Securities Act Registration No. 33-10830
Investment Company Act Registration No. 811-4959
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 12 [X]
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 12
__________________ [ X ]
Smith Barney Variable Account Funds
(a Maryland Corporation)
(Exact Name of Registrant as Specified in Charter)
388 Greenwich Street
New York, New York 10013
(Address of Principal Executive Offices)
(212) 816-6474
(Registrant's Telephone Number, including Area Code)
Christina T. Sydor, Secretary
Smith Barney Variable Account Funds
388 Greenwich Street
New York, New York 10013
(Name and Address of Agent for Service)
_____________________
Copies to:
John Baumgardner, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Burt Leibert
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019
______________
Approximate Date of Proposed Public Offering: Continuous.
It is proposed that this filing will become effective (check appropriate
box):
[XX] Immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] On (date) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) of Rule 485
[ ] 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: Shares of Beneficial Interest
SMITH BARNEY VARIABLE ACCOUNT FUNDS
FORM N-1A
SMITH BARNEY VARIABLE ACCOUNT FUNDS
PART A
SMITH BARNEY VARIABLE ACCOUNT FUNDS
Prospectus
April 30, 1999
The Income and Growth Portfolio seeks current income and long-term
growth of income and capital by investing primarily in common stocks.
The U.S. Government/High Quality Securities Portfolio seeks high
current income and security of principal from a portfolio consisting
primarily of U.S. Government Obligations and other high quality fixed
income securities. [This Portfolio currently has insufficient assets
to enable it to invest in accordance with its investment program and
as a result invests all of its assets in repurchase agreements.]
The Reserve Account Portfolio seeks current income from a portfolio
of money market instruments and other high quality fixed income
obligations with limited maturities. This Portfolio currently has
insufficient assets to enable it to invest in accordance with its
investment program and as a result invests all of its assets in
repurchase agreements.
Shares of each Portfolio are offered only to
insurance company separate accounts which fund
certain variable annuity and variable life
insurance contracts. This prospectus should be
read together with the prospectus for those
contracts.
The Securities and Exchange Commission has not
approved or disapproved these securities or
determined whether this prospectus is accurate
or complete. Any statement to the contrary is a
crime.
Contents
Fund goal and main strategies
Page
The Income and Growth Portfolio
1
The U.S. Government/High Quality
Securities
Portfolio
3
The Reserve Account Portfolio
5
More on the Portfolios' investments
6
Management
7
Share transactions
8
Share price
9
Dividends, distributions and taxes
9
Financial highlights
10
The manager:
SSBC Fund Management Inc. (SSBC) serves as the manager and selects
investments for each Portfolio. SSBC is an affiliate of Salomon Smith
Barney Inc. and subsidiary 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 consumers and corporate customers around the world.
You should know:
An investment in a Portfolio is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any
other government agency.
Fund goal and main strategies
The Income and Growth Portfolio
Investment objective
Current income and long-term growth of income and capital.
Key investments
The Portfolio invests primarily in dividend paying
common stocks of U.S. companies
having market capitalizations of at least $5 billion at the time of investment.
Selection process
The manager employs a two-step selection process.
First, the manager uses proprietary
models and fundamental research to find stocks that are
underpriced in the market
relative to their fundamental value. Next, the manager looks
for a positive catalyst in
the company's near term outlook which the manager believes
would accelerate earnings.
In selecting individual companies for investment, the manager looks
for the following:
- - Low market valuations measured by the manager's valuation models
- -Above average dividend yields and established dividend records
- -Positive changes in earnings prospects because of
- - New management
- - Effective research, product development and marketing
- - A business strategy not yet recognized by the marketplace
- - Regulatory changes favoring the company
- - High return on invested capital and strong cash flow
- - Liquidity
Principal risks of investing in the Portfolio
While an investment in common stocks offers the potential
for capital appreciation, it
also involves certain risks. Investors could lose money on
their investment in the
Portfolio, or the Portfolio may not perform as well as other
investments, if any of the
following occurs:
? The U.S. stock market goes down.
? Value stocks or larger capitalization stocks fall
temporarily out of favor with investors.
? An adverse event depresses the value of a company's stock
held by the Portfolio.
The manager's judgment about the attractiveness, value
or potential appreciation of a
particular stock proves to be incorrect.
Portfolio performance
This bar chart indicates the risks of investing in the
Portfolio by showing changes in
the Portfolio's performance from year to year.
The table shows how the Portfolio's
average annual returns for different calendar periods
compare to the return of the
Standard & Poor's (S&P) 500 Index. The S&P 500 Index is an index
of widely held common
stocks listed on the New York and American Stock Exchanges and
the over-the-counter
markets. Figures for the index include reinvestment of
dividends. The index is unmanaged
and is not subject to management and trading expenses as the
Portfolio is. Past
performance does not necessarily indicate how the Portfolio
will perform in the future.
