Registration No. 2-84199
811-3762
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Form N 1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No.
[X] Post-Effective Amendment No. 24
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X] Amendment No. 25
SMITH BARNEY AGGRESSIVE GROWTH FUND INC.
(Exact name of Registrant as Specified in Charter)
7 World Trade Center, New York, New York 10048
(Address of Principal Executive Offices) (Zip Code)
(212) 783-0693
(Registrant's Telephone Number, including Area Code)
Christina T. Sydor
Smith Barney Aggressive Growth Fund Inc.
7 World Trade Center
New York, New York 10048
(Name and Address of Agent for Service)
Continuous
(Approximate Date of Proposed Offering)
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to
Rule 485(b)
[XXX] on December 29, 2000 pursuant to Rule
485(b)
[ ] 60 days after filing pursuant to paragraph
(a)(1) of Rule 485(a)
[ ] On (date) pursuant to paragraph (a)(1) of
Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2)
of Rule 485
[ ] On (date) pursuant to paragraph (a)(2) 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.
Title of Securities being Registered: Common Stock
PART A - PROSPECTUS
<PAGE>
[SB] Smith Barney
[MF] Mutual Funds
Your Serious Money. Professionally Managed./SM/
P R O S P E C T U S
[GRAPHIC]
Aggressive
Growth
Fund Inc.
Class A, B, L and Y Shares
--------------------------------------------------------------------------------
December 29, 2000
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INVESTMENT PRODUCTS: NOT FDIC INSURED * NO BANK GUARANTEE * MAY LOSE VALUE
--------------------------------------------------------------------------------
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.
<PAGE>
Aggressive Growth Fund Inc.
Contents
<TABLE>
<S> <C>
Investments, risks and performance.......................................... 2
More on the fund's investments.............................................. 6
Management.................................................................. 6
Choosing a class of shares to buy........................................... 8
Comparing the fund's classes................................................ 9
Sales charge................................................................ 10
More about deferred sales charges........................................... 13
Buying shares............................................................... 14
Exchanging shares........................................................... 15
Redeeming shares............................................................ 16
Other things to know about share transactions............................... 19
Distributions, dividends and taxes.......................................... 21
Share price................................................................. 22
Financial highlights........................................................ 23
</TABLE>
Smith Barney Mutual Funds
1
<PAGE>
Investments, risks and performance
Investment objective
The fund seeks capital appreciation.
Principal Investment Strategies
Key investments The fund invests primarily in common stocks of companies that
the manager believes are experiencing, or will experience, growth in earnings
that exceeds the average rate of earnings growth of the companies which com-
prise the S&P 500 Index. The fund may invest in the securities of large, well-
known companies which offer prospects of long-term earnings growth. However,
because higher earnings growth rates are often achieved by small to medium-
sized companies, a significant portion of the fund's assets are invested in the
securities of such companies.
Selection process The manager emphasizes individual security selection while
diversifying the fund's investments across industries, which may help to reduce
risk. The manager focuses primarily, but not exclusively, on emerging growth
companies that have passed their "start-up" phase and show positive earnings
and the prospect of achieving significant profit gains beginning in the two to
three years after the fund acquires their stocks. When evaluating an individual
stock, the manager considers whether the company may benefit from:
. new technologies, products or services
. new cost reducing measures
. changes in management
. favorable changes in government regulations
Aggressive Growth Fund Inc.
2
<PAGE>
Principal risks of investing in the fund
Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if:
. Stock prices decline generally
. Small or medium capitalization companies fall out of favor with investors
. The manager's judgment about the attractiveness, growth prospects or poten-
tial appreciation of a particular stock proves to be incorrect
. A particular product or service developed by a company in which the fund
invests is unsuccessful, the company does not meet earnings expectations or
other events depress the value of the company's stock
Compared to mutual funds that focus only on large capitalization companies, the
fund's share price may be more volatile because the fund also invests a signif-
icant portion of its assets in small and medium capitalization companies.
Compared to large capitalization companies, small and medium capitalization
companies are likely to have:
. More limited product lines
. Fewer capital resources
. More limited management depth
Further, securities of small and medium capitalization companies are more
likely to:
. Experience sharper swings in market values
. Be harder to sell at times and at prices the manager believes appropriate
. Offer greater potential for gains and losses
Who may want to invest The fund may be an appropriate investment if you:
. Are seeking to participate in the long-term growth potential of small and
medium capitalization companies
. Currently have exposure to the stocks commonly held by large capitalization
and value oriented mutual funds and wish to broaden your investment portfolio
. Are willing to accept the risks of the stock market and the special risks and
potential long-term rewards of investing in smaller companies with more lim-
ited track records
Smith Barney Mutual Funds
3
<PAGE>
Risk return bar chart
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. Past performance does not neces-
sarily indicate how the fund will perform in the future.
The bar chart shows the performance of the fund's Class A shares for each of
the past 10 calendar years. Class B, L and Y shares would have different per-
formance because of their different expenses. The performance information in
the chart does not reflect sales charges, which would reduce your return.
Total Return for Class A Shares
[BAR CHART]
1990 (5.97)%
1991 42.30%
1992 2.03%
1993 21.10%
1994 (1.65)%
1995 35.73%
1996 2.72%
1997 28.44%
1998 35.08%
1999 63.74%
Calendar years ended December 31
Quarterly returns:
Highest: 37.54% in 4th quarter 1998; Lowest: (25.47)% in 3rd quarter 1990 Year
to date: 26.61% through 9/30/00
Risk return table
This table indicates the risks of investing in the fund by comparing the aver-
age annual total return of each class for the periods shown with that of the
Russell 2500 Growth Index (the "Russell Index"), a broad-based unmanaged index
of stocks of small to medium capitalization companies. This table assumes impo-
sition of the maximum sales charge applicable to the class, redemption of
shares at the end of the period, and reinvestment of distributions and divi-
dends.
Average Annual Total Returns
Calendar Years Ended December 31, 1999
<TABLE>
<CAPTION>
Class 1 year 5 years 10 years Since inception Inception date
<S> <C> <C> <C> <C> <C>
A 55.55% 30.35% 19.86% n/a 10/24/83
B 57.39% 30.57% n/a 24.57% 11/6/92
L 59.87% 30.45% n/a 26.01% 5/13/93
Y 64.30% n/a n/a 31.26%+ 10/12/95
Russell Index 55.48% 23.1% 16.25% n/a 12/31/89
</TABLE>
+ Performance begins 1/31/96 (for explanation see footnote 2 and footnote* to
Financial highlights, Class Y shares on page 25)
Aggressive Growth Fund Inc.
4
<PAGE>
Fee table
This table sets forth the fees and expenses you will pay if you invest in fund
shares.
Shareholder fees
<TABLE>
<CAPTION>
(fees paid directly from your investment) Class A Class B Class L Class Y
<S> <C> <C> <C> <C> <C>
Maximum sales charge (load) imposed on
purchases
(as a % of offering price) 5.00% None 1.00% None
Maximum deferred sales charge (load) (as a
% of the lower of net asset value at
purchase or redemption) None* 5.00% 1.00% None
Annual fund operating expenses
<CAPTION>
(expenses deducted from fund assets) Class A Class B Class L Class Y
<S> <C> <C> <C> <C> <C>
Management fee 0.80% 0.80% 0.80% 0.80%
Distribution and service (12b-1) fees 0.25% 1.00% 1.00% None
Other expenses 0.09% 0.14% 0.14% 0.02%
----- ----- ----- -----
Total annual fund operating expenses 1.14% 1.94% 1.94% 0.82%
===== ===== ===== =====
</TABLE>
*You may buy Class A shares in amounts of $1,000,000 or more at net asset value
(without an initial sales charge) but if you redeem those shares within 12
months of their purchase, you will pay a deferred sales charge of 1.00%.
Example
This example helps you compare the costs of investing in the fund with the
costs of investing in other mutual funds. Your actual costs may be higher or
lower. The example assumes:
. You invest $10,000 in the fund for the period shown
. Your investment has a 5% return each year
. You reinvest all distributions and dividends without a sales charge
. The fund's operating expenses remain the same
Number of years you own your shares
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
Class A (with or without redemption) $610 $844 $1,096 $1,817
Class B (redemption at end of period) $647 $909 $1,147 $2,057
Class B (no redemption) $197 $609 $1,047 $2,057
Class L (redemption at end of period) $395 $703 $1,137 $2,342
Class L (no redemption) $295 $703 $1,137 $2,342
Class Y (with or without redemption) $ 84 $262 $ 455 $1,014
</TABLE>
Smith Barney Mutual Funds
5
<PAGE>
More on the fund's investments
Foreign investments The fund may invest up to 10% of its assets (at the time of
investment) in foreign securities. The fund may invest directly in foreign
issuers or invest in depositary receipts. The fund's investments in foreign
securities may involve greater risk than investments in securities of U.S.
issuers. Because the value of a depositary receipt is dependent upon the market
price of an underlying foreign security, depositary receipts are subject to
most of the risk associated with investing in foreign securities directly. For-
eign countries generally have markets that are less liquid and more volatile
than markets in the U.S. In some foreign countries, less information is avail-
able about foreign issuers and markets because of less rigorous accounting and
regulatory standards than in the U.S. Currency fluctuations could erase invest-
ment gains or add to investment losses.
Defensive investing The fund may depart from its principal investment strate-
gies in response to adverse market, economic or political conditions by taking
temporary defensive positions in all types of money market and short-term debt
securities. If the fund takes a temporary defensive position, it may be unable
to achieve its investment goal.
Management
Manager The fund's investment adviser and administrator is SSB Citi Fund
Management LLC (successor to SSBC Fund Management Inc.) (the "manager"), an
affiliate of Salomon Smith Barney Inc. ("Salomon Smith Barney"). The manager's
address is 7 World Trade Center, New York, New York 10048. The manager selects
the fund's investments and oversees its 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.
Richard Freeman, investment officer of the manager and managing director of
Salomon Smith Barney, has been responsible for the day-to-day management of the
fund's portfolio since its inception in October 1983. Mr. Freeman has more than
25 years of securities business experience, 17 years of which has been with the
manager or its predecessors.
Management fees During the fiscal year ended August 31, 2000, the manager
received a management fee and administrative fee equal to 0.60% and 0.20%,
respectively, of the fund's average daily net assets.
Aggressive Growth Fund Inc.
6
<PAGE>
Distribution plan The fund has adopted a Rule 12b-1 distribution plan for its
Class A, B and L shares. Under the plan, the fund pays distribution and service
fees. These fees are an ongoing expense and, over time, may cost you more than
other types of sales charges.
In addition, a distributor may make payments for distribution and/or share-
holder servicing activities out of its past profits and other available sourc-
es. A distributor may also make payments for marketing, promotional or related
expenses to dealers. The amount of these payments is determined by the distrib-
utor and may be substantial. The manager or an affiliate may make similar pay-
ments under similar arrangements.
Transfer agent and shareholder servicing agent Citi Fiduciary Trust Company
serves as the fund's transfer agent and shareholder servicing agent (the
"transfer agent"). The transfer agent has entered into sub-transfer agency and
services agreements with PFPC Global Fund Services and PFS Shareholder Services
to serve as the fund's sub-transfer agents (the "sub-transfer agents"). The
sub-transfer agents will perform certain shareholder record keeping and
accounting services.
Smith Barney Mutual Funds
7
<PAGE>
Choosing a class of shares to buy
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 or in large amounts, buying Class A shares
may help you reduce sales charges and ongoing expenses.
. For Class B shares, all of your purchase amount and, for Class L shares, more
of your purchase amount (compared to Class A shares) will be immediately
invested. This may help offset the higher expenses of Class B and Class L
shares, but only if the fund performs well.
. Class L shares have a shorter deferred sales charge period than Class B
shares. However, because Class B shares convert to Class A shares, and Class
L shares do not, Class B shares may be more attractive to long term invest-
ors.
You may buy shares from:
. A broker-dealer, financial intermediary, financial institution or a
distributor's financial consultants (each called a "Service Agent")
. The fund, but only if you are investing through certain qualified plans or
Service Agents
All classes of shares are not available through all Service Agents. You should
contact your Service Agent for further information.
Investment minimums Minimum initial and additional investment amounts vary
depending on the class of shares you buy and the nature of your investment
account.
<TABLE>
<CAPTION>
Initial Additional
Classes A, B, L Class Y All Classes
<S> <C> <C> <C>
General $1,000 $15 million $50
IRAs, Self Employed Retirement Plans,
Uniform Gift to Minor Accounts $250 $15 million $50
Qualified Retirement Plans* $25 $15 million $25
Simple IRAs $1 n/a $1
Monthly Systematic Investment Plans $25 n/a $25
Quarterly Systematic Investment Plans $50 n/a $50
</TABLE>
*Qualified Retirement Plans are retirement plans qualified under Section
403(b)(7) or Section 401(a) of the Internal Revenue Code, including 401(k)
plans
Aggressive Growth Fund Inc.
8
<PAGE>
Comparing the fund's classes
Your Service Agent can help you decide which class meets your goals. The Serv-
ice Agent may receive different compensation depending upon which class you
choose.
<TABLE>
<CAPTION>
Class A Class B Class L Class Y
<S> <C> <C> <C> <C>
Key features .Initial .No initial .Initial .No initial
sales sales sales or
charge charge charge is deferred
.You may .Deferred lower than sales
qualify sales Class A charge
for reduc- charge .Deferred .Must
tion or declines sales invest at
waiver of over time charge for least $15
initial .Converts only 1 million
sales to Class A year .Lower
charge after 8 .Does not annual
.Lower years convert to expenses
annual .Higher Class A than the
expenses annual .Higher other
than Class expenses annual classes
B and than expenses
Class L Class A than
Class A
------------------------------------------------------------------------
Initial sales charge Up to None 1.00% None
5.00%;
reduced for
large pur-
chases and
waived for
certain
investors.
