Filed with the Securities and Exchange Commission on August
14, 1996
Securities Act File No. 33-64457
Investment Company Act File No. 811-7435
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 2 [ X]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 3 [X]
Smith Barney Concert Series Inc.
(Exact Name of Registrant as Specified in Charter)
388 Greenwich Street, New York, NY 10013
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 212-723-
9218
Christina T. Sydor, Esq.
Smith Barney Mutual Funds Management Inc.
388 Greenwich Street
New York, New York 10013
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as possible after this Post-Effective Amendment
becomes effective
It is proposed that this filing will become effective:
immediately upon filing pursuant to Rule 485(b)
on ______________ pursuant to Rule 485(b)
60 days after filing pursuant to Rule 485(a)
X 75 days after filing pursuant to Rule 485(a)(2)
on _________________ pursuant to Rule 485(a)
SMITH BARNEY CONCERT SERIES INC.
FORM N-1A
CROSS REFERENCE SHEET
Part A
Item No. Heading in the Prospectus
1. Cover Page Cover Page
2. Synopsis Prospectus Summary
3. Condensed Financial Not Applicable
Information
4. General Description of Cover Page; Prospectus
Registrant 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
6. Capital Stock and Other Prospectus Summary;
Securities Dividends, Distributions and
Taxes; Purchase of Shares;
Additional Information
7. Purchase of Securities Purchase of Shares; Valuation
Being Offered of Shares
8. Redemption or Repurchase Redemption of Shares; Minimum
Account Size
9. Legal Proceedings Not Applicable
<PAGE>4
Part B
Item No. Heading in Statement of
Additional Information
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and Not Applicable
History
13. Investment Objectives and Investment Objectives and
Policies Management Policies
14. Management of the Fund Management of the Concert
Series
15. Control Persons and Management of the Concert
Principal Holders of Series
Securities
16. Investment Advisory and Management of the Concert
Other Services Series; Additional Information
17. Brokerage Allocation and Not Applicable
Other Practices
18. Capital Stock and Other Additional Information
Securities
19. Purchase, Redemption and Purchase of Shares; Redemption
Pricing of of Shares; Valuation of Shares
Securities Being Offered
20. Tax Status Taxes (See in the Prospectus
"Dividends, Distributions and
Taxes")
21. Underwriters Not Applicable
22. Calculation of Performance Performance
Data
23. Financial Statements Financial Statements
<PAGE>4
PART A
The Prospectus for the High Growth, Growth, Balanced,
Conservative and Income Portfolios of Smith Barney Concert
Series Inc. (the "Fund") is incorporated by reference to
Part A of Post-Effective Amendment No. 1 to the Fund's
Registration Statement filed on August 7, 1996 (Accession
No. 91155-96-315).
The Prospectus for the Vintage High Growth, Vintage Growth,
Vintage Balanced, Vintage Conservative and Vintage Income
Portfolios of the Fund is filed herein.
Smith Barney Concert Series Inc.
PROSPECTUS
OCTOBER ,
1996
388 Greenwich Street
New York, New York 10013
(212) 723-9218
Smith Barney Concert Series Inc. (the "Concert Series" or
"Series") offers ten
professionally managed investment portfolios, five of which
are offered by this
Prospectus (each, a "Portfolio" and collectively, the
"Vintage Portfolios").
Each Portfolio seeks to achieve its objective by investing
in a number of other
Smith Barney Mutual Funds.
The Vintage High Growth Portfolio seeks capital
appreciation.
The Vintage Growth Portfolio seeks long-term growth of
capital.
The Vintage Balanced Portfolio seeks a balance of growth of
capital and
income.
The Vintage Conservative Portfolio seeks income and,
secondarily, long-term
growth of capital.
The Vintage Income Portfolio seeks high current income.
This Prospectus sets forth concisely certain information
about the Concert
Series and each of the Portfolios that prospective investors
will find helpful
in making an investment decision. Investors are encouraged
to read this Pro-
spectus carefully and retain it for future reference.
Shares of the Vintage Portfolios are offered ONLY to
insurance company sepa-
rate accounts (the "Separate Accounts"), which fund certain
variable annuity
and variable life insurance contracts (the "Contracts"). The
Separate Accounts
invest in shares of one or all of the Portfolios in
accordance with allocation
instructions received from Contract owners. Such allocation
rights are further
described in the accompanying Contract prospectus.
Shares of each Portfolio are offered to Separate Accounts
at their net asset
value, without a sales charge, next determined after receipt
of an order by an
insurance company. The offering of shares of a Portfolio may
be suspended from
time to time and the Series reserves the right to reject any
specific purchase
order.
THIS PROSPECTUS, WHICH SETS FORTH CONCISE INFORMATION ABOUT
THE CONCERT SERIES
THAT PROSPECTIVE INVESTORS SHOULD KNOW BEFORE INVESTING,
SHOULD BE READ AND
RETAINED FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL
INFORMATION, ALSO
REFERRED TO AS "PART B," DATED OCTOBER , 1996 IS HEREBY
INCORPORATED BY REFER-
ENCE INTO THIS PROSPECTUS AND IS AVAILABLE FROM THE CONCERT
SERIES, WITHOUT
CHARGE, BY WRITING TO THE CONCERT SERIES AT THE ABOVE
ADDRESS OR CALLING THE
TELEPHONE NUMBER LISTED ABOVE.
This Prospectus should be read in conjunction with the
prospectus for the
Contracts.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS
A CRIMINAL OFFENSE.
1
<PAGE>
Smith Barney Concert Series Inc.
TABLE OF CONTENTS
PROSPECTUS SUMMARY 3
- --------------------------------------------------
WHY INVEST IN THE CONCERT SERIES 4
- --------------------------------------------------
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES 4
- --------------------------------------------------
RISK FACTORS AND SPECIAL CONSIDERATIONS 6
- --------------------------------------------------
PORTFOLIO TURNOVER 7
- --------------------------------------------------
INVESTMENT RESTRICTIONS 7
- --------------------------------------------------
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS 7
- --------------------------------------------------
VALUATION OF SHARES 17
- --------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES 17
- --------------------------------------------------
TAXES 17
- --------------------------------------------------
PURCHASE OF SHARES 18
- --------------------------------------------------
REDEMPTION OF SHARES 18
- --------------------------------------------------
PERFORMANCE 18
- --------------------------------------------------
MANAGEMENT OF THE CONCERT SERIES 19
- --------------------------------------------------
SHARES OF THE CONCERT SERIES 20
- --------------------------------------------------
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.
- ------------------------------------------------------------
- --------------------
2
<PAGE>
Smith Barney Concert Series Inc.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by
detailed information
appearing elsewhere in this Prospectus and in the Statement
of Additional
Information. Cross references in this summary are to
headings in the Prospec-
tus. See "Table of Contents."
INVESTMENT OBJECTIVES The Concert Series is an open-end, non-
diversified man-
agement investment company that currently offers five
professionally managed
investment portfolios. The Vintage High Growth Portfolio
seeks to provide capi-
tal appreciation. The Vintage Growth Portfolio seeks to
provide long-term
growth of capital. The Vintage Balanced Portfolio seeks to
provide a balance of
growth of capital and income. The Vintage Conservative
Portfolio seeks to pro-
vide income and, secondarily, long-term growth of capital.
The Vintage 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 Vintage
Portfolios based on their
personal investment goals, risk tolerance and financial
circumstances. See "In-
vestment Objectives and Management Policies."
REDEMPTION OF SHARES Shares may be redeemed on each day the
New York Stock
Exchange, Inc. ("NYSE") is open for business. See
"Redemption of Shares."
MANAGEMENT OF EACH PORTFOLIO SBMFM serves as each
Portfolio's investment manag-
er. SBMFM is a wholly owned subsidiary of Smith Barney
Holdings Inc. ("Hold-
ings"). Holdings is a wholly owned subsidiary of Travelers
Group Inc. ("Travel-
ers"), a diversified financial services holding company
engaged, through its
subsidiaries, principally in four business segments:
Investment Services, Con-
sumer Finance Services, Life Insurance Services and Property
& Casualty Insur-
ance Services.
SBMFM serves as the investment adviser of each of the
Underlying Smith Barney
Funds (other than Smith Barney Premium Total Return Fund).
SBSA, a wholly owned
subsidiary of SBMFM, serves as investment adviser to Smith
Barney Premium Total
Return Fund. See "Management of the Concert Series."
VALUATION OF SHARES Net asset value of each Portfolio for
the prior day gener-
ally will be quoted daily in the financial section of most
newspapers and is
also available from a Smith Barney Financial Consultant. See
"Valuation of
Shares."
DIVIDENDS AND DISTRIBUTIONS The Concert Series intends to
pay dividends from
net investment income monthly on shares of the Vintage
Income Portfolio, quar-
terly on shares of the Vintage Conservative Portfolio and
the Vintage Balanced
Portfolio and annually on shares of the Vintage High Growth
Portfolio and the
Vintage 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 Port-
folio will be reinvested automatically, unless otherwise
specified by an
investor, in additional shares of the same Portfolio at
current net asset val-
ue. See "Dividends, Distributions and Taxes."
RISK FACTORS AND SPECIAL CONSIDERATIONS The assets of each
Portfolio are
invested in certain Underlying Smith Barney Funds, so each
Portfolio's invest-
ment performance is directly related to the investment
performance of the
Underlying Smith Barney Funds held. The ability of each
Portfolio to meet its
investment objective is directly related to the ability of
the Underlying Smith
Barney Funds held to meet their objectives as well as the
allocation among
those Underlying Smith Barney Funds by SBMFM. There can be
no assurance that
the investment objective of any Portfolio or any Underlying
Smith Barney Fund
will be achieved.
The value of the Underlying Smith Barney Funds'
investments, and thus the net
asset value of both those Underlying Smith Barney Funds' and
the Vintage Port-
folios' 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 Vintage Portfolios, see
"Investment Objectives
and Management Policies," "Description of the Underlying
Smith Barney Funds"
and the Appendix to this Prospectus.
3
<PAGE>
Smith Barney Concert Series Inc.
WHY INVEST IN THE CONCERT SERIES
The Vintage Portfolios are designed to meet the needs of
investors who prefer
to have their asset allocation decisions made by
professional money managers,
and appreciate the advantages of broad diversification.
The Concert Series will be managed so that each Portfolio
can serve as a com-
plete investment program or as a core part of a larger
portfolio. Each of the
Portfolios invests in a select group of Underlying Smith
Barney Funds suited to
the Portfolio's particular investment objective. The
allocation of assets among
Underlying Smith Barney Funds within each Portfolio is
determined by SBMFM
according to fundamental and quantitative analysis. Because
the assets will be
adjusted only periodically and only within pre-determined
ranges that will
attempt to ensure broad diversification, there should not be
any sudden large-
scale changes in the allocation of a Portfolio's investments
among Underlying
Smith Barney Funds. The Concert Series is not designed as a
market timing vehi-
cle, but rather as a simple and conservative approach to
helping investors meet
retirement and other long-term goals.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The Concert Series is an open-end, non-diversified,
management investment com-
pany that currently offers ten managed investment
portfolios. Each portfolio
seeks to achieve its investment objective by investing
within specified ranges
among Underlying Smith Barney Funds, as well as in
repurchase agreements. Ini-
tially, each portfolio will invest in the Underlying Smith
Barney Funds listed
below.
The investment manager for each of the Vintage Portfolios,
SBMFM, will allo-
cate investments for each Portfolio among Underlying Smith
Barney Funds based
on its outlook for the economy, financial markets and the
relative performance
of the Underlying Smith Barney Funds. The allocation among
the Underlying Smith
Barney Funds will be made within investment ranges
established by the Board of
Directors of the Concert Series which designate minimum and
maximum percentages
for each of the Underlying Smith Barney Funds.
The Vintage High Growth Portfolio's investment objective is
to seek capital
appreciation. The Vintage Growth Portfolio's investment
objective is to seek
long-term growth of capital. The Vintage Balanced
Portfolio's investment objec-
tive is to seek a balance of growth of capital and income.
The Vintage Conser-
vative Portfolio's investment objective is to seek income
and, secondarily,
long-term growth of capital. The Vintage Income Portfolio's
investment objec-
tive 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.
4
<PAGE>
Smith Barney Concert Series Inc.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES (CONTINUED)
In investing in Underlying Smith Barney Funds, the Vintage
Portfolios seek to
maintain different allocations between equity funds and
fixed income funds (in-
cluding money market funds) depending on a Portfolio's
investment objective.
Allocating investments between equity funds and fixed income
funds permits each
Portfolio to attempt to optimize performance consistent with
its investment
objective. The tables below illustrate the initial
equity/fixed income fund
allocation targets and ranges for each Portfolio:
Equity/Fixed Income Fund Range (Percent of Each
Portfolio's Net Assets)
TYPE OF FUND TARGET RANGE
- -----------------------------------------------
Vintage High Growth Portfolio
Equity 90% 80%-100%
Fixed Income 10% 0%- 20%
Vintage Growth Portfolio
Equity 70% 60%- 80%
Fixed Income 30% 20%- 40%
Vintage Balanced Portfolio
Equity 50% 40%- 60%
Fixed Income 50% 40%- 60%
Vintage Conservative Portfolio
Equity 30% 20%- 40%
Fixed Income 70% 60%- 80%
Vintage Income Portfolio
Equity 10% 0%- 20%
Fixed Income 90% 80%-100%
- -----------------------------------------------
The Vintage 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)
VINTAGE VINTAGE VINTAGE
VINTAGE VINTAGE
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 Portfolio -- 0-15% 5-20%
5-20% 5-30%
Smith Barney Income
Funds:
Smith Barney High Income
Fund 0-20% 5-20% 0-15%
0-20% 0-20%
Smith Barney Utilities
Fund -- 0-20% 5-20%
5-20% 0-15%
Smith Barney Premium
Total Return Fund -- -- 5-20%
5-25% 0-15%
Smith Barney Convertible
Fund -- -- 5-20%
5-15% 0-15%
Smith Barney Diversified
Strategic Income Fund -- -- 5-25%
10-30% 10-30%
Smith Barney Investment
Funds Inc.:
Smith Barney Managed
Growth Fund 0-20% 10-30% 0-15%
- -- --
Smith Barney Special
Equities Fund 10-30% 0-15% --
- -- --
Smith Barney Government
Securities Fund 0-15% 0-20% 0-20%
5-20% 5-20%
Smith Barney Investment
Grade Bond Fund 0-15% 0-15% --
- -- 0-15%
Smith Barney Managed
Governments Fund Inc. -- 0-15% 5-20%
5-25% 5-30%
Smith Barney Money Funds,
Inc.:
Cash Portfolio 0-20% 0-20% 0-25%
0-30% 0-30%
Smith Barney Natural
Resources Fund Inc. 0-10% 0-10% 0-10%
- -- --
Smith Barney World Funds,
Inc.:
International Equity
Portfolio 10-25% 5-20% 0-15%
0-10% 0-10%
Emerging Markets
Portfolio 0-20% -- --
- -- --
International Balanced
Portfolio 0-15% 0-10% 0-10%
0-10% 0-10%
Global Government Bond
Portfolio 0-15% 0-15% 0-15%
0-20% 0-20%
- ------------------------------------------------------------
- ------------------------
5
<PAGE>
Smith Barney Concert Series Inc.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES (CONTINUED)
The Underlying Smith Barney Funds have been selected to
represent a broad
spectrum of investment options for the Vintage 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 appro-
priate 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 per-
centage 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 Port-
folio of Smith Barney Money Funds, Inc. A reserve position
provides flexibility
in meeting redemptions, expenses and the timing of new
investments, and serves
as a short-term defense during periods of unusual
volatility.
For information about the investment objectives of each of
the Underlying
Smith Barney Funds and the investment techniques and the
risks involved in the
Underlying Smith Barney Funds, please refer to "Description
of the Underlying
Smith Barney Funds," the Appendix to this Prospectus, the
Statement of Addi-
tional Information and the prospectus for each of the
Underlying Smith Barney
Funds.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Non-Diversified Investment Company. The Concert Series is a
"non-diversified"
investment company for purposes of the Investment Company
Act of 1940, as
amended (the "1940 Act"), because it invests in the
securities of a limited
number of mutual funds. However, the Underlying Smith Barney
Funds themselves
are diversified investment companies (with the exception of
the Global Govern-
ment Bond Portfolio, the International Balanced Portfolio
and the Emerging Mar-
kets Portfolio). The Concert Series intends to qualify as a
diversified invest-
ment company for the purposes of Subchapter M of the Code.
Investing in Underlying Smith Barney Funds. The investments
of each Portfolio
are concentrated in the Underlying Smith Barney Funds, so
each Portfolio's
investment performance is directly related to the investment
performance of the
Underlying Smith Barney Funds held by it. The ability of
each Portfolio to meet
its investment objective is directly related to the ability
of the Underlying
Smith Barney Funds to meet their objectives as well as the
allocation among
those Underlying Smith Barney Funds by SBMFM. There can be
no assurance that
the investment objective of any Portfolio or any Underlying
Smith Barney Fund
will be achieved.
Affiliated Persons. SBMFM, the investment manager of the
Vintage Portfolios,
and the officers and directors of the Concert Series
presently serve as invest-
ment adviser, officers and directors, respectively, of many
of the Underlying
Smith Barney Funds. Therefore, conflicts may arise as these
persons fulfill
their fiduciary responsibilities to the Vintage Portfolios
and the Underlying
Smith Barney Funds.
Investment Practices of Underlying Smith Barney Funds. In
addition to their
principal investments, certain Underlying Smith Barney Funds
may invest a por-
tion of their assets in foreign securities; enter into
forward currency trans-
actions; lend their portfolio securities; enter into stock
index, interest rate
and currency futures contracts, and options on such
contracts; engage in
options transactions; make short sales; purchase zero coupon
bonds and payment-
in-kind bonds; purchase restricted and illiquid securities;
enter into forward
roll transactions; purchase securities on a when-issued or
delayed delivery
basis; enter into repurchase or reverse repurchase
agreements; borrow money;
and engage in various other investment practices.
High Yield Securities. Each of the Portfolios also may
invest in an Underlying
Smith Barney Fund that invests primarily in high yield, high
risk securities,
commonly referred to as junk bonds. As a result, the Vintage
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
Vintage 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 typi-
cally 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
6
<PAGE>
Smith Barney Concert Series Inc.
RISK FACTORS AND SPECIAL CONSIDERATIONS (CONTINUED)
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 infor-
mation on these investment policies and practices can be
found under "Descrip-
tion 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 Vintage High
Growth Portfolio may
invest in an Underlying Smith Barney Fund that concentrates
its investments in
the utilities industry. Under certain unusual circumstances,
this could result
in those Portfolios being indirectly concentrated in this
industry. If this
were to occur, the relevant Portfolios would consider
whether to maintain or
change their investment in that Underlying Smith Barney
Fund.
Market and Economic Factors. The Vintage Portfolios' share
prices and yields
will fluctuate in response to various market and economic
factors related to
both the stock and bond markets. All Vintage Portfolios may
invest in mutual
funds that in turn invest in international securities and
thus are subject to
additional risks of these investments, including changes in
foreign currency
exchange rates and political risk.
PORTFOLIO TURNOVER
Each Portfolio's turnover rate is not expected to exceed
25% annually. A Port-
folio may purchase or sell securities to: (a) accommodate
purchases and sales
of its shares; (b) change the percentages of its assets
invested in each of the
Underlying Smith Barney Funds in response to market
conditions; and (c) main-
tain or modify the allocation of its assets between equity
and fixed income
funds and among the Underlying Smith Barney Funds within the
percentage limits
described above.
The turnover rates of the Underlying Smith Barney Funds
have ranged from 16%
to 292% during their most recent fiscal years. There can be
no assurance that
the turnover rates of these funds will remain within this
range during subse-
quent fiscal years. Higher turnover rates may result in
higher expenses being
incurred by the Underlying Smith Barney Funds.
INVESTMENT RESTRICTIONS
In addition to the investment objectives of each Portfolio,
the Concert Series
has adopted restrictions with respect to each Portfolio that
may not be changed
without approval of a majority of the Portfolio's
outstanding shares. The fun-
damental investment restrictions imposed by the Concert
Series prohibit each
Portfolio from, among other things: (i) borrowing money
except from banks for
temporary or emergency purposes, including the meeting of
redemption requests
in an amount not exceeding 33 1/3% of the value of the
Portfolio's total assets
(including the amount borrowed) valued at market less
liabilities (not includ-
ing the amount borrowed) at the time the borrowing is made
and (ii) making
loans to others, except through the purchase of portfolio
securities consistent
with its investment objective and policies and through
entering into 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 Vin-
tage Portfolios invest may be more or less restrictive than
those adopted by
the Concert Series.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS
The following is a concise description of the investment
objectives and prac-
tices for each of the Underlying Smith Barney Funds in which
the Vintage Port-
folios 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.
7
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
EQUITY FUNDS The following Underlying Smith Barney Funds are
funds that invest
primarily in equity securities.
Smith Barney Aggressive Growth Fund Inc. seeks capital
appreciation by invest-
ing primarily in common stock of companies the Fund's
investment adviser
believes are experiencing, or have the potential to
experience, growth in earn-
ings that exceed the average earnings growth rate of
companies whose securities
are included in the Standard & Poor's Daily Price Index of
500 Common Stocks
(the "S&P 500"), a weighted index that measures the
aggregate change in market
value of 400 industrials, 60 transportation stocks and
utility companies and 40
financial issues. SBMFM focuses its stock selection for the
Fund on a diversi-
fied group of small- or medium-sized emerging growth
companies that have passed
their "start-up" phase and show positive earnings and the
prospect of achieving
significant profit gains in the two to three years after the
Fund acquires
their stocks. These companies generally may be expected to
benefit from new
technologies, techniques, products or services or cost-
reducing measures, and
may be affected by changes in management, capitalization or
asset deployment,
government regulations or other external circumstances.
Although SBMFM anticipates that the assets of the Fund
ordinarily will be
invested primarily in common stocks of U.S. companies, the
Fund may invest in
convertible securities, preferred stocks, securities of
foreign issuers, war-
rants and restricted securities. The Fund also is authorized
to borrow up to 33
1/3% of its total assets less liabilities for leveraging
purposes. Securities
of the kinds of companies in which the Fund invests may be
subject to signifi-
cant price fluctuation and above average risk.
Smith Barney Appreciation Fund Inc. seeks long-term
appreciation of sharehold-
ers' capital. The Fund attempts to achieve its investment
objective by invest-
ing primarily in equity securities (consisting of common
stocks, preferred
stocks, warrants, rights and securities convertible into
common stocks) that
are believed to afford attractive opportunities for
investment appreciation.
The core holdings of the Fund are blue chip companies that
are dominant in
their industries; however, at the same time, the Fund may
hold securities of
companies with prospects of sustained earnings growth and/or
companies with a
cyclical earnings record if it is felt these offer
attractive investment oppor-
tunities. Typically, the Fund invests in middle- and larger-
sized companies,
though it does invest in smaller companies whose securities
may reasonably be
expected to appreciate. The Fund's investments are spread
broadly among differ-
ent industries. The Fund may hold issues traded over-the-
counter as well as
those listed on one or more national securities exchanges,
and the Fund may
make investments in foreign securities although management
intends to limit
such investments to 10% of the Fund's assets.