The bar chart shows the performance of the
Portfolio's shares for each full calendar
year since its inception in 1989.
Quarterly returns:
Highest: 15.10% in 1st quarter 1998
Lowest: -11.59% in 3rd quarter 1998
Portfolio manager
Ellen Cardozo Sonsino
Ellen Cardozo Sonsino is primarily responsible for the day-to-day
management of the
Portfolio. Ms. Sonsino, an investment officer of SSBC Fund Management Inc.
and a managing director of Salomon Smith Barney, has been with
Salomon Smith Barney since
1984 and has 21 years of investment management experience.
Fund goal and main strategies
The U.S. Government/High
Quality Securities Portfolio
Investment objective
High current income and security of principal.
Key investments
The Portfolio invests primarily in U.S. government securities and
in U.S. corporate
fixed income obligations. A substantial portion of the Portfolio's
assets may be invested in mortgage-related securities,
including GNMA Certificates. GNMA Certificates
represent part ownership of a pool of mortgage loans
with the characteristic that the
timely payment of principal and interest from the pool is
guaranteed by the U.S. Government.
Credit quality: The Portfolio invests primarily in high quality fixed income
securities, which are securities rated within the two highest
rating categories by a
nationally recognized ratings organization, or, if
unrated, are of equivalent quality as
determined by the manager. All of the Portfolio's
nvestments will be rated at least
investment grade at the time of purchase.
Maturity: The Portfolio maintains an average portfolio maturity
of between 1 and 5
years. Average maturity is a dollar weighted average of the
maturities of individual
fixed income securities which the Portfolio owns. The Portfolio
may invest in
individual securities of any maturity.
Selection process
The manager employs a three step "top down" investment approach
to selecting investments
for the Portfolio by identifying undervalued
sectors of the fixed income securities
market first and then selecting attractive individual
securities within those
undervalued sectors. As the third component to
this approach, the manager evaluates
each potential investment to determine whether that
security would introduce undue risk
to the overall portfolio.
Specifically, the manager:
? Uses fundamental research methods to identify
undervalued sectors of the government
and corporate debt markets and adjusts portfolio
positions to take advantage of new
information
Determines appropriate sector and maturity weightings based on the manager's
intermediate and long-term assessments of broad economic
and interest rate trends
? Analyzes yield, maturity, issue classification and quality characteristics of
individual securities to identify those which the manager
believes offer high levels
of current income at lower levels of risk
Principal risks of investing in the Portfolio
While an investment in fixed income securities generally
involves less risk than an
investment in equity securities, it does
involve certain risks. Investors could lose
money in the Portfolio or the Portfolio's
performance could fall below other possible
investments, if:
? Interest rates go up, causing the prices of
debt securities held by the Portfolio to
fall.
? The issuer of a debt security in the
portfolio defaults on its obligation to pay
principal or interest, has its credit rating
downgraded by a rating organization or
is perceived by the market to be less creditworthy.
? As a result of declining interest rates,
the issuer of a security exercises its
right to prepay principal earlier than scheduled,
forcing the Portfolio to reinvest
in lower yielding securities.
This is known as call or prepayment risk.
? As a result of rising interest rates,
the issuer of a security exercises its right
to pay principal later than scheduled, which
will lock in a below-market interest
rate and reduce the value of the security.
This is known as extension risk.
? The manager's judgment about the attractiveness,
value or potential appreciation of
a particular security proves to be incorrect.
Portfolio performance
This bar chart indicates the risks of investing in the Portfolio
by showing changes in
the Portfolio's performance from year to year.
The table shows how the Portfolio's
average annual returns for different calendar periods
compare to the return of the
Lehman Brothers GNMA Mutual Fund Index (Lehman Brothers Index).
The Lehman Brothers
Index is composed of 15-year and 30-year fixed-rate
securities backed by mortgage pools
of the Government National Mortgage Association.
The index is unmanaged and is not
subject to management and trading expenses as
the Portfolio is. Past performance does
not necessarily indicate how the Portfolio
will perform in the future.
The bar chart shows the performance of
the Portfolio's shares for each full
calendar year since its inception in
1989`
Quarterly returns:
Highest: 6.47% in 2nd quarter 1992
Lowest: -3.42% in 1st quarter 1992
Fund goal and main strategies
The Reserve Account Portfolio
Investment objective
Current income.
Key investments
The Portfolio invests all of its assets in repurchase agreements.
The Portfolio has
insufficient assets to invest those assets according
to the policies which have been
adopted by the board of trustees of the trust. These policies provide for the
Portfolio to invest exclusively in money market instruments
and other high quality
fixed income obligations with limited maturities.
