ssf/pea10.doc
Registration No.
3340603
811-6310
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. 11
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF
1940
Amendment No. 14
SMITH BARNEY SERIES FUND
(Exact name of Registrant as Specified in
Charter)
388 Greenwich Street, New York, New York 10013
(Address of Principal Executive Office) (Zip
Code)
Registrant's Telephone Number, including Area
Code: (212) 723-9218
Christina T. Sydor, Esq.
Secretary
Smith Barney Series Fund 388 Greenwich Street
New York, New York 10013
(Name and Address of Agent of Service)
Approximate Date of Proposed Public Offering:
As soon as possible after this Post-Effective
Amendment becomes effective.
It is proposed that this filing will become effective:
_X___ immediately upon filing pursuant to Rule
485(b)
on ___________1995 pursuant to Rule 485(b) 60 days
after filing pursuant to Rule 485(a) on ____________
pursuant to Rule 485(a)
___________________________________________________________________
__ _______________
The Registrant has previously filed a declaration of
indefinite registration of its shares pursuant
to Rule 24f-2 under the Investment Company Act
of 1940, as amended. Registrant's Rule 24f-2
Notice for the fiscal year ended December 31,
1994 was filed on February 24, 1995.
SMITH BARNEY SERIES FUND
FORM N-1A CROSS-
REFERENCE SHEET* PURSUANT
TO RULE 495(b)
Part A Item No. Prospectus
Caption
1. Cover Page Cover Page
2. Synopsis Summary
3. Condensed Financial Financial Highlights; The
Information Portfolio's Performance
4. General Description of Cover Page; Investment
Goals
Registrant and Policies of the
Portfolio; Additional
Investments; Certain
Investment Guidelines;
Special Considerations and
Risk Factors; Additional
Information
5. Management of the Fund Management of the Fund;
Portfolio Management;
Custodian and Transfer
Agent; Distributor
6. Capital Stock and Other Additional Information;
Securities Dividends and Taxes
7. Purchase of Securities Net Asset Value; Cover
Page;
Being Offered How to Use the Fund;
Distributor
8. Redemption or Repurchase How to Use the Fund
9. Pending Legal Proceedings Not Applicable
Part B. Item No. Statement of Additional
Information
10. Cover Page Cover Page
11. Table of Contents Contents
12. General Information and Additional Information;
History Distributor
13. Investment Objectives Investment Goals and
Policies
and Policies of the Portfolio
14. Management of the Fund Management of the Fund
15. Control Persons and Management of the Fund
Principal Holders of
Securities
16. Investment Advisory and Management of the Fund;
Other Services Distributor
17. Brokerage Allocation and Investment Goals and
Other Practices Policies; Portfolio
Transactions
18. Capital Stock and Other Net Asset Value;
Performance Securities Data
19. Purchase, Redemption and Purchase of Shares;
Pricing of Securities Being Redemptions
Offered
20. Tax Status Taxes
21. Underwriters Management of the Fund
22. Calculations of Performance Data
Performance Data
23. Financial Statements Financial Statements
___________________________________________________
* Part A and Part B (Prospectus and Statement of
Additional Information) for all of the portfolios of the
Fund are incorporated by reference to Post-Effective
Amendment No.10 as filed with the Securities and Exchange
Commission (the "SEC") on May 3, 1995 as Accession
#0000091155-95-000042 ("Post-Effective Amendment No.
10").
SMITH BARNEY SERIES FUND
FORM N1-A
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P R O S P E C T U S
SMITH BARNEY SERIES FUND
THE TOTAL RETURN PORTFOLIO
- - - - - - - - -
1 9 9 5
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SMITH BARNEY SERIES FUND
the total return portfolio
388 GREENWICH STREET
NEW YORK, NEW YORK 10013
CONTRACT OWNER INQUIRIES: (212) 723-
9217
Smith Barney Series Fund is a diversified, open-end
management investment
company (a "mutual fund"), with ten portfolios (the
"Portfolios"), each with
separate goals and investment policies. Shares of the
Total Return Portfolio
(the "Portfolio") may be acquired only by investing in a
qualifying variable
annuity or variable life insurance contract (a "Contract")
offered by
participating life insurance companies.
The Portfolio's investment goal is to provide
shareholders with total
return, consisting of long-term capital appreciation and
income. The Portfolio
invests primarily in a diversified portfolio of dividend
paying common stocks.
There can be no guarantee that the Portfolio's
investment goal will be
achieved since any investment involves risks. Discussions
of the Portfolio's
investments, and their related risks, are found in the
sections of this
Prospectus entitled "Investment Goal and Policies of the
Portfolio,"
"Additional Investments" and "Special Considerations."
This Prospectus, which sets forth certain information
about the Fund and
the Portfolio that you should know before investing,
should be read in
conjunction with the applicable Contract prospectus and
retained for future
reference. Additional information about the Fund and the
Portfolio has been
filed with the Securities and Exchange Commission (the
"SEC") in a document
entitled "Statement of Additional Information," dated
September 1, 1995, as
amended or supplemented from time to time, which is
available upon request and
without charge by calling or writing the Fund at the
telephone number or address
set forth below or by contacting a representative of a
participating life
insurance company.
The Fund is responsible only for statements that are
included in this
Prospectus, the Statement of Additional Information or in
authorized sales
material. The Statement of Additional Information is
incorporated by reference
into this Prospectus in its entirety.
THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT CONTRACT
PROSPECTUS. BOTH
PROSPECTUSES SHOULD BE READ CAREFULLY AND RETAINED FOR
FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 1,
1995.
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CONTENTS
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== ====================
SUMMARY...................................................
.. ............... 1
EXPENSES OF THE
PORTFOLIO.................................................
. 2
INVESTMENT GOALS AND POLICIES OF THE
PORTFOLIO............................. 4
ADDITIONAL
INVESTMENTS...............................................
.. .... 4
CERTAIN INVESTMENT STRATEGIES AND
GUIDELINES............................... 5
SPECIAL CONSIDERATIONS AND RISK
FACTORS.................................... 9
PORTFOLIO
TRANSACTIONS..............................................
.. ..... 12
NET ASSET
VALUE.....................................................
.. ..... 12
HOW TO USE THE
PORTFOLIO.................................................
.. 13
DIVIDENDS AND
TAXES.....................................................
.. . 13
MANAGEMENT OF THE
FUND.....................................................
15
PORTFOLIO
MANAGEMENT................................................
.. ..... 15
CUSTODIAN AND TRANSFER
AGENT............................................... 15
DISTRIBUTOR...............................................
..
............... 16
ADDITIONAL
INFORMATION...............................................
.. .... 16
THE PORTFOLIO'S
PERFORMANCE...............................................
. 16
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SUMMARY
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== ====================
The following summary is qualified in its entirety by
detailed information
appearing elsewhere in this Prospectus and in the
Statement of Additional
Information. Cross-references in this summary are to
headings in the Prospectus.
THE PORTFOLIO The Portfolio is one of ten portfolios
of the Smith Barney
Series Fund (the "Fund"), a diversified, open-end
management investment company
registered under the Investment Company Act of 1940, as
amended (the "1940
Act"). The Portfolio's investment objective is to provide
shareholders with
total return, consisting of long-term capital appreciation
and income. The
Portfolio invests primarily in a diversified portfolio of
dividend-paying common
stocks. See "Additional Information."
MANAGEMENT Smith Barney Mutual Funds Management Inc.
("SBMFM") serves as
the Portfolio's investment adviser and administrator.
SBMFM is a wholly-owned
subsidiary of Smith Barney Holdings Inc. ("Holdings"),
which in turn is a wholly
owned subsidiary of Travelers Group, Inc., a diversified
financial services
holding company engaged, through its subsidiaries,
principally in four business
segments: Investment Services, Consumer Finance Services,
Life Insurance
Services and Property & Casualty Insurance Services. See
"Management of the
Fund."
BUYING SHARES Shares of the Portfolio are offered
only to Contract owners
as set forth in the specific Contract prospectus. A
Contract owner can direct
the allocation of part or all of his or her net purchase
payment to the
Portfolio. In the future, Contract owners may be offered
the opportunity to
invest in one or more of the other portfolios of the Fund.
See "How to Use the
Fund."
REDEEMING SHARES Shares may be redeemed as described
in the applicable
Contract prospectus. See "How to Use the Fund."
RISK FACTORS AND SPECIAL CONSIDERATIONS The non-
publicly traded and
illiquid securities, which the Portfolio may hold, may
have to be sold at lower
prices, or may remain unsold, when the Portfolio desires
to dispose of them. The
foreign securities, including securities of developing
countries, in which the
Portfolio may invest, may be subject to certain risks in
addition to those
inherent in U.S. investments. The medium- and lower-rated
securities as well as
unrated securities and the securities of unseasoned
issuers that the Portfolio
may hold, some of which have speculative characteristics,
may be subject to
greater market fluctuation and risk of loss of income or
principal than higher-
rated securities. The Portfolio may make certain
investments and employ certain
investment techniques that involve other risks, including
entering into
repurchase agreements, lending portfolio securities and
entering into futures
contracts and related options as hedges. These risks and
those associated with
when-issued and delayed delivery transactions, put and
call options, covered
option writing, short sales against the box, forward roll
transactions, currency
exchange transactions, options on foreign currencies,
interest rate and other
hedging transactions and reverse repurchase agreements,
are described under
"Investment Goal and Policies of the Portfolio" and
"Special Considerations."
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1
EXPENSES OF THE PORTFOLIO
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== ====================
The Portfolio will bear its own expenses. Operating
expenses for the
Portfolio generally will consist of all costs not
specifically borne by SBMFM
and/or the Fund's distributor, including organizational
costs, investment
advisory and administration fees, fees for necessary
professional and brokerage
services, fees for any pricing service, the costs of
regulatory compliance and
costs associated with maintaining legal existence and
shareholder relations.
From time to time, SBMFM may waive all or a portion of the
fees payable to it by
the Portfolio, thereby reducing the expenses of the
Portfolio. A detailed
description of the expenses involved in investing in a
Contract and the
Portfolio is included in the Contract prospectus.
FINANCIAL HIGHLIGHTS
The following information with respect to the years
ended December 31, 1994
and 1993 has been audited by Coopers & Lybrand L.L.P.,
independent accountants,
whose report thereon appears in the Fund's Annual Report
dated December 31,
1994, which if not included with this Prospectus, may be
obtained without
charge. This information should be read in conjunction
with the financial
statements and related notes that also appear in the
Fund's Annual Report which
is incorporated by reference into the Statement of
Additional Information.
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2
FINANCIAL HIGHLIGHTS
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== ====================
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993* --------------
- ----------------------------------------------------------
- ---------------------------------------
<S>
<C> <C>
Net asset value, beginning of year
$10.30 $10.00 ------------------------
- ----------------------------------------------------------
- ----------------------------Income from investment
operations:
Net investment income**
0.34 0.01
Net realized and unrealized gain/(loss) on investment
0.42*** 0.29 --------------------------
- ----------------------------------------------------------
- ---------------------------
Total from investment operations
0.76 0.30 --------------------------
- ----------------------------------------------------------
- ---------------------------
Less distributions:
Dividends from net investment income
(0.28) --
Distributions from capital gains
- -- --
Distributions in excess of realized
gain --
- --
Distributions from capital
- -- --
- ----------------------------------------------------------
- -----------------------------------------------------
Total distributions
(0.28) (0.00) ------------------------
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- -----------------------------
Net asset value, end of year
$10.78 $10.30 ------------------------
- ----------------------------------------------------------
- -----------------------------
Total return+
7.40% 3.00% -------------------------
- ----------------------------------------------------------
- ---------------------------Ratios to average net
assets/supplemental data:
Net assets, end of year (000's)
$23,196 $2,777
Ratio of operating expenses to average net assets++
1.00% 0.85%
Ratio of net investment income/(loss) to average net
assets 3.84% 1.93% ------------------
- ----------------------------------------------------------
- ----------------------------------Portfolio turnover rate
118% -
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== ====================================================
</TABLE>
* The Portfolio commenced operations on December 3,
1993.
** Net investment income before waiver of fees and
reimbursement of expenses
by investment adviser and/or custodian and/or transfer
agent and American
Express Financial Advisors was $(0.01) and $0.33 for
the fiscals years ended
December 31, 1993 and December 31, 1994, respectively.
*** The amount shown in this caption for each share
outstanding throughout the
period may not accord with the change in the aggregate
gains and losses in
the portfolio securities for the period because of the
timing of purchases
and withdrawal of shares in relation to the fluctuating
market values of the
portfolio.
+ Total return represents aggregate total return for the
period.
++ Operating expense ratio before fees waived and
expenses reimbursed by the
affiliated agents was 4.14% and 1.11% for the fiscal
years ended
December 31, 1993 and December 31, 1994, respectively.
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3
INVESTMENT GOAL AND POLICIES OF THE
PORTFOLIO
INVESTMENT GOAL
The Portfolio's goal is to provide shareholders with
total return,
consisting of long-term capital appreciation and income.
This investment goal
may not be changed without the approval of the holders of
a majority, as defined
in the 1940 Act, of the outstanding shares of the
Portfolio. There can, of
course, be no guarantee that the Portfolio will achieve
its investment goals.
Additional information about investment strategies that
the Portfolio may employ
and investment policies mentioned below appears in this
Prospectus and in the
Statement of Additional Information.
INVESTMENT POLICIES
The Portfolio will seek to achieve its goal by
investing primarily in a
diversified portfolio of dividend-paying common stocks.
The Portfolio may engage
in various portfolio strategies involving options to seek
to increase its return
and to hedge its portfolio against movements in the equity
markets and interest
rates. Because the Portfolio seeks total return by
emphasizing investments in
dividend-paying common stocks, it will not have as much
investment flexibility
as total return funds which may pursue their objective by
investing in both
income and equity stocks without such an emphasis. The
Portfolio also may invest
up to 10% of its assets in medium- or low-rated securities
(securities rated
less than investment-grade by Moody's Investor's Service,
Inc. ("Moody's") or
Standard and Poor's Corporation ("S&P")) or unrated
securities of comparable
quality, interest-paying debt securities, such as U.S.
government securities,
and other securities, including convertible bonds,
convertible preferred stock
and warrants. In addition, the Portfolio will limit its
investments in warrants
to 5% of its net assets. The Portfolio also may lend its
portfolio securities
and enter into "short sales against the box." A
description of the corporate
bond and commercial paper rating systems of S&P, Moody's
and other nationally
recognized statistical rating organizations ("NRSROs") is
also contained in the
Statement of Additional Information.
ADDITIONAL INVESTMENTS
MONEY MARKET INSTRUMENTS
The Portfolio may, as a cash management tool, invest
up to 35% of the value
of its total assets in cash and invest in short-term
instruments and, for
temporary defensive purposes, may hold cash and invest in
short-term instruments
without limitation. Short-term instruments in which the
Portfolio may invest
include: U.S. government securities; obligations of banks
having at least $1
billion in assets (including certificates of deposit, time
deposits and bankers'
acceptances of U.S. or foreign banks, U.S. savings and
loan associations and
similar institutions); commercial paper rated no lower
than A-2 by S&P or
Prime-2 by Moody's or the equivalent from another NRSRO
or, if unrated, of an
issuer having an outstanding, unsecured debt issue then
rated within the two
highest rating categories; and repurchase agreements with
respect to any of the
foregoing entered into with banks and non-bank dealers
approved by the Fund's
Board of Trustees.
