AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
JULY 17, 2000.
FILE NOS. 333-
811-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
___________________
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. [ ]
SMITH BARNEY INVESTMENT TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
388 GREENWICH STREET, NEW YORK, NY 10013
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(800) 451-2010
(REGISTRANT'S AREA CODE AND TELEPHONE NUMBER)
HEATH B. MCLENDON
SSB CITI FUND MANAGEMENT LLC
388 GREENWICH STREET
NEW YORK, NY 10013
(NAME AND ADDRESS OF AGENT FOR SERVICE)
WITH COPIES TO:
BURTON M. LEIBERT, ESQ.
CHRISTINA T. SYDOR, ESQ.
WILLKIE FARR & GALLAGHER
SSB CITI FUND MANAGEMENT LLC
787 SEVENTH AVENUE
388 GREENWICH STREET
NEW YORK, NY 10019-6099
NEW YORK, NY 10013
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: Registrant
proposes that the Registration Statement become effective on
August 16, 2000 (30 days after filing) pursuant to Rule 488 under
the Securities Act of 1933, as amended.
TITLE OF SECURITIES BEING REGISTERED:
Shares of Beneficial Interest ($.001 par value) of the Mid Cap
Blend Fund, a Series of the Registrant
___________________
The Registrant has registered an indefinite amount of
securities under the Securities Act of 1933 pursuant to Section
24(f) under the Investment Company Act of 1940; accordingly, no
fee is payable herewith because of reliance upon Section 24(f).
PART A
INFORMATION REQUIRED IN THE PROXY STATEMENT/PROSPECTUS
CONCERT INVESTMENT SERIES(r)
Mid Cap Fund
388 Greenwich Street
New York, New York 10013
August 21, 2000
Dear Shareholders:
You are being asked to vote on an Agreement and Plan of
Reorganization whereby all of the assets of
the Mid Cap Fund (the "Fund"), a series of Concert Investment
Series(r) ("Investment Series"), would be transferred in a tax-free
reorganization to the Mid Cap Blend Fund (the "Acquiring Fund"), a
series of Smith Barney Investment Trust ("Investment Trust"), in
exchange for shares of the corresponding class of shares of
beneficial interests of the Acquiring Fund. If the Agreement and
Plan of Reorganization is approved and consummated, you would no
longer be a shareholder of the Fund, but would become a
shareholder of the corresponding class of the Acquiring Fund,
which has similar investment objectives and policies to your Fund,
except as described in the Proxy Statement/Prospectus.
AFTER CAREFUL REVIEW, THE MEMBERS OF YOUR FUND'S BOARD HAVE
APPROVED THE PROPOSED REORGANIZATION. THE BOARD MEMBERS OF YOUR
FUND BELIEVE THAT THE PROPOSAL SET FORTH IN THE NOTICE OF MEETING
FOR YOUR FUND IS IMPORTANT AND RECOMMEND THAT YOU READ THE
ENCLOSED MATERIALS CAREFULLY AND THEN VOTE FOR THE PROPOSAL.
Your vote is important. PLEASE TAKE A MOMENT NOW TO SIGN AND
RETURN YOUR PROXY CARD(S) IN THE ENCLOSED POSTAGE-PAID RETURN
ENVELOPE. For more information, please call 1-800-451-2010. If
you prefer, you can fax the proxy card to _____________, Attn.:
________, at (800) ________ or vote by telephone by calling (800)
_______ using the xx-digit control number located on your proxy
card. The Fund may also solicit proxies from shareholders by
letter, telephone and/or telegraph. Voting by fax or telephone
will reduce the time and costs associated with the proxy
solicitation. When the Fund records proxies by telephone, it will
use procedures designed to (i) authenticate shareholders'
identities, (ii) allow shareholders to authorize the voting of
their shares in accordance with their instructions and
(iii) confirm that their instructions have been properly recorded.
Whichever voting method you choose, please read the full
text of the accompanying proxy statement/prospectus before you
vote.
Respectfully,
/s/ Heath B. McLendon
Heath B. McLendon
Chairman of the Board, President and Chief Executive Officer
Concert Investment Series(r)
WE URGE YOU TO SIGN AND RETURN YOUR PROXY CARD(S) IN THE ENCLOSED
POSTAGE-PAID ENVELOPE TO ENSURE A QUORUM AT THE MEETING. YOUR
VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
CONCERT INVESTMENT SERIES(r)
Mid Cap Fund
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Please take notice that a Special Meeting of Shareholders
(the "Special Meeting") of Concert Investment Series(r) ("Investment
Series"), on behalf of its series, the Mid Cap Fund (the "Fund"),
will be held at the offices of SSB Citi Fund Management LLC,
7 World Trade Center, New York, New York 10048, on September 25,
2000, at 9:45 a.m., Eastern time, for the following purposes:
PROPOSAL 1: To approve an Agreement and Plan of
Reorganization for the Fund;
PROPOSAL 2: To transact such other business as may
properly come before the meeting or any
adjournment(s) thereof.
The appointed proxies will vote in their discretion on any
other business as may properly come before the Special Meeting or
any adjournments thereof.
Holders of record of shares of the Fund at the close of
business on August 11, 2000 are entitled to vote at the Special
Meeting and at any adjournments thereof.
If the necessary quorum to transact business or the vote
required to approve a Proposal is not obtained at the Special
Meeting, the persons named as proxies may propose one or more
adjournments of the Special Meeting in accordance with applicable
law to permit further solicitation of proxies. Any such
adjournment as to a matter will require the affirmative vote of
the holders of a majority of the Fund's outstanding shares present
in person or by proxy at the Special Meeting. The persons named
as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor of the Proposal and will
vote against any such adjournment those proxies to be voted
against the Proposal. For more information, please call
1-800-451-2010.
By Order of the Board of
Trustees
/s/ Christina T. Sydor
Christina T. Sydor
Secretary
August 21, 2000
IMPORTANT -- WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY
CARD(S) AND RETURN THE CARD(S) IN THE ENCLOSED ADDRESSED ENVELOPE
WHICH REQUIRES NO POSTAGE AND IS INTENDED FOR YOUR CONVENIENCE.
YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD(S) MAY SAVE THE
NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS TO ENSURE A QUORUM
AT THE SPECIAL MEETING. IF YOU CAN ATTEND THE SPECIAL MEETING AND
WISH TO VOTE YOUR SHARES IN PERSON AT THAT TIME, YOU WILL BE ABLE
TO DO SO.
TABLE OF CONTENTS
PROPOSAL: APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION 4
SYNOPSIS 4
INVESTMENT OBJECTIVE AND POLICIES OF THE ACQUIRING FUND AND THE
FUND 6
INVESTMENT MANAGEMENT FEES AND EXPENSES 8
DISTRIBUTION OF SHARES AND OTHER SERVICES 12
PURCHASE, REDEMPTION AND EXCHANGE INFORMATION 13
DIVIDENDS AND OTHER DISTRIBUTIONS 14
TAX CONSEQUENCES 14
PRINCIPAL INVESTMENTS AND RISK FACTORS 14
THE PROPOSED TRANSACTION 21
REASONS FOR THE PROPOSED TRANSACTION 23
DESCRIPTION OF THE SECURITIES TO BE ISSUED 25
FEDERAL INCOME TAX CONSEQUENCES 27
LIQUIDATION AND TERMINATION OF SERIES 27
PORTFOLIO SECURITIES 28
PORTFOLIO TURNOVER 28
CAPITALIZATION AND PERFORMANCE 28
ADDITIONAL MATERIALS
The following additional materials, which have been
incorporated by reference into the Statement of Additional
Information dated August 16, 2000 relating to this
Prospectus/Proxy Statement and the Reorganization, will be sent to
all shareholders of the Fund requesting a copy of such Statement
of Additional Information.
1. The Statement of Additional Information for the Acquiring
Fund, dated March 29, 2000.
2. The Statement of Additional Information for the Fund,
dated February 28, 2000.
3. Annual Report of the Fund for the year ended October 31,
1999 and the Semi-Annual Report of the Fund for the six
months ended April 30, 2000.
Merger Q&A
Concert Mid Cap into Smith Barney Mid Cap Blend
The enclosed materials include a combined Prospectus/Proxy
Statement containing information you need to make an informed
decision. However, we thought it would also be helpful for you to
have, at the start, answers to some of the important questions you
might have about the proposed reorganization.
We hope you find these explanations useful as you review your
materials before voting. For more detailed information about the
proposed reorganization, please refer to the combined enclosed
Prospectus/Proxy Statement.
What will happen to my shares if the proposed reorganization is
approved?
You will become a shareholder of the Smith Barney Mid Cap Blend
Fund on
or about October 6, 2000 ("Closing Date") and will no longer be a
shareholder of the Concert Mid Cap Fund, which will be terminated
pursuant to the proposed reorganization. You will receive shares
of the Smith Barney Mid Cap Blend Fund with a total net asset
value equal to the total net asset value of your investment in the
Concert Mid Cap Fund at the time of the transaction.
What is the key reason for this fund reorganization?
The proposed reorganization will create one single larger sized
fund and provide shareholders of Concert Mid Cap Fund with a fund
that has lower annual expenses. The proposed reorganization is
part of a broader initiative by the Funds' manager, SSB Citi Fund
Management LLC, to restructure more efficiently its mutual fund
product offerings.
As a shareholder of the Smith Barney Mid Cap Blend Fund, you will
be able to exchange into the same class of shares of certain Smith
Barney mutual funds offered by the funds' distributor, provided
that the Smith Barney Fund offers the relevant class of shares.
Do the funds have similar investment objectives?
Yes. The principal investment objective of both Concert Mid Cap
Fund and Smith Barney Mid Cap Blend Fund is long-term growth of
capital. Lawrence Weissman, the portfolio manager of your Fund,
has also been the portfolio manager of the Smith Barney Mid Cap
Blend Fund since its inception in 1997.
In both funds, Lawrence seeks to achieve long-term growth of
capital by investing primarily in the equity securities of medium-
sized companies that are in a position to provide strong growth
potential and that have favorable valuations relative to their
growth characteristics. Shareholders will continue to participate
in a portfolio governed by similar investment objectives and
policies that is professionally managed by the same portfolio
manager. However, the investment practices and limitations of each
Fund (and related risk) are not identical. For additional
information regarding the differences between the two funds,
please refer to the enclosed proxy statement.
What are the tax consequences of this proposed reorganization?
Subject to shareholder approval, the proposed fund reorganization
will not be a taxable event. Shareholders will not realize any
capital gain or loss as a direct result of the proposed
reorganization.
Will I enjoy the same privileges as a shareholder of the Smith
Barney Mid Cap Blend Fund that I currently have as a shareholder
of the Concert Mid Cap Fund?
Yes. You will continue to enjoy many of the same shareholder
privileges such as systematic investment, automatic cash
withdrawal and dividend reinvestment as well as access to
professional service representatives.
How does the Board of Trustees recommend I vote?
The Trustees recommend that you vote FOR the reorganization.
Although no guarantees can be given, the Trustees believe the
reorganization is in the best interest of the Concert Mid Cap Fund
and its shareholders, and that the interests of the shareholders
would not be diluted as a result of the reorganization.
Why is my vote important?
Shareholders have a responsibility to vote on important matters
affecting their fund investments. No matter how many shares you
own, your vote --- and its timeliness-are also important. Please
complete and sign the enclosed proxy card today!
Please note if you sign and date your proxy card, but do not
provide voting instructions, your shares will be voted FOR the
proposal. By voting promptly, you will help us to avoid the
expense of having to re-solicit your proxy and help to keep fund
expenses down. Thank you in advance for your vote.
SUBJECT TO COMPLETION, DATED JULY 17, 2000
PROXY STATEMENT/PROSPECTUS
August 16, 2000
RELATING TO THE ACQUISITION BY MID CAP
BLEND FUND (THE "ACQUIRING FUND"), A SERIES OF
SMITH BARNEY INVESTMENT TRUST ("INVESTMENT TRUST")
388 Greenwich Street
New York, New York 10013
(800) 451-2010
OF THE ASSETS OF MID CAP FUND (THE "FUND"),
A SERIES OF CONCERT INVESTMENT SERIES(r) ("INVESTMENT SERIES").
General. This Proxy Statement/Prospectus is furnished to
shareholders of the Fund in connection with a proposed
reorganization in which all of the assets of
the Fund would be acquired by the Acquiring Fund, in exchange
solely for voting shares of the corresponding class of shares of
beneficial interest of the Acquiring Fund and the assumption by
the Acquiring Fund of all of the stated liabilities of the Fund
(collectively, the "Reorganization"). Shares of the Acquiring
Fund thereby received would then be distributed to the
shareholders of the Fund in complete liquidation of the Fund, and
the Fund would be terminated as a series of Investment Series. As
a result of the Reorganization, each shareholder of the Fund would
receive that number of full and fractional shares of the
corresponding class of the Acquiring Fund having an aggregate net
asset value equal to the aggregate net asset value of such
shareholder's shares of the Fund held as of the close of business
on the Closing Date (as defined herein) of the Reorganization.
Shareholders of the Fund are being asked to vote on an Agreement
and Plan of Reorganization pursuant to which such transactions, as
described more fully below, would be consummated.
This Proxy Statement/Prospectus, which should be retained
for future reference, sets forth concisely the information about
the Acquiring Fund that a prospective investor should know before
investing. For a more detailed discussion of the investment
objectives, policies, restrictions and risks of the Acquiring
Fund, see the prospectus for the Acquiring Fund, dated March 29,
2000, as supplemented from time to time, which is included
herewith and incorporated herein by reference. This Proxy
Statement/Prospectus is also accompanied by the Acquiring Fund's
annual report to shareholders for the year ended November 30,
1999, which is
included herewith and incorporated herein by reference. For a
more detailed discussion of the investment objectives, policies,
restrictions and risks of the Fund, see the prospectus for the
Fund, dated February 28, 2000, the annual report to shareholders
for the year ended October 31, 1999 and the semi-annual report to
shareholders for the six months ended April 30, 2000, each of
which is incorporated herein by reference and a copy of which may
be obtained without charge by writing to Smith Barney Mutual
Funds, 388 Greenwich Street, New York, New York 10013, or by
calling toll-free (800) 451-2010. A Statement of Additional
Information of the Fund and the Acquiring Fund dated August 16,
2000 containing additional information about the Reorganization
and the parties thereto has been filed with the Securities and
Exchange Commission (the "SEC" or the "Commission") and is
incorporated by reference into this Proxy Statement/Prospectus. A
copy of the Statement of Additional Information is available upon
request and without charge by writing to or calling Smith Barney
Mutual Funds at the address or phone number listed above.
Shareholder inquiries regarding the Fund or the Acquiring Fund may
also be made by calling the phone number listed above. The
information contained herein concerning the Fund has been provided
by, and is included herein in reliance upon, Investment Series on
behalf of the Fund. The information contained herein concerning
the Acquiring Fund has been provided by, and is included herein in
reliance upon, Investment Trust on behalf of the Acquiring Fund.
The Acquiring Fund is a diversified series of Investment
Trust, an open-end management investment company organized as a
Massachusetts business trust. The Fund is a diversified series of
Investment Series, an open-end management investment company also
organized as a Massachusetts business trust. The principal
investment objective of both the Acquiring Fund and the Fund is
long-term growth of capital. Each Fund seeks to achieve its
objective by investing in equity securities of medium sized
companies (i.e., those whose market capitalization is within the
market capitalization range of companies in the Standard and Poor's
("S&P") MidCap Index at the time of investment). Each Fund will,
under normal circumstances, invest at least 65% of its assets in
the equity securities of medium-sized companies, and may also
invest up to 35% of its assets in the equity securities of large
and small capitalization companies. Each Fund deems equity
securities to include exchange traded and over-the-counter common
stocks and preferred shares, debt securities convertible into
equity securities, and warrants and rights relating to equity
securities.
_______________________
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THESE SECURITIES NOR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED
PROSPECTUS/PROXY STATEMENT AND IN THE MATERIALS EXPRESSLY
INCORPORATED HEREIN BY REFERENCE AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE FUNDS.
_______________________
In the description of the Proposal below, the word "fund"
is sometimes used to mean investment companies or series thereof
in general, and not the Fund. In addition, in this Proxy
Statement/Prospectus, for simplicity, actions are described as
being taken by either the Fund or the Acquiring Fund (each, a
"Fund," and collectively, the "Funds"), although all actions are
actually taken by Investment Series on behalf of the Fund or by
Investment Trust on behalf of the Acquiring Fund, respectively.
This Proxy Statement/Prospectus, the Notice of Special
Meeting and the proxy card(s) are first being mailed to
shareholders on or about August 21, 2000 or as soon as practicable
thereafter. Any shareholder of the Fund giving a proxy has the
power to revoke it by mail (addressed to the Secretary at the
principal executive office of Investment Series at the address
shown at the beginning of this Proxy Statement/Prospectus) or in
person at the Special Meeting by executing a superseding proxy or
by submitting a notice of revocation to the Fund. All properly
executed proxies received in time for the Special Meeting will be
voted as specified in the proxy or, if no specification is made,
in favor of the Proposals referred to in the Proxy Statement.
In cases where certain shareholders have purchased their shares
through service agents, these service agents are the shareholders
of record of the Fund. At the special meeting, a service agent may,
as permitted by applicable laws and regulations, vote any shares of
which it is the holder of record and for which
it does not receive voting instructions proportionately in accordance with
the instructions it receives for all other shares of which that service agent
is the holder of record.
The presence at any shareholders' meeting, in person or by
proxy, of the holders of shares of the Fund holding 20% of
the outstanding shares of the Fund entitled to vote shall be
necessary and sufficient to constitute a quorum for the
transaction of business. If the necessary quorum to transact
business or the vote required to approve any Proposal is not
obtained at the Special Meeting, the persons named as proxies may
propose one or more adjournments of the Special Meeting in
accordance with applicable law to permit further solicitation of
proxies with respect to the Proposal that did not receive the vote
necessary for its passage or to obtain a quorum. Any such
adjournment as to a matter will require the affirmative vote of
the holders of a majority of the Fund's outstanding shares present
in person or by proxy at the Special Meeting. The persons named
as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor of that Proposal and will
vote against any such adjournment those proxies to be voted
against that Proposal. For purposes of determining the presence
of a quorum for transacting business at the Special Meeting,
abstentions and broker "non-votes" will be treated as shares that
are present but which have not been voted. Broker non-votes are
proxies received by the Fund from brokers or nominees when the
broker or nominee has neither received instructions from the
beneficial owner or other persons entitled to vote nor has
discretionary power to vote on a particular matter. Accordingly,
shareholders are urged to forward their voting instructions
promptly.