The Portfolio does not anticipate
that it will ever grow to a sufficient size to
invest according to these policies.
Credit quality: The Portfolio invests exclusively
in repurchase agreements which are
fully collaterlized as to principal and interest by
U.S. government securities and
money market instruments rated within the two highest rating
categories by a nationally
recognized ratings agency or, if unrated, are of equivalent
quality as determined by
the manager.
Principal risks of investing in the Portfolio
Because the Portfolio invests exclusively in repurchase agreements,
the Portfolio is
subject to the risks associated with entering into
repurchase agreements which are
described on page 7 below.
Portfolio performance
This bar chart indicates the risks of investing in the
Portfolio by showing changes in
the Portfolio's performance from year to year.
The table shows how the Portfolio's
average annual returns for different calendar periods
compare to the return of the
Salomon Brothers 1-Year Treasury Index (Salomon Brothers Index).
The Salomon Brothers
Index is composed of one 1-Year
United States Treasury Bond whose return is tracked
until its maturity. The index is unmanaged and is not
ubject to management and trading
expenses as the Portfolio is. Past performance does not
necessarily indicate how the
Portfolio will perform in the future.
The bar chart shows the performance of the
Portfolio's shares for each full calendar
year since its inception in 1989
Quarterly Returns:
Highest: xx% in 3.37 quarter 4Q99
Lowest: xx% in -.92% quarter 4Q96
Portfolio manager
SSBC employs a team of investment professionals to make the day-to-day
investment decisions for the Portfolio.
More on the Portfolios' Investments
Additional investments and investment techniques. Each portfolio describes its
investment objective and its principal investment strategies and
risks under "Portfolio
Goals and Strategies." This section provides additional information about the
Portfolios' investments and certain portfolio management techniques
the Portfolios may
use. More information about the Portfolios' investments
and portfolio management
techniques, some of which entail risks, is included
in the statement of additional
information (SAI).
Fixed income investments. The U.S. Government/High Quality Securities
Portfolio and,
to a limited extent, the Income and Growth Portfolio, invest in fixed income
securities, including bonds, notes (as well as structured notes),
mortgage-related and
asset-backed securities (The U.S. Government/High Quality Securities
Portfolio only),
convertible securities, preferred stocks, and money market instruments.
Fixed income
securities may be issued by U.S. corporations;
U.S. banks and U.S. branches of foreign
banks; the U.S. government, its agencies,
authorities, instrumentalities or sponsored
enterprises; and state and municipal governments.
These securities may have all types of interest
rate payment and reset terms, including
fixed rate, adjustable rate, zero coupon, contingent,
deferred, payment in kind and
auction rate features.
Mortgage-related securities may be issued by private
companies or by agencies of the
U.S. government and represent direct or indirect participations in, or are
collateralized by and payable from, mortgage loans
secured by real property. Asset
backed securities represent participation in, or are
secured by and payable from,
assets such as installment sales or loan contracts, leases, credit card
receivables and other categories of receivables.
Investment Grade Securities. Securities are investment grade if:
? They are rated, respectively, in one of the top
four long-term rating categories
of a nationally recognized statistical rating organization.
? They have received a comparable short-term or other rating.
? They are unrated securities that the manager believes
are of comparable quality to
investment grade rated securities.
If a security receives different ratings by two or more
nationally recognized ratings agencies, a Portfolio will
treat the security as being
rated in the highest rating
category. A Portfolio may choose not to sell securities
that are downgraded after
their purchase below the Portfolio's minimum acceptable credit
rating. The Income and
Growth Portfolio's credit quality standards also
apply to counterparties to over-the-
counter derivatives contracts.
Foreign investments. The Income and Growth Portfolio may purchase
American Depositary Receipts (ADRs) which are U.S.
dollar denominated securities r
epresenting an interest in an underlying foreign security.
Because the value of an ADR is dependent upon the
market price of the underlying foreign security, ADRs are
subject to most of the risks associated with foreign investing.
Foreign countries generally have markets that are
less liquid and more volatile than markets in the U.S.
In some foreign countries, there is also less information
available about foreign issuers and markets because of
less rigorous accounting and regulatory standards than
in the U.S. Currency fluctuations could erase investment
gains or add to investment losses.
Securities lending. Each Portfolio may engage in securities
lending to increase its
net investment income. Each Portfolio will only lend
securities if the loans are
callable by the Portfolio at any time and the loans are
continuously secured by cash or
liquid securities equal to no less than the market value,
determined daily, of the
securities loaned. The risks in lending securities consist of
possible delay in
receiving additional collateral, delay in recovery of securities
when the loan is
called or possible loss of collateral should the borrower fail financially.