U.S. GOVERNMENT SECURITIES
The U.S. government securities in which the Portfolio
may invest include:
direct obligations of the United States Treasury (such as
Treasury Bills,
Treasury Notes and Treasury Bonds), and obligations issued
by U.S. government
agencies and instrumentalities, including securities that
are supported by the
full faith and credit of the United States (such as
certificates issued by
GNMA); securities that are supported by the right of the
issuer to borrow from
the U.S. Treasury (such as securities of Federal Home Loan
Banks); and
securities that
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- ---------------------
4
are supported only by the credit of the instrumentality
(such as bonds issued by
FNMA and FHLMC). Treasury Bills have maturities of less
than one year, Treasury
Notes have maturities of one to ten years and Treasury
Bonds generally have
maturities of greater than ten years at the date of
issuance.
The Portfolio may invest up to 5% of its net assets
in U.S. government
securities for which the principal repayment at maturity,
while paid in U.S.
dollars, is determined by reference to the exchange rate
between the U.S. dollar
and the currency of one or more foreign countries
("Exchange
Rate-Related
Securities"). Exchange Rate-Related Securities are issued
in a variety of forms,
depending on the structure of the principal repayment
formula. The principal
repayment formula may be structured so that the
securityholder will benefit if a
particular foreign currency to which the security is
linked is stable or
appreciates against the U.S. dollar. In the alternative,
the principal repayment
formula may be structured so that the securityholder
benefits if the U.S. dollar
is stable or appreciates against the linked foreign
currency. Finally, the
principal repayment formula can be a function of more than
one currency and,
therefore, be designed in either of the aforementioned
forms or a combination of
those forms.
Investments in Exchange Rate-Related Securities
entail special risks. There
is the possibility of significant changes in rates of
exchange between the U.S.
dollar and any foreign currency to which an Exchange Rate
Related Security is
linked. If currency exchange rates do not move in the
direction or to the extent
anticipated at the time of purchase of the security, the
amount of principal
repaid at maturity might be significantly below the par
value of the security,
which might not be offset by the interest earned by the
Portfolio over the term
of the security. The rate of exchange between the U.S.
dollar and other
currencies is determined by the forces of supply and
demand in the foreign
exchange markets. These forces are affected by the
international balance of
payments and other economic and financial conditions,
government intervention,
speculation and other factors. The imposition or
modification of foreign
exchange controls by the United States or foreign
governments or intervention by
central banks also could affect exchange rates. Finally,
there is no assurance
that sufficient trading interest to create a liquid
secondary market will exist
for particular Exchange Rate-Related Securities due to
conditions in the debt
and foreign currency markets. Illiquidity in the forward
foreign exchange market
and the high volatility of the foreign exchange market may
from time to time
combine to make it difficult to sell an Exchange Rate
Related Security prior to
maturity without incurring a significant price loss.
CERTAIN INVESTMENT STRATEGIES AND
GUIDELINES
REPURCHASE AGREEMENTS
The Portfolio may engage in repurchase agreement
transactions on portfolio
securities, in each case with banks which are the issuers
of instruments
acceptable for purchase by the Portfolio and with certain
dealers listed on the
Federal Reserve Bank of New York's list of reporting
dealers. Under the terms of
a typical repurchase agreement, the Portfolio would
acquire an underlying debt
obligation for a relatively short period (usually not more
than one week)
subject to an obligation of the seller to repurchase, and
the Portfolio to
resell, the obligation at an agreed-upon price and time,
thereby determining the
yield during the Portfolio's holding period. This
arrangement results in a fixed
rate of return that is not subject to market fluctuations
during the Portfolio's
holding period. The value of the underlying securities
will be monitored by the
Portfolio's investment adviser to ensure that it at least
equals at all times
the total amount of the repurchase obligation, including
interest. The Portfolio
bears a risk of loss in the event that the other party to
a repurchase agreement
defaults on its obligations and the Portfolio is delayed
or prevented from
exercising its rights to dispose of the collateral
securities, including the
risk of a possible decline in the value of the underlying
securities during the
period while the Portfolio seeks to assert these rights.
SBMFM, acting under the
supervision of the Fund's
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5
Board of Trustees, reviews on an ongoing basis the value
of the collateral and
the creditworthiness of those banks and dealers with which
the Portfolio enters
into repurchase agreements to evaluate potential risks.
LENDING OF SECURITIES
The Portfolio may lend its portfolio securities to
brokers, dealers and
other financial organizations. By lending its securities,
the Portfolio can
increase its income by continuing to receive interest on
the loaned securities
as well as by either investing the cash collateral in
shortterm instruments or
obtaining yield in the form of interest paid by the
borrower when U.S.
government securities are used as collateral. Loans of
portfolio securities, if
and when made, by the Portfolio may not exceed 33.33% of
the
Portfolio's total
assets, taken at value. Loans of portfolio securities will
be collateralized by
cash, letters of credit or U.S. government securities,
which are maintained at
all times in an amount equal to the current market value
of the loaned
securities. Any gain or loss in the market price of the
securities loaned that
might occur during the term of the loan would be for the
account of the
Portfolio.
FUTURES AND OPTIONS ON FUTURES
When deemed advisable by SBMFM, the Portfolio may
enter into interest rate
futures contracts, stock index futures contracts and
related options that are
traded on a U.S. exchange or board of trade. These
transactions will be made
solely for the purpose of hedging against the effects of
changes in the value of
portfolio securities due to anticipated changes in
interest rates, market
conditions and currency values, as the case may be. The
Portfolio will enter
into futures and options on futures to purchase stock
indices in anticipation of
future purchases of securities ("long positions"). All
futures and options
contracts will be entered into only when the transactions
are economically
appropriate to the reduction of risks inherent in the
management of the
Portfolio.
An interest rate futures contract provides for the
future sale by one party
and the purchase by the other party of a specified amount
of a particular
financial instrument (debt security) at a specified price,
date, time and place.
Similarly, a foreign currency futures contract provides
for the future sale by
one party and the purchase by another party of a certain
amount of a particular
currency at a specified price, date, time and place. Stock
index futures
contracts are based on indices that reflect the market
value of common stock of
the firms included in the indices. An index futures
contract is an agreement
pursuant to which two parties agree to take or make
delivery of an amount of
cash equal to the difference between the value of the
index at the close of the
last trading day of the contract and the price at which
the index contract was
originally entered into. An option on an interest rate,
stock index or currency
futures contract gives the purchaser the right, in return
for the premium paid,
to assume a position in a futures contract (a long
position if the option is a
call and a short position if the option is a put) at a
specified exercise price
at any time prior to the expiration date of the option.
The use of futures contracts and options on futures
contracts as a hedging
device involves several risks. There can be no assurance
that there will be a
correlation between price movements in the underlying
securities, index or
currency, on the one hand, and price movements in the
securities that are the
subject of the hedge, on the other hand. Positions in
futures contracts and
options on futures contracts may be closed out only on the
exchange or board of
trade on which they were entered into, and there can be no
assurance that an
active market will exist for a particular contract or
option at any particular
time.
The Portfolio may not enter into futures and options
contracts for which
aggregate initial margin deposits and premiums paid for
unexpired options to
establish such positions that are not bona fide hedging
positions (as defined by
the Commodity Futures Trading Commission) exceed 5% of the
fair market value of
the
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6
Portfolio's assets, after taking into account unrealized
profits and unrealized
losses on futures contracts into which it has entered.
With respect to long
positions in futures or options on futures, the Portfolio
will "cover" the
position in a manner consistent with SEC guidance.
WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS
The Portfolio may purchase and sell securities on a
when-issued basis,
which calls for the purchase (or sale) of securities at an
agreed-upon price on
a specified future date. The Portfolio will enter into a
when-issued transaction
for the purpose of acquiring portfolio securities and not
for the purpose of
leverage. In such transactions, delivery of the securities
occurs beyond the
normal settlement periods, but no payment or delivery is
made by, and no
interest accrues to, the Portfolio prior to the actual
delivery or payment by
the other party to the transaction. Due to fluctuations in
the value of
securities purchased or sold on a when-issued or delayed
delivery basis, the
returns obtained on such securities may be higher or lower
than the returns
available in the market on the dates when the investments
are actually delivered
to the buyers. The Portfolio will establish a segregated
account consisting of
cash, U.S. government securities or other high-grade debt
obligations in an
amount equal to the amount of its when-issued and delayed
delivery commitments.
Placing securities rather than cash in the segregated
account may have a
leveraging effect on the Portfolio's net assets. The
Portfolio will not accrue
income with respect to a when-issued security prior to its
stated delivery date.
PURCHASING OPTIONS ON SECURITIES AND STOCK INDICES
The Portfolio may purchase put and call options that
are traded on a U.S.
securities exchange, and also may purchase such options on
foreign exchanges and
in the over-the-counter market. The Portfolio may utilize
up to 10% of its
assets to purchase put options on portfolio securities and
may do so at or about
the same time that it purchases the underlying security or
at a later time. By
buying a put, the Portfolio limits its risk of loss from a
decline in the market
value of the underlying security until the put expires.
Any appreciation in the
value of and yield otherwise available from the underlying
security, however,
will be partially offset by the amount of the premium paid
for the put option
and any related transaction costs. The Portfolio may
utilize up to 10% of its
assets to purchase call options on portfolio securities.
Call options may be
purchased by the Portfolio in order to acquire the
underlying securities for the
Portfolio at a price that avoids any additional cost that
would result from a
substantial increase in the market value of a security.
The Portfolio also may
purchase call options to increase its return to investors
at a time when the
call is expected to increase in value due to anticipated
appreciation of the
underlying security.
Prior to their expirations, put and call options may
be sold in closing
sale transactions (sales by the Portfolio, prior to the
exercise of options that
it has purchased, of options of the same series), and
profit or loss from the
sale will depend on whether the amount received is more or
less than the premium
paid for the option plus the related transaction costs.
The Portfolio may purchase call options on stock
indices. The Portfolio may
also write call options and buy put options on stock
indices. Options on stock
indices are similar to options on securities. However,
options on stock indices
do not involve the delivery of an underlying security;
rather, the options
represent the holder's right to obtain from the writer
in cash a fixed multiple
of the amount by which the exercise price exceeds (in
the case of a put) or is
less than (in the case of a call) the closing value of
the underlying index on
the exercise date.
A stock index measures the movement of a certain
group of stocks by
assigning relative values to the common stocks included in
the index. In
purchasing put options on a stock index, the Portfolio
seeks to benefit
- ----------------------------------------------------------
- ---------------------
7
from a decline in the value of the stocks underlying the
index or seeks to hedge
against the risk of loss on securities that it holds. In
purchasing call options
on a stock index, the Portfolio seeks to participate in an
advancing market in
anticipation of becoming more fully invested in equity
securities.
The advisability of using stock index options to
hedge against the risk of
marketwide movements will depend on the extent of
diversification of the stock
investments of the Fund and the sensitivity of its stock
investments to factors
influencing the underlying index. The effectiveness of
purchasing or writing
stock index options as a hedging technique will depend
upon the extent to which
price movements in the Portfolio's securities investments
correlate with price
movements in the stock index selected.
COVERED OPTION WRITING
The Portfolio may write put and call options on
securities. The Portfolio
realizes fees (referred to as "premiums") for granting the
rights evidenced by
the options. A put option embodies the right of its
purchaser to compel the
writer of the option to purchase from the option holder an
underlying security
at a specified price at any time during the option period.
In contrast, a call
option embodies the right of its purchaser to compel the
writer of the option to
sell to the option holder an underlying security at a
specified price at any
time during the option period. Thus, the purchaser of a
put
option written by
the Portfolio has the right to compel the Portfolio to
purchase from it the
underlying security at the agreed-upon price for a
specified time period, while
the purchaser of a call option written by the Portfolio
has the right to
purchase from the Portfolio the underlying security owned
by the Portfolio at
the agreed-upon price for a specified time period.
Upon the exercise of a put option written by the
Portfolio, the Portfolio
may suffer a loss equal to the difference between the
price at which the
Portfolio is required to purchase the underlying security
plus the premium
received for writing the option and its market value at
the time of the option
exercise.
Upon the exercise of a call option written by the
Portfolio, the Portfolio
may suffer a loss equal to the difference between the
security's market value at
the time of the option exercise less the premium received
for writing the option
and the Portfolio's acquisition cost of the security.
The Portfolio will write only covered options.
Accordingly, whenever the
Portfolio writes a call option, it will continue to own or
have the present
right to acquire the underlying security for as long as it
remains obligated as
the writer of the option. To support its obligation to
purchase the underlying
security if a put option is exercised, the Portfolio will
either (a) deposit
with the custodian in a segregated account cash, U.S.
government securities or
other high grade debt obligations having a value at least
equal to the exercise
price of the underlying securities or (b) continue to own
an equivalent number
of puts of the same "series" (that is, puts on the same
underlying security
having the same exercise prices and expiration dates as
those written by the
Portfolio) or an equivalent number of puts of the same
"class" (that is, puts on
the same underlying security) with exercise prices greater
than those that it
has written (or, if the exercise prices of the puts that
it holds are less than
the exercise prices of those that it has written, it will
deposit the difference
with its custodian in a segregated account).
The Portfolio may engage in a closing purchase
transaction to realize a
profit, to prevent an underlying security from being
called or put or, in the
case of a call option, to unfreeze an underlying security
(thereby permitting
its sale or the writing of a new option on the security
prior to the outstanding
option's expiration). To effect a closing purchase
transaction, the Portfolio
would purchase, prior to the holder's exercise of an
option that the Portfolio
has written, an option of the same series as that on which
the Portfolio desires
to terminate its obligation. The obligation of the
Portfolio under an option
that it has written would be terminated
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8
by a closing purchase transaction, but the Portfolio would
not be deemed to own
an option as the result of the transaction. There can be
no assurance that the
Portfolio will be able to effect closing purchase
transactions at a time when it
wishes to do so. To facilitate closing purchase
transactions, however, the
Portfolio ordinarily will write options only if a
secondary market for the
options exists on a U.S. securities exchange or in the
overthe-counter market.
The staff of the SEC considers most over-the-counter
options to be illiquid. The
ability to terminate options positions established in the
over-the-counter
market may be more limited than in the case of exchange
traded options and also
may involve the risk that securities dealers participating
in such transactions
would fail to meet their obligations to the Portfolio.
SHORT SALES AGAINST THE BOX
The Portfolio may make short sales of common stock
if, at all times when a
short position is open, the Portfolio owns the stock or
owns preferred stocks or
debt securities convertible or exchangeable into the
shares of common stock sold
short. Short sales of this kind are referred to as short
sales "against the
box." The broker-dealer that executes a short sale
generally invests cash
proceeds of the sale until they are paid to the Portfolio.
Arrangements may be
made with the broker-dealer to obtain a portion of the
interest earned by the
broker on the investment of short sale proceeds. The
Portfolio will segregate
the common stock or convertible or exchangeable preferred
stock or debt
securities in a special account with its custodian.