The Proposal requires the affirmative vote of the holders of
not less than a majority of the Fund's outstanding shares of
beneficial interest entitled to vote thereon. Abstentions and
broker non-votes will have the effect of a "no" vote on the
Proposal.
Holders of record of the shares of the Fund at the close of
business on August 11, 2000 (the "Record Date"), as to any matter
on which they are entitled to vote, will be entitled to one vote
per share on all business of the Special Meeting. As of August 11,
2000, there were ___________ shares of the Fund outstanding.
To the best of the Acquiring Fund's knowledge, as of August
11, 2000, [no person owned beneficially more than 5% of any class
of the Acquiring Fund's outstanding shares]. To the best of the
Fund's knowledge, as of August 11, 2000, [no person owned
beneficially more than 5% of any class of the Fund's outstanding
shares].
As of August 11, 2000, [less than 1% of the outstanding
shares of each of the Fund and the Acquiring Fund were owned
directly or beneficially by the Trustees of Investment Series or
Investment Trust, respectively.]
Each of the Fund and the Acquiring Fund provides periodic
reports to all of its shareholders which highlight relevant
information, including investment results and a review of
portfolio changes. You may receive an additional copy of the most
recent annual report for each of the Fund and the Acquiring Fund
and a copy of any more recent semi-annual report, without charge,
by calling 800-451-2010 or writing to the Fund or the Acquiring
Fund at the address shown at the beginning of this Proxy
Statement/Prospectus.
PROPOSAL: APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION
The Board of Trustees of Investment Series on behalf of the
Fund and Investment Trust on behalf of the Acquiring Fund,
including all of the Trustees who are not "interested persons" of
such Funds (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) (the "Non-Interested Trustees" or "Non-
Interested Board Members"), approved on July 17, 2000, and July
12, 2000, respectively, an Agreement and Plan of Reorganization
(the "Plan"). Subject to its approval by the shareholders of the
Fund, the Plan provides for (a) the transfer of all
of the assets and all of the stated liabilities of the
Fund to the Acquiring Fund in exchange for shares of the
corresponding class of the Acquiring Fund and assumption of the
Fund's liabilities; (b) the distribution of such Acquiring Fund
shares to the shareholders of the Fund in complete liquidation of
the Fund and the cancellation of the Fund's outstanding shares;
and (c) the termination of the Fund as a series of Investment
Series (collectively, the "Reorganization"). As a result of the
Reorganization, each shareholder of the Fund will become a
shareholder of the corresponding class of the Acquiring Fund and
will hold, immediately after the closing of the Reorganization
(the "Closing"), that number of full and fractional shares of the
corresponding class of the Acquiring Fund having an aggregate net
asset value equal to the aggregate net asset value of such
shareholder's shares held in the Fund as of the close of business
on the Closing Date (as defined below). The Closing is expected
to occur on October 6, 2000, or on such later date as the parties
may agree in writing (the "Closing Date").
SYNOPSIS
The following is a summary of certain information contained
in this Proxy Statement/Prospectus. This summary is qualified by
reference to the more complete information contained elsewhere in
this Proxy Statement/Prospectus, the Prospectus of the Acquiring
Fund, the Prospectus of the Fund and the Plan, the form of which
is attached to this Proxy Statement/Prospectus as Exhibit A.
Shareholders of the Fund should read this entire Proxy
Statement/Prospectus carefully.
Introduction. Like your Fund, the Acquiring Fund is managed
and administered by SSB Citi Fund Management LLC ("SSB Citi"), an
affiliate of Salomon Smith Barney Inc. ("Salomon Smith Barney")
and has long-term growth of capital as its investment objective.
Lawrence Weissman, the portfolio manager of your Fund, is also the
portfolio manager of the Acquiring Fund. Moreover, the
distributor, custodian and transfer agent of each of the Fund and
the Acquiring Fund are identical. Whereas each Fund has retained
PFPC Global Financial Services, Inc. as a sub-transfer agent, the
Fund has additionally retained PFS Shareholder Services as a sub-
transfer agent. Further, where the Fund has retained Ernst &
Young LLP as its independent auditors, the Acquiring Fund has
retained KPMG LLP as its independent auditors.
If the Plan is consummated, shareholders of the Fund will
become shareholders of the corresponding class of the Acquiring
Fund. The Reorganization has been proposed as part of a broader
initiative by SSB Citi to eliminate duplication and possible
confusion in its mutual fund product offerings. Specifically,
this Reorganization has been proposed as the Funds have
substantially similar investment objectives and policies and the
Acquiring Fund is subject to a lower total annual
expense ratio. Shareholders of the Fund will continue to enjoy
many of the same shareholder privileges, such as systematic
investment, automatic cash withdrawal and automatic dividend
reinvestment, and access to professional service representatives
upon becoming shareholders of the Acquiring Fund. Further,
shareholders of the Acquiring Fund may exchange into the same
class of any Smith Barney Fund (provided that the Smith Barney
Fund offers the relevant class of shares), whereas shareholders of
the Fund may only exchange into shares of certain Smith Barney Funds,
Concert brand funds or, in certain cases, Citi FundsSM Cash Reserves.
Moreover, although many of
the services provided by PFS Shareholder Services, Inc. to the
Fund are available to shareholders of the Acquiring Fund, PFS
Shareholder Services, Inc. will not provide services to the
Acquiring Fund. Each of the Fund and the Acquiring Fund declares
dividends from net investment income and pays distributions of net
realized capital gains, if any, annually. See "Dividends and
Other Distributions." It is a condition of the Reorganization
that each Fund receive an opinion of independent legal counsel
that the Reorganization will be tax-free. This means that
shareholders will not realize any capital gain or loss as a direct
result of the Reorganization.
Proposed Transaction. The aggregate net asset value of each
class of voting shares of the Acquiring Fund (the "Shares") issued
in exchange for the assets and liabilities of the corresponding
class of the Fund will be equal to the net asset value of that
class of the Fund as of the Closing Date. Immediately following
the transfer of Shares to the Fund, the Shares received by the
Fund will be distributed pro rata to the shareholders of record of
the Fund on the Closing Date and the shares of the Fund will be
cancelled.
For the reasons described below under "The Proposed
Transaction-Reasons for the Proposed Transaction," the Board of
Trustees of Investment Series on behalf of the Fund, including the
Non-Interested Trustees, has concluded the following:
- the Reorganization is in the best interests of the Fund
and its shareholders; and
- the interests of the existing shareholders of the Fund
will not be diluted as a result of the Reorganization.
Accordingly, the Trustees recommend approval of the Plan.
If the Plan is not approved, the Fund will continue in existence
unless other action is taken by the Trustees; such other action
may include resubmitting the Plan for shareholder approval and
termination and liquidation of the Fund.
Comparison of Investment Objectives and Policies. The
principal investment objective of each Fund is long-term growth of
capital. Each Fund seeks to achieve its objective by investing
primarily (at least 65% of its assets under normal circumstances)
in equity securities of medium-sized companies. Medium-sized
companies are those whose market capitalization is within the
market capitalization range of companies in the S&P MidCap Index
at the time of investment. Equity securities include exchange
traded and over-the-counter common stocks, preferred stocks, debt
securities convertible into equity securities and warrants and
rights relating to equity securities. Each Fund may also invest
up to 35% of its assets in equity securities of companies with
market capitalizations smaller or larger than those of medium-
sized companies (i.e., companies considered to be small or large
capitalization companies). The Fund's investment restrictions are
substantially similar to that of the Acquiring Fund, except as
described in this Proxy Statement/Prospectus.
Each Fund may invest up to 25% of its assets in foreign
securities (including those of issuers in emerging market
countries) directly or in the form of depositary receipts
representing an interest in those securities. While each Fund
intends to be substantially fully invested in equity securities,
each Fund may maintain up to 10% of its assets in money market
instruments and/or cash to pay expenses and meet redemption
requests. Whereas each Fund has adopted a non-fundamental
investment policy limiting investments in illiquid and restricted
securities to 15% of net assets, the Fund has adopted a more
restrictive informal policy limiting such investments to 10% of
net assets. While both Funds may use derivative contracts, such
as futures and options on securities, securities indices or
currencies, options on these futures, forward currency contracts
and interest rate or currency swaps (i) to hedge against the
economic impact of adverse changes in the market value of
portfolio securities because of changes in stock market prices,
currency exchange rates or interest rates; and (ii) as a
substitute for buying or selling securities, the Fund may also
engage in such activities to enhance return. Each Fund may invest
up to 35% of its assets in equity securities of companies with
market capitalizations smaller or larger than those of medium-
sized companies (i.e., companies considered to be small or large
capitalization companies). In connection with the purchase of put
and call options on foreign currencies, the Fund may not pay more
than 5% of its net assets in premiums for such options. The
Acquiring Fund is subject to no such limitation.
Each Fund may invest in real estate investment trusts
("REITS"), convertible securities, when-issued, delayed delivery
and forward commitment transactions, debt securities, repurchase
agreements and reverse repurchase agreements, and engage in
securities lending and borrowing in accordance with any 1940 Act
limitations. Both Funds may also engage in short sales against
the box. With respect to the Fund, however, no more than 25% of
its assets may be held as collateral for such short sales and the
Fund may not purchase or deliver new securities to satisfy its
short order if such purchase or sale would cause the Fund to
derive more than 30% of its gross income from the sale of
securities held for less than three months.
Each Fund has identical fundamental investment restrictions
with respect to its diversified status; issuing senior securities;
underwriting securities; industry concentration; borrowing money;
purchasing or selling real estate, real estate mortgages,
commodities or commodity contracts; and making loans. Each Fund's
fundamental investment restrictions may not be changed without the
approval of the applicable Fund's shareholders. Investors should
refer to the respective prospectuses and statements of additional
information of the Fund and the Acquiring Fund for a fuller
description of each Fund's investment policies and restrictions.
INVESTMENT OBJECTIVE AND POLICIES
OF THE ACQUIRING FUND AND THE FUND
Principal Investment Strategies. As stated above, each Fund
seeks long-term growth of capital and invests primarily in equity
securities of medium-sized companies. Each Fund will invest,
under normal circumstances, at least 65% of its total assets in
equity securities of medium-sized companies, and may also invest
up to 35% of its assets in equity securities of companies with
market capitalizations smaller or larger than those of medium-
sized companies (i.e., companies considered to be small or large
capitalization companies). Both Funds deem medium-sized companies
to be those whose market capitalization is within the market
capitalization range of companies in the S&P MidCap Index at the
time of investment. The Funds also deem equity securities to
include exchange traded and over-the-counter common stocks,
preferred stocks, debt securities convertible into equity
securities and warrants and rights relating to equity securities.
Each Fund may also invest up to 25% of its assets in securities of
foreign issuers both directly and through depositary receipts for
those securities.
Selection Process. On behalf of the Funds, SSB Citi focuses
on medium capitalization companies that exhibit attractive growth
characteristics and, with respect to the Fund, attractive value
characteristics. SSB Citi selects individual "growth" stocks for
investment in two ways: by identifying those companies which
exhibit the most favorable growth prospects and by identifying
those companies which have favorable valuations relative to their
growth characteristics. This strategy is commonly known as
"growth at a reasonable price" and offers investors style
diversification within a single mutual fund. In selecting
individual companies for investment, SSB Citi considers:
? Growth characteristics, including high historic growth
rates and high relative growth compared with companies in
the same industry or sector;
? Value characteristics, including low price/earnings
ratios and other statistics indicating a security is
undervalued;
? Increasing profits and sales;
? Competitive advantages that could be more fully exploited
by a company;
? Skilled management committed to long-term growth; and
? Potential for a long-term investment by a Fund.
SSB Citi uses fundamental research to find stocks with
strong growth potential and also uses quantitative analysis to
determine whether these stocks are relatively undervalued or
overvalued compared to stocks with similar fundamental
characteristics. SSB Citi's quantitative valuations determine
whether and when a Fund will purchase or sell the stocks it
identifies through fundamental research.
Principal Risks of Investing in the Funds. Investors could
lose money on their investment in the Funds, or the Funds may not
perform as well as other investments, if:
? U.S. stock markets decline, or perform poorly relative to
other types of investments;
? An adverse company specific event, such as an unfavorable
earnings report, negatively affects the stock price of a
company in which a Fund invests;
? Medium capitalization stocks fall out of favor with
investors; or
? SSB Citi's judgment about the attractiveness, growth
prospects, value or potential appreciation of a
particular stock proves to be incorrect.
Because the Funds invest primarily in medium capitalization
companies, an investment in a Fund may be more volatile and more
susceptible to loss than an investment in a fund which invests
primarily in large capitalization companies. Medium
capitalization companies may have more limited product lines,
markets and financial resources than large capitalization
companies. They may have shorter operating histories and more
erratic businesses, although they generally have more established
businesses than small capitalization companies. The prices of
medium capitalization company stocks tend to be more volatile than
the prices of large capitalization company stocks.
Who May Want to Invest in the Acquiring Fund. The Acquiring
Fund may be an appropriate investment if you:
? Are seeking to participate in the long-term growth
potential of the U.S. stock market;
? Are looking for an investment with potentially greater
return but higher risk than a fund that invests primarily
in large cap companies; or
? Are willing to accept the risks of the stock market.
INVESTMENT MANAGEMENT FEES AND EXPENSES
Investment Series, on behalf of the Fund, and Investment
Trust, on behalf of the Acquiring Fund, each retains SSB Citi
pursuant to separate contracts, to manage the daily investment and
business affairs of the Fund and the Acquiring Fund, respectively,
subject to the policies established by their respective Board of
Trustees. The expenses of each Fund are paid out of gross
investment income. Shareholders pay no direct charges or fees for
investment services.
The Acquiring Fund. SSB Citi, located at 388 Greenwich
Street, New York, New York 10013, serves as the Acquiring Fund's
investment adviser. SSB Citi
has been in the investment counseling business since 1968 and
renders investment management and administration services to a
wide variety of individual, institutional and investment company
clients having aggregate assets under management as of May 31,
2000 in excess of $218 billion. SSB Citi and Salomon Smith Barney
are subsidiaries of Citigroup Inc. Citigroup businesses produce a
broad range of financial services-asset management, banking and
consumer finance, credit and charge cards, insurance, investments,
investment banking and trading-and use diverse channels to make
them available to consumer and corporate customers around the
world.
Subject to the supervision and direction of Investment
Trust's Board of Trustees, SSB Citi manages the Acquiring Fund's
portfolio in accordance with the Acquiring Fund's stated
investment objective and policies, makes investment decisions for
the Acquiring Fund, places orders to purchase and sell securities
and employs professional portfolio managers and securities
analysts who provide research services to the Acquiring Fund.
Under an investment advisory agreement, the Acquiring Fund pays
SSB Citi a fee computed daily and paid monthly at the annual rate
of 0.75% of the value of its average daily net assets. The total
investment management fee incurred and paid by the Acquiring Fund
for the fiscal year ended November 30, 1999 was $3,544,958.
The Acquiring Fund's total expense ratio (total annual
operating expenses as a percentage of average net assets) for each
class of its shares for the year ended November 30, 1999 is set
forth below under "Annual Fund Operating Expenses." SSB Citi
projects that if the proposed Reorganization is effected, the
expense ratio for each class of the Acquiring Fund will be
unchanged for the year ending November 30, 2000. The actual
expense ratio for the Acquiring Fund for the year ending
November 30, 2000 may be higher or lower than as set forth below,
depending upon the Acquiring Fund's performance, general stock
market and economic conditions, sales and redemptions of the
Acquiring Fund's shares (including redemptions by former
shareholders of the Fund), and other factors.
Lawrence Weissman, investment officer of SSB Citi and
managing director of Salomon Smith Barney, has been responsible
for the day-to-day management of the Acquiring Fund's portfolio
since the Acquiring Fund's inception. Mr. Weissman has more than
15 years of securities business experience. Mr. Weissman's
management discussion and analysis of the Acquiring Fund's
performance during the fiscal year ended November 30, 1999 is
included in the Acquiring Fund's Annual Report to Shareholders
dated November 30, 1999.
The Fund. The Fund's investment manager is also SSB Citi.
SSB Citi selects the Fund's investments and oversees its
operations. Under an investment advisory agreement, the Fund pays
SSB Citi a fee computed daily and paid monthly at the annual rate
of 0.75% of the Fund's average daily net assets. SSB Citi may,
from time to time, agree to waive its investment advisory fees or
any portion thereof or elect to reimburse the Fund for ordinary
business expenses in excess of an agreed upon amount. During the
Fund's last fiscal year, SSB Citi received a fee equal to 0.11% of
the Fund's average daily net assets for its management services.
The total investment management fees paid by the Fund for the
fiscal year ended October 31, 1999 were $73,778. Had SSB Citi not
waived the management fee and reimbursed certain expenses in order
to cap total annual fund expenses, the gross advisory fees for the
Fund would have been $137,240 for this period.
Lawrence Weissman (described above) has been responsible for
the day-to-day management of the Fund since 1997.
The expenses of the Acquiring Fund and the Fund for the
fiscal year ended November 30, 1999 and October 31, 1999,
respectively, and pro forma expenses following the proposed
restructuring are outlined below:
ANNUAL FUND OPERATING EXPENSES
Mid Cap Blend Fund
Class A
Class B
Class
1*
Shareholder Transaction Expenses
Maximum sales charge imposed on
purchases
(as a percentage of offering price)
5.00%
None
8.50%
Maximum CDSC
(as a percentage of original cost
or redemption proceeds, whichever
is lower)
None**
5.00%
None
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management fees
0.75%
0.75%
0.75%
12b-1 fees
0.25%
1.00%
0.00%
Other expenses
0.16%
0.15%
0.49%
TOTAL ANNUAL FUND OPERATING EXPENSES
1.16%
1.90%
1.24%
Mid Cap Fund
Class A
Class B
Class 1
Shareholder Transaction Expenses
Maximum sales charge imposed on
purchases
(as a percentage of offering price)
5.00%
None
8.50%
Maximum CDSC
(as a percentage of original cost
or redemption proceeds, whichever
is lower)
None**
5.00%
None
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management fees
0.75%
0.75%
0.75%
12b-1 fees
0.25%
1.00%
0.00%
Other expenses
1.12%
1.13%
1.13%
TOTAL ANNUAL FUND OPERATING EXPENSES
2.12%
2.88%
1.88%
MANAGEMENT FEE WAIVER***
(0.64)%
(0.64)%
(0.64)%
NET ANNUAL OPERATING EXPENSES
1.48%
2.24%
1.24%
Acquiring Fund (Pro Forma)
Pro
Forma
Class A
Pro
Forma
Class B
Pro
Forma
Class
1*
Shareholder Transaction Expenses
Maximum sales charge imposed on
purchases
(as a percentage of offering price)
5.00%
None
8.50%
Maximum CDSC
(as a percentage of original cost
or redemption proceeds, whichever
is lower)
None**
5.00%
None
Annual Fund Operating Expenses
(as a percentage of average net
assets)
Management fees
0.75%
0.75%
0.75%
12b-1 fees
0.25%
1.00%
0.00%
Other expenses
0.16%
0.15%
0.49%
TOTAL FUND OPERATING EXPENSES
1.16%
1.90%
1.24%
* Class 1 Shares of the Acquiring Fund had not commenced
operations as of November 30, 1999. The amounts shown are
amounts estimated to be charged for the fiscal year ending
November 30, 2000.
