Registration No. 33-52643
811-07149
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. 3
Post-Effective Amendment No.
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 X
Amendment No. 3
SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
(Exact name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code
(212)720-9218
Christina T. Sydor
Secretary
Smith Barney Shearson Oregon Municipals Fund
1345 Avenue of the Americas
New York, New York 10105
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as possible after this Post-Effective Amendment
becomes effective
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to Rule 485(b)
X on May 23, 1994 pursuant to Rule 485(b)
_____ 60 days after filing pursuant to Rule 485(a)
on _____ pursuant to Rule 485(a)
________________________________________________________________________CALCU
LATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
Title of Securities Amount Proposed Proposed
Amount of
Being Registered: Being Maximum Maximum
of Registra-
Registered: Offering Price
Aggregate tion Fee:
Per Share:
Offering Price:
_____________________________________________________________________
__
Beneficial
Interest, $.001
par value
per share Indefinite* *
Indefinite* $500
___________
* An indefinite number of shares of beneficial interest of the
Registrant was registered by the Registration Statement
pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended.
________________________
The Registrant amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant files a further amendment that specifically states that
this Registration Statement will thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933, as
amended, or until this Registration Statement becomes effective on
such date as the Commission, acting pursuant to Section 8(a) of the
Securities Act of 1933, as amended, may determine.
The Registrant has previously filed a 24f-2 and fee with
its original registration statement on March 11, 1994.
SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
FORM N-1A
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
Part A
Item No.
Prospectus Caption
1. Cover Page
Cover Page
2. Synopsis
Prospectus Summary
3. Financial Highlights
The Fund's Performance
4. General Description of
Registrant
Cover Page; Prospectus Summary;
Investment Objective and
Management Policies; Additional
Information
5. Management of the Fund
Prospectus Summary ;
Management of the Fund;
Distributor; Additional
Information
6. Capital Stock and Other
Securities
Variable Pricing System;
Dividends, Distributions and
Taxes; Additional Information
7. Purchase of Securities Being
Offered
Variable Pricing System;
Purchase of Shares; Valuation
of Shares; Exchange Privilege;
Distributor; Additional
Information
8 Redemption or Repurchase
Variable Pricing System;
Purchase of Shares; Redemption
of Shares; Exchange Privilege
9. Pending Legal Proceedings
Not applicable
Part B
Item No.
Statement of
Additional Information Caption
10. Cover Page
Cover page
11. Table of Contents
Contents
12. General Information and
History
Organization and Description of
Fund Shares
13. Investment Objectives and
Policies
Investment Objective and
Management Policies
14. Management of the Fund
Management of the Fund;Distributor
15. Control Persons and Principal
Holders
of Securities
Management of the Fund
16. Investment Advisory and Other
Services
Management of the Fund;
Distributor
17. Brokerage Allocation and
Other
Services
Investment Objective and
Management Policies
18. Capital Stock and Other
Securities
Purchase of Shares;
Redemption of Shares; Taxes
19. Purchase, Redemption and
Pricing
of Securities Being
Offered
Purchase of Shares; Redemption of
Shares; Valuation of Shares;
Exchange Privilege; Distributor
20. Tax Status
Taxes
21. Underwriters
Distributor
22. Calculation of Performance
Data
Performance Data
23. Financial Statements
Financial Statements
<PAGE>
MAY 23, 1994
SMITH BARNEY SHEARSON
OREGON
MUNICIPALS
FUND
PROSPECTUS BEGINS
ON PAGE ONE.
[LOGO]
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- ---------------------------------------------------------------------------
PROSPECTUS May 23,
1994
Two World Trade Center
New York, New York 10048
(212) 720-9218
Smith Barney Shearson Oregon Municipals Fund (the "Fund") is a non-
diversified
municipal fund that seeks to provide Oregon investors with as high a level of
dividend income exempt from Federal income tax and Oregon state personal
income
tax as is consistent with prudent investment management and preservation of
capital.
This Prospectus concisely sets forth certain information about the Fund,
including sales charges, distribution and service fees and expenses, which
prospective investors will find helpful in making an investment decision.
Investors are encouraged to read this Prospectus carefully and retain it for
future reference.
Additional information about the Fund is contained in a Statement of
Additional Information dated May 23, 1994, as amended or supplemented
from
time to time, that is available upon request and without charge by calling or
writing the Fund at the telephone number or address set forth above or by
contacting your Smith Barney Shearson Financial Consultant. The Statement of
Additional Information has been filed with the Securities and Exchange
Commission (the "SEC") and is incorporated by reference into this Prospectus
in
its entirety.
SMITH BARNEY SHEARSON INC.
Distributor
GREENWICH STREET ADVISORS
Investment Adviser
SMITH, BARNEY ADVISERS, INC.
Administrator
THE BOSTON COMPANY ADVISORS, INC.
Sub-Administrator
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A
CRIMINAL OFFENSE.
1
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- ---------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY 3
----------------------------------------------------------------
VARIABLE PRICING SYSTEM 9
----------------------------------------------------------------
THE FUND'S PERFORMANCE 11
----------------------------------------------------------------
MANAGEMENT OF THE FUND 12
----------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES 14
----------------------------------------------------------------
OREGON MUNICIPAL SECURITIES 22
----------------------------------------------------------------
PURCHASE OF SHARES 23
----------------------------------------------------------------
REDEMPTION OF SHARES 27
----------------------------------------------------------------
VALUATION OF SHARES 31
----------------------------------------------------------------
EXCHANGE PRIVILEGE 31
----------------------------------------------------------------
DISTRIBUTOR 38
----------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES 39
----------------------------------------------------------------
ADDITIONAL INFORMATION 42
----------------------------------------------------------------
</TABLE>
2
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- ---------------------------------------------------------------------------
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY DETAILED INFORMATION
APPEARING ELSEWHERE IN THIS PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL
INFORMATION. CROSS REFERENCES IN THIS SUMMARY ARE TO HEADINGS IN THE
PROSPECTUS.
SEE "TABLE OF CONTENTS."
BENEFITS TO INVESTORS THE FUND OFFERS INVESTORS SEVERAL IMPORTANT BENEFITS:
- - Dividends consisting primarily of income which is exempt from Federal
income
tax and Oregon state personal income tax.
- - A professionally managed portfolio comprised primarily of investment-grade
Oregon municipal bonds.
- - Investment liquidity through convenient purchase and redemption procedures.
- - A convenient way to invest without the administrative and recordkeeping
burdens normally associated with the direct ownership of municipal
obligations.
- - Different methods for purchasing shares that allow investment flexibility
and
a wider range of investment alternatives.
- - Automatic dividend reinvestment feature, plus exchange privilege within the
same class of shares of most other funds in the Smith Barney Shearson Group
of Funds.
INVESTMENT OBJECTIVE The Fund is an open-end, non-diversified, management
investment company that seeks to provide Oregon investors with as high a level
of dividend income exempt from Federal income taxes and Oregon state personal
income tax as is consistent with prudent investment management and the
preservation of capital. Its investments consist primarily of intermediate-
and
long-term investment-grade municipal securities issued by the State of Oregon,
local governments in the State of Oregon and certain other municipal issuers
such as the Commonwealth of Puerto Rico ("Oregon Municipal Securities") that
pay
interest which is excluded from gross income for Federal income tax purposes
and
exempt from Oregon state personal income taxes. Intermediate- and long-term
securities have remaining maturities at the time of purchase of between three
and twenty years. See "Investment Objective and Management Policies."
3
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
VARIABLE PRICING SYSTEM The Fund offers two classes of shares ("Classes")
designed to provide investors with the flexibility of selecting an investment
best suited to their needs. These Classes, Class A shares and Class B shares,
differ principally in terms of the sales charges and rate of expenses to which
they are subject. See "Variable Pricing System."
CLASS A SHARES These shares are offered at net asset value per share plus a
maximum initial sales charge of 4.50%. The Fund pays an annual service fee of
.15% of the value of average daily net assets of this Class. See "Purchase of
Shares."
CLASS B SHARES These shares are offered at net asset value per share subject
to
a maximum contingent deferred sales charge ("CDSC") of 4.50% of redemption
proceeds, declining by .50% after the first year and by 1% each year
thereafter
to zero. The Fund pays an annual service fee of .15% and an annual
distribution
fee of .50% of the value of average daily net assets of this Class. See
"Purchase of Shares."
CLASS B CONVERSION FEATURE Class B shares will convert automatically to Class
A
shares, based on relative net asset value, eight years after the date of
original purchase. Upon conversion, these shares will no longer be subject to
an
annual distribution fee. See "Variable Pricing System -- Class B Shares."
PURCHASE OF SHARES Shares may be purchased through the Fund's distributor,
Smith
Barney Shearson Inc. ("Smith Barney Shearson"), or a broker that clears
securities transactions through Smith Barney Shearson on a fully disclosed
basis
(an "Introducing Broker"). Smith Barney Shearson recommends that single
investments of $250,000 or more should be made in Class A shares. See
"Purchase
of Shares."
INVESTMENT MINIMUMS Investors are subject to a minimum initial investment
requirement of $1,000 and a minimum subsequent investment requirement of $200.
See "Purchase of Shares."
SYSTEMATIC INVESTMENT PLAN The Fund offers shareholders a Systematic
Investment
Plan under which they may authorize the automatic placement of a purchase
order
each month or quarter for Fund shares in an amount not less than $100. See
"Purchase of Shares."
4
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
REDEMPTION OF SHARES Shares may be redeemed on each day the New York Stock
Exchange, Inc. ("NYSE") is open for business. Class A shares are redeemable at
net asset value and Class B shares are redeemable at net asset value
less any
applicable CDSC. See "Redemption of Shares."
MANAGEMENT OF THE FUND Greenwich Street Advisors, a division of Mutual
Management Corp. serves as the Fund's investment adviser. Mutual Management
Corp., provides investment advisory and management services to
investment
companies affiliated with Smith Barney Shearson. Smith, Barney Advisers, Inc.
serves as the Fund's administrator. Mutual Management Corp., Smith, Barney
Advisers, Inc., together with Smith Barney Shearson are wholly owned
subsidiaries of Smith Barney Shearson Holdings Inc., which is in turn a wholly
owned subsidiary of The Travelers Inc. ("Travelers") (formerly Primerica
Corporation), a diversified financial services holding company principally
engaged in the businesses of providing investment, consumer finance and
insurance services.
The Boston Company Advisors, Inc. ("Boston Advisors") serves as the Fund's
sub-administrator. Boston Advisors is a wholly owned subsidiary of The Boston
Company, Inc. ("TBC"), which in turn is a wholly owned subsidiary of Mellon
Bank
Corporation ("Mellon"). See "Management of the Fund."
EXCHANGE PRIVILEGE Shares of a Class may be exchanged for shares of the same
class of certain other funds in the Smith Barney Shearson Group of Funds and
certain money market funds. Certain exchanges may be subject to a sales charge
differential. See "Exchange Privilege."
VALUATION OF SHARES Net asset value of each Class is quoted daily in the
financial section of most newspapers and is also available from your Smith
Barney Shearson Financial Consultant. See "Valuation of Shares."
DIVIDENDS AND DISTRIBUTIONS Dividends from net investment income are declared
daily and paid on the last business day of the Smith Barney Shearson statement
month. Distributions of net realized long- and short-term capital gains, if
any,
are declared and paid annually after the end of the fiscal year in which they
were earned. See "Dividends, Distributions and Taxes."
REINVESTMENT OF DIVIDENDS Dividends and distributions paid on shares of a
Class
will be reinvested automatically unless otherwise specified by an
5
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
investor in additional shares of the same Class at current net asset value.
Shares acquired by dividend and distribution reinvestments will not be subject
to any sales charge or CDSC. Class B shares acquired through dividend and
distribution reinvestments will become eligible for conversion to Class A
shares
on a pro-rata basis. See "Dividends, Distributions and Taxes" and "Variable
Pricing System."
RISK FACTORS AND SPECIAL CONSIDERATIONS There can be no assurance that the
Fund will achieve its investment objective. Assets of the Fund also may be
invested
in the municipal securities of non-Oregon municipal issuers. Dividends paid by
the Fund which are derived from interest attributable to Oregon Municipal
Securities will be excluded from gross income for Federal income tax purposes
and exempt from Oregon state personal income taxes (but not from Oregon state
corporate franchise (excise) tax or Oregon state corporate income
tax). Dividends derived from
interest on obligations of non-Oregon municipal issuers will be exempt from
Federal income taxes, but generally will be subject to Oregon state
personal income taxes.
Dividends derived from certain municipal securities (including Oregon
Municipal
Securities), however, may be a specific tax item for Federal alternative
minimum
tax purposes. The Fund may invest without limit in securities subject to the
Federal alternative minimum tax. See "Investment Objective and Management
Policies" and "Dividends, Distributions and Taxes."
The Fund is more susceptible to factors adversely affecting issuers of
Oregon
municipal securities than is a municipal bond fund that does not
concentrate its investments in these
issuers. See "Oregon Municipal Securities" in the Prospectus and "Special
Considerations Relating to Oregon Municipal Securities" in the Statement of
Additional Information for further details about the risks of investing in
Oregon obligations.
The Fund is classified as a non-diversified investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), which means that
the Fund is not limited by the 1940 Act in the proportion of its assets that
it
may invest in the obligations of a single issuer. The Fund's assumption of
large
positions in the obligations of a small number of issuers may cause the Fund's
share price to fluctuate to a greater extent than that of a diversified
company
as a result of changes in the financial condition or in the market's
assessment
of the issuers. See "Investment Objective and Management Policies."
6
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
The Fund generally will invest at least 75% of its assets in securities
rated
investment grade, and may invest the remainder of its assets in securities
rated
as low as C by Moody's Investors Service, Inc. ("Moody's") or D by Standard &
Poor's Corporation ("S&P"), or in unrated obligations of comparable quality.
Securities in the fourth highest rating category, though considered to be
investment grade, have speculative characteristics. Securities rated as low as
D
are extremely speculative and are in actual default of interest and/or
principal
payments.
There are several risks in connection with the use of certain portfolio
strategies by the Fund, such as the use of when-issued securities, municipal
bond index futures contracts and put and call options on interest rate futures
as hedging devices, municipal leases and securities lending. See "Investment
Objective and Management Policies -- Certain Portfolio Strategies."
THE FUND'S EXPENSES The following expense table lists the costs and expenses
an
investor will incur either directly or indirectly as a shareholder of the
Fund,
based on the maximum sales charge or maximum CDSC that may be incurred at the
time of purchase or redemption and the Fund's operating expenses:
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
-----------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charges imposed on purchases
(as a percentage of offering price) 4.50% --
Maximum CDSC (as a percentage of redemption
proceeds) --
4.50%
-----------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management fees (includes Administration fees) 0.55
0.55
12b-1 fees* 0.15
0.65
Other expenses** 0.30 0.30
-----------------------------------------------------------------------------
TOTAL FUND OPERATING EXPENSES 1.00% 1.50%
-----------------------------------------------------------------------------
<FN>
* (Includes service and distribution fees.) Upon conversion, Class B
shares will no longer be subject to a distribution fee.
**Estimated expenses based upon Greenwich Street Advisors' management of
similar funds.
</TABLE>
7
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
The sales charge and CDSC set forth in the above table are the maximum
charges
imposed on purchases or redemptions of Fund shares and investors may pay
actual
charges of less than 4.50% depending on the amount purchased and, in the case
of
Class B shares, the length of time the shares are held. See "Purchase
of Shares"
and "Redemption of Shares." Management fees paid by the Fund include
investment
advisory fees paid to Greenwich Street Advisors at the following annual rates:
.35% of the value of the Fund's average daily net assets up to $500 million
and
.32% of the value of its average daily net assets in excess of $500 million
and
also include administration fees paid to Smith, Barney Advisers, Inc. at the
following annual rates: .20% of the value of the Fund's average daily net
assets
up to $500 million and .18% of the value of its average daily net asset in
excess of $500 million. The nature of the services for which the Fund pays
management and administration fees is described under "Management of the
Fund."
Smith Barney Shearson receives an annual 12b-1 service fee of .15% of the
value
of average daily net assets of Class A shares. Smith Barney Shearson also
receives with respect to Class B shares an annual 12b-1 fee of .65% of
the value
of average daily net assets of Class B shares, consisting of a .50%
distribution
fee and a .15% service fee. "Other expenses" in the above table include fees
for
shareholder services, custodial fees, legal and accounting fees, printing
costs
and registration fees.
EXAMPLE
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect
to
a hypothetical $1,000 investment in the Fund assuming a 5% total return. THE
EXAMPLE ASSUMES PAYMENT BY THE FUND OF OPERATING EXPENSES AT THE LEVELS SET
FORTH IN THE ABOVE TABLE. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION
OF PAST OR FUTURE EXPENSES AND ACTUAL
8
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
PROSPECTUS SUMMARY (CONTINUED)
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. MOREOVER, WHILE THE EXAMPLE
ASSUMES A 5% ANNUAL RETURN, THE FUND'S ACTUAL PERFORMANCE WILL VARY AND MAY
RESULT IN AN ACTUAL RETURN GREATER OR LESS THAN 5%.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------
- ---
Class A shares** $55 $ 75
Class B shares:
Assumes complete redemption at end
of each time period*** $60 $77
Assumes no redemption $15 $47
-----------------------------------------------------------------------------
- ---
<FN>
* Assumes deduction at the time of purchase of the maximum 4.50%
sales charge.
** Assumes deduction at the time of redemption of the maximum CDSC
applicable
for that time period.
</TABLE>
- --------------------------------------------------------------------
VARIABLE PRICING SYSTEM
The Fund offers individual investors two methods of purchasing shares, thus
enabling investors to choose the Class that best suits their needs, given the
amount of purchase and intended length of investment.
CLASS A SHARES. Class A shares are sold at net asset value per share plus a
maximum initial sales charge of 4.50% imposed at the time of purchase. The
initial sales charge may be reduced or waived for certain purchases. Class A
shares are subject to an annual service fee of .15% of the value of the Fund's
average daily net assets attributable to Class A. The annual service fee is
used
by Smith Barney Shearson to compensate its Financial Consultants for ongoing
services provided to shareholders. The sales charge is used to compensate
Smith
Barney Shearson for expenses incurred in selling Class A shares. See "Purchase
of Shares."
CLASS B SHARES. Class B shares are sold at net asset value per share subject
to a maximum 4.50% CDSC, which is assessed only if the shareholder redeems
shares within the first five years of investment. This results in 100% of the
investor's assets' being used to acquire shares of the Fund. After the first
year after the purchase of a share, the CDSC declines to 4.00%. For
each year of
investment thereafter within this five-year time
9
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
VARIABLE PRICING SYSTEM (CONTINUED)
frame, the applicable CDSC declines by 1%, so that in year six, the
applicable CDSC is
reduced to 0%. See "Purchase of Shares" and "Redemption of Shares."
Class B shares are subject to an annual service fee of .15% and an
annual
distribution fee of .50% of the value of the Fund's average daily net assets
attributable to the Class. Like the service fee applicable to Class A shares,
the Class B service fee is used to compensate Smith Barney Shearson
Financial
Consultants for ongoing services provided to shareholders. Additionally, the
distribution fee paid with respect to Class B shares compensates
Smith Barney
Shearson for expenses incurred in selling those shares, including expenses
such
as sales commissions, Smith Barney Shearsons' branch office overhead expenses
and marketing costs associated with Class B shares, such as preparation of
sales
literature, advertising and printing and distributing prospectuses, statements
of additional information and other materials to prospective investors in
Class
B shares. A Financial Consultant may receive different levels of
compensation
for selling different Classes. Class B shares are subject to a
distribution fee
and a higher transfer agency fee than Class A shares which, in turn, will
cause
Class B shares to have a higher expense ratio and pay lower dividends
than Class
A shares.
Eight years after the date of purchase, Class B shares will convert
automatically to Class A shares, based on the relative net asset values of
shares of each Class, and will no longer be subject to a distribution fee. In
addition, a certain portion of Class B shares that have been acquired through
the reinvestment of dividends and distributions ("Class B Dividend Shares")
will
be converted at that time. That portion will be a percentage of the total
number
of Class B Dividend Shares owned by the shareholder, equal to the ratio of the
total number of Class B shares converting at the time to the total number of
Class B shares (other than Class B Dividend Shares) owned by the shareholder.
The conversion of Class B shares into Class A shares is subject to the
continuing availability of an opinion of counsel to the effect that such
conversions will not constitute taxable events for Federal tax purposes.
10
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- --------------------------------------------------------------------
THE FUND'S PERFORMANCE
YIELD
From time to time, the Fund may advertise its 30-day "yield" and "equivalent
taxable yield" for each Class. The yield of a Class of the Fund refers to the
income generated by an investment in those shares over the 30-day period
identified in the advertisement and is computed by dividing the net investment
income per share earned by the Class during the period by the maximum public
offering price per share on the last day of the period. This income is
"annualized" by assuming that the amount of income is generated each month
over
a one-year period and is compounded semi-annually. The annualized income is
then
shown as a percentage of the net asset value.
The Fund's equivalent taxable yield demonstrates the yield on a taxable
investment necessary to produce an after-tax yield equal to the Fund's tax-
exempt yield for each class of shares. It is calculated by increasing the
yield
shown for the Class to the extent necessary to reflect the payment of taxes at
specified tax rates. Thus, the equivalent taxable yield always will exceed the
Fund's yield. For more information on equivalent taxable yields, refer to the
table under "Dividends, Distributions and Taxes."
TOTAL RETURN
From time to time, the Fund may advertise its "average annual total return"
over various periods of time for each Class. Such total return figures show
the
average percentage change in the value of an investment in the Class from the
beginning date of the measuring period to the end of the measuring period.
These
figures reflect changes in the price of the Fund's shares and assume that any
income dividends and/or capital gains distributions made by the Fund with
respect to that Class during the period were reinvested in shares of that
Class
of the Fund. Class A total return figures include the maximum initial 4.50%
sales charge and Class B total return figures include any applicable
CDSC. These
figures also take into account the service and distribution fees, if any,
payable with respect to the Classes.
Total return figures will be given for the recent one-, five-and ten-year
periods, or for the life of a Class to the extent it has not been in existence
for any such periods, and may be given for other periods as well, such as on a
year-by-year basis. When considering average annual total return figures for
periods longer than one year, it is important to note that the average
11
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
THE FUND'S PERFORMANCE (CONTINUED)
annual total return for any one year in the period might have been greater or
less than the average for the entire period. "Aggregate total return" figures
may be used for various periods, representing the cumulative change in the
value
of an investment in a Class for the specific period (again reflecting changes
in
share prices and assuming reinvestment of dividends and distributions).
Aggregate total return may be calculated either with or without the effect of
the maximum 4.50% sales charge for the Class A shares or any applicable CDSC
for
Class B shares and may be shown by means of schedules, charts or
graphs, and may
indicate subtotals of the various components of total return (that is, changes
in the value of initial investment, income dividends and capital gains
distributions). Because of the differences in sales charges and distribution
fees, the performance for each of the Classes will differ.
In reports or other communications to shareholders or in advertising
material,
performance of the Classes may be compared with that of other mutual funds or
Classes of shares of other funds as listed in the rankings prepared by Lipper
Analytical Services, Inc. or similar independent services that monitor the
performance of mutual funds, or other industry or financial publications such
as
BARRON'S, BUSINESS WEEK, CDA INVESTMENT TECHNOLOGIES, INC., FORBES, FORTUNE,
INSTITUTIONAL INVESTOR, INVESTORS DAILY, KIPLINGER'S PERSONAL FINANCE,
MORNINGSTAR MUTUAL FUND VALUES, MONEY, THE WALL STREET JOURNAL, THE NEW YORK
TIMES and USA TODAY. Performance figures are based on historical earnings and
are not intended to indicate future performance. To the extent that any
advertisement or sales literature of the Fund describes the expenses or
performance of a Class it will also disclose such information for the other
Class. The Statement of Additional Information contains a description of the
methods used to determine performance. Performance figures may be obtained
from
your Smith Barney Shearson Financial Consultant.
- --------------------------------------------------------------------
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
Overall responsibility for management and supervision of the Fund rests with
the Fund's Board of Trustees. The Trustees approve all significant
12
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
MANAGEMENT OF THE FUND (CONTINUED)
agreements between the Fund and the companies that furnish services to the
Fund,
including agreements with its distributor, investment adviser and
administrator,
sub-administrator, custodian and transfer agent. The day-to-day operations of
the Fund are delegated to the Fund's investment adviser, administrator and
sub-administrator. The Statement of Additional Information contains general
background information regarding each Trustee and executive officer of the
Fund.
INVESTMENT ADVISER--GREENWICH STREET ADVISORS
Greenwich Street Advisors, located at Two World Trade Center, New York, New
York 10048, serves as the Fund's investment adviser. Greenwich Street Advisors
(through predecessor entities) has been in the investment counseling business
since 1934 and is a division of Mutual Management Corp., which was
incorporated
in 1978. The Greenwich Street Advisors division of Mutual Management Corp.
renders investment advice to investment company clients which had aggregate
assets under management as of April 30, 1994, in excess of 42.6
billion. Mutual Management Corp. as a whole provides investment management and
investment
administration services to investment companies which had aggregate assets as
of
April 30, 1994, in excess of 48.9 billion .
Subject to the supervision and direction of the Fund's Board of Trustees,
Greenwich Street Advisors manages the Fund's portfolio in accordance with the
Fund's investment objective and policies, makes investment decisions for the
Fund, places orders to purchase and sell securities and employs professional
portfolio managers and securities analysts who provide research services to
the
Fund.
PORTFOLIO MANAGEMENT
Peter M. Coffey, Managing Director of Smith Barney Shearson and
Greenwich Street Advisors, serves as Vice President and Investment
Officer of the Fund and manages the day-to-day operations of the Fund
including making all investment decisions. Mr. Coffey has served in this
capacity since the inception of the Fund. Prior to the acquisition of
Greenwich Street Advisors, Mr. Coffey served, and continues to serve, in a
similar position with Smith Barney Shearson.
13
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
MANAGEMENT OF THE FUND (CONTINUED)
ADMINISTRATOR
Smith, Barney Advisers, Inc. located at 1345 Avenue of the Americas, New
York,
New York 10105, serves as the Fund's administrator. Smith, Barney Advisers,
Inc.
provides investment management and administrative services to investment
companies that had aggregate assets as of April 30, 1994, in excess of
$8.9
billion. Smith, Barney Advisers, Inc., among other responsibilities, provides
senior executive management for the Fund and generally oversees and directs
all
aspects of the Fund's administration and operation.
SUB-ADMINISTRATOR--BOSTON ADVISORS
Boston Advisors, located at One Boston Place, Boston, Massachusetts 02108,
serves as the Fund's sub-administrator. Boston Advisors provides investment
management and investment administrative services to investment companies that
had aggregate assets as of April 30, 1994, in excess of $91.9
billion. Boston
Advisors, among other responsibilities, calculates the net asset value of the
Fund's shares and generally assists in various aspects of the Fund's
administration and operation.
- --------------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The investment objective of the Fund is to provide Oregon investors with as
high a level of dividend income exempt from Federal income taxes and Oregon
state personal income tax as is consistent with prudent investment management
and the preservation of capital. This investment objective may not be changed
without the approval of the holders of a majority of the Fund's outstanding
shares. There can be no assurance that the Fund's investment objective will be
achieved.
The Fund will operate subject to an investment policy providing that, under
normal market conditions, the Fund will invest at least 80% of its net assets
in
Oregon Municipal Securities, which pay interest which is excluded from gross
income for Federal income tax purposes and which is exempt from Oregon state
personal income tax.
14
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
The Fund may invest up to 20% of its net assets in municipal securities of
non-Oregon municipal issuers, the interest on which is excluded from gross
income for Federal income tax purposes (not including the possible
applicability
of a Federal alternative minimum tax), but which is subject to Oregon state
personal income tax. When Greenwich Street Advisors believes that market
conditions warrant adoption of a temporary defensive investment posture, the
Fund may invest without limit in non-Oregon municipal issuers and in
"Temporary
Investments" as described below.
The Fund generally will invest at least 75% of its total assets in
investment
grade debt obligations rated no lower than Baa, MIG 3 or Prime-1 by Moody's or
BBB, SP-2 or A-1 by S&P, or in unrated obligations of comparable quality.
Unrated securities will be considered to be of investment grade if deemed by
Greenwich Street Advisors to be comparable in quality to instruments so rated,
or if other outstanding obligations of the issuers thereof are rated Baa or
better by Moody's or BBB or better by S&P. The balance of the Fund's assets
may
be invested in securities rated as low as C by Moody's or D by S&P, or
comparable unrated securities. Securities in the fourth highest rating
category,
though considered to be investment grade, have speculative characteristics.
Securities rated as low as D are extremely speculative and are in actual
default
of interest and/or principal payments.
The Fund's average weighted maturity will vary from time to time based on
the
judgment of Greenwich Street Advisors. The Fund intends to focus on
intermediate- and long-term obligations, that is, obligations with remaining
maturities at the time of purchase of between three and twenty years.
Obligations which are rated Baa by Moody's or BBB by S&P and those which are
rated lower than investment-grade are subject to greater market fluctuation
and
more uncertainty as to payment of principal and interest, and therefore
generate
higher yields than obligations rated above Baa or BBB.
LOW AND COMPARABLE UNRATED SECURITIES. While the market values of low-rated
and comparable unrated securities tend to react less to fluctuations in
interest
rate levels than the market values of higher-rated securities, the market
values
of certain low-rated and comparable unrated municipal securities also tend to
be
more sensitive than higher-rated securities to short-term corporate and
industry
developments and changes in economic
15
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
conditions (including recession) in specific regions or localities or among
specific types of issuers. In addition, low-rated securities and comparable
unrated securities generally present a higher degree of credit risk. During an
economic downturn or a prolonged period of rising interest rates, the ability
of
issuers of low-rated and comparable unrated securities to service their
payment
obligations, meet projected goals or obtain additional financing may be
impaired. The risk of loss due to default by such issuers is significantly
greater because low-rated and comparable unrated securities generally are
unsecured and frequently are subordinated to the prior payment of senior
indebtedness. The Fund may incur additional expenses to the extent it is
required to seek recovery upon a default in payment of principal or interest
on
its portfolio holdings.
While the market for municipal securities is considered to be generally
adequate, the existence of limited markets for particular low-rated and
comparable unrated securities may diminish the Fund's ability to (a) obtain
accurate market quotations for purposes of valuing such securities and
calculating its net asset value and (b) sell the securities at fair value
either
to meet redemption requests or to respond to changes in the economy or in the
financial markets. The market for certain low-rated and comparable unrated
securities is relatively new and has not fully weathered a major economic
recession. Any such economic downturn also could adversely affect the ability
of
the issuers of such securities to repay principal and pay interest thereon.
Fixed-income securities, including low-rated securities and comparable
unrated
securities, frequently have call or buy-back features that permit their
issuers
to call or repurchase the securities from their holders, such as the Fund. If
an
issuer exercises these rights during the periods of declining interest rates,
the Fund may have to replace the security with a lower yielding security, thus
resulting in a decreased return to the Fund. A description of the rating
systems
of Moody's and S&P is contained in the Statement of Additional Information.
MUNICIPAL LEASES. The Funds may invest in "Municipal leases," which
generally
are participations in intermediate- and short-term debt obligations issued by
municipalities consisting of leases or installment purchase contracts for
property or equipment. Although lease obligations do not constitute general
obligations of the municipality for which the municipality's taxing
16
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
power is pledged, a lease obligation is ordinarily backed by the
municipality's
covenant to budget for, appropriate and make the payments due under the lease
obligation. However, certain lease obligations contain "non-appropriation"
clauses which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated for
such purpose on a yearly basis. In addition to the "non-appropriation" risk,
these securities represent a relatively new type of financing that has not yet
developed the depth of marketability associated with more conventional bonds.
Although "non-appropriation" lease obligations are often secured by the
underlying property, disposition of the property in the event of foreclosure
might prove difficult. There is no limitation on the percentage of the Fund's
assets that may be invested in municipal lease obligations. In evaluating
municipal lease obligations, Greenwich Street Advisors will consider such
factors as it deems appropriate, which may include: (a) whether the lease can
be
canceled; (b) the ability of the lease obligee to direct the sale of the
underlying assets; (c) the general creditworthiness of the lease obligor; (d)
the likelihood that the municipality will discontinue appropriating funding
for
the leased property in the event such property is no longer considered
essential
by the municipality; (e) the legal recourse of the lease obligee in the event
of
such a failure to appropriate funding; (f) whether the security is backed by a
credit enhancement such as insurance; and (g) any limitations which are
imposed
on the lease obligor's ability to utilize substitute property or services
rather
than those covered by the lease obligation.
The Fund may invest without limit in private activity bonds. Interest income
on certain types of private activity bonds issued after August 7, 1986 to
finance non-governmental activities is a specific tax preference item for
purposes of the Federal individual and corporate alternative minimum taxes.
Individual and corporate shareholders may be subject to a Federal alternative
minimum tax to the extent the Fund's dividends are derived from interest on
those bonds. Dividends derived from interest income on Oregon Municipal
Securities are a component of the "current earnings" adjustment item for
purposes of the Federal corporate alternative minimum tax.
The Fund is classified as a non-diversified investment company under the
1940
Act, which means that the Fund is not limited by the 1940 Act in the
proportion
of its assets that it may invest in the obligations of a single issuer. The
Fund
intends to conduct its operations, however, so as to qualify
17
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
as a "regulated investment company" for purposes of the Internal Revenue Code
of
1986, as amended (the "Code"), which will relieve the Fund of any liability
for
Federal income tax and Oregon state franchise tax to the extent its earnings
are
distributed to shareholders. To so qualify, among other requirements, the Fund
will limit its investments so that, at the close of each quarter of the
taxable
year, (a) not more than 25% of the market value of the Fund's total assets
will
be invested in the securities of a single issuer and (b) with respect to 50%
of
the market value of its total assets, not more than 5% of the market value of
its total assets will be invested in the securities of a single issuer and the
Fund will not own more than 10% of the outstanding voting securities of a
single
issuer. The Fund's assumption of large positions in the obligations of a small
number of issuers may cause the Fund's share price to fluctuate to a greater
extent than that of a diversified company as a result of changes in the
financial condition or in the market's assessment of the issuers.
The Fund may invest without limit in debt obligations that are repayable out
of revenue streams generated from economically-related projects or facilities.
Sizeable investments in such obligations could involve an increased risk to
the
Fund should any of the related projects or facilities experience financial
difficulties. In addition, the Fund also may invest up to an aggregate of 15%
of
its total assets in securities with contractual or other restrictions on
resale
and other instruments which are not readily marketable. The Fund
also is authorized to borrow an amount of up to
10% of its total assets (including the amount borrowed) valued at market less
liabilities (not including the amount borrowed) in order to meet anticipated
redemptions and to pledge its assets to the same extent in connection with the
borrowings.
Further information about the Fund's investment policies, including a list
of
those restrictions on the Fund's investment activities that cannot be changed
without shareholder approval, appears in the Statement of Additional
Information.
CERTAIN PORTFOLIO STRATEGIES
In attempting to achieve its investment objective, the Fund may employ,
among
others, the following portfolio strategies.
18
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
WHEN-ISSUED SECURITIES. New issues of Oregon Municipal Securities (and other
tax-exempt obligations) frequently are offered on a when-issued basis, which
means that delivery and payment for such securities normally take place within
15 to 45 days after the date of the commitment to purchase. 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. Oregon Municipal
Securities, like other investments made by the Fund, may decline or appreciate
in value before their actual delivery to the Fund. Due to fluctuations in the
value of securities purchased and sold on a when-issued basis, the yields
obtained on these securities may be higher or lower than the yields available
in
the market on the date when the investments actually are delivered to the
buyers. The Fund will not accrue income with respect to a when-issued security
prior to its stated delivery date. The Fund will establish a segregated
account
with the Fund's custodian consisting of cash, obligations issued or guaranteed
by the United States government or its agencies or instrumentalities ("U.S.
government securities") or other high grade debt obligations in an amount
equal
to the purchase price of the when-issued securities. Placing securities rather
than cash in the segregated account may have a leveraging effect on the Fund's
net assets. The Fund generally will make commitments to purchase Oregon
Municipal Securities (and other tax-exempt obligations) on a when-issued basis
only with the intention of actually acquiring the securities, but the Fund may
sell such securities before the delivery date if it is deemed advisable.
TEMPORARY INVESTMENTS. Under normal market conditions, the Fund may hold up
to
20% of its total assets in cash or money market instruments, including taxable
money market instruments ("Temporary Investments"). In addition, when
Greenwich
Street Advisors believes that market conditions warrant, including when
acceptable Oregon Municipal Securities are not available, the Fund may take a
temporary defensive posture and invest without limitation in Temporary
Investments. Tax-exempt securities eligible for short-term investment by the
Fund are municipal notes having, at the time of purchase, a rating within the
three highest grades of Moody's or S&P or, if not rated, having an issue of
outstanding debt securities rated within the three highest grades of Moody's
or
S&P, and certain taxable short-term instruments having quality characteristics
comparable to those for tax-exempt investments. To the extent the Fund holds
Temporary Investments, it may not achieve its investment objective.
19
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
FINANCIAL FUTURES AND OPTIONS TRANSACTIONS. The Fund may enter into
financial
futures contracts and invest in options on financial futures contracts that
are
traded on a U.S. exchange or board of trade. Such investments, if any, by the
Fund will be made solely for the purpose of hedging against the changes in the
value of its portfolio securities due to anticipated changes in interest rates
and market conditions and where the transactions are economically appropriate
to
the reduction of risks inherent in the management of the Fund. The futures
contract or options on futures contracts that may be entered into by the Fund
will be restricted to those that are either based on a municipal bond index or
relate to debt securities the prices of which are anticipated by Greenwich
Street Advisors to correlate with the prices of the Municipal Bonds owned or
to
be purchased by the Fund.
In entering into a financial futures contract, the Fund will be required to
deposit with the broker through which it undertakes the transaction an amount
of
cash or cash equivalents equal to approximately 5% of the contract amount.
This
amount, which is known as "initial margin," is subject to change by the
exchange
or board of trade on which the contract is traded, and members of the exchange
or board of trade may charge a higher amount. Initial margin is in the nature
of
a performance bond or good faith deposit on the contract that is returned to
the
Fund upon termination of the futures contract, assuming all contractual
obligations have been satisfied. In accordance with a process known as
"marking-to-market," subsequent payments known as "variation margin," to and
from the broker will be made daily as the price of the index or securities
underlying the futures contract fluctuates, making the long and short
positions
in the futures contract more or less valuable. At any time prior to the
expiration of a futures contract, the Fund may elect to close the position by
taking an opposite position, which will operate to terminate the Fund's
existing
position in the contract.
A financial futures contract provides for the future sale by one party and
the
purchase by the other party of a certain amount of a specified property at a
specified price, date, time and place. Unlike the direct investment in a
20
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
futures contract, an option on a financial futures contract gives the
purchaser
the right, in turn for the premium paid, to assume a position in the financial
futures contract at a specified exercise price at any time prior to the
expiration date of the option. Upon exercise of an option, the delivery of the
futures position by the writer of the option to the holder of the option will
be
accompanied by delivery of the accumulated balance in the writer's futures
margin account, which represents the amount by which the market price of the
futures contract exceeds, in the case of a call, or is less than, in the case
of
a put, the exercise price of the option on the futures contract. The potential
loss related to the purchase of an option on financial futures contracts is
limited to the premium paid for the option (plus transaction costs). The value
of the option may change daily and that change would be reflected in the net
asset value of the Fund.
Regulations of the Commodity Futures Trading Commission applicable to the
Fund
require that its transactions in financial futures contracts and options on
financial futures contracts engaged in for other than bona fide hedging
purposes
be limited such that no such transactions may be entered into by the Fund if
the
aggregate initial margin deposits and premiums paid by the Fund exceed 5% of
the
market value of its assets. In addition, the Fund will, with respect to its
purchases of financial futures contracts, establish a segregated account
consisting of cash or cash equivalents in an amount equal to the total market
value of the futures contracts, less the amount of initial margin on deposit
for
the contracts. The Fund's ability to trade in financial futures contracts and
options on financial futures contracts may be limited to some extent by the
requirements of the Internal Revenue Code of 1986, as amended, applicable to a
regulated investment company that are described below under "Dividends,
Distributions and Taxes."