Repurchase Agreements. Each Portfolio may enter into repurchase agreements. A
repurchase agreement arises when a Portfolio purchases a security
and simultaneously
agrees to resell it to the counterparty at an agreed-upon future date,
normally the
next business day. The Portfolio earns a rate of return on the
repurchase agreement
because the resale price is higher than the purchase price.
In entering into a
repurchase agreement, a Portfolio bears a risk of loss in the
event that the
counterparty defaults on its obligation to repurchase the
security and the Portfolio is
delayed or prevented from exercising its rights to dispose of the
security. This
includes the risk of a possible decline in the value of the
security during the period
in which the Portfolio seeks to assert its rights to it, the
risk of incurring expenses
associated with asserting those rights and the risk of losing
all or a part of the
income from the agreement. Each Portfolio only enters into
repurchase agreements with
commercial banks or broker-dealers considered creditworthy by
the manager and which are
fully collateralized as to principal and interest
by U.S. Government securities and
money market instruments.
Reverse Repurchase Agreements. The U.S. Government/
High Quality Securities Portfolio
may enter into reverse repurchase agreements.
In a reverse repurchase agreement, the
Portfolio sells securities and agrees to repurchase
them at a mutually agreed upon date
and price. At the time the Portfolio enters
into a reverse repurchase agreement, it
will establish a segregated account containing
cash or liquid assets having a value not
less than the repurchase price (including accrued interest)
that is marked to market
daily. Reverse repurchase agreements involve several risks.
These include the risk
that the investments made with the cash proceeds
of the initial sale will incur losses
or otherwise generate a lower return than the
interest included in the amount of the
repurchase price. They also involve the risk
that the market value of the securities
which the Portfolio is obligated to repurchase
may decline below the repurchase price
or that the counterparty may default on its
obligation to resell the securities. To
the extent a fund enters into reverse
repurchase agreements to leverage its portfolio
this practice may have the effect of magnifying losses or gains.
Defensive investing: Each Portfolio may depart from its principal investment
strategies 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 a Portfolio takes a temporary
defensive position, it may be unable to
achieve its investment goal.
Management
SSBC manages the investment operations of
each Portfolio and receives the following
fees from each portfolio for these services:
Portfolio
Actual management fee
paid for the fiscal
year ended December
31, 1998
(as a percentage
of the portfolio's
average daily net
assets)
Contractual
management fee
(as a percentage
of the portfolio's
average daily net
assets)
The Income and Growth Portfolio
0.60%
0.60%
The U.S. Government/High Quality
Securities Portfolio
0.45%
0.45%
The Reserve Account Portfolio
0.45%
0.45%
Year 2000 issue. Information technology experts are concerned about
computer systems' ability to process date-related information on and
after January 1, 2000. This situation, commonly known as the "Year
2000" issue, could have an adverse impact on the Portfolios. The
managers are addressing the Year 2000 issue for their systems. The
Portfolios have been informed by their other service providers that they
are taking similar measures. Although the Portfolios do not expect the
Year 2000 issue to adversely affect them, the Portfolios cannot
guarantee that their efforts (limited to requesting and receiving
reports from their service providers) or the efforts of their service
providers to correct the problem will be successful.
Share Transactions
Availability of the Portfolios
Shares of the Portfolios are available only through the purchase of
variable annuity or variable life insurance contracts issued by
insurance companies through their separate accounts. The variable
insurance products may or may not make investments in all the Portfolios
described in this prospectus.
The interests of different variable insurance products investing in a
Portfolio could conflict due to differences of tax treatment and other
considerations. The Portfolios currently do not foresee any
disadvantages to investors arising from the fact that each Portfolio may
offer its shares to different insurance company separate accounts that
serve as the investment medium for their variable annuity and variable
life products. Nevertheless, the board of trustees intends to monitor
events to identify any material irreconcilable conflicts which may
arise, and to determine what action, if any, should be taken in response
to these conflicts. If a conflict were to occur, one or more insurance
companies' separate accounts might be required to withdraw their
investments in one or more Portfolios and shares of another Portfolio
may be substituted. In addition, the sale of shares may be suspended or
terminated if required by law or regulatory authority or is in the best
interests of the portfolios' shareholders.
Redemption of shares
The redemption price of the shares of each Portfolio will be the net
asset value next determined after receipt by the Portfolio of a
redemption order from a separate account, which may be more or less than
the price paid for the shares. The Portfolio will ordinarily make
payment within one business day after receipt of a redemption request in
good order, though redemption proceeds must be remitted to a separate
account on or before the seventh day following receipt of the request in
good order, except on a day on which the New York Stock Exchange is
closed or as permitted by the SEC in extraordinary circumstances.
Share Price
Each Portfolio's net asset value is the value of its assets minus its
liabilities. Each Portfolio 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). If the New York Stock Exchange closes early, each portfolio
accelerates the calculation of its net asset value to the actual closing
time.
