<PAGE>1
Filed with the Securities and Exchange Commission on January 23, 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. 1 [X]
Post-Effective Amendment No. _____ [ ]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 1 [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 Fund Management Inc.
388 Greenwich Street
New York, New York 10013
(Name and Address of Agent for Service)
Copy to:
Rose F. DiMartino, Esq.
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
<PAGE>2
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of the Registration Statement.
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
Proposed Maximum Proposed
Title of Securities Amount Being Offering Price Maximum Aggregate Amount of
Being Registered Registered per Unit Offering Price Registration Fee
- ------------------- -------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Shares of common
stock, $.001 par
value per share Indefinite* Indefinite* Indefinite* $500
</TABLE>
[FN]
- ---------------
* An indefinite number of shares of common stock of the Registrant is
being registered by this Registration Statement pursuant to Rule 24f-2
under the Investment Company Act of 1940, as amended.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
<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 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.
<PAGE>5
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
Smith Barney Concert Series Inc.
Prospectus __________ __, 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 Prospectus carefully and retain it for future reference.
Additional information about each of the Portfolios is contained in
a Statement of Additional Information dated January ___, 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 Commission (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.
<PAGE>6
<TABLE>
<CAPTION>
Table of Contents Page
<S> <C>
Prospectus Summary................................................................................................3
Why Invest in the Concert Series?.................................................................................10
Investment Objectives and Management Policies....................................................................11
Risk Factors and Special Considerations..........................................................................14
Portfolio Turnover...............................................................................................15
Investment Restrictions..........................................................................................16
Description of Underlying Smith Barney Funds.....................................................................16
Valuation of Shares..............................................................................................28
Dividends, Distributions and Taxes...............................................................................29
Purchase of Shares...............................................................................................30
Exchange Privilege...............................................................................................39
Redemption of Shares.............................................................................................42
Minimum Account Size.............................................................................................44
Performance......................................................................................................44
Management of the Concert Series.................................................................................45
Distributor......................................................................................................47
Additional Information...........................................................................................48
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.
<PAGE>7
Prospectus Summary
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY DETAILED INFORMATION
APPEARING ELSEWHERE IN THIS PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL
INFORMATION. CROSS REFERENCES IN THIS SUMMARY ARE TO HEADINGS IN THE
PROSPECTUS. SEE "TABLE OF CONTENTS."
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 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 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 Portfolio 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 Portfolio and the Income Portfolio are offered at net asset
value subject to a maximum CDSC of 4.50% of redemption proceeds, declining
<PAGE>8
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 and pay lower dividends than Class A shares.
Purchases of Class C shares, which when combined with current holdings of
Class C shares of the 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 initial 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 consider the following factors, as well as any other
relevant facts and circumstances:
Intended Holding Period. The decision as to which Class of shares
is more beneficial to an investor depends on the amount and intended length
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
<PAGE>9
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 conversion 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 distribution fees. The maximum purchase amount for Class A
shares is $499,999,999, Class B shares is $249,999 and Class C shares is
$499,999. There is no maximum purchase 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 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 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
sponsors 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 (collectively, "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 maintained 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
retirement plans and certain other institutional investors, may purchase
<PAGE>10
shares directly from the Concert Series through the Series' transfer agent,
First Data Investor Services Group, Inc. ("First Data"), a subsidiary of
First Data Corporation. 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 (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 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 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
manager. SBMFM is a wholly owned subsidiary of Smith Barney Holdings Inc.
("Holdings"). Holdings is a wholly owned subsidiary of The 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 Premium Total Return. See "Management of the Concert Series."
EXCHANGE PRIVILEGE Shares of a Class may be exchanged for shares of the same
Class of certain other funds of the 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 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 Balanced Portfolio and annually on
<PAGE>11
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 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 conditions, as well as the financial condition and prospects of
issuers in which the Underlying Smith Barney Funds invest. For a
description of the 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, None* 5.00% 1.00% None
whichever is lower)
- -------------------------------------------------------- --------------- -------------- -------------- --------------
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management fees 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%
- -------------------------------------------------------- --------------- -------------- -------------- --------------
</TABLE>
<PAGE>12
<TABLE>
<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, None* 4.50% 1.00% None
whichever is lower)
- -------------------------------------------------------- --------------- -------------- -------------- --------------
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management fees 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>
[FN]
* 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 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 conversion 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
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
Portfolio's 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. 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% service fee. For
Class C shares of the Conservative Portfolio and the Income Portfolio, Smith
Barney receives an annual 12b-1 fee of 0.70% of the value of average 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 Barney 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 Underlying 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 which 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
<PAGE>13
applicable to Class Y shareholders of each Underlying Smith Barney Fund held
by a Portfolio, based on estimated operating expenses for the 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 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 ratio of Underlying
Smith Barney Funds in which a particular Portfolio is expected to invest at the
commencment 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%, 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.
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 EXPENSES OF THE UNDERLYING SMITH BARNEY FUNDS
IN WHICH A PORTFOLIO MAY INVEST USING THE MIDPOINT OF THE RANGES SET FORTH
ABOVE. THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN
ABOVE.
<PAGE>14
<TABLE>
<CAPTION>
An investor would pay the following An investor would pay the following
expenses on a $1,000 investment, expenses on the same investment, assuming
assuming (1) 5.00% annual return and the same annual return and no redemptions:
(2) redemption at the 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
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>
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 experience, 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 diversification. The Portfolios may be
most appropriate for long-term investors planning for retirement, particularly
investors in tax-advantaged retirement accounts including
<PAGE>15
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 complete 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 vehicle, 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 company 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. Initially, each Portfolio will invest in the
Underlying Smith Barney Funds listed below.
A portfolio management committee consisting of senior
investment professionals of SBMFM allocates investments for each Portfolio
among Underlying Smith Barney Funds based on the outlook of SBMFM, 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.
The High Growth Portfolio's investment objective is to seek
capital appreciation. 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 objective 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.
<PAGE>16
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:
<TABLE>
<CAPTION>
Equity/Fixed Income Fund Range (Percent of Each Portfolio's Net Assets)
High Growth Portfolio Growth Portfolio
Type of Fund Target Range Type of Fund Target Range
------------ ------ ----- ------------ ------ -----
<S> <C> <C> <C> <C> <C>
Equity 90% 80%-100% Equity 70% 60%-80%
Fixed Income 10% 0%-20% Fixed Income 30% 20%-40%
<CAPTION>
Balanced Portfolio Conservative Portfolio
Type of Fund Target Range Type of Fund Target Range
------------ ------ ----- ------------ ------ -----
<S> <C> <C> <C> <C> <C>
Equity 50% 40%-60% Equity 30% 20%-40%
Fixed Income 50% 40%-60% Fixed Income 70% 60%-80%
<CAPTION>
<S> <C> <C>
Income Portfolio
Type of Fund Target Range
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>
<S> <C> <C> <C> <C> <C>
High Growth Growth Balanced Conservative Income
Underlying Smith Barney Fund Portfolio Portfolio Portfolio Portfolio Portfolio
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 -- 0-15% 5-20% 5-20% 5-30%
Portfolio
</TABLE>
<PAGE>17
Investment Range (Percent of Each Portfolio's Net Assets)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
High Growth Growth Balanced Conservative Income
Underlying Smith Barney Fund Portfolio Portfolio Portfolio Portfolio Portfolio
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 -- -- 5-25% 10-30% 10-30%
Income Fund
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.: 0-20% 0-20% 0-25% 0-30% 0-30%
Cash Portfolio
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
Underlying Smith Barney Funds selected are expected in combination to be
appropriate for a Portfolio's particular investment objective. If, as a
result of appreciation 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 PORTFOLIO MAY INVEST, THE EQUITY/FIXED INCOME
FUND TARGETS AND RANGES AND THE INVESTMENT 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 Portfolio 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.
<PAGE>18
For information about the investment objectives of each of
the Underlying Smith Barney Funds and 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 Additional 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 "nondiversified" 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 Government Bond Portfolio, the International
Balanced Portfolio and the Emerging Markets Portfolio). The Concert
Series intends to qualify as a diversified investment company for the
purposes of Subchapter M of the Internal Revenue 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. The officers and directors of the Concert
Series and SBMFM, the investment manager of the Portfolios, presently
serve as officers, directors and investment adviser, 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 portion of their assets in foreign securities; enter into
forward currency transactions; 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 which invests primarily in high yield, high
risk securities, commonly referred to as junk bonds. As a result, the
<PAGE>19
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 current yield than that
available from higher grade issues, but typically involve greater risk.
Lower rated and comparable unrated securities are especially subject 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
interest 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 investment 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 Barney 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 its 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 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 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 subsequent fiscal years. Higher turnover rates
may result in higher expenses being incurred by the Underlying Smith Barney
Funds.
<PAGE>20
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 fundamental 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 including 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 repurchase 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 Portfolios invest may be more
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 practices 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 Underlying 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 investing primarily in common stock of companies the Fund's investment
adviser believes are experiencing, or have the potential to experience,
growth in earnings 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 which measures
the aggregate change in market value of 400 industrials, 60 transportation
stocks and utility companies and 40 financial issues. SBMFM focuses its
stock election for the Fund on a diversified 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.
<PAGE>21
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, warrants 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 significant price fluctuation and above
average risk.
SMITH BARNEY APPRECIATION FUND INC. seeks long-term appreciation
of shareholders' capital. The Fund attempts to achieve its investment
objective by investing primarily in equity securities (consisting of common
stocks, preferred stocks, warrants, rights and securities convertible into
common stocks) which 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, 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 opportunities. 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 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 which are undervalued in the marketplace and,
accordingly, have above-average potential for capital growth. In general,
the Fund invests in securities of companies which are temporarily
unpopular among investors but which SBMFM regards as possessing
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) which
SBMFM believes to have superior appreciation potential. The Fund invests
primarily in equity securities of secondary growth companies, generally not
within the S&P 500, as identified 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 which appear to be
entering a new stage of more rapid earnings progress due to factors
such as management change or development of new technology, 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
<PAGE>22
capitalization is under $100 million. Investing in smaller, newer
issuers generally 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 capital. The Fund attempts to achieve its objective by
investing primarily in undervalued or out of favor common stock and other
securities, including debt securities which are convertible into common stock
and which 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 preferred 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. government 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,
emphasis 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 investments 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 sponsored 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, securities 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 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 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 SMBFM to be of comparable quality and in U.S. government securities.
SMITH BARNEY PREMIUM TOTAL RETURN FUND, an investment portfolio
of Smith Barney Income Funds, seeks to provide shareholders with total
<PAGE>23
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-paying common stocks, it will not
have as much investment flexibility as total return funds which 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 securities,
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 portfolio invested primarily in securities of emerging
country issuers (consisting of dividend and non-dividend paying common
stocks, preferred stocks, convertible 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, 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), notwithstanding that
the Fund may not anticipate that such securities will experience substantial
capital appreciation. The Fund also may invest in debt securities 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 dividend 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
<PAGE>24
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 which
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 investment purposes, which involves certain risk
considerations.
The Fund will generally invest it 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 temporarily invest all or a major portion of its
assets in U.S. government securities 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 AND INCLUDES THE MONEY MARKET FUND
IN WHICH EACH PORTFOLIO MAY INVEST AND WHICH SERVES 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 consider potential for growth as one factor, among
others, in selecting investments 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 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
<PAGE>25
following securities: 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 rated, issued by a corporation having an
outstanding debt issue rated Aa or better 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 common 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 obligations of, or guaranteed by, the U.S. government,
its agencies or instrumentalities (including, without limitation,
Treasury bills and bonds, mortgage participation certificates issued by
the Federal Home Loan Mortgage Corporation ("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 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. Government. 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 approximately three years. Pending
direct investment in U.S. Treasury debt securities, 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 consistent 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 mortgage-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
<PAGE>26
Fund's portfolio will vary from time to time and the Fund may invest in U.S.
government securities of all maturities: short-term, intermediate-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
repurchase 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 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.
SMITH BARNEY DIVERSIFIED STRATEGIC INCOME FUND, an investment
portfolio of Smith Barney Income Funds, seeks high current income
primarily through investment 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 securities among
which the Fund's assets will be primarily allocated are: obligations
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
foreign 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 market 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 certificates. 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 investment 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 governments or any of their political subdivisions that are considered
stable by Global Capital Management, 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 appreciation as is consistent with its policy of investing
principally in high quality bonds of the U.S. and foreign governments.
Under normal market conditions, the Fund invests at least 65% of its total
assets in bonds issued or guaranteed by the U.S. or foreign governments
<PAGE>27
(including foreign states, provinces, cantons and municipalities) or
their agencies, authorities or instrumentalities 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 comparable 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., industrialized countries) which the investment adviser
believes to pose limited credit risks. These countries currently are
Australia, Austria, Belgium, Canada, Denmark, 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 which are judged to
be of comparable quality by the investment adviser. Under normal market
conditions the Portfolio 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 Portfolio'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 Cash Portfolio may invest in
domestic and foreign money market securities consisting of bank
obligations and high quality commercial paper, corporate 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. 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 continuous 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
<PAGE>28
maturity in excess of 90 days (securities used as collateral for repurchase
agreements are not subject to these restrictions).
The Fund's investments will be 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 Standard &
Poor's Corporation ("S&P"), Moody's Investors Service, Inc. ("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 12 ABOVE), EACH OF THE
FOLLOWING UNDERLYING 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 securities and warrants or call options that together
resemble convertible securities ("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 SMBFM 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 secondary 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 regulated by
governmental agencies as utilities that provide communication facilities
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 conditions, the Fund will invest at least 65% of
<PAGE>29
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 market 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 securities, sovereign debt
instruments issued by governments or governmental entities, 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 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; however, there is no limitation on the percent of amount of the
Fund's assets which 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 outside of the U.S. The Fund 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 Portfolio expects to invest
will 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 counties 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 Portfolio may be invested
in securities of emerging market countries.
<PAGE>30
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 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 December 31, 1995
------------------------------------
Underlying Smith Barney Fund
---------------------------- Assets of all
Classes as of 30-Day Yield for
December 31, period ended
Inception 1995 December 31,
Date ($000's) One Year Five Years Ten Years 1995
<S> <C> <C> <C> <C> <C> <C>
Smith Barney Aggressive 10/24/83 525,528 28.94 17.40 15.70 N/A
Growth Fund Inc.
Smith Barney Appreciation 03/10/70 3,024,628 22.74 12.18 12.81 N/A
Fund Inc.
Smith Barney Growth and 11/06/92 218,807 24.36 - - N/A
Income Fund
Smith Barney Fundamental 11/12/81 987,935 21.48 17.38 12.12 N/A
Value Fund Inc.
Equity Income Portfolio 01/01/72 747,520 26.40 13.82 11.59 N/A
Short-Term U.S. Treasury
Securities Portfolio 11/11/91 106,902 13.16 - - 4.69
Smith Barney High Income Fund 09/02/86 888,802 13.03 16.35 - 7.83
Smith Barney Utilities Fund 03/28/88 1,958,317 25.89 11.19 - N/A
Smith Barney Premium Total 09/16/85 2,380,777 16.84 15.02 12.30 N/A
Return Fund
Smith Barney Convertible Fund 09/02/86 82,137 15.82 12.30 - 2.83
Smith Barney Diversified
Strategic Income Fund 12/28/89 2,627,676 10.57 9.45 - 8.48
Smith Barney Managed Growth 06/30/95 507,097 - - - N/A
Fund
Smith Barney Special 12/13/82 342,704 57.30 25.87 11.78 N/A
Equities Fund
Smith Barney Government 03/20/84 606,406 8.71 8.06 7.65 6.00
Securities Fund
Smith Barney Investment 01/04/82 519,566 30.56 13.78 10.93 5.71
Grade Bond Fund
Smith Barney Managed
Governments Fund Inc. 09/04/84 644,202 8.76 7.52 7.72 6.27
International Equity 02/18/86 1,049,624 (2.59) 13.44 - N/A
Portfolio
Emerging Markets Portfolio 05/11/95 16,972 - - - N/A
International Balanced 08/25/94 25,245 8.90 - - N/A
Portfolio
Global Government Bond 07/22/91 158,962 10.17 - - 5.50
Portfolio
</TABLE>
For the seven-day period ended December 31, 1995, the yield for
the Cash Portfolio 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.
<PAGE>31
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 policies. 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 Underlying
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
policies.
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 fluctuations 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 taxation,
political or social instability or diplomatic developments which could
adversely affect investments in those countries. There may be less publicly
available information about a foreign 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. securities markets are generally higher than in the U.S.
There is generally less government 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,
<PAGE>32
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 portfolio securities. Certain
of the Underlying Smith Barney Funds may purchase, sell or write call and put
options on securities, financial indices, and foreign 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.
The Concert Series could also experience losses if the prices of its
options and futures positions 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 Barney 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 characteristics 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
which are related 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.
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
<PAGE>33
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 Balanced Portfolio and annually income
dividends on shares of the High Growth Portfolio and the Growth Portfolio. In
addition, the Concert 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 distributions 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. Accounts 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 of 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 which it
pays out to its shareholders. To qualify, the Portfolio must meet certain
tests, including distributing 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.
<PAGE>34
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 shareholders of each Portfolio as ordinary income. A
portion of each Portfolio's dividends may qualify for the dividends
received deduction for corporations. Dividends 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 shareholders 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
Agreements" for a discussion of factors to consider in selecting which Class
of shares to purchase.
Shares may be purchased through a brokerage account maintained
with Smith Barney. Shares may also be purchased through an Introducing
Broker or an investment dealer in the selling group. In addition,
certain investors, including qualified retirement plans and certain other
institutional investors, may purchase shares directly from the Concert
Series through First Data. When purchasing 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
(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 investment requirement for all Classes
is $50. There are no minimum investment requirements in Class A shares for
employees 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
<PAGE>35
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.
Payment for Portfolio shares is due on the third business day after the trade
date.
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 quarterly 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 shareholder'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' Reallowance as %
% of Offering % of Amount of Offering Price
Amount of Investment Price Invested
<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>
<PAGE>36
The sales charges applicable to purchases of Class A shares of
the Conservative Portfolio and the Income Portfolio are as follows:
<TABLE>
<CAPTION>
Sales Charge
Dealers' Reallowance as %
% of Offering % of Amount of Offering Price
Amount of Investment Price Invested
<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>
[FN]
* 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 clients make purchases
of $500,000 or more. The CDSC is waived in the same circumstances 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 directors of the Concert Series and employees of Travelers and its
subsidiaries, or to the spouse and children of such persons (including the
surviving spouse of a deceased director or employee, and retired directors or
employees), or sales to any trust, pension, profit-sharing or other
benefit plan for such persons 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 commencement 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 Consultant
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
<PAGE>37
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; and (e)
accounts managed by registered investment advisory subsidiaries of
Travelers. 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.
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 aggregating 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
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 purchase 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 meeting 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
<PAGE>38
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 which (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 which 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 Portfolio 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 purchases of all Class A shares of each
Portfolio and other funds of the 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
appropriate number of escrowed shares will be redeemed. Please contact a
Smith Barney Financial Consultant or First Data to obtain a Letter of
Intent application.
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 Portfolio 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 purchased to date will be transferred to Class A shares,
where they will be subject 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 contact a Smith Barney Financial
Consultant or First Data for further information.
<PAGE>39
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: (a) Class
B shares; (b) Class C shares; and (c) Class A shares which when combined
with Class A shares offered with 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 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 distributions; (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 High Growth Portfolio, CDSC
Years Since Purchase Growth Portfolio and Balanced Portfolio Applicable to Conservative
Payment Was Made 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 proportion of Class B Dividend Shares owned by the
shareholder as the total number of his or her Class B shares converting at
<PAGE>
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 Portfolio 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 considered 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 additional 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 which 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 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
<PAGE>40
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 operation 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) Program. 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 the 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 initial 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 Participating 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 Barney 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 acquired 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 Alternatives."
<PAGE>41
CLASS C SHARES. Class C shares of each Portfolio are offered to
any Participating 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 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. 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 eligible 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 service 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.
No CDSC is imposed on redemptions of CDSC Shares to the extent that
the net asset value of the shares redeemed does not exceed the current net
asset value of the shares purchased through reinvestment of dividends or
capital gain distributions, plus (a) with respect to Class A and Class C
shares, the current net asset value of such shares purchased more than one
year prior to redemption and, with respect to Class B shares, the current
net asset value of Class B shares purchased more than eight years prior to
the redemption, plus (b) with respect to Class A and Class C shares,
increases in the net asset value of the shareholder's Class A or Class C
shares above the purchase payments made during the preceding year and, with
respect to Class B shares, increases in the net asset value of the
shareholder's Class B shares above the purchase payments made during the
preceding eight years. 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 from
which the amount is 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;
<PAGE>42
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 funds of the Smith Barney Mutual Funds,
to the extent shares are offered for sale in the shareholder's state of
residence. Exchange 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 Special Equities Fund
Smith Barney Telecommunications Growth Fund
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 Funds 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 National Resources Fund Inc.
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
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
<PAGE>43
[FN]
==============================================================================
* Available for exchange with Class A, Class C and Class Y
shares of the Portfolio.
** Available for exchange with Class A, Class B and Class Y
shares of the Portfolio. In addition,
shareholders who own Class C shares of the 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 the Portfolio.
+ Available for exchange with Class B and Class C shares of the
Portfolio.
++ Available for exchange with Class A and Class Y shares of the
shareholders who own Class C shares of the 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 limited to a percentage rate no greater than the excess of
the sales charge rate applicable to purchases of shares of the mutual fund
being acquired in the exchange over the sales charge rate(s) actually paid
on the mutual fund shares relinquished in the exchange and on any
predecessor of those shares. For purposes of the exchange privilege,
shares obtained through automatic reinvestment of dividends 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
differential upon exchange. Class A shares held in a Portfolio that are
subsequently exchanged for shares of other funds in the Smith Barney
Mutual Funds will not be subject to a sales charge differential.
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 in 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 detrimental to the Portfolio's performance and its
<PAGE>44
shareholders. SBMFM may determine that a pattern of frequent exchange is
excessive and contrary to the best interests of each Portfolio's other
shareholders. In this event, SBMFM will notify Smith Barney and Smith Barney
may, at its discretion, decide to limit additional purchases and/or
exchanges by the shareholder. Upon such a determination, Smith Barney
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.
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.
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 or 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 redemption must specify the Class being redeemed. In the event of a
failure to specify which Class, or if the investor owns fewer shares of
the Class than specified, the redemption request will be delayed until the
Concert Series' transfer agent receives further instructions from Smith
Barney or if the shareholder's account is 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 permitted 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
<PAGE>45
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 Financial Consultant, Introducing Broker or dealer
in the selling group or by submitting 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.
POB 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 registered. If the shares to be redeemed were issued in
certificate form, the certificates 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 appearing on a
redemption request, share certificate or stock power 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. 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.
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 a Smith Barney Financial Consultant.
<PAGE>46
Minimum Account Size
The Concert Series reserves the right to involuntarily liquidate
any shareholder'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 market 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 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
dividend return for each of their Classes by dividing the current
dividend 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, including net equalization credits or debits, 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 its investment
portfolio and operating expenses. These factors and possible differences
in the methods used in calculating current dividend return should be
considered when comparing a Class' current return 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 Analytical Services, Inc. and other financial publications.
<PAGE>47
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 will be 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 interests 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
possibility, 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 individual, institutional and
investment company clients which had aggregate assets under management as
of December 31, 1995, in excess of $71 billion. Subject to the supervision
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
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). 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
<PAGE>48
other than the management fee, the fees payable pursuant to the Rule
12b-1 Plan 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 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 December 31, 1995
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 management fee of each of the Underlying Smith Barney Funds in which the
Portfolios may invest is calculated at the following percentage rate of the
Fund's annual net assets:
<TABLE>
<CAPTION>
<S> <C>
Underlying Smith Barney Fund Management Fees
Smith Barney Aggressive Growth Fund Inc. 0.80%
Smith Barney Appreciation Fund Inc. 0.62%
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 0.63%
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 0.44%
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>
<PAGE>49
PORTFOLIO MANAGEMENT
Thomas B. Stiles II, Chief Investment Officer of SBMFM, has
primary responsibility 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 Managing Director of Smith
Barney Inc. 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, distributes 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 a plan of distribution 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 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
shareholder 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 prospectuses to potential investors; payments to and expenses of
Smith Barney Financial Consultants 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 Smith Barney associated
with the sale of Portfolio 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 continuing 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
<PAGE>50
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 an 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 representing shares in one of five separate
Portfolios and may authorize the issuance 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, 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 which pertain to a
particular Class. As described under "Voting" in the Statement of Additional
Information, the Series ordinarily will not hold shareholder meetings;
however, shareholders have the right to call a meeting upon a vote of 10% of
the Series' outstanding shares for the purpose of voting to remove
directors, 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 holders of shares of the Portfolio.
PNC Bank, National Association, located at 17th and Chestnut
Streets, Philadelphia, Pennsylvania 19103 serves as custodian of the
Portfolio's investments.
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 securities held by the Series at the end of the
period covered. In an effort to reduce the Series' printing and mailing
costs, the 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 record will receive a single
copy of each report. In addition, the 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
<PAGE>51
Plan accounts) will receive a single Prospectus annually. Shareholders
who do not want this consolidation to apply to their account should
contact their Smith Barney Financial Consultant or the Concert Series'
transfer agent.
<PAGE>52
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 could involve
certain risks in the event of default or insolvency of the other party,
including possible delays or restrictions upon the ability of an Underlying
Smith Barney Fund or a Portfolio of the Concert Series 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 Barney 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 possible 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 Underlying Smith Barney Funds are
permitted to invest a greater proportion of their assets in the
securities of a smaller number of issuers, such Funds 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 Underlying Smith Barney Funds may invest may have limited marketability
and, therefore, may be subject to wide fluctuations in market value. In
<PAGE>53
addition, certain 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 convertible securities generally offer lower yields than
non-convertible debt securities 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 convertible securities differ from convertible
securities in certain respects, including that each component of a synthetic
convertible security has a separate 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 considered to be a country that is in the initial stages of
its industrialization cycle. Investing in the equity and fixed-income
markets of developing countries involves exposure to economic structures that
are generally less diverse and mature, and to political systems that can be
expected to have less stability, than those of developed countries.
Historical experience indicates that the markets of developing countries
have been more volatile than the markets of the more mature economies of
developed countries; however, such markets often have provided higher rates
of return to investors.
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 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 substantial 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 which 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 substantially 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
<PAGE>54
smaller capital markets are generally more expensive than in the U.S. Such
markets have different clearance and settlement procedures, and in certain
markets there have been times when settlements have been unable to keep
pace with the volume of securities transactions, making it difficult
to conduct such transactions. Further, satisfactory custodial 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 temporary 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 security due to
settlement problems could result either in losses to the Fund due to
subsequent declines in value of the portfolio security or, if the Fund has
entered into a contract to sell the security, could result in possible
liability to the purchaser. There is generally less government
supervision and regulation 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 without 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 original investment. In addition, like
other debt securities, the values of mortgage-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 securities 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
<PAGE>55
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. Leverage creates an opportunity for increased returns to
shareholders of an Underlying 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 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 which 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 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 having 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
<PAGE>56
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 interest 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 suffer 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 currencies, 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 particularly 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, restrictions 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 facilities
for electric generation, including, among other considerations, the problems
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 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
<PAGE>57
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 which
are issuers of the securities 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 movements or price trends of utility
common stocks. Causes of these discrepancies include changes in the
overall demand for and supply of various securities (including 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.
<PAGE>59
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>60
Smith Barney Concert Series Inc.
Prospectus __________ __, 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 Prospectus carefully and retain it for future reference.
Additional information about each of the Portfolios is contained in a
Statement of Additional Information dated January ___, 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>61
Table of Contents Page
Prospectus Summary...........................................3
Why Invest in the Concert Series?............................9
Investment Objectives and Management Policies...............10
Risk Factors and Special Considerations.....................13
Portfolio Turnover..........................................14
Investment Restrictions.....................................15
Description of Underlying Smith Barney Funds................15
Valuation of Shares.........................................27
Dividends, Distributions and Taxes..........................28
Purchase of Shares..........................................29
Exchange Privilege..........................................34
Redemption of Shares........................................36
Minimum Account Size........................................37
Performance.................................................37
Management of the Concert Series............................38
Distributor.................................................41
Additional Information......................................42
Appendix...................................................A-1
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.
<PAGE>62
Prospectus Summary
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY DETAILED INFORMATION
APPEARING ELSEWHERE IN THIS PROSPECTUS AND IN THE STATEMENT OF ADDITIONAL
INFORMATION. CROSS REFERENCES IN THIS SUMMARY ARE TO HEADINGS IN THE
PROSPECTUS. SEE "TABLE OF CONTENTS."
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 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. 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 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 Portfolio 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
<PAGE>63
Conservative Portfolio and the Income Portfolio are offered at net asset value
subject to a maximum 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."
In deciding which Class of Portfolio shares to purchase, investors
should consider the following factors, as well as any other relevant facts and
circumstances:
INTENDED HOLDING PERIOD. The decision as to which Class of shares is
more beneficial to an investor depends on the amount and intended length 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 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 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 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 shares, purchasers eligible to purchase Class A
shares at net asset value or at a reduced sales charge should consider doing
so.
<PAGE>64
PFS Investments Representatives may receive different compensation
for selling 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
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.
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 $50 may be made for each Class. 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 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 $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
manager. SBMFM is a wholly owned subsidiary of Smith Barney Holdings Inc.
("Holdings"). Holdings is a wholly owned subsidiary of The 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 Premium Total Return. See "Management of the Concert Series."
Exchange Privilege Shares of each Class may be exchanged for shares of the
same Class of certain other funds of the 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."
<PAGE>65
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 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 conditions, 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 Policies," "Description of the Underlying Smith
Barney Funds" and the Appendix to this Prospectus.
<PAGE>66
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 Portfolios 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, None* 5.00%
whichever is lower)
- -------------------------------------------------------- ----------------------------- ------------------------------
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management fees 0.35% 0.35%
12b-1 fee** 0.25 1.00
Other expenses*** None None
- -------------------------------------------------------- ----------------------------- ------------------------------
TOTAL PORTFOLIO OPERATING EXPENSES 0.60% 1.35%
- -------------------------------------------------------- ----------------------------- ------------------------------
Applicable to the Conservative Portfolio
and the Income Portfolio
Class A Class B
- -------------------------------------------------------- ----------------------------- ------------------------------
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, None* 4.50%
whichever is lower)
- -------------------------------------------------------- ----------------------------- ------------------------------
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Management fees 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 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 Portfolio's
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. 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%
<PAGE>67
service fee. For Class B shares of the Conservative 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.
The Portfolios will invest only in Class Y shares of the Underlying
Smith Barney 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 Underlying 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 which 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 Portfolio, based on estimated operating
expenses for the 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 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>
<PAGE>68
Based on a weighted average of the Class Y expense ratio of Underlying
Smith Barney Funds in which a particular Portfolio is expected to invest at the
commencment 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%, 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.
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 EXPENSES OF THE UNDERLYING SMITH BARNEY FUNDS IN
WHICH A PORTFOLIO MAY INVEST USING THE MIDPOINT OF THE RANGES SET FORTH ABOVE.
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 following An investor would pay the following
expenses on a $1,000 investment, expenses on the same investment, assuming
assuming (1) 5.00% annual return and the same annual return and no redemptions:
(2) redemption at the 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>
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 experience, time and personal resources. The Portfolios are designed
<PAGE>69
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 diversification. 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 complete 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 vehicle, 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 company 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. Initially, each Portfolio will invest in the Underlying Smith
Barney Funds listed below.
A portfolio management committee consisting of senior investment
professionals of SBMFM allocates investments for each Portfolio among
Underlying Smith Barney Funds based on the outlook of SBMFM, 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.
The High Growth Portfolio's investment objective is to seek capital
appreciation. 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 objective 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.
<PAGE>70
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:
<TABLE>
<CAPTION>
Equity/Fixed Income Fund Range (Percent of Each Portfolio's Net Assets)
-----------------------------------------------------------------------
High Growth Portfolio Growth Portfolio
--------------------- ----------------
Type of Fund Target Range Type of Fund Target Range
------------ ------ ----- ------------ ------ -----
<S> <C> <C> <C> <C> <C>
Equity 90% 80%-100% Equity 70% 60%-80%
Fixed Income 10% 0%-20% Fixed Income 30% 20%-40%
<CAPTION>
Balanced Portfolio Conservative Portfolio
------------------ ----------------------
<S> <C> <C> <C> <C> <C>
Type of Fund Target Range Type of Fund Target Range
------------ ------ ----- ------------ ------ -----
Equity 50% 40%-60% Equity 30% 20%-40%
Fixed Income 50% 40%-60% Fixed Income 70% 60%-80%
Income Portfolio
----------------
Type of Fund Target Range
------------ ------ -----
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.
<PAGE>71
<TABLE>
<CAPTION>
Investment Range (Percent of Each Portfolio's Net Assets)
---------------------------------------------------------
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 -- 0-15% 5-20% 5-20% 5-30%
Portfolio
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 -- -- 5-25% 10-30% 10-30%
Income Fund
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.: 0-20% 0-20% 0-25% 0-30% 0-30%
Cash Portfolio
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
Underlying Smith Barney Funds selected are expected in combination to be
appropriate for a Portfolios particular investment objective. If, as a
result of appreciation 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 Portfolio may invest, the equity/fixed income fund targets
and ranges and the investment 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 Portfolio 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.
