Filed with the Securities and Exchange Commission on  May 29, 1997    

Securities Act File No.  33-64457
Investment Company Act File No.  811-7435

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933					[X]
   
Pre-Effective Amendment No.					[   ]
Post-Effective Amendment No. 9					[X]
    
and

REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940			[X]
   
Amendment No. 10						[X]
    

Smith Barney Concert  Allocation Series Inc.
(Formerly, Smith Barney Concert Series Inc.)
(Exact Name of Registrant as Specified in Charter)

388 Greenwich Street, New York, NY 10013
 (Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: 212-816-6474

Christina T. Sydor, Esq.
Smith Barney Mutual Funds Management Inc.
388 Greenwich Street
New York, New York 10013
 (Name and Address of Agent for Service)

Rule 24f-2 (1) Declaration:

Registrant filed its Rule 24f-2 Notice on March 21, 1997 for its most 
recent fiscal year ended  January 31, 1997.


Approximate Date of Proposed Public Offering:   
As soon as possible after this Post-Effective Amendment 
becomes effective   

It is proposed that this filing will become effective:   
      
		immediately upon filing pursuant to Rule 485(b)   
	XXXX	on May 30, 1997  pursuant to Rule 485(b)(i)(v)   
		60 days after filing pursuant to Rule 485(a)  
		75 days after filing pursuant to Rule 485(a)(2) 
		on _________________ pursuant to Rule 485(a)       





SMITH BARNEY CONCERT ALLOCATION SERIES INC.

FORM N-1A
CROSS REFERENCE SHEET


Part A
Item No.

Heading in the Prospectus


1. Cover Page

Cover Page


2.  Synopsis
Prospectus Summary


3.  Condensed Financial Information
Not Applicable


4. General Description of 
Registrant
Cover Page; Prospectus Summary; 
Investment Objectives and 
Management Policies; Why Invest in 
the Concert Series; Description of 
Underlying Smith Barney Funds; 
Additional Information; Appendix


5.  Management of the Fund
Prospectus Summary; Management of 
the Concert Series; Additional 
Information


6.  Capital Stock and Other 
Securities
Prospectus Summary; Dividends, 
Distributions and Taxes; Purchase 
of Shares; Additional Information


7.  Purchase of Securities Being 
Offered
Purchase of Shares; Valuation of 
Shares


8.  Redemption or Repurchase


Redemption of Shares

9.  Legal Proceedings
Not Applicable





Part B
Item No.

Heading in Statement of Additional 
Information



10.  Cover Page

Cover Page


11.  Table of Contents
Table of Contents


12.  General Information and History
Not Applicable


13. Investment Objectives and 
Policies
Investment Objectives and Management 
Policies


14.  Management of the Fund
Management of the Concert Series


15. Control Persons and Principal 
Holders of
Securities
Management of the Concert Series



16.  Investment Advisory and Other 
Services
Management of the Concert Series; 
Additional Information


17.  Brokerage Allocation and Other 
Practices


Not Applicable

18.  Capital Stock and Other 
Securities
Additional Information


19.  Purchase, Redemption and Pricing 
of 
Securities Being Offered
Purchase of Shares; Redemption of 
Shares; Valuation of Shares


20.  Tax Status
Taxes (See in the Prospectus 
"Dividends, Distributions and Taxes")


21.  Underwriters
Not Applicable



22. Calculation of Performance Data
Performance


23.  Financial Statements
Financial Statements


PART A


<PAGE>
 
                                 SMITH BARNEY
    
                        CONCERT ALLOCATION SERIES INC.     


                                    [ART]

                              P R O S P E C T U S
    
                                 MAY 30, 1997     

                         Prospectus begins on page one

                                    [LOGO]

                                 SMITH BARNEY
                                 MUTUAL FUNDS

                          Investing for your future.
                                Every day./sm/
<PAGE>
 
PROSPECTUS                                                       
                                                              May 30, 1997     
   
Smith Barney Concert Allocation Series Inc.     
388 Greenwich Street
New York, New York 10013
   
(800) 451-2010     
   
 Smith Barney Concert Allocation Series Inc. (the "Concert Series" or "Series")
currently offers ten professionally managed investment portfolios, five of
which are offered by this Prospectus (each, a "Portfolio"). Each Portfolio
seeks to achieve its objective by investing in a number of other Smith Barney
Mutual Funds ("Underlying Smith Barney Funds").     
 
 The High Growth Portfolio seeks capital appreciation.
 
 The Growth Portfolio seeks long-term growth of capital.
 
 The Balanced Portfolio seeks a balance of growth of capital and income.
 
 The Conservative Portfolio seeks income and, secondarily, long-term growth of
capital.
 
 The Income Portfolio seeks high current income.
 
 This Prospectus sets forth concisely certain information about the Concert
Series and each of the Portfolios that prospective investors will find helpful
in making an investment decision. Investors are encouraged to read this Pro-
spectus carefully and retain it for future reference.
   
 Additional information about each of the Portfolios is contained in a State-
ment of Additional Information dated May 30, 1997, as amended or supplemented
from time to time, that is available upon request and without charge by calling
or writing the Concert Series at the telephone number or address set forth
above or by contacting a Smith Barney Financial Consultant. The Statement of
Additional Information has been filed with the Securities and Exchange Commis-
sion (the "SEC") and is incorporated by reference into this Prospectus in its
entirety.     
 
SMITH BARNEY INC.
Distributor
 
SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Investment Manager
 
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.
 
                                                                               1
<PAGE>
 
TABLE OF CONTENTS
 
<TABLE>   
<S>                                            <C>
PROSPECTUS SUMMARY                               3
--------------------------------------------------
FINANCIAL HIGHLIGHTS                             9
--------------------------------------------------
WHY INVEST IN THE CONCERT SERIES                10
--------------------------------------------------
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES   10
--------------------------------------------------
RISK FACTORS AND SPECIAL CONSIDERATIONS         11
--------------------------------------------------
PORTFOLIO TURNOVER                              12
--------------------------------------------------
INVESTMENT RESTRICTIONS                         12
--------------------------------------------------
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS    13
--------------------------------------------------
VALUATION OF SHARES                             21
--------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES              21
--------------------------------------------------
PURCHASE OF SHARES                              22
--------------------------------------------------
EXCHANGE PRIVILEGE                              27
--------------------------------------------------
REDEMPTION OF SHARES                            29
--------------------------------------------------
MINIMUM ACCOUNT SIZE                            30
--------------------------------------------------
PERFORMANCE                                     31
--------------------------------------------------
MANAGEMENT OF THE CONCERT SERIES                31
--------------------------------------------------
DISTRIBUTOR                                     33
--------------------------------------------------
ADDITIONAL INFORMATION                          33
--------------------------------------------------
APPENDIX                                       A-1
--------------------------------------------------
</TABLE>    
 
--------------------------------------------------------------------------------
 No person has been authorized to give any information or to make any represen-
tations in connection with this offering other than those contained in this
Prospectus and, if given or made, such other information and representations
must not be relied upon as having been authorized by the Concert Series or the
Distributor. This Prospectus does not constitute an offer by the Concert Series
or the Distributor to sell or a solicitation of an offer to buy any of the
securities offered hereby or securities of any Underlying Smith Barney Fund in
any jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction.
--------------------------------------------------------------------------------
 
2
<PAGE>
 
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 OBJECTIVES The Concert Series is an open-end, non-diversified man-
agement investment company that currently offers ten professionally managed
investment portfolios. This Prospectus offers five Portfolios. The High Growth
Portfolio seeks to provide capital appreciation. The Growth Portfolio seeks to
provide long-term growth of capital. The Balanced Portfolio seeks to provide a
balance of growth of capital and income. The Conservative Portfolio seeks to
provide income and, secondarily, long-term growth of capital. The Income Port-
folio seeks to provide high current income. Each Portfolio seeks to achieve its
investment objective by investing in a diverse mix of "Underlying Smith Barney
Funds," which consist of open-end management investment companies or series
thereof for which Smith Barney Inc. ("Smith Barney") now or in the future acts
as principal underwriter or for which Smith Barney, Smith Barney Mutual Funds
Management Inc. ("SBMFM") or Smith Barney Strategy Advisers Inc. ("SBSA") now
or in the future acts as investment adviser. In addition, each Portfolio may
invest its short-term cash in repurchase agreements. Investors may choose to
invest in one or more of the Portfolios based on their personal investment
goals, risk tolerance and financial circumstances. See "Investment Objectives
and Management Policies."     
 
ALTERNATIVE PURCHASE ARRANGEMENTS Each Portfolio offers several classes of
shares ("Classes") to investors designed to provide them with the flexibility
of selecting an investment best suited to their needs. The general public is
offered three Classes of shares: Class A shares, Class B shares and Class C
shares, which differ principally in terms of sales charges and rate of expenses
to which they are subject. A fourth Class of shares, Class Y shares, is offered
only to investors meeting an initial investment minimum of $5,000,000. See
"Purchase of Shares" and "Redemption of Shares."
   
 Class A Shares. Class A shares are sold at net asset value plus an initial
sales charge of up to 5.00% with respect to the High Growth Portfolio, the
Growth Portfolio and the Balanced Portfolio and up to 4.50% with respect to the
Conservative Portfolio and the Income Portfolio. The initial sales charge may
be reduced or waived for certain purchases. Purchases of Class A shares of
$500,000 or more, 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 A shares of each Portfolio are subject to an
annual service fee of 0.25% of the average daily net assets of the Class.     
 
 Class B Shares. Class B shares of the High Growth Portfolio, the Growth Port-
folio and the Balanced Portfolio 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. Class B shares of the Conservative Portfo-
lio and the Income Portfolio are offered at net asset value subject to a maxi-
mum CDSC of 4.50% of redemption proceeds, declining by 0.50% the first year
after purchase and 1.00% each year thereafter to zero. The CDSC may be waived
for certain redemptions. Class B shares of the High Growth Portfolio, the
Growth Portfolio and the Balanced Portfolio are subject to an annual service
fee of 0.25% and an annual distribution fee of 0.75% of the average daily net
assets of the Class. Class B shares of the Conservative Portfolio and the
Income Portfolio are subject to an annual service fee of 0.25% and an annual
distribution fee of 0.50% 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.
 
 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."
 
 Class C Shares. Class C shares are sold at net asset value with no initial
sales charge; however, investors pay a CDSC of 1.00% if they redeem Class C
shares within 12 months of purchase. The CDSC may be waived for certain redemp-
tions. Class C shares of the High Growth Portfolio, the Growth Portfolio and
the Balanced Portfolio are subject to an annual service fee of 0.25% and an
annual distribution fee of 0.75% of the average daily net assets of the Class.
Class C shares of the Conservative Portfolio and the Income Portfolio are sub-
ject to an annual service fee of 0.25% and an annual distribution fee of 0.45%
of the average daily net assets of the Class. The Class C shares' distribution
fee may cause that Class to have higher expenses and pay lower dividends than
Class A shares. Purchases of Portfolio shares, which when combined with current
holdings of Class C shares of a Portfolio equal or exceed $500,000 in the
aggregate, should be made in Class A shares at net asset value with no sales
charge, and will be subject to a CDSC of 1.00% on redemptions made within 12
months of purchase.
 
 Class Y Shares. Class Y shares are available only to investors meeting an ini-
tial investment minimum of $5,000,000. Class Y shares are sold at net asset
value with no initial sales charge or CDSC. They are not subject to any service
or distribution fees.
 
                                                                               3
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
 
 
 In deciding which Class of Portfolio shares to purchase, investors should con-
sider the following factors, as well as any other relevant facts and circum-
stances:
 
 Intended Holding Period. The decision as to which Class of shares is more ben-
eficial to an investor depends on the amount and intended duration 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 and Class C shares are sold without any initial sales charge so the
entire purchase price is immediately invested in a Portfolio. Any investment
return on these additional invested amounts may partially or wholly offset the
higher annual expenses of these Classes. Because a Portfolio's future return
cannot be predicted, however, there can be no assurance that this would be the
case.
 
 Finally, investors should consider the effect of the CDSC period and any con-
version rights of the Classes in the context of their own investment time
frame. For example, while Class C shares have a shorter CDSC period than Class
B shares, they do not have a conversion feature, and therefore, are subject to
an ongoing distribution fee. Thus, Class B shares may be more attractive than
Class C shares to investors with longer term investment outlooks.
          
 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 a Portfolio. In addition, Class A share pur-
chases of $500,000 or more, will be made at net asset value with no initial
sales charge, but will be subject to a CDSC of 1.00% on redemptions made within
12 months of purchase. The $500,000 investment may be met by adding the pur-
chase to the net asset value of all Class A shares offered with a sales charge
held in funds sponsored by Smith Barney listed under "Exchange Privilege."
Class A share purchases also may 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 and Class C shares, purchasers eli-
gible to purchase Class A shares at net asset value or at a reduced sales
charge should consider doing so.     
   
 Smith Barney Financial Consultants may receive different compensation for
selling different Classes of shares. Investors should understand that the pur-
pose of the CDSC on the Class B and Class C shares is the same as that of the
initial sales charge on the Class A shares.     
 
 See "Purchase of Shares" and "Management of the Concert Series" for a complete
description of the sales charges and service and distribution fees for each
Class of shares and "Valuation of Shares," "Dividends, Distribution and Taxes"
and "Exchange Privilege" for other differences between the Classes of shares.
   
SMITH BARNEY 401(K) AND EXECCHOICE(TM) PROGRAMS Investors may be eligible to
participate in the Smith Barney 401(k) Program, which is generally designed to
assist plan sponsors in the creation and operation of retirement plans under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
as well as other types of participant directed, tax-qualified employee benefit
plans. Investors may also be eligible to participate in the Smith Barney
ExecChoice(TM) Program. Class A and Class C shares are available as investment
alternatives under both of these programs. See "Purchase of Shares--Smith Bar-
ney 401(k) and ExecChoice(TM) Programs."     
 
PURCHASE OF SHARES Shares may be purchased through a brokerage account main-
tained with Smith Barney. Shares may also be purchased through a broker that
clears securities transactions through Smith Barney on a fully disclosed basis
(an "Introducing Broker") or an investment dealer in the selling group. In
addition, certain investors, including qualified retirement plans and certain
other institutional investors, may purchase shares directly from the Concert
Series through the Series' transfer agent, First Data Investor Services Group,
Inc. ("First Data"). See "Purchase of Shares."
   
INVESTMENT MINIMUMS Investors in Class A, Class B and Class C shares may open
an account by making an initial investment of at least $1,000 for each account
in each class (except for Systematic Investment Plan accounts), or $250 for an
individual retirement account ("IRA") or a Self-Employed Retirement Plan.
Investors in Class Y shares may open an account for an initial investment of
$5,000,000. Subsequent investments of at least $50 may be made for all Classes.
For participants in retirement plans qualified under Section 403(b)(7) or Sec-
tion 401(a) of the Code, the minimum initial investment requirement for Class
A, Class B and Class C shares and the subsequent investment requirement for all
Classes is $25. The minimum investment requirements for purchases of Portfolio
Shares through the Systematic Investment Plan are described below. See "Pur-
chase of Shares."     
   
SYSTEMATIC INVESTMENT PLAN Each Portfolio offers shareholders a Systematic
Investment Plan under which they may authorize the automatic placement of a
purchase order each month or quarter for Portfolio shares. The minimum initial
investment requirement for Class A, Class B and Class C shares and the subse-
quent investment requirement for all Classes for shareholders purchasing shares
through the Systematic Investment Plan on a monthly basis is $25 and on a quar-
terly basis is $50. See "Purchase of Shares."     
 
4
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
 
 
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 EACH PORTFOLIO SBMFM serves as each Portfolio's investment manag-
er. SBMFM is a wholly owned subsidiary of Smith Barney Holdings Inc. ("Hold-
ings"). Holdings is a wholly owned subsidiary of Travelers Group Inc. ("Travel-
ers"), a diversified financial services holding company engaged, through its
subsidiaries, principally in four business segments: Investment Services, Con-
sumer Finance Services, Life Insurance Services and Property & Casualty Insur-
ance Services.
 
 SBMFM serves as the investment adviser of each of the Underlying Smith Barney
Funds (other than Smith Barney Premium Total Return Fund). SBSA, a wholly owned
subsidiary of SBMFM, serves as investment adviser to Smith Barney Premium Total
Return Fund. See "Management of the Concert Series."
   
EXCHANGE PRIVILEGE Shares of a Class may be exchanged for shares of the same
Class of certain other Smith Barney Mutual Funds, including the Underlying
Smith Barney Funds held by the Portfolios, at the respective net asset values
next determined. See "Exchange Privilege."     
 
VALUATION OF SHARES Net asset value of each Portfolio for the prior day gener-
ally will be quoted daily in the financial section of most newspapers and is
also available from a Smith Barney Financial Consultant. See "Valuation of
Shares."
 
DIVIDENDS AND DISTRIBUTIONS The Concert Series intends to pay dividends from
net investment income monthly on shares of the Income Portfolio, quarterly on
shares of the Conservative Portfolio and the Balanced Portfolio and annually on
shares of the High Growth Portfolio and the Growth Portfolio. Distributions of
net realized capital gains, if any, are paid annually for each Portfolio. 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 rein-
vestments will become eligible for conversion to Class A shares on a pro rata
basis. See "Dividends, Distributions and Taxes."
 
RISK FACTORS AND SPECIAL CONSIDERATIONS The assets of each Portfolio are
invested in certain Underlying Smith Barney Funds, so each Portfolio's invest-
ment performance is directly related to the investment performance of the
Underlying Smith Barney Funds held. The ability of each Portfolio to meet its
investment objective is directly related to the ability of the Underlying Smith
Barney Funds held to meet their objectives as well as the allocation among
those Underlying Smith Barney Funds by SBMFM. There can be no assurance that
the investment objective of any Portfolio or any Underlying Smith Barney Fund
will be achieved.
 
 The value of the Underlying Smith Barney Funds' investments, and thus the net
asset value of both those Underlying Smith Barney Funds' and the Portfolios'
shares, will fluctuate in response to changes in market and economic condi-
tions, as well as the financial condition and prospects of issuers in which the
Underlying Smith Barney Funds invest. For a description of the risks involved
in an investment in the Portfolios, see "Investment Objectives and Management
Policies," "Description of the Underlying Smith Barney Funds" and the Appendix
to this Prospectus.
 
                                                                               5
<PAGE>
 
   
PROSPECTUS SUMMARY (CONTINUED)     
   
EACH PORTFOLIO'S EXPENSES The following expense tables list the costs and
expenses an investor will incur as a shareholder of each Portfolio, based on
the maximum sales charge or maximum CDSC that may be incurred at the time of
purchase or redemption and, unless otherwise noted, each Portfolio's operating
expenses for its most recent fiscal year:     
 
<TABLE>   
<CAPTION>
                              APPLICABLE TO THE HIGH GROWTH PORTFOLIO,
                           THE GROWTH PORTFOLIO AND THE BALANCED PORTFOLIO
                           --------------------------------------------------------
                             CLASS A        CLASS B        CLASS C        CLASS Y
-------------------------------------------------------------------------------------
<S>                        <C>            <C>            <C>            <C>
SHAREHOLDER TRANSACTION
EXPENSES
 Maximum sales charge
 imposed on purchases (as
 a percentage of offering
 price)                            5.00%          None           None           None
 Maximum CDSC (as a
 percentage of original
 cost or redemption
 proceeds, whichever is
 lower)                            None*          5.00%          1.00%          None
-------------------------------------------------------------------------------------
ANNUAL PORTFOLIO
OPERATING EXPENSES (AS A
PERCENTAGE OF AVERAGE NET
ASSETS)
 Management fee                    0.35%          0.35%          0.35%          0.35%
 12b-1 fee**                       0.25           1.00           1.00            --
 Other expenses***                 None           None           None           None
-------------------------------------------------------------------------------------
TOTAL PORTFOLIO OPERATING
EXPENSES                           0.60%          1.35%          1.35%          0.35%
-------------------------------------------------------------------------------------
<CAPTION>
                              APPLICABLE TO THE CONSERVATIVE PORTFOLIO
                                      AND THE INCOME PORTFOLIO
                           --------------------------------------------------------
                             CLASS A        CLASS B        CLASS C        CLASS Y
-------------------------------------------------------------------------------------
<S>                        <C>            <C>            <C>            <C>
SHAREHOLDER TRANSACTION
EXPENSES
 Maximum sales charge
 imposed on purchases (as
 a percentage of offering
 price)                            4.50%          None           None           None
 Maximum CDSC (as a
 percentage of original
 cost or redemption
 proceeds, whichever is
 lower)                            None*          4.50%          1.00%          None
-------------------------------------------------------------------------------------
ANNUAL PORTFOLIO
OPERATING EXPENSES (AS A
PERCENTAGE OF AVERAGE NET
ASSETS)
 Management fee                    0.35%          0.35%          0.35%          0.35%
 12b-1 fee**                       0.25           0.75           0.70            --
 Other expenses***                 None           None           None           None
-------------------------------------------------------------------------------------
TOTAL PORTFOLIO OPERATING
EXPENSES                           0.60%          1.10%          1.05%          0.35%
-------------------------------------------------------------------------------------
</TABLE>    
   
  * Purchases of Class A shares of $500,000 or more 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 of purchase.     
 
 ** Upon conversion of Class B shares to Class A shares, such shares will no
    longer be subject to a distribution fee. Class C shares do not have a con-
    version feature and, therefore, are subject to an ongoing distribution fee.
    As a result, long-term shareholders of Class C shares may pay more than the
    economic equivalent of the maximum front-end sales charge permitted by the
    National Association of Securities Dealers, Inc.
 
*** Under the Asset Allocation and Administration Agreement with each Portfo-
    lio, SBMFM bears all expenses of each Class of each Portfolio other than
    the management fee, the 12b-1 fee and extraordinary expenses.
   
 Class A shares of the Fund purchased through the Smith Barney AssetOne Program
will be subject to an annual asset-based fee, payable quarterly, in lieu of the
initial sales charge. The fee will vary to a maximum of 1.50%, depending on the
amount of assets held through the Program. For more information, please call
your Smith Barney Financial Consultant.     
   
 The sales charges and CDSCs set forth in the above tables are the maximum
charges imposed on purchases or redemptions of each of the Portfolios' shares
and investors may actually pay lower or no charges, depending on the amount
purchased and, in the case of Class B, Class C and certain Class A shares, the
length of time the shares are held and whether the shares are held through the
Smith Barney 401(k) and ExecChoice(TM) Programs. See "Purchase of Shares" and
"Redemption of Shares." Smith Barney receives an annual 12b-1 service fee of
0.25% of the value of average daily net assets of Class A shares of each Port-
folio. Smith Barney also receives with respect to Class B and Class C shares of
the High Growth Portfolio, the Growth Portfolio and the Balanced Portfolio an
annual 12b-1 fee of 1.00% of the value of average daily net assets of the
respective Classes, consisting of a 0.75% distribution fee and a 0.25% service
fee. For Class B shares of the Conservative Portfolio and the Income Portfolio,
Smith Barney receives an annual 12b-1 fee of 0.75% of the value of average
daily net assets of that Class, consisting of a 0.50% distribution fee and a
0.25% service fee. For Class C shares of the Conservative Portfolio and the
Income Portfolio, Smith Barney receives an annual 12b-1 fee of 0.70% of the
value of average daily net assets of that Class, consisting of a 0.45% distri-
bution fee and a 0.25% service fee.     
 
 The Portfolios will invest only in Class Y shares of the Underlying Smith Bar-
ney Funds and, accordingly, will not pay any sales load or 12b-1 service or
distribution fees in connection with their investments in shares of the Under-
lying Smith Barney Funds. The Portfolios, however, will indirectly bear their
pro rata share of the fees and expenses incurred by the Underlying Smith Barney
Funds that are applicable to Class Y shareholders. The investment returns of
each Portfolio, therefore, will be net of the expenses of the Underlying
 
6
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
   
Smith Barney Funds in which it is invested. The following chart shows the
expense ratios applicable to Class Y shareholders of each Underlying Smith Bar-
ney Fund held by a Portfolio, based on operating expenses for its most recent
fiscal year:     
 
<TABLE>   
<CAPTION>
UNDERLYING SMITH BARNEY FUND                    EXPENSE RATIO
-------------------------------------------------------------
<S>                                             <C>
Smith Barney Aggressive Growth Fund Inc.            0.84%
Smith Barney Appreciation Fund Inc.                 0.66
Smith Barney Equity Funds
 Smith Barney Growth and Income Fund                0.73
Smith Barney Fundamental Value Fund Inc.            0.75
Smith Barney Funds, Inc.
 Equity Income Portfolio                            0.66
 Short-Term U.S. Treasury Securities Portfolio      0.58
Smith Barney Income Funds
 Smith Barney High Income Fund                      0.76
 Smith Barney Utilities Fund                        0.78
 Smith Barney Premium Total Return Fund             0.87
 Smith Barney Convertible Fund                      1.00
 Smith Barney Diversified Strategic Income Fund     0.69
Smith Barney Investment Funds Inc.
 Smith Barney Managed Growth Fund                   0.92
 Smith Barney Special Equities Fund                 0.82
 Smith Barney Government Securities Fund            0.59
 Smith Barney Investment Grade Bond Fund            0.72
Smith Barney Managed Governments Fund Inc.          0.78
Smith Barney Money Funds, Inc.
 Cash Portfolio                                     0.52
Smith Barney Natural Resources Fund Inc.*           1.37
Smith Barney World Funds, Inc.
 International Equity Portfolio                     0.96
 Emerging Markets Portfolio*                        2.00
 International Balanced Portfolio                   1.21
 Global Government Bond Portfolio                   0.84
</TABLE>    
 
--------------------------------------------------------------------------------

   
* Operating expenses of Class Y shares for Smith Barney Natural Resources Fund
  Inc. and Smith Barney World Funds, Inc.--Emerging Markets Portfolio are esti-
  mated because no Class Y shares were outstanding during each Fund's most
  recent fiscal year.     
   
 Based on a weighted average of the Class Y expense ratios of Underlying Smith
Barney Funds in which a particular Portfolio is expected to invest during the
current fiscal year the approximate expense ratios are expected to be as fol-
lows: High Growth Portfolio, Class A 1.43%, Class B 2.18%, Class C 2.18% and
Class Y 1.18%; Growth Portfolio, Class A 1.39%, Class B 2.14%, Class C 2.14%
and Class Y 1.14%; Balanced Portfolio, Class A 1.38%, Class B 2.13%, Class C
2.13% and Class Y 1.13%; Conservative Portfolio, Class A 1.36%, Class B 1.86%,
Class C 1.81% and Class Y 1.11%; and Income Portfolio, Class A 1.29%, Class B
1.79%, Class C 1.74% and Class Y 1.04%. The expense ratios may be higher or
lower depending on the allocation of the Underlying Smith Barney Funds within a
Portfolio.     
 
                                                                               7
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
   
EXAMPLE The following example is intended to assist an investor in understand-
ing the various costs that an investor in each of the Portfolios will bear
directly or indirectly. The example assumes payment by each Portfolio of oper-
ating expenses at the levels set forth in the table above and of its pro rata
share of the Class Y expenses of the Underlying Smith Barney Funds (also as set
forth above) in which a Portfolio is expected to invest during the current fis-
cal year. THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN ABOVE.     
 
<TABLE>   
<CAPTION>
          AN INVESTOR WOULD PAY THE    AN INVESTOR WOULD PAY THE
           FOLLOWING EXPENSES ON A     FOLLOWING EXPENSES ON THE
         $1,000 INVESTMENT, ASSUMING   SAME INVESTMENT, ASSUMING
         (1) 5.00% ANNUAL RETURN AND     THE SAME ANNUAL RETURN
         (2) REDEMPTION AT THE END OF BUT WITHOUT A REDEMPTION AT
              EACH TIME PERIOD:       THE END OF EACH TIME PERIOD:
         ---------------------------- ----------------------------
         1 YEAR 3 YEAR 5 YEAR 10 YEAR 1 YEAR 3 YEAR 5 YEAR 10 YEAR
------------------------------------------------------------------
<S>      <C>    <C>    <C>    <C>     <C>    <C>    <C>    <C>
High Growth Portfolio
 Class A  $64    $93    $124   $213    $64    $93    $124   $213
 Class B   72     98     127    233     22     68     117    233
 Class C   32     68     117    251     22     68     117    251
 Class Y   12     37      65    143     12     37      65    143
Growth Portfolio
 Class A  $63    $92    $122   $209    $63    $92    $122   $209
 Class B   72     97     125    228     22     67     115    228
 Class C   32     67     115    247     22     67     115    247
 Class Y   12     36      63    139     12     36      63    139
Balanced Portfolio
 Class A  $63    $92    $122   $207    $63    $92    $122   $207
 Class B   72     97     124    227     22     67     114    227
 Class C   32     67     114    246     22     67     114    246
 Class Y   12     36      62    137     12     36      62    137
Conservative Portfolio
 Class A  $58    $86    $116   $201    $58    $86    $116   $201
 Class B   64     88     111    205     19     58     101    205
 Class C   28     57      98    213     18     57      98    213
 Class Y   11     35      61    135     11     35      61    135
Income Portfolio
 Class A  $58    $84    $113   $194    $58    $84    $113   $194
 Class B   63     86     107    197     18     56      97    197
 Class C   28     55      94    205     18     55      94    205
 Class Y   11     33      57    127     11     33      57    127
------------------------------------------------------------------
</TABLE>    
 
8
<PAGE>
 
   
FINANCIAL HIGHLIGHTS     
          
 The following information has been audited by KPMG Peat Marwick LLP, indepen-
dent auditors, whose report thereon appears in the Concert Series' annual
report dated January 31, 1997. The information set out below should be read in
conjunction with the financial statements and related notes that also appear in
the Concert Series' Annual Report to Shareholders, which is incorporated by
reference into the Statement of Additional Information. No information is pres-
ent for Class Y shares, because no Class Y shares were outstanding for the
period shown.     
   
FOR A SHARE OF EACH CLASS OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE
PERIOD(1):     
 
<TABLE>   
<CAPTION>
                            HIGH GROWTH PORTFOLIO          GROWTH PORTFOLIO            BALANCED PORTFOLIO
                          ---------------------------  ---------------------------  --------------------------
                          CLASS A   CLASS B   CLASS C  CLASS A   CLASS B   CLASS C  CLASS A  CLASS B   CLASS C
---------------------------------------------------------------------------------------------------------------
<S>                       <C>       <C>       <C>      <C>       <C>       <C>      <C>      <C>       <C>
NET ASSET VALUE,
BEGINNING OF PERIOD       $  11.40  $  11.40  $ 11.40  $  11.40  $  11.40  $ 11.40  $ 11.40  $  11.40  $ 11.40
---------------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS:
 Net investment income        0.20      0.08     0.08      0.33      0.23     0.24     0.45      0.37     0.37
 Net realized and
 unrealized gain              1.05      1.04     1.05      0.92      0.94     0.93     0.74      0.74     0.74
---------------------------------------------------------------------------------------------------------------
Total Income from
Operations                    1.25      1.12     1.13      1.25      1.17     1.17     1.19      1.11     1.11
---------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
 Net investment income       (0.20)    (0.07)   (0.07)    (0.31)    (0.22)   (0.22)   (0.45)    (0.37)   (0.37)
 Net realized gains          (0.04)    (0.04)   (0.04)    (0.02)    (0.02)   (0.02)     --        --       --
---------------------------------------------------------------------------------------------------------------
Total Distributions          (0.24)    (0.11)   (0.11)    (0.33)    (0.24)   (0.24)   (0.45)    (0.37)   (0.37)
---------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD                    $  12.41  $  12.41  $ 12.42  $  12.32  $  12.33  $ 12.33  $ 12.14  $  12.14  $ 12.14
---------------------------------------------------------------------------------------------------------------
TOTAL RETURN++               11.04%     9.91%   10.00%    11.08%    10.32%   10.32%   10.64%     9.90%    9.90%
---------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF
PERIOD (000S)             $154,069  $141,241  $19,340  $161,026  $211,434  $31,279  $90,938  $111,918  $19,968
---------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET
ASSETS+:
 Expenses                     0.60%     1.35%    1.35%     0.60%     1.35%    1.35%    0.60%     1.35%    1.35%
 Net investment income        2.79      2.04     2.04      4.79      4.04     4.04     4.88      4.14     4.14
---------------------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE       0.00%     0.00%    0.00%     0.00%     0.00%    0.00%    0.00%     0.00%    0.00%
---------------------------------------------------------------------------------------------------------------
</TABLE>    
   
FOR A SHARE OF EACH CLASS OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE
PERIOD(1):     
 
<TABLE>   
<CAPTION>
                           CONSERVATIVE PORTFOLIO        INCOME PORTFOLIO
                           -------------------------  -------------------------
                           CLASS A  CLASS B  CLASS C  CLASS A  CLASS B  CLASS C
-------------------------------------------------------------------------------
<S>                        <C>      <C>      <C>      <C>      <C>      <C>
NET ASSET VALUE,
BEGINNING OF PERIOD         $11.46   $11.46  $11.46    $11.46   $11.46  $11.46
-------------------------------------------------------------------------------
INCOME FROM OPERATIONS:
 Net investment income        0.53     0.48    0.48      0.63     0.58    0.59
 Net realized and
 unrealized gain              0.43     0.42    0.42      0.07     0.07    0.07
-------------------------------------------------------------------------------
Total Income from
Operations                    0.96     0.90    0.90      0.70     0.65    0.66
-------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
 Net investment income       (0.52)   (0.47)  (0.47)    (0.63)   (0.58)  (0.59)
-------------------------------------------------------------------------------
Total Distributions          (0.52)   (0.47)  (0.47)    (0.63)   (0.58)  (0.59)
-------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD                     $ 11.90  $ 11.89  $11.89   $ 11.53  $ 11.53  $11.53
-------------------------------------------------------------------------------
TOTAL RETURN++                8.57%    8.03%   8.08%     6.39%    5.89%   5.94%
-------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(000S)                     $30,478  $28,297  $4,129   $17,817  $17,800  $2,113
-------------------------------------------------------------------------------
RATIOS TO AVERAGE NET
ASSETS+:
 Expenses                     0.60%    1.10%   1.05%     0.60%    1.10%   1.05%
 Net investment income        5.66     5.16    5.21      6.32     5.82    5.87
-------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE       0.00%    0.00%   0.00%     0.00%    0.00%   0.00%
-------------------------------------------------------------------------------
</TABLE>    
    
 (1) For the period from February 5, 1996 (inception date) to January 31,
     1997.     
           
 ++Total return is not annualized, as it may not be representative of the
   total return for the year.     
    
 + Annualized.     
 
                                                                               9
<PAGE>
 
WHY INVEST IN THE CONCERT SERIES
 
 The proliferation of mutual funds over the last several years has left many
investors in search of a simple means to manage their long-term investments.
With new investment categories emerging each year and with each mutual fund
reacting differently to political, economic and business events, many investors
are forced to make complex investment decisions in the face of limited experi-
ence, time and personal resources. The Portfolios are designed to meet the
needs of investors who prefer to have their asset allocation decisions made by
professional money managers, are looking for an appropriate core investment for
their retirement portfolio and appreciate the advantages of broad diversifica-
tion. The Portfolios may be most appropriate for long-term investors planning
for retirement, particularly investors in tax-advantaged retirement accounts
including IRAs, 401(k) corporate employee savings plans, 403(b) non-profit
organization savings plans, profit-sharing and money-purchase pension plans,
and other corporate pension and savings plans.
 
 The Concert Series will be managed so that each Portfolio can serve as a com-
plete investment program or as a core part of a larger portfolio. Each of the
Portfolios invests in a select group of Underlying Smith Barney Funds suited to
the Portfolio's particular investment objective. The allocation of assets among
Underlying Smith Barney Funds within each Portfolio is determined by SBMFM
according to fundamental and quantitative analysis. Because the assets will be
adjusted only periodically and only within pre-determined ranges that will
attempt to ensure broad diversification, there should not be any sudden large-
scale changes in the allocation of a Portfolio's investments among Underlying
Smith Barney Funds. The Concert Series is not designed as a market timing vehi-
cle, but rather as a simple and conservative approach to helping investors meet
retirement and other long-term goals.
 
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
   
 The Concert Series is an open-end, non-diversified, management investment com-
pany that currently offers ten managed investment portfolios, five of which are
offered by this Prospectus. Each Portfolio seeks to achieve its investment
objective by investing within specified ranges among Underlying Smith Barney
Funds, as well as in repurchase agreements. Initially, each Portfolio will
invest in the Underlying Smith Barney Funds listed below.     
   
 The investment manager for each Portfolio, SBMFM, will allocate investments
for each Portfolio among Underlying Smith Barney Funds based on its outlook for
the economy, financial markets and the relative performance of the Underlying
Smith Barney Funds. The allocation among the Underlying Smith Barney Funds will
be made within investment ranges established by the Board of Directors of the
Concert Series which designates minimum and maximum percentages for each of the
Underlying Smith Barney Funds.     
 
 The High Growth Portfolio's investment objective is to seek capital apprecia-
tion. The Growth Portfolio's investment objective is to seek long-term growth
of capital. The Balanced Portfolio's investment objective is to seek a balance
of growth of capital and income. The Conservative Portfolio's investment objec-
tive is to seek income and, secondarily, long-term growth of capital. The
Income Portfolio's investment objective is to seek high current income. Each
Portfolio's investment objective is fundamental and may be changed only with
the approval of a majority of the Portfolio's outstanding shares. There can be
no assurance that any Portfolio's investment objective will be achieved.
 
 In investing in Underlying Smith Barney Funds, the Portfolios seek to maintain
different allocations between equity funds and fixed income funds (including
money market funds) depending on a Portfolio's investment objective. Allocating
investments between equity funds and fixed income funds permits each Portfolio
to attempt to optimize performance consistent with its investment objective.
The tables below illustrate the initial equity/fixed income fund allocation
targets and ranges for each Portfolio:
   
Equity/Fixed Income Fund Range (Percentage of Each Portfolio's Net Assets)     
 
<TABLE>
<CAPTION>
TYPE OF FUND            TARGET  RANGE
---------------------------------------
<S>                     <C>    <C>
High Growth Portfolio
 Equity                  90%   80%-100%
 Fixed Income            10%    0%- 20%
Growth Portfolio
 Equity                  70%   60%- 80%
 Fixed Income            30%   20%- 40%
Balanced Portfolio
 Equity                  50%   40%- 60%
 Fixed Income            50%   40%- 60%
Conservative Portfolio
 Equity                  30%   20%- 40%
 Fixed Income            70%   60%- 80%
Income Portfolio
 Equity                  10%    0%- 20%
 Fixed Income            90%   80%-100%
---------------------------------------
</TABLE>
 
 
10
<PAGE>
 
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES (CONTINUED)
 
 The Portfolios invest their assets in the Underlying Smith Barney Funds listed
below within the ranges indicated.
          
       Investment Range (Percentage of Each Portfolio's Net Assets)     
 
<TABLE>
<CAPTION>
UNDERLYING SMITH BARNEY   HIGH GROWTH  GROWTH   BALANCED  CONSERVATIVE  INCOME
FUND                       PORTFOLIO  PORTFOLIO PORTFOLIO  PORTFOLIO   PORTFOLIO
--------------------------------------------------------------------------------
<S>                       <C>         <C>       <C>       <C>          <C>
Smith Barney Aggressive
Growth Fund Inc.             10-30%      0-15%     --          --          --
Smith Barney
Appreciation Fund Inc.        0-20%     10-30%    0-20%        --          --
Smith Barney Equity
Funds:
 Smith Barney Growth and
 Income Fund                  0-20%      0-20%    5-20%        --          --
Smith Barney Fundamental
Value Fund Inc.               0-20%     10-30%    0-20%        --          --
Smith Barney Funds,
Inc.:
 Equity Income Portfolio       --        0-20%    5-20%       5-20%       0-15%
 Short-Term U.S.
 Treasury Securities
 Portfolio                     --        0-15%    5-20%       5-20%       5-30%
Smith Barney Income
Funds:
 Smith Barney High
 Income Fund                  0-20%      5-20%    0-15%       0-20%       0-20%
 Smith Barney Utilities
 Fund                          --        0-20%    5-20%       5-20%       0-15%
 Smith Barney Premium
 Total Return Fund             --         --      5-20%       5-25%       0-15%
 Smith Barney
 Convertible Fund              --         --      5-20%       5-15%       0-15%
 Smith Barney
 Diversified Strategic
 Income Fund                   --         --      5-25%      10-30%      10-30%
Smith Barney Investment
Funds Inc.:
 Smith Barney Managed
 Growth Fund                  0-20%     10-30%    0-15%        --          --
 Smith Barney Special
 Equities Fund               10-30%      0-15%     --          --          --
 Smith Barney Government
 Securities Fund              0-15%      0-20%    0-20%       5-20%       5-20%
 Smith Barney Investment
 Grade Bond Fund              0-15%      0-15%     --          --         0-15%
Smith Barney Managed
Governments Fund Inc.          --        0-15%    5-20%       5-25%       5-30%
Smith Barney Money
Funds, Inc.:
 Cash Portfolio               0-20%      0-20%    0-25%       0-30%       0-30%
Smith Barney Natural
Resources Fund Inc.           0-10%      0-10%    0-10%        --          --
Smith Barney World
Funds, Inc.:
 International Equity
 Portfolio                   10-25%      5-20%    0-15%       0-10%       0-10%
 Emerging Markets
 Portfolio                    0-20%       --       --          --          --
 International Balanced
 Portfolio                    0-15%      0-10%    0-10%       0-10%       0-10%
 Global Government Bond
 Portfolio                    0-15%      0-15%    0-15%       0-20%       0-20%
--------------------------------------------------------------------------------
</TABLE>
 
 The Underlying Smith Barney Funds have been selected to represent a broad
spectrum of investment options for the Portfolios. The equity/fixed income
ranges and the investment ranges are based on the degree to which the Under-
lying Smith Barney Funds selected are expected in combination to be appropriate
for a Portfolio's particular investment objective. If, as a result of apprecia-
tion or depreciation, the percentage of a Portfolio's assets invested in an
Underlying Smith Barney Fund exceeds or is less than the applicable percentage
limitations set forth above, SBMFM will consider, in its discretion, whether to
reallocate the assets of the Portfolio to comply with the foregoing percentage
limitations. THE PARTICULAR UNDERLYING SMITH BARNEY FUNDS IN WHICH EACH PORTFO-
LIO MAY INVEST, THE EQUITY/FIXED INCOME FUND TARGETS AND RANGES AND THE INVEST-
MENT RANGES APPLICABLE TO EACH UNDERLYING SMITH BARNEY FUND MAY BE CHANGED FROM
TIME TO TIME BY THE CONCERT SERIES' BOARD OF DIRECTORS WITHOUT THE APPROVAL OF
THE PORTFOLIO'S SHAREHOLDERS.
 
 Each Portfolio can invest a certain portion of its cash reserves in repurchase
agreements. Each Portfolio may also invest its cash reserves in the Cash Port-
folio of Smith Barney Money Funds, Inc. A reserve position provides flexibility
in meeting redemptions, expenses and the timing of new investments, and serves
as a short-term defense during periods of unusual volatility.
 
 For information about the investment objectives of each of the Underlying
Smith Barney Funds and the investment techniques and the risks involved in the
Underlying Smith Barney Funds, please refer to "Description of the Underlying
Smith Barney Funds," the Appendix to this Prospectus, the Statement of Addi-
tional Information and the prospectus for each of the Underlying Smith Barney
Funds.
 
RISK FACTORS AND SPECIAL CONSIDERATIONS
 
 
 Non-Diversified Investment Company. The Concert Series is a "non-diversified"
investment company for purposes of the Investment Company Act of 1940, as
amended (the "1940 Act"), because it invests in the securities of a limited
number of mutual funds. However, the Underlying Smith Barney Funds themselves
are diversified investment companies (with the exception of the Global Govern-
ment Bond Portfolio, the International Balanced Portfolio and the Emerging Mar-
kets Portfolio). The Concert Series intends to qualify as a diversified invest-
ment company for the purposes of Subchapter M of the Code.
 
 Investing in Underlying Smith Barney Funds. The investments of each Portfolio
are concentrated in the Underlying Smith Barney Funds, so each Portfolio's
investment performance is directly related to the investment performance of the
Underlying Smith Barney
 
                                                                              11
<PAGE>
 
RISK FACTORS AND SPECIAL CONSIDERATIONS (CONTINUED)
 
Funds held by it. The ability of each Portfolio to meet its investment objec-
tive is directly related to the ability of the Underlying Smith Barney Funds to
meet their objectives as well as the allocation among those Underlying Smith
Barney Funds by SBMFM. There can be no assurance that the investment objective
of any Portfolio or any Underlying Smith Barney Fund will be achieved.
 
 Affiliated Persons. SBMFM, the investment manager of the Portfolios, and the
officers and directors of the Concert Series presently serve as investment
adviser, officers and directors, respectively, of many of the Underlying Smith
Barney Funds. Therefore, conflicts may arise as these persons fulfill their
fiduciary responsibilities to the Portfolios and the Underlying Smith Barney
Funds.
   
 Investment Practices of Underlying Smith Barney Funds. In addition to their
principal investments, certain Underlying Smith Barney Funds may invest a por-
tion of their assets in foreign securities; enter into forward currency trans-
actions; lend their portfolio securities; enter into stock index, interest
rate, currency and gold futures contracts, and options on such contracts;
engage in options transactions; make short sales; purchase zero coupon bonds
and payment-in-kind bonds; purchase restricted and illiquid securities; enter
into forward roll transactions; purchase securities on a when-issued or delayed
delivery basis; enter into repurchase or reverse repurchase agreements; borrow
money; and engage in various other investment practices.     
 
 High Yield Securities. Each of the Portfolios also may invest in an Underlying
Smith Barney Fund that invests primarily in high yield, high risk securities,
commonly referred to as junk bonds. As a result, the Portfolios may be subject
to some of the risks resulting from high yield investing. Further, each of the
Portfolios may invest in Underlying Smith Barney Funds that invest in medium
grade bonds. If these bonds are downgraded, the Portfolios will consider
whether to increase or decrease their investment in the affected Underlying
Smith Barney Fund. Lower quality debt instruments generally offer a higher cur-
rent yield than that available from higher grade issues, but typically involve
greater risk. Lower rated and comparable unrated securities are especially sub-
ject to adverse changes in general economic conditions, to changes in the
financial condition of their issuers, and to price fluctuation in response to
changes in interest rates. During periods of economic downturn or rising inter-
est rates, issuers of these instruments may experience financial stress that
could adversely affect their ability to make payments of principal and interest
and increase the possibility of default. Further information on these invest-
ment policies and practices can be found under "Description of the Underlying
Smith Barney Funds," in the Appendix to this Prospectus and in the Statement of
Additional Information as well as the prospectus of each Underlying Smith Bar-
ney Fund.
 
 Concentration. Each Portfolio other than the High Growth Portfolio may invest
in an Underlying Smith Barney Fund that concentrates its investments in the
utilities industry. Under certain unusual circumstances, this could result in
those Portfolios being indirectly concentrated in this industry. If this were
to occur, the relevant Portfolios would consider whether to maintain or change
their investment in that Underlying Smith Barney Fund.
 
 Market and Economic Factors. The Portfolios' share prices and yields will
fluctuate in response to various market and economic factors related to both
the stock and bond markets. All Portfolios may invest in mutual funds that in
turn invest in international securities and thus are subject to additional
risks of these investments, including changes in foreign currency exchange
rates and political risk.
 
PORTFOLIO TURNOVER
 
 
 Each Portfolio's turnover rate is not expected to exceed 25% annually. A Port-
folio may purchase or sell securities to: (a) accommodate purchases and sales
of its shares; (b) change the percentages of its assets invested in each of the
Underlying Smith Barney Funds in response to market conditions; and (c) main-
tain or modify the allocation of its assets between equity and fixed income
funds and among the Underlying Smith Barney Funds within the percentage limits
described above.
   