** You may buy Class A Shares in amounts of $1 million or more
at net asset value (without an initial sales charge) but if
you redeem those shares within 12 months of their purchase,
you will pay a deferred sales charge of 1.00%.
*** SSB Citi has agreed to waive a portion of its management fee
for all classes. The actual management fee is 0.11% and is
currently in effect. SSB Citi may discontinue or modify
this management fee waiver without the approval of the
Fund's Trustees.
Example. This Example is intended to help you compare the
cost of investing in each of the Funds. The Example assumes you
invest $10,000 in each Fund for the time periods indicated and
then redeem all of your shares at the end of those periods. The
Example also assumes your investment has a 5% return each year and
that each Fund's annual operating expenses remain the same.
Although your actual costs maybe higher or lower, based on these
assumptions your costs would be:
Mid Cap Blend Fund
1 year
3 years
5 years
10
years*
An Investor would pay the following
expenses on a $10,000 investment,
assuming (1) 5.00% annual return and
(2) redemption at the end of each time
period:
Class A
$612
$ 850
$ 1,106
$ 1,839
Class B
$693
$ 897
$ 1,126
$ 2,031
Class 1
$966
$ 1,210
$1,473
$2,222
An investor would pay the following
expenses on the same investment,
assuming the same annual return and no
redemption:
Class A
$ 612
$ 850
$ 1,106
$ 1,839
Class B
$ 193
$ 597
$ 1,026
$ 2,031
Class 1
$966
$ 1,210
$1,473
$2,222
Mid Cap Fund
1 year
3 years
5 years
10
years*
An Investor would pay the following
expenses on a $10,000 investment,
assuming (1) 5.00% annual return and
(2) redemption at the end of each time
period:
Class A
$ 704
$ 1,131
$ 1,582
$ 2,829
Class B
$ 791
$ 1,192
$ 1,618
$ 3,025
Class 1
$ 1,025
$ 1,391
$ 1,780
$ 2,864
An investor would pay the following
expenses on the same investment,
assuming the same annual return and no
redemption:
Class A
$ 704
$ 1,131
$ 1,582
$ 2,763
Class B
$ 291
$ 892
$ 1,518
$ 3,204
Class 1
$ 1,025
$ 1,391
$ 1,780
$ 2,864
Mid Cap Blend Fund (Pro Forma)
Pro
Forma
1 year
Pro
Forma
3 years
Pro
Forma
5 years
Pro
Forma
10
years*
An Investor would pay the following
expenses on a $10,000 investment,
assuming (1) 5.00% annual return and
(2) redemption at the end of each time
period:
Class A
$612
$ 850
$ 1,106
$ 1,839
Class B
$ 693
$ 897
$ 1,126
$ 2,031
Class 1
$966
$ 1,210
$1,473
$ 2,222
An investor would pay the following
expenses on the same investment,
assuming the same annual return and no
redemption:
Class A
$ 612
$ 850
$ 1,106
$ 1,839
Class B
$ 193
$ 597
$ 1,026
$ 2,031
Class 1
$966
$ 1,210
$1,473
$ 2,222
* Ten-year figures assume conversion of Class B shares to
Class A shares at the end of the eighth year following the
date of purchase.
The above examples assume reinvestment of all dividends and
distributions. The examples should not be considered
representations of past or future expenses. Actual Fund expenses
can vary from year to year and may be higher or lower than those
shown. Please refer to each Fund's prospectus and statement of
additional information for a more detailed discussion of the fees
and expenses applicable to each class of shares of a Fund.
DISTRIBUTION OF SHARES AND OTHER SERVICES
As of June 5, 2000, Salomon Smith Barney distributes shares
of each Fund as principal underwriter (PFS Distributors, Inc. also
serves as a principal underwriter in the case of the Fund) and, as
such, conducts a continuous offering pursuant to a "best efforts"
arrangement requiring Salomon Smith Barney and PFS Distributors,
Inc., as applicable, to take and pay for only such securities as
may be sold to the public. Prior to that time, CFBDS, Inc.,
located at 21 Milk Street, Boston, Massachusetts 02109-5408, acted
as distributor of each Fund's shares. With respect to the Fund,
Salomon Smith Barney has entered into a selling agreement with PFS
Distributors, Inc. (on behalf of PFS Investments, Inc.) and with
one or more other service agents giving the service agents the
rights to sell shares of the Fund. Each Fund has adopted a plan
of distribution under Rule 12b-1 under the 1940 Act (a "Plan").
With respect to the Acquiring Fund, Salomon Smith Barney is
paid a service fee for Class A and Class B shares at the annual
rate of 0.25% of the average daily net assets of the respective
Class under the Plan. Salomon Smith Barney is also paid a
distribution fee with respect to Class B shares of the Acquiring
Fund at the annual rate of 0.75% of the average daily net assets
attributable to that Class. The fees are used by Salomon Smith
Barney to pay its financial consultants for servicing shareholder
accounts and, in the case of Class B shares, to cover expenses
primarily intended to result in the sale of those shares.
With respect to Class A shares of the Fund, the Fund pays
PFS Distributors, Inc. and Salomon Smith Barney, as administrative
agents for "PFS Accounts" (i.e., accounts held by PFS Shareholder
Services, Inc.) and other accounts, respectively (the
"Administrative Agents") 0.25% per annum of its average daily net
assets attributable to such class of shares as a service fee. The
service fee is intended to cover shareholder and account
maintenance services provided to Class A shareholders of the Fund
by financial professionals. Class B shares of the Fund are
subject to a combined annual distribution fee and service fee at
the rate of 1.00% of the Fund's aggregate average daily net assets
attributable to such class of shares, which fees are paid to the
Administrative Agents. Payments are made by the Fund under the
Class B Plan of 0.25% per annum, and distribution fee payments of
0.75% per annum, of the aggregate average daily net assets
attributable to Class B shares. The distribution fee payments are
used as compensation for sales and promotional activities and
marketing of the Class B shares of the Fund. These expenditures
may consist of sales commissions to financial professionals for
selling Class B shares, compensation, sales incentives and
payments to sales and marketing personnel, and the payment of
expenses incurred in its sales and promotional activities,
including advertising expenditures related to the Class B shares
of the Fund and the costs of preparing and distributing
promotional materials with respect to the Class B shares.
Class 1 shares of the Funds are not subject to any
distribution fees. Class B shares of each Fund that automatically
convert to Class A shares eight years after the date of original
purchase will no longer be subject to a distribution fee.
Payments under the above Plans are not tied exclusively to
the distribution and shareholder service expenses actually
incurred by Salomon Smith Barney or PFS Distributors, Inc. and the
payments may exceed distribution expenses actually incurred by the
Funds. Please refer to each Fund's prospectus and statement of
additional information for a more detailed discussion of the
distribution and shareholder servicing arrangements applicable to
each class of shares of the Funds.
PURCHASE, REDEMPTION AND EXCHANGE INFORMATION
The purchase, redemption and exchange procedures and
privileges with respect to the Fund are substantially similar to
those of the Acquiring Fund. However, whereas shareholders of the
Fund may only exchange into shares of certain Smith Barney Funds,
Concert brand funds Or, in certain cases, Citi FundsSM Cash Reserves,
shareholders of the Acquiring Fund may exchange into the same class
of any Smith Barney Fund
(provided that the Smith Barney Fund offers the relevant class of
shares). Moreover, although many of the services provided by PFS
Shareholder Services, Inc. to the Fund are available to
shareholders of the Acquiring Fund, PFS Shareholder Services, Inc.
will not provide services to the Acquiring Fund. Please refer to
each Fund's prospectus and statement of additional information for
a more detailed discussion of the purchase, redemption and
exchange procedures and privileges applicable to each class of a
Fund.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund declares dividends from net investment income and
pays distributions of net realized capital gains, if any,
annually. Each Fund intends to distribute any net realized
capital gains after utilization of capital loss carryforwards, if
any, in November or December to prevent application of a federal
excise tax. An additional distribution may be made if necessary.
Any dividends or capital gains distributions declared in October,
November or December with a record date in such month and paid
during the following January will be treated by shareholders for
federal income tax purposes as if received on December 31 of the
calendar year in which it is declared. Dividends and
distributions of each Fund will be invested in additional shares
of the applicable Fund at net asset value and credited to the
shareholder's account on the payment date or, at the shareholder's
election, paid in cash.
If the Plan is approved by the Fund's shareholders, then as
soon as practicable before the Closing Date, the Fund will pay or
have paid its shareholders a cash distribution of substantially
all undistributed 2000 net investment income and undistributed
realized net capital gains.
TAX CONSEQUENCES
The Fund and the Acquiring Fund will have received an
opinion of Willkie Farr & Gallagher in connection with the
Reorganization, to the effect that, based upon certain facts,
assumptions and representations, the Reorganization will
constitute a tax-free reorganization within the meaning of section
368(a)(1) of the Internal Revenue Code of 1986, as amended (the
"Code"). If the Reorganization constitutes a tax-free
reorganization, no gain or loss will be recognized by the Fund or
its shareholders as a direct result of the Reorganization. See
"The Proposed Transaction -- Federal Income Tax Consequences."
PRINCIPAL INVESTMENTS AND RISK FACTORS
General. As described above, the Fund and the Acquiring
Fund have substantially similar investment objectives and policies
and pursue their respective objectives in a similar manner.
Accordingly, the Funds engage in investment practices and
techniques that are substantially similar. A more complete
description of the investment practices and limitations of the
Acquiring Fund is contained in the prospectus and statement of
additional information of the Acquiring Fund, dated March 29,
2000, as supplemented from time to time, a copy of which is
included herewith, and in the Statement of Additional Information
of the Fund and the Acquiring Fund dated August 16, 2000 (relating
to the proposed Reorganization) which is incorporated herein by
reference. Please refer to each Fund's prospectus and statement
of additional information for a more detailed discussion of the
specific investment practices and risks of the applicable Fund.
Because of their substantially similar investment policies,
the Funds are exposed to similar risks. The following summarizes
those principal risk factors:
Equity Securities. Common stocks represent an equity
(ownership) interest in a corporation. Although equity securities
have a history of long-term growth in value, their prices
fluctuate based on changes in a company's financial condition and
on overall market and economic conditions.
Real Estate Investment Trusts ("REITS"). The value of a
REIT is affected by changes in the value of the properties owned
by the REIT or securing mortgage loans held by the REIT. REITS
are dependent upon cash flow from their investments to repay
financing costs and the ability of the REIT's manager. REITs are
also subject to risks generally associated with investments in
real estate. Each Fund will indirectly bear its proportionate
share of any expenses, including management fees, paid by a REIT
in which it invests.
Convertible Securities. Convertible securities provide
higher yields than the underlying equity securities, but generally
offer lower yields than non-convertible securities of similar
quality. Like bonds, the value of convertible securities
fluctuates in relation to changes in interest rates and, in
addition, also fluctuates in relation to the underlying common
stock.
Warrants. Warrants are subject to the same market risks as
stocks, but may be more volatile in price. A Fund's investments
in warrants will not entitle it to receive dividends or exercise
voting rights and will become worthless if the warrants cannot be
profitably exercised before the expiration dates.
When-Issued, Delayed-Delivery and Forward Commitment
Transactions. The payment obligation and the interest rate that
will be received on when-issued securities are fixed at the time
the buyer enters into the commitment. Due to fluctuations in the
value of securities purchased or sold on a when-issued, delayed-
delivery basis or forward commitment basis, the prices obtained on
such securities may be higher or lower than the prices available
in the market on the dates when the investments are actually
delivered to the buyers. When a Fund agrees to purchase when-
issued or delayed-delivery securities, it will set aside cash or
liquid securities equal to the amount of the commitment in a
segregated account on the Fund's books which account will be
marked-to-market daily. It may be expected that a Fund's net
assets will fluctuate to a greater degree when it sets aside
portfolio securities to cover such purchase commitments than when
it sets aside cash. When a Fund engages in when-issued or
delayed-delivery transactions, it relies on the other party to
consummate the trade. Failure of the seller to do so may result
in the Fund incurring a loss or missing an opportunity to obtain a
price considered to be advantageous.
Foreign Securities. Investments in securities of foreign
issuers involve certain risks not ordinarily associated with
investments in securities of domestic issuers. Such risks include
fluctuations in foreign exchange rates, future political and
economic developments, and the possible imposition of exchange
controls or other foreign governmental laws or restrictions.
Changes in foreign currency exchange rates will, to the extent a
Fund does not adequately hedge against such fluctuations, affect
the value of securities in its portfolio and the unrealized
appreciation or depreciation of investments so far as U.S.
investors are concerned. In addition, with respect to certain
countries, there is the possibility of expropriation of assets,
confiscatory taxation, political or social instability or
diplomatic developments which could adversely affect investments
in those countries.
There may be less publicly available information about a
foreign security than about a security issued by a U.S. company,
and foreign entities may not be subject to accounting, auditing
and financial reporting standards and requirements comparable to
those of United States entities. In addition, certain foreign
investments made by a Fund may be subject to foreign withholding
taxes, which would reduce the Fund's total return on such
investments and the amounts available for distributions by the
Fund to its shareholders. Foreign financial markets, while
growing in volume, have, for the most part, substantially less
volume than United States markets, and securities of many foreign
companies are less liquid and their prices more volatile than
securities of comparable domestic companies. The foreign markets
also have different clearance and settlement procedures, and in
certain markets there have been times when settlements have been
unable to keep pace with the volume of securities transactions
making it difficult to conduct such transactions. Delays in
settlement could result in temporary periods when assets of a Fund
are not invested and no return is earned thereon. The inability
of each Fund to make intended security purchases due to settlement
problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of portfolio securities due
to settlement problems could result either in losses to the Fund
due to subsequent declines in value of the portfolio security or,
if the Fund has entered into a contract to sell the security,
could result in possible liability to the purchaser. Costs
associated with transactions in foreign securities, including
custodial costs and foreign brokerage commissions, are generally
higher than with transactions in United States securities. In
addition, the Fund will incur costs in connection with conversions
between various currencies. There is generally less government
supervision and regulation of exchanges, financial institutions
and issuers in foreign countries than there is in the United
States. These risks may be intensified in the case of investments
in developing or emerging markets. In many developing markets,
there is less government supervision and regulation of business
and industry practices, stock exchanges, brokers and listed
companies than in the United States. Finally, in the event of a
default on any such foreign debt obligations, it may be more
difficult for the Fund to obtain or to enforce a judgment against
the issuers of such securities.
Currency Risks. The U.S. dollar value of securities
denominated in a foreign currency will vary with changes in
currency exchange rates, which can be volatile. Accordingly,
changes in the value of the currency in which the Fund's
investments are denominated relative to the U.S. dollar will
affect a Fund's net asset value. Exchange rates are generally
affected by the forces of supply and demand in the international
currency markets, the relative merits of investing in different
countries and the intervention or failure to intervene of U.S. or
foreign governments and central banks. However, currency exchange
rates may fluctuate based on factors intrinsic to a country's
economy. Some emerging market countries also may have managed
currencies, which are not free floating against the U.S. dollar.
In addition, emerging markets are subject to the risk of
restrictions upon the free conversion of their currencies into
other currencies. Any devaluations relative to the U.S. dollar in
the currencies in which a Fund's securities are quoted would
reduce the Fund's net asset value per share.
Securities of Developing/Emerging Markets Countries.
Investing in the equity markets of developing countries involves
exposure to economic structures that are generally less diverse
and mature, and to political systems that can be expected to have
less stability, than those of developed countries. Historical
experience indicates that the markets of developing countries have
been more volatile than the markets of the more mature economies
of developed countries; however, such markets often have provided
higher rates of return to investors.
One or more of the risks discussed above could affect
adversely the economy of a developing market or a Fund's
investments in such a market. In Eastern Europe, for example,
upon the accession to power of Communist regimes in the past, the
governments of a number of Eastern European countries expropriated
a large amount of property. The claims of many property owners
against those governments may remain unsettled. There can be no
assurance that any investments that a Fund might make in such
emerging markets would not be expropriated, nationalized or
otherwise confiscated at some time in the future. In such an
event, a Fund could lose its entire investment in the market
involved. Moreover, changes in the leadership or policies of such
markets could halt the expansion or reverse the liberalization of
foreign investment policies now occurring and adversely affect
existing investment opportunities.
Many of a Fund's investments in the securities of emerging
markets may be unrated or rated below investment grade. Securities
rated below investment grade (and comparable unrated securities)
are the equivalent of high yield, high risk bonds, commonly known
as "junk bonds." Such securities are regarded as predominantly
speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the
obligations and involve major risk exposure to adverse business,
financial, economic, or political conditions.
Small Capitalization Companies. Small companies (those
companies that have market capitalizations in the lowest 20% of
all publicly traded U.S. companies) may (i) be subject to more
volatile market movements than securities of larger, more
established companies; (ii) have limited product lines, markets or
financial resources; and (iii) depend upon a limited or less
experienced management group. The securities of small companies
may be traded only on the over-the-counter market or on a regional
securities exchange and may not be traded daily or in the volume
typical of trading on a national securities exchange. Disposition
by a Fund of small company securities in order to meet redemptions
may require the Fund to sell these securities at a discount from
market prices, over a longer period of time or during periods when
disposition is not desirable.
Debt Securities. All debt securities are subject to market
risk and credit risk. Market risk relates to market-induced
changes in a security's value, usually as a result of changes in
interest rates. The value of a Fund's investments in debt
securities will change as the general levels of interest rates
fluctuate. During periods of falling interest rates, the value of
a Fund's debt securities will generally rise. Conversely, during
periods of rising interest rates, the value of a Fund's debt
securities will generally decline. Credit risk relates to the
ability of the issuer to make payments of principal and interest.
Additional risks include:
Interest Rate Risk. When interest rates decline, the market
value of fixed income securities tends to increase. Conversely,
when interest rates increase, the market value of fixed income
securities tends to decline. The volatility of a security's
market value will differ depending upon the security's duration,
the issuer and the type of instrument.
Default Risk/Credit Risk. Investments in fixed income
securities are subject to the risk that the issuer of the security
could default on its obligations, causing the Fund to sustain
losses on such investments. A default could impact both interest
and principal payments.
