains) and its net
realized long- and short-term capital gains, if any, that it distributes
to its shareholders, provided an amount equal to at least 90% of the sum
of its investment company taxable income (i.e., 90% of its taxable income
minus the excess, if any, of its net realized long-term capital gains over
its net realized short-term capital losses (including any capital loss
carryovers), plus or minus certain other adjustments as specified in the
Code) and its net tax-exempt income for the taxable year is distributed in
compliance with the Code's timing and other requirements but will be
subject to tax at regular corporate rates on any taxable income or gains
it does not distribute. Furthermore, the fund will be subject to a United
States corporate income tax with respect to such distributed amounts in
any year it fails to qualify as a regulated investment company or fails to
meet this distribution requirement. The Code imposes a 4% nondeductible
excise tax on the fund to the extent it does not distribute by the end of
any calendar year at least 98% of its net investment income for that year
and 98% of the net amount of its capital gains (both long-and short-term)
for the one-year period ending, as a general rule, on October 31 of that
year. For this purpose, however, any income or gain retained by the fund
that is subject to corporate income tax will be considered to have been
distributed by year-end. In addition, the minimum amounts that must be
distributed in any year to avoid the excise tax will be increased or
decreased to reflect any underdistribution or overdistribution, as the
case may be, from the previous year. The fund anticipates that it will
pay such dividends and will make such distributions as are necessary in
order to avoid the application of this tax.
If, in any taxable year, the fund fails to qualify as a regulated
investment company under the Code or fails to meet the distribution
requirement, it would be taxed in the same manner as an ordinary
corporation and distributions to its shareholders would not be deductible
by the fund in computing its taxable income. In addition, in the event of
a failure to qualify, the fund's distributions, to the extent derived from
the fund's current or accumulated earnings and profits would constitute
dividends (eligible for the corporate dividends-received deduction) which
are taxable to shareholders as ordinary income, even though those
distributions might otherwise (at least in part) have been treated in the
shareholders' hands as long-term capital gains. If the fund fails to
qualify as a regulated investment company in any year, it must pay out its
earnings and profits accumulated in that year in order to qualify again as
a regulated investment company. In addition, if the fund failed to
qualify as a regulated investment company for a period greater than one
taxable year, the fund may be required to recognize any net built-in gains
(the excess of the aggregate gains, including items of income, over
aggregate losses that would have been realized if it had been liquidated)
in order to qualify as a regulated investment company in a subsequent
year.
The fund's transactions in foreign currencies, forward contracts, options
and futures contracts (including options and futures contracts on foreign
currencies) will be subject to special provisions of the Code (including
provisions relating to "hedging transactions" and "straddles") that, among
other things, may affect the character of gains and losses realized by the
fund (i.e., may affect whether gains or losses are ordinary or capital),
accelerate recognition of income to the fund and defer fund losses. These
rules could therefore affect the character, amount and timing of
distributions to shareholders. These provisions also (a) will require the
fund to mark-to-market certain types of the positions in its portfolio
(i.e., treat them as if they were closed out) and (b) may cause the fund
to recognize income without receiving cash with which to pay dividends or
make distributions in amounts necessary to satisfy the distribution
requirements for avoiding income and excise taxes. The fund will monitor
its transactions, will make the appropriate tax elections and will make
the appropriate entries in its books and records when it acquires any
foreign currency, forward contract, option, futures contract or hedged
investment in order to mitigate the effect of these rules and prevent
disqualification of the fund as a regulated investment company.
The fund's investment in Section 1256 contracts, such as regulated futures
contracts, most forward currency forward contracts traded in the interbank
market and options on most stock indices, are subject to special tax
rules. All section 1256 contracts held by the fund at the end of its
taxable year are required to be marked to their market value, and any
unrealized gain or loss on those positions will be included in the fund's
income as if each position had been sold for its fair market value at the
end of the taxable year. The resulting gain or loss will be combined with
any gain or loss realized by the fund from positions in section 1256
contracts closed during the taxable year. Provided such positions were
held as capital assets and were not part of a "hedging transaction" nor
part of a "straddle," 60% of the resulting net gain or loss will be
treated as long-term capital gain or loss, and 40% of such net gain or
loss will be treated as short-term capital gain or loss, regardless of the
period of time the positions were actually held by the fund.
Foreign Investments. Dividends or other income (including, in some cases,
capital gains) received by the fund from investments in foreign securities
may be subject to withholding and other taxes imposed by foreign
countries. Tax conventions between certain countries and the United
States may reduce or eliminate such taxes in some cases. The fund will
not be eligible to elect to treat any foreign taxes paid by it as paid by
its shareholders, who therefore will not be entitled to credits for such
taxes on their own tax returns. Foreign taxes paid by the fund will
reduce the return from the fund's investments.
Passive Foreign Investment Companies. If the fund purchases shares in
certain foreign investment entities, called "passive foreign investment
companies" (a "PFIC"), it may be subject to United States federal income
tax on a portion of any "excess distribution" or gain from the disposition
of such shares even if such income is distributed as a taxable dividend by
the fund to its shareholders. Additional charges in the nature of
interest may be imposed on the fund in respect of deferred taxes arising
from such distributions or gains. If the fund were to invest in a PFIC
and elected to treat the PFIC as a "qualified electing fund" under the
Code, in lieu of the foregoing requirements, the fund might be required to
include in income each year a portion of the ordinary earnings and net
capital gains of the qualified electing fund, even if not distributed to
the fund, and such amounts would be subject to the 90% and excise tax
distribution requirements described above. In order to make this
election, the fund would be required to obtain certain annual information
from the passive foreign investment companies in which it invests, which
may be difficult or not possible to obtain.
Recently, legislation was enacted that provides a mark-to-market election
for regulated investment companies effective for taxable years beginning
after December 31, 1997. This election would result in the fund being
treated as if it had sold and repurchased all of the PFIC stock at the end
of each year. In this case, the fund would report gains as ordinary
income and would deduct losses as ordinary losses to the extent of
previously recognized gains. The election, once made, would be effective
for all subsequent taxable years of the fund, unless revoked with the
consent of the IRS. By making the election, the fund could potentially
ameliorate the adverse tax consequences with respect to its ownership of
shares in a PFIC, but in any particular year may be required to recognize
income in excess of the distributions it receives from PFICs and its
proceeds from dispositions of PFIC company stock. The fund may have to
distribute this "phantom" income and gain to satisfy its distribution
requirement and to avoid imposition of the 4% excise tax. The fund will
make the appropriate tax elections, if possible, and take any additional
steps that are necessary to mitigate the effect of these rules.
Taxation of United States Shareholders
Dividends and Distributions. Any dividend declared by the fund in
October, November or December of any calendar year and payable to
shareholders of record on a specified date in such a month shall be deemed
to have been received by each shareholder on December 31 of such calendar
year and to have been paid by the fund not later than such December 31,
provided such dividend is actually paid by the fund during January of the
following calendar year. The fund intends to distribute annually to its
shareholders substantially all of its investment company taxable income,
and any net realized long-term capital gains in excess of net realized
short-term capital losses (including any capital loss carryovers). The
fund currently expects to distribute any excess annually to its
shareholders. However, if the fund retains for investment an amount equal
to all or a portion of its net long-term capital gains in excess of its
net short-term capital losses and capital loss carryovers, it will be
subject to a corporate tax (currently at a rate of 35%) on the amount
retained. In that event, the fund will designate such retained amounts as
undistributed capital gains in a notice to its shareholders who (a) will
be required to include in income for United Stares federal income tax
purposes, as long-term capital gains, their proportionate shares of the
undistributed amount, (b) will be entitled to credit their proportionate
shares of the 35% tax paid by the fund on the undistributed amount against
their United States federal income tax liabilities, if any, and to claim
refunds to the extent their credits exceed their liabilities, if any, and
(c) will be entitled to increase their tax basis, for United States
federal income tax purposes, in their shares by an amount equal to 65% of
the amount of undistributed capital gains included in the shareholder's
income. Organizations or persons not subject to federal income tax on
such capital gains will be entitled to a refund of their pro rata share of
such taxes paid by the fund upon filing appropriate returns or claims for
refund with the Internal Revenue Service (the "IRS").
