<PAGE>
[GRAPHIC]
Global Portfolio
High Growth Portfolio
Growth Portfolio
Balanced Portfolio
Conservative Portfolio
Income Portfolio
SMITH BARNEY
CONCERT ALLOCATION SERIES
PROSPECTUS
June 1, 1999
Class A, B, L and Y Shares
Prospectus begins on page one
The Securities and Exchange Commission has
not approved or disapproved these securities
or determined whether this prospectus is
accurate or complete. Any statement to the
contrary is a crime.
SMITH BARNEY
MUTUAL FUNDS
<PAGE>
Contents
<TABLE>
<S> <C>
Investments, risks and performance 2
- ----------------------------------------------------
Global Portfolio 3
- ----------------------------------------------------
High Growth Portfolio 5
- ----------------------------------------------------
Growth Portfolio 8
- ----------------------------------------------------
Balanced Portfolio 11
- ----------------------------------------------------
Conservative Portfolio 14
- ----------------------------------------------------
Income Portfolio 17
- ----------------------------------------------------
More on the portfolios' investments 20
- ----------------------------------------------------
Investment strategies and related risks 22
- ----------------------------------------------------
Management 24
- ----------------------------------------------------
Choosing a class of shares to buy 25
- ----------------------------------------------------
Comparing the portfolios' classes 26
- ----------------------------------------------------
Sales charges 27
- ----------------------------------------------------
More about deferred sales charges 29
- ----------------------------------------------------
Buying shares 30
- ----------------------------------------------------
Exchanging shares 31
- ----------------------------------------------------
Redeeming shares 32
- ----------------------------------------------------
Other things to know about share transactions 33
- ----------------------------------------------------
Smith Barney 401(k) and ExecChoice(TM) programs 34
- ----------------------------------------------------
Dividends, distributions and taxes 35
- ----------------------------------------------------
Share price 36
- ----------------------------------------------------
Financial highlights 37
- ----------------------------------------------------
</TABLE>
1 The Concert Allocation Series Prospectus
<PAGE>
Investments, Risks and Performance
About the portfolios
Each portfolio is a "fund of funds"--meaning it invests in other mutual funds
rather than directly in portfolio securities like stocks, bonds and money mar-
ket instruments. These underlying mutual funds will be open-end funds managed
by the investment manager or its affiliates and have investment goals similar,
but not identical to, those of the portfolios.
Each portfolio is managed as an asset allocation program with a Target Alloca-
tion and a Target Range.
Target Allocation is the manager's initial strategic focus in allocating
between equity funds and fixed income funds.
Target Range is the range in which the manager may vary from the Target
Allocation.
Investing primarily in other mutual funds presents special risks
. In addition to the portfolio's operating expenses, you will indirectly bear
the operating expenses of the underlying funds. For instance, you will pay
management fees of both the portfolio and the underlying funds.
. One underlying fund may buy the same securities that another underlying fund
sells. You would indirectly bear the costs of these trades without accom-
plishing any investment purpose.
. You may receive taxable gains from portfolio transactions by the underlying
funds as well as taxable gains from transactions in shares of the underlying
funds by a portfolio.
You should know:
You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
An investment in any of the portfolios is not a bank deposit and is not insured
or guaranteed by the FDIC or any other government agency
Principal risks of investing in fixed income securities and equity securities
The underlying funds invest in fixed income securities and equity securities.
Risks common to investments in fixed income securities and equity securities
are set forth below. Because each portfolio has a different investment strate-
gy, there are also principal risks that are specific to an investment in a par-
ticular portfolio. These unique risks are described in the portfolio summaries
beginning on the next page.
Fixed Income Securities:
. When interest rates go up, prices of fixed income securities go down
. An issuer of a security may default on its obligation to pay principal and/or
interest or have its credit rating downgraded
. An issuer of a security may prepay principal earlier than scheduled, which
would force an underlying fund to reinvest in lower yielding securities. This
is known as call or prepayment risk
. Slower than expected principal payments may extend a security's life. This
locks in a below-market interest rate, increases the security's duration and
reduces the value of the security. This is known as extension risk
Equity Securities:
. Stock prices may decline generally
. If an adverse event occurs, such as the issuance of an unfavorable earnings
report, the value of a particular issuer's security may be depressed
2 The Concert Allocation Series Prospectus
<PAGE>
Global Portfolio
Investment objective
Capital appreciation.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney global, inter-
national and U.S. equity funds listed below.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity markets in general, particular sectors of such markets and the performance
outlook for the underlying funds. In assessing the equity markets, the manager
considers the relative outlook for domestic and international equity markets, a
broad range of market and economic trends and quantitative factors. The perfor-
mance of the underlying funds also influences their weighting in the portfolio.
The manager tends to emphasize a mix of underlying funds that together reflect
a broad range of U.S. and international equity investments. The portfolio can
invest in underlying funds that have a range of investment styles and focuses.
Under normal market conditions, the portfolio allocates all of its assets to
funds that invest primarily in equity securities.
- ---------------------------
<TABLE>
<CAPTION>
Target Allocation
- ---------------------------
<S> <C>
Equity Funds 100%
- ---------------------------
Target Range
- ---------------------------
Equity Funds 80-100%
- ---------------------------
Fixed Income Funds 0-20%
- ---------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Hansberger Global Value Fund 15-35%
- ------------------------------------------------------
International Equity Portfolio 10-35%
- ------------------------------------------------------
Smith Barney Hansberger Global Small Cap Value
Fund 5-20%
- ------------------------------------------------------
Cash Portfolio 0-20%
- ------------------------------------------------------
Concert Peachtree Growth Fund 0-20%
- ------------------------------------------------------
Emerging Markets Portfolio 0-20%
- ------------------------------------------------------
Large Cap Value Fund 0-20%
- ------------------------------------------------------
Smith Barney Aggressive Growth Fund Inc. 0-20%
- ------------------------------------------------------
Smith Barney Large Cap Blend Fund 0-20%
- ------------------------------------------------------
Smith Barney Large Capitalization Growth Fund 0-20%
- ------------------------------------------------------
<CAPTION>
<S> <C>
- ------------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 0-20%
- ------------------------------------------------------
European Portfolio 0-15%
- ------------------------------------------------------
Pacific Portfolio 0-15%
- ------------------------------------------------------
Smith Barney Mid Cap Blend Fund 0-15%
- ------------------------------------------------------
Smith Barney Natural Resources Fund Inc. 0-15%
- ------------------------------------------------------
Smith Barney Small Cap Value Fund 0-15%
- ------------------------------------------------------
Smith Barney Appreciation Fund Inc. 0-10%
- ------------------------------------------------------
Smith Barney Contrarian Fund 0-10%
- ------------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-10%
- ------------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in equity securities generally. The principal risks associated with in-
vesting in these securities are described on page 2 under "About the portfo-
lios". Your investment in the portfolio is also subject to the following spe-
cific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase in-
vestment gains or add to investment losses. These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are an aggressive investor seeking capital appreciation
. Currently have exposure to fixed income investments and less volatile equity
investments and wish to broaden your investment portfolio
. Are willing to accept the risks of the stock market and the special risks of
investing in foreign securities, including those of emerging markets
. Have a long-term time horizon and no need for current income
3 The Concert Allocation Series Prospectus
<PAGE>
Global Portfolio, continued
Performance
- --------------------------------------------------------------------------------
Because this portfolio commenced operations on March 9, 1998, the portfolio
does not yet have a sufficient operating history to generate the performance
information which other Smith Barney funds show in bar and table form in this
location of the prospectus.
Year to date: 2.92% (through 3/31/99)
Fee table
- --------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.
Based on the expense ratios of underlying Smith Barney funds in which the Global
portfolio was invested on January 31, 1999, the approximate expense ratios are
expected to be as follows: Class A 1.76%, Class B 2.51%, Class L 2.51% and Class
Y 1.51%. Fee table expenses would be higher if the expense ratios of the
underlying funds were included.
<TABLE>
<CAPTION>
Shareholder fees (paid
directly from your investment) Class A Class B Class L Class Y
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases
(as a % of offering price) 5.00% None 1.00% None
-------------------------------------------------------------
Maximum deferred sales charge
(load) (as a % of the
lower of net asset value at
purchase or redemption) None(*) 5.00% 1.00% None
-------------------------------------------------------------
Annual fund operating expenses
(expenses deducted from
portfolio assets)
-------------------------------------------------------------
Management fee 0.35% 0.35% 0.35% 0.35%
-------------------------------------------------------------
Distribution and service (12b-
1) fees 0.25% 1.00% 1.00% None
-------------------------------------------------------------
Other expenses None None None None
-------------------------------------------------------------
Total annual fund operating
expenses 0.60% 1.35% 1.35% 0.35%
-------------------------------------------------------------
(*) You may buy Class A shares in amounts of $500,000 or
more at net asset value (without an initial charge) but
if you redeem those shares within 12 months of purchase
you will pay a deferred sales charge of 1.00%.
</TABLE>
Example
- --------------------------------------------------------------------------------
The example helps you com pare the costs of investing in the portfolio with
other mu tual funds. Your actual costs may be higher or low er.
<TABLE>
<CAPTION>
Number of years you own
your shares 1 year(*) 3 years(*) 5 years(*) 10 years(*)
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (with or without
redemption) $670 $1,026 $1,406 $2,469
------------------------------------------------------------------
Class B (assuming
redemption at end of
period) $754 $1,082 $1,435 $2,662
------------------------------------------------------------------
Class B (assuming no
redemption) $254 $ 782 $1,335 $2,662
------------------------------------------------------------------
Class L (assuming
redemption at end of
period) $452 $ 874 $1,422 $2,917
------------------------------------------------------------------
Class L (assuming no
redemption) $352 $ 874 $1,422 $2,917
------------------------------------------------------------------
Class Y (with or without
redemption) $154 $ 477 $ 824 $1,802
------------------------------------------------------------------
</TABLE>
(*)The example assumes:
.You invest $10,000 for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a
sales charge
.The portfolio's operating expenses remain the same
. The expenses of the underlying Smith Barney funds are re-
flected.
4 The Concert Allocation Series Prospectus
<PAGE>
High Growth Portfolio
Investment objective
Capital appreciation.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney mutual funds
listed below, which are primarily equity funds.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity markets in general, particular sectors of such markets and the performance
outlook for the underlying funds. In assessing the equity markets, the manager
considers a broad range of market and economic trends and quantitative factors.
The performance of the underlying funds also influences their weighting in the
portfolio. The manager tends to emphasize underlying funds that focus upon
smaller cap, higher growth companies. However, the portfolio can invest in un-
derlying funds that have a range of investment styles and focuses, including
large cap, international, emerging markets, high yield (Smith Barney High In-
come Fund) and sector funds (SmithBarney Natural Resources Fund Inc.). The
portfolio also allocates a portion of its assets to underlying funds that pri-
marily invest in debt securities.
- ---------------------------
<TABLE>
<CAPTION>
Target Allocation
- ---------------------------
<S> <C>
Equity Funds 90%
- ---------------------------
Fixed Income Funds 10%
- ---------------------------
Target Range
- ---------------------------
Equity Funds 80-100%
- ---------------------------
Fixed Income Funds 0-20%
- ---------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Aggressive Growth Fund Inc. 10-30%
- -------------------------------------------------
International Equity Portfolio 5-25%
- -------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-25%
- -------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 0-25%
- -------------------------------------------------
Cash Portfolio 0-20%
- -------------------------------------------------
Concert Peachtree Growth Fund 0-20%
- -------------------------------------------------
Emerging Markets Portfolio 0-20%
- -------------------------------------------------
Large Cap Value Fund 0-20%
- -------------------------------------------------
Smith Barney Appreciation Fund Inc. 0-20%
- -------------------------------------------------
Smith Barney Contrarian Fund 0-20%
- -------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-20%
- -------------------------------------------------
<CAPTION>
<S> <C>
- -----------------------------------------------------
Smith Barney Hansberger Global Small Cap Value
Fund 0-20%
- -----------------------------------------------------
Smith Barney High Income Fund 0-20%
- -----------------------------------------------------
Smith Barney Large Cap Blend Fund 0-20%
- -----------------------------------------------------
Smith Barney Large Capitalization Growth Fund 0-20%
- -----------------------------------------------------
Global Government Bond Portfolio 0-15%
- -----------------------------------------------------
International Balanced Portfolio 0-15%
- -----------------------------------------------------
Smith Barney Government Securities Fund 0-15%
- -----------------------------------------------------
Smith Barney Investment Grade Bond Fund 0-15%
- -----------------------------------------------------
Smith Barney Mid Cap Blend Fund 0-15%
- -----------------------------------------------------
Smith Barney Small Cap Value Fund 0-15%
- -----------------------------------------------------
Smith Barney Natural Resources Fund Inc. 0-10%
- -----------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in equity securities generally. The principal risks associated with in-
vesting in equity securities are described on page 2 under "About the portfo-
lios". Your investment in the portfolio is also subject to the following spe-
cific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. Growth stocks or small capitalization stocks (generally those listed in the
Russell 2000 Indices) may fall out of favor with investors and may experience
greater volatility, as well as greater potential for gain or loss
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase in-
vestment gains or add to investmentlosses. These risks are heightened for in-
vestments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular assetclasses, investment styles, underlying funds or
other issues may prove to be wrong
Who may want to invest
The portfolio may be an appropriate investment if you:
. Currently have exposure to fixed income investments and less volatile equity
investments and wish to broaden your investment portfolio
. Are willing to accept the risks of the stock market
. Have a long-term time horizon and no need for current income
5 The Concert Allocation Series Prospectus
<PAGE>
High Growth Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 2 calendar
years. Class B, L and Y shares would have different performance because of
their different expenses. Performance information in the chart does not reflect
sales charges, which would reduce your return.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 22.13% in 4th quarter 1998; Lowest: (15.61)% in 3rd
quarter 1998
Year to date: 3.14% (through 3/31/99)
[BAR GRAPH APPEARS HERE]
PERCENTAGE TOTAL RETURNS FOR CLASS A SHARES
12.46% 15.52%
-------- --------
1997 1998
Calendar year ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table as sumes the impo sition of the maximum sales charge applica ble to
the class, redemp tion of shares at the end of the period, and reinvestment of
distributions and dividends.
The table indi cates the risks of investing in the portfolio by comparing the
average an nual total re turn of each class for the periods shown to that of the
S&P 500 Compos ite Stock Index (S&P 500), a broad-based un managed index of
widely held common stocks; the Russell 2000 Index (Russell 2000), a broad-based
unmanaged capi talization weighted index of small capi talization com panies;
the Morgan Stanley Capital Inter national EAFE Index (MSCI EAFE), a broad based
unmanaged index of for eign stocks; and the Salomon Smith Barney High Yield Mar
ket Index (High Yield), a broad-based un managed index of high yield securities.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar years ended
December 31, 1998)
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S&P Russell MSCI High
Class A Class B Class L Class Y 500 2000 EAFE Yield
-----------------------------------------------------------------------------
1 Year 9.74% 9.67% 12.52% n/a 28.60% (2.55)% 20.00% 3.60%
-----------------------------------------------------------------------------
Since Inception 9.83% 10.00% 10.48% n/a 28.10%* 11.11%* 9.25%* 9.05%*
-----------------------------------------------------------------------------
Inception Date 2/5/96 2/5/96 2/5/96 n/a n/a n/a n/a n/a
-----------------------------------------------------------------------------
</TABLE>
*Index comparison begins on February 29, 1996.
Fee table
- --------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.
Based on the expense ratios of underlying Smith Barney funds in which the High
Growth portfolio was invested on January 31, 1999, the approximate expense
ratios are expected to be as follows: Class A 1.53%, Class B 2.28%, Class L
2.28% and Class Y 1.28%. Fee table expenses would be higher if the expense
ratios of the underlying funds were included.
<TABLE>
<CAPTION>
Shareholder fees (paid
directly from your investment) Class A Class B Class L Class Y
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases (as a %
of offering price) 5.00% None 1.00% None
-------------------------------------------------------------
Maximum deferred sales charge
(load)
(as a % of the lower of net
asset value at purchase or
redemption) None* 5.00% 1.00% None
-------------------------------------------------------------
Annual fund operating expenses
(expenses deducted from
portfolio assets)
-------------------------------------------------------------
Management fee 0.35% 0.35% 0.35% 0.35%
-------------------------------------------------------------
Distribution and service (12b-
1) fees 0.25% 1.00% 1.00% None
-------------------------------------------------------------
Other expenses None None None None
-------------------------------------------------------------
Total annual fund operating
expenses 0.60% 1.35% 1.35% 0.35%
-------------------------------------------------------------
</TABLE>
* You may buy Class A shares in amounts of $500,000 or more
at net asset value (without an initial charge) but if you
redeem those shares within 12 months of purchase you will
pay a deferred sales charge of 1.00%.
6 The Concert Allocation Series Prospectus
<PAGE>
High Growth Portfolio, continued
Example
- --------------------------------------------------------------------------------
The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
<TABLE>
<CAPTION>
Number of years you own
your shares 1 year* 3 years* 5 years* 10 years*
----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (with or without
redemption) $648 $ 959 $1,292 $2,232
----------------------------------------------------------
Class B (assuming
redemption at end of
period) $731 $1,012 $1,320 $2,427
----------------------------------------------------------
Class B (assuming no
redemption) $231 $ 712 $1,220 $2,427
----------------------------------------------------------
Class L (assuming
redemption at end of
period) $429 $ 805 $1,308 $2,689
----------------------------------------------------------
Class L (assuming no
redemption) $329 $ 805 $1,308 $2,689
----------------------------------------------------------
Class Y (with or without
redemption) $130 $ 406 $ 702 $1,545
----------------------------------------------------------
</TABLE>
*The example assumes:
. You invest $10,000 for the period shown
. Your investment has a 5% return each year
. You reinvest all distributions and dividends without a
sales charge
. The portfolio's operating expenses remain the same
. The expenses of the underlying Smith Barney funds are re-
flected.
7 The Concert Allocation Series Prospectus
<PAGE>
Growth Portfolio
Investment objective
Long-term growth of capital.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney mutual funds
listed below, which are primarily equity funds.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity markets in general, and, to a lesser degree, the bond markets, particular
sectors of such markets and the performance outlook for the underlying funds.
In assessing the equity markets, the manager considers a broad range of market
and economic trends and quantitative factors. The performance of the underlying
funds also influences their weighting in the portfolio. The manager tends to
emphasize underlying funds that focus upon larger capitalization companies.
However, the portfolio can invest in underlying funds that have a range of in-
vestment styles and focuses, including small cap, international, high yield
(Smith Barney High Income Fund) and sector funds (Smith Barney Natural
Resources Fund Inc.). The portfolio also allocates a significant portion of its
assets to underlying funds that primarily invest in a broad range of debt secu-
rities to help reduce volatility.
- --------------------------
<TABLE>
<CAPTION>
Target Allocation
- --------------------------
<S> <C>
Equity Funds 70%
- --------------------------
Fixed Income Funds 30%
- --------------------------
Target Range
- --------------------------
Equity Funds 60-80%
- --------------------------
Fixed Income Funds 20-40%
- --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Appreciation Fund Inc. 0-30%
- ----------------------------------------------------
Smith Barney Contrarian Fund 0-30%
- ----------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-30%
- ----------------------------------------------------
Smith Barney High Income Fund 5-20%
- ----------------------------------------------------
Cash Portfolio 0-20%
- ----------------------------------------------------
Concert Peachtree Growth Fund 0-20%
- ----------------------------------------------------
International Equity Portfolio 0-20%
- ----------------------------------------------------
Large Cap Value Fund 0-20%
- ----------------------------------------------------
Smith Barney Government Securities Fund 0-20%
- ----------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-20%
- ----------------------------------------------------
Smith Barney Large Cap Blend Fund 0-20%
- ----------------------------------------------------
Smith Barney Large Capitalization Growth Fund 0-20%
- ----------------------------------------------------
<CAPTION>
<S> <C>
- -----------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 0-20%
- -----------------------------------------------------
Global Government Bond Portfolio 0-15%
- -----------------------------------------------------
Short-Term High Grade Bond Fund 0-15%
- -----------------------------------------------------
Smith Barney Aggressive Growth Fund Inc. 0-15%
- -----------------------------------------------------
Smith Barney Investment Grade Bond Fund 0-15%
- -----------------------------------------------------
Smith Barney Managed Governments Fund Inc. 0-15%
- -----------------------------------------------------
International Balanced Portfolio 0-10%
- -----------------------------------------------------
Smith Barney Hansberger Global Small Cap Value
Fund 0-10%
- -----------------------------------------------------
Smith Barney Mid Cap Blend Fund 0-10%
- -----------------------------------------------------
Smith Barney Natural Resources Fund Inc. 0-10%
- -----------------------------------------------------
Smith Barney Small Cap Value Fund 0-10%
- -----------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in equity securities and, to a lesser degree, fixed income securities
generally. The principal risks associated with investing in equity securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase in-
vestment gains or add to investment losses. These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. Growth stocks or small capitalization stocks (generally those listed on the
Russell 2000 Indices) may fall out of favor and may experience greater vola-
tility, as well as greater potential for gain or loss
. When interest rates go up, prices of fixed income securities go down
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are seeking growth of capital
. Are willing to accept the risks of the stock market, although lessened
through greater exposure to fixed income securities than the High Growth
Portfolio
. Have a long-term time horizon and no need for current income
8 The Concert Allocation Series Prospectus
<PAGE>
Growth Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 2 calendar
years. Class B, L and Y shares would have different performance because of
their different expenses. Performance information in the chart does not reflect
sales charges, which would reduce your return.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 15.29% in 4th quarter 1998; Lowest: (10.67)% in 3rd
quarter 1998
Year to date: 2.21% (through 3/31/99)
[BAR GRAPH APPEARS HERE]
PERCENTAGE TOTAL RETURNS FOR CLASS A SHARES
14.68% 13.61%
-------- --------
1997 1998
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table assumes the imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.
The table indicates the risks of investing in the portfolio by comparing the
average annual total return of each class for the periods shown to that of the
S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of widely
held common stocks; the Russell 2000 Index (Russell 2000), a broad-based
unmanaged capitalization weighted index of small capitalization companies; the
Morgan Stanley Capital International EAFE Index (MSCI EAFE), a broad-based
unmanaged index of foreign stocks; and the Lehman Government/ Corporate Bond
Index (Lehman), a broad-based index of fixed income securities.
<TABLE>
<CAPTION>
Average Annual Total Returns
(Calendar Years Ended December 31, 1998)
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S&P Russell MSCI
Class A Class B Class L Class Y 500 2000 EAFE Lehman
------------------------------------------------------------------------------
1 Year 7.92% 7.75% 10.71% n/a 28.60% (2.55)% 20.00% 9.47%
------------------------------------------------------------------------------
Since Inception 10.35% 10.64% 11.11% n/a 28.10%* 11.11%* 9.25%* 8.34%*
------------------------------------------------------------------------------
Inception Date 2/5/96 2/5/96 2/5/96 n/a n/a n/a n/a n/a
------------------------------------------------------------------------------
</TABLE>
*Index comparison begins on February 29, 1996.
Fee table
- --------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.
Based on the expense ratios of underlying Smith Barney funds in which the Growth
portfolio was invested on January 31, 1999, the approximate expense ratios are
expected to be as follows: Class A 1.43%, Class B 2.18%, Class L 2.18% and Class
Y 1.18%. Fee table expenses would be higher if the expense ratios of the
underlying funds were included.
<TABLE>
<CAPTION>
Shareholder fees (paid
directly from your investment) Class A Class B Class L Class Y
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases (as a %
of offering price) 5.00% None 1.00% None
-------------------------------------------------------------
Maximum deferred sales charge
(load)
(as a % of the lower of net
asset value at purchase or
redemption) None* 5.00% 1.00% None
-------------------------------------------------------------
Annual fund operating expenses
(expenses deducted from
portfolio assets)
-------------------------------------------------------------
Management fee 0.35% 0.35% 0.35% 0.35%
-------------------------------------------------------------
Distribution and service (12b-
1) fees 0.25% 1.00% 1.00% None
-------------------------------------------------------------
Other expenses None None None None
-------------------------------------------------------------
Total annual fund operating
expenses 0.60% 1.35% 1.35% 0.35%
-------------------------------------------------------------
</TABLE>
* You may buy Class A shares in amounts of $500,000 or more
at net asset value (without an initial charge) but if you
redeem those shares within 12 months of purchase you will
pay a deferred sales charge of 1.00%.
9 The Concert Allocation Series Prospectus
<PAGE>
Growth Portfolio, continued
Example
- --------------------------------------------------------------------------------
The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
<TABLE>
<CAPTION>
Number of years you own
your shares 1 year* 3 years* 5 years* 10 years*
----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (with or without
redemption) $638 $930 $1,243 $2,127
----------------------------------------------------------
Class B (assuming
redemption at end of
period) $721 $982 $1,269 $2,323
----------------------------------------------------------
Class B (assuming no
redemption) $221 $682 $1,169 $2,323
----------------------------------------------------------
Class L (assuming
redemption at end of
period) $419 $775 $1,258 $2,588
----------------------------------------------------------
Class L (assuming no
redemption) $319 $775 $1,258 $2,588
----------------------------------------------------------
Class Y (with or without
redemption) $120 $375 $ 649 $1,432
----------------------------------------------------------
</TABLE>
*The example assumes:
.You invest $10,000 for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a
sales charge
.The portfolio's operating expenses remain the same
. The expenses of the underlying Smith Barney funds are re-
flected.
10 The Concert Allocation Series Prospectus
<PAGE>
Balanced Portfolio
Investment objective
Balance of growth of capital and income.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney equity and
fixed income funds listed below.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity and bond markets in general, particular sectors of such markets and the
performance outlook for the underlying funds. In assessing the equity and bond
markets, the manager considers a broad range of market and economic trends and
quantitative factors. The performance of the underlying funds also influences
their weighting in the portfolio. In selecting equity funds, the manager tends
to emphasize underlying funds that focus upon established large-capitalization
U.S. stocks. The portfolio's fixed income funds mainly invest in U.S. govern-
ment and agency securities and mortgage-backed securities. However, the portfo-
lio can invest in underlying funds that have a range of investment styles and
focuses.
- --------------------------
<TABLE>
<CAPTION>
Target Allocation
- --------------------------
<S> <C>
Equity Funds 50%
- --------------------------
Fixed Income Funds 50%
- --------------------------
Target Range
- --------------------------
Equity Funds 40-60%
- --------------------------
Fixed Income Funds 40-60%
- --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Diversified Strategic Income Fund 5-25%
- -----------------------------------------------------
Large Cap Value Fund 5-20%
- -----------------------------------------------------
Smith Barney Convertible Fund 5-20%
- -----------------------------------------------------
Smith Barney Large Cap Blend Fund 5-20%
- -----------------------------------------------------
Smith Barney Managed Governments Fund Inc. 5-20%
- -----------------------------------------------------
Smith Barney Premium Total Return Fund 5-20%
- -----------------------------------------------------
Cash Portfolio 0-25%
- -----------------------------------------------------
Short-Term High Grade Bond Fund 0-20%
- -----------------------------------------------------
Smith Barney Appreciation Fund Inc. 0-20%
- -----------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-20%
- -----------------------------------------------------
Smith Barney Government Securities Fund 0-20%
- -----------------------------------------------------
<CAPTION>
<S> <C>
- -----------------------------------------------------
Concert Peachtree Growth Fund 0-15%
- -----------------------------------------------------
Global Government Bond Portfolio 0-15%
- -----------------------------------------------------
International Equity Portfolio 0-15%
- -----------------------------------------------------
Smith Barney Contrarian Fund 0-15%
- -----------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-15%
- -----------------------------------------------------
Smith Barney High Income Fund 0-15%
- -----------------------------------------------------
Smith Barney Large Capitalization Growth Fund 0-15%
- -----------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 0-15%
- -----------------------------------------------------
International Balanced Portfolio 0-10%
- -----------------------------------------------------
Smith Barney Natural Resources Fund Inc. 0-10%
- -----------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in both fixed income securities and equity securities generally. The
principal risks associated with investing in these securities are described on
page 2 under "About the portfolios". Your investment in the portfolio is also
subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase
investment gains or add to investment losses. These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. When interest rates go up, prices of fixed income securities go down
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are willing to sacrifice some growth potential for less volatility
. Are willing to accept the risks of the stock market
. Have a long-term time horizon
11 The Concert Allocation Series Prospectus
<PAGE>
Balanced Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 2 calendar
years. Class B, L and Y shares would have different performance because of
their different expenses. Performance information in the chart does not reflect
sales charges, which would reduce your return.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly returns: Highest: 7.71% in 4th quarter 1998; Lowest: (5.18)% in 3rd
quarter 1998
Year to date: 0.94% (through 3/31/99)
[BAR GRAPH APPEARS HERE]
PERCENTAGE TOTAL RETURNS FOR CLASS A SHARES
12.78% 8.84%
-------- --------
1997 1998
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table assumes the imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.
The table indicates the risks of investing in the portfolio by comparing the
average annual total return of each class for the periods shown to that of the
S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of widely
held common stocks; the Lehman Government/Corporate Bond Index (Lehman
Gov/Corp), a broad-based unmanaged index of fixed income securities; the Salomon
Smith Barney One-Year Treasury Bill Index (T-bill), consisting of a single 1-
Year U.S. Treasury bill whose return is tracked until maturity; and the Salomon
Smith Barney World Government Bond Index (World Bond), a broad-based unmanaged
index of international fixed income securities.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1998)
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S&P World
Class A Class B Class L Class Y 500 Lehman T-bill Bond
-----------------------------------------------------------------------------
1 Year 3.41% 3.04% 5.93% n/a 28.60% 9.47% 5.89% 15.29%
-----------------------------------------------------------------------------
Since Inception 8.59% 8.84% 9.32% n/a 28.10%* 8.34%* 5.96%* 7.23%*
-----------------------------------------------------------------------------
Inception Date 2/5/96 2/5/96 2/5/96 n/a n/a n/a n/a n/a
-----------------------------------------------------------------------------
</TABLE>
*Index comparison begins on February 29, 1996.
Fee table
- --------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.
Based on the expense ratios of underlying Smith Barney funds in which the
Balanced portfolio was invested on January 31, 1999, the approximate expense
ratios are expected to be as follows: Class A 1.30%, Class B 2.05%, Class L
2.05% and Class Y 1.05%. Fee table expenses would be higher if the expense
ratios of the underlying funds were included.
<TABLE>
<CAPTION>
Shareholder fees (paid
directly from your investment) Class A Class B Class L Class Y
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases
(as a % of offering price) 5.00% None 1.00% None
-------------------------------------------------------------
Maximum deferred sales charge
(load) (as a % of the lower of
net asset value at purchase or
redemption) None* 5.00% 1.00% None
-------------------------------------------------------------
Annual fund operating expenses
(expenses deducted from
portfolio assets)
-------------------------------------------------------------
Management fee 0.35% 0.35% 0.35% 0.35%
-------------------------------------------------------------
Distribution and service (12b-
1) fees 0.25% 1.00% 1.00% None
-------------------------------------------------------------
Other expenses None None None None
-------------------------------------------------------------
Total annual fund operating
expenses 0.60% 1.35% 1.35% 0.35%
-------------------------------------------------------------
</TABLE>
* You may buy Class A shares in amounts of $500,000 or more
at net asset value (without an initial charge) but if you
redeem those shares within 12 months of purchase you will
pay a deferred sales charge of 1.00%.
12 The Concert Allocation Series Prospectus
<PAGE>
Balanced Portfolio, continued
Example
- --------------------------------------------------------------------------------
The example helps you compare the costs of investing in the portfolio with other
mutual funds. Your actual costs may be higher or lower.
<TABLE>
<CAPTION>
Number of years you own
your shares 1 Year* 3 Years* 5 Years* 10 Years*
----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (with or without
redemption) $626 $891 $1,177 $1,989
----------------------------------------------------------
Class B (assuming
redemption at end of
period) $708 $943 $1,203 $2,182
----------------------------------------------------------
Class B (assuming no
redemption) $208 $643 $1,103 $2,182
----------------------------------------------------------
Class L (assuming
redemption at end of
period) $406 $736 $1,192 $2,455
----------------------------------------------------------
Class L (assuming no
redemption) $306 $736 $1,192 $2,455
----------------------------------------------------------
Class Y (with or without
redemption) $107 $334 $ 579 $1,283
----------------------------------------------------------
</TABLE>
*The example assumes:
.You invest $10,000 for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a
sales charge
.The portfolio's operating expenses remain the same
. The expenses of the underlying Smith Barney funds are re-
flected.
13 The Concert Allocation Series Prospectus
<PAGE>
Conservative Portfolio
Investment objective
Primary: Income. Secondary: Long-term growth of capital.
Principal investment strategies
The portfolio is a fund of funds. It invests primarily in the Smith Barney
funds that focus on the taxable fixed income funds listed below. The portfolio
also invests in stock funds invested primarily in U.S. large capitalization
stocks.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the dif-
ferent sectors of the bond market and, to a lesser degree, the equities mar-
kets. In assessing the bond markets, the manager considers a broad range of
economic trends and quantitative factors. The performance of the underlying
funds also influences their weighting in the portfolio. The portfolio's fixed
income funds mainly invest in U.S. government and agency securities and mort-
gage-backed securities. In selecting equity funds, the manager tends to empha-
size underlying funds that focus upon large capitalization stocks. However, the
portfolio can invest in underlying funds that have a range of investment styles
and focuses.
- --------------------------
<TABLE>
<CAPTION>
Target Allocation
- --------------------------
<S> <C>
Equity Funds 30%
- --------------------------
Fixed Income Funds 70%
- --------------------------
Target Range
- --------------------------
Equity Funds 20-40%
- --------------------------
Fixed Income Funds 60-80%
- --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Diversified Strategic Income Fund 10-30%
- ------------------------------------------------------
Smith Barney Managed Governments Fund Inc. 5-25%
- ------------------------------------------------------
Smith Barney Premium Total Return Fund 5-25%
- ------------------------------------------------------
Smith Barney Government Securities Fund 5-20%
- ------------------------------------------------------
Smith Barney Convertible Fund 5-15%
- ------------------------------------------------------
Cash Portfolio 0-30%
- ------------------------------------------------------
Global Government Bond Portfolio 0-20%
- ------------------------------------------------------
Large Cap Value Fund 0-20%
- ------------------------------------------------------
<CAPTION>
<S> <C>
- ------------------------------------------------
Short-Term High Grade Bond Fund 0-20%
- ------------------------------------------------
Smith Barney High Income Fund 0-20%
- ------------------------------------------------
Smith Barney Appreciation Fund Inc. 0-15%
- ------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-15%
- ------------------------------------------------
International Balanced Portfolio 0-10%
- ------------------------------------------------
International Equity Portfolio 0-10%
- ------------------------------------------------
Smith Barney Hansberger Global Value 0-10%
- ------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in fixed income securities and, to a lesser degree, equity securities
generally. The principal risks associated with investing in these securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. Whe interest rates go up, prices of fixed income securities go down
. An issuer of a security may prepay principal earlier than scheduled, which
would force an underlying fund to reinvest in lower yielding securities
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are seeking income, but also some long-term growth of capital to help offset
the loss of purchasing power because of inflation
. Are a conservative investor willing to sacrifice some growth potential in ex-
change for less (but not zero) volatility
14 The Concert Allocation Series Prospectus
<PAGE>
Conservative Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 2 calendar
years. Class B, L and Y shares would have different performance because of
their different expenses. Performance information in the chart does not reflect
sales charges, which would reduce your return.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 6.01% in 2nd quarter 1997; Lowest: (3.42)% in 3rd
quarter 1998
Year to date: 0.43% (through 3/31/99)
[BAR GRAPH APPEARS HERE]
PERCENTAGE TOTAL RETURNS FOR CLASS A SHARES
11.81% 6.02%
-------- --------
1997 1998
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table assumes the imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.
The table indicates the risks of investing in the portfolio by comparing the
average annual total return of each class for the periods shown to that of the
S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of widely
held common stocks; the Lehman Government/Corporate Bond Index (Lehman), a
broad-based unmanaged index of fixed income securities; Salomon Smith Barney
High Yield Market Index (High Yield), a broad-based unmanaged index of high
yield securities and the Salomon Smith Barney One-Year Treasury Bill Index (T-
bill), consisting of a single 1-Year U.S. Treasury bill whose return is tracked
until maturity.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1998)
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S&P Lehman High
Class A Class B Class L Class Y 500 Corp/Gov Yield T-bill
------------------------------------------------------------------------------
1 Year 1.24% 1.02% 3.52% n/a 28.60% 9.47% 3.60% 5.89%
------------------------------------------------------------------------------
Since Inception 7.02% 7.29% 7.86% n/a 28.10%* 8.34%* 9.05%* 5.96%*
------------------------------------------------------------------------------
Inception Date 2/5/96 2/5/96 2/5/96 n/a n/a n/a n/a n/a
------------------------------------------------------------------------------
</TABLE>
*Index comparison begins on February 29, 1996.
Fee table
- --------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.
Based on expense ratios of underlying Smith Barney funds in which the
Conservative portfolio was invested on January 31, 1999, the approximate expense
ratios are expected to be as follows: Class A 1.33%, Class B 1.83%, Class L
1.78% and Class Y 1.08%. Fee table expenses would be higher if the expense
ratios of the underlying funds were included.
<TABLE>
<CAPTION>
Shareholder fees (paid
directly from your investment) Class A Class B Class L Class Y
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases
(as a % of offering price) 4.50% None 1.00% None
-------------------------------------------------------------
Maximum deferred sales charge
(load)
(as a % of the lower of net
asset value at purchase or
redemption) None* 4.50% 1.00% None
-------------------------------------------------------------
Annual fund operating expenses
(expenses deducted from
portfolio assets)
-------------------------------------------------------------
Management fee 0.35% 0.35% 0.35% 0.35%
-------------------------------------------------------------
Distribution and service (12b-
1) fees 0.25% 0.75% 0.70% None
-------------------------------------------------------------
Other expenses None None None None
-------------------------------------------------------------
Total annual fund operating
expenses 0.60% 1.10% 1.05% 0.35%
-------------------------------------------------------------
</TABLE>
* You may buy Class A shares in amounts of $500,000 or more
at net asset value (without an initial charge) but if you
redeem those shares within 12 months of purchase you will
pay a deferred sales charge of 1.00%.
15 The Concert Allocation Series Prospectus
<PAGE>
Conservative Portfolio, continued
Example
- --------------------------------------------------------------------------------
The example helps you compare the costs of investing in the portfolio with other
mutual funds. Your actual costs may be higher or lower.
<TABLE>
<CAPTION>
Number of years you own
your shares 1 year* 3 years* 5 years* 10 years*
----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (with or without
redemption) $579 $852 $1,146 $1,979
----------------------------------------------------------
Class B (assuming
redemption at end of
period) $636 $876 $1,090 $2,017
----------------------------------------------------------
Class B (assuming no
redemption) $186 $576 $ 990 $2,017
----------------------------------------------------------
Class L (assuming
redemption at end of
period) $379 $655 $1,055 $2,174
----------------------------------------------------------
Class L (assuming no
redemption) $279 $655 $1,055 $2,174
----------------------------------------------------------
Class Y (with or without
redemption) $110 $343 $ 595 $1,317
----------------------------------------------------------
</TABLE>
*The example assumes:
.You invest $10,000 for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a
sales charge
.The portfolio's operating expenses remain the same
. The expenses of the underlying Smith Barney funds are re-
flected.
16 The Concert Allocation Series Prospectus
<PAGE>
Income Portfolio
Investment objective
High current income.
Principal investment strategies
The portfolio is a fund of funds. It invests primarily in the Smith Barney
funds listed below that focus on taxable fixed income securities.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the dif-
ferent sectors of the bond market. In assessing the bond markets, the manager
considers a broad range of economic trends and quantitative factors. The per-
formance of the underlying funds also influences their weighting in the portfo-
lio. The portfolio focuses on funds that invest in a broad range of fixed in-
come securities. The portfolio also allocates a portion of its assets to under-
lying funds that primarily invest in equity securities.
- ---------------------------
<TABLE>
<CAPTION>
Target Allocation
- ---------------------------
<S> <C>
Equity Funds 10%
- ---------------------------
Fixed Income Funds 90%
- ---------------------------
Target Range
- ---------------------------
Equity Funds 0-20%
- ---------------------------
Fixed Income Funds 80-100%
- ---------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Diversified Strategic Income Fund 10-30%
- ------------------------------------------------------
Short-Term High Grade Bond Fund 5-30%
- ------------------------------------------------------
Smith Barney Managed Governments Fund Inc. 5-30%
- ------------------------------------------------------
Smith Barney Government Securities Fund 5-20%
- ------------------------------------------------------
Cash Portfolio 0-30%
- ------------------------------------------------------
Smith Barney High Income Fund 0-25%
- ------------------------------------------------------
Global Government Bond Portfolio 0-20%
- ------------------------------------------------------
Large Cap Value Fund 0-15%
- ------------------------------------------------------
<CAPTION>
<S> <C>
- -----------------------------------------------
Smith Barney Convertible Fund 0-15%
- -----------------------------------------------
Smith Barney Investment Grade Bond Fund 0-15%
- -----------------------------------------------
Smith Barney Premium Total Return Fund 0-15%
- -----------------------------------------------
International Balanced Portfolio 0-10%
- -----------------------------------------------
International Equity Portfolio 0-10%
- -----------------------------------------------
Smith Barney Appreciation Fund Inc. 0-10%
- -----------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-10%
- -----------------------------------------------
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in fixed income securities and, to a lesser degree, equity securities
generally. The principal risks associated with investing in these securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. The manager's judgment about the attractiveness and risk adjusted return
potential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. When interest rates go up, prices of fixed income securities go down
. An issuer of a security may prepay principal earlier than scheduled, which
would force an underlying fund to reinvest in lower yielding securities
. An issuer of a security may default on its obligation to pay principal and/or
interest or have its credit rating downgraded
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are seeking current income
. Are a conservative investor willing to sacrifice growth potential for less
(but not zero) volatility
17 The Concert Allocation Series Prospectus
<PAGE>
Income Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 2 calendar
years. Class B, L and Y shares would have different performance because of
their different expenses. Performance information in the chart does not reflect
sales charges, which would reduce your return.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 5.09% in 2nd quarter 1997; Lowest: (1.10)% in 3rd
quarter 1998
Year to date: 0.10% (through 3/31/99)
[BAR GRAPH APPEARS HERE]
PERCENTAGE TOTAL RETURNS FOR CLASS A SHARES
11.00% 5.32%
-------- --------
1997 1998
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table assumes the imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.
The table indicates the risks of investing in the portfolio by comparing the
average annual total return of each class for the periods shown to that of the
S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of widely
held common stocks; the Lehman Government/Corporate Bond Index (Lehman), a
broad-based unmanaged index of fixed income securities; Salomon Smith Barney
High Yield Market Index (High Yield), a broad-based unmanaged index of high
yield securities and the Salomon Smith Barney One-Year Treasury Bill Index (T-
bill), consisting of a single 1-Year U.S. Treasury bill whose return is tracked
until maturity.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended December
31, 1998)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S&P High
Class A Class B Class L Class Y 500 Lehman Yield T-bill
-------------------------------------------------------------------------
1 Year 0.58% 0.35% 2.70% n/a 28.60% 9.47% 3.60% 5.89%
-------------------------------------------------------------------------
Since
Inception 5.86% 6.12% 6.67% n/a 28.10%* 8.34%* 9.05%* 5.96%*
-------------------------------------------------------------------------
Inception
Date 2/5/96 2/5/96 2/5/96 n/a n/a n/a n/a n/a
-------------------------------------------------------------------------
</TABLE>
*Index comparison begins on February 29, 1996.
Fee table
- --------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.
Based on expense ratios of underlying Smith Barney funds in which the Income
portfolio was invested on January 31, 1999, the approximate expense ratios are
expected to be as follows: Class A 1.27%, Class B 1.77%, Class L 1.72% and Class
Y 1.02%. Fee table expenses would be higher if the expense ratios of the
underlying funds were included.
<TABLE>
<CAPTION>
Shareholder fees (paid
directly from your investment) Class A Class B Class L Class Y
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Maximum sales charge (load)
imposed on purchases (as a %
of offering price) 4.50% None 1.00% None
----------------------------------------------------------------
Maximum deferred sales charge
(load) (as a % of the lower of
net asset value at purchase or
redemption) None* 4.50% 1.00% None
----------------------------------------------------------------
Annual fund operating expenses
(expenses deducted from
portfolio assets)
----------------------------------------------------------------
Management fee 0.35% 0.35% 0.35% 0.35%
----------------------------------------------------------------
Distribution and service (12b-
1) fees 0.25% 0.75% 0.70% None
----------------------------------------------------------------
Other expenses None None None None
----------------------------------------------------------------
Total annual fund operating
expenses 0.60% 1.10% 1.05% 0.35%
----------------------------------------------------------------
</TABLE>
* You may buy Class A shares in amounts of $500,000 or more at
net asset value (without an initial charge) but if you redeem
those shares within 12 months of purchase you will pay a
deferred sales charge of 1.00%.
18 The Concert Allocation Series Prospectus
<PAGE>
Income Portfolio, continued
Example
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of years you own
your shares 1 year* 3 years* 5 years* 10 years*
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (with or without
redemption) $574 $835 $1,116 $1,915
-------------------------------------------------------------
Class B (assuming
redemption at end of
period) $630 $857 $1,059 $1,952
-------------------------------------------------------------
Class B (assuming no
redemption) $180 $557 $ 959 $1,952
-------------------------------------------------------------
Class L (assuming no
redemption) $373 $636 $1,024 $2,110
-------------------------------------------------------------
Class L (assuming
redemption at end of
period) $273 $636 $1,024 $2,110
-------------------------------------------------------------
Class Y (with or without
redemption) $104 $325 $ 563 $1,248
-------------------------------------------------------------
</TABLE>
The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
*The example assumes:
.You invest $10,000 for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a
sales charge
.The portfolio's operating expenses remain the same
.The expenses of the underlying Smith Barney funds are re-
flected.
19 The Concert Allocation Series Prospectus
<PAGE>
More on the Portfolios' Investments
Underlying funds
The following is a description of the investment objectives and principal in-
vestments of the underlying funds in which the portfolios invest.
The underlying funds that invest primarily in equity securities are:
Smith Barney Aggressive Growth Fund Inc. seeks capital appreciation by invest-
ing primarily in common stocks of companies the adviser believes are experienc-
ing, or have the potential to experience, growth in earnings that exceed the
average earnings growth rate of companies whose securities are included in the
Standard & Poor's 500 Index.
Smith Barney Appreciation Fund Inc. seeks long-term appreciation of shareholder
capital by investing primarily in equity securities of U.S. companies. The core
holdings of the fund are blue chip companies that are dominant in their indus-
tries.
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.
Smith Barney Contrarian Fund's investment objective is long-term growth of cap-
ital. The fund attempts to achieve its objective by investing primarily in cur-
rently price depressed, undervalued or out of favor common stock and other se-
curities, including debt securities that are convertible into common stock.
Large Cap Value Fund seeks current income and long-term growth of capital. The
fund invests primarily in common stocks of companies having a market capital-
ization of at least $5 billion that are considered by its adviser (i) to be un-
dervalued by the marketplace, (ii) to offer potential opportunities not yet
recognized by the marketplace, or (iii) to have been out of favor in the mar-
ketplace but that are poised to turn around because of a new management team,
product or business strategy.
Smith Barney Large Cap Blend Fund seeks long-term capital growth by investing
primarily in common stocks and other equity securities of large capitalization
companies with market capitalizations greater than $5 billion at the time of
investment that exhibit growth and/or value attributes.
Smith Barney Large Capitalization Growth Fund seeks long-term growth of capital
by investing in equity securities of large capitalization companies with market
capitalizations greater than $5 billion at the time of investment that are be-
lieved to afford attractive opportunities for investment growth.
Smith Barney Mid Cap Blend Fund seeks long-term growth of capital by investing
primarily in equity securities of medium-sized companies whose market capital-
izations are no greater than the market capitalizations of companies in the S&P
MidCap Index at the time of investment.
Concert Peachtree Growth Fund's investment objective is capital appreciation by
investing in securities believed to have above average potential for capital
appreciation. In attempting to achieve the fund's investment objective, the
fund uses 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.
Smith Barney Small Cap Blend Fund, Inc. seeks long-term capital appreciation by
investing primarily in the common stocks of U.S. companies with relatively
small market capitalizations at the time of investment.
Smith Barney Small Cap Value Fund seeks long-term growth of capital by invest-
ing primarily in equity securities of smaller capitalized companies whose mar-
ket capitalizations are no greater than the market capitalization of companies
in the Russell 2000 Value Index at the time of investment.
Smith Barney Natural Resources Fund Inc. seeks long-term capital appreciation
by investing primarily in equity and debt securities of issuers in a variety of
natural resources industries.
Smith Barney Premium Total Return Fund seeks to provide shareholders with total
return, consisting of long-term capital appreciation and income, by investing
primarily in a diversified portfolio of equity and fixed income securities.
Smith Barney Hansberger Global Value Fund seeks long-term capital growth by in-
vesting primarily in equity securities of companies in any country including
the United States which, in the opinion of its advisers, are undervalued. In-
come is an incidental consideration.
Smith Barney Hansberger Global Small Cap Value Fund seeks long-term capital
growth by investing primarily in equity securities of U.S. and foreign issuers
with relatively small market capitalizations which, in the opinion of its ad-
visers, are undervalued. Income is an incidental consideration.
20 The Concert Allocation Series Prospectus
<PAGE>
More on the Portfolios' Investments, continued
Emerging Markets Portfolio seeks long-term capital appreciation through a port-
folio invested primarily in securities of emerging country issuers.
International Equity Portfolio seeks total return on its assets from growth of
capital and income. The fund invests primarily in a diversified portfolio of
equity securities of foreign companies including exchange traded and over-the-
counter common stocks and preferred shares, debt securities convertible into
equity securities and rights and warrants relating to equity securities.
European Portfolio seeks long-term capital appreciation by investing primarily
in the equity securities of issuers based in European countries including coun-
tries located in Western Europe (e.g., France, Germany, Italy, the Netherlands,
Switzerland and the United Kingdom) and Eastern Europe (e.g., Czech Republic,
Hungary, Poland and the countries of the former Soviet Union).
Pacific Portfolio seeks long-term capital appreciation by investing primarily
in equity securities of companies in Australia, Hong Kong, India, Indonesia,
Japan, Malaysia, New Zealand, Pakistan, Papua New Guinea, the People's Republic
of China, the Philippines, Singapore, South Korea, Sri Lanka, Taiwan and Thai-
land.
The underlying funds that invest primarily in fixed income securities are:
Smith Barney High Income Fund seeks to provide shareholders with high current
income. Although growth of capital is not an investment objective of the fund,
its adviser may consider potential for growth as one factor, among others, in
selecting investments for the fund. The fund will seek high current income by
investing in high risk, high-yielding corporate bonds, debentures and notes de-
nominated in U.S. dollars or foreign currencies.
Smith Barney Investment Grade Bond Fund seeks to provide as high a level of
current income as is consistent with prudent investment management and preser-
vation of capital. The fund invests primarily in a portfolio of investment
grade bonds.
Smith Barney Government Securities Fund seeks high current return by investing
in obligations of, or securities guaranteed by, the U.S. government, its agen-
cies or instrumentalities (including, without limitation, treasury bills and
bonds, mortgage participation certificates issued by the Federal Home Loan
Mortgage Corporation ("FHLMC") and mortgage-backed securities issued by the
Government National Mortgage Association ("GNMA").
Short-Term High Grade Bond Fund seeks current income, preservation of capital
and liquidity. The fund seeks to achieve its objective by investing its assets
in corporate debt securities, bank obligations and securities issued by the
U.S. Government and its agencies and instrumentalities.
Smith Barney Managed Governments Fund Inc. seeks high current income consistent
with liquidity and safety of capital. The fund invests substantially all of its
assets in U.S. government securities. The fund's portfolio consists primarily
of mortgage-backed securities issued or guaranteed by GNMA, the Federal Na-
tional Mortgage Association ("FNMA") and FHLMC.
Smith Barney Diversified Strategic Income Fund seeks high current income pri-
marily through investment in fixed income securities, including high yield se-
curities. The fund attempts to achieve its objective by allocating and reallo-
cating its assets primarily among various types of fixed-income securities such
as: obligations issued or guaranteed as to principal and interest by the U.S.
government; mortgage-related securities issued by various governmental and non-
governmental entities; domestic and foreign corporate securities; and foreign
government securities.
Global Government Bond Portfolio seeks as high a level of current income and
capital appreciation as is consistent with its policy of investing principally
in high quality bonds of the U.S. and foreign governments.
Cash Portfolio is a money market fund that seeks maximum current income and
preservation of capital by investing in high quality U.S. dollar denominated
short-term debt securities.
Smith Barney Convertible Fund seeks current income and capital appreciation by
investing in investment and non-investment grade convertible securities and in
combinations of non-convertible fixed-income securities and warrants or call
options that together resemble convertible securities.
International Balanced Portfolio seeks a competitive total return on assets
from growth of capital and income through a portfolio invested primarily in se-
curities of established non-U.S. issuers.
Temporary defensive investments (all portfolios)
Each of the portfolios may depart from its principal investment strategies in
response to adverse market, economic or political conditions by taking tempo-
rary defensive positions in the Cash Portfolio, a series of Smith Barney Money
Funds, Inc., repurchase agreements or cash. If a portfolio takes a temporary
defensive position, it may be unable to achieve its investment objective.
21 The Concert Allocation Series Prospectus
<PAGE>
Investment Strategies and Related Risks
Portfolio turnover all portfolios
Each underlying fund may engage in active and frequent trading to achieve its
principal investment strategies. As a result, an underlying fund may realize
and distribute to a portfolio higher capital gains, which could increase the
tax liability for the portfolio's shareholders. Frequent trading also increases
transaction costs, which could detract from an underlying fund's performance.
Non-diversification
Each portfolio is not diversified, which means that it can invest a higher per-
centage of its assets in any one underlying fund than a diversified portfolio.
Being non-diversified may magnify a portfolio's losses from adverse events af-
fecting a particular underlying fund. However, each of the underlying funds
(except Global Government Bond Portfolio, International Balanced Portfolio and
Emerging Markets Portfolio) is diversified.
Changes in allocations
The underlying funds in which the portfolios may invest, and the range of as-
sets allocated to each fund, may be changed by the board of directors from time
to time. Similarly, the target allocation between equity and fixed income ori-
ented investments may be adjusted from time to time. If the target limits for
investment in a particular fund are exceeded or are not met because of cash
flows or changes in the market value of the shares of the underlying funds, the
investment manager may but is not required to adjust the portfolio's holdings.
High yield securities
Certain of the underlying funds can invest all or a portion of their assets in
high yield securities. High yield securities involve a substantial risk of
loss. These securities are considered speculative with respect to the issuer's
ability to pay interest and principal and are susceptible to default or decline
in market value because of adverse economic and business developments. The mar-
ket values for high yield securities tend to be very volatile, and these secu-
rities are less liquid than investment grade debt securities. Underlying funds
that hold these issues are subject to the following specific risks:
. Increased price sensitivity to changing interest rates
. Greater risk of loss because of default or declining credit quality
. Adverse company specific events are more likely to render the issuer unable
to make interest and/or principal payments
. A negative perception of the high yield market may develop, depressing the
price and liquidity of high yield securities. This negative perception could
last for a significant period of time
Foreign securities
Certain of the underlying funds focus upon foreign securities and other under-
lying funds may invest a portion of their assets outside the U.S. Investing in
non-U.S. issuers involves unique risks compared to investing in the securities
of U.S. issuers. These risks are more pronounced to the extent a fund invests
in issuers in countries with emerging markets. These risks may include:
. Less information about non-U.S. issuers or markets may be available because
of less rigorous disclosure and accounting standards or regulatory practices
. Many non-U.S. markets are smaller, less liquid and more volatile than U.S.
markets. In a changing market, the adviser may not be able to sell the fund's
portfolio securities in amounts and at prices the adviser considers
reasonable
. The U.S. dollar may appreciate against non-U.S. currencies or a foreign
government may impose restrictions on currency conversion or trading
. The economies of non-U.S. countries may grow at a slower rate than expected
or may experience a downturn or recession
. Economic, political and social developments may adversely affect the
securities markets
. Foreign governmental obligations may involve the risk of debt moratorium,
repudiation or renegotiation and the fund may be unable to enforce its rights
against the issuers
Small capitalization issuers
Certain of the underlying funds focus on small capitalization companies. In-
vesting in small companies involves unique risks. Compared to large companies,
small companies, and the market for their common stocks, are likely to:
. Be more sensitive to changes in the economy, earnings results and investor
expectations
. Have more limited product lines and capital resources
. Experience sharper swings in market values
. Be harder to sell at the times and prices the fund thinks appropriate
. Offer greater potential for gain and loss
22 The Concert Allocation Series Prospectus
<PAGE>
Investment Strategies and Related Risks, continued
Derivatives
Certain of the underlying funds may, but need not, use derivative contracts,
such as futures and options on securities, securities indices or currencies;
options on these futures; forward currency contracts; and interest rate or cur-
rency swaps for any of the following purposes:
. To hedge against the economic impact of adverse changes in the market value
of its securities, because of changes in stock market prices, currency
exchange rates or interest rates
. As a substitute for buying or selling securities
A derivative contract will obligate or entitle an underlying fund to deliver or
receive an asset or cash payment based on the change in value of one or more
securities, currencies or indices. Even a small investment in derivative con-
tracts can have a big impact on an underlying fund's stock market, currency and
interest rate exposure. Therefore, using derivatives can disproportionately in-
crease losses and reduce opportunities for gains when stock prices, currency
rates or interest rates are changing. The underlying fund may not fully benefit
from or may lose money on derivatives if changes in their value do not corre-
spond accurately to changes in the value of the fund's holdings. The other par-
ties to certain derivative contracts present the same types of credit risk as
issuers of fixed income securities. Derivatives can also make the underlying
fund less liquid and harder to value, especially in declining markets.
