Filed with the Securities and Exchange Commission on
August 6, 1996
Securities Act
File No. 33-64457
Investment Company Act
File No. 811-7435
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1933 [X]
Pre-Effective Amendment No.
[]
Post-Effective Amendment No. 1
[ X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940 [X]
Amendment No. 2
[X]
Smith Barney Concert Series Inc.
(Exact Name of Registrant as Specified in
Charter)
388 Greenwich Street, New York, NY 10013
(Address of Principal Executive Offices) (Zip
Code)
Registrant's Telephone Number, including Area Code:
212-723-9218
Christina T. Sydor, Esq.
Smith Barney Mutual Funds Management Inc.
388 Greenwich Street
New York, New York 10013
(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:
X immediately upon filing pursuant to Rule 485(b)
on ______________ pursuant to Rule 485(b)
60 days after filing pursuant to Rule 485(a)
on _________________ pursuant to Rule 485(a)
___________________________________
<PAGE>3
SMITH BARNEY CONCERT SERIES INC.
FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Part A
Item No.
Heading in each of
- --------
the Prospectuses
- ------------------
<S> <C>
<C>
1. Cover
Page...................................................
Cover Page
2.
Synopsis....................................................
. Prospectus Summary
3. Condensed Financial
Information................................................
Not Applicable
4. General Description of
Registrant............................ Cover
Page; Prospectus Summary;
Investment Objectives and
Management Policies; Why Invest
in the Concert Series;
Description of Underlying Smith
Barney Funds; Additional
Information; Appendix
5. Management of the
Fund.......................................
Prospectus Summary; Management of
the Concert Series; Additional
Information
5A. Management's Discussion of
Fund
Performance...........................................
Not Applicable
6. Capital Stock and Other
Securities..........................
Prospectus Summary; Dividends,
Distributions and Taxes; Purchase
of Shares; Exchange Privilege;
Additional Information
7. Purchase of Securities Being
Offered....................... Purchase of
Shares; Exchange
Privilege; Valuation of
Shares; Distributor
8. Redemption or
Repurchase.....................................
Redemption of Shares; Minimum
Account Size
9. Legal
Proceedings............................................
Not applicable
</TABLE>
<PAGE>4
<TABLE>
<CAPTION>
Part B
Heading in Statement of
Item No.
Additional Information
- --------
- ----------------------
<S> <C>
<C>
10. Cover
Page...................................................
Cover Page
11. Table of
Contents............................................
Table of Contents
12. General Information and
History..............................
Not Applicable
13. Investment Objectives and
Policies...................................................
Investment Objectives and
Management Policies
14. Management of the
Fund.......................................
Management of the Concert Series
15. Control Persons and Principal
Holders of
Securities......................................
Management of the Concert Series
16. Investment Advisory and
Other
Services.............................................
Management of the Concert Series;
Additional Information
17. Brokerage Allocation
and Other
Practices........................................
Not Applicable
18. Capital Stock and Other
Securities.................................................
Additional Information
19. Purchase, Redemption and
Pricing of Securities
Being
Offered..............................................
Purchase of Shares; Redemption of
Shares; Exchange Privilege;
Valuation of Shares
20. Tax
Status...................................................
Taxes (See in The Prospectus
"Dividends, Distributions and
Taxes")
21.
Underwriters................................................
. Distributor
22. Calculation of Performance
Data.......................................................
Performance
23. Financial
Statements.........................................
Financial Statements
</TABLE>
Part A
<PAGE>
Smith Barney
Concert Series Inc.
[ART]
Prospectus
August 5, 1996
Prospectus begins on page one
[LOGO]
SMITH BARNEY
MUTUAL FUNDS
Investing for your future.
Every day/SM/.
<PAGE>
Smith Barney Concert Series Inc.
PROSPECTUS
AUGUST 5, 1996
388 Greenwich Street
New York, New York 10013
(212) 723-9218
Smith Barney Concert Series Inc. (the "Concert Series" or
"Series") offers
five professionally managed investment portfolios (each, a
"Portfolio"). Each
Portfolio seeks to achieve its objective by investing in a
number of other Smith
Barney Mutual Funds.
The High Growth Portfolio seeks capital appreciation.
The Growth Portfolio seeks long-term growth of capital.
The Balanced Portfolio seeks a balance of growth of
capital and income.
The Conservative Portfolio seeks income and, secondarily,
long-term growth of
capital.
The Income Portfolio seeks high current income.
This Prospectus sets forth concisely certain information
about the Concert
Series and each of the Portfolios that prospective investors
will find helpful
in making an investment decision. Investors are encouraged
to read this Pro-
spectus carefully and retain it for future reference.
Additional information about each of the Portfolios is
contained in a State-
ment of Additional Information dated August 5, 1996, as
amended or supplemented
from time to time, that is available upon request and
without charge by calling
or writing the Concert Series at the telephone number or
address set forth
above or by contacting a Smith Barney Financial Consultant.
The Statement of
Additional Information has been filed with the Securities
and Exchange Commis-
sion (the "SEC") and is incorporated by reference into this
Prospectus in its
entirety.
SMITH BARNEY INC.
Distributor
SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Investment Manager
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 Concert Series Inc.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY 3
- --------------------------------------------------
FINANCIAL HIGHLIGHTS 9
- --------------------------------------------------
WHY INVEST IN THE CONCERT SERIES 10
- --------------------------------------------------
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES 10
- --------------------------------------------------
RISK FACTORS AND SPECIAL CONSIDERATIONS 12
- --------------------------------------------------
PORTFOLIO TURNOVER 13
- --------------------------------------------------
INVESTMENT RESTRICTIONS 13
- --------------------------------------------------
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS 13
- --------------------------------------------------
VALUATION OF SHARES 22
- --------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES 22
- --------------------------------------------------
PURCHASE OF SHARES 23
- --------------------------------------------------
EXCHANGE PRIVILEGE 29
- --------------------------------------------------
REDEMPTION OF SHARES 32
- --------------------------------------------------
MINIMUM ACCOUNT SIZE 33
- --------------------------------------------------
PERFORMANCE 33
- --------------------------------------------------
MANAGEMENT OF THE CONCERT SERIES 34
- --------------------------------------------------
DISTRIBUTOR 35
- --------------------------------------------------
ADDITIONAL INFORMATION 36
- --------------------------------------------------
APPENDIX A-1
- --------------------------------------------------
</TABLE>
No person has been authorized to give any information or to
make any
representations in connection with this offering other than
those contained in
this Prospectus and, if given or made, such other
information and
representations must not be relied upon as having been
authorized by the
Concert Series or the Distributor. This Prospectus does not
constitute an offer
by the Concert Series or the Distributor to sell or a
solicitation of an offer
to buy any of the securities offered hereby or securities of
any Underlying
Smith Barney Fund in any jurisdiction to any person to whom
it is unlawful to
make such offer or solicitation in such jurisdiction.
- ------------------------------------------------------------
- --------------------
2
<PAGE>
Smith Barney Concert Series Inc.
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 Prospec-
tus. See "Table of Contents."
INVESTMENT OBJECTIVES The Concert Series is an open-end, non-
diversified man-
agement investment company that currently offers five
professionally managed
investment portfolios. The High Growth Portfolio seeks to
provide capital
appreciation. The Growth Portfolio seeks to provide long-
term growth of capi-
tal. The Balanced Portfolio seeks to provide a balance of
growth of capital
and income. The Conservative Portfolio seeks to provide
income and, secondari-
ly, long-term growth of capital. The Income Portfolio seeks
to provide high
current income. Each Portfolio seeks to achieve its
investment objective by
investing in a diverse mix of "Underlying Smith Barney
Funds," which consist
of open-end management investment companies or series
thereof for which Smith
Barney Inc. ("Smith Barney") now or in the future acts as
principal under-
writer or for which Smith Barney, Smith Barney Mutual Funds
Management Inc.
("SBMFM") or Smith Barney Strategy Advisers Inc. ("SBSA")
now or in the future
acts as investment adviser. In addition, each Portfolio may
invest its short-
term cash in repurchase agreements. Investors may choose to
invest in one or
more of the Portfolios based on their personal investment
goals, risk toler-
ance and financial circumstances. See "Investment Objectives
and Management
Policies."
ALTERNATIVE PURCHASE ARRANGEMENTS Each Portfolio offers
several classes of
shares ("Classes") to investors designed to provide them
with the flexibility
of selecting an investment best suited to their needs. The
general public is
offered three Classes of shares: Class A shares, Class B
shares and Class C
shares, which differ principally in terms of sales charges
and rate of
expenses to which they are subject. A fourth Class of
shares, Class Y shares,
is offered only to investors meeting an initial investment
minimum of
$5,000,000. See "Purchase of Shares" and "Redemption of
Shares."
Class A Shares. Class A shares are sold at net asset value
plus an initial
sales charge of up to 5.00% with respect to the High Growth
Portfolio, the
Growth Portfolio and the Balanced Portfolio and up to 4.50%
with respect to
the Conservative Portfolio and the Income Portfolio. The
initial sales charge
may be reduced or waived for certain purchases. Purchases of
Class A shares
which, when combined with current holdings of Class A shares
offered with a
sales charge, equal or exceed $500,000 in the aggregate,
will be made at net
asset value with no initial sales charge, but will be
subject to a contingent
deferred sales charge ("CDSC") of 1.00% on redemptions made
within 12 months
of purchase. See "Prospectus Summary--Reduced or No Initial
Sales Charge."
Class A shares of each Portfolio are subject to an annual
service fee of 0.25%
of the average daily net assets of the Class.
Class B Shares. Class B shares of the High Growth
Portfolio, the Growth Port-
folio and the Balanced Portfolio are offered at net asset
value subject to a
maximum CDSC of 5.00% of redemption proceeds, declining by
1.00% each year
after the date of purchase to zero. Class B shares of the
Conservative Portfo-
lio and the Income Portfolio are offered at net asset value
subject to a maxi-
mum CDSC of 4.50% of redemption proceeds, declining by 0.50%
the first year
after purchase and 1.00% each year thereafter to zero. The
CDSC may be waived
for certain redemptions. Class B shares of the High Growth
Portfolio, the
Growth Portfolio and the Balanced Portfolio are subject to
an annual service
fee of 0.25% and an annual distribution fee of 0.75% of the
average daily net
assets of the Class. Class B shares of the Conservative
Portfolio and the
Income Portfolio are subject to an annual service fee of
0.25% and an annual
distribution fee of 0.50% of the average daily net assets of
the Class. The
Class B shares' distribution fee may cause that Class to
have higher expenses
and pay lower dividends than Class A shares.
Class B Shares Conversion Feature. Class B shares will
convert automatically
to Class A shares, based on relative net asset value, eight
years after the
date of the original purchase. Upon conversion, these shares
will no longer be
subject to an annual 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. See
"Purchase of Shares--Deferred Sales Charge Alternatives."
Class C Shares. Class C shares are sold at net asset value
with no initial
sales charge; however, investors pay a CDSC of 1.00% if they
redeem Class C
shares within 12 months of purchase. The CDSC may be waived
for certain
redemptions. Class C shares of the High Growth Portfolio,
the Growth Portfolio
and the Balanced Portfolio are subject to an annual service
fee of 0.25% and
an annual distribution fee of 0.75% of the average daily net
assets of the
Class. Class C shares of the Conservative Portfolio and the
Income Portfolio
are subject to an annual service fee of 0.25% and an annual
distribution fee
of 0.45% of the average daily net assets of the Class. The
Class C shares'
distribution fee may cause that Class to have higher
expenses
3
<PAGE>
Smith Barney Concert Series Inc.
PROSPECTUS SUMMARY (CONTINUED)
and pay lower dividends than Class A shares. Purchases of
Portfolio shares,
which when combined with current holdings of Class C shares
of a Portfolio
equal or exceed $500,000 in the aggregate, should be made in
Class A shares at
net asset value with no sales charge, and will be subject to
a CDSC of 1.00% on
redemptions made within 12 months of purchase.
Class Y Shares. Class Y shares are available only to
investors meeting an ini-
tial investment minimum of $5,000,000. Class Y shares are
sold at net asset
value with no initial sales charge or CDSC. They are not
subject to any service
or distribution fees.
In deciding which Class of Portfolio shares to purchase,
investors should con-
sider the following factors, as well as any other relevant
facts and circum-
stances:
Intended Holding Period. The decision as to which Class of
shares is more ben-
eficial to an investor depends on the amount and intended
duration of his or
her investment. Shareholders who are planning to establish a
program of regular
investment may wish to consider Class A shares; as the
investment accumulates
shareholders may qualify for reduced sales charges and the
shares are subject
to lower ongoing expenses over the term of the investment.
As an alternative,
Class B and Class C shares are sold without any initial
sales charge so the
entire purchase price is immediately invested in a
Portfolio. Any investment
return on these additional invested amounts may partially or
wholly offset the
higher annual expenses of these Classes. Because a
Portfolio's future return
cannot be predicted, however, there can be no assurance that
this would be the
case.
Finally, investors should consider the effect of the CDSC
period and any con-
version rights of the Classes in the context of their own
investment time
frame. For example, while Class C shares have a shorter CDSC
period than Class
B shares, they do not have a conversion feature, and
therefore, are subject to
an ongoing distribution fee. Thus, Class B shares may be
more attractive than
Class C shares to investors with longer term investment
outlooks.
Investors investing a minimum of $5,000,000 must purchase
Class Y shares,
which are not subject to an initial sales charge, CDSC or
service or distribu-
tion fees. The maximum purchase amount for Class A shares is
$4,999,999, Class
B shares is $249,999 and Class C shares is $499,999. There
is no maximum pur-
chase amount for Class Y shares.
Reduced or No Initial Sales Charge. The initial sales
charge on Class A shares
may be waived for certain eligible purchasers, and the
entire purchase price
will be immediately invested in a Portfolio. In addition,
Class A share pur-
chases which, when combined with current holdings of Class A
shares offered
with a sales charge, equal or exceed $500,000 in the
aggregate, will be made at
net asset value with no initial sales charge, but will be
subject to a CDSC of
1.00% on redemptions made within 12 months of purchase. The
$500,000 aggregate
investment may be met by adding the purchase to the net
asset value of all
Class A shares offered with a sales charge held in funds
sponsored by Smith
Barney listed under "Exchange Privilege." Class A share
purchases also may be
eligible for a reduced initial sales charge. See "Purchase
of Shares." Because
the ongoing expenses of Class A shares may be lower than
those for Class B and
Class C shares, purchasers eligible to purchase Class A
shares at net asset
value or at a reduced sales charge should consider doing so.
Smith Barney Financial Consultants may receive different
compensation for
selling each Class of shares. Investors should understand
that the purpose of
the CDSC on the Class B and Class C shares is the same as
that of the initial
sales charge on the Class A shares.
See "Purchase of Shares" and "Management of the Concert
Series" for a complete
description of the sales charges and service and
distribution fees for each
Class of shares and "Valuation of Shares," "Dividends,
Distribution and Taxes"
and "Exchange Privilege" for other differences between the
Classes of shares.
SMITH BARNEY 401(k) PROGRAM Investors may be eligible to
participate in the
Smith Barney 401(k) Program, which is generally designed to
assist plan spon-
sors in the creation and operation of the retirement plans
under Section 401(a)
of the Internal Revenue Code of 1986, as amended (the
"Code"), as well as other
types of participant directed, tax-qualified employee
benefit plans (collec-
tively, "Participating Plans"). Class A, Class B, Class C
and Class Y shares
are available as investment alternatives for Participating
Plans. See "Purchase
of Shares--Smith Barney 401(k) Program."
PURCHASE OF SHARES Shares may be purchased through a
brokerage account main-
tained with Smith Barney. Shares may also be purchased
through a broker that
clears securities transactions through Smith Barney on a
fully disclosed basis
(an "Introducing Broker") or an investment dealer in the
selling group. In
addition, certain investors, including qualified retire-
4
<PAGE>
Smith Barney Concert Series Inc.
PROSPECTUS SUMMARY (CONTINUED)
ment plans and certain other institutional investors, may
purchase shares
directly from the Concert Series through the Series'
transfer agent, First
Data Investor Services Group, Inc. ("First Data"). See
"Purchase of Shares."
INVESTMENT MINIMUMS Investors in Class A, Class B and Class
C shares may open
an account by making an initial investment of at least
$1,000 for each account
in each class (except for Systematic Investment Plan
accounts), or $250 for an
individual retirement account ("IRA") or a Self-Employed
Retirement Plan.
Investors in Class Y shares may open an account for an
initial investment of
$5,000,000. Subsequent investments of at least $50 may be
made for all Clas-
ses. For participants in retirement plans qualified under
Section 403(b)(7) or
Section 401(a) of the Code, the minimum initial investment
requirement for
Class A, Class B and Class C shares and the subsequent
investment requirement
for all Classes is $25. The minimum initial investment
requirement for Class
A, Class B and Class C shares and the subsequent investment
requirement for
all Classes through the Systematic Investment Plan described
below is $50. See
"Purchase of Shares."
SYSTEMATIC INVESTMENT PLAN Each Portfolio offers
shareholders a Systematic
Investment Plan under which they may authorize the automatic
placement of a
purchase order each month or quarter for Portfolio shares in
an amount of at
least $50. See "Purchase of Shares."
REDEMPTION OF SHARES Shares may be redeemed on each day the
New York Stock
Exchange, Inc. ("NYSE") is open for business. See "Purchase
of Shares" and
"Redemption of Shares."
MANAGEMENT OF EACH PORTFOLIO SBMFM serves as each
Portfolio's investment man-
ager. SBMFM is a wholly owned subsidiary of Smith Barney
Holdings Inc. ("Hold-
ings"). Holdings is a wholly owned subsidiary of Travelers
Group Inc. ("Trav-
elers"), a diversified financial services holding company
engaged, through its
subsidiaries, principally in four business segments:
Investment Services, Con-
sumer Finance Services, Life Insurance Services and Property
& Casualty Insur-
ance Services.
SBMFM serves as the investment adviser of each of the
Underlying Smith Barney
Funds (other than Smith Barney Premium Total Return Fund).
SBSA, a wholly
owned subsidiary of SBMFM, serves as investment adviser to
Smith Barney Pre-
mium Total Return Fund. See "Management of the Concert
Series."
EXCHANGE PRIVILEGE Shares of a Class may be exchanged for
shares of the same
Class of certain other Smith Barney Mutual Funds, including
the Underlying
Smith Barney Funds held by the Portfolios, at the respective
net asset values
next determined, plus any applicable sales charge
differential. See "Exchange
Privilege."
VALUATION OF SHARES Net asset value of each Portfolio for
the prior day gener-
ally will be quoted daily in the financial section of most
newspapers and is
also available from a Smith Barney Financial Consultant. See
"Valuation of
Shares."
DIVIDENDS AND DISTRIBUTIONS The Concert Series intends to
pay dividends from
net investment income monthly on shares of the Income
Portfolio, quarterly on
shares of the Conservative Portfolio and the Balanced
Portfolio and annually
on shares of the High Growth Portfolio and the Growth
Portfolio. Distributions
of net realized capital gains, if any, are paid annually for
each Portfolio.
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
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 dis-
tribution reinvestments will become eligible for conversion
to Class A shares
on a pro rata basis. See "Dividends, Distributions and
Taxes."
RISK FACTORS AND SPECIAL CONSIDERATIONS The assets of each
Portfolio are
invested in certain Underlying Smith Barney Funds, so each
Portfolio's invest-
ment performance is directly related to the investment
performance of the
Underlying Smith Barney Funds held. The ability of each
Portfolio to meet its
investment objective is directly related to the ability of
the Underlying
Smith Barney Funds held to meet their objectives as well as
the allocation
among those Underlying Smith Barney Funds by SBMFM. There
can be no assurance
that the investment objective of any Portfolio or any
Underlying Smith Barney
Fund will be achieved.
The value of the Underlying Smith Barney Funds'
investments, and thus the net
asset value of both those Underlying Smith Barney Funds' and
the Portfolios'
shares, will fluctuate in response to changes in market and
economic condi-
tions, as well as the financial condition and prospects of
issuers in which
the Underlying Smith Barney Funds invest. For a description
of the
5
<PAGE>
Smith Barney Concert Series Inc.
PROSPECTUS SUMMARY (CONTINUED)
risks involved in an investment in the Portfolios, see
"Investment Objectives
and Management Policies," "Description of the Underlying
Smith Barney Funds"
and the Appendix to this Prospectus.
EACH PORTFOLIO'S EXPENSES The following expense tables list
the costs and
expenses an investor will incur as a shareholder of each
Portfolio, based on
the maximum sales charge or maximum CDSC that may be
incurred at the time of
purchase or redemption and estimates of each Portfolio's
operating expenses for
its first full year of operation.
<TABLE>
<CAPTION>
APPLICABLE TO THE HIGH GROWTH
PORTFOLIO,
THE GROWTH PORTFOLIO AND THE
BALANCED PORTFOLIO
---------------------------------
- -----------------------
CLASS A CLASS B
CLASS C CLASS Y
- ------------------------------------------------------------
- -------------------------
<S> <C> <C> <C>
<C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum sales charge
imposed on purchases (as
a percentage of offering
price) 5.00% None
None None
Maximum CDSC (as a
percentage of original
cost or redemption
proceeds, whichever is
lower) None* 5.00%
1.00% None
- ------------------------------------------------------------
- -------------------------
ANNUAL PORTFOLIO
OPERATING EXPENSES (AS A
PERCENTAGE OF AVERAGE NET
ASSETS)
Management fee 0.35% 0.35%
0.35% 0.35%
12b-1 fee** 0.25 1.00
1.00 --
Other expenses*** None None
None None
- ------------------------------------------------------------
- -------------------------
TOTAL PORTFOLIO OPERATING
EXPENSES 0.60% 1.35%
1.35% 0.35%
- ------------------------------------------------------------
- -------------------------
<CAPTION>
APPLICABLE TO THE CONSERVATIVE
PORTFOLIO
AND THE INCOME
PORTFOLIO
---------------------------------
- -----------------------
CLASS A CLASS B
CLASS C CLASS Y
- ------------------------------------------------------------
- -------------------------
<S> <C> <C> <C>
<C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum sales charge
imposed on purchases (as
a percentage of offering
price) 4.50% None
None None
Maximum CDSC (as a
percentage of original
cost or redemption
proceeds, whichever is
lower) None* 4.50%
1.00% None
- ------------------------------------------------------------
- -------------------------
ANNUAL PORTFOLIO
OPERATING EXPENSES (AS A
PERCENTAGE OF AVERAGE NET
ASSETS)
Management fee 0.35% 0.35%
0.35% 0.35%
12b-1 fee** 0.25 0.75
0.70 --
Other expenses*** None None
None None
- ------------------------------------------------------------
- -------------------------
TOTAL PORTFOLIO OPERATING
EXPENSES 0.60% 1.10%
1.05% 0.35%
- ------------------------------------------------------------
- -------------------------
</TABLE>
* Purchases of Class A shares, which when combined with
current holdings of
Class A shares offered with a sales charge equal or
exceed $500,000 in the
aggregate, will be made at net asset value with no sales
charge, but will
be subject to a CDSC of 1.00% on redemptions made within
12 months.
** Upon conversion of Class B shares to Class A shares,
such shares will no
longer be subject to a distribution fee. Class C shares
do not have a con-
version feature and, therefore, are subject to an
ongoing distribution fee.
As a result, long-term shareholders of Class C shares
may pay more than the
economic equivalent of the maximum front-end sales
charge permitted by the
National Association of Securities Dealers, Inc.
*** Under the Asset Allocation and Administration Agreement
with each Portfo-
lio, SBMFM bears all expenses of each Class of each
Portfolio other than
the management fee, the 12b-1 fee and extraordinary
expenses.
The sales charges and CDSCs set forth in the above tables
are the maximum
charges imposed on purchases or redemptions of each of the
Portfolios' shares
and investors may actually pay lower or no charges,
depending on the amount
purchased and, in the case of Class B, Class C and certain
Class A shares, the
length of time the shares are held and whether the shares
are held through the
Smith Barney 401(k) Program. See "Purchase of Shares" and
"Redemption of
Shares." Smith Barney receives an annual 12b-1 service fee
of 0.25% of the
value of average daily net assets of Class A shares of each
Portfolio. Smith
Barney also receives with respect to Class B and Class C
shares of the High
Growth Portfolio, the Growth Portfolio and the Balanced
Portfolio an annual
12b-1 fee of 1.00% of the value of average daily net assets
of the respective
Classes, consisting of a 0.75% distribution fee and a 0.25%
service fee. For
Class B shares of the Conservative Portfolio and the Income
Portfolio, Smith
Barney receives an annual 12b-1 fee of 0.75% of the value of
average daily net
assets of that Class, consisting of a 0.50% distribution fee
and a 0.25% serv-
ice fee. For Class C shares of the Conservative Portfolio
and the Income Port-
folio, Smith Barney receives an annual 12b-1 fee of 0.70% of
the value of aver-
age daily net assets of that Class, consisting of a 0.45%
distribution fee and
a 0.25% service fee.
The Portfolios will invest only in Class Y shares of the
Underlying Smith Bar-
ney Funds and, accordingly, will not pay any sales load or
12b-1 service or
distribution fees in connection with their investments in
shares of the Under-
lying Smith Barney
6
<PAGE>
Smith Barney Concert Series Inc.
PROSPECTUS SUMMARY (CONTINUED)
Funds. The Portfolios, however, will indirectly bear their
pro rata share of
the fees and expenses incurred by the Underlying Smith
Barney Funds that are
applicable to Class Y shareholders. The investment returns
of each Portfolio,
therefore, will be net of the expenses of the Underlying
Smith Barney Funds in
which it is invested. The following chart shows the expense
ratios applicable
to Class Y shareholders of each Underlying Smith Barney Fund
held by a Portfo-
lio, based on estimated operating expenses for its current
fiscal year:
<TABLE>
<CAPTION>
UNDERLYING SMITH BARNEY FUND EXPENSE
RATIO
- ------------------------------------------------------------
- -
<S> <C>
Smith Barney Aggressive Growth Fund Inc. 0.92%
Smith Barney Appreciation Fund Inc. 0.69%
Smith Barney Equity Funds
Smith Barney Growth and Income Fund 0.87%
Smith Barney Fundamental Value Fund Inc. 0.90%
Smith Barney Funds, Inc.
Equity Income Portfolio 0.67%
Short-Term U.S. Treasury Securities Portfolio 0.54%
Smith Barney Income Funds
Smith Barney High Income Fund 0.81%
Smith Barney Utilities Fund 0.74%
Smith Barney Premium Total Return Fund 0.83%
Smith Barney Convertible Fund 0.92%
Smith Barney Diversified Strategic Income Fund 0.79%
Smith Barney Investment Funds Inc.
Smith Barney Managed Growth Fund 0.95%
Smith Barney Special Equities Fund 0.86%
Smith Barney Government Securities Fund 0.64%
Smith Barney Investment Grade Bond Fund 0.76%
Smith Barney Managed Governments Fund Inc. 0.74%
Smith Barney Money Funds, Inc.
Cash Portfolio 0.46%
Smith Barney Natural Resources Fund Inc. 1.74%
Smith Barney World Funds, Inc.
International Equity Portfolio 0.98%
Emerging Markets Portfolio 1.40%
International Balanced Portfolio 1.07%
Global Government Bond Portfolio 0.95%
- ------------------------------------------------------------
- -
</TABLE>
Based on a weighted average of the Class Y expense ratios
of Underlying Smith
Barney Funds in which a particular Portfolio is expected to
invest at the com-
mencement of investment operations, the approximate expense
ratios are expected
to be as follows: High Growth Portfolio, Class A 1.51%,
Class B 2.26%, Class C
2.26% and Class Y 1.26%; Growth Portfolio, Class A 1.45%,
Class B 2.20%, Class
C 2.20% and Class Y 1.20%; Balanced Portfolio, Class A
1.38%, Class B 2.13%,
Class C 2.13% and Class Y 1.13%; Conservative Portfolio,
Class A 1.36%, Class B
1.86%, Class C 1.81% and Class Y 1.11%; and Income
Portfolio, Class A 1.30%,
Class B 1.80%, Class C 1.75% and Class Y 1.05%. The expense
ratios may be
higher or lower depending on the allocation of the
Underlying Smith Barney
Funds within a Portfolio.
7
<PAGE>
Smith Barney Concert Series Inc.
PROSPECTUS SUMMARY (CONTINUED)
EXAMPLE The following example is intended to assist an
investor in understand-
ing the various costs that an investor in each of the
Portfolios will bear
directly or indirectly. The example assumes payment by each
Portfolio of oper-
ating expenses at the levels set forth in the table above
and of its pro rata
share of the Class Y expenses of the Underlying Smith Barney
Funds (also as set
forth above) in which a Portfolio is expected to invest at
the commencement of
investment operations. This example should not be considered
a representation
of future expenses. Actual expenses may be greater or lesser
than those shown
above.
<TABLE>
<CAPTION>
AN INVESTOR AN INVESTOR
WOULD PAY WOULD PAY
THE FOLLOWING THE FOLLOWING
EXPENSES ON A EXPENSES ON
$1,000 THE SAME
INVESTMENT, INVESTMENT,
ASSUMING ASSUMING
(1) 5.00% THE SAME
ANNUAL RETURN ANNUAL RETURN
AND BUT WITHOUT A
(2) REDEMPTION REDEMPTION AT
AT THE END THE END OF
OF EACH TIME EACH TIME
PERIOD: PERIOD:
-------------- --------------
1 YEAR 3 YEARS 1 YEAR 3 YEARS
- --------------------------------------
<S> <C> <C> <C> <C>
High Growth Portfolio
Class A $65 $95 $65 $95
Class B 73 101 23 71
Class C 33 71 23 71
Class Y 13 40 13 40
Growth Portfolio
Class A $64 $94 $64 $94
Class B 72 99 22 69
Class C 32 69 22 69
Class Y 12 38 12 38
Balanced Portfolio
Class A $63 $92 $63 $92
Class B 72 97 22 67
Class C 32 67 22 67
Class Y 12 36 12 36
Conservative Portfolio
Class A $58 $86 $58 $86
Class B 64 88 19 58
Class C 28 57 18 57
Class Y 11 35 11 35
Income Portfolio
Class A $58 $84 $58 $84
Class B 63 87 18 57
Class C 28 55 18 55
Class Y 11 33 11 33
- --------------------------------------
</TABLE>
8
<PAGE>
Smith Barney Concert Series Inc.
FINANCIAL HIGHLIGHTS (UNAUDITED)
FOR THE PERIOD FROM FEBRUARY 5, 1996
TO MAY 31, 1996
For a share of each class of capital stock outstanding
<TABLE>
<CAPTION>
HIGH GROWTH PORTFOLIO
GROWTH PORTFOLIO BALANCED PORTFOLIO
------------------------- --------
- ----------------- -------------------------
CLASS A CLASS B CLASS C CLASS A
CLASS B CLASS C CLASS A CLASS B CLASS C
- ------------------------------------------------------------
- ---------------------------------------------
<S> <C> <C> <C> <C>
<C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 11.40 $ 11.40 $11.40 $ 11.40
$ 11.40 $ 11.40 $ 11.40 $11.40 $ 11.40
- ------------------------------------------------------------
- ---------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.01 * * 0.08
0.05 0.06 0.08 0.07 0.06
Net realized and
unrealized gain (loss)
on investment 0.86 0.81 0.81 0.40
0.40 0.40 0.06 0.04 0.05
- ------------------------------------------------------------
- ---------------------------------------------
Total Income from
Investment Operations 0.87 0.81 0.81 0.48
0.45 0.46 0.14 0.11 0.11
- ------------------------------------------------------------
- ---------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income -- -- -- --
- -- -- (0.04) (0.03) (0.03)
- ------------------------------------------------------------
- ---------------------------------------------
Total Distributions 0.00 0.00 0.00 0.00
0.00 0.00 (0.04) (0.03) (0.03)
- ------------------------------------------------------------
- ---------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 12.27 $ 12.21 $12.21 $ 11.88
$ 11.85 $ 11.86 $ 11.50 $11.48 $ 11.48
- ------------------------------------------------------------
- ---------------------------------------------
TOTAL RETURN 7.63% 7.11% 7.11% 4.21%
3.95% 4.04% 1.23% 0.99% 0.99%
- ------------------------------------------------------------
- ---------------------------------------------
NET ASSETS, END OF
PERIOD (000S) $46,225 $49,924 $7,496 $46,823
$69,714 $12,244 $22,054 $7,177 $34,788
- ------------------------------------------------------------
- ---------------------------------------------
RATIOS TO AVERAGE NET
ASSETS
Expenses (annualized) 0.60% 1.10% 1.05% 0.60%
1.35% 1.35% 0.60% 1.35% 1.35%
Net investment income
(annualized) 0.51% 0.82% 0.01% 2.50%
1.73% 1.69% 4.98% 4.44% 4.06%
- ------------------------------------------------------------
- ---------------------------------------------
PORTFOLIO TURNOVER RATE 0.00% 0.00% 0.00% 0.00%
0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------
- ---------------------------------------------
</TABLE>
* Amount represents less than $0.01 per share.
For a share of each class of capital stock outstanding
<TABLE>
<CAPTION>
CONSERVATIVE PORTFOLIO
INCOME PORTFOLIO
-------------------------- -------
- --------------------
CLASS A CLASS B CLASS C CLASS A
CLASS B CLASS C
- ------------------------------------------------------------
- ---------------------
<S> <C> <C> <C> <C>
<C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $11.46 $11.46 $11.46 $11.46
$11.46 $11.46
- ------------------------------------------------------------
- ---------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.23 0.16 0.16 0.17
0.16 0.16
Net realized and
unrealized loss on
investment (0.21) (0.17) (0.15) (0.30)
(0.30) (0.30)
- ------------------------------------------------------------
- ---------------------
Total Income from
Investment Operations 0.02 (0.01) 0.01 (0.13)
(0.14) (0.14)
- ------------------------------------------------------------
- ---------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.05) (0.04) (0.05) (0.17)
(0.16) (0.16)
- ------------------------------------------------------------
- ---------------------
Total Distributions (0.05) (0.04) (0.05) (0.17)
(0.16) (0.16)
- ------------------------------------------------------------
- ---------------------
NET ASSET VALUE, END OF
PERIOD $11.43 $11.41 $11.42 $11.16
$11.16 $11.16
- ------------------------------------------------------------
- ---------------------
TOTAL RETURN 0.18% (0.04)% 0.06%
(0.59)% (0.71)% (0.71)%
- ------------------------------------------------------------
- ---------------------
NET ASSETS, END OF
PERIOD (000S) $8,872 $9,751 $1,758 $5,121
$6,953 $ 812
- ------------------------------------------------------------
- ---------------------
RATIOS TO AVERAGE NET
ASSETS
Expenses (annualized) 0.60% 1.10% 1.05% 0.60%
1.10% 1.05%
Net investment income
(annualized) 2.31% 2.08% 2.09% 5.65%
5.38% 5.33%
- ------------------------------------------------------------
- ---------------------
PORTFOLIO TURNOVER RATE 0.00% 0.00% 0.00% 0.00%
0.00% 0.00%
- ------------------------------------------------------------
- ---------------------
</TABLE>
9
<PAGE>
Smith Barney Concert Series Inc.
WHY INVEST IN THE CONCERT SERIES
The proliferation of mutual funds over the last several
years has left many
investors in search of a simple means to manage their long-
term investments.
With new investment categories emerging each year and with
each mutual fund
reacting differently to political, economic and business
events, many investors
are forced to make complex investment decisions in the face
of limited experi-
ence, time and personal resources. The Portfolios are
designed to meet the
needs of investors who prefer to have their asset allocation
decisions made by
professional money managers, are looking for an appropriate
core investment for
their retirement portfolio and appreciate the advantages of
broad diversifica-
tion. The Portfolios may be most appropriate for long-term
investors planning
for retirement, particularly investors in tax-advantaged
retirement accounts
including IRAs, 401(k) corporate employee savings plans,
403(b) non-profit
organization savings plans, profit-sharing and money-
purchase pension plans,
and other corporate pension and savings plans.
The Concert Series will be managed so that each Portfolio
can serve as a com-
plete investment program or as a core part of a larger
portfolio. Each of the
Portfolios invests in a select group of Underlying Smith
Barney Funds suited to
the Portfolio's particular investment objective. The
allocation of assets among
Underlying Smith Barney Funds within each Portfolio is
determined by SBMFM
according to fundamental and quantitative analysis. Because
the assets will be
adjusted only periodically and only within pre-determined
ranges that will
attempt to ensure broad diversification, there should not be
any sudden large-
scale changes in the allocation of a Portfolio's investments
among Underlying
Smith Barney Funds. The Concert Series is not designed as a
market timing vehi-
cle, but rather as a simple and conservative approach to
helping investors meet
retirement and other long-term goals.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The Concert Series is an open-end, non-diversified,
management investment com-
pany that currently offers five managed investment
portfolios. Each Portfolio
seeks to achieve its investment objective by investing
within specified ranges
among Underlying Smith Barney Funds, as well as in
repurchase agreements. Ini-
tially, each Portfolio will invest in the Underlying Smith
Barney Funds listed
below.
The investment manager for each Portfolio, SBMFM, will
allocate investments
for each Portfolio among Underlying Smith Barney Funds based
on its outlook for
the economy, financial markets and the relative performance
of the Underlying
Smith Barney Funds. The allocation among the Underlying
Smith Barney Funds will
be made within investment ranges established by the Board of
Directors of the
Concert Series which designate minimum and maximum
percentages for each of the
Underlying Smith Barney Funds.
The High Growth Portfolio's investment objective is to seek
capital apprecia-
tion. The Growth Portfolio's investment objective is to seek
long-term growth
of capital. The Balanced Portfolio's investment objective is
to seek a balance
of growth of capital and income. The Conservative
Portfolio's investment objec-
tive is to seek income and, secondarily, long-term growth of
capital. The
Income Portfolio's investment objective is to seek high
current income. Each
Portfolio's investment objective is fundamental and may be
changed only with
the approval of a majority of the Portfolio's outstanding
shares. There can be
no assurance that any Portfolio's investment objective will
be achieved.
In investing in Underlying Smith Barney Funds, the
Portfolios seek to maintain
different allocations between equity funds and fixed income
funds (including
money market funds) depending on a Portfolio's investment
objective. Allocating
investments between equity funds and fixed income funds
permits each Portfolio
to attempt to optimize performance consistent with its
investment objective.
The tables below illustrate the initial equity/fixed income
fund allocation
targets and ranges for each Portfolio:
Equity/Fixed Income Fund Range (Percent of Each
Portfolio's Net Assets)
<TABLE>
<CAPTION>
TYPE OF FUND TARGET RANGE
- --------------------------------------
<S> <C> <C>
High Growth Portfolio
Equity 90% 80%-100%
Fixed Income 10% 0%- 20%
Growth Portfolio
Equity 70% 60%- 80%
Fixed Income 30% 20%- 40%
</TABLE>
10
<PAGE>
Smith Barney Concert Series Inc.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES (CONTINUED)
<TABLE>
<CAPTION>
TYPE OF FUND TARGET RANGE
- ---------------------------------------
<S> <C> <C>
Balanced Portfolio
Equity 50% 40%- 60%
Fixed Income 50% 40%- 60%
Conservative Portfolio
Equity 30% 20%- 40%
Fixed Income 70% 60%- 80%
Income Portfolio
Equity 10% 0%- 20%
Fixed Income 90% 80%-100%
- ---------------------------------------
</TABLE>
The Portfolios invest their assets in the Underlying Smith
Barney Funds listed
below within the ranges indicated.
Investment Range (Percent of Each Portfolio's Net
Assets)
<TABLE>
<CAPTION>
UNDERLYING SMITH BARNEY HIGH GROWTH GROWTH BALANCED
CONSERVATIVE INCOME
FUND PORTFOLIO PORTFOLIO PORTFOLIO
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------
- --------------------
<S> <C> <C> <C>
<C> <C>
Smith Barney Aggressive
Growth Fund Inc. 10-30% 0-15% --
- -- --
Smith Barney
Appreciation Fund Inc. 0-20% 10-30% 0-20%
- -- --
Smith Barney Equity
Funds:
Smith Barney Growth and
Income Fund 0-20% 0-20% 5-20%
- -- --
Smith Barney Fundamental
Value Fund Inc. 0-20% 10-30% 0-20%
- -- --
Smith Barney Funds,
Inc.:
Equity Income Portfolio -- 0-20% 5-20%
5-20% 0-15%
Short-Term U.S.
Treasury Securities
Portfolio -- 0-15% 5-20%
5-20% 5-30%
Smith Barney Income
Funds:
Smith Barney High
Income Fund 0-20% 5-20% 0-15%
0-20% 0-20%
Smith Barney Utilities
Fund -- 0-20% 5-20%
5-20% 0-15%
Smith Barney Premium
Total Return Fund -- -- 5-20%
5-25% 0-15%
Smith Barney
Convertible Fund -- -- 5-20%
5-15% 0-15%
Smith Barney
Diversified Strategic
Income Fund -- -- 5-25%
10-30% 10-30%
Smith Barney Investment
Funds Inc.:
Smith Barney Managed
Growth Fund 0-20% 10-30% 0-15%
- -- --
Smith Barney Special
Equities Fund 10-30% 0-15% --
- -- --
Smith Barney Government
Securities Fund 0-15% 0-20% 0-20%
5-20% 5-20%
Smith Barney Investment
Grade Bond Fund 0-15% 0-15% --
- -- 0-15%
Smith Barney Managed
Governments Fund Inc. -- 0-15% 5-20%
5-25% 5-30%
Smith Barney Money
Funds, Inc.:
Cash Portfolio 0-20% 0-20% 0-25%
0-30% 0-30%
Smith Barney Natural
Resources Fund Inc. 0-10% 0-10% 0-10%
- -- --
Smith Barney World
Funds, Inc.:
International Equity
Portfolio 10-25% 5-20% 0-15%
0-10% 0-10%
Emerging Markets
Portfolio 0-20% -- --
- -- --
International Balanced
Portfolio 0-15% 0-10% 0-10%
0-10% 0-10%
Global Government Bond
Portfolio 0-15% 0-15% 0-15%
0-20% 0-20%
- ------------------------------------------------------------
- --------------------
</TABLE>
The Underlying Smith Barney Funds have been selected to
represent a broad
spectrum of investment options for the Portfolios. The
equity/fixed income
ranges and the investment ranges are based on the degree to
which the Under-
lying Smith Barney Funds selected are expected in
combination to be appropriate
for a Portfolio's particular investment objective. If, as a
result of apprecia-
tion or depreciation, the percentage of a Portfolio's assets
invested in an
Underlying Smith Barney Fund exceeds or is less than the
applicable percentage
limitations set forth above, SBMFM will consider, in its
discretion, whether to
reallocate the assets of the Portfolio to comply with the
foregoing percentage
limitations. THE PARTICULAR UNDERLYING SMITH BARNEY FUNDS IN
WHICH EACH PORTFO-
LIO MAY INVEST, THE EQUITY/FIXED INCOME FUND TARGETS AND
RANGES AND THE INVEST-
MENT RANGES APPLICABLE TO EACH UNDERLYING SMITH BARNEY FUND
MAY BE CHANGED FROM
TIME TO TIME BY THE CONCERT SERIES' BOARD OF DIRECTORS
WITHOUT THE APPROVAL OF
THE PORTFOLIO'S SHAREHOLDERS.
Each Portfolio can invest a certain portion of its cash
reserves in repurchase
agreements. Each Portfolio may also invest its cash reserves
in the Cash Port-
folio of Smith Barney Money Funds, Inc. A reserve position
provides flexibility
in meeting redemptions, expenses and the timing of new
investments, and serves
as a short-term defense during periods of unusual
volatility.
11
<PAGE>
Smith Barney Concert Series Inc.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES (CONTINUED)
For information about the investment objectives of each of
the Underlying
Smith Barney Funds and the investment techniques and the
risks involved in the
Underlying Smith Barney Funds, please refer to "Description
of the Underlying
Smith Barney Funds," the Appendix to this Prospectus, the
Statement of Addi-
tional Information and the prospectus for each of the
Underlying Smith Barney
Funds.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Non-Diversified Investment Company. The Concert Series is a
"non-diversified"
investment company for purposes of the Investment Company
Act of 1940, as
amended (the "1940 Act"), because it invests in the
securities of a limited
number of mutual funds. However, the Underlying Smith Barney
Funds themselves
are diversified investment companies (with the exception of
the Global Govern-
ment Bond Portfolio, the International Balanced Portfolio
and the Emerging Mar-
kets Portfolio). The Concert Series intends to qualify as a
diversified invest-
ment company for the purposes of Subchapter M of the Code.
Investing in Underlying Smith Barney Funds. The investments
of each Portfolio
are concentrated in the Underlying Smith Barney Funds, so
each Portfolio's
investment performance is directly related to the investment
performance of the
Underlying Smith Barney Funds held by it. The ability of
each Portfolio to meet
its investment objective is directly related to the ability
of the Underlying
Smith Barney Funds to meet their objectives as well as the
allocation among
those Underlying Smith Barney Funds by SBMFM. There can be
no assurance that
the investment objective of any Portfolio or any Underlying
Smith Barney Fund
will be achieved.
Affiliated Persons. SBMFM, the investment manager of the
Portfolios, and the
officers and directors of the Concert Series presently serve
as investment
adviser, officers and directors, respectively, of many of
the Underlying Smith
Barney Funds. Therefore, conflicts may arise as these
persons fulfill their
fiduciary responsibilities to the Portfolios and the
Underlying Smith Barney
Funds.
Investment Practices of Underlying Smith Barney Funds. In
addition to their
principal investments, certain Underlying Smith Barney Funds
may invest a por-
tion of their assets in foreign securities; enter into
forward currency trans-
actions; lend their portfolio securities; enter into stock
index, interest rate
and currency futures contracts, and options on such
contracts; engage in
options transactions; make short sales; purchase zero coupon
bonds and payment-
in-kind bonds; purchase restricted and illiquid securities;
enter into forward
roll transactions; purchase securities on a when-issued or
delayed delivery
basis; enter into repurchase or reverse repurchase
agreements; borrow money;
and engage in various other investment practices.
High Yield Securities. Each of the Portfolios also may
invest in an Underlying
Smith Barney Fund that invests primarily in high yield, high
risk securities,
commonly referred to as junk bonds. As a result, the
Portfolios may be subject
to some of the risks resulting from high yield investing.
Further, each of the
Portfolios may invest in Underlying Smith Barney Funds that
invest in medium
grade bonds. If these bonds are downgraded, the Portfolios
will consider
whether to increase or decrease their investment in the
affected Underlying
Smith Barney Fund. Lower quality debt instruments generally
offer a higher cur-
rent yield than that available from higher grade issues, but
typically involve
greater risk. Lower rated and comparable unrated securities
are especially sub-
ject to adverse changes in general economic conditions, to
changes in the
financial condition of their issuers, and to price
fluctuation in response to
changes in interest rates. During periods of economic
downturn or rising inter-
est rates, issuers of these instruments may experience
financial stress that
could adversely affect their ability to make payments of
principal and interest
and increase the possibility of default. Further information
on these invest-
ment policies and practices can be found under "Description
of the Underlying
Smith Barney Funds," in the Appendix to this Prospectus and
in the Statement of
Additional Information as well as the prospectus of each
Underlying Smith Bar-
ney Fund.
Concentration. Each Portfolio other than the High Growth
Portfolio may invest
in an Underlying Smith Barney Fund that concentrates its
investments in the
utilities industry. Under certain unusual circumstances,
this could result in
those Portfolios being indirectly concentrated in this
industry. If this were
to occur, the relevant Portfolios would consider whether to
maintain or change
their investment in that Underlying Smith Barney Fund.
Market and Economic Factors. The Portfolios' share prices
and yields will
fluctuate in response to various market and economic factors
related to both
the stock and bond markets. All Portfolios may invest in
mutual funds that in
turn invest in
12
<PAGE>
Smith Barney Concert Series Inc.
RISK FACTORS AND SPECIAL CONSIDERATIONS (CONTINUED)
international securities and thus are subject to additional
risks of these
investments, including changes in foreign currency exchange
rates and political
risk.
PORTFOLIO TURNOVER
Each Portfolio's turnover rate is not expected to exceed
25% annually. A Port-
folio may purchase or sell securities to: (a) accommodate
purchases and sales
of its shares; (b) change the percentages of its assets
invested in each of the
Underlying Smith Barney Funds in response to market
conditions; and (c) main-
tain or modify the allocation of its assets between equity
and fixed income
funds and among the Underlying Smith Barney Funds within the
percentage limits
described above.
The turnover rates of the Underlying Smith Barney Funds
have ranged from 16%
to 292% during their most recent fiscal years. There can be
no assurance that
the turnover rates of these funds will remain within this
range during subse-
quent fiscal years. Higher turnover rates may result in
higher expenses being
incurred by the Underlying Smith Barney Funds.
INVESTMENT RESTRICTIONS
In addition to the investment objectives of each Portfolio,
the Concert Series
has adopted restrictions with respect to each Portfolio that
may not be changed
without approval of a majority of the Portfolio's
outstanding shares. The fun-
damental investment restrictions imposed by the Concert
Series prohibit each
Portfolio from, among other things: (i) borrowing money
except from banks for
temporary or emergency purposes, including the meeting of
redemption requests
in an amount not exceeding 33 1/3% of the value of the
Portfolio's total assets
(including the amount borrowed) valued at market less
liabilities (not includ-
ing the amount borrowed) at the time the borrowing is made
and (ii) making
loans to others, except through the purchase of portfolio
securities consistent
with its investment objective and policies and through the
entering into repur-
chase agreements.
Certain other investment restrictions, including
fundamental restrictions as
well as restrictions that may be changed without a
shareholder vote, adopted by
the Concert Series are described in the Statement of
Additional Information.
Investment restrictions of the Underlying Smith Barney Funds
in which the Port-
folios invest may be more or less restrictive than those
adopted by the Concert
Series.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS
The following is a concise description of the investment
objectives and prac-
tices for each of the Underlying Smith Barney Funds in which
the Portfolios may
invest. There can be no assurance that the investment
objectives of the Under-
lying Smith Barney Funds will be met. Additional information
regarding the
investment practices of the Underlying Smith Barney Funds is
located in the
Appendix to this Prospectus, in the Statement of Additional
Information and in
the prospectus of each of the Underlying Smith Barney Funds.
No offer is made
in this Prospectus of any of the Underlying Smith Barney
Funds.
EQUITY FUNDS The following Underlying Smith Barney Funds are
funds that invest
primarily in equity securities.
Smith Barney Aggressive Growth Fund Inc. seeks capital
appreciation by invest-
ing primarily in common stock of companies the Fund's
investment adviser
believes are experiencing, or have the potential to
experience, growth in earn-
ings that exceed the average earnings growth rate of
companies whose securities
are included in the Standard & Poor's Daily Price Index of
500 Common Stocks
(the "S&P 500"), a weighted index that measures the
aggregate change in market
value of 400 industrials, 60 transportation stocks and
utility companies and 40
financial issues. SBMFM focuses its stock selection for the
Fund on a diversi-
fied group of small- or medium-sized emerging growth
companies that have passed
their "start-up" phase and show positive earnings and the
prospect of achieving
significant profit gains in the two to three years after the
Fund acquires
their stocks. These companies generally may be expected to
benefit from new
technologies, techniques, products or services or cost-
reducing measures, and
may be affected by changes in management, capitalization or
asset deployment,
government regulations or other external circumstances.
Although SBMFM anticipates that the assets of the Fund
ordinarily will be
invested primarily in common stocks of U.S. companies, the
Fund may invest in
convertible securities, preferred stocks, securities of
foreign issuers, war-
rants and restricted
13
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
securities. The Fund also is authorized to borrow up to 33
1/3% of its total
assets less liabilities for leveraging purposes. Securities
of the kinds of
companies in which the Fund invests may be subject to
significant price fluctu-
ation and above average risk.
Smith Barney Appreciation Fund Inc. seeks long-term
appreciation of sharehold-
ers' capital. The Fund attempts to achieve its investment
objective by invest-
ing primarily in equity securities (consisting of common
stocks, preferred
stocks, warrants, rights and securities convertible into
common stocks) that
are believed to afford attractive opportunities for
investment appreciation.
The core holdings of the Fund are blue chip companies that
are dominant in
their industries; however, at the same time, the Fund may
hold securities of
companies with prospects of sustained earnings growth and/or
companies with a
cyclical earnings record if it is felt these offer
attractive investment oppor-
tunities. Typically, the Fund invests in middle- and larger-
sized companies,
though it does invest in smaller companies whose securities
may reasonably be
expected to appreciate. The Fund's investments are spread
broadly among differ-
ent industries. The Fund may hold issues traded over-the-
counter as well as
those listed on one or more national securities exchanges,
and the Fund may
make investments in foreign securities although management
intends to limit
such investments to 10% of the Fund's assets.
Smith Barney Fundamental Value Fund Inc.'s investment
objective is long-term
capital growth. Current income is a secondary objective. The
Fund seeks to
achieve its primary objective by investing in a diversified
portfolio of common
stocks and common stock equivalents and, to a lesser extent,
in bonds and other
debt instruments. The Fund's investment emphasis is on
securities that are
undervalued in the marketplace and, accordingly, have above-
average potential
for capital growth. In general, the Fund invests in
securities of companies
that are temporarily unpopular among investors but which
SBMFM regards as pos-
sessing favorable prospects for earnings growth and/or
improvements in the
value of their assets and, consequently, as having a
reasonable likelihood of
experiencing a recovery in market price.
Smith Barney Special Equities Fund, an investment portfolio
of Smith Barney
Investment Funds Inc., seeks long-term capital appreciation
by investing in
equity securities (common stocks or securities that are
convertible into or
exchangeable for such stocks, including warrants) that SBMFM
believes to have
superior appreciation potential. The Fund invests primarily
in equity securi-
ties of secondary growth companies, generally not within the
S&P 500, as iden-
tified by SBMFM. These companies may not have reached a
fully mature stage of
earnings growth, since they may still be in the
developmental stage, or may be
older companies that appear to be entering a new stage of
more rapid earnings
progress due to factors such as management change or
development of new tech-
nology, products or markets. A significant number of these
companies may be in
technology areas, including health care related sectors, and
may have annual
sales of less than $300 million. The Fund may also choose to
invest in some
relatively unseasoned stocks, i.e., securities issued by
companies whose market
capitalization is under $100 million. Investing in smaller,
newer issuers gen-
erally involves greater risk than investing in larger, more
established
issuers.
Smith Barney Managed Growth Fund, an investment portfolio
of Smith Barney
Investment Funds Inc., has as its investment objective long
term growth of cap-
ital. The Fund attempts to achieve its objective by
investing primarily in
undervalued or out of favor common stock and other
securities, including debt
securities that are convertible into common stock and that
are currently price
depressed. Such securities might typically be valued at the
low end of their
52-week trading range. Although under normal circumstances
the Fund's portfolio
will primarily consist of these securities, the Fund may
also invest in pre-
ferred stocks and warrants when SBMFM perceives an
opportunity for capital
growth from such securities.
The Equity Income Portfolio, an investment portfolio of
Smith Barney Funds,
Inc., seeks current income and long-term growth of capital.
The Fund invests
primarily in common stocks offering a current return from
dividends and will
also normally include some interest-paying debt obligations
(such as U.S. gov-
ernment obligations, investment grade bonds and debentures)
and high quality
short-term debt obligations (such as commercial paper and
repurchase agreements
collateralized by U.S. government securities with
broker/dealers or other
financial institutions, including the Fund's custodian) and
may also purchase
preferred stocks and convertible securities. Temporary
defensive investments or
a higher percentage of debt securities may be held when
deemed advisable by
SBMFM, the Fund's adviser. In the selection of common stock
investments, empha-
sis is generally placed on issues with established dividend
records as well as
potential for price appreciation. From time to time,
however, a portion of the
assets may be invested in non-dividend paying stocks. The
Fund may make invest-
ments in foreign securities, though management currently
intends to limit such
investments to 5% of the Fund's assets, and an additional
10% of its assets may
be invested in American Depository Receipts ("ADRs")
representing shares in
foreign securities that are traded in U.S. securities
markets.