No charge
for pur-
chases of
$1,000,000
or more
------------------------------------------------------------------------
Deferred sales charge 1% on pur- Up to 5% 1% if you None
chases of charged redeem
$1,000,000 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
deferred
sales
charge
after
6 years
------------------------------------------------------------------------
Annual distribution and 0.25% of 1% of aver- 1% of aver- None
service fees average age daily age daily
daily net net assets net assets
assets
------------------------------------------------------------------------
Exchange privilege* Class A Class B Class L Class Y
shares of shares of shares of shares of
most Smith most Smith most Smith most Smith
Barney Barney Barney Barney
funds funds funds funds
------------------------------------------------------------------------
</TABLE>
*Ask your Service Agent or visit the web site for the Smith Barney funds avail-
able for exchange.
Smith Barney Mutual Funds
9
<PAGE>
Sales charge
Class A shares
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
increases 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.
The table below shows the rate of sales charge you pay, depending on the amount
you purchase.
The table below also shows the amount of broker/dealer compensation that is
paid out of the sales charge. This compensation includes commissions and other
fees Service Agents that sell shares of the fund receive. The distributors keep
up to approximately 10% of the sales charge imposed on Class A shares. Service
Agents also will receive the service fee payable on Class A shares at an annual
rate equal to 0.25% of the average daily net assets represented by the Class A
shares sold by them.
<TABLE>
<CAPTION>
Sales charge as a % of
Broker/
Dealer
Commission
Offering Net amount as % of
Amount of purchase price (%) invested (%) offering price
<S> <C> <C> <C>
Less than $25,000 5.00 5.26 4.50
$25,000 but less than $50,000 4.25 4.44 3.83
$50,000 but less than $100,000 3.75 3.90 3.38
$100,000 but less than $250,000 3.25 3.36 2.93
$250,000 but less than $500,000 2.75 2.83 2.48
$500,000 but less than $1,000,000 2.00 2.04 1.80
$1,000,000 or more - 0 - - 0 - up to 1.00*
</TABLE>
*A distributor pays up to 1.00% to a Service Agent.
Investments of $1,000,000 or more You do not pay an initial sales charge when
you buy $1,000,000 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
advantage of the breakpoints in the sales charge schedule.
Aggressive Growth Fund Inc.
10
<PAGE>
Accumulation privilege - lets you combine the current value of Class A
shares owned
. by you, or
. by members of your immediate family,
and for which a sales charge was paid, with the amount of your next purchase
of Class A shares for purposes of calculating the initial sales charge. Cer-
tain 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 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 NASD members
. Investors participating in a fee-based program sponsored by certain broker-
dealers affiliated with Citigroup
. Investors who redeemed Class A shares of a Smith Barney fund in the past 60
days, if the investor's Service Agent is notified
If you want to learn about additional waivers of Class A initial sales charges,
contact your Service Agent or consult the Statement of Additional Information
("SAI").
Class B shares
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
decreases as the number of years since your purchase increases.
<TABLE>
<CAPTION>
Year after purchase 1st 2nd 3rd 4th 5th 6th through 8th
<S> <C> <C> <C> <C> <C> <C>
Deferred sales charge 5% 4% 3% 2% 1% 0%
</TABLE>
Service Agents selling Class B shares receive a commission of up to 4.50% of
the purchase price of the Class B shares they sell. Service Agents also receive
a service fee at an annual rate equal to 0.25% of the average daily net assets
represented by the Class B shares they are servicing.
Smith Barney Mutual Funds
11
<PAGE>
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:
<TABLE>
<CAPTION>
Shares issued: Shares issued:
At initial Shares issued: Upon exchange from
purchase On reinvestment of another Smith
dividends and Barney
distributions mutual fund
<S> <C> <C>
Eight years after the date of purchase In same proportion On the date the
that the number of shares originally
Class B shares acquired would
converting is to have converted
total Class B into Class A
shares you own shares
(excluding shares
issued as a divi-
dend)
</TABLE>
Class L shares (available through certain Service Agents)
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 the fund 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.
Service Agents selling Class L shares receive a commission of up to 2.00% of
the purchase price of the Class L shares they sell. Starting in the thirteenth
month, Service Agents also receive an annual fee of up to 1.00% of the average
daily net assets represented by the Class L shares held by their clients.
Class Y shares (available through certain Service Agents)
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 the fund over a 13-month period. To qualify, you
must initially invest $5,000,000.
Aggressive Growth Fund Inc.
12
<PAGE>
More about deferred sales charges
The deferred sales charge is based on the net asset value at the time of pur-
chase or redemption, whichever is less, and therefore you do not pay a sales
charge on amounts representing appreciation or depreciation.
In addition, you do not pay a deferred sales charge on:
. Shares exchanged for shares of 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, the fund 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
notify your Service Agent.
The fund's distributors receive deferred sales charges as partial compensation
for their expenses in selling shares, including the payment of compensation to
your Service Agent.
Deferred sales charge waivers
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
If you want to learn more about additional waivers of deferred sales charges,
contact your Service Agent or consult the SAI.
Smith Barney Mutual Funds
13
<PAGE>
Buying shares
Through a You should contact your Service Agent to open a brokerage
Service Agent 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
Your Service Agent may charge an annual account maintenance
fee.
--------------------------------------------------------------------------------
Through the Qualified retirement plans and certain other investors who
fund are clients of certain Service Agents are eligible to buy
shares directly from the fund.
. Write the fund at the following address:
Smith Barney Aggressive Growth Fund Inc.
(Specify class of shares)
c/o PFPC Global Fund Services
P.O. Box 9699
Providence, RI 02940-9699
. Enclose a check made payable to the fund to pay for the
shares. For initial purchases, complete and send an account
application
. For more information, call the transfer agent at 1-800-451-
2010
--------------------------------------------------------------------------------
Through a
systematic You may authorize a Service Agent or a sub-transfer agent to
investment transfer funds automatically from (i) a regular bank account
plan (ii) cash held in a brokerage account opened with a Service
Agent or (iii) certain money market funds, in order 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, your Service Agent or the sub-transfer agent
may charge you a fee
For more information, contact your Service Agent or the
transfer agent or consult the SAI.
Aggressive Growth Fund Inc.
14
<PAGE>
Exchanging shares
Smith Barney
offers a You should contact your Service Agent to exchange into other
distinctive Smith Barney funds. Be sure to read the prospectus of the
family of Smith Barney fund you are exchanging into. An exchange is a
funds taxable transaction.
tailored to
help meet the
varying needs
of both large
and small
investors
.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 in your state of
residence. Contact your Service Agent or the transfer agent
for further information.
.You must meet the minimum investment amount for each fund
(except for systematic investment plan exchanges).
.If you hold share certificates, the sub-transfer agent must
receive the certificates endorsed for transfer or with
signed stock powers (documents transferring 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 Your shares will not be subject to an initial sales charge at
additional the time of the exchange.
sales charges
Your deferred sales charge (if any) will continue to be mea-
sured 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 with a Service Agent,
you may be eligible to exchange shares through the fund. You
must complete an authorization form to authorize telephone
transfers. If eligible, you may make telephone exchanges on
any day the New York Stock Exchange is open. For clients of a
PFS Investments Registered Representative, call PFS Share-
holder Services at 1-800-544-5445 between 8:00 a.m. and 8:00
p.m. (Eastern time). All other shareholders should call the
transfer agent at 1-800-451-2010 between 9:00 a.m.
Smith Barney Mutual Funds
15
<PAGE>
and 4:00 p.m. (Eastern time). Requests received after the
close of regular trading on the Exchange are priced at the
net asset value next determined.
You can make telephone exchanges only between accounts that
have identical registrations.
--------------------------------------------------------------------------------
By mail
If you do not have a brokerage account, contact your Service
Agent or write to a sub-transfer agent at the address on the
following page.
Redeeming shares
Generally
Contact your Service Agent to redeem shares of the fund.
If you hold share certificates, the sub-transfer agent must
receive the certificates 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 request is received in good order. However,
if you recently purchased your shares by check, your redemp-
tion proceeds will not be sent to you until your original
check clears which may take up to 15 days.
If you have a brokerage account with a Service Agent your
redemption proceeds will be placed in your account and not
reinvested without your specific instruction. In other cases,
unless you direct otherwise, your redemption proceeds 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 fund at either of the following addresses:
Aggressive Growth Fund Inc.
16
<PAGE>
For clients of a PFS Investments Registered Representative,
write PFS Shareholder Services at the following address:
PFS Shareholder Services
P.O. Box 105033
Atlanta, GA 30348-5033
For all other investors, send your request to PFPC Global
Fund Services at the following address:
Smith Barney Aggressive Growth Fund Inc.
(Specify class of shares)
c/o PFPC Global Fund Services
P.O. Box 9699
Providence, RI 02940-9699
Your written request must provide the following:
. The name of the fund and account number
. The class of shares and the dollar amount or number of
shares to be redeemed
. Signatures of each owner exactly as the account is regis-
tered
By telephone
If you do not have a brokerage account with a Service Agent,
you may be eligible to redeem shares (except those held in
retirement plans) in amounts up to $50,000 per day through
the fund. You must complete an authorization form to autho-
rize telephone redemptions. If eligible, you may request
redemptions by telephone on any day the New York Stock
Exchange is open. For clients of a PFS Investments Registered
Representative, call PFS Shareholder Services at 1-800-544-
5445 between 8:00 a.m. and 8:00 p.m. (Eastern time). All
other shareholders should call the transfer agent at 1-800-
451-2010 between 9:00 a.m. and 4:00 p.m. (Eastern time).
Requests received after the close of regular trading on the
Exchange are priced at the net asset value next determined.
Your redemption proceeds can be sent by check to your address
of record or by wire or electronic transfer (ACH) to a bank
account designated on your authorization form. You must sub-
mit a new authorization form to change the bank account des-
ignated to receive wire
Smith Barney Mutual Funds
17
<PAGE>
or electronic transfers and you may be asked to provide cer-
tain other documents. The sub-transfer agents may charge a
fee on an electronic transfer (ACH).
--------------------------------------------------------------------------------
Automatic You can arrange for the automatic redemption of a portion of
cash your shares on a monthly or quarterly basis. To qualify you
withdrawal must own shares of the fund with a value of at least $10,000
plans ($5,000 for retirement plan accounts) and each automatic
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 Service Agent or consult
the SAI.
Aggressive Growth Fund Inc.
18
<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
request will not be processed:
. Name of the fund
. 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 fund will try to confirm that any telephone exchange or redemption request
is genuine by recording calls, asking the caller to provide certain personal
identification information, 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 $50,000
. Are sending signed share certificates or stock powers to a sub-transfer agent
. Instruct a 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.
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
Smith Barney Mutual Funds
19
<PAGE>
. 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 ($250 for IRA accounts)
because of a redemption of fund shares, the fund may ask you to bring your
account up to the applicable minimum investment amount. If you choose not to do
so within 60 days, the fund may close your account and send you the redemption
proceeds.
Excessive exchange transactions The manager may determine that a pattern of
frequent exchanges is detrimental to the fund's performance and other share-
holders. If so, the fund may limit additional purchases and/or exchanges by the
shareholder.
Share certificates The fund does not issue share certificates unless a written
request signed by all registered owners is made to a sub-transfer agent. If you
hold share certificates it will take longer to exchange or redeem shares.
Aggressive Growth Fund Inc.
20
<PAGE>
Distributions, dividends and taxes
Dividends The fund generally pays dividends and makes capital gain distribu-
tions, if any, once a year, typically in December. The fund may pay additional
distributions and dividends at other times if necessary for the fund to avoid a
federal tax. Capital gain distributions and dividends are reinvested in addi-
tional fund shares of the same class you hold. The fund expects distributions
to be primarily from capital gain. You do not pay a sales charge on reinvested
distributions or dividends. Alternatively, you can instruct your Service Agent,
the transfer agent or a sub-transfer agent to have your distributions and/or
dividends paid in cash. You can change your choice at any time to be effective
as of the next distribution or dividend, except that any change given to your
Service Agent, the transfer agent or a sub-transfer agent less than five days
before the payment date will not be effective until the next distribution or
dividend is paid.
Taxes In general, redeeming shares, exchanging shares and receiving distribu-
tions (whether in cash or additional shares) are all taxable events.
<TABLE>
<CAPTION>
Transaction Federal tax 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 the fund is about to declare a long-term capital gain dis-
tribution or a 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 fund will provide you with information about
the distributions and dividends you received and any redemptions of shares dur-
ing the previous year. If you do not provide the fund with your correct tax-
payer 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 investment
in the fund.
Smith Barney Mutual Funds
21
<PAGE>
Share price
You may buy, exchange or redeem shares at their net asset value, plus applica-
ble sales charge, next determined after receipt of your request in good order.
The fund's net asset value is the value of its assets minus its liabilities.
Net asset value is calculated separately for each class of shares. The fund
calculates its net asset value every day the New York Stock Exchange is open.
This calculation is done when regular trading closes on the Exchange (normally
4:00 p.m., Eastern time).
The fund generally values its fund securities based on market prices or quota-
tions. The fund's currency conversions are done when the London stock exchange
closes. When reliable market prices or quotations are not readily available, or
when the value of a security has been materially affected by events occurring
after a foreign 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.
International markets may be open on days when U.S. markets are closed and the
value of foreign securities owned by the fund could change on days when you
cannot buy or redeem shares.
In order to buy, redeem or exchange shares at that day's price, you must place
your order with your Service Agent or the applicable sub-transfer agent of the
fund before the New York Stock Exchange closes. If the New York Stock Exchange
closes early, you must place your order prior to the actual closing time. Oth-
erwise, you will receive the next business day's price.
Service Agents must transmit all orders to buy, exchange or redeem shares to
the fund's sub-transfer agents before the applicable sub-transfer agent's close
of business.
Aggressive Growth Fund Inc.
22
<PAGE>
Financial highlights
The financial highlights tables are intended to help you understand the perfor-
mance of each class for the past 5 years or since inception if less than five
years. Certain information reflects financial results for a single share. Total
return represents the rate that a shareholder would have earned (or lost) on a
fund share assuming reinvestment of all dividends and distributions. The infor-
mation in the following tables was audited by KPMG LLP, independent accoun-
tants, whose report, along with the fund's financial statements, is included in
the annual report (available upon request).