Investment policies (all portfolios)
Each portfolio's investment policies, including the particular underlying funds
in which each portfolio may invest and the equity/fixed income targets applica-
ble to each portfolio, generally may be changed by the board of directors with-
out shareholder approval.
23 The Concert Allocation Series Prospectus
<PAGE>
Management
Portfolio manager
The portfolios' investment manager is SSBC Fund Management, Inc., an affiliate
of Salomon Smith Barney Inc. The manager's address is 388 Greenwich Street, New
York, NY 10013. The manager selects the portfolios' investments and oversees
their operations. The manager and Salomon Smith Barney are subsidiaries of
Citigroup Inc. Citigroup businesses produce a broad range of financial services
and asset management, banking and consumer finance, credit and charge cards,
insurance, investments, investment banking and trading and use diverse
channels to make them available to consumer and corporate customers around the
world.
R. Jay Gerken, a Managing Director of Salomon Smith Barney, has been responsi-
ble for the day-to-day operations of the portfolios since inception. Mr. Gerken
has been with Salomon Smith Barney or companies that are now part of Salomon
Smith Barney since 1988.
Management fees
Management fees paid during the fiscal year ended January 31, 1999*
(as % of average daily net assets)
<TABLE>
<CAPTION>
Global High Growth Growth Balanced Conservative Income
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0.35% 0.35% 0.35% 0.35% 0.35% 0.35%
- --------------------------------------------------------------------------------------
</TABLE>
*For more information regarding the management fees of the underlying funds,
please consult the statement of additional information("SAI").
Distributor
The portfolios have entered into an agreement with CFBDS, Inc. to distribute
the portfolios' shares. A selling group consisting of Salomon Smith Barney and
other broker-dealers sells portfolio shares to the public.
Distribution plans
The portfolios each have adopted Rule 12b-1 distribution plans for their Class
A, B and L shares. Under each plan, the portfolio pays distribution and service
fees. These fees are an ongoing expense and, over time, may cost you more than
other types of sales charges.
Year 2000 issue
Information technology experts are concerned about computer systems' ability to
process date-related information on and after January 1, 2000. This situation,
commonly known as the "Year 2000" issue, could have an adverse impact on the
portfolios. The cost of addressing the Year 2000 issue, if substantial, could
adversely affect companies and governments that issue securities held by the
underlying funds. The manager, Salomon Smith Barney and distributor are ad-
dressing the Year 2000 issue for their systems. Each portfolio has been in-
formed by its other service providers that they are taking similar measures.
Although the portfolios do not expect the Year 2000 issue to adversely affect
them, the portfolios cannot guarantee that the efforts of each portfolio or its
service providers to correct the problem will be successful.
Possible conflict of interest
The Directors and officers of the Concert Series also serve in similar posi-
tions with many of the underlying Smith Barney funds. Thus, if the interests of
a portfolio and the underlying funds were ever to become divergent, it is pos-
sible that a conflict of interest could arise and affect how the directors and
officers of the Concert Series fulfill their fiduciary duties to that portfolio
and the underlying funds. The Directors of the Concert Series believe they have
structured each portfolio to avoid these concerns. However, conceivably a situ-
ation could occur where proper action for the Concert Series or a portfolio
separately could be adverse to the interests of an underlying fund, or the re-
verse could occur. If such a possibility arises, the directors and officers of
the Concert Series, the affected underlying funds and SSBC will carefully ana-
lyze the situation and take all steps they believe reasonable to minimize, and
where possible eliminate, the potential conflict. Moreover, limitations on ag-
gregate investments in the underlying funds have been adopted by the Concert
Series to minimize this possibility, and close and continuous monitoring will
be exercised to avoid, insofar as is possible, these concerns.
24 The Concert Allocation Series Prospectus
<PAGE>
Choosing a Class of Shares to Buy
Share classes
- --------------------------------------------------------------------------------
You can choose among four classes of shares: Classes A, B, L and Y. Each class
has different sales charges and expenses, allowing you to choose the class that
best meets your needs. Which class is more beneficial to an investor depends on
the amount and intended length of the investment.
. If you plan to invest regularly . Class L shares have a shorter
or in large amounts, buying deferred sales charge period
Class A shares may help you re- than Class B shares. However,
duce sales charges and ongoing because Class B shares convert
expenses. to Class A shares, and Class L
shares do not, Class B shares
. For Class B shares, all of your may be more attractive to long-
purchase amount and, for Class term investors. Class L shares
L shares, more of your purchase are also subject to an ongoing
amount (compared to Class A distribution fee. As a result,
shares) will be immediately in- long term shareholders of Class
vested. This may help offset L shares may pay more than the
the higher expenses of Class B economic equivalent of the max-
and Class L shares, but only if imum front-end sales charge
the fund performs well. permitted by the National Asso-
ciation of Securities Dealers,
Inc.
You may buy shares from:
. A Salomon Smith Barney Finan- . The portfolios, but only if you
cial Consultant are investing through certain
qualified plans or certain
. An investment dealer in the dealer representatives
selling group or a broker that
clears through Salomon Smith
Barney--a dealer representative
Investment minimums
- --------------------------------------------------------------------------------
Minimum initial and additional investment amounts vary depending on the class of
shares you buy and the nature of your investment account.
<TABLE>
<CAPTION>
Initial Additional
----------------------------------------------------------------
Classes A, B and L Class Y All Classes
----------------------------------------------------------------
<S> <C> <C> <C>
General $1,000 $15 million $50
----------------------------------------------------------------
IRAs, Self Employed
Retirement Plans,
Uniform Gift to
Minor Accounts $ 250 $15 million $50
----------------------------------------------------------------
Qualified Retirement
Plans(*) $ 25 $15 million $25
----------------------------------------------------------------
Simple IRAs $ 1 n/a $ 1
----------------------------------------------------------------
Monthly Systematic
Investment Plans $ 25 n/a $25
----------------------------------------------------------------
Quarterly Systematic
Investment Plans $ 50 n/a $50
----------------------------------------------------------------
</TABLE>
(*) Qualified Retirement Plans are qualified under Section
403(b)(7) or Section 401(a) of the Internal Revenue Code,
including 401(k) plans
25 The Concert Allocation Series Prospectus
<PAGE>
Comparing the Portfolios' Classes
Your Salomon Smith Barney Financial Consultant or dealer representative can
help you decide which class meets your goals. They may receive different com-
pensation depending upon which class you choose.
- --------------------------------------------------------------------------------
Key features Class A Class B Class L Class Y
. Initial . No . Initial . No
sales initial sales initial
charge sales charge is or
charge lower deferred
than sales
Class A charge
. You may . Deferred . Deferred . Must
qualify sales sales invest at
for charge charge least $15
reduction declines for only million
or waiver over time 1 year
of
initial
sales
charge
. Lower . Converts . Does not . Lower
annual to Class convert annual
expenses A shares to Class expenses
than after 8 A than the
Class B years other
and Class classes
L
. Higher . Higher
annual annual
expenses expenses
than than
Class A Class A
- --------------------------------------------------------------------------------
Initial sales Up to 5%, None 1.00% None
charge reduced for
large pur-
chases and
waived for
certain in-
vestors; no
charge for
purchases
of $500,000
or more
- --------------------------------------------------------------------------------
Deferred 1% on pur- Up to 5% 1% if you None
sales charge chases of charged redeem
$500,000 or when you within 1
more if you redeem year of
redeem shares. The purchase
within 1 charge is
year of reduced
purchase over time
and there
is no de-
ferred
sales
charge af-
ter 6 years
- --------------------------------------------------------------------------------
Annual 0.25% of 1% of 1% of None
distribution average average average
and service daily net daily net daily net
fees assets assets assets
- --------------------------------------------------------------------------------
Exchangeable Class A Class B Class L Class Y
into(*) shares of shares of shares of shares of
most Smith most Smith most Smith most Smith
Barney Barney Barney Barney
funds funds funds funds
- --------------------------------------------------------------------------------
(*) Ask your Salomon Smith Barney Financial Consultant or dealer representative
or visit the web site for the Smith Barney funds available for exchange.
26 The Concert Allocation Series Prospectus
<PAGE>
Sales Charge: Class A Shares
Class A sales charge
You buy Class A shares at the offering price, which is the net asset value plus
a sales charge. You pay a lower sales charge as the size of your investment in-
creases to certain levels called breakpoints. You do not pay a sales charge on
the fund's distributions or dividends you reinvest in additional Class A
shares.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For High Growth
Portfolio,
Growth Portfolio, For Conservative
Global Portfolio Portfolio
and Balanced Portfolio and Income Portfolio
- --------------------------------------------------------------------------------
Sales Charge as a % of Sales Charge as a % of
- --------------------------------------------------------------------------------
Offering Net amount Offering Net amount
Amount of purchase price (%) invested (%) price (%) invested (%)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $25,000 5.00% 5.26% 4.50% 4.71%
- --------------------------------------------------------------------------------
$25,000 but less than 4.00 4.17 4.00 4.17
- --------------------------------------------------------------------------------
$50,000 but less than 3.50 3.63 3.50 3.63
- --------------------------------------------------------------------------------
$100,000 but less than 3.00 3.09 2.50 2.56
- --------------------------------------------------------------------------------
$250,000 but less than 2.00 2.04 1.50 1.52
- --------------------------------------------------------------------------------
$500,000 or more(*) -0- -0- -0- -0-
- --------------------------------------------------------------------------------
</TABLE>
(*) You do not pay an initial sales charge when you buy $500,000 or more of
Class A shares. However, if you redeem these Class A shares within one year of
purchase, you will pay a deferred sales charge of 1%.
Qualifying for a reduced Class A sales charge. There are several ways you can
combine multiple purchases of Class A shares of Smith Barney funds to take ad-
vantage of the breakpoints in the sales charge schedule.
Accumulation privilege--lets you combine the current value of Class A shares
owned
. by you, or
. by members of your immediate family,
and for which you a sales charge was paid, with the amount of your next pur-
chase of Class A shares for purposes of calculating the initial sales charge.
Certain trustees and fiduciaries may be entitled to combine accounts in deter-
mining their sales charge.
Letter of intent--lets you purchase Class A shares of the fund and other Smith
Barney funds over a 13-month period and pay the same sales charge, if any, as
if all shares had been purchased at once. You may include purchases on which
you paid a sales charge made within 90 days before you sign the letter.
Waivers for certain Class A investors Class A initial sales charges are waived
for certain types of investors, including:
. Employees of members of the NASD
. 403(b) or 401(k) retirement plans, if certain conditions are met
. Clients of newly employed Salomon Smith Barney Financial Consultants, if cer-
tain conditions are met
. Investors who redeemed Class A shares of a Smith Barney fund in the past 60
days, if the investor's Salomon Smith Barney Financial Consultant or dealer
representative is notified
If you want to learn about additional waivers of Class A initial sales charges,
contact your Salomon Smith Barney Financial Consultant or dealer representative
or consult the SAI.
27 The Concert Allocation Series Prospectus
<PAGE>
Sales Charge: Class B Shares
Class B deferred sales charge
You buy Class B shares at net asset value without paying an initial sales
charge. However, if you redeem your Class B shares within six years of pur-
chase, you will pay a deferred sales charge. The deferred sales charge de-
creases as the number of years since your purchase increases.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year after purchase
- -----------------------------------------------------------------------------
6th
Deferred sales charge for: 1st 2nd 3rd 4th 5th through 8th
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Conservative and Income Portfolios 4.50% 4.00% 3.00% 2.00% 1.00% -0-
- -----------------------------------------------------------------------------
All other portfolios 5.00% 4.00% 3.00% 2.00% 1.00% -0-
- -----------------------------------------------------------------------------
</TABLE>
Class B conversion
After 8 years, Class B shares automatically convert into Class A shares. This
helps you because Class A shares have lower annual expenses. Your Class B
shares will convert to Class A shares as follows:
- --------------------------------------------------------------------------------
Shares issued at initial purchase
- --------------------------------------------------------------------------------
. Eight years after the date of purchase
Shares issued: On reinvestment of distributions and dividends
- --------------------------------------------------------------------------------
. In same proportion that the number of Class B shares converting is to total
Class B shares you own
Shares issued: Upon exchange from another Smith Barney fund
- --------------------------------------------------------------------------------
. On the date the shares originally acquired would have converted into Class A
shares
- --------------------------------------------------------------------------------
28 The Concert Allocation Series Prospectus
<PAGE>
Sales Charge: Class L Shares
Class L sales charge
You buy Class L shares at the offering price, which is the net asset value plus
a sales charge of 1% (1.01% of the net amount invested). In addition, if you
redeem your Class L shares within one year of purchase, you will pay a deferred
sales charge of 1%. If you held Class C shares of a portfolio on June 12, 1998,
you will not pay an initial sales charge on Class L shares you buy before June
22, 2001.
Sales Charge: Class Y Shares
Class Y sales charge
You buy Class Y shares at net asset value with no initial sales charge and no
deferred sales charge when you redeem. You must meet the $15,000,000 initial
investment requirement. You can use a letter of intent to meet this requirement
by buying Class Y shares of a portfolio over a 13-month period. To qualify, you
must initially invest $5,000,000.
More About Deferred Sales Charges
The deferred sales charge is based on the net asset value at the time of pur-
chase or redemption, whichever is less, and therefore you do not pay a sales
charge on amounts representing appreciation or depreciation.
In addition, you do not pay a deferred sales charge on:
. Shares exchanged for shares of another Smith Barney fund
. Shares representing reinvested distributions and dividends
. Shares no longer subject to the deferred sales charge
If you redeemed shares of a Smith Barney fund in the past 60 days and paid a
deferred sales charge, you may buy shares of the fund at the current net asset
value and be credited with the amount of the deferred sales charge, if you no-
tify your Salomon Smith Barney Financial Consultant or dealer representative.
Salomon Smith Barney receives deferred sales charges as partial compensation
for its expenses in selling shares, including the payment of compensation to
your Salomon Smith Barney Financial Consultant or dealer representative.
Deferred sales charge waivers
If you want to learn more about additional waivers of deferred sales charges,
contact your Salomon Smith Barney Financial Consultant or dealer representative
or consult the SAI.
The deferred sales charge for each share class will generally be waived:
. On payments made through certain systematic withdrawal plans
. On certain distributions from a retirement plan
. For involuntary redemptions of small account balances
. For 12 months following the death or disability of a shareholder
29 The Concert Allocation Series Prospectus
<PAGE>
Buying Shares
Through a Salomon Smith Barney Financial Consultant or dealer representative
You should contact your Salomon Smith Barney Financial Consultant or dealer
representative to open a brokerage account and make arrangements to buy shares.
If you do not provide the following information, your order will be rejected:
. Class of shares being bought
. Dollar amount or number of shares being bought
You should pay for your shares through your brokerage account no later than the
third business day after you place your order. Salomon Smith Barney or your
dealer representative may charge an annual account maintenance fee.
Through the portfolio's transfer agent
Qualified retirement plans and certain other investors who are clients of the
selling group are eligible to buy shares directly from the portfolio.
. Write the transfer agent at the following address:
Smith Barney Concert Allocation Series Inc.
(Specify portfolio and class of shares)
c/o First Data Investor Services Group, Inc.
P.O. Box 5128
Westborough, Massachusetts 01581-5128
. Enclose a check to pay for the shares. For initial purchases, complete and
send an account application.
. For more information, call the transfer agent at 1-800-451-2010.
Through a systematic investment plan
You may authorize Salomon Smith Barney, your dealer representative or the
transfer agent to transfer funds automatically from a regular bank account,
cash held in a Salomon Smith Barney brokerage account or Smith Barney money
market fund to buy shares on a regular basis.
. Amounts transferred should be at least: $25 monthly or $50 quarterly.
. If you do not have sufficient funds in your account on a transfer date, Salo-
mon Smith Barney, your dealer representative or the transfer agent may charge
you a fee.
For more information, contact your Salomon Smith Barney Financial Consultant,
dealer representative or the transfer agent or consult the SAI.
30 The Concert Allocation Series Prospectus
<PAGE>
Exchanging Shares
You should contact your Salomon Smith Barney Financial Consultant or dealer
representative to exchange into other Smith Barney funds. Be sure to read the
prospectus of the Smith Barney fund you are exchanging into. An exchange is a
taxable transaction.
. You may exchange shares only for shares of the same class of another Smith
Barney fund. Not all Smith Barney funds offer all classes.
. Not all Smith Barney funds may be offered for sale in your state of resi-
dence. Contact your Salomon Smith Barney Financial Consultant, dealer repre-
sentative or the transfer agent.
. You must meet the minimum investment amount for each fund.
. If you hold share certificates, the transfer agent must receive the certifi-
cates endorsed for transfer or with signed stock powers (documents transfer-
ring ownership of certificates) before the exchange is effective.
. The fund may suspend or terminate your exchange privilege if you engage in an
excessive pattern of exchanges.
Waiver of additional sales charges
Your shares will not be subject to an initial sales charge at the time of the
exchange.
Your deferred sales charge (if any) will continue to be measured from the date
of your original purchase. If the fund you exchange into has a higher deferred
sales charge, you will be subject to that charge. If you exchange at any time
into a fund with a lower charge, the sales charge will not be reduced.
By telephone
If you do not have a brokerage account, you may be eligible to exchange shares
through the transfer agent. You must complete an authorization form to autho-
rize telephone transfers. If eligible, you may make telephone exchanges on any
day the New York Stock Exchange is open. Call the transfer agent at 1-800-451-
2010 between 9:00 a.m. and 5:00 p.m. (Eastern time). Requests received after
the close of regular trading on the Exchange are priced at the net asset value
next determined.
You can make telephone exchanges only between accounts that have identical reg-
istrations.
By mail
If you do not have a Salomon Smith Barney brokerage account, contact your
dealer representative or write to the transfer agent at the address on the op-
posite page.
31 The Concert Allocation Series Prospectus
<PAGE>
Redeeming Shares
Generally
Contact your Salomon Smith Barney Financial Consultant or dealer representative
to redeem shares of the fund.
If you hold share certificates, the transfer agent must receive the certifi-
cates endorsed for transfer or with signed stock powers before the redemption
is effective.
If the shares are held by a fiduciary or corporation, other documents may be
required.
Your redemption proceeds will be sent within three business days after your re-
quest is received in good order. However, if you recently purchased your shares
by check, your redemption proceeds will not be sent to you until your original
check clears, which may take up to 15 days.
If you have a Salomon Smith Barney brokerage account, your redemption proceeds
will be placed in your account and not reinvested without your specific in-
struction. In other cases, unless you direct otherwise, your redemption pro-
ceeds will be paid by check mailed to your address of record.
By mail
For accounts held directly at the fund, send written requests to the transfer
agent at the following address:
Smith Barney Concert Allocation Series Inc.
(Specify portfolio and class of shares)
c/o First Data Investor Services Group, Inc.
P.O. Box 5128
Westborough, Massachusetts 01581-5128
Your written request must provide the following:
. Your account number
. The portfolio and class of shares
. The dollar amount or number of shares to be redeemed
. Signatures of each owner exactly as the account is registered
By telephone
If you do not have a brokerage account, you may be eligible to redeem shares
(except those held in retirement plans) in amounts up to $10,000 per day
through the transfer agent. You must complete an authorization form to autho-
rize telephone redemptions. If eligible, you may request redemptions by tele-
phone on any day the New York Stock Exchange is open. Call the transfer agent
at 1-800-451-2010 between 9:00 a.m. and 5:00 p.m. (Eastern time). Requests re-
ceived after the close of regular trading on the Exchange are priced at the net
asset value next determined. Your redemption proceeds can be sent by check to
your address of record or by wire transfer to a bank account designated on your
authorization form. You must submit a new authorization form to change the bank
account designated to receive wire transfers and you may be asked to provide
certain other documents.
Automatic cash withdrawal plans
You can arrange for the automatic redemption of a portion of your shares on a
monthly or quarterly basis. To qualify you must own shares of the fund with a
value of at least $10,000 ($5,000 for retirement plan accounts) and each auto-
matic redemption must be at least $50. If your shares are subject to a deferred
sales charge, the sales charge will be waived if your automatic payments do not
exceed 1% per month of the value of your shares subject to a deferred sales
charge.
The following conditions apply:
. Your shares must not be represented by certificates
. All dividends and distributions must be reinvested
For more information, contact your Salomon Smith Barney Financial Consultant or
dealer representative or consult the SAI.
32 The Concert Allocation Series Prospectus
<PAGE>
Other Things To Know About Share Transactions
Good order
When you buy, exchange or redeem shares, your request must be in good order.
This means you have provided the following information, without which your re-
quest will not be processed:
. Name of the portfolio
. Account number
. Class of shares being bought, exchanged or redeemed
. Dollar amount or number of shares being bought, exchanged or redeemed
. Signature of each owner exactly as the account is registered
The transfer agent will try to confirm that any telephone exchange or redemp-
tion request is genuine by recording calls, asking the caller to provide a per-
sonal identification number for the account, sending you a written confirmation
or requiring other confirmation procedures from time to time.
Signature guarantees
To be in good order, your redemption request must include a signature guarantee
if you:
. Are redeeming over $10,000 of shares
. Are sending signed share certificates or stock powers to the transfer agent
. Instruct the transfer agent to mail the check to an address different from
the one on your account
. Changed your account registration
. Want the check paid to someone other than the account owner(s)
. Are transferring the redemption proceeds to an account with a different reg-
istration
You can obtain a signature guarantee from most banks, dealers, brokers, credit
unions and federal savings and loan institutions, but not from a notary public.
Each portfolio has the right to:
. Suspend the offering of shares
. Waive or change minimum and additional investment amounts
. Reject any purchase or exchange order
. Change, revoke or suspend the exchange privilege
. Suspend telephone transactions
. Suspend or postpone redemptions of shares on any day when trading on the New
York Stock Exchange is restricted, or as otherwise permitted by the Securi-
ties and Exchange Commission.
. Pay redemption proceeds by giving you securities. You may pay transaction
costs to dispose of the securities
Small account balances
If your account falls below $500 because of redemption of fund shares, the fund
may ask balances you to bring your account up to the minimum requirement. If
your account balance is still below $500 after 60 days, the fund may close your
account and send you the redemption proceeds.
Excessive exchange transactions
The manager may determine that a pattern of frequent exchanges is detrimental
to a portfolio's performance and other shareholders. If so, the portfolio may
limit additional purchases and/or exchanges by the shareholder.
Share certificates
The portfolios do not issue share certificates unless a written request signed
by all registered owners is made to the transfer agent. If you hold share cer-
tificates, it will take longer to exchange or redeem shares.
33 The Concert Allocation Series Prospectus
<PAGE>
Smith Barney 401(k) and ExecChoice(TM) Programs
You may be eligible to participate in the Smith Barney 401(k) program or the
Smith Barney ExecChoice(TM) program. Each portfolio offers Class A and Class L
shares to participating plans as investment alternatives under the programs.
You can meet minimum investment and exchange amounts by combining the plan's
investments in any of the Smith Barney funds.
There are no sales charges when you buy or sell shares and the class of shares
you may purchase depends on the amount of your initial investment. Once a
class of shares is chosen, all additional purchases must be of the same class.
. Class A shares may be purchased by plans investing at least $1 million.
. Class L shares may be purchased by plans investing less than $1 million.
Class L shares are eligible for exchange into Class A shares not later than
8 years after the plan joined the program. They are eligible for exchange
sooner in the following circumstances:
If the account was opened on or after June 21, 1996 and a total of $1 million
is invested in Smith Barney Funds Class L shares (other than money market
funds), all Class L shares are eligible for exchange after the plan is in the
program 5 years.
If the account was opened before June 21, 1996 and a total of $500,000 is in-
vested in Smith Barney Funds Class L shares (other than money market funds) on
December 31 in any year, all Class L shares are eligible for exchange on or
about March 31 of the following year.
For more information, call your Salomon Smith Barney Financial Consultant or
the transfer agent, or consult the SAI.
34 The Concert Allocation Series Prospectus
<PAGE>
Distributions, Dividends and Taxes
Dividends and distributions
Annual distributions of capital gain normally take place at the end of the year
in which the gain is realized or the beginning of the next year.
The portfolios normally pay dividends and distribute capital gains, if any, as
follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income Dividend Capital Gain Distributions
Portfolio Distributions Distributions Mostly From
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
High Growth Annually Annually Gain
- ---------------------------------------------------------------------------------------
Growth Annually Annually Gain
- ---------------------------------------------------------------------------------------
Global Annually Annually Gain
- ---------------------------------------------------------------------------------------
Balanced Quarterly Annually Gain
- ---------------------------------------------------------------------------------------
Conservative Quarterly Annually Income
- ---------------------------------------------------------------------------------------
Income Monthly Annually Income
- ---------------------------------------------------------------------------------------
</TABLE>
The portfolios may pay additional distributions and dividends at other times if
necessary for a portfolio to avoid a federal tax. Capital gain distributions
and dividends are reinvested in additional portfolio shares of the same class
that you hold. You do not pay a sales charge on reinvested distributions or
dividends. Alternatively, you can instruct your Salomon Smith Barney Financial
Consultant, dealer representative or the transfer agent to have your distribu-
tions and/or dividends paid in cash. You can change your choice at any time to
be effective as of the next distribution or dividend, except that any change
given to the transfer agent less than five days before the payment date will
not be effective until the next distribution or dividend is made.
Taxes
In general, redeeming shares, exchanging shares and receiving distributions
(whether in cash or additional shares) are all taxable events.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Federal income tax
Transaction status
- --------------------------------------------------------------
<S> <C>
Redemption or exchange of shares Usually capital gain or
loss; long-term only if
shares owned more than
one year
- --------------------------------------------------------------
Long-term capital gain distributions Long-term capital gain
- --------------------------------------------------------------
Short-term capital gain distributions Ordinary income
- --------------------------------------------------------------
Dividends Ordinary income
- --------------------------------------------------------------
</TABLE>
Long-term capital gain distributions are taxable to you as long-term capital
gain regardless of how long you have owned your shares. You may want to avoid
buying shares when a portfolio is about to declare a long-term capital gain
distribution or a taxable dividend, because it will be taxable to you even
though it may actually be a return of a portion of your investment.
After the end of each year, the portfolios will provide you with information
about the distributions and dividends you received and any redemptions of
shares during the previous year. If you do not provide a portfolio with your
correct taxpayer identification number and any required certifications, you may
be subject to back-up withholding of 31% of your distributions, dividends and
redemption proceeds. Because each shareholder's circumstances are different and
special tax rules may apply, you should consult your tax adviser about your in-
vestment in a portfolio.
35 The Concert Allocation Series Prospectus
<PAGE>
Share Price
You may buy, exchange or redeem portfolio shares at their net asset value, plus
any applicable sales charge, next determined after receipt of your request in
good order. Each portfolio's net asset value is the value of its assets minus
its liabilities. Net asset value is calculated separately for each class of
shares. Each portfolio calculates its net asset value every day the New York
Stock Exchange is open. The Exchange is closed on certain holidays listed in
the SAI. This calculation is based on the net asset value of the underlying
funds, which is calculated when regular trading closes on the Exchange (nor-
mally 4:00 p.m., Eastern time).
Each portfolio and underlying fund generally values its fund securities
based on market prices or quota-
tions. When reliable market prices or quotations are not readily available, the
fund may price those securities at fair value. Fair value is determined in ac-
cordance with procedures approved by the fund's board. A fund that uses fair
value to price securities may value those securities higher or lower than an-
other fund using market quotations to price the same securities.
Short-term investments that have a maturity of more than 60 days are generally
valued based on market prices or quotations. Short-term investments that have a
maturity of 60 days or less are valued at amortized cost. Using this method, a
portfolio and underlying fund constantly amortizes over the remaining life of a
security the difference between the principal amount due at maturity and the
cost of the security to the portfolio and underlying fund.
In order to buy, redeem or exchange shares at that day's price, you must place
your order with your Salomon Smith Barney Financial Consultant before the New
York Stock Exchange closes. If the Exchange closes early, you must place your
order prior to the actual closing time. Otherwise, you will receive the next
business day's price.
Salomon Smith Barney or members of the portfolios' selling group must transmit
all orders to buy, exchange or redeem shares to the portfolios' agent before
the agent's close of business.
36 The Concert Allocation Series Prospectus
<PAGE>
Financial Highlights
The financial highlights tables are intended to help you understand the
performance of each portfolio's classes since inception. Certain information
reflects financial results for a single share. Total return represents the
rate that a shareholder would have earned (or lost) on a fund share assuming
reinvestment of all dividends and distributions. The information in the
following tables was audited by KPMG LLP, independent auditors, whose report,
along with the fund's financial statement is included in the annual report
(available upon request). No information is presented for Class Y shares of any
portfolio be-cause no Class Y shares were outstanding for the years shown.
For a share of each class of capital stock outstanding throughout each year
ending January 31:
Global Portfolio(1)
<TABLE>
<CAPTION>
----------------------------------------------------------------------
Class A Shares Class B Shares Class L Shares
1999(2) 1999(2) 1999(2)(3)
----------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of period $11.40 $11.40 $11.40
----------------------------------------------------------------------
Income from operations:
Net investment income
(loss) (4) 0.07 0.00* (0.02)
Net realized and
unrealized gain (0.26) (0.24) (0.23)
----------------------------------------------------------------------
Total distributions (0.19) (0.24) (0.25)
----------------------------------------------------------------------
Less distributions from:
Net investment income (0.04) -- --
Net realized gains (0.01) (0.01) (0.01)
----------------------------------------------------------------------
Total distributions (0.05) (0.01) (0.01)
----------------------------------------------------------------------
Net asset value, end of
period $11.16 $11.15 $11.14
----------------------------------------------------------------------
Total return(5) (1.60)% (2.16)% (2.25)%
----------------------------------------------------------------------
Net assets, end of year
(000's) $10,766 $9,220 $244
----------------------------------------------------------------------
Ratios to average net
assets(6):
Expenses 0.59% 1.32% 1.32%
Net investment income 0.80 0.06 (0.12)
----------------------------------------------------------------------
Portfolio turnover rate 0% 0% 0%
----------------------------------------------------------------------
</TABLE>
(1) For the period from March 9, 1998 (inception date) to
January 31, 1999.
(2) Per share amounts have been calculated using the monthly
average shares method.
(3) Prior to June 12, 1998, Class L shares were called Class
C shares.
(4) Net investment income (loss) per share includes short-
term capital gain distributions from underlying funds.
(5) Total return is not annualized, as it may not be
representative of the total return for the year.
(6) Annualized.
* Amount represents less than $0.01.
<TABLE>
<CAPTION>
High Growth Portfolio
--------------------------------------------------------------------------------------------------------------------------
Class A Shares Class B Shares Class L Shares
1999(1) 1998 1997(3) 1999(1) 1998 1997(3) 1999(1)(2) 1998 1997(3)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $12.97 $12.41 $11.40 $12.95 $12.41 $11.40 $12.96 $12.42 $11.40
--------------------------------------------------------------------------------------------------------------------------
Income from operations:
Net investment income
(loss)(4) 0.09 0.11 0.20 (0.01) 0.03 0.08 (0.01) 0.03 0.08
Net realized and
unrealized gain 2.36 0.91 1.05 2.35 0.89 1.04 2.34 0.89 1.05
--------------------------------------------------------------------------------------------------------------------------
Total Income from
operations 2.45 1.02 1.25 2.34 0.92 1.12 2.33 0.92 1.13
--------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.08) (0.13) (0.20) -- (0.05) (0.07) -- (0.05) (0.07)
Net realized gains (0.48) (0.33) (0.04) (0.48) (0.33) (0.04) (0.48) (0.33) (0.04)
--------------------------------------------------------------------------------------------------------------------------
Total distributions (0.56) (0.46) (0.24) (0.48) (0.38) (0.11) (0.48) (0.38) (0.11)
--------------------------------------------------------------------------------------------------------------------------
Net asset value, end of
year $14.86 $12.97 $12.41 $14.81 $12.95 $12.41 $14.81 $12.96 $12.42
--------------------------------------------------------------------------------------------------------------------------
Total return 19.15% 8.25% 11.04%(5) 18.30% 7.44% 9.91%(5) 18.21% 7.44% 10.00%(5)
--------------------------------------------------------------------------------------------------------------------------
Net assets, end of year
(000's) $365,225 $259,212 $ 154,069 $318,101 $230,142 $141,241 $37,969 $27,845 $ 19,340
--------------------------------------------------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.60% 0.60% 0.60%(6) 1.35% 1.35% 1.35%(6) 1.35% 1.35% 1.35%(6)
Net investment income
(loss) 0.68 1.00 2.79(6) (0.07) 0.25 2.04(6) (0.07) 0.25 2.04(6)
--------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 21% 39% 0% 21% 39% 0% 21% 39% 0%
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly
average shares method.
(2) Prior to June 12, 1998, Class L shares were called Class
C shares.
(3) For the period from February 5, 1996 (inception date) to
January 31, 1997.
(4) Net investment income (loss) per share includes short-
term capital gain distributions from underlying funds.
(5) Total return is not annualized, as it may not be
representative of the total return for the year.
(6) Annualized.
37 The Concert Allocation Series Prospectus
<PAGE>
Financial Highlights, continued
Growth Portfolio
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class L Shares
1999(1) 1998 1997(3) 1999(1) 1998 1997(3) 1999(1)(2) 1998 1997(3)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $12.99 $12.32 $11.40 $13.00 $12.33 $11.40 $13.00 $12.33 $11.40
- -------------------------------------------------------------------------------------------------------------------------------
Income from operations:
Net investment income(4) 0.26 0.31 0.33 0.16 0.22 0.23 0.16 0.22 0.24
Net realized and
unrealized gain 1.82 1.14 0.92 1.82 1.12 0.94 1.82 1.12 0.93
- -------------------------------------------------------------------------------------------------------------------------------
Total Income from
operations 2.08 1.45 1.25 1.98 1.34 1.17 1.98 1.34 1.17
- -------------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.27) (0.32) (0.31) (0.13) (0.21) (0.22) (0.13) (0.21) (0.22)
Net realized gains (0.37) (0.46) (0.02) (0.37) (0.46) (0.02) (0.37) (0.46) (0.02)
- -------------------------------------------------------------------------------------------------------------------------------
Total distributions (0.64) (0.78) (0.33) (0.50) (0.67) (0.24) (0.50) (0.67) (0.24)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of
year $14.43 $12.99 $12.32 $14.48 $13.00 $12.33 $14.48 $13.00 $12.33
- -------------------------------------------------------------------------------------------------------------------------------
Total return 16.20% 11.82% 11.08%(5) 15.40% 10.93% 10.32%(5) 15.40% 10.92% 10.32%(5)
- -------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year
(000's) $391,235 $279,842 $ 161,026 $452,943 $343,474 $ 211,434 $53,319 $42,983 $31,279
- -------------------------------------------------------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.60% 0.60% 0.60%(6) 1.35% 1.35% 1.35%(6) 1.35% 1.35% 1.35%(6)
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income 1.93 2.77 4.79(6) 1.18 1.96 4.04(6) 1.18 1.81 4.04(6)
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10% 41% 0% 10% 41% 0% 10% 41% 0%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) Prior to June 12, 1998, Class L shares were called Class C shares.
(3) For the period from February 5, 1996 (inception date) to January 31, 1997.
(4) Net investment income per share includes short-term capital gain
distributions from underlying funds.
(5) Total return is not annualized, as it may not be representative of the
total return for the year.
(6) Annualized.
38 The Concert Allocation Series Prospectus
<PAGE>
Financial Highlights, continued
Balanced Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class L Shares
1999(1) 1998 1997(3) 1999(1) 1998 1997(3) 1999(1)(2) 1998 1997(3)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $12.62 $12.14 $11.40 $12.61 $12.14 $11.40 $12.61 $12.14 $11.40
- -------------------------------------------------------------------------------------------------------------------
Income from operations:
Net investment
income(4) 0.42 0.58 0.45 0.32 0.48 0.37 0.32 0.46 0.37
Net realized and
unrealized gain 0.73 0.80 0.74 0.74 0.80 0.74 0.73 0.82 0.74
- -------------------------------------------------------------------------------------------------------------------
Total Income from
operations 1.15 1.38 1.19 1.06 1.28 1.11 1.05 1.28 1.11
- -------------------------------------------------------------------------------------------------------------------
Less distributions
from:
Net investment income (0.45) (0.54) (0.45) (0.35) (0.45) (0.37) (0.35) (0.45) (0.37)
Net realized gains (0.37) (0.36) -- (0.37) (0.36) -- (0.37) (0.36) --
- -------------------------------------------------------------------------------------------------------------------
Total distributions (0.82) (0.90) (0.45) (0.72) (0.81) (0.37) (0.72) (0.81) (0.37)
- -------------------------------------------------------------------------------------------------------------------
Net asset value, end of
year $12.95 $12.62 $12.14 $12.95 $12.61 $12.14 $12.94 $12.61 $12.14
- -------------------------------------------------------------------------------------------------------------------
Total return 9.33% 11.59% 10.64%(5) 8.62% 10.67% 9.90%(5) 8.53% 10.67% 9.90%(5)
- -------------------------------------------------------------------------------------------------------------------
Net assets, end of year
(000's) $227,674 $166,806 $90,938 $247,733 $193,791 $111,918 $34,809 $27,473 $19,968
- -------------------------------------------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.60% 0.60% 0.60%(6) 1.35% 1.35% 1.35%(6) 1.35% 1.35% 1.35%(6)
Net investment income 3.24 4.79 4.88(6) 2.50 3.96 4.14(6) 2.50 3.69 4.14(6)
- -------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 10% 23% 0% 10% 23% 0% 10% 23% 0%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) Prior to June 12, 1998, Class L shares were called Class C shares.
(3) For the period from February 5, 1996 (inception date) to January 31, 1997.
(4) Net investment income per share includes short-term capital gain
distributions from underlying funds.
(5) Total return is not annualized, as it may not be representative of the
total return for the year.
(6) Annualized.
39 The Concert Allocation Series Prospectus
<PAGE>
Conservative Portfolio Financial Highlights, continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class L Shares
1999(1) 1998 1997(2) 1999(1) 1998 1997(2) 1999(1)(3) 1998 1997(2)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $12.17 $11.90 $11.46 $12.16 $11.89 $11.46 $12.16 $11.89 $11.46
- -----------------------------------------------------------------------------------------------------
Income from operations:
Net investment
income(4) 0.58 0.73 0.53 0-.52 0.66 0.48 0.53 0.69 0.48
Net realized and
unrealized gain 0.11 0.63 0.43 0.10 0.64 0.42 0.10 0.62 0.42
- -----------------------------------------------------------------------------------------------------
Total Income from
operations 0.69 1.36 0.96 0.62 1.30 0.90 0.63 1.31 0.90
- -----------------------------------------------------------------------------------------------------
Less distributions
from:
Net investment income (0.58) (0.69) (0.52) (0.52) (0.63) (0.47) (0.53) (0.64) (0.47)
Net realized gains (0.24) (0.40) -- (0.24) (0.40) -- (0.24) (0.40) --
- -----------------------------------------------------------------------------------------------------
Total distributions (0.82) (1.09) (0.52) (0.76) (1.03) (0.47) (0.77) (1.04) (0.47)
- -----------------------------------------------------------------------------------------------------
Net asset value, end of
year $12.04 $12.17 $11.90 $12.02 $12.16 $11.89 $12.02 $12.16 $11.89
- -----------------------------------------------------------------------------------------------------
Total return 5.85% 11.70% 8.57%(5) 5.22% 11.21% 8.03%(5) 5.29% 11.25% 8.08%(5)
- -----------------------------------------------------------------------------------------------------
Net assets, end of year
(000's) $71,583 $51,233 $30,478 $64,983 $48,584 $28,297 $6,899 $5,386 $4,129
- -----------------------------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.60% 0.60% 0.60%(6) 1.09% 1.10% 1.10%(6) 1.05% 1.05% 1.05%(6)
Net investment income 4.80 6.17 5.66(6) 4.31 5.67 5.16(6) 4.32 5.72 5.21(6)
- -----------------------------------------------------------------------------------------------------
Portfolio turnover rate 5% 28% 0% 5% 28% 0% 5% 28% 0%
- -----------------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Prior to June 12, 1998, Class L shares were called Class C shares.
(4) Net investment income per share includes short-term capital gain
distributions from underlying funds.
(5) Total return is not annualized, as it may not be representative of the
total return for the year.
(6) Annualized.
40 The Concert Allocation Series Prospectus
<PAGE>
Financial Highlights, continued
Income Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class L Shares
1999(1) 1998 1997(2) 1999(1) 1998 1997(2) 1999(1)(3) 1998 1997(2)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $11.75 $11.53 $11.46 $11.76 $11.53 $11.46 $11.76 $11.53 $11.46
- ---------------------------------------------------------------------------------------------------------
Income from operations:
Net investment
income(4) 0.69 0.76 0.63 0.63 0.70 0.58 0.64 0.71 0.59
Net realized and
unrealized gain (loss) (0.14) 0.52 0.07 (0.15) 0.52 0.07 (0.15) 0.52 0.07
- ---------------------------------------------------------------------------------------------------------
Total income from
operations 0.55 1.28 0.70 0.48 1.22 0.65 0.49 1.23 0.66
- ---------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.69) (0.77) (0.63) (0.63) (0.70) (0.58) (0.64) (0.71) (0.59)
Net realized gains (0.11) (0.29) -- (0.11) (0.29) -- (0.11) (0.29) --
- ---------------------------------------------------------------------------------------------------------
Total distributions (0.80) (1.06) (0.63) (0.74) (0.99) (0.58) (0.75) (1.00) (0.59)
- ---------------------------------------------------------------------------------------------------------
Net asset value, end of
year $11.50 $11.75 $11.53 $11.50 $11.76 $11.53 $11.50 $11.76 $11.53
- ---------------------------------------------------------------------------------------------------------
Total return 4.88% 11.44% 6.39%(5) 4.25% 10.93% 5.89%(5) 4.31% 10.98% 5.94%(5)
- ---------------------------------------------------------------------------------------------------------
Net assets, end of year
(000's) $36,390 $29,575 $17,817 $34,497 $26,563 $17,800 $3,945 $3,568 $2,113
- ---------------------------------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.60% 0.60% 0.60%(6) 1.50% 1.10% 1.10%(6) 1.05% 1.05% 1.05%(6)
Net investment income 5.95 6.62 6.32(6) 5.45 6.12 5.82(6) 5.47 6.17 5.87(6)
- ---------------------------------------------------------------------------------------------------------
Portfolio turnover rate 0% 28% 0% 0% 28% 0% 0% 28% 0%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Prior to June 12, 1998, Class L shares were called Class C shares.
(4) Net investment income per share includes short-term capital gain
distributions from underlying funds.
(5) Total return is not annualized, as it may not be representative of the
total return for the year.
(6) Annualized.
41 The Concert Allocation Series Prospectus
<PAGE>
This page is intentionally left blank
<PAGE>
SMITH BARNEY
CONCERT ALLOCATION
SERIES INC.
Balanced Portfolio
Global Portfolio
High Growth Portfolio Conservative Portfolio
Growth Portfolio Income Portfolio
- --------------------------------------------------------------------------------
Additional Information About the
Portfolios
Shareholder Reports
Annual and semiannual reports to
shareholders provide additional
information about the portfolios'
investments. These reports dis-
cuss the market conditions and
investment strategies that af-
fected each portfolio's perfor-
mance.
The portfolios send only one re-
port to a household if more than
one account has the same address.
Contact your Salomon Smith Barney
Financial Consultant, dealer rep-
resentative or the transfer agent
if you do not want this policy to
apply to you.
Statement of Additional Information
The statement of additional in-
formation provides more detailed
information about each portfolio.
It is incorporated by reference
into (is legally part of) this
prospectus.
You can make inquiries about the portfolios or obtain shareholder reports or
the statement of additional information (without charge), by contacting your
Salomon Smith Barney Financial Consultant or dealer representative, by calling
the portfolios at 1-800-451-2010, or by writing to the portfolios at Smith Bar-
ney Mutual Funds, 388 Greenwich Street, MF2, New York, New York 10013.
Visit Our Web Site
Our web site is located at www.smithbarney.com
You can also review and copy the portfolios' shareholder reports, prospectus
and statement of additional information at the Securities and Exchange Commis-
sion's Public Reference Room in Washington, D.C. You can get copies of these
materials for a duplicating fee by writing to the Public Reference Section of
the Commission, Washington, D.C. 20549-6009. Information about the public ref-
erence room may be obtained by calling 1-800-SEC-0330. You can get the same re-
ports and information free from the Commission's Internet web site--
http://www.sec.gov
If someone makes a statement about the portfolios that is not in this prospec-
tus, you should not rely upon that information. Neither the portfolios nor the
distributor is offering to sell shares of the portfolios to any person to whom
the portfolios may not lawfully sell their shares.
(SM) Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
(Investment Company Act file no. 811-07435)
FD 01083 5/99 16794
<PAGE>
Global Portfolio
High Growth Portfolio
Growth Portfolio
Balanced Portfolio
Conservative Portfolio
Income Portfolio
Smith Barney
Concert Allocation Series Inc.
Prospectus
June 1, 1999
Class Z Shares
The Securities and Exchange Commission has Smith Barney
not approved or disapproves these securities or Mutual Funds
determined whether this prospectus is accurate
your future. Or complete. Any statement to the contrary
is a crime.
<PAGE>
Contents
<TABLE>
<S> <C>
Investments, risks and performance 2
- ----------------------------------------------------
Global Portfolio 3
- ----------------------------------------------------
High Growth Portfolio 5
- ----------------------------------------------------
Growth Portfolio 8
- ----------------------------------------------------
Balanced Portfolio 11
- ----------------------------------------------------
Conservative Portfolio 14
- ----------------------------------------------------
Income Portfolio 17
- ----------------------------------------------------
More on the portfolios' investments 20
- ----------------------------------------------------
Investment strategies and related risks 22
- ----------------------------------------------------
Management 24
- ----------------------------------------------------
Buying, redeeming and exchanging Class Z Shares 25
- ----------------------------------------------------
Distributions, dividends and taxes 26
- ----------------------------------------------------
Share price 27
- ----------------------------------------------------
Financial highlights 28
- ----------------------------------------------------
</TABLE>
Class Z shares described in this prospectus are offered exclusively for
sale to tax-exempt employee benefit and retirement plans of Salomon
Smith Barney Inc. and any of its affiliates.
The Concert Allocation Series Class Z Shares-- 1
<PAGE>
Investments, Risks and Performance
About the portfolios
Each portfolio is a "fund of funds"--meaning it invests in other mutual funds
rather than directly in portfolio securities like stocks, bonds, and money mar-
ket instruments. These underlying mutual funds will be open-end funds managed
by the investment manager or its affiliates and have investment goals similar,
but not identical to, those of the portfolios.
Each portfolio is managed as an asset allocation program with a Target Alloca-
tion and a Target Range.
Target Allocation is the manager's initial strategic focus in allocating
between equity funds and fixed income funds.
Target Range is the range in which the manager may vary from the Target
Allocation.
Investing primarily in other mutual funds presents special risks
. In addition to the portfolio's operating expenses, you will indirectly bear
the operating expenses of the underlying funds. For instance, you will pay
management fees of both the portfolio and the underlying funds.
. One underlying fund may buy the same securities that another underlying fund
sells. You would indirectly bear the costs of these trades without accom-
plishing any investment purpose.
. You may receive taxable gains from portfolio transactions by the underlying
funds as well as taxable gains resulting from transactions in shares of the
underlying funds by a portfolio.
You should know:
You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
An investment in any of the portfolios is not a bank deposit and is not insured
or guaranteed by the FDIC or any other government agency
Principal risks of investing in fixed income securities and equity securities
The underlying funds invest in fixed income securities and equity securities.
Risks common to investments in fixed income securities and equity securities
are set forth below. Because each portfolio has a different investment strate-
gy, there are also principal risks that are specific to an investment in a par-
ticular portfolio. These unique risks are described in the portfolio summaries
beginning on the next page.
Fixed Income Securities:
. When interest rates go up, prices of fixed income securities go down
. An issuer of a security may default on its obligation to pay principal and/or
interest or have its credit rating downgraded
. An issuer of a security may prepay principal earlier than scheduled, which
would force an underlying fund to reinvest in lower yielding securities. This
is known as call or prepayment risk
. Slower than expected principal payments may extend a security's life. This
locks in a below-market interest rate, increases the security's duration and
reduces the value of the security. This is known as extension risk
Equity Securities:
. Stock prices may decline generally
. If an adverse event occurs, such as the issuance of an unfavorable earnings
report, the value of a particular issuer's security may be depressed
The Concert Allocation Series Class Z Shares-- 2
<PAGE>
Global Portfolio
Investment objective
Capital appreciation.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney global, inter-
national and U.S. equity funds listed below.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity markets in general, particular sectors of such markets, and the perfor-
mance outlook for the underlying funds. In assessing the equity markets, the
manager considers the relative outlook for domestic and international equity
markets, a broad range of market and economic trends and quantitative factors.
The performance of the underlying funds also influences their weighting in the
portfolio. The manager tends to emphasize a mix of underlying funds that to-
gether reflect a broad range of U.S. and international equity investments. The
portfolio can invest in underlying funds that have a range of investment styles
and focuses. Under normal market conditions, the portfolio allocates all of its
assets to funds that invest primarily in equity securities.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- ---------------------------
<S> <C>
Equity Funds 100%
- ---------------------------
<CAPTION>
Target Range
- ---------------------------
<S> <C>
Equity Funds 80-100%
- ---------------------------
Fixed Income Funds 0-20%
- ---------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Hansberger Global Value Fund 15-35%
- ------------------------------------------------------
International Equity Portfolio 10-35%
- ------------------------------------------------------
Smith Barney Hansberger Global Small Cap Value
Fund 5-20%
- ------------------------------------------------------
Cash Portfolio 0-20%
- ------------------------------------------------------
Concert Peachtree Growth Fund Inc. 0-20%
- ------------------------------------------------------
Emerging Markets Portfolio 0-20%
- ------------------------------------------------------
Large Cap Value Fund 0-20%
- ------------------------------------------------------
Smith Barney Aggressive Growth Fund Inc. 0-20%
- ------------------------------------------------------
Smith Barney Large Cap Blend Fund 0-20%
- ------------------------------------------------------
Smith Barney Large Capitalization Growth Fund 0-20%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Small Cap Blend Fund, Inc. 0-20%
European Portfolio 0-15%
Pacific Portfolio 0-15%
Smith Barney Mid Cap Blend Fund 0-15%
Smith Barney Natural Resources Fund Inc. 0-15%
Smith Barney Small Cap Value Fund 0-15%
Smith Barney Appreciation Fund Inc. 0-10%
Smith Barney Contrarian Fund 0-10%
Smith Barney Fundamental Value Fund Inc. 0-10%
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in equity securities generally. The principal risks associated with in-
vesting in these securities are described on page 2 under "About the portfo-
lios". Your investment in the portfolio is also subject to the following spe-
cific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase in-
vestment gains or add to investment losses. These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are an aggressive investor seeking capital appreciation
. Currently have exposure to fixed income investments and less volatile equity
investments and wish to broaden your investment portfolio
. Are willing to accept the risks of the stock market and the special risks of
investing in foreign securities, including those of emerging markets
. Have a long-term time horizon and no need for current income
The Concert Allocation Series Class Z Shares-- 3
<PAGE>
Global Portfolio, continued
Performance
- --------------------------------------------------------------------------------
Because this portfolio commenced operations on March 9, 1998, the portfolio
does not yet have a sufficient operating history to generate the performance
information which other Smith Barney funds show in bar and table form in this
location of the prospectus.
Year to date: N/A
Fee table
- --------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.
Based on ex-pense ratios of underlying Smith Barney funds in which the
Global portfolio was invested on January 31, 1999, the ap-proximate ex-pense
ratio is expected to be 1.42%. Fee ta-ble expenses would be higher if the
expense ratios of the underlying funds were in-cluded.
<TABLE>
<CAPTION>
Shareholder fees (paid directly from your investment)
-----------------------------------------------------------
<S> <C>
Maximum sales charge on purchases (as a % of offering
price) None
-----------------------------------------------------------
Maximum deferred sales charge on redemptions (as a % of
the lower of net asset value
at purchase or redemption) None
-----------------------------------------------------------
Annual fund operating expenses (paid by the portfolio
as a % of net assets)
-----------------------------------------------------------
<S> <C>
Management fee 0.35%
-----------------------------------------------------------
Distribution and service (12b-1) fees None
-----------------------------------------------------------
Other expenses None
-----------------------------------------------------------
Total annual fund operating expenses 0.35%
-----------------------------------------------------------
</TABLE>
Example
- ----------------------------------------------------------------------------
The example helps you com-pare the costs of investing in the portfolio with
other mu-tual funds. Your actual costs may be higher or lower.
<TABLE>
<CAPTION>
Number of years you own your shares 1 year(*) 3 years(*) 5 years(*) 10 years(*)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class Z (with or without
redemption) $145 $449 $776 $1,702
--------------------------------------------------------------------------------
</TABLE>
(*)The example assumes:
. You invest $10,000 for the period shown
. Your investment has a 5% return each year
. You reinvest all distributions and dividends without a sales charge
. The portfolio's operating expenses remain the same
. The expenses of the underlying Smith Barney funds are re-flected.
The Concert Allocation Series Class Z Shares-- 4
<PAGE>
High Growth Portfolio
Investment objective
Capital appreciation.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney mutual funds
listed below, which are primarily equity funds.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity markets in general, particular sectors of such markets and the performance
outlook for the underlying funds. In assessing the equity markets, the manager
considers a broad range of market and economic trends and quantitative factors.
The performance of the underlying funds also influences their weighting in the
portfolio. The manager tends to emphasize underlying funds that focus upon
smaller cap, higher growth companies. However, the portfolio can invest in un-
derlying funds that have a range of investment styles and focuses, including
large cap, international, emerging markets, high yield (Smith Barney High In-
come Fund) and sector funds (Smith Barney Natural Resources Fund Inc.). The
portfolio also allocates a portion of its assets to underlying funds that pri-
marily invest in debt securities.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- ---------------------------
<S> <C>
Equity Funds 90%
- ---------------------------
Fixed Income Funds 10%
- ---------------------------
Target Range
- ---------------------------
Equity Funds 80-100%
- ---------------------------
Fixed Income Funds 0-20%
- ---------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Aggressive Growth Fund Inc. 10-30%
- -------------------------------------------------
International Equity Portfolio 5-25%
- -------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-25%
- -------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 0-25%
- -------------------------------------------------
Cash Portfolio 0-20%
- -------------------------------------------------
Concert Peachtree Growth Fund 0-20%
- -------------------------------------------------
Emerging Markets Portfolio 0-20%
- -------------------------------------------------
Large Cap Value Fund 0-20%
- -------------------------------------------------
Smith Barney Appreciation Fund Inc. 0-20%
- -------------------------------------------------
Smith Barney Contrarian Fund 0-20%
- -------------------------------------------------
Smith Barney Fundamental Value Fund 0-20%
- -------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Hansberger Global Small Cap Value
Fund 0-20%
Smith Barney High Income Fund 0-20%
Smith Barney Large Cap Blend Fund 0-20%
Smith Barney Large Capitalization Growth Fund 0-20%
Global Government Bond Portfolio 0-15%
International Balanced Portfolio 0-15%
Smith Barney Government Securities Fund 0-15%
Smith Barney Investment Grade Bond Fund 0-15%
Smith Barney Mid Cap Blend Fund 0-15%
Smith Barney Small Cap Value Fund 0-15%
Smith Barney Natural Resources Fund Inc. 0-10%
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in equity securities generally. The principal risks associated with in-
vesting in equity securities are described on page 2 under "About the portfo-
lios". Your investment in the portfolio is also subject to the following spe-
cific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. Growth stocks or small capitalization stocks (generally those listed on the
Russell 2000 Indices) may fall out of favor with investors and may experience
greater volatility, as well as greater potential for gain or loss
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase in-
vestment gains or add to investment losses. These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
Who may want to invest
The portfolio may be an appropriate investment if you:
. Currently have exposure to fixed income investments and less volatile equity
investments and wish to broaden your investment portfolio
. Are willing to accept the risks of the stock market
. Have a long-term time horizon and no need for current income
The Concert Allocation Series Class Z Shares-- 5
<PAGE>
High Growth Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class Z shares for the past calendar year.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly returns: Highest: 22.33% in 4th quarter 1998; Lowest: (15.60)% in 3rd
quarter 1998
Year to date: 2.95% (through 3/31/99)
Percentage Total Returns for Class Z shares
[BAR GRAPH]
98
--
15.81%
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table assumes redemption of shares at the end of the period and
reinvestment of distributions and dividends.
