SMITH BARNEY BALANCED PORTFOLIO
SMITH BARNEY CONSERVATIVE PORTFOLIO
SMITH BARNEY GROWTH PORTFOLIO
SMITH BARNEY HIGH GROWTH PORTFOLIO
SMITH BARNEY INCOME PORTFOLIO
SMITH BARNEY INVESTMENT GRADE BOND FUND
SMITH BARNEY PREMIUM TOTAL RETURN FUND
SUPPLEMENT DATED OCTOBER 18, 1996 TO PROSPECTUSES*
The following supplements and, to the extent inconsistent therewith,
supersedes the information contained in the Prospectus of each of the funds
listed above (each a "Fund") under the section "Purchase of Shares--Systematic
Investment Plan":
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 C shares and the minimum 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 requirement for Class A, Class B and Class C shares and the
minimum subsequent investment requirement for all Classes is $50.
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The following information supplements the section of each Fund's Prospectus
entitled "Purchase of Shares--Initial Sales Charge Waivers:"
Purchases of Class A shares also may be made at net asset value without a
sales charge in the following circumstances: (1) direct rollovers by plan
participants of distributions from a 401(k) plan enrolled in the Smith Barney
401(k) Program (Note: Subsequent investments will be subject to the applicable
sales charge); (2) purchases by separate accounts used to fund certain
unregistered variable annuity contracts; and (3) purchases by investors
participating in a Smith Barney fee based arrangement.
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The following information replaces in its entirety the disclosure in the
Prospectus of each Fund under "Purchase of Shares--Smith Barney 401(k)
Program:"
SMITH BARNEY 401(K) AND EXECCHOICE (TM) PROGRAMS
Investors may be eligible to participate in the Smith Barney 401(k) Program
or the Smith Barney ExecChoice (TM) Program. To the extent applicable, the same
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terms and conditions, which are outlined below, are offered to all plans
participating ("Participating Plans") in these programs.
Each Fund offers to Participating Plans Class A and Class C shares as
investment alternatives under the Smith Barney 401(k) and ExecChoice (TM)
Programs. Class A and Class C shares acquired through the Participating Plans
are subject to the same service and/or distribution fees as the Class A and
Class C shares acquired by other investors; however, they are not subject to
any initial sales charge or contingent deferred sales charge ("CDSC"). Once a
Participating Plan has made an initial investment in a Fund, all of its
subsequent investments in the Fund must be in the same Class of shares, except
as otherwise described below.
Class A Shares. Class A shares of a Fund are offered without any sales charge
or CDSC to any Participating Plan that purchases $1,000,000 or more of Class A
shares of one or more funds of the Smith Barney Mutual Funds.
Class C Shares. Class C shares of a Fund are offered without any sales charge
or CDSC to any Participating Plan that purchases less than $1,000,000 of Class
C shares of one or more funds of the Smith Barney Mutual Funds.
401(k) and ExecChoice (TM) Plans Opened On or After June 21, 1996. At the end
of the fifth year after the date the Participating Plan enrolled in the Smith
Barney 401(k) Program or the Smith Barney ExecChoice (TM) Program, if its total
Class C holdings in all non-money market Smith Barney Mutual Funds equal at
least $1,000,000, it will be offered the opportunity to exchange all of its
Class C shares for Class A shares of a Fund. (For Participating Plans that were
originally established through a Smith Barney retail brokerage account, the
five year period will be calculated from the date the retail brokerage account
was opened.) Such Participating Plans will be notified of the pending exchange
in writing within 30 days after the fifth anniversary of the enrollment date
and, unless the exchange offer has been rejected in writing, the exchange will
occur on or about the 90th day after the fifth anniversary date. If the
Participating Plan does not qualify for the five year exchange to Class A
shares, a review of the Participating Plan's holdings will be performed each
quarter until either the Participating Plan qualifies or the end of the eighth
year.
401(k) Plans Opened Prior to June 21, 1996. In any year after the date a
Participating Plan enrolled in the Smith Barney 401(k) Program, if its total
Class C holdings in all non-money market Smith Barney Mutual Funds equal at
least $500,000 as of the calendar year-end, the Participating Plan will be
offered the opportunity to exchange all of its Class C shares for Class A
shares of a Fund. Such Plans will be notified in writing within 30 days after
the last business day of the calendar year and, unless the exchange offer has
been rejected in
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writing, the exchange will occur on or about the last business day of the
following March.