 The turnover rates of the Underlying Smith Barney Funds have ranged from 9% to
420% during their most recent fiscal years. There can be no assurance that the
turnover rates of these funds will remain within this range during subsequent
fiscal years. Higher turnover rates may result in higher expenses being
incurred by the Underlying Smith Barney Funds.     
 
INVESTMENT RESTRICTIONS
 
 
 In addition to the investment objectives of each Portfolio, the Concert Series
has adopted restrictions with respect to each Portfolio that may not be changed
without approval of a majority of the Portfolio's outstanding shares. The fun-
damental investment restrictions imposed by the Concert Series prohibit each
Portfolio from, among other things: (i) borrowing money except from banks for
temporary or emergency purposes, including the meeting of redemption requests
in an amount not exceeding 33 1/3% of the value of the Portfolio's total assets
(including the amount borrowed) valued at market less liabilities (not includ-
ing the amount borrowed) at the time the
 
12
<PAGE>
 
INVESTMENT RESTRICTIONS (CONTINUED)
 
borrowing is made and (ii) making loans to others, except through the purchase
of portfolio securities consistent with its investment objective and policies
and through the entering into repurchase agreements.
 
 Certain other investment restrictions, including fundamental restrictions as
well as restrictions that may be changed without a shareholder vote, adopted
by the Concert Series are described in the Statement of Additional Informa-
tion. Investment restrictions of the Underlying Smith Barney Funds in which
the Portfolios invest may be more or less restrictive than those adopted by
the Concert Series.
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS
 
 
 The following is a concise description of the investment objectives and prac-
tices for each of the Underlying Smith Barney Funds in which the Portfolios
may invest. There can be no assurance that the investment objectives of the
Underlying Smith Barney Funds will be met. Additional information regarding
the investment practices of the Underlying Smith Barney Funds is located in
the Appendix to this Prospectus, in the Statement of Additional Information
and in the prospectus of each of the Underlying Smith Barney Funds. No offer
is made in this Prospectus of any of the Underlying Smith Barney Funds.
 
EQUITY FUNDS The following Underlying Smith Barney Funds are funds that invest
primarily in equity securities.
 
 Smith Barney Aggressive Growth Fund Inc. seeks capital appreciation by
investing primarily in common stock of companies the Fund's investment adviser
believes are experiencing, or have the potential to experience, growth in
earnings that exceed the average earnings growth rate of companies whose secu-
rities are included in the Standard & Poor's Daily Price Index of 500 Common
Stocks (the "S&P 500"), a weighted index that measures the aggregate change in
market value of 400 industrials, 60 transportation stocks and utility compa-
nies and 40 financial issues. SBMFM focuses its stock selection for the Fund
on a diversified group of small- or medium-sized emerging growth companies
that have passed their "start-up" phase and show positive earnings and the
prospect of achieving significant profit gains in the two to three years after
the Fund acquires their stocks. These companies generally may be expected to
benefit from new technologies, techniques, products or services or cost-reduc-
ing measures, and may be affected by changes in management, capitalization or
asset deployment, government regulations or other external circumstances.
 
 Although SBMFM anticipates that the assets of the Fund ordinarily will be
invested primarily in common stocks of U.S. companies, the Fund may invest in
convertible securities, preferred stocks, securities of foreign issuers, war-
rants and restricted securities. The Fund also is authorized to borrow up to
33 1/3% of its total assets less liabilities for leveraging purposes. Securi-
ties of the kinds of companies in which the Fund invests may be subject to
significant price fluctuation and above average risk.
 
 Smith Barney Appreciation Fund Inc. seeks long-term appreciation of share-
holders' capital. The Fund attempts to achieve its investment objective by
investing primarily in equity securities (consisting of common stocks, pre-
ferred stocks, warrants, rights and securities convertible into common stocks)
that are believed to afford attractive opportunities for investment apprecia-
tion. The core holdings of the Fund are blue chip companies that are dominant
in their industries; however, at the same time, the Fund may hold securities
of companies with prospects of sustained earnings growth and/or companies with
a cyclical earnings record if it is felt these offer attractive investment
opportunities. Typically, the Fund invests in middle- and larger-sized compa-
nies, though it does invest in smaller companies whose securities may reasona-
bly be expected to appreciate. The Fund's investments are spread broadly among
different industries. The Fund may hold issues traded over-the-counter as well
as those listed on one or more national securities exchanges, and the Fund may
make investments in foreign securities although management intends to limit
such investments to 10% of the Fund's assets.
 
 Smith Barney Fundamental Value Fund Inc.'s investment objective is long-term
capital growth. Current income is a secondary objective. The Fund seeks to
achieve its primary objective by investing in a diversified portfolio of com-
mon stocks and common stock equivalents and, to a lesser extent, in bonds and
other debt instruments. The Fund's investment emphasis is on securities that
are undervalued in the marketplace and, accordingly, have above-average poten-
tial for capital growth. In general, the Fund invests in securities of compa-
nies that are temporarily unpopular among investors but which SBMFM regards as
possessing favorable prospects for earnings growth and/or improvements in the
value of their assets and, consequently, as having a reasonable likelihood of
experiencing a recovery in market price.
 
 Smith Barney Special Equities Fund, an investment portfolio of Smith Barney
Investment Funds Inc., seeks long-term capital appreciation by investing in
equity securities (common stocks or securities that are convertible into or
exchangeable for such stocks, including warrants) that SBMFM believes to have
superior appreciation potential. The Fund invests primarily in equity securi-
ties of secondary growth companies, generally not within the S&P 500, as iden-
tified by SBMFM. These companies may not have reached a fully mature stage of
earnings growth, since they may still be in the developmental stage, or may be
older companies that appear to be entering a new stage of more rapid earnings
progress due to factors such as management change or development of new tech-
nology, products or markets. A significant number of these companies may be in
technology areas, including health care related sectors, and may have
 
                                                                             13
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
annual sales of less than $300 million. The Fund may also choose to invest in
some relatively unseasoned stocks, i.e., securities issued by companies whose
market capitalization is under $100 million. Investing in smaller, newer
issuers generally involves greater risk than investing in larger, more estab-
lished issuers.
 
 Smith Barney Managed Growth Fund, an investment portfolio of Smith Barney
Investment Funds Inc., has as its investment objective long term growth of cap-
ital. The Fund attempts to achieve its objective by investing primarily in
undervalued or out of favor common stock and other securities, including debt
securities that are convertible into common stock and that are currently price
depressed. Such securities might typically be valued at the low end of their
52-week trading range. Although under normal circumstances the Fund's portfolio
will primarily consist of these securities, the Fund may also invest in pre-
ferred stocks and warrants when SBMFM perceives an opportunity for capital
growth from such securities.
 
 The Equity Income Portfolio, an investment portfolio of Smith Barney Funds,
Inc., seeks current income and long-term growth of capital. The Fund invests
primarily in common stocks offering a current return from dividends and will
also normally include some interest-paying debt obligations (such as U.S. gov-
ernment obligations, investment grade bonds and debentures) and high quality
short-term debt obligations (such as commercial paper and repurchase agreements
collateralized by U.S. government securities with broker/dealers or other
financial institutions, including the Fund's custodian) and may also purchase
preferred stocks and convertible securities. Temporary defensive investments or
a higher percentage of debt securities may be held when deemed advisable by
SBMFM, the Fund's adviser. In the selection of common stock investments, empha-
sis is generally placed on issues with established dividend records as well as
potential for price appreciation. From time to time, however, a portion of the
assets may be invested in non-dividend paying stocks. The Fund may make invest-
ments in foreign securities, though management currently intends to limit such
investments to 5% of the Fund's assets, and an additional 10% of its assets may
be invested in American Depository Receipts ("ADRs") representing shares in
foreign securities that are traded in U.S. securities markets.
   
 Smith Barney Growth and Income Fund, an investment portfolio of Smith Barney
Equity Funds, seeks long-term capital growth and income by investing in income
producing equity securities, including dividend-paying common stocks, securi-
ties that are convertible into common stocks and warrants. Consistent with data
used in developing and maintaining quantitative investment criteria developed
by SBMFM to evaluate investment decisions, the Fund expects to invest primarily
in domestic companies of varying sizes, generally with capitalizations exceed-
ing $250 million in a wide range of industries. The Fund may also invest up to
20% in the securities of foreign issuers, including ADRs or European Depositary
Receipts. Under normal market conditions, the Fund will invest substantially
all, but not less than 65%, of its assets in equity securities. The Fund may
invest the remainder of its assets in high grade money market instruments in
order to develop income, as well as in corporate bonds and mortgage related
securities that are rated investment grade or are deemed by SBMFM to be of com-
parable quality and in U.S. government securities.     
   
 Smith Barney Natural Resources Fund Inc. seeks long-term capital appreciation
by investing primarily in "Natural Resource Investments." Natural Resource
Investments are defined as equity and debt securities of issuers that: (1) own
or process natural resources, such as precious metals, other minerals, water,
timberland, agricultural commodities and forest products; (2) own or produce
sources of energy such as oil, natural gas, coal, uranium, geothermal, oil
shale and biomass; (3) participate in the exploration and development, trans-
portation, distribution and/or processing of natural resources; (4) own or con-
trol oil, gas, or other mineral leases, rights or royalties; (5) provide
related services or supplies, such as drilling, well servicing, chemicals,
parts and equipment; (6) develop or participate in energy-efficient technolo-
gies; and (7) are involved in the upgrading or processing of raw commodities
into intermediate products. The Fund may also invest in gold bullion and gold
coins. (A company is considered a "Natural Resources Investment" when it
derives at least 50% of its total revenue from a business or activity described
above.)     
 
 Under normal market conditions, the Fund will invest at least 65% of its
assets in Natural Resource Investments. Up to 35% of the Fund's assets may be
invested in companies not in the natural resources area, investment grade cor-
porate debt securities, U.S. Government securities and, for cash management
purposes, money market instruments. For temporary defensive purposes, the Fund
may invest in excess of 35% in money market instruments.
 
 The Fund may utilize up to 10% of its assets to purchase put options on secu-
rities it owns and up to an additional 10% of its assets to purchase call
options on securities it may acquire in the future. The Fund may purchase only
put options that are traded on a regulated exchange. It also may purchase and
write put and call options on domestic and foreign stock indexes to hedge
against risks of market-wide movements affecting that portion of its assets
invested in the country whose stocks are subject to the hedges.
   
 The composition of the portfolio of the Fund will vary depending on the deter-
mination of SBMFM, of how best to achieve long-term capital appreciation.
Equity securities in which the Fund may invest include common stocks, preferred
stocks, convertible securities and warrants. Debt securities the Fund may
acquire include bonds, notes and debentures of companies and governments. The
Fund may invest in debt securities when SBMFM believes they will enhance the
Fund's ability to achieve long-term capital appreciation. The     
 
14
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
   
Fund may invest in fixed-income securities that are rated as low as B by
Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings Group
("S&P") or if unrated, are deemed by SBMFM to be of comparable quality. The
medium- and lower-rated securities in which the Fund may invest, some of which
have speculative characteristics, may be subject to greater market fluctuation
and greater risk of loss of income or principal than higher rated securities.
       
 Because issuers of Natural Resource Investments often are located outside the
United States, a significant portion of the Fund's investments may consist of
securities of foreign issuers. The percentage of assets invested in particular
countries or regions will change from time to time in accordance with the judg-
ment of SBMFM, which may be based on, among other things of consideration of
the political stability and economic outlook of these countries or regions.
    
 Smith Barney Premium Total Return Fund, an investment portfolio of Smith Bar-
ney Income Funds, seeks to provide shareholders with total return, consisting
of long-term capital appreciation and income, by investing primarily in a
diversified portfolio of dividend-paying common stocks. The Fund also purchases
put and call options and writes covered put and call options on securities it
holds and on stock indexes primarily as a hedge to reduce investment risk.
Because the Fund seeks total return by emphasizing investments in dividend-
paying common stocks, it will not have as much investment flexibility as total
return funds that may pursue their objective by investing in both income and
equity stocks without such an emphasis. The Fund also may invest up to 10% of
its assets in: (a) securities rated less than investment grade by Moody's or
S&P or unrated securities of comparable quality; (b) interest-paying debt secu-
rities, such as U.S. government securities; and (c) other securities, including
convertible bonds, convertible preferred stock and warrants.
 
 The Emerging Markets Portfolio, an investment portfolio of Smith Barney World
Funds, Inc., seeks long term capital appreciation on its assets through a port-
folio invested primarily in securities of emerging country issuers (consisting
of dividend and non-dividend paying common stocks, preferred stocks, convert-
ible securities and rights and warrants to such securities). The Fund will also
invest in debt securities having a high potential for capital appreciation,
especially in countries where direct equity investment is not permitted. Under
normal conditions, at least 70% of the Fund's assets will be invested in equity
securities. For purposes of its investment objective, the Fund considers as
"emerging" all countries other than the United States, Canada, Ireland, the
United Kingdom, Sweden, Norway, Finland, Denmark, Holland, Germany, Switzer-
land, Belgium, France, Italy, Spain and Japan. The Fund is a non-diversified
portfolio, but will generally invest its assets broadly among countries and
will normally have at least 65% of its assets invested in issuers in not less
than three different countries.
 
 The Fund also may invest in debt securities of issuers in countries having
smaller capital markets. Capital appreciation in debt securities may arise as a
result of a favorable change in relative foreign exchange rates, in relative
interest rate levels, or in the creditworthiness of issuers. The Fund will not
seek to benefit from anticipated short-term fluctuations in currency exchange
rates. The Fund may invest in debt securities with relatively high yields (as
compared to other debt securities meeting the Fund's investment criteria), not-
withstanding that the Fund may not anticipate that such securities will experi-
ence substantial capital appreciation. The Fund also may invest in debt securi-
ties issued or guaranteed by foreign governments (including foreign states,
provinces and municipalities) or their agencies and instrumentalities, issued
or guaranteed by supranational organizations or issued by foreign corporations
or financial institutions.
 
 The International Equity Portfolio, an investment portfolio of Smith Barney
World Funds, Inc., seeks a total return on its assets from growth of capital
and income. Under normal market conditions, the Fund invests at least 65% of
its assets in a diversified portfolio of equity securities consisting of divi-
dend and non-dividend paying common stock, preferred stock, convertible debt
and rights and warrants to such securities and up to 35% of the Fund's assets
in bonds, notes and debt securities (consisting of securities issued in the
Eurocurrency markets or obligations of the U.S. or foreign governments and
their political subdivisions) of established non-U.S. issuers. Investments may
be made for capital appreciation or for income or any combination of both for
the purpose of achieving a higher overall return than might otherwise be
obtained solely from investing for growth of capital or for income. There is no
limitation on the percent or amount of the Fund's assets that may be invested
for growth or income and, therefore, from time to time the investment emphasis
may be placed solely or primarily on growth of capital or solely or primarily
on income. The Fund may borrow up to 25% of the value of its assets for invest-
ment purposes, which involves certain risk considerations.
 
 The Fund will generally invest its assets broadly among countries and will
normally have represented in the portfolio business activities in not less than
three different countries. The Fund will normally invest at least 65% of its
assets in companies organized or governments located in any area of the world
other than the U.S. However, under unusual economic or market conditions as
determined by the investment adviser, for defensive purposes the Fund may tem-
porarily invest all or a major portion of its assets in U.S. government securi-
ties or in debt or equity securities of companies incorporated in and having
their principal business activities in the U.S.
 
                                                                              15
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
 
FIXED INCOME FUNDS The following Underlying Smith Barney Funds invest primarily
in fixed income securities, including the money market fund in which each Port-
folio may invest and which may serve as the cash reserve portion of each Port-
folio.
 
 Smith Barney High Income Fund, an investment portfolio of the Smith Barney
Income Funds, seeks to provide shareholders with high current income. Although
growth of capital is not an investment objective of the Fund, SBMFM may con-
sider potential for growth as one factor, among others, in selecting invest-
ments for the Fund. The Fund will seek high current income by investing, under
normal circumstances, at least 65% of its assets in high risk, high-yielding
corporate bonds, debentures and notes denominated in U.S. dollars or foreign
currencies. Up to 40% of the Fund's assets may be invested in fixed-income
obligations of foreign issuers, and up to 20% of its assets may be invested in
common stock or other equity-related securities, including convertible securi-
ties, preferred stock, warrants and rights. Securities purchased by the Fund
generally will be rated in the lower rating categories of recognized rating
agencies, as low as Caa by Moody's or D by S&P, or in unrated securities that
SBMFM deems of comparable quality. However, the Fund will not purchase securi-
ties rated lower than B by both Moody's and S&P unless, immediately after such
purchase, no more than 10% of its total assets are invested in such securities.
The Fund may hold securities with higher ratings when the yield differential
between low-rated and higher-rated securities narrows and the risk of loss may
be reduced substantially with only a relatively small reduction in yield. The
Fund also may invest in higher-rated securities when SBMFM believes that a more
defensive investment strategy is appropriate in light of market or economic
conditions.
 
 Smith Barney Investment Grade Bond Fund, an investment portfolio of Smith Bar-
ney Investment Funds Inc., seeks to provide as high a level of current income
as is consistent with prudent investment management and preservation of capi-
tal. Except when in a temporary defensive investment position, the Fund intends
to maintain at least 65% of its assets invested in bonds. The Fund seeks to
achieve its objective by investing in any of the following securities: corpo-
rate bonds rated Baa or better by Moody's or BBB or better by S&P; U.S. govern-
ment securities; commercial paper issued by domestic corporations and rated
Prime-1 or Prime-2 by Moody's or A-1 or A-2 by S&P, or, if not rated, issued by
a corporation having an outstanding debt issue rated Aa or better by Moody's or
AA or better by S&P; negotiable bank certificates of deposit and bankers'
acceptances issued by domestic banks (but not their foreign branches) having
total assets in excess of $1 billion; and high-yielding common stocks and war-
rants. A reduction in the rating of a security does not require the sale of the
security by the Fund.
 
 Smith Barney Government Securities Fund, an investment portfolio of Smith Bar-
ney Investment Funds Inc., seeks high current return by investing in obliga-
tions of, or guaranteed by, the U.S. government, its agencies or instrumentali-
ties (including, without limitation, Treasury bills and bonds, mortgage partic-
ipation certificates issued by the Federal Home Loan Mortgage Corporation
("FHLMC") and mortgage-backed securities issued by the Government National
Mortgage Association ("GNMA"). The Fund may invest up to 5% of its net assets
in U.S. government securities for which the principal repayment at maturity,
while paid in U.S. dollars, is determined by reference to the exchange rate
between the U.S. dollar and the currency of one or more foreign countries. In
addition, the Fund may borrow money (up to 25% of its total assets) to increase
its investments, thereby leveraging its portfolio and exaggerating the effect
on net asset value of any increase or decrease in the market value of the
Fund's securities. Except when in a temporary defensive investment position,
the Fund intends to maintain at least 65% of its assets invested in U.S. gov-
ernment securities (including futures contracts and options thereon and options
relating to U.S. government securities).
 
 The Short-Term U.S. Treasury Securities Portfolio, an investment portfolio of
Smith Barney Funds, Inc., seeks current income, preservation of capital and
liquidity. The Fund seeks to achieve its objective by investing its assets in
U.S. Treasury securities backed by the full faith and credit of the U.S. gov-
ernment. Shares of the Fund are not issued, insured or guaranteed, as to value
or yield, by the U.S. government or its agencies or instrumentalities. In an
effort to minimize fluctuations in market value of its portfolio securities,
the Fund is expected to maintain a dollar-weighted average maturity of approxi-
mately three years. Pending direct investment in U.S. Treasury debt securities,
the Fund may enter into repurchase agreements secured by such securities in an
amount up to 10% of the value of its total assets. The Fund may, to a limited
degree, engage in short-term trading to attempt to take advantage of short-term
market variations, or may dispose of a portfolio security prior to its maturity
if it believes such disposition advisable or it needs to generate cash to sat-
isfy redemptions.
 
 Smith Barney Managed Governments Fund Inc. seeks high current income consis-
tent with liquidity and safety of capital. The Fund invests substantially all
of its assets in U.S. government securities and, under normal circumstances,
the Fund is required to invest at least 65% of its assets in such securities.
The Fund's portfolio of U.S. government securities consists primarily of mort-
gage-backed securities issued or guaranteed by GNMA, the Federal National Mort-
gage Association ("FNMA") and FHLMC. Assets not invested in such mortgage-
backed securities are invested primarily in direct obligations of the United
States Treasury and other U.S. government securities. The weighted average
maturity of the Fund's portfolio will vary from time to time and the Fund may
invest in U.S. government securities of all maturities: short-term, intermedi-
ate-term and long-term. The Fund may invest without limit in securities of any
issuer of U.S. government securities, and may invest up to an aggregate of 15%
of its total assets in securities with contractual or other restrictions on
resale and other instruments that are not readily marketable (such as repur-
chase agreements with maturities in excess of seven
 
16
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
days). The Fund may invest up to 5% of its net assets in U.S. government secu-
rities for which the principal repayment at maturity, while paid in U.S. dol-
lars, is determined by reference to the exchange rate between the U.S. dollar
and the currency of one or more foreign countries.
 
 Smith Barney Diversified Strategic Income Fund, an investment portfolio of
Smith Barney Income Funds, seeks high current income primarily through invest-
ment in fixed-income securities. The Fund attempts to achieve its objective by
allocating and reallocating its assets primarily among various types of fixed-
income securities selected by Greenwich Street Advisors (a division of SBMFM)
based on its analysis of economic and market conditions and the relative risks
and opportunities of particular securities. The types of fixed-income securi-
ties among which the Fund's assets will be primarily allocated are: obligations
issued or guaranteed as to principal and interest by the United States govern-
ment; mortgage-related securities issued by various governmental and non-gov-
ernmental entities; domestic and foreign corporate securities; and foreign gov-
ernment securities. Under normal conditions, at least 65% of the Fund's assets
will be invested in fixed-income securities, which includes non-convertible
preferred stocks. The Fund generally will invest in intermediate- and long-term
fixed-income securities with the result that, under normal market conditions,
the weighted average maturity of the Fund's securities is expected to be
between five and 12 years.
 
 Mortgage-related securities in which the Fund may invest include mortgage
obligations collateralized by mortgage loans or mortgage pass-through certifi-
cates. Mortgage-related securities held by the Fund generally will be rated no
lower than Aa by Moody's or AA by S&P or, if not rated, of equivalent invest-
ment quality as determined by Greenwich Street Advisors. The Fund may invest up
to 35% of its assets in corporate fixed-income securities of domestic issuers
rated Ba or lower by Moody's or BB or lower by S&P or in nonrated securities
deemed by Greenwich Street Advisors to be of comparable quality. The Fund may
invest in fixed-income securities rated as low as Caa by Moody's or CCC by S&P.
 
 In general, the Fund may invest in debt securities issued by foreign govern-
ments or any of their political subdivisions that are considered stable by
Smith Barney Global Capital Management, Inc., the Fund's subadviser. Up to 5%
of the Fund's assets may be invested in foreign securities issued by countries
with developing economies. The Fund may also invest in securities issued by
supranational organizations.
 
 The Global Government Bond Portfolio, an investment portfolio of Smith Barney
World Funds, Inc., seeks as high a level of current income and capital appreci-
ation as is consistent with its policy of investing principally in high quality
bonds of the U.S. and foreign governments. Under normal market conditions, the
Fund invests at least 65% of its total assets in bonds issued or guaranteed by
the U.S. or foreign governments (including foreign states, provinces, cantons
and municipalities) or their agencies, authorities or instrumentalities denomi-
nated in various currencies, including U.S. dollars, or in multinational cur-
rency units, such as the European Currency Unit. Except with respect to govern-
ment securities of less developed countries, the Fund invests in foreign gov-
ernment securities only if the issue or the issuer thereof is rated in the two
highest rating categories by Moody's or S&P, or if unrated, are of comparable
quality in the determination of the investment adviser.
 
 Under normal circumstances the Fund may invest up to 35% of its total assets
in debt obligations (including debt obligations convertible into common stock)
of U.S. or foreign corporations and financial institutions and supranational
entities. Any non-governmental investment would be limited to issues that are
rated A or better by Moody's or S&P, or if not rated, determined to be of com-
parable quality.
   
 The Fund is a non-diversified portfolio and currently contemplates investing
primarily in obligations of the U.S. and of developed nations (i.e., industri-
alized countries) that the investment adviser believes to pose limited credit
risks. These countries currently are Australia, Austria, Belgium, Canada, Den-
mark, Finland, France, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zea-
land, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom and Ger-
many. Investments may be made from time to time in government securities,
including loan assignments and loan participations, of less developed coun-
tries. Such countries currently include Argentina, Brazil, Bulgaria, Czech
Republic, Ecuador, Hungary, Indonesia, Lithuania, Malaysia, Mexico, Peru, Phil-
ippines, Poland, Russia, Slovakia, South Africa, Thailand, Turkey, Uruguay and
Venezuela. Countries may be added to or deleted from this list as economic and
political conditions warrant. Historical experience indicates that the markets
of less developed countries have been more volatile than the markets of the
more mature economies of developed countries; however, such markets often pro-
vide rates of return to investors commensurate with the credit and market
risks. The investment adviser does not intend to invest more than 10% of the
Fund's assets in the government securities of less developed countries and will
not invest more than 5% of the Fund's assets in the government securities of
any one such country. Such investments may be unrated or rated below investment
grade or may be in default. Securities rated below investment grade (and compa-
rable unrated securities) are the equivalent of high yield, high risk bonds.
Such securities are regarded as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligations and involve major risk exposure to adverse business,
financial, economic, and political conditions, whether or not occurring within
the issuers' borders. Under normal market conditions the Fund invests at least
65% of its assets in issues of not     
 
                                                                              17
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
less than three different countries; issues of any one country (other than the
United States) will represent no more than 45% of the Fund's total assets.
 
 The Cash Portfolio is an investment portfolio of Smith Barney Money Funds,
Inc., a money market fund that seeks maximum current income and preservation of
capital. The Fund may invest in domestic and foreign money market securities
consisting of bank obligations and high quality commercial paper, corporate
obligations and municipal obligations, in addition to U.S. government obliga-
tions and related repurchase agreements. The Fund intends to maintain at least
25% of its total assets invested in obligations of domestic and foreign banks.
Shares of the Fund are not insured or guaranteed by the U.S. government.
 
 The Fund has adopted certain investment policies to assure that, to the extent
reasonably possible, the Fund's price per share will not change from $1.00,
although no assurance can be given that this goal will be achieved on a contin-
uous basis. In order to minimize fluctuations in market price, the Fund will
not purchase a security with a remaining maturity of greater than 13 months or
maintain a dollar-weighted average portfolio maturity in excess of 90 days (se-
curities used as collateral for repurchase agreements are not subject to these
restrictions).
   
 The Fund's investments are limited to U.S. dollar-denominated instruments that
have received the highest rating from the "Requisite NRSROs," securities of
issuers that have received such rating with respect to other short-term debt
securities and comparable unrated securities. "Requisite NRSROs" means (a) any
two nationally recognized statistical ratings organizations ("NRSROs") that
have issued a rating with respect to a security or class of debt obligations of
an issuer, or (b) one NRSRO, if only one NRSRO has issued such a rating at the
time that the Fund acquires the security. The NRSROs currently designated as
such by the SEC are S&P, Moody's, Fitch Investors Services, Inc., Duff and
Phelps Credit Rating Co., IBCA Limited and its affiliate, IBCA, Inc. and
Thomson BankWatch.     
   
 For purposes of the equity/fixed income fund allocation targets and ranges
applicable to each Portfolio (see page 10 above), each of the following Under-
lying Smith Barney Funds is considered to be an equity fund with respect to 50%
of a Portfolio's investment in such Fund and an income fund with respect to the
remaining 50% of such Portfolio's investment.     
 
 The Smith Barney Convertible Fund, an investment portfolio of Smith Barney
Income Funds, seeks current income and capital appreciation by investing in
convertible securities and in combinations of nonconvertible fixed-income secu-
rities and warrants or call options that together resemble convertible securi-
ties ("synthetic convertible securities"). Under normal circumstances, the Fund
will invest at least 65% of its assets in convertible securities, but is not
required to sell securities to conform to this limitation and may retain on a
temporary basis securities received upon the conversion or exercise of such
securities. The Fund will not invest in fixed-income securities that are rated
lower than B by Moody's or S&P or, if unrated, deemed by SBMFM to be comparable
to securities rated lower than B. The Fund may invest up to 35% of its assets
in synthetic convertible securities and in equity and debt securities that are
not convertible into common stock and, for temporary defensive purposes, may
invest in these securities without limitation.
 
 The Smith Barney Utilities Fund, an investment portfolio of Smith Barney
Income Funds, seeks current income by investing in equity and debt securities
of companies in the utility industry. Long-term capital appreciation is a sec-
ondary objective of the Fund. The utility industries are deemed to be comprised
of companies principally engaged (that is, at least 50% of a company's assets,
gross income or net profits results from utility operations or the company is
regulated as a utility by a government agency or authority) in the manufacture,
production, generation, transmission and sale of electric and gas energy and
companies principally engaged in the communications field, including entities
such as telephone, telegraph, satellite, microwave and other companies regu-
lated by governmental agencies as utilities that provide communication facili-
ties for the public benefit, but not including those in public broadcasting.
The Fund will invest primarily in utility equity and debt securities that have
a high expected rate of return as determined by SBMFM. Under normal market con-
ditions, the Fund will invest at least 65% of its assets in such securities.
The Fund may invest up to 35% of its assets in equity and debt securities of
non-utility companies believed to afford a reasonable opportunity for achieving
the Fund's investment objectives. The Fund will invest in investment grade debt
securities, but may invest up to 10% of its assets in securities rated BB or B
by S&P or Ba or B by Moody's whenever SBMFM believes that the incremental yield
on such securities is advantageous to the Fund in comparison to the additional
risk involved.
 
 The International Balanced Portfolio, an investment portfolio of Smith Barney
World Funds, Inc., seeks a competitive total return on its assets from growth
of capital and income through a portfolio invested primarily in securities of
established non-U.S. issuers. The Fund may borrow up to 15% of the value of its
assets for investment purposes, which involves certain risks. Under normal mar-
ket conditions, the Fund will invest its assets in an international portfolio
of equity securities (consisting of dividend and non-dividend paying common
stocks, preferred stocks, convertible securities, ADRs and rights and warrants
to such securities) and debt securities (consisting of corporate debt securi-
ties, sovereign debt instruments issued by governments or governmental enti-
ties, including supranational organizations and U.S. and foreign money market
instruments). The Fund attempts to achieve a balance between equity and debt
securities. However, the proportion of equity and debt held by the Fund at any
one time will depend on SBMFM's views on current market and economic condi-
tions. Under normal conditions, no more than 70%, nor less than 30%, of the
Fund's assets will be invested
 
18
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
in either equity or debt securities; however, there is no limitation on the
percent or amount of the Fund's assets that may be invested for growth or
income.
 
 The Fund is a non-diversified portfolio but will generally invest its assets
broadly among countries and will normally have at least 65% of its assets
invested in business activities in not less than three different countries out-
side of the U.S. The Fund will invest in a broad range of industries and sec-
tors and will mainly invest in securities issued by companies with market capi-
talization of at least $50,000,000. The Fund may invest in companies organized
or governments located in any area of the world. However, under unusual eco-
nomic or market conditions as determined by the investment adviser, for defen-
sive purposes the Fund may temporarily invest all or a major portion of its
assets in U.S. government securities, debt or equity securities of companies
incorporated in and having their principal business activities in the U.S. or
in U.S. as well as foreign money market instruments and equivalents.
 
 The debt securities in which the Fund invests generally range in maturity from
two to ten years. Debt securities of developed foreign countries must be rated
as investment grade (or deemed by SBMFM to be of comparable quality) at the
time of purchase. Debt securities of emerging market countries may be rated
below investment grade and could include securities that are in default as to
payments of principal or interest. Up to 25% of the total assets of the Fund
may be invested in securities of emerging market countries.
 
 PERFORMANCE OF UNDERLYING SMITH BARNEY FUNDS
   
 The following chart shows the average annual total returns for the longest
outstanding class of shares for each of the Underlying Smith Barney Funds in
which the Portfolios may invest (other than the Cash Portfolio of Smith Barney
Money Funds, Inc.) for the most recent one-, five- and ten-year periods (or
since inception if shorter and giving effect to the maximum applicable sales
charges) and the 30-day yields for income-oriented funds, in each case for the
period ended December 31, 1996.     
 
<TABLE>   
<CAPTION>
                                                               AVERAGE ANNUAL
                                                               TOTAL RETURNS
                                                                  THROUGH                30-DAY
                               ASSETS OF ALL                 DECEMBER 31, 1996         YIELD FOR
                               CLASSES AS OF                 ---------------------    PERIOD ENDED
                               DECEMBER 31,  INCEPTION        ONE     FIVE    TEN     DECEMBER 31,
 UNDERLYING SMITH BARNEY FUND  1996 ($000'S)   DATE    CLASS  YEAR    YEARS  YEARS        1996
--------------------------------------------------------------------------------------------------
<S>                            <C>           <C>       <C>   <C>      <C>    <C>      <C>
Smith Barney Aggressive
 Growth Fund Inc.                $ 607,914   10/24/83    A    (2.38)% 10.00% 13.39%        --
Smith Barney Appreciation
 Fund Inc.                       3,486,429   03/10/70    A    13.33   10.82  12.78         --
Smith Barney Equity
 Funds:
 Smith Barney Growth and
  Income Fund                      328,347   11/06/92     A   12.82     --   11.11(+)      --
Smith Barney Fundamental
 Value Fund Inc.                 1,390,274   11/12/81    A    13.77   15.20  13.65         --
Smith Barney Funds, Inc.:
 Equity Income Portfolio           837,512   01/01/72    A    10.25   11.86  11.13         --
 Short-Term U.S. Treasury
  Securities Portfolio             115,438   11/11/91    A     2.15    5.04   5.47(+)     4.96%
Smith Barney Income
 Funds:
 Smith Barney High Income
  Fund                           1,138,694   09/02/86    B     7.87   12.17   9.12        6.86
 Smith Barney Utilities
  Fund                           1,510,568   03/28/88    B    (3.10)   7.32  10.08(+)      --
 Smith Barney Premium
  Total Return Fund              3,032,742   09/16/85    B    15.09   13.40  12.76         --
 Smith Barney Convertible
  Fund                              97,978   09/02/86    B     5.73    9.61   8.58        2.93
 Smith Barney Diversified
  Strategic Income Fund          2,819,870   12/28/89    B     5.43    7.71   9.36(+)     5.76
Smith Barney Investment
 Funds Inc.:
 Smith Barney Managed
  Growth Fund                      859,735   06/30/95    A    10.54     --    7.94(+)      --
 Smith Barney Special
  Equities Fund                    732,687   12/13/82    B   (11.12)  15.31  10.26         --
 Smith Barney Government
  Securities Fund                  551,567   03/20/84    B    (3.08)   5.26   6.50        5.55
 Smith Barney Investment
  Grade Bond Fund                  489,231   01/04/82    B    (5.35)   8.97   8.83        6.33
Smith Barney Managed
 Governments Fund Inc.             597,264   09/04/84    A    (1.06)   5.08   6.94        6.16
Smith Barney Natural
 Resources Fund Inc.               143,674   12/24/86    A    28.08   10.32   4.56         --
Smith Barney World Funds,
 Inc.:
 International Equity
  Portfolio                      1,330,885   02/18/86    A     7.92    9.13   9.82         --
 Emerging Markets
  Portfolio                         28,681   05/11/95    A    14.07     --    2.39(+)      --
 International Balanced
  Portfolio                         49,191   08/25/94    A     6.43     --    7.28(+)      --
 Global Government Bond
  Portfolio                        150,356   07/22/91    A     2.69    6.45   8.20(+)     4.37
-----------
</TABLE>    
+ inception (less than 10 years)
--------------------------------------------------------------------------------
   
 For the seven-day period ended December 31, 1996, the yield for the Cash Port-
folio of Smith Barney Money Funds, Inc. was 4.90% and the effective yield was
5.02%.     
 
 The performance data relating to the Underlying Smith Barney Funds set forth
above is not, and should not be viewed as, indicative of the future performance
of either the Underlying Smith Barney Funds or the Concert Series. The perfor-
mance reflects the impact of sales charges and other distribution related
expenses that will not be incurred by the Class Y shares of the Underlying
Smith Barney Funds in which the Portfolios will invest.
 
                                                                              19
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
 
 INVESTMENT POLICIES AND STRATEGIES OF THE UNDERLYING SMITH BARNEY FUNDS
 
 In pursuing their investment objectives and programs, each of the Underlying
Smith Barney Funds is permitted to engage in a wide range of investment poli-
cies. The Underlying Smith Barney Funds' risks are determined by the nature of
the securities held and the investment strategies used by the Funds' adviser.
Certain of these policies are described below and further information about the
investment policies and strategies of the Underlying Smith Barney Funds in
which the Portfolios may invest is contained in the Appendix to this Prospectus
and in the Statement of Additional Information as well as the prospectuses of
the Underlying Smith Barney Funds. Because each Portfolio invests in the Under-
lying Smith Barney Funds, shareholders of each Portfolio will be affected by
these investment policies in direct proportion to the amount of assets each
Portfolio allocates to the Underlying Smith Barney Funds pursuing such poli-
cies.
 
 Securities of Non-U.S. Issuers. The Portfolios will each invest in certain
Underlying Smith Barney Funds that invest all or a portion of their assets in
securities of non-U.S. issuers. These include non-dollar denominated securities
traded outside the U.S. and dollar-denominated securities traded in the U.S.
(such as ADRs). Such investments involve some special risks such as fluctua-
tions in foreign exchange rates, future political and economic developments,
and the possible imposition of exchange controls or other foreign governmental
laws or restrictions. In addition, with respect to certain countries, there is
the possibility of expropriation of assets, repatriation, confiscatory taxa-
tion, political or social instability or diplomatic developments that could
adversely affect investments in those countries. There may be less publicly
available information about a foreign company than about a U.S. company, and
foreign companies may not be subject to accounting, auditing, and financial
reporting standards and requirements comparable to or as uniform as those of
U.S. companies. Non-U.S. securities markets, while growing in volume, have, for
the most part, substantially less volume than U.S. markets, and securities of
many foreign companies are less liquid and their prices more volatile than
securities of comparable U.S. companies. Transaction costs on non-U.S. securi-
ties markets are generally higher than in the U.S. There is generally less gov-
ernment supervision and regulation of exchanges, brokers and issuers than there
is in the U.S. An Underlying Smith Barney Fund might have greater difficulty
taking appropriate legal action in non-U.S. courts. Dividend and interest
income from non-U.S. securities will generally be subject to withholding taxes
by the country in which the issuer is located and may not be recoverable by the
Underlying Smith Barney Fund or a Portfolio investing in such Fund.
   
 Options and Futures. Certain of the Underlying Smith Barney Funds may enter
into stock index, interest rate and currency futures contracts (or options
thereon, including swaps, caps, collars and floors) as a hedging device, or as
an efficient means of regulating their exposure to various markets. Certain of
the Underlying Smith Barney Funds may also purchase and sell call and put
options. Futures (a type of potentially high-risk derivative) are often used to
manage risk because they enable the investor to buy or sell an asset at a pre-
determined price in the future. The Underlying Smith Barney Funds may buy and
sell futures and options contracts for a number of reasons including: to manage
their exposure to changes in interest rates, stock and bond prices, and foreign
currencies; as an efficient means of adjusting their overall exposure to cer-
tain markets; to adjust the portfolio's duration; to enhance income; and to
protect the value of the portfolio securities. Certain of the Underlying Smith
Barney Funds may purchase, sell or write call and put options on securities,
financial indices, and foreign currencies. Options and futures can be volatile
investments, and involve certain risks. If the adviser to the Underlying Smith
Barney Fund applies a hedge at an inappropriate time or judges market condi-
tions incorrectly, options and futures strategies may lower the Underlying
Smith Barney Fund's return. Further losses could also be experienced if the
options and futures positions held by an Underlying Smith Barney Fund were
poorly correlated with its other investments, or if it could not close out its
positions because of an illiquid secondary market.     
   
 The Smith Barney Natural Resources Fund may also enter into futures contracts
for the purchase and sale of gold, purchase put and call options on those
future contracts and write call options on those futures contracts. The Smith
Barney Natural Resources Fund will purchase or write options on gold futures
only on a regulated domestic or foreign exchange approved for such purpose by
the Commodities Futures Trading Commission.     
 
 Debt Securities. Certain of the Underlying Smith Barney Funds may be affected
by general changes in interest rates, which will result in increases or
decreases in the market value of the debt securities held by the Funds. The
market value of the fixed-income obligations in which the Underlying Smith Bar-
ney Funds may invest can be expected to vary inversely in relation to the
changes in prevailing interest rates and also may be affected by other market
and credit factors.
 
 Certain of the Underlying Smith Barney Funds may invest only in high-quality,
high-grade or investment-grade securities. High quality securities are those
rated in the two highest categories by Moody's (Aaa or Aa) or S&P (AAA or AA).
High-grade securities are those rated in the three highest categories by
Moody's (Aaa, Aa or A) or S&P (AAA, AA or A). Investment-grade securities are
those rated in the four highest categories by Moody's (Aaa, Aa, A or Baa) or
S&P (AAA, AA, A or BBB). Securities rated Baa or BBB have speculative charac-
teristics and changes in economic conditions or other circumstances are more
likely to lead to a weakened capacity of their issuers to make principal and
interest payments than is the case with higher grade securities.
 
 
20
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
 Certain Underlying Smith Barney Funds may invest in securities that are rated
below investment-grade; that is, rated below Baa by Moody's or BBB by S&P.
Securities rated below investment grade (and comparable unrated securities) are
the equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Such securities are regarded as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligations and involve major risk exposure to adverse business,
financial, economic or political conditions. See the Appendix to the Statement
of Additional Information for additional information on the bond ratings by
Moody's and S&P.
       
       
VALUATION OF SHARES
 
 Each Portfolio'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 Portfolio's net assets attributable to each Class by the total
number of shares of the Class outstanding. The value of each Underlying Smith
Barney Fund will be its net asset value at the time of computation. Short-term
investments that have a maturity of more than 60 days are valued at prices
based on market quotations for securities of similar type, yield and maturity.
Short-term investments that have a maturity of 60 days or less are valued at
amortized cost unless conditions dictate otherwise.
 
DIVIDENDS, DISTRIBUTIONS AND TAXES
 
 DIVIDENDS AND DISTRIBUTIONS
 
 The Concert Series intends to declare monthly income dividends on shares of
the Income Portfolio, quarterly income dividends on shares of the Conservative
Portfolio and the Balanced Portfolio and annually income dividends on shares of
the High Growth Portfolio and the Growth Portfolio. In addition, the Concert
Series intends to make annual distributions of capital gains, if any, on the
shares of each Portfolio.
 
 If a shareholder does not otherwise instruct, dividends and capital gain dis-
tributions will be reinvested automatically in additional shares of the same
Class at net asset value, subject to no sales charge or CDSC.
 
 Income dividends and capital gain distributions that are invested are credited
to shareholders' accounts in additional shares at the net value as of the close
of business on the payment date. A shareholder may change the option at any
time by notifying his or her Smith Barney Financial Consultant. Shareholders
whose accounts are held directly by First Data should notify First Data in
writing at least five business days prior to the payment date to permit the
change to be entered in the shareholder's account.
 
 The per share dividends on Class B and Class C shares of each Portfolio may be
lower than the per share dividends on Class A and Class Y shares principally as
a result of the distribution fee applicable with respect to Class B and Class C
shares. The per share dividends on Class A shares of each Portfolio may be
lower than the per share dividends on Class Y shares principally as a result of
the service fee applicable to Class A shares. Distributions of capital gains,
if any, will be in the same amount for Class A, Class B, Class C and Class Y
shares.
 
 TAXES
 
 Each Portfolio intends to qualify as a regulated investment company under
Subchapter M of the Code to be relieved of federal income tax on that part of
its net investment income and realized capital gains that it pays out to its
shareholders. To qualify, the Portfolio must meet certain tests, including dis-
tributing at least 90% of its investment company taxable income, and deriving
less than 30% of its gross income from the sale or other disposition of certain
investments held for less than three months.
 
 Dividends from net investment income and distributions of realized short-term
capital gains on the sale of securities, whether paid in cash or automatically
invested in additional shares of the same Portfolio, are taxable to sharehold-
ers of each Portfolio as ordinary income. A portion of each Portfolio's divi-
dends may qualify for the dividends received deduction for corporations. Divi-
dends and distributions declared by each Portfolio may also be subject to state
and local taxes. Distributions out of net long-term capital gains (i.e., net
long-term capital gains in excess of net short-term capital losses) are taxable
to shareholders as long-term capital gains. Information as to the tax status of
dividends paid or deemed paid in each calendar year will be mailed to share-
holders as early in the succeeding year as practical but not later than January
31.
 
                                                                              21
<PAGE>
 
PURCHASE OF SHARES
 
 
 GENERAL
   
 Each Portfolio offers four Classes of shares. Class A shares are sold to
investors with an initial sales charge and Class B and Class C shares are sold
without an initial sales charge but are subject to a CDSC payable upon certain
redemptions. Class Y shares are sold without an initial charge or CDSC and are
available only to investors investing a minimum of $5,000,000. Each Portfolio
also offers a fifth class of shares: Class Z shares, which are offered without
a sales charge, CDSC, service fee or distribution fee, exclusively to tax-
exempt employee benefit and retirement plans of Smith Barney and its affili-
ates. Investors meeting these criteria who are interested in acquiring Class Z
shares should contact a Smith Barney Financial Consultant for a Class Z Pro-
spectus. See "Prospectus Summary--Alternative Purchase Arrangements" for a dis-
cussion of factors to consider in selecting which Class of shares to purchase.
       
 Purchases of Portfolio shares must be made through a brokerage account main-
tained with Smith Barney, Introducing Broker or an investment dealer in the
selling group. In addition, certain investors, including qualified retirement
plans and certain other institutional investors, may purchase shares directly
from the Concert Series through First Data. When purchasing shares of a Portfo-
lio, investors must specify whether the purchase is for Class A, Class B, Class
C or Class Y shares. Smith Barney and other broker/dealers may charge their
customers an annual account maintenance fee in connection with a brokerage
account through which an investor purchases or hold shares. Accounts held
directly at First Data are not subject to a maintenance fee.     
          
 Investors in Class A, Class B and Class C shares may open an account by making
an initial investment of at least $1,000 for each account in each class (except
for Systematic Investment Plan accounts), or $250 for an IRA or a Self-Employed
Retirement Plan in a Portfolio. Investors in Class Y shares may open an account
by making an initial investment of $5,000,000. Subsequent investments of at
least $50 may be made for all Classes. For participants in retirement plans
qualified under Section 403(b)(7) or Section 401(a) of the Code, the minimum
initial investment requirement for Class A, Class B and Class C shares and the
subsequent investment requirement for all Classes in a Portfolio is $25. For
shareholders purchasing shares of a Portfolio through the Systematic Investment
Plan on a monthly basis, the minimum initial investment requirement for Class
A, Class B and Class C shares and the subsequent investment requirement for all
Classes is $25. For shareholders purchasing shares of a Portfolio through the
Systematic Investment Plan on a quarterly basis, the minimum initial investment
requirement for Class A, Class B and Class C shares and the subsequent invest-
ment requirement for all Classes is $50. There are no minimum investment
requirements in Class A shares for employees of Travelers and its subsidiaries,
including Smith Barney, Directors or Trustees of any of the Smith Barney Mutual
Funds, and their spouses and children. The Concert Series 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 Concert Series' transfer agent, First Data.
Share certificates are issued only upon a shareholder's written request to
First Data.     
   
 The minimum initial and subsequent investment requirements in a Portfolio for
accounts established through a payroll deduction program offered by Travelers
Group Diversified Distribution Services Inc. is $50 per month.     
   