LENDING OF PORTFOLIO SECURITIES. The Fund has the ability to lend securities
from its portfolio to brokers, dealers and other financial organizations. Such
loans, if and when made, may not exceed 20% of the Fund's total assets, taken
at
value. Loans of portfolio securities by the Fund 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 100% of the current market value
(determined by marking to market daily) of the loaned securities. The risks in
lending portfolio securities, as with other extensions of secured credit,
consist of possible delays in receiving additional collateral or in the
recovery
of the securities or possible loss of rights in the collateral
21
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
should the borrower fail financially. Loans will be made to firms deemed by
Greenwich Street Advisors to be of good standing and will not be made unless,
in
the judgment of Greenwich Street Advisors, the consideration to be earned from
such loans would justify the risk.
- --------------------------------------------------------------------
OREGON MUNICIPAL SECURITIES
As used in this Prospectus, the term "Oregon Municipal Securities"
generally
refers to intermediate-and long-term debt obligations issued by the State of
Oregon and local governments in the State of Oregon, together with certain
other
governmental issuers such as the Commonwealth of Puerto Rico, to obtain funds
for various public purposes. The interest on such obligations is, in the
opinion
of bond counsel to the issuers, excluded from gross income for Federal income
tax purposes and exempt from Oregon state personal income tax, and for that
reason generally is fixed at a lower rate than it would be if it were subject
to
such taxes. Interest income on certain municipal securities (including Oregon
Municipal Securities) is a specific tax preference item for purposes of the
Federal individual and corporate alternative minimum taxes.
CLASSIFICATIONS
The two principal classifications of Oregon Municipal Securities are
"general
obligation bonds" and "revenue bonds." General obligation bonds are secured by
the issuer's pledge of its full faith, credit and taxing power for the payment
of principal and interest. Revenue bonds are payable from the revenues derived
from a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise tax or other specific revenue source, but not
from
the issuer's general taxing power. Sizeable investments in such
obligations could involve
an increased risk to the Fund should any of such related facilities experience
financial difficulties. In addition, certain types of private activity bonds
issued by or on behalf of public authorities to obtain funds for privately
operated facilities are included in the term Oregon Municipal Securities,
provided the interest paid thereon is excludable from gross income
for
Federal income tax purposes and exempt from Oregon state personal
income tax.
Private activity bonds generally do not carry the pledge of the credit of the
issuing municipality.
22
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- ---------------------------------------------------------------------------
OREGON MUNICIPAL SECURITIES (CONTINUED)
SPECIAL CONSIDERATIONS
The Fund ordinarily will invest at least 65% of its total assets in Oregon
Municipal Securities, and therefore it is more susceptible to factors
adversely
affecting issuers of Oregon Municipal Securities than is a tax-exempt
mutual fund
that is not concentrated in issuers of Oregon Municipal Securities to
this degree.
The State of Oregon forecasts modest acceleration of the economy, fueled by
the
impact of low interest rates on the construction sector, in-migration,
appreciating home values, continued gains in high technology manufacturing, an
expanding service sector, and strong small business income growth.
However,
structural change is expected to limit the State's overall economic growth
rate.
President Clinton's forest plan is expected to cause further reductions in
timber jobs, and government employment is expected to remain weak as state and
local government revenues shrink relative to the overall economy. Nonfarm wage
and salary employment is expected to grow 3.0% in the first quarter of 1994.
Personal income is expected to increase 6.9% in 1994, compared to growth of
5.1%
in 1993.
A recently enacted property tax limitation has adversely affected the
financial condition of the State of Oregon and many local governments. In
addition, efforts to protect threatened and endangered species have limited,
and
may further restrict, available timber and fish supplies, and could
increase costs of
power and transportation in the State. Greenwich Street Advisors
does not believe that the
current economic conditions in Oregon will have a significant adverse effect
on
the Fund's ability to invest in high quality Oregon Municipal Securities
. Because the
Fund's portfolio will be comprised primarily of investment grade securities,
the
Fund is expected to be less subject to market and credit risks than a fund
that
invests primarily in lower quality Oregon Municipal Securities . See
"Special
Considerations Relating to Oregon Municipal Securities" in the Statement of
Additional Information.
- --------------------------------------------------------------------
PURCHASE OF SHARES
Purchases of shares must be made through a brokerage account maintained with
Smith Barney Shearson or with an Introducing Broker. When purchasing shares of
the Fund, investors must specify whether the purchase is for Class A
or Class B
shares. No maintenance fee will be charged in connection with a
23
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
PURCHASE OF SHARES (CONTINUED)
brokerage account through which an investor purchases or holds shares.
Purchases
are effected at the public offering price next determined after a purchase
order
is received by Smith Barney Shearson or an Introducing Broker (the "trade
date"). Payment for Fund shares is generally due to Smith Barney Shearson or
an
Introducing Broker on the fifth business day (the "settlement date") after the
trade date. Investors who make payment prior to the settlement date may permit
the payment to be held in their brokerage accounts or may designate a
temporary
investment (such as a money market fund in the Smith Barney Shearson Group of
Funds) for such payment until the settlement date. The Fund reserves the right
to reject any purchase order and to suspend the offering of shares for a
period
of time.
Purchase orders received by Smith Barney Shearson or an Introducing Broker
prior to the close of regular trading on the NYSE, currently 4:00 p.m., New
York
time, on any day the Fund calculates its net asset value, are priced according
to the net asset value determined on that day. Purchase orders received after
the close of regular trading on the NYSE are priced as of the time the net
asset
value is next determined. See "Valuation of Shares."
SYSTEMATIC INVESTMENT PLAN. The Fund offers shareholders a Systematic
Investment Plan under which shareholders may authorize Smith Barney Shearson
or
an Introducing Broker to place a purchase order each month or quarter for Fund
shares in an amount not less than $100. The purchase price is paid
automatically
from cash held in the shareholder's Smith Barney Shearson brokerage account or
through the automatic redemption of the shareholder's shares of a Smith Barney
Shearson money market fund. For further information regarding the Systematic
Investment Plan, shareholders should contact their Smith Barney Shearson
Financial Consultants.
MINIMUM INVESTMENTS. The minimum initial investment in the Fund is $1,000,
and
the minimum subsequent investment is $200, except that the minimum initial and
subsequent investments for the Systematic Investment Plan are both $100. There
are no minimum investment requirements for employees of Smith Barney
Shearson and its
affiliates. The Fund reserves the right to vary at any time the initial and
subsequent investment minimums. Certificates for Fund shares are issued upon
request to the Fund's transfer agent, The Shareholder Services Group, Inc.
("TSSG"), a subsidiary of First Data Corporation.
24
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
PURCHASE OF SHARES (CONTINUED)
CLASS A SHARES
The public offering price for Class A shares is the per share net asset
value
of that Class plus a sales charge, which is imposed in accordance with the
following schedule:
<TABLE>
<CAPTION>
SALES CHARGE AS % SALES CHARGE
AS %
AMOUNT OF INVESTMENT* OF OFFERING PRICE OF NET ASSET
VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
- --------
Less than $25,000 4.50% 4.71%
$25,000 but under $50,000 4.00% 4.17%
$50,000 but under $100,000 3.50% 3.63%
$100,000 but under $250,000 3.00% 3.09%
$250,000 but under $500,000 2.50% 2.56%
$500,000 but under $1,000,000 1.50% 1.52%
$1,000,000 or more** 0.00% 0.00%
- ------------------------------------------------------------------------------
- -------
<FN>
*Smith Barney Shearson has adopted guidelines directing its Financial
Consultants and
Introducing Brokers that single investments of $250,000 or more should be
made in
Class A shares.
**No sales charge is imposed on purchases of Class A shares of $1 million or
more;
however, a CDSC of .75% is imposed for the first year after purchase. The
CDSC on
Class A shares is payable to Smith Barney Shearson which, with Boston
Advisors,
compensates Smith Barney Shearson Financial Consultants upon the sale of
these
shares. The CDSC is waived in the same circumstances in which the CDSC
applicable to
Class B shares is waived. See "Redemption of Shares --
Contingent Deferred
Sales Charge -- Class B Shares."
</TABLE>
REDUCED SALES CHARGES--CLASS A SHARES
Reduced sales charges are available to investors who are eligible to combine
their purchases of Fund shares to receive volume discounts. Investors eligible
to receive volume discounts include individuals and their immediate families,
tax-qualified employee benefit plans and trustees or other professional
fiduciaries (including a bank or an investment adviser registered with the SEC
under the Investment Advisers Act of 1940, as amended) purchasing shares for
one
or more trust estates or fiduciary accounts even though more than one
beneficiary is involved. The initial sales charge also is reduced to 1% for
Smith Barney Shearson Personal Living Trust program participants for whom
Smith
Barney Shearson acts as Trustee. Reduced sales charges on Class A shares also
are available under a combined right of accumulation, under which an investor
may combine the value of Class A shares already held in the Fund and in any of
the funds in the Smith Barney Shearson Group of Funds listed below (except
those
sold without a sales charge), along with
25
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
PURCHASE OF SHARES (CONTINUED)
the value of the Class A shares being purchased, to qualify for a reduced
sales
charge. For example, if an investor owns Class A shares of the Fund and other
funds in the Smith Barney Shearson Group of Funds that have an aggregate value
of $22,000, and makes an additional investment in Class A shares of the Fund
of
$4,000, the sales charge applicable to the additional investment would be 4%,
rather than the 4.50% normally charged on a $4,000 purchase. Investors
interested in further information regarding reduced sales charges should
contact
their Smith Barney Shearson Financial Consultants.
Class A shares may be offered without any applicable sales charges to: (a)
employees of Smith Barney Shearson and its affiliates and employee benefit
plans
for such employees and their immediate families when orders on their behalf
are
placed by such employees; (b) accounts managed by registered investment
advisory
subsidiaries of Travelers; (c) directors, trustees or general partners of any
investment company for which Smith Barney Shearson serves as distributor; (d)
any other investment company in connection with the combination of such
company
with the Fund by merger, acquisition of assets or otherwise; (e) shareholders
who have redeemed Class A shares in the Fund (or Class A shares of another
fund
in the Smith Barney Shearson Group of Funds that are sold with a maximum sales
charge of at least 4.50%) and who wish to reinvest their redemption proceeds
in
the Fund, provided the reinvestment is made within 30 days of the redemption;
and (f) any client of a newly employed Smith Barney Shearson Financial
Consultant (for a period up to 90 days from the commencement of the Financial
Consultant's employment with Smith Barney Shearson), on the condition the
purchase is made with the proceeds of the redemption of shares of a mutual
fund
which (i) was sponsored by the Financial Consultant's prior employer, (ii) was
sold to the client by the Financial Consultant and (iii) when purchased, such
shares were sold with a sales charge.
CLASS B SHARES
The public offering price for Class B shares is the per share net
asset value
of that Class. No initial sales charge is imposed at the time of purchase. A
CDSC is imposed, however, on certain redemptions of Class B shares.
See
"Redemption of Shares" which describes the CDSC in greater detail.
26
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
PURCHASE OF SHARES (CONTINUED)
Smith Barney Shearson has adopted guidelines, in view of the relative sales
charges and distribution fees applicable to the Classes, directing Financial
Consultants and Introducing Brokers that all purchases of shares of $250,000
or
more should be for Class A shares. Smith Barney Shearson reserves the right to
vary these guidelines at any time.
- --------------------------------------------------------------------
REDEMPTION OF SHARES
Shareholders may redeem their shares on any day that the Fund calculates
its net
asset value. See "Valuation of Shares." Redemption requests received in proper
form prior to the close of regular trading on the NYSE are priced at the net
asset value per share determined on that day. Redemption requests received
after
the close of regular trading on the NYSE are priced at the net asset value as
next determined. If a shareholder holds shares in more than one Class, any
request for redemption must specify the Class of shares being redeemed. In the
event of a failure to specify which Class, or if the investor owns fewer
shares
of the Class than specified, the redemption request will be delayed until the
Fund's transfer agent receives further instructions from Smith Barney
Shearson,
or if the shareholder's account is not with Smith Barney Shearson, from the
shareholder directly.
The Fund normally transmits redemption proceeds for credit to the
shareholder's account at Smith Barney Shearson or to the Introducing Broker at
no charge (other than any applicable CDSC) within seven days after receipt of
a
redemption request. Generally, these funds will not be invested for the
shareholder's benefit without specific instruction and Smith Barney Shearson
will benefit from the use of temporarily uninvested funds. A shareholder who
pays for Fund shares by personal check will be credited with the proceeds of a
redemption of those shares only after the purchase check has been collected,
which may take up to 10 days or more. A shareholder who anticipates the need
for
more immediate access to his or her investment should purchase shares with
Federal funds, by bank wire or a certified or cashier's check.
A Fund account that is reduced by a shareholder to a value of $500 or less
may
be subject to redemption by the Fund, but only after the shareholder has been
given at least 30 days in which to increase the account balance to more than
$500.
27
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
REDEMPTION OF SHARES (CONTINUED)
Shares may be redeemed in one of the following ways:
REDEMPTION THROUGH SMITH BARNEY SHEARSON
Redemption requests may be made through Smith Barney Shearson or an
Introducing Broker. A shareholder desiring to redeem Fund shares represented
by
certificates must present the certificates to Smith Barney Shearson
or the
Introducing Broker endorsed for transfer (or accompanied by an endorsed stock
power), signed exactly as the shares are registered. Redemption requests
involving shares represented by certificates will not be deemed received until
the certificates are received by the Fund's transfer agent in proper form.
REDEMPTION BY MAIL
Shares may be redeemed by submitting a written request for redemption to:
Smith Barney Shearson Oregon Municipals Fund
Class A or B (please specify)
c/o The Shareholder Services Group, Inc.
P.O. Box 9134
Boston, Massachusetts 02205-9134
A written redemption request to the Fund's transfer agent or your Smith
Barney
Shearson Financial Consultant must (a) state the Class and number or dollar
amount of shares to be redeemed, (b) identify the shareholder's account number
and (c) be signed by each registered owner exactly as the shares are
registered.
If the shares to be redeemed were issued in certificate form, the certificates
must be endorsed for transfer (or accompanied by an endorsed stock power) and
must be submitted to TSSG together with the redemption request. Any signature
appearing on a redemption request, share certificate or stock power must be
guaranteed by a domestic bank, savings and loan institution, domestic credit
union, member bank of the Federal Reserve System or a member firm of a
national
securities exchange. TSSG may require additional supporting documents for
redemptions made by corporations, executors, administrators, trustees or
guardians. A redemption request will not be deemed properly received until
TSSG
receives all required documents in proper form.
28
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
REDEMPTION OF SHARES (CONTINUED)
AUTOMATIC CASH WITHDRAWAL PLAN
The Fund offers shareholders an automatic cash withdrawal plan, under which
shareholders who own shares with a value of at least $10,000 may elect to
receive periodic cash payments of at least $50 monthly. Any applicable CDSC
will
not be waived on amounts withdrawn by a shareholder that exceed 2% per month
of
the value of the shareholder's shares subject to the CDSC at the time the
withdrawal plan commences. For further information regarding the automatic
cash
withdrawal plan, shareholders should contact their Smith Barney Shearson
Financial Consultants.
CONTINGENT DEFERRED SALES CHARGE--CLASS B SHARES
A CDSC payable to Smith Barney Shearson is imposed on any redemption of
Class
B shares, however effected, that causes the current value of a
shareholder's
account to fall below the dollar amount of all payments by the shareholder for
the purchase of Class B shares ("purchase payments") during the
preceding five
years. No charge is imposed to the extent that the net asset value of
the Class
B shares redeemed does not exceed (a) the current net asset value of
Class B shares purchased through reinvestment of dividends or capital
gains
distributions, plus (b) the current net asset value of Class B shares
purchased
more than five years prior to the redemption, plus (c) increases in
the net
asset value of the shareholder's Class B shares above the purchase
payments made
during the preceding five years.
In circumstances in which the CDSC is imposed, the amount of the charge will
depend on the number of years since the shareholder made the purchase payment
from which the amount is being redeemed. Solely for the purposes of
determining
the number of years since a purchase payment, all purchase payments during a
month will be aggregated and deemed to have been made on the last day of the
preceding Smith Barney Shearson statement month.
29
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
REDEMPTION OF SHARES (CONTINUED)
The following table sets forth the rates of the charge for redemptions of
Class B shares by investors:
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE PAYMENT WAS MADE
CDSC
<S> <C>
- ------------------------------------------------------------------------------
- ----
First
4.50%
Second
4.00%
Third
3.00%
Fourth
2.00%
Fifth
1.00%
Sixth
0.00%
Seventh
0.00%
Eighth
0.00%
- ------------------------------------------------------------------------------
- ----
</TABLE>
Class B shares will automatically convert to Class A shares eight
years after
the date on which they were purchased and thereafter will no longer
be subject
to any distribution fee. The first of these conversions will commence on or
about September 30, 1994. See "Variable Pricing System -- Class B
Shares."
The purchase payment from which a redemption of Class B shares is
made is
assumed to be the earliest purchase payment from which a full redemption has
not
already been effected. In the case of redemptions of Class B shares of other
funds in the Smith Barney Shearson Group of Funds issued in exchange for Class
B
shares of the Fund, the term "purchase payments" refers to the purchase
payments
for the shares given in exchange. In the event of an exchange of Class B
shares
of funds with differing CDSC schedules, the shares will be, in all cases,
subject to the higher CDSC schedule. See "Exchange Privilege."
WAIVERS OF CDSC. The CDSC will be waived on: (a) exchanges (see "Exchange
Privilege"); (b) automatic cash withdrawals in amounts equal to or less than
2%
per month of the value of the shareholders' shares at the time the withdrawal
plan commences (see above); (c) redemption of shares following the death or
disability of the shareholders; (d) involuntary redemptions; (e) redemption
proceeds from other funds in the Smith Barney Shearson Group of Funds that are
reinvested within 30 days of the redemption; and (f) redemptions of shares in
connection with a combination of any investment company with the Fund by
merger,
acquisition of assets or otherwise.
30
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- --------------------------------------------------------------------
VALUATION OF SHARES
For each Class the net asset value per share is calculated on each day,
Monday
through Friday, except days on which the NYSE is closed. The NYSE currently is
scheduled to be closed on New Year's Day, Presidents' Day, Good Friday,
Memorial
Day, Independence Day, Labor Day, Thanksgiving and Christmas, and on the
preceding Friday or subsequent Monday when one of these holidays falls on a
Saturday or Sunday, respectively.
The net asset value per share of a Class is determined as of the close of
regular trading on the NYSE and is computed by dividing the value of the
Fund's
net assets attributable to that Class by the total number of shares of that
Class outstanding. Generally, the Fund's investments are valued at market
value
or, in the absence of a market value with respect to any securities, at fair
value as determined by or under the direction of the Fund's Board of Trustees.
Short-term investments that mature in 60 days or less are valued at amortized
cost whenever the Trustees determine that amortized cost reflects fair value
of
those investments. Amortized cost involves valuing an instrument at its cost
initially and, thereafter, assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating interest rates on
the market value of the instrument. Further information regarding the Fund's
valuation policies is contained in the Statement of Additional Information.
- --------------------------------------------------------------------
EXCHANGE PRIVILEGE
Shares of each Class may be exchanged for shares of the same Class in the
following funds in the Smith Barney Shearson Group of Funds, to the extent
shares are offered for sale in the shareholder's state of residence:
<TABLE>
<CAPTION>
EXCHANGEABLE
WITH SHARES
OF THE
FOLLOWING
CLASSES: FUND NAME AND INVESTMENT OBJECTIVE:
<S> <C>
-----------------------------------------------------------------------------
- --
MUNICIPAL BOND FUNDS
A SMITH BARNEY SHEARSON LIMITED MATURITY MUNICIPALS FUND, an
intermediate-term municipal bond fund investing in
investment-grade obligations.
</TABLE>
31
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
EXCHANGE PRIVILEGE (CONTINUED)
<TABLE>
<CAPTION>
EXCHANGEABLE
WITH SHARES
OF THE
FOLLOWING
CLASSES: FUND NAME AND INVESTMENT OBJECTIVE:
-----------------------------------------------------------------------------
- --
<S> <C>
A, B SMITH BARNEY SHEARSON MANAGED MUNICIPALS FUND INC., an
intermediate- and long-term municipal bond fund.
A, B SMITH BARNEY SHEARSON TAX-EXEMPT INCOME FUND, an
intermediate-
and long-term municipal bond fund investing in medium- and
lower-rated securities.
A, B SMITH BARNEY SHEARSON ARIZONA MUNICIPALS FUND INC., an
intermediate- and long-term municipal bond fund designed for
Arizona investors.
A SMITH BARNEY SHEARSON INTERMEDIATE MATURITY CALIFORNIA
MUNICIPALS FUND, an intermediate-term municipal bond fund
designed for California investors.
A, B SMITH BARNEY SHEARSON CALIFORNIA MUNICIPALS FUND, an
intermediate-and long-term municipal bond fund designed for
California investors.
A, B SMITH BARNEY SHEARSON FLORIDA MUNICIPALS FUND, an
intermediate- and long-term municipal bond fund designed for
Florida investors.
A, B SMITH BARNEY SHEARSON MASSACHUSETTS MUNICIPALS FUND, an
intermediate- and long-term municipal bond fund designed for
Massachusetts investors.
A, B SMITH BARNEY SHEARSON NEW JERSEY MUNICIPALS FUND INC., an
intermediate- and long-term municipal bond fund designed for
New Jersey investors.
A SMITH BARNEY SHEARSON INTERMEDIATE MATURITY NEW YORK
MUNICIPALS FUND, an intermediate-term municipal bond fund
designed for New York investors investing in investment
grade
obligations.
</TABLE>
32
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
EXCHANGE PRIVILEGE (CONTINUED)
<TABLE>
<CAPTION>
EXCHANGEABLE
WITH SHARES
OF THE
FOLLOWING
CLASSES: FUND NAME AND INVESTMENT OBJECTIVE:
-----------------------------------------------------------------------------
- --
<S> <C>
A, B SMITH BARNEY SHEARSON NEW YORK MUNICIPALS FUND INC., an
intermediate- and long-term municipal bond fund designed for
New York investors.
INCOME FUNDS
A, B SMITH BARNEY SHEARSON ADJUSTABLE RATE GOVERNMENT INCOME
FUND,
seeks high current income while limiting the degree of
fluctuation in net asset value resulting from movement in
interest rates.
A SMITH BARNEY SHEARSON LIMITED MATURITY TREASURY FUND,
invests
exclusively in securities issued by the United States
Treasury
and other U.S. government securities.
A, B SMITH BARNEY SHEARSON DIVERSIFIED STRATEGIC INCOME FUND,
seeks
high current income primarily by allocating and reallocating
its assets among various types of fixed-income securities.
A, B SMITH BARNEY SHEARSON MANAGED GOVERNMENT FUND INC., invests
in
obligations issued or guaranteed by the United States
government and its agencies and instrumentalities with
emphasis on mortgage-backed government securities.
A, B SMITH BARNEY SHEARSON GOVERNMENT SECURITIES FUND, seeks a
high
current return by investing in U.S. government securities.
A, B SMITH BARNEY SHEARSON INVESTMENT GRADE BOND FUND, seeks
maximum current income consistent with prudent investment
management and preservation of capital by investing in
corporate bonds.
A, B SMITH BARNEY SHEARSON HIGH INCOME FUND, seeks high current
income by investing in high-yield corporate bonds,
debentures
and notes.
</TABLE>
33
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
EXCHANGE PRIVILEGE (CONTINUED)
<TABLE>
<CAPTION>
EXCHANGEABLE
WITH SHARES
OF THE
FOLLOWING
CLASSES: FUND NAME AND INVESTMENT OBJECTIVE:
-----------------------------------------------------------------------------
- --
<S> <C>
A, B SMITH BARNEY SHEARSON GLOBAL BOND FUND, seeks current income
and capital appreciation by investing in bonds, debentures
and
notes of foreign and domestic issuers.
GROWTH AND INCOME FUNDS
A*, B* SMITH BARNEY SHEARSON CONVERTIBLE FUND, seeks current income
and capital appreciation by investing in convertible
securities.
A*, B* SMITH BARNEY SHEARSON GROWTH AND INCOME FUND, seeks income
and
long-term capital growth by investing in income-producing
equity securities.
A*, B* SMITH BARNEY SHEARSON UTILITIES FUND, seeks total return by
investing in equity and debt securities of utilities
companies.
A*, B* SMITH BARNEY SHEARSON STRATEGIC INVESTORS FUND, seeks high
total return consisting of current income and capital
appreciation by investing in a combination of equity, fixed-
income and money market securities.
A*, B* SMITH BARNEY SHEARSON PREMIUM TOTAL RETURN FUND, seeks total
return by investing in dividend-paying common stocks.
GROWTH FUNDS
A*, B* SMITH BARNEY SHEARSON APPRECIATION FUND INC., seeks long-
term
appreciation of capital.
A*, B* SMITH BARNEY SHEARSON FUNDAMENTAL VALUE FUND INC., seeks
long-term capital growth with current income as a secondary
objective.
A*, B* SMITH BARNEY SHEARSON TELECOMMUNICATIONS GROWTH FUND, seeks
capital appreciation, with income as a secondary
consideration.
</TABLE>
34
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
EXCHANGE PRIVILEGE (CONTINUED)
<TABLE>
<CAPTION>
EXCHANGEABLE
WITH SHARES
OF THE
FOLLOWING
CLASSES: FUND NAME AND INVESTMENT OBJECTIVE:
-----------------------------------------------------------------------------
- --
<S> <C>
A*, B* SMITH BARNEY SHEARSON AGGRESSIVE GROWTH FUND INC., seeks
above-average capital growth.
A*, B* SMITH BARNEY SHEARSON SPECIAL EQUITIES FUND, seeks long-term
capital appreciation by investing in equity securities
primarily of emerging growth companies.
A*, B* SMITH BARNEY SHEARSON GLOBAL OPPORTUNITIES FUND, seeks
long-term capital growth by investing principally in the
common stocks of foreign and domestic issuers.
A*, B* SMITH BARNEY SHEARSON EUROPEAN FUND, seeks long-term capital
appreciation by investing primarily in securities of issuers
based in European countries.
A*, B* SMITH BARNEY SHEARSON PRECIOUS METALS AND MINERALS FUND
INC.,
seeks long-term capital appreciation by investing primarily
in
precious metal- and mineral-related companies and gold
bullion.
MONEY MARKET FUNDS
** SMITH BARNEY SHEARSON MONEY MARKET FUND, invests in a
diversified portfolio of higher quality money market
instruments.
*** SMITH BARNEY SHEARSON DAILY DIVIDEND FUND INC., invests in a
diversified portfolio of high quality money market
instruments.
*** SMITH BARNEY SHEARSON GOVERNMENT AND AGENCIES FUND INC.,
invests in short-term U.S. government and agency securities.
*** SMITH BARNEY SHEARSON MUNICIPAL MONEY MARKET FUND INC.,
invests in short-term high quality municipal obligations.
</TABLE>
35
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
EXCHANGE PRIVILEGE (CONTINUED)
<TABLE>
<CAPTION>
EXCHANGEABLE
WITH SHARES
OF THE
FOLLOWING
CLASSES: FUND NAME AND INVESTMENT OBJECTIVE:
-----------------------------------------------------------------------------
- --
<S> <C>
*** SMITH BARNEY SHEARSON CALIFORNIA MUNICIPAL MONEY MARKET
FUND,
invests in short-term, high quality California municipal
obligations.
*** SMITH BARNEY SHEARSON MUNICIPAL MONEY MARKET FUND, invests
in
short-term, high quality New York municipal obligations.
--------------------------------------------------------------------
<FN>
*Shares of this fund are subject to a higher sales charge or CDSC than that
applicable to the Fund's shares.
**Shares of this money market fund may be exchanged for Class B shares of
the
Fund.
***Shares of this money market fund may be exchanged for Class A shares of
the
Fund.
</TABLE>
TAX EFFECT. The exchange of shares of one fund for shares of another fund is
treated for Federal income tax purposes as a sale of the shares given in
exchange by the shareholder. Therefore, an exchanging shareholder
generally will realize a
taxable gain or loss in connection with an exchange.
CLASS A EXCHANGES. Class A shareholders of the funds in the Smith Barney
Shearson Group of Funds sold without a sales charge or with a maximum sales
charge of less than 4.50% will be subject to the appropriate "sales charge
differential" upon the exchange of their shares for Class A shares of the Fund
or other fund sold with a higher sales charge. The "sales charge differential"
is limited to a percentage rate no greater than the excess of the sales charge
rate applicable to purchases of shares of the mutual fund being acquired in
the
exchange over the sales charge rate(s) actually paid on the mutual fund shares
relinquished in the exchange and on any predecessor of those shares. For
purposes of the exchange privilege, shares obtained through automatic
reinvestment of dividends, as described below, are treated as having paid the
same sales charges applicable to the shares on which the dividends were paid;
however, if no sales charge was imposed upon the initial purchase of the
shares,
any shares obtained through automatic reinvestment will be subject to a sales
charge differential upon exchange.
CLASS B EXCHANGES. Class B shareholders of the Fund who wish to exchange all
or a portion of their Class B shares for Class B shares in any of the funds
identified above may do so without imposition of any exchange fee.
36
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
EXCHANGE PRIVILEGE (CONTINUED)
In the event a Class B shareholder wishes to exchange all or a portion of his
or
her shares for shares in any of the funds imposing a CDSC higher than that
imposed by the Fund, the exchanged Class B shares will be subject to the
higher
applicable CDSC. Upon an exchange, the new Class B shares will be deemed to
have
been purchased on the same date as the Class B shares of the Fund that have
been
exchanged.
ADDITIONAL INFORMATION REGARDING THE EXCHANGE PRIVILEGE. Although the
exchange
privilege is an important benefit, excessive exchange transactions can be
detrimental to the Fund's performance and its shareholders. Greenwich Street
Advisors may determine that a pattern of frequent exchanges is excessive and
contrary to the best interests of the Fund's other shareholders. In this
event,
Greenwich Street Advisors will notify Smith Barney Shearson, and Smith Barney
Shearson may, at its discretion, decide to limit additional purchases and/or
exchanges by the shareholder. Upon such a determination, Smith Barney Shearson
will provide notice in writing or by telephone to the shareholder at least 15
days prior to suspending the exchange privilege and during the 15-day period
the
shareholder will be required to (a) redeem his or her shares in the Fund or
(b)
remain invested in the Fund or exchange into any of the funds in the Smith
Barney Shearson Group of Funds ordinarily available, which position the
shareholder would be expected to maintain for a significant period of
time. All
relevant factors will be considered in determining what constitutes an abusive
pattern of exchanges.
Shareholders exercising the exchange privilege with any of the other funds
in
the Smith Barney Shearson Group of Funds should review the prospectus of that
fund carefully prior to making an exchange. Smith Barney Shearson reserves the
right to reject any exchange request. The exchange privilege may be modified
or
terminated at any time after written notice to shareholders. For further
information regarding the exchange privilege or to obtain the current
prospectus
for members of the Smith Barney Shearson Group of Funds, investors should
contact their Smith Barney Shearson Financial Consultant.
37
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- --------------------------------------------------------------------
DISTRIBUTOR
Smith Barney Shearson is located at 388 Greenwich Street, New York, New York
10013 and serves as distributor of the Fund's shares. Smith Barney Shearson is
paid an annual service fee with respect to Class A and Class B
shares of theFund at the rate of .15% of the value of average daily net
assets of the
respective Class. Smith Barney Shearson is paid an annual distribution fee
with
respect to Class B shares at the rate of .50% of the value of the
average daily
net assets attributable to those shares. The fees are authorized pursuant to a
services and distribution plan (the "Plan") adopted by the Fund pursuant to
Rule
12b-1 under the 1940 Act and are used by Smith Barney Shearson 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. These expenses include: costs of printing and distributing the
Fund's Prospectus, Statement of Additional Information and sales literature to
prospective investors; an allocation of overhead and other Smith Barney
Shearsons' branch office distribution-related expenses; payments to and
expenses
of Smith Barney Shearson Financial Consultants and other persons who provide
support services in connection with the distribution of the shares; and
accruals
for interest on the amount of the foregoing expenses that exceed distribution
fees and, in the case of Class B shares, the CDSC received by Smith
Barney
Shearson. The payments to Smith Barney Shearson Financial Consultants for
selling shares of a Class include a commission paid at the time of sale and a
continuing fee for servicing shareholder accounts for as long as a shareholder
remains a holder of that Class. The service fee is credited at the rate of
.15%
of the value of the average daily net assets of the particular Class of shares
that remain invested in the Fund. Smith Barney Shearson Financial Consultants
may receive different levels of compensation for selling one Class over
another.
Payments under the Plan are not tied exclusively to the distribution and
shareholder service expenses actually incurred by Smith Barney Shearson and
the
payments may exceed distribution expenses actually incurred. The Fund's Board
of
Trustees will evaluate the appropriateness of the Plan and its payment terms
on
a continuing basis and in so doing will consider all relevant factors,
including
expenses borne by Smith Barney Shearson, the amount received under
the Plan and
proceeds of the CDSC.
38
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- --------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS AND TAXES
The Fund declares dividends from its net investment income (that is, income
other than its net realized long-and short-term capital gains) on each day the
Fund is open for business and pays dividends on the last business day of the
Smith Barney Shearson statement month. Distributions of net realized long-and
short-term capital gains, if any, are declared and paid annually after the end
of the fiscal year in which they have been earned. Unless a shareholder
instructs that dividends and capital gains distributions on shares of any
Class
be paid in cash and credited to the shareholder's account, dividends and
capital
gains distributions will be reinvested automatically in additional shares of
the
Class at net asset value, subject to no sales charge or CDSC. The Fund's
earnings for Saturdays, Sundays and holidays are declared as dividends on the
next business day. Shares redeemed during the month are entitled to dividends
declared up to and including the date of redemption. In addition, in order to
avoid the application of a 4% nondeductible excise tax on certain
undistributed
amounts of ordinary income and capital gains, the Fund may make an additional
distribution shortly before December 31 in each year of any undistributed
ordinary income or capital gains and expects to make any other distributions
as
are necessary to avoid the application of this tax.
If, for any full fiscal year, the Fund's total distributions exceed current
and accumulated earnings and profits, the excess distributions generally will
be
treated as a tax-free return of capital (up to the amount of the shareholder's
tax basis in his or her shares). The amount treated as a tax-free return of
capital will reduce a shareholder's adjusted basis in his or her shares.
Pursuant to the requirements of the 1940 Act and other applicable laws, a
notice
will accompany any distribution paid from sources other than net investment
income. In the event the Fund distributes amounts in excess of its net
investment income and net realized capital gains, such distributions may have
the effect of decreasing the Fund's total assets, which may increase the
Fund's
expense ratio.
TAXES
The Fund intends to qualify and to continue to qualify each year as
a
regulated investment company under the Code and will designate and pay
exempt-interest dividends derived from interest earned on qualifying tax-
exempt
obligations. Such exempt-interest dividends may be excluded by shareholders of
the Fund from their gross income for Federal income tax purposes although (a)
all or a portion of such exempt-interest dividends will
39
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS AND TAXES (CONTINUED)
be a specific preference item for purposes of the Federal individual and
corporate alternative minimum taxes to the extent they are derived from
certain
types of private activity bonds issued after August 7, 1986 and (b) all
exempt-interest dividends will be a component of the "current earnings"
adjustment item for purposes of the Federal corporate alternative minimum tax.
In addition, corporate shareholders may incur a greater Federal
"environmental"
tax liability through the receipt of the Fund's dividends and distributions.
Dividends derived from interest on Oregon Municipal Securities also will be
exempt from Oregon state personal income (but not corporate franchise
(excise) corporate income) taxes.
Dividends paid from taxable net investment income, if any, and distributions
of any net realized short-term capital gains (whether from tax-exempt or
taxable
securities) are taxable to shareholders as ordinary income, regardless of how
long they have held their Fund shares and whether such dividends or
distributions are received in cash or reinstated in additional Fund shares.
Distributions of net realized long-term capital gains are taxable to
shareholders as long-term capital gains, regardless of how long they have held
their Fund shares and whether such distributions are received in cash
or
reinvested in additional shares. Furthermore, as a general rule, a
shareholder's
gain or loss on a sale or redemption of his or her shares will be a long-term
capital gain or loss if the shareholder has held the shares for more than one
year and will be a short-term capital gain or loss if the shareholder has held
the shares for one year or less. The Fund's dividends and distributions will
not
qualify for the dividends-received deduction for corporations. The per share
dividends and distributions on Class A shares will be higher than those on
Class
B shares as a result of lower distribution and transfer agency fees
applicable
to Class A shares.
Statements as to the tax status of each shareholder's dividends and
distributions are mailed annually. Each shareholder will also receive, if
appropriate, various written notices after the close of the Fund's prior
taxable
year as to the Federal income tax status of his or her dividends and
distributions which were received from the Fund during the Fund's prior
taxable
year. These statements may set forth the dollar amount of income excluded or
exempt from Federal income taxes or Oregon state personal income taxes and the
dollar amount, if any, subject to such taxes. Moreover, these statements will
designate the amount of exempt-interest dividends that
40
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS AND TAXES (CONTINUED)
is a specific preference item for purposes of the Federal individual and
corporate alternative minimum taxes. Shareholders should consult their tax
advisors with specific reference to their own tax situations.
TAX-EXEMPT INCOME VS. TAXABLE INCOME
The table below shows Oregon individual taxpayers how to translate
Federal and Oregon
State tax savings from investments such as the Fund into an equivalent return
from a taxable investment which generated ordinary income such as interest
or dividends. . To the extent that the equivalent taxable yields,
illustrated in this table, are based on an effective tax rate which combines
the
Federal and Oregon marginal income tax rates, the table is not applicable to
tax payers who do not pay Oregon State personal income tax such
as corporations. The yields used below are
for illustration only and are not intended to represent current or future
yields
for the Fund, which may be higher or lower than those shown.
<TABLE>
<CAPTION>
COMBINED
FEDERAL OREGON COMBINED EFFECTIVE
TAXABLE INCOME* MARGINAL MARGINAL MARGINAL MARGINAL TAX
EXEMPT YIELDS
SINGLE JOINT RATE RATE RATE RATE** 4.00%
5.00% 6.00% 7.00% 8.00% 9.00%
<S> <C> <C> <C> <C> <C> <C> <C>
<C> <C> <C> <C>
-----------------------------------------------------------------------------
- --------------------
EQUIVALENT TAXABLE YIELDS
$ 22,750 $ 38,000 15.00% 9.00% 24.00% 22.65% 5.26% 6.58% 7.51%
9.21% 10.53% 11.84%
55,100 91,850 28.00% 9.00% 37.00% 34.48% 6.35% 7.94%
9.52% 11.11% 12.70% 14.29%
115,000 140,000 31.00% 9.00% 40.00% 37.21% 6.67%
7.99% 10.00% 11.67% 13.33% 15.00%
250,000 250,000 36.00% 9.00% 45.00% 41.76% 6.27% 8.68%
10.91% 12.73% 14.55% 16.36%
250,000 250,000 39.60% 9.00% 48.60% 45.04% 7.78% 9.30%
11.67% 13.62% 15.56% 17.51%
-----------------------------------------------------------------------------
- --------
<FN>
*Combined effective marginal tax rate represents the combined Federal and
Oregon state income tax
rates adjusted to account for the Federal deduction of state taxes paid. The
combined effective marginal income tax rate generally is lower than
the sum of the Federal and Oregon state marginal rates because the
state taxes that shareholders of the Fund will pay are deductible from
Federal taxable income for taxpayers who itemize their duductions.
The federal tax rates shown are those currently in effect for 1994 and are
subject to change. The calculations reflected in the table assume that no
income will be subjec to any federal, state or local individual alternative
minimum taxes. The rate brackets are subject to adjustment for the Internal
Revenue Service inflation indexation.