Smith Barney Fundamental Value Fund Inc.'s investment
objective is long-term
capital growth. Current income is a secondary objective. The
Fund seeks to
achieve its primary objective by investing in a diversified
portfolio of common
stocks and common stock equivalents and, to a lesser extent,
in bonds and other
debt instruments. The Fund's investment emphasis is on
securities that are
undervalued in the marketplace and, accordingly, have above-
average potential
for capital growth. In general, the Fund invests in
securities of companies
that are temporarily unpopular among investors but which
SBMFM regards as pos-
sessing favorable prospects for earnings growth and/or
improvements in the
value of their assets and, consequently, as having a
reasonable likelihood of
experiencing a recovery in market price.
Smith Barney Special Equities Fund, an investment portfolio
of Smith Barney
Investment Funds Inc., seeks long-term capital appreciation
by investing in
equity securities (common stocks or securities that are
convertible into or
exchangeable for such stocks, including warrants) that SBMFM
believes to have
superior appreciation potential. The Fund invests primarily
in equity securi-
ties of secondary growth companies, generally not within the
S&P 500, as iden-
tified by SBMFM. These companies may not have reached a
fully mature stage of
earnings growth, since they may still be in the
developmental stage, or may be
older companies that appear to be entering a new stage of
more rapid earnings
progress due to factors such as management change or
development of new tech-
nology, products or markets. A significant number of these
companies may be in
technology areas, including health care related sectors, and
may have annual
sales of less than $300 million. The Fund may also choose to
invest in some
relatively unseasoned stocks, i.e., securities issued by
companies whose market
capitalization is under $100 million. Investing in smaller,
newer issuers gen-
erally involves greater risk than investing in larger, more
established
issuers.
Smith Barney Managed Growth Fund, an investment portfolio
of Smith Barney
Investment Funds Inc., has as its investment objective long
term growth of cap-
ital. The Fund attempts to achieve its objective by
investing primarily in
undervalued or out of favor common stock and other
securities, including debt
securities that are convertible into common stock and that
are currently price
depressed. Such securities might typically be valued at the
low end of their
52-week trading range. Although under normal circumstances
the Fund's portfolio
will primarily consist of these securities, the Fund may
also invest in pre-
ferred stocks and warrants when SBMFM perceives an
opportunity for capital
growth from such securities.
8
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
The Natural Resources Fund seeks long-term capital
appreciation by investing
primarily in "Natural Resource Investments." Natural
Resource Investments are
defined as equity and debt securities of issuers that: (1)
own or process nat-
ural resources, such as precious metals, other minerals,
water, timberland,
agricultural commodities and forest products; (2) own or
produce sources of
energy such as oil, natural gas, coal, uranium, geothermal,
oil shale and bio-
mass; (3) participate in the exploration and development,
transportation, dis-
tribution and/or processing of natural resources; (4) own or
control oil, gas,
or other mineral leases, rights or royalties; (5) provide
related services or
supplies, such as drilling, well servicing, chemicals, parts
and equipment;
(6) develop or participate in energy-efficient technologies;
and (7) are
involved in the upgrading or processing of raw commodities
into intermediate
products. The Fund may also invest in gold bullion and gold
coins. (A company
is considered a "Natural Resources Investment" when it
derives at least 50% of
its total revenue from a business or activity described
above.) There is no
guarantee that the Fund will achieve its investment goal.
Under normal market conditions, the Fund will invest at
least 65% of its
assets in Natural Resource Investments. Up to 35% of the
Fund's assets may be
invested in companies not in the natural resources area,
investment grade cor-
porate debt securities, U.S. Government securities and, for
cash management
purposes, money market instruments. For temporary defensive
purposes, the Fund
may invest in excess of 35% in money market instruments.
The Fund may utilize up to 10% of its assets to purchase
put options on secu-
rities it owns and up to an additional 10% of its assets to
purchase call
options on securities it may acquire in the future. The Fund
may purchase only
put options that are traded on a regulated exchange. It also
may purchase and
write put and call options on domestic and foreign stock
indexes to hedge
against risks of market-wide movements affecting that
portion of its assets
invested in the country whose stocks are subject to the
hedges.
The composition of the portfolio of the Fund will vary
depending on the
determination of its investment adviser, SBMFM, of how best
to achieve long-
term capital appreciation. Equity securities in which the
Fund may invest
include common stocks, preferred stocks, convertible
securities and warrants.
Debt securities the Fund may acquire include bonds, notes
and debentures of
companies and governments. The Fund may invest in debt
securities when SBMFM
believes they will enhance the Fund's ability to achieve
long-term capital
appreciation. The Fund may invest in fixed-income securities
that are rated as
low as B by Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's
Corporation ("S&P") or if unrated, are deemed by SBMFM to be
of comparable
quality. The medium- and lower-rated securities in which the
Fund may invest,
some of which have speculative characteristics, may be
subject to greater mar-
ket fluctuation and greater risk of loss of income or
principal than higher
rated securities.
Because issuers of Investments often are located outside
the United States, a
significant portion of the Fund's investments may consist of
securities of
foreign issuers. The percentage of assets invested in
particular countries or
regions will change from the time to time in accordance with
the judgment of
the Fund's investment manager, which may be based on, among
other things of
consideration of the political stability and economic
outlook of these coun-
tries or regions.
The Equity Income Portfolio, an investment portfolio of
Smith Barney Funds,
Inc., seeks current income and long-term growth of capital.
The Fund invests
primarily in common stocks offering a current return from
dividends and will
also normally include some interest-paying debt obligations
(such as U.S. gov-
ernment obligations, investment grade bonds and debentures)
and high quality
short-term debt obligations (such as commercial paper and
repurchase agree-
ments 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, howev-
er, 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 addi-
tional 10% of its assets may be invested in American
Depository Receipts
("ADRs") representing shares in foreign securities that are
traded in U.S.
securities markets.
Smith Barney Growth and Income Fund, an investment
portfolio of Smith Barney
Equity Funds, seeks long-term capital growth and income by
investing in income
producing equity securities, including dividend-paying
common stocks, securi-
ties that are convertible into common stocks and warrants.
Consistent with
data used in developing and maintaining quantitative
investment criteria
developed by SBMFM to evaluate investment decisions, the
Fund expects to
invest primarily in domestic
9
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
companies of varying sizes, generally with capitalizations
exceeding $250 mil-
lion in a wide range of industries. The Fund may also invest
up to 20% in the
securities of foreign issuers, including ADRs or European
Depository Receipts.
Under normal market conditions, the Fund will invest
substantially all, but not
less than 65%, of its assets in equity securities. The Fund
may invest the
remainder of its assets in high grade money market
instruments in order to
develop income, as well as in corporate bonds and mortgage
related securities
that are rated investment grade or are deemed by SBMFM to be
of comparable
quality and in U.S. government securities.
Smith Barney Premium Total Return Fund, an investment
portfolio of Smith Bar-
ney Income Funds, seeks to provide shareholders with total
return, consisting
of long-term capital appreciation and income, by investing
primarily in a
diversified portfolio of dividend-paying common stocks. The
Fund also purchases
put and call options and writes covered put and call options
on securities it
holds and on stock indexes primarily as a hedge to reduce
investment risk.
Because the Fund seeks total return by emphasizing
investments in dividend-pay-
ing common stocks, it will not have as much investment
flexibility as total
return funds that may pursue their objective by investing in
both income and
equity stocks without such an emphasis. The Fund also may
invest up to 10% of
its assets in: (a) securities rated less than investment
grade by Moody's or
S&P or unrated securities of comparable quality; (b)
interest-paying debt secu-
rities, such as U.S. government securities; and (c) other
securities, including
convertible bonds, convertible preferred stock and warrants.
The Emerging Markets Portfolio, an investment portfolio of
Smith Barney World
Funds, Inc., seeks long term capital appreciation on its
assets through a port-
folio invested primarily in securities of emerging country
issuers (consisting
of dividend and non-dividend paying common stocks, preferred
stocks, convert-
ible securities and rights and warrants to such securities).
The Fund will also
invest in debt securities having a high potential for
capital appreciation,
especially in countries where direct equity investment is
not permitted. Under
normal conditions, at least 70% of the Fund's assets will be
invested in equity
securities. For purposes of its investment objective, the
Fund considers as
"emerging" all countries other than the United States,
Canada, Ireland, the
United Kingdom, Sweden, Norway, Finland, Denmark, Holland,
Germany, Switzer-
land, Belgium, France, Italy, Spain and Japan. The Fund is a
non-diversified
portfolio, but will generally invest its assets broadly
among countries and
will normally have at least 65% of its assets invested in
issuers in not less
than three different countries.
The Fund also may invest in debt securities of issuers in
countries having
smaller capital markets. Capital appreciation in debt
securities may arise as a
result of a favorable change in relative foreign exchange
rates, in relative
interest rate levels, or in the creditworthiness of issuers.
The Fund will not
seek to benefit from anticipated short-term fluctuations in
currency exchange
rates. The Fund may invest in debt securities with
relatively high yields (as
compared to other debt securities meeting the Fund's
investment criteria), not-
withstanding that the Fund may not anticipate that such
securities will experi-
ence substantial capital appreciation. The Fund also may
invest in debt securi-
ties issued or guaranteed by foreign governments (including
foreign states,
provinces and municipalities) or their agencies and
instrumentalities, issued
or guaranteed by supranational organizations or issued by
foreign corporations
or financial institutions.
The International Equity Portfolio, an investment portfolio
of Smith Barney
World Funds, Inc., seeks a total return on its assets from
growth of capital
and income. Under normal market conditions, the Fund invests
at least 65% of
its assets in a diversified portfolio of equity securities
consisting of divi-
dend and non-dividend paying common stock, preferred stock,
convertible debt
and rights and warrants to such securities and up to 35% of
the Fund's assets
in bonds, notes and debt securities (consisting of
securities issued in the
Eurocurrency markets or obligations of the U.S. or foreign
governments and
their political subdivisions) of established non-U.S.
issuers. Investments may
be made for capital appreciation or for income or any
combination of both for
the purpose of achieving a higher overall return than might
otherwise be
obtained solely from investing for growth of capital or for
income. There is no
limitation on the percent or amount of the Fund's assets
that may be invested
for growth or income and, therefore, from time to time the
investment emphasis
may be placed solely or primarily on growth of capital or
solely or primarily
on income. The Fund may borrow up to 25% of the value of its
assets for invest-
ment purposes, which involves certain risk considerations.
The Fund will generally invest its assets broadly among
countries and will
normally have represented in the portfolio business
activities in not less than
three different countries. The Fund will normally invest at
least 65% of its
assets in companies organized or governments located in any
area of the world
other than the U.S. However, under unusual economic or
market conditions as
determined by the investment adviser, for defensive purposes
the Fund may tem-
porarily invest all or a major
10
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
portion of its assets in U.S. government securities or in
debt or equity secu-
rities of companies incorporated in and having their
principal business activ-
ities in the U.S.
FIXED INCOME FUNDS The following Underlying Smith Barney
Funds invest primar-
ily in fixed income securities, including the money market
fund in which each
Portfolio may invest and which may serve as the cash reserve
portion of each
Portfolio.
Smith Barney High Income Fund, an investment portfolio of
the Smith Barney
Income Funds, seeks to provide shareholders with high
current income. Although
growth of capital is not an investment objective of the
Fund, SBMFM may con-
sider potential for growth as one factor, among others, in
selecting invest-
ments for the Fund. The Fund will seek high current income
by investing, under
normal circumstances, at least 65% of its assets in high
risk, high-yielding
corporate bonds, debentures and notes denominated in U.S.
dollars or foreign
currencies. Up to 40% of the Fund's assets may be invested
in fixed-income
obligations of foreign issuers, and up to 20% of its assets
may be invested in
common stock or other equity-related securities, including
convertible securi-
ties, preferred stock, warrants and rights. Securities
purchased by the Fund
generally will be rated in the lower rating categories of
recognized rating
agencies, as low as Caa by Moody's or D by S&P, or in
unrated securities that
SBMFM deems of comparable quality. However, the Fund will
not purchase securi-
ties rated lower than B by both Moody's and S&P unless,
immediately after such
purchase, no more than 10% of its total assets are invested
in such securi-
ties. The Fund may hold securities with higher ratings when
the yield differ-
ential between low-rated and higher-rated securities narrows
and the risk of
loss may be reduced substantially with only a relatively
small reduction in
yield. The Fund also may invest in higher-rated securities
when SBMFM believes
that a more defensive investment strategy is appropriate in
light of market or
economic conditions.
Smith Barney Investment Grade Bond Fund, an investment
portfolio of Smith
Barney Investment Funds Inc., seeks to provide as high a
level of current
income as is consistent with prudent investment management
and preservation of
capital. Except when in a temporary defensive investment
position, the Fund
intends to maintain at least 65% of its assets invested in
bonds. The Fund
seeks to achieve its objective by investing in any of the
following securi-
ties: corporate bonds rated Baa or better by Moody's or BBB
or better by S&P;
U.S. government securities; commercial paper issued by
domestic corporations
and rated Prime-1 or Prime-2 by Moody's or A-1 or A-2 by
S&P, or, if not rat-
ed, issued by a corporation having an outstanding debt issue
rated Aa or bet-
ter by Moody's or AA or better by S&P; negotiable bank
certificates of deposit
and bankers' acceptances issued by domestic banks (but not
their foreign
branches) having total assets in excess of $1 billion; and
high-yielding com-
mon stocks and warrants. A reduction in the rating of a
security does not
require the sale of the security by the Fund.
Smith Barney Government Securities Fund, an investment
portfolio of Smith
Barney Investment Funds Inc., seeks high current return by
investing in obli-
gations of, or guaranteed by, the U.S. government, its
agencies or instrumen-
talities (including, without limitation, Treasury bills and
bonds, mortgage
participation certificates issued by the Federal Home Loan
Mortgage Corpora-
tion ("FHLMC") and mortgage-backed securities issued by the
Government
National Mortgage Association ("GNMA"). The Fund may invest
up to 5% of its
net assets in U.S. government securities for which the
principal repayment at
maturity, while paid in U.S. dollars, is determined by
reference to the
exchange rate between the U.S. dollar and the currency of
one or more foreign
countries. In addition, the Fund may borrow money (up to 25%
of its total
assets) to increase its investments, thereby leveraging its
portfolio and
exaggerating the effect on net asset value of any increase
or decrease in the
market value of the Fund's securities. Except when in a
temporary defensive
investment position, the Fund intends to maintain at least
65% of its assets
invested in U.S. government securities (including futures
contracts and
options thereon and options relating to U.S. government
securities).
The Short-Term U.S. Treasury Securities Portfolio, an
investment portfolio of
Smith Barney Funds, Inc., seeks current income, preservation
of capital and
liquidity. The Fund seeks to achieve its objective by
investing its assets in
U.S. Treasury securities backed by the full faith and credit
of the U.S. gov-
ernment. Shares of the Fund are not issued, insured or
guaranteed, as to value
or yield, by the U.S. government or its agencies or
instrumentalities. In an
effort to minimize fluctuations in market value of its
portfolio securities,
the Fund is expected to maintain a dollar-weighted average
maturity of approx-
imately three years. Pending direct investment in U.S.
Treasury debt securi-
ties, the Fund may enter into repurchase agreements secured
by such securities
in an amount up to 10% of the value of its total assets. The
Fund may, to a
limited degree, engage in short-term trading to attempt to
take advantage of
short-term market variations, or may dispose of a portfolio
security prior to
its maturity if it believes such disposition advisable or it
needs to generate
cash to satisfy redemptions.
Smith Barney Managed Governments Fund Inc. seeks high
current income consis-
tent with liquidity and safety of capital. The Fund invests
substantially all
of its assets in U.S. government securities and, under
normal circumstances,
the Fund is
11
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
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 Associa-
tion ("FNMA") and FHLMC. Assets not invested in such
mortgage-backed securities
are invested primarily in direct obligations of the United
States Treasury and
other U.S. government securities. The weighted average
maturity of the Fund's
portfolio will vary from time to time and the Fund may
invest in U.S. govern-
ment 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. govern-
ment 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 matu-
rity, 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 invest-
ment in fixed-income securities. The Fund attempts to
achieve its objective by
allocating and reallocating its assets primarily among
various types of fixed-
income securities selected by Greenwich Street Advisors (a
division of SBMFM)
based on its analysis of economic and market conditions and
the relative risks
and opportunities of particular securities. The types of
fixed-income securi-
ties among which the Fund's assets will be primarily
allocated are: obligations
issued or guaranteed as to principal and interest by the
United States govern-
ment; mortgage-related securities issued by various
governmental and non-gov-
ernmental entities; domestic and foreign corporate
securities; and foreign gov-
ernment 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 certifi-
cates. Mortgage-related securities held by the Fund
generally will be rated no
lower than Aa by Moody's or AA by S&P or, if not rated, of
equivalent invest-
ment quality as determined by Greenwich Street Advisors. The
Fund may invest up
to 35% of its assets in corporate fixed-income securities of
domestic issuers
rated Ba or lower by Moody's or BB or lower by S&P or in
nonrated securities
deemed by Greenwich Street Advisors to be of comparable
quality. The Fund may
invest in fixed-income securities rated as low as Caa by
Moody's or CCC by S&P.
In general, the Fund may invest in debt securities issued
by foreign govern-
ments or any of their political subdivisions that are
considered stable by
Smith Barney Global Capital Management, Inc., the Fund's
subadviser. Up to 5%
of the Fund's assets may be invested in foreign securities
issued by countries
with developing economies. The Fund may also invest in
securities issued by
supranational organizations.
The Global Government Bond Portfolio, an investment
portfolio of Smith Barney
World Funds, Inc., seeks as high a level of current income
and capital appreci-
ation 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 (including foreign states,
provinces, cantons
and municipalities) or their agencies, authorities or
instrumentalities denomi-
nated in various currencies, including U.S. dollars, or in
multinational cur-
rency units, such as the European Currency Unit. Except with
respect to govern-
ment securities of less developed countries, the Fund
invests in foreign gov-
ernment securities only if the issue or the issuer thereof
is rated in the two
highest rating categories by Moody's or S&P, or if unrated,
are of comparable
quality in the determination of the investment adviser.
Under normal circumstances the Fund may invest up to 35% of
its total assets
in debt obligations (including debt obligations convertible
into common stock)
of U.S. or foreign corporations and financial institutions
and supranational
entities. Any non-governmental investment would be limited
to issues that are
rated A or better by Moody's or S&P, or if not rated,
determined to be of com-
parable quality.
The Fund is a non-diversified portfolio and currently
contemplates investing
primarily in obligations of the U.S. and of developed
nations (i.e., industri-
alized countries) that the investment adviser believes to
pose limited credit
risks. These countries currently are Australia, Austria,
Belgium, Canada, Den-
mark, Finland, France, Ireland, Italy, Japan, Luxembourg,
12
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
Netherlands, New Zealand, Norway, Portugal, Spain, Sweden,
Switzerland, the
United Kingdom and Germany. Investments may be made from
time to time in gov-
ernment 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 coun-
tries. 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 secu-
rities (rated at least Baa by Moody's or BBB by S&P), or if
unrated, securities
that are judged to be of comparable quality by the
investment adviser. Under
normal market conditions the Fund invests at least 65% of
its assets in issues
of not less than three different countries; issues of any
one country (other
than the United States) will represent no more than 45% of
the Fund's total
assets.
The Cash Portfolio is an investment portfolio of Smith
Barney Money Funds,
Inc., a money market fund that seeks maximum current income
and preservation of
capital. The Fund may invest in domestic and foreign money
market securities
consisting of bank obligations and high quality commercial
paper, corporate
obligations and municipal obligations, in addition to U.S.
government obliga-
tions 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 contin-
uous basis. In order to minimize fluctuations in market
price, the Fund will
not purchase a security with a remaining maturity of greater
than 13 months or
maintain a dollar-weighted average portfolio maturity in
excess of 90 days (se-
curities used as collateral for repurchase agreements are
not subject to these
restrictions).
The Fund's investments are limited to U.S. dollar-
denominated instruments that
have received the highest rating from the "Requisite
NRSROs," securities of
issuers that have received such rating with respect to other
short-term debt
securities and comparable unrated securities. "Requisite
NRSROs" means (a) any
two nationally recognized statistical ratings organizations
("NRSROs") that
have issued a rating with respect to a security or class of
debt obligations of
an issuer, or (b) one NRSRO, if only one NRSRO has issued
such a rating at the
time that the Fund acquires the security. The NRSROs
currently designated as
such by the SEC are S&P, Moody's, Fitch Investors Services,
Inc., Duff and
Phelps Inc., IBCA Limited and its affiliate, IBCA, Inc. and
Thomson BankWatch.
For purposes of the equity/fixed income fund allocation
targets and ranges
applicable to each Portfolio (see page 11 above), each of
the following Under-
lying Smith Barney Funds is considered to be an equity fund
with respect to 50%
of a Portfolio's investment in such Fund and an income fund
with respect to the
remaining 50% of such Portfolio's investment.
The Smith Barney Convertible Fund, an investment portfolio
of Smith Barney
Income Funds, seeks current income and capital appreciation
by investing in
convertible securities and in combinations of nonconvertible
fixed-income secu-
rities and warrants or call options that together resemble
convertible securi-
ties ("synthetic convertible securities"). Under normal
circumstances, the Fund
will invest at least 65% of its assets in convertible
securities, but is not
required to sell securities to conform to this limitation
and may retain on a
temporary basis securities received upon the conversion or
exercise of such
securities. The Fund will not invest in fixed-income
securities that are rated
lower than B by Moody's or S&P or, if unrated, deemed by
SBMFM to be comparable
to securities rated lower than B. The Fund may invest up to
35% of its assets
in synthetic convertible securities and in equity and debt
securities that are
not convertible into common stock and, for temporary
defensive purposes, may
invest in these securities without limitation.
The Smith Barney Utilities Fund, an investment portfolio of
Smith Barney
Income Funds, seeks current income by investing in equity
and debt securities
of companies in the utility industry. Long-term capital
appreciation is a sec-
ondary objective of the Fund. The utility industries are
deemed to be comprised
of companies principally engaged (that is, at least 50% of a
company's assets,
gross income or net profits results from utility operations
or the company is
regulated as a utility by a government agency or authority)
in the manufacture,
production, generation, transmission and sale of electric
and gas energy and
companies principally engaged in the communications field,
including entities
such as telephone, telegraph, satellite, microwave and other
companies regu-
lated by governmental agencies as utilities that provide
communication facili-
ties for the public benefit, but not including those in
public broadcasting.
The Fund will invest primarily in utility equity and debt
securities that
13
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
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 its assets in equity and
debt securities of
non-utility companies believed to afford a reasonable
opportunity for achieving
the Fund's investment objectives. The Fund will invest in
investment grade debt
securities, but may invest up to 10% of its assets in
securities rated BB or B
by S&P or Ba or B by Moody's whenever SBMFM believes that
the incremental yield
on such securities is advantageous to the Fund in comparison
to the additional
risk involved.