Up to 15% of the total assets of the Portfolio may be
invested in
securities with contractual or other restrictions on
resale and other
instruments that are not readily marketable, including (a)
repurchase agreements
with maturities greater than seven days, (b) futures
contracts and related
options for which a liquid secondary market does not exist
and (c) time deposits
maturing in more than seven calendar days. The Portfolio
may borrow from banks
for temporary or emergency purposes, but not for leverage,
in an amount up to
30% of its assets, and may pledge its assets to the same
extent in connection
with such borrowings. Whenever borrowings from banks
exceed 5% of the value of
the assets of the Portfolio, the Portfolio will not make
any additional
investments. Except for the limitations on borrowing, the
investment guidelines
set forth in this paragraph may be changed at any time
without shareholder
consent by vote of the Board of Trustees of the Fund. A
complete list of
investment restrictions that identifies additional
restrictions that cannot be
changed without the approval of a majority of the
Portfolio's outstanding shares
is contained in the Statement of Additional Information.
SPECIAL CONSIDERATIONS AND RISK
FACTORS
FIXED-INCOME SECURITIES
The market value of fixed-income obligations of the
Portfolio will be
affected by general changes in interest rates, which will
result in increases or
decreases in the value of fixed-income obligations held by
the Portfolio. The
market value of the Portfolio's fixed-income obligations
can be expected to vary
inversely in relation to changes in prevailing interest
rates. In addition,
fixed-income securities in which the Portfolio may invest
may not yield as high
a level of current income as might be achieved by
investing in securities with
less liquidity and safety and longer maturities.
NON-PUBLICLY TRADED AND ILLIQUID SECURITIES
The Portfolio may purchase securities that are not
publicly traded. The
sale of securities that are not publicly traded is
typically restricted under
federal securities laws. As a result, the Portfolio may be
forced to sell these
securities at less than fair market value or may not be
able to sell them when
its investment adviser
- ----------------------------------------------------------
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9
believes it desirable to do so. The Portfolio's
investments in illiquid
securities are subject to the risk that should the
Portfolio desire to sell any
of these securities when a ready buyer is not available at
a price that the
Portfolio deems representative of their value, the value
of the Portfolio's net
assets could be adversely affected.
MORTGAGE-RELATED SECURITIES
To the extent that the Portfolio purchases mortgage-
related securities at a
premium, mortgage foreclosures and prepayments of
principal by mortgagors (which
may be made at any time without penalty) may result in
some loss of the
Portfolio's principal investment to the extent of the
premium paid. The yield of
the Portfolio when investing in mortgage-related
securities may be affected by
reinvestment of prepayments at higher or lower rates than
the original
investment. In addition, like other debt securities, the
values of mortgage-
related securities, including government and government
related mortgage pools,
generally will fluctuate in relation to interest rates.
FOREIGN SECURITIES
The Portfolio may invest in obligations of companies
and governments of
foreign nations, which involve certain risks in addition
to the usual risks
inherent in U.S. investments. These risks include those
resulting from
revaluation of currencies, future adverse political and
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 lack of uniform accounting,
auditing and financial
reporting standards or of other regulatory practices and
requirements comparable
to those applicable to U.S. companies. The performance of
the Portfolio when
investing in foreign securities may be adversely affected
by fluctuations in
value of one or more foreign currencies relative to the
U.S. dollar. Moreover,
securities of many foreign companies may be less liquid
and their prices more
volatile than those of securities of comparable U.S.
companies. In addition,
with respect to certain foreign countries, there is the
possibility of
expropriation, nationalization, confiscatory taxation and
limitations on the use
or removal of funds or other assets of the Portfolio,
including the withholding
of dividends. Foreign securities may be subject to foreign
government taxes that
could reduce the return on such securities. Changes in
foreign currency exchange
rates may affect the value of portfolio securities and the
appreciation or
depreciation of investments. Investment in foreign
securities also may result in
higher expenses due to the cost of converting foreign
currency to U.S. dollars,
the payment of fixed brokerage commissions on foreign
exchanges, which generally
are higher than commissions on U.S. exchanges, and the
expense of maintaining
securities with foreign custodians.
MEDIUM- AND LOWER-RATED, AND UNRATED SECURITIES
The Portfolio may invest in medium- or lower-rated
securities and unrated
securities of comparable quality. Generally, these
securities offer a higher
current yield than is offered by higher-rated securities,
but also will likely
have some quality and protective characteristics that, in
the judgment of the
rating organizations, are outweighed by large
uncertainties or major risk
exposures to adverse conditions and are predominantly
speculative with respect
to the issuer's capacity to pay interest and repay
principal in accordance with
the terms of the obligation. The market values of certain
of these securities
also tend to be more sensitive to individual corporate
developments and changes
in economic conditions than higher-quality securities. In
addition, medium- and
lower-rated securities and comparable unrated securities
generally present a
higher degree of credit risk. Issuers of medium- and lower
rated, and comparable
unrated, securities are often highly leveraged and may not
have more traditional
methods of financing available to
- ----------------------------------------------------------
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10
them so that their ability to service their debt
obligations during a major
economic downturn or during sustained periods of rising
interest rates may be
impaired. The risk of loss due to default by such issuers
is significantly
greater because medium- and lower-rated securities and
unrated securities
generally are unsecured and frequently are subordinated to
the prior payment of
senior indebtedness. In light of these risks, SBMFM, in
evaluating the
creditworthiness of an issue, whether rated or unrated,
will take various
factors established by the Fund's Board of Trustees into
consideration, which
may include, as applicable, the issuer's financial
resources, its sensitivity to
economic conditions and trends, the operating history of
and the community
support for the facility financed by the issue, the
ability of the issuer's
management and regulatory matters.
The markets in which medium- and lower-rated or
comparable unrated
securities are traded generally are more limited than
those in which higher-
rated securities are traded. The existence of limited
markets for these
securities may restrict the availability of securities for
the Portfolio to
purchase and also may have the effect of limiting the
ability of the Portfolio
to (a) obtain accurate market quotations for purposes of
valuing securities and
calculating net asset value and (b) sell securities at
their fair value either
to meet redemption requests or to respond to changes in
the economy or the
financial markets. The market for medium- and lower-rated,
and comparable
unrated, securities is relatively new and has not fully
weathered a major
economic recession. Any such recession, however, would
disrupt severely the
market for such securities and adversely affect the value
of such securities,
and could adversely affect the ability of the issuers of
such securities to
repay principal and pay interest thereon.
Fixed-income securities, including medium- and lower-
rated, and comparable
unrated, securities, frequently have call or buy-back
features that permit their
issuers to call or repurchase the securities from their
holders, such as the
Portfolio. If an issuer exercises these rights during
periods of declining
interest rates, the Portfolio may have to replace the
security with a lower
yielding security resulting in a decreased return to the
Portfolio.
The market value of securities in lower rating
categories is more volatile
than that of higher quality securities, and the markets in
which medium- and
lower-rated or comparable unrated securities are traded
are more limited than
those in which higher-rated securities are traded. Adverse
publicity and
investor perceptions also may have a negative impact on
the value and liquidity
of lower-rated, high yield securities, especially in a
limited trading market.
Subsequent to its purchase by the Portfolio, an issue
of securities may
cease to be rated or its rating may be reduced below the
minimum required for
purchase by the Portfolio. Neither event will require sale
of such securities by
the Portfolio involved, but the Portfolio's investment
adviser will consider
such event in its determination of whether the Portfolio
should continue to hold
the securities.
Securities that are rated Ba by Moody's or BB by S&P
have speculative
characteristics with respect to their capacity to pay
interest and repay
principal. Securities that are rated B generally lack
characteristics of the
desirable investment and assurance of interest and
principal payments over any
long period of time may be small. Securities that are
rated Caa or CCC are of
poor standing. These issues may be in default or present
elements of danger with
respect to payment of principal or interest.
SECURITIES OF UNSEASONED ISSUERS
The Portfolio may invest in securities of unseasoned
issuers, which may
have limited marketability and, therefore, may be subject
to wide fluctuations
in market value. In addition, certain securities may lack
a
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11
significant operating history and may be dependent on
products or services
without an established market share.
PORTFOLIO TRANSACTIONS
All orders for transactions in securities, options,
futures contracts and
options on futures contracts on behalf of the Portfolio
will be placed by SBMFM
with broker-dealers that SBMFM selects, including Smith
Barney and other
affiliated brokers. The Portfolio may utilize Smith Barney
or a Smith Barney-
affiliated broker in connection with a purchase or sale of
securities when SBMFM
believes that the broker's charge for the transaction does
not exceed usual and
customary levels. The same standard applies to the use of
Smith Barney or a
Smith Barney-affiliated broker as a commodities broker in
connection with
entering into futures contracts and options on futures
contracts.
NET ASSET VALUE
The value of an individual share of the Portfolio is
the net asset value of
that share. The net asset value per share of the Portfolio
will be calculated
each day, Monday through Friday, except on days when the
New York Stock
Exchange, Inc. (the "NYSE") is closed. The NYSE is
currently scheduled to be
closed on New Year's Day, Presidents' Day, Good Friday,
Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas,
and on the preceding
Friday or subsequent Monday when one of these holidays
falls on a Saturday or
Sunday, respectively. Net asset value per share of the
Portfolio is determined
as of the close of regular trading on the NYSE (currently
4:00 p.m., New York
time).
Net asset value per share is computed by dividing the
value of the
Portfolio's net assets by the total number of its shares
outstanding. Generally,
the Portfolio's investments are valued at market value or,
in the absence of a
market value with respect to any portfolio securities, at
fair value as
determined by or under the direction of the Fund's Board
of Trustees. A security
that is primarily traded on a U.S. or foreign exchange
(including securities
traded through the National Market System) is valued at
the last sale price on
that exchange or, if there were no sales during the day,
at the current quoted
bid price. Portfolio securities that are primarily traded
on foreign exchanges
are generally valued at the preceding closing values of
such securities on their
respective exchanges, except that when an occurrence
subsequent to the time a
value was so established is likely to have changed the
value, then the fair
value of those securities will be determined by
consideration of other factors
by or under the direction of the Fund's Board of Trustees
or its delegates.
Over-the-counter securities that are not traded through
the National Market
System and securities listed or traded on certain foreign
exchanges whose
operations are similar to the U.S. over-the-counter market
are valued on the
basis of the bid price at the close of business on each
day. An option is
generally valued at the last sale price or, in the absence
of a last sale price,
the last offer price. Investments in U.S. government
securities (other than
short-term securities) are valued at the average of the
quoted bid and asked
prices in the over-the-counter market. Short-term
investments that mature in 60
days or less are valued at amortized cost when the Fund's
Board of Trustees
determines that this constitutes fair value. The value of
a futures contract
equals the unrealized gain or loss on the contract, which
is determined by
marking the contract to the current settlement price for a
like contract
acquired on the day on which the futures contract is being
valued. A settlement
price may not be used if the market makes a limit move
with respect to the
security, index or currency underlying the futures
contract. In such event, the
futures contract will be valued at a fair market price to
be determined by or
under the direction of the Fund's Board of Trustees.
Further information
regarding the Fund's valuation policies is contained in
the Statement of
Additional Information.
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12
HOW TO USE THE PORTFOLIO
INVESTING IN THE PORTFOLIO
In order to invest in shares of the Portfolio, an
investor must be a
variable annuity or variable life insurance contract
owner. For further
information regarding a Contract, see the description
provided in the Contract
prospectus.
SALES CHARGES AND SURRENDER CHARGES
The Fund does not assess any sales charge, either
when it sells or when it
redeems shares of the Portfolio. However, surrender
charges that may be assessed
under the Contract are described in the Contract
prospectus. Mortality and
expense risk fees and other charges are also described in
the Contract
prospectus.
REDEEMING AND EXCHANGING SHARES
A participating insurance company will redeem shares
of the Portfolio in
response to full or partial surrenders under the terms of
the Contract.
Generally, payment upon redemption will be made within
three days after
receiving a valid redemption request (unless redemption is
suspended or payment
is delayed as permitted in accordance with SEC
regulations). The Portfolio will
use the net asset value at the close of trading on the
NYSE on the day the
notice of surrender or transfer is received. If the
request is received after
the close of trading on the NYSE, the shares will be
redeemed at the net asset
value at the close of the next business day. The value of
any redeemed shares
may be more or less than their original purchase price.
A detailed description of how to surrender a Contract
is included in the
Contract prospectus, which must accompany this prospectus.
It is conceivable
that in the future it may be disadvantageous for both
variable annuity accounts
and variable life insurance accounts, or for variable
accounts of different
insurance companies, to invest simultaneously in the
Portfolio, although
currently neither the insurance companies nor the
Portfolio foresee any such
disadvantages to either variable annuity or variable life
insurance policy of
owners of any insurance company. The Fund's Board of
Trustees intends to monitor
events in order to identify any material conflicts between
such policy owners
and to determine what action, if any, should be taken in
response thereto.
DIVIDENDS AND TAXES
DIVIDENDS
NET INVESTMENT INCOME. Dividends and distributions
will be automatically
reinvested, without a sales charge, in the shareholder's
account at net asset
value in additional shares of the Portfolio, unless the
shareholder instructs
the Portfolio to pay all dividends and distributions in
cash. Net investment
income, including dividends on stocks and interest on
bonds or other securities
the Fund holds, is distributed to the shareholders of the
Portfolio on a monthly
basis. The shareholders of this Portfolio are the separate
accounts of
participating life insurance companies.
CAPITAL GAINS. Distributions of any net realized
capital gains of the
Portfolio will be paid annually shortly after the close of
the fiscal year in
which they are earned.
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13
TAXES
In the opinion of counsel to the Fund, the Portfolio
will be treated as a
separate taxpayer with the result that, for federal income
tax purposes, the
amounts of investment income and capital gains earned will
be determined on a
portfolio (rather than on a Fund-wide) basis.
The Fund intends that the Portfolio will meet the
requirements for
qualification each year as a "regulated investment
company" within the meaning
of the Internal Revenue Code of 1986, as amended (the
"Code"). In order to
qualify as a regulated investment company, the Portfolio
must meet certain
income and diversification tests, including the
requirement that it derive less
than 30% of its gross income in each taxable year from the
sale or other
disposition of (a) stock or securities held for less than
three months, (b)
options, futures or forward contracts (other than options,
futures or forward
contracts on foreign currencies) held for less than three
months and (c) foreign
currencies (or options, futures or forward contracts on
such foreign currencies)
held for less than three months but only if such
currencies (or options, futures
or forward contracts) are not directly related to the
Portfolio's principal
business of investing in stock or securities (or options
or futures with respect
to stock or securities). As a regulated investment company
and provided certain
distribution requirements are met, the Portfolio will not
be subject to federal
income tax on its net investment income and net capital
gains that it
distributes to its shareholders. Dividends paid by the
Portfolio from taxable
investment income and distributions of short-term capital
gains will be treated
as ordinary income in the hands of the shareholders for
federal income tax
purposes, whether received in cash or reinvested in
additional shares.
Distributions of net long-term capital gains will be
treated as long-term
capital gains in the hands of the shareholders, if certain
notice and
designation requirements are satisfied, whether paid in
cash or reinvested in
additional shares, regardless of the length of time the
investor has held shares
of the Portfolio.