<PAGE>72
For information about the investment objectives of each of the
Underlying Smith Barney Funds and 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 Additional 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
"nondiversified" 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 Government Bond Portfolio, the International Balanced Portfolio and the
Emerging Markets Portfolio). The Concert Series intends to qualify as a
diversified investment company for the purposes of Subchapter M of the
Internal Revenue 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. The officers and directors of the Concert Series
and SBMFM, the investment manager of the Portfolios, presently serve as
officers and directors and investment adviser, 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 portion of their assets in foreign securities; enter into forward
currency transactions; 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 which 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.
<PAGE>73
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 current yield than that available from higher grade
issues, but typically involve greater risk. Lower rated and comparable
unrated securities are especially subject 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 interest 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 investment 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 Barney 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 its 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 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 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 subsequent fiscal years. Higher turnover rates may result in higher
expenses being incurred by the Underlying Smith Barney Funds.
<PAGE>74
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 fundamental 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 including 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 repurchase 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 Portfolios invest may be more 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 practices 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 Underlying 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 investing primarily in common stock of companies the Fund's investment
adviser believes are experiencing, or have the potential to experience, growth
in earnings 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 which measures the aggregate
change in market value of 400 industrials, 60 transportation stocks and
utility companies and 40 financial issues. SBMFM focuses its stock election
for the Fund on a diversified 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.
<PAGE>75
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, warrants 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 significant price fluctuation and above average risk.
SMITH BARNEY APPRECIATION FUND INC. SEEKS LONG-TERM APPRECIATION OF
shareholders' capital. The Fund attempts to achieve its investment objective
by investing primarily in equity securities (consisting of common stocks,
preferred stocks, warrants, rights and securities convertible into common
stocks) which 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, 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 opportunities. 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 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 which are undervalued in the marketplace and, accordingly, have
above-average potential for capital growth. In general, the Fund invests in
securities of companies which are temporarily unpopular among investors but
which SBMFM regards as possessing 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) which
SBMFM believes to have superior appreciation potential. The Fund invests
primarily in equity securities of secondary growth companies, generally not
within the S&P 500, as identified 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 which appear to be entering
a new stage of more rapid earnings progress due to factors such as management
change or development of new technology, 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
<PAGE>76
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 generally 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 capital. The Fund attempts to achieve its objective by investing primarily
in undervalued or out of favor common stock and other securities, including
debt securities which are convertible into common stock and which 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 preferred 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. government 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, emphasis 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 investments 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 sponsored 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,
securities 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 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 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 SMBFM to be of comparable quality and in U.S.
government securities.
SMITH BARNEY PREMIUM TOTAL RETURN FUND, an investment portfolio of
Smith Barney Income Funds, seeks to provide shareholders with total return,
<PAGE>77
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-paying common stocks, it will not have as much
investment flexibility as total return funds which 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 securities, 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 portfolio invested primarily in securities of emerging country
issuers (consisting of dividend and non-dividend paying common stocks,
preferred stocks, convertible 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, 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), notwithstanding that the Fund may not anticipate
that such securities will experience substantial capital appreciation. The
Fund also may invest in debt securities 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 dividend 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
<PAGE>78
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 which 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 investment purposes, which involves certain risk considerations.
The Fund will generally invest it 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 temporarily invest all or a major portion of its assets in U.S.
government securities 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 AND INCLUDES THE MONEY MARKET FUND
IN WHICH EACH PORTFOLIO MAY INVEST AND WHICH SERVES 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 consider potential for growth as one factor, among others, in selecting
investments 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 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
<PAGE>79
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 securities: 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 rated, issued by a corporation having an outstanding debt
issue rated Aa or better 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 common 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
obligations of, or guaranteed by, the U.S. government, its agencies or
instrumentalities (including, without limitation, Treasury bills and bonds,
mortgage participation certificates issued by the Federal Home Loan Mortgage
Corporation ("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 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.
Government. 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 approximately three years. Pending direct investment in U.S.
Treasury debt securities, 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
consistent 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 mortgage-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
<PAGE>80
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, intermediate-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 repurchase 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 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.
SMITH BARNEY DIVERSIFIED STRATEGIC INCOME FUND, an investment
portfolio of Smith Barney Income Funds, seeks high current income primarily
through investment 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 securities among which the Fund's assets will be primarily
allocated are: obligations 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 foreign 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 market 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
certificates. 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
investment 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
governments or any of their political subdivisions that are considered stable
by Global Capital Management, 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 appreciation as is consistent with its policy of investing principally
in high quality bonds of the U.S. and foreign governments. Under normal
<PAGE>81
market conditions, 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, provinces, cantons and municipalities) or their agencies, authorities
or instrumentalities 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 comparable 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.,
industrialized countries) which the investment adviser believes to pose
limited credit risks. These countries currently are Australia, Austria,
Belgium, Canada, Denmark, 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 which are judged to be of comparable quality by the investment
adviser. Under normal market conditions the Portfolio 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 Portfolio'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 Cash Portfolio may invest in domestic and
foreign money market securities consisting of bank obligations and high
quality commercial paper, corporate 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. 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 continuous basis. In order to minimize fluctuations in market price, the
Fund will not purchase a security with a remaining maturity of greater than 13
<PAGE>82
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 will be 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 Standard & Poor's
Corporation ("S&P"), Moody's Investors Service, Inc. ("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 12 ABOVE), EACH OF THE FOLLOWING
UNDERLYING 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 securities and warrants or call options that together resemble
convertible securities ("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 SMBFM 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 secondary 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 regulated by governmental agencies as
utilities that provide communication facilities 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 conditions, the Fund will invest at
least 65% of its assets in such securities. The Fund may invest up to 35% of
<PAGE>83
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 market 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 securities, sovereign debt instruments issued by
governments or governmental entities, 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 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; however, there is no limitation on the percent of
amount of the Fund's assets which 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 outside of the U.S. The Fund 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 $50,000,000. The Fund may
invest in companies organized or governments located in any area of the world.
However, under unusual economic or market conditions as determined by the
investment adviser, for defensive purposes the Fund may temporarily invest all
or a major portion of its assets in U.S. government securities, debt or equity
securities of companies incorporated in and having their principal business
activities in the U.S. or in U.S. as well as foreign money market instruments
and equivalents.
The debt securities in which the Portfolio expects to invest will
generally range in maturity from two to ten years. Debt securities of
developed foreign countries must be rated as investment grade (or deemed by
SBMFM to be of comparable quality) at the time of purchase. Debt securities
of emerging market counties may be rated below investment grade and could
include securities that are in default as to payments of principal or
interest. Up to 25% of the total assets of the Portfolio may be invested in
securities of emerging market countries.
<PAGE>84
Performance of Underlying Smith Barney Funds
The following chart shows the average annual total returns for the
longest outstanding class of shares for each of the Underlying Smith Barney
Funds in which the Portfolios may invest (other than the Cash Portfolio of
Smith Barney Money Funds Inc.) for the most recent one-, five- and ten-year
periods (or since inception if shorter) and the 30-day yields for
income-oriented funds, in each case for the period ended December 31, 1995.
<TABLE>
<CAPTION>
Assets of all
Classes as of 30-Day Yield
December 31, Average Annual Total Returns for period
Inception 1995 (through December 31 , 1995) ended
Underlying Smith Barney Fund Date ($ 000's) December 31, 1995
---------------------------- --------- ------------- ----------------------------- -----------------
One Year Five Years Ten Years
-------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Smith Barney Aggressive 10/24/83 525,528 28.94 17.40 15.70 N/A
Growth Fund Inc.
Smith Barney Appreciation 03/10/70 3,024,628 22.74 12.18 12.81 N/A
Fund Inc.
Smith Barney Growth and 11/06/92 218,807 24.36 - - N/A
Income Fund
Smith Barney Fundamental 11/12/81 987,935 21.48 17.38 12.12 N/A
Value Fund Inc.
Equity Income Portfolio 01/01/72 747,520 26.40 13.82 11.59 N/A
Short-Term U.S. Treasury 11/11/91 106,902 13.16 - - 4.69
Securities Portfolio
Smith Barney High Income Fund 09/02/86 888,802 13.03 16.35 - 7.83
Smith Barney Utilities Fund 03/28/88 1,958,317 25.89 11.19 - N/A
Smith Barney Premium Total 09/16/85 2,380,777 16.84 15.02 12.30 N/A
Return Fund
Smith Barney Convertible Fund 09/02/86 82,137 15.82 12.30 - 2.83
Smith Barney Diversified 12/28/89 2,627,676 10.57 9.45 - 8.48
Strategic Income Fund
Smith Barney Managed Growth 06/30/95 507,097 - - - N/A
Fund
Smith Barney Special 12/13/82 342,704 57.30 25.87 11.76 N/A
Equities Fund
Smith Barney Government 03/20/84 606,406 8.71 8.06 7.65 6.00
Securities Fund
Smith Barney Investment 01/04/82 519,566 30.56 13.78 10.93 5.71
Grade Bond Fund
Smith Barney Managed 09/04/84 644,202 8.76 7.52 7.72 6.27
Governments Fund Inc.
International Equity 02/18/86 1,049,624 (2.59) 13.44 - N/A
Portfolio
Emerging Markets Portfolio 05/11/95 16,972 - - - N/A
International Balanced 08/25/94 25,245 8.90 - - N/A
Portfolio
Global Government Bond 07/22/91 158,962 10.17 - - 5.50
Portfolio
</TABLE>
For the seven-day period ended December 31, 1995, the yield for the
Cash Portfolio 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.
<PAGE>85
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 policies. 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 Underlying 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 policies.
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 fluctuations 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 taxation, political or social instability or
diplomatic developments which could adversely affect investments in those
countries. There may be less publicly available information about a foreign
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. securities markets are generally
higher than in the U.S. There is generally less government 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;
<PAGE>86
to adjust the portfolio's duration; to enhance income; and to protect the
value of the portfolio securities. Certain of the Underlying Smith Barney
Funds may purchase, sell or write call and put options on securities,
financial indices, and foreign 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. The Concert Series could also
experience losses if the prices of its options and futures positions 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
Barney 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 characteristics 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 which
are related 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.
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.
<PAGE>87
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 Balanced Portfolio and annually income dividends on
shares of the High Growth Portfolio and the Growth Portfolio. In addition,
the Concert 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 distributions 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 the Sub-Transfer Agent.
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 distribution fee applicable with respect to Class B shares.
Distributions of capital gains, if any, will be in the same amount of 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 which it pays out
to its shareholders. To qualify, the Portfolio must meet certain tests,
including distributing 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 shareholders of each Portfolio as ordinary income. A portion of each
Portfolio's dividends may qualify for the dividends received deduction for
corporations. Dividends 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 shareholders as early in the succeeding year
as practical but not later than January 31.
<PAGE>88
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 Agreements" 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 forwarded 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. dollars and have the routing number of the U.S. bank encoded
on the check. Subsequent 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 initial investment of at least $1,000 for each account (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 $50 may be
made for each Class. 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 and Class B shares and the subsequent
investment requirement for each Class in a Portfolio is $25. For each
Portfolio's Systematic Investment Plan, the minimum initial investment
requirement for Class A and Class B shares and the subsequent investment
requirement for each Class is $50. There are no minimum investment
requirements in Class A shares for employees 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 certificates 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 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.
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 preauthorized transfers of $50 or more to charge the regular bank
<PAGE>89
account or other financial institution indicated by the shareholder on a
monthly or quarterly 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 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'
Reallowance as %
% of Offering % of Amount of
Amount of Investment Price 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
Conservative Portfolio and the Income Portfolio are as follows:
<TABLE>
<CAPTION>
Sales Charge
------------
Dealers'
Reallowance as %
% of Offering % of Amount of
Amount of Investment Price 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 clients make purchases of $500,000 or more. The
CDSC is waived in the same circumstances in which the CDSC applicable to
Class B shares is waived. See "Deferred Sales Charge Alternatives" and
"Waivers of CDSC."
<PAGE>90
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
Directors of the Concert Series and employees of Travelers and its
subsidiaries, or to the spouse and children of such persons (including the
surviving spouse of a deceased Director or employee, and retired Directors or
employees), or sales to any trust, pension, profit-sharing or other benefit
plan for such persons 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) 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; (d) accounts managed by registered investment
advisory subsidiaries of Travelers; and (e) sales through PFS Investments
Representatives where the amounts invested represent the redemption proceeds
from investment companies distributed by an entity other than PFS, 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. PFS Investments may pay its Investments
Representatives an amount equal to 0.40% of the amount invested if the
purchase represents 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
<PAGE>91
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 entity. 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 purchases of all Class A shares of each Portfolio and
other funds of the 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 appropriate number of escrowed
shares will be redeemed. Please contact a PFS Investments 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 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 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 distributions; (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 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.
<PAGE>92
<TABLE>
<CAPTION>
CDSC
Applicable to High Growth Portfolio, CDSC
Years Since Purchase Growth Portfolio and Balanced Portfolio Applicable to Conservative
Payment Was Made 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 proportion 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 Portfolio 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 considered 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 additional 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
<PAGE>93
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 which 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;
(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 PFS of the
shareholder's status or holdings, as the case may be.
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 funds of the Smith Barney Mutual Funds, to
the extent shares are offered for sale in the shareholder's state of
residence. Exchange 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 the Portfolio.
** Available for exchange with Class B shares of the Portfolio.
<PAGE>94
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 limited to a percentage rate no greater than the excess of
the sales charge rate applicable to purchases of shares of the mutual fund
being acquired in the exchange over the sales charge rate(s) actually paid on
the mutual fund shares relinquished in the exchange and on any predecessor of
those shares. For purposes of the exchange privilege, shares obtained through
automatic reinvestment of dividends 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 in 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 detrimental to the Portfolio's performance and its
shareholders. SBMFM may determine that a pattern of frequent exchange is
excessive and contrary to the best interests of each Portfolio's other
shareholders. In this event, SBMFM will notify PFS that the Portfolio and PFS
may, at its discretion, decide to limit additional purchases and/or exchanges
by the shareholder. Upon such a determination by the Fund, PFS 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.
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.
<PAGE>95
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-Transfer 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 registration. 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 procedure 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
<PAGE>96
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 shareholder's bank account of record (defined as a currently
established pre-authorized 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 guarantee 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 your bank
account by your bank within 48 to 72 hours.
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
shareholder'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, 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
<PAGE>97
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 dividend return for each of their Classes by
dividing the current dividend 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, including net equalization credits or debits, 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 its
investment portfolio and operating expenses. These factors and possible
differences in the methods used in calculating current dividend return should
be considered when comparing a Class' current return 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
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 will be 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 interests of a Portfolio and the Underlying Smith Barney
<PAGE>98
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 possibility, 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 individual, institutional and investment company clients
which had aggregate assets under management as of December 31, 1995 in excess
of $71 billion. Subject to the supervision 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 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). The Directors of
the 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
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 Rule 12b-1 Plan 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 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 December 31, 1995 in excess
of $2.9 billion.
<PAGE>99
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 management fee of each of the Underlying Smith Barney Funds in which the
Portfolios may invest is calculated at the following percentage rate of the
Fund's annual net assets:
<TABLE>
<CAPTION>
<S> <C>
Underlying Smith Barney Fund Management Fees
- ----------------------------
Smith Barney Aggressive Growth Fund Inc. 0.80%
Smith Barney Appreciation Fund Inc. 0.62%
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 0.63%
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 0.44%
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
responsibility 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 Managing Director of Smith Barney Inc.
Certain managing directors of SBMFM will assist Mr. Stiles in managing the
Portfolios.
<PAGE>100
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. Pursuant to a plan of distribution 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 Portfolio, 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 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.
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 expenses borne by PFS, amounts received under the
Plan and proceeds of the CDSC.
<PAGE>101
Additional Information
The Concert Series, an open-end, non-diversified investment company,
was incorporated in Maryland on August 11, 1995. The Concert Series has an
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 representing shares in one of five separate Portfolios and may
authorize the issuance 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 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 which pertain to a particular Class. As described under
"Voting" in the Statement of Additional Information, the Series ordinarily
will not hold shareholder meetings; however, shareholders have the right to
call a meeting upon a vote of 10% of the Series' outstanding shares for the
purpose of voting to remove directors, 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 holders of shares of the Portfolio.
PNC Bank, National Association, located at 17th and Chestnut Streets,
Philadelphia, Pennsylvania 19103 serves as custodian of the Portfolio's
investments.
First Data, 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 does not hold annual shareholder meetings. There
normally will be no meeting 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. The Directors will call
meeting for any purpose upon written request of shareholders holding at least
10% of the Concert Series' outstanding shares and the Concert Series will
<PAGE>102
assist shareholders in calling such a meeting as required by the 1940 Act.
When matters are submitted for shareholder vote, shareholders of each Class
will have one vote for each full share owned and a proportionate, fractional
vote for any fractional share held of that Class. Generally, shares of the
Concert Series will be voted on a fund-wide basis on all matters except
matters affecting only the interests of one Portfolio or one Class of shares.
The Concert Series intends to send its shareholders a semi-annual
report and an audited annual report, which will include listings of the
investment securities held by the Series at the end of the period covered. In
an effort to reduce the Series' printing and mailing costs, the 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 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 consolidation
to apply to their account should contact the Sub-Transfer Agent.
<PAGE>103
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 could involve certain
risks in the event of default or insolvency of the other party, including
possible delays or restrictions upon the ability of an Underlying Smith Barney
Fund or a Portfolio of the Concert Series 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 Barney 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 possible 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 Underlying Smith Barney Funds are
permitted to invest a greater proportion of their assets in the securities of
a smaller number of issuers, such Funds 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
Underlying Smith Barney Funds may invest may have limited marketability and,
therefore, may be subject to wide fluctuations in market value. In addition,
certain securities may lack a significant operating history and be dependent
on products or services without an established market share.
<PAGE>104
CONVERTIBLE SECURITIES AND SYNTHETIC CONVERTIBLE SECURITIES. While
convertible securities generally offer lower yields than non-convertible debt
securities 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 convertible securities differ from convertible securities in certain
respects, including that each component of a synthetic convertible security
has a separate 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 considered to be a country that is in the initial stages of its
industrialization cycle. Investing in the equity and fixed-income markets of
developing countries involves exposure to economic structures that are
generally less diverse and mature, and to political systems that can be
expected to have less stability, than those of developed countries.
Historical experience indicates that the markets of developing countries have
been more volatile than the markets of the more mature economies of developed
countries; however, such markets often have provided higher rates of return to
investors.
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 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 substantial 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 which 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
substantially 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
<PAGE>105
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 settlement procedures, and in certain markets there have been
times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions.
Further, satisfactory custodial 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 temporary 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 security due to settlement problems could
result either in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser. There is
generally less government supervision and regulation 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 without 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 original investment. In addition, like other debt securities,
the values of mortgage-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 securities 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
<PAGE>106
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. Leverage creates an opportunity for increased returns to
shareholders of an Underlying 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 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 which 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 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 having 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.
<PAGE>107
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 interest 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 suffer 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 currencies, 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
particularly 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, restrictions 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 facilities for electric generation, including, among
other considerations, the problems 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 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.
<PAGE>108
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 which are
issuers of the securities 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 movements or price trends of utility common stocks.
Causes of these discrepancies include changes in the overall demand for and
supply of various securities (including 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.
<PAGE>109
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE A
PROSPECTUS.
<PAGE>110
0041220.03
Smith Barney
Concert Series Inc.
388 Greenwich Street
New York, New York 10013
(212) 723-9218
Statement of Additional Information January __, 1996
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 ___________ __, 1996, as amended or
supplemented from time to time (collectively the "Prospectus"), and should be
read in conjunction with the Concert Series' Prospectus. 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 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. The Portfolios may also invest in repurchase agreements. The
Concert Series' Prospectus may be obtained from a Smith Barney Financial
Consultant or an Investments Representative of PFS Investments, Inc., or by
writing or calling the Company 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 where shown below:
<TABLE>
<C>
<S> Page
Management Of The Concert Series..............................................................2
Investment Objectives And Management Policies.................................................5
Purchase Of Shares...........................................................................25
Redemption Of Shares.........................................................................26
Distributors.................................................................................27
Valuation Of Shares..........................................................................29
Exchange Privilege...........................................................................29
IRA And Other Prototype Plans................................................................30
Performance..................................................................................32
Taxes (See In The Prospectus "Dividends, Distributions And Taxes")...........................33
Voting (See In The Prospectus "Additional Information")......................................36
Additional Information.......................................................................37
Financial Statement..........................................................................37
Appendix - Ratings Of Debt Obligations......................................................A-1
</TABLE>
<PAGE>111
0041220.03
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:
Name Service
- ---- -------
Smith Barney and PFS Distributors, Inc. ("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 73). 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 73). Vice Chairman of the Board of
Restaurant Associates Industries, Inc.; prior to April 1990, Chairman of the
Board of Restaurant Associates Industries, Inc. His address is c/o HNK
Associates, Three ADP Boulevard, Roseland, New Jersey 07068.
H. John Ellis, Jr., Director (Age 67). Prior to 1992, Executive Vice
President of the Consulting Services Division of Shearson Lehman Brothers.
His address is 222 Delaware Avenue, Wilmington, Delaware 19801.
Stephen E. Kaufman, Director (Age 63). Attorney. His address is 277
Park Avenue, New York, New York 10017.
<PAGE>112--
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, LaJoila, CA 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 Inc. ("Shearson Lehman Brothers"),
Vice Chairman of Asset Management Division of Shearson Lehman Brothers. Mr.
McLendon also serves as director or trustee of 42 other mutual funds of the
Smith Barney Mutual Funds. His address is 388 Greenwich Street, New York, New
York 10013.
Madelon DeVoe Talley, Director (Age 62). 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 35). Executive Vice President
of Smith Barney; prior to 1994, Director of Sales and Marketing for Prudential
Mutual Funds; prior to 1990, First Vice President, Asset Management Division
of Shearson Lehman Brothers. Ms. Bibliowicz also serves as President of 42
other mutual funds of the Smith Barney Mutual Funds. Her address is 388
Greenwich Street, New York, New York 10013.
Lewis E. Daidone, Senior Vice President and Treasurer (Age 37).
Managing Director of Smith Barney; Chief Financial Officer of Smith Barney
Mutual Funds; Director and Senior Vice President of SBMFM. Mr. Daidone also
serves as Senior Vice President and Treasurer of 42 other mutual funds of the
Smith Barney Mutual Funds. His address is 388 Greenwich Street, New York, New
York 10013.
Christina T. Sydor, Secretary (Age 44). Managing Director of Smith
Barney; General Counsel and Secretary of SBMFM. Ms. Sydor also serves as
Secretary of __ other mutual funds of the 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
to the directors during the first fiscal year of the Concert Series by the
Concert Series and compensation paid to such directors during the 1995
calendar year by other Smith Barney Mutual Funds:
<PAGE>113
<TABLE>
<CAPTION>
Compensation Table
- --------------------------- ----------------- -------------------- ------------------- ------------------------ ---------------
(1) (2) (3) (4) (5) (6)
Pension or Total Compensation
Aggregate Retirement Estimated Annual From Concert Series Number of
Compensation Benefits Accrued Benefits Upon and other Smith Barney Funds Serving
Name of Person, Position From Concert As Part of Concert Retirement Mutual Funds Paid to as Director
Series Series Expenses Directors
- --------------------------- ----------------- -------------------- ------------------- ------------------------ ---------------
<S> <C> <C> <C> <C> <C>
Heath B. McLendon None None None None 42
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
</TABLE>
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 ("Holdings") and Holdings is a wholly
owned subsidiary of The 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 __, 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.
<PAGE>114
The management fee for each Portfolio is calculated at the annual rate
of 0.35% of the 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 Directors who are not "interested persons" 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.
<PAGE>115
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; certificate 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 time
deposits ("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
<PAGE>116
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 they 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.
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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
<PAGE>118
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
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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
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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
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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.
<PAGE>122
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. 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 the 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. Certain Funds 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, certain Funds 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, certain
Funds 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 specific receivable or payables of the Fund generally
arising in connection with the purchase or sale of its securities. Position
<PAGE>123
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.
<PAGE>124
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.
<PAGE>125
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.
<PAGE>126
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.
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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 future currency 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 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 extend 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.
<PAGE>128
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.
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
<PAGE>129
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 but, 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 investments 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
<PAGE>130
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 by a custodian that satisfied the requirements of the 1940 Act. [The
Funds will not enter into any interest rate swap, cap or floor transaction
unless the unsecured senior debt or the claims-paying ability of the other party
thereto is rated in the highest rating category of at least one nationally
recognized rating organization at the time of entering into such transaction.]
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 utilizing
swap documentation. 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.
New options and futures contracts and various combinations thereof
continue to be developed and certain Underlying Smith Barney Funds may invest in
any such options and contracts as may be developed to the extent consistent with
its investment objective and regulatory requirements applicable to investment
companies.
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 no
subject to restrictions on resale.
REVERSE REPURCHASE AGREEMENTS. Certain Underlying Smith Barney Funds
may enter into reverse repurchase agreements. 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.
Certain Underlying Smith Barney Funds may enter into reverse repurchase
agreements with banks or broker-dealers. Entry into such agreements with
broker-dealers 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 bank debt within three business days so as to
restore its asset coverage to the 300% level.
<PAGE>131
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.
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, same 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.
AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITARY RECEIPTS. Certain of the
Underlying Smith Barney Funds may invest in the securities of foreign and
domestic issuers in the form of American Depositary Receipts ("ADRs")
and European Depositary 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 Depositary 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, in
bearer form, 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
<PAGE>132
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, 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.
<PAGE>133
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 the 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 the 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.
<PAGE>134
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.
<PAGE>135
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.
<PAGE>136
Determination of Public Offering
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 computation of the public offering price is shown in the Concert
Series' financial statements incorporated by reference in their entirety into
this Statement of Additional Information.
REDEMPTION OF SHARES
The right of redemption may be suspended or the date of payment postponed (a)
for any period during which the 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. 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 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
<PAGE>137
Plans should be set up with any Smith Barney Financial Consultant. A
shareholders who purchase shares directly through TSSG may continue to do so and
applications for participation in the Withdrawals Plan must be received by TSSG
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 .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 .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 .50% and .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 Blvd., Bldg 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 .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 .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 .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
<PAGE>138
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.
<PAGE>139
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 fund of the Smith Barney Mutual Funds may exchange all or part of
their shares for shares of the same class of any other Portfolio or of other
funds of the 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
the sales charge differential, if any, will be applied. Class
A shares of any fund may be exchanged without a sales charge
for shares of the funds that are offered without a sales
charge. Class A shares of any fund purchased without a sales
charge may be exchanged for shares sold with a sales charge,
and the appropriate sales charge differential will be applied.
B. Class A shares of any fund acquired by a previous exchange of
shares 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.
<PAGE>140
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 CDSC, 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.
<PAGE>141
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. To the extent
any advertisement or sales literature of a Portfolio describes the expenses or
performance of a Class, it will also disclose such information for the other
Classes.
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[( [GRAPHIC OMITTED] + 1)6 - 1]
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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
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Where: P = a hypothetical initial payment of
$10,000.
ERV = Ending Redeemable Value of a
Hypothetical $10,000 investment made at
the beginning of a 1-, 5- or 10-year
period (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
<PAGE>144
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 which so 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
<PAGE>145
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
<PAGE>146
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 for the purpose of voting upon the question or
removal of any director 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 meeting, 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
<PAGE>147
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.
<PAGE>148
APPENDIX - RATINGS OF DEBT OBLIGATIONS
BOND (AND NOTES) 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.
<PAGE>149
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.
<PAGE>150
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.
<PAGE>
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 provide 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 confor~mity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
January 22, 1996
<PAGE>151
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.
<PAGE>152
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.
<PAGE>153
Part C
OTHER INFORMATION
Item 24: Financial Statements and Exhibits.
a. Financial Statements:
Included in Part A of this Registration Statement:
None.
Included in Part B of this Registration Statement:
Statement of assets and liabilities as of January 22, 1996.
Statements, schedules and historical information other than those
listed above have been omitted since they are either not applicable or
are not required.
b. Exhibits:
1. Articles of Incorporation of the Registrant.*
2. Restated By-Laws of the Registrant.
3. Inapplicable.
4. (a) Registrant's form of stock certificates for Class
A, B, C and Y Shares of the High Growth Portfolio.
(b) Registrant's form of stock certificates for Class
A, B, C and Y Shares of the Growth Portfolio.
- ------------------------
* Incorporated by reference to Registrant's Registration Statement on Form
N-1A filed on November 20, 1995.
<PAGE>154
(c) Registrant's form of stock certificates for Class
A, B, C and Y Shares of the Balanced Portfolio.
(d) Registrant's form of stock certificates for Class
A, B, C and Y Shares of the Conservative Portfolio.
(e) Registrant's form of stock certificates for Class
A, B, C and Y Shares of the Income Portfolio.
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.
6. (a) Form of the Distribution Agreement between the
Registrant and Smith Barney Inc.
(b) Form of the Distribution Agreement between the
Registrant and PFS Distributors, Inc.
7. Inapplicable.
8. Form of Custodian Agreement between the Registrant
and PNC Bank, National Association.
9. (a) Form of Transfer Agency and Service Agreement
between the Registrant and The Shareholder
Services Group, Inc.
(b) Form of Sub-Transfer Agency Agreement between the
Registrant and PFS Shareholders Services.
10. Opinion and Consent of Willkie Farr & Gallagher as
to legality of shares being registered.
11. Consent of Independent Public Accountants.
12. Inapplicable.
<PAGE>155
13. Form of Purchase Agreement between the Registrant and
the Purchaser of the initial shares.
14. Inapplicable.
15. Form of Service and Distribution Plan pursuant to Rule 12b-1
between the Registrant and Smith Barney Inc.
16. Inapplicable.
17. Inapplicable.
18. Form of Multiple Class Plan pursuant to Rule 18f-3(d) of
the Investment Company Act of 1940.
Item 25. Persons Controlled by or Under Common Control
with Registrant.
All of the outstanding shares of the Registrant, representing all of
the interests in Smith Barney Concert Series Inc., on the date
Registrant's Registration Statement becomes effective will be owned by
Smith Barney Inc.
Item 26. Number of Holders of Securities.
It is anticipated that Smith Barney Inc. will hold all of the shares, par
value $.001 per share, of the Registrant on the date Registrant's Registration
Statement becomes effective.
<PAGE>156
Item 27. Indemnification.
Under Maryland law, directors and officers of the Registrant are not liable
to the Registrant or its stockholders except for an act or omission
committed in bad faith or as a result of active and deliberate dishonesty or
for the receipt of an improper personal benefit. The Registrant's
corporate charter requires that it indemnify its directors and officers
against liabilities and advance expenses to the fullest extent permitted
by Maryland law, subject to the limitation that no director or officer may
be protected against liability for willful misfeasance, bad faith, gross
negligence or reckless disregard for the duties involved in the conduct of his
office.
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 New York 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
<PAGE>157
Smith Barney Investment Funds Inc.
Smith Barney Precious Metals and Minerals 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 Income Trust
Smith Barney Adjustable Rate Government Income Fund
Smith Barney Florida Municipals 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 The Shareholder Services Group, Inc., Exchange
Place, Boston, Massachusetts.
<PAGE>158
Item 31. Management Services.
Inapplicable.
Item 32. Undertakings.
The Registrant hereby undertakes to file a post-effective amendment,
using financial statements which need not be certified, within four to six
months from the effectiveness date of Registrant's initial Registration
Statement under the Securities Act of 1933, as amended (the "Securities Act").
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.
<PAGE>159
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 23rd day of January, 1996.
SMITH BARNEY CONCERT SERIES INC.
By:/s/ Heath B. McLendon
Heath B. McLendon
Chairman of the Board
of Directors
We, the undersigned, hereby severally constitute and appoint Heath
B. McLendon, Christina T. Sydor and Lee D. Augsburger and each of them
singly, our true and lawful attorneys, with full power to them and each of
them to sign for us, and in our hands and in the capacities indicated below,
any and all Amendments to this Registration Statement and to file the same,
with all exhibits thereto, and other documents therewith, with the
Securities and Exchange Commission, granting unto said attorneys, and
each of them, acting alone, full authority and power to do and perform each
and every act and thing requisite or necessary to be done in the premises,
as fully to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys or any of them may
lawfully do or cause to be done by virtue thereof.
WITNESS our hands on the date set forth below.
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Heath B. McLendon Director; Chairman of the Board January 23, 1996
- ------------------------------------------ (Principal Executive Officer)
Heath B. McLendon
/s/ Lewis E. Daidone Senior Vice President; January 23, 1996
- --------------------------------------------- Treasurer
Lewis E. Daidone (Principal Accounting
Officer)
/s/ Walter E. Auch Director January 23, 1996
- --------------------------------------------
Walter E. Auch
/s/ Martin Brody Director January 23, 1996
- --------------------------------------------
Martin Brody
/s/ H. John Ellis Director January 23, 1996
- ----------------------------------------------
H. John Ellis
/s/ Stephen E. Kaufman Director January 23, 1996
- -------------------------------------------
Stephen E. Kaufman
/s/ Armon E. Kamesar Director January 23, 1996
- -------------------------------------------
Armon E. Kamesar
/s/ Madelon DeVoe Talley Director January 23, 1996
- -------------------------------------------
Madelon DeVoe Talley
</TABLE>
<PAGE>161
EXHIBIT INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit
No. Document Page No.