** This Fund is not an appropriate investment vehicle for low-income
taxpayers. The Oregon personal income tax is imposed at the rate of 9% for
taxable incomes in excess of $5,000 for individuals filing as single status
and for taxable incomes in excess of $10,000 for married couples filing
jointly. Dividends qualifying for federal income tax purposes as capital
gains dividends are treated by shareholders as long-term capital gains and
subject to a maximum tax rate of 28%. Oregon taxes long-term capital gains at
the same rates as oridinary income while restricting the deductibility of
capital losses.
41
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- --------------------------------------------------------------------
ADDITIONAL INFORMATION
The Fund was organized on March 10, 1994 under the laws of the
Commonwealth of
Massachusetts and is a business entity commonly known as a "Massachusetts
business trust." The Fund offers shares of beneficial interest, with a par
value
of $.001 per share.
Each Class of shares has a par value of $.001 per share and represents an
identical interest in the Fund's investment portfolio. As a result, the
Classes
have the same rights, privileges and preferences, except with respect to: (a)
the designation of each Class; (b) the effect of the respective sales charges
for each Class; (c) the distribution and/or service fees borne by each Class;
(d) the expenses allocable exclusively to each Class; (e) voting rights on
matters exclusively affecting a single Class; (f) the exchange privilege of
each
Class; and (g) the conversion feature of the Class B shares. The Fund's Board
of
Trustees does not anticipate that there will be any conflicts among the
interests of the holders of the different Classes. The Trustees, on an ongoing
basis, will consider whether any such conflict exists and, if so, take
appropriate action.
The Fund does not hold annual shareholder meetings. There normally will be
no
meetings of shareholders for the purpose of electing Trustees unless and until
such time as less than a majority of the Trustees holding office have been
elected by shareholders. The Trustees will call a meeting for any purpose upon
written request of shareholders holding at least 10% of the Fund's outstanding
shares. When matters are submitted for shareholder vote, shareholders of each
Class will have one vote for each full share owned and a proportionate,
fractional vote for any fractional share held of that Class. Generally, shares
of the Fund will be voted on a Fund-wide basis on all matters except matters
affecting only the interests of one Class.
Boston Safe Deposit and Trust Company, a wholly owned subsidiary of TBC, is
located at One Boston Place, Boston, Massachusetts 02108, and serves as
custodian of the Fund's investments.
TSSG is located at Exchange Place, Boston, Massachusetts 02109, and serves
as
the Fund's transfer agent.
The Fund sends to each of its shareholders a semi-annual report and an
audited
annual report, which include listings of the investment securities held by the
Fund at the end of the period covered. In an effort to reduce the Fund's
printing and mailing costs, the Fund plans to consolidate the mailing
42
<PAGE>
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
- -------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
of its semi-annual and annual reports by household. This consolidation means
that a household having multiple accounts with the identical address of record
will receive a single copy of each report. In addition, the Fund also plans to
consolidate the mailing of its Prospectus so that a shareholder having
multiple
accounts will receive a single Prospectus annually. Any shareholder who does
not
want this consolidation to apply to his or her account should contact his or
her
Financial Consultant or TSSG. Shareholders may make inquiries regarding the
Fund
to their Smith Barney Shearson Financial Consultants.
-------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, THE STATEMENT
OF
ADDITIONAL INFORMATION AND/OR THE FUND'S OFFICIAL SALES LITERATURE IN
CONNECTION
WITH THE OFFERING OF THE FUND'S SHARES, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED
BY THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER IN ANY STATE IN
WHICH,
OR TO ANY PERSON TO WHOM, SUCH OFFER MAY NOT LAWFULLY BE MADE.
43
<PAGE>
SMITH BARNEY SHEARSON
OREGON
MUNICIPALS
FUND
Two World Trade Center
New York, New York 10048
[Fund 306,307 ]
[ FD0543 E4 ]
<PAGE>
Smith Barney Shearson
OREGON MUNICIPALS FUND
Two World Trade Center
New York, New York 10048
(212) 720-9218
STATEMENT OF ADDITIONAL INFORMATION
MAY 23,
1994
This Statement of Additional Information expands upon and supplements the
information contained in the current Prospectus of Smith Barney Shearson
Oregon
Municipals Fund Inc. (the "Fund") dated May 23, 1994, as amended or
supplemented
from time to time, and should be read in conjunction with the Fund's
Prospectus.
The Fund's Prospectus may be obtained from your Smith Barney Shearson
Financial
Consultant or by writing or calling the Fund at the address or telephone
number
set forth above. This Statement of Additional Information, although not in
itself a prospectus, is incorporated by reference into the Prospectus in its
entirety.
CONTENTS
For ease of reference, the same section headings are used in both the
Prospectus
and this Statement of Additional Information, except where shown below:
</TABLE>
<TABLE>
<S>
<C>
Management of the
Fund................................................................
1
Investment Objective and Management
Policies.......................................... 4
Municipal Bonds (See in the Prospectus "Oregon Municipal
Securities")................. 12
Purchase of
Shares....................................................................
16
Redemption of
Shares..................................................................
17
Distributor...................................................................
........ 18
Valuation of
Shares...................................................................
19
Exchange
Privilege....................................................................
20
Performance Data (See in the Prospectus "The Fund's
Performance")..................... 20
Taxes (See in the Prospectus "Dividends, Distributions and
Taxes").................... 22
Custodian and Transfer Agent (See in the Prospectus "Additional
Information")......... 25
Organization and Fund
Shares.......................................................... 25
Financial
Statements..................................................................
26
Report of Independent Accountants
................................................. 27
Appendix......................................................................
........ A-1
</TABLE>
MANAGEMENT OF THE FUND
The executive officers of the Fund are employees of certain of the
organizations
that provide services to the Fund. These organizations are as follows:
<TABLE>
<CAPTION>
NAME SERVICE
<S> <C>
Smith Barney Shearson Inc.
("Smith Barney Shearson")...................................... Distributor
Greenwich Street Advisors........................................ Investment
Adviser
Smith, Barney Advisers, Inc......................................
Administrator
("Smith Barney Advisers")
The Boston Company Advisors, Inc.
("Boston Advisors")............................................ Sub-
Administrator
Boston Safe Deposit and Trust Company
("Boston Safe")................................................ Custodian
The Shareholder Services Group, Inc. ("TSSG"),
a subsidiary of First Data Corporation......................... Transfer
Agent
</TABLE>
These organizations and the functions they perform for the Fund are
discussed
in the Prospectus and in this Statement of Additional Information.
<PAGE>
TRUSTEES AND EXECUTIVE OFFICERS OF THE FUND
The Trustees and executive officers of the Fund, together with information as
to
their principal business occupations during the past five years, are set
forth
below. Each Trustee who is an "interested person" of the Fund, as defined in
the
Investment Company Act of 1940, as amended (the "1940 Act"), is indicated by
an
asterisk.
Herbert Barg, Director. Private investor. His address is 273
Montgomery
Avenue, Bala Cynwyd, Pennsylvania 19004.
*Alfred J. Bianchetti, Director. Retired; formerly Senior Consultant to
Dean
Witter Reynolds Inc. His address is 19 Circle End Drive, Ramsey, New
Jersey
17466.
Martin Brody, Director. Vice Chairman of the Board of Restaurant
Associates
Corp.; a Director of Jaclyn, Inc. His address is HMK Associates, Three
ADP
Boulevard, Roseland, New Jersey 07068.
Dwight B. Crane, Director. Professor, Graduate School of
Business
Administration, Harvard University; a Director of Peer Review Analysis, Inc.
His
address is Graduate School of Business Administration, Harvard
University,
Boston, Massachusetts 02163.
James J. Crisona, Director. Attorney; formerly a Justice of the Supreme
Court
of the State of New York. His address is 118 East 60th Street, New York,
New
York 10022.
Robert A. Frankel, Director. Management Consultant; retired Vice President
of
The Reader's Digest Association, Inc. His address is 102 Grand
Street,
Croton-on-Hudson, New York 10520.
Dr. Paul Hardin, Director. Chancellor of the University of North Carolina
at
Chapel Hill; a Director of The Summit Bancorporation. His address is
University
of North Carolina, 103 S. Building, Chapel Hill, North Carolina 27599.
Stephen E. Kaufman, Director. Attorney; Director of Michigan Energy
Resources
Corp. His address is 277 Park Avenue, New York, New York 10172.
Joseph J. McCann, Director. Financial Consultant; formerly, Vice President
of
Ryan Homes, Inc. His address is 200 Oak Park Place, Pittsburgh,
Pennsylvania
15243.
*Heath B. McLendon, Chairman of the Board and Investment Officer.
Executive
Vice President of Smith Barney Shearson and Chairman of Smith Barney
Strategy
Advisers Inc.; prior to July 1993. Senior Executive Vice President of
Shearson
Lehman Brothers Inc. ("Shearson Lehman Brothers"); Vice Chairman of
Shearson
Asset Management, a member of the Asset Management Group of Shearson
Lehman
Brothers; a Director of PanAgora Asset Management, Inc. and PanAgora
Asset
Management Limited. His address is Two World Trade Center, New York, New
York
10048.
Stephen J. Treadway, President. Executive Vice President of Smith
Barney
Shearson; Director and President of Mutual Management Corp. and Smith,
Barney
Advisers, Inc. and Trustee of Corporate Realty Income Trust I. His address
is
1345 Avenue of the Americas, New York, New York, 10105.
Richard P. Roelofs, Executive Vice President. Managing Director of
Smith
Barney Shearson; President of Smith Barney Shearson Strategy Advisers
Inc.;
prior to July 1993, Senior Vice President of Shearson
2
<PAGE>
Lehman Brothers; Vice President of Shearson Lehman Investment Strategy
Advisors
Inc., an investment advisory affiliate of Shearson Lehman Brothers. His
address
is Two World Trade Center, New York, New York 10048.
Peter M. Coffey, Vice President and Investment Officer. Managing
Director of Smith Barney Shearson and Greenwich Street Advisors. His address
is 1345 Avenue of the Americas, New York, New York 10105.
Lewis E. Daidone, Treasurer. Managing Director of Smith Barney Shearson
and Director and Senior Vice President of Mutual Management Corp. and Smith
Barney Advisers. Prior to January, 1990, Senior Vice President and Chief
Financial Officer of Cortland Financial Group, Inc. His address is 1345
Avenue of the Americas, New York, New York 10105.
Christina T. Sydor, Secretary. Managing Director of Smith Barney
Shearson and Secretary of Mutual Management Corp. and Smith Barney Advisers.
Her address is
1345 Avenue of the Americas, New York, New York, 10105.
Each Trustee also serves as a director, trustee or general partner of
other
mutual funds for which Smith Barney Shearson serves as distributor. As of
April
30, 1994, the Trustees and officers of the Fund as a group owned no shares
of
the outstanding common stock of the Fund.
No director, officer or employee of Smith Barney Shearson, Boston Advisors
or
any parent or subsidiary receives any compensation from the Fund for serving
as
an officer or Trustee of the Fund. The Fund pays each Trustee who is not
an
officer, director or employee of Smith Barney Shearson, Boston Advisors or
any
of their affiliates a fee of $2,500 per annum plus $250 per meeting
attended and
reimburses them for travel and out-of-pocket expenses.
Investment Adviser--Greenwich Street Advisors
Administrator-- Smith Barney Advisers
Greenwich Street Advisors serves as investment adviser to the Fund and
Smith Barney Advisers serves as Administrator for the Fund pursuant to
written
agreements dated May 23, 1994 (the "Advisory Agreement and Administration
Agreement," respectively.), which were approved by
the Board of Trustees, including a majority of those Trustees who are
not
"interested persons" of the Fund, Greenwich Street Advisors or Smith Barney
Advisers, on April 20,
1994. The services provided by Greenwich Street Advisors under the Advisory
Agreement and by smith Barney Advisers under the Administration Agreement are
described in the Prospectus. Greenwich
Street Advisors and Smith Barney Advisers pay the salaries of all officers and
employees who are employed by both them and the Fund. Greenwich Street
Advisors
and Smith Barney Advisers bear all expenses in connection with the performance
of their services. Greenwich Street Advisors is a division of Mutual
Management
Corp., which, together with Smith Barney Advisers, is in turn a wholly owned
subsidiary of Smith Barney Shearson
Holdings Inc. ("Holdings"). Holdings is a wholly owned subsidiary of
The
Travelers Inc. ("Travelers"). As compensation for the services rendered to
the
Fund by Greenwich Street Advisors, the Fund pays a
fee computed daily and paid monthly at the following annual rates: .35% of
the
value of the Fund's average daily net assets up to $500 million and .32% of
the
value of its average daily net assets in excess of $500 million. As
compensation for the services rendered to the Fund by Smith Barney Advisers,
the Fund pays a fee computed daily and paid monthly at the following annual
rates: .20% of the value of the Fund's average daily net assets up to $500
million and .18% of the value of its average daily net assets in excess of
$500 million.
SUB-ADMINISTRATOR--BOSTON ADVISORS
Certain services are provided to the Fund by Boston Advisors pursuant to
the
Sub-administration Agreement are described in the Prospectus under
"Management
of the Fund." In addition to those services, Boston Advisors pays the
salaries
of all officers and employees who are employed by both it and the
Fund,
maintains office facilities for the Fund, furnishes the Fund with
statistical
and research data, clerical help
3
<PAGE>
and accounting, data processing, bookkeeping, internal auditing and
legal
services and certain other services required by the Fund, prepares reports
to
the Fund's shareholders and prepares tax returns and reports to and filings
with
the Securities and Exchange Commission (the "SEC") and state blue
sky
authorities. Boston Advisors bears all expenses in connection with
the
performance of its services. Under the Sub-administration agreement approved
by
the Board on April 20, 1994, Boston Advisors is compensated in such amounts
as
the Fund, Smith Barney Advisers and Boston Advisors shall from time
to time
agree. The compensation of Smith Barney Advisers Corp. is reduced by
amounts paid to
Boston Advisors.
The Fund bears expenses incurred in its operations, including:
taxes,
interest, brokerage fees and commissions, if any; fees of Trustees who are
not
officers, directors, shareholders or employees of Smith Barney Shearson
or its affiliates; SEC
fees and state blue sky qualification fees; charges of custodian; transfer
and
dividend disbursing agent's fees; certain insurance premiums; outside
auditing
and legal expenses; costs of any independent pricing service; costs
of
maintaining corporate existence; costs attributable to investor
services
(including allocated telephone and personnel expenses); costs of preparation
and
printing of prospectuses for regulatory purposes and for distribution
to
existing shareholders; costs of shareholders' reports and shareholders'
meetings
and meetings of the Fund's Board of Trustees and officers.
Greenwich Street Advisors Smith Barney Advisers and Boston Advisors
. have each agreed that
if in any fiscal year the aggregate expenses of the Fund (including fees
payable
pursuant to the Advisory Agreement , Administration Agreement and
Sub-administration Agreement, but excluding interest, taxes, brokerage
and, with the prior written consent of the necessary state securities
commissions, extraordinary expenses) exceed the expense limitations of any
state having jurisdiction over the Fund, Greenwich Street Advisors ,
Smith Barney Advisers and Boston Advisors will, to the extent required
by state law, reduce their fees by the amount of such excess
expenses, such amount to be allocated between them in the proportion their
respective fees bear to the aggregate of such fees paid by the Fund. Such
fee reductions, if any, will be reconciled on a monthly basis. The most
restrictive state expense
limitation presently applicable to the Fund would require Greenwich
Street
Advisors , Smith Barney Advisers and Boston Advisors to reduce their
fees in any year that such expenses exceed 2.5% of the first $30 million of
average daily net assets, 2% of the next $70 million of average daily net
assets and 1.5% of the remaining average daily net assets.
COUNSEL AND AUDITORS
Willkie Farr & Gallagher serves as legal counsel to the Fund. Lane,
Powell,, Spears, Lubersky, acts as special Oregon counsel for the Fund
and has reviewed the portions of the Prospectus and this Statement of
Additional Information concerning Oregon taxes
, specifically, the Prospectus section "Oregon Municipal Securities -
Special Considerations" and Statement of Additional Information section
"Special Considerations Relating to Oregon Municipal Securities." The
Trustees who are not "interested persons" of
the Fund have selected Stroock & Stroock & Lavan as their counsel.
Coopers & Lybrand, independent accountants, One Post Office Square,
Boston,
Massachusetts 02109, serve as auditors of the Fund and render an opinion on
the
Fund's financial statements annually.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The Prospectus discusses the Fund's investment objective and the policies
it
employs to achieve that objective. The following discussion supplements
the
description of the Fund's investment policies in the Prospectus. For purposes
of
this Statement of Additional Information, obligations of non-Oregon
municipal
issuers, the interest on which is excluded from gross income for Federal
income
tax purposes, together with
4
<PAGE>
obligations of the State of Oregon, local governments in the State of Oregon
and
certain other municipal issuers such as the Commonwealth of Puerto Rico
("Oregon
Municipal Securities"), are collectively referred to as "Municipal Bonds."
As noted in the Prospectus, the Fund is classified as a non-
diversified
investment company under the 1940 Act, which means that the Fund is not
limited
by the 1940 Act in the proportion of its assets that may be invested in
the
obligations of a single issuer. The identification of the issuer of
Municipal
Bonds generally depends upon the terms and conditions of the security. When
the
assets and revenues of an agency, authority, instrumentality or other
political
subdivision are separate from those of the government creating the
issuing
entity and the security is backed only by the assets and revenues of
such
entity, such entity would be deemed to be the sole issuer. Similarly, in
the
case of a private activity bond, if that bond is backed only by the assets
and
revenues of the nongovernmental user, then such nongovernmental user is
deemed
to be the sole issuer. If in either case, however, the creating government
or
some other entity guarantees a security, such a guarantee would be considered
a
separate security and would be treated as an issue of such government or
other
entity.
USE OF RATINGS AS INVESTMENT CRITERIA
In general, the ratings of Moody's Investors Service, Inc. ("Moody's")
and
Standard & Poor's Corporation ("S&P") represent the opinions of those
agencies
as to the quality of the Municipal Bonds and short-term investments which
they
rate. It should be emphasized, however, that such ratings are relative
and
subjective, are not absolute standards of quality and do not evaluate the
market
risk of securities. These ratings will be used by the Fund as initial
criteria
for the selection of portfolio securities, but the Fund also will rely upon
the
independent advice of Greenwich Street Advisors to evaluate
potential
investments. Among the factors that will be considered are the long-term
ability
of the issuer to pay principal and interest and general economic trends. To
the
extent the Fund invests in lower-rated and comparable unrated securities,
the
Fund's achievement of its investment objective may be more dependent
on
Greenwich Street Advisors' credit analysis of such securities than would be
the
case for a portfolio consisting entirely of higher-rated securities.
The
Appendix contains information concerning the ratings of Moody's and S&P
and
their significance.
Subsequent to its purchase by the Fund, an issue of Municipal Bonds may
cease
to be rated or its rating may be reduced below the rating given at the time
the
securities were acquired by the Fund. Neither event will require the sale
of
such Municipal Bonds by the Fund, but Greenwich Street Advisors will
consider
such event in its determination of whether the Fund should continue to hold
the
Municipal Bonds. In addition, to the extent that the ratings change as a
result
of changes in such organizations or their rating systems or due to a
corporate
restructuring of Moody's or S&P, the Fund will attempt to use comparable
ratings
as standards for its investments in accordance with its investment objective
and
policies.
The Fund generally may invest up to 25% of its total assets in
securities
rated below investment grade, I.E., lower than Baa, MIG 3 or Prime-1 by
Moody's
or BBB, SP-2 or A-1 by S&P, or in unrated securities of comparable quality.
Such
securities (a) will likely have some quality and protective
characteristics
that, in the judgment of the rating organization, are outweighed by
large
uncertainties or major risk exposures to adverse conditions and (b)
are
predominantly speculative with respect to the issuer's capacity to pay
interest
and repay principal in accordance with the terms of the obligation.
Zero coupon securities involve special considerations. Zero coupon
securities
are debt obligations which do not entitle the holder to any periodic payments
of
interest prior to maturity of a specified cash
5
<PAGE>
payment date when the securities begin paying current interest (the
"cash
payment date") and therefore are issued and traded at a discount from their
face
amounts or par values. The discount varies depending on the time remaining
until
maturity or cash payment date, prevailing interest rates, liquidity of
the
security and the perceived credit quality of the issuer. The discount, in
the
absence of financial difficulties of the issuer, decreases as the final
maturity
or cash payment date of the security approaches. The market prices of
zero
coupon securities generally are more volatile than the market prices of
other
debt securities that pay interest periodically and are likely to respond
to
changes in interest rates to a greater degree than do debt securities
having
similar maturities and credit quality. The credit risk factors pertaining
to
low-rated securities also apply to low-rated zero coupon bonds. Such zero
coupon
bonds carry an additional risk in that, unlike bonds which pay
interest
throughout the period to maturity, the Fund will realize no cash until the
cash
payment date unless a portion of such securities is sold and, if the
issuer
defaults, the Fund may obtain no return at all on its investment.
Current Federal income tax laws may require the holder of a zero
coupon
security to accrue income with respect to that security prior to the receipt
of
cash payments. To maintain its qualification as a registered investment
company
and to avoid liability for Federal income taxes, the Fund may be
required to
distribute income accrued with respect to zero coupon securities
(including to shareholders not electing to reinvest dividends) and may
have to
dispose of portfolio securities under disadvantageous circumstances in order
to
generate cash to satisfy these distribution requirements.
TEMPORARY INVESTMENTS
When the Fund is maintaining a defensive position, the Fund may invest
in
short-term investments ("Temporary Investments") consisting of: (a)
the
following tax-exempt securities: notes of municipal issuers having, at the
time
of purchase, a rating within the three highest grades of Moody's or S&P or,
if
not rated, having an issue of outstanding Municipal Bonds rated within the
three
highest grades by Moody's or S&P; and (b) the following taxable
securities:
obligations of the United States government, its agencies or
instrumentalities
("U.S. government securities"), repurchase agreements, other debt
securities
rated within the three highest grades by Moody's or S&P, commercial paper
rated
in the highest grade by either of such rating services, and certificates
of
deposit of domestic banks with assets of $1 billion or more. The Fund may
invest
in Temporary Investments for defensive reasons in anticipation of a
market
decline. At no time will more than 20% of the Fund's total assets be invested
in
Temporary Investments unless the Fund has adopted a defensive investment
policy.
The Fund intends, however, to purchase tax-exempt Temporary Investments
pending
the investment of the proceeds of the sale of portfolio securities or shares
of
the Fund, or in order to have highly liquid securities available to
meet
anticipated redemptions.
INVESTMENTS IN FINANCIAL FUTURES CONTRACTS AND OPTIONS ON FINANCIAL FUTURES
CONTRACTS
The Fund may invest in financial futures contracts and options on
financial
futures contracts that are traded on a domestic exchange or board of trade.
Such
investments may be made by the Fund solely for the purpose of hedging
against
changes in the value of its portfolio securities due to anticipated changes
in
interest rates and market conditions, and not for purposes of
speculation.
Further, such investments will be made only in unusual circumstances, such
as
when Greenwich Street Advisors anticipates an extreme change in interest
rates
or market conditions.
Unlike the purchase or sale of a Municipal Bond, no consideration is paid
or
received by the Fund upon the purchase or sale of a futures contract.
Initially,
the Fund will be required to deposit with the broker
an
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<PAGE>
amount of cash or cash equivalents equal to approximately 10% of the
contract
amount (this amount is subject to change by the board of trade on which
the
contract is traded and members of such board of trade may charge a
higher
amount). This amount is known as initial margin and is in the nature of
a
performance bond or good faith deposit on the contract which is returned to
the
Fund upon termination of the futures contract, assuming that all
contractual
obligations have been satisfied. Subsequent payments, known as variation
margin,
to and from the broker, will be made on a daily basis as the price of the
index
fluctuates, making the long and short positions in the futures contract more
or
less valuable, a process known as marking-to-market. At any time prior to
the
expiration of the contract, the Fund may elect to close the position by
taking
an opposite position, which will operate to terminate the Fund's
existing
position in the futures contract.
There are several risks in connection with the use of futures contracts as
a
hedging device. Successful use of futures contracts by the Fund is subject
to
Greenwich Street Advisors's ability to predict correctly movements
in the direction of
interest rates. Such predictions involve skills and techniques which may
be
different from those involved in the management of a long-term municipal
bond
portfolio. In addition, there can be no assurance that there will be
a
correlation between movements in the price of the municipal bond index
and
movements in the price of the Municipal Bonds which are the subject of
the
hedge. The degree of imperfection of correlation depends upon
various
circumstances, such as variations in speculative market demand for
futures
contracts and municipal securities, technical influences on futures trading,
and
differences between the municipal securities being hedged and the
municipal
securities underlying the futures contracts, in such respects as interest
rate
levels, maturities and creditworthiness of issuers. A decision of whether,
when
and how to hedge involves the exercise of skill and judgment and even
a
well-conceived hedge may be unsuccessful to some degree because of
market
behavior or unexpected trends in interest rates.
Although the Fund intends to purchase or sell futures contracts only if
there
is an active market for such contracts, there is no assurance that a
liquid
market will exist for the contracts at any particular time. Most
domestic
futures exchanges and boards of trade limit the amount of fluctuation
permitted
in futures contract prices during a single trading day. The daily
limit
establishes the maximum amount 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 contract,
no
trades may be made 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. It is possible that futures contract prices could move
to
the daily limit for several consecutive trading days with little or no
trading,
thereby preventing prompt liquidation of futures positions and subjecting
some
futures traders to substantial losses. In such event, it will not be possible
to
close a futures position and, in the event of adverse price movements, the
Fund
would be required to make daily cash payments of variation margin. In
such
circumstances, an increase in the value of the portion of the portfolio
being
hedged, if any, may partially or completely offset losses on the
futures
contract. As described above, however, there is no guarantee that the price
of
Municipal Bonds will, in fact, correlate with the price movements in
the
municipal bond index futures contract and thus provide an offset to losses on
a
futures contract.
If the Fund has hedged against the possibility of an increase in
interest
rates adversely affecting the value of the Municipal Bonds held in its
portfolio
and rates decrease instead, the Fund will lose part or all of the benefit of
the
increased value of the Municipal Bonds it has hedged because it will
have
offsetting losses in its
7
<PAGE>
futures positions. In addition, in such situations, if the Fund has
insufficient
cash, it may have to sell securities to meet daily variation
margin
requirements. Such sales of securities may, but will not necessarily, be
at
increased prices which reflect the decline in interest rates. The Fund may
have
to sell securities at a time when it may be disadvantageous to do so.
When the Fund purchases municipal bond index futures contracts, an amount
of
cash and U.S. government securities or other high grade debt securities equal
to
the market value of the futures contracts will be deposited in a
segregated
account with the Fund's custodian (and/or such other persons as appropriate)
to
collateralize the positions and thereby insure that the use of such
futures
contracts is not leveraged. In addition, the ability of the Fund to trade
in
municipal bond index futures contracts and options on interest rate
futures
contracts may be materially limited by the requirements of the Internal
Revenue
Code of 1986, as amended (the "Code"), applicable to a regulated
investment
company. See "Taxes" below.
OPTIONS ON FINANCIAL FUTURES CONTRACTS. The Fund may purchase put and
call
options on futures contracts which are traded on a domestic exchange or board
of
trade as a hedge against changes in interest rates, and may enter into
closing
transactions with respect to such options to terminate existing positions.
The
Fund will sell put and call options on interest rate futures contracts only
as
part of closing sale transactions to terminate its options positions. There
is
no guarantee that such closing transactions can be effected.
Options on futures contracts, as contrasted with the direct investment
in
such contracts, gives the purchaser the right, in return for the premium
paid,
to assume a position in futures contracts at a specified exercise price at
any
time prior to the expiration date of the options. Upon exercise of an
option,
the delivery of the futures position by the writer of the option to the
holder
of the option will be accompanied by delivery of the accumulated balance in
the
writer's futures contract margin account, which represents the amount by
which
the market price of the futures contract exceeds, in the case of a call, or
is
less than, in the case of a put, the exercise price of the option on the
futures
contract. The potential loss related to the purchase of an option on
interest
rate futures contracts is limited to the premium paid for the option
(plus
transaction costs). Because the value of the option is fixed at the point
of
sale, there are no daily cash payments to reflect changes in the value of
the
underlying contract; however, the value of the option does change daily and
that
change would be reflected in the net asset value of the Fund.
There are several risks relating to options on futures contracts. The
ability
to establish and close out positions on such options will be subject to
the
existence of a liquid market. In addition, the Fund's purchase of put or
call
options will be based upon predictions as to anticipated interest rate trends
by
Greenwich Street Advisors, which could prove to be inaccurate. Even if
Greenwich
Street Advisors' expectations are correct there may be an imperfect
correlation
between the change in the value of the options and of the Fund's
portfolio
securities.
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements
with
banks which are the issuers of instruments acceptable for purchase by the
Fund
and with certain dealers on the Federal Reserve Bank of New York's list
of
reporting dealers. A repurchase agreement is a contract under which the buyer
of
a security simultaneously commits to resell the security to the seller at
an
agreed-upon price on an agreed-upon date. Under the terms of a
typical
repurchase agreement, the Fund would acquire an underlying debt obligation for
a
relatively short period (usually not more than seven days) subject to
an
obligation of the seller to repurchase, and the Fund to resell, the
obligation
at an agreed-upon price and time, thereby
8
<PAGE>
determining the yield during the Fund's holding period. This arrangement
results
in a fixed rate of return that is not subject to market fluctuations during
the
Fund's holding period. Under each repurchase agreement, the selling
institution
will be required to maintain the value of the securities subject to
the
repurchase agreement at not less than their repurchase price.
Repurchase
agreements could involve certain risks in the event of default or insolvency
of
the other party, including possible delays or restrictions upon the
Fund's
ability to dispose of the underlying securities, the risk of a possible
decline
in the value of the underlying securities during the period in which the
Fund
seeks to assert its rights to them, the risk of incurring expenses
associated
with asserting those rights and the risk of losing all or part of the
income
from the agreement. In evaluating these potential risks, Greenwich
Street
Advisors , acting under the supervision of the Fund's Board of
Trustees, reviews on an ongoing basis the value of the collateral and
the
creditworthiness of those banks and dealers with which the Fund enters
into
repurchase agreements.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions for the protection
of
shareholders. Restrictions 1 through 7 below may not be changed without
the
approval of the holders of a majority of the outstanding shares of the
Fund,
defined as the lesser of (a) 67% of the Fund's shares present at a meeting
if
the holders of more than 50% of the outstanding shares are present in person
or
by proxy or (b) more than 50% of the Fund's outstanding shares. The
remaining
restrictions may be changed by the Fund's Board of Trustees at any time.
The Fund may not:
1. Issue senior securities as defined in the 1940 Act and any rules
and
orders thereunder, except insofar as the Fund may be deemed to
have
issued senior securities by reason of: (a) borrowing money or
purchasing
securities on a when-issued or delayed-delivery basis; (b) purchasing
or
selling futures contracts and options on futures contracts and other
similar
instruments; and (c) issuing separate classes of shares.
2. Invest more than 25% of its total assets in securities, the issuers
of
which are in the same industry. For purposes of this limitation,
U.S.
government securities and securities of state or municipal governments
and
their political subdivisions are not considered to be issued by members
of
any industry.
3. Borrow money, except that the Fund may borrow from banks for temporary
or
emergency (not leveraging) purposes, including the meeting of
redemption
requests which might otherwise require the untimely disposition
of
securities, in an amount not exceeding 10% of the value of the Fund's
total
assets (including the amount borrowed) valued at market less liabilities
(not
including the amount borrowed) at the time the borrowing is made.
Whenever
borrowings exceed 5% of the value of the Fund's total assets, the Fund
will
not make any additional investments.
4. Make loans. This restriction does not apply to: (a) the purchase of
debt
obligations in which the Fund may invest consistent with its
investment
objective and policies; (b) repurchase agreements; and (c) loans of
its
portfolio securities.
5. Engage in the business of underwriting securities issued by
other
persons, except to the extent that the Fund may technically be deemed
to
be an underwriter under the Securities Act of 1933, as amended, in
disposing
of portfolio securities.
9
<PAGE>
6. Purchase or sell real estate, real estate mortgages, real
estate
investment trust securities, commodities or commodity contracts, but
this
shall not prevent the Fund from: (a) investing in securities of
issuers
engaged in the real estate business and securities which are secured by
real
estate or interests therein; (b) holding or selling real estate received
in
connection with securities it holds; or (c) trading in futures contracts
and
options on futures contracts.
7. Purchase any securities on margin (except for such short-term credits
as
are necessary for the clearance of purchases and sales of
portfolio
securities) or sell any securities short (except against the box).
For
purposes of this restriction, the deposit or payment by the Fund of
initial
or maintenance margin in connection with futures contracts and
related
options and options on securities is not considered to be the purchase of
a
security on margin.
8. Purchase or otherwise acquire any security if, as a result, more than
15%
of its net assets would be invested in securities that are illiquid.
9. Purchase or sell oil and gas interests.
10. Invest more than 5% of the value of its total assets in the securities
of
issuers having a record, including predecessors, of less than three
years
of continuous operation, except U.S. government securities. For purposes
of
this restriction, issuers include predecessors, sponsors,
controlling
persons, general partners, guarantors and underlying assets.
11. Invest in companies for the purpose of exercising control.
12. Invest in securities of other investment companies, except as they may
be
acquired as part of a merger, consolidation or acquisition of assets.
13. Engage in the purchase or sale of put, call, straddle or spread
options
or in the writing of such options, except as is consistent with
the
Fund's investment objective and policies.
Certain restrictions listed above permit the Fund to engage in
investment
practices that the Fund does not currently pursue. The Fund has no
present
intention of altering its current investment practices as otherwise described
in
the Prospectus and this Statement of Additional Information and any
future
change in those practices would require Board approval and appropriate notice
to
shareholders. If a percentage restriction is complied with at the time of
an
investment, a later increase or decrease in the percentage of assets
resulting
from a change in the values of portfolio securities or in the amount of
the
Fund's assets will not constitute a violation of such restriction. In order
to
permit the sale of the Fund's shares in certain states, the Fund may
make
commitments more restrictive than the restrictions described above. Should
the
Fund determine that any such commitment is no longer in the best interests
of
the Fund and its shareholders it will revoke the commitment by terminating
sales
of its shares in the state involved.
PORTFOLIO TRANSACTIONS
Newly issued securities normally are purchased directly from the issuer or
from
an underwriter acting as principal. Other purchases and sales usually are
placed
with those dealers from which it appears the best price or execution will
be
obtained; those dealers may be acting as either agents or principals.
The
purchase price paid by the Fund to underwriters of newly issued
securities
usually includes a concession paid by the issuer to the underwriter,
and
purchases of after-market securities from dealers normally are executed at
a
price between the bid and asked prices.
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<PAGE>
Allocation of transactions, including their frequency, to various dealers
is
determined by Greenwich Street Advisors in its best judgment and in a
manner
deemed fair and reasonable to shareholders. The primary considerations
are
availability of the desired security and the prompt execution of orders in
an
effective manner at the most favorable prices. Subject to these
considerations,
dealers that provide supplemental investment research and statistical or
other
services to Greenwich Street Advisors may receive orders for
portfolio
transactions by the Fund. Information so received enables Greenwich
Street
Advisors to supplement their own research and analysis with the views
and
information of other securities firms. Such information may be useful
to
Greenwich Street Advisors in serving both the Fund and other clients,
and,
conversely, supplemental information obtained by the placement of business
of
other clients may be useful to Greenwich Street Advisors in carrying out
its
obligations to the Fund.
The Fund will not purchase Municipal Bonds during the existence of
any
underwriting or selling group relating thereto of which Smith Barney Shearson
is
a member, except to the extent permitted by the SEC. Under
certain
circumstances, the Fund may be at a disadvantage because of this limitation
in
comparison with other investment companies which have a similar
investment
objective but which are not subject to such limitation.
While investment decisions for the Fund are made independently from those
of
the other accounts managed by Greenwich Street Advisors, investments of the
type
the Fund may make also may be made by those other accounts. When the Fund
and
one or more other accounts managed by Greenwich Street Advisors are prepared
to
invest in, or desire to dispose of, the same security, available investments
or
opportunities for sales will be allocated in a manner believed by
Greenwich
Street Advisors to be equitable to each. In some cases, this procedure
may
adversely affect the price paid or received by the Fund or the size of
the
position obtained or disposed of by the Fund.
PORTFOLIO TURNOVER
The Fund's portfolio turnover rate (the lesser of purchases or sales
of
portfolio securities during the year, excluding purchases or sales of short-
term
securities, divided by the monthly average value of portfolio
securities)
generally is not expected to exceed 100%, but the portfolio turnover rate
will
not be a limiting factor whenever the Fund deems it desirable to sell
or
purchase securities. Securities may be sold in anticipation of a rise
in
interest rates (market decline) or purchased in anticipation of a decline
in
interest rates (market rise) and later sold. In addition, a security may be
sold
and another security of comparable quality may be purchased at approximately
the
same time in order to take advantage of what the Fund believes to be a
temporary
disparity in the normal yield relationship between the two securities.
These
yield disparities may occur for reasons not directly related to the
investment
quality of particular issues or the general movement of interest rates, such
as
changes in the overall demand for or supply of various types of tax-
exempt
securities.
MUNICIPAL BONDS
GENERAL INFORMATION
Municipal Bonds generally are understood to include debt obligations issued
to
obtain funds for various public purposes, including the construction of a
wide
range of public facilities, refunding of outstanding obligations, payment
of
general operating expenses and extensions of loans to public institutions
and
facilities. Private activity bonds that are issued by or on behalf of
public
authorities to finance various
11
<PAGE>
privately operated facilities are included within the term Municipal Bonds
if
the interest paid thereon qualifies as excluded from gross income (but
not
necessarily from alternative minimum taxable income) for Federal income
tax
purposes in the opinion of bond counsel to the issuer.
The yields on Municipal Bonds are dependent upon a variety of
factors,
including general economic and monetary conditions, general money
market
conditions, general conditions of the Municipal Bond market, the
financial
condition of the issuer, the size of a particular offering, the maturity of
the
obligation offered and the rating of the issue.
Municipal Bonds also are subject to the provisions of bankruptcy,
insolvency
and other laws affecting the rights and remedies of creditors, such as
the
Federal Bankruptcy Code, and laws, if any, that may be enacted by Congress
or
state legislatures extending the time for payment of principal or interest,
or
both, or imposing other constraints upon enforcement of such obligations or
upon
the ability of municipalities to levy taxes. There is also the possibility
that,
as a result of litigation or other conditions, the power or ability of any
one
or more issuers to pay, when due, the principal of and interest on its or
their
Municipal Bonds may be materially affected.
WHEN-ISSUED SECURITIES
The Fund may purchase Municipal Bonds on a "when-issued" basis (I.E.,
for
delivery beyond the normal settlement date at a stated price and yield).
The
payment obligation and the interest rate that will be received on the
Municipal
Bonds purchased on a when-issued basis are each fixed at the time the
buyer
enters into the commitment. Although the Fund will purchase Municipal Bonds on
a
when-issued basis only with the intention of actually acquiring the
securities,
the Fund may sell these securities before the settlement date if it is
deemed
advisable as a matter of investment strategy.
Municipal Bonds are subject to changes in value based upon the
public's
perception of the creditworthiness of the issuers and changes, real
or
anticipated, in the level of interest rates. In general, Municipal Bonds tend
to
appreciate when interest rates decline and depreciate when interest rates
rise.
Purchasing Municipal Bonds on a when-issued basis, therefore, can involve
the
risk that the yields available in the market when the delivery takes place
may
actually be higher than those obtained in the transaction itself. To account
for
this risk, a separate account of the Fund consisting of cash or liquid
debt
securities equal to the amount of the when-issued commitments will
be
established at the Fund's custodian bank. For the purpose of determining
the
adequacy of the securities in the account, the deposited securities will
be
valued at market or fair value. If the market or fair value of such
securities
declines, additional cash or securities will be placed in the account on a
daily
basis so the value of the account will equal the amount of such commitments
by
the Fund. Placing securities rather than cash in the segregated account may
have
a leveraging effect on the Fund's net assets. That is, to the extent the
Fund
remains substantially fully invested in securities at the same time it
has
committed to purchase securities on a when-issued basis, there will be
greater
fluctuations in its net assets than if it had set aside cash to satisfy
its
purchase commitments. Upon the settlement date of the when-issued
securities,
the Fund will meet obligations from then-available cash flow, sale of
securities
held in the segregated account, sale of other securities or, although
it
normally would not expect to do so, from the sale of the when-issued
securities
themselves (which may have a value greater or less than the Fund's
payment
obligations). Sales of securities to meet such obligations may involve
the
realization of capital gains, which are not exempt from Federal income taxes
or
Oregon state personal income tax.