14
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
Smith Barney Growth and Income Fund, an investment
portfolio of Smith Barney
Equity Funds, seeks long-term capital growth and income by
investing in income
producing equity securities, including dividend-paying
common stocks, securi-
ties that are convertible into common stocks and warrants.
Consistent with
data used in developing and maintaining quantitative
investment criteria
developed by SBMFM to evaluate investment decisions, the
Fund expects to
invest primarily in domestic companies of varying sizes,
generally with capi-
talizations exceeding $250 million in a wide range of
industries. The Fund may
also invest up to 20% in the securities of foreign issuers,
including ADRs or
European Depository Receipts. Under normal market
conditions, the Fund will
invest substantially all, but not less than 65%, of its
assets in equity secu-
rities. The Fund may invest the remainder of its assets in
high grade money
market instruments in order to develop income, as well as in
corporate bonds
and mortgage related securities that are rated investment
grade or are deemed
by SBMFM to be of comparable quality and in U.S. government
securities.
Smith Barney Natural Resources Fund Inc. seeks long-term
capital appreciation
by investing primarily in "Natural Resource Investments."
Natural Resource
Investments are defined as equity and debt securities of
issuers that: (1) own
or process natural resources, such as precious metals, other
minerals, water,
timberland, agricultural commodities and forest products;
(2) own or produce
sources of energy such as oil, natural gas, coal, uranium,
geothermal, oil
shale and biomass; (3) participate in the exploration and
development, trans-
portation, distribution and/or processing of natural
resources; (4) own or
control oil, gas, or other mineral leases, rights or
royalties; (5) provide
related services or supplies, such as drilling, well
servicing, chemicals,
parts and equipment; (6) develop or participate in energy-
efficient technolo-
gies; and (7) are involved in the upgrading or processing of
raw commodities
into intermediate products. The Fund may also invest in gold
bullion and gold
coins. (A company is considered a "Natural Resources
Investment" when it
derives at least 50% of its total revenue from a business or
activity
described above.) There is no guarantee that the Fund will
achieve its invest-
ment goal.
Under normal market conditions, the Fund will invest at
least 65% of its
assets in Natural Resource Investments. Up to 35% of the
Fund's assets may be
invested in companies not in the natural resources area,
investment grade cor-
porate debt securities, U.S. Government securities and, for
cash management
purposes, money market instruments. For temporary defensive
purposes, the Fund
may invest in excess of 35% in money market instruments.
The Fund may utilize up to 10% of its assets to purchase
put options on secu-
rities it owns and up to an additional 10% of its assets to
purchase call
options on securities it may acquire in the future. The Fund
may purchase only
put options that are traded on a regulated exchange. It also
may purchase and
write put and call options on domestic and foreign stock
indexes to hedge
against risks of market-wide movements affecting that
portion of its assets
invested in the country whose stocks are subject to the
hedges.
The composition of the portfolio of the Fund will vary
depending on the
determination of its investment adviser, SBMFM, of how best
to achieve long-
term capital appreciation. Equity securities in which the
Fund may invest
include common stocks, preferred stocks, convertible
securities and warrants.
Debt securities the Fund may acquire include bonds, notes
and debentures of
companies and governments. The Fund may invest in debt
securities when SBMFM
believes they will enhance the Fund's ability to achieve
long-term capital
appreciation. The Fund may invest in fixed-income securities
that are rated as
low as B by Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's
Corporation ("S&P") or if unrated, are deemed by SBMFM to be
of comparable
quality. The medium- and lower-rated securities in which the
Fund may invest,
some of which have speculative characteristics, may be
subject to greater mar-
ket fluctuation and greater risk of loss of income or
principal than higher
rated securities.
Because issuers of Natural Resource Investments often are
located outside the
United States, a significant portion of the Fund's
investments may consist of
securities of foreign issuers. The percentage of assets
invested in particular
countries or regions will change from time to time in
accordance with the
judgment of the Fund's investment manager, which may be
based on, among other
things of consideration of the political stability and
economic outlook of
these countries or regions.
Smith Barney Premium Total Return Fund, an investment
portfolio of Smith Bar-
ney Income Funds, seeks to provide shareholders with total
return, consisting
of long-term capital appreciation and income, by investing
primarily in a
diversified portfolio of dividend-paying common stocks. The
Fund also pur-
chases put and call options and writes covered put and call
options on securi-
ties it holds and on stock indexes primarily as a hedge to
reduce investment
risk. Because the Fund seeks total return
15
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
by emphasizing investments in dividend-paying common stocks,
it will not have
as much investment flexibility as total return funds that
may pursue their
objective by investing in both income and equity stocks
without such an empha-
sis. The Fund also may invest up to 10% of its assets in:
(a) securities rated
less than investment grade by Moody's or S&P or unrated
securities of compara-
ble quality; (b) interest-paying debt securities, such as
U.S. government secu-
rities; and (c) other securities, including convertible
bonds, convertible pre-
ferred stock and warrants.
The Emerging Markets Portfolio, an investment portfolio of
Smith Barney World
Funds, Inc., seeks long term capital appreciation on its
assets through a port-
folio invested primarily in securities of emerging country
issuers (consisting
of dividend and non-dividend paying common stocks, preferred
stocks, convert-
ible securities and rights and warrants to such securities).
The Fund will also
invest in debt securities having a high potential for
capital appreciation,
especially in countries where direct equity investment is
not permitted. Under
normal conditions, at least 70% of the Fund's assets will be
invested in equity
securities. For purposes of its investment objective, the
Fund considers as
"emerging" all countries other than the United States,
Canada, Ireland, the
United Kingdom, Sweden, Norway, Finland, Denmark, Holland,
Germany, Switzer-
land, Belgium, France, Italy, Spain and Japan. The Fund is a
non-diversified
portfolio, but will generally invest its assets broadly
among countries and
will normally have at least 65% of its assets invested in
issuers in not less
than three different countries.
The Fund also may invest in debt securities of issuers in
countries having
smaller capital markets. Capital appreciation in debt
securities may arise as a
result of a favorable change in relative foreign exchange
rates, in relative
interest rate levels, or in the creditworthiness of issuers.
The Fund will not
seek to benefit from anticipated short-term fluctuations in
currency exchange
rates. The Fund may invest in debt securities with
relatively high yields (as
compared to other debt securities meeting the Fund's
investment criteria), not-
withstanding that the Fund may not anticipate that such
securities will experi-
ence substantial capital appreciation. The Fund also may
invest in debt securi-
ties issued or guaranteed by foreign governments (including
foreign states,
provinces and municipalities) or their agencies and
instrumentalities, issued
or guaranteed by supranational organizations or issued by
foreign corporations
or financial institutions.
The International Equity Portfolio, an investment portfolio
of Smith Barney
World Funds, Inc., seeks a total return on its assets from
growth of capital
and income. Under normal market conditions, the Fund invests
at least 65% of
its assets in a diversified portfolio of equity securities
consisting of divi-
dend and non-dividend paying common stock, preferred stock,
convertible debt
and rights and warrants to such securities and up to 35% of
the Fund's assets
in bonds, notes and debt securities (consisting of
securities issued in the
Eurocurrency markets or obligations of the U.S. or foreign
governments and
their political subdivisions) of established non-U.S.
issuers. Investments may
be made for capital appreciation or for income or any
combination of both for
the purpose of achieving a higher overall return than might
otherwise be
obtained solely from investing for growth of capital or for
income. There is no
limitation on the percent or amount of the Fund's assets
that may be invested
for growth or income and, therefore, from time to time the
investment emphasis
may be placed solely or primarily on growth of capital or
solely or primarily
on income. The Fund may borrow up to 25% of the value of its
assets for invest-
ment purposes, which involves certain risk considerations.
The Fund will generally invest its assets broadly among
countries and will
normally have represented in the portfolio business
activities in not less than
three different countries. The Fund will normally invest at
least 65% of its
assets in companies organized or governments located in any
area of the world
other than the U.S. However, under unusual economic or
market conditions as
determined by the investment adviser, for defensive purposes
the Fund may tem-
porarily invest all or a major portion of its assets in U.S.
government securi-
ties or in debt or equity securities of companies
incorporated in and having
their principal business activities in the U.S.
FIXED INCOME FUNDS The following Underlying Smith Barney
Funds invest primarily
in fixed income securities, including the money market fund
in which each Port-
folio may invest and which may serve as the cash reserve
portion of each Port-
folio.
Smith Barney High Income Fund, an investment portfolio of
the Smith Barney
Income Funds, seeks to provide shareholders with high
current income. Although
growth of capital is not an investment objective of the
Fund, SBMFM may con-
sider potential for growth as one factor, among others, in
selecting invest-
ments for the Fund. The Fund will seek high current income
by investing, under
normal circumstances, at least 65% of its assets in high
risk, high-yielding
corporate bonds, debentures and notes denominated in U.S.
dollars or foreign
currencies. Up to 40% of the Fund's assets may be invested
in fixed-income
obligations of foreign issuers, and up to 20% of its assets
may be invested in
common stock or other equity-related
16
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
securities, including convertible securities, preferred
stock, warrants and
rights. Securities purchased by the Fund generally will be
rated in the lower
rating categories of recognized rating agencies, as low as
Caa by Moody's or D
by S&P, or in unrated securities that SBMFM deems of
comparable quality.
However, the Fund will not purchase securities rated lower
than B by both
Moody's and S&P unless, immediately after such purchase, no
more than 10% of
its total assets are invested in such securities. The Fund
may hold securities
with higher ratings when the yield differential between low-
rated and higher-
rated securities narrows and the risk of loss may be reduced
substantially
with only a relatively small reduction in yield. The Fund
also may invest in
higher-rated securities when SBMFM believes that a more
defensive investment
strategy is appropriate in light of market or economic
conditions.
Smith Barney Investment Grade Bond Fund, an investment
portfolio of Smith
Barney Investment Funds Inc., seeks to provide as high a
level of current
income as is consistent with prudent investment management
and preservation of
capital. Except when in a temporary defensive investment
position, the Fund
intends to maintain at least 65% of its assets invested in
bonds. The Fund
seeks to achieve its objective by investing in any of the
following securi-
ties: corporate bonds rated Baa or better by Moody's or BBB
or better by S&P;
U.S. government securities; commercial paper issued by
domestic corporations
and rated Prime-1 or Prime-2 by Moody's or A-1 or A-2 by
S&P, or, if not rat-
ed, issued by a corporation having an outstanding debt issue
rated Aa or bet-
ter by Moody's or AA or better by S&P; negotiable bank
certificates of deposit
and bankers' acceptances issued by domestic banks (but not
their foreign
branches) having total assets in excess of $1 billion; and
high-yielding com-
mon stocks and warrants. A reduction in the rating of a
security does not
require the sale of the security by the Fund.
Smith Barney Government Securities Fund, an investment
portfolio of Smith
Barney Investment Funds Inc., seeks high current return by
investing in obli-
gations of, or guaranteed by, the U.S. government, its
agencies or instrumen-
talities (including, without limitation, Treasury bills and
bonds, mortgage
participation certificates issued by the Federal Home Loan
Mortgage Corpora-
tion ("FHLMC") and mortgage-backed securities issued by the
Government
National Mortgage Association ("GNMA"). The Fund may invest
up to 5% of its
net assets in U.S. government securities for which the
principal repayment at
maturity, while paid in U.S. dollars, is determined by
reference to the
exchange rate between the U.S. dollar and the currency of
one or more foreign
countries. In addition, the Fund may borrow money (up to 25%
of its total
assets) to increase its investments, thereby leveraging its
portfolio and
exaggerating the effect on net asset value of any increase
or decrease in the
market value of the Fund's securities. Except when in a
temporary defensive
investment position, the Fund intends to maintain at least
65% of its assets
invested in U.S. government securities (including futures
contracts and
options thereon and options relating to U.S. government
securities).
The Short-Term U.S. Treasury Securities Portfolio, an
investment portfolio of
Smith Barney Funds, Inc., seeks current income, preservation
of capital and
liquidity. The Fund seeks to achieve its objective by
investing its assets in
U.S. Treasury securities backed by the full faith and credit
of the U.S. gov-
ernment. Shares of the Fund are not issued, insured or
guaranteed, as to value
or yield, by the U.S. government or its agencies or
instrumentalities. In an
effort to minimize fluctuations in market value of its
portfolio securities,
the Fund is expected to maintain a dollar-weighted average
maturity of approx-
imately three years. Pending direct investment in U.S.
Treasury debt securi-
ties, the Fund may enter into repurchase agreements secured
by such securities
in an amount up to 10% of the value of its total assets. The
Fund may, to a
limited degree, engage in short-term trading to attempt to
take advantage of
short-term market variations, or may dispose of a portfolio
security prior to
its maturity if it believes such disposition advisable or it
needs to generate
cash to satisfy redemptions.
Smith Barney Managed Governments Fund Inc. seeks high
current income consis-
tent with liquidity and safety of capital. The Fund invests
substantially all
of its assets in U.S. government securities and, under
normal circumstances,
the Fund is required to invest at least 65% of its assets in
such securities.
The Fund's portfolio of U.S. government securities consists
primarily of mort-
gage-backed securities issued or guaranteed by GNMA, the
Federal National
Mortgage Association ("FNMA") and FHLMC. Assets not invested
in such mortgage-
backed securities are invested primarily in direct
obligations of the United
States Treasury and other U.S. government securities. The
weighted average
maturity of the Fund's portfolio will vary from time to time
and the Fund may
invest in U.S. government securities of all maturities:
short-term, intermedi-
ate-term and long-term. The Fund may invest without limit in
securities of any
issuer of U.S. government securities, and may invest up to
an aggregate of 15%
of its total assets in securities with contractual or other
restrictions on
resale and other instruments that are not readily marketable
(such as repur-
chase agreements with maturities in excess of seven days).
The Fund may invest
up to 5% of its net assets in U.S. government securities for
which the princi-
pal repayment at maturity, while paid in U.S. dollars, is
determined by refer-
ence to the exchange rate between the U.S. dollar and the
currency of one or
more foreign countries.
17
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
Smith Barney Diversified Strategic Income Fund, an
investment portfolio of
Smith Barney Income Funds, seeks high current income
primarily through invest-
ment in fixed-income securities. The Fund attempts to
achieve its objective by
allocating and reallocating its assets primarily among
various types of fixed-
income securities selected by Greenwich Street Advisors (a
division of SBMFM)
based on its analysis of economic and market conditions and
the relative risks
and opportunities of particular securities. The types of
fixed-income securi-
ties among which the Fund's assets will be primarily
allocated are: obliga-
tions issued or guaranteed as to principal and interest by
the United States
government; mortgage-related securities issued by various
governmental and
non-governmental entities; domestic and foreign corporate
securities; and for-
eign government securities. Under normal conditions, at
least 65% of the
Fund's assets will be invested in fixed-income securities,
which includes non-
convertible preferred stocks. The Fund generally will invest
in intermediate-
and long-term fixed-income securities with the result that,
under normal mar-
ket conditions, the weighted average maturity of the Fund's
securities is
expected to be between five and 12 years.
Mortgage-related securities in which the Fund may invest
include mortgage
obligations collateralized by mortgage loans or mortgage
pass-through certifi-
cates. Mortgage-related securities held by the Fund
generally will be rated no
lower than Aa by Moody's or AA by S&P or, if not rated, of
equivalent invest-
ment quality as determined by Greenwich Street Advisors. The
Fund may invest
up to 35% of its assets in corporate fixed-income securities
of domestic
issuers rated Ba or lower by Moody's or BB or lower by S&P
or in nonrated
securities deemed by Greenwich Street Advisors to be of
comparable quality.
The Fund may invest in fixed-income securities rated as low
as Caa by Moody's
or CCC by S&P.
In general, the Fund may invest in debt securities issued
by foreign govern-
ments or any of their political subdivisions that are
considered stable by
Smith Barney Global Capital Management, Inc., the Fund's
subadviser. Up to 5%
of the Fund's assets may be invested in foreign securities
issued by countries
with developing economies. The Fund may also invest in
securities issued by
supranational organizations.
The Global Government Bond Portfolio, an investment
portfolio of Smith Barney
World Funds, Inc., seeks as high a level of current income
and capital appre-
ciation as is consistent with its policy of investing
principally in high
quality bonds of the U.S. and foreign governments. Under
normal market condi-
tions, the Fund invests at least 65% of its total assets in
bonds issued or
guaranteed by the U.S. or foreign governments (including
foreign states, prov-
inces, cantons and municipalities) or their agencies,
authorities or instru-
mentalities denominated in various currencies, including
U.S. dollars, or in
multinational currency units, such as the European Currency
Unit. Except with
respect to government securities of less developed
countries, the Fund invests
in foreign government securities only if the issue or the
issuer thereof is
rated in the two highest rating categories by Moody's or
S&P, or if unrated,
are of comparable quality in the determination of the
investment adviser.
Under normal circumstances the Fund may invest up to 35% of
its total assets
in debt obligations (including debt obligations convertible
into common stock)
of U.S. or foreign corporations and financial institutions
and supranational
entities. Any non-governmental investment would be limited
to issues that are
rated A or better by Moody's or S&P, or if not rated,
determined to be of com-
parable quality.
The Fund is a non-diversified portfolio and currently
contemplates investing
primarily in obligations of the U.S. and of developed
nations (i.e., industri-
alized countries) that the investment adviser believes to
pose limited credit
risks. These countries currently are Australia, Austria,
Belgium, Canada, Den-
mark, Finland, France, Ireland, Italy, Japan, Luxembourg,
Netherlands, New
Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the
United Kingdom and
Germany. Investments may be made from time to time in
government securities of
less developed countries (i.e., Argentina, Brazil, Chile,
Mexico and
Venezuela). Historical experience indicates that markets of
less developed
countries have been more volatile than the markets of
developed countries. The
investment adviser does not intend to invest more than 10%
of the Fund's total
assets in government securities of less developed countries
and will not
invest more than 5% of its assets in the government
securities of any one such
country. Such investments will be made only in investment
grade securities
(rated at least Baa by Moody's or BBB by S&P), or if
unrated, securities that
are judged to be of comparable quality by the investment
adviser. Under normal
market conditions the Fund invests at least 65% of its
assets in issues of not
less than three different countries; issues of any one
country (other than the
United States) will represent no more than 45% of the Fund's
total assets.
The Cash Portfolio is an investment portfolio of Smith
Barney Money Funds,
Inc., a money market fund that seeks maximum current income
and preservation
of capital. The Fund may invest in domestic and foreign
money market securi-
ties consisting of bank obligations and high quality
commercial paper, corpo-
rate obligations and municipal obligations, in addition to
U.S. govern-
18
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
ment obligations and related repurchase agreements. The Fund
intends to main-
tain at least 25% of its total assets invested in
obligations of domestic and
foreign banks. Shares of the Fund are not insured or
guaranteed by the U.S.
government.
The Fund has adopted certain investment policies to assure
that, to the extent
reasonably possible, the Fund's price per share will not
change from $1.00,
although no assurance can be given that this goal will be
achieved on a contin-
uous basis. In order to minimize fluctuations in market
price, the Fund will
not purchase a security with a remaining maturity of greater
than 13 months or
maintain a dollar-weighted average portfolio maturity in
excess of 90 days (se-
curities used as collateral for repurchase agreements are
not subject to these
restrictions).
The Fund's investments are limited to U.S. dollar-
denominated instruments that
have received the highest rating from the "Requisite
NRSROs," securities of
issuers that have received such rating with respect to other
short-term debt
securities and comparable unrated securities. "Requisite
NRSROs" means (a) any
two nationally recognized statistical ratings organizations
("NRSROs") that
have issued a rating with respect to a security or class of
debt obligations of
an issuer, or (b) one NRSRO, if only one NRSRO has issued
such a rating at the
time that the Fund acquires the security. The NRSROs
currently designated as
such by the SEC are S&P, Moody's, Fitch Investors Services,
Inc., Duff and
Phelps Inc., IBCA Limited and its affiliate, IBCA, Inc. and
Thomson BankWatch.
For purposes of the equity/fixed income fund allocation
targets and ranges
applicable to each Portfolio (see page 11 above), each of
the following Under-
lying Smith Barney Funds is considered to be an equity fund
with respect to 50%
of a Portfolio's investment in such Fund and an income fund
with respect to the
remaining 50% of such Portfolio's investment.
The Smith Barney Convertible Fund, an investment portfolio
of Smith Barney
Income Funds, seeks current income and capital appreciation
by investing in
convertible securities and in combinations of nonconvertible
fixed-income secu-
rities and warrants or call options that together resemble
convertible securi-
ties ("synthetic convertible securities"). Under normal
circumstances, the Fund
will invest at least 65% of its assets in convertible
securities, but is not
required to sell securities to conform to this limitation
and may retain on a
temporary basis securities received upon the conversion or
exercise of such
securities. The Fund will not invest in fixed-income
securities that are rated
lower than B by Moody's or S&P or, if unrated, deemed by
SBMFM to be comparable
to securities rated lower than B. The Fund may invest up to
35% of its assets
in synthetic convertible securities and in equity and debt
securities that are
not convertible into common stock and, for temporary
defensive purposes, may
invest in these securities without limitation.
The Smith Barney Utilities Fund, an investment portfolio of
Smith Barney
Income Funds, seeks current income by investing in equity
and debt securities
of companies in the utility industry. Long-term capital
appreciation is a sec-
ondary objective of the Fund. The utility industries are
deemed to be comprised
of companies principally engaged (that is, at least 50% of a
company's assets,
gross income or net profits results from utility operations
or the company is
regulated as a utility by a government agency or authority)
in the manufacture,
production, generation, transmission and sale of electric
and gas energy and
companies principally engaged in the communications field,
including entities
such as telephone, telegraph, satellite, microwave and other
companies regu-
lated by governmental agencies as utilities that provide
communication facili-
ties for the public benefit, but not including those in
public broadcasting.
The Fund will invest primarily in utility equity and debt
securities that have
a high expected rate of return as determined by SBMFM. Under
normal market con-
ditions, the Fund will invest at least 65% of its assets in
such securities.
The Fund may invest up to 35% of its assets in equity and
debt securities of
non-utility companies believed to afford a reasonable
opportunity for achieving
the Fund's investment objectives. The Fund will invest in
investment grade debt
securities, but may invest up to 10% of its assets in
securities rated BB or B
by S&P or Ba or B by Moody's whenever SBMFM believes that
the incremental yield
on such securities is advantageous to the Fund in comparison
to the additional
risk involved.
The International Balanced Portfolio, an investment
portfolio of Smith Barney
World Funds, Inc., seeks a competitive total return on its
assets from growth
of capital and income through a portfolio invested primarily
in securities of
established non-U.S. issuers. The Fund may borrow up to 15%
of the value of its
assets for investment purposes, which involves certain
risks. Under normal mar-
ket conditions, the Fund will invest its assets in an
international portfolio
of equity securities (consisting of dividend and non-
dividend paying common
stocks, preferred stocks, convertible securities, ADRs and
rights and warrants
to such securities) and debt securities (consisting of
corporate debt securi-
ties, sovereign debt instruments issued by governments or
governmental enti-
ties, including supranational organizations and U.S. and
foreign money market
instruments). The Fund attempts to achieve a balance between
equity and debt
securities. However, the proportion of equity and debt held
by the
19
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
Fund at any one time will depend on SBMFM's views on current
market and eco-
nomic conditions. Under normal conditions, no more than 70%,
nor less than 30%,
of the Fund's assets will be invested in either equity or
debt securities; how-
ever, there is no limitation on the percent or amount of the
Fund's assets that
may be invested for growth or income.
The Fund is a non-diversified portfolio but will generally
invest its assets
broadly among countries and will normally have at least 65%
of its assets
invested in business activities in not less than three
different countries out-
side of the U.S. The Fund will invest in a broad range of
industries and sec-
tors and will mainly invest in securities issued by
companies with market capi-
talization of at least $50,000,000. The Fund may invest in
companies organized
or governments located in any area of the world. However,
under unusual eco-
nomic or market conditions as determined by the investment
adviser, for defen-
sive purposes the Fund may temporarily invest all or a major
portion of its
assets in U.S. government securities, debt or equity
securities of companies
incorporated in and having their principal business
activities in the U.S. or
in U.S. as well as foreign money market instruments and
equivalents.
The debt securities in which the Fund invests generally
range in maturity from
two to ten years. Debt securities of developed foreign
countries must be rated
as investment grade (or deemed by SBMFM to be of comparable
quality) at the
time of purchase. Debt securities of emerging market
countries may be rated
below investment grade and could include securities that are
in default as to
payments of principal or interest. Up to 25% of the total
assets of the Fund
may be invested in securities of emerging market countries.
PERFORMANCE OF UNDERLYING SMITH BARNEY FUNDS
The following chart shows the average annual total returns
for the longest
outstanding class of shares for each of the Underlying Smith
Barney Funds in
which the Portfolios may invest (other than the Cash
Portfolio of Smith Barney
Money Funds, Inc.) for the most recent one-, five- and ten-
year periods (or
since inception if shorter and giving effect to the maximum
applicable sales
charges) and the 30-day yields for income-oriented funds, in
each case for the
period ended December 31, 1995.
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURNS
THROUGH 30-DAY
ASSETS OF ALL
DECEMBER 31, 1995 YIELD FOR
CLASSES AS OF
- --------------------- PERIOD ENDED
DECEMBER 31, INCEPTION
ONE FIVE TEN DECEMBER 31,
UNDERLYING SMITH BARNEY FUND 1995 ($000'S) DATE CLASS
YEAR YEARS YEARS 1995
- ------------------------------------------------------------
- ---------------------------------------
<S> <C> <C> <C>
<C> <C> <C> <C>
Smith Barney Aggressive
Growth Fund Inc. $ 525,528 10/24/83 A
28.94% 17.40% 15.70 % --
Smith Barney Appreciation
Fund Inc. 3,024,628 03/10/70 A
22.74 12.18 12.81 --
Smith Barney Equity
Funds:
Smith Barney Growth and
Income Fund 218,807 11/06/92 A
24.36 -- 8.77 (+) --
Smith Barney Fundamental
Value Fund Inc. 987,935 11/12/81 A
21.48 17.38 12.12 --
Smith Barney Funds, Inc.:
Equity Income Portfolio 747,520 01/01/72 A
26.40 13.82 11.59 --
Short-Term U.S. Treasury
Securities Portfolio 106,902 11/11/91 A
13.16 -- 6.26 (+) 4.69%
Smith Barney Equity
Funds:
Smith Barney High Income
Fund 888,802 09/02/86 B
13.03 16.35 8.76 (+) 7.83
Smith Barney Utilities
Fund 1,958,317 03/28/88 B
25.89 11.19 11.19 (+) --
Smith Barney Premium
Total Return Fund 2,380,777 09/16/85 B
16.84 15.02 12.30 --
Smith Barney Convertible
Fund 82,137 09/02/86 B
15.82 12.30 8.20 (+) 2.83
Smith Barney Diversified
Strategic Income Fund 2,627,676 12/28/89 B
10.57 9.45 9.20 (+) 8.48
Smith Barney Investment
Funds Inc.:
Smith Barney Managed
Growth Fund 507,097 06/30/95 A
- -- -- (3.30)(+) --
Smith Barney Special
Equities Fund 342,704 12/13/82 B
57.30 25.87 11.76 --
Smith Barney Government
Securities Fund 606,406 03/20/84 B
8.71 8.06 7.65 5.99
Smith Barney Investment
Grade Bond Fund 519,566 01/04/82 B
30.56 13.78 10.93 5.71
Smith Barney Managed
Governments Fund Inc. 644,202 09/04/84 A
8.76 7.52 7.72 6.27
Smith Barney Natural
Resources Fund Inc. 55,077 12/24/86 A
(15.23) 3.10 1.64 (+) --
Smith Barney World Funds,
Inc.:
International Equity
Portfolio 1,049,624 02/18/86 A
(2.59) 13.44 11.10 (+) --
Emerging Markets
Portfolio 16,972 05/11/95 A
- -- -- (13.47)(+) --
International Balanced
Portfolio 25,245 08/25/94 A
8.90 -- 3.92 (+) --
Global Government Bond
Portfolio 158,962 07/22/91 A
10.17 -- 8.36 (+) 5.82
- -----------
</TABLE>
+ inception (less than 10 years)
- ------------------------------------------------------------
- --------------------
20
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
For the seven-day period ended December 31, 1995, the yield
for the Cash Port-
folio of Smith Barney Money Funds, Inc. was 5.16% and the
effective yield was
5.30%.
The performance data relating to the Underlying Smith
Barney Funds set forth
above is not, and should not be viewed as, indicative of the
future performance
of either the Underlying Smith Barney Funds or the Concert
Series. The perfor-
mance reflects the impact of sales charges and other
distribution related
expenses that will not be incurred by the Class Y shares of
the Underlying
Smith Barney Funds in which the Portfolios will invest.
INVESTMENT POLICIES AND STRATEGIES OF THE UNDERLYING SMITH
BARNEY FUNDS
In pursuing their investment objectives and programs, each
of the Underlying
Smith Barney Funds is permitted to engage in a wide range of
investment poli-
cies. The Underlying Smith Barney Funds' risks are
determined by the nature of
the securities held and the investment strategies used by
the Funds' adviser.
Certain of these policies are described below and further
information about the
investment policies and strategies of the Underlying Smith
Barney Funds in
which the Portfolios may invest is contained in the Appendix
to this Prospectus
and in the Statement of Additional Information as well as
the prospectuses of
the Underlying Smith Barney Funds. Because each Portfolio
invests in the Under-
lying Smith Barney Funds, shareholders of each Portfolio
will be affected by
these investment policies in direct proportion to the amount
of assets each
Portfolio allocates to the Underlying Smith Barney Funds
pursuing such poli-
cies.
Securities of Non-U.S. Issuers. The Portfolios will each
invest in certain
Underlying Smith Barney Funds that invest all or a portion
of their assets in
securities of non-U.S. issuers. These include non-dollar
denominated securities
traded outside the U.S. and dollar-denominated securities
traded in the U.S.
(such as ADRs). Such investments involve some special risks
such as fluctua-
tions in foreign exchange rates, future political and
economic developments,
and the possible imposition of exchange controls or other
foreign governmental
laws or restrictions. In addition, with respect to certain
countries, there is
the possibility of expropriation of assets, repatriation,
confiscatory taxa-
tion, political or social instability or diplomatic
developments that could
adversely affect investments in those countries. There may
be less publicly
available information about a foreign company than about a
U.S. company, and
foreign companies may not be subject to accounting,
auditing, and financial
reporting standards and requirements comparable to or as
uniform as those of
U.S. companies. Non-U.S. securities markets, while growing
in volume, have, for
the most part, substantially less volume than U.S. markets,
and securities of
many foreign companies are less liquid and their prices more
volatile than
securities of comparable U.S. companies. Transaction costs
on non-U.S. securi-
ties markets are generally higher than in the U.S. There is
generally less gov-
ernment supervision and regulation of exchanges, brokers and
issuers than there
is in the U.S. An Underlying Smith Barney Fund might have
greater difficulty
taking appropriate legal action in non-U.S. courts. Dividend
and interest
income from non-U.S. securities will generally be subject to
withholding taxes
by the country in which the issuer is located and may not be
recoverable by the
Underlying Smith Barney Fund or a Portfolio investing in
such Fund.
Options and Futures. Certain of the Underlying Smith Barney
Funds may enter
into stock index, interest rate and currency futures
contracts (or options
thereon) as a hedging device, or as an efficient means of
regulating their
exposure to various markets. Certain of the Underlying Smith
Barney Funds may
also purchase and sell call and put options. Futures (a type
of potentially
high-risk derivative) are often used to manage risk because
they enable the
investor to buy or sell an asset at a predetermined price in
the future. The
Underlying Smith Barney Funds may buy and sell futures and
options contracts
for a number of reasons including: to manage their exposure
to changes in
interest rates, stock and bond prices, and foreign
currencies; as an efficient
means of adjusting their overall exposure to certain
markets; to adjust the
portfolio's duration; to enhance income; and to protect the
value of the port-
folio securities. Certain of the Underlying Smith Barney
Funds may purchase,
sell or write call and put options on securities, financial
indices, and for-
eign currencies. Options and futures can be volatile
investments, and involve
certain risks. If the adviser to the Underlying Smith Barney
Fund applies a
hedge at an inappropriate time or judges market conditions
incorrectly, options
and futures strategies may lower the Underlying Smith Barney
Fund's return.
Further losses could also be experienced if the options and
futures positions
held by an Underlying Smith Barney Fund were poorly
correlated with its other
investments, or if it could not close out its positions
because of an illiquid
secondary market.
Debt Securities. Certain of the Underlying Smith Barney
Funds may be affected
by general changes in interest rates, which will result in
increases or
decreases in the market value of the debt securities held by
the Funds. The
market value of the fixed-income obligations in which the
Underlying Smith Bar-
ney Funds may invest can be expected to vary inversely in
relation to the
changes in prevailing interest rates and also may be
affected by other market
and credit factors.
21
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
Certain of the Underlying Smith Barney Funds may invest
only in high-quality,
high-grade or investment-grade securities. High quality
securities are those
rated in the two highest categories by Moody's (Aaa or Aa)
or S&P (AAA or AA).
High-grade securities are those rated in the three highest
categories by
Moody's (Aaa, Aa or A) or S&P (AAA, AA or A). Investment-
grade securities are
those rated in the four highest categories by Moody's (Aaa,
Aa, A or Baa) or
S&P (AAA, AA, A or BBB). Securities rated Baa or BBB have
speculative charac-
teristics and changes in economic conditions or other
circumstances are more
likely to lead to a weakened capacity of their issuers to
make principal and
interest payments than is the case with higher grade
securities.
Certain Underlying Smith Barney Funds may invest in
securities that are rated
below investment-grade; that is, rated below Baa by Moody's
or BBB by S&P.
Securities rated below investment grade (and comparable
unrated securities)
are the equivalent of high yield, high risk bonds, commonly
known as "junk
bonds." Such securities are regarded as predominantly
speculative with respect
to the issuer's capacity to pay interest and repay principal
in accordance
with the terms of the obligations and involve major risk
exposure to adverse
business, financial, economic or political conditions. See
the Appendix to the
Statement of Additional Information for additional
information on the bond
ratings by Moody's and S&P.
Money Market Instruments. The Smith Barney Natural
Resources Fund may hold up
to 20% of the value of its assets in cash and invest in
short-term instru-
ments, and it may hold cash and short-term instruments
without limitation when
SBMFM determines that it is appropriate to maintain a
temporary defensive pos-
ture. Short-term instruments in which the Smith Barney
Natural Resources Fund
may invest include: (a) obligations issued or guaranteed as
to principal and
interest by the United States government, its agencies or
instrumentalities
("US government securities") (including repurchase
agreements with respect to
such securities); (b) bank obligations (including
certificates of deposit,
time deposits and banker's acceptances of domestic or
foreign banks, domestic
savings and loan associations and similar institutions); (c)
floating rate
securities and other instruments denominated in U.S. dollars
issued by inter-
national development agencies, banks and other financial
institutions, govern-
ments and their agencies or instrumentalities and
corporations located in
countries that are members of the Organization for Foreign
Cooperation and
Development; and (d) commercial paper rated no lower than A-
2 by S&P or Prime-
2 by Moody's or the equivalent from another major rating
service or, if
unrated, of an issuer having an outstanding, unsecured debt
issue then rated
within the three highest rating categories.
Gold Futures Contracts and Related Options. If SBMFM
determines it would be
advantageous to do so, the Smith Barney Natural Resources
Fund may, for hedg-
ing purposes, utilize its assets as initial margin and
premiums on futures
contracts and options on those contracts. The Fund may also
enter into futures
contracts for the purchase and sale of gold, purchase put
and call options on
those future contracts and write call options on those
futures contracts. The
Smith Barney Natural Resources Fund will only enter into
futures contracts
that are traded on a regulated domestic or foreign
commodities exchange and
will purchase or write options on gold futures only on a
regulated domestic or
foreign exchange approved for such purpose by the
Commodities and Exchange
Futures Trading Commission.
VALUATION OF SHARES
Each Portfolio's net asset value per share is determined as
of the close of
regular trading on the NYSE on each day that the NYSE is
open, by dividing the
value of the Portfolio's net assets attributable to each
Class by the total
number of shares of the Class outstanding. The value of each
Underlying Smith
Barney Fund will be its net asset value at the time of
computation. Short-term
investments that have a maturity of more than 60 days are
valued at prices
based on market quotations for securities of similar type,
yield and maturity.
Short-term investments that have a maturity of 60 days or
less are valued at
amortized cost unless conditions dictate otherwise.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Concert Series intends to declare monthly income
dividends on shares of
the Income Portfolio, quarterly income dividends on shares
of the Conservative
Portfolio and the Balanced Portfolio and annually income
dividends on shares
of the High Growth Portfolio and the Growth Portfolio. In
addition, the Con-
cert Series intends to make annual distributions of capital
gains, if any, on
the shares of each Portfolio.
22
<PAGE>
Smith Barney Concert Series Inc.
DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)
If a shareholder does not otherwise instruct, dividends and
capital gain dis-
tributions will be reinvested automatically in additional
shares of the same
Class at net asset value, subject to no sales charge or
CDSC.
Income dividends and capital gain distributions that are
invested are credited
to shareholders' accounts in additional shares at the net
value as of the close
of business on the payment date. A shareholder may change
the option at any
time by notifying his or her Smith Barney Financial
Consultant. Shareholders
whose accounts are held directly by First Data should notify
First Data in
writing at least five business days prior to the payment
date to permit the
change to be entered in the shareholder's account.
The per share dividends on Class B and Class C shares of
each Portfolio may be
lower than the per share dividends on Class A and Class Y
shares principally as
a result of the distribution fee applicable with respect to
Class B and Class C
shares. The per share dividends on Class A shares of each
Portfolio may be
lower than the per share dividends on Class Y shares
principally as a result of
the service fee applicable to Class A shares. Distributions
of capital gains,
if any, will be in the same amount for Class A, Class B,
Class C and Class Y
shares.
TAXES
Each Portfolio intends to qualify as a regulated investment
company under
Subchapter M of the Code to be relieved of federal income
tax on that part of
its net investment income and realized capital gains that it
pays out to its
shareholders. To qualify, the Portfolio must meet certain
tests, including dis-
tributing at least 90% of its investment company taxable
income, and deriving
less than 30% of its gross income from the sale or other
disposition of certain
investments held for less than three months.
Dividends from net investment income and distributions of
realized short-term
capital gains on the sale of securities, whether paid in
cash or automatically
invested in additional shares of the same Portfolio, are
taxable to sharehold-
ers of each Portfolio as ordinary income. A portion of each
Portfolio's divi-
dends may qualify for the dividends received deduction for
corporations. Divi-
dends and distributions declared by each Portfolio may also
be subject to state
and local taxes. Distributions out of net long-term capital
gains (i.e., net
long-term capital gains in excess of net short-term capital
losses) are taxable
to shareholders as long-term capital gains. Information as
to the tax status of
dividends paid or deemed paid in each calendar year will be
mailed to share-
holders as early in the succeeding year as practical but not
later than January
31.
PURCHASE OF SHARES
GENERAL
Each Portfolio offers four Classes of shares. Class A
shares are sold to
investors with an initial sales charge and Class B and Class
C shares are sold
without an initial sales charge but are subject to a CDSC
payable upon certain
redemptions. Class Y shares are sold without an initial
charge or CDSC and are
available only to investors investing a minimum of
$5,000,000. See "Prospectus
Summary--Alternative Purchase Arrangements" for a discussion
of factors to con-
sider in selecting which Class of shares to purchase.
Shares may be purchased through a brokerage account
maintained with Smith Bar-
ney. Shares may also be purchased through an Introducing
Broker or an invest-
ment dealer in the selling group. In addition, certain
investors, including
qualified retirement plans and certain other institutional
investors, may pur-
chase shares directly from the Concert Series through First
Data. When purchas-
ing shares of a Portfolio, investors must specify whether
the purchase is for
Class A, Class B, Class C or Class Y shares. No maintenance
fee will be charged
by the Concert Series.
Investors in Class A, Class B and Class C shares may open
an account by making
an initial investment of at least $1,000 for each account in
each class (except
for Systematic Investment Plan accounts), or $250 for an IRA
or a Self-Employed
Retirement Plan in a Portfolio. Investors in Class Y shares
may open an account
by making an initial investment of $5,000,000. Subsequent
investments of at
least $50 may be made for all Classes. For participants in
retirement plans
qualified under Section 403(b)(7) or Section 401(a) of the
Code, the minimum
initial investment requirement for Class A, Class B and
Class C shares and the
subsequent investment requirement for all Classes in a
Portfolio is $25. For
each Portfolio's Systematic Investment Plan, the minimum
initial investment
requirement for Class A, Class B and Class C shares and the
subsequent invest-
ment requirement for all Classes is $50. There are no
minimum investment
requirements in Class A shares for employees
23
<PAGE>
Smith Barney Concert Series Inc.
PURCHASE OF SHARES (CONTINUED)
of Travelers and its subsidiaries, including Smith Barney,
Directors of the
Concert Series, and their spouses and children. The Concert
Series reserves the
right to waive or change minimums, to decline any order to
purchase its shares
and to suspend the offering of shares from time to time.
Shares purchased will
be held in the shareholder's account by the Concert Series'
transfer agent,
First Data. Share certificates are issued only upon a
shareholder's written
request to First Data.
Purchase orders received by the Concert Series or Smith
Barney prior to the
close of regular trading on the NYSE, on any day a Portfolio
calculates its net
asset value, are priced according to the net asset value
determined on that day
(the "trade date"). Orders received by dealers or
Introducing Brokers prior to
the close of regular trading on the NYSE on any day a
Portfolio calculates its
net asset value, are priced according to the net asset value
determined on that
day, provided the order is received by the Concert Series or
Smith Barney prior
to Smith Barney's close of business. For shares purchased
through Smith Barney
or an Introducing Broker that transmits its orders to Smith
Barney, payment for
Portfolio shares is due on the third business day after the
trade date. In all
other cases, payment must be made with the purchase order.
SYSTEMATIC INVESTMENT PLAN
Shareholders may make additions to their accounts at any
time by purchasing
shares through a service known as the Systematic Investment
Plan. Under the
Systematic Investment Plan, Smith Barney or First Data is
authorized through
preauthorized transfers of $50 or more to charge the regular
bank account or
other financial institution indicated by the shareholder on
a monthly or quar-
terly basis to provide systematic additions to the
shareholder's Portfolio
account. A shareholder who has insufficient funds to
complete the transfer will
be charged a fee of up to $25 by Smith Barney or First Data.
The Systematic
Investment Plan also authorizes Smith Barney to apply cash
held in the share-
holder's Smith Barney brokerage account or redeem the
shareholder's shares of a
Smith Barney money market fund to make additions to the
account. Additional
information is available from the Concert Series or a Smith
Barney Financial
Consultant.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The sales charges applicable to purchases of Class A shares
of the High Growth
Portfolio, the Growth Portfolio and the Balanced Portfolio
are as follows:
<TABLE>
<CAPTION>
SALES CHARGE
------------------------------
DEALERS'
AMOUNT OF % OF % OF
REALLOWANCE AS % OF
INVESTMENT OFFERING PRICE AMOUNT INVESTED
OFFERING PRICE
- ------------------------------------------------------------
- ------------
<S> <C> <C> <C>
Less than $ 25,000 5.00% 5.26%
4.50%
$ 25,000 - 49,999 4.00 4.17
3.60
50,000 - 99,999 3.50 3.63
3.15
100,000 - 249,999 3.00 3.09
2.70
250,000 - 499,999 2.00 2.04
1.80
500,000 and over * *
*
- ------------------------------------------------------------
- ------------
</TABLE>
24
<PAGE>
Smith Barney Concert Series Inc.
PURCHASE OF SHARES (CONTINUED)
The sales charges applicable to purchases of Class A shares
of the Conserva-
tive Portfolio and the Income Portfolio are as follows:
<TABLE>
<CAPTION>
SALES CHARGE
------------------------------
DEALERS'
AMOUNT OF % OF % OF
REALLOWANCE AS % OF
INVESTMENT OFFERING PRICE AMOUNT INVESTED
OFFERING PRICE
- ------------------------------------------------------------
- ------------
<S> <C> <C> <C>
Less than $25,000 4.50% 4.71%
4.00%
$ 25,000 - 49,999 4.00 4.17
3.60
50,000 - 99,999 3.50 3.63
3.15
100,000 - 249,999 2.50 2.56
2.25
250,000 - 499,999 1.50 1.52
1.35
500,000 and over * *
*
- ------------------------------------------------------------
- ------------
</TABLE>
* Purchases of Class A shares, which when combined with
current holdings of
Class A shares offered with a sales charge equal or exceed
$500,000 in the
aggregate, will be made at net asset value without any
initial sales charge,
but will be subject to a CDSC of 1.00% on redemptions made
within 12 months
of purchase. The CDSC on Class A shares is payable to
Smith Barney, which
compensates Smith Barney Financial Consultants and other
dealers whose cli-
ents make purchases of $500,000 or more. The CDSC is
waived in the same cir-
cumstances in which the CDSC applicable to Class B and
Class C shares is
waived. See "Deferred Sales Charge Alternatives" and
"Waivers of CDSC."
Members of the selling group may receive up to 90% of the
sales charge and may
be deemed to be underwriters of the Concert Series as
defined in the Securities
Act of 1933, as amended.
The reduced sales charges shown above apply to the
aggregate of purchases of
Class A shares of a Portfolio made at one time by "any
person," which includes
an individual, his or her spouse and children, or a trustee
or other fiduciary
of a single trust estate or single fiduciary account. The
reduced sales charge
minimums may also be met by aggregating the purchase with
the net asset value
of all Class A shares offered with a sales charge held in
funds sponsored by
Smith Barney listed under "Exchange Privilege."
INITIAL SALES CHARGE WAIVERS
Purchases of Class A shares may be made at net asset value
without a sales
charge in the following circumstances: (a) sales of Class A
shares to (i) Board
Members and employees of Travelers and its subsidiaries and
any of the Smith
Barney Mutual Funds (including retired Board Members and
employees); the imme-
diate families of such persons (including the surviving
spouse of a deceased
Board Member or employee; and to a pension, profit-sharing
or other benefit
plan for such persons and (ii) employees of members of the
National Association
of Securities Dealers, Inc., provided such sales are made
upon the assurance of
the purchaser that the purchase is made for investment
purposes and that the
securities will not be resold except through redemption or
repurchase; (b)
offers of Class A shares to any other investment company in
connection with the
combination of such company with the Portfolio by merger,
acquisition of assets
or otherwise; (c) purchases of Class A shares by any client
of a newly employed
Smith Barney Financial Consultant (for a period up to 90
days from the com-
mencement of the Financial Consultant's employment with
Smith Barney), on the
condition the purchase of Class A shares 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 Con-
sultant and (iii) was subject to a sales charge; (d)
shareholders who have
redeemed Class A shares in a Portfolio (or Class A shares of
another fund of
the Smith Barney Mutual Funds that are sold with a maximum
sales charge equal
to or greater than the maximum sales charge of the
Portfolio) and who wish to
reinvest their redemption proceeds in the Portfolio,
provided the reinvestment
is made within 60 calendar days of the redemption; (e)
accounts managed by reg-
istered investment advisory subsidiaries of Travelers; and
(f) direct rollovers
by plan participants of distributions from a 401(k) plan
enrolled in the Smith
Barney 401(k) Program (Note: subsequent investments will be
subject to the
applicable sales charge, purchases by separate accounts used
to fund certain
unregistered variable annuity contracts and purchases by
investors participat-
ing in a Smith Barney fee based arrangement). In order to
obtain such dis-
counts, the purchaser must provide sufficient information at
the time of pur-
chase to permit verification that the purchase would qualify
for the elimina-
tion of the sales charge.
RIGHT OF ACCUMULATION
Class A shares of a Portfolio may be purchased by "any
person" (as defined
above) at a reduced sales charge or at net asset value
determined by aggregat-
ing the dollar amount of the new purchase and the total net
asset value of all
Class A shares of the Portfolio and of funds sponsored by
Smith Barney that are
offered with a sales charge listed under "Exchange
Privilege" then held by such
person and applying the sales charge applicable to such
aggregate. In order to
obtain such discount, the
25
<PAGE>
Smith Barney Concert Series Inc.
PURCHASE OF SHARES (CONTINUED)
purchaser must provide sufficient information at the time of
purchase to permit
verification that the purchase qualifies for the reduced
sales charge. The
right of accumulation is subject to modification or
discontinuance at any time
with respect to all shares purchased thereafter.
GROUP PURCHASES
Upon completion of certain automated systems, a reduced
sales charge or pur-
chase at net asset value will also be available to employees
(and partners) of
the same employer purchasing as a group, provided each
participant makes the
minimum initial investment required. The sales charge
applicable to purchases
by each member of such a group will be determined by the
table set forth above
under "Initial Sales Charge Alternative--Class A Shares,"
and will be based
upon the aggregate sales of Class A shares of Smith Barney
Mutual Funds offered
with a sales charge to, and share holdings of, all members
of the group. To be
eligible for such reduced sales charges or to purchase at
net asset value, all
purchases must be pursuant to an employer- or partnership-
sanctioned plan meet-
ing certain requirements. One such requirement is that the
plan must be open to
specified partners or employees of the employer and its
subsidiaries, if any.
Such plan may, but is not required to, provide for payroll
deductions, IRAs or
investments pursuant to retirement plans under Sections 401
or 408 of the Code.
Smith Barney may also offer a reduced sales charge or net
asset value purchase
for aggregating related fiduciary accounts under such
conditions that Smith
Barney will realize economies of sales efforts and sales
related expenses. An
individual who is a member of a qualified group may also
purchase Class A
shares at the reduced sales charge applicable to the group
as a whole. The
sales charge is based upon the aggregate dollar value of
Class A shares offered
with a sales charge that have been previously purchased and
are still owned by
the group, plus the amount of the current purchase. A
"qualified group" is one
that (a) has been in existence for more than six months, (b)
has a purpose
other than acquiring Portfolio shares at a discount and (c)
satisfies uniform
criteria that enable Smith Barney to realize economies of
scale in its costs of
distributing shares. A qualified group must have more than
10 members, must be
available to arrange for group meetings between
representatives of the Portfo-
lio and the members, and must agree to include sales and
other materials
related to the Portfolio in its publications and mailings to
members at no cost
to Smith Barney. In order to obtain such reduced sales
charge or to purchase at
net asset value, the purchaser must provide sufficient
information at the time
of purchase to permit verification that the purchase
qualifies for the reduced
sales charge. Approval of group purchase reduced sales
charge plans is subject
to the discretion of Smith Barney.
LETTER OF INTENT
Class A Shares. A Letter of Intent for amounts of $50,000
or more provides an
opportunity for an investor to obtain a reduced sales charge
by aggregating
investments over a 13-month period, provided that the
investor refers to such
Letter when placing orders. For purposes of a Letter of
Intent, the "Amount of
Investment" as referred to in the preceding sales charge
table includes pur-
chases of all Class A shares of each Portfolio and other
Smith Barney Mutual
Funds offered with a sales charge over a 13-month period
based on the total
amount of intended purchases plus the value of all Class A
shares previously
purchased and still owned. An alternative is to compute the
13-month period
starting up to 90 days before the date of execution of a
Letter of Intent. Each
investment made during the period receives the reduced sales
charge applicable
to the total amount of the investment goal. If the goal is
not achieved within
the period, the investor must pay the difference between the
sales charges
applicable to the purchases made and the charges previously
paid, or an appro-
priate number of escrowed shares will be redeemed. Please
contact a Smith Bar-
ney Financial Consultant or First Data to obtain a Letter of
Intent applica-
tion.
Class Y Shares. A Letter of Intent may also be used as a
way for investors to
meet the minimum investment requirement for Class Y shares.
Such investors must
make an initial minimum purchase of $1,000,000 in Class Y
shares of a Portfolio
and agree to purchase a total of $5,000,000 of Class Y
shares of the same Port-
folio within six months from the date of the Letter. If a
total investment of
$5,000,000 is not made within the six-month period, all
Class Y shares pur-
chased to date will be transferred to Class A shares, where
they will be sub-
ject to all fees (including a service fee of 0.25%) and
expenses applicable to
such Portfolio's Class A shares, which may include a CDSC of
1.00%. Please con-
tact a Smith Barney Financial Consultant or First Data for
further information.
DEFERRED SALES CHARGE ALTERNATIVES
CDSC Shares are sold at net asset value next determined
without an initial
sales charge so that the full amount of an investor's
purchase payment may be
immediately invested in a Portfolio. A CDSC, however, may be
imposed on certain
redemp-
26
<PAGE>
Smith Barney Concert Series Inc.
PURCHASE OF SHARES (CONTINUED)
tions of these shares. "CDSC Shares" are: (a) Class B
shares; (b) Class C
shares; and (c) Class A shares which when combined with
Class A shares offered
with a sales charge currently held by an investor equal or
exceed $500,000 in
the aggregate.
Any applicable CDSC will be assessed on an amount equal to
the lesser of the
original cost of the shares being redeemed or their net
asset value at the time
of redemption. CDSC Shares that are redeemed will not be
subject to a CDSC to
the extent that the value of such shares represents: (a)
capital appreciation
of Portfolio assets; (b) reinvestment of dividends or
capital gain distribu-
tions; (c) with respect to Class B shares, shares redeemed
more than five years
after their purchase; or (d) with respect to Class C shares
and Class A shares
that are CDSC Shares, shares redeemed more than 12 months
after their purchase.
Class C shares and Class A shares that are CDSC Shares are
subject to a 1.00%
CDSC if redeemed within 12 months of purchase. In
circumstances in which the
CDSC is imposed on Class B shares, 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 purposes of determining
the number of
years since a purchase payment, all purchase payments made
during a month will
be aggregated and deemed to have been made on the last day
of the preceding
Smith Barney statement month. The following table sets forth
the rates of the
charge for redemptions of Class B shares by shareholders,
except in the case of
purchases by Participating Plans, as described below. See
"Purchase of Shares--
Smith Barney 401(k) Program."
<TABLE>
<CAPTION>
CDSC APPLICABLE TO
CDSC
HIGH GROWTH PORTFOLIO,
APPLICABLE TO
YEARS SINCE PURCHASE GROWTH PORTFOLIO AND CONSERVATIVE
PORTFOLIO
PAYMENT WAS MADE BALANCED PORTFOLIO AND INCOME
PORTFOLIO
- ------------------------------------------------------------
- ----------
<S> <C> <C>
First 5.00%
4.50%
Second 4.00
4.00
Third 3.00
3.00
Fourth 2.00
2.00
Fifth 1.00
1.00
Sixth 0.00
0.00
Seventh 0.00
0.00
Eighth 0.00
0.00
- ------------------------------------------------------------
- ----------
</TABLE>
Class B shares will convert automatically to Class A shares
eight years after
the date on which they were purchased and thereafter will no
longer be subject
to any distribution fees. There will also be converted at
that time such pro-
portion of Class B Dividend Shares owned by the shareholder
as the total number
of his or her Class B shares converting at the time bears to
the total number
of outstanding Class B shares (other than Class B Dividend
Shares) owned by the
shareholder. Shareholders who held Class B shares of Smith
Barney Shearson
Short-Term World Income Fund (the "Short-Term World Income
Fund") on July 15,
1994 and who subsequently exchange those shares for Class B
shares of a Portfo-
lio will be offered the opportunity to exchange all such
Class B shares for
Class A shares of such Portfolio four years after the date
on which those
shares were deemed to have been purchased. Holders of such
Class B shares will
be notified of the pending exchange in writing approximately
30 days before the
fourth anniversary of the purchase date and, unless the
exchange has been
rejected in writing, the exchange will occur on or about the
fourth anniversary
date. See "Prospectus Summary--Alternative Purchase
Arrangements--Class B
Shares Conversion Feature."
