<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
PROSPECTUS JULY 3,
1995
- ------------------------------------------------------------
- -------------------
3100 Breckenridge Blvd., Bldg 200
Duluth, Georgia 30199-0062
(800) 544-5445
Smith Barney Appreciation Fund Inc. (the "Fund") is a
mutual fund which seeks
long-term appreciation of shareholders' capital through
investments primarily
in equity securities.
This Prospectus sets forth concisely certain information
about the Fund,
including sales charges, distribution and service fees and
expenses, that pro-
spective investors will find helpful in making an investment
decision. Invest-
ors are encouraged to read this Prospectus carefully and
retain it for future
reference.
Additional information about the Fund is contained in a
Statement of Addi-
tional Information dated July 3, 1995, as amended or
supplemented from time to
time, that is available upon request and without charge by
calling or writing
the Fund at the telephone number or address set forth above
or by contacting an
Investments Representative of PFS Investments Inc. ("PFS
Investments"). The
Statement of Additional Information has been filed with the
Securities and
Exchange Commission (the "SEC") and is incorporated by
reference into this Pro-
spectus in its entirety.
PFS DISTRIBUTORS
Distributor
SMITH BARNEY MUTUAL FUNDS MANAGEMENT
INC. Investment Adviser and
Administrator
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.
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY 3
- ------------------------------------------------FINANCIAL
HIGHLIGHTS 9
- ------------------------------------------------INVESTMENT
OBJECTIVE AND MANAGEMENT POLICIES 12
- ------------------------------------------------VALUATION
OF SHARES 15
- ------------------------------------------------DIVIDENDS,
DISTRIBUTIONS AND TAXES 15
- -------------------------------------------------
PURCHASE OF SHARES 17
- -------------------------------------------------
EXCHANGE PRIVILEGE 23
- ------------------------------------------------REDEMPTION
OF SHARES 24
- -------------------------------------------------
MINIMUM ACCOUNT SIZE 26
- ------------------------------------------------
PERFORMANCE 27
- ------------------------------------------------MANAGEMENT
OF THE FUND 27
- ------------------------------------------------
DISTRIBUTOR 29
- ------------------------------------------------ADDITIONAL
INFORMATION 30
- -------------------------------------------------
</TABLE>
No person has been authorized to give any information
or to
make any representations in connection with this offering
other
than those contained in this Prospectus and, if given or
made,
such other information or representations must not be
relied upon
as having been authorized by the Company or the
distributor. This
Prospectus does not constitute an offer by the Fund or
the distributor to sell or a solicitation of an offer
to buy
any of
the securities offered hereby in any jurisdiction to any
person
to whom it is unlawful to make such offer or solicitation
in such
jurisdiction.
2
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
PROSPECTUS SUMMARY
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 Prospec-
tus. See "Table of Contents."
INVESTMENT OBJECTIVE The Fund is an open-end,
diversified management investment
company whose sole investment objective is to seek long-
term appreciation of
shareholders' capital through investments primarily
in equity securities. See
"Investment Objective and Management Policies."
ALTERNATIVE PURCHASE ARRANGEMENTS The Fund offers
two classes of shares ("Clas-
ses") to investors purchasing through PFS
Investments Representatives designed
to provide them with the flexibility of selecting
an investment best suited to
their needs--the two classes of shares available are:
Class A shares and
Class
B shares. In addition to Class A and Class B shares,
the
Fund offers Class C
and Class Y shares to investors purchasing through
Smith Barney Inc. ("Smith
Barney"), a distributor of the Fund. Those shares
have different sales charges
and other expenses than Class A and Class B shares which
may affect perfor-
mance.
Class A Shares. Class A shares are sold at net asset value
plus an initial
sales charge of up to 5.00% and are subject to an
annual service fee of 0.25%
of the average daily net assets of the Class. The
initial sales charge may be
reduced or waived for certain purchases. Purchases of
Class A shares,
which
when combined with current holdings of Class A shares
equal or exceed $500,000
in the aggregate, will be made at net asset value with
no initial sales charge,
but will be subject to a contingent deferred sales
charge ("CDSC") of 1.00% on
redemptions made within 12 months of purchase.
See "Prospectus Summary--Reduced
or No Initial Sales Charge."
Class B Shares. Class B shares are offered at net asset
value subject to a
maximum CDSC of 5.00% of redemption proceeds, declining
by 1.00% each year
after the date of purchase to zero. This CDSC may be
waived for certain redemp-
tions. Class B shares bear an annual service fee of
0.25% and an annual distri-
bution fee of 0.75% of the average daily net assets of
the Class. The Class B
shares' distribution fee may cause that Class to have
higher expenses and pay
lower dividends than Class A shares.
3
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
Class B Shares Conversion Feature. Class B shares will
convert automatically
to Class A shares, based on relative net asset value,
eight years after the
date of the original purchase. Upon conversion, these
shares will no longer be
subject to an annual distribution fee. In addition,
a certain portion of Class
B shares that have been acquired through the reinvestment
of
dividends and dis-
tributions ("Class B Dividend Shares") will be converted
at that time. See
"Purchase of Shares--Deferred Sales Charge Alternatives."
In deciding which Class of Fund shares to purchase,
investors should consider
the following factors, as well as any other relevant
facts and circumstances:
Intended Holding Period. The decision as to which Class of
shares is more
beneficial to an investor depends on the amount and
intended length of his or
her investment. Shareholders who are planning to establish
a program of regular
investment may wish to consider Class A shares; as
the investment accumulates
shareholders may qualify for reduced sales charges and
the shares are subject
to lower ongoing expenses over the term of the
investment. As an alternative,
Class B shares are sold without any initial sales charge
so the entire purchase
price is immediately invested in the Fund. Any
investment return on these addi-
tional invested amounts may partially or wholly offset
the higher annual
expenses of this Class. Because the Fund's future
return cannot be predicted,
however, there can be no assurance that this would be
the case.
Reduced or No Initial Sales Charge. The initial sales
charge on Class A
shares may be waived for certain eligible purchasers,
and the entire purchase
price will be immediately invested in the Fund. In
addition, Class A share pur-
chases, which when combined with current holdings of Class
A shares equal or
exceed $500,000 in the aggregate, will be made at net
asset value with no ini-
tial sales charge, but will be subject to a CDSC of 1.00%
on redemptions made
within 12 months of purchase. The $500,000
aggregate investment may be met by
adding the purchase to the net asset value of all Class
A shares held in funds
sponsored by Smith Barney listed under "Exchange
Privilege."
Class A share pur-
chases may also be eligible for a reduced initial
sales charge. See "Purchase
of Shares". Because the ongoing expenses of Class A
shares may be lower than
those for Class B shares, purchasers eligible to
purchase Class A shares at net
asset value or at a reduced sales charge should
consider doing so.
PFS Investments Representatives may receive different
compensation for sell-
ing each Class of shares. Investors should understand
that the purpose of the
4
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
CDSC on the Class B shares is the same as that of
the initial sales charge on
the Class A shares.
See "Purchase of Shares" and "Management of the Fund" for
a complete descrip-
tion of the sales charges and service and distribution
fees for each Class of
shares and "Valuation of Shares," "Dividends,
Distributions and Taxes" and "Ex-
change Privilege" for other differences between the
Classes of shares.
PURCHASE OF SHARES Shares may be purchased through
PFS Distributors ("PFS"), a
distributor of the Fund. See "Purchase of Shares."
INVESTMENT MINIMUMS Investors in Class A and Class B
shares may open an account
by making an initial investment of at least $1,000 for
each account, or $250
for an individual retirement account ("IRA") or a
SelfEmployed Retirement
Plan. The initial investment amount will be waived
for accounts establishing a
Systematic Investment Plan. Subsequent investments of
at least $50 may be made
for both Classes. For participants in retirement
plans qualified under Section
403(b)(7) of the Internal Revenue Code of 1986, as
amended (the "Code"), the
minimum initial and subsequent investment requirement
for both Classes is $25.
The minimum initial and subsequent investment
requirement for both Classes
through the Systematic Investment Plan described below
is $50. See "Purchase of
Shares."
SYSTEMATIC INVESTMENT PLAN The Fund offers shareholders
a Systematic Investment
Plan under which they may authorize the automatic
placement of a purchase order
each month or quarter for Fund shares in an amount of
at least $50. See "Pur-
chase of Shares."
REDEMPTION OF SHARES Shares may be redeemed on each day
the New York Stock
Exchange, Inc. ("NYSE") is open for business. See
"Purchase of Shares" and "Re-
demption of Shares."
MANAGEMENT OF THE FUND Smith Barney Mutual Funds
Management Inc. (the "Manag-
er") serves as the Fund's investment adviser. The
Manager provides investment
advisory and management services to investment
companies affiliated with Smith
Barney. The Manager is a wholly owned subsidiary of
Smith Barney Holdings Inc.
("Holdings"). Holdings is a wholly owned subsidiary
of Travelers Group Inc.
("Travelers"), a diversified financial services
holding company engaged,
through its subsidiaries, principally in four business
5
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
segments: Investment Services, Consumer Finance
Services, Life Insurance Serv-
ices and Property & Casualty Insurance Services. The
Manager also serves as the
Fund's administrator. See "Management of the Fund."
EXCHANGE PRIVILEGE Shares of a Class may be exchanged
for shares of the same
Class of certain other funds of the Smith Barney
Mutual Funds at the respective
net asset values next determined, plus any applicable
sales charge differen-
tial. See "Exchange Privilege."
VALUATION OF SHARES Net asset value of the Fund for
the prior day generally is
quoted daily in the financial section of most newspapers
and is also available
from PFS Shareholder Services (the "Sub-Transfer
Agent"). See "Valuation of
Shares."
DIVIDENDS AND DISTRIBUTIONS Dividends from net
investment income and
distributions of net realized capital gains, if any,
are declared and paid
annually. See "Dividends, Distributions and Taxes."
REINVESTMENT OF DIVIDENDS Dividends and distributions
paid on shares of a Class
will be reinvested automatically, unless otherwise
specified by an investor, in
additional shares of the same Class at current net
asset
value. Shares acquired
by dividend and distribution reinvestments will not
be subject to any sales
charge or CDSC. Class B shares acquired through dividend
and distribution
reinvestments will become eligible for conversion to Class
A shares on a pro-
rata basis. See "Dividends, Distributions and Taxes."
