SMITH BARNEY CONCERT ALLOCATION SERIES INC.
High Growth Portfolio
Growth Portfolio
Balanced Portfolio
Conservative Portfolio
Income Portfolio
Supplement dated
October 7, 1997 to
Prospectuses dated May 30, 1997
The following information supplements the disclosure in the
Prospectuses of the Portfolios listed above. Defined terms have the
same meanings as set forth in the Prospectus.
Addition of Underlying Smith Barney Funds
Effective September 4, 1997, three underlying Smith Barney
Mutual Funds were added to the Smith Barney Concert Allocation Series
Inc. ("Concert Allocation Series"). The Portfolios listed above will
invest their assets in these new underlying funds within the ranges
indicated below.
FUND
PORTFOLIOS
RANGES
Smith Barney Large Cap Growth
High Growth
Growth
Balanced
0% -20%
0% - 20%
0% - 15%
Smith Barney Disciplined Small Cap
High Growth
Growth
Balanced
0% -25%
0% - 20%
0% - 15%
Smith Barney Growth Opportunity
High Growth
Growth
Balanced
0% - 20%
0% - 20%
0% - 15%
Description of the Smith Barney Large Capitalization Growth Fund
The Smith Barney Large Capitalization Growth Fund ("Large Cap
Fund") seeks long term growth of capital by investing in equity
securities of companies with large market capitalizations. This
investment objective may not be changed without the approval of the
holders of a majority of the Fund's outstanding shares. There can be
no assurance that the Fund's investment objective will be achieved.
The Large Cap Fund attempts to achieve its investment objective
by investing primarily in equity securities consisting of common
stocks which are believed to afford attractive opportunities for
investment growth. The core holdings of the Large Cap Fund are large
capitalization companies that are dominant in their industries, global
in scope and have a long history of performance. The Large Cap Fund
normally invests at least 65% of its total assets in these securities.
The Large Cap Fund does have the flexibility, however, to invest the
balance in companies with other market capitalizations. The Large Cap
Fund defines large market capitalization companies as those having $5
billion or more at the time of the Large Cap Fund's investment.
Companies whose capitalization falls below this level after purchase
will continue to be considered large market capitalization companies
for purposes of the 65% policy.
Under normal market conditions, the majority of the Large Cap
Fund's portfolio will consist of common stocks, securities convertible
into common stock and rights to subscribe for common stock. The Large
Cap Fund may also contain money market instruments for cash management
purposes such as U.S. government securities, repurchase agreements,
and time deposits.
Performance of the Large Cap Fund
Performance of the Large Cap Fund is presently not available
since the Large Cap Fund commenced operations on July 14, 1997.
Description of the Smith Barney Growth Opportunity Fund
The Smith Barney Growth Opportunity Fund ("Growth Opportunity
Fund") seeks an investment objective of capital appreciation by
investing in securities believed to have above average potential for
capital appreciation.
In attempting to achieve the Growth Opportunity Fund's
investment objective, the Growth Opportunity Fund will use a
disciplined approach to identify equity securities of companies having
prospects of strong, sustainable earnings growth and that are believed
to afford attractive opportunities for stock price appreciation. This
disciplined approach involves computer-aided, quantitative analysis
supported by fundamental research. The Growth Opportunity Fund
selects stocks for the Growth Opportunity Fund's portfolio by sorting
a universe of 1500 stocks into deciles based on earnings and other
valuation characteristics. Those stocks sorted into the top two
deciles are further analyzed quantitatively and fundamentally to
determine if they are attractive investments. In addition to
determining which stocks may be attractive investments for the Growth
Opportunity Fund, this analysis is used to determine if a particular
stock held in the Growth Opportunity Fund's portfolio continues to be
an attractive investment and stocks appearing in the bottom two
deciles are sold. Although the Growth Opportunity Fund may invest in
the stocks of smaller capitalized companies, the Growth Opportunity
Fund's assets will be invested primarily in the stock of mid- and
larger-capitalized companies.
The Growth Opportunity Fund invests principally in common stocks
and Smith Barney Mutual Funds Management Inc. ("SBMFM"), the Growth
Opportunity Fund's investment adviser uses a flexible management style
to select what it believes to be unusually attractive growth
investments on an individual company basis. Such securities will
typically be issued by small capitalization companies, larger
companies with established records of growth in sales or earnings, and
companies with new products, new services, or new processes. The
Growth Opportunity Fund may also invest in companies in cyclical
industries during periods when their securities appear overly
depressed and therefore attractive for capital appreciation. In
addition to common stocks of companies, the Growth Opportunity Fund
may invest in securities convertible into or exchangeable for common
stocks, such as convertible preferred stocks or convertible
debentures, and warrants.
