FORM OF INVESTMENT ADVISORY AND ADMINISTRATION
AGREEMENT
May 1, 1995
Smith Barney Mutual Fund Management, Inc.
388 Greenwich Street
New York, NY 10013
Dear Sirs:
This Investment Advisory and
Administration Agreement (the "Agreement") is
made on this 1st day of May, 1995, by and
between Smith Barney Investment Funds Inc.*, a
corporation organized under the laws of
Maryland (the "Fund"), and Smith Barney Mutual
Funds Management, Inc. ("SBMFM") 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: (i)
Articles of Incorporation, as amended
from time to time (the "Articles of
Incorporation"); (ii) Prospectus (the
"Prospectus"); and (iii) Statement of
Additional Information (the "Statement")
filed with the Securities and Exchange
Commission (the "SEC") as part of the
Fund's Registration Statement on Form N-
lA, as amended from time to time, and in
such manner and to such extent as may
from time to time be approved by the
Board of Directors of the Fund (the
"Board"). Copies of the Fund's
Prospectus, the Statement and the
Articles of Incorporation have been or
will be submitted to SBMFM. The Fund
desires to employ and hereby appoints
SBMFM to act as its investment adviser
and administrator. SBMFM accepts the
appointment and agrees to furnish the
services for the compensation set forth
below. SBMFM is hereby authorized to
retain third parties and is hereby
authorized to delegate some or all of its
duties and obligations hereunder to such
persons, provided such persons shall
remain under the general supervision of
SBMFM.
2. Services as Investment Adviser
Subject to the supervision and direction
of the Board, SBMFM will: (a) manage the
Fund's portfolio in accordance with the
Fund's investment objective and policies
as stated in the Prospectus and the
Statement; (b) make investment decisions
for the Fund; (c) place purchase and sale
orders for portfolio transactions for the
Fund; and (d) employ professional
portfolio managers and securities
analysts to provide research services to
the Fund. In providing those services,
SBMFM will conduct a continual program of
investment, evaluation and, if
appropriate, sale and reinvestment of the
Fund's assets.
*The Growth Opportunity Fund and the Managed Growth Fund
are both separate series of the Smith Barney Investment
Funds Inc.
3. Services as Administrator
Subject to the supervision and direction
of the Board, SBMFM will: (a) assist in
supervising all aspects of the Fund's
operations; (b) supply the Fund with
office facilities (which may be in
SBMFM's own offices), statistical and
research data, data processing services,
clerical, accounting and bookkeeping
services, including, but not limited to,
the calculation of (i) the net asset
value of shares of the Fund, (ii)
applicable contingent deferred sales
charges and similar fees and charges, and
(iii) distribution fees, internal
auditing and legal services, internal
executive and administrative services,
and stationary and office supplies; and
(c) prepare reports to shareholders of
the Fund, tax returns and reports to and
filings with the SEC and state blue sky
authorities.
4. Compensation
In consideration of the services rendered
pursuant to this Agreement, the Fund will
pay SBMFM, on the first business day of
each month, a fee for the previous month
at an annual rate of [ ] percent ([
]%)* of the Fund's average daily net
assets. The fee for the period from the
date the Fund commences its investment
operations to the end of the month during
which the Fund commences its investment
operations shall be pro-rated according
to the proportion that such period bears
to the full monthly period. Upon any
termination of this Agreement before the
end of any month, the fee for such part
of that month shall be pro-rated
according to the proportion that such
period bears to the full monthly period
and shall be payable upon the date of
termination of this Agreement. For the
purpose of determining fees payable to
SBMFM, the value of the Fund's net assets
shall be computed at the times and in the
manner specified in the Fund's Prospectus
and/or the Statement, as from time to
time in effect.
5. Expenses
SBMFM will bear all expenses in
connection with the performance of its
services under this Agreement. The Fund
will bear certain other expenses to be
incurred in its operation, including:
investment advisory, sub-investment
advisory and administration fees; charges
of custodians and transfer and dividend
disbursing agents; fees for necessary
professional services, such as the Fund's
and Board members' proportionate share of
insurance premiums, professional
associations, dues and/or assessments;
and brokerage services, including taxes,
interest and commissions; costs of
preparing and printing prospectuses and
statements of additional information for
regulatory purposes and for distribution
to existing shareholders; the costs of
regulatory compliance, such as SEC fees
and state blue sky qualifications fees;
outside auditing and legal expenses and
costs associated with maintaining the
Fund's legal existence; costs of
shareholders' reports and meetings of the
officers or Board; fees of the members of
the Board who are not officers, directors
or employees of Smith Barney, Inc. or its
affiliates or any person who is an
affiliate of any person to whom duties
may be delegated hereunder.
* Please see Exhibit A attached hereto for the fees
associated with each of the Growth Opportunity Fund and
the Managed Growth Fund.