Dividends of net investment income and distributions of net realized
short-term capital gains are taxable to a United States shareholder as
ordinary income, whether paid in cash or in shares. Distributions of net-
long-term capital gains, if any, that the fund designates as capital gains
dividends are taxable as long-term capital gains, whether paid in cash or
in shares and regardless of how long a shareholder has held shares of the
fund. Dividends and distributions paid by the fund attributable to
dividends on stock of U.S. corporations received by the fund, with respect
to which the fund meets certain holding period requirements, will be
eligible for the deduction for dividends received by corporations.
Distributions in excess of the fund's current and accumulated earnings and
profits will, as to each shareholder, be treated as a tax-free return of
capital to the extent of a shareholder's basis in his shares of the fund,
and as a capital gain thereafter (if the shareholder holds his shares of
the fund as capital assets).
Shareholders receiving dividends or distributions in the form of
additional shares should be treated for United States federal income tax
purposes as receiving a distribution in the amount equal to the amount of
money that the shareholders receiving cash dividends or distributions will
receive, and should have a cost basis in the shares received equal to such
amount.
Investors considering buying shares just prior to a dividend or capital
gain distribution should be aware that, although the price of shares just
purchased at that time may reflect the amount of the forthcoming
distribution, such dividend or distribution may nevertheless be taxable to
them. If the fund is the holder of record of any stock on the record date
for any dividends payable with respect to such stock, such dividends are
included in the fund's gross income not as of the date received but as of
the later of (a) the date such stock became ex-dividend with respect to
such dividends (i.e., the date on which a buyer of the stock would not be
entitled to receive the declared, but unpaid, dividends) or (b) the date
the fund acquired such stock. Accordingly, in order to satisfy its income
distribution requirements, the fund may be required to pay dividends based
on anticipated earnings, and shareholders may receive dividends in an
earlier year than would otherwise be the case.
Sales of Shares. Upon the sale or exchange of his shares, a shareholder
will realize a taxable gain or loss equal to the difference between the
amount realized and his basis in his shares. Such gain or loss will be
treated as capital gain or loss, if the shares are capital assets in the
shareholder's hands, and will be long-term capital gain or loss if the
shares are held for more than one year and short-term capital gain or loss
if the shares are held for one year or less. Any loss realized on a sale
or exchange will be disallowed to the extent the shares disposed of are
replaced, including replacement through the reinvesting of dividends and
capital gains distributions in the fund, within a 61-day period beginning
30 days before and ending 30 days after the disposition of the shares. In
such a case, the basis of the shares acquired will be increased to reflect
the disallowed loss. Any loss realized by a shareholder on the sale of a
fund share held by the shareholder for six months or less will be treated
for United States federal income tax purposes as a long-term capital loss
to the extent of any distributions or deemed distributions of long-term
capital gains received by the shareholder with respect to such share. If a
shareholder incurs a sales charge in acquiring shares of the fund,
disposes of those shares within 90 days and then acquires shares in a
mutual fund for which the otherwise applicable sales charge is reduced by
reason of a reinvestment right (e.g., an exchange privilege), the original
sales charge will not be taken into account in computing gain/loss on the
original shares to the extent the subsequent sales charge is reduced.
Instead, the disregarded portion of the original sales charge will be
added to the tax basis in the newly acquired shares. Furthermore, the
same rule also applies to a disposition of the newly acquired shares made
within 90 days of the second acquisition. This provision prevents a
shareholder from immediately deducting the sales charge by shifting his or
her investment in a family of mutual funds.
Backup Withholding. The fund may be required to withhold, for United
States federal income tax purposes, 31% of the dividends, distributions
and redemption proceeds payable to shareholders who fail to provide the
fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRS that they are subject
to backup withholding. Certain shareholders are exempt from backup
withholding. Backup withholding is not an additional tax and any amount
withheld may be credited against a shareholder's United States federal
income tax liabilities.
Notices. Shareholders will be notified annually by the fund as to the
United States federal income tax status of the dividends, distributions
and deemed distributions attributable to undistributed capital gains
(discussed above in "Taxes- Taxation of United States Shareholders -
Dividends and Distributions") made by the fund to its shareholders.
Furthermore, shareholders will also receive, if appropriate, various
written notices after the close of the fund's taxable year regarding the
United States federal income tax status of certain dividends,
distributions and deemed distributions that were paid (or that are treated
as having been paid) by the fund to its shareholders during the preceding
taxable year.
Other Taxation
Distributions also may be subject to additional state, local and foreign
taxes depending on each shareholder's particular situation.
The foregoing is only a summary of certain material tax consequences
affecting the fund and its shareholders. Shareholders are advised to
consult their own tax advisers with respect to the particular tax
consequences to them of an investment in the fund.
ADDITIONAL INFORMATION
The trust was organized on October 17, 1991 under the laws of the
Commonwealth of Massachusetts and is a business entity commonly known as a
"Massachusetts business trust." The trust offers shares of beneficial
interest of five separate funds with a par value of $.001 per share. The
fund offers shares of beneficial interest currently classified into four
Classes - A, B, L Y and Z. Each Class of the fund represents an identical
interest in the fund's investment portfolio. As a result, the Classes
have the same rights, privileges and preferences, except with respect to:
(a) the designation of each Class; (b) the effect of the respective sales
charges; if any, for each class; (c) the distribution and/or service fees
borne by each Class pursuant to the Plan; (d) the expenses allocable
exclusively to each Class; (e) voting rights on matters exclusively
affecting a single Class; (f) the exchange privilege of each Class; and
(g) the conversion feature of the Class B shares. The trust's board of
trustees does not anticipate that there will be any conflicts among the
interests of the holders of the different Classes. The trustees, on an
ongoing basis, will consider whether any such conflict exists and, if so,
take appropriate action.
Under Massachusetts's law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the fund.
The Master Trust Agreement disclaims shareholder liability for acts or
obligations of the fund, however, and requires that notice of such
disclaimer be given in each agreement, obligation or instrument entered
into or executed by the fund or a trustee. The Master Trust Agreement
provides for indemnification from fund property for all losses and
expenses of any shareholder held personally liable for the obligations of
the fund. Thus, the risk of a shareholder's incurring financial loss on
account of shareholder liability is limited to circumstances in which the
fund itself would be unable to meet its obligations, a possibility which
management of the fund believes is remote. Upon payment of any liability
incurred by the fund, a shareholder paying such liability will be entitled
to reimbursement from the general assets of the fund. The trustees intend
to conduct the operation of the fund in such a way so as to avoid, as far
as possible, ultimate liability of the shareholders for liabilities of the
fund.
The Master Trust Agreement of the fund permits the trustees of the fund to
issue an unlimited number of full and fractional shares of a single class
and to divide or combine the shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interests in
the fund. Each share in the fund represents an equal proportional
interest in the fund with each other share. Shareholders of the fund are
entitled upon its liquidation to share pro rata in its net assets
available for distribution. No shareholder of the fund has any preemptive
or conversion rights. Shares of the fund are fully paid and non-
assessable.
Pursuant to the Master Trust Agreement, the fund's trustees may authorize
the creation of additional series of shares (the proceeds of which would
be invested in separate, independently managed portfolios) and additional
classes of shares within any series (which would be used to distinguish
among the rights of different categories of shareholders, as might be
required by future regulations or other unforeseen circumstances).
The fund does not hold annual shareholder meetings. There normally will be
no meetings of shareholders for the purpose of electing trustees unless
and until such time as less than a majority of the trustees holding office
have been elected by shareholders, at which time the trustees then in
office will call a shareholders' meeting for the election of trustees.