Call Risk and Extension Risk. Fixed income securities may
be subject to both call risk and extension risk. Call risk exists
when the issuer may exercise its right to pay principal on an
obligation earlier than scheduled, which would cause cash flows to
be returned earlier than expected. This typically results when
interest rates have declined and a Fund will suffer from having to
reinvest in lower yielding securities. Extension risk exists when
the issuer may exercise its right to pay principal on an
obligation later than scheduled, which would cause cash flows to
be returned later than expected. This typically results when
interest rates have increased, and a Fund will suffer from the
inability to invest in higher yield securities.
Below Investment Grade Fixed-Income Securities. Securities
rated in the fourth highest ratings category, such as those rated
BBB by S&P or Baa by Moody's Investors Services, Inc. ("Moody's"),
are generally regarded as having adequate capacity to pay interest
and repay principal, but may have some speculative
characteristics. Securities rated below the fourth highest
ratings category, including those rated below Baa by Moody's or
BBB by S&P, are not "investment grade," and may have more
speculative characteristics, including the possibility of default
or bankruptcy of the issuers of such securities, market price
volatility based upon interest rate sensitivity, questionable
creditworthiness and relative liquidity of the secondary trading
market. Because high yield bonds have been found to be more
sensitive to adverse economic changes or individual corporate
developments and less sensitive to interest rate changes than
higher-rated investments, an economic downturn could disrupt the
market for high yield bonds and adversely affect the value of
outstanding bonds and the ability of issuers to repay principal
and interest. In addition, in a declining interest rate market,
issuers of high yield bonds may exercise redemption or call
provisions, which may force a Fund, to the extent it owns such
securities, to replace those securities with lower yielding
securities. This could result in a decreased return.
Money Market Instruments. Each Fund may invest for
temporary defensive purposes in short-term instruments including
corporate and government bonds and notes and money market
instruments. If a Fund takes a temporary defensive
position, it may be unable to achieve its investment goal.
U.S. Government Securities. Each Fund may invest in U.S.
Government securities. Generally, these securities include U.S.
Treasury obligations and obligations issued or guaranteed by U.S.
Government agencies, instrumentalities or sponsored enterprises.
U.S. Government securities also include Treasury receipts and
other stripped U.S. Government securities, where the interest and
principal components of stripped U.S. Government securities are
traded independently. The Acquiring Fund may also invest in zero
coupon U.S. Treasury securities and in zero coupon securities
issued by financial institutions, which represent a proportionate
interest in underlying U.S. Treasury securities. A zero coupon
security pays no interest to its holder during its life and its
value consists of the difference between its face value at
maturity and its cost. The market values of zero coupon
securities generally are more volatile than the market prices of
securities that pay interest periodically.
Repurchase Agreements. Each 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"). A 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.
Reverse Repurchase Agreements. Each Fund may enter into
reverse repurchase agreements with the same parties with whom it
may enter into repurchase agreements. Reverse repurchase
agreements involve the sale of securities held by a Fund pursuant
to its agreement to repurchase them at a mutually agreed upon
date, price and rate of interest. At the time a Fund enters into
a reverse repurchase agreement, it will establish and maintain a
segregated account with an approved custodian containing cash or
liquid securities having a value not less than the repurchase
price (including accrued interest). The assets contained in the
segregated account will be marked-to-market daily and additional
assets will be placed in such account on any day in which the
assets fall below the repurchase price (plus accrued interest). A
Fund's liquidity and ability to manage its assets might be
affected when it sets aside cash or portfolio securities to cover
such commitments. Reverse repurchase agreements involve the risk
that the market value of the securities retained in lieu of sale
may decline below the price of the securities the Fund has sold
but is obligated to repurchase. If the buyer of securities under
a reverse repurchase agreement files for bankruptcy or becomes
insolvent, such buyer or its trustee or receiver may receive an
extension of time to determine whether to enforce a Fund's
obligation to repurchase the securities, and the Fund's use of the
proceeds of the reverse repurchase agreement may effectively be
restricted pending such decision.
Lending of Portfolio Securities. Consistent with applicable
regulatory requirements, the Funds may lend portfolio securities
to brokers, dealers and other financial organizations that meet
capital and other credit requirements or other criteria
established by their respective Boards. A Fund will not lend
portfolio securities to affiliates of SSB Citi 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, a 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." 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.
Illiquid Securities. Each Fund has adopted a fundamental
policy allowing it to invest up to an aggregate amount equal to
15% of its net assets in illiquid securities, which term includes
securities subject to contractual or other restrictions on resale
and other instruments that lack readily available markets. The
Fund, however, currently operates under an informal restriction
limiting such investments to 10% of net assets. This investment
practice could have the effect of increasing the level of
illiquidity in each Fund to the extent that qualified
institutional buyers become for a time uninterested in purchasing
these restricted securities. These difficulties and delays could
result in a Fund's inability to realize a favorable price upon
disposition of restricted securities, and in some cases might make
the disposition of such securities at the time desired by the Fund
impossible. Since market quotations are not readily available for
restricted securities, such securities will be valued by a method
that the Trustees believe accurately reflects fair value.
Derivative Instruments. Transactions in derivative
instruments can be, but are not necessarily, riskier than
investments in conventional stocks, bonds and money market
instruments. A derivative instrument is more accurately viewed as
a way of reallocating risk among different parties or substituting
one type of risk for another. Every investment by a Fund,
including an investment in conventional securities, reflects an
implicit prediction about future changes in the value of that
investment. Every Fund investment also involves a risk that the
portfolio manager's expectations will be wrong. Transactions in
derivative instruments often enable a Fund to take investment
positions that more precisely reflect the portfolio manager's
expectations concerning the future performance of the various
investments available to the Fund. The following are the
principal risks associated with derivative instruments:
Market risk: The instrument will decline in value or that
an alternative investment would have appreciated more, but this is
no different from the risk of investing in conventional
securities.
Leverage and associated price volatility: Leverage causes
increased volatility in the price and magnifies the impact of
adverse market changes, but this risk may be consistent with the
investment objective of even a conservative fund in order to
achieve an average portfolio volatility that is within the
expected range for that type of fund.
Credit risk: The issuer of the instrument may default on
its obligation to pay interest and principal.
Liquidity and valuation risk: Many derivative instruments
are traded in institutional markets rather than on an exchange.
Nevertheless, many derivative instruments are actively traded and
can be priced with as much accuracy as conventional securities.
Derivative instruments that are custom designed to meet the
specialized investment needs of a relatively narrow group of
institutional investors such as the Funds are not readily
marketable and are subject to a Fund's restrictions on illiquid
investments.
Correlation risk: There may be imperfect correlation
between the price of the derivative and the underlying asset. For
example, there may be price disparities between the trading
markets for the derivative contract and the underlying asset.
Each derivative instrument purchased for a Fund's portfolio is
reviewed and analyzed by the Fund's portfolio manager to assess
the risk and reward of each such instrument in relation to the
Fund's portfolio investment strategy. The decision to invest in
derivative instruments or conventional securities is made by
measuring the respective instrument's ability to provide value to
the Fund and its shareholders.
Special Risks of Using Futures Contracts. The prices of
futures contracts are volatile and are influenced by, among other
things, actual and anticipated changes in interest rates, which in
turn are affected by fiscal and monetary policies and national and
international political and economic events.
At best, the correlation between changes in prices of
futures contracts and of the securities or currencies being hedged
can be only approximate. The degree of imperfection of
correlation depends upon circumstances such as: variations in
speculative market demand for futures and for debt securities or
currencies, including technical influences in futures trading; and
differences between the financial instruments being hedged and the
instruments underlying the standard futures contracts available
for trading, with respect to interest rate levels, maturities, and
creditworthiness of issuers. A decision of whether, when, and how
to hedge involves skill and judgment, and even a well-conceived
hedge may be unsuccessful to some degree because of unexpected
market behavior or interest rate trends.
Because of the low margin deposits required, futures trading
involves an extremely high degree of leverage. As a result, a
relatively small price movement in a futures contract may result
in immediate and substantial loss, as well as gain, to the
investor. A purchase or sale of a futures contract may result in
losses in excess of the amount invested in the futures contract.
Where a Fund enters into futures transactions for non-hedging
purposes, it will be subject to greater risks and could sustain
losses which are not offset by gains on other Fund assets.
Most U.S. futures exchanges limit the amount of fluctuation
permitted in futures contract prices during a single trading day.
The daily limit establishes the maximum amount that the price of a
futures contract may vary either up or down from the previous
day's settlement price at the end of a trading session. Once the
daily limit has been reached in a particular type of futures
contract, no trades may be made on that day at a price beyond that
limit. The daily limit governs only price movement during a
particular trading day and therefore does not limit potential
losses, because the limit may prevent the liquidation of
unfavorable positions. Futures contract prices have occasionally
moved 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.
Portfolio Turnover. Each Fund may purchase or sell
securities without regard to the length of time the security has
been held and thus may experience a high rate of portfolio
turnover. A 100% turnover rate would occur, for example, if all
the securities in a portfolio were replaced in a period of one
year. The rate of portfolio turnover is not a limiting factor
when SSB Citi deems it desirable to purchase or sell securities or
to engage in options transactions. High portfolio turnover
involves correspondingly greater transaction costs, including any
brokerage commissions, which are borne directly by a Fund and may
increase the recognition of short-term, rather than long-term,
capital gains if securities are held for one year or less and may
be subject to applicable income taxes.
THE PROPOSED TRANSACTION
Description of the Plan. As stated above, the Plan provides
for the transfer of all of the assets of the
Fund to the Acquiring Fund in exchange for that number of full and
fractional shares of the corresponding class of the Acquiring Fund
having an aggregate net asset value equal to the aggregate net
asset value of the shareholder's shares held in the Fund as of the
close of business on the business day preceding the date of the
Closing. The Acquiring Fund will assume all of the stated liabilities
of the Fund. In connection with the Closing, the Fund will
distribute the shares of the corresponding class of shares of
beneficial interest of the Acquiring Fund received in the exchange
to the shareholders of the Fund in complete liquidation of the
Fund. The Fund will be terminated as a series of Investment
Series.
Upon completion of the Reorganization, each shareholder of
the Fund will own that number of full and fractional shares of the
corresponding class of the Acquiring Fund having an aggregate net
asset value equal to the aggregate net asset value of such
shareholder's shares held in the Fund immediately as of the close
of business on the Closing Date. Each Fund shareholder's account
with the Acquiring Fund will be substantially similar in all
material respects to the accounts currently maintained by the
Fund's sub-transfer agent for such shareholder. Some of the
outstanding shares of beneficial interest of the Fund are
represented by physical certificates; however, in the interest of
economy and convenience, shares of the Fund generally are not
represented by physical certificates, and shares of the Acquiring
Fund issued to Fund shareholders similarly will be in
uncertificated form. Certificates representing shares of the Fund
will be cancelled after the Closing.
Until the Closing, shareholders of the Fund will, of course,
continue to be able to redeem their shares at the net asset value
next determined after receipt by the Fund's sub-transfer agent of
a redemption request in proper form. Redemption requests received
by the sub-transfer agent thereafter will be treated as requests
received for the redemption of shares of the Acquiring Fund
received by the shareholder in connection with the Reorganization.
The obligations of Investment Series, on behalf of the Fund,
and Investment Trust, on behalf of the Acquiring Fund, under the
Plan are subject to various conditions, as stated therein. Among
other things, the Plan requires that all filings be made with, and
all authority be received from, the SEC and state securities
commissions as may be necessary in the opinion of counsel to
permit the parties to carry out the transactions contemplated by
the Plan. The Fund and the Acquiring Fund are in the process of
making the necessary filings. To provide against unforeseen
events, the Plan may be terminated or amended at any time prior to
the Closing by action of the Trustees of either Investment Series
or Investment Trust, notwithstanding the approval of the Plan by
the shareholders of the Fund. However, no amendment may be made
that materially adversely affects the interests of the
shareholders of the Fund without obtaining the approval of the
Fund's shareholders. The Fund and the Acquiring Fund may at any
time waive compliance with certain of the covenants and conditions
contained in the Plan.
The Plan provides that the obligations of Investment Series
and Investment Trust are not personally binding upon any of their
Trustees, shareholders, nominees, officers, agents, or employees,
but binds only the property of the Fund and the Acquiring Fund as
provided in the Declaration of Trust of Investment Series and
Investment Trust. Moreover, no series of Investment Series or
Investment Trust is responsible for the obligations of Investment
Series or Investment Trust under the Plan, and all persons must
look only to the assets of the Fund and the Acquiring Fund to
satisfy the obligations of Investment Series and Investment Trust
under the Plan. The execution and delivery of the Plan have been
authorized by the board of Trustees of the Investment Series, on
behalf of the Fund, and Investment Trust, on behalf of the
Acquiring Fund, and the Plan has been signed by authorized
officers of Investment Series and Investment Trust acting as such,
and neither such authorization by such Trustees, nor the execution
and delivery by such officers, shall be deemed to have been made
by any of them individually or to impose any liability on any of
them personally. For a complete description of the terms and
conditions of the Reorganization, see the Plan at Exhibit A.
SSB Citi will assume and pay all of the expenses that are
solely and directly related to the Reorganization, which expenses
are estimated to be approximately $_______. Shareholders have no
rights of appraisal.
REASONS FOR THE PROPOSED TRANSACTION
At a telephonic meeting of Investment Series' Board of
Trustees held on July 17, 2000, the Trustees, including all of the
Non-Interested Trustees, were presented with materials discussing
the benefits which would accrue to the shareholders of the Fund if
the Fund were to reorganize with and into the Acquiring Fund. For
the reasons discussed below, the Board of Trustees of Investment
Series, including all of the Non-Interested Trustees, has
determined that the proposed Reorganization is in the best
interests of the Fund and its shareholders and that the interests
of the shareholders of the Fund will not be diluted as a result of
the proposed Reorganization.
The proposed combination of the Fund and the Acquiring Fund
will allow the shareholders of the Fund to continue to participate
in a portfolio governed by similar investment objectives and
policies that is professionally managed by the same portfolio
manager. The Board of Trustees of Investment Series believes that
shareholders of the Fund will benefit from the proposed
Reorganization because the Acquiring Fund offers the following
benefits:
Enhanced Flexibility with Respect to Portfolio Investments.
As stated previously the Reorganization is being proposed as part
of a broader initiative by SSB Citi to eliminate duplication and
possible confusion in its mutual fund product offerings. Having
determined that the offering of multiple funds with substantially
similar objectives and identical portfolio managers is both
repetitious and confusing, SSB Citi believes that the combination
of the Funds which have substantially similar investment
objectives and policies into a single larger fund may increase
economic and other efficiencies for investors and SSB Citi, and
may ultimately result in a lower total annual expense ratio for
investors. SSB Citi also believes that a larger asset base could
provide portfolio management benefits such as greater
diversification and the ability to command more attention from
brokers and underwriters. In light of the foregoing, it is
anticipated that the Acquiring Fund may achieve a higher level of
income over a year's time than the Fund. As discussed in detail
herein, the total operating expenses of the Acquiring Fund are
also currently (and are projected to be following the Closing of
the Reorganization) lower than the corresponding expenses incurred
by the Fund.
While past performance is not necessarily indicative of
future results, the Acquiring Fund has outperformed the S&P Mid
Cap Index since inception (September 1, 1998) and for the one year
period ended December 31, 1999. Because the Fund
commenced operations on March 15, 1999, however, it does not yet
have a sufficient operating history to generate performance
history that can be compared against the Acquiring Fund.
Morningstar assigns a rating of 1 to 5 stars to a fund based on
its performance in comparison with a peer group. The top 10% of
funds receive 5 stars.
Lower Fees and Expenses. If the proposed transaction is
approved, shareholders of the Fund may benefit from lower total
fund expenses. See "Investment Management Fees and Expenses" and
"Annual Fund Operating Expenses".
As set forth above, as of their most recent fiscal year end,
each class of shares of the Fund has higher gross and net
operating expenses than the corresponding class of the Acquiring
Fund. As a result of the Reorganization, absent waivers and
reimbusrements, shareholders of the Fund
will be investing in the corresponding class of the Acquiring Fund
with expenses that are currently significantly lower
than those of the relevant class of the Fund. If the
Reorganization is consummated, the Acquiring Fund's net expense
ratio for each class of its shares is estimated to remain
unchanged for the year ending November 30, 2000. Going forward,
shareholders should benefit from economies of scale through lower
expense ratios and higher net income distributions over time since
some of the fixed expenses currently paid by the Acquiring Fund,
such as accounting, legal and printing costs, would also be spread
over a larger asset base.
Due to a combination of factors, including the relatively
small size of the Fund, past and prospective sales of the Fund and
current market conditions, the Trustees and management of
Investment Series believe the Fund and its shareholders would
benefit from a tax-free reorganization with a larger fund with
substantially similar investment objectives and policies and with
a lower total annual expense ratio. Accordingly, it is
recommended that the shareholders of the Fund approve the
Reorganization with the Acquiring Fund.
The Board of Trustees of Investment Series, in recommending
the proposed transaction, considered a number of factors,
including the following:
(1) the Reorganization will result in a single larger
fund, which, may increase economic and other
efficiencies (e.g., eliminating one of the two sets of
prospectuses, annual reports and other documents
required for two Funds), and may result in a lower
expense ratio;
(2) a larger asset base could provide portfolio management
benefits, such as greater diversification and the
ability to command more attention from brokers and
underwriters;
(3) the positive compatibility of the Acquiring Fund's
investment objectives, policies and restrictions with
those of the Fund;
(4) the tax-free nature of the Reorganization;
(5) the potential opportunity for higher income levels and
higher annual return;
(6) the lower total annual expense ratio of the Acquiring
Fund;
(7) the terms and conditions of the Reorganization and
that it should not result in a dilution of Fund
shareholder interests; and
(8) the level of costs and expenses to the Fund of the
proposed Reorganization.
DESCRIPTION OF THE SECURITIES TO BE ISSUED
General. The Fund is a diversified series of Investment
Series, a business trust organized under the laws of The
Commonwealth of Massachusetts on January 29, 1987, and is
registered with the SEC as an open-end management investment
company. The Acquiring Fund is a diversified series of Investment
Trust, a business trust organized under the laws of The
Commonwealth of Massachusetts on October 17, 1991, and is
registered with the SEC as a diversified, open-end management
investment company. The Fund currently offers shares of
beneficial interest classified into three Classes: A, B and 1.
The Acquiring Fund currently offers shares of beneficial interest
classified into four Classes: A, B, L and Y and will offer Class
1 shares upon the closing of the Reorganization. Each Class of
shares represents an identical pro rata interest in the relevant
Fund's investment portfolio. As a result, the Classes of each
Fund have the same rights, privileges and preferences, except with
respect to: (a) the designation of each Class; (b) the amount of
the respective sales charges, if any, for each Class; (c) the
distribution and/or service fees borne by each Class; (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.