- ------- -------- --------
1. Articles of Incorporation of the
Registrant......................................................................... *
2. Restated By-Laws of the Registrant.................................................
3. Inapplicable.
4. (a) Registrant's form of stock certificates for Class A, B, C and Y Shares
of the High Growth Portfolio..................................................
(b) Registrant's form of stock certificates for Class A, B, C and Y Shares
of the Growth Portfolio......................................................
(c) Registrant's form of stock certificates for Class A, B, C and Y Shares
of the Balanced Portfolio.....................................................
(d) Registrant's form of stock certificates for Class A, B, C and Y Shares
of the Conservative Portfolio.................................................
(e) Registrant's form of stock certificates for Class A, B, C and Y Shares
of the Income Portfolio.......................................................
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..............................................................
6. (a) Form of the Distribution Agreement between the Registrant and Smith
Barney Inc....................................................................
(b) Form of the Distribution Agreement between the Registrant and PFS
Distributors Inc..............................................................
7. Inapplicable.
</TABLE>
- ------------------------
* Incorporated by reference to Registrant's Registration Statement
on Form N-1A filed on November 20, 1995.
<PAGE>162
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit
No. Document Page No.
- ------- -------- --------
8. Form of Custodian Agreement between the Registrant and PNC Bank, National
Association........................................................................
9. (a) Form of Transfer Agency and Service Agreement
between the Registrant and The Shareholder Services
Group, Inc....................................................................
(b) Form of Sub-Transfer Agency Agreement between the Registrant and PFS
Shareholders Services.........................................................
10. Opinion and Consent of Willkie Farr & Gallagher as to legality of shares
being registered...................................................................
11. Consent of Independent Public Accountants..........................................
12. Inapplicable.
13. Form of Purchase Agreement between the Registrant
and the Purchaser of the initial shares............................................
14. Innapplicable......................................................................
15. Form of Service and Distribution Plan pursuant to Rule 12b-1 between the
Registrant and Smith Barney Inc....................................................
16. Inapplicable.......................................................................
17. Inapplicable.
18. Form of Multiple Class Plan pursuant to Rule 18f-3(d) of the Investment
Company Act of 1940................................................................
</TABLE>
<PAGE>1
RESTATED BY-LAWS OF
SMITH BARNEY CONCERT SERIES INC.
A Maryland Corporation
ARTICLE I
STOCKHOLDERS
SECTION 1. Annual Meetings. No annual meeting of the
stockholders of the Corporation shall be held unless required by
applicable law or otherwise determined by the Board of Directors. An annual
meeting may be held at any place within the United States as may be
determined by the Board of Directors and as shall be designated in the notice
of the meeting, and at the time specified by the Board of Directors. Any
business of the Corporation may be transacted at an annual meeting without
being specifically designated in the notice unless otherwise provided by
statute, the Corporation's Charter, as amended or supplemented (the
"Charter"), or these By-Laws.
SECTION 2. Special Meetings. Special meetings of the stockholders
for any purpose or purposes, unless otherwise prescribed by statute or
by the Corporation's Charter, may be held at any place within the United
States, and may be called at any time by the Board of Directors or by the
President, and shall be called by the Secretary at the request in writing of
a majority of the Board of Directors or at the request in writing of
stockholders entitled to cast at least 10 (ten) percent of the votes entitled
to be cast at the meeting upon payment by such stockholders to the Corporation
of the reasonably estimated cost of preparing and mailing a notice of the
meeting (which estimated cost shall be provided to such stockholders by
the Secretary of the Corporation). Notwithstanding the foregoing, unless
requested by stockholders entitled to cast a majority of the votes entitled to
be cast at the meeting, a special meeting of the stockholders need not be
called at the request of stockholders to consider any matter which is
substantially the same as a matter voted on at any special meeting of the
stockholders held during the preceding 12 (twelve) months. A written
request shall state the purpose or purposes of the proposed meeting.
SECTION 3. Notice of Meetings. Written or printed notice of the
purpose or purposes and of the time and place of every meeting of the
stockholders shall be given by the Secretary of the Corporation to each
stockholder of record entitled to vote at the meeting, by placing the
notice in the mail at least 10 (ten) days, but not more than 90 (ninety) days,
prior to the date designated for the meeting addressed to each stockholder at
his address appearing on the books of the Corporation or supplied by the
stockholder to the Corporation for the purpose of notice. The notice of any
meeting of stockholders may be accompanied by a form of proxy approved by the
Board of Directors in favor of the actions or persons as the Board of
Directors may select. Notice of any meeting of stockholders shall be
deemed waived by any stockholder who attends the meeting in person or by
proxy, or who before or after the meeting submits a signed waiver of
notice that is filed with the records of the meeting.
SECTION 4. Quorum. Except as otherwise provided by law or by the
Corporation's Charter, the presence in person or by proxy of stockholders of
the Corporation entitled to cast at least one-third of the votes entitled
to be cast shall constitute a quorum at each meeting of the stockholders;
provided, however, that where any provision of law or the Charter permits or
requires that stockholders of any series or class of capital stock of the
Corporation shall vote as a series or class, stockholders of one-third of
the aggregate number of shares of capital stock of that series or class
outstanding and entitled to vote shall constitute a quorum at such meeting.
Except as otherwise required by law, all questions shall be decided by a
majority of the votes cast on such questions, except for the election of
directors. A plurality of all the votes cast at a meeting at which a quorum
is present is sufficient to elect a director. In the
<PAGE>2
absence of a quorum, the stockholders present in person or by proxy, by majority
vote and without notice other than by announcement at the meeting, may adjourn
the meeting from time to time as provided in Section 5 of this Article I until a
quorum shall attend. The stockholders present at any duly organized meeting may
continue to do business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum. The absence from any meeting in
person or by proxy of holders of the number of shares of stock of the
Corporation in excess of one-third that may be required by the laws of the State
of Maryland, the Investment Company Act of 1940, as amended, or other applicable
statute, the Corporation's Charter or these By-Laws, for action upon any given
matter shall not prevent action at the meeting on any other matter or matters
that may properly come before the meeting, so long as there are present, in
person or by proxy, holders of the number of shares of stock of the Corporation
required for action upon the other matter or matters.
SECTION 5. Adjournment. Any meeting of the stockholders may be
adjourned from time to time, without notice other than by announcement at the
meeting at which the adjournment is taken to a date not more than 120 (one
hundred twenty) days after the original record date. At any adjourned meeting
at which a quorum shall be present any action may be taken that could have
been taken at the meeting originally called.
SECTION 6. Organization. At every meeting of the stockholders, the
Chairman of the Board, or in his absence or inability to act, the
President, or in his absence or inability to act, a Vice President, or in the
absence or inability to act of the Chairman of the Board, the President and all
the Vice Presidents, a Chairman chosen by the stockholders, shall act as
Chairman of the meeting. The Secretary, or in his absence or inability to
act, a person appointed by the Chairman of the meeting, shall act as
secretary of the meeting and keep the minutes of the meeting.
SECTION 7. Order of Business. The order of business at all meetings of
the stockholders shall be as determined by the chairman of the meeting.
SECTION 8. Voting. Except as otherwise provided by statute or the
Corporation's Charter, each holder of record of shares of stock of the
Corporation having voting power shall be entitled at each meeting of the
stockholders to one vote for every share of stock standing in his name on the
records of the Corporation as of the record date determined pursuant to
Section 9 of this Article I; provided, however, that when required by
the Corporation's Charter, the Investment Company Act of 1940, as amended,
or the laws of the State of Maryland or when the Board of Directors has
determined that the matter affects only the interest of one series or class
of stock, matters may be submitted only to a vote of the stockholders of
that particular series or class, and each stockholder thereof shall be
entitled to votes equal to the shares of stock of that series or class
registered in his name on the books of the Corporation.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by the
stockholder or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof, unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of the
stockholder executing it, except in those cases in which the proxy states that
it is irrevocable and in which an irrevocable proxy is permitted by law.
If a vote shall be taken on any question then unless required by
statute or these By-Laws, or determined by the Chairman of the meeting to be
advisable, any such vote need not be by ballot. On a vote by ballot, each
ballot shall be signed by the stockholder voting, or by his proxy, and shall
state the number of shares voted.
SECTION 9. Fixing of Record Date. The Board of Directors may set a
record date for the purpose of determining stockholders entitled to vote at
any meeting of the stockholders. The record date for a particular meeting
shall be not more than 90 ninety) nor fewer than 10 (ten) days before the date
of the meeting. All persons who were holders of record of shares as of the
record date of a meeting, and no others, shall be entitled to vote at such
meeting and any adjournment thereof.
SECTION 10. Inspectors. The Board of Directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at the
meeting or at any adjournment of the meeting. If the inspectors shall not be
so appointed or if any of them shall fail to appear or act, the chairman of the
meeting may appoint inspectors. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath to execute faithfully the
duties of inspector at the meeting with strict impartiality and according to
the best of his ability. The
<PAGE>3
inspectors shall determine the number of shares outstanding and the voting power
of each share, the number of shares represented at the meeting, the existence of
a quorum and the validity and effect of proxies, and shall receive votes,
ballots or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do those acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the chairman
of the meeting or any stockholder entitled to vote at the meeting, the
inspectors shall make a report in writing of any challenge, request or matter
determined by them and shall execute a certificate of any fact found by them. No
Director or candidate for the office of Director shall act as inspector of an
election of Directors. Inspectors need not be stockholders of the Corporation.
SECTION 11. Consent of Stockholders in Lieu of Meeting. Except as
otherwise provided by statute, any action required to be taken at any
meeting of stockholders, or any action that may be taken at any meeting of the
stockholder, may be taken without a meeting, without prior notice and without
a vote, if the following are filed with the records of stockholders' meetings:
(i) a unanimous written consent that sets forth the action and is signed by
each stockholder entitled to vote on the matter and (ii) a written waiver of
any right to dissent signed by each stockholder entitled to notice of the
meeting but not entitled to vote at the meeting.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. General Powers. Except as otherwise provided in the
Corporation's Charter, the business and affairs of the Corporation shall be
managed under the direction of the Board of Directors. All powers of the
Corporation may be exercised by or under authority of the Board of Directors
except as conferred on or reserved to the stockholder by law, by the
Corporation's Charter or by these By-Laws.
SECTION 2. Number of Directors. The number of Directors initially
shall be one, and thereafter shall be fixed from time to time by resolution
of the Board of Directors adopted by a majority of the entire Board of
Directors; provided, however, that the number of Directors shall in no event
be fewer than the number required by the Maryland General Corporation Law
nor more than fifteen. Any vacancy created by an increase in Directors may
be filled in accordance with Section 6 of this Article II. No reduction in
the number of Directors shall have the effect of removing any Director from
office prior to the expiration of his term unless the Director is specifically
removed pursuant to Section 5 of this Article II at the time of the decrease.
A Director need not be a stockholder of the Corporation, a citizen of the
United States or a resident of the State of Maryland.
SECTION 3. Election and Term Directors. Directors shall be elected
by written ballot at any meeting of stockholders held for that purpose. The
term of office of each director, including any director elected to fill a
vacancy, shall be from the time of his election and qualification until his
successor shall have been elected and shall have qualified, or until his
death, resignation or removal, or as otherwise provided by statute or the
Corporation's Articles of Incorporation.
A Board Member who has reached the age of seventy-two (72) years may
elect the status of Director emeritus provided that the Board Member has
served for ten (10) years as a member of the Board of the Corporation or
of the Board of another investment company distributed, advised or
administered by an entity under common control with the Corporation's
distributor, investment adviser or administrator. Upon reaching eighty (80)
years of age, a Board Member must elect emeritus status. (The foregoing shall
not be deemed to restrict a Board Member's ability to resign.)
A Board Member designated as a Director emeritus may attend
meetings of the Board, however, he/she shall have not voting rights and
shall not be under a duty to manage or direct the business and affairs of the
Corporation. A Director emeritus shall not be deemed to stand in a fiduciary
relation to the Corporation and shall not be responsible to discharge the
duties of a Board Member or to exercise that diligence, care or skill that a
Board Member would ordinarily be required to exercise under applicable laws.
In addition, a Director emeritus shall be indemnified to the full extent
that an officer or Board Member of the Corporation may be indemnified under the
Corporation's governing documents and applicable state and federal laws.
<PAGE>4
As long as a Board Member is a Director emeritus, but in no event for
more that a period of ten (10) years, provided the Corporation has net assets
in excess of $100 million, a Director emeritus will receive 50% of the annual
retainer and annual meeting fees paid to active Board Members. In any
event, a Director emeritus shall be entitled to reasonable out-of-pocket
expenses for each meeting attended.
SECTION 4. Resignation. A Director of the Corporation may resign at
any time by giving written notice of his resignation to the Board of
Directors or the Chairman of the Board or to the President or the Secretary
of the Corporation. Any resignation shall take effect at the time
specified in it or, should the time when it is to become effective not be
specified in it, immediately upon its receipt. Acceptance of a resignation
shall not be necessary to make it effective unless the resignation states
otherwise.
SECTION 5. Removal of Directors. Any Director of the Corporation may
be removed by the stockholders with or without cause at any time by a vote of a
majority of the votes entitled to be cast for the election of Directors.
SECTION 6. Vacancies. Subject to the provisions of the Investment
Company Act of 1940, as amended, any vacancies in the Board of Directors,
whether arising from death, resignation, removal or any other cause except an
increase in the number of Directors, shall be filled by a vote of the
majority of the Board of Directors then in office even though that
majority is less than a quorum, provided that no vacancy or vacancies shall be
filled by action of the remaining Directors if, after the filling of the
vacancy or vacancies, fewer than two-thirds of the Directors then holding
office shall have been elected by the stockholders of the Corporation. A
majority of the entire Board in office at the time of increase may fill a
vacancy which results from an increase in the number of Directors. In the
event that at any time a vacancy exists in any office of a Director that may
not be filled by the remaining Directors, a special meeting of the
stockholders shall be held as promptly as possible and in any event within 60
sixty) days, for the purpose of filling the vacancy or vacancies. Any
Director elected or appointed to fill a vacancy shall hold office until
a successor has been chosen and qualifies or until his earlier resignation
or removal.
SECTION 7. Place of Meetings. Meetings of the Board may be held at
any place that the Board of Directors may from time to time determine or that
is specified in the notice of the meeting.
SECTION 8. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at the time and place determined by the Board of
Directors.
SECTION 9. Special Meetings. Special meetings of the Board of Directors
may be called by two or more Directors of the Corporation or by the Chairman of
the Board or the President.
SECTION 10. Notice of Special Meetings. Notice of each special
meeting of the Board of Directors shall be given by the Secretary as
hereinafter provided. Each notice shall state the time and place of the
meeting and shall be delivered to each Director, either personally or by
telephone or other standard form of telecommunication, at least 24
(twenty-four) hours before the time at which the meeting is to be held, or by
first-class mail, postage prepaid, addressed to the Director at his residence
or usual place of business, and mailed at least 3 (three) days before the day
on which the meeting is to be held.
SECTION 11. Waiver of Notice of Meetings. Notice of any special meeting
need not be given to any Director who shall, either before or after the
meeting, sign a written waiver of notice that is filed with the records of
the meeting or who shall attend the meeting.
SECTION 12. Quorum and Voting. One-third (but not fewer than 2
(two)) of the members of the entire Board of Directors shall be present
in person at any meeting of the Board in order to constitute a quorum for
the transaction of business at the meeting (unless there is only one
director, in which case that one will constitute a quorum for the
transaction of business), and except as otherwise expressly required by
statute, the Corporation's Charter, these By-Laws, the Investment Company
Act of 1940, as amended, or any other applicable statute, the act of a
majority of the Directors present at any meeting at which a quorum is present
shall be the act of the Board. In the absence of a quorum at any meeting of the
Board, a majority of the Directors present may adjourn the meeting to
another time and place until a quorum shall be present. Notice of the
<PAGE>5
time and place of any adjourned meeting shall be given to all Directors. At any
adjourned meeting at which a quorum is present, any business may be transacted
that might have been transacted at the meeting as originally called.
SECTION 13. Organization. The Board of Directors may designate a
Chairman of the Board, who shall preside at each meeting of the Board.
In the absence or inability of the Chairman of the Board to act, the
President, or, in his absence or inability to act, another Director chosen
by a majority of the Directors present, shall act as chairman of the meeting
and preside at the meeting. The Secretary, or, in his absence or inability
to act, any person appointed by the chairman, shall act as secretary of the
meeting and keep the minutes thereof.
SECTION 14. Committees. Except at otherwise provided in this
Section 14, the Board of Directors may designate one or more committees
of the Board of Directors, each consisting of two or more directors. To the
extent provided in the resolution, and permitted by law, the committee or
committee shall have and may exercise the powers of the Board of Directors
in the management of the business and affairs of the Corporation and may
authorize the seal of the Corporation to be affixed to all papers that may
require it. Any committee or committees shall have the name or names
determined from time to time by resolution adopted by the Board of Directors.
Each committee shall keep regular minutes of its meetings and report the
same to the Board of Directors when required. The members of the committee
present at any meeting whether or not they constitute a quorum, may
appoint a director to act in the place of an absent member.
Notwithstanding any provision to the contrary contained in these
ByLaws, a committee formed to value an illiquid security (a "Pricing
Committee") shall consist of at least two directors provided the Pricing
Committee is at all times comprised of at least 50% "non-interested" directors
as that term is defined in the Investment Company Act of 1940, as amended. In
the event the Chairman of the Board of Directors is not present at a
meeting of a Pricing Committee, the Committee shall only convene if the
President of the Corporation is present at such meeting, provided the
President, unless also a director of the Corporation, shall not have any voting
rights.
SECTION 15. Written Consent of Directors in Lieu of a Meeting.
Subject to the provisions of the Investment Company Act of 1940, as
amended, any action required or permitted to be taken at any meeting of the
Board of Directors or of any committee of the Board may be taken without a
meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of the proceedings of the Board or committee.
SECTION 16. Telephone Conference. Members of the Board of
Directors or any committee of the Board may participate in any Board or
committee meeting by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other at the same time. Participation by such means shall constitute
presence in person at the meeting.
SECTION 17. Compensation. Each Director shall be entitled to
receive compensation, if any, as may from time to time be fixed by the
Board of Directors, including a fee for each meeting of the Board or any
committee thereof, regular or special, he attends. Directors may also be
reimbursed by the Corporation for all reasonable expenses incurred in
traveling to and from the place of a Board or committee meeting.
ARTICLE III
OFFICERS, AGENTS AND EMPLOYEES
SECTION 1. Number and Qualifications. The officers of the Corporation
shall be a President, a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. The Board of Directors may elect or appoint
one or more Vice Presidents and may also appoint any other officers, agents
and employees it deems necessary or proper. Any two or more offices may
be held by the same person, except the offices of President and Vice President,
but no officer shall execute, acknowledge or verify in more than one capacity
any instrument required by law to be executed, acknowledged or verified by
more than one officer. Officers shall be elected by the Board of Directors
to hold office until their successors shall have been duly elected and shall
have qualified. Officers shall serve at the pleasure of the Board of Directors.
The Board of Directors may from
<PAGE>6
time to time elect, or delegate to the President the power to appoint, such
officers (including one or more Assistant Vice President, one or more Assistant
Treasurers and one or more Assistant Secretaries) and such agents as may be
necessary or desirable for the business of the Corporation. Such other officers
and agents shall have such duties and shall hold their offices for such terms as
may be prescribed by the Board or by the appointing authority.
SECTION 2. Resignations. Any officer of the Corporation may resign at
any time by giving written notice of his resignation to the Board of
Directors, the Chairman of the Board, the President or the Secretary. Any
resignation shall take effect at the time specified therein or, if the time
when it shall become effective is not specified therein, immediately upon its
receipt. Acceptance of a resignation shall not be necessary to make it
effective unless the resignation states otherwise.
SECTION 3. Removal of Officer, Agent or Employee. Any officer, agent or
employee of the Corporation may be removed by the Board of Directors with
or without cause at any time, and the Board may delegate the power of removal
as to agents and employees not elected or appointed by the Board of Directors.
Removal shall be without prejudice to the person's contract rights, if
any, but the appointment of any person as an officer, agent or employee of
the Corporation shall not of itself create contract rights.
SECTION 4. Vacancies. A vacancy in any office whether arising
from death, resignation, removal or any other cause, may be filled in the
manner prescribed in these By-Laws for the regular election or appointment to
the office.
SECTION 5. Compensation. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer with respect to other officers under his control.
SECTION 6. Bonds or Other Security. If required by the Board, any
officer, agent or employee of the Corporation shall give a bond or other
security for the faithful performance of his duties, in an amount and with any
surety or sureties as the Board may require.
SECTION 7. President; Chief Executive Officer; Chairman of the
Board. The President shall have, subject to the control of the Board of
Directors, general charge of the business and affairs of the Corporation,
and may employ and discharge employees and agents of the Corporation, except
those appointed by the Board and he may delegate these powers. The Chairman
of the Board shall be the chief executive officer of the Corporation. In
the absence of the Chairman of the Board (or if there is none), the
President shall preside at all meetings of the stockholders and of the Board
of Directors.
SECTION 8. Vice President. Each Vice President shall have the powers
and perform the duties that the Board of Directors or the President may from
time to time prescribe.
SECTION 9. Treasurer. Subject to the provisions of any contract
that may be entered into with any custodian pursuant to authority granted by
the Board of Directors, the Treasurer shall have charge of all receipts and
disbursements of the Corporation and shall have or provide for the custody of
the Corporation's funds and securities; he shall have full authority to
receive and give receipts for all money due and payable to the Corporation,
and to endorse checks, drafts and warrants, in its name and on its behalf and
to give full discharge for the same; he shall deposit all funds of the
Corporation, except those that may be required for current use, in such banks
or other places of deposit as the Board of Directors may from time to time
designate; and, in general, he shall perform all duties incident to the office
of Treasurer and such other duties as may from time to time be assigned to him
by the Board of Directors or the President.
SECTION 10. Secretary. The Secretary shall
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board of Directors, the
committees of the Board and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
<PAGE>7
(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all stock certificates of the Corporation (unless
the seal of the Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix and attest the seal to all other documents to
be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept
and filed; and
(e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him
by the Board of Directors or the President.
SECTION 12. Delegation of Duties. In case of the absence of any
officer of the Corporation, or for any other reason that the Board of
Directors may deem sufficient, the Board may confer for the time being the
powers or duties, or any of them, of such officer upon any other officer or
upon any Director.
ARTICLE IV
STOCK
SECTION 1. Stock Certificates. Each holder of stock of the Corporation
shall be entitled upon specific written request to such person as may be
designated by the Corporation to have a certificate or certificates, in a form
approved by the Board, representing the number of shares of stock of the
Corporation owned by him; provided, however, that certificates for
fractional shares will not be delivered in any case. The certificates
representing shares of stock shall be signed by or in the name of the
Corporation by the Chairman of the Board, the President or a Vice President
and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer and sealed with the seal of the Corporation. Any or
all of the signatures or the seal on the certificate may be facsimiles. In
case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to
be such officer, transfer agent or registrar before such certificate shall be
issued, it may be issued by the Corporation with the same effect as if
such officer, transfer agent or registrar were still in the office at the
date of issue.
SECTION 2. Transfers of Shares. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by
the registered holder thereof, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary or with a transfer
agent or transfer clerk, and on surrender of the certificate or certificates,
if issued, for the shares properly endorsed or accompanied by a duly executed
stock transfer power and the payment of all taxes thereon. Except as otherwise
provided by law, the Corporation shall be entitled to recognize the exclusive
right of a person in whose name any share or shares stand on the record of
stockholders as the owner of the share or shares for all purposes, including,
without limitation, the rights to receive dividends or other distributions
and to vote as the owner, and the Corporation shall not be bound to recognize
any equitable or legal claim to or interest in any such share or shares on the
part of any other person.
SECTION 3. Regulations. The Board of Directors may make any additional
rules and regulations, not inconsistent with these By-Laws, as it may deem
expedient concerning the issue, transfer and registration of certificates
for shares of stock of the Corporation. It may appoint, or authorize any
officer or officers to appoint, one or more transfer agents or one or more
transfer clerks and one or more registrars and may require all certificates
for shares of stock to bear the signature or signatures of any of them.
SECTION 4. Stolen. Lost. Destroyed or Mutilated Certificates. The
holder of any certificate representing shares of stock of the Corporation
shall immediately notify the Corporation of its theft, loss, destruction or
mutilation and the Corporation may issue a new certificate of stock in the
place of any certificate issued by it that has been alleged to have been
stolen, lost or destroyed or that shall have been mutilated. The Board may,
in its discretion, require the owner (or his legal representative) of a
stolen, lost, destroyed or mutilated certificate to give to the Corporation
a bond in a sum, limited or unlimited, and in a form and with any surety or
sureties, as the Board in its absolute
<PAGE>8
discretion shall determine, to indemnify the Corporation against any claim that
may be made against it on account of the alleged theft, loss or destruction of
any such certificate, or issuance of a new certificate. Anything herein to the
contrary notwithstanding, the Board of Directors, in its absolute discretion,
may refuse to issue any such new certificate, except pursuant to legal
proceedings under the laws of the State of Maryland.
SECTION 5. Fixing of Record Date for Dividends, Distributions. etc.
The Board may fix, in advanced a date not more than 90 (ninety) days
preceding the date fixed for the payment of any dividend or the making of any
distribution or the allotment of rights to subscribe for securities of the
Corporation, or for the delivery of evidences of rights or evidences of
interests arising out of any change, conversion or exchange of common stock
or other securities entitled to receive any such dividend, distribution,
allotment, rights or interests, and in such case only the stockholders of
record at the time so fixed shall be entitled to receive such dividend,
distribution, allotment, rights or interests.
SECTION 6. Information to Stockholders and Others. Any
stockholder of the Corporation or his agent may inspect and copy during the
Corporation's usual business hours the Corporations' By-Laws, minutes of
the proceedings of its stockholders, annual statements of its affairs and
voting trust agreements on file at its principal office.
ARTICLE V
INDEMNIFICATION AND INSURANCE
SECTION 1. Indemnification of Directors and Officers. Any person who
was or is a party or is threatened to be made a party in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is a
current or former Director or officer of the Corporation, or is or was serving
while a Director or officer of the Corporation at the request of the
Corporation as a Director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, enterprise
or employee benefit plan, shall be indemnified by the Corporation against
judgments, penalties, fines, excise taxes, settlements and reasonable
expenses (including attorneys' fees) actually incurred by such person in
connection with such action, suit or proceeding to the full extent
permissible under the Maryland General Corporation Law, the Securities Act
of 1933 and the Investment Company Act of 1940, as such statutes are now or
hereafter in force, except that such indemnity shall not protect any such
person against any liability to the Corporation or any stockholder thereof to
which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office ("disabling conduct").
SECTION 2. Advances. Any current or former Director or officer
of the Corporation claiming indemnification within the scope of this Article V
shall be entitled to advances from the Corporation for payment of the
reasonable expenses incurred by him in connection with proceedings to which
he is a party in the manner and to the full extent permissible under the
Maryland General Corporation Law, the Securities Act of 1933 and the Investment
Company Act of 1940, as such statutes are now or hereafter in force;
provided, however, that the person seeking indemnification shall provide to
the Corporation a written affirmation of his good faith belief that the
standard of conduct necessary for indemnification by the Corporation
has been met and a written undertaking to repay any such advance unless it is
ultimately determined that he is entitled to indemnification, and provided
further that at least one of the following additional conditions are
met: (1) the person seeking indemnification shall provide a security in
form and amount acceptable to the Corporation for his undertaking; (2) the
Corporation is insured against losses arising by reason of the advance; or (3)
a majority of a quorum of Directors of the Corporation who are neither
"interested persons" as defined in the Investment Company Act of 1940, as
amended, nor parties to the proceeding ("disinterested non-party
directors"), or independent legal counsel, in a written opinion,
shall determine, based on a review of facts readily available to the
Corporation at the time the advance is proposed to be made, that there is
reason to believe that the person seeking indemnification will ultimately be
found to be entitled to indemnification.
<PAGE>9
SECTION 3. Procedure. At the request of any current or former
Director or officer, or any employee or agent whom the Corporation proposes
to indemnify, the Board of Directors shall determine, or cause to be
determined, in a manner consistent with the Maryland General Corporation Law,
the Securities Act of 1933 and the Investment Company Act of 1940, as such
statutes are now or hereafter in force, whether the standards required by this
Article V have been met; provided, however, that indemnification shall be made
only following: (1) a final decision on the merits by a court or other body
before whom the proceeding was brought that the person to be indemnified was
not liable by reason of disabling conduct or (2) in the absence of such a
decision, a reasonable determination, based upon a review of the facts, that
the person to be indemnified was not liable by reason of disabling
conduct, by (a) the vote of a majority of a quorum of disinterested
non-party Directors or (b) an independent legal counsel in a written
opinion.
SECTION 4. Indemnification of Employees and Agents. Employees and
agents who are not officers or Directors of the Corporation may be indemnified,
and reasonable expenses may be advanced to such employees or agents, in
accordance with the procedures set forth in this Article V to the extent
permissible under the Investment Company Act of 1940, the Securities Act
of 1933 and the Maryland General Corporation Law, as such statutes are now or
hereafter in force, and to such further extent, consistent with the foregoing,
as may be provided by action of the Board of Directors or by contract.
SECTION 5. Other Rights. The indemnification provided by this
Article V shall not be deemed exclusive of any other right, in respect of
indemnification or otherwise, to which those seeking such indemnification may
be entitled under any insurance or other agreement, vote of stockholders or
disinterested Directors or otherwise, both as to action by a Director or
officer of the Corporation in his official capacity and as to action by such
person in another capacity while holding such office or position, and
shall continue as to a person who has ceased to be a Director or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
SECTION 6. Insurance. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
Director, officer, employee or agent of the Corporation, or who, while a
Director, officer, employee or agent of the Corporation, is or was serving
at the request of the Corporation as a Director, officer, partner,
trustee, employee, agent or fiduciary of another corporation, partnership,
joint venture, trust, enterprise or employee benefit plan, against any
liability asserted against and incurred by him in any such capacity, or arising
out of his status as such.
SECTION 7. Constituent. Resulting or Surviving Corporations. For the
purposes of this Article V, references to the "Corporation" shall include
all constituent corporations absorbed in a consolidation or merger as well as
the resulting or surviving corporation so that any person who is or was a
Director or officer of a constituent corporation or is or was serving at the
request of a constituent corporation as a Director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise shall stand in the same position under this Article V with
respect to the resulting or surviving corporation as he would if he had
served the resulting or surviving corporation in the same capacity.
ARTICLE VI
SEAL
The seal of the Corporation shall be circular in form and shall bear
the name of the Corporation, the year of its incorporation, the words
"Corporate Seal" and "Maryland" and any emblem or device approved by the Board
of Directors. The seal may be used by causing it or a facsimile to be
impressed or affixed or in any other manner reproduced, or by placing the
word "(seal)" adjacent to the signature of the authorized officer of the
Corporation.
<PAGE>10
ARTICLE VII
FISCAL YEAR
The Corporation's fiscal year shall be fixed by the Board of Directors.
ARTICLE VIII
AMENDMENTS
These By-Laws may be amended or repealed by the affirmative vote of a
majority of the Board of Directors at any regular or special meeting of
the Board of Directors, subject to the requirements of the Investment Company
Act of 1940, as amended.
<PAGE>1
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - HIGH GROWTH PORTFOLIO
Class A Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>2
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>3
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - HIGH GROWTH PORTFOLIO
Class B Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>4
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>5
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - HIGH GROWTH PORTFOLIO
Class C Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>6
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>7
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - HIGH GROWTH PORTFOLIO
Class Y Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>8
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>1
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - GROWTH PORTFOLIO
Class A Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>2
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>3
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - GROWTH PORTFOLIO
Class B Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>4
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>5
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - GROWTH PORTFOLIO
Class C Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>6
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>7
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - GROWTH PORTFOLIO
Class Y Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>8
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>1
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - BALANCED PORTFOLIO
Class A Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>2
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>3
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - BALANCED PORTFOLIO
Class B Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>4
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>5
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - BALANCED PORTFOLIO
Class C Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>6
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>7
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - BALANCED PORTFOLIO
Class Y Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>8
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>1
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - CONSERVATIVE PORTFOLIO
Class A Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>2
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>3
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - CONSERVATIVE PORTFOLIO
Class B Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>4
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>5
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - CONSERVATIVE PORTFOLIO
Class C Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>6
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>7
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - CONSERVATIVE PORTFOLIO
Class Y Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>8
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>1
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - INCOME PORTFOLIO
Class A Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>2
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>3
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - INCOME PORTFOLIO
Class B Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>4
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>5
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - INCOME PORTFOLIO
Class C Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>6-
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>7
NUMBER SHARES
_________ ---------
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - INCOME PORTFOLIO
Class Y Common Stock, Par Value $.001
SPECIMEN
THIS CERTIFIES that is the owner of
fully paid and non-assessable Shares of the above Corporation transferable
only on the books of the Corporation by the holder hereof in person or by duly
authorized Attorney upon surrender of this Certificate properly endorsed.