The International Balanced Portfolio, an investment
portfolio of Smith Barney
World Funds, Inc., seeks a competitive total return on its
assets from growth
of capital and income through a portfolio invested primarily
in securities of
established non-U.S. issuers. The Fund may borrow up to 15%
of the value of its
assets for investment purposes, which involves certain
risks. Under normal mar-
ket conditions, the Fund will invest its assets in an
international portfolio
of equity securities (consisting of dividend and non-
dividend paying common
stocks, preferred stocks, convertible securities, ADRs and
rights and warrants
to such securities) and debt securities (consisting of
corporate debt securi-
ties, sovereign debt instruments issued by governments or
governmental enti-
ties, including supranational organizations and U.S. and
foreign money market
instruments). The Fund attempts to achieve a balance between
equity and debt
securities. However, the proportion of equity and debt held
by the Fund at any
one time will depend on SBMFM's views on current market and
economic condi-
tions. Under normal conditions, no more than 70%, nor less
than 30%, of the
Fund's assets will be invested in either equity or debt
securities; however,
there is no limitation on the percent or amount of the
Fund's assets that may
be invested for growth or income.
The Fund is a non-diversified portfolio but will generally
invest its assets
broadly among countries and will normally have at least 65%
of its assets
invested in business activities in not less than three
different countries out-
side of the U.S. The Fund will invest in a broad range of
industries and sec-
tors and will mainly invest in securities issued by
companies with market capi-
talization of at least $50,000,000. The Fund may invest in
companies organized
or governments located in any area of the world. However,
under unusual eco-
nomic or market conditions as determined by the investment
adviser, for defen-
sive purposes the Fund may temporarily invest all or a major
portion of its
assets in U.S. government securities, debt or equity
securities of companies
incorporated in and having their principal business
activities in the U.S. or
in U.S. as well as foreign money market instruments and
equivalents.
The debt securities in which the Fund invests generally
range in maturity from
two to ten years. Debt securities of developed foreign
countries must be rated
as investment grade (or deemed by SBMFM to be of comparable
quality) at the
time of purchase. Debt securities of emerging market
countries may be rated
below investment grade and could include securities that are
in default as to
payments of principal or interest. Up to 25% of the total
assets of the Fund
may be invested in securities of emerging market countries.
14
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
PERFORMANCE OF UNDERLYING SMITH BARNEY FUNDS
The following chart shows the average annual total returns
for the longest
outstanding class of shares for each of the Underlying Smith
Barney Funds in
which the Portfolios may invest (other than the Cash
Portfolio of Smith Barney
Money Funds, Inc.) for the most recent one-, five- and ten-
year periods (or
since inception if shorter and giving effect to the maximum
applicable sales
charges) and the 30-day yields for income-oriented funds, in
each case for the
period ended December 31, 1995.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
ASSETS OF
ALL THROUGH DECEMBER 31, 1995 30-DAY
YIELD FOR
CLASSES AS
OF ----------------------------- PERIOD
ENDED
DECEMBER 31,
INCEPTION DECEMBER
31,
UNDERLYING SMITH BARNEY FUND 1995
($000'S) DATE CLASS ONE YEAR FIVE YEARS TEN YEARS
1995
- ------------------------------------------------------------
- ------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Smith Barney Aggressive
Growth Fund Inc. $525,528 10/24/83 A 28.94% 17.40% 15.70% --
Smith Barney Appreciation
Fund Inc. 3,024,628 03/10/70 A 22.74 12.18 12.81 --
Smith Barney Equity Funds:
Smith Barney Growth and
Income Fund 218,807 11/06/92 A 24.36 -- 8.77(+) --
Smith Barney Fundamental
Value Fund Inc. 987,935 11/12/81 A 21.48 17.38 12.12 --
Smith Barney Funds, Inc.:
Equity Income
Portfolio 747,520 01/01/72 A 26.40 13.82 11.59 --
Short-Term U.S. Treasury Securities
Portfolio 106,902 11/11/91 A 13.16 -- 6.26(+) 4.69%
Smith Barney Equity Funds:
Smith Barney High
Income Fund 888,802 09/02/86 B 13.03 16.35 8.76(+) 7.83
Smith Barney
Utilities Fund 1,958,317 03/28/88 B 25.89 11.19 11.19(+) --
Smith Barney Premium Total
Return Fund 2,380,777 09/16/85 B 16.84 15.02 12.30 --
Smith Barney Convertible
Fund 82,137 09/02/86 B 15.82 12.30 8.20(+) 2.83
Smith Barney Diversified Strategic
Income Fund 2,627,676 12/28/89 B 10.57 9.45 9.20(+) 8.48
Smith Barney Investment Funds Inc.:
Smith Barney Managed
Growth Fund 507,097 06/30/95 A -- -- (3.30)(+) --
Smith Barney Special
Equities Fund 342,704 12/13/82 B 57.30 25.87 11.76 --
Smith Barney Government
Securities Fund 606,406 03/20/84 B 8.71 8.06 7.65 5.99
Smith Barney Investment
Grade Bond Fund 519,566 01/04/82 B 30.56 13.78 10.93 5.71
Smith Barney Managed Governments
Fund Inc. 644,202 09/04/84 A 8.76 7.52 7.72 6.27
Smith Barney Natural Resources
Fund Inc. -- 12/24/06 (15.23) 3.10% -- --
Smith Barney World Funds, Inc.:
International
Equity Portfolio 1,049,624 02/18/86 A (2.59) 13.44 11.10 (+) --
Emerging Markets
Portfolio 16,972 05/11/95 A -- -- (13.47)(+) --
International
Balanced Portfolio 25,245 08/25/94 A 8.90 -- 3.92 (+) --
Global Government
Bond Portfolio 158,962 07/22/91 A 10.17 -- 8.36 (+) 5.82
- -----------
</TABLE>
+ inception (less than 10 years)
- ------------------------------------------------------------
- --------------------
For the seven-day period ended December 31, 1995, the yield
for the Cash Port-
folio of Smith Barney Money Funds, Inc. was 5.16% and the
effective yield was
5.30%.
The performance data relating to the Underlying Smith
Barney Funds set forth
above is not, and should not be viewed as, indicative of the
future performance
of either the Underlying Smith Barney Funds or the Concert
Series. The perfor-
mance reflects the impact of sales charges and other
distribution related
expenses that will not be incurred by the Class Y shares of
the Underlying
Smith Barney Funds in which the Portfolios will invest.
INVESTMENT POLICIES AND STRATEGIES OF THE UNDERLYING SMITH
BARNEY FUNDS
In pursuing their investment objectives and programs, each
of the Underlying
Smith Barney Funds is permitted to engage in a wide range of
investment poli-
cies. The Underlying Smith Barney Funds' risks are
determined by the nature of
the securities held and the investment strategies used by
the Funds' adviser.
Certain of these policies are described below and further
information about the
investment policies and strategies of the Underlying Smith
Barney Funds in
which the Vintage Portfolios may invest is contained in the
Appendix to this
Prospectus and in the Statement of Additional Information as
well as the pro-
spectuses 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.
15
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
Securities of Non-U.S. Issuers. The Vintage 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 develop-
ments, and the possible imposition of exchange controls or
other foreign gov-
ernmental 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 that could
adversely affect investments in those countries. There may
be less publicly
available information about a foreign company than about a
U.S. company, and
foreign companies may not be subject to accounting,
auditing, and financial
reporting standards and requirements comparable to or as
uniform as those of
U.S. companies. Non-U.S. securities markets, while growing
in volume, have, for
the most part, substantially less volume than U.S. markets,
and securities of
many foreign companies are less liquid and their prices more
volatile than
securities of comparable U.S. companies. Transaction costs
on non-U.S. securi-
ties markets are generally higher than in the U.S. There is
generally less gov-
ernment supervision and regulation of exchanges, brokers and
issuers than there
is in the U.S. An Underlying Smith Barney Fund might have
greater difficulty
taking appropriate legal action in non-U.S. courts. Dividend
and interest
income from non-U.S. securities will generally be subject to
withholding taxes
by the country in which the issuer is located and may not be
recoverable by the
Underlying Smith Barney Fund or a Portfolio investing in
such Fund.
Options and Futures. Certain of the Underlying Smith Barney
Funds may enter
into stock index, interest rate and currency futures
contracts (or options
thereon) as a hedging device, or as an efficient means of
regulating their
exposure to various markets. Certain of the Underlying Smith
Barney Funds may
also purchase and sell call and put options. Futures (a type
of potentially
high-risk derivative) are often used to manage risk because
they enable the
investor to buy or sell an asset at a predetermined price in
the future. The
Underlying Smith Barney Funds may buy and sell futures and
options contracts
for a number of reasons including: to manage their exposure
to changes in
interest rates, stock and bond prices, and foreign
currencies; as an efficient
means of adjusting their overall exposure to certain
markets; to adjust the
portfolio's duration; to enhance income; and to protect the
value of the port-
folio securities. Certain of the Underlying Smith Barney
Funds may purchase,
sell or write call and put options on securities, financial
indices, and for-
eign currencies. Options and futures can be volatile
investments, and involve
certain risks. If the adviser to the Underlying Smith Barney
Fund applies a
hedge at an inappropriate time or judges market conditions
incorrectly, options
and futures strategies may lower the Underlying Smith Barney
Fund's return.
Further losses could also be experienced if the options and
futures positions
held by an Underlying Smith Barney Fund were poorly
correlated with its other
investments, or if it could not close out its positions
because of an illiquid
secondary market.
Debt Securities. Certain of the Underlying Smith Barney
Funds may be affected
by general changes in interest rates, which will result in
increases or
decreases in the market value of the debt securities held by
the Funds. The
market value of the fixed-income obligations in which the
Underlying Smith Bar-
ney Funds may invest can be expected to vary inversely in
relation to the
changes in prevailing interest rates and also may be
affected by other market
and credit factors.
Certain of the Underlying Smith Barney Funds may invest
only in high-quality,
high-grade or investment-grade securities. High quality
securities are those
rated in the two highest categories by Moody's (Aaa or Aa)
or S&P (AAA or AA).
High-grade securities are those rated in the three highest
categories by
Moody's (Aaa, Aa or A) or S&P (AAA, AA or A). Investment-
grade securities are
those rated in the four highest categories by Moody's (Aaa,
Aa, A or Baa) or
S&P (AAA, AA, A or BBB). Securities rated Baa or BBB have
speculative charac-
teristics and changes in economic conditions or other
circumstances are more
likely to lead to a weakened capacity of their issuers to
make principal and
interest payments than is the case with higher grade
securities.
Certain Underlying Smith Barney Funds may invest in
securities that are rated
below investment-grade; that is, rated below Baa by Moody's
or BBB by S&P.
Securities rated below investment grade (and comparable
unrated securities) are
the equivalent of high yield, high risk bonds, commonly
known as "junk bonds."
Such securities are regarded as predominantly speculative
with respect to the
issuer's capacity to pay interest and repay principal in
accordance with the
terms of the obligations and involve major risk exposure to
adverse business,
financial, economic or political conditions. See the
Appendix to the Statement
of Additional Information for additional information on the
bond ratings by
Moody's and S&P.
Money Market Instruments. The Smith Barney Natural
Resources Fund may hold up
to 20% of the value of its assets in cash and invest in
short-term instruments,
and it may hold cash and short-term instruments without
limitation when SBMFM
16
<PAGE>
Smith Barney Concert Series Inc.
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
determines that it is appropriate to maintain a temporary
defensive posture.
Short-term instruments in which the Smith Barney Natural
Resources Fund may
invest include: (a) obligations issued or guaranteed as to
principal and
interest by the United States government, its agencies or
instrumentalities
("US government securities") (including repurchase
agreements with respect to
such securities); (b) bank obligations (including
certificates of deposit,
time deposits and banker's acceptances of domestic or
foreign banks, domestic
savings and loan associations and similar institutions); (c)
floating rate
securities and other instruments denominated in U.S. dollars
issued by inter-
national development agencies, banks and other financial
institutions, govern-
ments and their agencies or instrumentalities and
corporations located in
countries that are members of the Organization for Foreign
Cooperation and
Development; and (d) commercial paper rated no lower than A-
2 by S&P or Prime-
2 by Moody's or the equivalent from another major rating
service or, if
unrated, of an issuer having an outstanding, unsecured debt
issue then rated
within the three highest rating categories.
Gold Futures Contracts and Related Options. If SBMFM
determines it would be
advantageous to do so, the Smith Barney Natural Resources
Fund may, for hedg-
ing purposes, utilize its assets as initial margin and
premiums on futures
contracts and options on those contracts. The Fund may also
enter into futures
contracts for the purchase and sale of gold, purchase put
and call options on
those future contracts and write call options on those
futures contracts. The
Smith Barney Natural Resources Fund will only enter into
futures contracts
that are traded on a regulated domestic or foreign
commodities exchange and
will purchase or write options on gold futures only on a
regulated domestic or
foreign exchange approved for such purpose by the
Commodities and Exchange
Futures Trading Commission.
VALUATION OF SHARES
Each Portfolio's net asset value per share is determined as
of the close of
regular trading on the NYSE on each day that the NYSE is
open, by dividing the
value of the Portfolio's net assets attributable to each
Class by the total
number of shares of the Class outstanding. The value of each
Underlying Smith
Barney Fund will be its net asset value at the time of
computation. Short-term
investments that have a maturity of more than 60 days are
valued at prices
based on market quotations for securities of similar type,
yield and maturity.
Short-term investments that have a maturity of 60 days or
less are valued at
amortized cost unless conditions dictate otherwise.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Concert Series intends to declare monthly income
dividends on shares of
the Vintage Income Portfolio, quarterly income dividends on
shares of the Vin-
tage Conservative Portfolio and the Vintage Balanced
Portfolio and annually
income dividends on shares of the Vintage High Growth
Portfolio and the Vin-
tage Growth Portfolio. In addition, the Concert Series
intends to make annual
distributions of capital gains, if any, on the shares of
each Portfolio.
Income dividends and capital gain distributions that are
invested are cred-
ited to shareholders' accounts in additional shares at the
net value as of the
close of business on the payment date. A shareholder may
change the option at
any time by notifying his or her Smith Barney Financial
Consultant. Sharehold-
ers whose accounts are held directly by First Data Investor
Services Group
Inc. ("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.
TAXES
Each Portfolio of the Concert Series intends to qualify as
a "regulated
investment company" under Subchapter M of the Code. To
qualify, each 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. Each Portfolio intends at least annually to declare
and make distribu-
tions of substantially all of its taxable income and net
taxable capital gains
to its shareowners (i.e., the Separate Accounts). Such
distributions are auto-
matically reinvested in additional shares of the Portfolio
at net asset value
and are includable in gross income of the Separate Accounts
holding such
shares. See the accompanying Contract prospectus for
information regarding the
federal income tax treatment of distributions to the
Separate Accounts and to
holders of the Contracts.
17
<PAGE>
Smith Barney Concert Series Inc.
TAXES (CONTINUED)
Each Portfolio of the Concert Series is also subject to
asset diversification
regulations promulgated by the U.S. Treasury Department
under the Code. The
regulations generally provide that, as of the end of each
calendar quarter or
within 30 days thereafter, no more than 55% of the total
assets of each Portfo-
lio may be represented by any one investment, no more than
70% by any two
investments, no more than 80% by any three investments, and
no more than 90% by
any four investments. For this purpose all securities of the
same issuer are
considered a single investment. If a Portfolio should fail
to comply with these
regulations, Contracts invested in that Portfolio would not
be treated as annu-
ity, endowment or life insurance contracts under the Code.
PURCHASE OF SHARES
Investment in the Concert Series is only available to
owners of either vari-
able annuity or variable life insurance contracts issued by
insurance companies
through their separate accounts. It is possible that in the
future it may
become disadvantageous for both variable annuity and
variable life insurance
separate accounts to be invested simultaneously in the
Concert Series. However,
the Concert Series does not currently foresee any
disadvantages to the contract
owners of the different contracts which are funded by such
separate accounts.
The Board monitors events for the existence of any material
irreconcilable con-
flict between or among such owners, and each insurance
company will take what-
ever remedial action may be necessary to resolve any such
conflict. Such action
could include the sale of the Concert Series shares by one
or more of the
insurance company separate accounts which fund these
contracts, which could
have adverse consequences to the Concert Series. Material
irreconcilable con-
flicts could result from, for example: (a) changes in state
insurance laws; (b)
changes in U.S. federal income tax laws; or (c) differences
in voting instruc-
tions between those given by variable annuity contract
owners and those given
by variable life insurance contract owners. If the Board
were to conclude that
separate series of the Concert Series should be established
for variable annu-
ity and variable life separate accounts, each insurance
company would bear the
attendant expenses. Should this become necessary, contract
owners would presum-
ably no longer have the economies of scale resulting from a
larger combined
mutual fund.
REDEMPTION OF SHARES
The redemption price of the shares of each Portfolio will
be the net asset
value next determined after receipt by the Concert Series of
a redemption order
from a Separate Account, which may be more or less than the
price paid for the
shares. The Concert Series will ordinarily make payment
within one business
day, though redemption proceeds must be remitted to a
Separate Account on or
before the third day following receipt of proper tender,
except on a day on
which the New York Stock Exchange is closed or as permitted
by the SEC in
extraordinary circumstances.
PERFORMANCE
From time to time the Concert Series may include a
Portfolio's total return,
average annual total return, yield and current distribution
return in adver-
tisements and/or other types of sales literature. THESE
FIGURES ARE BASED ON
HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE FUTURE
PERFORMANCE. In
addition, these figures will not reflect the deduction of
the charges that are
imposed on the Contracts by the Separate Account (see
Contract prospectus)
which, if reflected, would reduce the performance quoted.
Total return is com-
puted for a specified period of time assuming reinvestment
of all income divi-
dends and capital gains distributions at net asset value on
the ex-dividend
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 over
different periods of
time by means of aggregate, average, year-by-year, or other
types of total
return figures. The yield of a Portfolio refers to the net
investment income
earned by investments in the Portfolio over a thirty-day
period. This net
investment income is then annualized, i.e., the amount of
income earned by the
investments during that thirty-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 quotation is calculated according to a formula
prescribed by the SEC
to facilitate comparison with yields quoted by other
investment companies. The
Concert Series calculates current distribution return for
each Portfolio by
dividing the distributions from investment income declared
during the most
recent period by the net asset value on the last day of the
period for
18
<PAGE>
Smith Barney Concert Series Inc.
PERFORMANCE (CONTINUED)
which current distribution return is presented. A
Portfolio's current distribu-
tion return may vary from time to time depending on market
conditions, the com-
position of its investment portfolio and operating expenses.
These factors and
possible differences in the methods used in calculating
current distribution
return, and the charges that are imposed on the Contracts by
the Separate
Account, should be considered when comparing the Portfolio's
current distribu-
tion return to yields published for other investment
companies and other
investment vehicles.
MANAGEMENT OF THE CONCERT SERIES
BOARD OF DIRECTORS
Overall responsibility for management and supervision of
the Concert Series
rests with the Concert Series' Board of Directors. A
majority of the Series'
directors are non-interested persons as defined in Section
2(a)(19) of the 1940
Act. However, the directors and officers of the Series also
serve in similar
positions with many of the Underlying Smith Barney Funds.
Thus, if the inter-
ests of a Portfolio and the Underlying Smith Barney Funds
were ever to become
divergent, it is possible that a conflict of interest could
arise and affect
how the directors and officers of the Series fulfill their
fiduciary duties to
that Portfolio and the Underlying Smith Barney Funds. The
directors of the
Series believe they have structured each Portfolio to avoid
these concerns.
However, conceivably a situation could occur where proper
action for the Series
or a Portfolio separately could be adverse to the interests
of an Underlying
Smith Barney Fund, or the reverse could occur. If such a
possibility arises,
the directors and officers of the Series, the affected
Underlying Smith Barney
Funds and SBMFM will carefully analyze the situation and
take all steps they
believe reasonable to minimize and, where possible,
eliminate the potential
conflict. Moreover, limitations on aggregate investments in
the Underlying
Smith Barney Funds have been adopted by the Series to
minimize this possibili-
ty, and close and continuous monitoring will be exercised to
avoid, insofar as
is possible, these concerns. The Statement of Additional
Information contains
background information regarding each director and executive
officer of the
Concert Series.
INVESTMENT MANAGER--SBMFM
SBMFM, the investment manager to each Portfolio, is a
registered investment
adviser whose principal offices are located at 388 Greenwich
Street, New York,
New York 10013. SBMFM (through its predecessor entities) has
been in the
investment counseling business since 1940. SBMFM renders
investment advice to a
wide variety of investment company clients that had
aggregate assets under man-
agement as of May 31, 1996 in excess of $72 billion. Subject
to the 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 recommenda-
tions 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 Bar-
ney Fund and (c) the percentage range of assets of any
Portfolio that may be
invested in equity funds and fixed income funds (including
money market funds).
The directors of the Concert Series will periodically
monitor the allocations
made and the basis upon which such allocations were made or
maintained. SBMFM
also furnishes each Portfolio with bookkeeping, accounting
and administrative
services, office space and equipment, and the services of
the officers and
employees of the Concert Series. Under the Asset Allocation
and Administration
Agreement with each Portfolio, SBMFM has agreed to bear all
expenses of the
Concert Series other than the management fee, the fees
payable pursuant to the
plan adopted pursuant to Rule 12b-1 under the 1940 Act and
extraordinary
expenses. For the services rendered and expenses borne, each
Portfolio pays
SBMFM a monthly fee at the annual rate of 0.35% of the value
of its average
daily net assets.
SBMFM also serves as investment adviser to each of the
Underlying Smith Barney
Funds in which the Vintage Portfolios may invest (other than
the Smith Barney
Premium Total Return Fund) and is responsible for the
selection and management
of each of the Underlying Smith Barney Fund's investments.
SBSA, located at 388
Greenwich Street, New York, New York 10013, serves as
investment adviser to
Smith Barney Premium Total Return Fund. SBSA has been in the
investment
counseling business since 1968 and is a wholly owned
subsidiary of SBMFM. SBSA
renders investment advice to investment companies that had
aggregate assets
under management as of May 31, 1996 in excess of $2.9
billion.
19
<PAGE>
Smith Barney Concert Series Inc.
MANAGEMENT OF THE CONCERT SERIES (CONTINUED)
Each Portfolio, as a shareholder in the Underlying Smith
Barney Funds, will
indirectly bear its proportionate share of any investment
management fees and
other expenses paid by the Underlying Smith Barney Funds.
The effective manage-
ment fee of each of the Underlying Smith Barney Funds in
which the Vintage
Portfolios may invest is set forth below as a percentage
rate of the Fund's
annual net assets:
<TABLE>
<CAPTION>
MANAGEMENT
UNDERLYING SMITH BARNEY FUND FEES
- ----------------------------------------------------------
<S> <C>
Smith Barney Aggressive Growth Fund Inc. 0.80%
Smith Barney Appreciation Fund Inc. 0.61
Smith Barney Equity Funds
Smith Barney Growth and Income Fund 0.65
Smith Barney Fundamental Value Fund Inc. 0.75
Smith Barney Funds, Inc.