In determining the applicability of any CDSC or the
conversion feature
described above, it will be assumed that a redemption is
made first of shares
representing capital appreciation, next of shares
representing the reinvestment
of dividends and capital gain distributions and finally of
other shares held by
the shareholder for the longest period of time. The length
of time that CDSC
Shares acquired through an exchange have been held will be
calculated from the
date that the shares exchanged were initially acquired in
one of the other
Smith Barney Mutual Funds, and Portfolio shares being
redeemed will be consid-
ered to represent, as applicable, capital appreciation or
dividend and capital
gain distribution reinvestments in such other funds. For
Federal income tax
purposes, the amount of the CDSC will reduce the gain or
increase the loss, as
the case may be, on the amount realized on redemption. The
amount of any CDSC
will be paid to Smith Barney.
To provide an example, assume an investor purchased 100
Class B shares at $10
per share for a cost of $1,000. Subsequently, the investor
acquired 5 addi-
tional shares through dividend reinvestment. During the
fifteenth month after
the purchase, the investor decided to redeem $500 of his or
her investment.
Assuming at the time of the redemption the net asset value
had
27
<PAGE>
Smith Barney Concert Series Inc.
PURCHASE OF SHARES (CONTINUED)
appreciated to $12 per share, the value of the investor's
shares would be
$1,260 (105 shares at $12 per share). The CDSC would not be
applied to the
amount that represents appreciation ($200) and the value of
the reinvested
dividend shares ($60). Therefore, $240 of the $500
redemption proceeds ($500
minus $260) would be charged at a rate of 4.00% (the
applicable rate for Class
B shares) for a total deferred sales charge of $9.60.
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
1.00% per month of
the value of the shareholder's shares at the time the
withdrawal plan com-
mences (see "Automatic Cash Withdrawal Plan"); (c)
redemptions of shares
within twelve months following the death or disability of
the shareholder; (d)
redemption of shares made in connection with qualified
distributions from
retirement plans or IRAs upon the attainment of age 59 1/2;
(e) involuntary
redemptions; and (f) redemptions of shares in connection
with a combination of
the Portfolio with any investment company by merger,
acquisition of assets or
otherwise. In addition, a shareholder who has redeemed
shares from other funds
of the Smith Barney Mutual Funds may, under certain
circumstances, reinvest
all or part of the redemption proceeds within 60 days and
receive pro rata
credit for any CDSC imposed on the prior redemption.
CDSC waivers will be granted subject to confirmation (by
Smith Barney in the
case of shareholders who are also Smith Barney clients or by
First Data in the
case of all other shareholders) of the shareholder's status
or holdings, as
the case may be.
SMITH BARNEY 401(K) PROGRAM
Investors may be eligible to participate in the Smith
Barney 401(k) Program,
which is generally designed to assist plan sponsors in the
creation and opera-
tion of retirement plans under Section 401(a) of the Code.
To the extent
applicable, the same terms and conditions are offered to all
Participating
Plans in the Smith Barney 401(k) Program.
Each Portfolio offers to Participating Plans Class A, Class
B, Class C and
Class Y shares as investment alternatives under the Smith
Barney 401(k) Pro-
gram. Class A, Class B and Class C shares acquired through
the Smith Barney
401(k) Program are subject to the same service and/or
distribution fees as,
but different sales charge and CDSC schedules than, the
Class A, Class B and
Class C shares acquired by other investors. Similar to those
shares available
to other investors, Class Y shares acquired through the
Smith Barney 401(k)
Program are not subject to any service or distribution fees
or any initial
sales charge or CDSC. Once a Participating Plan has made an
initial investment
in a Portfolio, all of its subsequent investments in the
Portfolio must be in
the same Class of shares, except as otherwise described
below.
Class A Shares. Class A shares of each Portfolio are
offered without any ini-
tial sales charge to any Participating Plan that purchases
from $500,000 to
$4,999,999 of Class A shares of one or more funds of the
Smith Barney Mutual
Funds. Class A shares acquired through the Smith Barney
401(k) Program are
subject to a CDSC of 1.00% of redemption proceeds, if the
Participating Plan
terminates within four years of the date the Participating
Plan first enrolled
in the Smith Barney 401(k) Program.
Class B Shares. Class B shares of each Portfolio are
offered to any Partici-
pating Plan that purchases less than $250,000 of one or more
funds of the
Smith Barney Mutual Funds. Class B shares acquired through
the Smith Barney
401(k) Program are subject to a CDSC of 3.00% of redemption
proceeds, if the
Participating Plan terminates within eight years of the date
the Participating
Plan first enrolled in the Smith Barney 401(k) Program.
Eight years after the date the Participating Plan enrolled
in the Smith Bar-
ney 401(k) Program, it will be offered the opportunity to
exchange all of its
Class B shares for Class A shares of a Portfolio. Such Plans
will be notified
of the pending exchange in writing approximately 60 days
before the eighth
anniversary of the enrollment date and, unless the exchange
has been rejected
in writing, the exchange will occur on or about the eighth
anniversary date.
Once the exchange has occurred, a Participating Plan will
not be eligible to
acquire additional Class B shares of the Portfolio but
instead may acquire
Class A shares of the Portfolio. If the Participating Plan
elects not to
exchange all of its Class B shares at that time, each Class
B share held by
the Participating Plan will have the same conversion feature
as Class B shares
held by other investors. See "Purchase of Shares--Deferred
Sales Charge Alter-
natives."
Class C Shares. Class C shares of each Portfolio are
offered to any Partici-
pating Plan that purchases from $250,000 to $499,999 of one
or more funds of
the Smith Barney Mutual Funds. Class C shares acquired
through the Smith Bar-
ney 401(k) Program are subject to a CDSC of 1.00% of
redemption proceeds, if
the Participating Plan terminates within four years of the
28
<PAGE>
Smith Barney Concert Series Inc.
PURCHASE OF SHARES (CONTINUED)
date the Participating Plan first enrolled in the Smith
Barney 401(k) Program.
Each year after the date a Participating Plan enrolled in
the Smith Barney
401(k) Program, if its total Class C holdings equal at least
$500,000 as of the
calendar year-end, the Participating Plan will be offered
the opportunity to
exchange all of its Class C shares for Class A shares of a
Portfolio. Such
Plans will be notified in writing within 30 days after the
last business day of
the calendar year, and unless the exchange offer has been
rejected in writing,
the exchange will occur on or about the last business day of
the following
March. Once the exchange has occurred, a Participating Plan
will not be eligi-
ble to acquire Class C shares of a Portfolio but instead may
acquire Class A
shares of such Portfolio. Any Class C shares not converted
will continue to be
subject to the distribution fee.
Class Y Shares. Class Y shares of each Portfolio are
offered without any serv-
ice or distribution fees, sales charge or CDSC to any
Participating Plan that
purchases $5,000,000 or more of Class Y shares of one or
more funds of the
Smith Barney Mutual Funds.
The applicable CDSC will be assessed on shares held through
the Smith Barney
401(k) Program on an amount equal to the lesser of the
original cost of the
shares being redeemed or their net asset value at the time
of redemption; pro-
vided however, that shares will not be subject to a CDSC to
the extent that the
value of such shares represents: (a) capital appreciation of
Portfolio assets;
(b) reinvestments of dividends or capital gain
distributions; and (c) with
respect to Class B shares, shares redeemed more than eight
years after their
purchase (which will have converted to Class A shares), or
(d) with respect to
Class C shares or Class A shares (not obtained through the
conversion from
Class B shares), shares redeemed more than four years after
their purchase.
Whether or not the CDSC applies to a Participating Plan
depends on the number
of years since the Participating Plan first became enrolled
in the Smith Barney
401(k) Program, unlike the applicability of the CDSC to
other shareholders,
which depends on the number of years since those
shareholders made the purchase
payment for the shares which are being redeemed.
The CDSC will be waived on redemptions of Class A, Class B
and Class C shares
in connection with lump-sum or other distributions made by a
Participating Plan
as a result of: (a) the retirement of an employee in the
Participating Plan;
(b) the termination of employment of an employee in the
Participating Plan; (c)
the death or disability of an employee in the Participating
Plan; (d) the
attainment of age 59 1/2 by an employee in the Participating
Plan; (e) hardship
of an employee in the Participating Plan to the extent
permitted under Section
401(k) of the Code; or (f) redemptions of shares in
connection with a loan made
by the Participating Plan to an employee.
Participating Plans wishing to acquire shares of a
Portfolio through the Smith
Barney 401(k) Program must purchase such shares directly
from First Data. For
further information regarding the Smith Barney 401(k)
Program, investors should
contact a Smith Barney Financial Consultant.
EXCHANGE PRIVILEGE
Except as otherwise noted below, shares of each Class may
be exchanged for
shares of the same Class in any other Portfolio of the
Concert Series, as well
as in the following Smith Barney Mutual Funds, to the extent
shares are offered
for sale in the shareholder's state of residence. Exchanges
of Class A, Class B
and Class C shares are subject to minimum investment
requirements and all
shares are subject to the other requirements of the fund
into which exchanges
are made and a sales charge differential may apply.
FUND NAME
Growth Funds
Smith Barney Aggressive Growth Fund Inc.
Smith Barney Appreciation Fund Inc.
Smith Barney Fundamental Value Fund Inc.
Smith Barney Growth Opportunity Fund
Smith Barney Managed Growth Fund
Smith Barney Natural Resources Fund Inc.
Smith Barney Special Equities Fund
29
<PAGE>
Smith Barney Concert Series Inc.
EXCHANGE PRIVILEGE (CONTINUED)
Growth and Income Funds
Smith Barney Convertible Fund
Smith Barney Funds, Inc.-- Equity Income Portfolio
Smith Barney Growth and Income Fund
Smith Barney Premium Total Return Fund
Smith Barney Strategic Investors Fund
Smith Barney Utilities Fund
Taxable Fixed-Income Funds
** Smith Barney Adjustable Rate Government Income Fund
Smith Barney Diversified Strategic Income Fund
* Smith Barney Funds, Inc.--Income Return Account Portfolio
Smith Barney Funds, Inc.--Short-Term U.S. Treasury
Securities Portfolio
Smith Barney Funds, Inc.--U.S. Government Securities
Portfolio
Smith Barney Government Securities Fund
Smith Barney High Income Fund
Smith Barney Investment Grade Bond Fund
Smith Barney Managed Governments Fund Inc.
Tax-Exempt Funds
Smith Barney Arizona Municipals Fund Inc.
Smith Barney California Municipals Fund Inc.
* Smith Barney Intermediate Maturity California Municipals
Fund
* Smith Barney Intermediate Maturity New York Municipals
Fund
Smith Barney Managed Municipals Fund Inc.
Smith Barney Massachusetts Municipals Fund
* Smith Barney Muni Funds--Florida Limited Term Portfolio
Smith Barney Muni Funds--Florida Portfolio
Smith Barney Muni Funds--Georgia Portfolio
* Smith Barney Muni Funds--Limited Term Portfolio
Smith Barney Muni Funds--National Portfolio
Smith Barney Muni Funds--New York Portfolio
Smith Barney Muni Funds--Ohio Portfolio
Smith Barney Muni Funds--Pennsylvania Portfolio
Smith Barney New Jersey Municipals Fund Inc.
Smith Barney Oregon Municipals Fund
Smith Barney Tax-Exempt Income Fund
International Funds
Smith Barney World Funds, Inc.--Emerging Markets Portfolio
Smith Barney World Funds, Inc.--European Portfolio
Smith Barney World Funds, Inc.--Global Government Bond
Portfolio
Smith Barney World Funds, Inc.--International Balanced
Portfolio
Smith Barney World Funds, Inc.--International Equity
Portfolio
Smith Barney World Funds, Inc.--Pacific Portfolio
30
<PAGE>
Smith Barney Concert Series Inc.
EXCHANGE PRIVILEGE (CONTINUED)
Money Market Funds
+ Smith Barney Exchange Reserve Fund
++ Smith Barney Money Funds, Inc.--Cash Portfolio
++ Smith Barney Money Funds, Inc.--Government Portfolio
*** Smith Barney Money Funds, Inc.--Retirement Portfolio
+++ Smith Barney Municipal Money Market Fund, Inc.
+++ Smith Barney Muni Funds--California Money Market
Portfolio
+++ Smith Barney Muni Funds--New York Money Market
Portfolio
- ------------------------------------------------------------
- --------------------
* Available for exchange with Class A, Class C and Class Y
shares of each
Portfolio.
** Available for exchange with Class A, Class B and Class Y
shares of each
Portfolio. In addition, shareholders who own Class C
shares of a Portfolio
through the Smith Barney 401(k) Program may exchange
those shares for Class
C shares of this fund.
*** Available for exchange with Class A shares of each
Portfolio.
+ Available for exchange with Class B and Class C shares
of each Portfolio.
++ Available for exchange with Class A and Class Y shares
of each Portfolio.
In addition, shareholders who own Class C shares of a
Portfolio through the
Smith Barney 401(k) Program may exchange those shares
for Class C shares of
this fund.
+++ Available for exchange with Class A and Class Y shares
of each Portfolio.
Class A Exchanges. Class A shares of Smith Barney Mutual
Funds sold without a
sales charge or with a maximum sales charge of less than the
maximum charged by
other Smith Barney Mutual Funds will be subject to the
appropriate "sales
charge differential" upon the exchange of such shares for
Class A shares of a
fund sold with a higher sales charge. The "sales charge
differential" is lim-
ited 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 pur-
poses of the exchange privilege, shares obtained through
automatic reinvestment
of dividends and capital gain distributions are treated as
having paid the same
sales charges applicable to the shares on which the
dividends or distributions
were paid; however, except in the case of the Smith Barney
401(k) Program, 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 dif-
ferential upon exchange.
Class B Exchanges. In the event a Class B shareholder
(unless such shareholder
was a Class B shareholder of the Short-Term World Income
Fund on July 15, 1994)
wishes to exchange all or a portion of his or her shares
into any of the funds
imposing a higher CDSC than that imposed by a Portfolio, 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 Portfolio that have been exchanged.
Class C Exchanges. Upon an exchange, the new Class C shares
will be deemed to
have been purchased on the same date as the Class C shares
of the Portfolio
that have been exchanged.
Class Y Exchanges. Class Y shareholders of each Portfolio
who wish to exchange
all or a portion of their Class Y shares for Class Y shares
in any of the funds
identified above may do so without imposition of any charge.
Additional Information Regarding the Exchange Privilege.
Although the exchange
privilege is an important benefit, excessive exchange
transactions can be det-
rimental to a Portfolio's performance and its shareholders.
The Concert Series
may determine that a pattern of frequent exchanges is
excessive and contrary to
the best interests of each Portfolio's other shareholders.
In this event, the
Concert Series may, at its discretion, decide to limit
additional purchases
and/or exchanges by the shareholder. Upon such a
determination, the Concert
Series 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
Portfolio or (b) remain invested in the Portfolio or
exchange into any of the
funds of the Smith Barney Mutual 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.
Certain shareholders may be able to exchange shares by
telephone. See "Redemp-
tion of Shares--Telephone Redemption and Exchange Program."
Exchanges will be
processed at the net asset value next determined, plus any
applicable sales
charge differential. Redemption procedures discussed below
are also applicable
for exchanging shares, and exchanges will be made upon
receipt of all support-
ing documents in proper form. If the account registration of
the shares of the
fund being acquired is identical to the registration of the
shares of the fund
exchanged, no signature guarantee is required. A capital
gain or loss
31
<PAGE>
Smith Barney Concert Series Inc.
EXCHANGE PRIVILEGE (CONTINUED)
for tax purposes will be realized upon the exchange,
depending upon the cost or
other basis of shares redeemed. Before exchanging shares,
investors should read
the current prospectus describing the shares to be acquired.
Each Portfolio
reserves the right to modify or discontinue exchange
privileges upon 60 days'
prior notice to shareholders.
REDEMPTION OF SHARES
The Concert Series is required to redeem the shares of each
Portfolio tendered
to it, as described below, at a redemption price equal to
their net asset value
per share next determined after receipt of a written request
in proper form at
no charge other than any applicable CDSC. Redemption
requests received after
the close of regular trading on the NYSE are priced at the
net asset value next
determined.
If a shareholder holds shares in more than one Class, any
requests for redemp-
tion must specify the Class being redeemed. In the event of
a failure to spec-
ify which Class, or if the investor owns fewer shares of the
Class than speci-
fied, the redemption request will be delayed until the
Concert Series' transfer
agent receives further instructions from Smith Barney or if
the shareholder's
account is not with Smith Barney, from the shareholder
directly. The redemption
proceeds will be remitted on or before the third business
day following receipt
of proper tender, except on any days on which the NYSE is
closed or as permit-
ted under the 1940 Act in extraordinary circumstances.
Generally, if the
redemption proceeds are remitted to a Smith Barney brokerage
account, these
funds will not be invested for the shareholder's benefit
without specific
instruction and Smith Barney will benefit from the use of
temporarily
uninvested funds. Redemption proceeds for shares purchased
by check, other than
a certified or official bank check, will be remitted upon
clearance of the
check, which may take up to ten days or more.
Shares held by Smith Barney as custodian must be redeemed
by submitting a
written request to a Smith Barney Financial Consultant.
Shares other than those
held by Smith Barney as custodian may be redeemed through an
investor's Finan-
cial Consultant, Introducing Broker or dealer in the selling
group or by sub-
mitting a written request for redemption to:
Smith Barney Concert Series Inc.
Class A, B, C or Y (please specify)
c/o First Data Investor Services Group, Inc.
P.O. Box 9134
Boston, Massachusetts 02205-9134
A written redemption request 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 regis-
tered. If the shares to be redeemed were issued in
certificate form, the cer-
tificates must be endorsed for transfer (or be accompanied
by an endorsed stock
power) and must be submitted to First Data together with the
redemption
request. Any signature required in connection with a
redemption request in
excess of $2,000 must be guaranteed by an eligible guarantor
institution, such
as a domestic bank, savings and loan institution, domestic
credit union, member
bank of the Federal Reserve System or member firm of a
national securities
exchange. Written redemption requests of $2,000 or less do
not require a signa-
ture guarantee unless more than one such redemption is made
in any 10-day peri-
od. First Data may require additional supporting documents
for redemptions made
by corporations, executors, administrators, trustees or
guardians. A redemption
request will not be deemed properly received until First
Data receives all
required documents in proper form. Redemption proceeds will
be mailed to the
shareholder's address of record.
TELEPHONE REDEMPTION AND EXCHANGE PROGRAM FOR SHAREHOLDERS
WHO DO NOT HAVE A
SMITH BARNEY BROKERAGE ACCOUNT
Certain shareholders may be eligible to redeem and exchange
Portfolio shares
by telephone. To determine if a shareholder is entitled to
participate in this
program, he or she should contact First Data at (800) 451-
2010. Once eligibil-
ity is confirmed, the shareholder must complete and return a
Telephone/Wire
Authorization Form, including a signature guarantee, that
will be provided by
First Data upon request. (Alternatively, an investor may
authorize telephone
redemptions on the new account application with a signature
guarantee when mak-
ing his/her initial investment in the Concert Series.)
Redemptions. Redemption requests of up to $10,000 of any
Class or Classes of a
Portfolio's shares may be made by eligible shareholders by
calling First Data
at (800) 451-2010. Such requests may be made between 9:00
a.m. and 4:00 p.m.
(New
32
<PAGE>
Smith Barney Concert Series Inc.
REDEMPTION OF SHARES (CONTINUED)
York City time) on any day the NYSE is open. Redemptions of
shares (i) by
retirement plans or (ii) for which certificates have been
issued are not per-
mitted under this program.
A shareholder will have the option of having the redemption
proceeds mailed to
his/her address of record or wired to a bank account
predesignated by the
shareholder. Generally, redemption proceeds will be mailed
or wired, as the
case may be, on the next business day following the
redemption request. In
order to use the wire procedures, the bank receiving the
proceeds must be a
member of the Federal Reserve System or be a correspondent
with a member bank.
The Concert Series reserves the right to charge shareholders
a nominal fee for
each wire redemption. Such charges, if any, will be assessed
against the share-
holder's Portfolio account from which shares were redeemed.
In order to change
the bank account designated to receive redemption proceeds,
a shareholder must
complete a new Telephone/Wire Authorization Form and, for
the protection of the
shareholder's assets, will be required to provide a
signature guarantee and
certain other documentation.
Exchanges. Eligible shareholders may make exchanges by
telephone if the
account registration of the shares of the fund being
acquired is identical to
the registration of the shares of the fund exchanged. Such
exchange requests
may be made by calling First Data at (800) 451-2010 between
9:00 a.m. and 4:00
p.m. (New York City time) on any day on which the NYSE is
open.
Additional Information regarding Telephone Redemption and
Exchange Program.
Neither the Concert Series not its agents will be liable for
following instruc-
tions communicated by telephone that are reasonably believed
to be genuine. The
Concert Series and its agents will employ procedures
designed to verify the
identity of the caller and legitimacy of instructions (for
example, a share-
holder's name and account number will be required and phone
calls may be
recorded). The Concert Series reserves the right to suspend,
modify or discon-
tinue the telephone redemption and exchange program or to
impose a charge for
this service at any time following at least seven (7) days
prior notice to
shareholders.
AUTOMATIC CASH WITHDRAWAL PLAN
Each Portfolio 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 cash payments of at least $50 monthly or quarterly.
Retirement plan
accounts are eligible for automatic cash withdrawal plans
only where the share-
holder is eligible to receive qualified distributions and
has an account value
of at least $5,000. The withdrawal plan will be carried over
on exchanges
between funds or Classes of a Portfolio. Any applicable CDSC
will not be waived
on amounts withdrawn by a shareholder that exceed 1.00% 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 a Smith Barney Financial
Consultant.
MINIMUM ACCOUNT SIZE
The Concert Series reserves the right to involuntarily
liquidate any share-
holder's account in a Portfolio if the aggregate net asset
value of the shares
held in that Portfolio account is less than $500. (If a
shareholder has more
than one account in a Portfolio, each account must satisfy
the minimum account
size.) The Concert Series, however, will not redeem shares
based solely on mar-
ket reductions in net asset value. Before the Concert Series
exercises such
right, shareholders will receive written notice and will be
permitted 60 days
to bring accounts up to the minimum to avoid involuntary
liquidation.
PERFORMANCE
From time to time a Portfolio may include its total return,
average annual
total return, yield and current dividend return in
advertisements and/or other
types of sales literature. These figures are computed
separately for Class A,
Class B, Class C and Class Y shares of each Portfolio. These
figures are based
on historical earnings and are not intended to indicate
future performance.
Total return is computed for a specified period of time
assuming deduction of
the maximum sales charge, if any, from the initial amount
invested and rein-
vestment of all income dividends and capital gain
distributions on the rein-
vestment dates at prices calculated as stated in this
Prospectus, then dividing
the value of the investment at the end of the period so
calculated by the ini-
tial amount invested and subtracting 100%. The standard
average annual total
return, as prescribed by the SEC is derived from this total
return, which pro-
vides the ending redeemable value. Such standard total
return information may
also be accompanied with nonstandard total return
information for differing
periods computed in the same manner but
33
<PAGE>
Smith Barney Concert Series Inc.
PERFORMANCE (CONTINUED)
without annualizing the total return or taking sales charges
into account. The
yield of a Portfolio's Class refers to the net investment
income earned by
investments in the Class over a 30-day period. This net
investment income is
then annualized, i.e., the amount of income earned by the
investments during
that 30-day period is assumed to be earned each 30-day
period for twelve peri-
ods and is expressed as a percentage of the investments. The
yield is calcu-
lated according to a formula prescribed by the SEC to
facilitate comparison
with yields quoted by other investment companies. The
Balanced Portfolio and
the Conservative Portfolio calculate current dividend return
for each of their
Classes by annualizing the most recent quarterly dividend
and dividing by the
net asset value or the maximum public offering price
(including sales charge)
on the last day of the period for which current dividend
return is presented.
The Income Portfolio calculates current dividend return for
each of its Classes
by annualizing the most recent monthly distribution and
dividing by the net
asset value or the maximum public offering price (including
sales charge) on
the last day of the period for which current dividend return
is presented. Each
Class' current dividend return may vary from time to time
depending on market
conditions, the composition of the investment portfolio and
its operating
expenses. These factors and possible differences in the
methods used in calcu-
lating current dividend return should be considered when
comparing current
return of a Class to yields published for other investment
companies and other
investment vehicles. Each Portfolio may also include
comparative performance
information in advertising or marketing its shares. Such
performance informa-
tion may include data from Lipper Analytical Services, Inc.
and other financial
publications.
MANAGEMENT OF THE CONCERT SERIES
BOARD OF DIRECTORS
Overall responsibility for management and supervision of
the Concert Series
rests with the Concert Series' Board of Directors. A
majority of the Series'
directors are non-interested persons as defined in Section
2(a)(19) of the 1940
Act. However, the directors and officers of the Series also
serve in similar
positions with many of the Underlying Smith Barney Funds.
Thus, if the inter-
ests of a Portfolio and the Underlying Smith Barney Funds
were ever to become
divergent, it is possible that a conflict of interest could
arise and affect
how the directors and officers of the Series fulfill their
fiduciary duties to
that Portfolio and the Underlying Smith Barney Funds. The
directors of the
Series believe they have structured each Portfolio to avoid
these concerns.
However, conceivably a situation could occur where proper
action for the Series
or a Portfolio separately could be adverse to the interests
of an Underlying
Smith Barney Fund, or the reverse could occur. If such a
possibility arises,
the directors and officers of the Series, the affected
Underlying Smith Barney
Funds and SBMFM will carefully analyze the situation and
take all steps they
believe reasonable to minimize and, where possible,
eliminate the potential
conflict. Moreover, limitations on aggregate investments in
the Underlying
Smith Barney Funds have been adopted by the Series to
minimize this possibili-
ty, and close and continuous monitoring will be exercised to
avoid, insofar as
is possible, these concerns. The Statement of Additional
Information contains
background information regarding each director and executive
officer of the
Concert Series.
INVESTMENT MANAGER--SBMFM
SBMFM, the investment manager to each Portfolio, is a
registered investment
adviser whose principal offices are located at 388 Greenwich
Street, New York,
New York 10013. SBMFM (through its predecessor entities) has
been in the
investment counseling business since 1940. SBMFM renders
investment advice to a
wide variety of investment company clients that had
aggregate assets under man-
agement as of May 31, 1996 in excess of $72 billion. Subject
to the super-
vision and direction of the Concert Series' Board of
Directors, SBMFM will
determine how each Portfolio's assets will be invested in
the Underlying Smith
Barney Funds and in repurchase agreements pursuant to the
investment objective
and policies of each Portfolio set forth in this Prospectus
and make recommen-
dations to the Board of Directors concerning changes to (a)
the Underlying
Smith Barney Funds in which the Portfolios may invest, (b)
the percentage range
of assets that may be invested by each Portfolio in any one
Underlying Smith
Barney Fund and (c) the percentage range of assets of any
Portfolio that may be
invested in equity funds and fixed income funds (including
money market funds).
The directors of the Concert Series will periodically
monitor the allocations
made and the basis upon which such allocations were made or
maintained. SBMFM
also furnishes each Portfolio with bookkeeping, accounting
and administrative
services, office space and equipment, and the services of
the officers and
employees of the Concert Series. Under the Asset Allocation
and Administration
Agreement with each Portfolio, SBMFM has agreed to bear all
expenses of the
Concert Series other than the management fee, the fees
payable pursuant to the
plan adopted pursuant to Rule 12b-1 under the 1940 Act and
extraordinary
expenses. For the services rendered and expenses borne, each
Portfolio pays
SBMFM a monthly fee at the annual rate of 0.35% of the value
of its average
daily net assets.
34
<PAGE>
Smith Barney Concert Series Inc.
MANAGEMENT OF THE CONCERT SERIES (CONTINUED)
SBMFM also serves as investment adviser to each of the
Underlying Smith Barney
Funds in which the Portfolios may invest (other than the
Smith Barney Premium
Total Return Fund) and is responsible for the selection and
management of each
of the Underlying Smith Barney Fund's investments. SBSA,
located at 388
Greenwich Street, New York, New York 10013, serves as
investment adviser to
Smith Barney Premium Total Return Fund. SBSA has been in the
investment
counseling business since 1968 and is a wholly owned
subsidiary of SBMFM. SBSA
renders investment advice to investment companies that had
aggregate assets
under management as of May 31, 1996 in excess of $2.9
billion.
Each Portfolio, as a shareholder in the Underlying Smith
Barney Funds, will
indirectly bear its proportionate share of any investment
management fees and
other expenses paid by the Underlying Smith Barney Funds.
The effective manage-
ment fee of each of the Underlying Smith Barney Funds in
which the Portfolios
may invest is set forth below as a percentage rate of the
Fund's annual net
assets:
<TABLE>
<CAPTION>
MANAGEMENT
UNDERLYING SMITH BARNEY FUND FEES
- ----------------------------------------------------------
<S> <C>
Smith Barney Aggressive Growth Fund Inc. 0.80%
Smith Barney Appreciation Fund Inc. 0.61%
Smith Barney Equity Funds
Smith Barney Growth and Income Fund 0.65%
Smith Barney Fundamental Value Fund Inc. 0.75%
Smith Barney Funds, Inc.
Equity Income Portfolio 0.58%
Short-Term U.S. Treasury Securities Portfolio 0.45%
Smith Barney Income Funds
Smith Barney High Income Fund 0.70%
Smith Barney Utilities Fund 0.65%
Smith Barney Premium Total Return Fund 0.75%
Smith Barney Convertible Fund 0.70%
Smith Barney Diversified Strategic Income Fund 0.65%
Smith Barney Investment Funds Inc.
Smith Barney Managed Growth Fund 0.85%
Smith Barney Special Equities Fund 0.75%
Smith Barney Government Securities Fund 0.55%
Smith Barney Investment Grade Bond Fund 0.65%
Smith Barney Managed Governments Fund Inc. 0.65%
Smith Barney Money Funds, Inc.
Cash Portfolio 0.41%
Smith Barney Natural Resources Fund Inc. 0.75%
Smith Barney World Funds, Inc.
International Equity Portfolio 0.85%
Emerging Markets Portfolio 1.00%
International Balanced Portfolio 0.85%
Global Government Bond Portfolio 0.75%
- ----------------------------------------------------------
</TABLE>
PORTFOLIO MANAGEMENT
Thomas B. Stiles II, Chief Investment Officer of SBMFM, has
primary responsi-
bility for the day-to-day management of each Portfolio. Mr.
Stiles, born in
1940, is Chairman and Chief Executive Officer of Greenwich
Street Advisors, a
division of SBMFM, and a Managing Director of Smith Barney.
Certain managing
directors of SBMFM will assist Mr. Stiles in managing the
Portfolios.
DISTRIBUTOR
Smith Barney, located at 388 Greenwich Street, New York,
New York 10013, dis-
tributes shares of each Portfolio as principal underwriter
and as such conducts
a continuous offering pursuant to a best efforts arrangement
requiring Smith
Barney to take and pay for only such securities as may be
sold to the public.
Pursuant to the services and distribution plan adopted by
each Portfolio under
Rule 12b-1 under the 1940 Act (the "Plan"), Smith Barney is
paid a service fee
with respect to Class A, Class B and Class C shares of each
Portfolio at the
annual rate of 0.25% of the average daily net assets
attributable to these
35
<PAGE>
Smith Barney Concert Series Inc.
DISTRIBUTOR (CONTINUED)
Classes. Smith Barney is also paid a distribution fee with
respect to Class B
shares and Class C shares of the High Growth Portfolio, the
Growth Portfolio
and the Balanced Portfolio at the annual rate of 0.75% of
the average daily
net assets attributable to those Classes. Smith Barney is
paid a distribution
fee with respect to Class B and Class C shares of the
Conservative Portfolio
and the Income Portfolio at the annual rate of 0.50% and
0.45%, respectively,
of the average daily net assets attributable to those
Classes. Class B shares
that automatically convert to Class A shares eight years
after the date of
original purchase will no longer be subject to a
distribution fee. The fees
are used by Smith Barney to pay its Financial Consultants
for servicing share-
holder accounts and, in the case of Class B and Class C
shares, to cover
expenses primarily intended to result in the sale of those
shares. These
expenses include: advertising expenses; the cost of printing
and mailing pro-
spectuses to potential investors; payments to and expenses
of Smith Barney
Financial Consultants and other persons who provide support
services in con-
nection with the distribution of shares; interest and/or
carrying charges; and
indirect and overhead costs of Smith Barney associated with
the sale of Port-
folio shares, including lease, utility, communications and
sales promotion
expenses.
The payments to Smith Barney Financial Consultants for
selling shares of a
Class include a commission or fee paid by the investor or
Smith Barney at the
time of sale and, with respect to Class A, Class B and Class
C shares, a con-
tinuing fee for servicing shareholder accounts for as long
as a shareholder
remains a holder of that Class. Smith Barney Financial
Consultants may receive
different levels of compensation for selling different
Classes of shares.
Actual distribution expenses for Class B and Class C shares
of each Portfolio
for any given year may exceed the fees received pursuant to
the Plan and will
be carried forward and paid by each Portfolio in future
years so long as the
Plan is in effect. Interest is accrued monthly on such
carryforward amounts at
a rate comparable to that paid by Smith Barney for bank
borrowings.
ADDITIONAL INFORMATION
The Concert Series, an open-end, non-diversified investment
company, was
incorporated in Maryland on August 11, 1995. The Concert
Series has authorized
capital of 3,000,000,000 shares with a par value of $.001
per share. The Board
of Directors has authorized the issuance of five series of
shares, each repre-
senting shares in one of five separate Portfolios and may
authorize the issu-
ance of additional series of shares in the future. The
assets of each Portfo-
lio are segregated and separately managed and a
shareholder's interest is in
the assets of the Portfolio in which he or she holds shares.
Class A, Class B,
Class C and Class Y shares of a Portfolio represent
interests in the assets of
that Portfolio and have identical voting, dividend,
liquidation and other
rights (other than conversion) on the same terms and
conditions except that
expenses related to the distribution of each Class of shares
are borne solely
by each Class and each Class of shares has exclusive voting
rights with
respect to provisions of the Concert Series' Rule 12b-1
distribution plan that
pertain to a particular Class. As described under "Voting"
in the Statement of
Additional Information, the Concert Series ordinarily will
not hold share-
holder meetings; however, shareholders have the right to
call a meeting upon a
vote of 10% of the Concert Series' outstanding shares and
the Concert Series
will assist shareholders in calling such a meeting as
required by the 1940
Act. Shares do not have cumulative voting rights or
preemptive rights and are
fully paid, transferable and non-assessable when issued for
payment as
described in this Prospectus.
On matters submitted for consideration by shareholders of
any Underlying
Smith Barney Fund, a Portfolio will vote its shares in
proportion to the vote
of all other holders of shares of that Fund or, in certain
limited instances,
the Portfolio will vote its shares in the manner indicated
by a vote of hold-
ers of shares of the Portfolio.
PNC Bank, National Association, located at 17th and
Chestnut Streets, Phila-
delphia, Pennsylvania 19103 serves as custodian of the
Portfolio's invest-
ments.
First Data, located at Exchange Place, Boston,
Massachusetts 02109, serves as
the Concert Series' transfer agent.
The Concert Series intends to send its shareholders a semi-
annual report and
an audited annual report, which will include listings of the
investment secu-
rities held by the Concert Series at the end of the period
covered. In an
effort to reduce the Concert Series' printing and mailing
costs, the Concert
Series plans to consolidate the mailing of its semi-annual
and annual reports
by household. This consolidation means that a household
having multiple
accounts with the identical address of
36
<PAGE>
Smith Barney Concert Series Inc.
ADDITIONAL INFORMATION (CONTINUED)
record will receive a single copy of each report. In
addition, the Concert
Series also plans to consolidate the mailing of its
Prospectus so that a share-
holder having multiple accounts (that is, individual, IRA
and/or Self-Employed
Retirement Plan accounts) will receive a single Prospectus
annually. Sharehold-
ers who do not want this consolidation to apply to their
account should contact
their Smith Barney Financial Consultant or the Concert
Series' transfer agent.
37
<PAGE>
Smith Barney Concert Series Inc.
APPENDIX
DESCRIPTIONS OF CERTAIN RISKS RELATED TO VARIOUS SECURITIES
INVESTED IN, AND
INVESTMENT STRATEGIES EMPLOYED BY, THE UNDERLYING SMITH
BARNEY FUNDS IN WHICH
THE PORTFOLIOS MAY INVEST
Repurchase Agreements. Repurchase agreements, as utilized
by an Underlying
Smith Barney Fund or a Portfolio of the Concert Series,
could involve certain
risks in the event of default or insolvency of the other
party, including pos-
sible delays or restrictions upon the ability of an
Underlying Smith Barney
Fund or a Portfolio to dispose of the underlying securities,
the risk of a
possible decline in the value of the underlying securities
during the period
in which an Underlying Smith Barney Fund or a Portfolio
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.
Reverse Repurchase Agreements. Certain of the Underlying
Smith Barney Funds
may engage in reverse repurchase agreement transactions with
banks, brokers
and other financial institutions. Reverse repurchase
agreements involve the
risk that the market value of the securities sold by the
Underlying Smith Bar-
ney Fund may decline below the repurchase price of the
securities.
Lending of Portfolio Securities. The risks in lending
portfolio securities,
like those associated with other extensions of secured
credit, consist of pos-
sible delays in receiving additional collateral or in the
recovery of the
securities or possible loss of rights in the collateral
should the borrower
fail financially. Loans will be made to firms deemed by the
adviser to the
Underlying Smith Barney Fund to be of good standing and will
not be made
unless, in the judgment of the adviser, the consideration to
be earned from
such loans would justify the risk.
When-Issued Securities and Delayed-Delivery Transactions.
The purchase of
securities on a when-issued or delayed-delivery basis
involves the risk that,
as a result of an increase in yields available in the
marketplace, the value
of the securities purchased will decline prior to the
settlement date. The
sale of securities for delayed delivery involves the risk
that the prices
available in the market on the delivery date may be greater
than those
obtained in the sale transaction.
Non-Diversified Funds. Certain of the Underlying Smith
Barney Funds are
classified as non-diversified investment companies under the
1940 Act. Since,
as a non-diversified fund, such an Underlying Smith Barney
Fund is permitted
to invest a greater proportion of its assets in the
securities of a smaller
number of issuers, each such Fund may be subject to greater
risk with respect
to its individual portfolio than a Fund that is more broadly
diversified.
Securities of Unseasoned Issuers. Securities in which
certain of the Under-
lying Smith Barney Funds may invest may have limited
marketability and, there-
fore, may be subject to wide fluctuations in market value.
In addition, cer-
tain securities may lack a significant operating history and
be dependent on
products or services without an established market share.
Convertible Securities and Synthetic Convertible
Securities. While convert-
ible securities generally offer lower yields than non-
convertible debt securi-
ties of similar quality, their prices may reflect changes in
the value of the
underlying common stock. Convertible securities entail less
credit risk than
the issuer's common stock.
Synthetic convertible securities are created by combining
non-convertible
bonds or preferred stocks with warrants or stock call
options. Synthetic con-
vertible securities differ from convertible securities in
certain respects,
including that each component of a synthetic convertible
security has a sepa-
rate market value and responds differently to market
fluctuations. Investing
in synthetic convertible securities involves the risks
normally involved in
holding the securities comprising the synthetic convertible
security.
Securities of Developing Countries. A developing country
generally is consid-
ered to be a country that is in the initial stages of its
industrialization
cycle. Investing in the equity and fixed-income markets of
developing coun-
tries involves exposure to economic structures that are
generally less diverse
and mature, and to political systems that can be expected to
have less stabil-
ity, than those of developed countries. Historical
experience indicates that
the markets of developing countries have been more volatile
than the markets
of the more mature economies of developed countries;
however, such markets
often have provided higher rates of return to investors.
Sovereign Debt Obligations. Sovereign debt of developing
countries may
involve a high degree of risk, and may be in default or
present the risk of
default. Governmental entities responsible for repayment of
the debt may be
unable or unwilling to repay principal and interest when
due, and may require
renegotiation or rescheduling of debt payments. In addition,
prospects for
repaying of principal and interest may depend on political
as well as economic
factors. Although some sovereign
A-1
<PAGE>
Smith Barney Concert Series Inc.
APPENDIX (CONTINUED)
debt, such as Brady Bonds, is collateralized by U.S.
government securities,
repayment of principal and interest is not guaranteed by the
U.S. government.
Restrictions on Foreign Investment. Some countries prohibit
or impose substan-
tial restrictions on investments in their capital markets,
particularly their
equity markets, by foreign entities. As illustrations,
certain countries
require governmental approval prior to investments by
foreign persons, or limit
the amount of investment by foreign persons in a particular
company, or limit
the investment by foreign persons to only a specific class
of securities of a
company that may have less advantageous terms than
securities of the company
available for purchase by nationals or limit the
repatriation of funds for a
period of time.
Smaller capital markets, while often growing in trading
volume, have substan-
tially less volume than U.S. markets, and securities in many
smaller capital
markets are less liquid and their prices may be more
volatile than securities
of comparable U.S. companies. Brokerage commissions,
custodial services, and
other costs relating to investment in smaller capital
markets are generally
more expensive than in the U.S. Such markets have different
clearance and set-
tlement procedures, and in certain markets there have been
times when settle-
ments have been unable to keep pace with the volume of
securities transactions,
making it difficult to conduct such transactions. Further,
satisfactory custo-
dial services for investment securities may not be available
in some countries
having smaller capital markets, which may result in an
Underlying Smith Barney
Fund incurring additional costs and delays in transporting
and custodying such
securities outside such countries. Delays in settlement
could result in tempo-
rary periods when assets of a Fund are uninvested and no
return is earned
thereon. The inability of an Underlying Smith Barney Fund to
make intended
security purchases due to settlement problems could cause
such Fund to miss
attractive investment opportunities. Inability to dispose of
a portfolio secu-
rity due to settlement problems could result either in
losses to the Fund due
to subsequent declines in value of the portfolio security
or, if the Fund has
entered into a contract to sell the security, could result
in possible liabil-
ity to the purchaser. There is generally less government
supervision and regu-
lation of exchanges, brokers and issuers in countries having
smaller capital
markets than there is in the U.S.
Mortgage-Related Securities. To the extent that an
Underlying Smith Barney
Fund purchases mortgage-related securities at a premium,
mortgage foreclosures
and prepayments of principal by mortgagors (which may be
made at any time with-
out penalty) may result in some loss of the Fund's principal
investment to the
extent of the premium paid. The Underlying Smith Barney
Fund's yield may be
affected by reinvestment of prepayments at higher or lower
rates than the orig-
inal investment. In addition, like other debt securities,
the values of mort-
gage-related securities, including government and government-
related mortgage
pools, generally will fluctuate in response to market
interest rates.
Non-Publicly Traded and Illiquid Securities. The sale of
securities that are
not publicly traded is typically restricted under the
Federal securities laws.
As a result, an Underlying Smith Barney Fund may be forced
to sell these secu-
rities at less than fair market value or may not be able to
sell them when the
Fund's adviser believes it desirable to do so. Investments
by an Underlying
Smith Barney Fund in illiquid securities are subject to the
risk that should
the Fund desire to sell any of these securities when a ready
buyer is not
available at a price that the Fund's adviser deems
representative of its value,
the value of the Underlying Smith Barney Fund's net assets
could be adversely
affected.
Short Sales. Possible losses from short sales differ from
losses that could be
incurred from a purchase of a security, because losses from
short sales may be
unlimited, whereas losses from purchases can equal only the
total amount
invested.
Forward Roll Transactions. Forward roll transactions
involve the risk that the
market value of the securities sold by an Underlying Smith
Barney Fund may
decline below the repurchase price of the securities.
Forward roll transactions
are considered borrowings by a Fund. Although investing the
proceeds of these
borrowings in repurchase agreements or money market
instruments may provide an
Underlying Smith Barney Fund with the opportunity for higher
income, this
leveraging practice will increase a Fund's exposure to
capital risk and higher
current expenses. Any income earned from the securities
purchased with the
proceeds of these borrowings that exceeds the cost of the
borrowings would
cause a Fund's net asset value per share to increase faster
than would
otherwise be the case; any decline in the value of the
securities purchased
would cause a Fund's net asset value per share to decrease
faster than would
otherwise be the case.
Leverage. Certain of the Underlying Smith Barney Funds may
borrow from banks,
on a secured or unsecured basis, in order to leverage their
portfolios. Lever-
age creates an opportunity for increased returns to
shareholders of an Under-
lying Smith Barney Fund but, at the same time, creates
special risk considera-
tions. For example, leverage may exaggerate changes in the
net asset value of a
Fund's shares and in a Fund's yield. Although the principal
or stated value of
such borrowings will be
A-2
<PAGE>
Smith Barney Concert Series Inc.
APPENDIX (CONTINUED)
fixed, the Fund's assets may change in value during the time
the borrowing is
outstanding. Leverage will create interest or dividend
expenses for the Fund
that can exceed the income from the assets retained. To the
extent the income
or other gain derived from securities purchased with
borrowed funds exceeds the
interest or dividends the Fund will have to pay in respect
thereof, the Fund's
net income or other gain will be greater than if leverage
had not been used.
Conversely, if the income or other gain from the incremental
assets is not suf-
ficient to cover the cost of leverage, the net income or
other gain of the Fund
will be less than if leverage had not been used. If the
amount of income for
the incremental securities is insufficient to cover the cost
of borrowing,
securities might have to be liquidated to obtain required
funds. Depending on
market or other conditions, such liquidations could be
disadvantageous to the
Underlying Smith Barney Fund.
Floating and Variable Rate Income Securities. Floating and
variable rate
income securities include securities whose rates vary
inversely with changes in
market rates of interest. Such securities may also pay a
rate of interest
determined by applying a multiple to the variable rate. The
extent of increases
and decreases in the value of securities whose rates vary
inversely with
changes in market rates of interest generally will be larger
than comparable
changes in the value of an equal principal amount of a fixed
rate security hav-
ing similar credit quality, redemption provisions and
maturity.
Zero Coupon, Discount and Payment-in-Kind Securities. Zero
coupon securities
generally pay no cash interest (or dividends in the case of
preferred stock) to
their holders prior to maturity. Payment-in-kind securities
allow the lender,
at its option, to make current interest payments on such
securities either in
cash or in additional securities. Accordingly, such
securities usually are
issued and traded at a deep discount from their face or par
value and generally
are subject to greater fluctuations of market value in
response to changing
interest rates than securities of comparable maturities and
credit quality that
pay cash interest (or dividends in the case of preferred
stock) on a current
basis.
Premium Securities. Premium securities are income
securities bearing coupon
rates higher than prevailing market rates. Premium
securities are typically
purchased at prices greater than the principal amounts
payable on maturity. If
securities purchased by an Underlying Smith Barney Fund at a
premium are called
or sold prior to maturity, the Fund will recognize a capital
loss to the extent
the call or sale price is less than the purchase price.
Additionally, the Fund
will recognize a capital loss if it holds such securities to
maturity.
Yankee Bonds. Yankee bonds are U.S. dollar-denominated
bonds sold in the U.S.
by non-U.S. issuers. As compared with bonds issued in the
U.S., such bond
issues normally carry a higher interest rate but are less
actively traded.
Swap Agreements. As one way of managing its exposure to
different types of
investments, certain of the Underlying Smith Barney Funds
may enter into inter-
est rate swaps, currency swaps, and other types of swap
agreements such as
caps, collars, and floors. Swap agreements can be highly
volatile and may have
a considerable impact on a Fund's performance. Swap
agreements are subject to
risks related to the counterparty's ability to perform, and
may decline in
value if the counterparty's creditworthiness deteriorates. A
Fund may also suf-
fer losses if it is unable to terminate outstanding swap
agreements or reduce
its exposure through offsetting transactions.
Indexed Securities. Certain of the Underlying Smith Barney
Funds may invest in
indexed securities, including inverse floaters, whose value
is linked to cur-
rencies, interest rates, commodities, indices, or other
financial indicators.
Indexed securities may be positively or negatively indexed
(i.e., their value
may increase or decrease if the underlying instrument
appreciates), and may
have return characteristics similar to direct investments in
the underlying
instrument or to one or more options on the underlying
instrument. Indexed
securities may be more volatile than the underlying
instrument itself.
Investment in Utility Securities. The Smith Barney
Utilities Fund is particu-
larly subject to risks that are inherent to the utility
industries, including
difficulty in obtaining an adequate return on invested
capital, difficulty in
financing large construction programs during an inflationary
period, restric-
tions on operations and increased cost and delays
attributable to environmental
considerations and regulation, difficulty in raising capital
in adequate
amounts on reasonable terms in periods of high inflation and
unsettled capital
markets, increased costs and reduced availability of certain
types of fuel,
occasional reduced availability and high costs of natural
gas for resales, the
effects of energy conservation, the effects of a national
energy policy and
lengthy delays and greatly increased costs and other
problems associated with
the design, construction, licensing, regulation and
operation of nuclear facil-
ities for electric generation, including, among other
considerations, the prob-
lems associated with the use of radioactive materials and
the disposal of
radioactive wastes. There are substantial differences
between the regulatory
practices and policies of various jurisdictions, and any
given regulatory
agency may make major shifts in policy from time to time.
There is no assurance
that regulatory authorities will grant rate increases in the
future or that
such
A-3
<PAGE>
Smith Barney Concert Series Inc.
APPENDIX (CONTINUED)
increases will be adequate to permit the payment of
dividends on common stocks.
Additionally, existing and possible future regulatory
legislation may make it
even more difficult for these utilities to obtain adequate
relief. Certain of
the issuers of securities held by the Smith Barney Utilities
Fund may own or
operate nuclear generating facilities. Governmental
authorities may from time
to time review existing policies, and impose additional
requirements governing
the licensing, construction and operation of nuclear power
plants.
Each of the risks referred to above could adversely affect
the ability and
inclination of public utilities to declare or pay dividends
and the ability of
holders of common stock to realize any value from the assets
of the issuer upon
liquidation or bankruptcy. All of the utilities that are
issuers of the securi-
ties held by the Smith Barney Utilities Fund have been
experiencing one or more
of these problems in varying degrees. Moreover, price
disparities within
selected utility groups and discrepancies in relation to
averages and indices
have occurred frequently for reasons not directly related to
the general move-
ments or price trends of utility common stocks. Causes of
these discrepancies
include changes in the overall demand for and supply of
various securities (in-
cluding the potentially depressing effect of new stock
offerings), and changes
in investment objectives, market expectations or cash
requirements of other
purchasers and sellers of securities.
A-4
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
SMITH BARNEY
A Member of TravelersGroup[ART]
Smith Barney
Concert Series Inc.
388 Greenwich Street
New York, NY 10013
FD01083 7/96 16794
<PAGE>
Smith Barney Concert Series Inc.
PROSPECTUS
AUGUST 5, 1996
- ------------------------------------------------------------
- --------------------
3100 Breckinridge Blvd., Bldg 200
Duluth, Georgia 30199-0062
(800) 544-5445
Smith Barney Concert Series Inc. (the "Concert Series" or
"Series") offers
five professionally managed investment portfolios (each, a
"Portfolio"). Each
Portfolio seeks to achieve its objective by investing in a
number of other
Smith Barney Mutual Funds.
The High Growth Portfolio seeks capital appreciation.
The Growth Portfolio seeks long-term growth of capital.
The Balanced Portfolio seeks a balance of growth of capital
and income.
The Conservative Portfolio seeks income and, secondarily,
long-term growth of
capital.
The Income Portfolio seeks high current income.
This Prospectus sets forth concisely certain information
about the Concert
Series and each of the Portfolios that prospective investors
will find helpful
in making an investment decision. Investors are encouraged
to read this Pro-
spectus carefully and retain it for future reference.
Additional information about each of the Portfolios is
contained in a State-
ment of Additional Information dated August 5, 1996, as
amended or supplemented
from time to time, that is available upon request and
without charge by calling
or writing the Concert Series at the telephone number or
address set forth
above or by contacting an Investments Representative of PFS
Investments Inc.
("PFS Investments"). 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.
PFS DISTRIBUTORS, INC.
Distributor
SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Investment Manager
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.
<PAGE>
Smith Barney Concert Series Inc.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY 3
- --------------------------------------------------
WHY INVEST IN THE CONCERT SERIES? 9
- --------------------------------------------------
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES 9
- --------------------------------------------------
RISK FACTORS AND SPECIAL CONSIDERATIONS 12
- --------------------------------------------------
PORTFOLIO TURNOVER 12
- --------------------------------------------------
INVESTMENT RESTRICTIONS 13
- --------------------------------------------------
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS 13
- --------------------------------------------------
VALUATION OF SHARES 22
- --------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES 23
- --------------------------------------------------
PURCHASE OF SHARES 23
- --------------------------------------------------
EXCHANGE PRIVILEGE 27
- --------------------------------------------------
REDEMPTION OF SHARES 28
- --------------------------------------------------
MINIMUM ACCOUNT SIZE 29
- --------------------------------------------------
PERFORMANCE 29
- --------------------------------------------------
MANAGEMENT OF THE CONCERT SERIES 30
- --------------------------------------------------
DISTRIBUTOR 31
- --------------------------------------------------
ADDITIONAL INFORMATION 32
- --------------------------------------------------
APPENDIX A-1
- --------------------------------------------------
</TABLE>
- ------------------------------------------------------------
- --------------------
No person has been authorized to give any information or to
make any
representations in connection with this offering other than
those contained in
this Prospectus and, if given or made, such other
information and
representations must not be relied upon as having been
authorized by the
Concert Series or the Distributor. This Prospectus does not
constitute an offer
by the Concert Series or the Distributor to sell or a
solicitation of an offer
to buy any of the securities offered hereby or securities of
any Underlying
Smith Barney Fund in any jurisdiction to any person to whom
it is unlawful to
make such offer or solicitation in such jurisdiction.
- ------------------------------------------------------------
- --------------------
2
<PAGE>
Smith Barney Concert Series Inc.
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 Prospec-
tus. See "Table of Contents."
INVESTMENT OBJECTIVES The Concert Series is an open-end, non-
diversified
management investment company that currently offers five
professionally managed
investment portfolios. The High Growth Portfolio seeks to
provide capital
appreciation. The Growth Portfolio seeks to provide long-
term growth of
capital. The Balanced Portfolio seeks to provide a balance
of growth of capital
and income. The Conservative Portfolio seeks to provide
income and,
secondarily, long-term growth of capital. The Income
Portfolio seeks to provide
high current income. Each Portfolio seeks to achieve its
investment objective
by investing in a diverse mix of "Underlying Smith Barney
Funds," which consist
of open-end management investment companies or series
thereof for which Smith
Barney Inc. ("Smith Barney") now or in the future acts as
principal underwriter
or for which Smith Barney, Smith Barney Mutual Funds
Management Inc. ("SBMFM")
or Smith Barney Strategy Advisers Inc. ("SBSA") now or in
the future acts as
investment adviser. In addition, each Portfolio may invest
its short-term cash
in repurchase agreements. Investors may choose to invest in
one or more of the
Portfolios based on their personal investment goals, risk
tolerance and
financial circumstances. See "Investment Objectives and
Management Policies."
ALTERNATIVE PURCHASE ARRANGEMENTS Each Portfolio offers
several classes of
shares ("Classes") to investors designed to provide them
with the flexibility
of selecting an investment best suited to their needs. The
general public is
offered three Classes of shares: Class A shares, Class B
shares and Class C
shares, which differ principally in terms of sales charges
and rates of
expenses to which they are subject. A fourth Class of
shares, Class Y shares,
is offered only to investors meeting an initial investment
minimum of
$5,000,000. The only Classes of shares being offered for
sale pursuant to this
prospectus are Class A shares and Class B shares. See
"Purchase of Shares" and
"Redemption of Shares."