In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation.
Dated_____________________
------------------------------
President
-----------------------------
Secretary
<PAGE>8
The Corporation is authorized to issue two or more classes of stock. The
Corporation will furnish to any stockholder on request and without charge a
full statement of the designation and any preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption of the stock of each
class which the Corporation is authorized to issue and, if the Corporation is
authorized to issue any preferred or special class in series, of the
differences in the relative rights and preferences between the shares of each
series to the extent they have been set and the authority of the Board of
Directors to set the relative rights and preferences of subsequent series.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations. Additional abbreviations may
also be used though not in the list.
<TABLE>
<CAPTION>
<S> <C>
TEN COM as tenants in common UNIF GIFT MIN ACT Custodian
TEN ENT as tenants by the entireties (Minor)
JT TEN as joint tenants with right of survivorship and not under Uniform Gifts to Minors Act (State)
as tenants in common
</TABLE>
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
------------------------------
For value received, the undersigned hereby sells, assigns
and transfers unto ____________________________________________________
__________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
_____________________________________________________________________ Shares
represented by the within Certificate, and hereby irrevocably constitutes and
appoints ________________________________________________________________
_____________________________________________ Attorney to transfer the said
shares on the books of the within-named Corporation with full power of
substitution in the premises.
Dated, _____________________
In presence of
NOTICE: The signature to the assignment must correspond with the
name as written on the face of the certificate in every particular
without alteration or enlargement, or any change whatsoever.
<PAGE>1
SMITH BARNEY CONCERT SERIES INC.
HIGH GROWTH PORTFOLIO
ASSET ALLOCATION AND ADMINISTRATION AGREEMENT
AGREEMENT, made this _____ day of ________ 1996 between Smith
Barney Concert Series Inc., a Maryland corporation (the "Fund"), with
respect to the High Growth Portfolio (the "Portfolio") and Smith Barney
Mutual Funds Management Inc., a New York corporation ("Funds Management").
W I T N E S S E T H:
WHEREAS, the Portfolio is a series of the Fund which will operate as
an open-end management investment company registered under the Investment
Company Act of 1940, as amended, and the rules thereunder (the "1940 Act");
and
WHEREAS, the Fund has been organized for the purpose of investing its
assets in open-end management investment companies or series thereof that
are or will be part of a group of investment companies that holds itself
out to investors as related companies for purposes of investment and investor
services (i) for which Smith Barney Inc. ("Smith Barney") or any entity
controlling, controlled by, or under common control with Smith Barney now
or in the future acts as principal underwriter or (ii) for which Smith
Barney, Funds Management or Smith Barney Strategy Advisers Inc. ("SBSA")
or any entity controlling, controlled by, or under common control with Smith
Barney, Funds Management or SBSA now or in the future acts as investment
adviser (collectively, the "Underlying Smith Barney Funds"), as well as
repurchase agreements, and desires to avail itself of the experience, sources
of information, advice, assistance and facilities available to Funds
Management and to have Funds Management perform for it various asset
allocation and administration services; and Funds Management is willing to
furnish such advice and services on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed as follows:
1. The Fund on behalf of the Portfolio hereby appoints Funds
Management to act as investment manager to the Portfolio on the terms set
forth in this Agreement. Funds Management accepts such appointment and
agrees to render the services herein described, for the compensation herein
provided.
2. Subject to the supervision of the Board of Directors of the
Fund (the "Board"), Funds Management shall manage the investment of the
Portfolio's assets and provide investment research advice and supervision
of the Portfolio's investments in accordance with the Portfolio's investment
objective, policies and restrictions as stated in the Fund's Registration
Statement under the 1940 Act as it may be amended from time to time (the
"Registration Statement"), and subject to the following understandings:
(a) Funds Management shall provide supervision of the Portfolio's
investments and determine from time to time the investments or
securities that will be purchased, retained or sold by the Portfolio.
Funds Management shall determine the percentage of the Portfolio's
assets invested from time to time in each Underlying Smith Barney
Fund selected by the Board pursuant to the investment objective and
policies of the Portfolio as set forth in the prospectus forming
part of the Registration Statement and in repurchase agreements.
Funds Management shall allocate investments for the Portfolio among
the Underlying Smith Barney Funds and repurchase agreements based on
factors it considers relevant, including 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
shall be made within investment ranges established by the Board,
which will designate minimum and maximum percentages for each of the
Underlying Smith Barney Funds..
<PAGE>2
Funds Management will also make recommendations to the Board
concerning changes to (i) the Underlying Smith Barney Funds in which
the Portfolio may invest, (ii) the percentage range of assets that
may be invested by the Portfolio in any one Underlying Smith Barney
Fund and (iii) the percentage range of assets of the Portfolio that
may be invested in equity funds and fixed income funds (including
money market funds).
(b) Funds Management shall use its best judgment in the
performance of its duties under this Agreement.
(c) Funds Management undertakes to perform its duties and obligations
under this Agreement in conformity with the Registration Statement,
with the requirements of the 1940 Act and all other applicable Federal
and state laws and regulations and with the instructions and
directions of the Board.
(d) Funds Management shall maintain such books and records with
respect to the Portfolio's investments transactions and such books
and records required to be maintained by Funds Management pursuant
to the Rules of the Securities and Exchange Commission ("SEC") under
the 1940 Act and Funds Management shall render to the Board such
periodic and special reports as the Board may reasonably request.
Funds Management agrees that all records that it maintains for the
Portfolio or the Fund are the property of the Fund and it will
surrender promptly to the Fund on behalf of the Portfolio any of
such records upon the Fund's request.
(e) Funds Management will (i) maintain office facilities for the
Fund, (ii) furnish the Portfolio with statistical and research
data, clerical help and accounting, data processing, bookkeeping,
internal auditing and legal services and certain other services
required by the fund and the Portfolio, (iii) prepare reports to each
Portfolio's shareholders and (iv) prepare tax returns, reports to
and filings with the SEC and state Blue Sky authorities.
3. Funds Management will bear all of the expenses of its employees
and overhead in connection with its duties under this Agreement. Funds
Management will also bear all expenses incurred in the operation of the
Portfolio other than the management fee payable under this Agreement, the
fees payable pursuant to the plan adopted pursuant to Rule 12b-1 under
the 1940 Act and extraordinary expenses (such as costs of litigation to
which the Fund is a party and of indemnifying officers and Directors of
the Fund), which will be borne by the Portfolio. The expenses to be borne by
Funds Management include taxes, interest, brokerage fees and commissions, if
any; fees of the Fund's directors, salaries of all officers and employees who
are employed by both it and the Fund, SEC fees and state Blue Sky
qualification fees; charges of custodians; transfer agent, registrar 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
and statement of additional information relating to the Portfolio; cost
of printing and mailing stock certificates, shareholders' reports, notices,
proxy statements and reports to governmental offices; or directors of
the Fund; expenses of membership in investment company associations; and
expenses of fidelity bonding and other insurance premiums.
4. For the services provided and the expenses assumed pursuant
to this Agreement, the Fund will pay to Funds Management out of the
assets of the Portfolio a monthly fee in arrears equal to 0.35% per annum of
the Portfolio's average daily net assets during the month.
5. Funds Management shall authorize and permit any of its directors,
officers and employees who may be elected as directors or officers of the
Fund to serve in the capacities in which they are elected.
<PAGE>3
6. Funds Management shall not be liable for any error of judgment
or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services (in which
case any award of damages shall be limited to the period and the amount set
forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance
of its duties or from reckless disregard by it of its obligations and
duties under this Agreement.
7. This Agreement shall commence upon the effectiveness of
the Fund's Registration Statement and shall continue in effect for a
period of two years from its effective date, and if not sooner terminated,
will continue in effect for successive periods of 12 months thereafter,
provided that each continuance is specifically approved at least annually in
conformity with the requirements of the 1940 Act. This Agreement may be
terminated as a whole at any time by the Fund on behalf of the Portfolio,
without the payment of any penalty, upon the vote of a majority of the
Board or the vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Portfolio, or by Funds Management, on 60
days' written notice by either party to the other. This Agreement shall
terminate automatically in the event of its assignment (as defined in the
1940 Act).
8. Nothing in this Agreement shall limit or restrict the right of
any of Funds Management's directors, officers, or employees who may also
be a director, officer or employee of the Fund to engage in any other
business or to devote his time and attention in part to management or
other aspects of any business, whether of a similar or a dissimilar nature,
nor limit or restrict the Manger's right to engage in any other business or
to render services of any kind to any other corporation, firm, individual
or association. The investment management services provided by Funds
Management hereunder are not to be deemed exclusive, and Funds Management
shall be free to render similar services to others.
9. Any notice or other communication required to be given pursuant
to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (i) to Funds Management at 388 Greenwich
Street, New York, New York 10013, Attention: Secretary; or (ii) to the Fund
at 388 Greenwich Street, New York, New York 10013, Attention: Secretary.
10. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to the conflict
of law rules thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day
and year first above written.
SMITH BARNEY CONCERT SERIES INC. SMITH BARNEY MUTUAL
on behalf of the HIGH GROWTH PORTFOLIO FUNDS MANAGEMENT INC.
By: By:
Heath B. McLendon Heath B. McLendon
Chairman of the Board President
Attest: Attest:
Lee D. Augsburger Lee D. Augsburger
Assistant Secretary Deputy General Counsel
<PAGE>1
SMITH BARNEY CONCERT SERIES INC.
GROWTH PORTFOLIO
ASSET ALLOCATION AND ADMINISTRATION AGREEMENT
AGREEMENT, made this ____ day of ________ 1996 between Smith Barney
Concert Series Inc., a Maryland corporation (the "Fund"), with respect to
the Growth Portfolio (the "Portfolio") and Smith Barney Mutual Funds
Management Inc., a New York corporation ("Funds Management").
W I T N E S S E T H:
WHEREAS, the Portfolio is a series of the Fund which will operate as
an open-end management investment company registered under the Investment
Company Act of 1940, as amended, and the rules thereunder (the "1940 Act");
and
WHEREAS, the Fund has been organized for the purpose of investing its
assets in open-end management investment companies or series thereof that
are or will be part of a group of investment companies that holds itself
out to investors as related companies for purposes of investment and investor
services (i) for which Smith Barney Inc. ("Smith Barney") or any entity
controlling, controlled by, or under common control with Smith Barney now
or in the future acts as principal underwriter or (ii) for which Smith
Barney, Funds Management or Smith Barney Strategy Advisers Inc. ("SBSA")
or any entity controlling, controlled by, or under common control with Smith
Barney, Funds Management or SBSA now or in the future acts as investment
adviser (collectively, the "Underlying Smith Barney Funds"), as well as
repurchase agreements, and desires to avail itself of the experience, sources
of information, advice, assistance and facilities available to Funds
Management and to have Funds Management perform for it various asset
allocation and administration services; and Funds Management is willing to
furnish such advice and services on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed as follows:
1. The Fund on behalf of the Portfolio hereby appoints Funds
Management to act as investment manager to the Portfolio on the terms set
forth in this Agreement. Funds Management accepts such appointment and
agrees to render the services herein described, for the compensation herein
provided.
2. Subject to the supervision of the Board of Directors of the
Fund (the "Board"), Funds Management shall manage the investment of the
Portfolio's assets and provide investment research advice and supervision
of the Portfolio's investments in accordance with the Portfolio's investment
objective, policies and restrictions as stated in the Fund's Registration
Statement under the 1940 Act as it may be amended from time to time (the
"Registration Statement"), and subject to the following understandings:
(a) Funds Management shall provide supervision of the Portfolio's
investments and determine from time to time the investments or
securities that will be purchased, retained or sold by the Portfolio.
Funds Management shall determine the percentage of the Portfolio's
assets invested from time to time in each Underlying Smith Barney
Fund selected by the Board pursuant to the investment objective and
policies of the Portfolio as set forth in the prospectus forming
part of the Registration Statement and in repurchase agreements.
Funds Management shall allocate investments for the Portfolio among
the Underlying Smith Barney Funds and repurchase agreements based on
factors it considers relevant, including 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
shall be made within investment ranges established by the Board,
which will designate minimum and maximum percentages for each of the
Underlying Smith Barney Funds..
<PAGE>2
Funds Management will also make recommendations to the Board
concerning changes to (i) the Underlying Smith Barney Funds in which
the Portfolio may invest, (ii) the percentage range of assets that
may be invested by the Portfolio in any one Underlying Smith Barney
Fund and (iii) the percentage range of assets of the Portfolio that
may be invested in equity funds and fixed income funds (including
money market funds).
(b) Funds Management shall use its best judgment in the
performance of its duties under this Agreement.
(c) Funds Management undertakes to perform its duties and obligations
under this Agreement in conformity with the Registration Statement,
with the requirements of the 1940 Act and all other applicable Federal
and state laws and regulations and with the instructions and
directions of the Board.
(d) Funds Management shall maintain such books and records with
respect to the Portfolio's investments transactions and such books
and records required to be maintained by Funds Management pursuant
to the Rules of the Securities and Exchange Commission ("SEC") under
the 1940 Act and Funds Management shall render to the Board such
periodic and special reports as the Board may reasonably request.
Funds Management agrees that all records that it maintains for the
Portfolio or the Fund are the property of the Fund and it will
surrender promptly to the Fund on behalf of the Portfolio any of
such records upon the Fund's request.
(e) Funds Management will (i) maintain office facilities for the
Fund, (ii) furnish the Portfolio with statistical and research
data, clerical help and accounting, data processing, bookkeeping,
internal auditing and legal services and certain other services
required by the fund and the Portfolio, (iii) prepare reports to each
Portfolio's shareholders and (iv) prepare tax returns, reports to
and filings with the SEC and state Blue Sky authorities.
3. Funds Management will bear all of the expenses of its employees
and overhead in connection with its duties under this Agreement.
Funds Management will also bear all expenses incurred in the operation of
the Portfolio other than the management fee payable under this Agreement,
the fees payable pursuant to the plan adopted pursuant to Rule 12b-1
under the 1940 Act and extraordinary expenses (such as costs of
litigation to which the Fund is a party and of indemnifying officers and
Directors of the Fund), which will be borne by the Portfolio. The expenses
to be borne by Funds Management include taxes, interest, brokerage fees and
commissions, if any; fees of the Fund's directors, salaries of all officers
and employees who are employed by both it and the Fund, SEC fees and state
Blue Sky qualification fees; charges of custodians; transfer agent,
registrar 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
and statement of additional information relating to the Portfolio; cost of
printing and mailing stock certificates, shareholders' reports, notices,
proxy statements and reports to governmental offices; or directors of
the Fund; expenses of membership in investment company associations; and
expenses of fidelity bonding and other insurance premiums.
4. For the services provided and the expenses assumed pursuant
to this Agreement, the Fund will pay to Funds Management out of the
assets of the Portfolio a monthly fee in arrears equal to 0.35% per annum of
the Portfolio's average daily net assets during the month.
5. Funds Management shall authorize and permit any of its directors,
officers and employees who may be elected as directors or officers of the
Fund to serve in the capacities in which they are elected.
<PAGE>3
6. Funds Management shall not be liable for any error of judgment
or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services (in which
case any award of damages shall be limited to the period and the amount set
forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance
of its duties or from reckless disregard by it of its obligations and
duties under this Agreement.
7. This Agreement shall commence upon the effectiveness of
the Fund's Registration Statement and shall continue in effect for a
period of two years from its effective date, and if not sooner terminated,
will continue in effect for successive periods of 12 months thereafter,
provided that each continuance is specifically approved at least annually in
conformity with the requirements of the 1940 Act. This Agreement may be
terminated as a whole at any time by the Fund on behalf of the Portfolio,
without the payment of any penalty, upon the vote of a majority of the
Board or the vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Portfolio, or by Funds Management, on 60
days' written notice by either party to the other. This Agreement shall
terminate automatically in the event of its assignment (as defined in the
1940 Act).
8. Nothing in this Agreement shall limit or restrict the right of
any of Funds Management's directors, officers, or employees who may also
be a director, officer or employee of the Fund to engage in any other
business or to devote his time and attention in part to management or
other aspects of any business, whether of a similar or a dissimilar nature,
nor limit or restrict the Manger's right to engage in any other business or
to render services of any kind to any other corporation, firm, individual
or association. The investment management services provided by Funds
Management hereunder are not to be deemed exclusive, and Funds Management
shall be free to render similar services to others.
9. Any notice or other communication required to be given pursuant
to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (i) to Funds Management at 388 Greenwich
Street, New York, New York 10013, Attention: Secretary; or (ii) to the Fund
at 388 Greenwich Street, New York, New York 10013, Attention: Secretary.
10. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to the conflict
of law rules thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day
and year first above written.
SMITH BARNEY CONCERT SERIES INC. SMITH BARNEY MUTUAL
on behalf of the GROWTH PORTFOLIO FUNDS MANAGEMENT INC.
By: By:
Heath B. McLendon Heath B. McLendon
Chairman of the Board President
Attest: Attest:
Lee D. Augsburger Lee D. Augsburger
Assistant Secretary Deputy General Counsel
<PAGE>1
SMITH BARNEY CONCERT SERIES INC.
BALANCED PORTFOLIO
ASSET ALLOCATION AND ADMINISTRATION AGREEMENT
AGREEMENT, made this ____ day of ________ 1996 between Smith Barney
Concert Series Inc., a Maryland corporation (the "Fund"), with respect to
the Balanced Portfolio (the "Portfolio") and Smith Barney Mutual Funds
Management Inc., a New York corporation ("Funds Management").
W I T N E S S E T H:
WHEREAS, the Portfolio is a series of the Fund which will operate as
an open-end management investment company registered under the Investment
Company Act of 1940, as amended, and the rules thereunder (the "1940 Act");
and
WHEREAS, the Fund has been organized for the purpose of investing its
assets in open-end management investment companies or series thereof that
are or will be part of a group of investment companies that holds itself
out to investors as related companies for purposes of investment and investor
services (i) for which Smith Barney Inc. ("Smith Barney") or any entity
controlling, controlled by, or under common control with Smith Barney now
or in the future acts as principal underwriter or (ii) for which Smith
Barney, Funds Management or Smith Barney Strategy Advisers Inc. ("SBSA")
or any entity controlling, controlled by, or under common control with Smith
Barney, Funds Management or SBSA now or in the future acts as investment
adviser (collectively, the "Underlying Smith Barney Funds"), as well as
repurchase agreements, and desires to avail itself of the experience, sources
of information, advice, assistance and facilities available to Funds
Management and to have Funds Management perform for it various asset
allocation and administration services; and Funds Management is willing to
furnish such advice and services on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed as follows:
1. The Fund on behalf of the Portfolio hereby appoints Funds
Management to act as investment manager to the Portfolio on the terms set
forth in this Agreement. Funds Management accepts such appointment and
agrees to render the services herein described, for the compensation herein
provided.
2. Subject to the supervision of the Board of Directors of the
Fund (the "Board"), Funds Management shall manage the investment of the
Portfolio's assets and provide investment research advice and supervision
of the Portfolio's investments in accordance with the Portfolio's investment
objective, policies and restrictions as stated in the Fund's Registration
Statement under the 1940 Act as it may be amended from time to time (the
"Registration Statement"), and subject to the following understandings:
(a) Funds Management shall provide supervision of the Portfolio's
investments and determine from time to time the investments or
securities that will be purchased, retained or sold by the Portfolio.
Funds Management shall determine the percentage of the Portfolio's
assets invested from time to time in each Underlying Smith Barney
Fund selected by the Board pursuant to the investment objective and
policies of the Portfolio as set forth in the prospectus forming
part of the Registration Statement and in repurchase agreements. Funds
Management shall allocate investments for the Portfolio among the
Underlying Smith Barney Funds and repurchase agreements based on
factors it considers relevant, including 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
shall be made within investment ranges established by the Board,
which will designate minimum and maximum percentages for each of the
Underlying Smith Barney Funds..
<PAGE>2
Funds Management will also make recommendations to the Board
concerning changes to (i) the Underlying Smith Barney Funds in which
the Portfolio may invest, (ii) the percentage range of assets that
may be invested by the Portfolio in any one Underlying Smith Barney
Fund and (iii) the percentage range of assets of the Portfolio that
may be invested in equity funds and fixed income funds (including
money market funds).
(b) Funds Management shall use its best judgment in the
performance of its duties under this Agreement.
(c) Funds Management undertakes to perform its duties and obligations
under this Agreement in conformity with the Registration Statement,
with the requirements of the 1940 Act and all other applicable Federal
and state laws and regulations and with the instructions and
directions of the Board.
(d) Funds Management shall maintain such books and records with
respect to the Portfolio's investments transactions and such books
and records required to be maintained by Funds Management pursuant
to the Rules of the Securities and Exchange Commission ("SEC") under
the 1940 Act and Funds Management shall render to the Board such
periodic and special reports as the Board may reasonably request.
Funds Management agrees that all records that it maintains for the
Portfolio or the Fund are the property of the Fund and it will
surrender promptly to the Fund on behalf of the Portfolio any of such
records upon the Fund's request.
(e) Funds Management will (i) maintain office facilities for the
Fund, (ii) furnish the Portfolio with statistical and research
data, clerical help and accounting, data processing, bookkeeping,
internal auditing and legal services and certain other services
required by the fund and the Portfolio, (iii) prepare reports to each
Portfolio's shareholders and (iv) prepare tax returns, reports to
and filings with the SEC and state Blue Sky authorities.
3. Funds Management will bear all of the expenses of its employees
and overhead in connection with its duties under this Agreement. Funds
Management will also bear all expenses incurred in the operation of the
Portfolio other than the management fee payable under this Agreement, the
fees payable pursuant to the plan adopted pursuant to Rule 12b-1 under
the 1940 Act and extraordinary expenses (such as costs of litigation to
which the Fund is a party and of indemnifying officers and Directors of
the Fund), which will be borne by the Portfolio. The expenses to be borne by
Funds Management include taxes, interest, brokerage fees and commissions, if
any; fees of the Fund's directors, salaries of all officers and employees who
are employed by both it and the Fund, SEC fees and state Blue Sky
qualification fees; charges of custodians; transfer agent, registrar 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
and statement of additional information relating to the Portfolio; cost
of printing and mailing stock certificates, shareholders' reports, notices,
proxy statements and reports to governmental offices; or directors of
the Fund; expenses of membership in investment company associations; and
expenses of fidelity bonding and other insurance premiums.
4. For the services provided and the expenses assumed pursuant
to this Agreement, the Fund will pay to Funds Management out of the
assets of the Portfolio a monthly fee in arrears equal to 0.35% per annum of
the Portfolio's average daily net assets during the month.
5. Funds Management shall authorize and permit any of its directors,
officers and employees who may be elected as directors or officers of the
Fund to serve in the capacities in which they are elected.
<PAGE>3
6. Funds Management shall not be liable for any error of judgment
or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services (in which
case any award of damages shall be limited to the period and the amount set
forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance
of its duties or from reckless disregard by it of its obligations and
duties under this Agreement.
7. This Agreement shall commence upon the effectiveness of
the Fund's Registration Statement and shall continue in effect for a period
of two years from its effective date, and if not sooner terminated, will
continue in effect for successive periods of 12 months thereafter, provided
that each continuance is specifically approved at least annually in
conformity with the requirements of the 1940 Act. This Agreement may be
terminated as a whole at any time by the Fund on behalf of the Portfolio,
without the payment of any penalty, upon the vote of a majority of the
Board or the vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Portfolio, or by Funds Management, on 60
days' written notice by either party to the other. This Agreement shall
terminate automatically in the event of its assignment (as defined in the
1940 Act).
8. Nothing in this Agreement shall limit or restrict the right of
any of Funds Management's directors, officers, or employees who may also
be a director, officer or employee of the Fund to engage in any other business
or to devote his time and attention in part to management or other aspects
of any business, whether of a similar or a dissimilar nature, nor limit or
restrict the Manger's right to engage in any other business or to render
services of any kind to any other corporation, firm, individual or
association. The investment management services provided by Funds Management
hereunder are not to be deemed exclusive, and Funds Management shall be free
to render similar services to others.
9. Any notice or other communication required to be given pursuant
to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (i) to Funds Management at 388 Greenwich
Street, New York, New York 10013, Attention: Secretary; or (ii) to the Fund
at 388 Greenwich Street, New York, New York 10013, Attention: Secretary.
10. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to the conflict
of law rules thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day
and year first above written.
SMITH BARNEY CONCERT SERIES INC. SMITH BARNEY MUTUAL
on behalf of the BALANCED PORTFOLIO FUNDS MANAGEMENT INC.
By: By:
Heath B. McLendon Heath B. McLendon
Chairman of the Board President
Attest: Attest:
Lee D. Augsburger Lee D. Augsburger
Assistant Secretary Deputy General Counsel
<PAGE>1
SMITH BARNEY CONCERT SERIES INC.
CONSERVATIVE PORTFOLIO
ASSET ALLOCATION AND ADMINISTRATION AGREEMENT
AGREEMENT, made this ____ day of ________ 1996 between Smith
Barney Concert Series Inc., a Maryland corporation (the "Fund"), with
respect to the Conservative Portfolio (the "Portfolio") and Smith
Barney Mutual Funds Management Inc., a New York corporation ("Funds
Management").
W I T N E S S E T H:
WHEREAS, the Portfolio is a series of the Fund which will operate as
an open-end management investment company registered under the Investment
Company Act of 1940, as amended, and the rules thereunder (the "1940 Act");
and
WHEREAS, the Fund has been organized for the purpose of investing its
assets in open-end management investment companies or series thereof that
are or will be part of a group of investment companies that holds itself
out to investors as related companies for purposes of investment and investor
services (i) for which Smith Barney Inc. ("Smith Barney") or any entity
controlling, controlled by, or under common control with Smith Barney now
or in the future acts as principal underwriter or (ii) for which Smith
Barney, Funds Management or Smith Barney Strategy Advisers Inc. ("SBSA")
or any entity controlling, controlled by, or under common control with Smith
Barney, Funds Management or SBSA now or in the future acts as investment
adviser (collectively, the "Underlying Smith Barney Funds"), as well as
repurchase agreements, and desires to avail itself of the experience, sources
of information, advice, assistance and facilities available to Funds
Management and to have Funds Management perform for it various asset
allocation and administration services; and Funds Management is willing to
furnish such advice and services on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed as follows:
1. The Fund on behalf of the Portfolio hereby appoints Funds
Management to act as investment manager to the Portfolio on the terms set
forth in this Agreement. Funds Management accepts such appointment and
agrees to render the services herein described, for the compensation herein
provided.
2. Subject to the supervision of the Board of Directors of the
Fund (the "Board"), Funds Management shall manage the investment of the
Portfolio's assets and provide investment research advice and supervision
of the Portfolio's investments in accordance with the Portfolio's investment
objective, policies and restrictions as stated in the Fund's Registration
Statement under the 1940 Act as it may be amended from time to time (the
"Registration Statement"), and subject to the following understandings:
(a) Funds Management shall provide supervision of the Portfolio's
investments and determine from time to time the investments or
securities that will be purchased, retained or sold by the Portfolio.
Funds Management shall determine the percentage of the Portfolio's
assets invested from time to time in each Underlying Smith Barney
Fund selected by the Board pursuant to the investment objective and
policies of the Portfolio as set forth in the prospectus forming
part of the Registration Statement and in repurchase agreements.
Funds Management shall allocate investments for the Portfolio among
the Underlying Smith Barney Funds and repurchase agreements based on
factors it considers relevant, including 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
shall be made within investment ranges established by the Board,
which will designate minimum and maximum percentages for each of the
Underlying Smith Barney Funds..
<PAGE>2
Funds Management will also make recommendations to the Board
concerning changes to (i) the Underlying Smith Barney Funds in which
the Portfolio may invest, (ii) the percentage range of assets that
may be invested by the Portfolio in any one Underlying Smith Barney
Fund and (iii) the percentage range of assets of the Portfolio that
may be invested in equity funds and fixed income funds (including
money market funds).
(b) Funds Management shall use its best judgment in the
performance of its duties under this Agreement.
(c) Funds Management undertakes to perform its duties and obligations
under this Agreement in conformity with the Registration Statement,
with the requirements of the 1940 Act and all other applicable Federal
and state laws and regulations and with the instructions and
directions of the Board.
(d) Funds Management shall maintain such books and records with
respect to the Portfolio's investments transactions and such books
and records required to be maintained by Funds Management pursuant
to the Rules of the Securities and Exchange Commission ("SEC") under
the 1940 Act and Funds Management shall render to the Board such
periodic and special reports as the Board may reasonably request.
Funds Management agrees that all records that it maintains for the
Portfolio or the Fund are the property of the Fund and it will
surrender promptly to the Fund on behalf of the Portfolio any of such
records upon the Fund's request.
(e) Funds Management will (i) maintain office facilities for the
Fund, (ii) furnish the Portfolio with statistical and research
data, clerical help and accounting, data processing, bookkeeping,
internal auditing and legal services and certain other services
required by the fund and the Portfolio, (iii) prepare reports to each
Portfolio's shareholders and (iv) prepare tax returns, reports to
and filings with the SEC and state Blue Sky authorities.
3. Funds Management will bear all of the expenses of its employees
and overhead in connection with its duties under this Agreement. Funds
Management will also bear all expenses incurred in the operation of the
Portfolio other than the management fee payable under this Agreement, the
fees payable pursuant to the plan adopted pursuant to Rule 12b-1 under
the 1940 Act and extraordinary expenses (such as costs of litigation to
which the Fund is a party and of indemnifying officers and Directors of
the Fund), which will be borne by the Portfolio. The expenses to be borne by
Funds Management include taxes, interest, brokerage fees and commissions, if
any; fees of the Fund's directors, salaries of all officers and employees who
are employed by both it and the Fund, SEC fees and state Blue Sky
qualification fees; charges of custodians; transfer agent, registrar 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
and statement of additional information relating to the Portfolio; cost
of printing and mailing stock certificates, shareholders' reports, notices,
proxy statements and reports to governmental offices; or directors of
the Fund; expenses of membership in investment company associations; and
expenses of fidelity bonding and other insurance premiums.
4. For the services provided and the expenses assumed pursuant
to this Agreement, the Fund will pay to Funds Management out of the
assets of the Portfolio a monthly fee in arrears equal to 0.35% per annum of
the Portfolio's average daily net assets during the month.
<PAGE>
5. Funds Management shall authorize and permit any of its directors,
officers and employees who may be elected as directors or officers of the
Fund to serve in the capacities in which they are elected.
6. Funds Management shall not be liable for any error of judgment
or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services (in which
case any award of damages shall be limited to the period and the amount set
forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance
of its duties or from reckless disregard by it of its obligations and
duties under this Agreement.
7. This Agreement shall commence upon the effectiveness of
the Fund's Registration Statement and shall continue in effect for a period
of two years from its effective date, and if not sooner terminated, will
continue in effect for successive periods of 12 months thereafter, provided
that each continuance is specifically approved at least annually in
conformity with the requirements of the 1940 Act. This Agreement may be
terminated as a whole at any time by the Fund on behalf of the Portfolio,
without the payment of any penalty, upon the vote of a majority of the
Board or the vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Portfolio, or by Funds Management, on 60
days' written notice by either party to the other. This Agreement shall
terminate automatically in the event of its assignment (as defined in the
1940 Act).
8. Nothing in this Agreement shall limit or restrict the right of
any of Funds Management's directors, officers, or employees who may also
be a director, officer or employee of the Fund to engage in any other business
or to devote his time and attention in part to management or other aspects
of any business, whether of a similar or a dissimilar nature, nor limit or
restrict the Manger's right to engage in any other business or to render
services of any kind to any other corporation, firm, individual or
association. The investment management services provided by Funds Management
hereunder are not to be deemed exclusive, and Funds Management shall be free
to render similar services to others.
9. Any notice or other communication required to be given pursuant
to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (i) to Funds Management at 388 Greenwich
Street, New York, New York 10013, Attention: Secretary; or (ii) to the Fund
at 388 Greenwich Street, New York, New York 10013, Attention: Secretary.
10. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to the conflict
of law rules thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day
and year first above written.
SMITH BARNEY CONCERT SERIES INC. SMITH BARNEY MUTUAL
on behalf of the CONSERVATIVE PORTFOLIO FUNDS MANAGEMENT INC.
By: By:
Heath B. McLendon Heath B. McLendon
Chairman of the Board President
Attest: Attest:
Lee D. Augsburger Lee D. Augsburger
Assistant Secretary Deputy General Counsel
<PAGE>1
SMITH BARNEY CONCERT SERIES INC.
INCOME PORTFOLIO
ASSET ALLOCATION AND ADMINISTRATION AGREEMENT
AGREEMENT, made this ___ day of ________ 1996 between Smith Barney
Concert Series Inc., a Maryland corporation (the "Fund"), with respect to
the Income Portfolio (the "Portfolio") and Smith Barney Mutual Funds
Management Inc., a New York corporation ("Funds Management").