RISK FACTORS AND SPECIAL CONSIDERATIONS There can be
no assurance that the
Fund's investment objective will be achieved. The value
of the Fund's
investments will fluctuate in response to changes in
market and economic
conditions, as well as the financial condition and
prospects of issuers in
which the Fund invests. The Fund may invest in
foreign securities though
management intends to limit such investments to 10% of
the Fund's assets.
Foreign investments may include additional risks
associated with currency
exchange rates, less complete financial information
about individual companies,
less market liquidity and political instability.
See "Investment Objective and
Management Policies."
6
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
THE FUND'S EXPENSES The following expense table lists
the costs and estimated
expenses that an investor will incur either directly
or indirectly as a
shareholder of the Fund, based on the maximum sales
charge or maximum CDSC that
may be incurred at the time of purchase or redemption:
<TABLE>
<CAPTION>
CLASS A CLASS B ------------------------------------------
- ----------------------------------
<S>
<C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge imposed on purchases
(as a percentage of offering
price) 5.00% None
Maximum CDSC (as a percentage of original cost or
redemption
proceeds, whichever is lower)
None* 5.00%
- ----------------------------------------------------------
- ------------------
ANNUAL FUND OPERATING EXPENSES
(as a percentage of offering price)
Management
Fees 0.62% 0.62%
12b-1
Fees** 0.25% 1.00%
Other
Expenses 0.15% 0.18% -----------------------------------
- -----------------------------------------
TOTAL FUND OPERATING
EXPENSES
1.02% 1.80% --------------------------------------------
- --------------------------------
</TABLE>
* Purchases of Class A shares, which when combined with
current holdings of
Class A shares offered with a sales charge, equal
or exceed $500,000 in the
aggregate, will be made at net asset value with no
sales charge, but will be
subject to a CDSC of 1.00% on redemptions made within
12 months.
** Upon conversion of Class B shares to Class A shares,
such shares will no
longer be subject to a distribution fee.
The sales charge and CDSC set forth in the above table are
the maximum
charges imposed on purchases or redemptions of Fund
shares and investors may
actually pay lower or no charges, depending on the
amount purchased and, in the
case of Class B and certain Class A shares, the length
of time the shares are
held. See "Purchase of Shares" and "Redemption of
Shares." PFS receives an
annual 12b-1 service fee of 0.25% of the value of
average daily net assets of
Class A shares. With respect to Class B shares, PFS
receives an annual 12b-1
fee of 1.00% of the value of average daily net assets
of that Class, consisting
of a 0.25% service fee and a 0.75% distribution fee.
"Other
expenses" in the
above table include fees for shareholder services,
custodial fees, legal and
accounting fees, printing costs and registration fees.
7
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
PROSPECTUS SUMMARY (CONTINUED)
EXAMPLE
The following example is intended to assist an investor in
understanding the
various costs that an investor in the Fund will
bear directly or indirectly.
The example assumes payment by the Fund of
operating expenses at the levels set
forth in the table above. See "Purchase of
Shares," "Redemption of Shares" and
"Management of the Fund."
<TABLE>
<CAPTION>
1 YEAR 3
YEARS 5 YEARS 10
YEARS*
- ----------------------------------------------------------
- -------------------
<S> <C>
<C>
<C> <C>
An investor would pay the following expenses
on a $1,000 investment, assuming (1) 5.00% annual return
and (2) redemption at the end of each time period:
Class A $60
$81
$104 $169
Class B 68
87
107 191 ---------------------------------------------
- --------------------------------
An investor would pay the following expenses
on the same investment, assuming the same
annual return and no redemption:
Class A $60
$81
$104 $169
Class B 18
57
97 191 ----------------------------------------------
- -------------------------------
</TABLE>
* Ten-year figures assume conversion of Class B shares
to
Class A shares at the
end of the eighth year following the date of purchase.
The example also provides a means for the investor to
compare expense levels
of funds with different fee structures over
varying investment periods. To
facilitate such comparison, all funds are required
to utilize a 5.00% annual
return assumption. However, the Fund's actual return
will vary and may be
greater or less than 5.00%. THIS EXAMPLE SHOULD NOT
BE CONSIDERED A REPRESENTA-
TION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN
THOSE SHOWN ABOVE.
8
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
FINANCIAL HIGHLIGHTS
The following information has been audited by Coopers &
Lybrand L.L.P., inde-
pendent accountants, whose report thereon appears in
the Fund's Annual Report.
The information set out below should be read in
conjunction with the financial
statements and related notes that also appear in the
Fund's
Annual Report dated
December 31, 1994, which is incorporated by reference
into the Statement of
Additional Information.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR ENDED: 12/31/94 12/31/93#
12/31/92** 12/31/91 12/31/90
- ----------------------------------------------------------
- ---------------------------
<S> <C> <C>
<C>
<C> <C>
NET ASSET VALUE, BEGIN-
NING OF YEAR $11.01 $10.66
$10.26 $8.30 $8.66
- ----------------------------------------------------------
- ---------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.16 0.15
0.18
0.18 0.23
Net realized and
unrealized
gain/(loss) on
investments (0.24) 0.72 0.46
2.05 (0.26) ----------------------------------------
- ---------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS (0.08) 0.87 0.64
2.23 (0.03) ----------------------------------------
- ---------------------------------------------
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.18)
(0.16) (0.15) (0.20) (0.25)
Distributions from cap-
ital gains (0.60)
(0.36) (0.09) (0.07) (0.08)
- ----------------------------------------------------------
- ---------------------------
TOTAL DISTRIBUTIONS (0.78)
(0.52) (0.24) (0.27) (0.33)
- ----------------------------------------------------------
- ---------------------------
NET ASSET VALUE, END OF
YEAR $10.15 $11.01
$10.66
$10.26 $8.30
- ----------------------------------------------------------
- ---------------------------
TOTAL RETURN+ (0.77)%
8.13% 6.29% 26.94% (0.27)% ---------------------
- ----------------------------------------------------------
- ------
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL
DATA:
Net assets, end of year
(in 000's) $1,689,268 $1,579,248 $1,712,411
$1,752,884 $1,103,293
Ratio of expenses to
average net assets 1.02%
1.03%
0.88% 0.80% 0.80%
Ratio of net income to
average net assets 1.61%
1.35% 1.58% 2.20% 2.90% ----------------------
- ----------------------------------------------------------
- -----
PORTFOLIO TURNOVER RATE 52%
52%
21% 19% 30%
- ----------------------------------------------------------
- ---------------------------
</TABLE>
**All shares in existence prior to November 6, 1992
were designated as Class A
shares.
+ Total return represents aggregate total return for the
periods indicated and
does not reflect any applicable sales charges.
# Per share amounts have been calculated using the monthly
average shares
method, which more appropriately presents per share
data for this year since
use of the undistributed income method did not
accord with results of opera-
tions.
9
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
YEAR ENDED: 12/31/89* 12/31/88*
12/31/87* 12/31/86* 12/31/85* ---------------------------
- ---------------------------------------------------
<S> <C> <C>
<C>
<C> <C>
NET ASSET VALUE, BEGIN-
NING OF YEAR $7.04 $6.49
$6.54 $5.82 $4.45 -----------------------------------
- -------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.18 0.18
0.14
0.12 0.12
Net realized and
unrealized
gain/(loss) on
investments 1.90 0.69
0.32
1.01 1.38 ------------------------------------------
- ------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 2.08 0.87
0.46
1.13 1.50 ------------------------------------------
- ------------------------------------
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.24) (0.19)
(0.26) -- (0.04)
Distributions from cap-
ital gains (0.22) (0.13)
(0.25) (0.41) (0.09) ---------------------------------
- ---------------------------------------------
TOTAL DISTRIBUTIONS (0.46) (0.32)
(0.51) (0.41) (0.13) ---------------------------------
- ---------------------------------------------
NET ASSET VALUE, END OF
YEAR $8.66 $7.04 $6.49
$6.54 $5.82 -----------------------------------------
- -------------------------------------
TOTAL RETURN+ 29.55% 13.45%
6.95% 19.93% 34.38% ----------------------------------
- --------------------------------------------
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL
DATA:
Net assets, end of year
(in 000's) $1,000,433 $491,397
$431,092 $315,804 $179,186
Ratio of expenses to
average net assets 0.90% 0.90%
0.90%
1.00% 1.00%
Ratio of net income to
average net assets 3.20% 2.70%
2.20%
2.10% 2.40% -----------------------------------------
- -------------------------------------
PORTFOLIO TURNOVER RATE 24% 25%
26%
30% 62% -------------------------------------------
- -----------------------------------
</TABLE>
* Per share data and shares outstanding data adjusted for
4-
for-1 stock split
which occurred on August 7, 1989.
+ Total return represents aggregate total return for
the
periods indicated and
does not reflect any applicable sales charge.
10
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH YEAR:
<TABLE>
<CAPTION>
PERIOD
ENDED
YEAR ENDED:
12/31/94
12/31/93# 12/31/92*#
- ----------------------------------------------------------
- -------------------
<S> <C>
<C>
<C>
NET ASSET VALUE, BEGINNING OF YEAR
$11.00
$10.65 $10.55
- ----------------------------------------------------------
- -------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income
0.13
0.06 0.01
Net realized and unrealized gain/(loss) on
investments
(0.29)
0.73 0.34
- ----------------------------------------------------------
- -------------------
TOTAL FROM INVESTMENT OPERATIONS
(0.16)
0.79 0.35
- ----------------------------------------------------------
- -------------------
LESS DISTRIBUTIONS:
Distributions from net investment income
(0.10)
(0.08) (0.16)
Distributions from capital gains
(0.60)
(0.36) (0.09)
- ----------------------------------------------------------
- -------------------
TOTAL DISTRIBUTIONS
(0.70)
(0.44) (0.25)
- ----------------------------------------------------------
- -------------------
NET ASSET VALUE, END OF YEAR
$10.14
$11.00 $10.65
- ----------------------------------------------------------
- -------------------
TOTAL RETURN++
1.53%
7.38% 3.28%
- ----------------------------------------------------------
- -------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA:
Net assets, end of year (in 000's) $761,000
$1,285,966 $1,122,249
Ratio of expenses to average net assets
1.80%
1.83% 1.82%+
Ratio of net income to average net assets
0.83%
0.56% 0.64%+
- ----------------------------------------------------------
- -------------------
PORTFOLIO TURNOVER RATE
52%
52% 21%
- ----------------------------------------------------------
- -------------------
</TABLE>
*The Fund commenced offering Class B shares on November 6,
1992.
+Annualized.
