Securities Act File No. 33-64457
Investment Company Act File No. 811-7435
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 17 [X]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 18 [X]
Smith Barney Concert Allocation Series Inc.
(Formerly, Smith Barney Concert Series Inc.)
(Exact Name of Registrant as Specified in Charter)
388 Greenwich Street, New York, NY 10013
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 212-816-6474
Christina T. Sydor, Esq.
SSBC Fund Management Inc.
388 Greenwich Street
New York, New York 10013
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b)
XXX on May 30, 2000 pursuant to paragraph (b) of Rule 485
60 days after filing pursuant to paragraph (a)(i) of Rule 485
on (date) pursuant to paragraph (a)(i) of Rule 485
75 days after filing pursuant to paragraph (a)(ii)of Rule 485
on (date) pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
PART A
<PAGE>
SMITH BARNEY
CONCERT ALLOCATION SERIES INC.
[GRAPHIC]
P R O S P E C T U S
May 30, 2000
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 Smith Barney
complete. Any statement to the contrary is a crime. Mutual Funds
<PAGE>
Contents
Smith Barney Concert Allocation Series Inc. consists of 11 separate investment
portfolios, each with its own investment objective and policies. This
prospectus relates to 6 of those portfolios. Each portfolio offers different
levels of potential return and involves different levels of risk.
<TABLE>
<S> <C>
Investments, risks and performance 2
- --------------------------------------------------
Global Portfolio 3
- --------------------------------------------------
High Growth Portfolio 6
- --------------------------------------------------
Growth Portfolio 9
- --------------------------------------------------
Balanced Portfolio 12
- --------------------------------------------------
Conservative Portfolio 15
- --------------------------------------------------
Income Portfolio 18
- --------------------------------------------------
More on the portfolios' investments 21
- --------------------------------------------------
Investment strategies and related risks 23
- --------------------------------------------------
Management 25
- --------------------------------------------------
Choosing a class of shares to buy 26
- --------------------------------------------------
Comparing the portfolios' classes 27
- --------------------------------------------------
Sales charges 28
- --------------------------------------------------
More about deferred sales charges 30
- --------------------------------------------------
Buying shares 31
- --------------------------------------------------
Exchanging shares 32
- --------------------------------------------------
Redeeming shares 33
- --------------------------------------------------
Other things to know about share transactions 34
- --------------------------------------------------
Salomon Smith Barney Retirement programs 35
- --------------------------------------------------
Dividends, distributions and taxes 36
- --------------------------------------------------
Share price 37
- --------------------------------------------------
Financial highlights 38
- --------------------------------------------------
</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.
Selection process
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%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Large Capitalization Growth Fund 0-20%
- ------------------------------------------------------
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 Small Cap Growth Fund 0-15%
- ------------------------------------------------------
Smith Barney Small Cap Value Fund 0-15%
- ------------------------------------------------------
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 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
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 the past calendar year. Class
B, L and Y shares have different performance because of 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: 22.76% in 4th quarter 1999; Lowest: (17.89)% in 3rd
quarter 1999
Year to date: 1.18% (through 3/31/00)
Percentage Total Returns for Class A shares
[BAR CHART]
99
------
33.62%
<TABLE>
<CAPTION>
Risk return table
- --------------------------------------------------------------------------------------------
Average Annual Total Returns (Calendar years ended December 31, 1999)
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The table as- S&P Russell MSCI MSCI
sumes the impo- Class A Class B Class L Class Y 500 2000 EAFE EMI
sition of the -----------------------------------------------------------------------
maximum sales 1 Year 26.91% 27.67% 30.38% n/a 21.03% 19.62% 26.96% 66.41%
charge applica- -----------------------------------------------------------------------
ble to the Since
class, redemp- Inception 11.95% 12.35% 13.64% n/a 19.51% 2.83% 17.61% 9.38%
tion of shares -----------------------------------------------------------------------
at the end of Inception
the period, and Date 3/9/98 3/9/98 3/9/98 n/a * * * *
reinvestment of -----------------------------------------------------------------------
distributions * Index comparison begins on March 31, 1998.
and dividends.
</TABLE>
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 Morgan
Stanley Capital
International
Emerging Mar-
kets Index
("MSCI EMI"), a
broad-based un-
managed index
of emerging
market compa-
nies with an
average size of
$800 million
and the index
performance of
emerging mar-
kets in South
America, South
Africa, Asia
and Eastern Eu-
rope.
Fee table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shareholder fees (fees paid
directly from your investment) Class A Class B Class L Class Y
----------------------------------------------------------------
<S> <C> <C> <C> <C>
The table sets Maximum sales charge (load)
forth the fees imposed on purchases
and expenses (as a % of offering price) 5.00% None 1.00% None
you will pay if ----------------------------------------------------------------
you invest in Maximum deferred sales charge
shares of the (load) (as a % of the
portfolio. lower of net asset value at
purchase or redemption) None(*) 5.00% 1.00% None
Based on the ----------------------------------------------------------------
expense ratios Annual fund operating expenses
of underlying (expenses deducted from
Smith Barney portfolio assets)
funds in which ----------------------------------------------------------------
the Global Management fee 0.35% 0.35% 0.35% 0.35%
portfolio was ----------------------------------------------------------------
invested on Distribution and service
January 31, (12b-1) fees 0.25% 1.00% 1.00% None
2000, the ap- ----------------------------------------------------------------
proximate ex- Other expenses None None None None
pense ratios ----------------------------------------------------------------
are expected to Total annual fund operating
be as follows: expenses 0.60% 1.35% 1.35% 0.35%
----------------------------------------------------------------
Class A 1.63%, (*) You may buy Class A shares in amounts of $500,000 or
Class B 2.38%, more at net asset value (without an initial sales
Class L 2.38% charge) but if you redeem those shares within 12 months
and Class Y of purchase you will pay a deferred sales charge of
1.38%. Fee ta- 1.00%.
ble expenses
would be higher
if the expense
ratios of the
underlying
funds were in-
cluded.
</TABLE>
4 | The Concert Allocation Series Prospectus
<PAGE>
Global 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>
The example Class A (with or without
helps you com- redemption) $657 $ 988 $1,342 $2,336
pare the costs ---------------------------------------------------------------------
of investing in Class B (assuming
the portfolio redemption at end of
with other mu- period) $741 $1,042 $1,370 $2,530
tual funds. ---------------------------------------------------------------------
Your actual Class B (assuming no
costs may be redemption) $241 $ 742 $1,270 $2,530
higher or low- ---------------------------------------------------------------------
er. Class L (assuming
redemption at end of
period) $439 $ 835 $1,358 $2,789
---------------------------------------------------------------------
Class L (assuming no
redemption) $339 $ 835 $1,358 $2,789
---------------------------------------------------------------------
Class Y (with or without
redemption) $140 $ 437 $ 755 $1,657
---------------------------------------------------------------------
(*) The example assumes:
</TABLE>
. 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.
5 | 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.
Selection process
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 and high yield (Smith Barney High
Income Fund) funds. The portfolio also allocates a portion of its assets to un-
derlying funds that primarily 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 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%
- -----------------------------------------------------------
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 Growth Fund 0-15%
- -----------------------------------------------------------
Smith Barney Small Cap Value Fund 0-15%
- -----------------------------------------------------------
</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
6 | 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 3 calendar
years. Class B, L and Y shares have different performance because of 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: 4.89% (through 3/31/00)
Percentage Total Returns for Class A shares
[BAR CHART]
Calendar years ended December 31
97 98 99
------ ------ ------
12.46% 15.52% 27.46%
Risk return table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar years ended December 31, 1999)
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The table as- S&P Russell MSCI High
sumes the impo- Class A Class B Class L Class Y 500 2000 EAFE Yield
sition of the ----------------------------------------------------------------------
maximum sales 1 Year 21.12% 21.46% 24.21% n/a 21.03% 19.62% 26.96% 1.73%
charge applica- ----------------------------------------------------------------------
ble to the Since
class, redemp- Inception 14.10% 14.31% 14.37% n/a 26.27% 12.18% 13.63% 7.08%
tion of shares ----------------------------------------------------------------------
at the end of Inception
the period, and Date 2/5/96 2/5/96 2/5/96 n/a * * * *
reinvestment of ----------------------------------------------------------------------
distributions * Index comparison begins on February 29, 1996.
and dividends.
</TABLE>
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.
Fee table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shareholder fees (fees paid
directly from your investment) Class A Class B Class L Class Y
----------------------------------------------------------------
<S> <C> <C> <C> <C>
The table sets Maximum sales charge (load)
forth the fees imposed on purchases (as a %
and expenses of offering price) 5.00% None 1.00% None
you will pay if ----------------------------------------------------------------
you invest in Maximum deferred sales charge
shares of the (load)
portfolio. (as a % of the lower of net
asset value at purchase or
Based on the redemption) None* 5.00% 1.00% None
expense ratios ----------------------------------------------------------------
of underlying Annual fund operating expenses
Smith Barney (expenses deducted from
funds in which portfolio assets)
the High Growth ----------------------------------------------------------------
portfolio was Management fee 0.35% 0.35% 0.35% 0.35%
invested on ----------------------------------------------------------------
January 31, Distribution and service
2000, the ap- (12b-1) fees 0.25% 1.00% 1.00% None
proximate ex- ----------------------------------------------------------------
pense ratios Other expenses None None None None
are expected to ----------------------------------------------------------------
be as follows: Total annual fund operating
Class A 1.45%, expenses 0.60% 1.35% 1.35% 0.35%
Class B 2.20%, ----------------------------------------------------------------
Class L 2.20% * You may buy Class A shares in amounts of $500,000 or more
and Class Y at net asset value (without an initial sales charge) but
1.20%. Fee ta- if you redeem those shares within 12 months of purchase
ble expenses you will pay a deferred sales charge of 1.00%.
would be higher
if the expense
ratios of the
underlying
funds were in-
cluded.
</TABLE>
7 | The Concert Allocation Series Prospectus
<PAGE>
High Growth 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>
The example Class A (with or without
helps you com- redemption) $640 $936 $1,253 $2,148
pare the costs -------------------------------------------------------------
of investing in Class B (assuming
the portfolio redemption at end of
with other mu- period) $723 $988 $1,280 $2,344
tual funds. -------------------------------------------------------------
Your actual Class B (assuming no
costs may be redemption) $223 $688 $1,180 $2,344
higher or low- -------------------------------------------------------------
er. Class L (assuming
redemption at end of
period) $421 $781 $1,268 $2,609
-------------------------------------------------------------
Class L (assuming no
redemption) $321 $781 $1,268 $2,609
-------------------------------------------------------------
Class Y (with or without
redemption) $122 $381 $ 660 $1,455
-------------------------------------------------------------
*The example assumes:
</TABLE>
. 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.
8 | 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.
Selection process
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 and high yield
(Smith Barney High Income Fund) funds. The portfolio also allocates a signifi-
cant 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 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%
- -----------------------------------------------------
Smith Barney Hansberger Global Small Cap Value
Fund 0-10%
- -----------------------------------------------------
Smith Barney Mid Cap Blend Fund 0-10%
- -----------------------------------------------------
Smith Barney Small Cap Growth Fund 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
9 | 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 3 calendar
years. Class B, L and Y shares have different performance because of 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: 3.60% (through 3/31/00)
Percentage Total Returns for Class A shares
[BAR CHART]
Calendar years ended December 31
97 98 99
------ ------ ------
14.68% 13.61% 17.23%
Risk return table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns
(Calendar Years Ended December 31, 1999)
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The table as- S&P Russell MSCI
sumes the impo- Class A Class B Class L Class Y 500 2000 EAFE Lehman
sition of the -------------------------------------------------------------------------
maximum sales 1 Year 11.35% 11.31% 14.15% n/a 21.03% 19.62% 26.96% (2.15)%
charge applica- -------------------------------------------------------------------------
ble to the Since
class, redemp- Inception 12.08% 12.34% 12.42% n/a 26.27%* 12.18% 13.63% 5.51%
tion of shares -------------------------------------------------------------------------
at the end of Inception
the period, and Date 2/5/96 2/5/96 2/5/96 n/a * * * *
reinvestment of -------------------------------------------------------------------------
distributions * Index comparison begins on February 29, 1996.
and dividends.
</TABLE>
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.
Fee table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shareholder fees (fees paid
directly from your investment) Class A Class B Class L Class Y
----------------------------------------------------------------
<S> <C> <C> <C> <C>
The table sets Maximum sales charge (load)
forth the fees imposed on purchases (as a %
and expenses of offering price) 5.00% None 1.00% None
you will pay if ----------------------------------------------------------------
you invest in Maximum deferred sales charge
shares of the (load)
portfolio. (as a % of the lower of net
asset value at purchase or
Based on the redemption) None* 5.00% 1.00% None
expense ratios ----------------------------------------------------------------
of underlying Annual fund operating expenses
Smith Barney (expenses deducted from
funds in which portfolio assets)
the Growth ----------------------------------------------------------------
portfolio was Management fee 0.35% 0.35% 0.35% 0.35%
invested on ----------------------------------------------------------------
January 31, Distribution and service
2000, the ap- (12b-1) fees 0.25% 1.00% 1.00% None
proximate ex- ----------------------------------------------------------------
pense ratios Other expenses None None None None
are expected to ----------------------------------------------------------------
be as follows: Total annual fund operating
Class A 1.39%, expenses 0.60% 1.35% 1.35% 0.35%
Class B 2.14%, ----------------------------------------------------------------
Class L 2.14% * You may buy Class A shares in amounts of $500,000 or more
and Class Y at net asset value (without an initial sales charge) but
1.14%. Fee ta- if you redeem those shares within 12 months of purchase
ble expenses you will pay a deferred sales charge of 1.00%.
would be higher
if the expense
ratios of the
underlying
funds were in-
cluded.
</TABLE>
10 | The Concert Allocation Series Prospectus
<PAGE>
Growth Portfolio, continued
Example
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The example Number of years you own
helps you com- your shares 1 year* 3 years* 5 years* 10 years*
pare the costs -------------------------------------------------------------
of investing in <S> <C> <C> <C> <C>
the portfolio Class A (with or without
with other mu- redemption) $634 $918 $1,222 $2,085
tual funds. -------------------------------------------------------------
Your actual Class B (assuming
costs may be redemption at end of
higher or low- period) $717 $970 $1,249 $2,282
er. -------------------------------------------------------------
Class B (assuming no
redemption) $217 $670 $1,149 $2,282
-------------------------------------------------------------
Class L (assuming
redemption at end of
period) $415 $763 $1,238 $2,548
-------------------------------------------------------------
Class L (assuming no
redemption) $315 $763 $1,238 $2,548
-------------------------------------------------------------
Class Y (with or without
redemption) $116 $362 $ 628 $1,386
-------------------------------------------------------------
</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.
11 | 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.
Selection process
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%
- -----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Fundamental Value Fund Inc. 0-20%
- ----------------------------------------------------
Smith Barney Government Securities Fund 0-20%
- ----------------------------------------------------
Concert Peachtree Growth Fund 0-15%
- -----------------------------------------------------
Global Government Bond Portfolio 0-15%
- -----------------------------------------------------
International Equity Portfolio 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%
- -----------------------------------------------------
</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
12 | 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 3 calendar
years. Class B, L and Y shares have different performance because of 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: 3.43% (through 3/31/00)
Percentage Total Returns for Class A shares
[BAR CHART]
Calendar years ended December 31
97 98 99
------ ------ ------
12.78% 8.84% 7.35%
Risk return table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years
Ended December 31, 1999)
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The table as- S&P World
sumes the impo- Class A Class B Class L Class Y 500 Lehman T-bill Bond
sition of the ------------------------------------------------------------------------
maximum sales 1 Year 1.95% 1.52% 4.46% n/a 21.03% (2.15)% 4.26% (4.27)%
charge applica- ------------------------------------------------------------------------
ble to the Since
class, redemp- Inception 8.27% 8.48% 8.59% n/a 26.27% 5.51% 5.54% 4.11%
tion of shares ------------------------------------------------------------------------
at the end of Inception
the period, and Date 2/5/96 2/5/96 2/5/96 n/a * * * *
reinvestment of ------------------------------------------------------------------------
distributions * Index comparison begins on February 29, 1996.
and dividends.
</TABLE>
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.
Fee table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shareholder fees (fees paid
directly from your investment) Class A Class B Class L Class Y
----------------------------------------------------------------
<S> <C> <C> <C> <C>
The table sets Maximum sales charge (load)
forth the fees imposed on purchases
and expenses (as a % of offering price) 5.00% None 1.00% None
you will pay if ----------------------------------------------------------------
you invest in Maximum deferred sales charge
shares of the (load) (as a % of the lower of
portfolio. net asset value at purchase or
redemption) None* 5.00% 1.00% None
Based on the ----------------------------------------------------------------
expense ratios Annual fund operating expenses
of underlying (expenses deducted from
Smith Barney portfolio assets)
funds in which ----------------------------------------------------------------
the Balanced Management fee 0.35% 0.35% 0.35% 0.35%
portfolio was ----------------------------------------------------------------
invested on Distribution and service
January 31, (12b-fees) 0.25% 1.00% 1.00% None
2000, the ap- ----------------------------------------------------------------
proximate ex- Other expenses None None None None
pense ratios ----------------------------------------------------------------
are expected to Total annual fund operating
be as follows: expenses 0.60% 1.35% 1.35% 0.35%
Class A 1.32%, ----------------------------------------------------------------
Class B 2.07%, * You may buy Class A shares in amounts of $500,000 or more
Class L 2.07% at net asset value (without an initial sales charge) but
and Class Y if you redeem those shares within 12 months of purchase
1.07%. Fee ta- you will pay a deferred sales charge of 1.00%.
ble expenses
would be higher
if the expense
ratios of the
underlying
funds were in-
cluded.
</TABLE>
13 | The Concert Allocation Series Prospectus
<PAGE>
Balanced 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>
The example Class A (with or without
helps you com- redemption) $628 $897 $1,187 $2,011
pare the costs -------------------------------------------------------------
of investing in Class B (assuming
the portfolio redemption at end of
with other mu- period) $710 $949 $1,214 $2,208
tual funds. -------------------------------------------------------------
Your actual Class B (assuming no
costs may be redemption) $210 $649 $1,114 $2,208
higher or low- -------------------------------------------------------------
er. Class L (assuming
redemption at end of
period) $408 $742 $1,202 $2,476
-------------------------------------------------------------
Class L (assuming no
redemption) $308 $742 $1,202 $2,476
-------------------------------------------------------------
Class Y (with or without
redemption) $109 $340 $ 590 $1,306
-------------------------------------------------------------
* The example assumes:
</TABLE>
. 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.
14 | 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.
Selection process
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%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Large Cap Value Fund 0-20%
- ------------------------------------------------------
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 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 because of inflation
. Are a conservative investor willing to sacrifice some growth potential in ex-
change for less (but not zero) volatility
15 | 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 3 calendar
years. Class B, L and Y shares have different performance because of 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: 2.42% (through 3/31/00)
Percentage Total Returns for Class A shares
[BAR CHART]
Calendar years ended December 31
97 98 99
------ ------ ------
11.81% 6.02% 3.98%
Risk return table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years
Ended December 31, 1999)
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The table as- S&P High
sumes the impo- Class A Class B Class L Class Y 500 Lehman Yield T-bill
sition of the ----------------------------------------------------------------------
maximum sales 1 Year (0.67)% (0.96)% 1.52% n/a 21.03% (2.15)% 1.73% 4.26%
charge applica- ----------------------------------------------------------------------
ble to the Since
class, redemp- Inception 6.23% 6.52% 6.73% n/a 26.27% 5.51% 7.08% 5.54%
tion of shares ----------------------------------------------------------------------
at the end of Inception
the period, and Date 2/5/96 2/5/96 2/5/96 n/a * * * *
reinvestment of ----------------------------------------------------------------------
distributions * Index comparison begins on February 29, 1996.
and dividends.
</TABLE>
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.
Fee table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shareholder fees (fees paid
directly from your investment) Class A Class B Class L Class Y
----------------------------------------------------------------
<S> <C> <C> <C> <C>
The table sets Maximum sales charge (load)
forth the fees imposed on purchases
and expenses (as a % of offering price) 4.50% None 1.00% None
you will pay if ----------------------------------------------------------------
you invest in Maximum deferred sales charge
shares of the (load)
portfolio. (as a % of the lower of net
asset value at purchase or
Based on ex- redemption) None* 4.50% 1.00% None
pense ratios of ----------------------------------------------------------------
underlying Annual fund operating expenses
Smith Barney (expenses deducted from
funds in which portfolio assets)
the Conserva- ----------------------------------------------------------------
tive portfolio Management fee 0.35% 0.35% 0.35% 0.35%
was invested on ----------------------------------------------------------------
January 31, Distribution and service
2000, the ap- (12b-1) fees 0.25% 0.75% 0.70% None
proximate ex- ----------------------------------------------------------------
pense ratios Other expenses None None None None
are expected to ----------------------------------------------------------------
be as follows: Total annual fund operating
Class A 1.32%, expenses 0.60% 1.10% 1.05% 0.35%
Class B 1.82%, ----------------------------------------------------------------
Class L 1.77% * You may buy Class A shares in amounts of $500,000 or more
and Class Y at net asset value (without an initial sales charge) but
1.07%. Fee ta- if you redeem those shares within 12 months of purchase
ble expenses you will pay a deferred sales charge of 1.00%.
would be higher
if the expense
ratios of the
underlying
funds were in-
cluded.
</TABLE>
16| The Concert Allocation Series Prospectus
<PAGE>
Conservative Portfolio, continued
Example
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The example Number of years you own
helps you com- your shares 1 year* 3 years* 5 years* 10 years*
pare the costs ----------------------------------------------------------
of investing in <S> <C> <C> <C> <C>
the portfolio Class A (with or without
with other mu- redemption) $578 $849 $1,141 $1,969
tual funds. ----------------------------------------------------------
Your actual Class B (assuming
costs may be redemption at end of
higher or low- period) $635 $873 $1,085 $2,006
er. ----------------------------------------------------------
Class B (assuming no
redemption) $185 $573 $ 985 $2,006
----------------------------------------------------------
Class L (assuming
redemption at end of
period) $378 $652 $1,050 $2,163
----------------------------------------------------------
Class L (assuming no
redemption) $278 $652 $1,050 $2,163
----------------------------------------------------------
Class Y (with or without
redemption) $109 $340 $ 590 $1,306
----------------------------------------------------------
</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.
17 | 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.
Selection process
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%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Large Cap Value Fund 0-15%
- ------------------------------------------------------
Smith Barney Convertible Fund 0-15%
- ------------------------------------------------------
Smith Barney Investment Grade Bond Fund 0-15%
- ------------------------------------------------------
Smith Barney Premium Total Return Fund 0-15%
- ------------------------------------------------------
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 the security's credit rating may be 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
18 | 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 3 calendar
years. Class B, L and Y shares have different performance because of 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: 1.34% (through 3/31/00)
Percentage Total Returns for Class A shares
[BAR CHART]
97 98 99
---- ---- ----
11.00% 5.32% 0.34%
Risk return table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The table as- Average Annual Total Returns (Calendar Years Ended December
sumes the impo- 31, 1999)
sition of the ----------------------------------------------------------------------
maximum sales S&P High
charge applica- Class A Class B Class L Class Y 500 Lehman Yield T-bill
ble to the ----------------------------------------------------------------------
class, redemp- <S> <C> <C> <C> <C> <C> <C> <C> <C>
tion of shares 1 Year (4.17)% (4.40)% (2.00)% n/a 21.03% (2.15)% 1.73% 4.26%
at the end of ----------------------------------------------------------------------
the period, and Since
reinvestment of Inception 4.42% 4.72% 4.91% n/a 26.27% 5.51% 7.08% 5.54%
distributions ----------------------------------------------------------------------
and dividends. Inception
Date 2/5/96 2/5/96 2/5/96 n/a * * * *
The table indi- ----------------------------------------------------------------------
cates the risks * Index comparison begins on February 29, 1996.
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>
Fee table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The table sets Shareholder fees (fees paid
forth the fees directly from your investment) Class A Class B Class L Class Y
and expenses ----------------------------------------------------------------
you will pay if <S> <C> <C> <C> <C>
you invest in Maximum sales charge (load)
shares of the imposed on purchases (as a %
portfolio. of offering price) 4.50% None 1.00% None
----------------------------------------------------------------
Based on ex- Maximum deferred sales charge
pense ratios of (load) (as a % of the lower of
underlying net asset value at purchase or
Smith Barney redemption) None* 4.50% 1.00% None
funds in which ----------------------------------------------------------------
the Income Annual fund operating expenses
portfolio was (expenses deducted from
invested on portfolio assets)
January 31, ----------------------------------------------------------------
2000, the ap- Management fee 0.35% 0.35% 0.35% 0.35%
proximate ex- ----------------------------------------------------------------
pense ratios Distribution and service (12b-
are expected to 1) fees 0.25% 0.75% 0.70% None
be as follows: ----------------------------------------------------------------
Class A 1.27%, Other expenses None None None None
Class B 1.77%, ----------------------------------------------------------------
Class L 1.72% Total annual fund operating
and Class Y expenses 0.60% 1.10% 1.05% 0.35%
1.02%. Fee ta- ----------------------------------------------------------------
ble expenses * You may buy Class A shares in amounts of $500,000 or more
would be higher at net asset value (without an initial sales charge) but
if the expense if you redeem those shares within 12 months of purchase
ratios of the you will pay a deferred sales charge of 1.00%.
underlying
funds were in-
cluded.
</TABLE>
19 | The Concert Allocation Series Prospectus
<PAGE>
Income Portfolio, continued
Example
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
The example Number of years you own
helps you com- your shares 1 year* 3 years* 5 years* 10 years*
pare the costs -------------------------------------------------------------
of investing in <S> <C> <C> <C> <C>
the portfolio Class A (with or without
with other mu- redemption) $574 $835 $1,116 $1,915
tual funds. -------------------------------------------------------------
Your actual Class B (assuming
costs may be redemption at end of
higher or low- period) $630 $857 $1,059 $1,952
er. -------------------------------------------------------------
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 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.
20 | 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.
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 Growth Fund seeks long-term growth of capital by invest-
ing primarily in equity securities of high growth companies. These companies
possess a market capitalization within the market capitalization range of com-
panies in the Russell 2000 Growth Index at the time of the fund's 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 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.
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
21 | The Concert Allocation Series Prospectus
<PAGE>
More on the Portfolios' Investments, continued
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.
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.
22 | 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 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
Economic and Monetary Union (EMU) and the introduction of a single European
currency (the Euro), which began on January 1, 1999, may increase uncertainties
relating to investment in European markets. Among other things, EMU entails
sharing a single currency and official interest rate and adhering to limits on
government borrowing by participating countries. EMU is driven by the expecta-
tion of economic benefits; however, there are significant risks associated with
EMU. Monetary and economic union on this scale has not been attempted before,
and there is uncertainty whether participating countries will remain committed
to EMU in the face of changing economic conditions.