The table indicates the risks of investing in the portfolio by comparing the
average an-nual total re-turn of Class Z shares for the periods shown to that
of the S&P 500 Composite Stock Index (S&P 500), a broad based unmanaged index
of widely held common stocks; the Russell 2000 Index (Russell 2000), a broad-
based unmanaged capi-talization weighted index of small capitalization
companies; the Morgan Stanley Capital International EAFE Index (MSCI EAFE), a
broad based unmanaged index of foreign stocks; and the Salomon Smith Barney
High Yield Market Index, (High Yield) a broad-based un-managed index of high
yield securities.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar
Years Ended December 31, 1998)
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class Z S&P 500 Russell 2000 MSCI EAFE High Yield
------------------------------------------------------------------
1 Year 15.81% 28.60% (2.55)% 20.00% 3.60%
------------------------------------------------------------------
Since
Inception 12.97% 28.32%* 8.48 %* 13.05%* 8.24%*
------------------------------------------------------------------
Inception
Date 1/17/97 n/a n/a n/a n/a
------------------------------------------------------------------
</TABLE>
*Index comparison begins on January 31, 1997.
Fee table
- --------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio
Based on the expense ratios of underlying Smith Barney funds in which the
High Growth portfolio was invested on January 31, 1999, the approximate ex-
pense ratio is expected to be 1.28%. Fee table expenses would be higher if the
expense ratios of the underlying funds were included.
<TABLE>
<CAPTION>
Shareholder fees (paid directly from your investment)
-----------------------------------------------------------------
<S> <C>
Maximum sales charge (load) imposed on purchases (as a %
of offering price) None
-----------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of the lower
of net asset value at purchase or redemption) None
-----------------------------------------------------------------
Annual fund operating expenses (expenses deducted from
portfolio assets)
-----------------------------------------------------------------
Management fee 0.35%
-----------------------------------------------------------------
Distribution and service (12b-1) fees None
-----------------------------------------------------------------
Other expenses None
----------------------------------------------------------------
Total annual fund operating expenses 0.35%
----------------------------------------------------------------
</TABLE>
The Concert Allocation Series Class Z Shares-- 6
<PAGE>
High Growth Portfolio, continued
Example
- --------------------------------------------------------------------------------
The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
*The example assumes:
. You invest $10,000 for the period shown
. Your invest-ment has a 5% return each year
. You reinvest all distributions and dividends without a sales charge
. The portfolio's operating ex-penses remain the same
. The expenses of the un-derlying Smith Barney funds are reflected.
<TABLE>
<CAPTION>
Number of years you own
your shares 1 year* 3 years* 5 years* 10 years*
----------------------------------------------------------
<S> <C> <C> <C> <C>
Class Z (with or without
redemption) $130 $406 $702 $1,545
----------------------------------------------------------
</TABLE>
The Concert Allocation Series Class Z Shares-- 7
<PAGE>
Growth Portfolio
Investment objective
Long-term growth of capital.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney mutual funds
listed below, which are primarily equity funds.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity markets in general, and, to a lesser degree, the bond markets, particular
sectors of such markets, and the performance outlook for the underlying funds.
In assessing the equity markets, the manager considers a broad range of market
and economic trends and quantitative factors. The performance of the underlying
funds also influences their weighting in the portfolio. The manager tends to
emphasize underlying funds that focus upon larger capitalization companies.
However, the portfolio can invest in underlying funds that have a range of in-
vestment styles and focuses, including small cap, international, high yield
(Smith Barney High Income Fund) and sector funds (Smith Barney Natural Re-
sources Fund Inc.). The portfolio also allocates a significant portion of its
assets to underlying funds that primarily invest in a broad range of debt secu-
rities to help reduce volatility.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- --------------------------
<S> <C>
Equity Funds 70%
- --------------------------
Fixed Income Funds 30%
- --------------------------
Target Range
- --------------------------
Equity Funds 60-80%
- --------------------------
Fixed Income Funds 20-40%
- --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Appreciation Fund Inc. 0-30%
- ----------------------------------------------------
Smith Barney Contrarian Fund 0-30%
- ----------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-30%
- ----------------------------------------------------
Smith Barney High Income Fund 5-20%
- ----------------------------------------------------
Cash Portfolio 0-20%
- ----------------------------------------------------
Concert Peachtree Growth Fund 0-20%
- ----------------------------------------------------
International Equity Portfolio 0-20%
- ----------------------------------------------------
Large Cap Value Fund 0-20%
- ----------------------------------------------------
Smith Barney Government Securities Fund 0-20%
- ----------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-20%
- ----------------------------------------------------
Smith Barney Large Cap Blend Fund 0-20%
- ----------------------------------------------------
Smith Barney Large Capitalization Growth Fund 0-20%
- ----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Small Cap Blend Fund, Inc. 0-20%
Global Government Bond Portfolio 0-15%
Short-Term High Grade Bond Fund 0-15%
Smith Barney Aggressive Growth Fund Inc. 0-15%
Smith Barney Investment Grade Bond Fund 0-15%
Smith Barney Managed Governments Fund 0-15%
International Balanced Portfolio 0-15%
Smith Barney Hansberger Global Small Cap Value
Fund 0-10%
Smith Barney Mid Cap Blend Fund 0-10%
Smith Barney Natural Resources Fund Inc. 0-10%
Smith Barney Small Cap Value Fund 0-10%
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in equity securities and, to a lesser degree, fixed income securities
generally. The principal risks associated with investing in equity securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase in-
vestment gains or add to investment losses. These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. Growth stock or small capitalization stocks (generally those listed on the
Russell 2000 Indices) may fall out of favor and may experience greater vola-
tility, as well as greater potential for gain or loss
. When interest rates go up, prices of fixed income securities go down
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are seeking growth of capital
. Are willing to accept the risks of the stock market, although lessened
through greater exposure to fixed income securities than the High Growth
Portfolio
. Have a long-term time horizon and no need for current income
The Concert Allocation Series Class Z Shares-- 8
<PAGE>
Growth Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risk of investing in the portfolio by showing the
performance of the portfolio's Class Z shares for the past calendar year.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly returns: Highest: 15.41% in 4th quarter 1998; Lowest: (10.63)% in
3rd quarter 1998
Year to date: 1.94% (through 3/31/99)
[BAR GRAPH]
Percentage Total Returns for Class Z shares
98
--
13.95%
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table as sumes redemp tion of shares at the end of the period and
reinvestment of distributions and dividends.
The table indicates the risks of investing in the portfolio by comparing the
average an-nual total return of Class Z shares for the periods shown to that of
the S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Russell 2000 Index (Russell 2000), a broad-based
unmanaged capi-talization weighted index of small capitalization companies;
the Morgan Stanley Capital International EAFE Index (MSCI EAFE), a broad-based
unmanaged index of foreign stocks; and the Lehman Government/Corporate Bond
Index (Lehman), a broad-based un-managed index of fixed income securities.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended December 31,
1998)
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class Z S&P 500 Russell 2000 MSCI EAFE Lehman
------------------------------------------------------------------
1 Year 13.95% 28.60% (2.55)% 20.00% 9.47%
------------------------------------------------------------------
Since
Inception 13.56% 28.32%* 8.48 %* 13.05%* 9.97%*
------------------------------------------------------------------
Inception
Date 1/17/97 n/a n/a n/a n/a
------------------------------------------------------------------
</TABLE>
*Index comparison begins on January 31, 1997.
Fee table
- --------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.
Based on the expense ratios of underlying Smith Barney funds in which the
Growth portfolio was invested on January 31, 1999, the approximate expense
ratio is expected to be 1.18%. Fee table expenses would be higher if the
expense ratios of the underlying Funds were in-cluded.
<TABLE>
<CAPTION>
Shareholder fees (paid directly from your investment)
-------------------------------------------------------------
<S> <C>
Maximum sales charge (load) imposed on purchases (as a %
of offering price) None
-------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of the lower
of net asset value at purchase or redemption) None
-------------------------------------------------------------
Annual fund operating expenses (expenses deducted from
portfolio assets)
-------------------------------------------------------------
<S> <C>
Management fee 0.35%
-------------------------------------------------------------
Distribution and service (12b-1) fees None
-------------------------------------------------------------
Other expenses None
-------------------------------------------------------------
Total annual fund operating expenses 0.35%
-------------------------------------------------------------
</TABLE>
The Concert Allocation Series Class Z Shares-- 9
<PAGE>
Growth Portfolio, continued
Example
- --------------------------------------------------------------------------------
The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
*The example assumes:
. You invest $10,000 for the period shown
. Your investment has a 5% return each year
. You reinvest all distributions and dividends without a sales charge
. The portfolio's operating expenses remain the same
. The expenses of the underlying Smith Barney funds are reflected.
<TABLE>
<CAPTION>
Number of years you own
your shares 1 year* 3 years 5 years 10 years*
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class Z (with or without
redemption) $120 $375 $649 $1,432
-----------------------------------------------------------------------------------------------------
</TABLE>
The Concert Allocation Series Class Z Shares-- 10
<PAGE>
Balanced Portfolio
Investment objective
Balance of growth of capital and income.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney equity and
fixed income funds listed below.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity and bond markets in general, particular sectors of such markets, and the
performance outlook for the underlying funds. In assessing the equity and bond
markets, the manager considers a broad range of market and economic trends and
quantitative factors. The performance of the underlying funds also influences
their weighting in the portfolio. In selecting equity funds, the manager tends
to emphasize underlying funds that focus upon established large-capitalization,
U.S. stocks. The portfolio's fixed income funds mainly invest in U.S. govern-
ment and agency securities and mortgage-backed securities. However, the portfo-
lio can invest in underlying funds that have a range of investment styles and
focuses.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- --------------------------
<S> <C>
Equity Funds 50%
- --------------------------
Fixed Income Funds 50%
- --------------------------
<CAPTION>
Target Range
- --------------------------
<S> <C>
Equity Funds 40-60%
- --------------------------
Fixed Income Funds 40-60%
- --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Diversified Strategic Income Fund 5-25%
- -----------------------------------------------------
Large Cap Value Fund 5-20%
- -----------------------------------------------------
Smith Barney Convertible Fund 5-20%
- -----------------------------------------------------
Smith Barney Large Cap Blend Fund 5-20%
- -----------------------------------------------------
Smith Barney Managed Governments Fund Inc. 5-20%
- -----------------------------------------------------
Smith Barney Premium Total Return Fund 5-20%
- -----------------------------------------------------
Cash Portfolio 0-25%
- -----------------------------------------------------
Short-Term High Grade Bond Fund 0-20%
- -----------------------------------------------------
Smith Barney Appreciation Fund Inc. 0-20%
- -----------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-20%
- -----------------------------------------------------
Smith Barney Government Securities Fund 0-20%
- -----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Concert Peachtree Growth Fund 0-15%
Global Government Bond Portfolio 0-15%
International Equity Portfolio 0-15%
Smith Barney Contrarian Fund 0-15%
Smith Barney Hansberger Global Value Fund 0-15%
Smith Barney High Income Fund 0-15%
Smith Barney Large Capitalization Growth Fund 0-15%
Smith Barney Small Cap Blend Fund, Inc. 0-15%
International Balanced Portfolio 0-10%
Smith Barney Natural Resources Fund Inc. 0-10%
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in both fixed income securities and equity securities generally. The
principal risks associated with investing in these securities are described on
page 2 under "About the portfolios". Your investment in the portfolio is also
subject to the following specific risks:
You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase
investment gains or add to investment losses
These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return
potential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. When interest rates go up, prices of fixed income securities go down
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are willing to sacrifice some growth potential for less volatility
. Are willing to accept the risks of the stock market
. Have a long-term time horizon
The Concert Allocation Series Class Z Shares-- 11
<PAGE>
Balanced Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class Z shares for the past calendar year.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly returns: Highest: 7.86% in 4th quarter 1998; Lowest: (5.20)% in 3rd
quarter 1998
Year to date: 0.87% (through 3/31/99)
[BAR GRAPH]
Percentage Total Returns for Class Z shares
98
--
9.20%
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table assumes redemption of shares at the end of the period and
reinvestment of distributions and dividends.
The table indicates the risks of investing in the portfolio by comparing
the average annual total return of Class Z shares for the periods shown to
that of the S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged
index of widely held common stocks; the Lehman Government/Corporate Bond Index
(Lehman Gov/Corp), a broad-based unmanaged index of fixed income securities;
the Salomon Smith Barney One-Year Treasury Bill Index (T-bill), consisting of a
single 1-Year U.S. Treasury bill whose return is tracked until maturity; and
the Salomon Smith Barney World Government Bond Index (World Bond), a broad-
based unmanaged index of international fixed income securities.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended December 31,
1998)
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class Z S&P 500 Lehman Gov/Corp T-bill World Bond
------------------------------------------------------------------
1 Year 9.20% 28.60% 9.47% 5.89% 15.29%
------------------------------------------------------------------
Since
Inception 10.63% 28.32%* 9.97%* 5.99%* 9.38%*
------------------------------------------------------------------
Inception
Date
1/17/97 n/a n/a n/a n/a
------------------------------------------------------------------
</TABLE>
*Index comparison begins on January 31, 1997.
Fee table
- --------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.
Based on the expense ratios of underlying Smith Barney funds in which the
Balanced portfolio was invested on January 31, 1999, the approximate expense
ratio is expected to be 1.05%. Fee table expenses would be higher if the expense
ratios of the underlying funds were included.
<TABLE>
<CAPTION>
Shareholder fees (paid directly from your investment)
-------------------------------------------------------------
<S> <C>
Maximum sales charge (load) imposed on purchases (as a %
of offering price) None
-------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of the lower
of net asset
value at purchase or redemption) None
-------------------------------------------------------------
Annual fund operating expenses (expenses deducted from
portfolio assets)
-------------------------------------------------------------
<S> <C>
Management fee 0.35%
-------------------------------------------------------------
Distribution and service (12b-1) fees None
-------------------------------------------------------------
Other expenses None
-------------------------------------------------------------
Total annual fund operating expenses 0.35%
-------------------------------------------------------------
</TABLE>
The Concert Allocation Series Class Z Shares-- 12
<PAGE>
Balanced Portfolio, continued
Example
- --------------------------------------------------------------------------------
The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
* The example assumes:
. You invest $10,000 for the period shown
. Your investment has a 5% return each year
. You reinvest all distributions and dividends without a sales charge
. The portfolio's operating expenses remain the same
. The expenses of the underlying Smith Barney funds are reflected.
<TABLE>
<CAPTION>
Number of years you own your shares 1 year* 3 years 5 years 10 years*
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class Z (With or without
redemption) $107 $334 $579 $1,283
-----------------------------------------------------------------------
</TABLE>
The Concert Allocation Series Class Z Shares-- 13
<PAGE>
Conservative Portfolio
Investment objective
Primary: Income. Secondary: Long-term growth of capital.
Principal investment strategies
The portfolio is a fund of funds. It invests primarily in the Smith Barney
funds that focus on the taxable fixed income funds listed below. The portfolio
also invests in stock funds invested primarily in U.S. large capitalization
stocks.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the dif-
ferent sectors of the bond market and, to a lesser degree, the equities mar-
kets. In assessing the bond markets, the manager considers a broad range of
economic trends and quantitative factors. The performance of the underlying
funds also influences their weighting in the portfolio. The portfolio's fixed
income funds mainly invest in U.S. government and agency securities and mort-
gage-backed securities. In selecting equity funds, the manager tends to empha-
size underlying funds that focus upon large capitalization stocks. However, the
portfolio can invest in underlying funds that have a range of investment styles
and focuses.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- --------------------------
<S> <C>
Equity Funds 30%
- --------------------------
Fixed Income Funds 70%
- --------------------------
Target Range
- --------------------------
Equity Funds 20-40%
- --------------------------
Fixed Income Funds 60-80%
- --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Diversified Strategic Income Fund 10-30%
- ------------------------------------------------------
Smith Barney Managed Governments Fund Inc. 5-25%
- ------------------------------------------------------
Smith Barney Premium Total Return Fund 5-25%
- ------------------------------------------------------
Smith Barney Government Securities Fund 5-20%
- ------------------------------------------------------
Smith Barney Convertible Fund 5-15%
- ------------------------------------------------------
Cash Portfolio 0-30%
- ------------------------------------------------------
Global Government Bond Portfolio 0-20%
- ------------------------------------------------------
Large Cap Value Fund 0-20%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Short-Term High Grade Bond Fund 0-20%
Smith Barney High Income Fund 0-20%
Smith Barney Appreciation Fund Inc. 0-15%
Smith Barney Fundamental Value Fund Inc. 0-15%
International Balanced Portfolio 0-10%
International Equity Portfolio 0-10%
Smith Barney Hansberger Global Value Fund 0-10%
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in fixed income securities and, to a lesser degree, equity securities
generally. The principal risks associated with investing in these securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. When interest rates go up, prices of fixed income securities go down
. An issuer of a security may prepay principal earlier than scheduled, which
would force an underlying fund to reinvest in lower yielding securities
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are seeking income, but also some long-term growth of capital to help offset
the loss of purchasing power due to inflation
. Are a conservative investor willing to sacrifice some growth potential in ex-
change for less (but not zero) volatility
The Concert Allocation Series Class Z Shares-- 14
<PAGE>
Conservative Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class Z shares for the past calendar year.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly returns: Highest: 6.08% in 2nd quarter 1997; Lowest: (3.36)% in
3rd quarter 1998
Year to date: N/A
[BAR GRAPH]
Percentage Total Returns for Class Z shares
98
--
6.31%
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table assumes redemption of shares at the end of the period and
reinvestment of distributions and dividends.
The table indicates the risks of investing in the portfolio by comparing the
average annual total return of Class Z shares for the periods shown to that of
the S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Lehman Government/Corpor Bond Index (Lehman), a
broad-based un-managed index of fixed income securities; Salomon Smith Barney
High Yield Market Index (High Yield), a broad-based un-managed index of high
yield securities and the Salomon Smith Barney One-Year Treasury Bill Index (T-
bill), consisting of a single 1-Year U.S. Treasury bill whose re-turn is tracked
until maturity.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1998)
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class Z S&P 500 Lehman High Yield T-bill
----------------------------------------------------------
1 Year 6.31% 28.60% 9.47% 3.60% 5.89%
----------------------------------------------------------
Since 8.93% 28.32%* 9.97%* 8.24%* 5.99%*
----------------------------------------------------------
Inception 1/17/97 n/a n/a n/a n/a
----------------------------------------------------------
</TABLE>
*Index comparison begins on January 31, 1997.
Fee table
- --------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.
Based on the expense ratios of underlying Smith Barney funds in which the
Conservative portfolio invested during the most recent fiscal year, the
approximate expense ratio is expected to be 1.08%. Fee table expenses would be
higher if the expense ratios of the underlying funds were included.
<TABLE>
<CAPTION>
Shareholder fees (paid directly from your investment)
----------------------------------------------------------------
<S> <C>
Maximum sales charge (load) imposed on purchases (as a %
of offering price) None
----------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of the lower
of net asset value at purchase or redemption) None
----------------------------------------------------------------
Annual fund operating expenses (expenses deducted from
portfolio assets)
----------------------------------------------------------------
<S> <C>
Management fee 0.35%
----------------------------------------------------------------
Distribution and service (12b-1) fees None
----------------------------------------------------------------
Other expenses None
----------------------------------------------------------------
Total annual fund operating expenses 0.35
----------------------------------------------------------------
</TABLE>
The Concert Allocation Series Class Z Shares-- 15
<PAGE>
Example
- --------------------------------------------------------------------------------
The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
*The example assumes:
.You invest $10,000 for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a sales charge
.The portfolio's operating expenses remain the same
. The expenses of the underlying Smith Barney funds are reflected.
<TABLE>
<CAPTION>
Number of years you own
your 1 year* 3 years* 5 years* 10 years*
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Class Z (with or without
redemption) $110 $343 $595 $1,317
-------------------------------------------------------------
</TABLE>
The Concert Allocation Series Class Z Shares-- 16
<PAGE>
Income Portfolio
Investment objective
High current income.
Principal investment strategies
The portfolio is a fund of funds. It invests primarily in the Smith Barney
funds listed below that focus on taxable fixed income securities.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the dif-
ferent sectors of the bond market. In assessing the bond markets, the manager
considers a broad range of economic trends and quantitative factors. The per-
formance of the underlying funds also influences their weighting in the portfo-
lio. The portfolio focuses on funds that invest in a broad range of fixed
income securities. The portfolio also allocates a portion of its assets to un-
derlying funds that primarily invest in equity securities.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- ---------------------------
<S> <C>
Equity Funds 10%
- ---------------------------
Fixed Income Funds 90%
- ---------------------------
<CAPTION>
Target Range
- ---------------------------
<S> <C>
Equity Funds 0-20%
- ---------------------------
Fixed Income Funds 80-100%
- ---------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Diversified Strategic Income Fund 10-30%
- ------------------------------------------------------
Short-Term High Grade Bond Fund 5-30%
- ------------------------------------------------------
Smith Barney Managed Governments Fund Inc. 5-30%
- ------------------------------------------------------
Smith Barney Government Securities Fund 5-20%
- ------------------------------------------------------
Cash Portfolio 0-30%
- ------------------------------------------------------
Smith Barney High Income Fund 0-25%
- ------------------------------------------------------
Global Government Bond Portfolio 0-20%
- ------------------------------------------------------
Large Cap Value Fund 0-15%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Convertible Fund 0-15%
Smith Barney Investment Grade Bond Fund 0-15%
Smith Barney Premium Total Return Fund 0-15%
International Balanced Portfolio 0-10%
International Equity Portfolio 0-10%
Smith Barney Appreciation Fund Inc. 0-10%
Smith Barney Fundamental Value Fund Inc. 0-10%
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in fixed income securities and, to a lesser degree, equity securities
generally. The principal risks associated with investing in these securities
are described on page 2 in "About the portfolios". Your investment in the port-
folio is also subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. When interest rates go up, prices of fixed income securities go down
. An issuer of a security may prepay principal earlier than scheduled, which
would force an underlying fund to reinvest in lower yielding securities
. An issuer of a security may default on its obligation to pay principal and/or
interest or have its credit rating downgraded
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are seeking current income
. Are a conservative investor willing to sacrifice growth potential for less
(but not zero) volatility
The Concert Allocation Series Class Z Shares-- 17
<PAGE>
Income Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class Z shares for the past calendar year.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly returns: Highest: 5.24% in 2nd quarter 1997; Lowest: (1.00)% in 3rd
quarter 1998
Year to date: N/A
[BAR GRAPH]
Percentage Total Returns for Class Z shares
98
--
5.56%
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table assumes redemption of shares at the end of the period and
reinvestment of distributions and dividends.
The table indicates the risks of investing in the portfolio by comparing the
average an-nual total re-turn of Class Z shares for the periods shown to that of
the S&P 500 Compos-ite Stock Index (S&P 500), a broad-based un-managed index of
widely held common stocks; the Lehman Government/Corporate Bond Index (Lehman),
a broad-based un-managed index of fixed income securities; Salomon Smith Barney
High Yield Market Index (High Yield), a broad-based un-managed index of high
yield securities and the Salomon Smith Barney One-Year Treasury Bill Index
(T-bill), consisting of one 1-Year U.S. Treasury bill whose return is tracked
until maturity.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1998)
---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class Z S&P 500 Lehman High Yield T-bill
----------------------------------------------------------
1 Year 5.56% 28.60% 9.47%
----------------------------------------------------------
Since 8.47% 28.32%* 9.97%* * *
----------------------------------------------------------
Inception 1/17/97 n/a n/a n/a n/a
----------------------------------------------------------
</TABLE>
*Index comparison begins on January 31, 1997.
Fee table
- --------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.
Based on the expense ratios of underlying Smith Barney funds in which the
Income portfolio in-vested during the most recent fiscal year, the approximate
expense ratio is expected to be 1.02%. Fee table expenses would be higher if the
expense ratios of the underlying funds were in-cluded.
<TABLE>
<CAPTION>
Shareholder fees (paid directly from your investment)
----------------------------------------------------------------
<S> <C>
Maximum sales charge (load) imposed on purchases (as a %
of offering price) None
----------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of the lower
of net asset value
at purchase or redemption) None
----------------------------------------------------------------
Annual fund operating expenses (expenses deducted from
portfolio assets)
----------------------------------------------------------------
<S> <C>
Management fee 0.35%
----------------------------------------------------------------
Distribution and service (12b-1) fees None
----------------------------------------------------------------
Other expenses None
----------------------------------------------------------------
Total annual fund operating expenses 0.35%
----------------------------------------------------------------
</TABLE>
The Concert Allocation Series Class Z Shares-- 18
<PAGE>
Income Portfolio, continued
Example
- --------------------------------------------------------------------------------
The example helps you com-pare the costs of investing in the portfolio with
other mu-tual funds. Your actual costs may be higher or lower.
*The exampleassumes:
.You invest $10,000 for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a sales charge
.The portfolio's operating expenses remain the same
.The expenses of the underlying Smith Barney funds are reflected.
<TABLE>
<CAPTION>
Number of years you own your 1 year* 3 years* 5 years* 10 years*
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Class Z (with or without
redemption) $104 $325 $563 $1,248
-----------------------------------------------------------------
</TABLE>
The Concert Allocation Series Class Z Shares-- 19
<PAGE>
More On The Portfolios' Investments
Underlying funds
The following is a description of the investment objectives and principal in-
vestments of the underlying funds in which the portfolios invest.
The underlying funds that invest primarily in equity securities are:
Smith Barney Aggressive Growth Fund Inc. seeks capital appreciation by invest-
ing primarily in common stocks of companies the adviser believes are experienc-
ing, or have the potential to experience, growth in earnings that exceed the
average earnings growth rate of companies whose securities are included in the
Standard & Poor's 500 Index.
Smith Barney Appreciation Fund Inc. seeks long-term appreciation of shareholder
capital by investing primarily in equity securities of U.S. companies. The core
holdings of the fund are blue chip companies that are dominant in their indus-
tries.
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.
Smith Barney Contrarian Fund's investment objective is long-term growth of cap-
ital. The fund attempts to achieve its objective by investing primarily in un-
dervalued or out of favor common stock and other securities, including debt se-
curities that are convertible into common stock and that are currently price
depressed.
Large Cap Value Fund seeks current income and long-term growth of capital. The
fund invests primarily in common stocks of companies having a market capital-
ization of at least $5 billion that are considered by its adviser (i) to be un-
dervalued by the marketplace, (ii) to offer potential opportunities not yet
recognized by the marketplace, or (iii) to have been out of favor in the mar-
ketplace but that are poised to turn around because of a new management team,
product or business strategy.
Smith Barney Large Cap Blend Fund seeks long-term capital growth by investing
primarily in common stocks and other equity securities of large capitalization
companies with market capitalizations greater than $5 billion at the time of
investment that exhibit growth and/or value attributes.
Smith Barney Large Capitalization Growth Fund seeks long-term growth of capital
by investing in equity securities of large capitalization companies with market
capitalizations greater than $5 billion at the time of investment that are be-
lieved to afford attractive opportunities for investment growth.
Smith Barney Mid Cap Blend Fund seeks long-term growth of capital by investing
primarily in equity securities of medium-sized companies whose market capital-
izations are no greater than the market capitalizations of companies in the S&P
MidCap Index at the time of investment.
Concert Peachtree Growth Fund's investment objective is capital appreciation by
investing in securities believed to have above average potential for capital
appreciation. In attempting to achieve the fund's investment objective, the
fund uses 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.
Smith Barney Small Cap Blend Fund, Inc. seeks long-term capital appreciation by
investing primarily in the common stocks of U.S. companies with relatively
small market capitalizations at the time of investment.
Smith Barney Small Cap Value Fund seeks long-term growth of capital by invest-
ing primarily in equity securities of smaller capitalized companies whose mar-
ket capitalizations are no greater than the market capitalizations of companies
in the Russell 2000 Value Index at the time of investment.
Smith Barney Natural Resources Fund Inc. seeks long-term capital appreciation
by investing primarily in equity and debt securities of issuers in a variety of
natural resources industries.
Smith Barney Premium Total Return Fund seeks to provide shareholders with total
return, consisting of long-term capital appreciation and income, by investing
primarily in a diversified portfolio of equity and fixed income securities.
Smith Barney Hansberger Global Value Fund seeks long-term capital growth by in-
vesting primarily in equity securities of companies in any country including
the United States which, in the opinion of its advisers, are undervalued. In-
come is an incidental consideration.
Smith Barney Hansberger Global Small Cap Value Fund seeks long-term capital
growth by investing primarily in equity securities of U.S. and foreign issuers
with relatively small market capitalizations which, in the opinion of its ad-
visers, are undervalued. Income is an incidental consideration.
The Concert Allocation Series Class Z Shares-- 20
<PAGE>
More on the Portfolios' Investments, continued
Emerging Markets Portfolio seeks long-term capital appreciation through a port-
folio invested primarily in securities of emerging country issuers.
International Equity Portfolio seeks total return on its assets from growth of
capital and income. The fund invests primarily in a diversified portfolio of
equity securities of foreign companies including exchange traded and over-the-
counter common stocks and preferred shares, debt securities convertible into
equity securities and rights and warrants relating to equity securities.
European Portfolio seeks long-term capital appreciation by investing primarily
in the equity securities of issuers based in European countries including coun-
tries located in Western Europe (e.g., France, Germany, Italy, the Netherlands,
Switzerland and the United Kingdom) and Eastern Europe (e.g., Czech Republic,
Hungary, Poland and the countries of the former Soviet Union).
Pacific Portfolio seeks long-term capital appreciation by investing primarily
in equity securities of companies in Australia, Hong Kong, India, Indonesia,
Japan, Malaysia, New Zealand, Pakistan, Papua New Guinea, the People's Republic
of China, the Philippines, Singapore, South Korea, Sri Lanka, Taiwan and Thai-
land.
The underlying funds that invest primarily in fixed income securities are:
Smith Barney High Income Fund seeks to provide shareholders with high current
income. Although growth of capital is not an investment objective of the fund,
its adviser may consider potential for growth as one factor, among others, in
selecting investments for the fund. The fund will seek high current income by
investing in high risk, high-yielding corporate bonds, debentures and notes de-
nominated in U.S. dollars or foreign currencies.
Smith Barney Investment Grade Bond Fund seeks to provide as high a level of
current income as is consistent with prudent investment management and preser-
vation of capital. The fund invests primarily in a portfolio of investment
grade bonds.
Smith Barney Government Securities Fund seeks high current return by investing
in obligations of, or securities guaranteed by, the U.S. government, its agen-
cies or instrumentalities (including, without limitation, treasury bills and
bonds, mortgage participation certificates issued by the Federal Home Loan
Mortgage Corporation ("FHLMC") and mortgage-backed securities issued by the
Government National Mortgage Association ("GNMA").
Short-Term High Grade Bond Fund seeks current income, preservation of capital
and liquidity. The fund seeks to achieve its objective by investing its assets
in corporate debt securities, bank obligations and securities issued by the
U.S. government and its agencies and instrumentalities.
Smith Barney Managed Governments Fund Inc. seeks high current income consistent
with liquidity and safety of capital. The fund invests substantially all of its
assets in U.S. government securities. The fund's portfolio consists primarily
of mortgage-backed securities issued or guaranteed by GNMA, the Federal Na-
tional Mortgage Association ("FNMA") and FHLMC.
Smith Barney Diversified Strategic Income Fund seeks high current income pri-
marily through investment in fixed income securities, including high yield se-
curities. The fund attempts to achieve its objective by allocating and reallo-
cating its assets primarily among various types of fixed-income securities such
as: obligations issued or guaranteed as to principal and interest by the U.S.
government; mortgage-related securities issued by various governmental and non-
governmental entities; domestic and foreign corporate securities; and foreign
government securities.
Global Government Bond Portfolio seeks as high a level of current income and
capital appreciation as is consistent with its policy of investment principally
in high quality bonds of the U.S. and foreign governments.
Cash Portfolio is a money market fund that seeks maximum current income and
preservation of capital by investing in high quality U.S. dollar denominated
short-term debt securities.
Smith Barney Convertible Fund seeks current income and capital appreciation by
investing in investment and non-investment grade convertible securities and in
combinations of non-convertible fixed-income securities and warrants or call
options that together resemble convertible securities.
International Balanced Portfolio seeks a competitive total return on assets
from growth of capital and income through a portfolio invested primarily in se-
curities of established non-U.S. issuers.
Temporary defensive investments (all portfolios)
Each of the portfolios may depart from its principal investment strategies in
response to adverse market, economic or political conditions by taking tempo-
rary defensive positions in the Cash Portfolio, a series of Smith Barney Money
Funds, Inc., repurchase agreements or cash. If a portfolio takes a temporary
defensive position, it may be unable to achieve its investment objective.
The Concert Allocation Series Class Z Shares-- 21
<PAGE>
Investment Strategies and Related Risks
Portfolio turnover all portfolios
Each underlying fund may engage in active and frequent trading to achieve its
principal investment strategies. As a result, an underlying fund may realize
and distribute to a portfolio higher capital gains, which could increase the
tax liability for the portfolio's shareholders. Frequent trading also increases
transaction costs, which could detract from an underlying fund's performance.
Non-diversification
Each portfolio is not diversified, which means that it can invest a higher per-
centage of its assets in any one underlying fund than a diversified portfolio.
Being non-diversified may magnify a portfolio's losses from adverse events af-
fecting a particular underlying fund. However, each of the underlying funds
(except Global Government Bond Portfolio, International Balanced Portfolio and
Emerging Markets Portfolio) is diversified.
Changes in allocations
The underlying funds in which the portfolios may invest, and the range of as-
sets allocated to each fund, may be changed by the board of directors from time
to time. Similarly, the target allocation between equity and fixed income ori-
ented investments may be adjusted from time to time. If the target limits for
investment in a particular fund are exceeded or are not met because of cash
flows or changes in the market value of the shares of the underlying funds, the
investment manager may but is not required to adjust the portfolio's holdings.
High yield securities
Certain of the underlying funds can invest all or a portion of their assets in
high yield securities. High yield securities involve a substantial risk of
loss. These securities are considered speculative with respect to the issuer's
ability to pay interest and principal and are susceptible to default or decline
in market value because of adverse economic and business developments. The mar-
ket values for high yield securities tend to be very volatile, and these secu-
rities are less liquid than investment grade debt securities. Underlying funds
that hold these issues are subject to the following specific risks:
. Increased price sensitivity to changing interest rates
. Greater risk of loss because of default or declining credit quality
. Adverse company specific events are more likely to render the issuer unable
to make interest and/or principal payments
. A negative perception of the high yield market may develop, depressing the
price and liquidity of high yield securities. This negative perception could
last for a significant period of time
Foreign securities
Certain of the underlying funds focus upon foreign securities and other under-
lying funds may invest a portion of their assets outside the U.S. Investing in
non-U.S. issuers involves unique risks compared to investing in the securities
of U.S. issuers. These risks are more pronounced to the extent a fund invests
in issuers in countries with emerging markets. These risks may include:
. Less information about non-U.S. issuers or markets may be available because
of less rigorous disclosure and accounting standards or regulatory practices
. Many non-U.S. markets are smaller, less liquid and more volatile than U.S.
markets. In a changing market, the adviser may not be able to sell the fund's
portfolio securities in amounts and at prices the adviser considers
reasonable
. The U.S. dollar may appreciate against non-U.S. currencies or a foreign
government may impose restrictions on currency conversion or trading
. The economies of non-U.S. countries may grow at a slower rate than expected
or may experience a downturn or recession
. Economic, political and social developments may adversely affect the
securities markets
. Foreign governmental obligations may involve the risk of debt moratorium,
repudiation or renegotiation and the fund may be unable to enforce its rights
against the issuers
Small capitalization issuers
Certain of the underlying funds focus on small capitalization companies. In-
vesting in small companies involves unique risks. Compared to large companies,
small companies, and the market for their common stocks, are likely to:
. Be more sensitive to changes in the economy, earnings results and investor
expectations
. Have more limited product lines and capital resources
. Experience sharper swings in market values
. Be harder to sell at the times and prices the fund thinks appropriate
. Offer greater potential for gain and loss
The Concert Allocation Series Class Z Shares-- 22
<PAGE>
Investment Strategies and Related Risks, continued
Derivatives
Certain of the underlying funds may, but need not, use derivative contracts,
such as futures and options on securities, securities indices or currencies;
options on these futures; forward currency contracts; and interest rate or cur-
rency swaps for any of the following purposes:
. To hedge against the economic impact of adverse changes in the market value
of its securities, because of changes in stock market prices, currency
exchange rates or interest rates
. As a substitute for buying or selling securities
A derivative contract will obligate or entitle an underlying fund to deliver or
receive an asset or cash payment based on the change in value of one or more
securities, currencies or indices. Even a small investment in derivative con-
tracts can have a big impact on an underlying fund's stock market, currency and
interest rate exposure. Therefore, using derivatives can disproportionately in-
crease losses and reduce opportunities for gains when stock prices, currency
rates or interest rates are changing. The underlying fund may not fully benefit
from or may lose money on derivatives if changes in their value do not corre-
spond accurately to changes in the value of the fund's holdings. The other par-
ties to certain derivative contracts present the same types of credit risk as
issuers of fixed income securities. Derivatives can also make the underlying
fund less liquid and harder to value, especially in declining markets.
Investment Policies (all portfolios)
Each portfolio's investment policies, including the particular underlying funds
in which each portfolio may invest and the equity/fixed income targets applica-
ble to each portfolio, generally may be changed by the board of directors with-
out shareholder approval.
The Concert Allocation Series Class Z Shares-- 23
<PAGE>
Management
Portfolio manager
The portfolios' investment manager is SSBC Fund Management, Inc., an affiliate
of Salomon Smith Barney Inc. The manager's address is 388 Greenwich Street, New
York, NY 10013. The manager selects the portfolios' investments and oversees
their operations. The manager and Salomon Smith Barney are subsidiaries of
Citigroup Inc. Citigroup businesses produce a broad range of financial servic-
es--asset management, banking and consumer finance, credit and charge cards,
insurance, investments, investment banking and trading--and use diverse chan-
nels to make them available to consumer and corporate customers around the
world.
R. Jay Gerken, a Managing Director of Salomon Smith Barney, has been responsi-
ble for the day-to-day operations of the portfolios since inception. Mr. Gerken
has been with Salomon Smith Barney or companies that are now part of Salomon
Smith Barney since 1988.
Management fees
Management fees paid during the fiscal year ended January 31, 1999*
(as % of average daily net assets)
<TABLE>
<CAPTION>
Global High Growth Growth Balanced Conservative Income
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
0.35% 0.35% 0.35% 0.35% 0.35% 0.35%
- --------------------------------------------------------------------------------------
</TABLE>
* For more information regarding the management fees of the underlying funds,
please consult the statement of additional information("SAI").
Distributor
The portfolios have entered into an agreement with CFBDS, Inc. to distribute
the portfolios' shares. A selling group consisting of Salomon Smith Barney and
other broker-dealers sells portfolio shares to the public.
Year 2000 issue
Information technology experts are concerned about computer systems' ability to
process date-related information on and after January 1, 2000. This situation,
commonly known as the "Year 2000" issue, could have an adverse impact on the
portfolios. The cost of addressing the Year 2000 issue, if substantial, could
adversely affect companies and governments that issue securities held by the
underlying funds. The manager, Salomon Smith Barney and distributor are ad-
dressing the Year 2000 issue for their systems. Each portfolio has been in-
formed by its other service providers that they are taking similar measures.
Although the portfolios do not expect the Year 2000 issue to adversely affect
them, the portfolios cannot guarantee that the efforts of each portfolio or its
service providers to correct the problem will be successful.
Possible conflict of interest
The Directors and officers of the Concert Series also serve in similar posi-
tions with many of the underlying Smith Barney funds. Thus, if the interests of
a portfolio and the underlying funds were ever to become divergent, it is pos-
sible that a conflict of interest could arise and affect how the directors and
officers of the Concert Series fulfill their fiduciary duties to that portfolio
and the underlying funds. The Directors of the Concert Series believe they have
structured each portfolio to avoid these concerns. However, conceivably a situ-
ation could occur where proper action for the Concert Series or a portfolio
separately could be adverse to the interests of an underlying fund, or the re-
verse could occur. If such a possibility arises, the directors and officers of
the Concert Series, the affected underlying funds and SSBC will carefully ana-
lyze the situation and take all steps they believe reasonable to minimize, and
where possible eliminate, the potential conflict. Moreover, limitations on ag-
gregate investments in the underlying funds have been adopted by the Concert
Series to minimize this possibility, and close and continuous monitoring will
be exercised to avoid, insofar as is possible, these concerns.
The Concert Allocation Series Class Z Shares-- 24
<PAGE>
Buying, Redeeming And Exchanging Class Z Shares
Through a qualified plan
You may buy, sell or exchange Class Z shares only through a "qualified plan." A
qualified plan is a tax-exempt employee benefit or retirement plan of Salomon
Smith Barney, Inc. or one of its affiliates.
There are no minimum investment requirements for Class Z shares. However, each
portfolio reserves the right to change this policy at any time.
Buying
Orders to buy Class Z shares must be made in accordance with the terms of a
qualified plan. If you are a participant in a qualified plan, you may place an
order with your plan to buy Class Z shares at net asset value, without any
sales charge. Payment is due to Salomon Smith Barney on settlement date, which
is the third business day after your order is accepted. If you make payment
prior to this date, you may designate a temporary investment (such as a money
market fund of the Smith Barney funds) for payment until settlement date. Each
portfolio reserves the right to reject any order to buy shares and to suspend
the offering of shares for a period of time.
Redeeming
Qualified plans may redeem their shares on any day on which each portfolio cal-
culates its net asset value. You should consult the terms of your qualified
plan for special redemption provisions.
Exchanging
You should consult your qualified plan for information about available exchange
options.
The Concert Allocation Series Class Z Shares-- 25
<PAGE>
Distributions, Dividends and Taxes
An investment in the fund will have the following consequences for a qualified
plan as the owner of shares in the fund. Qualified plan participants should
consult their plan document or tax advisors about the tax consequences of par-
ticipating in a qualified plan.
Dividends The fund generally pays dividends from net investment income periodi-
cally and makes capital gain distributions, if any, once a year, typically in
December. The fund may pay additional distributions and dividends at other
times if necessary for the fund to avoid a federal tax. Capital gain distribu-
tions and dividends are reinvested in additional Class Z shares. The fund ex-
pects distributions to be primarily from income. No sales charge is imposed on
reinvested distributions or dividends. Alternatively, a qualified plan can in-
struct its Salomon Smith Barney Financial Consultant, dealer representative, or
the transfer agent to have distributions and/or dividends paid in cash. It can
change that choice at any time to be effective as of the next distribution or
dividend, except that any change given to the transfer agent less than five
days before the payment date will not be effective until the next distribution
or dividend is paid.
Taxes Provided that a qualified plan has not borrowed to finance its investment
in the fund, it will not be taxable on the receipt of dividends and distribu-
tions from the fund.
The Concert Allocation Series Class Z Shares-- 26
<PAGE>
Share Price
Qualified plans may buy, exchange or redeem Class Z shares of each portfolio at
their net asset value next determined after receipt of your request in good or-
der. Each portfolio's net asset value is the value of its assets minus its lia-
bilities. Net asset value is calculated separately for each class of shares.
Each portfolio calculates its net asset value every day the New York Stock Ex-
change is open. The Exchange is closed on certain holidays listed in the State-
ment of Additional Information. This calculation is based on the net asset
value of the underlying funds, which is calculated when regular trading closes
on the Exchange (normally 4:00 p.m., Eastern time).
Each portfolio and underlying fund generally values its fund securities
based on market prices or quota-
tions. When reliable market prices or quotations are not readily available, the
fund may price those securities at fair value. Fair value is determined in ac-
cordance with procedures approved by the fund's board. A fund that uses fair
value to price securities may value those securities higher or lower than an-
other fund using market quotations to price the same securities.
Short-term investments that have a maturity of more than 60 days are generally
valued based on market prices or quotations. Short-term investments that have a
maturity of 60 days or less are valued at amortized cost. Using this method, a
portfolio and underlying fund constantly amortizes over the remaining life of a
security the difference between the principal amount due at maturity and the
cost of the security to the portfolio and underlying fund.
In order to buy, redeem or exchange shares at that day's price, you must place
your order with your qualified plan before the New York Stock Exchange closes.
If the Exchange closes early, you must place your order prior to the actual
closing time. Otherwise, you will receive the next business day's price.
Your qualified plan must transmit all orders to buy, exchange or redeem shares
to the portfolios' agent before the agent's close of business.
The Concert Allocation Series Class Z Shares-- 27
<PAGE>
Financial Highlights
The financial highlights tables are intended to help you understand the
performance of each portfolios' Class Z shares since inception. Certain
information reflects financial results for a single share. Total return
represents the rate that a shareholder would have earned (or lost) on a
portfolio share assuming reinvestment of all dividends and distributions. The
information in the following tables was audited by KPMG LLP, independent
auditors, whose report, along with the portfolio's financial statement is in-
cluded in the annual report (available upon request).
For a Class Z share of capital stock outstanding throughout each year ending
January 31:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
High Growth Portfolio Growth Portfolio
1999(3) 1998(3) 1997(1) 1999(3) 1998(3) 1997(1)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $12.97 $12.41 $12.24 $12.99 $12.32 $12.18
--------------------------------------------------------------------------------
Income from operations:
Net investment
income(2) 0.13 0.17 0.01 0.30 0.73 0.02
Net realized and
unrealized gain 2.36 0.89 0.16 1.81 0.75 0.12
--------------------------------------------------------------------------------
Total income from
operations 2.49 1.06 0.17 2.11 1.48 0.14
--------------------------------------------------------------------------------
Less distributions
from:
Net investment income (0.12) (0.17) -- (0.32) (0.35) --
Net realized gains (0.48) (0.33) -- (0.37) (0.46) --
--------------------------------------------------------------------------------
Total distributions (0.60) (0.50) -- (0.69) (0.81) --
--------------------------------------------------------------------------------
Net asset value, end of
year $14.86 $12.97 $12.41 $14.41 $12.99 $12.32
--------------------------------------------------------------------------------
Total return 19.45% 8.57% 1.39%(4) 16.47% 12.08% 1.15%(4)
--------------------------------------------------------------------------------
Net assets, end of year
(000's) $6,712 $3,037 $4 $6,190 $2,908 $6
--------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.35% 0.35% 0.35%(5) 0.35% 0.35% 0.35%(5)
Net investment income 0.95 1.25 3.33(6) 2.18 5.24 5.30(6)
--------------------------------------------------------------------------------
Portfolio turnover rate 21% 39% 0% 10% 41% 0%
--------------------------------------------------------------------------------
</TABLE>
(1)For the period from January 17, 1997 (inception date) to
January 31, 1997.
(2)Net investment income per share includes short-term
capital gain distributions from underlying funds.
(3)Per share amounts calculated using the monthly average
shares method.
(4)Total return is not annualized, as it may not be
representative of the total return for the year.
(5)Annualized.
(6)Not annualized
<TABLE>
<CAPTION>
----------------------------------------------------
Balanced Portfolio
1999(3) 1998(3) 1997(1)
----------------------------------------------------
<S> <C> <C> <C>
Net asset value,
beginning of year $12.61 $12.13 $12.10
----------------------------------------------------
Income from operations:
Net investment income(2) 0.45 1.11 0.00(6)
Net realized and
unrealized gain 0.74 0.30 0.03
----------------------------------------------------
Total income from
operations 1.19 1.41 0.03
----------------------------------------------------
Less distributions from:
Net investment income (0.48) (0.57) --
Net realized gains (0.37) (0.36) --
----------------------------------------------------
Total distributions (0.85) (0.93) --
----------------------------------------------------
Net asset value, end of
year $12.95 $12.61 $12.13
----------------------------------------------------
Total return 9.70% 11.82% 0.25%(4)
----------------------------------------------------
Net assets, end of year
(000's) $36,726 $2,919 $2
----------------------------------------------------
Ratios to average net
assets:
Expenses 0.35% 0.35% 0.35%(5)
Net investment income 3.50 8.31 5.39 (7)
----------------------------------------------------
Portfolio turnover rate 10% 23% 0%
----------------------------------------------------
</TABLE>
(1)For the period from January 17, 1997 (inception date) to
January 31, 1997.
(2)Net investment income per share includes short-term
capital gain distributions from underlying funds.
(3)Per share amounts calculated using the monthly average
shares method.
(4)Total return is not annualized, as it may not be
representative of the total return for the year.
(5)Annualized.
(6)Amount represents less than $0.01.
(7)Not annualized.
The Concert Allocation Series Class Z Shares-- 28
<PAGE>
Financial Highlights, continued
For a Class Z share of capital stock outstanding throughout each year ended
January 31:
<TABLE>
- ------------------------------------------------------------------------------
<CAPTION>
Conservative Portfolio* Income Portfolio*
1998(3) 1997(1) 1998 1997(1)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of year $11.90 $11.89 $11.53 $11.55
- ------------------------------------------------------------------------------
Income from operations:
Net investment income(2) 0.84 0.01 0.84 0.07
Net realized and
unrealized gain 0.56 -- 0.49 (0.03)
- ------------------------------------------------------------------------------
Total income from
operations 1.40 0.01 1.33 0.04
- ------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.73) -- (0.82) (0.06)
Net realized gains (0.40) -- (0.29) --
- ------------------------------------------------------------------------------
Total distributions (1.13) -- (1.11) (0.06)
- ------------------------------------------------------------------------------
Net asset value, end of
year $12.17 $11.90 $11.75 $11.53
- ------------------------------------------------------------------------------
Total return 12.09% 0.08%(4) 11.88% 0.35%(4)
- ------------------------------------------------------------------------------
Net assets, end of year
(000's) $638 $1 $691 $0.2
- ------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.35% 0.35%(5) 0.35% 0.35%(5)
Net investment income 6.42 6.15 (6) 6.85 6.86 (6)
- ------------------------------------------------------------------------------
Portfolio turnover rate 28% 0% 28% 0%
- ------------------------------------------------------------------------------
</TABLE>
(1)For the period from January 17, 1997 (inception date) to January 31, 1997.
(2)Net investment income per share includes short-term capital gain
distributions from underlying funds.
(3)Per share amounts calculated using the monthly average shares method.
(4)Total return is not annualized, as it may not be representative of the total
return for the year.
(5)Annualized.
(6)Not annualized
*There were no Class Z shares outstanding for the year ended January 31, 1999.
The Concert Allocation Series Class Z Shares-- 29
<PAGE>
This page is intentionally left blank
<PAGE>
Smith Barney
Concert Allocation
Series Inc.
- --Class Z
Balanced Portfolio
Global Portfolio
High Growth Portfolio Conservative Portfolio
Growth Portfolio Income Portfolio
- --------------------------------------------------------------------------------
Additional Information About the Portfolios
Shareholder Reports
Annual and semiannual reports to shareholders provide additional information
about the portfolios' investments. These reports discuss the market conditions
and investment strategies that affected each portfolio's performance.
The portfolios send only one report to a household if more than one account has
the same address. Contact your Salomon Smith Barney Financial Consultant,
dealer representative or the transfer agent if you do not want this policy to
apply to you.
Statement of Additional Information
The statement of additional information provides more detailed information
about each portfolio. It is incorporated by reference into (is legally part of)
this prospectus.
You can make inquiries about the portfolios or obtain shareholder reports or
the statement of additional information (without charge), by contacting your
Salomon Smith Barney Financial Consultant or dealer representative, by calling
the portfolios at 1-800-451-2010, or by writing to the portfolios at Smith Bar-
ney Mutual Funds, 388 Greenwich Street, MF2, New York, New York 10013.
Visit Our Web Site
Our web site is located at www.smithbarney.com
You can also review and copy the portfolios' shareholder reports, prospectus
and statement of additional information at the Securities and Exchange Commis-
sion's Public Reference Room in Washington, D.C. You can get copies of these
materials for a duplicating fee by writing to the Public Reference Section of
the Commission, Washington, D.C. 20549-6009. Information about the public ref-
erence room may be obtained by calling 1-800-SEC-0330. You can get the same re-
ports and information free from the Commission's Internet web site--
http://www.sec.gov
If someone makes a statement about the portfolios that is not in this prospec-
tus, you should not rely upon that information. Neither the portfolios nor the
distributor is offering to sell shares of the portfolios to any person to whom
the portfolios may not lawfully sell their shares.
(SM) Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
(Investment Company Act file no. 811-07435)
FD 01233 6/99
<PAGE>
SMITH BARNEY
CONCERT ALLOCATION SERIES INC.
PROSPECTUS
JUNE 1, 1999
SELECT PORTFOLIOS
Prospectus begins on page one
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is accurate or complete. Any
statement to the contrary is a crime.
High Growth Portfolio
Growth Portfolio
Balanced Portfolio
Conservative Portfolio
Income Portfolio
Smith Barney
Mutual Funds
<PAGE>
Contents
<TABLE>
<S> <C>
Investments, risks and performance 2
- --------------------------------------------
High Growth Portfolio 3
- --------------------------------------------
Growth Portfolio 5
- --------------------------------------------
Balanced Portfolio 7
- --------------------------------------------
Conservative Portfolio 9
- --------------------------------------------
Income Portfolio 11
- --------------------------------------------
More on the portfolios' investments 13
- --------------------------------------------
Investment strategies and related risks 15
- --------------------------------------------
Management 17
- --------------------------------------------
Share transactions 18
- --------------------------------------------
Distributions, dividends and taxes 19
- --------------------------------------------
Share price 20
- --------------------------------------------
Financial highlights 21
- --------------------------------------------
</TABLE>
1
Concert Series--Select Portfolios
<PAGE>
Investments, Risks and Performance
About the portfolios
Each portfolio is a "fund of funds"--meaning it invests in other mutual funds
rather than directly in portfolio securities like stocks, bonds, and money mar-
ket instruments. These underlying mutual funds will be open-end funds managed
by the investment manager or its affiliates and have investment goals similar,
but not identical to, those of the portfolios.
Each portfolio is managed to serve as a complete investment program or as a
core part of a larger portfolio.
Target Allocation is the manager's initial strategic focus in allocating
between equity funds and fixed income funds.
Target Range is the range in which the manager may vary from the Target
Allocation.
Investing primarily in other mutual funds presents special risks
. In addition to the portfolio's operating expenses, you will indirectly bear
the operating expenses of the underlying funds. For instance, you will pay
management fees of both the portfolio and the underlying funds.
. One underlying fund may buy the same securities that another underlying fund
sells. You would indirectly bear the costs of these trades without accom-
plishing any investment purpose.
You should know:
You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
An investment in any of the portfolios is not a bank deposit and is not insured
or guaranteed by the FDIC or any other government agency
Principal risks of investing in fixed income securities and equity securities
The underlying funds invest in fixed income securities and equity securities.
Risks common to investments in fixed income securities and equity securities
are set forth below. Because each portfolio has a different investment strate-
gy, there are also principal risks which are specific to an investment in a
particular portfolio. These unique risks are described in the portfolio summa-
ries beginning on the next page.
Fixed Income Securities:
. When interest rates go up, prices of fixed income securities go down
. An issuer of a security may default on its obligation to pay principal and/or
interest or have its credit rating downgraded
. An issuer of a security may prepay principal earlier than scheduled, which
would force an underlying fund to reinvest in lower yielding securities. This
is known as call or prepayment risk
. Slower than expected principal payments may extend a security's life. This
locks in a below-market interest rate, increases the security's duration and
reduces the value of the security. This is known as extension risk
Equity Securities:
. Stock prices may decline generally
. If an adverse event occurs, such as the issuance of an unfavorable earnings
report, the value of a particular issuer's security may be depressed
2
Concert Series-- Select Portfolios Prospectus
<PAGE>
High Growth Portfolio
Investment objective
Capital appreciation.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney mutual funds
listed below, which are primarily equity funds.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity markets in general, particular sectors of such markets and the performance
outlook for the underlying funds. In assessing the equity markets, the manager
considers a broad range of market and economic trends and quantitative factors.
The performance of the underlying funds also influences their weighting in the
portfolio. The manager tends to emphasize underlying funds that focus upon
smaller cap, higher growth companies. However, the portfolio can invest in un-
derlying funds that have a range of investment styles and focuses, including
large cap, international, emerging markets high yield (Smith Barney High Income
Fund) and sector funds (Smith Barney Natural Resources Fund Inc.) The portfolio
also allocates a portion of its assets to underlying funds that primarily in-
vest in debt securities.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- ---------------------------
<S> <C>
Equity Funds 90%
- ---------------------------
Fixed Income Funds 10%
- ---------------------------
<CAPTION>
Target Range
- ---------------------------
<S> <C>
Equity Funds 80-100%
- ---------------------------
Fixed Income Funds 0-20%
- ---------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Aggressive Growth Fund Inc. 10-30%
- --------------------------------------------------------------
International Equity Portfolio 5-25%
- --------------------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-25%
- --------------------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 0-25%
- --------------------------------------------------------------
Cash Portfolio 0-20%
- --------------------------------------------------------------
Concert Peachtree Growth Fund 0-20%
- --------------------------------------------------------------
Emerging Markets Portfolio 0-20%
- --------------------------------------------------------------
Large Cap Value Fund 0-20%
- --------------------------------------------------------------
Smith Barney Appreciation Fund Inc. 0-20%
- --------------------------------------------------------------
Smith Barney Contrarian Fund 0-20%
- --------------------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-20%
- --------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Hansberger Global Small Cap Value Fund 0-20%
- --------------------------------------------------------------
Smith Barney High Income Fund 0-20%
- --------------------------------------------------------------
Smith Barney Large Cap Blend Fund 0-20%
- --------------------------------------------------------------
Smith Barney Large Capitalization Growth Fund 0-20%
- --------------------------------------------------------------
Global Government Bond Portfolio 0-15%
- --------------------------------------------------------------
International Balanced Portfolio 0-15%
- --------------------------------------------------------------
Smith Barney Government Securities Fund 0-15%
- --------------------------------------------------------------
Smith Barney Investment Grade Bond Fund 0-15%
- --------------------------------------------------------------
Smith Barney Mid Cap Blend Fund 0-15%
- --------------------------------------------------------------
Smith Barney Small Cap Value Fund 0-15%
- --------------------------------------------------------------
Smith Barney Natural Resources Fund Inc. 0-10%
- --------------------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in equity securities generally. The principal risks associated with in-
vesting in equity securities are described on page 2 under "About the portfo-
lios". Your investment in the portfolio is also subject to the following spe-
cific risks:
. You could lose money on your investment in a portfolio, or the portfolios may
not perform as well as other investments
. Growth stocks or small capitalization stocks (generally those listed on the
Russell 2000 Indices) may fall out of favor with investors and may experience
greater volatility, as well as greater potential for gain or loss
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase in-
vestment gains or add to investment losses. These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
Concert Series--Select Portfolios Prospectus
3
<PAGE>
High Growth Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio for the past calendar year. Performance figures do
not reflect expenses incurred from investing in a Separate Account. These ex-
penses will reduce performance. Please refer to the Separate Account prospectus
for more information on expenses.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 22.23% in 4th quarter 1998; Lowest: (15.57)% in
3rd quarter 1998
Year to date: 2.78% (through 3/31/99)
[CHART]
Risk return table
- --------------------------------------------------------------------------------
The table assumes the redemption of shares at the end of the period and rein-
vestment of distributions and dividends.