++ Total return represents aggregate total return for
the
periods indicated and
does not reflect any applicable sales charge.
# Per share amounts have been calculated using the monthly
average shares
method, which more appropriately presents per share
data for this year since
use of the undistributed income method did not
accord with results of opera-
tions.
11
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES
The Fund's sole investment objective is long-
term appreciation of sharehold-
ers' capital through investments primarily in
equity securities. This invest-
ment objective may not be changed without the approval
of the holders of a
majority of the Fund's outstanding shares. There can be
no assurance that the
Fund's investment objective will be achieved.
The Fund attempts to achieve its investment objective by
investing primarily
in equity securities (consisting of common stocks,
preferred stocks, warrants,
rights and securities convertible into common stocks)
which are believed to
afford attractive opportunities for investment
appreciation. The core holdings
of the Fund are blue chip companies that are dominant
in their industries. At
the same time, the Fund may hold securities of
companies with prospects of sus-
tained earnings growth and/or companies with a
cyclical earnings record if it
is felt these offer attractive investment opportunities.
For example, the Fund
may invest in the securities of companies whose earnings
are expected to
increase, companies whose securities prices are lower
than are believed justi-
fied in relation to their underlying assets or
earning power, or companies in
which changes are anticipated that would result in
improved operations or prof-
itability. Typically, the Fund invests in middle- and
largersized companies,
though it does invest in smaller companies whose
securities may reasonably be
expected to appreciate. The Fund's investments are
spread broadly among differ-
ent industries. The Fund may hold issues traded over-the
counter as well as
those listed on one or more national exchanges, and the
Fund may make invest-
ments in foreign securities though management intends
to limit such investments
to 10% of the Fund's assets. In analyzing securities
for investment, the Man-
ager considers many different factors, including past
growth records, manage-
ment capability, future earnings prospects and
technological innovation, as
well as general market and economic factors which
can
influence the price of
securities. While the Manager considers dividend
potential in selecting invest-
ments, current income for distribution to shareholders
is secondary to the
Fund's principal objective of long-term
capital appreciation. The value of the
Fund's investments, and thus the net asset value of
the Fund's shares, will
fluctuate in response to changes in market and
economic conditions, as well as
the financial condition and prospects of issuers in
which the Fund invests.
Under normal market conditions, the majority of the Fund's
portfolio consists
of common stocks, but it also may contain other
equity securities as described
above, as well as short-term money market instruments
for cash management pur-
poses. When the Manager believes that market
conditions warrant,
12
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
the Fund may adopt a temporary defensive investment
posture, and invest in debt
obligations or increase investment in short-term
money market instruments, and
may engage in repurchase agreement transactions with
respect to the securities
it is authorized to hold (as described below
under "Investments and Strate-
gies").
Further information about the Fund's investment policies,
including a list of
those restrictions on its investment activities that
cannot be changed without
shareholder approval, appears in the Statement of
Additional Information.
INVESTMENTS AND STRATEGIES
LENDING OF PORTFOLIO SECURITIES. From time to time, the
Fund may lend its
portfolio securities to brokers, dealers and other
financial organizations.
These loans may not exceed 33 1/3% of the Fund's
total assets taken at value.
Loans of portfolio securities by the Fund will
be collateralized by cash, let-
ters of credit or obligations of the United
States government or its agencies
and instrumentalities ("U.S. government securities")
which are maintained at
all times in an amount equal to at least 100% of the
current market value of
the loaned securities. By lending its portfolio
securities, the Fund will seek
to generate income by continuing to receive interest on
the loaned securities,
by investing the cash collateral in short-term
instruments or by obtaining
yield in the form of interest paid by the borrower when
U.S. government securi-
ties are used as collateral. The risks in lending
portfolio securities, as with
other extensions of secured credit, consist of
possible delays in receiving
additional collateral or in the recovery of the
securities or possible loss of
rights in the collateral should the borrower
fail financially. Loans will be
made to firms deemed by the Manager to be of good
standing and will not be made
unless, in the judgment of the Manager, the consideration
to be earned from
such loans would justify the risk.
SHORT-TERM INVESTMENTS. As noted above, the Fund may
invest in short-term
money market instruments, such as: U.S.
government securities; certificates of
deposit, time deposits and bankers' acceptances issued
by domestic banks (in-
cluding their branches located outside the United States
and subsidiaries
located in Canada), domestic branches of foreign
banks, savings and loan asso-
ciations and similar institutions; high grade
commercial paper; and repurchase
agreements with respect to such instruments.
REPURCHASE AGREEMENTS. The Fund will enter into repurchase
agreements with
banks which are the issuers of instruments acceptable
for purchase by the
13
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
Fund and with certain dealers on the Federal Reserve Bank
of New York's list of
reporting dealers. Under the terms of a typical
repurchase agreement, the Fund
would acquire an underlying obligation for a
relatively short period (usually
not more than one week) subject to an obligation of
the seller to repurchase,
and the Fund to resell, the obligation at an agreed-
upon price and time,
thereby determining the yield during the Fund's
holding period. This arrange-
ment results in a fixed rate of return that is not
subject to market fluctua-
tions during the Fund's holding period. Further
information on repurchase
agreements and the risks associated with such
investments appears in the State-
ment of Additional Information.
PORTFOLIO TRANSACTIONS AND TURNOVER. Portfolio securities
transactions on
behalf of the Fund are placed by the Manager with a number
of brokers and deal-
ers, including Smith Barney. Smith Barney has advised the
Fund that in transac-
tions with the Fund, Smith Barney charges a commission rate
at least as favora-
ble as the rate that Smith Barney charges its comparable
unaffiliated customers
in similar transactions.
The Fund generally does not engage in short-term trading
but intends to pur-
chase securities for long-term capital appreciation. While
the Fund's portfolio
rate has in the past exceeded 100%, the Fund's annual
portfolio turnover rate
is not expected to exceed 100%.
FOREIGN SECURITIES. The Fund may invest in securities of
non-U.S. issuers in
the form of American Depositary Receipts ("ADRs"), European
Depositary Receipts
("EDRs") or similar securities representing interests in the
common stock of
foreign issuers. Management intends to limit the Fund's
investment in these
types of securities, together with other types of foreign
securities, to 10% of
the Fund's net assets. ADRs are receipts, typically issued
by a U.S. bank or
trust company, which evidence ownership of underlying securities
issued by a
foreign corporation. EDRs are receipts issued in Europe
which evidence a simi-
lar ownership arrangement. Generally, ADRs, in registered
form, are designed
for use in the U.S. securities markets and EDRs are designed
for use in Euro-
pean securities markets. The underlying securities are not
always denominated
in the same currency as the ADRs or EDRs. Although
investment in the form of
ADRs or EDRs facilitates trading in foreign securities, it
does not mitigate
the risks associated with investing in foreign securities.
Investments in foreign securities incur higher costs than
investments in U.S.
securities, including higher costs in making securities
transactions as well as
14
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)
foreign government taxes which may reduce the investment
return of the Fund. In
addition, foreign investments may include additional risks
associated with cur-
rency exchange rates, less complete financial
information about individual com-
panies, less market liquidity and political instability.
VALUATION OF SHARES
The Fund's net asset value per share is determined as of
the close of regular
trading on the NYSE, on each day that the NYSE is open,
by dividing the value
of the Fund's net assets attributable to each Class by
the total number of
shares of the Class outstanding.
Generally, the Fund's investments are valued at market
value or, in the
absence of a market value with respect to any securities,
at fair value as
determined by or under the direction of the Fund's Board
of Directors. Short-
term investments that mature in 60 days or less are
valued at amortized cost
whenever the Fund's Board of Directors determines
that amortized cost is the
fair value of those instruments. Further
information regarding the Fund's valu-
ation policies is contained in the Statement of
Additional Information.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The Fund's policy is to distribute substantially all of
its net investment
income (that is, its income other than its net
realized capital gains) and net
realized capital gains, if any, once a year, normally at
the end of the year in
which earned or at the beginning of the next year.
If a shareholder does not otherwise instruct, dividends
and capital gains
distributions will be reinvested automatically in
additional shares of the same
Class at net asset value, subject to no sales charge
or CDSC. In order to avoid
the application of a 4.00% nondeductible excise tax
on certain undistributed
amounts of ordinary income and capital gains, the Fund
may make an additional
distribution, shortly before December 31 in each year,
of any undistributed
ordinary income or capital gains and expects to pay
any other dividends and
distributions necessary to avoid the application of
this tax.
15
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)
The per share dividends on Class B shares of the Fund may
be lower than the
per share dividends on Class A shares principally as
a result of the distribu-
tion fee applicable with respect to Class B
shares. Distributions of capital
gains, if any, will be in the same amount for Class A
and Class B shares.
TAXES
The Fund has qualified and intends to continue to qualify
as a "regulated
investment company" under the Code. To qualify, the
Fund must first meet cer-
tain tests, including the distribution of at least 90%
of its investment com-
pany taxable income (which includes, among other
items, dividends, interest and
the excess of any net short-term capital gains over net
longterm capital loss-
es).
Dividends paid from net investment income
and distributions of net realized
short-term capital gains are taxable to shareholders
as ordinary income,
regardless of how long shareholders have held their
Fund shares and whether
such dividends and distributions are received in cash
or reinvested in addi-
tional Fund shares. Distributions of net realized long-
term capital gains will
be taxable to shareholders as long-term capital
gains, regardless of how long
shareholders have held Fund shares and whether
such distributions are received
in cash or are reinvested in additional Fund
shares. Furthermore, as a general
rule, a shareholder's gain or loss on a sale or
redemption of Fund shares will
be a long-term capital gain or loss if the shareholder
has held the shares for
more than one year and will be a short-term capital gain
or loss if the share-
holder has held the shares for one year or less. Some of
the Fund's dividends
declared from net investment income may qualify for
the Federal dividends-
received deduction for corporations.
Statements as to the tax status of each shareholder's
dividends and distribu-
tions are mailed annually. Each shareholder also
will receive, if appropriate,
various written notices after the close of the Fund's
prior taxable year as to
the Federal income tax status of his or her dividends
and distributions which
were received from the Fund during the Fund's prior
taxable year. Shareholders
should consult their own tax advisors about the status
of the Fund's dividends
and distributions for state and local tax liabilities.