23 | The Concert Allocation Series Prospectus
<PAGE>
Investment Strategies and Related Risks, continued
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
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.
24 | The Concert Allocation Series Prospectus
<PAGE>
Management
Portfolio manager
The portfolios' investment manager is SSB Citi Fund Management LLC ("SSB Citi")
(successor to 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, 2000*
(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.
Distribution plan
The portfolios each have adopted a Rule 12b-1 distribution plan for their Class
A, B and L shares. Under the plan, the portfolio pays distribution and/or serv-
ice fees. These fees are an ongoing expense and, over time, may cost you more
than other types of sales charges.
Transfer agent and shareholder servicing agent
Citi Fiduciary Trust Company serves as the portfolios' transfer agent and
shareholder servicing agent (the "transfer agent"). Pursuant to a sub-transfer
agency and services agreement with the transfer agent, PFPC Global Fund Serv-
ices serves as the portfolios' sub-transfer agent (the "sub-transfer agent") to
render certain shareholder record keeping and accounting services and func-
tions.
Possible conflict of interest
The Directors and officers of Smith Barney Concert Allocation Series Inc.
("Concert Series") also serve in similar positions 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 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 portfolio and the underlying funds. The
Directors of the Concert Series believe they have structured each portfolio to
avoid these concerns. However, conceivably 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 possi-
bility arises, the directors and officers of the Concert Series, the affected
underlying funds and SSB Citi will carefully analyze the situation and take all
steps they believe reasonable to minimize, and where possible eliminate, the
potential conflict. Moreover, limitations on aggregate investments in the un-
derlying funds have been adopted by the Concert Series to minimize this possi-
bility, and close and continuous monitoring will be exercised to avoid, insofar
as is possible, these concerns.
25 | 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
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Initial Additional
-----------------------------------------------------------------
Classes A, B and L Class Y All Classes
-----------------------------------------------------------------
<S> <C> <C> <C>
Minimum initial General $1,000 $15 million $50
and additional -----------------------------------------------------------------
investment IRAs, Self Employed
amounts vary Retirement Plans,
depending on the Uniform Gift to
class of shares Minor Accounts $ 250 $15 million $50
you buy and the -----------------------------------------------------------------
nature of your Qualified Retirement
investment Plans(*) $ 25 $15 million $25
account. -----------------------------------------------------------------
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
26 | 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
. You may than sales
qualify . Deferred Class A charge
for sales
reduction charge . Deferred . Must
or waiver declines sales invest at
of over time charge least $15
initial for only million
sales . Converts 1 year
charge to Class . Lower
A shares . Does not annual
. Lower after 8 convert expenses
annual years to Class than the
expenses A other
than . Higher classes
Class B annual . Higher
and Class expenses annual
L than expenses
Class A than
Class A
1.00%
Initial sales None None
charge Up to
5.00%, re-
duced for
large pur-
chases and
waived for
certain in-
vestors; no
charge for
purchases
of $500,000
or more
Deferred
sales charge 1.00% on Up to 5.00% 1.00% if None
purchases charged you redeem
of $500,000 when you within 1
or more if redeem year of
you 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 1.00% of 1.00% of None
distribution average average average
and service daily net daily net daily net
fees assets assets assets
(Applicable (Applicable
for the for the
Global, Global,
High High
Growth, Growth,
Growth and Growth and
Balanced Balanced
Portfolios) Portfolios)
0.75% of 0.70% of
average average
daily net daily net
assets assets
(Applicable (Applicable
for the for the
Conservative Conservative
and Income and Income
Portfolios) Portfolios)
Exchange Class A Class B Class L Class Y
privilege(*) 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.
27 | 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
. 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.
28 | 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 as the number of Class B shares converting is to total
Class B shares you own (excluding shares issued as dividends)
Shares issued: Upon exchange from another Smith Barney fund
- --------------------------------------------------------------------------------
. On the date the shares originally acquired would have converted into Class A
shares
- --------------------------------------------------------------------------------
29 | 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 and/or other
Smith Barney funds 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
Each time you place a request to redeem shares, a portfolio will first redeem
any shares in your account that are not subject to a deferred sales charge and
then the shares in your account that have been held the longest.
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
30 | 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 sub-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 sub-transfer agent at the following address:
Smith Barney Concert Allocation Series Inc.
(Specify portfolio and class of shares)
c/o PFPC Global Fund Services
P.O. Box 9699
Providence, RI 02940-9699
. Enclose a check made payable to the portfolio to pay for the shares. For ini-
tial 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 sub-
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 sub-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.
31 | 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 (except systematic
exchanges).
. If you hold share certificates, the sub-transfer agent must receive the cer-
tificates endorsed for transfer or with signed stock powers (documents trans-
ferring 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 4:00 p.m. (Eastern time).
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 sub-transfer agent at the address on the
following page.
32 | 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 sub-transfer agent must receive the certif-
icates 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 sub-trans-
fer agent at the following address:
Smith Barney Concert Allocation Series Inc.
(Specify portfolio and class of shares)
c/o PFPC Global Fund Services
P.O. Box 9699
Providence, Rhode Island 02940-9699
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 4:00 p.m. (Eastern time).
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 re-
ceive 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.
33 | The Concert Allocation Series Prospectus
<PAGE>
Other Things To Know About Share Transactions
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 sub-transfer
agent
. Instruct the sub-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 you to bring your account up to the minimum requirement. If your ac-
count balance is still below $500 after 60 days, the fund may close your ac-
count 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 sub-transfer agent. If you hold share
certificates, it will take longer to exchange or redeem shares.
34 | The Concert Allocation Series Prospectus
<PAGE>
Salomon Smith Barney Retirement Programs
You may be eligible to participate in a retirement program sponsored by Salomon
Smith Barney or one of its affiliates. The fund offers Class A and Class L
shares at net asset value to participating plans under the programs. You can
meet minimum investment and exchange amounts, if any, by combining the plan's
investments in any of the Smith Barney mutual 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 and/or the
date your account is opened. Once a class of shares is chosen, all additional
purchases must be of the same class.
. For plans opened on or after March 1, 2000 that are not plans for which
Paychex Inc. or an affiliate provides administrative services (a "Paychex
plan"), Class A shares may be purchased regardless of the amount invested.
. For plans opened prior to March 1, 2000 and for Paychex plans, the class of
shares you may purchase depends on the amount of your initial investment:
. 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 to exchange into Class A shares not later than
8 years after the plan joined the program. They are eligible for exchange
in the following circumstances:
If the plan 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 plan was opened before June 21, 1996 and a total of $500,000 is invested
in Smith Barney Funds Class L shares (other than money market funds) on Decem-
ber 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.
35 | The Concert Allocation Series Prospectus
<PAGE>
Dividends, Distributions 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 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.
36 | 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). If the New York Stock Exchange closes early,
each portfolio and each underlying fund accelerates the calculation of its net
asset value to the actual closing time.
International markets may be open on days when U.S. markets are closed and the
value of foreign securities owned by an underlying fund could change on days
when you cannot buy or redeem shares.
Each portfolio and underlying fund generally values its fund securities based
on market prices or quotations. To the extent an underlying fund holds securi-
ties denominated in a foreign currency, the fund's currency conversions are
done when the London Stock Exchange closes. When reliable market prices or quo-
tations are not readily available, or when the value of a security held by an
underlying fund has been materially affected by events occurring after a for-
eign exchange closes, 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
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.
37 | The Concert Allocation Series Prospectus
<PAGE>
Financial Highlights
<TABLE>
<S> <C>
The financial For a share of each class of capital stock
highlights ta- outstanding throughout each year ending
bles are in- January 31:
tended to help
you understand Global Portfolio
the performance =============================================================================================
of each portfo- Class A Shares Class B Shares Class L Shares
lio's classes 2000(1) 1999(1)(2) 2000(1) 1999(1)(2) 2000(1) 1999(1)(2)(3)
since incep- =============================================================================================
tion. Certain
information re- Net asset value,
flects finan- beginning of year $11.16 $11.40 $11.15 $11.40 $11.14 $11.40
cial results ---------------------------------------------------------------------------------------------
for a single Income (loss) from
share. Total operations:
return repre- Net investment income
sents the rate (loss)(4) 0.21 0.07 0.10 0.00* 0.30 (0.02)
that a share- Net realized and
holder would unrealized gain (loss) 2.54 (0.26) 2.53 (0.24) 2.33 (0.23)
have earned (or ---------------------------------------------------------------------------------------------
lost) on a fund Total income (loss) from
share assuming operations 2.75 (0.19) 2.63 (0.24) 2.63 (0.25)
reinvestment of ---------------------------------------------------------------------------------------------
all dividends Less distributions from:
and distribu- Net investment income (0.20) (0.04) (0.09) -- (0.09) --
tions. The in- Net realized gains (0.04) (0.01) (0.04) (0.01) (0.04) (0.01)
formation in ---------------------------------------------------------------------------------------------
the following Total distributions (0.24) (0.05) (0.13) (0.01) (0.13) (0.01)
tables was au- ---------------------------------------------------------------------------------------------
dited by KPMG Net asset value, end of
LLP, indepen- year $13.67 $11.16 $13.65 $11.15 $13.64 $11.14
dent auditors, ---------------------------------------------------------------------------------------------
whose report, Total return 24.57% (1.60)%++ 23.59% (2.16)%++ 23.61% (2.25)%++
along with the ---------------------------------------------------------------------------------------------
fund's finan- Net assets, end of year
cial statements (000's) $18,133 $10,766 $14,392 $9,220 $758 $244
is included in ---------------------------------------------------------------------------------------------
the annual re- Ratios to average net
port (available assets:
upon request). Expenses 0.60% 0.59%+ 1.35% 1.32%+ 1.35% 1.32%+
No information Net investment income
is presented (loss) 1.73 0.80+ 0.83 0.06+ 2.36 (0.12)+
for Class Y ---------------------------------------------------------------------------------------------
shares of any Portfolio turnover rate 0% 0% 0% 0% 0% 0%
portfolio be- =============================================================================================
cause no Class
Y shares were (1) Per share amounts have been calculated using the monthly
outstanding for average shares method.
the years (2) For the period from March 9, 1998 (inception date) to
shown. January 31, 1999.
(3) On June 12, 1998, Class C shares were renamed Class L
shares.
(4) Net investment income (loss) per share includes short-
term capital gain distributions from Underlying Funds.
* Amount represents less than $0.01.
++ Total return is not annualized, as it may not be
representative of the total return for the year.
+ Annualized.
</TABLE>
High Growth Portfolio
<TABLE>
=====================================================================================================
<CAPTION>
Class A Shares Class B Shares
2000(1) 1999(1) 1998 1997(2) 2000(1) 1999(1) 1998 1997(2)
=====================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
year $14.86 $12.97 $12.41 $11.40 $14.81 $12.95 $12.41 $11.40
- -----------------------------------------------------------------------------------------------------
Income from
operations:
Net investment
income
(loss)(3) 0.54 0.09 0.11 0.20 0.41 (0.01) 0.03 0.08
Net realized
and unrealized
gain 2.29 2.36 0.91 1.05 2.26 2.35 0.89 1.04
- -----------------------------------------------------------------------------------------------------
Total income
from operations 2.83 2.45 1.02 1.25 2.67 2.34 0.92 1.12
- -----------------------------------------------------------------------------------------------------
Less
distributions
from:
Net investment
income (0.53) (0.08) (0.13) (0.20) (0.39) -- (0.05) (0.07)
Net realized
gains (0.35) (0.48) (0.33) (0.04) (0.35) (0.48) (0.33) (0.04)
- -----------------------------------------------------------------------------------------------------
Total
distributions (0.88) (0.56) (0.46) (0.24) (0.74) (0.48) (0.38) (0.11)
- -----------------------------------------------------------------------------------------------------
Net asset value,
end of year $16.81 $14.86 $12.97 $12.41 $16.74 $14.81 $12.95 $12.41
- -----------------------------------------------------------------------------------------------------
Total return 18.97% 19.15% 8.25% 11.04%++ 18.01% 18.30% 7.44% 9.91%++
- -----------------------------------------------------------------------------------------------------
Net assets, end
of year (000's) $441,050 $365,225 $259,212 $154,069 $375,224 $318,101 $230,142 $141,241
- -----------------------------------------------------------------------------------------------------
Ratios to
average net
assets:
Expenses 0.60% 0.60% 0.60% 0.60%+ 1.35% 1.35% 1.35% 1.35%+
Net investment
income (loss) 3.44 0.68 1.00 2.79+ 2.65 (0.07) 0.25 2.04+
- -----------------------------------------------------------------------------------------------------
Portfolio
turnover rate 2% 21% 39% 0% 2% 21% 39% 0%
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
<CAPTION>
Class L Shares
2000(1) 1999(1)(4) 1998 1997(2)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of
year $14.81 $12.96 $12.42 $11.40
- -----------------------------------------------------------------------------------------------------
Income from
operations:
Net investment
income
(loss)(3) 0.43 (0.01) 0.03 0.08
Net realized
and unrealized
gain 2.25 2.34 0.89 1.05
- -----------------------------------------------------------------------------------------------------
Total income
from operations 2.68 2.33 0.92 1.13
- -----------------------------------------------------------------------------------------------------
Less
distributions
from:
Net investment
income (0.39) -- (0.05) (0.07)
Net realized
gains (0.35) (0.48) (0.33) (0.04)
- -----------------------------------------------------------------------------------------------------
Total
distributions (0.74) (0.48) (0.38) (0.11)
- -----------------------------------------------------------------------------------------------------
Net asset value,
end of year $16.75 $14.81 $12.96 $12.42
- -----------------------------------------------------------------------------------------------------
Total return 18.08% 18.21% 7.44% 10.00%++
- -----------------------------------------------------------------------------------------------------
Net assets, end
of year (000's) $45,979 $37,969 $27,845 $19,340
- -----------------------------------------------------------------------------------------------------
Ratios to
average net
assets:
Expenses 1.35% 1.35% 1.35% 1.35%+
Net investment
income (loss) 2.74 (0.07) 0.25 2.04+
- -----------------------------------------------------------------------------------------------------
Portfolio
turnover rate 2% 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) On June 12, 1998, Class C shares were renamed Class L shares
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
38 | The Concert Allocation Series Prospectus
<PAGE>
Financial Highlights, continued
Growth Portfolio
<TABLE>
<CAPTION>
Class A Shares Class B Shares
2000(1) 1999(1) 1998(1) 1997(2) 2000(1) 1999(1) 1998 1997(2)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $14.43 $12.99 $12.32 $11.40 $14.48 $13.00 $12.33 $11.40
- --------------------------------------------------------------------------------------------------
Income from
operations:
Net investment
income(3) 0.47 0.26 0.31 0.33 0.36 0.16 0.22 0.23
Net realized and
unrealized gain 1.05 1.82 1.14 0.92 1.03 1.82 1.12 0.94
- --------------------------------------------------------------------------------------------------
Total income from
operations 1.52 2.08 1.45 1.25 1.39 1.98 1.34 1.17
- --------------------------------------------------------------------------------------------------
Less
distributions
from:
Net investment
income (0.49) (0.27) (0.32) (0.31) (0.34) (0.13) (0.21) (0.22)
Net realized
gains (0.35) (0.37) (0.46) (0.02) (0.35) (0.37) (0.46) (0.02)
- --------------------------------------------------------------------------------------------------
Total
distributions (0.84) (0.64) (0.78) (0.33) (0.69) (0.50) (0.67) (0.24)
- --------------------------------------------------------------------------------------------------
Net asset value,
end of year $15.11 $14.43 $12.99 $12.32 $15.18 $14.48 $13.00 $12.33
- --------------------------------------------------------------------------------------------------
Total return 10.53% 16.20% 11.82% 11.08%++ 9.61% 15.40% 10.93% 10.32%++
- --------------------------------------------------------------------------------------------------
Net assets, end
of year (000's) $432,580 $391,235 $279,842 $161,026 $486,164 $452,943 $343,474 $211,434
- --------------------------------------------------------------------------------------------------
Ratios to average
net assets:
Expenses 0.60% 0.60% 0.60% 0.60%+ 1.35% 1.35% 1.35% 1.35%+
Net investment
income 3.23 1.93 2.77 4.79+ 2.43 1.18 1.96 4.04+
- --------------------------------------------------------------------------------------------------
Portfolio
turnover rate 2% 10% 41% 0% 2% 10% 41% 0%
- --------------------------------------------------------------------------------------------------
<CAPTION>
Class L Shares
2000(1) 1999(1)(4) 1998 1997(2)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of year $14.48 $13.00 $12.33 $11.40
- --------------------------------------------------------------------------------------------------
Income from
operations:
Net investment
income(3) 0.35 0.16 0.22 0.24
Net realized and
unrealized gain 1.05 1.82 1.12 0.93
- --------------------------------------------------------------------------------------------------
Total income from
operations 1.40 1.98 1.34 1.17
- --------------------------------------------------------------------------------------------------
Less
distributions
from:
Net investment
income (0.34) (0.13) (0.21) (0.22)
Net realized
gains (0.35) (0.37) (0.46) (0.02)
- --------------------------------------------------------------------------------------------------
Total
distributions (0.69) (0.50) (0.67) (0.24)
- --------------------------------------------------------------------------------------------------
Net asset value,
end of year $15.19 $14.48 $13.00 $12.33
- --------------------------------------------------------------------------------------------------
Total return 9.68% 15.40% 10.92% 10.32%++
- --------------------------------------------------------------------------------------------------
Net assets, end
of year (000's) $57,596 $53,319 $42,983 $31,279
- --------------------------------------------------------------------------------------------------
Ratios to average
net assets:
Expenses 1.35% 1.35% 1.35% 1.35%+
Net investment
income 2.39 1.18 1.96 4.04+
- --------------------------------------------------------------------------------------------------
Portfolio
turnover rate 2% 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) On June 12, 1998, Class C shares were renamed Class L shares.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
39 | The Concert Allocation Series Prospectus
<PAGE>
Financial Highlights, continued
Balanced Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Class B Shares
2000(1) 1999(1) 1998 1997(3) 2000(1) 1999(1) 1998 1997(3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
year $12.95 $12.62 $12.14 $11.40 $12.95 $12.61 $12.14 $11.40
- --------------------------------------------------------------------------------------------------
Income from
operations:
Net investment
income(4) 0.45 0.42 0.58 0.45 0.35 0.32 0.48 0.37
Net realized and
unrealized gain 0.10 0.73 0.80 0.74 0.09 0.74 0.80 0.74
- --------------------------------------------------------------------------------------------------
Total Income from
operations 0.55 1.15 1.38 1.19 0.44 1.06 1.28 1.11
- --------------------------------------------------------------------------------------------------
Less
distributions
from:
Net investment
income (0.46) (0.45) (0.54) (0.45) (0.29) (0.35) (0.45) (0.37)
Net realized
gains (0.46) (0.37) (0.36) -- (0.46) (0.37) (0.36) --
- --------------------------------------------------------------------------------------------------
Total
distributions (0.92) (0.82) (0.90) (0.45) (0.75) (0.72) (0.81) (0.37)
- --------------------------------------------------------------------------------------------------
Net asset value,
end of year $12.58 $12.95 $12.62 $12.14 $12.64 $12.95 $12.61 $12.14
- --------------------------------------------------------------------------------------------------
Total return 4.37% 9.33% 11.59% 10.64%++ 3.48% 8.62% 10.67% 9.90%++
- --------------------------------------------------------------------------------------------------
Net assets, end
of year (000's) $222,275 $227,674 $166,806 $ 90,938 $238,456 $247,733 $193,791 $111,918
- --------------------------------------------------------------------------------------------------
Ratios to average
net assets:
Expenses 0.60% 0.60% 0.60% 0.60%+ 1.35% 1.35% 1.35% 1.35%+
Net investment
income 3.54 3.24 4.79 4.88+ 2.75 2.50 3.96 4.14+
- --------------------------------------------------------------------------------------------------
Portfolio
turnover rate 4% 10% 23% 0% 4% 10% 23% 0%
- --------------------------------------------------------------------------------------------------
<CAPTION>
Class L Shares
2000(1) 1999(1)(2) 1998 1997(3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of
year $12.94 $12.61 $12.14 $11.40
- --------------------------------------------------------------------------------------------------
Income from
operations:
Net investment
income(4) 0.36 0.32 0.46 0.37
Net realized and
unrealized gain 0.09 0.73 0.82 0.74
- --------------------------------------------------------------------------------------------------
Total Income from
operations 0.45 1.05 1.28 1.11
- --------------------------------------------------------------------------------------------------
Less
distributions
from:
Net investment
income (0.29) (0.35) (0.45) (0.37)
Net realized
gains (0.46) (0.37) (0.36) --
- --------------------------------------------------------------------------------------------------
Total
distributions (0.75) (0.72) (0.81) (0.37)
- --------------------------------------------------------------------------------------------------
Net asset value,
end of year $12.64 $12.94 $12.61 $12.14
- --------------------------------------------------------------------------------------------------
Total return 3.56% 8.53% 10.67% 9.90%++
- --------------------------------------------------------------------------------------------------
Net assets, end
of year (000's) $33,989 $34,809 $27,473 $19,968
- --------------------------------------------------------------------------------------------------
Ratios to average
net assets:
Expenses 1.35% 1.35% 1.35% 1.35%+
Net investment
income 2.76 2.50 3.69 4.14+
- --------------------------------------------------------------------------------------------------
Portfolio
turnover rate 4% 10% 23% 0%
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) On June 12, 1998, Class C shares were renamed Class L 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.
++ Total return is not annualized, as it may not be representative of the total
return for the year.
+ Annualized.
40 | The Concert Allocation Series Prospectus
<PAGE>
Financial Highlights, continued
For a share of each class of capital stock outstanding throughout each year
ended January 31:
Conservative Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class L Shares
2000(1) 1999(1) 1998 1997(2) 2000(1) 1999(1) 1998 1997(2) 2000(1) 1999(1)(3) 1998 1997(2)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $12.04 $12.17 $11.90 $11.46 $12.02 $12.16 $11.89 $11.46 $12.02 $12.16 $11.89 $11.46
- --------------------------------------------------------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment
income(4) 0.56 0.58 0.73 0.53 0.51 0.52 0.66 0.48 0.51 0.53 0.69 0.48
Net realized and
unrealized gain
(loss) (0.33) 0.11 0.63 0.43 (0.33) 0.10 0.64 0.42 (0.32) 0.10 0.62 0.42
- --------------------------------------------------------------------------------------------------------------------------------
Total income from
operations 0.23 0.69 1.36 0.96 0.18 0.62 1.30 0.90 0.19 0.63 1.31 0.90
- --------------------------------------------------------------------------------------------------------------------------------
Less distributions
from:
Net investment
income (0.55) (0.58) (0.69) (0.52) (0.45) (0.52) (0.63) (0.47) (0.46) (0.53) (0.64) (0.47)
Net realized
gains (0.25) (0.24) (0.40) -- (0.25) (0.24) (0.40) -- (0.25) (0.24) (0.40) --
- --------------------------------------------------------------------------------------------------------------------------------
Total
distributions (0.80) (0.82) (1.09) (0.52) (0.70) (0.76) (1.03) (0.47) (0.71) (0.77) (1.04) (0.47)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of year $11.47 $12.04 $12.17 $11.90 $11.50 $12.02 $12.16 $11.89 $11.50 $12.02 $12.16 $11.89
- --------------------------------------------------------------------------------------------------------------------------------
Total return 1.96% 5.85% 11.70% 8.57%++ 1.50% 5.22% 11.21% 8.03%++ 1.59% 5.29% 11.25% 8.08%++
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of
year (000's) $70,327 $71,583 $51,233 $30,478 $64,910 $64,983 $48,584 $28,297 $6,952 $6,899 $5,386 $4,129
- --------------------------------------------------------------------------------------------------------------------------------
Ratios to average
net assets:
Expenses 0.60% 0.60% 0.60% 0.60%+ 1.10% 1.09% 1.10% 1.10%+ 1.05% 1.05% 1.05% 1.05%+
Net investment
income 4.76 4.80 6.17 5.66+ 4.29 4.31 5.67 5.16+ 4.34 4.32 5.72 5.21+
- --------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover
rate 3% 5% 28% 0% 3% 5% 28% 0% 3% 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) On June 12, 1998, Class C shares were renamed Class L shares.
(4) 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.
41 | The Concert Allocation Series Prospectus
<PAGE>
Financial Highlights, continued
Income Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Shares Class B Shares Class L Shares
2000(1) 1999(1) 1998 1997(2) 2000(1) 1999(1) 1998 1997(2) 2000(1) 1999(1)(3) 1998 1997(2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 11.50 $ 11.75 $ 11.53 $ 11.46 $ 11.50 $ 11.76 $ 11.53 $ 11.46 $ 11.50 $11.76 $11.53 $ 11.46
- ---------------------------------------------------------------------------------------------------------------------------
Income (loss)
from operations:
Net investment
income(4) 0.64 0.69 0.76 0.63 0.59 0.63 0.70 0.58 0.60 0.64 0.71 0.59
Net realized and
unrealized gain
(loss) (0.76) (0.14) 0.52 0.07 (0.75) (0.15) 0.52 0.07 (0.76) (0.15) 0.52 0.07
- ---------------------------------------------------------------------------------------------------------------------------
Total income
(loss) from
operations (0.12) 0.55 1.28 0.70 (0.16) 0.48 1.22 0.65 (0.16) 0.49 1.23 0.66
- ---------------------------------------------------------------------------------------------------------------------------
Less distributions from:
Net investment
income (0.63) (0.69) (0.77) (0.63) (0.58) (0.63) (0.70) (0.58) (0.58) (0.64) (0.71) (0.59)
Net realized
gains (0.11) (0.11) (0.29) -- (0.11) (0.11) (0.29) -- (0.11) (0.11) (0.29) --
- ---------------------------------------------------------------------------------------------------------------------------
Total
distributions (0.74) (0.80) (1.06) (0.63) (0.69) (0.74) (0.99) (0.58) (0.69) (0.75) (1.00) (0.59)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value,
end of year $ 10.64 $ 11.50 $ 11.75 $ 11.53 $ 10.65 $ 11.50 $ 11.76 $ 11.53 $ 10.65 $11.50 $11.76 $ 11.53
- ---------------------------------------------------------------------------------------------------------------------------
Total return (1.04)% 4.88% 11.44% 6.39%++ (1.47)% 4.25% 10.93% 5.89%++ (1.42)% 4.31% 10.98% 5.94%++
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of
year (000's) $32,111 $36,390 $29,574 $17,817 $28,302 $34,497 $26,563 $17,800 $ 3,698 $3,945 $3,568 $ 2,113
- ---------------------------------------------------------------------------------------------------------------------------
Ratios to average
net assets:
Expenses 0.60% 0.60% 0.60% 0.60%+ 1.10% 1.10% 1.10% 1.10%+ 1.05% 1.05% 1.05% 1.05%+
Net investment
income 5.78 5.95 6.62 6.32+ 5.27 5.45 6.12 5.82+ 5.36 5.47 6.17 5.87+
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover
rate 4% 0% 28% 0% 4% 0% 28% 0% 4% 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) On June 12, 1998, Class C shares were renamed Class L shares.
