SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[XXX] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
SMITH BARNEY ALLOCATION SERIES INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than
Registrant)
Barbara Allen
Payment of Filing Fee (Check the appropriate box):
[X] No Fee Required
[ ] Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which
transaction applies:
2) Aggregate number of securities to which
transaction applies:
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated
and state how it was determined.
[ ] Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee
was paid previously. Identify the previous
filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed: December 28, 2000
A SPECIAL NOTICE TO SHAREHOLDERS OF SMITH BARNEY
ALLOCATION SERIES INC.
(FORMERLY KNOWN AS SMITH BARNEY
CONCERT ALLOCATION SERIES INC.)
WITH RESPECT TO
GLOBAL PORTFOLIO
HIGH GROWTH PORTFOLIO
GROWTH PORTFOLIO
BALANCED PORTFOLIO
CONSERVATIVE PORTFOLIO
INCOME PORTFOLIO
Dear Shareholder:
I am writing to inform you about some important changes that have been
approved by the Board of Directors of Smith Barney Allocation Series Inc. (the
"Company") regarding the management of the Global Portfolio, High Growth
Portfolio, Growth Portfolio, Balanced Portfolio, Conservative Portfolio, and
Income Portfolio (each, a "Portfolio" or collectively, the "Portfolios").
SSB Citi Fund Management LLC ("SSB Citi") currently acts as investment
adviser to the Portfolios pursuant to a separate Asset Allocation and
Administration Agreement for each Portfolio (each, a "Current Agreement" or
collectively, the "Current Agreements"). Under the Current Agreements, SSB Citi
provides investment advisory and administrative services, including investing
each Portfolio's assets, providing investment research and supervising each
Portfolio's investments in accordance with its investment objective, policies
and restrictions. For these services, SSB Citi is paid an annual fee of 0.35% of
each Portfolio's average daily net assets. This fee is a bundled, or "all-in"
fee, which requires SSB Citi to pay all other operating expenses for each
Portfolio out of this one fee, except charges for distribution under the
Company's distribution plan. In a traditional mutual fund advisory contract, the
investment adviser is compensated solely for its investment advisory services,
as described above, and the fund bears the cost of all other operating expenses.
On October 10, 2000, a majority of the Board of Directors of the Company,
including a majority of the Directors who are not interested persons of the
Portfolios, voted to restructure the Current Agreements by eliminating the
all-in advisory fee and replacing it with a traditional advisory fee that
compensates SSB Citi solely for its investment advisory services. Pursuant to
the restructuring, each Current Agreement will be replaced by a new agreement
(each a "New Agreement" or collectively the "New Agreements") providing for an
advisory fee calculated at the annual rate of 0.20% of that Portfolio's average
daily net assets. Although the New Agreements provide for lower advisory fees,
the Portfolios will be subject to higher total operating expenses since they
will bear all of their own operating expenses. However, the
<PAGE>
proposed fee structure will be subject to a voluntary fee waiver and expense
reimbursement in order to maintain an expense cap on each of the Portfolios that
is no more than 0.20% higher than the current total expenses for that Portfolio.
This expense cap will not be changed in the future without the approval of the
Board of Directors of the Company. This structure should permit the Portfolios
to remain competitive and allow the Company and the Portfolios to provide
shareholders with enhanced services on the same basis provided by other funds.
There are no other proposed changes and the Portfolios will continue to be
managed pursuant to the investment objectives and policies as set forth in the
Prospectus.
A special shareholder meeting regarding the proposed New Agreements is
scheduled to take place on January 23, 2001. I ask that you take a few moments
to review the accompanying proxy materials carefully. Shareholders owning shares
in more than one of the Company's Portfolios will receive a separate proxy card
for each Portfolio and Share Class owned. If you do not plan to attend the
special shareholder meeting, please complete each proxy card (unless you are
voting by telephone or through the Internet) and return it as soon as possible
in the postage-paid envelope. We also encourage you to vote by telephone or
through the Internet. Proxies may be voted by telephone by calling the toll-free
number that appears on your proxy card or through the Internet by using the
Internet address located on your proxy card.
Voting by telephone or through the Internet will reduce the time and costs
associated with the proxy solicitation. When the Portfolios record proxies by
telephone or through the Internet, they will use reasonable procedures designed
to (i) authenticate shareholders' identities, (ii) allow shareholders to
authorize the voting of their shares in accordance with their instructions and
(iii) confirm that their instructions have been properly recorded.
Whichever voting method you choose, please read the full text of the proxy
statement before you vote.
Thank you for taking the time to read this letter and the accompanying
proxy statement. We look forward to helping you pursue your financial goals in
the years ahead.
Sincerely,
Heath B. McLendon
Chairman of the Board of Directors
December 1, 2000
<PAGE>
SMITH BARNEY ALLOCATION SERIES INC.
(FORMERLY KNOWN AS SMITH BARNEY
CONCERT ALLOCATION SERIES INC.)
WITH RESPECT TO
GLOBAL PORTFOLIO
HIGH GROWTH PORTFOLIO
GROWTH PORTFOLIO
BALANCED PORTFOLIO
CONSERVATIVE PORTFOLIO
INCOME PORTFOLIO
7 World Trade Center, New York, New York 10048
--------------------------------------------------------------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held On January 23, 2001
--------------------------------------------------------------------------------
TO THE SHAREHOLDERS:
A special meeting (the "Special Meeting") of Smith Barney Allocation
Series Inc. (the "Company") on behalf of the shareholders of the Global
Portfolio, High Growth Portfolio, Growth Portfolio, Balanced Portfolio,
Conservative Portfolio, and Income Portfolio (each, a "Portfolio" or
collectively, the "Portfolios") will be held on January 23, 2001 beginning at 9
a.m. Eastern time at the offices of SSB Citi Fund Management LLC ("SSB Citi"),
Downtown Conference Center, Lobby, 7 World Trade Center, New York, New York,
10048 to consider and vote on the following proposal:
To approve or disapprove a new Asset Allocation and Administration
Agreement with SSB Citi on behalf of each Portfolio.
The appointed proxies will vote in their discretion on any other business
as may properly come before the Special Meeting or any adjournments thereof.
Shareholders of record at the close of business on November 3, 2000 are entitled
to notice of and to vote at the Special Meeting and any adjournments thereof. As
a convenience to shareholders, you can now vote in any of four ways:
o By mail, by completing, dating, signing and returning the proxy card
in the enclosed envelope that requires no postage if mailed in the
United States;
o By telephone, with a toll-free call to the telephone number that
appears on your proxy card;
o Through the Internet, by using the Internet address located on your
proxy card and following the instructions on the site; or
o In person at the Special Meeting.
<PAGE>
Your vote is important and your participation in the governance of the
Portfolios does make a difference.
The proposal has been approved by a majority of the Company's Board of
Directors, including a majority of the Directors who are not interested persons
of the Company, the Portfolios or SSB Citi, who believe the proposal set forth
above is important and recommend you read the enclosed material carefully and
recommend you vote "FOR" the proposal. Your immediate response will help save on
the costs of additional solicitations. We look forward to your participation.
This notice and related proxy material are first being mailed to
shareholders on or about December 1, 2000 or as soon as practicable thereafter.