Each Portfolio generally values its portfolio securities based on market
prices or quotations. When market prices are not available, or when the
manager believes that they are unreliable, the Portfolio may price those
securities at fair value. Fair value is determined in accordance with
procedures approved by the Portfolio's board. A Portfolio that uses
fair value to price securities may value those securities higher or
lower than another portfolio that uses market quotations to price the
same securities.
Unless there are extraordinary or unusual circumstances, the Portfolios
use the amortized cost method of valuing their money market securities
with remaining maturities of 60 days or less. Under the amortized cost
method, assets are valued by constantly amortizing over the remaining
life of an instrument the difference between the principal amount due at
maturity and the cost of the instrument to the Portfolio.
Dividends, Distributions and Taxes
Each Portfolio intends to qualify and be taxed as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of
1986 (the "Code"), as amended. In order to qualify to be taxed as a
regulated investment company, each Portfolio must meet certain income
and diversification tests and distribution requirements. As a regulated
investment company meeting these requirements, a Portfolio will not be
subject to federal income tax on its net investment income and net
capital gains that it distributes to its shareholders. All income and
capital gain distributions are automatically reinvested in additional
shares of the Portfolio at net asset value and are includable in gross
income of the separate accounts holding such shares. The Income and
Growth Portfolio expects distributions to be primarily from capital
gain. The U.S. Government/High Quality Securities Portfolio and the
Reserve Account Portfolio expect distributions to be primarily from
income. See the accompanying contract prospectus for information
regarding the federal income tax treatment of distributions to the
separate accounts and to holders of the contracts.
Financial Highlights
The financial highlights tables for the fiscal years
ended December 31 are intended to help you
understand the performance of each Portfolio for the
past five years. The information in the
following tables was audited by KPMG LLP,
independent accountants, whose report, along with each
Portfolio's financial statements, are included
in the annual report (available upon request). Certain
information reflects financial results for a
single share. Total returns represent the rate that a
shareholder would have earned (or lost) on a share
of a Portfolio assuming reinvestment of all
dividends and distributions.
Income From Investment
Operations
Distributions
Ratios to Average Net
Assets
Year
Ended
Net
Asset
Value,
Beginning of
Year
Net
Investment
Income(1)
Net
Realized
and
Unrealized Gain
(Loss)
on
Investment
Total
Income
(loss)
From
Investment
Operations
Dividen
ds from
Net
Investment
Income
Distributions
from
Net
Realized
Gains
Total
Distributions
Net
Asset
Value
, End
of
Year
Total
Return
Net
Assets
End of
Year
(000's)
Expenses
(1)
Net
Investment
Income
Portfolio
Turnover
Rate
INCOME AND GROWTH PORTFOLIO
1998
17.29
0.29
$1.87
$2.16
$(0.49)
$(4.98)
$(5.47)
$13.9
8
12.8
9%
$13,778
0.76%
1.53%
49.00%
1997
14.69
0.47
3.61
4.08
(0.10)
$(1.38)
$(1.48)
17.29
28.1
1
16,236
0.77
2.18
38.00
1996
15.24
0.57
2.68
3.25
(0.56)
(3.24)
(3.80)
14.69
21.0
2
20,812
0.74
2.39
30.00
1995
13.05
0.45
3.12
3.57
(0.44)
(0.94)
(1.38)
15.24
27.5
6
29,782
0.77
2.77
46.26
1994
14.93
0.39
(0.86)
(0.47)
(0.39)
(1.02)
(1.41)
13.05
(3.1
2)
27,484
0.75
2.49
40.41
U.S. GOVERNMENT/HIGH QUALITY SECURITIES PORTFOLIO
1998
12.66
0.03
___
0.03
(1.06)
(1.23)
(2.29)
10.40
0.22
973
1.00
0.22
0.00%
1997
12.90
.72
(.02)
.70
(.04)
(0.90)
(.94)
12.66
5.43
1,617
1.00
4.33
.43
1996
13.66
1.22
(0.76)
(0.46)
(1.22)
- -
(1.22)
12.90
3.34
2,876
0.98
6.30
13.00
1995
12.46
0.94
1.20
2.14
(0.94)
- -
(0.94)
13.66
17.2
0
4,856
0.87
6.36
0.00
1994
13.35
0.84
(0.89)
(0.05)
(0.84)
- -
(0.84)
12.46
(0.3
5)
4,838
0.76
5.87
36.33
RESERVE ACCOUNT PORTFOLIO
1998
7.70
(0.07)
__
(0.07)
(0.27)
__
(0.27)
7.36
(0.8
9)
56
1.00
(1.00)
0%
1997
10.99
.15
- -
.15
(0.25)
(3.19)
(3.44)
7.70
1.36
97
1.00
1.59
0
1996
12.71
1.92
(1.72)
0.20
(1.92)
- -
(1.92)
10.99
1.57
435
1.00
4.98
- -
1995
12.39
0.73
0.38
1.11
(0.74)
(0.05)
(0.79)
12.71
8.83
2,315
0.97
5.30
16.98
1994
12.75
0.59
(0.34)
0.25
(0.58)
(0.03)
(0.61)
12.39
1.99
2,528
0.86
4.77
81.28