For a Class A share of capital stock outstanding throughout each year ended
August 31:
<TABLE>
<CAPTION>
2000(/1/) 1999(/1/) 1998 1997 1996
--------------------------------------------------------------------------------
-
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 67.73 $ 33.78 $ 41.80 $ 28.76 $ 33.53
--------------------------------------------------------------------------------
-
Income (loss) from
operations:
Net investment loss (0.59) (0.48) (0.42) (0.33) (0.31)
Net realized and
unrealized gain (loss) 44.11 35.31 (5.64) 14.18 (2.09)
--------------------------------------------------------------------------------
-
Total income (loss) from
operations 43.52 34.83 (6.06) 13.85 (2.40)
--------------------------------------------------------------------------------
-
Less distributions from:
Net realized gains (0.72) (0.88) (1.96) (0.81) (2.37)
--------------------------------------------------------------------------------
-
Total distributions (0.72) (0.88) (1.96) (0.81) (2.37)
--------------------------------------------------------------------------------
-
Net asset value, end of
year $ 110.53 $ 67.73 $ 33.78 $ 41.80 $ 28.76
--------------------------------------------------------------------------------
-
Total return 64.91% 104.42% (15.16)% 49.11%
(7.44)%
--------------------------------------------------------------------------------
-
Net assets, end of year
(000)'s $1,731,025 $690,142 $296,376 $333,877 $252,531
--------------------------------------------------------------------------------
-
Ratios to average net
assets:
Expenses 1.14% 1.18% 1.21% 1.21% 1.30%
Net investment loss (0.66) (0.89) (0.97) (0.93) (0.97)
--------------------------------------------------------------------------------
-
Portfolio turnover rate 1% 8% 7% 6% 13%
--------------------------------------------------------------------------------
-
</TABLE>
(/1/)Per share amounts have been calculated using the monthly average shares
method.
Smith Barney Mutual Funds
23
<PAGE>
For a Class B share of capital stock outstanding throughout each year ended
August 31:
<TABLE>
<CAPTION>
2000(/1/) 1999(/1/) 1998 1997 1996
--------------------------------------------------------------------------------
-
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 63.82 $ 32.12 $ 40.17 $ 27.88 $ 32.82
--------------------------------------------------------------------------------
-
Income (loss) from
operations:
Net investment loss (1.23) (0.87) (0.66) (0.56) (0.53)
Net realized and
unrealized gain (loss) 41.37 33.45 (5.43) 13.66 (2.04)
--------------------------------------------------------------------------------
-
Total income (loss) from
operations 40.14 32.58 (6.09) 13.10 (2.57)
--------------------------------------------------------------------------------
-
Less distributions from:
Realized gains (0.72) (0.88) (1.96) (0.81) (2.37)
--------------------------------------------------------------------------------
-
Total distributions (0.72) (0.88) (1.96) (0.81) (2.37)
--------------------------------------------------------------------------------
-
Net asset value, end of
year $ 103.24 $ 63.82 $ 32.12 $ 40.17 $ 27.88
--------------------------------------------------------------------------------
-
Total return+ 63.58% 102.78% (15.90)% 47.94%
(8.16)%
--------------------------------------------------------------------------------
-
Net assets, end of year
(000)'s $1,485,305 $470,141 $185,808 $197,559 $136,322
--------------------------------------------------------------------------------
-
Ratios to average net
assets:
Expenses 1.94% 2.00% 2.02% 2.01% 2.07%
Net investment loss (1.47) (1.70) (1.78) (1.73) (1.75)
--------------------------------------------------------------------------------
-
Portfolio turnover rate 1% 8% 7% 6% 13%
--------------------------------------------------------------------------------
-
</TABLE>
+ Total return indicated does not reflect any applicable sales charge.
(/1/) Per share amounts have been calculated using the monthly average shares
method.
For a Class L share of capital stock outstanding throughout each year ended
August 31:
<TABLE>
<CAPTION>
2000(/1/) 1999(/1/) 1998(/2/) 1997 1996
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 63.99 $ 32.19 $ 40.22 $ 27.91 $ 32.84
------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment loss (1.24) (0.84) (0.68) (0.59) (0.53)
Net realized and
unrealized gain (loss) 41.51 33.52 (5.39) 13.71 (2.03)
------------------------------------------------------------------------------
Total income (loss) from
operations 40.27 32.68 (6.07) 13.12 (2.56)
------------------------------------------------------------------------------
Less distributions from:
Net realized gains (0.72) (0.88) (1.96) (0.81) (2.37)
------------------------------------------------------------------------------
Total distributions (0.72) (0.88) (1.96) (0.81) (2.37)
------------------------------------------------------------------------------
Net asset value, end of
year $ 103.54 $ 63.99 $ 32.19 $ 40.22 $ 27.91
------------------------------------------------------------------------------
Total return+ 63.62% 102.87% (15.80)% 47.97% (8.12)%
------------------------------------------------------------------------------
Net assets, end of year
(000)'s $695,844 $161,784 $65,312 $77,297 $63,786
------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 1.94% 1.94% 1.97% 1.97% 2.06%
Net investment loss (1.46) (1.64) (1.73) (1.68) (1.75)
------------------------------------------------------------------------------
Portfolio turnover rate 1% 8% 7% 6% 13%
------------------------------------------------------------------------------
</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.
+ Total return does not reflect any applicable sales charges.
Aggressive Growth Fund Inc.
24
<PAGE>
For a Class Y share of capital stock outstanding throughout each year ended
August 31:
<TABLE>
<CAPTION>
2000(/1/) 1999(/1/) 1998 1997 1996(/2/)
--------------------------------------------------------------------------------
--
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $ 68.69 $ 34.13 $ 42.07 $ 28.84 $ 31.86
--------------------------------------------------------------------------------
--
Income (loss) from
operations:
Net investment loss (0.30) (0.29) (0.25) (0.16) (0.12)
Net realized and
unrealized gain (loss) 44.79 35.73 (5.73) 14.20 (0.53)
--------------------------------------------------------------------------------
--
Total income (loss) from
operations 44.49 35.44 (5.98) 14.04 (0.65)
--------------------------------------------------------------------------------
--
Less distributions from:
Realized gains (0.72) (0.88) (1.96) (0.81) (2.37)
--------------------------------------------------------------------------------
--
Total distributions (0.72) (0.88) (1.96) (0.81) (2.37)
--------------------------------------------------------------------------------
--
Net asset value, end of
year $ 112.46 $ 68.69 $ 34.13 $ 42.07 $ 28.84
--------------------------------------------------------------------------------
--
Total return 65.42% 105.15% (14.86)% 49.64%
(10.13)%*++
--------------------------------------------------------------------------------
--
Net assets, end of year
(000)'s $219,074 $172,385 $89,675 $158,146 $58,641
--------------------------------------------------------------------------------
--
Ratios to average net
assets:
Expenses 0.82% 0.82% (0.85)% 0.84% 0.84%+
Net investment loss (0.34) (0.53) (0.62) (0.56) (0.49)+
--------------------------------------------------------------------------------
--
Portfolio turnover rate 1% 8% 7% 6% 13%
--------------------------------------------------------------------------------
--
</TABLE>
(/1/) Per share amounts have been calculated using the monthly average shares
method.
(/2/) For the period from October 12, 1995 (inception date) to August 31, 1996.
* Performance for Class Y shares is for the period January 31, 1996 to
August 31, 1996 since all Class Y shares were redeemed during November
1995 and new shares in Class Y were not purchased until January 31, 1996.
++ Total return is not annualized, as it may not be representative of the
total return for the year.
+ Annualized.
Smith Barney Mutual Funds
25
<PAGE>
(This page is intentionally left blank.)
<PAGE>
[SB] Smith Barney
[MF] Mutual Funds
Your Serious Money. Professionally Managed./SM/
Aggressive
Growth Fund Inc.
Shareholder reports Annual and semiannual reports to shareholders provide addi-
tional information about the fund's investments. These reports discuss the mar-
ket conditions and investment strategies that significantly affected the fund's
performance during its last fiscal year or period.
The fund sends only one report to a household if more than one account has the
same address. Contact your Service Agent 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 the fund and is incorporated by refer-
ence into (is legally part of) this prospectus.
You can make inquiries about the fund or obtain shareholder reports or the
statement of additional information (without charge) by contacting your Service
Agent, by calling one of the fund's sub-transfer agents (PFS Shareholders Serv-
ices at 1-800-544- 5445 or PFPC Global Fund Services at 1-800-451-2010, or by
writing to the fund at Smith Barney Mutual Funds, 7 World Trade Center, 39th
floor, New York, New York 10048.
Information about the fund (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 fund are available on the EDGAR Data-
base 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 Commission's
Public Reference Section, Washington, D.C. 20549-0102.
If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. Neither the fund nor the distributor is
offering to sell shares of the fund to any person to whom the fund may not law-
fully sell its shares.
Your Serious Money. Professionally Man- aged. is a service mark of Salomon
Smith Barney Inc.
(Investment Company Act
file no. 811-03762)
FD01060 12/00
<PAGE>
[SB] Smith Barney
[MF] Mutual Funds
Your Serious Money. Professionally Managed./SM/
P R O S P E C T U S
Aggressive
Growth
Fund Inc.
Class Z Shares
--------------------------------------------------------------------------------
December 29, 2000
--------------------------------------------------------------------------------
INVESTMENT PRODUCTS: NOT FDIC INSURED * NO BANK GUARANTEE * MAY LOSE VALUE
--------------------------------------------------------------------------------
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.
<PAGE>
AGGRESSIVE GROWTH FUND
CONTENTS
<TABLE>
<S> <C>
Investments, risks and performance.......................................... 2
More on the fund's investments.............................................. 6
Management.................................................................. 7
Buying, selling and exchanging Class Z shares............................... 8
Distributions, dividends and taxes.......................................... 9
Share price................................................................. 10
Financial highlights........................................................ 11
</TABLE>
The Class Z shares described in this prospectus are offered exclusively for
sale to tax-exempt employee benefit and retirement plans of Salomon Smith Bar-
ney Inc. or any of its affiliates.
Smith Barney Mutual Funds
1
<PAGE>
INVESTMENTS, RISKS AND PERFORMANCE
INVESTMENT OBJECTIVE
The fund seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
KEY INVESTMENTS The fund invests primarily in common stocks of companies that
the manager believes are experiencing, or will experience, growth in earnings
that exceeds the average rate of earnings growth of the companies which com-
prise the S&P 500 Index. The fund may invest in the securities of large, well-
known companies which offer prospects of long-term earnings growth. However,
because higher earnings growth rates are often achieved by small to medium-
sized companies, a significant portion of the fund's assets are invested in the
securities of such companies.
SELECTION PROCESS The manager emphasizes individual security selection while
diversifying the fund's investments across industries, which may help to reduce
risk. The manager focuses primarily, but not exclusively, on emerging growth
companies that have passed their "start-up" phase and show positive earnings
and the prospect of achieving significant profit gains beginning in the two to
three years after the fund acquires their stocks. When evaluating an individual
stock, the manager considers whether the company may benefit from:
. new technologies, products or services
. new cost reducing measures
. changes in management
. favorable changes in government regulations
PRINCIPAL RISKS OF INVESTING IN THE FUND
Investors could lose money on their investment in the fund, or the fund may not
perform as well as other investments, if:
. Stock prices decline generally
. Small or medium capitalization companies fall out of favor with investors
. The manager's judgment about the attractiveness, growth prospects or poten-
tial appreciation of a particular stock proves to be incorrect
. A particular product or service developed by a company in which the fund
invests is unsuccessful, the company does not meet earnings expectations or
other events depress the value of the company's stock
Aggressive Growth Fund--Class Z Shares
2
<PAGE>
Compared to mutual funds that focus only on large capitalization companies, the
fund's share price may be more volatile because the fund also invests a signif-
icant portion of its assets in small and medium capitalization companies.
Compared to large capitalization companies, small and medium capitalization
companies are more likely to have:
. More limited product lines
. Fewer capital resources
. More limited management depth
Further, securities of small and medium capitalization companies are more
likely to:
. Experience sharper swings in market values
. Be harder to sell at times and at prices the manager believes appropriate
. Offer greater potential for gains and losses
WHO MAY WANT TO INVEST The fund may be an appropriate investment if you:
. Are seeking to participate in the long-term growth potential of small and
medium capitalization companies
. Currently have exposure to the stocks commonly held by large capitalization
and value oriented mutual funds and wish to broaden your investment portfolio
. Are willing to accept the risks of the stock market and the special risks and
potential long-term rewards of investing in smaller companies with more lim-
ited track records
Smith Barney Mutual Funds
3
<PAGE>
RISK RETURN BAR CHART
This bar chart indicates the risks of investing in the fund by showing changes
in the fund's performance from year to year. Past performance does not neces-
sarily indicate how the fund will perform in the future.
The bar chart shows the performance of the fund's Class Z shares for each of
the past 7 calendar years. On November 7, 1994, the former Class C shares were
renamed Class Z shares. Performance for the period prior to that date reflects
the performance of the Class C shares.
[GRAPH]
Total Return for Class Z Shares
1993 21.50%
1994 (1.23)%
1995 36.14%
1996 3.10%
1997 28.91%
1998 35.60%
1999 64.30%
Calendar years ended December 31
QUARTERLY RETURNS:
Highest: 37.70% in 4th quarter 1998; Lowest: (12.08)% in 3rd quarter 1998
Year to date: 26.91% through 9/30/00
RISK RETURN TABLE
This table indicates the risks of investing in the fund by comparing the aver-
age annual total return of Class Z shares of the fund for the periods shown
with that of the Russell 2500 Growth Index (the "Russell Index"), a broad-based
unmanaged index of stocks of small to medium capitalization companies. This
table assumes reinvestment of distributions and dividends.
AVERAGE ANNUAL TOTAL RETURNS
CALENDAR YEARS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION INCEPTION DATE
<S> <C> <C> <C> <C> <C>
Class Z 35.60% 19.37% n/a 20.66% 11/6/92
Russell Index 55.48% 23.10% n/a 25.99% 11/6/92
</TABLE>
Aggressive Growth Fund--Class Z Shares
4
<PAGE>
FEE TABLE
This table sets forth the fees and expenses you will pay if you invest in Class
Z shares of the fund.