This proxy is being solicited on behalf of the Board of Directors of the
Company.
December 1, 2000
By Order of the Board of Directors,
Christina T. Sydor, Secretary
<PAGE>
THE PORTFOLIOS WILL FURNISH, WITHOUT CHARGE, A COPY OF THEIR MOST RECENT ANNUAL
REPORT AND MOST RECENT SEMI-ANNUAL REPORT SUCCEEDING THE ANNUAL REPORT, IF ANY,
TO A SHAREHOLDER OF ANY PORTFOLIO UPON REQUEST. ANY SUCH REQUEST SHOULD BE MADE
BY CALLING (800) 842-8573 OR BY WRITING TO THE SECRETARY OF THE PORTFOLIO AT 7
WORLD TRADE CENTER, NEW YORK, NEW YORK 10048.
SHAREHOLDERS OF THE PORTFOLIOS ARE INVITED TO ATTEND THE SPECIAL MEETING IN
PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE INDICATE
YOUR VOTING INSTRUCTIONS ON EACH ENCLOSED PROXY CARD, DATE AND SIGN EACH PROXY
CARD, AND RETURN EACH PROXY CARD IN THE ENVELOPE PROVIDED UNLESS YOU ARE VOTING
BY TELEPHONE OR THROUGH THE INTERNET. EACH PROXY CARD IS ADDRESSED FOR YOUR
CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. PROXIES MAY
ALSO BE VOTED BY TELEPHONE BY CALLING THE TOLL-FREE NUMBER THAT APPEARS ON YOUR
PROXY CARD OR THROUGH THE INTERNET BY USING THE INTERNET ADDRESS LOCATED ON YOUR
PROXY CARD.
IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, WE ASK THAT
YOU MAIL YOUR PROXY CARD(S) PROMPTLY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU CAST YOUR VOTE:
o FOR APPROVAL OF A NEW ASSET ALLOCATION AND ADMINISTRATION AGREEMENT WITH
SSB CITI ON BEHALF OF EACH PORTFOLIO
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY CARD(S) PROMPTLY
(UNLESS YOU ARE VOTING BY TELEPHONE OR
THROUGH THE INTERNET)
NO MATTER HOW MANY SHARES YOU OWN.
<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to you
and avoid the time and expense to the Company involved in validating your vote
if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to the name shown in the registration on the proxy
card.
3. All Other Accounts: The capacity of the individual signing the proxy card
should be indicated unless it is reflected in the form of registration.
For example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
Trust Accounts
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA John B. Smith
(2) Estate of John B. Smith John B. Smith Jr., Executor
<PAGE>
SMITH BARNEY ALLOCATION SERIES INC.
(FORMERLY KNOWN AS SMITH BARNEY
CONCERT ALLOCATION SERIES INC.)
WITH RESPECT TO
GLOBAL PORTFOLIO
HIGH GROWTH PORTFOLIO
GROWTH PORTFOLIO
BALANCED PORTFOLIO
CONSERVATIVE PORTFOLIO
INCOME PORTFOLIO
7 World Trade Center, New York, New York 10048
---------------------------
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
To Be Held On January 23, 2001
---------------------------
General
The accompanying proxy is solicited by the Board of Directors of Smith
Barney Allocation Series Inc. (the "Company") on behalf of the Global Portfolio,
High Growth Portfolio, Growth Portfolio, Balanced Portfolio, Conservative
Portfolio, and Income Portfolio (each, a "Portfolio" or collectively, the
"Portfolios"), in connection with the special meeting of shareholders (the
"Special Meeting") of the Portfolios to be held at the offices of SSB Citi Fund
Management LLC ("SSB Citi"), the Downtown Conference Center, Lobby, 7 World
Trade Center, New York, New York 10048 beginning at 9 a.m. Eastern time on
January 23, 2001.
Each Portfolio is a "fund of funds" which seeks to achieve its objective
by investing in a number of underlying open-end management investment companies
or series thereof. These underlying funds, which are operated by SSB Citi and an
affiliate thereof, are described in the Portfolios' prospectus.
The proposal to be considered and voted on at the Special Meeting is as
follows:
To approve or disapprove a new Asset Allocation and Administration
Agreement (each a "New Agreement" or collectively, the "New Agreements") with
SSB Citi on behalf of each Portfolio.
The appointed proxies will vote in their discretion on any other business
as may properly come before the Special Meeting or any adjournments thereof. The
Board of Directors has fixed the close of business on November 3, 2000 as the
record date (the "Record Date") for the determination of holders of shares of
the Portfolios entitled
1
<PAGE>
to notice of and to vote at the Special Meeting (the "Shares"). Shareholders of
the Portfolios on the Record Date will be entitled to one vote per share with
respect to the proposal submitted to the Shareholders of the Portfolios, with no
share having cumulative voting rights.
Those persons who owned, beneficially or of record, more than 5% of the
outstanding shares of any of the Portfolios as of the Record Date, to the best
knowledge of the Board and the Portfolios, are set forth in Annex A hereto. As
of the Record Date, the officers and Directors of the Company, collectively,
beneficially owned less than 1% of the shares of the Portfolio.
Voting
Shareholders of each class of each Portfolio will vote separately on the
proposal, and separate proxy cards are enclosed for each class of each Portfolio
in respect of which a shareholder is a record owner of shares. The favorable
vote of the holders of a "majority of the outstanding voting securities" of each
class of each Portfolio ("Class"), as defined in the Investment Company Act of
1940, as amended (the "1940 Act"), is required to approve each Portfolio's New
Agreement. The 1940 Act defines a "majority of the outstanding voting
securities" of each Class to mean the lesser of (a) the vote of holders of 67%
or more of the shares of Common Stock of each Class present in person or by
proxy at the Special Meeting, if the holders of more than 50% of the outstanding
Common Stock of each Class are present in person or by proxy, or (b) the vote of
the holders of more than 50% of the outstanding Common Stock of each Class. If
the shareholders of all classes of a Portfolio do not approve the proposal, the
proposal will not be implemented for that Portfolio.
The Proxy Statement, Notice of Special Meeting and the proxy card are
first being mailed to shareholders on or about December 1, 2000 or as soon as
practicable thereafter. All properly executed proxies received prior to the
Special Meeting will be voted at the Special Meeting in accordance with the
instructions marked thereon.
Proxies received prior to the Special Meeting on which no vote is
indicated will be voted "for" the proposal. For purposes of determining the
presence of a quorum for transacting business at the Special Meeting,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been voted. The holders
of at least one-third of the outstanding shares entitled to vote on the proposal
must be present in person or by proxy to have a quorum to conduct business at
the Special Meeting. Because abstentions and broker non-votes are treated as
shares present but not voting, any abstentions and broker non-votes will have
the effect of votes against the proposal for purposes of tabulating the votes
necessary for the proposal's approval. Accordingly, shareholders are urged to
forward their voting instructions promptly.
2
<PAGE>
Any proxy may be revoked at any time prior to exercise thereof by giving
written notice to the Secretary of the Company at the address indicated above,
by voting in person at the Special Meeting, by telephone or on the Internet.