 The minimum initial investment requirement in a Portfolio for an account
established under the Uniform Gift to Minors Act is $250 and the subsequent
investment requirement is $50.     
   
 Purchases of Class A shares also may be made at net asset value without a
sales charge by employees of employers participating in payroll deduction pro-
grams offered by Travelers Group Diversified Distribution Services Inc. Such
employees may purchase sales charge waived Class A shares through payroll
deductions or a lump-sum, direct payment initial investment. All other pur-
chases of Class A shares will be subject to applicable sales charges in accor-
dance with the terms of the Prospectus.     
 
 Purchase orders received by the Concert Series or Smith Barney prior to the
close of regular trading on the NYSE, on any day a Portfolio calculates its net
asset value, are priced according to the net asset value determined on that day
(the "trade date"). Orders received by dealers or Introducing Brokers prior to
the close of regular trading on the NYSE on any day a Portfolio calculates its
net asset value, are priced according to the net asset value determined on that
day, provided the order is received by the Concert Series or Smith Barney prior
to Smith Barney's close of business. For shares purchased through Smith Barney
or an Introducing Broker that transmits its orders to Smith Barney, payment for
Portfolio shares is due on the third business day after the trade date. In all
other cases, payment must be made with the purchase order.
 
 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, Smith Barney or First Data is authorized through
preauthorized transfers of at least $25 on a monthly basis or at least $50 on a
quarterly basis to charge the regular bank account or other financial institu-
tion indicated by the shareholder on a monthly or quarterly basis to provide
systematic additions to the shareholder's Portfolio account. A shareholder who
has insufficient funds to complete the transfer will be charged a fee of up to
$25 by Smith Barney or First Data. The     
 
22
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
Systematic Investment Plan also authorizes Smith Barney to apply cash held in
the shareholder's Smith Barney brokerage account or redeem the shareholder's
shares of a Smith Barney money market fund to make additions to the account.
Additional information is available from the Concert Series or a Smith Barney
Financial Consultant.
 
 INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
 
 The sales charges applicable to purchases of Class A shares of the High Growth
Portfolio, the Growth Portfolio and the Balanced Portfolio are as follows:
 
<TABLE>
<CAPTION>
                               SALES CHARGE
                      ------------------------------      DEALERS'
  AMOUNT OF                % OF           % OF       REALLOWANCE AS % 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>
 
 The sales charges applicable to purchases of Class A shares of the Conserva-
tive Portfolio and the Income Portfolio are as follows:
 
<TABLE>
<CAPTION>
                               SALES CHARGE
                      ------------------------------      DEALERS'
  AMOUNT OF                % OF           % OF       REALLOWANCE AS % OF
  INVESTMENT          OFFERING PRICE AMOUNT INVESTED   OFFERING PRICE
------------------------------------------------------------------------
  <S>                 <C>            <C>             <C>
  Less than $25,000        4.50%          4.71%             4.00%
  $ 25,000 - 49,999        4.00           4.17              3.60
    50,000 - 99,999        3.50           3.63              3.15
   100,000 - 249,999       2.50           2.56              2.25
   250,000 - 499,999       1.50           1.52              1.35
   500,000 and over         *               *                 *
------------------------------------------------------------------------
</TABLE>
   
* Purchases of Class A shares of $500,000 or more 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 Smith Barney, which compensates Smith Barney Financial
  Consultants and other dealers whose clients make purchases of $500,000 or
  more. The CDSC is waived in the same circumstances in which the CDSC applica-
  ble to Class B and Class C shares is waived. See "Deferred Sales Charge
  Alternatives" and "Waivers of CDSC."     
 
 Members of the selling group may receive up to 90% of the sales charge and may
be deemed to be underwriters of the Concert Series as defined in the Securities
Act of 1933, as amended.
   
 The reduced sales charges shown above apply to the aggregate of purchases of
Class A shares of a Portfolio made at one time by "any person," which includes
an individual and his or her immediate family, or a trustee or other fiduciary
of a single trust estate or single fiduciary account.     
 
 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 (i) Board
Members and employees of Travelers and its subsidiaries and any of the Smith
Barney Mutual Funds (including retired Board Members and employees); the imme-
diate families of such persons (including the surviving spouse of a deceased
Board Member or employee) and to a pension, profit-sharing or other benefit
plan for such persons and (ii) employees of members of the National Association
of Securities Dealers, Inc., 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 to effect the combina-
tion of such company with the Portfolio by merger, acquisition of assets or
otherwise; (c) purchases of Class A shares by any client of a newly employed
Smith Barney Financial Consultant (for a period up to 90 days from the com-
mencement of the Financial Consultant's employment with Smith Barney), on the
condition the purchase of Class A shares is made with the proceeds of the
redemption of shares of a mutual fund which (i) was sponsored by the Financial
Consultant's prior employer, (ii) was sold to the client by the Financial Con-
sultant and (iii) was subject to a sales charge; (d) purchases by shareholders
who have redeemed Class A shares in a Portfolio (or Class A shares of another
fund of the Smith Barney Mutual Funds that are sold with a sales charge) and
who wish to reinvest their redemption proceeds in the Portfolio, provided the
reinvestment is made within 60 calendar days of the redemption; (e) purchases
by accounts managed by registered investment advisory subsidiaries of Travel-
ers; (f) direct rollovers by plan participants of distributions from a 401(k)
plan enrolled in the Smith Barney 401(k) Program (Note: subsequent investments
will be subject to the applicable sales charge); (g) purchases by separate
accounts used to fund certain unregistered variable     
 
                                                                              23
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
   
annuity contracts; (h) purchases by investors participating in a Smith Barney
fee based arrangement; and (i) purchases of Class A shares of a Portfolio by
Section 403(b) or Section 401(a) or (k) accounts associated with Copeland
Retirement Programs. In order to obtain such discounts, the purchaser must pro-
vide sufficient information at the time of purchase to permit verification that
the purchase would qualify for the elimination of the sales charge.     
 
 RIGHT OF ACCUMULATION
 
 Class A shares of a Portfolio may be purchased by "any person" (as defined
above) at a reduced sales charge or at net asset value determined by aggregat-
ing the dollar amount of the new purchase and the total net asset value of all
Class A shares of the Portfolio and of funds sponsored by Smith Barney that are
offered with a sales charge listed under "Exchange Privilege" then held by such
person and applying the sales charge applicable to such aggregate. In order to
obtain such discount, the purchaser must provide sufficient information at the
time of purchase to permit verification that the purchase qualifies for the
reduced sales charge. The right of accumulation is subject to modification or
discontinuance at any time with respect to all shares purchased thereafter.
 
 GROUP PURCHASES
 
 Upon completion of certain automated systems, a reduced sales charge or pur-
chase at net asset value will also be available to employees (and partners) of
the same employer purchasing as a group, provided each participant makes the
minimum initial investment required. The sales charge applicable to purchases
by each member of such a group will be determined by the table set forth above
under "Initial Sales Charge Alternative--Class A Shares," and will be based
upon the aggregate sales of Class A shares of Smith Barney Mutual Funds offered
with a sales charge to, and share holdings of, all members of the group. To be
eligible for such reduced sales charges or to purchase at net asset value, all
purchases must be pursuant to an employer- or partnership-sanctioned plan meet-
ing certain requirements. One such requirement is that the plan must be open to
specified partners or employees of the employer and its subsidiaries, if any.
Such plan may, but is not required to, provide for payroll deductions, IRAs or
investments pursuant to retirement plans under Sections 401 or 408 of the Code.
Smith Barney may also offer a reduced sales charge or net asset value purchase
for aggregating related fiduciary accounts under such conditions that Smith
Barney will realize economies of sales efforts and sales related expenses. An
individual who is a member of a qualified group may also purchase Class A
shares at the reduced sales charge applicable to the group as a whole. The
sales charge is based upon the aggregate dollar value of Class A shares offered
with a sales charge that have been previously purchased and are still owned by
the group, plus the amount of the current purchase. A "qualified group" is one
that (a) has been in existence for more than six months, (b) has a purpose
other than acquiring Portfolio shares at a discount and (c) satisfies uniform
criteria that enable Smith Barney to realize economies of scale in its costs of
distributing shares. A qualified group must have more than 10 members, must be
available to arrange for group meetings between representatives of the Portfo-
lio and the members, and must agree to include sales and other materials
related to the Portfolio in its publications and mailings to members at no cost
to Smith Barney. In order to obtain such reduced sales charge or to purchase at
net asset value, the purchaser must provide sufficient information at the time
of purchase to permit verification that the purchase qualifies for the reduced
sales charge. Approval of group purchase reduced sales charge plans is subject
to the discretion of Smith Barney.
 
 LETTER OF INTENT
 
 Class A Shares. 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
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 pur-
chases of all Class A shares of each Portfolio and other Smith Barney Mutual
Funds offered with a sales charge 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 execution 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 difference between the sales charges
applicable to the purchases made and the charges previously paid, or an appro-
priate number of escrowed shares will be redeemed. Please contact a Smith Bar-
ney Financial Consultant or First Data to obtain a Letter of Intent applica-
tion.
 
 Class Y Shares. A Letter of Intent may also be used as a way for investors to
meet the minimum investment requirement for Class Y shares. Such investors must
make an initial minimum purchase of $1,000,000 in Class Y shares of a Portfolio
and agree to purchase a total of $5,000,000 of Class Y shares of the same Port-
folio within six months from the date of the Letter. If a total investment of
$5,000,000 is not made within the six-month period, all Class Y shares pur-
chased to date will be transferred to Class A shares, where they will be sub-
ject to all fees (including a service fee of 0.25%) and expenses applicable to
such Portfolio's Class A shares, which may include a CDSC of 1.00%. Please con-
tact a Smith Barney Financial Consultant or First Data for further information.
 
24
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
 
 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 a Portfolio. A CDSC, however, may be imposed on certain
redemptions of these shares. "CDSC Shares" are: (a) Class B shares; (b) Class C
shares; and (c) Class A shares that were purchased without an initial sales
charge but subject to a CDSC.     
 
 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 CDSC to
the extent that the value of such shares represents: (a) capital appreciation
of Portfolio 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 C shares and Class A shares
that are CDSC Shares, shares redeemed more than 12 months after their purchase.
   
 Class C shares and 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 purchase 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 statement month. The following table sets forth the rates of the
charge for redemptions of Class B shares by shareholders, except in the case of
purchases by Participating Plans, as described below. See "Purchase of Shares--
Smith Barney 401(k) and ExecChoice(TM) Programs."     
 
<TABLE>
<CAPTION>
                           CDSC APPLICABLE TO            CDSC
                         HIGH GROWTH PORTFOLIO,     APPLICABLE TO
  YEARS SINCE PURCHASE    GROWTH PORTFOLIO AND  CONSERVATIVE PORTFOLIO
  PAYMENT WAS MADE         BALANCED PORTFOLIO    AND INCOME PORTFOLIO
----------------------------------------------------------------------
  <S>                    <C>                    <C>
    First                         5.00%                  4.50%
    Second                        4.00                   4.00
    Third                         3.00                   3.00
    Fourth                        2.00                   2.00
    Fifth                         1.00                   1.00
    Sixth                         0.00                   0.00
    Seventh                       0.00                   0.00
    Eighth                        0.00                   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 fees. There will also be converted at that time such pro-
portion 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. See "Prospectus Summary--Alternative Purchase Arrangements--Class
B Shares Conversion Feature."     
 
 In determining the applicability of any CDSC or the conversion feature
described above, 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 gain distributions 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 acquired in one of the other
Smith Barney Mutual Funds, and Portfolio shares being redeemed will be consid-
ered 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 Smith Barney.
 
 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 addi-
tional shares through dividend reinvestment. During the fifteenth month after
the purchase, 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 that represents
appreciation ($200) and the value of the reinvested dividend shares ($60).
Therefore, $240 of the $500 redemption proceeds ($500 minus $260) would be
charged at a rate of 4.00% (the applicable rate for Class B shares) for a total
deferred sales charge of $9.60.
 
 
                                                                              25
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
 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 "Automatic Cash Withdrawal Plan"); (c) redemptions of shares within twelve
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)
redemptions of shares to effect a combination of the Portfolio with any invest-
ment company by merger, acquisition of assets or otherwise. 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 Smith Barney in the
case of shareholders who are also Smith Barney clients or by First Data in the
case of all other shareholders) of the shareholder's status or holdings, as the
case may be.
          
 SMITH BARNEY 401(K) AND EXECCHOICE(TM) PROGRAMS     
   
 Investors may be eligible to participate in the Smith Barney 401(k) Program or
the Smith Barney ExecChoice(TM) Program. To the extent applicable, the same
terms and conditions, which are outlined below, are offered to all plans par-
ticipating ("Participating Plans") in these programs.     
   
 Each of the Portfolios offers to Participating Plans Class A and Class C
shares as investment alternatives under the Smith Barney 401(k) and
ExecChoice(TM) Programs. Class A and Class C shares acquired through the Par-
ticipating Plans are subject to the same service and/or distribution fees as
the Class A and Class C shares acquired by other investors; however, they are
not subject to any initial sales charges or CDSC. Once a Participating Plan has
made an initial investment in a Portfolio, all of its subsequent investments in
the Portfolio must be in the same Class of shares, except as otherwise
described below.     
   
 Class A Shares. Class A shares of a Portfolio are offered without any sales
charge or CDSC to any Participating Plan that purchases $1,000,000 or more of
Class A shares of one or more Smith Barney Mutual Funds.     
   
 Class C Shares. Class C shares of a Portfolio are offered without any sales
charge or CDSC to any Participating Plan that purchases less than $1,000,000 of
Class C shares of one or more Smith Barney Mutual Funds.     
   
 401(k) and ExecChoice(TM) Plans Opened On or After June 21, 1996. At the end
of the fifth year after the date the Participating Plan enrolled in the Smith
Barney 401(k) Program or Smith Barney ExecChoice(TM) Program, if its total
Class C holdings in all non-money market Smith Barney Mutual Funds equal at
least $1,000,000, it will be offered the opportunity to exchange all of its
Class C shares for Class A shares of a Portfolio. (For Participating Plans that
were originally established through a Smith Barney retail brokerage account,
the five year period will be calculated from the date the retail brokerage
account was opened.) Such Participating Plans will be notified of the pending
exchange in writing within 30 days after the fifth anniversary of the enroll-
ment date and, unless the exchange offer has been rejected in writing, the
exchange will occur on or about the 90th day after the fifth anniversary date.
If the Participating Plan does not qualify for the five year exchange of Class
A shares, a review of the Participating Plan's holdings will be performed each
quarter until either the Participating Plan qualifies or the end of the eighth
year.     
   
 401(k) Plan Opened Prior to June 21, 1996. In any year after the date a Par-
ticipating Plan enrolled in the Smith Barney 401(k) Program, if its total Class
C holdings in all non-money market Smith Barney Mutual Funds equal at least
$500,000 as of the calendar year-end, the Participating Plan will be offered
the opportunity to exchange all of its Class C shares for Class A shares of a
Portfolio. Such Plans will be notified in writing within 30 days after the last
business day of the calendar year and, unless the exchange offer has been
rejected in writing, the exchange will occur on or about the last business day
of the following March.     
   
 Any Participating Plan in the Smith Barney 401(k) or ExecChoice(TM) Programs
whether opened before or after June 21, 1996 that has not previously qualified
for an exchange into Class A shares will be offered the opportunity to exchange
all of its Class C shares for Class A shares of a Portfolio, regardless of
asset size, at the end of the eighth year after the date the Participating Plan
enrolled in the Smith Barney 401(k) or ExecChoice(TM) Program. Such Plans will
be notified of the pending exchange in writing approximately 60 days before the
eighth anniversary of the enrollment date and, unless the exchange has been
rejected in writing, the exchange will occur on or about the eighth anniversary
date. Once an exchange has occurred, a Participating Plan will not be eligible
to acquire additional Class C shares of the Portfolio, but instead may acquire
Class A shares of the Portfolio. Any Class C shares not converted will continue
to be subject to the distribution fee.     
   
 Participating Plans wishing to acquire shares of a Portfolio through the Smith
Barney 401(k) Program or the Smith Barney ExecChoice(TM) Program must purchase
such shares directly from First Data. For further information regarding these
Programs, investors should contact a Smith Barney Financial Consultant.     
 
26
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
          
 Existing 401(k) Plans Investing in Class B Shares. Class B shares of the Smith
Barney Mutual Funds are not available for purchase by Participating Plans
opened on or after June 21, 1996, but may continue to be purchased by any Par-
ticipating Plan in the Smith Barney 401(k) Program opened prior to such date
and originally investing in such Class. Class B shares acquired are subject to
a CDSC of 3.00% of redemption proceeds, if the Participating Plan terminates
within eight years of the date the Participating Plan first enrolled in the
Smith Barney 401(k) Program.     
   
 At the end of the eighth year after the date the Participating Plan enrolled
in the Smith Barney 401(k) Program, it will be offered the opportunity to
exchange all of its Class B shares for Class A shares of a Portfolio. Such Par-
ticipating Plan will be notified of the pending exchange in writing approxi-
mately 60 days before the eighth anniversary of the enrollment date and, unless
the exchange has been rejected in writing, the exchange will occur on or about
the eighth anniversary date. Once the exchange has occurred, a Participating
Plan will not be eligible to acquire Class B shares of the Portfolio but
instead may acquire Class A shares of the Portfolio. If the Participating Plan
elects not to exchange all of its Class B Shares at that time, each Class B
share held by the Participating Plan will have the same conversion features as
Class B shares held by other investors. See "Purchase of Shares--Deferred Sales
Charge Alternatives" in the Prospectus.     
   
 No CDSC is imposed on redemptions of Class B shares to the extent that the net
asset value of the shares redeemed does not exceed the current net asset value
of the shares purchased through reinvestment of dividends or capital gain dis-
tributions, plus the current net asset value of Class B shares purchased more
than eight years prior to the redemption, plus increases in the net asset value
of the shareholder's Class B shares above the purchase payments made during the
preceding eight years. Whether or not the CDSC applies to the redemption by a
Participating Plan depends on the number of years since the Participating Plan
first became enrolled in the Smith Barney 401(k) Program, unlike the applica-
bility of the CDSC to redemptions by other shareholders, which depends on the
number of years since those shareholders made the purchase payment from which
the amount is being redeemed.     
   
 The CDSC will be waived on redemptions of Class B shares in connection with
lump-sum or other distributions made by a Participating Plan as a result of:
(a) the retirement of an employee in the Participating Plan; (b) the termina-
tion of employment of an employee in the Participating Plan; (c) the death or
disability of an employee in the Participating Plan; (d) the attainment of age
59 1/2 by an employee in the Participating Plan; (e) hardship of an employee in
the Participating Plan to the extent permitted under Section 401(k) of the
Code; or (f) redemptions of shares in connection with a loan made by the Par-
ticipating Plan to an employee.     
 
EXCHANGE PRIVILEGE
   
 Except as otherwise noted below, shares of each Class may be exchanged for
shares of the same Class in any other Portfolio of the Concert Series, as well
as in the following Smith Barney Mutual Funds, to the extent shares are offered
for sale in the shareholder's state of residence. Exchanges of Class A, Class B
and Class C shares are subject to minimum investment requirements and all
shares are subject to the other requirements of the fund into which exchanges
are made.     
 
 FUND NAME
 
 Growth Funds
     Smith Barney Aggressive Growth Fund Inc.
     Smith Barney Appreciation Fund Inc.
     Smith Barney Fundamental Value Fund Inc.
     Smith Barney Growth Opportunity Fund
     Smith Barney Managed Growth Fund
     Smith Barney Natural Resources Fund Inc.
     Smith Barney Special Equities Fund
 
 Growth and Income Funds
        
     Concert Social Awareness Fund     
     Smith Barney Convertible Fund
     Smith Barney Funds, Inc.-- Equity Income Portfolio
     Smith Barney Growth and Income Fund
     Smith Barney Premium Total Return Fund
           
     Smith Barney Utilities Fund
 
 Taxable Fixed-Income Funds
     ** Smith Barney Adjustable Rate Government Income Fund
 
                                                                              27
<PAGE>
 
EXCHANGE PRIVILEGE (CONTINUED)
 
     Smith Barney Diversified Strategic Income Fund
           
     Smith Barney Funds, Inc.--Short-Term U.S. Treasury Securities Portfolio
     Smith Barney Funds, Inc.--U.S. Government Securities Portfolio
     Smith Barney Government Securities Fund
     Smith Barney High Income Fund
     Smith Barney Investment Grade Bond Fund
     Smith Barney Managed Governments Fund Inc.
 
 Tax-Exempt Funds
     Smith Barney Arizona Municipals Fund Inc.
     Smith Barney California Municipals Fund Inc.
     * Smith Barney Intermediate Maturity California Municipals Fund
     * Smith Barney Intermediate Maturity New York Municipals Fund
     Smith Barney Managed Municipals Fund Inc.
     Smith Barney Massachusetts Municipals Fund
           
     Smith Barney Muni Funds--Florida Portfolio
     Smith Barney Muni Funds--Georgia Portfolio
     * Smith Barney Muni Funds--Limited Term Portfolio
     Smith Barney Muni Funds--National Portfolio
     Smith Barney Muni Funds--New York Portfolio
           
     Smith Barney Muni Funds--Pennsylvania Portfolio
     Smith Barney New Jersey Municipals Fund Inc.
     Smith Barney Oregon Municipals Fund
     Smith Barney Tax-Exempt Income Fund
 
 International Funds
     Smith Barney World Funds, Inc.--Emerging Markets Portfolio
     Smith Barney World Funds, Inc.--European Portfolio
     Smith Barney World Funds, Inc.--Global Government Bond Portfolio
     Smith Barney World Funds, Inc.--International Balanced Portfolio
     Smith Barney World Funds, Inc.--International Equity Portfolio
     Smith Barney World Funds, Inc.--Pacific Portfolio
 
 Money Market Funds
     + Smith Barney Exchange Reserve Fund
     ++ Smith Barney Money Funds, Inc.--Cash Portfolio
     ++ Smith Barney Money Funds, Inc.--Government Portfolio
     *** Smith Barney Money Funds, Inc.--Retirement Portfolio
     +++ Smith Barney Municipal Money Market Fund, Inc.
     +++ Smith Barney Muni Funds--California Money Market Portfolio
     +++ Smith Barney Muni Funds--New York Money Market Portfolio
--------------------------------------------------------------------------------
  * Available for exchange with Class A, Class C and Class Y shares of each
    Portfolio.
   
 ** Available for exchange with Class A and Class B shares of each Portfolio.
    In addition, shareholders who own Class C shares of a Portfolio through the
    Smith Barney 401(k) Program may exchange those shares for Class C shares of
    this fund.     
*** Available for exchange with Class A shares of each Portfolio.
  + Available for exchange with Class B and Class C shares of each Portfolio.
 ++ Available for exchange with Class A and Class Y shares of each Portfolio.
    In addition, shareholders who own Class C shares of a Portfolio through the
    Smith Barney 401(k) Program may exchange those shares for Class C shares of
    this fund.
   
+++ Available for exchange with Class A and Class Y shares of each Portfolio.
    In addition, Participating Plans opened prior to June 21, 1996 and invest-
    ing in Class C shares may exchange Portfolio shares for Class C shares of
    this fund.     
          
 Class B Exchanges. In the event a Class B shareholder wishes to exchange all
or a portion of his or her shares into any of the funds imposing a higher CDSC
than that imposed by a Portfolio, 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
Portfolio that have been exchanged.     
 
 Class C Exchanges. Upon an exchange, the new Class C shares will be deemed to
have been purchased on the same date as the Class C shares of the Portfolio
that have been exchanged.
 
 
28
<PAGE>
 
EXCHANGE PRIVILEGE (CONTINUED)
   
 Class A and Class Y Exchanges. Class A and Class Y shareholders of each Port-
folio who wish to exchange all or a portion of their shares for shares of the
respective Class in any of the funds identified above may do so without imposi-
tion of any charge.     
 
 Additional Information Regarding the Exchange Privilege. Although the exchange
privilege is an important benefit, excessive exchange transactions can be det-
rimental to a Portfolio's performance and its shareholders. The Concert Series
may determine that a pattern of frequent exchanges is excessive and contrary to
the best interests of each Portfolio's other shareholders. In this event, the
Concert Series may, at its discretion, decide to limit additional purchases
and/or exchanges by the shareholder. Upon such a determination, the Concert
Series 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
Portfolio or (b) remain invested in the Portfolio or exchange into any of the
funds of the Smith Barney Mutual Funds ordinarily available, which position the
shareholder would be expected to maintain for a significant period of time. All
relevant factors will be considered in determining what constitutes an abusive
pattern of exchanges.
   
 Certain shareholders may be able to exchange shares by telephone. See "Redemp-
tion of Shares--Telephone Redemption and Exchange Program." Exchanges will be
processed at the net asset value next determined. Redemption procedures dis-
cussed 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 reg-
istration 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. Each Portfolio reserves the right to modify or discon-
tinue exchange privileges upon 60 days' prior notice to shareholders.     
 
REDEMPTION OF SHARES
 
 The Concert Series is required to redeem the shares of each Portfolio tendered
to it, as described below, at a redemption price equal to their net asset value
per share next determined after receipt of a written request in proper form at
no charge other than any applicable CDSC. Redemption requests received after
the close of regular trading on the NYSE are priced at the net asset value next
determined.
 
 If a shareholder holds shares in more than one Class, any requests for redemp-
tion must specify the Class being redeemed. In the event of a failure to spec-
ify which Class, or if the investor owns fewer shares of the Class than speci-
fied, the redemption request will be delayed until the Concert Series' transfer
agent receives further instructions from Smith Barney or if the shareholder's
account is not with Smith Barney, from the shareholder directly. The redemption
proceeds will be remitted on or before the third business day following receipt
of proper tender, except on any days on which the NYSE is closed or as permit-
ted under the 1940 Act in extraordinary circumstances. Generally, if the
redemption proceeds are remitted to a Smith Barney brokerage account, these
funds will not be invested for the shareholder's benefit without specific
instruction and Smith Barney will benefit from the use of temporarily
uninvested funds. Redemption proceeds for shares purchased by check, other than
a certified or official bank check, will be remitted upon clearance of the
check, which may take up to ten days or more.
 
 Shares held by Smith Barney as custodian must be redeemed by submitting a
written request to a Smith Barney Financial Consultant. Shares other than those
held by Smith Barney as custodian may be redeemed through an investor's Finan-
cial Consultant, Introducing Broker or dealer in the selling group or by sub-
mitting a written request for redemption to:
     
  Smith Barney Concert Allocation Series Inc.     
  Class A, B, C or Y (please specify)
  c/o First Data Investor Services Group, Inc.
     
  P.O. Box 5128     
     
  Westborough, Massachusetts 01581-5128     
 
 A written redemption request must (a) state the Class and number or dollar
amount of shares to be redeemed (b) identify the shareholder's account number
and (c) be signed by each registered owner exactly as the shares are regis-
tered. If the shares to be redeemed were issued in certificate form, the cer-
tificates must be endorsed for transfer (or be accompanied by an endorsed stock
power) and must be submitted to First Data together with the redemption
request. Any signature required in connection with a redemption request in
excess of $2,000 must be guaranteed by an eligible guarantor institution, such
as a domestic bank, savings and loan institution, domestic credit union, member
bank of the Federal Reserve System or member firm of a national securities
exchange. Written redemption requests of $2,000 or less do not require a signa-
ture guarantee unless more than one such redemption is made in any 10-day peri-
od. First Data may require additional supporting documents for redemptions made
by corporations, executors, administrators, trustees or guardians. A redemption
request will not be deemed properly received until First Data receives all
required documents in proper form. Redemption proceeds will be mailed to the
shareholder's address of record.
 
                                                                              29
<PAGE>
 
REDEMPTION OF SHARES (CONTINUED)
    
 TELEPHONE REDEMPTION AND EXCHANGE PROGRAM     
   
 Shareholders who do not have a Smith Barney brokerage account may be eligible
to redeem and exchange Portfolio shares by telephone. To determine if a share-
holder is entitled to participate in this program, he or she should contact
First Data at (800) 451-2010. Once eligibility is confirmed, the shareholder
must complete and return a Telephone/Wire Authorization Form, including a sig-
nature guarantee, that will be provided by First Data upon request. (Alterna-
tively, an investor may authorize telephone redemptions on the new account
application with a signature guarantee when making his/her initial investment
in the Concert Series.)     
   
 Redemptions. Redemption requests of up to $10,000 of any Class or Classes of a
Portfolio's shares may be made by eligible shareholders by calling First Data
at (800) 451-2010. Such requests may be made between 9:00 a.m. and 5:00 p.m.
(New York City time) on any day the NYSE is open. Redemptions of shares (i) by
retirement plans or (ii) for which certificates have been issued are not per-
mitted under this program.     
 
 A shareholder will have the option of having the redemption proceeds mailed to
his/her address of  record or wired to a bank account predesignated by the
shareholder. Generally, redemption proceeds will be mailed or wired, as the
case may be, on the next business day following the redemption request. In
order to use the wire procedures, the bank receiving the proceeds must be a
member of the Federal Reserve System or be a correspondent with a member bank.
The Concert Series reserves the right to charge shareholders a nominal fee for
each wire redemption. Such charges, if any, will be assessed against the share-
holder's Portfolio account from which shares were redeemed. In order to change
the bank account designated to receive redemption proceeds, a shareholder must
complete a new Telephone/Wire Authorization Form and, for the protection of the
shareholder's assets, will be required to provide a signature guarantee and
certain other documentation.
   
 Exchanges. Eligible shareholders may make exchanges by telephone if the
account registration of the shares of the fund being acquired is identical to
the registration of the shares of the fund exchanged. Such exchange requests
may be made by calling First Data at (800) 451-2010 between 9:00 a.m. and 5:00
p.m. (New York City time) on any day on which the NYSE is open.     
 
 Additional Information regarding Telephone Redemption and Exchange Program.
Neither the Concert Series not its agents will be liable for following instruc-
tions communicated by telephone that are reasonably believed to be genuine. The
Concert Series and its agents will employ procedures designed to verify the
identity of the caller and legitimacy of instructions (for example, a share-
holder's name and account number will be required and phone calls may be
recorded). The Concert Series reserves the right to suspend, modify or discon-
tinue the telephone redemption and exchange program or to impose a charge for
this service at any time following at least seven (7) days prior notice to
shareholders.
 
 AUTOMATIC CASH WITHDRAWAL PLAN
 
 Each Portfolio 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 cash payments of at least $50 monthly or quarterly. Retirement plan
accounts are eligible for automatic cash withdrawal plans only where the share-
holder 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 a Portfolio. 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 a Smith Barney Financial Consultant.
 
MINIMUM ACCOUNT SIZE
 
 The Concert Series reserves the right to involuntarily liquidate any share-
holder's account in a Portfolio if the aggregate net asset value of the shares
held in that Portfolio account is less than $500. (If a shareholder has more
than one account in a Portfolio, each account must satisfy the minimum account
size.) The Concert Series, however, will not redeem shares based solely on mar-
ket reductions in net asset value. Before the Concert Series exercises such
right, shareholders will receive written notice and will be permitted 60 days
to bring accounts up to the minimum to avoid involuntary liquidation.
 
30
<PAGE>
 
PERFORMANCE
 
 From time to time a Portfolio may include its total return, average annual
total return, yield and current dividend return in advertisements and/or other
types of sales literature. These figures are computed separately for Class A,
Class B, Class C and Class Y shares of each Portfolio. These figures are based
on historical earnings and are not intended to indicate future performance.
Total return is computed for a specified period of time assuming deduction of
the maximum sales charge, if any, from the initial amount invested and rein-
vestment of all income dividends and capital gain distributions on the rein-
vestment 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 ini-
tial amount invested and subtracting 100%. The standard average annual total
return, as prescribed by the SEC is derived from this total return, which pro-
vides 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 yield of a Portfolio's Class refers to
the net investment income earned by investments in the Class over a 30-day
period. This net investment income is then annualized, i.e., the amount of
income earned by the investments during that 30-day period is assumed to be
earned each 30-day period for twelve periods and is expressed as a percentage
of the investments. The yield is calculated according to a formula prescribed
by the SEC to facilitate comparison with yields quoted by other investment com-
panies. The Balanced Portfolio and the Conservative Portfolio calculate current
dividend return for each of their Classes by annualizing the most recent quar-
terly dividend and dividing by the net asset value or the maximum public offer-
ing price (including sales charge) on the last day of the period for which cur-
rent dividend return is presented. The Income Portfolio calculates current div-
idend return for each of its Classes 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. Each Class' current dividend return may vary from
time to time depending on market conditions, the composition of the investment
portfolio and its operating expenses. These factors and possible differences in
the methods used in calculating current dividend return should be considered
when comparing current return of a Class to yields published for other invest-
ment companies and other investment vehicles. Each Portfolio 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.
 
MANAGEMENT OF THE CONCERT SERIES
 
 
 BOARD OF DIRECTORS
   
 Overall responsibility for management and supervision of the Concert Series
rests with the Concert Series' Board of Directors. A majority of the Concert
Series' directors are non-interested persons as defined in Section 2(a)(19) of
the 1940 Act. However, the directors and officers of the Concert Series also
serve in similar positions with many of the Underlying Smith Barney Funds.
Thus, if the interests of a Portfolio and the Underlying Smith Barney Funds
were ever to become divergent, it is possible that a conflict of interest could
arise and affect how the directors and officers of the Concert Series fulfill
their fiduciary duties to that Portfolio and the Underlying Smith Barney Funds.
The directors of the Concert Series believe they have structured each Portfolio
to avoid these concerns. However, conceivably a situation could occur where
proper action for the Concert Series or a Portfolio separately could be adverse
to the interests of an Underlying Smith Barney Fund, or the reverse could
occur. If such a possibility arises, the directors and officers of the Concert
Series, the affected Underlying Smith Barney Funds and SBMFM will carefully
analyze the situation and take all steps they believe reasonable to minimize
and, where possible, eliminate the potential conflict. Moreover, limitations on
aggregate investments in the Underlying Smith Barney Funds have been adopted by
the Concert Series to minimize this possibility, and close and continuous moni-
toring will be exercised to avoid, insofar as is possible, these concerns. The
Statement of Additional Information contains background information regarding
each director and executive officer of the Concert Series.     
    
 INVESTMENT MANAGER     
   
 SBMFM, the investment manager to each Portfolio, is a registered investment
adviser whose principal offices are located at 388 Greenwich Street, New York,
New York 10013. SBMFM (through its predecessor entities) has been in the
investment counseling business since 1940. SBMFM renders investment advice to a
wide variety of investment company clients that had aggregate assets under man-
agement as of January 31, 1997 in excess of $80 billion. Subject to the super-
vision and direction of the Concert Series' Board of Directors, SBMFM will
determine how each Portfolio's assets will be invested in the Underlying Smith
Barney Funds and in repurchase agreements pursuant to the investment objective
and policies of each Portfolio set forth in this Prospectus and make recommen-
dations to the Board of Directors concerning changes to (a) the Underlying
Smith Barney Funds in which the Portfolios may invest, (b) the percentage range
of assets that may be invested by each Portfolio in any one Underlying Smith
Barney Fund and (c) the percentage range of assets of any Portfolio that may be
invested in equity funds and fixed income funds (including money market funds).
The directors of the Concert Series will periodically monitor the allocations
made and the basis upon which such allocations were made or maintained. SBMFM
also furnishes each Portfolio with bookkeeping, accounting and administrative
services, office space and equipment, and the services of the officers and
employees of the Concert Series. Under the Asset Allocation and Administration
    
                                                                              31
<PAGE>
 
MANAGEMENT OF THE CONCERT SERIES (CONTINUED)
   
Agreement with each Portfolio, SBMFM has agreed to bear all expenses of the
Concert Series other than the management fee, the fees payable pursuant to the
plan adopted pursuant to Rule 12b-1 under the 1940 Act and extraordinary
expenses. For the services rendered and expenses borne for each Portfolio's
last fiscal period, each Portfolio paid SBMFM a monthly fee at the annual rate
of 0.35% of the value of its average daily net assets.     
   
 SBMFM also serves as investment adviser to each of the Underlying Smith Barney
Funds in which the Portfolios may invest (other than the Smith Barney Premium
Total Return Fund) and is responsible for the selection and management of each
of the Underlying Smith Barney Fund's investments. SBSA, located at 388
Greenwich Street, New York, New York 10013, serves as investment adviser to
Smith Barney Premium Total Return Fund. SBSA has been in the investment
counseling business since 1968 and is a wholly owned subsidiary of SBMFM. SBSA
renders investment advice to investment companies that had aggregate assets
under management as of January 31, 1997 in excess of $3 billion.     
 
 Each Portfolio, as a shareholder in the Underlying Smith Barney Funds, will
indirectly bear its proportionate share of any investment management fees and
other expenses paid by the Underlying Smith Barney Funds. The effective manage-
ment fee of each of the Underlying Smith Barney Funds in which the Portfolios
may invest is set forth below as a percentage rate of the Fund's annual net
assets:
 
<TABLE>   
<CAPTION>
                                                MANAGEMENT
UNDERLYING SMITH BARNEY FUND                       FEES
----------------------------------------------------------
<S>                                             <C>
Smith Barney Aggressive Growth Fund Inc.          0.80%
Smith Barney Appreciation Fund Inc.               0.60%
Smith Barney Equity Funds
 Smith Barney Growth and Income Fund              0.65%
Smith Barney Fundamental Value Fund Inc.          0.75%
Smith Barney Funds, Inc.
 Equity Income Portfolio                          0.58%
 Short-Term U.S. Treasury Securities Portfolio    0.45%
Smith Barney Income Funds
 Smith Barney High Income Fund                    0.70%
 Smith Barney Utilities Fund                      0.65%
 Smith Barney Premium Total Return Fund           0.75%
 Smith Barney Convertible Fund                    0.70%
 Smith Barney Diversified Strategic Income Fund   0.65%
Smith Barney Investment Funds Inc.
 Smith Barney Managed Growth Fund                 0.85%
 Smith Barney Special Equities Fund               0.75%
 Smith Barney Government Securities Fund          0.55%
 Smith Barney Investment Grade Bond Fund          0.65%
Smith Barney Managed Governments Fund Inc.        0.65%
Smith Barney Money Funds, Inc.
 Cash Portfolio                                   0.40%
Smith Barney Natural Resources Fund Inc.          0.75%
Smith Barney World Funds, Inc.
 International Equity Portfolio                   0.85%
 Emerging Markets Portfolio                       1.00%
 International Balanced Portfolio                 0.85%
 Global Government Bond Portfolio                 0.75%
----------------------------------------------------------
</TABLE>    
 
 PORTFOLIO MANAGEMENT
 
 Thomas B. Stiles II, Chief Investment Officer of SBMFM, has primary responsi-
bility for the day-to-day management of each Portfolio. Mr. Stiles, born in
1940, is Chairman and Chief Executive Officer of Greenwich Street Advisors, a
division of SBMFM, and a Managing Director of Smith Barney. Certain managing
directors of SBMFM will assist Mr. Stiles in managing the Portfolios.
   
 Management's discussion and analysis and additional performance information
regarding the Concert Series during the fiscal year ended January 31, 1997 is
included in the Annual Report dated January 31, 1997. A copy of the Annual
Report may be obtained upon request and without charge from a Smith Barney
Financial Consultant or by writing or calling the Concert Series at the address
or phone number listed on page one of this Prospectus.     
 
32
<PAGE>
 
DISTRIBUTOR
 
 Smith Barney, located at 388 Greenwich Street, New York, New York 10013, dis-
tributes shares of each Portfolio as principal underwriter and as such conducts
a continuous offering pursuant to a best efforts arrangement requiring Smith
Barney to take and pay for only such securities as may be sold to the public.
Pursuant to the services and distribution plan adopted by each Portfolio under
Rule 12b-1 under the 1940 Act (the "Plan"), Smith Barney is paid a service fee
with respect to Class A, Class B and Class C shares of each Portfolio at the
annual rate of 0.25% of the average daily net assets attributable to these
Classes. Smith Barney is also paid a distribution fee with respect to Class B
shares and Class C shares of the High Growth Portfolio, the Growth Portfolio
and the Balanced Portfolio at the annual rate of 0.75% of the average daily net
assets attributable to those Classes. Smith Barney is paid a distribution fee
with respect to Class B and Class C shares of the Conservative Portfolio and
the Income Portfolio at the annual rate of 0.50% and 0.45%, respectively, of
the average daily net assets attributable to those Classes. Class B shares that
automatically convert to Class A shares eight years after the date of original
purchase will no longer be subject to a distribution fee. The fees are used by
Smith Barney to pay its Financial Consultants for servicing shareholder
accounts and, in the case of Class B and Class C shares, to cover expenses pri-
marily intended to result in the sale of those shares. These expenses include:
advertising expenses; the cost of printing and mailing prospectuses to poten-
tial investors; payments to and expenses of Smith Barney Financial Consultants
and other persons who provide support services in connection with the distribu-
tion of shares; interest and/or carrying charges; and indirect and overhead
costs of Smith Barney associated with the sale of Portfolio shares, including
lease, utility, communications and sales promotion expenses.
 
 The payments to Smith Barney Financial Consultants for selling shares of a
Class include a commission or fee paid by the investor or Smith Barney at the
time of sale and, with respect to Class A, Class B and Class C shares, a con-
tinuing fee for servicing shareholder accounts for as long as a shareholder
remains a holder of that Class. Smith Barney Financial Consultants may receive
different levels of compensation for selling different Classes of shares.
 
 Actual distribution expenses for Class B and Class C shares of each Portfolio
for any given year may exceed the fees received pursuant to the Plan and will
be carried forward and paid by each Portfolio in future years so long as the
Plan is in effect. Interest is accrued monthly on such carryforward amounts at
a rate comparable to that paid by Smith Barney for bank borrowings.
 
ADDITIONAL INFORMATION
   
 The Concert Series, an open-end, non-diversified investment company, was
incorporated in Maryland on August 11, 1995. The Concert Series commenced oper-
ations on February 5, 1996 under the name Smith Barney Concert Series Inc. The
Select Portfolios of Concert Series commenced operations on February 5, 1997.
On February 24, 1997, the Concert Series changed its name to Smith Barney Con-
cert Allocation Series Inc. The Concert Series has authorized capital of
5,500,000,000 shares with a par value of $.001 per share. The Board of Direc-
tors has authorized the issuance of ten series of shares, each representing
shares in one of ten separate Portfolios and may authorize the issuance of
additional series of shares in the future. The assets of each Portfolio are
segregated and separately managed and a shareholder's interest is in the assets
of the Portfolio in which he or she holds shares. Class A, Class B, Class C,
Class Y and Class Z shares of a Portfolio represent interests in the assets of
that Portfolio and have identical voting, dividend, liquidation and other
rights (other than conversion) on the same terms and conditions except that
expenses related to the distribution of each Class of shares are borne solely
by each Class and each Class of shares has exclusive voting rights with respect
to provisions of the Concert Series' Rule 12b-1 distribution plan that pertain
to a particular Class. As described under "Voting" in the Statement of Addi-
tional Information, the Concert Series ordinarily will not hold shareholder
meetings; however, shareholders have the right to call a meeting upon a vote of
10% of the Concert Series' outstanding shares and the Concert Series will
assist shareholders in calling such a meeting as required by the 1940 Act.
Shares do not have cumulative voting rights or preemptive rights and are fully
paid, transferable and non-assessable when issued for payment as described in
this Prospectus.     
 
 On matters submitted for consideration by shareholders of any Underlying Smith
Barney Fund, a Portfolio will vote its shares in proportion to the vote of all
other holders of shares of that Fund or, in certain limited instances, the
Portfolio will vote its shares in the manner indicated by a vote of holders of
shares of the Portfolio.
 
 PNC Bank, National Association, located at 17th and Chestnut Streets, Phila-
delphia, Pennsylvania 19103 serves as custodian of the Portfolio's investments.
 
 First Data, located at Exchange Place, Boston, Massachusetts 02109, serves as
the Concert Series' transfer agent.
   
 The Concert Series intends to send its shareholders a semi-annual report and
an audited annual report, which will include listings of the investment securi-
ties held by the Concert Series at the end of the period covered. In an effort
to reduce the Concert Series' printing and mailing costs, the Concert Series
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.
Shareholders who do not want this consolidation to apply to their account
should contact their Smith Barney Financial Consultant or the Concert Series'
transfer agent.     
 
                                                                              33
<PAGE>
 
APPENDIX
 
 DESCRIPTIONS OF CERTAIN RISKS RELATED TO VARIOUS SECURITIES INVESTED IN, AND
 INVESTMENT STRATEGIES EMPLOYED BY, THE UNDERLYING SMITH BARNEY FUNDS IN WHICH
 THE PORTFOLIOS MAY INVEST
 
 Repurchase Agreements. Repurchase agreements, as utilized by an Underlying
Smith Barney Fund or a Portfolio of the Concert Series, could involve certain
risks in the event of default or insolvency of the other party, including pos-
sible delays or restrictions upon the ability of an Underlying Smith Barney
Fund or a Portfolio to dispose of the underlying securities, the risk of a pos-
sible decline in the value of the underlying securities during the period in
which an Underlying Smith Barney Fund or a Portfolio seeks to assert its rights
to them, the risk of incurring expenses associated with asserting those rights
and the risk of losing all or part of the income from the agreement.
 
 Reverse Repurchase Agreements. Certain of the Underlying Smith Barney Funds
may engage in reverse repurchase agreement transactions with banks, brokers and
other financial institutions. Reverse repurchase agreements involve the risk
that the market value of the securities sold by the Underlying Smith Barney
Fund may decline below the repurchase price of the securities.
 
 Lending of Portfolio Securities. The risks in lending portfolio securities,
like those associated with other extensions of secured credit, consist of pos-
sible delays in receiving additional collateral or in the recovery of the secu-
rities or possible loss of rights in the collateral should the borrower fail
financially. Loans will be made to firms deemed by the adviser to the Under-
lying Smith Barney Fund to be of good standing and will not be made unless, in
the judgment of the adviser, the consideration to be earned from such loans
would justify the risk.
 
 When-Issued Securities and Delayed-Delivery Transactions. The purchase of
securities on a when-issued or delayed-delivery basis involves the risk that,
as a result of an increase in yields available in the marketplace, the value of
the securities purchased will decline prior to the settlement date. The sale of
securities for delayed delivery involves the risk that the prices available in
the market on the delivery date may be greater than those obtained in the sale
transaction.
 
 Non-Diversified Funds. Certain of the Underlying Smith Barney Funds are
classified as non-diversified investment companies under the 1940 Act. Since,
as a non-diversified fund, such an Underlying Smith Barney Fund is permitted to
invest a greater proportion of its assets in the securities of a smaller number
of issuers, each such Fund may be subject to greater risk with respect to its
individual portfolio than a Fund that is more broadly diversified.
 
 Securities of Unseasoned Issuers. Securities in which certain of the Under-
lying Smith Barney Funds may invest may have limited marketability and, there-
fore, may be subject to wide fluctuations in market value. In addition, certain
securities may lack a significant operating history and be dependent on prod-
ucts or services without an established market share.
 
 Convertible Securities and Synthetic Convertible Securities. While convertible
securities generally offer lower yields than non-convertible debt securities of
similar quality, their prices may reflect changes in the value of the under-
lying common stock. Convertible securities entail less credit risk than the
issuer's common stock.
 
 Synthetic convertible securities are created by combining non-convertible
bonds or preferred stocks with warrants or stock call options. Synthetic con-
vertible securities differ from convertible securities in certain respects,
including that each component of a synthetic convertible security has a sepa-
rate market value and responds differently to market fluctuations. Investing in
synthetic convertible securities involves the risks normally involved in hold-
ing the securities comprising the synthetic convertible security.
 
 Securities of Developing Countries. A developing country generally is consid-
ered to be a country that is in the initial stages of its industrialization
cycle. Investing in the equity and fixed-income markets of developing countries
involves exposure to economic structures that are generally less diverse and
mature, and to political systems that can be expected to have less stability,
than those of developed countries. Historical experience indicates that the
markets of developing countries have been more volatile than the markets of the
more mature economies of developed countries; however, such markets often have
provided higher rates of return to investors.
 