(4) 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.
42 | The Concert Allocation Series Prospectus
<PAGE>
(This page is intentionally left blank.)
<PAGE>
Smith Barney SalomonSmithBarney
Concert Allocation ============================
Series Inc. A member of citigroup [LOGO]
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 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
Information about the portfolios (including the SAI) can be reviewed and copied
at the Securities and Exchange Commission's (the "Commission") Public Reference
Room in Washington, D.C. In addition, information on the operation of the Pub-
lic Reference Room may be obtained by calling the Commission at 1-202-942-8090.
Reports and other information about the portfolios are available on the EDGAR
Database on the Commission's Internet site at http://www.sec.gov. Copies of
this information may be obtained for a duplicating fee by electronic request at
the following E-mail address: [email protected], or by writing the Commis-
sion's Public Reference Section, Washington, D.C. 20549-0102.
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)
[FD01083 5/00 16794]
<PAGE>
SMITH BARNEY
Concert
Allocation
Series Inc.
Prospectus
Class Z Shares Only
May 30, 2000
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
Smith Barney Concert Allocation Series Inc. consists of 11 separate in-
vestment portfolios, each with its own investment objective and poli-
cies. This prospectus relates to 6 of those portfolios. Each portfolio
offers different levels of potential return and involves different lev-
els of risk.
<TABLE>
<S> <C>
Investments, risks and performance 2
- ----------------------------------------------------
Global Portfolio 3
- ----------------------------------------------------
High Growth Portfolio 6
- ----------------------------------------------------
Growth Portfolio 9
- ----------------------------------------------------
Balanced Portfolio 12
- ----------------------------------------------------
Conservative Portfolio 15
- ----------------------------------------------------
Income Portfolio 18
- ----------------------------------------------------
More on the portfolios' investments 21
- ----------------------------------------------------
Investment strategies and related risks 23
- ----------------------------------------------------
Management 25
- ----------------------------------------------------
Buying, redeeming and exchanging Class Z Shares 26
- ----------------------------------------------------
Dividends, distributions and taxes 27
- ----------------------------------------------------
Share price 28
- ----------------------------------------------------
Financial highlights 29
- ----------------------------------------------------
</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.
1 The Concert Allocation Series Class Z Shares
<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
2 The Concert Allocation Series Class Z Shares
<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.
Selection process
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%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Large Capitalization Growth Fund 0-20%
- ----------------------------------------------------
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 Small Cap Growth Fund 0-15%
- ----------------------------------------------------
Smith Barney Small Cap Value Fund 0-15%
- ----------------------------------------------------
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 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 Class Z Shares
<PAGE>
Global 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 the past calendar year. Since
the portfolio did not have any Class Z shares outstanding during the calendar
year ended December 31, 1999, the portfolio is showing total return, quarterly
returns and comparative performance of its Class A shares (the class with the
greatest net assets) to provide you with some indication of the portfolio's
historical performance. Class Z shares have different performance because of
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: 22.76% in 4th quarter 1999; Lowest: (17.89)% in 3rd
quarter 1999.
Year to date: 1.18% (through 3/31/00)
Percentage Total Returns for Class A shares
[GRAPH]
1999 33.62%
Risk return table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar years ended
December 31, 1999)
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
S&P Russell MSCI MSCI
Class A 500 2000 EAFE EMI
-----------------------------------------------------------
1 Year 26.91% 21.03% 19.62% 26.96% 66.41%
-----------------------------------------------------------
Since Inception 11.95% 19.51% 2.83% 17.61% 9.38%
-----------------------------------------------------------
Inception Date 3/9/98 * * * *
-----------------------------------------------------------
</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 Class A
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), a broad-
based unmanaged
index of for-
eign stocks;
and the Morgan
Stanley Capital
International
Emerging Mar-
kets Index
("MSCI EMI"), a
broad-based un-
managed index
of emerging
market compa-
nies with an
average size of
$800 million
and the index
performance of
emerging mar-
kets in South
America, South
Africa, Asia
and Eastern Eu-
rope.
*Index comparison begins on March 31, 1998.
Fee table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shareholder fees (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
-----------------------------------------------------------
<CAPTION>
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>
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,
2000, the ap-
proximate ex-
pense ratio is
expected to be
1.38%. Fee ta-
ble expenses
would be higher
if the expense
ratios of the
underlying
funds were in-
cluded.
4 The Concert Allocation Series Class Z Shares
<PAGE>
Global 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 Z (with or without
redemption) $140 $437 $755 $1,657
------------------------------------------------------------------------------
</TABLE>
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.
(*)The example
assumes:
. You invest
$10,000 for
the period
shown
. Your invest-
ment has a 5%
return each
year
. You reinvest
all distribu-
tions and
dividends
without a
sales charge
. The portfo-
lio's operat-
ing expenses
remain the
same
. The expenses
of the under-
lying Smith
Barney funds
are re-
flected.
5 The Concert Allocation Series Class Z Shares
<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.
Selection process
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 and high yield (Smith Barney High
Income Fund) funds. The portfolio also allocates a portion of its assets to un-
derlying funds that primarily 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 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%
- -----------------------------------------------------
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 Small Cap Growth Fund 0-15%
- -----------------------------------------------------
</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
6 The Concert Allocation Series Class Z Shares
<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 2 calendar years.
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: 5.01% (through 3/31/00)
Percentage Total Returns for Class Z shares
[GRAPH]
1998 15.81%
1999 27.70%
Risk return table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar
Years Ended December 31, 1999)
------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class Z S&P 500 Russell 2000 MSCI EAFE High Yield
------------------------------------------------------------
1 Year 27.70% 21.03% 19.62% 26.96% 1.73%
------------------------------------------------------------
Since
Inception 17.76% 25.81% 11.29% 17.66% 5.97%
------------------------------------------------------------
Inception
Date 1/17/97 * * * *
------------------------------------------------------------
</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 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 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.
*Index comparison begins on January 31, 1997.
Fee table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shareholder fees (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 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,
2000, the ap-
proximate ex-
pense ratio is
expected to be
1.20%. Fee ta-
ble expenses
would be higher
if the expense
ratios of the
underlying
funds were in-
cluded.
7 The Concert Allocation Series Class Z Shares
<PAGE>
High Growth 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 Z (with or without
redemption) $122 $381 $660 $1,455
----------------------------------------------------------
</TABLE>
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.
*The example
assumes:
. You invest
$10,000 for
the period
shown
. Your invest-
ment has a
5% return
each year
. You reinvest
all distri-
butions and
dividends
without a
sales charge
. The portfo-
lio's oper-
ating ex-
penses re-
main the
same
. The expenses
of the un-
derlying
Smith Barney
funds are
reflected.
8 The Concert Allocation Series Class Z Shares
<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.
Selection process
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 and high yield
(Smith Barney High Income Fund) funds. The portfolio also allocates a signifi-
cant 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 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%
- -----------------------------------------------------
Smith Barney Hansberger Global Small Cap Value
Fund 0-10%
- -----------------------------------------------------
Smith Barney Mid Cap Blend Fund 0-10%
- -----------------------------------------------------
Smith Barney Small Cap Growth Fund 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
9 The Concert Allocation Series Class Z Shares
<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 2 calendar years.
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: 3.68% (through 3/31/00)
Percentage Total Returns for Class Z shares
[GRAPH]
1998 13.95%
1999 17.50%
Risk return table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended December
31, 1999)
----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class Z S&P 500 Russell 2000 MSCI EAFE Lehman
----------------------------------------------------------
1 Year 17.50% 21.03% 19.62% 26.96% (2.15)%
----------------------------------------------------------
Since
Inception 14.88% 25.81% 11.29% 17.66% 5.66 %
----------------------------------------------------------
Inception
Date 1/17/97 * * * *
----------------------------------------------------------
</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 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 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 un-
managed index
of fixed income
securities.
*Index comparison begins on January 31, 1997.
Fee table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shareholder fees (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
-------------------------------------------------------------
<CAPTION>
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 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,
2000, the ap-
proximate ex-
pense ratio is
expected to be
1.14%. Fee ta-
ble expenses
would be higher
if the expense
ratios of the
underlying
Funds were in-
cluded.
10 The Concert Allocation Series Class Z Shares
<PAGE>
Growth 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 Z (with or without
redemption) $116 $362 $628 $1,386
--------------------------------------------------------
</TABLE>
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.
*The example
assumes:
. You invest
$10,000 for
the period
shown
. Your invest-
ment has a
5% return
each year
. You reinvest
all distri-
butions and
dividends
without a
sales charge
. The portfo-
lio's oper-
ating ex-
penses re-
main the
same
. The expenses
of the un-
derlying
Smith Barney
funds are
reflected.
11 The Concert Allocation Series Class Z Shares
<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.
Selection process
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%
- -----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Fundamental Value Fund Inc. 0-20%
- ----------------------------------------------------
Smith Barney Government Securities Fund 0-20%
- ----------------------------------------------------
Concert Peachtree Growth Fund 0-15%
- ----------------------------------------------------
Global Government Bond Portfolio 0-15%
- ----------------------------------------------------
International Equity Portfolio 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%
- ----------------------------------------------------
</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
12 The Concert Allocation Series Class Z Shares
<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 2 calendar years.
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: 3.58% (through 3/31/00)
Percentage Total Returns for Class Z shares
[GRAPH]
1998 9.20%
1999 7.58%
Risk return table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended December 31,
1999)
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class Z S&P 500 Lehman Gov/Corp T-bill World Bond
---------------------------------------------------------------
1 Year 7.58% 21.03% 2.15% 4.26% (4.27)%
---------------------------------------------------------------
Since
Inception 9.59% 25.81% 5.66% 5.40%* 4.49 %
---------------------------------------------------------------
Inception
Date 1/17/97 * * * *
---------------------------------------------------------------
</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 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
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
securities.
*Index comparison begins on January 31, 1997.
Fee table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shareholder fees (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
-------------------------------------------------------------
<CAPTION>
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 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,
2000, the
approximate
expense ratio
is expected to
be 1.07%. Fee
table expenses
would be higher
if the expense
ratios of the
underlying
funds were
included.
13 The Concert Allocation Series Class Z Shares
<PAGE>
Balanced 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 Z (With or without
redemption) $109 $340 $590 $1,306
--------------------------------------------------------------------
</TABLE>
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.
* The example
assumes:
. You invest
$10,000 for
the period
shown
. Your invest-
ment has a 5%
return each
year
. You reinvest
all distribu-
tions and
dividends
without a
sales charge
. The portfo-
lio's operat-
ing expenses
remain the
same
. The expenses
of the under-
lying Smith
Barney funds
are re-
flected.
14 The Concert Allocation Series Class Z Shares
<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.
Selection process
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%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Large Cap Value Fund 0-20%
- ----------------------------------------------------------------------------------
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 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
15 The Concert Allocation Series Class Z Shares
<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 the past 3 calendar years.
Since the portfolio did not have any Class Z shares outstanding during the cal-
endar year ended December 31, 1999, the portfolio is showing total return,
quarterly returns and comparative performance of its Class A shares (the class
with the greatest net assets) to provide you with some indication of the port-
folio's historical performance. Class Z shares have different performance be-
cause of different expenses. Performance information in the chart does not re-
flect 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: 2.42% (through 3/31/00)
Percentage Total Returns for Class A shares
[GRAPH]
1997 11.81%
1998 6.02%
1999 3.98%
Risk return table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1999)
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
S&P High
Class A 500 Lehman Yield T-bill
----------------------------------------------------------
1 Year (0.67)% 21.03% (2.15)% 1.73% 4.26%
----------------------------------------------------------
Since Inception 6.23 % 26.27% 5.51 % 7.08% 5.54%
----------------------------------------------------------
Inception Date 2/5/96 * * * *
----------------------------------------------------------
</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 Class A
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 Trea-
sury Bill Index
(T-bill), con-
sisting of a
single 1-Year
U.S. Treasury
bill whose re-
turn is tracked
until maturity.
*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.
<TABLE>
<CAPTION>
Shareholder fees (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
-------------------------------------------------------------
<CAPTION>
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>
Based on the
expense ratios
of underlying
Smith Barney
funds in which
the Conserva-
tive portfolio
invested during
the most recent
fiscal year,
the approximate
expense ratio
is expected to
be 1.07%. Fee
table expenses
would be higher
if the expense
ratios of the
underlying
funds were in-
cluded.
16 The Concert Allocation Series Class Z Shares
<PAGE>
Example
- --------------------------------------------------------------------------------
<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) $109 $340 $590 $1,306
----------------------------------------------------------
</TABLE>
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.
* The example
assumes:
. You invest
$10,000 for
the period
shown
. Your invest-
ment has a 5%
return each
year
. You reinvest
all distribu-
tions and
dividends
without a
sales charge
. The portfo-
lio's operat-
ing expenses
remain the
same
. The expenses
of the under-
lying Smith
Barney funds
are
reflected.
17 The Concert Allocation Series Class Z Shares
<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.
Selection process
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%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Large Cap Value Fund 0-15%
- -----------------------------------------------
Smith Barney Convertible Fund 0-15%
- -----------------------------------------------
Smith Barney Investment Grade Bond Fund 0-15%
- -----------------------------------------------
Smith Barney Premium Total Return Fund 0-15%
- -----------------------------------------------
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 the security's credit rating may be 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
18 The Concert Allocation Series Class Z Shares
<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 3 calendar
years. Since the portfolio did not have any Class Z shares outstanding during
the calendar year ended December 31, 1999, the portfolio is showing total re-
turn, quarterly returns and comparative performance of its Class A shares (the
class with the greatest net assets) to provide you with some indication of the
portfolio's historical performance. Class Z shares have different performance
because of 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: 1.34% (through 3/31/00)
Percentage Total Returns for Class A shares
[GRAPH]
1997 11.00%
1998 5.32%
1999 0.34%
Risk return table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended
December 31, 1999)
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
S&P High
Class A 500 Lehman Yield T-bill
----------------------------------------------------------
1 Year (4.17)% 21.03% (2.15)% 1.73% 4.26%
----------------------------------------------------------
Since Inception 4.42 % 26.27% 5.51 % 7.08% 5.54%
----------------------------------------------------------
Inception Date 2/5/96 * * * *
----------------------------------------------------------
</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 Class A
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 Trea-
sury Bill Index
(T-bill), con-
sisting of one
1-Year U.S.
Treasury bill
whose return is
tracked until
maturity.
*Index comparison begins on February 29, 1996.
Fee table
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shareholder fees (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
-------------------------------------------------------------
<CAPTION>
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 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.
19 The Concert Allocation Series Class Z Shares
<PAGE>
Income Portfolio, continued
Example
- --------------------------------------------------------------------------------
<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 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 example
assumes:
. You invest
$10,000 for
the period
shown
. Your invest-
ment has a
5% return
each year
. You reinvest
all distri-
butions and
dividends
without a
sales charge
. The portfo-
lio's oper-
ating ex-
penses re-
main the
same
. The expenses
of the un-
derlying
Smith Barney
funds are
reflected.
20 The Concert Allocation Series Class Z Shares
<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.
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
marketplace 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 Growth Fund seeks long-term growth of capital by invest-
ing primarily in equity securities of high growth companies. These companies
possess a market capitalization within the market capitalization range of com-
panies in the Russell 2000 Growth Index at the time of the fund's 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 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.
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
21 The Concert Allocation Series Class Z Shares
<PAGE>
More on the Portfolios' Investments, continued
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.
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.
22 The Concert Allocation Series Class Z Shares
<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 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
Economic and Monetary Union (EMU) and the introduction of a single European
currency (the Euro), which began on January 1, 1999, may increase uncertainties
relating to investment in European markets. Among other things, EMU entails
sharing a single currency and official interest rate and adhering to limits on
government borrowing by participating countries. EMU is driven by the expecta-
tion of economic benefits; however, there are significant risks associated with
EMU. Monetary and economic union on this scale has not been attempted before,
and there is uncertainty whether participating countries will remain committed
to EMU in the face of changing economic conditions.
23 The Concert Allocation Series Class Z Shares
<PAGE>
Investment Strategies and Related Risks, continued
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
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.
24 The Concert Allocation Series Class Z Shares
<PAGE>
Management
Portfolio manager
The portfolios' investment manager is SSB Citi Fund Management LLC ("SSB Citi")
(successor to 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--asset management, bank-
ing and consumer finance, credit and charge cards, insurance, investments, in-
vestment 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, 2000*
(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.
Transfer agent and shareholder servicing agent
Citi Fiduciary Trust Company serves as the portfolios' transfer agent and
shareholder servicing agent (the "transfer agent"). Pursuant to a sub-transfer
agency and services agreement with the transfer agent, PFPC Global Fund Serv-
ices serves as the portfolios' sub-transfer agent to render certain shareholder
record keeping and accounting services and functions.
Possible conflict of interest
The Directors and officers of Smith Barney Concert Allocation Series Inc.
("Concert Series") also serve in similar positions 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 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 portfolio and the underlying funds. The
Directors of the Concert Series believe they have structured each portfolio to
avoid these concerns. However, conceivably 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 possi-
bility arises, the directors and officers of the Concert Series, the affected
underlying funds and SSB Citi will carefully analyze the situation and take all
steps they believe reasonable to minimize, and where possible eliminate, the
potential conflict. Moreover, limitations on aggregate investments in the un-
derlying funds have been adopted by the Concert Series to minimize this possi-
bility, and close and continuous monitoring will be exercised to avoid, insofar
as is possible, these concerns.
25 The Concert Allocation Series Class Z Shares
<PAGE>
Buying, Redeeming and Exchanging Class Z Shares
Through a qualified plan
You may buy, redeem 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.
Other Information
The fund 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
26 The Concert Allocation Series Class Z Shares
<PAGE>
Dividends, Distributions and Taxes
An investment in a portfolio will have the following consequences for a quali-
fied 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 participating in a qualified plan.
Dividends Each portfolio generally pays dividends from net investment income
periodically and makes capital gain distributions, if any, once a year, typi-
cally in December. Each portfolio may pay additional distributions and divi-
dends at other times if necessary for the fund to avoid a federal tax. Capital
gain distributions and dividends are reinvested in additional Class Z shares.
Each portfolio expects distributions to be primarily from income. No sales
charge is imposed on reinvested distributions or dividends.
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.
27 The Concert Allocation Series Class Z Shares
<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). If the New York Stock Ex-
change closes early, each portfolio and each underlying fund accelerates the
calculation of its net asset value to the actual closing time.
International markets may be open on days when U.S. markets are closed and the
value of foreign securities owned by an underlying fund could change on days
when you can not buy or redeem shares.
Each portfolio and underlying fund generally values its fund securities based
on market prices or quotations. To the extent an underlying fund holds securi-
ties denominated in a foreign currency, the fund's currency conversions are
done when the London Stock Exchange closes. When reliable market prices or quo-
tations are not readily available, or when the value of a security held by an
underlying fund has been materially affected by events occurring after a for-
eign exchange closes, 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
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.
28 The Concert Allocation Series Class Z Shares
<PAGE>
Financial Highlights
The financial highlights tables are intended to help you understand the perfor-
mance 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 follow-
ing tables was audited by KPMG LLP, independent auditors, whose report, along
with the portfolio's financial statements is included in the annual report
(available upon request). No information is presented for the Global Portfolio
because no Class Z shares were outstanding for the years shown.
For a share of each class of capital stock outstanding throughout each year
ended January 31:
<TABLE>
- -------------------------------------------------------------------
<CAPTION>
High Growth Portfolio
Class Z Shares 2000(1) 1999(1) 1998(1) 1997(2)
-------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $14.86 $12.97 $12.41 $12.24
-------------------------------
Income from operations:
Net investment income(3) 0.63 0.13 0.17 0.01
Net realized and unrealized gain 2.24 2.36 0.89 0.16
-------------------------------
Total income from operations 2.87 2.49 1.06 0.17
-------------------------------
Less distributions from:
Net investment income (0.57) (0.12) (0.17) --
Net realized gains (0.35) (0.48) (0.33) --
-------------------------------
Total distributions (0.92) (0.60) (0.50) --
-------------------------------
Net asset value, end of year $16.81 $14.86 $12.97 $12.41
-------------------------------
Total return 19.26% 19.45% 8.58% 1.39%++
-------------------------------
Net assets, end of year (000's) $10,038 $6,712 $3,037 $4
-------------------------------
Ratios to average net assets:
Expenses 0.35% 0.35% 0.35% 0.35%+
Net investment income 4.00 0.95 1.25 3.33*
-------------------------------
Portfolio turnover rate 2% 21% 39% 0%
- -------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from January 17, 1997 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
distributionsfrom Underlying Funds.
* Not annualized.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
<TABLE>
- -------------------------------------------------------------------
<CAPTION>
Growth Portfolio
Class Z Shares 2000(1) 1999(1) 1998(1) 1997(2)
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year $14.41 $12.99 $12.32 $12.18
- -------------------------------------------------------------------
Income from operations:
Net investment income(3) 0.55 0.30 0.73 0.02
Net realized and unrealized gain 1.00 1.81 0.75 0.12
- -------------------------------------------------------------------
Total income from operations 1.55 2.11 1.48 0.14
- -------------------------------------------------------------------
Less distributions from:
Net investment income (0.58) (0.32) (0.35) --
Net realized gains (0.35) (0.37) (0.46) --
- -------------------------------------------------------------------
Total distributions (0.93) (0.69) (0.81) --
- -------------------------------------------------------------------
Net asset value, end of year $15.03 $14.41 $12.99 $12.32
- -------------------------------------------------------------------
Total return 10.76% 16.47% 12.08% 1.15%++
- -------------------------------------------------------------------
Net assets, end of year (000's) $8,080 $6,190 $2,908 $6
- -------------------------------------------------------------------
Ratios to average net assets:
Expenses 0.35% 0.35% 0.35% 0.35%+
Net investment income 3.72 2.18 5.24 5.30*
- -------------------------------------------------------------------
Portfolio turnover rate 2% 10% 41% 0%
- -------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from January 17, 1997 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
distributionsfrom Underlying Funds.
* Not annualized.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
29 The Concert Allocation Series Class Z Shares
<PAGE>
Financial Highlights, continued
For a share of each class of capital stock outstanding throughout each year
ended January 31:
<TABLE>
- -------------------------------------------------------------------
<CAPTION>
Balanced Portfolio
Class Z Shares 2000(1) 1999(1) 1998(1) 1997(2)
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year $12.95 $12.61 $12.13 $12.10
- -------------------------------------------------------------------
Income From Operations:
Net investment income(3) 0.45 0.45 1.11 0.00#
Net realized and unrealized gain 0.13 0.74 0.30 0.03
- -------------------------------------------------------------------
Total Income From Operations 0.58 1.19 1.41 0.03
- -------------------------------------------------------------------
Less Distributions From:
Net investment income (0.52) (0.48) (0.57) --
Net realized gains (0.46) (0.37) (0.36) --
- -------------------------------------------------------------------
Total Distributions (0.98) (0.85) (0.93) --
- -------------------------------------------------------------------
Net Asset Value, End of Year $12.55 $12.95 $12.61 $12.13
- -------------------------------------------------------------------
Total Return 4.58% 9.70% 11.82% 0.25%++
- -------------------------------------------------------------------
Net Assets, End of Year (000's) $29,653 $36,726 $2,919 $2
- -------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses 0.35% 0.35% 0.35% 0.35%+
Net investment income 3.48 3.50 8.31 5.39*
- -------------------------------------------------------------------
Portfolio Turnover Rate 4% 10% 23% 0%
- -------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from January 17, 1996 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
distributions from Underlying Funds.
# Amount represents less than $0.01.
* Not annualized.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
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 years ended January 31,
2000 and January 31, 1999.
30 The Concert Allocation Series Class Z Shares
<PAGE>
(This page is intentionally left blank.)
<PAGE>
Smith Barney SalomonSmithBarney
Concert Allocation ------------------------------
Series Inc.--Class Z A member of citigroup[LOGO]
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 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
Information about the portfolios (including the SAI) can be reviewed and copied
at the Securities and Exchange Commission's (the "Commission") Public Reference
Room in Washington, D.C. In addition, information on the operation of the Pub-
lic Reference Room may be obtained by calling the Commission at 1-202-942-8090.
Reports and other information about the portfolios are available on the EDGAR
Database on the Commission's Internet site at http://www.sec.gov. Copies of
this information may be obtained for a duplicating fee by electronic request at
the following E-mail address: [email protected], or by writing the Commis-
sion's Public Reference Section, Washington, D.C. 20549-0102.
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 5/00]
<PAGE>
SMITH BARNEY
CONCERT ALLOCATION SERIES INC.
PROSPECTUS
MAY 30, 2000
SELECT PORTFOLIOS
Prospectus begins on page one
Shares of each portfolio are offered only to insurance company separate accounts
which fund certain annuity and variable life insurance contracts and to certain
qualified pension and retirement plans. This prospectus should be read together
with the prospectus for those contracts.
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
Smith Barney Concert Allocation Series Inc. consists of 11 separate in-
vestment portfolios, each with its own investment objective and poli-
cies. This prospectus relates to 5 of those portfolios. Each portfolio
offers different levels of potential return and involves different lev-
els of risk.
<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
- --------------------------------------------
Share price 19
- --------------------------------------------
Dividends, distributions and taxes 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.
Selection process
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 and high yield (Smith Barney High
Income Fund) funds. The portfolio also allocates a portion of its assets to un-
derlying funds that primarily invest 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 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%
- ------------------------------------------------------
Smith Barney Government Securities Fund 0-15%
- ------------------------------------------------------
Smith Barney Investment Grade Bond Fund 0-15%
- ------------------------------------------------------
</TABLE>
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
3 Concert Series--Select Portfolios 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 for the past 2 calendar years. Performance figures
do not reflect expenses incurred from investing in a Separate Account. These
expenses will reduce performance. Please refer to the Separate Account prospec-
tus 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: 4.27% (through 3/31/00)
Percentage Total Returns for High Growth Portfolio
[BAR CHART APPEARS HERE]
1998 1999
15.38% 26.87%
Calendar years ended December 31
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 un-
managed index of foreign stocks; and the Salomon Smith Barney High Yield Market
Index (High Yield), a broad-based unmanaged index of high yield securities.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended December
31, 1999)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Portfolio S&P 500 Russell 2000 MSCI EAFE High Yield
- -----------------------------------------------------------------------------
1 Year 26.87% 21.03% 19.62% 26.96% 1.73%
- -----------------------------------------------------------------------------
Since Inception 17.88% 26.31% 12.66% 17.55% 5.51%
- -----------------------------------------------------------------------------
Inception Date 2/5/97 * * * *
- -----------------------------------------------------------------------------
</TABLE>
*Index comparison begins on February 28, 1997.
4 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.