The table indicates the risks of investing in the portfolio by comparing the
average annual total return of the portfolio for the periods shown to that of
the S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Russell 2000 Index (Russell 2000), a broad-based
unmanaged capitalization weighted index of small capitalization companies; the
Morgan Stanley Capital International EAFE Index (MSCI EAFE), a broad-based
unmanaged index of foreign stocks; and the Salomon Smith Barney High Yield Mar-
ket Index (High Yield), a broad-based unmanaged index of high yield securities.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar
Years Ended December 31, 1998)
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Portfolio S&P 500 Russell 2000 MSCI EAFE High Yield
------------------------------------------------------------------
1 Year 15.38% 28.60% (2.55)% 20.00% 3.60%
------------------------------------------------------------------
Since
Inception 13.41% 29.17%* 10.32 %* 12.66%* 7.64%*
------------------------------------------------------------------
Inception
Date 2/5/97 n/a n/a n/a n/a
------------------------------------------------------------------
</TABLE>
*Index comparison begins on February 28, 1997.
Concert Series--Select Portfolios Prospectus
4
<PAGE>
Growth Portfolio
Investment objective
Long-term growth of capital.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney mutual funds
listed below, which are primarily equity funds.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity markets in general, particular sectors of such markets and the performance
outlook for the underlying funds and, to a lesser degree, the bond markets. In
assessing the equity markets, the manager considers a broad range of market and
economic trends and quantitative factors. The performance of the underlying
funds also influences their weighting in the portfolio. The manager tends to
emphasize underlying funds that focus upon larger capitalization companies.
However, the portfolio can invest in underlying funds that have a range of in-
vestment styles and focuses, including small cap, international, high yield
(Smith Barney High Income Fund) and sector funds (Smith Barney Natural Re-
sources Fund Inc.) The portfolio also allocates a significant portion of its as-
sets to underlying funds that primarily invest in a broad range of debt securi-
ties to help reduce volatility.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- --------------------------
<S> <C>
Equity Funds 70%
- --------------------------
Fixed Income Funds 30%
- --------------------------
<CAPTION>
Target Range
- --------------------------
<S> <C>
Equity Funds 60-80%
- --------------------------
Fixed Income Funds 20-40%
- --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Appreciation Fund Inc. 0-30%
- --------------------------------------------------------------
Smith Barney Contrarian Fund 0-30%
- --------------------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-30%
- --------------------------------------------------------------
Smith Barney High Income Fund 5-20%
- --------------------------------------------------------------
Cash Portfolio 0-20%
- --------------------------------------------------------------
Concert Peachtree Growth Fund 0-20%
- --------------------------------------------------------------
International Equity Portfolio 0-20%
- --------------------------------------------------------------
Large Cap Value Fund 0-20%
- --------------------------------------------------------------
Smith Barney Government Securities Fund 0-20%
- --------------------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-20%
- --------------------------------------------------------------
Smith Barney Large Cap Blend Fund 0-20%
- --------------------------------------------------------------
Smith Barney Large Capitalization Growth Fund 0-20%
- --------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Small Cap Blend Fund, Inc. 0-20%
- --------------------------------------------------------------
Global Government Bond Portfolio 0-15%
- --------------------------------------------------------------
Short-Term High Grade Bond Fund 0-15%
- --------------------------------------------------------------
Smith Barney Aggressive Growth Fund Inc. 0-15%
- --------------------------------------------------------------
Smith Barney Investment Grade Bond Fund 0-15%
- --------------------------------------------------------------
Smith Barney Managed Governments Fund Inc. 0-15%
- --------------------------------------------------------------
International Balanced Portfolio 0-10%
- --------------------------------------------------------------
Smith Barney Hansberger Global Small Cap Value Fund 0-10%
- --------------------------------------------------------------
Smith Barney Mid Cap Blend Fund 0-10%
- --------------------------------------------------------------
Smith Barney Natural Resources Fund Inc. 0-10%
- --------------------------------------------------------------
Smith Barney Small Cap Value Fund 0-10%
- --------------------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in equity securities and, to a lesser degree, fixed income securities
generally. The principal risks associated with investing in equity securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments.
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase in-
vestment gains or add to investment losses. These risks are heightened for
investments in emerging markets.
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. Growth stocks or small capitalization stocks (generally those listed on the
Russell 2000 Indices) may fall out of favor and may experience greater vola-
tility, as well as greater potential for gain or loss
. When interest rates go up, prices of fixed income securities go down
Concert Series--Select Portfolios Prospectus
5
<PAGE>
Growth Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio for the past calendar year. Performance figures do
not reflect expenses incurred from investing in a Separate Account. These ex-
penses will reduce performance. Please refer to the Separate Account prospectus
for more information on expenses.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 15.73% in 4th quarter 1998; Lowest: (10.70)% in
3rd quarter 1998
Year to date: 2.00% (through 3/31/99)
[CHART]
Risk return table
- --------------------------------------------------------------------------------
The table assumes redemption of shares at the end of the period and
reinvestment of distributions and dividends.
The table indicates the risks of investing in the portfolio by comparing the
average annual total return of the portfolio for the periods shown to that of
the S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Russell 2000 Index (Russell 2000), a broad-based
unmanaged capitalization weighted index of small capitalization companies; the
Morgan Stanley Capital International EAFE Index (MSCI EAFE), broad-based
unmanaged index of foreign stocks; and the Lehman Government/Corporate Bond
Index (Lehman), a broad-based unmanaged index of fixed income securities.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1998)
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Portfolio S&P 500 Russell 2000 MSCI EAFE Lehman
--------------------------------------------------------------
1 Year 13.97% 28.60% (2.55)% 20.00% 9.47%
--------------------------------------------------------------
Since
Inception 13.64% 29.17%* 10.32 %* 12.66%* 10.30%*
--------------------------------------------------------------
Inception
Date 2/5/97 n/a n/a n/a n/a
--------------------------------------------------------------
</TABLE>
*Index comparison begins on February 28, 1997.
Concert Series--Select Portfolios Prospectus
6
<PAGE>
Balanced Portfolio
Investment objective
Balance of growth of capital and income.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney equity and
fixed income funds listed below.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity and bond markets in general, particular sectors of such markets, and the
performance outlook for the underlying funds. In assessing the equity and bond
markets, the manager considers a broad range of market and economic trends and
quantitative factors. The performance of the underlying funds also influences
their weighting in the portfolio. In selecting equity funds, the manager tends
to emphasize underlying funds that focus upon established large-capitalization,
U.S. stocks. The portfolio's fixed income funds mainly invest in U.S. govern-
ment and agency securities and mortgage-backed securities. However, the portfo-
lio can invest in underlying funds that have a range of investment styles and
focuses.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- --------------------------
<S> <C>
Equity Funds 50%
- --------------------------
Fixed Income Funds 50%
- --------------------------
<CAPTION>
Target Range
- --------------------------
<S> <C>
Equity Funds 40-60%
- --------------------------
Fixed Income Funds 40-60%
- --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Diversified Strategic Income Fund 5-25%
- -----------------------------------------------------
Large Cap Value Fund 5-20%
- -----------------------------------------------------
Smith Barney Convertible Fund 5-20%
- -----------------------------------------------------
Smith Barney Large Cap Blend Fund 5-20%
- -----------------------------------------------------
Smith Barney Managed Governments Fund Inc. 5-20%
- -----------------------------------------------------
Smith Barney Premium Total Return Fund 5-20%
- -----------------------------------------------------
Cash Portfolio 0-25%
- -----------------------------------------------------
Short-Term High Grade Bond Fund 0-20%
- -----------------------------------------------------
Smith Barney Appreciation Fund Inc. 0-20%
- -----------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-20%
- -----------------------------------------------------
Smith Barney Government Securities Fund 0-20%
- -----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Concert Peachtree Growth Fund 0-15%
- -----------------------------------------------------
Global Government Bond Portfolio 0-15%
- -----------------------------------------------------
International Equity Portfolio 0-15%
- -----------------------------------------------------
Smith Barney Contrarian Fund 0-15%
- -----------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-15%
- -----------------------------------------------------
Smith Barney High Income Fund 0-15%
- -----------------------------------------------------
Smith Barney Large Capitalization Growth Fund 0-15%
- -----------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 0-15%
- -----------------------------------------------------
International Balanced Portfolio 0-10%
- -----------------------------------------------------
Smith Barney Natural Resources Fund Inc. 0-10%
- -----------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in both fixed income securities and equity securities generally. The
principal risks associated with investing in these securities are described on
page 2 under "About the portfolios". Your investment in the portfolio is also
subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase in-
vestment gains or add to investment losses. These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. When interest rates go up, prices of fixed income securities go down
7
Concert Series--Select Portfolios Prospectus
<PAGE>
Balanced Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio for the past calendar year. Performance figures do
not reflect expenses incurred from investing in a Separate Account. These ex-
penses will reduce performance. Please refer to the Separate Account prospectus
for more information on expenses.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 7.87% in 4th quarter 1998; Lowest: (5.07)% in
3rd quarter 1998
Year to date: 1.01% (through 3/31/99)
[CHART]
Risk return table
- --------------------------------------------------------------------------------
The table assumes redemption of shares at the end of the period and
reinvestment of distributions and dividends.
The table indicates the risks of investing in the portfolio by comparing the
average annual total return of the portfolio for the periods shown to that of
the S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Lehman Government/Corporate Bond Index (Lehman
Gov/Corp), a broad-based unmanaged index of fixed income securities; the
Salomon Smith Barney One-Year Treasury Bill Index (T-bill), consisting of a 1-
Year Treasury bill whose return is tracked until maturity; and the Salomon
Smith Barney World Government Bond Index (World Bond), a broad-based unmanaged
index of international fixed income securities.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1998)
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Portfolio S&P 500 Lehman Gov/Corp T-bill World Bond
------------------------------------------------------------------------
1 Year 9.53% 28.60% 9.47% 5.89% 15.29%
------------------------------------------------------------------------
Since
Inception 11.35% 29.17%* 10.30%* 6.06%* 10.27%*
------------------------------------------------------------------------
Inception
Date 2/5/97 n/a n/a n/a n/a
------------------------------------------------------------------------
</TABLE>
*Index comparison begins on February 28, 1997.
Concert Series--Select Portfolios Prospectus
8
<PAGE>
Conservative Portfolio
Investment objective
Primary: Income. Secondary: Long-term growth of capital.
Principal investment strategies
The portfolio is a fund of funds. It invests primarily in the Smith Barney
funds that focus on the taxable fixed income funds listed below. The portfolio
also invests in stock funds invested primarily in U.S. large capitalization
stocks.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the dif-
ferent sectors of the bond market and, to a lesser degree, the equities mar-
kets. In assessing the bond markets, the manager considers a broad range of
economic trends and quantitative factors. The performance of the underlying
funds also influences the weighting in the portfolio. The portfolio's fixed in-
come funds mainly invest in U.S. government and agency securities and mortgage-
backed securities. In selecting equity funds, the manager tends to emphasize
underlying funds that focus upon large capitalization stocks. However, the
portfolio can invest in underlying funds that have a range of investment styles
and focuses.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- --------------------------
<S> <C>
Equity Funds 30%
- --------------------------
Fixed Income Funds 70%
- --------------------------
<CAPTION>
Target Range
- --------------------------
<S> <C>
Equity Funds 20-40%
- --------------------------
Fixed Income Funds 60-80%
- --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Diversified Strategic Income Fund 10-30%
- ------------------------------------------------------
Smith Barney Managed Governments Fund Inc. 5-25%
- ------------------------------------------------------
Smith Barney Premium Total Return Fund 5-25%
- ------------------------------------------------------
Smith Barney Government Securities Fund 5-20%
- ------------------------------------------------------
Smith Barney Convertible Fund 5-15%
- ------------------------------------------------------
Cash Portfolio 0-30%
- ------------------------------------------------------
Global Government Bond Portfolio 0-20%
- ------------------------------------------------------
Large Cap Value Fund 0-20%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Short-Term High Grade Bond Fund 0-20%
- ------------------------------------------------------
Smith Barney High Income Fund 0-20%
- ------------------------------------------------------
Smith Barney Appreciation Fund Inc. 0-15%
- ------------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-15%
- ------------------------------------------------------
International Balanced Portfolio 0-10%
- ------------------------------------------------------
International Equity Portfolio 0-10%
- ------------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-10%
- ------------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in fixed income securities and, to a lesser degree, equity securities
generally. The principal risks associated with investing in these securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. When interest rates go up, prices of fixed income securities go down
. An issuer of a security may prepay principal earlier than scheduled, which
would force an underlying fund to reinvest in lower yielding securities
9
Concert Series--Select Portfolios Prospectus
<PAGE>
Conservative Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio for the past calendar year. Performance figures do
not reflect expenses incurred from investing in a Separate Account. These ex-
penses will reduce performance. Please refer to the Separate Account prospectus
for more information on expenses.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 6.01% in 2nd quarter 1997; Lowest: (3.43)% in
3rd quarter 1998
Year to date: 0.60% (through 3/31/99)
[CHART]
The table assumes redemption of shares at the end of the period and
reinvestment of distributions and dividends.
The table indicates the risks of investing in the portfolio by comparing the
average annual total return of the portfolio for the periods shown to that of
the S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Lehman Government/Corporate Bond Index (Lehman
Gov/Corp), a broad-based unmanaged index of fixed income securities; Salomon
Smith Barney High Yield Market Index (High Yield), a broad-based unmanaged
index of high yield securities and the Salomon Smith Barney One-Year Treasury
Bill Index (T-bill), consisting of a 1-Year U.S. Treasury bill whose return is
tracked until maturity.
Risk return table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1998)
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Portfolio S&P 500 Lehman Gov/Corp High Yield T-bill
--------------------------------------------------------------------
1 Year 6.17% 28.60% 9.47% 3.60% 5.89%
--------------------------------------------------------------------
Since
Inception 9.59% 29.17%* 10.30%* 7.64%* 6.06%*
--------------------------------------------------------------------
Inception
Date 2/5/97 n/a n/a n/a n/a
--------------------------------------------------------------------
</TABLE>
*Index comparison begins on February 28, 1997.
Concert Series--Select Portfolios Prospectus
10
<PAGE>
Income Portfolio
Investment objective
High current income.
Principal investment strategies
The portfolio is a fund of funds. It invests primarily in the Smith Barney
funds listed below that focus on taxable fixed income securities.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the dif-
ferent sectors of the bond market. In assessing the bond markets, the manager
considers a broad range of economic trends and quantitative factors. The per-
formance of the underlying funds also influences their weighting in the portfo-
lio. The portfolio focuses on funds that invest in a broad range of fixed in-
come securities. The portfolio may also allocate a portion of its assets to un-
derlying funds that primarily invest in equity securities.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- ---------------------------
<S> <C>
Equity Funds 10%
- ---------------------------
Fixed Income Funds 90%
- ---------------------------
<CAPTION>
Target Range
- ---------------------------
<S> <C>
Equity Funds 0-20%
- ---------------------------
Fixed Income Funds 80-100%
- ---------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Diversified Strategic Income Fund 10-30%
- ------------------------------------------------------
Short-Term High Grade Bond Fund 5-30%
- ------------------------------------------------------
Smith Barney Managed Governments Fund Inc. 5-30%
- ------------------------------------------------------
Smith Barney Government Securities Fund 5-20%
- ------------------------------------------------------
Cash Portfolio 0-30%
- ------------------------------------------------------
Smith Barney High Income Fund 0-25%
- ------------------------------------------------------
Global Government Bond Portfolio 0-20%
- ------------------------------------------------------
Large Cap Value Fund 0-15%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Convertible Fund 0-15%
- ------------------------------------------------------
Smith Barney Investment Grade Bond Fund 0-15%
- ------------------------------------------------------
Smith Barney Premium Total Return Fund 0-15%
- ------------------------------------------------------
International Balanced Portfolio 0-10%
- ------------------------------------------------------
International Equity Portfolio 0-10%
- ------------------------------------------------------
Smith Barney Appreciation Fund Inc. 0-10%
- ------------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-10%
- ------------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in fixed income securities and, to a lesser degree, equity securities
generally. The principal risks associated with investing in these securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. When interest rates go up, prices of fixed income securities go down
. An issuer of a security may prepay principal earlier than scheduled, which
would force an underlying fund to reinvest in lower yielding securities
. An issuer of a security may default on its obligation to pay principal and/or
interest or have its credit rating downgraded
11
Concert Series--Select Portfolios Prospectus
<PAGE>
Income Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio for the past calendar year. Performance figures do
not reflect expenses incurred from investing in a Separate Account. These ex-
penses will reduce performance. Please refer to the Separate Account prospectus
for more information on expenses.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 5.41% in 2nd quarter 1997; Lowest: (0.96)% in
3rd quarter 1998
Year to date: 0.17% (through 3/31/99)
[CHART]
Risk return table
- --------------------------------------------------------------------------------
The table assumes redemption of shares at the end of the period and
reinvestment of distributions and dividends.
The table indicates the risks of investing in the portfolio by comparing the
average annual total return of the portfolio for the periods shown to that of
the S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Lehman Government/Corporate Bond Index (Lehman
Gov/Corp), a broad-based unmanaged index of fixed income securities; Salomon
Smith Barney High Yield Market Index (High Yield), a broad-based unmanaged
index of high yield securities and the Salomon Smith Barney One-Year Treasury
Bill Index (T-bill), consisting of a 1-Year U.S. Treasury bill whose return is
tracked until maturity.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1998)
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Portfolio S&P 500 Lehman Gov/Corp High Yield T-bill
-------------------------------------------------------------------
1 Year 5.58% 28.60% 9.47% 3.60% 5.89%
-------------------------------------------------------------------
Since
Inception 9.06% 29.17%* 10.30%* 7.64%* 6.06%*
-------------------------------------------------------------------
Inception
Date 2/5/97 n/a n/a n/a n/a
-------------------------------------------------------------------
</TABLE>
*Index comparison begins on February 28, 1997.
Concert Series--Select Portfolios Prospectus
12
<PAGE>
More on the Portfolios' Investments
Underlying funds
The following is a description of the investment objectives and principal in-
vestments of the underlying funds in which the portfolios invest.
The underlying funds that invest primarily in equity securities are:
Smith Barney Aggressive Growth Fund Inc. seeks capital appreciation by invest-
ing primarily in common stocks of companies the adviser believes are experienc-
ing, or have the potential to experience, growth in earnings that exceed the
average earnings growth rate of companies whose securities are included in the
Standard & Poor's 500 Index.
Smith Barney Appreciation Fund Inc. seeks long-term appreciation of shareholder
capital by investing primarily in equity securities of U.S. companies. The core
holdings of the fund are blue chip companies that are dominant in their indus-
tries.
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.
Smith Barney Contrarian Fund's investment objective is long-term growth of cap-
ital. The fund attempts to achieve its objective by investing primarily in cur-
rently price depressed, undervalued or out of favor common stocks and other se-
curities, including debt securities that are convertible into common stock.
Large Cap Value Fund seeks current income and long-term growth of capital. The
fund invests primarily in common stocks of companies having a market capital-
ization of at least $5 billion that are considered by its adviser (i) to be un-
dervalued by the marketplace, (ii) to offer potential opportunities not yet
recognized by the marketplace, or (iii) to have been out of favor in the mar-
ketplace but that are poised to turn around because of a new management team,
product or business strategy.
Smith Barney Large Cap Blend Fund seeks long-term capital growth by investing
primarily in common stocks and other equity securities of large capitalization
companies with market capitalizations greater than $5 billion at the time of
investment that exhibit growth and/or value attributes.
Smith Barney Large Capitalization Growth Fund seeks long-term growth of capital
by investing in equity securities of large capitalization companies with market
capitalizations greater than $5 billion at the time of investment that are be-
lieved to afford attractive opportunities for investment growth.
Smith Barney Mid Cap Blend Fund seeks long-term growth of capital by investing
primarily in equity securities of medium-sized companies whose market capital-
izations are no greater than the market capitalizations of companies in the S&P
Mid Cap Index at the time of investment.
Concert Peachtree Growth Fund's investment objective is capital appreciation by
investing in securities believed to have above average potential for capital
appreciation. In attempting to achieve the fund's investment objective, the
fund uses 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.
Smith Barney Small Cap Blend Fund, Inc. seeks long-term capital appreciation by
investing primarily in the common stocks of U.S. companies with relatively
small market capitalizations at the time of investment.
Smith Barney Small Cap Value Fund seeks long-term growth of capital by invest-
ing primarily in equity securities of smaller capitalized companies whose mar-
ket capitalizations are no greater than the market capitalization of companies
in the Russell 2000 Value Index at the time of investment.
Smith Barney Natural Resources Fund Inc. seeks long-term capital appreciation
by investing primarily in equity and debt securities of issuers in a variety of
natural resources industries.
Smith Barney Premium Total Return Fund seeks to provide shareholders with total
return, consisting of long-term capital appreciation and income, by investing
primarily in a diversified portfolio of equity and fixed income securities.
Smith Barney Hansberger Global Value Fund seeks long-term capital growth by in-
vesting primarily in equity securities of companies in any country including
the United States which, in the opinion of its advisers, are undervalued. In-
come is an incidental consideration.
Smith Barney Hansberger Global Small Cap Value Fund seeks long-term capital
growth by investing primarily in equity securities of U.S. and foreign issuers
with relatively small market capitalizations which, in the opinion of its ad-
visers, are undervalued. Income is an incidental consideration.
13
Concert Series--Select Portfolios Prospectus
<PAGE>
More on the Portfolios' Investments, continued
Emerging Markets Portfolio seeks long-term capital appreciation through a port-
folio invested primarily in securities of emerging country issuers.
International Equity Portfolio seeks total return on its assets from growth of
capital and income. The fund invests primarily in a diversified portfolio of
equity securities of foreign companies including exchange traded and over-the-
counter common stocks and preferred shares, debt securities convertible into
equity securities and rights and warrants relating to equity securities.
European Portfolio seeks long-term capital appreciation by investing primarily
in the equity securities of issuers based in European countries including coun-
tries located in Western Europe (e.g., France, Germany, Italy, the Netherlands,
Switzerland and the United Kingdom) and Eastern Europe (e.g., Czech Republic,
Hungary, Poland and the countries of the former Soviet Union).
Pacific Portfolio seeks long-term capital appreciation by investing primarily
in equity securities of companies in Australia, Hong Kong, India, Indonesia,
Japan, Malaysia, New Zealand, Pakistan, Papua New Guinea, the People's Republic
of China, the Philippines, Singapore, South Korea, Sri Lanka, Taiwan and Thai-
land.
The underlying funds that invest primarily in fixed income securities are:
Smith Barney High Income Fund seeks to provide shareholders with high current
income. Although growth of capital is not an investment objective of the fund,
its adviser may consider potential for growth as one factor, among others, in
selecting investments for the fund. The fund will seek high current income by
investing in high risk, high-yielding corporate bonds, debentures and notes de-
nominated in U.S. dollars or foreign currencies.
Smith Barney Investment Grade Bond Fund seeks to provide as high a level of
current income as is consistent with prudent investment management and preser-
vation of capital. The fund invests primarily in a portfolio of investment
grade bonds.
Smith Barney Government Securities Fund seeks high current return by investing
in obligations of, or securities guaranteed by, the U.S. government, its agen-
cies or instrumentalities (including, without limitation, treasury bills and
bonds, mortgage participation certificates issued by the Federal Home Loan
Mortgage Corporation ("FHLMC") and mortgage-backed securities issued by the
Government National Mortgage Association ("GNMA").
Short-Term High Grade Bond Fund seeks current income, preservation of capital
and liquidity. The fund seeks to achieve its objective by investing its assets
in corporate debt securities, bank obligations and securities issued by the
U.S. Government and its agencies and instrumentalities.
Smith Barney Managed Governments Fund Inc. seeks high current income consistent
with liquidity and safety of capital. The fund invests substantially all of its
assets in U.S. government securities. The fund's portfolio consists primarily
of mortgage-backed securities issued or guaranteed by GNMA, the Federal Na-
tional Mortgage Association ("FNMA") and FHLMC.
Smith Barney Diversified Strategic Income Fund seeks high current income pri-
marily through investment in fixed income securities, including high yield se-
curities. The fund attempts to achieve its objective by allocating and reallo-
cating its assets primarily among various types of fixed-income securities such
as: obligations issued or guaranteed as to principal and interest by the U.S.
government; mortgage-related securities issued by various governmental and non-
governmental entities; domestic and foreign corporate securities; and foreign
government securities.
Global Government Bond Portfolio seeks as high a level of current income and
capital appreciation as is consistent with its policy of investing principally
in high quality bonds of the U.S. and foreign governments.
Cash Portfolio is a money market fund that seeks maximum current income and
preservation of capital by investing in high quality U.S. dollar denominated
short-term debt securities.
Smith Barney Convertible Fund seeks current income and capital appreciation by
investing in investment and non-investment grade convertible securities and in
combinations of non-convertible fixed-income securities and warrants or call
options that together resemble convertible securities.
International Balanced Portfolio seeks a competitive total return on assets
from growth of capital and income through a portfolio invested primarily in se-
curities of established non-U.S. issuers.
Temporary defensive investments (all portfolios)
Each of the portfolios may depart from its principal investment strategies in
response to adverse market, economic or political conditions by taking tempo-
rary defensive positions in the Cash Portfolio, a series of Smith Barney Money
Funds Inc., repurchase agreements or cash. If a portfolio takes a temporary de-
fensive position, it may be unable to achieve its investment objective.
14
Concert Series--Select Portfolios Prospectus
<PAGE>
Investment Strategies and Related Risks
Portfolio turnover all portfolios
Each underlying fund may engage in active and frequent trading to achieve its
principal investment strategies. Frequent trading also increases transaction
costs, which could detract from an underlying fund's performance.
Non-diversification
Each portfolio is not diversified, which means that it can invest a higher per-
centage of its assets in any one underlying fund than a diversified portfolio.
Being non-diversified may magnify a portfolio's losses from adverse events af-
fecting a particular underlying fund. However, each of the underlying funds
(except Global Government Bond Portfolio, International Balanced Portfolio and
Emerging Markets Portfolio is diversified.
Changes in allocations
The underlying funds in which the portfolios may invest, and the range of as-
sets allocated to each fund, may be changed by the board of directors from time
to time. Similarly, the target allocation between equity and fixed income ori-
ented investments may be adjusted from time to time. If the target limits for
investment in a particular fund are exceeded or are not met because of cash
flows or changes in the market value of the shares of the underlying funds, the
investment manager may but is not required to adjust the portfolio's holdings.
High yield securities
Certain of the underlying funds can invest all or a portion of their assets in
high yield securities. High yield securities involve a substantial risk of
loss. These securities are considered speculative with respect to the issuer's
ability to pay interest and principal and are susceptible to default or decline
in market value because of adverse economic and business developments. The mar-
ket values for high yield securities tend to be very volatile, and these secu-
rities are less liquid than investment grade debt securities. Underlying funds
that hold these issues are subject to the following specific risks:
. Increased price sensitivity to changing interest rates
. Greater risk of loss because of default or declining credit quality
. Adverse company specific events are more likely to render the issuer unable
to make interest and/or principal payments
. A negative perception of the high yield market may develop, depressing the
price and liquidity of high yield securities. This negative perception could
last for a significant period of time
Foreign securities
Certain of the underlying funds focus upon foreign securities and other under-
lying funds may invest a portion of their assets outside the U.S. Investing in
non-U.S. issuers involves unique risks compared to investing in the securities
of U.S. issuers. These risks are more pronounced to the extent a fund invests
in issuers in countries with emerging markets. These risks may include:
. Less information about non-U.S. issuers or markets may be available because
of less rigorous disclosure and accounting standards or regulatory practices
. Many non-U.S. markets are smaller, less liquid and more volatile than U.S.
markets. In a changing market, the adviser may not be able to sell the fund's
portfolio securities in amounts and at prices the adviser considers reason-
able
. The U.S. dollar may appreciate against non-U.S. currencies or a foreign gov-
ernment may impose restrictions on currency conversion or trading
. The economies of non-U.S. countries may grow at a slower rate than expected
or may experience a downturn or recession
. Economic, political and social developments may adversely affect the securi-
ties markets
. Foreign governmental obligations may involve the risk of debt moratorium, re-
pudiation or renegotiation and the fund may be unable to enforce its rights
against the issuers
Small capitalization issuers
Certain of the underlying funds focus on small capitalization companies. In-
vesting in small companies involves unique risks. Compared to large companies,
small companies, and the market for their common stocks, are likely to:
. Be more sensitive to changes in the economy, earnings results and investor
expectations
. Have more limited product lines and capital resources
. Experience sharper swings in market values
. Be harder to sell at the times and prices the fund thinks appropriate
. Offer greater potential for gain and loss
15
Concert Series--Select Portfolios Prospectus
<PAGE>
Investment Strategies and Related Risks, continued
Derivatives
Certain of the underlying funds may, but need not, use derivative contracts,
such as futures and options on securities, securities indices or currencies;
options on these futures; forward currency contracts; and interest rate or cur-
rency swaps for any of the following purposes:
. To hedge against the economic impact of adverse changes in the market value
of its securities, because of changes in stock market prices, currency ex-
change rates or interest rates
. As a substitute for buying or selling securities
A derivative contract will obligate or entitle an underlying fund to deliver or
receive an asset or cash payment based on the change in value of one or more
securities, currencies or indices. Even a small investment in derivative con-
tracts can have a big impact on an underlying fund's stock market, currency and
interest rate exposure. Therefore, using derivatives can disproportionately in-
crease losses and reduce opportunities for gains when stock prices, currency
rates or interest rates are changing. The underlying fund may not fully benefit
from or may lose money on derivatives if changes in their value do not corre-
spond accurately to changes in the value of the fund's holdings. The other par-
ties to certain derivative contracts present the same types of credit risk as
issuers of fixed income securities. Derivatives can also make the underlying
fund less liquid and harder to value, especially in declining markets.
Investment policies (all portfolios)
Each portfolio's investment policies, including the particular underlying funds
in which each portfolio may invest and the equity/fixed income targets applica-
ble to each portfolio, may be changed by the board of directors without share-
holder approval.
16
Concert Series--Select Portfolios Prospectus
<PAGE>
Management
Portfolio manager
The portfolios' investment manager is Travelers Investment Advisers, Inc.
("TIA"), an affiliate of Salomon Smith Barney Inc. The manager's address is 388
Greenwich Street, New York, NY 10013. The manager selects the portfolios' in-
vestments and oversees their operations. The manager and Salomon Smith Barney
are subsidiaries of Citigroup Inc. Citigroup businesses produce a broad range
of financial services--asset management, banking and consumer finance, credit
and charge cards, insurance, investments, investment banking and trading--and
use diverse channels to make them available to consumer and corporate customers
around the world.
R. Jay Gerken, a Managing Director of Salomon Smith Barney, has been responsi-
ble for the day-to-day operations of the portfolios since inception. Mr. Gerken
has been with Salomon Smith Barney or companies that are now part of Salomon
Smith Barney since 1988.
Management fees
Management fees paid during the fiscal year ended January 31, 1999*
(as % of average daily net assets)
<TABLE>
<CAPTION>
High Growth Growth Balanced Conservative Income
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
0.35% 0.35% 0.35% 0.35% 0.35%
- ----------------------------------------------------------------------------------------------
</TABLE>
* For more information regarding the management fees of the underlying funds,
please consult the statement of additional information.
Distributor
The portfolios have entered into an agreement with CFBDS, Inc. to distribute
the portfolios' shares.
Year 2000 issue
Information technology experts are concerned about computer systems' ability to
process date-related information on and after January 1, 2000. This situation,
commonly known as the "Year 2000" issue, could have an adverse impact on the
portfolios. The cost of addressing the Year 2000 issue, if substantial, could
adversely affect companies and governments that issue securities held by the
underlying funds. The manager, Salomon Smith Barney and distributor are ad-
dressing the Year 2000 issue for their systems. Each portfolio has been in-
formed by its other service providers that they are taking similar measures.
Although the portfolios do not expect the Year 2000 issue to adversely affect
them, the portfolios cannot guarantee that the efforts of each portfolio or its
service providers to correct the problem will be successful.
Possible conflict of interest
The Directors and officers of the Concert Series also serve in similar posi-
tions with many of the underlying Smith Barney funds. Thus, if the interests of
a portfolio and of the underlying 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 Concert Series fulfill their fiduciary duties to that port-
folio and the underlying funds. The Directors of the Concert Series believe
they have structured each portfolio to avoid these concerns. However, conceiv-
ably a situation could occur where proper action for the Concert Series or a
portfolio separately could be adverse to the interests of an underlying fund,
or the reverse could occur. If such a possibility arises, the directors and of-
ficers of the Concert Series, the affected underlying funds and TIA will care-
fully analyze the situation and take all steps they believe reasonable to mini-
mize, and where possible eliminate, the potential conflict. Moreover, limita-
tions on aggregate investments in the underlying funds have been adopted by the
Concert Series to minimize this possibility, and close and continuous monitor-
ing will be exercised to avoid, insofar as is possible, these concerns.
17
Concert Series--Select Portfolios Prospectus
<PAGE>
Share Transactions
Availability of shares
Individuals may not purchase shares directly from the portfolios. You should
read the prospectus for your insurance company's variable contract to learn how
to purchase a variable contract based on the portfolios.
Each portfolio may sell its shares directly to separate accounts established
and maintained by insurance companies for the purpose of funding variable annu-
ity and variable life insurance contracts and to certain qualified pension and
retirement plans. The variable insurance products and qualified plans may or
may not make investments in all the portfolios described in this prospectus.
Shares of the portfolios are sold at net asset value.
The interests of different variable insurance products and qualified plans in-
vesting in a portfolio could conflict due to differences of tax treatment and
other considerations. The portfolios currently do not foresee any disadvantages
to investors arising from the fact that each portfolio may offer its shares to
different insurance company separate accounts that serve as the investment me-
dium for their variable annuity and variable life products and to qualified
plans. Nevertheless, the board of directors intends to monitor events to iden-
tify any material conflicts which may arise, and to determine what action, if
any, should be taken in response to these conflicts. If a conflict were to oc-
cur, one or more insurance companies' separate accounts or qualified plans
might be required to withdraw their investments in one or more portfolios and
shares of another portfolio may be substituted.
The sale of shares may be suspended or terminated if required by law or regula-
tory authority or if it is in the best interests of the portfolios' sharehold-
ers. Each portfolio reserves the right to reject any specific purchase order.
Redemption of shares
Redemption requests may be placed by separate accounts of participating insur-
ance companies and by qualified plans. The redemption price of the shares of
each portfolio will be the net asset value next determined after receipt by the
portfolio of a redemption request in good order. The value of redeemed shares
may be more or less than the price paid for the shares. Sales proceeds will
normally be forwarded to the selling insurance company or qualified plan on the
next business day after receipt of a redemption request in good order but in no
event later than 3 days following receipt of instructions. Each portfolio may
suspend sales or postpone payment dates during any period in which any of the
following conditions exist:
. the New York Stock Exchange is closed;
. trading on the New York Stock Exchange is restricted;
. an emergency exists as a result of which disposal by the portfolio of securi-
ties is not reasonably practicable or it is not reasonably practicable for a
fund and underlying fund to fairly determine the value of its net assets; or
. as permitted by SEC order in extraordinary circumstances.
18
Concert Series--Select Portfolios Prospectus
<PAGE>
Distributions, Dividends and Taxes
Taxes
Each portfolio intends to qualify and be taxed as a "regulated investment com-
pany" under Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as
amended. In order to qualify to be taxed as a regulated investment company,
each portfolio must meet certain income and diversification tests and distribu-
tion requirements. As a regulated investment company meeting these require-
ments, a portfolio will not be subject to federal income tax on its net invest-
ment income and net capital gains that it distributes to its shareholders. All
income and capital gain distributions are automatically reinvested in addi-
tional shares of the portfolio at net asset value and are includable in gross
income of the separate accounts holding such shares. See the accompanying con-
tract prospectus for information regarding the federal income tax treatment of
distributions to the separate accounts and to holders of the contracts.
Each portfolio is also subject to asset diversification regulations promulgated
by the U.S. Treasury Department under the Code. The regulations generally pro-
vide that, as of the end of each calendar quarter or within 30 days thereafter,
no more than 55% of the total assets of each portfolio 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 invest-
ment. An alternative diversification test may be satisfied under certain cir-
cumstances. If a portfolio should fail to comply with these regulations or
fails to qualify for the special tax treatment afforded regulated investment
companies under the Code, contracts invested in that portfolio would not be
treated as annuity, endowment or life insurance contracts under the Code.
Concert Series--Select Portfolios Prospectus
19
<PAGE>
Share Price
Each portfolio's net asset value is the value of its assets minus its liabili-
ties. Each portfolio calculates its net asset value every day the New York
Stock Exchange is open. The Exchange is closed on certain holidays listed in
the Statement of Additional Information. This calculation is based on the net
asset value of the underlying funds, which is calculated when regular trading
closes on the Exchange (normally 4:00 p.m., Eastern time).
Each portfolio and underlying fund generally values its fund securities
based on market prices or quota-
tions. When reliable market prices or quotations are not readily available, the
fund may price those securities at fair value. Fair value is determined in ac-
cordance with procedures approved by the fund's board. A fund that uses fair
value to price securities may value those securities higher or lower than an-
other fund using market quotations to price the same securities.
Short-term investments that have a maturity of more than 60 days are generally
valued based on market prices or quotations. Short-term investments that have a
maturity of 60 days or less are value at amortized cost. Using this method, a
portfolio and underlying fund constantly amortizes over the remaining life of a
security the difference between the principal amount due at maturity and the
cost of the security to the portfolio and underlying fund.
In order to buy, redeem or exchange shares at that day's price, an insurance
company separate account or a qualified plan must place its order with the
transfer agent before the New York Stock Exchange closes. If the New York Stock
Exchange closes early, the order must be placed prior to the actual closing
time. Otherwise, the investor will receive the next business day's price.
20
Concert Series--Select Portfolios Prospectus
<PAGE>
Financial Highlights
The financial highlights tables are intended to help you understand the
performance of each portfolio since inception. Certain information reflects
financial results for a single share. Total returns represent the rate that a
shareholder would have earned (or lost) on a portfolio share assuming rein-
vestment of all dividends and distributions. The information in the following
tables was audited by KPMG LLP, independent auditors, whose report, along with
the fund's financial statement is included in the annual report (available
upon request).
For a share of capital stock outstanding throughout each year ending January 31:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
High Growth Portfolio Growth Portfolio
1999(1) 1998(1)(2) 1999(1) 1998(1)(2)
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of year $11.06 $10.00 $11.28 $10.00
-----------------------------------------------------------------------
Income from operations:
Net investment
income(3) 0.13 0.26 0.27 0.44
Net realized and
unrealized gain 1.94 0.80 1.55 0.84
-----------------------------------------------------------------------
Total income from
operations 2.07 1.06 1.82 1.28
-----------------------------------------------------------------------
Less distributions
from:
Net investment income (0.07) -- (0.11) --
Net realized gains (0.04) -- (0.12) --
-----------------------------------------------------------------------
Total distributions (0.11) -- (0.23) --
-----------------------------------------------------------------------
Net asset value, end of
year $13.02 $11.06 $12.87 $11.28
-----------------------------------------------------------------------
Total return 18.79% 10.60%++ 16.31% 12.80%++
-----------------------------------------------------------------------
Net assets, end of year
(000's) $75,780 $ 27,071 $129,929 $ 45,982
-----------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.35% 0.35%+ 0.35% 0.35%+
Net investment income 1.08 2.41+ 2.29 4.11+
-----------------------------------------------------------------------
Portfolio turnover rate 19% 43% 10% 43%
-----------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly
average shares method, rather than the undistributed net
investment income method, because it more accurately
reflects the per share data for the period.
(2) For the period from February 5, 1997 (inception date) to
January 31, 1998.
(3) Net investment income per share includes short-term
capital gain distributions from underlying funds.
++Total return is not annualized, as it may not be
representative of the total return for the year.
+ Annualized.
For a share of capital stock outstanding
throughout each year ending January 31:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
Balanced Portfolio Conservative Portfolio
1999(1) 1998(1)(2) 1999(1) 1998(1)(2)
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of year $11.28 $10.00 $11.30 $10.00
-----------------------------------------------------------------------
Income from operations:
Net investment
income(3) 0.42 0.64 0.60 0.78
Net realized and
unrealized gain 0.66 0.64 0.08 0.52
-----------------------------------------------------------------------
Total income from
operations 1.08 1.28 0.68 1.30
-----------------------------------------------------------------------
Less distributions
from:
Net investment income (0.16) -- (0.17) --
Net realized gains (0.16) -- (0.10) --
-----------------------------------------------------------------------
Total distributions (0.32) -- (0.27) --
-----------------------------------------------------------------------
Net asset value, end of
year $12.04 $11.28 $11.71 $11.30
-----------------------------------------------------------------------
Total return 9.76% 12.80%++ 6.05% 13.00%++
-----------------------------------------------------------------------
Net assets, end of year
(000's) $133,796 $ 45,071 $38,815 $ 10,698
-----------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.35% 0.35%+ 0.35% 0.35%+
Net investment income 3.64 5.89+ 5.27 7.24+
-----------------------------------------------------------------------
Portfolio turnover rate 7% 19% 3% 35%
-----------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly
average shares method, rather than the undistributed net
investment income method, because it more accurately
reflects the per share data for the period.
(2) For the period from February 5, 1997 (inception date) to
January 31, 1998.
(3) Net investment income per share includes short-term
capital gain distributions from underlying funds.
++Total return is not annualized, as it may not be
representative of the total return for the year.
+ Annualized.
Concert Series--Select Portfolios Prospectus
21
<PAGE>
Financial Highlights, continued
For a share of capital stock outstanding throughout each year ending January
31:
<TABLE>
- -------------------------------------------------------
<CAPTION>
Income Portfolio
1999(1) 1998(1)(2)
- -------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year $ 11.29 $10.00
- -------------------------------------------------------
Income from operations: 0.74 0.80
Net investment income(3)
- -------------------------------------------------------
Net realized and unrealized gain (0.16) 0.49
- -------------------------------------------------------
Total income from operations 0.58 1.29
- -------------------------------------------------------
Less distributions from:
Net investment income (0.15) --
Net realized gains (0.06) --
- -------------------------------------------------------
Total distributions (0.21) --
- -------------------------------------------------------
Net asset value, end of year $ 11.66 $11.29
- -------------------------------------------------------
Total return 5.18% 12.90%++
- -------------------------------------------------------
Net assets, end of year (000's) $20,597 $ 4,440
- -------------------------------------------------------
Ratios to average net assets:
Expenses 0.35% 0.35%+
Net investment income 6.45 7.36+
- -------------------------------------------------------
Portfolio turnover rate 14% 11%
- -------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method, rather than the undistributed net investment income method, because
it more accurately reflects the per share data for the period.
(2) For the period from February 5, 1997 (inception date) to January 31, 1998.
(3) Net investment income per share includes short-term capital gain
distributions from underlying funds.
++Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
22
Concert Series--Select Portfolios Prospectus
<PAGE>
This page is intentionally left blank
<PAGE>
Smith Barney
Concert Allocation
Series Inc.
Select Portfolios
High Growth Portfolio Conservative Portfolio
Growth Portfolio Income Portfolio
Balanced Portfolio
- --------------------------------------------------------------------------------
Additional Information About the
Portfolios
Shareholder Reports
Annual and semiannual reports to shareholders provide additional information
about the portfolios' investments. These reports discuss the market conditions
and investment strategies that affected each portfolio's performance.
Statement of Additional Information
The statement of additional information provides more detailed information
about each portfolio. It is incorporated by reference into (is legally part of)
this prospectus.
You can make inquiries about the portfolios or obtain shareholder reports or
the statement of additional information (without charge), by contacting Salomon
Smith Barney Inc., by calling the portfolios at 1-800-451-2010, or by writing
to the portfolios at Smith Barney Mutual Funds, 388 Greenwich Street, MF2, New
York, New York 10013.
Visit Our Web Site
Our web site is located at www.smithbarney.com
You can also review and copy the portfolios' shareholder reports, prospectus
and statement of additional information at the Securities and Exchange Commis-
sion's Public Reference Room in Washington, D.C. You can get copies of these
materials for a duplicating fee by writing to the Public Reference Section of
the Commission, Washington, D.C. 20549-6009. Information about the public ref-
erence room may be obtained by calling 1-800-SEC-0330. You can get the same re-
ports and information free from the Commission's Internet web site--
http://www.sec.gov
If someone makes a statement about the portfolios that is not in this prospec-
tus, you should not rely upon that information. Neither the portfolios nor the
distributor is offering to sell shares of the portfolios to any person to whom
the portfolios may not lawfully sell their shares.
(SM) Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
(Investment Company Act file no. 811-07435)
[FD01656 6/99]
<PAGE>
SMITH BARNEY
CONCERT ALLOCATION SERIES INC.
PROSPECTUS
JUNE 1, 1999
CLASS A AND B SHARES
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is accurate or complete. Any
statement to the contrary is a crime.
Global Portfolio
High Growth Portfolio
Growth Portfolio
Balanced Portfolio
Conservative Portfolio
Income Portfolio
Smith Barney
Mutual Funds
<PAGE>
Contents
<TABLE>
<S> <C>
Investments, risks and performance 2
- --------------------------------------------------
Global Portfolio 3
- --------------------------------------------------
High Growth Portfolio 5
- --------------------------------------------------
Growth Portfolio 8
- --------------------------------------------------
Balanced Portfolio 11
- --------------------------------------------------
Conservative Portfolio 14
- --------------------------------------------------
Income Portfolio 17
- --------------------------------------------------
More on the portfolios' investments 20
- --------------------------------------------------
Investment strategies and related risks 22
- --------------------------------------------------
Management 24
- --------------------------------------------------
Choosing a class of shares to buy 25
- --------------------------------------------------
Comparing the portfolios' classes 26
- --------------------------------------------------
Sales charges 27
- --------------------------------------------------
More about deferred sales charges 29
- --------------------------------------------------
Buying shares 30
- --------------------------------------------------
Exchanging shares 31
- --------------------------------------------------
Redeeming shares 32
- --------------------------------------------------
Other things to know about share transactions 33
- --------------------------------------------------
Distributions, dividends and taxes 34
- --------------------------------------------------
Share price 35
- --------------------------------------------------
Financial highlights 36
- --------------------------------------------------
</TABLE>
1 The Concert Allocation Series Prospectus
<PAGE>
Investments, Risks and Performance
About the portfolios
Each portfolio is a "fund of funds"--meaning it invests in other mutual funds
rather than directly in portfolio securities like stocks, bonds and money mar-
ket instruments. These underlying mutual funds will be open-end funds managed
by the investment manager or its affiliates and have investment goals similar,
but not identical to, those of the portfolios.
Each portfolio is managed as an asset allocation program with a Target Alloca-
tion and a Target Range.
Target Allocation is the manager's initial strategic focus in allocating
between equity funds and fixed income funds.
Target Range is the range in which the manager may vary from the Target
Allocation.
Investing primarily in other mutual funds presents special risks
. In addition to the portfolio's operating expenses, you will indirectly bear
the operating expenses of the underlying funds. For instance, you will pay
management fees of both the portfolio and the underlying funds.
. One underlying fund may buy the same securities that another underlying fund
sells. You would indirectly bear the costs of these trades without accom-
plishing any investment purpose.
. You may receive taxable gains from portfolio transactions by the underlying
funds as well as taxable gains from transactions in shares of the underlying
funds by a portfolio.
You should know:
You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments.
An investment in any of the portfolios is not a bank deposit and is not insured
or guaranteed by the FDIC or any other government agency.
Principal risks of investing in fixed income securities and equity securities
The underlying funds invest in fixed income securities and equity securities.
Risks common to investments in fixed income securities and equity securities
are set forth below. Because each portfolio has a different investment strate-
gy, there are also principal risks that are specific to an investment in a par-
ticular portfolio. These unique risks are described in the portfolio summaries
beginning on the next page.
Fixed Income Securities:
. When interest rates go up, prices of fixed income securities go down
. An issuer of a security may default on its obligation to pay principal and/or
interest or have its credit rating downgraded
. An issuer of a security may prepay principal earlier than scheduled, which
would force an underlying fund to reinvest in lower yielding securities. This
is known as call or prepayment risk
. Slower than expected principal payments may extend a security's life. This
locks in a below-market interest rate, increases the security's duration and
reduces the value of the security. This is known as extension risk
Equity Securities:
. Stock prices may decline generally
. If an adverse event occurs, such as the issuance of an unfavorable earnings
report, the value of a particular issuer's security may be depressed.
2 The Concert Allocation Series Prospectus
<PAGE>
Global Portfolio
Investment objective
Capital appreciation.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney global, inter-
national and U.S. equity funds listed below.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity markets in general, particular sectors of such markets and the performance
outlook for the underlying funds. In assessing the equity markets, the manager
considers the relative outlook for domestic and international equity markets, a
broad range of market and economic trends and quantitative factors. The perfor-
mance of the underlying funds also influences their weighting in the portfolio.
The manager tends to emphasize a mix of underlying funds that together reflect
a broad range of U.S. and international equity investments. The portfolio can
invest in underlying funds that have a range of investment styles and focuses.
Under normal market conditions, the portfolio allocates all of its assets to
funds that invest primarily in equity securities.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- ---------------------------
<S> <C>
Equity Funds 100%
- ---------------------------
Target Range
- ---------------------------
Equity Funds 80-100%
- ---------------------------
Fixed Income Funds 0-20%
- ---------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Hansberger Global Value Fund 15-35%
- ------------------------------------------------------
International Equity Portfolio 10-35%
- ------------------------------------------------------
Smith Barney Hansberger Global Small Cap Value
Fund 5-20%
- ------------------------------------------------------
Cash Portfolio 0-20%
- ------------------------------------------------------
Concert Peachtree Growth Fund 0-20%
- ------------------------------------------------------
Emerging Markets Portfolio 0-20%
- ------------------------------------------------------
Large Cap Value Fund 0-20%
- ------------------------------------------------------
Smith Barney Aggressive Growth Fund Inc. 0-20%
- ------------------------------------------------------
Smith Barney Large Cap Blend Fund 0-20%
- ------------------------------------------------------
Smith Barney Large Capitalization Growth Fund 0-20%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Small Cap Blend Fund, Inc. 0-20%
European Portfolio 0-15%
Pacific Portfolio 0-15%
Smith Barney Mid Cap Blend Fund 0-15%
Smith Barney Natural Resources Fund Inc. 0-15%
Smith Barney Small Cap Value Fund 0-15%
Smith Barney Appreciation Fund Inc. 0-10%
Smith Barney Contrarian Fund 0-10%
Smith Barney Fundamental Value Fund Inc. 0-10%
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in equity securities generally. The principal risks associated with in-
vesting in these securities are described on page 2 under "About the portfo-
lios". Your investment in the portfolio is also subject to the following spe-
cific risks:
. You could lose money on your investment in a portfolio, or the porfolio may
not perform as well as other investments
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase in-
vestment gains or add to investment losses. These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are an aggressive investor seeking capital appreciation
. Currently have exposure to fixed income investments and less volatile equity
investments and wish to broaden your investment portfolio
. Are willing to accept the risks of the stock market and the special risks of
investing in foreign securities, including those of emerging markets
. Have a long-term time horizon and no need for current income
3 The Concert Allocation Series Prospectus
<PAGE>
Global Portfolio, continued
Performance
- --------------------------------------------------------------------------------
Because this portfolio commenced operations on March 9, 1998, the portfolio
does not yet have a sufficient operating history to generate the performance
information which other Smith Barney funds show in bar and table form in this
location of the prospectus.
Year to date: 2.92% (through 3/31/99)
Fee table
- --------------------------------------------------------------------------------
The table sets forth the fees and
expenses you will pay if you
invest in shares of the portfolio.
Based on the
expense ratios
of underlying
Smith Barney
funds in which
the Global
portfolio was
invested on
January 31,
1999, the ap-
proximate ex-
pense ratios
are expected to
be as follows:
Class A 1.76%
and Class B
2.51%. Fee ta-
ble expenses
would be higher
if the expense
ratios of the
underlying
funds were in-
cluded.
<TABLE>
<CAPTION>
Shareholder fees (paid directly from your
investment) Class A Class B
----------------------------------------------------------
<S> <C> <C>
Maximum sales charge (load) imposed on
purchases
(as a % of offering price) 5.00% None
----------------------------------------------------------
Maximum deferred sales charge (load) (as a %
of the
lower of net asset value at purchase or
redemption) None(*) 5.00%
----------------------------------------------------------
Annual fund operating expenses
(expenses deducted from portfolio assets)
----------------------------------------------------------
Management fee 0.35% 0.35%
----------------------------------------------------------
Distribution and service (12b-1) fees 0.25% 1.00%
----------------------------------------------------------
Other expenses None None
----------------------------------------------------------
Total annual fund operating expenses 0.60% 1.35%
----------------------------------------------------------
</TABLE>
(*) You may buy Class A shares in amounts of $500,000 or
more at net asset value (without an initial charge) but
if you redeem those shares within 12 months of purchase
you will pay a deferred sales charge of 1.00%.
Example
- --------------------------------------------------------------------------------
The example
helps you com-
pare the costs
of investing in
the portfolio
with other mu-
tual funds.
Your actual
costs may be
higher or low-
er.
<TABLE>
<CAPTION>
Number of years you own
your shares 1 year(*) 3 years(*) 5 years(*) 10 years(*)
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (with or without
redemption) $670 $1,026 $1,406 $2,469
------------------------------------------------------------------
Class B (assuming
redemption at end of
period) $754 $1,082 $1,435 $2,662
------------------------------------------------------------------
Class B (assuming no
redemption) $254 $ 782 $1,335 $2,662
------------------------------------------------------------------
</TABLE>
(*)The example assumes:
.You invest $10,000 for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a
sales charge
.The portfolio's operating expenses remain the same
. The expenses of the underlying Smith Barney funds are re-
flected.
4 The Concert Allocation Series Prospectus
<PAGE>
High Growth Portfolio
Investment objective
Capital appreciation.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney mutual funds
listed below, which are primarily equity funds.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity markets in general, particular sectors of such markets and the performance
outlook for the underlying funds. In assessing the equity markets, the manager
considers a broad range of market and economic trends and quantitative factors.
The performance of the underlying funds also influences their weighting in the
portfolio. The manager tends to emphasize underlying funds that focus upon
smaller cap, higher growth companies. However, the portfolio can invest in un-
derlying funds that have a range of investment styles and focuses, including
large cap, international, emerging markets, high yield (Smith Barney High In-
come Fund) and sector funds (Smith Barney Natural Resources Fund Inc.). The
portfolio also allocates a portion of its assets to underlying funds that pri-
marily invest in debt securities.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- ---------------------------
<S> <C>
Equity Funds 90%
- ---------------------------
Fixed Income Funds 10%
- ---------------------------
Target Range
- ---------------------------
Equity Funds 80-100%
- ---------------------------
Fixed Income Funds 0-20%
- ---------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Aggressive Growth Fund Inc. 10-30%
- -------------------------------------------------
International Equity Portfolio 5-25%
- -------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-25%
- -------------------------------------------------
Smith Barney Small Cap Blend Fund, Inc. 0-25%
- -------------------------------------------------
Cash Portfolio 0-20%
- -------------------------------------------------
Concert Peachtree Growth Fund 0-20%
- -------------------------------------------------
Emerging Markets Portfolio 0-20%
- -------------------------------------------------
Large Cap Value Fund 0-20%
- -------------------------------------------------
Smith Barney Appreciation Fund Inc. 0-20%
- -------------------------------------------------
Smith Barney Contrarian Fund 0-20%
- -------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-20%
- -------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Hansberger Global Small Cap Value
Fund 0-20%
Smith Barney High Income Fund 0-20%
Smith Barney Large Cap Blend Fund 0-20%
Smith Barney Large Capitalization Growth Fund 0-20%
Global Government Bond Portfolio 0-15%
International Balanced Portfolio 0-15%
Smith Barney Government Securities Fund 0-15%
Smith Barney Investment Grade Bond Fund 0-15%
Smith Barney Mid Cap Blend Fund 0-15%
Smith Barney Small Cap Value Fund 0-15%
Smith Barney Natural Resources Fund Inc. 0-10%
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in equity securities generally. The principal risks associated with in-
vesting in equity securities are described on page 2 under "About the portfo-
lios". Your investment in the portfolio is also subject to the following spe-
cific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. Growth stocks or small capitalization stocks (generally those listed in the
Russell 2000 Indices) may fall out of favor with investors and may experience
greater volatility, as well as greater potential for gain or loss
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase in-
vestment gains or add to investment losses. These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
Who may want to invest
The portfolio may be an appropriate investment if you:
. Currently have exposure to fixed income investments and less volatile equity
investments and wish to broaden your investment portfolio
. Are willing to accept the risks of the stock market
. Have a long-term time horizon and no need for current income
5 The Concert Allocation Series Prospectus
<PAGE>
High Growth Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 2 calendar
years. Class B shares would have different performance because of its different
expenses. Performance information in the chart does not reflect sales charges,
which would reduce your return.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 22.13% in 4th quarter 1998; Lowest: (15.61)% in 3rd
quarter 1998
Year to date: 3.14% (through 3/31/99)
[BAR CHART]
Percentage Total Returns for Class A shares
- -------------------------------------------
97 12.46%
98 15.52%
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table as-
sumes the impo-
sition of the
maximum sales
charge applica-
ble to the
class, redemp-
tion of shares
at the end of
the period, and
reinvestment of
distributions
and dividends.