Equity Income Portfolio 0.58
Short-Term U.S. Treasury Securities Portfolio 0.45
Smith Barney Income Funds
Smith Barney High Income Fund 0.70
Smith Barney Utilities Fund 0.65
Smith Barney Premium Total Return Fund 0.75
Smith Barney Convertible Fund 0.70
Smith Barney Diversified Strategic Income Fund 0.65
Smith Barney Investment Funds Inc.
Smith Barney Managed Growth Fund 0.85
Smith Barney Special Equities Fund 0.75
Smith Barney Government Securities Fund 0.55
Smith Barney Investment Grade Bond Fund 0.65
Smith Barney Managed Governments Fund Inc. 0.65
Smith Barney Money Funds, Inc.
Cash Portfolio 0.41
Smith Barney Natural Resources Fund Inc. 0.75
Smith Barney World Funds, Inc.
International Equity Portfolio 0.85
Emerging Markets Portfolio 1.00
International Balanced Portfolio 0.85
Global Government Bond Portfolio 0.75
</TABLE>
PORTFOLIO MANAGEMENT
Thomas B. Stiles II, Chief Investment Officer of SBMFM, has
primary responsi-
bility for the day-to-day management of each Portfolio. Mr.
Stiles, born in
1940, is Chairman and Chief Executive Officer of Greenwich
Street Advisors, a
division of SBMFM, and a Managing Director of Smith Barney.
Certain managing
directors of SBMFM will assist Mr. Stiles in managing the
Portfolios.
SHARES OF THE CONCERT SERIES
The Concert Series, an open-end, non-diversified investment
company, was
incorporated in Maryland on August 11, 1995. The Concert
Series has authorized
capital of 3,000,000,000 shares with a par value of $.001
per share. The Board
of Directors has authorized the issuance of 10 series of
shares, each repre-
senting shares in one of ten 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.
PNC Bank, National Association, located at 17th and
Chestnut Streets, Phila-
delphia, 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 securi-
ties held by the Concert Series at the end of the period
covered. In an effort
to reduce the
20
<PAGE>
Smith Barney Concert Series Inc.
SHARES OF THE CONCERT SERIES (CONTINUED)
Concert Series' printing and mailing costs, the Concert
Series plans to con-
solidate the mailing of its semi-annual and annual reports
by household. This
consolidation means that a household having multiple
accounts with the identi-
cal 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 annu-
ally. 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.
VOTING RIGHTS
The Concert Series offers shares of the Vintage High
Growth, Vintage Growth,
Vintage Balanced, Vintage Conservative and Vintage Income
Portfolios only for
purchase by insurance company separate accounts. Thus, the
insurance company
is technically the shareholder of these Portfolios and,
under the 1940 Act, is
deemed to be in control of the these Portfolios.
Nevertheless, with respect to
any Concert Series shareholder meeting, an insurance company
will solicit and
accept timely voting instruction from its contract owners
who own units in a
separate account investment division which corresponds to
shares in the Port-
folios in accordance with the procedures set forth in the
accompanying pro-
spectus of the applicable contract issued by the insurance
company and to the
extent required by law. Shares of the Concert Series
attributable to contract
owner interests for which no voting instructions are
received will be voted by
an insurance company in proportion to the shares for which
voting instructions
are received.
Each share of a Portfolio represents an equal proportionate
interest in that
Portfolio with each other share of the same Portfolio and is
entitled to such
dividends and distributions out of the net income of that
Portfolio as are
declared in the discretion of the Directors. Shareowners are
entitled to one
vote for each share held and will vote by individual
Portfolio except to the
extent required by the 1940 Act. The Concert Series is not
required to hold
annual shareowner meetings, although special meetings may be
called for the
Concert Series as a whole, or a specific Portfolio, for
purposes such as
electing or removing Directors, changing fundamental
policies or approving a
management contract. Shareowners may cause a meeting of
shareowners to be held
upon a vote of 10% of the Fund's outstanding shares for the
purposes of voting
on the removal of Directors.
21
<PAGE>
Smith Barney Concert Series Inc.
APPENDIX
DESCRIPTIONS OF CERTAIN RISKS RELATED TO VARIOUS SECURITIES
INVESTED IN, AND
INVESTMENT STRATEGIES EMPLOYED BY, THE UNDERLYING SMITH
BARNEY FUNDS IN WHICH
THE VINTAGE PORTFOLIOS MAY INVEST
Repurchase Agreements. Repurchase agreements, as utilized
by an Underlying
Smith Barney Fund or a Portfolio of the Concert Series,
could involve certain
risks in the event of default or insolvency of the other
party, including pos-
sible delays or restrictions upon the ability of an
Underlying Smith Barney
Fund or a Portfolio to dispose of the underlying securities,
the risk of a
possible decline in the value of the underlying securities
during the period
in which an Underlying Smith Barney Fund or a Portfolio
seeks to assert its
rights to them, the risk of incurring expenses associated
with asserting those
rights and the risk of losing all or part of the income from
the agreement.
Reverse Repurchase Agreements. Certain of the Underlying
Smith Barney Funds
may engage in reverse repurchase agreement transactions with
banks, brokers
and other financial institutions. Reverse repurchase
agreements involve the
risk that the market value of the securities sold by the
Underlying Smith Bar-
ney Fund may decline below the repurchase price of the
securities.
Lending of Portfolio Securities. The risks in lending
portfolio securities,
like those associated with other extensions of secured
credit, consist of pos-
sible delays in receiving additional collateral or in the
recovery of the
securities or possible loss of rights in the collateral
should the borrower
fail financially. Loans will be made to firms deemed by the
adviser to the
Underlying Smith Barney Fund to be of good standing and will
not be made
unless, in the judgment of the adviser, the consideration to
be earned from
such loans would justify the risk.
When-Issued Securities and Delayed-Delivery Transactions.
The purchase of
securities on a when-issued or delayed-delivery basis
involves the risk that,
as a result of an increase in yields available in the
marketplace, the value
of the securities purchased will decline prior to the
settlement date. The
sale of securities for delayed delivery involves the risk
that the prices
available in the market on the delivery date may be greater
than those
obtained in the sale transaction.
Non-Diversified Funds. Certain of the Underlying Smith
Barney Funds are
classified as non-diversified investment companies under the
1940 Act. Since,
as a non-diversified fund, such an Underlying Smith Barney
Fund is permitted
to invest a greater proportion of its assets in the
securities of a smaller
number of issuers, each such Fund may be subject to greater
risk with respect
to its individual portfolio than a Fund that is more broadly
diversified.
Securities of Unseasoned Issuers. Securities in which
certain of the Under-
lying Smith Barney Funds may invest may have limited
marketability and, there-
fore, may be subject to wide fluctuations in market value.
In addition, cer-
tain securities may lack a significant operating history and
be dependent on
products or services without an established market share.
Convertible Securities and Synthetic Convertible
Securities. While convert-
ible securities generally offer lower yields than non-
convertible debt securi-
ties of similar quality, their prices may reflect changes in
the value of the
underlying common stock. Convertible securities entail less
credit risk than
the issuer's common stock.
Synthetic convertible securities are created by combining
non-convertible
bonds or preferred stocks with warrants or stock call
options. Synthetic con-
vertible securities differ from convertible securities in
certain respects,
including that each component of a synthetic convertible
security has a sepa-
rate market value and responds differently to market
fluctuations. Investing
in synthetic convertible securities involves the risks
normally involved in
holding the securities comprising the synthetic convertible
security.
Securities of Developing Countries. A developing country
generally is consid-
ered to be a country that is in the initial stages of its
industrialization
cycle. Investing in the equity and fixed-income markets of
developing coun-
tries involves exposure to economic structures that are
generally less diverse
and mature, and to political systems that can be expected to
have less stabil-
ity, than those of developed countries. Historical
experience indicates that
the markets of developing countries have been more volatile
than the markets
of the more mature economies of developed countries;
however, such markets
often have provided higher rates of return to investors.
Sovereign Debt Obligations. Sovereign debt of developing
countries may
involve a high degree of risk, and may be in default or
present the risk of
default. Governmental entities responsible for repayment of
the debt may be
unable or unwilling to repay principal and interest when
due, and may require
renegotiation or rescheduling of debt payments. In addition,
prospects for
repaying of principal and interest may depend on political
as well as economic
factors. Although some sovereign
A-1
<PAGE>
Smith Barney Concert Series Inc.
APPENDIX (CONTINUED)
debt, such as Brady Bonds, is collateralized by U.S.
government securities,
repayment of principal and interest is not guaranteed by the
U.S. government.
Restrictions on Foreign Investment. Some countries prohibit
or impose substan-
tial restrictions on investments in their capital markets,
particularly their
equity markets, by foreign entities. As illustrations,
certain countries
require governmental approval prior to investments by
foreign persons, or limit
the amount of investment by foreign persons in a particular
company, or limit
the investment by foreign persons to only a specific class
of securities of a
company that may have less advantageous terms than
securities of the company
available for purchase by nationals or limit the
repatriation of funds for a
period of time.
Smaller capital markets, while often growing in trading
volume, have substan-
tially less volume than U.S. markets, and securities in many
smaller capital
markets are less liquid and their prices may be more
volatile than securities
of comparable U.S. companies. Brokerage commissions,
custodial services, and
other costs relating to investment in smaller capital
markets are generally
more expensive than in the U.S. Such markets have different
clearance and set-
tlement procedures, and in certain markets there have been
times when settle-
ments have been unable to keep pace with the volume of
securities transactions,
making it difficult to conduct such transactions. Further,
satisfactory custo-
dial services for investment securities may not be available
in some countries
having smaller capital markets, which may result in an
Underlying Smith Barney
Fund incurring additional costs and delays in transporting
and custodying such
securities outside such countries. Delays in settlement
could result in tempo-
rary periods when assets of a Fund are uninvested and no
return is earned
thereon. The inability of an Underlying Smith Barney Fund to
make intended
security purchases due to settlement problems could cause
such Fund to miss
attractive investment opportunities. Inability to dispose of
a portfolio secu-
rity due to settlement problems could result either in
losses to the Fund due
to subsequent declines in value of the portfolio security
or, if the Fund has
entered into a contract to sell the security, could result
in possible liabil-
ity to the purchaser. There is generally less government
supervision and regu-
lation of exchanges, brokers and issuers in countries having
smaller capital
markets than there is in the U.S.
Mortgage-Related Securities. To the extent that an
Underlying Smith Barney
Fund purchases mortgage-related securities at a premium,
mortgage foreclosures
and prepayments of principal by mortgagors (which may be
made at any time with-
out penalty) may result in some loss of the Fund's principal
investment to the
extent of the premium paid. The Underlying Smith Barney
Fund's yield may be
affected by reinvestment of prepayments at higher or lower
rates than the orig-
inal investment. In addition, like other debt securities,
the values of mort-
gage-related securities, including government and government-
related mortgage
pools, generally will fluctuate in response to market
interest rates.
Non-Publicly Traded and Illiquid Securities. The sale of
securities that are
not publicly traded is typically restricted under the
Federal securities laws.
As a result, an Underlying Smith Barney Fund may be forced
to sell these secu-
rities at less than fair market value or may not be able to
sell them when the
Fund's adviser believes it desirable to do so. Investments
by an Underlying
Smith Barney Fund in illiquid securities are subject to the
risk that should
the Fund desire to sell any of these securities when a ready
buyer is not
available at a price that the Fund's adviser deems
representative of its value,
the value of the Underlying Smith Barney Fund's net assets
could be adversely
affected.
Short Sales. Possible losses from short sales differ from
losses that could be
incurred from a purchase of a security, because losses from
short sales may be
unlimited, whereas losses from purchases can equal only the
total amount
invested.
Forward Roll Transactions. Forward roll transactions
involve the risk that the
market value of the securities sold by an Underlying Smith
Barney Fund may
decline below the repurchase price of the securities.
Forward roll transactions
are considered borrowings by a Fund. Although investing the
proceeds of these
borrowings in repurchase agreements or money market
instruments may provide an
Underlying Smith Barney Fund with the opportunity for higher
income, this
leveraging practice will increase a Fund's exposure to
capital risk and higher
current expenses. Any income earned from the securities
purchased with the
proceeds of these borrowings that exceeds the cost of the
borrowings would
cause a Fund's net asset value per share to increase faster
than would
otherwise be the case; any decline in the value of the
securities purchased
would cause a Fund's net asset value per share to decrease
faster than would
otherwise be the case.
Leverage. Certain of the Underlying Smith Barney Funds may
borrow from banks,
on a secured or unsecured basis, in order to leverage their
portfolios. Lever-
age creates an opportunity for increased returns to
shareholders of an Under-
lying Smith Barney Fund but, at the same time, creates
special risk considera-
tions. For example, leverage may exaggerate changes in the
net asset value of a
Fund's shares and in a Fund's yield. Although the principal
or stated value of
such borrowings will be
A-2
<PAGE>
Smith Barney Concert Series Inc.
APPENDIX (CONTINUED)
fixed, the Fund's assets may change in value during the time
the borrowing is
outstanding. Leverage will create interest or dividend
expenses for the Fund
that can exceed the income from the assets retained. To the
extent the income
or other gain derived from securities purchased with
borrowed funds exceeds the
interest or dividends the Fund will have to pay in respect
thereof, the Fund's
net income or other gain will be greater than if leverage
had not been used.
Conversely, if the income or other gain from the incremental
assets is not suf-
ficient to cover the cost of leverage, the net income or
other gain of the Fund
will be less than if leverage had not been used. If the
amount of income for
the incremental securities is insufficient to cover the cost
of borrowing,
securities might have to be liquidated to obtain required
funds. Depending on
market or other conditions, such liquidations could be
disadvantageous to the
Underlying Smith Barney Fund.
Floating and Variable Rate Income Securities. Floating and
variable rate
income securities include securities whose rates vary
inversely with changes in
market rates of interest. Such securities may also pay a
rate of interest
determined by applying a multiple to the variable rate. The
extent of increases
and decreases in the value of securities whose rates vary
inversely with
changes in market rates of interest generally will be larger
than comparable
changes in the value of an equal principal amount of a fixed
rate security hav-
ing similar credit quality, redemption provisions and
maturity.
Zero Coupon, Discount and Payment-in-Kind Securities. Zero
coupon securities
generally pay no cash interest (or dividends in the case of
preferred stock) to
their holders prior to maturity. Payment-in-kind securities
allow the lender,
at its option, to make current interest payments on such
securities either in
cash or in additional securities. Accordingly, such
securities usually are
issued and traded at a deep discount from their face or par
value and generally
are subject to greater fluctuations of market value in
response to changing
interest rates than securities of comparable maturities and
credit quality that
pay cash interest (or dividends in the case of preferred
stock) on a current
basis.
Premium Securities. Premium securities are income
securities bearing coupon
rates higher than prevailing market rates. Premium
securities are typically
purchased at prices greater than the principal amounts
payable on maturity. If
securities purchased by an Underlying Smith Barney Fund at a
premium are called
or sold prior to maturity, the Fund will recognize a capital
loss to the extent
the call or sale price is less than the purchase price.
Additionally, the Fund
will recognize a capital loss if it holds such securities to
maturity.
Yankee Bonds. Yankee bonds are U.S. dollar-denominated
bonds sold in the U.S.
by non-U.S. issuers. As compared with bonds issued in the
U.S., such bond
issues normally carry a higher interest rate but are less
actively traded.
Swap Agreements. As one way of managing its exposure to
different types of
investments, certain of the Underlying Smith Barney Funds
may enter into inter-
est rate swaps, currency swaps, and other types of swap
agreements such as
caps, collars, and floors. Swap agreements can be highly
volatile and may have
a considerable impact on a Fund's performance. Swap
agreements are subject to
risks related to the counterparty's ability to perform, and
may decline in
value if the counterparty's creditworthiness deteriorates. A
Fund may also suf-
fer losses if it is unable to terminate outstanding swap
agreements or reduce
its exposure through offsetting transactions.
Indexed Securities. Certain of the Underlying Smith Barney
Funds may invest in
indexed securities, including inverse floaters, whose value
is linked to cur-
rencies, interest rates, commodities, indices, or other
financial indicators.
Indexed securities may be positively or negatively indexed
(i.e., their value
may increase or decrease if the underlying instrument
appreciates), and may
have return characteristics similar to direct investments in
the underlying
instrument or to one or more options on the underlying
instrument. Indexed
securities may be more volatile than the underlying
instrument itself.
Investment in Utility Securities. The Smith Barney
Utilities Fund is particu-
larly subject to risks that are inherent to the utility
industries, including
difficulty in obtaining an adequate return on invested
capital, difficulty in
financing large construction programs during an inflationary
period, restric-
tions on operations and increased cost and delays
attributable to environmental
considerations and regulation, difficulty in raising capital
in adequate
amounts on reasonable terms in periods of high inflation and
unsettled capital
markets, increased costs and reduced availability of certain
types of fuel,
occasional reduced availability and high costs of natural
gas for resales, the
effects of energy conservation, the effects of a national
energy policy and
lengthy delays and greatly increased costs and other
problems associated with
the design, construction, licensing, regulation and
operation of nuclear facil-
ities for electric generation, including, among other
considerations, the prob-
lems associated with the use of radioactive materials and
the disposal of
radioactive wastes. There are substantial differences
between the regulatory
practices and policies of various jurisdictions, and any
given regulatory
agency may make major shifts in policy from time to time.
There is no assurance
that regulatory authorities will grant rate increases in the
future or that
such
A-3
<PAGE>
Smith Barney Concert Series Inc.
APPENDIX (CONTINUED)
increases will be adequate to permit the payment of
dividends on common stocks.
Additionally, existing and possible future regulatory
legislation may make it
even more difficult for these utilities to obtain adequate
relief. Certain of
the issuers of securities held by the Smith Barney Utilities
Fund may own or
operate nuclear generating facilities. Governmental
authorities may from time
to time review existing policies, and impose additional
requirements governing
the licensing, construction and operation of nuclear power
plants.
Each of the risks referred to above could adversely affect
the ability and
inclination of public utilities to declare or pay dividends
and the ability of
holders of common stock to realize any value from the assets
of the issuer upon
liquidation or bankruptcy. All of the utilities that are
issuers of the securi-
ties held by the Smith Barney Utilities Fund have been
experiencing one or more
of these problems in varying degrees. Moreover, price
disparities within
selected utility groups and discrepancies in relation to
averages and indices
have occurred frequently for reasons not directly related to
the general move-
ments or price trends of utility common stocks. Causes of
these discrepancies
include changes in the overall demand for and supply of
various securities (in-
cluding the potentially depressing effect of new stock
offerings), and changes
in investment objectives, market expectations or cash
requirements of other
purchasers and sellers of securities.
A-4
PART B
The Statement of Additional Information for the High Growth,
Growth, Balanced, Conservative and Income Portfolios of
Smith Barney Concert Series Inc. (the "Fund") is
incorporated by reference to Part B of Post-Effective
Amendment No. 1 to the Fund's Registration Statement filed
on August 7, 1996 (Accession No. 91155-96-315).
The Statement of Additional Information for the Vintage High
Growth, Vintage Growth, Vintage Balanced, Vintage
Conservative and Vintage Income Portfolios of the Fund is
filed herein.
Statement of Additional Information
_________, 1996
SMITH BARNEY CONCERT SERIES INC.
Vintage High Growth Portfolio
Vintage Growth Portfolio
Vintage Balanced Portfolio
Vintage Conservative Portfolio
Vintage Income Portfolio
388 Greenwich Street, New York, New York 10013 (212) 723-
9218
This Statement of Additional Information expands upon and
supplements the information contained in the current
Prospectuses of Smith Barney Concert Series Inc. (the
"Concert Series") dated _________, 1996, as amended or
supplemented from time to time (collectively the
"Prospectus"), and should be read in conjunction therewith.
The Concert Series currently offers ten investment
portfolios, five of which are offered by this Statement of
Additional Information (individually, a "Portfolio" and
collectively, the "Vintage Portfolios"). Each Portfolio
seeks to achieve its objective by investing in a number of
open-end management investment companies or series thereof
("Underlying Smith Barney Funds") for which Smith Barney
Inc. ("Smith Barney") now or in the future acts as principal
underwriter or for which Smith Barney, Smith Barney Mutual
Funds Management Inc. ("SBMFM") or Smith Barney Strategy
Advisers Inc. ("SBSA") now or in the future acts as
investment adviser. A Concert Series' Prospectus may be
obtained from designated insurance companies offering
separate accounts ("Separate Accounts") which fund certain
variable annuity and variable life insurance contracts (the
"contract") or by writing or calling the Concert Series at
the address or telephone number listed above. This
Statement of Additional Information, although not in itself
a prospectus, is incorporated by reference into the
Prospectus in its entirety.
TABLE OF CONTENTS
For ease of reference, the same section headings are used in
the Prospectus for the Portfolios and this Statement of
Additional Information, except as shown below:
Caption Page
Management Of The Concert Series
Investment Objectives And Management Policies
Purchase Of Shares
Redemption Of Shares
Distributors
Valuation Of Shares
Exchange Privilege
IRA And Other Prototype Plans
Performance
Taxes (See In The Prospectus "Dividends, Distributions And
Taxes")
Voting (See In The Prospectus "Additional Information")
Additional Information
Financial Statement
Appendix - Ratings Of Debt Obligations A-1
MANAGEMENT OF THE CONCERT SERIES
The executive officers of the Concert Series are employees
of certain of the organizations that provide services to the
Concert Series. These organizations are the following:
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
These organizations and the functions they perform for the
Concert Series are discussed in the Prospectus and in this
Statement of Additional Information.
Directors and Executive Officers of the Concert Series
The names of the directors and executive officers of the
Concert Series, together with information as to their
principal business occupations during the past five years,
are shown below. Each director who is an "interested
person" of the Concert Series, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), is
indicated by an asterisk.
Walter E. Auch, Director (Age 75). Consultant to
companies in the financial services industry; Director of
Pimco Advisers L.P. His address is 6001 N. 62nd Place,
Paradise Valley, Arizona 85253.
Martin Brody, Director (Age 74). Vice Chairman of the
Board of Restaurant Associates Industries, Inc. His address
is c/o HMK Associates, 30 Columbia Turnpike, Florham Park,
New Jersey 07932.
H. John Ellis, Jr., Director (Age 67). Prior to 1992,
Executive Vice President of the Consulting Services Division
of Shearson Lehman Brothers Inc. ("Shearson Lehman
Brothers"). His address is 858 East Crystal Downs Drive,
Frankfort, Michigan 49635.
Stephen E. Kaufman, Director (Age 64). Attorney. His
address is 277 Park Avenue, New York, New York 10172.
Armon E. Kamesar, Director (Age 67). Chairman of TEC,
an international organization of Chief Executive Officers;
Trustee, U.S. Bankruptcy Court. His address is 7328 Country
Club Drive, LaJolla, California 92037.
*Heath B. McLendon, Chairman of the Board (Age 63).