Shareholders of record of no less than two-thirds of the outstanding
shares of the trust may remove a trustee through a declaration in writing
or by vote cast in person or by proxy at a meeting called for that
purpose. The trustees will call a meeting for any purpose upon written
request of shareholders holding at least 10% of the trust's outstanding
shares and the trust will assist shareholders in calling such a meeting as
required by the 1940 Act.
When matters are submitted for shareholder vote, shareholders of each
Class will have one vote for each full share owned and a proportionate,
fractional vote for any fractional share held of that Class. Generally,
shares of the fund will be voted on a fund-wide basis on all matters
except matters affecting only the interests of one Class, in which case
only shares of the affected Class would be entitled to vote.
The trust was organized as an unincorporated Massachusetts business trust
on October 17, 1991 under the name Shearson Lehman Brothers Intermediate-
Term Trust. On October 14, 1994 and August 16, 1995, the Trust's name was
changed Smith Barney Income Trust and Smith Barney Investment Trust,
respectively.
Annual and Semi-annual Reports. The fund sends its shareholders a semi-
annual report and an audited annual report, which include listings of
investment securities held by the fund at the end of the period covered.
In an effort to reduce the fund's printing and mailing costs, the fund
consolidates 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 also consolidates the mailing of its
prospectus so that a shareholder having multiple accounts (that is,
individual, IRA and/or Self-Employed Retirement Plan accounts) will
receive a single Prospectus annually. Shareholders who do not want this
consolidation to apply to their accounts should contact their Salomon
Smith Barney Financial Consultant or the transfer agent.
FINANCIAL STATEMENTS
The fund's annual report for the fiscal year ended November 30, 1998 is
incorporated herein by reference in its entirety. The annual report was
filed on February 26, 1999, Accession Number 91155-99-102.
"S&P 500(r)" is a trademark of The McGraw-Hill Companies, Inc. and has been
licensed for use by Salomon Smith Barney. The fund is not sponsored,
endorsed, sold or promoted by Standard & Poor's (S&P), a division of The
McGraw-Hill Companies, Inc. S&P makes no representation or warranty,
express or implied, to the shareholders of the fund or any member of the
public regarding the advisability of investing in securities generally or
in the fund particularly or the ability of the S&P 500 Index to track
general stock market performance. S&P's only relationship to Salomon
Smith Barney is the licensing of certain trademarks and trade names of S&P
and the S&P 500 Index which is determined, composed and calculated by S&P
without regard to Salomon Smith Barney or the fund. S&P has no obligation
to take the needs of Salomon Smith Barney or the shareholders of the fund
into consideration in determining, composing or calculating the S&P 500
Index. S&P is not responsible for and has not participated in the
determination of the prices and 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 THE FUND, 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 OR
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE 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 LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
SMITH BARNEY
INVESTMENT TRUST
S&P 500 Index Fund
March 30, 1999
SMITH BARNEY INVESTMENT TRUST
388 Greenwich Street
New York, NY 10013
SALOMON SMITH BARNEY
A Member of Citigroup [Symbol]
PART C - OTHER INFORMATION
Item 23. 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).
(a)(1) Registrant's Master Trust Agreement
dated
October 17, 1991 and Amendments to the Master Trust
Agreement dated November 21, 1991 and July 30,1993,
respectively, are incorporated by reference to Post-
Effective Amendment No. 4 to the Registration
Statement filed on January 28, 1994 (Post-Effective
Amendment No. 4).
(a)(2) Amendments to the Master Trust
Agreement
dated October 14, 1994 and November 7, 1994,
respectively, are incorporated by reference to the
Registration Statement filed on Form N-14 on January
6, 1995 (the N-14).
(a)(3) 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).
(a)(4) Amended and Restated Master Trust
Agreement
dated February 28, 1998 is incorporated by reference
to Post Effective Amendment No. 18 to the
Registration
Statement filed on March 30, 1998 (Post-
Effective Amendment No, 18)
(a)(5) Amendment No. 1 to the First Amended and
Restated
Master Trust Agreement dated June 1, 1998
is incorporated by reference to Post-Effective
Amendment No.20 to the
Registration Statement filed on June 26, 1998.
(a)(6) Amendment No. 2 to the First Amended and
Restated Master
Trust Agreement dated October 16, 1998 is
incorporated by reference
to Post-Effective Amendment No.21 to the Registration
Statement
filed on November 12, 1998.
(b) Registrant's by-laws are incorporated by
reference to the Registration Statement.
(c)(1) Registrant's form of stock certificate
for Smith Barney S&P 500 Index Fund is incorporated
by
reference to Post-Effective Amendment No. 16 to the
Registration Statement filed on December 29, 1997.
(c)(2) Registrant's form of stock certificate
for Smith Barney Large Capitalization Growth Fund is
incorporated by reference to Post-Effective Amendment
No.17 to the Registration Statement filed on
February 20, 1998 (Post-Effective Amendment No. 17).
(c)(3) Registrant's form of stock certificate
for
Smith Barney Mid Cap Blend Fund is incorporated by
reference to Post-Effective Amendment No. 22 to the
Registration Statement filed on January 28, 1999
(Post-Effective Amendment No. 22).
(d)(1) 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).
(d)(2) 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 Mutual Management Corp. is incorporated by
reference to the N-14.
(d)(3) 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)(4) 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
incorporated by reference to Post Effective Amendment
No. 15 to the Registration Statement
filed on December 12, 1997.
(d)(5) Form of Investment Management Agreement
between the Registrant on behalf of Smith Barney
Large Capitalization Growth Fund and Mutual
Management Corp.("MMC") (f/k/a Smith Barney Mutual
Funds
Management Inc.) is incorporated by reference to
Post-Effective Amendment No. 17 to the Registration
Statement filed on February 20,1998 (Post-Effective
Amendment No. 17)
(d)(6) Form of Investment Management Agreement
between Smith Barney Mid Cap Blend Fund and MMC.
is incorporated by reference to Post-Effective
Amendment
No. 17 to the Registration Statement filed on
February 20,1998
(Post-Effective Amendment No. 17)
(e)(1) Distribution Agreement between the
Registrant and Smith Barney Shearson Inc. dated July
30, 1993 is incorporated by reference to Post-
Effective Amendment No. 3.
(e)(2) 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.
(e)(3) Distribution Agreement between the
Registrant
and CFBDS, Inc. dated October 8, 1998 is incorporated
by reference
to Post-Effective Amendment No.21 to the Registration
Statement
Filed on November 12, 1998.
(e)(4) Selling Group Agreement between CFBDS
Inc. And
Salomon Smith Barney is incorporated by reference to
Post-Effective
Amendment No. 24 to the Registration Statement filed
on March 30, 1999
(Post-Effective Amendment No.24).
(f) Not Applicable.
(g) Form of Custody Agreement with PNC Bank,
National Association, is incorporated by reference to
Post-Effective Amendment No. 9.
(h)(1) 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.
(h)(2) 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.
(h)(3) Form of Administration Agreement
between
the Registrant on behalf of Smith Barney S&P 500
Index Fund and Mutual Management Corp. is
incorporated by reference to Post Effective Amendment
No. 15.
(h)(4) Transfer Agency Agreement with First
Data
Investor Services Group, Inc. is incorporated by
reference
to Post-Effective Amendment No. 3.
(h)(5) 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.
(h)(6) Form of Administration Agreement
between
the Registrant on behalf of Smith Barney U.S. 5000
Index
Fund ("U.S. 5000 Index Fund") and SSB Citi Fund
Management LLC ("SSB Citi") is incorporated by
reference to
Post-Effective Amendment No. 26 to the Registration
Statement
filed on October 13, 1999 (Post-Effective Amendment
No. 26).
(h)(7) Form of Administration Agreement
between
the Registrant on behalf of Smith Barney EAFE Index
Fund
("EAFE Index Fund") and SSB Citi is incorporated by
reference
to Post-Effective Amendment No. 26.