The Company knows of no other business that will be presented for
consideration at the Special Meeting. If any other matters are properly
presented, it is the intention of the persons named on the enclosed proxy to
vote proxies in accordance with their best judgment. In the event a quorum is
present at the Special Meeting but sufficient votes to approve the proposal are
not received, the persons named as proxies may propose one or more adjournments
of the Special Meeting to permit further solicitation of proxies provided they
determine that such an adjournment and additional solicitation is reasonable and
in the interest of shareholders based on a consideration of all relevant
factors, including the nature of the relevant proposal, the percentage of votes
then cast, the percentage of negative votes then cast, the nature of the
proposed solicitation activities and the nature of the reasons for such further
solicitation. Any such adjournment will require the affirmative vote of the
holders of a majority of the shares present in person or by proxy at the Special
Meeting. The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of the proposal and will
vote against any such adjournment those proxies to be voted against the
proposal.
3
<PAGE>
PROPOSAL:
APPROVAL OF A NEW ASSET ALLOCATION AND ADMINISTRATION
AGREEMENT WITH SSB CITI ON BEHALF OF EACH PORTFOLIO
Introduction
The Board of Directors of the Company is recommending that the
shareholders of each Portfolio approve a New Agreement for each Portfolio
providing for a restructuring of advisory fees, to be entered into between the
Company (on behalf of each Portfolio) and SSB Citi. SSB Citi serves as
investment adviser to each Portfolio and is a wholly owned subsidiary of Salomon
Smith Barney Holdings Inc. ("Holdings"), which is a wholly owned subsidiary of
Citigroup Inc. ("Citigroup").
At a meeting of the Board of Directors of the Company held on October 10,
2000, a majority of the Board, including a majority of the Directors who are not
interested persons of the Company, the Portfolios or SSB Citi (the "Independent
Directors"), approved the New Agreements on behalf of each Portfolio, subject to
shareholder approval. The current Asset Allocation and Administration Agreements
(each, a "Current Agreement" or collectively, the "Current Agreements") for the
High Growth Portfolio, Growth Portfolio, Balanced Portfolio, Conservative
Portfolio and Income Portfolio commenced on January 26, 1996, and the Current
Agreement for the Global Portfolio commenced on March 9, 1998. If the
shareholders approve the New Agreements, they will be effective on the date the
proposal is approved by shareholders. If the shareholders do not approve the New
Agreements, the Current Agreements will remain in effect and the Company's Board
of Directors will consider whether other courses of action, including a
reconsideration of the New Agreements, are appropriate.
Each New Agreement reflects the proposed restructuring of the advisory
fee, including a decrease in the advisory fee and, effectively, an increase in
total operating expenses, and also reflects the new name of the adviser, SSB
Citi, successor to Mutual Management Corp. Except for those changes, its terms
are substantially similar to the terms of each Current Agreement.
Current Agreements and Proposed New Agreements
SSB Citi currently acts as investment adviser to the Portfolios pursuant
to the Current Agreements. Under the Current Agreements, SSB Citi provides
investment advisory and administrative services, including investing each
Portfolio's assets, providing investment research and supervising each
Portfolio's investments in accordance with its investment objective, policies
and restrictions. For these services, SSB Citi is paid an annual fee of 0.35% of
each Portfolio's average daily net assets. For the fiscal year ended January 31,
2000, SSB Citi was paid an aggregate fee of $2,922,105.35 on behalf of all of
the Portfolios. The advisory fee has been a bundled, or "all-in" fee, which
requires SSB Citi to pay all of the Portfolios' other
4
<PAGE>
operating expenses out of this fee, including transfer agency, audit, legal,
printing, SEC registration and miscellaneous (but not including charges for
distribution under the Company's 12b-1 plan). In a traditional mutual fund
advisory contract, the investment adviser is compensated solely for its
investment advisory services, as described above, and the fund bears the cost of
all other operating expenses.
At the time the Company was organized and the Current Agreements were
approved, the all-in fee structure was considered simpler and more efficient in
administering the Portfolios. It was also anticipated at that time that the
all-in fee would generate sufficient levels of fees to cover each Portfolio's
expenses, including transfer agency and sub-transfer agency charges, and
generate a reasonable profit. However, because of a higher than anticipated
number of small accounts, the expenses of the Portfolios have been significantly
higher than anticipated.
The high cost of servicing a large number of relatively small accounts
will be exacerbated as a result of a recent decision by PFS Shareholder Services
Inc. ("PFSSS") to significantly upgrade client services in order to increase
client satisfaction and retention. PFSSS, a wholly owned subsidiary of
Citigroup, serves as a sub-transfer agent for the Company, maintaining
shareholder account records for a majority of the Portfolios' outstanding
shares. Although this upgrade will result in enhanced shareholder services, as
further described below, it will also result in increased sub-transfer agency
costs.
As a result of the increase in expenses above what was originally
contemplated and the desire to provide service enhancements to the Company's
shareholders, SSB Citi is proposing that the Portfolios adopt a new fee
structure. The proposed fee structure will consist of an advisory fee of 0.20%,
with other expenses, including transfer agency fees, to be charged directly to
the Portfolios. The proposed fee structure will also be subject to a voluntary
fee waiver and expense reimbursement by SSB Citi, as further described below.
The Board of Directors has determined that the proposed fee structure,
unbundling the advisory fee paid to SSB Citi from fees for other services,
provides for an appropriate level of advisory fees.
With respect to the transfer agency fee, PFSSS is requesting an increase
in fees from the current level of $11.00 for Class A shares and $12.00 for Class
B and L shares (borne by SSB Citi under the Current Agreements) to $18.00 for
Class A shares and $20.00 for Class B and Class L shares. As previously noted,
this level of transfer agency fee is necessary because of the enhancements that
PFSSS will be making for client services, which include, among other things,
on-line and telephone account access and improved shareholder communications,
including integrated account statements and year-end tax statements. Currently,
a small percentage (approximately 14%) of the Company's shareholders have more
extensive services than those currently available to PFSSS clients. In order to
provide comparable services to all investors, PFSSS will incur higher costs and,
therefore, it will be necessary for PFSSS to charge higher transfer agency fees.
The Company and SSB Citi propose to pass along these costs to all investors, as
contemplated by the proposed fee restructuring.
5
<PAGE>
The proposed fee structure will be subject to a voluntary fee waiver and
expense reimbursement in order to maintain an expense cap on each of the
Portfolios that is no more than 0.20% higher than current expenses, for the
Global, High Growth, Growth and Balanced Portfolios, a maximum increase from
0.60% to 0.80% for Class A shares, from 1.35% to 1.55% for Class B and Class L
shares, and from 0.35% to 0.55% for Class Y and Class Z shares; for the
Conservative and Income Portfolios, a maximum increase from 0.60% to 0.80% for
Class A shares, from 1.10% to 1.30% for Class B shares, from 1.05% to 1.25% for
Class L shares, and from 0.35% to 0.55% for Class Y and Class Z shares. This
expense cap will not be changed in the future without the approval of the
Company's Board of Directors.