The Fund has been informed that the separate accounts
represented by the
Contracts should, for federal income tax purposes, be
considered the
shareholders of the Portfolio.
To comply with regulations under Section 817(h) of
the Code, the Portfolio
will be required to diversify its investments so that on
the last day of each
calendar quarter no more than 55% of the value of its
assets is represented by
any one investment, no more than 70% is represented by any
two investments, no
more than 80% is represented by any three investments and
no more than 90% is
represented by any four investments. Generally, all
securities of the same
issuer are treated as a single investment. For the
purposes of Section 817(h) of
the Code, obligations of the United States Treasury and
each U.S. government
agency or instrumentality are treated as securities of
separate issuers.
The Treasury Department has indicated that it may
issue future
pronouncements addressing the circumstances in which a
variable contract owner's
control of the investments of a separate account may cause
the variable contract
owner, rather than the insurance company, to be treated as
the owner of the
assets held by the separate account. If the variable
contract owner is
considered the owner of the securities underlying the
separate account, income
and gains produced by those securities would be included
currently in the
variable contract owner's gross income. It is not known
what standards will be
set forth in such pronouncements or when, if at all, these
pronouncements may be
issued.
In the event that rules or regulations are adopted,
there can be no
assurance that the Portfolio will be able to operate as
currently described in
this Prospectus, or that the Fund will not have to change
the investment goal or
investment policies of the Portfolio. While the
Portfolio's investment goal is
fundamental and may be changed only by a vote of a
majority of the Portfolio's
outstanding shares, the Fund's Board of Trustees reserves
the right to modify
the investment policies of the Portfolio as necessary to
prevent any such
- ----------------------------------------------------------
- ---------------------
14
prospective rules and regulations from causing a Contract
owner to be considered
the owner of the shares of the Portfolio.
Refer to the Contract prospectus for information
regarding the federal
income tax treatment of distributions.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
Overall responsibility for management and supervision
of the Fund and its
portfolios, including the Portfolio, rests with the Fund's
Board of Trustees.
The Trustees approve all significant agreements between
the Fund and the persons
or companies that furnish services to the Fund and the
Portfolio, including
agreements with SBMFM, the Fund's custodian, transfer
agent and distributor. The
day-to-day operations of the Portfolio are delegated to
SBMFM. The identities
and backgrounds of the Trustees and officers of the Fund,
together with certain
additional information about them, are contained in the
Statement of Additional
Information. By virtue of the responsibilities assumed by
SBMFM, the Fund
requires no employees other than its executive officers,
none of whom devotes
full time to the affairs of the Fund.
INVESTMENT ADVISERS AND ADMINISTRATOR
Subject to the supervision and direction of the
Fund's Board of Trustees,
SBMFM manages the Portfolio in accordance with the
Portfolio's goal and stated
investment policies, makes investment decisions for the
Portfolio, places orders
to purchase and sell securities on behalf of the Portfolio
and employs
professional portfolio managers and securities analysts
who provide research
services to the Portfolio.
SBMFM, located at 388 Greenwich Street, New York, New
York 10013, provides
investment advisory and management services to investment
companies affiliated
with Holdings. SBMFM renders investment advice to
investment companies that had
aggregate assets under management as of July 31, 1995, in
excess of $67 billion.
PORTFOLIO MANAGEMENT
John G. Goode has been President and Chief Executive
Officer of what is now
the Davis Skaggs Investment Management Division of SBMFM
since 1989. Since
November 1990, Mr. Goode has also been the Portfolio
Manager of the Smith Barney
Fundamental Value Fund Inc.
The Fund's management discussion and analysis, and
additional performance
information regarding the portfolios of the Fund,
including the Portfolio,
during the fiscal year ended December 31, 1994, is
included in the Annual Report
dated December 31, 1994. A copy of the Annual Report may
be obtained upon
request without charge from a Smith Barney Financial
Consultant or by writing or
calling the Fund at the address or phone number listed on
page one of this
Prospectus.
CUSTODIAN AND TRANSFER AGENT
PNC, located at 17th and Chestnut Streets,
Philadelphia, Pennsylvania
19103, acts as custodian of the Fund's investments
generally.
TSSG, located at Exchange Place, Boston,
Massachusetts 02109, acts as the
Fund's transfer and dividend paying agent.
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15
DISTRIBUTOR
Smith Barney, a subsidiary of Holdings, located at
388 Greenwich Street,
New York, New York, 10013, serves as distributor of the
Fund's shares, for which
it receives no separate fee from the Fund. Insurance
companies offering the
Contracts pay Smith Barney for the services it provides
and the expenses it
bears in distributing the Contracts, including payment of
commissions for sales.
Insurance companies offering the Contracts will bear
certain additional costs in
connection with the offering of the Portfolio's shares,
including the costs of
printing and distributing prospectuses, statements of
additional information and
sales literature.
ADDITIONAL INFORMATION
FORMATION
The Fund was organized on May 13, 1991, under the
laws of the Commonwealth
of Massachusetts and is a business entity commonly known
as a "Massachusetts
business trust." The Fund is registered with the SEC as a
diversified, open-end
management investment company, as defined in the 1940
Act. The Fund commenced
operations on October 16, 1991, under the name Shearson
Series Fund. On October
14, 1994, the Fund changed its name to its current name,
Smith Barney Series
Fund.
SHARES OF BENEFICIAL INTEREST
The Fund offers shares of beneficial interest of
separate series with a par
value of $.001 per share. Shares of ten series have been
authorized. When
matters are submitted for shareholder vote, shareholders
of each portfolio will
have one vote for each full share owned and
proportionate,
fractional votes for
fractional shares held.
For a discussion of the rights of Contract owners
concerning the voting of
shares, please refer to the Contract prospectus.
Generally, shares of the Fund
vote by individual portfolio on all matters except (a)
matters affecting only
the interests of one or more of the portfolios, in which
case only shares of the
affected portfolio or portfolios would be entitled to
vote, or (b) when the 1940
Act requires that shares of the portfolios be voted in the
aggregate. All shares
of the Fund vote together as one series for the election
of Trustees. There will
normally be no meetings of shareholders for the purpose of
electing Trustees
unless less than a majority of the Trustees holding office
have been elected by
shareholders, at which time the Trustees then in office
will call a
shareholders' meeting for the election of Trustees. Any
Trustee may be removed
from office upon the vote of shareholders holding at least
two-thirds of the
Fund's outstanding shares at a meeting called for that
purpose. The Trustees are
required to call such a meeting upon the written request
of shareholders holding
at least 10% of the Fund's outstanding shares. In
addition, shareholders who
meet certain criteria will be assisted by the Fund in
communicating with other
shareholders in seeking the holding of such a meeting.
The participating life insurance company will send
owners of the Contract a
semi-annual report and an audited annual report, each of
which includes a list
of the investment securities held by the Portfolio at the
end of the period
covered. Contract owners may make inquiries regarding the
Portfolio from a
representative of the participating life insurance
company.
THE PORTFOLIO'S PERFORMANCE
TOTAL RETURN
From time to time, the Portfolio may advertise its
"average annual total
return" over various periods of time. Such total return
figures show the average
percentage change in value of an investment in the
Portfolio
- ----------------------------------------------------------
- ---------------------
16
from the beginning date of the measuring period to the end
of the measuring
period. These figures reflect changes in the price of the
Portfolio's shares and
assume that any income dividends and/or capital gains
distributions made by the
Portfolio during the period were reinvested in shares of
the Portfolio. Figures
will be given for recent one-, five- and ten-year periods
(if applicable), and
may be given for other periods as well (such as from
commencement of the
Portfolio's operations, or on a year-by-year basis). When
considering average
annual total return figures for periods longer than one
year, it is important to
note that the Portfolio's annual total return for any one
year in the period
might have been greater or less than the average for the
entire period. The
Portfolio also may use "aggregate" total return figures
for various periods,
representing the cumulative change in value of an
investment in the Portfolio
for the specific period (again reflecting changes in the
Portfolio's share
prices and assuming reinvestment of dividends and
distributions). Aggregate
total returns may be shown by means of schedules, charts
or graphs and may
indicate subtotals of the various components of total
return (i.e., change in
value of initial investment, income dividends and capital
gains distributions).
It is important to note that yield and total return
figures are based on
historical earnings and are not intended to indicate
future performance. The
Statement of Additional Information describes the method
used to determine the
Portfolio's yield and total return. Shareholders may make
inquiries regarding
the Portfolio, including current yield quotations or total
return figures, to a
Smith Barney Financial Consultant.
In reports or other communications to shareholders or
in advertising
material, the Portfolio may compare its performance with
that of other mutual
funds as listed in the rankings prepared by Lipper
Analytical Services, Inc. or
similar independent services that monitor the performance
of mutual funds or
with other appropriate indices of investment securities,
such as the S&P 500,
Salomon Brothers World Government Bond Index, Lehman
Brothers Government Bond
Index and Lehman Brothers Mortgage-Backed Securities
Index, with the Consumer
Price Index, Dow Jones Industrial Average or NASDAQ, or
with investment or
savings vehicles. The performance information also may
include evaluations of
the Portfolio published by nationally recognized ranking
services and by
financial publications that are nationally recognized,
such as Barron's,
Business Week, Forbes, Fortune, Institutional Investor,
Investor's Business
Daily, Kiplinger's Personal Finance Magazine, Money,
Morningstar Mutual Fund
Values, Mutual Fund Forecaster, The New York Times,
Stranger's Investment
Advisor, USA Today, U.S. News & World Report and The Wall
Street Journal. Such
comparative performance information will be stated in the
same terms in which
the comparative data or indices are stated. Any such
advertisement also would
include the standard performance information required by
the SEC as described
above. For these purposes, the performance of the
Portfolio, as well as the
performance of other mutual funds or indices, do not
reflect sales charges, the
inclusion of which would reduce the Portfolio's
performance.
The Portfolio may also utilize performance
information in hypothetical
illustrations provided in narrative form. These
hypotheticals will be
accompanied by the standard performance information
required by the SEC as
described above.
A Contract owner's actual return on its investment in
this Portfolio will
be affected by Contract charges imposed by the separate
accounts of the
participating life insurance companies.
- ----------------------------------------------------------
- ---------------------
No person has been authorized to give any information
or to make any
representations other than those contained in this
Prospectus, the Statement of
Additional Information or the Fund's official sales
literature in connection
with the offering of the Fund's shares, and, if given or
made, such other
information or representations must not be relied upon as
having been authorized
by the Fund. This Prospectus does not constitute an offer
in any state in which,
or to any person to whom, the offer may not lawfully be
made. ----------------------------------------------------
- ---------------------------
- ----------------------------------------------------------
- ---------------------
17
- ----------------------------------------------------------
- ---------------------
P R O S P E C T U S
L 12728 Smith Barney Series Fund
SB Ed. 9-95
- ----------------------------------------------------------
- ---------------------
SMITH BARNEY SERIES FUND
PART C
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A of Post-Effective Amendment No. 10
which is incorporated herein by reference:
Financial Highlights
Included in Part B:
The Registrant's Annual Report for the fiscal
year ened December 31, 1994 and the
Report of Independent Accountants dated February
10, 1995 are incorporated by
reference to the Definitive 30D filed on March
8, 1995 as Accession # 0000053798-95- 000128.
Included in Part C:
Incorporated by reference to Item #24 of Post
Effective Amendment No. 10.
(b) Exhibits
Exhibit No. Description of Exhibit
All references are to the Registrant's
registration statement on Form N-1A (the
"Registration Statement") as filed with the SEC
on May 16, 1991 (File Nos. 33-40603 and 811-
6310).
(1) Registrant's Master Trust Agreement and
Amendment
Nos. 1 and 2 are incorporated by reference to
PostEffective Amendment No. 6 to the Registrant's
Registration Statement as filed with the SEC on
December 1, 1993 ("Post-Effective Amendment No.
6").
(2) By-Laws are incorporated by reference to the
Registration Statement.
(3) Not applicable.
(4) Specimen certificates for shares of beneficial
interest in the Money Market Portfolio,
Intermediate High Grade Portfolio, Diversified
Strategic Income Portfolio, Equity Income
Portfolio, Equity Index Portfolio, Growth and
Income Portfolio and Appreciation Portfolio is
incorporated by reference to Pre-Effective
Amendment No. 1 to the Registrant's Registration
Statement as filed with the SEC on July 10, 1991
("Pre-Effective Amendment No. 1").
(5)(a) Investment Advisory Agreement dated April 1,
1995 between the Registrant and Travelers
Investment Management Company relating to Equity
Index Portfolio, is incorporated by reference to
Post-Effective Amendment No. 10 to the
Registrant's Registration Statement as filed
with the SEC on May 3, 1995 ("Post-Effective
Amendment No. 10").
(b) Investment Advisory Agreements dated July 30,
1993
between the Registrant and Greenwich Street
Advisors relating to Money Market, Intermediate
High Grade, Diversified Strategic Income, Equity
Income and Growth and Income Portfolios and
between the Registrant and Smith Barney Shearson
Asset Management relating to Appreciation
Portfolio dated July 30, 1993, are incorporated
by reference to Post-Effective Amendment No. 4
to the Registrant's Registration Statement as
filed with the SEC on October 22, 1993 ("Post
Effective Amendment No. 4").
(c) Investment Advisory Agreement with Smith Barney
Shearson Asset Management relating to Total
Return Portfolio, dated November 23, 1993, is
incorporated by reference to Post-Effective
Amendment No. 6.
(d) Investment Advisory Agreement with Smith, Barney
Advisers, Inc. relating to International Equity
Portfolio, dated November 23, 1993, is
incorporated by reference to Post-Effective
Amendment No. 6.
(e) Investment Advisory Agreement with American
Capital Asset Management, Inc. relating to
Emerging Growth Portfolio, is incorporated by
reference to Post-Effective Amendment No.
10.
(f) Form of Investment Advisory Agreement with
Greenwich Street Advisors relating to
Diversified Strategic Income Portfolio dated
March 21, 1994 is incorporated by reference to
Post-Effective Amendment No. 9 to the
Registration Statement as filed with the SEC on
May 1, 1994 ("Post-Effective Amendment No. 9").
(g) Form of Sub-Investment Advisory Agreement with
Smith Barney Global Capital Management Inc.
relating to Diversified Strategic Income
Portfolio dated March 21, 1994 is incorporated
by reference to Post-Effective Amendment No. 9.
(6)(a) Distribution Agreement with Smith Barney
Shearson Inc., dated July 30, 1993, is
incorporated by reference to Post-Effective
Amendment No. 4.
(7) Not Applicable.
(8) Form of Custody Agreement between the
Registrant and PNC Bank, National Association is
filed herein.
(9)(a) Administration Agreements dated June 4, 1994
with
Smith Barney Mutual Funds Management Inc.
relating to Money Market, Intermediate High
Grade, Diversified Strategic Income, Equity
Income, Equity Index, Growth and Income,
Appreciation, Total Return, Emerging Growth and
International Equity Portfolios are incorporated
by reference to Post-Effective Amendment No. 10.
(b) Transfer Agency Agreement between the Registrant
and The Shareholder Services Group, Inc. dated
August 2, 1993 is incorporated by reference to
Post-Effective Amendment No. 7 to the
Registrant's Registration Statement as filed
with the SEC on March 1, 1994 ("Post-Effective
Amendment No. 7").