Under a voluntary fee waiver, the aggregate expenses of the
Portfolios may not exceed 1.00% of the
average daily net assets for any year. With respect to the
U.S. Government/High Quality Securities
Portfolio, the investment manager waived a
portion of its fees in the amount of $0.80 per share (0.49%
of average net assets) and also reimbursed the
Portfolio for $719 in expenses for the year ended
December 31, 1997. In addition, if such fees were
not waived and expenses reimbursed, the net
investment income per share and expense ratio would
have been $0.64 and 1.49%, respectively, for the
year ended December 31, 1997. With respect to the
Reserve Account Portfolio, the investment manager
waived a portion of its fees in the amount
of $1.61 per share (10.65% of average net assets) in 1997,
$0.15 per share (0.45% of average net assets)
in 1996 and $0.01 per share (0.05% of average net
assets) in 1993. The investment manager
also reimbursed the Portfolio for $19,395 and $19,861 in
expenses for the years ended December 31, 1997
and 1996, respectively. If such fees were not waived
and expenses not reimbursed, the net investment
income (loss) per share would have been $(1.76) and
$1.27 and the expense ratio would have been
11.65% and 2.79%, for the year ended December 31, 1997 and
1996, respectively.
SMITH BARNEY VARIABLE ACCOUNT FUNDS
ADDITIONAL INFORMATION
Shareholder reports. Annual and semiannual reports to shareholders provide
additional information about each Portfolio's investments. These reports
discuss the market conditions and investment strategies that affected each
Portfolio's performance.
[Each Portfolio sends one report to a household if more than one account has
the same address. Contact your Salomon Smith Barney Financial Consultant,
dealer representative or 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 Portfolios. It is incorporated
by reference into this prospectus.
You can make inquiries about the Portfolios or obtain shareholder reports or
the statement of additional information (without charge) by calling 1-800-451-
2010 or writing to Smith Barney Variable Account Funds, 388 Greenwich Street,
MF2, New York, NY 10013.
You can also review the Portfolios' shareholder reports, prospectus and
statement of additional information at the Securities and Exchange
Commission's Public Reference Room in Washington, D.C. The Commission charges
a fee for this service. Information about the public reference room may be
obtained by calling 1-800-SEC-0330. You can get the same reports and
information free from the Commission's Internet web site at http: www.sec.gov
If someone makes a statement about any of the Portfolios that is not in this
prospectus, you should not rely upon that information. The Portfolios are not
offering to sell their shares to any person to whom the Portfolios may not
lawfully sell their shares.
(Investment Company Act file no. 811-04959)
PART C Other Information
Item 23 . Exhibits
(a) Declaration of Trust dated as of December 18, 1986 is
incorporated herein by reference to Exhibit 1 to Pre-Effective Amendment No.
1 to the Registration Statement N. 33-10839.
(b) Bylaws of the Trust are incorporated by reference to
Exhibit 2 to Pre-Effective Amendment No. 4.
(c) Not applicable.
(d) (1) Management Agreement between the Income and
Growth Portfolio and Smith, Barney Advisers, Inc. is incorporated by
reference to Exhibit 5(a)(i) to Pre-Effective Amendment No. 4.
(2) Management Agreement between U.S.
Government/High Quality Securities Portfolio and Smith, Barney Advisers, Inc.
by reference to Exhibit 5(a)(ii) to Pre-Effective Amendment No. 4.
(3) Management Agreement between Reserve Account
Portfolio and Smith Barney Advisers, Inc. is incorporated by reference to
Exhibit (5)(a)(iii) to Pre-Effective Amendment No. 4.
(4) Subadvisory Agreement between Smith, Barney
Advisers, Inc. and Smith Barney, Harris Upham & Co. Incorporated is
incorporated by reference to Exhibit (5)(b) to Pre-Effective Amendment No. 4.
(e) Distribution Agreement between Smith Barney Variable
Account Funds and CFBDS, Inc. is incorporated by reference to Exhibit (e)
to Post-Effective Amendment No.11.
(f) Not applicable.
(g) Custodian Agreement between Registrant and Provident
National Bank is incorporated herein by reference to Exhibit 8 to Pre-
Effective Amendment No. 4.
(h) (1) Transfer Agency Agreement between Registrant and
Provident Financial Processing Corp. is incorporated herein by reference
to Exhibit 9 to Pre-Effective Amendment No. 4.