Impact of the New Agreements
As stated in the Introduction, the New Agreements each provide for a
decrease in the advisory fee and an effective increase in total operating
expenses when compared to the Current Agreements. The following table compares
the advisory fees paid by the Portfolios to SSB Citi for the fiscal year ended
January 31, 2000 as calculated under the Current Agreements to the advisory fees
each Portfolio would have paid if the New Agreements had been in effect. This
table reflects only the proposed changes in advisory fees and does not reflect
the increase in total operating expenses as shown in the tables below.
<TABLE>
<CAPTION>
Portfolio Current Agreement New Agreement Percentage Difference
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
Global $ 93,310 $ 53,169.17 -43.02%
High Growth $2,747,177 $1,493,095.23 -45.65%
Growth $3,282,233 $1,866,098.09 -43.15%
Balanced $1,899,634 $1,083,686.03 -42.95%
Conservative $ 519,947 $ 295,534.82 -43.16%
Income $ 248,660 $ 141,217.91 -43.21%
</TABLE>
The following tables compare the total operating expenses, including
advisory fees, under the Current Agreements to the total operating expenses to
be incurred under the New Agreements.
Comparative Fee Tables
Global Portfolio
<TABLE>
<CAPTION>
Current Agreement
Class A Class B Class L Class Y Class Z
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fee 0.35% 0.35% 0.35% 0.35% 0.35%
12b-1 Fee 0.25% 1.00% 1.00% None None
Other Expenses None None None None None
Total Operating
Expenses 0.60% 1.35% 1.35% 0.35% 0.35%
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
New Agreement
Class A Class B Class L Class Y Class Z
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fee 0.20% 0.20% 0.20% 0.20% 0.20%
12b-1 Fee 0.25% 1.00% 1.00% None None
Other Expenses 0.78% 0.83% 1.50% 0.35% 0.35%
Total Operating
Expenses 1.23% 2.03% 2.70% 0.55% 0.55%
Expense
Reimbursement* (0.43%) (0.48%) (1.15%) N/A N/A
Net Annual
Operating Expenses 0.80% 1.55% 1.55% 0.55% 0.55%
</TABLE>
---------------
* Net annual operating expenses will be capped at 80 basis points for Class
A, 155 basis points for Classes B and L, and 55 basis points for Classes Y
and Z, with any increases subject to Board approval.
High Growth Portfolio
<TABLE>
<CAPTION>
Current Agreement
Class A Class B Class L Class Y Class Z
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fee 0.35% 0.35% 0.35% 0.35% 0.35%
12b-1 Fee 0.25% 1.00% 1.00% None None
Other Expenses None None None None None
Total Operating
Expenses 0.60% 1.35% 1.35% 0.35% 0.35%
</TABLE>
<TABLE>
<CAPTION>
New Agreement
Class A Class B Class L Class Y Class Z
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fee 0.20% 0.20% 0.20% 0.20% 0.20%
12b-1 Fee 0.25% 1.00% 1.00% None None
Other Expenses 0.88% 0.41% 0.24% 0.35% 0.35%
Total Operating
Expenses 1.33% 1.61% 1.44% 0.55% 0.55%
Expense
Reimbursement* (0.53%) (0.06%) N/A N/A N/A
Net Annual
Operating Expenses 0.80% 1.55% 1.44% 0.55% 0.55%
</TABLE>
---------------
* Net annual operating expenses will be capped at 80 basis points for Class
A, 155 basis points for Classes B and L, and 55 basis points for Classes Y
and Z, with any increases subject to Board approval.
7
<PAGE>
Growth Portfolio
<TABLE>
<CAPTION>
Current Agreement
Class A Class B Class L Class Y Class Z
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fee 0.35% 0.35% 0.35% 0.35% 0.35%
12b-1 Fee 0.25% 1.00% 1.00% None None
Other Expenses None None None None None
Total Operating
Expenses 0.60% 1.35% 1.35% 0.35% 0.35%
</TABLE>
<TABLE>
<CAPTION>
New Agreement
Class A Class B Class L Class Y Class Z
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fee 0.20% 0.20% 0.20% 0.20% 0.20%
12b-1 Fee 0.25% 1.00% 1.00% None None
Other Expenses 0.31% 0.28% 0.21% 0.35% 0.35%
Total Operating
Expenses 0.76% 1.48% 1.41% 0.55% 0.55%
Expense
Reimbursement* N/A N/A N/A N/A N/A
Net Annual
Operating Expenses 0.76% 1.48% 1.41% 0.55% 0.55%
</TABLE>
---------------
* Net annual operating expenses will be capped at 80 basis points for Class
A, 155 basis points for Classes B and L, and 55 basis points for Classes Y
and Z, with any increases subject to Board approval.
Balanced Portfolio
<TABLE>
<CAPTION>
Current Agreement
Class A Class B Class L Class Y Class Z
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fee 0.35% 0.35% 0.35% 0.35% 0.35%
12b-1 Fee 0.25% 1.00% 1.00% None None
Other Expenses None None None None None
Total Operating
Expenses 0.60% 1.35% 1.35% 0.35% 0.35%
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
New Agreement
Class A Class B Class L Class Y Class Z
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fee 0.20% 0.20% 0.20% 0.20% 0.20%
12b-1 Fee 0.25% 1.00% 1.00% None None
Other Expenses 0.19% 0.20% 0.16% 0.35% 0.35%
Total Operating
Expenses 0.64% 1.40% 1.36% 0.55% 0.55%
Expense
Reimbursement* N/A N/A N/A N/A N/A
Net Annual
Operating Expenses 0.64% 1.40% 1.36% 0.55% 0.55%
</TABLE>
---------------
* Net annual operating expenses will be capped at 80 basis points for Class
A, 155 basis points for Classes B and L, and 55 basis points for Classes Y
and Z, with any increases subject to Board approval.
Conservative Portfolio
<TABLE>
<CAPTION>
Current Agreement
Class A Class B Class L Class Y Class Z
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fee 0.35% 0.35% 0.35% 0.35% 0.35%
12b-1 Fee 0.25% 0.75% 0.70% None None
Other Expenses None None None None None
Total Operating
Expenses 0.60% 1.10% 1.05% 0.35% 0.35%
</TABLE>
<TABLE>
<CAPTION>
New Agreement
Class A Class B Class L Class Y Class Z
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fee 0.20% 0.20% 0.20% 0.20% 0.20%
12b-1 Fee 0.25% 0.75% 0.70% None None
Other Expenses 0.19% 0.20% 0.35% 0.35% 0.35%
Total Operating
Expenses 0.64% 1.15% 1.25% 0.55% 0.55%
Expense
Reimbursement* N/A N/A N/A N/A N/A
Net Annual
Operating Expenses 0.64% 1.15% 1.25% 0.55% 0.55%
</TABLE>
---------------
* Net annual operating expenses will be capped at 80 basis points for Class A,
155 basis points for Classes B and L, and 55 basis points for Classes Y and Z,
with any increases subject to Board approval.