16
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
PURCHASE OF SHARES
GENERAL
The Fund offers two Classes of shares to investors
purchasing through PFS
Investments Representatives. Class A shares are sold
to investors with an ini-
tial sales charge and Class B shares are sold without
an initial sales charge
but are subject to a CDSC payable upon certain
redemptions. See "Prospectus
Summary--Alternative Purchase Arrangements" for a
discussion of factors to con-
sider in selecting which Class of shares to purchase.
Initial purchases of Fund shares must be made through a
PFS Investments Rep-
resentative by completing the appropriate application
found in the prospectus.
The completed application should be forwarded to the
SubTransfer Agent, 3100
Breckinridge Blvd., Bldg 200, Duluth, Georgia 30199-
0062. Checks drawn on for-
eign banks must be payable in U.S. dollars and have
the routing number of the
U.S. bank encoded on the check. Subsequent investments
may be sent directly to
the Sub-Transfer Agent.
Investors in Class A and Class B shares may open an
account by making an ini-
tial investment of at least $1,000 for each account, or
$250 for an IRA or a
Self-Employed Retirement Plan in the Fund. The
initial investment amount will
be waived for accounts establishing a Systematic
Investment Plan. Subsequent
investments of at least $50 may be made for both
Classes. For participants in
retirement plans qualified under Section 403(b)(7) of
the Code, the minimum
initial and subsequent investment requirement for
both Classes in the Fund is
$25. For the Fund's Systematic Investment Plan, the
minimum initial and subse-
quent investment requirement for both Classes is $50.
There are no minimum
investment requirements for Class A shares for employees
of Travelers and its
subsidiaries, including Smith Barney, Directors of the
Fund and their spouses
and children. The Fund reserves the right to waive or
change minimums, to
decline any order to purchase its shares and to suspend
the
offering of shares
from time to time. Shares purchased will be held in
the shareholder's account
by the Sub-Transfer Agent. Share certificates are
issued
only upon a sharehold-
er's written request to the Sub-Transfer Agent.
Purchase orders received by the Sub-Transfer Agent prior
to the close of reg-
ular trading on the NYSE, on any day the Fund calculates
its net asset value,
are priced according to the net asset value determined
on that day (the "trade
date").
17
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
PURCHASE OF SHARES (CONTINUED)
SYSTEMATIC INVESTMENT PLAN
Shareholders may make additions to their accounts at any
time by purchasing
shares through a service known as the Systematic
Investment Plan. Under the
Systematic Investment Plan, the Sub-Transfer Agent
is authorized through preau-
thorized transfers of $50 or more to charge the regular
bank account or other
financial institution indicated by the shareholder on
a monthly or quarterly
basis to provide systematic additions to the
shareholder's Fund account. A
shareholder who has insufficient funds to complete
the transfer will be charged
a fee of up to $25 by PFS or the Sub-Transfer Agent.
INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES
The sales charges applicable to purchases of Class A
shares of the Fund are
as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS ----------
--------------------
DEALERS'
% OF %
OF REALLOWANCE AS % OF
AMOUNT OF INVESTMENT OFFERING PRICE AMOUNT INVESTED
OFFERING PRICE -------------------------------------------
- -------------------------------
<S> <C> <C>
<C>
Less than $ 25,000 5.00%
5.26%
4.50%
$ 25,000 - 49,999 4.00
4.17
3.60
50,000 - 99,999 3.50
3.63
3.15
100,000 - 249,999 3.00
3.09 2.70
250,000 - 499,999 2.00
2.04 1.80
500,000 - and over *
* * ------------------------------------------------------
- --------------------
</TABLE>
* PURCHASES OF CLASS A SHARES, WHICH WHEN COMBINED
WITH
CURRENT HOLDINGS OF
CLASS A SHARES OFFERED WITH A SALES CHARGE EQUAL OR EXCEED
$500,000 IN THE
AGGREGATE, WILL BE MADE AT NET ASSET VALUE WITHOUT ANY
INITIAL SALES CHARGE,
BUT WILL BE SUBJECT TO A CDSC OF 1.00% ON REDEMPTIONS MADE
WITHIN 12 MONTHS
OF PURCHASE. THE CDSC ON CLASS A SHARES IS PAYABLE TO PFS,
WHICH, IN TURN,
PAYS PFS INVESTMENTS TO COMPENSATE ITS
INVESTMENTS REPRESENTATIVES WHOSE
CLIENTS MAKE PURCHASES OF $500,000 OR MORE. THE CDSC IS
WAIVED IN THE SAME
CIRCUMSTANCES IN WHICH THE CDSC APPLICABLE TO CLASS B
SHARES IS WAIVED. SEE
"DEFERRED SALES CHARGE ALTERNATIVES" AND "WAIVERS OF
CDSC."
The reduced sales charges shown above apply to the
aggregate of purchases of
Class A shares of the Fund made at one time by "any
person," which includes an
individual, his or her spouse and children, or a trustee
or other fiduciary of
a single trust estate or single fiduciary account.
The
reduced sales charge
minimums may also be met by aggregating the purchase
with the net asset value
of all Class A shares offered with a sales charge held
in
funds sponsored by
Smith Barney that are offered with a sales charge
listed under "Exchange Privi-
lege."
18
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
PURCHASE OF SHARES (CONTINUED)
INITIAL SALES CHARGE WAIVERS
Purchases of Class A shares may be made at net asset value
without a sales
charge in the following circumstances: (a) sales of Class
A shares to Directors
of the Fund and employees of Travelers and its
subsidiaries, or the spouses and
children of such persons (including the surviving spouse
of a deceased Director
or employee, and retired Directors or employees), or
sales
to any trust, pen-
sion, profit-sharing or other benefit plan for such
persons provided such sales
are made upon the assurance of the purchaser that
the purchase is made for
investment purposes and that the securities will not
be resold except through
redemption or repurchase; (b) offers of Class A shares
to any other investment
company in connection with the combination of such
company with the Fund by
merger, acquisition of assets or otherwise; (c)
shareholders who have redeemed
Class A shares in the Fund (or Class A shares of
another fund in the Smith Bar-
ney Mutual Funds that are offered with a sales charge
equal to or greater than
the maximum sales charge of the Fund) and who wish
to reinvest their redemption
proceeds in the Fund, provided the reinvestment is
made within 60 calendar days
of the redemption; (d) accounts managed by
registered investment advisory sub-
sidiaries of Travelers; and (e) sales through
PFS Investments Representatives
where the amounts invested represent the redemption
proceeds from investment
companies distributed by an entity other than PFS, on
the condition that (i)
the redemption has occurred no more than 60 days prior
to the purchase of the
shares, (ii) the shareholder paid an initial sales charge
on such redeemed
shares and (iii) the shares redeemed were not subject to
a deferred sales
charge. PFS Investments may pay its
Investments Representatives an amount equal
to 0.40% of the amount invested if the purchase
represents redemption proceeds
from an investment company distributed by an entity
other than PFS. In order to
obtain such discounts, the purchaser must provide
sufficient information at the
time of purchase to permit verification that the
purchase would qualify for the
elimination of the sales charge.
VOLUME DISCOUNTS
The "Amount of Investment" referred to in the sales
charge table set forth
above under "Initial Sales Charge Alternative--Class
A Shares" includes the
purchase of Class A shares in the Fund and of other
funds sponsored by Smith
Barney that are offered with a sales charge listed
under "Exchange Privilege."A
person eligible for a volume discount includes:
an individual; members of a
family unit comprising a husband, wife and minor children;
a trustee or other
19
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
PURCHASE OF SHARES (CONTINUED)
fiduciary purchasing for a single fiduciary
account including pension, profit-
sharing and other employee benefit trusts qualified
under Section 401(a) of the
Code, or multiple custodial accounts where more than
one beneficiary is
involved if purchases are made by salary reduction
and/or payroll deductionfor
qualified and nonqualified accounts and transmitted by
a common employer enti-
ty. Employer entity for payroll deduction accounts
may include trade and craft
associations and any other similar organizations.
LETTER OF INTENT
A Letter of Intent for amounts of $50,000 or more provides
an opportunity for
an investor to obtain a reduced sales charge by
aggregating the investments
over a 13-month period, provided that the investor refers
to such Letter when
placing orders. For purposes of a Letter of Intent,
the "Amount of Investment"
as referred to in the preceding sales charge table
includes purchases of all
Class A shares of the Fund and other funds of the
Smith Barney Mutual Funds
that are offered with a sales charge listed under
"Exchange Privilege" over a
13-month period based on the total amount of
intended purchases plus the value
of all Class A shares previously purchased and still
owned. An alternative is
to compute the 13-month period starting up to 90 days
before the date of execu-
tion of a Letter of Intent. Each investment made during
the period receives the
reduced sales charge applicable to the total amount of
the investment goal. If
the goal is not achieved within the period, the
investor must pay the differ-
ence between the sales charges applicable to the
purchases made and the charges
previously paid, or an appropriate number of escrowed
shares will be redeemed.
DEFERRED SALES CHARGE ALTERNATIVES
"CDSC Shares" are sold at net asset value next determined
without an initial
sales charge so that the full amount of an
investor's purchase payment may be
immediately invested in the Fund. A CDSC, however, may
be imposed on certain
redemptions of these shares. "CDSC Shares" are: (a) Class
B shares, and (b)
Class A shares which, when combined with Class A
shares offered with a sales
charge currently held by an investor, equal or
exceed $500,000 in the
aggregate.
Any applicable CDSC will be assessed on an amount equal to
the lesser of the
original cost of the shares being redeemed or their
net asset value at the time
of redemption. CDSC Shares that are redeemed will not
be subject to a
20
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
PURCHASE OF SHARES (CONTINUED)
CDSC to the extent that the value of such shares
represents: (a) capital appre-
ciation of Fund assets; (b) reinvestment of dividends
or capital gain distribu-
tions; (c) with respect to Class B shares, shares
redeemed more than five years
after their purchase; or (d) with respect to Class A
shares that are CDSC
Shares, shares redeemed more than 12 months after
their purchase.
Class A shares that are CDSC Shares are subject to a 1.00%
CDSC if redeemed
within 12 months of purchase. In circumstances in which
the CDSC is imposed on
Class B shares, the amount of the charge will depend on
the number of years
since the shareholder made the purchase payment from
which the amount is being
redeemed. Solely for purposes of determining the number
of years since a pur-
chase payment, all purchase payments made during a
month will be aggregated and
deemed to have been made on the last day of the
preceding Smith Barney state-
ment month. The following table sets forth the rates of
the charge for redemp-
tions of Class B shares by shareholders.