 Sovereign Debt Obligations. Sovereign debt of developing countries may involve
a high degree of risk, and may be in default or present the risk of default.
Governmental entities responsible for repayment of the debt may be unable or
unwilling to repay principal and interest when due, and may require renegoti-
ation or rescheduling of debt payments. In addition, prospects for repaying of
principal and interest may depend on political as well as economic factors.
Although some sovereign debt, such as Brady Bonds, is collateralized by U.S.
government securities, repayment of principal and interest is not guaranteed by
the U.S. government.
 
 Restrictions on Foreign Investment. Some countries prohibit or impose substan-
tial restrictions on investments in their capital markets, particularly their
equity markets, by foreign entities. As illustrations, certain countries
require governmental approval prior to investments by foreign persons, or limit
the amount of investment by foreign persons in a particular company, or limit
the investment
 
A-1
<PAGE>
 
APPENDIX (CONTINUED)
 
by foreign persons to only a specific class of securities of a company that may
have less advantageous terms than securities of the company available for pur-
chase by nationals or limit the repatriation of funds for a period of time.
 
 Smaller capital markets, while often growing in trading volume, have substan-
tially less volume than U.S. markets, and securities in many smaller capital
markets are less liquid and their prices may be more volatile than securities
of comparable U.S. companies. Brokerage commissions, custodial services, and
other costs relating to investment in smaller capital markets are generally
more expensive than in the U.S. Such markets have different clearance and set-
tlement procedures, and in certain markets there have been times when settle-
ments have been unable to keep pace with the volume of securities transactions,
making it difficult to conduct such transactions. Further, satisfactory custo-
dial services for investment securities may not be available in some countries
having smaller capital markets, which may result in an Underlying Smith Barney
Fund incurring additional costs and delays in transporting and custodying such
securities outside such countries. Delays in settlement could result in tempo-
rary periods when assets of a Fund are uninvested and no return is earned
thereon. The inability of an Underlying Smith Barney Fund to make intended
security purchases due to settlement problems could cause such Fund to miss
attractive investment opportunities. Inability to dispose of a portfolio secu-
rity due to settlement problems could result either in losses to the Fund due
to subsequent declines in value of the portfolio security or, if the Fund has
entered into a contract to sell the security, could result in possible liabil-
ity to the purchaser. There is generally less government supervision and regu-
lation of exchanges, brokers and issuers in countries having smaller capital
markets than there is in the U.S.
 
 Mortgage-Related Securities. To the extent that an Underlying Smith Barney
Fund purchases mortgage-related securities at a premium, mortgage foreclosures
and prepayments of principal by mortgagors (which may be made at any time with-
out penalty) may result in some loss of the Fund's principal investment to the
extent of the premium paid. The Underlying Smith Barney Fund's yield may be
affected by reinvestment of prepayments at higher or lower rates than the orig-
inal investment. In addition, like other debt securities, the values of mort-
gage-related securities, including government and government-related mortgage
pools, generally will fluctuate in response to market interest rates.
 
 Non-Publicly Traded and Illiquid Securities. The sale of securities that are
not publicly traded is typically restricted under the Federal securities laws.
As a result, an Underlying Smith Barney Fund may be forced to sell these secu-
rities at less than fair market value or may not be able to sell them when the
Fund's adviser believes it desirable to do so. Investments by an Underlying
Smith Barney Fund in illiquid securities are subject to the risk that should
the Fund desire to sell any of these securities when a ready buyer is not
available at a price that the Fund's adviser deems representative of its value,
the value of the Underlying Smith Barney Fund's net assets could be adversely
affected.
 
 Short Sales. Possible losses from short sales differ from losses that could be
incurred from a purchase of a security, because losses from short sales may be
unlimited, whereas losses from purchases can equal only the total amount
invested.
 
 Forward Roll Transactions. Forward roll transactions involve the risk that the
market value of the securities sold by an Underlying Smith Barney Fund may
decline below the repurchase price of the securities. Forward roll transactions
are considered borrowings by a Fund. Although investing the proceeds of these
borrowings in repurchase agreements or money market instruments may provide an
Underlying Smith Barney Fund with the opportunity for higher income, this
leveraging practice will increase a Fund's exposure to capital risk and higher
current expenses. Any income earned from the securities purchased with the
proceeds of these borrowings that exceeds the cost of the borrowings would
cause a Fund's net asset value per share to increase faster than would
otherwise be the case; any decline in the value of the securities purchased
would cause a Fund's net asset value per share to decrease faster than would
otherwise be the case.
 
 Leverage. Certain of the Underlying Smith Barney Funds may borrow from banks,
on a secured or unsecured basis, in order to leverage their portfolios. Lever-
age creates an opportunity for increased returns to shareholders of an Under-
lying Smith Barney Fund but, at the same time, creates special risk considera-
tions. For example, leverage may exaggerate changes in the net asset value of a
Fund's shares and in a Fund's yield. Although the principal or stated value of
such borrowings will be fixed, the Fund's assets may change in value during the
time the borrowing is outstanding. Leverage will create interest or dividend
expenses for the Fund that can exceed the income from the assets retained. To
the extent the income or other gain derived from securities purchased with bor-
rowed funds exceeds the interest or dividends the Fund will have to pay in
respect thereof, the Fund's net income or other gain will be greater than if
leverage had not been used. Conversely, if the income or other gain from the
incremental assets is not sufficient to cover the cost of leverage, the net
income or other gain of the Fund will be less than if leverage had not been
used. If the amount of income for the incremental securities is insufficient to
cover the cost of borrowing, securities might have to be liquidated to obtain
required funds. Depending on market or other conditions, such liquidations
could be disadvantageous to the Underlying Smith Barney Fund.
 
 Floating and Variable Rate Income Securities. Floating and variable rate
income securities include securities whose rates vary inversely with changes in
market rates of interest. Such securities may also pay a rate of interest
determined by applying a multiple to
 
                                                                             A-2
<PAGE>
 
APPENDIX (CONTINUED)
 
the variable rate. The extent of increases and decreases in the value of secu-
rities whose rates vary inversely with changes in market rates of interest gen-
erally will be larger than comparable changes in the value of an equal princi-
pal amount of a fixed rate security having similar credit quality, redemption
provisions and maturity.
 
 Zero Coupon, Discount and Payment-in-Kind Securities. Zero coupon securities
generally pay no cash interest (or dividends in the case of preferred stock) to
their holders prior to maturity. Payment-in-kind securities allow the lender,
at its option, to make current interest payments on such securities either in
cash or in additional securities. Accordingly, such securities usually are
issued and traded at a deep discount from their face or par value and generally
are subject to greater fluctuations of market value in response to changing
interest rates than securities of comparable maturities and credit quality that
pay cash interest (or dividends in the case of preferred stock) on a current
basis.
 
 Premium Securities. Premium securities are income securities bearing coupon
rates higher than prevailing market rates. Premium securities are typically
purchased at prices greater than the principal amounts payable on maturity. If
securities purchased by an Underlying Smith Barney Fund at a premium are called
or sold prior to maturity, the Fund will recognize a capital loss to the extent
the call or sale price is less than the purchase price. Additionally, the Fund
will recognize a capital loss if it holds such securities to maturity.
 
 Yankee Bonds. Yankee bonds are U.S. dollar-denominated bonds sold in the U.S.
by non-U.S. issuers. As compared with bonds issued in the U.S., such bond
issues normally carry a higher interest rate but are less actively traded.
 
 Swap Agreements. As one way of managing its exposure to different types of
investments, certain of the Underlying Smith Barney Funds may enter into inter-
est rate swaps, currency swaps, and other types of swap agreements such as
caps, collars, and floors. Swap agreements can be highly volatile and may have
a considerable impact on a Fund's performance. Swap agreements are subject to
risks related to the counterparty's ability to perform, and may decline in
value if the counterparty's creditworthiness deteriorates. A Fund may also suf-
fer losses if it is unable to terminate outstanding swap agreements or reduce
its exposure through offsetting transactions.
 
 Indexed Securities. Certain of the Underlying Smith Barney Funds may invest in
indexed securities, including inverse floaters, whose value is linked to cur-
rencies, interest rates, commodities, indices, or other financial indicators.
Indexed securities may be positively or negatively indexed (i.e., their value
may increase or decrease if the underlying instrument appreciates), and may
have return characteristics similar to direct investments in the underlying
instrument or to one or more options on the underlying instrument. Indexed
securities may be more volatile than the underlying instrument itself.
 
 Investment in Utility Securities. The Smith Barney Utilities Fund is particu-
larly subject to risks that are inherent to the utility industries, including
difficulty in obtaining an adequate return on invested capital, difficulty in
financing large construction programs during an inflationary period, restric-
tions on operations and increased cost and delays attributable to environmental
considerations and regulation, difficulty in raising capital in adequate
amounts on reasonable terms in periods of high inflation and unsettled capital
markets, increased costs and reduced availability of certain types of fuel,
occasional reduced availability and high costs of natural gas for resales, the
effects of energy conservation, the effects of a national energy policy and
lengthy delays and greatly increased costs and other problems associated with
the design, construction, licensing, regulation and operation of nuclear facil-
ities for electric generation, including, among other considerations, the prob-
lems associated with the use of radioactive materials and the disposal of
radioactive wastes. There are substantial differences between the regulatory
practices and policies of various jurisdictions, and any given regulatory
agency may make major shifts in policy from time to time. There is no assurance
that regulatory authorities will grant rate increases in the future or that
such increases will be adequate to permit the payment of dividends on common
stocks. Additionally, existing and possible future regulatory legislation may
make it even more difficult for these utilities to obtain adequate relief. Cer-
tain of the issuers of securities held by the Smith Barney Utilities Fund may
own or operate nuclear generating facilities. Governmental authorities may from
time to time review existing policies, and impose additional requirements gov-
erning the licensing, construction and operation of nuclear power plants.
 
 Each of the risks referred to above could adversely affect the ability and
inclination of public utilities to declare or pay dividends and the ability of
holders of common stock to realize any value from the assets of the issuer upon
liquidation or bankruptcy. All of the utilities that are issuers of the securi-
ties held by the Smith Barney Utilities Fund have been experiencing one or more
of these problems in varying degrees. Moreover, price disparities within
selected utility groups and discrepancies in relation to averages and indices
have occurred frequently for reasons not directly related to the general move-
ments or price trends of utility common stocks. Causes of these discrepancies
include changes in the overall demand for and supply of various securities (in-
cluding the potentially depressing effect of new stock offerings), and changes
in investment objectives, market expectations or cash requirements of other
purchasers and sellers of securities.
 
A-3
<PAGE>
 
                                                                    SMITH BARNEY
                                                                    ------------

                             A Member of Travelers Group [UMBRELLA APPEARS HERE]


                                                                    SMITH BARNEY

                                                  CONCERT ALLOCATION SERIES INC.

                                                            388 Greenwich Street
                                                              New York, NY 10013

<PAGE>
 
 
                                                                    SMITH BARNEY
                                                                       
                                                                    Concert     
                                                                       
                                                                      Allocation
                                                                Series Inc.     

                                                             Class Z Shares Only
                                                                  
                                                               MAY 30, 1997     
 
                                                   PROSPECTUS BEGINS ON PAGE ONE
 
 
P R O S P E C T U S

[LOGO] SMITH BARNEY MUTUAL FUNDS
       Investing For Your Future.
       Everyday.


<PAGE>
 
PROSPECTUS                                                       
                                                              May 30, 1997     
   
Smith Barney Concert Allocation Series Inc.     
388 Greenwich Street
New York, New York 10013
   
(800) 451-2010     
   
 Smith Barney Concert Allocation Series Inc. (the "Concert Series" or "Series")
offers ten professionally managed investment portfolios, five of which are
offered by this Prospectus (each, a "Portfolio"). Each Portfolio seeks to
achieve its objective by investing in a number of other Smith Barney Mutual
Funds ("Underlying Smith Barney Funds").     
 
    The High Growth Portfolio seeks capital appreciation.
 
    The Growth Portfolio seeks long-term growth of capital.
 
    The Balanced Portfolio seeks a balance of growth of capital and income.
 
    The Conservative Portfolio seeks income and, secondarily, long-term
    growth of capital.
 
    The Income Portfolio seeks high current income.
 
 This Prospectus sets forth concisely certain information about the Concert
Series and each of the Portfolios, that prospective investors will find helpful
in making an investment decision. Investors are encouraged to read this Pro-
spectus carefully and retain it for future reference.
 
 The Class Z shares described in this Prospectus are currently offered exclu-
sively for sale to tax-exempt employee benefit and retirement plans of Smith
Barney Inc. ("Smith Barney") or any of its affiliates ("Qualified Plans") and
to certain unit investment trusts sponsored by Smith Barney or any of its
affiliates ("Smith Barney UITs").
   
 Additional information about the Concert Series and each of the Portfolios is
contained in a Statement of Additional Information dated May 30, 1997 and as
amended or supplemented from time to time, that is available upon request and
without charge by calling or writing the Concert Series at the telephone number
or address set forth above or by contacting a Smith Barney Financial Consul-
tant. The Statement of Additional Information has been filed with the Securi-
ties and Exchange Commission (the "SEC") and is incorporated by reference into
this Prospectus in its entirety.     
 
SMITH BARNEY INC.
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.
 
 
                                                                               1
<PAGE>
 
TABLE OF CONTENTS
 
<TABLE>   
<S>                                            <C>
EACH PORTFOLIO'S EXPENSES                        3
--------------------------------------------------
FINANCIAL HIGHLIGHTS                             4
--------------------------------------------------
WHY INVEST IN THE CONCERT SERIES                 5
--------------------------------------------------
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES    5
--------------------------------------------------
RISK FACTORS AND SPECIAL CONSIDERATIONS          7
--------------------------------------------------
PORTFOLIO TURNOVER                               8
--------------------------------------------------
INVESTMENT RESTRICTIONS                          8
--------------------------------------------------
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS     8
--------------------------------------------------
VALUATION OF SHARES                             16
--------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES              17
--------------------------------------------------
PURCHASE, EXCHANGE AND REDEMPTION OF SHARES     17
--------------------------------------------------
PERFORMANCE                                     17
--------------------------------------------------
MANAGEMENT OF CONCERT SERIES                    18
--------------------------------------------------
ADDITIONAL INFORMATION                          19
--------------------------------------------------
APPENDIX                                       A-1
--------------------------------------------------
</TABLE>    
 
--------------------------------------------------------------------------------
   
 No person has been authorized to give any information or to make any represen-
tations 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 Concert Series or the dis-
tributor. This Prospectus does not constitute an offer by Concert Series 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 an offer or solicitation in such jurisdiction.     
--------------------------------------------------------------------------------
 
2
<PAGE>
 
   
EACH PORTFOLIO'S EXPENSES     
   
 The following expense table lists the costs and expenses an investor will
incur either directly or indirectly as a shareholder of Class Z shares of each
Portfolio, based on the Portfolios' operating expenses for its most recent fis-
cal year.     
 
<TABLE>
<CAPTION>
                                                           APPLICABLE TO
                                                           EACH PORTFOLIO
-------------------------------------------------------------------------
  <S>                                                      <C>
  ANNUAL PORTFOLIO OPERATING EXPENSES (AS A PERCENTAGE OF
   AVERAGE NET ASSETS)
    Management fees                                            0.35%
    Other expenses                                              None
-------------------------------------------------------------------------
  TOTAL PORTFOLIO OPERATING EXPENSES                           0.35%
-------------------------------------------------------------------------
</TABLE>
 
 The nature of the services for which each Portfolio pays management fees is
described under "Management of the Portfolios."
   
 The Portfolios will invest only in Class Y shares of the Underlying Smith Bar-
ney Funds and, accordingly, will not pay any sales load or 12b-1 service or
distribution fees in connection with their investments in shares of the Under-
lying Smith Barney Funds. The Portfolios, however, will indirectly bear their
pro rata share of the fees and expenses incurred by the Underlying Smith Barney
Funds that are applicable to Class Y shareholders. The investment returns of
each Portfolio, therefore, will be net of the expenses of the Underlying Smith
Barney Funds in which it is invested. The following chart shows the expense
ratios applicable to Class Y shareholders of each Underlying Smith Barney Fund
held by a Portfolio, based on operating expenses for its most recent fiscal
year:     
 
<TABLE>   
<CAPTION>
UNDERLYING SMITH BARNEY FUND                    EXPENSE RATIO
-------------------------------------------------------------
<S>                                             <C>
Smith Barney Aggressive Growth Fund Inc.            0.84%
Smith Barney Appreciation Fund Inc.                 0.66
Smith Barney Equity Funds
 Smith Barney Growth and Income Fund                0.73
Smith Barney Fundamental Value Fund Inc.            0.75
Smith Barney Funds, Inc.
 Equity Income Portfolio                            0.66
 Short-Term U.S. Treasury Securities Portfolio      0.58
Smith Barney Income Funds
 Smith Barney High Income Fund                      0.76
 Smith Barney Utilities Fund                        0.78
 Smith Barney Premium Total Return Fund             0.87
 Smith Barney Convertible Fund                      1.00
 Smith Barney Diversified Strategic Income Fund     0.69
Smith Barney Investment Funds Inc.
 Smith Barney Managed Growth Fund                   0.92
 Smith Barney Special Equities Fund                 0.82
 Smith Barney Government Securities Fund            0.59
 Smith Barney Investment Grade Bond Fund            0.72
Smith Barney Managed Governments Fund Inc.          0.78
Smith Barney Money Funds, Inc.
 Cash Portfolio                                     0.52
Smith Barney Natural Resources Fund Inc.*           1.37
Smith Barney World Funds, Inc.
 International Equity Portfolio                     0.96
 Emerging Markets Portfolio*                        2.00
 International Balanced Portfolio                   1.21
 Global Government Bond Portfolio                   0.84
-------------------------------------------------------------
</TABLE>    
----------
   
* Operating expenses of Class Y shares for Smith Barney Natural Resources Fund
 Inc. and Smith Barney World Funds, Inc.--Emerging Markets Portfolio are esti-
 mated because no Class Y shares were outstanding during each Fund's most
 recent fiscal year.     
   
 Based on each Portfolio's estimated annual operating expenses plus a weighted
average of the Class Y expense ratios of Underlying Smith Barney Funds in which
each Portfolio is expected to invest during the current fiscal year, the
approximate expense ratios are expected to be as follows: High Growth
Portfolio, Class Z 1.18%; Growth Portfolio, Class Z 1.14%; Balanced Portfolio,
Class Z 1.13%; Conservative Portfolio, Class Z 1.11%; and Income Portfolio,
Class Z 1.04%. The expense ratios may be higher or lower depending on the allo-
cation of the Underlying Smith Barney Funds within a Portfolio.     
 
                                                                               3
<PAGE>
 
   
EACH PORTFOLIO'S EXPENSES (CONTINUED)     
 
 
 EXAMPLE
   
 The following example is intended to assist an investor in understanding the
various costs that an investor in each of the Portfolios will bear directly or
indirectly. The example assumes payment by each Portfolio of operating expenses
at the levels set forth in the table above. See "Purchase, Exchange and Redemp-
tion of Shares" and "Management of Concert Series." The example also reflects
each Portfolio's pro rata share of the Class Y expenses of the Underlying Smith
Barney Funds (see preceding paragraph) in which it is expected to invest 
during the current fiscal year.     
 
<TABLE>   
<CAPTION>
                             AN INVESTOR WOULD PAY           AN INVESTOR WOULD PAY
                          THE FOLLOWING EXPENSES ON A      THE FOLLOWING EXPENSES ON
                          $1,000 INVESTMENT, ASSUMING    THE SAME INVESTMENT, ASSUMING
                          (1) 5.00% ANNUAL RETURN AND       THE SAME ANNUAL RETURN
                           (2) REDEMPTION AT THE END      BUT WITHOUT A REDEMPTION AT
                             OF EACH TIME PERIOD:        THE END OF EACH TIME PERIOD:
                        ------------------------------- -------------------------------
                        1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------------------------------------------
<S>                     <C>    <C>     <C>     <C>      <C>    <C>     <C>     <C>
 High Growth Portfolio   $12     $37     $65     $143    $12     $37     $65     $143
 Growth Portfolio         12      36      63      139     12      36      63      139
 Balanced Portfolio       12      36      62      137     12      36      62      137
 Conservative Portfolio   11      35      61      135     11      35      61      135
 Income Portfolio         11      33      57      127     11      33      57      127
---------------------------------------------------------------------------------------
</TABLE>    
 
 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.
 
FINANCIAL HIGHLIGHTS
   
 The following information has been audited by KPMG Peat Marwick LLP, indepen-
dent auditors, whose report thereon appears in the Concert Series' annual
report dated January 31, 1997. The information set out below should be read in
conjunction with the financial statements and related notes that also appear in
the Concert Series' Annual Report to Shareholders, which is incorporated by
reference into the Statement of Additional Information.     
 
FOR A SHARE OF CLASS Z OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD:
 
<TABLE>   
<CAPTION>
                         HIGH GROWTH PORTFOLIO(1) GROWTH PORTFOLIO(1) BALANCED PORTFOLIO(1)
                         ------------------------ ------------------- ---------------------
-------------------------------------------------------------------------------------------
<S>                      <C>                      <C>                 <C>
NET ASSET VALUE,
BEGINNING OF PERIOD               $12.24                $12.18               $12.10
-------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS:
 Net investment income              0.01                  0.02                 0.00**
 Net realized and
 unrealized gain                    0.16                  0.12                 0.03
-------------------------------------------------------------------------------------------
Total Income From
Operations                          0.17                  0.14                 0.03
-------------------------------------------------------------------------------------------
LESS DISTRIBUTION FROM:
 Net investment income               --                    --                   --
 Net realized gains                  --                    --                   --
-------------------------------------------------------------------------------------------
Total Distributions                  --                    --                   --
-------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD                            $12.41                $12.32               $12.13
-------------------------------------------------------------------------------------------
TOTAL RETURN++                      1.39%                 1.15%                0.25%
-------------------------------------------------------------------------------------------
NET ASSETS, END OF
PERIOD (000'S)                        $4                    $6                   $2
-------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET
ASSETS+:
 Expenses                           0.35%                 0.35%                0.35%
 Net investment income              3.33*                 5.30*                5.39*
-------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE                0%                    0%                   0%
-------------------------------------------------------------------------------------------
</TABLE>    
   
(1) For the period from January 17, 1997 (inception date) to January 31, 1997.
           
 * Not annualized.     
   
** Amount represents less than $0.01.     
   
 ++Total return is not annualized, as it may not be representative of the total
   return for the year.     
   
 + Annualized.     
 
4
<PAGE>
 
FINANCIAL HIGHLIGHTS (CONTINUED)
 
 
<TABLE>   
<CAPTION>
                                   CONSERVATIVE PORTFOLIO(1) INCOME PORTFOLIO(1)
                                   ------------------------- -------------------
--------------------------------------------------------------------------------
<S>                                <C>                       <C>
NET ASSET VALUE, BEGINNING OF
PERIOD                                      $11.89                 $11.55
--------------------------------------------------------------------------------
INCOME FROM OPERATIONS:
 Net investment income                        0.01                   0.07
 Net realized and unrealized gain
 (loss)                                        --                   (0.03)
--------------------------------------------------------------------------------
Total Income From Operations                  0.01                   0.04
--------------------------------------------------------------------------------
LESS DISTRIBUTION FROM:
 Net investment income                         --                   (0.06)
 Net realized gains                            --                     --
--------------------------------------------------------------------------------
Total Distributions                            --                  ( 0.06)
--------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD              $11.90                 $11.53
--------------------------------------------------------------------------------
TOTAL RETURN++                                0.08%                  0.35%
--------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (000'S)           $ 1                    $  0.2
--------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS+:
 Expenses                                     0.35%                  0.35%
 Net investment income                        6.15*                  6.86*
--------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE                          0%                     0%
--------------------------------------------------------------------------------
</TABLE>    
   
(1) For the period from January 17, 1997 (inception date) to January 31, 1997.
           
* Not annualized.     
   
++Total return is not annualized, as it may not be representative of the total
  return for the year.     
   
+ Annualized.     
 
WHY INVEST IN THE CONCERT SERIES
 
 
 The proliferation of mutual funds over the last several years has left many
investors in search of a simple means to manage their long-term investments.
With new investment categories emerging each year and with each mutual fund
reacting differently to political, economic and business events, many investors
are forced to make complex investment decisions in the face of limited experi-
ence, time and personal resources. The Portfolios are designed to meet the
needs of investors who prefer to have their asset allocation decisions made by
professional money managers, are looking for an appropriate core investment for
their retirement portfolio and appreciate the advantages of broad diversifica-
tion. The Portfolios may be most appropriate for long-term investors planning
for retirement, particularly investors in tax-advantaged retirement accounts
including IRAs, 401(k) corporate employee savings plans, 403(b) non-profit
organization savings plans, profit-sharing and money-purchase pension plans,
and other corporate pension and savings plans.
 
 The Concert Series will be managed so that each Portfolio can serve as a com-
plete investment program or as a core part of a larger portfolio. Each of the
Portfolios invests in a select group of Underlying Smith Barney Funds suited to
the Portfolio's particular investment objective. The allocation of assets among
Underlying Smith Barney Funds within each Portfolio is determined by Smith Bar-
ney Mutual Funds Management Inc. ("SBMFM") according to fundamental and quanti-
tative analysis. Because the assets will be adjusted only periodically and only
within pre-determined ranges that will attempt to ensure broad diversification,
there should not be any sudden large-scale changes in the allocation of a Port-
folio's investments among Underlying Smith Barney Funds. The Concert Series is
not designed as a market timing vehicle, but rather as a simple and conserva-
tive approach to helping investors meet retirement and other long-term goals.
 
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
 
 
 The Concert Series is an open-end, non-diversified, management investment com-
pany that currently offers ten managed investment portfolios, five of which are
offered by this Prospectus. Each portfolio seeks to achieve its investment
objective by investing within specified ranges among Underlying Smith Barney
Funds, as well as in repurchase agreements. Initially, each Portfolio will
invest in the Underlying Smith Barney Funds listed below.
 
 The investment manager for each Portfolio, SBMFM, will allocate investments
for each Portfolio among Underlying Smith Barney Funds based on its outlook for
the economy, financial markets and the relative performance of the Underlying
Smith Barney Funds. The allocation among the Underlying Smith Barney Funds will
be made within investment ranges established by the Board of Directors of the
Concert Series which designate minimum and maximum percentages for each of the
Underlying Smith Barney Funds.
 
                                                                               5
<PAGE>
 
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES (CONTINUED)
 
 
 The High Growth Portfolio's investment objective is to seek capital apprecia-
tion. The Growth Portfolio's investment objective is to seek long-term growth
of capital. The Balanced Portfolio's investment objective is to seek a balance
of growth of capital and income. The Conservative Portfolio's investment objec-
tive is to seek income and, secondarily, long-term growth of capital. The
Income Portfolio's investment objective is to seek high current income. Each
Portfolio's investment objective is fundamental and may be changed only with
the approval of a majority of the Portfolio's outstanding shares. There can be
no assurance that any Portfolio's investment objective will be achieved.
 
 In investing in Underlying Smith Barney Funds, the Portfolios seek to maintain
different allocations between equity funds and fixed income funds (including
money market funds) depending on a Portfolio's investment objective. Allocating
investments between equity funds and fixed income funds permits each Portfolio
to attempt to optimize performance consistent with its investment objective.
The tables below illustrate the initial equity/fixed income fund allocation
targets and ranges for each Portfolio:
   
Equity/Fixed Income Fund Range (Percentage of Each Portfolio's Net Assets)     
 
<TABLE>
<CAPTION>
TYPE OF FUND            TARGET  RANGE
---------------------------------------
<S>                     <C>    <C>
High Growth Portfolio
 Equity                  90%   80%-100%
 Fixed Income            10%    0%- 20%
Growth Portfolio
 Equity                  70%   60%- 80%
 Fixed Income            30%   20%- 40%
Balanced Portfolio
 Equity                  50%   40%- 60%
 Fixed Income            50%   40%- 60%
Conservative Portfolio
 Equity                  30%   20%- 40%
 Fixed Income            70%   60%- 80%
Income Portfolio
 Equity                  10%    0%- 20%
 Fixed Income            90%   80%-100%
---------------------------------------
</TABLE>
 
 The Portfolios invest their assets in the Underlying Smith Barney Funds listed
below within the ranges indicated.
          
       Investment Range (Percentage of Each Portfolio's Net Assets)     
 
<TABLE>
<CAPTION>
UNDERLYING SMITH BARNEY   HIGH GROWTH  GROWTH   BALANCED  CONSERVATIVE  INCOME
FUND                       PORTFOLIO  PORTFOLIO PORTFOLIO  PORTFOLIO   PORTFOLIO
--------------------------------------------------------------------------------
<S>                       <C>         <C>       <C>       <C>          <C>
Smith Barney Aggressive
Growth Fund Inc.             10-30%      0-15%     --          --          --
Smith Barney
Appreciation Fund Inc.        0-20%     10-30%    0-20%        --          --
Smith Barney Equity
Funds:
 Smith Barney Growth and
 Income Fund                  0-20%      0-20%    5-20%        --          --
Smith Barney Fundamental
Value Fund Inc.               0-20%     10-30%    0-20%        --          --
Smith Barney Funds,
Inc.:
 Equity Income Portfolio       --        0-20%    5-20%       5-20%       0-15%
 Short-Term U.S.
  Treasury Securities
  Portfolio                    --        0-15%    5-20%       5-20%       5-30%
Smith Barney Income
Funds:
 Smith Barney High
 Income Fund                  0-20%      5-20%    0-15%       0-20%       0-20%
 Smith Barney Utilities
 Fund                          --        0-20%    5-20%       5-20%       0-15%
 Smith Barney Premium
  Total Return Fund            --         --      5-20%       5-25%       0-15%
 Smith Barney
 Convertible Fund              --         --      5-20%       5-15%       0-15%
 Smith Barney
 Diversified Strategic
 Income Fund                   --         --      5-25%      10-30%      10-30%
Smith Barney Investment
Funds Inc.:
 Smith Barney Managed
 Growth Fund                  0-20%     10-30%    0-15%        --          --
 Smith Barney Special
 Equities Fund               10-30%      0-15%     --          --          --
 Smith Barney Government
  Securities Fund             0-15%      0-20%    0-20%       5-20%       5-20%
 Smith Barney Investment
  Grade Bond Fund             0-15%      0-15%     --          --         0-15%
Smith Barney Managed
 Governments Fund Inc.         --        0-15%    5-20%       5-25%       5-30%
Smith Barney Money
Funds, Inc.:
 Cash Portfolio               0-20%      0-20%    0-25%       0-30%       0-30%
Smith Barney Natural
Resources Fund Inc.           0-10%      0-10%    0-10%        --          --
Smith Barney World
Funds, Inc.:
 International Equity
 Portfolio                   10-25%      5-20%    0-15%       0-10%       0-10%
 Emerging Markets
 Portfolio                    0-20%       --       --          --          --
 International Balanced
 Portfolio                    0-15%      0-10%    0-10%       0-10%       0-10%
 Global Government Bond
 Portfolio                    0-15%      0-15%    0-15%       0-20%       0-20%
--------------------------------------------------------------------------------
</TABLE>
 
6
<PAGE>
 
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES (CONTINUED)
 
 
 The Underlying Smith Barney Funds have been selected to represent a broad
spectrum of investment options for the Portfolios. The equity/fixed income
ranges and the investment ranges are based on the degree to which the Under-
lying Smith Barney Funds selected are expected in combination to be appropriate
for a Portfolio's particular investment objective. If, as a result of apprecia-
tion or depreciation, the percentage of a Portfolio's assets invested in an
Underlying Smith Barney Fund exceeds or is less than the applicable percentage
limitations set forth above, SBMFM will consider, in its discretion, whether to
reallocate the assets of the Portfolio to comply with the foregoing percentage
limitations. THE PARTICULAR UNDERLYING SMITH BARNEY FUNDS IN WHICH EACH PORTFO-
LIO MAY INVEST, THE EQUITY/FIXED INCOME FUND TARGETS AND RANGES AND THE INVEST-
MENT RANGES APPLICABLE TO EACH UNDERLYING SMITH BARNEY FUND MAY BE CHANGED FROM
TIME TO TIME BY THE CONCERT SERIES' BOARD OF DIRECTORS WITHOUT THE APPROVAL OF
THE PORTFOLIO'S SHAREHOLDERS.
 
 Each Portfolio can invest a certain portion of its cash reserves in repurchase
agreements. Each Portfolio may also invest its cash reserves in the Cash Port-
folio of Smith Barney Money Funds, Inc. A reserve position provides flexibility
in meeting redemptions, expenses and the timing of new investments, and serves
as a short-term defense during periods of unusual volatility.
 
 For information about the investment objectives of each of the Underlying
Smith Barney Funds and the investment techniques and the risks involved in the
Underlying Smith Barney Funds, please refer to "Description of the Underlying
Smith Barney Funds," the Appendix to this Prospectus, the Statement of Addi-
tional Information and the prospectus for each of the Underlying Smith Barney
Funds.
 
RISK FACTORS AND SPECIAL CONSIDERATIONS
 
 
 Non-Diversified Investment Company. The Concert Series is a "non-diversified"
investment company for purposes of the Investment Company Act of 1940, as
amended (the "1940 Act"), because it invests in the securities of a limited
number of mutual funds. However, the Underlying Smith Barney Funds themselves
are diversified investment companies (with the exception of the Global Govern-
ment Bond Portfolio, the International Balanced Portfolio and the Emerging Mar-
kets Portfolio). The Concert Series intends to qualify as a diversified invest-
ment company for the purposes of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code").
 
 Investing in Underlying Smith Barney Funds. The investments of each Portfolio
are concentrated in the Underlying Smith Barney Funds, so each Portfolio's
investment performance is directly related to the investment performance of the
Underlying Smith Barney Funds held by it. The ability of each Portfolio to meet
its investment objective is directly related to the ability of the Underlying
Smith Barney Funds to meet their objectives as well as the allocation among
those Underlying Smith Barney Funds by SBMFM. There can be no assurance that
the investment objective of any Portfolio or any Underlying Smith Barney Fund
will be achieved.
 
 Affiliated Persons. SBMFM, the investment manager of the Portfolios, and the
officers and directors of the Concert Series presently serve as investment
adviser, officers and directors, respectively, of many of the Underlying Smith
Barney Funds. Therefore, conflicts may arise as these persons fulfill their
fiduciary responsibilities to the Portfolios and the Underlying Smith Barney
Funds.
   
 Investment Practices of Underlying Smith Barney Funds. In addition to their
principal investments, certain Underlying Smith Barney Funds may: invest a por-
tion of their assets in foreign securities; enter into forward currency trans-
actions; lend their portfolio securities; enter into stock index, interest
rate, currency and gold futures contracts, and options on such contracts;
engage in options transactions; make short sales; purchase zero coupon bonds
and payment-in-kind bonds; purchase restricted and illiquid securities; enter
into forward roll transactions; purchase securities on a when-issued or delayed
delivery basis; enter into repurchase or reverse repurchase agreements; borrow
money; and engage in various other investment practices.     
 
 High Yield Securities. Each of the Portfolios also may invest in an Underlying
Smith Barney Fund that invests primarily in high yield, high risk securities,
commonly referred to as junk bonds. As a result, the Portfolios may be subject
to some of the risks resulting from high yield investing. Further, each of the
Portfolios may invest in Underlying Smith Barney Funds that invest in medium
grade bonds. If these bonds are downgraded, the Portfolios will consider
whether to increase or decrease their investment in the affected Underlying
Smith Barney Fund. Lower quality debt instruments generally offer a higher cur-
rent yield than that available from higher grade issues, but typically involve
greater risk. Lower rated and comparable unrated securities are especially sub-
ject to adverse changes in general economic conditions, to changes in the
financial condition of their issuers, and to price fluctuation in response to
changes in interest rates. During periods of economic downturn or rising inter-
est rates, issuers of these instruments may experience financial stress that
could adversely affect their ability to make payments of principal and interest
and increase the possibility of default. Further information on these invest-
ment policies and practices can be found under "Description of the Underlying
Smith Barney Funds," in the Appendix to this Prospectus and in the Statement of
Additional Information as well as the prospectus of each Underlying Smith Bar-
ney Fund.
 
                                                                               7
<PAGE>
 
RISK FACTORS AND SPECIAL CONSIDERATIONS (CONTINUED)
 
 
 Concentration. Each Portfolio other than the High Growth Portfolio may invest
in an Underlying Smith Barney Fund that concentrates its investments in the
utilities industry. Under certain unusual circumstances, this could result in
those Portfolios being indirectly concentrated in this industry. If this were
to occur, the relevant Portfolios would consider whether to maintain or change
their investment in that Underlying Smith Barney Fund.
 
 Market and Economic Factors. The Portfolios' share prices and yields will
fluctuate in response to various market and economic factors related to both
the stock and bond markets. All Portfolios may invest in mutual funds that in
turn invest in international securities and thus are subject to additional
risks of these investments, including changes in foreign currency exchange
rates and political risk.
 
PORTFOLIO TURNOVER
 
 
 Each Portfolio's turnover rate is not expected to exceed 25% annually. A Port-
folio may purchase or sell securities to: (a) accommodate purchases and sales
of its shares; (b) change the percentages of its assets invested in each of the
Underlying Smith Barney Funds in response to market conditions; and (c) main-
tain or modify the allocation of its assets between equity and fixed income
funds and among the Underlying Smith Barney Funds within the percentage limits
described above.
   
 The turnover rates of the Underlying Smith Barney Funds have ranged from 9% to
420% during their most recent fiscal years. There can be no assurance that the
turnover rates of these funds will remain within this range during subsequent
fiscal years. Higher turnover rates may result in higher expenses being
incurred by the Underlying Smith Barney Funds.     
 
INVESTMENT RESTRICTIONS
 
 
 In addition to the investment objectives of each Portfolio, the Concert Series
has adopted restrictions with respect to each Portfolio that may not be changed
without approval of a majority of the Portfolio's outstanding shares (as
defined in the 1940 Act). The fundamental investment restrictions imposed by
the Concert Series prohibit each Portfolio from, among other things: (i) bor-
rowing money except from banks for temporary or emergency purposes, including
the meeting of redemption requests in an amount not exceeding 33 1/3% of the
value of the Portfolio's total assets (including the amount borrowed) valued at
market less liabilities (not including the amount borrowed) at the time the
borrowing is made and (ii) making loans to others, except through the purchase
of portfolio securities consistent with its investment objective and policies
and through entering into repurchase agreements.
 
 Certain other investment restrictions, including fundamental restrictions as
well as restrictions that may be changed without a shareholder vote, adopted by
the Concert Series are described in the Statement of Additional Information.
Investment restrictions of the Underlying Smith Barney Funds in which the Port-
folios invest may be more or less restrictive than those adopted by the Concert
Series.
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS
 
 
 The following is a concise description of the investment objectives and prac-
tices for each of the Underlying Smith Barney Funds in which the Portfolios may
invest. There can be no assurance that the investment objectives of the Under-
lying Smith Barney Funds will be met. Additional information regarding the
investment practices of the Underlying Smith Barney Funds is located in the
Appendix to this Prospectus, in the Statement of Additional Information and in
the prospectus of each of the Underlying Smith Barney Funds. No offer is made
in this Prospectus of any of the Underlying Smith Barney Funds.
 
EQUITY FUNDS The following Underlying Smith Barney Funds are funds that invest
primarily in equity securities.
 
 Smith Barney Aggressive Growth Fund Inc. seeks capital appreciation by invest-
ing primarily in common stock of companies the Fund's investment adviser
believes are experiencing, or have the potential to experience, growth in earn-
ings that exceed the average earnings growth rate of companies whose securities
are included in the Standard & Poor's Daily Price Index of 500 Common Stocks
(the "S&P 500"), a weighted index that measures the aggregate change in market
value of 400 industrials, 60 transportation stocks and utility companies and 40
financial issues. SBMFM focuses its stock selection for the Fund on a diversi-
fied group of small- or medium-sized emerging growth companies that have passed
their "start-up" phase and show positive earnings and the prospect of achieving
significant profit gains in the two to three years after the Fund acquires
their stocks. These companies generally may be expected to benefit from new
technologies, techniques, products or services or cost-reducing measures, and
may be affected by changes in management, capitalization or asset deployment,
government regulations or other external circumstances.
 
8
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
 
 Although SBMFM anticipates that the assets of the Fund ordinarily will be
invested primarily in common stocks of U.S. companies, the Fund may invest in
convertible securities, preferred stocks, securities of foreign issuers, war-
rants and restricted securities. The Fund also is authorized to borrow up to
33 1/3% of its total assets less liabilities for leveraging purposes. Securi-
ties of the kinds of companies in which the Fund invests may be subject to
significant price fluctuation and above average risk.
 
 Smith Barney Appreciation Fund Inc. seeks long-term appreciation of share-
holders' capital. The Fund attempts to achieve its investment objective by
investing primarily in equity securities (consisting of common stocks, pre-
ferred stocks, warrants, rights and securities convertible into common stocks)
that are believed to afford attractive opportunities for investment apprecia-
tion. The core holdings of the Fund are blue chip companies that are dominant
in their industries; however, at the same time, the Fund may hold securities
of companies with prospects of sustained earnings growth and/or companies with
a cyclical earnings record if it is felt these offer attractive investment
opportunities. Typically, the Fund invests in middle- and larger-sized compa-
nies, though it does invest in smaller companies whose securities may reasona-
bly be expected to appreciate. The Fund's investments are spread broadly among
different industries. The Fund may hold issues traded over-the-counter as well
as those listed on one or more national securities exchanges, and the Fund may
make investments in foreign securities although management intends to limit
such investments to 10% of the Fund's assets.
 
 Smith Barney Fundamental Value Fund Inc.'s investment objective is long-term
capital growth. Current income is a secondary objective. The Fund seeks to
achieve its primary objective by investing in a diversified portfolio of com-
mon stocks and common stock equivalents and, to a lesser extent, in bonds and
other debt instruments. The Fund's investment emphasis is on securities that
are undervalued in the marketplace and, accordingly, have above-average poten-
tial for capital growth. In general, the Fund invests in securities of compa-
nies that are temporarily unpopular among investors but which SBMFM regards as
possessing favorable prospects for earnings growth and/or improvements in the
value of their assets and, consequently, as having a reasonable likelihood of
experiencing a recovery in market price.
 
 Smith Barney Special Equities Fund, an investment portfolio of Smith Barney
Investment Funds Inc., seeks long-term capital appreciation by investing in
equity securities (common stocks or securities that are convertible into or
exchangeable for such stocks, including warrants) that SBMFM believes to have
superior appreciation potential. The Fund invests primarily in equity securi-
ties of secondary growth companies, generally not within the S&P 500, as iden-
tified by SBMFM. These companies may not have reached a fully mature stage of
earnings growth, since they may still be in the developmental stage, or may be
older companies that appear to be entering a new stage of more rapid earnings
progress due to factors such as management change or development of new tech-
nology, products or markets. A significant number of these companies may be in
technology areas, including health care related sectors, and may have annual
sales of less than $300 million. The Fund may also choose to invest in some
relatively unseasoned stocks, i.e., securities issued by companies whose mar-
ket capitalization is under $100 million. Investing in smaller, newer issuers
generally involves greater risk than investing in larger, more established
issuers.
 
 Smith Barney Managed Growth Fund, an investment portfolio of Smith Barney
Investment Funds Inc., has as its investment objective long term growth of
capital. The Fund attempts to achieve its objective by investing primarily in
undervalued or out of favor common stock and other securities, including debt
securities that are convertible into common stock and that are currently price
depressed. Such securities might typically be valued at the low end of their
52-week trading range. Although under normal circumstances the Fund's portfo-
lio will primarily consist of these securities, the Fund may also invest in
preferred stocks and warrants when SBMFM perceives an opportunity for capital
growth from such securities.
   
 The Equity Income Portfolio, an investment portfolio of Smith Barney Funds,
Inc., seeks current income and long-term growth of capital. The Fund invests
primarily in common stocks offering a current return from dividends and will
also normally include some interest-paying debt obligations (such as U.S. gov-
ernment obligations, investment grade bonds and debentures) and high quality
short-term debt obligations (such as commercial paper and repurchase agree-
ments collateralized by U.S. government securities with broker/dealers or
other financial institutions, including the Fund's custodian) and may also
purchase preferred stocks and convertible securities. Temporary defensive
investments or a higher percentage of debt securities may be held when deemed
advisable by SBMFM. In the selection of common stock investments, emphasis is
generally placed on issues with established dividend records as well as poten-
tial for price appreciation. From time to time, however, a portion of the
assets may be invested in non-dividend paying stocks. The Fund may make
investments in foreign securities, though management currently intends to
limit such investments to 5% of the Fund's assets, and an additional 10% of
its assets may be invested in American Depository Receipts ("ADRs") represent-
ing shares in foreign securities that are traded in U.S. securities markets.
    
 Smith Barney Growth and Income Fund, an investment portfolio of Smith Barney
Equity Funds, seeks long-term capital growth and income by investing in income
producing equity securities, including dividend-paying common stocks, securi-
ties that are convertible into common stocks and warrants. Consistent with
data used in developing and maintaining quantitative investment criteria
developed by SBMFM to evaluate investment decisions, the Fund expects to
invest primarily in domestic companies of varying sizes, generally
 
                                                                              9
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
   
with capitalizations exceeding $250 million in a wide range of industries. The
Fund may also invest up to 20% in the securities of foreign issuers, including
ADRs or European Depositary Receipts. Under normal market conditions, the Fund
will invest substantially all, but not less than 65%, of its assets in equity
securities. The Fund may invest the remainder of its assets in high grade money
market instruments in order to develop income, as well as in corporate bonds
and mortgage related securities that are rated investment grade or are deemed
by SBMFM to be of comparable quality and in U.S. government securities.     
 
 Smith Barney Natural Resources Fund Inc. seeks long-term capital appreciation
by investing at least 65% under normal market conditions in "Natural Resource
Investments." Natural Resource Investments are defined as equity and debt secu-
rities of issuers that: (1) own or process natural resources, such as precious
metals, other minerals, water, timberland, agricultural commodities and forest
products; (2) own or produce sources of energy such as oil, natural gas, coal,
uranium, geothermal, oil shale and biomass; (3) participate in the exploration
and development, transportation, distribution and/or processing of natural
resources; (4) own or control oil, gas, or other mineral leases, rights or roy-
alties; (5) provide related services or supplies, such as drilling, well ser-
vicing, chemicals, parts and equipment; (6) develop or participate in energy-
efficient technologies; and (7) are involved in the upgrading or processing of
raw commodities into intermediate products. The Fund may also invest in gold
bullion and gold coins. (A company is considered a "Natural Resources Invest-
ment" when it derives at least 50% of its total revenue from a business or
activity described above.)
 
 Up to 35% of the Fund's assets may be invested in companies not in the natural
resources area, investment grade corporate debt securities, U.S. Government
securities and, for cash management purposes, money market instruments. For
temporary defensive purposes, the Fund may invest in excess of 35% in money
market instruments. The Fund may utilize up to 10% of its assets to purchase
put options on securities it owns and up to an additional 10% of its assets to
purchase call options on securities it may acquire in the future. The Fund may
purchase only put options that are traded on a regulated exchange. It also may
write covered put and call options on securities. The Fund may enter into
futures on domestic and foreign stock indexes and purchase and write related
put and call options to hedge against risks of market-wide movements affecting
that portion of its assets invested in the country whose stocks are subject to
the hedges.
   