(10) Not applicable
(11)
Consent of Independent Accountants is
incorporated
by reference to Post-Effective Amendment No. 10.
(12) Not Applicable.
(13) Purchase Agreement is incorporated by reference
to
Pre-Effective Amendment No. 3 to the
Registration Statement filed with the SEC on
October 15, 1991.
(14) Not Applicable.
(15) Not Applicable.
(16) Performance Data is incorporated by reference to
Post-Effective Amendment No. 1.
Item 25. Persons Controlled by or under Common Control
with Registrant
Shares of the Registrant will be offered to The
Travelers Insurance Company ("Travelers"), a
corporation organized under the laws of the State of
Connecticut, for allocation to one or more separate
subaccounts of the Travelers Fund BD for Variable
Annuities. Travelers is a wholly owned subsidiary of
Travelers Group Inc.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Holders by Class
Title of Class as of
August
1, 1995
Shares of beneficial interest,
par value $.001 per share
Appreciation Portfolio 2
Diversified Strategic Income Portfolio
2
Emerging Growth Portfolio 2
Equity Income Portfolio 2
Equity Index Portfolio 2
Intermediate High Grade Portfolio
2
International Equity Portfolio
2
Growth & Income Portfolio 2
Money Market Portfolio 2
Total Return Portfolio 3
Item 27. Indemnification
The response to this item is incorporated by
reference to Pre-Effective Amendment No. 3.
Item 28(a.) Business and Other Connections of
Investment Adviser
Investment Adviser - - Smith Barney Mutual Funds
Management Inc. (formerly known as Smith, Barney Advisers,
Inc.)
SBMFM was incorporated in 1968 under the laws of the state
of Delaware. SBMFM is a wholly owned subsidiary of Smith
Barney Holdings Inc., which in turn is a wholly owned
subsidiary of Travelers Group Inc. (formerly know as
Primerica Corporation) ("Travelers").
The list required by this Item 28 of officers and
directors of SBMFM, 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 fiscal years, is
incorporated by reference to Schedules A and D of FORM ADV
filed by SBMFM pursuant to the Investment Advisers Act of
1940(the "Advisers Act") (SEC File No. 801-8314).
Prior to the close of business on July 30, 1993 (the
"Closing"), Smith Barney Asset Management ("Asset
Management") was a member of the Asset Management Group of
Shearson Lehman Brothers Inc. ("Shearson Lehman
Brothers"), and served as one of the Registrant's
investment advisers. On the Closing, Travelers and Smith
Barney Shearson Inc. (now known as Smith Barney Inc.)
acquired the domestic retail brokerage and asset
management business of Shearson Lehman Brothers, which
included the business of Asset Management. Shearson
Lehman Brothers was a wholly owned subsidiary of Shearson
Lehman Brothers Holdings Inc. ("Shearson Holdings"). All
of the issued and outstanding common stock of Shearson
Holdings (representing 92% of the voting stock) was held
by American Express Company. Information as to any past
business vocation or employment of a substantial nature
engaged in by officers and directors of Asset Management
can be located in Schedules A and D of FORM ADV filed by
Shearson Lehman Brothers on behalf of Asset Management
prior to July 30, 1993 (SEC FILE NO. 8013701).
08/01/95
Item 28(a). Business and Other Connections of
Investment Adviser
Investment Adviser - - Smith Barney Global Capital
Management, Inc.
Investment Adviser - - Smith Barney Global Capital
Management, Inc. ("SBGCM") was incorporated on January 22,
1988 under the laws of the State of Delaware. SBGCM is an
indirect wholly owned subsidiary of Smith Barney Holdings
Inc., which in turn is a wholly owned subsidiary of
Travelers. SBGCM is an investment adviser registered with
the Securities and Exchange Commission in the United
States and with the Investment Management Regulatory
Organization Limited in the United Kingdom. SBGCM
conducts its operations primarily in the United Kingdom.
The list required by this Item 28 of officers and
directors of SBGCM, 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 SBGCM
pursuant to the Advisers Act (SEC File No. 801-31824).
3/15/94
Item 28(a). Business and Other Connections of
Investment Adviser
Investment Adviser - - American Capital Asset Management,
Inc.
American Capital Asset Management Inc. ("American
Capital"), is located at 2800 Post Oak Boulevard, Houston,
Texas 77056, and through its predecessors, has been in the
investment counseling business since 1926. American
Capital is a wholly owned subsidiary of The Van Kampen
Merritt Companies, Inc.
The list required by this Item 28 of officers and
directors of American Capital, 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 fiscal years,
is incorporated by reference to Schedules A and D of FORM
ADV filed by American Capital pursuant to the Advisers Act
(SEC File No. 8011169).
Item 28(a). Business and Other Connections of
Investment Adviser
Investment Adviser -- Travelers Investment Management
Company
Travelers Investment Management Company ("TIMCO"), is
located at One Tower Square, Hartford, Connecticut 06183,
and has been in the investment counselling business since
1976. TIMCO is a wholly owned subsidiary of Travelers
Group Inc.
The list required by this Item 28 of officers and
directors
of TIMCO, 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 fiscal years, is
incorporated by reference to Schedules A and D of Form ADV
filed by TIMCO pursuant to Advisers Act (SEC File No. 801-
07212).
Item 29. Principal Underwriters
Smith Barney Inc. ("Smith Barney") currently acts as a
distributor for Smith Barney Managed Municipals Fund Inc.,
Smith Barney New York Municipals Fund Inc., Smith Barney
California Municipals Fund Inc., Smith Barney
Massachusetts Municipals Fund, Smith Barney Managed
Government Fund Inc., Smith Barney Aggressive Growth Fund
Inc., Smith Barney Appreciation Fund Inc., Smith Barney
Principal Return Fund, Smith Barney Income Funds, Smith
Barney Equity Funds, Smith Barney Investment Funds Inc.,
Smith Barney Precious Metals and Minerals Fund Inc., Smith
Barney Telecommunications Trust, Smith Barney Arizona
Municipals Fund Inc., Smith Barney New Jersey Municipals
Fund Inc., The USA High Yield Fund N.V., Smith
Barney/Travelers Series Fund, Smith Barney Fundamental
Value Fund Inc., Smith Barney Series Fund, Consulting
Group Capital Markets Funds, Smith Barney Income Trust,
Smith Barney Adjustable Rate Government Income Fund, Smith
Barney Florida Municipals Fund, Smith Barney Oregon
Municipals Fund, Smith Barney Funds, Inc., Smith Barney
Muni Funds, Smith Barney World Funds, Inc., Smith Barney
Money Funds, Inc., Smith Barney Municipal Money Market
Fund, Inc., Smith Barney Variable Account Funds, Smith
Barney U.S. Dollar Reserve Fund (Cayman), Worldwide
Special Fund, N.V., Worldwide Securities Limited
(Bermuda), Smith Barney International Fund (Luxembourg),
Smith Barney Institutional Cash Management Fund, Inc. and
various series of unit investment trusts.
Smith Barney is a wholly owned subsidiary of Smith Barney
Holdings Inc., which in turn is a wholly owned subsidiary
of Travelers Group Inc. (formerly Primerica Corporation).
The information required by this Item 29 with respect to
each director, officer and partner of Smith Barney is
incorporated by reference to Schedule A of FORM BD filed
by Smith Barney pursuant to the Securities Exchange Act of
1934 (SEC File No. 812-8510).
Item 30. Location of Accounts and Records
(1) Smith Barney Mutual Funds Management Inc.
388 Greenwich Street
New York, New York 10013
(Records relating to its function as Investment
Adviser and Administrator)
(2) American Capital Asset Management, Inc.
2800 Post Oak Boulevard
Houston, Texas 77056
(Records relating to its function as
Investment Adviser)
(3) Smith Barney Global Capital Management Inc.
10 Piccadilly
London, U.K. W1V-9LA
(Records relating to its function as
SubInvestment Adviser)
(4) Travelers Investment Management Company
One Tower Square
Hartford, CT 06183-2030
(Records relating to its function as
Investment Adviser)
(5) PNC Bank, National Association
17th and Chestnut Streets
Philadelphia, PA 19103
(Records relating to its function as
Custodian)
(6) The Shareholders Services Group, Inc.
One Exchange Place
53 State Street
Boston, Massachusetts 02109
(Records relating to its function as
Transfer Agent and
Dividend Paying Agent)
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
None
485(b) Certification
The Registrant hereby certifies that it meets all the
requirements for effectiveness pursuant to Rule 485(b)(1)(ix)
under the Securities Act of 1933, as amended.
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 SERIES FUND, certifies
that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the
Securities and Exchange Act of 1933, 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 29th day of
August, 1995.
SMITH BARNEY SERIES FUND
By:/s/ Heath B. McLendon
Heath B. McLendon,
Chairman of the Board
WITNESS our hands on the date set forth below.
Pursuant to the requirements of the Securities Act of
1933, as amended, this 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
Heath B. McLendon Trustee and Chairman of
the Board (Chief Executive
08/29/95
Officer)
/s/ Lewis E. Daidone
Lewis E. Daidone Treasurer (Chief
Financial
and Accounting Officer)
08/29/95
/s/ Burt N. Dorsett Trustee
08/29/95
Burt N. Dorsett
/s/ Eliott S. Jaffe Trustee
08/29/95
Eliott S. Jaffe
/s/ Cornelius C. Rose
Cornelius C. Rose Trustee
08/29/95
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> SB SERIES: MONEY MARKET
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 7,140,004
<INVESTMENTS-AT-VALUE> 7,140,004
<RECEIVABLES> 11,903
<ASSETS-OTHER> 782
<OTHER-ITEMS-ASSETS> 8,937
<TOTAL-ASSETS> 7,161,626
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20,680
<TOTAL-LIABILITIES> 20,680
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,140,946
<SHARES-COMMON-STOCK> 7,140,946
<SHARES-COMMON-PRIOR> 3,702,688
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 7,140,946
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 287,558
<OTHER-INCOME> 0
<EXPENSES-NET> 49,261
<NET-INVESTMENT-INCOME> 238,297
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 238,297
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 238,297
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,671,065
<NUMBER-OF-SHARES-REDEEMED> 6,475,417
<SHARES-REINVESTED> 242,610
<NET-CHANGE-IN-ASSETS> 3,438,258
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 19,592
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 49,261
<AVERAGE-NET-ASSETS> 6,530,705
<PER-SHARE-NAV-BEGIN> 1.0000
<PER-SHARE-NII> 0.0350
<PER-SHARE-GAIN-APPREC> 0.0000
<PER-SHARE-DIVIDEND> 0.0350
<PER-SHARE-DISTRIBUTIONS> 0.0000
<RETURNS-OF-CAPITAL> 0.0000
<PER-SHARE-NAV-END> 1.0000
<EXPENSE-RATIO> 0.75
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<AVG-DEBT-PER-SHARE> 0
<ARTICLE> 6
<SERIES>
[NUMBER] 2
<NAME> SB SERIES: INTERMEDIATE HIGH GRADE
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
[INVESTMENTS-AT-COST] 13,737,993
[INVESTMENTS-AT-VALUE] 13,029,483
[RECEIVABLES] 266,907
[ASSETS-OTHER] 629
[OTHER-ITEMS-ASSETS] 8,934
[TOTAL-ASSETS] 13,305,953
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 25,791
[TOTAL-LIABILITIES] 25,791
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 14,239,723
[SHARES-COMMON-STOCK] 1,374,312
[SHARES-COMMON-PRIOR] 922,006
[ACCUMULATED-NII-CURRENT] 174,543
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (425,594)
[ACCUM-APPREC-OR-DEPREC] (708,510)
[NET-ASSETS] 13,280,162
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 914,252
[OTHER-INCOME] 0
[EXPENSES-NET] 104,633
[NET-INVESTMENT-INCOME] 809,619
[REALIZED-GAINS-CURRENT] (425,633)
[APPREC-INCREASE-CURRENT] (706,692)
[NET-CHANGE-FROM-OPS] (322,706)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 754,838
[DISTRIBUTIONS-OF-GAINS] 96,524
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 5,706,733
[NUMBER-OF-SHARES-REDEEMED] 1,963,006
[SHARES-REINVESTED] 851,363
[NET-CHANGE-IN-ASSETS] 3,421,022
[ACCUMULATED-NII-PRIOR] 119,762
[ACCUMULATED-GAINS-PRIOR] 96,524
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 49,279
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 104,633
[AVERAGE-NET-ASSETS] 12,319,740
[PER-SHARE-NAV-BEGIN] 10.6900
[PER-SHARE-NII] 0.6100
[PER-SHARE-GAIN-APPREC] (0.9400)
[PER-SHARE-DIVIDEND] 0.6100
[PER-SHARE-DISTRIBUTIONS] 0.0900
[RETURNS-OF-CAPITAL] 0.0000
[PER-SHARE-NAV-END] 9.6600
[EXPENSE-RATIO] 0.85
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<SERIES>
[NUMBER] 3
<NAME> SB SERIES: DIVERSIFIED STRATEGIC INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
[INVESTMENTS-AT-COST] 56,094,571
[INVESTMENTS-AT-VALUE] 52,981,897
[RECEIVABLES] 6,469,792
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 1,142,010
[TOTAL-ASSETS] 60,593,699
[PAYABLE-FOR-SECURITIES] 10,464
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 5,322,980
[TOTAL-LIABILITIES] 5,333,444
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 59,220,776
[SHARES-COMMON-STOCK] 6,018,370
[SHARES-COMMON-PRIOR] 4,294,279
[ACCUMULATED-NII-CURRENT] 662
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (905,769)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (3,055,414)
[NET-ASSETS] 55,260,255
[DIVIDEND-INCOME] 62,907
[INTEREST-INCOME] 4,313,546
[OTHER-INCOME] 0
[EXPENSES-NET] 505,283
[NET-INVESTMENT-INCOME] 3,871,170
[REALIZED-GAINS-CURRENT] (1,560,526)