Each share of each class of a Fund represents an interest in
that class of the Fund that is equal to and proportionate with
each other share of that class of the Fund. Shareholders are
entitled to one vote per share (and a proportionate fractional
vote per each fractional share) held on matters on which they are
entitled to vote.
Voting Rights. Neither Fund is required to hold shareholder
meetings annually, although shareholder meetings may be called for
purposes such as electing or removing Trustees, changing
fundamental policies or approving an investment management
contract. In the event that shareholders of a Fund wish to
communicate with other shareholders concerning the removal of any
Trustee, such shareholders shall be assisted in communicating with
other shareholders for the purpose of obtaining signatures to
request a meeting of shareholders, all in the manner provided in
Section 16(c) of the 1940 Act as if Section 16(c) were applicable.
Board. The By-Laws of Investment Series provide that the
term of office of each Trustee shall be from the time of his or
her election and qualification until the next annual meeting of
shareholders and until his or her successor shall have been
elected and shall have qualified. Any Trustee may be removed by
the vote of at least a majority of the outstanding shares then
entitled to be cast for the election of Trustees. The Declaration
of Trust of Investment Trust provides that the term of office of
each Trustee is unlimited in duration unless the Trustees
themselves adopt a limited term. A person serving as Trustee will
continue as Trustee until the person resigns, dies or is removed
from office. Any Trustee may be removed with or without cause at
any time by the vote of either two-thirds of the number of
Trustees prior to such removal, or by a vote of not less than two-
thirds of the outstanding shares then entitled to be cast for the
election of Trustees. Vacancies on the Boards of both Funds may
be filled by the Trustees remaining in office. A meeting of
shareholders will be required for the purpose of electing
additional Trustees whenever fewer than a majority of the Trustees
then in office were elected by shareholders and to fill vacancies
if less than two-thirds of the Trustees then holding office have
been elected by the shareholders.
Liquidation or Termination. In the event of the liquidation
or termination of a Fund, the shareholders are entitled to
receive, when and as declared by the Trustees, the excess of the
assets over the liabilities belonging to the relevant Fund. In
either case, the assets so distributed to shareholders will be
distributed among the shareholders in proportion to the number of
shares of the class held by them and recorded on the books of the
relevant Fund. The net asset value of the classes of shares would
differ due to differences in expense ratios.
Liability of Trustees. The Declaration of Trust of
Investment Series provides that the Trustees and officers shall
not be liable for monetary damages for breach of fiduciary duty as
a Trustee or officer, except to the extent such exemption is not
permitted by law. This instrument also provides that the Fund
shall indemnify each Trustee and officer and make advances for the
payment of expenses relating to the matter for which
indemnification is sought, each to the fullest extent permitted by
Massachusetts law and other applicable law. The Declaration of
Trust of Investment Trust provides that a Trustee or officer of
Investment Trust will be personally liable only for his or her own
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of
Trustee. This instrument also provides that each Trustee and
officer will be indemnified for the expenses of litigation against
them unless it is determined that his or her conduct constitutes
willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties.
Rights of Inspection. The Declaration of Trust of
Investment Series permits any shareholder of a Fund or his agent
to inspect and copy during normal business hours the By-Laws,
minutes of the proceedings of shareholders and annual financial
statements of the Fund (including a balance sheet and financial
statements of operations) on file, at its principal offices. The
Declaration of Trust of Investment Trust provides that records of
Investment Trust shall be open to inspection by the Trust's
shareholders to the same extent as is permitted stockholders of a
Massachusetts business corporation under the Massachusetts
Business Corporation Law.
Shareholder Liability. Under Massachusetts law,
shareholders of a Massachusetts business trust could, under
certain circumstances, be held personally liable for obligations
of a fund. The Declarations of Trust of Investment Trust and
Investment Series, however, disclaim shareholder liability for
acts or obligations of the Funds and require that notice of such
disclaimer be given in each agreement, obligation, or instrument
entered into or executed by that Fund or its Trustees. Moreover,
the Declarations of Trust provide for indemnification out of the
Funds' property for all losses and expenses of any shareholder
held personally liable for the obligations of the Funds. Thus,
the risk of a shareholder of Fund incurring financial loss on
account of shareholder liability is considered by SSB Citi remote
and not material, since it is limited to circumstances in which a
disclaimer is inoperative and the Fund itself is unable to meet
its obligations.
Shares of the Acquiring Fund issued to the shareholders of
the Fund pursuant to the Reorganization will be fully paid and
nonassessable when issued, transferable without restrictions and
will have no preemptive rights.
The foregoing is only a summary of certain characteristics
of the operations of Investment Trust and Investment Series. The
foregoing is not a complete description of the documents cited.
Shareholders should refer to the provisions of trust documents and
state laws governing each Fund for a more thorough description.
FEDERAL INCOME TAX CONSEQUENCES
The Reorganization is conditioned upon the receipt by
Investment Series, on behalf of the Fund, and Investment Trust, on
behalf of the Acquiring Fund, of an opinion from Willkie Farr &
Gallagher, substantially to the effect that, based upon certain
facts, assumptions and representations of the parties, for federal
income tax purposes: (i) the transfer to the Acquiring Fund of
all or substantially all of the assets of the Fund in exchange
solely for Shares and the assumption by the Acquiring Fund of all
of the liabilities of the Fund, followed by the distribution of
such Shares to Fund shareholders in exchange for their shares of
the Fund in complete liquidation of the Fund, will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the
Code, and the Acquiring Fund and the Fund will each be "a party to
a reorganization" within the meaning of Section 368(b) of the
Code; (ii) no gain or loss will be recognized by the Fund upon the
transfer of the Fund's assets to the Acquiring Fund in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring
Fund of liabilities of the Fund or upon the distribution (whether
actual or constructive) of the Acquiring Fund Shares to the Fund's
shareholders in exchange for their shares of the Fund; (iii) the
basis of the assets of the Fund in the hands of the Acquiring Fund
will be the same as the basis of such assets of the Fund
immediately prior to the transfer; (iv) the holding period of the
assets of the Fund in the hands of the Acquiring Fund will include
the period during which such assets were held by the Fund; (v) no
gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Fund in exchange for Shares and the
assumption by the Acquiring Fund of all of the liabilities of the
Fund; (vi) no gain or loss will be recognized by the shareholders
of the Fund upon the receipt of Shares solely in exchange for
their shares of the Fund as part of the transaction; (vii) the
basis of Shares received by the shareholders of the Fund will be
the same as the basis of the shares of the Fund exchanged
therefor; and (viii) the holding period of Shares received by the
shareholders of the Fund will include the holding period during
which the shares of the Fund exchanged therefor were held,
provided that at the time of the exchange the shares of the Fund
were held as capital assets in the hands of the shareholders of
the Fund.
While neither Investment Series nor Investment Trust is
aware of any adverse state or local tax consequences of the
proposed Reorganization, they have not requested any ruling or
opinion with respect to such consequences and shareholders may
wish to consult their own tax adviser with respect to such
matters.
LIQUIDATION AND TERMINATION OF SERIES
If the Reorganization is effected, the Fund will be
liquidated and terminated as a series of Investment Series, and
the Fund's outstanding shares will be cancelled.
PORTFOLIO SECURITIES
If the Reorganization is effected, SSB Citi will analyze and
evaluate the portfolio securities of the Fund being transferred to
the Acquiring Fund. Consistent with the Acquiring Fund's
investment objective and policies, any restrictions imposed by the
Code and the best interests of the Acquiring Fund's shareholders
(including former shareholders of the Fund), SSB Citi will
determine the extent and duration to which the Fund's portfolio
securities will be maintained by the Acquiring Fund. Subject to
market conditions at the time of any such rebalancing, the
disposition of the Fund's portfolio securities may result in a
capital gain or loss. The actual tax consequences of any
disposition of portfolio securities will vary depending upon the
specific security(ies) being sold.
PORTFOLIO TURNOVER
The portfolio turnover rate for the Acquiring Fund (i.e.,
the ratio of the lesser of annual sales or purchases to the
monthly average value of the portfolio (excluding from both the
numerator and the denominator securities with maturities at the
time of acquisition of one year or less)), for the year ended
November 30, 1999 was 61%. The portfolio turnover rate for the
Fund for the year ended October 31, 1999 was 47%.
CAPITALIZATION AND PERFORMANCE
Pro Forma Capitalization (Unaudited). The following table
sets forth the unaudited capitalization of each class of each of
the Acquiring Fund and the Fund as of June 30, 2000 as adjusted
giving effect to the Reorganization discussed herein:1
1 Assumes the Reorganization had been consummated on June 30,
2000, and is for information purposes only. No assurance can
be given as to how many shares of the Acquiring Fund will be
received by shareholders of the Fund on the date the
Reorganization takes place, and the foregoing should not be
relied upon to reflect the number of shares of the Acquiring
Fund that actually will be received on or after such date.
ACQUIRING
FUND
(Actual)
THE
FUND
(Actual)
PRO FORMA
ADJUSTMENTS
PRO FORMA
COMBINED
Class A
Net Assets
213,113,3
14
28,378,009
241,491,32
3
Net Asset Value
Per Share
22.68
16.27
22.68
Shares Outstanding
9,394,701
1,744,310
1,251,235
10,645,936
Class B
Net Assets
372,790,0
22
46,441,097
419,231,11
8
Net Asset Value
Per Share
22.38
16.13
22.38
Shares Outstanding4
16,660,18
1
2,880,010
2,075,116
18,735,297
Class L
Net Assets
267,290,8
11
267,290,81
1
Net Asset Value
Per Share
22.38
22.38
Shares Outstanding
11,945,45
1
11,945,451
Class Y
Net Assets
146,333,2
19
146,333,21
9
Net Asset Value
Per Share
22.79
22.79
Shares Outstanding
6,422,013
6,422,013
Class 1
Net Assets
2,550,602
2,550,602
Net Asset Value
Per Share
22.68
16.32
22.68
Shares Outstanding
156,277
112,460
112,460
Due to the net asset value of the Acquired Fund being less
than 10% of the Acquiring Fund's value, pro forma statements are
not required to be and have not been prepared for inclusion in the
Statement of Additional Information filed in connection with the
Reorganization.
Total return is a measure of the change in value of an
investment in a fund over the period covered, which assumes that
any dividends or capital gains distributions are automatically
reinvested in shares of the fund rather than paid to the investor
in cash. The formula for total return used by a fund is
prescribed by the SEC and includes three steps: (1) adding to the
total number of shares of the fund that would be purchased by a
hypothetical $1,000 investment in the fund all additional shares
that would have been purchased if all dividends and distributions
paid or distributed during the period had been automatically
reinvested; (2) calculating the redemption value of the
hypothetical initial investment as of the end of the period by
multiplying the total number of shares owned at the end of the
period by the net asset value per share on the last trading day of
the period; and (3) dividing this account value for the
hypothetical investor by the amount of the initial investment, and
annualizing the result for periods of less than one year. Total
return may be stated with or without giving effect to any expense
limitations in effect for a fund.
The following table reflects the average annual total
returns of Class A shares of the Acquiring Fund for the 1 year and
since inception periods, ending December 31, 1999. Because the
Fund commenced operations on March 15, 1999, however, it does not
yet have a sufficient operating history to generate the
performance information for those periods specified below.
THE ACQUIRING FUND
Average Annual Total Return:1
1 year
23.13%
5 year
N/A
10 year
N/A
Since Inception
48.96%
(9/1/98)
__________________
1 The average annual total returns for other classes of each
Fund's shares would be similar to the returns of the Class A
Shares of the relevant Fund, but would differ to the extent
that the other class of shares had a higher or lower total
annual expense ratio during the relevant periods. Class 1
Shares of the Acquiring Fund had not been issued as of the date
of this Proxy Statement/Prospectus.
ADDITIONAL INFORMATION ABOUT THE FUNDS
As noted above, additional information about Investment
Series with respect to the Fund, and Investment Trust with respect
to the Acquiring Fund, and the Reorganization has been filed with
the SEC and may be obtained without charge by writing to Smith
Barney Mutual Funds, 388 Greenwich Street, New York, New York
10013, or by calling (800) 451-2010.
Each Fund is subject to the informational requirements of
the Securities Exchange Act of 1934 and the 1940 Act, and in
accordance therewith, files reports, proxy material and other
information about the applicable Fund with the Commission.
Such reports, proxy material and other information can be
inspected and copied at the Public Reference Room (202-942-8090)
maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such material can also be
obtained from the Public Reference Branch, Office of Consumer
Affairs and Information Services, Securities and Exchange
Commission 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates or without charge from the Commission at
[email protected]. Copies of such material can also be obtained
from Smith Barney Mutual Funds, 388 Greenwich Street, New York,
New York 10013, or by calling (800) 451-2010.
INTERESTS OF CERTAIN PERSONS
SSB Citi and certain of the Acquiring Fund's service
providers have a financial interest in the Reorganization, arising
from the fact that their respective fees under their respective
agreements with the Acquiring Fund will increase as the amount of
the Acquiring Fund's assets increases; the amount of those assets
will increase by virtue of the Reorganization.
THE BOARD MEMBERS OF INVESTMENT SERIES RECOMMEND THAT THE
SHAREHOLDERS OF THE FUND VOTE IN FAVOR OF THIS PROPOSAL.
ADDITIONAL INFORMATION TC "ADDITIONAL INFORMATION" \f C \l "1"
General. The cost of preparing, printing and mailing the
enclosed proxy card(s) and Proxy Statement/Prospectus and all
other costs incurred in connection with the solicitation of
proxies, including any additional solicitation made by letter,
telephone or telegraph, will be paid by SSB Citi. In addition to
solicitation by mail, certain officers and representatives of
Investment Series, officers and employees of SSB Citi and certain
financial services firms and their representatives, who will
receive no extra compensation for their services, may solicit
proxies by telephone, telegram or personally.
When the Fund records proxies by telephone, it will use
procedures designed to (i) authenticate shareholders' identities,
(ii) allow shareholders to authorize the voting of their shares in
accordance with their instructions and (iii) confirm that their
instructions have been properly recorded.
To participate in the Special Meeting, the shareholder may
submit the proxy card originally sent with the Proxy
Statement/Prospectus or attend in person. Any proxy given by a
shareholder is revocable until voted at the Special Meeting.
Proposals Of Shareholders. Shareholders wishing to submit
proposals for inclusion in a proxy statement for a shareholder
meeting subsequent to the Special Meeting, if any, should send
their written proposals to the Secretary of Investment Series, c/o
Smith Barney Mutual Funds, 388 Greenwich Street, New York, New
York 10013, within a reasonable time before the solicitation of
proxies for such meeting. The timely submission of a proposal
does not guarantee its inclusion.
Other Matters To Come Before The Special Meeting. No Board
member is aware of any matters that will be presented for action
at the Special Meeting other than the matters set forth herein.
Should any other matters requiring a vote of shareholders arise,
the proxy in the accompanying form will confer upon the person or
persons entitled to vote the shares represented by such proxy the
discretionary authority to vote the shares as to any such other
matters in accordance with their best judgment in the interest of
Investment Series and/or the Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S)
PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
By order of the Board of Trustees,
/s/ Christina T. Sydor
Christina T. Sydor
Secretary
INDEX OF EXHIBITS
ANNEX: 5% Shareholders
Exhibit A: Form of Agreement and Plan of Reorganization
ANNEX
5% SHAREHOLDERS
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
is made as of this ____ day of _________, 2000, between Concert
Investment Series(r) ("Investment Series"), a Massachusetts business
trust with its principal place of business at 388 Greenwich
Street, New York, New York 10013, on behalf of its series, the
Mid Cap Fund (the "Acquired Fund"), and Smith Barney Investment
Trust ("Investment Trust'), a Massachusetts business trust with
its principal place of business at 388 Greenwich Street, New York,
New York 10013, on behalf of its series, Mid Cap Blend Fund (the
"Acquiring Fund"), and solely for purposes of Section 10.2 hereof,
SSB Citi Fund Management LLC ("SSB Citi").
This Agreement is intended to be and is adopted as a plan of
reorganization and liquidation within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). The reorganization (the "Reorganization") will consist
of the transfer of all of the assets of the
Acquired Fund to the Acquiring Fund in exchange solely for voting
shares of the corresponding class of common stock($.001 par value
per share) of the Acquiring Fund (the "Acquiring Fund Shares"),
the assumption by the Acquiring Fund of all of the stated
liabilities of the Acquired Fund and the distribution of
the Acquiring Fund Shares to the shareholders of the Acquired Fund
in complete
liquidation of the Acquired Fund as provided herein, all upon the
terms and conditions hereinafter set forth in this Agreement.
All representations, warranties, agreements or covenants
made or undertaken by the Acquired Fund and the Acquiring Fund in
this Agreement are actually made or undertaken by Investment
Series on behalf of the Acquired Fund and Investment Trust on
behalf of the Acquiring Fund.
NOW, THEREFORE, in consideration of the premises and of the
covenants and agreements hereinafter set forth, the parties hereto
covenant and agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING
FUND IN EXCHANGE FOR THE ACQUIRING FUND SHARES, THE
ASSUMPTION OF ALL ACQUIRED FUND LIABILITIES AND THE
LIQUIDATION OF THE ACQUIRED FUND
1.1. Subject to the terms and conditions herein set forth
and on the basis of the representations and warranties contained
herein, the Acquired Fund agrees to transfer to the Acquiring Fund
all of the Acquired Fund's assets as set
forth in Section 1.2, and the Acquiring Fund agrees in exchange
therefor (i) to deliver to the Acquired Fund that number of full
and fractional Acquiring Fund Shares determined by dividing the
value of the Acquired Fund's assets, computed in the manner and as
of the time and date set forth in Section 2.1, by the net asset
value of one Acquiring Fund Share, computed in the manner and as
of the time and date set forth in Section 2.2; and (ii) to assume
all of the stated liabilities of the Acquired Fund, as set forth in
Section 1.3. Such transactions shall take place at the closing
provided for in Section 3.1 (the "Closing").
1.2. The assets of the Acquired Fund to be acquired by the
Acquiring Fund (collectively "Assets") shall consist of all
assets, including, without limitation, all cash, cash equivalents,
securities, commodities and futures interests and dividends or
interest or other receivables that are owned by the Acquired Fund
and any deferred or prepaid expenses shown on the unaudited
statement of assets and liabilities of the Acquired Fund prepared
as of the effective time of the closing (the "Effective Time
Statement"), prepared in accordance with generally accepted
accounting principles ("GAAP") applied consistently with those of
the Acquired Fund's most recent audited balance sheet.
1.3. The Acquired Fund will endeavor to discharge all the
Acquired Fund's known liabilities and obligations prior to the
Closing Date as defined in Section 3.1, other than those
liabilities and obligations which would otherwise be discharged at
a later date in the ordinary course of business.