12
<PAGE>
When the Fund engages in when-issued transactions, it relies on the seller
to
consummate the trade. Failure of the seller to do so may result in the
Fund's
incurring a loss or missing an opportunity to obtain a price considered to
be
advantageous.
SPECIAL CONSIDERATIONS RELATING TO OREGON MUNICIPAL SECURITIES
Some of the significant financial considerations relating to the
Fund's
investments in Oregon Municipal Obligations are summarized below. This
summary
information is derived principally from official statements and
prospectuses
relating to securities offerings of the State of Oregon and various
local
agencies in Oregon, available as of the date of this Statement of
Additional
Information and does not purport to be a complete description of any of
the
considerations mentioned herein. The accuracy and completeness of
the
information contained in such official statements has not been
independently
verified.
EMPLOYMENT. Oregon's economy has outperformed the nation's economy
in
recent years. Oregon employment increased 15.4 percent between 1987 and
1992;
national employment during the same period increased only 6.1 percent.
However,
in 1990 and 1991 total employment remained relatively flat, and
unemployment
increased. In 1992, growth resumed at an annual rate of 1.9 percent
and increased 2.9 percent for 1993. The unemployment rate in 1991 was 6.0,
percent. 7.5 percent in 1992, 7.2 percent in 1993, and was 8.0 percent as of
February 1, 1994.
As the economy has grown, it has diversified, becoming less dependent on
the
forest products industry and expanding the number of high technology
industries.
Compared to 1980, 16,400 fewer people worked in lumber and
products
manufacturing in 1993, while 10,000 more people worked in high
technology
sectors.
Most of the recent job gains have come from nonmanufacturing sectors.
Since
1985, nonmanufacturing employment has increased by 32 percent, led by
trade (up
26 percent), services (up 52 percent) and construction (up 62
percent).
Nonmanufacturing sectors now provide more than 83 percent of total
Oregon
employment.
Per capita income growth in recent years has often outpaced the
national
average. Oregon per capita income increased 2.7 percent in 1991 and 4.0
percent in 1992; in each of those years Oregon per capita income was
92 percent of United States per capita
income.
STATE FORECAST. In December of 1993, the State of Oregon forecast
modest
acceleration of the economy into 1994, fueled by the impact of low
interest
rates on the construction sector, in-migration, appreciating home
values,
continued gains in high technology manufacturing, an expanding service
sector,
and strong small business income growth. However, structural change is
expected
to limit the State's overall economic growth rate. President Clinton's
forest
plan is expected to cause further reductions in timber jobs, and
government
employment is expected to remain weak as state and local government
revenue
shrinks relative to the overall economy. Nonfarm wage and salary employment
is
expected to grow 3.0% in the first quarter of 1994. Personal income is
expected
to increase 6.9% in 1994, compared to growth of 5.1 percent in 1993.
The State forecasts that inflation-adjusted personal income during the
1990s
will grow at a substantially more rapid rate than it did in the 1980s, but at
a
substantially slower rate than it did in the 1960s
and
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<PAGE>
1970s. Population in the 1990s is expected to grow at more than twice the
rate
recorded in the 1980s. On a per capita basis, inflation-adjusted personal
income
in the 1990s is expected to grow at a slower rate than any of the
previous
post-World War II decades.
POPULATION. Oregon's population as of July 1, 1993 was estimated to
be
3,038,000. Since 1960 the State's population has increased almost 72
percent;
between 1980 and 1990, Oregon's population increased approximately 7.7
percent.
There are four major population areas in Oregon. The City of
Portland,
located at the northern end of the Willamette Valley, is the largest city in
the
State, and its primary metropolitan statistical area was estimated to have
a
population of 1,285,100 in 1991, or 44 percent of the total State
population.
The City of Eugene, located at the southern end of the Willamette Valley, is
the
second largest city, with a metropolitan statistical area of 290,900, or
ten
percent of the State's total population. Salem, located in the middle of
the
Willamette Valley, is the third largest city, with a metropolitan
statistical
area of 287,900, or ten percent of the State's total population. The
fourth
largest city, Medford, is located in southwestern Oregon outside the
Willamette
Valley, and has a metropolitan statistical area of 151,400. Approximately
70
percent of the State's population resides in the Willamette Valley.
West Oregon consists largely of small coastal communities which focus
on
tourism, fishing, agriculture and dairy operations. Central Oregon, west of
the
Cascade Mountains, has the Willamette Valley, Oregon's four largest cities,
and
the highly economically diversified Portland metropolitan area. East of
the
Cascade Mountains communities tend to be smaller, and economic activity
centers
on agriculture, forestry and ranching. A number of small, timber
dependent
communities through the State have been particularly adversely affected by
the
recent reductions in timber and forest products employment. Local economies
in
Oregon vary substantially, and respond to different factors; statistical data
on
economic activity in the State as a whole may mask significant differences
in
local economies.
HOUSING, AGRICULTURE, TRADE, FOREST PRODUCTS AND TOURISM. Much of
the
recent and forecasted growth in the Oregon nonmanufacturing sectors
can be traced
to population growth. Oregon's quality of life and low housing costs have
always
encouraged in-migration. The State's rapid job growth since 1987 pushed
Oregon's
population growth rate above the nation's. The growth caused Oregon
housing starts to
increase in 1988, 1989 and 1990, even though national housing starts
declined.
In 1990, Oregon housing starts increased by one percent, compared to a
national
decline of 12.9 percent. In 1991 housing starts declined, but increased again
in
1992.
Oregon has a highly diversified agricultural base, with gross farms sales
of
over $2.8 billion in 1993, over 83 commodities with sales of
$1,000,000 or more,
and over 37 commodities with gross sales of $10,000,000 or more. Agriculture
in
Oregon follows the national trend of increasing capital intensity,
with
employment decreasing as constant dollar output has increased.
Recent
agricultural expansion is attributable to use of more efficient methods
and
increased use of irrigation. Although every county in the State is involved
in
agricultural production, activity is concentrated in the Willamette Valley.
Oregon's forest products industry consists of several components: lumber
and
wood products, paper and allied products, and a small number of workers
in
reforestation and other services. Employment for paper and allied products
has
remained relatively constant at about 9,000. Reforestation currently
employs
14
<PAGE>
about 4,000, and has been growing steadily. Lumber and wood products,
once
Oregon's manufacturing mainstay, has experienced massive, and
probably
permanent, reductions in employment, with jobs declining from about 65,000
to
about 50,000 during the period from 1988 to 1992.
Oregon is located on the western coast of the United States, where
the
Columbia River flows into the Pacific Ocean. International trade and exports
are
an important part of the Oregon economy, with much of the trade
occurring
through Oregon's 23 port districts. The Port of Portland is most active,
having
developed an efficient system for dealing with large numbers of
vessels,
including modern grain elevators, cranes, break-bulk and containerized-
cargo
facilities and ship repair and dry dock facilities. Chief export items
include
grains, logs, lumber and other forest products, paper and paper
products,
vegetables, metal products and chemical/petroleum products. The value of
foreign
exports through the Oregon Columbia-Snake River Customs District, which
includes
the Port of Portland, was in excess of $7.1 billion in 1992, and had
increased
approximately 98 percent from 1987 levels. Items imported in amounts in
excess
of $100 million in 1991 include cars, chemical/petroleum products,
metals/metal
products, food and headwear/flat goods, computing equipment,
electronic
components, electrical machinery, general purpose machinery and
rubber/plastic.
Imports through the Oregon Columbia-Snake River Customs District
increased
approximately 14 percent over the five year period beginning in 1987, but
have
declined an average of 4.1 percent in the years 1991 and 1992.
Tourism is a rapidly growing segment of the Oregon economy. The State
has
major mountain ranges, vast coastal and desert regions, and multi-use
and
wilderness forest areas. There are more than 400 miles of seacoast, 47,000
miles
of streams, 1,400 lakes and reservoirs, 225 state parks and 2 national
parks in
Oregon. 6.8 million people were estimated to visit the State in 1989-1990.
Hotel
and motel occupancies increased approximately 14 percent in the 1990
fiscal
year, and room tax revenues increased 42 percent for 1987-89 and 68 percent
for
1989-91.
RECENT DEVELOPMENT AFFECTING THE OREGON ECONOMY AND CREDITWORTHINESS
OF
OREGON. On November 6, 1990, the Oregon voters approved an
initiative petition
("Measure Five") amending the Oregon Constitution to limit property taxes
and
certain other charges against property. The measure imposes a maximum tax
rate
for non-school local governments of $10/$1,000 of property value, and
a
declining rate for schools which begin at $15/$1,000 and declines $5/$1,000
in
the fiscal year 1995-1996. Measure Five has an exemption for voter
approved
general obligation bonds issued by local governments, and an exemption
for
general obligation bonds issued by the State of Oregon. However, there is
no
exemption for taxes collected for operating purposes. Measure Five has
an
adverse effect on the financial condition of the State of Oregon and on
all
local governments which impose ad valorem taxes in areas where the aggregate
tax
rate exceeds the measure's limits.
Although the State of Oregon does not currently levy property taxes,
the
State is adversely affected because Measure Five requires the State
to
contribute State funds to make up tax revenues lost by school districts as
a
result of Measure Five. The State's required contribution to the schools
under
Measure Five is estimated to be $1.5 billion in the 1993-1995
biennium and $1.4
billion in the 1995-1997 biennium. The required contribution for the 1993-
1995
biennium is estimated to be 26 percent of the State's forecast general
fund
revenue in the 1993-1995 biennium.
15
<PAGE>
The Oregon Legislature meets in regular session once every two years, and
is
not scheduled to meet in regular session again until January of 1995. The
1993
regular session of the Oregon legislature referred a tax reform proposal,
which
included a sales tax, to the Oregon voters in November of 1993. The proposal
was
defeated by a substantial margin.
Measure Five adversely affects the financial condition of many
school
districts, because the total amount of property taxes and State funding
each
school district receives is often less than it would have been if Measure
Five
had not been enacted. The reduction occurs because the Oregon Legislature
has
reduced the portion of its contribution to Oregon schools which is not
mandated
by Measure Five, and because State replacement revenues are
distributed
proportionally among districts, not based on the actual losses of
individual
districts.
Measure Five adversely affects non-school local governments which levy
taxes
in areas where the aggregate tax rate exceeds $10/$1,000. Generally, these
areas
are population centers.
The Oregon Supreme Court has held that tax increment, or urban
renewal
revenues collected to pay bonds are subject to Measure Five's $10/$1,000
limit.
Measure Five also limits certain kinds of charges which are not property
taxes.
Litigation is pending which, if resolved adversely to local governments,
could
limit the ability of municipal utilities to impose certain kinds of
municipal
utility and other charges.
Pending litigation, environmental proceedings and President Clinton's
new
timber management plans relating to the logging of old growth forests and
the
protection of the Northern Spotted Owl make it difficult to predict
future
timber supplies in Oregon. In addition, proceedings to protect
threatened
anadromous fish species in the Columbia River and other Oregon waterways
may
require changes to the operations of locks and dams on those waterways.
These
changes could adversely affect regional power production and the cost of
moving
trade goods along these waterways. Further, an Oregon state agency
recently curtailed fishing for certain species in 1994. This action and
future restrictions could, in the short term, adversely affect the local
fishing industry.
ADDITIONAL CONSIDERATIONS. With respect to Municipal Obligations issued
by
the State of Oregon and its political sub-divisions, the Fund cannot
predict
what legislation, if any, may be proposed in the Oregon State Legislature
as
regards the Oregon State personal income tax status of interest on
such
obligations, or which proposals, if any, might be enacted. Such proposals,
if
enacted, might materially adversely affect the availability of Oregon
Municipal
Obligations for investment by the Fund and the value of the Fund's portfolio.
In
such an event, the Trustees would reevaluate the Fund's investment objective
and
policies and consider changes in its structure or possible dissolution.
PURCHASE OF SHARES
VOLUME DISCOUNTS
The schedule of sales charges on Class A shares described in the
Prospectus
applies to purchases made by any "purchaser," which is defined to include
the
following: (a) an individual; (b) an individual's immediate family
purchasing
shares for his or her own account; (c) a trustee or other fiduciary
purchasing
shares for a single trust estate or single fiduciary account; (d) a
pension,
profit sharing or other employee benefit plan qualified under Section 401(a)
of
the Code and qualified employee benefit plans of employers who are
"affiliated
persons" of each other within the meaning of the 1940 Act; (e) tax-
exempt
organizations enumerated in Section 501(c)(3) or (13) of the Code; (f) any
other
organized group of persons, provided the organization has been in existence
for
at least six months and was organized for a purpose other than the purchase
of
investment company securities at a discount; or (g) a trustee or
other
professional fiduciary
16
<PAGE>
(including a bank, or an investment adviser registered with the SEC under
the
Investment Advisers Act of 1940) purchasing shares of the Fund for one or
more
trust estates or fiduciary accounts. Purchasers who wish to combine
purchase
orders to take advantage of volume discounts on Class A shares should
contact
their Smith Barney Shearson Financial Consultants.
COMBINED RIGHT OF ACCUMULATION
Reduced sales charges, in accordance with the schedule in the Prospectus,
apply
to any purchase of Class A shares if the aggregate investment in Class A
shares
of the Fund and in Class A shares of other funds in the Smith Barney
Shearson
Group of Funds that are sold with a sales charge, including the purchase
being
made, of any purchaser is $25,000 or more. The funds in the Smith
Barney
Shearson Group of Funds that are sold with a sales charge are shown
under
"Exchange Privilege" in the Prospectus. The reduced sales charge is subject
to
confirmation of the shareholder's holdings through a check of
appropriate
records. The Fund reserves the right to terminate or amend the combined right
of
accumulation at any time after notice to shareholders. For further
information
regarding the right of accumulation, shareholders should contact their
Smith
Barney Shearson Financial Consultants.
DETERMINATION OF PUBLIC OFFERING PRICE
The Fund offers its shares to the public on a continuous basis. The
public
offering price per Class A share of the Fund is equal to the net asset value
per
share at the time of purchase plus a sales charge based on the aggregate
amount
of the investment. The public offering price per Class B share (and Class
A
share purchases, including applicable rights of accumulation, equaling
or
exceeding $1 million), is equal to the net asset value per share at the time
of
purchase and no sales charge is imposed at the time of purchase. A
contingent
deferred sales charge ("CDSC"), however, is imposed on certain redemptions
of
Class B shares and Class A shares when purchased in amounts equalling
or
exceeding $1 million. The method of computing the public offering price is
shown
in the Fund's financial statements incorporated by reference into this
Statement
of Additional Information.
REDEMPTION OF SHARES
The right of redemption may be suspended or the date of payment postponed
(a)
for any period during which the New York Stock Exchange, Inc. ("NYSE") is
closed
(other than for customary weekend and holiday closings), (b) when trading in
the
markets the Fund normally utilizes is restricted, or an emergency, as
determined
by the SEC, exists making disposal of the Fund's investments or determination
of
net asset value not reasonably practicable or (c) for such other periods as
the
SEC by order may permit for protection of the Fund's shareholders.
DISTRIBUTIONS IN KIND
If the Fund's Board of Trustees determines that it would be detrimental to
the
best interests of the remaining shareholders of the Fund to make a
redemption
payment wholly in cash, the Fund may pay, in accordance with rules adopted
by
the SEC, any portion of a redemption in excess of the lesser of $250,000 or
1%
of the Fund's net assets by a distribution in kind of portfolio securities
in
lieu of cash. Portfolio securities issued in a distribution in kind will
be
readily marketable, although shareholders receiving distributions in kind
may
incur brokerage commissions when subsequently disposing of those securities.
17
<PAGE>
AUTOMATIC CASH WITHDRAWAL PLAN
An automatic cash withdrawal plan (the "Withdrawal Plan") is available
to
shareholders who own shares with a value of at least $10,000 and who wish
to
receive specific amounts of cash periodically. Withdrawals of at least
$50
monthly may be made under the Withdrawal Plan by redeeming as many shares of
the
Fund as may be necessary to cover the stipulated withdrawal payment.
Any
applicable CDSC will not be waived on amounts withdrawn by shareholders
that
exceed 2% per month of the value of a shareholder's shares at the time
the
Withdrawal Plan commences. To the extent withdrawals exceed
dividends,
distributions and appreciation of a shareholder's investment in the Fund,
the
value of the shareholder's investment will be reduced and continued
withdrawal
payments may reduce the shareholder's investment and ultimately exhaust
it.
Withdrawal payments should not be considered as income from investment in
the
Fund. Furthermore, as it generally would not be advantageous to a shareholder
to
make additional investments in the Fund at the same time he or she
is
participating in the Withdrawal Plan, purchases by such shareholder in
amounts
of less than $5,000 ordinarily will not be permitted.
Shareholders who wish to participate in the Withdrawal Plan and who
hold
their shares in certificate form must deposit their share certificates with
TSSG
as agent for Withdrawal Plan members. All dividends and distributions on
shares
in the Withdrawal Plan are reinvested automatically at net asset value
in
additional shares of the Fund. All applications for participation in
the
Withdrawal Plan must be received by TSSG as Withdrawal Plan agent no later
than
the eighth day of the month to be eligible for participation beginning with
that
month's withdrawal. The Withdrawal Plan will not be carried over on
exchanges
between funds or classes of the Fund ("Classes"). A new Withdrawal
Plan
application is required to establish the Withdrawal Plan in the new fund
or
Class. For additional information, shareholders should contact their
Smith
Barney Shearson Financial Consultants.
DISTRIBUTOR
Smith Barney Shearson serves as the Fund's distributor on a best efforts
basis
pursuant to a written agreement (the "Distribution Agreement") approved by
the
Board of Trustees on April 20, 1994. Smith Barney Shearson forwards
investors'
funds for the purchase of shares five business days after placement of
purchase
orders (i.e., the "settlement date"). When payment is made by the
investor
before settlement date, unless otherwise directed by the investor, the
funds
will be held as a free credit balance in the investor's brokerage account,
and
Smith Barney Shearson may benefit from the temporary use of the funds.
The
investor may designate another use for the funds prior to settlement date,
such
as an investment in a money market fund (other than the Smith
Barney
Shearson--Money Market Fund) in the Smith Barney Shearson Group of Funds. If
the
investor instructs Smith Barney Shearson to invest the funds in a money
market
fund in the Smith Barney Shearson Group of Funds, the amount of the
investment
will be included as part of the average daily net assets of both the Fund
and
the money market fund, and affiliates of Smith Barney Shearson which serve
the
funds in an investment advisory capacity will benefit from the fact that
they
are receiving investment management fees from both such investment
companies,
computed on the basis of their average daily net assets. The Fund's Board
of
Trustees has been advised of the benefits to Smith Barney Shearson
resulting
from five-day settlement procedures and will take such benefits
into
consideration when reviewing the Advisory and Distribution Agreements
for
continuance.
18
<PAGE>
DISTRIBUTION ARRANGEMENTS
Shares of the Fund are distributed on a best efforts basis by Smith
Barney
Shearson as exclusive sales agent of the Fund pursuant to the
Distribution
Agreement. To compensate Smith Barney Shearson for the services it provides
and
for the expense it bears under the Distribution Agreement, the Fund has
adopted
a services and distribution plan (the "Plan") pursuant to Rule 12b-1 under
the
1940 Act. Under the Plan, the Fund pays Smith Barney Shearson a service
fee,
accrued daily and paid monthly, calculated at the annual rate of .15% of
the
value of the Fund's average daily net assets attributable to the Class A
and
Class B shares. In addition, Class B shares pay a distribution fee intended
to
compensate Smith Barney Shearson for its initial expense of paying
financial
consultants a commission upon sales of the respective shares. The Class
B
distribution fees are calculated at the annual rate of .50% of the value of
the
Fund's average net assets attributable to the shares of the Class.
Under its terms, the Plan continues from year to year, provided
such
continuance is approved annually by vote of the Fund's Board of
Trustees,
including a majority of the Trustees who are not interested persons of the
Fund
and who have no direct or indirect financial interest in the operation of
the
Plan or in the Distribution Agreement (the "Independent Trustees"). The Plan
may
not be amended to increase the amount of the service and distribution
fees
without shareholder approval, and all material amendments of the Plan also
must
be approved by the Trustees and Independent Trustees in the manner
described
above. The Plan may be terminated at any time with respect to a Class,
without
penalty, by vote of a majority of the Independent Trustees or by a vote of
a
majority of the outstanding voting securities of the Class (as defined in
the
1940 Act). Pursuant to the Plan, Smith Barney Shearson will provide the
Fund's
Board of Trustees periodic reports of amounts expended under the Plan and
the
purpose for which such expenditures were made.
VALUATION OF SHARES
The Prospectus discusses the time at which the net asset value of shares of
each
Class of the Fund is determined for purposes of sales and redemptions.
Because
of the differences in distribution fees and Class-specific expenses, the
per
share net asset value of each Class will differ. The following is a
description
of the procedures used by the Fund in valuing its assets.
The valuation of the Fund's assets is made by Boston Advisors
after
consultation with an independent pricing service (the "Service") approved by
the
Fund's Board of Trustees. When, in the judgment of the Service, quoted
bid
prices for investments are readily available and representative of the bid
side
of the market, these investments are valued at the mean between the quoted
bid
and asked prices. Investments for which, in the judgment of the Service,
there
is no readily obtainable market quotation (which may constitute a majority
of
the portfolio securities) are carried at fair value as determined by
the
Service. For the most part, such investments are liquid and may be readily
sold.
The Service may employ electronic data processing techniques and/or a
matrix
system to determine valuations. The procedures of the Service are
reviewed
periodically by the officers of the Fund under the general supervision
and
responsibility of the Board of Trustees, which may replace any such Service
at
any time if it determines it to be in the best interest of the Fund to do so.
19
<PAGE>
EXCHANGE PRIVILEGE
Except as noted below, shareholders of any fund in the Smith Barney
Shearson
Group of Funds may exchange all or part of their shares for shares of the
same
Class of other funds in the Smith Barney Shearson Group of Funds, to the
extent
such shares are offered for sale in the shareholder's state of residence, on
the
basis of relative net asset value per share at the time of exchange as
follows:
A. Class A shares of any fund purchased with a sales charge may
be
exchanged for Class A shares of any of the other funds, and the
sales
charge differential, if any, will be applied. Class A shares of any
fund
may be exchanged without a sales charge for shares of the funds that
are
offered without a sales charge. Class A shares of any fund
purchased
without a sales charge may be exchanged for shares sold with a
sales
charge, and the appropriate sales charge differential will be applied.
B. Class A shares of any fund acquired by a previous exchange of
shares
purchased with a sales charge may be exchanged for Class A shares of
any
of the other funds, and the sales charge differential, if any, will
be
applied.
C. Class B shares of any fund may be exchanged without a sales
charge.
Class B shares of the Fund exchanged for Class B shares of another
fund
will be subject to the higher applicable CDSC of the two funds and,
for
purposes of calculating CDSC rates and conversion periods, will be
deemed
to have been held since the date the shares being exchanged
were
purchased.
Dealers other than Smith Barney Shearson must notify TSSG of the
investor's
prior ownership of Class A shares of Smith Barney Shearson High Income Fund
and
the account number in order to accomplish an exchange of shares of the
High
Income Fund under paragraph B above.
The exchange privilege enables shareholders to acquire shares of the
same
Class in a fund with different investment objectives when they believe that
a
shift between funds is an appropriate investment decision. Prior to
any
exchange, the shareholder should obtain and review a copy of the
current
prospectus of each fund into which an exchange is being considered.
Prospectuses
may be obtained from any Smith Barney Shearson Financial Consultant.
Upon receipt of proper instructions and all necessary supporting
documents,
shares submitted for exchange are redeemed at the then-current net asset
value
and, subject to any applicable CDSC, the proceeds immediately invested, at
a
price as described above, in shares of the fund being acquired. Smith
Barney
Shearson reserves the right to reject any exchange request. The
exchange
privilege may be modified or terminated at any time after notice
to
shareholders.
PERFORMANCE DATA
From time to time, the Fund may quote yield or total return of a Class
in
advertisements or in reports and other communications to shareholders. To
the
extent any advertisement or sales literature of the Fund describes the
expenses
or performance of any Class, it will also disclose such information for
the
other Class.
20
<PAGE>
YIELD
A Class' 30-day yield figure described below is calculated according to
a
formula prescribed by the SEC. The formula can be expressed as follows:
<TABLE>
<C> <S>
[ (a-b +1) 6-1]
YIELD=2 cd
</TABLE>
<TABLE>
<C> <S> <C> <C>
Where: a = dividends and interest earned during the
period.
b = expenses accrued for the period (net of
reimbursement).
c = the average daily number of shares
outstanding during the
period that were entitled to receive
dividends.
d = the maximum offering price per share on the
last day of the
period.
</TABLE>
For the purpose of determining the interest earned (variable "a" in
the
formula) on debt obligations that were purchased by the Fund at a discount
or
premium, the formula generally calls for amortization of the discount
or
premium; the amortization schedule will be adjusted monthly to reflect
changes
in the market values of the debt obligations.
The Fund's equivalent taxable 30-day yield for a Class of shares is
computed
by dividing that portion of the Class' 30-day yield which is tax-exempt by
one
minus a stated income tax rate and adding the product to that portion, if
any,
of the Class' yield that is not tax-exempt.
The yields on municipal securities are dependent upon a variety of
factors,
including general economic and monetary conditions, conditions of the
municipal
securities market, size of a particular offering, maturity of the
obligation
offered and rating of the issue. Investors should recognize that in periods
of
declining interest rates the Fund's yield for each Class of shares will tend
to
be somewhat higher than prevailing market rates, and in periods of
rising
interest rates the Fund's yield for each Class of shares will tend to
be
somewhat lower. In addition, when interest rates are falling, the inflow of
net
new money to the Fund from the continuous sale of its shares will likely
be
invested in portfolio instruments producing lower yields than the balance of
the
Fund's portfolio, thereby reducing the current yield of the Fund. In periods
of
rising interest rates, the opposite can be expected to occur.
AVERAGE ANNUAL TOTAL RETURN
Average annual total return figures are computed according to a
formula
prescribed by the SEC. The formula can be expressed as follows:
<TABLE>
<S> <C>
P(1 + T)n= ERV
</TABLE>
<TABLE>
<C> <S> <C> <C>
Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a hypothetical
$1,000
investment made at the beginning of a 1-, 5-
or 10-year
period at the end of a 1-, 5- or 10-year
period (or
fractional portion thereof), assuming
reinvestment of all
dividends and distributions.
</TABLE>
21
<PAGE>
AGGREGATE TOTAL RETURN
Aggregate total return figures represent the cumulative change in the value
of
an investment in the Class for the specified period and are computed by
the
following formula:
<TABLE>
<C> <S>
ERV - P
P
</TABLE>
<TABLE>
<C> <S> <C> <C>
Where: P = a hypothetical initial payment of $10,000.
ERV = Ending Redeemable Value of a hypothetical
$10,000
investment made at the beginning of a 1-, 5-
or 10-year
period at the end of a 1-, 5- or 10-year
period (or
fractional portion thereof), assuming
reinvestment of all
dividends and distributions.
</TABLE>
A Class' performance will vary from time to time depending upon
market
conditions, the composition of the Fund's portfolio and operating expenses
and
the expenses exclusively attributable to the Class. Consequently, any
given
performance quotation should not be considered representative of the
Class'
performance for any specified period in the future. Because the performance
will
vary, it may not provide a basis for comparing an investment in the Class
with
certain bank deposits or other investments that pay a fixed yield for a
stated
period of time. Investors comparing a Class' performance with that of
other
mutual funds should give consideration to the quality and maturity of
the
respective investment companies' portfolio securities.
TAXES
As described above and in the Prospectus, the Fund is designed to
provide
investors with current income which is excluded from gross income for
Federal
income tax purposes and exempt from Oregon state personal income taxes. The
Fund
is not intended to constitute a balanced investment program and is not
designed
for investors seeking capital gains or maximum tax-exempt income irrespective
of
fluctuations in principal. Investment in the Fund would not be suitable
for
tax-exempt institutions, qualified retirement plans, H.R. 10 plans
and
individual retirement accounts because such investors would not gain
any
additional tax benefit from the receipt of tax-exempt income. Similarly,
investment in the Fund would not be appropriate for persons who are not
subject to relatively high rates of income or franchise (excise) taxes.
The following is a summary of selected Federal income tax considerations
that
may affect the Fund and its shareholders. The summary is not intended as
a
substitute for individual tax advice and investors are urged to consult
their
own tax advisors as to the tax consequences of an investment in the Fund.
The Fund intends to qualify and to continue to qualify each
year as a
"regulated investment company" under the Code. Provided that the Fund
(a)
qualifies as a regulated investment company and (b) distributes at least 90%
of
its taxable net investment income and net realized short-term capital gains
and
90% of its tax-exempt interest income (reduced by certain expenses), the
Fund
will not be liable for Federal and Oregon state income or franchise
(excise) taxes to the
extent its taxable net investment income and its net realized short-
and
long-term capital gains, if any, are distributed to its shareholders. Any
such
taxes paid by the Fund would reduce the amount of income and gains available
for
distribution to shareholders.
Because the Fund will distribute exempt-interest dividends, interest
on
indebtedness incurred by a shareholder to purchase or carry Fund shares is
not
deductible for Federal and Oregon state income tax
22
<PAGE>
purposes except to the extent provided in the following paragraph. .
If a shareholder receives exempt-interest dividends with respect to
any share and if such share is held by the shareholder for six months or
less,
then for Federal and Oregon state income tax purposes, any loss on the sale
or
exchange of such share, to the extent of such exempt-interest dividend,
generally is disallowed. In addition, the Code may require a
shareholder, if he or she
receives exempt-interest dividends, to treat as taxable income a portion
of
certain otherwise non-taxable social security and railroad retirement
benefit
payments. Furthermore, that portion of any exempt-interest dividends paid by
the
Fund which represents income derived from private activity bonds held by
the
Fund may not retain its Federal tax-exempt status in the hands of a
shareholder
who is a "substantial user" of a facility financed by such bonds or a
"related
person" thereof. Similar rules are applicable for Oregon state personal
income
tax purposes. Moreover, as noted in the Fund's Prospectus, (a) some or all
of
the Fund's dividends and distributions may be a specific tax preference item,
or
a component of an adjustment item, for purposes of the Federal individual
and
corporate alternative minimum taxes and (b) the receipt of the Fund's
dividends
and distributions may affect a corporate shareholder's Federal
"environmental"
tax liability. In addition, the receipt of Fund dividends and distributions
may
affect a foreign corporate shareholder's Federal "branch profits" tax
liability
and the Federal and Oregon state "excess net passive income" tax liability of
a
shareholder of a Subchapter S corporation. Moreover, tax exempt bonds may
be purchased at a price which is less than principal of the bond and less than
its adjusted issue price. This "market discount" is taxable as ordinary
income (instead of capital gain) if the bond was acquired after April 30,
1993. Shareholders should consult their own
tax advisors as to whether they are (a) substantial users with respect to
a
facility or related to such users within the meaning of the Code and (b)
subject
to a Federal alternative minimum tax, the Federal environmental tax, the
Federal
branch profits tax or the Federal and Oregon state excess net passive
income
tax.
In the event any interest or dividends on obligations of Oregon counties,
cities, districts, ports or other public or municipal corporations or
political subdivisions of Oregon is included in the federal taxable income of
an individual, then such interests or dividends nevertheless may be eliminated
for purposes of computing the amount of income subject to Oregon's personal
income tax. In such event, however, the amount subtracted from Oregon taxable
income is reduced by any interest on indebtedness incurred to carry such
obligations or securities, and by any expenses incurred in the production of
such interest or dividend income. With respect to Oregon corporate franchise
(excise) and income taxes, federal taxable income is increased by the amount
of interest or dividends received during the taxable year from obligations of
a state or any political subdivision of a state (including Oregon) that is
exempt from federal taxation uder the Code. However, the amount added to
Oregon taxable income under this provision is reduced by any interest on
indebtedness incurred to carry the obligations or securities so described, and
by any expenses incurred in the production of such interest or dividend
income. To derive Oregon taxable income of a corporation, discount and gain
or loss on retirement or dispostion of municipal obligations excluded from
federal taxable income, and issued on or after January 1, 1985, is treated in
the same manner as under Code sections 1271 to 1283 and other pertinent
provisions of the Code and applicable Treasury regulations as if the
obligations, although issued by a state or a political subdivision of a state,
were not tax exempt under the Code.
As described above and in the Fund's Prospectus, the Fund may invest
in
exchange-traded futures contracts and options on futures contracts. The
Fund
anticipates that these investment activities will not prevent the Fund
from
qualifying as a regulated investment company. As a general rule,
these
investment activities will increase or decrease the amount of long-
and
short-term capital gains or losses realized by the Fund and, accordingly,
will
affect the amount of capital gains distributed to the Fund's shareholders.
For Federal and Oregon state income tax purposes, gain or loss on the
futures
contracts and options described above (collectively referred to herein
as
"section 1256 contracts") is taxed pursuant to a special "mark-to-
market
system." Under the mark-to-market system, these instruments are treated as
if
sold at the Fund's fiscal year end for their fair market value. As a result,
the
Fund will be recognizing gains or losses before they are actually realized. As
a
general rule, gain or loss on section 1256 contracts is treated as 60% long-
term
capital gain or loss and 40% short-term capital gain or loss, and
accordingly,
the mark-to-market system generally will affect the amount of capital gains
or
losses taxable to the Fund and the amount of distributions taxable to
a
shareholder. Moreover, if the Fund invests in both section 1256 contracts
and
offsetting positions in such contracts which together constitute a
straddle,
then the Fund may be required to defer certain realized losses. The Fund
expects
that its activities with respect to section 1256 contracts and
offsetting
positions in such contracts will not cause it to be treated as recognizing
a
materially greater amount of capital gains than actually realized and
will
permit it to use substantially all of the losses of the Fund for the
fiscal
years in which such losses actually occur.
While the Fund does not expect to realize a significant amount of
net
long-term capital gains, any such gains realized by the Fund will be
distributed
annually as described in the Prospectus. Such distributions ("capital
gain
dividends") will be taxable to shareholders as long-term capital
gains,
regardless of how long they have held Fund shares, and will be designated
as
capital gain dividends in a written notice mailed to shareholders after
the
close of the Fund's taxable year. If a shareholder receives a capital
gain
dividend with
23
<PAGE>
respect to any share and if the share has been held by the shareholder for
six
months or less, then any loss (to the extent not disallowed pursuant to
the
other six-month rule described above relating to exempt-interest dividends)
on
the sale or exchange of such share will be treated as a long-term capital
loss
to the extent of the capital gain dividend.
If a shareholder incurs a sales charge when acquiring shares of the
Fund,
disposes of those shares within 90 days and then acquires shares in a
mutual
fund for which the otherwise applicable sales charge is reduced by reason of
a
reinvestment right (I.E., exchange privilege), the original sales charge
will
not be taken into account when computing gain/loss on original shares to
the
extent the subsequent sales charge is reduced. Instead, it will be added to
the
tax basis in the newly acquired shares. The portion of the original sales
charge
that does not increase the shareholder's tax basis in the original shares
will
be treated as incurred with respect to the second acquisition and, as a
general
rule, will increase the shareholder's tax basis in the newly acquired
shares.
Furthermore, the same rule also applies to a disposition of the newly
acquired
or redeemed shares made within 90 days of the second acquisition. This
provision
prevents a shareholder from immediately recognizing a loss on the
sales charge by shifting
his or her investment in a family of mutual funds.
Each shareholder will receive after the close of the calendar year an
annual
statement as to the Federal income tax and Oregon state personal income
tax
status of his or her dividends and distributions from the Fund for the
prior
calendar year. Dividends attributable to Oregon Municipal Securities and
any
other obligations which, when held by an individual, the interest
therefrom
would be exempt from taxation by Oregon, will be exempt from Oregon
state
personal income taxation ("Oregon exempt-interest dividends"). Any
dividends
attributable to interest on municipal obligations that are not Oregon
Municipal
Securities generally will be taxable as ordinary dividends for Oregon
state
personal income tax purposes even if such dividends are excluded from
gross
income for Federal income tax purposes. These statements also will designate
the
amount of exempt-interest dividends that is a specific preference item
for
purposes of the Federal individual and corporate alternative minimum taxes.
Each
shareholder also will receive, if appropriate, various written notices after
the
close of the Fund's prior taxable year as to the Federal income tax status
of
his or her dividends and distributions which were received from the Fund
during
the Fund's prior taxable year. Shareholders should consult their tax advisors
as
to any other state and local taxes that may apply to these dividends
and
distributions. The dollar amount of dividends excluded or exempt from
Federal
income taxation or Oregon state personal income taxation and the dollar
amount
subject to Federal income taxation or Oregon state personal income taxation,
if
any, will vary for each shareholder depending upon the size and duration of
each
shareholder's investment in the Fund. In the event the Fund earns taxable
net
investment income, it intends to designate as taxable dividends the
same
percentage of each day's dividend as its actual taxable net investment
income
bears to its total net investment income earned for the year.
Investors considering buying shares of the Fund just prior to a record
date
for a taxable dividend or capital gain distribution should be aware
that,
regardless of whether the price of the Fund shares to be purchased reflects
the
amount of the forthcoming dividend or distribution payment, any such
payment
will be a taxable dividend or distribution payment.
If a shareholder fails to furnish the Fund with a correct
taxpayer
identification number, fails to fully report dividend or interest income
or
fails to certify to the Fund that he or she has provided a correct
taxpayer
identification number and that he or she is not subject to "backup
withholding,"
then the shareholder may be subject to a 31% backup withholding tax with
respect
to (a) any taxable dividends and
24
<PAGE>
distributions and (b) the proceeds of any redemption of Fund shares.
An
individual's taxpayer identification number is his or her social
security
number. The backup withholding tax is not an additional tax and may be
credited
against a shareholder's regular Federal income tax liability.
The foregoing is only a summary of certain tax considerations
generally
affecting the Fund and its shareholders, and is not intended as a substitute
for
careful tax planning. Further, it should be noted that, for Oregon state
tax
purposes, the portion of any Fund dividends constituting Oregon exempt-
interest
dividends is exempt from income for Oregon state personal income tax
purposes
only. Dividends (including Oregon exempt-interest dividends) paid
to
shareholders subject to Oregon state franchise (excise) tax or
Oregon state corporate income tax will generally be taxed as
ordinary dividends to such shareholders, notwithstanding that all or a
portion of such dividends is exempt from Oregon state personal income tax.
Potential shareholders in the Fund, including, in
particular, corporate shareholders which may be subject to either
Oregon
franchise tax or Oregon corporate income tax, should consult their tax
advisors
with respect to (a) the application of such corporate and franchise taxes to
the
receipt of Fund dividends and as to their own Oregon state tax situation
in
general, (b) the application of other state and local taxes to the receipt
of
Fund dividends and distributions and (c) their own specific tax situations.
CUSTODIAN AND TRANSFER AGENT
Boston Safe, a wholly owned subsidiary of The Boston Company, Inc., is
located at One Boston Place, Boston, Massachusetts 02108, and pursuant to a
custody agreement, serves as the Fund's custodian. Under the custody
agreement, Boston Safe holds the Fund's portfolio securities and keeps
all necessary accounts and records. For its
services, Boston Safe receives a monthly fee based upon the month-end
market
value of securities held in custody and also receives certain
securities
transaction charges. The assets of the Fund are held under bank custodianship
in
compliance with the 1940 Act.
TSSG is located at Exchange Place, Boston, Massachusetts 02109, and
pursuant
to a transfer agency agreement, serves as the Fund's transfer agent. Under
the
transfer agency agreement, TSSG maintains the shareholder account records
for
the Fund, handles certain communications between shareholders and the Fund
and
distributes dividends and distributions payable by the Fund. For these
services,
TSSG receives a monthly fee computed on the basis of the number of
shareholder
accounts it maintains for the Fund during the month, and is reimbursed
for
certain out-of-pocket expenses.