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE
PAYMENT WAS MADE CDSC --------------------------
- ------
<S> <C>
First 5.00%
Second 4.00
Third 3.00
Fourth 2.00
Fifth 1.00
Sixth 0.00
Seventh 0.00
Eighth 0.00
- --------------------------------
</TABLE>
Class B shares will convert automatically to Class A
shares eight years after
the date on which they were purchased and thereafter will
no longer be subject
to any distribution fee. There will also be converted
at that time such propor-
tion of Class B Dividend Shares owned by the shareholder
as the total number of
his or her Class B shares converting at the time bears
to the total number of
outstanding Class B shares (other than Class B
Dividend Shares) owned by the
shareholder.
In determining the applicability of any CDSC, it will be
assumed that a
redemption is made first of shares representing
capital appreciation, next of
shares representing the reinvestment of dividends
and capital gains distribu-
tions and finally of other shares held by the
shareholder for the longest
period of time. The length of time that CDSC Shares
acquired through an
exchange have been held will be calculated from the
date that the shares
exchanged were initially
21
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
PURCHASE OF SHARES (CONTINUED)
acquired in one of the other Smith Barney Mutual Funds,
and Fund shares being
redeemed will be considered to represent, as
applicable, capital appreciation
or dividend and capital gain distribution reinvestments
in such other funds.
For Federal income tax purposes, the amount of the CDSC
will reduce the gain or
increase the loss, as the case may be, on the
amount realized on redemption.
The amount of any CDSC will be paid to PFS.
To provide an example, assume an investor purchased 100
Class B shares at $10
per share for a cost of $1,000. Subsequently the
investor acquired 5 additional
shares through dividend reinvestment. During the
fifteenth month after the pur-
chase, the investor decided to redeem $500 of his or
her investment. Assuming
at the time of the redemption the net asset value
had appreciated to $12 per
share, the value of the investor's shares would be
$1,260 (105 shares at $12
per share). The CDSC would not be applied to the
amount which represents appre-
ciation ($200) and the value of the reinvested
dividend shares ($60). There-
fore, $240 of the $500 redemption proceeds ($500-$260)
would be charged at a
rate of 4% (the applicable rate for Class B shares) for
a total deferred sales
charge of $9.60.
WAIVERS OF CDSC
The CDSC will be waived on: (a) exchanges (see "Exchange
Privilege"); (b)
automatic cash withdrawals in amounts equal to or less
than 1.00% per month of
the value of the shareholder's shares at the time
the withdrawal plan commences
(see "Redemption of Shares--Automatic Cash
Withdrawal Plan"); (c) redemption of
shares within 12 months following the death or disability
of the shareholder;
(d) redemption of shares made in connection with
qualified distributions from
retirement plans or IRAs upon the attainment of age 59
1/2; (e) involuntary
redemptions, and (f) redemption of shares in connection
with a combination of
the Fund with any investment company by merger,
acquisition of assets or other-
wise. In addition, a shareholder who has redeemed
shares from other funds of
the Smith Barney Mutual Funds may, under
certain circumstances, reinvest all or
part of the redemption proceeds within 60 days and
receive pro rata credit for
any CDSC imposed on the prior redemption.
CDSC waivers will be granted subject to confirmation by
PFS of the sharehold-
er's status or holdings, as the case may be.
22
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
EXCHANGE PRIVILEGE
Except as otherwise noted below, shares of each Class may
be exchanged at the
net asset value next determined for shares of the same
Class in the following
funds of the Smith Barney Mutual Funds, to the extent
shares are offered for
sale in the shareholder's state of residence. Exchanges
of shares are subject
to minimum investment requirements and all shares
are subject to the other
requirements of the fund into which exchanges are made and
a sales charge dif-
ferential may apply.
FUND NAME:
Smith Barney Growth Opportunity Fund Smith Barney
Investment Grade Bond Fund
Class A Exchanges. Class A shares of Smith Barney Mutual
Funds sold without a
sales charge or with a maximum sales charge of less than
the maximum charged by
other Smith Barney Mutual Funds will be subject to
the appropriate "sales
charge differential" upon the exchange of their shares
for Class A shares of a
fund sold with a higher sales charge. The "sales
charge differential" is lim-
ited to a percentage rate no greater than the excess of
the sales charge rate
applicable to purchases of shares of the mutual fund
being acquired in the
exchange over the sales charge rate(s) actually paid on
the mutual fund shares
relinquished in the exchange and on any predecessor of
those shares. For pur-
poses of the exchange privilege, shares obtained
through automatic reinvestment
of dividends and capital gains distributions are treated
as having paid the
same sales charges applicable to the shares on which
the dividends or distribu-
tions were paid; however, if no sales charge was
imposed upon the initial pur-
chase of the shares, any shares obtained through
automatic reinvestment will be
subject to a sales charge differential upon exchange.
Class B Exchanges. In the event a Class B shareholder
wishes to exchange all
or a portion of his or her shares in any of the
funds imposing a higher CDSC
than that imposed by the Fund, the exchanged Class B
shares will be subject to
the higher applicable CDSC. Upon an exchange, the new
Class B shares will be
deemed to have been purchased on the same date as the
Class B shares of the
Fund that have been exchanged.
Additional Information Regarding the Exchange Privilege.
Although the
exchange privilege is an important benefit,
excessive exchange transactions can
23
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
EXCHANGE PRIVILEGE (CONTINUED)
be detrimental to the Fund's performance and
its shareholders. The Manager may
determine that a pattern of frequent exchanges is
excessive and contrary to the
best interests of the Fund's other shareholders. In
this event, the Manager
will notify PFS and PFS may, at its discretion, decide
to limit additional pur-
chases and/or exchanges by the shareholder. Upon such
a determination by the
Fund, PFS will provide notice in writing or by telephone
to the shareholder at
least 15 days prior to suspending the exchange privilege
and during the 15-day
period the shareholder will be required to (a) redeem his
or her shares in the
Fund or (b) remain invested in the Fund or exchange into
any of the Smith Bar-
ney Mutual Funds listed under "Exchange Privilege,"
which position the share-
holder would be expected to maintain for a
significant period of time. All rel-
evant factors will be considered in determining
what constitutes an abusive
pattern of exchanges.
Exchanges will be processed at the net asset value next
determined, plus any
applicable sales charge differential. Redemption
procedures discussed below are
also applicable for exchanging shares, and exchanges will
be made upon receipt
of all supporting documents in proper form. If the
account registration of the
shares of the fund being acquired is identical to
the registration of the
shares of the fund exchanged, no signature guarantee
is required. A capital
gain or loss for tax purposes will be realized upon
the exchange, depending
upon the cost or other basis of shares redeemed.
Before exchanging shares,
investors should read the current prospectus describing
the shares to be
acquired. The Fund reserves the right to modify
or discontinue exchange privi-
leges upon 60 days' prior notice to shareholders.
REDEMPTION OF SHARES
Shareholders may redeem for cash some or all of their
shares of the Fund at
any time by sending a written request in proper
form directly to the Sub-Trans-
fer Agent, PFS Shareholder Services, at 3100
Breckinridge Blvd., Bldg. 200,
Duluth, Georgia 30199-0062. Shareholders who,
after reviewing the information
below, have questions on how to redeem their accounts
should contact the Sub-
Transfer Agent at (800) 544-5445 or Spanish-
speaking representatives at (800)
544-7278 or TDD Line for the Hearing Impaired at (800)
8241721.
As described under "Purchase of Shares," redemptions of
Class B shares are
subject to a contingent deferred sales charge.
24
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
REDEMPTION OF SHARES (CONTINUED)
The request for redemption must be signed by all persons
in whose names the
shares are registered. Signatures must conform exactly
to the account registra-
tion. If the proceeds of the redemption exceed $50,000,
or if the proceeds are
not to be paid to the record owner(s) at the record
address, if the sharehold-
er(s) has had an address change in the past 45 days, or
if the shareholder(s)
is a corporation, sole proprietor, partnership, trust
or fiduciary, signa-
ture(s) must be guaranteed by one of the following: a
bank or trust company; a
broker-dealer; a credit union; a national
securities exchange, registered secu-
rities association or clearing agency; a savings and
loan association; or a
federal savings bank.
Generally, a properly completed Redemption Form with any
required signature
guarantee is all that is required for a redemption. In
some cases, however,
other documents may be necessary. For example, in the
case of shareholders
holding certificates, the certificates for the shares
being redeemed must
accompany the redemption request. Additional
documentary evidence of authority
is required by the Sub-Transfer Agent in the
event redemption is requested by a
corporation, partnership, trust, fiduciary, executor
or administrator. Addi-
tionally, if a shareholder requests a redemption from
a Retirement Plan account
(IRA, SEP or 403(b)(7) ), such request must state whether
or not federal income
tax is to be withheld from the proceeds of the
redemption check.
A shareholder may utilize the Sub-Transfer Agent's FAX to
redeem his or her
account as long as a signature guarantee or
other documentary evidence is not
required. Redemption requests should be properly signed
by all owners of the
account and faxed to the Sub-Transfer Agent at (800)
5542374. Facsimile
redemptions may not be available if the shareholder
cannot reach the Sub-Trans-
fer Agent by FAX, whether because all telephone lines
are busy or for any other
reason; in such case, a shareholder would have to use
the Fund's regular
redemption procedure described above. Facsimile
redemptions received by the
Sub-Transfer Agent prior to 4:00 p.m. Eastern time on
a regular business day
will be processed at the net asset value per
share determined that day.
In all cases, the redemption price is the net asset value
per share of the
Fund next determined after the request for redemption
is received in proper
form by the Sub-Transfer Agent. Payment for shares
redeemed
will be made by
check mailed within three days after acceptance by the
SubTransfer Agent of
the request and any other necessary documents in
proper order. Such payment may
be postponed or the right of redemption suspended
as provided by the rules of
the SEC. If the shares to be redeemed have been
recently purchased by check or
draft, the Sub-Transfer Agent may hold the payment of
the proceeds until the
25
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
REDEMPTION OF SHARES (CONTINUED)
purchase check or draft has cleared, usually a period of
up to 15 days. Any
taxable gain or loss will be recognized by the
shareholder upon redemption of
shares.