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS)
<S> <C>
Management fee 0.80%
Other expenses 0.03%
-----
Total annual fund operating expenses 0.83%
</TABLE>
EXAMPLE
This example helps you compare the costs of investing in the fund with the
costs of investing in other mutual funds. Your actual costs may be higher or
lower. The example assumes:
. You invest $10,000 in the fund for the period shown
. Your investment has a 5% return each year
. You reinvest all distributions and dividends
. The fund's operating expenses remain the same
NUMBER OF YEARS YOU OWN YOUR SHARES
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class Z (with or without redemption) $85 $265 $460 $1,025
</TABLE>
Smith Barney Mutual Funds
5
<PAGE>
MORE ON THE FUND'S INVESTMENTS
FOREIGN INVESTMENTS The fund may invest up to 10% of its assets (at the time of
investment) in foreign securities. The fund may invest directly in foreign
issuers or invest in depositary receipts. The fund's investments in foreign
securities may involve greater risk than investments in securities of U.S.
issuers. Because the value of a depositary receipt is dependent upon the market
price of an underlying foreign security, depositary receipts are subject to
most of the risk associated with investing in foreign securities directly. For-
eign countries generally have markets that are less liquid and more volatile
than markets in the U.S. In some foreign countries, less information is avail-
able about foreign issuers and markets because of less rigorous accounting and
regulatory standards than in the U.S. Currency fluctuations could erase invest-
ment gains or add to investment losses.
DEFENSIVE INVESTING The fund may depart from its principal investment strate-
gies in response to adverse market, economic or political conditions by taking
temporary defensive positions in all types of money market and short-term debt
securities. If the fund takes a temporary defensive position, it may be unable
to achieve its investment goal.
Aggressive Growth Fund--Class Z Shares
6
<PAGE>
MANAGEMENT
MANAGER The fund's investment manager is SSB Citi Fund Management LLC (succes-
sor to SSBC Fund Management Inc.) ("SSB Citi" or the "manager"), an affiliate
of Salomon Smith Barney Inc. ("Salmon Smith Barney"). The manager's address is
7 World Trade Center, New York, New York 10048. The manager selects the fund's
investments and oversees its 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.
Richard Freeman, investment officer of the manager and managing director of
Salomon Smith Barney, has been responsible for the day-to-day management of the
fund's portfolio since its inception in October 1983. Mr. Freeman has more than
25 years of securities business experience, 17 years of which has been with the
manager or its predecessors.
MANAGEMENT FEES During the fiscal year ended August 31, 2000, the manager
received a management fee and administrative fee equal to 0.60% and 0.20%,
respectively, of the fund's average daily net assets.
Smith Barney Mutual Funds
7
<PAGE>
BUYING, SELLING AND EXCHANGING CLASS Z SHARES
Through a
qualified You may buy, sell or exchange Class Z shares only through a
plan "qualified plan." A qualified plan is a tax-exempt employee
benefit or retirement plan of Salomon Smith Barney, or one of
its affiliates.
There are no minimum investment requirements for Class Z
shares. However, the fund 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. The
fund reserves the right to reject any order to buy shares and
to suspend the offering of shares for a period of time.
--------------------------------------------------------------------------------
Selling Qualified plans may redeem their shares on any day on which
the fund calculates its net asset value. You should consult
the terms of your qualified plan for special redemption pro-
visions.
--------------------------------------------------------------------------------
Exchanging You should consult your qualified plan for information about
available exchange options.
Aggressive Growth Fund--Class Z Shares
8
<PAGE>
DISTRIBUTIONS, DIVIDENDS AND TAXES
An investment in the fund will have the following consequences for a qualified
plan as the owner of shares in the fund. Qualified plan participants should
consult their plan document or tax advisors about the tax consequences of par-
ticipating in a qualified plan.
DIVIDENDS The fund generally pays dividends and makes capital gain distribu-
tions, if any, once a year, typically in December. The fund may pay additional
distributions and dividends at other times if necessary for the fund to avoid a
federal tax. Capital gain distributions and dividends are reinvested in addi-
tional Class Z shares. The fund expects distributions to be primarily from cap-
ital gains. 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.
Dividends and interest received by the fund from investing in foreign securi-
ties may give rise to withholding and other taxes imposed by foreign countries.
Tax conventions between certain countries and the United States may reduce or
eliminate such taxes. The fund's foreign tax payments will reduce the amount of
its dividends and distributions.
Smith Barney Mutual Funds
9
<PAGE>
SHARE PRICE
Qualified plans may buy, exchange or redeem Class Z shares of the fund at the
net asset value next determined after receipt of your request in good order.
The fund's net asset value is the value of its assets minus its liabilities.
Net asset value is calculated separately for each class of shares. The fund
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 Addi-
tional Information. This calculation is done when regular trading closes on the
Exchange.
The fund generally values its fund securities based on market price or quota-
tions. The fund's currency conversions are done when the London stock exchange
closes. When reliable market prices are not readily available, or when the
value of a security has been materially affected by events occurring after a
foreign 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 securi-
ties higher or lower than another fund that uses market quotations to price the
same securities.
International markets may be open on days when U.S. markets are closed and the
value of foreign securities owned by the fund could change on days when your
qualified plan cannot buy or redeem shares.
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 New York Stock Exchange closes early, you must place your order with
your qualified plan 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 fund's agent before the agent's close of business.
Aggressive Growth Fund--Class Z Shares
10
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the perfor-
mance of Class Z shares of the fund for the past 5 years. Certain information
reflects financial results for a single share. Total return represents the rate
that a shareholder would have earned (or lost) on a fund share assuming rein-
vestment of all dividends and distributions. The information in the following
table was audited by KPMG LLP, independent accountants, whose report, along
with the fund's financial statements, is included in the annual report (avail-
able upon request).
FOR A CLASS Z SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH YEAR ENDED
AUGUST 31:
<TABLE>
<CAPTION>
2000 1999(/1/) 1998 1997 1996
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year $69.63 $34.58 $42.60 $29.20 $33.88
--------------------------------------------------------------------------------
Income (loss) from
operations:
Net investment loss (0.32) (0.30) (0.28) (0.20) (0.20)
Net realized and unrealized
gain (loss) 45.72 36.23 (5.78) 14.41 (2.11)
--------------------------------------------------------------------------------
Total income (loss) from
operations 45.10 35.93 (6.06) 14.21 (2.31)
--------------------------------------------------------------------------------
Less distributions from:
Net realized gains (0.72) (0.88) (1.96) (0.81) (2.37)
--------------------------------------------------------------------------------
Total distributions (0.72) (0.88) (1.96) (0.81) (2.37)
--------------------------------------------------------------------------------
Net asset value, end of year $114.01 $69.63 $34.58 $42.60 $29.20
--------------------------------------------------------------------------------
Total return 65.42% 105.20% (14.86)% 49.61% (7.07)%
--------------------------------------------------------------------------------
Net assets, end of year
(000)'s $463,032 $169,905 $42,155 $43,553 $30,837
--------------------------------------------------------------------------------
Ratios to average net
assets:
Expenses 0.83% 0.82% 0.85% 0.85% 0.93%
Net investment loss (0.35) (0.51) (0.62) (0.57) (0.61)
--------------------------------------------------------------------------------
Portfolio turnover rate 1% 8% 7% 6% 13%
--------------------------------------------------------------------------------
</TABLE>
(/1/) Per share amounts have been calculated using the monthly average shares
method.
Smith Barney Mutual Funds
11
<PAGE>
[SB]Smith Barney
[MF]Mutual Funds
Your Serious Money. Professionally Managed. /SM/
AGGRESSIVE GROWTH FUND INC.
SHAREHOLDER REPORTS Annual and semiannual reports to shareholders provide addi-
tional information about the fund's investments. These reports discuss the mar-
ket conditions and investment strategies that significantly affected the fund's
performance during its last fiscal year or period.
The fund sends only one report to a household if more than one account has the
same address. Contact your qualified plan 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 the fund and is incorporated by refer-
ence into (is legally part of) this prospectus.
You can make inquiries about the fund or obtain shareholder reports or the
statement of additional information (without charge) by contacting your Salomon
Smith Barney Financial Consultant, by calling the fund at 1-800-451-2010, or by
writing to the fund at Smith Barney Mutual Funds, 7 World Trade Center, 39th
floor, New York, New York 10048.
Information about the fund (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 Fund are available on the EDGAR Data-
base 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 Commission's
Public Reference Section, Washington, D.C. 20549-0102.
If someone makes a statement about the fund that is not in this prospectus, you
should not rely upon that information. Neither the fund nor the distributor is
offering to sell shares of the fund to any person to whom the fund may not law-
fully sell its shares.
YOUR SERIOUS MONEY. PROFESSIONALLY MANAGED. is a service mark of Salomon Smith
Barney Inc.
(Investment Company Act
file no. 811-03762)
FD01061 12/00
PART B - STATEMENT OF ADDITIONAL INFORMATION
Smith Barney Aggressive Growth Fund, Inc.
7 World Trade Center
New York, NY 10048
Statement of Additional
Information
December 29, 2000
This Statement of Additional Information (the "SAI") expands upon
and supplements the information contained in the current
prospectus of the Smith Barney Aggressive Growth Fund, Inc. (the
"fund"), dated December 29, 2000, as amended or supplemented from
time to time, and should be read in conjunction with the
prospectus. Additional information about the fund's investments
is available in the fund's annual and semi-annual reports to
shareholders. The fund's prospectus may be obtained free of
charge from your Salomon Smith Barney Financial Consultant, a
registered representative of PFS Distributors, Inc. ("PFS") or a
Service Agent (as defined on page 12), or by writing or calling
the fund at the address or telephone number set forth above.
This SAI, although not in itself a prospectus, is incorporated by
reference into the prospectus in its entirety.
TABLE OF CONTENTS
Investment Objective and Management Policies 2
Directors and Officers 8
Purchase of Shares 11
PFS Accounts 16
Redemption of Shares 18
Investment Manager and Administrator 19
Distributor 20
Valuation of Shares 23
Exchange Privilege 24 Performance Data 25
Taxes 28
Additional Information 29
Financial Statements 30
Other Information 30
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The prospectus discusses the fund's investment objective and
policies. The following discussion supplements the description of
the fund's investment policies in its prospectus. SSB Citi Fund
Management LLC (successor to SSBC Fund Management Inc.) ("SSB
Citi" or the "manager") serves as investment manager and
administrator to the fund.
The investment objective of the fund is capital appreciation.
Although the fund may receive current income from dividends,
interest and other sources, income is only an incidental
consideration of the fund. The fund attempts to achieve its
investment objective by investing primarily in common stocks of
companies that the manager believes are experiencing, or have the
potential to experience, growth in earnings that exceed the
average earnings growth rate of companies having securities
included in the S&P 500. Although the manager anticipates that
the assets of the fund ordinarily will be invested primarily in
common stocks of U.S. companies, the fund may invest in
convertible securities, preferred stocks, securities of foreign
issuers, warrants and restricted securities. In addition, when
the manager believes that market conditions warrant, the fund may
invest for temporary defensive purposes in corporate and U.S.
government bonds and notes and money market instruments. The
fund is also authorized to borrow up to 5% of its total assets
for extraordinary or emergency purposes, and may borrow up to 33
1/3% of its total assets less liabilities, for leveraging
purposes. See "Leveraging."
Certain Risk Considerations Securities of the kinds of companies
in which the fund invests may be subject to significant price
fluctuation and above-average risk. In addition, companies
achieving an earnings growth rate higher than that of S&P 500
companies tend to reinvest their earnings rather than distribute
them. As a result, the fund is not likely to receive significant
dividend income on its portfolio securities. Accordingly, an
investment in the fund should not be considered as a complete
investment program and may not be appropriate for all investors.
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.
Convertible securities generally are subordinated to other
similar but nonconvertible 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
non-convertible securities.
Foreign Securities The fund may invest up to 10% of its net
assets (at the time of investment) in foreign securities. The
fund may invest directly in foreign issuers or invest in
depositary receipts. The fund's investments in foreign
securities may involve greater risk than investments in
securities of U.S. issuers. Because the value of a depositary
receipt is dependent upon the market price of an underlying
foreign security, depositary receipts are subject to most of the
risk associated with investing in foreign securities directly.
There are certain risks involved in investing in foreign
securities, including those resulting from fluctuations in
currency exchange rates, revaluation of currencies, future
political or economic developments and the possible imposition of
currency exchange blockages or other foreign governmental laws or
restrictions, reduced availability of public information
concerning issuers, and the fact that foreign companies are not
generally subject to uniform accounting, auditing and financial
reporting standards or to other regulatory practices and
requirements comparable to those applicable to domestic
companies. Moreover, securities of many foreign companies may be
less liquid and their prices more volatile than securities of
comparable domestic companies. In addition, with respect to
certain foreign countries, there is the possibility of
expropriation, confiscatory taxation and limitations on the use
or removal of funds or other assets of the fund, including the
withholding of dividends. The risks of investing in foreign
securities are greater for securities of emerging market issuers
because political or economic instability, lack of market
liquidity, and negative government actions like currency controls
or seizure of private businesses or property are more likely.
Repurchase Agreements The fund will enter into repurchase
agreements with banks which are the issuers of instruments
acceptable for purchase by the fund and with certain dealers on
the Federal Reserve Bank of New York's list of reporting dealers.
Under the terms of a typical repurchase agreement, the fund would
acquire an underlying obligation for a relatively short period
(usually not more than one week) subject to an obligation of the
seller to repurchase, and the fund to resell, the obligation at
an agreed-upon price and time, thereby determining the yield
during the fund's holding period. This arrangement results in a
fixed rate of return that is not subject to market fluctuations
during the fund's holding period. 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 the 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 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 agreement. The manager, acting under the
supervision of the Board of Directors, reviews on an ongoing
basis the creditworthiness of those banks and dealers with which
the fund enters into repurchase agreements to evaluate potential
risk.
Lending of Portfolio Securities The fund has the ability to lend
securities from its portfolio to brokers, dealers and other
financial organizations. Such loans, if and when made, will be
consistent with applicable regulatory requirements. The fund may
not lend its portfolio securities to Salomon Smith Barney or its
affiliates unless it has applied for and received specific
authority from the Securities and Exchange Commission (the
"SEC"). Loans of portfolio securities by the fund will be
collateralized by cash, letters of credit or securities issued or
guaranteed by the United States government, its agencies or
instrumentalities ("U.S. government securities") which will be
maintained at all times in an amount equal to at least 100% of
the current market value of the loaned securities. From time to
time, the fund may return 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 or with Salomon Smith Barney, and which is acting as a
"finder."