[APPREC-INCREASE-CURRENT] (3,687,044)
[NET-CHANGE-FROM-OPS] (1,376,400)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 3,209,940
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 200,460
[NUMBER-OF-SHARES-SOLD] 18,827,572
[NUMBER-OF-SHARES-REDEEMED] 5,435,332
[SHARES-REINVESTED] 3,410,400
[NET-CHANGE-IN-ASSETS] 12,015,840
[ACCUMULATED-NII-PRIOR] 29,871
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 238,422
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 505,283
[AVERAGE-NET-ASSETS] 52,983,217
[PER-SHARE-NAV-BEGIN] 10.0700
[PER-SHARE-NII] 0.5800
[PER-SHARE-GAIN-APPREC] (0.8600)
[PER-SHARE-DIVIDEND] 0.5800
[PER-SHARE-DISTRIBUTIONS] 0.0000
[RETURNS-OF-CAPITAL] 0.0300
[PER-SHARE-NAV-END] 9.1800
[EXPENSE-RATIO] 0.95
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<SERIES>
[NUMBER] 4
<NAME> SB SERIES: EQUITY INCOME
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
[INVESTMENTS-AT-COST] 48,324,433
[INVESTMENTS-AT-VALUE] 43,407,001
[RECEIVABLES] 461,572
[ASSETS-OTHER] 631,673
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 44,500,246
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 82,850
[TOTAL-LIABILITIES] 82,850
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 50,336,936
[SHARES-COMMON-STOCK] 4,502,148
[SHARES-COMMON-PRIOR] 5,210,301
[ACCUMULATED-NII-CURRENT] 627,374
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (1,629,482)
[ACCUM-APPREC-OR-DEPREC] (4,917,432)
[NET-ASSETS] 44,417,396
[DIVIDEND-INCOME] 2,381,677
[INTEREST-INCOME] 766,674
[OTHER-INCOME] 0
[EXPENSES-NET] 416,677
[NET-INVESTMENT-INCOME] 2,731,674
[REALIZED-GAINS-CURRENT] (1,629,482)
[APPREC-INCREASE-CURRENT] (6,956,371)
[NET-CHANGE-FROM-OPS] (5,854,179)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 2,331,772
[DISTRIBUTIONS-OF-GAINS] 117,669
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 3,601,508
[NUMBER-OF-SHARES-REDEEMED] 13,489,892
[SHARES-REINVESTED] 2,449,442
[NET-CHANGE-IN-ASSETS] (15,742,562)
[ACCUMULATED-NII-PRIOR] 227,472
[ACCUMULATED-GAINS-PRIOR] 117,669
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 223,055
[INTEREST-EXPENSE] 340
[GROSS-EXPENSE] 416,677
[AVERAGE-NET-ASSETS] 49,567,681
[PER-SHARE-NAV-BEGIN] 11.5500
[PER-SHARE-NII] 0.5800
[PER-SHARE-GAIN-APPREC] (1.7500)
[PER-SHARE-DIVIDEND] 0.4900
[PER-SHARE-DISTRIBUTIONS] 0.0200
[RETURNS-OF-CAPITAL] 0.0000
[PER-SHARE-NAV-END] 9.8700
[EXPENSE-RATIO] 0.84
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<SERIES>
[NUMBER] 5
<NAME> SB SERIES: EQUITY INDEX
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
[INVESTMENTS-AT-COST] 9,786,366
[INVESTMENTS-AT-VALUE] 10,204,881
[RECEIVABLES] 57,570
[ASSETS-OTHER] 1,384,050
[OTHER-ITEMS-ASSETS] 9,054
[TOTAL-ASSETS] 11,655,555
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1,430,143
[TOTAL-LIABILITIES] 1,430,143
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 9,630,127
[SHARES-COMMON-STOCK] 874,944
[SHARES-COMMON-PRIOR] 742,872
[ACCUMULATED-NII-CURRENT] 200,919
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (42,749)
[ACCUM-APPREC-OR-DEPREC] 437,115
[NET-ASSETS] 10,225,412
[DIVIDEND-INCOME] 236,206
[INTEREST-INCOME] 60,280
[OTHER-INCOME] 0
[EXPENSES-NET] 95,547
[NET-INVESTMENT-INCOME] 200,939
[REALIZED-GAINS-CURRENT] (39,099)
[APPREC-INCREASE-CURRENT] (57,595)
[NET-CHANGE-FROM-OPS] 104,245
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 111,775
[DISTRIBUTIONS-OF-GAINS] 111,690
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 2,438,324
[NUMBER-OF-SHARES-REDEEMED] 1,159,262
[SHARES-REINVESTED] 223,465
[NET-CHANGE-IN-ASSETS] 1,383,307
[ACCUMULATED-NII-PRIOR] 111,758
[ACCUMULATED-GAINS-PRIOR] 108,037
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 38,236
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 95,547
[AVERAGE-NET-ASSETS] 9,559,102
[PER-SHARE-NAV-BEGIN] 11.9000
[PER-SHARE-NII] 0.2300
[PER-SHARE-GAIN-APPREC] (0.1400)
[PER-SHARE-DIVIDEND] 0.1500
[PER-SHARE-DISTRIBUTIONS] 0.1500
[RETURNS-OF-CAPITAL] 0.0000
[PER-SHARE-NAV-END] 11.6900
[EXPENSE-RATIO] 1.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<SERIES>
[NUMBER]6
<NAME> SB SERIES: GROWTH & INCOME
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
[INVESTMENTS-AT-COST] 28,913,544
[INVESTMENTS-AT-VALUE] 29,325,496
[RECEIVABLES] 834,972
[ASSETS-OTHER] 708
[OTHER-ITEMS-ASSETS] 9,082
[TOTAL-ASSETS] 30,170,258
[PAYABLE-FOR-SECURITIES] 501,496
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 44,092
[TOTAL-LIABILITIES] 545,588
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 29,561,442
[SHARES-COMMON-STOCK] 2,757,006
[SHARES-COMMON-PRIOR] 2,246,457
[ACCUMULATED-NII-CURRENT] 74,799
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (423,523)
[ACCUM-APPREC-OR-DEPREC] 411,952
[NET-ASSETS] 29,624,670
[DIVIDEND-INCOME] 726,517
[INTEREST-INCOME] 250,659
[OTHER-INCOME] 0
[EXPENSES-NET] 264,326
[NET-INVESTMENT-INCOME] 712,850
[REALIZED-GAINS-CURRENT] (343,937)
[APPREC-INCREASE-CURRENT] (1,273,005)
[NET-CHANGE-FROM-OPS] (904,092)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 667,174
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 7,429,055
[NUMBER-OF-SHARES-REDEEMED] 2,448,822
[SHARES-REINVESTED] 667,175
[NET-CHANGE-IN-ASSETS] 4,076,142
[ACCUMULATED-NII-PRIOR] 30,295
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] (80,758)
[GROSS-ADVISORY-FEES] 127,450
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 264,326
[AVERAGE-NET-ASSETS] 28,322,222
[PER-SHARE-NAV-BEGIN] 11.3700
[PER-SHARE-NII] 0.2700
[PER-SHARE-GAIN-APPREC] (0.6300)
[PER-SHARE-DIVIDEND] 0.2600
[PER-SHARE-DISTRIBUTIONS] 0.0000
[RETURNS-OF-CAPITAL] 0.0000
[PER-SHARE-NAV-END] 10.7500
[EXPENSE-RATIO] 0.93
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<SERIES>
[NUMBER] 7
<NAME> SB SERIES: APPRECIATION
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
[INVESTMENTS-AT-COST] 77,806,423
[INVESTMENTS-AT-VALUE] 80,836,700
[RECEIVABLES] 153,810
[ASSETS-OTHER] 2,737
[OTHER-ITEMS-ASSETS] 10,219
[TOTAL-ASSETS] 81,003,466
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 180,850
[TOTAL-LIABILITIES] 180,850
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 74,990,083
[SHARES-COMMON-STOCK] 7,004,234
[SHARES-COMMON-PRIOR] 6,593,923
[ACCUMULATED-NII-CURRENT] 1,410,239
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 1,392,017
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 3,030,277
[NET-ASSETS] 80,822,616
[DIVIDEND-INCOME] 1,657,502
[INTEREST-INCOME] 467,319
[OTHER-INCOME] 0
[EXPENSES-NET] 712,981
[NET-INVESTMENT-INCOME] 1,411,840
[REALIZED-GAINS-CURRENT] 2,426,383
[APPREC-INCREASE-CURRENT] (4,664,335)
[NET-CHANGE-FROM-OPS] (826,112)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 893,799
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 10,824,472
[NUMBER-OF-SHARES-REDEEMED] 7,016,905
[SHARES-REINVESTED] 893,799
[NET-CHANGE-IN-ASSETS] 2,981,455
[ACCUMULATED-NII-PRIOR] 892,198
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] (1,034,366)
[GROSS-ADVISORY-FEES] 444,244
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 712,981
[AVERAGE-NET-ASSETS] 80,771,607
[PER-SHARE-NAV-BEGIN] 11.8000
[PER-SHARE-NII] 0.2000
[PER-SHARE-GAIN-APPREC] (0.3200)
[PER-SHARE-DIVIDEND] 0.1400
[PER-SHARE-DISTRIBUTIONS] 0.0000
[RETURNS-OF-CAPITAL] 0.0000
[PER-SHARE-NAV-END] 11.5400
[EXPENSE-RATIO] 0.88
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<SERIES>
[NUMBER] 8
<NAME> SB SERIES: TOTAL RETURN
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
[INVESTMENTS-AT-COST] 24,159,162
[INVESTMENTS-AT-VALUE] 23,368,385
[RECEIVABLES] 109,239
[ASSETS-OTHER] 697
[OTHER-ITEMS-ASSETS] 12,604
[TOTAL-ASSETS] 23,490,925
[PAYABLE-FOR-SECURITIES] 210,300
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 84,734
[TOTAL-LIABILITIES] 295,034
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 23,136,830
[SHARES-COMMON-STOCK] 2,151,407
[SHARES-COMMON-PRIOR] 269,587
[ACCUMULATED-NII-CURRENT] 133,581
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 686,358
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (760,878)
[NET-ASSETS] 23,195,891
[DIVIDEND-INCOME] 494,165
[INTEREST-INCOME] 193,568
[OTHER-INCOME] 0
[EXPENSES-NET] 141,891
[NET-INVESTMENT-INCOME] 545,842
[REALIZED-GAINS-CURRENT] 686,358
[APPREC-INCREASE-CURRENT] (800,268)
[NET-CHANGE-FROM-OPS] 431,932
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 413,990
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 20,827,157
[NUMBER-OF-SHARES-REDEEMED] 840,368
[SHARES-REINVESTED] 413,991
[NET-CHANGE-IN-ASSETS] 20,418,722
[ACCUMULATED-NII-PRIOR] 1,729
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 78,167
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 141,891
[AVERAGE-NET-ASSETS] 14,212,110
[PER-SHARE-NAV-BEGIN] 10.3000
[PER-SHARE-NII] 0.3400
[PER-SHARE-GAIN-APPREC] 0.4200
[PER-SHARE-DIVIDEND] 0.2800
[PER-SHARE-DISTRIBUTIONS] 0.0000
[RETURNS-OF-CAPITAL] 0.0000
[PER-SHARE-NAV-END] 10.7800
[EXPENSE-RATIO] 1.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<SERIES>
[NUMBER] 9
<NAME> SB SERIES: Emerging Growth
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
[INVESTMENTS-AT-COST] 11,196,444
[INVESTMENTS-AT-VALUE] 11,979,237
[RECEIVABLES] 116,460
[ASSETS-OTHER] 2,742
[OTHER-ITEMS-ASSETS] 12,550
[TOTAL-ASSETS] 12,110,989
[PAYABLE-FOR-SECURITIES] 536,421
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 35,510
[TOTAL-LIABILITIES] 571,931
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 12,157,167
[SHARES-COMMON-STOCK] 1,198,109
[SHARES-COMMON-PRIOR] 216,901
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (1,400,902)
[ACCUM-APPREC-OR-DEPREC] 782,793
[NET-ASSETS] 11,539,058
[DIVIDEND-INCOME] 47,002
[INTEREST-INCOME] 47,209
[OTHER-INCOME] 0
[EXPENSES-NET] 109,572
[NET-INVESTMENT-INCOME] (15,361)
[REALIZED-GAINS-CURRENT] (1,399,759)
[APPREC-INCREASE-CURRENT] 715,785
[NET-CHANGE-FROM-OPS] (699,335)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 897
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 11,029,729
[NUMBER-OF-SHARES-REDEEMED] 1,048,804
[SHARES-REINVESTED] 897
[NET-CHANGE-IN-ASSETS] 9,281,590
[ACCUMULATED-NII-PRIOR] 895
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] (1,143)
[GROSS-ADVISORY-FEES] 68,528
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 109,572
[AVERAGE-NET-ASSETS] 9,137,001
[PER-SHARE-NAV-BEGIN] 10.4100
[PER-SHARE-NII] 0.0000
[PER-SHARE-GAIN-APPREC] (0.7800)
[PER-SHARE-DIVIDEND] 0.0000
[PER-SHARE-DISTRIBUTIONS] 0.0000
[RETURNS-OF-CAPITAL] 0.0000
[PER-SHARE-NAV-END] 9.6300
[EXPENSE-RATIO] 1.20
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
<ARTICLE> 6
<SERIES>
[NUMBER] 10
<NAME> SB SERIES: INTERNATIONAL EQUITY
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
[INVESTMENTS-AT-COST] 29,811,507
[INVESTMENTS-AT-VALUE] 28,401,425
[RECEIVABLES] 56,006
[ASSETS-OTHER] 43,365
[OTHER-ITEMS-ASSETS] 12,621
[TOTAL-ASSETS] 28,513,417
[PAYABLE-FOR-SECURITIES] 9,374
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 91,237
[TOTAL-LIABILITIES] 100,611
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 30,133,232
[SHARES-COMMON-STOCK] 3,086,160
[SHARES-COMMON-PRIOR] 583,970
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] (310,638)
[ACCUM-APPREC-OR-DEPREC] (1,409,788)
[NET-ASSETS] 28,412,806
[DIVIDEND-INCOME] 284,416
[INTEREST-INCOME] 80,491
[OTHER-INCOME] 0
[EXPENSES-NET] 295,422
[NET-INVESTMENT-INCOME] 69,485
[REALIZED-GAINS-CURRENT] (457,968)
[APPREC-INCREASE-CURRENT] (1,437,165)
[NET-CHANGE-FROM-OPS] (1,825,648)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 25,681,169
[NUMBER-OF-SHARES-REDEEMED] 1,309,624
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 22,545,897
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 193,164
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 295,422
[AVERAGE-NET-ASSETS] 22,725,095
[PER-SHARE-NAV-BEGIN] 10.0500
[PER-SHARE-NII] 0.0000
[PER-SHARE-GAIN-APPREC] (0.8400)
[PER-SHARE-DIVIDEND] 0.0000
[PER-SHARE-DISTRIBUTIONS] 0.0000
[RETURNS-OF-CAPITAL] 0.0000
[PER-SHARE-NAV-END] 9.2100
[EXPENSE-RATIO] 1.30
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
CUSTODIAN SERVICES AGREEMENT
This Agreement is made as of ____________1995 by and
between SMITH BARNEY SERIES FUND, a Massachusetts business
trust (the "Fund") and PNC BANK, NATIONAL ASSOCIATION, a
national banking association ("PNC Bank").
The Fund is registered as an open-end investment
company under the Investment Company Act of 1940, as amended
(the "1940 Act"). The Fund wishes to retain PNC Bank to
provide custodian services and PNC Bank wishes to furnish
such services, either directly or through an affiliate or
affiliates, as more fully described herein. In
consideration of the premises and mutual covenants herein
contained, the parties agree as follows:
1. Definitions.
(a) "Authorized Person." The term "Authorized
Person" shall mean any officer of the Fund and any other
person, who is duly authorized by the Fund's Governing
Board, to give Oral and Written Instructions on behalf of
the Fund. Such persons are listed in the Certificate
attached hereto as the Authorized Persons Appendix, as such
Appendix may be amended in writing by the Fund's Governing
Board from time to time.
(b) "Book-Entry System." The term "Book-Entry
System" means Federal Reserve Treasury book-entry system for
United States and federal agency securities, its successor
or successors, and its nominee or nominees and any book-
entry system maintained by an exchange registered with the
SEC under the 1934 Act.
