NOTES TO FINANCIAL STATEMENTS
3. INVESTMENT ADVISORY AGREEMENT, ADMINISTRATION AGREEMENT AND OTHER
Smith Barney Mutual Funds Management Inc. ("SBMFM"), a subsidiary of Smith Barney Holdings Inc. ("SBH"),
through its Greenwich Street Advisors division, acts as investment adviser to the Fund. The Fund pays SBMFM
a fee calculated at an annual rate of 0.70% of the average daily net assets of the Fund. This fee is calculated daily
and paid monthly.
SBMFM also acts as the Fund's administrator for which the Fund pays a fee calculated at an annual rate of
0.20% of the average daily net assets; this fee is calculated daily and paid monthly.
All officers and one Director of the Fund are employees of Smith Barney Inc.
For the three months ended August 31, 1997, the aggregate cost of purchases and proceeds from sales of
investments (including maturities, but excluding short-term securities) were as follows:
At August 31, 1997, the aggregate gross unrealized appreciation and depreciation of investments for Federal
income tax purposes were substantially as follows:
5. FUTURES CONTRACTS
Initial margin deposits made upon entering into futures contracts are recognized as assets. Securities equal to the
initial margin amount are segregated by the custodian in the name of the broker. Additional securities are also
segregated up to the current market value of the futures contracts. During the period the futures contract is open,
changes in the value of the contract are recognized as unrealized gains or losses by "marking-to-market" on a
daily basis to reflect the market value of the contract at the end of each day's trading. Variation margin payments
are made or received and recognized as assets due from or liabilities due to broker, depending upon whether
unrealized gains or losses are incurred. When the contract is closed,