In lending its portfolio securities, the 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 government securities are used as collateral.
Requirements of the SEC, which may be subject to future
modifications, currently provide that the following conditions
must be met whenever 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 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 an amount equal to
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; however, if a material event adversely affecting the
investment occurs, the fund's Board of Directors 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 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 the manager to be of good
standing and will not be made unless, in the judgment of the
manager, the consideration to be earned from such loans would
justify the risk.
Leveraging The fund may from time to time leverage its
investments by purchasing securities with borrowed money. The
fund may borrow money only from banks and in an amount not to
exceed 33 1/3% of the total value of its assets less its
liabilities. The amount of the fund's borrowings also may be
limited by the availability and cost of credit and by
restrictions imposed by the Federal Reserve Board.
The fund is required under the Investment Company Act of 1940, as
amended (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
bank debt 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 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 the fund's net investment income in
any given period.
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, warrants
may be considered more speculative than certain other types of
investments. Also, 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.
Restricted Securities Restricted securities are those that may
not be sold publicly without first being registered under the
Securities Act of 1933, as amended (the "1933 Act"). For that
reason, the fund may not be able to dispose of restricted
securities at a time when, or at a price at which, it desires to
do so and may have to bear expenses associated with registering
the securities. At any one time, the fund's aggregate holdings
of restricted securities, repurchase agreements having a duration
of more than five business days, and securities lacking readily
available market quotations will not exceed 15% of the fund's
total assets.
Portfolio Turnover The fund's investment policies may result in
its experiencing a greater portfolio turnover rate than those of
investment companies that seek to produce income or to maintain a
balanced investment position. Although the fund's portfolio
turnover rate cannot be predicted and will vary from year to
year, the manager expects that the fund's annual portfolio
turnover rate may exceed 100%, but will not exceed 200%. A 100%
portfolio turnover rate would occur, for instance, if all
securities in the fund's portfolio were replaced once during a
period of one year. A high rate of portfolio turnover in any
year will increase brokerage commissions paid and could result in
high amounts of realized investment gain subject to the payment
of taxes by shareholders. Any realized short-term investment
gain will be taxed to shareholders as ordinary income. For the
1998, 1999 and 2000 fiscal years, the fund's portfolio turnover
rates were 7%, 8% and 1%, respectively.
Money Market Instruments As stated in the prospectus, the fund
may invest for defensive purposes in corporate and government
bonds and notes and money market instruments. Money market
instruments in which the fund may invest include: U.S. government
securities; certificates of deposit, time deposits 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. The following is a more detailed
description of such money market instruments.
Bank Obligations Certificates of deposits ("CDs") are short-
term, negotiable obligations of commercial banks. Time deposits
("TDs") are non-negotiable deposits maintained in banking
institutions for specified periods of time at stated interest
rates. Bankers' acceptances are time drafts drawn on commercial
banks by borrowers, usually in connection with international
transactions.
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 the fund, depending upon the principal
amount of CDs of each bank held by the fund) and are subject to
federal examination and to a substantial body of federal law and
regulation. As a result of governmental 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 domestic 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. Such
obligations are subject to different risks than are those of
domestic banks or domestic 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 domestic banks are not
necessarily subject to the same or similar regulatory
requirements that apply to domestic 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
domestic bank than about a domestic bank. CDs issued by wholly
owned Canadian subsidiaries of domestic banks are guaranteed as
to repayment of principal and interest (but not as to sovereign
risk) by the domestic parent bank.
Obligations of domestic 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
governmental regulation as well as governmental action in the
country in which the foreign bank has its head office. A
domestic 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 domestic branch of a foreign bank than about
a domestic bank.
In view of the foregoing factors associated with the purchase of
CDs and TDs issued by foreign branches of domestic banks or by
domestic branches of foreign banks, the manager will carefully
evaluate such investments on a case-by-case basis.
Savings and loans associations whose CDs may be purchased by the
fund are supervised by the Office of Thrift Supervision and are
insured by the Savings Association Insurance Fund which is
administered by the FDIC and is backed by the full faith and
credit of the United States government. As a result, such
savings and loan associations are subject to regulation and
examination.
Investment Restrictions
The fund has adopted the following investment restrictions for
the protection of shareholders. Restrictions 1 through 7 cannot
be changed without approval by the holders of a majority of the
outstanding shares of the fund, defined as the lesser of (a) 67%
or more of the fund's shares present at a meeting, if the holders
of more than 50% of the outstanding shares are present in person
or by proxy or (b) more than 50% of the fund's outstanding
shares. The remaining restrictions may be changed by the Board
of Directors at any time. The fund may not:
1. Invest in a manner that would cause it to fail to be a
"diversified company" under the 1940 Act and the rules,
regulations and orders thereunder.
2. Issue "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.
3. Invest more than 25% of its total assets in securities, the
issuers of which conduct their principal business
activities in the same industry. For purposes of this
limitation, securities of the U.S. government (including
its agencies and instrumentalities) and securities of state
or municipal governments and their political subdivisions
are not considered to be issued by members of any industry.
4. Make loans. This restriction does not apply to: (a) the
purchase of debt obligations in which the fund may invest
consistent with its investment objective and policies; (b)
repurchase agreements and; (c) loans of its portfolio
securities, to the fullest extent permitted under the 1940
Act.
5. Engage in the business of underwriting securities issued by
other persons, except to the extent that the fund may
technically be deemed to be an underwriter under the 1933
Act, as amended, in disposing of portfolio securities.
6. Purchase or sell real estate, real estate mortgages,
commodities or commodity contracts, but this restriction
shall not prevent the fund from: (a) investing in
securities of issuers engaged in the real estate business
or the 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 fund's investment objective and
policies); or (d) investing in real estate investment trust
securities.
7. Borrow money except that (a) the fund 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 fund 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
fund 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.
8. Purchase any securities on margin (except for such short-
term credits as are necessary for the clearance of
purchases and sales of portfolio securities) or sell any
securities short (except "against the box"). For purposes
of this restriction, the deposit or payment by the fund of
underlying securities and other assets in escrow and
collateral agreements with respect to initial or
maintenance margin in connection with futures contracts and
related options and options on securities, indexes or
similar items is not considered to be the purchase of a
security on margin.
9. Purchase or otherwise acquire any security if, as a result,
more than 15% of its net assets would be invested in
securities that are illiquid.
10. Invest more than 5% of the value of its net assets (valued
at the lower of cost or market) in warrants, of which no
more than 2% of net assets may be invested in warrants not
listed on the New York Stock Exchange, Inc. (the "NYSE") or
the American Stock Exchange. The acquisition of warrants
attached to other securities is not subject to this
restriction.
11. Purchase, sell or write put, call, straddle or spread
options.
12. Purchase participations or other direct interests in oil,
gas or other mineral exploration or development programs.
13. Invest in companies for the purpose of exercising
management or control.
14. Invest more than 5% of the value of its total assets in
securities of issuers having a record of fewer than three
years of continual operation except that the restriction
will not apply to U.S. government securities. (For purposes
of this restriction, issuers include predecessors,
sponsors, controlling persons, general partners, and
guarantors of underlying assets.)
Certain restrictions listed above permit the fund without
shareholder approval to engage in investment practices that the
fund does not currently pursue. The fund has no present
intention of altering its current investment practices as
otherwise described in the prospectus and this SAI and any future
change in these practices would require Board approval. If any
percentage restriction described above is complied with at the
time of an investment, a later increase or decrease in percentage
resulting from a change in values or assets will not constitute a
violation of such restriction.
DIRECTORS AND OFFICERS
Set forth below is a list of each Director and executive officer
of the fund, including a description of principal occupation
during the last 5 years, age and address of each such person.
Paul R. Ades, Director (Age 60). Partner in the law firm of Paul
R. Ades, PLLC. Director of 5 investment companies associated with
Citigroup Inc. ("Citigroup"). His address is 181 West Main
Street, Suite C, P.O. Box 790, Babylon, New York 11702.
Herbert Barg, Director (Age 77). Private investor. Director of 16
investment companies associated with Citigroup. His address is
1460 Drayton Lane, Wynnewood, Pennsylvania 19096.
Dwight B. Crane, Director (Age 63). Professor, Graduate School of
Business Administration, Harvard University; Director of 23
investment companies associated with Citigroup. His address is
Graduate School of Business Administration, Harvard University,
Boston, Massachusetts 02163.
Frank G. Hubbard, Director (Age 63). Vice President, S&S
Industries; Former Corporate Vice President, Materials Management
and Marketing Services of Huls America, Inc.; Director of 5
investment companies associated with Citigroup. His address is 87
Whittredge Road, Summit, New Jersey 07901.
*Heath B. McLendon, Chairman of the Board, President and Chief
Executive Officer (Age 67). Managing Director of Salomon Smith
Barney Inc. ("Salomon Smith Barney"); Director and President of
SSB Citi and Travelers Investment Adviser, Inc. ("TIA"); and
formerly Chairman of the Board of Smith Barney Strategy Advisers
Inc. Mr. McLendon is a Director of 78 investment companies
associated with Citigroup. His address is 7 World Trade Center,
45th Floor, New York, New York 10048.
Jerome Miller, Director (Age 62). Retired, Former President,
Asset Management Group of Shearson Lehman Brothers. Director of 5
investment companies associated with Citigroup. His address is
27 Hemlock Road, Manhasset, New York, NY 11030.
Ken Miller, Director (Age 58). President of Young Stuff Apparel
Group, Inc. Director of 5 investment companies associated with
Citigroup. His address is 1407 Broadway, 6th Floor, Suite 610,
New York, New York 10018.
Lewis E. Daidone, (Age 43) Senior Vice President and Treasurer
(Age 43). Managing Director of Salomon Smith Barney, Director and
Senior Vice President of SSB Citi and TIA. Treasurer of 61
investment companies associated with Citigroup. His address is
125 Broad Street, New York, New York 10004.
Richard A. Freeman (Age 46). Managing Director of Salomon Smith
Barney. His address is 7 World Trade Center, New York, New York
10048.
Paul Brook, Controller (Age 46). Director of Salomon Smith
Barney; Controller or Assistant Treasurer of 43 investment
companies associated with Citigroup; from 1997-1998 Managing
Director of AMT Capital Services Inc.; Prior to 1997, Partner
with Ernst & Young LLP; His address is 125 Broad Street, New
York, New York 10004.
Christina T. Sydor, Secretary (Age 49). Managing Director of
Salomon Smith Barney; General Counsel and Secretary of SSB Citi
and TIA. Secretary of 61 investment companies associated with
Citigroup. Her address is 7 World Trade Center, New York, New
York 10048.
*Designates a Director that is an "interested person" as defined
in the 1940 Act. Such persons compensated by Salomon Smith
Barney and are not separately compensated by the fund for serving
as a fund officer or Director.
The following table shows the compensation paid by the fund to
each person who was a Director during the fund's last fiscal
year. None of the officers of the fund received any compensation
from the fund for such period. Officers and interested Directors
of the fund are compensated by Salomon Smith Barney.
Compensation Table
Name of Person
Aggregate
Compensation
from Fund
For Fiscal
Year
Ended
08/31/00
Pension or
Retirement
Benefits
Accrued as
part of
Fund
Expenses
Total
Compensation
from Fund
Complex for
Calendar Year
Ended 12/31/99
Number of
Funds for
Which Person
Serves within
Fund Complex
as of
08/31/00
Paul R. Ades
$5,700
0
$ 56,238
5
Herbert Barg
5,700
0
114,288
16
Dwight B. Crane
5,600
0
155,363
23
Frank G. Hubbard
5,700
0
56,138
5
Heath B. McLendon
---
---
---
78
Jerome Miller
5,600
0
51,613
5
Ken Miller
5,200
0
47,188
5
* 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 are paid 50% of the annual retainer fee and
meeting fees otherwise applicable to the fund Directors
together with reasonable out-of-pocket expenses for each
meeting attended. During the fund's last fiscal year
aggregate compensation paid by the fund to Directors
Emeritus totaled $9,873.
On December 15, 2000, the Directors and officers owned in the
aggregate less than 1% of the outstanding shares of the fund.
To the best knowledge of the Directors, as of December 1, 2000,
the following shareholders or "groups" (as such term is defined
in Section 13(d) of the Securities Exchange Act of 1934, as
amended) owned beneficially or of record more than 5% of the
shares of the following classes:
CLASS
PERCENT
NAME
ADDRESS
A
5.1057
Travelers Insurance
Company
Separate Account QPN
401(K)-TIC
Travelers Insurance
Company
Attn: Roger Ferland 5S
One Tower Square
Hartford CT 06183
Y
53.4426
Smith Barney
Allocation Series, Inc.
High Growth Portfolio
PNC Bank, NA
Attn: Sheila Heacock
8800 Tinicum Blvd., 3FL
Suite 200
Philadelphia, PA 19153-
3111
Y
28.3890
Smith Barney
Allocation Series, Inc.
Growth Portfolio
PNC Bank, NA
Attn: Sheila Heacock
8800 Tinicum Blvd., 3FL
Suite 200
Philadelphia, PA 19153-
3111
Y
10.1202
Smith Barney
Allocation Series, Inc.
Select High Growth
Portfolio
PNC Bank, NA
Attn: Sheila Heacock
8800 Tinicum Blvd., 3FL
Suite 200
Philadelphia, PA 19153-
3111
Y
8.0136
Smith Barney
Allocation Series, Inc.
Select Growth Portfolio
PNC Bank, NA
Attn: Sheila Heacock
8800 Tinicum Blvd., 3FL
Suite 200
Philadelphia, PA 19153-
3111
Z
89.04456
State Street Bank &
Trust
The Travelers Group
401(K)
Saving Plan
Attn: Rick Vest
225 Franklin Street
Boston MA 02101
Z
10.5503
Savings Incentive Plan
For Citibank, NA
State Street Bank &
Trust Co.