The Growth Opportunity Fund generally holds a portion of its
assets in investment grade short-term debt securities, investment
grade corporate or government bonds, cash and cash equivalents in
order to provide liquidity. Such investments may be increased when
deemed appropriate by the SBMFM for temporary defensive purposes.
Under such circumstances, the Growth Opportunity Fund may invest up to
100% of its assets in short-term investments which may include
repurchase agreements with domestic banks or broker-dealers. The
Growth Opportunity Fund may invest up to 35% of its total assets in
securities of foreign issuers. The Growth Opportunity Fund may also
engage in portfolio management strategies and techniques involving
options, futures contracts and options on futures (which are sometimes
referred to as "derivatives"). A derivative is a financial instrument
whose performance is derived, at least in part, from the performance
of an underlying asset. The Growth Opportunity Fund's use of
derivatives is limited to 10% of the Growth Opportunity Fund's net
assets.
Investments in smaller capitalized companies (companies with a
capitalization of less than $1 billion) may offer greater
opportunities for growth of capital than larger, more established
companies, but may also involve certain risks because smaller
capitalized companies often have limited product use, market or
financial resources and may be dependent on one or two people for
management. In addition, small capitalized companies may be subject to
a limited liquidity and more volatility which could result in
significant fluctuations in the price of their shares.
The Growth Opportunity Fund may also invest in money market
instruments, enter into repurchase agreements and reverse repurchase
agreements for temporary defensive purposes lend its portfolio
securities, invest in real estate investment trusts, sell securities
short "against the box", purchase the securities of companies with
less than three years of continuous operation, and enter into forward
contracts.
The value of the Growth Opportunity Fund's portfolio securities
that are traded in foreign markets may be affected by changes in
currency exchange rates and exchange control regulations. In addition,
the Growth Opportunity Fund will incur costs in connection with the
conversions between various currencies. The Growth Opportunity Fund's
foreign currency exchange transactions generally will be conducted on
a spot basis (that is, cash basis) at the spot rate for purchasing or
selling currency prevailing in the foreign currency exchange market.
The Growth Opportunity Fund purchases and sells foreign currency on a
spot basis in connection with the settlement of transactions in
securities traded in such foreign currency. The Growth Opportunity
Fund does not purchase and sell foreign currencies as an investment.
Performance of the Growth Opportunity Fund
The following chart shows the average annual total return for
the longest outstanding class of shares, Class A, of the Growth
Opportunity Fund for the most recent one-year period and since
inception, giving effect to the maximum applicable sales charge for
the period ended December 31, 1996.
Average Annual Returns through December 31, 1996
Assets of all Classes as of
December 31, 1996 (000s)
Inception
Date
One Year
Since Inception
$115,502
7/3/95
8.28%
14.44%
The performance data set forth above is not, and should not be
viewed as, indicative of the future performance of the Growth
Opportunity 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 Growth Opportunity Fund in which
the Portfolios will invest.
Description of the Smith Barney Disciplined Small Cap Fund
Smith Barney Disciplined Small Cap Fund, Inc. (formerly The
Inefficient-Market Fund, Inc.) (the "Disciplined Small Cap Fund") is
an open-end diversified management investment company that seeks long
term capital appreciation by investing primarily (at least 65% of its
total assets) in the common stocks of U.S. companies with relatively
small market capitalizations at the time of investment. Companies with
relatively small market capitalization are defined as those which fall
in the lowest 20% of market capitalization of publicly traded
companies in the U.S. with market values above $100 million.
Travelers Investment Management Company, the investment manager
to the Disciplined Small Cap Fund, will select stocks based on a
disciplined quantitative screening process that seeks a combination of
attractive relative value and earnings growth.
In order to provide consistent relative performance, the
Disciplined Small Cap Fund will hold a portfolio that is comparable to
the Russell 2500 Stock Index in terms of overall risk, economic sector
weightings, and market capitalization. The Russell 2500 is a broad
based index of the smaller cap segment of the U.S. stock market. By
linking its investment strategy to the Russell 2500 Stock Index, the
Disciplined Small Cap Fund will provide diversified exposure to the
universe of stocks that comprise the lowest 25% of market
capitalization of publicly traded companies in the U.S. with market
values of greater than $100 million. However, the Disciplined Small
Cap Fund is not an index fund and is not limited to investing in the
stocks that comprise the Russell 2500 Stock Index. Over time, the
Disciplined Small Cap Fund is expected to exhibit performance
volatility that is similar to that of the Russell 2500 Stock Index. Of
course, there can be no assurance that the Disciplined Small Cap
Fund's total return, before or after expenses, will match or exceed
that of the Russell 2500 Stock Index.