9
<PAGE>
Income Portfolio
<TABLE>
<CAPTION>
Current Agreement
Class A Class B Class L Class Y Class Z
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fee 0.35% 0.35% 0.35% 0.35% 0.35%
12b-1 Fee 0.25% 0.75% 0.70% None None
Other Expenses None None None None None
Total Operating
Expenses 0.60% 1.10% 1.05% 0.35% 0.35%
</TABLE>
<TABLE>
<CAPTION>
New Agreement
Class A Class B Class L Class Y Class Z
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fee 0.20% 0.20% 0.20% 0.20% 0.20%
12b-1 Fee 0.25% 0.75% 0.70% None None
Other Expenses 0.21% 0.24% 0.55% 0.35% 0.35%
Total Operating
Expenses 0.66% 1.19% 1.45% 0.55% 0.55%
Expense
Reimbursement* N/A N/A (0.20) N/A N/A
Net Annual
Operating Expenses 0.66% 1.19% 1.25% 0.55% 0.55%
</TABLE>
---------------
* Net annual operating expenses will be capped at 80 basis points for Class
A, 155 basis points for Classes B and L, and 55 basis points for Classes Y
and Z, with any increases subject to Board approval.
Example: The following tables illustrate the expenses a shareholder would
pay on a $10,000 investment in a Portfolio assuming the fees and expenses stated
in the comparative fee tables above under both the Current Agreements and the
New Agreements.
Global Portfolio*
<TABLE>
<CAPTION>
Current Agreement New Agreement
Number of Years 1 3 5 10 1 3 5 10
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A 657 988 1342 2336 677 1047 1441 2541
B Redemption 741 1042 1370 2527 761 1102 1470 2729
B No Redemption 241 742 1270 2527 261 802 1370 2729
L Redemption 439 835 1358 2789 459 894 1457 2986
L No Redemption 339 835 1358 2789 359 894 1457 2986
Y 140 437 755 1657 161 499 860 1878
Z 140 437 755 1657 161 499 860 1878
</TABLE>
10
<PAGE>
High Growth Portfolio*
<TABLE>
<CAPTION>
Current Agreement New Agreement
Number of Years 1 3 5 10 1 3 5 10
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A 640 936 1253 2148 659 994 1352 2357
B Redemption 723 988 1280 2342 743 1048 1380 2547
B No Redemption 223 688 1180 2342 243 748 1280 2547
L Redemption 421 781 1268 2609 430 808 1313 2699
L No Redemption 321 781 1268 2609 370 808 1313 2699
Y 122 381 660 1455 143 443 766 1680
Z 122 381 660 1455 143 443 766 1680
</TABLE>
Growth Portfolio*
<TABLE>
<CAPTION>
Current Agreement New Agreement
Number of Years 1 3 5 10 1 3 5 10
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A 634 918 1222 2085 650 965 1302 2253
B Redemption 717 970 1249 2279 730 1009 1315 2422
B No Redemption 217 670 1149 2279 230 709 1215 2422
L Redemption 415 763 1238 2548 421 781 1268 2609
L No Redemption 315 763 1238 2548 321 781 1268 2609
Y 116 362 628 1386 132 412 713 1568
Z 116 362 628 1386 132 412 713 1568
</TABLE>
Balanced Portfolio*
<TABLE>
<CAPTION>
Current Agreement New Agreement
Number of Years 1 3 5 10 1 3 5 10
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A 628 897 1187 2011 632 909 1207 2053
B Redemption 710 949 1214 2205 715 964 1239 2255
B No Redemption 210 649 1114 2205 215 664 1139 2255
L Redemption 408 742 1202 2476 408 745 1207 2486
L No Redemption 308 742 1202 2476 308 745 1207 2486
Y 109 340 590 1306 113 353 612 1352
Z 109 340 590 1306 113 353 612 1352
</TABLE>
Conservative Portfolio*
<TABLE>
<CAPTION>
Current Agreement New Agreement
Number of Years 1 3 5 10 1 3 5 10
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A 578 849 1141 1969 582 861 1161 2011
B Redemption 635 873 1086 2005 640 888 1111 2056
B No Redemption 185 573 985 2005 190 588 1011 2056
L Redemption 378 652 1050 2163 398 712 1152 2373
L No Redemption 278 652 1050 2163 298 712 1152 2373
Y 109 340 590 1306 113 353 612 1352
Z 109 340 590 1306 113 353 612 1352
</TABLE>
11
<PAGE>
Income Portfolio*
<TABLE>
<CAPTION>
Current Agreement New Agreement
Number of Years 1 3 5 10 1 3 5 10
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A 574 835 1116 1915 579 852 1146 1979
B Redemption 630 857 1059 1951 639 885 1106 2040
B No Redemption 180 557 959 1951 189 585 1006 2040
L Redemption 373 636 1024 2110 393 697 1126 2321
L No Redemption 273 636 1024 2110 293 697 1126 2321
Y 104 325 563 1248 110 343 595 1317
Z 104 325 563 1248 110 343 595 1317
</TABLE>
---------------
* The examples assume:
o You invest $10,000 for the period shown
o Your investment has a 5% return each year
o You reinvest all distributions and dividends without a sales charge
o The Portfolios' operating expenses stay the same
o The expenses of the underlying funds are reflected
Board of Directors Evaluation
The Board of Directors met on October 10, 2000 to consider SSB Citi's
proposal to restructure the advisory fees and to increase total expenses of each
Portfolio.
The Board of Directors reviewed the circumstances surrounding the
proposal. SSB Citi informed the Board that the current advisory fee was
structured as a bundled, or all-in, advisory fee. SSB Citi explained that it
paid virtually all of the Portfolios' other expenses (other than the fees
payable under the plan adopted pursuant to Rule 12b-1 under the 1940 Act and
extraordinary expenses) out of this fee. Therefore, any increases in such
expenses were paid directly by SSB Citi.
SSB Citi noted that the costs of certain of the services paid out of the
advisory fee, in particular the sub-transfer agency fees, as described above,
have been increasing beyond what the Board of Directors or SSB Citi contemplated
at the time the all-in fee structure was established. These costs have been
increasing largely because PFSSS has been servicing a higher than anticipated
number of small accounts and because of its intention to provide enhanced
transfer agency services. The Board was informed that because shareholders would
continue to need and desire enhanced services, there would, in all likelihood,
be further service enhancements with possible accompanying increases in
expenses. Thus, in order to permit the Portfolios to remain competitive and to
allow the Portfolios to provide their shareholders with enhanced services on the
same basis provided by other funds, a restructuring of the advisory fee for each
Portfolio was proposed.
SSB Citi described the sub-transfer agency enhancements PFSSS planned to
provide. These include, among other things, on-line and telephone account access
and improved shareholder communications, including integrated account statements
and year-end tax statements. Currently, some of the Fund's shareholders already
benefit from such extensive services. SSB Citi explained that it was necessary
to
12
<PAGE>
incur higher transfer agency costs in order to provide comparable services to
all investors in the Portfolios.
SSB Citi reviewed the proposed fee structure and expense increase with the
Board of Directors. SSB Citi explained its proposal to lower the current
advisory fee from 0.35% of each Portfolio's average daily net assets to 0.20% of
each Portfolio's average daily net assets. SSB Citi further explained to the
Board that, although the advisory fee will be lower following the restructuring,
the Portfolios will pay higher total operating expenses because all other
operating expenses previously paid by SSB Citi will be borne directly by the
Portfolios.