(i) 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.
(i)(2) Legal Counsel's consent is incorporated
by
reference to Post-Effective Amendment No. 24.
(j)(1) Auditor's consent is incorporated by
reference
to Post-Effective Amendment No. 24.
(j)(2) Auditor's consent is filed herein.
(k) Not Applicable.
(l) Purchase Agreement between the Registrant
and Shearson Lehman Brothers Inc. is incorporated by
reference to Pre-Effective Amendment No. 1.
(m)(1) 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.
(m)(2) 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.
(m)(3) 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 incorporated by reference to Post Effective
Amendment No. 15.
(m)(4) Form of Service and Distribution Plan
pursuant to Rule 12b-1 between the Registrant on
behalf
of the Fund and Smith Barney Large Capitalization
Growth
Fund is incorporated by reference to Post
Effective Amendment No. 17 to the Registration
Statement filed on February 20, 1998 (Post-Effective
Amendment
No. 17).
(m)(5) Form of Amended and Restated
Service and Distribution Plan
pursuant to Rule 12b-1 between the Registrant on
behalf
of the Funds is incorporated by
reference to Post-Effective Amendment No. 22.
(m)(6) Form of Shareholder Services Plan
pursuant to Rule 12b-1 between the Registrant on
behalf of the U.S. 5000 Index Fund and Salomon
Smith Barney Inc. is incorporated by reference to
Post-Effective Amendment No. 26.
(m)(7) Form of Shareholder Services Plan
pursuant to Rule 12b-1 between the Registrant on
behalf of the EAFE Index Fund and Salomon
Smith Barney Inc. is incorporated by reference
to Post-Effective Amendment No. 26.
(n)(1) Financial Data Schedule is incorporated by
reference to
Post-Effective Amendment No. 24.
(n)(2) Financial Data Schedule is filed herein.
(o)(1) 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.
(o)(2) Rule 18f-3(d) Multiple Class Plan of the
Registrant
is incorporated by reference to Post-Effective
Amendment No. 22.
(p) Code of Ethics is filed herein.
Item 24. Persons Controlled by or under Common
Control with Registrant
None
Item 25. Indemnification
The response to this item is incorporated by
reference to Pre-Effective Amendment No. 1.
Item 26(a). Business and Other Connections of
Investment Adviser
Investment Adviser - SSB Citi Fund Management LLC
("SSB Citi")
(successor to as Mutual Management Corp. Smith Barney
Mutual Funds
Management Inc. and Smith, Barney Advisers, Inc.) was
incorporated in
December 1968 under the laws of the State of
Delaware.
On September 21, 1999, SSB Citi was converted into a
Delaware Limited
Liability Company. SSB Citi is a wholly owned
subsidiary of Salomon
Smith Barney Holdings Inc. ("Holdings"), which in
turn is a wholly
owned subsidiary of Citigroup Inc. (formerly known as
Travelers
Group Inc.). SSB Citi is registered as an investment
adviser under the
Investment Advisers Act of 1940 (the "Advisers Act")
and has, through its
predecessors, been in the investment counseling
business since 1968.
SSB Citi serves as the Investment Adviser and
Administrator
for Smith Barney Intermediate Maturity California
Fund and Smith Barney Intermediate Maturity New York
Fund and Investment Manager for Smith Barney Large
Capitalization Growth Fund and Smith Barney Mid Cap
Blend Fund.
SSB Citi also serves as the administrator to the
Smith Barney S&P 500
Index Fund, the Smith Barney U.S. 5000 Index Fund and
the
Smith Barney EAFE Index Fund.
The list required by this Item 26 of officers and
directors of SSB
Citi 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 SSB Citi
pursuant to the Advisers Act (SEC File No. 801-8314).
Investment Adviser - Travelers Investment Management
Company. (TIMCO). TIMCO serves as the investment
adviser for Smith Barney S&P 500 Index Fund pursuant
to a written
agreement (the Advisory Agreement). TIMCO was
incorporated on August 31, 1967 under the laws of the
State of Connecticut. TIMCO is a wholly owned
subsidiary of Holdings, which in turn is a wholly
owned
subsidiary of Citigroup.
TIMCO is registered as an investment adviser under
the Investment Advisers Act of 1940 (the Advisers
Act) since 1971 and has, through its predecessors,
been in the investment counseling business since
1967.
The list required by this Item 26 of the officers
and directors of TIMCO 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 SSBC pursuant to the
Advisers Act (SEC File No.801-07212).
Item 27. Principal Underwriters
(a) CFBDS, Inc. the Registrant's Distributor, is also
the distributor for
CitiFundsSM International Growth & Income Portfolio,
CitiFundsSM International Equity Portfolio,
CitiFundsSM Large Cap
Growth Portfolio, CitiFundsSM Intermediate Income
Portfolio,
CitiFundsSM Short-Term U.S. Government Income
Portfolio,
CitiFundsSM Emerging Asian Markets Equity Portfolio,
CitiFundsSM U.S. Treasury Reserves, CitiFundsSM Cash
Reserves,
CitiFundsSM Premium U.S. Treasury Reserves,
CitiFundsSM Premium Liquid Reserves, CitiFundsSM
Institutional U.S.
Treasury Reserves, CitiFundsSM Institutional Liquid
Reserves,
SM Institutional Cash Reserves, CitiFundsSM Tax Free
Reserves,
CitiFundsSM Institutional Tax Free Reserves,
CitiFundsSM California Tax Free Reserves,
CitiFundsSM Connecticut Tax Free Reserves,
CitiFundsSM New York Tax Free Reserves, CitiFundsSM
Balanced Portfolio,
CitiFundsSM Small Cap Value Portfolio, CitiFundsSM
Growth & Income
Portfolio,CitiFundsSM Small Cap Growth Portfolio,
CitiFundsSM National
Tax Free Income Portfolio, CitiFundsSM New York Tax
Free Income
Portfolio,CitiSelect VIP Folio 200, Citiselect VIP
Folio 300,
CitiSelect VIP Folio 400, CitiSelect VIP Folio 500,
CitiFundsSM Small Cap Growth VIP Portfolio,
CitiSelect Folio 200,
CitiSelect Folio 300, CitiSelect Folio 400, and
CitiSelect Folio
500.
CFBDS is also the placement agent for Large Cap Value
Portfolio,
International Portfolio, Foreign Bond Portfolio,
Intermediate Income Portfolio, Short-Term Portfolio,
Growth & Income Portfolio, Large Cap Growth
Portfolio,
Small Cap Growth Portfolio, International Equity
Portfolio,
Balanced Portfolio, Government Income Portfolio,
Emerging
Asian Markets Equity Portfolio, Tax Free Reserves
Portfolio,
Cash Reserves Portfolio and U.S. Treasury Reserves
Portfolio.
CFBDS, Inc. is also the distributor for the following
Smith Barney Mutual Fund registrants:
Concert Investment Series
Consulting Group Capital Markets Funds
Greenwich Street Series Fund
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 Allocation Series Inc.
Smith Barney Equity Funds
Smith Barney Fundamental Value Fund Inc.
Smith Barney Funds, Inc.
Smith Barney Income Funds
Smith Barney Institutional Cash Management Fund, Inc.
Smith Barney Investment Funds Inc.
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 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 Small Cap Blend Fund, Inc.
Smith Barney Telecommunications Trust
Smith Barney Variable Account Funds
Smith Barney World Funds, Inc.
Travelers Series Fund Inc.
And various series of unit investment trusts.