 The composition of the portfolio of the Fund will vary depending on the deter-
mination of SBMFM of how best to achieve long-term capital appreciation. Equity
securities in which the Fund may invest include common stocks, preferred
stocks, convertible securities and warrants. The Fund may invest in debt secu-
rities when SBMFM believes they will enhance the Fund's ability to achieve
long-term capital appreciation. The Fund may invest in fixed-income securities
that are rated as low as B by Moody's Investors Service, Inc. ("Moody's") or
Standard & Poor's Ratings Group ("S&P") or if unrated, are deemed by SBMFM to
be of comparable quality.     
   
 Because issuers of Natural Resource Investments often are located outside the
United States, a significant portion of the Fund's investments may consist of
securities of foreign issuers. The percentage of assets invested in particular
countries or regions will change from time to time in accordance with the judg-
ment of SBMFM, which may be based on, among other things, consideration of the
political stability and economic outlook of these countries or regions.     
 
 Smith Barney Premium Total Return Fund, an investment portfolio of Smith Bar-
ney Income Funds, seeks to provide shareholders with total return, consisting
of long-term capital appreciation and income, by investing primarily in a
diversified portfolio of dividend-paying common stocks. The Fund also purchases
put and call options and writes covered put and call options on securities it
holds and on stock indexes primarily as a hedge to reduce investment risk.
Because the Fund seeks total return by emphasizing investments in dividend-
paying common stocks, it will not have as much investment flexibility as total
return funds that may pursue their objective by investing in both income and
equity stocks without such an emphasis. The Fund also may invest up to 10% of
its assets in: (a) securities rated less than investment grade by Moody's or
S&P or unrated securities of comparable quality; (b) interest-paying debt secu-
rities, such as U.S. government securities; and (c) other securities, including
convertible bonds, convertible preferred stock and warrants.
 
 The Emerging Markets Portfolio, an investment portfolio of Smith Barney World
Funds, Inc., seeks long term capital appreciation on its assets through a port-
folio invested primarily in securities of emerging country issuers (consisting
of dividend and non-dividend paying common stocks, preferred stocks, convert-
ible securities and rights and warrants to such securities). The Fund will also
invest in debt securities having a high potential for capital appreciation,
especially in countries where direct equity investment is not permitted. Under
normal conditions, at least 70% of the Fund's assets will be invested in equity
securities. For purposes of its investment objective, the Fund considers as
"emerging" all countries other than the United States, Canada, Ireland, the
United Kingdom, Sweden, Norway, Finland, Denmark, Holland, Germany, Switzer-
land, Belgium, France, Italy, Spain and Japan. The Fund is a non-diversified
portfolio, but will generally invest its assets broadly among countries and
will normally have at least 65% of its assets invested in issuers in not less
than three different countries.
 
 The Fund also may invest in debt securities of issuers in countries having
smaller capital markets. Capital appreciation in debt securities may arise as a
result of a favorable change in relative foreign exchange rates, in relative
interest rate levels, or in the creditworthiness of issuers. The Fund will not
seek to benefit from anticipated short-term fluctuations in currency exchange
rates. The Fund may invest in debt securities with relatively high yields (as
compared to other debt securities meeting the Fund's investment
 
10
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
criteria), notwithstanding that the Fund may not anticipate that such securi-
ties will experience substantial capital appreciation. The Fund also may invest
in debt securities issued or guaranteed by foreign governments (including for-
eign states, provinces and municipalities) or their agencies and instrumentali-
ties, issued or guaranteed by supranational organizations or issued by foreign
corporations or financial institutions.
 
 The International Equity Portfolio, an investment portfolio of Smith Barney
World Funds, Inc., seeks a total return on its assets from growth of capital
and income. Under normal market conditions, the Fund invests at least 65% of
its assets in a diversified portfolio of equity securities consisting of divi-
dend and non-dividend paying common stock, preferred stock, convertible debt
and rights and warrants to such securities and up to 35% of the Fund's assets
in bonds, notes and debt securities (consisting of securities issued in the
Eurocurrency markets or obligations of the U.S. or foreign governments and
their political subdivisions) of established non-U.S. issuers. Investments may
be made for capital appreciation or for income or any combination of both for
the purpose of achieving a higher overall return than might otherwise be
obtained solely from investing for growth of capital or for income. There is no
limitation on the percent or amount of the Fund's assets that may be invested
for growth or income and, therefore, from time to time the investment emphasis
may be placed solely or primarily on growth of capital or solely or primarily
on income. The Fund may borrow up to 25% of the value of its assets for invest-
ment purposes, which involves certain risk considerations.
 
 The Fund will generally invest its assets broadly among countries and will
normally have represented in the portfolio business activities in not less than
three different countries. The Fund will normally invest at least 65% of its
assets in companies organized or governments located in any area of the world
other than the U.S. However, under unusual economic or market conditions as
determined by the investment adviser, for defensive purposes the Fund may tem-
porarily invest all or a major portion of its assets in U.S. government securi-
ties or in debt or equity securities of companies incorporated in and having
their principal business activities in the U.S.
 
FIXED INCOME FUNDS The following Underlying Smith Barney Funds invest primarily
in fixed income securities, including the money market fund in which each Port-
folio may invest and which may serve as the cash reserve portion of each Port-
folio.
 
 Smith Barney High Income Fund, an investment portfolio of the Smith Barney
Income Funds, seeks to provide shareholders with high current income. Although
growth of capital is not an investment objective of the Fund, SBMFM may con-
sider potential for growth as one factor, among others, in selecting invest-
ments for the Fund. The Fund will seek high current income by investing, under
normal circumstances, at least 65% of its assets in high risk, high-yielding
corporate bonds, debentures and notes denominated in U.S. dollars or foreign
currencies. Up to 40% of the Fund's assets may be invested in fixed-income
obligations of foreign issuers, and up to 20% of its assets may be invested in
common stock or other equity-related securities, including convertible securi-
ties, preferred stock, warrants and rights. Securities purchased by the Fund
generally will be rated in the lower rating categories of recognized rating
agencies, as low as Caa by Moody's or D by S&P, or in unrated securities that
SBMFM deems of comparable quality. However, the Fund will not purchase securi-
ties rated lower than B by both Moody's and S&P unless, immediately after such
purchase, no more than 10% of its total assets are invested in such securities.
The Fund may hold securities with higher ratings when the yield differential
between low-rated and higher-rated securities narrows and the risk of loss may
be reduced substantially with only a relatively small reduction in yield. The
Fund also may invest in higher-rated securities when SBMFM believes that a more
defensive investment strategy is appropriate in light of market or economic
conditions.
 
 Smith Barney Investment Grade Bond Fund, an investment portfolio of Smith Bar-
ney Investment Funds Inc., seeks to provide as high a level of current income
as is consistent with prudent investment management and preservation of capi-
tal. Except when in a temporary defensive investment position, the Fund intends
to maintain at least 65% of its assets invested in bonds. The Fund seeks to
achieve its objective by investing in any of the following securities: corpo-
rate bonds rated Baa or better by Moody's or BBB or better by S&P; U.S. govern-
ment securities; commercial paper issued by domestic corporations and rated
Prime-1 or Prime-2 by Moody's or A-1 or A-2 by S&P, or, if not rated, issued by
a corporation having an outstanding debt issue rated Aa or better by Moody's or
AA or better by S&P; negotiable bank certificates of deposit and bankers'
acceptances issued by domestic banks (but not their foreign branches) having
total assets in excess of $1 billion; and high-yielding common stocks and war-
rants. A reduction in the rating of a security does not require the sale of the
security by the Fund.
 
 Smith Barney Government Securities Fund, an investment portfolio of Smith Bar-
ney Investment Funds Inc., seeks high current return by investing in obliga-
tions of, or guaranteed by, the U.S. government, its agencies or instrumentali-
ties (including, without limitation, Treasury bills and bonds, mortgage partic-
ipation certificates issued by the Federal Home Loan Mortgage Corporation
("FHLMC") and mortgage-backed securities issued by the Government National
Mortgage Association ("GNMA"). The Fund may invest up to 5% of its net assets
in U.S. government securities for which the principal repayment at maturity,
while paid in U.S. dollars, is determined by reference to the exchange rate
between the U.S. dollar and the currency of one or more foreign countries. In
addition, the Fund may borrow money (up to 25% of its total assets) to increase
its investments, thereby leveraging its portfolio and exaggerating the effect
on net asset value of any increase or decrease in the market value of the
Fund's securities. Except when in a temporary defensive invest-
 
                                                                              11
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
ment position, the Fund intends to maintain at least 65% of its assets invested
in U.S. government securities (including futures contracts and options thereon
and options relating to U.S. government securities).
 
 The Short-Term U.S. Treasury Securities Portfolio, an investment portfolio of
Smith Barney Funds, Inc., seeks current income, preservation of capital and
liquidity. The Fund seeks to achieve its objective by investing its assets in
U.S. Treasury securities backed by the full faith and credit of the U.S. gov-
ernment. Shares of the Fund are not issued, insured or guaranteed, as to value
or yield, by the U.S. government or its agencies or instrumentalities. In an
effort to minimize fluctuations in market value of its portfolio securities,
the Fund is expected to maintain a dollar-weighted average maturity of approxi-
mately three years. Pending direct investment in U.S. Treasury debt securities,
the Fund may enter into repurchase agreements secured by such securities in an
amount up to 10% of the value of its total assets. The Fund may, to a limited
degree, engage in short-term trading to attempt to take advantage of short-term
market variations, or may dispose of a portfolio security prior to its maturity
if it believes such disposition advisable or it needs to generate cash to sat-
isfy redemptions.
 
 Smith Barney Managed Governments Fund Inc. seeks high current income consis-
tent with liquidity and safety of capital. The Fund invests substantially all
of its assets in U.S. government securities and, under normal circumstances,
the Fund is required to invest at least 65% of its assets in such securities.
The Fund's portfolio of U.S. government securities consists primarily of mort-
gage-backed securities issued or guaranteed by GNMA, the Federal National Mort-
gage Association ("FNMA") and FHLMC. Assets not invested in such mortgage-
backed securities are invested primarily in direct obligations of the United
States Treasury and other U.S. government securities. The weighted average
maturity of the Fund's portfolio will vary from time to time and the Fund may
invest in U.S. government securities of all maturities: short-term, intermedi-
ate-term and long-term. The Fund may invest without limit in securities of any
issuer of U.S. government securities, and may invest up to an aggregate of 15%
of its total assets in securities with contractual or other restrictions on
resale and other instruments that are not readily marketable (such as repur-
chase agreements with maturities in excess of seven days). The Fund may invest
up to 5% of its net assets in U.S. government securities for which the princi-
pal repayment at maturity, while paid in U.S. dollars, is determined by refer-
ence to the exchange rate between the U.S. dollar and the currency of one or
more foreign countries.
   
 Smith Barney Diversified Strategic Income Fund, an investment portfolio of
Smith Barney Income Funds, seeks high current income primarily through invest-
ment in fixed-income securities. The Fund attempts to achieve its objective by
allocating and reallocating its assets primarily among various types of fixed-
income securities selected by Greenwich Street Advisors (a division of SBMFM)
based on its analysis of economic and market conditions and the relative risks
and opportunities of particular securities. The types of fixed-income securi-
ties among which the Fund's assets will be primarily allocated are: obligations
issued or guaranteed as to principal and interest by the United States govern-
ment; mortgage-related securities issued by various governmental and non-gov-
ernmental entities; domestic and foreign corporate securities; and foreign gov-
ernment securities. Under normal market conditions, at least 65% of the Fund's
assets will be invested in fixed-income securities, which includes non-convert-
ible preferred stocks. The Fund generally will invest in intermediate- and
long-term fixed-income securities with the result that, under normal market
conditions, the weighted average maturity of the Fund's securities is expected
to be between five and 12 years.     
 
 Mortgage-related securities in which the Fund may invest include mortgage
obligations collateralized by mortgage loans or mortgage pass-through certifi-
cates. Mortgage-related securities held by the Fund generally will be rated no
lower than Aa by Moody's or AA by S&P or, if not rated, of equivalent invest-
ment quality as determined by Greenwich Street Advisors. The Fund may invest up
to 35% of its assets in corporate fixed-income securities of domestic issuers
rated Ba or lower by Moody's or BB or lower by S&P or in nonrated securities
deemed by Greenwich Street Advisors to be of comparable quality. The Fund may
invest in fixed-income securities rated as low as Caa by Moody's or CCC by S&P.
 
 In general, the Fund may invest in debt securities issued by foreign govern-
ments or any of their political subdivisions that are considered stable by
Smith Barney Global Capital Management, Inc., the Fund's subadviser. Up to 5%
of the Fund's assets may be invested in foreign securities issued by countries
with developing economies. The Fund may also invest in securities issued by
supranational organizations.
 
 The Global Government Bond Portfolio, an investment portfolio of Smith Barney
World Funds, Inc., seeks as high a level of current income and capital appreci-
ation as is consistent with its policy of investing principally in high quality
bonds of the U.S. and foreign governments. Under normal market conditions, the
Fund invests at least 65% of its total assets in bonds issued or guaranteed by
the U.S. or foreign governments (including foreign states, provinces, cantons
and municipalities) or their agencies, authorities or instrumentalities denomi-
nated in various currencies, including U.S. dollars, or in multinational cur-
rency units, such as the European Currency Unit. Except with respect to govern-
ment securities of less developed countries, the Fund invests in foreign gov-
ernment securities only if the issue or the issuer thereof is rated in the two
highest rating categories by Moody's or S&P, or if unrated, are of comparable
quality in the determination of the investment adviser.
 
 
12
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
 Under normal circumstances the Fund may invest up to 35% of its total assets
in debt obligations (including debt obligations convertible into common stock)
of U.S. or foreign corporations and financial institutions and supranational
entities. Any non-governmental investment would be limited to issues that are
rated A or better by Moody's or S&P, or if not rated, determined to be of com-
parable quality by the investment adviser.
   
 The Fund is a non-diversified portfolio and currently contemplates investing
primarily in obligations of the U.S. and of developed nations (i.e., industri-
alized countries) that the investment adviser believes to pose limited credit
risks. These countries currently are Australia, Austria, Belgium, Canada, Den-
mark, Finland, France, Ireland, Italy, Japan, Luxembourg, the Netherlands, New
Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom and
Germany. Investments may be made from time to time in government securities,
including loan assignments and loan participations, of less developed coun-
tries. Such countries currently include Argentina, Brazil, Bulgaria, Czech
Republic, Ecuador, Hungary, Indonesia, Lithuania, Malaysia, Mexico, Peru, Phil-
ippines, Poland, Russia, Slovakia, South Africa, Thailand, Turkey, Uruguay and
Venezuela. Countries may be added to or deleted from this list as economic and
political conditions warrant. Historical experience indicates that the markets
of less developed countries have been more volatile than the markets of the
more mature economies of developed countries; however, such markets often pro-
vide rates of return to investors commensurate with the credit and market
risks. The investment adviser does not intend to invest more than 10% of the
Fund's assets in the government securities of less developed countries and will
not invest more than 5% of the Fund's assets in the government securities of
any one such country.     
   
 Such investments may be unrated or rated below investment grade or may be in
default. Securities rated below investment grade (and comparable unrated secu-
rities) are the equivalent of high yield, high risk bonds. Such securities are
regarded as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the obliga-
tions and involve major risk exposure to adverse business, financial, economic,
and political conditions, whether or not occurring within the issuers' borders.
Under normal market conditions the Fund invests at least 65% of its assets in
issues of not less than three different countries; issues of any one country
(other than the United States) will represent no more than 45% of the Fund's
total assets.     
 
 The Cash Portfolio is an investment portfolio of Smith Barney Money Funds,
Inc., a money market fund that seeks maximum current income and preservation of
capital. The Fund may invest in domestic and foreign money market securities
consisting of bank obligations and high quality commercial paper, corporate
obligations and municipal obligations, in addition to U.S. government obliga-
tions and related repurchase agreements. The Fund intends to maintain at least
25% of its total assets invested in obligations of domestic and foreign banks.
Shares of the Fund are not insured or guaranteed by the U.S. government.
 
 The Fund has adopted certain investment policies to assure that, to the extent
reasonably possible, the Fund's price per share will not change from $1.00,
although no assurance can be given that this goal will be achieved on a contin-
uous basis. In order to minimize fluctuations in market price, the Fund will
not purchase a security with a remaining maturity of greater than 13 months or
maintain a dollar-weighted average portfolio maturity in excess of 90 days (se-
curities used as collateral for repurchase agreements are not subject to these
restrictions).
   
 The Fund's investments are limited to U.S. dollar-denominated instruments that
have received the highest rating from the "Requisite NRSROs," securities of
issuers that have received such rating with respect to other short-term debt
securities and comparable unrated securities. "Requisite NRSROs" means (a) any
two nationally recognized statistical ratings organizations ("NRSROs") that
have issued a rating with respect to a security or class of debt obligations of
an issuer, or (b) one NRSRO, if only one NRSRO has issued such a rating at the
time that the Fund acquires the security. The NRSROs currently designated as
such by the SEC are S&P, Moody's, Fitch Investors Services, Inc., L.P., Duff
and Phelps Credit Rating Co., IBCA Limited and its affiliate, IBCA, Inc. and
Thomson BankWatch.     
   
 For purposes of the equity/fixed income fund allocation targets and ranges
applicable to each Portfolio (see page 6 above), each of the following Under-
lying Smith Barney Funds is considered to be an equity fund with respect to 50%
of a Portfolio's investment in such Fund and an income fund with respect to the
remaining 50% of such Portfolio's investment.     
 
 The Smith Barney Convertible Fund, an investment portfolio of Smith Barney
Income Funds, seeks current income and capital appreciation by investing in
convertible securities and in combinations of nonconvertible fixed-income secu-
rities and warrants or call options that together resemble convertible securi-
ties ("synthetic convertible securities"). Under normal circumstances, the Fund
will invest at least 65% of its assets in convertible securities, but is not
required to sell securities to conform to this limitation and may retain on a
temporary basis securities received upon the conversion or exercise of such
securities. The Fund will not invest in fixed-income securities that are rated
lower than B by Moody's or S&P or, if unrated, deemed by SBMFM to be comparable
to securities rated lower than B. The Fund may invest up to 35% of its assets
in synthetic convertible securities and in equity and debt securities that are
not convertible into common stock and, for temporary defensive purposes, may
invest in these securities without limitation.
 
                                                                              13
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
 
 The Smith Barney Utilities Fund, an investment portfolio of Smith Barney
Income Funds, seeks current income by investing in equity and debt securities
of companies in the utility industry. Long-term capital appreciation is a sec-
ondary objective of the Fund. The utility industries are deemed to be comprised
of companies principally engaged (that is, at least 50% of a company's assets,
gross income or net profits results from utility operations or the company is
regulated as a utility by a government agency or authority) in the manufacture,
production, generation, transmission and sale of electric and gas energy and
companies principally engaged in the communications field, including entities
such as telephone, telegraph, satellite, microwave and other companies regu-
lated by governmental agencies as utilities that provide communication facili-
ties for the public benefit, but not including those in public broadcasting.
The Fund will invest primarily in utility equity and debt securities that have
a high expected rate of return as determined by SBMFM. Under normal market con-
ditions, the Fund will invest at least 65% of its assets in such securities.
The Fund may invest up to 35% of its assets in equity and debt securities of
non-utility companies believed to afford a reasonable opportunity for achieving
the Fund's investment objectives. The Fund will invest in investment grade debt
securities, but may invest up to 10% of its assets in securities rated BB or B
by S&P or Ba or B by Moody's whenever SBMFM believes that the incremental yield
on such securities is advantageous to the Fund in comparison to the additional
risk involved.
   
 The International Balanced Portfolio, an investment portfolio of Smith Barney
World Funds, Inc., seeks a competitive total return on its assets from growth
of capital and income through a portfolio invested primarily in securities of
established non-U.S. issuers. The Fund may borrow up to 15% of the value of its
assets for investment purposes, which involves certain risks. Under normal mar-
ket conditions, the Fund will invest its assets in an international portfolio
of equity securities (consisting of dividend and non-dividend paying common
stocks, preferred stocks, convertible securities, ADRs and rights and warrants
to such securities) and debt securities (consisting of corporate debt securi-
ties, sovereign debt instruments issued by governments or governmental enti-
ties, including supranational organizations and U.S. and foreign money market
instruments). The Fund attempts to achieve a balance between equity and debt
securities. However, the proportion of equity and debt held by the Fund at any
one time will depend on SBMFM's views on current market and economic condi-
tions. Under normal conditions, no more than 70%, nor less than 30%, of the
Fund's assets will be invested in either equity or debt securities; however,
there is no limitation on the percentage or amount of the Fund's assets that
may be invested for growth or income.     
   
 The Fund is a non-diversified portfolio but will generally invest its assets
broadly among countries and will normally have at least 65% of its assets
invested in business activities in not less than three different countries out-
side of the U.S. The Fund will invest in a broad range of industries and sec-
tors and will mainly invest in securities issued by companies with market capi-
talizations of at least $50,000,000. The Fund may invest in companies organized
or governments located in any area of the world. However, under unusual eco-
nomic or market conditions as determined by the investment adviser, for defen-
sive purposes the Fund may temporarily invest all or a major portion of its
assets in U.S. government securities, debt or equity securities of companies
incorporated in and having their principal business activities in the U.S. or
in U.S. as well as foreign money market instruments and equivalents.     
 
 The debt securities in which the Fund invests generally range in maturity from
two to ten years. Debt securities of developed foreign countries must be rated
as investment grade (or deemed by SBMFM to be of comparable quality) at the
time of purchase. Debt securities of emerging market countries may be rated
below investment grade and could include securities that are in default as to
payments of principal or interest. Up to 25% of the total assets of the Fund
may be invested in securities of emerging market countries.
 
14
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
 
 PERFORMANCE OF UNDERLYING SMITH BARNEY FUNDS
   
 The following chart shows the average annual total returns for the longest
outstanding class of shares for each of the Underlying Smith Barney Funds in
which the Portfolios may invest (other than the Cash Portfolio of Smith Barney
Money Funds, Inc.) for the most recent one-, five- and ten-year periods (or
since inception if shorter and giving effect to the maximum applicable sales
charges) and the 30-day yields for income-oriented funds, in each case for the
period ended December 31, 1996.     
 
<TABLE>   
<CAPTION>
                                                           AVERAGE ANNUAL
                                                           TOTAL RETURNS              30-DAY
                                                          THROUGH DECEMBER          YIELD FOR
                           ASSETS OF ALL                      31, 1996                PERIOD
                           CLASSES AS OF                 ---------------------        ENDED
 UNDERLYING SMITH BARNEY   DECEMBER 31,  INCEPTION        ONE     FIVE    TEN      DECEMBER 31,
           FUND            1996 ($000'S)   DATE    CLASS  YEAR    YEARS  YEARS         1996
-----------------------------------------------------------------------------------------------
 <S>                       <C>           <C>       <C>   <C>      <C>    <C>       <C>
 Smith Barney Aggressive
  Growth Fund Inc.          $  607,914   10/24/83    A    (2.38)% 10.00% 13.39%         --
 Smith Barney
  Appreciation Fund Inc.     3,486,429   03/10/70    A    13.33   10.82  12.78          --
 Smith Barney Equity
  Funds:
  Smith Barney Growth and
   Income Fund                 328,347   11/06/92     A   12.82     --   11.11 (+)      --
 Smith Barney Fundamental
  Value Fund Inc.            1,390,274   11/12/81    A    13.77   15.20  13.65          --
 Smith Barney Funds,
  Inc.:
  Equity Income Portfolio      837,512   01/01/72    A    10.25   11.86  11.13          --
  Short-Term U.S.
   Treasury Securities
   Portfolio                   115,438   11/11/91    A     2.15    5.04   5.47 (+)     4.96%
 Smith Barney Income
  Funds:
  Smith Barney High
   Income Fund               1,138,694   09/02/86    B     7.87   12.17   9.12         6.86
  Smith Barney Utilities
   Fund                      1,510,568   03/28/88    B    (3.10)   7.32  10.08 (+)      --
  Smith Barney Premium
   Total Return Fund         3,032,742   09/16/85    B    15.09   13.40  12.76          --
  Smith Barney
   Convertible Fund             97,978   09/02/86    B     5.73    9.61   8.58         2.93
  Smith Barney
   Diversified Strategic
   Income Fund               2,819,870   12/28/89    B     5.43    7.71   9.36 (+)     5.76
 Smith Barney Investment
  Funds Inc.:
  Smith Barney Managed
   Growth Fund                 859,735   06/30/95    A    10.54     --    7.94 (+)      --
  Smith Barney Special
   Equities Fund               732,687   12/13/82    B   (11.12)  15.31  10.26          --
  Smith Barney Government
   Securities Fund             551,567   03/20/84    B    (3.08)   5.26   6.50         5.55
  Smith Barney Investment
   Grade Bond Fund             489,231   01/04/82    B    (5.35)   8.97   8.83         6.33
 Smith Barney Managed
  Governments Fund Inc.        597,264   09/04/84    A    (1.06)   5.08   6.94         6.16
 Smith Barney Natural
  Resources Fund Inc.          143,674   12/24/86    A    28.08   10.32   4.56          --
 Smith Barney World
  Funds, Inc.:
  International Equity
   Portfolio                 1,330,885   02/18/86    A     7.92    9.13   9.82          --
  Emerging Markets
   Portfolio                    28,681   05/11/95    A    14.07     --    2.39 (+)      --
  International Balanced
   Portfolio                    49,191   08/25/94    A     6.43     --    7.28 (+)      --
  Global Government Bond
   Portfolio                   150,356   07/22/91    A     2.69    6.45   8.20 (+)     4.37
-----------
</TABLE>    
+ Since inception (less than 10 years)
--------------------------------------------------------------------------------
   
 For the seven-day period ended December 31, 1996, the yield for the Cash Port-
folio of Smith Barney Money Funds, Inc. was 4.90% and the effective yield was
5.02%.     
 
 The performance data relating to the Underlying Smith Barney Funds set forth
above is not, and should not be viewed as, indicative of the future performance
of either the Underlying Smith Barney Funds or the Concert Series. The perfor-
mance reflects the impact of sales charges and other distribution related
expenses that will not be incurred by the Class Y shares of the Underlying
Smith Barney Funds in which the Portfolios will invest.
 
 INVESTMENT POLICIES AND STRATEGIES OF THE UNDERLYING SMITH BARNEY FUNDS
 
 In pursuing their investment objectives and programs, each of the Underlying
Smith Barney Funds is permitted to engage in a wide range of investment poli-
cies. The Underlying Smith Barney Funds' risks are determined by the nature of
the securities held and the investment strategies used by the Funds' adviser.
Certain of these policies are described below and further information about the
investment policies and strategies of the Underlying Smith Barney Funds in
which the Portfolios may invest is contained in the Appendix to this Prospectus
and in the Statement of Additional Information as well as the prospectuses of
the Underlying Smith Barney Funds. Because each Portfolio invests in the Under-
lying Smith Barney Funds, shareholders of each Portfolio will be affected by
these investment policies in direct proportion to the amount of assets each
Portfolio allocates to the Underlying Smith Barney Funds pursuing such poli-
cies.
 
 Securities of Non-U.S. Issuers. The Portfolios will each invest in certain
Underlying Smith Barney Funds that invest all or a portion of their assets in
securities of non-U.S. issuers. These include non-dollar denominated securities
traded outside the U.S. and dollar-denominated securities traded in the U.S.
(such as ADRs). Such investments involve some special risks such as fluctua-
tions in foreign exchange rates, future political and economic developments,
and the possible imposition of exchange controls or other foreign governmental
laws or restrictions. In addition, with respect to certain countries, there is
the possibility of expropriation of assets, repatriation, confiscatory taxa-
tion, political or social instability or diplomatic developments that could
adversely affect investments in those countries. There may be less publicly
available information about a foreign company than about a U.S. company, and
foreign companies
 
                                                                              15
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
may not be subject to accounting, auditing, and financial reporting standards
and requirements comparable to or as uniform as those of U.S. companies. Non-
U.S. securities markets, while growing in volume, have, for the most part, sub-
stantially less volume than U.S. markets, and securities of many foreign compa-
nies are less liquid and their prices more volatile than securities of compara-
ble U.S. companies. Transaction costs on non-U.S. securities markets are gener-
ally higher than in the U.S. There is generally less government supervision and
regulation of exchanges, brokers and issuers than there is in the U.S. An
Underlying Smith Barney Fund might have greater difficulty taking appropriate
legal action in non-U.S. courts. Dividend and interest income from non-U.S.
securities will generally be subject to withholding taxes by the country in
which the issuer is located and may not be recoverable by the Underlying Smith
Barney Fund or a Portfolio investing in such Fund.
   
 Options and Futures. Certain of the Underlying Smith Barney Funds may enter
into stock index, interest rate and currency futures contracts (or options
thereon, including swaps, caps, collars and floors) as a hedging device, or as
an efficient means of regulating their exposure to various markets. Certain of
the Underlying Smith Barney Funds may also purchase and sell call and put
options. Futures (a type of potentially high-risk derivative) are often used to
manage risk because they enable the investor to buy or sell an asset at a pre-
determined price in the future. The Underlying Smith Barney Funds may buy and
sell futures and options contracts for a number of reasons including: to manage
their exposure to changes in interest rates, stock and bond prices, and foreign
currencies; as an efficient means of adjusting their overall exposure to cer-
tain markets; to adjust the portfolio's duration; to enhance income; and to
protect the value of the portfolio securities. Certain of the Underlying Smith
Barney Funds may purchase, sell or write call and put options on securities,
financial indices, and foreign currencies. Options and futures can be volatile
investments, and involve certain risks. If the adviser to the Underlying Smith
Barney Fund applies a hedge at an inappropriate time or judges market condi-
tions incorrectly, options and futures strategies may lower the Underlying
Smith Barney Fund's return. Further losses could also be experienced if the
options and futures positions held by an Underlying Smith Barney Fund were
poorly correlated with its other investments, or if it could not close out its
positions because of an illiquid secondary market.     
 
 The Smith Barney Natural Resources Fund may also enter into futures contracts
for the purchase and sale of gold, purchase put and call options on those
future contracts and write call options on those futures contracts. The Smith
Barney Natural Resources Fund will purchase or write options on gold futures
only on a regulated domestic or foreign exchange approved for such purpose by
the Commodities Futures Trading Commission.
 
 Debt Securities. Certain of the Underlying Smith Barney Funds may be affected
by general changes in interest rates, which will result in increases or
decreases in the market value of the debt securities held by the Funds. The
market value of the fixed-income obligations in which the Underlying Smith Bar-
ney Funds may invest can be expected to vary inversely in relation to the
changes in prevailing interest rates and also may be affected by other market
and credit factors.
 
 Certain of the Underlying Smith Barney Funds may invest only in high-quality,
high-grade or investment-grade securities. High quality securities are those
rated in the two highest categories by Moody's (Aaa or Aa) or S&P (AAA or AA).
High-grade securities are those rated in the three highest categories by
Moody's (Aaa, Aa or A) or S&P (AAA, AA or A). Investment-grade securities are
those rated in the four highest categories by Moody's (Aaa, Aa, A or Baa) or
S&P (AAA, AA, A or BBB). Securities rated Baa or BBB have speculative charac-
teristics and changes in economic conditions or other circumstances are more
likely to lead to a weakened capacity of their issuers to make principal and
interest payments than is the case with higher grade securities.
 
 Certain Underlying Smith Barney Funds may invest in securities that are rated
below investment-grade; that is, rated below Baa by Moody's or BBB by S&P.
Securities rated below investment grade (and comparable unrated securities) are
the equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Such securities are regarded as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligations and involve major risk exposure to adverse business,
financial, economic or political conditions. See the Appendix to the Statement
of Additional Information for additional information on the bond ratings by
Moody's and S&P.
 
VALUATION OF SHARES
 
 
 The net asset value per share of Class Z shares is determined as of the close
of regular trading on the New York Stock Exchange, Inc. (the "NYSE"), on each
day that the NYSE is open by dividing the value of the Portfolio's net assets
attributable to Class Z by the number of shares of the Class outstanding. The
per share net asset value of the Class Z shares may be higher than those of
other Classes because of the lower expenses attributable to Class Z shares. The
value of each Underlying Smith Barney Fund will be its net asset value at the
time of computation. Short-term investments that have a maturity of more than
60 days are valued at prices based on market quotations for securities of simi-
lar type, yield and maturity. Short-term investments that have a maturity of 60
days or less are valued at amortized cost unless conditions dictate otherwise.
 
16
<PAGE>
 
DIVIDENDS, DISTRIBUTIONS AND TAXES
 
 DIVIDENDS AND DISTRIBUTIONS
 
 The Concert Series intends to declare monthly income dividends on shares of
the Income Portfolio, quarterly income dividends on shares of the Conservative
Portfolio and the Balanced Portfolio and annual income dividends on shares of
the High Growth Portfolio and the Growth Portfolio. In addition, the Concert
Series intends to make annual distributions of capital gains, if any, on shares
of each Portfolio.
 
 Unless a shareholder is eligible for qualified distributions and instructs
that dividends and capital gains distributions on shares be paid in cash and
credited to the shareholder's account, dividends and capital gains distribu-
tions will be reinvested automatically in additional shares of the Class at net
asset value, subject to no sales charge or CDSC.
 
 TAXES
 
 Each Portfolio intends to qualify as a regulated investment company under
Subchapter M of the Code to be relieved of federal income tax on that part of
its net investment income and realized capital gains that it pays out to its
shareholders. To qualify, the Portfolio must meet certain tests, including dis-
tributing at least 90% of its investment company taxable income, and deriving
less than 30% of its gross income from the sale or other disposition of certain
investments held for less than three months.
 
 Dividends from net investment income and distributions of realized short-term
capital gains on the sale of securities, whether paid in cash or automatically
invested in additional shares of the same Portfolio, are taxable to sharehold-
ers of each Portfolio as ordinary income. A portion of each Portfolio's divi-
dends may qualify for the dividends received deduction for corporations. Divi-
dends and distributions declared by each Portfolio may also be subject to state
and local taxes. Distributions out of net long-term capital gains (i.e., net
long-term capital gains in excess of net short-term capital losses) are taxable
to shareholders as long-term capital gains. Information as to the tax status of
dividends paid or deemed paid in each calendar year will be mailed to share-
holders as early in the succeeding year as practical but not later than January
31.
 
PURCHASE, EXCHANGE AND REDEMPTION OF SHARES
 
 
 Purchases of a Portfolio's Class Z shares must be made in accordance with the
terms of a Qualified Plan or Smith Barney UIT. Purchases are effected at the
net asset value next determined after a purchase order is received by Smith
Barney (the "trade date"). For shares purchased through Smith Barney or Intro-
ducing Brokers purchasing through Smith Barney, payment is due to Smith Barney
on the third business day (the "settlement date") after the trade date. In all
other cases, payment must be made with the purchase order. Investors who make
payment prior to the settlement date may designate a temporary investment (such
as a money market fund of the Smith Barney Mutual Funds) for such payment until
settlement date. The Concert Series reserves the right to reject any purchase
order and to suspend the offering of shares for a period of time. There are no
minimum investment requirements for Class Z shares; however, the Concert Series
reserves the right to vary this policy at any time.
   
 Purchase orders received by the Concert Series or Smith Barney prior to the
close of regular trading on the NYSE on any day that the Concert Series calcu-
lates its net asset value, are priced according to the net asset value deter-
mined on that day. See "Valuation of Shares."     
 
 Shareholders may redeem their shares on any day on which the Concert Series
calculates the Portfolios' net asset values. See "Valuation of Shares." Redemp-
tion requests received in proper form prior to the close of regular trading on
the NYSE are priced at the net asset value per share determined on that day.
Redemption requests received after the close of regular trading on the NYSE are
priced at the net asset value as next determined. Shareholders acquiring Class
Z shares through a Qualified Plan or a Smith Barney UIT should consult the
terms of their respective plans for redemption provisions.
 
 Holders of Class Z shares should consult their Qualified Plans for information
about exchange options.
       
PERFORMANCE
 
 
 From time to time, a Portfolio may include its total return, average annual
total return, yield, and current dividend return for Class Z shares in adver-
tisements. These figures are based on historical earnings and are not intended
to indicate future performance. Total return is computed for a specified period
of time assuming deduction of the maximum sales charge, if any, from the ini-
tial 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
 
                                                                              17
<PAGE>
 
PERFORMANCE (CONTINUED)
 
subtracting 100%. The standard average annual total return, as prescribed by
the SEC, is derived from this total return, which provides the ending redeem-
able 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 yield of a Portfolio's Class Z refers to the net investment income
earned by investments in the Class over a 30-day period. This net investment
income is then annualized, i.e., the amount of income earned by the investments
during the 30-day period is assumed to be earned each 30-day period for twelve
periods and is expressed as a percentage of the investments. The yield is cal-
culated according to a formula prescribed by the SEC to facilitate comparison
with yields quoted by other investment companies. The Balanced Portfolio and
the Conservative Portfolio calculate current dividend return for Class Z shares
by annualizing the most recent quarterly dividend distribution and dividing by
the net asset value on the last day of the period for which the current divi-
dend return is presented. The Income Portfolio calculates current dividend
return for Class Z shares by annualizing the most recent monthly distribution
and dividing by net asset value on the last day of the period for which the
current dividend return is presented. The current dividend return may vary from
time to time depending on market conditions, the composition 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 the Fund's current return to yields published for other investment
companies and other investment vehicles. Each Portfolio may also include com-
parative performance information in advertising or marketing the Class Z
shares. Such performance information may include data from Lipper Analytical
Services, Inc. and other financial publications.
   
MANAGEMENT OF CONCERT SERIES     
 
 
 BOARD OF DIRECTORS
   
 Overall responsibility for management and supervision of the Concert Series
rests with the Concert Series' Board of Directors. A majority of the Concert
Series' directors are non-interested persons as defined in Section 2(a)(19) of
the 1940 Act. However, the directors and officers of the Concert Series also
serve in similar positions with many of the Underlying Smith Barney Funds.
Thus, if the interests of a Portfolio and the Underlying Smith Barney Funds
were ever to become divergent, it is possible that a conflict of interest could
arise and affect how the directors and officers of the Concert Series fulfill
their fiduciary duties to that Portfolio and the Underlying Smith Barney Funds.
The directors of the Concert Series believe they have structured each Portfolio
to avoid these concerns. However, conceivably a situation could occur where
proper action for the Concert Series or a Portfolio separately could be adverse
to the interests of an Underlying Smith Barney Fund, or the reverse could
occur. If such a possibility arises, the directors and officers of the Concert
Series, the affected Underlying Smith Barney Funds and SBMFM will carefully
analyze the situation and take all steps they believe reasonable to minimize
and, where possible, eliminate the potential conflict. Moreover, limitations on
aggregate investments in the Underlying Smith Barney Funds have been adopted by
the Concert Series to minimize this possibility, and close and continuous moni-
toring will be exercised to avoid, insofar as is possible, these concerns. The
Statement of Additional Information contains background information regarding
each director and executive officer of the Concert Series.     
    
 INVESTMENT MANAGER     
   
 SBMFM, the investment manager to each Portfolio, is a registered investment
adviser whose principal offices are located at 388 Greenwich Street, New York,
New York 10013. SBMFM (through its predecessor entities) has been in the
investment counseling business since 1940. SBMFM renders investment advice to a
wide variety of investment company clients that had aggregate assets under man-
agement as of January 31, 1997 in excess of $80 billion. Subject to the super-
vision and direction of the Concert Series' Board of Directors, SBMFM will
determine how each Portfolio's assets will be invested in the Underlying Smith
Barney Funds and in repurchase agreements pursuant to the investment objective
and policies of each Portfolio set forth in this Prospectus and make recommen-
dations to the Board of Directors concerning changes to (a) the Underlying
Smith Barney Funds in which the Portfolios may invest, (b) the percentage range
of assets that may be invested by each Portfolio in any one Underlying Smith
Barney Fund and (c) the percentage range of assets of any Portfolio that may be
invested in equity funds and fixed income funds (including money market funds).
The directors of the Concert Series will periodically monitor the allocations
made and the basis upon which such allocations were made or maintained. SBMFM
also furnishes each Portfolio with bookkeeping, accounting and administrative
services, office space and equipment, and the services of the officers and
employees of the Concert Series. Under the Asset Allocation and Administration
Agreement with each Portfolio, SBMFM has agreed to bear all expenses of the
Concert Series other than the management fee, the fees payable pursuant to the
plan adopted pursuant to Rule 12b-1 under the 1940 Act and extraordinary
expenses. For the services rendered and expenses borne, for each Portfolio's
most recent fiscal period, each Portfolio paid SBMFM a monthly fee at the
annual rate of 0.35% of the value of its average daily net assets.     
 
 SBMFM also serves as investment adviser to each of the Underlying Smith Barney
Funds in which the Portfolios may invest (other than the Smith Barney Premium
Total Return Fund) and is responsible for the selection and management of each
of the Underlying
 
18
<PAGE>
 
   
MANAGEMENT OF CONCERT SERIES (CONTINUED)     
   
Smith Barney Fund's investments. Smith Barney Strategy Advisers Inc. ("SBSA"),
located at 388 Greenwich Street, New York, New York 10013, serves as investment
adviser to Smith Barney Premium Total Return Fund. SBSA has been in the
investment counseling business since 1968 and is a wholly owned subsidiary of
SBMFM. SBSA renders investment advice to investment companies that had
aggregate assets under management as of January 31, 1997 in excess of $3
billion.     
 
 Each Portfolio, as a shareholder in the Underlying Smith Barney Funds, will
indirectly bear its proportionate share of any investment management fees and
other expenses paid by the Underlying Smith Barney Funds. The effective manage-
ment fee of each of the Underlying Smith Barney Funds in which the Portfolios
may invest is set forth below as a percentage rate of the Fund's annual net
assets:
 
<TABLE>   
<CAPTION>
                                                MANAGEMENT
UNDERLYING SMITH BARNEY FUND                       FEES
----------------------------------------------------------
<S>                                             <C>
Smith Barney Aggressive Growth Fund Inc.          0.80%
Smith Barney Appreciation Fund Inc.               0.60%
Smith Barney Equity Funds
 Smith Barney Growth and Income Fund              0.65%
Smith Barney Fundamental Value Fund Inc.          0.75%
Smith Barney Funds, Inc.
 Equity Income Portfolio                          0.58%
 Short-Term U.S. Treasury Securities Portfolio    0.45%
Smith Barney Income Funds
 Smith Barney High Income Fund                    0.70%
 Smith Barney Utilities Fund                      0.65%
 Smith Barney Premium Total Return Fund           0.75%
 Smith Barney Convertible Fund                    0.70%
 Smith Barney Diversified Strategic Income Fund   0.65%
Smith Barney Investment Funds Inc.
 Smith Barney Managed Growth Fund                 0.85%
 Smith Barney Special Equities Fund               0.75%
 Smith Barney Government Securities Fund          0.55%
 Smith Barney Investment Grade Bond Fund          0.65%
Smith Barney Managed Governments Fund Inc.        0.65%
Smith Barney Money Funds, Inc.
 Cash Portfolio                                   0.40%
Smith Barney Natural Resources Fund Inc.          0.75%
Smith Barney World Funds, Inc.
 International Equity Portfolio                   0.85%
 Emerging Markets Portfolio                       1.00%
 International Balanced Portfolio                 0.85%
 Global Government Bond Portfolio                 0.75%
----------------------------------------------------------
</TABLE>    
 
 PORTFOLIO MANAGEMENT
 
 Thomas B. Stiles II, Chief Investment Officer of SBMFM, has primary responsi-
bility for the day-to-day management of each Portfolio. Mr. Stiles, born in
1940, is Chairman and Chief Executive Officer of Greenwich Street Advisors, a
division of SBMFM, and a Managing Director of Smith Barney. Certain managing
directors of SBMFM will assist Mr. Stiles in managing the Portfolios.
   
 Management's discussion and analysis and additional performance information
regarding the Concert Series during the fiscal year ended January 31, 1997 is
included in the Annual Report dated January 31, 1997. A copy of the Annual
Report may be obtained upon request and without charge from a Smith Barney
Financial Consultant or by writing or calling the Concert Series at the address
or phone number listed on page one of this Prospectus.     
 
 DISTRIBUTOR -- SMITH BARNEY
 
 Smith Barney is located at 388 Greenwich Street, New York, New York 10013, and
serves as the Fund's distributor. Smith Barney is a wholly owned subsidiary of
Travelers Group Inc. ("Travelers").
 
                                                                              19
<PAGE>
 
ADDITIONAL INFORMATION
   
 The Concert Series, an open-end, non-diversified investment company, was
incorporated in Maryland on August 11, 1995. The Concert Series commenced oper-
ations on February 5, 1996 under the name Smith Barney Concert Series Inc. The
Select Portfolios of Concert Series commenced operations on February 5, 1997.
On February 24, 1997, the Concert Series changed its name to Smith Barney Con-
cert Allocation Series Inc. The Concert Series has authorized capital of
5,500,000,000 shares with a par value of $.001 per share. The Board of Direc-
tors has authorized the issuance of ten series of shares, each representing
shares in one of ten separate portfolios and may authorize the issuance of
additional series of shares in the future. The assets of each Portfolio are
segregated and separately managed and a shareholder's interest is in the assets
of the Portfolio in which he or she holds shares. Class A, Class B, Class C,
Class Y and Class Z shares of a Portfolio represent interests in the assets of
that Portfolio and have identical voting, dividend, liquidation and other
rights (other than conversion) on the same terms and conditions except that
expenses related to the distribution of each Class of shares are borne solely
by each Class and each Class of shares has exclusive voting rights with respect
to provisions of the Concert Series' Rule 12b-1 distribution plan that pertain
to a particular Class. As described under "Voting" in the Statement of Addi-
tional Information, the Concert Series ordinarily will not hold shareholder
meetings; however, shareholders have the right to call a meeting upon a vote of
10% of the Concert Series' outstanding shares and the Concert Series will
assist shareholders in calling such a meeting as required by the 1940 Act.
Shares do not have cumulative voting rights or preemptive rights and are fully
paid, transferable and non-assessable when issued for payment as described in
this Prospectus.     
 
 On matters submitted for consideration by shareholders of any Underlying Smith
Barney Fund, a Portfolio will vote its shares in proportion to the vote of all
other holders of shares of that Fund or, in certain limited instances, the
Portfolio will vote its shares in the manner indicated by a vote of holders of
shares of the Portfolio.
 
 PNC Bank, National Association, located at 17th and Chestnut Streets, Phila-
delphia, Pennsylvania 19103, serves as custodian of the Portfolios' invest-
ments.
 
 First Data, located at Exchange Place, Boston, Massachusetts 02109, serves as
the Concert Series' transfer agent.
   
 The Concert Series intends to send its shareholders a semi-annual report and
an audited annual report, which will include listings of the investment securi-
ties held by the Concert Series at the end of the period covered. In an effort
to reduce the Concert Series' printing and mailing costs, the Concert Series
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.
Shareholders who do not want this consolidation to apply to their account
should contact their Smith Barney Financial Consultant or the Concert Series'
transfer agent.     
 
20
<PAGE>
 
APPENDIX
 
 DESCRIPTIONS OF CERTAIN RISKS RELATED TO VARIOUS SECURITIES INVESTED IN, AND
 INVESTMENT STRATEGIES EMPLOYED BY, THE UNDERLYING SMITH BARNEY FUNDS IN WHICH
 THE PORTFOLIOS MAY INVEST
 
 Repurchase Agreements. Repurchase agreements, as utilized by an Underlying
Smith Barney Fund or a Portfolio of the Concert Series, could involve certain
risks in the event of default or insolvency of the other party, including pos-
sible delays or restrictions upon the ability of an Underlying Smith Barney
Fund or a Portfolio to dispose of the underlying securities, the risk of a pos-
sible decline in the value of the underlying securities during the period in
which an Underlying Smith Barney Fund or a Portfolio seeks to assert its rights
to them, the risk of incurring expenses associated with asserting those rights
and the risk of losing all or part of the income from the agreement.
 