SSB Citi agreed that each Portfolio's total expenses would be subject to a
voluntary fee waiver and expense reimbursement in order to maintain an expense
cap on each of the Portfolios that is no more than 0.20% higher than current
expenses for each Portfolio. SSB Citi also agreed that this expense cap would
not be changed in the future without the prior approval of the Board of
Directors. The New Agreements will be subject to termination by the Board of
Directors on 60 days' prior written notice.
The Board was reminded that, at its meeting on June 13, 2000, it was
furnished with a study prepared by SSB Citi setting forth its revenues, expenses
and resulting profitability in connection with its management of the Portfolios.
At its October 10, 2000 meeting, the Board was given a competitive fund of funds
expense analysis comparing the Portfolios' expected and proposed expenses to
those borne by a representative list of investment companies with structures
similar to the Portfolios. The Board also received information indicating that
the transfer agency fees would differ from class to class depending upon the
services required by each class. It was explained to the Board that the
differences in transfer agency fees would be based on the complexity and level
of services to be received by each class and that no class would subsidize the
expenses of another class. It was further explained that classes of shares with
large numbers of small accounts would be subject to higher expense ratios, but
that this would be mitigated by the proposed cap on expenses proposed by SSB
Citi. Finally, the Board received a comparison of the current transfer agency
fees paid by SSB Citi under the Current Agreements, the proposed transfer agency
fees to be paid by the Portfolios under the New Agreements and the industry
average transfer agency fees. SSB Citi observed that both the current transfer
agency fees and the proposed transfer agency fees are lower than the industry
average.
In their review, the Board of Directors considered, among other factors,
the reasons presented by SSB Citi for the proposed advisory fee restructuring
and increase, including the desirability of providing enhanced services to all
shareholders and, in particular, the enhanced services to be provided by PFSSS;
the nature, quality and scope of the services provided to the Portfolios by SSB
Citi; the importance of supporting quality, long-term service by SSB Citi to
achieve solid investment performance and efficient fund management and
operations; the data as to revenues, expenses and profitability of SSB Citi, the
competitive fund of funds analysis and the comparison of
13
<PAGE>
the current and proposed transfer agency fees with transfer agency fees charged
by comparable funds; whether it would be appropriate for each class of shares to
bear the costs specifically attributable to services rendered for the benefit of
shareholders of that class; the fact that Portfolio expenses will be subject to
a voluntary expense cap; the effect of the proposed advisory fee restructuring
and increase on the expense ratio of the Portfolios; and SSB Citi's overall
profitability and financial resources.
Based on the information provided to the Board of Directors and the
factors discussed above, a majority of the Board of Directors, including a
majority of the Independent Directors, approved the proposed advisory fee
restructuring, including an increase in total expenses, and the New Agreements,
subject to shareholder approval.
Description of SSB Citi
SSB Citi acts as investment adviser to the Portfolios pursuant to a
separate Current Agreement with each Portfolio. Pursuant to each of those
Agreements, SSB Citi determines how each Portfolio's assets are 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 makes
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 Company, maintains office facilities for the
Company, furnishes the Company with statistical and research data, clerical help
and accounting, data processing, bookkeeping, internal auditing and legal
services and certain other services required by the Company 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.
SSB Citi (successor to SSBC Fund Management Inc.) was organized as a
Delaware corporation on March 12, 1968 and converted to a Delaware limited
liability company in 1999. Its principal business address is 7 World Trade
Center, New York, New York, 10048. SSB Citi is a wholly-owned subsidiary of
Holdings which is also located at 7 World Trade Center, New York, New York,
10048. Holdings is a wholly-owned subsidiary of Citigroup, which is located at 1
Citicorp Center, 153 East 53rd Street, New York, New York 10028.
The names, titles and principal occupations of the current directors and
executive officers of SSB Citi are set forth below:
HEATH B. MCLENDON. The principal occupation of Mr. McLendon is to serve as
Chairman or Co-Chairman of investment companies managed by affiliates of
Citigroup and as President and Chief Executive Officer of SSB Citi.
14
<PAGE>
A. GEORGE SAKS. The principal occupation of Mr. Saks is to serve as
Director of SSB Citi and Managing Director and Special Counsel of Salomon Smith
Barney.
LEWIS E. DAIDONE. The principal occupation of Mr. Daidone is to serve as
Executive Vice President and Treasurer of 61 investment companies associated
with Citigroup, Managing Director of Salomon Smith Barney and Director and
Senior Vice President of SSB Citi.
MICHAEL J. DAY. The principal occupation of Mr. Day is to serve as
Treasurer of SSB Citi and Managing Director of Salomon Smith Barney.
VIRGIL H. CUMMING. The principal occupation of Mr. Cumming is to serve as
Chief Investment Officer of SSB Citi.
CHRISTINA T. SYDOR. The principal occupation of Ms. Sydor is to serve as
Managing Director of Salomon Smith Barney, General Counsel and Secretary of SSB
Citi and Secretary of 61 investment companies associated with Citigroup.
JEFFREY HILLER. The principal occupation of Mr. Hiller is to serve as
Chief Compliance Officer of SSB Citi.
R. JAY GERKEN. The principal occupation of Mr. Gerken is to serve as
Managing Director of Salomon Smith Barney and portfolio manager of four
investment companies associated with Citigroup, including the Company's
Portfolios.
With the exception of Heath B. McLendon, Lewis E. Daidone, Christina T.
Sydor and R. Jay Gerken, no other officers or Directors of the Company are
officers, directors or employees of SSB Citi.
Portfolio Manager
R. Jay Gerken, a Managing Director of Salomon Smith Barney, has been
responsible 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. A team of investment professionals currently
assists Mr. Gerken in the management of the Portfolios. If the shareholders
approve the change in management fees, Mr. Gerken will continue to manage the
Portfolios in accordance with their investment objectives.
Other Information
Salomon Smith Barney, located at 7 World Trade Center, New York, New York
10048, serves as the Company's principal underwriter pursuant to a written
agreement dated June 5, 2000. For the fiscal year ended January 31, 2000, the
Portfolios paid no commissions to Salomon Smith Barney, an "affiliated broker"
of the Portfolios as defined in Schedule 14A of the Securities Exchange Act of
1934.
15
<PAGE>
Required Vote
Approval of the proposal requires the affirmative vote of a "majority of
the outstanding voting securities," as defined above, of each class of each
Portfolio. The Board of Directors of the Company, including the Independent
Directors, recommend that the shareholders of the Portfolios vote in favor of
the proposal.