CFBDS also serves as the distributor for the
following funds: The
Travelers Fund UL for Variable Annuities, The
Travelers Fund VA for
Variable Annuities, The Travelers Fund BD for
Variable Annuities, The
Travelers Fund BD II for Variable Annuities, The
Travelers Fund BD
III for Variable Annuities, The Travelers Fund BD IV
for Variable
Annuities, The Travelers Fund ABD for Variable
Annuities, The
Travelers Fund ABD II for Variable Annuities, The
Travelers Separate
Account PF for Variable Annuities, The Travelers
Separate Account PF
II for Variable Annuities, The Travelers Separate
Account QP for
Variable Annuities, The Travelers Separate Account TM
for Variable
Annuities, The Travelers Separate Account TM II for
Variable
Annuities, The Travelers Separate Account Five for
Variable
Annuities, The Travelers Separate Account Six for
Variable Annuities,
The Travelers Separate Account Seven for Variable
Annuities, The
Travelers Separate Account Eight for Variable
Annuities, The
Travelers Fund UL for Variable Annuities, The
Travelers Fund UL II
for Variable Annuities, The Travelers Variable Life
Insurance
Separate Account One, The Travelers Variable Life
Insurance Separate
Account Two, The Travelers Variable Life Insurance
Separate Account
Three, The Travelers Variable Life Insurance Separate
Account Four,
The Travelers Separate Account MGA, The Travelers
Separate Account
MGA II, The Travelers Growth and Income Stock Account
for Variable
Annuities, The Travelers Quality Bond Account for
Variable Annuities,
The Travelers Money Market Account for Variable
Annuities, The
Travelers Timed Growth and Income Stock Account for
Variable
Annuities, The Travelers Timed Short-Term Bond
Account for Variable
Annuities, The Travelers Timed Aggressive Stock
Account for Variable
Annuities, The Travelers Timed Bond Account for
Variable Annuities.
CFBDS, Inc. is also the distributor for the following
Salomon Brothers funds;
Salomon Brothers Opportunity Fund Inc
Salomon Brothers Investors Fund Inc
Salomon Brothers Capital Fund Inc
Salomon Brothers Series Funds Inc
Salomon Brothers Institutional Series Funds Inc
Salomon Brothers Variable Series Funds Inc
In addition, CFBDS is also the distributor for the
Centurion Funds,
Inc.
(b) The information required by this Item 27 with
respect to each
director and officer of CFBDS is incorporated by
reference to
Schedule A of Form BD filed by CFBDS pursuant to the
Securities and
Exchange Act of 1934 (File No. 8-32417).
(c) Not applicable.
Item 28. Location of Accounts and Records
(1) Smith Barney Investment Trust
388 Greenwich Street, 22nd Floor
New York, New York 10013
(2) With respect to the Registrant's Administrator:
SSB Citi Fund Management LLC
Formerly known as SSBC Fund Management Inc.
388 Greenwich Street, 22nd Floor
New York, New York 10013
(3) With respect to the Registrant's Investment
Adviser:
Travelers Investment Management Company
One Tower Square
Hartford, CT 06183
(For Smith Barney S&P 500 Index Fund)
(4) With respect to the Registrant's Custodian:
(a) PNC Bank, National Association
17th and Chestnut Streets
Philadelphia, PA
(Custodian for Smith Barney Intermediate
Maturity
California Municipals Fund, Smith Barney
Intermediate
Maturity New York Municipals Fund, Smith Barney
Large Capitalization Growth Fund and Smith
Barney
Mid Cap Blend Fund and Smith Barney S&P 500
Index Fund)
(b) Investors Bank and Trust Company
200 Clarendon Street
Boston, Massachusetts 02117-9130
(Custodian for Smith Barney U.S. 5000 Index
Fund and
Smith Barney EAFE Index Fund)
(5) With respect to the Registrant's Sub-Transfer
Agent:
PFPC Global Fund Services
One Exchange Place
Boston, Massachusetts 02109
(6) With respect to the Registrant's Distributor:
CFBDS Inc.
21 Milk Street, 5th floor
Boston, Massachusetts 02109
Item 29. Management Services
Not Applicable.
Item 30. Undertakings
Not applicable
EXHIBIT INDEX
Exhibit No. Exhibit
(j)(2) Consent of Auditor's
(n)(2) Financial Data Schedule
(p) Code of Ethics
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, and the Investment Company Act of 1940,
the Fund certifies that it meets all of the
requirements for effectiveness
of this registration statement under rule 485(b)
under the Securities
Act and 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 28th day of March, 2000.
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 Chairman of the Board
03/28/00
Heath B. McLendon (Chief Executive Officer)
and President
/s/Lewis E. Daidone Treasurer
03/28/00
Lewis E. Daidone (Chief Financial and
Accounting Officer)
/s/Herbert Barg* Trustee
03/28/00
Herbert Barg
/s/Alfred J. Bianchetti* Trustee
03/28/00
Alfred J. Bianchetti
/s/Martin Brody* Trustee
03/28/00
Martin Brody
/s/Dwight B. Crane* Trustee
03/28/00
Dwight B. Crane
/s/Burt N. Dorsett* Trustee
03/28/00
Burt N. Dorsett
/s/Elliot S. Jaffe* Trustee
03/28/00
Elliot S. Jaffe
/s/Stephen E. Kaufman* Trustee
03/28/00
Stephen E. Kaufman
/s/Joseph J. McCann* Trustee
03/28/00
Joseph J. McCann
/s/Cornelius C. Rose, Jr.* Trustee
03/28/00
Cornelius C. Rose, Jr.
_____________________________________________________
________________
* Signed by Heath B. McLendon, their duly authorized
attorney-in-fact, pursuant to power
of attorney dated January 27, 1995.
/s/ Heath B. McLendon
Heath B. McLendon
Independent Auditors' Consent
To the Shareholders and Board of Trustees of
Smith Barney S & P 500 Index Fund:
We consent to the incorporation by reference, in this
Supplement to the Prospectus, of our report dated
February 11, 2000, on the statement of assets and
liabilities for the Smith Barney S & P 500 Index Fund
(the Fund) as of December 31, 1999 and the related
statements of operations and changes in net assets for
the one month period then ended and for the year ended
November 30, 1999, and the financial highlights for
the one month period ended December 31, 1999, for the
year ended November 30, 1999, and for the period from
January 5, 1998 (commencement of operations) to
November 30, 1998. These financial statements and
financial highlights and our report thereon are
included in the Annual Report of the Fund as filed on
Form N-30D.
We also consent to the reference to our firm under the
heading "Financial Highlights" in the Supplement to
the Prospectus.
KPMG LLP
New York, New York
March 27, 2000
Page
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PERSONAL INVESTMENT POLICY
FOR
SSB CITI ASSET MANAGEMENT GROUP - NORTH AMERICA
AND CERTAIN REGISTERED INVESTMENT COMPANIES
SSB Citi Asset Management Group ("SSB Citi") , and
those U.S.?registered investment companies advised or
managed by SSB Citi that have adopted this policy
("Funds"), have adopted this policy on securities
transactions in order to accomplish two goals: first,
to minimize conflicts and potential conflicts of
interest between employees of SSB Citi and SSB Citi's
clients (including the Funds), and between Fund
directors or trustees and their Funds, and second, to
provide policies and procedures consistent with
applicable law, including Rule 17j-1 under the
Investment Company Act of 1940, to prevent fraudulent
or manipulative practices with respect to purchases
or sales of securities held or to be acquired by
client accounts. All U.S. employees of SSB Citi,
including employees who serve as Fund officers or
directors, and all directors or trustees
("directors") of each Fund, are Covered Persons under
this policy. Other Covered Persons are described in
Section II below.
I. Statement of Principles - All SSB Citi
employees owe a fiduciary duty to SSB Citi's clients
when conducting their personal investment
transactions. Employees must place the interests of
clients first and avoid activities, interests and
relationships that might interfere with the duty to
make decisions in the best interests of the clients.
All Fund directors owe a fiduciary duty to each Fund
of which they are a director and to that Fund's
shareholders when conducting their personal
investment transactions. At all times and in all
matters Fund directors shall place the interests of
their Funds before their personal interests. The
fundamental standard to be followed in personal
securities transactions is that Covered Persons may
not take inappropriate advantage of their positions.