(c) "CFTC." The term "CFTC" shall mean the
Commodities Futures Trading Commission.
(d) "Governing Board." The term "Governing
Board" shall mean the Fund's Board of Directors if the Fund
is a corporation or the Fund's Board of Trustees if the Fund
is a trust, or, where duly authorized, a competent committee
thereof.
(e) "Oral Instructions." The term "Oral
Instructions" shall mean oral instructions received by PNC
Bank from an Authorized Person or from a person reasonably
believed by PNC Bank to be an Authorized Person.
(f) "SEC." The term "SEC" shall mean the
Securities and Exchange Commission.
(g) "Securities and Commodities Laws." The term
"Securities and Commodities Laws" shall mean the "1933 Act"
which shall mean the Securities Act of 1933, the "1934 Act"
which shall mean the Securities Exchange Act of 1934, the
1940 Act, and the "CEA" which shall mean the Commodities
Exchange Act, as amended.
(h) "Shares." The term "Shares" shall mean the
shares of stock of any series or class of the Fund, or,
where appropriate, units of beneficial interest in a trust
where the Fund is organized as a Trust.
(i) "Property." The term "Property" shall mean:
(i) any and all securities and other
investment items which the Fund may from time to time
deposit, or cause to be deposited, with PNC Bank or which
PNC Bank may from time to time hold for the Fund;
(ii) all income in respect of any of such
securities or other investment items;
(iii) all proceeds of the sale of any of such
securities or investment items; and
(iv) all proceeds of the sale of securities
issued by the Fund, which are received by PNC Bank from
time to time, from or on behalf of the Fund.
(j) "Written Instructions." The term "Written
Instructions" shall mean written instructions signed by one
Authorized Person and received by PNC Bank. The
instructions may be delivered by hand, mail, tested
telegram, cable, telex or facsimile sending device.
2. Appointment. The Fund hereby appoints PNC Bank to
provide custodian services to the Fund, and PNC Bank accepts
such appointment and agrees to furnish such services.
3. Delivery of Documents. The Fund has provided or,
where applicable, will provide PNC Bank with the following:
(a) certified or authenticated copies of the
resolutions of the Fund's Governing Board, approving the
appointment of PNC Bank or its affiliates to provide
services;
(b) a copy of the Fund's most recent effective
registration statement;
(c) a copy of the Fund's advisory agreement or
agreements;
(d) a copy of the Fund's distribution agreement
or agreements;
(e) a copy of the Fund's administration
agreements if PNC Bank is not providing the Fund with such
services; (f) copies of any shareholder
servicing agreements made in respect of the Fund; and
(g) certified or authenticated copies of any and
all amendments or supplements to the foregoing.
4. Compliance with Government Rules and Regulations.
PNC Bank undertakes to comply with all applicable
requirements of the Securities and Commodities Laws and any
laws, rules and regulations of governmental authorities
having jurisdiction with respect to all duties to be
performed by PNC Bank hereunder. Except as specifically set
forth herein, PNC Bank assumes no responsibility for such
compliance by the Fund.
5. Instructions. Unless otherwise provided in this
Agreement, PNC Bank shall act only upon Oral and Written
Instructions. PNC Bank shall be entitled to rely upon any
Oral and Written Instructions it receives from an Authorized
Person (or from a person reasonably believed by PNC Bank to
be an Authorized Person) pursuant to this Agreement. PNC
Bank may assume that any Oral or Written Instructions
received hereunder are not in any way inconsistent with the
provisions of organizational documents or this Agreement or
of any vote, resolution or proceeding of the Fund's
Governing Board or of the Fund's shareholders.
The Fund agrees to forward to PNC Bank Written
Instructions confirming Oral Instructions so that PNC Bank
receives the Written Instructions by the close of business
on the same day that such Oral Instructions are received.
The fact that such confirming Written Instructions are not
received by PNC Bank shall in no way invalidate the
transactions or enforceability of the transactions
authorized by the Oral Instructions.
The Fund further agrees that PNC Bank shall incur no
liability to the Fund in acting upon Oral or Written
Instructions provided such instructions reasonably appear to
have been received from an Authorized Person.
6. Right to Receive Advice.
(a) Advice of the Fund. If PNC Bank is in doubt
as to any action it should or should not take, PNC Bank may
request directions or advice, including Oral or Written
Instructions, from the Fund.
(b) Advice of Counsel. If PNC Bank shall be in
doubt as to any questions of law pertaining to any action it
should or should not take, PNC Bank may request advice at
its own cost from such counsel of its own choosing (who may
be counsel for the Fund, the Fund's advisor or PNC Bank, at
the option of PNC Bank).
(c) Conflicting Advice. In the event of a
conflict between directions, advice or Oral or Written
Instructions PNC Bank receives from the Fund, and the advice
it receives from counsel, PNC Bank shall be entitled to rely
upon and follow the advice of counsel.
(d) Protection of PNC Bank. PNC Bank shall be
protected in any action it takes or does not take in
reliance upon directions, advice or Oral or Written
Instructions it receives from the Fund or from counsel and
which PNC Bank believes, in good faith, to be consistent
with those directions, advice or Oral or Written
Instructions.
Nothing in this paragraph shall be construed so as to
impose an obligation upon PNC Bank (i) to seek such
directions, advice or Oral or Written Instructions, or (ii)
to act in accordance with such directions, advice or Oral or
Written Instructions unless, under the terms of other
provisions of this Agreement, the same is a condition of PNC
Bank's properly taking or not taking such action.
7. Records. The books and records pertaining to the
Fund which are in the possession of PNC Bank, shall be the
property of the Fund. Such books and records shall be
prepared and maintained as required by the 1940 Act and
other applicable securities laws, rules and regulations.
The Fund, or the Fund's Authorized Persons, shall have
access to such books and records at all time during PNC
Bank's normal business hours. Upon the reasonable request
of the Fund, copies of any such books and records shall be
provided by PNC Bank to the Fund or to an Authorized Person
of the Fund, at the Fund's expense.
8. Confidentiality. PNC Bank agrees to keep
confidential all records of the Fund and information
relative to the Fund and its shareholders (past, present and
potential), unless the release of such records or
information is otherwise consented to, in writing, by the
Fund. The Fund agrees that such consent shall not be
unreasonably withheld and may not be withheld where PNC Bank
may be exposed to civil or criminal contempt proceedings or
when required to divulge. The Fund further agrees that,
should PNC Bank be required to provide such information or
records to duly constituted authorities (who may institute
civil or criminal contempt proceedings for failure to
comply), PNC Bank shall not be required to seek the Fund's
consent prior to disclosing such information.
9. Cooperation with Accountants. PNC Bank shall
cooperate with the Fund's independent public accountants and
shall take all reasonable action in the performance of its
obligations under this Agreement to ensure that the
necessary information is made available to such accountants
for the expression of their opinion, as required by the
Fund.
10. Disaster Recovery. PNC Bank shall enter into and
shall maintain in effect with appropriate parties one or
more agreements making reasonable provision for emergency
use of electronic data processing equipment to the extent
appropriate equipment is available. In the event of
equipment failures, PNC Bank shall, at no additional expense
to the Fund, take reasonable steps to minimize service
interruptions but shall have no liability with respect
thereto.
11. Compensation. As compensation for custody
services rendered by PNC Bank during the term of this
Agreement, the Fund will pay to PNC Bank a fee or fees as
may be agreed to in writing from time to time by the Fund
and PNC Bank.
12. Indemnification. The Fund agrees to indemnify and
hold harmless PNC Bank and its nominees from all taxes,
charges, expenses, assessment, claims and liabilities
(including, without limitation, liabilities arising under
the Securities and Commodities Laws and any state and
foreign securities and blue sky laws, and amendments
thereto, and expenses, including (without limitation)
attorneys' fees and disbursements, arising directly or
indirectly from any action which PNC Bank takes or does not
take (i) at the request or on the direction of or in
reliance on the advice of the Fund or (ii) upon Oral or
Written Instructions. Neither PNC Bank, nor any of its
nominees, shall be indemnified against any liability to the
Fund or to its shareholders (or any expenses incident to
such liability) arising out of PNC Bank's own willful
misfeasance, bad faith, negligence or reckless disregard of
its duties and obligations under this Agreement.
13. Responsibility of PNC Bank. PNC Bank shall be
under no duty to take any action on behalf of the Fund
except as specifically set forth herein or as may be
specifically agreed to by PNC Bank, in writing. PNC Bank
shall be obligated to exercise care and diligence in the
performance of its duties hereunder, to act in good faith
and to use its best effort, within reasonable limits, in
performing services provided for under this Agreement. PNC
Bank shall be responsible for its own negligent failure to
perform its duties under this Agreement. Notwithstanding the
foregoing, PNC Bank shall not be responsible for losses
beyond its control, provided that PNC Bank has acted in
accordance with the standard of care set forth above; and
provided further that PNC Bank shall only be responsible for
that portion of losses or damages suffered by the Fund that
are attributable to the negligence of PNC Bank.
Without limiting the generality of the foregoing or of
any other provision of this Agreement, PNC Bank, in
connection with its duties under this Agreement, shall not
be under any duty or obligation to inquire into and shall
not be liable for (a) the validity or invalidity or
authority or lack thereof of any Oral or Written
Instruction, notice or other instrument which conforms to
the applicable requirements of this Agreement, and which PNC
Bank reasonably believes to be genuine; or (b) delays or
errors or loss of data occurring by reason of circumstances
beyond PNC Bank's control, including acts of civil or
military authority, national emergencies, labor
difficulties, fire, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
Notwithstanding anything in this Agreement to the
contrary, PNC Bank shall have no liability to the Fund for
any consequential, special or indirect losses or damages
which the Fund may incur or suffer by or as a consequence of
PNC Bank's performance of the services provided hereunder,
whether or not the likelihood of such losses or damages was
known by PNC Bank.
14. Description of Services.
(a) Delivery of the Property. The Fund will
deliver or arrange for delivery to PNC Bank, all the
property owned by the Fund, including cash received as a
result of the distribution of its Shares, during the period
that is set forth in this Agreement. PNC Bank will not be
responsible for such property until actual receipt.
(b) Receipt and Disbursement of Money. PNC Bank,
acting upon Written Instructions, shall open and maintain
separate account(s) in the Fund's name using all cash
received from or for the account of the Fund, subject to the
terms of this Agreement. In addition, upon Written
Instructions, PNC Bank shall open separate custodial
accounts for each separate series, class or portfolio of the
Fund and shall hold in such account(s) all cash received
from or for the accounts of the Fund specifically designated
to each separate series, class or portfolio. PNC Bank shall
make cash payments from or for the account of the Fund only
for:
(i) purchases of securities in the name of
the Fund or PNC Bank or PNC Bank's nominee as provided in
sub-paragraph j and for which PNC Bank has received a copy
of the broker's or dealer's confirmation or payee's invoice,
as appropriate;
(ii) purchase or redemption of Shares of the
Fund delivered to PNC Bank;
(iii) payment of, subject to Written
Instructions, interest, taxes, administration, accounting,
distribution, advisory, management fees or similar expenses
which are to be borne by the Fund;
(iv) payment to, subject to receipt of
Written Instructions, the Fund's transfer agent, as agent
for the shareholders, an amount equal to the amount of
dividends and distributions stated in the Written
Instructions to be distributed in cash by the transfer agent
to shareholders, or, in lieu of paying the Fund's transfer
agent, PNC Bank may arrange for the direct payment of cash
dividends and distributions to shareholders in accordance
with procedures mutually agreed upon from time to time by
and among the Fund, PNC Bank and the Fund's transfer agent;
(v) payments, upon receipt of Written
Instructions, in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Fund
and held by or delivered to PNC Bank;
(vi) payments of the amounts of dividends
received with respect to securities sold short; payments
made to a sub-custodian pursuant to provisions in sub-
paragraph c of this Paragraph; and
(viii) payments, upon Written Instructions made
for other proper Fund purposes. PNC Bank is hereby
authorized to endorse and collect all checks, drafts or
other orders for the payment of money received as custodian
for the account of the Fund.
(c) Receipt of Securities.
(i) PNC Bank shall hold all securities
received by it for the account of the Fund in a separate
account that physically segregates such securities from
those of any other persons, firms or corporations, except
for securities held in a Book-Entry System. All such
securities shall be held or disposed of only upon Written
Instructions of the Fund pursuant to the terms of this
Agreement. PNC Bank shall have no power or authority to
assign, hypothecate, pledge or otherwise dispose of any such
securities or investment, except upon the express terms of
this Agreement and upon Written Instructions, accompanied by
a certified resolution of the Fund's Governing Board,
authorizing the transaction. In no case may any member of
the Fund's Governing Board, or any officer, employee or
agent of the Fund withdraw any securities. At PNC Bank's
own expense and for its own convenience, PNC Bank may enter
into sub-custodian agreements with other banks or trust
companies to perform duties described in this sub-paragraph
c. Such bank or trust company shall have an aggregate
capital, surplus and undivided profits, according to its
last published report, of at least one million dollars
($1,000,000), if it is a subsidiary or affiliate of PNC
Bank, or at least twenty million dollars ($20,000,000) if
such bank or trust company is not a subsidiary or
affiliate of PNC Bank. In addition, such bank or trust
company must agree to comply with the relevant provisions of
the 1940 Act and other applicable rules and regulations.
PNC Bank shall remain responsible for the performance of all
of its duties as described in this Agreement and shall hold
the Fund harmless from PNC Bank's own (or any sub-custodian
chosen by PNC Bank under the terms of this sub-paragraph c)
acts or omissions, under the standards of care provided for
herein.
(d) Transactions Requiring Instructions. Upon
receipt of Oral or Written Instructions and not otherwise,
PNC Bank, directly or through the use of the Book-Entry
System, shall:
(i) deliver any securities held for the Fund
against the receipt of payment for the sale of such
securities;
(ii) execute and deliver to such persons as
may be designated in such Oral or Written Instructions,
proxies, consents, authorizations, and any other instruments
whereby the authority of the Fund as owner of any
securities may be exercised;
(iii) deliver any securities to the issuer
thereof, or its agent, when such securities are called,
redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is
to be delivered to PNC Bank;
(iv) deliver any securities held for the Fund
against receipt of other securities or cash issued or paid
in connection with the liquidation, reorganization,
refinancing, tender offer, merger, consolidation or
recapitalization of any corporation, or the exercise of any
conversion privilege;
(v) deliver any securities held for the Fund
to any protective committee, reorganization committee or
other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization or sale
of assets of any corporation, and receive and hold under the
terms of this Agreement such certificates of deposit,
interim receipts or other instruments or documents as may be
issued to it to evidence such delivery;
(vi) make such transfer or exchanges of the
assets of the Fund and take such other steps as shall be
stated in said Oral or Written Instructions to be for the
purpose of effectuating a duly authorized plan of
liquidation, reorganization, merger, consolidation or
recapitalization of the Fund;
(vii) release securities belonging to the Fund
to any bank or trust company for the purpose of a pledge or
hypothecation to secure any loan incurred by the Fund;
provided, however, that securities shall be released only
upon payment to PNC Bank of the monies borrowed, except that
in cases where additional collateral is required to secure a
borrowing already made subject to proper prior
authorization, further securities may be released for that
purpose; and repay such loan upon redelivery to it of the
securities pledged or hypothecated therefor and upon
surrender of the note or notes evidencing the loan;
(viii) release and deliver securities owned by
the Fund in connection with any repurchase agreement entered
into on behalf of the Fund, but only on receipt of payment
therefor; and pay out moneys of the Fund in connection with
such repurchase agreements, but only upon the delivery of
the securities;
(ix) release and deliver or exchange
securities owned by the Fund in connection with any
conversion of such securities, pursuant to their terms, into
other securities;
(x) release and deliver securities owned by
the Fund for the purpose of redeeming in kind shares of the
Fund upon delivery thereof to PNC Bank; and
(xi) release and deliver or exchange
securities owned by the Fund for other corporate purposes.