Managing Director of Smith Barney, Chairman of the Board of
Smith Barney Strategy Advisers Inc. and President of SBMFM;
prior to July 1993, Senior Executive Vice President of
Shearson Lehman Brothers, Vice Chairman of Asset Management
Division of Shearson Lehman Brothers. Mr. McLendon also
serves as Chairman of the Board of 42 investment companies
sponsored by Smith Barney ("Smith Barney Mutual Funds").
His address is 388 Greenwich Street, New York, New York
10013.
Madelon DeVoe Talley, Director (Age 63). Author.
Governor-at-large of the National Association of Securities
Dealers, Inc. Her address is 876 Park Avenue, New York, New
York 10021.
Jessica M. Bibliowicz, President (Age 36). Executive
Vice President of Smith Barney; prior to 1994, Director of
Sales and Marketing for Prudential Mutual Funds. Ms.
Bibliowicz also serves as President of 40 Smith Barney
Mutual Funds. Her address is 388 Greenwich Street, New
York, New York 10013.
Lewis E. Daidone, Senior Vice President and Treasurer
(Age 38). Managing Director of Smith Barney; Director and
Senior Vice President of SBMFM. Mr. Daidone also serves as
Senior Vice President and Treasurer of 42 Smith Barney
Mutual Funds. His address is 388 Greenwich Street, New
York, New York 10013.
Christina T. Sydor, Secretary (Age 45). Managing
Director of Smith Barney; General Counsel and Secretary of
SBMFM. Ms. Sydor also serves as Secretary of 42 Smith
Barney Mutual Funds. Her address is 388 Greenwich Street,
New York, New York 10013.
No officer, director or employee of SBMFM, or any of its
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 SBMFM, or any of its
affiliates a fee of $5,000 per annum plus $100 per Portfolio
per meeting attended and reimburses travel and out-of-pocket
expenses.
The following table shows the estimated compensation to be
provided by Concert Series to the directors during its first
fiscal year and compensation paid to such directors during
the 1995 calendar year by other Smith Barney Mutual Funds:
Compensation Table
Total
Pension or Total Number
Retirement BenefitsEstimatedCompensation
of Funds
AggregateAccrued as Expense Benefits on From
Served in
Name Compensationof Concert Series RetirementFund C
omplex Complex
Heath B. McLendon None None None None
41
Walter Auch$ 7,000 None None $ 19,500 2
Martin Brody7,000 None None 103,625 15
H. John Ellis7,000 None None None 1
Armon E. Kamesar7,000 None None 19,500 1
Stephen E. Kaufman 7,000 None None 83,600
10
Madelon DeVoe Talley 7,000 None None 63,500
3
Investment Manager - SBMFM
SBMFM acts as investment manager to each Portfolio pursuant
to separate asset allocation and administration agreements
(the "Asset Allocation and Administration Agreements").
SBMFM is a wholly owned subsidiary of Smith Barney Holdings
Inc. ("Holdings") and Holdings is a wholly owned subsidiary
of Travelers Group Inc. ("Travelers"). The Asset
Allocation and Administration Agreements with respect to
each Portfolio were approved by the Board of Directors,
including a majority of the directors who are not
"interested persons" of the Concert Series or SBMFM (the
"Independent Directors"), on December 14, 1995 and by the
initial shareholder of the respective Portfolios on January
31, 1996. Pursuant to the Asset Allocation and
Administration Agreements, SBMFM will determine how each
Portfolio's assets will be invested in the Underlying Smith
Barney Funds and in repurchase agreements pursuant to the
investment objectives and policies of each Portfolio set
forth in the Prospectus and make recommendations to the
Board of Directors concerning changes to (a) the Underlying
Smith Barney Funds in which the Vintage Portfolios may
invest, (b) the percentage range of assets that may be
invested by each Portfolio in any one Underlying Smith
Barney Fund and (c) the percentage range of assets of any
Portfolio that may be invested in equity funds and fixed
income funds (including money market funds). In addition to
such services, SBMFM pays the salaries of all officers and
employees who are employed by both it and the Concert
Series, maintains office facilities for the Concert Series,
furnishes the Concert Series with statistical and research
data, clerical help and accounting, data processing,
bookkeeping, internal auditing and legal services and
certain other services required by the Concert Series and
each Portfolio, prepares reports to each Portfolio's
shareholders and prepares tax returns, reports to and
filings with the Securities and Exchange Commission (the
"SEC") and state Blue Sky authorities. SBMFM provides
investment advisory and management services to investment
companies affiliated with Smith Barney.
The management fee for each Portfolio is calculated at the
annual rate of 0.35% of that Portfolio's average daily net
assets. Under the Asset Allocation and Administration
Agreements, SBMFM has agreed to bear all expenses incurred
in the operation of each Portfolio other than the management
fee, the fees payable pursuant to the plan adopted pursuant
to Rule 12b-1 under the 1940 Act and extraordinary expenses.
Such expenses include taxes, interest, brokerage fees and
commissions, if any; fees of directors who are not officers,
directors, shareholders or employees of Smith Barney or
SBMFM; SEC fees and state Blue Sky qualification fees;
charges of custodians; transfer and dividend disbursing
agent's fees; certain insurance premiums; outside auditing
and legal expenses; costs of maintenance of corporate
existence; investor services (including allocated telephone
and personnel expenses); and costs of preparation and
printing of the prospectus for regulatory purposes and for
distribution to existing shareholders; cost of shareholders'
reports and shareholder meetings and meetings of the
officers or Board of Directors of the Concert Series.
Counsel and Auditors
Willkie Farr & Gallagher serves as legal counsel to the
Concert Series. The Independent Directors of the Concert
Series have selected Stroock & Stroock & Lavan as their
legal counsel.
KPMG Peat Marwick LLP, independent accountants, 345 Park
Avenue, New York, New York 10154, have been selected as
auditors for the Concert Series and will render an opinion
on the Concert Series' financial statements annually.
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
The Prospectus discusses the investment objectives of the
Vintage Portfolios and each of the Underlying Smith Barney
Funds in which the Vintage 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 Vintage 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
Vintage Portfolios or the Underlying Smith Barney Funds will
be achieved.
The Articles of Incorporation of the Concert Series permit
the Board of Directors to establish additional portfolios of
the Concert Series from time to time. The investment
objectives, policies and restrictions applicable to
additional portfolios would be established by the Board of
Directors at the time such portfolios were established and
may differ from those set forth in the Prospectus and this
Statement of Additional Information.
MONEY MARKET INSTRUMENTS. Each of the Underlying Smith
Barney Funds may invest in certain types of money market
instruments which may include: U.S. government securities;
certificates of deposit ("CDs"), time deposits ("TDs") and
bankers' acceptances issued by domestic banks (including
their branches located outside the United States and
subsidiaries located in Canada), domestic branches of
foreign banks, savings and loan associations and similar
institutions; high grade commercial paper; and repurchase
agreements with respect to the foregoing types of
instruments. The following is a more detailed description
of such money market instruments.
U.S. GOVERNMENT SECURITIES. U.S. government securities
include debt obligations of varying maturities issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities. U.S. government securities include not
only direct obligations of the U.S. Treasury, but also
securities issued or guaranteed by the Federal Housing
Administration, Farmers Home Administration, Export-Import
Bank of the United States, Small Business Administration,
Government National Mortgage Association ("GNMA"), General
Services Administration, Central Bank for Cooperatives,
Federal Intermediate Credit Banks, Federal Land Banks,
Federal National Mortgage Association ("FNMA"), Maritime
Administration, Tennessee Valley Authority, District of
Columbia Armory Board, Student Loan Marketing Association,
International Bank for Reconstruction and Development and
Resolution Trust Corporation. Certain U.S. government
securities, such as those issued or guaranteed by GNMA, FNMA
and Federal Home Loan Mortgage Corporation ("FHLMC"), are
mortgage-related securities. Because the U.S. Government is
not obligated by law to provide support to an
instrumentality that it sponsors, a Portfolio or an
Underlying Smith Barney Fund will invest in obligations
issued by such an instrumentality only if its investment
adviser determines that the credit risk with respect to the
instrumentality does not make its securities unsuitable for
investment by the Portfolio or the Fund, as the case may be.
BANK OBLIGATIONS. Domestic commercial banks organized under
Federal law are supervised and examined by the Comptroller
of the Currency and are required to be members of the
Federal Reserve System and to be insured by the Federal
Deposit Insurance Corporation (the "FDIC"). Domestic banks
organized under state law are supervised and examined by
state banking authorities but are members of the Federal
Reserve System only if they elect to join. Most state banks
are insured by the FDIC (although such insurance may not be
of material benefit to an Underlying Smith Barney Fund,
depending upon the principal amount of certificates of
deposit ("CDs") of each held by the Fund) and are subject to
Federal examination and to a substantial body of Federal law
and regulation. As a result of Federal and state laws and
regulations, domestic branches of domestic banks are, among
other things, generally required to maintain specified
levels of reserves, and are subject to other supervision and
regulation designed to promote financial soundness.
Obligations of foreign branches of U.S. banks, such as CDs
and TDs, may be general obligations of the parent bank in
addition to the issuing branch, or may be limited by the
terms of a specific obligation and governmental regulation.
Obligations of foreign branches of U.S. banks and foreign
banks are subject to different risks than are those of U.S.
banks or U.S. branches of foreign banks. These risks
include foreign economic and political developments, foreign
governmental restrictions that may adversely affect payment
of principal and interest on the obligations, foreign
exchange controls and foreign withholding and other taxes on
interest income. Foreign branches of U.S. banks are not
necessarily subject to the same or similar regulatory
requirements that apply to U.S. banks, such as mandatory
reserve requirements, loan limitations and accounting,
auditing and financial recordkeeping requirements. In
addition, less information may be publicly available about a
foreign branch of a U.S. bank than about a U.S. bank. CDs
issued by wholly owned Canadian subsidiaries of U.S. banks
are guaranteed as to repayment of principal and interest,
but not as to sovereign risk, by the U.S. parent bank.
Obligations of U.S. branches of foreign banks may be general
obligations of the parent bank in addition to the issuing
branch, or may be limited by the terms of a specific
obligation and by Federal and state regulation as well as
governmental action in the country in which the foreign bank
has its head office. A U.S. branch of a foreign bank with
assets in excess of $1 billion may or may not be subject to
reserve requirements imposed by the Federal Reserve System
or by the state in which the branch is located if the branch
is licensed in that state. In addition, branches licensed
by the Comptroller of the Currency and branches licensed by
certain states ("State Branches") may or may not be required
to: (a) pledge to the regulator by depositing assets with a
designated bank within the state, an amount of its assets
equal to 5% of its total liabilities; and (b) maintain
assets within the state in an amount equal to a specified
percentage of the aggregate amount of liabilities of the
foreign bank payable at or through all of its agencies or
branches within the state. The deposits of State Branches
may not necessarily be insured by the FDIC. In addition,
there may be less publicly available information about a
U.S. branch of a foreign bank than about a U.S. bank.
COMMERCIAL PAPER. Commercial paper consists of short-term
(usually from 1 to 270 days) unsecured promissory notes
issued by corporations in order to finance their current
operations. A variable amount master demand note (which is
a type of commercial paper) represents a direct borrowing
arrangement involving periodically fluctuating rates of
interest under a letter agreement between a commercial paper
issuer and an institutional lender, such as one of the
Underlying Smith Barney Funds, pursuant to which the lender
may determine to invest varying amounts. Transfer of such
notes is usually restricted by the issuer, and there is no
secondary trading market for such notes.
REPURCHASE AGREEMENTS. The Portfolios and the Underlying
Smith Barney Funds may purchase securities and concurrently
enter into repurchase agreements with certain member banks
which are the issuers of instruments acceptable for purchase
by the Portfolio or the Fund, as the case may be, and with
certain dealers on the Federal Reserve Bank of New York's
list of reporting dealers. Repurchase agreements are
contracts under which the buyer of a security simultaneously
commits to resell the security to the seller at an agreed-
upon price and date. Under each repurchase agreement, the
selling institution will be required to maintain the value
of the securities subject to the repurchase agreement at not
less than their repurchase price. Repurchase agreements
could involve certain risks in the event of default or
insolvency of the other party, including possible delays or
restrictions upon a Portfolio's or a Fund's ability to
dispose of the underlying securities, the risk of a possible
decline in the value of the underlying securities during the
period in which the Portfolio or Fund seeks to assert its
rights to them, the risk of incurring expenses associated
with asserting those rights and the risk of losing all or
part of the income from the repurchase agreement.
WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. To
secure an advantageous price or yield, certain of the
Underlying Smith Barney Funds may purchase certain
securities on a when-issued basis or purchase or sell
securities for delayed delivery. Delivery of the securities
in such cases occurs beyond the normal settlement periods,
but no payment or delivery is made by a Fund prior to the
reciprocal delivery or payment by the other party to the
transaction. In entering into a when-issued or delayed-
delivery transaction, an Underlying Smith Barney Fund will
rely on the other party to consummate the transaction and
may be disadvantaged if the other party fails to do so.
U.S. government securities normally are subject to changes
in value based upon changes, real or anticipated, in the
level of interest rates and the public's perception of the
creditworthiness of the issuers. In general, U.S.
government securities tend to appreciate when interest rates
decline and depreciate when interest rates rise. Purchasing
these securities on a when-issued or delayed-delivery basis,
therefore, can involve the risk that the yields available in
the market when the delivery takes place may actually be
higher than those obtained in the transaction itself.
Similarly, the sale of U.S. government securities for
delayed delivery can involve the risk that the prices
available in the market when the delivery is made may
actually be higher than those obtained in the transaction
itself.
In the case of the purchase by an Underlying Smith Barney
Fund of securities on a when-issued or delayed-delivery
basis, a segregated account in the name of the Fund
consisting of cash or liquid debt securities equal to the
amount of the when-issued or delayed-delivery commitments
will be established at the Fund's custodian. For the
purpose of determining the adequacy of the securities in the
accounts, the deposited securities will be valued at market
or fair value. If the market or fair value of the
securities declines, additional cash or securities will be
placed in the account daily so that the value of the account
will equal the amount of such commitments by the Fund
involved. On the settlement date, a Fund will meet its
obligations from then-available cash flow, the sale of
securities held in the segregated account, the sale of other
securities or, although it would not normally expect to do
so, from the sale of the securities purchased on a when-
issued or delayed-delivery basis (which may have a value
greater or less than the Fund's payment obligations).
LENDING OF PORTFOLIO SECURITIES. Certain of the Underlying
Smith Barney Funds have the ability to lend portfolio
securities to brokers, dealers and other financial
organizations. A Fund will not lend portfolio securities to
Smith Barney unless it has applied for and received specific
authority to do so from the SEC. Loans of portfolio
securities will be collateralized by cash, letters of credit
or U.S. government securities which are maintained at all
times in an amount at least equal to the current market
value of the loaned securities. From time to time, an
Underlying Smith Barney Fund may pay a part of the interest
earned from the investment of collateral received for
securities loaned to the borrower and/or a third party which
is unaffiliated with the Fund and is acting as a "finder."
By lending its securities, an Underlying Smith Barney Fund
can increase its income by continuing to receive interest on
the loaned securities as well as by either investing the
cash collateral in short-term instruments or obtaining yield
in the form of interest paid by the borrower when U.S.
government securities are used as collateral. A Fund will
comply with the following conditions whenever its portfolio
securities are loaned: (a) the Fund must receive at least
100% cash collateral or equivalent securities from the
borrower; (b) the borrower must increase such collateral
whenever the market value of the securities loaned rises
above the level of such collateral; (c) the Fund must be
able to terminate the loan at any time; (d) the Fund must
receive reasonable interest on the loan, as well as any
dividends, interest or other distributions on the loaned
securities, and any increase in market value; (e) the Fund
may pay only reasonable custodian fees in connection with
the loan; and (f) voting rights on the loaned securities may
pass to the borrower; provided, however, that if a material
event adversely affecting the investment in the loaned
securities occurs, the Fund's trustees or directors, as the
case may be, must terminate the loan and regain the right to
vote the securities. The risks in lending portfolio
securities, as with other extensions of secured credit,
consist of a possible delay in receiving additional
collateral or in the recovery of the securities or possible
loss of rights in the collateral should the borrower fail
financially. Loans will be made to firms deemed by each
Underlying Smith Barney Fund's investment adviser to be of
good standing and will not be made unless, in the judgment
of the adviser, the consideration to be earned from such
loans would justify the risk.
OPTIONS ON SECURITIES. Certain of the Underlying Smith
Barney Funds may engage in transactions in options on
securities, which, depending on the Fund, may include the
writing of covered put options and covered call options, the
purchase of put and call options and the entry into closing
transactions.
The principal reason for writing covered call options on
securities is to attempt to realize, through the receipt of
premiums, a greater return than would be realized on the
securities alone. Certain Underlying Smith Barney Funds,
however, may engage in option transactions only to hedge
against adverse price movements in the securities that it
holds or may wish to purchase and the currencies in which
certain portfolio securities may be denominated. In return
for a premium, the writer of a covered call option forfeits
the right to any appreciation in the value of the underlying
security above the strike price for the life of the option
(or until a closing purchase transaction can be effected).
Nevertheless, the call writer retains the risk of a decline
in the price of the underlying security. Similarly, the
principal reason for writing covered put options is to
realize income in the form of premiums. The writer of a
covered put option accepts the risk of a decline in the
price of the underlying security. The size of the premiums
that a Fund may receive may be adversely affected as new or
existing institutions, including other investment companies,
engage in or increase their option-writing activities.
Options written by an Underlying Smith Barney Fund normally
will have expiration dates between one and nine months from
the date written. The exercise price of the options may be
below, equal to or above the market values of the underlying
securities at the times the options are written. In the
case of call options, these exercise prices are referred to
as "in-the-money," "at-the-money" and "out-of-the-money,"
respectively. An Underlying Smith Barney Fund with option-
writing authority may write (a) in-the-money call options
when its investment adviser expects that the price of the
underlying security will remain flat or decline moderately
during the option period, (b) at-the-money call options when
its adviser expects that the price of the underlying
security will remain flat or advance moderately during the
option period and (c) out-of-the-money call options when its
adviser expects that the price of the underlying security
may increase but not above a price equal to the sum of the
exercise price plus the premiums received from writing the
call option. In any of the preceding situations, if the
market price of the underlying security declines and the
security is sold at this lower price, the amount of any
realized loss will be offset wholly or in part by the
premium received. Out-of-the-money, at-the-money and in-the-
money put options (the reverse of call options as to the
relation of exercise price to market price) may be utilized
in the same market environments that such call options are
used in equivalent transactions.
So long as the obligation of an Underlying Smith Barney Fund
as the writer of an option continues, the Fund may be
assigned an exercise notice by the broker-dealer through
which the option was sold, requiring the Fund to deliver, in
the case of a call, or take delivery of, in the case of a
put, the underlying security against payment of the exercise
price. This obligation terminates when the option expires
or the Fund effects a closing purchase transaction. A Fund
can no longer effect a closing purchase transaction with
respect to an option once it has been assigned an exercise
notice. To secure its obligation to deliver the underlying
security when it writes a call option, or to pay for the
underlying security when it writes a put option, an
Underlying Smith Barney Fund will be required to deposit in
escrow the underlying security or other assets in accordance
with the rules of the Options Clearing Corporation (the
"Clearing Corporation") or similar foreign clearing
corporation and of the securities exchange on which the
option is written.
Certain Underlying Smith Barney Funds may purchase and sell
put, call and other types of option securities that are
traded on domestic or foreign exchanges or the over-the-
counter market including, but not limited to, "spread"
options, "knock-out" options, "knock-in" options and
"average rate" or "look-back" options. "Spread" options are
dependent upon the difference between the price of two
securities or futures contracts, "knock-out" options are
canceled if the price of the underlying asset reaches a
trigger level prior to expiration, "knock-in" options only
have value if the price of the underlying asset reaches a
trigger level and, "average rate" or "look-back" options are
options where, at expiration, the option's strike price is
set based on either the average, maximum or minimum price of
the asset over the period of the option.
An option position may be closed out only where there exists
a secondary market for an option of the same series on a
recognized securities exchange or in the over-the-counter
market. Certain Underlying Smith Barney Funds with option-
writing authority may write options on U.S. or foreign
exchanges and in the over-the-counter market.
An Underlying Smith Barney Fund may realize a profit or loss
upon entering into a closing transaction. In cases in which
a Fund has written an option, it will realize a profit if
the cost of the closing purchase transaction is less than
the premium received upon writing the original option and
will incur a loss if the cost of the closing purchase
transaction exceeds the premium received upon writing the
original option. Similarly, when a Fund has purchased an
option and engages in a closing sale transaction, whether
the Fund realizes a profit or loss will depend upon whether
the amount received in the closing sale transaction is more
or less than the premium that the Fund initially paid for
the original option plus the related transaction costs.
Although an Underlying Smith Barney Fund generally will
purchase or write only those options for which its adviser
believes there is an active secondary market so as to
facilitate closing transactions, there is no assurance that
sufficient trading interest to create a liquid secondary
market on a securities exchange will exist for any
particular option or at any particular time, and for some
options no such secondary market may exist. A liquid
secondary market in an option may cease to exist for a
variety of reasons. In the past, for example, higher than
anticipated trading activity or order flow, or other
unforeseen events, have at times rendered inadequate certain
of the facilities of the Clearing Corporation and U.S. and
foreign securities exchanges and resulted in the institution
of special procedures, such as trading rotations,
restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise
interfere with the timely execution of customers' orders,
will not recur. In such event, it might not be possible to
effect closing transactions in particular options. If as a
covered call option writer a Fund is unable to effect
closing purchase transaction in a secondary market, it will
not be able to sell the underlying security until the option
expires or it delivers the underlying security upon
exercise.
Securities exchanges generally have established limitations
governing the maximum number of calls and puts of each class
which may be held or written, or exercised within certain
time periods, by an investor or group of investors acting in
concert (regardless of whether the options are written on
the same or different securities exchanges or are held,
written or exercised in one or more accounts or through one
or more brokers). It is possible that the Underlying Smith
Barney Funds with authority to engage in options
transactions and other clients of their respective advisers
and certain of their affiliates may be considered to be such
a group. A securities exchange may order the liquidation of
positions found to be in violation of these limits and it
may impose certain other sanctions.
In the case of options written by an Underlying Smith Barney
Fund that are deemed covered by virtue of the Fund's holding
convertible or exchangeable preferred stock or debt
securities, the time required to convert or exchange and
obtain physical delivery of the underlying common stocks
with respect to which the Fund has written options may
exceed the time within which the Fund must make delivery in
accordance with an exercise notice. In these instances, an
Underlying Smith Barney Fund may purchase or borrow
temporarily the underlying securities for purposes of
physical delivery. By so doing, the Fund will not bear any
market risk because the Fund will have the absolute right to
receive from the issuer of the underlying security an equal
number of shares to replace the borrowed stock, but the Fund
may incur additional transaction costs or interest expenses
in connection with any such purchase or borrowing.