Selection process
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 and high yield
(Smith Barney High Income Fund) funds. The portfolio also allocates a signifi-
cant 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%
- --------------------------
<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 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%
- ----------------------------------------------------
Smith Barney Hansberger Global Small Cap Value
Fund 0-10%
- ----------------------------------------------------
Smith Barney Mid Cap Blend Fund 0-10%
- ----------------------------------------------------
Smith Barney Small Cap Growth Fund 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
5 Concert Series--Select Portfolios 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 for the past 2 calendar years. Performance figures
do not reflect expenses incurred from investing in a Separate Account. These
expenses will reduce performance. Please refer to the Separate Account prospec-
tus 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: 3.10% (through 3/31/00)
Percentage Total Returns for Growth Portfolio
[BAR CHART APPEARS HERE]
1998 1999
13.97% 16.15%
Calendar Years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table assumes redemption of shares at the end of the period and reinvest-
ment 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 unman-
aged 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, 1999)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Portfolio S&P 500 Russell 2000 MSCI EAFE Lehman
- -----------------------------------------------------------------------------------
1 Year 16.15% 21.03% 19.62% 26.96% (2.15)%
- -----------------------------------------------------------------------------------
Since Inception 14.50% 26.31% 12.66% 17.55% 5.76 %
- -----------------------------------------------------------------------------------
Inception Date 2/5/97 * * * *
- -----------------------------------------------------------------------------------
</TABLE>
*Index comparison begins on February 28, 1997.
6 Concert Series--Select Portfolios 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.
Selection process
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%
- -----------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Smith Barney Fundamental Value Fund Inc. 0-20%
- -----------------------------------------------------
Smith Barney Government Securities Fund 0-20%
- -----------------------------------------------------
Concert Peachtree Growth Fund 0-15%
- -----------------------------------------------------
Global Government Bond Portfolio 0-15%
- -----------------------------------------------------
International Equity Portfolio 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%
- -----------------------------------------------------
</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 2 calendar years. Performance figures
do not reflect expenses incurred from investing in a Separate Account. These
expenses will reduce performance. Please refer to the Separate Account prospec-
tus 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: 3.56% (through 3/31/00)
Percentage Total Returns for Balanced Portfolio
[BAR CHART APPEARS HERE]
1998 1999
9.53% 7.57%
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 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.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended December
31, 1999)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Portfolio S&P 500 Lehman Gov/Corp T-bill World Bond
- ------------------------------------------------------------------------------
1 Year 7.57% 21.03% (2.15)% 4.26% (4.27)%
- ------------------------------------------------------------------------------
Since Inception 10.03% 26.31% 5.76 % 5.42% 4.91 %
- ------------------------------------------------------------------------------
Inception Date 2/5/97 * * * *
- ------------------------------------------------------------------------------
</TABLE>
*Index comparison begins on February 28, 1997.
8 Concert Series--Select Portfolios 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.
Selection process
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%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Large Cap Value Fund 0-20%
- ------------------------------------------------------
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 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 2 calendar years. Performance figures
do not reflect expenses incurred from investing in a Separate Account. These
expenses will reduce performance. Please refer to the Separate Account prospec-
tus 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: 2.65% (through 3/31/00)
Percentage Total Returns for Conservative Portfolio
[BAR CHART APPEARS HERE]
1998 1999
6.17% 4.14%
Calendar years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table assumes redemption of shares at the end of the period and reinvest-
ment 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 in-
dex 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,
1999)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Portfolio S&P 500 Lehman Gov/Corp High Yield T-bill
- -----------------------------------------------------------------------------
1 Year 4.14% 21.03% (2.15)% 1.73% 4.26%
- -----------------------------------------------------------------------------
Since Inception 7.68% 26.31% 5.76 % 5.51% 5.42%
- -----------------------------------------------------------------------------
Inception Date 2/5/97 * * * *
- -----------------------------------------------------------------------------
</TABLE>
*Index comparison begins on February 28, 1997.
10 Concert Series--Select Portfolios 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.
Selection process
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%
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Large Cap Value Fund 0-15%
- ------------------------------------------------------
Smith Barney Convertible Fund 0-15%
- ------------------------------------------------------
Smith Barney Investment Grade Bond Fund 0-15%
- ------------------------------------------------------
Smith Barney Premium Total Return Fund 0-15%
- ------------------------------------------------------
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 the security's credit rating may be 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 2 calendar years. Performance figures
do not reflect expenses incurred from investing in a Separate Account. These
expenses will reduce performance. Please refer to the Separate Account prospec-
tus 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: 1.42% (through 3/31/00)
Percentage Total Returns for Income Portfolio
1998 1999
5.58% 0.65%
Calendar Years ended December 31
Risk return table
- --------------------------------------------------------------------------------
The table assumes redemption of shares at the end of the period and reinvest-
ment 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 in-
dex 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,
1999)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Portfolio S&P 500 Lehman Gov/Corp High Yield T-bill
- -----------------------------------------------------------------------------
1 Year 0.65% 21.03% (2.15)% 1.73% 4.26%
- -----------------------------------------------------------------------------
Since Inception 6.09% 26.31% 5.76 % 5.51% 5.42%
- -----------------------------------------------------------------------------
Inception Date 2/5/97 * * * *
- -----------------------------------------------------------------------------
</TABLE>
*Index comparison begins on February 28, 1997.
12 Concert Series--Select Portfolios 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.
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 Growth Fund seeks long-term growth of capital by invest-
ing primarily in equity securities of high growth companies. These companies
possess a market capitalization within the market capitalization range of com-
panies in the Russell 2000 Growth Index at the time of the fund's 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 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.
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
13 Concert Series--Select Portfolios Prospectus
<PAGE>
More on the Portfolios' Investments, continued
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.
Economic and Monetary Union (EMU) and the introduction of a single European
currency (the Euro), which began on January 1, 1999, may increase uncertainties
relating to investment in European markets. Among other things, EMU entails
sharing a single currency and official interest rate and adhering to limits on
government borrowing by participating countries. EMU is driven by the expecta-
tion of economic benefits; however, there are significant risks associated with
EMU. Monetary and economic union on this scale has not been attempted before,
and there is uncertainty whether participating countries will remain committed
to EMU in the face of changing economic conditions.
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 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, 2000*
(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.
Transfer Agent and shareholder servicing agent
Citi Fiduciary Trust Company serves as the portfolios' transfer agent and
shareholder servicing agent (the "transfer agent"). Pursuant to a sub-transfer
agency and services agreement with the transfer agent, PFPC Global Fund Serv-
ices serves as the portfolios' sub-transfer agent (the "sub-transfer agent") to
render certain shareholder record keeping and accounting services and func-
tions.
Possible conflict of interest
The Directors and officers of the Smith Barney Concert Allocation Series Inc.
("Concert Series") also serve in similar positions 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 portfolio and the underlying funds. The
Directors of the Concert Series believe they have structured each portfolio to
avoid these concerns. However, conceivably 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 possi-
bility arises, the directors and officers of the Concert Series, the affected
underlying funds and TIA will carefully analyze the situation and take all
steps they believe reasonable to minimize, and where possible eliminate, the
potential conflict. Moreover, limitations on aggregate investments in the un-
derlying funds have been adopted by the Concert Series to minimize this possi-
bility, and close and continuous monitoring 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>
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). If the New York
Stock Exchange closes early, each portfolio and each underlying fund acceler-
ates the calculation of its net asset value to the actual closing time.
International markets may be open on days when U.S. markets are closed and the
value of foreign securities owned by an underlying fund could change on days
when you cannot buy or redeem shares.
Each portfolio and underlying fund generally values its fund securities based
on market prices or quotations. To the extent an underlying fund holds securi-
ties denominated in a foreign currency, the fund's currency conversions are
done when the London Stock Exchange closes. When reliable market prices or quo-
tations are not readily available, or when the value of a security held by an
underlying fund has been materially affected by events occurring after a for-
eign exchange closes, 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, 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.
19 Concert Series--Select Portfolios Prospectus
<PAGE>
Dividends, Distributions and Taxes
Taxes
Each portfolio intends to qualify and be taxed as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). In order to qualify to be taxed as a regulated investment
company, each portfolio must meet certain income and diversification tests and
distribution requirements. As a regulated investment company meeting these
requirements, a portfolio will not be subject to federal income tax on its net
investment income and net capital gains that it distributes to its
shareholders. All income and capital gain distributions are automatically
reinvested in additional shares of the portfolio at net asset value and are
includable in gross income of the separate accounts holding such shares. See
the accompanying contract prospectus for information regarding the federal
income tax treatment of distributions to the separate accounts and to holders
of the contracts.
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.
20 Concert Series--Select Portfolios Prospectus
<PAGE>
Financial Highlights
The financial highlights tables are intended to help you understand the perfor-
mance 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 reinvestment of all
dividends and distributions. The information in the following tables was au-
dited by KPMG LLP, independent auditors, whose report, along with the fund's
financial statements is included in the annual report (available upon request).
For a share of capital stock outstanding throughout each year ended January 31:
<TABLE>
- ---------------------------------------------------------------------------------
<CAPTION>
Select
High Growth Portfolio Select Growth Portfolio
2000(1) 1999(1) 1998(1)(2) 2000(1) 1999(1) 1998(1)(2)
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $13.02 $11.06 $10.00 $12.87 $11.28 $10.00
- ---------------------------------------------------------------------------------
Income from operations:
Net investment
income(3) 0.60 0.13 0.26 0.51 0.27 0.44
Net realized and
unrealized gain 1.78 1.94 0.80 0.72 1.55 0.84
- ---------------------------------------------------------------------------------
Total income from
operations 2.38 2.07 1.06 1.23 1.82 1.28
- ---------------------------------------------------------------------------------
Less distributions
from:
Net investment income (0.07) (0.07) -- (0.13) (0.11) --
Net realized gains (0.17) (0.04) -- (0.17) (0.12) --
- ---------------------------------------------------------------------------------
Total distributions (0.24) (0.11) -- (0.30) (0.23) --
- ---------------------------------------------------------------------------------
Net asset value, end of
year $15.16 $13.02 $11.06 $13.80 $12.87 $11.28
- ---------------------------------------------------------------------------------
Total return 18.46% 18.79% 10.60%++ 9.72% 16.31% 12.80%++
- ---------------------------------------------------------------------------------
Net assets, end of year
(000's) $148,033 $75,780 $ 27,071 $236,028 $129,929 $ 45,982
- ---------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.35% 0.35% 0.35%+ 0.35% 0.35% 0.35%+
Net investment income 4.30 1.08 2.41+ 3.85 2.29 4.11+
- ---------------------------------------------------------------------------------
Portfolio turnover rate 0% 19% 43% 0% 10% 43%
- ---------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from February 5, 1997 (commencement of operations) 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 ended January 31:
<TABLE>
- --------------------------------------------------------------------------------
<CAPTION>
Select
Select Balanced Portfolio Conservative Portfolio
2000(1) 1999(1) 1998(1)(2) 2000(1) 1999(1) 1998(1)(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $12.04 $11.28 $10.00 $11.71 $11.30 $10.00
- --------------------------------------------------------------------------------
Income from operations:
Net investment
income(3) 0.48 0.42 0.64 0.61 0.60 0.78
Net realized and
unrealized gain (loss) 0.07 0.66 0.64 (0.35) 0.08 0.52
- --------------------------------------------------------------------------------
Total income from
operations 0.55 1.08 1.28 0.26 0.68 1.30
- --------------------------------------------------------------------------------
Less distributions
from:
Net investment income (0.22) (0.16) -- (0.27) (0.17) --
Net realized gains (0.24) (0.16) -- (0.13) (0.10) --
- --------------------------------------------------------------------------------
Total distributions (0.46) (0.32) -- (0.40) (0.27) --
- --------------------------------------------------------------------------------
Net asset value, end of
year $12.13 $12.04 $11.28 $11.57 $11.71 $11.30
- --------------------------------------------------------------------------------
Total return 4.69% 9.76% 12.80%++ 2.19% 6.05% 13.00%++
- --------------------------------------------------------------------------------
Net assets, end of year
(000's) $192,922 $133,796 $ 45,071 $56,414 $38,815 $ 10,698
- --------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.35% 0.35% 0.35%+ 0.35% 0.35% 0.35%+
Net investment income 3.92 3.64 5.89+ 5.20 5.27 7.24+
- --------------------------------------------------------------------------------
Portfolio turnover rate 0% 7% 19% 1% 3% 35%
- --------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from February 5, 1997 (commencement of operations) 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.
21 Concert Series--Select Portfolios Prospectus
<PAGE>
Financial Highlights, continued
For a share of capital stock outstanding throughout each year ended January 31:
<TABLE>
- -------------------------------------------------------------------
<CAPTION>
Select Income Portfolio
2000(1) 1999(1) 1998(1)(2)
- -------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of year $11.66 $11.29 $10.00
- -------------------------------------------------------------------
Income from operations: 0.70 0.74 0.80
Net investment income(3)
Net realized and unrealized gain (loss) (0.79) (0.16) 0.49
- -------------------------------------------------------------------
Total income (loss) from operations (0.09) 0.58 1.29
- -------------------------------------------------------------------
Less distributions from:
Net investment income (0.33) (0.15) --
Net realized gains (0.06) (0.06) --
- -------------------------------------------------------------------
Total distributions (0.39) (0.21) --
- -------------------------------------------------------------------
Net asset value, end of year $11.18 $11.66 $11.29
- -------------------------------------------------------------------
Total return (0.75)% 5.18% 12.90%++
- -------------------------------------------------------------------
Net assets, end of year (000's) $23,277 $20,597 $4,440
- -------------------------------------------------------------------
Ratios to average net assets:
Expenses 0.35% 0.35% 0.35%+
Net investment income 6.08 6.45 7.36+
- -------------------------------------------------------------------
Portfolio turnover rate 11% 14% 11%
- -------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
method.
(2) For the period from February 5, 1997 (commencement of operations) 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.
The portfolios send one report to a household if more than one account has the
same address. Contact your participating life insurance company representative
or your Salomon Smith Barney Financial Consultant if you do not want this pol-
icy 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 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
Information about the portfolios (including the SAI) can be reviewed and copied
at the Securities and Exchange Commission's (the "Commission") Public Reference
Room in Washington D.C. In addition, information on the operation of the Public
Reference Room may be obtained by calling the Commission at 1-202-942-8090. Re-
ports and other information about the portfolios are available on the EDGAR
Database on the Commission's Internet site at http://www.sec.gov. Copies of
this information may be obtained for a duplicating fee by electronic request at
the following E-mail address: [email protected], or by writing the Commis-
sion's Public Reference Section, Washington, D.C. 20549-0102.
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 5/00]
PART B
May 30, 2000
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 May 30, 2000 for Class A, Class B,
Class L, Class Y and Class Z shares of the Global Portfolio, High
Growth Portfolio, Growth 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, SSB Citi Fund Management LLC ("SSB
Citi" or the "manager") (successor to SSBC Fund Management Inc.)
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
24
Portfolio Turnover
26
Purchase of Shares
27
PFS Accounts
33
Redemption of Shares
35
Exchange Privilege
36
Taxes
39
Performance
42
Valuation of Shares
49
Investment Management and Other Services
49
Additional Information About the Portfolios
58
Financial Statements
61
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 SSB Citi 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, SSB Citi.
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 79). 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 78). Consultant, HMK
Associates; Retired Vice Chairman of the Board of Restaurant
Associates Industries, Inc. Director or trustee of 21 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 73). 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 68). 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 73). 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 67). Managing
Director of Salomon Smith Barney, President of SSB Citi and
Travelers Investment Adviser, Inc. ("TIA"). Mr. McLendon also
serves as Chairman, Co-Chairman or Director of 71 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
42). Managing Director of Salomon Smith Barney; Director and
Senior Vice President of SSB Citi and TIA. Mr. Daidone also serves
as Senior Vice President or Executive Vice President and Treasurer
of 61 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.
Irving David, Controller (Age 39). Director of Salomon Smith
Barney. Controller or Assistant Treasurer of 43 investment
companies associated with Citigroup; His address is 388 Greenwich
Street, New York, New York 10013.
Christina T. Sydor, Secretary (Age 49). Managing Director of
Salomon Smith Barney; General Counsel and Secretary of SSB Citi and
TIA. Ms. Sydor also serves as Secretary of 61 investment companies
associated with 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 12, 2000, 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, 2000, the directors were reimbursed,
in the aggregate, $21,924 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,
2000:
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
71
Walter Auch
$14,400
None
$50,600
2
Martin Brody
12,200
None
138,600
21
H. John Ellis
14,400
None
50,600
2
Armon E. Kamesar
15,500
None
52,600
2
Stephen E. Kaufman
15,500
None
110,650
13
* Designates "interested director" of Concert Series.
** As of December 31, 1999.
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, Government National Mortgage Association
("GNMA"), General Services Administration, Central Bank for
Cooperatives, Federal Intermediate Credit Banks, Federal Land
Banks, Federal National Mortgage Association ("FNMA"), Maritime
Administration, Tennessee Valley Authority, District of Columbia
Armory Board, Student Loan Marketing Association, 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.
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 funds 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 SSB Citi. 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.
Economic and Monetary Union (EMU). EMU began on January 1, 1999
when 11 European countries adopted a single currency -- the Euro.
EMU may create new economic opportunities for investors, such as
lower interest rates, easier cross-border mergers, acquisitions
and similar restructurings, more efficient distribution and
product packaging and greater competition. Budgetary decisions
remain in the hands of each participating country, but are subject
to each country's commitment to avoid "excessive deficits" and
other more specific budgetary criteria. A European Central Bank
is responsible for setting the official interest rate within the
Euro zone. EMU and the introduction of the Euro, however, present
unique risks and uncertainties for investors in EMU-participating
countries, including: (i) monetary and economic union on this
scale has never before been attempted; (ii) there is uncertainty
whether participating countries will remain committed to EMU in
the face of changing economic conditions; (iii) instability within
EMU may increase the volatility of European markets and may
adversely affect the prices of securities of European issuers in
the funds' portfolios; (iv) there is uncertainty concerning the
fluctuation of the Euro relative to non-Euro currencies during the
transition period from January 1, 1999 to December 31, 2000, and
beyond; and (v) there is no assurance that interest rate, tax and
labor regimes of EMU-participating countries will converge over
time. These and other factors may cause market disruption and
could adversely affect European securities and currencies held by
the funds.
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 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 non-fundamental
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 SSB Citi
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 portfolio turnover for the two most recent fiscal years for
each portfolio is contained in the following table:
Fiscal Year
Fiscal Year
Name of Portfolio
Ended 01/31/99
Ended 01/31/00
High Growth
Portfolio
21%
2%
Global Portfolio
0%
0%
Growth Portfolio
10%
2%
Balanced Portfolio
10%
4%
Conservative
Portfolio
5%
3%
Income Portfolio
0%
4%
The turnover rates of the underlying funds have ranged from 8% to
205% 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-
- -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 and/or other Smith
Barney funds 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.
Class Z Shares. Class Z Shares are sold without an initial sales
charge or deferred sales charge and are currently offered
exclusively for sale to tax-exempt employee benefit and retirement
plans of Salomon Smith Barney or any of its affiliates ("Qualified
Plans") and to certain unit investment trusts ("UIT) sponsored by
Salomon Smith Barney or any of its affiliates.
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 PFPC Global
Fund Services ("sub-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 the sub-transfer agent.
Share certificates are issued only upon a shareholder's written
request to the sub-transfer agent.
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 the sub-transfer agent 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 funds to complete the transfer will be charged a fee
of up to $25 by Salomon Smith Barney or the sub-transfer agent.
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 Citi Fiduciary Trust Company (the
"transfer agent") 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 the transfer agent 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-Salomon Smith Barney
Retirement 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.
In determining the applicability of any deferred sales charge, it
will be assumed that redemption is made first of shares
representing capital appreciation, next of shares representing the
reinvestment of dividends and capital gain distributions and
finally of other shares held by the shareholder for the longest
period of time. The length of time that 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 the transfer agent
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 the propectus. The completed
application should be forwarded to PFS Shareholder Services, P.O.
Box 105033, Atlanta, GA 30348. 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 PFS Shareholder Services. In processing applications
and investments, PFS Shareholder Services acts as agent for the
investor and for PFS Investments Inc. ("PFSI") 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 PFS
Shareholder Services. 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 up to $30 per returned purchase by PFS
Shareholder Services.
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.
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 PFS Shareholder Services 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 PFS Shareholder Services 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 PFS Shareholder
Services 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 PFS
Shareholder Services 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 $30 by PFS Shareholder Services. 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 $30 by PFS Shareholder Services. Subsequent investments by
telephone may not be available if the shareholder cannot reach PFS
Shareholder Services 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,
by wire transfer to a bank account designated on the application
or to a bank account designated on the application via the
Automated Clearinghouse (ACH). 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 ACH. PFS
Shareholder Services 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.
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.
Additional information regarding PFS Shareholder Services may be
obtained by contacting the Client Services Department at (800)
544-5445.
Salomon Smith Barney Retirement Programs. You may be eligible to
participate in a retirement program sponsored by Salomon Smith
Barney or one of its affiliates. The fund offers Class A and
Class L shares at net asset value to participating plans under the
programs. You can meet minimum investment and exchange amounts, if
any, by combining the plan's investments in any of the Smith
Barney mutual 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 and/or the date your account is opened. Once a
class of shares is chosen, all additional purchases must by of the
same class.
For plans opened on or after March 1, 2000 that are not plans for
which Paychex Inc. or an affiliate provides administrative
services (a "Paychex plan"), Class A shares may be purchased
regardless of the amount invested.
For plans opened prior to March 1, 2000 and for Paychex plans, the
class of shares you may purchase depends on the amount of your
initial investment:
Class A Shares. Class A shares may be purchased by plans
investing at least $1million.
Class L Shares. Class L shares may be purchased by plans
investing less than $1 million. Class L shares are eligible to
exchange into Class A shares not later than 8 years after the plan
joined the program. They are eligible for exchange in the
following circumstances:
If the plan 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 plan was opened before June 21, 1996 and a total of
$500,000 is invested 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.
Retirement Programs 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 ExecChoiceTM
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 the fund. (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.
Retirement Programs Opened Prior to June 21, 1996. In any year
after the date a participating plan enrolled in the Smith Barney
401(k) Program, if its 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 the same fund. 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 ExecChoiceTM
Program, 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 same fund regardless of asset size, at
the end of the eighth year after the date the participating plan
enrolled in the Smith Barney 401(k) or ExecChoiceTM 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,
but instead may acquire Class A shares of the same fund. Any Class
L shares not converted will continue to be subject to the
distribution fee.
Participating plans wishing to acquire shares of the fund through
the Smith Barney 401(k) Program or the Smith Barney ExecChoiceTM
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 PFPC Global Fund Services
P.O. Box 9699
Providence, RI 02940-9699
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 the sub-transfer agent. 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. The transfer agent 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 the transfer
agent 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 the sub-transfer agent 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 the sub-transfer
agent 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 the transfer agent 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, if 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 the
transfer agent 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 the sub-transfer agent 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 the sub-transfer
agent may continue to do so and applications for participation in
the Withdrawals Plan must be received by the sub-transfer agent 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 above 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 Registered 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 continue
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 such 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 has 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) with respect to certain of its assets 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 realized
capital gains, 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 the sub-transfer agent should notify the sub-
transfer agent 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 also 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 shareholder on the
redemption, 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
continue 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 having paid if
the election is made, the portfolio will not itself be able to
elect to treat such 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, 2000 is
as follows:
One Year
Since Inception
Inception Date
High Growth
13.03%
12.83%
2/5/96
Growth
5.00%
10.98%
2/5/96
Global
18.32%
8.37%
3/9/98
Balanced
(0.84%)
7.58%
2/5/96
Conservative
(2.65%)
5.75%
2/5/96
Income
(5.48%)
4.13%
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, 2000
is as follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
13.01%
13.01%
2/5/96
Growth
4.61%
11.21%
2/5/96
Global
18.59%
8.60%
3/9/98
Balanced
(1.40%)
7.76%
2/5/96
Conservative
(2.81%)
6.03%
2/5/96
Income
(5.64%)
4.41%
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,
2000 is as follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
15.90%
13.07%
2/5/96
Growth
7.56%
11.30%
2/5/96
Global
21.40%
9.89%
3/9/98
Balanced
1.57%
7.87%
2/5/96
Conservative
(0.36%)
6.23%
2/5/96
Income
(3.35%)
4.60%
2/5/96
There is no performance information for Class Y Shares because there
were no outstanding Class Y Shares as of January 31, 2000.
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
19.26%
15.96%
2/5/96
Growth
10.76%
13.33%
2/5/96
Global
N/A
N/A
3/9/98
Balanced
4.58%
8.63%
2/5/96
Conservative
N/A
N/A
2/5/96
Income
N/A
N/A
2/5/96
There is no performance information for Class Z Shares for the
Global, Conservative and Income Portfolios because there were no
outstanding Class Z Shares as of January 31, 2000.
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, 2000 without
including the deduction of the maximum applicable sales charge is as
follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
18.97%
14.29%
2/5/96
Growth
10.53%
12.42%
2/5/96
Global
24.57%
11.34%
3/9/98
Balanced
4.37%
8.97%
2/5/96
Conservative
1.96%
6.98%
2/5/96
Income
(1.04%)
5.34%
2/5/96
The average annual total return for each portfolio's Class B Shares
for the periods shown end January 31, 2000 without including the
deduction of the maximum applicable deferred sales charge is as
follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
18.01%
13.35%
2/5/96
Growth
9.61%
11.58%
2/5/96
Global
23.59%
10.54%
3/9/98
Balanced
3.48%
8.15%
2/5/96
Conservative
1.50%
6.45%
2/5/96
Income
(1.47%)
4.82%
2/5/96
The average annual total return for each portfolio's Class L Shares
of the periods shown ended January 31, 2000 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
18.08%
13.37%
2/5/96
Growth
9.68%
11.59%
2/5/96
Global
23.61%
10.50%
3/9/98
Balanced
3.56%
8.15%
2/5/96
Conservative
1.59%
6.51%
2/5/96
Income
(1.42%)
4.87%
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, 1999.
Average Annual Total Returns
through
December 31, 1999
30-Day
Yield for
period
ended
December
31,
Underlying Fund
Net Assets
of all
Classes as
of
December
31, 1999
($000's)
Inception
Date
Class
One
Year
Five
Years
Ten
Years
1999
Smith Barney Aggressive Growth Fund
Inc.
$2,402,888
10/27/83
A
55.55%
30.35%
19.86%
N/A
Smith Barney Appreciation Fund Inc.
5,612,763
03/10/
70
A
9.29
20.72
13.98
N/A
Smith Barney Equity Funds:
Smith Barney Large Cap Blend Fund
560,514
11/06/92
A
10.32
19.07
13.71(+)
N/A
Smith Barney Fundamental Value Fund Inc.