Class A Shares. Class A shares are sold at net asset value
plus an initial
sales charge of up to 5.00% with respect to the High Growth
Portfolio, the
Growth Portfolio and the Balanced Portfolio and up to 4.50%
with respect to the
Conservative Portfolio and the Income Portfolio. The initial
sales charge may
be reduced or waived for certain purchases. Purchases of
Class A shares which,
when combined with current holdings of Class A shares
offered with a sales
charge, equal or exceed $500,000 in the aggregate, will be
made at net asset
value with no initial sales charge, but will be subject to a
contingent
deferred sales charge ("CDSC") of 1.00% on redemptions made
within 12 months of
purchase. See "Prospectus Summary--Reduced or No Initial
Sales Charge." Class A
shares of each Portfolio are subject to an annual service
fee of 0.25% of the
average daily net assets of the Class.
Class B Shares. Class B shares of the High Growth
Portfolio, the Growth Port-
folio and the Balanced Portfolio are offered at net asset
value subject to a
maximum CDSC of 5.00% of redemption proceeds, declining by
1.00% each year
after the date of purchase to zero. Class B shares of the
Conservative Portfo-
lio and the Income Portfolio are offered at net asset value
subject to a maxi-
mum CDSC of 4.50% of redemption proceeds, declining by 0.50%
the first year
after purchase and 1.00% each year thereafter to zero. The
CDSC may be waived
for certain redemptions. Class B shares of the High Growth
Portfolio, the
Growth Portfolio and the Balanced Portfolio are subject to
an annual service
fee of 0.25% and an annual distribution fee of 0.75% of the
average daily net
assets of the Class. Class B shares of the Conservative
Portfolio and the
Income Portfolio are subject to an annual service fee of
0.25% and an annual
distribution fee of 0.50% of the average daily net assets of
the Class. The
Class B shares' distribution fee may cause that Class to
have higher expenses
and pay lower dividends than Class A shares.
Class B Shares Conversion Feature. Class B shares will
convert automatically
to Class A shares, based on relative net asset value, eight
years after the
date of the original purchase. Upon conversion, these shares
will no longer be
subject to an annual distribution fee. In addition, a
certain portion of Class
B shares that have been acquired through the reinvestment of
dividends and dis-
tributions ("Class B Dividend Shares") will be converted at
that time. See
"Purchase of Shares--Deferred Sales Charge Alternatives."
In deciding which Class of Portfolio shares to purchase,
investors should con-
sider the following factors, as well as any other relevant
facts and circum-
stances:
Intended Holding Period. The decision as to which Class of
shares is more ben-
eficial to an investor depends on the amount and intended
duration of his or
her investment. Shareholders who are planning to establish a
program of regular
invest-
3
<PAGE>
Smith Barney Concert Series Inc.
PROSPECTUS SUMMARY (CONTINUED)
ment may wish to consider Class A shares; as the investment
accumulates share-
holders may qualify for reduced sales charges and the shares
are subject to
lower ongoing expenses over the term of the investment. As
an alternative,
Class B shares are sold without any initial sales charge so
the entire pur-
chase price is immediately invested in a Portfolio. Any
investment return on
these additional invested amounts may partially or wholly
offset the higher
annual expenses of this Class. Because a Portfolio's future
return cannot be
predicted, however, there can be no assurance that this
would be the case.
The maximum purchase amount for Class A shares is
$499,999,999 and for Class
B shares is $249,999.
Reduced or No Initial Sales Charge. The initial sales
charge on Class A
shares may be waived for certain eligible purchasers, and
the entire purchase
price will be immediately invested in a Portfolio. In
addition, Class A share
purchases which, when combined with current holdings of
Class A shares offered
with a sales charge, equal or exceed $500,000 in the
aggregate, will be made
at net asset value with no initial sales charge, but will be
subject to a CDSC
of 1.00% on redemptions made within 12 months of purchase.
The $500,000 aggre-
gate investment may be met by adding the purchase to the net
asset value of
all Class A shares offered with a sales charge held in funds
sponsored by
Smith Barney listed under "Exchange Privilege." Class A
share purchases also
may be eligible for a reduced initial sales charge. See
"Purchase of Shares."
Because the ongoing expenses of Class A shares may be lower
than those for
Class B shares, purchasers eligible to purchase Class A
shares at net asset
value or at a reduced sales charge should consider doing so.
PFS Investments Representatives may receive different
compensation for sell-
ing each Class of shares. Investors should understand that
the purpose of the
CDSC on the Class B shares is the same as that of the
initial sales charge on
the Class A shares.
See "Purchase of Shares" and "Management of the Concert
Series" for a com-
plete description of the sales charges and service and
distribution fees for
each Class of shares and "Valuation of Shares," "Dividends,
Distribution and
Taxes" and "Exchange Privilege" for other differences
between the Classes of
shares.
PURCHASE OF SHARES Shares may be purchased through PFS
Distributors, Inc.
("PFS"), a distributor of the Series' shares. See "Purchase
of Shares."
INVESTMENT MINIMUMS Investors in Class A and Class B shares
may open an
account by making an initial investment of at least $1,000
for each account
(except for Systematic Investment Plan accounts), or $250
for an individual
retirement account ("IRA") or a Self-Employed Retirement
Plan. Subsequent
investments of at least $25 may be made for each Class. For
participants in
retirement plans qualified under Section 403(b)(7) or
Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), the
minimum initial
investment requirement for Class A and Class B shares and
the subsequent
investment requirement for each Class is $25. The minimum
initial investment
requirement for Class A and Class B shares and the
subsequent investment
requirement for all Classes through the Systematic
Investment Plan described
below is $25. See "Purchase of Shares."
SYSTEMATIC INVESTMENT PLAN Each Portfolio offers
shareholders a Systematic
Investment Plan under which they may authorize the automatic
placement of a
purchase order each month for Portfolio shares in an amount
of at least $25.
See "Purchase of Shares."
REDEMPTION OF SHARES Shares may be redeemed on each day the
New York Stock
Exchange, Inc. ("NYSE") is open for business. See "Purchase
of Shares" and
"Redemption of Shares."
MANAGEMENT OF EACH PORTFOLIO SBMFM serves as each
Portfolio's investment
manager. SBMFM is a wholly owned subsidiary of Smith Barney
Holdings Inc.
("Holdings"). Holdings is a wholly owned subsidiary of
Travelers Group Inc.
("Travelers"), a diversified financial services holding
company engaged,
through its subsidiaries, principally in four business
segments: Investment
Services, Consumer Finance Services, Life Insurance Services
and Property &
Casualty Insurance Services.
SBMFM serves as the investment adviser of each of the
Underlying Smith Barney
Funds (other than Smith Barney Premium Total Return Fund).
SBSA, a wholly
owned subsidiary of SBMFM, serves as investment adviser to
Smith Barney Pre-
mium Total Return Fund. See "Management of the Concert
Series."
4
<PAGE>
Smith Barney Concert Series Inc.
PROSPECTUS SUMMARY (CONTINUED)
EXCHANGE PRIVILEGE Shares of each Class may be exchanged for
shares of the same
Class of certain other Smith Barney Mutual Funds, including
the Underlying
Smith Barney Funds held by the Portfolios, at the respective
net asset values
next determined, plus any applicable sales charge
differential. See "Exchange
Privilege."
VALUATION OF SHARES Net asset value of each Portfolio for
the prior day
generally will be quoted daily in the financial section of
most newspapers and
is also available from PFS Shareholder Services (the "Sub-
Transfer Agent"). See
"Valuation of Shares."
DIVIDENDS AND DISTRIBUTIONS The Concert Series intends to
pay dividends from
net investment income monthly on shares of the Income
Portfolio, quarterly on
shares of the Conservative Portfolio and the Balanced
Portfolio and annually on
shares of the High Growth Portfolio and the Growth
Portfolio. Distributions of
net realized capital gains, if any, are paid annually for
each Portfolio. See
"Dividends, Distributions and Taxes."
REINVESTMENT OF DIVIDENDS Dividends and distributions paid
on shares of each
Class will be reinvested automatically, unless otherwise
specified by an
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."
RISK FACTORS AND SPECIAL CONSIDERATIONS The assets of each
Portfolio are
invested in certain Underlying Smith Barney Funds, so each
Portfolio's
investment performance is directly related to the investment
performance of the
Underlying Smith Barney Funds held. The ability of each
Portfolio to meet its
investment objective is directly related to the ability of
the Underlying Smith
Barney Funds held to meet their objectives as well as the
allocation among
those Underlying Smith Barney Funds by SBMFM. There can be
no assurance that
the investment objective of any Portfolio or any Underlying
Smith Barney Fund
will be achieved.
The value of the Underlying Smith Barney Funds'
investments, and thus the net
asset value of both those Underlying Smith Barney Funds' and
the Portfolios'
shares, will fluctuate in response to changes in market and
economic condi-
tions, as well as the financial condition and prospects of
issuers in which the
Underling Smith Barney Funds invest. For a description of
the risks involved in
an investment in the Portfolios, see "Investment Objectives
and Management Pol-
icies," "Description of the Underlying Smith Barney Funds"
and the Appendix to
this Prospectus.
5
<PAGE>
Smith Barney Concert Series Inc.
PROSPECTUS SUMMARY (CONTINUED)
EACH PORTFOLIO'S EXPENSES The following expense tables list
the costs and
expenses an investor will incur as a shareholder of each
Portfolio, based on
the maximum sales charge or maximum CDSC that may be
incurred at the time of
purchase or redemption and estimates of each Portfolio's
operating expenses
for its first full year of operation.
<TABLE>
<CAPTION>
APPLICABLE TO THE HIGH GROWTH
PORTFOLIO, THE GROWTH
PORTFOLIO AND THE
BALANCED PORTFOLIO
-------------------------------
- -----------------------
CLASS A
CLASS B
- ------------------------------------------------------------
- -------------------------
<S> <C>
<C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum sales charge
imposed on purchases
(as a percentage of
offering price)...... 5.00%
None
Maximum CDSC (as a
percentage of
original cost or
redemption proceeds,
whichever is lower).. None*
5.00%
- ------------------------------------------------------------
- -------------------------
ANNUAL PORTFOLIO
OPERATING EXPENSES
(as a percentage of
average net assets)
Management fee........ 0.35%
0.35%
12b-1 fee**........... 0.25
1.00
Other expenses***..... None
None
- ------------------------------------------------------------
- -------------------------
TOTAL PORTFOLIO OPER-
ATING EXPENSES...... 0.60%
1.35%
- ------------------------------------------------------------
- -------------------------
</TABLE>
<TABLE>
<CAPTION>
APPLICABLE TO THE CONSERVATIVE
PORTFOLIO
AND THE INCOME
PORTFOLIO
------------------------
- -------------------
CLASS A
CLASS B
- ------------------------------------------------------------
- --------------------
<S> <C>
<C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum sales charge imposed
on purchases
(as a percentage of offering
price) 4.50%
None
Maximum CDSC (as a percentage
of original cost or
redemption proceeds,
whichever is lower)......... None*
4.50%
- ------------------------------------------------------------
- --------------------
ANNUAL PORTFOLIO OPERATING
EXPENSES
(as a percentage of average
net assets)
Management fee............... 0.35%
0.35%
12b-1 fee**.................. 0.25
0.75
Other expenses*** None
None
- ------------------------------------------------------------
- --------------------
TOTAL PORTFOLIO OPERATING
EXPENSES................... 0.60%
1.10%
- ------------------------------------------------------------
- --------------------
</TABLE>
* Purchases of Class A shares, which when combined with
current holdings of
Class A shares offered with a sales charge equal or
exceed $500,000 in the
aggregate, will be made at net asset value with no sales
charge, but will
be subject to a CDSC of 1.00% on redemptions made within
12 months.
** Upon conversion of Class B shares to Class A shares,
such shares will no
longer be subject to a distribution fee.
*** Under the Asset Allocation and Administration Agreement
with each
Portfolio, SBMFM bears all expenses of each Class of
each Portfolio other
than the management fee, the 12b-1 fee and extraordinary
expenses.
The sales charges and CDSCs set forth in the above tables
are the maximum
charges imposed on purchases or redemptions of each of the
Portfolios' shares
and investors may actually pay lower or no charges,
depending on the amount
purchased and, in the case of Class B and certain Class A
shares, the length
of time the shares are held. See "Purchase of Shares" and
"Redemption of
Shares." PFS receives an annual 12b-1 service fee of 0.25%
of the value of
average daily net assets of Class A shares of each
Portfolio. PFS also
receives with respect to Class B shares of the High Growth
Portfolio, the
Growth Portfolio and the Balanced Portfolio an annual 12b-1
fee of 1.00% of
the value of average daily net assets of that Class,
consisting of a 0.75%
distribution fee and a 0.25% service fee. For Class B shares
of the Conserva-
tive Portfolio and the Income Portfolio, PFS receives an
annual 12b-1 fee of
0.75% of the value of average daily net assets of that
Class, consisting of a
0.50% distribution fee and a 0.25% service fee.
6
<PAGE>
Smith Barney Concert Series Inc.
PROSPECTUS SUMMARY (CONTINUED)
The Portfolios will invest only in Class Y shares of the
Underlying Smith Bar-
ney Funds and, accordingly, will not pay any sales load or
12b-1 service or
distribution fees in connection with their investments in
shares of the Under-
lying Smith Barney Funds. The Portfolios, however, will
indirectly bear their
pro rata share of the fees and expenses incurred by the
Underlying Smith Barney
Funds that are applicable to Class Y shareholders. The
investment returns of
each Portfolio, therefore, will be net of the expenses of
the Underlying Smith
Barney Funds in which it is invested. The following chart
shows the expense
ratios applicable to Class Y shareholders of each Underlying
Smith Barney Fund,
based on estimated operating expenses for its current fiscal
year:
<TABLE>
<CAPTION>
UNDERLYING SMITH BARNEY FUND EXPENSE
RATIO
- ------------------------------------------------------------
- ---
<S> <C>
Smith Barney Aggressive Growth Fund Inc. 0.92%
Smith Barney Appreciation Fund Inc. 0.69%
Smith Barney Equity Funds:
Smith Barney Growth and Income Fund 0.87%
Smith Barney Fundamental Value Fund Inc. 0.90%
Smith Barney Funds, Inc.:
Equity Income Portfolio 0.67%
Short-Term U.S. Treasury Securities Portfolio 0.54%
Smith Barney Income Funds:
Smith Barney High Income Fund 0.81%
Smith Barney Utilities Fund 0.74%
Smith Barney Premium Total Return Fund 0.83%
Smith Barney Convertible Fund 0.92%
Smith Barney Diversified Strategic Income Fund 0.79%
Smith Barney Investment Funds Inc.:
Smith Barney Managed Growth Fund 0.95%
Smith Barney Special Equities Fund 0.86%
Smith Barney Government Securities Fund 0.64%
Smith Barney Investment Grade Bond Fund 0.76%
Smith Barney Managed Governments Fund Inc. 0.74%
Smith Barney Money Funds, Inc.:
Cash Portfolio 0.46%
Smith Barney Natural Resources Fund Inc. 1.74%
Smith Barney World Funds, Inc.:
International Equity Portfolio 0.98%
Emerging Markets Portfolio 1.40%
International Balanced Portfolio 1.07%
Global Government Bond Portfolio 0.95%
- ------------------------------------------------------------
- ---
</TABLE>
Based on a weighted average of the Class Y expense ratios
of Underlying Smith
Barney Funds in which a particular Portfolio is expected to
invest at the com-
mencement of investment operations, the approximate expense
ratios are expected
to be as follows: High Growth Portfolio, Class A 1.51%,
Class B 2.26%, Class C
2.26% and Class Y 1.26%; Growth Portfolio, Class A 1.45%,
Class B 2.20%, Class
C 2.20% and Class Y 1.20%; Balanced Portfolio, Class A
1.38%, Class B 2.13%,
Class C 2.13% and Class Y 1.13%; Conservative Portfolio,
Class A 1.36%, Class B
1.86%, Class C 1.81% and Class Y 1.11%; and Income
Portfolio, Class A 1.30%,
Class B 1.80%, Class C 1.75% and Class Y 1.05%. The expense
ratios may be
higher or lower depending on the allocation of the
Underlying Smith Barney
Funds within a Portfolio.
7
<PAGE>
Smith Barney Concert Series Inc.
PROSPECTUS SUMMARY (CONTINUED)
EXAMPLE
The following example is intended to assist an investor in
understanding the
various costs that an investor in each of the Portfolios
will bear directly or
indirectly. The example assumes payment by each Portfolio of
operating expenses
at the levels set forth in the table above and of its pro
rata share of the
Class Y expenses of the Underlying Smith Barney Funds (also
as set forth above)
in which a Portfolio is expected to invest at the
commencement of investment
operations. This example should not be considered a
representation of past or
future expenses. Actual expenses may be greater or lesser
than those shown
above.
<TABLE>
<CAPTION>
AN INVESTOR WOULD PAY THE
AN INVESTOR WOULD PAY THE
FOLLOWING EXPENSES ON A $1,000
FOLLOWING EXPENSES ON THE SAME
INVESTMENT, ASSUMING (1) 5.00%
ANNUAL INVESTMENT, ASSUMING THE SAME ANNUAL
RETURN AND (2) REDEMPTION AT THE
BUT WITHOUT A REDEMPTION AT THE
END OF EACH TIME PERIOD:
END OF EACH TIME PERIOD:
------------------------------------
- - ------------------------------------
1 YEAR 3 YEARS
1 YEAR 3 YEARS
- ------------------------------------------------------------
- ------------------------------------------------
<S> <C> <C>
<C> <C>
High Growth Portfolio
Class A $65 $ 95
$65 $95
Class B 73 101
23 71
Growth Portfolio
Class A $64 $ 94
$64 $94
Class B 72 99
22 69
Balanced Portfolio
Class A $63 $ 92
$63 $92
Class B 72 97
22 67
Conservative Portfolio
Class A $58 $ 86
$58 $86
Class B 64 88
19 58
Income Portfolio
Class A $58 $ 84
$58 $84
Class B 63 87
18 57
- ------------------------------------------------------------
- ------------------------------------------------
</TABLE>
8
<PAGE>
Smith Barney Concert Series Inc.
FINANCIAL HIGHLIGHTS (UNAUDITED)
FOR THE PERIOD FROM FEBRUARY 5, 1996
TO MAY 31, 1996
For a share of each class of capital stock outstanding
<TABLE>
<CAPTION>
HIGH GROWTH PORTFOLIO
GROWTH PORTFOLIO BALANCED PORTFOLIO
------------------------- --------
- ----------------- -------------------------
CLASS A CLASS B CLASS C CLASS A
CLASS B CLASS C CLASS A CLASS B CLASS C
- ------------------------------------------------------------
- ---------------------------------------------
<S> <C> <C> <C> <C>
<C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 11.40 $ 11.40 $11.40 $ 11.40
$ 11.40 $ 11.40 $ 11.40 $11.40 $ 11.40
- ------------------------------------------------------------
- ---------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.01 * * 0.08
0.05 0.06 0.08 0.07 0.06
Net realized and
unrealized gain (loss)
on investment 0.86 0.81 0.81 0.40
0.40 0.40 0.06 0.04 0.05
- ------------------------------------------------------------
- ---------------------------------------------
Total Income from
Investment Operations 0.87 0.81 0.81 0.48
0.45 0.46 0.14 0.11 0.11
- ------------------------------------------------------------
- ---------------------------------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income -- -- -- --
- -- -- (0.04) (0.03) (0.03)
- ------------------------------------------------------------
- ---------------------------------------------
Total Distributions 0.00 0.00 0.00 0.00
0.00 0.00 (0.04) (0.03) (0.03)
- ------------------------------------------------------------
- ---------------------------------------------
NET ASSET VALUE, END OF
PERIOD $ 12.27 $ 12.21 $12.21 $ 11.88
$ 11.85 $ 11.86 $ 11.50 $11.48 $ 11.48
- ------------------------------------------------------------
- ---------------------------------------------
TOTAL RETURN 7.63% 7.11% 7.11% 4.21%
3.95% 4.04% 1.23% 0.99% 0.99%
- ------------------------------------------------------------
- ---------------------------------------------
NET ASSETS, END OF
PERIOD (000S) $46,225 $49,924 $7,496 $46,823
$69,714 $12,244 $22,054 $7,177 $34,788
- ------------------------------------------------------------
- ---------------------------------------------
RATIOS TO AVERAGE NET
ASSETS
Expenses (annualized) 0.60% 1.10% 1.05% 0.60%
1.35% 1.35% 0.60% 1.35% 1.35%
Net investment income
(annualized) 0.51% 0.82% 0.01% 2.50%
1.73% 1.69% 4.98% 4.44% 4.06%
- ------------------------------------------------------------
- ---------------------------------------------
PORTFOLIO TURNOVER RATE 0.00% 0.00% 0.00% 0.00%
0.00% 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------
- ---------------------------------------------
</TABLE>
* Amount represents less than $0.01 per share.
For a share of each class of capital stock outstanding
<TABLE>
<CAPTION>
CONSERVATIVE PORTFOLIO
INCOME PORTFOLIO
-------------------------- -------
- --------------------
CLASS A CLASS B CLASS C CLASS A
CLASS B CLASS C
- ------------------------------------------------------------
- ---------------------
<S> <C> <C> <C> <C>
<C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $11.46 $11.46 $11.46 $11.46
$11.46 $11.46
- ------------------------------------------------------------
- ---------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.23 0.16 0.16 0.17
0.16 0.16
Net realized and
unrealized loss on
investment (0.21) (0.17) (0.15) (0.30)
(0.30) (0.30)
- ------------------------------------------------------------
- ---------------------
Total Income from
Investment Operations 0.02 (0.01) 0.01 (0.13)
(0.14) (0.14)
- ------------------------------------------------------------
- ---------------------
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.05) (0.04) (0.05) (0.17)
(0.16) (0.16)
- ------------------------------------------------------------
- ---------------------
Total Distributions (0.05) (0.04) (0.05) (0.17)
(0.16) (0.16)
- ------------------------------------------------------------
- ---------------------
NET ASSET VALUE, END OF
PERIOD $11.43 $11.41 $11.42 $11.16
$11.16 $11.16
- ------------------------------------------------------------
- ---------------------
TOTAL RETURN 0.18% (0.04)% 0.06%
(0.59)% (0.71)% (0.71)%
- ------------------------------------------------------------
- ---------------------
NET ASSETS, END OF
PERIOD (000S) $8,872 $9,751 $1,758 $5,121
$6,953 $ 812
- ------------------------------------------------------------
- ---------------------
RATIOS TO AVERAGE NET
ASSETS
Expenses (annualized) 0.60% 1.10% 1.05% 0.60%
1.10% 1.05%
Net investment income
(annualized) 2.31% 2.08% 2.09% 5.65%
5.38% 5.33%
- ------------------------------------------------------------
- ---------------------
PORTFOLIO TURNOVER RATE 0.00% 0.00% 0.00% 0.00%
0.00% 0.00%
- ------------------------------------------------------------
- ---------------------
</TABLE>
WHY INVEST IN THE CONCERT SERIES?
The proliferation of mutual funds over the last several
years has left many
investors in search of a simple means to manage their long-
term investments.
With new investment categories emerging each year and with
each mutual fund
reacting differently to political, economic and business
events, many investors
are forced to make complex investment decisions in the face
of limited experi-
ence, time and personal resources. The Portfolios are
designed to meet the
needs of investors who prefer to have their asset allocation
decisions made by
professional money managers, are looking for an appropriate
core investment for
their retirement portfolio and appreciate the advantages of
broad diversifica-
tion. The Portfolios may be most appropriate for
9
<PAGE>
Smith Barney Concert Series Inc.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES (CONTINUED)
long-term investors planning for retirement, particularly
investors in tax-
advantaged retirement accounts including IRAs, 401(k)
corporate employee sav-
ings plans, 403(b) non-profit organization savings plans,
profit-sharing and
money-purchase pension plans, and other corporate pension
and savings plans.
The Concert Series will be managed so that each Portfolio
can serve as a com-
plete investment program or as a core part of a larger
portfolio. Each of the
Portfolios invests in a select group of Underlying Smith
Barney Funds suited to
the Portfolio's particular investment objective. The
allocation of assets among
Underlying Smith Barney Funds within each Portfolio is
determined by SBMFM
according to fundamental and quantitative analysis. Because
the assets will be
adjusted only periodically and only within pre-determined
ranges that will
attempt to ensure broad diversification, there should not be
any sudden large-
scale changes in the allocation of a Portfolio's investments
among Underlying
Smith Barney Funds. The Concert Series is not designed as a
market timing vehi-
cle, but rather as a simple and conservative approach to
helping investors meet
retirement and other long-term goals.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The Concert Series is an open-end, non-diversified,
management investment com-
pany that currently offers five managed investment
portfolios. Each Portfolio
seeks to achieve its investment objective by investing
within specified ranges
among Underlying Smith Barney Funds, as well as in
repurchase agreements. Ini-
tially, each Portfolio will invest in the Underlying Smith
Barney Funds listed
below.
The investment manager for each Portfolio, SBMFM, will
allocate investments
for each Portfolio among Underlying Smith Barney Funds based
on its outlook for
the economy, financial markets and the relative performance
of the Underlying
Smith Barney Funds. The allocation among the Underlying
Smith Barney Funds will
be made within investment ranges established by the Board of
Directors of the
Concert Series which designate minimum and maximum
percentages for each of the
Underlying Smith Barney Funds.
The High Growth Portfolio's investment objective is to seek
capital apprecia-
tion. The Growth Portfolio's investment objective is to seek
long-term growth
of capital. The Balanced Portfolio's investment objective is
to seek a balance
of growth of capital and income. The Conservative
Portfolio's investment objec-
tive is to seek income and, secondarily, long-term growth of
capital. The
Income Portfolio's investment objective is to seek high
current income. Each
Portfolio's investment objective is fundamental and may be
changed only with
the approval of a majority of the Portfolio's outstanding
shares. There can be
no assurance that any Portfolio's investment objective will
be achieved.
In investing in Underlying Smith Barney Funds, the
Portfolios seek to maintain
different allocations between equity funds and fixed income
funds (including
money market funds) depending on a Portfolio's investment
objective. Allocating
investments between equity funds and fixed income funds
permits each Portfolio
to attempt to optimize performance consistent with its
investment objective.
The tables below illustrate the initial equity/fixed income
fund allocation
targets and ranges for each Portfolio:
Equity/Fixed Income Fund Range (Percent of Each
Portfolio's Net Assets)
<TABLE>
<CAPTION>
TYPE OF FUND TARGET RANGE
- ---------------------------------------
<S> <C> <C>
High Growth Portfolio
Equity 90% 80%-100%
Fixed Income 10% 0%-20%
Growth Portfolio
Equity 70% 60%-80%
Fixed Income 30% 20%-40%
Balanced Portfolio
Equity 50% 40%-60%
Fixed Income 50% 40%-60%
Conservative Portfolio
Equity 30% 20%-40%
Fixed Income 70% 60%-80%
Income Portfolio
Equity 10% 0%-20%
Fixed Income 90% 80%-100%
</TABLE>
10
<PAGE>
Smith Barney Concert Series Inc.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES (CONTINUED)
The Portfolios invest their assets in the Underlying Smith
Barney Funds listed
below within the ranges indicated.
Investment Range (Percent of Each Portfolio's Net
Assets)
<TABLE>
<CAPTION>
HIGH
GROWTH GROWTH BALANCED
CONSERVATIVE INCOME
UNDERLYING SMITH BARNEY FUND PORTFOLIO PORTFOLIO PORTFOLIO
PORTFOLIO PORTFOLIO
- ------------------------------------------------------------
- ----------------------
<S> <C> <C> <C>
<C> <C>
Smith Barney Aggressive
Growth Fund Inc. 10-30% 0-15% --
- -- --
Smith Barney Appreciation
Fund Inc. 0-20% 10-30% 0-20%
- -- --
Smith Barney Equity Funds:
Smith Barney Growth and
Income Fund 0-20% 0-20% 5-20%
- -- --
Smith Barney Fundamental
Value Fund Inc. 0-20% 10-30% 0-20%
- -- --
Smith Barney Funds, Inc.:
Equity Income Portfolio -- 0-20% 5-20%
5-20% 0-15%
Short-Term U.S. Treasury
Securities Portfolio -- 0-15% 5-20%
5-20% 5-30%
Smith Barney Income Funds:
Smith Barney High Income
Fund 0-20% 5-20% 0-15%
0-20% 0-20%
Smith Barney Utilities
Fund -- 0-20% 5-20%
5-20% 0-15%
Smith Barney Premium Total
Return Fund -- -- 5-20%
5-25% 0-15%
Smith Barney Convertible
Fund -- -- 5-20%
5-15% 0-15%
Smith Barney Diversified
Strategic Income Fund -- -- 5-25%
10-30% 10-30%
Smith Barney Investment
Funds Inc.:
Smith Barney Managed
Growth Fund 0-20% 10-30% 0-15%
- -- --
Smith Barney Special
Equities Fund 10-30% 0-15% --
- -- --
Smith Barney Government
Securities Fund 0-15% 0-20% 0-20%
5-20% 5-20%
Smith Barney Investment
Grade Bond Fund 0-15% 0-15% --
- -- 0-15%
Smith Barney Managed
Governments Fund Inc. -- 0-15% 5-20%
5-25% 5-30%
Smith Barney Money Funds,
Inc.:
Cash Portfolio 0-20% 0-20% 0-25%
0-30% 0-30%
Smith Barney Natural
Resources Fund Inc. 0-10% 0-10% 0-10%
- -- --
Smith Barney World Funds,
Inc.:
International Equity
Portfolio 10-25% 5-20% 0-15%
0-10% 0-10%
Emerging Markets Portfolio 0-20% -- --
- -- --
International Balanced
Portfolio 0-15% 0-10% 0-10%
0-10% 0-10%
Global Government Bond
Portfolio 0-15% 0-15% 0-15%
0-20% 0-20%
- ------------------------------------------------------------
- ----------------------
</TABLE>
The Underlying Smith Barney Funds have been selected to
represent a broad
spectrum of investment options for the Portfolios. The
equity/fixed income
ranges and the investment ranges are based on the degree to
which the Under-
lying Smith Barney Funds selected are expected in
combination to be appropriate
for a Portfolio's particular investment objective. If, as a
result of apprecia-
tion or depreciation, the percentage of a Portfolio's assets
invested in an
Underlying Smith Barney Fund exceeds or is less than the
applicable percentage
limitations set forth above, SBMFM will consider, in its
discretion, whether to
reallocate the assets of the Portfolio to comply with the
foregoing percentage
limitations. THE PARTICULAR UNDERLYING SMITH BARNEY FUNDS IN
WHICH EACH PORTFO-
LIO MAY INVEST, THE EQUITY/FIXED INCOME FUND TARGETS AND
RANGES AND THE INVEST-
MENT RANGES APPLICABLE TO EACH UNDERLYING SMITH BARNEY FUND
MAY BE CHANGED
FROM TIME TO TIME BY THE CONCERT SERIES' BOARD OF DIRECTORS
WITHOUT THE
APPROVAL OF THE PORTFOLIO'S SHAREHOLDERS.
Each Portfolio can invest a certain portion of its cash
reserves in repurchase
agreements. Each Portfolio may also invest its cash reserves
in the Cash Port-
folio of Smith Barney Money Funds, Inc. A reserve position
provides flexibility
in meeting redemptions, expenses and the timing of new
investments, and serves
as a short-term defense during periods of unusual
volatility.
For information about the investment objectives of each of
the Underlying
Smith Barney Funds and the investment techniques and the
risks involved in the
Underlying Smith Barney Funds, please refer to "Description
of the Underlying
Smith Barney Funds," the Appendix to this Prospectus, the
Statement of Addi-
tional Information and the prospectus for each of the
Underlying Smith Barney
Funds.
11
<PAGE>
Smith Barney Concert Series Inc.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Non-Diversified Investment Company. The Concert Series is a
"non-diversified"
investment company for purposes of the Investment Company
Act of 1940, as
amended (the "1940 Act"), because it invests in the
securities of a limited
number of mutual funds. However, the Underlying Smith Barney
Funds themselves
are diversified investment companies (with the exception of
the Global Govern-
ment Bond Portfolio, the International Balanced Portfolio
and the Emerging Mar-
kets Portfolio). The Concert Series intends to qualify as a
diversified invest-
ment company for the purposes of Subchapter M of the Code.
Investing in Underlying Smith Barney Funds. The investments
of each Portfolio
are concentrated in the Underlying Smith Barney Funds, so
each Portfolio's
investment performance is directly related to the investment
performance of the
Underlying Smith Barney Funds held by it. The ability of
each Portfolio to meet
its investment objective is directly related to the ability
of the Underlying
Smith Barney Funds to meet their objectives as well as the
allocation among
those Underlying Smith Barney Funds by SBMFM. There can be
no assurance that
the investment objective of any Portfolio or any Underlying
Smith Barney Fund
will be achieved.
Affiliated Persons. SBMFM, the investment manager of the
Portfolios, and the
officers and directors of the Concert Series presently serve
as investment
adviser, officers and directors, respectively, of many of
the Underlying Smith
Barney Funds. Therefore, conflicts may arise as these
persons fulfill their
fiduciary responsibilities to the Portfolios and the
Underlying Smith Barney
Funds.
Investment Practices of Underlying Smith Barney Funds. In
addition to their
principal investments, certain Underlying Smith Barney Funds
may invest a por-
tion of their assets in foreign securities; enter into
forward currency trans-
actions; lend their portfolio securities; enter into stock
index, interest rate
and currency futures contracts, and options on such
contracts; engage in
options transactions; make short sales; purchase zero coupon
bonds and payment-
in-kind bonds; purchase restricted and illiquid securities;
enter into forward
roll transactions; purchase securities on a when-issued or
delayed delivery
basis; enter into repurchase or reverse repurchase
agreements; borrow money;
and engage in various other investment practices.
High Yield Securities. Each of the Portfolios also may
invest in an Underlying
Smith Barney Fund that invests primarily in high yield, high
risk securities,
commonly referred to as junk bonds. As a result, the
Portfolios may be subject
to some of the risks resulting from high yield investing.
Further, each of the
Portfolios may invest in Underlying Smith Barney Funds that
invest in medium
grade bonds. If these bonds are downgraded, the Portfolios
will consider
whether to increase or decrease their investment in the
affected Underlying
Smith Barney Fund. Lower quality debt instruments generally
offer a higher cur-
rent yield than that available from higher grade issues, but
typically involve
greater risk. Lower rated and comparable unrated securities
are especially sub-
ject to adverse changes in general economic conditions, to
changes in the
financial condition of their issuers, and to price
fluctuation in response to
changes in interest rates. During periods of economic
downturn or rising inter-
est rates, issuers of these instruments may experience
financial stress that
could adversely affect their ability to make payments of
principal and interest
and increase the possibility of default. Further information
on these invest-
ment policies and practices can be found under "Description
of the Underlying
Smith Barney Funds," in the Appendix to this Prospectus and
in the Statement of
Additional Information as well as the prospectus of each
Underlying Smith Bar-
ney Fund.
Concentration. Each Portfolio other than the High Growth
Portfolio may invest
in an Underlying Smith Barney Fund that concentrates its
investments in the
utilities industry. Under certain unusual circumstances,
this could result in
those Portfolios being indirectly concentrated in this
industry. If this were
to occur, the relevant Portfolios would consider whether to
maintain or change
their investment in that Underlying Smith Barney Fund.
Market and Economic Factors. The Portfolios' share prices
and yields will
fluctuate in response to various market and economic factors
related to both
the stock and bond markets. All Portfolios may invest in
mutual funds that in
turn invest in international securities and thus are subject
to additional
risks of these investments, including changes in foreign
currency exchange
rates and political risk.
PORTFOLIO TURNOVER
Each Portfolio's turnover rate is not expected to exceed
25% annually. A Port-
folio may purchase or sell securities to: (a) accommodate
purchases and sales
of its shares, (b) change the percentages of its assets
invested in each of the
Underlying Smith Barney Funds in response to market
conditions, and (c) main-
tain or modify the allocation of its assets between equity
and fixed income
funds and among the Underlying Smith Barney Funds within the
percentage limits
described above.
12
<PAGE>
Smith Barney Concert Series Inc.
PORTFOLIO TURNOVER (CONTINUED)
The turnover rates of the Underlying Smith Barney Funds
have ranged from 16%
to 292% during their most recent fiscal years. There can be
no assurance that
the turnover rates of these funds will remain within this
range during subse-
quent fiscal years. Higher turnover rates may result in
higher expenses being
incurred by the Underlying Smith Barney Funds.
INVESTMENT RESTRICTIONS
In addition to the investment objectives of each Portfolio,
the Concert Series
has adopted restrictions with respect to each Portfolio that
may not be changed
without approval of a majority of the Portfolio's
outstanding shares. The fun-
damental investment restrictions imposed by the Concert
Series prohibit each
Portfolio from, among other things: (i) borrowing money
except from banks for
temporary or emergency purposes, including the meeting of
redemption requests
in an amount not exceeding 33 1/3% of the value of the
Portfolio's total assets
(including the amount borrowed) valued at market less
liabilities (not includ-
ing the amount borrowed) at the time the borrowing is made
and (ii) making
loans to others, except through the purchase of portfolio
securities consistent
with its investment objective and policies and through the
entering into repur-
chase agreements.
Certain other investment restrictions, including
fundamental restrictions as
well as restrictions that may be changed without a
shareholder vote, adopted by
the Concert Series are described in the Statement of
Additional Information.
Investment restrictions of the Underlying Smith Barney Funds
in which the Port-
folios invest may be more or less restrictive than those
adopted by the Concert
Series.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS
The following is a concise description of the investment
objectives and prac-
tices for each of the Underlying Smith Barney Funds in which
the Portfolios may
invest. There can be no assurance that the investment
objectives of the Under-
lying Smith Barney Funds will be met. Additional information
regarding the
investment practices of the Underlying Smith Barney Funds is
located in the
Appendix to this Prospectus, in the Statement of Additional
Information and in
the prospectus of each of the Underlying Smith Barney Funds.
No offer is made
in this Prospectus of any of the Underlying Smith Barney
Funds.
EQUITY FUNDS The following Underlying Smith Barney Funds
are funds that
invest primarily in equity securities.
Smith Barney Aggressive Growth Fund Inc. seeks capital
appreciation by invest-
ing primarily in common stock of companies the Fund's
investment adviser
believes are experiencing, or have the potential to
experience, growth in earn-
ings that exceed the average earnings growth rate of
companies whose securities
are included in the Standard & Poor's Daily Price Index of
500 Common Stocks
(the "S&P 500"), a weighted index that measures the
aggregate change in market
value of 400 industrials, 60 transportation stocks and
utility companies and 40
financial issues. SBMFM focuses its stock selection for the
Fund on a diversi-
fied group of small- or medium-sized emerging growth
companies that have passed
their "start-up" phase and show positive earnings and the
prospect of achieving
significant profit gains in the two to three years after the
Fund acquires
their stocks. These companies generally may be expected to
benefit from new
technologies, techniques, products or services or cost-
reducing measures, and
may be affected by changes in management, capitalization or
asset deployment,
government regulations or other external circumstances.
Although SBMFM anticipates that the assets of the Fund
ordinarily will be
invested primarily in common stocks of U.S. companies, the
Fund may invest in
convertible securities, preferred stocks, securities of
foreign issuers, war-
rants and restricted securities. The Fund also is authorized
to borrow up to 33
1/3% of its total assets less liabilities for leveraging
purposes. Securities
of the kinds of companies in which the Fund invests may be
subject to signifi-
cant price fluctuation and above average risk.
Smith Barney Appreciation Fund Inc. seeks long-term
appreciation of sharehold-
ers' capital. The Fund attempts to achieve its investment
objective by invest-
ing primarily in equity securities (consisting of common
stocks, preferred
stocks, warrants, rights and securities convertible into
common stocks) that
are believed to afford attractive opportunities for
investment appreciation.
The core holdings of the Fund are blue chip companies that
are dominant in
their industries; however, at the same time, the Fund may
hold securities of
companies with prospects of sustained earnings growth and/or
companies with a
cyclical earnings record if it is felt these offer
attractive investment oppor-
tunities. Typically, the Fund invests in middle- and larger-
sized companies,
though it does invest in smaller companies whose securities
may reasonably be
expected to appreciate. The
13
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
Fund's investments are spread broadly among different
industries. The Fund may
hold issues traded over-the-counter as well as those listed
on one or more
national securities exchanges, and the Fund may make
investments in foreign
securities although management intends to limit such
investments to 10% of the
Fund's assets.
Smith Barney Fundamental Value Fund Inc.'s investment
objective is long-term
capital growth. Current income is a secondary objective. The
Fund seeks to
achieve its primary objective by investing in a diversified
portfolio of common
stocks and common stock equivalents and, to a lesser extent,
in bonds and other
debt instruments. The Fund's investment emphasis is on
securities that are
undervalued in the marketplace and, accordingly, have above-
average potential
for capital growth. In general, the Fund invests in
securities of companies
that are temporarily unpopular among investors but which
SBMFM regards as pos-
sessing favorable prospects for earnings growth and/or
improvements in the
value of their assets and, consequently, as having a
reasonable likelihood of
experiencing a recovery in market price.
Smith Barney Special Equities Fund, an investment portfolio
of Smith Barney
Investment Funds Inc., seeks long-term capital appreciation
by investing in
equity securities (common stocks or securities which are
convertible into or
exchangeable for such stocks, including warrants) that SBMFM
believes to have
superior appreciation potential. The Fund invests primarily
in equity securi-
ties of secondary growth companies, generally not within the
S&P 500, as iden-
tified by SBMFM. These companies may not have reached a
fully mature stage of
earnings growth, since they may still be in the
developmental stage, or may be
older companies that appear to be entering a new stage of
more rapid earnings
progress due to factors such as management change or
development of new tech-
nology, products or markets. A significant number of these
companies may be in
technology areas, including health care related sectors, and
may have annual
sales of less than $300 million. The Fund may also choose to
invest in some
relatively unseasoned stocks, i.e., securities issued by
companies whose market
capitalization is under $100 million. Investing in smaller,
newer issuers gen-
erally involves greater risk than investing in larger, more
established
issuers.
Smith Barney Managed Growth Fund, an investment portfolio
of Smith Barney
Investment Funds Inc., has as its investment objective long
term growth of cap-
ital. The Fund attempts to achieve its objective by
investing primarily in
undervalued or out of favor common stock and other
securities, including debt
securities that are convertible into common stock and that
are currently price
depressed. Such securities might typically be valued at the
low end of their
52-week trading range. Although under normal circumstances
the Fund's portfolio
will primarily consist of these securities, the Fund may
also invest in pre-
ferred stocks and warrants when SBMFM perceives an
opportunity for capital
growth from such securities.
The Equity Income Portfolio, an investment portfolio of
Smith Barney Funds,
Inc., seeks current income and long-term growth of capital.
The Fund invests
primarily in common stocks offering a current return from
dividends and will
also normally include some interest-paying debt obligations
(such as U.S. gov-
ernment obligations, investment grade bonds and debentures)
and high quality
short-term debt obligations (such as commercial paper and
repurchase agreements
collateralized by U.S. government securities with
broker/dealers or other
financial institutions, including the Fund's custodian) and
may also purchase
preferred stocks and convertible securities. Temporary
defensive investments or
a higher percentage of debt securities may be held when
deemed advisable by
SBMFM, the Fund's adviser. In the selection of common stock
investments, empha-
sis is generally placed on issues with established dividend
records as well as
potential for price appreciation. From time to time,
however, a portion of the
assets may be invested in non-dividend paying stocks. The
Fund may make invest-
ments in foreign securities, though management currently
intends to limit such
investments to 5% of the Fund's assets, and an additional
10% of its assets may
be invested in American Depositary Receipts ("ADRs")
representing shares in
foreign securities that are traded in U.S. securities
markets.
Smith Barney Growth and Income Fund, an investment
portfolio of Smith Barney
Equity Funds, seeks long-term capital growth and income by
investing in income
producing equity securities, including dividend-paying
common stocks, securi-
ties that are convertible into common stocks and warrants.
Consistent with data
used in developing and maintaining quantitative investment
criteria developed
by SBMFM to evaluate investment decisions, the Fund expects
to invest primarily
in domestic companies of varying sizes, generally with
capitalizations exceed-
ing $250 million in a wide range of industries. The Fund may
also invest up to
20% in the securities of foreign issuers, including ADRs or
European Depository
Receipts. Under normal market conditions, the Fund will
invest substantially
all, but not less than 65%, of its assets in equity
securities. The Fund may
invest the remainder of its assets in high grade money
market instruments in
order to develop income, as well as in corporate bonds and
mortgage related
securities that are rated investment grade or are deemed by
SBMFM to be of com-
parable quality and in U.S. government securities.
14
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
Smith Barney Natural Resources Fund Inc. seeks long-term
capital appreciation
by investing primarily in "Natural Resource Investments."
Natural Resource
Investments are defined as equity and debt securities of
issuers that: (1) own
or process natural resources, such as precious metals, other
minerals, water,
timberland, agricultural commodities and forest products;
(2) own or produce
sources of energy such as oil, natural gas, coal, uranium,
geothermal, oil
shale and biomass; (3) participate in the exploration and
development, trans-
portation, distribution and/or processing of natural
resources; (4) own or con-
trol oil, gas, or other mineral leases, rights or royalties;
(5) provide
related services or supplies, such as drilling, well
servicing, chemicals,
parts and equipment; (6) develop or participate in energy-
efficient technolo-
gies; and (7) are involved in the upgrading or processing of
raw commodities
into intermediate products. The Fund may also invest in gold
bullion and gold
coins. (A company is considered a "Natural Resources
Investment" when it
derives at least 50% of its total revenue from a business or
activity described
above.) There is no guarantee that the Fund will achieve its
investment goal.
Under normal market conditions, the Fund will invest at
least 65% of its
assets in Natural Resource Investments. Up to 35% of the
Fund's assets may be
invested in companies not in the natural resources area,
investment grade cor-
porate debt securities, U.S. Government securities and, for
cash management
purposes, money market instruments. For temporary defensive
purposes, the Fund
may invest in excess of 35% in money market instruments.
The Fund may utilize up to 10% of its assets to purchase
put options on secu-
rities it owns and up to an additional 10% of its assets to
purchase call
options on securities it may acquire in the future. The Fund
may purchase only
put options that are traded on a regulated exchange. It also
may purchase and
write put and call options on domestic and foreign stock
indexes to hedge
against risks of market-wide movements affecting that
portion of its assets
invested in the country whose stocks are subject to the
hedges.
The composition of the portfolio of the Fund will vary
depending on the deter-
mination of its investment adviser, SBMFM, of how best to
achieve long-term
capital appreciation. Equity securities in which the Fund
may invest include
common stocks, preferred stocks, convertible securities and
warrants. Debt
securities the Fund may acquire include bonds, notes and
debentures of compa-
nies and governments. The Fund may invest in debt securities
when SBMFM
believes they will enhance the Fund's ability to achieve
long-term capital
appreciation. The Fund may invest in fixed-income securities
that are rated as
low as B by Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's
Corporation ("S&P") or if unrated, are deemed by SBMFM to be
of comparable
quality. The medium- and lower-rated securities in which the
Fund may invest,
some of which have speculative characteristics, may be
subject to greater mar-
ket fluctuation and greater risk of loss of income or
principal than higher
rated securities.
Because issuers of Natural Resource Investments often are
located outside the
United States, a significant portion of the Fund's
investments may consist of
securities of foreign issuers. The percentage of assets
invested in particular
countries or regions will change from time to time in
accordance with the judg-
ment of the Fund's investment manager, which may be based
on, among other
things of consideration of the political stability and
economic outlook of
these countries or regions.
Smith Barney Premium Total Return Fund, an investment
portfolio of Smith Bar-
ney Income Funds, seeks to provide shareholders with total
return, consisting
of long-term capital appreciation and income, by investing
primarily in a
diversified portfolio of dividend-paying common stocks. The
Fund also purchases
put and call options and writes covered put and call options
on securities it
holds and on stock indexes primarily as a hedge to reduce
investment risk.
Because the Fund seeks total return by emphasizing
investments in dividend-pay-
ing common stocks, it will not have as much investment
flexibility as total
return funds that may pursue their objective by investing in
both income and
equity stocks without such an emphasis. The Fund also may
invest up to 10% of
its assets in: (a) securities rated less than investment
grade by Moody's or
S&P or unrated securities of comparable quality; (b)
interest-paying debt secu-
rities, such as U.S. government securities; and (c) other
securities, including
convertible bonds, convertible preferred stock and warrants.
The Emerging Markets Portfolio, an investment portfolio of
Smith Barney World
Funds, Inc., seeks long term capital appreciation on its
assets through a port-
folio invested primarily in securities of emerging country
issuers (consisting
of dividend and non-dividend paying common stocks, preferred
stocks, convert-
ible securities and rights and warrants to such securities).
The Fund will also
invest in debt securities having a high potential for
capital appreciation,
especially in countries where direct
15
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
equity investment is not permitted. Under normal conditions,
at least 70% of
the Fund's assets will be invested in equity securities. For
purposes of its
investment objective, the Fund considers as "emerging" all
countries other than
the United States, Canada, Ireland, the United Kingdom,
Sweden, Norway, Fin-
land, Denmark, Holland, Germany, Switzerland, Belgium,
France, Italy, Spain and
Japan. The Fund is a non-diversified portfolio, but will
generally invest its
assets broadly among countries and will normally have at
least 65% of its
assets invested in issuers in not less than three different
countries.
The Fund also may invest in debt securities of issuers in
countries having
smaller capital markets. Capital appreciation in debt
securities may arise as a
result of a favorable change in relative foreign exchange
rates, in relative
interest rate levels, or in the creditworthiness of issuers.
The Fund will not
seek to benefit from anticipated short-term fluctuations in
currency exchange
rates. The Fund may invest in debt securities with
relatively high yields (as
compared to other debt securities meeting the Fund's
investment criteria), not-
withstanding that the Fund may not anticipate that such
securities will experi-
ence substantial capital appreciation. The Fund also may
invest in debt securi-
ties issued or guaranteed by foreign governments (including
foreign states,
provinces and municipalities) or their agencies and
instrumentalities, issued
or guaranteed by supranational organizations or issued by
foreign corporations
or financial institutions.
The International Equity Portfolio, an investment portfolio
of Smith Barney
World Funds, Inc., seeks a total return on its assets from
growth of capital
and income. Under normal market conditions, the Fund invests
at least 65% of
its assets in a diversified portfolio of equity securities
consisting of divi-
dend and non-dividend paying common stock, preferred stock,
convertible debt
and rights and warrants to such securities and up to 35% of
the Fund's assets
in bonds, notes and debt securities (consisting of
securities issued in the
Eurocurrency markets or obligations of the U.S. or foreign
governments and
their political subdivisions) of established non-U.S.
issuers. Investments may
be made for capital appreciation or for income or any
combination of both for
the purpose of achieving a higher overall return than might
otherwise be
obtained solely from investing for growth of capital or for
income. There is no
limitation on the percent or amount of the Fund's assets
that may be invested
for growth or income and, therefore, from time to time the
investment emphasis
may be placed solely or primarily on growth of capital or
solely or primarily
on income. The Fund may borrow up to 25% of the value of its
assets for invest-
ment purposes, which involves certain risk considerations.
The Fund will generally invest its assets broadly among
countries and will
normally have represented in the portfolio business
activities in not less than
three different countries. The Fund will normally invest at
least 65% of its
assets in companies organized or governments located in any
area of the world
other than the U.S. However, under unusual economic or
market conditions as
determined by the investment adviser, for defensive purposes
the Fund may tem-
porarily invest all or a major portion of its assets in U.S.
government securi-
ties or in debt or equity securities of companies
incorporated in and having
their principal business activities in the U.S.
FIXED INCOME FUNDS The following Underlying Smith Barney
Funds invest primarily
in fixed income securities including the money market fund
in which each
Portfolio may invest and which may serve as the cash reserve
portion of each
Portfolio.
Smith Barney High Income Fund, an investment portfolio of
the Smith Barney
Income Funds, seeks to provide shareholders with high
current income. Although
growth of capital is not an investment objective of the
Fund, SBMFM may con-
sider potential for growth as one factor, among others, in
selecting invest-
ments for the Fund. The Fund will seek high current income
by investing, under
normal circumstances, at least 65% of its assets in high
risk, high-yielding
corporate bonds, debentures and notes denominated in U.S.
dollars or foreign
currencies. Up to 40% of the Fund's assets may be invested
in fixed-income
obligations of foreign issuers, and up to 20% of its assets
may be invested in
common stock or other equity-related securities, including
convertible securi-
ties, preferred stock, warrants and rights. Securities
purchased by the Fund
generally will be rated in the lower rating categories of
recognized rating
agencies, as low as Caa by Moody's or D by S&P, or in
unrated securities that
SBMFM deems of comparable quality. However, the Fund will
not purchase securi-
ties rated lower than B by both Moody's and S&P unless,
immediately after such
purchase, no more than 10% of its total assets are invested
in such securities.
The Fund may hold securities with higher ratings when the
yield differential
between low-rated and higher-rated securities narrows and
the risk of loss may
be reduced substantially with only a relatively small
reduction in yield. The
Fund also may invest in higher-rated securities when SBMFM
believes that a more
defensive investment strategy is appropriate in light of
market or economic
conditions.
16
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
Smith Barney Investment Grade Bond Fund, an investment
portfolio of Smith
Barney Investment Funds Inc., seeks to provide as high a
level of current
income as is consistent with prudent investment management
and preservation of
capital. Except when in a temporary defensive investment
position, the Fund
intends to maintain at least 65% of its assets invested in
bonds. The Fund
seeks to achieve its objective by investing in any of the
following securi-
ties: corporate bonds rated Baa or better by Moody's or BBB
or better by S&P;
U.S. government securities; commercial paper issued by
domestic corporations
and rated Prime-1 or Prime-2 by Moody's or A-1 or A-2 by
S&P, or, if not rat-
ed, issued by a corporation having an outstanding debt issue
rated Aa or bet-
ter by Moody's or AA or better by S&P; negotiable bank
certificates of deposit
and bankers' acceptances issued by domestic banks (but not
their foreign
branches) having total assets in excess of $1 billion; and
high-yielding com-
mon stocks and warrants. A reduction in the rating of a
security does not
require the sale of the security by the Fund.
Smith Barney Government Securities Fund, an investment
portfolio of Smith
Barney Investment Funds Inc., seeks high current return by
investing in obli-
gations of, or guaranteed by, the U.S. government, its
agencies or instrumen-
talities (including, without limitation, Treasury bills and
bonds, mortgage
participation certificates issued by the Federal Home Loan
Mortgage Corpora-
tion ("FHLMC") and mortgage-backed securities issued by the
Government
National Mortgage Association ("GNMA"). The Fund may invest
up to 5% of its
net assets in U.S. government securities for which the
principal repayment at
maturity, while paid in U.S. dollars, is determined by
reference to the
exchange rate between the U.S. dollar and the currency of
one or more foreign
countries. In addition, the Fund may borrow money (up to 25%
of its total
assets) to increase its investments, thereby leveraging its
portfolio and
exaggerating the effect on net asset value of any increase
or decrease in the
market value of the Fund's securities. Except when in a
temporary defensive
investment position, the Fund intends to maintain at least
65% of its assets
invested in U.S. government securities (including futures
contracts and
options thereon and options relating to U.S. government
securities).
The Short-Term U.S. Treasury Securities Portfolio, an
investment portfolio of
Smith Barney Funds, Inc., seeks current income, preservation
of capital and
liquidity. The Fund seeks to achieve its objective by
investing its assets in
U.S. Treasury securities backed by the full faith and credit
of the U.S. Gov-
ernment. Shares of the Fund are not issued, insured or
guaranteed, as to value
or yield, by the U.S. Government or its agencies or
instrumentalities. In an
effort to minimize fluctuations in market value of its
portfolio securities,
the Fund is expected to maintain a dollar-weighted average
maturity of approx-
imately three years. Pending direct investment in U.S.