ORGANIZATION AND DESCRIPTION OF FUND SHARES
The Fund is a business trust established under the laws of the Commonwealth
of
Massachusetts pursuant to a Master Trust Agreement dated March 10, 1994.
Under Massachusetts law, shareholders could, under certain circumstances,
be
held personally liable for the obligations of the Fund. The Master
Trust
Agreement disclaims shareholder liability for acts or obligations of the
Fund,
however, and requires that notice of such disclaimer be given in each
agreement,
obligation or instrument entered into or executed by the Fund or a Trustee.
The
Master Trust Agreement provides for indemnification from Fund property for
all
losses and expenses of any shareholder held personally liable for
the
obligations of the Fund. Thus, the risk of a shareholder's incurring
financial
loss on account of shareholder liability is limited to circumstances in
which
the Fund itself would be unable to meet
25
<PAGE>
its obligations, a possibility which management of the Fund believes is
remote.
Upon payment of any liability incurred by the Fund, a shareholder paying
such
liability will be entitled to reimbursement from the general assets of the
Fund.
The Trustees intend to conduct the operation of the Fund in such a way so as
to
avoid, as far as possible, ultimate liability of the shareholders
for
liabilities of the Fund.
DESCRIPTION OF SHARES
The Master Trust Agreement of the Fund permits the Trustees of the Fund
to issue
an unlimited number of full and fractional shares of a single class and
to
divide or combine the shares into a greater or lesser number of shares
without
thereby changing the proportionate beneficial interests in the Fund. Each
share
in the Fund represents an equal proportional interest in the Fund with
each
other share. Shareholders of the Fund are entitled upon its liquidation to
share
pro rata in its net assets available for distribution. No shareholder of
the
Fund has any preemptive or conversion rights. Shares of the Fund are fully
paid
and non-assessable.
Pursuant to the Master Trust Agreement, the Fund's Trustees may authorize
the
creation of additional series of shares (the proceeds of which would be
invested
in separate, independently managed portfolios) and additional classes of
shares
within any series (which would be used to distinguish among the rights
of
different categories of shareholders, as might be required by future
regulations
or other unforeseen circumstances).
VOTING RIGHTS
The shareholders of the Fund are entitled to a full vote for each full
share
held (and a fractional vote for any fractional share held). The Trustees of
the
Fund have the power to alter the number and the terms of office of the
Trustees,
and have terms of unlimited duration (subject to certain removal procedures)
and
may appoint their own successors, provided at least a majority of the
Trustees
at all times have been elected by the shareholders of the Fund. The
voting
rights of the shareholders of the Fund are not cumulative, so that the
holders
of more than 50% of the shares can, if they choose, elect all of the Trustees
of
the Fund; the holders of the remaining shares of the fund would be unable
to
elect any of the Trustees.
FINANCIAL STATEMENTS
The Fund's audited financial statement as of May 20, 1994
accompanies this
Statement of Additional Information and is incorporated herein by reference
in
its entirety.
26
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholder and Trustees of
Smith Barney Shearson Oregon Municipals Fund:
We have audited the accompanying statement of assets and liabilities of
Smith
Barney Shearson Oregon Municipals Fund (the "Fund") as of May 20,
1994. This
financial statement is the responsibility of the Fund's management.
Our
responsibility is to express an opinion on this financial statement based on
our
audit.
We conducted our audit in accordance with generally accepted
auditing
standards. Those standards require that we plan and perform the audit to
obtain
reasonable assurance about whether the statement of assets and liabilities
is
free of material misstatement. An audit includes examining, on a test
basis,
evidence supporting the amounts and disclosures in the statement of assets
and
liabilities. Our procedures included confirmation of cash held by the
Fund's
custodian as of May 20, 1994. An audit also includes assessing the
accounting
principals used and significant estimates made by management, as well
as
evaluating the overall financial statement presentation. We believe that
our
audit of the statement of assets and liabilities provides a reasonable basis
for
our opinion.
In our opinion, the statement of assets and liabilities referred to
above
presents fairly, in all material respects, the financial position of
Smith
Barney Shearson Oregon Municipals Fund as of May 20, 1994 in
conformity with
generally accepted accounting principals.
COOPERS & LYBRAND
Boston, Massachusetts
May 20 </R. 1994
27
<PAGE>
SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
STATEMENT OF ASSETS AND LIABILITIES
AS OF MAY
20, 1994
<TABLE>
<S>
<C>
ASSETS
Cash.....................................................................
$ 2,000,000
Deferred organization costs (Note 1)...................... .......
.55,785
-----2,055,785
Total Assets.........................................................
LIABILITIES
Accrued organization costs (Note
1)....................... ..........55,785
- -------------
NET ASSETS............................................................ .$
2,000,000
- -------------
- -------------
Net Assets:
Class A
shares........................................................ .. $
1,999,990.45
Class B
shares.......................................................... .
9.55
- -------------
- -------------
Shares Outstanding:
Class A
shares....................................................... ....
209,423
Class B
shares....................................................... ....
1
- -------------
- -------------
Class A Shares:
Net Asset Value and redemption price per share...........................
$ 9.55
- -------------
- -------------
Maximum offering price per share ($9.55 DIVIDED BY .955)................
$ 10.00
- -------------
- -------------
Class B Shares:
Net Asset Value and offering price per share.............................
$ 9.55
- -------------
- -------------
</TABLE>
The accompanying notes are an integral part of this statement.
28
<PAGE>
SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
AS OF MAY 20, 1994
(1) Smith Barney Shearson Oregon Municipals Fund (the "Fund") was
organized
under the laws of the Commonwealth of Massachusetts on March 10, 1994,
and
is a "Massachusetts business trust." The Fund is registered with
the
Securities and Exchange Commission under the Investment Company Act of
1940,
as amended, as a non-diversified, open-end management investment
company.
The Fund offers both Class A and Class B shares. Class A shares are
sold
with a front end sales charge. Class B shares may be subject to a
contingent
deferred sales charge. The Fund has had no operations other
than
organizational matters and the issuance and sale on May 20, 1994 of
209,423
shares of Class A common stock and 1 share of Class B common
stock to
Smith Barney Shearson Inc. ("Smith Barney Shearson"), the distributor of
the
Fund's shares. Costs incurred by the Fund in connection with
its
organization and the initial offering costs of its shares have been
deferred
and will be amortized over a five-year period using the straight-line
method
from the date upon which the Fund commences its investment activities.
In
the event that the initial shares purchased by Smith Barney Shearson
are
redeemed during the amortization period by any holder thereof, the Fund
will
be reimbursed for any unamortized costs in the same proportion as the
number
of shares redeemed bears to the initial shares outstanding at the time
of
redemption.
(2) The Fund intends to comply with the requirements of the Internal
Revenue
Code of 1986, as amended, necessary to qualify as a regulated
investment
company and to make the requisite distributions of income to
its
shareholders that will be sufficient to relieve it from all or
substantially
all federal income taxes.
29
<PAGE>
APPENDIX
Description of S&P and Moody's ratings:
S&P RATINGS FOR MUNICIPAL BONDS
S&P's Municipal Bond Ratings cover obligations of states and
political
subdivisions. Ratings are assigned to general obligation and revenue
bonds.
General obligation bonds are usually secured by all resources available to
the
municipality and the factors outlined in the rating definitions below
are
weighed in determining the rating. Because revenue bonds in general are
payable
from specifically pledged revenues, the essential element in the security for
a
revenue bond is the quantity and quality of the pledged revenues available
to
pay debt service.
Although an appraisal of most of the same factors that bear on the quality
of
general obligation bond credit is usually appropriate in the rating analysis
of
a revenue bond, other factors are important, including particularly,
the
competitive position of the municipal enterprise under review and the
basic
security covenants. Although a rating reflects S&P's judgment as to the
issuer's
capacity for the timely payment of debt service, in certain instances it
may
also reflect a mechanism or procedure for an assured and prompt cure of
a
default, should one occur, I.E., an insurance program, Federal or
state
guarantee or the automatic withholding and use of state aid to pay the
defaulted
debt service.
AAA
PRIME--These are obligations of the highest quality. They have the
strongest
capacity for timely payment of debt service.
GENERAL OBLIGATION BONDS--In a period of economic stress, the issuers
will
suffer the smallest declines in income and will be least susceptible
to
autonomous decline. Debt burden is moderate. A strong revenue structure
appears
more than adequate to meet future expenditure requirements. Quality
of
management appears superior.
REVENUE BONDS--Debt service coverage has been, and is expected to
remain,
substantial. Stability of the pledged revenues is also exceptionally strong,
due
to the competitive position of the municipal enterprise or to the nature of
the
revenues. Basic security provisions (including rate covenant, earnings test
for
issuance of additional bonds and debt service reserve requirements)
are
rigorous. There is evidence of superior management.
AA
HIGH GRADE--The investment characteristics of general obligation and
revenue
bonds in this group are only slightly less marked than those of the
prime
quality issues. Bonds rated "AA" have the second strongest capacity for
payment
of debt service.
A
GOOD GRADE--Principal and interest payments on bonds in this category
are
regarded as safe. This rating describes the third strongest capacity for
payment
of debt service. It differs from the two higher ratings because:
A-1
<PAGE>
GENERAL OBLIGATION BONDS--There is some weakness, either in the
local
economic base, in debt burden, in the balance between revenues and
expenditures,
or in quality of management. Under certain adverse circumstances, any one
such
weakness might impair the ability of the issuer to meet debt obligations at
some
future date.
REVENUE BONDS--Debt service coverage is good, but not exceptional.
Stability
of the pledged revenues could show some variations because of
increased
competition or economic influences on revenues. Basic security provisions,
while
satisfactory, are less stringent. Management performance appears adequate.
BBB
MEDIUM GRADE--Of the investment grade ratings, this is the lowest.
GENERAL OBLIGATION BONDS--Under certain adverse conditions, several of
the
above factors could contribute to a lesser capacity for payment of debt
service.
The difference between "A" and "BBB" ratings is that the latter shows more
than
one fundamental weakness, or one very substantial fundamental weakness,
whereas
the former shows only one deficiency among the factors considered.
REVENUE BONDS--Debt coverage is only fair. Stability of the pledged
revenues
could show substantial variations, with the revenue flow possibly being
subject
to erosion over time. Basic security provisions are no more than
adequate.
Management performance could be stronger.
BB, B, CCC AND CC
Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominately
speculative with respect to capacity to pay interest and repay principal
in
accordance with the terms of the obligation. BB indicates the lowest degree
of
speculation and CC the highest degree of speculation. While such bonds
will
likely have some quality and protective characteristics, these are outweighed
by
large uncertainties or major risk exposures to adverse conditions.
C
The rating C is reserved for income bonds on which no interest is being paid.
D
Bonds rated D are in default, and payment of interest and/or repayment
of
principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus or a
minus
sign, which is used to show relative standing within the major
rating
categories, except in the AAA-Prime Grade category.
S&P RATINGS FOR MUNICIPAL NOTES
Municipal notes with maturities of three years or less are usually given
note
ratings (designated SP-1, -2 or -3) by S&P to distinguish more clearly
the
credit quality of notes as compared to bonds. Notes rated SP-1 have a
very
strong or strong capacity to pay principal and interest. Those issues
determined
to possess overwhelming safety characteristics are given the designation
of
SP-1+. Notes rated SP-2 have a satisfactory capacity to pay principal
and
interest.
A-2
<PAGE>
MOODY'S RATINGS FOR MUNICIPAL BONDS
AAA
Bonds which are rated Aaa are judged to be of the best quality. They carry
the
smallest degree of investment risk and are generally referred to as "gilt
edge."
Interest payments are protected by a large or by an exceptionally stable
margin
and principal is secure. While the various protective elements are likely
to
change, such changes as can be visualized are most unlikely to impair
the
fundamentally strong position of such issues.
AA
Bonds which are rated Aa are judged to be of high quality by all
standards.
Together with the Aaa group they comprise what are generally known as high
grade
bonds. They are rated lower than the best bonds because margins of
protection
may not be as large as in Aaa securities or fluctuation of protective
elements
may be of greater amplitude or there may be other elements present which
make
the long-term risks appear somewhat larger than in Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes and are
to
be considered as upper medium grade obligations. Factors giving security
to
principal and interest are considered adequate, but elements may be
present
which suggest a susceptibility to impairment sometime in the future.
BAA
Bonds which are rated Baa are considered as medium grade obligations, I.E.,
they
are neither highly protected nor poorly secured. Interest payments and
principal
security appear adequate for the present but certain protective elements may
be
lacking or may be characteristically unreliable over any great length of
time.
Such bonds lack outstanding investment characteristics and in fact
have
speculative characteristics as well.
BA
Bonds which are rated Ba are judged to have speculative elements; their
future
cannot be considered as well assured. Often the protection of interest
and
principal payments may be very moderate and therefore not well
safeguarded
during both good and bad times over the future. Uncertainty of
position
characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the
desirable
investment. Assurance of interest and principal payments or of maintenance
of
other terms of the contract over any long period of time may be small.
CAA
Bonds that are rated Caa are of poor standing. These issues may be in default
or
present elements of danger may exist with respect to principal or interest.
CA
Bonds that are rated Ca represent obligations which are speculative in a
high
degree. These issues are often in default or have other marked shortcomings.
A-3
<PAGE>
C
Bonds that are rated C are the lowest rated class of bonds, and issues so
rated
can be regarded as having extremely poor prospects of ever attaining any
real
investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 in each generic
rating
classification from Aa through Baa. The modifier 1 indicates that the
security
ranks in the higher end of its generic rating category; the modifier 2
indicates
a mid-range ranking; and the modifier 3 indicates that the issue ranks in
the
lower end of its generic rating category.
MOODY'S RATINGS FOR MUNICIPAL NOTES
Moody's ratings for state and municipal notes and other short-term loans
are
designated Moody's Investment Grade ("MIG") and for variable rate
demand
obligations are designated Variable Moody's Investment Grade ("VMIG").
This
distinction is in recognition of the differences between short-term
and
long-term credit risk. Loans bearing the designation MIG 1 or VMIG 1 are of
the
best quality, enjoying strong protection from established cash flows of
funds
for their servicing, from established and broad-based access to the market
for
refinancing or both. Loans bearing the designation MIG 2 or VMIG 2 are of
high
quality, with ample margins of protection although not as large as the
preceding
group. Loans bearing the designation MIG 3 or VMIG 3 are of favorable
quality,
with all security elements accounted for but lacking the undeniable strength
of
the preceding grades. Liquidity and cash flow may be tight and market access
for
refinancing is likely to be less well established.
DESCRIPTION OF S&P A-1+ AND A-1 COMMERCIAL PAPER RATING
The rating A-1+ is the highest, and A-1 the second highest, commercial
paper
rating assigned by S&P. Paper rated A-1+ must have either the direct
credit
support of an issuer or guarantor that possesses excellent long-term
operating
and financial strengths combined with strong liquidity
characteristics
(typically, such issuers or guarantors would display credit
quality
characteristics which would warrant a senior bond rating of "AA-" or higher),
or
the direct credit support of an issuer or guarantor that possesses above-
average
long-term fundamental operating and financing capabilities combined
with
on-going excellent liquidity characteristics. Paper rated A-1 by S&P has
the
following characteristics: liquidity ratios are adequate to meet
cash
requirements; long-term senior debt is rated "A" or better; the issuer
has
access to at least two additional channels of borrowing; basic earnings and
cash
flow have an upward trend with allowance made for unusual
circumstances;
typically, the issuer's industry is well established and the issuer has a
strong
position within the industry; and the reliability and quality of management
are
unquestioned.
DESCRIPTION OF MOODY'S PRIME-1 COMMERCIAL PAPER RATING
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's.
Among the factors considered by Moody's in assigning ratings are the
following:
(a) evaluation of the management of the issuer; (b) economic evaluation of
the
issuer's industry or industries and an appraisal of speculative-type risks
which
may be inherent in certain areas; (c) evaluation of the issuer's products
in
relation to competition and customer acceptance; (d) liquidity; (e) amount
and
quality of long-term debt; (f) trend of earnings over a period of ten years;
(g)
financial strength of a parent company and the relationships which exist
with
the issuer; and (h) recognition by the management of obligations which may
be
present or may arise as a result of public interest questions and
preparations
to meet such obligations.
A-4
<PAGE>
Smith Barney Shearson
OREGON
MUNICIPALS
FUND
STATEMENT OF
ADDITIONAL INFORMATION
May 23, 1994
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
Two World Trade Center
New York, New York 10048 [Fund 14]
SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Included in Part A
None
Included in Part B:
Report of Independent Accountants
Statement of Assets and Liabilities
Notes to Statement of Assets and Liabilities
Included in Part C:
Consent of Independent Accountants is filed herein.
(b) Exhibits
All references are to the Registrant's registration statement on Form
N-1A as filed with the Securities and Exchange Commission on March 11, 1994
(the "Registration Statement") (File Nos. 33-52643 and 811-07149).
(1) Registrant's Master Trust Agreement, dated March 10, 1994, is
incorporated by reference to the Registration Statement.
(2) Registrant's By-Laws, dated March 10, 1994, are incorporated by
reference to the Registration Statement.
(3) Not Applicable.
(4) Registrant's form of stock certificate for Classes A, B, C and
D are filed herein.
(5) Investment Advisory Agreement between the Registrant and Greenwich
Street Advisors, dated May 23, 1994, is filed herein.
(6) Distribution Agreement between the Registrant and Smith Barney
Shearson Inc., dated May 23, 1994, is filed herein.
(7) Not Applicable.
(8) Custody Agreement between the Registrant and Boston Safe Deposit
and Trust Company, dated May 23, 1994, is filed herein.
(9)(a) Administration Agreement between the Registrant and
Smith, Barney Advisers, Inc., dated May 23, 1994, is filed herein.
(b) Sub-Administration Agreement between the Registrant and The
Boston Company Advisors, Inc., dated May 23, 1994, is filed herein.
(c) Transfer Agency Agreement between the Registrant and The
Shareholders Services Group, Inc., dated May 23, 1994, is filed herein.
(10) Not Applicable.
(11)(a) Consent of Independent Accountants is filed herein.
(b) Opinion of special State Counsel is filed herein.
(12) Not Applicable.
(13) Purchase Agreement between the Registrant and Smith Barney
Shearson Inc. is filed herein.
(14) Not Applicable.
(15) Services and Distribution Plan is filed herein.
(16) Not Applicable.
Item 25. Persons Controlled by or Under Common Control with Registrant
All of the outstanding shares of beneficial interest of the Registrant
will be owned by Smith Barney Shearson Inc., a Delaware Corporation, on the
effective date of this Registration Statement.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Title of Class Holders as of Effective Date
Beneficial Interest,
par value $.001 per share One
Item 27. Indemnification
Under Section 6.4 of the Registrant's Master Trust Agreement,
any past or present Trustee or officer of the Registrant, including
persons who serve at the Registrant's request as directors, officers
or trustees of another organization in which the Registrant has any
interest as a shareholder, creditor or otherwise (hereinafter
referred to as a "Covered Person") is to be indemnified to the
fullest extent permitted by law against liability and all expenses
reasonable incurred by him in connection with any claim, action, suit
or proceeding to which he may be a party or otherwise involved by
reason of his being or having been a Covered Person of the Registrant
and against amounts paid or incurred by him in the settlement
thereof. These provisions do not authorize indemnification when it
is determined, in the manner specified in the Master Trust Agreement,
that a Covered Person has not acted in good faith in the reasonable
belief that his actions were in, or not opposed to, the best
interests of the Registrant. Moreover, this provision does not
authorize indemnification when it is determined, in the manner
specified in the Master Trust Agreement, that the Covered Person
would otherwise be liable to the Registrant or its shareholders by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of his duties involved in the conduct of his
office. Expenses may be paid by the Registrant in advance of the
final disposition of any claim, action, suit or proceeding upon
receipt of an undertaking by a Covered Person to repay those expenses
to the Registrant in the event that it is ultimately determined that
indemnification of the expenses is not authorized under the Master
Trust Agreement and the Covered Person either provides security for
such undertaking or insures the Registrant against losses from such
advances or the majority of disinterested Trustees or independent
legal counsel determines, in the manner specified in the Master Trust
Agreement, that there is reason to believe the Covered Person will be
entitled to indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended the("Securities Act"), may be
permitted to Trustees, officers and controlling person of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a Trustee, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted
by such Trustee, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
present, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed the Securities Act will be governed by the final
adjudication of such issue.
Item 28(a). Business and Other Connections of Investment Adviser
Investment Adviser - - Greenwich Street Advisors
Greenwich Street Advisors, through its predecessors, has been in the
investment counseling business since 1934 and is a division of Mutual
Management Corp. ("MMC"). MMC was incorporated in 1978 and is a wholly owned
subsidiary of Smith Barney Shearson Holdings Inc. ("Holdings"), which is in
turn a wholly owned subsidiary of The Travelers Inc. (formerly known as
Primerica Corporation) ("Travelers").
The list required by this Item 28 of officers and directors of MMC and
Greenwich Street Advisors, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by such
officers and directors during the past two fiscal years, is incorporated by
reference to Schedules A and D of FORM ADV filed by MMC on behalf of Greenwich
Street Advisors pursuant to the Advisers Act (SEC File No. 801-14437).
Prior to the close of business on July 30, 1993 (the "Closing"), Shearson
Lehman Advisors, a member of the Asset Management Group of Shearson Lehman
Brothers Inc. ("Shearson Lehman Brothers"), served as the Registrant's
investment adviser. On the Closing, Travelers and Smith Barney Shearson Inc.
acquired the domestic retail brokerage and asset management business of
Shearson Lehman Brothers, which included the business of the Registrant's
prior investment adviser. Shearson Lehman Brothers was a wholly owned
subsidiary of Shearson Lehman Brothers Holdings Inc. ("Shearson Holdings").
All of the issued and outstanding common stock of Shearson Holdings
(representing 92% of the voting stock) was held by American Express Company.
Information as to any past business vocation or employment of a substantial
nature engaged in by officers and directors of Shearson Lehman Advisors can be
located in Schedules A and D of FORM ADV filed by Shearson Lehman Brothers on
behalf of Shearson Lehman Advisors prior to July 30, 1993. (SEC FILE NO. 801-
3701)
3/15/94
Item 29. Principal Underwriters
Smith Barney Shearson Inc. ("Smith Barney Shearson") currently acts as
distributor for Smith Barney Shearson Managed Municipals Fund Inc., Smith
Barney Shearson New York Municipals Fund Inc., Smith Barney Shearson
California Municipals Fund Inc., Smith Barney Shearson Massachusetts
Municipals Fund, Smith Barney Shearson Global Opportunities Fund, Smith Barney
Shearson Aggressive Growth Fund Inc., Smith Barney Shearson Appreciation Fund
Inc., Smith Barney Shearson Worldwide Prime Assets Fund, Smith Barney
Shearson Short-Term World Income Fund, Smith Barney Shearson Principal Return
Fund, Smith Barney Shearson Municipal Money Market Fund Inc., Smith Barney
Shearson Daily Dividend Fund Inc., Smith Barney Shearson Government and
Agencies Fund Inc., Smith Barney Shearson Managed Governments Fund Inc., Smith
Barney Shearson New York Municipal Money Market Fund, Smith Barney Shearson
California Municipal Money Market Fund, Smith Barney Shearson Income Funds,
Smith Barney Shearson Equity Funds, Smith Barney Shearson Investment Funds
Inc., Smith Barney Shearson Precious Metals and Minerals Fund Inc., Smith
Barney Shearson Telecommunications Trust, Smith Barney Shearson Arizona
Municipals Fund Inc., Smith Barney Shearson New Jersey Municipals Fund Inc.,
The USA High Yield Fund N.V., Garzarelli Sector Analysis Portfolio N.V., The
Advisors Fund L.P., Smith Barney Shearson Fundamental Value Fund Inc., Smith
Barney Shearson Series Fund, The Trust for TRAK Investments, Smith Barney
Shearson Income Trust, Smith Barney Shearson FMA R Trust, Smith Barney
Shearson Adjustable Rate Government Income Fund, Smith Barney Shearson Florida
Municipals Fund, Smith Barney Funds, Inc., Smith Barney Equity Funds, Inc.,
Smith Barney Muni Funds, Smith Barney World Funds, Inc., Smith Barney Money
Funds, Inc., Smith Barney Tax Free Money Fund, Inc., Smith Barney Variable
Account Funds, Smith Barney U.S. Dollar Reserve Fund (Cayman), Worldwide
Special Fund, N.V., Worldwide Securities Limited, (Bermuda), and various
series of unit investment trusts.
Smith Barney Shearson is a wholly owned subsidiary of Smith Barney
Shearson Holdings Inc., which in turn is a wholly owned subsidiary of The
Travelers Inc. (formerly known as Primerica Corporation) ("Travelers"). The
information required by this Item 29 with respect to each director, officer
and partner of Smith Barney Shearson is incorporated by reference to Schedule
A of FORM BD filed by Smith Barney Shearson pursuant to the Securities
Exchange Act of 1934 (SEC File No. 812-8510).
3/08/94
Item 30. Location of Accounts and Records
(1) Smith Barney Shearson Oregon Municipals Fund
Two World Trade Center
New York, New York 10048
(2) The Boston Company Advisors, Inc.
One Boston Place
Boston, Massachusetts 02108
(3) Greenwich Street Advisors
Two World Trade Center
New York, New York 10048
(4) Boston Safe Deposit and Trust Company
One Cabot Road
Medford, Massachusetts 02155
(5) The Shareholder Services Group, Inc.
Exchange Place
Boston, Massachusetts 02109
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) The Registrant undertakes to call a meeting of shareholders
for the purpose of voting upon the question of removal of a trustee
or trustees of the Registrant when requested in writing to do so by
the holders of at least 10% of the Registrant's outstanding shares
and, in connection with the meeting, to comply with the provisions of
Section 16(c) of the 1940 Act relating to communications with the
shareholders of certain common-law trusts.
(b) The Registrant undertakes to file a post-effective
amendment containing reasonably current financial statements that
need not be certified, within four to six months from the effective
date of this Registration Statement.
Rule 485(b) Certification
The Registrant hereby certifies that it meets all requirements
for effectiveness pursuant to Rule 485(b) under the Securities Act of
1933, as amended.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant, SMITH BARNEY SHEARSON OREGON
MUNICIPALS FUND, has duly caused this Amendment to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of Boston, Commonwealth of Massachusetts on the 15th day of
May, 1994.
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
By: /s/ Heath B. McLendon*
Heath B. McLendon, Chairman of the Board
We, the undersigned, hereby severally constitute and appoint Heath B.
McLendon, Lee D. Augsburger and Christina T. Sydor and each of them singly,
our true and lawful attorneys, with full power to them and each of them to
sign for us, and in our hands and in the capacities indicated below, any and
all Amendments to this Registration Statement and to file the same, with all
exhibits thereto, and other documents therewith, with the Securities and
Exchange Commission, granting unto said attorneys, and each of them, acting
alone, full authority and power to do and perform each and every act and thing
requisite or necessary to be done in the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys or any of them may lawfully do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to the Registration Statement and the above Power of Attorney
has been signed below by the following persons in the capacities and on the
dates indicated.
Signature Title Date
/s/ Heath B. McLendon* Chairman of the Board
5/15/94
Heath B. McLendon (Chief Executive Officer)
/s/ Lewis E. Daidone* Treasurer (Chief Financial
5/15/94
Lewis E. Daidone and Accounting Officer)
/s/ Herbert Barg* Trustee
5/15/94
Herbert Barg
/s/ Alfred J. Bianchetti* Trustee
5/15/94
Alfred J. Bianchetti
/s/ Martin Brody* Trustee
5/15/94
Martin Brody
Signature Title Date
/s/ Dwight B. Crane* Trustee
5/15/94
Dwight B. Crane
/s/ James J. Crisona* Trustee
5/15/94
James J. Crisona
/s/ Robert A. Frankel* Trustee
5/15/94
Robert A. Frankel
/s/ Dr. Paul Hardin* Trustee
5/15/94
Dr. Paul Hardin
/s/ Stephen E. Kaufman* Trustee
5/15/94
Stephen E. Kaufman
/s/ Joseph J. McCann* Trustee
5/15/94
Joseph J. McCann
EXHIBIT 4
SPECIMEN
SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
(A MASSACHUSETTS BUSINESS TRUST)
CLASS A SHARES
(SHARES OF BENEFICIAL INTEREST)
ACCOUNT NO.
THIS CERTIFIES THAT CUSIP
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES
(PAR VALUE $ .001 PER SHARE)
of SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
CLASS A SHARES
Shares established and designated under the Master Trust Agreement of SMITH
BARNEY SHEARSON OREGON MUNICIPALS FUND, a Massachusetts business trust (the
"Trust"), dated March 10, 1994, as amended from time to time (the "Master
Trust Agreement"). The terms of the Master Trust Agreement, a copy of
which is on file with the Secretary of the Commonwealth of Massachusetts,
are hereby incorporated by reference as fully as if set forth herein in
their entirety. The shares have the rights and preferences set forth in
the Master Trust Agreement, and the Trust will furnish to the holder of
this certificate upon written request and without charge a statement of
such relative rights and preferences. This certificate is issued by the
Trustees of SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND not individually
but as Trustees under the Master Trust Agreement, and represents shares of
the Trust and does not bind any of the Trustees, Stockholders, Officers,
Employees or Agents of the Trust personally but only the assets and
property Agreement, the shares represented by this certificate are
transferable upon the books of the Trust by the registered holder hereof in
person or his duly authorized attorney upon surrender of this certificate.
WITNESS the facsimile signature of the Trust's duly authorized
officer.
Dated:
________________________ ___________________________
Christina Sydor Stephen J. Treadway
Secretary President
SPECIMEN
SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
(A MASSACHUSETTS BUSINESS TRUST)
CLASS B SHARES
(SHARES OF BENEFICIAL INTEREST)
ACCOUNT NO.
THIS CERTIFIES THAT CUSIP
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES
(PAR VALUE $ .001 PER SHARE)
of SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
CLASS B SHARES
Shares established and designated under the Master Trust Agreement of SMITH
BARNEY SHEARSON OREGON MUNICIPALS FUND, a Massachusetts business trust (the
"Trust"), dated March 10, 1994, as amended from time to time (the "Master
Trust Agreement"). The terms of the Master Trust Agreement, a copy of
which is on file with the Secretary of the Commonwealth of Massachusetts,
are hereby incorporated by reference as fully as if set forth herein in
their entirety. The shares have the rights and preferences set forth in
the Master Trust Agreement, and the Trust will furnish to the holder of
this certificate upon written request and without charge a statement of
such relative rights and preferences. This certificate is issued by the
Trustees of SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND not individually
but as Trustees under the Master Trust Agreement, and represents shares of
the Trust and does not bind any of the Trustees, Stockholders, Officers,
Employees or Agents of the Trust personally but only the assets and
property Agreement, the shares represented by this certificate are
transferable upon the books of the Trust by the registered holder hereof in
person or his duly authorized attorney upon surrender of this certificate.
WITNESS the facsimile signature of the Trust's duly authorized
officer.
Dated:
________________________ ___________________________
Christina Sydor Stephen J. Treadway
Secretary President
SPECIMEN
SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
(A MASSACHUSETTS BUSINESS TRUST)
CLASS C SHARES
(SHARES OF BENEFICIAL INTEREST)
ACCOUNT NO.
THIS CERTIFIES THAT CUSIP
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES
(PAR VALUE $ .001 PER SHARE)
of SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
CLASS C SHARES
Shares established and designated under the Master Trust Agreement of SMITH
BARNEY SHEARSON OREGON MUNICIPALS FUND, a Massachusetts business trust (the
"Trust"), dated March 10, 1994, as amended from time to time (the "Master
Trust Agreement"). The terms of the Master Trust Agreement, a copy of
which is on file with the Secretary of the Commonwealth of Massachusetts,
are hereby incorporated by reference as fully as if set forth herein in
their entirety. The shares have the rights and preferences set forth in
the Master Trust Agreement, and the Trust will furnish to the holder of
this certificate upon written request and without charge a statement of
such relative rights and preferences. This certificate is issued by the
Trustees of SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND not individually
but as Trustees under the Master Trust Agreement, and represents shares of
the Trust and does not bind any of the Trustees, Stockholders, Officers,
Employees or Agents of the Trust personally but only the assets and
property Agreement, the shares represented by this certificate are
transferable upon the books of the Trust by the registered holder hereof in
person or his duly authorized attorney upon surrender of this certificate.
WITNESS the facsimile signature of the Trust's duly authorized
officer.
Dated:
________________________ ___________________________
Christina Sydor Stephen J. Treadway
Secretary President
SPECIMEN
SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
(A MASSACHUSETTS BUSINESS TRUST)
CLASS D SHARES
(SHARES OF BENEFICIAL INTEREST)
ACCOUNT NO.
THIS CERTIFIES THAT CUSIP
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES
(PAR VALUE $ .001 PER SHARE)
of SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
CLASS D SHARES
Shares established and designated under the Master Trust Agreement of SMITH
BARNEY SHEARSON OREGON MUNICIPALS FUND, a Massachusetts business trust (the
"Trust"), dated March 10, 1994, as amended from time to time (the "Master
Trust Agreement"). The terms of the Master Trust Agreement, a copy of
which is on file with the Secretary of the Commonwealth of Massachusetts,
are hereby incorporated by reference as fully as if set forth herein in
their entirety. The shares have the rights and preferences set forth in
the Master Trust Agreement, and the Trust will furnish to the holder of
this certificate upon written request and without charge a statement of
such relative rights and preferences. This certificate is issued by the
Trustees of SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND not individually
but as Trustees under the Master Trust Agreement, and represents shares of
the Trust and does not bind any of the Trustees, Stockholders, Officers,
Employees or Agents of the Trust personally but only the assets and
property Agreement, the shares represented by this certificate are
transferable upon the books of the Trust by the registered holder hereof in
person or his duly authorized attorney upon surrender of this certificate.
WITNESS the facsimile signature of the Trust's duly authorized
officer.
Dated:
________________________ ___________________________
Christina Sydor Stephen J. Treadway
Secretary President
g:\shared\domestic\clients\shearson\funds\ore\certs.doc
EXHIBIT 5
ADVISORY AGREEMENT
SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
May 23, 1994
The Greenwich Street Advisors Division of
Mutual Management Corp.
Two World Trade Center
New York, New York 10048
Dear Sirs:
Smith Barney Shearson Oregon Municipals Fund (the "Company"), a trust
organized under the laws of the Commonwealth of Massachusetts, confirms its
agreement with the Greenwich Street Advisors Division of Mutual Management
Corp. (the "Adviser"), as follows:
1. Investment Description; Appointment
The Company desires to employ its capital by investing and
reinvesting in investments of the kind and in accordance with the
investment objective(s), policies and limitations specified in its Master
Trust Agreement, as amended from time to time (the "Master Trust
Agreement"), in the prospectus (the "Prospectus") and the statement of
additional information (the "Statement") filed with the Securities and
Exchange Commission as part of the Company's Registration Statement on Form
N-1A, as amended from time to time, and in the manner and to the extent as
may from time to time be approved by the Board of Trustees of the Company
(the "Board"). Copies of the Prospectus, the Statement and the Master
Trust Agreement have been or will be submitted to the Adviser. The Company
agrees to provide copies of all amendments to the Prospectus, the Statement
and the Master Trust Agreement to the Adviser on an on-going basis. The
Company desires to employ and hereby appoints the Adviser to act as the
investment adviser to the Company. The Adviser accepts the appointment and
agrees to furnish the services for the compensation set forth below.
2. Services as Investment Adviser
Subject to the supervision, direction and approval of the Board of
the Company, the Adviser will (a) manage the Company's holdings in
accordance with the Company's investment objective(s) and policies as
stated in the Master Trust Agreement, the Prospectus and the Statement; (b)
make investment decisions for the Company; (c) place purchase and sale
orders for portfolio transactions for the Company; and (d) employ
professional portfolio managers and securities analysts who provide
research services to the Company. In providing those services, the Adviser
will conduct a continual program of investment, evaluation and, if
appropriate, sale and reinvestment of the Company's assets.
3. Brokerage
In selecting brokers or dealers to execute transactions on behalf of
the Company, the Adviser will seek the best overall terms available. In
assessing the best overall terms available for any transaction, the Adviser
will consider factors it deems relevant, including, but not limited to, the
breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer and
the reasonableness of the commission, if any, for the specific transaction
and on a continuing basis. In selecting brokers or dealers to execute a
particular transaction, and in evaluating the best overall terms available,
the Adviser is authorized to consider the brokerage and research services
(as those terms are defined in Section 28(e) of the Securities Exchange Act
of 1934), provided to the Company and/or other accounts over which the
Adviser or its affiliates exercise investment discretion.
4. Information Provided to the Company
The Adviser will keep the Company informed of developments materially
affecting the Company's holdings, and will, on its own initiative, furnish
the Company from time to time with whatever information the Adviser
believes is appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the
services listed in paragraphs 2 and 3 above. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered
by the Company in connection with the matters to which this Agreement
relates, provided that nothing in this Agreement shall be deemed to protect
or purport to protect the Adviser against any liability to the Company or
to its shareholders to which the Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or by reason of the Adviser's reckless
disregard of its obligations and duties under this Agreement.
6. Compensation
In consideration of the services rendered pursuant to this Agreement,
the Company will pay the Adviser on the first business day of each month a
fee for the previous month at the annual rate of: .35 of 1.00% of the first
$500 million of the Company's average daily net assets; and .32 of 1.00% of
the Company's average daily net assets in excess of $500 million. The fee
for the period from the Effective Date (defined below) of the Agreement to
the end of the month during which the Effective Date occurs shall be
prorated according to the proportion that such period bears to the full
monthly period. Upon any termination of this Agreement before the end of a
month, the fee for such part of that month shall be prorated according to
the proportion that such period bears to the full monthly period and shall
be payable upon the date of termination of this Agreement. For the purpose
of determining fees payable to the Adviser, the value of the Company's net
assets shall be computed at the times and in the manner specified in the
Prospectus and/or the Statement.
7. Expenses
The Adviser will bear all expenses in connection with the performance
of its services under this Agreement. The Company will bear certain other
expenses to be incurred in its operation, including, but not limited to,
investment advisory and administration fees; fees for necessary
professional and brokerage services; fees for any pricing service; the
costs of regulatory compliance; and costs associated with maintaining the
Company's legal existence and shareholder relations.
8. Reduction of Fee
If in any fiscal year the aggregate expenses of the Company
(including fees pursuant to this Agreement and the Company's administration
agreements, but excluding interest, taxes, brokerage and extraordinary
expenses) exceed the expense limitation of any state having jurisdiction
over the Company, the Adviser will reduce its fee to the Company by the
proportion of such excess expense equal to the proportion that its fee
thereunder bears to the aggregate of fees paid by the Company for
investment advice and administration in that year, to the extent required
by state law. A fee reduction pursuant to this paragraph 8, if any, will
be estimated, reconciled and paid on a monthly basis.
9. Services to Other Companies or Accounts
The Company understands that the Adviser now acts, will continue to
act and may act in the future as investment adviser to fiduciary and other
managed accounts, and as investment adviser to other investment companies,
and the Company has no objection to the Adviser's so acting, provided that
whenever the Company and one or more other investment companies advised by
the Adviser have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with a formula
believed to be equitable to each company. The Company recognizes that in
some cases this procedure may adversely affect the size of the position
obtainable for the Company. In addition, the Company understands that the
persons employed by the Adviser to assist in the performance of the
Adviser's duties under this Agreement will not devote their full time to
such service and nothing contained in this Agreement shall be deemed to
limit or restrict the right of the Adviser or any affiliate of the Adviser
to engage in and devote time and attention to other businesses or to render
services of whatever kind or nature.
10. Term of Agreement
This Agreement shall become effective as of the date the Fund
commences its investment operations and shall continue for a period of two
years and thereafter shall continue automatically (unless terminated as
provided herein) for successive annual periods provided that such
continuance is specifically approved at least annually by the Board of
Trustees of the Fund including a majority of the Board of Trustees who are
not "interested persons" (as defined in the Investment Company Act of 1940,
as amended) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting such approval. This Agreement is
terminable, without penalty, on 60 days' written notice, by the Board of
Trustees of the Fund or by vote of holders of a majority of the Fund's
shares, or upon 90 days' written notice, by Greenwich Street Advisors.