After following the above-stated redemption guidelines, a
shareholder may
elect to have the redemption proceeds wire-
transferred directly to the share-
holder' bank account of record (defined as a
currently established pre-autho-
rized draft on the shareholder's account with no
changes within the previous 45
days), as long as the bank account is registered in the
same name(s) as the
account with the Fund. If the proceeds are not to be
wired to the bank account
of record, or mailed to the registered owner, a
signature guarantee will be
required from all shareholders. A $25 service fee will
be charged by the Sub-
Transfer Agent to help defray the administrative expense
of executing a wire
redemption. Redemption proceeds will normally be wired
to the designated bank
account on the next business day following the
redemption, and should ordinar-
ily be credited to the shareholder's bank account by
his/her bank within 48 to
72 hours.
AUTOMATIC CASH WITHDRAWAL PLAN
The Fund offers shareholders an automatic cash withdrawal
plan, under which
shareholders who own shares with a value of at least
$10,000 may elect to
receive periodic cash payments of at least $50 monthly
or quarterly. Retirement
plan accounts are eligible for automatic cash
withdrawal plans only where the
shareholder is eligible to receive qualified
distributions and has an account
value of at least $5,000. The withdrawal plan will
be
carried over on exchanges
between funds or Classes of the Fund. Any applicable
CDSC will not be waived on
amounts withdrawn by a shareholder that exceed 1.00%
per month of the value of
the shareholder's shares subject to the CDSC at the time
the withdrawal plan
commences. For further information regarding the
automatic cash withdrawal
plan, shareholders should contact the Sub-Transfer Agent.
MINIMUM ACCOUNT SIZE
The Fund reserves the right to involuntarily liquidate any
shareholder's
account in the Fund if the aggregate net asset value of
the shares held in the
Fund account is less than $500. (If a shareholder has
more than one account in
this Fund, each account must satisfy the minimum
account size). The Fund, how-
ever, will not redeem shares based solely on
market reductions in net asset
value. Before the Fund exercises such right,
shareholders will receive written
26
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
MINIMUM ACCOUNT SIZE
notice and will be permitted 60 days to bring accounts up
to the minimum to
avoid automatic redemption.
PERFORMANCE
From time to time the Fund may include its total return,
average annual total
return and current dividend return in advertisements
and/or other types of
sales literature. These figures are computed separately
for Class A and Class B
shares of the Fund. These figures are based on
historical earnings and are not
intended to indicate future performance. Total return
is computed for a speci-
fied period of time assuming deduction of the maximum
sales charge, if any,
from the initial amount invested and reinvestment of
all income dividends and
capital gain distributions on the reinvestment dates
at prices calculated as
stated in this Prospectus, then dividing the value of
the investment at the end
of the period so calculated by the initial amount
invested and subtracting
100%. The standard average annual total return,
as prescribed by the SEC, is
derived from this total return, which provides the
ending redeemable value.
Such standard total return information may also
be accompanied with nonstandard
total return information for differing periods computed
in the same manner but
without annualizing the total return or taking sales
charges into account. The
Fund calculates current dividend return for each Class
by annualizing the most
recent monthly distribution and dividing by the net
asset value or the maximum
public offering price (including sales charge) on the
last day of the period
for which current dividend return is presented. The
current dividend return for
each Class may vary from time to time depending on
market conditions, the com-
position of its investment portfolio and operating
expenses. These factors and
possible differences in the methods used in
calculating current dividend return
should be considered when comparing a Class' current
return to yields published
for other investment companies and other
investment vehicles. The Fund may also
include comparative performance information in
advertising or marketing its
shares. Such performance information may include data
from Lipper Analytical
Services, Inc. and other financial publications. The
Fund will include perfor-
mance data for Class A and Class B shares in
any advertisement or information
including performance data of the Fund.
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
Overall responsibility for management and supervision of
the Fund rests with
the Fund's Board of Directors. The Directors approve
all significant agreements
27
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
MANAGEMENT OF THE FUND (CONTINUED)
between the Fund and the companies that furnish services
to the Fund, including
agreements with its distributor, investment
adviser, custodian and transfer
agent. The day-to-day operations of the Fund are
delegated to the Fund's
investment adviser. The Statement of Additional
Information contains background
information regarding each Director and executive officer
of the Fund.
MANAGER -- SBMFM
The Manager, located at 388 Greenwich Street, New York,
New York 10013,
serves as the Fund's investment adviser and manages the
dayto-day operations
of the Fund pursuant to a management agreement entered
into by the Manager and
the Fund. The Manager, which is a registered
investment adviser, has (through
its predecessors) been in the investment counseling
business since 1940 and
renders investment advice to investment companies that
had aggregate assets
under management as of January 31, 1995, in excess of
$51.9 billion.
Subject to the supervision and direction of the Fund's
Board of Directors,
the Manager manages the Fund's portfolio in accordance
with the Fund's stated
investment objective and policies, makes
investment decisions for the Fund,
places orders to purchase and sell securities and
employs professional portfo-
lio managers and securities analysts who provide
research services to the Fund.
Investment advisory fees are computed daily and paid
monthly at the following
annual rates of the Fund's average daily net assets 0.55%
up to $250 million;
0.513% of the next $250 million; 0.476% of the next
$500 million; 0.439% of the
next $1 billion; 0.402% of the next $1 billion, and
0.365% of the net assets in
excess of $3 billion. For the fiscal year ended December
31, 1994, the Fund
paid investment advisory fees equal to 0.45% of the value
of its net assets.
PORTFOLIO MANAGEMENT
Harry D. Cohen, Vice President and Investment Officer of
the Fund, is primar-
ily responsible for management of the Fund's assets.
Mr. Cohen has served in
this capacity since January 1979, and manages the day-to-
day operations of the
Fund including making all investment decisions.
Management's discussion and analysis, and additional
performance information
regarding the Fund during the fiscal year ended December
31, 1994 are
28
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
MANAGEMENT OF THE FUND (CONTINUED)
included in the Annual Report dated December 31, 1994.
A copy of the Annual
Report may be obtained upon request and without charge
from the Sub-Transfer
Agent or by writing or calling the Fund at the address
or phone number listed
on page one of this Prospectus.
ADMINISTRATOR
The Manager also serves as the Fund's administrator and
oversees all aspects
of the Fund's administration and operation.
Administration fees are computed
daily and paid monthly at the following annual rates of
the Fund's average
daily net assets: 0.20% up to $250 million; 0.187% of
the next $250 million;
0.174% of the next $500 million; 0.161% of the next
$1 billion; 0.148% of the
next billion; and 0.135% of net assets in excess of
$3 billion. For the fiscal
year ended December 31, 1994, the Fund paid
administration fees equal to 0.17%
of the value of the average daily net assets of the Fund.
DISTRIBUTOR
PFS is located at 3100 Breckenridge Boulevard, Duluth,
Georgia 30199-0001.
PFS distributes shares of the Fund as a
principal underwriter and as such con-
ducts a continuous offering pursuant to a "best
efforts" arrangement requiring
PFS to take and pay for only such securities as may be
sold to the public. Pur-
suant to a plan of distribution adopted by the Fund
under Rule 12b-1 under the
1940 Act (the "Plan"), PFS is paid an annual service
fee with respect to Class
A and Class B shares of the Fund at the annual rate of
0.25% of the average
daily net assets of the respective Class. PFS is also
paid an annual distribu-
tion fee with respect to Class B shares at the annual
rate of 0.75% of the
average daily net assets attributable to that Class. Class
B shares that auto-
matically convert to Class A shares eight years after
the date of original pur-
chase will no longer be subject to distribution fees.
The fees are paid to PFS
which, in turn, pays PFS Investments to pay its
Investments Representatives for
servicing shareholder accounts and, in the case of Class
B shares, to cover
expenses primarily intended to result in the sale of
those shares. These
expenses include: advertising expenses; the cost of
printing and mailing pro-
spectuses to potential investors; payments to and
expenses of Investments Rep-
resentatives and other persons who provide support
services in connection with
the distribution of shares; interest and/or
carrying charges; and indirect and
overhead costs of PFS
29
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
DISTRIBUTOR (CONTINUED)
Investments associated with the sale of Fund
shares, including lease, utility,
communications and sales promotion expenses.
The payments to PFS Investments Representatives for
selling shares of a Class
include a commission or fee paid by the investor or PFS
at the time of sale and
a continuing fee for servicing shareholder accounts for
as
long as a share-
holder remains a holder of that Class. PFS
Investments Representatives may
receive different levels of compensation for
selling different Classes.
PFS Investments may be deemed to be an underwriter for
purposes of the Secu-
rities Act of 1933. From time to time, PFS or its
affiliates may also pay for
certain non-cash sales incentives provided to
PFS
Investments Representatives.
Such incentives do not have any effect on the net
amount invested. In addition
to the reallowances from the applicable public
offering price described above,
PFS may, from time to time, pay or allow
additional reallowances or promotional
incentives, in the form of cash or other compensation to
PFS Investments Repre-
sentatives that sell shares of the Fund.
Payments under the Plan are not tied exclusively to the
distribution and
shareholder service expenses actually incurred by PFS
and the payments may
exceed distribution expenses actually incurred. The
Fund's Board of Directors
will evaluate the appropriateness of the Plan and
its payment terms on a con-
tinuing basis and in so doing will consider all
relevant factors, including
expenses borne by PFS, amounts received under the Plan
and proceeds of the
CDSC.
ADDITIONAL INFORMATION
The Fund was organized as a Maryland corporation pursuant
to Articles of
Incorporation dated September 2, 1969, as amended from
time to time, and is
registered with the SEC as a diversified open-end
management investment compa-
ny. The Fund offers to investors purchasing through
PFS shares of common stock
currently classified into two Classes, A and B. Each
Class
represents an iden-
tical interest in the Fund's investment portfolio. As
a result, the Classes
have the same rights, privileges and preferences,
except with respect to: (a)
the designation of each Class; (b) the effect of
the respective sales charges
for each Class; (c) the distribution and/or service
fees borne by each Class
pursuant to the Plan; (d) the expenses allocable
exclusively to each Class; (e)
voting rights on matters exclusively affecting a
single Class; (f) the exchange
privilege of each
30
<PAGE>
SMITH BARNEY
Appreciation Fund Inc.
ADDITIONAL INFORMATION (CONTINUED)
Class; and (g) the conversion feature of the Class B
shares. The Fund's Board
of Directors does not anticipate that there will be
any conflicts among the
interests of the holders of the two Classes. The
Directors, on an ongoing
basis, will consider whether any such conflicts exists
and, if so, take appro-
priate action.
PNC Bank, National Association, located at 17th and
Chestnut Streets, Phila-
delphia, Pennsylvania 19103 serves as custodian of
the Fund's investments.