Treasury debt securi-
ties, the Fund may enter into repurchase agreements secured
by such securities
in an amount up to 10% of the value of its total assets. The
Fund may, to a
limited degree, engage in short-term trading to attempt to
take advantage of
short-term market variations, or may dispose of a portfolio
security prior to
its maturity if it believes such disposition advisable or it
needs to generate
cash to satisfy redemptions.
Smith Barney Managed Governments Fund Inc. seeks high
current income consis-
tent with liquidity and safety of capital. The Fund invests
substantially all
of its assets in U.S. government securities and, under
normal circumstances,
the Fund is required to invest at least 65% of its assets in
such securities.
The Fund's portfolio of U.S. government securities consists
primarily of mort-
gage-backed securities issued or guaranteed by GNMA, the
Federal National
Mortgage Association ("FNMA") and FHLMC. Assets not invested
in such mortgage-
backed securities are invested primarily in direct
obligations of the United
States Treasury and other U.S. government securities. The
weighted average
maturity of the Fund's portfolio will vary from time to time
and the Fund may
invest in U.S. government securities of all maturities:
short-term, intermedi-
ate-term and long-term. The Fund may invest without limit in
securities of any
issuer of U.S. government securities, and may invest up to
an aggregate of 15%
of its total assets in securities with contractual or other
restrictions on
resale and other instruments that are not readily marketable
(such as repur-
chase agreements with maturities in excess of seven days).
The Fund may invest
up to 5% of its net assets in U.S. government securities for
which the princi-
pal repayment at maturity, while paid in U.S. dollars, is
determined by refer-
ence to the exchange rate between the U.S. dollar and the
currency of one or
more foreign countries.
Smith Barney Diversified Strategic Income Fund, an
investment portfolio of
Smith Barney Income Funds, seeks high current income
primarily through invest-
ment in fixed-income securities. The Fund attempts to
achieve its objective by
allocating and reallocating its assets primarily among
various types of fixed-
income securities selected by Greenwich Street Advisors (a
division of SBMFM)
based on its analysis of economic and market conditions and
the relative risks
and opportunities of particular securities. The types of
fixed-income securi-
ties among which the Fund's assets will be primarily
allocated are: obliga-
tions issued or guaranteed as to principal and interest by
the United States
government; mortgage-related securities issued by various
governmental and
non-governmental entities; domestic and foreign corporate
securities; and for-
eign government securities.
17
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
Under normal conditions, at least 65% of the Fund's assets
will be invested in
fixed-income securities, which includes non-convertible
preferred stocks. The
Fund generally will invest in intermediate- and long-term
fixed-income securi-
ties with the result that, under normal market conditions,
the weighted aver-
age maturity of the Fund's securities is expected to be
between five and 12
years.
Mortgage-related securities in which the Fund may invest
include mortgage
obligations collateralized by mortgage loans or mortgage
pass-through certifi-
cates. Mortgage-related securities held by the Fund
generally will be rated no
lower than Aa by Moody's or AA by S&P or, if not rated, of
equivalent invest-
ment quality as determined by Greenwich Street Advisors. The
Fund may invest
up to 35% of its assets in corporate fixed-income securities
of domestic
issuers rated Ba or lower by Moody's or BB or lower by S&P
or in nonrated
securities deemed by Greenwich Street Advisors to be of
comparable quality.
The Fund may invest in fixed-income securities rated as low
as Caa by Moody's
or CCC by S&P.
In general, the Fund may invest in debt securities issued
by foreign govern-
ments or any of their political subdivisions that are
considered stable by
Smith Barney Global Capital Management, Inc. the Fund's
subadviser. Up to 5%
of the Fund's assets may be invested in foreign securities
issued by countries
with developing economies. The Fund may also invest in
securities issued by
supranational organizations.
The Global Government Bond Portfolio, an investment
portfolio of Smith Barney
World Funds, Inc., seeks as high a level of current income
and capital appre-
ciation as is consistent with its policy of investing
principally in high
quality bonds of the U.S. and foreign governments. Under
normal market condi-
tions, the Fund invests at least 65% of its total assets in
bonds issued or
guaranteed by the U.S. or foreign governments (including
foreign states, prov-
inces, cantons and municipalities) or their agencies,
authorities or instru-
mentalities denominated in various currencies, including
U.S. dollars, or in
multinational currency units, such as the European Currency
Unit. Except with
respect to government securities of less developed
countries, the Fund invests
in foreign government securities only if the issue or the
issuer thereof is
rated in the two highest rating categories by Moody's or
S&P, or if unrated,
are of comparable quality in the determination of the
investment adviser.
Under normal circumstances the Fund may invest up to 35% of
its total assets
in debt obligations (including debt obligations convertible
into common stock)
of U.S. or foreign corporations and financial institutions
and supranational
entities. Any non-governmental investment would be limited
to issues that are
rated A or better by Moody's or S&P, or if not rated,
determined to be of com-
parable quality.
The Fund is a non-diversified portfolio and currently
contemplates investing
primarily in obligations of the U.S. and of developed
nations (i.e., industri-
alized countries) that the investment adviser believes to
pose limited credit
risks. These countries currently are Australia, Austria,
Belgium, Canada, Den-
mark, Finland, France, Ireland, Italy, Japan, Luxembourg,
Netherlands, New
Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the
United Kingdom and
Germany. Investments may be made from time to time in
government securities of
less developed countries (i.e., Argentina, Brazil, Chile,
Mexico and Venezue-
la). Historical experience indicates that markets of less
developed countries
have been more volatile than the markets of developed
countries. The invest-
ment adviser does not intend to invest more than 10% of the
Fund's total
assets in government securities of less developed countries
and will not
invest more than 5% of its assets in the government
securities of any one such
country. Such investments will be made only in investment
grade securities
(rated at least Baa by Moody's or BBB by S&P), or if
unrated, securities that
are judged to be of comparable quality by the investment
adviser. Under normal
market conditions the Fund invests at least 65% of its
assets in issues of not
less than three different countries; issues of any one
country (other than the
United States) will represent no more than 45% of the Fund's
total assets.
The Cash Portfolio is an investment portfolio of Smith
Barney Money Funds,
Inc., a money market fund that seeks maximum current income
and preservation
of capital. The Fund may invest in domestic and foreign
money market securi-
ties consisting of bank obligations and high quality
commercial paper, corpo-
rate obligations and municipal obligations, in addition to
U.S. government
obligations and related repurchase agreements. The Fund
intends to maintain at
least 25% of its total assets invested in obligations of
domestic and foreign
banks. Shares of the Fund are not insured or guaranteed by
the U.S. govern-
ment.
The Fund has adopted certain investment policies to assure
that, to the
extent reasonably possible, the Fund's price per share will
not change from
$1.00, although no assurance can be given that this goal
will be achieved on a
continuous basis. In order to minimize fluctuations in
market price, the Fund
will not purchase a security with a remaining maturity of
greater
18
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
than 13 months or maintain a dollar-weighted average
portfolio maturity in
excess of 90 days (securities used as collateral for
repurchase agreements are
not subject to these restrictions).
The Fund's investments are limited to U.S. dollar-
denominated instruments that
have received the highest rating from the "Requisite
NRSROs," securities of
issuers that have received such rating with respect to other
short-term debt
securities and comparable unrated securities. "Requisite
NRSROs" means (a) any
two nationally recognized statistical ratings organizations
("NRSROs") that
have issued a rating with respect to a security or class of
debt obligations of
an issuer, or (b) one NRSRO, if only one NRSRO has issued
such a rating at the
time that the Fund acquires the security. The NRSROs
currently designated as
such by the SEC are S&P, Moody's, Fitch Investors Services,
Inc., Duff and
Phelps Inc., IBCA Limited and its affiliate, IBCA, Inc. and
Thomson BankWatch.
For purposes of the equity/fixed income fund allocation
targets and ranges
applicable to each Portfolio (see page 11 above), each of
the following Under-
lying Smith Barney Fund is considered to be an equity fund
with respect to 50%
of a Portfolio's investment in such Fund and an income fund
with respect to the
remaining 50% of such Portfolio's investment.
The Smith Barney Convertible Fund, an investment portfolio
of Smith Barney
Income Funds, seeks current income and capital appreciation
by investing in
convertible securities and in combinations of nonconvertible
fixed-income secu-
rities and warrants or call options that together resemble
convertible securi-
ties ("synthetic convertible securities"). Under normal
circumstances, the Fund
will invest at least 65% of its assets in convertible
securities, but is not
required to sell securities to conform to this limitation
and may retain on a
temporary basis securities received upon the conversion or
exercise of such
securities. The Fund will not invest in fixed-income
securities that are rated
lower than B by Moody's or S&P or, if unrated, deemed by
SBMFM to be comparable
to securities rated lower than B. The Fund may invest up to
35% of its assets
in synthetic convertible securities and in equity and debt
securities that are
not convertible into common stock and, for temporary
defensive purposes, may
invest in these securities without limitation.
The Smith Barney Utilities Fund, an investment portfolio of
Smith Barney
Income Funds, seeks current income by investing in equity
and debt securities
of companies in the utility industry. Long-term capital
appreciation is a sec-
ondary objective of the Fund. The utility industries are
deemed to be comprised
of companies principally engaged (that is, at least 50% of a
company's assets,
gross income or net profits results from utility operations
or the company is
regulated as a utility by a government agency or authority)
in the manufacture,
production, generation, transmission and sale of electric
and gas energy and
companies principally engaged in the communications field,
including entities
such as telephone, telegraph, satellite, microwave and other
companies regu-
lated by governmental agencies as utilities that provide
communication facili-
ties for the public benefit, but not including those in
public broadcasting.
The Fund will invest primarily in utility equity and debt
securities that have
a high expected rate of return as determined by SBMFM. Under
normal market con-
ditions, the Fund will invest at least 65% of its assets in
such securities.
The Fund may invest up to 35% of its assets in equity and
debt securities of
non-utility companies believed to afford a reasonable
opportunity for achieving
the Fund's investment objectives. The Fund will invest in
investment grade debt
securities, but may invest up to 10% of its assets in
securities rated BB or B
by S&P or Ba or B by Moody's whenever SBMFM believes that
the incremental yield
on such securities is advantageous to the Fund in comparison
to the additional
risk involved.
The International Balanced Portfolio, an investment
portfolio of Smith Barney
World Funds, Inc., seeks a competitive total return on its
assets from growth
of capital and income through a portfolio invested primarily
in securities of
established non-U.S. issuers. The Fund may borrow up to 15%
of the value of its
assets for investment purposes, which involves certain
risks. Under normal mar-
ket conditions, the Fund will invest its assets in an
international portfolio
of equity securities (consisting of dividend and non-
dividend paying common
stocks, preferred stocks, convertible securities, ADRs and
rights and warrants
to such securities) and debt securities (consisting of
corporate debt securi-
ties, sovereign debt instruments issued by governments or
governmental enti-
ties, including supranational organizations and U.S. and
foreign money market
instruments). The Fund attempts to achieve a balance between
equity and debt
securities. However, the proportion of equity and debt held
by the Fund at any
one time will depend on SBMFM's views on current market and
economic condi-
tions. Under normal conditions, no more than 70%, nor less
than 30%, of the
Fund's assets will be invested in either equity or debt
securities; however,
there is no limitation on the percent or amount of the
Fund's assets that may
be invested for growth or income.
The Fund is a non-diversified portfolio but will generally
invest its assets
broadly among countries and will normally have at least 65%
of its assets
invested in business activities in not less than three
different countries out-
side of the U.S. The Fund
19
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
will invest in a broad range of industries and sectors and
will mainly invest
in securities issued by companies with market capitalization
of at least
$50,000,000. The Fund may invest in companies organized or
governments located
in any area of the world. However, under unusual economic or
market conditions
as determined by the investment adviser, for defensive
purposes the Fund may
temporarily invest all or a major portion of its assets in
U.S. government
securities, debt or equity securities of companies
incorporated in and having
their principal business activities in the U.S. or in U.S.
as well as foreign
money market instruments and equivalents.
The debt securities in which the Fund invests generally
range in maturity from
two to ten years. Debt securities of developed foreign
countries must be rated
as investment grade (or deemed by SBMFM to be of comparable
quality) at the
time of purchase. Debt securities of emerging market
countries may be rated
below investment grade and could include securities that are
in default as to
payments of principal or interest. Up to 25% of the total
assets of the Fund
may be invested in securities of emerging market countries.
PERFORMANCE OF UNDERLYING SMITH BARNEY FUNDS
The following chart shows the average annual total returns
for the longest
outstanding class of shares for each of the Underlying Smith
Barney Funds in
which the Portfolios may invest (other than the Cash
Portfolio of Smith Barney
Money Funds, Inc.) for the most recent one-, five- and ten-
year periods (or
since inception if shorter and giving effect to the maximum
applicable sales
charges) and the 30-day yields for income-oriented funds, in
each case for the
period ended December 31, 1995.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
ASSETS OF
ALL THROUGH DECEMBER 31, 1995 30-DAY
YIELD FOR
CLASSES AS
OF ----------------------------- PERIOD
ENDED
DECEMBER 31,
INCEPTION DECEMBER
31,
UNDERLYING SMITH BARNEY FUND 1995
($000'S) DATE CLASS ONE YEAR FIVE YEARS TEN YEARS
1995
- ------------------------------------------------------------
- ------------------------------------------------------------
- -------
<S> <C>
<C> <C> <C> <C> <C> <C>
Smith Barney Aggressive Growth Fund Inc. $ 525,528
10/24/83 A 28.94% 17.40% 15.70 % --
Smith Barney Appreciation Fund Inc. 3,024,628
03/10/70 A 22.74 12.18 12.81 --
Smith Barney Equity Funds:
Smith Barney Growth and Income Fund 218,807
11/06/92 A 24.36 -- 8.77 (+) --
Smith Barney Fundamental Value Fund Inc. 987,935
11/12/81 A 21.48 17.38 12.12 --
Smith Barney Funds, Inc.:
Equity Income Portfolio 747,520
01/01/72 A 26.40 13.82 11.59 --
Short-Term U.S. Treasury Securities Portfo-
lio 106,902
11/11/91 A 13.16 -- 6.26 (+) 4.69%
Smith Barney Equity Funds:
Smith Barney High Income Fund 888,802
09/02/86 B 13.03 16.35 8.76 (+) 7.83
Smith Barney Utilities Fund 1,958,317
03/28/88 B 25.89 11.19 11.19 (+) --
Smith Barney Premium Total Return Fund 2,380,777
09/16/85 B 16.84 15.02 12.30 --
Smith Barney Convertible Fund 82,137
09/02/86 B 15.82 12.30 8.20 (+) 2.83
Smith Barney Diversified Strategic Income Fund 2,627,676
12/28/89 B 10.57 9.45 9.20 (+) 8.48
Smith Barney Investment Funds Inc.:
Smith Barney Managed Growth Fund 507,097
06/30/95 A -- -- (3.30)(+) --
Smith Barney Special Equities Fund 342,704
12/13/82 B 57.30 25.87 11.76 --
Smith Barney Government Securities Fund 606,406
03/20/84 B 8.71 8.06 7.65 5.99
Smith Barney Investment Grade Bond Fund 519,566
01/04/82 B 30.56 13.78 10.93 5.71
Smith Barney Managed Governments Fund Inc. 644,202
09/04/84 A 8.76 7.52 7.72 6.27
Smith Barney Natural Resources Fund Inc. 55,077
12/24/86 A (15.23) 3.10 1.64 (+) --
Smith Barney World Funds, Inc.:
International Equity Portfolio 1,049,624
02/18/86 A (2.59) 13.44 11.10 (+) --
Emerging Markets Portfolio 16,972
05/11/95 A -- -- (13.47)(+) --
International Balanced Portfolio 25,245
08/25/94 A 8.90 -- 3.92 (+) --
Global Government Bond Portfolio 158,962
07/22/91 A 10.17 -- 8.36 (+) 5.82
- -----------
</TABLE>
+ inception (less than 10 years)
- ------------------------------------------------------------
- --------------------
For the seven-day period ended December 31, 1995, the yield
for the Cash Port-
folio of Smith Barney Money Funds, Inc. was 5.16% and the
effective yield was
5.30%.
The performance data relating to the Underlying Smith
Barney Funds set forth
above is not, and should not be viewed as, indicative of the
future performance
of either the Underlying Smith Barney Funds or the Concert
Series. The perfor-
mance reflects the impact of sales charges and other
distribution related
expenses that will not be incurred by the Class Y shares of
the Underlying
Smith Barney Funds in which the Portfolios will invest.
20
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
INVESTMENT POLICIES AND STRATEGIES OF THE UNDERLYING SMITH
BARNEY FUNDS
In pursuing their investment objectives and programs, each
of the Underlying
Smith Barney Funds is permitted to engage in a wide range of
investment poli-
cies. The Underlying Smith Barney Funds' risks are
determined by the nature of
the securities held and the investment strategies used by
the Funds' adviser.
Certain of these policies are described below and further
information about the
investment policies and strategies of the Underlying Smith
Barney Funds in
which the Portfolios may invest is contained in the Appendix
to this Prospectus
and in the Statement of Additional Information as well as
the prospectuses of
the Underlying Smith Barney Funds. Because each Portfolio
invests in the Under-
lying Smith Barney Funds, shareholders of each Portfolio
will be affected by
these investment policies in direct proportion to the amount
of assets each
Portfolio allocates to the Underlying Smith Barney Funds
pursuing such poli-
cies.
Securities of Non-U.S. Issuers. The Portfolios will each
invest in certain
Underlying Smith Barney Funds that invest all or a portion
of their assets in
securities of non-U.S. issuers. These include non-dollar
denominated securities
traded outside the U.S. and dollar-denominated securities
traded in the U.S.
(such as ADRs). Such investments involve some special risks
such as fluctua-
tions in foreign exchange rates, future political and
economic developments,
and the possible imposition of exchange controls or other
foreign governmental
laws or restrictions. In addition, with respect to certain
countries, there is
the possibility of expropriation of assets, repatriation,
confiscatory taxa-
tion, political or social instability or diplomatic
developments that could
adversely affect investments in those countries. There may
be less publicly
available information about a foreign company than about a
U.S. company, and
foreign companies may not be subject to accounting,
auditing, and financial
reporting standards and requirements comparable to or as
uniform as those of
U.S. companies. Non-U.S. securities markets, while growing
in volume, have, for
the most part, substantially less volume than U.S. markets,
and securities of
many foreign companies are less liquid and their prices more
volatile than
securities of comparable U.S. companies. Transaction costs
on non-U.S. securi-
ties markets are generally higher than in the U.S. There is
generally less gov-
ernment supervision and regulation of exchanges, brokers and
issuers than there
is in the U.S. An Underlying Smith Barney Fund might have
greater difficulty
taking appropriate legal action in non-U.S. courts. Dividend
and interest
income from non-U.S. securities will generally be subject to
withholding taxes
by the country in which the issuer is located and may not be
recoverable by the
Underlying Smith Barney Fund or a Portfolio investing in
such Fund.
Options and Futures. Certain of the Underlying Smith Barney
Funds may enter
into stock index, interest rate and currency futures
contracts (or options
thereon) as a hedging device, or as an efficient means of
regulating their
exposure to various markets. Certain of the Underlying Smith
Barney Funds may
also purchase and sell call and put options. Futures (a type
of potentially
high-risk derivative) are often used to manage risk because
they enable the
investor to buy or sell an asset at a predetermined price in
the future. The
Underlying Smith Barney Funds may buy and sell futures and
options contracts
for a number of reasons including: to manage their exposure
to changes in
interest rates, stock and bond prices, and foreign
currencies; as an efficient
means of adjusting their overall exposure to certain
markets; to adjust the
portfolio's duration; to enhance income; and to protect the
value of the port-
folio securities. Certain of the Underlying Smith Barney
Funds may purchase,
sell or write call and put options on securities, financial
indices, and for-
eign currencies. Options and futures can be volatile
investments, and involve
certain risks. If the adviser to the Underlying Smith Barney
Fund applies a
hedge at an inappropriate time or judges market conditions
incorrectly, options
and futures strategies may lower the Underlying Smith Barney
Fund's return.
Further losses could also be experienced if the options and
futures positions
held by an Underlying Smith Barney Fund were poorly
correlated with its other
investments or if it could not close out its positions
because of an illiquid
secondary market.
Debt Securities. Certain of the Underlying Smith Barney
Funds may be affected
by general changes in interest rates, which will result in
increases or
decreases in the market value of the debt securities held by
the Funds. The
market value of the fixed-income obligations in which the
Underlying Smith Bar-
ney Funds may invest can be expected to vary inversely in
relation to the
changes in prevailing interest rates and also may be
affected by other market
and credit factors.
Certain of the Underlying Smith Barney Funds may invest
only in high-quality,
high-grade or investment-grade securities. High quality
securities are those
rated in the two highest categories by Moody's (Aaa or Aa)
or S&P (AAA or AA).
High-grade securities are those rates in the three highest
categories by
Moody's (Aaa, Aa or A) or S&P (AAA, AA or A). Investment-
grade securities are
those rated in the four highest categories by Moody's (Aaa,
Aa, A or Baa) or
S&P (AAA, AA, A or BBB). Securities rated Baa or BBB have
speculative charac-
teristics and changes in economic conditions or other
circumstances are more
likely to lead to a weakened capacity of their issuers to
make principal and
interest payments than is the case with higher grade
securities.
21
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
Certain Underlying Smith Barney Funds may invest in
securities that are rated
below investment-grade; that is, rated below Baa by Moody's
or BBB by S&P.
Securities rated below investment grade (and comparable
unrated securities)
are the equivalent of high yield, high risk bonds, commonly
known as "junk
bonds." Such securities are regarded as predominantly
speculative with respect
to the issuer's capacity to pay interest and repay principal
in accordance
with the terms of the obligations and involve major risk
exposure to adverse
business, financial, economic or political conditions. See
the Appendix to the
Statement of Additional Information for additional
information on the bond
ratings by Moody's and S&P.
Money Market Instruments. The Smith Barney Natural
Resources Fund may hold up
to 20% of the value of its assets in cash and invest in
short-term instru-
ments, and it may hold cash and short-term instruments
without limitation when
SBMFM determines that it is appropriate to maintain a
temporary defensive pos-
ture. Short-term instruments in which the Smith Barney
Natural Resources Fund
may invest include: (a) obligations issued or guaranteed as
to principal and
interest by the United States government, its agencies or
instrumentalities
("US government securities") (including repurchase
agreements with respect to
such securities); (b) bank obligations (including
certificates of deposit,
time deposits and banker's acceptances of domestic or
foreign banks, domestic
savings and loan associations and similar institutions); (c)
floating rate
securities and other instruments denominated in U.S. dollars
issued by inter-
national development agencies, banks and other financial
institutions, govern-
ments and their agencies or instrumentalities and
corporations located in
countries that are members of the Organization for Foreign
Cooperation and
Development; and (d) commercial paper rated no lower than A-
2 by S&P or Prime-
2 by Moody's or the equivalent from another major rating
service or, if
unrated, of an issuer having an outstanding, unsecured debt
issue then rated
within the three highest rating categories.
Gold Futures Contracts and Related Options. If SBMFM
determines it would be
advantageous to do so, the Smith Barney Natural Resources
Fund may, for hedg-
ing purposes, utilize its assets as initial margin and
premiums on futures
contracts and options on those contracts. The Fund may also
enter into futures
contracts for the purchase and sale of gold, purchase put
and call options on
those future contracts and write call options on those
futures contracts. The
Smith Barney Natural Resources Fund will only enter into
futures contracts
that are traded on a regulated domestic or foreign
commodities exchange and
will purchase or write options on gold futures only on a
regulated domestic or
foreign exchange approved for such purpose by the
Commodities and Exchange
Futures Trading Commission.
VALUATION OF SHARES
Each Portfolio's net asset value per share is determined as
of the close of
regular trading on the NYSE on each day that the NYSE is
open, by dividing the
value of the Portfolio's net assets attributable to each
Class by the total
number of shares of the Class outstanding. The value of each
Underlying Smith
Barney Fund will be its net asset value at the time of
computation. Short-term
investments that have a maturity of more than 60 days are
valued at prices
based on market quotations for securities of similar type,
yield and maturity.
Short-term investments that have a maturity of 60 days or
less are valued at
amortized cost unless conditions dictate otherwise.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Concert Series intends to declare monthly income
dividends on shares of
the Income Portfolio, quarterly income dividends on shares
of the Conservative
Portfolio and the Balanced Portfolio and annually income
dividends on shares
of the High Growth Portfolio and the Growth Portfolio. In
addition, the Con-
cert Series intends to make annual distributions of capital
gains, if any, on
the shares of each Portfolio.
If a shareholder does not otherwise instruct, dividends and
capital gain dis-
tributions will be reinvested automatically in additional
shares of the same
Class at net asset value, subject to no sales charge or
CDSC.
Income dividends and capital gain distributions that are
invested are cred-
ited to shareholders' accounts in additional shares at the
net value as of the
close of business on the payment date. A shareholder may
change the option at
any time by notifying the Sub-Transfer Agent.
22
<PAGE>
Smith Barney Concert Series Inc.
DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)
The per share dividends on Class B shares of each Portfolio
may be lower than
the per share dividends on Class A shares principally as a
result of the dis-
tribution fee applicable with respect to Class B shares.
Distributions of capi-
tal gains, if any, will be in the same amount for Class A
and Class B shares.
TAXES
Each Portfolio intends to qualify as a regulated investment
company under
Subchapter M of the Code to be relieved of federal income
tax on that part of
its net investment income and realized capital gains that it
pays out to its
shareholders. To qualify, the Portfolio must meet certain
tests, including dis-
tributing at least 90% of its investment company taxable
income, and deriving
less than 30% of its gross income from the sale or other
disposition of certain
investments held for less than three months.
Dividends from net investment income and distributions of
realized short-term
capital gains on the sale of securities, whether paid in
cash or automatically
invested in additional shares of the same Portfolio, are
taxable to sharehold-
ers of each Portfolio as ordinary income. A portion of each
Portfolio's divi-
dends may qualify for the dividends received deduction for
corporations. Divi-
dends and distributions declared by each Portfolio may also
be subject to state
and local taxes. Distributions out of net long-term capital
gains (i.e., net
long-term capital gains in excess of net short-term capital
losses) are taxable
to shareholders as long-term capital gains. Information as
to the tax status of
dividends paid or deemed paid in each calendar year will be
mailed to share-
holders as early in the succeeding year as practical but not
later than January
31.
PURCHASE OF SHARES
GENERAL
Each Portfolio offers four Classes of shares. However, only
the Class A shares
and Class B shares are being offered pursuant to this
Prospectus. Class A
shares are sold to investors with an initial sales charge
and Class B shares
are sold without an initial sales charge but are subject to
a CDSC payable upon
certain redemptions. See "Prospectus Summary--Alternative
Purchase Arrange-
ments" for a discussion of factors to consider in selecting
which Class of
shares to purchase.
Initial purchases of shares of each Portfolio of the
Concert Series must be
made through a PFS Investments Representative by completing
the appropriate
application found in the prospectus. The completed
application should be for-
warded to the Sub-Transfer Agent, 3100 Breckinridge Blvd.,
Bldg. 200, Duluth,
Georgia 30199-0062. Checks drawn on foreign banks must be
payable in U.S. dol-
lars and have the routing number of the U.S. bank encoded on
the check. Subse-
quent investments may be sent directly to the Sub-Transfer
Agent.
Investors in Class A and Class B shares may open an account
by making an ini-
tial investment of at least $1,000 for each account in each
Class (except for
Systematic Investment Plan accounts), or $250 for an IRA or
a Self-Employed
Retirement Plan in a Portfolio. Subsequent investments of at
least $25 may be
made for each Class. For participants in retirement plans
qualified under Sec-
tion 403(b)(7) or Section 401(a) of the Code, the minimum
initial investment
requirement for Class A and Class B shares and the
subsequent investment
requirement for each Class in a Portfolio is $25. For each
Portfolio's System-
atic Investment Plan, the minimum initial investment
requirement for Class A
and Class B shares and the subsequent investment requirement
for each Class is
$25. There are no minimum investment requirements in Class A
shares for employ-
ees of Travelers and its subsidiaries, including Smith
Barney, Directors of the
Concert Series, and their spouses and children. The Concert
Series reserves the
right to waive or change minimums, to decline any order to
purchase its shares
and to suspend the offering of shares from time to time.
Shares purchased will
be held in the shareholder's account by the Sub-Transfer
Agent. Share certifi-
cates are issued only upon a shareholder's written request
to the Sub-Transfer
Agent.
Purchase orders received by the Sub-Transfer Agent prior to
the close of regu-
lar trading on the NYSE, on any day a Portfolio calculates
its net asset value,
are priced according to the net asset value determined on
that day.
SYSTEMATIC INVESTMENT PLAN
Shareholders may make additions to their accounts at any
time by purchasing
shares through a service known as the Systematic Investment
Plan. Under the
Systematic Investment Plan, the Sub-Transfer Agent is
authorized through preau-
thorized trans-
23
<PAGE>
Smith Barney Concert Series Inc.
PURCHASE OF SHARES (CONTINUED)
fers of $25 or more to charge the regular bank account or
other financial
institution indicated by the shareholder on a monthly basis
to provide system-
atic additions to the shareholder's Portfolio account. A
shareholder who has
insufficient funds to complete the transfer will be charged
a fee of up to $25
by PFS or the Sub-Transfer Agent.
INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES
The sales charges applicable to purchases of Class A shares
of the High Growth
Portfolio, the Growth Portfolio and the Balanced Portfolio
are as follows:
<TABLE>
<CAPTION>
SALES CHARGE
---------------------------------
DEALERS'
% OF % OF
REALLOWANCE AS % OF
AMOUNT OF INVESTMENT OFFERING PRICE AMOUNT INVESTED
OFFERING PRICE
- ------------------------------------------------------------
- -----------------
<S> <C> <C>
<C>
Less than $ 25,000 5.00% 5.26%
4.50%
$ 25,000 - 49,999 4.00 4.17
3.60
50,000 - 99,999 3.50 3.63
3.15
100,000 - 249,999 3.00 3.09
2.70
250,000 - 499,999 2.00 2.04
1.80
500,000 and over * *
*
- ------------------------------------------------------------
- -----------------
</TABLE>
The sales charges applicable to purchases of Class A shares
of the Conserva-
tive Portfolio and the Income Portfolio are as follows:
<TABLE>
<CAPTION>
SALES CHARGE
---------------------------------
DEALERS'
% OF % OF
REALLOWANCE AS % OF
AMOUNT OF INVESTMENT OFFERING PRICE AMOUNT INVESTED
OFFERING PRICE
- ------------------------------------------------------------
- -----------------
<S> <C> <C>
<C>
Less than $ 25,000 4.50% 4.71%
4.05%
$ 25,000 - 49,999 4.00 4.17
3.60
50,000 - 99,999 3.50 3.63
3.15
100,000 - 249,999 2.50 2.56
2.25
250,000 - 499,999 1.50 1.52
1.35
500,000 and over * *
*
- ------------------------------------------------------------
- -----------------
</TABLE>
* Purchases of Class A shares, which when combined with
current holdings of
Class A shares offered with a sales charge equal or exceed
$500,000 in the
aggregate, will be made at net asset value without any
initial sales charge,
but will be subject to a CDSC of 1.00% on redemptions made
within 12 months
of purchase. The CDSC on Class A shares is payable to PFS,
which in turn,
pays PFS Investments to compensate its Investments
Representatives whose cli-
ents make purchases of $500,000 or more. The CDSC is
waived in the same cir-
cumstances in which the CDSC applicable to Class B shares
is waived. See "De-
ferred Sales Charge Alternatives" and "Waivers of CDSC."
Members of the selling group may receive up to 90% of the
sales charge and may
be deemed to be underwriters of the Concert Series as
defined in the Securities
Act of 1933, as amended.
INITIAL SALES CHARGE WAIVERS
Purchases of Class A shares may be made at net asset value
without a sales
charge in the following circumstances: (a) sales of Class A
shares to (i) Board
members and employees of Travelers and its subsidiaries and
any of the Smith
Barney Mutual Funds (including retired Board Members and
employees); the imme-
diate families of such persons (including the surviving
spouse of a deceased
Board Member or employee); and to a pension, profit-sharing
or other benefit
plan for such persons; and (ii) employees of members of the
National Associa-
tion of Securities Dealers, Inc., provided such sales are
made upon the assur-
ance of the purchaser that the purchase is made for
investment purposes and
that the securities will not be resold except through
redemption or repurchase;
(b) offers of Class A shares to any other investment company
in connection with
the combination of such company with the Portfolio by
merger, acquisition of
assets or otherwise; (c) shareholders who have redeemed
Class A shares in a
Portfolio (or Class A shares of another fund of the Smith
Barney Mutual Funds
that are sold with a maximum sales charge equal to or
greater than the maximum
sales charge of the Portfolio) and who wish to reinvest
their redemption pro-
ceeds in the Portfolio, provided the reinvestment is made
within 60 calendar
days of the redemption; (d) accounts managed by registered
investment advisory
subsidiaries of Travelers; (e) sales through PFS Investments
Representa-
24
<PAGE>
Smith Barney Concert Series Inc.
PURCHASE OF SHARES (CONTINUED)
tives where the amounts invested represent the redemption
proceeds from invest-
ment companies, on the condition that (i) the redemption has
occurred no more
than 60 days prior to the purchase of the shares, (ii) the
shareholder paid an
initial sales charge on such redeemed shares and (iii) the
shares redeemed were
not subject to a deferred sales charge; and (f) direct
rollovers by plan par-
ticipants of distributions from a 401(k) plan enrolled in
the Smith Barney
401(k) Program (note: subsequent investments will be subject
to the applicable
sales charge, purchases by separate accounts used to fund
certain unregistered
variable annuity contracts and purchases by investors
participating in a Smith
Barney fee based arrangement. PFS Investments may pay its
Investments Repre-
sentatives an amount equal to 0.40% of the amount invested
if the purchase rep-
resents redemption proceeds from an investment company
distributed by an entity
other than PFS. In order to obtain such discounts, the
purchaser must provide
sufficient information at the time of purchase to permit
verification that the
purchase would qualify for the elimination of the sales
charge.
VOLUME DISCOUNTS
The "Amount of Investment" referred to in the sales charge
table set forth
above under "Initial Sales Charge Alternative--Class A
Shares" includes the
purchase of Class A shares in a Portfolio and of other funds
sponsored by Smith
Barney that are offered with a sales charge listed under
"Exchange Privilege."
A person eligible for a volume discount includes: an
individual; members of a
family unit comprising a husband, wife and minor children; a
trustee or other
fiduciary purchasing for a single fiduciary account
including pension, profit-
sharing and other employee benefit trusts qualified under
Section 401(a) of the
Code; or multiple custodial accounts where more than one
beneficiary is
involved if purchases are made by salary reduction and/or
payroll deduction for
qualified and nonqualified accounts and transmitted by a
common employer enti-
ty. Employer entity for payroll deduction accounts may
include trade and craft
associations and any other similar organizations.
LETTER OF INTENT
Class A Shares. A Letter of Intent for amounts of $50,000
or more provides an
opportunity for an investor to obtain a reduced sales charge
by aggregating
investments over a 13-month period, provided that the
investor refers to such
Letter when placing orders. For purposes of a Letter of
Intent, the "Amount of
Investment" as referred to in the preceding sales charge
table includes pur-
chases of all Class A shares of each Portfolio and other
Smith Barney Mutual
Funds offered with a sales charge over a 13-month period
based on the total
amount of intended purchases plus the value of all Class A
shares previously
purchased and still owned. An alternative is to compute the
13-month period
starting up to 90 days before the date of execution of a
Letter of Intent. Each
investment made during the period receives the reduced sales
charge applicable
to the total amount of the investment goal. If the goal is
not achieved within
the period, the investor must pay the difference between the
sales charges
applicable to the purchases made and the charges previously
paid, or an appro-
priate number of escrowed shares will be redeemed. Please
contact a PFS Invest-
ments Representative to obtain a Letter of Intent
application.
DEFERRED SALES CHARGE ALTERNATIVES
CDSC Shares are sold at net asset value next determined
without an initial
sales charge so that the full amount of an investor's
purchase payment may be
immediately invested in a Portfolio. A CDSC, however, may be
imposed on certain
redemptions of these shares. "CDSC Shares" are: (i) Class B
shares and
(ii) Class A shares which when combined with Class A shares
offered with a
sales charge currently held by an investor equal or exceed
$500,000 in the
aggregate.
Any applicable CDSC will be assessed on an amount equal to
the lesser of the
original cost of the shares being redeemed or their net
asset value at the time
of redemption. CDSC Shares that are redeemed will not be
subject to a CDSC to
the extent that the value of such shares represents: (a)
capital appreciation
of Portfolio assets; (b) reinvestment of dividends or
capital gain distribu-
tions; (c) with respect to Class B shares, shares redeemed
more than five years
after their purchase; or (d) with respect to Class A shares
that are CDSC
Shares, shares redeemed more than 12 months after their
purchase.
Class A shares that are CDSC Shares are subject to a 1.00%
CDSC if redeemed
within 12 months of purchase. In circumstances in which the
CDSC is imposed on
Class B shares, 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 purposes of determining the number of
years since a pur-
chase payment, all purchase payments made during a month
will be aggregated and
deemed to
25
<PAGE>
Smith Barney Concert Series Inc.
PURCHASE OF SHARES (CONTINUED)
have been made on the last day of the preceding Smith Barney
statement month.
The following table sets forth the rates of the charge for
redemptions of Class
B shares by shareholders.
<TABLE>
<CAPTION>
CDSC
APPLICABLE TO HIGH GROWTH
CDSC
YEARS SINCE PURCHASE PORTFOLIO, GROWTH PORTFOLIO AND
APPLICABLE TO CONSERVATIVE
PAYMENT WAS MADE BALANCED PORTFOLIO
PORTFOLIO AND INCOME PORTFOLIO
- ------------------------------------------------------------
- ------------------------
<S> <C> <C>
First 5.00%
4.50%
Second 4.00
4.00
Third 3.00
3.00
Fourth 2.00
2.00
Fifth 1.00
1.00
Sixth 0.00
0.00
Seventh 0.00
0.00
Eighth 0.00
0.00
- ------------------------------------------------------------
- ------------------------
</TABLE>
Class B shares will convert automatically to Class A shares
eight years after
the date on which they were purchased and thereafter will no
longer be subject
to any distribution fees. There will also be converted at
that time such pro-
portion of Class B Dividend Shares owned by the shareholder
as the total number
of his or her Class B shares converting at the time bears to
the total number
of outstanding Class B shares (other than Class B Dividend
Shares) owned by the
shareholder. See "Prospectus Summary--Alternative Purchase
Arrangements--Class
B Shares Conversion Feature."
In determining the applicability of any CDSC or the
conversion feature
described above, it will be assumed that a redemption is
made first of shares
representing capital appreciation, next of shares
representing the reinvestment
of dividends and capital gain distributions and finally of
other shares held by
the shareholder for the longest period of time. The length
of time that CDSC
Shares acquired through an exchange have been held will be
calculated from the
date that the shares exchanged were initially acquired in
one of the other
Smith Barney Mutual Funds, and Portfolio shares being
redeemed will be consid-
ered to represent, as applicable, capital appreciation or
dividend and capital
gain distribution reinvestments in such other funds. For
Federal income tax
purposes, the amount of the CDSC will reduce the gain or
increase the loss, as
the case may be, on the amount realized on redemption. The
amount of any CDSC
will be paid to PFS.
To provide an example, assume an investor purchased 100
Class B shares at $10
per share for a cost of $1,000. Subsequently, the investor
acquired 5 addi-
tional shares through dividend reinvestment. During the
fifteenth month after
the purchase, the investor decided to redeem $500 of his or
her investment.
Assuming at the time of the redemption the net asset value
had appreciated to
$12 per share, the value of the investor's shares would be
$1,260 (105 shares
at $12 per share). The CDSC would not be applied to the
amount that represents
appreciation ($200) and the value of the reinvested dividend
shares ($60).
Therefore, $240 of the $500 redemption proceeds ($500 minus
$260) would be
charged at a rate of 4.00% (the applicable rate for Class B
shares) for a total
deferred sales charge of $9.60.
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
1.00% per month of
the value of the shareholder's shares at the time the
withdrawal plan commences
(see "Automatic Cash Withdrawal Plan"); (c) redemptions of
shares within twelve
months following the death or disability of the shareholder;
(d) redemption of
shares made in connection with qualified distributions from
retirement plans or
IRAs upon the attainment of age 59 1/2; (e) involuntary
redemptions; and (f)
redemptions of shares in connection with a combination of
the Portfolio with
any investment company by merger, acquisition of assets or
otherwise. In addi-
tion, a shareholder who has redeemed shares from other Smith
Barney Mutual
Funds may, under certain circumstances, reinvest all or part
of the redemption
proceeds within 60 days and receive pro rata credit for any
CDSC imposed on the
prior redemption.
CDSC waivers will be granted subject to confirmation by PFS
of the sharehold-
er's status or holdings, as the case may be.
26
<PAGE>
Smith Barney Concert Series Inc.
EXCHANGE PRIVILEGE
Except as otherwise noted below, shares of each Class may
be exchanged for
shares of the same Class in any other Portfolio of the
Concert Series, as well
as in the following Smith Barney Mutual Funds, to the extent
shares are offered
for sale in the shareholder's state of residence. Exchanges
of Class A and
Class B shares are subject to minimum investment
requirements and all shares
are subject to the other requirements of the fund into which
exchanges are made
and a sales charge differential may apply.
FUND NAME
.Smith Barney Appreciation Fund Inc.
.Smith Barney Growth Opportunity Fund
.Smith Barney Investment Grade Bond Fund
.*Smith Barney Money Funds, Inc.--Cash Portfolio
.**Smith Barney Exchange Reserve Fund
- ------------------------------------------------------------
- --------------------
* Available for exchange with Class A shares of a Portfolio.
** Available for exchange with Class B shares of a
Portfolio.
Class A Exchanges. Class A shares of Smith Barney Mutual
Funds sold without a
sales charge or with a maximum sales charge of less than the
maximum charged by
other Smith Barney Mutual Funds will be subject to the
appropriate "sales
charge differential" upon the exchange of such shares for
Class A shares of a
fund sold with a higher sales charge. The "sales charge
differential" is lim-
ited 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 pur-
poses of the exchange privilege, shares obtained through
automatic reinvestment
of dividends and capital gain distributions are treated as
having paid the same
sales charges applicable to the shares on which the
dividends or distributions
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. In the event a Class B shareholder
wishes to exchange all
or a portion of his or her shares into any of the funds
imposing a higher CDSC
than that imposed by a Portfolio, 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
Portfolio that have been exchanged.
Additional Information Regarding the Exchange Privilege.
Although the exchange
privilege is an important benefit, excessive exchange
transactions can be det-
rimental to a Portfolio's performance and its shareholders.
The Concert Series
may determine that a pattern of frequent exchanges is
excessive and contrary to
the best interests of each Portfolio's other shareholders.
In this event, the
Concert Series may, at its discretion, decide to limit
additional purchases
and/or exchanges by the shareholder. Upon such a
determination by the Fund, the
Concert Series will provide notice in writing or by
telephone to the share-
holder 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 Portfolio or (b) remain invested in the
Portfolio or exchange
into any of the Smith Barney Mutual 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 abu-
sive pattern of exchanges.
Exchanges will be processed at the net asset value next
determined, plus any
applicable sales charge differential. Redemption procedures
discussed below are
also applicable for exchanging shares, and exchanges will be
made upon receipt
of all supporting documents in proper form. If the account
registration of the
shares of the fund being acquired is identical to the
registration of the
shares of the fund exchanged, no signature guarantee is
required. A capital
gain or loss for tax purposes will be realized upon the
exchange, depending
upon the cost or other basis of shares redeemed. Before
exchanging shares,
investors should read the current prospectus describing the
shares to be
acquired. Each Portfolio reserves the right to modify or
discontinue exchange
privileges upon 60 days' prior notice to shareholders.
27
<PAGE>
Smith Barney Concert Series Inc.
REDEMPTION OF SHARES
Shareholders may redeem for cash some or all of their
shares of a Portfolio at
any time by sending a written request in proper form
directly to the Sub-Trans-
fer Agent, PFS Shareholder Services, at 3100 Breckinridge
Blvd, Bldg. 200,
Duluth, Georgia 30199-0062. If you should have any questions
concerning how to
redeem your account after reviewing the information below,
please contact the
Sub-Transfer Agent at (800) 544-5445, Spanish-speaking
representatives (800)
544-7278 or TDD Line for the Hearing Impaired (800) 824-
1721.
As described under "Purchase of Shares," redemptions of
Class B shares are
subject to a CDSC.
The request for redemption must be signed by all persons in
whose names the
shares are registered. Signatures must conform exactly to
the account registra-
tion. If the proceeds of the redemption exceed $50,000, or
if the proceeds are
not paid to the record owner(s) at the record address, if
the shareholder(s)
has had an address change in the past 45 days, or if the
shareholder(s) is a
corporation, sole proprietor, partnership, trust or
fiduciary, signature(s)
must be guaranteed by one of the following: a bank or trust
company; a broker-
dealer; a credit union; a national securities exchange,
registered securities
association or clearing agency; a saving and loan
association; or a federal
savings bank.
Generally, a properly completed Redemption Form with any
required signature
guarantee is all that is required for a redemption. In some
cases, however,
other documents may be necessary. For example, in the case
of shareholders
holding certificates, the certificates for the shares being
redeemed must
accompany the redemption request. Additional documentary
evidence of authority
is also required by the Sub-Transfer Agent in the event
redemption is requested
by a corporation, partnership, trust, fiduciary, executor or
administrator.
Additionally, if a shareholder requests a redemption from a
Retirement Plan
account (IRA, SEP or 403(b)(7)), such request must state
whether or not federal
income tax is to be withheld from the proceeds of the
redemption check.
A shareholder may utilize the Sub-Transfer Agent's FAX to
redeem their account
as long as a signature guarantee or other documentary
evidence is not required.
Redemption requests should be properly signed by all owners
of the account and
faxed to the Sub-Transfer Agent at (800) 554-2374. Facsimile
redemptions may
not be available if the shareholder cannot reach the Sub-
Transfer Agent by FAX,
whether because all telephone lines are busy or for any
other reason; in such
case, a shareholder would have to use the Portfolio's
regular redemption proce-
dure described above. Facsimile redemptions received by the
Sub-Transfer Agent
prior to 4:00 p.m. Eastern time on a regular business day
will be processed at
the net asset value per share determined that day.
In all cases, the redemption price is the net asset value
per share of the
Portfolio next determined after the request for redemption
is received in
proper form by the Sub-Transfer Agent. Payment for shares
redeemed will be made
by check mailed within three days after acceptance by the
Sub-Transfer Agent of
the request and any other necessary documents in proper
order. Such payment may
be postponed or the right of redemption suspended as
provided by the rules of
the SEC. If the shares to be redeemed have been recently
purchased by check or
draft, the Sub-Transfer Agent may hold the payment of the
proceeds until the
purchase check or draft has cleared, usually a period of up
to 15 days. Any
taxable gain or loss will be recognized by the shareholder
upon redemption of
shares.
After following the above-stated redemption guidelines, a
shareholder(s) may
elect to have the redemption proceeds wire-transferred
directly to the share-
holder's bank account of record (defined as a currently
established pre-autho-
rized draft on the shareholder's account with no changes
within the previous 45
days), as long as the bank account is registered in the same
name(s) as the
account with the Concert Series. If the proceeds are not to
be wired to the
bank account of record, or mailed to the registered
owner(s), a signature guar-
antee will be required from all shareholder(s). A $25
service fee will be
charged by the Sub-Transfer Agent to help defray the
administrative expense of
executing a wire redemption. Redemption proceeds will
normally be wired to the
designated bank account on the next business day following
the redemption, and
should ordinarily be credited to the shareholder's bank
account by the share-
holder's bank within 48 to 72 hours.
28
<PAGE>
Smith Barney Concert Series Inc.
REDEMPTION OF SHARES (CONTINUED)
AUTOMATIC CASH WITHDRAWAL PLAN
Each Portfolio 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 cash payments of at least $50 monthly or
quarterly. Retirement plan
accounts are eligible for automatic cash withdrawal plans
only where the
shareholder is eligible to receive qualified distributions
and has an account
value of at least $5,000. The withdrawal plan will be
carried over on
exchanges between funds or Classes of a Portfolio. Any
applicable CDSC will
not be waived on amounts withdrawn by a shareholder that
exceed 1.00% 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 the Sub-
Transfer Agent.
MINIMUM ACCOUNT SIZE
The Concert Series reserves the right to involuntarily
liquidate any share-
holder's account in a Portfolio if the aggregate net asset
value of the shares
held in that Portfolio account is less than $500. (If a
shareholder has more
than one account in a Portfolio, each account must satisfy
the minimum account
size.) The Series, however, will not redeem shares based
solely on market
reductions in net asset value. Before the Series exercises
such right, share-
holders will receive written notice and will be permitted 60
days to bring
accounts up to the minimum to avoid involuntary liquidation.
PERFORMANCE
From time to time a Portfolio may include its total return,
average annual
total return, yield and current dividend return in
advertisements and/or other
types of sales literature. These figures are computed
separately for Class A
and Class B shares of each Portfolio. These figures are
based on historical
earnings and are not intended to indicate future
performance. Total return is
computed for a specified period of time assuming deduction
of the maximum
sales charge, if any, from the initial amount invested and
reinvestment of all
income dividends and capital gain distributions on the
reinvestment dates at
prices calculated as stated in this Prospectus, then
dividing the value of the
investment at the end of the period so calculated by the
initial amount
invested and subtracting 100%. The standard average annual
total return, as
prescribed by the SEC is derived from this total return,
which provides the
ending redeemable value. Such standard total return
information may also be
accompanied with nonstandard total return information for
differing periods
computed in the same manner but without annualizing the
total return or taking
sales charges into account. The yield of a Portfolio's Class
refers to the net
investment income earned by investments in the Class over a
30-day period.
This net investment income is then annualized, i.e., the
amount of income
earned by the investments during that 30-day period is
assumed to be earned
each 30-day period for twelve periods and is expressed as a
percentage of the
investments. The yield is calculated according to a formula
prescribed by the
SEC to facilitate comparison with yields quoted by other
investment companies.
The Balanced Portfolio and the Conservative Portfolio
calculate current divi-
dend return for each of their Classes annualizing the most
recent quarterly
dividend and dividing by the net asset value or the maximum
public offering
price (including sales charge) on the last day of the period
for which current
dividend return is presented. The Income Portfolio
calculates current dividend
return for each of its Classes by annualizing the most
recent monthly distri-
bution and dividing by the net asset value or the maximum
public offering
price (including sales charge) on the last day of the period
for which current
dividend return is presented. Each Class' current dividend
return may vary
from time to time depending on market conditions, the
composition of the
investment portfolio and its operating expenses. These
factors and possible
differences in the methods used in calculating current
dividend return should
be considered when comparing current return of a Class to
yields published for
other investment companies and other investment vehicles.
Each Portfolio may
also include comparative performance information in
advertising or marketing
its shares. Such performance information may include data
from Lipper Analyti-
cal Services, Inc. and other financial publications.
29
<PAGE>
Smith Barney Concert Series Inc.
MANAGEMENT OF THE CONCERT SERIES
BOARD OF DIRECTORS
Overall responsibility for management and supervision of
the Concert Series
rests with the Concert Series' Board of Directors. A
majority of the Series'
directors are non-interested persons as defined in Section
2(a)(19) of the 1940
Act. However, the directors and officers of the Series also
serve in similar
positions with many of the Underlying Smith Barney Funds.
Thus, if the inter-
ests of a Portfolio and the Underlying Smith Barney Funds
were ever to become
divergent, it is possible that a conflict of interest could
arise and affect
how the directors and officers of the Series fulfill their
fiduciary duties to
that Portfolio and the Underlying Smith Barney Funds. The
directors of the
Series believe they have structured each Portfolio to avoid
these concerns.
However, conceivably a situation could occur where proper
action for the Series
or a Portfolio separately could be adverse to the interests
of an Underlying
Smith Barney Fund, or the reverse could occur. If such a
possibility arises,
the directors and officers of the Series, the affected
Underlying Smith Barney
Funds and SBMFM will carefully analyze the situation and
take all steps they
believe reasonable to minimize and, where possible,
eliminate the potential
conflict. Moreover, limitations on aggregate investments in
the Underlying
Smith Barney Funds have been adopted by the Series to
minimize this possibili-
ty, and close and continuous monitoring will be exercised to
avoid, insofar as
is possible, these concerns. The Statement of Additional
Information contains
background information regarding each director and executive
officer of the
Concert Series.
INVESTMENT MANAGER -- SBMFM
SBMFM, the investment manager to each Portfolio, is a
registered investment
adviser whose principal offices are located at 388 Greenwich
Street, New York,
New York 10013. SBMFM (through its predecessor entities) has
been in the
investment counseling business since 1940. SBMFM renders
investment advice to a
wide variety of investment company clients that had
aggregate assets under man-
agement as of May 31, 1996 in excess of $72 billion. Subject
to the super-
vision and direction of the Concert Series' Board of
Directors, SBMFM will
determine how each Portfolio's assets will be invested in
the Underlying Smith
Barney Funds and in repurchase agreements pursuant to the
investment objective
and policies of each Portfolio set forth in this Prospectus
and make recommen-
dations to the Board of Directors concerning changes to (a)
the Underlying
Smith Barney Funds in which the Portfolios may invest, (b)
the percentage range
of assets that may be invested by each Portfolio in any one
Underlying Smith
Barney Fund and (c) the percentage range of assets of any
Portfolio that may be
invested in equity funds and fixed income funds (including
money market funds).
The directors of the Series will periodically monitor the
allocations made and
the basis upon which such allocations were made or
maintained. SBMFM also fur-
nishes each Portfolio with bookkeeping, accounting and
administrative services,
office space and equipment, and the services of the officers
and employees of
the Series. Under the Asset Allocation and Administration
Agreement with each
Portfolio, SBMFM has agreed to bear all expenses of the
Concert Series other
than the management fee, the fees payable pursuant to the
plan adopted pursuant
to Rule 12b-1 under the 1940 Act and extraordinary expenses.
For the services
rendered and expenses borne, each Portfolio pays SBMFM a
monthly fee at the
annual rate of 0.35% of the value of its average daily net
assets.
SBMFM also serves as investment adviser to each of the
Underlying Smith Barney
Funds in which the Portfolios may invest (other than the
Smith Barney Premium
Total Return Fund) and is responsible for the selection and
management of each
of the Underlying Smith Barney Fund's investments. SBSA,
located at 388 Green-
wich Street, New York, New York 10013, serves as investment
adviser to Smith
Barney Premium Total Return Fund. SBSA has been in the
investment counseling
business since 1968 and is a wholly owned subsidiary of
SBMFM. SBSA renders
investment advice to investment companies that had aggregate
assets under man-
agement as of May 31, 1996 in excess of $2.9 billion.
30
<PAGE>
Smith Barney Concert Series Inc.
MANAGEMENT OF THE CONCERT SERIES (CONTINUED)
Each Portfolio, as a shareholder in the Underlying Smith
Barney Funds, will
indirectly bear its proportionate share of any investment
management fees and
other expenses paid by the Underlying Smith Barney Funds.