As Subtrustee U/A/D
10/97
105 Rosemont Rd
Westwood MA 02090
No officer, director or employee of Salomon Smith Barney or any
parent or subsidiary receives any compensation from the fund for
serving as an officer or Director of the Fund. The fund pays
each Director who is not an officer, director or employee of
Salomon Smith Barney or any of its affiliates a fee of $3,000 per
annum plus $500 per meeting attended and reimburses travel and
out-of-pocket expenses. For the calendar year, such expenses
totaled $18,574.09.
PURCHASE OF SHARES
The fund offers five classes ("Classes") of shares: Class A,
Class B, Class L, Class Y and Class Z. Class A shares are sold
to investors with an initial sales charge and Class B shares are
sold without an initial sales charge but with higher ongoing
expenses and a Contingent Deferred Sales Charge ("Deferred Sales
Charge") payable upon certain redemptions. Class L shares are
sold with a lower initial sales charge than Class A shares but
with higher ongoing expenses and a Deferred Sales Charge. Class
Y shares are sold without an initial sales charge and are
available only to investors investing a minimum of $15,000,000.
These alternatives are designed to provide investors with the
flexibility of selecting an investment best suited to his or her
needs based on the amount of purchase, the length of time the
investor expects to hold the shares and other circumstances.
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:
Amount of
Investment
Sales Charge as
a %
Of Transaction
Sales Charge as
a %
Of Amount
Invested
Dealers'
Reallowance as %
Of Offering Price
Less than $25,000
5.00%
5.26%
4.50%
$ 25,000 -
$49,999
4.25%
4.44%
3.83%
$50,000 $99,999
3.75%
3.90%
3.38%
$100,000
$249,999
3.25%
3.36%
2.93%
$250,000
$499,999
2.75%
2.83%
2.48%
$500,000
$999,999
2.00%
2.04%
1.80%
$1,000,000 or
more.
-0-
-0-
-0-
* Purchases of Class A shares of $1,000,000 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 Service Agents
(as defined on page 12) whose clients make purchases of
$1,000,000 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 Provisions" and "Waivers of Deferred Sales Charge."
Members of a selling group may receive up to 90% of the sales
charge and may be deemed to be underwriters of a fund as defined
in the 1933 Act. The reduced sales charges shown above apply to
the aggregate of purchases of Class A shares of a fund made at
one time by "any person," which includes an individual and his or
her immediate family, or a Director 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 fund 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 (except purchases of
Class Y shares by Smith Barney Allocation Series Inc., for which
there is no minimum purchase amount).
Class Z Shares Class Z shares are sold exclusively to (a) tax-
exempt employee benefit and retirement plans of Salomon Smith
Barney, Inc. and its affiliates and (b) unit investment trusts
sponsored by Salomon Smith Barney and its affiliates.
General
Investors may purchase shares from a broker dealer, financial
intermediary, financial institution (each called a "Service
Agent"), or a Salomon Smith Barney Financial Consultant. In
addition, certain investors, including qualified retirement plans
purchasing through certain Service Agents, may purchase shares
directly from a fund. When purchasing shares of a fund,
investors must specify which class is being purchased. Salomon
Smith Barney and Service Agents 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 fund by making an initial investment of at least
$1,000 for each account. 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 shareholders purchasing shares of the fund 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 the fund 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 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. 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.
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 the fund or a Salomon Smith Barney
Financial Consultant 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
(the ''trade date''). Orders received by a Service 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, provided the order is
received by a fund or the fund's agent prior to its close of
business. For shares purchased through a Service Agent purchasing
through Salomon Smith Barney, payment for shares of the fund 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 fund 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 fund to make additions to the account.
Additional information is available from the fund or a Service
Agent.
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 funds
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 fund 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 Salomon Smith Barney 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 fund which (i) was sponsored by the Financial Consultant's
prior employer, (ii) was sold to the client by the Salomon Smith
Financial Consultant and (iii) was subject to a sales charge; (d)
purchases by shareholders who have redeemed Class A shares in the
fund (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 the fund, 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;
and (i) purchases by investors participating in a Salomon Smith
Barney fee-based arrangement; and (j) accounts associated with
"k" Choice. 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 fund 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 fund and of other Smith Barney Mutual Funds
that are offered with a sales charge as currently listed under
''Exchange Privilege'' 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 that 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 the fund 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 option of the investor, up to 90 days before such date.
Please contact a Salomon Smith Barney Financial Consultant or 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 (except purchases of Class Y
shares by Smith Barney Allocation Series Inc., for which there is
no minimum purchase amount). Such investors must make an initial
minimum purchase of $5,000,000 in Class Y shares of the fund and
agree to purchase a total of $15,000,000 of Class Y shares of the
fund within thirteen months from the date of the Letter. If a
total investment of $15,000,000 is not made within the 13-month
period, as applicable, 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 fund'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.
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 that are redeemed will
not be subject to a Deferred Sales Charge to the extent the value
of such shares represents: (a) capital appreciation of fund
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.
Year Since Purchase Payment Was
Made
Deferred sales charge
First
5.00%
Second
4.00
Third
3.00
Fourth
2.00
Fifth
1.00
Sixth and thereafter
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 owned by the shareholders 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 a 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 the shares exchanged were initially
acquired in one of the other Smith Barney Mutual Funds, and fund
shares being redeemed will be considered to represent, as
applicable, capital appreciation or dividend and capital gain
distribution reinvestments in such other funds. 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
amount realized on 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 of the fund at $10 per share for a cost of $1,000.
Subsequently, the investor acquired 5 additional shares of the
fund 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'') (however, 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 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 59; (e) involuntary redemptions;
and (f) redemptions of shares to effect a combination of the fund
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.
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
their own account; (c) a Director or other fiduciary purchasing
shares for a single trust estate or single fiduciary account; and
(d) a Director 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
the fund 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.
PFS ACCOUNTS ONLY
Initial purchase of shares of the fund must be made through a PFS
Investments Registered Representative by completing the
appropriate application found in the prospectus. 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 PFS Shareholder Services. 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.
Subsequent investments of at least $50 may be made for each
Class. 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 PFS Shareholder Services 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 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. 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 $27.50 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 $27.50 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). Written redemption
requests of $50,000 or less do not require a signature guarantee
unless the shareholder has changed his/her address within 45 days
or less of the shareholder's request. 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 at a
charge of $10 for each tax form.
Additional information regarding PFS Shareholder Services
may be obtained by contacting the Client Services
Department at (800) 544-5445.
Determination of Public Offering Price
The fund offers its shares to the public on a continuous basis.
The public offering price for a Class A, Class L (effective June
12, 1998 the former Class C shares were renamed Class L shares)
and Class Y share of the fund is equal to the net asset value per
share at the time of purchase, plus for Class A and Class L
shares an initial sales charge based on the aggregate amount of
the investment. The public offering price for a Class B share
(and Class A share purchases, including applicable rights of
accumulation, equaling or exceeding $500,000) is equal to the net
asset value per share at the time of purchase and no sales charge
is imposed at the time of purchase. A Deferred Sales Charge,
however, is imposed on certain redemptions of Class B and Class L
shares, and Class A shares when purchased in amounts equaling or
exceeding $500,000. The method of computation of the public
offering price is shown in the fund's financial statements,
incorporated by reference in their entirety into this SAI.
REDEMPTION OF SHARES
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 and holiday closings), (b) when
trading in the markets the fund normally utilizes is restricted,
or an emergency exists, as determined by the SEC, so that
disposal of the fund'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 the fund's
shareholders.
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 together with the redemption request. Any
signature appearing on a share certificate, stock power or
written 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 unless
more than one such redemption request is made in any 10-day
period or the redemption proceeds are to be sent to an address
other than the address of record. Unless otherwise directed,
redemption proceeds will be mailed to an investor's address of
record. The Transfer Agent may require additional supporting
documents for redemptions made by corporations, executors,
administrators, Directors or guardians. A redemption request
will not be deemed properly received until the Transfer Agent
receives all required documents in proper form.
If a shareholder holds shares in more than one Class, any request
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 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. Redemption proceeds will be mailed to shareholder's
address of record.
Distributions in Kind
If the Board of Directors of the fund determines that it would be
detrimental to the best interests of the remaining shareholders
to make a redemption payment wholly in cash, each fund may pay,
in accordance with SEC rules, any portion of a redemption in
excess of the lesser of $250,000 or 1.00% of the fund's net
assets by a distribution in kind of fund securities in lieu of
cash. Securities issued as a distribution in kind may incur
brokerage commissions when shareholders subsequently sell those
securities.
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 monthly
or quarterly. Withdrawals of at least $50 may be made under the
Withdrawal Plan by redeeming as many shares of the fund 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 shareholder's shares at the time the Withdrawal Plan
commences. (With respect to Withdrawal Plans in effect prior to
November 7, 1994, any applicable Deferred Sales Charge will be
waived on amounts withdrawn that do not exceed 2.00% per month of
the value of the shareholder's shares that are subject to a
Deferred Sales Charge). To the extent withdrawals exceed
dividends, distributions and appreciation of a shareholder's
investment in the fund, there will be a reduction in the value of
the shareholder's investment, and continued withdrawal payments
may reduce the shareholder's investment and ultimately exhaust
it. Withdrawal payments should not be considered as income from
investment in the fund. Furthermore, as it generally would not be
advantageous to a shareholder to make additional investments in
the fund at the same time he or she is participating in the
Withdrawal Plan, purchases by such shareholder in amounts of less
than $5,000 ordinarily will not be permitted. All dividends and
distributions on shares in the Withdrawal Plan are reinvested
automatically at net asset value in additional shares of the
fund.
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. For additional information,
shareholders should contact a Salomon Smith Barney Financial
Consultant or the fund's sub-transfer agent.. A shareholder who
purchases shares directly through the sub-transfer agent may
continue to do so and applications for participation in the
Withdrawal 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.
INVESTMENT MANAGER AND ADMINISTRATOR
SSB Citi serves as investment manager to the fund pursuant to a
written agreement (the "Advisory Agreement"). The services
provided by the manager under the Advisory Agreement are
described in the prospectus under "Management." The manager pays
the salary of any officer and employee who is employed by both it
and the fund. The manager bears all expenses in connection with
the performance of its services. The manager is a wholly owned
subsidiary of Citigroup.
As compensation for investment advisory services, the fund pays
the manager a fee computed daily and paid monthly at an annual
rate of 0.60% of the fund's average daily net assets. For the
1998, 1999 and 2000 fiscal years, the fund incurred $5,176,481,
$7,183,426 and $17,040,650, respectively, in investment advisory
fees.
SSB Citi also serves as administrator to the fund pursuant to a
written agreement (the "Administration Agreement"). The services
provided by SSB Citi under the Administration Agreement are
described in the prospectus under "Management". SSB Citi pays
the salary of any officer and employee who is employed by both it
and the fund and bears all expenses in connection with the
performance eof its services.
As compensation for administrative services rendered to the fund,
SSB Citi receives a fee computed daily and paid monthly at the
annual rate of 0.20% of the fund's average daily net assets. For
1998, 1999 and 2000 fiscal years, the fund paid SSB Citi
$1,725,494, $2,394,475 and $5,680,217, respectively, in
administration fees.
The fund bears expenses incurred in its operation, including:
taxes, interest, brokerage fees and commissions, if any; fees of
Directors who are not officers, directors, shareholders or
employees of Salomon Smith Barney, or the manager, 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 prospectuses and statements of
additional information for regulatory purposes and for
distribution to existing shareholders, shareholders' reports and
corporate meetings.
The manager has voluntarily agreed to waive its fees if in any
fiscal year the aggregate expenses of any Class of the following
funds, exclusive of 12b-1 fees, taxes brokerage, interest and
extraordinary expenses, such as litigation costs, exceed the
indicated percentage of the fund's average net assets for that
fiscal year.
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.
DISTRIBUTOR
Distributor Effective June 5, 2000, Salomon Smith Barney,
located at 388 Greenwich Street, New York, New York 10013 serves
as the fund's distributor ("the Distributor") pursuant to a
written agreement dated June 5, 2000 (the " Distribution
Agreement") which was approved by the fund's Board of Directors,
including a majority of the independent directors, on April 17,
2000. This Distribution Agreement replaces the Distribution
Agreement with CFBDS, Inc.
The Distributor may be deemed to be an underwriter for purposes
of the 1933 Act. 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 re-allowances from the applicable public offering
price described above, PFS may, from time to time, pay or allow
additional re-allowances or promotional incentives, in the form
of cash or other compensation to PFSI Registered Representatives
that sell shares of the fund.
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 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 the fund 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 1998 fiscal year, the
period from September 1, 1998 through October 7, 1998, the period
from October 8, 1998 through August 31, 1999 and the 2000 fiscal
year, the aggregate dollar amount of commissions on Class A
shares is as follows:
Fiscal Year
Ended
8/31/98*
9/1/98 through
10/7/98*
10/8/98
through
8/31/99**
Fiscal Year
Ended
8/31/00***
$759,000
$32,000
$1,205,000
$9,995,000
* The entire amount was paid to Salomon Smith
Barney.
** $1,084,500 was paid to Salomon Smith Barney
*** $8,995,500 was paid to Salomon Smith Barney.
Commissions on Class L Shares. For the 1999 fiscal year, the
period from September 1, 1998 through October 7, 1998 and the
period from October 8, 1998 through August 31, 1999 and the 2000
fiscal year, the aggregate dollar amount of commissions on Class
L shares is as follows:
Fiscal Year
Ended
8/31/98*
9/1/98
through
10/7/98*
10/8/98 through
8/31/99**
Fiscal Year
Ended 8/31/00
$25,000
$3,000
$319,000
3,335,000***
* The entire amount was paid to Salomon Smith
Barney
** $284,400 was paid to Salomon Smith Barney
***$3,001,500 was paid to Salomon Smith Barney.
For the 2000, 1999 and 1998 fiscal years, SSB Citi received from
shareholders $27,000, $1,000 and $1,000 respectively, in Deferred
Sales Charge on the redemption of Class A shares. For the 2000,
1999 and 1998 fiscal years, SSB received from shareholders
$624,000, $355,000, and $341,000, respectively, in Deferred Sales
Charge on the redemption of Class B shares. For the 2000, 1999
and 1998 fiscal years, SSB received from shareholders $93,000,
$10,000 and $9,000, respectively, in Deferred Sales Charge on the
redemption of Class L shares.