W I T N E S S E T H:
WHEREAS, the Portfolio is a series of the Fund which will operate as
an open-end management investment company registered under the Investment
Company Act of 1940, as amended, and the rules thereunder (the "1940 Act");
and
WHEREAS, the Fund has been organized for the purpose of investing its
assets in open-end management investment companies or series thereof that
are or will be part of a group of investment companies that holds itself
out to investors as related companies for purposes of investment and investor
services (i) for which Smith Barney Inc. ("Smith Barney") or any entity
controlling, controlled by, or under common control with Smith Barney now
or in the future acts as principal underwriter or (ii) for which Smith
Barney, Funds Management or Smith Barney Strategy Advisers Inc. ("SBSA")
or any entity controlling, controlled by, or under common control with Smith
Barney, Funds Management or SBSA now or in the future acts as investment
adviser (collectively, the "Underlying Smith Barney Funds"), as well as
repurchase agreements, and desires to avail itself of the experience, sources
of information, advice, assistance and facilities available to Funds
Management and to have Funds Management perform for it various asset
allocation and administration services; and Funds Management is willing to
furnish such advice and services on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed as follows:
1. The Fund on behalf of the Portfolio hereby appoints Funds
Management to act as investment manager to the Portfolio on the terms set
forth in this Agreement. Funds Management accepts such appointment and
agrees to render the services herein described, for the compensation herein
provided.
2. Subject to the supervision of the Board of Directors of the
Fund (the "Board"), Funds Management shall manage the investment of the
Portfolio's assets and provide investment research advice and supervision
of the Portfolio's investments in accordance with the Portfolio's investment
objective, policies and restrictions as stated in the Fund's Registration
Statement under the 1940 Act as it may be amended from time to time (the
"Registration Statement"), and subject to the following understandings:
(a) Funds Management shall provide supervision of the Portfolio's
investments and determine from time to time the investments or
securities that will be purchased, retained or sold by the Portfolio.
Funds Management shall determine the percentage of the Portfolio's
assets invested from time to time in each Underlying Smith Barney
Fund selected by the Board pursuant to the investment objective and
policies of the Portfolio as set forth in the prospectus forming
part of the Registration Statement and in repurchase agreements.
Funds Management shall allocate investments for the Portfolio among
the Underlying Smith Barney Funds and repurchase agreements based on
factors it considers relevant, including 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 shall be made within investment ranges established by the
Board, which will designate minimum and maximum percentages for each
of the Underlying Smith Barney Funds.
<PAGE>2
Funds Management will also make recommendations to the Board
concerning changes to (i) the Underlying Smith Barney Funds in which
the Portfolio may invest, (ii) the percentage range of assets that
may be invested by the Portfolio in any one Underlying Smith Barney
Fund and (iii) the percentage range of assets of the Portfolio that
may be invested in equity funds and fixed income funds (including
money market funds).
(b) Funds Management shall use its best judgment in the
performance of its duties under this Agreement.
(c) Funds Management undertakes to perform its duties and obligations
under this Agreement in conformity with the Registration Statement,
with the requirements of the 1940 Act and all other applicable Federal
and state laws and regulations and with the instructions and
directions of the Board.
(d) Funds Management shall maintain such books and records with
respect to the Portfolio's investments transactions and such books
and records required to be maintained by Funds Management pursuant
to the Rules of the Securities and Exchange Commission ("SEC") under
the 1940 Act and Funds Management shall render to the Board such
periodic and special reports as the Board may reasonably request.
Funds Management agrees that all records that it maintains for the
Portfolio or the Fund are the property of the Fund and it will
surrender promptly to the Fund on behalf of the Portfolio any of such
records upon the Fund's request.
(e) Funds Management will (i) maintain office facilities for the
Fund, (ii) furnish the Portfolio with statistical and research
data, clerical help and accounting, data processing, bookkeeping,
internal auditing and legal services and certain other services
required by the fund and the Portfolio, (iii) prepare reports to each
Portfolio's shareholders and (iv) prepare tax returns, reports to
and filings with the SEC and state Blue Sky authorities.
3. Funds Management will bear all of the expenses of its employees
and overhead in connection with its duties under this Agreement. Funds
Management will also bear all expenses incurred in the operation of the
Portfolio other than the management fee payable under this Agreement, the
fees payable pursuant to the plan adopted pursuant to Rule 12b-1 under
the 1940 Act and extraordinary expenses (such as costs of litigation to
which the Fund is a party and of indemnifying officers and Directors of
the Fund), which will be borne by the Portfolio. The expenses to be borne by
Funds Management include taxes, interest, brokerage fees and commissions, if
any; fees of the Fund's directors, salaries of all officers and employees who
are employed by both it and the Fund, SEC fees and state Blue Sky
qualification fees; charges of custodians; transfer agent, registrar 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
and statement of additional information relating to the Portfolio; cost
of printing and mailing stock certificates, shareholders' reports, notices,
proxy statements and reports to governmental offices; or directors of
the Fund; expenses of membership in investment company associations; and
expenses of fidelity bonding and other insurance premiums.
4. For the services provided and the expenses assumed pursuant
to this Agreement, the Fund will pay to Funds Management out of the
assets of the Portfolio a monthly fee in arrears equal to 0.35% per annum of
the Portfolio's average daily net assets during the month.
5. Funds Management shall authorize and permit any of its directors,
officers and employees who may be elected as directors or officers of the
Fund to serve in the capacities in which they are elected.
<PAGE>3
6. Funds Management shall not be liable for any error of judgment
or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services (in which
case any award of damages shall be limited to the period and the amount set
forth in Section 36(b)(3) of the 1940 Act) or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance
of its duties or from reckless disregard by it of its obligations and
duties under this Agreement.
7. This Agreement shall commence upon the effectiveness of
the Fund's Registration Statement and shall continue in effect for a period
of two years from its effective date, and if not sooner terminated, will
continue in effect for successive periods of 12 months thereafter, provided
that each continuance is specifically approved at least annually in
conformity with the requirements of the 1940 Act. This Agreement may be
terminated as a whole at any time by the Fund on behalf of the Portfolio,
without the payment of any penalty, upon the vote of a majority of the
Board or the vote of a majority of the outstanding voting securities (as
defined in the 1940 Act) of the Portfolio, or by Funds Management, on 60
days' written notice by either party to the other. This Agreement shall
terminate automatically in the event of its assignment (as defined in the
1940 Act).
8. Nothing in this Agreement shall limit or restrict the right of
any of Funds Management's directors, officers, or employees who may also
be a director, officer or employee of the Fund to engage in any other business
or to devote his time and attention in part to management or other aspects
of any business, whether of a similar or a dissimilar nature, nor limit or
restrict the Manger's right to engage in any other business or to render
services of any kind to any other corporation, firm, individual or
association. The investment management services provided by Funds Management
hereunder are not to be deemed exclusive, and Funds Management shall be free
to render similar services to others.
9. Any notice or other communication required to be given pursuant
to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (i) to Funds Management at 388 Greenwich
Street, New York, New York 10013, Attention: Secretary; or (ii) to the Fund
at 388 Greenwich Street, New York, New York 10013, Attention: Secretary.
10. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to the conflict
of law rules thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day
and year first above written.
SMITH BARNEY CONCERT SERIES INC. SMITH BARNEY MUTUAL FUNDS
on behalf of the INCOME PORTFOLIO MANAGEMENT INC.
By: By:
Heath B. McLendon Heath B. McLendon
Chairman of the Board President
Attest: Attest:
Lee D. Augsburger Lee D. Augsburger
Assistant Secretary Deputy General Counsel
<PAGE>1
DISTRIBUTION AGREEMENT
________________, 1996
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, Smith Barney Concert Series Inc.
a Corporation organized under the laws of the State of Maryland has agreed
that Smith Barney Inc.("Smith Barney") shall be, for the period of this
Agreement, the distributor of shares (the "Shares") of the Fund.
1. Services as Distributor
1.1 Smith Barney will act as agent for the distribution of Shares
covered by the registration statement, prospectus and statement of additional
information then in effect under the Securities Act of 1933, as amended (the
"1933 Act"), and the Investment Company Act of 1940, as amended (the "1940
Act").
1.2 Smith Barney agrees to use its best efforts to solicit
orders for the sale of Shares and will undertake such advertising and
promotion as it believes is reasonable in connection with such solicitation.
1.3 All activities by Smith Barney as distributor of the
Shares shall comply with all applicable laws, rules, and regulations,
including, without limitation, all rules and regulations made or adopted
by the Securities and Exchange Commission (the "SEC") or by any securities
association registered under the Securities Exchange Act of 1934.
1.4 Smith Barney will provide one or more persons during normal
business hours to respond to telephone questions concerning the Fund.
1.5 Smith Barney will transmit any orders received by it for
purchase or redemption of Shares to First Data Investor Services Group Inc.
(the "Transfer Agent"), the Fund's transfer and dividend agent, or any
successor Transfer Agent of which the Fund has notified Smith Barney in
writing.
1.6 Whenever in their judgment such action is warranted
for any reason, including, without limitation, market, economic or
political conditions, the Fund's officers may decline to accept any orders
for, or make any sales of, the Shares until such time as those officers deem
it advisable to accept such orders and to make such sales.
<PAGE>2
1.7 Smith Barney will act only on its own behalf as principal
should it choose to enter into selling agreements with selected dealers or
others.
1.8 The Fund will pay to Smith Barney an annual fee in
connection with the offering and sale of the Shares under this Agreement.
The annual fee paid to Smith Barney, will be calculated daily and paid monthly
by the Fund at an annual rate set forth in the Services and Distribution
Plan (the "Plan") based on the average daily net assets of each portfolio of
the Fund which has adopted a Plan; provided that payment shall be made in
any month only to the extent that such payment shall not exceed the sales
charge limitations established by the National Association of Securities
Dealers, Inc.
The annual fee paid to Smith Barney under this Section 1.8 maybe
used by Smith Barney to cover any expenses primarily intended to result in the
sale of Shares, including, but not limited to, the following:
(a) cost of payments made to Smith Barney investments
representatives and other employees of Smith Barney or other
broker-dealers that engage in the distribution of the Fund's
Shares;
(b) payments made to, and expenses of, persons who provide
support services in connection with the distribution of the Fund's
Shares, including, but not limited to, office space and equipment,
telephone facilities, answering routine inquiries regarding the Fund,
processing shareholder transactions and providing any other
shareholder services not provided by the Fund's Transfer Agent;
(c) costs relating to the formulation and
implementation of marketing and promotional activities, including,
but not limited to, direct mail promotions and television, radio,
newspaper, magazine and other mass media advertising;
(d) costs of printing and distributing prospectuses and
reports of the Fund to prospective shareholders of the Fund;
(e) costs involved in preparing, printing and distributing
sales literature pertaining to the Fund; and
(f) costs involved in obtaining whatever information,
analyses and reports with respect to marketing and promotional
activities that the Fund may, from time to time, deem advisable;
except that distribution expenses shall not include any expenditures
in connection with services which Smith Barney, any of its
affiliates, or any other person have agreed to bear without
reimbursement.
1.9 Smith Barney shall prepare and deliver reports to the
Treasurer of the Fund on a regular, at least quarterly, basis, showing the
distribution expenses incurred pursuant to this Agreement and the Plan and
the purposes therefor, as well as any supplemental reports as the
Trustees, from time to time, may reasonably request.
<PAGE>3
2. Duties of the Fund
2.1 The Fund agrees at its own expense to execute any and all
documents, to furnish any and all information and to take any other
actions that may be reasonably necessary in connection with the qualification
of the Shares for sale in those states that Smith Barney may designate.
2.2 The Fund shall furnish from time to time for use in connection
with the sale of the Shares, such information reports with respect to the
Fund and its Shares as Smith Barney may reasonably request, all of which
shall be signed by one or more of the Fund's duly authorized officers; and
the Fund warrants that the statements contained in any such reports, when so
signed by the Fund's officers, shall be true and correct. The Fund shall also
furnish Smith Barney upon request with (a) annual audits of the Fund's books
and accounts made by independent certified public accountants regularly
retained by the Fund; (b) semi-annual unaudited financial statements
pertaining to the Fund; (c) quarterly earnings statements prepared by the
Fund; (d) a monthly itemized list of the securities in the Fund's portfolio;
(e) monthly balance sheets as soon as practicable after the end of each
month; and (f) from time to time such additional information regarding the
Fund's financial condition as Smith Barney may reasonably request.
3. Representations and Warranties
The Fund represents to Smith Barney that all registration
statements, prospectuses and statements of additional information filed by the
Fund with the SEC under the 1933 Act and the 1940 Act with respect to the
Shares have been carefully prepared in conformity with the requirements of
the 1933 Act, the 1940 Act and the rules and regulations of the SEC
thereunder. As used in this Agreement, the terms "registration statement",
"prospectus" and "statement of additional information" shall mean any
registration statement, prospectus and statement of additional
information filed by the Fund with the SEC and any amendments and
supplements thereto which at any time shall have been filed with the SEC. The
Fund represents and warrants to Smith Barney that any registration statement,
prospectus and statement of additional information, when such
registration statement becomes effective, will include all statements
required to be contained therein in conformance with the 1933 Act, the 1940
Act and the rules and regulations of the SEC; that all statements of fact
contained in any registration statement, prospectus or statement of
additional information will be true and correct when such registration
statement becomes effective; and that neither any registration statement nor
any prospectus or statement of additional information when such registration
statement becomes effective will include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading to a purchaser of the
Fund's Shares. The Fund may, but shall not be obligated to, propose from
time to time such amendment or amendments to any registration statement
and such supplement or supplements to any prospectus or statement of
additional information as, in the light of future developments, may, in
the opinion of the Fund's counsel, be necessary or advisable. If the Fund
shall not propose such amendment or amendments and/or supplement or
supplements within fifteen days after receipt by the Fund of a written
request from Smith Barney to do so, Smith Barney may, at its option, terminate
this Agreement. The Fund shall not file any amendment to any registration
statement or supplement to any prospectus or statement of additional
information without giving Smith Barney reasonable notice thereof in
advance; provided, however, that nothing contained in this Agreement shall
in any way limit the Fund's right to file at any time such amendments to
any registration statement and/or supplements to any prospectus or
statement of additional information, of whatever character, as the Fund may
deem advisable, such right being in all respects absolute and
unconditional.
<PAGE>4
4. Indemnification
4.1 The Fund authorizes Smith Barney and dealers to use any
prospectus or statement of additional information furnished by the Fund from
time to time, in connection with the sale of the Shares. The Fund agrees to
indemnify, defend and hold Smith Barney, its several officers and
directors, and any person who controls Smith Barney within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any
such counsel fees incurred in connection therewith) which Smith Barney, its
officers and directors, or any such controlling person, may incur under the
1933 Act or under common law or otherwise, arising out of or based upon any
untrue statement, or alleged untrue statement, of a material fact contained in
any registration statement, any prospectus or any statement of additional
information or arising out of or based upon any omission, or alleged omission,
to state a material fact required to be stated in any registration
statement, any prospectus or any statement of additional information
or necessary to make the statements in any thereof not misleading;
provided, however, that the Fund's agreement to indemnify Smith Barney, its
officers or directors, and any such controlling person shall not be
deemed to cover any claims, demands, liabilities or expenses arising out
of any statements or representations made by Smith Barney or its
representatives or agents other than such statements and representations
as are contained in any prospectus or statement of additional information
and in such financial and other statements as are furnished to Smith Barney
pursuant to paragraph 2.2 of this Agreement; and further provided that the
Fund's agreement to indemnify Smith Barney and the Fund's representations and
warranties herein before set forth in paragraph 3 of this Agreement shall
not be deemed to cover any liability to the Fund or its shareholders to
which Smith Barney would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of Smith Barney's reckless disregard of its obligations
and duties under this Agreement. The Fund's agreement to indemnify Smith
Barney, its officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Fund's being notified of
any action brought against Smith Barney, its officers or directors, or any
such controlling person, such notification to be given by letter or by
telegram addressed to the Fund at its principal office in New York, New
York and sent to the Fund by the person against whom such action is brought,
within ten days after the summons or other first legal process shall have been
served. The failure so to notify the Fund of any such action shall not relieve
the Fund from any liability that the Fund may have to the person against
whom such action is brought by reason of any such untrue, or alleged untrue,
statement or omission, or alleged omission, otherwise than on account of the
Fund's indemnity agreement contained in this paragraph 4.1. The Fund will
be entitled to assume the defense of any suit brought to enforce any such
claim, demand or liability, but, in such case, such defense shall be
conducted by counsel of good standing chosen by the Fund and approved by
Smith Barney. In the event the Fund elects to assume the defense of any such
suit and retains counsel of good standing approved by Smith Barney,
the defendant or defendants in such suit shall bear the fees and expenses
of any additional counsel retained by any of them; but if the Fund does not
elect to assume the defense of any such suit, or if Smith Barney does not
approve of counsel chosen by the Fund, the Fund will reimburse Smith Barney,
its officers and directors, or the controlling person or persons named as
defendant or defendants in such suit, for the fees and expenses of any
counsel retained by Smith Barney or them. The Fund's indemnification
agreement contained in this paragraph 4.1 and the Fund's representations
and warranties in this Agreement shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of
Smith Barney, its officers and directors, or any controlling person, and
shall survive the delivery of any of the Fund's Shares. This agreement of
indemnity will inure exclusively to Smith Barney's benefit, to the benefit
of its several officers and directors, and their respective estates,
and to the benefit of the controlling persons and their successors. The
Fund agrees to notify Smith Barney promptly of the commencement of any
<PAGE>5-
litigation or proceedings against the Fund or any of its officers or
trustees in connection with the issuance and sale of any of the Fund's Shares.
4.2 Smith Barney agrees to indemnify, defend and hold the
Fund, its several officers and Directors, and any person who controls the
Fund within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the costs of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) that the
Fund, its officers or Directors or any such controlling person may incur
under the 1933 Act, or under common law or otherwise, but only to the
extent that such liability or expense incurred by the Fund, its officers or
Directors, or such controlling person resulting from such claims or demands
shall arise out of or be based upon any untrue, or alleged untrue,
statement of a material fact contained in information furnished in
writing by Smith Barney to the Fund and used in the answers to any of the
items of the registration statement or in the corresponding statements
made in the prospectus or statement of additional information, or shall
arise out of or be based upon any omission, or alleged omission, to state
a material fact in connection with such information furnished in writing
by Smith Barney to the Fund and required to be stated in such answers or
necessary to make such information not misleading. Smith Barney's agreement
to indemnify the Fund, its officers or Directors, and any such controlling
person, as aforesaid, is expressly conditioned upon Smith Barney being
notified of any action brought against the Fund, its officers or Directors,
or any such controlling person, such notification to be given by letter or
telegram addressed to Smith Barney at its principal office in New York,
New York and sent to Smith Barney by the person against whom such action is
brought, within ten days after the summons or other first legal process
shall have been served. Smith Barney shall have the right to control the
defense of such action, with counsel of its own choosing, satisfactory to
the Fund, if such action is based solely upon such alleged misstatement
or omission on Smith Barney's part, and in any other event the Fund, its
officers or Directors or such controlling person shall each have the right
to participate in the defense or preparation of the defense of any such
action. The failure to so notify Smith Barney of any such action shall
not relieve Smith Barney from any liability that Smith Barney may have to the
Fund, its officers or Directors, or to such controlling person by reason of
any such untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of Smith Barney's indemnity
agreement contained in this paragraph 4.2. Smith Barney agrees to
notify the Fund promptly of the commencement of any litigation or
proceedings against Smith Barney or any of its officers or directors in
connection with the issuance and sale of any of the Fund's Shares.
4.3 In case any action shall be brought against any
indemnified party under paragraph 4.1 or 4.2, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall
wish to do so, to assume the defense thereof with counsel satisfactory to
such indemnified party. If the indemnifying party opts to assume the defense
of such action, the indemnifying party will not be liable to the indemnified
party for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than (a)
reasonable costs of investigation or the furnishing of documents or
witnesses and (b) all reasonable fees and expenses of separate counsel to
such indemnified party if (i) the indemnifying party and the indemnified
party shall have agreed to the retention of such counsel or (ii) the
indemnified party shall have concluded reasonably that representation of the
indemnifying party and the indemnified party by the same counsel would be
inappropriate due to actual or potential differing interests between them in
the conduct of the defense of such action.
<PAGE>6
5. Effectiveness of Registration
None of the Fund's Shares shall be offered by either Smith Barney
or the Fund under any of the provisions of this Agreement and no orders for
the purchase or sale of the Shares under this Agreement shall be accepted by
the Fund if and so long as the effectiveness of the registration statement
then in effect or any necessary amendments thereto shall be suspended under
any of the provision of the 1933 Act or if and so long as a current
prospectus as required by Section 5(b) (2) of the 1933 Act is not on file
with the SEC; provided, that nothing contained in this paragraph 5 shall
in any way restrict or have an application to or bearing upon the Fund's
obligation to repurchase its Shares from any shareholder in accordance
with the provisions of the Fund's prospectus, statement of additional
information or Articles of Incorporation dated Articles of Incorporation, as
amended from time to time.
6. Notice to Smith Barney
The Fund agrees to advise Smith Barney immediately in writing:
(a) of any request by the SEC for amendments to the registration
statement, prospectus or statement of additional information then in
effect or for additional information;
(b) In the event of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement,
prospectus or statement of additional information then in effect
or the initiation of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any
statement or a material fact made in the registration statement,
prospectus or statement of additional information then in effect or
that requires the making of a change in such registration
statement, prospectus or statement of additional information in
order to make the statements therein not misleading; and
(d) of all actions of the SEC with respect to any amendment to
any registration statement, prospectus or statement of additional
information which may from time to time be filed with the SEC.
7. Term of the Agreement
This Agreement shall become effective on the date first written above
and shall continue for successive annual periods thereafter so long as
such continuance is specifically approved at least annually by (a) the Fund's
Board of Directors or (b) by a vote of a majority (as defined in the
1940 Act) of the Fund's outstanding voting securities, provided that in
either event the continuance is also approved by a majority of the Directors
of the Fund who are not interested persons (as defined in the 1940 Act) of
any party to this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This Agreement is terminable,
without penalty, on 60 days' notice by the Fund's Board of Directors, by vote
of the holders of a majority of the Fund's Shares, or on 90 days' notice by
Smith Barney. This Agreement will also terminate automatically in the
event of its assignment (as defined in the 1940 Act).
<PAGE>7
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning to us the
enclosed copy of this Agreement.
Very truly yours,
Smith Barney Concert Series Inc.
By:
Heath B. McLendon
Chairman of the Board
Accepted:
Smith Barney Inc.
By:
Heath B. McLendon
Managing Director
<PAGE>1-
DISTRIBUTION AGREEMENT
____________, 1996
PFS Distributors, Inc.
3100 Breckinridge Blvd., Bldg 200
Duluth, Georgia 30199-0062
Dear Sirs:
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, Smith Barney Concert Series
Inc., a business corporation organized under the laws of the State of
Maryland has agreed that PFS Distributors, Inc. ("PFS") shall be, for the
period of this Agreement, the distributor of shares (the "Shares") of the
Fund.
1. Services as Distributor
1.1 PFS will act as agent for the distribution of Shares
covered by the registration statement, prospectus and statement of
additional information then in effect under the Securities Act of 1933, as
amended (the "1933 Act"), and the Investment Company Act of 1940, as amended
(the "1940 Act").
1.2 PFS agrees to use its best efforts to solicit orders for
the sale of Shares and will undertake such advertising and promotion as it
believes is reasonable in connection with such solicitation.
1.3 All activities by PFS as distributor of the Shares shall
comply with all applicable laws, rules, and regulations, including, without
limitation, all rules and regulations made or adopted by the Securities and
Exchange Commission (the "SEC") or by any securities association
registered under the Securities Exchange Act of 1934.
1.4 PFS will provide one or more persons during normal business
hours to respond to telephone questions concerning the Fund.
1.5 PFS will transmit any orders received by it for purchase
or redemption of Shares to PFS Shareholder Service (the "Sub-Transfer
Agent"), the Fund's sub-transfer and dividend agent, or any successor
Sub-Transfer Agent of which the Fund has notified PFS in writing.
1.6 Whenever in their judgment such action is warranted
for any reason, including, without limitation, market, economic or
political conditions, the Fund's officers may decline to accept any orders
for, or make any sales of, the Shares until such time as those officers deem
it advisable to accept such orders and to make such sales.
1.7 PFS will act only on its own behalf as principal should it
choose to enter into selling agreements with selected dealers or others.
1.8 The Fund will pay to PFS an annual fee in connection with
the offering and sale of the Shares under this Agreement. The annual fee
paid to PFS, will be calculated daily and paid monthly by the Fund at an
annual rate set forth in the Services and Distribution Plan (the "Plan")
based on the average daily net assets of each portfolio of the Fund which
has adopted a Plan; provided that payment shall be made in any month only
to the extent that such payment shall not exceed the sales charge
limitations established by the National Association of Securities Dealers,
Inc.
<PAGE>2
The annual fee paid to PFS under this Section 1.8 maybe used by PFS to
cover any expenses primarily intended to result in the sale of Shares,
including, but not limited to, the following:
(a) cost of payments made to PFS investments
representatives and other employees of PFS or other broker-dealers
that engage in the distribution of the Fund's Shares;
(b) payments made to, and expenses of, persons who provide
support services in connection with the distribution of the
Fund's Shares, including, but not limited to, office space and
equipment, telephone facilities, answering routine inquiries
regarding the Fund, processing shareholder transactions and providing
any other shareholder services not provided by the Fund's Transfer
Agent;
(c) costs relating to the formulation and
implementation of marketing and promotional activities,
including, but not limited to, direct mail promotions and television,
radio, newspaper, magazine and other mass media advertising;
(d) costs of printing and distributing prospectuses and
reports of the Fund to prospective shareholders of the Fund;
(e) costs involved in preparing, printing and distributing
sales literature pertaining to the Fund; and
(f) costs involved in obtaining whatever information,
analyses and reports with respect to marketing and promotional
activities that the Fund may, from time to time, deem advisable;
except that distribution expenses shall not include any expenditures in
connection with services which PFS, any of its affiliates, or any other person
have agreed to bear without reimbursement.
1.9 PFS shall prepare and deliver reports to the Treasurer
of the Fund on a regular, at least quarterly, basis, showing the distribution
expenses incurred pursuant to this Agreement and the Plan and the purposes
therefor, as well as any supplemental reports as the Trustees, from time
to time, may reasonably request.
2. Duties of the Fund
2.1 The Fund agrees at its own expense to execute any and all
documents, to furnish any and all information and to take any other
actions that may be reasonably necessary in connection with the qualification
of the Shares for sale in those states that PFS may designate.
2.2 The Fund shall furnish from time to time for use in connection
with the sale of the Shares, such information reports with respect to the
Fund and its Shares as PFS may reasonably request, all of which shall be
signed by one or more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such reports, when so signed by
<PAGE>3
the Fund's officers, shall be true and correct. The Fund shall also furnish
PFS upon request with (a) annual audits of the Fund's books and accounts made
by independent certified public accountants regularly retained by the
Fund; (b) semi-annual unaudited financial statements pertaining to the Fund;
(c) quarterly earnings statements prepared by the Fund; (d) a monthly itemized
list of the securities in the Fund's portfolio; (e) monthly balance sheets as
soon as practicable after the end of each month; and (f) from time to time
such additional information regarding the Fund's financial condition as
PFS may reasonably request.
3. Representations and Warranties
The Fund represents to PFS that all registration statements,
prospectuses and statements of additional information filed by the Fund
with the SEC under the 1933 Act and the 1940 Act with respect to the
Shares have been carefully prepared in conformity with the requirements
of the 1933 Act, the 1940 Act and the rules and regulations of the SEC
thereunder. As used in this Agreement, the terms "registration statement",
"prospectus" and "statement of additional information" shall mean any
registration statement, prospectus and statement of additional information
filed by the Fund with the SEC and any amendments and supplements thereto
which at any time shall have been filed with the SEC. The Fund represents and
warrants to PFS that any registration statement, prospectus and statement
of additional information, when such registration statement becomes
effective, will include all statements required to be contained therein in
conformance with the 1933 Act, the 1940 Act and the rules and regulations of
the SEC; that all statements of fact contained in any registration
statement, prospectus or statement of additional information will be true and
correct when such registration statement becomes effective; and that neither
any registration statement nor any prospectus or statement of additional
information when such registration statement becomes effective will include
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading to a purchaser of the Fund's Shares. The Fund may, but shall
not be obligated to, propose from time to time such amendment or
amendments to any registration statement and such supplement or
supplements to any prospectus or statement of additional information
as, in the light of future developments, may, in the opinion of the Fund's
counsel, be necessary or advisable. If the Fund shall not propose such
amendment or amendments and/or supplement or supplements within fifteen
days after receipt by the Fund of a written request from PFS to do so, PFS
may, at its option, terminate this Agreement. The Fund shall not file any
amendment to any registration statement or supplement to any prospectus
or statement of additional information without giving PFS reasonable notice
thereof in advance; provided, however, that nothing contained in this
Agreement shall in any way limit the Fund's right to file at any time such
amendments to any registration statement and/or supplements to any
prospectus or statement of additional information, of whatever character,
as the Fund may deem advisable, such right being in all respects absolute and
unconditional.
4. Indemnification
4.1 The Fund authorizes PFS and dealers to use any prospectus
or statement of additional information furnished by the Fund from time to
time, in connection with the sale of the Shares. The Fund agrees to indemnify,
defend and hold PFS, its several officers and directors, and any person who
controls PFS within the meaning of Section 15 of the 1933 Act, free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims,
demands or liabilities and any such counsel fees incurred in connection
therewith) which PFS, its officers and directors, or any such controlling
person, may incur under the 1933 Act or under common law or otherwise, arising
out of or based upon any untrue statement, or alleged untrue statement, of
<PAGE>4
a material fact contained in any registration statement, any prospectus or
any statement of additional information or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated
in any registration statement, any prospectus or any statement of
additional information or necessary to make the statements in any thereof
not misleading; provided, however, that the Fund's agreement to
indemnify PFS, its officers or directors, and any such controlling person
shall not be deemed to cover any claims, demands, liabilities or expenses
arising out of any statements or representations made by PFS or its
representatives or agents other than such statements and representations as
are contained in any prospectus or statement of additional information and
in such financial and other statements as are furnished to PFS pursuant to
paragraph 2.2 of this Agreement; and further provided that the Fund's
agreement to indemnify PFS and the Fund's representations and warranties
herein before set forth in paragraph 3 of this Agreement shall not be deemed
to cover any liability to the Fund or its shareholders to which PFS would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of PFS's reckless
disregard of its obligations and duties under this Agreement. The Fund's
agreement to indemnify PFS, its officers and directors, and any such
controlling person, as aforesaid, is expressly conditioned upon the Fund's
being notified of any action brought against PFS, its officers or
directors, or any such controlling person, such notification to be given
by letter or by telegram addressed to the Fund at its principal office in New
York, New York and sent to the Fund by the person against whom such action is
brought, within ten days after the summons or other first legal process
shall have been served. The failure so to notify the Fund of any such action
shall not relieve the Fund from any liability that the Fund may have to the
person against whom such action is brought by reason of any such untrue,
or alleged untrue, statement or omission, or alleged omission, otherwise
than on account of the Fund's indemnity agreement contained in this
paragraph 4.1. The Fund will be entitled to assume the defense of any suit
brought to enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing chosen by the
Fund and approved by PFS. In the event the Fund elects to assume the defense
of any such suit and retains counsel of good standing approved by PFS, the
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by any of them; but if the Fund does not elect to
assume the defense of any such suit, or if PFS does not approve of counsel
chosen by the Fund, the Fund will reimburse PFS, its officers and directors,
or the controlling person or persons named as defendant or defendants in such
suit, for the fees and expenses of any counsel retained by PFS or them. The
Fund's indemnification agreement contained in this paragraph 4.1 and the
Fund's representations and warranties in this Agreement shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of PFS, its officers and directors, or any controlling person, and
shall survive the delivery of any of the Fund's Shares. This agreement
of indemnity will inure exclusively to PFS's benefit, to the benefit of its
several officers and directors, and their respective estates, and to the
benefit of the controlling persons and their successors. The Fund agrees to
notify PFS promptly of the commencement of any litigation or proceedings
against the Fund or any of its officers or Directors in connection with the
issuance and sale of any of the Fund's Shares.
4.2 PFS agrees to indemnify, defend and hold the Fund, its
several officers and Directors, and any person who controls the Fund within
the meaning of Section 15 of the 1933 Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the costs of
investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) that the Fund, its
officers or Directors or any such controlling person may incur under the
1933 Act, or under common law or otherwise, but only to the extent that such
liability or expense incurred by the Fund, its officers or Directors or such
controlling person resulting from such claims or demands shall arise out of
or be based upon any untrue, or alleged untrue, statement of a material fact
contained in information furnished in writing by PFS to the Fund and used in
the answers to any of the items of the registration statement or in the
<PAGE>5
corresponding statements made in the prospectus or statement of additional
information, or shall arise out of or be based upon any omission, or
alleged omission, to state a material fact in connection with such information
furnished in writing by PFS to the Fund and required to be stated in such
answers or necessary to make such information not misleading. PFS's
agreement to indemnify the Fund, its officers or Directors, and any such
controlling person, as aforesaid, is expressly conditioned upon PFS
being notified of any action brought against the Fund, its officers or
Directors, or any such controlling person, such notification to be given by
letter or telegram addressed to PFS at its principal office in New York, New
York and sent to PFS by the person against whom such action is brought,
within ten days after the summons or other first legal process shall have
been served. PFS shall have the right to control the defense of such action,
with counsel of its own choosing, satisfactory to the Fund, if such action
is based solely upon such alleged misstatement or omission on PFS's part,
and in any other event the Fund, its officers or Directors or such
controlling person shall each have the right to participate in the defense or
preparation of the defense of any such action. The failure to so notify PFS
of any such action shall not relieve PFS from any liability that PFS may have
to the Fund, its officers or Directors, or to such controlling person by
reason of any such untrue, or alleged untrue, statement or omission, or
alleged omission, otherwise than on account of PFS's indemnity agreement
contained in this paragraph 4.2. PFS agrees to notify the Fund promptly of
the commencement of any litigation or proceedings against PFS or any of its
officers or directors in connection with the issuance and sale of any of the
Fund's Shares.