The effective manage-
ment fee of each of the Underlying Smith Barney Funds is set
forth below as a
percentage rate of its annual net assets:
<TABLE>
<CAPTION>
UNDERLYING SMITH BARNEY FUND MANAGEMENT
FEES
- ------------------------------------------------------------
- ----
<S> <C>
Smith Barney Aggressive Growth Fund Inc. 0.80%
Smith Barney Appreciation Fund Inc. 0.61%
Smith Barney Equity Funds:
Smith Barney Growth and Income Fund 0.65%
Smith Barney Fundamental Value Fund Inc. 0.75%
Smith Barney Funds, Inc.:
Equity Income Portfolio 0.58%
Short-Term U.S. Treasury Securities Portfolio 0.45%
Smith Barney Income Funds:
Smith Barney High Income Fund 0.70%
Smith Barney Utilities Fund 0.65%
Smith Barney Premium Total Return Fund 0.75%
Smith Barney Convertible Fund 0.70%
Smith Barney Diversified Strategic Income Fund 0.65%
Smith Barney Investment Funds Inc.:
Smith Barney Managed Growth Fund 0.85%
Smith Barney Special Equities Fund 0.75%
Smith Barney Government Securities Fund 0.55%
Smith Barney Investment Grade Bond Fund 0.65%
Smith Barney Managed Governments Fund Inc. 0.65%
Smith Barney Money Funds, Inc.:
Cash Portfolio 0.41%
Smith Barney Natural Resources Fund Inc. 0.75%
Smith Barney World Funds, Inc.:
International Equity Portfolio 0.85%
Emerging Markets Portfolio 1.00%
International Balanced Portfolio 0.85%
Global Government Bond Portfolio 0.75%
- ------------------------------------------------------------
- ----
</TABLE>
PORTFOLIO MANAGEMENT
Thomas B. Stiles II, Chief Investment Officer of SBMFM, has
primary responsi-
bility for the day-to-day management of each Portfolio. Mr.
Stiles, born in
1940, is Chairman and Chief Executive Officer of Greenwich
Street Advisors, a
division of SBMFM, and a Managing Director of Smith Barney.
Certain managing
directors of SBMFM will assist Mr. Stiles in managing the
Portfolios.
DISTRIBUTOR
PFS, located at 3100 Breckinridge Blvd., Bldg 200, Duluth,
Georgia 30199-0062,
distributes shares of each Portfolio as a principal
underwriter and as such
conducts a continuous offering pursuant to a best efforts
arrangement requiring
PFS to take and pay for only such securities as may be sold
to the public. Pur-
suant to the services and distribution plan adopted by each
Portfolio under
Rule 12b-1 under the 1940 Act (the "Plan"), PFS is paid a
service fee with
respect to Class A and Class B shares of each Portfolio at
the annual rate of
0.25% of the average daily net assets attributable to each
Class. PFS is also
paid a distribution fee with respect to Class B shares of
the High Growth Port-
folio, the Growth Portfolio and the Balanced Portfolio at
the annual rate of
0.75% of the average daily net assets attributable to that
Class. PFS is paid a
distribution fee with respect to Class B shares of the
Conservative Portfolio
and the Income Portfolio at the annual rate of 0.50% of the
average daily net
assets attributable to that Class. Class B shares that
automatically convert to
Class A shares eight years after the date of original
purchase will no longer
be subject to a distribution fee. The fees are paid to PFS,
which in turn, pays
PFS Investments to pay its Investments Representatives for
servicing share-
holder 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: adver-
tising expenses; the cost of printing and mailing
prospectuses to potential
investors; payments to and expenses of Investments
Representatives and other
31
<PAGE>
Smith Barney Concert Series Inc.
DISTRIBUTOR (CONTINUED)
persons who provide support services in connection with the
distribution of
shares; interest and/or carrying charges; and indirect and
overhead costs of
PFS Investments associated with the sale of Portfolio
shares, including lease,
utility, communications and sales promotion expenses.
The payments to PFS Investments Representatives for selling
shares of a Class
include a commission or fee paid by the investor or PFS at
the time of sale
and, with respect to Class A and Class B shares, a
continuing fee for servicing
shareholder accounts for as long as a shareholder remains a
holder of that
Class. Investments Representatives may receive different
levels of compensation
for selling different Classes of shares.
PFS Investments may be deemed to be an underwriter for
purposes of the Securi-
ties Act of 1933. From time to time, PFS or its affiliates
may also pay for
certain non-cash sales incentives provided to PFS
Investments Representatives.
Such incentives do not have any effect on the net amount
invested. In addition
to the reallowances from the applicable public offering
price described above,
PFS may from time to time, pay or allow additional
reallowances or promotional
incentives, in the form of cash or other compensation to PFS
Investments Repre-
sentatives that sell shares of each Portfolio.
Actual distribution expenses for Class B shares of each
Portfolio for any
given year may exceed the fees received pursuant to the Plan
and will be car-
ried forward and paid by each Portfolio in future years so
long as the Plan is
in effect. Interest is accrued monthly on such carryforward
amounts at a rate
comparable to that paid by Smith Barney for bank borrowings.
The Concert
Series' Board of Directors will evaluate the appropriateness
of the Plan and
its payment terms on a continuing basis and in so doing will
consider all rele-
vant factors, including expenses borne by PFS, amounts
received under the Plan
and proceeds of the CDSC.
ADDITIONAL INFORMATION
The Concert Series, an open-end, non-diversified investment
company, was
incorporated in Maryland on August 11, 1995. The Concert
Series has authorized
capital of 3,000,000,000 shares with a par value of $.001
per share. The Board
of Directors has authorized the issuance of five series of
shares, each repre-
senting shares in one of five separate Portfolios and may
authorize the issu-
ance of additional series of shares in the future. The
assets of each Portfolio
are segregated and separately managed and a shareholder's
interest is in the
assets of the Portfolio in which he or she holds shares.
Class A and Class B
shares of a Portfolio represent interests in the assets of
that Portfolio and
have identical voting, dividend, liquidation and other
rights (other than con-
version) on the same terms and conditions except that
expenses related to the
distribution of each Class of shares are borne solely by
each Class and each
Class of shares has exclusive voting rights with respect to
provisions of the
Concert Series' Rule 12b-1 distribution plan that pertain to
a particular
Class. As described under "Voting" in the Statement of
Additional Information,
the Concert Series ordinarily will not hold shareholder
meetings; however,
shareholders have the right to call a meeting upon a vote of
10% of the Concert
Series' outstanding shares and the Concert Series will
assist shareholders in
calling such a meeting as required by the 1940 Act. Shares
do not have cumula-
tive voting rights or preemptive rights and are fully paid,
transferable and
non-assessable when issued for payment as described in this
Prospectus.
On matters submitted for consideration by shareholders of
any Underlying Smith
Barney Fund, a Portfolio will vote its shares in proportion
to the vote of all
other holders of shares of that Fund or, in certain limited
instances, the
Portfolio will vote its shares in the manner indicated by a
vote of holders of
shares of the Portfolio.
PNC Bank, National Association, located at 17th and
Chestnut Streets, Phila-
delphia, Pennsylvania 19103, serves as custodian of the
Portfolio's invest-
ments.
First Data Investor Services Group, Inc., located at
Exchange Place, Boston,
Massachusetts 02109, serves as the Concert Series' transfer
agent.
PFS Shareholder Services is located at 3100 Breckinridge
Blvd., Bldg 200,
Duluth, Georgia 30199-0062 and serves as the Concert Series'
Sub-Transfer
Agent.
The Concert Series intends to send its shareholders a semi-
annual report and
an audited annual report, which will include listings of the
investment securi-
ties held by the Concert Series at the end of the period
covered. In an effort
to reduce the Concert Series' printing and mailing costs,
the Concert Series
plans to consolidate the mailing of its semi-annual and
annual
32
<PAGE>
Smith Barney Concert Series Inc.
ADDITIONAL INFORMATION (CONTINUED)
reports by household. This consolidation means that a
household having multi-
ple accounts with the identical address of record will
receive a single copy
of each report. In addition, the Concert Series also plans
to consolidate the
mailing of its Prospectus so that a shareholder having
multiple accounts (that
is, individual, IRA and/or Self-Employed Retirement Plan
accounts) will
receive a single Prospectus annually. Shareholders who do
not want this con-
solidation to apply to their account should contact the Sub-
Transfer Agent.
33
<PAGE>
Smith Barney Concert Series Inc.
APPENDIX
DESCRIPTIONS OF CERTAIN RISKS RELATED TO VARIOUS SECURITIES
INVESTED IN, AND
INVESTMENT STRATEGIES EMPLOYED BY, THE UNDERLYING SMITH
BARNEY FUNDS IN WHICH
THE PORTFOLIOS MAY INVEST
Repurchase Agreements. Repurchase agreements, as utilized
by an Underlying
Smith Barney Fund or a Portfolio of The Concert Series,
could involve certain
risks in the event of default or insolvency of the other
party, including pos-
sible delays or restrictions upon the ability of an
Underlying Smith Barney
Fund or a Portfolio to dispose of the underlying securities,
the risk of a
possible decline in the value of the underlying securities
during the period
in which an Underlying Smith Barney Fund or a Portfolio
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.
Reverse Repurchase Agreements. Certain of the Underlying
Smith Barney Funds
may engage in reverse repurchase agreement transactions with
banks, brokers
and other financial institutions. Reverse repurchase
agreements involve the
risk that the market value of the securities sold by the
Underlying Smith Bar-
ney Fund may decline below the repurchase price of the
securities.
Lending of Portfolio Securities. The risks in lending
portfolio securities,
like those associated with other extensions of secured
credit, consist of pos-
sible delays in receiving additional collateral or in the
recovery of the
securities or possible loss of rights in the collateral
should the borrower
fail financially. Loans will be made to firms deemed by the
adviser to the
Underlying Smith Barney Fund to be of good standing and will
not be made
unless, in the judgment of the adviser, the consideration to
be earned from
such loans would justify the risk.
When-Issued Securities and Delayed-Delivery Transactions.
The purchase of
securities on a when-issued or delayed-delivery basis
involves the risk that,
as a result of an increase in yields available in the
marketplace, the value
of the securities purchased will decline prior to the
settlement date. The
sale of securities for delayed delivery involves the risk
that the prices
available in the market on the delivery date may be greater
than those
obtained in the sale transaction.
Non-Diversified Funds. Certain of the Underlying Smith
Barney Funds are clas-
sified as non-diversified investment companies under the
1940 Act. Since, as a
non-diversified fund, such an Underlying Smith Barney Fund
is permitted to
invest a greater proportion of its assets in the securities
of a smaller num-
ber of issuers, each such Fund may be subject to greater
risk with respect to
its individual portfolio than a Fund that is more broadly
diversified.
Securities of Unseasoned Issuers. Securities in which
certain of the Under-
lying Smith Barney Funds may invest may have limited
marketability and, there-
fore, may be subject to wide fluctuations in market value.
In addition, cer-
tain securities may lack a significant operating history and
be dependent on
products or services without an established market share.
Convertible Securities and Synthetic Convertible
Securities. While convert-
ible securities generally offer lower yields than non-
convertible debt securi-
ties of similar quality, their prices may reflect changes in
the value of the
underlying common stock. Convertible securities entail less
credit risk than
the issuer's common stock.
Synthetic convertible securities are created by combining
non-convertible
bonds or preferred stocks with warrants or stock call
options. Synthetic con-
vertible securities differ from convertible securities in
certain respects,
including that each component of a synthetic convertible
security has a sepa-
rate market value and responds differently to market
fluctuations. Investing
in synthetic convertible securities involves the risks
normally involved in
holding the securities comprising the synthetic convertible
security.
Securities of Developing Countries. A developing country
generally is consid-
ered to be a country that is in the initial stages of its
industrialization
cycle. Investing in the equity and fixed-income markets of
developing coun-
tries involves exposure to economic structures that are
generally less diverse
and mature, and to political systems that can be expected to
have less stabil-
ity, than those of developed countries. Historical
experience indicates that
the markets of developing countries have been more volatile
than the markets
of the more mature economies of developed countries;
however, such markets
often have provided higher rates of return to investors.
Sovereign Debt Obligations. Sovereign debt of developing
countries may
involve a high degree of risk, and may be in default or
present the risk of
default. Governmental entities responsible for repayment of
the debt may be
unable or unwilling to repay principal and interest when
due, and may require
renegotiation or rescheduling of debt payments. In addition,
pros-
A-1
<PAGE>
Smith Barney Concert Series Inc.
APPENDIX (CONTINUED)
pects for repaying of principal and interest may depend on
political as well as
economic factors. Although some sovereign debt, such as
Brady Bonds, is collat-
eralized by U.S. government securities, repayment of
principal and interest is
not guaranteed by the U.S. Government.
Restrictions on Foreign Investment. Some countries prohibit
or impose substan-
tial restrictions on investments in their capital markets,
particularly their
equity markets, by foreign entities. As illustrations,
certain countries
require governmental approval prior to investments by
foreign persons, or limit
the amount of investment by foreign persons in a particular
company, or limit
the investment by foreign persons to only a specific class
of securities of a
company that may have less advantageous terms than
securities of the company
available for purchase by nationals or limit the
repatriation of funds for a
period of time.
Smaller capital markets, while often growing in trading
volume, have substan-
tially less volume than U.S. markets, and securities in many
smaller capital
markets are less liquid and their prices may be more
volatile than securities
of comparable U.S. companies. Brokerage commissions,
custodial services, and
other costs relating to investment in smaller capital
markets are generally
more expensive than in the U.S. Such markets have different
clearance and set-
tlement procedures, and in certain markets there have been
times when settle-
ments have been unable to keep pace with the volume of
securities transactions,
making it difficult to conduct such transactions. Further,
satisfactory custo-
dial services for investment securities may not be available
in some countries
having smaller capital markets, which may result in an
Underlying Smith Barney
Fund incurring additional costs and delays in transporting
and custodying such
securities outside such countries. Delays in settlement
could result in tempo-
rary periods when assets of a Fund are uninvested and no
return is earned
thereon. The inability of an Underlying Smith Barney Fund to
make intended
security purchases due to settlement problems could cause
such Fund to miss
attractive investment opportunities. Inability to dispose of
a portfolio secu-
rity due to settlement problems could result either in
losses to the Fund due
to subsequent declines in value of the portfolio security
or, if the Fund has
entered into a contract to sell the security, could result
in possible liabil-
ity to the purchaser. There is generally less government
supervision and regu-
lation of exchanges, brokers and issuers in countries having
smaller capital
markets than there is in the U.S.
Mortgage-Related Securities. To the extent that an
Underlying Smith Barney
Fund purchases mortgage-related securities at a premium,
mortgage foreclosures
and prepayments of principal by mortgagors (which may be
made at any time with-
out penalty) may result in some loss of the Fund's principal
investment to the
extent of the premium paid. The Underlying Smith Barney
Fund's yield may be
affected by reinvestment of prepayments at higher or lower
rates than the orig-
inal investment. In addition, like other debt securities,
the values of mort-
gage-related securities, including government and government-
related mortgage
pools, generally will fluctuate in response to market
interest rates.
Non-Publicly Traded and Illiquid Securities. The sale of
securities that are
not publicly traded is typically restricted under the
Federal securities laws.
As a result, an Underlying Smith Barney Fund may be forced
to sell these secu-
rities at less than fair market value or may not be able to
sell them when the
Fund's adviser believes it desirable to do so. Investments
by an Underlying
Smith Barney Fund in illiquid securities are subject to the
risk that should
the Fund desire to sell any of these securities when a ready
buyer is not
available at a price that the Fund's adviser deems
representative of its value,
the value of the Underlying Smith Barney Fund's net assets
could be adversely
affected.
Short Sales. Possible losses from short sales differ from
losses that could be
incurred from a purchase of a security, because losses from
short sales may be
unlimited, whereas losses from purchases can equal only the
total amount
invested.
Forward Roll Transactions. Forward roll transactions
involve the risk that the
market value of the securities sold by an Underlying Smith
Barney Fund may
decline below the repurchase price of the securities.
Forward roll transactions
are considered borrowings by a Fund. Although investing the
proceeds of these
borrowings in repurchase agreements or money market
instruments may provide an
Underlying Smith Barney Fund with the opportunity for higher
income, this
leveraging practice will increase a Fund's exposure to
capital risk and higher
current expenses. Any income earned from the securities
purchased with the pro-
ceeds of these borrowings that exceeds the cost of the
borrowings would cause a
Fund's net asset value per share to increase faster than
would otherwise be the
case; any decline in the value of the securities purchased
would cause a Fund's
net asset value per share to decrease faster than would
otherwise be the case.
Leverage. Certain of the Underlying Smith Barney Funds may
borrow from banks,
on a secured or unsecured basis, in order to leverage their
portfolios. Lever-
age creates an opportunity for increased returns to
shareholders of an Under-
lying
A-2
<PAGE>
Smith Barney Concert Series Inc.
APPENDIX (CONTINUED)
Smith Barney Fund but, at the same time, creates special
risk considerations.
For example, leverage may exaggerate changes in the net
asset value of a Fund's
shares and in a Fund's yield. Although the principal or
stated value of such
borrowings will be fixed, the Fund's assets may change in
value during the time
the borrowing is outstanding. Leverage will create interest
or dividend
expenses for the Fund that can exceed the income from the
assets retained. To
the extent the income or other gain derived from securities
purchased with bor-
rowed funds exceeds the interest or dividends the Fund will
have to pay in
respect thereof, the Fund's net income or other gain will be
greater than if
leverage had not been used. Conversely, if the income or
other gain from the
incremental assets is not sufficient to cover the cost of
leverage, the net
income or other gain of the Fund will be less than if
leverage had not been
used. If the amount of income for the incremental securities
is insufficient to
cover the cost of borrowing, securities might have to be
liquidated to obtain
required funds. Depending on market or other conditions,
such liquidations
could be disadvantageous to the Underlying Smith Barney
Fund.
Floating and Variable Rate Income Securities. Floating and
variable rate
income securities include securities whose rates vary
inversely with changes in
market rates of interest. Such securities may also pay a
rate of interest
determined by applying a multiple to the variable rate. The
extent of increases
and decreases in the value of securities whose rates vary
inversely with
changes in market rates of interest generally will be larger
than comparable
changes in the value of an equal principal amount of a fixed
rate security hav-
ing similar credit quality, redemption provisions and
maturity.
Zero Coupon, Discount and Payment-in-Kind Securities. Zero
coupon securities
generally pay no cash interest (or dividends in the case of
preferred stock) to
their holders prior to maturity. Payment-in-kind securities
allow the lender,
at its option, to make current interest payments on such
securities either in
cash or in additional securities. Accordingly, such
securities usually are
issued and traded at a deep discount from their face or par
value and generally
are subject to greater fluctuations of market value in
response to changing
interest rates than securities of comparable maturities and
credit quality that
pay cash interest (or dividends in the case of preferred
stock) on a current
basis.
Premium Securities. Premium securities are income
securities bearing coupon
rates higher than prevailing market rates. Premium
securities are typically
purchased at prices greater than the principal amounts
payable on maturity. If
securities purchased by an Underlying Smith Barney Fund at a
premium are called
or sold prior to maturity, the Fund will recognize a capital
loss to the extent
the call or sale price is less than the purchase price.
Additionally, the Fund
will recognize a capital loss if it holds such securities to
maturity.
Yankee Bonds. Yankee bonds are U.S. dollar-denominated
bonds sold in the U.S.
by non-U.S. issuers. As compared with bonds issued in the
U.S., such bond
issues normally carry a higher interest rate but are less
actively traded.
Swap Agreements. As one way of managing its exposure to
different types of
investments, certain of the Underlying Smith Barney Funds
may enter into inter-
est rate swaps, currency swaps, and other types of swap
agreements such as
caps, collars, and floors. Swap agreements can be highly
volatile and may have
a considerable impact on a Fund's performance. Swap
agreements are subject to
risks related to the counterparty's ability to perform, and
may decline in
value if the counterparty's creditworthiness deteriorates. A
Fund may also suf-
fer losses if it is unable to terminate outstanding swap
agreements or reduce
its exposure through offsetting transactions.
Indexed Securities. Certain of the Underlying Smith Barney
Funds may invest in
indexed securities, including inverse floaters, whose value
is linked to cur-
rencies, interest rates, commodities, indices, or other
financial indicators.
Indexed securities may be positively or negatively indexed
(i.e., their value
may increase or decrease if the underlying instrument
appreciates), and may
have return characteristics similar to direct investments in
the underlying
instrument or to one or more options on the underlying
instrument. Indexed
securities may be more volatile than the underlying
instrument itself.
Investment in Utility Securities. The Smith Barney
Utilities Fund is particu-
larly subject to risks that are inherent to the utility
industries, including
difficulty in obtaining an adequate return on invested
capital, difficulty in
financing large construction programs during an inflationary
period, restric-
tions on operations and increased cost and delays
attributable to environmental
considerations and regulation, difficulty in raising capital
in adequate
amounts on reasonable terms in periods of high inflation and
unsettled capital
markets, increased costs and reduced availability of certain
types of fuel,
occasional reduced availability and high costs of natural
gas for resales, the
effects of energy conservation, the effects of a national
energy policy and
lengthy delays and greatly increased costs and other
problems associated with
the design, construction, licensing, regulation and
operation of nuclear facil-
ities for electric generation, including, among other
considerations, the prob-
lems associated
A-3
<PAGE>
Smith Barney Concert Series Inc.
APPENDIX (CONTINUED)
with the use of radioactive materials and the disposal of
radioactive wastes.
There are substantial differences between the regulatory
practices and policies
of various jurisdictions, and any given regulatory agency
may make major shifts
in policy from time to time. There is no assurance that
regulatory authorities
will grant rate increases in the future or that such
increases will be adequate
to permit the payment of dividends on common stocks.
Additionally, existing and
possible future regulatory legislation may make it even more
difficult for
these utilities to obtain adequate relief. Certain of the
issuers of securities
held by the Smith Barney Utilities Fund may own or operate
nuclear generating
facilities. Governmental authorities may from time to time
review existing pol-
icies, and impose additional requirements governing the
licensing, construction
and operation of nuclear power plants.
Each of the risks referred to above could adversely affect
the ability and
inclination of public utilities to declare or pay dividends
and the ability of
holders of common stock to realize any value from the assets
of the issuer upon
liquidation or bankruptcy. All of the utilities that are
issuers of the securi-
ties held by the Smith Barney Utilities Fund have been
experiencing one or more
of these problems in varying degrees. Moreover, price
disparities within
selected utility groups and discrepancies in relation to
averages and indices
have occurred frequently for reasons not directly related to
the general move-
ments or price trends of utility common stocks. Causes of
these discrepancies
include changes in the overall demand for and supply of
various securities (in-
cluding the potentially depressing effect of new stock
offerings), and changes
in investment objectives, market expectations or cash
requirements of other
purchasers and sellers of securities.
A-4
<PAGE>
- ------------------------------------------------------------
- --------------------
Smith
Barney
Concert
Series
Inc.
3100 Breckenridge Blvd, Bldg 200
Duluth, Georgia 30199-0062
FDXXXX XX
Part B
Statement of Additional Information
August 5, 1996
Smith Barney Concert Series Inc.
388 Greenwich Street, New York, New York 10013 (212) 723-
9218
This Statement of Additional Information expands upon and
supplements the information contained in the current
Prospectuses of Smith Barney Concert Series Inc. (the
"Concert Series") dated August 5, 1996, as amended
or supplemented from time to time (collectively the
"Prospectus"), and should be read in conjunction therewith.
The Concert Series currently offers five investment
portfolios (individually, a "Portfolio" and collectively,
the "Portfolios"). Each Portfolio seeks to achieve its
objective by investing in a number of open-end management
investment companies or series thereof ("Underlying
Smith Barney Funds") for which Smith Barney Inc.
("Smith Barney") now or in the future acts as principal
underwriter or for which Smith Barney, Smith Barney Mutual
Funds Management Inc. ("SBMFM") or Smith Barney Strategy
Advisers Inc. ("SBSA") now or in the future acts as
investment adviser. The Portf olios may also invest in
repurchase agreements. The Concert Series' Prospectus may be
obtained from a Smith Barney Financial Consultant or an
Investment Representative of PFS Distributors, Inc. ("PFS"),
or by writing or calling the Concert Series at the address
or telephone number listed above. This Statement of
Additional Information, although not in itself a prospectus,
is incorporated by reference into the Prospectus in its
entirety.
TABLE OF CONTENTS
For ease of reference, the same section headings are used in
the Prospectus and this Statement of Additional Information,
except as shown below:
Caption Page
Management Of The Concert Series 2
Investment Objectives And Management Policies 4
Purchase Of Shares 20
Redemption Of Shares 21
Distributors 21
Valuation Of Shares 23
Exchange Privilege 23
IRA And Other Prototype Plans 24
Performance 25
Taxes (See In The Prospectus "Dividends, Distributions And
Taxes") 26
Voting (See In The Prospectus "Additional Information")
29
Additional Information 29
Financial Statement 29
Appendix - Ratings Of Debt Obligations A-1
MANAGEMENT OF THE CONCERT SERIES
The executive officers of the Concert Series are employees
of certain of the organizations that provide services to the
Concert Series. These organizations are the following:
Smith Barney and PFS Distributors
SBMFM Investment Manager
PNC Bank, National Association ("PNC Bank") Custodian
First Data Investor Services Group, Inc. ("First Data"),
a subsidiary of First Data Corporation Transfer Agent
PFS Shareholder Services (the "Sub-Transfer Agent") Sub-
Transfer Agent
These organizations and the functions they perform for the
Concert Series are discussed in the Prospectus and in this
Statement of Additional Information.
Directors and Executive Officers of the Concert Series
The names of the directors and executive officers of the
Concert Series, together with information as to their
principal business occupations during the past five years,
are shown below. Each director who is an "interested
person" of the Concert Series, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), is
indicated by an asterisk.
Walter E. Auch, Director (Age 75). Consultant to
companies in the financial services industry; Director of
Pimco Advisers L.P. His address is 6001 N. 62nd Place,
Paradise Valley, Arizona 85253.
Martin Brody, Director (Age 74). Vice Chairman of
the Board of Restaurant Associates Industries, Inc. His
address is c/o HMK Associates, 30 Columbia Turnpike, Florham
Park, New Jersey 07932.
H. John Ellis, Jr., Director (Age 67). Prior to 1992,
Executive Vice President of the Consulting Services Division
of Shearson Lehman Brothers Inc. ("Shearson Lehman
Brothers"). His address is 858 East Crystal Downs Drive,
Frankfort, Michigan 49635.
Stephen E. Kaufman, Director (Age 64). Attorney. His
address is 277 Park Avenue, New York, New York 10172.
Armon E. Kamesar, Director (Age 67). Chairman of TEC,
an international organization of Chief Executive Officers;
Trustee, U.S. Bankruptcy Court. His address is 7328 Country
Club Drive, LaJolla, California 92037.
*Heath B. McLendon, Chairman of the Board (Age 63).
Managing Director of Smith Barney, Chairman of the Board of
Smith Barney Strategy Advisers Inc. and President of SBMFM;
prior to July 1993, Senior Executive Vice President of
Shearson Lehman Brothers, Vice Chairman of Asset Management
Division of Shearson Lehman Brothers. Mr. McLendon also
serves as Chairman of the Board of 42 investment companies
sponsored by Smith Barney ("Smith Barney Mutual Funds").
His address is 388 Greenwich Street, New York, New York
10013.
Madelon DeVoe Talley, Director (Age 63). Author.
Governor-at-large of the National Association of Securities
Dealers, Inc. Her address is 876 Park Avenue, New York, New
York 10021.
Jessica M. Bibliowicz, President (Age 36). Executive
Vice President of Smith Barney; prior to 1994, Director of
Sales and Marketing for Prudential Mutual Funds. Ms.
Bibliowicz also serves as President of 40 Smith Barney
Mutual Funds. Her address is 388 Greenwich Street, New
York, New York 10013.
Lewis E. Daidone, Senior Vice President and
Treasurer (Age 38). Managing Director of Smith Barney;
Director and Senior Vice President of SBMFM. Mr. Daidone
also serves as Senior Vice President and Treasurer of 42
Smith Barney Mutual Funds. His address is 388 Greenwich
Street, New York, New York 10013.
Christina T. Sydor, Secretary (Age 45). Managing
Director of Smith Barney; General Counsel and Secretary of
SBMFM. Ms. Sydor also serves as Secretary of 42 Smith
Barney Mutual Funds. Her address is 388 Greenwich Street,
New York, New York 10013.
No officer, director or employee of Smith Barney, PFS or any
of their affiliates will receive any compensation from the
Concert Series for serving as an officer or director of the
Concert Series. The Concert Series pays each director who
is not an officer, director or employee of Smith Barney, PFS
or any of their affiliates a fee of $5,000 per annum plus
$100 per Portfolio per meeting attended and reimburses
travel and out-of-pocket expenses.
The following table shows the estimated compensation to be
provided by Concert Series to the directors during its first
fiscal year and compensation paid to such directors during
the 1995 calendar year by other Smith Barney Mutual Funds:
Compensation Table
Total
Pension or Total Number
Retirement Benefits Estimated Compensation of Funds
Aggregate Accrued as Expense Benefits on From
Served in
Name Compensation of Concert Series Retirement
Fund Complex Complex
Heath B. McLendon None None None None 41
Walter Auch $ 7,000 None None $ 19,500 2
Martin Brody 7,000 None None 103,625 15
H. John Ellis 7,000 None None None 1
Armon E. Kamesar 7,000 None None 19,500 1
Stephen E. Kaufman 7,000 None None 83,600 10
Madelon DeVoe Talley 7,000 None None 63,500
3
Investment Manager - SBMFM
SBMFM acts as investment manager to each Portfolio pursuant
to separate asset allocation and administration agreements
(the "Asset Allocation and Administration Agreements").
SBMFM is a wholly owned subsidiary of Smith Barney Holdings
Inc. ("Holdings") and Holdings is a wholly owned subsidiary
of Travelers Group Inc. ("Travelers"). The Asset
Allocation and Administration Agreements with respect to
each Portfolio were approved by the Board of Directors,
including a majority of the directors who are not
"interested persons" of the Concert Series or SBMFM (the
"Independent Directors"), on December 14, 1995 and by
the initial shareholder of the respective Portfolios on
January 31, 1996. Pursuant to the Asset Allocation and
Administration Agreements, SBMFM will determine how each
Portfolio's assets will be invested in the Underlying Smith
Barney Funds and in repurchase agreements pursuant to the
investment objectives and policies of each Portfolio set
forth in the Prospectus and make recommendations to the
Board of Directors concerning changes to (a) the Underlying
Smith Barney Funds in which the Portfolios may invest, (b)
the percentage range of assets that may be invested by each
Portfolio in any one Underlying Smith Barney Fund and (c)
the percentage range of assets of any Portfolio that may be
invested in equity funds and fixed income funds (including
money market funds). In addition to such services, SBMFM
pays the salaries of all officers and employees who are
employed by both it and the Concert Series, maintains office
facilities for the Concert Series, furnishes the Concert
Series with statistical and research data, clerical help and
accounting, data processing, bookkeeping, internal auditing
and legal services and certain other services required by
the Concert Series and each Portfolio, prepares reports to
each Portfolio's shareholders and prepares tax returns,
reports to and filings with the Securities and Exchange
Commission (the "SEC") and state Blue Sky authorities.
SBMFM provides investment advisory and management services
to investment companies affiliated with Smith Barney.
The management fee for each Portfolio is calculated at the
annual rate of 0.35% of that Portfolio's average daily net
assets. Under the Asset Allocation and Administration
Agreements, SBMFM has agreed to bear all expenses incurred
in the operation of each Portfolio other than the management
fee, the fees payable pursuant to the plan adopted pursuant
to Rule 12b-1 under the 1940 Act and extraordinary expenses.
Such expenses include taxes, interest, brokerage fees and
commissions, if any; fees of directors who are not officers,
directors, shareholders or employees of Smith Barney or
SBMFM; SEC fees and state Blue Sky qualification fees;
charges of custodians; transfer and dividend disbursing
agent's fees; certain insurance premiums; outside auditing
and legal expenses; costs of maintenance of corporate
existence; investor services (including allocated telephone
and personnel expenses); and costs of preparation and
printing of the prospectus for regulatory purposes and for
distribution to existing shareholders; cost of shareholders'
reports and shareholder meetings and meetings of the
officers or Board of Directors of the Concert Series.
Counsel and Auditors
Willkie Farr & Gallagher serves as legal counsel to the
Concert Series. The Independent Directors of the
Concert Series have selected Stroock & Stroock & Lavan as
their legal counsel.
KPMG Peat Marwick LLP, independent accountants, 345 Park
Avenue, New York, New York 10154, have been selected as
auditors for the Concert Series and will render an opinion
on the Concert Series' financial statements annually.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The Prospectus discusses the investment objectives of the
Portfolios and each of the Underlying Smith Barney Funds in
which the Portfolios may invest, as well as the policies
employed to achieve those objectives. This section contains
supplemental information concerning the types of securities
and other instruments in which the Underlying Smith Barney
Funds may invest (and repurchase agreements in which the
Portfolios and/or the Underlying Smith Barney Funds may
invest), the investment policies and portfolio strategies
the Underlying Smith Barney Funds may utilize and certain
risks attendant to such investments, policies and
strategies. There can be no assurance that the respective
investment objectives of the Portfolios or the Underlying
Smith Barney Funds will be achieved.
The Articles of Incorporation of the Concert Series permit
the Board of Directors to establish additional Portfolios of
the Concert Series from time to time. The investment
objectives, policies and restrictions applicable to
additional Portfolios would be established by the Board of
Directors at the time such Portfolios were established and
may differ from those set forth in the Prospectus and this
Statement of Additional Information.
MONEY MARKET INSTRUMENTS. Each of the Underlying Smith
Barney Funds may invest in certain types of money market
instruments which may include: U.S. government securities;
certificates of deposit ("CDs"), time deposits ("TDs") and
bankers' acceptances issued by domestic banks (including
their branches located outside the United States and
subsidiaries located in Canada), domestic branches of
foreign banks, savings and loan associations and similar
institutions; high grade commercial paper; and repurchase
agreements with respect to the foregoing types of
instruments. The following is a more detailed description
of such money market instruments.
U.S. GOVERNMENT SECURITIES. U.S. government securities
include debt obligations of varying maturities issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities. U.S. government securities include not
only direct obligations of the U.S. Treasury, but also
securities issued or guaranteed by the Federal Housing
Administration, Farmers Home Administration, Export-Import
Bank of the United States, Small Business Administration,
Government National Mortgage Association ("GNMA"), General
Services Administration, Central Bank for Cooperatives,
Federal Intermediate Credit Banks, Federal Land Banks,
Federal National Mortgage Association ("FNMA"), Maritime
Administration, Tennessee Valley Authority, District of
Columbia Armory Board, Student Loan Marketing Association,
International Bank for Reconstruction and Development and
Resolution Trust Corporation. Certain U.S. government
securities, such as those issued or guaranteed by GNMA, FNMA
and Federal Home Loan Mortgage Corporation ("FHLMC"), are
mortgage-related securities. Because the U.S. Government is
not obligated by law to provide support to an
instrumentality that it sponsors, a Portfolio or an
Underlying Smith Barney Fund will invest in obligations
issued by such an instrumentality only if its investment
adviser determines that the credit risk with respect to the
instrumentality does not make its securities unsuitable for
investment by the Portfolio or the Fund, as the case may be.
BANK OBLIGATIONS. Domestic commercial banks organized under
Federal law are supervised and examined by the Comptroller
of the Currency and are required to be members of the
Federal Reserve System and to be insured by the Federal
Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by
state banking authorities but are members of the Federal
Reserve System only if they elect to join. Most state banks
are insured by the FDIC (although such insurance may not be
of material benefit to an Underlying Smith Barney Fund,
depending upon the principal amount of certificates of
deposit ("CDs") of each held by the Fund) and are subject to
Federal examination and to a substantial body of Federal law
and regulation. As a result of Federal and state laws and
regulations, domestic branches of domestic banks are, among
other things, generally required to maintain specified
levels of reserves, and are subject to other supervision and
regulation designed to promote financial soundness.
Obligations of foreign branches of U.S. banks, such as CDs
and TDs, may be general obligations of the parent bank in
addition to the issuing branch, or may be limited by the
terms of a specific obligation and governmental regulation.
Obligations of foreign branches of U.S. banks and foreign
banks are subject to different risks than are those of U.S.
banks or U.S. branches of foreign banks. These risks
include foreign economic and political developments, foreign
governmental restrictions that may adversely affect payment
of principal and interest on the obligations, foreign
exchange controls and foreign withholding and other taxes on
interest income. Foreign branches of U.S. banks are not
necessarily subject to the same or similar regulatory
requirements that apply to U.S. banks, such as mandatory
reserve requirements, loan limitations and accounting,
auditing and financial recordkeeping requirements. In
addition, less information may be publicly available about a
foreign branch of a U.S. bank than about a U.S. bank. CDs
issued by wholly owned Canadian subsidiaries of U.S. banks
are guaranteed as to repayment of principal and interest,
but not as to sovereign risk, by the U.S. parent bank.
Obligations of U.S. branches of foreign banks may be general
obligations of the parent bank in addition to the issuing
branch, or may be limited by the terms of a specific
obligation and by Federal and state regulation as well as
governmental action in the country in which the foreign bank
has its head office. A U.S. branch of a foreign bank with
assets in excess of $1 billion may or may not be subject to
reserve requirements imposed by the Federal Reserve System
or by the state in which the branch is located if the branch
is licensed in that state. In addition, branches licensed
by the Comptroller of the Currency and branches licensed by
certain states ("State Branches") may or may not be required
to: (a) pledge to the regulator by depositing assets with a
designated bank within the state, an amount of its assets
equal to 5% of its total liabilities; and (b) maintain
assets within the state in an amount equal to a specified
percentage of the aggregate amount of liabilities of the
foreign bank payable at or through all of its agencies or
branches within the state. The deposits of State Branches
may not necessarily be insured by the FDIC. In addition,
there may be less publicly available information about a
U.S. branch of a foreign bank than about a U.S. bank.
COMMERCIAL PAPER. Commercial paper consists of short-term
(usually from 1 to 270 days) unsecured promissory notes
issued by corporations in order to finance their current
operations. A variable amount master demand note (which is
a type of commercial paper) represents a direct borrowing
arrangement involving periodically fluctuating rates of
interest under a letter agreement between a commercial paper
issuer and an institutional lender, such as one of the
Underlying Smith Barney Funds, pursuant to which the lender
may determine to invest varying amounts. Transfer of such
notes is usually restricted by the issuer, and there is no
secondary trading market for such notes.
REPURCHASE AGREEMENTS. The Portfolios and the Underlying
Smith Barney Funds may purchase securities and concurrently
enter into repurchase agreements with certain member banks
which are the issuers of instruments acceptable for purchase
by the Portfolio or the Fund, as the case may be, and with
certain dealers on the Federal Reserve Bank of New York's
list of reporting dealers. Repurchase agreements are
contracts under which the buyer of a security simultaneously
commits to resell the security to the seller at an agreed-
upon price and date. 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 a Portfolio's or a 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 Portfolio or 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 repurchase agreement.
WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. To
secure an advantageous price or yield, certain of the
Underlying Smith Barney Funds may purchase certain
securities on a when-issued basis or purchase or sell
securities for delayed delivery. Delivery of the securities
in such cases occurs beyond the normal settlement periods,
but no payment or delivery is made by a Fund prior to the
reciprocal delivery or payment by the other party to the
transaction. In entering into a when-issued or delayed-
delivery transaction, an Underlying Smith Barney Fund will
rely on the other party to consummate the transaction and
may be disadvantaged if the other party fails to do so.
U.S. government securities normally are subject to changes
in value based upon changes, real or anticipated, in the
level of interest rates and the public's perception of the
creditworthiness of the issuers. In general, U.S.
government securities tend to appreciate when interest rates
decline and depreciate when interest rates rise. Purchasing
these securities on a when-issued or delayed-delivery 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.
Similarly, the sale of U.S. government securities for
delayed delivery can involve the risk that the prices
available in the market when the delivery is made may
actually be higher than those obtained in the transaction
itself.
In the case of the purchase by an Underlying Smith Barney
Fund of securities on a when-issued or delayed-delivery
basis, a segregated account in the name of the Fund
consisting of cash or liquid debt securities equal to the
amount of the when-issued or delayed-delivery commitments
will be established at the Fund's custodian. For the
purpose of determining the adequacy of the securities in the
accounts, the deposited securities will be valued at market
or fair value. If the market or fair value of the
securities declines, additional cash or securities will be
placed in the account daily so that the value of the account
will equal the amount of such commitments by the Fund
involved. On the settlement date, a Fund will meet its
obligations from then-available cash flow, the sale of
securities held in the segregated account, the sale of other
securities or, although it would not normally expect to do
so, from the sale of the securities purchased on a when-
issued or delayed-delivery basis (which may have a value
greater or less than the Fund's payment obligations).
LENDING OF PORTFOLIO SECURITIES. Certain of the Underlying
Smith Barney Funds have the ability to lend portfolio
securities to brokers, dealers and other financial
organizations. A Fund will not lend portfolio securities to
Smith Barney unless it has applied for and received specific
authority to do so from the SEC. Loans of portfolio
securities will be collateralized by cash, letters of credit
or U.S. government securities which are maintained at all
times in an amount at least equal to the current market
value of the loaned securities. From time to time, an
Underlying Smith Barney Fund may pay a part of the interest
earned from the investment of collateral received for
securities loaned to the borrower and/or a third party which
is unaffiliated with the Fund and is acting as a "finder."
By lending its securities, an Underlying Smith Barney Fund
can increase its income by continuing to receive interest on
the loaned securities as well as by either investing the
cash collateral in short-term instruments or obtaining yield
in the form of interest paid by the borrower when U.S.
government securities are used as collateral. A Fund will
comply with the following conditions whenever its portfolio
securities are loaned: (a) the Fund must receive at least
100% cash collateral or equivalent securities from the
borrower; (b) the borrower must increase such collateral
whenever the market value of the securities loaned rises
above the level of such collateral; (c) the Fund must be
able to terminate the loan at any time; (d) the Fund must
receive reasonable interest on the loan, as well as any
dividends, interest or other distributions on the loaned
securities, and any increase in market value; (e) the Fund
may pay only reasonable custodian fees in connection with
the loan; and (f) voting rights on the loaned securities may
pass to the borrower; provided, however, that if a material
event adversely affecting the investment in the loaned
securities occurs, the Fund's trustees or directors, as the
case may be, must terminate the loan and regain the right to
vote the securities. The risks in lending portfolio
securities, as with other extensions of secured credit,
consist of a possible delay in receiving additional
collateral or in the recovery of the securities or possible
loss of rights in the collateral should the borrower fail
financially. Loans will be made to firms deemed by each
Underlying Smith Barney Fund's investment adviser to be of
good standing and will not be made unless, in the judgment
of the adviser, the consideration to be earned from such
loans would justify the risk.
OPTIONS ON SECURITIES. Certain of the Underlying Smith
Barney Funds may engage in transactions in options on
securities, which, depending on the Fund, may include the
writing of covered put options and covered call options, the
purchase of put and call options and the entry into closing
transactions.
The principal reason for writing covered call options on
securities is to attempt to realize, through the receipt of
premiums, a greater return than would be realized on the
securities alone. Certain Underlying Smith Barney Funds,
however, may engage in option transactions only to hedge
against adverse price movements in the securities that it
holds or may wish to purchase and the currencies in which
certain portfolio securities may be denominated. In return
for a premium, the writer of a covered call option forfeits
the right to any appreciation in the value of the underlying
security above the strike price for the life of the option
(or until a closing purchase transaction can be effected).
Nevertheless, the call writer retains the risk of a decline
in the price of the underlying security. Similarly, the
principal reason for writing covered put options is to
realize income in the form of premiums. The writer of a
covered put option accepts the risk of a decline in the
price of the underlying security. The size of the premiums
that a Fund may receive may be adversely affected as new or
existing institutions, including other investment companies,
engage in or increase their option-writing activities.
Options written by an Underlying Smith Barney Fund normally
will have expiration dates between one and nine months from
the date written. The exercise price of the options may be
below, equal to or above the market values of the underlying
securities at the times the options are written. In the
case of call options, these exercise prices are referred to
as "in-the-money," "at-the-money" and "out-of-the-money,"
respectively. An Underlying Smith Barney Fund with option-
writing authority may write (a) in-the-money call options
when its investment adviser expects that the price of the
underlying security will remain flat or decline moderately
during the option period, (b) at-the-money call options when
its adviser expects that the price of the underlying
security will remain flat or advance moderately during the
option period and (c) out-of-the-money call options when its
adviser expects that the price of the underlying security
may increase but not above a price equal to the sum of the
exercise price plus the premiums received from writing the
call option. In any of the preceding situations, if the
market price of the underlying security declines and the
security is sold at this lower price, the amount of any
realized loss will be offset wholly or in part by the
premium received. Out-of-the-money, at-the-money and in-the-
money put options (the reverse of call options as to the
relation of exercise price to market price) may be utilized
in the same market environments that such call options are
used in equivalent transactions.
So long as the obligation of an Underlying Smith Barney Fund
as the writer of an option continues, the Fund may be
assigned an exercise notice by the broker-dealer through
which the option was sold, requiring the Fund to deliver, in
the case of a call, or take delivery of, in the case of a
put, the underlying security against payment of the exercise
price. This obligation terminates when the option expires
or the Fund effects a closing purchase transaction. A Fund
can no longer effect a closing purchase transaction with
respect to an option once it has been assigned an exercise
notice. To secure its obligation to deliver the underlying
security when it writes a call option, or to pay for the
underlying security when it writes a put option, an
Underlying Smith Barney Fund will be required to deposit in
escrow the underlying security or other assets in accordance
with the rules of the Options Clearing Corporation (the
"Clearing Corporation") or similar foreign clearing
corporation and of the securities exchange on which the
option is written.
Certain Underlying Smith Barney Funds may purchase and sell
put, call and other types of option securities that are
traded on domestic or foreign exchanges or the over-the-
counter market including, but not limited to, "spread"
options, "knock-out" options, "knock-in" options and
"average rate" or "look-back" options. "Spread" options are
dependent upon the difference between the price of two
securities or futures contracts, "knock-out" options are
canceled if the price of the underlying asset reaches a
trigger level prior to expiration, "knock-in" options only
have value if the price of the underlying asset reaches a
trigger level and, "average rate" or "look-back" options are
options where, at expiration, the option's strike price is
set based on either the average, maximum or minimum price of
the asset over the period of the option.
An option position may be closed out only where there exists
a secondary market for an option of the same series on a
recognized securities exchange or in the over-the-counter
market. Certain Underlying Smith Barney Funds with option-
writing authority may write options on U.S. or foreign
exchanges and in the over-the-counter market.
An Underlying Smith Barney Fund may realize a profit or loss
upon entering into a closing transaction. In cases in which
a Fund has written an option, it will realize a profit if
the cost of the closing purchase transaction is less than
the premium received upon writing the original option and
will incur a loss if the cost of the closing purchase
transaction exceeds the premium received upon writing the
original option. Similarly, when a Fund has purchased an
option and engages in a closing sale transaction, whether
the Fund realizes a profit or loss will depend upon whether
the amount received in the closing sale transaction is more
or less than the premium that the Fund initially paid for
the original option plus the related transaction costs.
Although an Underlying Smith Barney Fund generally will
purchase or write only those options for which its adviser
believes there is an active secondary market so as to
facilitate closing transactions, there is no assurance that
sufficient trading interest to create a liquid secondary
market on a securities exchange will exist for any
particular option or at any particular time, and for some
options no such secondary market may exist. A liquid
secondary market in an option may cease to exist for a
variety of reasons. In the past, for example, higher than
anticipated trading activity or order flow, or other
unforeseen events, have at times rendered inadequate certain
of the facilities of the Clearing Corporation and U.S. and
foreign securities exchanges and resulted in the institution
of special procedures, such as trading rotations,
restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise
interfere with the timely execution of customers' orders,
will not recur. In such event, it might not be possible to
effect closing transactions in particular options. If as a
covered call option writer a Fund is unable to effect
closing purchase transaction in a secondary market, it will
not be able to sell the underlying security until the option
expires or it delivers the underlying security upon
exercise.
Securities exchanges generally have established limitations
governing the maximum number of calls and puts of each class
which may be held or written, or exercised within certain
time periods, by an investor or group of investors acting in
concert (regardless of whether the options are written on
the same or different securities exchanges or are held,
written or exercised in one or more accounts or through one
or more brokers). It is possible that the Underlying Smith
Barney Funds with authority to engage in options
transactions and other clients of their respective advisers
and certain of their affiliates may be considered to be such
a group. A securities exchange may order the liquidation of
positions found to be in violation of these limits and it
may impose certain other sanctions.
In the case of options written by an Underlying Smith Barney
Fund that are deemed covered by virtue of the Fund's holding
convertible or exchangeable preferred stock or debt
securities, the time required to convert or exchange and
obtain physical delivery of the underlying common stocks
with respect to which the Fund has written options may
exceed the time within which the Fund must make delivery in
accordance with an exercise notice. In these instances, an
Underlying Smith Barney Fund may purchase or borrow
temporarily the underlying securities for purposes of
physical delivery. By so doing, the Fund will not bear any
market risk because the Fund will have the absolute right to
receive from the issuer of the underlying security an equal
number of shares to replace the borrowed stock, but the Fund
may incur additional transaction costs or interest expenses
in connection with any such purchase or borrowing.
Additional risks exist with respect to certain of the U.S.
government securities for which an Underlying Smith Barney
Fund may write covered call options. If a Fund writes
covered call options on mortgage-backed securities, the
securities that it holds as cover may, because of scheduled
amortization or unscheduled prepayments, cease to be
sufficient cover. The Fund will compensate for the decline
in the value of the cover by purchasing an appropriate
additional amount of those securities.
STOCK INDEX OPTIONS. Certain of the Underlying Smith Barney
Funds may purchase and write put and call options on U.S.
stock indexes listed on U.S. exchanges for the purpose of
hedging its portfolio. A stock index fluctuates with
changes in the market values of the stocks included in the
index. Some stock index options are based on a broad market
index such as the New York Stock Exchange Composite Index or
a narrower market index such as the Standard & Poor's 100.
Indexes also are based on an industry or market segment such
as the American Stock Exchange Oil and Gas Index or the
Computer and Business Equipment Index.
Options on stock indexes are similar to options on stock
except that (a) the expiration cycles of stock index options
are monthly, while those of stock options currently are
quarterly, and (b) the delivery requirements are different.
Instead of giving the right to take or make delivery of
stock at a specified price, an option on a stock index gives
the holder the right to receive a cash "exercise settlement
amount" equal to (a) the amount, if any, by which the fixed
exercise price of the option exceeds (in the case of a put)
or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by
(b) a fixed "index multiplier." Receipt of this cash amount
will depend upon the closing level of the stock index upon
which the option is based being greater than, in the case of
a call, or less than, in the case of a put, the exercise
price of the option. The amount of cash received will be
equal to such difference between the closing price of the
index and the exercise price of the option expressed in
dollars times a specified multiple. The writer of the
option is obligated, in return for the premium received, to
make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by
entering into a closing transaction on an exchange or it may
let the options expire unexercised.
The effectiveness of purchasing or writing stock index
options as a hedging technique will depend upon the extent
to which price movements in the portion of a securities
portfolio being hedged correlate with price movements of the
stock index selected. Because the value of an index option
depends upon movements in the level of the index rather than
the price of a particular stock, whether a Fund will realize
a gain or loss from the purchase or writing of options on an
index depends upon movements in the level of stock prices in
the stock market generally or, in the case of certain
indexes, in an industry or market segment, rather than
movements in the price of a particular stock. Accordingly,
successful use by a Fund of options on stock indexes will be
subject to its adviser's ability to predict correctly
movements in the direction of the stock market generally or
of a particular industry. This requires different skills
and techniques than predicting changes in the prices of
individual stocks.
An Underlying Smith Barney Fund will engage in stock index
options transactions only when determined by its adviser to
be consistent with the Fund's efforts to control risk.
There can be no assurance that such judgment will be
accurate or that the use of these portfolio strategies will
be successful. When a Fund writes an option on a stock
index, the Fund will establish a segregated account with its
custodian in an amount equal to the market value of the
option and will maintain the account while the option is
open.
MORTGAGE-RELATED SECURITIES. The average maturity of pass-
through pools of mortgage related securities varies with the
maturities of the underlying mortgage instruments. In
addition, a pool's stated maturity may be shortened by
unscheduled payments on the underlying mortgages. Factors
affecting mortgage prepayments include the level of interest
rates, general economic and social conditions, the location
of the mortgaged property and age of the mortgage. Because
prepayment rates of individual pools vary widely, it is not
possible to accurately predict the average life of a
particular pool. Common practice is to assume that
prepayments will result in an average life ranging from 2 to
10 years for pools of fixed-rate 30-year mortgages. Pools
of mortgages with other maturities or different
characteristics will have varying average life assumptions.
Mortgage-related securities may be classified as private,
governmental or government-related, depending on the issuer
or guarantor. Private mortgage-related securities represent
pass-through pools consisting principally of conventional
residential mortgage loans created by non-governmental
issuers, such as commercial banks, savings and loan
associations and private mortgage insurance companies.
Governmental mortgage-related securities are backed up by
the full faith and credit of the U.S. Government. GNMA, the
principal guarantor of such securities, is a wholly owned
U.S. government corporation within the Department of Housing
and Urban Development. Government-related mortgage-related
securities are not backed by the full faith and credit of
the U.S. Government. Issuers of such securities include
FNMA and FHLMC. FNMA is a government-sponsored corporation
owned entirely by private stockholders, which is subject to
general regulation by the Secretary of Housing and Urban
Development. Pass-through securities issued by FNMA are
guaranteed as to timely payment of principal and interest by
FNMA. FHLMC is a corporate instrumentality of the U.S., the
stock of which is owned by Federal Home Loan Banks.
Participation certificates representing interests in
mortgages from FHLMC's national portfolio are guaranteed as
to the timely payment of interest and ultimate collection of
principal by FHLMC.
Private U.S. governmental or government-related entities
create mortgage loan pools offering pass-through investments
in addition to those described above. The mortgages
underlying these securities may be alternative mortgage
instruments, that is, mortgage instruments whose principal
or interest payments may vary or whose terms to maturity may
be shorter than previously customary. As new types of
mortgage-related securities are developed and offered to
investors, certain of the Underlying Smith Barney Funds,
consistent with their investment objective and policies, may
consider making investments in such new types of securities.
CURRENCY TRANSACTIONS. Certain of the Underlying Smith
Barney Funds may enter into forward currency exchange
transactions. A forward currency contract is an obligation
to purchase or sell a currency against another currency at a
future date and price as agreed upon by the parties. An
Underlying Smith Barney Fund that enters into a forward
currency contract may either accept or make delivery of the
currency at the maturity of the forward contract or, prior
to maturity, enter into a closing transaction involving the
purchase or sale of an offsetting contract. A Fund may
engage in forward currency transactions in anticipation of,
or to protect itself against, fluctuations in exchange
rates. A Fund might sell a particular foreign currency
forward, for example, when it holds bonds denominated in
that currency but anticipates, and seeks to be protected
against, decline in the currency against the U.S. dollar.
Similarly, a Fund may sell the U.S. dollar forward when it
holds bonds denominated in U.S. dollars but anticipates, and
seeks to be protected against, a decline in the U.S. dollar
relative to other currencies. Further, a Fund may purchase
a currency forward to "lock in" the price of securities
denominated in that currency which it anticipates
purchasing.
Transaction hedging is the purchase or sale of forward
currency contracts with respect to a specific receivable or
payable of the Fund generally arising in connection with the
purchase or sale of its securities. Position hedging,
generally, is the sale of forward currency contracts with
respect to portfolio security positions denominated or
quoted in the currency. A Fund may not position hedge with
respect to a particular currency to an extent greater than
the aggregate market value at any time of the security or
securities held in its portfolio denominated or quoted in or
currently convertible (such as through exercise of an option
or consummation of a forward currency contract) into that
particular currency, except that certain Underlying Smith
Barney Funds may utilize forward currency contracts
denominated in the European Currency Unit to hedge portfolio
security positions when a security or securities are
denominated in currencies of member countries in the
European Monetary System. If a Fund enters into a
transaction hedging or position hedging transaction, it will
cover the transaction through one or more of the following
methods: (a) ownership of the underlying currency or an
option to purchase such currency; (b) ownership of an option
to enter into an offsetting forward currency contract; (c)
entering into a forward contract to purchase currency being
sold or to sell currency being purchased, provided that such
covering contract is itself covered by any one of these
methods unless the covering contract closes out the first
contract; or (d) depositing into a segregated account with
the custodian or a sub-custodian of the Fund cash or readily
marketable securities in an amount equal to the value of the
Fund's total assets committed to the consummation of the
forward currency contract and not otherwise covered. In the
case of transaction hedging, any securities placed in an
account must be liquid debt securities. In any case, if the
value of the securities placed in the segregated account
declines, additional cash or securities will be placed in
the account so that the value of the account will equal the
above amount. Hedging transactions may be made from any
foreign currency into dollars or into other appropriate
currencies.