When payment is made by the investor before settlement date,
unless otherwise directed by the investor, the funds will be held
as a free credit balance in the investor's brokerage account and
Salomon Smith Barney may benefit from the temporary use of the
funds. The investor may designate another use for the funds
prior to settlement date, such as an investment in a money market
fund (other than Smith Barney Exchange Reserve Fund) of the Smith
Barney Mutual Funds. If the investor instructs Salomon Smith
Barney to invest the funds in a Smith Barney money market fund,
the amount of the investment will be included as part of the
average daily net assets of both the fund and the Smith Barney
money market fund, and affiliates of Salomon Smith Barney that
serve the funds in an investment advisory capacity or
administrative capacity will benefit from the fact that they are
receiving fees from both such investment companies for managing
these assets computed on the basis of their average daily net
assets. The fund's Board of Directors has been advised of the
benefits to Salomon Smith Barney resulting from these settlement
procedures and will take such benefits into consideration when
reviewing the Advisory and Administration Agreements for
continuance.
Distribution Arrangements. To compensate each of Salomon Smith
Barney and PFSI for the service it provides and for the expense
it bears, the fund has adopted a services and distribution plan
(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 the fund sold through
Salomon Smith Barney and PFSI is paid a fee with respect to
shares of the fund sold through PFSI. Under the Plan, the fund
pays Salomon Smith Barney or PFSI (who pays its Registered
Representative), 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 fund'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 PFSI Registered Representatives) for servicing shareholder
accounts. In addition, the fund pays Salomon Smith Barney a
distribution fee with respect to Class B and Class L shares (and
pays PFSI with respect to Class A and 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; payment to and
expenses of Salomon Smith Barney Financial Consultants, PFSI
Registereded 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. The Class B and Class L distribution
fee is calculated at the annual rate of 0.75% and 0.75%,
respectively, of the value of the fund's average net assets
attributable to the shares of each Class.
For the fiscal year ended August 31, 2000, Salomon Smith Barney
incurred distribution expenses totaling $9,984,722 consisting of
$519,085 for mutual funds marketing, $38,144 for printing and
mailing of prospectuses, $1,892,319 for support services,
$7,148,006 to Salomon Smith Barney Financial Consultants, and
$387,168 in accruals for interest on the excess of Salomon Smith
Barney expenses incurred in distributing the fund's shares over
the sum of the distribution fees and deferred sales charge
received by Salomon Smith Barney from the fund.
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.
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 Plan
and may be paid from amounts received by Salomon Smith Barney from
the fund under the Plan.
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 the fund.
Under its terms, each Plan continues from year to year, provided
such continuance is approved annually by vote of the Board of
Directors, including a majority of the Directors who are not.
Interested persons of the funad and who have no indirect
financial interest in the operation or the Plan or in the
Distribution Agreement (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 the fund at any
time, without penalty, by 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 Plans, Salomon Smith Barney and PFSI will provide the
fund's Board of Directors with periodic reports of amounts
expended under the Plan and the purpose for which such
expenditures were made.
Services and Distribution Plans
To compensate Salomon Smith Barney and PFS for the services they
provide and for the expense they bear, the fund has adopted the
Plans pursuant to Rule 12b-1 under the 1940 Act. Under the Plan,
the fund pays Salomon Smith Barney a service fee, accrued daily
and paid monthly, calculated at the annual rate of 0.25% of the
value of the fund's average daily net assets attributable to the
Class A, Class B and Class L shares. In addition, the fund pays
Salomon Smith Barney a distribution fee with respect to Class B
and Class L shares primarily intended to compensate Salomon Smith
Barney for its initial expense of paying Financial Consultants a
commission upon sales of those shares. The Class B and Class L
distribution fee is calculated at the annual rate of 0.75% of the
value of the fund's average net assets attributable to the shares
of the respective Class.
For the fiscal years ended August 31, 2000, 1999, and 1998 the
fund incurred $2,730,890, $1,270,442 and $927,437 for Class A
shares, $8,893,499, $3,219,990 and $2,247,276 in Class B shares
and $3,676,705, $1,103,379, $809,577 in Class L shares,
respectively, in distribution plan fees.
Under its terms, the Plan continues from year to year, provided
such continuance is approved annually by vote of the Board of
Directors, including a majority of the Independent Directors who
have no direct or indirect financial interest in the operation of
the Plan.. 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 the
fund at any time, without penalty, by vote of a majority of the
Independent Directors or by 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 will provide the
fund's Board of Directors with periodic reports of amounts
expended under the Plan and the purpose for which such
expenditures were made.
Custodian
The securities and cash owned by the fund will be held in the
custody of PFPC Trust Company, 8800 Tinicum Boulevard,
Philadelphia, Pennsylvania 19153.
Counsel
Willkie Farr & Gallagher, 787 Seventh Avenue, New York, New York
10019-6099, serves as counsel to the fund.
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New
York 10038, serves as counsel to the Directors who are not
"interested persons" of the fund.
Auditors
KPMG LLP, 757 Third Avenue, New York, New York 10017, has been
selected as independent auditors to examine and report on the
fund's financial statements for the fiscal year ending August 31,
2001.
VALUATION OF SHARES
The prospectus states that the net asset value of the fund's
Classes of shares will be determined on any date 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 Day and
Christmas Day.
Securities listed on a national securities exchange will be
valued on the basis of the last sale on the date on which the
valuation is made or, in the absence of sales, at the mean
between the closing bid and asked prices. Over-the-counter
securities will be valued on the basis of the bid price at the
close of business on each day, or, if market quotations for these
securities are not readily available, at fair value, as
determined in good faith by the fund's Board of Directors.
Short-term obligations with maturities of 60 days or less are
valued at amortized cost, which constitutes fair value as
determined by the fund's Board of Directors. Amortized cost
involves valuing an instrument at its original cost to the fund
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. All other
securities and other assets of the fund will be valued at fair
value as determined in good faith by the fund's Board of
Directors.
EXCHANGE PRIVILEGE
Except as noted below, shareholders of certain Smith Barney
Mutual Funds may exchange all or part of their shares for shares
of the same class of other Smith Barney Mutual Funds, to the
extent such shares are offered for sale in the shareholder's
state of residence, on the basis of relative net asset value per
share at the time of exchange as follows:
A. Class A and Class Y shareholders of the fund who wish to
exchange all or a portion of their shares for shares of the
respective Class in any of the funds of the Smith Barney Mutual
Fund Complex may do so without imposition of any charge.
B. Class B shares of the fund exchanged for Class B shares of
another fund will be subject to the higher applicable Deferred
Sales Charge of the two funds. 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 fund that have been exchanged.
C. Upon exchange, the new Class L shares will be deemed to
have been purchased on the same date as the Class C shares of the
fund that have been exchanged.
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 Investment 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, subject to any applicable
Deferred Sales Charge, the proceeds immediately invested, at a
price as described above, in shares of the fund being acquired.
Smith Barney reserves the right to reject any exchange request.
The exchange privilege may be modified or terminated at any time
after written notice to shareholders.
Additional Information Regarding the Exchange Privilege Although
the exchange privilege is an important benefit, excessive exchange
transactions can be detrimental to the fund's performance and its
shareholders. The manager may determine that a pattern of
frequent exchanges is excessive and contrary to the best interests
of the fund's other shareholders. In this event, each fund may,
at its discretion, decide to limit additional purchases and/or
exchanges by a shareholder. Upon such a determination, the fund
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 fund or (b) remain invested in
the fund or exchange into any of the 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.
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 the 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 fund 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.
Additional Information Regarding Telephone Redemption and Exchange
Program.
Neither the fund nor its agents will be liable for following
instructions communicated by telephone that are reasonably
believed to be genuine. The fund 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 fund 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.
PERFORMANCE DATA
From time to time, the fund may quote yield or total return of a
Class in advertisements or in reports and other communications to
shareholders. The fund may include comparative performance
information in advertising or marketing the fund's shares. Such
performance information may be included in the following
financial publications: Barron's, Business Week, CDA Investment
Technologies, Inc., Changing Times, Forbes, Fortune,
Institutional Investor, Investor's Business Daily, Money,
Morningstar Mutual Fund Values, The New York Times, USA Today and
The Wall Street Journal. To the extent any advertisement or sales
literature of the fund describes the expenses or performance of
any Class, it will also disclose such information for the other
Classes.
Average Annual Total Return
"Average annual total return" figures 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 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.
The ERV assumes complete redemption of the hypothetical
investment at the end of the measuring period. A fund's net
investment income changes in response to fluctuations in interest
rates and the expenses of the fund.
Aggregate Total Return
"Aggregate total return" figures represent the cumulative change
in the value of an investment in the Class for the specified
period and are computed by the following formula:
ERV - P
P
Where: P = a hypothetical initial payment of $10,000
ERV = Ending Redeemable Value of a hypothetical
$10,000 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.
The ERV assumes complete redemption of the hypothetical
investment at the end of the measuring period.
The total returns below show what an investment in the fund would
have earned over a specified period of time (one, five or ten
years or since inception) without assuming the payment of the
maximum sales load when the investment was first made and that
all distributions and dividends by the fund were invested on the
reinvestment dates during the period, less all recurring fees.
The following chart reflects the financial performance of the
fund through the one, five and ten year periods ended August 31,
2000 and since inception:
Total Returns
Clas
s
1 Year
5
Year
Averag
e
Annual
10
Average
Annual
Since
Incepti
on
Average
Annual
Inception:
5/12/83
A
64.91%
31.60%
25.22%
19.36%
Inception:
11/6/92
B
63.58%
30.55%
N/A
26.77%
Inception:
5/13/93
L
63.62%
30.60%
N/A
28.43%
Inception:
10/12/95*
Y
65.42%
N/A
N/A
34.42%*
Inception:
11/6/92
Z
65.42%
32.07%
N/A
28.21%
* Performance begins January 30, 1996 since all Class Y
shares were redeemed during November 1995 and new
shares were not purchased until January 30, 1996.
The total returns below show what an investment in the fund would
have earned over a specified period of time (one, five or ten
years or since inception) assuming the payment of the maximum
sales load when the investment was first made and that all
distributions and dividends by the fund were invested on the
reinvestment dates during the period, less all recurring fees.
The average annual total return is derived from this total
return, which provides the ending redeemable value. The
following chart reflects the financial performance of the funds
through the one, five and ten year periods ended August 31, 2000
and since inception:
Total Returns
Clas
s
1
Year
5
Year
Averag
e
Annual
10
Average
Annual
Since
Incepti
on
Average
Annual
Inception:
5/12/83
A
56.68
%
30.26%
24.58%
19.00%
Inception:
11/6/92
B
58.58
%
30.48%
N/A
26.77%
Inception:
5/13/93
L
60.97
%
30.34%
N/A
28.25%
Inception:
10/12/95+
Y*
65.42
%
N/A
N/A
34.42%*
Inception:
11/6/92
Z*
65.42
%
32.07%
N/A
28.21%
* Class Y shares and Class Z shares do not incur sales
charges nor Deferred Sales Charge.
+ Performance begins January 31, 1996 since all Class Y
shares were redeemed during November 1995 and new
shares were not purchased until January 31, 1996.
It is important to note that the yield and total return formulas
set forth above are based on historical earnings and are not
intended to indicate future performance.
Performance will vary from time to time depending upon market
conditions, the composition of the fund's portfolio and operating
expenses and the expenses exclusively attributable to the Class.
Consequently, any given performance quotation should not be
considered representative of the Class' performance for any
specified period in the future. Because the performance will
vary, it may not provide a basis for comparing an investment in
the Class with certain bank deposits or other investments that
pay a fixed yield for a stated period of time. Investors
comparing a Class' performance with that of other mutual funds
should give consideration to the quality and maturity of the
respective investment companies' portfolio securities.
It is important to note that the total return figures set forth
above are based on historical earnings and are not intended to
indicate future performance. Each Class' net investment income
changes in response to
TAXES
The following is a summary of certain federal income tax
considerations that may affect the fund and its shareholders. The
summary is not intended as a substitute for individual tax advice
and investors are urged to consult their own tax advisers as to
the tax consequences of an investment in the fund.
The fund has qualified and intends to continue to qualify each
year as a regulated investment company under the Code. Provided
that the fund (a) is a regulated investment company and (b)
distributes at least 90% of its net investment income (including,
for this purpose, net realized short-term capital gains), the
fund will not be liable for federal income taxes to the extent
its net investment income and its net realized long- and short-
term capital gains, if any, are distributed to its shareholders.
Although the fund expects to be relieved of all or substantially
all federal, state, and local income or franchise taxes,
depending upon the extent of its activities in states and
localities in which its offices are maintained, in which its
agents or independent contractors are located, or in which it is
otherwise deemed to be conducting business, that portion of the
fund's income which is treated as earned in any such state or
locality could be subject to state and local taxes. Any such
taxes paid by the fund would reduce the amount of income and
gains available for distribution to shareholders. All net
investment income and net capital gains earned by the fund will
be reinvested automatically in additional shares of the same
Class of the fund at net asset value, unless the shareholder
elects to receive dividends and distributions in cash.
Gains or losses on the sales of securities by the fund generally
will be long-term capital gains or losses if the fund has held
the securities for more than one year. Gains or losses on the
sales of securities held for not more than one year generally
will be short-term capital gains or losses. If the fund acquires
a debt security at a substantial discount, a portion of any gain
upon the sale or redemption will be taxed as ordinary income,
rather than capital gain, to the extent it reflects accrued
market discount.
Dividends of net investment income and distributions of net
realized short-term capital gains will be taxable to shareholders
as ordinary income for federal income tax purposes, whether
received in cash or reinvested in additional shares. Dividends
received by corporate shareholders will qualify for the
dividends-received deduction only to the extent that the fund
designates the amount distributed as a dividend and the amount so
designated does not exceed the aggregate amount of dividends
received by the fund from domestic corporations for the taxable
year. The federal dividends-received deduction for corporate
shareholders may be further reduced or disallowed if the shares
with respect to which dividends are received are treated as debt
financed or are deemed to have been held for less than 46 days.
Foreign countries may impose withholding and other taxes on
dividends and interest paid to the fund with respect to
investments in foreign securities. However, certain foreign
countries have entered into tax conventions with the United
States to reduce or eliminate such taxes.