The Disciplined Small Cap Fund will employ an active investment
strategy that focuses primarily on individual stock selection. In
selecting individual holdings for the Disciplined Small Cap Fund's
portfolio, the investment adviser will apply a number of computerized
investment models to identify stocks that have a high probability of
outperforming their respective industry/sector peer groups within the
Russell 2500. These investment models incorporate a diverse set of
valuation, earnings and relative price variables to produce a
comprehensive appraisal profile on every stock in the universe of
securities described above. Stocks that are determined to be
attractive based on a combination of quantitative and fundamental
criteria will be overweighted relative to the benchmark index. In
general, the discipline will favor stocks that demonstrate an
improving trend of earnings and also appear attractive based on
measures of fundamental value. While these securities have the
potential to outperform the securities represented in the Russell
2500, they may in fact be more volatile or have a lower return than
the benchmark index. Although equity securities have historically
demonstrated long-term growth in value, their prices fluctuate based
on changes in a company's financial condition and general economic
conditions. This is especially true in the case of smaller companies.
The Disciplined Small Cap Fund may also invest in real estate
investment trusts ("REITs"). REITs are pooled investment vehicles that
invest primarily in either real estate or real estate related loans.
The value of a REIT is affected by changes in the value of the
properties owned by the REIT or securing mortgage loans held by the
REIT. REITs are dependent upon cash flow from its investments to repay
financing costs and the ability of the REIT's manager. REITs are also
subject to risks generally associated with investments in real estate.
Performance of the Disciplined Small Cap Fund
The following chart shows the average annual total return for
the longest outstanding class of shares, Class A, of the Disciplined
Small Cap Fund for the most recent one-year period, five-year period
and since inception for the period ended December 31, 1996.
Average Annual Returns through December 31, 1996
Assets of all Classes as
of
December 31, 1996 (000s)
One Year
Five Years
Since
Inception
$52,911
20.56%
11.64%
13.20%
The performance data set forth above is not, and should not be
viewed as, indicative of the future performance of the Disciplined
Small Cap 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 Disciplined Small Cap Fund in which the
Portfolios will invest.
Investment Objectives and Management Policies
The Portfolios invest their assets in the underlying Smith Barney Funds
listed below within the ranges indicated.
Investment Range (Percentage of Each Portfolio's Net Assets)
Underlying Smith Barney
Fund
High
Growth
Portfolio
Growth
Portfolio
Balanced
Portfolio
Conservative
Portfolio
Income
Portfolio
Smith Barney Aggressive Growth Fund
Inc.
10-30%
0-15%
- --
- --
- --
Smith Barney Appreciation Fund Inc.
0-20%
0-30%
0-20%
0-15%
0-10%
Smith Barney Equity Funds:
Smith Barney Growth and Income
Fund
0-20%
0-20%
5-20%
- --
- --
Smith Barney Fundamental Value Fund
Inc.
0-20%
0-30%
0-20%
0-15%
0-10%
Smith Barney Funds, Inc.:
Equity Income Portfolio
Short-Term U.S. Treasury
Securities
Portfolio
0-20%
- --
0-20%
0-15%
5-20%
0-20%
0-20%
0-20%
0-15%
5-30%
Smith Barney Income Funds:
Smith Barney High Income Fund
Smith Barney Utilities Fund
Smith Barney Premium Total Return Fund
Smith Barney Convertible Fund
Smith Barney Diversified Strategic
Income Fund
0-20%
- --
- --
- --
- --
5-20%
0-20%
- --
- --
- --
0-15%
0-20%
5-20%
5-20%
5-25%
0-20%
0-20%
5-25%
5-15%
10-30%
0-25%
0-15%
0-15%
0-15%
10-30%
Smith Barney Investment Funds Inc.:
Smith Barney Managed Growth Fund
Smith Barney Special Equities Fund
Smith Barney Government Securities Fund
Smith Barney Investment Grade Bond Fund
Smith Barney Managed Governments Fund Inc.
0-20%
10-30%
0-15%
0-15%
- --
0-30%
0-15%
0-20%
0-15%
0-15%
0-15%
- --
0-20%
- --
5-20%
- --
- --
5-20%
- --
5-25%
- --
- --
5-20%
0-15%
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
Emerging Markets Portfolio
International Balanced Portfolio
Global Government Bond Portfolio
5-25%
0-20%
0-15%
0-15%
0-20%
- --
0-10%
0-15%
0-15%
- --
0-10%
0-15%
0-10%
- --
0-10%
0-20%
0-10%
- --
0-10%
0-20%
FD 01333 10/97
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