At or before the maturity of a forward contract, a Fund
either may sell a portfolio security and make delivery of
the currency, or retain the security and offset its
contractual obligation to deliver the currency by purchasing
a second contract pursuant to which the relevant Fund will
obtain, on the same maturity date, the same amount of the
currency which it is obligated to deliver. If a Fund
retains the portfolio security and engages in an offsetting
transaction, the Fund, at the time of execution of the
offsetting transaction, will incur a gain or loss to the
extent movement has occurred in forward contract prices.
Should forward prices decline during the period between a
Fund's entering into a forward contract for the sale of a
currency and the date that it enters into an offsetting
contract for the purchase of the currency, the Fund will
realize a gain to the extent that the price of the currency
it has agreed to sell exceeds the price of the currency it
has agreed to purchase. Should forward prices increase, the
Fund will suffer a loss to the extent the price of the
currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell.
The cost to a Fund of engaging in currency transactions
varies with factors such as the currency involved, the
length of the contract period and the market conditions then
prevailing. Because transactions in currency exchange are
usually conducted on a principal basis, no fees or
commissions are involved. The use of forward currency
contracts does not eliminate fluctuations in the underlying
prices of the securities, but it does establish a rate of
exchange that can be achieved in the future. In addition,
although forward currency contracts limit the risk of loss
due to a decline in the value of the hedged currency, at the
same time, they limit any potential gain that might result
should the value of the currency increase. If a devaluation
is generally anticipated a Fund may not be able to contract
to sell the currency at a price above the devaluation level
they anticipate.
FOREIGN CURRENCY OPTIONS. Certain Underlying Smith Barney
Funds may purchase or write put and call options on foreign
currencies for the purpose of hedging against changes in
future currency exchange rates. Foreign currency options
generally have three, six and nine month expiration cycles.
Put options convey the right to sell the underlying currency
at a price which is anticipated to be higher than the spot
price of the currency at the time the option expires. Call
options convey the right to buy the underlying currency at a
price which is expected to be lower than the spot price of
the currency at the time that the option expires.
An Underlying Smith Barney Fund may use foreign currency
options under the same circumstances that it could use
forward currency exchange transactions. A decline in the
dollar value of a foreign currency in which a Fund's
securities are denominated, for example, will reduce the
dollar value of the securities, even if their value in the
foreign currency remains constant. In order to protect
against such diminutions in the value of securities that it
holds, the Fund may purchase put options on the foreign
currency. If the value of the currency does decline, the
Fund will have the right to sell the currency for a fixed
amount in dollars and will thereby offset, in whole or in
part, the adverse effect on its securities that otherwise
would have resulted. Conversely, if a rise in the dollar
value of a currency in which securities to be acquired are
denominated is projected, thereby potentially increasing the
cost of the securities, the Fund may purchase call options
on the particular currency. The purchase of these options
could offset, at least partially, the effects of the adverse
movements in exchange rates. The benefit to the Fund
derived from purchases of foreign currency options, like the
benefit derived from other types of options, will be reduced
by the amount of the premium and related transaction costs.
In addition, if currency exchange rates do not move in the
direction or to the extent anticipated, the Fund could
sustain losses on transactions in foreign currency options
that would require it to forego a portion or all of the
benefits of advantageous changes in the rates.
FOREIGN GOVERNMENT SECURITIES. Among the foreign government
securities in which certain Underlying Smith Barney Funds
may invest are those issued by countries with developing
economies, which are countries in the initial stages of
their industrialization cycles. Investing in securities of
countries with developing economies involves exposure to
economic structures that are generally less diverse and less
mature, and to political systems that can be expected to
have less stability, than those of developed countries. The
markets of countries with developing economies historically
have been more volatile than markets of the more mature
economies of developed countries, but often have provided
higher rates of return to investors.
RATINGS AS INVESTMENT CRITERIA. In general, the ratings of
nationally recognized statistical rating organization
("NRSROs") represent the opinions of these agencies as to
the quality of securities that they rate. Such ratings,
however, are relative and subjective, and are not absolute
standards of quality and do not evaluate the market value
risk of the securities. These ratings will be used the by
Underlying Smith Barney Funds as initial criteria for the
selection of portfolio securities, but the Funds also will
rely upon the independent advice of their respective
advisers 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. The Appendix to this Statement of
Additional Information contains further information
concerning the rating categories of NRSROs and their
significance.
Subsequent to its purchase by a Fund, an issue of securities
may cease to be rated or its rating may be reduced below the
minimum required for purchase by the Fund. In addition, it
is possible that an NRSRO might not change its rating of a
particular issue to reflect subsequent events. None of
these events will require sale of such securities by a Fund,
but the Fund's adviser will consider such events in its
determination of whether the Fund should continue to hold
the securities. 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 reorganization, a Fund
will attempt to use comparable ratings as standards for its
investments in accordance with its investment objective and
policies.
FUTURES CONTRACTS. The purpose of the acquisition or sale
of a futures contract by a Fund is to mitigate the effects
of fluctuations in interest rates or currency or market
values, depending on the type of contract, on securities or
their values without actually buying or selling the
securities. Of course, because the value of portfolio
securities will far exceed the value of the futures
contracts sold by a Fund, an increase in the value of the
futures contracts could only mitigate -- but not totally
offset -- the decline in the value of the Fund.
Certain of the Underlying Smith Barney Funds may enter into
futures contracts or related options on futures contracts
that are traded on a domestic or foreign exchange or in the
over-the-counter market. Generally, these investments may
be made solely for the purpose of hedging against changes in
the value of its portfolio securities due to anticipated
changes in interest rates, currency values and/or market
conditions when the transactions are economically
appropriate to the reduction of risks inherent in the
management of the Fund and not for purposes of speculation.
However, the International Equity Portfolio and the
International Balanced Portfolio may also enter into futures
transactions for non-hedging purposes, subject to applicable
law. The ability of the Funds to trade in futures contracts
may be limited by the requirements of the Internal Revenue
Code of 1986 as amended (the "Code"), applicable to a
regulated investment company.
No consideration is paid or received by a Fund upon entering
into a futures contract. Initially, a Fund will be required
to deposit with its custodian an amount of cash or cash
equivalents equal to approximately 1% to 10% of the contract
amount (this amount is subject to change by the board of
trade on which the contract is traded and members of such
board of trade may charge a higher amount). This amount,
known as initial margin, is in the nature of a performance
bond or good faith deposit on the contract and is returned
to a 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 daily as the price of the
securities, currency or index underlying the futures
contract fluctuates, making the long and short positions in
the futures contract more or less valuable, a process known
as "marking-to-market." At any time prior to expiration of a
futures contract, a 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.
Several risks are associated with the use of futures
contracts as a hedging device. Successful use of futures
contracts by a Fund is subject to the ability of its adviser
to predict correctly movements in interest rates, stock or
bond indices or foreign currency values. These predictions
involve skills and techniques that may be different from
those involved in the management of the portfolio being
hedged. In addition, there can be no assurance that there
will be a correlation between movements in the price of the
underlying securities, currency or index and movements in
the price of the securities which are the subject of the
hedge. 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 or
currency values.
There is no assurance that an active market will exist for
future contracts at any particular time. Most futures
exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices during a
single trading day. Once the daily limit has been reached
in a particular contract, no trades may be made that day at
a price beyond that limit. It is possible that futures
contract prices could move to the daily limit for several
consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and
subjecting some futures traders to substantial losses. In
such event, and in the event of adverse price movements, a
Fund would be required to make daily cash payments of
variation margin, and 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 the securities being hedged will, in fact,
correlate with the price movements in a futures contract and
thus provide an offset to losses on the futures contract.
If a Fund has hedged against the possibility of a change in
interest rates or currency or market values adversely
affecting the value of securities held in its portfolio and
rates or currency or market values move in a direction
opposite to that which the Fund has anticipated, the Fund
will lose part or all of the benefit of the increased value
of securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in
such situations, if the Fund had insufficient cash, it may
have to sell securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do
so. These sales of securities may, but will not
necessarily, be at increased prices which reflect the change
in interest rates or currency values, as the case may be.
OPTIONS ON FUTURES CONTRACTS. An option on an interest rate
futures contract, as contrasted with the direct investment
in such a contract, gives the purchaser the right, in return
for the premium paid, to assume a position in the underlying
interest rate futures contract at a specified exercise price
at any time prior to the expiration date of the option. An
option on a foreign currency futures contract, as contracted
with the direct investment in such a contract, gives the
purchaser the right, but not the obligation, to assume a
long or short position in the relevant underlying foreign
currency futures contract at a predetermined exercise price
at a time in the future. 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
for loss related to the purchase of an option on 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
a Fund investing in the options.
Several risks are associated with options on futures
contracts. The ability to establish and close out positions
on such options will be subject to the existence of a liquid
market. In addition, the purchase of put or call options on
interest rate and foreign currency futures will be based
upon predictions by a Fund's adviser as to anticipate trends
in interest rates and currency values, as the case may be,
which could price to be incorrect. Even if the expectations
of an adviser are correct, there may be an imperfect
correlation between the change in the value of the options
and of the portfolio securities in the currencies being
hedged.
FOREIGN INVESTMENTS. Investors should recognize that
investing in foreign companies involves certain
considerations which are not typically associated with
investing in U.S. issuers. Since certain Underlying Smith
Barney Funds will be investing in securities denominated in
currencies other than the U.S. dollar, and since certain
Funds may temporarily hold funds in bank deposits or other
money market investments denominated in foreign currencies,
the Funds may be affected favorably or unfavorably by
exchange control regulations or changes in the exchange rate
between such currencies and the dollar. A change in the
value of a foreign currency relative to the U.S. dollar will
result in a corresponding change in the dollar value of a
Fund's assets denominated in that foreign currency. Changes
in foreign currency exchange rates may also affect the value
of dividends and interest earned, gains and losses realized
on the sale of securities and net investment income and
gain, if any, to be distributed to shareholders by the Fund.
The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand
in the foreign exchange markets. Changes in the exchange
rate may result over time from the interaction of many
factors directly or indirectly affecting economic conditions
and political developments in other countries. Of
particular importance are rates of inflation, interest rate
levels, the balance of payments and the extent of government
surpluses or deficits in the U.S. and the particular foreign
country, all of which are in turn sensitive to the monetary,
fiscal and trade policies pursued by the governments of the
U.S. and other foreign countries important to international
trade and finance. Governmental intervention may also play
a significant role. National governments rarely voluntarily
allow their currencies to float freely in response to
economic forces. Sovereign governments use a variety of
techniques, such as intervention by a country's central bank
or imposition of regulatory controls or taxes, to affect the
exchange rates of their currencies.
Securities held by an Underlying Smith Barney Fund may not
be registered with, nor the issuers thereof be subject to
reporting requirements of, the SEC. Accordingly, there may
be less publicly available information about the securities
and about the foreign company or government issuing them
than is available about a domestic company or government
entity. Foreign issuers are generally not subject to
uniform financial reporting standards, practices and
requirements comparable to those applicable to U.S. issuers.
In addition, with respect to some foreign countries, there
is the possibility of expropriation or confiscatory
taxation, limitations on the removal of funds or other
assets of the Fund, political or social instability, or
domestic developments which could affect U.S. investments in
those countries. Moreover, individual foreign economies may
differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency
and balance of payments positions. Certain Underlying Smith
Barney Funds may invest in securities of foreign governments
(or agencies or instrumentalities thereof), and many, if not
all, of the foregoing considerations apply to such
investments as well.
Securities of some foreign companies are less liquid and
their prices are more volatile than securities of comparable
domestic companies. Certain foreign countries are known to
experience long delays between the trade and settlement
dates of securities purchased or sold.
The interest payable on a Fund's foreign securities may be
subject to foreign withholding taxes, and while investors
may be able to claim some credit or deductions for such
taxes with respect to their allocated shares of such foreign
tax payments, the general effect of these taxes will be to
reduce the Fund's income. Additionally, the operating
expenses of a Fund can be expected to be higher than that of
an investment company investing exclusively in the U.S.
securities, since the expenses of the Fund, such as
custodial costs, valuation costs and communication costs, as
well as the rate of the investment advisory fees, though
similar to such expenses of some other international funds,
are higher than those costs incurred by other investment
companies.
FOREIGN COMMODITY EXCHANGES. Unlike trading on domestic
commodity exchanges, trading on foreign commodity exchanges
is not regulated by the Commodity Futures Trading Commission
and may be subject to greater risks than trading on domestic
exchanges. For example, some foreign exchanges may be
principal markets so that no common clearing facility exists
and a trader may look only to the broker for performance of
the contract. In addition, unless an Underlying Smith
Barney Fund trading on a foreign commodity exchange hedges
against fluctuations in the exchange rate between the U.S.
dollar and the currencies in which trading is done on
foreign exchanges, any profits that the Fund might realize
in trading could be eliminated by adverse changes in the
exchange rate, or the Fund could incur losses as a result of
those changes.
SHORT SALES. Certain of the Underlying Smith Barney Funds
may from time to time sell securities short. A short sale
is a transaction in which the Fund sells securities that it
does not own (but has borrowed) in anticipation of a decline
in the market price of the securities.
When a Fund makes a short sale, the proceeds it receives
from the sale are retained by a broker until the Fund
replaces the borrowed securities. To deliver the securities
to the buyer, the Fund must arrange through a broker to
borrow the securities and, in so doing, the Fund becomes
obligated to replace the securities borrowed at their market
price at the time of replacement, whatever that price may
be. The Fund may have to pay a premium to borrow the
securities and must pay any dividends or interest payable on
the securities until they are replaced.
A Fund's obligation to replace the securities borrowed in
connection with a short sale will be secured by collateral
deposited with the broker that consists of cash or U.S.
government securities. In addition, the Fund will place in
a segregated account with its custodian an amount of cash or
U.S. government securities equal to the difference, if any,
between (a) the market value of the securities sold at the
time they were sold short and (b) any cash or U.S.
government securities deposited as collateral with the
broker in connection with the short sale (not including the
proceeds of the short sale). Until it replaces the borrowed
securities, the Fund will maintain the segregated account
daily at a level so that the amount deposited in the account
plus the amount deposited with the broker (not including the
proceeds from the short sale) (a) will equal the current
market value of the securities sold short and (b) will not
be less than the market value of the securities at the time
they were sold short.
SHORT SALES AGAINST THE BOX. Certain of the Underlying
Smith Barney Funds may enter into a short sale of common
stock such that when the short position is open the Fund
involved owns an equal amount of preferred stocks or debt
securities, convertible or exchangeable, without payment of
further consideration, into an equal number of shares of the
common stock sold short. This kind of short sale, which is
described as "against the box," will be entered into by a
Fund for the purpose of receiving a portion of the interest
earned by the executing broker from the proceeds of the
sale. The proceeds of the sale will be held by the broker
until the settlement date when the Fund delivers the
convertible securities to close out its short position.
Although prior to delivery a Fund will have to pay an amount
equal to any dividends paid on the common stock sold short,
the Fund will receive the dividends from the preferred stock
or interest from the debt securities convertible into the
stock sold short, plus a portion of the interest earned from
the proceeds of the short sale. The Funds will deposit, in
a segregated account with their custodian, convertible
preferred stock or convertible debt securities in connection
with short sales against the box.
SWAP AGREEMENTS. Among the hedging transactions into which
certain Underlying Smith Barney Funds may enter are interest
rate swaps and the purchase or sale of interest rate caps
and floors. Interest rate swaps involve the exchange by a
Fund with another party of their respective commitments to
pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments. The purchase of an
interest rate cap entitles the purchaser, to the extent that
a specified index exceeds a predetermined interest rate, to
receive payments of interest on a notional principal amount
from the party selling such interest rate cap. The purchase
of an interest rate floor entitles the purchaser, to the
extent that a specified index falls below a predetermined
interest rate, to receive payment of interest on a notional
principal amount from the party selling such interest rate
floor.
Certain Underlying Smith Barney Funds may enter into
interest rate swaps, caps and floors on either an asset-
based or liability-based basis, depending on whether it is
hedging its assets or its liabilities, and will usually
enter into interest rate swaps on a net basis, i.e., the two
payment streams are netted, with the Fund receiving or
paying, as the case may be, only the net amount of the two
payments. Inasmuch as these hedging transactions are
entered into for good faith hedging purposes, the investment
adviser and the Fund believe such obligations do not
constitute senior securities and, accordingly will not treat
them as being subject to its borrowing restrictions. The
net amount of the excess, if any, of a Fund's obligations
over its entitlement with respect to each interest rate swap
will be accrued on a daily basis and an amount of cash or
liquid securities having an aggregate net asset value at
least equal to the accrued excess will be maintained in a
segregated account with PNC Bank. If there is a default by
the other party to such a transaction, a Fund will have
contractual remedies pursuant to the agreement related to
the transaction. The swap market has grown substantially in
recent years with a large number of banks and investment
banking firms acting both as principals and as agents. As a
result, the swap market has become relatively liquid. Caps
and floors are more recent innovations for which
standardized documentation has not yet been developed and,
accordingly, they are less liquid than swaps.
RESTRICTED SECURITIES. Certain of the Underlying Smith
Barney Funds may invest in securities the disposition of
which is subject to legal or contractual restrictions. The
sale of restricted securities often requires more time and
results in higher brokerage charges or dealer discounts and
other selling expenses than does the sale of securities
eligible for trading on a national securities exchange that
are not subject to restrictions on resale. Restricted
securities often sell at a price lower than similar
securities that are not subject to restrictions on resale.
REVERSE REPURCHASE AGREEMENTS. Certain Underlying Smith
Barney Funds may enter into reverse repurchase agreements
with banks or broker-dealers. A reverse repurchase
agreement involves the sale of a money market instrument
held by an Underlying Smith Barney Fund coupled with an
agreement by the Fund to repurchase the instrument at a
stated price, date and interest payment. The Fund will use
the proceeds of a reverse repurchase agreement to purchase
other money market instruments which either mature at a date
simultaneous with or prior to the expiration of the reverse
repurchase agreement or which are held under an agreement to
resell maturing as of that time.
An Underlying Smith Barney Fund will enter into a reverse
repurchase agreement only when the interest income to be
earned from the investment of the proceeds of the
transaction is greater than the interest expense of the
transaction. Under the 1940 Act, reverse repurchase
agreements may be considered to be borrowings by the seller.
Entry into such agreements requires the creation and
maintenance of a segregated account with the Fund's
custodian consisting of U.S. government securities, cash or
cash equivalents.
LEVERAGING. Certain of the Underlying Smith Barney Funds
may from time to time leverage their investments by
purchasing securities with borrowed money. A Fund is
required under the 1940 Act to maintain at all times an
asset coverage of 300% of the amount of its borrowings. If,
as a result of market fluctuations or for any other reason,
the Fund's asset coverage drops below 300%, the Fund must
reduce its outstanding borrowings within three business days
so as to restore its asset coverage to the 300% level.
Any gain in the value of securities purchased with borrowed
money that exceeds the interest paid on the amount borrowed
would cause the net asset value of the Underlying Smith
Barney Fund's shares to increase more rapidly than otherwise
would be the case. Conversely, any decline in the value of
securities purchased would cause the net asset value of the
Fund's shares to decrease more rapidly than otherwise would
be the case. Borrowed money thus creates an opportunity for
greater capital gain but at the same time increases exposure
to capital risk. The net cost of any borrowed money would
be an expense that otherwise would not be incurred, and this
expense could restrict or eliminate a Fund's net investment
income in any given period.
AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITORY RECEIPTS.
Certain of the Underlying Smith Barney Funds may invest in
the securities of foreign and domestic issuers in the form
of American Depository Receipts ("ADRs") and European
Depository Receipts ("EDRs"). These securities may not
necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are
receipts typically issued by a U.S. bank or trust company
that evidence ownership of underlying securities issued by a
foreign corporation. EDRs, which sometimes are referred to
as Continental Depository Receipts ("CDRs"), are receipts
issued in Europe typically by foreign banks and trust
companies that evidence ownership of either foreign or
domestic securities. Generally, ADRs, in registered form,
are designed for use in U.S. securities markets and EDRs and
CDRs are designed for use in European securities markets.
CONVERTIBLE SECURITIES. Convertible securities are fixed-
income securities that may be converted at either a stated
price or stated rate into underlying shares of common stock.
Convertible securities have general characteristics similar
to both fixed-income and equity securities. Although to a
lesser extent than with fixed-income securities generally,
the market value of convertible securities tends to decline
as interest rates increase and, conversely, tends to
increase as interest rates decline. In addition, because of
the conversion feature, the market value of convertible
securities tends to vary with fluctuations in the market
value of the underlying common stocks and, therefore, also
will react to variations in the general market for equity
securities. A unique feature of convertible securities is
that as the market price of the underlying common stock
declines, convertible securities tend to trade increasingly
on a yield basis, and so may not experience market value
declines to the same extent as the underlying common stock.
When the market price of the underlying common stock
increases, the prices of the convertible securities tend to
rise as a reflection of the value of the underlying common
stock. While no securities investments are without risk,
investments in convertible securities generally entail less
risk than investments in common stock of the same issuer.
As fixed-income securities, convertible securities are
investments that provide for a stable stream of income with
generally higher yields than common stocks. Of course, like
all fixed-income securities, there can be no assurance of
current income because the issuers of the convertible
securities may default on their obligations. Convertible
securities, however, generally offer lower interest or
dividend yields than non-convertible securities of similar
quality because of the potential for capital appreciation.
A convertible security, in addition to providing fixed
income, offers the potential for capital appreciation
through the conversion feature, which enables the holder to
benefit from increases in the market price of the underlying
common stock. There can be no assurance of capital
appreciation, however, because securities prices fluctuate.
Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer,
although convertible bonds, such as corporate debt
obligations, enjoy seniority in right of payment to all
equity securities, and convertible preferred stock is senior
to common stock, of the same issuer. Because of the
subordination feature, however, convertible securities
typically have lower ratings than similar nonconvertible
securities.
WARRANTS. Because a warrant does not carry with it the
right to dividends or voting rights with respect to the
securities that the warrant holder is entitled to purchase,
and because it does not represent any rights to the assets
of the issuer, a warrant may be considered more speculative
than certain other types of investments. In addition, the
value of a warrant does not necessarily change with the
value of the underlying securities and a warrant ceases to
have value if it is not exercised prior to its expiration
date. Warrants acquired by an Underlying Smith Barney Fund
in units or attached to securities may be deemed to be
without value.
PREFERRED STOCK. Preferred stocks, like debt obligations,
are generally fixed-income securities. Shareholder of
preferred stocks normally have the right to receive
dividends at a fixed rate when and as declared by the
issuer's board of directors, but do not participate in other
amounts available for distribution by the issuing
corporation. Dividends on the preferred stock may be
cumulative, and all cumulative dividends usually must be
paid prior to common shareholders receiving any dividends.
Preferred stock dividends must be paid before common stock
dividends and, for that reason, preferred stocks generally
entail less risk than common stocks. Upon liquidation,
preferred stocks are entitled to a specified liquidation
preference, which is generally the same as the par or stated
value, and are senior in right of payment to common stock.
Preferred stocks are, however, equity securities in the
sense that they do not represent a liability of the issuer
and, therefore, do not offer as great a degree of protection
of capital or assurance of continued income as investments
in corporate debt securities. In addition, preferred stocks
are subordinated in right of payment to all debt obligations
and creditors of the issuer, and convertible preferred
stocks may be subordinated to other preferred stock of the
same issuer.
Investment Restrictions
The Concert Series has adopted the following investment
restrictions for the protection of shareholders.
Restrictions 1 through 6 below have been adopted by the
Concert Series with respect to each Portfolio as fundamental
policies. Under the 1940 Act, a fundamental policy of a
Portfolio may not be changed without the vote of a majority,
as defined in the 1940 Act, of the outstanding voting
securities of the Portfolio. Such majority is defined as
the lesser of (a) 67% or more of the shares present at the
meeting, if the holders of more than 50% of the outstanding
shares of the Portfolio are present or represented by proxy,
or (b) more than 50% of the outstanding shares. Investment
restrictions 7 through 15 may be changed by a vote of a
majority of the Concert Series' Board of Directors at any
time.
The investment policies adopted by the Concert Series
prohibit a Portfolio from:
1. Borrowing money except from banks for temporary or
emergency purposes, including the meeting of redemption
requests in an amount not exceeding 33-1/3% of the value of
a Portfolio's total assets (including the amount borrowed)
valued at market less liabilities (not including the amount
borrowed) at the time the borrowing is made.
2. Making loans of money to others, except through the
purchase of portfolio securities consistent with its
investment objective and policies and repurchase agreements.
3. Underwriting the securities of other issuers, except
insofar as the Portfolio may be deemed an underwriter under
the Securities Act of 1933, as amended, by virtue of
disposing of portfolio securities.
4. Purchasing or selling real estate except that each
Portfolio may purchase and sell money market securities that
are secured by real estate or issued by companies that
invest or deal in real estate.
5. Investing in commodities.
6. Issuing senior securities except as permitted by
investment restriction 1.
7. Purchasing securities on margin.
8. Making short sales of securities or maintaining a short
position.
9. Pledging, hypothecating, mortgaging or otherwise
encumbering more than 33-1/3% of the value of a Portfolio's
total assets.
10. Investing in oil, gas or other mineral exploration or
development programs.
11. Writing or selling puts, calls, straddles, spreads or
combinations thereof.
12. Purchasing restricted securities, illiquid securities
(such as repurchase agreements with maturities in excess of
seven days) or other securities that are not readily
marketable.
13. Purchasing any security if as a result the Portfolio
would then have more than 5% of its total assets invested in
securities of companies (including predecessors) that have
been in continuous operation for fewer than three years
(except for Underlying Smith Barney Funds).
14. Making investments for the purpose of exercising
control or management.
15. Purchasing or retaining securities of any company if,
to the knowledge of the Concert Series, any officer or
director of the Concert Series or SBMFM individually owns
more than 1/2 of 1% of the outstanding securities of such
company and together they own beneficially more than 5% of
such securities.
The Concert Series may make commitments more restrictive
than the restrictions listed above with respect to a
Portfolio so as to permit the sale of shares of the
Portfolio in certain states. Should the Concert Series
determine that any such commitment is no longer in the best
interests of the Portfolio and its shareholders, the Concert
Series will revoke the commitment by terminating the sale of
shares of the Portfolio in the relevant state. The
percentage limitations contained in the restrictions listed
above (other than with respect to (1) above) apply at the
time of purchases of securities.
Notwithstanding the foregoing investment restrictions, the
Underlying Smith Barney Funds in which the Portfolios invest
have adopted certain investment restrictions which may be
more or less restrictive than those listed above, thereby
permitting a Portfolio to engage in investment strategies
indirectly that are prohibited under the investment
restrictions listed above. The investment restrictions of
an Underlying Smith Barney Fund are located in its Statement
of Additional Information.
Pursuant to an exemptive order issued by the SEC (Investment
Company Act Release No. IC-21613, December 19, 1995) each
Portfolio may (i) purchase more than 3% of the outstanding
voting securities of any Underlying Smith Barney Fund, (ii)
invest more than 5% of its assets in any one Underlying
Smith Barney Fund and (iii) invest substantially all of its
assets in the Underlying Smith Barney Funds.
Because of their investment objectives and policies, the
Portfolios will each concentrate more than 25% of their
assets in the mutual fund industry. In accordance with the
Portfolios' investment programs set forth in the Prospectus,
each of the Portfolios may invest more than 25% of its
assets in certain Underlying Smith Barney Funds. However,
each of the Underlying Smith Barney Funds in which each Fund
will invest (other than the Smith Barney Utilities Fund)
will not concentrate more than 25% of its total assets in
any one industry. The Smith Barney Utilities Fund will
invest at least 65% of its assets in securities of companies
in the utility industries.
Portfolio Turnover
Each Portfolio's turnover rate is not expected to exceed 25%
annually. A Portfolio may purchase or sell securities to:
(a) accommodate purchases and sales of its shares, (b)
change the percentages of its assets invested in each of the
Underlying Smith Barney Funds in response to market
conditions, and (c) maintain or modify the allocation of its
assets between equity and fixed income funds and among the
Underlying Smith Barney Funds within the percentage limits
described in the Prospectus.
The turnover rates of the Underlying Smith Barney Funds have
ranged from 16% to 292% during their most recent fiscal
years. There can be no assurance that the turnover rates of
these funds will remain within this range during subsequent
fiscal years. Higher turnover rates may result in higher
expenses being incurred by the Underlying Smith Barney
Funds.
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 spouse and his or her
children purchasing shares for his or her own account; (c) a
pension, profit-sharing or other employee benefit plan
qualified under Section 401(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and qualified employee
benefit plans of employers who are "affiliated persons" of
each other within the meaning of the 1940 Act; (d) tax-
exempt organizations enumerated in Section 501(c)(3) or (13)
of the Code; and (e) a trustee or other professional
fiduciary (including a bank, or an investment adviser
registered with the SEC under the Investment Advisers Act of
1940, as amended) purchasing shares of a Portfolio for one
or more trust estates of fiduciary accounts. Purchasers who
wish to combine purchase orders to take advantage of volume
discounts on Class A shares should contact a Smith Barney
Financial Consultant.
Combined Right of Accumulation
Reduced sales charges, in accordance with the schedule in
the Prospectus, apply to any purchase of Class A shares from
Smith Barney if the aggregate investment in Class A shares
of a Portfolio and in Class A shares of other funds of the
Smith Barney Mutual Funds that are offered with an initial
sales charge, including the purchase being made, of any
purchaser is $25,000 or more. The reduced sales charge is
subject to confirmation of the shareholder's holdings
through a check of appropriate records. The Concert Series
reserves the right to terminate or amend the combined right
of accumulation at any time after written notice to
shareholders. For further information regarding the
combined right of accumulation, shareholders should contact
a Smith Barney Financial Consultant.
Determination of Public Offering Price
The Concert Series offers its shares to the public on a
continuous basis. The public offering price for Class A
shares of the Concert Series is equal to the net asset value
per share at the time of purchase plus an initial sales
charge based on the aggregate amount of the investment. The
public offering price for Class B, Class C and Class Y
shares (and Class A share purchases, including applicable
rights of accumulation, equaling or exceeding $500,000) 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 and
Class C shares, and of Class A shares when purchased in
amounts equaling or exceeding $500,000. The method of
determining a Portfolio's net asset value is discussed below
under "Valuation of Shares."
REDEMPTION OF SHARES
The right of redemption may be suspended or the date of
payment postponed (a) for any period during which the NYSE
is closed (other than for customary weekend or holiday
closings), (b) when trading in markets a Portfolio normally
utilizes is restricted, or an emergency, as determined by
the SEC, exists so that disposal of a Portfolio's
investments or determination of net asset value is not
reasonably practicable or (c) for such other periods as the
SEC by order may permit for protection of a Portfolio's
shareholders.
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 ($5,000 for retirement plan accounts) and who
wish to receive specific amounts of cash monthly or
quarterly. Withdrawals of at least $100 may be made under
the Withdrawal Plan by redeeming as many shares of a
Portfolio as may be necessary to cover the stipulated
withdrawal payment. Any applicable CDSC will not be waived
on amounts withdrawn by shareholders that exceed 1.00% per
month of the value of a shareholder's shares at the time the
Withdrawal Plan commences. (With respect to Withdrawal Plans
in effect prior to November 7, 1994, any applicable CDSC
will be waived on amounts that do not exceed 2.00% 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 a Portfolio, there will be a reduction in the
value of the shareholder's account and continued withdrawal
payments will reduce the shareholder's investment and
ultimately may exhaust it. Withdrawal payments should not
be considered as income from investment in a Portfolio.
Furthermore, as it generally would not be advantageous to a
shareholder to make additional investments in a Portfolio at
the same time he or she is participating in the Withdrawal
Plan, purchases by such shareholders in amounts of less than
$5,000 ordinarily will not be permitted.
Shareholders who wish to participate in the Withdrawal Plan
and who hold their shares in certificate form must deposit
their share certificates with First Data 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 Portfolio.
Effective November 7, 1994, Withdrawal Plans should be set
up with any Smith Barney Financial Consultant. A
shareholders who purchase shares directly through First Data
may continue to do so and applications for participation in
the Withdrawals Plan must be received by First Data no later
than the eighth day of the month to be eligible for
participation beginning with that month's withdrawal. For
additional information, shareholders should contact a Smith
Barney Financial Consultant.
DISTRIBUTORS
SMITH BARNEY. Smith Barney serves as a principal
underwriter of the Concert Series on a best efforts basis
pursuant to a distribution agreement (the "Distribution
Agreement"). The Distribution Agreement also gives
authority to the Concert Series to use the "Smith Barney"
name so long as the Distribution Agreement is in effect. To
compensate its distributors for the services provided and
for the expenses borne, the Concert Series has adopted a
services and distribution plan (the "Plan'") pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan, each
Portfolio pays Smith Barney a service fee, accrued daily and
paid monthly, calculated at the annual rate of 0.25% of the
value of the Portfolio's average daily net assets
attributable to the Class A, Class B and Class C shares sold
through Smith Barney. In addition, each Portfolio pays
Smith Barney a distribution fee with respect to the Class B
and Class C shares sold through Smith Barney primarily
intended to compensate Smith Barney for its initial expense
of paying Financial Consultants a commission upon sales of
those shares. The distribution fees applicable to Class B
and Class C shares of the High Growth Portfolio, the Growth
Portfolio and the Balanced Portfolio, accrued daily and paid
monthly, are calculated at the annual rate of 0.75% of the
value of a Portfolio's average daily net assets attributable
to the shares of the respective Class. The distribution
fees applicable to Class B and Class C shares of the
Conservative Portfolio and the Income Portfolio, accrued
daily and paid monthly, are calculated at the annual rate of
0.50% and 0.45%, respectively, of the value of the
Portfolio's average daily net assets attributable to the
shares of the respective Class.
PFS. PFS, located at 3100 Breckinridge Boulevard, Building
200, Duluth, Georgia 30199-0062, also distributes shares of
each Portfolio as a principal underwriter and as such
conducts a continuous offering pursuant to a best efforts
arrangement requiring PFS to take and pay for only such
securities as may be sold to the public. The only Classes
of shares being offered for sale through PFS are Class A
shares and Class B shares. Pursuant to the Plan (described
above), PFS is paid a service fee with respect to Class A
and Class B shares of each Portfolio sold through PFS at the
annual rate of 0.25% of the average daily net assets
attributable to each Class. PFS is also paid a distribution
fee with respect to Class B shares of the High Growth
Portfolio, the Growth Portfolio and the Balanced Portfolio
sold through PFS at the annual rate of 0.75% of the average
daily net assets attributable to that Class. PFS is paid a
distribution fee with respect to Class B shares of the
Conservative Portfolio and the Income Portfolio sold through
PFS at the annual rate of 0.50% of the average daily net
assets attributable to that Class. Class B shares that
automatically convert to Class A shares eight years after
the date of original purchase will no longer be subject to a
distribution fee. The fees are paid to PFS, which in turn,
pays PFS Investments Inc. ("PFS Investments") to pay its
Investments Representatives 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: advertising expenses; the
cost of printing and mailing prospectuses to potential
investors; payments to and expenses of Investments
Representatives and other persons who provide support
services in connection with the distribution of shares;
interest and/or carrying charges; and indirect and overhead
costs of PFS Investments associated with the sale of
Portfolio shares, including lease, utility, communications
and sales promotion expenses.
The payments to PFS Investments Representatives for selling
shares of a Class include a commission or fee paid by the
investor or PFS at the time of sale and, with respect to
Class A and Class B shares, a continuing fee for servicing
shareholder accounts for as long as a shareholder remains a
holder of that Class. Investments Representatives may
receive different levels of compensation for selling
different Classes of shares.
PFS Investments may be deemed to be an underwriter for
purposes of the Securities Act of 1933. From time to time,
PFS or its affiliates may also pay for certain non-cash
sales incentives provided to PFS Investments
Representatives. Such incentives do not have any effect on
the net amount invested. In addition to the reallowances
from the applicable public offering price described above,
PFS may from time to time, pay or allow additional
reallowances or promotional incentives, in the form of cash
or other compensation to PFS Investments Representatives
that sell shares of each Portfolio.
Under its terms, the Plan continues from year to year,
provided such continuance is approved annually by vote of
the Concert Series' Board of Directors, including a majority
of the Independent Directors. 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 directors and
Independent directors in the manner described above. The
Plan may be terminated with respect to a Class of a
Portfolio at any time, without penalty, by the vote of a
majority of the Independent Directors 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 and PFS will provide the Concert Series' Board of
Directors with periodic reports of amounts expended under
the Plan and the purpose for which such expenditures were
made.
GENERAL. Actual distribution expenses for Class B shares of
each Portfolio for any given year may exceed the fees
received pursuant to the Plan and will be carried forward
and paid by each Portfolio in future years so long as the
Plan is in effect. Interest is accrued monthly on such
carryforward amounts at a rate comparable to that paid by
Smith Barney for bank borrowings. The Concert Series' Board
of Directors 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 amounts
received under the Plan and proceeds of the CDSC.
VALUATION OF SHARES
The net asset value of each Portfolio's Classes of Shares
will be determined on any day that the New York Stock
Exchange (the "NYSE") is open. The NYSE is closed on the
following holidays: New Year's Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day, and on the preceding
Friday or subsequent Monday when one of these holidays falls
on a Saturday or Sunday, respectively. Because of the
differences in distribution fees and Class-specific
expenses, the per share net asset value of each Class may
differ. The following is a description of the procedures
used by each Portfolio in valuing its assets.
The value of each Underlying Smith Barney Fund will be its
net asset value at the time of computation. Short-term
investments that have a maturity of more than 60 days are
valued at prices based on market quotations for securities
of similar type, yield and maturity. Short-term investments
that have a maturity of 60 days or less are valued at
amortized cost, which constitutes fair value as determined
by the Concert Series' Board of Directors. Amortized cost
involves valuing an instrument at its original cost to the
Portfolio and thereafter assuming a constant amortization to
maturity of any discount or premium regardless of the effect
of fluctuating interest rates on the market value of the
instrument.
EXCHANGE PRIVILEGE
Except as noted below and in the Prospectus, shareholders of
any Portfolio and of any other Smith Barney Mutual Fund may
exchange all or part of their shares for shares of the same
class of any other Portfolio or of other Smith Barney Mutual
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 a 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 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 any 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 deemed to be purchased.
AS STATED IN THE PROSPECTUS FOR SHARES DISTRIBUTED THROUGH
PFS, THE EXCHANGE PRIVILEGE IS LIMITED. Dealers other than
Smith Barney must notify First Data of the investor's prior
ownership of Class A shares of Smith Barney High Income Fund
and the account number in order to accomplish an exchange of
shares of Smith Barney 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. This privilege is
available to shareholders residing in any state in which the
fund shares being acquired may legally be sold. 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 a Smith Barney Financial Consultant or a PFS
Investments Representative.
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 sale charge differential, the proceeds are
immediately invested, at a price as described above, in
shares of the fund being acquired. Smith Barney and PFS
reserve the right to reject any exchange request. The
exchange privilege may be modified or terminated at any time
after written notice to shareholders.
IRA AND OTHER PROTOTYPE PLANS
Copies of the following plans with custody or trust
agreements have been approved by the Internal Revenue
Service and are available from the Concert Series, Smith
Barney or PFS; investors should consult with their own tax
or retirement planning advisors prior to the establishment
of a plan.
IRA, Rollover IRA and Simplified Employee Pension - IRA
The Tax Reform Act of 1986 (the "Tax Reform Act") changed
the eligibility requirements for participants in Individual
Retirement Accounts ("IRAs"). Under the Tax Reform Act's
new provisions, if you or your spouse has earned income and
neither you nor your spouse is an active participant in any
employer-sponsored retirement plan, each of you may
establish an IRA and make maximum annual contributions equal
to the lesser of earned income or $2,000. If your spouse is
not employed, you may contribute and deduct on your joint
venture a total of $2,250 between two IRA's.
If you or your spouse is an active participant in an
employer-sponsored retirement plan, a deduction for
contributions to an IRA might still be allowed in full or in
part, depending on your combined adjusted gross income. For
married couples filing jointly, a full deduction of
contributions to an IRA will be allowed where the couples'
adjusted gross income is below $40,001 ($25,001 for an
unmarried individual); a partial deduction will be allowed
when adjusted gross income is between $40,001-$50,000
($25,001-$35,000 for an unmarried individual); and no
deduction when adjusted income is $50,000 ($35,000 for an
unmarried individual). Shareholders should consult their
tax advisors concerning the effects of the Tax Reform Act on
the deductibility of their IRA contributions.
A Rollover IRA is available to defer taxes on lump sum
payments and other qualifying rollover amounts (no maximum)
received from another retirement plan.
An employer who has established a Simplified Employee
Pension - IRA ("SEP-IRA") on behalf of eligible employees
may make a maximum annual contribution to each participant's
account of 15% (up to $22,500) of each participant's
compensation.
In addition, certain small employers (those who have 25 or
fewer employees) can establish a Simplified Employees
Pension Plan - Salary Reduction Plan ("SEP-Salary Reduction
Plan") under which employees can make elective pre-tax
contributions up to $9,240 of gross income. Consult your
tax advisor for special rules regarding establishing either
type of SEP.
An ERISA disclosure statement providing additional details
is included with each IRA application sent to participants.
Paired Defined Contribution Prototype
Corporations (including Subchapter S corporations) and non-
corporate entities may purchase shares of the Fund through
the Smith Barney Prototype Paired Defined Contribution Plan.
The prototype permits adoption of profit-sharing provisions,
money purchase pension provisions, or both, to provide
benefits for eligible employees and their beneficiaries. The
prototype provides for a maximum annual tax deductible
contribution on behalf of each Participant of up to 25% of
compensation, but not to exceed $30,000 (provided that a
money purchase pension plan or both a profit-sharing plan
and a money purchase pension plan are adopted thereunder).
PERFORMANCE
From time to time, the Concert Series may quote a
Portfolio's yield or total return in advertisements or in
reports and other communications to shareholders. The
Concert Series may include comparative performance
information in advertising or marketing the Portfolio's
shares. Such performance information may include the
following industry and financial publications: BARRON'S,
BUSINESS WEEK, CDA INVESTMENT TECHNOLOGIES, INC., CHANGING
TIMES, FORBES, FORTUNE, INSTITUTIONAL INVESTOR, INVESTORS
DAILY, MONEY, MORNINGSTAR MUTUAL FUND VALUES, THE NEW YORK
TIMES, USA TODAY AND THE WALL STREET JOURNAL.
Yield
A Portfolio's 30-day yield figure described below is
calculated according to a formula prescribed by the SEC.
The formula can be expressed as follows: YIELD = 2[( [(a-
b/(c*d))/1] + 1)6 - 1], 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.
For the purpose of determining the interest earned (variable
"a" in the formula) on debt obligations purchased by the
Portfolio 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.
Investors should recognize that in periods of declining
interest rates a Portfolio's yield will tend to be somewhat
higher than prevailing market rates, and in periods of
rising interest rates, the Portfolio's yield will tend to be
somewhat lower. In addition, when interest rates are
falling, the inflow of net new money to the Portfolio from
the continuous sale of its shares will likely be invested in
portfolio instruments producing lower yields than the
balance of the Portfolio's investments, thereby reducing the
current yield of the Portfolio. In periods of rising
interest rates, the opposite can be expected to occur.
Average Annual Total Return
"Average annual total return" figures, as described below,
are computed according to a formula prescribed by the SEC.
The formula can be expressed as follows: P(1+T)/n = ERV,
where:
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a Hypothetical
$1,000 investment made at the beginning of a 1-, 5- or 10-
year period at the end of the 1-, 5- or 10-year period (or
fractional portion thereof), assuming reinvestment of all
dividends and distributions. A Class' total return figures
calculated in accordance with the above formula assume that
the maximum applicable sales charge or maximum applicable
CDSC, as the case may be, has been deducted from the
hypothetical $1,000 initial investment at the time of
purchase or redemption, as applicable.
Aggregate Total Return
Aggregate total return figures, as described below,
represent the cumulative change in the value of an
investment in the Class for the specified period and are
computed by the following formula:
(ERV-P)/P
Where: P = a hypothetical initial payment of $10,000, and
ERV = Ending Redeemable Value of a Hypothetical $10,000
investment made at the beginning of a 1-, 5- or 10-year
period (or fractional portion thereof), at the end of the 1-
, 5- or 10-year period (or fractional portion thereof),
assuming reinvestment of all dividends and distributions.
A Class' performance will vary from time to time depending
upon market conditions, the composition of the Portfolio's
investment portfolio and operating expenses and the expenses
exclusively attributable to the Class. Consequently, any
given performance quotation should not be considered
representative of the Class' performance for any specified
period in the future. Because performance will vary, it may
not provide a basis for comparing an investment in the Class
with certain bank deposits or other investments that pay a
fixed yield for a stated period of time. Investors
comparing the Class' performance with that of other mutual
funds should give consideration to the quality and maturity
of the respective investment companies' portfolio
securities.
TAXES
The following is a summary of certain Federal income tax
considerations that may affect the Concert Series and its
shareholders. The summary is not intended as a substitute
for individual tax advice, and investors are urged to
consult their tax advisors as to the tax consequences of an
investment in any Portfolio of the Concert Series .
Tax Status of the Portfolios
Each Portfolio will be treated as a separate taxable entity
for Federal income tax purposes.
Each Portfolio intends to qualify separately each year as a
"regulated investment company" under the Code. A qualified
Portfolio will not be liable for Federal income taxes to the
extent that its taxable net investment income and net
realized capital gains are distributed to its shareholders,
provided that each Portfolio distributes at least 90% of its
net investment income.
Each Portfolio intends to accrue dividend income for Federal
income tax purposes in accordance with the rules applicable
to regulated investment companies. In some cases, these
rules may have the effect of accelerating (in comparison to
other recipients of the dividend) the time at which the
dividend is taken into account by a Portfolio as taxable
income.
Distributions of an Underlying Smith Barney Fund's
investment company taxable income are taxable as ordinary
income to a Portfolio which invests in the Fund.
Distributions of the excess of an Underlying Smith Barney
Fund's net long-term capital gain over its net short-term
capital loss, which are properly designated as "capital gain
dividends," are taxable as long-term capital gain to a
Portfolio which invests in the Fund, regardless of how long
the Portfolio held the Fund's shares, and are not eligible
for the corporate dividends-received deduction. Upon the
sale or other disposition by a Portfolio of shares of any
Underlying Smith Barney Fund, the Portfolio generally will
realize a capital gain or loss which will be long-term or
short-term, generally depending upon the Portfolio's holding
period for the shares.
Tax Treatment of Shareholders
Distributions of investment company taxable income generally
are taxable to shareholders as ordinary income. If an
Underlying Smith Barney Fund derives dividends from domestic
corporations, a portion of the income distributions of a
Portfolio which invests in that Fund may be eligible for the
70% deduction for dividends received by corporations.
Shareholders will be informed of the portion of dividends
that qualify. The dividends received deduction is reduced
to the extent the shares of the Underlying Smith Barney Fund
with respect to which the dividends are received are treated
as debt-financed under federal income tax law and is
eliminated if either the shares of the corporation paying
the dividend, the shares of the Underlying Smith Barney Fund
or the shares of the Portfolio are deemed to have been held
by the Underlying Smith Barney Fund, the Portfolio or the
shareholders, as the case may be, for less than 46 days.
Distributions of net realized capital gain designated by a
Portfolio as capital gain dividends are taxable to
shareholders as long-term capital gain, regardless of the
length of time the shares of a Portfolio have been held by a
shareholder. Distributions of capital gain, whether long-
or short-term, are not eligible for the dividends received
deduction.
Dividends (including capital gain dividends) declared by a
Portfolio in October, November or December of any calendar
year to shareholders of record on a date in such a month
will be deemed to have been received by shareholders on
December 31 of that calendar year, provided that the
dividend is actually paid by the Portfolio during January of
the following calendar year.
All dividends are taxable to the shareholder whether
reinvested in additional shares or received in cash.
Shareholders receiving distributions in the form of
additional shares will have a cost basis for Federal income
tax purposes in each share received equal to the net asset
value of a share of Portfolio on the reinvestment date.
Shareholders will be notified annually as to the Federal tax
status of distributions.
Distributions by a Portfolio reduce the net asset value of
the Portfolio's shares. Should a distribution reduce the
net asset value below a shareholder's cost basis, such
distribution nevertheless generally would be taxable to the
shareholder as ordinary income or capital gain as described
above, even though, from an investment standpoint, it may
constitute a partial return of capital. In particular,
investors should be careful to consider the tax implications
of buying shares just prior to a distribution. The price of
shares purchased at that time includes the amount of the
forthcoming distribution but the distribution generally
would be taxable to him or her.
Upon redemption, sale or exchange of his shares, a
shareholder will realize a taxable gain or loss depending
upon his basis for his shares. Such gain or loss will be
treated as capital gain or loss if the shares are capital
assets in the shareholder's hands. Such gain or loss
generally will be long-term or short-term depending upon the
shareholder's holding period for the shares. However, a
loss realized by a shareholder on the sale of shares of a
Portfolio with respect to which capital gain dividends have
been paid will, to the extent of such capital gain
dividends, be treated as long-term capital loss if such
shares have been held by the shareholder for six months or
less. A gain realized on a redemption, sale or exchange
will not be affected by a reacquisition of shares. A loss
realized on a redemption, sale or exchange, however, will be
disallowed to the extent the shares disposed of are replaced
(whether through reinvestment of distributions or otherwise)
within a period of 61 days beginning 30 days before and
ending 30 days after the disposition of the shares. In such
a case, the basis of the shares acquired will be adjusted to
reflect the disallowed loss.
If a shareholder (a) incurs a sales charge in acquiring
shares of the Concert Series, (b) disposes of those shares
within 90 days and (c) 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 increases the shareholder's tax
basis in the original shares only to the extent the
otherwise applicable sales charge for the second acquisition
is not reduced. The portion of the original sales charge
that does not increase the shareholder's tax basis in the
original shares would be treated as incurred with respect to
the second acquisition and, as a general rule, would
increase the shareholder's tax basis in the newly acquired
shares. Furthermore, the same rule also applies to a
disposition of the newly acquired shares made within 90 days
of the subsequent acquisition. This provision prevents a
shareholder from immediately deducting the sales charge by
shifting his or her investment in a family of mutual funds.
BACKUP WITHHOLDING. If a shareholder fails to furnish a
correct taxpayer identification number, fails to fully
report dividend or interest income, or fails to certify that
he or she has provided a correct taxpayer identification
number and that he or she is not subject to such
withholding, then the shareholder may be subject to a 31%
"backup withholding tax" with respect to (a) any taxable
dividends and distributions and (b) any proceeds of any
redemption of the Concert Series 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.
Taxation of the Underlying Smith Barney Funds
Each Underlying Smith Barney Fund intends to qualify
annually and elect to be treated as a regulated investment
company under Subchapter M of the Code. In any year in
which an Underlying Smith Barney Fund qualifies as a
regulated investment company and timely distributes all of
its taxable income, the Underlying Smith Barney Fund
generally will not pay any federal income or excise tax.
If more than 50% in value of an Underlying Smith Barney
Fund's assets at the close of any taxable year consists of
stocks or securities of foreign corporations, that
Underlying Smith Barney Fund may elect to treat certain
foreign taxes paid by it as paid by its shareholders. The
shareholders would then be required to include their
proportionate share of the electing Fund's foreign income
and related foreign taxes in income even if the shareholder
does not receive the amount representing foreign taxes.
Shareholders itemizing deductions could then deduct the
foreign taxes, or, whether or not deductions are itemized
but subject to certain limitations, claim a direct dollar
for dollar tax credit against their U.S. federal income tax
liability attributable to foreign income. In many cases, a
foreign tax credit will be more advantageous than a
deduction for foreign taxes. Each of the Portfolios may
invest in some Underlying Smith Barney Funds that expect to
be eligible to make the above-described election. While a
Portfolio will be able to deduct the foreign taxes that it
will be treated as receiving if the election is made, the
Portfolio will not itself be able to elect to treat its
foreign taxes as paid by its shareholders. Accordingly, the
shareholders of the Portfolio will not have an option of
claiming a foreign tax credit for foreign taxes paid by the
Underlying Smith Barney Funds, while persons who invest
directly in such Underlying Smith Barney Funds may have that
option.
General
The foregoing discussion related only to Federal income tax
law as applicable to U.S. citizens. Distributions by the
Portfolio also may be subject to state, local and foreign
taxes, and their treatment under state, local and foreign
income tax laws may differ from the Federal income tax
treatment. Shareholders should consult their tax advisors
with respect to particular questions of Federal, state,
local and foreign taxation.
VOTING
As permitted by Maryland law, there will normally be no
meetings of shareholders for the purpose of electing
directors unless and until such time as less than a majority
of the directors holding office have been elected by
shareholders. At that time, the directors then in office
will call a shareholders' meeting for the election of
directors. The directors must call a meeting of
shareholders when requested in writing to do so by the
record holders of not less than 10% of the outstanding
shares of the Concert Series. At such a shareholder meeting
called for the purpose, a director may be removed after the
holders of record of not less than a majority of the
outstanding shares of the Concert Series have declared that
the director be removed by votes cast in person or by proxy.
Except as set forth above, the directors shall continue to
hold office and may appoint successor directors.
On matters submitted for consideration by shareholders of
any Underlying Smith Barney Fund, a Portfolio will vote its
shares in proportion to the vote of all other holders of
shares of that Fund or, in certain limited instances, the
Portfolio will vote its shares in the manner indicated by a
vote of holders of shares of the Portfolio.
As used in the Prospectus and this Statement of Additional
Information, a "vote of a majority of the outstanding voting
securities" means the affirmative vote of the lesser of (a)
more than 50% of the outstanding shares of the Concert
Series (or the affected Portfolio or Class) or (b) 67% or
more of such shares present at a meeting if more than 50% of
the outstanding shares of the Concert Series (or the
affected Portfolio or Class) are represented at the meeting
in person or by proxy. A Portfolio or Class shall be deemed
to be affected by a matter unless it is clear that the
interests of each Portfolio or Class in the matter are
identical or that the matter does not affect any interest of
the Portfolio or Class. The approval of a management
agreement, a distribution agreement or any change in a
fundamental investment policy would be effectively acted
upon with respect to a Portfolio only if approved by a "vote
of a majority of the outstanding voting securities" of the
Portfolio affected by the matter; however, the ratification
of independent accountants and the election of directors are
not subject to separate voting requirements and may be
effectively acted upon by a vote of the holders of a
majority of all Concert Series shares voting without regard
to Portfolio.
ADDITIONAL INFORMATION
The Concert Series was incorporated in Maryland on August
11, 1995.
Portfolio securities and cash owned by the Concert Series
are held in the custody of PNC Bank, National Association,
17th and Chestnut Streets, Philadelphia, Pennsylvania 19103.
In the event of the liquidation or dissolution of the
Concert Series, shareholders of a Portfolio are entitled to
receive the assets belonging to that Portfolio that are
available for distribution and a proportionate distribution,
based upon the relative net assets of the respective
Portfolios, of any general assets not belonging to any
particular Portfolio that are available for distribution.
FINANCIAL STATEMENT
The Concert Series' Statement of Assets and Liabilities as
of January 22, 1996 accompanies this Statement of Additional
Information and is incorporated herein by reference.