Additional risks exist with respect to certain of the U.S.
government securities for which an Underlying Smith Barney
Fund may write covered call options. If a Fund writes
covered call options on mortgage-backed securities, the
securities that it holds as cover may, because of scheduled
amortization or unscheduled prepayments, cease to be
sufficient cover. The Fund will compensate for the decline
in the value of the cover by purchasing an appropriate
additional amount of those securities.
STOCK INDEX OPTIONS. Certain of the Underlying Smith Barney
Funds may purchase and write put and call options on U.S.
stock indexes listed on U.S. exchanges for the purpose of
hedging its portfolio. A stock index fluctuates with
changes in the market values of the stocks included in the
index. Some stock index options are based on a broad market
index such as the New York Stock Exchange Composite Index or
a narrower market index such as the Standard & Poor's 100.
Indexes also are based on an industry or market segment such
as the American Stock Exchange Oil and Gas Index or the
Computer and Business Equipment Index.
Options on stock indexes are similar to options on stock
except that (a) the expiration cycles of stock index options
are monthly, while those of stock options currently are
quarterly, and (b) the delivery requirements are different.
Instead of giving the right to take or make delivery of
stock at a specified price, an option on a stock index gives
the holder the right to receive a cash "exercise settlement
amount" equal to (a) the amount, if any, by which the fixed
exercise price of the option exceeds (in the case of a put)
or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by
(b) a fixed "index multiplier." Receipt of this cash amount
will depend upon the closing level of the stock index upon
which the option is based being greater than, in the case of
a call, or less than, in the case of a put, the exercise
price of the option. The amount of cash received will be
equal to such difference between the closing price of the
index and the exercise price of the option expressed in
dollars times a specified multiple. The writer of the
option is obligated, in return for the premium received, to
make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by
entering into a closing transaction on an exchange or it may
let the options expire unexercised.
The effectiveness of purchasing or writing stock index
options as a hedging technique will depend upon the extent
to which price movements in the portion of a securities
portfolio being hedged correlate with price movements of the
stock index selected. Because the value of an index option
depends upon movements in the level of the index rather than
the price of a particular stock, whether a Fund will realize
a gain or loss from the purchase or writing of options on an
index depends upon movements in the level of stock prices in
the stock market generally or, in the case of certain
indexes, in an industry or market segment, rather than
movements in the price of a particular stock. Accordingly,
successful use by a Fund of options on stock indexes will be
subject to its adviser's ability to predict correctly
movements in the direction of the stock market generally or
of a particular industry. This requires different skills
and techniques than predicting changes in the prices of
individual stocks.
An Underlying Smith Barney Fund will engage in stock index
options transactions only when determined by its adviser to
be consistent with the Fund's efforts to control risk.
There can be no assurance that such judgment will be
accurate or that the use of these portfolio strategies will
be successful. When a Fund writes an option on a stock
index, the Fund will establish a segregated account with its
custodian in an amount equal to the market value of the
option and will maintain the account while the option is
open.
MORTGAGE-RELATED SECURITIES. The average maturity of pass-
through pools of mortgage related securities varies with the
maturities of the underlying mortgage instruments. In
addition, a pool's stated maturity may be shortened by
unscheduled payments on the underlying mortgages. Factors
affecting mortgage prepayments include the level of interest
rates, general economic and social conditions, the location
of the mortgaged property and age of the mortgage. Because
prepayment rates of individual pools vary widely, it is not
possible to accurately predict the average life of a
particular pool. Common practice is to assume that
prepayments will result in an average life ranging from 2 to
10 years for pools of fixed-rate 30-year mortgages. Pools
of mortgages with other maturities or different
characteristics will have varying average life assumptions.
Mortgage-related securities may be classified as private,
governmental or government-related, depending on the issuer
or guarantor. Private mortgage-related securities represent
pass-through pools consisting principally of conventional
residential mortgage loans created by non-governmental
issuers, such as commercial banks, savings and loan
associations and private mortgage insurance companies.
Governmental mortgage-related securities are backed up by
the full faith and credit of the U.S. Government. GNMA, the
principal guarantor of such securities, is a wholly owned
U.S. government corporation within the Department of Housing
and Urban Development. Government-related mortgage-related
securities are not backed by the full faith and credit of
the U.S. Government. Issuers of such securities include
FNMA and FHLMC. FNMA is a government-sponsored corporation
owned entirely by private stockholders, which is subject to
general regulation by the Secretary of Housing and Urban
Development. Pass-through securities issued by FNMA are
guaranteed as to timely payment of principal and interest by
FNMA. FHLMC is a corporate instrumentality of the U.S., the
stock of which is owned by Federal Home Loan Banks.
Participation certificates representing interests in
mortgages from FHLMC's national portfolio are guaranteed as
to the timely payment of interest and ultimate collection of
principal by FHLMC.
Private U.S. governmental or government-related entities
create mortgage loan pools offering pass-through investments
in addition to those described above. The mortgages
underlying these securities may be alternative mortgage
instruments, that is, mortgage instruments whose principal
or interest payments may vary or whose terms to maturity may
be shorter than previously customary. As new types of
mortgage-related securities are developed and offered to
investors, certain of the Underlying Smith Barney Funds,
consistent with their investment objective and policies, may
consider making investments in such new types of securities.
CURRENCY TRANSACTIONS. Certain of the Underlying Smith
Barney Funds may enter into forward currency exchange
transactions. A forward currency contract is an obligation
to purchase or sell a currency against another currency at a
future date and price as agreed upon by the parties. An
Underlying Smith Barney Fund that enters into a forward
currency contract may either accept or make delivery of the
currency at the maturity of the forward contract or, prior
to maturity, enter into a closing transaction involving the
purchase or sale of an offsetting contract. A Fund may
engage in forward currency transactions in anticipation of,
or to protect itself against, fluctuations in exchange
rates. A Fund might sell a particular foreign currency
forward, for example, when it holds bonds denominated in
that currency but anticipates, and seeks to be protected
against, decline in the currency against the U.S. dollar.
Similarly, a Fund may sell the U.S. dollar forward when it
holds bonds denominated in U.S. dollars but anticipates, and
seeks to be protected against, a decline in the U.S. dollar
relative to other currencies. Further, a Fund may purchase
a currency forward to "lock in" the price of securities
denominated in that currency which it anticipates
purchasing.
Transaction hedging is the purchase or sale of forward
currency contracts with respect to a specific receivable or
payable of the Fund generally arising in connection with the
purchase or sale of its securities. Position hedging,
generally, is the sale of forward currency contracts with
respect to portfolio security positions denominated or
quoted in the currency. A Fund may not position hedge with
respect to a particular currency to an extent greater than
the aggregate market value at any time of the security or
securities held in its portfolio denominated or quoted in or
currently convertible (such as through exercise of an option
or consummation of a forward currency contract) into that
particular currency, except that certain Underlying Smith
Barney Funds may utilize forward currency contracts
denominated in the European Currency Unit to hedge portfolio
security positions when a security or securities are
denominated in currencies of member countries in the
European Monetary System. If a Fund enters into a
transaction hedging or position hedging transaction, it will
cover the transaction through one or more of the following
methods: (a) ownership of the underlying currency or an
option to purchase such currency; (b) ownership of an option
to enter into an offsetting forward currency contract; (c)
entering into a forward contract to purchase currency being
sold or to sell currency being purchased, provided that such
covering contract is itself covered by any one of these
methods unless the covering contract closes out the first
contract; or (d) depositing into a segregated account with
the custodian or a sub-custodian of the Fund cash or readily
marketable securities in an amount equal to the value of the
Fund's total assets committed to the consummation of the
forward currency contract and not otherwise covered. In the
case of transaction hedging, any securities placed in an
account must be liquid debt securities. In any case, if the
value of the securities placed in the segregated account
declines, additional cash or securities will be placed in
the account so that the value of the account will equal the
above amount. Hedging transactions may be made from any
foreign currency into dollars or into other appropriate
currencies.
At or before the maturity of a forward contract, a Fund
either may sell a portfolio security and make delivery of
the currency, or retain the security and offset its
contractual obligation to deliver the currency by purchasing
a second contract pursuant to which the relevant Fund will
obtain, on the same maturity date, the same amount of the
currency which it is obligated to deliver. If a Fund
retains the portfolio security and engages in an offsetting
transaction, the Fund, at the time of execution of the
offsetting transaction, will incur a gain or loss to the
extent movement has occurred in forward contract prices.
Should forward prices decline during the period between a
Fund's entering into a forward contract for the sale of a
currency and the date that it enters into an offsetting
contract for the purchase of the currency, the Fund will
realize a gain to the extent that the price of the currency
it has agreed to sell exceeds the price of the currency it
has agreed to purchase. Should forward prices increase, the
Fund will suffer a loss to the extent the price of the
currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell.
The cost to a Fund of engaging in currency transactions
varies with factors such as the currency involved, the
length of the contract period and the market conditions then
prevailing. Because transactions in currency exchange are
usually conducted on a principal basis, no fees or
commissions are involved. The use of forward currency
contracts does not eliminate fluctuations in the underlying
prices of the securities, but it does establish a rate of
exchange that can be achieved in the future. In addition,
although forward currency contracts limit the risk of loss
due to a decline in the value of the hedged currency, at the
same time, they limit any potential gain that might result
should the value of the currency increase. If a devaluation
is generally anticipated a Fund may not be able to contract
to sell the currency at a price above the devaluation level
they anticipate.
FOREIGN CURRENCY OPTIONS. Certain Underlying Smith Barney
Funds may purchase or write put and call options on foreign
currencies for the purpose of hedging against changes in
future currency exchange rates. Foreign currency options
generally have three, six and nine month expiration cycles.
Put options convey the right to sell the underlying currency
at a price which is anticipated to be higher than the spot
price of the currency at the time the option expires. Call
options convey the right to buy the underlying currency at a
price which is expected to be lower than the spot price of
the currency at the time that the option expires.
An Underlying Smith Barney Fund may use foreign currency
options under the same circumstances that it could use
forward currency exchange transactions. A decline in the
dollar value of a foreign currency in which a Fund's
securities are denominated, for example, will reduce the
dollar value of the securities, even if their value in the
foreign currency remains constant. In order to protect
against such diminutions in the value of securities that it
holds, the Fund may purchase put options on the foreign
currency. If the value of the currency does decline, the
Fund will have the right to sell the currency for a fixed
amount in dollars and will thereby offset, in whole or in
part, the adverse effect on its securities that otherwise
would have resulted. Conversely, if a rise in the dollar
value of a currency in which securities to be acquired are
denominated is projected, thereby potentially increasing the
cost of the securities, the Fund may purchase call options
on the particular currency. The purchase of these options
could offset, at least partially, the effects of the adverse
movements in exchange rates. The benefit to the Fund
derived from purchases of foreign currency options, like the
benefit derived from other types of options, will be reduced
by the amount of the premium and related transaction costs.
In addition, if currency exchange rates do not move in the
direction or to the extent anticipated, the Fund could
sustain losses on transactions in foreign currency options
that would require it to forego a portion or all of the
benefits of advantageous changes in the rates.
FOREIGN GOVERNMENT SECURITIES. Among the foreign government
securities in which certain Underlying Smith Barney Funds
may invest are those issued by countries with developing
economies, which are countries in the initial stages of
their industrialization cycles. Investing in securities of
countries with developing economies involves exposure to
economic structures that are generally less diverse and less
mature, and to political systems that can be expected to
have less stability, than those of developed countries. The
markets of countries with developing economies historically
have been more volatile than markets of the more mature
economies of developed countries, but often have provided
higher rates of return to investors.
RATINGS AS INVESTMENT CRITERIA. In general, the ratings of
nationally recognized statistical rating organization
("NRSROs") represent the opinions of these agencies as to
the quality of securities that they rate. Such ratings,
however, are relative and subjective, and are not absolute
standards of quality and do not evaluate the market value
risk of the securities. These ratings will be used the by
Underlying Smith Barney Funds as initial criteria for the
selection of portfolio securities, but the Funds also will
rely upon the independent advice of their respective
advisers to evaluate potential investments. Among the
factors that will be considered are the long-term ability of
the issuer to pay principal and interest and general
economic trends. The Appendix to this Statement of
Additional Information contains further information
concerning the rating categories of NRSROs and their
significance.
Subsequent to its purchase by a Fund, an issue of securities
may cease to be rated or its rating may be reduced below the
minimum required for purchase by the Fund. In addition, it
is possible that an NRSRO might not change its rating of a
particular issue to reflect subsequent events. None of
these events will require sale of such securities by a Fund,
but the Fund's adviser will consider such events in its
determination of whether the Fund should continue to hold
the securities. In addition, to the extent that the ratings
change as a result of changes in such organizations or their
rating systems, or due to a corporate reorganization, a Fund
will attempt to use comparable ratings as standards for its
investments in accordance with its investment objective and
policies.
FUTURES CONTRACTS. The purpose of the acquisition or sale
of a futures contract by a Fund is to mitigate the effects
of fluctuations in interest rates or currency or market
values, depending on the type of contract, on securities or
their values without actually buying or selling the
securities. Of course, because the value of portfolio
securities will far exceed the value of the futures
contracts sold by a Fund, an increase in the value of the
futures contracts could only mitigate -- but not totally
offset -- the decline in the value of the Fund.
Certain of the Underlying Smith Barney Funds may enter into
futures contracts or related options on futures contracts
that are traded on a domestic or foreign exchange or in the
over-the-counter market. Generally, these investments may
be made solely for the purpose of hedging against changes in
the value of its portfolio securities due to anticipated
changes in interest rates, currency values and/or market
conditions when the transactions are economically
appropriate to the reduction of risks inherent in the
management of the Fund and not for purposes of speculation.
However, the International Equity Portfolio and the
International Balanced Portfolio may also enter into futures
transactions for non-hedging purposes, subject to applicable
law. The ability of the Funds to trade in futures contracts
may be limited by the requirements of the Internal Revenue
Code of 1986 as amended (the "Code"), applicable to a
regulated investment company.
No consideration is paid or received by a Fund upon entering
into a futures contract. Initially, a Fund will be required
to deposit with its custodian an amount of cash or cash
equivalents equal to approximately 1% to 10% of the contract
amount (this amount is subject to change by the board of
trade on which the contract is traded and members of such
board of trade may charge a higher amount). This amount,
known as initial margin, is in the nature of a performance
bond or good faith deposit on the contract and is returned
to a Fund upon termination of the futures contract, assuming
that all contractual obligations have been satisfied.
Subsequent payments, known as variation margin, to and from
the broker, will be made daily as the price of the
securities, currency or index underlying the futures
contract fluctuates, making the long and short positions in
the futures contract more or less valuable, a process known
as "marking-to-market." At any time prior to expiration of a
futures contract, a Fund may elect to close the position by
taking an opposite position, which will operate to terminate
the Fund's existing position in the contract.
Several risks are associated with the use of futures
contracts as a hedging device. Successful use of futures
contracts by a Fund is subject to the ability of its adviser
to predict correctly movements in interest rates, stock or
bond indices or foreign currency values. These predictions
involve skills and techniques that may be different from
those involved in the management of the portfolio being
hedged. In addition, there can be no assurance that there
will be a correlation between movements in the price of the
underlying securities, currency or index and movements in
the price of the securities which are the subject of the
hedge. A decision of whether, when and how to hedge
involves the exercise of skill and judgment, and even a well-
conceived hedge may be unsuccessful to some degree because
of market behavior or unexpected trends in interest rates or
currency values.
There is no assurance that an active market will exist for
future contracts at any particular time. Most futures
exchanges and boards of trade limit the amount of
fluctuation permitted in futures contract prices during a
single trading day. Once the daily limit has been reached
in a particular contract, no trades may be made that day at
a price beyond that limit. It is possible that futures
contract prices could move to the daily limit for several
consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures positions and
subjecting some futures traders to substantial losses. In
such event, and in the event of adverse price movements, a
Fund would be required to make daily cash payments of
variation margin, and an increase in the value of the
portion of the portfolio being hedged, if any, may partially
or completely offset losses on the futures contract. As
described above, however, there is no guarantee that the
price of the securities being hedged will, in fact,
correlate with the price movements in a futures contract and
thus provide an offset to losses on the futures contract.
If a Fund has hedged against the possibility of a change in
interest rates or currency or market values adversely
affecting the value of securities held in its portfolio and
rates or currency or market values move in a direction
opposite to that which the Fund has anticipated, the Fund
will lose part or all of the benefit of the increased value
of securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in
such situations, if the Fund had insufficient cash, it may
have to sell securities to meet daily variation margin
requirements at a time when it may be disadvantageous to do
so. These sales of securities may, but will not
necessarily, be at increased prices which reflect the change
in interest rates or currency values, as the case may be.
OPTIONS ON FUTURES CONTRACTS. An option on an interest rate
futures contract, as contrasted with the direct investment
in such a contract, gives the purchaser the right, in return
for the premium paid, to assume a position in the underlying
interest rate futures contract at a specified exercise price
at any time prior to the expiration date of the option. An
option on a foreign currency futures contract, as contracted
with the direct investment in such a contract, gives the
purchaser the right, but not the obligation, to assume a
long or short position in the relevant underlying foreign
currency futures contract at a predetermined exercise price
at a time in the future. Upon exercise of an option, the
delivery of the futures position by the writer of the option
to the holder of the option will be accompanied by delivery
of the accumulated balance in the writer's futures margin
account, which represents the amount by which the market
price of the futures contract exceeds, in the case of a
call, or is less than, in the case of a put, the exercise
price of the option on the futures contract. The potential
for loss related to the purchase of an option on futures
contracts is limited to the premium paid for the option
(plus transaction costs). Because the value of the option
is fixed at the point of sale, there are no daily cash
payments to reflect changes in the value of the underlying
contract; however, the value of the option does change daily
and that change would be reflected in the net asset value of
a Fund investing in the options.
Several risks are associated with options on futures
contracts. The ability to establish and close out positions
on such options will be subject to the existence of a liquid
market. In addition, the purchase of put or call options on
interest rate and foreign currency futures will be based
upon predictions by a Fund's adviser as to anticipate trends
in interest rates and currency values, as the case may be,
which could price to be incorrect. Even if the expectations
of an adviser are correct, there may be an imperfect
correlation between the change in the value of the options
and of the portfolio securities in the currencies being
hedged.
FOREIGN INVESTMENTS. Investors should recognize that
investing in foreign companies involves certain
considerations which are not typically associated with
investing in U.S. issuers. Since certain Underlying Smith
Barney Funds will be investing in securities denominated in
currencies other than the U.S. dollar, and since certain
Funds may temporarily hold funds in bank deposits or other
money market investments denominated in foreign currencies,
the Funds may be affected favorably or unfavorably by
exchange control regulations or changes in the exchange rate
between such currencies and the dollar. A change in the
value of a foreign currency relative to the U.S. dollar will
result in a corresponding change in the dollar value of a
Fund's assets denominated in that foreign currency. Changes
in foreign currency exchange rates may also affect the value
of dividends and interest earned, gains and losses realized
on the sale of securities and net investment income and
gain, if any, to be distributed to shareholders by the Fund.
The rate of exchange between the U.S. dollar and other
currencies is determined by the forces of supply and demand
in the foreign exchange markets. Changes in the exchange
rate may result over time from the interaction of many
factors directly or indirectly affecting economic conditions
and political developments in other countries. Of
particular importance are rates of inflation, interest rate
levels, the balance of payments and the extent of government
surpluses or deficits in the U.S. and the particular foreign
country, all of which are in turn sensitive to the monetary,
fiscal and trade policies pursued by the governments of the
U.S. and other foreign countries important to international
trade and finance. Governmental intervention may also play
a significant role. National governments rarely voluntarily
allow their currencies to float freely in response to
economic forces. Sovereign governments use a variety of
techniques, such as intervention by a country's central bank
or imposition of regulatory controls or taxes, to affect the
exchange rates of their currencies.
Securities held by an Underlying Smith Barney Fund may not
be registered with, nor the issuers thereof be subject to
reporting requirements of, the SEC. Accordingly, there may
be less publicly available information about the securities
and about the foreign company or government issuing them
than is available about a domestic company or government
entity. Foreign issuers are generally not subject to
uniform financial reporting standards, practices and
requirements comparable to those applicable to U.S. issuers.
In addition, with respect to some foreign countries, there
is the possibility of expropriation or confiscatory
taxation, limitations on the removal of funds or other
assets of the Fund, political or social instability, or
domestic developments which could affect U.S. investments in
those countries. Moreover, individual foreign economies may
differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency
and balance of payments positions. Certain Underlying Smith
Barney Funds may invest in securities of foreign governments
(or agencies or instrumentalities thereof), and many, if not
all, of the foregoing considerations apply to such
investments as well.
Securities of some foreign companies are less liquid and
their prices are more volatile than securities of comparable
domestic companies. Certain foreign countries are known to
experience long delays between the trade and settlement
dates of securities purchased or sold.
The interest payable on a Fund's foreign securities may be
subject to foreign withholding taxes, and while investors
may be able to claim some credit or deductions for such
taxes with respect to their allocated shares of such foreign
tax payments, the general effect of these taxes will be to
reduce the Fund's income. Additionally, the operating
expenses of a Fund can be expected to be higher than that of
an investment company investing exclusively in the U.S.
securities, since the expenses of the Fund, such as
custodial costs, valuation costs and communication costs, as
well as the rate of the investment advisory fees, though
similar to such expenses of some other international funds,
are higher than those costs incurred by other investment
companies.
FOREIGN COMMODITY EXCHANGES. Unlike trading on domestic
commodity exchanges, trading on foreign commodity exchanges
is not regulated by the Commodity Futures Trading Commission
and may be subject to greater risks than trading on domestic
exchanges. For example, some foreign exchanges may be
principal markets so that no common clearing facility exists
and a trader may look only to the broker for performance of
the contract. In addition, unless an Underlying Smith
Barney Fund trading on a foreign commodity exchange hedges
against fluctuations in the exchange rate between the U.S.
dollar and the currencies in which trading is done on
foreign exchanges, any profits that the Fund might realize
in trading could be eliminated by adverse changes in the
exchange rate, or the Fund could incur losses as a result of
those changes.
SHORT SALES. Certain of the Underlying Smith Barney Funds
may from time to time sell securities short. A short sale
is a transaction in which the Fund sells securities that it
does not own (but has borrowed) in anticipation of a decline
in the market price of the securities.
When a Fund makes a short sale, the proceeds it receives
from the sale are retained by a broker until the Fund
replaces the borrowed securities. To deliver the securities
to the buyer, the Fund must arrange through a broker to
borrow the securities and, in so doing, the Fund becomes
obligated to replace the securities borrowed at their market
price at the time of replacement, whatever that price may
be. The Fund may have to pay a premium to borrow the
securities and must pay any dividends or interest payable on
the securities until they are replaced.
A Fund's obligation to replace the securities borrowed in
connection with a short sale will be secured by collateral
deposited with the broker that consists of cash or U.S.
government securities. In addition, the Fund will place in
a segregated account with its custodian an amount of cash or
U.S. government securities equal to the difference, if any,
between (a) the market value of the securities sold at the
time they were sold short and (b) any cash or U.S.
government securities deposited as collateral with the
broker in connection with the short sale (not including the
proceeds of the short sale). Until it replaces the borrowed
securities, the Fund will maintain the segregated account
daily at a level so that the amount deposited in the account
plus the amount deposited with the broker (not including the
proceeds from the short sale) (a) will equal the current
market value of the securities sold short and (b) will not
be less than the market value of the securities at the time
they were sold short.