All personal securities transactions by Covered
Persons shall adhere to the requirements of this
policy and shall be conducted in such a manner as to
avoid any actual or potential conflict of interest,
the appearance of such a conflict, or the abuse of
the person's position of trust and responsibility.
While this policy is designed to address both
identified conflicts and potential conflicts, it
cannot possibly be written broadly enough to cover
all potential situations. In this regard, Covered
Persons are expected to adhere not only to the
letter, but also the spirit of the policies contained
herein.
Employees are reminded that they also are subject to
other Citigroup policies, including policies on
insider trading, the purchase and sale of securities
listed on any applicable SSB Citi restricted list,
the receipt of gifts and service as a director of a
publicly traded company. Employees must never trade
in a security or commodity while in possession of
material, non-public information about the issuer or
the market for those securities or commodities, even
if the employee has satisfied all other requirements
of this policy.
The reputation of SSB Citi and its employees for
straightforward practices and integrity is a
priceless asset, and all employees have the duty and
obligation to support and maintain it when conducting
their personal securities transactions.
II. Applicability - SSB Citi Employees - This
policy applies to all U.S. employees of SSB Citi,
including part-time employees. Each employee,
including employees who serve as Fund officers or
directors, must comply with all of the provisions of
the policy applicable to SSB Citi employees unless
otherwise indicated. Certain employees are considered
to be "investment personnel" (i.e., portfolio
managers, traders and research analysts (and each of
their assistants)), and as such, are subject to
certain additional restrictions outlined in the
policy. All other employees of SSB Citi are
considered to be "advisory personnel."
Generally, temporary personnel and consultants
working in any SSB Citi business are subject to the
same provisions of the policy as full-time employees,
and their adherence to specific requirements will be
addressed on a case-by-case basis.
The personal investment policies, procedures and
restrictions referred to herein also apply to an
employee's spouse and minor children. The policies
also apply to any other account over which the
employee is deemed to have beneficial ownership. This
includes: accounts of any immediate family members
sharing the same household as the employee; accounts
of persons or other third parties for whom the
employee exercises investment discretion or gives
investment advice; a legal vehicle in which the
employee has a direct or indirect beneficial interest
and has power over investment decisions; accounts for
the benefit of a third party (e.g., a charity) which
may be directed by the employee (other than in the
capacity of an employee); and any account over which
the employee may be deemed to have control. For a
more detailed description of beneficial ownership,
see Exhibit A attached hereto.
These policies place certain restrictions on the
ability of an employee to purchase or sell securities
that are being or have been purchased or sold by an
SSB Citi managed fund or client account. The
restrictions also apply to securities that are
"related" to a security being purchased or sold by an
SSB Citi managed fund or client account. A "related
security" is one whose value is derived from the
value of another security (e.g., a warrant, option or
an indexed instrument).
Fund Directors - This policy applies to all directors
of Funds that have adopted this policy. The personal
investment policies, procedures and restrictions that
specifically apply to Fund directors apply to all
accounts and securities in which the director has
direct or indirect beneficial ownership. See Exhibit
A attached hereto for a more detailed description of
beneficial ownership.
Securities are defined as stocks, notes, bonds,
closed-end mutual funds, debentures, and other
evidences of indebtedness, including senior debt,
subordinated debt, investment contracts, commodity
contracts, futures and all derivative instruments
such as options, warrants and indexed instruments,
or, in general, any interest or instrument commonly
known as a "security."
III. Enforcement - It is the responsibility of each
Covered Person to act in accordance with a high
standard of conduct and to comply with the policies
and procedures set forth in this document. SSB Citi
takes seriously its obligation to monitor the
personal investment activities of its employees. Any
violation of this policy by employees will be
considered serious, and may result in disciplinary
action, which may include the unwinding of trades,
disgorgement of profits, monetary fine or censure,
and suspension or termination of employment. Any
violation of this policy by a Fund director will be
reported to the Board of Directors of the applicable
Fund, which may impose such sanctions as it deems
appropriate.
IV. Opening and Maintaining Employee Accounts - All
employee brokerage accounts, including spouse
accounts, accounts for which the employee is deemed
to have beneficial ownership, and any other accounts
over which the employee and/or spouse exercise
control, must be maintained either at Salomon Smith
Barney ("SSB") or at Citicorp Investment Services
("CIS"). For spouses or other persons who, by
reason of their employment, are required to conduct
their securities, commodities or other financial
transactions in a manner inconsistent with this
policy, or in other exceptional circumstances,
employees may submit a written request for an
exemption to the Compliance Department. If approval
is granted, copies of trade confirmations and monthly
statements must be sent to the Compliance Department.
In addition, all other provisions of this policy will
apply.
V. Excluded Accounts and Transactions - The
following types of accounts/transactions need not be
maintained at SSB or CIS, nor are they subject to the
other restrictions of this policy:
1. Accounts at outside mutual funds that hold only
shares of open-end funds purchased directly from that
fund company. Note: transactions relating to
closed-end funds are subject to the pre-clearance,
blackout period and other restrictions of this
policy;
2. Estate or trust accounts in which an employee
or related person has a beneficial interest, but no
power to affect investment decisions. There must be
no communication between the account(s) and the
employee with regard to investment decisions prior to
execution. The employee must direct the trustee/bank
to furnish copies of confirmations and statements to
the Compliance Department;
3. Fully discretionary accounts managed by either
an internal or external registered investment adviser
are permitted and may be custodied away from SSB and
CIS if (i) the employee receives permission from the
Regional Director of Compliance and the unit's Chief
Investment Officer, and (ii) there is no
communication between the manager and the employee
with regard to investment decisions prior to
execution. The employee must designate that copies
of trade confirmations and monthly statements be sent
to the Compliance Department;
4. Employees may participate in direct investment
programs which allow the purchase of securities
directly from the issuer without the intermediation
of a broker/dealer provided that the timing and size
of the purchases are established by a pre-arranged,
regularized schedule (e.g., dividend reinvestment
plans). Employees must pre-clear the transaction at
the time that the dividend reinvestment plan is being
set up. Employees also must provide documentation of
these arrangements and direct periodic (monthly or
quarterly) statements to the Compliance Department;
and
5. In addition to the foregoing, the following
types of securities are exempted from pre-clearance,
blackout periods, reporting and short-term trading
requirements: open-ended mutual funds; open-end unit
investment trusts; U.S. Treasury bills, bonds and
notes; mortgage pass-throughs (e.g. Ginnie Maes) that
are direct obligations of the U.S. government;
bankers acceptances; bank certificates of deposit;
commercial paper; and high quality short-term debt
instruments (meaning any instrument that has a
maturity at issuance of less than 366 days and that
is rated in one of the two highest rating categories
by a nationally recognized statistical rating
organization, such as S&P or Moody's), including
repurchase agreements.
VI. Securities Holding Period/Short-Term Trading -
Securities transactions must be for investment
purposes rather than for speculation. Consequently,
employees may not profit from the purchase and sale,
or sale and purchase, of the same or equivalent
securities within sixty (60) calendar days,
calculated on a First In, First Out (FIFO) basis
(i.e., the security may be sold on the 61st day).
Citigroup securities received as part of an
employee's compensation are not subject to the 60-day
holding period. All profits from short-term trades
are subject to disgorgement. However, with the prior
written approval of both a Chief Investment Officer
and the Regional Director of Compliance, and only in
rare and/or unusual circumstances, an employee may
execute a short-term trade that results in a
significant loss or in break-even status.
VII. Pre-Clearance - All SSB Citi employees must
pre-clear all personal securities transactions (see
Section V for a listing of accounts, transactions and
securities that do not require pre-clearance). A copy
of the pre-clearance form is attached as Exhibit B.