Distributions of long-term capital gains will be taxable to
shareholders as such, whether paid in cash or reinvested in
additional shares and regardless of the length of time that the
shareholder has held his or her shares in the fund. If a
shareholder receives a distribution taxable as long-term capital
gain with respect to his or her investment in the fund and
redeems or exchanges the shares before he or she has held them
for more than six months, any loss on the redemption or exchange
that is less than or equal to the amount of the distribution will
be treated as a long-term capital loss.
If a shareholder (a) incurs a sales charge in acquiring shares of
the fund, (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 (i.e., 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 or redeemed shares made within 90 days of the
second acquisition. This provision prevents a shareholder from
immediately deducting the sales charge by shifting his or her
investment in a family of mutual funds.
Investors considering buying shares of the fund on or just prior
to a record date for a taxable dividend or capital gain
distribution should be aware that, regardless of whether the
price of the fund shares to be purchased reflects the amount of
the forthcoming dividend or distribution payment, any such
payment will be a taxable dividend or distribution payment.
If a shareholder fails to furnish a correct taxpayer
identification number, fails to report dividend and interest
income in full, 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, the shareholder may be subject to a
31% "backup withholding" tax with respect to (a) any taxable
dividends and distributions and (b) any proceeds of any
redemption of fund shares. 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.
The foregoing is only a summary of certain tax considerations
generally affecting the fund and its shareholders and is not
intended as a substitute for careful tax planning. Shareholders
are urged to consult their tax advisers with specific reference
to their own tax situations, including their state and local tax
liabilities.
ADDITIONAL INFORMATION
The fund was incorporated in the State of Maryland on May 12,
1983 and is registered with the SEC as a diversified, open-end
management investment company.
The fund offers shares of common stock currently classified into
five Classes, A, B, L, Y and Z. Each Class represents an
identical pro rata interest in the Fund's investment portfolio.
As a result, the Classes have the same rights privileges and
preferences, except with respect to: (a) the designation of each
Class; (b) the effect of the respective sales charges, if any,
for each Class; (c) the distribution and/or service fees borne by
each Class pursuant to a plan adopted by the fund pursuant to
Rule 12b-1 under the 1940 Act (d) the expenses allocable to each
Class; (e) voting rights on matters exclusively affecting a
single class; (f) the exchange privileges of each Class; and (g)
the conversion feature of shares of Class B. The fund's Board of
Directors does not anticipate that there will be any conflicts
among the interests of the holders of the different Classes. The
Directors, on an ongoing basis, will consider whether any such
conflict exists and, if so, take appropriate action.
The fund does not hold annual shareholder meetings. There
normally will be no meeting 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. The Directors will call a meeting for any purpose
upon written request of shareholders holding at least 10% of the
fund's outstanding shares and the fund will assist shareholders
in calling such a meeting as required by the 1940 Act. When
matters are submitted for shareholder vote, shareholders of each
Class will have one vote for each full share owned and a
proportionate fractional vote for any fractional share held of
that Class. Generally, shares of the fund will be voted on a
fund-wide basis on all matters except matters affecting only the
interests of one or more of the Classes.
The fund sends its shareholders a semi-annual report and an
audited annual report, which include listings of the investment
securities held by the fund at the end of the reporting period.
The fund was incorporated on May 12, 1983 under the name Shearson
Aggressive Growth Fund Inc. On May 20, 1988, November 6, 1992,
July 30, 1993 and October 14, 1994, the fund changed its name to
Shearson Lehman Aggressive Growth Fund Inc., Shearson Lehman
Brothers Aggressive Growth Fund Inc., Smith Barney Shearson
Aggressive Growth Fund Inc. and Smith Barney Aggressive Growth
Fund Inc., respectively.
PFPC Trust Company, 8800 Tinicum Blvd, Philadelphia, Pennsylvania
19153, serves as the custodian of the fund. Under the custody
agreement with the fund, PFPC holds the fund's portfolio
securities and keeps all necessary accounts and records. For its
services, PFPC receives a monthly fee based upon the month-end
market value of securities held in custody and also receives
certain securities transaction charges. The assets of the fund are
held under bank custodianship in compliance with the 1940 Act.
Citi Fiduciary Trust Company, located at 125 Broad Street, New
York, NY 10004 serves as the Transfer Agent and shareholder
services agent of the fund. PFPC Global Fund Services, located at
P.O Box 9699 Providence, RI 02940-9699 and PFS Shareholder
Services, located at 3120 Breckinridge Blvd, Duluth Georgia 30099
serve as the fund's sub-transfer agents to render certain
shareholder record keeping and accounting services functions.
FINANCIAL STATEMENTS
The Fund's financial information will be incorporated by reference
to the fund's Annual Reports to Shareholders for the fiscal year
ended August 31, 2000 which will be subsequently filed in a post-
effective amendment to this registration.
OTHER INFORMATION
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 or a
Service Agent..
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 Smith Barney Allocation Series
As a fund of funds, investors can select a Smith Barney
Allocation Series Portfolio that may help their investment
needs. As needs change, investors can easily choose
another long-term, diversified investment from our
Allocation Series 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.
1
42
PART C OTHER INFORMATION
Item 23. Exhibits
All references are to the Registrant's registration
statement on Form N-1A (the "Registration Statement") as
filed with the Securities and Exchange Commission (the
"SEC") on June 5, 1983 (File Nos. 284199 and 811-3762).
(a)(1) Registrant's Articles of Incorporation dated May
12, 1983 and Articles of Amendment dated May 27, 1983,
October 3, 1983, May 20, 1988, November 5, 1992 and
July 30, 1993, respectively, are incorporated by
reference to Post-Effective Amendment No. 15 to the
Registration Statement filed on October 28, 1993
("Post-Effective Amendment No. 15 to the Registration
Statement filed on October 28, 1993 ("Post-Effective
Amendment No. 15").
(a)(2) Articles of Amendment dated October 14, 1994, Form of
Articles Supplementary and Form of Articles of
Amendment filed December 28,1995 ("Post-Effective
Amendment No. 18).
(a)(3) Articles of Amendment dated June 1, 1998 incorporated by
reference to the Post-Effective Amendment No. 21.
(b)(1) Registrant's By-Laws are incorporated by
reference to the Registration Statement.
(b)(2) Amendments dated January 27, 1987, October 22, 1987
and October 20, 1988 to By-Laws are incorporated by
reference to Post-Effective Amendment No. 9.
(c) Registrant's form of stock certificates for Class A,
Class B, Class C and Class Y shares are incorporated
by reference to Post-Effective Amendment No. 14 to the
Registration Statement filed on October 23, 1992
("Post-Effective Amendment No. 14"). to the
Registration Statement.
(d) Investment Advisory Agreement between the Registrant
and Smith Barney Asset Management Division of Smith
Barney Advisers, Inc. is incorporated by reference to
Post-Effective Amendment No. 15.
(e)(1) Distribution Agreement between the Registrant and
Smith Barney Inc. is incorporated by reference to the
Post-Effective Amendment No. 15.
(e)(2) form of Distribution Agreement between the
Registrant and CFBDS, Inc. is incorporated by reference to the
Post-Effective Amendment No. 21.
(e) (3) form of Broker Dealer Contract between the
Registrant and CFBDS, Inc. is incorporated by reference to the
Post-Effective Amendment No. 22.
(e) (4) Form of Distribution Agreement with Salomon Smith Barney
Inc. is filed herewith
(e) (5) Form of Distribution Agreement with PFS Distributors,
Inc. is filed herewith
(f) Not Applicable.
(g) Custodian Agreement between the Registrant and PNC
Bank, National Association ("PNC Bank") is
incorporated by reference to Pre-Effective Amendment
No. 1.
(h) (1) Transfer Agency Agreement dated August 2, 1993,
between the Registrant and First Data Investors
Services Group, Inc., is incorporated by reference to
Post-Effective Amendment No. 16, filed on January 1,
1994 ("Post-Effective Amendment No. 16").
(h)(2) Administration Agreement dated April 21, 1994,
between the Registrant and Smith Barney Advisers, Inc.
is incorporated by reference to Post-Effective Amendment No. 20.
(h)(3) Transfer Agency Agreement between Registrant and Citi
Fiduciary Trust is filed herewith.
(h)(4) Sub-Transfer Agency Agreement with PFPC Global Fund
Services is filed herewith.
(h)(5) Sub-Transfer Agency Agreement with PFS Shareholder
Services is filed herewith
(i) Opinion of Robert A. Vegliante Assistant Secretary of
the Fund filed with the Registrants Rule 24F-2 Notice
is incorporated by reference.
(j) Auditors' Consent filed herewith
(k) Not Applicable.
(l) Purchase Agreement between the Registrant and Shearson
Lehman Brothers Inc. is incorporated by reference to
Pre-Effective Amendment No. 1.
(m)(1) Amended Services and Distribution Plans pursuant to
Rule 12b-1 between the Registrant and Smith Barney
Inc. ("Smith Barney") filed on December 28, 1995
(Post-Effective Amendment No. 18).
(m)(2) Form of Amended and Restated Shareholder Services
and Distribution Plan pursuant to Rule 12b-1 between
the Registrant is incorporated by reference to Post-Effective
Amendment No. 21.
(m)(3) Form of Amended and Restated Shareholder Services and
Distribution Plan pursuant to Rule 12b-1 with Salomon Smith
Barney Inc. and PFS Distributors, Inc. is filed herewith
(n) Financial Data Schedule filed herewith
(o) Form of Plan pursuant to Rule 18f-3 is
incorporated by reference to Post-Effective Amendment No. 21.
(p) Code of Ethics is filed herewith.
Item 24.
None.
Item 25. Indemnification
Under the Registrant's corporate charter and Maryland law,
directors and officers of the Registrant are not liable to
the Registrant or its stockholders except for receipt of an
improper personal benefit or active and deliberate
dishonesty. The Registrant's corporate charter requires that
it indemnify its directors and officers against liabilities
unless it is proved that a director or officer acted in bad
faith or with active and deliberate dishonesty or received
an improper personal benefit. These Indemnification
provisions are subject to the limitation under the
Investment Company Act of 1940, as amended, that no director
or officer may be protected against liability for willful
misfeasance, bad faith, gross negligence or reckless
disregard for the duties of his office.
Item 26. Business and Other Connections of Investment Adviser
Investment Adviser - - SSB Citi Fund Management LLC ("SSB Citi")
formerly known as SSBC Fund Management Inc. ("SSBC")
SSBC was incorporated in December 1968 under the laws
of the State of Delaware. On September 21, 1999, SSBC
was converted into a Delaware Limited Liability Company.
SSB Citi is a wholly owned subsidiary of Salomon Smith Barney
Holdings Inc. ("Holdings") (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 "Advisers 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 SSBC pursuant to the Advisers Act
(SEC File No. 801-8314).
Item 27. Principal Underwriters
(a) Salomon Smith Barney, Inc., ("Salomon Smith Barney")
the Registrant's Distributor, is also the distributor for the
following
Smith Barney funds:
Smith Barney 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
Allocation Series 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 Core 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.
In addition, Salomon Smith Barney is also the distributor for the
Centurion Funds, Inc.
(b) The information required by this Item 27 with respect
to each director, officer and partner of Salomon Smith Barney
is incorporated by reference to Schedule A of Form BD
filed by Salomon Smith Barney pursuant to the Securities
Exchange Act of 1934 (SEC File No. 812-8510).
Item 28. Location of Accounts and Records.
(1) Salomon Smith Barney Inc.
7 World Trade Center
New York, New York 10048
(2) Smith Barney Aggressive Growth Fund Inc.
7 World Trade Center
New York, New York 10048
(3) SSB Citi Fund Management LLC.
7 World Trade Center
New York, New York 10048
(4) PFPC Trust Co.
8800 Tinicum Blvd.
Philadelphia, PA, 19153
(5) Citi Fiduciary Trust Company
125 Broad Street
New York, New York 10004
(6) PFPC Global Fund Services
P.O. Box 9699
Providence RI 02940-9699
(7) PFS Distibutors Inc.
3100 Breckinridge Blvd.
Building 20
Duluth, GA 30099-0062
Item 29. Management Services.
Not Applicable.
Item 30. Not Applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the
Registrant, SMITH BARNEY AGGRESSIVE GROWTH FUND INC., has duly
caused this Amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, all
in the City of New York, State of New York on the 21st day of
December, 2000.
SMITH BARNEY AGGRESSIVE GROWTH FUND INC.
By: /s/ Heath B. McLendon
Heath B. McLendon
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment to
the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Heath B. McLendon* Chairman of the Board 12/27/00
Heath B. McLendon (Chief Executive Officer)
/s/ Lewis E. Daidone* Senior Vice President
and Treasurer 12/21/00
Lewis E. Daidone (Chief Financial and Accounting Officer)
/s/ Paul R. Ades* Director 12/27/00
Paul R. Ades
/s/ Herbert Barg* Director 12/27/00
Herbert Barg
/s/ Dwight B. Crane* Director 12/27/00
Dwight B. Crane
/s/ Frank Hubbard* Director 12/27/00
Frank Hubbard
/s/ Ken Miller* Director 12/27/00
Ken Miller
/s/ Jerome Miller** Director 12/27/00
Jerome Miller
*Signed by Heath B. McLendon, their duly authorized attorney-in-
fact, pursuant to power of attorney dated September 8, 1994.
**Signed by Heath B. McLendon, their duly authorized
attorney-in-fact, pursuant
to power of attorney dated April 15, 1998.
/s/ Heath B. McLendon
Heath B. McLendon
EXHIBITS
Exhibit No. Description of Exhibits
e)(4) Form of Distribution Agreement with Salomon Smith Barney
(e)(5) Form of Distribution Agreement with PFS Distributors
(h)(3) Transfer Agency Agreement with Citi Fiduciary Trust
Company
(h)(4) Sub-Transfer Agency Agreement with PFPC Global Fund
Services
(h)(5) Sub-Transfer Agency Agreement with PFS Shareholder
Services
(j) Consent of independent auditors
(m)(3) Form of Amended and Restated Shareholder Services and
Distribution Plan pursuant to Rule 12b-1 with Salomon
Smith Barney and PFS Distributors, Inc.
(n) Financial Data Schedule
(p) Code of Ethics
Cover