The table indi-
cates the risks
of investing in
the portfolio
by comparing
the average an-
nual total re-
turn of each
class for the
periods shown
to that of the
S&P 500 Compos-
ite Stock Index
(S&P 500), a
broad-based un-
managed index
of widely held
common stocks;
the Russell
2000 Index
(Russell 2000),
a broad-based
unmanaged capi-
talization
weighted index
of small capi-
talization com-
panies; the
Morgan Stanley
Capital Inter-
national EAFE
Index (MSCI
EAFE), a broad-
based unmanaged
index of for-
eign stocks;
and the Salomon
Smith Barney
High Yield Mar-
ket Index (High
Yield), a
broad-based un-
managed index
of high yield
securities.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar years ended
December 31, 1998)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
S&P Russell MSCI High
Class A Class B 500 2000 EAFE Yield
-------------------------------------------------------------
1 Year 9.74% 9.67% 28.60% (2.55)% 20.00% 3.60%
-------------------------------------------------------------
Since Inception 9.83% 10.00% 28.10%* 11.11%* 9.25%* 9.05%*
-------------------------------------------------------------
Inception Date 2/5/96 2/5/96 n/a n/a n/a n/a
-------------------------------------------------------------
</TABLE>
*Index comparison begins on February 29, 1996.
Fee table
- --------------------------------------------------------------------------------
The table sets
forth the fees
and expenses
you will pay if
you invest in
shares of the
portfolio.
Based on the
expense ratios
of underlying
Smith Barney
funds in which
the High Growth
portfolio was
invested on
January 31,
1999, the ap-
proximate ex-
pense ratios
are expected to
be as follows:
Class A 1.53%
and Class B
2.28%. Fee ta-
ble expenses
would be higher
if the expense
ratios of the
underlying
funds were in-
cluded.
<TABLE>
<CAPTION>
Shareholder fees (paid directly from your
investment) Class A Class B
--------------------------------------------------------
<S> <C> <C>
Maximum sales charge (load) imposed on
purchases (as a % of offering price) 5.00% None
--------------------------------------------------------
Maximum deferred sales charge (load)
(as a % of the lower of net asset value at
purchase or redemption) None* 5.00%
--------------------------------------------------------
Annual fund operating expenses
(expenses deducted from portfolio assets)
--------------------------------------------------------
Management fee 0.35% 0.35%
--------------------------------------------------------
Distribution and service (12b-1) fees 0.25% 1.00%
--------------------------------------------------------
Other expenses None None
--------------------------------------------------------
Total annual fund operating expenses 0.60% 1.35%
--------------------------------------------------------
</TABLE>
* You may buy Class A shares in amounts of $500,000 or more
at net asset value (without an initial charge) but if you
redeem those shares within 12 months of purchase you will
pay a deferred sales charge of 1.00%.
6 The Concert Allocation Series Prospectus
<PAGE>
High Growth Portfolio, continued
Example
- --------------------------------------------------------------------------------
The example
helps you com-
pare the costs
of investing in
the portfolio
with other mu-
tual funds.
Your actual
costs may be
higher or low-
er.
<TABLE>
<CAPTION>
Number of years you own
your shares 1 year* 3 years* 5 years* 10 years*
----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (with or without
redemption) $648 $ 959 $1,292 $2,232
----------------------------------------------------------
Class B (assuming
redemption at end of
period) $731 $1,012 $1,320 $2,427
----------------------------------------------------------
Class B (assuming no
redemption) $231 $ 712 $1,220 $2,427
----------------------------------------------------------
</TABLE>
*The example assumes:
. You invest $10,000 for the period shown
. Your investment has a 5% return each year
. You reinvest all distributions and dividends without a
sales charge
. The portfolio's operating expenses remain the same
. The expenses of the underlying Smith Barney funds are re-
flected.
7 The Concert Allocation Series Prospectus
<PAGE>
Growth Portfolio
Investment objective
Long-term growth of capital.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney mutual funds
listed below, which are primarily equity funds.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity markets in general, and, to a lesser degree, the bond markets, particular
sectors of such markets and the performance outlook for the underlying funds.
In assessing the equity markets, the manager considers a broad range of market
and economic trends and quantitative factors. The performance of
the underlying funds also influences their weighting in the portfolio. The man-
ager tends to emphasize underlying funds that focus upon larger capitalization
companies. However, the portfolio can invest in underlying funds that have a
range of investment styles and focuses, including small cap, international,
high yield (Smith Barney High Income Fund) and sector funds (Smith Barney Natu-
ral Resources Fund Inc.). The portfolio also allocates a significant portion of
its assets to underlying funds that primarily invest in a broad range of debt
securities to help reduce volatility.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- --------------------------
<S> <C>
Equity Funds 70%
- --------------------------
Fixed Income Funds 30%
- --------------------------
Target Range
- --------------------------
Equity Funds 60-80%
- --------------------------
Fixed Income Funds 20-40%
- --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Appreciation Fund Inc. 0-30%
- ----------------------------------------------------
Smith Barney Contrarian Fund 0-30%
- ----------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-30%
- ----------------------------------------------------
Smith Barney High Income Fund 5-20%
- ----------------------------------------------------
Cash Portfolio 0-20%
- ----------------------------------------------------
Concert Peachtree Growth Fund 0-20%
- ----------------------------------------------------
International Equity Portfolio 0-20%
- ----------------------------------------------------
Large Cap Value Fund 0-20%
- ----------------------------------------------------
Smith Barney Government Securities Fund 0-20%
- ----------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-20%
- ----------------------------------------------------
Smith Barney Large Cap Blend Fund 0-20%
- ----------------------------------------------------
Smith Barney Large Capitalization Growth Fund 0-20%
- ----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Small Cap Blend Fund, Inc. 0-20%
Global Government Bond Portfolio 0-15%
Short-Term High Grade Bond Fund 0-15%
Smith Barney Aggressive Growth Fund Inc. 0-15%
Smith Barney Investment Grade Bond Fund 0-15%
Smith Barney Managed Governments Fund Inc. 0-15%
International Balanced Portfolio 0-10%
Smith Barney Hansberger Global Small Cap Value
Fund 0-10%
Smith Barney Mid Cap Blend Fund 0-10%
Smith Barney Natural Resources Fund Inc. 0-10%
Smith Barney Small Cap Value Fund 0-10%
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in equity securities and, to a lesser degree, fixed income securities
generally. The principal risks associated with investing in equity securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase in-
vestment gains or add to investment losses. These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. Growth stocks or small capitalization stocks (generally those listed on the
Russell 2000 Indices) may fall out of favor and may experience greater vola-
tility, as well as greater potential for gain or loss
. When interest rates go up, prices of fixed income securities go down
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are seeking growth of capital
. Are willing to accept the risks of the stock market, although lessened
through greater exposure to fixed income securities than the High Growth
Portfolio
. Have a long-term time horizon and no need for current income
8 The Concert Allocation Series Prospectus
<PAGE>
Growth Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 2 calendar
years. Class B shares would have different performance because of its different
expenses. Performance information in the chart does not reflect sales charges,
which would reduce your return.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 15.29% in 4th quarter 1998; Lowest: (10.67)% in 3rd
quarter 1998
Year to date: 2.21% (through 3/31/99)
[BAR CHART]
Percentage Total Returns for Class A shares
- -------------------------------------------
97 14.68%
98 13.61%
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table as-
sumes the impo-
sition of the
maximum sales
charge applica-
ble to the
class, redemp-
tion of shares
at the end of
the period, and
reinvestment of
distributions
and dividends.
The table indi-
cates the risks
of investing in
the portfolio
by comparing
the average an-
nual total re-
turn of each
class for the
periods shown
to that of the
S&P 500 Compos-
ite Stock Index
(S&P 500), a
broad-based un-
managed index
of widely held
common stocks;
the Russell
2000 Index
(Russell 2000),
a broad-based
unmanaged capi-
talization
weighted index
of small capi-
talization com-
panies; the
Morgan Stanley
Capital Inter-
national EAFE
Index (MSCI
EAFE), a broad-
based unmanaged
index of for-
eign stocks;
and the Lehman
Government/
Corporate Bond
Index (Lehman),
a broad-based
index of fixed
income securi-
ties.
<TABLE>
<CAPTION>
Average Annual Total Returns
(Calendar Years Ended December 31, 1998)
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
S&P Russell MSCI
Class A Class B 500 2000 EAFE Lehman
--------------------------------------------------------------
1 Year 7.92% 7.75% 28.60% (2.55)% 20.00% 9.47%
--------------------------------------------------------------
Since Inception 10.35% 10.64% 28.10%* 11.11%* 9.25%* 8.34%*
--------------------------------------------------------------
Inception Date 2/5/96 2/5/96 n/a n/a n/a n/a
--------------------------------------------------------------
</TABLE>
*Index comparison begins on February 29, 1996.
Fee table
- --------------------------------------------------------------------------------
The table sets
forth the fees
and expenses
you will pay if
you invest in
shares of the
portfolio.
Based on the
expense ratios
of underlying
Smith Barney
funds in which
the Growth
portfolio was
invested on
January 31,
1999, the ap-
proximate ex-
pense ratios
are expected to
be as follows:
Class A 1.43%
and Class B
2.18%. Fee ta-
ble expenses
would be higher
if the expense
ratios of the
underlying
funds were in-
cluded.
<TABLE>
<CAPTION>
Shareholder fees (paid directly from your
investment) Class A Class B
--------------------------------------------------------
<S> <C> <C>
Maximum sales charge (load) imposed on
purchases (as a % of offering price) 5.00% None
--------------------------------------------------------
Maximum deferred sales charge (load)
(as a % of the lower of net asset value at
purchase or redemption) None* 5.00%
--------------------------------------------------------
Annual fund operating expenses
(expenses deducted from portfolio assets)
--------------------------------------------------------
Management fee 0.35% 0.35%
--------------------------------------------------------
Distribution and service (12b-1) fees 0.25% 1.00%
--------------------------------------------------------
Other expenses None None
--------------------------------------------------------
Total annual fund operating expenses 0.60% 1.35%
--------------------------------------------------------
</TABLE>
* You may buy Class A shares in amounts of $500,000 or more
at net asset value (without an initial charge) but if you
redeem those shares within 12 months of purchase you will
pay a deferred sales charge of 1.00%.
9 The Concert Allocation Series Prospectus
<PAGE>
Growth Portfolio, continued
Example
- --------------------------------------------------------------------------------
The example
helps you com-
pare the costs
of investing in
the portfolio
with other mu-
tual funds.
Your actual
costs may be
higher or low-
er.
<TABLE>
<CAPTION>
Number of years you own
your shares 1 year* 3 years* 5 years* 10 years*
----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (with or without
redemption) $638 $930 $1,243 $2,127
----------------------------------------------------------
Class B (assuming
redemption at end of
period) $721 $982 $1,269 $2,323
----------------------------------------------------------
Class B (assuming no
redemption) $221 $682 $1,169 $2,323
----------------------------------------------------------
</TABLE>
*The example assumes:
.You invest $10,000 for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a
sales charge
.The portfolio's operating expenses remain the same
. The expenses of the underlying Smith Barney funds are re-
flected.
10 The Concert Allocation Series Prospectus
<PAGE>
Balanced Portfolio
Investment objective
Balance of growth of capital and income.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney equity and
fixed income funds listed below.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity and bond markets in general, particular sectors of such markets and the
performance outlook for the underlying funds. In assessing the equity and bond
markets, the manager considers a broad range of market and economic trends and
quantitative factors. The performance of the underlying funds also influences
their weighting in the portfolio. In selecting equity funds, the manager tends
to emphasize underlying funds that focus upon established large-capitalization
U.S. stocks. The portfolio's fixed income funds mainly invest in U.S. govern-
ment and agency securities and mortgage-backed securities. However, the portfo-
lio can invest in underlying funds that have a range of investment styles and
focuses.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- --------------------------
<S> <C>
Equity Funds 50%
- --------------------------
Fixed Income Funds 50%
- --------------------------
Target Range
- --------------------------
Equity Funds 40-60%
- --------------------------
Fixed Income Funds 40-60%
- --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Diversified Strategic Income Fund 5-25%
- -----------------------------------------------------
Large Cap Value Fund 5-20%
- -----------------------------------------------------
Smith Barney Convertible Fund 5-20%
- -----------------------------------------------------
Smith Barney Large Cap Blend Fund 5-20%
- -----------------------------------------------------
Smith Barney Managed Governments Fund Inc. 5-20%
- -----------------------------------------------------
Smith Barney Premium Total Return Fund 5-20%
- -----------------------------------------------------
Cash Portfolio 0-25%
- -----------------------------------------------------
Short-Term High Grade Bond Fund 0-20%
- -----------------------------------------------------
Smith Barney Appreciation Fund Inc. 0-20%
- -----------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-20%
- -----------------------------------------------------
Smith Barney Government Securities Fund 0-20%
- -----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Concert Peachtree Growth Fund 0-15%
Global Government Bond Portfolio 0-15%
International Equity Portfolio 0-15%
Smith Barney Contrarian Fund 0-15%
Smith Barney Hansberger Global Value Fund 0-15%
Smith Barney High Income Fund 0-15%
Smith Barney Large Capitalization Growth Fund 0-15%
Smith Barney Small Cap Blend Fund, Inc. 0-15%
International Balanced Portfolio 0-10%
Smith Barney Natural Resources Fund Inc. 0-10%
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in both fixed income securities and equity securities generally. The
principal risks associated with investing in these securities are described on
page 2 under "About the portfolios". Your investment in the portfolio is also
subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase
investment gains or add to investment losses. These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. When interest rates go up, prices of fixed income securities go down
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are willing to sacrifice some growth potential for less volatility
. Are willing to accept the risks of the stock market
. Have a long-term time horizon
11 The Concert Allocation Series Prospectus
<PAGE>
Balanced Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 2 calendar
years. Class B shares would have different performance because of its different
expenses. Performance information in the chart does not reflect sales charges,
which would reduce your return.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly returns: Highest: 7.71% in 4th quarter 1998; Lowest: (5.18)% in 3rd
quarter 1998
Year to date: 0.94% (through 3/31/99)
[BAR CHART]
Percentage Total Returns for Class A shares
- -------------------------------------------
97 12.78%
98 8.84%
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table as-
sumes the impo-
sition of the
maximum sales
charge applica-
ble to the
class, redemp-
tion of shares
at the end of
the period, and
reinvestment of
distributions
and dividends.
The table indi-
cates the risks
of investing in
the portfolio
by comparing
the average an-
nual total re-
turn of each
class for the
periods shown
to that of the
S&P 500 Compos-
ite Stock Index
(S&P 500), a
broad-based un-
managed index
of widely held
common stocks;
the Lehman
Government/Corporate
Bond Index
(Lehman
Gov/Corp), a
broad-based un-
managed index
of fixed income
securities; the
Salomon Smith
Barney One-Year
Treasury Bill
Index (T-bill),
consisting of a
single 1-Year
U.S. Treasury
bill whose re-
turn is tracked
until maturity;
and the Salomon
Smith Barney
World Govern-
ment Bond Index
(World Bond), a
broad-based un-
managed index
of interna-
tional fixed
income securi-
ties.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1998)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
S&P World
Class A Class B 500 Lehman T-bill Bond
-------------------------------------------------------------
1 Year 3.41% 3.04% 28.60% 9.47% 5.89% 15.29%
-------------------------------------------------------------
Since Inception 8.59% 8.84% 28.10%* 8.34%* 5.96%* 7.23%*
-------------------------------------------------------------
Inception Date 2/5/96 2/5/96 n/a n/a n/a n/a
-------------------------------------------------------------
</TABLE>
*Index comparison begins on February 29, 1996.
Fee table
- --------------------------------------------------------------------------------
The table sets
forth the fees
and expenses
you will pay if
you invest in
shares of the
portfolio.
Based on the
expense ratios
of underlying
Smith Barney
funds in which
the Balanced
portfolio was
invested on
January 31,
1999, the ap-
proximate ex-
pense ratios
are expected to
be as follows:
Class A 1.30%
and Class B
2.05%. Fee ta-
ble expenses
would be higher
if the expense
ratios of the
underlying
funds were in-
cluded.
<TABLE>
<CAPTION>
Shareholder fees (paid directly from your
investment) Class A Class B
-------------------------------------------------------------
<S> <C> <C>
Maximum sales charge (load) imposed on
purchases
(as a % of offering price) 5.00% None
-------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of
the lower of net asset value at purchase or
redemption) None* 5.00%
-------------------------------------------------------------
Annual fund operating expenses
(expenses deducted from portfolio assets)
-------------------------------------------------------------
Management fee 0.35% 0.35%
-------------------------------------------------------------
Distribution and service (12b-1) fees 0.25% 1.00%
-------------------------------------------------------------
Other expenses None None
-------------------------------------------------------------
Total annual fund operating expenses 0.60% 1.35%
-------------------------------------------------------------
</TABLE>
* You may buy Class A shares in amounts of $500,000 or more
at net asset value (without an initial charge) but if you
redeem those shares within 12 months of purchase you will
pay a deferred sales charge of 1.00%.
12 The Concert Allocation Series Prospectus
<PAGE>
Balanced Portfolio, continued
Example
- --------------------------------------------------------------------------------
The example
helps you com-
pare the costs
of investing in
the portfolio
with other mu-
tual funds.
Your actual
costs may be
higher or low-
er.
<TABLE>
<CAPTION>
Number of years you own
your shares 1 Year* 3 Years* 5 Years* 10 Years*
----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (with or without
redemption) $626 $891 $1,177 $1,989
----------------------------------------------------------
Class B (assuming
redemption at end of
period) $708 $943 $1,203 $2,182
----------------------------------------------------------
Class B (assuming no
redemption) $208 $643 $1,103 $2,182
----------------------------------------------------------
</TABLE>
*The example assumes:
.You invest $10,000 for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a
sales charge
.The portfolio's operating expenses remain the same
. The expenses of the underlying Smith Barney funds are re-
flected.
13 The Concert Allocation Series Prospectus
<PAGE>
Conservative Portfolio
Investment objective
Primary: Income. Secondary: Long-term growth of capital.
Principal investment strategies
The portfolio is a fund of funds. It invests primarily in the Smith Barney
funds that focus on the taxable fixed income funds listed below. The portfolio
also invests in stock funds invested primarily in U.S. large capitalization
stocks.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the dif-
ferent sectors of the bond market and, to a lesser degree, the equities mar-
kets. In assessing the bond markets, the manager considers a broad range of
economic trends and quantitative factors. The performance of the underlying
funds also influences their weighting in the portfolio. The portfolio's fixed
income funds mainly invest in U.S. government and agency securities and mort-
gage-backed securities. In selecting equity funds, the manager tends to empha-
size underlying funds that focus upon large capitalization stocks. However, the
portfolio can invest in underlying funds that have a range of investment styles
and focuses.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- --------------------------
<S> <C>
Equity Funds 30%
- --------------------------
Fixed Income Funds 70%
- --------------------------
Target Range
- --------------------------
Equity Funds 20-40%
- --------------------------
Fixed Income Funds 60-80%
- --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Diversified Strategic Income Fund 10-30%
- ------------------------------------------------------
Smith Barney Managed Governments Fund Inc. 5-25%
- ------------------------------------------------------
Smith Barney Premium Total Return Fund 5-25%
- ------------------------------------------------------
Smith Barney Government Securities Fund 5-20%
- ------------------------------------------------------
Smith Barney Convertible Fund 5-15%
- ------------------------------------------------------
Cash Portfolio 0-30%
- ------------------------------------------------------
Global Government Bond Portfolio 0-20%
- ------------------------------------------------------
Large Cap Value Fund 0-20%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Short-Term High Grade Bond Fund 0-20%
Smith Barney High Income Fund 0-20%
Smith Barney Appreciation Fund Inc. 0-15%
Smith Barney Fundamental Value Fund Inc. 0-15%
International Balanced Portfolio 0-10%
International Equity Portfolio 0-10%
Smith Barney Hansberger Global Value 0-10%
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in fixed income securities and, to a lesser degree, equity securities
generally. The principal risks associated with investing in these securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. When interest rates go up, prices of fixed income securities go down
. An issuer of a security may prepay principal earlier than scheduled, which
would force an underlying fund to reinvest in lower yielding securities
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are seeking income, but also some long-term growth of capital to help offset
the loss of purchasing power because of inflation
. Are a conservative investor willing to sacrifice some growth potential in ex-
change for less (but not zero) volatility
14 The Concert Allocation Series Prospectus
<PAGE>
Conservative Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 2 calendar
years. Class B shares would have different performance because of its different
expenses. Performance information in the chart does not reflect sales charges,
which would reduce your return.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 6.01% in 2nd quarter 1997; Lowest: (3.42)% in 3rd
quarter 1998
Year to date: 0.43% (through 3/31/99)
[BAR CHART]
Percentage Total Returns for Class A shares
- -------------------------------------------
97 11.81%
98 6.02%
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table as-
sumes the impo-
sition of the
maximum sales
charge applica-
ble to the
class, redemp-
tion of shares
at the end of
the period, and
reinvestment of
distributions
and dividends.
The table indi-
cates the risks
of investing in
the portfolio
by comparing
the average an-
nual total re-
turn of each
class for the
periods shown
to that of the
S&P 500 Compos-
ite Stock Index
(S&P 500), a
broad-based un-
managed index
of widely held
common stocks;
the Lehman
Government/Corporate
Bond Index
(Lehman), a
broad-based un-
managed index
of fixed income
securities;
Salomon Smith
Barney High
Yield Market
Index (High
Yield), a
broad-based un-
managed index
of high yield
securities and
the Salomon
Smith Barney
One-Year Trea-
sury Bill Index
(T-bill), con-
sisting of a
single 1-Year
U.S. Treasury
bill whose re-
turn is tracked
until maturity.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1998)
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
S&P Lehman High
Class A Class B 500 Corp/Gov Yield T-bill
--------------------------------------------------------------
1 Year 1.24% 1.02% 28.60% 9.47% 3.60% 5.89%
--------------------------------------------------------------
Since Inception 7.02% 7.29% 28.10%* 8.34%* 9.05%* 5.96%*
--------------------------------------------------------------
Inception Date 2/5/96 2/5/96 n/a n/a n/a n/a
--------------------------------------------------------------
</TABLE>
*Index comparison begins on February 29, 1996.
Fee table
- --------------------------------------------------------------------------------
The table sets
forth the fees
and expenses
you will pay if
you invest in
shares of the
portfolio.
Based on ex-
pense ratios of
underlying
Smith Barney
funds in which
the Conserva-
tive portfolio
was invested on
January 31,
1999, the ap-
proximate ex-
pense ratios
are expected to
be as follows:
Class A 1.33%
and Class B
1.83%. Fee ta-
ble expenses
would be higher
if the expense
ratios of the
underlying
funds were in-
cluded.
<TABLE>
<CAPTION>
Shareholder fees (paid directly from your
investment) Class A Class B
---------------------------------------------------------
<S> <C> <C>
Maximum sales charge (load) imposed on
purchases
(as a % of offering price) 4.50% None
---------------------------------------------------------
Maximum deferred sales charge (load)
(as a % of the lower of net asset value at
purchase or redemption) None* 4.50%
---------------------------------------------------------
Annual fund operating expenses
(expenses deducted from portfolio assets)
---------------------------------------------------------
Management fee 0.35% 0.35%
---------------------------------------------------------
Distribution and service (12b-1) fees 0.25% 0.75%
---------------------------------------------------------
Other expenses None None
---------------------------------------------------------
Total annual fund operating expenses 0.60% 1.10%
---------------------------------------------------------
</TABLE>
* You may buy Class A shares in amounts of $500,000 or more
at net asset value (without an initial charge) but if you
redeem those shares within 12 months of purchase you will
pay a deferred sales charge of 1.00%.
15 The Concert Allocation Series Prospectus
<PAGE>
Conservative Portfolio, continued
Example
- --------------------------------------------------------------------------------
The example
helps you com-
pare the costs
of investing in
the portfolio
with other mu-
tual funds.
Your actual
costs may be
higher or low-
er.
<TABLE>
<CAPTION>
Number of years you own
your shares 1 year* 3 years* 5 years* 10 years*
----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (with or without
redemption) $579 $852 $1,146 $1,979
----------------------------------------------------------
Class B (assuming
redemption at end of
period) $636 $876 $1,090 $2,017
----------------------------------------------------------
Class B (assuming no
redemption) $186 $576 $ 990 $2,017
----------------------------------------------------------
</TABLE>
*The example assumes:
.You invest $10,000 for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a
sales charge
.The portfolio's operating expenses remain the same
. The expenses of the underlying Smith Barney funds are re-
flected.
16 The Concert Allocation Series Prospectus
<PAGE>
Income Portfolio
Investment objective
High current income.
Principal investment strategies
The portfolio is a fund of funds. It invests primarily in the Smith Barney
funds listed below that focus on taxable fixed income securities.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the dif-
ferent sectors of the bond market. In assessing the bond markets, the manager
considers a broad range of economic trends and quantitative factors. The per-
formance of the underlying funds also influences their weighting in the portfo-
lio. The portfolio focuses on funds that invest in a broad range of fixed in-
come securities. The portfolio also allocates a portion of its assets to under-
lying funds that primarily invest in equity securities.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- ---------------------------
<S> <C>
Equity Funds 10%
- ---------------------------
Fixed Income Funds 90%
- ---------------------------
Target Range
- ---------------------------
Equity Funds 0-20%
- ---------------------------
Fixed Income Funds 80-100%
- ---------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Diversified Strategic Income Fund 10-30%
- ------------------------------------------------------
Short-Term High Grade Bond Fund 5-30%
- ------------------------------------------------------
Smith Barney Managed Governments Fund Inc. 5-30%
- ------------------------------------------------------
Smith Barney Government Securities Fund 5-20%
- ------------------------------------------------------
Cash Portfolio 0-30%
- ------------------------------------------------------
Smith Barney High Income Fund 0-25%
- ------------------------------------------------------
Global Government Bond Portfolio 0-20%
- ------------------------------------------------------
Large Cap Value Fund 0-15%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Convertible Fund 0-15%
Smith Barney Investment Grade Bond Fund 0-15%
Smith Barney Premium Total Return Fund 0-15%
International Balanced Portfolio 0-10%
International Equity Portfolio 0-10%
Smith Barney Appreciation Fund Inc. 0-10%
Smith Barney Fundamental Value Fund Inc. 0-10%
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in fixed income securities and, to a lesser degree, equity securities
generally. The principal risks associated with investing in these securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. When interest rates go up, prices of fixed income securities go down
. An issuer of a security may prepay principal earlier than scheduled, which
would force an underlying fund to reinvest in lower yielding securities
. An issuer of a security may default on its obligation to pay principal and/or
interest or have its credit rating downgraded
Who may want to invest
The portfolio may be an appropriate investment if you:
. Are seeking current income
. Are a conservative investor willing to sacrifice growth potential for less
(but not zero) volatility
17 The Concert Allocation Series Prospectus
<PAGE>
Income Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 2 calendar
years. Class B shares would have different performance because of its different
expenses. Performance information in the chart does not reflect sales charges,
which would reduce your return.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 5.09% in 2nd quarter 1997; Lowest: (1.10)% in 3rd
quarter 1998
Year to date: 0.10% (through 3/31/99)
[BAR CHART]
Percentage Total Returns for Class A shares
- -------------------------------------------
97 11.00%
98 5.32%
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table as-
sumes the impo-
sition of the
maximum sales
charge applica-
ble to the
class, redemp-
tion of shares
at the end of
the period, and
reinvestment of
distributions
and dividends.
The table indi-
cates the risks
of investing in
the portfolio
by comparing
the average an-
nual total re-
turn of each
class for the
periods shown
to that of the
S&P 500 Compos-
ite Stock Index
(S&P 500), a
broad-based un-
managed index
of widely held
common stocks;
the Lehman
Government/Corporate
Bond Index
(Lehman), a
broad-based un-
managed index
of fixed income
securities;
Salomon Smith
Barney High
Yield Market
Index (High
Yield), a
broad-based un-
managed index
of high yield
securities and
the Salomon
Smith Barney
One-Year Trea-
sury Bill Index
(T-bill), con-
sisting of a
single 1-Year
U.S. Treasury
bill whose re-
turn is tracked
until maturity.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1998)
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
S&P High
Class A Class B 500 Lehman Yield T-bill
----------------------------------------------------------
1 Year 0.58% 0.35% 28.60% 9.47% 3.60% 5.89%
----------------------------------------------------------
Since
Inception 5.86% 6.12% 28.10%* 8.34%* 9.05%* 5.96%*
----------------------------------------------------------
Inception
Date 2/5/96 2/5/96 n/a n/a n/a n/a
----------------------------------------------------------
</TABLE>
*Index comparison begins on February 29, 1996.
Fee table
- --------------------------------------------------------------------------------
The table sets
forth the fees
and expenses
you will pay if
you invest in
shares of the
portfolio.
Based on ex-
pense ratios of
underlying
Smith Barney
funds in which
the Income
portfolio was
invested on
January 31,
1999, the ap-
proximate ex-
pense ratios
are expected to
be as follows:
Class A 1.27%
and Class B
1.77%. Fee ta-
ble expenses
would be higher
if the expense
ratios of the
underlying
funds were in-
cluded.
<TABLE>
<CAPTION>
Shareholder fees (paid directly from your
investment) Class A Class B
-------------------------------------------------------------
<S> <C> <C>
Maximum sales charge (load) imposed on
purchases (as a % of offering price) 4.50% None
-------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of
the lower of net asset value at purchase or
redemption) None* 4.50%
-------------------------------------------------------------
Annual fund operating expenses
(expenses deducted from portfolio assets)
-------------------------------------------------------------
Management fee 0.35% 0.35%
-------------------------------------------------------------
Distribution and service (12b-1) fees 0.25% 0.75%
-------------------------------------------------------------
Other expenses None None
-------------------------------------------------------------
Total annual fund operating expenses 0.60% 1.10%
-------------------------------------------------------------
</TABLE>
* You may buy Class A shares in amounts of $500,000 or more
at net asset value (without an initial charge) but if you
redeem those shares within 12 months of purchase you will
pay a deferred sales charge of 1.00%.
18 The Concert Allocation Series Prospectus
<PAGE>
Income Portfolio, continued
Example
- --------------------------------------------------------------------------------
The example
helps you com-
pare the costs
of investing in
the portfolio
with other mu-
tual funds.
Your actual
costs may be
higher or low-
er.
<TABLE>
<CAPTION>
Number of years you own
your shares 1 year* 3 years* 5 years* 10 years*
----------------------------------------------------------
<S> <C> <C> <C> <C>
Class A (with or without
redemption) $574 $835 $1,116 $1,915
----------------------------------------------------------
Class B (assuming
redemption at end of
period) $630 $857 $1,059 $1,952
----------------------------------------------------------
Class B (assuming no
redemption) $180 $557 $ 959 $1,952
----------------------------------------------------------
</TABLE>
*The example assumes:
.You invest $10,000 for the period shown
.Your investment has a 5% return each year
.You reinvest all distributions and dividends without a
sales charge
.The portfolio's operating expenses remain the same
.The expenses of the underlying Smith Barney funds are re-
flected.
19 The Concert Allocation Series Prospectus
<PAGE>
More on the Portfolios' Investments
Underlying funds
The following is a description of the investment objectives and principal in-
vestments of the underlying funds in which the portfolios invest.
The underlying funds that invest primarily in equity securities are:
Smith Barney Aggressive Growth Fund Inc. seeks capital appreciation by invest-
ing primarily in common stocks of companies the adviser believes are experienc-
ing, or have the potential to experience, growth in earnings that exceed the
average earnings growth rate of companies whose securities are included in the
Standard & Poor's 500 Index.
Smith Barney Appreciation Fund Inc. seeks long-term appreciation of shareholder
capital by investing primarily in equity securities of U.S. companies. The core
holdings of the fund are blue chip companies that are dominant in their indus-
tries.
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.
Smith Barney Contrarian Fund's investment objective is long-term growth of cap-
ital. The fund attempts to achieve its objective by investing primarily in cur-
rently price depressed, undervalued or out of favor common stock and other se-
curities, including debt securities that are convertible into common stock.
Large Cap Value Fund seeks current income and long-term growth of capital. The
fund invests primarily in common stocks of companies having a market capital-
ization of at least $5 billion that are considered by its adviser (i) to be un-
dervalued by the marketplace, (ii) to offer potential opportunities not yet
recognized by the marketplace, or (iii) to have been out of favor in the mar-
ketplace but that are poised to turn around because of a new management team,
product or business strategy.
Smith Barney Large Cap Blend Fund seeks long-term capital growth by investing
primarily in common stocks and other equity securities of large capitalization
companies with market capitalizations greater than $5 billion at the time of
investment that exhibit growth and/or value attributes.
Smith Barney Large Capitalization Growth Fund seeks long-term growth of capital
by investing in equity securities of large capitalization companies with market
capitalizations greater than $5 billion at the time of investment that are be-
lieved to afford attractive opportunities for investment growth.
Smith Barney Mid Cap Blend Fund seeks long-term growth of capital by investing
primarily in equity securities of medium-sized companies whose market capital-
izations are no greater than the market capitalizations of companies in the S&P
MidCap Index at the time of investment.
Concert Peachtree Growth Fund's investment objective is capital appreciation by
investing in securities believed to have above average potential for capital
appreciation. In attempting to achieve the fund's investment objective, the
fund uses 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.
Smith Barney Small Cap Blend Fund, Inc. seeks long-term capital appreciation by
investing primarily in the common stocks of U.S. companies with relatively
small market capitalizations at the time of investment.
Smith Barney Small Cap Value Fund seeks long-term growth of capital by invest-
ing primarily in equity securities of smaller capitalized companies whose mar-
ket capitalizations are no greater than the market capitalization of companies
in the Russell 2000 Value Index at the time of investment.
Smith Barney Natural Resources Fund Inc. seeks long-term capital appreciation
by investing primarily in equity and debt securities of issuers in a variety of
natural resources industries.
Smith Barney Premium Total Return Fund seeks to provide shareholders with total
return, consisting of long-term capital appreciation and income, by investing
primarily in a diversified portfolio of equity and fixed income securities.
Smith Barney Hansberger Global Value Fund seeks long-term capital growth by in-
vesting primarily in equity securities of companies in any country including
the United States which, in the opinion of its advisers, are undervalued. In-
come is an incidental consideration.
Smith Barney Hansberger Global Small Cap Value Fund seeks long-term capital
growth by investing primarily in equity securities of U.S. and foreign issuers
with relatively small market capitalizations which, in the opinion of its ad-
visers, are undervalued. Income is an incidental consideration.
20 The Concert Allocation Series Prospectus
<PAGE>
More on the Portfolios' Investments, continued
Emerging Markets Portfolio seeks long-term capital appreciation through a port-
folio invested primarily in securities of emerging country issuers.
International Equity Portfolio seeks total return on its assets from growth of
capital and income. The fund invests primarily in a diversified portfolio of
equity securities of foreign companies including exchange traded and over-the-
counter common stocks and preferred shares, debt securities convertible into
equity securities and rights and warrants relating to equity securities.
European Portfolio seeks long-term capital appreciation by investing primarily
in the equity securities of issuers based in European countries including coun-
tries located in Western Europe (e.g., France, Germany, Italy, the Netherlands,
Switzerland and the United Kingdom) and Eastern Europe (e.g., Czech Republic,
Hungary, Poland and the countries of the former Soviet Union).
Pacific Portfolio seeks long-term capital appreciation by investing primarily
in equity securities of companies in Australia, Hong Kong, India, Indonesia,
Japan, Malaysia, New Zealand, Pakistan, Papua New Guinea, the People's Republic
of China, the Philippines, Singapore, South Korea, Sri Lanka, Taiwan and Thai-
land.
The underlying funds that invest primarily in fixed income securities are:
Smith Barney High Income Fund seeks to provide shareholders with high current
income. Although growth of capital is not an investment objective of the fund,
its adviser may consider potential for growth as one factor, among others, in
selecting investments for the fund. The fund will seek high current income by
investing in high risk, high-yielding corporate bonds, debentures and notes de-
nominated in U.S. dollars or foreign currencies.
Smith Barney Investment Grade Bond Fund seeks to provide as high a level of
current income as is consistent with prudent investment management and preser-
vation of capital. The fund invests primarily in a portfolio of investment
grade bonds.
Smith Barney Government Securities Fund seeks high current return by investing
in obligations of, or securities guaranteed by, the U.S. government, its agen-
cies or instrumentalities (including, without limitation, treasury bills and
bonds, mortgage participation certificates issued by the Federal Home Loan
Mortgage Corporation ("FHLMC") and mortgage-backed securities issued by the
Government National Mortgage Association ("GNMA").
Short-Term High Grade Bond Fund seeks current income, preservation of capital
and liquidity. The fund seeks to achieve its objective by investing its assets
in corporate debt securities, bank obligations and securities issued by the
U.S. Government and its agencies and instrumentalities.
Smith Barney Managed Governments Fund Inc. seeks high current income consistent
with liquidity and safety of capital. The fund invests substantially all of its
assets in U.S. government securities. The fund's portfolio consists primarily
of mortgage-backed securities issued or guaranteed by GNMA, the Federal Na-
tional Mortgage Association ("FNMA") and FHLMC.
Smith Barney Diversified Strategic Income Fund seeks high current income pri-
marily through investment in fixed income securities, including high yield se-
curities. The fund attempts to achieve its objective by allocating and reallo-
cating its assets primarily among various types of fixed-income securities such
as: obligations issued or guaranteed as to principal and interest by the U.S.
government; mortgage-related securities issued by various governmental and non-
governmental entities; domestic and foreign corporate securities; and foreign
government securities.
Global Government Bond Portfolio seeks as high a level of current income and
capital appreciation as is consistent with its policy of investing principally
in high quality bonds of the U.S. and foreign governments.
Cash Portfolio is a money market fund that seeks maximum current income and
preservation of capital by investing in high quality U.S. dollar denominated
short-term debt securities.
Smith Barney Convertible Fund seeks current income and capital appreciation by
investing in investment and non-investment grade convertible securities and in
combinations of non-convertible fixed-income securities and warrants or call
options that together resemble convertible securities.
International Balanced Portfolio seeks a competitive total return on assets
from growth of capital and income through a portfolio invested primarily in se-
curities of established non-U.S. issuers.
Temporary defensive investments (all portfolios)
Each of the portfolios may depart from its principal investment strategies in
response to adverse market, economic or political conditions by taking tempo-
rary defensive positions in the Cash Portfolio, a series of Smith Barney Money
Funds, Inc., repurchase agreements or cash. If a portfolio takes a temporary
defensive position, it may be unable to achieve its investment objective.
21 The Concert Allocation Series Prospectus
<PAGE>
Investment Strategies and Related Risks
Portfolio turnover all portfolios
Each underlying fund may engage in active and frequent trading to achieve its
principal investment strategies. As a result, an underlying fund may realize
and distribute to a portfolio higher capital gains, which could increase the
tax liability for the portfolio's shareholders. Frequent trading also increases
transaction costs, which could detract from an underlying fund's performance.
Non-diversification
Each portfolio is not diversified, which means that it can invest a higher per-
centage of its assets in any one underlying fund than a diversified portfolio.
Being non-diversified may magnify a portfolio's losses from adverse events af-
fecting a particular underlying fund. However, each of the underlying funds
(except Global Government Bond Portfolio, International Balanced Portfolio and
Emerging Markets Portfolio) is diversified.
Changes in allocations
The underlying funds in which the portfolios may invest, and the range of as-
sets allocated to each fund, may be changed by the board of directors from time
to time. Similarly, the target allocation between equity and fixed income ori-
ented investments may be adjusted from time to time. If the target limits for
investment in a particular fund are exceeded or are not met because of cash
flows or changes in the market value of the shares of the underlying funds, the
investment manager may but is not required to adjust the portfolio's holdings.
High yield securities
Certain of the underlying funds can invest all or a portion of their assets in
high yield securities. High yield securities involve a substantial risk of
loss. These securities are considered speculative with respect to the issuer's
ability to pay interest and principal and are susceptible to default or decline
in market value because of adverse economic and business developments. The mar-
ket values for high yield securities tend to be very volatile, and these secu-
rities are less liquid than investment grade debt securities. Underlying funds
that hold these issues are subject to the following specific risks:
. Increased price sensitivity to changing interest rates
. Greater risk of loss because of default or declining credit quality
. Adverse company specific events are more likely to render the issuer unable
to make interest and/or principal payments
. A negative perception of the high yield market may develop, depressing the
price and liquidity of high yield securities. This negative perception could
last for a significant period of time
Foreign securities
Certain of the underlying funds focus upon foreign securities and other under-
lying funds may invest a portion of their assets outside the U.S. Investing in
non-U.S. issuers involves unique risks compared to investing in the securities
of U.S. issuers. These risks are more pronounced to the extent a fund invests
in issuers in countries with emerging markets. These risks may include:
. Less information about non-U.S. issuers or markets may be available because
of less rigorous disclosure and accounting standards or regulatory practices
. Many non-U.S. markets are smaller, less liquid and more volatile than U.S.
markets. In a changing market, the adviser may not be able to sell the fund's
portfolio securities in amounts and at prices the adviser considers
reasonable
. The U.S. dollar may appreciate against non-U.S. currencies or a foreign
government may impose restrictions on currency conversion or trading
. The economies of non-U.S. countries may grow at a slower rate than expected
or may experience a downturn or recession
. Economic, political and social developments may adversely affect the
securities markets
. Foreign governmental obligations may involve the risk of debt moratorium,
repudiation or renegotiation and the fund may be unable to enforce its rights
against the issuers
Small capitalization issuers
Certain of the underlying funds focus on small capitalization companies. In-
vesting in small companies involves unique risks. Compared to large companies,
small companies, and the market for their common stocks, are likely to:
. Be more sensitive to changes in the economy, earnings results and investor
expectations
. Have more limited product lines and capital resources
. Experience sharper swings in market values
. Be harder to sell at the times and prices the fund thinks appropriate
. Offer greater potential for gain and loss
22 The Concert Allocation Series Prospectus
<PAGE>
Investment Strategies and Related Risks, continued
Derivatives
Certain of the underlying funds may, but need not, use derivative contracts,
such as futures and options on securities, securities indices or currencies;
options on these futures; forward currency contracts; and interest rate or cur-
rency swaps for any of the following purposes:
. To hedge against the economic impact of adverse changes in the market value
of its securities, because of changes in stock market prices, currency
exchange rates or interest rates
. As a substitute for buying or selling securities
A derivative contract will obligate or entitle an underlying fund to deliver or
receive an asset or cash payment based on the change in value of one or more
securities, currencies or indices. Even a small investment in derivative con-
tracts can have a big impact on an underlying fund's stock market, currency and
interest rate exposure. Therefore, using derivatives can disproportionately in-
crease losses and reduce opportunities for gains when stock prices, currency
rates or interest rates are changing. The underlying fund may not fully benefit
from or may lose money on derivatives if changes in their value do not corre-
spond accurately to changes in the value of the fund's holdings. The other par-
ties to certain derivative contracts present the same types of credit risk as
issuers of fixed income securities. Derivatives can also make the underlying
fund less liquid and harder to value, especially in declining markets.
Investment policies (all portfolios)
Each portfolio's investment policies, including the particular underlying funds
in which each portfolio may invest and the equity/fixed income targets applica-
ble to each portfolio, generally may be changed by the board of directors with-
out shareholder approval.
23 The Concert Allocation Series Prospectus
<PAGE>
Management
Portfolio manager
The portfolios' investment manager is SSBC Fund Management, Inc., an affiliate
of Salomon Smith Barney Inc. The manager's address is 388 Greenwich Street, New
York, NY 10013. The manager selects the portfolios' investments and oversees
their operations. The manager and Salomon Smith Barney are subsidiaries of
Citigroup Inc. Citigroup businesses produce a broad range of financial services
and asset management, banking and consumer finance, credit and charge cards,
insurance, investments, investment banking and trading and use diverse
channels to make them available to consumer and corporate customers around the
world.
R. Jay Gerken, a Managing Director of Salomon Smith Barney, has been responsi-
ble for the day-to-day operations of the portfolios since inception. Mr. Gerken
has been with Salomon Smith Barney or companies that are now part of Salomon
Smith Barney since 1988.
Management fees
Management fees paid during the fiscal year ended January 31, 1999*
(as % of average daily net assets)
<TABLE>
<CAPTION>
Global High Growth Growth Balanced Conservative Income
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
0.35% 0.35% 0.35% 0.35% 0.35% 0.35%
- --------------------------------------------------------------------------------------
</TABLE>
*For more information regarding the management fees of the underlying funds,
please consult the Statement of Additional Information ("SAI").
Distributor
The portfolios have entered into an agreement with CFBDS, Inc. to distribute
the portfolios' shares. Through a selling agreement, PFS Investments Inc. sells
portfolio shares to the public.
Distribution plans
The portfolios each have adopted Rule 12b-1 distribution plans for their Class
A and B shares. Under each plan, the portfolio pays distribution and service
fees. These fees are an ongoing expense and, over time, may cost you more than
other types of sales charges.
Year 2000 issue
Information technology experts are concerned about computer systems' ability to
process date-related information on and after January 1, 2000. This situation,
commonly known as the "Year 2000" issue, could have an adverse impact on the
portfolios. The cost of addressing the Year 2000 issue, if substantial, could
adversely affect companies and governments that issue securities held by the
underlying funds. The manager, Salomon Smith Barney and distributor are ad-
dressing the Year 2000 issue for their systems. Each portfolio has been in-
formed by its other service providers that they are taking similar measures.
Although the portfolios do not expect the Year 2000 issue to adversely affect
them, the portfolios cannot guarantee that the efforts of each portfolio or its
service providers to correct the problem will be successful.
Possible conflict of interest
The Directors and officers of the Concert Series also serve in similar posi-
tions with many of the underlying Smith Barney funds. Thus, if the interests of
a portfolio and the underlying funds were ever to become divergent, it is pos-
sible that a conflict of interest could arise and affect how the directors and
officers of the Concert Series fulfill their fiduciary duties to that portfolio
and the underlying funds. The Directors of the Concert Series believe they have
structured each portfolio to avoid these concerns. However, conceivably a situ-
ation could occur where proper action for the Concert Series or a portfolio
separately could be adverse to the interests of an underlying fund, or the re-
verse could occur. If such a possibility arises, the directors and officers of
the Concert Series, the affected underlying funds and SSBC will carefully ana-
lyze the situation and take all steps they believe reasonable to minimize, and
where possible eliminate, the potential conflict. Moreover, limitations on ag-
gregate investments in the underlying funds have been adopted by the Concert
Series to minimize this possibility, and close and continuous monitoring will
be exercised to avoid, insofar as is possible, these concerns.
24 The Concert Allocation Series Prospectus
<PAGE>
Choosing a Class of Shares to Buy
Share classes
- --------------------------------------------------------------------------------
You can choose between two classes of shares: Classes A and B. Each class has
different sales charges and expenses, allowing you to choose the class that
best meets your needs. Which class is more beneficial to an investor depends on
the amount and intended length of the investment.
. If you plan to invest regularly You may buy shares from:
or in large amounts, buying
Class A shares may help you re- . Initial purchases of shares of
duce sales charges and ongoing the portfolios must be made
expenses. through a PFS Investments Reg-
istered Representative.
. For Class B shares, all of your
purchase amount will be immedi-
ately invested. This may help
offset the higher expenses of
Class B shares, but only if the
fund performs well.
. Because Class B shares convert
to Class A shares, Class B
shares may be more attractive
to long-term investors.
Investment minimums
- --------------------------------------------------------------------------------
Minimum initial
and additional
investment
amounts vary
depending on the
class of shares
you buy and the
nature of your
investment
account.
<TABLE>
<CAPTION>
Initial Additional
----------------------------------------------------------
Classes A
and B Both Classes
----------------------------------------------------------
<S> <C> <C>
General $1,000 $50
----------------------------------------------------------
IRAs, Self Employed Retirement Plans,
Uniform Gift to Minor Accounts $ 250 $50
----------------------------------------------------------
Qualified Retirement Plans(*) $ 25 $25
----------------------------------------------------------
Systematic Investment Plans $ 25 $25
----------------------------------------------------------
</TABLE>
(*) Qualified Retirement Plans are qualified under Section
403(b)(7) or Section 401(a) of the Internal Revenue Code,
including 401(k) plans
25 The Concert Allocation Series Prospectus
<PAGE>
Comparing the Portfolios' Classes
Your PFS Investments Registered Representative can help you decide which class
meets your goals. They may receive different compensation depending upon which
class you choose.
Key features Class A Class B
. Initial . No
sales initial
charge sales
charge
. You may
qualify . Deferred
for sales
reduction charge
or waiver declines
of over time
initial
sales . Converts
charge to Class
A shares
. Lower after 8
annual years
expenses
than
Class B
and Class L
. Higher
annual
expenses
than
Class A
- --------------------------------------------------------------------------------
Initial sales Up to 5%, None
charge reduced for
large pur-
chases and
waived for
certain in-
vestors; no
charge for
purchases
of $500,000
or more
- --------------------------------------------------------------------------------
Deferred 1% on pur- Up to 5%
sales charge chases of charged
$500,000 or when you
more if you redeem
redeem shares. The
within 1 charge is
year of reduced
purchase over time
and there
is no de-
ferred
sales
charge af-
ter 6 years
- --------------------------------------------------------------------------------
Annual 0.25% of 1% of
distribution average average
and service daily net daily net
fees assets assets
- --------------------------------------------------------------------------------
Exchangeable Class A Class B
into(*) shares of shares of
most Smith most Smith
Barney Barney
funds funds
- --------------------------------------------------------------------------------
(*) Ask your PFS Investments Registered Representative for the Smith Barney
funds available for exchange.
26 The Concert Allocation Series Prospectus
<PAGE>
Sales Charge: Class A Shares
Class A sales charge
You buy Class A shares at the offering price, which is the net asset value plus
a sales charge. You pay a lower sales charge as the size of your investment in-
creases to certain levels called breakpoints. You do not pay a sales charge on
the fund's distributions or dividends you reinvest in additional Class A
shares.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For High Growth
Portfolio,
Growth Portfolio, For Conservative
Global Portfolio Portfolio
and Balanced Portfolio and Income Portfolio
- --------------------------------------------------------------------------------
Sales Charge as a % of Sales Charge as a % of
- --------------------------------------------------------------------------------
Offering Net amount Offering Net amount
Amount of purchase price (%) invested (%) price (%) invested (%)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than $25,000 5.00% 5.26% 4.50% 4.71%
- --------------------------------------------------------------------------------
$25,000 but less than 4.00 4.17 4.00 4.17
- --------------------------------------------------------------------------------
$50,000 but less than 3.50 3.63 3.50 3.63
- --------------------------------------------------------------------------------
$100,000 but less than 3.00 3.09 2.50 2.56
- --------------------------------------------------------------------------------
$250,000 but less than 2.00 2.04 1.50 1.52
- --------------------------------------------------------------------------------
$500,000 or more(*) -0- -0- -0- -0-
- --------------------------------------------------------------------------------
</TABLE>
(*) You do not pay an initial sales charge when you buy $500,000 or more of
Class A shares. However, if you redeem these Class A shares within one year of
purchase, you will pay a deferred sales charge of 1%.
Qualifying for a reduced Class A sales charge. There are several ways you can
combine multiple purchases of Class A shares of Smith Barney funds to take ad-
vantage of the breakpoints in the sales charge schedule.
Accumulation privilege--lets you combine the current value of Class A shares
owned
. by you, or
. by members of your immediate family,
and for which a sales charge was paid, with the amount of your next pur-
chase of Class A shares for purposes of calculating the initial sales charge.
Certain trustees and fiduciaries may be entitled to combine accounts in deter-
mining their sales charge.
Letter of intent--lets you purchase Class A shares of the fund and other Smith
Barney funds over a 13-month period and pay the same sales charge, if any, as
if all shares had been purchased at once. You may include purchases on which
you paid a sales charge made within 90 days before you sign the letter.
Waivers for certain Class A investors Class A initial sales charges are waived
for certain types of investors, including:
. Employees of members of the NASD
. 403(b) or 401(k) retirement plans, if certain conditions are met
. Investors who redeemed Class A shares of a Smith Barney fund in the past 60
days, if your PFS Investments Registered Representative is notified
. Participants in the Primerica Corporation Savings and Retirement Plan
. Investors who purchase through a PFS Investments Registered Representative
with proceeds from a prior mutual fund redemption if certain conditions are
met
If you want to learn about additional waivers of Class A initial sales charges,
contact your PFS Investments Registered Representative or consult the SAI.
27 The Concert Allocation Series Prospectus
<PAGE>
Sales Charge: Class B Shares
Class B deferred sales charge
You buy Class B shares at net asset value without paying an initial sales
charge. However, if you redeem your Class B shares within six years of pur-
chase, you will pay a deferred sales charge. The deferred sales charge de-
creases as the number of years since your purchase increases.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year after purchase
- -----------------------------------------------------------------------------
6th
Deferred sales charge for: 1st 2nd 3rd 4th 5th through 8th
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Conservative and Income Portfolios 4.50% 4.00% 3.00% 2.00% 1.00% -0-
- -----------------------------------------------------------------------------
All other portfolios 5.00% 4.00% 3.00% 2.00% 1.00% -0-
- -----------------------------------------------------------------------------
</TABLE>
Class B conversion
After 8 years, Class B shares automatically convert into Class A shares. This
helps you because Class A shares have lower annual expenses. Your Class B
shares will convert to Class A shares as follows:
- --------------------------------------------------------------------------------
Shares issued at initial purchase
- --------------------------------------------------------------------------------
. Eight years after the date of purchase
Shares issued: On reinvestment of distributions and dividends
- --------------------------------------------------------------------------------
. In same proportion that the number of Class B shares converting is to total
Class B shares you own
Shares issued: Upon exchange from another Smith Barney fund
- --------------------------------------------------------------------------------
. On the date the shares originally acquired would have converted into Class A
shares
- --------------------------------------------------------------------------------
28 The Concert Allocation Series Prospectus
<PAGE>
More About Deferred Sales Charges
The deferred sales charge is based on the net asset value at the time of pur-
chase or redemption, whichever is less, and therefore you do not pay a sales
charge on amounts representing appreciation or depreciation.
In addition, you do not pay a deferred sales charge on:
. Shares exchanged for shares of certain Smith Barney funds
. Shares representing reinvested distributions and dividends
. Shares no longer subject to the deferred sales charge
If you redeemed shares of a Smith Barney fund in the past 60 days and paid a
deferred sales charge, you may buy shares of the fund at the current net asset
value and be credited with the amount of the deferred sales charge, if you no-
tify your PFS Investments Registered Representative.
PFS Distributors Inc., an affiliate of PFS Investments Inc. receives deferred
sales charges as reimbursement for shares sold, in-
cluding the payment of compensation to your PFS Investments Registered
Representative.
Deferred sales charge waivers
If you want to learn more about additional waivers of deferred sales charges,
contact your PFS Investments Registered Representative or consult the SAI.
The deferred sales charge for each share class will generally be waived:
. On payments made through certain systematic withdrawal plans
. On certain distributions from a retirement plan
. For involuntary redemptions of small account balances
. For 12 months following the death or disability of a shareholder
29 The Concert Allocation Series Prospectus
<PAGE>
Buying Shares
Buying shares by mail
. Initial purchases of shares of each fund must be made through a PFS Invest-
ments Registered Representative by completing the appropriate application.
The completed application should be forwarded to the Fund's subtransfer
agent, PFS Shareholder Services. Subsequent investments may be sent by mailing
directly to PFS Shareholder Services.
Buying shares by telephone
. Upon completion of certain automated systems, you will be able to elect
telephone transactions on your account application an to call
PFS Shareholder Services and request a purchase through a transfer
from your bank account. Telephone purchases can be made between 8:00 a.m. and
8:00 p.m. eastern time on any day the New York Stock Exchange is open. Pur-
chase orders received after the close of regular trading on the Exchange are
priced at the net asset value next determined. The minimum telephone invest-
ment is $250 and the maximum is $10,000. You will be charged a fee if you
have insufficient funds to complete the investment.
. The address and telephone number of PFS Shareholder Services is: 3100 Breck-
inridge Blvd., Bldg. 200, Duluth, Georgia 30099-0062; (800) 544-5445.