In addition, employees are prohibited from engaging
in more than twenty (20) transactions in any calendar
month, except with prior written approval from their
Chief Investment Officer, or designee. A transaction
must not be executed until the employee has received
the necessary approval. Pre-clearance is valid only
on the day it is given. If a transaction is not
executed on the day pre-clearance is granted, it is
required that pre-clearance be sought again on a
subsequent day (i.e., open orders, such as limit
orders, good until cancelled orders and stop-loss
orders, must be pre-cleared each day until the
transaction is effected). In connection with
obtaining approval for any personal securities
transaction, employees must describe in detail any
factors which might be relevant to an analysis of the
possibility of a conflict of interest. Any trade
that violates the pre-clearance process may be
unwound at the employee's expense, and the employee
will be required to absorb any resulting loss and to
disgorge any resulting profit.
In addition to the foregoing, the CGAM NA Director of
Global Equity Research, or his designate, must
approve all personal securities transactions for
members of the CGAM Research Department prior to pre-
clearance from the Compliance Department as set forth
in this section. Pre-approval by the Director of
Research, or his designate, is in addition to and
does not replace the requirement for the pre-
clearance of all personal securities transactions.
VIII. Blackout Periods - No Covered Person shall
purchase or sell, directly or indirectly, any
security in which he/she has, or by reason of the
transaction acquires, any direct or indirect
beneficial ownership if he/she has knowledge at the
time of such transaction that the security is being
purchased or sold, or is being considered for
purchase or sale, by a managed fund or client account
or in the case of a Fund director, by the director's
Fund. In addition, the following Blackout Periods
apply to the categories of SSB Citi employees listed
below:
1. Portfolio Managers and Portfolio Manager
Assistants - may not buy or sell any securities for
personal accounts seven (7) calendar days before or
after managed funds or client accounts he/she manages
trade in that security.
2. Traders and Trader Assistants - may not buy or
sell any securities for personal accounts three (3)
calendar days before or seven (7) calendar days after
managed funds or client accounts he/she executes
trades for trade in that security.
3. Research Analysts and Research Assistants - may
not buy or sell any securities for personal accounts:
seven (7) calendar days before or after the issuance
of or a change in any recommendation; or seven (7)
calendar days before or after any managed fund or
client account about which the employee is likely to
have trading or portfolio information (as determined
by the Compliance Department) trades in that
security.
4. Advisory Personnel (see Section II for details)
- - may not buy or sell any securities for personal
accounts on the same day that a managed fund or
client account about which the employee is likely to
have trading or portfolio information (as determined
by the Compliance Department) trades in that
security.
5. Unit Trust Personnel - all employees assigned
to the Unit Trust Department are prohibited from
transacting in any security when a SSB Citi-sponsored
Unit Trust portfolio is buying the same (or a
related) security, until seven business days after
the later of the completion of the accumulation
period or the public announcement of the trust
portfolio. Similarly, all UIT employees are
prohibited from transacting in any security held in a
UIT (or a related security) seven business days prior
to the liquidation period of the trust.
Employees in the above categories may also be
considered Advisory Personnel for other accounts
about which the employee is likely to have trading or
portfolio information (as determined by the
Compliance Department).
Any violation of the foregoing provisions will
require the employee's trade to be unwound, with the
employee absorbing any resulting loss and disgorging
any resulting profit. Advisory personnel are subject
to the unwinding of the trade provision; however,
they may not be required to absorb any resulting loss
(at the discretion of the Compliance Department and
the employee's supervisor). Please be reminded that,
regardless of the provisions set forth above, all
employees are always prohibited from effecting
personal securities transactions based on material,
non-public information.
Blackout period requirements shall not apply to any
purchase or sale, or series of related transactions
involving the same or related securities, involving
500 or fewer shares in the aggregate if the issuer
has a market capitalization (outstanding shares
multiplied by the current price per share) greater
than $10 billion and is listed on a U.S. Stock
Exchange or NASDAQ. Note: Pre-clearance is still
required. Under certain circumstances, the Compliance
Department may determine that an employee may not
rely upon this "Large Cap/De Minimis" exemption. In
such a case, the employee will be notified prior to
or at the time the pre-clearance request is made.
IX. Prohibited Transactions - The following
transactions by SSB Citi employees are prohibited
without the prior written approval from the Chief
Investment Officer, or designee, and the Regional
Compliance Director:
1. The purchase of private placements; and
2. The acquisition of any securities in an initial
public offering (new issues of municipal debt
securities may be acquired subject to the other
requirements of this policy (e.g., pre-clearance).)
X. Transactions in Options and Futures - SSB Citi
employees may buy or sell derivative instruments such
as individual stock options, options and futures on
indexes and options and futures on fixed-income
securities, and may buy or sell physical commodities
and futures and forwards on such commodities. These
transactions must comply with all of the policies and
restrictions described in this policy, including pre-
clearance, blackout periods, transactions in
Citigroup securities and the 60-day holding period.
However, the 60-day holding period does not apply to
individual stock options that are part of a hedged
position where the underlying stock has been held for
more than 60 days and the entire position (including
the underlying security) is closed out.
XI. Prohibited Recommendations - No Covered Person
shall recommend or execute any securities transaction
by any managed fund or client account, or, in the
case of a Fund director, by the director's Fund,
without having disclosed, in writing, to the Chief
Investment Officer, or designee, any direct or
indirect interest in such securities or issuers,
except for those securities purchased pursuant to the
"Large Cap/De Minimis" exemption described in Section
VIII above. Prior written approval of such
recommendation or execution also must be received
from the Chief Investment Officer, or designee. The
interest in personal accounts could be in the form
of:
1. Any direct or indirect beneficial ownership of
any securities of such issuer;
2. Any contemplated transaction by the person in
such securities;
3. Any position with such issuer or its
affiliates; or
4. Any present or proposed business relationship
between such issuer or its affiliates and the person
or any party in which such person has a significant
interest.
XII. Transactions in Citigroup Securities - Unless
an SSB Citi employee is a member of a designated
group subject to more restrictive provisions, or is
otherwise notified to the contrary, the employee may
trade in Citigroup securities without restriction
(other than the pre-clearance and other requirements
of this policy), subject to the limitations set forth
below.
Employees whose jobs are such that they know about
Citigroup's quarterly earnings prior to release may
not engage in any transactions in Citigroup
securities during the "blackout periods" beginning on
the first day of a calendar quarter and ending on the
second business day following the release of earnings
for the prior quarter. Members of the SSB Citi
Executive Committee and certain other senior SSB Citi
employees are subject to these blackout periods.
Stock option exercises are permitted during a
blackout period (but the simultaneous exercise of an
option and sale of the underlying stock is
prohibited). With regard to exchange traded options,
no transactions in Citigroup options are permitted
except to close or roll an option position that
expires during a blackout period. Charitable
contributions of Citigroup securities may be made
during the blackout period, but an individual's
private foundation may not sell donated Citigroup
common stock during the blackout period. "Good 'til
cancelled" orders on Citigroup stock must be
cancelled before entering a blackout period and no
such orders may be entered during a blackout period.
No employee may engage at any time in any personal
transactions in Citigroup securities while in
possession of material non-public information.
Investments in Citigroup securities must be made with
a long-term orientation rather than for speculation
or for the generation of short-term trading profits.
In addition, please note that employees may not
engage in the following transactions:
Short sales of Citigroup securities;
Purchases or sales of options ("puts" or
"calls") on Citigroup securities, except writing a
covered call at a time when the securities could have
been sold under this policy;
Purchases or sales of futures on Citigroup
securities; or
Any transactions relating to Citigroup
securities that might reasonably appear speculative.
The number of Citigroup shares an employee is
entitled to in the Citigroup Stock Purchase Plan is
not treated as a long stock position until such time
as the employee has given instructions to purchase
the shares of Citigroup. Thus, employees are not
permitted to use options to hedge their financial
interest in the Citigroup Stock Purchase Plan.