 Reverse Repurchase Agreements. Certain of the Underlying Smith Barney Funds
may engage in reverse repurchase agreement transactions with banks, brokers and
other financial institutions. Reverse repurchase agreements involve the risk
that the market value of the securities sold by the Underlying Smith Barney
Fund may decline below the repurchase price of the securities.
 
 Lending of Portfolio Securities. The risks in lending portfolio securities,
like those associated with other extensions of secured credit, consist of pos-
sible delays in receiving additional collateral or in the recovery of the secu-
rities or possible loss of rights in the collateral should the borrower fail
financially. Loans will be made to firms deemed by the adviser to the Under-
lying Smith Barney Fund to be of good standing and will not be made unless, in
the judgment of the adviser, the consideration to be earned from such loans
would justify the risk.
 
 When-Issued Securities and Delayed-Delivery Transactions. The purchase of
securities on a when-issued or delayed-delivery basis involves the risk that,
as a result of an increase in yields available in the marketplace, the value of
the securities purchased will decline prior to the settlement date. The sale of
securities for delayed delivery involves the risk that the prices available in
the market on the delivery date may be greater than those obtained in the sale
transaction.
 
 Non-Diversified Funds. Certain of the Underlying Smith Barney Funds are
classified as non-diversified investment companies under the 1940 Act. Since,
as a non-diversified fund, such an Underlying Smith Barney Fund is permitted to
invest a greater proportion of its assets in the securities of a smaller number
of issuers, each such Fund may be subject to greater risk with respect to its
individual portfolio than a Fund that is more broadly diversified.
 
 Securities of Unseasoned Issuers. Securities in which certain of the Under-
lying Smith Barney Funds may invest may have limited marketability and, there-
fore, may be subject to wide fluctuations in market value. In addition, certain
securities may lack a significant operating history and be dependent on prod-
ucts or services without an established market share.
 
 Convertible Securities and Synthetic Convertible Securities. While convertible
securities generally offer lower yields than non-convertible debt securities of
similar quality, their prices may reflect changes in the value of the under-
lying common stock. Convertible securities entail less credit risk than the
issuer's common stock.
 
 Synthetic convertible securities are created by combining non-convertible
bonds or preferred stocks with warrants or stock call options. Synthetic con-
vertible securities differ from convertible securities in certain respects,
including that each component of a synthetic convertible security has a sepa-
rate market value and responds differently to market fluctuations. Investing in
synthetic convertible securities involves the risks normally involved in hold-
ing the securities comprising the synthetic convertible security.
 
 Securities of Developing Countries. A developing country generally is consid-
ered to be a country that is in the initial stages of its industrialization
cycle. Investing in the equity and fixed-income markets of developing countries
involves exposure to economic structures that are generally less diverse and
mature, and to political systems that can be expected to have less stability,
than those of developed countries. Historical experience indicates that the
markets of developing countries have been more volatile than the markets of the
more mature economies of developed countries; however, such markets often have
provided higher rates of return to investors.
 
 Sovereign Debt Obligations. Sovereign debt of developing countries may involve
a high degree of risk, and may be in default or present the risk of default.
Governmental entities responsible for repayment of the debt may be unable or
unwilling to repay principal and interest when due, and may require renegoti-
ation or rescheduling of debt payments. In addition, prospects for repaying of
principal and interest may depend on political as well as economic factors.
Although some sovereign debt, such as Brady Bonds, is collateralized by U.S.
government securities, repayment of principal and interest is not guaranteed by
the U.S. government.
 
                                                                             A-1
<PAGE>
 
APPENDIX (CONTINUED)
 
 
 Restrictions on Foreign Investment. Some countries prohibit or impose substan-
tial restrictions on investments in their capital markets, particularly their
equity markets, by foreign entities. As illustrations, certain countries
require governmental approval prior to investments by foreign persons, or limit
the amount of investment by foreign persons in a particular company, or limit
the investment by foreign persons to only a specific class of securities of a
company that may have less advantageous terms than securities of the company
available for purchase by nationals or limit the repatriation of funds for a
period of time.
 
 Smaller capital markets, while often growing in trading volume, have substan-
tially less volume than U.S. markets, and securities in many smaller capital
markets are less liquid and their prices may be more volatile than securities
of comparable U.S. companies. Brokerage commissions, custodial services, and
other costs relating to investment in smaller capital markets are generally
more expensive than in the U.S. Such markets have different clearance and set-
tlement procedures, and in certain markets there have been times when settle-
ments have been unable to keep pace with the volume of securities transactions,
making it difficult to conduct such transactions. Further, satisfactory custo-
dial services for investment securities may not be available in some countries
having smaller capital markets, which may result in an Underlying Smith Barney
Fund incurring additional costs and delays in transporting and custodying such
securities outside such countries. Delays in settlement could result in tempo-
rary periods when assets of a Fund are uninvested and no return is earned
thereon. The inability of an Underlying Smith Barney Fund to make intended
security purchases due to settlement problems could cause such Fund to miss
attractive investment opportunities. Inability to dispose of a portfolio secu-
rity due to settlement problems could result either in losses to the Fund due
to subsequent declines in value of the portfolio security or, if the Fund has
entered into a contract to sell the security, could result in possible liabil-
ity to the purchaser. There is generally less government supervision and regu-
lation of exchanges, brokers and issuers in countries having smaller capital
markets than there is in the U.S.
 
 Mortgage-Related Securities. To the extent that an Underlying Smith Barney
Fund purchases mortgage-related securities at a premium, mortgage foreclosures
and prepayments of principal by mortgagors (which may be made at any time with-
out penalty) may result in some loss of the Fund's principal investment to the
extent of the premium paid. The Underlying Smith Barney Fund's yield may be
affected by reinvestment of prepayments at higher or lower rates than the orig-
inal investment. In addition, like other debt securities, the values of mort-
gage-related securities, including government and government-related mortgage
pools, generally will fluctuate in response to market interest rates.
 
 Non-Publicly Traded and Illiquid Securities. The sale of securities that are
not publicly traded is typically restricted under the Federal securities laws.
As a result, an Underlying Smith Barney Fund may be forced to sell these secu-
rities at less than fair market value or may not be able to sell them when the
Fund's adviser believes it desirable to do so. Investments by an Underlying
Smith Barney Fund in illiquid securities are subject to the risk that should
the Fund desire to sell any of these securities when a ready buyer is not
available at a price that the Fund's adviser deems representative of its value,
the value of the Underlying Smith Barney Fund's net assets could be adversely
affected.
 
 Short Sales. Possible losses from short sales differ from losses that could be
incurred from a purchase of a security, because losses from short sales may be
unlimited, whereas losses from purchases can equal only the total amount
invested.
 
 Forward Roll Transactions. Forward roll transactions involve the risk that the
market value of the securities sold by an Underlying Smith Barney Fund may
decline below the repurchase price of the securities. Forward roll transactions
are considered borrowings by a Fund. Although investing the proceeds of these
borrowings in repurchase agreements or money market instruments may provide an
Underlying Smith Barney Fund with the opportunity for higher income, this
leveraging practice will increase a Fund's exposure to capital risk and higher
current expenses. Any income earned from the securities purchased with the
proceeds of these borrowings that exceeds the cost of the borrowings would
cause a Fund's net asset value per share to increase faster than would
otherwise be the case; any decline in the value of the securities purchased
would cause a Fund's net asset value per share to decrease faster than would
otherwise be the case.
 
 Leverage. Certain of the Underlying Smith Barney Funds may borrow from banks,
on a secured or unsecured basis, in order to leverage their portfolios. Lever-
age creates an opportunity for increased returns to shareholders of an Under-
lying Smith Barney Fund but, at the same time, creates special risk considera-
tions. For example, leverage may exaggerate changes in the net asset value of a
Fund's shares and in a Fund's yield. Although the principal or stated value of
such borrowings will be fixed, the Fund's assets may change in value during the
time the borrowing is outstanding. Leverage will create interest or dividend
expenses for the Fund that can exceed the income from the assets retained. To
the extent the income or other gain derived from securities purchased with bor-
rowed funds exceeds the interest or dividends the Fund will have to pay in
respect thereof, the Fund's net income or other gain will be greater than if
leverage had not been used. Conversely, if the income or other gain from the
incremental assets is not sufficient to cover the cost of leverage, the net
income or other gain of the Fund will be less than if leverage had not been
used. If the amount of income from the incremental securities is insufficient
to cover the cost of borrowing, securities might have to be liquidated to
obtain required funds. Depending on market or other conditions, such liquida-
tions could be disadvantageous to the Underlying Smith Barney Fund.
 
A-2
<PAGE>
 
APPENDIX (CONTINUED)
 
 
 Floating and Variable Rate Income Securities. Floating and variable rate
income securities include securities whose rates vary inversely with changes in
market rates of interest. Such securities may also pay a rate of interest
determined by applying a multiple to the variable rate. The extent of increases
and decreases in the value of securities whose rates vary inversely with
changes in market rates of interest generally will be larger than comparable
changes in the value of an equal principal amount of a fixed rate security hav-
ing similar credit quality, redemption provisions and maturity.
 
 Zero Coupon, Discount and Payment-in-Kind Securities. Zero coupon securities
generally pay no cash interest (or dividends in the case of preferred stock) to
their holders prior to maturity. Payment-in-kind securities allow the lender,
at its option, to make current interest payments on such securities either in
cash or in additional securities. Accordingly, such securities usually are
issued and traded at a deep discount from their face or par value and generally
are subject to greater fluctuations of market value in response to changing
interest rates than securities of comparable maturities and credit quality that
pay cash interest (or dividends in the case of preferred stock) on a current
basis.
 
 Premium Securities. Premium securities are income securities bearing coupon
rates higher than prevailing market rates. Premium securities are typically
purchased at prices greater than the principal amounts payable on maturity. If
securities purchased by an Underlying Smith Barney Fund at a premium are called
or sold prior to maturity, the Fund will recognize a capital loss to the extent
the call or sale price is less than the purchase price. Additionally, the Fund
will recognize a capital loss if it holds such securities to maturity.
 
 Yankee Bonds. Yankee bonds are U.S. dollar-denominated bonds sold in the U.S.
by non-U.S. issuers. As compared with bonds issued in the U.S., such bond
issues normally carry a higher interest rate but are less actively traded.
 
 Swap Agreements. As one way of managing its exposure to different types of
investments, certain of the Underlying Smith Barney Funds may enter into inter-
est rate swaps, currency swaps, and other types of swap agreements such as
caps, collars, and floors. Swap agreements can be highly volatile and may have
a considerable impact on a Fund's performance. Swap agreements are subject to
risks related to the counterparty's ability to perform, and may decline in
value if the counterparty's creditworthiness deteriorates. A Fund may also suf-
fer losses if it is unable to terminate outstanding swap agreements or reduce
its exposure through offsetting transactions.
 
 Indexed Securities. Certain of the Underlying Smith Barney Funds may invest in
indexed securities, including inverse floaters, whose value is linked to cur-
rencies, interest rates, commodities, indices, or other financial indicators.
Indexed securities may be positively or negatively indexed (i.e., their value
may increase or decrease if the underlying instrument appreciates), and may
have return characteristics similar to direct investments in the underlying
instrument or to one or more options on the underlying instrument. Indexed
securities may be more volatile than the underlying instrument itself.
 
 Investment in Utility Securities. The Smith Barney Utilities Fund is particu-
larly subject to risks that are inherent to the utility industries, including
difficulty in obtaining an adequate return on invested capital, difficulty in
financing large construction programs during an inflationary period, restric-
tions on operations and increased cost and delays attributable to environmental
considerations and regulation, difficulty in raising capital in adequate
amounts on reasonable terms in periods of high inflation and unsettled capital
markets, increased costs and reduced availability of certain types of fuel,
occasional reduced availability and high costs of natural gas for resales, the
effects of energy conservation, the effects of a national energy policy and
lengthy delays and greatly increased costs and other problems associated with
the design, construction, licensing, regulation and operation of nuclear facil-
ities for electric generation, including, among other considerations, the prob-
lems associated with the use of radioactive materials and the disposal of
radioactive wastes. There are substantial differences between the regulatory
practices and policies of various jurisdictions, and any given regulatory
agency may make major shifts in policy from time to time. There is no assurance
that regulatory authorities will grant rate increases in the future or that
such increases will be adequate to permit the payment of dividends on common
stocks. Additionally, existing and possible future regulatory legislation may
make it even more difficult for these utilities to obtain adequate relief. Cer-
tain of the issuers of securities held by the Smith Barney Utilities Fund may
own or operate nuclear generating facilities. Governmental authorities may from
time to time review existing policies, and impose additional requirements gov-
erning the licensing, construction and operation of nuclear power plants.
 
 Each of the risks referred to above could adversely affect the ability and
inclination of public utilities to declare or pay dividends and the ability of
holders of common stock to realize any value from the assets of the issuer upon
liquidation or bankruptcy. All of the utilities that are issuers of the securi-
ties held by the Smith Barney Utilities Fund have been experiencing one or more
of these problems in varying degrees. Moreover, price disparities within
selected utility groups and discrepancies in relation to averages and indices
have occurred frequently for reasons not directly related to the general move-
ments or price trends of utility common stocks. Causes of these discrepancies
include changes in the overall demand for and supply of various securities (in-
cluding the potentially depressing effect of new stock offerings), and changes
in investment objectives, market expectations or cash requirements of other
purchasers and sellers of securities.
 
                                                                             A-3
<PAGE>
 
 
                                             SMITHBARNEY 
                                             -----------
                                             A Member of TravelersGroup [LOGO]




                                                                      
                                                                    SMITH BARNEY
                                                              CONCERT ALLOCATION
                                                                SERIES INC.     
 


                                                            388 Greenwich Street
                                                        New York, New York 10013

                                                                 
                                                              FD 01233 5/97     

<PAGE>
 
   
PROSPECTUS                                                 May 30, 1997     
 
--------------------------------------------------------------------------------
   
Smith Barney Concert Allocation Series Inc.     
3100 Breckinridge Blvd., Bldg 200
Duluth, Georgia 30199-0062
(800) 544-5445
   
 Smith Barney Concert Allocation Series Inc. (the "Concert Series" or "Series")
currently offers ten professionally managed investment portfolios, five of
which are offered by this Prospectus (each, a "Portfolio"). Each Portfolio
seeks to achieve its objective by investing in a number of other Smith Barney
Mutual Funds ("Underlying Smith Barney Funds").     
 
 The High Growth Portfolio seeks capital appreciation.
 
 The Growth Portfolio seeks long-term growth of capital.
 
 The Balanced Portfolio seeks a balance of growth of capital and income.
 
 The Conservative Portfolio seeks income and, secondarily, long-term growth of
capital.
 
 The Income Portfolio seeks high current income.
 
 This Prospectus sets forth concisely certain information about the Concert
Series and each of the Portfolios that prospective investors will find helpful
in making an investment decision. Investors are encouraged to read this Pro-
spectus carefully and retain it for future reference.
   
 Additional information about each of the Portfolios is contained in a State-
ment of Additional Information dated May 30, 1997, as amended or supplemented
from time to time, that is available upon request and without charge by calling
or writing the Concert Series at the telephone number or address set forth
above or by contacting a Registered 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 Prospectus in its entirety.     
 
PFS DISTRIBUTORS, INC.
Distributor
 
SMITH BARNEY MUTUAL FUNDS MANAGEMENT INC.
Investment Manager
 
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>
 
TABLE OF CONTENTS
 
<TABLE>   
<S>                                            <C>
PROSPECTUS SUMMARY                               3
--------------------------------------------------
FINANCIAL HIGHLIGHTS                             8
--------------------------------------------------
WHY INVEST IN THE CONCERT SERIES?                9
--------------------------------------------------
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES    9
--------------------------------------------------
RISK FACTORS AND SPECIAL CONSIDERATIONS         10
--------------------------------------------------
PORTFOLIO TURNOVER                              11
--------------------------------------------------
INVESTMENT RESTRICTIONS                         11
--------------------------------------------------
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS    12
--------------------------------------------------
VALUATION OF SHARES                             20
--------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES              20
--------------------------------------------------
PURCHASE OF SHARES                              20
--------------------------------------------------
EXCHANGE PRIVILEGE                              24
--------------------------------------------------
REDEMPTION OF SHARES                            25
--------------------------------------------------
MINIMUM ACCOUNT SIZE                            26
--------------------------------------------------
PERFORMANCE                                     26
--------------------------------------------------
MANAGEMENT OF THE CONCERT SERIES                26
--------------------------------------------------
DISTRIBUTOR                                     28
--------------------------------------------------
ADDITIONAL INFORMATION                          29
--------------------------------------------------
APPENDIX                                       A-1
--------------------------------------------------
</TABLE>    
 
--------------------------------------------------------------------------------
 No person has been authorized to give any information or to make any represen-
tations in connection with this offering other than those contained in this
Prospectus and, if given or made, such other information and representations
must not be relied upon as having been authorized by the Concert Series or the
Distributor. This Prospectus does not constitute an offer by the Concert Series
or the Distributor to sell or a solicitation of an offer to buy any of the
securities offered hereby or securities of any Underlying Smith Barney Fund in
any jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction.
 
--------------------------------------------------------------------------------
 
2
<PAGE>
 
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 OBJECTIVES The Concert Series is an open-end, non-diversified
management investment company that currently offers ten professionally managed
investment portfolios. This Prospectus offers five Portfolios. The High Growth
Portfolio seeks to provide capital appreciation. The Growth Portfolio seeks to
provide long-term growth of capital. The Balanced Portfolio seeks to provide a
balance of growth of capital and income. The Conservative Portfolio seeks to
provide income and, secondarily, long-term growth of capital. The Income
Portfolio seeks to provide high current income. Each Portfolio seeks to achieve
its investment objective by investing in a diverse mix of "Underlying Smith
Barney Funds," which consist of open-end management investment companies or
series thereof for which Smith Barney Inc. ("Smith Barney") now or in the
future acts as principal underwriter or for which Smith Barney, Smith Barney
Mutual Funds Management Inc. ("SBMFM") or Smith Barney Strategy Advisers Inc.
("SBSA") now or in the future acts as investment adviser. In addition, each
Portfolio may invest its short-term cash in repurchase agreements. Investors
may choose to invest in one or more of the Portfolios based on their personal
investment goals, risk tolerance and financial circumstances. See "Investment
Objectives and Management Policies."     
   
ALTERNATIVE PURCHASE ARRANGEMENTS Each Portfolio offers two classes of shares
("Classes") to investors purchasing through PFS Investments Registered
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 performance. See "Purchase of Shares" and "Redemption of
Shares."     
   
 Class A Shares. Class A shares are sold at net asset value plus an initial
sales charge of up to 5.00% with respect to the High Growth Portfolio, the
Growth Portfolio and the Balanced Portfolio and up to 4.50% with respect to the
Conservative Portfolio and the Income Portfolio. The initial sales charge may
be reduced or waived for certain purchases. Purchases of Class A shares of
$500,000 or more 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 A shares of each Portfolio are subject to an
annual service fee of 0.25% of the average daily net assets of the Class.     
 
 Class B Shares. Class B shares of the High Growth Portfolio, the Growth Port-
folio and the Balanced Portfolio 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. Class B shares of the Conservative Portfo-
lio and the Income Portfolio are offered at net asset value subject to a maxi-
mum CDSC of 4.50% of redemption proceeds, declining by 0.50% the first year
after purchase and 1.00% each year thereafter to zero. The CDSC may be waived
for certain redemptions. Class B shares of the High Growth Portfolio, the
Growth Portfolio and the Balanced Portfolio are subject to an annual service
fee of 0.25% and an annual distribution fee of 0.75% of the average daily net
assets of the Class. Class B shares of the Conservative Portfolio and the
Income Portfolio are subject to an annual service fee of 0.25% and an annual
distribution fee of 0.50% 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.
 
 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 Portfolio shares to purchase, investors should con-
sider the following factors, as well as any other relevant facts and circum-
stances:
 
 Intended Holding Period. The decision as to which Class of shares is more ben-
eficial to an investor depends on the amount and intended duration 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 a Portfolio. Any investment return on these
additional invested amounts may partially or wholly offset the higher annual
expenses of this Class. Because a Portfolio's future return cannot be predict-
ed, 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 a Portfolio. In addition, Class A share pur-
chases of $500,000 or more will be     
 
                                                                               3
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
   
made at net asset value with no initial sales charge, but will be subject to a
CDSC of 1.00% on redemptions made within 12 months of purchase. The $500,000
investment may be met by adding the purchase to the net asset value of all
Class A shares offered with a sales charge held in funds sponsored by Smith
Barney listed under "Exchange Privilege." Class A share purchases also may 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 Registered Representatives may receive different compensation
for selling different Classes of shares. Investors should understand that the
purpose of the 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 Concert Series" for a complete
description of the sales charges and service and distribution fees for each
Class of shares and "Valuation of Shares," "Dividends, Distribution and Taxes"
and "Exchange Privilege" for other differences between the Classes of shares.
 
PURCHASE OF SHARES Shares may be purchased through PFS Distributors, Inc.
("PFS"), a distributor of the Series' shares. 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 (except for
Systematic Investment Plan accounts), or $250 for an individual retirement
account ("IRA") or a Self-Employed Retirement Plan. Subsequent investments of
at least $50 may be made for each Class. For participants in retirement plans
qualified under Section 403(b)(7) or Section 401(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), the minimum initial investment
requirement for Class A and Class B shares and the subsequent investment
requirement for each Class is $25. The minimum initial investment requirement
for Class A and Class B shares and the subsequent investment requirement for
all Classes through the Systematic Investment Plan described below is $25. See
"Purchase of Shares."     
 
SYSTEMATIC INVESTMENT PLAN Each Portfolio offers shareholders a Systematic
Investment Plan under which they may authorize the automatic placement of a
purchase order each month for Portfolio shares in an amount of at least $25.
See "Purchase 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
"Redemption of Shares."
 
MANAGEMENT OF EACH PORTFOLIO SBMFM serves as each Portfolio's investment
manager. SBMFM 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 segments: Investment
Services, Consumer Finance Services, Life Insurance Services and Property &
Casualty Insurance Services.
 
 SBMFM serves as the investment adviser of each of the Underlying Smith Barney
Funds (other than Smith Barney Premium Total Return Fund). SBSA, a wholly owned
subsidiary of SBMFM, serves as investment adviser to Smith Barney Premium Total
Return Fund. See "Management of the Concert Series."
   
EXCHANGE PRIVILEGE Shares of each Class may be exchanged for shares of the same
Class of certain other Smith Barney Mutual Funds, including the Underlying
Smith Barney Funds held by the Portfolios, at the respective net asset values
next determined. See "Exchange Privilege."     
 
VALUATION OF SHARES Net asset value of each Portfolio for the prior day
generally will be 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 The Concert Series intends to pay dividends from
net investment income monthly on shares of the Income Portfolio, quarterly on
shares of the Conservative Portfolio and the Balanced Portfolio and annually on
shares of the High Growth Portfolio and the Growth Portfolio. Distributions of
net realized capital gains, if any, are paid annually for each Portfolio. See
"Dividends, Distributions and Taxes."
 
REINVESTMENT OF DIVIDENDS Dividends and distributions paid on shares of each
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."
 
4
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
 
 
RISK FACTORS AND SPECIAL CONSIDERATIONS The assets of each Portfolio are
invested in certain Underlying Smith Barney Funds, so each Portfolio's
investment performance is directly related to the investment performance of
the Underlying Smith Barney Funds held. The ability of each Portfolio to meet
its investment objective is directly related to the ability of the Underlying
Smith Barney Funds held to meet their objectives as well as the allocation
among those Underlying Smith Barney Funds by SBMFM. There can be no assurance
that the investment objective of any Portfolio or any Underlying Smith Barney
Fund will be achieved.
 
 The value of the Underlying Smith Barney Funds' investments, and thus the net
asset value of both those Underlying Smith Barney Funds' and the Portfolios'
shares, will fluctuate in response to changes in market and economic condi-
tions, as well as the financial condition and prospects of issuers in which
the Underling Smith Barney Funds invest. For a description of the risks
involved in an investment in the Portfolios, see "Investment Objectives and
Management Policies," "Description of the Underlying Smith Barney Funds" and
the Appendix to this Prospectus.
   
EACH PORTFOLIO'S EXPENSES The following expense tables list the costs and
expenses an investor will incur as a shareholder of each Portfolio, based on
the maximum sales charge or maximum CDSC that may be incurred at the time of
purchase or redemption and, unless otherwise noted, each Portfolio's operating
expenses for its most recent fiscal year:     
 
<TABLE>
<CAPTION>
                            APPLICABLE TO THE HIGH GROWTH PORTFOLIO, THE GROWTH
                                   PORTFOLIO AND THE BALANCED PORTFOLIO
                            ------------------------------------------------------
                                     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 PORTFOLIO OPERATING
 EXPENSES
 (as a percentage of
 average net assets)
 Management fee...........                        0.35%                        0.35%
 12b-1 fee**..............                        0.25                         1.00
 Other expenses***........                        None                         None
------------------------------------------------------------------------------------
  Total Portfolio Operat-
   ing Expenses...........                        0.60%                        1.35%
------------------------------------------------------------------------------------
</TABLE>
 
<TABLE>
<CAPTION>
                            APPLICABLE TO THE CONSERVATIVE PORTFOLIO
                                    AND THE INCOME PORTFOLIO
                                   -------------------------------------------
                                         CLASS A                CLASS B
-------------------------------------------------------------------------------
   <S>                             <C>                    <C>
   SHAREHOLDER TRANSACTION
   EXPENSES
    Maximum sales charge imposed
     on purchases
     (as a percentage of
     offering price)                                4.50%                 None
    Maximum CDSC (as a
     percentage of original cost
     or redemption proceeds,
     whichever is lower)........                   None*                  4.50%
-------------------------------------------------------------------------------
   ANNUAL PORTFOLIO OPERATING
    EXPENSES
    (as a percentage of average
    net assets)
    Management fee..............                    0.35%                 0.35%
    12b-1 fee**.................                    0.25                  0.75
    Other expenses***                               None                  None
-------------------------------------------------------------------------------
     Total Portfolio Operating
      Expenses..................                    0.60%                 1.10%
-------------------------------------------------------------------------------
</TABLE>
   
  * Purchases of Class A shares of $500,000 or more 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 of purchase.     
 ** Upon conversion of Class B shares to Class A shares, such shares will no
    longer be subject to a distribution fee.
*** Under the Asset Allocation and Administration Agreement with each
    Portfolio, SBMFM bears all expenses of each Class of each Portfolio other
    than the management fee, the 12b-1 fee and extraordinary expenses.
 
 The sales charges and CDSCs set forth in the above tables are the maximum
charges imposed on purchases or redemptions of each of the Portfolios' 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 of each Portfolio. PFS also
receives with respect to Class B shares of the High Growth Portfolio, the
Growth Portfolio and the Balanced Portfolio an annual 12b-1 fee of 1.00% of
the value of average daily net assets of that Class, consisting of a 0.75%
distribution fee and a 0.25% service fee. For Class B shares of the Conserva-
tive Portfolio and the Income Portfolio, PFS receives an annual 12b-1 fee of
0.75% of the value of average daily net assets of that Class, consisting of a
0.50% distribution fee and a 0.25% service fee.
 
                                                                              5
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
   
 The Portfolios will invest only in Class Y shares of the Underlying Smith Bar-
ney Funds and, accordingly, will not pay any sales load or 12b-1 service or
distribution fees in connection with their investments in shares of the Under-
lying Smith Barney Funds. The Portfolios, however, will indirectly bear their
pro rata share of the fees and expenses incurred by the Underlying Smith Barney
Funds that are applicable to Class Y shareholders. The investment returns of
each Portfolio, therefore, will be net of the expenses of the Underlying Smith
Barney Funds in which it is invested. The following chart shows the expense
ratios applicable to Class Y shareholders of each Underlying Smith Barney Fund,
based on operating expenses for its most recent fiscal year:     
 
<TABLE>   
<CAPTION>
UNDERLYING SMITH BARNEY FUND                      EXPENSE RATIO
---------------------------------------------------------------
<S>                                               <C>
Smith Barney Aggressive Growth Fund Inc.              0.84%
Smith Barney Appreciation Fund Inc.                   0.66
Smith Barney Equity Funds:
  Smith Barney Growth and Income Fund                 0.73
Smith Barney Fundamental Value Fund Inc.              0.75
Smith Barney Funds, Inc.:
  Equity Income Portfolio                             0.66
  Short-Term U.S. Treasury Securities Portfolio       0.58
Smith Barney Income Funds:
  Smith Barney High Income Fund                       0.76
  Smith Barney Utilities Fund                         0.78
  Smith Barney Premium Total Return Fund              0.87
  Smith Barney Convertible Fund                       1.00
  Smith Barney Diversified Strategic Income Fund      0.69
Smith Barney Investment Funds Inc.:
  Smith Barney Managed Growth Fund                    0.92
  Smith Barney Special Equities Fund                  0.82
  Smith Barney Government Securities Fund             0.59
  Smith Barney Investment Grade Bond Fund             0.72
Smith Barney Managed Governments Fund Inc.            0.78
Smith Barney Money Funds, Inc.:
  Cash Portfolio                                      0.52
Smith Barney Natural Resources Fund Inc.*             1.37
Smith Barney World Funds, Inc.:
  International Equity Portfolio                      0.96
  Emerging Markets Portfolio*                         2.00
  International Balanced Portfolio                    1.21
  Global Government Bond Portfolio                    0.84
---------------------------------------------------------------
</TABLE>    
   
* Operating expenses of Class Y shares for Smith Barney Natural Resources Fund
 Inc. and Smith Barney World Funds, Inc.--Emerging Markets Portfolio are
 estimated because no Class Y shares were outstanding during each Fund's most
 recent fiscal year.     
   
 Based on a weighted average of the Class Y expense ratios of Underlying Smith
Barney Funds in which a particular Portfolio is expected to invest during the
current fiscal year, the approximate expense ratios are expected to be as fol-
lows: High Growth Portfolio, Class A 1.43% and Class B 2.18%; Growth Portfolio,
Class A 1.39% and Class B 2.14%; Balanced Portfolio, Class A 1.38% and Class B
2.13%; Conservative Portfolio, Class A 1.36% and Class B 1.86%; and Income
Portfolio, Class A 1.29% and Class B 1.79%. The expense ratios may be higher or
lower depending on the allocation of the Underlying Smith Barney Funds within a
Portfolio.     
 
6
<PAGE>
 
PROSPECTUS SUMMARY (CONTINUED)
 
 
 EXAMPLE
   
 The following example is intended to assist an investor in understanding the
various costs that an investor in each of the Portfolios will bear directly or
indirectly. The example assumes payment by each Portfolio of operating expenses
at the levels set forth in the table above and of its pro rata share of the
Class Y expenses of the Underlying Smith Barney Funds (also as set forth above)
in which a Portfolio is expected to invest during the current fiscal year. THIS
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN ABOVE.     
 
<TABLE>   
<CAPTION>
                               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:
                        ----------------------------------------------------------------
                           1 YEAR          3 YEARS         5 YEARS          10 YEARS
-----------------------------------------------------------------------------------------
<S>                     <C>             <C>             <C>              <C>
High Growth Portfolio
 Class A                 $          64              $93            $124              $213
 Class B                            72               98             127               233
Growth Portfolio
 Class A                 $          63              $92            $122              $209
 Class B                            72               97             125               228
Balanced Portfolio
 Class A                 $          63              $92            $122              $207
 Class B                            72               97             124               227
Conservative Portfolio
 Class A                 $          58              $86            $116              $201
 Class B                            64               88             111               205
Income Portfolio
 Class A                 $          58              $84            $113              $194
 Class B                            63               86             107               197
-----------------------------------------------------------------------------------------
<CAPTION>
                               AN INVESTOR WOULD PAY THE FOLLOWING EXPENSES
                          ON THE SAME INVESTMENT, ASSUMING THE SAME ANNUAL RETURN
                         BUT WITHOUT A REDEMPTION AT THE END OF EACH TIME PERIOD:
                        -----------------------------------------------------------------
                           1 YEAR          3 YEARS         5 YEARS          10 YEARS
-----------------------------------------------------------------------------------------
<S>                     <C>             <C>             <C>              <C>
High Growth Portfolio
 Class A                 $          64    $          93            $124              $213
 Class B                            22               68             117               233
Growth Portfolio
 Class A                 $          63    $          92            $122              $209
 Class B                            22               67             115               228
Balanced Portfolio
 Class A                 $          63    $          92            $122              $207
 Class B                            22               67             114               227
Conservative Portfolio
 Class A                 $          58    $          86            $116              $201
 Class B                            19               58             101               205
Income Portfolio
 Class A                 $          58    $          84            $113              $194
 Class B                            18               56              97               197
-----------------------------------------------------------------------------------------
</TABLE>    
 
                                                                               7
<PAGE>
 
    
FINANCIAL HIGHLIGHTS     
   
 The following information has been audited by KPMG Peat Marwick LLP, indepen-
dent auditors, whose report thereon appears in the Concert Series' annual
report dated January 31, 1997. The information set out below should be read in
conjunction with the financial statements and related notes that also appear in
the Concert Series' Annual Report to Shareholders, which is incorporated by
reference into the Statement of Additional Information.     
   
FOR A SHARE OF EACH CLASS OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD:
    
<TABLE>   
<CAPTION>
                          HIGH GROWTH PORTFOLIO(1)    GROWTH PORTFOLIO(1)   BALANCED PORTFOLIO(1)
                          ------------------------    --------------------  -----------------------
                            CLASS A       CLASS B      CLASS A    CLASS B    CLASS A      CLASS B
----------------------------------------------------------------------------------------------------
<S>                       <C>           <C>           <C>        <C>        <C>         <C>
NET ASSET VALUE,
BEGINNING OF PERIOD       $      11.40  $      11.40  $   11.40  $   11.40  $    11.40  $     11.40
----------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS:
 Net investment income            0.20          0.08       0.33       0.23        0.45         0.37
 Net realized and
 unrealized gain                  1.05          1.04       0.92       0.94        0.74         0.74
----------------------------------------------------------------------------------------------------
Total Income from
Operations                        1.25          1.12       1.25       1.17        1.19         1.11
----------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
 Net investment income           (0.20)        (0.07)     (0.31)     (0.22)      (0.45)       (0.37)
 Net realized gains              (0.04)        (0.04)     (0.02)     (0.02)        --           --
----------------------------------------------------------------------------------------------------
Total Distributions              (0.24)        (0.11)     (0.33)     (0.24)      (0.45)       (0.37)
----------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF
PERIOD                    $      12.41  $      12.41  $   12.32  $   12.33  $    12.14       $12.14
----------------------------------------------------------------------------------------------------
TOTAL RETURN++                   11.04%         9.91%     11.08%     10.32%      10.64%        9.90%
----------------------------------------------------------------------------------------------------
NET ASSETS, END OF
PERIOD (000S)             $    154,069  $    141,241  $ 161,026  $ 211,434  $   90,938  $   111,918
----------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET
ASSETS+:
 Expenses                         0.60%         1.35%      0.60%      1.35%       0.60%        1.35%
 Net investment income            2.79          2.04       4.79       4.04        4.88         4.14
----------------------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE           0.00%         0.00%      0.00%      0.00%       0.00%        0.00%
----------------------------------------------------------------------------------------------------
</TABLE>    
   
FOR A SHARE OF EACH CLASS OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD:
    
<TABLE>   
<CAPTION>
                                                                  INCOME
                                  CONSERVATIVE PORTFOLIO(1)    PORTFOLIO(1)
                                  -------------------------   ----------------
                                    CLASS A       CLASS B     CLASS A  CLASS B
-------------------------------------------------------------------------------
<S>                               <C>           <C>           <C>      <C>
NET ASSET VALUE, BEGINNING OF
PERIOD                            $      11.46  $      11.46  $ 11.46  $ 11.46
-------------------------------------------------------------------------------
INCOME FROM OPERATIONS:
 Net investment income                    0.53          0.48     0.63     0.58
 Net realized and unrealized gain         0.43          0.42     0.07     0.07
-------------------------------------------------------------------------------
Total Income from Operations              0.96          0.90     0.70     0.65
-------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM:
 Net investment income                   (0.52)        (0.47)   (0.63)   (0.58)
-------------------------------------------------------------------------------
Total Distributions                      (0.52)        (0.47)   (0.63)   (0.58)
-------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD    $      11.90  $      11.89  $ 11.53  $ 11.53
-------------------------------------------------------------------------------
TOTAL RETURN++                            8.57%         8.03%    6.39%    5.89%
-------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (000S)  $     30,478  $     28,297  $17,817  $17,800
-------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS+:
 Expenses                                 0.60%         1.10%    0.60%    1.10%
 Net investment income                    5.66          5.16     6.32     5.82
-------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE                   0.00%         0.00%    0.00%    0.00%
-------------------------------------------------------------------------------
</TABLE>    
   
(1) For the period from February 5, 1996 (inception date) to January 31, 1997.
        
          
++Total return is not annualized, as it may not be representative of the total
  return for the year.     
   
+ Annualized.     
 
8
<PAGE>
 
WHY INVEST IN THE CONCERT SERIES
 
 
 The proliferation of mutual funds over the last several years has left many
investors in search of a simple means to manage their long-term investments.
With new investment categories emerging each year and with each mutual fund
reacting differently to political, economic and business events, many investors
are forced to make complex investment decisions in the face of limited experi-
ence, time and personal resources. The Portfolios are designed to meet the
needs of investors who prefer to have their asset allocation decisions made by
professional money managers, are looking for an appropriate core investment for
their retirement portfolio and appreciate the advantages of broad diversifica-
tion. The Portfolios may be most appropriate for long-term investors planning
for retirement, particularly investors in tax-advantaged retirement accounts
including IRAs, 401(k) corporate employee savings plans, 403(b) non-profit
organization savings plans, profit-sharing and money-purchase pension plans,
and other corporate pension and savings plans.
 
 The Concert Series will be managed so that each Portfolio can serve as a com-
plete investment program or as a core part of a larger portfolio. Each of the
Portfolios invests in a select group of Underlying Smith Barney Funds suited to
the Portfolio's particular investment objective. The allocation of assets among
Underlying Smith Barney Funds within each Portfolio is determined by SBMFM
according to fundamental and quantitative analysis. Because the assets will be
adjusted only periodically and only within pre-determined ranges that will
attempt to ensure broad diversification, there should not be any sudden large-
scale changes in the allocation of a Portfolio's investments among Underlying
Smith Barney Funds. The Concert Series is not designed as a market timing vehi-
cle, but rather as a simple and conservative approach to helping investors meet
retirement and other long-term goals.
 
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
 
 
 The Concert Series is an open-end, non-diversified, management investment com-
pany that currently offers five managed investment portfolios. Each Portfolio
seeks to achieve its investment objective by investing within specified ranges
among Underlying Smith Barney Funds, as well as in repurchase agreements. Ini-
tially, each Portfolio will invest in the Underlying Smith Barney Funds listed
below.
 
 The investment manager for each Portfolio, SBMFM, will allocate investments
for each Portfolio among Underlying Smith Barney Funds based on its outlook for
the economy, financial markets and the relative performance of the Underlying
Smith Barney Funds. The allocation among the Underlying Smith Barney Funds will
be made within investment ranges established by the Board of Directors of the
Concert Series which designate minimum and maximum percentages for each of the
Underlying Smith Barney Funds.
 
 The High Growth Portfolio's investment objective is to seek capital apprecia-
tion. The Growth Portfolio's investment objective is to seek long-term growth
of capital. The Balanced Portfolio's investment objective is to seek a balance
of growth of capital and income. The Conservative Portfolio's investment objec-
tive is to seek income and, secondarily, long-term growth of capital. The
Income Portfolio's investment objective is to seek high current income. Each
Portfolio's investment objective is fundamental and may be changed only with
the approval of a majority of the Portfolio's outstanding shares. There can be
no assurance that any Portfolio's investment objective will be achieved.
 
 In investing in Underlying Smith Barney Funds, the Portfolios seek to maintain
different allocations between equity funds and fixed income funds (including
money market funds) depending on a Portfolio's investment objective. Allocating
investments between equity funds and fixed income funds permits each Portfolio
to attempt to optimize performance consistent with its investment objective.
The tables below illustrate the initial equity/fixed income fund allocation
targets and ranges for each Portfolio:
   
Equity/Fixed Income Fund Range (Percentage of Each Portfolio's Net Assets)     
 
<TABLE>
<CAPTION>
TYPE OF FUND            TARGET  RANGE
---------------------------------------
<S>                     <C>    <C>
High Growth Portfolio
 Equity                   90%  80%-100%
 Fixed Income             10%    0%-20%
Growth Portfolio
 Equity                   70%   60%-80%
 Fixed Income             30%   20%-40%
Balanced Portfolio
 Equity                   50%   40%-60%
 Fixed Income             50%   40%-60%
Conservative Portfolio
 Equity                   30%   20%-40%
 Fixed Income             70%   60%-80%
Income Portfolio
 Equity                   10%    0%-20%
 Fixed Income             90%  80%-100%
---------------------------------------
</TABLE>
 
                                                                               9
<PAGE>
 
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES (CONTINUED)
 
 
 The Portfolios invest their assets in the Underlying Smith Barney Funds listed
below within the ranges indicated.
          
       Investment Range (Percentage of Each Portfolio's Net Assets)     
 
<TABLE>
<CAPTION>
                                HIGH
                               GROWTH    GROWTH   BALANCED  CONSERVATIVE  INCOME
UNDERLYING SMITH BARNEY FUND  PORTFOLIO PORTFOLIO PORTFOLIO  PORTFOLIO   PORTFOLIO
----------------------------------------------------------------------------------
<S>                           <C>       <C>       <C>       <C>          <C>
Smith Barney Aggressive
Growth Fund Inc.                10-30%     0-15%     --          --          --
Smith Barney Appreciation
Fund Inc.                        0-20%    10-30%    0-20%        --          --
Smith Barney Equity Funds:
 Smith Barney Growth and
 Income Fund                     0-20%     0-20%    5-20%        --          --
Smith Barney Fundamental
Value Fund Inc.                  0-20%    10-30%    0-20%        --          --
Smith Barney Funds, Inc.:
 Equity Income Portfolio          --       0-20%    5-20%       5-20%       0-15%
 Short-Term U.S. Treasury
 Securities Portfolio             --       0-15%    5-20%       5-20%       5-30%
Smith Barney Income Funds:
 Smith Barney High Income
 Fund                            0-20%     5-20%    0-15%       0-20%       0-20%
 Smith Barney Utilities
 Fund                             --       0-20%    5-20%       5-20%       0-15%
 Smith Barney Premium Total
 Return Fund                      --        --      5-20%       5-25%       0-15%
 Smith Barney Convertible
 Fund                             --        --      5-20%       5-15%       0-15%
 Smith Barney Diversified
 Strategic Income Fund            --        --      5-25%      10-30%      10-30%
Smith Barney Investment
Funds Inc.:
 Smith Barney Managed
 Growth Fund                     0-20%    10-30%    0-15%        --          --
 Smith Barney Special
 Equities Fund                  10-30%     0-15%     --          --          --
 Smith Barney Government
 Securities Fund                 0-15%     0-20%    0-20%       5-20%       5-20%
 Smith Barney Investment
 Grade Bond Fund                 0-15%     0-15%     --          --         0-15%
Smith Barney Managed
Governments Fund Inc.             --       0-15%    5-20%       5-25%       5-30%
Smith Barney Money Funds,
Inc.:
 Cash Portfolio                  0-20%     0-20%    0-25%       0-30%       0-30%
Smith Barney Natural
Resources Fund Inc.              0-10%     0-10%    0-10%        --          --
Smith Barney World Funds,
Inc.:
 International Equity
 Portfolio                      10-25%     5-20%    0-15%       0-10%       0-10%
 Emerging Markets Portfolio      0-20%      --       --          --          --
 International Balanced
 Portfolio                       0-15%     0-10%    0-10%       0-10%       0-10%
 Global Government Bond
 Portfolio                       0-15%     0-15%    0-15%       0-20%       0-20%
----------------------------------------------------------------------------------
</TABLE>
 
 The Underlying Smith Barney Funds have been selected to represent a broad
spectrum of investment options for the Portfolios. The equity/fixed income
ranges and the investment ranges are based on the degree to which the Under-
lying Smith Barney Funds selected are expected in combination to be appropriate
for a Portfolio's particular investment objective. If, as a result of apprecia-
tion or depreciation, the percentage of a Portfolio's assets invested in an
Underlying Smith Barney Fund exceeds or is less than the applicable percentage
limitations set forth above, SBMFM will consider, in its discretion, whether to
reallocate the assets of the Portfolio to comply with the foregoing percentage
limitations. THE PARTICULAR UNDERLYING SMITH BARNEY FUNDS IN WHICH EACH PORTFO-
LIO MAY INVEST, THE EQUITY/FIXED INCOME FUND TARGETS AND RANGES AND THE INVEST-
MENT RANGES APPLICABLE TO EACH UNDERLYING SMITH BARNEY FUND MAY BE CHANGED
FROM TIME TO TIME BY THE CONCERT SERIES' BOARD OF DIRECTORS WITHOUT THE
APPROVAL OF THE PORTFOLIO'S SHAREHOLDERS.
 
 Each Portfolio can invest a certain portion of its cash reserves in repurchase
agreements. Each Portfolio may also invest its cash reserves in the Cash Port-
folio of Smith Barney Money Funds, Inc. A reserve position provides flexibility
in meeting redemptions, expenses and the timing of new investments, and serves
as a short-term defense during periods of unusual volatility.
 
 For information about the investment objectives of each of the Underlying
Smith Barney Funds and the investment techniques and the risks involved in the
Underlying Smith Barney Funds, please refer to "Description of the Underlying
Smith Barney Funds," the Appendix to this Prospectus, the Statement of Addi-
tional Information and the prospectus for each of the Underlying Smith Barney
Funds.
 
RISK FACTORS AND SPECIAL CONSIDERATIONS
 
 
 Non-Diversified Investment Company. The Concert Series is a "non-diversified"
investment company for purposes of the Investment Company Act of 1940, as
amended (the "1940 Act"), because it invests in the securities of a limited
number of mutual funds. However, the Underlying Smith Barney Funds themselves
are diversified investment companies (with the exception of the Global Govern-
ment Bond Portfolio, the International Balanced Portfolio and the Emerging Mar-
kets Portfolio). The Concert Series intends to qualify as a diversified invest-
ment company for the purposes of Subchapter M of the Code.
 
10
<PAGE>
 
RISK FACTORS AND SPECIAL CONSIDERATIONS (CONTINUED)
 
 
 Investing in Underlying Smith Barney Funds. The investments of each Portfolio
are concentrated in the Underlying Smith Barney Funds, so each Portfolio's
investment performance is directly related to the investment performance of the
Underlying Smith Barney Funds held by it. The ability of each Portfolio to meet
its investment objective is directly related to the ability of the Underlying
Smith Barney Funds to meet their objectives as well as the allocation among
those Underlying Smith Barney Funds by SBMFM. There can be no assurance that
the investment objective of any Portfolio or any Underlying Smith Barney Fund
will be achieved.
 
 Affiliated Persons. SBMFM, the investment manager of the Portfolios, and the
officers and directors of the Concert Series presently serve as investment
adviser, officers and directors, respectively, of many of the Underlying Smith
Barney Funds. Therefore, conflicts may arise as these persons fulfill their
fiduciary responsibilities to the Portfolios and the Underlying Smith Barney
Funds.
   
 Investment Practices of Underlying Smith Barney Funds. In addition to their
principal investments, certain Underlying Smith Barney Funds may invest a por-
tion of their assets in foreign securities; enter into forward currency trans-
actions; lend their portfolio securities; enter into stock index, interest
rate, currency and gold futures contracts, and options on such contracts;
engage in options transactions; make short sales; purchase zero coupon bonds
and payment-in-kind bonds; purchase restricted and illiquid securities; enter
into forward roll transactions; purchase securities on a when-issued or delayed
delivery basis; enter into repurchase or reverse repurchase agreements; borrow
money; and engage in various other investment practices.     
 