APPENDIX - RATINGS OF DEBT OBLIGATIONS
BOND (AND NOTE) RATINGS
Moody's Investors Services, Inc.
Aaa - Bonds that 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 edged." 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 that 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 that make
the long term risks appear somewhat larger than in "Aaa"
securities.
A - Bonds that 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 that suggest a susceptibility to impairment
sometime in the future.
Baa - Bonds that 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 thereby 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 which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of
danger with respect to principal or interest.
Ca - Bonds which are rated Ca represent obligations which
are speculative in a high degree. Such issues are often in
default or have other marked shortcomings.
C - Bonds which are rated C are the lowest class of bonds
and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
Con (..) - Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition
are rated conditionally. These are bonds secured by (a)
earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals
which begin when facilities are completed, or (d) payments
to which some other limiting condition attaches.
Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of
condition.
Note: 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.
Standard & Poor's Corporation
AAA - Debt rated "AAA" has the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated "AA" has a very strong capacity to pay
interest and repay principal and differs from the highest
rated issues only in small degree.
A - Debt rated "A" has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB - Debt rated "BBB" is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher
rated categories.
BB, B, CCC, CC, C - Debt rated 'BB', 'B', 'CCC', 'CC' and
'C' is regarded, on balance, as predominantly 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 'C' the
highest degree of speculation. While such debt will likely
have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to
adverse conditions.
Plus (+) or Minus (-): The ratings from 'AA' to 'B' may be
modified by the addition of a plus or minus to show relative
standing within the major rating categories.
Provisional Ratings: The letter "p" indicates that the
rating is provisional. A provisional rating assumes the
successful completion of the project being financed by the
debt being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the
successful and timely completion of the project. This
rating, however, while addressing credit quality subsequent
to completion of the project, makes no comment on the
likelihood of, or the risk of default upon failure of, such
completion. The investor should exercise judgment with
respect to such likelihood and risk.
L - The letter "L" indicates that the rating pertains to the
principal amount of those bonds where the underlying deposit
collateral is fully insured by the Federal Savings & Loan
Insurance Corp. or the Federal Deposit Insurance Corp.
+ Continuance of the rating is contingent upon S&P's receipt
of closing documentation confirming investments and cash
flow.
* Continuance of the rating is contingent upon S&P's receipt
of an executed copy of the escrow agreement.
NR Indicates no rating has been requested, that there is
insufficient information on which to base a rating, or that
S&P does not rate a particular type of obligation as a
matter of policy.
COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc.
Issuers rated "Prime-1" (or related supporting institutions)
have a superior capacity for repayment of short-term
promissory obligations. Prime-1 repayment will normally be
evidenced by the following characteristics: leading market
positions in well-established industries; high rates of
return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset
protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; well-
established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers rated "Prime-2" (or related supporting institutions)
have strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Standard & Poor's Corporation
A-1 - This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very
strong. Those issuers determined to possess overwhelming
safety characteristics will be noted with a plus (+) sign
designation.
A-2 - Capacity for timely payment on issues with this
designation is strong. However, the relative degree of
safety is not as high as for issues designated A-1.
STATEMENT OF ASSETS AND LIABILITIES
Independent Auditors Report
The Shareholder and Board of Trustees
of Smith Barney Concert Series Fund Inc.:
We have audited the accompanying statement of assets and
liabilities of the High Growth Portfolio of Smith Barney
Concert Series Fund Inc. as of January 22, 1996. This
statement of assets and liabilities is the responsibility of
the Fund's management. Our responsibility is to express an
opinion on this statement of assets and liabilities 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 of a statement of assets
and liabilities 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 in bank by correspondence with
the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audit 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 the High Growth Portfolio of Smith
Barney Concert Series Fund Inc. as of January 22, 1996 in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
January 22, 1996
SMITH BARNEY CONCERT SERIES FUND INC.
High Growth Portfolio
Statement of Assets and Liabilities
January 22, 1996
ASSETS:
Cash
Total Assets $100,000.00
NET ASSETS
Paid-in Capital $100,000.00
Net Assets $100,000.00
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE $11.40
MAXIMUM PUBLIC OFFERING PRICE PER SHARE $12.00
SHARES OUTSTANDING 8,772
The accompanying notes are an integral part of this
financial statement.
SMITH BARNEY CONCERT SERIES FUND INC.
High Growth Portfolio
Notes to Statement of Assets and Liabilities
January 22, 1996
Note 1. Organization
The Concert Series Funds (the "Trust") was incorporated in
Maryland on August 11, 1995 and is registered under the
Investment Company Act of 1940, as amended, as an open-end
non-diversified management investment company. The Trust
consists of five portfolios (the "Funds"): The High Growth
Portfolio, The Growth Portfolio, The Balanced Portfolio, The
Conservative Portfolio, and The Income Portfolio.
The only transactions of the Funds have been the initial
sale on January 18, 1996 of 8,772 shares of the High Growth
Portfolio to Smith Barney Inc.
Note 2. Federal Taxes
The Trust intends to comply with the requirements of the
Internal Revenue Code applicable to regulated investments
companies and to distribute each year substantially all of
the investment company taxable income to the shareholders of
each of the Funds. Accordingly, no federal tax provisions
are required.
Note 3. Asset Allocation and Administration Agreement
The Funds have entered into an Advisory Agreement with Smith
Barney Mutual Funds Management Inc. (the "Advisor"), a
subsidiary of Smith Barney Holdings Inc. Pursuant to the
terms of the Advisory Agreement, the Advisor will manage the
investments and make investment decisions for each of the
Funds. A portfolio management committee consisting of
senior investment professionals of Smith Barney Mutual Funds
Management will allocate investments for each Portfolio
among Underlying Smith Barney Funds based on the outlook of
Smith Barney Mutual Funds Management, each Portfolio's
investment manager, for the economy, financial markets and
the relative performance of the Underlying Smith Barney
Funds. The allocation among the Underlying Smith Barney
Funds will be made within investment ranges established by
the Board of Directors of the Concert Series which designate
minimum and maximum percentages for each of the Underlying
Smith Barney Funds. For these services, the Advisor is
entitled to a monthly fee at the annual rate of 0.35% of
each Fund's average daily net assets.
Part C
Information required to be included in Part C is set
forth after the
appropriate item, so numbered, in Part C to this
Registration Statement.
OTHER
INFORMATION
Item 24: Financial Statements and Exhibits.
a. Financial Statements:
Included in Part A of this Registration Statement:
Financial Highlights
Included in Part B of this Registration Statement:
Statement of assets and liabilities as of January 22, 1996.
Included in Part C of this Registration Statement:
Statement of assets and liabilities as of May 31, 1996.
b. Exhibits:
1. Articles of Incorporation of the
Registrant is incorporated by reference to
Registrant's Registration Statement Pre-Effective Amendment
No. 1
on Form N-1A as filed on January 23, 1996
(the "Registration Statement").
2. Restated By-Laws of the Registrant is
incorporated by reference to
Registrant's Registration Statement as filed January 23,
1996.
3. Inapplicable.
4. (a) Registrant's form of stock
certificates for Class
A, B, C and Y shares of the High
Growth Portfolio
is incorporated by reference to Registrant's Registration
Statement as
filed January 23, 1996.
(b) Registrant's form of stock
certificates for Class
A, B, C and Y shares of the
Growth Portfolio is incorporated
by reference to Registrant's Registration Statement as filed
January 23, 1996.
(c) Registrant's form of stock
certificates for Class
A, B, C and Y shares of the
Balanced Portfolio is incorporated
by reference to Registrant's Registration Statement as filed
January 23, 1996.
(d) Registrant's form of stock
certificates for Class
A, B, C and Y shares of the
Conservative Portfolio
is incorporated by reference to Registrant's Registration
Statement as filed January 23, 1996.
(e) Registrant's form of stock
certificates for Class
A, B, C and Y shares of the
Income Portfolio
is incorporated by reference to Registrant's Registration
Statement
as filed January 23, 1996.
5. Form of Asset Allocation and
Administration Agreement
between the Registrant and Smith Barney
Mutual Funds
Management Inc. for each of the following:
(a) High Growth Portfolio.
(b) Growth Portfolio.
(c) Balanced Portfolio.
(d) Conservative Portfolio.
(e) Income Portfolio.
is incorporated by reference to Registrant's
Registration
Statement as filed January 23, 1996.
6. (a) Form of the Distribution
Agreement between the
Registrant and Smith Barney Inc.
is incorporated by reference to
Registrant's Registration Statement as filed January 23,
1996.
(b) Form of the Distribution
Agreement between the
Registrant and PFS Distributors,
Inc. is incorporated by reference to
Registrant's Registration Statement as filed January 23,
1996.
7. Inapplicable.
8. Form of Custodian Agreement between the
Registrant
and PNC Bank, National Association is
incorporated by reference to
Registrant's Registration Statement as filed January 23,
1996.
9. (a) Form of Transfer Agency and
Service Agreement
between the Registrant and The
Shareholder
Services Group, Inc. is
incorporated by reference to
Registrant's Registration Statement as filed January 23,
1996.
(b) Form of Sub-Transfer Agency
Agreement between the
Registrant and PFS Shareholders
Services is incorporated by reference to
Registrant's Registration Statement as filed January 23,
1996.
10. Opinion and Consent of Willkie Farr
& Gallagher as
to legality of shares being registered is
incorporated by reference to
Registrant's Registration Statement as filed January 23,
1996.
11. Consent of Independent Public Accountants
is filed herein.
12. Inapplicable.
13. Form of Purchase Agreement between the
Registrant and
the Purchaser of the initial shares is
incorporated by reference to
Registrant's Registration Statement as filed January 23,
1996.
14. Inapplicable.
15. Form of Service and Distribution Plan
pursuant to Rule 12b-1
between the Registrant and Smith Barney
Inc. is incorporated by reference to
Registrant's Registration Statement as filed January 23,
1996.
16. Performance Data is filed herein.
17. Inapplicable.
18. Form of Multiple Class Plan pursuant to
Rule 18f-3(d) of
the Investment Company Act of 1940 is
incorporated by reference to
Registrant's Registration Statement as filed January 23,
1996.
Item 25. Persons Controlled by or Under Common Control
with Registrant.
None.
Item 26. Number of Holders of Securities.
Shares
Balanced Portfolio Class A 3,399,391.768
Balanced Portfolio Class B 4,782,789.764
Balanced Portfolio Class C 929,446.663
Balanced Portfolio Class Y 1
Income Portfolio Class A 819,968.047
Income Portfolio Class B 927,418.714
Income Portfolio Class C 134,891.461
Income Portfolio Class Y 1
High Growth Portfolio Class A 6,451,969.652
High Growth Portfolio Class B 6,208,489.221
High Growth Portfolio Class C 872,938.213
High Growth Portfolio Class Y 1
Conserative Portfolio Class A 1,398,051.514
Conserative Portfolio Class B 1,279,715.543
Conserative Portfolio Class C 198,172.142
Conserative Portfolio Class Y 1
Growth Portfolio Class A 6,715,329.427
Growth Portfolio Class B 9,070,191.284
Growth Portfolio Class C 1,438,747.487
Growth Portfolio Class Y 1
Item 27. Indemnification.
The response to this item is incorporated by reference
to
the Registrant Statement filed with the SEC on January
23, 1996.
Item 28. Business or Other Connections of
Investment
Adviser.
Investment Adviser -- Smith Barney Mutual Funds
Management Inc.,
formerly known as Smith Barney Advisers, Inc.
SBMFM was incorporated in December 1968 under the laws of
the State of
Delaware. SBMFM is a wholly owned subsidiary of Smith
Barney Holdings
Inc. (formerly known as Smith Barney Shearson Holdings
Inc.), which in
turn is a wholly owned subsidiary of The Travelers Group
Inc. (formerly known
as Primerica Corporation) ("Travelers"). SBMFM is
registered as an
investment adviser under the Investment Advisers Act of 1940
(the "Advisers
Act").
The list required by this Item 28 of officers and
directors of SBMFM
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 years, is incorporated by
reference to
Schedules A and D of the Form ADV filed by SBMFM
pursuant to the
Advisers Act (SEC File No. 801-8314).
Item 29. Principal Underwriters.
Smith Barney Inc. ("Smith Barney") also serves as
distributor for each of the
following investment companies:
(a) Smith Barney Managed Municipals Fund Inc.
Smith Barney California Municipals Fund
Inc.
Smith Barney Massachusetts Municipals Fund
Smith Barney Global Opportunities Fund
Smith Barney Aggressive Growth Fund Inc.
Smith Barney Appreciation Fund Inc.
Smith Barney Principal Return Fund
Smith Barney Income Funds
Smith Barney Equity Funds
Smith Barney Investment Funds Inc.
Smith Barney Natural Resources Fund Inc.
Smith Barney Telecommunications Trust
Smith Barney Arizona Municipals Fund Inc.
Smith Barney New Jersey Municipals Fund
Inc.
The USA High Yield Fund N.V.
Garzarelli Sector Analysis Portfolio N.V.
Smith Barney Fundamental Value Fund Inc.
Smith Barney Series Fund
Consulting Group Capital Markets Funds
Smith Barney Investmnet Trust
Smith Barney Adjustable Rate Government
Income Fund
Smith Barney Oregon Municipals Fund
Smith Barney Funds, Inc.
Smith Barney Muni Funds
Smith Barney World Funds, Inc.
Smith Barney Money Funds, Inc.
Smith Barney Municipal Money Market Fund,
Inc.
Smith Barney Variable Account Funds
Smith Barney U.S. Dollar Reserve Fund
(Cayman)
Worldwide Special Fund, N.V.
Worldwide Securities Limited (Bermuda)
Smith Barney International Fund
(Luxembourg)
and various series of unit investment
trusts.
(b) The information required by this Item
29(b) with respect
to each director and officer of Smith
Barney is
incorporated by reference to Schedule A of
the Form BD filed
by Smith Barney pursuant to the
Securities Exchange Act
of 1934 (File No. 8-8177).
(c) Inapplicable.
Item 30. Location of Accounts and Records.
Certain accounts, books and other documents required to be
maintained by
Section 31(a) of the Investment Company Act of 1940, as
amended (the
"Investment Company Act"), and the Rules promulgated
thereunder are maintained
by Smith Barney Inc., 388 Greenwich Street, New York, New
York 10013.
Records relating to the duties of the Registrant's
custodian are maintained
by PNC Bank, National Association, 17th and Chestnut
Streets, Philadelphia,
Pennsylvania. Records relating to the duties of the
Registrant's transfer
agent are maintained by
First Data Investor Services
Group, Inc., Exchange
Place, Boston, Massachusetts.
Item 31. Management Services.
Inapplicable.
Item 32. Undertakings.
The Registrant hereby undertakes to furnish each person to
whom a prospectus
is delivered with a copy of the Registrant's latest annual
report to
shareholders upon request and without charge.
The Registrant hereby undertakes to call a meeting of
shareholders for
the purpose of voting on the question of removal of a
Director or Directors
when requested to do so by the holders of at least
10% of the
Registrant's outstanding shares and in connection with
such meeting to
comply with the provisions of Section 16(c) of the
Investment Company
Act relating to shareholder communications.
The Registrant hereby undertakes, insofar as
indemnification for
liability arising under the Securities Act may be
permitted to Directors,
officers and controlling persons of the Registrant pursuant
to the foregoing
provisions, or otherwise, to indemnify the Directors,
officers and
controlling persons of the Registrant. 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 Director,
officer or controlling
person of the Registrant in the successful defense of any
action, suit or
proceeding) is asserted by such Director, 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 precedent, submit to a court of appropriate
jurisdiction the
question whether such indemnification by it is against
public policy as
expressed in the Securities Act and will be governed by
the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act
of 1933 and the
Investment Company Act of 1940, the Registrant has
duly caused this
Amendment to its Registration Statement to be signed
on its behalf by
the undersigned, thereunto duly authorized, in the City of
New York and the
State of New York on the 5th day of August 1996.
SMITH BARNEY CONCERT
SERIES INC.
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as
amended, the
Registrant, Smith Barney Concert Series, has duly caused
this Post-
Effective Amendment No. 1 to the Registration Statement to
be signed on its behalf
by the undersigned, thereunto duly authorized, all in the
City of
New York, State of New York as of the 5th day of August,
1996.
By:/s/ Heath B. McLendon
Heath B. McLendon
Chairman of the
Board
of Directors
<TABLE>
<CAPTION>
SIGNATURE TITLE
DATE
---------
- ----- ----
<S> <C>
<C>
/s/ Heath B. McLendon Director; Chairman of the
Board August 5, 1996
- ----------------------------------- (Principal Executive
Officer)
Heath B. McLendon
/s/ Lewis E. Daidone Senior Vice President;
August 5, 1996
- --------------------------------------- Treasurer
Lewis E. Daidone (Principal Accounting
Officer)
/s/ Walter E. Auch* Director
August 5, 1996
- ----------------------------------
Walter E. Auch
/s/ Martin Brody* Director
August 5,, 1996
- --------------------------------------------
Martin Brody
/s/ H. John Ellis* Director
August 5, 1996
- ----------------------------------------------
H. John Ellis
/s/ Stephen E. Kaufman* Director
August 5, 1996
- -------------------------------------------
Stephen E. Kaufman
/s/ Armon E. Kamesar* Director
August 5, 1996
- -------------------------------------------
Armon E. Kamesar
/s/ Madelon DeVoe Talley* Director
August 5, 1996
- -------------------------------------------
Madelon DeVoe Talley
* Signed by Heath B. McLendon, their duly authorized
attorney-in-fact,pursuant to power of attorney dated
January 23, 1996.
/s/ Heath B. McLendon
Heath B. McLendon
</TABLE>
<PAGE>
Smith Barney Concert Series Inc.
Statements of Assets and Liabilities (Unaudited)
May 31, 1996
<TABLE>
<CAPTION>
High
Growth Growth Balanced
Portfolio Portfolio Portfolio
--
- ------- --------- ---------
<S> <C>
<C> <C>
ASSETS:
Investments, at cost
$102,150,443 $127,354,572 $64,659,837
============== ==============
=============
Investments, at value
$105,851,091 $130,062,333 $64,909,331
Cash
290 1,021 985
Receivable for fund shares sold
1,663,166 3,057,104 1,098,647
Receivable from investment advisor
5,172 - 15,933
Dividends and interest receivable
716 236,433 202,603
----
- ---------- -------------- -------------
Total Assets
107,520,435 133,356,891 66,227,499
----
- ---------- -------------- -------------
LIABILITIES:
Payable for securities purchased
3,826,803 4,501,596 2,174,589
Investment advisory fees payable
- - 7,904 -
Distribution fees payable
48,510 66,586 34,184
----
- ---------- -------------- -------------
Total Liabilities
3,875,313 4,576,086 2,208,773
----
- ---------- -------------- -------------
Total Net Assets
$103,645,122 $128,780,805 $64,018,726
============== ==============
=============
NET ASSETS:
Par value of capital shares
$8,471 $10,854 $5,572
Capital paid in excess of par value
99,888,996 125,735,971 63,448,958
Undistributed net investment income
47,007 326,219 314,702
Net unrealized appreciation on investments
3,700,648 2,707,761 249,494
----
- ---------- -------------- -------------
Total Net Assets
$103,645,122 $128,780,805 $64,018,726
Shares Outstanding:
Class A
3,767,240 3,940,794 1,917,852
============== ==============
=============
Class B
4,090,092 5,880,560 3,029,197
============== ==============
=============
Class C
613,847 1,032,741 625,024
============== ==============
=============
Net Asset Value:
Class A (and redemption price)
$12.27 $11.88 $11.50
============== ==============
=============
Class B *
$12.21 $11.85 $11.48
============== ==============
=============
Class C **
$12.21 $11.86 $11.48
============== ==============
=============
Class A Maximum Public Offering Price Per Share
(net asset value plus 5.26% of net asset
value per share
$12.92 $12.51 $12.11
============== ==============
=============
</TABLE>
* Redemption price is NAV of Class B shares reduced by a
5.00% CDSC if shares
are redeemed less than one year from initial purchase.
** Redemption price is NAV of Class C shares reduced by a
1.00% CDSC if shares
are redeemed within the first year of purchase.
See Notes to Financial
Statements.
<PAGE>
Smith Barney Concert Series Inc.
For the Period
from February 5, 1996
Statements of Operations (Unaudited)
to May 31, 1996
<TABLE>
<CAPTION>
High
Growth Growth Balanced
Portfolio Portfolio Portfolio
- --------- --------- ---------
<S>
<C> <C> <C>
INVESTMENT INCOME:
Dividends
$34,448 $465,755 $19,272
Interest
146,013 37,223 448,016
- -------------- -------------- --------------
- -
Total Investment Income
180,461 502,978 467,288
- -------------- -------------- --------------
- -
EXPENSES:
Investment advisory fees (Note 2)
45,236 56,340 28,892
Distribution fees (Note 2)
88,218 120,419 64,244
- -------------- -------------- --------------
- -
Total Expenses
133,454 176,759 93,136
- -------------- -------------- --------------
- -
Net Investment Income
47,007 326,219 374,152
- -------------- -------------- --------------
- -
UNREALIZED GAIN ON INVESTMENTS
Change in Net Unrealized Appreciation of Investments:
Beginning of period
- - - -
End of period
3,700,648 2,707,761 249,494
- -------------- -------------- --------------
- -
Increase in Net Unrealized Appreciation
3,700,648 2,707,761 249,494
- -------------- -------------- --------------
- -
Net Gain on Investments
3,700,648 2,707,761 249,494
- -------------- -------------- --------------
- -
Increase in Net Assets From Operations
$3,747,655 $3,033,980 $623,646
============== ==============
===============
</TABLE>
See Notes to Financial
Statements.
<PAGE>
Smith Barney Concert Series Inc.
For the Period from
Statements of Changes in Net Assets (Unaudited)
February 5, 1996 to
May 31, 1996
<TABLE>
<CAPTION>
High
Growth Growth Balanced
Portfolio Portfolio Portfolio
---
- ------ --------- ---------
<S> <C>
<C> <C>
OPERATIONS
Net investment income
$47,007 $326,219 $374,152
Increase in net unrealized appreciation
3,700,648 2,707,761 249,494
-----
- --------- -------------- --------------
Increase in Net Assets From Operations
$3,747,655 $3,033,980 $623,646
-----
- --------- -------------- --------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income
- - - ($59,450)
-----
- --------- -------------- --------------
Decrease in Net Assets from Distributions
to Shareholders
- - - ($59,450)
-----
- --------- -------------- --------------
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares
100,492,400 126,386,647 64,437,774
Net asset value of shares issued for
reinvestment of dividends
- - - 55,206
Cost of shares reacquired
(694,933) (639,822) (1,038,450)
-----
- --------- -------------- --------------
Increase in Net Assets From Fund
Share Transactions
99,797,467 125,746,825 63,454,530
-----
- --------- -------------- --------------
Total Increase in Net Assets
$103,545,122 $128,780,805 $64,018,726
-----
- --------- -------------- --------------
NET ASSETS:
Beginning of period
100,000 - -
End of period
$103,545,122 $128,780,805 $64,018,726
============== ============== ==============
* Includes undistributed net investment
income of:
$47,007 $326,219 $314,702
============== ============== ==============
</TABLE>
<PAGE>
Smith Barney Concert Series Inc.
Statements of Assets and Liabilities (Unaudited)
May 31, 1996
<TABLE>
<CAPTION>
Conservative Income
Portfolio Portfolio
- --------- ---------
<S> <C> <C>
ASSETS:
Investments, at cost
$20,511,229 $13,171,402
============= =============
Investments, at value
$20,426,983 $13,042,947
Cash
120 193
Receivable for fund shares sold
33,970 120,864
Receivable from investment advisor
142,201 34,659
Dividends and interest receivable
97,585 63,415
- ------------- -------------
Total Assets
20,700,859 13,262,078
- ------------- -------------
LIABILITIES:
Payable for securities purchased
312,226 309,860
Dividends payable
- - 61,469
Distribution fees payable
7,799 4,951
- ------------- -------------
Total Liabilities
320,025 376,280
- ------------- -------------
Total Net Assets
$20,380,834 $12,885,798
============= =============
NET ASSETS:
Par value of capital shares
$1,785 $1,155
Capital paid in excess of par value
20,306,568 13,012,691
Undistributed net investment income
156,727 407
Net unrealized depreciation on investments
(84,246) (128,455)
- ------------- -------------
Total Net Assets
$20,380,834 $12,885,798
============= =============
Shares Outstanding:
Class A
776,400 458,966
============= =============
Class B
854,248 623,086
============= =============
Class C
153,964 72,812
============= =============
Net Asset Value:
Class A (and redemption price)
$11.43 $11.16
============= =============
Class B *
$11.41 $11.16
============= =============
Class C **
$11.42 $11.16
============= =============
Class A Maximum Public Offering Price Per Share
(net asset value plus 4.71% of net asset value per
share $11.97 $11.69
============= =============
</TABLE>
* Redemption price is NAV of Class B shares reduced by a
4.50% CDSC if shares
are redeemed less than one year from initial purchase.
** Redemption price is NAV of Class C shares reduced by a
1.00% CDSC if shares
are redeemed within the first year of purchase.
See Notes to Financial
Statements.
<PAGE>
Smith Barney Concert Series Inc.
For the Period
from February 5, 1996
Statements of Operations (Unaudited)
to May 31, 1996
<TABLE>
<CAPTION>
Conservative Income
Portfolio Portfolio
- --------- ---------
<S> <C> <C>
INVESTMENT INCOME:
Dividends
$199,251 $128,800
Interest
7,030 3,496
- ------------ ------------
Total Investment Income
206,281 132,296
- ------------ ------------
EXPENSES:
Investment advisory fees (Note 2)
9,214 5,705
Distribution fees (Note 2)
14,339 9,016
- ------------ ------------
Total Expenses
23,553 14,721
- ------------ ------------
Net Investment Income
182,728 117,575
- ------------ ------------
UNREALIZED GAIN ON INVESTMENTS
Change in Net Unrealized Depreciation of Investments:
Beginning of period
- - -
End of period
(84,246) (128,455)
- ------------ ------------
Increase in Net Unrealized Depreciation
(84,246) (128,455)
- ------------ ------------
Net Loss on Investments
(84,246) (128,455)
- ------------ ------------
Increase (Decrease) in Net Assets From Operations
$98,482 ($10,880)
============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
Smith Barney Concert Series Inc.
For the Period from
Statements of Changes in Net Assets (Unaudited)
February 5, 1996 to
May 31, 1996
<TABLE>
<CAPTION>
Conservative Portfolio Income Portfolio
<S>
<C> <C>
OPERATIONS
Net investment income
$182,728 $117,575
Increase in net unrealized depreciation
(84,246) (128,455)
- ------------- -------------
Increase (Decrease) in Net Assets From Operations
$98,482 ($10,880)
- ------------- -------------
DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income
($26,001) ($117,168)
- ------------- -------------
Decrease in Net Assets from Distributions
to Shareholders
($26,001) ($117,168)
- ------------- -------------
FUND SHARE TRANSACTIONS:
Net proceeds from sale of shares
21,083,578 13,625,755
Net asset value of shares issued for
reinvestment of dividends
22,884 45,129
Cost of shares reacquired
(798,109) (657,038)
- ------------- -------------
Increase in Net Assets From Fund
Share Transactions
20,308,353 13,013,846
- ------------- -------------
Total Increase in Net Assets
$20,380,834 $12,885,798
- ------------- -------------
NET ASSETS:
Beginning of period
- - -
End of period
$20,380,834 $12,885,798
============= =============
* Includes undistributed net investment income of:
$156,727 $407
============= =============
</TABLE>
See Notes to Financial Statements.
<PAGE>
Smith Barney Concert Series Fund Inc.
Balanced Portfolio
Schedule of Investments (unaudited)
May 31, 1996
<TABLE>
<CAPTION>
SHARES/
FACE VALUE SECURITY
VALUE
- ---------- -----------------------------------------------
- ----- -----------
<S> <C>
<C>
COMMON STOCKS - 95.6%
$244,700 Smith Barney Appreciation Fund Inc.
$3,139,506
191,659 Smith Barney Convertible Fund
3,139,387
1,203,501 Smith Barney Diversified Strategic Income Fund
9,411,381
402,857 Smith Barney Equity Income Portfolio
6,272,495
334,960 Smith Barney Fundamental Value Fund Inc.
3,141,932
343,450 Smith Barney Government Securities Fund
3,118,530
486,429 Smith Barney Growth and Income Fund
6,279,799
509,824 Smith Barney Managed Governments Fund Inc.
6,235,158
351,721 Smith Barney Premium Total Return Fund
6,267,683
1,411,338 Smith Barney Short-Term U.S. Treasury
Securities
Portfolio
5,617,129
212,505 Smith Barney Utilities Fund
3,100,459
462,967 Smith Barney World Funds International Balanced
Portfolio
6,314,871
- -----------
TOTAL COMMON STOCKS
(Cost -$ 61,788,837)
62,038,331
- -----------
REPURCHASE AGREEMENTS - 4.4%
$2,871,000 Chase Securities Inc., 5.218% due 6/3/96;
Proceeds at maturity - $2,872,249; (Fully
collateralized by U.S. Treasury Notes, 6.125%,
due 5/31/97; Market Value - $2,929,622)
(Cost - 2,871,000)
2,871,000
- -----------
TOTAL INVESTMENTS - 100%
(Cost - $64,659,837)
$64,909,331
===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
Smith Barney Concert Series Fund Inc.
Conservative Portfolio
Schedule of Investments (unaudited)
May 31, 1996
<TABLE>
<CAPTION>
SHARES/
FACE VALUE SECURITY
VALUE
- ---------- -----------------------------------------------
- ----- ----------
<S> <C>
<C>
COMMON STOCKS - 97.5%
123,190 Smith Barney Convertible Fund
$2,017,853
515,590 Smith Barney Diversified Strategic Fund
4,031,915
129,516 Smith Barney Equity Income Portfolio
2,016,558
220,490 Smith Barney Government Securities Income Fund
2,002,052
90,176 Smith Barney High Income Fund
1,008,166
245,591 Smith Barney Managed Governments Fund Inc.
3,003,583
113,043 Smith Barney Premium Total Return
2,014,422
454,654 Smith Barney Short-Term U.S. Fund
1,809,525
68,203 Smith Barney Utilities Fund
995,085
74,621 Smith Barney World Funds International Equity
Portfolio
1,017,824
- -----------
TOTAL COMMON STOCKS
(Cost - $20,001,229)
19,916,983
- -----------
REPURCHASE AGREEMENT - 2.5%
510,000 Chase Securities Inc., 5.218% due 6/3/96
Proceeds at maturity - $510,221.78 (Fully
collateralized by U.S. Treasury Notes 6.125%,
due
5/31/97; Market value - $520,413) (Cost -
$510,000) 510,000
- -----------
TOTAL INVESTMENTS - 100%
(Cost - $20,511,229)
$20,426,983
===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
Smith Barney Concert Series Fund Inc.
Growth Portfolio
Schedule of Investments (unaudited)
May 31, 1996
<TABLE>
<CAPTION>
SHARES/
FACE VALUE SECURITY
VALUE
- ---------- -----------------------------------------------
- ---- -----------
<S> <C>
<C>
COMMON STOCKS - 96.4%
381,114 Smith Barney Aggressive Growth Fund Inc.
$12,755,901
984,537 Smith Barney Appreciation Fund Inc.
12,631,608
1,347,593 Smith Barney Fundamental Value Fund Inc.
12,640,426
691,082 Smith Barney Government Securities Fund
6,275,024
978,519 Smith Barney Growth and Income Fund
12,632,681
1,015,929 Smith Barney High Income Fund
11,358,081
533,870 Smith Barney Investment Grade Bond Fund
6,251,616
512,898 Smith Barney Managed Government Fund Inc.
6,272,743
948,726 Smith Barney Managed Growth Fund
12,703,444
361,167 Smith Barney Special Equities Fund
12,853,935
521,886 Smith Barney World Funds Global Government Bond
Portfolio
6,278,289
673,104 Smith Barney World Funds International Equity
Portfolio
12,748,585
- ------------
TOTAL COMMON STOCKS
(Cost - $122,694,572)
125,402,333
- ------------
REPURCHASE AGREEMENT - 3.6%
4,660,000 Chase Securities Inc., 5.218% due 6/3/96
Proceeds at maturity - $4,662,027 (Fully
collateralized by U.S. Treasury Notes,
6.125%, due 5/31/97; Market value - $4,755,150)
(Cost - $4,660,000)
4,660,000
- ------------
TOTAL INVESTMENTS - 100%
(Cost - $127,354,572)
$130,062,333
============
</TABLE>
See Notes to Financial Statement
<PAGE>
Smith Barney Concert Series Fund Inc.
High Growth Portfolio
Schedule of Investments (unaudited)
May 31, 1996
<TABLE>
<CAPTION>
SHARES/
FACE VALUE SECURITY
VALUE
- ---------- -----------------------------------------------
- ---- -----------
<S> <C>
<C>
COMMON STOCKS - 95.3%
$610,266 Smith Barney Aggressive Growth Fund Inc.
$20,425,606
788,223 Smith Barney Appreciation Fund Inc.
10,112,905
539,406 Smith Barney Fundamental Value Fund Inc.
5,059,627
391,680 Smith Barney Growth and Income Fund
5,056,593
813,513 Smith Barney High Income Fund
9,095,074
759,310 Smith Barney Managed Growth Fund
10,167,154
578,592 Smith Barney Special Equities Fund
20,592,087
1,077,299 Smith Barney World Funds International Equity
Portfolio
20,404,045
- ------------
TOTAL COMMON STOCKS
(Cost - $97,212,443)
100,913,091
- ------------
REPURCHASE AGREEMENTS - 4.7%
$4,938,000 Chase Securities Inc., 5.218% due 6/3/96;
Proceeds at maturity - $4,940,147; (Fully
collaterlized by U.S. Treasury Notes, 6.125%
due 5/31/97; Market Value - $5,038,827)
(Cost - 4,938,000)
4,938,000
- ------------
TOTAL INVESTMENTS - 100%
(Cost - $102,150,443)
$105,851,091
============
</TABLE>
See Notes to Financial Statements.
<PAGE>
Smith Barney Concert Series Fund Inc.
Income Portfolio
Schedule of Investments (unaudited)
May 31, 1996
<TABLE>
<CAPTION>
SHARES/
FACE VALUE SECURITY
VALUE
- ---------- -----------------------------------------------
- ----- -----------
<S> <C>
<C>
COMMON STOCKS - 96.5%
$38,977 Smith Barney Convertible Fund
$638,449
326,365 Smith Barney Diversified Strategic Income Fund
2,552,175
81,917 Smith Barney Equity Income Portfolio
1,275,452
209,540 Smith Barney Government Securities Fund
1,902,630
43,213 Smith Barney High Income Fund
1,275,822
155,523 Smith Barney Managed Government Fund
1,902,055
606,001 Smith Barney Short-Term U.S. Treasury
Securities
Portfolio
2,411,885
43,213 Smith Barney Utilities Fund
630,479
- -----------
TOTAL COMMON STOCKS
(Cost - $12,717,402)
12,588,947
- -----------
REPURCHASE AGREEMENT - 3.5%
454,000 Chase Securities Inc., 5.218% due 6/3/96
Proceeds at maturity - $454,197 (Fully
collateralized by U.S. Treasury Notes 6.125%,
due 5/31/97; Market value - $463,270)
(Cost - $454,000]
454,000
- -----------
TOTAL INVESTMENTS - 100%
(Cost - $13,171,402)
$13,042,947
===========
</TABLE>
See Notes to Financial Statements.
Independent Auditors Consent
To the Trustees and Shareholders of the
Consulting Group Capital Markets Fund;
We consent to the use of our report dated October 24, 1995,
incorporated herein by reference and to the references to
our firm under the headings "Financial Highlights" in the
Prospectus and "Counsel and Auditors" in the Statement of
Additional Information.
KPMG Peat Marwick
LLP
August 2, 1996
New York, New York
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES FUND
[SERIES]
[NUMBER] 1
[NAME] BALANCED PORTFOLIO - CLASS A
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 64,659,837
[INVESTMENTS-AT-VALUE] 64,909,331
[RECEIVABLES] 1,317,183
[ASSETS-OTHER] 985
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 66,227,499
[PAYABLE-FOR-SECURITIES] 2,174,589
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 34,184
[TOTAL-LIABILITIES] 2,208,773
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 63,454,530
[SHARES-COMMON-STOCK] 1,917,852
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 314,702
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 249,494
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 249,494
[NET-ASSETS] 64,018,726
[DIVIDEND-INCOME] 19,272
[INTEREST-INCOME] 448,016
[OTHER-INCOME] 0
[EXPENSES-NET] 93,136
[NET-INVESTMENT-INCOME] 374,152
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 249,494
[NET-CHANGE-FROM-OPS] 0
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 16,318
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 22,533,751
[NUMBER-OF-SHARES-REDEEMED] 697,456
[SHARES-REINVESTED] 16,429
[NET-CHANGE-IN-ASSETS] 0
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 28,892
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 93,892
[AVERAGE-NET-ASSETS] 7,565,049
[PER-SHARE-NAV-BEGIN] 11.40
[PER-SHARE-NII] 0.08
[PER-SHARE-GAIN-APPREC] 0.06
[PER-SHARE-DIVIDEND] 0.04
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.50
[EXPENSE-RATIO] 0.60
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES FUND
[SERIES]
[NUMBER] 1
[NAME] BALANCED PORTFOLIO - CLASS B
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 64,659,837
[INVESTMENTS-AT-VALUE] 64,909,331
[RECEIVABLES] 1,317,183
[ASSETS-OTHER] 985
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 66,227,499
[PAYABLE-FOR-SECURITIES] 2,174,589
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 34,184
[TOTAL-LIABILITIES] 2,208,773
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 63,454,530
[SHARES-COMMON-STOCK] 3,029,197
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 314,702
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 249,494
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 249,494
[NET-ASSETS] 64,018,726
[DIVIDEND-INCOME] 19,272
[INTEREST-INCOME] 448,016
[OTHER-INCOME] 0
[EXPENSES-NET] 93,136
[NET-INVESTMENT-INCOME] 374,152
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 249,494
[NET-CHANGE-FROM-OPS] 0
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 33,778
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 34,780,172
[NUMBER-OF-SHARES-REDEEMED] 324,068
[SHARES-REINVESTED] 31,272
[NET-CHANGE-IN-ASSETS] 0
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 28,892
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 93,892
[AVERAGE-NET-ASSETS] 14,507,978
[PER-SHARE-NAV-BEGIN] 11.40
[PER-SHARE-NII] 0.07
[PER-SHARE-GAIN-APPREC] 0.04
[PER-SHARE-DIVIDEND] 0.03
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.48
[EXPENSE-RATIO] 1.35
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES FUND
[SERIES]
[NUMBER] 1
[NAME] BALANCED PORTFOLIO - CLASS C
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 64,659,837
[INVESTMENTS-AT-VALUE] 64,909,331
[RECEIVABLES] 1,317,183
[ASSETS-OTHER] 985
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 66,227,499
[PAYABLE-FOR-SECURITIES] 2,174,589
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 34,184
[TOTAL-LIABILITIES] 2,208,773
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 63,454,530
[SHARES-COMMON-STOCK] 625,024
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 314,702
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 249,494
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 249,494
[NET-ASSETS] 64,018,726
[DIVIDEND-INCOME] 19,272
[INTEREST-INCOME] 448,016
[OTHER-INCOME] 0
[EXPENSES-NET] 93,136
[NET-INVESTMENT-INCOME] 374,152
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 249,494
[NET-CHANGE-FROM-OPS] 0
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 9,354
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 7,123,851
[NUMBER-OF-SHARES-REDEEMED] 16,926
[SHARES-REINVESTED] 7,505
[NET-CHANGE-IN-ASSETS] 0
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 28,892
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 93,892
[AVERAGE-NET-ASSETS] 3,425,616
[PER-SHARE-NAV-BEGIN] 11.40
[PER-SHARE-NII] 0.06
[PER-SHARE-GAIN-APPREC] 0.05
[PER-SHARE-DIVIDEND] 0.03
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.48
[EXPENSE-RATIO] 1.35
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES FUND
[SERIES]
[NUMBER] 3
[NAME] CONSERVATIVE PORTFOLIO - CLASS A
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 20,511,229
[INVESTMENTS-AT-VALUE] 20,426,983
[RECEIVABLES] 273,756
[ASSETS-OTHER] 120
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 20,700,859
[PAYABLE-FOR-SECURITIES] 312,226
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 7,799
[TOTAL-LIABILITIES] 329,025
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 20,308,353
[SHARES-COMMON-STOCK] 776,400
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 156,727
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (84,246)
[NET-ASSETS] 20,380,834
[DIVIDEND-INCOME] 199,251
[INTEREST-INCOME] 7,030
[OTHER-INCOME] 0
[EXPENSES-NET] 23,553
[NET-INVESTMENT-INCOME] 182,728
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] (84,246)
[NET-CHANGE-FROM-OPS] 98,482
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 9,813
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 804,880
[NUMBER-OF-SHARES-REDEEMED] 28,479
[SHARES-REINVESTED] 800
[NET-CHANGE-IN-ASSETS] 20,380,834
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 9,214
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 23,553
[AVERAGE-NET-ASSETS] 3,392,470
[PER-SHARE-NAV-BEGIN] 11.46
[PER-SHARE-NII] 0.23
[PER-SHARE-GAIN-APPREC] (0.21)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0.05
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.43
[EXPENSE-RATIO] 0.60
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES FUND
[SERIES]
[NUMBER] 3
[NAME] CONSERVATIVE PORTFOLIO - CLASS B
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 20,511,229
[INVESTMENTS-AT-VALUE] 20,426,983
[RECEIVABLES] 273,756
[ASSETS-OTHER] 120
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 20,700,859
[PAYABLE-FOR-SECURITIES] 312,226
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 7,799
[TOTAL-LIABILITIES] 329,025
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 20,308,353
[SHARES-COMMON-STOCK] 854,248
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 156,727
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (84,246)
[NET-ASSETS] 20,380,834
[DIVIDEND-INCOME] 199,251
[INTEREST-INCOME] 7,030
[OTHER-INCOME] 0
[EXPENSES-NET] 23,553
[NET-INVESTMENT-INCOME] 182,728
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] (84,246)
[NET-CHANGE-FROM-OPS] 98,482
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 13,584
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 887,552
[NUMBER-OF-SHARES-REDEEMED] 34,305
[SHARES-REINVESTED] 1001
[NET-CHANGE-IN-ASSETS] 20,380,834
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 9,214
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 23,553
[AVERAGE-NET-ASSETS] 4,243,718
[PER-SHARE-NAV-BEGIN] 11.46
[PER-SHARE-NII] 0.16
[PER-SHARE-GAIN-APPREC] (0.17)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0.04
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.41
[EXPENSE-RATIO] 1.10
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES FUND
[SERIES]
[NUMBER] 3
[NAME] CONSERVATIVE PORTFOLIO - CLASS C
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 20,511,229
[INVESTMENTS-AT-VALUE] 20,426,983
[RECEIVABLES] 273,756
[ASSETS-OTHER] 120
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 20,700,859
[PAYABLE-FOR-SECURITIES] 312,226
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 7,799
[TOTAL-LIABILITIES] 329,025
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 20,308,353
[SHARES-COMMON-STOCK] 153,964
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 156,727
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (84,246)
[NET-ASSETS] 20,380,834
[DIVIDEND-INCOME] 199,251
[INTEREST-INCOME] 7,030
[OTHER-INCOME] 0
[EXPENSES-NET] 23,553
[NET-INVESTMENT-INCOME] 182,728
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] (84,246)
[NET-CHANGE-FROM-OPS] 98,482
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 2,604
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 460,861
[NUMBER-OF-SHARES-REDEEMED] 7,111
[SHARES-REINVESTED] 214
[NET-CHANGE-IN-ASSETS] 20,380,834
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 9,214
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 23,553
[AVERAGE-NET-ASSETS] 773,395
[PER-SHARE-NAV-BEGIN] 11.46
[PER-SHARE-NII] 0.16
[PER-SHARE-GAIN-APPREC] (0.15)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0.05
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.42
[EXPENSE-RATIO] 1.05
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES FUND
[SERIES]
[NUMBER] 4
[NAME] GROWTH PORTFOLIO - CLASS A
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 127,354,572
[INVESTMENTS-AT-VALUE] 130,062,333
[RECEIVABLES] 3,293,537
[ASSETS-OTHER] 1,021
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 133,356,891
[PAYABLE-FOR-SECURITIES] 4,501,596
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 74,490
[TOTAL-LIABILITIES] 4,576,086
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 125,746,825
[SHARES-COMMON-STOCK] 3,940,794
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 326,219
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 2,707,761
[NET-ASSETS] 128,780,805
[DIVIDEND-INCOME] 465,755
[INTEREST-INCOME] 37,223
[OTHER-INCOME] 0
[EXPENSES-NET] 176,759
[NET-INVESTMENT-INCOME] 326,219
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 2,707,761
[NET-CHANGE-FROM-OPS] 3,033,980
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 3,955,510
[NUMBER-OF-SHARES-REDEEMED] 14,716
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 128,780,805
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 56,340
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 176,759
[AVERAGE-NET-ASSETS] 16,780,954
[PER-SHARE-NAV-BEGIN] 11.40
[PER-SHARE-NII] 0.08
[PER-SHARE-GAIN-APPREC] 0.40
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.88
[EXPENSE-RATIO] 0.60
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES FUND
[SERIES]
[NUMBER] 4
[NAME] GROWTH PORTFOLIO - CLASS B
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 127,354,572
[INVESTMENTS-AT-VALUE] 130,062,333
[RECEIVABLES] 3,293,537
[ASSETS-OTHER] 1,021
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 133,356,891
[PAYABLE-FOR-SECURITIES] 4,501,596
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 74,490
[TOTAL-LIABILITIES] 4,576,086
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 125,746,825
[SHARES-COMMON-STOCK] 5,880,560
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 326,219
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 2,707,761
[NET-ASSETS] 128,780,805
[DIVIDEND-INCOME] 465,755
[INTEREST-INCOME] 37,223
[OTHER-INCOME] 0
[EXPENSES-NET] 176,759
[NET-INVESTMENT-INCOME] 326,219
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 2,707,761
[NET-CHANGE-FROM-OPS] 3,033,980
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 5,917,945
[NUMBER-OF-SHARES-REDEEMED] 37,385
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 128,780,805
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 56,340
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 176,759
[AVERAGE-NET-ASSETS] 27,913,088
[PER-SHARE-NAV-BEGIN] 11.40
[PER-SHARE-NII] 0.05
[PER-SHARE-GAIN-APPREC] 0.40
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.85
[EXPENSE-RATIO] 1.35
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES FUND
[SERIES]
[NUMBER] 4
[NAME] GROWTH PORTFOLIO - CLASS C
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 127,354,572
[INVESTMENTS-AT-VALUE] 130,062,333
[RECEIVABLES] 3,293,537
[ASSETS-OTHER] 1,021
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 133,356,891
[PAYABLE-FOR-SECURITIES] 4,501,596
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 74,490
[TOTAL-LIABILITIES] 4,576,086
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 125,746,825
[SHARES-COMMON-STOCK] 1,032,741
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 326,219
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 2,707,761
[NET-ASSETS] 128,780,805
[DIVIDEND-INCOME] 465,755
[INTEREST-INCOME] 37,223
[OTHER-INCOME] 0
[EXPENSES-NET] 176,759
[NET-INVESTMENT-INCOME] 326,219
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 2,707,761
[NET-CHANGE-FROM-OPS] 3,033,980
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 1,036,006
[NUMBER-OF-SHARES-REDEEMED] 3,264
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 128,780,805
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 56,340
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 176,759
[AVERAGE-NET-ASSETS] 5,060,807
[PER-SHARE-NAV-BEGIN] 11.40
[PER-SHARE-NII] 0.06
[PER-SHARE-GAIN-APPREC] 0.40
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.86
[EXPENSE-RATIO] 1.35
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES
[SERIES]
[NUMBER] 5
[NAME] HIGH GROWTH PORTFOLIO - CLASS A
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 102,150,443
[INVESTMENTS-AT-VALUE] 105,851,091
[RECEIVABLES] 1,669,054
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 290
[TOTAL-ASSETS] 107,520,435
[PAYABLE-FOR-SECURITIES] 3,826,803
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 48,510
[TOTAL-LIABILITIES] 3,875,313
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 99,897,467
[SHARES-COMMON-STOCK] 3,767,240
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (47,007)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 3,700,648
[NET-ASSETS] 103,645,122
[DIVIDEND-INCOME] 34,448
[INTEREST-INCOME] 146,013
[OTHER-INCOME] 0
[EXPENSES-NET] 133,454
[NET-INVESTMENT-INCOME] 47,007
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 3,700,648
[NET-CHANGE-FROM-OPS] 3,747,655
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 44,808,241
[NUMBER-OF-SHARES-REDEEMED] 217,599
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 103,545,122
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 45,236
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 133,454
[AVERAGE-NET-ASSETS] 23,113,000
[PER-SHARE-NAV-BEGIN] 11.40
[PER-SHARE-NII] 0.01
[PER-SHARE-GAIN-APPREC] 0.86
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 12.27
[EXPENSE-RATIO] 0.60
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES
[SERIES]
[NUMBER] 5
[NAME] HIGH GROWTH PORTFOLIO - CLASS B
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 102,150,443
[INVESTMENTS-AT-VALUE] 105,851,091
[RECEIVABLES] 1,669,054
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 290
[TOTAL-ASSETS] 107,520,435
[PAYABLE-FOR-SECURITIES] 3,826,803
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 48,510
[TOTAL-LIABILITIES] 3,875,313
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 99,897,467
[SHARES-COMMON-STOCK] 4,090,092
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (47,007)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 3,700,648
[NET-ASSETS] 103,645,122
[DIVIDEND-INCOME] 34,448
[INTEREST-INCOME] 146,013
[OTHER-INCOME] 0
[EXPENSES-NET] 133,454
[NET-INVESTMENT-INCOME] 47,007
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 3,700,648
[NET-CHANGE-FROM-OPS] 3,747,655
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 44,806,963
[NUMBER-OF-SHARES-REDEEMED] 217,599
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 103,545,122
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 45,236
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 133,454
[AVERAGE-NET-ASSETS] 24,962,000
[PER-SHARE-NAV-BEGIN] 11.40
[PER-SHARE-NII] 0.00
[PER-SHARE-GAIN-APPREC] 0.81
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 12.21
[EXPENSE-RATIO] 1.10
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES
[SERIES]
[NUMBER] 5
[NAME] HIGH GROWTH PORTFOLIO - CLASS C
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 102,150,443
[INVESTMENTS-AT-VALUE] 105,851,091
[RECEIVABLES] 1,669,054
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 290
[TOTAL-ASSETS] 107,520,435
[PAYABLE-FOR-SECURITIES] 3,826,803
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 48,510
[TOTAL-LIABILITIES] 3,875,313
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 99,897,467
[SHARES-COMMON-STOCK] 613,847
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (47,007)
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 3,700,648
[NET-ASSETS] 103,645,122
[DIVIDEND-INCOME] 34,448
[INTEREST-INCOME] 146,013
[OTHER-INCOME] 0
[EXPENSES-NET] 133,454
[NET-INVESTMENT-INCOME] 47,007
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 3,700,648
[NET-CHANGE-FROM-OPS] 3,747,655
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 44,806,963
[NUMBER-OF-SHARES-REDEEMED] 217,599
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 103,545,122
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 45,236
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 133,454
[AVERAGE-NET-ASSETS] 3,748,000
[PER-SHARE-NAV-BEGIN] 11.40
[PER-SHARE-NII] 0.00
[PER-SHARE-GAIN-APPREC] 0.81
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 12.21
[EXPENSE-RATIO] 1.05
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES FUND
[SERIES]
[NUMBER] 2
[NAME] INCOME PORTFOLIO - CLASS A
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 13,171,402
[INVESTMENTS-AT-VALUE] 13,042,947
[RECEIVABLES] 218,938
[ASSETS-OTHER] 193
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 13,262,078
[PAYABLE-FOR-SECURITIES] 309,860
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 66,420
[TOTAL-LIABILITIES] 376,280
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 13,013,846
[SHARES-COMMON-STOCK] 458,966
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 407
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (128,455)
[NET-ASSETS] 12,885,798
[DIVIDEND-INCOME] 128,800
[INTEREST-INCOME] 3,496
[OTHER-INCOME] 0
[EXPENSES-NET] 14,721
[NET-INVESTMENT-INCOME] 117,575
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] (128,455)
[NET-CHANGE-FROM-OPS] (10,880)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 46,984
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 5,543,498
[NUMBER-OF-SHARES-REDEEMED] 391,801
[SHARES-REINVESTED] 18,268
[NET-CHANGE-IN-ASSETS] (10,880)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 5,705
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 14,721
[AVERAGE-NET-ASSETS] 5,121,251
[PER-SHARE-NAV-BEGIN] 11.46
[PER-SHARE-NII] 0.17
[PER-SHARE-GAIN-APPREC] (0.30)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0.17
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.16
[EXPENSE-RATIO] 0.45
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES FUND
[SERIES]
[NUMBER] 2
[NAME] INCOME PORTFOLIO - CLASS B
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 13,171,402
[INVESTMENTS-AT-VALUE] 13,042,947
[RECEIVABLES] 218,938
[ASSETS-OTHER] 193
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 13,262,078
[PAYABLE-FOR-SECURITIES] 309,860
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 66,420
[TOTAL-LIABILITIES] 376,280
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 13,013,846
[SHARES-COMMON-STOCK] 623,086
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 407
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (128,455)
[NET-ASSETS] 12,885,798
[DIVIDEND-INCOME] 128,800
[INTEREST-INCOME] 3,496
[OTHER-INCOME] 0
[EXPENSES-NET] 14,721
[NET-INVESTMENT-INCOME] 117,575
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] (128,455)
[NET-CHANGE-FROM-OPS] (10,880)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 62,430
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 7,263,323
[NUMBER-OF-SHARES-REDEEMED] 264,687
[SHARES-REINVESTED] 24,001
[NET-CHANGE-IN-ASSETS] (10,880)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 5,705
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 14,721
[AVERAGE-NET-ASSETS] 3,644,782
[PER-SHARE-NAV-BEGIN] 11.46
[PER-SHARE-NII] 0.16
[PER-SHARE-GAIN-APPREC] (0.30)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0.16
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.16
[EXPENSE-RATIO] 0.83
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0001000077
[NAME] SMITH BARNEY CONCERT SERIES FUND
[SERIES]
[NUMBER] 2
[NAME] INCOME PORTFOLIO - CLASS C
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JAN-31-1997
[PERIOD-END] MAY-31-1996
[INVESTMENTS-AT-COST] 13,171,402
[INVESTMENTS-AT-VALUE] 13,042,947
[RECEIVABLES] 218,938
[ASSETS-OTHER] 193
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 13,262,078
[PAYABLE-FOR-SECURITIES] 309,860
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 66,420
[TOTAL-LIABILITIES] 376,280
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 13,013,846
[SHARES-COMMON-STOCK] 72,812
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 407
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (128,455)
[NET-ASSETS] 12,885,798
[DIVIDEND-INCOME] 128,800
[INTEREST-INCOME] 3,496
[OTHER-INCOME] 0
[EXPENSES-NET] 14,721
[NET-INVESTMENT-INCOME] 117,575
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] (128,455)
[NET-CHANGE-FROM-OPS] (10,880)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 7,798
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 818,933
[NUMBER-OF-SHARES-REDEEMED] 550
[SHARES-REINVESTED] 2,860
[NET-CHANGE-IN-ASSETS] (10,880)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 5,705
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 14,721
[AVERAGE-NET-ASSETS] 454,032
[PER-SHARE-NAV-BEGIN] 11.46
[PER-SHARE-NII] 0.16
[PER-SHARE-GAIN-APPREC] (0.30)
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0.16
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 11.16
[EXPENSE-RATIO] 0.80
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
