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SMITH BARNEY CONCERT SERIES INC.
HIGH GROWTH PORTFOLIO
GROWTH PORTFOLIO
BALANCED PORTFOLIO
Supplement dated July 3, 1996 to
Prospectus dated February 5, 1996
The following information supplements the disclosure in the Prospectus of the
Portfolios listed above. Defined terms have the same meanings as set forth in
the Prospectus.
ADDITION OF AN UNDERLYING SMITH BARNEY FUND
Effective June 6, 1996, the equity allocation of each of the above portfolios
(each a "Portfolio") of the Smith Barney Concert Series Fund Inc. (the "Fund")
has been expanded to include Smith Barney Natural Resources Fund Inc. (the
"Natural Resources Fund"). The annual management fee for the Natural Resources
Fund is 0.75% of its average daily net assets. The expense ratio applicable to
Class Y shareholders of the Natural Resources Fund held by the Portfolios,
based on estimated operating expenses for its current fiscal year, is 1.74%.
Each of the Portfolios may invest their assets in the Natural Resources Fund
within the following ranges:
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<S> <C>
Balanced Portfolio 0% to 10%
Growth Portfolio 0% to 10%
High Growth Portfolio 0% to 10%
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DESCRIPTION OF THE NATURAL RESOURCES FUND
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
natural resources, such as precious metals, other minerals, water, timberland,
agricultural commodities and forest products; (2) own or produce sources of
energy such as oil, natural gas, coal, uranium, geothermal, oil shale and
biomass; (3) participate in the exploration and development, transportation,
distribution and/or processing of natural resources; (4) own or control oil,
gas, or other mineral leases, rights or royalties; (5) provide related services
or supplies, such as drilling, well servicing, chemicals, parts and equipment;
(6) develop or participate in energy-efficient technologies; and (7) are
involved in the upgrading or processing of raw commodities into intermediate
products The Natural Resources Natural Resources 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 Natural Resources
Fund will achieve its investment goal.
Under normal market conditions, the Natural Resources Fund will invest at
least 65% of its assets in Natural Resource Investments. Up to 35% of the
Natural Resources Fund's assets may be invested in companies not in the natural
resources area, investment grade corporate debt securities, U.S. Government
securities and, for cash management purposes, money market instruments. For
temporary defensive purposes, the Natural Resources Fund may invest in excess
of 35% in money market instruments.
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The Natural Resources Fund may utilize up to 10% of its assets to purchase
put options on securities it owns and up to an additional 10% of its assets to
purchase call options on securities it may acquire in the future. The Natural
Resources 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 Natural Resources 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 Natural
Resources Fund may invest include common stocks, preferred stocks, convertible
securities and warrants. Debt securities the Natural Resources Fund may acquire
include bonds, noted and debentures of companies and governments. The Natural
Resources Fund may invest in debt securities when SBMFM believes they will
enhance the Natural Resources Fund's ability to achieve long-term capital
appreciation. The Natural Resources Fund may invest in fixed-income securities
that are rated as low as B by Moody's or S&P or if unrated, are deemed by SBMFM
to be of comparable quality. The medium- and lower-rated securities in which
the Natural Resources Fund may invest, some of which have speculative
characteristics, may be subject to greater market fluctuation and greater risk
of loss of income or principal than higher rated securities.
Because issuers of Natural Resource Investments often are located outside the
United States, a significant portion of the Natural Resources Fund's
investments may consist of securities of foreign issuers. The percentage of
assets invested in particular countries or regions will change from time to
time in accordance with the judgment of the Natural Resources Fund's investment
manager, which may be based on, among other things of consideration of the
political stability and economic outlook of these countries or regions.
Money Market Instruments. The 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
determines that it is appropriate to maintain a temporary defensive posture.
Short-term instruments in which the 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 ("U.S. 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 international development
agencies, banks and other financial institutions, governments 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.
U.S. Government Securities. U.S. government securities in which the Natural
Resources Fund may investment include: direct obligations of the United States
Treasury, obligations issued by U.S. government agencies and instrumentalities,
including instruments that are supported by the full faith and credit of the
United States; instruments that are supported by the right of the issuer to
borrow from the United Stated Treasury; and instruments that are supported
solely by the credit of the instrumentality.
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Gold Futures Contracts and Related Options. If SBMFM determines it would be
advantageous to do so, the Natural Resources Fund may, for hedging purposes,
utilize its assets as initial margin and premiums on futures contracts and
options on those contracts. The Natural Resources Fund may enter into futures
contracts for the purchase and sale of gold, purchase put and call options on
those futures contracts and write call options on those futures contracts. The
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.
Currency Exchange Transactions. The Natural Resources Fund may engage in
currency exchange transactions in order to protect against uncertainty in the
level of future exchange rates. The Natural Resources Fund will conduct its
currency exchange transactions either on a spot (i.e., cash) basis at the rate
prevailing in the currency exchange market or through entering into forward
contracts to purchase or sell currencies. The Natural Resources Fund's dealings
in forward currency contracts will be limited to hedging involving either
specific transactions or portfolio positions.
PERFORMANCE OF THE NATURAL RESOURCES FUND
The following chart shows the average annual total return for the longest
outstanding class of shares, Class A, of the Natural Resources Fund for the
most recent one-, five- and ten-year periods (or since inception if shorter and
giving effect to the maximum applicable sales charges) for the period ended
December 31, 1995.
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1995
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<CAPTION>
ASSETS OF
ALL CLASSES
AS OF
DECEMBER
31, 1995 INCEPTION FIVE SINCE
($000S) DATE ONE YEAR YEARS INCEPTION
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<S> <C> <C> <C> <C>
$55,077,000 12/24/86 (15.23%) 3.10% 1.64%
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The performance data set forth above is not, and should not be viewed as,
indicative of the future performance of either the Fund or the Natural
Resources Fund. The performance reflects the impact of sales charges and other
distribution related expenses that will not be incurred by the Class Y shares
of the Natural Resources Fund in which the Portfolios will invest.