 High Yield Securities. Each of the Portfolios also may invest in an Underlying
Smith Barney Fund that invests primarily in high yield, high risk securities,
commonly referred to as junk bonds. As a result, the Portfolios may be subject
to some of the risks resulting from high yield investing. Further, each of the
Portfolios may invest in Underlying Smith Barney Funds that invest in medium
grade bonds. If these bonds are downgraded, the Portfolios will consider
whether to increase or decrease their investment in the affected Underlying
Smith Barney Fund. Lower quality debt instruments generally offer a higher cur-
rent yield than that available from higher grade issues, but typically involve
greater risk. Lower rated and comparable unrated securities are especially sub-
ject to adverse changes in general economic conditions, to changes in the
financial condition of their issuers, and to price fluctuation in response to
changes in interest rates. During periods of economic downturn or rising inter-
est rates, issuers of these instruments may experience financial stress that
could adversely affect their ability to make payments of principal and interest
and increase the possibility of default. Further information on these invest-
ment policies and practices can be found under "Description of the Underlying
Smith Barney Funds," in the Appendix to this Prospectus and in the Statement of
Additional Information as well as the prospectus of each Underlying Smith Bar-
ney Fund.
 
 Concentration. Each Portfolio other than the High Growth Portfolio may invest
in an Underlying Smith Barney Fund that concentrates its investments in the
utilities industry. Under certain unusual circumstances, this could result in
those Portfolios being indirectly concentrated in this industry. If this were
to occur, the relevant Portfolios would consider whether to maintain or change
their investment in that Underlying Smith Barney Fund.
 
 Market and Economic Factors. The Portfolios' share prices and yields will
fluctuate in response to various market and economic factors related to both
the stock and bond markets. All Portfolios may invest in mutual funds that in
turn invest in international securities and thus are subject to additional
risks of these investments, including changes in foreign currency exchange
rates and political risk.
 
PORTFOLIO TURNOVER
 
 
 Each Portfolio's turnover rate is not expected to exceed 25% annually. A Port-
folio may purchase or sell securities to: (a) accommodate purchases and sales
of its shares, (b) change the percentages of its assets invested in each of the
Underlying Smith Barney Funds in response to market conditions, and (c) main-
tain or modify the allocation of its assets between equity and fixed income
funds and among the Underlying Smith Barney Funds within the percentage limits
described above.
   
 The turnover rates of the Underlying Smith Barney Funds have ranged from 9% to
420% during their most recent fiscal years. There can be no assurance that the
turnover rates of these funds will remain within this range during subsequent
fiscal years. Higher turnover rates may result in higher expenses being
incurred by the Underlying Smith Barney Funds.     
 
INVESTMENT RESTRICTIONS
 
 
 In addition to the investment objectives of each Portfolio, the Concert Series
has adopted restrictions with respect to each Portfolio that may not be changed
without approval of a majority of the Portfolio's outstanding shares. The fun-
damental investment restrictions imposed by the Concert Series prohibit each
Portfolio from, among other things: (i) borrowing money except from banks for
temporary
 
                                                                              11
<PAGE>
 
INVESTMENT RESTRICTIONS (CONTINUED)
 
or emergency purposes, including the meeting of redemption requests in an
amount not exceeding 33 1/3% of the value of the Portfolio's total assets (in-
cluding the amount borrowed) valued at market less liabilities (not including
the amount borrowed) at the time the borrowing is made and (ii) making loans
to others, except through the purchase of portfolio securities consistent with
its investment objective and policies and through the entering into repurchase
agreements.
 
 Certain other investment restrictions, including fundamental restrictions as
well as restrictions that may be changed without a shareholder vote, adopted
by the Concert Series are described in the Statement of Additional Informa-
tion. Investment restrictions of the Underlying Smith Barney Funds in which
the Portfolios invest may be more or less restrictive than those adopted by
the Concert Series.
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS
 
 
 The following is a concise description of the investment objectives and prac-
tices for each of the Underlying Smith Barney Funds in which the Portfolios
may invest. There can be no assurance that the investment objectives of the
Underlying Smith Barney Funds will be met. Additional information regarding
the investment practices of the Underlying Smith Barney Funds is located in
the Appendix to this Prospectus, in the Statement of Additional Information
and in the prospectus of each of the Underlying Smith Barney Funds. No offer
is made in this Prospectus of any of the Underlying Smith Barney Funds.
 
 EQUITY FUNDS The following Underlying Smith Barney Funds are funds that
 invest primarily in equity securities.
 
 Smith Barney Aggressive Growth Fund Inc. seeks capital appreciation by
investing primarily in common stock of companies the Fund's investment adviser
believes are experiencing, or have the potential to experience, growth in
earnings that exceed the average earnings growth rate of companies whose secu-
rities are included in the Standard & Poor's Daily Price Index of 500 Common
Stocks (the "S&P 500"), a weighted index that measures the aggregate change in
market value of 400 industrials, 60 transportation stocks and utility compa-
nies and 40 financial issues. SBMFM focuses its stock selection for the Fund
on a diversified group of small- or medium-sized emerging growth companies
that have passed their "start-up" phase and show positive earnings and the
prospect of achieving significant profit gains in the two to three years after
the Fund acquires their stocks. These companies generally may be expected to
benefit from new technologies, techniques, products or services or cost-reduc-
ing measures, and may be affected by changes in management, capitalization or
asset deployment, government regulations or other external circumstances.
 
 Although SBMFM anticipates that the assets of the Fund ordinarily will be
invested primarily in common stocks of U.S. companies, the Fund may invest in
convertible securities, preferred stocks, securities of foreign issuers, war-
rants and restricted securities. The Fund also is authorized to borrow up to
33 1/3% of its total assets less liabilities for leveraging purposes. Securi-
ties of the kinds of companies in which the Fund invests may be subject to
significant price fluctuation and above average risk.
 
 Smith Barney Appreciation Fund Inc. seeks long-term appreciation of share-
holders' capital. The Fund attempts to achieve its investment objective by
investing primarily in equity securities (consisting of common stocks, pre-
ferred stocks, warrants, rights and securities convertible into common stocks)
that are believed to afford attractive opportunities for investment apprecia-
tion. The core holdings of the Fund are blue chip companies that are dominant
in their industries; however, at the same time, the Fund may hold securities
of companies with prospects of sustained earnings growth and/or companies with
a cyclical earnings record if it is felt these offer attractive investment
opportunities. Typically, the Fund invests in middle- and larger-sized compa-
nies, though it does invest in smaller companies whose securities may reasona-
bly be expected to appreciate. The Fund's investments are spread broadly among
different industries. The Fund may hold issues traded over-the-counter as well
as those listed on one or more national securities exchanges, and the Fund may
make investments in foreign securities although management intends to limit
such investments to 10% of the Fund's assets.
 
 Smith Barney Fundamental Value Fund Inc.'s investment objective is long-term
capital growth. Current income is a secondary objective. The Fund seeks to
achieve its primary objective by investing in a diversified portfolio of com-
mon stocks and common stock equivalents and, to a lesser extent, in bonds and
other debt instruments. The Fund's investment emphasis is on securities that
are undervalued in the marketplace and, accordingly, have above-average poten-
tial for capital growth. In general, the Fund invests in securities of compa-
nies that are temporarily unpopular among investors but which SBMFM regards as
possessing favorable prospects for earnings growth and/or improvements in the
value of their assets and, consequently, as having a reasonable likelihood of
experiencing a recovery in market price.
 
 Smith Barney Special Equities Fund, an investment portfolio of Smith Barney
Investment Funds Inc., seeks long-term capital appreciation by investing in
equity securities (common stocks or securities which are convertible into or
exchangeable for such stocks, including warrants) that SBMFM believes to have
superior appreciation potential. The Fund invests primarily in equity securi-
ties of secondary growth companies, generally not within the S&P 500, as iden-
tified by SBMFM. These companies may not have reached a fully mature stage of
earnings growth, since they may still be in the developmental stage, or may be
older companies that appear to be entering a
 
12
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
new stage of more rapid earnings progress due to factors such as management
change or development of new technology, products or markets. A significant
number of these companies may be in technology areas, including health care
related sectors, and may have annual sales of less than $300 million. The Fund
may also choose to invest in some relatively unseasoned stocks, i.e., securi-
ties issued by companies whose market capitalization is under $100 million.
Investing in smaller, newer issuers generally involves greater risk than
investing in larger, more established issuers.
 
 Smith Barney Managed Growth Fund, an investment portfolio of Smith Barney
Investment Funds Inc., has as its investment objective long term growth of cap-
ital. The Fund attempts to achieve its objective by investing primarily in
undervalued or out of favor common stock and other securities, including debt
securities that are convertible into common stock and that are currently price
depressed. Such securities might typically be valued at the low end of their
52-week trading range. Although under normal circumstances the Fund's portfolio
will primarily consist of these securities, the Fund may also invest in pre-
ferred stocks and warrants when SBMFM perceives an opportunity for capital
growth from such securities.
   
 The Equity Income Portfolio, an investment portfolio of Smith Barney Funds,
Inc., seeks current income and long-term growth of capital. The Fund invests
primarily in common stocks offering a current return from dividends and will
also normally include some interest-paying debt obligations (such as U.S. gov-
ernment obligations, investment grade bonds and debentures) and high quality
short-term debt obligations (such as commercial paper and repurchase agreements
collateralized by U.S. government securities with broker/dealers or other
financial institutions, including the Fund's custodian) and may also purchase
preferred stocks and convertible securities. Temporary defensive investments or
a higher percentage of debt securities may be held when deemed advisable by
SBMFM. In the selection of common stock investments, emphasis is generally
placed on issues with established dividend records as well as potential for
price appreciation. From time to time, however, a portion of the assets may be
invested in non-dividend paying stocks. The Fund may make investments in for-
eign securities, though management currently intends to limit such investments
to 5% of the Fund's assets, and an additional 10% of its assets may be invested
in American Depositary Receipts ("ADRs") representing shares in foreign securi-
ties that are traded in U.S. securities markets.     
   
 Smith Barney Growth and Income Fund, an investment portfolio of Smith Barney
Equity Funds, seeks long-term capital growth and income by investing in income
producing equity securities, including dividend-paying common stocks, securi-
ties that are convertible into common stocks and warrants. Consistent with data
used in developing and maintaining quantitative investment criteria developed
by SBMFM to evaluate investment decisions, the Fund expects to invest primarily
in domestic companies of varying sizes, generally with capitalizations exceed-
ing $250 million in a wide range of industries. The Fund may also invest up to
20% in the securities of foreign issuers, including ADRs or European Depositary
Receipts. Under normal market conditions, the Fund will invest substantially
all, but not less than 65%, of its assets in equity securities. The Fund may
invest the remainder of its assets in high grade money market instruments in
order to develop income, as well as in corporate bonds and mortgage related
securities that are rated investment grade or are deemed by SBMFM to be of com-
parable quality and in U.S. government securities.     
   
 Smith Barney Natural Resources Fund Inc. seeks long-term capital appreciation
by investing primarily in "Natural Resource Investments." Natural Resource
Investments are defined as equity and debt securities of issuers that: (1) own
or process natural resources, such as precious metals, other minerals, water,
timberland, agricultural commodities and forest products; (2) own or produce
sources of energy such as oil, natural gas, coal, uranium, geothermal, oil
shale and biomass; (3) participate in the exploration and development, trans-
portation, distribution and/or processing of natural resources; (4) own or con-
trol oil, gas, or other mineral leases, rights or royalties; (5) provide
related services or supplies, such as drilling, well servicing, chemicals,
parts and equipment; (6) develop or participate in energy-efficient technolo-
gies; and (7) are involved in the upgrading or processing of raw commodities
into intermediate products. The Fund may also invest in gold bullion and gold
coins. (A company is considered a "Natural Resources Investment" when it
derives at least 50% of its total revenue from a business or activity described
above.)     
 
 Under normal market conditions, the Fund will invest at least 65% of its
assets in Natural Resource Investments. Up to 35% of the Fund's assets may be
invested in companies not in the natural resources area, investment grade cor-
porate debt securities, U.S. Government securities and, for cash management
purposes, money market instruments. For temporary defensive purposes, the Fund
may invest in excess of 35% in money market instruments.
 
 The Fund may utilize up to 10% of its assets to purchase put options on secu-
rities it owns and up to an additional 10% of its assets to purchase call
options on securities it may acquire in the future. The Fund may purchase only
put options that are traded on a regulated exchange. It also may purchase and
write put and call options on domestic and foreign stock indexes to hedge
against risks of market-wide movements affecting that portion of its assets
invested in the country whose stocks are subject to the hedges.
 
                                                                              13
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
   
 The composition of the portfolio of the Fund will vary depending on the deter-
mination of its investment adviser, SBMFM, of how best to achieve long-term
capital appreciation. Equity securities in which the Fund may invest include
common stocks, preferred stocks, convertible securities and warrants. Debt
securities the Fund may acquire include bonds, notes and debentures of compa-
nies and governments. The Fund may invest in debt securities when SBMFM
believes they will enhance the Fund's ability to achieve long-term capital
appreciation. The Fund may invest in fixed-income securities that are rated as
low as B by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Ratings Group ("S&P") or if unrated, are deemed by SBMFM to be of comparable
quality. The medium- and lower-rated securities in which the Fund may invest,
some of which have speculative characteristics, may be subject to greater mar-
ket fluctuation and greater risk of loss of income or principal than higher
rated securities.     
   
 Because issuers of Natural Resource Investments often are located outside the
United States, a significant portion of the Fund's investments may consist of
securities of foreign issuers. The percentage of assets invested in particular
countries or regions will change from time to time in accordance with the judg-
ment of SBMFM, which may be based on, among other things of consideration of
the political stability and economic outlook of these countries or regions.
    
 Smith Barney Premium Total Return Fund, an investment portfolio of Smith Bar-
ney Income Funds, seeks to provide shareholders with total return, consisting
of long-term capital appreciation and income, by investing primarily in a
diversified portfolio of dividend-paying common stocks. The Fund also purchases
put and call options and writes covered put and call options on securities it
holds and on stock indexes primarily as a hedge to reduce investment risk.
Because the Fund seeks total return by emphasizing investments in dividend-pay-
ing common stocks, it will not have as much investment flexibility as total
return funds that may pursue their objective by investing in both income and
equity stocks without such an emphasis. The Fund also may invest up to 10% of
its assets in: (a) securities rated less than investment grade by Moody's or
S&P or unrated securities of comparable quality; (b) interest-paying debt secu-
rities, such as U.S. government securities; and (c) other securities, including
convertible bonds, convertible preferred stock and warrants.
 
 The Emerging Markets Portfolio, an investment portfolio of Smith Barney World
Funds, Inc., seeks long term capital appreciation on its assets through a port-
folio invested primarily in securities of emerging country issuers (consisting
of dividend and non-dividend paying common stocks, preferred stocks, convert-
ible securities and rights and warrants to such securities). The Fund will also
invest in debt securities having a high potential for capital appreciation,
especially in countries where direct equity investment is not permitted. Under
normal conditions, at least 70% of the Fund's assets will be invested in equity
securities. For purposes of its investment objective, the Fund considers as
"emerging" all countries other than the United States, Canada, Ireland, the
United Kingdom, Sweden, Norway, Finland, Denmark, Holland, Germany, Switzer-
land, Belgium, France, Italy, Spain and Japan. The Fund is a non-diversified
portfolio, but will generally invest its assets broadly among countries and
will normally have at least 65% of its assets invested in issuers in not less
than three different countries.
 
 The Fund also may invest in debt securities of issuers in countries having
smaller capital markets. Capital appreciation in debt securities may arise as a
result of a favorable change in relative foreign exchange rates, in relative
interest rate levels, or in the creditworthiness of issuers. The Fund will not
seek to benefit from anticipated short-term fluctuations in currency exchange
rates. The Fund may invest in debt securities with relatively high yields (as
compared to other debt securities meeting the Fund's investment criteria), not-
withstanding that the Fund may not anticipate that such securities will experi-
ence substantial capital appreciation. The Fund also may invest in debt securi-
ties issued or guaranteed by foreign governments (including foreign states,
provinces and municipalities) or their agencies and instrumentalities, issued
or guaranteed by supranational organizations or issued by foreign corporations
or financial institutions.
 
 The International Equity Portfolio, an investment portfolio of Smith Barney
World Funds, Inc., seeks a total return on its assets from growth of capital
and income. Under normal market conditions, the Fund invests at least 65% of
its assets in a diversified portfolio of equity securities consisting of divi-
dend and non-dividend paying common stock, preferred stock, convertible debt
and rights and warrants to such securities and up to 35% of the Fund's assets
in bonds, notes and debt securities (consisting of securities issued in the
Eurocurrency markets or obligations of the U.S. or foreign governments and
their political subdivisions) of established non-U.S. issuers. Investments may
be made for capital appreciation or for income or any combination of both for
the purpose of achieving a higher overall return than might otherwise be
obtained solely from investing for growth of capital or for income. There is no
limitation on the percent or amount of the Fund's assets that may be invested
for growth or income and, therefore, from time to time the investment emphasis
may be placed solely or primarily on growth of capital or solely or primarily
on income. The Fund may borrow up to 25% of the value of its assets for invest-
ment purposes, which involves certain risk considerations.
 
 The Fund will generally invest its assets broadly among countries and will
normally have represented in the portfolio business activities in not less than
three different countries. The Fund will normally invest at least 65% of its
assets in companies organized or governments located in any area of the world
other than the U.S. However, under unusual economic or market conditions as
determined by the investment adviser, for defensive purposes the Fund may tem-
porarily invest all or a major portion of its assets in U.S. government securi-
ties or in debt or equity securities of companies incorporated in and having
their principal business activities in the U.S.
 
14
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
 
FIXED INCOME FUNDS The following Underlying Smith Barney Funds invest primarily
in fixed income securities including the money market fund in which each
Portfolio may invest and which may serve as the cash reserve portion of each
Portfolio.
 
 Smith Barney High Income Fund, an investment portfolio of the Smith Barney
Income Funds, seeks to provide shareholders with high current income. Although
growth of capital is not an investment objective of the Fund, SBMFM may con-
sider potential for growth as one factor, among others, in selecting invest-
ments for the Fund. The Fund will seek high current income by investing, under
normal circumstances, at least 65% of its assets in high risk, high-yielding
corporate bonds, debentures and notes denominated in U.S. dollars or foreign
currencies. Up to 40% of the Fund's assets may be invested in fixed-income
obligations of foreign issuers, and up to 20% of its assets may be invested in
common stock or other equity-related securities, including convertible securi-
ties, preferred stock, warrants and rights. Securities purchased by the Fund
generally will be rated in the lower rating categories of recognized rating
agencies, as low as Caa by Moody's or D by S&P, or in unrated securities that
SBMFM deems of comparable quality. However, the Fund will not purchase securi-
ties rated lower than B by both Moody's and S&P unless, immediately after such
purchase, no more than 10% of its total assets are invested in such securities.
The Fund may hold securities with higher ratings when the yield differential
between low-rated and higher-rated securities narrows and the risk of loss may
be reduced substantially with only a relatively small reduction in yield. The
Fund also may invest in higher-rated securities when SBMFM believes that a more
defensive investment strategy is appropriate in light of market or economic
conditions.
 
 Smith Barney Investment Grade Bond Fund, an investment portfolio of Smith Bar-
ney Investment Funds Inc., seeks to provide as high a level of current income
as is consistent with prudent investment management and preservation of capi-
tal. Except when in a temporary defensive investment position, the Fund intends
to maintain at least 65% of its assets invested in bonds. The Fund seeks to
achieve its objective by investing in any of the following securities: corpo-
rate bonds rated Baa or better by Moody's or BBB or better by S&P; U.S. govern-
ment securities; commercial paper issued by domestic corporations and rated
Prime-1 or Prime-2 by Moody's or A-1 or A-2 by S&P, or, if not rated, issued by
a corporation having an outstanding debt issue rated Aa or better by Moody's or
AA or better by S&P; negotiable bank certificates of deposit and bankers'
acceptances issued by domestic banks (but not their foreign branches) having
total assets in excess of $1 billion; and high-yielding common stocks and war-
rants. A reduction in the rating of a security does not require the sale of the
security by the Fund.
 
 Smith Barney Government Securities Fund, an investment portfolio of Smith Bar-
ney Investment Funds Inc., seeks high current return by investing in obliga-
tions of, or guaranteed by, the U.S. government, its agencies or instrumentali-
ties (including, without limitation, Treasury bills and bonds, mortgage partic-
ipation certificates issued by the Federal Home Loan Mortgage Corporation
("FHLMC") and mortgage-backed securities issued by the Government National
Mortgage Association ("GNMA"). The Fund may invest up to 5% of its net assets
in U.S. government securities for which the principal repayment at maturity,
while paid in U.S. dollars, is determined by reference to the exchange rate
between the U.S. dollar and the currency of one or more foreign countries. In
addition, the Fund may borrow money (up to 25% of its total assets) to increase
its investments, thereby leveraging its portfolio and exaggerating the effect
on net asset value of any increase or decrease in the market value of the
Fund's securities. Except when in a temporary defensive investment position,
the Fund intends to maintain at least 65% of its assets invested in U.S. gov-
ernment securities (including futures contracts and options thereon and options
relating to U.S. government securities).
 
 The Short-Term U.S. Treasury Securities Portfolio, an investment portfolio of
Smith Barney Funds, Inc., seeks current income, preservation of capital and
liquidity. The Fund seeks to achieve its objective by investing its assets in
U.S. Treasury securities backed by the full faith and credit of the U.S. Gov-
ernment. Shares of the Fund are not issued, insured or guaranteed, as to value
or yield, by the U.S. Government or its agencies or instrumentalities. In an
effort to minimize fluctuations in market value of its portfolio securities,
the Fund is expected to maintain a dollar-weighted average maturity of approxi-
mately three years. Pending direct investment in U.S. Treasury debt securities,
the Fund may enter into repurchase agreements secured by such securities in an
amount up to 10% of the value of its total assets. The Fund may, to a limited
degree, engage in short-term trading to attempt to take advantage of short-term
market variations, or may dispose of a portfolio security prior to its maturity
if it believes such disposition advisable or it needs to generate cash to sat-
isfy redemptions.
 
 Smith Barney Managed Governments Fund Inc. seeks high current income consis-
tent with liquidity and safety of capital. The Fund invests substantially all
of its assets in U.S. government securities and, under normal circumstances,
the Fund is required to invest at least 65% of its assets in such securities.
The Fund's portfolio of U.S. government securities consists primarily of mort-
gage-backed securities issued or guaranteed by GNMA, the Federal National Mort-
gage Association ("FNMA") and FHLMC. Assets not invested in such mortgage-
backed securities are invested primarily in direct obligations of the United
States Treasury and other U.S. government securities. The weighted average
maturity of the Fund's portfolio will vary from time to time and the Fund may
invest in U.S. government securities of all maturities: short-term, intermedi-
ate-term and long-term. The Fund may invest without limit in securities of any
issuer of U.S. government securities, and may invest up to an aggregate of 15%
of its total assets in securities with contractual or other
 
                                                                              15
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
restrictions on resale and other instruments that are not readily marketable
(such as repurchase agreements with maturities in excess of seven days). The
Fund may invest up to 5% of its net assets in U.S. government securities for
which the principal repayment at maturity, while paid in U.S. dollars, is
determined by reference to the exchange rate between the U.S. dollar and the
currency of one or more foreign countries.
 
 Smith Barney Diversified Strategic Income Fund, an investment portfolio of
Smith Barney Income Funds, seeks high current income primarily through invest-
ment in fixed-income securities. The Fund attempts to achieve its objective by
allocating and reallocating its assets primarily among various types of fixed-
income securities selected by Greenwich Street Advisors (a division of SBMFM)
based on its analysis of economic and market conditions and the relative risks
and opportunities of particular securities. The types of fixed-income securi-
ties among which the Fund's assets will be primarily allocated are: obligations
issued or guaranteed as to principal and interest by the United States govern-
ment; mortgage-related securities issued by various governmental and non-gov-
ernmental entities; domestic and foreign corporate securities; and foreign gov-
ernment securities. Under normal conditions, at least 65% of the Fund's assets
will be invested in fixed-income securities, which includes non-convertible
preferred stocks. The Fund generally will invest in intermediate- and long-term
fixed-income securities with the result that, under normal market conditions,
the weighted average maturity of the Fund's securities is expected to be
between five and 12 years.
 
 Mortgage-related securities in which the Fund may invest include mortgage
obligations collateralized by mortgage loans or mortgage pass-through certifi-
cates. Mortgage-related securities held by the Fund generally will be rated no
lower than Aa by Moody's or AA by S&P or, if not rated, of equivalent invest-
ment quality as determined by Greenwich Street Advisors. The Fund may invest up
to 35% of its assets in corporate fixed-income securities of domestic issuers
rated Ba or lower by Moody's or BB or lower by S&P or in nonrated securities
deemed by Greenwich Street Advisors to be of comparable quality. The Fund may
invest in fixed-income securities rated as low as Caa by Moody's or CCC by S&P.
 
 In general, the Fund may invest in debt securities issued by foreign govern-
ments or any of their political subdivisions that are considered stable by
Smith Barney Global Capital Management, Inc. the Fund's subadviser. Up to 5% of
the Fund's assets may be invested in foreign securities issued by countries
with developing economies. The Fund may also invest in securities issued by
supranational organizations.
 
 The Global Government Bond Portfolio, an investment portfolio of Smith Barney
World Funds, Inc., seeks as high a level of current income and capital appreci-
ation as is consistent with its policy of investing principally in high quality
bonds of the U.S. and foreign governments. Under normal market conditions, the
Fund invests at least 65% of its total assets in bonds issued or guaranteed by
the U.S. or foreign governments (including foreign states, provinces, cantons
and municipalities) or their agencies, authorities or instrumentalities denomi-
nated in various currencies, including U.S. dollars, or in multinational cur-
rency units, such as the European Currency Unit. Except with respect to govern-
ment securities of less developed countries, the Fund invests in foreign gov-
ernment securities only if the issue or the issuer thereof is rated in the two
highest rating categories by Moody's or S&P, or if unrated, are of comparable
quality in the determination of the investment adviser.
 
 Under normal circumstances the Fund may invest up to 35% of its total assets
in debt obligations (including debt obligations convertible into common stock)
of U.S. or foreign corporations and financial institutions and supranational
entities. Any non-governmental investment would be limited to issues that are
rated A or better by Moody's or S&P, or if not rated, determined to be of com-
parable quality.
   
 The Fund is a non-diversified portfolio and currently contemplates investing
primarily in obligations of the U.S. and of developed nations (i.e., industri-
alized countries) that the investment adviser believes to pose limited credit
risks. These countries currently are Australia, Austria, Belgium, Canada, Den-
mark, Finland, France, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zea-
land, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom and Ger-
many. Investments may be made from time to time in government securities,
including loan assignments and loan participations, of less developed coun-
tries. Such countries currently include Argentina, Brazil, Bulgaria, Czech
Republic, Ecuador, Hungary, Indonesia, Lithuania, Malaysia, Mexico, Peru, Phil-
ippines, Poland, Russia, Slovakia, South Africa, Thailand, Turkey, Uruguay and
Venezuela. Countries may be added to or deleted from this list as economic and
political conditions warrant. Historical experience indicates that the markets
of less developed countries have been more volatile than the markets of the
more mature economies of developed countries; however, such markets often pro-
vide rates of return to investors commensurate with the credit and market
risks. The investment adviser does not intend to invest more than 10% of the
Fund's assets in the government securities of less developed countries and will
not invest more than 5% of the Fund's assets in the government securities of
any one such country. Such investments may be unrated or rated below investment
grade or may be in default. Securities rated below investment grade (and compa-
rable unrated securities) are the equivalent of high yield, high risk bonds.
Such securities are regarded as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
    
16
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
   
terms of the obligations and involve major risk exposure to adverse business,
financial, economic, and political conditions, whether or not occurring within
the issuers' borders. Under normal market conditions the Fund invests at least
65% of its assets in issues of not less than three different countries; issues
of any one country (other than the United States) will represent no more than
45% of the Fund's total assets.     
 
 The Cash Portfolio is an investment portfolio of Smith Barney Money Funds,
Inc., a money market fund that seeks maximum current income and preservation of
capital. The Fund may invest in domestic and foreign money market securities
consisting of bank obligations and high quality commercial paper, corporate
obligations and municipal obligations, in addition to U.S. government obliga-
tions and related repurchase agreements. The Fund intends to maintain at least
25% of its total assets invested in obligations of domestic and foreign banks.
Shares of the Fund are not insured or guaranteed by the U.S. government.
 
 The Fund has adopted certain investment policies to assure that, to the extent
reasonably possible, the Fund's price per share will not change from $1.00,
although no assurance can be given that this goal will be achieved on a contin-
uous basis. In order to minimize fluctuations in market price, the Fund will
not purchase a security with a remaining maturity of greater than 13 months or
maintain a dollar-weighted average portfolio maturity in excess of 90 days (se-
curities used as collateral for repurchase agreements are not subject to these
restrictions).
   
 The Fund's investments are limited to U.S. dollar-denominated instruments that
have received the highest rating from the "Requisite NRSROs," securities of
issuers that have received such rating with respect to other short-term debt
securities and comparable unrated securities. "Requisite NRSROs" means (a) any
two nationally recognized statistical ratings organizations ("NRSROs") that
have issued a rating with respect to a security or class of debt obligations of
an issuer, or (b) one NRSRO, if only one NRSRO has issued such a rating at the
time that the Fund acquires the security. The NRSROs currently designated as
such by the SEC are S&P, Moody's, Fitch Investors Services, Inc., Duff and
Phelps Credit Rating Co., IBCA Limited and its affiliate, IBCA, Inc. and
Thomson BankWatch.     
   
 For purposes of the equity/fixed income fund allocation targets and ranges
applicable to each Portfolio (see page 9 above), each of the following Under-
lying Smith Barney Funds is considered to be an equity fund with respect to 50%
of a Portfolio's investment in such Fund and an income fund with respect to the
remaining 50% of such Portfolio's investment.     
 
 The Smith Barney Convertible Fund, an investment portfolio of Smith Barney
Income Funds, seeks current income and capital appreciation by investing in
convertible securities and in combinations of nonconvertible fixed-income secu-
rities and warrants or call options that together resemble convertible securi-
ties ("synthetic convertible securities"). Under normal circumstances, the Fund
will invest at least 65% of its assets in convertible securities, but is not
required to sell securities to conform to this limitation and may retain on a
temporary basis securities received upon the conversion or exercise of such
securities. The Fund will not invest in fixed-income securities that are rated
lower than B by Moody's or S&P or, if unrated, deemed by SBMFM to be comparable
to securities rated lower than B. The Fund may invest up to 35% of its assets
in synthetic convertible securities and in equity and debt securities that are
not convertible into common stock and, for temporary defensive purposes, may
invest in these securities without limitation.
 
 The Smith Barney Utilities Fund, an investment portfolio of Smith Barney
Income Funds, seeks current income by investing in equity and debt securities
of companies in the utility industry. Long-term capital appreciation is a sec-
ondary objective of the Fund. The utility industries are deemed to be comprised
of companies principally engaged (that is, at least 50% of a company's assets,
gross income or net profits results from utility operations or the company is
regulated as a utility by a government agency or authority) in the manufacture,
production, generation, transmission and sale of electric and gas energy and
companies principally engaged in the communications field, including entities
such as telephone, telegraph, satellite, microwave and other companies regu-
lated by governmental agencies as utilities that provide communication facili-
ties for the public benefit, but not including those in public broadcasting.
The Fund will invest primarily in utility equity and debt securities that have
a high expected rate of return as determined by SBMFM. Under normal market con-
ditions, the Fund will invest at least 65% of its assets in such securities.
The Fund may invest up to 35% of its assets in equity and debt securities of
non-utility companies believed to afford a reasonable opportunity for achieving
the Fund's investment objectives. The Fund will invest in investment grade debt
securities, but may invest up to 10% of its assets in securities rated BB or B
by S&P or Ba or B by Moody's whenever SBMFM believes that the incremental yield
on such securities is advantageous to the Fund in comparison to the additional
risk involved.
 
 The International Balanced Portfolio, an investment portfolio of Smith Barney
World Funds, Inc., seeks a competitive total return on its assets from growth
of capital and income through a portfolio invested primarily in securities of
established non-U.S. issuers. The Fund may borrow up to 15% of the value of its
assets for investment purposes, which involves certain risks. Under normal mar-
ket conditions, the Fund will invest its assets in an international portfolio
of equity securities (consisting of dividend and non-dividend paying common
stocks, preferred stocks, convertible securities, ADRs and rights and warrants
to such securities) and debt securities (consisting of corporate debt securi-
ties, sovereign debt instruments issued by governments or governmental enti-
ties, including suprana-
 
                                                                              17
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
   
tional organizations and U.S. and foreign money market instruments). The Fund
attempts to achieve a balance between equity and debt securities. However, the
proportion of equity and debt held by the Fund at any one time will depend on
SBMFM's views on current market and economic conditions. Under normal condi-
tions, no more than 70%, nor less than 30%, of the Fund's assets will be
invested in either equity or debt securities; however, there is no limitation
on the percentage or amount of the Fund's assets that may be invested for
growth or income.     
   
 The Fund is a non-diversified portfolio but will generally invest its assets
broadly among countries and will normally have at least 65% of its assets
invested in business activities in not less than three different countries out-
side of the U.S. The Fund will invest in a broad range of industries and sec-
tors and will mainly invest in securities issued by companies with market capi-
talizations of at least $50,000,000. The Fund may invest in companies organized
or governments located in any area of the world. However, under unusual eco-
nomic or market conditions as determined by the investment adviser, for defen-
sive purposes the Fund may temporarily invest all or a major portion of its
assets in U.S. government securities, debt or equity securities of companies
incorporated in and having their principal business activities in the U.S. or
in U.S. as well as foreign money market instruments and equivalents.     
 
 The debt securities in which the Fund invests generally range in maturity from
two to ten years. Debt securities of developed foreign countries must be rated
as investment grade (or deemed by SBMFM to be of comparable quality) at the
time of purchase. Debt securities of emerging market countries may be rated
below investment grade and could include securities that are in default as to
payments of principal or interest. Up to 25% of the total assets of the Fund
may be invested in securities of emerging market countries.
 
 PERFORMANCE OF UNDERLYING SMITH BARNEY FUNDS
   
 The following chart shows the average annual total returns for the longest
outstanding class of shares for each of the Underlying Smith Barney Funds in
which the Portfolios may invest (other than the Cash Portfolio of Smith Barney
Money Funds, Inc.) for the most recent one-, five- and ten-year periods (or
since inception if shorter and giving effect to the maximum applicable sales
charges) and the 30-day yields for income-oriented funds, in each case for the
period ended December 31, 1996.     
 
<TABLE>   
<CAPTION>
                                                                              AVERAGE ANNUAL TOTAL RETURNS
                                                ASSETS OF ALL                   THROUGH DECEMBER 31, 1996     30-DAY YIELD FOR
                                                CLASSES AS OF                 ------------------------------    PERIOD ENDED
                                                DECEMBER 31,  INCEPTION                                         DECEMBER 31,
        UNDERLYING SMITH BARNEY FUND            1996 ($000'S)   DATE    CLASS ONE YEAR  FIVE YEARS TEN YEARS        1996
------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>       <C>   <C>       <C>        <C>        <C>
Smith Barney Aggressive Growth Fund Inc.          $ 607,914   10/24/83    A     (2.38)%   10.00%     13.39%          --
Smith Barney Appreciation Fund Inc.               3,486,429   03/10/70    A     13.33     10.82      12.78           --
Smith Barney Equity Funds:
 Smith Barney Growth and Income Fund                328,347   11/06/92     A    12.82       --       11.11(+)        --
Smith Barney Fundamental Value Fund Inc.          1,390,274   11/12/81    A     13.77     15.20      13.65           --
Smith Barney Funds, Inc.:
 Equity Income Portfolio                            837,512   01/01/72    A     10.25     11.86      11.13           --
 Short-Term U.S. Treasury Securities Portfo-
  lio                                               115,438   11/11/91    A      2.15      5.04       5.47(+)       4.96%
Smith Barney Income Funds:
 Smith Barney High Income Fund                    1,138,694   09/02/86    B      7.87     12.17       9.12          6.86
 Smith Barney Utilities Fund                      1,510,568   03/28/88    B     (3.10)     7.32      10.08(+)        --
 Smith Barney Premium Total Return Fund           3,032,742   09/16/85    B     15.09     13.40      12.76           --
 Smith Barney Convertible Fund                       97,978   09/02/86    B      5.73      9.61       8.58          2.93
 Smith Barney Diversified Strategic Income Fund   2,819,870   12/28/89    B      5.43      7.71       9.36(+)       5.76
Smith Barney Investment Funds Inc.:
 Smith Barney Managed Growth Fund                   859,735   06/30/95    A     10.54       --        7.94(+)        --
 Smith Barney Special Equities Fund                 732,687   12/13/82    B    (11.12)    15.31      10.26           --
 Smith Barney Government Securities Fund            551,567   03/20/84    B     (3.08)     5.26       6.50          5.55
 Smith Barney Investment Grade Bond Fund            489,231   01/04/82    B     (5.35)     8.97       8.83          6.33
Smith Barney Managed Governments Fund Inc.          597,264   09/04/84    A     (1.06)     5.08       6.94          6.16
Smith Barney Natural Resources Fund Inc.            143,674   12/24/86    A     28.08     10.32       4.56           --
Smith Barney World Funds, Inc.:
 International Equity Portfolio                   1,330,885   02/18/86    A      7.92      9.13       9.82           --
 Emerging Markets Portfolio                          28,681   05/11/95    A     14.07       --        2.39(+)        --
 International Balanced Portfolio                    49,191   08/25/94    A      6.43       --        7.28(+)        --
 Global Government Bond Portfolio                   150,356   07/22/91    A      2.69      6.45       8.20(+)       4.37
-----------
</TABLE>    
   
+ Since inception (less than 10 years)     
--------------------------------------------------------------------------------
   
 For the seven-day period ended December 31, 1996, the yield for the Cash Port-
folio of Smith Barney Money Funds, Inc. was 4.90% and the effective yield was
5.02%.     
 
 The performance data relating to the Underlying Smith Barney Funds set forth
above is not, and should not be viewed as, indicative of the future performance
of either the Underlying Smith Barney Funds or the Concert Series. The perfor-
mance reflects the impact of sales charges and other distribution related
expenses that will not be incurred by the Class Y shares of the Underlying
Smith Barney Funds in which the Portfolios will invest.
 
18
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
 
 INVESTMENT POLICIES AND STRATEGIES OF THE UNDERLYING SMITH BARNEY FUNDS
 
 In pursuing their investment objectives and programs, each of the Underlying
Smith Barney Funds is permitted to engage in a wide range of investment poli-
cies. The Underlying Smith Barney Funds' risks are determined by the nature of
the securities held and the investment strategies used by the Funds' adviser.
Certain of these policies are described below and further information about the
investment policies and strategies of the Underlying Smith Barney Funds in
which the Portfolios may invest is contained in the Appendix to this Prospectus
and in the Statement of Additional Information as well as the prospectuses of
the Underlying Smith Barney Funds. Because each Portfolio invests in the Under-
lying Smith Barney Funds, shareholders of each Portfolio will be affected by
these investment policies in direct proportion to the amount of assets each
Portfolio allocates to the Underlying Smith Barney Funds pursuing such poli-
cies.
 
 Securities of Non-U.S. Issuers. The Portfolios will each invest in certain
Underlying Smith Barney Funds that invest all or a portion of their assets in
securities of non-U.S. issuers. These include non-dollar denominated securities
traded outside the U.S. and dollar-denominated securities traded in the U.S.
(such as ADRs). Such investments involve some special risks such as fluctua-
tions in foreign exchange rates, future political and economic developments,
and the possible imposition of exchange controls or other foreign governmental
laws or restrictions. In addition, with respect to certain countries, there is
the possibility of expropriation of assets, repatriation, confiscatory taxa-
tion, political or social instability or diplomatic developments that could
adversely affect investments in those countries. There may be less publicly
available information about a foreign company than about a U.S. company, and
foreign companies may not be subject to accounting, auditing, and financial
reporting standards and requirements comparable to or as uniform as those of
U.S. companies. Non-U.S. securities markets, while growing in volume, have, for
the most part, substantially less volume than U.S. markets, and securities of
many foreign companies are less liquid and their prices more volatile than
securities of comparable U.S. companies. Transaction costs on non-U.S. securi-
ties markets are generally higher than in the U.S. There is generally less gov-
ernment supervision and regulation of exchanges, brokers and issuers than there
is in the U.S. An Underlying Smith Barney Fund might have greater difficulty
taking appropriate legal action in non-U.S. courts. Dividend and interest
income from non-U.S. securities will generally be subject to withholding taxes
by the country in which the issuer is located and may not be recoverable by the
Underlying Smith Barney Fund or a Portfolio investing in such Fund.
   
 Options and Futures. Certain of the Underlying Smith Barney Funds may enter
into stock index, interest rate and currency futures contracts (or options
thereon, including swaps, caps, collars and floors) as a hedging device, or as
an efficient means of regulating their exposure to various markets. Certain of
the Underlying Smith Barney Funds may also purchase and sell call and put
options. Futures (a type of potentially high-risk derivative) are often used to
manage risk because they enable the investor to buy or sell an asset at a pre-
determined price in the future. The Underlying Smith Barney Funds may buy and
sell futures and options contracts for a number of reasons including: to manage
their exposure to changes in interest rates, stock and bond prices, and foreign
currencies; as an efficient means of adjusting their overall exposure to cer-
tain markets; to adjust the portfolio's duration; to enhance income; and to
protect the value of the portfolio securities. Certain of the Underlying Smith
Barney Funds may purchase, sell or write call and put options on securities,
financial indices, and foreign currencies. Options and futures can be volatile
investments, and involve certain risks. If the adviser to the Underlying Smith
Barney Fund applies a hedge at an inappropriate time or judges market condi-
tions incorrectly, options and futures strategies may lower the Underlying
Smith Barney Fund's return. Further losses could also be experienced if the
options and futures positions held by an Underlying Smith Barney Fund were
poorly correlated with its other investments or if it could not close out its
positions because of an illiquid secondary market.     
   
 The Smith Barney Natural Resources Fund may also enter into futures contracts
for the purchase and sale of gold, purchase put and call options on those
future contracts and write call options on those futures contracts. The Smith
Barney Natural Resources Fund will purchase or write options on gold futures
only on a regulated domestic or foreign exchange approved for such purpose by
the Commodities Futures Trading Commission.     
 
 Debt Securities. Certain of the Underlying Smith Barney Funds may be affected
by general changes in interest rates, which will result in increases or
decreases in the market value of the debt securities held by the Funds. The
market value of the fixed-income obligations in which the Underlying Smith Bar-
ney Funds may invest can be expected to vary inversely in relation to the
changes in prevailing interest rates and also may be affected by other market
and credit factors.
 
 Certain of the Underlying Smith Barney Funds may invest only in high-quality,
high-grade or investment-grade securities. High quality securities are those
rated in the two highest categories by Moody's (Aaa or Aa) or S&P (AAA or AA).
High-grade securities are those rates in the three highest categories by
Moody's (Aaa, Aa or A) or S&P (AAA, AA or A). Investment-grade securities are
those rated in the four highest categories by Moody's (Aaa, Aa, A or Baa) or
S&P (AAA, AA, A or BBB). Securities rated Baa or BBB have speculative charac-
teristics and changes in economic conditions or other circumstances are more
likely to lead to a weakened capacity of their issuers to make principal and
interest payments than is the case with higher grade securities.
 
 
                                                                              19
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
 Certain Underlying Smith Barney Funds may invest in securities that are rated
below investment-grade; that is, rated below Baa by Moody's or BBB by S&P.
Securities rated below investment grade (and comparable unrated securities) are
the equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Such securities are regarded as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligations and involve major risk exposure to adverse business,
financial, economic or political conditions. See the Appendix to the Statement
of Additional Information for additional information on the bond ratings by
Moody's and S&P.
       
       
VALUATION OF SHARES
 
 
 Each Portfolio'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 Portfolio's net assets attributable to each Class by the total
number of shares of the Class outstanding. The value of each Underlying Smith
Barney Fund will be its net asset value at the time of computation. Short-term
investments that have a maturity of more than 60 days are valued at prices
based on market quotations for securities of similar type, yield and maturity.
Short-term investments that have a maturity of 60 days or less are valued at
amortized cost unless conditions dictate otherwise.
 
DIVIDENDS, DISTRIBUTIONS AND TAXES
 
 
 DIVIDENDS AND DISTRIBUTIONS
 
 The Concert Series intends to declare monthly income dividends on shares of
the Income Portfolio, quarterly income dividends on shares of the Conservative
Portfolio and the Balanced Portfolio and annually income dividends on shares of
the High Growth Portfolio and the Growth Portfolio. In addition, the Concert
Series intends to make annual distributions of capital gains, if any, on the
shares of each Portfolio.
 
 If a shareholder does not otherwise instruct, dividends and capital gain dis-
tributions will be reinvested automatically in additional shares of the same
Class at net asset value, subject to no sales charge or CDSC.
   
 Income dividends and capital gain distributions that are invested are credited
to shareholders' accounts in additional shares at the net asset value as of the
close of business on the payment date. A shareholder may change the option at
any time by notifying the Sub-Transfer Agent.     
 
 The per share dividends on Class B shares of each Portfolio may be lower than
the per share dividends on Class A shares principally as a result of the dis-
tribution fee applicable with respect to Class B shares. Distributions of capi-
tal gains, if any, will be in the same amount for Class A and Class B shares.
 
 TAXES
 
 Each Portfolio intends to qualify as a regulated investment company under
Subchapter M of the Code to be relieved of federal income tax on that part of
its net investment income and realized capital gains that it pays out to its
shareholders. To qualify, the Portfolio must meet certain tests, including dis-
tributing at least 90% of its investment company taxable income, and deriving
less than 30% of its gross income from the sale or other disposition of certain
investments held for less than three months.
 
 Dividends from net investment income and distributions of realized short-term
capital gains on the sale of securities, whether paid in cash or automatically
invested in additional shares of the same Portfolio, are taxable to sharehold-
ers of each Portfolio as ordinary income. A portion of each Portfolio's divi-
dends may qualify for the dividends received deduction for corporations. Divi-
dends and distributions declared by each Portfolio may also be subject to state
and local taxes. Distributions out of net long-term capital gains (i.e., net
long-term capital gains in excess of net short-term capital losses) are taxable
to shareholders as long-term capital gains. Information as to the tax status of
dividends paid or deemed paid in each calendar year will be mailed to share-
holders as early in the succeeding year as practical but not later than January
31.
 
PURCHASE OF SHARES
 
 
 GENERAL
   
 Each Portfolio offers two Classes of shares to investors purchasing through
PFS Investments Registered Representatives. Class A shares are sold to invest-
ors with an initial 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 consider in selecting which Class of shares to purchase.     
 
20
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
   
 Initial purchases of shares of each Portfolio of the Concert Series must be
made through a PFS Investments Registered Representative by completing the
appropriate application found in the prospectus. The completed application
should be forwarded to the Sub-Transfer Agent, 3100 Breckinridge Blvd., Bldg.
200, Duluth, Georgia 30199-0062. Checks drawn on foreign 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 in each Class (except for
Systematic Investment Plan accounts), or $250 for an IRA or a Self-Employed
Retirement Plan in a Portfolio. Subsequent investments of at least $50 may be
made for each Class. For participants in retirement plans qualified under Sec-
tion 403(b)(7) or Section 401(a) of the Code, the minimum initial investment
requirement for Class A and Class B shares and the subsequent investment
requirement for each Class in a Portfolio is $25. For each Portfolio's System-
atic Investment Plan, the minimum initial investment requirement for Class A
and Class B shares and the subsequent investment requirement for each Class is
$25. There are no minimum investment requirements in Class A shares for employ-
ees of Travelers and its subsidiaries, including Smith Barney, Directors or
Trustees of any of the Smith Barney Mutual Funds, and their spouses and chil-
dren. The Concert Series 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. A shareholder who has insuffi-
cient funds to complete any purchase, will be charged a fee of $25 per returned
purchase by PFS or the Sub-Transfer Agent.     
   