. You may also reach PFS Shareholder Services by calling (800) 544-7278 for
Spanish speaking representative or (800) 824-1721 for the TDD Line for the
hearing impaired.
. Checks drawn on foreign banks must be payable in U.S. dollars and have the
routing number of the U.S. bank encoded on the check.
Buying shares by wire
Initial purchases of shares for $10,000 may be made by wire order from your
bank account. Contact your PFS Investments Registered Representative for
details. In addition, once
an account is open, you may make additional wire orders through your PFS
Shareholder Services.
Through a systematic investment plan
You may authorize PFS Shareholder Services to transfer funds automatically from
a regular bank account, or other financial institution to buy shares of a fund.
. Amounts transferred should be at least $25 monthly
. If you do not have sufficient funds in your account on a transfer date, PFS
Shareholder Services may charge you a fee
For more information, contact your PFS Investments Registered Representative or
consult the SAI.
30 The Concert Allocation Series Prospectus
<PAGE>
Exchanging Shares
You should contact your PFS Investments Registered Representative to exchange
into other eligible Smith Barney funds. Be sure to read the prospectus of the
Smith Barney fund you are exchanging into. An exchange is a taxable transac-
tion.
. You may exchange shares only for shares of the same class of another Smith
Barney fund. Not all Smith Barney funds offer all classes.
. Not all Smith Barney funds may be offered for sale in your state of resi-
dence. Contact your PFS Investments Registered Representative.
. You must meet the minimum investment amount for each fund.
. If you hold share certificates, the transfer agent must receive the certifi-
cates endorsed for transfer or with signed stock powers (documents transfer-
ring ownership of certificates) before the exchange is effective.
. The fund may suspend or terminate your exchange privilege if you engage in an
excessive pattern of exchanges.
Waiver of additional sales charges
Your shares will not be subject to an initial sales charge at the time of the
exchange.
Your deferred sales charge (if any) will continue to be measured from the date
of your original purchase. If the fund you exchange into has a higher deferred
sales charge, you will be subject to that charge. If you exchange at any time
into a fund with a lower charge, the sales charge will not be reduced.
By telephone
Upon completion of certain automated systems, you will be able to
exchange shares by telephone if you elect telephone transactions on
your account application. Telephone exchanges are subject to the same limita-
tions as telephone redemptions.
To learn more about the exchange privilege and Smith Barney mutual funds you
may be eligible to exchange into, contact your PFS Investments Registered Rep-
resentative or consult the SAI.
31 The Concert Allocation Series Prospectus
<PAGE>
Redeeming Shares
Redemptions by mail
Generally, a properly completed Redemption Form with any required signature
guarantee is all that is required for a redemption. In some cases, however,
other documents may be necessary.
You may redeem some or all of your shares by sending a Redemption Form or other
written request in proper form to PFS Shareholder Services, 3100 Breckinridge
Blvd., Bldg. 200, Duluth, Georgia 30099-0062. You may also reach PFS Share-
holder Services by calling (800) 544-5445 or (800) 544-7278 for Spanish speak-
ing representatives or (800) 824-1721 for the TDD Line for the hearing im-
paired. The written request for redemption must be in good order. This means
that you have provided the following information. Your request will not be
processed without this information.
.Name of the fund
.Account number
.Dollar amount or number of shares to redeem
.Signature of each owner exactly as account is registered
.Other documentation required by PFS Shareholder Services
To be in good order, your request must include a signature guarantee if:
.The proceeds of the redemption exceed $50,000
.The proceeds are not paid to the record owner(s) at the record address
.The shareholder(s) has had an address change in the past 45 days
.The shareholder(s) is a corporation, sole proprietor, partnership, trust or
fiduciary
You can obtain a signature guarantee from most banks, dealers, brokers, credit
unions and federal savings and loans, but not from a notary public.
In all cases, your redemption price is the net asset value next determined af-
ter your request is received in good order. Redemption proceeds normally will
be sent within three days. However, if you recently purchased your shares by
check, your redemption proceeds will not be sent to you until your original
check clears, which may take up to 15 days. Any request that your redemption
proceeds be sent to a destination other than your bank account or address of
record must be in writing and must include signature guarantees.
Redemptions by telephone
You may redeem shares by telephone if you elect the telephone transaction op-
tion on your account application. This is available only for redemptions of
$50,000 or less, and the proceeds must be mailed to your address of record. In
addition, you must be able to provide proper identification information. You
may not redeem by telephone if your address has changed within the past 45 days
or if your shares are in certificate form. Telephone redemption requests may be
made by calling PFS Shareholder Services at (800) 544-5445 between 8:00 a.m.
and 8:00 p.m. eastern time on any day the New York Stock Exchange is open. Re-
quests received after the close of regular trading on the New York Stock Ex-
change are priced at the net asset value next computed. If telephone redemp-
tions are not available for any reason, you may use the Fund's regular redemp-
tion procedure described above.
Payment of redemption proceeds
Whether you redeem by mail, fax or telephone, your redemption proceeds can be
sent by check to your address of record or by wire transfer to a bank account
designated on your application. You will be charged for wire transfers and for
transfers made directly to your bank by the Automated Clearinghouse (ACH).
Automatic cash withdrawal plan
You can arrange for the automatic redemption of a portion of your shares on a
monthly or quarterly basis. To qualify you must own shares of the fund with a
value of at least $10,000 ($5,000 for retirement plan accounts) and each auto-
matic redemption must be at least $50. If your shares are subject to a deferred
sales charge, the sales charge will be waived if your automatic payments are
equal to or less than 1% per month of the value of your shares subject to a de-
ferred sales charge. The following conditions apply:
.Shares may not be represented by certificates
.All dividends and distributions must be reinvested
.You can establish a withdrawal plan for a retirement account only if you are
eligible to receive distributions from the account
32 The Concert Allocation Series Prospectus
<PAGE>
Other Things To Know About Share Transactions
Each portfolio has the right to:
. Suspend the offering of shares
. Waive or change minimum and additional investment amounts
. Reject any purchase or exchange order
. Change, revoke or suspend the exchange privilege
. Suspend telephone transactions
. Suspend or postpone redemptions of shares on any day when trading on the New
York Stock Exchange is restricted, or as otherwise permitted by the Securi-
ties and Exchange Commission.
. Pay redemption proceeds by giving you securities. You may pay transaction
costs to dispose of the securities
Small account balances
If your account balance falls below $500 because of redemption of fund shares,
the fund may ask you to bring your account up to the minimum require-
ment. If your account balance is still below $500 after 60 days, the fund may
close your account and send you the redemption proceeds.
Excessive exchange transactions
The manager may determine that a pattern of frequent exchanges is detrimental
to a portfolio's performance and other shareholders. If so, the portfolio may
limit additional purchases and/or exchanges by the shareholder.
Share certificates
The portfolios do not issue share certificates unless a written request signed
by all registered owners is made to the transfer agent. If you hold share cer-
tificates, it will take longer to exchange or redeem shares.
33 The Concert Allocation Series Prospectus
<PAGE>
Distributions, Dividends and Taxes
Dividends and distributions
Annual distributions of capital gain normally take place at the end of the year
in which the gain is realized or the beginning of the next year.
The portfolios normally pay dividends and distribute capital gains, if any, as
follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Income Dividend Capital Gain Distributions
Portfolio Distributions Distributions Mostly From
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Global Annually Annually Gain
- ---------------------------------------------------------------------------------------
High Growth Annually Annually Gain
- ---------------------------------------------------------------------------------------
Growth Annually Annually Gain
- ---------------------------------------------------------------------------------------
Balanced Quarterly Annually Gain
- ---------------------------------------------------------------------------------------
Conservative Quarterly Annually Income
- ---------------------------------------------------------------------------------------
Income Monthly Annually Income
- ---------------------------------------------------------------------------------------
</TABLE>
The portfolios may pay additional distributions and dividends at other times if
necessary for a portfolio to avoid a federal tax. Capital gain distributions
and dividends are reinvested in additional portfolio shares of the same class
that you hold. You do not pay a sales charge on reinvested distributions or
dividends. Alternatively, you can instruct your PFS Investments Registered Rep-
resentative to have your distributions and/or dividends paid in cash. You can
change your choice at any time to be effective as of the next distribution or
dividend, except that any change given to the transfer agent less than five
days before the payment date will not be effective until the next distribution
or dividend is made.
Taxes
In general, redeeming shares, exchanging shares and receiving distributions
(whether in cash or additional shares) are all taxable events.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Federal income tax
Transaction status
- --------------------------------------------------------------
<S> <C>
Redemption or exchange of shares Usually capital gain or
loss; long-term only if
shares owned more than
one year
- --------------------------------------------------------------
Long-term capital gain distributions Long-term capital gain
- --------------------------------------------------------------
Short-term capital gain distributions Ordinary income
- --------------------------------------------------------------
Dividends Ordinary income
- --------------------------------------------------------------
</TABLE>
Long-term capital gain distributions are taxable to you as long-term capital
gain regardless of how long you have owned your shares. You may want to avoid
buying shares when a portfolio is about to declare a long-term capital gain
distribution or a taxable dividend, because it will be taxable to you even
though it may actually be a return of a portion of your investment.
After the end of each year, the portfolios will provide you with information
about the distributions and dividends you received and any redemptions of
shares during the previous year. If you do not provide a portfolio with your
correct taxpayer identification number and any required certifications, you may
be subject to back-up withholding of 31% of your distributions, dividends and
redemption proceeds. Because each shareholder's circumstances are different and
special tax rules may apply, you should consult your tax adviser about your in-
vestment in a portfolio.
34 The Concert Allocation Series Prospectus
<PAGE>
Share Price
You may buy, exchange or redeem portfolio shares at their net asset value, plus
any applicable sales charge, next determined after receipt of your request in
good order. Each portfolio's net asset value is the value of its assets minus
its liabilities. Net asset value is calculated separately for each class of
shares. Each portfolio calculates its net asset value every day the New York
Stock Exchange is open. The Exchange is closed on certain holidays listed in
the SAI. This calculation is based on the net asset value of the underlying
funds, which is calculated when regular trading closes on the Exchange (nor-
mally 4:00 p.m., Eastern time).
Each portfolio and underlying fund generally values its fund securities based
on market prices or quotations. When reliable market prices or quotations are
not readily available, the fund may price those securities at fair value. Fair
value is determined in accordance with procedures approved by the fund's board.
A fund that uses fair value to price securities may value those securities
higher or lower than another fund using market quotations to price the same se-
curities.
Short-term investments that have a maturity of more than 60 days are generally
valued based on market prices or quotations. Short-term investments that have a
maturity of 60 days or less are valued at amortized cost. Using this method, a
portfolio and underlying fund constantly amortizes over the remaining life of a
security the difference between the principal amount due at maturity and the
cost of the security to the portfolio and underlying fund.
In order to buy, redeem or exchange shares at that day's price, you must place
your order with a PFS Shareholder Services Representative before the New
York Stock Exchange closes. If the Exchange closes early, you must place your
order prior to the actual closing time. Otherwise, you will receive the next
business day's price.
Salomon Smith Barney or members of the portfolios' selling group must transmit
all orders to buy, exchange or redeem shares to the portfolios' agent before
the agent's close of business.
35 The Concert Allocation Series Prospectus
<PAGE>
Financial Highlights
The financial
highlights ta-
bles are in-
tended to help
you understand
the performance
of each portfo-
lio's classes
since incep-
tion. Certain
information re-
flects finan-
cial results
for a single
share. Total
return repre-
sents the rate
that a share-
holder would
have earned (or
lost) on a fund
share assuming
reinvestment of
all dividends
and distribu-
tions. The in-
formation in
the following
tables was au-
dited by KPMG
LLP, indepen-
dent auditors,
whose report,
along with the
fund's finan-
cial statement
is included in
the annual re-
port (available
upon request).
No information
is presented
for Class Y
shares of any
portfolio be-
cause no Class
Y shares were
outstanding for
the years
shown.
For a share of each class of capital stock
outstanding throughout each year ending
January 31:
Global Portfolio(1)
- -------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Class B Shares
1999(2) 1999(2)
-------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of
period $11.40 $11.40
-------------------------------------------------------------
Income from operations:
Net investment income (loss) (3) 0.07 0.00*
Net realized and unrealized gain (0.26) (0.24)
-------------------------------------------------------------
Total distributions (0.19) (0.24)
-------------------------------------------------------------
Less distributions from:
Net investment income (0.04) --
Net realized gains (0.01) (0.01)
-------------------------------------------------------------
Total distributions (0.05) (0.01)
-------------------------------------------------------------
Net asset value, end of period $11.16 $11.15
-------------------------------------------------------------
Total return(4) (1.60)% (2.16)%
-------------------------------------------------------------
Net assets, end of year (000's) $10,766 $9,220
-------------------------------------------------------------
Ratios to average net assets(5):
Expenses 0.59% 1.32%
Net investment income 0.80 0.06
-------------------------------------------------------------
Portfolio turnover rate 0% 0%
-------------------------------------------------------------
</TABLE>
(1) For the period from March 9, 1998 (inception date) to
January 31, 1999.
(2) Per share amounts have been calculated using the monthly
average shares method.
(3) Net investment income (loss) per share includes short-
term capital gain distributions from underlying funds.
(4) Total return is not annualized, as it may not be
representative of the total return for the year.
(5) Annualized.
* Amount represents less than $0.01.
High Growth Portfolio
<TABLE>
----------------------------------------------------------------------------------------------------
<CAPTION>
Class A Shares Class B Shares
1999(1) 1998 1997(2) 1999(1) 1998 1997(2)
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $12.97 $12.41 $11.40 $12.95 $12.41 $11.40
----------------------------------------------------------------------------------------------------
Income from operations:
Net investment income
(loss)(3) 0.09 0.11 0.20 (0.01) 0.03 0.08
Net realized and
unrealized gain 2.36 0.91 1.05 2.35 0.89 1.04
----------------------------------------------------------------------------------------------------
Total Income from
operations 2.45 1.02 1.25 2.34 0.92 1.12
----------------------------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.08) (0.13) (0.20) -- (0.05) (0.07)
Net realized gains (0.48) (0.33) (0.04) (0.48) (0.33) (0.04)
----------------------------------------------------------------------------------------------------
Total distributions (0.56) (0.46) (0.24) (0.48) (0.38) (0.11)
----------------------------------------------------------------------------------------------------
Net asset value, end of
year $14.86 $12.97 $12.41 $14.81 $12.95 $12.41
----------------------------------------------------------------------------------------------------
Total return 19.15% 8.25% 11.04%(4) 18.30% 7.44% 9.91%(4)
----------------------------------------------------------------------------------------------------
Net assets, end of year
(000's) $365,225 $259,212 $ 154,069 $318,101 $230,142 $141,241
----------------------------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.60% 0.60% 0.60%(5) 1.35% 1.35% 1.35%(5)
Net investment income
(loss) 0.68 1.00 2.79(5) (0.07) 0.25 2.04(5)
----------------------------------------------------------------------------------------------------
Portfolio turnover rate 21% 39% 0% 21% 39% 0%
----------------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly
average shares method.
(2) For the period from February 5, 1996 (inception date) to
January 31, 1997.
(3) Net investment income (loss) per share includes short-
term capital gain distributions from underlying funds.
(4) Total return is not annualized, as it may not be
representative of the total return for the year.
(5) Annualized.
36 The Concert Allocation Series Prospectus
<PAGE>
Financial Highlights, continued
Growth Portfolio
<TABLE>
<CAPTION>
Class A Shares Class B Shares
1999(1) 1998 1997(2) 1999(1) 1998 1997(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $12.99 $12.32 $11.40 $13.00 $12.33 $11.40
- --------------------------------------------------------------------------------
Income from operations:
Net investment
income(3) 0.26 0.31 0.33 0.16 0.22 0.23
Net realized and
unrealized gain 1.82 1.14 0.92 1.82 1.12 0.94
- --------------------------------------------------------------------------------
Total Income from
operations 2.08 1.45 1.25 1.98 1.34 1.17
- --------------------------------------------------------------------------------
Less distributions
from:
Net investment income (0.27) (0.32) (0.31) (0.13) (0.21) (0.22)
Net realized gains (0.37) (0.46) (0.02) (0.37) (0.46) (0.02)
- --------------------------------------------------------------------------------
Total distributions (0.64) (0.78) (0.33) (0.50) (0.67) (0.24)
- --------------------------------------------------------------------------------
Net asset value, end of
year $14.43 $12.99 $12.32 $14.48 $13.00 $12.33
- --------------------------------------------------------------------------------
Total return 16.20% 11.82% 11.08%(4) 15.40% 10.93% 10.32%(4)
- --------------------------------------------------------------------------------
Net assets, end of year
(000's) $391,235 $279,842 $ 161,026 $452,943 $343,474 $ 211,434
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.60% 0.60% 0.60%(5) 1.35% 1.35% 1.35%(5)
- --------------------------------------------------------------------------------
Net investment income 1.93 2.77 4.79(5) 1.18 1.96 4.04(5)
- --------------------------------------------------------------------------------
Portfolio turnover rate 10% 41% 0% 10% 41% 0%
- --------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
distributions from underlying funds.
(4) Total return is not annualized, as it may not be representative of the
total return for the year.
(5) Annualized.
37 The Concert Allocation Series Prospectus
<PAGE>
Financial Highlights, continued
Balanced Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Class B Shares
1999(1) 1998 1997(2) 1999(1) 1998 1997(2)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $12.62 $12.14 $11.40 $12.61 $12.14 $11.40
- -------------------------------------------------------------------------------
Income from operations:
Net investment
income(3) 0.42 0.58 0.45 0.32 0.48 0.37
Net realized and
unrealized gain 0.73 0.80 0.74 0.74 0.80 0.74
- -------------------------------------------------------------------------------
Total Income from
operations 1.15 1.38 1.19 1.06 1.28 1.11
- -------------------------------------------------------------------------------
Less distributions
from:
Net investment income (0.45) (0.54) (0.45) (0.35) (0.45) (0.37)
Net realized gains (0.37) (0.36) -- (0.37) (0.36) --
- -------------------------------------------------------------------------------
Total distributions (0.82) (0.90) (0.45) (0.72) (0.81) (0.37)
- -------------------------------------------------------------------------------
Net asset value, end of
year $12.95 $12.62 $12.14 $12.95 $12.61 $12.14
- -------------------------------------------------------------------------------
Total return 9.33% 11.59% 10.64%(4) 8.62% 10.67% 9.90%(4)
- -------------------------------------------------------------------------------
Net assets, end of year
(000's) $227,674 $166,806 $90,938 $247,733 $193,791 $111,918
- -------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.60% 0.60% 0.60%(5) 1.35% 1.35% 1.35%(5)
Net investment income 3.24 4.79 4.88(5) 2.50 3.96 4.14(5)
- -------------------------------------------------------------------------------
Portfolio turnover rate 10% 23% 0% 10% 23% 0%
- -------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
distributions from underlying funds.
(4) Total return is not annualized, as it may not be representative of the
total return for the year.
(5) Annualized.
38 The Concert Allocation Series Prospectus
<PAGE>
Conservative Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Class B Shares
1999(1) 1998 1997(2) 1999(1) 1998 1997(2)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $12.17 $11.90 $11.46 $12.16 $11.89 $11.46
- -------------------------------------------------------------------------------
Income from operations:
Net investment income(3) 0.58 0.73 0.53 0-.52 0.66 0.48
Net realized and unrealized
gain 0.11 0.63 0.43 0.10 0.64 0.42
- -------------------------------------------------------------------------------
Total Income from operations 0.69 1.36 0.96 0.62 1.30 0.90
- -------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.58) (0.69) (0.52) (0.52) (0.63) (0.47)
Net realized gains (0.24) (0.40) -- (0.24) (0.40) --
- -------------------------------------------------------------------------------
Total distributions (0.82) (1.09) (0.52) (0.76) (1.03) (0.47)
- -------------------------------------------------------------------------------
Net asset value, end of year $12.04 $12.17 $11.90 $12.02 $12.16 $11.89
- -------------------------------------------------------------------------------
Total return 5.85% 11.70% 8.57%(4) 5.22% 11.21% 8.03%(4)
- -------------------------------------------------------------------------------
Net assets, end of year
(000's) $71,583 $51,233 $30,478 $64,983 $48,584 $28,297
- -------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.60% 0.60% 0.60%(5) 1.09% 1.10% 1.10%(5)
Net investment income 4.80 6.17 5.66(5) 4.31 5.67 5.16(5)
- -------------------------------------------------------------------------------
Portfolio turnover rate 5% 28% 0% 5% 28% 0%
- -------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
distributions from underlying funds.
(4) Total return is not annualized, as it may not be representative of the
total return for the year.
(5) Annualized.
39 The Concert Allocation Series Prospectus
<PAGE>
Financial Highlights, continued
Income Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Class B Shares
1999(1) 1998 1997(2) 1999(1) 1998 1997(2)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $11.75 $11.53 $11.46 $11.76 $11.53 $11.46
- -------------------------------------------------------------------------------
Income from operations:
Net investment income(3) 0.69 0.76 0.63 0.63 0.70 0.58
Net realized and unrealized
gain (loss) (0.14) 0.52 0.07 (0.15) 0.52 0.07
- -------------------------------------------------------------------------------
Total income from operations 0.55 1.28 0.70 0.48 1.22 0.65
- -------------------------------------------------------------------------------
Less distributions from:
Net investment income (0.69) (0.77) (0.63) (0.63) (0.70) (0.58)
Net realized gains (0.11) (0.29) -- (0.11) (0.29) --
- -------------------------------------------------------------------------------
Total distributions (0.80) (1.06) (0.63) (0.74) (0.99) (0.58)
- -------------------------------------------------------------------------------
Net asset value, end of year $11.50 $11.75 $11.53 $11.50 $11.76 $11.53
- -------------------------------------------------------------------------------
Total return 4.88% 11.44% 6.39%(4) 4.25% 10.93% 5.89%(4)
- -------------------------------------------------------------------------------
Net assets, end of year
(000's) $36,390 $29,575 $17,817 $34,497 $26,563 $17,800
- -------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.60% 0.60% 0.60%(5) 1.50% 1.10% 1.10%(5)
Net investment income 5.95 6.62 6.32(5) 5.45 6.12 5.82(5)
- -------------------------------------------------------------------------------
Portfolio turnover rate 0% 28% 0% 0% 28% 0%
- -------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
distributions from underlying funds.
(4) Total return is not annualized, as it may not be representative of the
total return for the year.
(5) Annualized.
40 The Concert Allocation Series Prospectus
<PAGE>
Securities offered through
PFS INVESTMENTS INC.
---------------------------
A member of citigroup[LOGO]
Concert Allocation Series
Global Portfolio Balanced Portfolio
High Growth Portfolio Conservative Portfolio
Growth Portfolio Income Portfolio
- --------------------------------------------------------------------------------
Additional Information About the
Portfolios
Shareholder Reports
Annual and semiannual reports to
shareholders provide additional
information about the portfolios'
investments. These reports dis-
cuss the market conditions and
investment strategies that af-
fected each portfolio's perfor-
mance.
Statement of Additional Information
The statement of additional in-
formation provides more detailed
information about each portfolio.
It is incorporated by reference
into (is legally part of) this
prospectus.
You can make inquiries about the portfolios or obtain shareholder reports or
the statement of additional information (without charge), by contacting your
PFS Investments Registered Representative, by calling the PFS Shareholder Serv-
ices at 1-800-544-5445, or by writing to the portfolios at 3100 Breckinridge
Blvd., Building 200, Duluth, Georgia 30099-0062.
You can also review and copy the portfolios' shareholder reports, prospectus
and statement of additional information at the Securities and Exchange Commis-
sion's Public Reference Room in Washington, D.C. You can get copies of these
materials for a duplicating fee by writing to the Public Reference Section of
the Commission, Washington, D.C. 20549-6009. Information about the public ref-
erence room may be obtained by calling 1-800-SEC-0330. You can get the same re-
ports and information free from the Commission's Internet web site--
http://www.sec.gov
If someone makes a statement about the portfolios that is not in this prospec-
tus, you should not rely upon that information. Neither the portfolios nor the
distributor is offering to sell shares of the portfolios to any person to whom
the portfolios may not lawfully sell their shares.
(Investment Company Act file no. 811-07435)
SB-ID
PFS Investments Inc.
5/99
<PAGE>
SMITH BARNEY
CONCERT ALLOCATION SERIES INC.
PROSPECTUS
JUNE 1, 1999
SELECT GROWTH PORTFOLIO
SELECT BALANCED PORTFOLIO
Prospectus begins on page one
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is accurate or complete. Any
statement to the contrary is a crime.
Smith Barney
Mutual Funds
<PAGE>
Contents
<TABLE>
<S> <C>
Investments, risks and performance 2
- --------------------------------------------
Growth Portfolio 3
- --------------------------------------------
Balanced Portfolio 5
- --------------------------------------------
More on the portfolios' investments 7
- --------------------------------------------
Investment strategies and related risks 9
- --------------------------------------------
Management 11
- --------------------------------------------
Share transactions 12
- --------------------------------------------
Distributions, dividends and taxes 13
- --------------------------------------------
Share price 14
- --------------------------------------------
Financial highlights 15
- --------------------------------------------
</TABLE>
1
Concert Series--Select Portfolios
<PAGE>
Investments, Risks and Performance
About the portfolios
Each portfolio is a "fund of funds"--meaning it invests in other mutual funds
rather than directly in portfolio securities like stocks, bonds, and money mar-
ket instruments. These underlying mutual funds will be open-end funds managed
by the investment manager or its affiliates and have investment goals similar,
but not identical to, those of the portfolios.
Each portfolio is managed to serve as a complete investment program or as a
core part of a larger portfolio.
Target Allocation is the manager's initial strategic focus in allocating
between equity funds and fixed income funds.
Target Range is the range in which the manager may vary from the Target
Allocation.
Investing primarily in other mutual funds presents special risks
. In addition to the portfolio's operating expenses, you will indirectly bear
the operating expenses of the underlying funds. For instance, you will pay
management fees of both the portfolio and the underlying funds.
. One underlying fund may buy the same securities that another underlying fund
sells. You would indirectly bear the costs of these trades without accom-
plishing any investment purpose.
You should know:
You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
An investment in any of the portfolios is not a bank deposit and is not insured
or guaranteed by the FDIC or any other government agency
Principal risks of investing in fixed income securities and equity securities
The underlying funds invest in fixed income securities and equity securities.
Risks common to investments in fixed income securities and equity securities
are set forth below. Because each portfolio has a different investment strate-
gy, there are also principal risks which are specific to an investment in a
particular portfolio. These unique risks are described in the portfolio summa-
ries beginning on the next page.
Fixed Income Securities:
. When interest rates go up, prices of fixed income securities go down
. An issuer of a security may default on its obligation to pay principal and/or
interest or have its credit rating downgraded
. An issuer of a security may prepay principal earlier than scheduled, which
would force an underlying fund to reinvest in lower yielding securities. This
is known as call or prepayment risk
. Slower than expected principal payments may extend a security's life. This
locks in a below-market interest rate, increases the security's duration and
reduces the value of the security. This is known as extension risk
Equity Securities:
. Stock prices may decline generally
. If an adverse event occurs, such as the issuance of an unfavorable earnings
report, the value of a particular issuer's security may be depressed
2
Concert Series-- Select Portfolios Prospectus
<PAGE>
Growth Portfolio
Investment objective
Long-term growth of capital.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney mutual funds
listed below, which are primarily equity funds.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity markets in general, particular sectors of such markets and the performance
outlook for the underlying funds and, to a lesser degree, the bond markets. In
assessing the equity markets, the manager considers a broad range of market and
economic trends and quantitative factors. The performance of the underlying
funds also influences their weighting in the portfolio. The manager tends to
emphasize underlying funds that focus upon larger capitalization companies.
However, the portfolio can invest in underlying funds that have a range of in-
vestment styles and focuses, including small cap, international, high yield
(Smith Barney High Income Fund) and sector funds (Smith Barney Natural Re-
sources Fund Inc.) The portfolio also allocates a significant portion of its
assets to underlying funds that primarily invest in a broad range of debt secu-
rities to help reduce volatility.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- --------------------------
<S> <C>
Equity Funds 70%
- --------------------------
Fixed Income Funds 30%
- --------------------------
<CAPTION>
Target Range
- --------------------------
<S> <C>
Equity Funds 60-80%
- --------------------------
Fixed Income Funds 20-40%
- --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Appreciation Fund Inc. 0-30%
- ----------------------------------------------------
Smith Barney Contrarian Fund 0-30%
- ----------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-30%
- ----------------------------------------------------
Smith Barney High Income Fund 5-20%
- ----------------------------------------------------
Cash Portfolio 0-20%
- ----------------------------------------------------
Concert Peachtree Growth Fund 0-20%
- ----------------------------------------------------
International Equity Portfolio 0-20%
- ----------------------------------------------------
Large Cap Value Fund 0-20%
- ----------------------------------------------------
Smith Barney Government Securities Fund 0-20%
- ----------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-20%
- ----------------------------------------------------
Smith Barney Large Cap Blend Fund 0-20%
- ----------------------------------------------------
Smith Barney Large Capitalization Growth Fund 0-20%
- ----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Small Cap Blend Fund, Inc. 0-20%
Global Government Bond Portfolio 0-15%
Short-Term High Grade Bond Fund 0-15%
Smith Barney Aggressive Growth Fund Inc. 0-15%
Smith Barney Investment Grade Bond Fund 0-15%
Smith Barney Managed Governments Fund Inc. 0-15%
International Balanced Portfolio 0-10%
Smith Barney Hansberger Global Small Cap Value
Fund 0-10%
Smith Barney Mid Cap Blend Fund 0-10%
Smith Barney Natural Resources Fund Inc. 0-10%
Smith Barney Small Cap Value Fund 0-10%
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in equity securities and, to a lesser degree, fixed income securities
generally. The principal risks associated with investing in equity securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase in-
vestment gains or add to investment losses. These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. Growth stocks or small capitalization stocks (generally those listed on the
Russell 2000 Indices) may fall out of favor and may experience greater vola-
tility, as well as greater potential for gain or loss
. When interest rates go up, prices of fixed income securities go down
Concert Series--Select Portfolios Prospectus
3
<PAGE>
Growth Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio for the past calendar year. Performance figures do
not reflect expenses incurred from investing in a Separate Account. These ex-
penses will reduce performance. Please refer to the Separate Account prospectus
for more information on expenses.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 15.73% in 4th quarter 1998; Lowest: (10.70)% in
3rd quarter 1998
Year to date: 2.00% (through 3/31/99)
Risk return table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1998)
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Portfolio S&P 500 Russell 2000 MSCI EAFE Lehman
-----------------------------------------------------------
1 Year 13.97% 28.60% (2.55)% 20.00% 9.47%
-----------------------------------------------------------
Since
Inception 13.64% 29.17%* 10.32 %* 12.66%* 10.30%*
-----------------------------------------------------------
Inception
Date 2/5/97 n/a n/a n/a n/a
-----------------------------------------------------------
</TABLE>
The table as-
sumes redemp-
tion of shares
at the end of
the period and
reinvestment of
distributions
and dividends.
The table indi-
cates the risks
of investing in
the portfolio
by comparing
the average an-
nual total re-
turn of the
portfolio for
the periods
shown to that
of the S&P 500
Composite Stock
Index (S&P
500), a broad-
based unmanaged
index of widely
held common
stocks; the
Russell 2000
Index (Russell
2000), a broad-
based unmanaged
capitalization
weighted index
of small capi-
talization com-
panies; the
Morgan Stanley
Capital Inter-
national EAFE
Index (MSCI
EAFE), broad-
based unmanaged
index of for-
eign stocks;
and the Lehman
Government/Corporate
Bond Index
(Lehman), a
broad-based un-
managed index
of fixed income
securities.
*Index comparison begins on February 28, 1997.
Concert Series--Select Portfolios Prospectus
4
<PAGE>
Balanced Portfolio
Investment objective
Balance of growth of capital and income.
Principal investment strategies
The portfolio is a fund of funds. It invests in the Smith Barney equity and
fixed income funds listed below.
How the manager selects the portfolio's investments
The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the eq-
uity and bond markets in general, particular sectors of such markets, and the
performance outlook for the underlying funds. In assessing the equity and bond
markets, the manager considers a broad range of market and economic trends and
quantitative factors. The performance of the underlying funds also influences
their weighting in the portfolio. In selecting equity funds, the manager tends
to emphasize underlying funds that focus upon established large-capitalization,
U.S. stocks. The portfolio's fixed income funds mainly invest in U.S. govern-
ment and agency securities and mortgage-backed securities. However, the portfo-
lio can invest in underlying funds that have a range of investment styles and
focuses.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
- --------------------------
<S> <C>
Equity Funds 50%
- --------------------------
Fixed Income Funds 50%
- --------------------------
<CAPTION>
Target Range
- --------------------------
<S> <C>
Equity Funds 40-60%
- --------------------------
Fixed Income Funds 40-60%
- --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Smith Barney Diversified Strategic Income Fund 5-25%
- -----------------------------------------------------
Large Cap Value Fund 5-20%
- -----------------------------------------------------
Smith Barney Convertible Fund 5-20%
- -----------------------------------------------------
Smith Barney Large Cap Blend Fund 5-20%
- -----------------------------------------------------
Smith Barney Managed Governments Fund Inc. 5-20%
- -----------------------------------------------------
Smith Barney Premium Total Return Fund 5-20%
- -----------------------------------------------------
Cash Portfolio 0-25%
- -----------------------------------------------------
Short-Term High Grade Bond Fund 0-20%
- -----------------------------------------------------
Smith Barney Appreciation Fund Inc. 0-20%
- -----------------------------------------------------
Smith Barney Fundamental Value Fund Inc. 0-20%
- -----------------------------------------------------
Smith Barney Government Securities Fund 0-20%
- -----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Concert Peachtree Growth Fund 0-15%
Global Government Bond Portfolio 0-15%
International Equity Portfolio 0-15%
Smith Barney Contrarian Fund 0-15%
Smith Barney Hansberger Global Value Fund 0-15%
Smith Barney High Income Fund 0-15%
Smith Barney Large Capitalization Growth Fund 0-15%
Smith Barney Small Cap Blend Fund, Inc. 0-15%
International Balanced Portfolio 0-10%
Smith Barney Natural Resources Fund Inc. 0-10%
</TABLE>
Principal risks of investing in the portfolio
Your investment in the portfolio is subject to the risks associated with in-
vesting in both fixed income securities and equity securities generally. The
principal risks associated with investing in these securities are described on
page 2 under "About the portfolios". Your investment in the portfolio is also
subject to the following specific risks:
. You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments
. An underlying fund's investments in foreign securities may decline because of
adverse governmental action or political, economic or market instability in a
foreign country or region. In addition, currency fluctuations could erase in-
vestment gains or add to investment losses. These risks are heightened for
investments in emerging markets
. The manager's judgment about the attractiveness and risk adjusted return po-
tential of particular asset classes, investment styles, underlying funds or
other issues may prove to be wrong
. When interest rates go up, prices of fixed income securities go down
5
Concert Series--Select Portfolios Prospectus
<PAGE>
Balanced Portfolio, continued
Risk return bar chart
- --------------------------------------------------------------------------------
The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio for the past calendar year. Performance figures do
not reflect expenses incurred from investing in a Separate Account. These ex-
penses will reduce performance. Please refer to the Separate Account prospectus
for more information on expenses.
Past performance does not necessarily indicate how the portfolio will perform
in the future.
Quarterly Returns: Highest: 7.87% in 4th quarter 1998; Lowest: (5.07)% in
3rd quarter 1998
Year to date: 1.01% (through 3/31/99)
Risk return table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1998)
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Portfolio S&P 500 Lehman Gov/Corp T-bill World Bond
---------------------------------------------------------------------
1 Year 9.53% 28.60% 9.47% 5.89% 15.29%
---------------------------------------------------------------------
Since
Inception 11.35% 29.17%* 10.30%* 6.06%* 10.27%*
---------------------------------------------------------------------
Inception
Date 2/5/97 n/a n/a n/a n/a
---------------------------------------------------------------------
</TABLE>
The table as-
sumes redemp-
tion of shares
at the end of
the period and
reinvestment of
distributions
and dividends.
The table indi-
cates the risks
of investing in
the portfolio
by comparing
the average an-
nual total re-
turn of the
portfolio for
the periods
shown to that
of the S&P 500
Composite Stock
Index (S&P
500), a broad-
based unmanaged
index of widely
held common
stocks; the
Lehman
Government/Corporate
Bond Index
(Lehman
Gov/Corp), a
broad-based un-
managed index
of fixed income
securities; the
Salomon Smith
Barney One-Year
Treasury Bill
Index (T-bill),
consisting of a
1-Year Treasury
bill whose re-
turn is tracked
until maturity;
and the Salomon
Smith Barney
World Govern-
ment Bond Index
(World Bond), a
broad-based un-
managed index
of interna-
tional fixed
income securi-
ties.
*Index comparison begins on February 28, 1997.
Concert Series--Select Portfolios Prospectus
6
<PAGE>
More on the Portfolios' Investments
Underlying funds
The following is a description of the investment objectives and principal in-
vestments of the underlying funds in which the portfolios invest.
The underlying funds that invest primarily in equity securities are:
Smith Barney Aggressive Growth Fund Inc. seeks capital appreciation by invest-
ing primarily in common stocks of companies the adviser believes are experienc-
ing, or have the potential to experience, growth in earnings that exceed the
average earnings growth rate of companies whose securities are included in the
Standard & Poor's 500 Index.
Smith Barney Appreciation Fund Inc. seeks long-term appreciation of shareholder
capital by investing primarily in equity securities of U.S. companies. The core
holdings of the fund are blue chip companies that are dominant in their indus-
tries.
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.
Smith Barney Contrarian Fund's investment objective is long-term growth of cap-
ital. The fund attempts to achieve its objective by investing primarily in cur-
rently price depressed, undervalued or out of favor common stocks and other se-
curities, including debt securities that are convertible into common stock.
Large Cap Value Fund seeks current income and long-term growth of capital. The
fund invests primarily in common stocks of companies having a market capital-
ization of at least $5 billion that are considered by its adviser (i) to be un-
dervalued by the marketplace, (ii) to offer potential opportunities not yet
recognized by the marketplace, or (iii) to have been out of favor in the mar-
ketplace but that are poised to turn around because of a new management team,
product or business strategy.
Smith Barney Large Cap Blend Fund seeks long-term capital growth by investing
primarily in common stocks and other equity securities of large capitalization
companies with market capitalizations greater than $5 billion at the time of
investment that exhibit growth and/or value attributes.
Smith Barney Large Capitalization Growth Fund seeks long-term growth of capital
by investing in equity securities of large capitalization companies with market
capitalizations greater than $5 billion at the time of investment that are be-
lieved to afford attractive opportunities for investment growth.
Smith Barney Mid Cap Blend Fund seeks long-term growth of capital by investing
primarily in equity securities of medium-sized companies whose market capital-
izations are no greater than the market capitalizations of companies in the S&P
Mid Cap Index at the time of investment.
Concert Peachtree Growth Fund's investment objective is capital appreciation by
investing in securities believed to have above average potential for capital
appreciation. In attempting to achieve the fund's investment objective, the
fund uses 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.
Smith Barney Small Cap Blend Fund, Inc. seeks long-term capital appreciation by
investing primarily in the common stocks of U.S. companies with relatively
small market capitalizations at the time of investment.
Smith Barney Small Cap Value Fund seeks long-term growth of capital by invest-
ing primarily in equity securities of smaller capitalized companies whose mar-
ket capitalizations are no greater than the market capitalization of companies
in the Russell 2000 Value Index at the time of investment.
Smith Barney Natural Resources Fund Inc. seeks long-term capital appreciation
by investing primarily in equity and debt securities of issuers in a variety of
natural resources industries.
Smith Barney Premium Total Return Fund seeks to provide shareholders with total
return, consisting of long-term capital appreciation and income, by investing
primarily in a diversified portfolio of equity and fixed income securities.
Smith Barney Hansberger Global Value Fund seeks long-term capital growth by in-
vesting primarily in equity securities of companies in any country including
the United States which, in the opinion of its advisers, are undervalued. In-
come is an incidental consideration.
Smith Barney Hansberger Global Small Cap Value Fund seeks long-term capital
growth by investing primarily in equity securities of U.S. and foreign issuers
with relatively small market capitalizations which, in the opinion of its ad-
visers, are undervalued. Income is an incidental consideration.
7
Concert Series--Select Portfolios Prospectus
<PAGE>
More on the Portfolios' Investments, continued
International Equity Portfolio seeks total return on its assets from growth of
capital and income. The fund invests primarily in a diversified portfolio of
equity securities of foreign companies including exchange traded and over-the-
counter common stocks and preferred shares, debt securities convertible into
equity securities and rights and warrants relating to equity securities.
The underlying funds that invest primarily in fixed income securities are:
Smith Barney High Income Fund seeks to provide shareholders with high current
income. Although growth of capital is not an investment objective of the fund,
its adviser may consider potential for growth as one factor, among others, in
selecting investments for the fund. The fund will seek high current income by
investing in high risk, high-yielding corporate bonds, debentures and notes de-
nominated in U.S. dollars or foreign currencies.
Smith Barney Investment Grade Bond Fund seeks to provide as high a level of
current income as is consistent with prudent investment management and preser-
vation of capital. The fund invests primarily in a portfolio of investment
grade bonds.
Smith Barney Government Securities Fund seeks high current return by investing
in obligations of, or securities guaranteed by, the U.S. government, its agen-
cies or instrumentalities (including, without limitation, treasury bills and
bonds, mortgage participation certificates issued by the Federal Home Loan
Mortgage Corporation ("FHLMC") and mortgage-backed securities issued by the
Government National Mortgage Association ("GNMA").
Short-Term High Grade Bond Fund seeks current income, preservation of capital
and liquidity. The fund seeks to achieve its objective by investing its assets
in corporate debt securities, bank obligations and securities issued by the
U.S. Government and its agencies and instrumentalities.
Smith Barney Managed Governments Fund Inc. seeks high current income consistent
with liquidity and safety of capital. The fund invests substantially all of its
assets in U.S. government securities. The fund's portfolio consists primarily
of mortgage-backed securities issued or guaranteed by GNMA, the Federal Na-
tional Mortgage Association ("FNMA") and FHLMC.
Smith Barney Diversified Strategic Income Fund seeks high current income pri-
marily through investment in fixed income securities, including high yield se-
curities. The fund attempts to achieve its objective by allocating and reallo-
cating its assets primarily among various types of fixed-income securities such
as: obligations issued or guaranteed as to principal and interest by the U.S.
government; mortgage-related securities issued by various governmental and non-
governmental entities; domestic and foreign corporate securities; and foreign
government securities.
Global Government Bond Portfolio seeks as high a level of current income and
capital appreciation as is consistent with its policy of investing principally
in high quality bonds of the U.S. and foreign governments.
Cash Portfolio is a money market fund that seeks maximum current income and
preservation of capital by investing in high quality U.S. dollar denominated
short-term debt securities.
Smith Barney Convertible Fund seeks current income and capital appreciation by
investing in investment and non-investment grade convertible securities and in
combinations of non-convertible fixed-income securities and warrants or call
options that together resemble convertible securities.
International Balanced Portfolio seeks a competitive total return on assets
from growth of capital and income through a portfolio invested primarily in se-
curities of established non-U.S. issuers.
Temporary defensive investments (all portfolios)
Each of the portfolios may depart from its principal investment strategies in
response to adverse market, economic or political conditions by taking tempo-
rary defensive positions in the Cash Portfolio, a series of Smith Barney Money
Funds Inc., repurchase agreements or cash. If a portfolio takes a temporary de-
fensive position, it may be unable to achieve its investment objective.
8
Concert Series--Select Portfolios Prospectus
<PAGE>
Investment Strategies and Related Risks
Portfolio turnover (all portfolios)
Each underlying fund may engage in active and frequent trading to achieve its
principal investment strategies. Frequent trading also increases transaction
costs, which could detract from an underlying fund's performance.
Non-diversification
Each portfolio is not diversified, which means that it can invest a higher per-
centage of its assets in any one underlying fund than a diversified portfolio.
Being non-diversified may magnify a portfolio's losses from adverse events af-
fecting a particular underlying fund. However, each of the underlying funds
(except Global Government Bond Portfolio and International Balanced Portfolio)
is diversified.
Changes in allocations
The underlying funds in which the portfolios may invest, and the range of as-
sets allocated to each fund, may be changed by the board of directors from time
to time. Similarly, the target allocation between equity and fixed income ori-
ented investments may be adjusted from time to time. If the target limits for
investment in a particular fund are exceeded or are not met because of cash
flows or changes in the market value of the shares of the underlying funds, the
investment manager may but is not required to adjust the portfolio's holdings.
High yield securities
Certain of the underlying funds can invest all or a portion of their assets in
high yield securities. High yield securities involve a substantial risk of
loss. These securities are considered speculative with respect to the issuer's
ability to pay interest and principal and are susceptible to default or decline
in market value because of adverse economic and business developments. The mar-
ket values for high yield securities tend to be very volatile, and these secu-
rities are less liquid than investment grade debt securities. Underlying funds
that hold these issues are subject to the following specific risks:
. Increased price sensitivity to changing interest rates
. Greater risk of loss because of default or declining credit quality
. Adverse company specific events are more likely to render the issuer unable
to make interest and/or principal payments
. A negative perception of the high yield market may develop, depressing the
price and liquidity of high yield securities. This negative perception could
last for a significant period of time
Foreign securities
Certain of the underlying funds focus upon foreign securities and other under-
lying funds may invest a portion of their assets outside the U.S. Investing in
non-U.S. issuers involves unique risks compared to investing in the securities
of U.S. issuers. These risks are more pronounced to the extent a fund invests
in issuers in countries with emerging markets. These risks may include:
. Less information about non-U.S. issuers or markets may be available because
of less rigorous disclosure and accounting standards or regulatory practices
. Many non-U.S. markets are smaller, less liquid and more volatile than U.S.
markets. In a changing market, the adviser may not be able to sell the fund's
portfolio securities in amounts and at prices the adviser considers reason-
able
. The U.S. dollar may appreciate against non-U.S. currencies or a foreign gov-
ernment may impose restrictions on currency conversion or trading
. The economies of non-U.S. countries may grow at a slower rate than expected
or may experience a downturn or recession
. Economic, political and social developments may adversely affect the securi-
ties markets
. Foreign governmental obligations may involve the risk of debt moratorium, re-
pudiation or renegotiation and the fund may be unable to enforce its rights
against the issuers
Small capitalization issuers
Certain of the underlying funds focus on small capitalization companies. In-
vesting in small companies involves unique risks. Compared to large companies,
small companies, and the market for their common stocks, are likely to:
. Be more sensitive to changes in the economy, earnings results and investor
expectations
. Have more limited product lines and capital resources
. Experience sharper swings in market values
. Be harder to sell at the times and prices the fund thinks appropriate
. Offer greater potential for gain and loss
9
Concert Series--Select Portfolios Prospectus
<PAGE>
Investment Strategies and Related Risks, continued
Derivatives
Certain of the underlying funds may, but need not, use derivative contracts,
such as futures and options on securities, securities indices or currencies;
options on these futures; forward currency contracts; and interest rate or cur-
rency swaps for any of the following purposes:
. To hedge against the economic impact of adverse changes in the market value
of its securities, because of changes in stock market prices, currency ex-
change rates or interest rates
. As a substitute for buying or selling securities
A derivative contract will obligate or entitle an underlying fund to deliver or
receive an asset or cash payment based on the change in value of one or more
securities, currencies or indices. Even a small investment in derivative con-
tracts can have a big impact on an underlying fund's stock market, currency and
interest rate exposure. Therefore, using derivatives can disproportionately in-
crease losses and reduce opportunities for gains when stock prices, currency
rates or interest rates are changing. The underlying fund may not fully benefit
from or may lose money on derivatives if changes in their value do not corre-
spond accurately to changes in the value of the fund's holdings. The other par-
ties to certain derivative contracts present the same types of credit risk as
issuers of fixed income securities. Derivatives can also make the underlying
fund less liquid and harder to value, especially in declining markets.
Investment policies (all portfolios)
Each portfolio's investment policies, including the particular underlying funds
in which each portfolio may invest and the equity/fixed income targets applica-
ble to each portfolio, may be changed by the board of directors without share-
holder approval.
10
Concert Series--Select Portfolios Prospectus
<PAGE>
Management
Portfolio manager
The portfolios' investment manager is Travelers Investment Advisers, Inc.
("TIA"), an affiliate of Salomon Smith Barney Inc. The manager's address is 388
Greenwich Street, New York, NY 10013. The manager selects the portfolios' in-
vestments and oversees their operations. The manager and Salomon Smith Barney
are subsidiaries of Citigroup Inc. Citigroup businesses produce a broad range
of financial services--asset management, banking and consumer finance, credit
and charge cards, insurance, investments, investment banking and trading--and
use diverse channels to make them available to consumer and corporate customers
around the world.
R. Jay Gerken, a Managing Director of Salomon Smith Barney, has been responsi-
ble for the day-to-day operations of the portfolios since inception. Mr. Gerken
has been with Salomon Smith Barney or companies that are now part of Salomon
Smith Barney since 1988.
Management fees
Management fees paid during the fiscal year ended January 31, 1999*
(as % of average daily net assets)
<TABLE>
<CAPTION>
Growth Balanced
- -------------------------------------------------------------------------------- <S> <C> <C>
0.35% 0.35%
- -----------------------------------------------------------
</TABLE>
* For more information regarding the management fees of the underlying funds,
please consult the statement of additional information.
Distributor
The portfolios have entered into an agreement with CFBDS, Inc. to distribute
the portfolios' shares.
Year 2000 issue
Information technology experts are concerned about computer systems' ability to
process date-related information on and after January 1, 2000. This situation,
commonly known as the "Year 2000" issue, could have an adverse impact on the
portfolios. The cost of addressing the Year 2000 issue, if substantial, could
adversely affect companies and governments that issue securities held by the
underlying funds. The manager, Salomon Smith Barney and distributor are ad-
dressing the Year 2000 issue for their systems. Each portfolio has been in-
formed by its other service providers that they are taking similar measures.
Although the portfolios do not expect the Year 2000 issue to adversely affect
them, the portfolios cannot guarantee that the efforts of each portfolio or its
service providers to correct the problem will be successful.
Possible conflict of interest
The Directors and officers of the Concert Series also serve in similar posi-
tions with many of the underlying Smith Barney funds. Thus, if the interests of
a portfolio and of the underlying 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 Concert Series fulfill their fiduciary duties to that port-
folio and the underlying funds. The Directors of the Concert Series believe
they have structured each portfolio to avoid these concerns. However, conceiv-
ably a situation could occur where proper action for the Concert Series or a
portfolio separately could be adverse to the interests of an underlying fund,
or the reverse could occur. If such a possibility arises, the directors and of-
ficers of the Concert Series, the affected underlying funds and TIA will care-
fully analyze the situation and take all steps they believe reasonable to mini-
mize, and where possible eliminate, the potential conflict. Moreover, limita-
tions on aggregate investments in the underlying funds have been adopted by the
Concert Series to minimize this possibility, and close and continuous monitor-
ing will be exercised to avoid, insofar as is possible, these concerns.
11
Concert Series--Select Portfolios Prospectus
<PAGE>
Share Transactions
Availability of shares
Individuals may not purchase shares directly from the portfolios. You should
read the prospectus for your insurance company's variable contract to learn how
to purchase a variable contract based on the portfolios.
Each portfolio may sell its shares directly to separate accounts established
and maintained by insurance companies for the purpose of funding variable annu-
ity and variable life insurance contracts and to certain qualified pension and
retirement plans. The variable insurance products and qualified plans may or
may not make investments in all the portfolios described in this prospectus.
Shares of the portfolios are sold at net asset value.
The interests of different variable insurance products and qualified plans in-
vesting in a portfolio could conflict due to differences of tax treatment and
other considerations. The portfolios currently do not foresee any disadvantages
to investors arising from the fact that each portfolio may offer its shares to
different insurance company separate accounts that serve as the investment me-
dium for their variable annuity and variable life products and to qualified
plans. Nevertheless, the board of directors intends to monitor events to iden-
tify any material conflicts which may arise, and to determine what action, if
any, should be taken in response to these conflicts. If a conflict were to oc-
cur, one or more insurance companies' separate accounts or qualified plans
might be required to withdraw their investments in one or more portfolios and
shares of another portfolio may be substituted.
The sale of shares may be suspended or terminated if required by law or regula-
tory authority or if it is in the best interests of the portfolios' sharehold-
ers. Each portfolio reserves the right to reject any specific purchase order.
Redemption of shares
Redemption requests may be placed by separate accounts of participating insur-
ance companies and by qualified plans. The redemption price of the shares of
each portfolio will be the net asset value next determined after receipt by the
portfolio of a redemption request in good order. The value of redeemed shares
may be more or less than the price paid for the shares. Sales proceeds will
normally be forwarded to the selling insurance company or qualified plan on the
next business day after receipt of a redemption request in good order but in no
event later than 3 days following receipt of instructions. Each portfolio may
suspend sales or postpone payment dates during any period in which any of the
following conditions exist:
. the New York Stock Exchange is closed;
. trading on the New York Stock Exchange is restricted;
. an emergency exists as a result of which disposal by the portfolio of securi-
ties is not reasonably practicable or it is not reasonably practicable for a
fund and underlying fund to fairly determine the value of its net assets; or
. as permitted by SEC order in extraordinary circumstances.
12
Concert Series--Select Portfolios Prospectus
<PAGE>
Distributions, Dividends and Taxes
Taxes
Each portfolio intends to qualify and be taxed as a "regulated investment com-
pany" under Subchapter M of the Internal Revenue Code of 1986 (the "Code"), as
amended. In order to qualify to be taxed as a regulated investment company,
each portfolio must meet certain income and diversification tests and distribu-
tion requirements. As a regulated investment company meeting these require-
ments, a portfolio will not be subject to federal income tax on its net invest-
ment income and net capital gains that it distributes to its shareholders. All
income and capital gain distributions are automatically reinvested in addi-
tional shares of the portfolio at net asset value and are includable in gross
income of the separate accounts holding such shares. See the accompanying con-
tract prospectus for information regarding the federal income tax treatment of
distributions to the separate accounts and to holders of the contracts.
Each portfolio is also subject to asset diversification regulations promulgated
by the U.S. Treasury Department under the Code. The regulations generally pro-
vide that, as of the end of each calendar quarter or within 30 days thereafter,
no more than 55% of the total assets of each portfolio 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 invest-
ment. An alternative diversification test may be satisfied under certain cir-
cumstances. If a portfolio should fail to comply with these regulations or
fails to qualify for the special tax treatment afforded regulated investment
companies under the Code, contracts invested in that portfolio would not be
treated as annuity, endowment or life insurance contracts under the Code.
13
Concert Series--Select Portfolios Prospectus
<PAGE>
Share Price
Each portfolio's net asset value is the value of its assets minus its liabili-
ties. Each portfolio calculates its net asset value every day the New York
Stock Exchange is open. The Exchange is closed on certain holidays listed in
the Statement of Additional Information. This calculation is based on the net
asset value of the underlying funds, which is calculated when regular trading
closes on the Exchange (normally 4:00 p.m., Eastern time).
Each portfolio and underlying fund generally values its fund securities
based on market prices or quota-
tions. When reliable market prices or quotations are not readily available, the
fund may price those securities at fair value. Fair value is determined in ac-
cordance with procedures approved by the fund's board. A fund that uses fair
value to price securities may value those securities higher or lower than an-
other fund using market quotations to price the same securities.
Short-term investments that have a maturity of more than 60 days are generally
valued based on market prices or quotations. Short-term investments that have a
maturity of 60 days or less are value at amortized cost. Using this method, a
portfolio and underlying fund constantly amortizes over the remaining life of a
security the difference between the principal amount due at maturity and the
cost of the security to the portfolio and underlying fund.
In order to buy, redeem or exchange shares at that day's price, an insurance
company separate account or a qualified plan must place its order with the
transfer agent before the New York Stock Exchange closes. If the New York Stock
Exchange closes early, the order must be placed prior to the actual closing
time. Otherwise, the investor will receive the next business day's price.
14
Concert Series--Select Portfolios Prospectus
<PAGE>
Financial Highlights
The financial
highlights ta-
bles are in-
tended to help
you understand
the performance
of each portfo-
lio since in-
ception. Cer-
tain informa-
tion reflects
financial re-
sults for a
single share.
Total returns
represent the
rate that a
shareholder
would have
earned (or
lost) on a
portfolio share
assuming rein-
vestment of all
dividends and
distributions.
The information
in the follow-
ing tables was
audited by KPMG
LLP, indepen-
dent auditors,
whose report,
along with the
fund's finan-
cial statement
is included in
the annual re-
port (available
upon request).
<TABLE>
<CAPTION>
For a share of capital stock outstanding
throughout each year ending January 31:
-----------------------------------------------------
Growth Portfolio
1999(1) 1998(1)(2)
-----------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year $11.28 $10.00
-----------------------------------------------------
Income from operations:
Net investment income(3) 0.27 0.44
Net realized and unrealized gain 1.55 0.84
-----------------------------------------------------
Total income from operations 1.82 1.28
-----------------------------------------------------
Less distributions from:
Net investment income (0.11) --
Net realized gains (0.12) --
-----------------------------------------------------
Total distributions (0.23) --
-----------------------------------------------------
Net asset value, end of year $12.87 $11.28
-----------------------------------------------------
Total return 16.31% 12.80%++
-----------------------------------------------------
Net assets, end of year (000's) $129,929 $ 45,982
-----------------------------------------------------
Ratios to average net assets:
Expenses 0.35% 0.35%+
Net investment income 2.29 4.11+
-----------------------------------------------------
Portfolio turnover rate 10% 43%
-----------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly
average shares method, rather than the undistributed net
investment income method, because it more accurately
reflects the per share data for the period.