The Shareholder Services Group, Inc. is located at
Exchange Place, Boston,
Massachusetts 02109, and serves as the Fund's
transfer agent.
PFS Shareholder Services is located at 3100 Breckenridge
Blvd., Bldg. 200,
Duluth, Georgia 30199-0062 and serves as the Fund's
SubTransfer Agent.
The Fund does not hold annual shareholder meetings. There
normally will be no
meeting of shareholders for the purpose of
electing Directors unless and until
such time as less than a majority of the Directors
holding office have been
elected by shareholders. The Directors will call a
meeting for any purpose upon
written request of shareholders holding at least 10% of
the Fund's outstanding
shares and the Fund will assist shareholders in calling
such a meeting as
required by the 1940 Act. When matters are submitted
for shareholder vote,
shareholders of each Class will have one vote for each
full share owned and a
proportionate, fractional vote for any fractional share
held of that Class.
Generally, shares of the Fund will be voted on a Fund-
wide basis on all matters
except matters affecting only the interests of one Class
of shares.
The Fund sends its shareholders a semi-annual report and
an audited annual
report, each of which includes a list of the
investment securities held by the
Fund at the end of the reporting period. In an effort
to reduce the Fund's
printing and mailing costs, the Fund plans to
consolidate the mailing of its
semi-annual and annual reports by household.
This consolidation means that a
household having multiple accounts with the
identical address of record will
receive a single copy of each report. In addition, the
Fund plans to consoli-
date the mailing of its Prospectuses so that a
shareholder having multiple
accounts (i.e., individual, IRA and/or Self-
Employed Retirement Plan accounts)
will receive a single Prospectus annually. Shareholders
who do not want this
consolidation to apply to their accounts should contact
the Fund's Sub-Transfer
Agent.
31
<PAGE>
- ----------------------------------------------------------
- ---------------------
Smith Barney
Appreciation
Fund Inc.
3100 Breckenridge Blvd, Bldg 200
Duluth, Georgia 30199-0062
FDXXXX XX
Smith Barney Additional New Account Options
This Form Must be Accompanied by a New Account Application
Client Services 1-800-544-5445
1. Account Information
Owner(s) name: Owner(s) Social Security
Number: ___
2. Systematic Exchange
You may automatically exchange shares from certain Smith
Barney Fund for shares in another Smith Barney Fund of the
same series on a regular schedule. The accounts must have
identical registrations. Exchange must be for a minimum of
$50. You may incur an additional sales charge when moving
shares from a fund with a lower charge to a fund with a
higher charge. Please see the prospectus for details on
possible tax consequences.
Frequency (select one): q Monthly q Quarterly
Beginning on Month __________ Day __________ Year
__________ Exchange into the:
(1-28) (Name of fund)
Amount to be exchanged each period: o
$___________ or o Shares ____________ Account No.:
(If established)
3. Dividend and Capital Gain Distributions Option
Dividend and capital gain distributions are always
reinvested at net asset value (no sales charge) unless
otherwise indicated below. Dividend and capital gain
distributions for retirement plan accounts must be
reinvested.
I/We wish to designate my/our distribution option as
checked below:
q Invest dividends and capital gains into (same series)
Smith Barney Account
Number:_______________________________________
Pay cash for:
q Dividends q Capital gains q Dividend
and
capital gain distributions
Mail check:
q To me (us for joint accounts) as identified on
my/our account registration.
q To the payee and address indicated to the right.
4. Systematic Withdrawal Plan (SWP)
You may automatically sell shares at net asset value from
your Smith Barney account on a regular basis. You may
designate either a set dollar amount or a set number of
shares. To establish this service, your account must have
a minimum value of $5,000 or $10,000 depending on the
Fund. You may establish a SWP Distribution on a retirement
plan account only if you have obtained the age of 59 1/2
and indicated whether you elected to have 10% Federal
Income Tax withheld from your SWP Distributions. Please
call Client Services at the above toll-free number for
further information. Should you need assistance in
calculating your payment, please contact one of our
Retirement Plan Specialists at the above toll-free number.
Your SWP Distribution will start on the day indicated
below. You may choose any day between 1-28. Your check
will usually be mailed within two business days from the
date your distribution is processed, but in no event later
than three days.
Frequency (select one):
q Monthly q Quarterly q Semi-Annually q
Annually
Amount to be redeemed:
q $ ___________________ or q shares
___________________
Begin SWP Distribution on:
____________/____________/____________
(Month) (Day 1-28) (Year)
Payment Method - Mail SWP check:
q To me (us for joint accounts) as identified on my/our
account registration.
q To the following payee and address:
_______________________________________________________
(Name)
_______________________________________________________
(Name)
_______________________________________________________
(Address)
_______________________________________________________
(City) (State) (Zip)
16084 10.95
Smith Barney
Individual Retirement Account Adoption Agreement
Client Services 1-800-544-5445
Please print clearly. Mail completed application to: PFS
Investments Inc., Custodian, c/o PFS Investments Inc.,
3100 Breckinridge Blvd., Bldg 200, Duluth, GA 30199-0025.
The owner named below hereby establishes an Individual
Retirement Account ("IRA") by executing this Adoption
Agreement and herein agrees to the provisions of the
Custodial Account Agreement (make check payable to PFS
Shareholder Services).
1. Type of Account Registration
Please check the appropriate box indicating how you would
like the account registered.
o Contributory o Non-Contributory o SEP o SAR/SEP o
Minor IRA
Name Social Security Number
Birth Date
If client is a minor, please print parent or guardian
name: 2. Address
Street or P.O. Box
City, State, Zip
(________)
Daytime Telephone Number
3. Annual Custodian Fee Payment
The custodian fee is an annual fee to maintain your
retirement plan account. Your annual custodian fee will be
directly deducted from your account at the end of each
year. If you prefer to prepay this year's fee, please
check the box below and include the fee amount in the
"Total Amount Enclosed" area in Section 4. There is only
one fee assessed per person.
o Pre-pay first year $20.00 Annual Fee
4. Investment Section
Tell us how much you want to invest and in what Fund(s).
Contribution Type
Prior Year IRA
Jan 1- April 15 (14)
Current Year IRA (03)
60-Day Rollover (11)
Salary Reduction
(SAR/SEP only) (35)
Prior Year Employer
Contribution (SEP Only) (31)
Current Year Employer
Contribution (SEP only) (30)
PAC AMOUNT ($50 min.)
Smith Barney Offered at A and B Pricing
Class of Share - Must Select Only One
A Shares
(front-end sales
charge)
B Shares
(contingent deferred sales
charge)
Fund Name and Number
Growth Investment
Opportunity Appreciation Grade Bond
(700) (710) (730)
$__________________________
$__________________________ $__________________________
$__________________________
$__________________________ $__________________________
$__________________________
$__________________________ $__________________________
$__________________________
$__________________________ $__________________________
$__________________________
$__________________________ $__________________________
$__________________________
$__________________________ $__________________________
$__________________________
$__________________________ $__________________________
Total Amount Enclosed: $___________________ Total PAC
Amount: $____________ _______ Please Indicate
PAC Start Date: Month__________Day__________
Year__________
(minimum $50 per PAC)
(1-28)
To establish a PAC, you must attach a voided check in the
space provided on the reverse side of this application.
This check must be from the bank account that you wish us
to draft. When selecting the PAC Option, your IRA
contributions will be coded as current year purchases.
Additionally, if you are establishing a SEP account, your
PAC contributions will be coded as current year employer
purchases. When executing a transfer of assets into Smith
Barney, attach a completed Transfer Form. If your transfer
represents the initial investment into this account,
please do not complete Section 4.
5. PAC Automatic Increase Option
If you would like to increase your PAC on a regular basis,
please indicate the dollar amount or percentage and the
interval that you would like between increases.
Note: Maximum monthly amount for a contributory IRA is
$166.66 and $1,875.00 for employer contribution to a SEP.
PAC: o Quarterly o Semi-Annually o Annually
Beginning on: Month ____________ Day _____________ Year
_____________
(1
28)
Please check only 1 box below:
o Amount of Increase: o $10.00 o $25.00 o $50.00 o
Other ____________ Percentage of Increase:
o
10% o 25% o 50% o Other _____________
16084 10.95
6. Primerica Life Directed Investment
If you have elected a Primerica Life/National Benefit
Life T2000 or Eagle 15 Insurance Policy and wish to
have PFS Shareholder Services begin drafting the amount
of your premium reduction in the 13th month from your
bank account, please indicate below your policy number
(if known), or the social security number of the
policyholder and the month/year you submitted the
application.
o T-2000 o Eagle-15
Primerica Life/National Benefit Life Policy Number:
_______________________________________________________
__
(Policy Number/Social
Security Number)
Policy Submitted (month/year)
7. Related Account Information
Do you have other Smith Barney accounts?
o Yes o No
If so, please indicate the account number(s) or social
security number
of the primary owner.
Acct # Acct #
Acct # Acct #
8. Letter of Intent/Reduced Sales Charge
If this purchase qualifies for a reduced sales charge due
to the accumulated value in any related account(s) for any
Smith Barney Fund sold through PFS Investments Inc., or if
you would like to establish a Letter of Intent to qualify
for a lower sales load, please indicate your expected
breakpoint amount. Group Plan Purchases (i.e., Payroll
Deduction Plans (PDP), 403(b)(7), SEP, SAR/SEP) are linked
for reduced sales charges.
o New Letter of Intent
o Existing Letter of Intent
o Cumulative Purchases
o Group Plan Purchases (403(b)(7), SEP, SAR/SEP, PDP)
o $25,000* o $50,000 o $100,000 o $250,000 o
$500,000
Applicable to Class A Shares only.
*Not Available for Letter of Intent
9. Representative Information
Representative Code #
Representative Name (Please Print)
Representative Daytime Phone # (____________) ______
State of Sale
(must complete only if different from client's
resident state.)
10. Beneficiary Information
In the event no Beneficiary is designated, then the
Depositor's Beneficiary shall be the spouse, followed by
Depositor's descendant's
(per stirpes including adopted children), or if neither
spouse nor any descendant is living at the time of the
Depositor's death, to the Depositor's estate.
If you desire to designate a different Beneficiary, please
complete the section below:
Beneficiary_______________________________________________
__ _______
Relationship
_______________________________________________________
Social Security Number
______________________________________________
Birth Date
11. Signature
The Undersigned certifies that he/she has full authority
and is of legal age to
purchase shares of the fund selected, has received and
read a current prospectus, the Custodial Account Agreement
(IRS form 5305-A and any attachments) and the IRA
Disclosure Statement and agrees to all their terms and
accompanying custodial fees incorporated in this brochure.