1,974,035
11/12/81
A
24.29
20.49
15.62
N/A
Smith Barney Funds, Inc.:
Large Cap Value Fund
Short-Term High Grade Bond Fund
1,310,636
104,094
01/01/72
11/11/91
A
A
(5.86)
0.76
16.33
5.71
11.29
5.11(+)
N/A
5.50%
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
1,570,593
888,957
2,549,418
138,004
2,380,334
09/02/86
03/28/88
09/16/85
09/02/86
12/28/89
B
B
B
B
B
(1.88)
6.15
0.63
(7.41)
(4.93)
8.53
14.67
14.97
8.00
7.05
9.14(+)
10.39
13.09
7.22
7.68
9.83%
N/A
N/A
3.25%
6.71%
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 Small Cap Growth Fund
Smith Barney Investment Funds Inc.:
Smith Barney Small Cap Value Fund
Smith Barney Government Securities Fund
Smith Barney Investment Grade Bond Fund
447,040
258,850
13,991
72,222
$134,708
636,929
531,506
06/30/95
12/19/97
12/19/97
10/11/99
02/26/99
03/20/84
01/04/82
A
A
A
A
A
B
B
13.90
27.34
(3.69)
N/A
N/A
(9.42)
(13.30)
N/A
N/A
N/A
N/A
N/A
5.25
8.53
17.72(+)
9.04(+)
(9.08)(+)
N/A
2.29%(+)
6.20
8.28
N/A
N/A
N/A
N/A
N/A
5.99%
5.96%
Smith Barney Investment Trust
Smith Barney Large Capitalization Growth Fund
Smith Barney Mid Cap Blend Fund
3,724,161
760,578
08/29/97
09/01/98
A
A
24.28
23.13
N/A
N/A
35.75(+)
48.96(+)
N/A
N/A
Smith Barney Managed Governments Fund, Inc.
476,822
09/04/84
A
(5.17)
5.31
6.54
5.90%
Smith Barney Small Cap Blend Fund,
Inc.
343,974
01/23/90
A
15.05
16.83
10.53(+)
N/A
Smith Barney World Funds, Inc.:
International Equity Portfolio
European Portfolio
Pacific Portfolio
Emerging Markets Portfolio
Global Government Bond Portfolio
1,812,722
100,230
15,380
19,227
121,526
02/18/86
02/07/94
02/07/94
05/12/95
07/22/91
A
A
A
A
A
52.26
26.72
87.72
54.58
(7.65)
15.11
19.41
4.04
N/A
6.03
13.13
15.80(+)
2.02(+)
(0.83)(+)
6.76(+)
N/A
N/A
N/A
N/A
4.34%
+ inception (less than 10 years)
For the seven-day period ended December 31,1999, the yield for the Class A
shares of Cash Portfolio of Smith Barney Money Funds, Inc. was 5.18% and the
effective yield was 5.32%.
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-1 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.
0.82%
Smith Barney Appreciation Fund Inc.
0.57
Smith Barney Equity Funds:
Smith Barney Large Cap Blend Fund
0.69
Smith Barney Fundamental Value Fund Inc.
0.82
Smith Barney Funds, Inc.:
Large Cap Value Fund
0.58
Short-Term High Grade Bond Fund
0.53
Smith Barney Income Funds:
Smith Barney High Income Fund
0.72
Smith Barney Balanced Fund
0.67
Smith Barney Premium Total Return Fund
0.77
Smith Barney Convertible Fund
0.83
Smith Barney Diversified Strategic Income Fund
0.67
Smith Barney Investment Funds Inc.:
Concert Peachtree Growth Fund
1.00
Smith Barney Hansberger Global Value Fund
1.10
Smith Barney Hansberger Global Small Cap Value
Fund
1.23
Smith Barney Small Cap Growth Fund*
1.00
Smith Barney Small Cap Value Fund*
1.07
Smith Barney Government Securities Fund
0.59
Smith Barney Investment Grade Bond Fund
0.68
Smith Barney Investment Trust
Smith Barney Large Capitalization Growth Fund
0.78
Smith Barney Mid Cap Blend Fund
0.82
Smith Barney Managed Governments Fund Inc.
0.70
Smith Barney Money Funds, Inc.
Cash Portfolio
0.42
Smith Barney Small Cap Blend Fund, Inc.
0.82
Smith Barney World Funds, Inc.:
International Equity Portfolio
0.92
European Portfolio*
1.26
Pacific Portfolio*
3.14
Emerging Markets Portfolio
2.32
Global Government Bond Portfolio
0.91
*Operating expenses of Class Y shares for Smith Barney Investment
Funds Inc.-Smith Barney Small Cap Growth Fund and Smith Barney
Small Cap Value Fund, and Smith Barney World Funds, Inc.-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 1.45%, Class B 2.20%, Class L 2.20%, Class Y 1.20% and Class Z
1.20%; Growth Portfolio, Class A 1.39%, Class B 2.14%, Class L
2.14%, Class Y 1.14% and Class Z 1.14%; Global Portfolio, Class A
1.63%, Class B 2.38%, Class L 2.38%, Class Y 1.38% and Class Z
1.38%; Balanced Portfolio, Class A 1.32%, Class B 2.07%, Class L
2.07%, Class Y 1.07% and Class Z 1.07%; Conservative Portfolio,
Class A 1.32%, Class B 1.82%, Class L 1.77%, Class Y 1.07% and
Class Z 1.07%; 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, 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
SSB Citi 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").
SSB Citi 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, SSB Citi 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, SSB Citi 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. SSB Citi 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,
SSB Citi 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 SSB Citi; 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, 2000, January 31, 1999 and
January 31, 1998, the management fees for each portfolio were as
follows:
Portfolio
2000
1999
1998
High Growth
$2,747,177
$2,147,850
$1,494,425
Growth
3,282,233
2,712,756
1,905,460
Global
93,310
29,278
N/A
Balanced
1,899,634
1,605,830
1,102,666
Conservative
519,947
433,128
297,381
Income
248,660
237,885
169,641
SSB Citi 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 SSB Citi, 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.
0.56
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
0.55
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 Small Cap Growth Fund
0.75
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
0.38
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
Global Government Bond Portfolio
0.75
Code of Ethics
Pursuant to Rule 17j-1 of the 1940 Act, the fund, its investment
advisers and principal underwriter have adopted codes of ethics
that permit personnel to invest in securities for their own
accounts, including securities that may be purchased or held by
the fund. All personnel must place the interests of clients first
and avoid activities, interests and relationships that might
interfere with the duty to make decisions in the best interests of
the clients. All personal securities transactions by employees
must adhere to the requirements of the codes and must be conducted
in such a manner as to avoid any actual or potential conflict of
interest, the appearance of such a conflict, or the abuse of an
employee's position of trust and responsibility.
A copy of the fund's Code of Ethics is on file with the
Securities and Exchange Commission.
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 PFSI
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 and
PFS has entered into an agreement with PFSI giving PFSI 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 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 $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
For the fiscal year ended January 31, 2000, the aggregate dollar
amounts of commissions on Class A shares, were as follows:
Name of Portfolio
2/1/99 through
01/31/00***
High Growth Portfolio
$132,000
Global Portfolio
10,000
Growth Portfolio
127,000
Balanced Portfolio
42,000
Conservative
Portfolio
7,000
Income Portfolio
4,000
* The entire amount was paid to Salomon Smith Barney.
**The following amounts were paid to Salomon Smith Barney:
$42,300, $900, $49,500, $29,700, $6,300, $900, respectively, to
each portfolio in descending order.
*** The following amounts were paid to Salomon Smith Barney:
$118,800, $9,000, $114,300, $37,800, $6,300, $3,600, respectively,
to each portfolio in descending order.
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
For the fiscal year ended January 31, 2000, the aggregate dollar
amounts of commissions on Class A shares, were as follows:
Name of Portfolio
2/1/99 through
01/31/00***
High Growth Portfolio
$39,000
Global Portfolio
2,000
Growth Portfolio
64,000
Balanced Portfolio
44,000
Conservative
Portfolio
6,000
Income Portfolio
9,000
* 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.
***The following amounts were paid to Salomon Smith Barney:
$35,100, $1,800, $57,600, $39,600, $5,400, $8,100, respectively,
to each portfolio in descending order.
Deferred Sales Charges on Class A, B and L Shares For each of the
fiscal years ended January 31, 1998, January 31, 1999 and January
31, 2000, the following deferred sales charges were paid on
redemptions of the portfolios' shares:
Class A
Fiscal Year
Fiscal Year
Fiscal Year
Name of Portfolio
Ended 01/31/98
Ended 01/31/99
Ended 01/31/00
High Growth
Portfolio
$0
$0
$3,000
Global Portfolio
N/A
0
0
Growth Portfolio
0
0
2,000
Balanced Portfolio
1,000
0
0
Conservative
Portfolio
0
0
1,000
Income Portfolio
0
0
0
Class B
Fiscal Year
Fiscal Year
Fiscal Year
Name of Portfolio
Ended 01/31/98
Ended 01/31/99
Ended 01/31/00
High Growth
Portfolio
$260,000
$280,000
$257,000
Global Portfolio
N/A
2,000
0
Growth Portfolio
404,000
490,000
432,000
Balanced Portfolio
194,000
232,000
280,000
Conservative
Portfolio
41,000
35,000
48,000
Income Portfolio
32,000
34,000
32,000
Class L
Fiscal Year
Fiscal Year
Fiscal Year
Name of Portfolio
Ended 01/31/98
Ended 01/31/99
Ended 01/31/00
High Growth
Portfolio
$11,000
$8,000
$4,000
Global Portfolio
N/A
0
0
Growth Portfolio
11,000
4,000
11,000
Balanced Portfolio
5,000
3,000
6,000
Conservative
Portfolio
0
0
2,000
Income Portfolio
1,000
0
0
Distribution Arrangements. To compensate each of Salomon Smith
Barney and PFSI 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 PFSI are Class A
shares and Class B shares. Under the Plan, Salomon Smith Barney
is paid a fee with respect to shares of each portfolio sold
through Salomon Smith Barney and PFSI is paid a fee with respect
to shares of each portfolio sold through PFS. Under the Plan,
each portfolio pays Salomon Smith Barney, or PFSI (who pays its
Registered Representatives), as the case may be, 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 PFSI 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 PFSI 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 PFSI 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 PFSI, amounts received under the Plan and proceeds of
the deferred sales charges.
For the fiscal years ended January 31, 1998, January 31, 1999 and
January 31, 2000, the following distribution and service fees were
accrued and/or paid to Salomon Smith Barney and PFSI:
Class A
Fiscal Year
Fiscal Year
Fiscal Year
Name of Portfolio
Ended 01/31/98
Ended 01/3l/99
Ended 01/3l/00
High Growth
Portfolio
$531,389
$765,218
$988,428
Global Portfolio
N/A
10,958
36,155
Growth Portfolio
560,372
823,014
1,021,504
Balanced Portfolio
331,374
497,891
570,225
Conservative
Portfolio
102,331
152,606
181,917
Income Portfolio
58,968
82,447
87,026
Class B
Fiscal Year
Fiscal Year
Fiscal Year
Name of Portfolio
Ended 01/31/98
Ended 01/31/99
Ended 01/31/00
High Growth
Portfolio
$1,892,285
$2,700,351
$3,407,050
Global Portfolio
N/A
38,673
117,753
Growth Portfolio
2,815,048
3,941,671
4,667,876
Balanced Portfolio
1,569,471
2,220,756
2,480,309
Conservative
Portfolio
292,108
419,651
514,670
Income Portfolio
163,187
227,917
240,920
Class L(formerly
Class C shares
as of June 12,
1998)
Fiscal Year
Fiscal Year
Fiscal Year
Name of Portfolio
Ended
01/31/98
Ended 01/31/99
Ended 01/31/00
High Growth
Portfolio
$239,000
$ 327,957
$408,449
Global Portfolio
N/A
1,146
4,224
Growth Portfolio
374,895
472,118
553,509
Balanced Portfolio
243,810
310,701
357,049
Conservative
Portfolio
33,250
41,006
50,168
Income Portfolio
19,300
25,272
28,787
For the fiscal year ended January 31, 2000, Salomon Smith Barney
incurred the following distribution expenses for the portfolios:
Salomon
Smith
Printing
and
Barney
Portfolio
Mailing of
Support
Financial
Interest
Name
Advertisi
ng
Prospectus
es
Services
Consultan
ts
Expense
Total
High
Growth
$(41,363)
$(14,893)
$714,469
$6,518,55
6
$164,997
$7,341,7
67
Global
(2,484)
(702)
14,030
407,984
13,928
432,756
Growth
(32,494)
(16,857)
1,036,37
4
7,497,556
194,572
8,679,15
0
Balanced
(58,198)
(10,356)
409,236
4,466,238
114,647
4,921,56
7
Conservati
ve
(16,566)
(3,395)
83,523
1,628,461
54,775
1,746,79
8
Income
(3,316)
(1,398)
82,689
580,368
16,965
675,309
Each of PFSI 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, PFSI 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, PFSI 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 PFSI 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, 757 Third Avenue, New York, New York 10017,
has been selected as independent auditors for the Concert Series
for its fiscal year ending January 31, 2001 to examine and report
on the Concert Series' financial statements and financial
highlights.
Transfer Agent. Citi Fiduciary Trust Company, located at 388
Greenwich Street, New York, New York 10013, serves as the fund's
transfer and dividend-paying agent. Under the transfer agency
agreement, the transfer agent maintains the shareholder account
records for the fund, handles certain communications between
shareholders and the fund, distributes dividends and distributions
payable by the fund and produces statements with respect to
account activity for the fund and its shareholders. For these
services, the transfer agent receives fees from the fund computed
on the basis of the number of shareholder accounts that the
transfer agent maintains for the fund during the month and is
reimbursed for out-of-pocket expenses.
Sub-Transfer Agent. PFPC Global Fund Services, located at P.O.
Box 9699, Providence, RI 02940-9699, serves as one of the fund's
sub-transfer agents. Under the transfer agency agreement, the
sub-transfer agent maintains the shareholder account records for
the fund, handles certain communications between shareholders and
the fund and distributes dividends and distributions payable by
the fund. For these services, the sub-transfer agent receives a
monthly fee computed on the basis of the number of shareholder
accounts it maintains for the fund during the month, and is
reimbursed for out-of-pocket expenses.
The fund has also engaged the services of PFS Shareholder Services
as a sub-transfer agent for PFS Accounts. This 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 12, 2000, 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
22,693,387.734*
85.38%
Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100
Breckinridge Blvd.
Duluth, GA 30199
15,869,124.751*
70.38%
Class
Z
State Street Bank &
Trust Cust.
Travelers Group
401k Savings Plan
Attn. Rick Vest
225 Franklin Street
Boston, MA 02101
699,999.512*
100.00%
Growth
Class
A
PFS Shareholder
Services (A)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
23,185,211.886*
80.54%
Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
18,793,198.813*
59.64%
Class
Z
State Street Bank &
Trust Cust.
Travelers Group
401k Savings Plan
Attn. Rick Vest
225 Franklin Street
Boston, MA 02101
543,915.421*
100.00%
Global
Class
A
PFS Shareholder
Services (A)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
1,419,342.049*
95.75%
Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
1,100,937.403*
95.77%
Balanced
Class
A
PFS Shareholder
Services (A)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
14,184,806.675*
83.10%
Class
A
Travelers Insurance
Company
Separate Account
QPN 401(k)-TIC
Travelers Insurance
Company
Attn: Roger Ferland
5 MS
One Tower Square
Hartford, CT 06183
872,477.718*
5.11%
Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
12,488,649.177*
68.70%
Class
Z
State Street Bank & Trust
Travelers Group
401(k)
Savings Plan
Attn. Rick Vest
225 Franklin Street
Boston, MA 02101
2,127,194.917*
97.93%
* The fund believes that these entities are not the beneficial
owners of shares held of record by them.
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
4,893,059.856*
87.05%
Class
B
PFS Shareholder Services (B)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
3,792,057.041*
77.36%
Class
L
Frank A Abacherli
Shirley M. Abacherli
TTEES
FBO Abacherli Family
Trust
DTD 10/06/89
29875 Newport Road
Menifee, CA 92584-9524
45,420.023
7.72%
Income
Class
A
PFS Shareholder Services (A)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
2,348,974.857*
86.80%
Class
B
PFS Shareholder Services (B)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
1,622,684.223*
67.43%
Class
L
D. Joyce Engel TTEE
FBO Robert T Cowan
Family TR, U/A/D
2/20/97
161 S. Civic
Drive, #8
Palm Springs, CA
92262
29,643.602
9.06%
Class
L
Frontier Trust
Company
TTEE
Citizens State Bank
Salary
Savings
111 Monument Circle
Ste. 3100
Indianapolis, IN 46204-5100
25,152.782
7.69%
Class
L
Rita Diana
SSB IRA Cust
108 Palmetto Lane Road
Milford, PA 18337
17,900.790
5.47%
* The fund believes that these entities are not the beneficial
owners of shares held of record by them.
FINANCIAL STATEMENTS
The Concert Series' Annual Report for the fiscal year ended
January 31, 2000 is incorporated herein by reference in its
entirety. The Annual Report was filed with the SEC on April 4,
2000 (Accession number 950130-00-1864). A copy of the Report is
furnished with this Statement of Additional Information.
OTHER INFORMATION
Styles of Fund Management: In an industry where the average
portfolio manager has seven years of experience (source: ICI,
1998), the portfolio managers of Smith Barney mutual funds average
21 years in the industry and 15 years with the firm.
Smith Barney mutual funds offers more than 60 mutual funds. We
understand that many investors prefer an active role in allocating
the mix of funds in their portfolio, while others want the asset
allocation decisions to be made by experienced managers.
That's why we offer four "styles" of fund management that can be
tailored to suit each investor's unique financial goals.
Style Pure Series - Our style Pure Series funds stay fully
invested within their asset class and investment style, enabling
investors to make asset allocation decisions in conjunction with
their Salomon Smith Barney Financial Consultant.
Classic Investor Series - Our Classic Investor Series funds offer
a range of equity and fixed income strategies that seek to capture
opportunities across asset classes and investment styles using
disciplined investment approaches.
The Concert Allocation Series - As a fund of funds, investors can
select a Concert Portfolio that may help their investment needs.
As needs change, investors can easily choose another long-term,
diversified investment from our Concert family.
Special Discipline Series - Our Special Discipline Series funds
are designed for investors who are looking beyond more traditional
market categories: from natural resources to a roster of state-
specific municipal funds.
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.
May 30, 2000
Statement of Additional Information
Smith Barney Concert Allocation Series Inc.
Select High Growth Portfolio
Select Conservative Portfolio
Select Growth Portfolio
Select Income Portfolio
Select Balanced Portfolio
388 Greenwich Street, New York, New York 10013
(800) 451-2010
Smith Barney Concert Allocation Series Inc. (the "Concert Series" or the
"fund") currently offers eleven investment portfolios, five of which are
described in this Statement of Additional Information ("SAI") (individually, a
"portfolio" and collectively, the "Select Portfolios.") This SAI expands upon
and supplements the information contained in the current prospectus dated May
30, 2000 for the Select Portfolios, as amended or supplemented from time to
time, and should be read in conjunction therewith.
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,
SSB Citi Fund Management LLC ("SSB Citi") (successor to SSBC Fund Management
Inc.) or Travelers Investment Management Company ("TIMCO") now or in the
future acts as investment adviser. The prospectus may be obtained from
designated insurance companies offering separate accounts ("separate
accounts") which fund certain variable annuity and variable life insurance
contracts (each, a "contract") and qualified pension and retirement plans 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
28
Taxes
28
Performance
30
Valuation of Shares
31
Investment Management and Other Services
31
Additional Information About the Portfolios
32
Financial Statements
34
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 appreciate the advantages
of broad diversification.
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 the
portfolios' manager, Travelers Investment Adviser, Inc. ("TIA" or the
"Manager") 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 TIA.
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 79). 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 78). Consultant, HMK Associates; Retired
Vice Chairman of the Board of Restaurant Associates Industries, Inc.
Director or trustee of 21 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 73). 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 68). 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 73). 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 67). Managing Director of
Salomon Smith Barney, and President of SSB Citi and Travelers Investment
Adviser, Inc. ("TIA"). Mr. McLendon also serves as Chairman or Co-Chairman of
71 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 42). Managing
Director of Salomon Smith Barney; Director and Senior Vice President of SSB
Citi and TIA. Mr. Daidone also serves as Senior Vice President or Executive
Vice President and Treasurer of 61 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.
Irving David, Controller (Age 39). Director of Salomon Smith Barney.
Controller or Assistant Treasurer of 43 investment companies associated with
Citigroup; His address is 388 Greenwich Street, New York, New York 10013.
Christina T. Sydor, Secretary (Age 49). Managing Director of Salomon
Smith Barney; General Counsel and Secretary of SSB Citi and TIA. Ms. Sydor
also serves as Secretary of 61 investment companies associated with 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 12, 2000, 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 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
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 telephone 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, 2000, the
directors were reimbursed, in the aggregate, $21,924 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, 2000:
Name
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
Heath B. McLendon*
None
None
None
71
Walter Auch
$14,400
None
$50,600
2
Martin Brody
12,200
None
138,600
21
H. John Ellis
14,400
None
50,600
2
Armon E. Kamesar
15,500
None
52,600
2
Stephen E. Kaufman
15,500
None
110,650
13
* Designates "Interested Director" of Concert Series.
** As of December 31, 1999.
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 Select
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. Shareholders of preferred stocks normally have the right to
receive dividends at a fixed rate when and as declared by the issuer's board
of directors, but do not participate in other amounts available for
distribution by the issuing corporation. Dividends on the preferred stock may
be cumulative, and all cumulative dividends usually must be paid prior to
common shareholders receiving any dividends. Preferred stock dividends must
be paid before common stock dividends and, for that reason, preferred stocks
generally entail less risk than common stocks. Upon liquidation, preferred
stocks are entitled to a specified liquidation preference, which is generally
the same as the par or stated value, and are senior in right of payment to
common stock. Preferred stocks are, however, equity securities in the sense
that they do not represent a liability of the issuer and, therefore, do not
offer as great a degree of protection of capital or assurance of continued
income as investments in corporate debt securities. In addition, preferred
stocks are subordinated in right of payment to all debt obligations and
creditors of the issuer, and convertible preferred stocks may be subordinated
to other preferred stock of the same issuer.
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 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 that evidence
ownership of underlying securities issued by a foreign corporation. EDRs,
which sometimes are referred to as Continental Depositary Receipts ("CDRs"),
are receipts issued in Europe typically by foreign banks and trust companies
that evidence ownership of either foreign or domestic securities. Generally,
ADRS, in registered form, are designed for use in U.S. securities markets and
EDRs and CDRs 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, such as
corporate debt obligations, enjoy seniority in right of payment to all equity
securities, and convertible preferred stock is senior to common stock, of the
same issuer. Because of the subordination feature, however, convertible
securities typically have lower ratings than similar nonconvertible
securities.
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,
Government National Mortgage Association ("GNMA"), General Services
Administration, Central Bank for Cooperatives, Federal Intermediate Credit
Banks, Federal Land Banks, Federal National Mortgage Association ("FNMA"),
Maritime Administration, Tennessee Valley Authority, District of Columbia
Armory Board, Student Loan Marketing Association 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 national portfolio are guaranteed as to the timely payment of interest
and ultimate collection of principal by FHLMC.
Private U.S. governmental or government-related entities create mortgage loan
pools offering pass-through investments in addition to those described above.
The mortgages underlying these securities may be alternative mortgage
instruments, that is, mortgage instruments whose principal or interest
payments may vary or whose terms to maturity may be shorter than previously
customary. As new types of mortgage-related securities are developed and
offered to investors, certain of the underlying 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 organization ("NRSROs") represent the opinions
of these agencies as to the quality of securities that they rate. Such
ratings, however, are relative and subjective, and are not absolute standards
of quality and do not evaluate the market value risk of the securities. These
ratings will be used 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 due to a corporate reorganization, a fund will attempt to use comparable
ratings as standards for its investments in accordance with its investment
objective and policies.
INVESTMENT PRACTICES
In attempting to achieve its investment objective, an underlying fund may
employ, among others, the following portfolio strategies.
Repurchase Agreements. The Select 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.
U.S. government securities normally are subject to changes in value based upon
changes, real or anticipated, in the level of interest rates and the public's
perception of the creditworthiness of the issuers. In general, U.S.
government securities tend to appreciate when interest rates decline and
depreciate when interest rates rise. Purchasing these securities on a when-
issued or delayed-delivery basis, therefore, can involve the risk that the
yields available in the market when the delivery takes place may actually be
higher than those obtained in the transaction itself. Similarly, the sale of
U.S. government securities for delayed delivery can involve the risk that the
prices available in the market when the delivery is made may actually be
higher than those obtained in the transaction itself.
In the case of the purchase by an underlying 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 equal amount of preferred stocks or debt securities,
convertible or exchangeable, without payment of further consideration, into an
equal number of shares of the common stock sold short. This kind of short
sale, which is described as "against the box," will be entered into by a fund
for the purpose of receiving a portion of the interest earned by the executing
broker from the proceeds of the sale. The proceeds of the sale will be held
by the broker until the settlement date when the fund delivers the convertible
securities to close out its short position. Although prior to delivery a fund
will have to pay an amount equal to any dividends paid on the common stock
sold short, the fund will receive the dividends from the preferred stock or
interest from the debt securities convertible into the stock sold short, plus
a portion of the interest earned from the proceeds of the short sale. The
Funds will deposit, in a segregated account with their custodian, convertible
preferred stock or convertible debt securities in connection with short sales
against the box.
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 funds with authority to engage in options transactions and other
clients of their respective advisers and certain of their affiliates may be
considered to be such a group. A securities exchange may order the
liquidation of positions found to be in violation of these limits and it may
impose certain other sanctions.
In the case of options written by an underlying 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 their portfolios. 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 diminution's 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 fund trading on a foreign commodity exchange hedges against
fluctuations in the exchange rate between the U.S. dollar and the currencies
in which trading is done on foreign exchanges, any profits that the fund might
realize in trading could be eliminated by adverse changes in the exchange
rate, or the fund could incur losses as a result of those changes.
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 fails 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 funds 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 investment 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 SSB Citi.
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.
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.
Sovereign Debt Obligations. Sovereign debt of developing countries may
involve a high degree of risk, and may be in default or present the risk of
default. Governmental entities responsible for repayment of the debt may be
unable or unwilling to repay principal and interest when due, and may require
renegotiation or rescheduling of debt payments. In addition, prospects for
repaying of principal and interest may depend on political as well as economic
factors. Although some sovereign debt, such as Brady Bonds, is collateralized
by U.S. government securities, repayment of principal and interest is not
guaranteed by the U.S. government.
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 due to subsequent declines in value of the portfolio security or, if
the fund has entered into a contract to sell the security, could result in
possible liability to the purchaser. There is generally less government
supervision and regulation of exchanges, brokers and issuers in countries
having smaller capital markets than there is in the U.S.