1.4. On or as soon as practicable prior to the Closing Date
as defined in Section 3.1, the Acquired Fund will declare and pay
to its shareholders of record one or more dividends and/or other
distributions so that it will have distributed substantially all
of its investment company taxable income (computed without regard
to any deduction for dividends paid) and realized net capital
gain, if any, for the current taxable year through the Closing
Date.
1.5. Immediately after the transfer of assets provided for
in Section 1.1 (the "Liquidation Time"), Investment Series will
distribute to the Acquired Fund's shareholders of record (the
"Acquired Fund Shareholders"), determined as of the Valuation Time
(as defined herein), on a pro rata basis, the Acquiring Fund
Shares received by the Acquired Fund pursuant to Section 1.1 and
the Acquired Fund will completely liquidate. Such distribution
and liquidation will be accomplished by the transfer of the
Acquiring Fund Shares then credited to the account of the Acquired
Fund on the books of the Acquiring Fund to open accounts on the
share records of the Acquiring Fund in the names of the Acquired
Fund Shareholders. The aggregate net asset value of Acquiring
Fund Shares to be so credited to Acquired Fund Shareholders shall
be equal to the aggregate net asset value of each class of the
Acquired Fund shares owned by such shareholders as of the
Valuation Time (as defined herein). All issued and outstanding
shares of the Acquired Fund will simultaneously be cancelled on
the books of the Acquired Fund, although share certificates
representing interests in shares of the Acquired Fund will
represent a number of Acquiring Fund Shares after the Closing Date
as determined in accordance with Section 2.3. The Acquiring Fund
will not issue certificates representing Acquiring Fund Shares in
connection with such exchange.
1.6. Ownership of Acquiring Fund Shares will be shown on
the books of the Acquiring Fund. Shares of the Acquiring Fund
will be issued in the manner described in the Acquiring Fund's
then-current prospectus and statement of additional information.
1.7. Any reporting responsibility of the Acquired Fund
including, without limitation, the responsibility for filing of
regulatory reports, tax returns, or other documents with the
Securities and Exchange Commission (the "Commission"), any state
securities commission, and any federal, state or local tax
authorities or any other relevant regulatory authority, is and
shall remain the responsibility of the Acquired Fund.
1.8. All books and records of the Acquired Fund, including
all books and records required to be maintained under the 1940 Act
and the rules and regulations thereunder, shall be available to
the Acquiring Fund from and after the Closing Date and shall be
turned over to the Acquiring Fund as soon as practicable following
the closing date.
2. VALUATION
2.1. The value of the Assets shall be computed as of the
close of regular trading on The New York Stock Exchange, Inc.
("NYSE") on the Closing Date, as defined in Section 3.1 (such time
and date also being hereinafter called the "Valuation Time") after
the declaration and payment of any dividends and/or other
distributions on that date, using the valuation procedures set
forth in Investment Trust's Declaration of Trust, as amended, and
the Acquiring Fund's then-current prospectus or statement of
additional information.
2.2. The net asset value of an Acquiring Fund share shall
be the net asset value per share of each class computed as of the
Valuation Time using the valuation procedures referred to in
Section 2.1.
2.3. The number of the Acquiring Fund Shares to be issued
(including fractional shares, if any) in exchange for the Assets
shall be determined by dividing the value of the Assets with
respect to shares of each class of the Acquired Fund determined in
accordance with Section 2.1 by the net asset value by class of an
Acquiring Fund Share determined in accordance with Section 2.2.
2.4. All computations of value hereunder shall be made by
or under the direction of each Fund's respective accounting agent,
if applicable, in accordance with its regular practice and the
requirements of the 1940 Act and shall be subject to confirmation
by each Fund's respective independent accountants.
3. CLOSING AND CLOSING DATE
3.1. The Closing of the transactions contemplated by this
Agreement shall be October 6, 2000, or such later date as the
parties may agree in writing (the "Closing Date"). All acts
taking place at the Closing shall be deemed to take place
simultaneously as of 4:00 P.M., Eastern time, on the Closing Date,
unless otherwise agreed to by the parties. The Closing shall be
held at the offices of [Willkie Farr & Gallagher] or at such other
place and time as the parties may agree.
3.2. Acquired Fund shall deliver to Acquiring Fund on the
Closing Date a schedule of assets.
3.3. PNC Bank, National Association, as custodian for the
Acquired Fund, shall deliver at the Closing a certificate of an
authorized officer stating that (a) the Assets shall have been
delivered in proper form to PNC Bank, National Association,
custodian for the Acquiring Fund, prior to or on the Closing Date
and (b) all necessary taxes in connection with the delivery of the
Assets, including all applicable federal and state stock transfer
stamps, if any, have been paid or provision for payment has been
made. The Acquired Fund's portfolio securities represented by a
certificate or other written instrument shall be presented by
Custodian for Acquired Fund to Custodian for Acquiring Fund for
examination no later than five business days preceding the Closing
Date and transferred and delivered by the Acquired Fund as of the
Closing Date by the Acquired Fund for the account of Acquiring
Fund duly endorsed in proper form for transfer in such condition
as to constitute good delivery thereof. The Acquired Fund's
portfolio securities and instruments deposited with a securities
depository, as defined in Rule 17f-4 under the 1940 Act, shall be
delivered as of the Closing Date by book entry in accordance with
the customary practices of such depositories and Custodian for
Acquiring Fund. The cash to be transferred by the Acquired Fund
shall be delivered by wire transfer of federal funds on the
Closing Date.
3.4. Citi Fiduciary Trust Company (the "Transfer Agent"),
on behalf of the Acquired Fund, shall deliver at the Closing a
certificate of an authorized officer stating that its records
contain the names and addresses of the Acquired Fund Shareholders
and the number and percentage ownership (to three decimal places)
of outstanding Acquired Fund Shares owned by each such shareholder
immediately prior to the Closing. The Acquiring Fund shall issue
and deliver a confirmation evidencing the Acquiring Fund Shares to
be credited on the Closing Date to the Acquired Fund or provide
evidence satisfactory to the Acquired Fund that such Acquiring
Fund Shares have been credited to the Acquired Fund's account on
the books of the Acquiring Fund. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments,
share certificates, if any, receipts or other documents as such
other party or its counsel may reasonably request to effect the
transactions contemplated by this Agreement.
3.5. In the event that immediately prior to the Valuation
Time (a) the NYSE or another primary trading market for portfolio
securities of the Acquiring Fund or the Acquired Fund shall be
closed to trading or trading thereupon shall be restricted, or
(b) trading or the reporting of trading on such Exchange or
elsewhere shall be disrupted so that, in the judgment of the Board
of Trustees of either Fund, accurate appraisal of the value of the
net assets with respect to the Acquiring Fund Shares or the
Acquired Fund Shares is impracticable, the Closing Date shall be
postponed until the first business day after the day when trading
shall have been fully resumed and reporting shall have been
restored.
4. REPRESENTATIONS AND WARRANTIES
4.1. Investment Series, on behalf of the Acquired Fund,
represents and warrants to Investment Trust, on behalf of the
Acquiring Fund, as follows:
(a) Investment Series is a business trust duly
organized and validly existing under the laws of The
Commonwealth of Massachusetts with power under its
Declaration of Trust, as amended, to own all of its
properties and assets and to carry on its business as it is
now being conducted;
(b) Investment Series is registered with the
Commission as an open-end management investment company
under the Investment Company Act of 1940, as amended (the
"1940 Act"), and such registration is in full force and
effect;
(c) No consent, approval, authorization, or order of
any court or governmental authority is required for the
consummation by the Acquired Fund of the transactions
contemplated herein, except such as have been obtained under
the Securities Act of 1933, as amended (the "1933 Act"), the
Securities Exchange Act of 1934 (the "1934 Act") and the
1940 Act and such as may be required by state securities
laws;
(d) Other than with respect to contracts entered
into in connection with the portfolio management of the
Acquired Fund which shall terminate on or prior to the
Closing Date, Investment Series is not, and the execution,
delivery and performance of this Agreement by Investment
Series will not result, in violation of Massachusetts law or
of its Declaration of Trust, as amended, or By-Laws, or of
any material agreement, indenture, instrument, contract,
lease or other undertaking known to counsel to which the
Acquired Fund is a party or by which it is bound, and the
execution, delivery and performance of this Agreement by the
Acquired Fund will not result in the acceleration of any
obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment
or decree to which the Acquired Fund is a party or by which
it is bound;
(e) No material litigation or administrative
proceeding or investigation of or before any court or
governmental body is presently pending or to its knowledge
threatened against the Acquired Fund or any properties or
assets held by it. The Acquired Fund knows of no facts
which might form the basis for the institution of such
proceedings which would materially and adversely affect its
business and is not a party to or subject to the provisions
of any order, decree or judgment of any court or
governmental body which materially and adversely affects its
business or its ability to consummate the transactions
herein contemplated;
(f) The Statements of Assets and Liabilities,
including the Investment Portfolio, Operations, and Changes
in Net Assets, and the Financial Highlights of the Acquired
Fund at and for the year ended October 31, 1999, has been
audited by Ernst & Young LLP, independent certified public
accountants, and are in accordance with GAAP consistently
applied, and such statements (copies of which have been
furnished to the Acquiring Fund) present fairly, in all
material respects, the financial position, results of
operations, changes in net assets and financial highlights
of the Acquired Fund as of such date in accordance with
GAAP, and there are no known contingent liabilities of the
Acquired Fund required to be reflected on a statement of
assets and liabilities (including the notes thereto) in
accordance with GAAP as of such date not disclosed therein;
(g) Since October 31, 1999, there has not been any
material adverse change in the Acquired Fund's financial
condition, assets, liabilities or business other than
changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing
more than one year from the date such indebtedness was
incurred except as otherwise disclosed to and accepted in
writing by the Acquiring Fund. For purposes of this
subsection (g), a decline in net asset value per share of
the Acquired Fund due to declines in market values of
securities in the Acquired Fund's portfolio, the discharge
of Acquired Fund liabilities, or the redemption of Acquired
Fund shares by Acquired Fund Shareholders shall not
constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all
federal and other tax returns and reports of the Acquired
Fund required by law to have been filed by such dates
(including any extensions) shall have been filed and are or
will be correct in all material respects, and all federal
and other taxes shown as due or required to be shown as due
on said returns and reports shall have been paid or
provision shall have been made for the payment thereof, and,
to the best of the Acquired Fund's knowledge, no such return
is currently under audit and no assessment has been asserted
with respect to such returns;
(i) For each taxable year of its operation, the
Acquired Fund has met the requirements of Subchapter M of
the Code for qualification as a regulated investment company
and has elected to be treated as such, has been eligible to
and has computed its federal income tax under Section 852 of
the Code, and will have distributed all of its investment
company taxable income and net capital gain (as defined in
the Code) that has accrued through the Closing Date;
(j) All issued and outstanding shares of the
Acquired Fund (i) have been offered and sold in every state
and the District of Columbia in compliance in all material
respects with applicable registration requirements of the
1933 Act and state securities laws, (ii) are, and on the
Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable, and (iii) will
be held at the time of the Closing by the persons and in the
amounts set forth in the records of the Transfer Agent, as
provided in Section 3.3. The Acquired Fund does not have
outstanding any options, warrants or other rights to
subscribe for or purchase any of the Acquired Fund shares,
nor is there outstanding any security convertible into any
of the Acquired Fund shares;
(k) At the Closing Date, the Acquired Fund will have
good and marketable title to the Acquired Fund's assets to
be transferred to the Acquiring Fund pursuant to Section 1.2
and full right, power, and authority to sell, assign,
transfer and deliver such assets hereunder free of any liens
or other encumbrances, except those liens or encumbrances as
to which the Acquiring Fund has received notice at or prior
to the Closing, and upon delivery and payment for such
assets, the Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full
transfer thereof, including such restrictions as might arise
under the 1933 Act and the 1940 Act, except those
restrictions as to which the Acquiring Fund has received
notice and necessary documentation at or prior to the
Closing;
(l) The execution, delivery and performance of this
Agreement will have been duly authorized prior to the
Closing Date by all necessary action on the part of the
Trustees of Investment Series, and, subject to the approval
of the Acquired Fund Shareholders, this Agreement
constitutes a valid and binding obligation of Investment
Series, on behalf of the Acquired Fund, enforceable in
accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(m) The information to be furnished by the Acquired
Fund for use in applications for orders, registration
statements or proxy materials or for use in any other
document filed or to be filed with any federal, state or
local regulatory authority (including the National
Association of Securities Dealers, Inc.), which may be
necessary in connection with the transactions contemplated
hereby, shall be accurate and complete in all material
respects and shall comply in all material respects with
federal securities and other laws and regulations applicable
thereto; and
(n) The current prospectus and statement of
additional information of the Acquired Fund conform in all
material respects to the applicable requirements of the 1933
Act and the 1940 Act and the rules and regulations of the
Commission thereunder and do not include any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not materially misleading; and
(o) The proxy statement of the Acquired Fund to be
included in the Registration Statement referred to in
Section 5.7 (the "Proxy Statement"), insofar as it relates
to the Acquired Fund, will, on the effective date of the
Registration Statement and on the Closing Date, not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which such statements are made, not materially
misleading; provided, however, that the representations and
warranties in this Section shall not apply to statements in
or omissions from the Proxy Statement and the Registration
Statement made in reliance upon and in conformity with
information that was furnished or should have been furnished
by the Acquiring Fund for use therein.
4.2. Investment Trust, on behalf of the Acquiring Fund,
represents and warrants to Investment Series, on behalf of the
Acquired Fund, as follows:
(a) Investment Trust is a voluntary association of
the type commonly referred to as a Massachusetts business
trust with transferable shares duly organized and validly
existing under the laws of The Commonwealth of Massachusetts
with power under its Declaration of Trust, as amended, to
own all of its properties and assets and to carry on its
business as it is now being conducted;
(b) Investment Trust is registered with the
Commission as an open-end management investment company
under the 1940 Act, and such registration is in full force
and effect;
(c) No consent, approval, authorization, or order of
any court or governmental authority is required for the
consummation by the Acquiring Fund of the transactions
contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may
be required by state securities laws;
(d) Investment Trust is not, and the execution,
delivery and performance of this Agreement by Investment
Trust will not result, in violation of Massachusetts law or
of its Declaration of Trust, as amended, or By-Laws, or of
any material agreement, indenture, instrument, contract,
lease or other undertaking known to counsel to which the
Acquiring Fund is a party or by which it is bound, and the
execution, delivery and performance of this Agreement by the
Acquiring Fund will not result in the acceleration of any
obligation, or the imposition of any penalty, under any
agreement, indenture, instrument, contract, lease, judgment
or decree to which the Acquiring Fund is a party or by which
it is bound;
(e) No material litigation or administrative
proceeding or investigation of or before any court or
governmental body is presently pending or to its knowledge
threatened against the Acquiring Fund or any properties or
assets held by it. The Acquiring Fund knows of no facts
which might form the basis for the institution of such
proceedings which would materially and adversely affect its
business and is not a party to or subject to the provisions
of any order, decree or judgment of any court or
governmental body which materially and adversely affects its
business or its ability to consummate the transactions
herein contemplated;
(f) The Statements of Assets and Liabilities,
including the Investment Portfolio, Operations, and Changes
in Net Assets, and the Financial Highlights of the Acquiring
Fund at and for the year ended November 30, 1999 has been
audited by KPMG LLP, independent certified public
accountants, and are in accordance with GAAP consistently
applied, and such statements (copies of which have been
furnished to the Acquired Fund) present fairly, in all
material respects, the financial position, results of
operations, changes in net assets and financial highlights
of the Acquiring Fund as of such date in accordance with
GAAP, and there are no known contingent liabilities of the
Acquiring Fund required to be reflected on a statement of
assets and liabilities (including the notes thereto) in
accordance with GAAP as of such date not disclosed therein;
(g) Since November 30, 1999, there has not been any
material adverse change in the Acquiring Fund's financial
condition, assets, liabilities or business other than
changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing
more than one year from the date such indebtedness was
incurred except as otherwise disclosed to and accepted in
writing by Investment Funds on behalf of the Acquired Fund.
For purposes of this subsection (g), a decline in net asset
value per share of the Acquiring Fund due to declines in
market values of securities in the Acquiring Fund's
portfolio, the discharge of Acquiring Fund liabilities, or
the redemption of Acquiring Fund shares by Acquiring Fund
shareholders shall not constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all
federal and other tax returns and reports of the Acquiring
Fund required by law to have been filed by such dates
(including any extensions) shall have been filed and are or
will be correct in all material respects, and all federal
and other taxes shown as due or required to be shown as due
on said returns and reports shall have been paid or
provision shall have been made for the payment thereof, and,
to the best of the Acquiring Fund's knowledge, no such
return is currently under audit and no assessment has been
asserted with respect to such returns;
(i) For each taxable year of its operation, the
Acquiring Fund has met the requirements of Subchapter M of
the Code for qualification as a regulated investment company
and has elected to be treated as such, has been eligible to
and has computed its federal income tax under Section 852 of
the Code, and will do so for the taxable year including the
Closing Date;
(j) All issued and outstanding shares of the
Acquiring Fund (i) have been offered and sold in every state
and the District of Columbia in compliance in all material
respects with applicable registration requirements of the
1933 Act and state securities laws and (ii) are, and on the
Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable, recognizing that
under Massachusetts law shareholders of the Acquiring Fund
could under certain circumstances be held personally liable
for its obligations. The Acquiring Fund does not have
outstanding any options, warrants or other rights to
subscribe for or purchase any of the Acquiring Fund shares,
nor is there outstanding any security convertible into any
of the Acquiring Fund shares;
(k) The Acquiring Fund Shares to be issued and
delivered to the Acquired Fund, for the account of the
Acquired Fund Shareholders, pursuant to the terms of this
Agreement, will at the Closing Date have been duly
authorized and, when so issued and delivered, will be duly
and validly issued and outstanding Acquiring Fund Shares,
and will be fully paid and non-assessable, recognizing that
under Massachusetts law shareholders of the Acquiring Fund
could under certain circumstances be held personally liable
for its obligations;
(l) At the Closing Date, the Acquiring Fund will
have good and marketable title to the Acquiring Fund's
assets, free of any liens or other encumbrances, except
those liens or encumbrances as to which the Acquired Fund
has received notice at or prior to the Closing;
(m) The execution, delivery and performance of this
Agreement will have been duly authorized prior to the
Closing Date by all necessary action on the part of the
Trustees of Investment Trust will constitute a valid and
binding obligation of Investment Trust on behalf of the
Acquiring Fund, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other
laws relating to or affecting creditors' rights and to
general equity principles;
(n) The information to be furnished by the Acquiring
Fund for use in applications for orders, registration
statements or proxy materials or for use in any other
document filed or to be filed with any federal, state or
local regulatory authority (including the National
Association of Securities Dealers, Inc.), which may be
necessary in connection with the transactions contemplated
hereby, shall be accurate and complete in all material
respects and shall comply in all material respects with
federal securities and other laws and regulations applicable
thereto;
(o) The current prospectus and statement of
additional information of the Acquiring Fund conform in all
material respects to the applicable requirements of the 1933
Act and the 1940 Act and the rules and regulations of the
Commission thereunder and do not include any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not materially misleading;
(p) The Proxy Statement to be included in the
Registration Statement, only insofar as it relates to the
Acquiring Fund, will, on the effective date of the
Registration Statement and on the Closing Date, not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which such statements were made, not materially
misleading; provided, however, that the representations and
warranties in this Section shall not apply to statements in
or omissions from the Proxy Statement and the Registration
Statement made in reliance upon and in conformity with
information that was furnished or should have been furnished
by the Acquired Fund for use therein; and
(q) The Acquiring Fund agrees to use all reasonable
efforts to obtain the approvals and authorizations required
by the 1933 Act, the 1940 Act and such of the state
securities laws as may be necessary in order to continue its
operations after the Closing Date.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1. Investment Trust, on behalf of the Acquiring Fund, and
Investment Series, on behalf of the Acquired Fund, each covenants
to operate its business in the ordinary course between the date
hereof and the Closing Date, it being understood that (a) such
ordinary course of business will include (i) the declaration and
payment of customary dividends and other distributions and
(ii) such changes as are contemplated by the Funds' normal
operations; and (b) each Fund shall retain exclusive control of
the composition of its portfolio until the Closing Date.