(2) For the period from February 5, 1997 (inception date) to
January 31, 1998.
(3) Net investment income per share includes short-term
capital gain distributions from underlying funds.
++Total return is not annualized, as it may not be
representative of the total return for the year.
+ Annualized.
For a share of capital stock outstanding
throughout each year ending January 31:
<TABLE>
-----------------------------------------------------
<CAPTION>
Balanced Portfolio
1999(1) 1998(1)(2)
-----------------------------------------------------
<S> <C> <C>
Net asset value, beginning of year $11.28 $10.00
-----------------------------------------------------
Income from operations:
Net investment income(3) 0.42 0.64
Net realized and unrealized gain 0.66 0.64
-----------------------------------------------------
Total income from operations 1.08 1.28
-----------------------------------------------------
Less distributions from:
Net investment income (0.16) --
Net realized gains (0.16) --
-----------------------------------------------------
Total distributions (0.32) --
-----------------------------------------------------
Net asset value, end of year $12.04 $11.28
-----------------------------------------------------
Total return 9.76% 12.80%++
-----------------------------------------------------
Net assets, end of year (000's) $133,796 $ 45,071
-----------------------------------------------------
Ratios to average net assets:
Expenses 0.35% 0.35%+
Net investment income 3.64 5.89+
-----------------------------------------------------
Portfolio turnover rate 7% 19%
-----------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly
average shares method, rather than the undistributed net
investment income method, because it more accurately
reflects the per share data for the period.
(2) For the period from February 5, 1997 (inception date) to
January 31, 1998.
(3) Net investment income per share includes short-term
capital gain distributions from underlying funds.
++Total return is not annualized, as it may not be
representative of the total return for the year.
+ Annualized.
15
Concert Series--Select Portfolios Prospectus
<PAGE>
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<PAGE>
Smith Barney
Concert Allocation
Series Inc.
Select Portfolios
Growth Portfolio
Balanced Portfolio
- --------------------------------------------------------------------------------
Additional Information About the
Portfolios
Shareholder Reports
Annual and semiannual reports to shareholders provide additional information
about the portfolios' investments. These reports discuss the market conditions
and investment strategies that affected each portfolio's performance.
Statement of Additional Information
The statement of additional information provides more detailed information
about each portfolio. It is incorporated by reference into (is legally part of)
this prospectus.
You can make inquiries about the portfolios or obtain shareholder reports or
the statement of additional information (without charge), by contacting Salomon
Smith Barney Inc., by calling the portfolios at 1-800-451-2010, or by writing
to the portfolios at Smith Barney Mutual Funds, 388 Greenwich Street, MF2, New
York, New York 10013.
Visit Our Web Site
Our web site is located at www.smithbarney.com
You can also review and copy the portfolios' shareholder reports, prospectus
and statement of additional information at the Securities and Exchange Commis-
sion's Public Reference Room in Washington, D.C. You can get copies of these
materials for a duplicating fee by writing to the Public Reference Section of
the Commission, Washington, D.C. 20549-6009. Information about the public ref-
erence room may be obtained by calling 1-800-SEC-0330. You can get the same re-
ports and information free from the Commission's Internet web site--
http://www.sec.gov
If someone makes a statement about the portfolios that is not in this prospec-
tus, you should not rely upon that information. Neither the portfolios nor the
distributor is offering to sell shares of the portfolios to any person to whom
the portfolios may not lawfully sell their shares.
(SM) Salomon Smith Barney is a service mark of Salomon Smith Barney Inc.
(Investment Company Act file no. 811-07435)
[FD01657 6/99]
June 1, 1999
Statement of Additional Information
Smith Barney Concert Allocation Series Inc.
High Growth Portfolio Balanced Portfolio
Growth Portfolio Conservative Portfolio
Global Portfolio Income Portfolio
388 Greenwich Street, New York, New York 10013
(800) 451-2010
This Statement of Additional Information ("SAI") expands upon and
supplements the information contained in the current Prospectuses of Smith
Barney Concert Allocation Series Inc. (the "Concert Series" or the "fund")
dated June 1, 1999 for Class A, Class B, Class L, Class Y and Class Z
shares of the High Growth Portfolio, Growth Portfolio, Global Portfolio,
Balanced Portfolio, Conservative Portfolio and Income Portfolio
(individually, a "portfolio" and collectively, the "portfolios"), as
amended or supplemented from time to time (collectively the "prospectus"),
and should be read in conjunction therewith.
The Concert Series currently offers eleven investment portfolios, six of
which are described herein. Each portfolio seeks to achieve its objective
by investing in a number of open-end management investment companies or
series thereof ("underlying funds") for which Salomon Smith Barney Inc.
("Salomon Smith Barney") now or in the future acts as principal
underwriter or for which Salomon Smith Barney, SSBC Fund Management Inc.
("SSBC" or the "manager") (formerly Mutual Management Corp.) or Travelers
Investment Management Company ("TIMCO") now or in the future acts as
investment adviser. The prospectus may be obtained from a Salomon Smith
Barney Financial Consultant or a registered representative of PFS
Distributors, Inc. ("PFS"), or by writing or calling the Concert Series at
the address or telephone number listed above. This SAI, although not in
itself a prospectus, is incorporated by reference into the prospectus in
its entirety.
CONTENTS
Page
Why invest in the Concert Series
2
Directors and Executive Officers of Concert Series
2
Investment Objectives, Management Policies and Risk Factors
4
Additional Risk Factors
21
Investment Restrictions
25
Portfolio Turnover
27
Purchase of Shares
27
Redemption of Shares
35
Exchange Privilege
36
Taxes
38
Performance
41
Valuation of Shares
49
Investment Management and Other Services
49
Additional Information About the Portfolios
57
Financial Statements
58
Appendix - Ratings of Debt Obligations
A-1
WHY INVEST IN THE CONCERT SERIES
The proliferation of mutual funds over the last several years has left
many investors in search of a simple means to manage their long-term
investments. With new investment categories emerging each year and with
each mutual fund reacting differently to political, economic and business
events, many investors are forced to make complex investment decisions in
the face of limited experience, time and personal resources. The
portfolios are designed to meet the needs of investors who prefer to have
their asset allocation decisions made by professional money managers, are
looking for an appropriate core investment for their retirement portfolio
and appreciation the advantages of broad diversification. The portfolios
may be most appropriate for long-term investors planning for retirement,
particularly investors in tax-advantaged retirement accounts including
IRAs, 401(k) corporate employee savings plans, 403(b) non-profit
organization savings plans, profit-sharing and money-purchase pension
plans, and other corporate pension and savings plans.
Each of the portfolios invests in a select group of underlying
funds suited to the portfolio's particular investment objective. The
allocation of assets among underlying funds within each portfolio is
determined by SSBC 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 funds. The Concert Series is
not designed as a market timing vehicle, but rather as a simple and
conservative approach to helping investors meet retirement and other
long-term goals.
DIRECTORS AND EXECUTIVE OFFICERS OF THE CONCERT SERIES
Overall responsibility for management and supervision of the fund rests
with the fund's Board of Directors. The Directors approve all
significant agreements between the portfolios and the companies that
furnish services to the portfolios, including agreements with the
portfolios' distributor, investment adviser, custodian and transfer
agent. The day-to-day operations of the portfolios are delegated to the
portfolios' manager, SSBC.
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 78). Consultant to companies in the
financial services industry; Director of PIMCO Advisers L.P.; Brinson
Partners; Nicholas-Applegate (each a registered investment adviser);
Legend Properties, a real estate management company; Banyan Realty Trust;
Banyan Land Fund II; Geotek Communications Inc., an international
wireless communications company. Director or trustee of 2 investment
companies associated with Citigroup Inc.("Citigroup"). His address is
6001 N. 62nd Place, Paradise Valley, Arizona 85253.
Martin Brody, Director (Age 77). Consultant, HMK Associates;
Retired Vice Chairman of the Board of Restaurant Associates Industries,
Inc. Director or trustee of 20 investment companies associated with
Citigroup. His address is c/o HMK Associates, 30 Columbia Turnpike,
Florham Park, New Jersey 07932.
H. John Ellis, Jr., Director (Age 72). Retired. Director or
trustee of 2 investment companies associated with Citigroup.His address
is 858 East Crystal Downs Drive, Frankfort, Michigan 49635.
Stephen E. Kaufman, Director (Age 67). Attorney. Director or
trustee of 13 investment companies associated with Citigroup. His address
is 277 Park Avenue, New York, New York 10172.
Arrnon E. Kamesar, Director (Age 72). Chairman of TEC, an
international organization of Chief Executive Officers; Trustee, U.S.
Bankruptcy Court. Director or trustee of 2 investment companies
associated with Citigroup. His address is 7328 Country Club Drive, La
Jolla, California 92037.
*Heath B. McLendon, Chairman of the Board (Age 65). Managing Director
of Salomon Smith Barney, and President of SSBC and Travelers Investment
Adviser, Inc. ("TIA"). Mr. McLendon also serves as Chairman, Co-Chairman
or Director of 64 investment companies associated with Citigroup. His
address is 388 Greenwich Street, New York, New York 10013.
Lewis E. Daidone, Senior Vice President and Treasurer (Age 41).
Managing Director of Salomon Smith Barney; Director and Senior Vice
President of SSBC and TIA. Mr. Daidone also serves as Senior Vice President
and Treasurer of 59 investment companies associated with Citigroup. His
address is 388 Greenwich Street, New York, New York 10013.
Jay Gerken, Vice President and Investment Officer (Age 48). Managing
Director of Salomon Smith Barney and portfolio manager of four investment
companies associated with Citigroup. His address is 388 Greenwich Street,
New York, New York 10013.
Paul Brook, Controller (Age 45). Director of Salomon Smith Barney;
Controller or Assistant Treasurer of 43 investment companies associated
with Citigroup; from 1997-1998 Managing Director of AMT Capital Services
Inc.; prior to 1997 Partner with Ernst & Young LLP; His address is 388
Greenwich Street, New York, New York 10013.
Christina T. Sydor, Secretary (Age 48). Managing Director of Salomon Smith
Barney; General Counsel and Secretary of SSBC and TIA. Ms. Sydor also
serves as Secretary of 59 investment companies associated Citigroup. Her
address is 388 Greenwich Street, New York, New York 10013.
Each Director also serves as a director, trustee, consultant and/or general
partner of certain other mutual funds for which CFBDS, Inc. serves as
distributor. As of May 14, 1999, the Directors and officers of the
portfolios, as a group, owned less than 1.00% of the outstanding common
stock of the portfolios.
No officer, director or employee of Salomon Smith Barney, PFS or any of
their affiliates will receive any compensation from the Concert Series for
serving as an officer or director of the Concert Series. The Concert
Series pays each director who is not an officer, director or employee of
Salomon Smith Barney, PFS or any of their affiliates a fee of $10,000 per
annum plus $100 per portfolio per meeting attended and reimburses travel
and out-of-pocket expenses. In addition, each such director is paid $100
per telephonic meeting attended. Upon attainment of age 80, Directors are
required to change to emeritus status. Directors Emeritus are entitled to
serve in emeritus status for a maximum of 10 years during which time they
receive 50% of the annual retainer fee and meeting fees otherwise
applicable to the Concert Series' Directors. All Directors are reimbursed
for travel and out-of-pocket expenses incurred in attending such meetings.
. For the fiscal year ended January 31, 1999, the directors were
reimbursed, in the aggregate, $23,139 for travel and out-of-pocket
expenses.
The following table shows the compensation paid by Concert Series to each
incumbent Director for the fiscal year ended January 31, 1999:
Aggregate
Compensation
from Concert
Series
Pension or
Retirement
Benefits
Accrued as
Expense of
Concert Series
Total
Compensation
From
Fund Complex**
Total Number
of Funds
Served in
Complex
Name
Heath B. McLendon*
None
None
None
64
Walter Auch
$15,588
None
$45,400
2
Martin Brody
16,588
None
132,500
20
H. John Ellis
14,074
None
41,500
1
Armon E. Kamesar
16,588
None
47,400
2
Stephen E. Kaufman
15,488
None
96,400
13
* Designates "interested director" of Concert Series.
** As of December 31, 1998.
INVESTMENT OBJECTIVES, MANAGEMENT POLICIES AND RISK FACTORS
The Concert Series is an open-end, non-diversified management investment
company. The prospectus discusses the investment objectives of the
portfolios and each of the underlying funds in which the portfolios may
invest. In pursuing their investment objectives and policies, each of the
underlying funds is permitted to engage in a wide-range of investment
policies. Because the portfolios invest in the underlying 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 funds pursuing such policy. This section
contains supplemental information concerning the types of securities and
other instruments in which the underlying funds may invest (and repurchase
agreements in which the portfolios and/or the underlying funds may invest),
the investment policies and portfolio strategies the underlying funds may
utilize and certain risks attendant to such investments, policies and
strategies. There can be no assurance that the respective investment
objectives of the portfolios or the underlying 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 SAI.
EQUITY SECURITIES
Common Stocks. Certain of the underlying funds invest primarily in
common stocks. Common stocks are shares of a corporation or other entity
that entitle the holder to a pro rata share of the profits of the
corporation, if any, without preference over any other shareholder or
class of shareholders, including holders of the entity's preferred stock
and other senior equity. Common stock usually carries with it the right
to vote and frequently an exclusive right to do so.
Preferred Stock. Certain of the underlying funds invest in preferred
stocks which, like debt obligations, have characteristics similar to
fixed-income securities. Holders 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
preferred stock may be cumulative, and all cumulative dividends usually
must be paid prior to common shareholders receiving any 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.
Foreign Investments. The portfolios will each invest in certain
underlying funds that invest all or a portion of their assets in
securities of non-U.S. issuers. Foreign investments include non-dollar
denominated securities traded outside the U.S. and dollar-denominated
securities traded in the U.S. (such as American Depositary Receipts).
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 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 fund may not be registered with, nor the
issuers thereof be subject to reporting requirements of, the Securities
and Exchange Commission (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 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 and dividends payable on a fund's foreign securities may be
subject to foreign withholding taxes, and 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 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. In
addition, 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 fund or a
portfolio investing in such fund.
American, European and Continental Depositary Receipts. Certain of the
underlying funds may invest in the securities of foreign and domestic
issuers in the form of American Depositary Receipts ("ADRs") and European
Depositary Receipts ("EDRs"). These securities may not necessarily be
denominated in the same currency as the securities into which they may be
converted. ADRs are receipts typically issued by a U.S. bank or trust
company evidencing ownership of underlying securities issued by a foreign
corporation. EDRS, which sometimes are referred to as Continental
Depositary Receipts ("CDRs"), are receipts issued in Europe typically by
foreign banks and trust companies evidencing 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.
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 fund in units or attached to securities may be deemed to be
without value.
FIXED-INCOME SECURITIES
General. Fixed income securities 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 underlying funds. The market
value of the fixed-income obligations in which the underlying 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 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 Investors Service
("Moody's") (Aaa or Aa) or Standard & Poor's Ratings Group ("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 characteristics and changes in economic
conditions or other circumstances are more likely to lead to a weakened
capacity of their issuer to make principal and interest payments than is
the case with higher grade securities.
High Yield Securities. Certain of the underlying funds may invest in
securities rated below investment grade; that is rated below Baa by
Moody's or BBB by S&P, or determined by the underlying fund's adviser to
be of comparable quality. 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 for
additional information on the bond ratings by Moody's and S&P.
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.
While convertible securities generally offer lower yields than non-
convertible debt securities of similar quality, their prices may reflect
changes in the value of the underlying common stock. Convertible
securities entail less credit risk than the issuer's common stock.
Synthetic convertible securities are created by combining non-convertible
bonds or preferred stocks with warrants or stock call options. Synthetic
convertible securities differ from convertible securities in certain
respects, including that each component of a synthetic convertible
security has a separate market value and responds differently to market
fluctuations. Investing in synthetic convertible securities involves the
risks normally involved in holding the securities comprising the
synthetic convertible security.
Convertible securities generally are subordinated to other similar but
non-convertible securities of the same issuer, although convertible
bonds, as corporate debt obligations, enjoy seniority in right of payment
to all equity securities, and convertible preferred stock is senior to
common stock, of the same issuer. Because of the subordination feature,
however, convertible securities typically have lower ratings than similar
nonconvertible securities.
Money Market Instruments. Money market instruments 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.
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, Governmental 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, 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 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.
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 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 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 funds, consistent with their investment objective and
policies, may consider making investments in such new types of
securities.
Foreign Government Securities. Among the foreign government securities
in which certain underlying 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.
Brady Bonds. Certain of the underlying funds may invest in Brady bonds
which are debt securities, generally denominated in U.S. dollars, issued
under the framework of the Brady Plan. In restructuring its external
debt under the Brady Plan framework, a debtor nation negotiates with its
existing bank lenders as well as multilateral institutions such as the
International Bank for Reconstruction and Development (the 'World Bank")
and the International Monetary Fund (the 'IMF"). Brady bonds may also be
issued in respect of new money being advanced by existing lenders in
connection with the debt restructuring. Under these arrangements with
the World Bank and/or the IMF, debtor nations have been required to agree
to the implementation of certain domestic monetary and fiscal reforms
including liberalization of trade and foreign investment, privatization
of state-owned enterprises and establishing targets for public spending
and borrowing.
Brady Bonds which have been issued to date are rated in the categories
'BB" or "B" by S&P or 'Ba' or 'B" by Moody's or, in cases in which a
rating by S&P or Moody's has not been assigned, are generally considered
by the underlying fund's investment adviser to be of comparable quality.
Agreements implemented under the Brady Plan to date are designed to
achieve debt and debt-service reduction through specific options
negotiated by a debtor nation with its creditors. As a result, the
financial packages offered by each country differ. Brady bonds issued to
date have traded at a deep discount from their face value. Certain
sovereign bonds are entitled to 'value recovery payments" in certain
circumstances, which constitute supplemental interest payments but
generally are not collateralized. Certain Brady bonds have been
collateralized as to principal due at maturity (typically 30 years from
the date of issuance) by U.S. Treasury zero coupon bonds with a maturity
equal to the final maturity of such Brady Bonds, although the collateral
is not available to investors until the final maturity of the Brady
Bonds.
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 fund, depending
upon the principal amount of 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 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.
Ratings as Investment Criteria. In general, the ratings of nationally
recognized statistical rating organizations ("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 by the underlying 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 SAI 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 because of a corporate
reorganization, a fund will attempt to use comparable ratings as
standards for its investments in accordance with its investment objective
and policies.
INVESTMENT PRACTICES
In attempting to achieve its investment objective, an underlying fund may
employ, among others, the following portfolio strategies.
Repurchase Agreements. The portfolios and the underlying 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 underlying 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 an underlying
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 underlying 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 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 an underlying 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 fund will rely on the other
party to consummate the transaction and may be disadvantaged if the other
party fails to do so.
Fixed income 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,
fixed income 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 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 securities equal to the amount
of the when-issued or delayed-delivery commitments will be established.
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 funds have
the ability to lend portfolio securities to brokers, dealers and other
financial organizations. A fund will not lend portfolio securities to
Salomon 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 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 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
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.
Short Sales. Certain of the underlying 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 funds may enter
into a short sale of common stock such that when the short position is
open the fund involved owns an 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 fund will deposit, in a segregated account with their
custodian, convertible preferred stock or convertible debt securities in
connection with short sales against the box.
Restricted Securities. Certain of the underlying 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 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 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 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 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 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.
DERIVATIVE TRANSACTIONS
Derivative transactions, including the options and futures transactions
described below, are used for a number of reasons including: to manage
exposure to changes in interest rates, stock and bond prices and foreign
currencies; as an efficient means of adjusting overall exposure to
certain markets; to adjust duration; to enhance income; and to protect
the value of portfolio securities. Options and futures can be volatile
instruments, and involve certain risks. If the adviser to the underlying
fund applies a hedge at an inappropriate time or judges market conditions
incorrectly, options and futures strategies may lower the underlying
fund's return. Further losses could also be experienced if the options
and futures positions held by an underlying fund were poorly correlated
with its other investments, or if it could not close out its positions
because of an illiquid secondary market.
Certain of the underlying funds may enter into stock index, interest rate
and currency futures contracts (or options thereon, including swaps,
caps, collars and floors). Certain underlying funds may also purchase
and sell call and put options, futures and options contracts.
Options On Securities. Certain of the underlying 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
funds, however, may engage in option transactions only to hedge against
adverse price movements in the securities that they hold 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 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 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 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 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 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 funds
with option-writing authority may write options on U.S. or foreign
exchanges and in the over-the-counter market.
An underlying 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 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 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 fund 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 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 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 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 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.
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 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.
Currency Transactions. Certain of the underlying 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 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 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
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 it anticipates.
Foreign Currency Options. Certain underlying 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 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.
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 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 contrasted 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 anticipated trends in
interest rates and currency values, as the case may be, which could prove
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 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 funds 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.
The Smith Barney Natural Resources Fund Inc. may also 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 Smith Barney Natural Resources Fund Inc. will purchase or
write options on gold futures only on a regulated domestic or foreign
exchange approved for such purpose by the Commodities Futures Trading
Commission.
Swap Agreements. Among the hedging transactions into which certain
underlying 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 fund may enter into interest rate swaps, caps and
floors on either an asset-based or liability-based basis, depending on
whether a fund 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 entitlements 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 funds 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.
ADDITIONAL RISK FACTORS
Investment in Other Mutual Funds. The investments of each portfolio are
concentrated in underlying funds so each portfolio's performance is
directly related to the investment performance of the underlying funds
held by it. The ability of each portfolio to meet its investment
objective is directly related to the ability of the underlying funds to
meet their objectives as well as the allocation among those underlying
funds by SSBC. There can be no assurance that the investment objective of
any portfolio or any underlying fund will be achieved. The portfolios
will only invest in Class Y shares of the underlying Smith Barney funds
and, accordingly, will not pay any sales loads or 12b-1 or service or
distribution fees in connection with their investments in shares of the
underlying funds. The portfolios, however, will indirectly bear their pro
rata share of the fees and expenses incurred by the underlying Smith
Barney funds that are applicable to Class Y shareholders. The investment
returns of each portfolio, therefore, will be net of the expenses of the
underlying funds in which it is invested.
Non-Diversified Portfolios. Each portfolio and certain of the underlying
funds are classified as non-diversified investment companies under the
1940 Act. Since, as a non-diversified investment company, each such
company is permitted to invest a greater proportion of its assets in the
securities of a smaller number of issuers, each such company may be
subject to greater risk with respect to its individual portfolio than an
investment company that is more broadly diversified.
Securities of Unseasoned Issuers. Securities in which certain of the
underlying funds may invest may have limited marketability and, therefore,
may be subject to wide fluctuations in market value. In addition, certain
securities may lack a significant operating history and be dependent on
products or services without an established market share.
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 principal and interest may depend on political as
well as economic factors. Although some sovereign debt, such as Brady
bonds, is collateralized by U.S. government securities, repayment of
principal and interest is not guaranteed by the U.S. government.
Brady Bonds. A significant amount of the Brady bonds that the underlying
funds may purchase have no or limited collateralization, and an underlying
fund will be relying for payment of interest and (except in the case of
principal collateralized Brady bonds) principal primarily on the
willingness and ability of the foreign government to make payment in
accordance with the terms of the Brady bonds. In the event of a default
on collateralized Brady bonds for which obligations are accelerated, the
collateral for the payment of principal will not be distributed to
investors, nor will such obligations be sold and the proceeds distributed.
In light of the residual risk of the Brady bonds and, among other factors,
the history of default with respect to commercial bank loans by public and
private entities of countries issuing Brady bonds, investments in Brady
bonds are to be viewed as speculative.
Sovereign obligors in developing and emerging market countries are among
the world's largest debtors to commercial banks, other governments,
international financial organizations and other financial institutions.
These obligors have in the past experienced substantial difficulties in
servicing their external debt obligations, which led to defaults on
certain obligations and the restructuring of certain indebtedness.
Restructuring arrangements have included, among other things, reducing and
rescheduling interest and principal payments by negotiating new or amended
credit agreements or converting outstanding principal and unpaid interest
to Brady bonds, and obtaining new credit to finance interest payments.
Holders of certain foreign sovereign debt securities may be requested to
participate in the restructuring of such obligations and to extend further
loans to their issuers. There can be no assurance that the Brady bonds
and other foreign sovereign debt securities in which the funds may invest
will not be subject to similar restructuring arrangements or to requests
for new credit which may adversely affect a fund's holdings. Furthermore,
certain participants in the secondary market for such debt may be directly
involved in negotiating the terms of these arrangements and may therefore
have access to information not available to other market participants.
Restrictions on Foreign Investment. Some countries prohibit or impose
substantial restrictions on investments in their capital markets,
particularly their equity markets, by foreign entities. For example,
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
substantially less volume than U.S. markets, and securities in many
smaller capital markets are less liquid and their prices may be more
volatile than securities of comparable U.S. companies. Brokerage
commissions, custodial services, and other costs relating to investment in
smaller capital markets are generally more expensive than in the U.S. Such
markets have different clearance and settlement procedures, and in certain
markets there have been times when settlements have been unable to keep
pace with the volume of securities transactions, making it difficult to
conduct such transactions. Further, satisfactory custodial services for
investment securities may not be available in some countries having
smaller capital markets, which may result in an underlying fund incurring
additional costs and delays in transporting and custodying such securities
outside such countries. Delays in settlement could result in temporary
periods when assets of a fund are uninvested and no return is earned
thereon. The inability of an underlying fund to make intended security
purchases due to settlement problems could cause such fund to miss
attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems could result either in losses to the
fund because of subsequent declines in value of the portfolio security or,
if the fund has entered into a contract to sell the security, could result
in possible liability to the purchaser. There is generally less
government supervision and regulation of exchanges, brokers and issuers in
countries having smaller capital markets than there is in the U.S.
Mortgage-Related Securities. To the extent an underlying fund purchases
mortgage-related securities at a premium, mortgage foreclosures and
prepayments of principal by mortgagors (which may be made at any time
without penalty) may result in some loss of the fund's principal
investment to the extent of the premium paid. The underlying fund's yield
may be affected by reinvestment of prepayments at higher or lower rates
than the original investment. In addition, like other debt securities,
the values of mortgage-related securities, including government and
government-related mortgage pools, generally will fluctuate in response to
market interest rates.
Non-Publicly Traded and Illiquid Securities. The sale of securities that
are not publicly traded is typically restricted under the Federal
securities laws. As a result, an underlying fund may be forced to sell
these securities at less than fair market value or may not be able to sell
them when the fund's adviser believes it desirable to do so. Investments
by an underlying 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 fund's net assets could be
adversely affected.
High Yield Securities. An underlying fund may invest in high yield, below
investment grade securities. Investments in high yield securities are
subject to special risks, including a greater risk of loss of principal
and non-payment of interest. An investor should carefully consider the
following factors before investing in these funds.
Generally, high yield, below investment grade securities offer a higher
return potential than higher-rated securities but involve greater
volatility of price and greater risk of loss of income and principal,
including the possibility of default or bankruptcy of the issuers of such
securities. Below investment grade securities and comparable non-rated
securities will likely have large uncertainties or major risk exposure to
adverse conditions and are predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with
the terms of the obligation. The occurrence of adverse conditions and
uncertainties would likely reduce the value of securities held by an
underlying fund, with a commensurate effect on the value of the underlying
fund's shares.
The markets in which below investment grade securities or comparable non-
rated securities are traded generally are more limited than those in which
higher-quality securities are traded. The existence of limited markets
for these securities may restrict the availability of securities for an
underlying fund to purchase and also may restrict the ability of an
underlying fund to obtain accurate market quotations for purposes of
valuing securities and calculating net asset value or to sell securities
at their fair value. An economic downturn could adversely affect the
ability of issuers of high yield securities to repay principal and pay
interest thereon.
While the market values of below investment grade securities and
comparable non-rated securities tend to react less to fluctuations in
interest rate levels than do those of higher-quality securities, the
market values of certain of these securities also tend to be more
sensitive to individual corporate developments and changes in economic
conditions than higher-quality securities. In addition, below investment
grade securities and comparable non-rated securities generally present a
higher degree of credit risk. Issuers of below investment grade
securities and comparable non-rated securities are often highly leveraged
and may not have more traditional methods of financing available to them
so that their ability to service their debt obligations during an economic
downturn or during sustained periods of rising interest rates may be
impaired. The risk of loss because of default by such issuers is
significantly greater because below investment grade securities and
comparable non-rated securities generally are unsecured and frequently are
subordinated to the prior payment of senior indebtedness. An underlying
fund may incur additional expenses to the extent it is required to seek
recovery upon a default in the payment of principal or interest on its
portfolio holdings.
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.
Repurchase Agreements. Repurchase agreements, as utilized by an
underlying fund or a portfolio of the Concert Series, could involve
certain risks in the event of default or insolvency of the other party,
including possible delays or restrictions upon the ability of an
underlying 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 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 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 fund may
decline below the repurchase price of the securities.
Lending of Portfolio Securities. The risks in lending portfolio
securities, like those associated with other extensions of secured credit,
consist of possible delays in receiving additional collateral or in the
recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially. Loans will be made to firms deemed
by the adviser to the underlying 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.
Leverage. Certain of the underlying funds may borrow from banks, on a
secured or unsecured basis, in order to leverage their portfolios.
Leverage creates an opportunity for increased returns to shareholders of
an underlying fund but, at the same time, creates special risk
considerations. For example, leverage may exaggerate changes in the net
asset value of a fund's shares and in a fund's yield. Although the
principal or stated value of such borrowings will be fixed, the fund's
assets may change in value during the time the borrowing is outstanding.
Leverage will create interest or dividend expenses for the fund that can
exceed the income from the assets retained. To the extent the income or
other gain derived from securities purchased with borrowed funds exceeds
the interest or dividends the fund will have to pay in respect thereof,
the fund's net income or other gain will be greater than if leverage had
not been used.
Conversely, if the income or other gain from the incremental assets is not
sufficient to cover the cost of leverage, the net income or other gain of
the fund will be less than if leverage had not been used. If the amount
of income for the incremental securities is insufficient to cover the cost
of borrowing, securities might have to be liquidated to obtain required
funds. Depending on market or other conditions, such liquidations could
be disadvantageous to the underlying fund.
Indexed Securities. Certain of the underlying funds may invest in indexed
securities, including inverse floaters, whose value is linked to
currencies, interest rates, commodities, indices, or other financial
indicators. Indexed securities may be positively or negatively indexed
(i.e., their value may increase or decrease if the underlying instrument
appreciates), and may have return characteristics similar to direct
investments in the underlying instrument or to one or more options on the
underlying instrument. Indexed securities may be more volatile than the
underlying instrument itself.
Forward Roll Transactions. Forward roll transactions involve the risk
that the market value of the securities sold by an underlying 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 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.
Swap Agreements. As one way of managing their exposure to different types
of investments, certain of the underlying funds may enter into interest
rate swaps, currency swaps, and other types of swap agreements such as
caps, collars, and floors. Swap agreements can be highly volatile and may
have a considerable impact on a fund's performance. Swap agreements are
subject to risks related to the counterparty's ability to perform, and may
decline in value if the counterparty's creditworthiness deteriorates. A
fund may also suffer losses if it is unable to terminate outstanding swap
agreements or reduce its exposure through offsetting transactions.
Floating and Variable Rate Income Securities. Floating and variable rate
income securities include securities whose rates vary inversely with
changes in market rates of interest. Such securities may also pay a rate
of interest determined by applying a multiple to the variable rate. The
extent of increases and decreases in the value of securities whose rates
vary inversely with changes in market rates of interest generally will be
larger than comparable changes in the value of an equal principal amount
of a fixed rate security having similar credit quality, redemption
provisions and maturity.
Zero Coupon, Discount and Payment-in-Kind Securities. Zero coupon
securities generally pay no cash interest (or dividends in the case of
preferred stock) to their holders prior to maturity. Payment-in-kind
securities allow the lender, at its option, to make current interest
payments on such securities either in cash or in additional securities.
Accordingly, such securities usually are issued and traded at a deep
discount from their face or par value and generally are subject to greater
fluctuations of market value in response to changing interest rates than
securities of comparable maturities and credit quality that pay cash
interest (or dividends in the case of preferred stock) on a current basis.
Premium Securities. Premium securities are income securities bearing
coupon rates higher than prevailing market rates. Premium securities are
typically purchased at prices greater than the principal amounts payable
on maturity. If securities purchased by an underlying 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.
INVESTMENT RESTRICTIONS
The Concert Series has adopted the following fundamental investment
restrictions for the protection of shareholders. 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. The percentage
limitations contained in the restrictions listed below (other than with
respect to (1) below) apply at the time of purchases of securities.
The investment policies adopted by the Concert Series prohibit a portfolio
from:
1. Borrowing money except that (a) the portfolio may borrow from
banks for temporary or emergency (not leveraging) purposes,
including the meeting of redemption requests which might
otherwise require the untimely disposition of securities, and
(b) the portfolio may, to the extent consistent with its
investment policies, enter into reverse repurchase agreements,
forward roll transactions similar investment strategies and
techniques. To the extent that it engages in transactions
described in (a) and (b), the portfolio will be limited so
that no more than 33-1/3% of the value of its total assets
(including the amount borrowed) valued at the lesser of cost
or market, less liabilities (not including the amount
borrowed) is made, is derived from such transactions.
2. Making loans. This restriction does not apply to: (a) the
purchase of debt obligations in which the portfolio may invest
consistent with its investment objectives and policies; (b)
repurchase agreements; and (c) loans of its portfolio
securities, to the fullest extent permitted under the 1940
Act.
3. Engaging in the business of underwriting securities issued by
other persons, except to the extent that the portfolio may
technically be deemed to be an underwriter under the
Securities Act of 1933, as amended, in disposing of portfolio
securities.
4. Purchasing or selling real estate, real estate mortgages,
commodities or commodity contracts, but this restriction shall
not prevent the portfolio from (a) investing in securities of
issuers engaged in the real estate business or business of
investing in real estate (including interests in limited
partnerships owning or otherwise engaging in the real estate
business or the business of investing in real estate) and
securities which are secured by real estate or interests
therein; (b) holding or selling real estate received in
connection with securities it holds or held; (c) trading in
futures contracts and options on futures contracts (including
options on currencies to the extent consistent with the
portfolio's investment objective and policies); or (d)
investing in real estate investment trust securities.
5. Issuing "senior securities" as defined in the 1940 Act and the
rules, regulations and orders thereunder, except as permitted
under the 1940 Act and the rules, regulations and orders
thereunder.
The portfolios have also adopted certain nonfundamental investment
restrictions that may be changed by the portfolios' Board of Directors at
any time. Accordingly the portfolios are prohibited from:
1. Purchasing securities on margin.
2. Making short sales of securities or maintaining a short
position.
3. Pledging, hypothecating, mortgaging or otherwise encumbering
more than 33-1/3% of the value of a portfolio's total assets.
4. Investing in oil, gas or other mineral exploration or
development programs.
5. Writing or selling puts, calls, straddles, spreads or
combinations thereof.
6. Purchasing restricted securities, illiquid securities (such as
repurchase agreements with maturities in excess of seven days)
or other securities that are not readily marketable.
7. 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 funds).
8. Making investments for the purpose of exercising control or
management.
9. Purchasing or retaining securities of any company if, to the
knowledge of the Concert Series, any officer or director of
the Concert Series or SSBC 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.
Notwithstanding the foregoing investment restrictions, the underlying
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 fund are located in
its SAI.
Under Section 12d(l)(G) of the 1940 Act, each portfolio may invest
substantially all of its assets in the underlying funds.
Because of their investment objectives and policies, the portfolios will
each concentrate more than 25% of their assets in the mutual fund
industry. In accordance with the portfolios' investment programs set
forth in the prospectus, each of the portfolios may invest more than 25%
of its assets in certain underlying funds. However, each of the
underlying funds in which each portfolio will invest (other than the Smith
Barney Money Funds - Cash Portfolio) will not concentrate more than 25% of
its total assets in any one industry. The Smith Barney Money Funds - Cash
Portfolio will invest at least 25% of its assets in obligations issued by
banks.
PORTFOLIO TURNOVER
Each portfolio's turnover rate is not expected to exceed 25% annually.
Under certain market conditions, a portfolio may experience high portfolio
turnover as a result of its investment strategies. 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 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 funds within the percentage limits described in
the Prospectus.
The turnover rates of the underlying funds have ranged from 1% to 367%
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 funds.
PURCHASE OF SHARES
Sales Charge Alternatives
The following classes of shares are available for purchase. See the
prospectus for a discussion of factors to consider in selecting which
class of shares to purchase.
Class A Shares. Class A shares are sold to investors at the public
offering price, which is the net asset value plus an initial sales charge
as follows:
Conservative Portfolio and
Income Portfolio
High Growth Portfolio, Global
Portfolio, Growth Portfolio and
Balanced Portfolio
Amount of
Investment
Sales Charge
as %
of Offering
Price
Sales Charge
as %
of Amount
Invested
Sales Charge as
%
of Offering
Price
Sales Charge as
%
of Amount
Invested
Less than $25,000
4.50%
4.71%
5.00%
5.26%
$ 25,000 - 49,999
4.00
4.17
4.00
4.17
50,000 - 99,999
3.50
3.63
3.50
3.63
100,000 - 249,999
2.50
2.56
3.00
3.09
250,000 - 499,999
1.50
1.52
2.00
2.04
500,000 and over
- -0-
- -0-
? Purchases of Class A shares of $500,000 or more will be made at net
asset value without any initial sales charge, but will be subject to a
deferred sales charge of 1.00% on redemptions made within 12 months of
purchase. The deferred sales charge on Class A shares is payable to
Salomon Smith Barney, which compensates Salomon Smith Barney Financial
Consultants and other dealers whose clients make purchases of $500,000
or more. The deferred sales charge is waived in the same circumstances
in which the deferred sales charge applicable to Class B and Class L
shares is waived. See "Deferred Sales Charge Alternatives" and 'Waivers
of Deferred Sales Charge."
Members of the selling group may receive up to 90% of the sales charge and
may be deemed to be underwriters of the portfolio as defined in the 1933
Act. The reduced sales charges shown above apply to the aggregate of
purchases of Class A shares of the portfolio made at one time by "any
person," which includes an individual and his or her immediate family, or
a trustee or other fiduciary of a single trust estate or single fiduciary
account.
Class B Shares. Class B shares are sold without an initial sales charge
but are subject to a deferred sales charge payable upon certain
redemptions. See "Deferred Sales Charge Provisions" below.
Class L Shares. Class L shares are sold with an initial sales charge of
1.00% (which is equal to 1.01% of the amount invested) and are subject to a
deferred sales charge payable upon certain redemptions. See "Deferred
Sales Charge Provisions" below. Until June 22, 2001 purchases of Class L
shares by investors who were holders of Class C shares of the portfolio on
June 12, 1998 will not be subject to the 1% initial sales charge.
Class Y Shares. Class Y shares are sold without an initial sales charge or
deferred sales charge and are available only to investors investing a
minimum of $15,000,000.
General
Investors may purchase shares from a Salomon Smith Barney Financial
Consultant or a broker that clears through Salomon Smith Barney ("Dealer
Representative"). In addition, certain investors, including qualified
retirement plans purchasing through certain Dealer Representatives, may
purchase shares directly from the portfolio. When purchasing shares of a
portfolio, investors must specify whether the purchase is for Class A,
Class B, Class L or Class Y shares. Salomon Smith Barney and Dealer
Representatives may charge their customers an annual account maintenance
fee in connection with a brokerage account through which an investor
purchases or holds shares. Accounts held directly at First Data Investor
Services Group, Inc. ("First Data" or "transfer agent") are not subject to
a maintenance fee.
Investors in Class A, Class B and Class L shares may open an account in a
portfolio by making an initial investment of at least $1,000 for each
account, or $250 for an IRA or a Self-Employed Retirement Plan, in the
portfolio. Investors in Class Y shares may open an account by making an
initial investment of $15,000,000. Subsequent investments of at least $50
may be made for all Classes. For participants in retirement plans
qualified under Section 403(b)(7) or Section 401(c) of the Code, the
minimum initial investment required for Class A, Class B and Class L shares
and the subsequent investment requirement for all Classes in the portfolio
is $25. For shareholders purchasing shares of a portfolio through the
Systematic Investment Plan on a monthly basis, the minimum initial
investment requirement for Class A, Class B and Class L shares and
subsequent investment requirement for all Classes is $25. For shareholders
purchasing shares of a portfolio through the Systematic Investment Plan on
a quarterly basis, the minimum initial investment required for Class A,
Class B and Class L shares and the subsequent investment requirement for
all Classes is $50. There are no minimum investment requirements for Class
A shares for employees of Citigroup Inc. ("Citigroup") and its
subsidiaries, including Salomon Smith Barney, unitholders who invest
distributions from a Unit Investment Trust ("UIT") sponsored by Salomon
Smith Barney, and Directors/Trustees of any of the Smith Barney Mutual
Funds, and their spouses and children. Each portfolio reserves the right
to waive or change minimums, to decline any order to purchase its shares
and to suspend the offering of shares from time to time. Shares purchased
will be held in the shareholder's account by First Data. Share
certificates are issued only upon a shareholder's written request to First
Data.
Purchase orders received by a portfolio or a Salomon Smith Barney
Financial Consultant prior to the close of regular trading on the New York
Stock Exchange ("NYSE"), on any day a portfolio calculates its net asset
value, are priced according to the net asset value determined on that day
(the "trade date). Orders received by a Dealer Representative prior to
the close of regular trading on the NYSE on any day a portfolio calculates
its net asset value, are priced according to the net asset value
determined on that day, provided the order is received by a portfolio or a
portfolio's agent prior to its close of business. For shares purchased
through Salomon Smith Barney or a Dealer Representative purchasing through
Salomon Smith Barney, payment for shares of the portfolio is due on the
third business day after the trade date. In all other cases, payment must
be made with the purchase order.
Systematic Investment Plan. Shareholders may make additions to their
accounts at any time by purchasing shares through a service known as the
Systematic Investment Plan. Under the Systematic Investment Plan, Salomon
Smith Barney or First Data is authorized through preauthorized transfers
of at least $25 on a monthly basis or at least $50 on a quarterly basis to
charge the shareholder's account held with a bank or other financial
institution on a monthly or quarterly basis as indicated by the
shareholder, to provide for systematic additions to the shareholder's
portfolio account. A shareholder who has insufficient portfolios to
complete the transfer will be charged a fee of up to $25 by Salomon Smith
Barney or First Data. The Systematic Investment Plan also authorizes
Salomon Smith Barney to apply cash held in the shareholder's Salomon Smith
Barney brokerage account or redeem the shareholder's shares of a Smith
Barney money market portfolio to make additions to the account.
Additional information is available from each portfolio or a Salomon Smith
Barney Financial Consultant or a Dealer Representative.
Sales Charge Waivers and Reductions
Initial Sales Charge Waivers. Purchases of Class A shares may be made at
net asset value without a sales charge in the following circumstances: (a)
sales to (i) Board Members and employees of Citigroup and its subsidiaries
and any Citigroup affiliated portfolios including the Smith Barney Mutual
Funds (including retired Board Members and employees); the immediate
families of such persons (including the surviving spouse of a deceased
Board Member or employee); and to a pension, profit-sharing or other
benefit plan for such persons and (ii) employees of members of the
National Association of Securities Dealers, Inc., provided such sales are
made upon the assurance of the purchaser that the purchase is made for
investment purposes and that the securities will not be resold except
through redemption or repurchase; (b) offers of Class A shares to any
other investment company to effect the combination of such company with
the portfolio by merger, acquisition of assets or otherwise; (c) purchases
of Class A shares by any client of a newly employed Salomon Smith Barney
Financial Consultant (for a period up to 90 days from the commencement of
the Financial Consultant's employment with Salomon Smith Barney), on the
condition the purchase of Class A shares is made with the proceeds of the
redemption of shares of a mutual portfolio which (i) was sponsored by the
Financial Consultant's prior employer, (ii) was sold to the client by the
Financial Consultant and (iii) was subject to a sales charge; (d)
purchases by shareholders who have redeemed Class A shares in a portfolio
(or Class A shares of another Smith Barney Mutual Fund that is offered
with a sales charge) and who wish to reinvest their redemption proceeds in
a portfolio, provided the reinvestment is made within 60 calendar days of
the redemption; (e) purchases by accounts managed by registered investment
advisory subsidiaries of Citigroup; (f) direct rollovers by plan
participants of distributions from a 401(k) plan offered to employees of
Citigroup or its subsidiaries or a 401(k) plan enrolled in the Smith
Barney 401(k) Program (Note: subsequent investments will be subject to the
applicable sales charge); (g) purchases by a separate account used to fund
certain unregistered variable annuity contracts; (h) investments of
distributions from or proceeds from a sale of a UIT sponsored by Salomon
Smith Barney; (i) purchases by investors participating in a Salomon Smith
Barney fee-based arrangement; and (j) purchases by Section 403(b) or
Section 401(a) or (k) accounts associated with Copeland Retirement
Programs. In order to obtain such discounts, the purchaser must provide
sufficient information at the time of purchase to permit verification that
the purchase would qualify for the elimination of the sales charge.
Right of Accumulation. Class A shares of the portfolio may be purchased
by "any person" (as defined above) at a reduced sales charge or at net
asset value determined by aggregating the dollar amount of the new
purchase and the total net asset value of all Class A shares of the
portfolio and of most other Smith Barney Mutual Funds that are offered
with a sales charge then held by such person and applying the sales charge
applicable to such aggregate. In order to obtain such discount, the
purchaser must provide sufficient information at the time of purchase to
permit verification that the purchase qualifies for the reduced sales
charge. The right of accumulation is subject to modification or
discontinuance at any time with respect to all shares purchased
thereafter.
Letter of Intent - Class A Shares. A Letter of Intent for an amount of
$50,000 or more provides an opportunity for an investor to obtain a
reduced sales charge by aggregating investments over a 13 month period,
provided the investor refers to such Letter when placing orders. For
purposes of a Letter of Intent, the "Amount of Investment" as referred to
in the preceding sales charge table includes (i) all Class A shares of a
portfolio and other Smith Barney Mutual Funds offered with a sales charge
acquired during the term of the letter plus (ii) the value of all Class A
shares previously purchased and still owned. Each investment made during
the period receives the reduced sales charge applicable to the total
amount of the investment goal. If the goal is not achieved within the
period, the investor must pay the difference between the sales charges
applicable to the purchases made and the charges previously paid, or an
appropriate number of escrowed shares will be redeemed. The term of the
Letter will commence upon the date the Letter is signed, or at the options
of the investor, up to 90 days before such date. Please contact a Salomon
Smith Barney Financial Consultant or First Data to obtain a Letter of
Intent application.
Letter of Intent - Class Y Shares. A Letter of Intent may also be used as
a way for investors to meet the minimum investment requirement for Class Y
shares. For each of the portfolios, investors must make an initial
minimum purchase of $5,000,000 in Class Y shares of a portfolio and agree
to purchase a total of $15,000,000 of Class Y shares of a portfolio within
13 months from the date of the Letter. If a total investment of
$15,000,000 is not made within the 13-month period, all Class Y shares
purchased to date will be transferred to Class A shares, where they will
be subject to all fees (including a service fee of 0.25%) and expenses
applicable to the portfolio's Class A shares, which may include a deferred
sales charge of 1.00%. Please contact a Salomon Smith Barney Financial
Consultant or First Data for further information.
Volume Discounts. The schedule of sales charges on Class A shares
described in the Prospectus applies to purchases made by any "purchaser,"
which is defined to include the following: (a) an individual; (b) an
individual's spouse and his or her children purchasing shares for his or
her own account; (c) a pension, profit-sharing or other employee benefit
plan qualified under Section 401(a) of the Code, and qualified employee
benefit plans of employers who are "affiliated persons" of each other
within the meaning of the 1940 Act; (d) tax-exempt organizations
enumerated in Section 501(c)(3) or (13) of the Code; and (e) a trustee or
other professional fiduciary (including a bank, or an investment adviser
registered with the SEC under the Investment Advisers Act of 1940, as
amended) purchasing shares of a portfolio for one or more trust estates or
fiduciary accounts. Purchasers who wish to combine purchase orders to
take advantage of volume discounts on Class A shares should contact a
Salomon Smith Barney Financial Consultant.
Deferred Sales Charge Provisions
"Deferred Sales Charge Shares" are: (a) Class B shares; (b) Class L
shares; and (c) Class A shares that were purchased without an initial
sales charge but are subject to a deferred sales charge. A deferred sales
charge may be imposed on certain redemptions of these shares.
Any applicable deferred sales charge will be assessed on an amount equal to
the lesser of the original cost of the shares being redeemed or their net
asset value at the time of redemption. Deferred Sales Charge Shares which
are redeemed will not be subject to a deferred sales charge to the extent
that the value of such shares represents: (a) capital appreciation of
portfolio assets; (b) reinvestment of dividends or capital gain
distributions; (c) with respect to Class B shares, shares redeemed more
than five years after their purchase; or (d) with respect to Class L shares
and Class A shares that are Deferred Sales Charge Shares, shares redeemed
more than 12 months after their purchase.
Class L shares and Class A shares that are Deferred Sales Charge Shares are
subject to a 1.00% deferred sales charge if redeemed within 12 months of
purchase. In circumstances in which the deferred sales charge is imposed
on Class B shares, the amount of the charge will depend on the number of
years since the shareholder made the purchase payment from which the amount
is being redeemed. Solely for purposes of determining the number of years
since a purchase payment, all purchase payments made during a month will be
aggregated and deemed to have been made on the last day of the preceding
Salomon Smith Barney statement month. The following table sets forth the
rates of the charge for redemptions of Class B shares by shareholders,
except in the case of Class B shares held under the Smith Barney 401(k)
Program, as described below. See "Purchase of Shares-Smith Barney 401(k)
and ExecChoice(tm) Programs."
Deferred Sales Charge
Year Payment Was
Made Since
Purchase
Conservative Portfolio
and Income Portfolio
High Growth Portfolio, Global
Portfolio, Growth Portfolio
and Balanced Portfolio
First
4.50%
5.00%
Second
4.00
4.00
Third
3.00
3.00
Fourth
2.00
2.00
Fifth
1.00
1.00
Sixth and thereafter
0.00
0.00
Class B shares will convert automatically to Class A shares eight years
after the date on which they were purchased and thereafter will no longer
be subject to any distribution fees. There will also be converted at that
time such proportion of Class B Dividend Shares (Class B shares that were
acquired through the reinvestment of dividends and distributions) owned by
the shareholder as the total number of his or her Class B shares converting
at the time bears to the total number of outstanding Class B shares (other
than Class B Dividend Shares) owned by the shareholder.
The length of time that Deferred Sales Charge Shares acquired through an
exchange have been held will be calculated from the date that the shares
exchanged were initially acquired in one of the other Smith Barney Mutual
Funds, and portfolio shares being redeemed will be considered to represent,
as applicable, capital appreciation or dividend and capital gain
distribution reinvestments in such other portfolios. For Federal income
tax purposes, the amount of the deferred sales charge will reduce the gain
or increase the loss, as the case may be, on the redemption. The amount of
any deferred sales charge will be paid to Salomon Smith Barney.
To provide an example, assume an investor purchased 100 Class B shares at
$10 per share for a cost of $1,000. Subsequently, the investor acquired 5
additional shares through dividend reinvestment. During the fifteenth
month after the purchase, the investor decided to redeem $500 of his or her
investment. Assuming at the time of the redemption the net asset value had
appreciated to $12 per share, the value of the investor's shares would be
$1,260 (105 shares at $12 per share). The deferred sales charge would not
be applied to the amount which represents appreciation ($200) and the value
of the reinvested dividend shares ($60). Therefore, $240 of the $500
redemption proceeds ($500 minus $260) would be charged at a rate of 4.00%
(the applicable rate for Class B shares) for a total deferred sales charge
of $9.60.
Waivers of Deferred Sales Charge
The deferred sales charge will be waived on: (a) exchanges (see "Exchange
Privilege"); (b) automatic cash withdrawals in amounts equal to or less
than 1.00% per month of the value of the shareholder's shares at the time
the withdrawal plan commences (see "Automatic Cash Withdrawal Plan') (but,
automatic cash withdrawals in amounts equal to or less than 2.00% per
month of the value of the shareholder's shares will be permitted for
withdrawal plans that were established prior to November 7, 1994); (c)
redemptions of shares within 12 months following the death or disability
of the shareholder; (d) redemptions of shares made in connection with
qualified distributions from retirement plans or IRAs upon the attainment
of age 591/2; (e) involuntary redemptions; and (f) redemptions of shares to
effect a combination of a portfolio with any investment company by merger,
acquisition of assets or otherwise. In addition, a shareholder who has
redeemed shares from other Smith Barney Mutual Funds may, under certain
circumstances, reinvest all or part of the redemption proceeds within 60
days and receive pro rata credit for any deferred sales charge imposed on
the prior redemption.
Deferred sales charge waivers will be granted subject to confirmation (by
Salomon Smith Barney in the case of shareholders who are also Salomon
Smith Barney clients or by First Data in the case of all other
shareholders) of the shareholder's status or holdings, as the case may be.
PFS Accounts
Initial purchase of shares of the fund must be made through a PFS
Investments Registered Representative by completing the appropriate
application found in this prospectus. The completed application should be
forwarded to the sub-transfer agent, 3100 Breckinridge Blvd., Bldg. 200,
Duluth, Georgia 30099-0062. Checks drawn on foreign banks must be payable
in U.S. dollars and have the routing number of the U.S. bank encoded on
the check. Subsequent investments may be sent directly to the sub-transfer
agent. In processing applications and investments, the transfer agent
acts as agent for the investor and for PFS Investments and also as agent
for the distributor, in accordance with the terms of the prospectus. If
the transfer agent ceases to act as such, a successor company named by the
fund will act in the same capacity so long as the account remains open.
Shares purchased will be held in the shareholder's account by the sub-
transfer agent. Share certificates are issued only upon a shareholder's
written request to the sub-transfer agent. A shareholder that has
insufficient funds to complete any purchase will be charged a fee of
$27.50 per returned purchase by PFS.
Investors in Class A and Class B shares may open an account by making an
initial investment of at least $1,000 for each account in each Class
(except for Systematic Investment Plan accounts), or $250 for an IRA or a
Self-Employed Retirement Plan in a Fund. Subsequent investments of at
least $50 may be made for each Class. For participants in retirement plans
qualified under Section 403(b)(7) or Section 401(a) of the Code, the
minimum initial investment requirement for Class A and Class B shares and
the subsequent investment requirement for each Class in the Fund is $25.
For the fund's Systematic Investment Plan, the minimum initial investment
requirement for Class A and Class B shares and the subsequent investment
requirement for each Class is $25. There are no minimum investment
requirements in Class A shares for employees of Citigroup and its
subsidiaries, including Salomon Smith Barney, Directors or Trustees of any
of the Smith Barney Mutual Funds, and their spouses and children. The fund
reserves the right to waive or change minimums, to decline any order to
purchase its shares and to suspend the offering of shares from time to
time. Purchase orders received by the transfer agent or sub-transfer
agent prior to the close of regular trading on the NYSE, on any day the
fund calculates its net asset value, are priced according to the net asset
value determined on that day.
Upon completion of certain automated systems, initial purchases of fund
shares may be made by wire. The minimum investment that can be made by
wire is $10,000. Before sending the wire, the PFS Investments Registered
Representative must contact the sub-transfer agent at (800) 665-8677 to
obtain proper wire instructions. Once an account is open, a shareholder
may make additional investments by wire. The shareholder should contact
the sub-transfer agent at (800) 544-5445 to obtain proper wire
instructions.
Upon completion of certain automated systems, shareholders who establish
telephone transaction authority on their account and supply bank account
information may make additions to their accounts at any time.
Shareholders should contact the sub-transfer agent at (800) 544-5445
between 8:00 a.m. and 8:00 p.m. eastern time any day that the NYSE is
open. If a shareholder does not wish to allow telephone subsequent
investments by any person in his account, he should decline the telephone
transaction option on the account application. The minimum telephone
subsequent investment is $250 and can be up to a maximum of $10,000. By
requesting a subsequent purchase by telephone, you authorize the sub-
transfer agent to transfer funds from the bank account provided for the
amount of the purchase. A shareholder that has insufficient funds to
complete the transfer will be charged a fee of up to $27.50 by PFS or the
sub-transfer agent. A shareholder who places a stop payment on a transfer
or the transfer is returned because the account has been closed, will also
be charged a fee of up to $27.50 by PFS or the sub-transfer agent.
Subsequent investments by telephone may not be available if the
shareholder cannot reach the sub-transfer agent whether because all
telephone lines are busy or for any other reason; in such case, a
shareholder would have to use the fund's regular subsequent investment
procedure described above.
Redemption proceeds can be sent by check to the address of record or by
wire transfer to a bank account designated on the application. A
shareholder will be charged a $25 service fee for wire transfers and a
nominal service fee for transfers made directly to the shareholder's bank
by the Automated Clearing House.
An Account Transcript is available at a shareholder's request, which
identifies every financial transaction in an account since it has opened.
To defray administrative expenses involved with providing multiple years
worth of information, there is a $15 charge for each Account Transcript
requested. Additional copies of tax forms are available at the
shareholder's request. A $10 fee for each tax form will be assessed.