Economic and Monetary Union (EMU). EMU began on January 1, 1999 when 11
European countries adopted a single currency -- the Euro. EMU may create new
economic opportunities for investors, such as lower interest rates, easier
cross-border mergers, acquisitions and similar restructurings, more efficient
distribution and product packaging and greater competition. Budgetary
decisions remain in the hands of each participating country, but are subject
to each country's commitment to avoid "excessive deficits" and other more
specific budgetary criteria. A European Central Bank is responsible for
setting the official interest rate within the Euro zone. EMU and the
introduction of the Euro, however, present unique risks and uncertainties for
investors in EMU-participating countries, including: (i) monetary and
economic union on this scale has never before been attempted; (ii) there is
uncertainty whether participating countries will remain committed to EMU in
the face of changing economic conditions; (iii) instability within EMU may
increase the volatility of European markets and may adversely affect the
prices of securities of European issuers in the funds' portfolios; (iv) there
is uncertainty concerning the fluctuation of the Euro relative to non-Euro
currencies during the transition period from January 1, 1999 to December 31,
2000, and beyond; and (v) there is no assurance that interest rate, tax and
labor regimes of EMU-participating countries will converge over time. These
and other factors may cause market disruption and could adversely affect
European securities and currencies held by the funds.
Mortgage-Related securities. To the extent that 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 due to 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 that 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 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 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 its 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.
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 and 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 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 [TIA] 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, Inc. - Cash
Portfolio) will not concentrate more than 25% of its total assets in any one
industry. The Smith Barney Money Funds, Inc. - 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 portfolio turnover for the two most recent fiscal years for each portfolio
is contained in the following table:
Name of Portfolio
Fiscal Year
Ended 01/31/99
Fiscal Year
Ended 01/31/00
High Growth
Portfolio
19%
0%
Growth Portfolio
10%
0%
Balanced Portfolio
7%
0%
Conservative
Portfolio
3%
1%
Income Portfolio
14%
11%
The turnover rates of the underlying funds have ranged from 8% to 205% 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
The Concert Series offers it shares of capital stock on a continuous basis.
Shares of the Select Portfolios can only be acquired by buying a contract from
an insurance company designated by Concert Series and directing the allocation
of part or all of the net purchase payment to one or more of five subaccounts
(the "Subaccounts"), each of which invests in a Select Portfolio as permitted
under the contract prospectus. Investors should read this SAI and the
prospectus for the Select Portfolios dated May 30, 2000 along with the
contract prospectus.
Sales Charges and Surrender Charges
The Concert Series Select Portfolios do not assess any sales charge, either
when it sells or when it redeems shares of a portfolio. Surrender charges may
be assessed under the contract, as described in the contract prospectus.
Mortality and expense risk fees and other charges are also described in that
prospectus.
REDEMPTION OF SHARES
The Concert Series will redeem the shares of the Select Portfolios presented
by the subaccounts, its sole shareholders, for redemption. The subaccounts'
policy on when or whether to buy or redeem portfolio shares is described in
the contract prospectus.
Payment upon redemption of shares of a portfolio is normally made within three
days of receipt of such request. The right of redemption of shares of a
portfolio may be suspended or the date of payment postponed (a) for any
periods during which the New York Stock Exchange, Inc. ("NYSE") is closed
(other than for customary weekend and holiday closings), (b) when trading in
the markets the portfolio customarily utilizes is restricted, or an emergency,
as defined by the rules and regulations of the SEC, exists, making disposal of
the portfolio's investments or determination of its net asset value not
reasonably practicable, or (c) for such other periods as the SEC by order may
permit for the protection of the portfolio's shareholders.
Should the redemption of shares of a portfolio be suspended or postponed, the
Concert Series' Board of Directors may make a deduction from the value of the
assets of the portfolio to cover the cost of future liquidations of assets so
as to distribute fairly these costs among all owners of the contract.
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 continue to qualify separately each year as a
"regulated investment company" under the Code. A qualified portfolio will not
be liable for Federal income taxes to the extent that its taxable net
investment income and net realized capital gains are distributed to its
shareholders, provided that such 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.
Each Select Portfolio intends at least annually to declare and make
distributions of substantially all of its taxable income and net taxable
capital gains to its shareowners (i.e., the Separate Accounts). Such
distributions are automatically reinvested in additional shares of the
portfolio at net asset value and are includable in gross income of the
separate accounts holding such shares. See the accompanying contract
prospectus for information regarding the federal income tax treatment of
distributions to the separate accounts and to holders of the contracts.
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.
The Concert Series has undertaken to meet the diversification requirements of
Section 817(h) of the Code. This undertaking may limit the ability of a
particular Select Portfolio to make certain otherwise permitted investments.
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) with respect
to certain of its assets in order to qualify as a regulated investment company
in a subsequent year.
Segregated asset account. The Concert Series has been informed that certain
of the life insurance companies offering contracts intend to qualify each of
the subaccounts as a "segregated asset account" within the meaning of the
Code. For a subaccount to qualify as a segregated asset account, the Select
Portfolio in which such subaccount holds shares must meet the diversification
requirements of Section 817(h) of the Code and the regulations promulgated
thereunder. To meet those requirements, a Select Portfolio generally may not
invest more than certain specified percentages of its assets in the securities
of any one, two, three or four issuers. For these purposes, all obligations
of the United States Treasury and each governmental instrumentality are
treated as securities of separate issuers.
Income on assets of a subaccount qualified as a segregated asset account whose
underlying investments are adequately diversified will not be taxable to
contract owners. However, in the event a subaccount is not so qualified, all
annuities allocating any amount of premiums to such subaccount will not
qualify as annuities for federal income tax purposes and the holders of such
annuities would be taxed on any income on the annuities for any taxable year.
Taxation of the underlying funds. Each underlying fund intends to continue 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.
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/(c*d))/1] + 1)6 - 1], where
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursement)
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends
d = the maximum offering price per share on the last day of the period
For the purpose of determining the interest earned (variable "a" in the
formula) on debt obligations purchased by the portfolio at a discount or
premium, the formula generally calls for amortization of the discount or
premium; the amortization schedule will be adjusted monthly to reflect changes
in the market values of the debt obligations.
Investors should recognize that in periods of declining interest rates a
portfolio's yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates, the portfolio's yield will
tend to be somewhat lower. In addition, when interest rates are failing, 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(I+T)/n = ERV, where:
P = a hypothetical initial payment of $ 1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a Hypothetical $ 1,000 investment made
at the beginning of a 1-, 5- or 10-year period at the end of the 1-
, 5- or 10-year period (or fractional portion thereof), assuming
reinvestment of all dividends and distributions.
Each portfolio's average annual total return with respect to its shares for
the one-year period and for the life of the portfolio through January 31, 2000
is as follows:
One Year
Since
Inception
Inception
Date
High Growth
18.46%
15.96%
2/5/97
Growth
9.72%
12.97%
2/5/97
Balanced
4.69%
9.07%
2/5/97
Conservative
2.19%
7.02%
2/5/97
Income
(0.75)%
5.66%
2/5/97
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, 1999.
Average Annual Total Returns
through
December 31, 1999
30-Day
Yield for
period
ended
December
31,
Underlying Fund
Net Assets
of all
Classes as
of
December
31, 1999
($000's)
Inception
Date
Class
One
Year
Five
Years
Ten
Years
1999
Smith Barney Aggressive Growth Fund
Inc.
$2,402,888
10/27/83
A
55.55%
30.35%
19.86%
N/A
Smith Barney Appreciation Fund Inc.
5,612,763
03/10/
70
A
9.29
20.72
13.98
N/A
Smith Barney Equity Funds:
Smith Barney Large Cap Blend Fund
560,514
11/06/92
A
10.32
19.07
13.71(+)
N/A
Smith Barney Fundamental Value Fund Inc.
1,974,035
11/12/81
A
24.29
20.49
15.62
N/A
Smith Barney Funds, Inc.:
Large Cap Value Fund
Short-Term High Grade Bond Fund
1,310,636
104,094
01/01/72
11/11/91
A
A
(5.86)
0.76
16.33
5.71
11.29
5.11(+)
N/A
5.50%
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
1,570,593
888,957
2,549,418
138,004
2,380,334
09/02/86
03/28/88
09/16/85
09/02/86
12/28/89
B
B
B
B
B
(1.88)
6.15
0.63
(7.41)
(4.93)
8.53
14.67
14.97
8.00
7.05
9.14(+)
10.39
13.09
7.22
7.68
9.83%
N/A
N/A
3.25%
6.71%
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 Small Cap Growth Fund
Smith Barney Investment Funds Inc.:
Smith Barney Small Cap Value Fund
Smith Barney Government Securities Fund
Smith Barney Investment Grade Bond Fund
447,040
258,850
13,991
72,222
$134,708
636,929
531,506
06/30/95
12/19/97
12/19/97
10/11/99
02/26/99
03/20/84
01/04/82
A
A
A
A
A
B
B
13.90
27.34
(3.69)
N/A
N/A
(9.42)
(13.30)
N/A
N/A
N/A
N/A
N/A
5.25
8.53
17.72(+)
9.04(+)
(9.08)(+)
N/A
2.29%(+)
6.20
8.28
N/A
N/A
N/A
N/A
N/A
5.99%
5.96%
Smith Barney Investment Trust
Smith Barney Large Capitalization Growth Fund
Smith Barney Mid Cap Blend Fund
3,724,161
760,578
08/29/97
09/01/98
A
A
24.28
23.13
N/A
N/A
35.75(+)
48.96(+)
N/A
N/A
Smith Barney Managed Governments Fund, Inc.
476,822
09/04/84
A
(5.17)
5.31
6.54
5.90%
Smith Barney Small Cap Blend Fund,
Inc.
343,974
01/23/90
A
15.05
16.83
10.53(+)
N/A
Smith Barney World Funds, Inc.:
International Equity Portfolio
European Portfolio
Pacific Portfolio
Emerging Markets Portfolio
Global Government Bond Portfolio
1,812,722
100,230
15,380
19,227
121,526
02/18/86
02/07/94
02/07/94
05/12/95
07/22/91
A
A
A
A
A
52.26
26.72
87.72
54.58
(7.65)
15.11
19.41
4.04
N/A
6.03
13.13
15.80(+)
2.02(+)
(0.83)(+)
6.76(+)
N/A
N/A
N/A
N/A
4.34%
+ inception (less than 10 years)
For the seven-day period ended December 31,1999, the yield for the Class A
shares of Cash Portfolio of Smith Barney Money Funds, Inc. was 5.18% and the
effective yield was 5.32%.
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.
0.82%
Smith Barney Appreciation Fund Inc.
0.57
Smith Barney Equity Funds:
Smith Barney Large Cap Blend Fund
0.69
Smith Barney Fundamental Value Fund Inc.
0.82
Smith Barney Funds, Inc.:
Large Cap Value Fund
0.58
Short-Term High Grade Bond Fund
0.53
Smith Barney Income Funds:
Smith Barney High Income Fund
0.72
Smith Barney Balanced Fund
0.67
Smith Barney Premium Total Return Fund
0.77
Smith Barney Convertible Fund
0.83
Smith Barney Diversified Strategic Income Fund
0.67
Smith Barney Investment Funds Inc.:
Concert Peachtree Growth Fund
1.00
Smith Barney Hansberger Global Value Fund
1.10
Smith Barney Hansberger Global Small Cap Value
Fund
1.23
Smith Barney SmallCap Growth Fund*
1.00
Smith Barney Small Cap Value Fund*
1.07
Smith Barney Government Securities Fund
0.59
Smith Barney Investment Grade Bond Fund
0.68
Smith Barney Investment Trust
Smith Barney Large Capitalization Growth Fund
0.78
Smith Barney Mid Cap Blend Fund*
0.82
Smith Barney Managed Governments Fund Inc.
0.70
Smith Barney Money Funds, Inc.
Cash Portfolio
0.42
Smith Barney Small Cap Blend Fund, Inc.
Smith Barney World Funds, Inc.:
0.92
International Equity Portfolio
1.26
European Portfolio*
3.14
Pacific Portfolio*
2.32
Emerging Markets Portfolio
0.91
Global Government Bond Portfolio
0.91
*Operating expenses of Class Y shares for Smith Barney Investment Funds Inc.-
Smith Barney Small Cap Growth Fund and Smith Barney Small Cap Value Fund, and
Smith Barney World Funds, Inc.-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, 1.20%; Growth Portfolio, 1.13%;Balanced Portfolio
1.03%; Conservative Portfolio 1.07%; and Income Portfolio 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 shares will be determined on any day
that 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 and on the
preceding Friday or subsequent Monday when one of these holidays falls on a
Saturday or Sunday, respectively. 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
TIA 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"). TIA is a wholly owned subsidiary
of Salomon Smith Barney Holdings Inc. ("Holdings") and Holdings is a wholly
owned subsidiary of Citigroup.
Pursuant to each Asset Allocation and Administration Agreement, TIA 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, TIA 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. TIA 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, TIA has agreed to bear all
expenses incurred in the operation of each portfolio other than the management
fee 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 TIA;
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, 2000, January 31, 1999 and the fiscal
period ended January 31, 1998, the management fees for each portfolio were as
follows:
Portfolio
2000
1999
1998
Select High Growth
$376,639
$164,464
$37,387
Select Growth
650,124
280,011
58,327
Select Balanced
596,867
289,300
62,481
Select Conservative
177,812
76,957
13,941
Select Income
81,355
36,506
5,866
Decisions to buy and sell shares of the underlying funds for the portfolios
are made by TIA, 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.
0.56
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
0.55
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 Small Cap Growth Fund
0.75
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
0.38
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
Global Government Bond Portfolio
0.75
Code of Ethics
Pursuant to Rule 17j-1 of the 1940 Act, the fund, its investment advisers and
principal underwriter have adopted codes of ethics that permit personnel to
invest in securities for their own accounts, including securities that may be
purchased or held by the fund. All personnel must place the interests of
clients first and avoid activities, interests and relationships that might
interfere with the duty to make decisions in the best interests of the
clients. All personal securities transactions by employees must adhere to the
requirements of the codes and must be conducted in such a manner as to avoid
any actual or potential conflict of interest, the appearance of such a
conflict, or the abuse of an employee's position of trust and responsibility.
A copy of the fund's Code of Ethics is on file with the SEC.
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.
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, 757 Third Avenue, New York, New York 10017, has been
selected as independent auditors for the Concert Series for its fiscal year
ending January 31, 2001 to examine and report on the Concert Series' financial
statements and highlights.
Transfer Agent. Citi Fiduciary Trust Company, located at 388 Greenwich
Street, New York, New York 10013, serves as the fund's transfer and dividend-
paying agent. Under the transfer agency agreement, the transfer agent
maintains the shareholder account records for the fund, handles certain
communications between shareholders and the fund, distributes dividends and
distributions payable by the fund and produces statements with respect to
account activity for the fund and its shareholders. For these services, the
transfer agent receives fees from the fund computed on the basis of the number
of shareholder accounts that the transfer agent maintains for the fund during
the month and is reimbursed for out-of-pocket expenses.
Sub-Transfer Agent. PFPC Global Fund Services, located at P.O. Box 9699,
Providence, RI 02940-9699, serves as the fund's sub-transfer agent. Under the
transfer agency agreement, the sub-transfer agent maintains the shareholder
account records for the fund, handles certain communications between
shareholders and the fund and distributes dividends and distributions payable
by the fund. For these services, the sub-transfer agent receives a monthly
fee computed on the basis of the number of shareholder accounts it maintains
for the fund during the month, and is reimbursed for out-of-pocket expenses.
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. The Concert Series offers shares of the Select High Growth, Select
Growth, Select Balanced, Select Conservative and Select Income Portfolios only
for purchase by insurance company separate accounts. Thus, the insurance
company is technically the shareholder of these portfolios, and under the 1940
Act, is deemed to be in control of these portfolios. Nevertheless, with
respect to any Concert Series shareholder meeting, an insurance company will
solicit and accept timely voting instructions from its contract owners who own
units in a separate account investment division which corresponds to shares in
the Select Portfolios in accordance with the procedures set forth in the
accompanying prospectus of the applicable contract issued by the insurance
company and to the extent required by law. Shares of the Concert Series
attributable to contract owner interests for which no voting instructions are
received will be voted by an insurance company in proportion to the shares for
which voting instructions are received.
Each share of a portfolio represents an equal proportionate interest in that
portfolio with each other share of the same portfolio and is entitled to such
dividends and distributions out of the net income of that portfolio as are
declared in the discretion of the Directors. Shareowners are entitled to one
vote for each share held and will vote by individual portfolio except to the
extent required by the 1940 Act. The Concert Series is not required to hold
annual shareowner meetings, although special meetings may be called for
Concert Series as a whole, or a specific portfolio, for purposes such as
electing or removing Directors, changing fundamental policies or approving a
management contract. Shareowners may cause a meeting of shareowners to be
held upon a vote of 10% of the portfolio's outstanding shares for the purposes
of voting on the removal of Directors.
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 (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) are represented at the meeting in person or by proxy. A portfolio
shall be deemed to be affected by a matter unless it is clear that the
interests of each portfolio in the matter are identical or that the matter
does not affect any interest of the portfolio. 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 12, 2000, 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
Shareholder
Name
And Address
Number of
Shares
Percen
t
Select High
Growth
The Travelers
Ins. Co.
Attn: Roger
Ferland
One Tower
Square
Hartford, CT
06183
Equitable Life
of Iowa
Prime Elite
Attn: Gina Keck
M51
604 Locust
Street
Des Moines, IA
50306
3,721,326.643*
3,311,303.474*
52.91%
47.08%
Select Growth
The Travelers
Ins. Co.
Attn: Roger
Ferland
One Tower
Square
Hartford, CT
06183
Equitable Life
of Iowa
Prime Elite
Attn: Gina Keck
M51
604 Locust
Street
Des Moines, IA
50306
7,387,311.104*
5,382,632.139*
57.85%
42.15%
Portfolio
Shareholder
Name
And Address
Number of
Shares
Percen
t
Select Balanced
The Travelers
Ins. Co.
Attn: Roger
Ferland
One Tower
Square
Hartford, CT
06183
Equitable Life
of Iowa
Prime Elite
Attn: Gina Keck
M51
604 Locust
Street
Des Moines, IA
50306
7,626,793.818*
5,308,951.417*
58.95%
41.04%
Select Income
The Travelers
Ins. Co.
Attn: Roger
Ferland
One Tower
Square
Hartford, CT
06183
Equitable Life
of Iowa
Prime Elite
Attn: Gina Keck
M51
604 Locust
Street
Des Moines, IA
50306
1,354,410.659*
637,335.175*
68.00%
31.99%
Select
Conservative
The Travelers
Ins. Co.
Attn: Roger
Ferland
One Tower
Square
Hartford, CT
06183
Equitable Life
of Iowa
Prime Elite
Attn: Gina Keck
M51
604 Locust
Street
Des Moines, IA
50306
2,620,564.443*
1,478,790.698*
63.92%
36.07%
FINANCIAL STATEMENTS
The Concert Series' Annual Report for the fiscal year ended January 31, 2000
is incorporated herein by reference in its entirety. It was filed with the
Securities and Exchange Commission on April 4, 2000 (Accession Number 950130-
00-1864). 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 & Poors
Ratings Group. 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 term 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 Standard & Poor's Ratings
Group's receipt of closing documentation confirming investments and cash flow.
* Continuance of the rating is contingent upon Standard & Poor's Rating
Group'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- I" (or related supporting institutions) have a superior
capacity for repayment of short- term promissory obligations. Prime-1
repayment will normally be evidenced by the following characteristics:
leading market positions in well-established industries- high rates of return
on funds employed; conservative capitalization structures with moderate
reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation; well-
established access to a range of financial markets and assured sources of
alternate liquidity.
Issuers rated "Prime-2" (or related supporting institutions) have strong
capacity for repayment of short- term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Standard & Poor's 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.
PART C
Information required to be included in Part C is set forth after the
appropriate item, so numbered, in Part C of this Registration Statement.
OTHER INFORMATION
Item 23. Exhibits
(a)(1) Articles of Incorporation of the Registrant is incorporated by
reference to Registrant's Registration Statement Pre-Effective Amendment No. 1
on Form N-1A as filed on January 23, 1996 (the "Registration Statement").
(a)(2) Articles Supplementary to the Articles of Incorporation of the
Registrant dated October 28, 1996 is incorporated by reference to Post-
Effective Amendment No. 4 to the Registration Statement as filed on October
31, 1996 ("Post-Effective Amendment No. 4").
(a)(3) Articles Supplementary to the Articles of Incorporation of the
Registrant dated June 2, 1998 is incorporated by reference to Post-
Effective Amendment No. 16 to the Registration Statement as filed on June 1,
1999 ("Post-Effective Amendment No. 16").
(a)(4) Articles of Amendment to the Articles of Incorporation of the
Registrant dated June 4, 1998 is incorporated by reference to Post-Effective
Amendment No. 16.
(b) Restated By-Laws of the Registrant is incorporated by reference to
the Registration Statement.
(c)(1) Registrant's form of stock certificates for Class A, B, C and Y
shares of the High Growth Portfolio is incorporated by reference to the
Registration Statement.
(c)(2) Registrant's form of stock certificates for Class A, B, C and Y
shares of the Growth Portfolio is incorporated by reference to the
Registration Statement.
(c)(3) Registrant's form of stock certificates for Class A, B, C and Y
shares of the Balanced Portfolio is incorporated by reference to the
Registration Statement.
(c)(4) Registrant's form of stock certificates for Class A, B, C and Y
shares of the Conservative Portfolio is incorporated by reference to the
Registration Statement.
(c)(5)Registrant's form of stock certificates for Class A, B, C and Y
shares of the Income Portfolios incorporated by reference to the Registration
Statement.
(c)(6) Registrant's form of stock certificate for shares of the Smith
Barney Concert Series - Select High Growth Portfolio is incorporated by
reference to Post-Effective Amendment No. 3 to Registration Statement as filed
August 13, 1996 ("Post-Effective Amendment No. 3").
(c)(7) Registrant's form of stock certificate for shares of the Smith
Barney Concert Series - Select Growth Portfolio is incorporated by reference
to Post-Effective Amendment No. 3.
(c)(8) Registrant's form of stock certificate for shares of the Smith
Barney Concert Series - Select Balanced Portfolio is incorporated by reference
to Post-Effective Amendment No. 3.
(c)(9)Registrant's form of stock certificate for shares of the Smith
Barney Concert Series - Select Conservative Portfolio is incorporated by
reference to Post-Effective Amendment No. 3.
(c)(10)Registrant's form of stock certificate for shares of the Smith
Barney Concert Series - Select Income Portfolio is incorporated by reference
to Post-Effective Amendment No. 3.
(c)(11)Registrant's form of stock certificate for Class Z shares of the
High Growth Portfolio is incorporated by reference to Post-Effective Amendment
No. 5.
(c)(12)Registrant's form of stock certificate for Class Z shares of the
Growth Portfolio is incorporated by reference to Post-Effective Amendment No.
5.
(c)(13) Registrant's form of stock certificate for Class Z shares of the
Balanced Portolio is incorporated by reference to Post-Effective Amendment No.
5.
(c)(14) Registrant's form of stock certificate for Class Z shares of the
Conservative Portfolio is incorporated by reference to Post-Effective
Amendment No. 5.
(c)(15) Registrant's form of stock certificate for Class Z shares of the
Income Portfolio is incorporated by reference to Post-Effective Amendment No.
5.
(c)(16) Registrant's form of stock certificate for Class A, B, C and Y
shares of the Global Portfolio will be filed by amendment.
(d)(1) Form of Asset Allocation and Administration Agreement between the
Registrant and Smith Barney Mutual Funds Management Inc. is incorporated by
reference to the Registration Statement for each of the following:
(i) High Growth Portfolio
(ii) Growth Portfolio
(iii) Balanced Portfolio
(iv) Conservative Portfolio
(v) Income Portfolio
(vi) Global Portfolio
(d)(2) Form of Asset Allocation and Administration Agreement between the
Registrant and Travelers Investment Adviser, Inc. is incorporated by reference
to Post-Effective Amendment No. 4 for each of the following:
(i) Select High Growth Portfolio
(ii) Select Growth Portfolio
(iii) Select Balanced Portfolio
(iv) Select Conservative Portfolio
(v) Select Income Portfolio
(e)(1) Form of the Distribution Agreement between the Registrant and
Smith Barney Inc. is incorporated by reference to the Registration Statement.
(e)(2) Form of the Distribution Agreement between the Registrant and PFS
Distributors, Inc. is incorporated by reference to the Registration Statement.
(e)(3) Form of Participation Agreement between the Registrant and
Travelers Fund BD for Variable Annuities and Travelers Fund BD II for Variable
Annuities is incorporated by reference to Post-Effective Amendment No. 4.
(e)(4) Form of Distribution Agreement between Registrant and CFBDS, Inc. is
incorporated by reference to Post-Effective Amendment No. 16.
(e)(5) Form of Selling Group Agreement is incorporated by reference to
Post-Effective Amendment No. 16.
(f) Inapplicable.
(g) Form of Custodian Agreement between the Registrant and PNC Bank,
National Association is incorporated by reference to the Registration
Statement.
(h)(1) Form of Transfer Agency and Service Agreement between the
Registrant and The Shareholder Services Group, Inc. is incorporated by
reference to the Registration Statement.
(h)(2) Form of Sub-Transfer Agency Agreement between the Registrant and
PFS Shareholders Services is incorporated by reference to the Registration
Statement.
(i) Opinion and Consent of Willkie Farr & Gallagher as to legality of
the series of shares being registered is incorporated by reference to the
Registration Statement and Post-Effective
Amendment No. 4.
(j) Consent of Independent Public Accountants is filed herewith.
(k) Inapplicable.
(l) Form of Purchase Agreement between the Registrant and the
Purchaser of the initial shares is incorporated by reference to the
Registration Statement.
(m)(1) Form of Service and Distribution Plan pursuant to Rule 12b-1
is incorporated by reference to the Registration Statement.
(m)(2) Form of Amended Service and Distribution Plan pursuant to
Rule 12b-1 is incorporated by reference to Post-Effective Amendment No. 16.
(n) Financial Data Schedules is filed herewith.
(o)(1) Form of Multiple Class Plan pursuant to Rule 18f-3(d) of the
Investment Company Act of 1940 is incorporated by reference to the
Registration Statement.
(o)(2) Form of Amended Multiple Class Plan pursuant to Rule 18f-3(d)
of the Investment Company Act of 1940 is incorporated by reference to
Post-Effective Amendment No. 16.
(p)Code of Ethics - North America is filed herewith
Item 24. Persons Controlled by or Under Common Control with Registrant.
None.
Item 25. Indemnification. The response to this item is incorporated by
reference to the Registrant Statement filed with the SEC on January 23,
1996.
Item 26.
Business or Other Connections of Investment Advisers.
(a) Investment Adviser-SSB Citi Fund Management LLC
(successor to SSBC Fund Management Inc.) ("SSB Citi")
(formerly known as Mutual Management Corp.)
SSB Citi was incorporated in December 1968 under the
laws of the State of Delaware and converted to a
Delaware limited liability company in 1999. SSB Citi
is a wholly owned subsidiary of Salomon Smith Barney
Holdings Inc., formerly known as Smith Barney Holdings
Inc., which in turn is a wholly owned subsidiary of
Citigroup Inc. ("Citigroup"). SSB Citi is registered
as an investment adviser under the Investment Advisers
Act of 1940 (the "1940 Act").