In the event that I make any rollover contributions to
this account, I hereby elect, pursuant to the requirement
of Section 1.402(a)(5)-IT of the IRS regulations, to treat
these contributions as rollover contributions. If the
account will have the PAC or Primerica Life/National
Benefit Life Directed Investment Option, that I agree to
the terms of the PAC Indemnification Agreement below. This
plan shall be deemed to have been accepted by the
Custodian upon receipt of the first transaction statement.
I also acknowledge that I determine the deductibility of
any contribution.
I authorize PFS Shareholder Services (hereafter called
"company") to initiate debit entries, electronically, by
means of check, draft or by any other commercially
acceptable method, to my checking account indicated by the
attached check, for deposit to my Smith Barney account(s)
and I authorize the depository named on the attached check
(hereafter called "depository") to debit the same to such
account. This authority is to remain in full force and
effect until company and depository have each received
written notification from me of its termination in such
time and in such manner as to afford company and
depository a reasonable opportunity to act on it. I
further agree that if any such debit be dishonored,
whether with or without cause and whether intentionally or
inadvertently, depository shall be under no liability
whatsoever, regardless of the consequences of such action.
Signature - Owner (Parent/Guardian if Owner is a Minor)
Date
Don't forget to sign this application!
X
Please attach your voided check here if you have selected
the PAC Option.
Smith Barney IRA to IRA Transfer Form
Must be Accompanied by a Smith Barney IRA Adoption
Agreement Client Services: 1-800-544-5445
Complete this form with the IRA Adoption Agreement to
transfer your IRA into a Smith Barney IRA and return to
PFS Investments Inc., 3100 Breckinridge Blvd., Bldg. 200,
Duluth, GA 30199-0025. Your present custodian may require
the completion of the following documents prior to
executing your Smith Barney IRA to IRA Transfer: Cash
Surrender Form, Original Contract, and/or Signature
Guarantee. Please contact your present custodian for
specific transfer procedures.
1. Print your name and address here
_____________________________________________________
Name
_____________________________________________________
Address
___________________________________________________
__ City State Zip
( )
___________________________________________________
__ Your Social Security Number Your Daytime Phone
2. Please tell us about your present IRA
Transfer from: (please complete entirely)
____________________________________________________
_ Name of Resigning Trustee or Custodian
( )
____________________________________________________
_ Attention Telephone Number
____________________________________________________
_ Address of Resigning Trustee or Custodian
____________________________________________________
_ City State Zip
Policy/Account Number
________________________________
3. Please tell us how to invest your Transfer
of Assets
o New Account - Please attach a Smith Barney IRA
Adoption
Agreement and a PFSI New Account Application. Please
indicate the share class, your social security number and
percentage allocated to each fund. If all transfer
proceeds are deposited into the same fund, the fund
allocation percentage should be 100%.
o Existing Accounts - Indicate existing account number
and percentage allocated to each account. If all transfer
proceeds are to be deposited into the same account, the
fund allocation percent should be 100%.
Fund Social Security #/ Percentage
Name Existing Fund Account # Allocated
Share Class (Must Indicate)
Select only one
Growth Opportunity (700) o A o B _________________
_______
Appreciation (710) o A o B _________________
_______ Investment Grade Bond (730) o A o B
_________________ _______
Total 100%
_______
4. Please authorize your current Trustee or
Custodian to transfer your IRA to a
Smith Barney IRA
To Resigning Trustee or Custodian:
Please liquidate o all, or o part ($___________) of the
account listed in Section 2 and transfer the proceeds of
liquidation to my Smith Barney IRA. The estimated value
is:
$______________________.
o immediately o at maturity* ____________________.
maturity date
* Please send us this transfer form at least two weeks
prior to maturity date but no earlier than four weeks.
5. Signature of Client
I understand that my former Trustee or Custodian may have
a surrender charge or liquidation penalty when redeeming
my account.
_____________________________________________________
Client Signature
Date
An important note: Your Resigning Trustee or Custodian may
require your signature to be guaranteed. Please call them
for requirements.
_____________________________________________________
Name of Bank or Firm
_____________________________________________________
Signature of Officer and Title
6. Acceptance by Successor Custodian
Please liquidate and transfer account as instructed in
Section 4. Make check payable and send to address shown
above. This account is accepted by PFS Investments Inc.
as Custodian upon placement of authorized signatures in
the space below. Should you have any questions, please
contact our Client Services Department at 1-800-544-
5445.
(Acceptance Signatures)
_______________________________________________
Account Number (must provide on check)
16084
10.95
Smith Barney
Voluntary Account Application
Client Services 1-800-544-5445
Please print clearly, mail completed applications and make
checks payable to:
PFS Shareholder Services, 3100 Breckinridge Blvd., Bldg
200, Duluth, GA 30199-0062
1. Account Registration
Please complete this Section.
Please check the appropriate box indicating how you
would like the account registered.
o Individual or o Joint* Account
Name (First, Middle Initial, Last)
Social Security Number Birth
Date Joint Owner's Name
Social Security Number Birth
Date * Joint Tenants with Right of Survivorship
unless you specify otherwise
( ) Joint Tenants in Common
o Gift or Transfer to Minor (UGMA/UTMA)
Custodian's Name (First, Middle Initial, Last)
Custodian's Social Security Number
Birth Date
Minor's Name (First, Middle Initial, Last)
Minor's Social Security Number
Birth
Date
o Trust
__________________________________________________________
__ __
Trustee's Name
__________________________________________________________
__ __
Name of Trust Agreement
__________________________________
___________________
Taxpayer Identification Number
Date of Trust
o Other Registration
(i.e. corporation, non-profit, partnership,
sole proprietorship, etc.)
__________________________________________________________
__ ___________
Registration
__________________________________________________________
__ ___________
Registration
____________________________________
______________________________
Taxpayer Identification Number
Type of Organization
2. Address and Citizenship
We'll need to know this info!
__________________________________________________________
__ ___________
Street or P.O. Box
__________________________________________________________
__ ___________
City, State, Zip
(_____________)___________________________________________
__ ____
Daytime Telephone Number
o U.S. Citizen oNon-Resident
Alien___________________________________
Specify Country
o Resident Alien
3. Investment Section
Tell us how much you want to invest, in what share
class... and in what fund(s).
Smith Barney Offered at A and B Share
Pricing
o A Share
(front-end sales
charge)
o B Share
(contingent deferred sales
charge
PAC Draft Amount
Amount Enclosed ($50 min per PAC)
Fund Name and Number:
Growth Opportunity (700) $ $
Appreciation (710) $ $ Investment Grade
Bond (730) $ $
Total Amount Enclosed $ ________________________
Total PAC Amount ($50 min. per pac)
$_________________________________
Please indicate PAC start date:
Month_____________
Day________ Year_________
(1-28)
To establish a PAC, you must attach a voided check from
the bank account that you wish us to draft in the space
provided on the reverse side of this application. All
Dividends and Capital Gains will be reinvested unless
otherwise indicated on the "Additional New Account
Options" form contained in the
prospectus.
4. PAC Automatic Increase Option
If you would like to increase your PAC on a regular basis,
please indicate the dollar amount or percentage and the
interval that you would like between increases.
Please increase my PAC: o Quarterly o Semi-Annually
o Annually
Beginning on: Month _____________ Day ____________ Year
_____________
(1-28)
Please check only 1 box below:
Amount of Increase: o$10.00 o$25.00 o$50.00
oOther________
Percentage of Increase: o10% o25% o50% oOther________
5. Primerica Life Directed Investment
Tell us about your Primerica Life/National Benefit Life
Product.
If you have elected a Primerica Life/National Benefit Life
T2000 or Eagle 15 Insurance Policy and wish to have PFS
Shareholder Services begin drafting the amount of your
premium reduction in the 13th month from your bank account,
please indicate below your policy number (if known) or the
social security number of the policyholder and the
month/year you submitted your insurance application.
o T-2000 o Eagle 15
Primerica Life/National Benefit Life Policy Number:
_________________________________________________________
Policy Number/Social
Security
Number
Policy Submitted:
Month/Year
16084
10.95
6. Related Account Information
Do you have other Smith Barney Accounts?
o Yes o No
If so, please indicate the account number(s) or social
security number of the primary owner.
Acct # Acct #
Acct # Acct #
7. Letter of Intent/Reduced Sales Charge
If this purchase qualifies for a reduced sales charge due
to the accumulated value in any related account(s) for any
Smith Barney Fund, or if you would like to establish a
Letter of Intent to qualify for a lower sales load, please
check the appropriate box and indicate your expected
breakpoint amount. Group Plan Purchases (i.e., Payroll
Deduction Plans, PDP) are linked for reduced sales charge.
o New Letter of Intent o Cumulative Purchases
o Existing Letter of Intent o Group Plan Purchases
(PDP) o $25,000* o $50,000 o $100,000 o $250,000
o $500,000
Applicable to Class A Shares only.
*Not available for Letter of Intent.
8. Representative Information
Representative Code #
Representative Name (First, Middle Initial, Last)
Representative Daytime Phone # (_____________)
State of Sale
(Must complete only
if different from client's resident state.)
9. Signature and PAC Authorization
By my/our signature below, I/we certify, under penalties
of perjury, that the social security or taxpayer
identification number provided in Section 1 is correct,
that I am not subject to nor has the IRS notified me that
I am subject to backup withholding, that I have been given
a current prospectus, and if the account will have the PAC
or Primerica Life/National Benefit Life Directed
Investment Option, that I agree to the terms of the PAC
Indemnification Agreement below.
I/we authorize PFS Shareholder Services (hereafter called
"company") to initiate debit entries, electronically, by
means of check, draft or by any other commercially
acceptable method, to my (our) checking account indicated
by the attached check, for deposit to my Smith Barney
account(s) and I authorize the depository named on the
attached check (hereafter called "depository") to debit
the same to such account. This authority is to remain in
full force and effect until company and depository have
each received written notification from me (or either of
us) of its termination in such time and in such manner as
to afford company and depository a reasonable opportunity
to act on it. I further agree that if any such debit be
dishonored, whether with or without cause and whether
intentionally or inadvertently, depository shall be under
no liability whatsoever, regardless of the consequences of
such action.
Signature - Owner or Custodian Date
Signature - Joint Owner Date
Please attach your voided check here if you have selected
the PAC Option.
Don't forget to sign this application!