SHORT SALES AGAINST THE BOX. Certain of the Underlying
Smith Barney Funds may enter into a short sale of common
stock such that when the short position is open the Fund
involved owns an equal amount of preferred stocks or debt
securities, convertible or exchangeable, without payment of
further consideration, into an equal number of shares of the
common stock sold short. This kind of short sale, which is
described as "against the box," will be entered into by a
Fund for the purpose of receiving a portion of the interest
earned by the executing broker from the proceeds of the
sale. The proceeds of the sale will be held by the broker
until the settlement date when the Fund delivers the
convertible securities to close out its short position.
Although prior to delivery a Fund will have to pay an amount
equal to any dividends paid on the common stock sold short,
the Fund will receive the dividends from the preferred stock
or interest from the debt securities convertible into the
stock sold short, plus a portion of the interest earned from
the proceeds of the short sale. The Funds will deposit, in
a segregated account with their custodian, convertible
preferred stock or convertible debt securities in connection
with short sales against the box.
SWAP AGREEMENTS. Among the hedging transactions into which
certain Underlying Smith Barney Funds may enter are interest
rate swaps and the purchase or sale of interest rate caps
and floors. Interest rate swaps involve the exchange by a
Fund with another party of their respective commitments to
pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments. The purchase of an
interest rate cap entitles the purchaser, to the extent that
a specified index exceeds a predetermined interest rate, to
receive payments of interest on a notional principal amount
from the party selling such interest rate cap. The purchase
of an interest rate floor entitles the purchaser, to the
extent that a specified index falls below a predetermined
interest rate, to receive payment of interest on a notional
principal amount from the party selling such interest rate
floor.
Certain Underlying Smith Barney Funds may enter into
interest rate swaps, caps and floors on either an asset-
based or liability-based basis, depending on whether it is
hedging its assets or its liabilities, and will usually
enter into interest rate swaps on a net basis, i.e., the two
payment streams are netted, with the Fund receiving or
paying, as the case may be, only the net amount of the two
payments. Inasmuch as these hedging transactions are
entered into for good faith hedging purposes, the investment
adviser and the Fund believe such obligations do not
constitute senior securities and, accordingly will not treat
them as being subject to its borrowing restrictions. The
net amount of the excess, if any, of a Fund's obligations
over its entitlement with respect to each interest rate swap
will be accrued on a daily basis and an amount of cash or
liquid securities having an aggregate net asset value at
least equal to the accrued excess will be maintained in a
segregated account with PNC Bank. If there is a default by
the other party to such a transaction, a Fund will have
contractual remedies pursuant to the agreement related to
the transaction. The swap market has grown substantially in
recent years with a large number of banks and investment
banking firms acting both as principals and as agents. As a
result, the swap market has become relatively liquid. Caps
and floors are more recent innovations for which
standardized documentation has not yet been developed and,
accordingly, they are less liquid than swaps.
RESTRICTED SECURITIES. Certain of the Underlying Smith
Barney Funds may invest in securities the disposition of
which is subject to legal or contractual restrictions. The
sale of restricted securities often requires more time and
results in higher brokerage charges or dealer discounts and
other selling expenses than does the sale of securities
eligible for trading on a national securities exchange that
are not subject to restrictions on resale. Restricted
securities often sell at a price lower than similar
securities that are not subject to restrictions on resale.
REVERSE REPURCHASE AGREEMENTS. Certain Underlying Smith
Barney Funds may enter into reverse repurchase agreements
with banks or broker-dealers. A reverse repurchase
agreement involves the sale of a money market instrument
held by an Underlying Smith Barney Fund coupled with an
agreement by the Fund to repurchase the instrument at a
stated price, date and interest payment. The Fund will use
the proceeds of a reverse repurchase agreement to purchase
other money market instruments which either mature at a date
simultaneous with or prior to the expiration of the reverse
repurchase agreement or which are held under an agreement to
resell maturing as of that time.
An Underlying Smith Barney Fund will enter into a reverse
repurchase agreement only when the interest income to be
earned from the investment of the proceeds of the
transaction is greater than the interest expense of the
transaction. Under the 1940 Act, reverse repurchase
agreements may be considered to be borrowings by the seller.
Entry into such agreements requires the creation and
maintenance of a segregated account with the Fund's
custodian consisting of U.S. government securities, cash or
cash equivalents.
LEVERAGING. Certain of the Underlying Smith Barney Funds
may from time to time leverage their investments by
purchasing securities with borrowed money. A Fund is
required under the 1940 Act to maintain at all times an
asset coverage of 300% of the amount of its borrowings. If,
as a result of market fluctuations or for any other reason,
the Fund's asset coverage drops below 300%, the Fund must
reduce its outstanding borrowings within three business days
so as to restore its asset coverage to the 300% level.
Any gain in the value of securities purchased with borrowed
money that exceeds the interest paid on the amount borrowed
would cause the net asset value of the Underlying Smith
Barney Fund's shares to increase more rapidly than otherwise
would be the case. Conversely, any decline in the value of
securities purchased would cause the net asset value of the
Fund's shares to decrease more rapidly than otherwise would
be the case. Borrowed money thus creates an opportunity for
greater capital gain but at the same time increases exposure
to capital risk. The net cost of any borrowed money would
be an expense that otherwise would not be incurred, and this
expense could restrict or eliminate a Fund's net investment
income in any given period.
AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITORY RECEIPTS.
Certain of the Underlying Smith Barney Funds may invest in
the securities of foreign and domestic issuers in the form
of American Depository Receipts ("ADRs") and European
Depository Receipts ("EDRs"). These securities may not
necessarily be denominated in the same currency as the
securities into which they may be converted. ADRs are
receipts typically issued by a U.S. bank or trust company
that evidence ownership of underlying securities issued by a
foreign corporation. EDRs, which sometimes are referred to
as Continental Depository Receipts ("CDRs"), are receipts
issued in Europe typically by foreign banks and trust
companies that evidence ownership of either foreign or
domestic securities. Generally, ADRs, in registered form,
are designed for use in U.S. securities markets and EDRs and
CDRs are designed for use in European securities markets.
CONVERTIBLE SECURITIES. Convertible securities are fixed-
income securities that may be converted at either a stated
price or stated rate into underlying shares of common stock.
Convertible securities have general characteristics similar
to both fixed-income and equity securities. Although to a
lesser extent than with fixed-income securities generally,
the market value of convertible securities tends to decline
as interest rates increase and, conversely, tends to
increase as interest rates decline. In addition, because of
the conversion feature, the market value of convertible
securities tends to vary with fluctuations in the market
value of the underlying common stocks and, therefore, also
will react to variations in the general market for equity
securities. A unique feature of convertible securities is
that as the market price of the underlying common stock
declines, convertible securities tend to trade increasingly
on a yield basis, and so may not experience market value
declines to the same extent as the underlying common stock.
When the market price of the underlying common stock
increases, the prices of the convertible securities tend to
rise as a reflection of the value of the underlying common
stock. While no securities investments are without risk,
investments in convertible securities generally entail less
risk than investments in common stock of the same issuer.
As fixed-income securities, convertible securities are
investments that provide for a stable stream of income with
generally higher yields than common stocks. Of course, like
all fixed-income securities, there can be no assurance of
current income because the issuers of the convertible
securities may default on their obligations. Convertible
securities, however, generally offer lower interest or
dividend yields than non-convertible securities of similar
quality because of the potential for capital appreciation.
A convertible security, in addition to providing fixed
income, offers the potential for capital appreciation
through the conversion feature, which enables the holder to
benefit from increases in the market price of the underlying
common stock. There can be no assurance of capital
appreciation, however, because securities prices fluctuate.
Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer,
although convertible bonds, such as corporate debt
obligations, enjoy seniority in right of payment to all
equity securities, and convertible preferred stock is senior
to common stock, of the same issuer. Because of the
subordination feature, however, convertible securities
typically have lower ratings than similar nonconvertible
securities.
WARRANTS. Because a warrant does not carry with it the
right to dividends or voting rights with respect to the
securities that the warrant holder is entitled to purchase,
and because it does not represent any rights to the assets
of the issuer, a warrant may be considered more speculative
than certain other types of investments. In addition, the
value of a warrant does not necessarily change with the
value of the underlying securities and a warrant ceases to
have value if it is not exercised prior to its expiration
date. Warrants acquired by an Underlying Smith Barney Fund
in units or attached to securities may be deemed to be
without value.
PREFERRED STOCK. Preferred stocks, like debt obligations,
are generally fixed-income securities. Shareholder of
preferred stocks normally have the right to receive
dividends at a fixed rate when and as declared by the
issuer's board of directors, but do not participate in other
amounts available for distribution by the issuing
corporation. Dividends on the preferred stock may be
cumulative, and all cumulative dividends usually must be
paid prior to common shareholders receiving any dividends.
Preferred stock dividends must be paid before common stock
dividends and, for that reason, preferred stocks generally
entail less risk than common stocks. Upon liquidation,
preferred stocks are entitled to a specified liquidation
preference, which is generally the same as the par or stated
value, and are senior in right of payment to common stock.
Preferred stocks are, however, equity securities in the
sense that they do not represent a liability of the issuer
and, therefore, do not offer as great a degree of protection
of capital or assurance of continued income as investments
in corporate debt securities. In addition, preferred stocks
are subordinated in right of payment to all debt obligations
and creditors of the issuer, and convertible preferred
stocks may be subordinated to other preferred stock of the
same issuer.
Investment Restrictions
The Concert Series has adopted the following investment
restrictions for the protection of shareholders.
Restrictions 1 through 6 below have been adopted by the
Concert Series with respect to each Portfolio as fundamental
policies. Under the 1940 Act, a fundamental policy of a
Portfolio may not be changed without the vote of a majority,
as defined in the 1940 Act, of the outstanding voting
securities of the Portfolio. Such majority is defined as
the lesser of (a) 67% or more of the shares present at the
meeting, if the holders of more than 50% of the outstanding
shares of the Portfolio are present or represented by proxy,
or (b) more than 50% of the outstanding shares. Investment
restrictions 7 through 15 may be changed by a vote of a
majority of the Concert Series' Board of Directors at any
time.
The investment policies adopted by the Concert Series
prohibit a Portfolio from:
1. Borrowing money except from banks for temporary or
emergency purposes, including the meeting of redemption
requests in an amount not exceeding 33-1/3% of the value of
a Portfolio's total assets (including the amount borrowed)
valued at market less liabilities (not including the amount
borrowed) at the time the borrowing is made.
2. Making loans of money to others, except through the
purchase of portfolio securities consistent with its
investment objective and policies and repurchase agreements.
3. Underwriting the securities of other issuers, except
insofar as the Portfolio may be deemed an underwriter under
the Securities Act of 1933, as amended, by virtue of
disposing of portfolio securities.
4. Purchasing or selling real estate except that each
Portfolio may purchase and sell money market securities that
are secured by real estate or issued by companies that
invest or deal in real estate.
5. Investing in commodities.
6. Issuing senior securities except as permitted by
investment restriction 1.
7. Purchasing securities on margin.
8. Making short sales of securities or maintaining a short
position.
9. Pledging, hypothecating, mortgaging or otherwise
encumbering more than 33-1/3% of the value of a Portfolio's
total assets.
10. Investing in oil, gas or other mineral exploration or
development programs.
11. Writing or selling puts, calls, straddles, spreads or
combinations thereof.
12. Purchasing restricted securities, illiquid securities
(such as repurchase agreements with maturities in excess of
seven days) or other securities that are not readily
marketable.
13. Purchasing any security if as a result the Portfolio
would then have more than 5% of its total assets invested in
securities of companies (including predecessors) that have
been in continuous operation for fewer than three years
(except for Underlying Smith Barney Funds).
14. Making investments for the purpose of exercising
control or management.
15. Purchasing or retaining securities of any company if,
to the knowledge of the Concert Series, any officer or
director of the Concert Series or SBMFM individually owns
more than 1/2 of 1% of the outstanding securities of such
company and together they own beneficially more than 5% of
such securities.
The Concert Series may make commitments more restrictive
than the restrictions listed above with respect to a
Portfolio so as to permit the sale of shares of the
Portfolio in certain states. Should the Concert Series
determine that any such commitment is no longer in the best
interests of the Portfolio and its shareholders, the Concert
Series will revoke the commitment by terminating the sale of
shares of the Portfolio in the relevant state. The
percentage limitations contained in the restrictions listed
above (other than with respect to (1) above) apply at the
time of purchases of securities.
Notwithstanding the foregoing investment restrictions, the
Underlying Smith Barney Funds in which the Portfolios invest
have adopted certain investment restrictions which may be
more or less restrictive than those listed above, thereby
permitting a Portfolio to engage in investment strategies
indirectly that are prohibited under the investment
restrictions listed above. The investment restrictions of
an Underlying Smith Barney Fund are located in its Statement
of Additional Information.
Pursuant to an exemptive order issued by the SEC (Investment
Company Act Release No. IC-21613, December 19, 1995) each
Portfolio may (i) purchase more than 3% of the outstanding
voting securities of any Underlying Smith Barney Fund, (ii)
invest more than 5% of its assets in any one Underlying
Smith Barney Fund and (iii) invest substantially all of its
assets in the Underlying Smith Barney Funds.
Because of their investment objectives and policies, the
Vintage Portfolios will each concentrate more than 25% of
their assets in the mutual fund industry. In accordance
with the Vintage Portfolios' investment programs set forth
in the Prospectus, each of the Portfolios may invest more
than 25% of its assets in certain Underlying Smith Barney
Funds. However, each of the Underlying Smith Barney Funds
in which each Fund will invest (other than the Smith Barney
Utilities Fund) will not concentrate more than 25% of its
total assets in any one industry. The Smith Barney
Utilities Fund will invest at least 65% of its assets in
securities of companies in the utility industries.
Portfolio Turnover
Each Portfolio's turnover rate is not expected to exceed 25%
annually. A Portfolio may purchase or sell securities to:
(a) accommodate purchases and sales of its shares, (b)
change the percentages of its assets invested in each of the
Underlying Smith Barney Funds in response to market
conditions, and (c) maintain or modify the allocation of its
assets between equity and fixed income funds and among the
Underlying Smith Barney Funds within the percentage limits
described in the Prospectus.
The turnover rates of the Underlying Smith Barney Funds have
ranged from 16% to 292% during their most recent fiscal
years. There can be no assurance that the turnover rates of
these funds will remain within this range during subsequent
fiscal years. Higher turnover rates may result in higher
expenses being incurred by the Underlying Smith Barney
Funds.
PURCHASE OF SHARES
The Concert Series offers its shares of capital stock on a
continuous basis. Shares can only be acquired by buying a
Contract from a life insurance company designated by Concert
Series and directing the allocation of part or all of the
net purchase payment to one or more of five subaccounts,
each of which invests in a Portfolio as permitted under the
Contract prospectus. Investors should read this Statement
of Additional Information and the Fund's Prospectus dated
_______ along with the Contract prospectus.
Sales Charges and Surrender Charges
The Concert Series does not assess any sales charge, either
when it sells or when it redeems shares of a Portfolio.
Surrender charges may be assessed under the Contract, as
described in the Contract prospectus. Mortality and expense
risk fees and other charges are also described in that
prospectus.
REDEMPTION OF SHARES
The Concert Series will redeem any shares of the Vintage
Portfolios presented by the Subaccounts, its sole
shareholders, for redemption. The Subaccounts' policy on
when or whether to buy or redeem Portfolio shares is
described in the Contract prospectus.
Payment upon redemption of shares of a Portfolio is normally
made within three days of receipt of such request. The
right of redemption of shares of a Portfolio may be
suspended or the date of payment postponed (a) for any
periods during which the NYSE is closed (other than for
customary weekend and holiday closings), (b) when trading in
the markets the Portfolio customarily utilizes is
restricted, or an emergency, as defined by the rules and
regulations of the SEC, exists, making disposal of the
Portfolio's investments or determination of its net asset
value not reasonably practicable, or (c) for such other
periods as the SEC by order may permit for the protection of
the Portfolio's shareholders.
Should the redemption of shares of a Portfolio be suspended
or postponed, the Concert Series' Board of Directors may
make a deduction from the value of the assets of the
Portfolio to cover the cost of future liquidations of the
assets so as to distribute fairly these costs among all
owners of the Contract.
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.
PERFORMANCE
From time to time, the Concert Series may quote a
Portfolio's yield or total return in advertisements or in
reports and other communications to shareholders. The
Concert Series may include comparative performance
information in advertising or marketing the Portfolio's
shares. Such performance information may include the
following industry and financial publications: BARRON'S,
BUSINESS WEEK, CDA INVESTMENT TECHNOLOGIES, INC., CHANGING
TIMES, FORBES, FORTUNE, INSTITUTIONAL INVESTOR, INVESTORS
DAILY, MONEY, MORNINGSTAR MUTUAL FUND VALUES, THE NEW YORK
TIMES, USA TODAY AND THE WALL STREET JOURNAL.
Yield
A Portfolio's 30-day yield figure described below is
calculated according to a formula prescribed by the SEC.
The formula can be expressed as follows: YIELD = 2[( [(a-
b/(c*d))/1] + 1)6 - 1], where
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of
reimbursement).
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.
d = the maximum offering price per share on the last
day of the period.
For the purpose of determining the interest earned (variable
"a" in the formula) on debt obligations purchased by the
Portfolio at a discount or premium, the formula generally
calls for amortization of the discount or premium; the
amortization schedule will be adjusted monthly to reflect
changes in the market values of the debt obligations.
Investors should recognize that in periods of declining
interest rates a Portfolio's yield will tend to be somewhat
higher than prevailing market rates, and in periods of
rising interest rates, the Portfolio's yield will tend to be
somewhat lower. In addition, when interest rates are
falling, the inflow of net new money to the Portfolio from
the continuous sale of its shares will likely be invested in
portfolio instruments producing lower yields than the
balance of the Portfolio's investments, thereby reducing the
current yield of the Portfolio. In periods of rising
interest rates, the opposite can be expected to occur.
Average Annual Total Return
"Average annual total return" figures, as described below,
are computed according to a formula prescribed by the SEC.
The formula can be expressed as follows: P(1+T)/n = ERV,
where:
P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a
Hypothetical $1,000 investment made at the
beginning of a 1-, 5- or 10-year period at the end
of the 1-, 5- or 10-year period (or fractional
portion thereof), assuming reinvestment of all
dividends and distributions. A Class' total
return figures calculated in accordance with the
above formula assume that the maximum applicable
sales charge or maximum applicable CDSC, as the
case may be, has been deducted from the
hypothetical $1,000 initial investment at the time
of purchase or redemption, as applicable.
Aggregate Total Return
Aggregate total return figures, as described below,
represent the cumulative change in the value of an
investment in the Class for the specified period and are
computed by the following formula:
(ERV-P)/P
Where: P = a hypothetical initial payment of $10,000, and
ERV = Ending Redeemable Value of a Hypothetical $10,000
investment made at the beginning of a 1-, 5- or 10-year
period (or fractional portion thereof), at the end of the 1-
, 5- or 10-year period (or fractional portion thereof),
assuming reinvestment of all dividends and distributions.
A Class' performance will vary from time to time depending
upon market conditions, the composition of the Portfolio's
investment portfolio and operating expenses and the expenses
exclusively attributable to the Class. Consequently, any
given performance quotation should not be considered
representative of the Class' performance for any specified
period in the future. Because performance will vary, it may
not provide a basis for comparing an investment in the Class
with certain bank deposits or other investments that pay a
fixed yield for a stated period of time. Investors
comparing the Class' performance with that of other mutual
funds should give consideration to the quality and maturity
of the respective investment companies' portfolio
securities.
TAXES
The following is a summary of certain Federal income tax
considerations that may affect the Concert Series and its
shareholders. The summary is not intended as a substitute
for individual tax advice, and investors are urged to
consult their tax advisors as to the tax consequences of an
investment in any Portfolio of the Concert Series .
Tax Status of the Portfolios
Each Portfolio will be treated as a separate taxable entity
for Federal income tax purposes.
Each Portfolio intends to qualify separately each year as a
"regulated investment company" under the Code. A qualified
Portfolio will not be liable for Federal income taxes to the
extent that its taxable net investment income and net
realized capital gains are distributed to its shareholders,
provided that each Portfolio distributes at least 90% of its
net investment income.
Each Portfolio intends to accrue dividend income for Federal
income tax purposes in accordance with the rules applicable
to regulated investment companies. In some cases, these
rules may have the effect of accelerating (in comparison to
other recipients of the dividend) the time at which the
dividend is taken into account by a Portfolio as taxable
income.
Distributions of an Underlying Smith Barney Fund's
investment company taxable income are taxable as ordinary
income to a Portfolio which invests in the Fund.
Distributions of the excess of an Underlying Smith Barney
Fund's net long-term capital gain over its net short-term
capital loss, which are properly designated as "capital gain
dividends," are taxable as long-term capital gain to a
Portfolio which invests in the Fund, regardless of how long
the Portfolio held the Fund's shares, and are not eligible
for the corporate dividends-received deduction. Upon the
sale or other disposition by a Portfolio of shares of any
Underlying Smith Barney Fund, the Portfolio generally will
realize a capital gain or loss which will be long-term or
short-term, generally depending upon the Portfolio's holding
period for the shares.
Tax Treatment of Shareholders
[Segregated Asset Account
The Concert Series has been informed that certain of the
life insurance companies offering Contracts intend to
qualify each of the Subaccounts as a "segregated asset
account" within the meaning of the Code. For a Subaccount
to quality as a segregated asset account, the Portfolio in
which such Subaccount holds shares must meet the
diversification requirements of Section 817(h) of the Code
and the regulations promulgated thereunder. To meet those
requirements, a Portfolio may not invest more than certain
specified percentages of its assets in the securities of any
one, two, three or four issuers. However, certain increases
are made to the percentage limitations to the extent of
investments in United States Treasury obligations. For
these purposes, all obligations of the United States
Treasury and each instrumentality are treated as securities
of separate issuers.
Income on assets of a Subaccount qualified as a segregated
asset account whose underlying investments are adequately
diversified will not be taxable to Contract owners.
However, in the event a Subaccount is not so qualified, all
annuities allocating any amount of premiums to such
Subaccount will not qualify as annuities for federal income
tax purposes and the holders of such annuities would be
taxed on any income on the annuities during the period of
disqualification.
The Concert Series has undertaken to meet the
diversification requirements of Section 817(h) of the Code.
This undertaking may limit the ability of a particular
Portfolio to make certain otherwise permitted investments.]
Taxation of the Underlying Smith Barney Funds
Each Underlying Smith Barney Fund intends to qualify
annually and elect to be treated as a regulated investment
company under Subchapter M of the Code. In any year in
which an Underlying Smith Barney Fund qualifies as a
regulated investment company and timely distributes all of
its taxable income, the Underlying Smith Barney Fund
generally will not pay any federal income or excise tax.