5.2. Upon reasonable notice, the Acquiring Fund's officers
and agents shall have reasonable access to the Acquired Fund's
books and records necessary to maintain current knowledge of the
Acquired Fund and to ensure that the representations and
warranties made by the Acquired Fund are accurate.
5.3. Investment Series, on behalf of the Acquired Fund,
covenants to call a meeting of the Acquired Fund Shareholders
entitled to vote thereon to consider and act upon this Agreement
and to take all other reasonable action necessary to obtain
approval of the transactions contemplated herein. Such meeting
shall be scheduled for no later than _______, 2000 (or such other
date as the Acquired Fund and the Acquiring Fund may agree to in
writing).
5.4. Investment Series, on behalf of the Acquired Fund,
covenants that the Acquiring Fund Shares to be issued hereunder
are not being acquired for the purpose of making any distribution
thereof other than in accordance with the terms of this Agreement.
5.5. Investment Series, on behalf of the Acquired Fund,
covenants that it will assist the Acquiring Fund in obtaining such
information as the Acquiring Fund reasonably requests concerning
the beneficial ownership of the Acquired Fund Shares and will
provide the Acquiring Fund with a list of affiliates of the
Acquired Fund.
5.6. Subject to the provisions of this Agreement,
Investment Trust, on behalf of the Acquiring Fund, and Investment
Series, on behalf of the Acquired Fund, will each take, or cause
to be taken, all actions, and do or cause to be done, all things
reasonably necessary, proper, and/or advisable to consummate and
make effective the transactions contemplated by this Agreement.
5.7. Each Fund covenants to prepare the Registration
Statement on Form N-14 (the "Registration Statement"), in
compliance with the 1933 Act, the 1934 Act and the 1940 Act in
connection with the meeting of the Acquired Fund Shareholders to
consider approval of this Agreement and the transactions
contemplated herein. The Acquiring Fund will file the
Registration Statement, including the Proxy Statement, with the
Commission. The Acquired Fund will provide the Acquiring Fund
with information reasonably necessary for the preparation of a
prospectus, which will include the Proxy Statement referred to in
Section 4.1(o), all to be included in the Registration Statement,
in compliance in all material respects with the 1933 Act, the 1934
Act and the 1940 Act.
5.8. Investment Trust, on behalf of the Acquired Fund,
covenants that it will, from time to time, as and when reasonably
requested by the Acquiring Fund, execute and deliver or cause to
be executed and delivered all such assignments and other
instruments, and will take or cause to be taken such further
action as the Acquiring Fund may reasonably deem necessary or
desirable in order to vest in and confirm the Acquiring Fund's
title to and possession of all the assets and otherwise to carry
out the intent and purpose of this Agreement.
5.9. The Acquiring Fund covenants to use all reasonable
efforts to obtain the approvals and authorizations required by the
1933 Act and 1940 Act, and such of the state securities laws as it
deems appropriate in order to continue its operations after the
Closing Date and to consummate the transactions contemplated
herein; provided, however, that the Acquiring Fund may take such
actions it reasonably deems advisable after the Closing Date as
circumstances change.
5.10. The Acquiring Fund covenants that it will, from time
to time, as and when reasonably requested by the Acquired Fund,
execute and deliver or cause to be executed and delivered all such
assignments, assumption agreements, releases, and other
instruments, and will take or cause to be taken such further
action, as the Acquired Fund may reasonably deem necessary or
desirable in order to (i) vest and confirm to the Acquired Fund
title to and possession of all Acquiring Fund shares to be
transferred to Acquired Fund pursuant to this Agreement and
(ii) assume the liabilities from the Acquired Fund.
5.11. As soon as reasonably practicable after the Closing,
the Acquired Fund shall make a liquidating distribution to its
shareholders consisting of the Acquiring Fund Shares received at
the Closing.
5.12. Investment Trust, on behalf of the Acquiring Fund, and
the Investment Series, on behalf of the Acquired Fund, shall each
use its reasonable best efforts to fulfill or obtain the
fulfillment of the conditions precedent to effect the transactions
contemplated by this Agreement as promptly as practicable.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of Investment Series, on behalf of the
Acquired Fund, to consummate the transactions provided for herein
shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it
hereunder on or before the Closing Date, and, in addition thereto,
the following further conditions:
6.1. All representations and warranties of Investment
Trust, with respect to the Acquiring Fund, contained in this
Agreement shall be true and correct in all material respects as of
the date hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the Closing
Date, with the same force and effect as if made on and as of the
Closing Date; and there shall be (i) no pending or threatened
litigation brought by any person (other than Acquired Fund, its
adviser or any of their affiliates) against the Acquiring Fund,
the Acquired Fund or their advisers, trustees or officers arising
out of this Agreement and (ii) no facts known to the Acquired Fund
which the Acquired Fund reasonably believes might result in such
litigation.
6.2. The Acquiring Fund shall have delivered to the
Acquired Fund on the Closing Date a certificate executed in its
name by a President or a Vice President of Investment Trust, in a
form reasonably satisfactory to the Acquired Fund and dated as of
the Closing Date, to the effect that the representations and
warranties of Investment Trust, with respect to the Acquiring
Fund, made in this Agreement are true and correct on and as of the
Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as
the Acquired Fund shall reasonably request;
6.3. Investment Series, on behalf of the Acquired Fund,
shall have received on the Closing Date an opinion of Willkie Farr
& Gallagher, in a form reasonably satisfactory to Investment
Series, and dated as of the Closing Date, to the effect that:
(a) Investment Trust is a voluntary association of
the type commonly referred to as a Massachusetts business
trust with transferable shares, validly existing under the
laws of The Commonwealth of Massachusetts;
(b) Investment Trust has filed the necessary
certificates required to be filed under Chapter 182 of the
General Laws of The Commonwealth of Massachusetts and paid
the necessary fees due thereon; and Investment Trust is duly
authorized to exercise in The Commonwealth of Massachusetts
all of the powers recited in its Declaration of Trust, and
to transact business as a registered open-end management
investment company in The Commonwealth of Massachusetts.
The Acquiring Fund has the power to carry on its business as
presently conducted in accordance with the description
thereof in Investment Trust's registration statement under
the 1940 Act;
(c) the Agreement has been duly authorized, executed
and delivered by Investment Trust, on behalf of the
Acquiring Fund, and constitutes a valid and legally binding
obligation of Investment Trust, on behalf of the Acquiring
Fund, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and laws of general applicability relating to or
affecting creditors' rights and to general equity
principles;
(d) the execution and delivery of the Agreement did
not, and the exchange of the Acquired Fund's assets for
Acquiring Fund Shares pursuant to the Agreement will not,
violate the Declaration of Trust, as amended, or By-laws of
Investment Trust; and
(e) to the knowledge of such counsel, all regulatory
consents, authorizations, approvals or filings required to
be obtained or made by Investment Trust, on behalf of the
Acquiring Fund, under the Federal laws of the United States
or the laws of The Commonwealth of Massachusetts for the
exchange of the Acquired Fund's assets for Acquiring Fund
Shares pursuant to the Agreement have been obtained or made.
Such opinion may state that it is solely for the benefit of
Investment Series, its Trustees and its officers. Such counsel
may rely as to matters governed by the laws of The Commonwealth of
Massachusetts on an opinion of Massachusetts counsel and/or
certificates of officers or Trustees of Investment Trust. Such
opinion also shall include such other matters incident to the
transaction contemplated hereby as the Acquired Fund may
reasonably request.
6.4. The Acquiring Fund shall have performed all of the
covenants and complied with all of the provisions required by this
Agreement to be performed or complied with by the Acquiring Fund
on or before the Closing Date.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the
transactions provided for herein shall be subject, at its
election, to the performance by the Acquired Fund of all of the
obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following further
conditions:
7.1. All representations and warranties of Investment
Series, with respect to the Acquired Fund, contained in this
Agreement shall be true and correct in all material respects as of
the date hereof and, except as they may be affected by the
transactions contemplated by this Agreement, as of the Closing
Date, with the same force and effect as if made on and as of the
Closing Date; and there shall be (i) no pending or threatened
litigation brought by any person (other than Acquiring Fund, its
adviser or any of their affiliates) against the Acquired Fund, the
Acquiring Fund or their advisers, trustees or officers arising out
of this Agreement and (ii) no facts known to the Acquiring Fund
which the Acquiring Fund reasonably believes might result in such
litigation.
7.2. Investment Series shall have delivered to the
Acquiring Fund a statement of the Acquired Fund's assets and
liabilities as of the Closing Date, certified by the Treasurer of
Investment Series;
7.3. Investment Series shall have delivered to the
Acquiring Fund on the Closing Date a certificate executed in its
name by its President or a Vice President, in a form reasonably
satisfactory to the Acquiring Fund and dated as of the Closing
Date, to the effect that the representations and warranties of
Investment Series with respect to the Acquired Fund made in this
Agreement are true and correct on and as of the Closing Date,
except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Acquiring Fund
shall reasonably request;
7.4. The Acquiring Fund shall have received on the Closing
Date an opinion of [Sullivan & Worcester LLP], in a form
reasonably satisfactory to the Acquiring Fund, and dated as of the
Closing Date, to the effect that:
(a) Investment Series has been duly formed and is an
existing business trust;
(b) Investment Series, with respect to the Acquired
Fund, has the power to carry on its business as presently
conducted in accordance with the description thereof in
Investment Series' registration statement under the 1940
Act;
(c) the Agreement has been duly authorized, executed
and delivered by Investment Series, on behalf of the
Acquired Fund, and constitutes a valid and legally binding
obligation of Investment Series, on behalf of the Acquired
Fund, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and laws of general applicability relating to or
affecting creditors' rights and to general equity
principles;
(d) the execution and delivery of the Agreement did
not, and the exchange of the Acquired Fund's assets for
Acquiring Fund Shares pursuant to the Agreement will not,
violate Investment Series' Declaration of Trust, as amended,
or By-laws; and
(e) to the knowledge of such counsel, all regulatory
consents, authorizations, approvals or filings required to
be obtained or made by the Acquired Fund under the Federal
laws of the United States or the laws of The Commonwealth of
Massachusetts for the exchange of the Acquired Fund's assets
for Acquiring Fund Shares pursuant to the Agreement have
been obtained or made.
Such opinion may state that it is solely for the benefit of
Investment Trust, its Trustees and its officers. Such counsel may
rely as to matters governed by the laws of The Commonwealth of
Massachusetts on an opinion of Massachusetts counsel and/or
certificates of officers or Trustees of the Acquired Fund. Such
opinion also shall include such other matters incident to the
transaction contemplated hereby, as the Acquiring Fund may
reasonably request.
7.5. Investment Series, on behalf of the Acquired Fund
shall have performed all of the covenants and complied with all of
the provisions required by this Agreement to be performed or
complied with by the Acquired Fund on or before the Closing Date.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE ACQUIRED FUND
If any of the conditions set forth below have not been met
on or before the Closing Date with respect to the Acquired Fund or
the Acquiring Fund, the other party to this Agreement shall, at
its option, not be required to consummate the transactions
contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated
herein shall have been approved by the requisite vote of the
holders of the outstanding shares of beneficial interests in the
Acquired Fund in accordance with the provisions of Investment
Series' Declaration of Trust, as amended, and By-Laws, applicable
Massachusetts law and the 1940 Act, and certified copies of the
resolutions evidencing such approval shall have been delivered to
the Acquiring Fund. Notwithstanding anything herein to the
contrary, neither the Acquiring Fund nor the Acquired Fund may
waive the conditions set forth in this Section 8.1;
8.2. On the Closing Date, no action, suit or other
proceeding shall be pending or to its knowledge threatened before
any court or governmental agency in which it is sought to restrain
or prohibit, or obtain material damages or other relief in
connection with, this Agreement or the transactions contemplated
herein;
8.3. All consents of other parties and all other consents,
orders and permits of Federal, state and local regulatory
authorities deemed necessary by the Acquiring Fund or the Acquired
Fund to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except
where failure to obtain any such consent, order or permit would
not involve a risk of a material adverse effect on the assets or
properties of the Acquiring Fund or the Acquired Fund, provided
that either party hereto may for itself waive any of such
conditions;
8.4. The Registration Statement shall have become effective
under the 1933 Act and no stop orders suspending the effectiveness
thereof shall have been issued and, to the best knowledge of the
parties hereto, no investigation or proceeding for that purpose
shall have been instituted or be pending, threatened or
contemplated under the 1933 Act; and
8.5. The parties shall have received an opinion of Willkie
Farr & Gallagher addressed to Investment Series, on behalf of the
Acquired Fund, and Investment Trust, on behalf of the Acquiring
Fund, substantially to the effect that, based upon certain facts,
assumptions and representations, for Federal income tax purposes:
(i) the transfer to the Acquiring Fund of all or substantially all
of the assets of the Acquired Fund in exchange solely for Shares
and the assumption by the Acquiring Fund of all of the liabilities
of the Acquired Fund, followed by the distribution of such Shares
to Acquired Fund shareholders in exchange for their shares of the
Acquired Fund in complete liquidation of the Acquired Fund, will
constitute a "reorganization" within the meaning of Section
368(a)(1) of the Code, and the Acquiring Fund and the Acquired
Fund will each be "a party to a reorganization" within the meaning
of Section 368(b) of the Code; (ii) no gain or loss will be
recognized by the Acquired Fund upon the transfer of the Acquired
Fund's assets to the Acquiring Fund in exchange for the Acquiring
Fund Shares and the assumption by the Acquiring Fund of
liabilities of the Acquired Fund or upon the distribution (whether
actual or constructive) of the Acquiring Fund Shares to the
Acquired Fund's shareholders in exchange for their shares of the
Acquired Fund; (iii) the basis of the assets of the Acquired Fund
in the hands of the Acquiring Fund will be the same as the basis
of such assets of the Acquired Fund immediately prior to the
transfer; (iv) the holding period of the assets of the Acquired
Fund in the hands of the Acquiring Fund will include the period
during which such assets were held by the Acquired Fund; (v) no
gain or loss will be recognized by the Acquiring Fund upon the
receipt of the assets of the Acquired Fund in exchange for Shares
and the assumption by the Acquiring Fund of all of the liabilities
of the Acquired Fund; (vi) no gain or loss will be recognized by
the shareholders of the Acquired Fund upon the receipt of Shares
solely in exchange for their shares of the Acquired Fund as part
of the transaction; (vii) the basis of Shares received by the
shareholders of the Acquired Fund will be the same as the basis of
the shares of the Acquired Fund exchanged therefor; and (viii) the
holding period of Shares received by the shareholders of the
Acquired Fund will include the holding period during which the
shares of the Acquired Fund exchanged therefor were held, provided
that at the time of the exchange the shares of the Acquired Fund
were held as capital assets in the hands of the shareholders of
the Acquired Fund. The delivery of such opinion is conditioned
upon receipt by Willkie Farr & Gallagher of representations it
shall request of each of Investment Series, on behalf of the
Acquired Fund, and Investment Trust, on behalf of the Acquiring
Fund. Notwithstanding anything herein to the contrary, neither
Investment Trust, on behalf of the Acquiring Fund nor Investment
Series, on behalf of the Acquired Fund, may waive the condition
set forth in this Section 8.5.
9. INDEMNIFICATION
9.1. Investment Trust, on behalf of the Acquiring Fund,
agrees to indemnify and hold harmless Investment Series and each
of its trustees and officers from and against any and all losses,
claims, damages, liabilities or expenses (including, without
limitation, the payment of reasonable legal fees and reasonable
costs of investigation) to which jointly and severally Investment
Series or any of its trustees or officers may become subject,
insofar as any such loss, claim damage liability or expense (or
actions with respect thereto) arises out of or is based on any
breach by the Acquiring Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
9.2. Investment Series agrees to indemnify and hold
harmless Investment Trust and each of its trustees and officers
from and against any and all losses, claims, damages, liabilities
or expenses (including, without limitation, the payment of
reasonable legal fees and reasonable costs of investigation) to
which jointly and severally Investment Trust or any of its
trustees or officers may become subject, insofar as any such loss,
claim damage liability or expense (or actions with respect
thereto) arises out of or is based on any breach by the Acquired
Fund of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
10. FEES AND EXPENSES
10.1. Investment Trust, on behalf of the Acquiring Fund, and
Investment Series, on behalf of the Acquired Fund, represents and
warrants to the other that it has no obligations to pay any
brokers or finders fees in connection with the transactions
provided for herein.
10.2. Expenses of the Reorganization that relate to the
Acquiring Fund and the Acquired Fund will be borne by SSB Citi.
Any such expenses which are so borne by SSB Citi will be solely
and directly related to the Reorganization.
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. Investment Trust, on behalf of the Acquiring Fund and
Investment Series, on behalf of the Acquired Fund, agree that
neither party has made any representation, warranty or covenant
not set forth herein and that this Agreement constitutes the
entire agreement between the parties.
11.2. Except as specified in the next sentence set forth in
this Section 11.2, the representations, warranties and covenants
contained in this Agreement or in any document delivered pursuant
hereto or in connection herewith shall not survive the
consummation of the transactions contemplated hereunder.