11. Representation by the Company
The Company represents that a copy of the Master Trust Agreement is
on file with the Secretary of The Commonwealth of Massachusetts.
12. Limitation of Liability
The Company and the Adviser agree that the obligations of the Company
under this Agreement shall not be binding upon any of the members of the
Board, shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Company, individually, but are binding only upon
the assets and property of the Company, as provided in the Master Trust
Agreement. The execution and delivery of this Agreement have been
authorized by the Board and a majority of the holders of the Company's
outstanding voting securities, and signed by an authorized officer of the
Company, acting as such, and neither such authorization by such members of
the Board and shareholders nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose
any liability on any of them personally, but shall bind only the assets and
property of the Company as provided in the Master Trust Agreement.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning the
enclosed copy of this Agreement.
Very truly yours,
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
By:
________________________
Name: Heath B. McLendon
Title: Chairman of the Board
Accepted:
THE GREENWICH STREET ADVISORS
DIVISION OF MUTUAL MANAGEMENT CORP.
By: _____________________
Name: Christine T. Sydor
Title: Managing Director
4
shared/domestic/clients/shearson/funds/ore/adv.doc 09:11 AM
EXHIBIT 6
SERVICES AND DISTRIBUTION AGREEMENT
SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
May 23, 1994
Smith Barney Shearson Inc.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, Smith Barney Shearson Oregon
Municipals Fund a business trust, organized under the laws of the
Commonwealth of Massachusetts has agreed that Smith Barney Shearson
Inc.("SBS") shall be, for the period of this Agreement, the distributor of
shares (the "Shares") of the Fund.
1. Services as Distributor
1.1 SBS will act as agent for the distribution of Shares
covered by the registration statement, prospectus and statement of
additional information then in effect under the Securities Act of 1933, as
amended (the "1933 Act"), and the Investment Company Act of 1940, as
amended (the "1940 Act").
1.2 SBS agrees to use its best efforts to solicit orders for
the sale of Shares and will undertake such advertising and promotion as it
believes is reasonable in connection with such solicitation.
1.3 All activities by SBS as distributor of the Shares shall
comply with all applicable laws, rules, and regulations, including, without
limitation, all rules and regulations made or adopted by the Securities and
Exchange Commission (the "SEC") or by any securities association registered
under the Securities Exchange Act of 1934.
1.4 SBS will provide one or more persons during normal
business hours to respond to telephone questions concerning the Fund.
1.5 SBS will transmit any orders received by it for purchase
or redemption of Shares to The Shareholder Services Group, Inc. ("TSSG"),
the Fund's transfer and dividend agent, or any successor to TSSG of which
the Fund has notified SBS in writing.
1.6 Whenever in their judgment such action is warranted for
any reason, including, without limitation, market, economic or political
conditions, the Fund's officers may decline to accept any orders for, or
make any sales of, the Shares until such time as those officers deem it
advisable to accept such orders and to make such sales.
1.7 SBS will act only on its own behalf as principal should it
choose to enter into selling agreements with selected dealers or others.
1.8 The Fund will pay to SBS an annual fee in connection with
the offering and sale of the Shares under this Agreement. The annual fee
paid to SBS, will be calculated daily and paid monthly by the Fund at an
annual rate set forth in the Services and Distribution Plan (the "Plan")
based on the average daily net assets of the Fund ; provided that payment
shall be made in any month only to the extent that such payment shall not
exceed the sales charge limitations established by the National Association
of Securities Dealers, Inc.
The annual fee paid to SBS under this Section 1.8 maybe used by SBS
to cover any expenses primarily intended to result in the sale of Shares,
including, but not limited to, the following: (a) cost of payments made
to SBS Financial Consultants and other employees of SBS or other broker-
dealers that engage in the distribution of the Fund's Shares; (b)payments
made to, and expenses of, persons who provide support services in
connection with the distribution of the Fund's Shares, including, but not
limited to, office space and equipment, telephone facilities, answering
routine inquiries regarding the Fund, processing shareholder transactions
and providing any other shareholder services; (c) costs relating to the
formulation and implementation of marketing and promotional activities,
including, but not limited to, direct mail promotions and television,
radio, newspaper, magazine and other mass media advertising; (d) costs of
printing and distributing prospectuses and reports of the Fund to
prospective shareholders of the Fund; (e) costs involved in preparing,
printing and distributing sales literature pertaining to the Fund; and (f)
costs involved in obtaining whatever information, analyses and reports with
respect to marketing and promotional activities that the Fund may, from
time to time, deem advisable.
Distribution expenses shall not include any expenditures in connection with
services which SBS, any of its affiliates, or any other person have agreed
to bear without reimbursement.
1.9 SBS shall prepare and deliver reports to the Treasurer of the
Fund and to the sub-investment advisor and/or administrator of the Fund on
a regular, at least quarterly, basis, showing the distribution expenses
incurred pursuant to this Agreement and the Plan and the purposes therefor,
as well as any supplemental reports as the Trustees, from time to time, may
reasonably request.
2. Duties of the Fund
2.1 The Fund agrees at its own expense to execute any and all
documents, to furnish any and all information and to take any other actions
that may be reasonably necessary in connection with the qualification of
the Shares for sale in those states that SBS may designate.
2.2 The Fund shall furnish from time to time for use in
connection with the sale of the Shares, such information reports with
respect to the Fund and its Shares as SBS may reasonably request, all of
which shall be signed by one or more of the Fund's duly authorized
officers; and the Fund warrants that the statements contained in any such
reports, when so signed by the Fund's officers, shall be true and correct.
The Fund shall also furnish SBS upon request with (a) annual audits of the
Fund's books and accounts made by independent certified public accountants
regularly retained by the Fund; (b) semi-annual unaudited financial
statements pertaining to the Fund; (c) quarterly earnings statements
prepared by the Fund; (d) a monthly itemized list of the securities in the
Fund's portfolio; (e) monthly balance sheets as soon as practicable after
the end of each month; and (f) from time to time such additional
information regarding the Fund's financial condition as SBS may reasonably
request.
3. Representations and Warranties
The Fund represents to SBS that all registration statements,
prospectuses and statements of additional information filed by the Fund
with the SEC under the 1933 Act and the 1940 Act with respect to the Shares
have been carefully prepared in conformity with the requirements of the
1933 Act, the 1940 Act and the rules and regulations of the SEC thereunder.
As used in this Agreement, the terms "registration statement",
"prospectus" and "statement of additional information" shall mean any
registration statement, prospectus and statement of additional information
filed by the Fund with the SEC and any amendments and supplements thereto
which at any time shall have been field with the SEC. The Fund represents
and warrants to SBS that any registration statement, prospectus and
statement of additional information, when such registration statement
becomes effective, will include all statements required to be contained
therein in conformance with the 1933 Act, the 1940 Act and the rules and
regulations of the SEC; that all statements of fact contained in any
registration statement, prospectus or statement of additional information
will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus
or statement of additional information when such registration statement
becomes effective will include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading to a purchaser of the Fund's
Shares. The Fund may, but shall not be obligated to, propose from time to
time such amendment or amendments to any registration statement and such
supplement or supplements to any prospectus or statement of additional
information as, in the light of future developments, may, in the opinion of
the Fund's counsel, be necessary or advisable. If the Fund shall not
propose such amendment or amendments and/or supplement or supplements
within fifteen days after receipt by the Fund of a written request from SBS
to do so, SBS may, at its option, terminate this Agreement. The Fund shall
not file any amendment to any registration statement or supplement to any
prospectus or statement of additional information without giving SBS
reasonable notice thereof in advance; provided, however, that nothing
contained in this Agreement shall in any way limit the Fund's right to file
at any time such amendments to any registration statement and/or
supplements to any prospectus or statement of additional information, of
whatever character, as the Fund may deem advisable, such right being in all
respects absolute and unconditional.
4. Indemnification
4.1 The Fund authorizes SBS and dealers to use any prospectus
or statement of additional information furnished by the Fund from time to
time, in connection with the sale of the Shares. The Fund agrees to
indemnify, defend and hold SBS, its several officers and directors, and any
person who controls SBS within the meaning of Section 15 of the 1933 Act,
free and harmless from and against any and all claims, demands, liabilities
and expenses (including the cost of investigating or defending such claims,
demands or liabilities and any such counsel fees incurred in connection
therewith) which SBS, its officers and directors, or any such controlling
person, may incur under the 1933 Act or under common law or otherwise,
arising out of or based upon any untrue statement, or alleged untrue
statement, of a material fact contained in any registration statement, any
prospectus or any statement of additional information or arising out of or
based upon any omission, or alleged omission, to state a material fact
required to be stated in any registration statement, any prospectus or any
statement of additional information or necessary to make the statements in
any thereof not misleading; provided, however, that the Fund's agreement to
indemnify SBS, its officers or directors, and any such controlling person
shall not be deemed to cover any claims, demands, liabilities or expenses
arising out of any statements or representations made by SBS or its
representatives or agents other than such statements and representations as
are contained in any prospectus or statement of additional information and
in such financial and other statements as are furnished to SBS pursuant to
paragraph 2.2 of this Agreement; and further provided that the Fund's
agreement to indemnify SBS and the Fund's representations and warranties
herein before set forth in paragraph 3 of this Agreement shall not be
deemed to cover any liability to the Fund or its shareholders to which SBS
would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of SBS's
reckless disregard of its obligations and duties under this Agreement. The
Fund's agreement to indemnify SBS, its officers and directors, and any such
controlling person, as aforesaid, is expressly conditioned upon the Fund's
being notified of any action brought against SBS, its officers or
directors, or any such controlling person, such notification to be given by
letter or by telegram addressed to the Fund at its principal office in New
York, New York and sent to the Fund by the person against whom such action
is brought, within ten days after the summons or other first legal process
shall have been served. The failure so to notify the Fund of any such
action shall not relieve the Fund from any liability that the Fund may have
to the person against whom such action is brought by reason of any such
untrue, or alleged untrue, statement or omission, or alleged omission,
otherwise than on account of the Fund's indemnity agreement contained in
this paragraph 4.1. The Fund will be entitled to assume the defense of any
suit brought to enforce any such claim, demand or liability, but, in such
case, such defense shall be conducted by counsel of good standing chosen by
the Fund and approved by SBS. In the event the Fund elects to assume the
defense of any such suit and retains counsel of good standing approved by
SBS, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but if the Fund
does not elect to assume the defense of any such suit, or if SBS does not
approve of counsel chosen by the Fund, the Fund will reimburse SBS, its
officers and directors, or the controlling person or persons named as
defendant or defendants in such suit, for the fees and expenses of any
counsel retained by SBS or them. The Fund's indemnification agreement
contained in this paragraph 4.1 and the Fund's representations and
warranties in this Agreement shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of SBS, its
officers and directors, or any controlling person, and shall survive the
delivery of any of the Fund's Shares. This agreement of indemnity will
inure exclusively to SBS's benefit, to the benefit of its several officers
and directors, and their respective estates, and to the benefit of the
controlling persons and their successors. The Fund agrees to notify SBS
promptly of the commencement of any litigation or proceedings against the
Fund or any of its officers or trustees in connection with the issuance and
sale of any of the Fund's Shares.
4.2 SBS agrees to indemnify, defend and hold the Fund, its
several officers and Trustees, and any person who controls the Fund within
the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities and expenses (including
the costs of investigating or defending such claims, demands or liabilities
and any counsel fees incurred in connection therewith) that the Fund, its
officers or Trustees or any such controlling person may incur under the
1933 Act, or under common law or otherwise, but only to the extent that
such liability or expense incurred by the Fund, its officers or Trustees,
or such controlling person resulting from such claims or demands shall
arise out of or be based upon any untrue, or alleged untrue, statement of a
material fact contained in information furnished in writing by SBS to the
Fund and used in the answers to any of the items of the registration
statement or in the corresponding statements made in the prospectus or
statement of additional information, or shall arise out of or be based upon
any omission, or alleged omission, to state a material fact in connection
with such information furnished in writing by SBS to the Fund and required
to be stated in such answers or necessary to make such information not
misleading. SBS's agreement to indemnify the Fund, its officers or
Trustees, and any such controlling person, as aforesaid, is expressly
conditioned upon SBS being notified of any action brought against the Fund,
its officers or Trustees, or any such controlling person, such notification
to be given by letter or telegram addressed to SBS at its principal office
in New York, New York and sent to SBS by the person against whom such
action is brought, within ten days after the summons or other first legal
process shall have been served. SBS shall have the right to control the
defense of such action, with counsel of its own choosing, satisfactory to
the Fund, if such action is based solely upon such alleged misstatement or
omission on SBS's part, and in any other event the Fund, its officers or
Trustees or such controlling person shall each have the right to
participate in the defense or preparation of the defense of any such
action. The failure to so notify SBS of any such action shall not relieve
SBS from any liability that SBS may have to the Fund, its officers or
Trustees, or to such controlling person by reason of any such untrue, or
alleged untrue, statement or omission, or alleged omission, otherwise than
on account of SBS's indemnity agreement contained in this paragraph 4.2.
SBS agrees to notify the Fund promptly of the commencement of any
litigation or proceedings against SBS or any of its officers or directors
in connection with the issuance and sale of any of the Fund's Shares.
4.3 In case any action shall be brought against any
indemnified party under paragraph 4.1 or 4.2, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall wish
to do so, to assume the defense thereof with counsel satisfactory to such
indemnified party. If the indemnifying party opts to assume the defense of
such action, the indemnifying party will not be liable to the indemnified
party for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than (a)
reasonable costs of investigation or the furnishing of documents or
witnesses and (b) all reasonable fees and expenses of separate counsel to
such indemnified party if (i) the indemnifying party and the indemnified
party shall have agreed to the retention of such counsel or (ii) the
indemnified party shall have concluded reasonably that representation of
the indemnifying party and the indemnified party by the same counsel would
be inappropriate due to actual or potential differing interests between
them in the conduct of the defense of such action.
5. Effectiveness of Registration
None of the Fund's Shares shall be offered by either SBS or the Fund
under any of the provisions of this Agreement and no orders for the
purchase or sale of the Shares under this Agreement shall be accepted by
the Fund if and so long as the effectiveness of the registration statement
then in effect or any necessary amendments thereto shall be suspended under
any of the provision of the 1933 Act or if and so long as a current
prospectus as required by Section 5(b) (2) of the 1933 Act is not on file
with the SEC; provided, that nothing contained in this paragraph 5 shall in
any way restrict or have an application to or bearing upon the Fund's
obligation to repurchase its Shares from any shareholder in accordance with
the provisions of the Fund's prospectus, statement of additional
information or the Master Trust Agreement dated March 9, 1994, as amended
from time to time.
6. Notice to SBS
The Fund agrees to advise SBS immediately in writing: (a) of
any request by the SEC for amendments to the registration statement,
prospectus or statement of additional information then in effect or for
additional information; (b) in the event of the issuance by the SEC of any
stop order suspending the effectiveness of the registration statement,
prospectus or statement of additional information then in effect or the
initiation of any proceeding for that purpose; (c) of the happening of
any event that makes untrue any statement or a material fact made in the
registration statement, prospectus or statement of additional information
then in effect or that requires the making of a change in such registration
statement, prospectus or statement of additional information in order to
make the statements therein not misleading; and (d) of all actions of the
SEC with respect to any amendment to any registration statement, prospectus
or statement of additional information which may from time to time be filed
with the SEC.
7. Term of the Agreement
This Agreement shall become effective as of the date the Fund
commences its investment operations and shall continues for successive
annual periods thereafter so long as such continuance is specifically
approved at least annually by (a) the Fund's Board of Trustees or (b) by a
vote of a majority (as defined in the 1940 Act) of the Fund's outstanding
voting securities, provided that in either event the continuance is also
approved by a majority of the Trustees of the Fund who are not interested
persons (as defined in the 1940 Act) of any party to this Agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. This Agreement is terminable, without penalty, on 60 days'
notice by the Fund's Board of Trustees, by vote of the holders of a
majority of the Fund's Shares, or on 90 days' notice by SBS. This
Agreement will also terminate automatically in the event of its assignment
(as defined in the 1940 Act).
8. Miscellaneous
The Fund recognizes that directors, officers and employees of SBS may
from time to time serve as directors, trustees, officers and employees of
corporations and business trusts (including other investment companies) and
that such other corporations and trusts may include the name "Smith Barney
Shearson" as part of their name, and that SBS or its affiliates may enter
into distribution or other agreements with such other corporations and
trusts. If SBS ceases to act as the distributor of the Shares, the Fund
agrees that, at SBS's request, the Fund's license to use the word ""Smith
Barney Shearson"" will terminate and that the Fund will take all necessary
action to change the name of the Fund to a name not including the words
"Smith Barney Shearson."
9. Limitation of Liability
The Fund and SBS agree that the obligations of the Fund under this
Agreement shall not be binding upon any of the Trustees, shareholders,
nominees, officers, employees or agents, whether past, present or future,
of the Fund, individually, but are binding only upon the assets and
property of the Fund, as provided in the Master Trust Agreement. The
execution and delivery of this Agreement have been authorized by the
Trustees and signed by an authorized officer of the Fund, acting as such,
and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Fund as provided in its Master
Trust Agreement.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance
of this Agreement by signing and returning to us the enclosed copy of this
Agreement.
Very truly yours,
SMITH BARNEY SHEARSON OREGON
MUNICIPALS FUND
By: _________________________________
Title: Chairman of the Board
Accepted:
SMITH BARNEY SHEARSON INC.
By: ___________________________
Authorized Officer
Page: 2
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g\shared\domestic\clients\shearson\funds\ore\distrib09:15 AM
EXHIBIT 8
CUSTODY AGREEMENT
THIS AGREEMENT is made as of May 23, 1994 between SMITH BARNEY
SHEARSON OREGON MUNICIPALS FUND (the "Fund"), a Massachusetts Business
Trust having its principal office and place of business at Two World Trade
Center, New York, New York 10048, and BOSTON SAFE DEPOSIT & TRUST COMPANY
(the "Custodian"), a Massachusetts trust company having its principal place
of business at One Boston Place, Boston, Massachusetts 02108.
W I T N E S S E T H:
That for and in consideration of the mutual premises and convenants
hereinafter set forth, the Fund and the Custodian agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to this
Agreement, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
(a) "Charter" shall mean the Master Trust Agreement of the
Fund dated March 10, 1994 as now in effect and as the same may be amended
from time to time.
(b) "Authorized Person" shall be deemed to include the
President, any Vice President, the Secretary, any Assistant Secretary, the
Treasurer or Assistant Treasurer or any other person, whether or not any
such person is an officer or employee of the Fund, duly authorized by the
Board of Trustees of the Fund to give Oral Instructions and Written
Instructions on behalf of the Fund and listed in a certification in the
form annexed hereto as Appendix A or such other certification as may be
received by the Custodian from time to time.
(c) "Book-Entry System" shall mean the Federal Reserve/
Treasury book-entry system for United States and federal agency securities,
its successor or successors and its nominee or nominees.
(d) "Depository" shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934, as
amended, its successor or successors and its nominee or nominees, in which
the Custodian is specifically authorized by the Fund's Board to make
deposits. The term "Depository" shall further mean and include any other
person to be named in Written Instructions authorized to act as a
depository under the 1940 Act, its successor or successors and its nominee
or nominees.
(e) "Money Market Securities" shall be deemed to include,
without limitation, debt obligations issued or guaranteed as to interest
and principal by the Government of the United States or agencies or
instrumentalities thereof, commercial paper, bank certificates of deposit,
bankers' acceptances and short-term corporate obligations, where the
purchase or sale of such securities normally requires settlement in federal
funds on the same day as such purchase or sale, and repurchase and reverse
repurchase agreements with respect to any of the foregoing types of
securities.
(f) "Oral Instructions" shall mean verbal instructions
actually received by the Custodian from an Authorized Person or a person
reasonably believed by the Custodian to be an Authorized Person.
(g) "Prospectus" shall mean the Fund's current prospectus
relating to the registration of the Fund's Shares under the Securities Act
of 1933, as amended.
(h) "Shares" refers to the Shares of beneficial interest
$.001 par value, as may be issued by the Fund from time to time.
(i) "Security" or Securities" shall be deemed to include
bonds, debentures, notes, stocks, shares, evidences or indebtedness, and
other securities and investments from time to time of the Fund, including
futures contracts and options on futures contracts.
(j) "Transfer Agent" shall mean the person which performs the
transfer agent, dividend disbursing agent and shareholder servicing agent
functions for the Fund.
(k) "Written Instructions" shall mean a written communication
actually received by the Custodian from an Authorized Person or from a
person reasonably believed by the Custodian to be an Authorized Person by
telex or facsimile machine or any other such system whereby the receiver of
such communication is able to verify through codes or otherwise with a
reasonable degree of certainty the authenticity of the sender of such
communication.
(l) The "1940 Act" refers to the Investment Company Act of
1940, and the rules and regulations thereunder, all as amended from time to
time.
2. Appointment of Custodian.
(a) The Fund hereby constitutes and appoints the Custodian as
custodian of all of the Securities and monies at any time owned by or in
the possession of the Fund during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such
custodian for the Fund and agrees to perform the duties thereof as
hereinafter set forth.
3. Compensation.
(a) The Fund will compensate the Custodian for its services
rendered under this Agreement in accordance with the fees set forth in the
Fee Agreement, annexed hereto as Schedule A and incorporated herein (the
"Fee Agreement") Such Fee Agreement does not include out-of-pocket
disbursements of the Custodian for which the Custodian shall be entitled to
bill separately. Out-of-pocket disbursements shall include, but shall not
be limited to, the items specified in the Schedule of Out-of-Pocket charges
annexed hereto as Schedule B and incorporated herein (the "Schedule"),
which Schedule may be modified by the Custodian upon not less than sixty
(60) days' prior written notice to the Fund.
(b) Any compensation agreed to hereunder may be adjusted from
time to time by attaching to Schedule A of this Agreement a revised Fee
Schedule, dated and signed by an Authorized Officer of each party hereto.
(c) The Custodian will bill the Fund in respect of out-of-
pocket expenses as soon as practicable after the end of each calendar
month, and said billings will be detailed in accordance with the Schedule.
The Fund will promptly pay to the Custodian the amount of such billing.
4. Custody of Cash and Securities.
(a) Receipt and Holding of Assets. The Fund will deliver or
cause to be delivered to the Custodian all Securities and monies owned by
it, including cash received from the issuance of its Shares, at any time
during the period of this Agreement. The Custodian will not be responsible
for such Securities and monies until actually received by it. The Fund
shall instruct the Custodian from time to time in its sole discretion, by
means of Written Instructions, or in connection with the purchase or sale
of Money Market Securities, by means of Oral Instructions or Written
Instructions, as to the manner in which and in what amounts Securities and
monies of the Fund are to be deposited on behalf of the Fund in the Book-
Entry System or a Depository and specifically allocated on the books of the
Custodian to the Fund' provided, however, that prior to the initial deposit
of Securities of the Fund in the Book-Entry System or the Depository, the
Custodian shall have received Written Instructions specifically approving
such deposit by the Custodian in the Book-Entry System or a Depository.
(b) Accounts and Disbursements. The Custodian shall
establish and maintain a separate account for the Fund and shall credit to
the separate account of the Fund all monies received by it for the account
of such Fund and shall disburse the same only:
(i) In payment for Securities purchased for the Fund,
as provided in Section 5 hereof;
(ii) For the payment of any expense or liability
incurred by the Fund, including but not limited to the following payments
for the account of the Fund: interest, taxes, management, accounting,
transfer agenda and legal fees and operating expenses of the Fund whether
or not such expenses are, in whole or in part, to be capitalized or treated
as deferred expenses;
(iii) For payment of the amount of dividends received in
respect of Securities sold short;
(iv) In payment of dividends or distributions with
respect to the Shares of the Fund, as provided in Section 7 hereof;
(v) In payment of original issue or other taxes with
respect to the Shares of the Fund;
(vi) In payment for Shares which have been repurchased
by the Fund, in the open market or otherwise;
(vii) Pursuant to Written Instructions or, with respect
to Money Market Securities, Oral Instructions or Written Instructions,
setting forth the name and address of the person to whom the payment is to
be made, the amount to be paid and the purpose for which payment is to be
made; or
(viii) In payment of fees and in reimbursement of
the expenses and liabilities of the Custodian attributable to the Fund, as
provided in Section 3(a) and Section 10(h) hereof.
(c) Confirmation and Statements. Promptly after the
close of business on each day, the Custodian shall furnish the Fund with
confirmation and a summary of all transfers to or from the account of the
Fund during said day. Where securities purchased by the Fund are in a
tangible bulk of securities registered in the name of the Custodian (or its
nominee) or shown on the Custodian's account on the books of the Depository
or the Book-Entry System, the Custodian shall by book entry or otherwise
identify the quantity of those securities belonging to the Fund. At least
monthly, the Custodian shall furnish the Fund with a detailed statement of
the Securities and monies held for the Fund under this Agreement.
(d) Registration of Securities and Physical Separation.
All Securities held for the Fund which are issued or issuable only in
bearer form, except such Securities as are held in the Book-Entry System,
shall be held by the Custodian in that form; all other Securities held for
the Fund may be registered in the name of the Fund, in the name of any duly
appointed registered nominee of the Custodian as the Custodian may from
time to time determine, or in the name of the Book-Entry System or a
Depository or their successor or successors, or their nominee or nominees.
The Fund reserves the right to instruct the Custodian as to the method of
registration and safekeeping of the Securities of the Fund. The Fund
agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to register in
the name of its registered nominee or in the name of the Book-Entry System
or a Depository, any Securities which it may hold for the account of the
Fund and which may from time to time be registered in the name of the Fund.
The Custodian shall hold all such Securities which are not held in the
Book-Entry System or the Depository in a separate account for the Fund in
the name of the Fund physically segregated at all times from those of any
other person or persons.
(e) Collection of Income and Other Matters Affecting
Securities. Unless otherwise instructed to the contrary by Written
Instructions, the Custodian by itself, or through the use of the Book-Entry
System or the Depository with respect to Securities therein deposited,
shall with respect to all Securities held for the Fund in accordance with
this Agreement:
(i) Collect on a timely basis all income due or
payable;
(ii) Present on a timely basis for payment and
collect the amount payable upon all Securities which may mature or be
called redeemed or retired, or otherwise become payable. Notwithstanding
the foregoing, the Custodian shall have no responsibility to the Fund for
monitoring or ascertaining any call, redemption or retirement dates with
respect to any put bonds which are owned by the Fund and held by the
Custodian or its nominee, nor shall the Custodian have any responsibility
or liability to the Fund for any loss by the Fund for any missed payment or
other default resulting therefrom; unless the Custodian received timely
notification from the Fund specifying the time, place and manner for the
presentment of any such put bond owned by the Fund and held by the
Custodian or its nominee. The Custodian shall not be responsible and
assumes no liability to the Fund for the accuracy or completeness of any
notification the Custodian may furnish to the Fund with respect to put
bonds;
(iii) Surrender Securities in temporary form
for definitive Securities;
(iv) Execute any necessary declarations or
certificates of ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in effect; and
(v) Hold directly, or through the Book-
Entry System or a Depository with respect to Securities therein deposited,
for the account of the Fund all rights and similar Securities issued with
respect to any Securities held by the Custodian hereunder for the Fund.
(f) Delivery of Securities and Evidence of Authority.
Upon receipt of Written Instructions and not otherwise, except for
subparagraphs (v) - (vii) below which may be effected by Oral or Written
Instructions, the Custodian, directly or through the use of the Book-Entry
System or a Depository, shall:
(i) Execute and deliver or cause to be
executed and delivered to such persons as may be designated in such Written
Instructions proxies, consents authorizations and any other instruments
whereby the authority of the Fund as owner of any Securities may be
exercised;
(ii) Deliver or cause to be delivered any
Securities held for the Fund in exchange for other Securities or cash
issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any corporation,
or the exercise of any conversion privilege;
(iii) Deliver or cause to be delivered any
Securities held for the Fund to any protective committee, reorganization
committee or other person in connection with the reorganization,
refinancing, merger, consolidation or recapitalization or sale of assets of
any corporation, and receive and hold under the terms of this Agreement in
the separate account for the Fund such certificates of deposit, interim
receipts or other instruments or documents as may be issued to it to
evidence such delivery;
(iv) Make or cause to be made such transfers
or exchanges of the assets specifically allocated to the separate account
of the Fund and take such other steps as shall be stated in said Written
Instructions to be for the purpose of effectuating any duly authorized plan
of liquidation, reorganization, merger, consolidation or recapitalization
of the Fund;
(v) Deliver Securities owned by the Fund
upon sale of such Securities for the account of the Fund pursuant to
Section 5;
(vi) Deliver Securities owned by the Fund
upon the receipt of payment in connection with any repurchase agreement
related to such Securities entered into by the Fund;
(vii) Deliver Securities owned by the Fund to
the issuer thereof or its agent when such Securities are called, redeemed,
retired or otherwise become payable; provided, however, that in any such
case the cash or other consideration is to be delivered to the Custodian.
Notwithstanding the foregoing, the Custodian shall have no responsibility
to the Fund for monitoring or ascertaining any call, redemption or
retirement dates with respect to any put bonds which are owned by the Fund
and held by the Custodian or its nominee, nor shall the Custodian have any
responsibility or liability to the Fund for any loss by the Fund for any
missed payment or other default resulting therefrom unless the Custodian
received timely notification from the Fund specifying the time, place and
manner for the presentment of any such put bond owned by the Fund and held
by the Custodian or its nominee. The Custodian shall not be responsible
and assumes no liability to the Fund for the accuracy or completeness of
any notification the Custodian may furnish to the Fund with respect to put
bonds;
(viii) Deliver Securities owned by the
Fund to the issuer thereof, or its agent, for transfer into the name of the
Fund or into the name of any nominee or nominees of the Custodian or into
the name or nominee name of any agent appointed pursuant to Section 10(f)
or into the name or nominee name of any sub-custodian appointed pursuant to
Section 10(e); or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate face amount
or number of units; provided, however, that in any such case, the new
Securities are to be delivered to the Custodian;
(ix) Deliver Securities owned by the Fund to
the broker for examination in accordance with "street delivery" custom;
(x) Deliver Securities owned by the Fund in
accordance with the provisions of any agreement among the Fund, the
Custodian and a broker-dealer registered national securities exchange, or
of any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund;
(xi) Deliver Securities owned by Fund in
accordance with the provisions of any agreement among the Fund, the
Custodian, and a futures commission merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in connection
with transactions by the Fund;
(xii) Deliver Securities owned by the Fund
for delivery in connection with any loans of Securities made by the Fund
but only against receipt of adequate collateral as agreed upon from time to
time by the Custodian and the Fund which may be in the form of cash or
obligations issued by the United States government, its agencies or
instrumentalities;
(xiii) Deliver Securities owned by the
Fund for delivery as security in connection with any borrowings by the Fund
requiring a pledge of Fund assets, but only against receipt of amounts
borrowed;
(xiv) Deliver Securities owned by the Fund
upon receipt of instructions from the Fund for delivery to the Transfer
Agent or to the holders of Shares in connection with distributions in kind,
as may be described from time to time in the Fund's Prospectus, in
satisfaction of requests by holders of Shares for redemption; and
(xv) Deliver Securities owned by the Fund
for any other proper business purpose, but only upon receipt of, in
addition to Written Instructions, a certified copy of a resolution of the
Board of Directors signed by an Authorized Person and certified by the
Secretary of the Fund specifying the Securities to be delivered, setting
forth the purpose for which such delivery is to be made, declaring such
purpose to be a proper business purpose, and naming the person or persons
to whom delivery of such Securities shall be made.
(g) Endorsement and Collection of Checks, Etc. The
Custodian is hereby authorized to endorse and collect all checks, drafts or
other orders for the payment of money received by the Custodian for the
account of the Fund; provided, however, that the Custodian shall not be
liable for any money, whether or not represented by any check, draft, or
other instrument for the payment of money, received by it on behalf of the
Fund until the Custodian actually receives and collects such money directly
or by the final crediting of the account representing the Fund's interest
in the Book-Entry System or the Depository.
5. Purchase and Sale of Investments of the Fund.
(a) Promptly after each purchase of Securities for the
Fund, the Fund shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, Written
Instructions and (ii) with respect to each purchase of Money Market
Securities, either Written Instructions or Oral Instructions, in either
case specifying with respect to each purchase: (1) the name of the issuer
and the title of the Securities; (2) the number of shares or the principal
amount purchased and accrued interest, if any; (3) the date of purchase and
settlement; (4) the purchase price per unit; (5) the total amount payable
upon such purchase; (6) the name of the person from whom or the broker
through whom the purchase was made, if any; (7) whether or not such
purchase is to be settled through the Book-Entry System or the Depository;
and (8) whether the Securities purchased are to be deposited in the Book-
Entry System or the Depository. The Custodian shall receive the Securities
purchased by or for the Fund and upon receipt of such Securities shall pay
out of the monies held for the account of the Fund the total amount payable
upon such purchase, provided that the same conforms to the total amount
payable as set forth in such Written Instructions or Oral Instructions.
(b) Promptly after each sale of Securities of the
Fund, the Fund shall deliver to the Custodian (i) with respect to each sale
of Securities which are not Money Market Securities, Written Instructions,
and (ii) with respect to each sale of Money Market Securities, either
Written or Oral Instructions, in either case specifying with respect to
such sale: (1) the name of the issuer and the title of the Securities; (2)
the number of shares or principal amount sold, and accrued interest, if
any; (3) the date of sale; (4) the sale price per unit; (5) the total
amount payable to the Fund upon such sale; (6) the name of the broker
through whom or the person to whom the sale was made; and (7) whether or
not such sale is to be settled through the Book-Entry System or the
Depository. The Custodian shall deliver or cause to be delivered the
Securities to the broker or other person designated by the Fund upon
receipt of the total amount payable to the Fund upon such receipt of the
total amount payable to the Fund upon such sale, provided that the same
conforms to the total amount payable to the Fund as set forth in such
Written or such Oral Instructions. Subject to the foregoing, the Custodian
may accept payment in such form as shall be satisfactory to it, and may
deliver Securities and arrange for payment in accordance with the customs
prevailing among dealers in securities.
6. Lending of Securities.
(a) Within 24 hours after each loan of Securities by
the Fund as disclosed in its Prospectus, the Fund shall deliver or cause to
be delivered to the Custodian Written Instructions specifying with respect
to each such loan: (1) the name of the issuer and the title of the
Securities; (2) the number of shares or the principal amount loaned; (3)
the date of loan and delivery; (4) the total amount to be delivered to the
Custodian, including the amount of cash collateral and the premium, if any,
separately identified; (5) the name of the broker, dealer or financial
institution to which the loan was made; and (6) whether the Securities
loaned are to be delivered through the Book-Entry System or the Depository.
Promptly after each termination of a loan of
Securities, the Fund shall deliver to the Custodian Written Instructions
specifying with respect to each such loan termination and return of
securities: (1) the name of the issuer and the title of the Securities to
be returned; (2) the number of shares or the principal amount to be
returned; (3) the date of termination; (4) the total amount to be delivered
by the Custodian (including the cash collateral for such Securities minus
any offsetting credits as described in said Written Instructions); (5) the
name of the broker, dealer or financial institution from which the
Securities will be returned; and (6) whether such return is to be effected
through the Book-Entry System or the Depository. The Custodian shall
receive all Securities returned from the broker, dealer or financial
institution thereof shall pay, out of the monies held for the account of
the Fund, the total amount payable upon such return of Securities as set
forth in the Written Instructions. Securities returned to the Custodian
shall be held as they were prior to such loan.
7. Payment of Dividends or Distributions.
(a) The Fund shall furnish to the Custodian a copy of
the resolution of the Board of Trustees of the Fund certified by the
Secretary or an Assistant Secretary (i) authorizing the declaration of
dividends or distributions with respect to the Fund on a specified periodic
basis and authorizing the Custodian to rely on Oral or Written Instructions
specifying the date of the declaration of such dividend or distribution,
the date of payment thereof, the record date as of which shareholders
entitled to payment shall be determined and the amount payable per share to
the shareholders of record as of the record date, or (ii) setting forth the
date of declaration of any dividend or distribution by the Fund, the date
of payment thereof, the record date as of which shareholders entitled to
payment shall be determined and the amount payable per share to the
shareholders of record as of the record date.
(b) Prior to the payment date specified in such
resolution, Oral Instructions or Written Instructions, as the case may be,
the Fund shall deliver to the Custodian Oral Instructions or Written
Instructions specifying the total amount payable to the Transfer Agent.
(c) Upon the payment date specified in such resolution,
Oral Instructions or Written Instructions, as the case may be, the
Custodian shall pay to the Transfer Agent out of monies specifically
allocated to and held for the account of the Fund to total amount payable
to the Transfer Agent.
8. Indebtedness.
(a) The Fund will cause to be delivered to the
Custodian by any bank (excluding the Custodian) from which the Fund borrows
money using Securities as collateral for such borrowings, a notice or
undertaking in the form currently employed by any such bank setting forth
the amount which such bank will loan to the Fund against delivery of a
stated amount of collateral. The Fund shall promptly deliver to the
Custodian Written or Oral Instructions stating with respect to each such
borrowing: (1) the name of the bank; (2) the amount and terms of the
borrowing, which may be set forth by incorporating by reference an attached
promissory note, duly endorsed by the Fund, or other loan agreement; (3)
the time and date, if known, on which the loan is to be entered into (the
"Borrowing Date") (4) the date on which the loan becomes due and payable;
(5) the total amount payable to the Fund on the Borrowing Date; (6) the
market value of Securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the number of shares or the
principal amount of any particular Securities; (7) whether the Custodian is
to deliver such collateral through the Book-Entry System or the Depository;
and (8) a statement that such loan is in conformance with the 1940 Act and
the Fund's Prospectus.
(b) Upon receipt of the Written or Oral Instructions
referred to in subparagraph (a) above, the Custodian shall deliver on the
Borrowing Date the specified collateral and the executed promissory note,
if any, against delivery by the lending bank of the total amount of the
loan payable, provided that the same conforms to the total amount payable
as set forth in the Written or Oral Instructions. The Custodian may, at
the option of the lending bank by virtue of any promissory note or loan
agreement. The Custodian shall deliver as additional collateral in the
manner directed by the Fund from time to time such Securities as may be
specified in Written or Oral Instructions to collateralize further any
transaction described in this Section 8. The Fund shall cause all
Securities released from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time such return of
collateral as may be tendered to it. In the event that the Fund fails to
specify in Written or Oral Instructions all of the information required by
this Section 8, the Custodian shall not be under any obligation to deliver
any Securities or to seek the return of the collateral; provided, however,
that the Custodian shall promptly notify the Fund of any information
required by this Section 8 and not specified in Written or Oral
Instructions. Collateral returned to the Custodian shall be held hereunder
as it was prior to being used as collateral.
9. Persons Having Access to Assets of the Fund.
(a) No Trustee, employee or agent of the Fund, and no
officer, director, employee or agent of the Fund's investment adviser,
shall have physical access to the assets of the Fund held by the Custodian
or be authorized or permitted to withdraw any investments of the Fund to
any such person. No officer, director, employee or agent of the Custodian
who holds any similar position with the Fund or its investment adviser
shall have access to the assets of the Fund.
(b) Nothing in this Section shall prohibit any officer,
employee or agent of the Fund, or any officer, director, employee or agent
of the Fund's investment adviser, from giving Oral Instructions or Written
Instructions to the Custodian or executing a certificate so long as it does
not result in delivery of or access to assets of the Fund as prohibited by
subparagraph (a) of this Section.
10. Concerning the Custodian.
(a) Standard of Conduct. Except as otherwise provided
herein, neither the Custodian nor its nominee shall be liable for any loss
or damage, including counsel fees, resulting from its action or omission to
act or otherwise, except for any such loss or damage arising out of its own
negligence, bad faith or willful misconduct. The Custodian may, with
respect to questions of law, apply for and obtain the advice and opinion of
counsel to the Fund (at the expense of the Fund) or of its own counsel and
shall be fully protected with respect to anything done or omitted by it in
good faith in conformity with such advice or opinion. The Custodian shall
be liable to the Fund for any loss or damage resulting from the use of the
Book-Entry System or the Depository arising by reason of any negligence,
misfeasance or misconduct on the part of the Custodian or any of its
employees or agents.