(2) Form of Transfer Agency Agreement between
Registrant and First Data Investor Services Group, Inc. is
incorporated herein by reference to Exhibit 9(b) to Post-Effective
Amendment No. 8.
(i) (1) Opinion of Sullivan & Cromwell is incorporated
by reference to Pre-Effective Amendment No. 1.
(2) Opinion of Gaston & Snow is incorporated herein
by reference to Exhibit 10 to Pre-Effective Amendment No. 4.
(j) Auditors' Consent (filed herewith)
(k) Not applicable.
(l) Subscription Agreement between the Fund and
Smith, Barney Advisers, Inc. dated June 27, 1989 is
incorporated herein by reference to Exhibit 13 to
Pre-Effective Amendment No. 4.
(m) Not applicable.
(n) Financial Data Schedule is filed herewith.
(o) Plan 3 pursuant to Rule 18f-3 is incorporated by
reference to Exhibit 18 to Post-Effective Amendment No. 7
Item 24. Persons Controlled by or under Common Control with Registrant.
The Registrant is not controlled directly or indirectly by
any person. Information with respect to the Registrant's investment manager
is set forth under the caption "Management" in the prospectus included in
Part
A of this Amendment to the Registration Statement on Form N-1A.
Item 25. Indemnification
Reference is made to ARTICLE V of Registrant's Declaration
of Trust for a complete statement of its terms. Section 52. of ARTICLE V
provides: "No Trustee, officer, employee or agent of the Trust shall be
liable to
the Trust, its Shareholders, or to any Shareholder, Trustee, officer,
employee or agent thereof for any action or failure to act (including without
limitation the failure to compel in any way any former or acting Trustee to
redress any breach of trust) except for his own bad faith, willful
misfeasance, gross negligence or reckless disregard of his or its duties."
Emphasis added.
Item 26. Business and other Connections of the Manager and Investment
Adviser
See the material under the caption Management included in
Part A (Prospectus) of this Registration Statement and the material appearing
under the caption Management Agreements included in Part B (Statement
of Additional Information) of this Registration Statement.
Information as to the Directors and Officers of SSBC Fund Management Inc.
is included in its Form ADV (File no. 801-8314),
filed with the Commission, which is incorporated herein by reference
thereto.
Item 27. Principal Underwriters
(a) CFBDS, Inc., ("CFBDS") the Registrant's Distributor, is also
the distributor for the following Smith Barney funds: Concert
Investment Series, Consulting Group Capital Markets Funds, Greenwich
Street Series Fund, Smith Barney Adjustable Rate Government Income
Fund, Smith Barney Aggressive Growth Fund Inc., Smith Barney
Appreciation Fund Inc., Smith Barney Arizona Municipals Fund Inc.,
Smith Barney California Municipals Fund Inc., Smith Barney Concert
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
Natural Resources Fund Inc., Smith Barney New Jersey Municipals
Fund Inc., Smith Barney Oregon Municipals Fund Inc., Smith Barney
Principal Return Fund, Smith Barney Small Cap Blend Fund, Inc., Smith
Barney Telecommunications Trust, Smith Barney Variable Account Funds,
Smith Barney World Funds, Inc., Travelers Series Fund Inc., and
various series of unit investment trusts.
CFBDS also serves as the distributor for the following funds: The
Travelers Fund UL for Variable Annuities, The Travelers Fund VA for
Variable Annuities, The Travelers Fund BD for Variable Annuities, The
Travelers Fund BD II for Variable Annuities, The Travelers Fund BD
III for Variable Annuities, The Travelers Fund BD IV for Variable
Annuities, The Travelers Fund ABD for Variable Annuities, The
Travelers Fund ABD II for Variable Annuities, The Travelers Separate
Account PF for Variable Annuities, The Travelers Separate Account PF
II for Variable Annuities, The Travelers Separate Account QP for
Variable Annuities, The Travelers Separate Account TM for Variable
Annuities, The Travelers Separate Account TM II for Variable
Annuities, The Travelers Separate Account Five for Variable
Annuities, The Travelers Separate Account Six for Variable Annuities,
The Travelers Separate Account Seven for Variable Annuities, The
Travelers Separate Account Eight for Variable Annuities, The
Travelers Fund UL for Variable Annuities, The Travelers Fund UL II
for Variable Annuities, The Travelers Variable Life Insurance
Separate Account One, The Travelers Variable Life Insurance Separate
Account Two, The Travelers Variable Life Insurance Separate Account
Three, The Travelers Variable Life Insurance Separate Account Four,
The Travelers Separate Account MGA, The Travelers Separate Account
MGA II, The Travelers Growth and Income Stock Account for Variable
Annuities, The Travelers Quality Bond Account for Variable Annuities,
The Travelers Money Market Account for Variable Annuities, The
Travelers Timed Growth and Income Stock Account for Variable
Annuities, The Travelers Timed Short-Term Bond Account for Variable
Annuities, The Travelers Timed Aggressive Stock Account for Variable
Annuities, The Travelers Timed Bond Account for Variable Annuities.