PNC Bank must also receive a certified resolution describing
the nature of the corporate purpose and the name and address
of the person(s) to whom delivery shall be made when such
action is pursuant to sub-paragraph d above.
(e) Use of Book-Entry System. The Fund shall deliver
to PNC Bank certified resolutions of the Fund's Governing
Board approving, authorizing and instructing PNC Bank on a
continuous and on-going basis, to deposit in the Book-Entry
System all securities belonging to the Fund eligible for
deposit therein and to utilize the Book-Entry System to the
extent possible in connection with settlements of purchases
and sales of securities by the Fund, and deliveries and
returns of securities loaned, subject to repurchase
agreements or used as collateral in connection with
borrowings. PNC Bank shall continue to perform such duties
until it receives Written or Oral Instructions authorizing
contrary actions(s).
To administer the Book-Entry System properly, the
following provisions shall apply:
(i) With respect to securities of the Fund
which are maintained in the Book-Entry system, established
pursuant to this sub-paragraph e hereof, the records of PNC
Bank shall identify by Book-Entry or otherwise those
securities belonging to the Fund. PNC Bank shall furnish
the Fund a detailed statement of the Property held for the
Fund under this Agreement at least monthly and from time to
time and upon written request.
(ii) Securities and any cash of the Fund
deposited in the Book-Entry System will at all times be
segregated from any assets and cash controlled by PNC Bank
in other than a fiduciary or custodian capacity but may be
commingled with other assets held in such capacities. PNC
Bank and its sub-custodian, if any, will pay out money only
upon receipt of securities and will deliver securities only
upon the receipt of money.
(iii) All books and records maintained by PNC
Bank which relate to the Fund's participation in the Book-
Entry System will at all times during PNC Bank's regular
business hours be open to the inspection of the Fund's duly
authorized employees or agents, and the Fund will be
furnished with all information in respect of the services
rendered to it as it may require.
(iv) PNC Bank will provide the Fund with
copies of any report obtained by PNC Bank on the system of
internal accounting control of the Book-Entry System
promptly after receipt of such a report by PNC Bank. PNC
Bank will also provide the Fund with such reports on its own
system of internal control as the Fund may reasonably
request from time to time.
(f) Registration of Securities. All Securities
held for the Fund which are issued or issuable only in
bearer form, except such securities held in the Book-Entry
System, shall be held by PNC Bank in bearer form; all other
securities held for the Fund may be registered in the name
of the Fund; PNC Bank; the Book-Entry System; a sub-
custodian; or any duly appointed nominee(s) of the Fund, PNC
Bank, Book-Entry system or sub-custodian. The Fund reserves
the right to instruct PNC Bank as to the method of
registration and safekeeping of the securities of the Fund.
The Fund agrees to furnish to PNC Bank appropriate
instruments to enable PNC Bank to hold or deliver in proper
form for transfer, or to register its registered nominee or
in the name of the Book-Entry System, any securities which
it may hold for the account of the Fund and which may from
time to time be registered in the name of the Fund. PNC
Bank shall hold all such securities which are not held in
the Book-Entry System in a separate account for the Fund in
the name of the Fund physically segregated at all times from
those of any other person or persons.
(g) Voting and Other Action. Neither PNC Bank
nor its nominee shall vote any of the securities held
pursuant to this Agreement by or for the account of the
Fund, except in accordance with Written Instructions. PNC
Bank, directly or through the use of the Book-Entry System,
shall execute in blank and promptly deliver all notice,
proxies, and proxy soliciting materials to the registered
holder of such securities. If the registered holder is not
the Fund then Written or Oral Instructions must designate
the person(s) who owns such securities.
(h) Transactions Not Requiring Instructions. In
the absence of contrary Written Instructions, PNC Bank is
authorized to take the following actions:
(i) Collection of Income and Other Payments.
(A) collect and receive for the account
of the Fund, all income, dividends, distributions, coupons,
option premiums, other payments and similar items, included
or to be included in the Property, and, in addition,
promptly advise the Fund of such receipt and credit such
income, as collected, to the Fund's custodian account;
(B) endorse and deposit for collection,
in the name of the Fund, checks, drafts, or other orders for
the payment of money;
(C) receive and hold for the account of
the Fund all securities received as a distribution on the
Fund's portfolio securities as a result of a stock dividend,
share split-up or reorganization, recapitalization,
readjustment or other rearrangement or distribution of
rights or similar securities issued with respect to any
portfolio securities belonging to the Fund held by PNC Bank
hereunder;
(D) present for payment and collect the
amount payable upon all securities which may mature or be
called, redeemed, or retired, or otherwise become payable on
the date such securities become payable; and
(E) take any action which may be
necessary and proper in connection with the collection and
receipt of such income and other payments and the
endorsement for collection of checks, drafts, and other
negotiable instruments.
(ii) Miscellaneous Transactions.
(A) PNC Bank is authorized to deliver
or cause to be delivered Property against payment or other
consideration or written receipt therefor in the following
cases:
(1) for examination by a broker or
dealer selling for the account of the Fund in accordance
with street delivery custom;
(2) for the exchange of interim
receipts or temporary securities for definitive securities;
and
(3) for transfer of securities
into the name of the Fund or PNC Bank or nominee of either,
or for exchange of securities for a different number of
bonds,certificates, or other evidence, representing the same
aggregate face amount or number of units bearing the same
interest rate, maturity date and call provisions, if any;
provided that, in any such case, the new securities are to
be delivered to PNC Bank.
(B) Unless and until PNC Bank receives
Oral or Written Instructions to the contrary, PNC Bank
shall:
(1) pay all income items held by
it which call for payment upon presentation and hold the
cash received by it upon such payment for the account of the
Fund;
(2) collect interest and cash
dividends received, with notice to the Fund, to the Fund's
account;
(3) hold for the account of the
Fund all stock dividends, rights and similar securities
issued with respect to any securities held by PNC Bank; and
(4) execute as agent on behalf of
the Fund all necessary ownership certificates required by
the Internal Revenue Code or the Income Tax Regulations of
the United States Treasury Department or under the laws of
any State now or hereafter in effect, inserting the Fund's
name, on such certificate as the owner of the securities
covered thereby, to the extent it may lawfully do so.
(i) Segregated Accounts.
(i) PNC Bank shall upon receipt of Written
or Oral Instructions establish and maintain segregated
account(s) on its records for and on behalf of the Fund.
Such account(s) may be used to transfer cash and securities,
including securities in the Book-Entry System:
(A) for the purposes of compliance by
the Fund with the procedures required by a securities or
option exchange, providing such procedures comply with the
1940 Act and any releases of the SEC relating to the
maintenance of segregated accounts by registered investment
companies; and
(B) Upon receipt of Written
Instructions, for other proper corporate purposes.
(ii) PNC Bank may enter into separate
custodial agreements with various futures commission
merchants ("FCMs") that the Fund uses ("FCM Agreement").
Pursuant to an FCM Agreement, the Fund's margin deposits in
any transactions involving futures contracts and options on
futures contracts will be held by PNC Bank in accounts ("FCM
Account") subject to the disposition by the FCM involved in
such contracts and in accordance with the customer contract
between FCM and the Fund ("FCM Contract"), SEC rules and the
rules of the applicable commodities exchange. Such FCM
Agreements shall only be entered into upon receipt of
Written Instructions from the Fund which state that:
(A) a customer agreement between the
FCM and the Fund has been entered into; and
(B) the Fund is in compliance with all
the rules and regulations of the CFTC. Transfers of initial
margin shall be made into a FCM Account only upon Written
Instructions; transfers of premium and variation margin may
be made into a FCM Account pursuant to Oral Instructions.
Transfers of funds from a FCM
Account to the FCM for which PNC Bank holds such an account
may only occur upon certification by the FCM to PNC Bank
that pursuant to the FCM Agreement and the FCM Contract, all
conditions precedent to its right to give PNC Bank such
instructions have been satisfied.
(iii) PNC Bank shall arrange for the
establishment of IRA custodian accounts for such share-
holders holding Shares through IRA accounts, in accordance
with the Fund's prospectuses, the Internal Revenue Code
(including regulations), and with such other procedures as
are mutually agreed upon from time to time by and among the
Fund, PNC Bank and the Fund's transfer agent.
(j) Purchases of Securities. PNC Bank shall
settle purchased securities upon receipt of Oral or Written
Instructions from the Fund or its investment advisor(s) that
specify:
(i) the name of the issuer and the title of
the securities, including CUSIP number if applicable;
(ii) the number of shares or the principal
amount purchased and accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such
purchase; and
(vi) the name of the person from whom or the
broker through whom the purchase was made. PNC Bank shall
upon receipt of securities purchased by or for the Fund pay
out of the moneys held for the account of the Fund the total
amount payable to the person from whom or the broker through
whom the purchase was made, provided that the same conforms
to the total amount payable as set forth in such Oral or
Written Instructions.
(k) Sales of Securities. PNC Bank shall settle
sold securities upon receipt of Oral or Written Instructions
from the Fund that specify:
(i) the name of the issuer and the title of
the security, including CUSIP number if applicable;
(ii) the number of shares or principal amount
sold, and accrued interest, if any;
(iii) the date of trade, settlement and sale;
(iv) the sale price per unit;
(v) the total amount payable to the Fund
upon such sale;
(vi) the name of the broker through whom or
the person to whom the sale was made; and
(vii) the location to which the security must
be delivered and delivery deadline, if any. PNC Bank shall
deliver the securities upon receipt of the total amount
payable to the Fund upon such sale, provided that the total
amount payable is the same as was set forth in the Oral or
Written Instructions. Subject to the foregoing, PNC Bank
may accept payment in such form as shall be satisfactory to
it, and may deliver securities and arrange for payment in
accordance with the customs prevailing among dealers in
securities.
(l) Reports.
(i) PNC Bank shall furnish the Fund the
following reports:
(A) such periodic and special reports
as the Fund may reasonably request;
(B) a monthly statement summarizing all
transactions and entries for the account of the Fund,
listing the portfolio securities belonging to the Fund with
the adjusted average cost of each issue and the market value
at the end of such month, and stating the cash account of
the Fund including disbursement;
(C) the reports to be furnished to the
Fund pursuant to Rule 17f-4; and
(D) such other information as may be
agreed upon from time to time between the Fund and PNC Bank.
(ii) PNC Bank shall transmit promptly to the
Fund any proxy statement, proxy material, notice of a call
or conversion or similar communication received by it as
custodian of the Property. PNC Bank shall be under no other
obligation to inform the Fund as to such actions or events.
(m) Collections. All collections of monies or
other property, in respect, or which are to become part of
the Property (but not the safekeeping thereof upon receipt
by PNC Bank) shall be at the sole risk of the Fund. If
payment is not received by PNC Bank within a reasonable time
after proper demands have been made, PNC Bank shall notify
the Fund in writing, including copies of all demand letters,
any written responses, memoranda of all oral responses and
telephonic demands thereto, and await instructions from the
Fund. PNC Bank shall not be obliged to take legal action
for collection unless and until reasonably indemnified to
its satisfaction. PNC Bank shall also notify the Fund as
soon as reasonably practicable whenever income due on
securities is not collected in due course.
15. Duration and Termination. This Agreement shall
continue until terminated by the Fund or by PNC Bank on
sixty (60) days' prior written notice to the other party.
In the event this Agreement is terminated (pending
appointment of a successor to PNC Bank or vote of the
shareholders of the Fund to dissolve or to function without
a custodian of its cash, securities or other property), PNC
Bank shall not deliver cash, securities or other property of
the Fund to the Fund. It may deliver them to a bank or
trust company of PNC Bank's choice, having an aggregate
capital, surplus and undivided profits, as shown by its last
published report, of not less than twenty million dollars
($20,000,000), as a custodian for the Fund to be held under
terms similar to those of this Agreement. PNC Bank shall
not be required to make any such delivery or payment until
full payment shall have been made to PNC Bank of all of its
fees, compensation, costs and expenses. PNC Bank shall have
a security interest in and shall have a right of setoff
against Property in the Fund's possession as security for
the payment of such fees, compensation, costs and expenses.
16. Notices. All notices and other communications,
including Written Instructions, shall be in writing or by
confirming telegram, cable, telex or facsimile sending
device. Notice shall be addressed (a) if to PNC Bank at PNC
Bank's address: Airport Business Center, International Court
2, 200 Stevens Drive, Lester, Pennsylvania 19113, marked for
the attention of the Custodian Services Department (or its
successor) (b) if to the Fund, at the address of the Fund;
or (c) if to neither of the foregoing, at such other address
as shall have been notified to the sender of any such notice
or other communication. If notice is sent by confirming
telegram, cable, telex or facsimile sending device, it shall
be deemed to have been given immediately. If notice is sent
by first-class mail, it shall be deemed to have been given
five days after it has been mailed. If notice is sent by
messenger, it shall be deemed to have been given on the day
it is delivered.
17. Amendments. This Agreement, or any term hereof,
may be changed or waived only by a written amendment, signed
by the party against whom enforcement of such change or
waiver is sought. 18. Delegation. PNC Bank may
assign its rights and delegate its duties hereunder to any
wholly-owned direct or indirect subsidiary of PNC Bank,
National Association or PNC Bank Corp., provided that (i)
PNC Bank gives the Fund thirty (30) days prior written
notice; (ii) the delegate agrees with PNC Bank to comply
with all relevant provisions of the 1940 Act; and (iii) PNC
Bank and such delegate promptly provide such information as
the Fund may request, and respond to such questions as the
Fund may ask, relative to the assignment, including (without
limitation) the capabilities of the delegate.
19. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument. 20. Further Actions. Each party
agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes
hereof.
21. Miscellaneous. This Agreement embodies the entire
agreement and understanding between the parties and
supersedes all prior agreements and understandings relating
to the subject matter hereof, provided that the parties may
embody in one or more separate documents their agreement, if
any, with respect to delegated duties and/or Oral
Instructions. The captions in this Agreement are included
for convenience of reference only and in no way define or
delimit any of the provisions hereof or otherwise affect
their construction or effect.
This Agreement shall be deemed to be a contract made in
Pennsylvania and governed by Pennsylvania law, without
regard to principles of conflicts of law. If any provision
of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted
assigns.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below
on the day and year first above written.
PNC BANK, NATIONAL ASSOCIATION
By:
Title:
SMITH BARNEY SERIES FUND
By:
Title:
AUTHORIZED PERSONS APPENDIX
NAME (Type) SIGNATURE
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