(b) Limit of Duties. Without limiting the generality
of the foregoing, the Custodian shall be under no duty or obligation to
inquire into, and shall not be liable for:
(i) The validity of the issue of any Securities
purchased by the Fund, the legality of the purchase thereof, or the
propriety of the amount paid therefor;
(ii) The legality of the sale of any Securities by
the Fund or the propriety of the amount for which the same are sold;
(iii) The legality of the issue or sale of any
Shares, or the sufficiency of the amount to be received therefor;
(iv) The legality of the repurchase of any Shares,
or the propriety of the amount to be paid therefor;
(v) The legality of the declaration or payment of
any dividend or other distribution of the Fund; or
(vi) The legality of any borrowing for temporary
or emergency administrative purposes.
(c) Amounts Due from Transfer Agent. The Custodian
shall not be under any duty or obligation to take action to effect
collection of any amount due to the Fund from the Transfer Agent nor to
take any action to effect payment or distribution by the Transfer Agent of
any amount paid by the Custodian to the Transfer Agent in accordance with
this Agreement.
(d) Collection Where Payment Refused. The Custodian
shall not be under any duty or obligation to take action to effect
collection of any amount, if the Securities upon which such amount is
payable are in default, or if payment is refused after due demand or
presentation, unless and until (i) it shall be directed to take such action
by Written Instructions and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any such action.
(e) Appointment of Sub-Custodians. The Custodian may
appoint one or more qualified institutions, including but not limited to
banking institutions, to act as Depository or Depositories or as Sub-
Custodian or Sub-Custodians of Securities and monies at any time owned by
the Fund, upon terms of which have been mutually agreed upon from time to
time by the Custodian and the Fund. The Custodian shall use reasonable
care in selecting any such Depository and/or Sub-Custodian and shall
oversee the maintenance of any Securities or monies of the Fund by the Sub-
Custodian. In addition, the Custodian may from time to time appoint one or
more of the institutions listed in Appendix C hereto, or such other
institutions as may hereafter by approved by vote of the Trustees of the
Fund, as foreign sub-custodians for the Fund's securities located outside
the United States, Provided that any such institution shall constitute an
"Eligible Foreign Custodian" within the meaning of Rule 17f-5 under the
1940 Act.
The Custodian shall maintain such records as
shall be necessary to identify the assets of the Fund held by any foreign
sub-custodians. The Custodian shall furnish to the Fund such periodic
reports as the Fund shall reasonably request sub-custodian, and shall
furnish to the Fund such notices of transfers of securities, deposits or
other assets to or from the Fund's account by any foreign sub-custodian as
the Fund shall request.
The Custodian shall advise the Fund promptly
if it learns that any foreign agent or sub-custodian no longer constitutes
an "Eligible Foreign Custodian" and of any failure by any foreign sub-
custodian to observe any material term of its appointment.
The Custodian may authorize one or more of
the foreign sub-custodians to use the facilities of one or more foreign
central securities depositories or clearing agencies listed in Appendix D
hereto, or as may hereafter by approved by vote of the Trustees of the
Fund; provided that any such organization shall constitute an "Eligible
Foreign Custodian.
In the event that any foreign sub-custodian
fails to perform any of its obligations under the terms of its appointment,
the Custodian shall use its best efforts to cause such foreign sub-
custodian to perform such obligations. At the written request of the Fund,
the Custodian shall use its best efforts to assert and collect any claim
for liability for any loss or damage incurred by the Fund arising out of
the failure of any such subcustodian to perform such obligations.
(e) Appointment of Agents. The Custodian may at any
time or times in its discretion appoint, and may at any time remove, any
other bank or trust company which is itself qualified under the 1940 Act to
act as a custodian, as its agent to carry out such of the provisions of
this Agreement as the Custodian may from time to time direct.
(g) No Duty to Ascertain Authority. The Custodian
shall not be under any duty or obligation to ascertain whether any
Securities at any time delivered to or held by it for the Fund are such as
may properly be held by the Fund under the provisions of its Charter and
the Prospectus.
(h) Payments to the Custodian. The Custodian may
charge against any money held by it for the account of the Fund any
expenses incurred by the Custodian in the performance of its duties
pursuant to this Agreement with respect to the Fund. The Custodian shall
also be entitled to charge against any money of the Fund held by it the
amount of any loss, damage, liability or expense incurred with respect to
the Fund including counsel fees, for which it shall be entitled to
reimbursement under the provisions of this Agreement.
(i) Reliance on Certificates and Instructions. The
Custodian shall be entitled to rely upon any certificate, notice or other
instrument in writing received by the Custodian and reasonably believed by
the Custodian to be genuine and to be signed by an Authorized Person. The
Custodian shall be entitled to rely upon any Written Instructions or Oral
Instructions actually received by the Custodian pursuant to the applicable
Sections of this Agreement and reasonably believed by the Custodian to be
genuine and to be given an Authorized Person. The Fund agrees to forward
to the Custodian Written Instructions from an Authorized Person confirming
such Oral Instructions in such manner so that such Written Instructions are
received by the Custodian, whether by hand delivery, telex or otherwise, by
the close of business on the same day that such Oral Instructions are given
to the Custodian. The Fund agrees that the fact that such confirming
instructions are not received by the Custodian shall in no way affect the
validity of the transactions or enforceability of the transactions hereby
authorized by the Fund. The Fund agrees that the Custodian shall incur no
liability to the Fund in acting upon Oral Instructions given to the
Custodian hereunder concerning such transactions, provided such
instructions reasonably appear to have been received from a duly Authorized
Person.
11. Records. The Custodian shall create and maintain all
records relating to its activities and obligations under this Agreement in
such a manner as will meet the obligations of the Fund under the 1940 Act,
with particular attention to Section 31 thereof, Rules 31a-1 and 31a-2
thereunder, applicable federal and state tax laws and any law or
administrative rules or procedures which may be applicable to the Fund.
All such records shall be the property of the Fund and shall at all times
during regular business hours of the Custodian be open for inspection by
duly authorized officers, employees or agents of the Fund and employees and
agents of the Securities and Exchange Commission.
12. Opinion of Fund's Independent Accountants. The Custodian
shall take all reasonable action as the Fund may from time to time request,
to obtain from year to year favorable opinions from the Fund's independent
accountants with respect to the activities hereunder in connection with the
preparation of Amendments to the Fund's Registration Statement, and Form N-
SAR or other annual reports to the Securities and Exchange Commission, and
with respect to any other requirements of such Commission.
13. Reports to Fund by Independent Public Accountants. The
Custodian shall provide the Fund with reports by independent public
accountants on the accounting system, internal accounting controls and
procedures for safeguarding Securities, including securities deposited
and/or maintained in a Depository or Book-Entry System, relating to the
services provided by the Custodian under this Agreement.
14. Miscellaneous.
(a) Annexed hereto as Appendix A is a certification
signed by the Secretary or an Assistant Secretary of the Fund setting forth
the names and the signatures of the present Authorized Persons. The Fund
agrees to furnish to the Custodian a new certification in similar form in
the event that any such present Authorized Person ceases to be such an
Authorized Person or in the event that other or additional Authorized
Persons are elected or appointed. Until such new certification shall be
received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon Oral Instructions or signatures of the
present Authorized Persons as set forth in the last delivered
certification.
(b) Annexed hereto as Appendix B is a certification
signed by the secretary or an Assistant Secretary of the Fund setting forth
the names and the signatures of the present officers of the Fund. The Fund
agrees to furnish to the Custodian as new certification in similar form in
the event that any such present officer ceases to be an officer of the Fund
or in the event that other or additional officers are elected or appointed.
Until such new certification shall be received, the Custodian shall be
fully protected in acting under the provisions of this Agreement upon the
signature of the officer as set forth in the last delivered certification.
(c) Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Custodian,
shall be sufficiently given if addressed to the Custodian and mailed or
delivered to it at its offices at 31 St. James Avenue, Boston,
Massachusetts 02116, Attention: Vin Molloy, or at such other place as the
Custodian may from time to time designate in writing.
(d) Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Fund, shall be
sufficiently given if addressed to the Fund and mailed or delivered to it
at Two World Trade Center, New York, New York 10048, Attention:
_______________, or at such other place as the Fund may from time to time
designate in writing.
(e) This Agreement may not be amended or modified in
any manner except by a written agreement executed by both parties with the
same formality as this Agreement.
(f) This Agreement shall extend to and shall be binding
upon the parties hereto and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by the Fund
without the written consent of the Custodian, or by the Custodian without
the written consent of the authorized or approved by a resolution of the
Board of Trustees of the Fund, and any attempted assignment without such
written consent shall be null and void.
(g) This Agreement shall be construed in accordance
with the laws of The Commonwealth of Massachusetts.
(h) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but such
counterparts shall, together, constitute only one agreement.
(i) The captions of this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their contraction or effect.
15. Termination of Agreement
(a) This Agreement shall become effective on the date
hereof and shall remain in force unless terminated pursuant to the
provisions of subparagraph (b) of this Section 15.
(b) This Agreement may be terminated at any time
without payment of any penalty, upon sixty (60) days' written notice, by
vote of the holders of a majority of the outstanding voting securities of
the Fund, by vote of a majority of the Board of Trustees of the Fund, or by
the Custodian. In the event such notice is given by the Fund, it shall be
accompanied by a certified resolution of the Board of Trustees of the Fund,
electing a successor custodian or custodians. In the event such notice is
given by the Custodian, the Fund shall, on or before the termination date,
deliver to the Custodian a certified resolution of the Board of Trustees of
the Fund, designating a successor custodian or custodians. In the absence
of such designation, the Custodian may designate a successor custodian
which shall be qualified to so act under the 1940 Act. If the Fund fails
to designate a successor custodian, upon the delivery by the Custodian of
all Securities and monies then owned by the Fund to a successor custodian
designated by the Custodian, the Custodian shall thereby be relieved of all
duties and responsibilities pursuant to this Agreement.
(c) Upon the date set forth in such notice under this
Section 15, this Agreement shall terminate to the extent specified in such
notice, and the Custodian shall upon receipt of a notice of acceptance by
the successor custodian on that date deliver directly to the successor
custodian all Securities and monies then held by the Custodian, after
deducting all fees, expenses and other amounts for the payment or
reimbursement of which it shall then be entitled.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their duly authorized
officers as of the date first set forth above.
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
By: ________________________________
BOSTON SAFE DEPOSIT & TRUST
COMPANY
By: ________________________________
SCHEDULE A
BOSTON SAFE DEPOSIT AND TRUST COMPANY
CUSTODY FEE SCHEDULE
A. Domestic Safekeeping:
First $50 million
- -.033%
Next $50 million
- -.017%
Next $900 million
- -.010%
Next $ 2 billion
- -.007%
Excess
B. PLUS $5/security holding
charge per month
C. PLUS Transaction charges:
DTC eligible
- -$10
Non-DTC eligible
- -$30
Fed Book Entry
- -$10
Options
- -$25
Futures
- -$ 8
GNMA Paydowns
- -$ 5
Repo - depository
- -$10
-non-deposit
- -$17
Physical - Govt
- -$30
Physical - Corp/Muni
- -$30
Commercial Paper
- -$30
Euro-CDs (London)
- -$30
CUSTODY AGREEMENT
SCHEDULE B
OUT-OF POCKET EXPENSES
I. Out-of-pocket expenses include, but are not limited to, the
following:
Telephone
Wire Charges
Postage and Insurance
Courier Charges
Supplies
Duplicating
Transfer Fees
Sub-Custodian Charges
Single Audit Letters
CUSTODY AGREEMENT
APPENDIX A
I., Christina T. Sydor, Secretary of SMITH BARNEY SHEARSON OREGON
MUNICIPALS FUND (the "Fund"), do hereby certify that, in addition to the
officers of the Fund, the following individuals have been duly authorized
by the Board of Trustees of the Trust in conformity with the Trust's Master
Trust Agreement and By-Laws to give Oral Instructions and Written
Instructions on behalf of the Trust, and the signatures set forth opposite
their respective names are their true and correct signatures:
Name Signature
Diane Leone ____________________________
Vincent Molloy ____________________________
Thomas B. Stiles II ____________________________
Vera Sanducci-Dendy ____________________________
Kenneth A. Egan ____________________________
Thomas P. Rivoir ____________________________
Thomas M. Reynolds ____________________________
Karen Mahoney-Malcomson ____________________________
John Hawke ____________________________
Joseph Benevento ____________________________
____________________________
Christina T. Sydor
Secretary
CUSTODY AGREEMENT
SCHEDULE B
OUT-OF-POCKET EXPENSES
I. Out-of-pocket expenses include, but are not limited to, the
following:
* Telephone
* Wire Charges
* Postage and Insurance
* Courier Charges
* Supplies
* Duplicating
* Transfer Fees
* Sub-Custodian Charges
* Single Audit Letters
CUSTODY AGREEMENT
APPENDIX B
I., Christina T. Sydor, Secretary of SMITH BARNEY SHEARSON OREGON
MUNICIPALS FUND (the "Fund"), do hereby certify that the following
individuals serve in the following positions with the Trust and each
individual has been duly elected or appointed by the Board of Trustees of
the Trust to each such position and qualified therefor in conformity with
the Trust's Master Trust Agreement and By-Laws, and the signature set forth
opposite their respective names are their true and correct signatures:
Name Title Signature
Heath B. McLendon Chief Executive Officer ______________________
Stephen J. Treadway President
______________________
Richard P. Roelofs Executive Vice President
______________________
Peter Coffey Vice President and
______________________
Investment Officer
Daniel S. Malone Investment Officer
______________________
Lewis E. Daidone Treasurer ______________________
Christina T. Sydor Secretary
______________________
Lee D. Augsburger Assistant Secretary
______________________
Mary Bucci Assistant Secretary
______________________
Christina Haage Assistant Treasurer
______________________
______________________
Christina T. Sydor
Secretary
CUSTODY AGREEMENT
APPENDIX C
SUB-CUSTODIANS
Citibank, N.A., Buenoa Aires
National Australia Bank, Ltd., Melbourne
Creditanstalt-Bankverein, Vienna
Generale Bank, Brussels
Citibank, N.A., San Paulo
Canada Trust, Toronto
Citibank, N.A., Santiago
Barclays Bank, PLC, Nicosia
Den Danske Bank, Copenhagen
Kansallis-Osake-Pankki, Helsinki
Banque Paribas, Paris
Berliner Handels und Frankfurter Bank, Frankfurt
National Bank of Greece, Athens
The Hongkong and Shanghai Banking Corp., Hong Kong
The Hongkong and Shanghai Banking Corp., Jakarta
Bank of Ireland, Dublin
Bank Hapoalim B.M., Tel Aviv
Morgan Guarnty Trust Co., Milan
The Mitsubishi Bank, Ltd., Tokyo
Arab Bank, Amman
Banque Generale du Luxembourg, Luxembourg
Standard Chartered Bank, Kuala Lumpur
Citibank, N.A., Mexico City
Pierson, Heldring & Pierson, N.A., Amersterdam
National Nominees, Ltd., Auckland
Christiania Bank, Oslo
The Hongkong and Shanghai Banking Corp., Manila
Banco Totta & Acores S.A., Lisbon
Development Bank of Singapore, Singapore
Standard Chartered Bank, Seoul
Banco Urquijo, Madrid
The Hongkong and Shanghai Banking Corp., Colombo
Svenska Handelsbanken, Stockholm
Morgan Guaranty Trust Co., Zurich
The Hongkong and Shanghai Banking Corp., Bangkok
Citibank, N.A., Istanbul
Boston Safe Deposit and Trust Co., London
Citibank, N.A., Caracus
CUSTODY AGREEMENT
APPENDIX D
CENTRAL SECURITIES
DEPOSITORIES AND CLEARING AGENCIES
Caja de Valores (CDV)
Austraclear Limited
Wertpapiersammelbank (WSB)
Caisse Interprofessionelle de Depots et de Virements de Titres S.A.
(C.I.K.)
Bolsa de Valores de Sao Paulo (BOVESPA)
The Canadian Depository for Securities Ltd. (CDS)
Vaerdipapircentralen (VP-Centralen)
Society Interprofessionelle pour la Conversation des Valeurs Mobilieres
(SICOVAM)
Kassenvereine
Hong Kong Securities Clearing Co. (HSCC)
Bank Hapoalim, Bank Leumi, Bank Mizrahi and Israel Discount Bank
Monte Titoli, S.p.A.
Japan Securities Depository Centre (JASDEC)
Central Depository System (CDS)
Instituto para el Deposito de Valores (INDEVAL)
Netherlands Clearing Institute for Giro Securities Deliveries (NECIGEF)
Verdipapirsentralen (VPS)
Central Depository (Pte) Ltd. (CDP)
Korea Securities Settlement Corp. (KSSC)
Central Depository System (Pvt) Ltd. (CDS)
Vardepapperscentralen (VPC)
The Schweizerrische Effekten-Giro AG (SEGA)
Taurus
Euro-clear Clearance System, Belgium
Cebtrale de Livraison de Valeures Mobilieres (Cedel), Luxembourg
CUSTODY AGREEMENT
APPENDIX E
INDIVIDUALS WITH ACCESS
I, Lynne E. Larkin, Secretary of Boston Safe Deposit and Trust
Company, a Massachusetts corporation (the "Custodian"), do hereby certify
that:
The following twelve named individuals have been duly authorized by
the Executive Committee of the Board of Directors of the Custodian to have
access to the assets of SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND, a
business trust organized under the laws of the Commonwealth of
Massachusetts, held by the Custodian in its capacity as such:
Diane Contardo Cynthia E. Peluso
Marie F. Cullerton Geraldine E. Ryan
Karen D. DeVitto Mary A. Sannella
Joan M. Donahue Daniel J. Smith
Claire J. Lurie Merton E. Thompson, III
Eleanor L. Millan George H. Whitney, III
________________________________
Lynne E. Larkin, Secretary
Boston Safe Deposit and Trust Company
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shared/domestic/clients/bjb/a&rcust.doc
EXHIBIT 9(a)
SMith Barney Shearson OREGON Municipals Fund
ADMINISTRATION AGREEMENT
May 23, 1994
Smith, Barney Advisers, Inc.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
Smith Barney Shearson Oregon Municipals Fund, a business trust
organized under the laws of the Commonwealth of Massachusetts, confirms its
agreement with Mutual Management Corp. ("MMC") as follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified
in its Amended and Restated Master Trust Agreement (the "Master Trust
Agreement"), as amended from time to time, in its Prospectus and Statement
of Additional Information as from time to time in effect, and in such
manner and to the extent as may from time to time be approved by the Board
of Trustees of the Fund. Copies of the Fund's Prospectus, Statement of
Additional Information and the Master Trust Agreement have been submitted
to MMC. The Fund employs Greenwich Street Advisors (the "Adviser") as its
investment adviser and desires to employ and hereby appoints MMC as its
administrator. MMC accepts this appointment and agrees to furnish services
for the compensation set forth below.
2. Services as Administrator
Subject to the supervision and direction of the Board of Trustees of
the Fund, MMC will (a) assist in supervising all aspects of the Fund's
operations except those performed by the Fund's Adviser under its
investment advisory agreement; (b) assist in the execution of cash
management decisions made by the Fund's Adviser(s) pursuant to instructions
from Fund's Adviser(s); (c) furnish such statistical or other factual
information, advice regarding economic factors and trends and advice as to
occasional transactions in specific securities (but without generally
furnishing advice or making recommendations regarding the purchase or sale
of securities) as may be requested by the Fund's Adviser(s) in connection
with the selection of cash equivalent investments as may be requested from
time to time by the Fund's Adviser(s); (d) supply the Fund with office
facilities (which may be MMC' own offices) statistical and research data,
data processing services, clerical, accounting and bookkeeping services,
including but not limited to, the calculation of net asset value of shares
of the Fund, internal auditing and legal services, internal executive and
administrative services, and stationary and office supplies; and (e)
prepare reports to the shareholders of the Fund, tax returns and reports to
and filings with the Securities and Exchange Commission and state Blue Sky
authorities.
3. Compensation
In consideration of services rendered pursuant to this Agreement, the
Fund will pay MMC on the first business day of each month a fee for the
previous month at an annual rate of .20% of the Fund's average daily net
assets up to $500 million and .18% of the value of its daily net assets in
excess of $500 million. Upon any termination of this Agreement before the
end of any month, the fee for such part of the month shall be prorated
according to the proportion which such period bears to the full monthly
period and shall be payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to MMC, the value of the Fund's
net assets shall be computed at the times and in the manner specified in
the Prospectus and Statement of Additional Information as from time to time
in effect.
4. Expenses
MMC will bear all expenses in connection with the performance of its
services under this Agreement. The Fund will bear certain other expenses
to be incurred in its operation, including: taxes, interest, brokerage fees
and commissions, if any; fees of Trustees of the Fund who are not officers,
directors, or employees of the Adviser or MMC; Securities and Exchange
Commission fees and state Blue Sky qualification fees; charges of
custodians and transfer and dividend disbursing agents; certain insurance
premiums; outside auditing and legal expenses, costs of maintenance of
corporate existence; costs attributable to investor services, including
without limitation, telephone and personnel expenses; costs of preparing
and printing prospectuses and statement of additional information for
regulatory purposes and for distribution to existing shareholders; costs of
shareholders' reports and meetings, and meetings of the officers or Board
of Trustees of the Fund; and any extraordinary expenses.
5. Reimbursement to the Fund
If in any fiscal year, the aggregate expenses of the Fund (including
fees pursuant to this Agreement and the Fund's investment advisory
agreement, but excluding interest, taxes, brokerage and, if permitted by
state securities commissions, extraordinary expenses) exceed the expense
limitations of any state having jurisdiction over the Fund, MMC will
reimburse the Fund for that excess expense to the extent required by state
law in the same proportion as its respective fees bear to the combined fees
for investment advice and administration. The expense reimbursement
obligation of MMC will be limited to the amount of fees hereunder. Such
expense reimbursement, if any, will be estimated, reconciled and paid on a
monthly basis.
6. Standard of Care
MMC shall exercise its best judgment in rendering the services listed
in paragraph 2 above. MMC shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates provided that nothing in this
Agreement shall be deemed to protect or purport to protect MMC against
liability to the Fund or to its shareholders to which MMC would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or by reason of MMC' reckless
disregard of its obligations and duties under this Agreement.
7. Term of Agreement
This Agreement shall continue automatically (unless terminated as
provided herein) for successive annual periods provided that such
continuance is specifically approved at least annually by the Board of
Trustees of the Fund including a majority of the Board of Trustees who are
not "interested persons" (as defined in the Investment Company Act of 1940,
as amended) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting such approval. This Agreement is
terminable, without penalty, on 60 days' written notice, by the Board of
Trustees of the Fund or by vote of holders of a majority of the Fund's
shares, or upon 90 days' written notice, by MMC.
8. Service to Other Companies or Accounts
The Fund understands that MMC now acts, will continue to act and may
act in the future as administrator to one or more other investment
companies, and the Fund has no objection to MMC' so acting. The Fund
understands that the persons employed by MMC to assist in the performance
of MMC' duties hereunder will not devote their full time to such service
and nothing contained herein shall be deemed to limit or restrict the right
of MMC or any affiliate of MMC to engage in and devote time and attention
to other businesses or to render services of whatever kind or nature.
9. Filing of Trust Agreement
The Trust represents that a copy of its Amended and Restated Master
Trust Agreement, dated November 5, 1992, together with all amendments
thereto, is on file with the Secretary of the Commonwealth of Massachusetts
and with the Boston City Clerk.
10. Limitation of Liability
This Fund and MMC agree that the obligations of the Fund under this
Agreement shall not be binding upon any of the Trustees, shareholders,
nominees, officers, employees or agents, whether past, present or future,
of the Fund individually, but are binding only upon the assets and property
of the Fund, as provided in the Master Trust Agreement. The execution and
delivery of this Agreement have been authorized by the Trustees and the
sole shareholder of the Fund, and signed by an authorized officer of the
Fund, acting as such, and neither such authorization by such Trustees and
shareholder nor such execution and delivery by such officer shall be deemed
to have been made by any of them individually or to impose any liability on
any of them personally, but shall bind only the assets and property of the
Fund as provided in the Master Trust Agreement.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed
copy hereof.
Very truly yours,
Smith Barney Shearson
Oregon Municipals Fund
By:
Title:
Accepted:
Mutual Management Corp.
By:
Title:
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EXHIBIT 9(b)
SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
SUB-ADMINISTRATION AGREEMENT
May 23, 1994
The Boston Company Advisors, Inc.
One Exchange Place
Boston, MA 02210
Dear Sirs:
Smith Barney Shearson Oregon Municipals Fund (the "Fund"), a
business trust organized under the laws of the Commonwealth of
Massachusetts and Smith, Barney Advisers, Inc. ("SBA") confirm their
agreement with The Boston Company Advisors, Inc. ("Boston Advisors") as
follows:
1. Investment Description; Appointment
The Fund desires to employ its capital by investing and
reinvesting in investments of the kind and in accordance with the
limitations specified in its Master Trust Agreement dated March 10, 1994,
as amended from time to time (the "Master Trust Agreement"), in its
Prospectus and Statement of Additional Information as from time to time in
effect, and in such manner and to such extent as may from time to time be
approved by the Board of Trustees of the Fund (the "Board"). Copies of the
Fund's Prospectus, Statement of Additional Information and Master Trust
Agreement have been or will be submitted to you. The Fund employs SBA as
its administrator, and the Fund and SBA desire to employ and hereby appoint
Boston Advisors as the Fund's sub-administrator. Boston Advisors accepts
this appointment and agrees to furnish the services to the Fund, for the
compensation set forth below, under the general supervision of SBA.
2. Services as Sub-Administrator
Subject to the supervision and direction of the Board and SBA,
Boston Advisors will: (a) assist in supervising all aspects of the Fund's
operations except those performed by the Fund's investment adviser under
the Fund's investment advisory agreement; (b) supply the Fund with office
facilities (which may be in Boston Advisor's own offices), statistical and
research data, data processing services, clerical, accounting and
bookkeeping services, including, but not limited to, the calculation of (i)
the net asset value of shares of the Fund, (ii) applicable contingent
deferred sales charges and similar fees and changes and (iii) distribution
fees, internal auditing and legal services, internal executive and
administrative services, and stationery and office supplies; and (c)
prepare reports to shareholders of the Fund, tax returns and reports to and
filings with the Securities and Exchange Commission (the "SEC") and state
blue sky authorities.
3. Compensation
In consideration of services rendered pursuant to this
Agreement, SBA will pay Boston Advisors on the first business day of each
month a fee for the previous month calculated in accordance with the terms
set forth in Appendix B, and as agreed to from time to time by the Fund,
SBA and Boston Advisors. Upon any termination of this Agreement before the
end of any month, the fee for such part of a month shall be prorated
according to the proportion which such period bears to the full monthly
period and shall be payable upon the date of termination of this Agreement.
For the purpose of determining fees payable to Boston Advisors, the value
of the Fund's net assets shall be computed at the times and in the manner
specified in the Fund's Prospectus and Statement of Additional Information
as from time to time in effect.
4. Expenses
Boston Advisors will bear all expenses in connection with the
performance of its services under this Agreement. The Fund will bear
certain other expenses to be incurred in its operation, including: taxes,
interest, brokerage fees and commissions, if any; fees of the Board members
of the Fund who are not officers, directors or employees of Smith Barney
Shearson Inc., Boston Advisors of their affiliates; SEC fees and state blue
sky qualification fees; charges of custodians and transfer and dividend
disbursing agents; the Fund's and its Board members' proportionate share of
insurance premiums, professional association dues and/or assessments;
outside auditing and legal expenses; costs of maintaining the Fund's
existence; costs attributable to investor services, including, without
limitation, telephone and personnel expenses; costs of preparing and
printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders; costs of
shareholders' reports and meetings of the officers or Board and any
extraordinary expenses. In addition, the Fund will pay all distribution
fees pursuant to a Distribution Plan adopted under Rule 12b-1 of the
Investment Company Act of 1940, as amended (the "1940 Act").
5. Reimbursement of the Fund
If in any fiscal year the aggregate expenses of the Fund
(including fees pursuant to this Agreement and the Fund's investment
advisory agreement(s) and administration agreement, but excluding
distribution fees, interest, taxes, brokerage and, if permitted by state
securities commissions, extraordinary expenses) exceed the expense
limitations of any state having jurisdiction over the Fund, Boston Advisory
will reimburse the Fund for that excess expense to the extent required by
state law in the same proportion as its respective fees bear to the
combined fees for investment advice and administration. The expense
reimbursement obligation of Boston Advisors will be limited to the amount
of its fees hereunder. Such expense reimbursement, if any, will be
estimated, reconciled and paid on a monthly basis.
6. Standard of Care
Boston Advisors shall exercise its best judgment in rendering
the services listed in paragraph 2 above. Boston Advisors shall not be
liable for any error of judgment or mistake of law or for any loss suffered
by the Fund in connection with the matters to which this Agreement
relates, provided that nothing herein shall be deemed to protect or purport
to protect Boston Advisors against liability to the Fund or to its
shareholders to which Boston Advisors would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of Boston Advisor's reckless
disregard of its obligations and duties under this Agreement.
7. Term of Agreement
This agreement shall continue automatically for successive
annual periods, provided that it may be terminated by 90 days' written
notice to the other parties by any of the Fund, SBA or Boston Advisors.
This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns, provided, however,
that this agreement may not be assigned, transferred or amended without the
written consent of all the parties hereto.
8. Service to Other Companies or Accounts
The Fund understands that Boston Advisors now acts, will
continue to act and may act in the future as administrator to one or more
other investment companies, and the Fund has no objection to Boston
Advisors so acting. In addition, the Fund understands that the persons
employed by Boston Advisors to assist in the performance of its duties
hereunder may or may not devote their full time to such service and nothing
contained herein shall be deemed to limit or restrict the right of Boston
Advisors or its affiliates to engage in and devote time and attention to
other businesses or to render services of whatever kind of nature.
9. Indemnification
SBA agrees to indemnify Boston Advisors and its officers,
directors, employees, affiliates, controlling persons and agents
("indemnitees") to the extent that indemnification is available from the
Fund, and Boston Advisors agrees to indemnify SBA and its indemnitees,
against any loss, claim, expenses or cost of any kind (including reasonable
attorney's fees) resulting or arising in connection with this Agreement or
from the performance or failure to perform any act hereunder, provided that
not such indemnification shall be available if the indemnitee violated the
standard of care in paragraph 6 above. This indemnification shall be
limited by the 1940 Act, and relevant state law. Each indemnitee shall be
entitled to advancement of its expenses in accordance with the requirements
of the 1940 Act and the rules, regulations and interpretations thereof as
in effect from time to time.
10. Limitations of Liability
The Fund, SBA and Boston Advisors agree that the obligations of
the Fund under this Agreement shall not be binding upon any of the Board
members, shareholders, nominees, officers, employees or agents, whether
past, present or future, of the Fund individually, but are binding only
upon the assets and property of the Fund, as provided in the Master Trust
Agreement and Bylaws.
The execution and delivery of this Agreement has been duly authorized by
the Fund, SBA and Boston Advisors, and signed by an authorized officer of
each, acting as such. Neither the authorization by the Board Members of
the Fund, nor the execution and delivery by the officer of the Fund shall
be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the assets and
property of the Fund as provided in the Master Trust Agreement.
If the foregoing is in accordance with your understanding,
kindly indicate your acceptance hereof by signing and returning to us the
enclosed copy hereof.
Very truly yours,
Smith Barney Shearson
Oregon Municipals Fund
By:________________
Title:
Smith, Barney Advisers, Inc.
By:_________________
Title:
Accepted:
The Boston Company Advisors, Inc.
By:_________________
Title
Appendix A
ADMINISTRATIVE SERVICES
Fund Accounting. Fund accounting services involve comprehensive
accrual-based recordkeeping and management information. They include
maintaining a fund's books and records in accordance with the Investment
Company Act of 1940, as amended (the "1940 Act" ), net asset value
calculation, daily dividend calculation, tax accounting and portfolio
accounting.
The designated fund accountants interact with the Fund's
custodian, transfer agent and investment adviser daily. As required,
the responsibilities of each fund accountant may include:
- Cash Reconciliation - Reconcile prior day's ending cash
balance per custodian's records and the accounting system to the prior
day's ending cash balance per fund accounting's cash availability
report;
- Cash Availability - Combine all activity affecting the
Fund's cash account and produce a net cash amount available for
investment;
- Formal Reconciliation - Reconcile system generated reports
to prior day's calculations of interest, dividends, amortization,
accretion, distributions, capital stock and net assets;
- Trade Processing - Upon receipt of instructions from the
investment adviser review, record and transmit buys and sells to the
custodian;
- Journal Entries - Input entries to the accounting system
reflecting shareholder activity and Fund expense accruals;
- Reconcile and Calculate N.O.A. (net other assets) - Compile
all activity affecting asset and liability accounts other than
investment account;
- Calculate Net Income, Mil Rate and Yield for Daily
Distribution
Funds - Calculate income on purchases and sales, calculate
change in income due to variable rate change; combine all daily income
less expenses to arrive at net income; calculate mil rate and yields (1
day, 7 day and 30 day);
- Mini-Cycle (except for Money Market Funds) - Review intra
day trial balance and reports, review trial balance N.O.A.;
- Holdings Reconciliation - Reconcile the portfolio holdings
per the system to custodian reports;
- Pricing - Determine N.A.V. for the Fund using market value
of all securities and currencies (plus N.O.A.), divided by the shares
outstanding, and investigate securities with significant price changes
(over 5%);
- Money Market Fund Pricing - Monitor valuation for compliance
with Rule 2a-7;
- System Check-Back - Verify the change in market value of
securities which saw trading activity per the system;
- Net Asset Value Reconciliation - Identify the impact of
current day's Fund activity on a per share basis;
- Reporting of Price to NASDAQ - 5:30 P.M. is the final
deadline for Fund prices being reported to the newspaper;
- Reporting of Price to Transfer Agent - N.A.V.s are reported
to transfer agent upon total completion of above activities.
In addition, fund accounting personnel: communicate corporate
actions of portfolio holdings to portfolio mangers; initiate
notification to custodian procedures on outstanding income receivables;
provide information to the Fund's treasurer for reports to shareholders,
SEC, Board, tax authorities, statistical and performance reporting
companies and the Fund's auditors; interface with Fund's auditors;
prepare monthly reconciliation packages, including expense pro forma;
prepare amortization schedules for premium and discount bonds based on
the effective yield method; prepare vault reconciliation reports to
indicate securities currently "out-for-transfer;" and calculate daily
expenses based on expense ratios supplied by Fund's treasurer.
Financial Administration. The financial administration services made
available to the Fund fall within three main categories: Financial
Reporting; Statistical Reporting; and Publications. The following is a
summary of the services made available to the Fund by the Financial
Administration Division:
Financial Reporting
- Coordinate the preparation and review of the annual, semi-
annual and quarterly portfolio of investments and financial statements
included in the Fund's shareholder reports.
Statistical Reporting
- Total return reporting;
- SEC 30-day yield reporting and 7-day yield reporting (for
money market funds);
- Prepare dividend summary;
- Prepare quarter-end reports;
- Communicate statistical data to the financial media
(Donoghue, Lipper, Morningstar, et al.).
Publications
- Coordinate the printing and mailing process with outside
printers for annual and semi-annual reports, prospectuses, statements of
additional information, proxy statements and special letters or
supplements;
Treasury. The following is a summary of the treasury services available
to the Fund:
- Provide an Assistant Treasurer for the Fund;
- Authorize payment of bills for expenses of the Fund;
- Establish and monitor the rate of expense accruals;
- Prepare financial materials for review by the Fund's Board
(e.g., Rule 2a-7, 10f-3 17a-7 and 17e-1 reports, repurchase agreement
dealer lists, securities transactions);
- Monitor mark-to-market comparisons for money market funds;
- Recommend valuations to be used for securities which are not
readily saleable;
- Function as a liaison with the Fund's outside auditors and
arrange for audits;
- Provide accounting, financial and tax support relating to
portfolio management and any contemplated changes in the fund's
structure or operations;
- Prepare and file forms with the Internal Revenue Service
* Form 8613
* Form 1120-RIC
* Board Members' and Shareholders' 1099s
* Mailings in connection with Section 852 and related
regulations.
Legal and Regulatory Services. The legal and regulatory services made
available to the Fund fall within four main areas: SEC and Public
Disclosure Assistance; Corporate and Secretarial Services; Compliance
Services; and Blue Sky Registration. The following is a summary of the
legal and regulatory services available to the Fund:
SEC and Public Disclosure Assistance
- File annual amendments to the Fund's registration
statements, including updating the prospectus and statement of
additional information where applicable;
- File annual and semi-annual shareholder reports with the
appropriate regulatory agencies;
- Prepare and file proxy statements;
- Provide legal assistance for shareholder communications.
Corporate and Secretarial Services
- Provide an Assistant Secretary for the Fund;
- Maintain general corporate calendar;
- Prepare agenda and background materials for Fund board
meetings, make presentations where appropriate, prepare minutes and
follow-up matters raised at Board meetings;
- Organize, attend and keep minutes of shareholder meetings;
- Maintain Articles of Incorporation or Master Trust
Agreements and By-Laws of the Fund.
Legal Consultation and Business Planning
- Provide general legal advice on matters relating to
portfolio management, Fund operations and any potential changes in the
Fund's investment policies, operations or structure;
- Maintain continuing awareness of significant emerging
regulatory and legislative developments which may affect the Fund,
update the Fund's Board and the investment adviser on those developments
and provide related planning assistance where requested or appropriate;
- Develop or assist in developing guidelines and procedures to
improve overall compliance by the Fund and its various agents;
- Manage Fund litigation matters and assume full
responsibility for the handling of routine fund examinations and
investigations by regulatory agencies.
Compliance Services
The Compliance Department is responsible for preparing compliance
manuals, conducting seminars for fund accounting and advisory personnel
and performing on-going testing of the Fund's portfolio to assist the
Fund's investment adviser in complying with prospectus guidelines and
limitations, 1940 Act requirements and Internal Revenue Code
requirements. The Department may also act as liaison to the SEC during
its routine examinations of the Fund.
State Regulation
The State Regulation Department operates in a fully automated
environment using blue sky registration software development by Price
Waterhouse. In addition to being responsible for the initial and on-
going registration of shares in each state, the Department acts as
liaison between the Fund and state regulators, and monitors and reports
on shares sold and remaining registered shares available for sale.
Schedule B
Fee
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EXHIBIT 9(c)
SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
FORM OF
TRANSFER AGENCY AND REGISTRAR AGREEMENT
AGREEMENT, dated as of May 23, 1994, between Smith Barney Shearson
Oregon Municipals Fund (the "Fund"), a business trust organized under the
laws of Massachusetts and having its principal place of business at Two
World Trade Center, New york, New York 10048 and THE SHAREHOLDER SERVICES
GROUP, INC. (MA) (the "Transfer Agent"), a Massachusetts corporation with
principal offices at One Exchange Place, 53 State Street, Boston,
Massachusetts 02109.
W I T N E S S E T H
That for and in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and the Transfer Agent agree as follows:
1. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, Partnership Agreement, or similar
organizational document as the case may be, of the Fund as the same may be
amended from time to time.
(b) "Authorized Person" shall be deemed to include any person,
whether or not such person is an officer or employee of the Fund, duly
authorized to give Oral Instructions or Written Instructions on behalf of
the Fund as indicated in a certificate furnished to the Transfer Agent
pursuant to Section 4(c) hereof as may be received by the Transfer Agent
from time to time.
(c) "Board of Directors" shall mean the Board of Directors,
Board of Trustees or, if the Fund is a limited partnership, the General
Partner(s) of the Fund, as the case may be.
(d) "Commission" shall mean the Securities and Exchange
Commission.
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time deposit,
or cause to be deposited or held under the name or account of such a
custodian pursuant to a Custodian Agreement.