In addition, CFBDS, the Registrant's Distributor, is also the
distributor for CitiFunds Multi-State Tax Free Trust, CitiFunds
Premium Trust, CitiFunds Institutional Trust, CitiFunds Tax Free
Reserves, CitiFunds Trust I, CitiFunds Trust II, CitiFunds Trust III,
CitiFunds International Trust, CitiFunds Fixed Income Trust,
CitiSelect VIP Folio 200, CitiSelect VIP Folio 300, CitiSelect VIP
Folio 400, CitiSelect VIP Folio 500, CitiFunds Small Cap Growth VIP
Portfolio. CFBDS is also the placement agent for Large Cap Value
Portfolio, Small Cap Value Portfolio, International Portfolio,
Foreign Bond Portfolio, Intermediate Income Portfolio, Short-Term
Portfolio, Growth & Income Portfolio, U.S. Fixed Income Portfolio,
Large Cap Growth Portfolio, Small Cap Growth Portfolio, International
Equity Portfolio, Balanced Portfolio, Government Income Portfolio,
Tax Free Reserves Portfolio, Cash Reserves Portfolio and U.S.
Treasury Reserves Portfolio.
In addition, CFBDS is also the distributor for the following Salomon
Brothers funds: Salomon Brothers Opportunity Fund Inc., Salomon
Brothers Investors Fund Inc., Salomon Brothers Capital Fund Inc.,
Salomon Brothers Series Funds Inc., Salomon Brothers Institutional
Series Funds Inc., Salomon Brothers Variable Series Funds Inc.
In addition, CFBDS is also the distributor for the Centurion Funds,
Inc.
(b) The information required by this Item 27 with respect to each
director and officer of CFBDS is incorporated by reference to
Schedule A of Form BD filed by CFBDS pursuant to the Securities and
Exchange Act of 1934 (File No. 8-32417).
(c) Not applicable.
Item 28. Location of Accounts and Records
PNC Bank, National Association, 17th and Chestnut Streets,
Philadelphia, Pennsylvania 19103, and First Data Investor Services Group,
Inc., Exchange Place, Boston, Massachusetts 02109-2873, will maintain the
custodian and the shareholders servicing agent records, respectively required
by Section 31(a) of the Investment Company Act of 1940, as amended (the 1940
Act).
All other records required by Section 31(a) of the 1940 Act are
maintained at the offices of the Registrant at 388 Greenwich Street, New
York, New York 10013 (and preserved for the periods specified by Rule
31a-2 of the 1940 Act).
Item 29. Management Services
Not applicable.
Item 30. Undertakings
None
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies that it meets
all of the requirements for effectiveness of this Post-Effective Amendment to
the Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Post-Effective Amendment to its
Registration Statement to be signed on its behalf by the undersigned, and
where applicable, the true and lawful attorney-in-fact, thereto duly
authorized, in the City of New York, and State of New York on the 30th day
of April 1999.
SMITH BARNEY VARIABLE ACCOUNT FUNDS
By/s/ Heath B. McLendon
Heath B. McLendon
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below
by the following persons in the capacities and on the date indicated.
Signatures Title Date
/s/ Heath B. McLendon Chairman of the Board April 30, 1999
(Heath B. McLendon) and Chief Executive Officer
/s/ Lewis E. Daidone Senior Vice President
(Lewis E. Daidone) and Treasurer April 30, 1999
Donald R. Foley* Trustee April 30, 1999
(Donald R. Foley)
Paul Hardin* Trustee April 30, 1999
(Paul Hardin)
Roderick C. Rasmussen* Trustee April 30, 1999
(Roderick C. Rasmussen)
John P. Toolan* Trustee April 30, 1999
(John P. Toolan)
*By: /s/ Christina T. Sydor April 30, 1999
Christina T. Sydor
Pursuant to Power of Attorney
EXHIBIT INDEX j Auditors'Consent
n. Financial Data Schedule
Independent Auditors' Consent
To the Shareholders and Board of Trustees of
Smith Barney Variable Account Funds:
We consent to the use of our reports dated February 8, 1999, with
respect to the Funds listed below of Smith Barney Variable Account
Funds, incorporated herein by reference and to the references to our
Firm under the headings "Financial Highlights" in the Prospectus and
"Independent Auditors" in the Statement of Additional Information.
Funds
Income and Growth Portfolio
U.S. Government/High Quality Securities Portfolio
Reserve Account Portfolio
KPMG LLP
New York, New York
April 26, 1999
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