4.3 In case any action shall be brought against any
indemnified party under paragraph 4.1 or 4.2, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall
wish to do so, to assume the defense thereof with counsel satisfactory to
such indemnified party. If the indemnifying party opts to assume the defense
of such action, the indemnifying party will not be liable to the indemnified
party for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than (a)
reasonable costs of investigation or the furnishing of documents or
witnesses and (b) all reasonable fees and expenses of separate counsel to
such indemnified party if (i) the indemnifying party and the indemnified
party shall have agreed to the retention of such counsel or (ii) the
indemnified party shall have concluded reasonably that representation of the
indemnifying party and the indemnified party by the same counsel would be
inappropriate due to actual or potential differing interests between them in
the conduct of the defense of such action.
5. Effectiveness of Registration
None of the Fund's Shares shall be offered by either PFS or the Fund
under any of the provisions of this Agreement and no orders for the
purchase or sale of the Shares under this Agreement shall be accepted by the
Fund if and so long as the effectiveness of the registration statement then
in effect or any necessary amendments thereto shall be suspended under any of
the provision of the 1933 Act or if and so long as a current prospectus as
required by Section 5(b) (2) of the 1933 Act is not on file with the SEC;
provided, that nothing contained in this paragraph 5 shall in any way
restrict or have an application to or bearing upon the Fund's obligation
to repurchase its Shares from any shareholder in accordance with the
provisions of the Fund's prospectus, statement of additional information or
Articles of Incorporation dated Articles of Incorporation, as amended from
time to time.
<PAGE>6
6. Notice to PFS
The Fund agrees to advise PFS immediately in writing:
(a) of any request by the SEC for amendments to the
registration statement, prospectus or statement of additional
information then in effect or for additional information;
(b) In the event of the issuance by the SEC of any stop
order suspending the effectiveness of the registration
statement, prospectus or statement of additional information
then in effect or the initiation of any proceeding for that purpose;
(c) of the happening of any event that makes untrue any
statement or a material fact made in the registration statement,
prospectus or statement of additional information then in effect or
that requires the making of a change in such registration
statement, prospectus or statement of additional information in
order to make the statements therein not misleading; and
(d) of all actions of the SEC with respect to any amendment to
any registration statement, prospectus or statement of additional
information which may from time to time be filed with the SEC.
7. Term of the Agreement
This Agreement shall become effective on the date first written above
and shall continue for successive annual periods thereafter so long as such
continuance is specifically approved at least annually by (a) the Fund's
Board of Directors or (b) by a vote of a majority (as defined in the
1940 Act) of the Fund's outstanding voting securities, provided that in
either event the continuance is also approved by a majority of the Directors
of the Fund who are not interested persons (as defined in the 1940 Act) of
any party to this Agreement, by vote cast in person at a meeting called for
the purpose of voting on such approval. This Agreement is terminable,
without penalty, on 60 days' notice by the Fund's Board of Directors, by vote
of the holders of a majority of the Fund's Shares, or on 90 days' notice by
PFS. This Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act).
<PAGE>7
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Agreement by signing and returning to us the
enclosed copy of this Agreement.
Very truly yours,
SMITH BARNEY CONCERT SERIES INC.
By:
HEATH B. MCLENDON
CHAIRMAN OF THE BOARD
Accepted:
PFS DISTRIBUTORS, INC.
By:
<PAGE>1
FORM OF
CUSTODIAN SERVICES AGREEMENT
This Agreement is made as of ____________, 1996 by and between Smith
Barney Concert Series Inc., a Maryland corporation (the "Fund") and PNC BANK,
NATIONAL ASSOCIATION, a national banking association ("PNC Bank").
The Fund is registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Fund wishes
to retain PNC Bank to provide custodian services and PNC Bank wishes to furnish
such services, either directly or through an affiliate or affiliates, as more
fully described herein. In consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Definitions.
(a) "Authorized Person". The term "Authorized Person" shall
mean any officer of the Fund and any other person, who is duly authorized by
the Fund's Governing Board, to give Oral and Written Instructions on behalf of
the Fund. Such persons are listed in the Certificate attached hereto as
the Authorized Persons Appendix, as such Appendix may be amended in
writing by the Fund's Governing Board from time to time.
(b) "Book-Entry System". The term "Book-Entry System"
means Federal Reserve Treasury book-entry system for United States and federal
<PAGE>2
agency securities, its successor or successors, and its nominee or nominees
and any book-entry system maintained by an exchange registered with the SEC
under the 1934 Act.
(c) "CFTC". The term "CFTC" shall mean the Commodities
Futures Trading Commission.
(d) "Governing Board". The term "Governing Board" shall mean
the Fund's Board of Directors if the Fund is a corporation or the Fund's
Board of Trustees if the Fund is a trust, or, where duly authorized, a
competent committee thereof.
(e) "Oral Instructions". The term "Oral Instructions"
shall mean oral instructions received by PNC Bank from an Authorized
Person or from a person reasonably believed by PNC Bank to be an Authorized
Person.
(f) "SEC". The term "SEC" shall mean the Securities and
Exchange Commission.
(g) "Securities and Commodities Laws". The term "Securities
and Commodities Laws" shall mean the "1933 Act" which shall mean the Securities
Act of 1933, the "1934 Act" which shall mean the Securities Exchange Act of
1934, the 1940 Act, and the "CEA" which shall mean the Commodities Exchange
Act, each as amended.
(h) "Shares". The term "Shares" shall mean the shares of stock
of any series or class of the Fund, or, where appropriate, units of
<PAGE>3
beneficial interest in a trust where the Fund is organized as a Trust.
(i) "Property". The term "Property" shall mean:
(i) any and all securities and other investment items
which the Fund may from time to time deposit, or
cause to be deposited, with PNC Bank or which PNC
Bank may from time to time hold for the Fund;
(ii) all income in respect of any of such securities or
other investment items;
(iii) all proceeds of the sale of any of such securities
or investment items; and
(iv) all proceeds of the sale of securities issued by
the Fund, which are received by PNC Bank from time
to time, from or on behalf of the Fund.
(j) "Written Instructions". The term "Written Instructions"
shall mean written instructions signed by one Authorized Person and received
by PNC Bank. The instructions may be delivered by hand, mail, tested telegram,
cable, telex or facsimile sending device.
<PAGE>4
2. Appointment. The Fund hereby appoints PNC Bank to provide
custodian services to the Fund, and PNC Bank accepts such appointment and
agrees to furnish such services.
3. Delivery of Documents. The Fund has provided or, where applicable,
will provide PNC Bank with the following:
(a) certified or authenticated copies of the resolutions of the
Fund's Governing Board, approving the appointment of PNC Bank or its
affiliates to provide services;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of the Fund's advisory agreement or agreements;
(d) a copy of the Fund's distribution agreement or agreements;
(e) a copy of the Fund's administration agreements if PNC Bank
is not providing the Fund with such services;
(f) copies of any shareholder servicing agreements made in
respect of the Fund; and
(g) certified or authenticated copies of any and all
amendments or supplements to the foregoing.
4. Compliance with Government Rules and Regulations. PNC Bank
undertakes to comply with all applicable requirements of the Securities and
Commodities Laws and any laws, rules and regulations of governmental
<PAGE>5
authorities having jurisdiction with respect to all duties to be performed by
PNC Bank hereunder. Except as specifically set forth herein, PNC Bank
assumes no responsibility for such compliance by the Fund.
5. Instructions. Unless otherwise provided in this Agreement, PNC Bank
shall act only upon Oral and Written Instructions. PNC Bank shall be entitled
to rely upon any Oral and Written Instructions it receives from an Authorized
Person (or from a person reasonably believed by PNC Bank to be an Authorized
Person) pursuant to this Agreement. PNC Bank may assume that any Oral or
Written Instructions received hereunder are not in any way inconsistent
with the provisions of organizational documents or this Agreement or of
any vote, resolution or proceeding of the Fund's Governing Board or of the
Fund's shareholders.
The Fund agrees to forward to PNC Bank Written Instructions
confirming Oral Instructions so that PNC Bank receives the Written
Instructions by the close of business on the same day that such Oral
Instructions are received. The fact that such confirming Written Instructions
are not received by PNC Bank shall in no way invalidate the transactions or
enforceability of the transactions authorized by the Oral Instructions.
The Fund further agrees that PNC Bank shall incur no liability to
the Fund in acting upon Oral or Written Instructions provided such
<PAGE>6
instructions reasonably appear to have been received from an Authorized
Person.
6. Right to Receive Advice.
(a) Advice of the Fund. If PNC Bank is in doubt as to any
action it should or should not take, PNC Bank may request directions or
advice, including Oral or Written Instructions, from the Fund.
(b) Advice of Counsel. If PNC Bank shall be in doubt as to any
questions of law pertaining to any action it should or should not take, PNC
Bank may request advice at its own cost from such counsel of its own choosing
(who may be counsel for the Fund, the Fund's advisor or PNC Bank, at the option
of PNC Bank).
(c) Conflicting Advice. In the event of a conflict between
directions, advice or Oral or Written Instructions PNC Bank receives from the
Fund, and the advice it receives from counsel, PNC Bank shall be entitled to
rely upon and follow the advice of counsel.
(d) Protection of PNC Bank. PNC Bank shall be protected in
any action it takes or does not take in reliance upon directions, advice
or Oral or Written Instructions it receives from the Fund or from counsel
and which PNC Bank believes, in good faith, to be consistent with those
directions, advice or Oral or Written Instructions.
<PAGE>7
Nothing in this paragraph shall be construed so as to impose an
obligation upon PNC Bank (i) to seek such directions, advice or Oral or Written
Instructions, or (ii) to act in accordance with such directions, advice or
Oral or Written Instructions unless, under the terms of other provisions of
this Agreement, the same is a condition of PNC Bank's properly taking or not
taking such action.
7. Records. The books and records pertaining to the Fund which
are in the possession of PNC Bank, shall be the property of the Fund.
Such books and records shall be prepared and maintained as required by the
1940 Act and other applicable securities laws, rules and regulations. The
Fund, or the Fund's Authorized Persons, shall have access to such books
and records at all time during PNC Bank's normal business hours. Upon the
reasonable request of the Fund, copies of any such books and records shall be
provided by PNC Bank to the Fund or to an Authorized Person of the Fund, at the
Fund's expense.
8. Confidentiality. PNC Bank agrees to keep confidential all records of
the Fund and information relative to the Fund and its shareholders (past,
present and potential), unless the release of such records or information
is otherwise consented to, in writing, by the Fund. The Fund agrees that
such consent shall not be unreasonably withheld and may not be withheld
where PNC Bank may be exposed to civil or criminal contempt proceedings or
when required to divulge. The Fund further agrees that, should PNC Bank be
<PAGE>8
required to provide such information or records to duly constituted
authorities (who may institute civil or criminal contempt proceedings for
failure to comply), PNC Bank shall not be required to seek the Fund's consent
prior to disclosing such information.
9. Cooperation with Accountants. PNC Bank shall cooperate with
the Fund's independent public accountants and shall take all reasonable
action in the performance of its obligations under this Agreement to ensure
that the necessary information is made available to such accountants for the
expression of their opinion, as required by the Fund.
10. Disaster Recovery. PNC Bank shall enter into and shall maintain
in effect with appropriate parties one or more agreements making reasonable
provision for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment failures,
PNC Bank shall, at no additional expense to the Fund, take reasonable steps
to minimize service interruptions but shall have no liability with respect
thereto.
11. Compensation. As compensation for custody services rendered by
PNC Bank during the term of this Agreement, the Fund will pay to PNC Bank a fee
<PAGE>9
or fees as may be agreed to from time to time in writing by the Fund and PNC
Bank.
12. Indemnification. The Fund agrees to indemnify and hold harmless PNC
Bank and its nominees from all taxes, charges, expenses, assessment,
claims and liabilities (including, without limitation, liabilities arising
under the Securities and Commodities Laws and any state and foreign
securities and blue sky laws, and amendments thereto, and expenses, including
(without limitation) attorneys' fees and disbursements, arising directly or
indirectly from any action which PNC Bank takes or does not take (i) at
the request or on the direction of or in reliance on the advice of the
Fund or (ii) upon Oral or Written Instructions. Neither PNC Bank, nor any
of its nominees, shall be indemnified against any liability to the Fund or
to its shareholders (or any expenses incident to such liability) arising
out of PNC Bank's own willful misfeasance, bad faith, negligence or
reckless disregard of its duties and obligations under this Agreement.
13. Responsibility of PNC Bank. PNC Bank shall be under no duty to
take any action on behalf of the Fund except as specifically set forth herein
or as may be specifically agreed to by PNC Bank, in writing. PNC Bank shall
be obligated to exercise care and diligence in the performance of its duties
hereunder, to act in good faith and to use its best effort, within
reasonable limits, in performing services provided for under this
<PAGE>10
Agreement. PNC Bank shall be responsible for its own negligent failure to
perform its duties under this Agreement. Notwithstanding the foregoing, PNC
Bank shall not be responsible for losses beyond its control, provided that PNC
Bank has acted in accordance with the standard of care set forth above; and
provided further that PNC Bank shall only be responsible for that portion of
losses or damages suffered by the Fund that are attributable to the negligence
of PNC Bank.
Without limiting the generality of the foregoing or of any other
provision of this Agreement, PNC Bank, in connection with its duties under
this Agreement, shall not be under any duty or obligation to inquire into
and shall not be liable for (a) the validity or invalidity or authority or
lack thereof of any Oral or Written Instruction, notice or other instrument
which conforms to the applicable requirements of this Agreement, and which
PNC Bank reasonably believes to be genuine; or (b) delays or errors or loss
of data occurring by reason of circumstances beyond PNC Bank's control,
including acts of civil or military authority, national emergencies, labor
difficulties, fire, flood or catastrophe, acts of God, insurrection, war,
riots or failure of the mails, transportation, communication or power supply.
<PAGE>11
Notwithstanding anything in this Agreement to the contrary, PNC Bank
shall have no liability to the Fund for any consequential, special or
indirect losses or damages which the Fund may incur or suffer by or as a
consequence of PNC Bank's performance of the services provided hereunder,
whether or not the likelihood of such losses or damages was known by PNC Bank.
14. Description of Services.
(a) Delivery of the Property. The Fund will deliver or
arrange for delivery to PNC Bank, all the property owned by the Fund,
including cash received as a result of the distribution of its Shares, during
the period that is set forth in this Agreement. PNC Bank will not be
responsible for such property until actual receipt.
<PAGE>12
(b) Receipt and Disbursement of Money. PNC Bank, acting
upon Written Instructions, shall open and maintain separate account(s) in
the Fund's name using all cash received from or for the account of the Fund,
subject to the terms of this Agreement. In addition, upon Written Instructions,
PNC Bank shall open separate custodial accounts for each separate series, class
or portfolio of the Fund and shall hold in such account(s) all cash received
from or for the accounts of the Fund specifically designated to each separate
series, class or portfolio. PNC Bank shall make cash payments from or for the
account of the Fund only for:
(i) purchases of securities in the name of the Fund or
PNC Bank or PNC Bank's nominee as provided in
sub-paragraph j and for which PNC Bank has
received a copy of the broker's or dealer's
confirmation or payee's invoice, as
appropriate;
(ii) purchase or redemption of Shares of the Fund
delivered to PNC Bank;
(iii) payment of, subject to Written Instructions,
interest, taxes, administration, accounting,
distribution, advisory, management fees or similar
expenses which are to be borne by the Fund;
<PAGE>13
(iv) payment to, subject to receipt of Written
Instructions, the Fund's transfer agent, as agent
for the shareholders, an amount equal to the
amount of dividends and distributions stated in the
Written Instructions to be distributed in cash by
the transfer agent to shareholders, or, in lieu of
paying the Fund's transfer agent, PNC Bank may
arrange for the direct payment of cash dividends
and distributions to shareholders in accordance
with procedures mutually agreed upon from time to
time by and among the Fund, PNC Bank and the Fund's
transfer agent;
(v) payments, upon receipt of Written Instructions,
in connection with the conversion, exchange or
surrender of securities owned or subscribed to by
the Fund and held by or delivered to PNC Bank;
(vi) payments of the amounts of dividends received with
respect to securities sold short; payments made
to a sub-custodian pursuant to provisions in
sub-paragraph c of this Paragraph; and
<PAGE>14
(viii) payments, upon Written Instructions made for
other proper Fund purposes. PNC Bank is hereby
authorized to endorse and collect all checks,
drafts or other orders for the payment of money
received as custodian for the account of the
Fund.
(c) Receipt of Securities.
(i) PNC Bank shall hold all securities received by it
for the account of the Fund in a separate account
that physically segregates such securities from
those of any other persons, firms or corporations,
except for securities held in a Book-Entry
System. All such securities shall be held or
disposed of only upon Written Instructions of the
Fund pursuant to the terms of this Agreement. PNC
Bank shall have no power or authority to
assign, hypothecate, pledge or otherwise dispose
of any such securities or investment, except upon
the express terms of this Agreement and upon
Written Instructions, accompanied by a certified
resolution of the Fund's Governing Board,
authorizing the transaction. In no case may any
<PAGE>15
member of the Fund's Governing Board, or any
officer, employee or agent of the Fund withdraw any
securities. At PNC Bank's own expense and for its
own convenience, PNC Bank may enter into
sub-custodian agreements with other banks or
trust companies to perform duties described in
this sub-paragraph c. Such bank or trust company
shall have an aggregate capital, surplus and
undivided profits, according to its last
<PAGE>16
published report, of at least one million dollars
($1,000,000), if it is a subsidiary or affiliate
of PNC Bank, or at least twenty million dollars
($20,000,000) if such bank or trust company is not
a subsidiary or affiliate of PNC Bank. In addition,
such bank or trust company must agree to comply
with the relevant provisions of the 1940 Act and
other applicable rules and regulations. PNC Bank
shall remain responsible for the performance of
all of its duties as described in this Agreement
and shall hold the Fund harmless from PNC Bank's
own (or any sub-custodian chosen by PNC Bank under
the terms of this sub-paragraph c) acts or
omissions, under the standards of care provided
for herein.
(d) Transactions Requiring Instructions. Upon receipt of Oral
or Written Instructions and not otherwise, PNC Bank, directly or through the
use of the Book-Entry System, shall:
(i) deliver any securities held for the Fund against
the receipt of payment for the sale of such
securities;
(ii) execute and deliver to such persons as may be
designated in such Oral or Written Instructions,
proxies, consents, authorizations, and any
other instruments whereby the authority of the
Fund as owner of any securities may be exercised;
(iii) deliver any securities to the issuer thereof, or
its agent, when such securities are called,
redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to PNC Bank;
<PAGE>17
(iv) deliver any securities held for the Fund
against receipt of other securities or cash
issued or paid in connection with the
liquidation, reorganization, refinancing, tender
offer, merger, consolidation or
recapitalization of any corporation, or the
exercise of any conversion privilege;
(v) deliver any securities held for the Fund to any
protective committee, reorganization committee or
other person in connection with the reorganization,
refinancing, merger, consolidation,
recapitalization or sale of assets of any
corporation, and receive and hold under the
terms of this Agreement such certificates of
deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such
delivery;
(vi) make such transfer or exchanges of the assets of
the Fund and take such other steps as shall be
stated in said Oral or Written Instructions to be
<PAGE>18
for the purpose of effectuating a duly
authorized plan of liquidation,
reorganization, merger, consolidation or
recapitalization of the Fund;
(vii) release securities belonging to the Fund to any
bank or trust company for the purpose of a pledge
or hypothecation to secure any loan incurred by the
Fund; provided, however, that securities shall be
released only upon payment to PNC Bank of the
monies borrowed, except that in cases where
<PAGE>19
additional collateral is required to secure a
borrowing already made subject to proper prior
authorization, further securities may be released
for that purpose; and repay such loan upon
redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the
note or notes evidencing the loan;
(viii) release and deliver securities owned by the Fund in
connection with any repurchase agreement entered
into on behalf of the Fund, but only on receipt of
payment therefor; and pay out moneys of the
Fund in connection with such repurchase
agreements, but only upon the delivery of the
securities;
(ix) release and deliver or exchange securities
owned by the Fund in connection with any
conversion of such securities, pursuant to their
terms, into other securities;
(x) release and deliver securities owned by the Fund
for the purpose of redeeming in kind shares of the
Fund upon delivery thereof to PNC Bank; and
(xi) release and deliver or exchange securities owned
by the Fund for other corporate purposes. PNC Bank
must also receive a certified resolution describing
the nature of the corporate purpose and the name
and address of the person(s) to whom delivery
shall be made when such action is pursuant to
sub-paragraph d above.
(e) Use of Book-Entry System. The Fund shall deliver PNC
Bank certified resolutions of the Fund's Governing Board approving,
authorizing and instructing PNC Bank on a continuous and on-going basis, to
<PAGE>20
deposit in the Book-Entry System all securities belonging to the Fund eligible
for deposit therein and to utilize the Book-Entry System to the extent
possible in connection with settlements of purchases and sales of securities
by the Fund, and deliveries and returns of securities loaned, subject to
repurchase agreements or used as collateral in connection with borrowings. PNC
Bank shall continue to perform such duties until it receives Written or Oral
Instructions authorizing contrary actions(s).
To administer the Book-Entry System properly, the following
provisions shall apply:
(i) With respect to securities of the Fund which
are maintained in the Book-Entry system,
established pursuant to this sub-paragraph e
hereof, the records of PNC Bank shall identify by
Book-Entry or otherwise those securities belonging
to the Fund. PNC Bank shall furnish the Fund a
detailed statement of the Property held for the
Fund under this Agreement at least monthly and from
time to time and upon written request.
(ii) Securities and any cash of the Fund deposited in
the Book-Entry System will at all times be
<PAGE>21
segregated from any assets and cash controlled by
PNC Bank in other than a fiduciary or custodian
capacity but may be commingled with other assets
held in such capacities. PNC Bank and its
sub-custodian, if any, will pay out money only upon
receipt of securities and will deliver securities
only upon the receipt of money.
(iii) All books and records maintained by PNC Bank which
relate to the Fund's participation in the
Book-Entry System will at all times during PNC
Bank's regular business hours be open to the
inspection of the Fund's duly authorized employees
or agents, and the Fund will be furnished with
all information in respect of the services
rendered to it as it may require.
(iv) PNC Bank will provide the Fund with copies of any
report obtained by PNC Bank on the system of
internal accounting control of the Book-Entry
System promptly after receipt of such a report by
PNC Bank. PNC Bank will also provide the Fund with
such reports on its own system of internal control
as the Fund may reasonably request from time to
time.
<PAGE>22
(f) Registration of Securities. All Securities held for
the Fund which are issued or issuable only in bearer form, except such
securities held in the Book-Entry System, shall be held by PNC Bank in
bearer form; all other securities held for the Fund may be registered in
the name of the Fund; PNC Bank; the Book-Entry System; a sub-custodian; or
any duly appointed nominee(s) of the Fund, PNC Bank, Book-Entry system or
sub-custodian. The Fund reserves the right to instruct PNC Bank as to the
method of registration and safekeeping of the securities of the Fund. The
Fund agrees to furnish to PNC Bank appropriate instruments to enable PNC Bank
to hold or deliver in proper form for transfer, or to register its registered
nominee or in the name of the Book-Entry System, any securities which it may
hold for the account of the Fund and which may from time to time be registered
in the name of the Fund. PNC Bank shall hold all such securities which are not
held in the Book-Entry System in a separate account for the Fund in the name of
the Fund physically segregated at all times from those of any other person or
persons.
(g) Voting and Other Action. Neither PNC Bank nor its nominee
shall vote any of the securities held pursuant to this Agreement by or for
the account of the Fund, except in accordance with Written Instructions.
PNC Bank, directly or through the use of the Book-Entry System, shall
execute in blank and promptly deliver all notice, proxies, and proxy
soliciting materials to the registered holder of such securities. If the
registered holder is not the Fund then Written or Oral Instructions must
designate the person(s) who owns such securities.
<PAGE>23
(h) Transactions Not Requiring Instructions. In the absence
of contrary Written Instructions, PNC Bank is authorized to take the following
actions:
(i) Collection of Income and Other Payments.
(A) collect and receive for the account of
the Fund, all income, dividends,
distributions, coupons, option
premiums, other payments and similar
items, included or to be included in
the Property, and, in addition,
promptly advise the Fund of such
receipt and credit such income, as
collected, to the Fund's custodian
account;
(B) endorse and deposit for collection,
in the name of the Fund, checks,
drafts, or other orders for the payment
of money;
<PAGE>24
(C) receive and hold for the account of the
Fund all securities received as a
distribution on the Fund's portfolio
securities as a result of a stock
dividend, share split-up or
reorganization, recapitalization,
readjustment or other rearrangement
or distribution of rights or similar
securities issued with respect to
any portfolio securities belonging
to the Fund held by PNC Bank
hereunder;
(D) present for payment and collect the
amount payable upon all securities
which may mature or be called,
redeemed, or retired, or otherwise
become payable on the date such
securities become payable; and
(E) take any action which may be necessary
and proper in connection with the
collection and receipt of such income
and other payments and the endorsement
for collection of checks, drafts, and
other negotiable instruments.
<PAGE>25
(ii) Miscellaneous Transactions.
(A) PNC Bank is authorized to deliver or
cause to be delivered Property
against payment or other consideration
or written receipt therefor in the
following cases:
(1) for examination by a
broker or dealer selling
for the account of the
Fund in accordance with
street delivery custom;
(2) for the exchange of
interim receipts or
temporary securities for
definitive securities; and
(3) for transfer of
securities into the name
of the Fund or PNC Bank or
nominee of either, or for
exchange of securities for
a different number of
bonds,certificates, or
other evidence,
<PAGE>26
representing the same
aggregate face amount or
number of units bearing
the same interest rate,
maturity date and call
provisions, if any;
provided that, in any such
case, the new securities
are to be delivered to PNC
Bank.
(B) Unless and until PNC Bank receives Oral
or Written Instructions to the contrary,
PNC Bank shall:
(1) pay all income items held
by it which call for
payment upon presentation
and hold the cash received
by it upon such payment
for the account of the
Fund;
(2) collect interest and cash
dividends received, with
notice to the Fund, to the
Fund's account;
(3) hold for the account of
the Fund all stock
dividends, rights and
similar securities issued
with respect to any
securities held by PNC
Bank; and
(4) execute as agent on behalf
of the Fund all necessary
ownership certificates
required by the Internal
Revenue Code or the Income
<PAGE>27
Tax Regulations of the
United States Treasury
Department or under the
laws of any State now or
hereafter in effect,
inserting the Fund's name,
on such certificate as the
owner of the securities
covered thereby, to the
extent it may lawfully do
so.
(i) Segregated Accounts.
(i) PNC Bank shall upon receipt of Written or Oral
Instructions establish and maintain segregated
account(s) on its records for and on behalf of
the Fund. Such account(s) may be used to
transfer cash and securities, including
securities in the Book-Entry System:
(A) for the purposes of compliance by the Fund
with the procedures required by a securities
or option exchange, providing such
procedures comply with the 1940 Act and any
releases of the SEC relating to the
maintenance of segregated accounts by
registered investment companies; and
<PAGE>28
(B) Upon receipt of Written Instructions, for
other proper corporate purposes.
(ii) PNC Bank may enter into separate custodial
agreements with various futures commission
merchants ("FCMs") that the Fund uses ("FCM
Agreement"). Pursuant to an FCM Agreement, the
Fund's margin deposits in any transactions
involving futures contracts and options on futures
contracts will be held by PNC Bank in accounts
("FCM Account") subject to the disposition by the
FCM involved in such contracts and in accordance
with the customer contract between FCM and the Fund
("FCM Contract"), SEC rules and the rules of the
applicable commodities exchange. Such FCM
Agreements shall only be entered into upon receipt
of Written Instructions from the Fund which state
that:
(A) a customer agreement between the FCM and the
Fund has been entered into; and
<PAGE>29
(B) the Fund is in compliance with all the rules
and regulations of the CFTC. Transfers of
initial margin shall be made into a FCM
Account only upon Written Instructions;
transfers of premium and variation margin
may be made into a FCM Account pursuant to
Oral Instructions.
Transfers of funds from a FCM Account to
the FCM for which PNC Bank holds such an
account may only occur upon certification
by the FCM to PNC Bank that pursuant to the
FCM Agreement and the FCM Contract, all
conditions precedent to its right to give
PNC Bank such instructions have been
satisfied.
(iii) PNC Bank shall arrange for the establishment of
IRA custodian accounts for such share- holders
holding Shares through IRA accounts, in accordance
with the Fund's prospectuses, the Internal Revenue
Code (including regulations), and with such other
procedures as are mutually agreed upon from time to
time by and among the Fund, PNC Bank and the Fund's
transfer agent.
<PAGE>30
(j) Purchases of Securities. PNC Bank shall settle purchased
securities upon receipt of Oral or Written Instructions from the Fund
or its investment advisor(s) that specify:
(i) the name of the issuer and the title of the
securities, including CUSIP number if applicable;
(ii) the number of shares or the principal amount
purchased and accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase; and
(vi) the name of the person from whom or the broker
through whom the purchase was made. PNC Bank shall
upon receipt of securities purchased by or for the
Fund pay out of the moneys held for the account of
the Fund the total amount payable to the person
from whom or the broker through whom the purchase
was made, provided that the same conforms to the
<PAGE>31
total amount payable as set forth in such Oral or
Written Instructions.
(k) Sales of Securities. PNC Bank shall settle sold
securities upon receipt of Oral or Written Instructions from the Fund that
specify:
(i) the name of the issuer and the title of the
security, including CUSIP number if applicable;
(ii) the number of shares or principal amount sold, and
accrued interest, if any;
(iii) the date of trade, settlement and sale;
(iv) the sale price per unit;
(v) the total amount payable to the Fund upon such
sale;
(vi) the name of the broker through whom or the person
to whom the sale was made; and
(vii) the location to which the security must be
delivered and delivery deadline, if any. PNC Bank
shall deliver the securities upon receipt of the
total amount payable to the Fund upon such sale,
provided that the total amount payable is the same
as was set forth in the Oral or Written
<PAGE>32
Instructions. Subject to the foregoing, PNC Bank
may accept payment in such form as shall be
satisfactory to it, and may deliver securities and
arrange for payment in accordance with the customs
prevailing among dealers in securities.
(l) Reports.
(i) PNC Bank shall furnish the Fund the following
reports:
(A) such periodic and special reports as the Fund
may reasonably request;
(B) a monthly statement summarizing all
transactions and entries for the account of
the Fund, listing the portfolio securities
belonging to the Fund with the adjusted
average cost of each issue and the market
value at the end of such month, and stating
the cash account of the Fund including
disbursement;
(C) the reports to be furnished to the Fund
pursuant to Rule 17f-4; and
(D) such other information as may be agreed upon
from time to time between the Fund and PNC
Bank.
<PAGE>33
(ii) PNC Bank shall transmit promptly to the Fund any
proxy statement, proxy material, notice of a call
or conversion or similar communication received by
it as custodian of the Property. PNC Bank shall be
under no other obligation to inform the Fund as to
such actions or events.
(m) Collections. All collections of monies or other property,
in respect, or which are to become part of the
Property (but not the safekeeping thereof upon receipt by PNC Bank) shall be
at the sole risk of the Fund. If payment is not received by PNC Bank within a
reasonable time after proper demands have been made, PNC Bank shall notify
the Fund in writing, including copies of all demand letters, any written
responses, memoranda of all oral responses and telephonic demands thereto,
and await instructions from the Fund. PNC Bank shall not be obliged to take
legal action for collection unless and until reasonably indemnified to
its satisfaction. PNC Bank shall also notify the Fund as soon as reasonably
practicable whenever income due on securities is not collected in due course.
15. Duration and Termination. This Agreement shall continue until
terminated by the Fund or by PNC Bank on sixty (60) days' prior written
notice to the other party. In the event this Agreement is terminated
(pending appointment of a successor to PNC Bank or vote of the shareholders
<PAGE>34
of the Fund to dissolve or to function without a custodian of its cash,
securities or other property), PNC Bank shall not deliver cash, securities
or other property of the Fund to the Fund. It may deliver them to a bank or
trust company of PNC Bank's choice, having an aggregate capital, surplus and
undivided profits, as shown by its last published report, of not less than
twenty million dollars ($20,000,000), as a custodian for the Fund to be
held under terms similar to those of this Agreement. PNC Bank shall not
be required to make any such delivery or payment until full payment shall
have been made to PNC Bank of all of its fees, compensation, costs and
expenses. PNC Bank shall have a security interest in and shall have a right of
setoff against Property in the Fund's possession as security for the
payment of such fees, compensation, costs and expenses.