If more than 50% in value of an Underlying Smith Barney
Fund's assets at the close of any taxable year consists of
stocks or securities of foreign corporations, that
Underlying Smith Barney Fund may elect to treat certain
foreign taxes paid by it as paid by its shareholders. The
shareholders would then be required to include their
proportionate share of the electing Fund's foreign income
and related foreign taxes in income even if the shareholder
does not receive the amount representing foreign taxes.
Shareholders itemizing deductions could then deduct the
foreign taxes, or, whether or not deductions are itemized
but subject to certain limitations, claim a direct dollar
for dollar tax credit against their U.S. federal income tax
liability attributable to foreign income. In many cases, a
foreign tax credit will be more advantageous than a
deduction for foreign taxes. Each of the Portfolios may
invest in some Underlying Smith Barney Funds that expect to
be eligible to make the above-described election. While a
Portfolio will be able to deduct the foreign taxes that it
will be treated as receiving if the election is made, the
Portfolio will not itself be able to elect to treat its
foreign taxes as paid by its shareholders. Accordingly, the
shareholders of the Portfolio will not have an option of
claiming a foreign tax credit for foreign taxes paid by the
Underlying Smith Barney Funds, while persons who invest
directly in such Underlying Smith Barney Funds may have that
option.
General
The foregoing discussion related only to Federal income tax
law as applicable to U.S. citizens. Distributions by the
Portfolio also may be subject to state, local and foreign
taxes, and their treatment under state, local and foreign
income tax laws may differ from the Federal income tax
treatment. Shareholders should consult their tax advisors
with respect to particular questions of Federal, state,
local and foreign taxation.
VOTING
Voting Rights
The Concert Series offers shares of the Vintage High Growth,
Vintage Growth, Vintage Balanced, Vintage Conservative and
Vintage Income Portfolios only for purchase by insurance
company separate accounts. Thus, the insurance company is
technically the shareholder of these Portfolios, and under
the 1940 Act, is deemed to be in control of these
Portfolios. Nevertheless, with respect to any Concert
Series shareholder meeting, an insurance company will
solicit and accept timely voting instruction from its
contract owners who own units in a separate account
investment division which corresponds to shares in the
Vintage Portfolios in accordance with the procedures set
forth in the accompanying prospectus of the applicable
contract issued by the insurance company and to the extent
required by law. Shares of the Concert Series attributable
to contract owner interests for which no voting instructions
are received will be voted by an insurance company in
proportion to the shares for which voting instructions are
received.
Each share of a Portfolio represents an equal proportionate
interest in that Portfolio with each other share of the same
Portfolio and is entitled to such dividends and
distributions out of the net income of that Portfolio as are
declared in the discretion of the Directors. Shareowners
are entitled to one vote for each share held and will vote
by individual Portfolio except to the extent required by the
1940 Act. The Concert Series is not required to hold annual
shareowner meetings, although special meetings may be called
for the Concert Series as a whole, or a specific Portfolio,
for purposes such as electing or removing Directors,
changing fundamental policies or approving a management
contract. Shareowners may cause a meeting of shareowners to
be held upon a vote of 10% of the Fund's outstanding shares
for the purposes of voting on the removal of Directors.
As used in the Prospectus and this Statement of Additional
Information, a "vote of a majority of the outstanding voting
securities" means the affirmative vote of the lesser of (a)
more than 50% of the outstanding shares of the Concert
Series (or the affected Portfolio or Class) or (b) 67% or
more of such shares present at a meeting if more than 50% of
the outstanding shares of the Concert Series (or the
affected Portfolio or Class) are represented at the meeting
in person or by proxy. A Portfolio or Class shall be deemed
to be affected by a matter unless it is clear that the
interests of each Portfolio or Class in the matter are
identical or that the matter does not affect any interest of
the Portfolio or Class. The approval of a management
agreement, a distribution agreement or any change in a
fundamental investment policy would be effectively acted
upon with respect to a Portfolio only if approved by a "vote
of a majority of the outstanding voting securities" of the
Portfolio affected by the matter; however, the ratification
of independent accountants and the election of directors are
not subject to separate voting requirements and may be
effectively acted upon by a vote of the holders of a
majority of all Concert Series shares voting without regard
to Portfolio.
ADDITIONAL INFORMATION
The Concert Series was incorporated in Maryland on August
11, 1995.
Portfolio securities and cash owned by the Concert Series
are held in the custody of PNC Bank, National Association,
17th and Chestnut Streets, Philadelphia, Pennsylvania 19103.
In the event of the liquidation or dissolution of the
Concert Series, shareholders of a Portfolio are entitled to
receive the assets belonging to that Portfolio that are
available for distribution and a proportionate distribution,
based upon the relative net assets of the respective
Portfolios, of any general assets not belonging to any
particular Portfolio that are available for distribution.
APPENDIX - RATINGS OF DEBT OBLIGATIONS
BOND (AND NOTE) RATINGS
Moody's Investors Services, Inc.
Aaa - Bonds that are rated "Aaa" are judged to be of the
best quality. They carry the smallest degree of investment
risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various
protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa - Bonds that are rated "Aa" are judged to be of high
quality by all standards. Together with the "Aaa" group
they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or
fluctuation of protective elements may be of greater
amplitude or there may be other elements present that make
the long term risks appear somewhat larger than in "Aaa"
securities.
A - Bonds that are rated "A" possess many favorable
investment attributes and are to be considered as upper
medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements
may be present that suggest a susceptibility to impairment
sometime in the future.
Baa - Bonds that are rated "Baa" are considered as medium
grade obligations, i.e., they are neither highly protected
nor poorly secured. Interest payments and principal
security appear adequate for the present but certain
protective elements may be lacking or may be
characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and
in fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may
be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics
of the desirable investment. Assurance of interest and
principal payments or of maintenance of other terms of the
contract over any long period of time may be small.
Caa - Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of
danger with respect to principal or interest.
Ca - Bonds which are rated Ca represent obligations which
are speculative in a high degree. Such issues are often in
default or have other marked shortcomings.
C - Bonds which are rated C are the lowest class of bonds
and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
Con (..) - Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition
are rated conditionally. These are bonds secured by (a)
earnings of projects under construction, (b) earnings of
projects unseasoned in operating experience, (c) rentals
which begin when facilities are completed, or (d) payments
to which some other limiting condition attaches.
Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of
condition.
Note: The modifier 1 indicates that the security ranks in
the higher end of its generic rating category; the modifier
2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its
generic rating category.
Standard & Poor's Corporation
AAA - Debt rated "AAA" has the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay
principal is extremely strong.
AA - Debt rated "AA" has a very strong capacity to pay
interest and repay principal and differs from the highest
rated issues only in small degree.
A - Debt rated "A" has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB - Debt rated "BBB" is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher
rated categories.
BB, B, CCC, CC, C - Debt rated 'BB', 'B', 'CCC', 'CC' and
'C' is regarded, on balance, as predominantly speculative
with respect to capacity to pay interest and repay principal
in accordance with the terms of the obligation. 'BB'
indicates the lowest degree of speculation and 'C' the
highest degree of speculation. While such debt will likely
have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to
adverse conditions.
Plus (+) or Minus (-): The ratings from 'AA' to 'B' may be
modified by the addition of a plus or minus to show relative
standing within the major rating categories.
Provisional Ratings: The letter "p" indicates that the
rating is provisional. A provisional rating assumes the
successful completion of the project being financed by the
debt being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the
successful and timely completion of the project. This
rating, however, while addressing credit quality subsequent
to completion of the project, makes no comment on the
likelihood of, or the risk of default upon failure of, such
completion. The investor should exercise judgment with
respect to such likelihood and risk.
L - The letter "L" indicates that the rating pertains to the
principal amount of those bonds where the underlying deposit
collateral is fully insured by the Federal Savings & Loan
Insurance Corp. or the Federal Deposit Insurance Corp.
+ Continuance of the rating is contingent upon S&P's receipt
of closing documentation confirming investments and cash
flow.
* Continuance of the rating is contingent upon S&P's receipt
of an executed copy of the escrow agreement.
NR Indicates no rating has been requested, that there is
insufficient information on which to base a rating, or that
S&P does not rate a particular type of obligation as a
matter of policy.
COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc.
Issuers rated "Prime-1" (or related supporting institutions)
have a superior capacity for repayment of short-term
promissory obligations. Prime-1 repayment will normally be
evidenced by the following characteristics: leading market
positions in well-established industries; high rates of
return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset
protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; well-
established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers rated "Prime-2" (or related supporting institutions)
have strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
Standard & Poor's Corporation
A-1 - This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very
strong. Those issuers determined to possess overwhelming
safety characteristics will be noted with a plus (+) sign
designation.
A-2 - Capacity for timely payment on issues with this
designation is strong. However, the relative degree of
safety is not as high as for issues designated A-1.
PART C
Information required to be included in Part C is set
forth after the appropriate item, so numbered, in Part C of
this Registration Statement.
OTHER INFORMATION
Item 24: Financial Statements and Exhibits
a. Financial Statements:
Included in Part A of this Registration Statement:
Financial Highlights
Included in Part B of this Registration Statement:
Statement of assets and liabilities as of January
22, 1996.
Statement of assets and liabilities as of May 31,
1996.
b. Exhibits:
1. Articles of Incorporation of the Registrant is
incorporated by reference to Registrant's Registration
Statement Pre-Effective Amendment No. 1 on Form N-1A as
filed on January 23, 1996 (the "Registration Statement").
2. Restated By-Laws of the Registrant is incorporated
by reference to Registrant's Registration Statement as filed
January 23, 1996.
3. Inapplicable.
4.(a) Registrant's form of stock certificates for
Class A, B, C and Y shares of the High Growth Portfolio is
incorporated by reference to Registrant's Registration
Statement as filed January 23, 1996.
(b) Registrant's form of stock certificates for
Class A, B, C and Y shares of the Growth Portfolio is
incorporated by reference to Registrant's Registration
Statement as filed January 23, 1996.
(c) Registrant's form of stock certificates for
Class A, B, C and Y shares of the Balanced Portfolio is
incorporated by reference to Registrant's Registration
Statement as filed January 23, 1996.
(d) Registrant's form of stock certificates for
Class A, B, C and Y shares of the Conservative
Portfolio is incorporated by reference to Registrant's
Registration Statement as filed January 23, 1996.
(e) Registrant's form of stock certificates for
Class A, B, C and Y shares of the Income Portfolios
incorporated by reference to Registrant's Registration
Statement as filed January 23, 1996.
(f) Registrant's form of stock certificate for shares
of the Smith Barney Concert Series - Vintage High Growth
Portfolio is filed herein.
(g) Registrant's form of stock certificate for shares
of the Smith Barney Concert Series - Vintage Growth
Portfolio is filed herein.
(h) Registrant's form of stock certificate for shares
of the Smith Barney Concert Series - Vintage Balanced
Portfolio is filed herein.
(i) Registrant's form of stock certificate for shares
of the Smith Barney Concert Series- Vintage Conservative
Portfolio is filed herein.
(j) Registrant's form of stock certificate for shares
of the Smith Barney Concert Series - Vintage Income
Portfolio is filed herein.
5.(a) Form of Asset Allocation and Administration
Agreement between the Registrant and Smith Barney Mutual
Funds Management Inc. is incorporated by reference to
Registrant's Registration Statement as filed January 23,
1996 for each of the following:
(a) High Growth Portfolio
(b) Growth Portfolio
(c) Balanced Portfolio
(d) Conservative Portfolio
(e) Income Portfolio
5.(b) Form of Asset Allocation and Administration
Agreement between the Registrant and Smith Barney Mutual
Funds Management Inc. will be filed by amendment for each of
the following:
(f) Vintage High Growth Portfolio.
(g) Vintage Growth Portfolio.
(h) Vintage Balanced Portfolio.
(I) Vintage Conservative Portfolio.
(j) Vintage Income Portfolio.
6.(a) Form of the Distribution Agreement between
the Registrant and Smith Barney Inc. is incorporated by
reference to Registrant's Registration Statement as filed
January 23, 1996.
(b) Form of the Distribution Agreement between the
Registrant and PFS Distributors, Inc. is incorporated by
reference to Registrant's Registration Statement as filed
January 23, 1996.
(c) Form of Participation Agreement between the
Registrant and Travelers Fund BD for Variable Annuities will
be filed by amendment.
(d) Form of Participation Agreement between the
Registrant and Travelers Fund BD II for Variable Annuities
will be filed by amendment.
7. Inapplicable.
8. Form of Custodian Agreement between the Registrant
and PNC Bank, National Association is incorporated by
reference to Registrant's Registration Statement as filed
January 23, 1996.
9.(a) Form of Transfer Agency and Service Agreement
between the Registrant and The Shareholder Services Group,
Inc. is incorporated by reference to Registrant's
Registration Statement as filed January 23, 1996.
(b) Form of Sub-Transfer Agency Agreement between the
Registrant and PFS Shareholders Services is incorporated by
reference to Registrant's Registration Statement as filed
January 23, 1996.
10. Opinion and Consent of Willkie Farr & Gallagher
as to legality of the series of shares being registered will
be filed by amendment.
11. Consent of Independent Public Accountants of the
series of shares being registered will be filed by
amendment.
12. Inapplicable.
13. Form of Purchase Agreement between the
Registrant and the Purchaser of the initial shares is
incorporated by reference to Registrant's Registration
Statement as filed January 23, 1996.
14. Inapplicable.
15. Form of Service and Distribution Plan pursuant to
Rule 12b-1 between the Registrant and Smith Barney Inc. is
incorporated by reference to Registrant's Registration
Statement as filed January 23, 1996.
16. Inapplicable.
17. Inapplicable.
18. Form of Multiple Class Plan pursuant to Rule 18f-
3(d) of the Investment Company Act of 1940 is incorporated
by reference to Registrant's Registration Statement as filed
January 23, 1996.
Item 25. Persons Controlled by or Under Common Control with
Registrant.
None.
Item 26. Number of Holders of Securities.
August 2, 1996 Shares
Balanced Portfolio Class A 3,399,391.768
Balanced Portfolio Class B 4,782,789.764
Balanced Portfolio Class C 929,446.663
Balanced Portfolio Class Y 1
Income Portfolio Class A 819,968.047
Income Portfolio Class B 927,418.714
Income Portfolio Class C 134,891.461
Income Portfolio Class Y 1
High Growth Portfolio Class A 6,451,969.652
High Growth Portfolio Class B 6,208,489.221
High Growth Portfolio Class C 872,938.213
High Growth Portfolio Class Y 1
Conservative Portfolio Class A
1,398,051.514
Conservative Portfolio Class B
1,279,715.543
Conservative Portfolio Class C
198,172.142
Conservative Portfolio Class Y 1
Growth Portfolio Class A 6,715,329.427
Growth Portfolio Class B 9,070,191.284
Growth Portfolio Class C 1,438,747.487
Growth Portfolio Class Y 1
Item 27. Indemnification.
The response to this item is incorporated by reference
to the Registrant Statement filed with the SEC on January
23, 1996.
Item 28. Business or Other Connections of Investment
Adviser.
Investment Adviser -- Smith Barney Mutual Funds
Management Inc., formerly known as Smith Barney Advisers,
Inc.
SBMFM was incorporated in December 1968 under the laws of
the State of Delaware. SBMFM is a wholly owned subsidiary
of Smith Barney Holdings Inc. (formerly known as Smith
Barney Shearson Holdings Inc.), which in turn is a
wholly owned subsidiary of The Travelers Group Inc.
(formerly known as Primerica Corporation) ("Travelers").
SBMFM is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act").
The list required by this Item 28 of officers and
directors of SBMFM together with information as to any
other business, profession, vocation or employment of a
substantial nature engaged in by such officers and
directors during the past two years, is incorporated by
reference to Schedules A and D of the Form ADV filed by
SBMFM pursuant to the Advisers Act (SEC File No. 801-
8314).
Item 29. Principal Underwriters.
Smith Barney Inc. ("Smith Barney") also serves as
distributor for each of the following investment companies:
(a) Smith Barney Managed Municipals Fund Inc.
Smith Barney California Municipals Fund Inc.
Smith Barney Massachusetts Municipals Fund
Smith Barney Global Opportunities Fund
Smith Barney Aggressive Growth Fund Inc.
Smith Barney Appreciation Fund Inc.
Smith Barney Principal Return Fund
Smith Barney Income Funds
Smith Barney Equity Funds
Smith Barney Investment Funds Inc.
Smith Barney Natural Resources Fund Inc.
Smith Barney Telecommunications Trust
Smith Barney Arizona Municipals Fund Inc.
Smith Barney New Jersey Municipals Fund Inc.
The USA High Yield Fund N.V.
Garzarelli Sector Analysis Portfolio N.V.
Smith Barney Fundamental Value Fund Inc.
Smith Barney Series Fund
Consulting Group Capital Markets Funds
Smith Barney Investment Trust
Smith Barney Adjustable Rate Government Income
Fund
Smith Barney Oregon Municipals Fund
Smith Barney Funds, Inc.
Smith Barney Muni Funds
Smith Barney World Funds, Inc.
Smith Barney Money Funds, Inc.
Smith Barney Municipal Money Market Fund, Inc.
Smith Barney Variable Account Funds
Smith Barney U.S. Dollar Reserve Fund (Cayman)
Worldwide Special Fund, N.V.
Worldwide Securities Limited (Bermuda)
Smith Barney International Fund (Luxembourg)
and various series of unit investment trusts.
(b) The information required by this Item 29(b) with
respect to each director and officer of Smith Barney is
incorporated by reference to Schedule A of the Form BD filed
by Smith Barney pursuant to the Securities Exchange Act
of 1934 (File No. 8-8177).
(c) Inapplicable.
Item 30. Location of Accounts and Records.
Certain accounts, books and other documents required to
be maintained by Section 31(a) of the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and the
Rules promulgated thereunder are maintained by Smith Barney
Inc., 388 Greenwich Street, New York, New York 10013.
Records relating to the duties of the Registrant's
custodian are maintained by PNC Bank, National Association,
17th and Chestnut Streets, Philadelphia, Pennsylvania.
Records relating to the duties of the Registrant's transfer
agent are maintained by First Data Investor Services
Group, Inc., Exchange Place, Boston, Massachusetts.
Item 31. Management Services.
Inapplicable.
Item 32. Undertakings.
The Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders upon
request and without charge.
The Registrant hereby undertakes to call a meeting of
shareholders for the purpose of voting on the question of
removal of a Director or Directors when requested to do
so by the holders of at least 10% of the
Registrant's outstanding shares and in connection with
such meeting to comply with the provisions of Section
16(c) of the Investment Company Act relating to
shareholder communications.
The Registrant hereby undertakes, insofar as
indemnification for liability arising under the Securities
Act may be permitted to Directors, officers and controlling
persons of the Registrant pursuant to the foregoing
provisions, or otherwise, to indemnify the Directors,
officers and controlling persons of the Registrant. The
Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities
Act, and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or
paid by a Director, officer or controlling person of the
Registrant in the successful defense of any action, suit
or proceeding) is asserted by such Director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is
against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such
issue.
The Registrant hereby undertakes to file, with respect to
the Vintage High Growth Portfolio, Vintage Growth Portfolio,
Vintage Balanced Portfolio, Vintage Conservative Portfolio
and Vintage Income Portfolio, a post-effective amendment,
using financial statements which need not be certified,
within four to six months from the effectiveness date of
this Amendment to the Registrant's Registration Statement
under the Securities Act of 1933, as amended (the
"Securities Act").
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 14th day of August
1996.
SMITH BARNEY CONCERT
SERIES INC.
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as
amended, the Registrant, Smith Barney Concert Series, has
duly caused this Post-Effective Amendment No. 2 to the
Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of
New York, State of New York as of the 14th day of August,
1996.
By:/s/ Heath B. McLendon
Heath B. McLendon
Chairman of the Board of
Directors
Signature Title Date
/s/ Heath B. Director; Chairman August 14, 1996
McLendon of the Board
Heath B. McLendon
/s/ Lewis E. Senior Vice August 14, 1996
Daidone President;
Lewis E. Daidone Treasurer
(Principal
Accounting Officer)
/s/ Walter E. Auch* Director August 14, 1996
Walter E. Auch
/s/ Martin Brody* Director August 14, 1996
Martin Brody
/s/ H. John Ellis* Director August 14, 1996
H. John Ellis
/s/ Stephen E. Director August 14, 1996
Kaufman*
Stephen E. Kaufman
/s/ Armon E. Director August 14, 1996
Kamesar*
Armon E. Kamesar
/s/ Madelon DeVoe Director August 14, 1996
Talley*
Madelon DeVoe
Talley
* Signed by Heath B. McLendon, their duly authorized
attorney-in-fact, pursuant to power of attorney dated
January 23, 1996.
/s/ Heath B. McLendon
Heath B. McLendon
SPECIMEN
No. ______________ Shares
____________________
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - VINTAGE HIGH GROWTH
PORTFOLIO
Common Stock, Par Value $.001
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
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.
TEN COM as tenants in common
TEN ENT as tenants by the entireties
JT TEN as joint tenants with right
of survivorship and not as
tenants in common
UNIF GIFT MIN ACT (Cust.) Custodian Minor)
under Uniform Gifts to Minors
Act (State)
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 the 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.
SPECIMEN
No. ______________ Shares
____________________
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - VINTAGE GROWTH PORTFOLIO
Common Stock, Par Value $.001
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
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.
TEN COM as tenants in common
TEN ENT as tenants by the entireties
JT TEN as joint tenants with right
of survivorship and not as
tenants in common
UNIF GIFT MIN ACT (Cust.) Custodian (Minor)
under Uniform Gifts to Minors
Act (State)
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 the 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.
SPECIMEN
No. ______________ Shares
____________________
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - VINTAGE BALANCED
PORTFOLIO
Common Stock, Par Value $.001
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
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.
TEN COM as tenants in common
TEN ENT as tenants by the entireties
JT TEN as joint tenants with right
of survivorship and not as
tenants in common
UNIF GIFT MIN ACT (Cust.) Custodian (Minor)
under Uniform Gifts to Minors
Act (State)
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 the 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.
SPECIMEN
No. ______________ Shares
____________________
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - VINTAGE INCOME PORTFOLIO
Common Stock, Par Value $.001
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
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.
TEN COM as tenants in common
TEN ENT as tenants by the entireties
JT TEN as joint tenants with right
of survivorship and not as
tenants in common
UNIF GIFT MIN ACT (Cust.) Custodian (Minor)
under Uniform Gifts to Minors
Act (State)
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 the 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.
SPECIMEN
No. ______________ Shares
____________________
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
SMITH BARNEY CONCERT SERIES INC. - VINTAGE CONSERVATIVE
PORTFOLIO
Common Stock, Par Value $.001
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
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.
TEN COM as tenants in common
TEN ENT as tenants by the entireties
JT TEN as joint tenants with right
of survivorship and not as
tenants in common
UNIF GIFT MIN ACT (Cust.) Custodian (Minor)
under Uniform Gifts to Minors
Act (State)
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 the 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.