The list required by this Item 26 of officers and
directors of SSB Citi together with information as to
any other business, profession, vocation or employment
of a substantial nature engaged in by such officers
and directors during the past two years, is
incorporated by reference to Schedules A and D of Form
ADV filed by SSB Citi pursuant to the Investment
Advisers Act of 1940 Act (the "Advisers Act") (SEC
File No. 801-8314).
(b)Travelers Investment Adviser, Inc. ("TIA") was incorporated in June 1996
under the laws of the State of Delaware. TIA is a wholly owned subsidiary of
The Plaza Corporation which, in turn, is an indirect wholly owned subsidiary of
Citigroup. TIA is registered as an investment adviser under the Advisers Act.
The list required by this Item 26 of officers and directors of TIA together
with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and
directors during the past two years, is incorporated by reference to
Schedules A and D of the Form ADV filed by TIA pursuant to the Advisers
Act (SEC File No. 801-52365).
Item 27. Principal Underwriters.
(a) CFBDS, Inc., ("CFBDS") the Registrant's
Distributor, is also the distributor for the
following Smith Barney funds: Concert Investment
Series, Consulting Group Capital Markets Funds,
Greenwich Street Series Fund,
Smith Barney Adjustable Rate Government Income Fund,
Smith Barney Aggressive Growth Fund Inc., Smith Barney
Appreciation Fund Inc., Smith Barney Arizona
Municipals Fund Inc., Smith Barney California
Municipals Fund Inc., Smith Barney Equity
Funds, Smith Barney Fundamental Value Fund Inc.,
Smith Barney Funds, Inc., Smith Barney Income
Funds, Smith Barney Institutional Cash
Management Fund, Inc., Smith Barney Investment
Funds Inc., Smith Barney Investment Trust, Smith
Barney Managed Governments Fund Inc., Smith
Barney Managed Municipals Fund Inc., Smith
Barney Massachusetts Municipals Fund, Smith
Barney Money Funds, Inc., Smith Barney Muni
Funds, Smith Barney Municipal Money Market Fund,
Inc., Smith Barney New Jersey Municipals Fund
Inc., Smith Barney Oregon Municipals Fund Inc.,
Smith Barney Principal Return Fund, Smith Barney
Sector Series Inc., Smith Barney Small Cap Blend
Fund, Inc., Smith Barney Telecommunications
Trust, Smith Barney Variable Account Funds,
Smith Barney World Funds, Inc., Travelers Series
Fund Inc., and various series of unit investment
trusts.
CFBDS also serves as the distributor for the
following funds: The Travelers Fund UL for Variable
Annuities, The Travelers Fund VA for Variable
Annuities, The Travelers Fund BD for Variable
Annuities, The Travelers Fund BD II for Variable
Annuities, The Travelers Fund BD III for Variable
Annuities, The Travelers Fund BD IV for Variable
Annuities, The Travelers Fund ABD for Variable
Annuities, The Travelers Fund ABD II for Variable
Annuities, The Travelers Separate Account PF for
Variable Annuities, The Travelers Separate Account
PF II for Variable Annuities, The Travelers
Separate Account QP for Variable Annuities, The
Travelers Separate Account TM for Variable
Annuities, The Travelers Separate Account TM II for
Variable Annuities, The Travelers Separate Account
Five for Variable Annuities, The Travelers Separate
Account Six for Variable Annuities, The Travelers
Separate Account Seven for Variable Annuities, The
Travelers Separate Account Eight for Variable
Annuities, The Travelers Fund UL for Variable
Annuities, The Travelers Fund UL II for Variable
Annuities, The Travelers Variable Life Insurance
Separate Account One, The Travelers Variable Life
Insurance Separate Account Two, The Travelers
Variable Life Insurance Separate Account Three, The
Travelers Variable Life Insurance Separate Account
Four, The Travelers Separate Account MGA, The
Travelers Separate Account MGA II, The Travelers
Growth and Income Stock Account for Variable
Annuities, The Travelers Quality Bond Account for
Variable Annuities, The Travelers Money Market
Account for Variable Annuities, The Travelers Timed
Growth and Income Stock Account for Variable
Annuities, The Travelers Timed Short-Term Bond
Account for Variable Annuities, The Travelers Timed
Aggressive Stock Account for Variable Annuities,
The Travelers Timed Bond Account for Variable
Annuities.
In addition, CFBDS, the Registrant's Distributor,
is also the distributor for CitiFunds Multi-State
Tax Free Trust, CitiFunds Premium Trust, CitiFunds
Institutional Trust, CitiFunds Tax Free Reserves,
CitiFunds Trust I, CitiFunds Trust II, CitiFunds
Trust III, CitiFunds International Trust, CitiFunds
Fixed Income Trust, CitiSelect VIP Folio 200,
CitiSelect VIP Folio 300, CitiSelect VIP Folio 400,
CitiSelect VIP Folio 500, CitiFunds Small Cap
Growth VIP Portfolio. CFBDS is also the placement
agent for Large Cap Value Portfolio, Small Cap
Value Portfolio, International Portfolio, Foreign
Bond Portfolio, Intermediate Income Portfolio,
Short-Term Portfolio, Growth & Income Portfolio,
U.S. Fixed Income Portfolio, Large Cap Growth
Portfolio, Small Cap Growth Portfolio,
International Equity Portfolio, Balanced Portfolio,
Government Income Portfolio, Tax Free Reserves
Portfolio, Cash Reserves Portfolio and U.S.
Treasury Reserves Portfolio.
In addition, CFBDS is also the distributor for the
following Salomon Brothers funds: Salomon Brothers
Opportunity Fund Inc., Salomon Brothers Investors
Fund Inc., Salomon Brothers Capital Fund Inc.,
Salomon Brothers Series Funds Inc., Salomon
Brothers Institutional Series Funds Inc., Salomon
Brothers Variable Series Funds Inc.,SSB Citi Funds Inc.
In addition, CFBDS is also the distributor for the
Centurion Funds, Inc.
(b) The information required by this Item 27 with
respect to each director and officer of CFBDS is
incorporated by reference to Schedule A of Form BD
filed by CFBDS pursuant to the Securities and
Exchange Act of 1934 (File No. 8-32417).
(c) Not applicable.
Item 28. Location of Accounts and Records.
Certain accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the Rules promulgated thereunder are maintained
by Salomon Smith Barney Inc., 388 Greenwich Street, New York, New York 10013.
(1) SSB Citi Fund Management LLC
388 Greenwich Street
New York, New York 10013
(Records relating to its function as Investment
Adviser and Administrator)
(2) Travelers Investment Adviser, Inc.
388 Greenwich Street
New York, New York 10013
(Records relating to its function as Investment
Adviser)
(3) CFBDS, Inc.
21 Milk Street, 5th Floor
Boston, MA 02109
(Records relating to its function as Distributor)
(4) PNC Bank, National Association
17th and Chestnut Streets
Philadelphia, PA 19103
(Records relating to its function as Custodian)
(5) Citi Fiduciary Trust Company
388 Greenwich Street
New York, New York 10013
(Records relating to its function as Transfer Agent
and Dividend Paying Agent)
(6) PFPC Global Fund Services
P. O. Box 9699
Providence, RI 02940-9699
(Records relating to its function as Sub-Transfer
Agent)
(7) PFS Shareholder Services
3100 Breckinridge Blvd., Bldg. 200
Duluth, Georgia 30099
(Records relating to its function as Sub-Transfer
Agent)
Item 29. Management Services.
Inapplicable.
Item 30. Undertakings.
Inapplicable
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all
the requirements for effectiveness of this Registration Statement pursuant
to Rule 485(b)under the 1933 Act and has duly caused this Post-Effective
Amendment to its Registration Statement to be signed on its behalf by the
undersigned, and where applicable, the true and lawful attorney-in-fact,
thereto duly authorized, in the City of New York and State of New York on
the 26th day of May 2000.
By:/s/ Heath B. McLendon Heath B. McLendon
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below
by the following persons in the capacities and on the date indicated.
Signatures Title Date
/s/ Heath B. McLendon Director, and
(Heath B. McLendon) Chief Executive Officer 5/26/00
Signature
Title
Date
/s/ Heath B. McLendon Director; Chairman 5/26/00
Heath B. McLendon of the Board
/s/ Lewis E. Daidone Senior Vice President; 5/26/00
Lewis E. Daidone Treasurer
(Principal
Accounting Officer)
/s/ Walter E. Auch* Director 5/26/00
Walter E. Auch
/s/ Martin Brody* Director 5/26/00
Martin Brody
/s/ H. John Ellis* Director 5/26/00
H. John Ellis
/s/ Stephen E. Kaufman* Director 5/26/00
Stephen E. Kaufman
/s/ Armon E. Kamesar* Director 5/26/00
Armon E. Kamesar
* Signed by Heath B. McLendon, their duly authorized attorney-in-fact,
pursuant to power of attorney dated January 23, 1996.
/s/ Heath B. McLendon
Heath B. McLendon
Independent Auditors' Consent
To the Shareholders and Board of Directors of
Smith Barney Concert Allocation Series Inc.:
We consent to the incorporation by reference, with respect to the portfolios
listed below for the Smith Barney Concert Allocation Series Inc., in this
Prospectus and Statement of Additional Information, of our report dated
March 8, 2000, on the statement of assets and liabilities, and the
related statement of operations, the statements of changes in net assets,
and the financial highlights for each of the periods described below. These
financial statements and financial
highlights and our report thereon are included in the Annual Report of the
Fund as filed on Form N-30D.
We also consent to the references to our firm under the headings "Financial
Highlights" in the Prospectus and "Auditors" in the Statement of Additional
Information.
Portfolio
High Growth Portfolio Statement of Assets and Liabilities
Year ended
January 31, 2000
Growth Portfolio Statement of Operations Year ended January 31, 2000
Balanced Portfolio Statements of Changes in Net Assets
Two years ended January 31,2000
Conservative Portfolio Financial Highlights Three years ended
January 31, 2000
Income Portfolio and for the period from February 5, 1996
(commencement of operations)
to January 31, 1997
Global Portfolio Statement of Assets and Liabilities
Year ended January 31, 2000
Statement of Operations Year ended January 31, 2000
Statements of Changes in Net Assets Year ended January 31, 2000
and for the period from March 9, 1998
(commencement of operations)
to January 31, 1999
Financial Highlights Year ended
January 31, 2000 and for
the period from March 9, 1998
(commencement of operations) to
January 31, 1999
KPMG LLP
New York, New York
May 23, 2000
Independent Auditors' Consent
To the Shareholders and Board of Directors of
Smith Barney Concert Allocation Series Inc.:
We consent to the incorporation by reference, with respect to the portfolios
listed below for the Smith Barney Concert Allocation Series Inc. (the Funds),
in this Prospectus and Statement of Additional Information, of our report dated
March 8, 2000, on the statements of assets and liabilities
as of January 31, 2000 and the related statements of operations for the year
then ended, the statements of changes in net assets for each of the years
in the two-year period then ended and the financial highlights for each of
the years in the two year period then ended and for the period from
February 5, 1997 (commencement of operations) to January 31, 1998. These
financial statements and financial highlights and our report thereon are
included in the Annual Report of the Funds as filed on
Form N-30D.
We also consent to the references to our firm under the headings "Financial
Highlights" in the Prospectus and "Auditors" in the Statement of Additional
Information.
Portfolio
Select High Growth Portfolio
Select Growth Portfolio
Select Balanced Portfolio
Select Conservative Portfolio
Select Income Portfolio
KPMG LLP
New York, New York
May 23, 2000
Page
PERSONAL INVESTMENT POLICY
FOR
SSB CITI ASSET MANAGEMENT GROUP - NORTH AMERICA
AND CERTAIN REGISTERED INVESTMENT COMPANIES
SSB Citi Asset Management Group ("SSB Citi") , and
those U.S.-registered investment companies advised or
managed by SSB Citi that have adopted this policy
("Funds"), have adopted this policy on securities
transactions in order to accomplish two goals: first,
to minimize conflicts and potential conflicts of
interest between employees of SSB Citi and SSB Citi's
clients (including the Funds), and between Fund
directors or trustees and their Funds, and second, to
provide policies and procedures consistent with
applicable law, including Rule 17j-1 under the
Investment Company Act of 1940, to prevent fraudulent
or manipulative practices with respect to purchases or
sales of securities held or to be acquired by client
accounts. All U.S. employees of SSB Citi, including
employees who serve as Fund officers or directors, and
all directors or trustees ("directors") of each Fund,
are Covered Persons under this policy. Other Covered
Persons are described in Section II below.
I. Statement of Principles - All SSB Citi employees
owe a fiduciary duty to SSB Citi's clients when
conducting their personal investment
transactions. Employees must place the
interests of clients first and avoid activities,
interests and relationships that might interfere
with the duty to make decisions in the best
interests of the clients. All Fund directors
owe a fiduciary duty to each Fund of which they
are a director and to that Fund's shareholders
when conducting their personal investment
transactions. At all times and in all matters
Fund directors shall place the interests of
their Funds before their personal interests.
The fundamental standard to be followed in
personal securities transactions is that Covered
Persons may not take inappropriate advantage of
their positions.
All personal securities transactions by Covered
Persons shall adhere to the requirements of this
policy and shall be conducted in such a manner
as to avoid any actual or potential conflict of
interest, the appearance of such a conflict, or
the abuse of the person's position of trust and
responsibility. While this policy is designed
to address both identified conflicts and
potential conflicts, it cannot possibly be
written broadly enough to cover all potential
situations. In this regard, Covered Persons are
expected to adhere not only to the letter, but
also the spirit of the policies contained
herein.
Employees are reminded that they also are
subject to other Citigroup policies, including
policies on insider trading, the purchase and
sale of securities listed on any applicable SSB
Citi restricted list, the receipt of gifts and
service as a director of a publicly traded
company. Employees must never trade in a
security or commodity while in possession of
material, non-public information about the
issuer or the market for those securities or
commodities, even if the employee has satisfied
all other requirements of this policy.
The reputation of SSB Citi and its employees for
straightforward practices and integrity is a
priceless asset, and all employees have the duty
and obligation to support and maintain it when
conducting their personal securities
transactions.
II. Applicability - SSB Citi Employees - This policy
applies to all U.S. employees of SSB Citi,
including part-time employees. Each employee,
including employees who serve as Fund officers
or directors, must comply with all of the
provisions of the policy applicable to SSB Citi
employees unless otherwise indicated. Certain
employees are considered to be "investment
personnel" (i.e., portfolio managers, traders
and research analysts (and each of their
assistants)), and as such, are subject to
certain additional restrictions outlined in the
policy. All other employees of SSB Citi are
considered to be "advisory personnel."
Generally, temporary personnel and consultants
working in any SSB Citi business are subject to
the same provisions of the policy as full-time
employees, and their adherence to specific
requirements will be addressed on a case-by-case
basis.
The personal investment policies, procedures and
restrictions referred to herein also apply to an
employee's spouse and minor children. The
policies also apply to any other account over
which the employee is deemed to have beneficial
ownership. This includes: accounts of any
immediate family members sharing the same
household as the employee; accounts of persons
or other third parties for whom the employee
exercises investment discretion or gives
investment advice; a legal vehicle in which the
employee has a direct or indirect beneficial
interest and has power over investment
decisions; accounts for the benefit of a third
party (e.g., a charity) which may be directed by
the employee (other than in the capacity of an
employee); and any account over which the
employee may be deemed to have control. For a
more detailed description of beneficial
ownership, see Exhibit A attached hereto.
These policies place certain restrictions on the
ability of an employee to purchase or sell
securities that are being or have been purchased
or sold by an SSB Citi managed fund or client
account. The restrictions also apply to
securities that are "related" to a security
being purchased or sold by an SSB Citi managed
fund or client account. A "related security" is
one whose value is derived from the value of
another security (e.g., a warrant, option or an
indexed instrument).
Fund Directors - This policy applies to all
directors of Funds that have adopted this
policy. The personal investment policies,
procedures and restrictions that specifically
apply to Fund directors apply to all accounts
and securities in which the director has direct
or indirect beneficial ownership. See Exhibit A
attached hereto for a more detailed description
of beneficial ownership.
Securities are defined as stocks, notes, bonds,
closed-end mutual funds, debentures, and other
evidences of indebtedness, including senior
debt, subordinated debt, investment contracts,
commodity contracts, futures and all derivative
instruments such as options, warrants and
indexed instruments, or, in general, any
interest or instrument commonly known as a
"security."
III. Enforcement - It is the responsibility of each
Covered Person to act in accordance with a high
standard of conduct and to comply with the
policies and procedures set forth in this
document. SSB Citi takes seriously its
obligation to monitor the personal investment
activities of its employees. Any violation of
this policy by employees will be considered
serious, and may result in disciplinary action,
which may include the unwinding of trades,
disgorgement of profits, monetary fine or
censure, and suspension or termination of
employment. Any violation of this policy by a
Fund director will be reported to the Board of
Directors of the applicable Fund, which may
impose such sanctions as it deems appropriate.
IV. Opening and Maintaining Employee Accounts - All
employee brokerage accounts, including spouse
accounts, accounts for which the employee is
deemed to have beneficial ownership, and any
other accounts over which the employee and/or
spouse exercise control, must be maintained
either at Salomon Smith Barney ("SSB") or at
Citicorp Investment Services ("CIS"). For
spouses or other persons who, by reason of their
employment, are required to conduct their
securities, commodities or other financial
transactions in a manner inconsistent with this
policy, or in other exceptional circumstances,
employees may submit a written request for an
exemption to the Compliance Department. If
approval is granted, copies of trade
confirmations and monthly statements must be
sent to the Compliance Department. In addition,
all other provisions of this policy will apply.
V. Excluded Accounts and Transactions - The
following types of accounts/transactions need
not be maintained at SSB or CIS, nor are they
subject to the other restrictions of this
policy:
1. Accounts at outside mutual funds that
hold only shares of open-end funds
purchased directly from that fund
company. Note: transactions relating to
closed-end funds are subject to the
pre-clearance, blackout period and
other restrictions of this policy;
2. Estate or trust accounts in which an
employee or related person has a
beneficial interest, but no power to
affect investment decisions. There
must be no communication between the
account(s) and the employee with regard
to investment decisions prior to
execution. The employee must direct
the trustee/bank to furnish copies of
confirmations and statements to the
Compliance Department;
3. Fully discretionary accounts managed by
either an internal or external
registered investment adviser are
permitted and may be custodied away
from SSB and CIS if (i) the employee
receives permission from the Regional
Director of Compliance and the unit's
Chief Investment Officer, and (ii)
there is no communication between the
manager and the employee with regard to
investment decisions prior to
execution. The employee must designate
that copies of trade confirmations and
monthly statements be sent to the
Compliance Department;
4. Employees may participate in direct
investment programs which allow the
purchase of securities directly from
the issuer without the intermediation
of a broker/dealer provided that the
timing and size of the purchases are
established by a pre-arranged,
regularized schedule (e.g., dividend
reinvestment plans). Employees must
pre-clear the transaction at the time
that the dividend reinvestment plan is
being set up. Employees also must
provide documentation of these
arrangements and direct periodic
(monthly or quarterly) statements to
the Compliance Department; and
5. In addition to the foregoing, the
following types of securities are
exempted from pre-clearance, blackout
periods, reporting and short-term
trading requirements: open-ended mutual
funds; open-end unit investment trusts;
U.S. Treasury bills, bonds and notes;
mortgage pass-throughs (e.g. Ginnie
Maes) that are direct obligations of
the U.S. government; bankers
acceptances; bank certificates of
deposit; commercial paper; and high
quality short-term debt instruments
(meaning any instrument that has a
maturity at issuance of less than 366
days and that is rated in one of the
two highest rating categories by a
nationally recognized statistical
rating organization, such as S&P or
Moody's), including repurchase
agreements.
VI. Securities Holding Period/Short-Term Trading -
Securities transactions must be for investment
purposes rather than for speculation.
Consequently, employees may not profit from the
purchase and sale, or sale and purchase, of the
same or equivalent securities within sixty (60)
calendar days, calculated on a First In, First
Out (FIFO) basis (i.e., the security may be sold
on the 61st day). Citigroup securities received
as part of an employee's compensation are not
subject to the 60-day holding period. All
profits from short-term trades are subject to
disgorgement. However, with the prior written
approval of both a Chief Investment Officer and
the Regional Director of Compliance, and only in
rare and/or unusual circumstances, an employee
may execute a short-term trade that results in a
significant loss or in break-even status.
VII. Pre-Clearance - All SSB Citi employees must pre-
clear all personal securities transactions (see
Section V for a listing of accounts,
transactions and securities that do not require
pre-clearance). A copy of the pre-clearance form
is attached as Exhibit B. In addition,
employees are prohibited from engaging in more
than twenty (20) transactions in any calendar
month, except with prior written approval from
their Chief Investment Officer, or designee. A
transaction must not be executed until the
employee has received the necessary approval.
Pre-clearance is valid only on the day it is
given. If a transaction is not executed on the
day pre-clearance is granted, it is required
that pre-clearance be sought again on a
subsequent day (i.e., open orders, such as limit
orders, good until cancelled orders and stop-
loss orders, must be pre-cleared each day until
the transaction is effected). In connection
with obtaining approval for any personal
securities transaction, employees must describe
in detail any factors which might be relevant to
an analysis of the possibility of a conflict of
interest. Any trade that violates the pre-
clearance process may be unwound at the
employee's expense, and the employee will be
required to absorb any resulting loss and to
disgorge any resulting profit.
In addition to the foregoing, the CGAM NA
Director of Global Equity Research, or his
designate, must approve all personal securities
transactions for members of the CGAM Research
Department prior to pre-clearance from the
Compliance Department as set forth in this
section. Pre-approval by the Director of
Research, or his designate, is in addition to
and does not replace the requirement for the
pre-clearance of all personal securities
transactions.
VIII. Blackout Periods - No Covered Person shall
purchase or sell, directly or indirectly, any
security in which he/she has, or by reason of
the transaction acquires, any direct or indirect
beneficial ownership if he/she has knowledge at
the time of such transaction that the security
is being purchased or sold, or is being
considered for purchase or sale, by a managed
fund or client account or in the case of a Fund
director, by the director's Fund. In addition,
the following Blackout Periods apply to the
categories of SSB Citi employees listed below:
1. Portfolio Managers and Portfolio Manager
Assistants - may not buy or sell any
securities for personal accounts seven (7)
calendar days before or after managed
funds or client accounts he/she manages
trade in that security.
2. Traders and Trader Assistants - may not
buy or sell any securities for personal
accounts three (3) calendar days before or
seven (7) calendar days after managed
funds or client accounts he/she executes
trades for trade in that security.
3. Research Analysts and Research Assistants
- - may not buy or sell any securities for
personal accounts: seven (7) calendar days
before or after the issuance of or a
change in any recommendation; or seven (7)
calendar days before or after any managed
fund or client account about which the
employee is likely to have trading or
portfolio information (as determined by
the Compliance Department) trades in that
security.
4. Advisory Personnel (see Section II for
details) - may not buy or sell any
securities for personal accounts on the
same day that a managed fund or client
account about which the employee is likely
to have trading or portfolio information
(as determined by the Compliance
Department) trades in that security.
5. Unit Trust Personnel - all employees
assigned to the Unit Trust Department are
prohibited from transacting in any
security when a SSB Citi-sponsored Unit
Trust portfolio is buying the same (or a
related) security, until seven business
days after the later of the completion of
the accumulation period or the public
announcement of the trust portfolio.
Similarly, all UIT employees are
prohibited from transacting in any
security held in a UIT (or a related
security) seven business days prior to the
liquidation period of the trust.
Employees in the above categories may also be
considered Advisory Personnel for other
accounts about which the employee is likely
to have trading or portfolio information (as
determined by the Compliance Department).
Any violation of the foregoing provisions
will require the employee's trade to be
unwound, with the employee absorbing any
resulting loss and disgorging any resulting
profit. Advisory personnel are subject to
the unwinding of the trade provision;
however, they may not be required to absorb
any resulting loss (at the discretion of the
Compliance Department and the employee's
supervisor). Please be reminded that,
regardless of the provisions set forth above,
all employees are always prohibited from
effecting personal securities transactions
based on material, non-public information.
Blackout period requirements shall not apply
to any purchase or sale, or series of related
transactions involving the same or related
securities, involving 500 or fewer shares in
the aggregate if the issuer has a market
capitalization (outstanding shares multiplied
by the current price per share) greater than
$10 billion and is listed on a U.S. Stock
Exchange or NASDAQ. Note: Pre-clearance is
still required. Under certain circumstances,
the Compliance Department may determine that
an employee may not rely upon this "Large
Cap/De Minimis" exemption. In such a case,
the employee will be notified prior to or at
the time the pre-clearance request is made.
IX. Prohibited Transactions - The following
transactions by SSB Citi employees are
prohibited without the prior written approval
from the Chief Investment Officer, or designee,
and the Regional Compliance Director:
1. The purchase of private placements; and
2. The acquisition of any securities in an
initial public offering (new issues of
municipal debt securities may be
acquired subject to the other
requirements of this policy (e.g., pre-
clearance).)
X. Transactions in Options and Futures - SSB Citi
employees may buy or sell derivative instruments
such as individual stock options, options and
futures on indexes and options and futures on
fixed-income securities, and may buy or sell
physical commodities and futures and forwards on
such commodities. These transactions must
comply with all of the policies and restrictions
described in this policy, including pre-
clearance, blackout periods, transactions in
Citigroup securities and the 60-day holding
period. However, the 60-day holding period does
not apply to individual stock options that are
part of a hedged position where the underlying
stock has been held for more than 60 days and
the entire position (including the underlying
security) is closed out.
XI. Prohibited Recommendations - No Covered Person
shall recommend or execute any securities
transaction by any managed fund or client
account, or, in the case of a Fund director, by
the director's Fund, without having disclosed,
in writing, to the Chief Investment Officer, or
designee, any direct or indirect interest in
such securities or issuers, except for those
securities purchased pursuant to the "Large
Cap/De Minimis" exemption described in Section
VIII above. Prior written approval of such
recommendation or execution also must be
received from the Chief Investment Officer, or
designee. The interest in personal accounts
could be in the form of:
1. Any direct or indirect beneficial
ownership of any securities of such
issuer;
2. Any contemplated transaction by the
person in such securities;
3. Any position with such issuer or its
affiliates; or
4. Any present or proposed business
relationship between such issuer or its
affiliates and the person or any party
in which such person has a significant
interest.
XII. Transactions in Citigroup Securities - Unless an
SSB Citi employee is a member of a designated
group subject to more restrictive provisions, or
is otherwise notified to the contrary, the
employee may trade in Citigroup securities
without restriction (other than the pre-
clearance and other requirements of this
policy), subject to the limitations set forth
below.
Employees whose jobs are such that they
know about Citigroup's quarterly earnings
prior to release may not engage in any
transactions in Citigroup securities
during the "blackout periods" beginning on
the first day of a calendar quarter and
ending on the second business day
following the release of earnings for the
prior quarter. Members of the SSB Citi
Executive Committee and certain other
senior SSB Citi employees are subject to
these blackout periods.