16. Notices. All notices and other communications, including
Written Instructions, shall be in writing or by confirming telegram, cable,
telex or facsimile sending device. Notice shall be addressed (a) if to PNC
Bank at PNC Bank's address: Airport Business Center, International Court
2, 200 Stevens Drive, Lester, Pennsylvania 19113, marked for the attention
<PAGE>35
of the Custodian Services Department (or its successor) (b) if to the Fund, at
the address of the Fund; or (c) if to neither of the foregoing, at such other
address as shall have been notified to the sender of any such notice or other
communication. If notice is sent by confirming telegram, cable, telex or
facsimile sending device, it shall be deemed to have been given immediately.
If notice is sent by first-class mail, it shall be deemed to have been given
five days after it has been mailed. If notice is sent by messenger, it shall
be deemed to have been given on the day it is delivered.
17. Amendments. This Agreement, or any term hereof, may be changed or
waived only by a written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
18. Delegation. PNC Bank may assign its rights and delegate its duties
hereunder to any wholly-owned direct or indirect subsidiary of PNC
Bank, National Association or PNC Bank Corp., provided that (i) PNC Bank
gives the Fund thirty (30) days prior written notice; (ii) the delegate agrees
with PNC Bank to comply with all relevant provisions of the 1940 Act; and
(iii) PNC Bank and such delegate promptly provide such information as the Fund
may request, and respond to such questions as the Fund may ask, relative to
the assignment, including (without limitation) the capabilities of the
delegate.
<PAGE>36
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. Further Actions. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
21. Miscellaneous. This Agreement embodies the entire
agreement and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter hereof, provided
that the parties may embody in one or more separate documents their
agreement, if any, with respect to delegated duties and/or Oral
Instructions. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
This Agreement shall be deemed to be a contract made in
Pennsylvania and governed by Pennsylvania law, without regard to principles
of conflicts of law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
<PAGE>37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first above
written.
PNC BANK, NATIONAL ASSOCIATION
By:
Title:
SMITH BARNEY CONCERT SERIES INC.
By:
Title:
<PAGE>38
AUTHORIZED PERSONS APPENDIX
NAME (Type) SIGNATURE
<PAGE>1
FORM OF
TRANSFER AGENCY AND REGISTRAR AGREEMENT
AGREEMENT, dated as of ___________, 1996 between Smith Barney
Concert Series Inc., (the "Fund"), a corporation organized under the
laws of Maryland and having its principal place of business at 388
Greenwich Street New York, NY 10013, and First Data Investors Services
Group, Inc.INC. (MA) (the "Transfer Agent"), a Massachusetts corporation
with principal offices at One Exchange Place, 53 State Street, Boston,
Massachusetts 02109.
W I T N E S S E T H
That for and in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and the Transfer Agent agree as follows:
1. Definitions. Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have the following
meanings:
(a) "Articles of Incorporation" shall mean the Articles
of Incorporation, Declaration of Trust, Partnership Agreement, or similar
organizational document as the case may be, of the Fund as the same may be
amended from time to time.
(b) "Authorized Person" shall be deemed to include any
person, whether or not such person is an officer or employee of the Fund,
duly authorized to give Oral Instructions or Written Instructions on behalf
of the Fund as indicated in a certificate furnished to the Transfer Agent
pursuant to Section 4(c) hereof as may be received by the Transfer Agent from
time to time.
(c) "Board of Directors" shall mean the Board of Directors,
Board of Trustees or, if the Fund is a limited partnership, the General
Partner(s) of the Fund, as the case may be.
(d) "Commission" shall mean the Securities and Exchange
Commission.
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time deposit,
or cause to be deposited or held under the name or account of such a
custodian pursuant to a Custodian Agreement.
<PAGE>2
(f) "Fund" shall mean the entity executing this Agreement, and
if it is a series fund, as such term is used in the 1940 Act, such term shall
mean each series of the Fund hereafter created, except that appropriate
documentation with respect to each series must be presented to the Transfer
Agent before this Agreement shall become effective with respect to each such
series.
(g) "1940 Act" shall mean the Investment Company Act of 1940.
(h) "Oral Instructions" shall mean instructions,
other than Written Instructions, actually received by the Transfer Agent
from a person reasonably believed by the Transfer Agent to be an Authorized
Person;
(i) "Prospectus" shall mean the most recently dated
Fund Prospectus and Statement of Additional Information, including any
supplements thereto if any, which has become effective under the Securities
Act of 1933 and the 1940 Act.
(j) "Shares" refers collectively to such shares of capital
stock, beneficial interest or limited partnership interests, as the case
may be, of the Fund as may be issued from time to time and, if the Fund is a
closed-end or a series fund, as such terms are used in the 1940 Act any
other classes or series of stock, shares of beneficial interest or limited
partnership interests that may be issued from time to time.
(k) "Shareholder" shall mean a holder of shares of capital
stock, beneficial interest or any other class or series, and also refers
to partners of limited partnerships.
(l) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by the Transfer Agent to be an
Authorized Person and actually received by the Transfer Agent. Written
Instructions shall include manually executed originals and authorized
electronic transmissions, including telefacsimile of a manually executed
original or other process.
2. Appointment of the Transfer Agent. The Fund hereby appoints and
constitutes the Transfer Agent as transfer agent, registrar and dividend
disbursing agent for Shares of the Fund and as shareholder servicing
agent for the Fund. The Transfer Agent accepts such appointments and
agrees to perform the duties hereinafter set forth.
3. Compensation.
(a) The Fund will compensate or cause the Transfer Agent to
be compensated for the performance of its obligations hereunder in
<PAGE>3
accordance with the fees set forth in the written schedule of fees
annexed hereto as Schedule A and incorporated herein. The Transfer Agent
will transmit an invoice to the Fund as soon as practicable after the end of
each calendar month which will be detailed in accordance with Schedule A, and
the Fund will pay to the Transfer Agent the amount of such invoice within
thirty (30) days after the Fund's receipt of the invoice.
In addition, the Fund agrees to pay, and will be billed
separately for, reasonable out-of-pocket expenses incurred by the
Transfer Agent in the performance of its duties hereunder. Out-of-pocket
expenses shall include, but shall not be limited to, the items specified
in the written schedule of out-of-pocket charges annexed hereto as
Schedule B and incorporated herein. Unspecified out-of-pocket expenses
shall be limited to those out-of-pocket expenses reasonably incurred by
the Transfer Agent in the performance of its obligations hereunder.
Reimbursement by the Fund for expenses incurred by the Transfer Agent in any
month shall be made as soon as practicable but no later than 15 days after
the receipt of an itemized bill from the Transfer Agent.
(b) Any compensation agreed to hereunder may be adjusted
from time to time by attaching to Schedule A, a revised fee schedule
executed and dated by the parties hereto.
4. Documents. In connection with the appointment of the Transfer
Agent the Fund shall deliver or caused to be delivered to the Transfer
Agent the following documents on or before the date this Agreement goes into
effect, but in any case within a reasonable period of time for the Transfer
Agent to prepare to perform its duties hereunder:
(a) If applicable, specimens of the certificates for Shares
of the Fund;
(b) All account application forms and other documents
relating to Shareholder accounts or to any plan, program or service offered by
the Fund;
(c) A signature card bearing the signatures of any officer of
the Fund or other Authorized Person who will sign Written Instructions or
is authorized to give Oral Instructions.
(d) A certified copy of the Articles of Incorporation, as
amended;
(e) A certified copy of the By-laws of the Fund, as amended;
(f) A copy of the resolution of the Board of Directors
authorizing the execution and delivery of this Agreement;
<PAGE>4
(g) A certified list of Shareholders of the Fund with the
name, address and taxpayer identification number of each Shareholder, and
the number of Shares of the Fund held by each, certificate numbers
and denominations (if any certificates have been issued), lists of any
accounts against which stop transfer orders have been placed, together
with the reasons therefore, and the number of Shares redeemed by the Fund;
and
(h) An opinion of counsel for the Fund with respect to the
validity of the Shares and the status of such Shares under the
Securities Act of 1933, as amended.
5. Further Documentation. The Fund will also furnish the Transfer
Agent with copies of the following documents promptly after the same shall
become available:
(a) each resolution of the Board of Directors authorizing the
issuance of Shares;
(b) any registration statements filed on behalf of the Fund
and all pre-effective and post-effective amendments thereto filed with the
Commission;
(c) a certified copy of each amendment to the Articles of
Incorporation or the By-laws of the Fund;
(d) certified copies of each resolution of the Board of
Directors or other authorization designating Authorized Persons; and
(e) such other certificates, documents or opinions as the
TransferAgent may reasonably request in connection with the performance of
its duties hereunder.
6. Representations of the Fund. The Fund represents to the Transfer
Agent that all outstanding Shares are validly issued, fully paid and
non-assessable. When Shares are hereafter issued in accordance with the
terms of the Fund's Articles of Incorporation and its Prospectus, such Shares
shall be validly issued, fully paid and non-assessable.
7. Distributions Payable in Shares. In the event that the Board of
Directors of the Fund shall declare a distribution payable in Shares, the
Fund shall deliver or cause to be delivered to the Transfer Agent
written notice of such declaration signed on behalf of the Fund by an
officer thereof, upon which the Transfer Agent shall be entitled to rely for
all purposes, certifying (i) the identity of the Shares involved, (ii) the
number of Shares involved, and (iii) that all appropriate action has been
taken.
<PAGE>5
8. Duties of the Transfer Agent. The Transfer Agent shall be
responsible for administering and/or performing those functions
typically performed by a transfer agent; for acting as service agent in
connection with dividend and distribution functions; and for
performing shareholder account and administrative agent functions in
connection with the issuance, transfer and redemption or repurchase
(including coordination with the Custodian) of Shares in accordance with the
terms of the Prospectus and applicable law. The operating standards and
procedures to be followed shall be determined from time to time by agreement
between the Fund and the Transfer Agent and shall initially be as
described in Schedule C attached hereto. In addition, the Fund shall deliver
to the Transfer Agent all notices issued by the Fund with respect to the
Shares in accordance with and pursuant to the Articles of Incorporation or
By-laws of the Fund or as required by law.
9. Record Keeping and Other Information. The Transfer Agent shall
create and maintain all records required of it pursuant to its duties
hereunder and as set forth in Schedule C in accordance with all
applicable laws, rules and regulations, including records required by
Section 31(a) of the 1940 Act. All records shall be available during regular
business hours for inspection and use by the Fund. Where applicable, such
records shall be maintained by the Transfer Agent for the periods and in the
places required by Rule 31a-2 under the 1940 Act.
Upon reasonable notice by the Fund, the Transfer Agent shall make
available during regular business hours such of its facilities and premises
employed in connection with the performance of its duties under this
Agreement for reasonable visitation by the Fund, or any person retained by
the Fund as may be necessary for the Fund to evaluate the quality of the
services performed by the Transfer Agent pursuant hereto.
10. Other Duties. In addition to the duties set forth in
Schedule C, the Transfer Agent shall perform such other duties and functions,
and shall be paid such amounts therefor, as may from time to time be
agreed upon in writing between the Fund and the Transfer Agent. The
compensation for such other duties and functions shall be reflected in a
written amendment to Schedule A or B and the duties and functions shall be
reflected in an amendment to Schedule C, both dated and signed by authorized
persons of the parties hereto.
11. Reliance by Transfer Agent; Instructions
(a) The Transfer Agent will have no liability when acting
upon Written or Oral Instructions believed to have been executed or
orally communicated by an Authorized Person and will not be held to have
any notice of any change of authority of any person until receipt of a
Written Instruction thereof from the Fund pursuant to Section 4(c). The
<PAGE>6
Transfer Agent will also have no liability when processing Share
certificates which it reasonably believes to bear the proper manual or
facsimile signatures of the officers of the Fund and the proper
countersignature of the Transfer Agent.
(b) At any time, the Transfer Agent may apply to any
Authorized Person of the Fund for Written Instructions and may seek advice
from legal counsel for the Fund, or its own legal counsel, with respect to
any matter arising in connection with this Agreement, and it shall not be
liable for any action taken or not taken or suffered by it in good
faith in accordance with such Written Instructions or in accordance
with the opinion of counsel for the Fund or for the Transfer Agent. Written
Instructions requested by the Transfer Agent will be provided by the Fund
within a reasonable period of time. In addition, the Transfer Agent,
its officers, agents or employees, shall accept Oral Instructions or
Written Instructions given to them by any person representing or acting on
behalf of the Fund only if said representative is an Authorized Person.
The Fund agrees that all Oral Instructions shall be followed within one
business day by confirming Written Instructions, and that the Fund's failure
to so confirm shall not impair in any respect the Transfer Agent's right to
rely on Oral Instructions. The Transfer Agent shall have no duty or
obligation to inquire into, nor shall the Transfer Agent be responsible
for, the legality of any act done by it upon the request or direction of a
person reasonably believed by the Transfer Agent to be an Authorized Person.
(c) Notwithstanding any of the foregoing provisions of
this Agreement, the Transfer Agent shall be under no duty or obligation to
inquire into, and shall not be liable for: (i) the legality of the issuance
or sale of any Shares or the sufficiency of the amount to be received
therefor; (ii) the legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor; (iii) the legality of the
declaration of any dividend by the Board of Directors, or the legality of the
issuance of any Shares in payment of any dividend; or (iv) the legality of
any recapitalization or readjustment of the Shares.
12. Acts of God, etc. The Transfer Agent will not be liable or
responsible for delays or errors by acts of God or by reason of
circumstances beyond its control, including acts of civil or military
authority, national emergencies, labor difficulties, mechanical breakdown,
insurrection, war, riots, or failure or unavailability of transportation,
communication or power supply, fire, flood or other catastrophe.
13. Duty of Care and Indemnification. Each party hereto (the
"Indemnifying Party') will indemnify the other party (the "Indemnified
Party") against and hold it harmless from any and all losses, claims,
damages, liabilities or expenses of any sort or kind (including reasonable
counsel fees and expenses) resulting from any claim, demand, action or suit or
other proceeding (a "Claim") unless such Claim has resulted from a negligent
<PAGE>7
failure to act or omission to act or bad faith of the Indemnified Party in
the performance of its duties hereunder. In addition, the Fund will
indemnify the Transfer Agent against and hold it harmless from any Claim,
damages, liabilities or expenses (including reasonable counsel fees) that
is a result of: (i) any action taken in accordance with Written or Oral
Instructions, or any other instructions, or share certificates
reasonably believed by the Transfer Agent to be genuine and to be signed,
countersigned or executed, or orally communicated by an Authorized
Person; (ii) any action taken in accordance with written or oral
advice reasonably believed by the Transfer Agent to have been given by
counsel for the Fund or its own counsel; or (iii) any action taken as a
result of any error or omission in any record (including but not limited to
magnetic tapes, computer printouts, hard copies and microfilm copies)
delivered, or caused to be delivered by the Fund to the Transfer Agent in
connection with this Agreement.
In any case in which the Indemnifying Party may be asked to
indemnify or hold the Indemnified Party harmless, the Indemnifying Party
shall be advised of all pertinent facts concerning the situation in question.
The Indemnified Party will notify the Indemnifying Party promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party although
the failure to do so shall not prevent recovery by the Indemnified Party. The
Indemnifying Party shall have the option to defend the Indemnified Party
against any Claim which may be the subject of this indemnification, and, in
the event that the Indemnifying Party so elects, such defense shall be
conducted by counsel chosen by the Indemnifying Party and satisfactory to
the Indemnified Party, and thereupon the Indemnifying Party shall take
over complete defense of the Claim and the Indemnified Party shall sustain
no further legal or other expenses in respect of such Claim. The
Indemnified Party will not confess any Claim or make any compromise in any
case in which the Indemnifying Party will be asked to provide indemnification,
except with the Indemnifying Party's prior written consent. The
obligations of the parties hereto under this Section shall survive the
termination of this Agreement.
14. Consequential Damages. In no event and under no circumstances
shall either party under this Agreement be liable to the other party for
indirect loss of profits, reputation or business or any other special damages
under any provision of this Agreement or for any act or failure to act
hereunder.
15. Term and Termination.
(a) This Agreement shall be effective on the date first
written above and shall continue until , 199 , and thereafter
shall automatically continue for successive annual periods ending on the
anniversary of the date first written above, provided that it may be
terminated by either party upon written notice given at least 60 days prior to
termination.
<PAGE>8
(b) In the event a termination notice is given by the
Fund, it shall be accompanied by a resolution of the Board of
Directors, certified by the Secretary of the Fund, designating a
successor transfer agent or transfer agents. Upon such termination and at
the expense of the Fund, the Transfer Agent will deliver to such successor a
certified list of shareholders of the Fund (with names and addresses),
and all other relevant books, records, correspondence and other Fund
records or data in the possession of the Transfer Agent, and the Transfer
Agent will cooperate with the Fund and any successor transfer agent or
agents in the substitution process.
16. Confidentiality. Both parties hereto agree that any non
public information obtained hereunder concerning the other party is
confidential and may not be disclosed to any other person without the consent
of the other party, except as may be required by applicable law or at the
request of the Commission or other governmental agency. The parties further
agree that a breach of this provision would irreparably damage the other
party and accordingly agree that each of them is entitled, without bond or
other security, to an injunction or injunctions to prevent breaches of this
provision.
17. Amendment. This Agreement may only be amended or modified by a
written instrument executed by both parties.
18. Subcontracting. The Fund agrees that the Transfer Agent may, in
its discretion, subcontract for certain of the services described under
this Agreement or the Schedules hereto; provided that the appointment of
any such Transfer Agent shall not relieve the Transfer Agent of its
responsibilities hereunder.
19. Miscellaneous.
(a) Notices. Any notice or other instrument authorized or
required by this Agreement to be given in writing to the Fund or the
Transfer Agent, shall be sufficiently given if addressed to that party and
received by it at its office set forth below or at such other place as it may
from time to time designate in writing.
To the Fund:
Smith Barney Concert Series Inc.
388 Greenwich Street, 22 Floor
New York, NY 10013
Attention:Heath B. McLendon
To the Transfer Agent:
The Shareholder Services Group
<PAGE>9
One Exchange Place
53 State Street
Boston, Massachusetts 02109
(b) Successors. This Agreement shall extend to and shall
be binding upon the parties hereto, and their respective successors and
assigns, provided, however, that this Agreement shall not be assigned to
any person other than a person controlling, controlled by or under common
control with the assignor without the written consent of the other party,
which consent shall not be unreasonably withheld.
(c) Governing Law. This Agreement shall be governed
exclusively by the laws of the State of New York without reference to the
choice of law provisions thereof. Each party hereto hereby agrees that (i)
the Supreme Court of New York sitting in New York County shall have exclusive
jurisdiction over any and all disputes arising hereunder; (ii) hereby
consents to the personal jurisdiction of such court over the parties hereto,
hereby waiving any defense of lack of personal jurisdiction; and (iii)
appoints the person to whom notices hereunder are to be sent as agent for
service of process.
(d) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original; but
such counterparts shall, together, constitute only one instrument.
(e) Captions. The captions of this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(f) Use of Transfer Agent's Name. The Fund shall not
use the name of the Transfer Agent in any Prospectus, Statement of
Additional Information, shareholders' report, sales literature or other
material relating to the Fund in a manner not approved prior thereto in
writing; provided, that the Transfer Agent need only receive notice of all
reasonable uses of its name which merely refer in accurate terms to its
appointment hereunder or which are required by any government agency or
applicable law or rule. Notwithstanding the foregoing, any reference to the
Transfer Agent shall include a statement to the effect that it is a wholly
owned subsidiary of First Data Corporation.
(g) Use of Fund's Name. The Transfer Agent shall not use the
name of the Fund or material relating to the Fund on any documents or forms
for other than internal use in a manner not approved prior thereto in writing;
provided, that the Fund need only receive notice of all reasonable uses of
its name which merely refer in accurate terms to the appointment of the
Transfer Agent or which are required by any government agency or applicable
law or rule.
<PAGE>10
(h) Independent Contractors. The parties agree that they are
independent contractors and not partners or co-venturers.
(i) Entire Agreement; Severability. This Agreement and the
Schedules attached hereto constitute the entire agreement of the parties
hereto relating to the matters covered hereby and supersede any previous
agreements. If any provision is held to be illegal, unenforceable or
invalid for any reason, the remaining provisions shall not be affected or
impaired thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers, as of the day and year first
above written.
SMITH BARNEY CONCERT SERIES INC.
By:
Chairman of the Board
FIRST DATA INVESTORS SERVICES GROUP, INC.
By:
Title: Vice President
Transfer Agent Fee
Schedule A
Class A shares
The Fund shall pay the Transfer Agent an annualized fee of $11.00 per
shareholder account that is open during any monthly period. Such fee shall be
billed by the Transfer Agent monthly in arrears on a prorated basis of 1/12 of
the annualized fee for all accounts that are open during such a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
<PAGE>11
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent monthly in arrears.
Class B shares
The Fund shall pay the Transfer Agent an annualized fee of $12.50 per
shareholder account that is open during any monthly period. Such fee shall be
billed by the Transfer Agent monthly in arrears on a prorated basis of 1/12 of
the annualized fee for all accounts that are open during such a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent monthly in arrears.
Class C shares
The Fund shall pay the Transfer Agent an annualized fee of $8.50 per shareholder
account that is open during any monthly period. Such fee shall be billed by the
Transfer Agent monthly in arrears on a prorated basis of 1/12 of the annualized
fee for all accounts that are open during such a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent monthly in arrears.
<PAGE>12
Class D shares
The Fund shall pay the Transfer Agent an annualized fee of $9.50 per shareholder
account that is open during any monthly period. Such fee shall be billed by the
Transfer Agent monthly in arrears on a prorated basis of 1/12 of the annualized
fee for all accounts that are open during such a month.
The Fund shall pay the Transfer Agent an additional fee of $.125 per closed
account per month applicable to those shareholder accounts which close in a
given month and remain closed through the following month-end billing cycle.
Such fee shall be billed by the Transfer Agent monthly in arrears.
<PAGE>13
Schedule B
OUT-OF-POCKET EXPENSES
The Fund shall reimburse the Transfer Agent monthly for applicable
out-of-pocket expenses, including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including certificates, envelopes, checks and
stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct pass
through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs,
including all lease, maintenance and line costs
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Terminals, communication lines, printers and other equipment
and any expenses incurred in connection with such terminals and lines
- Duplicating services
- Courier services
- Incoming and outgoing wire charges
- Federal Reserve charges for check clearance
- Record retention, retrieval and destruction costs,
including, but not limited to exit fees charged by third party record keeping
vendors
- Third party audit reviews
- Insurance
- Such other miscellaneous expenses reasonably incurred
by the Transfer Agent in performing its duties and responsibilities under
this Agreement.
The Fund agrees that postage and mailing expenses will be paid on the
day of or prior to mailing as agreed with the Transfer Agent. In addition,
the Fund will promptly reimburse the Transfer Agent for any other
unscheduled expenses incurred by the Transfer Agent whenever the Fund and the
Transfer Agent mutually agree that such expenses are not otherwise properly
borne by the Transfer Agent as part of its duties and obligations under the
Agreement.
<PAGE>14
Schedule C
DUTIES OF THE TRANSFER AGENT
1. Shareholder Information. The Transfer Agent or its agent shall
maintain a record of the number of Shares held by each holder of record which
shall include name, address, taxpayer identification and which shall
indicate whether such Shares are held in certificates or uncertificated form.
2. Shareholder Services. The Transfer Agent or its agent will
investigate all inquiries from shareholders of the Fund relating to
Shareholder accounts and will respond to all communications from
Shareholders and others relating to its duties hereunder and such other
correspondence as may from time to time be mutually agreed upon between the
Transfer Agent and the Fund. The Transfer Agent shall provide the Fund with
reports concerning shareholder inquires and the responses thereto by the
Transfer Agent, in such form and at such times as are agreed to by the Fund
and the Transfer Agent.
3. Share Certificates.
(a) At the expense of the Fund, it shall supply the Transfer
Agent or its agent with an adequate supply of blank share certificates to
meet the Transfer Agent or its agent's requirements therefor. Such Share
certificates shall be properly signed by facsimile. The Fund agrees
that, notwithstanding the death, resignation, or removal of any officer
of the Fund whose signature appears on such certificates, the Transfer
Agent or its agent may continue to countersign certificates which bear such
signatures until otherwise directed by Written Instructions.
(b) The Transfer Agent or its agent shall issue replacement
Share certificates in lieu of certificates which have been lost, stolen or
destroyed, upon receipt by the Transfer Agent or its agent of properly
executed affidavits and lost certificate bonds, in form satisfactory to the
Transfer Agent or its agent, with the Fund and the Transfer Agent or its agent
as obligees under the bond.
(c) The Transfer Agent or its agent shall also maintain
a record of each certificate issued, the number of Shares represented
thereby and the holder of record. With respect to Shares held in open
accounts or uncertificated form, i.e., no certificate being issued with
respect thereto, the Transfer Agent or its agent shall maintain
comparable records of the record holders thereof, including their names,
addresses and taxpayer identification. The Transfer Agent or its agent shall
further maintain a stop transfer record on lost and/or replaced
certificates.
<PAGE>15
4. Mailing Communications to Shareholders; Proxy Materials. The
Transfer Agent or its agent will address and mail to Shareholders of the
Fund, all reports to Shareholders, dividend and distribution notices and
proxy material for the Fund's meetings of Shareholders. In connection with
meetings of Shareholders, the Transfer Agent or its Agent will prepare
Shareholder lists, mail and certify as to the mailing of proxy materials,
process and tabulate returned proxy cards, report on proxies voted prior to
meetings, act as inspector of election at meetings and certify Shares voted
at meetings.
5. Sales of Shares
(a) Suspension of Sale of Shares. The Transfer Agent or its
agent shall not be required to issue any Shares of the Fund where it has
received a Written Instruction from the Fund or official notice from any
appropriate authority that the sale of the Shares of the Fund has been
suspended or discontinued. The existence of such Written Instructions
or such official notice shall be conclusive evidence of the right of the
Transfer Agent or its agent to rely on such Written Instructions or official
notice.
(b) Returned Checks. In the event that any check or other
order for the payment of money is returned unpaid for any reason, the
Transfer Agent or its agent will: (i) give prompt notice of such return to
the Fund or its designee; (ii) place a stop transfer order against all
Shares issued as a result of such check or order; and (iii) take such
actions as the Transfer Agent may from time to time deem appropriate.
6. Transfer and Repurchase
(a) Requirements for Transfer or Repurchase of Shares. The
Transfer Agent or its agent shall process all requests to transfer or redeem
Shares in accordance with the transfer or repurchase procedures set forth in
the Fund's Prospectus.
The Transfer Agent or its agent will transfer or repurchase Shares
upon receipt of Oral or Written Instructions or otherwise pursuant to the
Prospectus and Share certificates, if any, properly endorsed for
transfer or redemption, accompanied by such documents as the Transfer Agent
or its agent reasonably may deem necessary.
The Transfer Agent or its agent reserves the right to refuse to
transfer or repurchase Shares until it is satisfied that the endorsement on
the instructions is valid and genuine. The Transfer Agent or its agent also
reserves the right to refuse to transfer or repurchase Shares until it is
satisfied that the requested transfer or repurchase is legally authorized,
and it shall incur no liability for the refusal, in good faith, to make
<PAGE>16
transfers or repurchases which the Transfer Agent or its agent, in its
good judgement, deems improper or unauthorized, or until it is reasonably
satisfied that there is no basis to any claims adverse to such transfer or
repurchase.
(b) Notice to Custodian and Fund. When Shares are redeemed,
the Transfer Agent or its agent shall, upon receipt of the instructions and
documents in proper form, deliver to the Custodian and the Fund or its
designee a notification setting forth the number of Shares to be
repurchased. Such repurchased shares shall be reflected on appropriate
accounts maintained by the Transfer Agent or its agent reflecting
outstanding Shares of the Fund and Shares attributed to individual accounts.
(c) Payment of Repurchase Proceeds. The Transfer Agent or its
agent shall, upon receipt of the moneys paid to it by the Custodian for the
repurchase of Shares, pay such moneys as are received from the Custodian, all
in accordance with the procedures described in the written instruction
received by the Transfer Agent or its agent from the Fund.
The Transfer Agent or its agent shall not process or effect any
repurchase with respect to Shares of the Fund after receipt by the Transfer
Agent or its agent of notification of the suspension of the determination of
the net asset value of the Fund.
7. Dividends
(a) Notice to Agent and Custodian. Upon the declaration of
each dividend and each capital gains distribution by the Board of
Directors of the Fund with respect to Shares of the Fund, the Fund shall
furnish or cause to be furnished to the Transfer Agent or its agent a copy of
a resolution of the Fund's Board of Directors certified by the Secretary of
the Fund setting forth the date of the declaration of such dividend or
distribution, the ex-dividend date, the date of payment thereof, the record
date as of which shareholders entitled to payment shall be determined, the
amount payable per Share to the shareholders of record as of that date, the
total amount payable to the Transfer Agent or its agent on the payment date
and whether such dividend or distribution is to be paid in Shares of such
class at net asset value.
On or before the payment date specified in such resolution of
the Board of Directors, the Custodian of the Fund will pay to the Transfer
Agent sufficient cash to make payment to the shareholders of record as of
such payment date.
<PAGE>17
(b) Insufficient Funds for Payments. If the Transfer Agent or
its agent does not receive sufficient cash from the Custodian to make
total dividend and/or distribution payments to all shareholders of the Fund
as of the record date, the Transfer Agent or its agent will, upon notifying
the Fund, withhold payment to all Shareholders of record as of the record
date until sufficient cash is provided to the Transfer Agent or its agent.
Exhibit 1
to
Schedule C
Summary of Services
The services to be performed by the Transfer Agent or its agent
shall be as follows:
A. DAILY RECORDS
Maintain daily the following information with respect to each
Shareholder account as received:
Name and Address (Zip Code)
Class of Shares
Taxpayer Identification Number
Balance of Shares held by Agent
Beneficial owner code: i.e., male, female, joint tenant,
etc.
Dividend code (reinvestment)
Number of Shares held in certificate form
B. OTHER DAILY ACTIVITY
Answer written inquiries relating to Shareholder accounts (matters
relating to portfolio management, distribution of Shares and
other management policy questions will be referred to the Fund).
Process additional payments into established Shareholder accounts in
accordance with Written Instruction from the Agent.
Upon receipt of proper instructions and all required
documentation, process requests for repurchase of Shares.
Identify redemption requests made with respect to accounts in which
Shares have been purchased within an agreed-upon period of time for
determining whether good funds have been collected with respect to such
purchase and process as agreed by the Agent in accordance with written
instructions set forth by the Fund.
<PAGE>18
Examine and process all transfers of Shares, ensuring that all
transfer requirements and legal documents have been supplied.
Issue and mail replacement checks.
Open new accounts and maintain records of exchanges between
accounts
C. DIVIDEND ACTIVITY
Calculate and process Share dividends and distributions as
instructed by the Fund.
Compute, prepare and mail all necessary reports to Shareholders
or various authorities as requested by the Fund. Report to the Fund
reinvestment plan share purchases and determination of the
reinvestment price.
D. MEETINGS OF SHAREHOLDERS
Cause to be mailed proxy and related material for all meetings of
Shareholders. Tabulate returned proxies (proxies must be adaptable to
mechanical equipment of the Agent or its agents) and supply daily
reports when sufficient proxies have been received.
Prepare and submit to the Fund an Affidavit of Mailing.
At the time of the meeting, furnish a certified list of Shareholders,
hard copy, microfilm or microfiche and, if requested by the Fund,
Inspection of Election.
E. PERIODIC ACTIVITIES
Cause to be mailed reports, Prospectuses, and any other enclosures
requested by the Fund (material must be adaptable to mechanical
equipment of Agent or its agents).
<PAGE>19
Receive all notices issued by the Fund with respect to the Preferred
Shares in accordance with and pursuant to the Articles of
Incorporation and the Indenture and perform such other specific
duties as are set forth in the Articles of Incorporation including
a giving of notice of a special meeting and notice of redemption in
the circumstances and otherwise in accordance with all relevant
provisions of the Articles of Incorporation.
<PAGE>1
FORM OF
SUB-TRANSFER AGENCY AGREEMENT
AGREEMENT made as of the ____ day of _______,1996 by and between Smith Barney
Concert Series Inc. (the "Fund") and PFS Shareholders Services (the
"Sub-Transfer Agent").
WITNESSETH:
WHEREAS, the Fund desires that Sub-Transfer Agent be retained to perform
certain recordkeeping and accounting services and functions with respect to
transactions in Fund's Class A and Class B shares ("Shares") made by
shareholders of the Fund (the "Shareholders") when the Sub- Transfer Agent
maintains with the Fund's transfer agent ("Transfer Agent") a single
master shareholder account with respect to the Shareholders; and
WHEREAS, Sub-Transfer Agent desires to provide such services on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the following premises and mutual
covenants, the parties agree as follows:
1. Services Provided by Sub-Transfer Agent
When and to the extent requested by the Fund, Sub-Transfer Agent agrees to
perform recordkeeping and accounting services and functions with respect to
transactions in Shares made by the Shareholders when the Sub-Transfer Agent
maintains with the Transfer Agent a single master shareholder account. To
the extent requested, Sub-Transfer will provide the following services:
A. Maintain separate records for each Shareholder reflecting Shares
purchased, redeemed and exchanged on behalf of such Shareholder and
outstanding balances of Shares owned by or for the benefit of such
Shareholder.