Any Participating Plan in the Smith Barney 401(k) Program that has not
previously qualified for an exchange into Class A shares will be offered the
opportunity to exchange all of its Class C shares for Class A shares of a Fund,
regardless of asset size, at the end of the eighth year after the date the
Participating Plan enrolled in the Smith Barney 401(k) Program. Such Plans will
be notified of the pending exchange in writing approximately 60 days before the
eighth anniversary of the enrollment date and, unless the exchange has been
rejected in writing, the exchange will occur on or about the eighth anniversary
date. Once an exchange has occurred, a Participating Plan will not be eligible
to acquire additional Class C shares of the Fund but instead may acquire Class
A shares of the Fund. Any Class C shares not converted will continue to be
subject to the distribution fee.
Participating Plans wishing to acquire shares of a Fund through the Smith
Barney 401(k) Program or the Smith Barney ExecChoice (TM) Program must purchase
such shares directly from the Transfer Agent. For further information regarding
these Programs, investors should contact a Smith Barney Financial Consultant.
Existing 401(k) Plans Investing in Class B Shares. Class B shares of the
Smith Barney Mutual Funds are not available for purchase by Participating Plans
opened on or after June 21, 1996, but may continue to be purchased by any
Participating Plan in the Smith Barney 401(k) Program opened prior to such date
and originally investing in such Class. Class B shares acquired are subject to
a CDSC of 3.00% of redemption proceeds, if the Participating Plan terminates
within eight years of the date the Participating Plan first enrolled in the
Smith Barney 401(k) Program.
At the end of the eighth year after the date the Participating Plan enrolled
in the Smith Barney 401(k) Program, it will be offered the opportunity to
exchange all of its Class B shares for Class A shares of a Fund. Such
Participating Plan will be notified of the pending exchange in writing
approximately 60 days before the eighth anniversary of the enrollment date and,
unless the exchange has been rejected in writing, the exchange will occur on or
about the eighth anniversary date. Once the exchange has occurred, a
Participating Plan will not be eligible to acquire additional Class B shares of
a Fund but instead may acquire Class A shares of the Fund. If the Participating
Plan elects not to exchange all of its Class B shares at that time, each Class
B share held by the Participating Plan will have the same conversion feature as
Class B shares held by other investors. See "Purchase of Shares--Deferred Sales
Charge Alternatives" in each Fund's prospectus.
<PAGE>
No CDSC is imposed on redemptions of Class B shares to the extent that the
net asset value of the shares redeemed does not exceed the current net asset
value of the shares purchased through reinvestment of dividends or capital gain
distributions, plus the current net asset value of Class B shares purchased
more than eight years prior to the redemption, plus increases in the net asset
value of the shareholder's Class B shares above the purchase payments made
during the preceding eight years. Whether or not the CDSC applies to the
redemption by a Participating Plan depends on the number of years since the
Participating Plan first became enrolled in the Smith Barney 401(k) Program,
unlike the applicability of the CDSC to redemptions by other shareholders,
which depends on the number of years since those shareholders made the purchase
payment from which the amount is being redeemed.
The CDSC will be waived on redemptions of Class B shares in connection with
lump-sum or other distributions made by a Participating Plan as a result of:
(a) the retirement of an employee in the Participating Plan; (b) the
termination of employment of an employee in the Participating Plan; (c) the
death or disability of an employee in the Participating Plan; (d) the
attainment of age 59 1/2 by an employee in the Participating Plan; (e) hardship
of an employee in the Participating Plan to the extent permitted under Section
401(k) of the Code; or (f) redemptions of shares in connection with a loan made
by the Participating Plan to an employee.
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The provisions contained in each Fund's Prospectus under "Exchange
Privilege--Class A Exchanges" notwithstanding, Class A shares of the Fund that
are exchanged for the same class of shares of another Smith Barney Mutual Fund
sold with a higher maximum sales charge, will not be subject to any sales
charge differential.
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* Prospectuses dated:
<TABLE>
<S> <C>
Balanced Portfolio August 5, 1996
Conservative Portfolio August 5, 1996
Growth Portfolio August 5, 1996
High Growth Portfolio August 5, 1996
Income Portfolio August 5, 1996
Investment Grade Bond Fund April 29,1996, as
amended June 24, 1996
Premium Total Return Fund November 28, 1995
</TABLE>
FD01226 10/96