Stock option exercises are permitted
during a blackout period (but the
simultaneous exercise of an option and
sale of the underlying stock is
prohibited). With regard to exchange
traded options, no transactions in
Citigroup options are permitted except to
close or roll an option position that
expires during a blackout period.
Charitable contributions of Citigroup
securities may be made during the blackout
period, but an individual's private
foundation may not sell donated Citigroup
common stock during the blackout period.
"Good 'til cancelled" orders on Citigroup
stock must be cancelled before entering a
blackout period and no such orders may be
entered during a blackout period.
No employee may engage at any time in any
personal transactions in Citigroup
securities while in possession of material
non-public information. Investments in
Citigroup securities must be made with a
long-term orientation rather than for
speculation or for the generation of
short-term trading profits. In addition,
please note that employees may not engage
in the following transactions:
? Short sales of Citigroup securities;
? Purchases or sales of options ("puts" or
"calls") on Citigroup securities,
except writing a covered call at a time
when the securities could have been
sold under this policy;
? Purchases or sales of futures on
Citigroup securities; or
? Any transactions relating to Citigroup
securities that might reasonably appear
speculative.
The number of Citigroup shares an employee
is entitled to in the Citigroup Stock
Purchase Plan is not treated as a long
stock position until such time as the
employee has given instructions to
purchase the shares of Citigroup. Thus,
employees are not permitted to use options
to hedge their financial interest in the
Citigroup Stock Purchase Plan.
Contributions into the firm's 401(k) Plan
are not subject to the restrictions and
prohibitions described in this policy.
XIII. Acknowledgement and Reporting Requirements - SSB
Citi Employees - All new SSB Citi employees must
certify that they have received a copy of this
policy, and have read and understood its
provisions. In addition, all SSB Citi employees
must:
1. Acknowledge receipt of the policy and
any modifications thereof, in writing
(see Exhibit C for the form of
Acknowledgement);
2. Within 10 days of becoming an SSB Citi
employee, disclose in writing all
information with respect to all
securities beneficially owned and any
existing personal brokerage
relationships (employees must also
disclose any new brokerage
relationships whenever established).
Such information should be provided on
the form attached as Exhibit D;
3. Direct their brokers to supply, on a
timely basis, duplicate copies of
confirmations of all personal
securities transactions (Note: this
requirement may be satisfied through
the transmission of automated feeds);
4. Within 10 days after the end of each
calendar quarter, provide information
relating to securities transactions
executed during the previous quarter
for all securities accounts (Note:
this requirement may be satisfied
through the transmission of automated
feeds);
5. Submit an annual holdings report
containing similar information that
must be current as of a date no more
than 30 days before the report is
submitted, and confirm at least
annually all brokerage relationships
and any and all outside business
affiliations (Note: this requirement
may be satisfied through the
transmission of automated feeds or the
regular receipt of monthly brokerage
statements); and
6. Certify on an annual basis that he/she
has read and understood the policy,
complied with the requirements of the
policy and that he/she has pre-cleared
and disclosed or reported all personal
securities transactions and securities
accounts required to be disclosed or
reported pursuant to the requirements
of the policy.
Fund Directors - Fund Directors shall deliver
the information required by Items 1 through 6 of
the immediately preceding paragraph, except that
a Fund director who is not an "interested
person" of the Fund within the meaning of
Section 2(a)(19) of the Investment Company Act
of 1940, and who would be required to make
reports solely by reason of being a Fund
Director, is not required to make the initial
and annual holdings reports required by Items 2
and 5. Also, a "non-interested" Fund Director
need not supply duplicate copies of
confirmations of personal securities
transactions required by Item 3, and need only
make the quarterly transactions reports required
by Item 4 as to any security if at the time of a
transaction by the Director in that security,
he/she knew or in the ordinary course of
fulfilling his/her official duties as a Fund
Director should have known that, during the 15-
day period immediately preceding or following
the date of that transaction, that security is
or was purchased or sold by that Director's Fund
or was being considered for purchase or sale by
that Director's Fund.
Disclaimer of Beneficial Ownership - The reports
described in Items 4 and 5 above may contain a
statement that the reports shall not be
construed as an admission by the person making
the reports that he/she has any direct or
indirect beneficial ownership in the securities
to which the reports relate.
XIV. Handling of Disgorged Profits - Any amounts that
are paid/disgorged by an employee under this
policy shall be donated by SSB Citi to one or
more charities. Amounts donated may be
aggregated by SSB Citi and paid to such charity
or charities at the end of each year.
XV. Confidentiality - All information obtained from
any Covered Person pursuant to this policy shall
be kept in strict confidence, except that such
information will be made available to the
Securities and Exchange Commission or any other
regulatory or self-regulatory organization or to
the Fund Boards of Directors to the extent
required by law, regulation or this policy.
XVI. Other Laws, Rules and Statements of Policy -
Nothing contained in this policy shall be
interpreted as relieving any person subject to
the policy from acting in accordance with the
provision of any applicable law, rule or
regulation or, in the case of SSB Citi
employees, any statement of policy or procedure
governing the conduct of such person adopted by
Citigroup, its affiliates and subsidiaries.
XVII. Retention of Records - All records relating to
personal securities transactions hereunder and
other records meeting the requirements of
applicable law, including a copy of this policy
and any other policies covering the subject
matter hereof, shall be maintained in the manner
and to the extent required by applicable law,
including Rule 17j-1 under the 1940 Act. The
Compliance Department shall have the
responsibility for maintaining records created
under this policy.
XVIII. Monitoring - SSB Citi takes seriously its
obligation to monitor the personal investment
activities of its employees and to review the
periodic reports of all Covered Persons.
Employee personal investment transaction
activity will be monitored by the Compliance
Department. All noted deviations from the
policy requirements will be referred back to the
employee for follow-up and resolution (with a
copy to be supplied to the employee's
supervisor). Any noted deviations by Fund
directors will be reported to the Board of
Directors of the applicable Fund for
consideration and follow-up as contemplated by
Section III hereof.
XIX. Exceptions to the Policy - Any exceptions to
this policy must have the prior written approval
of both the Chief Investment Officer and the
Regional Director of Compliance. Any questions
about this policy should be directed to the
Compliance Department.
XX. Board Review - Fund management and SSB Citi
shall provide to the Board of Directors of each
Fund, on a quarterly basis, a written report of
all material violations of this policy, and at
least annually, a written report and
certification meeting the requirements of Rule
17j-1 under the 1940 Act.
XXI. Other Codes of Ethics - To the extent that any
officer of any Fund is not a Covered Person
hereunder, or an investment subadviser of or
principal underwriter for any Fund and their
respective access persons (as defined in Rule
17j-1) are not Covered Persons hereunder, those
persons must be covered by separate codes of
ethics which are approved in accordance with
applicable law.
XXII. Amendments - SSB Citi Employees - Unless
otherwise noted herein, this policy shall become
effective as to all SSB Citi employees on March
30, 2000. This policy may be amended as to SSB
Citi employees from time to time by the
Compliance Department. Any material amendment
of this policy shall be submitted to the Board
of Directors of each Fund for approval in
accordance with Rule 17j-1 under the 1940 Act.
Fund Directors - This policy shall become
effective as to a Fund upon the approval and
adoption of this policy by the Board of
Directors of that Fund in accordance with Rule
17j-1 under the 1940 Act or at such earlier date
as determined by the Secretary of the Fund. Any
material amendment of this policy that applies
to the directors of a Fund shall become
effective as to the directors of that Fund only
when the Board of Directors of that Fund has
approved the amendment in accordance with Rule
17j-1 or at such earlier date as determined by
the Secretary of the Fund.
March 15, 2000
EXHIBIT A
EXPLANATION OF BENEFICIAL OWNERSHIP
You are considered to have "Beneficial Ownership" of
Securities if you have or share a direct or indirect
"Pecuniary Interest" in the Securities.
You have a "Pecuniary Interest" in Securities if you
have the opportunity, directly or indirectly, to
profit or share in any profit derived from a
transaction in the Securities.
The following are examples of an indirect Pecuniary
Interest in Securities:
1. Securities held by members of your
immediate family sharing the same
household; however, this presumption may
be rebutted by convincing evidence that
profits derived from transactions in these
Securities will not provide you with any
economic benefit.
"Immediate family" means any child,
stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-
law, father-in-law, son-in-law, daughter-
in-law, brother-in-law, or sister-in-law,
and includes any adoptive relationship.
2. Your interest as a general partner in
Securities held by a general or limited
partnership.
3. Your interest as a manager-member in the
Securities held by a limited liability
company.
You do not have an indirect Pecuniary Interest in
Securities held by a corporation, partnership,
limited liability company or other entity in which
you hold an equity interest, unless you are a
controlling equityholder or you have or share
investment control over the Securities held by the
entity.
The following circumstances constitute Beneficial
Ownership by you of Securities held by a trust:
1. Your ownership of Securities as a trustee
where either you or members of your
immediate family have a vested interest in
the principal or income of the trust.
2. Your ownership of a vested interest in a
trust.
3. Your status as a settlor of a trust,
unless the consent of all of the
beneficiaries is required in order for you
to revoke the trust.
The foregoing is a summary of the meaning of
"beneficial ownership". For purposes of the
attached policy, "beneficial ownership" shall be
interpreted in the same manner as it would be in
determining whether a person is subject to the
provisions of Section 16 of the Securities Exchange
Act of 1934 and the rules and regulations thereunder
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<TABLE> <S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001000077
<NAME> CONSERVATIVE PORTFOLIO
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001000077
<NAME> CONSERVATIVE PORTFOLIO
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001000077
<NAME> GLOBAL PORTFOLIO
<SERIES>
<NUMBER> 11
<NAME> SMITH BARNEY CONCERT ALLOCATION SERIES, INC.
<S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001000077
<NAME> GLOBAL PORTFOLIO
<SERIES>
<NUMBER> 11
<NAME> SMITH BARNEY CONCERT ALLOCATION SERIES, INC.
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</TABLE>
<TABLE> <S> <C>
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<NAME> GLOBAL PORTFOLIO
<SERIES>
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<NAME> SMITH BARNEY CONCERT ALLOCATION SERIES, INC.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<NAME> GROWTH SERIES PORTFOLIO
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<NAME> GROWTH SERIES PORTFOLIO
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
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<NAME> HIGH GROWTH PORTFOLIO
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001000077
<NAME> HIGH GROWTH PORTFOLIO
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<CIK> 0001000077
<NAME> HIGH GROWTH PORTFOLIO
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<REALIZED-GAINS-CURRENT> 31,085,233
<APPREC-INCREASE-CURRENT> 81,015,481
<NET-CHANGE-FROM-OPS> 136,068,904
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 308,068
<DISTRIBUTIONS-OF-GAINS> 184,391
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 264,790
<NUMBER-OF-SHARES-REDEEMED> 148,132
<SHARES-REINVESTED> 28,805
<NET-CHANGE-IN-ASSETS> 144,283,823
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 4,994,153
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 7,551,104
<AVERAGE-NET-ASSETS> 7,958,885
<PER-SHARE-NAV-BEGIN> 14.86
<PER-SHARE-NII> 0.63
<PER-SHARE-GAIN-APPREC> 2.24
<PER-SHARE-DIVIDEND> 0.57
<PER-SHARE-DISTRIBUTIONS> 0.35
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 16.81
<EXPENSE-RATIO> 0.35
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001000077
<NAME> INCOME PORTFOLIO
<SERIES>
<NUMBER> 2
<NAME> SMITH BARNEY CONCERT ALLOCATION SERIES, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-END> JAN-31-2000
<INVESTMENTS-AT-COST> 69,695,727
<INVESTMENTS-AT-VALUE> 64,349,816
<RECEIVABLES> 128,705
<ASSETS-OTHER> 86,797
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 64,565,318
<PAYABLE-FOR-SECURITIES> 411,230
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 43,518
<TOTAL-LIABILITIES> 454,748
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 69,445,918
<SHARES-COMMON-STOCK> 3,017,575
<SHARES-COMMON-PRIOR> 3,165,682
<ACCUMULATED-NII-CURRENT> 43,298
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (32,735)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5,345,911)
<NET-ASSETS> 64,110,570
<DIVIDEND-INCOME> 4,498,632
<INTEREST-INCOME> 8,807
<OTHER-INCOME> 0
<EXPENSES-NET> 605,393
<NET-INVESTMENT-INCOME> 3,902,046
<REALIZED-GAINS-CURRENT> 168,875
<APPREC-INCREASE-CURRENT> (4,971,682)
<NET-CHANGE-FROM-OPS> (900,761)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,964,791
<DISTRIBUTIONS-OF-GAINS> 334,518
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,022,474
<NUMBER-OF-SHARES-REDEEMED> 1,368,490
<SHARES-REINVESTED> 197,909
<NET-CHANGE-IN-ASSETS> (10,721,714)
<ACCUMULATED-NII-PRIOR> (32,960)
<ACCUMULATED-GAINS-PRIOR> 476,460
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 605,393
<AVERAGE-NET-ASSETS> 34,600,396
<PER-SHARE-NAV-BEGIN> 11.50
<PER-SHARE-NII> 0.64
<PER-SHARE-GAIN-APPREC> (0.76)
<PER-SHARE-DIVIDEND> 0.63
<PER-SHARE-DISTRIBUTIONS> 0.11
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.64
<EXPENSE-RATIO> 0.60
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001000077
<NAME> INCOME PORTFOLIO
<SERIES>
<NUMBER> 2
<NAME> SMITH BARNEY CONCERT ALLOCATION SERIES, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-END> JAN-31-2000
<INVESTMENTS-AT-COST> 69,695,727
<INVESTMENTS-AT-VALUE> 64,349,816
<RECEIVABLES> 128,705
<ASSETS-OTHER> 86,797
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 64,565,318
<PAYABLE-FOR-SECURITIES> 411,230
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 43,518
<TOTAL-LIABILITIES> 454,748
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 69,445,918
<SHARES-COMMON-STOCK> 2,657,312
<SHARES-COMMON-PRIOR> 2,999,001
<ACCUMULATED-NII-CURRENT> 43,298
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (32,735)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5,345,911)
<NET-ASSETS> 64,110,570
<DIVIDEND-INCOME> 4,498,632
<INTEREST-INCOME> 8,807
<OTHER-INCOME> 0
<EXPENSES-NET> 605,393
<NET-INVESTMENT-INCOME> 3,902,046
<REALIZED-GAINS-CURRENT> 168,875
<APPREC-INCREASE-CURRENT> (4,971,682)
<NET-CHANGE-FROM-OPS> (900,761)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,647,446
<DISTRIBUTIONS-OF-GAINS> 304,470
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 624,103
<NUMBER-OF-SHARES-REDEEMED> 1,122,358
<SHARES-REINVESTED> 156,566
<NET-CHANGE-IN-ASSETS> (10,721,714)
<ACCUMULATED-NII-PRIOR> (32,960)
<ACCUMULATED-GAINS-PRIOR> 476,460
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 605,393
<AVERAGE-NET-ASSETS> 31,918,092
<PER-SHARE-NAV-BEGIN> 11.50
<PER-SHARE-NII> 0.59
<PER-SHARE-GAIN-APPREC> (0.75)
<PER-SHARE-DIVIDEND> 0.58
<PER-SHARE-DISTRIBUTIONS> 0.11
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.65
<EXPENSE-RATIO> 1.10
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001000077
<NAME> INCOME PORTFOLIO
<SERIES>
<NUMBER> 2
<NAME> SMITH BARNEY CONCERT ALLOCATION SERIES, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-END> JAN-31-2000
<INVESTMENTS-AT-COST> 69,695,727
<INVESTMENTS-AT-VALUE> 64,349,816
<RECEIVABLES> 128,705
<ASSETS-OTHER> 86,797
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 64,565,318
<PAYABLE-FOR-SECURITIES> 411,230
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 43,518
<TOTAL-LIABILITIES> 454,748
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 69,445,918
<SHARES-COMMON-STOCK> 347,231
<SHARES-COMMON-PRIOR> 342,982
<ACCUMULATED-NII-CURRENT> 43,298
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (32,735)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5,345,911)
<NET-ASSETS> 64,110,570
<DIVIDEND-INCOME> 4,498,632
<INTEREST-INCOME> 8,807
<OTHER-INCOME> 0
<EXPENSES-NET> 605,393
<NET-INVESTMENT-INCOME> 3,902,046
<REALIZED-GAINS-CURRENT> 168,875
<APPREC-INCREASE-CURRENT> (4,971,682)
<NET-CHANGE-FROM-OPS> (900,761)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 213,551
<DISTRIBUTIONS-OF-GAINS> 39,082
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 154,679
<NUMBER-OF-SHARES-REDEEMED> 167,729
<SHARES-REINVESTED> 17,299
<NET-CHANGE-IN-ASSETS> (10,721,714)
<ACCUMULATED-NII-PRIOR> (32,960)
<ACCUMULATED-GAINS-PRIOR> 476,460
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 605,393
<AVERAGE-NET-ASSETS> 4,090,314
<PER-SHARE-NAV-BEGIN> 11.50
<PER-SHARE-NII> 0.60
<PER-SHARE-GAIN-APPREC> (0.76)
<PER-SHARE-DIVIDEND> 0.58
<PER-SHARE-DISTRIBUTIONS> 0.11
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 10.65
<EXPENSE-RATIO> 1.05
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001000077
<NAME> SELECT BALANCED PORTFOLIO
<SERIES>
<NUMBER> 9
<NAME> SMITH BARNEY CONCERT ALLOCATION SERIES, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-END> JAN-31-2000
<INVESTMENTS-AT-COST> 198,519,830
<INVESTMENTS-AT-VALUE> 193,020,376
<RECEIVABLES> 172,764
<ASSETS-OTHER> 840
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 193,193,980
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 272,005
<TOTAL-LIABILITIES> 272,005
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 183,334,863
<SHARES-COMMON-STOCK> 183,334,863
<SHARES-COMMON-PRIOR> 11,108,833
<ACCUMULATED-NII-CURRENT> 6,669,804
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,416,762
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5,499,454)
<NET-ASSETS> 192,921,975
<DIVIDEND-INCOME> 7,182,317
<INTEREST-INCOME> 84,959
<OTHER-INCOME> 0
<EXPENSES-NET> 596,867
<NET-INVESTMENT-INCOME> 6,670,409
<REALIZED-GAINS-CURRENT> 8,432,422
<APPREC-INCREASE-CURRENT> (7,271,112)
<NET-CHANGE-FROM-OPS> 7,831,719
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,039,821
<DISTRIBUTIONS-OF-GAINS> 3,405,269
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,623,593
<NUMBER-OF-SHARES-REDEEMED> 1,372,026
<SHARES-REINVESTED> 544,349
<NET-CHANGE-IN-ASSETS> 59,126,457
<ACCUMULATED-NII-PRIOR> 3,039,216
<ACCUMULATED-GAINS-PRIOR> 3,389,609
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 596,867,009
<AVERAGE-NET-ASSETS> 169,965,009
<PER-SHARE-NAV-BEGIN> 12.04
<PER-SHARE-NII> 0.48
<PER-SHARE-GAIN-APPREC> 0.07
<PER-SHARE-DIVIDEND> 0.22
<PER-SHARE-DISTRIBUTIONS> 0.24
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.13
<EXPENSE-RATIO> 0.35
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001000077
<NAME> SELECT CONSERVATIVE PORTFOLIO
<SERIES>
<NUMBER> 6
<NAME> SMITH BARNEY CONCERT ALLOCATION SERIES, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-END> JAN-31-2000
<INVESTMENTS-AT-COST> 59,491,631
<INVESTMENTS-AT-VALUE> 56,588,463
<RECEIVABLES> 16,111
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 56,604,574
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 190,849
<TOTAL-LIABILITIES> 190,849
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 55,609,052
<SHARES-COMMON-STOCK> 4,877,849
<SHARES-COMMON-PRIOR> 3,313,806
<ACCUMULATED-NII-CURRENT> 2,633,026
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,074,815
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2,903,168)
<NET-ASSETS> 56,413,725
<DIVIDEND-INCOME> 2,784,960
<INTEREST-INCOME> 26,541
<OTHER-INCOME> 0
<EXPENSES-NET> 177,812
<NET-INVESTMENT-INCOME> 2,633,689
<REALIZED-GAINS-CURRENT> 1,075,326
<APPREC-INCREASE-CURRENT> (2,717,439)
<NET-CHANGE-FROM-OPS> 911,576
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,173,394
<DISTRIBUTIONS-OF-GAINS> 549,268
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,128,330
<NUMBER-OF-SHARES-REDEEMED> 714,607
<SHARES-REINVESTED> 150,320
<NET-CHANGE-IN-ASSETS> 17,598,470
<ACCUMULATED-NII-PRIOR> 1,172,731
<ACCUMULATED-GAINS-PRIOR> 548,757
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 177,812
<AVERAGE-NET-ASSETS> 50,640,251
<PER-SHARE-NAV-BEGIN> 11.71
<PER-SHARE-NII> 0.61
<PER-SHARE-GAIN-APPREC> (0.35)
<PER-SHARE-DIVIDEND> 0.27
<PER-SHARE-DISTRIBUTIONS> 0.13
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.57
<EXPENSE-RATIO> 0.35
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001000077
<NAME> SELECT GROWTH SERIES PORTFOLIO
<SERIES>
<NUMBER> 7
<NAME> SMITH BARNEY CONCERT ALLOCATION SERIES, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-END> JAN-31-2000
<INVESTMENTS-AT-COST> 222,027,017
<INVESTMENTS-AT-VALUE> 236,027,249
<RECEIVABLES> 315,055
<ASSETS-OTHER> 94
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 236,342,398
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 314,878
<TOTAL-LIABILITIES> 314,878
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 206,649,947
<SHARES-COMMON-STOCK> 17,107,763
<SHARES-COMMON-PRIOR> 10,096,641
<ACCUMULATED-NII-CURRENT> 7,137,325
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 8,240,016
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,000,232
<NET-ASSETS> 236,027,520
<DIVIDEND-INCOME> 7,669,588
<INTEREST-INCOME> 119,117
<OTHER-INCOME> 0
<EXPENSES-NET> 650,124
<NET-INVESTMENT-INCOME> 7,138,581
<REALIZED-GAINS-CURRENT> 8,297,200
<APPREC-INCREASE-CURRENT> 3,658,340
<NET-CHANGE-FROM-OPS> 19,094,121
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,845,631
<DISTRIBUTIONS-OF-GAINS> 2,379,175
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,386,057
<NUMBER-OF-SHARES-REDEEMED> 703,458
<SHARES-REINVESTED> 328,523
<NET-CHANGE-IN-ASSETS> 106,098,545
<ACCUMULATED-NII-PRIOR> 1,844,375
<ACCUMULATED-GAINS-PRIOR> 2,321,991
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 650,124
<AVERAGE-NET-ASSETS> 185,327,734
<PER-SHARE-NAV-BEGIN> 12.87
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> 0.72
<PER-SHARE-DIVIDEND> 0.13
<PER-SHARE-DISTRIBUTIONS> 0.17
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.80
<EXPENSE-RATIO> 0.35
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001000077
<NAME> SELECT HIGH GROWTH PORTFOLIO
<SERIES>
<NUMBER> 8
<NAME> SMITH BARNEY CONCERT ALLOCATION SERIES, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-END> JAN-31-2000
<INVESTMENTS-AT-COST> 128,977,744
<INVESTMENTS-AT-VALUE> 147,836,130
<RECEIVABLES> 337,975
<ASSETS-OTHER> 2,499
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 148,176,604
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 143,453
<TOTAL-LIABILITIES> 143,453
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 120,445,149
<SHARES-COMMON-STOCK> 9,763,335
<SHARES-COMMON-PRIOR> 5,820,310
<ACCUMULATED-NII-CURRENT> 4,616,597
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,113,019
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 18,858,386
<NET-ASSETS> 148,033,151
<DIVIDEND-INCOME> 4,917,912
<INTEREST-INCOME> 75,943
<OTHER-INCOME> 0
<EXPENSES-NET> 376,639
<NET-INVESTMENT-INCOME> 4,617,216
<REALIZED-GAINS-CURRENT> 4,178,642
<APPREC-INCREASE-CURRENT> 10,873,783
<NET-CHANGE-FROM-OPS> 19,669,641
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 513,766
<DISTRIBUTIONS-OF-GAINS> 1,277,582
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,226,369
<NUMBER-OF-SHARES-REDEEMED> 414,964
<SHARES-REINVESTED> 131,620
<NET-CHANGE-IN-ASSETS> 72,253,016
<ACCUMULATED-NII-PRIOR> 513,147
<ACCUMULATED-GAINS-PRIOR> 12,119,59
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 376,639
<AVERAGE-NET-ASSETS> 107,393,248
<PER-SHARE-NAV-BEGIN> 13.02
<PER-SHARE-NII> 0.60
<PER-SHARE-GAIN-APPREC> 1.78
<PER-SHARE-DIVIDEND> 0.07
<PER-SHARE-DISTRIBUTIONS> 0.17
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.16
<EXPENSE-RATIO> 0.35
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001000077
<NAME> SELECT INCOME PORTFOLIO
<SERIES>
<NUMBER> 10
<NAME> SMITH BARNEY CONCERT ALLOCATION SERIES, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-END> JAN-31-2000
<INVESTMENTS-AT-COST> 25,284,582
<INVESTMENTS-AT-VALUE> 23,486,162
<RECEIVABLES> 82,826
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 23,568,988
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 291,896
<TOTAL-LIABILITIES> 291,896
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23,621,012
<SHARES-COMMON-STOCK> 2,082,429
<SHARES-COMMON-PRIOR> 1,767,044
<ACCUMULATED-NII-CURRENT> 1,407,820
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 46,680
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,798,420)
<NET-ASSETS> 23,277,092
<DIVIDEND-INCOME> 1,478,747
<INTEREST-INCOME> 10,540
<OTHER-INCOME> 0
<EXPENSES-NET> 81,355
<NET-INVESTMENT-INCOME> 1,407,932
<REALIZED-GAINS-CURRENT> 119,014
<APPREC-INCREASE-CURRENT> (1,713,642)
<NET-CHANGE-FROM-OPS> (168,696)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 681,850
<DISTRIBUTIONS-OF-GAINS> 132,281
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 986,630
<NUMBER-OF-SHARES-REDEEMED> 744,458
<SHARES-REINVESTED> 73,213
<NET-CHANGE-IN-ASSETS> 2,680,036
<ACCUMULATED-NII-PRIOR> 681,738
<ACCUMULATED-GAINS-PRIOR> 59,947
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 81,355
<AVERAGE-NET-ASSETS> 23,138,827
<PER-SHARE-NAV-BEGIN> 11.66
<PER-SHARE-NII> 0.70
<PER-SHARE-GAIN-APPREC> (0.79)
<PER-SHARE-DIVIDEND> 0.33
<PER-SHARE-DISTRIBUTIONS> 0.06
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.18
<EXPENSE-RATIO> 0.35
</TABLE>