B. Prepare and transmit to Shareholders periodic account statements
indicating the number of Shares of the Fund owned by or for the
benefit of Shareholders and purchases, redemptions and exchanges made
on behalf of Shareholders.
C. Transmit to Shareholders copies of proxy materials, periodic reports
and other materials relating to the Fund.
<PAGE>2
D. With respect to each Shareholder, aggregate all purchase,
redemption and exchange orders made by or on behalf of the
Shareholders and transmit instructions based on such aggregate
orders ("Instructions") to the Transfer Agent for acceptance.
E. Transmit to the Shareholders confirmations of transactions made in
accordance with Instructions.
F. Provide to the Fund, the Transfer Agent and/or other parties
designated by them such other information relating to transactions
in and holdings of Shares by or on behalf of the Shareholders as is
reasonably requested.
G. Arrange for the delivery to the Transfer Agent of appropriate
documentation and, in the case of purchase orders, payment, in
connection with each aggregate order transmitted to the Transfer Agent.
2. Appointment as Agent for Limited Purpose Sub-Transfer Agent shall be deemed
to be agent of the Fund for the sole and limited purpose of receiving purchase,
redemption and exchange orders from Shareholders and transmitting corresponding
Instructions to the Transfer Agent. Except as provided specifically herein,
neither Sub-Transfer Agent nor any person to which Sub-Transfer Agent may
delegate any of its duties hereunder shall be or hold itself out as an agent of
the Transfer Agent or the Fund.
3. Delegation by Sub-Transfer Agent With respect to any Shareholder,
Sub-Transfer Agent may delegate some or all of its duties under this Agreement
to other parties which after reasonable inquiry Sub-Transfer Agent deems to be
competent to assume such duties. In the event of any such delegation,
Sub-Transfer Agent shall enter into a written agreement with the delegatee in
which the delegatee will, among other things:
A. agree to forward Instructions to the Transfer Agent within such
time periods as are specified by the Transfer Agent, the Fund's
prospectus and applicable law and regulation; and
B. represent and warrant that it is duly registered as required under
all federal and state securities laws.
4. Records and Reporting
Sub-Transfer Agent will maintain and preserve all records as required by law in
connection with its provision of services under this Agreement. Upon the
reasonable request of the Fund or the Transfer Agent, Sub-Transfer Agent will
provide copies of: historical records relating to transactions involving the
Fund and Shareholders; written communications regarding the Fund to or from
Shareholders; and other materials relating to the provision of services by Sub-
<PAGE>3
Transfer under this Agreement. Sub-Transfer Agent will comply with any
reasonable request for such information and documents made by the board of
directors of the Fund or any governmental body or self-regulatory organization.
Sub- Transfer Agent agrees that it will permit the Fund, the Transfer Agent or
their representatives to have reasonable access to its personnel and records in
order to facilitate the monitoring of the quality of the services provided by
Sub-Transfer Agent. Notwithstanding anything herein to the contrary,
Sub-Transfer Agent shall not be required to provide the names and addresses of
Shareholders to the Fund or the Transfer Agent, unless applicable law or
regulation otherwise requires.
5. Sub-Transfer Agent's Ability to Provide Services Sub-Transfer Agent agrees to
notify the Fund promptly if for any reason it is unable to perform its
obligations under this Agreement.
6.Compensation
A. In consideration of performance of the services by Sub-
Transfer Agent hereunder and the costs it will incur in providing
those services, the Fund agrees to reimburse Sub-Transfer for
its costs (including payments to delegatees) in amounts that do
not exceed those indicated in the maximum reimbursement schedule
attached as Schedule A hereto. With respect to any Shareholder,
to the extent Sub-Transfer Agent delegates any obligations
hereunder to a third party, Sub-Transfer Agent will negotiate in
good faith with such third party delegatee regarding the fees to be
paid to the delegatee. Sub-Transfer Agent, and not the Fund,
will be solely responsible for compensating such a delegatee. If
as a result of its fee negotiations with such a delegatee Sub-
Transfer Agent is required to pay the delegatee less than would be the
case if Exhibit A were the delegatee's fee schedule, Sub-Transfer
Agent will reduce the amount of compensation it receives from the
Fund hereunder by the amount of such differential.
B. The Fund agree to reimburse Sub-Transfer Agent or its delegatees
for their reasonable out-of-pocket costs incurred in connection
with mailings to Shareholders of materials as described in Paragraph 1
hereto.
C. Sub-Transfer Agent will permit the Fund or its representatives
(including counsel and independent accountants) with reasonable
access to its records to enable the Fund to verify that Sub-Transfer
Agent's charges to the Fund hereunder comply with the provisions of
this Agreement. Such access shall include, but not be limited to, up
<PAGE>4
to four on-site inspections of Sub-Transfer Agent's records each
year.
7. Indemnification
Sub-Transfer Agent shall indemnify and hold harmless Fund from and against any
and all losses and liabilities that any one or more of them may incur, including
without limitation reasonable attorneys' fees, expenses and costs arising out of
or related to the performance or non-performance of Sub-Transfer Agent or any of
its delegatees of its responsibilities under this Agreement; excluding, however,
any such claims, suits, loss, damage or costs caused by, contributed to or
arising from any noncompliance by the Fund with its obligations under this
Agreement, as to which the Fund shall indemnify, hold harmless and defend
Sub-Transfer Agent on the same basis as set forth above.
8. Termination
This Agreement may be terminated at any time by Sub-Transfer Agent or the Fund
upon 30 days written notice. The provisions of paragraphs 4 and 7 shall continue
in full force and effect after termination of this Agreement.
9. Addition of Funds
In addition to the Fund, any other mutual fund sponsored by Smith Barney Inc. or
its affiliates may become a party to this Agreement by having this Agreement
executed on its behalf.
10. Miscellaneous
This Agreement represents the entire agreement between the parties with regard
to the matters described herein, and may not be modified or amended except by
written instrument executed by all parties. This Agreement may not be assigned
by any party hereto without the prior written consent of the other parties. This
Agreement is made and shall be construed under the laws of the State of New
York. This Agreement supersedes all previous agreements and understandings
between the parties with respect to its subject matter. If any provision of the
Agreement shall be held or made invalid by a statute, rule, regulation, decision
of a tribunal or otherwise, the remainder of the Agreement shall not be affected
thereby. No Fund shall be responsible for the liabilities of any other Fund
hereunder.
<PAGE>5
IN WITNESS HEREOF, the parties hereto have executed and delivered this Agreement
as of the date first above written.
PFS SHAREHOLDER SERVICES
By:
Title:
SMITH BARNEY CONCERT SERIES INC.
By:
Title:
<PAGE>1
[LETTERHEAD OF WILLKIE FARR & GALLAGHER]
January 22, 1996
Smith Barney Concert Series Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
We have acted as counsel to Smith Barney Concert Series Inc. (the "Company"),
a corporation organized under the laws of the State of Maryland, in connection
with the preparation and filing with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended, of a Registration Statement on Form N-1A (the
"Registration Statement") relating to the offer and sale of an indefinite
number of shares (the "Shares") of the Company's Class A Common Stock, Class B
Common Stock, Class C Common Stock and Class Y Common Stock of each of the
Fund's High Growth Portfolio, Growth Portfolio, Balanced Portfolio,
Conservative Portfolio and Income Portfolio, par value $.001 per share (the
"Common Stock").
We have examined copies of the Company's Charter, as amended, and Restated
By-Laws, Fund's prospectuses and statement of additional information (the
"Statement of Additional Information") included in the Registration Statement,
all resolutions adopted to date by the Company's Board of Directors (the
"Board") and other records that we have deemed necessary for the purpose of
rendering the opinions expressed below. We have also examined such other
documents, papers, statutes and authorities as we have deemed necessary to
form a basis for those opinions, including a certificate of the Maryland State
Department of Assessments and Taxation to the effect that the Company is duly
incorporated and existing under the laws of the State of Maryland and is in
good standing and duly authorized to transact business in the State of
Maryland.
In our examination of the materials described above, we have assumed the
genuineness of all signatures and the conformity to original documents of all
copies submitted to us. As to various questions of fact material to our
opinions, we have relied on statements and certificates of officers and
representatives of the Company and others.
Based on the foregoing, we are of the opinion that:
(1) The Company is duly organized and validly existing as a
corporation in good standing under the laws of the State of
Maryland.
<PAGE>2
Smith Barney Concert Series Inc.
January 22, 1996
Page 2
(2) The 8,772 presently issued and outstanding shares
of the High Growth Portfolio of the Company have been
validly and legally issued and are fully paid and
nonassessable.
(3) The Shares to be offered for sale pursuant to the
Registration Statement are, to the extent of the respective
number of shares of each Class of each Portfolio authorized
to be issued by the Company in its Charter, duly authorized
and, when sold, issued and paid for as contemplated by the
Registration Statement will have been validly and legally
issued and will be fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the
Statement of Additional Information and to the filing of this opinion as an
exhibit to any application made by or on behalf of the Company or any
distributor or dealer in connection with the registration or qualification of
the Company or the Shares under the securities laws of any state or other
jurisdiction.
We are members of the Bar of the State of New York only and do not opine as to
the laws of any jurisdiction other than the laws of the State of New York and
the laws of the United States, and the opinions set forth above are,
accordingly, limited to the laws of those jurisdictions. As to matters
involving the application of the laws of the State of Maryland, we have relied
on the opinion of Messrs. Venable, Baetjer and Howard, LLP, appended to this
letter.
Very truly yours,
/s/ Willkie Farr & Gallagher
<PAGE>1
[LETTERHEAD OF VENABLE, BAETJER AND HOWARD, LLP]
January 22, 1996
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022-4677
Re: Smith Barney Concert Series Inc.
Ladies and Gentlemen:
We have acted as special Maryland counsel for Smith Barney
Concert Series Inc., a Maryland corporation (the "Fund"), in connection with
the organization of the Fund and the issuance of shares of its Class A Common
Stock, Class B Common Stock, Class C Common Stock and Class Y Common Stock
(each a "Class") of each of the Fund's High Growth Portfolio, Growth
Portfolio, Balanced Portfolio, Conservative Portfolio and Income Portfolio
(each a "Portfolio"), par value $.001 per share (collectively the "Shares").
As special Maryland counsel for the Fund, we are familiar
with its Charter and Bylaws. We have examined the prospectuses included in
its Registration Statement on Form N-1A, File Nos. 33-64457; 811-7435 (the
"Registration Statement"), substantially in the form in which it is to become
effective (the "Prospectus"). We have further examined and relied upon a
certificate of the Maryland State Department of Assessments and Taxation to
the effect that the Fund is duly incorporated and existing under the laws of
the State of Maryland and is in good standing and duly authorized to transact
business in the State of Maryland.
We have also examined and relied upon such corporate records
of the Fund and other documents and certificates with respect to factual
matters as we have deemed necessary to render the opinion expressed herein.
We have assumed, without independent verification, the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity with originals of all documents submitted to us as copies.
Based on such examination, we are of the opinion and so
advise you that:
<PAGE>2
Willkie Farr & Gallagher
January 22, 1996
Page 2
1. The Fund is duly organized and validly existing as
a corporation in good standing under the laws of
the State of Maryland.
2. The 8,772 presently issued and outstanding shares
of the High Growth Portfolio of the Fund have been
validly and legally issued and are fully paid and
nonassessable.
3. The Shares of the Fund to be offered for sale
pursuant to the Prospectus are, to the extent of
the respective number of Shares of each Class of
each Portfolio authorized to be issued by the Fund
in its Charter, duly authorized and, when sold,
issued and paid for as contemplated by the
Registration Statement, will have been validly and
legally issued and will be fully paid and
nonassessable under the laws of the State of
Maryland.
This letter expresses our opinion with respect to the
Maryland General Corporation Law governing matters such as due organization
and the authorization and issuance of stock. It does not extend to the
securities or "blue sky" laws of Maryland, to federal securities laws or to
other laws.
You may rely upon our foregoing opinion in rendering your
opinion to the Fund that is to be filed as an exhibit to the Registration
Statement. We consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Venable, Baetjer and Howard, LLP
<PAGE>1
INDEPENDENT AUDITORS' CONSENT
The Shareholder and Board of Trustees of
Smith Barney Concert Series Inc.:
We consent to the use of our report dated January 22, 1996 with respect to
the High Growth Portfolio of Smith Barney Concert Series Inc. incuded in
this Registration Statement on Form N-1A and to the reference to our firm
under the heading "Counsel and Auditors" in the Statement of Additional
Information.
KPMG PEAT MARWICK LLP
New York, New York
January 22, 1996
<PAGE>1
SMITH BARNEY CONCERT SERIES INC.
FORM OF PURCHASE AGREEMENT
Smith Barney Concert Series Inc. (the "Fund"), a corporation
organized under the laws of the State of Maryland, and Smith Barney Inc.
("Smith Barney") hereby agree as follows:
1. The Fund offers Smith Barney and Smith Barney hereby agrees to
purchase the number and amount of shares shown on the Schedule attached to
this Agreement of the Aggressive Portfolio (High Growth Portfolio), the Growth
Portfolio, the Traditional Portfolio (Conservative Portfolio), the Balanced
Portfolio and the Income Portfolio, each a series of the Fund with four
classes of shares, each having a par value of $.001 per share (the "Shares")
at a price of $11.40 per Share (the Shares of Class A of Aggressive
Portfolio (High Growth Portfolio) being "Initial Shares"). Smith Barney
hereby acknowledges receipt of certificates representing the Initial Shares
and the Fund hereby acknowledges receipt from Smith Barney of $100,000 in
full payment for the Initial Shares. Shares other than the Initial Shares may
be purchased subsequent to payment for the Initial Shares.
2. Smith Barney represents and warrants to the Fund that the
Initial Shares are being acquired for investment purposes and not for the
purpose of distributing them.
3. Smith Barney agrees that if any holder of the Initial Shares
redeems any Initial Share in the Fund before five years after the date upon
which the Fund commences its investment activities, the redemption proceeds
will be reduced by the amount of unamortized organizational expenses, in the
same proportion as the number of Initial Shares being redeemed bears to the
number
<PAGE>2
of Initial Shares outstanding at the time of redemption. The parties hereby
acknowledge that any Shares acquired by Smith Barney other than the Initial
Shares will not be acquired to fulfill the requirements of Section 14 of the
Investment Company Act of 1940, as amended, and if redeemed, their redemption
proceeds will not be subject to reduction based on the unamortized
organizational expenses of the Fund.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the __ day of ________, 1996.
SMITH BARNEY CONCERT SERIES INC.
By:
Name:
Title:
ATTEST:
SMITH BARNEY INC.
By:
Name:
Title:
ATTEST:
<PAGE>3
Schedule
Portfolio Amount of Shares Price Per Share Total
- --------- ---------------- --------------- -----
High Growth Portfolio
Class A 8,772 $11.40 $ 100,000
Class B 1 $11.40 11.40
Class C 1 $11.40 11.40
Class Y 1 $11.40 11.40
Growth Portfolio
Class A 1 $11.40 11.40
Class B 1 $11.40 11.40
Class C 1 $11.40 11.40
Class Y 1 $11.40 11.40
Balanced Portfolio
Class A 1 $11.40 11.40
Class B 1 $11.40 11.40
Class C 1 $11.40 11.40
Class Y 1 $11.40 11.40
Conservative Portfolio
Class A 1 $11.40 11.40
Class B 1 $11.40 11.40
Class C 1 $11.40 11.40
Class Y 1 $11.40 11.40
Income Portfolio
Class A 1 $11.40 11.40
Class B 1 $11.40 11.40
Class C 1 $11.40 11.40
Class Y 1 $11.40 11.40
_______ ________
Total $ 8,791 $100,217
<PAGE>1
SERVICES AND DISTRIBUTION PLAN
Smith Barney Concert Series Inc.
This Services and Distribution Plan (the "Plan") is adopted in accordance with
Rule 12b-1 (the "Rule") under the Investment Company Act of 1940, as amended
(the "1940 Act"), by Smith Barney Concert Series Inc., a corporation organized
under the laws of the State of Maryland (the "Fund"), subject to the following
terms and conditions:
Section 1. Annual Fee.
(a) Service Fee for Class A shares. The Fund will pay to the distributor of its
shares, Smith Barney Inc. and PFS Distributors, Inc., (each a "Distributor"), a
service fee under the Plan at the annual rate of 0.25% of the average daily net
assets of the Fund attributable to the Class A shares (the "Class A Service
Fee") sold through such Distributor.
(b) Service Fee for Class B shares. The Fund will pay to a Distributor a service
fee under the Plan at the annual rate of 0.25% of the average daily net assets
of the Fund attributable to the Class B shares (the "Class B Service Fee").
(c) Service Fee for Class C shares. The Fund will pay to a Distributor a service
fee under the Plan at the annual rate of 0.25% of the average daily net assets
of the Fund attributable to the Class C shares (the "Class C Service Fee," and
collectively with the Class A Service Fee and the Class B Service Fee, the
"Service Fees").
(d) Distribution Fee for Class B shares. In addition to the Class B Service Fee,
the Fund will pay the Distributor a distribution fee under the Plan at the
annual rate of 0.75% of the average daily net assets of the Fund attributable to
the Class B shares attributable to High Growth Portfolio, Growth Portfolio and
Balanced Portfolio and 0.50% of the average daily net assets of the Fund
attributable to the Class B shares of the Conservative Portfolio and Income
Portfolio (the "Class B Distribution Fee").
(e) Distribution Fee for Class C shares. In addition to the Class C Service Fee,
the Fund will pay the Distributor a distribution fee under the Plan at the
annual rate of 0.75% of the average daily net assets of the Fund attributable to
the Class C shares of the High Growth Portfolio, Growth Portfolio and Balanced
Portfolio and 0.45% of the average daily net assets of the Fund attributable to
the Class C shares of the Conservative Portfolio and Income Portfolio (the
"Class C Distribution Fee," and collectively with the Class B Distribution Fee,
the "Distribution Fees").
(f) Payment of Fees. The Service Fees and Distribution Fees will be calculated
daily and paid monthly by the Fund with respect to the foregoing classes of the
Fund's shares (each a "Class" and together the "Classes") at the annual rates
indicated above.
Section 2. Expenses Covered by the Plan.
With respect to expenses incurred by each Class, its respective Service Fees
and/or Distribution Fees may be used for: (a) costs of printing and distributing
the Fund's prospectus, statement of additional information and reports to
prospective investors in the Fund; (b) costs involved in preparing, printing and
distributing sales literature pertaining to the Fund; (c) an allocation of
overhead and other branch office distribution-related expenses of the
Distributor; (d) payments made to, and expenses of, Smith Barney Financial
Consultants and Investment Representatives of PFS Distributors, Inc. and other
persons who provide support services in connection with the distribution of the
Fund's shares (collectively, "Financial Consultants"), including but not limited
<PAGE>2
to, office space and equipment, telephone facilities, answering routine inquires
regarding the Fund, processing shareholder transactions and providing any other
shareholder services not otherwise provided by the Fund's transfer agent; and
(e) accruals for interest on the amount of the foregoing expenses that exceed
the Distribution Fee and, in the case of Class B shares, the contingent deferred
sales charge received by the Distributor; provided, however, that the
Distribution Fees may be used by the Distributor only to cover expenses
primarily intended to result in the sale of the Fund's Class B and C shares,
including without limitation, payments to Distributor's Financial Consultants at
the time of the sale of Class B and C shares. In addition, Service Fees are
intended to be used by a Distributor primarily to pay its Financial Consultants
for servicing shareholder accounts, including a continuing fee to each such
Financial Consultant, which fee shall begin to accrue immediately after the sale
of such shares.
Section 3. Approval of Shareholders.
The Plan will not take effect, and no fees will be payable in accordance with
Section 1 of the Plan, with respect to a Class until the Plan has been approved
by a vote of at least a majority of the outstanding voting securities of the
Class. The Plan will be deemed to have been approved with respect to a Class so
long as a majority of the outstanding voting securities of the Class votes for
the approval of the Plan, notwithstanding that: (a) the Plan has not been
approved by a majority of the outstanding voting securities of any other Class,
or (b) the Plan has not been approved by a majority of the outstanding voting
securities of the Fund.
Section 4. Approval of Directors.
Neither the Plan nor any related agreements will take effect until approved by a
majority of both (a) the full Board of Directors of the Fund and (b) those
Directors who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related to it (the "Qualified Directors"), cast in person at a meeting called
for the purpose of voting on the Plan and the related agreements.
Section 5. Continuance of the Plan.
The Plan will continue in effect with respect to each Class until , 199 ,
and thereafter for successive twelve-month periods with respect to each Class;
provided, however, that such continuance is specifically approved at least
annually by the Directors of the Fund and by a majority of the Qualified
Directors.
Section 6. Termination.
The Plan may be terminated at any time with respect to a Class (i) by the Fund
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of such Class or (ii) by a vote of the Qualified Directors.
The Plan may remain in effect with respect to a particular Class even if the
Plan has been terminated in accordance with this Section 6 with respect to any
other Class.
Section 7. Amendments.
The Plan may not be amended with respect to any Class so as to increase
materially the amounts of the fees described in Section 1 above, unless the
amendment is approved by a vote of the holders of at least a majority of the
outstanding voting securities of that Class. No material amendment to the Plan
may be made unless approved by the Fund's Board of Directors in the manner
described in Section 4 above.
<PAGE>3
Section 8. Selection of Certain Directors.
While the Plan is in effect, the selection and nomination of the Fund's
Qualified Directors will be committed to the discretion of the Qualified
Directors then in office.
Section 9. Written Reports
In each year during which the Plan remains in effect, a person authorized to
direct the disposition of moneys paid or payable by the Fund pursuant to the
Plan or any related agreement will prepare and furnish to the Fund's Board of
Directors and the Board will review, at least quarterly, written reports,
complying with the requirements of the Rule, which sets out the amounts expended
under the Plan and the purposes for which those expenditures were made.
Section 10. Preservation of Materials.
The Fund will preserve copies of the Plan, any agreement relating to the Plan
and any report made pursuant to Section 9 above, for a period of not less than
six years (the first two years in an easily accessible place) from the date of
the Plan, agreement or report.
Section 11. Meanings of Certain Terms.
As used in the Plan, the terms "interested person" and "majority of the
outstanding voting securities" will be deemed to have the same meaning that
those terms have under the 1940 Act by the Securities and Exchange Commission.
IN WITNESS WHEREOF, the Fund executes the Plan as of , 1996.
SMITH BARNEY CONCERT SERIES INC.
By:
Heath B. McLendon
Chairman of the Board
<PAGE>1
Rule 18f-3 (d) Multiple Class Plan
for Smith Barney Mutual Funds
Introduction
This plan (the "Plan") is adopted pursuant to Rule 18f-3 (d) of the
Investment Company Act of 1940, as amended (the "1940 Act"). Shares of the
Smith Barney Mutual Funds listed on Schedule A, as may be from time to time
amended (the "Funds" and each a "Fund") are distributed pursuant to a
system (the "Multiple Class System") in which each class of shares (a "Class")
of a Fund represents a pro rata interest in the same portfolio of
investments of the Fund and differs only to the extent outlined below.
I. Distribution Arrangements and Service Fees
One or more Classes of shares of the Funds are offered for purchase by
investors with the following sales load structure. In addition, pursuant
to Rule 12b-1 under the 1940 Act (the "Rule"), the Funds have each
adopted a plan (the "Services and Distribution Plan") under which shares of
the Classes are subject to the services and distribution fees described below.
1. Class A Shares
Class A shares are offered with a front-end sales load and under
the Services and Distribution Plan are subject to a service fee of up to
0.25% of average daily net assets. In addition, the Funds are permitted to
assess a contingent deferred sales charge ("CDSC") on certain redemptions
of Class A shares sold pursuant to a complete waiver of front-end sales
loads applicable to large purchases, if the shares are redeemed within one
year of the date of purchase. This waiver applies to sales of Class A shares
where the amount of purchase is equal to or exceeds $500,000 although this
amount may be changed in the future.
2. Class B Shares
Class B shares are offered without a front-end sales load, but
are subject to a five-year declining CDSC and under the Services and
Distribution Plan are subject to a service fee at an annual rate of up to
0.25% of average daily net assets and a distribution fee at an annual rate
of up to 0.75% of average daily net assets.
3. Class C Shares
Class C shares are offered without a front-end load, but are
subject to a one-year CDSC and under the Services and Distribution Plan
are subject to a service fee at an annual rate of up to 0.25% of average
daily net assets and a distribution fee at an annual rate of up to 0.75% of
average daily net assets. Unlike Class B shares, Class C shares do not have
the conversion feature as discussed below and accordingly, these shares are
subject to a distribution fee for an indefinite period of time. The Funds
reserve the right to impose these fees at such higher rates as may be
determined.
<PAGE>2
4. Class Y Shares
Class Y shares are offered without imposition of either a
sales charge, a service fee or distribution fee for investments where the
amount of purchase is equal to or exceeds $5 million.
5. Class Z Shares
Class Z shares are offered without imposition of either a
sales charge or a service or distribution fee for purchase (i) by employee
benefit and retirement plans of Smith Barney and its affiliates, (ii) by
certain unit investment trusts sponsored by Smith Barney and its affiliates,
and (iii) although not currently authorized by the governing boards of the
Funds, when and if authorized, (x) by employees of Smith Barney and its
affiliates and (y) by directors, general partners or trustees of any
investment company for which Smith Barney serves as a distributor and, for
each of (x) and (y), their spouses and minor children.
6. Additional Classes of Shares
The Boards of Directors and Trustees of the Funds have the
authority to create additional classes, or change existing Classes, from time
to time, in accordance with Rule 18f-3 of the 1940 Act.
II. Expense Allocations
Under the Multiple Class System, all expenses incurred by a Fund are
allocated among the various Classes of shares based on the net assets
of the Fund attributable to each Class, except that each Class's net
assets value and expenses reflect the expenses associated with that
Class under the Fund's Services and Distribution Plan, including any costs
associated with obtaining shareholder approval of the Services and
Distribution Plan (or an amendment thereto) and any expenses specific to
that Class. Such expenses are limited to the following:
(i) transfer agency fees as identified by the transfer agent as being
attributable to a specific Class;
(ii) printing and postage expenses related to preparing and
distributing materials such as shareholder reports, prospectuses
and proxies to current shareholders;
(iii) Blue Sky registration fees incurred by a Class of shares;
(iv) Securities and Exchange Commission registration fees incurred by a
Class of shares;
(v) the expense of administrative personnel and services as required
to support the shareholders of a specific Class;
<PAGE>3
(vi) litigation or other legal expenses relating solely to one Class
of shares; and
(vii) fees of members of the governing boards of the funds incurred
as a result of issues relating to one Class of shares.
Pursuant to the Multiple Class System, expenses of a Fund
allocated to a particular Class of shares of that Fund are borne on a pro
rata basis by each outstanding share of that Class.
III. Conversion Rights of Class B Shares
All Class B shares of each Fund will automatically convert to
Class A shares after a certain holding period, expected to be, in most
cases, approximately eight years but may be shorter. Upon the expiration of
the holding period, Class B shares (except those purchases through the
reinvestment of dividends and other distributions paid in respect of Class B
shares) will automatically convert to Class A shares of the Fund at the
relative net asset value of each of the Classes, and will, as a result,
thereafter be subject to the lower fee under the Services and Distribution
Plan. For purposes of calculating the holding period required for conversion,
newly created Class B shares issued after the date of implementation of the
Multiple Class System are deemed to have been issued on (i) the date on which
the issuance of the Class B shares occurred or (ii) for Class B shares
obtained through an exchange, or a series of exchanges, the date on which the
issuance of the original Class B shares occurred.
Shares purchased through the reinvestment of dividends and other
distributions paid in respect of Class B shares are also Class B shares.
However, for purposes of conversion to Class A, all Class B shares in a
shareholder's Fund account that were purchased through the
reinvestment of dividends and other distributions paid in respect of
Class B shares (and that have not converted to Class A shares as provided in
the following sentence) are considered to be held in a separate
sub-account. Each time any Class B shares in the shareholder's Fund account
(other than those in the sub-account referred to in the preceding sentence)
convert to Class A, a pro rata portion of the Class B shares then in the
sub-account also converts to Class A. The portion is determined by the ratio
that the shareholder's Class B shares converting to Class A bears to
the shareholder's total Class B shares not acquired through
dividends and distributions.
The conversion of Class B shares to Class A shares is subject to the
continuing availability of a ruling of the Internal Revenue Service that
payment of different dividends on Class A and Class B shares does not result
in the Fund's dividends or distributions constituting "preferential
dividends" under the Internal Revenue Code of 1986, as amended (the
"Code"), and the continuing availability of an opinion of counsel to the
effect that the conversion of shares does not constitute a taxable event
under the Code. The conversion of Class B shares to Class A shares may be
suspended if this opinion is no longer available, In the event that
conversion of Class B shares of not occur, Class B shares would continue to
be subject to the distribution fee and any incrementally higher
transfer agency costs attending the Class B shares for an indefinite period.
<PAGE>4
IV. Exchange Privileges
Shareholders of a Fund may exchange their shares at net asset value
for shares of the same Class in certain other of the Smith Barney Mutual Funds
as set forth in the prospectuses for such Fund. Class A shareholders who
wish to exchange all or part of their shares for Class A shares of a Fund
sold subject to a sales charge equal to or lower that that assessed with
respect to the shares of the Fund being exchanged may do so without
paying a sales charge. Class A shareholders of a Fund who wish to
exchange all or part of their shares for Class A shares of a Fund sold
subject to a sales charge higher than that assessed with respect to the
shares of the Fund being exchanged are charged the appropriate "sales charge
differential." Funds only permit exchanges into shares of money market funds
having a plan under the Rule if, as permitted by paragraph (b) (5) of Rule
11a-3 under the 1940 Act, either (i) the time period during which the
shares of the money market funds are held is included in the
calculations of the CDSC or (ii) the time period is not included but the
amount of the CDSC is reduced by the amount of any payments made under a
plan adopted pursuant to the Rule by the money market funds with respects to
those shares. Currently, the Funds include the time period during which
shares of the money market fund are held in the CDSC period. The exchange
privileges applicable to all Classes of shares must comply with Rule 11a-3
under the 1940 Act.
<PAGE>5
Smith Barney Sponsored Investment Companies
Operating under Rule 18f-3 - Schedule A
Smith Barney Adjustable Rate Government Income Fund
Smith Barney Aggressive Growth Fund Inc.
Smith Barney Appreciation Fund Inc.
Smith Barney Arizona Municipals Fund Inc.
Smith Barney California Municipals Fund
Smith Barney Concert Series Inc. -
Aggressive Portfolio
Growth Portfolio
Traditional Portfolio
Balanced Portfolio
Income Portfolio
Smith Barney Equity Funds -
Smith Barney Strategic Investors Fund
Smith Barney Growth and Income Fund
Smith Barney Fundamental Value Fund Inc.
Smith Barney Funds, Inc. -
Equity Income Portfolio
Income Return Account Portfolio
Short-Term U.S. Treasury Securities Portfolio
U.S. Government Securities Portfolio
Smith Barney Income Funds
Smith Barney Premium Total Return Fund
Smith Barney Convertible Fund
Smith Barney Diversified Strategic Income Fund
Smith Barney High Income Fund
Smith Barney Tax-Exempt Income Fund
Smith Barney Exchange Reserve Fund
Smith Barney Utilities Fund
Smith Barney Institutional Cash Management Fund Inc.
Cash Portfolio
Government Portfolio
Municipal Portfolio
Smith Barney Investment Funds Inc. -
Smith Barney Special Equities Fund
Smith Barney Government Securities Fund
Smith Barney Investment Grade Bond Fund
Smith Barney Growth Opportunity Fund
Smith Barney Managed Growth Fund
Smith Barney Investment Trust -
Smith Barney Intermediate Maturity California Municipals Fund
Smith Barney Intermediate Maturity New York Municipals Fund
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Smith Barney Investment Companies
Schedule A -Page Two
Smith Barney Managed Governments Fund Inc.
Smith Barney Managed Municipals Fund Inc.
Smith Barney Massachusetts Municipals Fund
Smith Barney Money Funds, Inc. -
Cash Portfolio
Government Portfolio
Retirement Portfolio
Smith Barney Municipal Money Market Fund, Inc.
Smith Barney Muni Funds -
California Limited Portfolio
California Money Market Portfolio
Florida Portfolio
Florida Limited Portfolio
Georgia Portfolio
Limited Term Portfolio
National Portfolio
New York Portfolio
New York Money Market Portfolio
Ohio Portfolio
Pennsylvania Portfolio
Smith Barney Natural Resources Fund Inc.
Smith Barney New Jersey Municipals Fund Inc.
Smith Barney Oregon Municipals Fund
Smith Barney Telecommunications Trust -
Smith Barney Telecommunications Growth Fund
Smith Barney World Funds, Inc. -
Emerging Markets Portfolio
European Portfolio
Global Government Bond Portfolio
International Equity Portfolio
International Balanced Portfolio
Pacific Portfolio
