SMITH BARNEY/TRAVELERS SERIES FUND INC.
Supplement dated May 13, 1996 to
Prospectus dated February 28, 1996
The following information supplements the information set forth under "SPECIAL
INVESTMENT TECHNIQUES AND RISK CONSIDERATIONS" in the Prospectus dated
February 28, 1996.
Synthetic Security Positions. The GT Global Strategic Income Portfolio may
utilize combinations of futures on bonds and forward currency contracts to
create investment positions that have substantially the same characteristics
as bonds of the same type on which the futures contracts are written.
Investment positions of this type are generally referred to as "synthetic
securities."
For example, in order to establish a synthetic security position for the GT
Global Strategic Income Portfolio that is comparable to owning a Japanese
government bond, LGT Asset Management might purchase futures contracts on
Japanese government bonds in the desired principal amount and purchase forward
currency contracts for Japanese Yen in an amount equal to the then current
purchase price for such bonds in the Japanese cash market, with each contract
having approximately the same delivery date.
LGT Asset Management might roll over the futures and forward currency contract
positions before taking delivery in order to continue the GT Global Strategic
Income Portfolio's investment position, or LGT Asset Management might close
out those positions, thus effectively selling the synthetic security.
Further, the amount of each contract might be adjusted in response to market
conditions and the forward currency contract might be changed in amount or
eliminated in order to hedge against currency fluctuations.
Further, while these futures and currency contracts remain open, the GT Global
Strategic Income Portfolio will comply with applicable Securities and Exchange
Commission guidelines to set aside cash, U.S. government securities or other
liquid high grade debt securities in a segregated account with its custodian
in an amount sufficient to cover its potential obligations under such
contracts.
LGT Asset Management would create synthetic security positions for the GT
Global Strategic Income Portfolio when it believes that it can obtain a better
yield or achieve cost savings in comparison to purchasing actual bonds or when
comparable bonds are not readily available in the market. Synthetic security
positions are subject to the risk that changes in the value of purchased
futures contracts may differ from changes in the value of the bonds that might
otherwise have been purchased in the cash market. Also, while LGT Asset
Management believes that the cost of creating synthetic security positions
generally will be materially lower than the cost of acquiring comparable bonds
in the cash market, the GT Global Strategic Income Portfolio will incur
transaction costs in connection with each purchase of a futures or forward
currency contract. The use of futures contracts and forward currency
contracts to create synthetic security positions also is subject to
substantially the same risks as those that exist when these instruments are
used in connection with hedging strategies. See "Futures, Options and
Currency Transactions" in the Prospectus and "Options, Futures Contracts and
Related Options," "Interest Rate, Securities Index, Financial Futures and
Currency Futures Contracts," "Options on Futures Contracts" and "Forward
Currency Contracts and Options on Currency" in the Statement of Additional
Information.
Securities of Emerging Markets. The Smith Barney International Equity
Portfolio and the Smith Barney Pacific Basin Portfolio should be added to the
list of Portfolios on page 27 of the Prospectus that will invest in securities
of emerging markets.
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