(f) "Fund" shall mean the entity executing this Agreement, and
if it is a series fund, as such term is used in the 1940 Act, such term
shall mean each series of the Fund hereafter created, except that
appropriate documentation with respect to each series must be presented to
the Transfer Agent before this Agreement shall become effective with
respect to each such series.
(g) "1940 Act" shall mean the Investment Company Act of 1940,
as amended.
(h) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by the Transfer Agent from a person
reasonably believed by the Transfer Agent to be an Authorized Person;
(i) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any
supplements thereto if any, which has become effective under the Securities
Act of 1933 and the 1940 Act.
(j) "Shares" refers collectively to such shares of capital
stock, beneficial interest or limited partnership interests, as the case
may be, of the Fund as may be issued from time to time and, if the Fund is
a closed-end or a series fund, as such terms are used in the 1940 Act any
other classes or series of stock, shares of beneficial interest or limited
partnership interests that may be issued from time to time.
(k) "Shareholder" shall mean a holder of shares of capital
stock, beneficial interest or any other class or series, and also refers to
partners of limited partnerships.
(l) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by the Transfer Agent to be an
Authorized Person and actually received by the Transfer Agent. Written
Instructions shall include manually executed originals and authorized
electronic transmissions, including telefacsimile of a manually executed
original or other process.
2. Appointment of the Transfer Agent. The Fund hereby appoints and
constitutes the Transfer Agent as transfer agent, registrar and dividend
disbursing agent for Shares of the Fund and as shareholder servicing agent
for the Fund. The Transfer Agent accepts such appointments and agrees to
perform the duties hereinafter set forth.
3. Compensation.
(a) The Fund will compensate or cause the Transfer Agent to
be compensated for the performance of its obligations hereunder in
accordance with the fees set forth in the written schedule of fees annexed
hereto as Schedule A and incorporated herein. The Transfer Agent will
transmit an invoice to the Fund as soon as practicable after the end of
each calendar month which will be detailed in accordance with Schedule A,
and the Fund will pay to the Transfer Agent the amount of such invoice
within thirty (30) days after the Fund's receipt of the invoice.
In addition, the Fund agrees to pay, and will be billed
separately for, reasonable out-of-pocket expenses incurred by the Transfer
Agent in the performance of its duties hereunder. Out-of-pocket expenses
shall include, but shall not be limited to, the items specified in the
written schedule of out-of-pocket charges annexed hereto as Schedule B and
incorporated herein. Unspecified out-of-pocket expenses shall be limited to
those out-of-pocket expenses reasonably incurred by the Transfer Agent in
the performance of its obligations hereunder. Reimbursement by the Fund
for expenses incurred by the Transfer Agent in any month shall be made as
soon as practicable but no later than 15 days after the receipt of an
itemized bill from the Transfer Agent.
(b) Any compensation agreed to hereunder may be adjusted from
time to time by attaching to Schedule A, a revised fee schedule executed
and dated by the parties hereto.
4. Documents. In connection with the appointment of the Transfer
Agent the Fund shall deliver or caused to be delivered to the Transfer
Agent the following documents on or before the date this Agreement goes
into effect, but in any case within a reasonable period of time for the
Transfer Agent to prepare to perform its duties hereunder:
(a) If applicable, specimens of the certificates for Shares
of the Fund;
(b) All account application forms and other documents relating
to Shareholder accounts or to any plan, program or service offered by the
Fund;
(c) A signature card bearing the signatures of any officer of
the Fund or other Authorized Person who will sign Written Instructions or
is authorized to give Oral Instructions.
(d) A certified copy of the Articles of Incorporation, as
amended;
(e) A certified copy of the By-laws of the Fund, as amended;
(f) A copy of the resolution of the Board of Directors
authorizing the execution and delivery of this Agreement;
(g) A certified list of Shareholders of the Fund with the
name, address and taxpayer identification number of each Shareholder, and
the number of Shares of the Fund held by each, certificate numbers and
denominations (if any certificates have been issued), lists of any accounts
against which stop transfer orders have been placed, together with the
reasons therefore, and the number of Shares redeemed by the Fund; and
(h) An opinion of counsel for the Fund with respect to the
validity of the Shares and the status of such Shares under the Securities
Act of 1933, as amended.
5. Further Documentation. The Fund will also furnish the Transfer
Agent with copies of the following documents promptly after the same shall
become available:
(a) each resolution of the Board of Directors authorizing the
issuance of Shares;
(b) any registration statements filed on behalf of the Fund
and all pre-effective and post-effective amendments thereto filed with the
Commission;
(c) a certified copy of each amendment to the Articles of
Incorporation or the By-laws of the Fund;
(d) certified copies of each resolution of the Board of
Directors or other authorization designating Authorized Persons; and
(e) such other certificates, documents or opinions as the
Transfer Agent may reasonably request in connection with the performance of
its duties hereunder.
6. Representations of the Fund. The Fund represents to the Transfer
Agent that all outstanding Shares are validly issued, fully paid and non-
assessable. When Shares are hereafter issued in accordance with the terms
of the Fund's Articles of Incorporation and its Prospectus, such Shares
shall be validly issued, fully paid and non-assessable.
7. Distributions Payable in Shares. In the event that the Board of
Directors of the Fund shall declare a distribution payable in Shares, the
Fund shall deliver or cause to be delivered to the Transfer Agent written
notice of such declaration signed on behalf of the Fund by an officer
thereof, upon which the Transfer Agent shall be entitled to rely for all
purposes, certifying (i) the identity of the Shares involved, (ii) the
number of Shares involved, and (iii) that all appropriate action has been
taken.
8. Duties of the Transfer Agent. The Transfer Agent shall be
responsible for administering and/or performing those functions typically
performed by a transfer agent; for acting as service agent in connection
with dividend and distribution functions; and for performing shareholder
account and administrative agent functions in connection with the issuance,
transfer and redemption or repurchase (including coordination with the
Custodian) of Shares in accordance with the terms of the Prospectus and
applicable law. The operating standards and procedures to be followed shall
be determined from time to time by agreement between the Fund and the
Transfer Agent and shall initially be as described in Schedule C attached
hereto. In addition, the Fund shall deliver to the Transfer Agent all
notices issued by the Fund with respect to the Shares in accordance with
and pursuant to the Articles of Incorporation or By-laws of the Fund or as
required by law and shall perform such other specific duties as are set
forth in the Articles of Incorporation including the giving of notice of
any special or annual meetings of shareholders and any other notices
required thereby.
9. Record Keeping and Other Information. The Transfer Agent shall
create and maintain all records required of it pursuant to its duties
hereunder and as set forth in Schedule C in accordance with all applicable
laws, rules and regulations, including records required by Section 31(a) of
the 1940 Act. All records shall be available during regular business hours
for inspection and use by the Fund. Where applicable, such records shall
be maintained by the Transfer Agent for the periods and in the places
required by Rule 31a-2 under the 1940 Act.
Upon reasonable notice by the Fund, the Transfer Agent shall make
available during regular business hours such of its facilities and premises
employed in connection with the performance of its duties under this
Agreement for reasonable visitation by the Fund, or any person retained by
the Fund as may be necessary for the Fund to evaluate the quality of the
services performed by the Transfer Agent pursuant hereto.
10. Other Duties. In addition to the duties set forth in Schedule
C, the Transfer Agent shall perform such other duties and functions, and
shall be paid such amounts therefor, as may from time to time be agreed
upon in writing between the Fund and the Transfer Agent. The compensation
for such other duties and functions shall be reflected in a written
amendment to Schedule A or B and the duties and functions shall be
reflected in an amendment to Schedule C, both dated and signed by
authorized persons of the parties hereto.
11. Reliance by Transfer Agent; Instructions
(a) The Transfer Agent will have no liability when acting upon
Written or Oral Instructions believed to have been executed or orally
communicated by an Authorized Person and will not be held to have any
notice of any change of authority of any person until receipt of a Written
Instruction thereof from the Fund pursuant to Section 4(c). The Transfer
Agent will also have no liability when processing Share certificates which
it reasonably believes to bear the proper manual or facsimile signatures of
the officers of the Fund and the proper countersignature of the Transfer
Agent.
(b) At any time, the Transfer Agent may apply to any
Authorized Person of the Fund for Written Instructions and may seek advice
from legal counsel for the Fund, or its own legal counsel, with respect to
any matter arising in connection with this Agreement, and it shall not be
liable for any action taken or not taken or suffered by it in good faith in
accordance with such Written Instructions or in accordance with the opinion
of counsel for the Fund or for the Transfer Agent. Written Instructions
requested by the Transfer Agent will be provided by the Fund within a
reasonable period of time. In addition, the Transfer Agent, its officers,
agents or employees, shall accept Oral Instructions or Written Instructions
given to them by any person representing or acting on behalf of the Fund
only if said representative is an Authorized Person. The Fund agrees that
all Oral Instructions shall be followed within one business day by
confirming Written Instructions, and that the Fund's failure to so confirm
shall not impair in any respect the Transfer Agent's right to rely on Oral
Instructions. The Transfer Agent shall have no duty or obligation to
inquire into, nor shall the Transfer Agent be responsible for, the legality
of any act done by it upon the request or direction of a person reasonably
believed by the Transfer Agent to be an Authorized Person.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, the Transfer Agent shall be under no duty or obligation to
inquire into, and shall not be liable for: (i) the legality of the
issuance or sale of any Shares or the sufficiency of the amount to be
received therefor; (ii) the legality of the redemption of any Shares, or
the propriety of the amount to be paid therefor; (iii) the legality of the
declaration of any dividend by the Board of Directors, or the legality of
the issuance of any Shares in payment of any dividend; or (iv) the legality
of any recapitalization or readjustment of the Shares.
12. Acts of God, etc. The Transfer Agent will not be liable or
responsible for delays or errors by acts of God or by reason of
circumstances beyond its control, including acts of civil or military
authority, national emergencies, labor difficulties, mechanical breakdown,
insurrection, war, riots, or failure or unavailability of transportation,
communication or power supply, fire, flood or other catastrophe.
13. Duty of Care and Indemnification. Each party hereto (the
"Indemnifying Party') will indemnify the other party (the "Indemnified
Party") against and hold it harmless from any and all losses, claims,
damages, liabilities or expenses of any sort or kind (including reasonable
counsel fees and expenses) resulting from any claim, demand, action or suit
or other proceeding (a "Claim") unless such Claim has resulted from a
negligent failure to act or omission to act or bad faith of the Indemnified
Party in the performance of its duties hereunder. In addition, the Fund
will indemnify the Transfer Agent against and hold it harmless from any
Claim, damages, liabilities or expenses (including reasonable counsel fees)
that is a result of: (i) any action taken in accordance with Written or
Oral Instructions, or any other instructions, or share certificates
reasonably believed by the Transfer Agent to be genuine and to be signed,
countersigned or executed, or orally communicated by an Authorized Person;
(ii) any action taken in accordance with written or oral advice reasonably
believed by the Transfer Agent to have been given by counsel for the Fund
or its own counsel; or (iii) any action taken as a result of any error or
omission in any record (including but not limited to magnetic tapes,
computer printouts, hard copies and microfilm copies) delivered, or caused
to be delivered by the Fund to the Transfer Agent in connection with this
Agreement.
In any case in which the Indemnifying Party may be asked to indemnify
or hold the Indemnified Party harmless, the Indemnifying Party shall be
advised of all pertinent facts concerning the situation in question. The
Indemnified Party will notify the Indemnifying Party promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party although
the failure to do so shall not prevent recovery by the Indemnified Party.
The Indemnifying Party shall have the option to defend the Indemnified
Party against any Claim which may be the subject of this indemnification,
and, in the event that the Indemnifying Party so elects, such defense shall
be conducted by counsel chosen by the Indemnifying Party and satisfactory
to the Indemnified Party, and thereupon the Indemnifying Party shall take
over complete defense of the Claim and the Indemnified Party shall sustain
no further legal or other expenses in respect of such Claim. The
Indemnified Party will not confess any Claim or make any compromise in any
case in which the Indemnifying Party will be asked to provide
indemnification, except with the Indemnifying Party's prior written
consent. The obligations of the parties hereto under this Section shall
survive the termination of this Agreement.
14. Consequential Damages. In no event and under no circumstances
shall either party under this Agreement be liable to the other party for
indirect loss of profits, reputation or business or any other special
damages under any provision of this Agreement or for any act or failure to
act hereunder.
15. Term and Termination.
(a) This Agreement shall be effective on the date first
written above and shall continue until _____________, and thereafter shall
automatically continue for successive annual periods ending on the
anniversary of the date first written above, provided that it may be
terminated by either party upon written notice given at least 60 days prior
to termination.
(b) In the event a termination notice is given by the Fund,
it shall be accompanied by a resolution of the Board of Directors,
certified by the Secretary of the Fund, designating a successor transfer
agent or transfer agents. Upon such termination and at the expense of the
Fund, the Transfer Agent will deliver to such successor a certified list of
shareholders of the Fund (with names and addresses), and all other relevant
books, records, correspondence and other Fund records or data in the
possession of the Transfer Agent, and the Transfer Agent will cooperate
with the Fund and any successor transfer agent or agents in the
substitution process.
16. Confidentiality. Both parties hereto agree that any non public
information obtained hereunder concerning the other party is confidential
and may not be disclosed to any other person without the consent of the
other party, except as may be required by applicable law or at the request
of the Commission or other governmental agency. The parties further agree
that a breach of this provision would irreparably damage the other party
and accordingly agree that each of them is entitled, without bond or other
security, to an injunction or injunctions to prevent breaches of this
provision.
17. Amendment. This Agreement may only be amended or modified by a
written instrument executed by both parties.
18. Subcontracting. The Fund agrees that the Transfer Agent may, in
its discretion, subcontract for certain of the services described under
this Agreement or the Schedules hereto; provided that the appointment of
any such Transfer Agent shall not relieve the Transfer Agent of its
responsibilities hereunder.
19. Miscellaneous.
(a) Notices. Any notice or other instrument authorized or
required by this Agreement to be given in writing to the Fund or the
Transfer Agent, shall be sufficiently given if addressed to that party and
received by it at its office set forth below or at such other place
as it may from time to time designate in writing.
To the Fund:
______________________________
______________________________
______________________________
Attention: __________________
To the Transfer Agent:
The Shareholder Services Group
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: Robert F. Radin, President
with a copy to TSSG Counsel
(b) Successors. This Agreement shall extend to and shall be
binding upon the parties hereto, and their respective successors and
assigns, provided, however, that this Agreement shall not be assigned to
any person other than a person controlling, controlled by or under common
control with the assignor without the written consent of the other party,
which consent shall not be unreasonably withheld.
(c) Governing Law. This Agreement shall be governed
exclusively by the laws of the State of New York without reference to the
choice of law provisions thereof. Each party hereto hereby agrees that (i)
the Supreme Court of New York sitting in New York County shall have
exclusive jurisdiction over any and all disputes arising hereunder; (ii)
hereby consents to the personal jurisdiction of such court over the parties
hereto, hereby waiving any defense of lack of personal jurisdiction; and
(iii) appoints the person to whom notices hereunder are to be sent as agent
for service of process.
(d) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original;
but such counterparts shall, together, constitute only one instrument.
(e) Captions. The captions of this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(f) Use of Transfer Agent's Name. The Fund shall not use the
name of the Transfer Agent in any Prospectus, Statement of Additional
Information, shareholders' report, sales literature or other material
relating to the Fund in a manner not approved prior thereto in writing;
provided, that the Transfer Agent need only receive notice of all
reasonable uses of its name which merely refer in accurate terms to its
appointment hereunder or which are required by any government agency or
applicable law or rule. Notwithstanding the foregoing, any reference to the
Transfer Agent shall include a statement to the effect that it is a wholly
owned subsidiary of First Data Corporation.
(g) Use of Fund's Name. The Transfer Agent shall not use the
name of the Fund or material relating to the Fund on any documents or forms
for other than internal use in a manner not approved prior thereto in
writing; provided, that the Fund need only receive notice of all reasonable
uses of its name which merely refer in accurate terms to the appointment of
the Transfer Agent or which are required by any government agency or
applicable law or rule.
(h) Independent Contractors. The parties agree that they are
independent contractors and not partners or co-venturers.
(i) Entire Agreement; Severability. This Agreement and the
Schedules attached hereto constitute the entire agreement of the parties
hereto relating to the matters covered hereby and supersede any previous
agreements. If any provision is held to be illegal, unenforceable or
invalid for any reason, the remaining provisions shall not be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers, as of the day
and year first above written.
SMITH BARNEY SHEARSON THE SHAREHOLDER SERVICES
OREGON MUNICIPALS FUND GROUP, INC.
By:/s/ By:
Title: Title:
Transfer Agent Fee
Schedule A
Class A shares
The Fund shall pay the Transfer Agent an annualized fee of $11.00 per
shareholder account that is open during any monthly period. Such fee shall
be billed by the Transfer Agent monthly in arrears on a prorated basis of
1/12 of the annualized fee for all accounts that are open during such a
month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing
cycle. Such fee shall be billed by the Transfer Agent monthly in arrears.
Class B shares
The Fund shall pay the Transfer Agent an annualized fee of $12.50 per
shareholder account that is open during any monthly period. Such fee shall
be billed by the Transfer Agent monthly in arrears on a prorated basis of
1/12 of the annualized fee for all accounts that are open during such a
month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing
cycle. Such fee shall be billed by the Transfer Agent monthly in arrears.
Class C shares
The Fund shall pay the Transfer Agent an annualized fee of $8.50 per
shareholder account that is open during any monthly period. Such fee shall
be billed by the Transfer Agent monthly in arrears on a prorated basis of
1/12 of the annualized fee for all accounts that are open during such a
month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing
cycle. Such fee shall be billed by the Transfer Agent monthly in arrears.
Class D shares
The Fund shall pay the Transfer Agent an annualized fee of $9.50 per
shareholder account that is open during any monthly period. Such fee shall
be billed by the Transfer Agent monthly in arrears on a prorated basis of
1/12 of the annualized fee for all accounts that are open during such a
month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing
cycle. Such fee shall be billed by the Transfer Agent monthly in arrears.
Schedule B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including certificates, envelopes, checks and
stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class)
direct pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including
all lease, maintenance and line costs
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other equipment
and any
expenses incurred in connection with such terminals and
lines
- Duplicating services
- Courier services
- Incoming and outgoing wire charges
- Federal Reserve charges for check clearance
- Record retention, retrieval and destruction costs, including,
but not
limited to exit fees harged by third party record keeping
vendors
- Third party audit reviews
- Insurance
- Such other miscellaneous expenses reasonably incurred by the
Transfer
Agent in performing its duties and responsibilities under
this
Agreement.
The Fund agrees that postage and mailing expenses will be paid on the
day of or prior to mailing as agreed with the Transfer Agent. In addition,
the Fund will promptly reimburse the Transfer Agent for any other
unscheduled expenses incurred by the Transfer Agent whenever the Fund and
the Transfer Agent mutually agree that such expenses are not otherwise
properly borne by the Transfer Agent as part of its duties and obligations
under the Agreement.
Schedule C
DUTIES OF THE TRANSFER AGENT
1. Shareholder Information. The Transfer Agent or its agent
shall maintain a record of the number of Shares held by each holder of
record which shall include name, address, taxpayer identification and which
shall indicate whether such Shares are held in certificates or
uncertificated form.
2. Shareholder Services. The Transfer Agent or its agent will
investigate all inquiries from shareholders of the Fund relating to
Shareholder accounts and will respond to all communications from
Shareholders and others relating to its duties hereunder and such other
correspondence as may from time to time be mutually agreed upon between the
Transfer Agent and the Fund. The Transfer Agent shall provide the Fund
with reports concerning shareholder inquires and the responses thereto by
the Transfer Agent, in such form and at such times as are agreed to by the
Fund and the Transfer Agent.
3. Share Certificates.
(a) At the expense of the Fund, it shall supply the Transfer
Agent or its agent with an adequate supply of blank share certificates to
meet the Transfer Agent or its agent's requirements therefor. Such Share
certificates shall be properly signed by facsimile. The Fund agrees that,
notwithstanding the death, resignation, or removal of any officer of the
Fund whose signature appears on such certificates, the Transfer Agent or
its agent may continue to countersign certificates which bear such
signatures until otherwise directed by Written Instructions.
(b) The Transfer Agent or its agent shall issue replacement
Share certificates in lieu of certificates which have been lost, stolen or
destroyed, upon receipt by the Transfer Agent or its agent of properly
executed affidavits and lost certificate bonds, in form satisfactory to the
Transfer Agent or its agent, with the Fund and the Transfer Agent or its
agent as obligees under the bond.
(c) The Transfer Agent or its agent shall also maintain a
record of each certificate issued, the number of Shares represented thereby
and the holder of record. With respect to Shares held in open accounts or
uncertificated form, i.e., no certificate being issued with respect
thereto, the Transfer Agent or its agent shall maintain comparable records
of the record holders thereof, including their names, addresses and
taxpayer identification. The Transfer Agent or its agent shall further
maintain a stop transfer record on lost and/or replaced certificates.
4. Mailing Communications to Shareholders; Proxy Materials. The
Transfer Agent or its agent will address and mail to Shareholders of the
Fund, all reports to Shareholders, dividend and distribution notices and
proxy material for the Fund's meetings of Shareholders. In connection with
meetings of Shareholders, the Transfer Agent or its Agent will prepare
Shareholder lists, mail and certify as to the mailing of proxy materials,
process and tabulate returned proxy cards, report on proxies voted prior to
meetings, act as inspector of election at meetings and certify Shares voted
at meetings.
5. Sales of Shares
(a) Suspension of Sale of Shares. The Transfer Agent or its
agent shall not be required to issue any Shares of the Fund where it has
received a Written Instruction from the Fund or official notice from any
appropriate authority that the sale of the Shares of the Fund has been
suspended or discontinued. The existence of such Written Instructions or
such official notice shall be conclusive evidence of the right of the
Transfer Agent or its agent to rely on such Written Instructions or
official notice.
(b) Returned Checks. In the event that any check or other
order for the payment of money is returned unpaid for any reason, the
Transfer Agent or its agent will: (i) give prompt notice of such return to
the Fund or its designee; (ii) place a stop transfer order against all
Shares issued as a result of such check or order; and (iii) take such
actions as the Transfer Agent may from time to time deem appropriate.
6. Transfer and Repurchase
(a) Requirements for Transfer or Repurchase of Shares. The
Transfer Agent or its agent shall process all requests to transfer or
redeem Shares in accordance with the transfer or repurchase procedures set
forth in the Fund's Prospectus.
The Transfer Agent or its agent will transfer or repurchase
Shares upon receipt of Oral or Written Instructions or otherwise pursuant
to the Prospectus and Share certificates, if any, properly endorsed for
transfer or redemption, accompanied by such documents as the Transfer Agent
or its agent reasonably may deem necessary.
The Transfer Agent or its agent reserves the right to refuse to
transfer or repurchase Shares until it is satisfied that the endorsement on
the instructions is valid and genuine. The Transfer Agent or its agent
also reserves the right to refuse to transfer or repurchase Shares until it
is satisfied that the requested transfer or repurchase is legally
authorized, and it shall incur no liability for the refusal, in good faith,
to make transfers or repurchases which the Transfer Agent or its agent, in
its good judgement, deems improper or unauthorized, or until it is
reasonably satisfied that there is no basis to any claims adverse to such
transfer or repurchase.
(b) Notice to Custodian and Fund. When Shares are redeemed,
the Transfer Agent or its agent shall, upon receipt of the instructions and
documents in proper form, deliver to the Custodian and the Fund or its
designee a notification setting forth the number of Shares to be
repurchased. Such repurchased shares shall be reflected on appropriate
accounts maintained by the Transfer Agent or its agent reflecting
outstanding Shares of the Fund and Shares attributed to individual
accounts.
(c) Payment of Repurchase Proceeds. The Transfer Agent or its
agent shall, upon receipt of the moneys paid to it by the Custodian for the
repurchase of Shares, pay such moneys as are received from the Custodian,
all in accordance with the procedures described in the written instruction
received by the Transfer Agent or its agent from the Fund.
The Transfer Agent or its agent shall not process or effect any
repurchase with respect to Shares of the Fund after receipt by the Transfer
Agent or its agent of notification of the suspension of the determination
of the net asset value of the Fund.
7. Dividends
(a) Notice to Agent and Custodian. Upon the declaration of
each dividend and each capital gains distribution by the Board of Directors
of the Fund with respect to Shares of the Fund, the Fund shall furnish or
cause to be furnished to the Transfer Agent or its agent a copy of a
resolution of the Fund's Board of Directors certified by the Secretary of
the Fund setting forth the date of the declaration of such dividend or
distribution, the ex-dividend date, the date of payment thereof, the record
date as of which shareholders entitled to payment shall be determined, the
amount payable per Share to the shareholders of record as of that date, the
total amount payable to the Transfer Agent or its agent on the payment date
and whether such dividend or distribution is to be paid in Shares of such
class at net asset value.
On or before the payment date specified in such resolution of
the Board of Directors, the Custodian of the Fund will pay to the Transfer
Agent sufficient cash to make payment to the shareholders of record as of
such payment date.
(b) Insufficient Funds for Payments. If the Transfer Agent
or its agent does not receive sufficient cash from the Custodian to make
total dividend and/or distribution payments to all shareholders of the Fund
as of the record date, the Transfer Agent or its agent will, upon notifying
the Fund, withhold payment to all Shareholders of record as of the record
date until sufficient cash is provided to the Transfer Agent or its agent.
Exhibit 1 to Schedule C
Summary of Services
The services to be performed by the Transfer Agent or its agent shall
be as follows:
A. DAILY RECORDS
Maintain daily the following information with respect to each
Shareholder account as received:
o Name and Address (Zip Code)
o Class of Shares
o Taxpayer Identification Number
o Balance of Shares held by Agent
o Beneficial owner code: i.e., male, female, joint tenant,
etc.
o Dividend code (reinvestment)
o Number of Shares held in certificate form
B. OTHER DAILY ACTIVITY
o Answer written inquiries relating to Shareholder accounts
(matters relating to portfolio management, distribution of Shares and other
management policy questions will be referred to the Fund).
o Process additional payments into established Shareholder
accounts in accordance with Written Instruction from the Agent.
o Upon receipt of proper instructions and all required
documentation, process requests for repurchase of Shares.
o Identify redemption requests made with respect to
accounts in which Shares have been purchased within an agreed-upon period
of time for determining whether good funds have been collected with respect
to such purchase and process as agreed by the Agent in accordance with
written instructions set forth by the Fund.
o Examine and process all transfers of Shares, ensuring
that all transfer requirements and legal documents have been supplied.
o Issue and mail replacement checks.
o Open new accounts and maintain records of exchanges
between accounts
C. DIVIDEND ACTIVITY
o Calculate and process Share dividends and distributions
as instructed by the Fund.
o Compute, prepare and mail all necessary reports to
Shareholders or various authorities as requested by the Fund. Report to
the Fund reinvestment plan share purchases and determination of the
reinvestment price.
D. MEETINGS OF SHAREHOLDERS
o Cause to be mailed proxy and related material for all
meetings of Shareholders. Tabulate returned proxies (proxies must be
adaptable to mechanical equipment of the Agent or its agents) and supply
daily reports when sufficient proxies have been received.
o Prepare and submit to the Fund an Affidavit of Mailing.
o At the time of the meeting, furnish a certified list of
Shareholders, hard copy, microfilm or microfiche and, if requested by the
Fund, Inspection of Election.
E. PERIODIC ACTIVITIES
o Cause to be mailed reports, Prospectuses, and any other
enclosures requested by the Fund (material must be adaptable to mechanical
equipment of Agent or its agents).
o Receive all notices issued by the Fund with respect to the
Preferred Shares in accordance with and pursuant to the Articles of
Incorporation and the Indenture and perform such other specific duties as
are set forth in the Articles of Incorporation including a giving of notice
of a special meeting and notice of redemption in the circumstances and
otherwise in accordance with all relevant provisions of the Articles of
Incorporation.
g\shared\domestic\clients\funds\ore\tssg.doc -17-
EXHIBIT 11(b)
CONSENT
We hereby consent to the use of our name and to the reference to our
firm under the
caption "Counsel and Auditors" in the Statement of Additional
Information dated May 23,
1994 included in the Registration Statement on Form N-1A
under the Securities Act of
1933, as amended, of Smith Barney Shearson Oregon Municipals
Fund.
/s/ Lane Powell Spears Lubersky
Lane Powell Spears Lubersky
g:\shared\domestic\clients\shearson\funds\ore\consent.doc
EXHIBIT 13
SMITH BARNEY SHEARSON OREGON MUNICIPALS FUND
PURCHASE AGREEMENT
Smith Barney Shearson Oregon Municipals Fund (the "Fund"), a business
trust organized under the laws of the Commonwealth of Massachusetts, and
Smith Barney Shearson Inc. ("Smith Barney Shearson"), a corporation
organized under the laws of the State of Delaware, agree as follows:
1. Offer and Purchase. The Fund offers Smith Barney Shearson, and
Smith Barney Shearson purchases, 10,000 shares of the Fund's authorized
shares of beneficial interest, $ .001 par value per share (the "Shares") at
a price of $10.00 per Share broken down as follows:
9,997 shares Class A
1 share Class B
1 share Class C
1 share Class D
Smith Barney Shearson acknowledges receipt of four certificates
representing the Shares and the Fund acknowledges receipt from Smith Barney
Shearson of $100,000 in full payment for the Shares.
2. Representation by Smith Barney Shearson. Smith Barney Shearson
represents and warrants to the Fund that the Shares are being acquired for
investment purposes and not with a view to resale or further distribution.
3. No Right of Assignment. Smith Barney Shearson's rights under
this Purchase Agreement to purchase the Shares is not assignable.
4. Reduction of Redemption Proceeds. Smith Barney Shearson agrees
that, if any of the Shares of the Fund are redeemed before five years after
the date of this Agreement by Smith Barney Shearson or by any other holder,
the proceeds of the redemption will be reduced by the unamortized portion
of the organization expenses in the same proportion as the number of Shares
of the Fund being redeemed bears to the number of initial shares of the
Fund outstanding at the time of the redemption.
5. Representation by the Fund. The Fund represents that a copy of
its Master Trust Agreement dated March 10, 1994 and any amendment to the
Master Trust Agreement (the "Master Trust Agreement") is on file with the
Secretary of The Commonwealth of Massachusetts and with the Boston City
Clerk.
6. Limitation of Liability. The Fund and Smith Barney Shearson
agree that the obligations of the Fund under this Agreement will not be
binding upon any of the Fund's Trustees, shareholders, nominees, officers,
employees or agents, whether past, present or future, of the Fund
individually, but are binding only upon the assets and property of the
Fund, as provided in the Master Trust Agreement. The execution and
delivery of this Agreement have been authorized by the Trustees of the
Fund, and signed by an authorized officer of the Fund, acting as such, and
neither the authorization by the Trustees nor the execution and delivery by
the officer is to be deemed to have been made by any of them individually
or to impose any liability on any of them or any shareholder of the Fund
personally, but will bind only the trust property of the Fund as provided
in the Master Trust Agreement.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the ______ day of ________________, 1994.
SMITH BARNEY SHEARSON OREGON
MUNICIPALS FUND
By:_______________________________
Name:
Title:
SMITH BARNEY SHEARSON INC.
By:___________________________
Name:
Title:
g:\shared\domestic\clients\shearson\funds\ore\purch.doc
EXHIBIT 15
SERVICES AND DISTRIBUTION PLAN
Smith Barney Shearson Oregon Municipals Fund
This Services and Distribution Plan (the "Plan") is adopted in
accordance with Rule 12b-1 (the "Rule") under the Investment Company Act of
1940, as amended (the "1940 Act"), by Smith Barney Shearson Oregon
Municipals Fund, a business trust organized under the laws of the
Commonwealth of Massachusetts (the "Fund"), subject to the following terms
and conditions:
Section 1. Annual Fee.
(a) Class A Service Fee. The Fund will pay to the distributor of its
shares, Smith Barney Shearson Inc., a corporation organized under the laws
of the State of Delaware ("Distributor"), a service fee under the Plan at
the annual rate of .15% of the average daily net assets of the Fund
attributable to the Class A shares (the "Class A Service Fee").
(b) Service Fee for Class B shares. The Fund will pay to the
Distributor a service fee under the Plan at the annual rate of .15% of the
average daily net assets of the Fund attributable to the Class B shares
(the "Class B Service Fee," and collectively with the Class A Service Fee,
the "Service Fees").
(c) Distribution Fee for Class B shares. In addition to the Class B
Service Fee, the Fund will pay the Distributor a distribution fee under the
Plan at the annual rate of .50% of the average daily net assets of the Fund
attributable to the Class B shares (the "Distribution Fee").
(d) Payment of Fees. The Service Fees and Distribution Fee will be
calculated daily and paid monthly by the Fund with respect to each class of
the Fund's shares (each a "Class" and together the "Classes") at the annual
rates indicated above.
Section 2. Expenses Covered by the Plan.
With respect to expenses incurred by each Class, its respective
Service Fees and/or Distribution Fee may be used for: (a) costs of
printing and distributing the Fund's prospectus, statement of additional
information and reports to prospective investors in the Fund; (b) costs
involved in preparing, printing and distributing sales literature
pertaining to the Fund; (c) an allocation of overhead and other branch
office distribution-related expenses of the Distributor; (d) payments made
to, and expenses of, Smith Barney Shearson Financial Consultants and other
persons who provide support services in connection with the distribution of
the Fund's shares, including but not limited to, office space and
equipment, telephone facilities, answering routine inquires regarding the
Fund, processing shareholder transactions and providing any other
shareholder services not otherwise provided by the Fund's transfer agent;
and (e) accruals for interest on the amount of the foregoing expenses that
exceed the Distribution Fee and, in the case of Class B shares, the
contingent deferred sales charge received by the Distributor; provided,
however, that the Distribution Fee may be used by the Distributor only to
cover expenses primarily intended to result in the sale of the Fund's Class
B shares, including without limitation, payments to Distributor's financial
consultants at the time of the sale of Class B shares. In addition,
Service Fees are intended to be used by the Distributor primarily to pay
its financial consultants for servicing shareholder accounts, including a
continuing fee to each such financial consultant, which fee shall begin to
accrue immediately after the sale of such shares.
Section 3. Approval of Shareholders
The Plan will not take effect, and no fees will be payable in
accordance with Section 1 of the Plan, with respect to a Class until the
Plan has been approved by a vote of at least a majority of the outstanding
voting securities of the Class. The Plan will be deemed to have been
approved with respect to a Class so long as a majority of the outstanding
voting securities of the Class votes for the approval of the Plan,
notwithstanding that: (a) the Plan has not been approved by a majority of
the outstanding voting securities of any other Class, or (b) the Plan has
not been approved by a majority of the outstanding voting securities of the
Fund.
Section 4. Approval of Trustees.
Neither the Plan nor any related agreements will take effect until
approved by a majority of both (a) the full Board of Trustees of the Fund
and (b) those Trustees who are not interested persons of the Fund and who
have no direct or indirect financial interest in the operation of the Plan
or in any agreements related to it (the "Qualified Trustees"), cast in
person at a meeting called for the purpose of voting on the Plan and the
related agreements.
Section 5. Continuance of the Plan.
The Plan will continue in effect with respect to each Class until
July 30, 1994, and thereafter for successive twelve-month periods with
respect to each Class; provided, however, that such continuance is
specifically approved at least annually by the Trustees of the Fund and by
a majority of the Qualified Trustees.
Section 6. Termination.
The Plan may be terminated at any time with respect to a Class (i) by
the Fund without the payment of any penalty, by the vote of a majority of
the outstanding voting securities of such Class or (ii) by a vote of the
Qualified Trustees. The Plan may remain in effect with respect to a
particular Class even if the Plan has been terminated in accordance with
this Section 6 with respect to any other Class.
Section 7. Amendments.
The Plan may not be amended with respect to any Class so as to
increase materially the amounts of the fees described in Section 1 above,
unless the amendment is approved by a vote of the holders of at least a
majority of the outstanding voting securities of that Class. No material
amendment to the Plan may be made unless approved by the Fund's Board of
Trustees in the manner described in Section 4 above.
Section 8. Selection of Certain Trustees.
While the Plan is in effect, the selection and nomination of the
Fund's Trustees who are not interested persons of the Fund will be
committed to the discretion of the Trustees then in office who are not
interested persons of the Fund.
Section 9. Written Reports
In each year during which the Plan remains in effect, a person
authorized to direct the disposition of monies paid or payable by the Fund
pursuant to the Plan or any related agreement will prepare and furnish to
the Fund's Board of Trustees and the Board will review, at least quarterly,
written reports, complying with the requirements of the Rule, which sets
out the amounts expended under the Plan and the purposes for which those
expenditures were made.
Section 10. Preservation of Materials.
The Fund will preserve copies of the Plan, any agreement relating to
the Plan and any report made pursuant to Section 9 above, for a period of
not less than six years (the first two years in an easily accessible place)
from the date of the Plan, agreement or report.
Section 11. Meanings of Certain Terms.
As used in the Plan, the terms "interested person" and "majority of
the outstanding voting securities" will be deemed to have the same meaning
that those terms have under the 1940 Act by the Securities and Exchange
Commission.
Section 12. Limitation of Liability.
It is expressly agreed that the obligations of the Fund hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, employees or agents, whether past, present or future, of the
Fund, individually, but are binding only upon the assets and property of
the Fund, as provided in the Master Trust Agreement of the Fund. The
execution and delivery of this Plan has been authorized by the Trustees and
by shareholders of the Fund holding at least a majority of the outstanding
voting securities and signed by an authorized officer of the Fund, acting
as such, and neither such authorization by such Trustees and shareholders
nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the trust property of the Fund as
provided in its Master Trust Agreement.
IN WITNESS WHEREOF, the Fund executed the Plan as of May , 1994.
SMITH BARNEY SHEARSON
OREGON MUNICIPALS FUND
By:__________________
Heath B. McLendon
Chairman of the Board
g\shared\domestic\clients\shearson\funds\ore\12b1.doc04:38 PM
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text>CONSENT OF INDEPENDENT ACCOUNTANTS
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text>To the Shareholder and Trustees of Smith Barney Shearson Oregon
Municipals Fund:
<Body Text>
<Body Text> We hereby consent to the following with respect to Pre-Effective
Amendment
<Body Text>No. 2 to the Registration Statement on Form N-1A (File No. 33-
52643) under the Securities Act of 1933, as amended, of Smith Barney Shearson
Oregon Municipals Fund:
<Body Text>
<Body Text> 1. The inclusion of our report dated May 20, 1994 accompanying
the statement of assets and liabilities of Smith Barney Shearson Oregon
Municipals Fund as of May 20, 1994, in the Statement of Additional
Information.
<Body Text>
<Body Text> 2. The reference to our firm under the heading "Independent
Accountants" in the Statement of Additional Information.
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text> COOPERS & LYBRAND
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text>Boston, Massachusetts
<Body Text>May 20, 1994
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text>REPORT OF INDEPENDENT ACCOUNTANTS
<Body Text>
<Body Text>
<Body Text>
<Body Text>To the Shareholder and Trustees of Smith Barney Shearson Oregon
Municipals Fund:
<Body Text>
<Body Text> We have audited the accompanying statement of assets and
liabilities of Smith Barney Shearson Oregon Municipals Fund (the "Fund") as of
May 20, 1994. This financial statement is the responsibility of the Fund's
management. Our responsibility is to express an opinion on this financial
statements based on our audit.
<Body Text>
<Body Text> We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the statement of assets and
liabilities is free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the statement
of assets and liabilities. Our procedures included confirmation of cash held
by the Fund's custodian as of May 20, 1994. An audit also includes assessing
the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the statement of assets and
liabilities. We believe that our audit of the statement of assets and
liabilities provides a reasonable basis for our opinion.
<Body Text>
<Body Text> In our opinion, the statement of assets and liabilities referred
to above presents fairly, in all material respects, the financial position of
Smith Barney Shearson Oregon Municipals Fund as of May 20, 1994, in conformity
with generally accepted accounting principles.
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text>
<Body Text> COOPERS & LYBRAND
<Body Text>
<Body Text>
<Body Text>
<Body Text>Boston, Massachusetts
<Body Text>May 20, 1994
_