Issued and Outstanding Shares
As of the close of business on the Record Date, the following shares were
issued and outstanding for each Portfolio:
<TABLE>
<CAPTION>
Portfolio Class A Class B Class L Class Y Class Z
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Global Portfolio 1,647,242.508 1,239,809.768 109,720.148 - 0 - - 0 -
High Growth Portfolio 27,457,270.990 22,982,571.997 3,096,059.747 1.009 - 0 -
Growth Portfolio 29,724,053.654 31,517,213.931 3,830,343.661 1.012 - 0 -
Balanced Portfolio 17,455,739.149 17,865,562.552 2,719,819.471 1.070 44,812.869
Conservative Portfolio 5,485,734.411 4,520,855.909 623,444.143 1.014 - 0 -
Income Portfolio 2,545,651.582 2,183,559.736 319,732.025 1.022 - 0 -
</TABLE>
16
<PAGE>
ADDITIONAL INFORMATION
Proxy Solicitation
Proxy solicitations will be made primarily by mail, but proxy
solicitations also may be made by telephone, telegraph, other electronic means
or personal interviews conducted by officers and employees of the Company;
Salomon Smith Barney, the Company's principal underwriter; Citi Fiduciary Trust
Company ("Citi"), transfer agent of the Company; and/or PFPC Global Fund
Services ("PFPC") or PFSSS, sub-transfer agents of the Company. Such
representatives and employees will not receive additional compensation for
solicitation activities. Salomon Smith Barney has retained the services of PFPC
to assist in the solicitation of proxies. The aggregate cost of solicitation of
the shareholders of the Portfolio is expected to be approximately $730,000. The
costs of the proxy solicitation and expenses incurred in connection with the
preparation of this Proxy Statement and its enclosures will be borne by the
Portfolios. The Portfolios also will reimburse expenses of forwarding
solicitation materials to beneficial owners of shares of the Portfolios.
If the Portfolios record votes by telephone or on the Internet, they will
use procedures designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions, and to confirm that their instructions have been properly
recorded. Proxies voted by telephone or on the Internet may be revoked at any
time before they are voted in the same manner that proxies voted by mail may be
revoked.
Proposals of Shareholders
The Company does not hold regular shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a shareholder
meeting subsequent to the Special Meeting, if any, should send their written
proposals to the Secretary of the Company at the address set forth on the cover
of this Proxy Statement. Proposals must be received within a reasonable time
before the solicitation of proxies for such Special Meeting. The timely
submission of a proposal does not guarantee its inclusion.
Shareholders' Request for Special Meeting
Special meetings of shareholders for any purpose or purposes, unless
otherwise prescribed by statute or by the Company's Charter, may be held at any
place within the United States and may be called at any time at the request in
writing of shareholders entitled to cast at least 10% of the votes entitled to
be cast at the meeting upon payment by such shareholders to the Company of the
reasonably estimated cost of preparing and mailing a notice of the meeting
(which estimated cost shall be provided to such shareholders by the Secretary of
the Company). A written request shall state the purpose or purposes of the
proposed meeting.
17
<PAGE>
Other Matters To Come Before the Special Meeting
The Company does not intend to present any other business at the Special
Meeting, nor is it aware that any shareholder intends to do so. If, however, any
other matters are properly brought before the Special Meeting, the persons named
in the accompanying proxy card will vote thereon in accordance with their
judgment.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE SPECIAL MEETING ARE THEREFORE URGED TO COMPLETE, SIGN, DATE
AND RETURN THE PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE (UNLESS THEY ARE VOTING BY TELEPHONE OR THROUGH THE INTERNET).
By Order of the Board of Directors,
Christina T. Sydor
Secretary
18
<PAGE>
ANNEX A
Conservative Portfolio - Class A
Travelers Insurance Company
Separate Account QPN 401(k)
One Tower Square
Hartford, CT 06183
Attn: Roger Ferland
owned 325,707.415 shares (5.9270%)
Income Portfolio - Class L
Frontier Trust Company as Trustee
Citizens State Bank Salary Savings
111 Monument Circle, Suite 3100
Indianapolis, IN 46204
Owned 27,048.635 (8.4468%)
Rita Diana
SSB IRA Custodian
108 Palmetto Lane Road
Milford, PA 18337
Owned 18,406.522 (5.7480%)
Balanced Portfolio - Class A
Travelers Insurance Company
Separate Account QPN 401(k)
One Tower Square
Hartford, CT 06183
Attn: Roger Ferland
owned 1,019,304.315 shares (5.8346%)
19
<PAGE>
EXHIBIT A
SMITH BARNEY ALLOCATION SERIES INC.
__________ PORTFOLIO
ASSET ALLOCATION AND ADMINISTRATION AGREEMENT
AGREEMENT, made this __ day of January 2001 between Smith Barney
Allocation Series Inc., a Maryland corporation (the "Fund"), with respect to the
_______ Portfolio (the "Portfolio") and SSB Citi Fund Management LLC, a Delaware
limited liability company ("SSB Citi").
W I T N E S S E T H:
WHEREAS, the Portfolio is a series of the Fund which will operate as an
open-end management investment company registered under the Investment Company
Act of 1940, as amended, and the rules thereunder (the "1940 Act"); and
WHEREAS, the Fund has been organized for the purpose of investing its
assets in (a) open-end management investment companies or series thereof that
are or will be part of a group of investment companies that holds itself out to
investors as related companies for purposes of investment and investor services
(i) for which Salomon Smith Barney Inc. ("Salomon Smith Barney") or any entity
controlling, controlled by, or under common control with Salomon Smith Barney
now or in the future acts as principal underwriter or (ii) for which Salomon
Smith Barney or SSB Citi or any entity controlling, controlled by, or under
common control with Salomon Smith Barney or SSB Citi now or in the future acts
as investment adviser (collectively, the "Underlying Smith Barney Funds") and
(b) repurchase agreements, and the Fund desires to avail itself of the
experience, sources of information, advice, assistance and facilities available
to SSB Citi and to have SSB Citi perform for it various asset allocation and
administration services; and SSB Citi is willing to furnish such advice and
services on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed as follows:
1. The Fund on behalf of the Portfolio hereby appoints SSB Citi to act as
investment adviser to the Portfolio on the terms set forth in this Agreement.
SSB Citi accepts such appointment and agrees to render the services herein
described, for the compensation herein provided.
2. Subject to the supervision of the Board of Directors of the Fund (the
"Board"), SSB Citi shall manage the investment of the Portfolio's assets and
provide investment research advice and supervision of the Portfolio's
investments in accordance with the Portfolio's investment objective, policies
and restrictions as stated in the Fund's Registration Statement under the 1940
Act as it may be amended from time to time (the "Registration Statement"), and
subject to the following understandings:
20
<PAGE>
(a) SSB Citi shall provide supervision of the Portfolio's investments and
determine from time to time the investments or securities that will be
purchased, retained or sold by the Portfolio. SSB Citi shall determine the
percentage of the Portfolio's assets invested from time to time in (i)
each Underlying Smith Barney Fund selected by the Board pursuant to the
investment objective and policies of the Portfolio as set forth in the
prospectus forming part of the Registration Statement and (ii) repurchase
agreements. SSB Citi shall allocate investments for the Portfolio among
the Underlying Smith Barney Funds and repurchase agreements based on
factors it considers relevant, including its outlook for the economy,
financial markets and the relative performance of the Underlying Smith
Barney Funds. The allocation among the Underlying Smith Barney Funds shall
be made within investment ranges established by the Board, which will
designate minimum and maximum percentages for each of the Underlying Smith
Barney Funds.
SSB Citi will also make recommendations to the Board concerning changes to
(i) the Underlying Smith Barney Funds in which the Portfolio may invest,
(ii) the percentage range of assets that may be invested by the Portfolio
in any one Underlying Smith Barney Fund and (iii) the percentage range of
assets of the Portfolio that may be invested in equity funds and fixed
income funds (including money market funds).