6. Reimbursement to the Fund
If in any fiscal year the aggregate
expenses of the Fund (including fees
pursuant to this Agreement, but excluding
distribution fees, interest, taxes,
brokerage and, if permitted by state
securities commissions, extraordinary
expenses) exceed the expense limitations
of any state having jurisdiction over the
Fund, SBMFM will reimburse the Fund for
that excess expense to the extent
required by state law in the same
proportion as its respective fees bear to
the combined fees for investment advice
and administration. The expense
reimbursement obligation of SBMFM will be
limited to the amount of its fees
hereunder. Such expense reimbursement, if
any, will be estimated, reconciled and
paid on a monthly basis.
7. Brokerage
In selecting brokers or dealers to
execute transactions on behalf of the
Fund, SBMFM will seek the best overall
terms available. In assessing the
best overall terms available for any
transaction, SBMFM 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, SBMFM is
authorized to consider the brokerage and
research services (as those terms are
defined in Section 28(e) of the
Securities Exchange Act of 1934, as
amended) provided to the Fund and/or
other accounts over which SBMFM or its
affiliates exercise investment
discretion.
8. Information Provided to the Fund
SBMFM will keep the Fund informed of
developments materially affecting the
Fund's portfolio, and will, on its own
initiative, furnish the Fund from time to
time with whatever information SBMFM
believes is appropriate for this purpose.
9. Standard of Care
SBMFM shall exercise its best judgment in
rendering the services listed in
paragraphs 2 and 3 above. SBMFM shall
not be liable for any error of judgment
or mistake of law or for any loss
suffered by the Fund in connection with
the matters to which this Agreement
relates, provided that nothing in this
Agreement shall be deemed to protect or
purport to protect SBMFM against any
liability to the Fund or to its
shareholders to which SBMFM would
otherwise be subject by reason of willful
malfeasance, bad faith or gross
negligence on its part in the performance
of its duties or by reason of SBMFM's
reckless disregard of its obligations and
duties under this Agreement.
10. Services to Other Companies or Accounts
The Fund understands that SBMFM now acts,
will continue to act and may act in the
future as: investment adviser to
fiduciary and other managed accounts, as
well as to other investment companies;
and acts as administator to one or more
other investment companies, and the Fund
has no objection to SBMFM's so acting,
provided that whenever the Fund and one
or more other investment companies
advised by SBMFM 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 Fund
recognizes that in some cases this
procedure may adversely affect the size
of the position obtainable for the Fund.
In addition, the Fund understands that
the persons employed by SBMFM to assist
in the performance of SBMFM'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 SBMFM or any affiliate of SBMFM to
engage in and devote time and attention
to other businesses or to render services
of whatever kind or nature.
l1. Term of Agreement
This Agreement shall become effective as
of the date the Fund commences its
investment operations and continue for an
initial two-year term and shall continue
thereafter so long as such continuance is
specifically approved at least annually
by (i) the Board or (ii) a vote of a
"majority" (as defined in the Investment
Company Act of 1940, as amended (the
"1940 Act") of the Fund's outstanding
voting securities, provided that in
either event the continuance is also
approved by a majority of the Board who
are not "interested persons" (as defined
in the 1940 Act) of any party to this
Agreement, by vote cast in person or by
proxy at a meeting called for the purpose
of voting on such approval. This
Agreement is terminable, without penalty,
on 60 days' written notice, by the Board
or by vote of holders of a majority of
the Fund's shares, or upon 90 days'
written notice, by SBMFM. This Agreement
will also terminate automatically in the
event of its assignment (as defined in
the 1940 Act).
12. Representation by the Fund
The Fund represents that a copy of the
Master Trust Agreement is on file with
the Secretary of the Commonwealth of
Massachusetts and with the City of
Boston.
13. Indemnification
The Fund agrees to indemnify SBMFM and
its officers, directors, employees,
affiliates, controlling persons, agents
(including persons to whom
responsibilities are delegated hereunder)
against any loss, claim, expense or cost
of any kind (including reasonable
attorney's fees) resulting or arising in
connection with this Agreement, or from
the performance or failure to perform any
act hereunder, provided that no such
indemnification shall be available if the
indemnitee violated the standard of care
in paragraph 8 above. This
indemnification shall be limited by the
1940 Act and relevant state law. Each
indemnitee shall be entitled to advance
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.
14. Limitation of Liability
The Fund and SBMFM agree that the
obligations of the Fund under this
Agreement shall not be binding upon any
of the Board members, shareholders,
nominees, officers, employees or agents,
whether past, present or future, of the
Fund individually, but are binding only
upon the assets and property of the Fund,
as provided in the Master Trust
Agreement. The execution and delivery of
this Agreement have been duly authorized
by the Fund and SBMFM, and signed by an
authorized officer of each, acting as
such. Neither the authorization by the
Board members of the Fund, nor the
execution and delivery by 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 the
enclosed copy of this Agreement to us.
Very truly yours,
Smith Barney
Investment Funds Inc.
By:
Title:
Accepted:
Smith Barney Mutual Fund Management, Inc.
By:
Title:
INVESTMENT ADVISORY AND ADMINISTRATION
AGREEMENT
Exhibit A
SMITH BARNEY, INC.
Name of Fund
Fee
Growth Opportunity Fund
1.00%
Managed Growth Fund 0.85%