Contributions into the firm's 401(k) Plan are not
subject to the restrictions and prohibitions
described in this policy.
XIII. Acknowledgement and Reporting Requirements -
SSB Citi Employees - All new SSB Citi employees must
certify that they have received a copy of this
policy, and have read and understood its provisions.
In addition, all SSB Citi employees must:
1. Acknowledge receipt of the policy and any
modifications thereof, in writing (see Exhibit C for
the form of Acknowledgement);
2. Within 10 days of becoming an SSB Citi
employee, disclose in writing all information with
respect to all securities beneficially owned and any
existing personal brokerage relationships (employees
must also disclose any new brokerage relationships
whenever established). Such information should be
provided on the form attached as Exhibit D;
3. Direct their brokers to supply, on a timely
basis, duplicate copies of confirmations of all
personal securities transactions (Note: this
requirement may be satisfied through the transmission
of automated feeds);
4. Within 10 days after the end of each calendar
quarter, provide information relating to securities
transactions executed during the previous quarter for
all securities accounts (Note: this requirement may
be satisfied through the transmission of automated
feeds);
5. Submit an annual holdings report containing
similar information that must be current as of a date
no more than 30 days before the report is submitted,
and confirm at least annually all brokerage
relationships and any and all outside business
affiliations (Note: this requirement may be
satisfied through the transmission of automated feeds
or the regular receipt of monthly brokerage
statements); and
6. Certify on an annual basis that he/she has read
and understood the policy, complied with the
requirements of the policy and that he/she has pre-
cleared and disclosed or reported all personal
securities transactions and securities accounts
required to be disclosed or reported pursuant to the
requirements of the policy.
Fund Directors - Fund Directors shall deliver the
information required by Items 1 through 6 of the
immediately preceding paragraph, except that a Fund
director who is not an "interested person" of the
Fund within the meaning of Section 2(a)(19) of the
Investment Company Act of 1940, and who would be
required to make reports solely by reason of being a
Fund Director, is not required to make the initial
and annual holdings reports required by Items 2 and
5. Also, a "non-interested" Fund Director need not
supply duplicate copies of confirmations of personal
securities transactions required by Item 3, and need
only make the quarterly transactions reports required
by Item 4 as to any security if at the time of a
transaction by the Director in that security, he/she
knew or in the ordinary course of fulfilling his/her
official duties as a Fund Director should have known
that, during the 15-day period immediately preceding
or following the date of that transaction, that
security is or was purchased or sold by that
Director's Fund or was being considered for purchase
or sale by that Director's Fund.
Disclaimer of Beneficial Ownership - The reports
described in Items 4 and 5 above may contain a
statement that the reports shall not be construed as
an admission by the person making the reports that
he/she has any direct or indirect beneficial
ownership in the securities to which the reports
relate.
XIV. Handling of Disgorged Profits - Any amounts
that are paid/disgorged by an employee under this
policy shall be donated by SSB Citi to one or more
charities. Amounts donated may be aggregated by SSB
Citi and paid to such charity or charities at the end
of each year.
XV. Confidentiality - All information obtained from
any Covered Person pursuant to this policy shall be
kept in strict confidence, except that such
information will be made available to the Securities
and Exchange Commission or any other regulatory or
self-regulatory organization or to the Fund Boards of
Directors to the extent required by law, regulation
or this policy.
XVI. Other Laws, Rules and Statements of Policy -
Nothing contained in this policy shall be interpreted
as relieving any person subject to the policy from
acting in accordance with the provision of any
applicable law, rule or regulation or, in the case of
SSB Citi employees, any statement of policy or
procedure governing the conduct of such person
adopted by Citigroup, its affiliates and
subsidiaries.
XVII. Retention of Records - All records relating to
personal securities transactions hereunder and other
records meeting the requirements of applicable law,
including a copy of this policy and any other
policies covering the subject matter hereof, shall be
maintained in the manner and to the extent required
by applicable law, including Rule 17j-1 under the
1940 Act. The Compliance Department shall have the
responsibility for maintaining records created under
this policy.
XVIII. Monitoring - SSB Citi takes seriously its
obligation to monitor the personal investment
activities of its employees and to review the
periodic reports of all Covered Persons. Employee
personal investment transaction activity will be
monitored by the Compliance Department. All noted
deviations from the policy requirements will be
referred back to the employee for follow-up and
resolution (with a copy to be supplied to the
employee's supervisor). Any noted deviations by Fund
directors will be reported to the Board of Directors
of the applicable Fund for consideration and follow-
up as contemplated by Section III hereof.
XIX. Exceptions to the Policy - Any exceptions to
this policy must have the prior written approval of
both the Chief Investment Officer and the Regional
Director of Compliance. Any questions about this
policy should be directed to the Compliance
Department.
XX. Board Review - Fund management and SSB Citi
shall provide to the Board of Directors of each Fund,
on a quarterly basis, a written report of all
material violations of this policy, and at least
annually, a written report and certification meeting
the requirements of Rule 17j-1 under the 1940 Act.
XXI. Other Codes of Ethics - To the extent that any
officer of any Fund is not a Covered Person
hereunder, or an investment subadviser of or
principal underwriter for any Fund and their
respective access persons (as defined in Rule 17j-1)
are not Covered Persons hereunder, those persons must
be covered by separate codes of ethics which are
approved in accordance with applicable law.
XXII. Amendments - SSB Citi Employees - Unless
otherwise noted herein, this policy shall become
effective as to all SSB Citi employees on March 30,
2000. This policy may be amended as to SSB Citi
employees from time to time by the Compliance
Department. Any material amendment of this policy
shall be submitted to the Board of Directors of each
Fund for approval in accordance with Rule 17j-1 under
the 1940 Act.
Fund Directors - This policy shall become
effective as to a Fund upon the approval and adoption
of this policy by the Board of Directors of that Fund
in accordance with Rule 17j-1 under the 1940 Act or
at such earlier date as determined by the Secretary
of the Fund. Any material amendment of this policy
that applies to the directors of a Fund shall become
effective as to the directors of that Fund only when
the Board of Directors of that Fund has approved the
amendment in accordance with Rule 17j-1 or at such
earlier date as determined by the Secretary of the
Fund.
March 15, 2000
EXHIBIT A
EXPLANATION OF BENEFICIAL OWNERSHIP
You are considered to have "Beneficial Ownership" of
Securities if you have or share a direct or indirect
"Pecuniary Interest" in the Securities.
You have a "Pecuniary Interest" in Securities if you
have the opportunity, directly or indirectly, to
profit or share in any profit derived from a
transaction in the Securities.
The following are examples of an indirect Pecuniary
Interest in Securities:
1. Securities held by members of your immediate
family sharing the same household; however, this
presumption may be rebutted by convincing evidence
that profits derived from transactions in these
Securities will not provide you with any economic
benefit.
"Immediate family" means any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law,
and includes any adoptive relationship.
2. Your interest as a general partner in
Securities held by a general or limited partnership.
3. Your interest as a manager-member in the
Securities held by a limited liability company.
You do not have an indirect Pecuniary Interest in
Securities held by a corporation, partnership,
limited liability company or other entity in which
you hold an equity interest, unless you are a
controlling equityholder or you have or share
investment control over the Securities held by the
entity.
The following circumstances constitute Beneficial
Ownership by you of Securities held by a trust:
1. Your ownership of Securities as a trustee where
either you or members of your immediate family have a
vested interest in the principal or income of the
trust.
2. Your ownership of a vested interest in a trust.
3. Your status as a settlor of a trust, unless the
consent of all of the beneficiaries is required in
order for you to revoke the trust.
The foregoing is a summary of the meaning of
"beneficial ownership". For purposes of the attached
policy, "beneficial ownership" shall be interpreted
in the same manner as it would be in determining
whether a person is subject to the provisions of
Section 16 of the Securities Exchange Act of 1934 and
the rules and regulations thereunder