The sub-transfer agent will process and mail a shareholder's redemption
check usually within two to three business days after receiving the
redemption request in good order. The shareholder may request the
proceeds to be mailed by two-day air express for an $8 fee that will be
deducted from the shareholder's account or by one-day air express for a
$15 fee that will be deducted from the shareholder's account.
Additional information regarding the sub-transfer agent's services may be
obtained by contacting the Client Services Department at (800) 544-5445.
Smith Barney 401(k) and ExecChoice(tm) Programs
Investors may be eligible to participate in the Smith Barney 401(k)
Program or the Smith Barney ExecChoice(tm) Program. To the extent
applicable, the same terms and conditions, which are outlined below, are
offered to all plans participating ("Participating Plans") in these
programs.
Each portfolio offers to Participating Plans Class A and Class L shares as
investment alternatives under the Smith Barney 401(k) and ExecChoice(tm)
Programs. Class A and Class L shares acquired through the Participating
Plans are subject to the same service and/or distribution fees as the
Class A and Class L shares acquired by other investors; however, they are
not subject to any initial sales charge or deferred sales charge. Once a
Participating Plan has made an initial investment in a portfolio, all of
its subsequent investments in the portfolio must be in the same Class of
shares, except as otherwise described below.
Class A Shares. Class A shares of each portfolio are offered without any
sales charge or deferred sales charge to any Participating Plan that
purchases $1,000,000 or more of Class A shares of one or more portfolios
of the Smith Barney Mutual Funds.
Class L Shares. Class L shares of each portfolio are offered without any
sales charge or deferred sales charge to any Participating Plan that
purchases less than $1,000,000 of Class L shares of one or more portfolios
of the Smith Barney Mutual Funds.
401(k) and ExecChoice(tm) Plans Opened On or After June 21, 1996. If, at the
end of the fifth year after the date the Participating Plan enrolled in
the Smith Barney 401(k) Program or the Smith Barney ExecChoice(tm) Program, a
Participating Plan's total Class L holdings in all non-money market Smith
Barney Mutual Funds equal at least $1,000,000, the Participating Plan will
be offered the opportunity to exchange all of its Class L shares for Class
A shares of a portfolio. For Participating Plans that were originally
established through a Salomon Smith Barney retail brokerage account, the
five-year period will be calculated from the date the retail brokerage
account was opened. Such Participating Plans will be notified of the
pending exchange in writing within 30 days after the fifth anniversary of
the enrollment date and, unless the exchange offer has been rejected in
writing, the exchange will occur on or about the 90th day after the fifth
anniversary date. If the Participating Plan does not qualify for the
five-year exchange to Class A shares, a review of the Participating Plan's
holdings will be performed each quarter until either the Participating
Plan qualifies or the end of the eighth year.
401(k) Plans Opened Prior to June 21, 1996. In any year after the date a
Participating Plan enrolled in the Smith Barney 401(k) Program, if a
Participating Plan's total Class L holdings in all non-money market Smith
Barney Mutual Funds equal at least $500,000 as of the calendar year-end,
the Participating Plan will be offered the opportunity to exchange all of
its Class L shares for Class A shares of a portfolio. Such Plans will be
notified in writing within 30 days after the last business day of the
calendar year and, unless the exchange offer has been rejected in writing,
the exchange will occur on or about the last business day of the following
March.
Any Participating Plan in the Smith Barney 401(k) or the Smith Barney
ExecChoice(tm) Programs, whether opened before or after June 21, 1996, that
has not previously qualified for an exchange into Class A shares will be
offered the opportunity to exchange all of its Class L shares for Class A
shares of the portfolio, regardless of asset size, at the end of the
eighth year after the date the Participating Plan enrolled in the Smith
Barney 401(k) Program. Such Plans will be notified of the pending
exchange in writing approximately 60 days before the eighth anniversary of
the enrollment date and, unless the exchange has been rejected in writing,
the exchange will occur on or about the eighth anniversary date. Once an
exchange has occurred, a Participating Plan will not be eligible to
acquire additional Class L shares of a portfolio, but instead may acquire
Class A shares of a portfolio. Any Class L shares not converted will
continue to be subject to the distribution fee.
Participating Plans wishing to acquire shares of a portfolio through the
Smith Barney 401(k) Program or the Smith Barney ExecChoice(tm) Program must
purchase such shares directly from the transfer agent. For further
information regarding these Programs, investors should contact a Salomon
Smith Barney Financial Consultant.
REDEMPTION OF SHARES
The Concert Series is required to redeem the shares of each portfolio
tendered to it, as described below, at a redemption price equal to their
net asset value per share next determined after receipt of a written
request in proper form at no charge other than any applicable deferred
sales charge. Redemption requests received after the close of regular
trading on the NYSE are priced at the net asset value next determined.
If a shareholder holds shares in more than one class, any requests for
redemption must specify the class being redeemed. In the event of a
failure to specify which class, or if the investor owns fewer shares of
the class than specified, the redemption request will be delayed until the
Concert Series' transfer agent receives further instructions from Salomon
Smith Barney or if the shareholder's account is not with Salomon Smith
Barney, from the shareholder directly. The redemption proceeds will be
remitted on or before the third business day following receipt of proper
tender, except on any days on which the NYSE is closed or as permitted
under the 1940 Act in extraordinary circumstances.
Generally, if the redemption proceeds are remitted to a Salomon Smith
Barney brokerage account, these funds will not be invested for the
shareholder's benefit without specific instruction and Salomon Smith
Barney will benefit from the use of temporarily uninvested funds.
Redemption proceeds for shares purchased by check, other than a certified
or official bank check, will be remitted upon clearance of the check,
which may take up to fifteen days or more.
Shares held by Salomon Smith Barney as custodian must be redeemed by
submitting a written request to a Salomon Smith Barney Financial
Consultant. Shares other than those held by Salomon Smith Barney as
custodian may be redeemed through an investor's Financial Consultant,
Introducing Broker or dealer in the selling group or by submitting a
written request for redemption to:
Smith Barney Concert Allocation Series Inc./ [Name of Portfolio]
Class A, B, L or Y (please specify)
c/o First Data Investor Services Group, Inc.
P.O. Box 5128
Westborough, Massachusetts 01581-5128
A written redemption request must (a) state the class and number or dollar
amount of shares to be redeemed (b) identify the shareholder's account
number and (c) be signed by each registered owner exactly as the shares
are registered. If the shares to be redeemed were issued in certificate
form, the certificates must be endorsed for transfer (or be accompanied by
an endorsed stock power) and must be submitted to First Data together with
the redemption request. Any signature required in connection with a
redemption request in excess of $10,000 must be guaranteed by an eligible
guarantor institution, such as a domestic bank, savings and loan
institution, domestic credit union, member bank of the Federal Reserve
System or member firm of a national securities exchange. Written
redemption requests of $10,000 or less do not require a signature
guarantee. First Data may require additional supporting documents for
redemptions made by corporations, executors, administrators, trustees or
guardians. A redemption request will not be deemed properly received
until First Data receives all required documents in proper form.
Redemption proceeds will be mailed to the shareholder's address of record.
The right of redemption may be suspended or the date of payment postponed
(a) for any period during which the NYSE is closed (other than for
customary weekend or holiday closings), (b) when trading in markets a
portfolio normally utilizes is restricted, or an emergency, as determined
by the SEC, exists so that disposal of a portfolio's investments or
determination of net asset value is not reasonably practicable or (c) for
such other periods as the SEC by order may permit for protection of a
portfolio's shareholders.
Telephone Redemption and Exchange Program. Shareholders who do not have a
Salomon Smith Barney brokerage account may be eligible to redeem and
exchange portfolio shares by telephone. To determine if a shareholder is
entitled to participate in this program, he or she should contact First
Data at (800) 451-2010. Once eligibility is confirmed, the shareholder
must complete and return a Telephone/Wire Authorization Form, including a
signature guarantee, that will be provided by First Data upon request.
(Alternatively, an investor may authorize telephone redemptions on the new
account application with a signature guarantee when making his/her initial
investment in the Concert Series.)
Redemptions. Redemption requests of up to $10,000 of any class or classes
of a portfolio's shares may be made by eligible shareholders by calling
First Data at (800) 451-2010. Such requests may be made between 9:00 a.m.
and 5:00 p.m. (New York City time) on any day the NYSE is open.
Redemptions of shares (i) by retirement plans or (ii) for which
certificates have been issued are not permitted under this program.
A shareholder will have the option of having the redemption proceeds
mailed to his/her address of record or wired to a bank account
predesignated by the shareholder. Generally, redemption proceeds will be
mailed or wired, as the case may be, on the next business day following
the redemption request. In order to use the wire procedures, the bank
receiving the proceeds must be a member of the Federal Reserve System or
be a correspondent of a member bank. The Concert Series reserves the
right to charge shareholders a nominal fee for each wire redemption. Such
charges, of any, will be assessed against the shareholder's portfolio
account from which shares were redeemed. In order to change the bank
account designated to receive redemption proceeds, a shareholder must
complete a new Telephone/Wire Authorization Form and, for the protection
of the shareholder's assets, will be required to provide a signature
guarantee and certain other documentation.
Exchanges. Eligible shareholders may make exchanges by telephone if the
account registration of the shares of the fund being acquired is identical
to the registration of the shares of the fund exchanged. Such exchange
requests may be made by calling First Data at (800) 451-2010 between 9:00
a.m. and 5:00 p.m. (New York City time) on any day on which the NYSE is
open.
Additional Information Regarding Telephone Redemption and Exchange
Program. Neither the Concert Series nor its agents will be liable for
following instructions communicated by telephone that are reasonably
believed to be genuine. The Concert Series and its agents will employ
procedures designed to verify the identity of the caller and legitimacy of
instructions (for example, a shareholder's name and account number will be
required and phone calls may be recorded). The Concert Series reserves
the right to suspend, modify or discontinue the telephone redemption and
exchange program or to impose a charge for this service at any time
following at least seven (7) days prior notice to shareholders.
Automatic Cash Withdrawal Plan. An automatic cash withdrawal plan (the
"Withdrawal Plan") is available to shareholders who own shares with a
value of at least $ 10,000 and who wish to receive specific amounts of
cash of at least $50 monthly or quarterly. Retirement plan accounts are
eligible for automatic cash withdrawal plans only where the shareholder is
eligible to receive qualified distributions and has an account value of at
least $5,000. The withdrawal plan will be carried over on exchanges
between funds or classes of a portfolio. Withdrawals may be made under
the Withdrawal Plan by redeeming as many shares of a portfolio as may be
necessary to cover the stipulated withdrawal payment. Any applicable
deferred sales charge will not be waived on amounts withdrawn by
shareholders that exceed 1.00% per month of the value of a shareholders
shares at the time the Withdrawal Plan commences. To the extent
withdrawals exceed dividends, distributions and appreciation of a
shareholders investment in a portfolio, there will be a reduction in the
value of the shareholder's account and continued withdrawal payments will
reduce the shareholder's investment and ultimately may exhaust it.
Withdrawal payments should not be considered as income from investment in
a portfolio. Furthermore, as it generally would not be advantageous to a
shareholder to make additional investments in a portfolio at the same time
he or she is participating in the Withdrawal Plan, purchases by such
shareholders in amounts of less than $5,000 ordinarily will not be
permitted.
Shareholders who wish to participate in the Withdrawal Plan and who hold
their shares in certificate form must deposit their share certificates
with First Data as agent for Withdrawal Plan members. All dividends and
distributions on shares in the Withdrawal Plan are reinvested
automatically at net asset value in additional shares of the portfolio.
Withdrawal Plans should be set up with a Salomon Smith Barney Financial
Consultant. Shareholders who purchase shares directly through First Data
may continue to do so and applications for participation in the
Withdrawals Plan must be received by First Data no later than the eighth
day of the month to be eligible for participation beginning with that
month's withdrawal. For additional information, shareholders should
contact a Salomon Smith Barney Financial Consultant.
EXCHANGE PRIVILEGE
Shares of each class of a portfolio may be exchanged for shares of the
same class of certain Smith Barney Mutual Funds, to the extent shares are
offered for sale in the shareholder's state of residence. Exchanges of
Class A, Class B and Class L shares are subject to minimum investment
requirements and all shares are subject to the other requirements of the
fund into which exchanges are made.
Class B Exchanges. If a Class B shareholder wishes to exchange all or a
portion of his or her shares in any of the funds imposing a higher
deferred sales charge than that imposed by a portfolio, the exchanged
Class B shares will be subject to the higher applicable deferred sales
charge. Upon an exchange, the new Class B shares will be deemed to have
been purchased on the same date as the Class B shares of the portfolio
that have been exchanged.
Class L Exchanges. Upon an exchange, the new Class L shares will be
deemed to have been purchased on the same date as the Class L shares of
the portfolio that have been exchanged.
Class A and Class Y Exchanges. Class A and Class Y shareholders of the
portfolio who wish to exchange all or a portion of their shares for shares
of the respective Class in any of the available Smith Barney Mutual Funds
may do so without imposition of any charge.
Additional Information Regarding the Exchange Privilege. Although the
exchange privilege is an important benefit, excessive exchange
transactions can be detrimental to the portfolio's performance and its
shareholders. The manager may determine that a pattern of frequent
exchanges is excessive and contrary to the best interests of a portfolio's
other shareholders. In this event, the portfolio may, at its discretion,
decide to limit additional purchases and/or exchanges by the shareholder.
Upon such a determination, the portfolio will provide notice in writing or
by telephone to the shareholder at least 15 days prior to suspending the
exchange privilege and during the 15 day period the shareholder will be
required to (a) redeem his or her shares in the portfolio or (b) remain
invested in the portfolio or exchange into any of the available funds of
the Smith Barney Mutual Funds ordinarily available, which position the
shareholder would be expected to maintain for a significant period of
time. All relevant factors will be considered in determining what
constitutes an abusive pattern of exchanges.
Certain shareholders may be able to exchange shares by telephone. See
"Redemption of Shares-Telephone Redemptions and Exchange Program."
Exchanges will be processed at the net asset value next determined.
Redemption procedures discussed below are also applicable for exchanging
shares, and exchanges will be made upon receipt of all supporting
documents in proper form. If the account registration of the shares of
the portfolio being acquired is identical to the registration of the
shares of the portfolio exchanged, no signature guarantee is required. An
exchange involves a taxable redemption of shares, subject to the tax
treatment described in "Additional Tax Information" above, followed by a
purchase of shares of a different portfolio. Before exchanging shares,
investors should read the current prospectus describing the shares to be
acquired. The portfolio reserves the right to modify or discontinue
exchange privileges upon 60 days' prior notice to shareholders.
The exchange privilege enables shareholders to acquire shares of the same
class in a fund with different investment objectives when they believe
that a shift between funds is an appropriate investment decision. This
privilege is available to shareholders residing in any state in which the
fund shares being acquired may legally be sold. Prior to any exchange,
the shareholder should obtain and review a copy of the current prospectus
of each fund into which an exchange is being considered. Prospectuses may
be obtained from a Salomon Smith Barney Financial Consultant or a PFS
Investments Representative.
Upon receipt of proper instructions and all necessary supporting
documents, shares submitted for exchange are redeemed at the then-current
net asset value and the proceeds are immediately invested at a price as
described above in shares of the portfolio being acquired. Salomon Smith
Barney and PFS reserve the right to reject any exchange request. The
exchange privilege may be modified or terminated at any time after written
notice to shareholders.
As stated in the prospectus for shares distributed through pfs, the
Exchange privilege is limited.
TAXES
General. The following is a summary of certain federal income tax
considerations that may affect the Concert Series and its shareholders.
The discussion relates 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.
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 its
taxable net investment income and net realized capital gains are
distributed to its shareholders, provided each portfolio distributes at
least 90% of the sum of its net investment income and any excess of its
net short-term capital gain over its net long-term capital loss.
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 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 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 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.
If, in any taxable year, the fund fails to qualify as a regulated
investment company under the Code or fails to meet the distribution
requirement, it would be taxed in the same manner as an ordinary
corporation and distributions to its shareholders would not be deductible
by the fund in computing its taxable income. In addition, in the event of
a failure to qualify, the fund's distributions, to the extent derived from
the fund's current or accumulated earnings and profits would constitute
dividends (eligible for the corporate dividends-received deduction) which
are taxable to shareholders as ordinary income, even though those
distributions might otherwise (at least in part) have been treated in the
shareholders' hands as long-term capital gains. If the fund fails to
qualify as a regulated investment company in any year, it must pay out its
earnings and profits accumulated in that year in order to qualify again as
a regulated investment company. In addition, if the fund failed to
qualify as a regulated investment company for a period greater than one
taxable year, the fund may be required to recognize any net built-in gains
(the excess of the aggregate gains, including items of income, over
aggregate losses that would have been realized if it had been liquidated)
in order to qualify as a regulated investment company in a subsequent
year.
Dividends and Distributions. The Income Portfolio declares and pays
monthly dividends from its net investment income. The Balanced Portfolio
and Conservative Portfolio declare and pay quarterly dividends from net
investment income. The Global Portfolio, Growth Portfolio and High Growth
Portfolio declare and pay annual dividends from net investment income.
Dividends from net realized capital gains, if any, in each of the separate
portfolios will be distributed annually. Each separate portfolio may also
pay additional dividends shortly before December 31 from certain amounts
of undistributed ordinary income and capital gains realized, in order to
avoid a Federal excise tax liability.
If a shareholder does not otherwise instruct, dividends and capital gain
distributions paid will automatically reinvest in additional shares of the
same class at net asset value, with no additional sales charge or deferred
sales charge. A shareholder may change the option at any time by
notifying his or her Salomon Smith Barney Financial Consultant.
Shareholders whose accounts are held directly by First Data should notify
First Data in writing, requesting a change to this automatic reinvestment
option.
Tax Treatment of Shareholders. Distributions of investment company
taxable income generally are taxable to shareholders as ordinary income.
If an underlying fund derives dividends from domestic corporations, a
portion of the income distributions of a portfolio which invests in that
Fund may be eligible for the 70% deduction for dividends received by
corporations. Shareholders will be informed of the portion of dividends
that qualify.
The dividends received deduction is reduced to the extent the shares of
the corporation paying the dividend, the underlying fund or the portfolio
with respect to which the dividends are received are treated as debt-
financed under federal income tax law and is eliminated if either the
shares of the corporation paying the dividend, the shares of the
underlying fund or the shares of the portfolio are deemed to have been
held by the underlying fund, the portfolio or the shareholders, as the
case may be, for less than a minimum period, generally 46 days, during a
prescribed period with respect to each dividend.
Distributions of net realized capital gain designated by a portfolio as
capital gain dividends are taxable to shareholders as long-term capital
gain, regardless of the length of time the shares of a portfolio have been
held by a shareholder. Distributions of capital gain, whether long- or
short-term, are not eligible for the dividends received deduction.
Dividends (including capital gain dividends) declared by a portfolio in
October, November or December of any calendar year to shareholders of
record on a date in such a month will be deemed to have been received by
shareholders on December 31 of that calendar year, provided that the
dividend is actually paid by the portfolio during January of the following
calendar year.
All dividends are taxable to the shareholder whether reinvested in
additional shares or received in cash. Shareholders receiving
distributions in the form of additional shares will have a cost basis for
Federal income tax purposes in each share received equal to the amount of
cash they would have received had they elected to receive cash, divided by
the number of shares received. Shareholders will be notified annually as
to the Federal tax status of distributions.
Distributions by a portfolio reduce the net asset value of the portfolio's
shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution nevertheless generally would
be taxable to the shareholder as ordinary income or capital gain as
described above, even though, from an investment standpoint, it may
constitute a partial return of capital. In particular, investors should
be careful to consider the tax implications of buying shares just prior to
a distribution. The price of shares purchased at that time includes the
amount of the forthcoming distribution but the distribution generally
would be taxable to him or her.
Upon redemption, sale or exchange of his shares, a shareholder will
generally realize a taxable gain or loss depending upon his basis for his
shares. Such gain or loss will be treated as capital gain or loss if the
shares are capital assets in the shareholder's hands. Such gain or loss
generally will be long-term or short-term depending upon the shareholder's
holding period for the shares. However, a loss realized by a of,
shareholder on the sale, of shares of a portfolio with respect to which
capital gain dividends have been paid will, to the extent of such capital
gain dividends, be treated as long-term capital loss if such shares are
held by the shareholder for six months or less. A gain realized on a
redemption, sale or exchange will not be affected by a reacquisition of
shares, except as described in the next paragraph. A loss realized on a
redemption, sale or exchange, however, will be disallowed to the extent
the shares disposed of are replaced (whether through reinvestment of
distributions or otherwise) within a period of 61 days beginning 30 days
before and ending 30 days after the disposition of the shares. In such a
case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss.
If a shareholder (a) incurs a sales charge in acquiring shares of a
portfolio, (b) disposes of those shares within 90 days and (c) acquires
shares in a mutual fund for which the otherwise applicable sales charge is
reduced by reason of a reinvestment right (e.g., an exchange privilege),
the original sales charge increases the shareholder's tax basis in the
original shares only to the extent the otherwise applicable sales charge
for the second acquisition is not reduced. The portion of the original
sales charge that does not increase the shareholder's tax basis in the
original shares would be treated as incurred with respect to the second
acquisition and, as a general rule, would increase the shareholder's tax
basis in the newly acquired shares. Furthermore, the same rule also
applies to a disposition of the newly acquired shares made within 90 days
of the subsequent acquisition. This provision prevents a shareholder from
immediately deducting the sales charge by shifting his or her investment
in a family of mutual funds.
Backup Withholding. If a shareholder fails to furnish a correct taxpayer
identification number, fails to fully report dividend or interest income,
or fails to certify that he or she has provided a correct taxpayer
identification number and that he or she is not subject to such
withholding, then the shareholder may be subject to a 31% "backup
withholding tax" with respect to (a) any dividends and distributions and
(b) any proceeds of any redemption of shares of a portfolio. An
individual's taxpayer identification number is his or her social security
number. The backup withholding tax is not an additional tax and may be
credited against a shareholder's regular federal income tax liability.
Taxation of the underlying funds. Each underlying 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 fund
qualifies as a regulated investment company and timely distributes all of
its taxable income, the underlying fund generally will not pay any federal
income or excise tax.
If more than 50% in value of an underlying fund's assets at the close of
any taxable year consists of stocks or securities of foreign corporations,
that underlying 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 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 or deduction for foreign taxes paid by the underlying
funds, while persons who invest directly in such underlying funds may have
that option.
Class Z. Qualified plan participants should consult their plan document or
tax advisors about the tax consequences of participating in a Qualified
Plan. In addition to the considerations described below, there may be
other federal, state, local, and/or foreign tax applications to consider.
Provided a Qualified Plan has not borrowed to finance its investment in
the Fund, it will not be taxable on the receipt of dividends and
distributions from the Fund. Qualified plan participants should consult
their plan document or tax advisors about the tax consequences of
participating in a Qualified Plan.
Other Taxation. Distributions also may be subject to additional state,
local and foreign taxes depending on each shareholder's particular
situation.
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 data from 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/(cd)) + 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 l-, 5- or 10-year period at the end
of the l-, 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 initial sales charge or maximum applicable deferred
sales charge, as the case may be, has been deducted from the
hypothetical $ 1,000 initial investment at the time of purchase
or redemption, as applicable.
Each portfolio's average annual total return with respect to its Class A
shares for the one-year period (if applicable) and for the life of such
portfolio's Class A shares through January 31, 1999 is as follows:
One Year
Since Inception
Inception Date
High Growth
3.22%
10.85%
2/5/96
Growth
10.42%
11.14%
2/5/96
Global
N/A
(6.52)%
3/9/98
Balanced
3.90%
8.68%
2/5/96
Conservative
1.12%
7.05%
2/5/96
Income
0.19%
5.92%
2/5/96
Each portfolio's average annual total return with respect to its Class B
shares for the one-year period (if applicable) and for the life of such
portfolio's Class B shares through January 31, 1999 is as follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
13.30%
11.03%
2/5/96
Growth
10.40%
11.44%
2/5/96
Global
N/A
(7.05)%
3/9/98
Balanced
3.62%
8.92%
2/5/96
Conservative
0.77%
7.29%
2/5/96
Income
(0.15)%
6.13%
2/5/96
Each portfolio's average annual total return with respect to its Class L
Shares for the one- year period (if applicable) and for the life of such
portfolio's Class L shares through January 31, 1999 is as follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
16.04%
11.44%
2/5/96
Growth
13.26%
11.85%
2/5/96
Global
N/A
(4.23)%
3/9/98
Balanced
6.43%
9.35%
2/5/96
Conservative
3.28%
7.83%
2/5/96
Income
2.29%
6.69%
2/5/96
There is no performance information for Class Y Shares because there were no
outstanding Class Y Shares as of January 31, 1999.
Each portfolio's average annual total return with respect to its Class Z
Shares for the one-year period (if applicable) and for the life of such
portfolio's Class Z shares through January 31, 1999 is as follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
19.45%
14.38%
2/5/96
Growth
16.47%
14.61%
2/5/96
Global
N/A
N/A
3/9/98
Balanced
9.70%
10.67%
2/5/96
Conservative
6.31%
8.93%
2/5/96
Income
5.56%
8.47%
2/5/96
Each portfolio may, from time to time, advertise its average annual total
return calculated as shown above but without including the deduction of the
maximum applicable initial sales charge or deferred sales charge. The
average annual total return for each portfolio's Class A Shares for the
periods shown ended January 31, 1999 without including the deduction of the
maximum applicable sales charge is as follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
19.15%
12.77%
2/5/96
Growth
16.20%
13.06%
2/5/96
Global
N/A
(1.60)%
3/9/98
Balanced
9.33%
10.56%
2/5/96
Conservative
5.85%
8.71%
2/5/96
Income
4.88%
7.56%
2/5/96
The average annual total return for each portfolio's Class B Shares for the
periods shown end January 31, 1999 without including the deduction of the
maximum applicable deferred sales charge is as follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
18.30%
11.84%
2/5/96
Growth
15.40%
12.24%
2/5/96
Global
N/A
(2.16)%
3/9/98
Balanced
8.62%
9.76%
2/5/96
Conservative
5.22%
8.16%
2/5/96
Income
4.25%
7.01%
2/5/96
The average annual total return for each portfolio's Class L Shares of the
periods shown ended January 31, 1999 without including the deduction of the
maximum applicable initial sales charge or deferred sales charge is as
follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
18.21%
11.83%
2/5/96
Growth
15.40%
12.24%
2/5/96
Global
N/A
(2.25)%
3/9/98
Balanced
8.53%
9.74%
2/5/96
Conservative
5.29%
8.21%
2/5/96
Income
4.31%
7.07%
2/5/96
Neither Class Y nor Class Z shares impose an initial sales charge or deferred
sales charge.
Performance of Underlying Funds
The following chart shows the average annual total return (unaudited) for
the longest outstanding class of shares for each of the underlying 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, 1998.
Average Annual Total Returns
through
December 31, 1998
30-Day
Yield for
period
ended
December
31,
Underlying Fund
Net Assets
of all
Classes as
of
December
31, 1998
($000's)
Incept
ion
Date
Class
One
Year
Five
Years
Ten
Years
1998
Smith Barney Aggressive Growth Fund
Inc.
$1,061,526
10/27/
83
A
28.33%
17.71%
18.11%
N/A
Smith Barney Appreciation Fund Inc.
4,857,239
03/10/
70
A
14.45
17.19
15.34
N/A
Smith Barney Equity Funds:
Smith Barney Large Cap Blend Fund
501,292
11/06/
92
A
7.88
14.55
13.32(+)
N/A
Smith Barney Fundamental Value Fund
Inc.
1,545,181
11/12/
81
A
10.04
14.51
14.47
N/A
Smith Barney Funds, Inc.:
Large Cap Value Fund
Short-Term High Grade Bond Fund
1,227,783
115,042
01/01/
72
11/11/
91
A
A
8.88
6.07
15.52
5.21
13.92
5.73(+)
N/A
4.37%
Smith Barney Income Funds:
Smith Barney High Income Fund
Smith Barney Balanced Fund
Smith Barney Premium Total Return
Fund
Smith Barney Convertible Fund
Smith Barney Diversified Strategic
Income Fund
1,635,940
968,715
4,219,547
150,639
2,986,615
09/02/
86
03/28/
88
09/16/
85
09/02/
86
12/28/
89
B
B
B
B
B
(4.44)
7.61
0.84
(6.48)
0.82
6.91
9.89
14.54
7.08
6.43
8.37
11.30
14.37
8.53
8.64
7.73%
N/A
N/A
3.35%
5.22%
Smith Barney Investment Funds Inc.:
Concert Peachtree Growth Fund
Smith Barney Hansberger Global Value
Fund
Smith Barney Hansberger Global Small
Cap
Value Fund
Smith Barney Contrarian Fund
Smith Barney Small Cap Value Fund
Smith Barney Government Securities
Fund
Smith Barney Investment Grade Bond
Fund
333,680
195,102
18,266
546,611
N/A
635,232
626,538
06/30/
95
12/19/
97
12/19/
97
06/30/
95
02/26/
99
03/20/
84
01/04/
82
A
A
A
A
A
B
B
26.43
(12.40)
(18.93)
(6.07)
N/A
2.94
3.26
N/A
N/A
N/A
N/A
N/A
5.73
8.53
17.11(+)
(10.69)(+
)
(18.16)(+
)
6.85(+)
N/A
8.25
10.95
N/A
N/A
N/A
N/A
N/A
4.48%
4.88%
Smith Barney Investment Trust
Smith Barney Large Capitalization
Growth Fund
Smith Barney Mid Cap Blend Fund
1,572,367
295,958
08/29/
97
09/01/
98
A
A
46.96%
N/A
N/A
N/A
38.68%(+)
31.14(+)
N/A
N/A
Smith Barney Managed Governments
Fund, Inc.
547,817
09/04/
84
A
1.01
5.07
7.63
4.72%
Smith Barney Natural Resources Fund
Inc.
47,243
12/24/
86
A
(28.35)
(6.79)
(0.10)
N/A
Smith Barney Small Cap Blend Fund,
Inc.
281,664
01/23/
90
A
(6.24)
11.38
9.40(+)
N/A
Smith Barney World Funds, Inc.:
International Equity Portfolio
European Portfolio
Pacific Portfolio
Emerging Markets Portfolio
International Balanced Portfolio
Global Government Bond Portfolio
1,176,881
84,760
5,370
13,330
16,665
142,028
02/18/
86
02/07/
94
02/07/
94
05/12/
95
08/25/
94
07/22/
91
A
A
A
A
A
A
6.15
18.09
(5.30)
(40.48)
14.34
3.34
2.83
N/A
N/A
N/A
N/A
5.89
10.94
12.51(+)
(10.84)(+
)
(13.42)(+
)
6.75(+)
8.20(+)
N/A
N/A
N/A
N/A
N/A
3.41%
+ inception (less than 10 years)
For the seven-day period ended December 31,1998, the yield for the
Cash Portfolio of Smith Barney Money Funds, Inc. was 4.66% and
the effective yield was 4.77%.
The performance data relating to the underlying funds set forth above is
not, and should not be viewed as, indicative of the future performance of
either the underlying funds or the Concert Series. The
performance reflects the impact of sales charges and other distribution
related expenses that will not be incurred by the Class Y shares of
underlying funds in which the portfolios invest.
The portfolios will invest only in Class Y shares of the underlying funds
and, accordingly, will not pay any sales load or 12b-I service or
distribution fees in connection with their investments in shares of the
underlying funds. The portfolios, however, will indirectly bear their pro
rata share of the fees and expenses incurred by the underlying funds that
are applicable to Class Y shareholders. The investment returns of each
portfolio, therefore, will be net of the expense of the underlying funds
in which it is invested. The following chart shows the expense ratios
applicable to Class Y shareholders of each underlying fund held by a
portfolio, based on operating expenses for its most recent fiscal year:
Underlying Fund
Expense Ratio
Smith Barney Aggressive Growth Fund Inc.
0.85%
Smith Barney Appreciation Fund Inc.
0.59
Smith Barney Equity Funds:
Smith Barney Large Cap Blend Fund
0.69
Smith Barney Fundamental Value Fund Inc.
0.79
Smith Barney Funds, Inc.:
Large Cap Value Fund
0.58
Short-Term High Grade Bond Fund
0.56
Smith Barney Income Funds:
Smith Barney High Income Fund
0.72
Smith Barney Balanced Fund
0.67
Smith Barney Premium Total Return Fund
0.76
Smith Barney Convertible Fund
0.83
Smith Barney Diversified Strategic Income Fund
0.66
Smith Barney Investment Funds Inc.:
Concert Peachtree Growth Fund
1.07
Smith Barney Hansberger Global Value Fund
1.47
Smith Barney Hansberger Global Small Cap Value
Fund
1.73
Smith Barney Contrarian Fund
0.90
Smith Barney Small Cap Value Fund*
1.00
Smith Barney Government Securities Fund
0.59
Smith Barney Investment Grade Bond Fund
0.70
Smith Barney Investment Trust
Smith Barney Large Capitalization Growth Fund
0.83
Smith Barney Mid Cap Blend Fund*
1.02
Smith Barney Managed Governments Fund Inc.
0.69
Smith Barney Money Funds, Inc.
Cash Portfolio
0.42
Smith Barney Natural Resources Fund Inc.*
1.32
Smith Barney Small Cap Blend Fund, Inc.
0.94
Smith Barney World Funds, Inc.:
International Equity Portfolio
0.91
European Portfolio*
1.31
Pacific Portfolio*
3.22
Emerging Markets Portfolio
1.89
International Balanced Portfolio*
1.54
Global Government Bond Portfolio
0.83
*Operating expenses of Class Y shares for Smith Barney Investment Funds
Inc.-Smith Barney Mid Cap Blend Fund and Smith Barney Small Cap Value Fund,
Smith Barney Natural Resources Fund Inc. and Smith Barney World Funds,
Inc.-International Balanced Portfolio, European Portfolio and Pacific
Portfolio are estimated because no Class Y shares were outstanding during
each Fund's most recent fiscal year.
Based on a weighted average of the Class Y expense ratios of the underlying
funds in which a particular portfolio is expected to invest during the
current fiscal year, the approximate expense ratios are expected to be as
follows: High Growth Portfolio, Class A 1.53%, Class B 2.28%, Class L
2.28%, Class Y 1.28% and Class Z 1.28%; Growth Portfolio, Class A 1.43%,
Class B 2.18%, Class L 2.18%, Class Y 1.18% and Class Z 1.18%; Global
Portfolio, Class A 1.76%, Class B 2.51%, Class L 2.51%, Class Y 2.51% and
Class Z 1.51%; Balanced Portfolio, Class A 1.30%, Class B 2.05%, Class L
2.05%, Class Y 1.05% and Class Z 1.05%; Conservative Portfolio, Class A
1.33%, Class B 1.83%, Class L 1.78%, Class Y 1.08% and Class Z 1.08%; and
Income Portfolio, Class A 1.27%, Class B 1.77%, Class L 1.72%, Class Y
1.02% and Class Z 1.02%. The expense ratios may be higher or lower
depending on the allocation of the underlying funds within a portfolio.
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, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving 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 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.
INVESTMENT MANAGEMENT AND OTHER SERVICES
Investment Manager
SSBC acts as investment manager to the portfolios pursuant to a separate
asset allocation and administration agreement for each portfolio (an "Asset
Allocation and Administration Agreement"). SSBC is a wholly owned
subsidiary of Salomon Smith Barney Holdings Inc. ("Holdings") and Holdings
is a wholly owned subsidiary of Citigroup.
Pursuant to each portfolio's Asset Allocation and Administration
Agreements, SSBC will determine how each portfolio's assets will be
invested in the underlying 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 funds in which the portfolios may invest, (b)
the percentage range of assets that may be invested by each portfolio in
any one underlying 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, SSBC 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 SEC and state Blue
Sky authorities. SSBC provides investment advisory and management services
to investment companies affiliated with Salomon 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 each portfolio's
Asset Allocation and Administration Agreement, SSBC 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
Salomon Smith Barney or SSBC; 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.
For the fiscal years ended January 31, 1999 and January 31, 1998 and the
fiscal period ended January 31, 1997, the management fees for each
portfolio were as follows:
Portfolio
1999
1998
1997
High Growth
$2,147,850
$1,494,425
$528,764
Growth
2,712,756
1,905,460
678,365
Global
29,278
N/A
N/A
Balanced
1,605,830
1,102,666
369,783
Conservative
433,128
297,381
109,360
Income
237,885
169,641
69,248
SSBC also serves as investment adviser to each of the underlying funds in
which the portfolios may invest (other than Smith Barney Small Cap Blend
Fund, Inc.) and is responsible for the selection and management of each of
the underlying fund's investments. TIMCO, located at One Tower Square,
Hartford, Connecticut 06183, serves as investment adviser to Smith Barney
Small Cap Blend Fund, Inc. TIMCO is a wholly-owned subsidiary of Salomon
Smith Barney Holdings Inc.
Decisions to buy and sell shares of the underlying funds for the portfolios
are made by SSBC, subject to the overall supervision and review of the
portfolios' Board of Directors.
Each portfolio, as a shareholder in the underlying funds, will indirectly
bear its proportionate share of any investment management fees and other
expenses paid by the underlying funds. The effective management fee of
each of the underlying funds in which the portfolios may invest is set
forth below as a percentage rate of the fund's average net assets:
Underlying Fund
Management
Fees
Smith Barney Aggressive Growth Fund Inc.
0.80%
Smith Barney Appreciation Fund Inc.
0.57
Smith Barney Equity Funds:
Smith Barney Large Cap Blend Fund
0.65
Smith Barney Fundamental Value Fund Inc.
0.75
Smith Barney Funds, Inc.:
Large Cap Value Fund
0.56
Short-Term High Grade Bond Fund
0.45
Smith Barney Income Funds:
Smith Barney High Income Fund
0.70
Smith Barney Balanced 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.:
Concert Peachtree Growth Fund
0.99
Smith Barney Hansberger Global Value Fund
0.95
Smith Barney Hansberger Global Small Cap
Value Fund
1.05
Smith Barney Contrarian Fund
0.85
Smith Barney Small Cap Value Fund
0.75
Smith Barney Government Securities Fund
0.55
Smith Barney Investment Grade Bond Fund
0.65
Smith Barney Investment Trust:
Smith Barney Large Capitalization Growth
Fund
0.75
Smith Barney Mid Cap Blend Fund
0.75
Smith Barney Managed Governments Fund Inc.
0.65
Smith Barney Money Funds, Inc.
Cash Portfolio
0.39
Smith Barney Natural Resources Fund Inc.
0.75
Smith Barney Small Cap Blend Fund, Inc.
0.75
Smith Barney World Funds, Inc.:
International Equity Portfolio
0.85
European Portfolio
0.85
Pacific Portfolio
0.85
Emerging Markets Portfolio
1.00
International Balanced Portfolio
0.85
Global Government Bond Portfolio
0.75
Distributors
Distributor. CFBDS, Inc., located at 20 Milk Street, Boston, Massachusetts
02109-5408, serves as the Company's distributor pursuant to a written
agreement dated October 8, 1998 (the "Distribution Agreement") which was
approved by the Fund's Board of Directors, including a majority of the
Independent Directors on July 13, 1998. Prior to the merger of Travelers
Group Inc. and Citicorp Inc. on October 8, 1998, Salomon Smith Barney and
PFS served as the portfolios' distributors. Salomon Smith Barney continues
to sell the portfolios' shares as part of the selling group.
The Distributor may be deemed to be an underwriter for purposes of the
Securities Act of 1933. From time to time, the Distributor, or PFS or its
affiliates may also pay for certain non-cash sales incentives provided to
PFS Investments Registered Representatives. Such incentives do not have
any effect on the net amount invested. In addition to the reallowances
from the applicable public offering price described above, PFS may, from
time to time, pay or allow additional reallowances or promotional
incentives, in the form of cash or other compensation to PFS Investments
Registered Representatives that sell shares of each portfolio.
The Distributor has entered into a selling agreement with PFS on behalf of
PFS Investments (collectively, "PFS") giving PFS the right to sell shares
of each portfolio of the fund on behalf of the Distributor. The
Distributor's obligation is an agency or "best efforts" arrangement under
which the Distributor is required to take and pay only for such shares of
each portfolio as may be sold to the public. The Distributor is not
obligated to sell any stated number of shares. The Distribution Agreement
is renewable from year to year if approved (a) by the directors or by a
vote of a majority of the fund's outstanding voting securities, and (b) by
the affirmative vote of a majority of directors who are not parties to the
Distribution Agreement or interested persons of any party by votes cast in
person at a meeting called for such purpose. The Distribution Agreement
provides that it will terminate if assigned, and that it may be terminated
without penalty by either party on 60 days' written notice.
Commissions on Class A Shares. For the period February 5, 1996 through
January 31, 1997, and for the fiscal year ended January 31, 1998, the
aggregate dollar amount of commissions on Class A shares for all portfolios
of the fund in the aggregate were approximately $2,700,000 and $1,163,000,
respectively.
For the period February 1, 1998 through October 7, 1998 and for the period
October 8, 1998 through January 31, 1999, the aggregate dollar amounts of
commissions on Class A shares, were as follows:
Name of Portfolio
02/01/98 through
10/07/98*
10/08/98 through
01/31/99**
High Growth Portfolio
$147,000
$47,000
Global Portfolio
2,000
1,000
Growth Portfolio
186,000
55,000
Balanced Portfolio
58,000
33,000
Conservative
Portfolio
20,000
7,000
Income Portfolio
7,000
1,000
Commissions on Class L Shares. For the period June 12, 1998 through
October 7, 1998 and for the period October 8, 1998 through January 31,
1999, the aggregate dollar amounts of commission on Class L shares were as
follows:
(On June 12,1998, Class C shares were
renamed
Class L Shares)
06/12/98 through
10/08/98 through
Name of Portfolio
10/07/98*
01/31/99**
High Growth Portfolio
$10,000
$4,000
Global Portfolio
0
1,000
Growth Portfolio
17,000
17,000
Balanced Portfolio
22,000
22,000
Conservative Portfolio
5,000
7,000
Income Portfolio
0
3,000
* The entire amount was paid to Salomon Smith Barney.
**The following amounts were paid to Salomon Smith Barney: $3,600, $900,
$15,300, $19,800, $6,300, $2,700, respectively, to each portfolio in
descending order.
Deferred Sales Charges on Class A, B and L Shares For the period February
5, 1996 through January 31, 1997, and for each of the fiscal years ended
January 31, 1998 and January 31, 1999, the following deferred sales charges
were paid on redemptions of the portfolios' shares:
Class A
02/05/96 -
Fiscal Year
Fiscal Year
Name of Portfolio
01/31/97*
Ended 01/31/99**
Ended
01/31/99***
High Growth
Portfolio
$7,000
$0
$0
Global Portfolio
N/A
N/A
0
Growth Portfolio
0
0
0
Balanced Portfolio
0
1,000
0
Conservative
Portfolio
1,000
0
0
Income Portfolio
0
0
0
Class B
02/05/96 -
Fiscal Year
Fiscal Year
Name of Portfolio
01/31/97*
Ended 01/31/98**
Ended
01/31/99***
High Growth
Portfolio
$77,000
$260,000
$280,000
Global Portfolio
N/A
N/A
2,000
Growth Portfolio
104,000
404,000
490,000
Balanced Portfolio
32,000
194,000
232,000
Conservative
Portfolio
21,000
41,000
35,000
Income Portfolio
15,000
32,000
34,000
Class L
02/05/96 -
Fiscal Year
Fiscal Year
Name of Portfolio
01/31/97*
Ended 01/31/98**
Ended
01/31/99***
High Growth
Portfolio
$6,000
$11,000
$8,000
Global Portfolio
N/A
N/A
0
Growth Portfolio
8,000
11,000
4,000
Balanced Portfolio
6,000
5,000
3,000
Conservative
Portfolio
2,000
0
0
Income Portfolio
0
1,000
0
Distribution Arrangements. To compensate each of Salomon Smith Barney and
PFS for the service it provides and for the expenses it bears, each
portfolio has adopted a plan of distribution (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. The only Classes of shares being offered for
sale through PFS are Class A shares and Class B shares. PFS does not offer
shares of the Global Portfolio. Under the Plan, Salomon Smith Barney is
paid a fee with respect to shares of each portfolio sold through Salomon
Smith Barney and PFS is paid a fee with respect to shares of each portfolio
sold through PFS. Under the Plan, each portfolio pays Salomon Smith
Barney, or PFS, as the case may be (who in turn pays PFS Investments Inc.
("PFS Investments") to pay its Investments Representatives) a service fee,
accrued daily and paid monthly, calculated at the annual rate of 0.25% of
the value of the portfolio's average daily net assets attributable to the
Class A, Class B and Class L shares. The service fee is primarily used to
pay Salomon Smith Barney Financial Consultants (and PFS Investments
Representatives) for servicing shareholder accounts. In addition, each
portfolio pays Salomon Smith Barney a distribution fee with respect to
Class B and Class L (and pays PFS with respect to Class B shares) to cover
expenses primarily intended to result in the sale of those shares. These
expenses include: advertising expenses; the cost of printing and mailing
prospectuses to potential investors; payments to and expenses of Salomon
Smith Barney Financial Consultant, PFS Investments Representatives, and
other persons who provide support services in connection with the
distribution of shares; interest and/or carrying charges; and indirect and
overhead costs of Salomon Smith Barney and PFS associated with the sale of
portfolio shares, including lease, utility, communications and sales
promotion expenses. For the Conservative Portfolio and the Income
Portfolio the Class B and Class L distribution fee is calculated at the
annual rate of 0.50% and 0.45% of the value of the portfolio's average
daily net assets attributable to the shares of the respective Class. For
the High Growth Portfolio, the Global Portfolio, the Growth Portfolio and
the Balanced Portfolio, the Class B and Class L distribution fee is
calculated at the annual rate of 0.75% of the value of such portfolio's
average net assets attributable to the shares of the respective Class.
Payments under each Plan are not tied exclusively to the distribution and
shareholder services expenses actually incurred by Salomon Smith Barney or
PFS and the payments may exceed distribution expenses actually incurred.
The Fund's Board of Directors will evaluate the appropriateness of each
Plan and its payment terms on a continuing basis and in so doing will
consider all relevant factors, including expenses borne by Salomon Smith
Barney and PFS, amounts received under the Plan and proceeds of the
deferred sales charges.
For the period February 5, 1996 through January 31, 1997 and for each of
the fiscal years ended January 31, 1998 and January 31, 1999, the following
distribution and service fees were accrued and/or paid to Salomon Smith
Barney and PFS:
Class A
02/05/96 -
Fiscal Year
Fiscal Year
Name of Portfolio
01/31/97*
Ended 01/3/98**
Ended 01/3l/99***
High Growth
Portfolio
$181,145
$531,389
$765,218
Global Portfolio
N/A
N/A
10,958
Growth Portfolio
188,769
560,372
823,014
Balanced Portfolio
102,703
331,374
497,891
Conservative
Portfolio
37,430
102,331
152,606
Income Portfolio
22,108
58,968
82,447
Class B
02/05/96 -
Fiscal Year
Fiscal Year
Name of Portfolio
01/31/97*
Ended 01/31/98**
Ended 01/31/99***
High Growth
Portfolio
$ 689,309
$1,892,285
$2,700,351
Global Portfolio
N/A
N/A
38,673
Growth Portfolio
1,020,855
2,815,048
3,941,671
Balanced Portfolio
541,210
1,569,471
2,220,756
Conservative
Portfolio
106,340
292,108
419,651
Income Portfolio
73,157
163,187
227,917
Class L(formerly
Class C shares
as of June 12,
1998)
02/05/96 -
Fiscal Year
Fiscal Year
Name of Portfolio
01/31/97*
Ended 01/31/98**
Ended
01/31/99***
High Growth
Portfolio
$ 97,014
$239,000
$ 327,957
Global Portfolio
N/A
N/A
1,146
Growth Portfolio
162,265
374,895
472,118
Balanced Portfolio
104,502
243,810
310,701
Conservative
Portfolio
14,674
33,250
41,006
Income Portfolio
8,332
19,300
25,272
For the fiscal year ended January 31, 1999, Salomon Smith Barney incurred
the following distribution expenses for the portfolios:
Salomon
Smith
Printing
and
Barney
Portfolio
Mailing of
Support
Financial
Interest
Name
Advertising
Prospectus
es
Services
Consultants
Expense
Total
High
Growth
$223,869
$34,409
$2,417,074
$8,607,965
$751,131
$12,034,448
Global
5,262
(255)
36,168
234,741
20,442
296,359
Growth
117,012
15,652
1,206,086
4,281,214
272,212
5,892,177
Balanced
64,553
8,001
643,006
2,596,882
178,489
3,490,93
1
Conservative
15,173
1,401
131,665
692,133
55,523
895,896
Income
9,839
1,024
101,444
354,744
28,071
495,122
Each of PFS and Salomon Smith Barney will pay for the printing, at
printer's overrun cost, of prospectuses and periodic reports after they
have been prepared, set in type and mailed to shareholders, and will also
pay the cost of distributing such copies used in connection with the
offering to prospective investors and will also pay for supplementary sales
literature and other promotional costs. Such expenses incurred by Salomon
Smith Barney are distribution expenses within the meaning of the Plans and
may be paid from amounts received by Salomon Smith Barney from Concert
Series under the Plans.
From time to time, PFS or its affiliates may also pay for certain non-cash
sales incentives provided to PFS Investments Representatives. Such
incentives do not have any effect on the net amount invested. In addition
to the reallowances from the applicable public offering price described
above, PFS may from time to time, pay or allow additional reallowances or
promotional incentives, in the form of cash or other compensation to PFS
Investments Representatives that sell shares of each portfolio.
Under its terms, the Plan continues from year to year, provided such
continuance is approved annually by vote of the Concert Series' Board of
Directors, including a majority of the Independent Directors. The Plan may
not be amended to increase the amount of the service and distribution fees
without shareholder approval, and all material amendments of the Plan also
must be approved by the Directors and Independent Directors in the manner
described above. The Plan may be terminated with respect to a class of a
portfolio at any time, without penalty, by the vote of a majority of the
Independent Directors or by a vote of a majority of the outstanding voting
securities of the class (as defined in the 1940 Act). Pursuant to the
Plan, Salomon Smith Barney and PFS will provide the Concert Series' Board
of Directors with periodic reports of amounts expended under the Plan and
the purpose for which such expenditures were made.
[General. Actual distribution expenses for Class B shares of each portfolio
for any given year may exceed the fees received pursuant to the Plan and
will be carried forward and paid by each portfolio in future years so long
as the Plan is in effect. Interest is accrued monthly on such carry
forward amounts at a rate comparable to that paid by Salomon Smith Barney
for bank borrowings. The Concert Series' Board of Directors will evaluate
the appropriateness of the Plan and its payment terms on a continuing basis
and in so doing will consider all relevant factors, including amounts
received under the Plan and proceeds of the deferred sales charge.]
ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS
Portfolio history. The Concert Series, an open-end, non-diversified
investment company, was incorporated in Maryland on August 11, 1995. The
Concert Series commenced operations on February 5, 1996 under the name
Smith Barney Concert Series Inc. The Select Portfolios of Concert Series
commenced operations on February 5, 1997. On February 24, 1997, the
Concert Series changed its name to Smith Barney Concert Allocation Series
Inc. The Concert Series has authorized capital of 6,100,000,000 shares
with a par value of $.001 per share. The Board of Directors has authorized
the issuance of eleven series of shares, each representing shares in one of
eleven separate portfolios and may authorize the issuance of additional
series of shares in the future. The assets of each portfolio are
segregated and separately managed and a shareholder's interest is in the
assets of the portfolio in which he or she holds shares. Class A, Class B,
Class L, Class Y and Class Z shares of a portfolio represent interests in
the assets of that portfolio and have identical voting, dividend,
liquidation and other rights (other than conversion) on the same terms and
conditions except that expenses related to the distribution of each class
of shares are borne solely by each class and each Class of shares has
exclusive voting rights with respect to provisions of the Concert Series'
Rule 12b-1 distribution plan that pertain to a particular Class.
Custodian. 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.
Auditors. KPMG LLP, 345 Park Avenue, New York, New York 10154, has been
selected as independent auditors for the Concert Series for its fiscal year
ending January 31, 2000 to examine and report on the Concert Series'
financial statements and highlights.
Transfer Agent. First Data Investor Services Group, Inc. is located at
Exchange Place, Boston, MA 02109. The fund has engaged the services of PFS
Shareholder Services as the sub-transfer agent for PFS Accounts. The sub-
transfer agent is located at 3100 Breckinridge Blvd., Bldg. 200, Duluth, GA
30099.
Minimum Account Size. The Concert Series reserves the right to
involuntarily liquidate any shareholder's account in a portfolio if the
aggregate net asset value of the shares held in that portfolio account is
less than $500. (If a shareholder has more than one account in a portfolio,
each account must satisfy the minimum account size.) The Concert Series,
however, will not redeem shares based solely on market reductions in net
asset value. Before the Concert Series exercises such right, shareholders
will receive written notice and will be permitted 60 days to bring accounts
up to the minimum to avoid involuntary liquidation.
Voting. As permitted by Maryland law, there will normally be no meetings
of shareholders for the purpose of electing directors unless and until such
time as less than a majority of the directors holding office have been
elected by shareholders. At that time, the directors then in office will
call a shareholders' meeting for the election of directors. The directors
must call a meeting of shareholders when requested in writing to do so by
the record holders of not less than 10% of the outstanding shares of the
Concert Series. At such a shareholder meeting called for the purpose, a
director may be removed after the holders of record of not less than a
majority of the outstanding shares of the Concert Series have declared that
the director be removed. Except as set forth above, the directors shall
continue to hold office and may appoint successor directors.
On matters submitted for consideration by shareholders of any underlying
fund, a portfolio will vote its shares in proportion to the vote of all
other holders of shares of that Fund or, in certain limited instances, the
portfolio will vote its shares in the manner indicated by a vote of holders
of shares of the portfolio.
As used in the prospectus and this SAI, 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.
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.
As of May 14, 1999, to the knowledge of the fund and the Board of
Directors, no single shareholder or "group" (as that term is used in
Section 13(d) of the Securities Act of 1934) beneficially owned more than
5% of the outstanding shares of the fund with the exception of the
following:
Portfolio
Class
Shareholder Name
Shareholder
Address
Number of
Shares
Percent
High
Growth
Class
A
PFS Shareholders
Services (A)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
21,235,556.320
85.87%
Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
14,549,853.940
67.72%
Class
Z
State Street Bank &
Trust Cust.
Travelers Group
401k Savings Plan
Attn. Rick Vest
225 Franklin
Street
Boston, MA
02101
491,537.171
100.00%
Growth
Class
A
PFS Shareholder
Services (A)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
21,729,212.403
79.36%
Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
17,359,885.250
55.29%
Class
Z
State Street Bank &
Trust Cust.
Travelers Group
401k Savings Plan
Attn. Rick Vest
225 Franklin
Street
Boston, MA
02101
465,534.123
100.00%
Global
Class
A
PFS Shareholder
Services (A)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
1,079,048.493
97.42%
Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
898,206.286
96.58%
Class
L
Sandra S. Dubois
Smith Barney Inc.
Rollover
Cust.
12 Front Street
Rumford, ME
4276-2308
3,670.280
13.53%
Class
L
Denise D. Carrier
Smith Barney Inc.
Rollover
Cust.
PO Box 518
Dixfield, ME
04224-0518
1,664.501
6.13%
Balanced
Class
A
PFS Shareholder
Services (A)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
14,457,121.056
82.93%
Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
12,041,369.359
62.76%
Class
Z
State Street Bank &
Trust
Travelers Group
401(k)
Savings Plan
Attn. Rick Vest
225 Franklin
Street
Boston, MA
02101
2,607,285.157
98.33%
Portfolio
Class
Shareholder Name
Shareholder
Address
Number of
Shares
Percent
Conservative
Class
A
PFS Shareholder
Services (A)
Attn. Jay Barnhill
3100 Breckinridge
Blvd.
Duluth, GA 30199
5,313,079.409
87.75%
Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100 Breckinridge
Blvd.
Duluth, GA 30199
4,263,230.513
75.74%
Class
L
Frank A Abacherli
Shirley M. Abacherli
TTEES
FBO Abacherli Family
Trust
DTD 10/06/89
29875 Newport
Road
Menifee, CA
92584-9524
42,773.472
7.23%
Income
Class
A
PFS Shareholder
Services (A)
Attn. Jay Barnhill
3100 Breckinridge
Blvd.
Duluth, GA 30199
2,638,379.843
83.99%
Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100 Breckinridge
Blvd.
Duluth, GA 30199
1,905,456.639
63.86%
Class
L
Frontier Trust
Company
TTEE
Citizens State Bank
Salary
Savings
111 Monument
Circle
Ste. 3100
Indianapolis, IN
46204-5100
24,440.933
6.56%
Class
L
Billy Brewer
SSB EASY IRA
Rollover Cust
131 Phil Court
Fort Hill, SC
29715
19,244.539
5.17%
FINANCIAL STATEMENTS
The Concert Series' Annual Report for the fiscal year ended January 31,
1999 is incorporated herein by reference in its entirety. The Annual
Report was filed with the SEC on April 21, 1999 (Accession number 91155-99-
258). A copy of the Report is furnished with this Statement of Additional
Information.
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 Ratings Group
AAA - Debt rated "AAA" has the highest rating assigned by Standard & Poor's
Ratings Group ("S&P"). 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-l" (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
Priine-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 Ratings Group
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.