(b) SSB Citi shall use its best judgment in the performance of its duties
under this Agreement.
(c) SSB Citi undertakes to perform its duties and obligations under this
Agreement in conformity with the Registration Statement, with the
requirements of the 1940 Act and all other applicable Federal and state
laws and regulations and with the instructions and directions of the
Board.
(d) SSB Citi shall maintain books and records with respect to the Portfolio's
investment transactions and such other books and records required to be
maintained by SSB Citi pursuant to the Rules of the Securities and
Exchange Commission ("SEC") under the 1940 Act and SSB Citi shall render
to the Board such periodic and special reports as the Board may reasonably
request. SSB Citi agrees that all books and records that it maintains for
the Portfolio or the Fund are the property of the Fund and it will
surrender promptly to the Fund on behalf of the Portfolio any of such
books and records upon the Fund's request.
(e) SSB Citi will (i) maintain office facilities for the Fund, (ii) furnish
the Portfolio with statistical and research data, clerical help and
accounting, data processing, bookkeeping, internal auditing and legal
services and certain other services required by the Fund and the
Portfolio, (iii) prepare reports to each Portfolio's shareholders and (iv)
prepare tax returns, reports to and filings with the SEC and state Blue
Sky authorities.
21
<PAGE>
3. SSB Citi will bear all of the expenses of its employees and overhead in
connection with its duties under this Agreement.
4. For the services provided and the expenses assumed pursuant to this
Agreement, the Fund will pay to SSB Citi out of the assets of the Portfolio a
monthly fee in arrears equal to 0.20% per annum of the Portfolio's average daily
net assets during the month.
5. SSB Citi shall authorize and permit any of its directors, officers and
employees who may be elected as directors or officers of the Fund to serve in
the capacities in which they are elected.
6. SSB Citi shall not be liable for any error of judgment or for any loss
suffered by the Fund in connection with the matters to which this Agreement
relates, except a loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3) of
the 1940 Act) or a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
7. This Agreement shall commence January __, 2001 and shall continue in
effect for a period of two years from its effective date, and if not sooner
terminated, will continue in effect for successive periods of 12 months
thereafter, provided that each continuance is specifically approved at least
annually in conformity with the requirements of the 1940 Act. This Agreement may
be terminated as a whole at any time by the Fund on behalf of the Portfolio,
without the payment of any penalty, upon the vote of a majority of the Board or
the vote of a majority of the outstanding voting securities (as defined in the
1940 Act) of the Portfolio, or by SSB Citi, on 60 days' written notice by either
party to the other. This Agreement shall terminate automatically in the event of
its assignment (as defined in the 1940 Act).
8. Nothing in this Agreement shall limit or restrict the right of any of
SSB Citi's directors, officers, or employees who may also be a director, officer
or employee of the Fund to engage in any other business or to devote his or her
time and attention in part to management or other aspects of any business,
whether of a similar or a dissimilar nature, nor limit or restrict the Manager's
right to engage in any other business or to render services of any kind to any
other corporation, firm, individual or association. The investment management
services provided by SSB Citi hereunder are not to be deemed exclusive, and SSB
Citi shall be free to render similar services to others.
9. Any notice or other communication required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid, (i) to SSB Citi at 7 World Trade Center, New York, New York
10048, Attention: Secretary; or (ii) to the Fund at 388 Greenwich Street, New
York, New York 10013, Attention: Secretary.
22
<PAGE>
10. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to the conflict of law
rules thereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
SMITH BARNEY ALLOCATION SERIES INC. SSB CITI FUND MANAGEMENT LLC
on behalf of the ___________ Portfolio
By:___________________________ By:___________________________
Heath B. McLendon Heath B. McLendon
Chairman of the Board President
Attest: ________________________ Attest: ________________________
Christina T. Sydor Christina T. Sydor
Secretary General Counsel
23
FORM OF PROXY CARD
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
..................................................................
..................................................................
..............................
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
Smith Barney Allocation Series Inc.
_______ Portfolio
Class ____
This Proxy is Solicited on Behalf
of the Directors of Smith Barney
Allocation Series Inc.
The undersigned holder of shares of Class ____ of the _______
Portfolio (the "Portfolio"), a portfolio of the Smith Barney
Allocation Series Inc., a Maryland corporation, hereby appoints
Heath B. McLendon, Christina T. Sydor, and Barbara J. Allen, and
each of them, with full power of substitution, attorneys and
proxies for the undersigned to vote all shares of the Portfolio
that the undersigned is entitled in any capacity to vote at the
special meeting of shareholders of the Portfolio and at any and
all adjournments or postponements thereof (the "Special Meeting")
to be held at the offices of the investment adviser for the
Portfolio, SSB Citi Fund Management LLC, Downtown Conference
Center, Lobby, 7 World Trade Center, New York, New York, 10048 on
January 23, 2001 at 9:00 A.M. Eastern time. The undersigned
hereby acknowledges receipt of the Notice of Special Meeting and
Proxy Statement dated December 1, 2000 and hereby instructs said
attorneys and proxies to vote said shares as indicated hereon. In
their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Special Meeting. A
majority of the proxies present and acting at the Special Meeting
in person or by substitute (or, if only one shall be so present,
then that one) shall have and may exercise all the power and
authority of said proxies hereunder. The undersigned hereby
revokes any proxy previously given.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at
hand.
2) Call 1-800-___-____.
3) Enter the [__-digit] control number set forth on the Proxy
card and follow the simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at
hand.
2) Go to Website www.__________.com.
3) Enter the [__-digit] control number set forth on the Proxy
card and follow the simple instructions.
DO NOT RETURN YOUR PROXY CARD
IF YOU VOTE BY TELEPHONE OR INTERNET.
PLEASE SIGN, DATE AND
RETURN PROMPTLY IN
THE ENCLOSED ENVELOPE
(UNLESS VOTING BY
TELEPHONE OR THE
INTERNET)
NOTE: PLEASE SIGN
EXACTLY AS YOUR NAME
APPEARS ON THIS PROXY.
IF JOINT OWNERS, EITHER
MAY SIGN THIS PROXY.
WHEN SIGNING AS
ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE,
GUARDIAN OR CORPORATE
OFFICER, PLEASE GIVE
YOUR FULL TITLE.
DATE:
________________________
__________________
________________________
________________________
________________________
________________________
(Signature(s), Title(s),
if applicable)
VOTE THIS PROXY CARD TODAY!
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS
(Please Detach at Perforation Before Mailing)
..................................................................
..................................................................
..............................
Please indicate your vote by an "X" in the appropriate box below.
This proxy, if properly executed, will be voted in the manner
directed herein by the
undersigned
shareholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
PROPOSAL.
All ABSTAIN votes will be counted in determining the existence of
a quorum but as votes
AGAINST the proposal.
Please refer to the Proxy Statement for a discussion of the
Proposal.
1. APPROVAL OF A NEW ASSET ALLOCATION AND
ADMINISTRATION AGREEMENT WITH SSB CITI
FUND MANAGEMENT LLC ON BEHALF OF CLASS ___
OF THE PORTFOLIO.
FOR AGAINST ABSTAIN
Please sign on the reverse side. XXX