The covenants to be performed after the Closing and the
obligations of each of Investment Series, on behalf of the
Acquired Fund, and Investment Trust, on behalf of the Acquired
Fund, in Sections 9.1 and 9.2 shall survive the Closing.
12. TERMINATION
This Agreement may be terminated and the transactions
contemplated hereby may be abandoned by either party by (i) mutual
agreement of the parties, or (ii) by either party if the Closing
shall not have occurred on or before January 1, 2001, unless such
date is extended by mutual agreement of the parties, or (iii) by
either party if the other party shall have materially breached its
obligations under this Agreement or made a material and
intentional misrepresentation herein or in connection herewith.
In the event of any such termination, this Agreement shall become
void and there shall be no liability hereunder on the part of any
party or their respective directors or officers, except for any
such material breach or intentional misrepresentation, as to each
of which all remedies at law or in equity of the party adversely
affected shall survive.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in
such manner as may be mutually agreed upon in writing by the
authorized officers of Investment Series and Investment Trust;
provided, however, that following the meeting of the Acquired Fund
Shareholders called by Investment Series pursuant to Section 5.3
of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of the
Acquiring Fund Shares to be issued to the Acquired Fund
shareholders under this Agreement to the detriment of such
shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or
permitted by any provisions of this Agreement shall be in writing
and shall be deemed duly given if delivered by hand (including by
Federal Express or similar express courier) or transmitted by
facsimile or three days after being mailed by prepaid registered
or certified mail, return receipt requested, addressed to the
Acquired Fund, c/o Concert Investment Series(r), 388 Greenwich
Street, New York, New York 10013, with a copy to Willkie Farr &
Gallagher, 787 Seventh Avenue, New York, New York. 10019-6099,
Attn.: Burton M. Leibert, Esq., or to the Acquiring Fund, c/o
Smith Barney Investment Trust, 388 Greenwich Street, New York, New
York 10013, with a copy to Willkie Farr & Gallagher, 787 Seventh
Avenue, New York, N.Y. 10019-6099, Attn.: Burton M. Leibert,
Esq., or to any other address that the Investment Series or
Investment Trust shall have last designated by notice to the other
party.
15. HEADINGS; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY
15.1. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
15.2. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
15.3. This Agreement shall bind and inure to the benefit of
the parties hereto and their respective successors and assigns,
but no assignment or transfer hereof or of any rights or
obligations hereunder shall be made by any party without the
written consent of the other party. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give
any person, firm or corporation, other than the parties hereto and
the shareholders of the Acquiring Fund and the Acquired Fund and
their respective successors and assigns, any rights or remedies
under or by reason of this Agreement.
15.4. Each of Investment Series and Investment Trust is
organized as a Massachusetts business trust, and references in
this Agreement to Investment Series or Investment Trust mean and
refer to the Trustees from time to time serving under the
Declarations of Trust on file with the Secretary of State of The
Commonwealth of Massachusetts, as the same may be amended from
time to time, pursuant to which Investment Series and Investment
Trust conduct their businesses. It is expressly agreed that the
obligations of Investment Series and Investment Trust hereunder
shall not be binding upon any of their Trustees, shareholders,
nominees, officers, agents, or employees of Investment Series or
Investment Trust personally, but bind only the property of each of
the Acquired Fund and the Acquiring Fund as provided in the
Declaration of Trust of Investment Series and of Investment Trust.
Moreover, no series of Investment Series other than the Acquired
Fund or of Investment Trust other than the Acquiring Fund shall be
responsible for the obligations of Investment Series or Investment
Trust hereunder, and all persons shall look only to the assets of
the Acquired Fund and the Acquiring Fund to satisfy the
obligations of Investment Series and Investment Trust hereunder.
The execution and the delivery of this Agreement have been
authorized by the Board of Trustees of Investment Series and of
Investment Trust and this Agreement has been signed by authorized
officers of Investment Series and Investment Trust acting as such,
and neither such authorization by such Trustees, nor such
execution and delivery by such officers, shall be deemed to have
been made by any of them individually or to impose any liability
on any of them personally, but shall bind only the property of the
Acquired Fund as provided in the Declaration of Trust of
Investment Series and the Acquiring Fund as provided in the
Declaration of Trust of Investment Trust.
15.5. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York,
without regard to its principles of conflicts of laws.
IN WITNESS WHEREOF, each of the parties hereto has caused
this Agreement to be executed by its President, Vice President, or
in the case of SSB Citi, an authorized person and attested by its
Secretary, Assistant Secretary, or in the case of SSB Citi, an
authorized person.
Attest: CONCERT INVESTMENT SERIES(r)
on behalf of Mid Cap Fund
By:
Name:
Title:
Attest: SMITH BARNEY INVESTMENT TRUST
on
behalf of Mid Cap Blend
Fund
By:
Name:
Title:
Attest: SSB CITI FUND MANAGEMENT LLC
By:
Name:
Title:
THE PROSPECTUS AND ANNUAL REPORT OF THE ACQUIRING FUND DATED
MARCH 29, 2000 AND NOVEMBER 30, 1999, RESPECTIVELY, ARE
INCORPORATED BY REFERENCE TO THE MOST RECENT FILINGS
THEREOF BY THE ACQUIRING FUND
PART B
INFORMATION REQUIRED IN THE STATEMENT OF ADDITIONAL INFORMATION
SUBJECT TO COMPLETION, DATED JULY 17, 2000
STATEMENT OF ADDITIONAL INFORMATION
RELATING TO THE ACQUISITION BY MID CAP BLEND
FUND (THE "ACQUIRING FUND"), A SERIES OF
SMITH BARNEY INVESTMENT TRUST ("INVESTMENT TRUST")
388 Greenwich Street
New York, New York 10013
(800) 451-2010
OF THE ASSETS OF MID CAP
FUND (THE "FUND"),
A SERIES OF CONCERT INVESTMENT SERIES(r) ("INVESTMENT SERIES").
Dated: August 16, 2000
This Statement of Additional Information, relating
specifically to the proposed transfer of all or substantially all
of the assets of the Fund, a series of Investment Series, to the
Acquiring Fund in exchange for shares of the corresponding class
of the Acquiring Fund and the assumption by the Acquiring Fund of
liabilities of the Fund, consists of this cover page and the
following described documents, each of which accompanies this
Statement of Additional Information and is incorporated herein by
reference.
1. Statement of Additional Information for the Acquiring
Fund, dated March 29, 2000.
2. Statement of Additional Information for the Fund,
dated February 28, 1999.
3. Annual Report of the Acquiring Fund for the year ended
November 30, 1999 (and, if applicable, any more recent
semi-annual report).
4. Annual Report of the Fund for the year ended
October 31, 1999, and the Semi-Annual Report of the
Fund for the six months ended April 30, 2000.
This Statement of Additional Information is not a prospectus. A
Prospectus/Proxy Statement, dated August 16, 2000, relating to the
above-referenced matter may be obtained without charge by calling
or writing the Acquiring Fund at the telephone number or address
set forth above. This Statement of Additional Information should
be read in conjunction with the Prospectus/Proxy Statement.
FINANCIAL STATEMENTS
The Annual Report of the Acquiring Fund for the year ended
November 30, 1999 and the Annual Report of the Fund for the year
ended October 31, 1999, each including audited financial
statements, notes to the financial statements and report of the
independent auditors, are incorporated by reference herein. To
obtain a copy of the Annual Reports (and, if applicable, any more
recent semi-annual report) without charge, please call 1-800-
451-2010.
THE ANNUAL REPORT AND STATEMENT OF ADDITIONAL INFORMATION OF THE
ACQUIRING FUND DATED NOVEMBER 30, 1999 AND MARCH 29, 2000,
RESPECTIVELY, ARE INCORPORATED BY REFERENCE
TO THE MOST RECENT FILINGS THEREOF BY
SMITH BARNEY INVESTMENT TRUST
THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION, ANNUAL
REPORT AND SEMI-ANNUAL REPORT OF THE FUND DATED FEBRUARY 28,
2000, OCTOBER 31, 1999 AND APRIL 30, 2000, RESPECTIVELY, ARE
INCORPORATED BY REFERENCE TO THE MOST RECENT FILINGS THEREOF BY
CONCERT INVESTMENT SERIES(r)
PART C
OTHER INFORMATION
ITEM 15. INDEMNIFICATION -- The response to this item is
incorporated by reference to Section 9 of the Agreement and Plan
of Reorganization and to the Registrant's Registration Statement
on Form N-1A as filed with the Securities and Exchange Commission
on October 21, 1991 (the "Registration Statement"). Registrant is
a named insured on a joint insured bond pursuant to Rule 17g-1 of
the Investment Company Act of 1940. Other insureds include SSB
Citi Fund Management LLC (Registrant's Adviser) and affiliated
investment companies.
ITEM 16. EXHIBITS
1(a) Registrant's Master Trust Agreement dated October
17, 1991 and Amendments to the Master Trust
Agreement dated November 21, 1991 and July 30,
1993, respectively, are incorporated by reference
to Post-Effective Amendment No. 4 to the
Registration Statement filed on January 28, 1994
(Post-Effective Amendment No. 4).
1(b) 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).
1(c) Amendments to the Master Trust Agreement dated July
20, 1995 and August 10, 1995 are incorporated by
reference to Post-Effective Amendment No. 9 to the
Registration Statement filed on August 29, 1995
(Post-Effective Amendment No. 9).
1(d) 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).
1(e) 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.
1(f) 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 (Post-Effective
Amendment No. 21).
1(g) Amendment No. 3 to the First Amended and Restated
Master Trust Agreement dated February 28, 1998 is
incorporated by reference to Post-Effective
Amendment No. 29 to the Registration Statement
filed on April 28, 2000 (Post-Effective Amendment
No. 29).
2 Registrant's By-Laws are incorporated by reference
to the Registration Statement.
3 Not Applicable.
4 Form of Agreement and Plan of Reorganization is
filed herewith as Exhibit A.
5(a) 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.
5(b) 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).
5(c) 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).
6(a) Investment Advisory Agreement between the
Registrant and Greenwich Street Advisors dated July
30, 1993 is incorporated by reference to Post-
Effective Amendment No. 3 to the Registration
Statement filed on December 1, 1993 (Post-Effective
Amendment No. 3).
6(b) Transfer of Investment Advisory Agreement dated
November 7, 1994 between Registrant on behalf of
Smith Barney Intermediate Maturity California
Municipals Fund, Greenwich Street Advisors and
Mutual Management Corp. (predecessor to SSB Citi
Fund Management LLC) is incorporated by reference
to the N-14.
6(c) Form of Transfer of Investment Advisory Agreement
for Smith Barney Limited Maturity Municipals Fund,
Smith Barney Intermediate Maturity New York
Municipals Fund and Smith Barney Limited Maturity
Treasury Fund is incorporated by reference to Post-
Effective Amendment No. 6 to the Registration
Statement filed on January 27, 1995 (Post-Effective
Amendment No. 6).
6(d) Form of Investment Advisory Agreement between the
Registrant on behalf of Smith Barney S&P 500 Index
Fund and Travelers Investment Management Company
dated December 11, 1997 is incorporated by
reference to Post Effective Amendment No. 15 to the
Registration Statement filed on December 12, 1997
(Post-Effective Amendment No. 15).
6(e) 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.
6(f) Form of Investment Management Agreement between
Smith Barney Mid Cap Blend Fund and MMC is
incorporated by reference to Post-Effective
Amendment No. 17.
7(a) Distribution Agreement between the Registrant and
Smith Barney Shearson Inc. dated July 30, 1993 is
incorporated by reference to Post-Effective
Amendment No. 3.
7(b) Form of Distribution Agreement between the
Registrant on behalf of Smith Barney S&P 500 Index
Fund and PFS Distributors is incorporated by
reference to Post-Effective Amendment No. 10 to the
Registration Statement filed on November 13, 1995 (Post-
Effective Amendment No. 10).
7(c) Distribution Agreement between the Registrant and
CFBDS, Inc. dated October 8, 1998 is incorporated
by reference to Post-Effective Amendment No. 21.
7(d) 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).
7(e) Form of Third Party Feeder Agreement between the
Registrant, CFBDS, Inc. and Barclays Global Fund
Advisors on behalf of the Smith Barney U.S. 5000
Index Fund and EAFE Index Fund is incorporated by
reference to Post-Effective Amendment No. 29.
7(f) Form of Distribution Agreements between Registrant
and Salomon Smith Barney and PFS Distributors, Inc.
dated June 5, 2000 are filed herein.
8 Not Applicable.
9(a) Form of Custodian Agreement with PNC Bank, National
Association is incorporated by reference to Post-
Effective Amendment No. 9.
9(b) Form of Custodian Agreement with Investors Bank &
Trust Company is incorporated by reference to Post-
Effective Amendment No. 29.
10(a) Amended Service and Distribution Plan pursuant to
Rule 12b-1 between the Registrant on behalf of
Smith Barney Intermediate Maturity California
Municipal Fund and Smith Barney Inc. is
incorporated by reference to the N-14.
10(b) Form of Amended Service and Distribution Plan
pursuant to Rule 12b-1 between the Registrant on
behalf of Smith Barney Limited Maturity Municipals
Fund and Smith Barney Intermediate Maturity New
York Municipals Fund and Smith Barney Inc. is
incorporated by reference to Post-Effective
Amendment No. 6.
10(c) Form of Shareholder Services and Distribution Plan
pursuant to Rule 12b-1 between the Registrant on
behalf of Smith Barney S&P 500 Index Fund is
incorporated by reference to Post Effective
Amendment No. 15.
10(d) Form of Service and Distribution Plan pursuant to
12b-1 between Registrant on behalf of the Fund and
Smith Barney Large Capitalization Growth Fund is
incorporated by reference to Post Effective
Amendment No. 17.
10(e) 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.
10(f) 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.
10(g) 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 to the Registration Statement
filed on October 13, 1999 (Post-Effective Amendment
No. 26).
10(h) 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.
10(i) Rule 18f-3(d) Multiple Class Plan of the Registrant
is incorporated by reference to Post-Effective
Amendment No. 22.
11 Opinion and Consent of Willkie Farr & Gallagher is
filed herewith.
12 Form of Opinion and Consent of Willkie Farr &
Gallagher supporting the tax matters and
consequences to shareholders discussed in the
prospectus is filed herewith.
13(a) Administration Agreement between the Registrant on
behalf of Smith Barney Intermediate Maturity
California Municipals Fund and Smith Barney
Advisers, Inc. (SBA) is incorporated by reference
to the N-14.
13(b) Form of Administration Agreement between the
Registrant on behalf of Smith Barney Limited
Maturity Municipals Fund and Smith Barney
Intermediate Maturity New York Municipals Fund and
SBA is incorporated by reference to Post-Effective
Amendment No. 6.
13(c) Form of Administration Agreement between the
Registrant on behalf of Smith Barney S&P 500 Index
Fund and MMC is incorporated by reference to Post
Effective Amendment No. 15.
13(d) Transfer Agency Agreement with First Data Investor
Services Group, Inc. is incorporated by reference
to Post-Effective Amendment No. 3.
13(e) Form of Sub-Transfer Agency Agreement between the
Registrant on behalf of Smith Barney S&P 500 Index
Fund and PFS Shareholder Services is incorporated
by reference to Post-Effective Amendment No. 10.
13(f) 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.
13(g) 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.
14 Consent of accountants.
15 Not Applicable.
16 Power of Attorney dated July 12, 2000 is filed
herein.
17(a) Form of proxy card is filed herewith.
17(b) Annual Report of Concert Investment Series(r), dated
October 31, 1999, and Semi-Annual Report dated
April 30, 2000, are incorporated herein by
reference.
17(c) Prospectus and statement of additional information
of Concert Investment Series(r), dated February 28,
2000, are incorporated herein by reference.
17(d) Annual Report of Registrant, dated November 30,
1999, is incorporated herein by reference.
17(e) Prospectus and statement of additional information
of Registrant, dated March 29, 2000, are
incorporated herein by reference.
ITEM 17. UNDERTAKINGS
(1) The undersigned registrant agrees that prior to
any public reoffering of the securities registered through the use
of a prospectus which is a part of this registration statement by
any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act [17 CFR 230.145c],
the reoffering prospectus will contain the information called for
by the applicable registration form for reofferings by persons who
may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The undersigned registrant agrees that every
prospectus that is filed under paragraph (1) above will be filed
as a part of an amendment to the registration statement and will
not be used until the amendment is effective, and that, in
determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for
the securities offered therein, and the offering of the securities
at that time shall be deemed to be the initial bona fide offering
of them.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, as amended, the Registrant
has duly caused this Registration Statement on Form N-14 to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York and the State of New York on
the 17th day of July, 2000.
SMITH BARNEY INVESTMENT TRUST
By: /s/ Heath B. McLendon
Name: Heath B. McLendon
Title: Chairman of the
Board
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed below by
the following persons in the capacities and on the dates
indicated.
SIGNATURE
TITLE
DATE
/s/Heath B. McLendon
Heath B. McLendon
Chairman of the Board
(Chief Executive
Officer and
President)
July 17, 2000
/s/Lewis E. Daidone
Lewis E. Daidone
Treasurer (Chief
Financial and
Accounting Officer)
July 17, 2000
/s/Herbert Barg*
Trustee
July 17, 2000
Herbert Barg
/s/Alfred J. Bianchetti*
Trustee
July 17, 2000
Alfred J. Bianchetti
/s/Martin Brody*
Trustee
July 17, 2000
Martin Brody
/s/Dwight B. Crane*
Trustee
July 17, 2000
Dwight B. Crane
/s/Burt N. Dorsett*
Trustee
July 17, 2000
Burt N. Dorsett
/s/Elliot S. Jaffe*
Trustee
July 17, 2000
Elliot S. Jaffe
/s/Stephen E. Kaufman*
Stephen E. Kaufman
Trustee
July 17, 2000
/s/Joseph J. McCann*
Joseph J. McCann
Trustee
July 17, 2000
/s/Cornelius C.Rose, Jr.*
Cornelius C. Rose, Jr.
Trustee
July 17, 2000
*By: /s/Heath B.
McLendon
Heath B. McLendon
Attorney-in-fact pursuant to a
power of attorney dated July
12, 2000.
*Signed pursuant to power of attorney filed herein.
EXHIBITS
(7) Form of Distribution Agreements between Registrant and
Salomon Smith Barney and PFS Distributors, Inc. dated June
5, 2000
(11) Opinion and consent of Counsel as to the legality of the
securities being registered
(12) Opinion and consent of Counsel supporting tax matters and
consequences to shareholders discussed in the prospectus
(14) Auditors' Consents
(16) Power of Attorney dated July 12, 2000
(17) Proxy Card