 The minimum initial investment requirement in a Portfolio for an account
established under the Uniform Gift to Minors Act is $250 and the subsequent
investment requirement is $50.     
 
 Purchase orders received by the Sub-Transfer Agent prior to the close of regu-
lar trading on the NYSE, on any day a Portfolio calculates its net asset value,
are priced according to the net asset value determined on that day.
 
 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 $25 or more to charge the regular bank account or other
financial institution indicated by the shareholder on a monthly basis to pro-
vide systematic additions to the shareholder's Portfolio 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. A shareholder who places a stop pay-
ment on a transfer or the transfer is returned because the account has been
closed, will also be charged a fee of $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 High Growth
Portfolio, the Growth Portfolio and the Balanced Portfolio are as follows:
 
<TABLE>
<CAPTION>
                                SALES CHARGE
                       ---------------------------------       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>
 
                                                                              21
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
 
 The sales charges applicable to purchases of Class A shares of the Conserva-
tive Portfolio and the Income Portfolio are as follows:
 
<TABLE>
<CAPTION>
                                SALES CHARGE
                       ---------------------------------       DEALERS'
                            % OF             % OF         REALLOWANCE AS % OF
AMOUNT OF INVESTMENT   OFFERING PRICE   AMOUNT INVESTED     OFFERING PRICE
-----------------------------------------------------------------------------
<S>                    <C>              <C>               <C>
Less than  $ 25,000         4.50%            4.71%               4.05%
$ 25,000 -  49,999          4.00             4.17                3.60
  50,000 -  99,999          3.50             3.63                3.15
 100,000 - 249,999          2.50             2.56                2.25
 250,000 - 499,999          1.50             1.52                1.35
 500,000 and over            *                 *                   *
-----------------------------------------------------------------------------
</TABLE>
   
* Purchases of Class A shares of $500,000 or more 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 applica-
  ble to Class B shares is waived. See "Deferred Sales Charge Alternatives" and
  "Waivers of CDSC."     
 
 Members of the selling group may receive up to 90% of the sales charge and may
be deemed to be underwriters of the Concert Series as defined in the Securities
Act of 1933, as amended.
   
 The reduced sales charges shown above apply to the aggregate of purchases of
Class A Shares of a Portfolio made at one time by "any person", which includes
an individual and his or her immediate family, or a trustee or other fiduciary
of a single trust estate or single fiduciary account.     
 
 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 (i) Board
members and employees of Travelers and its subsidiaries and any of the Smith
Barney Mutual Funds (including retired Board Members and employees); the imme-
diate families of such persons (including the surviving spouse of a deceased
Board Member or employee); and to a pension, profit-sharing or other benefit
plan for such persons; and (ii) employees of members of the National Associa-
tion of Securities Dealers, Inc., provided such sales are made upon the assur-
ance 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 to effect the com-
bination of such company with the Portfolio by merger, acquisition of assets or
otherwise; (c) purchases by shareholders who have redeemed Class A shares in a
Portfolio (or Class A shares of another fund of the Smith Barney Mutual Funds
that are sold with a maximum sales charge equal to or greater than the maximum
sales charge of the Portfolio) and who wish to reinvest their redemption pro-
ceeds in the Portfolio, provided the reinvestment is made within 60 calendar
days of the redemption; (d) purchases by accounts managed by registered invest-
ment advisory subsidiaries of Travelers; (e) sales through PFS Investments Reg-
istered Representatives where the amounts invested represent the redemption
proceeds from investment companies, 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; and (f) direct
rollovers by plan participants of distributions from a 401(k) plan enrolled in
the Smith Barney 401(k) Program (note: subsequent investments will be subject
to the applicable sales charge, purchases by separate accounts used to fund
certain unregistered variable annuity contracts and purchases by investors par-
ticipating in a Smith Barney fee based arrangement. PFS Investments may pay its
Registered Representatives an amount equal to 0.40% of the amount invested if
the purchase represents redemption proceeds from an investment company distrib-
uted by an entity other than PFS. In order to obtain such discounts, the pur-
chaser 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 a Portfolio 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
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 deduction for
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.
 
22
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
 
 LETTER OF INTENT
   
 Class A Shares. 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
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 pur-
chases of all Class A shares of each Portfolio and other Smith Barney Mutual
Funds offered with a sales charge 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 execution 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 difference between the sales charges
applicable to the purchases made and the charges previously paid, or an appro-
priate number of escrowed shares will be redeemed. Please contact a PFS Invest-
ments Registered Representative to obtain a Letter of Intent application.     
 
 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 a Portfolio. A CDSC, however, may be imposed on certain
redemptions of these shares. "CDSC Shares" are: (i) Class B shares and
(ii) Class A shares that were purchased without an initial sales charge but
subject to a CDSC.     
 
 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 CDSC to
the extent that the value of such shares represents: (a) capital appreciation
of Portfolio 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>
                                   CDSC
                         APPLICABLE TO HIGH GROWTH                 CDSC
YEARS SINCE PURCHASE  PORTFOLIO, GROWTH PORTFOLIO AND   APPLICABLE TO CONSERVATIVE
PAYMENT WAS MADE            BALANCED PORTFOLIO        PORTFOLIO AND INCOME PORTFOLIO
------------------------------------------------------------------------------------
<S>                   <C>                             <C>
      First                        5.00%                           4.50%
      Second                       4.00                            4.00
      Third                        3.00                            3.00
      Fourth                       2.00                            2.00
      Fifth                        1.00                            1.00
      Sixth                        0.00                            0.00
      Seventh                      0.00                            0.00
      Eighth                       0.00                            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 fees. There will also be converted at that time such pro-
portion 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. See "Prospectus Summary--Alternative Purchase Arrangements--Class
B Shares Conversion Feature."
 
 In determining the applicability of any CDSC or the conversion feature
described above, 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 gain distributions 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 acquired in one of the other
Smith Barney Mutual Funds, and Portfolio shares being redeemed will be consid-
ered 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.
 
                                                                              23
<PAGE>
 
PURCHASE OF SHARES (CONTINUED)
 
 
 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 addi-
tional shares through dividend reinvestment. During the fifteenth month after
the purchase, 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 that represents
appreciation ($200) and the value of the reinvested dividend shares ($60).
Therefore, $240 of the $500 redemption proceeds ($500 minus $260) would be
charged at a rate of 4.00% (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 "Automatic Cash Withdrawal Plan"); (c) redemptions of shares within twelve
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)
redemptions of shares to effect a combination of the Portfolio with any invest-
ment company by merger, acquisition of assets or otherwise. In addition, a
shareholder who has redeemed shares from other 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.
 
EXCHANGE PRIVILEGE
   
 Except as otherwise noted below, shares of each Class may be exchanged for
shares of the same Class in any other Portfolio of the Concert Series, as well
as in the following Smith Barney Mutual Funds, to the extent shares are offered
for sale in the shareholder's state of residence. Exchanges of Class A and
Class B shares are subject to minimum investment requirements and all shares
are subject to the other requirements of the fund into which exchanges are
made.     
 
 FUND NAME
    
 .Concert Social Awareness Fund     
 
 .Smith Barney Appreciation Fund Inc.
 
 .Smith Barney Growth Opportunity Fund
 
 .Smith Barney Investment Grade Bond Fund
 
 .*Smith Barney Money Funds, Inc.--Cash Portfolio
 
 .**Smith Barney Exchange Reserve Fund
--------------------------------------------------------------------------------
* Available for exchange with Class A shares of a Portfolio.
** Available for exchange with Class B shares of a Portfolio.
          
 Class A Exchanges. Class A shareholders of each Portfolio who wish to exchange
all or a portion of their shares for Class A shares in any of the funds identi-
fied above may do so without imposition of any charge.     
 
 Class B Exchanges. In the event a Class B shareholder wishes to exchange all
or a portion of his or her shares into any of the funds imposing a higher CDSC
than that imposed by a Portfolio, 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
Portfolio that have been exchanged.
 
 Additional Information Regarding the Exchange Privilege. Although the exchange
privilege is an important benefit, excessive exchange transactions can be det-
rimental to a Portfolio's performance and its shareholders. The Concert Series
may determine that a pattern of frequent exchanges is excessive and contrary to
the best interests of each Portfolio's other shareholders. In this event, the
Concert Series may, at its discretion, decide to limit additional purchases
and/or exchanges by the shareholder. Upon such a determination by the Fund, the
Concert Series will provide notice in writing or by telephone to the share-
holder 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 Portfolio or (b) remain invested in the Portfolio or exchange
into any of the Smith Barney Mutual Funds ordinarily available, which position
the shareholder would be expected to maintain for a significant period of time.
All relevant factors will be considered in determining what constitutes an abu-
sive pattern of exchanges.
   
 Exchanges will be processed at the net asset value next determined. 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 identi-
cal to the registration of the shares of the fund exchanged, no signature guar-
antee is     
 
24
<PAGE>
 
EXCHANGE PRIVILEGE (CONTINUED)
 
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. Each Portfolio reserves the right to modify or discon-
tinue exchange privileges upon 60 days' prior notice to shareholders.
 
REDEMPTION OF SHARES
 
 
 Shareholders may redeem for cash some or all of their shares of a Portfolio
at any time by sending a written request in proper form directly to the Sub-
Transfer Agent, PFS Shareholder Services, at 3100 Breckinridge Blvd, Bldg.
200, Duluth, Georgia 30199-0062. If you should have any questions concerning
how to redeem your account after reviewing the information below, please con-
tact the Sub-Transfer Agent at (800) 544-5445, Spanish-speaking representa-
tives (800) 544-7278 or TDD Line for the Hearing Impaired (800) 824-1721.
 
 As described under "Purchase of Shares," redemptions of Class B shares are
subject to a CDSC.
 
 The request for redemption must be signed by all persons in whose names the
shares are registered. Signatures must conform exactly to the account regis-
tration. If the proceeds of the redemption exceed $50,000, or if the proceeds
are not 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
securities association or clearing agency; a saving 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 also required by the Sub-Transfer Agent in the event redemption is
requested by a corporation, partnership, trust, fiduciary, executor or admin-
istrator. Additionally, if a shareholder requests a redemption from a Retire-
ment 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 their
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) 554-2374. Facsimile
redemptions may not be available if the shareholder cannot reach the Sub-
Transfer 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 Portfolio'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 busi-
ness 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
Portfolio 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 Sub-Transfer
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 pur-
chased by check or draft, the Sub-Transfer Agent may hold the payment of the
proceeds until the 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(s) may
elect to have the redemption proceeds wire-transferred directly to the share-
holder's 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 Concert Series. If the proceeds are not to be wired to the
bank account of record, or mailed to the registered owner(s), a signature
guarantee will be required from all shareholder(s). 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 ordinarily be credited to the shareholder's bank account by the share-
holder's bank within 48 to 72 hours.
 
 AUTOMATIC CASH WITHDRAWAL PLAN
 
 Each Portfolio 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 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
 
                                                                             25
<PAGE>
 
REDEMPTION OF SHARES (CONTINUED)
 
least $5,000. The withdrawal plan will be carried over on exchanges between
funds or Classes of a Portfolio. 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 Concert Series reserves the right to involuntarily liquidate any share-
holder's account in a Portfolio if the aggregate net asset value of the shares
held in that Portfolio account is less than $500. (If a shareholder has more
than one account in a Portfolio, each account must satisfy the minimum account
size.) The Series, however, will not redeem shares based solely on market
reductions in net asset value. Before the Series exercises such right, share-
holders will receive written notice and will be permitted 60 days to bring
accounts up to the minimum to avoid involuntary liquidation.
 
PERFORMANCE
 
 
 From time to time a Portfolio may include its total return, average annual
total return, yield 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 each Portfolio. These figures are based on historical
earnings and are not intended to indicate future performance. Total return is
computed for a specified 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 yield of a Portfolio's Class refers to the net
investment income earned by investments in the Class over a 30-day period.
This net investment income is then annualized, i.e., the amount of income
earned by the investments during that 30-day period is assumed to be earned
each 30-day period for twelve periods and is expressed as a percentage of the
investments. The yield is calculated according to a formula prescribed by the
SEC to facilitate comparison with yields quoted by other investment companies.
The Balanced Portfolio and the Conservative Portfolio calculate current divi-
dend return for each of their Classes annualizing the most recent quarterly
dividend 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 Income Portfolio calculates current dividend
return for each of its Classes by annualizing the most recent monthly distri-
bution 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. Each Class' current dividend return may vary
from time to time depending on market conditions, the composition of the
investment portfolio and its operating expenses. These factors and possible
differences in the methods used in calculating current dividend return should
be considered when comparing current return of a Class to yields published for
other investment companies and other investment vehicles. Each Portfolio may
also include comparative performance information in advertising or marketing
its shares. Such performance information may include data from Lipper Analyti-
cal Services, Inc. and other financial publications.
 
MANAGEMENT OF THE CONCERT SERIES
 
 
 BOARD OF DIRECTORS
   
 Overall responsibility for management and supervision of the Concert Series
rests with the Concert Series' Board of Directors. A majority of the Concert
Series' directors are non-interested persons as defined in Section 2(a)(19) of
the 1940 Act. However, the directors and officers of the Concert Series also
serve in similar positions with many of the Underlying Smith Barney Funds.
Thus, if the interests of a Portfolio and the Underlying Smith Barney Funds
were ever to become divergent, it is possible that a conflict of interest
could arise and affect how the directors and officers of the Concert Series
fulfill their fiduciary duties to that Portfolio and the Underlying Smith Bar-
ney Funds. The directors of the Concert Series believe they have structured
each Portfolio to avoid these concerns. However, conceivably a situation could
occur where proper action for the Concert Series or a Portfolio separately
could be adverse to the interests of an Underlying Smith Barney Fund, or the
reverse could occur. If such a possibility arises, the directors and officers
of the Concert Series, the affected Underlying Smith Barney Funds and SBMFM
will carefully analyze the situation and take all steps they believe reason-
able to minimize and, where possible, eliminate the potential conflict. More
over, limitations on aggregate     
 
26
<PAGE>
 
MANAGEMENT OF THE CONCERT SERIES (CONTINUED)
   
investments in the Underlying Smith Barney Funds have been adopted by the Con-
cert Series to minimize this possibility, and close and continuous monitoring
will be exercised to avoid, insofar as is possible, these concerns. The State-
ment of Additional Information contains background information regarding each
director and executive officer of the Concert Series.     
    
 INVESTMENT MANAGER     
   
 SBMFM, the investment manager to each Portfolio, is a registered investment
adviser whose principal offices are located at 388 Greenwich Street, New York,
New York 10013. SBMFM (through its predecessor entities) has been in the
investment counseling business since 1940. SBMFM renders investment advice to a
wide variety of investment company clients that had aggregate assets under man-
agement as of January 31, 1997 in excess of $80 billion. Subject to the super-
vision and direction of the Concert Series' Board of Directors, SBMFM will
determine how each Portfolio's assets will be invested in the Underlying Smith
Barney Funds and in repurchase agreements pursuant to the investment objective
and policies of each Portfolio set forth in this Prospectus and make recommen-
dations to the Board of Directors concerning changes to (a) the Underlying
Smith Barney Funds in which the Portfolios may invest, (b) the percentage range
of assets that may be invested by each Portfolio in any one Underlying Smith
Barney Fund and (c) the percentage range of assets of any Portfolio that may be
invested in equity funds and fixed income funds (including money market funds).
The directors of the Series will periodically monitor the allocations made and
the basis upon which such allocations were made or maintained. SBMFM also fur-
nishes each Portfolio with bookkeeping, accounting and administrative services,
office space and equipment, and the services of the officers and employees of
the Series. Under the Asset Allocation and Administration Agreement with each
Portfolio, SBMFM has agreed to bear all expenses of the Concert Series other
than the management fee, the fees payable pursuant to the plan adopted pursuant
to Rule 12b-1 under the 1940 Act and extraordinary expenses. For the most
recent fiscal period of each Portfolio, for the services rendered and expenses
borne, each Portfolio paid SBMFM a monthly fee at the annual rate of 0.35% of
the value of its average daily net assets.     
   
 SBMFM also serves as investment adviser to each of the Underlying Smith Barney
Funds in which the Portfolios may invest (other than the Smith Barney Premium
Total Return Fund) and is responsible for the selection and management of each
of the Underlying Smith Barney Fund's investments. SBSA, located at 388 Green-
wich Street, New York, New York 10013, serves as investment adviser to Smith
Barney Premium Total Return Fund. SBSA has been in the investment counseling
business since 1968 and is a wholly owned subsidiary of SBMFM. SBSA renders
investment advice to investment companies that had aggregate assets under man-
agement as of January 31, 1997 in excess of $3 billion.     
 
                                                                              27
<PAGE>
 
MANAGEMENT OF THE CONCERT SERIES (CONTINUED)
 
 
 Each Portfolio, as a shareholder in the Underlying Smith Barney Funds, will
indirectly bear its proportionate share of any investment management fees and
other expenses paid by the Underlying Smith Barney Funds. The effective manage-
ment fee of each of the Underlying Smith Barney Funds is set forth below as a
percentage rate of its annual net assets:
 
<TABLE>   
<CAPTION>
UNDERLYING SMITH BARNEY FUND                     MANAGEMENT FEES
----------------------------------------------------------------
<S>                                              <C>
Smith Barney Aggressive Growth Fund Inc.              0.80%
Smith Barney Appreciation Fund Inc.                   0.60%
Smith Barney Equity Funds:
 Smith Barney Growth and Income Fund                  0.65%
Smith Barney Fundamental Value Fund Inc.              0.75%
Smith Barney Funds, Inc.:
 Equity Income Portfolio                              0.58%
 Short-Term U.S. Treasury Securities Portfolio        0.45%
Smith Barney Income Funds:
 Smith Barney High Income Fund                        0.70%
 Smith Barney Utilities Fund                          0.65%
 Smith Barney Premium Total Return Fund               0.75%
 Smith Barney Convertible Fund                        0.70%
 Smith Barney Diversified Strategic Income Fund       0.65%
Smith Barney Investment Funds Inc.:
 Smith Barney Managed Growth Fund                     0.85%
 Smith Barney Special Equities Fund                   0.75%
 Smith Barney Government Securities Fund              0.55%
 Smith Barney Investment Grade Bond Fund              0.65%
Smith Barney Managed Governments Fund Inc.            0.65%
Smith Barney Money Funds, Inc.:
 Cash Portfolio                                       0.40%
Smith Barney Natural Resources Fund Inc.              0.75%
Smith Barney World Funds, Inc.:
 International Equity Portfolio                       0.85%
 Emerging Markets Portfolio                           1.00%
 International Balanced Portfolio                     0.85%
 Global Government Bond Portfolio                     0.75%
----------------------------------------------------------------
</TABLE>    
 
 PORTFOLIO MANAGEMENT
 
 Thomas B. Stiles II, Chief Investment Officer of SBMFM, has primary responsi-
bility for the day-to-day management of each Portfolio. Mr. Stiles, born in
1940, is Chairman and Chief Executive Officer of Greenwich Street Advisors, a
division of SBMFM, and a Managing Director of Smith Barney. Certain managing
directors of SBMFM will assist Mr. Stiles in managing the Portfolios.
   
 Management's discussion and analysis and additional performance information
regarding the Concert Series during the fiscal year ended January 31, 1997 is
included in the Annual Report dated January 31, 1997. A copy of the Annual
Report may be obtained upon request and without charge from a Smith Barney
Financial Consultant or by writing or calling the Concert Series at the address
or phone number listed on page one of this Prospectus.     
 
DISTRIBUTOR
   
 PFS, located at 3100 Breckinridge Blvd., Bldg 200, Duluth, Georgia 30199-0062,
distributes shares of each Portfolio as a principal underwriter and as such
conducts 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 the services and distribution plan adopted by each Portfolio under
Rule 12b-1 under the 1940 Act (the "Plan"), PFS is paid a service fee with
respect to Class A and Class B shares of each Portfolio at the annual rate of
0.25% of the average daily net assets attributable to each Class. PFS is also
paid a distribution fee with respect to Class B shares of the High Growth Port-
folio, the Growth Portfolio and the Balanced Portfolio at the annual rate of
0.75% of the average daily net assets attributable to that Class. PFS is paid a
distribution fee with respect to Class B shares of the Conservative Portfolio
and the Income Portfolio at the annual rate of 0.50% of the average daily net
assets attributable to that Class. Class B shares that automatically convert to
Class A shares eight years after the date of original purchase will no longer
be subject to a distribution fee. The fees are paid to PFS, which in turn, pays
PFS Investments to pay its Registered 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: adver-
tising expenses;     
 
28
<PAGE>
 
DISTRIBUTOR (CONTINUED)
   
the cost of printing and mailing prospectuses to potential investors; payments
to and expenses of Registered Representatives 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 Investments associated
with the sale of Portfolio shares, including lease, utility, communications and
sales promotion expenses.     
   
 The payments to PFS Investments Registered Representatives for selling shares
of a Class include a commission or fee paid by the investor or PFS at the time
of sale and, with respect to Class A and Class B shares, a continuing fee for
servicing shareholder accounts for as long as a shareholder remains a holder of
that Class. PFS Investments Registered Representatives may receive different
levels of compensation for selling different Classes of shares.     
   
 PFS Investments may be deemed to be an underwriter for purposes of the Securi-
ties Act of 1933. From time to time, PFS or its affiliates may also pay for
certain non-cash sales incentives provided to PFS Investments Registered Repre-
sentatives. 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 compensa-
tion to PFS Investments Registered Representatives that sell shares of each
Portfolio.     
 
 Actual distribution expenses for Class B shares of each Portfolio for any
given year may exceed the fees received pursuant to the Plan and will be car-
ried forward and paid by each Portfolio in future years so long as the Plan is
in effect. Interest is accrued monthly on such carryforward amounts at a rate
comparable to that paid by Smith Barney for bank borrowings. The Concert
Series' Board of Directors will evaluate the appropriateness of the Plan and
its payment terms on a continuing basis and in so doing will consider all rele-
vant factors, including expenses borne by PFS, amounts received under the Plan
and proceeds of the CDSC.
 
ADDITIONAL INFORMATION
   
 The Concert Series, an open-end, non-diversified investment company, was
incorporated in Maryland on August 11, 1995. The Concert Series commenced oper-
ations on February 5, 1996 under the name Smith Barney Concert Series Inc. The
Select Portfolios of Concert Series commenced operations on February 5, 1997.
On February 24, 1997, the Concert Series changed its name to Smith Barney Con-
cert Allocation Series Inc. The Concert Series has authorized capital of
5,500,000,000 shares with a par value of $.001 per share. The Board of Direc-
tors has authorized the issuance of ten series of shares, each representing
shares in one of ten separate Portfolios and may authorize the issuance of
additional series of shares in the future. The assets of each Portfolio are
segregated and separately managed and a shareholder's interest is in the assets
of the Portfolio in which he or she holds shares. Class A and Class B shares of
a Portfolio represent interests in the assets of that Portfolio and have iden-
tical voting, dividend, liquidation and other rights (other than conversion) on
the same terms and conditions except that expenses related to the distribution
of each Class of shares are borne solely by each Class and each Class of shares
has exclusive voting rights with respect to provisions of the Concert Series'
Rule 12b-1 distribution plan that pertain to a particular Class. As described
under "Voting" in the Statement of Additional Information, the Concert Series
ordinarily will not hold shareholder meetings; however, shareholders have the
right to call a meeting upon a vote of 10% of the Concert Series' outstanding
shares and the Concert Series will assist shareholders in calling such a meet-
ing as required by the 1940 Act. Shares do not have cumulative voting rights or
preemptive rights and are fully paid, transferable and non-assessable when
issued for payment as described in this Prospectus.     
 
 On matters submitted for consideration by shareholders of any Underlying Smith
Barney Fund, a Portfolio will vote its shares in proportion to the vote of all
other holders of shares of that Fund or, in certain limited instances, the
Portfolio will vote its shares in the manner indicated by a vote of holders of
shares of the Portfolio.
 
 PNC Bank, National Association, located at 17th and Chestnut Streets, Phila-
delphia, Pennsylvania 19103, serves as custodian of the Portfolio's invest-
ments.
 
 First Data Investor Services Group, Inc., located at Exchange Place, Boston,
Massachusetts 02109, serves as the Concert Series' transfer agent.
 
 PFS Shareholder Services is located at 3100 Breckinridge Blvd., Bldg 200,
Duluth, Georgia 30199-0062 and serves as the Concert Series' Sub-Transfer
Agent.
 
 The Concert Series intends to send its shareholders a semi-annual report and
an audited annual report, which will include listings of the investment securi-
ties held by the Concert Series at the end of the period covered. In an effort
to reduce the Concert Series' printing
 
                                                                              29
<PAGE>
 
ADDITIONAL INFORMATION (CONTINUED)
   
and mailing costs, the Concert Series 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. Shareholders who do not want this consol-
idation to apply to their account should contact the Sub-Transfer Agent. Also
available at the shareholder's request, is an Account Transcript identifying
every financial transaction in an account since it was opened. To defray admin-
istrative expenses involved with providing multiple years worth of information,
there is a $15 charge for each Account Transcript requested.     
   
  Additional copies of tax forms are available at the shareholder's request. A
$10 fee for each tax form will be assessed.     
   
  Additional information regarding the Transfer Agent's services may be
obtained by contacting the Client Services Department at (800) 544-5445.     
 
30
<PAGE>
 
APPENDIX
 
 DESCRIPTIONS OF CERTAIN RISKS RELATED TO VARIOUS SECURITIES INVESTED IN, AND
 INVESTMENT STRATEGIES EMPLOYED BY, THE UNDERLYING SMITH BARNEY FUNDS IN WHICH
 THE PORTFOLIOS MAY INVEST
 
 Repurchase Agreements. Repurchase agreements, as utilized by an Underlying
Smith Barney Fund or a Portfolio of The Concert Series, could involve certain
risks in the event of default or insolvency of the other party, including pos-
sible delays or restrictions upon the ability of an Underlying Smith Barney
Fund or a Portfolio to dispose of the underlying securities, the risk of a pos-
sible decline in the value of the underlying securities during the period in
which an Underlying Smith Barney Fund or a Portfolio seeks to assert its rights
to them, the risk of incurring expenses associated with asserting those rights
and the risk of losing all or part of the income from the agreement.
 
 Reverse Repurchase Agreements. Certain of the Underlying Smith Barney Funds
may engage in reverse repurchase agreement transactions with banks, brokers and
other financial institutions. Reverse repurchase agreements involve the risk
that the market value of the securities sold by the Underlying Smith Barney
Fund may decline below the repurchase price of the securities.
 
 Lending of Portfolio Securities. The risks in lending portfolio securities,
like those associated with other extensions of secured credit, consist of pos-
sible delays in receiving additional collateral or in the recovery of the secu-
rities or possible loss of rights in the collateral should the borrower fail
financially. Loans will be made to firms deemed by the adviser to the Under-
lying Smith Barney Fund to be of good standing and will not be made unless, in
the judgment of the adviser, the consideration to be earned from such loans
would justify the risk.
 
 When-Issued Securities and Delayed-Delivery Transactions. The purchase of
securities on a when-issued or delayed-delivery basis involves the risk that,
as a result of an increase in yields available in the marketplace, the value of
the securities purchased will decline prior to the settlement date. The sale of
securities for delayed delivery involves the risk that the prices available in
the market on the delivery date may be greater than those obtained in the sale
transaction.
 
 Non-Diversified Funds. Certain of the Underlying Smith Barney Funds are clas-
sified as non-diversified investment companies under the 1940 Act. Since, as a
non-diversified fund, such an Underlying Smith Barney Fund is permitted to
invest a greater proportion of its assets in the securities of a smaller number
of issuers, each such Fund may be subject to greater risk with respect to its
individual portfolio than a Fund that is more broadly diversified.
 
 Securities of Unseasoned Issuers. Securities in which certain of the Under-
lying Smith Barney Funds may invest may have limited marketability and, there-
fore, may be subject to wide fluctuations in market value. In addition, certain
securities may lack a significant operating history and be dependent on prod-
ucts or services without an established market share.
 
 Convertible Securities and Synthetic Convertible Securities. While convertible
securities generally offer lower yields than non-convertible debt securities of
similar quality, their prices may reflect changes in the value of the under-
lying common stock. Convertible securities entail less credit risk than the
issuer's common stock.
 
 Synthetic convertible securities are created by combining non-convertible
bonds or preferred stocks with warrants or stock call options. Synthetic con-
vertible securities differ from convertible securities in certain respects,
including that each component of a synthetic convertible security has a sepa-
rate market value and responds differently to market fluctuations. Investing in
synthetic convertible securities involves the risks normally involved in hold-
ing the securities comprising the synthetic convertible security.
 
 Securities of Developing Countries. A developing country generally is consid-
ered to be a country that is in the initial stages of its industrialization
cycle. Investing in the equity and fixed-income markets of developing countries
involves exposure to economic structures that are generally less diverse and
mature, and to political systems that can be expected to have less stability,
than those of developed countries. Historical experience indicates that the
markets of developing countries have been more volatile than the markets of the
more mature economies of developed countries; however, such markets often have
provided higher rates of return to investors.
 
 Sovereign Debt Obligations. Sovereign debt of developing countries may involve
a high degree of risk, and may be in default or present the risk of default.
Governmental entities responsible for repayment of the debt may be unable or
unwilling to repay principal and interest when due, and may require renegoti-
ation or rescheduling of debt payments. In addition, prospects for repaying of
principal and interest may depend on political as well as economic factors.
Although some sovereign debt, such as Brady Bonds, is collateralized by U.S.
government securities, repayment of principal and interest is not guaranteed by
the U.S. Government.
 
 Restrictions on Foreign Investment. Some countries prohibit or impose substan-
tial restrictions on investments in their capital markets, particularly their
equity markets, by foreign entities. As illustrations, certain countries
require governmental approval prior to investments by foreign persons, or limit
the amount of investment by foreign persons in a particular company, or limit
the investment
 
                                                                             A-1
<PAGE>
 
APPENDIX (CONTINUED)
 
by foreign persons to only a specific class of securities of a company that may
have less advantageous terms than securities of the company available for pur-
chase by nationals or limit the repatriation of funds for a period of time.
 
 Smaller capital markets, while often growing in trading volume, have substan-
tially less volume than U.S. markets, and securities in many smaller capital
markets are less liquid and their prices may be more volatile than securities
of comparable U.S. companies. Brokerage commissions, custodial services, and
other costs relating to investment in smaller capital markets are generally
more expensive than in the U.S. Such markets have different clearance and set-
tlement procedures, and in certain markets there have been times when settle-
ments have been unable to keep pace with the volume of securities transactions,
making it difficult to conduct such transactions. Further, satisfactory custo-
dial services for investment securities may not be available in some countries
having smaller capital markets, which may result in an Underlying Smith Barney
Fund incurring additional costs and delays in transporting and custodying such
securities outside such countries. Delays in settlement could result in tempo-
rary periods when assets of a Fund are uninvested and no return is earned
thereon. The inability of an Underlying Smith Barney Fund to make intended
security purchases due to settlement problems could cause such Fund to miss
attractive investment opportunities. Inability to dispose of a portfolio secu-
rity due to settlement problems could result either in losses to the Fund due
to subsequent declines in value of the portfolio security or, if the Fund has
entered into a contract to sell the security, could result in possible liabil-
ity to the purchaser. There is generally less government supervision and regu-
lation of exchanges, brokers and issuers in countries having smaller capital
markets than there is in the U.S.
 
 Mortgage-Related Securities. To the extent that an Underlying Smith Barney
Fund purchases mortgage-related securities at a premium, mortgage foreclosures
and prepayments of principal by mortgagors (which may be made at any time with-
out penalty) may result in some loss of the Fund's principal investment to the
extent of the premium paid. The Underlying Smith Barney Fund's yield may be
affected by reinvestment of prepayments at higher or lower rates than the orig-
inal investment. In addition, like other debt securities, the values of mort-
gage-related securities, including government and government-related mortgage
pools, generally will fluctuate in response to market interest rates.
 
 Non-Publicly Traded and Illiquid Securities. The sale of securities that are
not publicly traded is typically restricted under the Federal securities laws.
As a result, an Underlying Smith Barney Fund may be forced to sell these secu-
rities at less than fair market value or may not be able to sell them when the
Fund's adviser believes it desirable to do so. Investments by an Underlying
Smith Barney Fund in illiquid securities are subject to the risk that should
the Fund desire to sell any of these securities when a ready buyer is not
available at a price that the Fund's adviser deems representative of its value,
the value of the Underlying Smith Barney Fund's net assets could be adversely
affected.
 
 Short Sales. Possible losses from short sales differ from losses that could be
incurred from a purchase of a security, because losses from short sales may be
unlimited, whereas losses from purchases can equal only the total amount
invested.
 
 Forward Roll Transactions. Forward roll transactions involve the risk that the
market value of the securities sold by an Underlying Smith Barney Fund may
decline below the repurchase price of the securities. Forward roll transactions
are considered borrowings by a Fund. Although investing the proceeds of these
borrowings in repurchase agreements or money market instruments may provide an
Underlying Smith Barney Fund with the opportunity for higher income, this
leveraging practice will increase a Fund's exposure to capital risk and higher
current expenses. Any income earned from the securities purchased with the pro-
ceeds of these borrowings that exceeds the cost of the borrowings would cause a
Fund's net asset value per share to increase faster than would otherwise be the
case; any decline in the value of the securities purchased would cause a Fund's
net asset value per share to decrease faster than would otherwise be the case.
 
 Leverage. Certain of the Underlying Smith Barney Funds may borrow from banks,
on a secured or unsecured basis, in order to leverage their portfolios. Lever-
age creates an opportunity for increased returns to shareholders of an Under-
lying Smith Barney Fund but, at the same time, creates special risk considera-
tions. For example, leverage may exaggerate changes in the net asset value of a
Fund's shares and in a Fund's yield. Although the principal or stated value of
such borrowings will be fixed, the Fund's assets may change in value during the
time the borrowing is outstanding. Leverage will create interest or dividend
expenses for the Fund that can exceed the income from the assets retained. To
the extent the income or other gain derived from securities purchased with bor-
rowed funds exceeds the interest or dividends the Fund will have to pay in
respect thereof, the Fund's net income or other gain will be greater than if
leverage had not been used. Conversely, if the income or other gain from the
incremental assets is not sufficient to cover the cost of leverage, the net
income or other gain of the Fund will be less than if leverage had not been
used. If the amount of income for the incremental securities is insufficient to
cover the cost of borrowing, securities might have to be liquidated to obtain
required funds. Depending on market or other conditions, such liquidations
could be disadvantageous to the Underlying Smith Barney Fund.
 
 Floating and Variable Rate Income Securities. Floating and variable rate
income securities include securities whose rates vary inversely with changes in
market rates of interest. Such securities may also pay a rate of interest
determined by applying a multiple to
 
A-2
<PAGE>
 
APPENDIX (CONTINUED)
 
the variable rate. The extent of increases and decreases in the value of secu-
rities whose rates vary inversely with changes in market rates of interest gen-
erally will be larger than comparable changes in the value of an equal princi-
pal amount of a fixed rate security having similar credit quality, redemption
provisions and maturity.
 
 Zero Coupon, Discount and Payment-in-Kind Securities. Zero coupon securities
generally pay no cash interest (or dividends in the case of preferred stock) to
their holders prior to maturity. Payment-in-kind securities allow the lender,
at its option, to make current interest payments on such securities either in
cash or in additional securities. Accordingly, such securities usually are
issued and traded at a deep discount from their face or par value and generally
are subject to greater fluctuations of market value in response to changing
interest rates than securities of comparable maturities and credit quality that
pay cash interest (or dividends in the case of preferred stock) on a current
basis.
 
 Premium Securities. Premium securities are income securities bearing coupon
rates higher than prevailing market rates. Premium securities are typically
purchased at prices greater than the principal amounts payable on maturity. If
securities purchased by an Underlying Smith Barney Fund at a premium are called
or sold prior to maturity, the Fund will recognize a capital loss to the extent
the call or sale price is less than the purchase price. Additionally, the Fund
will recognize a capital loss if it holds such securities to maturity.
 
 Yankee Bonds. Yankee bonds are U.S. dollar-denominated bonds sold in the U.S.
by non-U.S. issuers. As compared with bonds issued in the U.S., such bond
issues normally carry a higher interest rate but are less actively traded.
 
 Swap Agreements. As one way of managing its exposure to different types of
investments, certain of the Underlying Smith Barney Funds may enter into inter-
est rate swaps, currency swaps, and other types of swap agreements such as
caps, collars, and floors. Swap agreements can be highly volatile and may have
a considerable impact on a Fund's performance. Swap agreements are subject to
risks related to the counterparty's ability to perform, and may decline in
value if the counterparty's creditworthiness deteriorates. A Fund may also suf-
fer losses if it is unable to terminate outstanding swap agreements or reduce
its exposure through offsetting transactions.
 
 Indexed Securities. Certain of the Underlying Smith Barney Funds may invest in
indexed securities, including inverse floaters, whose value is linked to cur-
rencies, interest rates, commodities, indices, or other financial indicators.
Indexed securities may be positively or negatively indexed (i.e., their value
may increase or decrease if the underlying instrument appreciates), and may
have return characteristics similar to direct investments in the underlying
instrument or to one or more options on the underlying instrument. Indexed
securities may be more volatile than the underlying instrument itself.
 
 Investment in Utility Securities. The Smith Barney Utilities Fund is particu-
larly subject to risks that are inherent to the utility industries, including
difficulty in obtaining an adequate return on invested capital, difficulty in
financing large construction programs during an inflationary period, restric-
tions on operations and increased cost and delays attributable to environmental
considerations and regulation, difficulty in raising capital in adequate
amounts on reasonable terms in periods of high inflation and unsettled capital
markets, increased costs and reduced availability of certain types of fuel,
occasional reduced availability and high costs of natural gas for resales, the
effects of energy conservation, the effects of a national energy policy and
lengthy delays and greatly increased costs and other problems associated with
the design, construction, licensing, regulation and operation of nuclear facil-
ities for electric generation, including, among other considerations, the prob-
lems associated with the use of radioactive materials and the disposal of
radioactive wastes. There are substantial differences between the regulatory
practices and policies of various jurisdictions, and any given regulatory
agency may make major shifts in policy from time to time. There is no assurance
that regulatory authorities will grant rate increases in the future or that
such increases will be adequate to permit the payment of dividends on common
stocks. Additionally, existing and possible future regulatory legislation may
make it even more difficult for these utilities to obtain adequate relief. Cer-
tain of the issuers of securities held by the Smith Barney Utilities Fund may
own or operate nuclear generating facilities. Governmental authorities may from
time to time review existing policies, and impose additional requirements gov-
erning the licensing, construction and operation of nuclear power plants.
 
 Each of the risks referred to above could adversely affect the ability and
inclination of public utilities to declare or pay dividends and the ability of
holders of common stock to realize any value from the assets of the issuer upon
liquidation or bankruptcy. All of the utilities that are issuers of the securi-
ties held by the Smith Barney Utilities Fund have been experiencing one or more
of these problems in varying degrees. Moreover, price disparities within
selected utility groups and discrepancies in relation to averages and indices
have occurred frequently for reasons not directly related to the general move-
ments or price trends of utility common stocks. Causes of these discrepancies
include changes in the overall demand for and supply of various securities (in-
cluding the potentially depressing effect of new stock offerings), and changes
in investment objectives, market expectations or cash requirements of other
purchasers and sellers of securities.
 
 
                                                                             A-3
<PAGE>
 
                                     [ART]
                                  PROSPECTUS

                                    Vintage

                          UNDERLYING FUND PROSPECTUS

                  SMITH BARNEY CONCERT ALLOCATION SERIES INC.

                               SELECT PORTFOLIOS
                                     
                                 MAY THIRTIETH

                                     1997     
<PAGE>
 
PROSPECTUS                                                        
                                                               May 30, 1997     
          
 Smith Barney Concert Allocation Series Inc.     
 388 Greenwich Street
 New York, New York 10013
    
 (800) 451-2010     
 
 Smith Barney Concert Allocation Series Inc. (the "Concert Series" or "Series")
offers ten professionally managed investment portfolios, five of which are
offered by this Prospectus (each, a "Portfolio" and collectively, the "Select
Portfolios") to separate accounts sponsored by certain life insurance companies
and qualified pension and retirement plans. Each Portfolio seeks to achieve its
objective by investing in a number of other Smith Barney Mutual Funds.
 
 The Select High Growth Portfolio seeks capital appreciation.
 
 The Select Growth Portfolio seeks long-term growth of capital.
 
 The Select Balanced Portfolio seeks a balance of growth of capital and income.
 
 The Select Conservative Portfolio seeks income and, secondarily, long-term
growth of capital.
 
 The Select Income Portfolio seeks high current income.
 
 This Prospectus sets forth concisely certain information about the Concert
Series and each of the Select Portfolios that prospective investors will find
helpful in making an investment decision. Investors are encouraged to read this
Prospectus carefully and retain it for future reference.
 
 Shares of the Select Portfolios are offered ONLY to insurance company separate
accounts (the "Separate Accounts"), which fund certain variable annuity and
variable life insurance contracts (the "Contracts") and qualified pension and
retirement plans. The Separate Accounts invest in shares of one or all of the
Select Portfolios in accordance with allocation instructions received from Con-
tract owners. Such allocation rights are further described in the accompanying
Contract prospectus.
 
 Shares of each Select Portfolio are offered to Separate Accounts and qualified
pension and retirement plans at their net asset value, without a sales charge,
next determined after receipt of an order by an insurance company. The offering
of shares of a Portfolio may be suspended from time to time and the Series
reserves the right to reject any specific purchase order.
   
THIS PROSPECTUS, WHICH SETS FORTH CONCISE INFORMATION ABOUT THE CONCERT SERIES
THAT PROSPECTIVE INVESTORS SHOULD KNOW BEFORE INVESTING, SHOULD BE READ AND
RETAINED FOR FUTURE REFERENCE. A STATEMENT OF ADDITIONAL INFORMATION, ALSO
REFERRED TO AS "PART B," DATED MAY 30, 1997 IS HEREBY INCORPORATED BY REFERENCE
INTO THIS PROSPECTUS AND IS AVAILABLE FROM THE CONCERT SERIES, WITHOUT CHARGE,
BY WRITING TO THE CONCERT SERIES AT THE ABOVE ADDRESS OR CALLING THE TELEPHONE
NUMBER LISTED ABOVE.     
 
   This Prospectus should be read in conjunction with the prospectus for the
                                   Contracts.
 
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.
 
                                                                               1
<PAGE>
 
TABLE OF CONTENTS
 
<TABLE>   
<S>                                            <C>
PROSPECTUS SUMMARY                               3
--------------------------------------------------
WHY INVEST IN THE CONCERT SERIES                 4
--------------------------------------------------
FINANCIAL HIGHLIGHTS                             4
--------------------------------------------------
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES    4
--------------------------------------------------
RISK FACTORS AND SPECIAL CONSIDERATIONS          6
--------------------------------------------------
PORTFOLIO TURNOVER                               7
--------------------------------------------------
INVESTMENT RESTRICTIONS                          7
--------------------------------------------------
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS     7
--------------------------------------------------
VALUATION OF SHARES                             15
--------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES              16
--------------------------------------------------
TAXES                                           16
--------------------------------------------------
PURCHASE OF SHARES                              16
--------------------------------------------------
REDEMPTION OF SHARES                            16
--------------------------------------------------
PERFORMANCE                                     17
--------------------------------------------------
MANAGEMENT OF THE CONCERT SERIES                17
--------------------------------------------------
SHARES OF THE CONCERT SERIES                    18
--------------------------------------------------
APPENDIX                                       A-1
--------------------------------------------------
</TABLE>    
 
--------------------------------------------------------------------------------
 
 No person has been authorized to give any information or to make any represen-
tations in connection with this offering other than those contained in this
Prospectus and, if given or made, such other information and representations
must not be relied upon as having been authorized by the Concert Series or the
Distributor. This Prospectus does not constitute an offer by the Concert Series
or the Distributor to sell or a solicitation of an offer to buy any of the
securities offered hereby or securities of any Underlying Smith Barney Fund in
any jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction.
 
--------------------------------------------------------------------------------
 
2
<PAGE>
 
PROSPECTUS SUMMARY                                             DATE
 
 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 OBJECTIVES The Concert Series is an open-end, non-diversified man-
agement investment company that currently offers ten professionally managed
investment portfolios. The Select High Growth Portfolio seeks to provide capi-
tal appreciation. The Select Growth Portfolio seeks to provide long-term
growth of capital. The Select Balanced Portfolio seeks to provide a balance of
growth of capital and income. The Select Conservative Portfolio seeks to pro-
vide income and, secondarily, long-term growth of capital. The Select Income
Portfolio seeks to provide high current income. Each Select Portfolio seeks to
achieve its investment objective by investing in a diverse mix of "Underlying
Smith Barney Funds," which consist of open-end management investment companies
or series thereof for which Smith Barney Inc. ("Smith Barney") now or in the
future acts as principal underwriter or for which Smith Barney, Smith Barney
Mutual Funds Management Inc. ("SBMFM") or Smith Barney Strategy Advisers Inc.
("SBSA") now or in the future acts as investment adviser. In addition, each
Select Portfolio may invest its short-term cash in repurchase agreements.
Investors may choose to invest in one or more of the Select Portfolios based
on their personal investment goals, risk tolerance and financial circumstanc-
es. See "Investment Objectives and Management Policies."
 
REDEMPTION OF SHARES Shares may be redeemed on each day the New York Stock
Exchange, Inc. ("NYSE") is open for business. See "Redemption of Shares."
 
MANAGEMENT OF EACH PORTFOLIO Travelers Investment Adviser, Inc. ("TIA") serves
as each Select Portfolio's investment manager. TIA is an indirect wholly owned
subsidiary of Travelers Group Inc. ("Travelers"), a diversified financial
services holding company engaged, through its subsidiaries, principally in
four business segments: Investment Services, Consumer Finance Services, Life
Insurance Services and Property & Casualty Insurance Services.
 
 SBMFM serves as the investment adviser of each of the Underlying Smith Barney
Funds (other than Smith Barney Premium Total Return Fund). SBSA, a wholly
owned subsidiary of SBMFM, serves as investment adviser to Smith Barney Pre-
mium Total Return Fund. See "Management of the Concert Series."
 
VALUATION OF SHARES Net asset value of each Portfolio for the prior day gener-
ally will be quoted daily in the financial section of most newspapers and is
also available from a Smith Barney Financial Consultant. See "Valuation of
Shares."
 
DIVIDENDS AND DISTRIBUTIONS The Concert Series intends to pay dividends from
net investment income monthly on shares of the Select Income Portfolio, quar-
terly on shares of the Select Conservative Portfolio and the Select Balanced
Portfolio and annually on shares of the Select High Growth Portfolio and the
Select Growth Portfolio. Distributions of net realized capital gains, if any,
are paid annually for each Portfolio. See "Dividends, Distributions and Tax-
es."
 
REINVESTMENT OF DIVIDENDS Dividends and distributions paid on shares of a
Portfolio will be reinvested automatically, unless otherwise specified by an
investor, in additional shares of the same Portfolio at current net asset val-
ue. See "Dividends, Distributions and Taxes."
 
RISK FACTORS AND SPECIAL CONSIDERATIONS The assets of each Portfolio are
invested in certain Underlying Smith Barney Funds, thus each Portfolio's
investment performance is directly related to the investment performance of
the Underlying Smith Barney Funds held. The ability of each Portfolio to meet
its investment objective is directly related to the ability of the Underlying
Smith Barney Funds held to meet their objectives as well as the allocation
among those Underlying Smith Barney Funds by TIA. There can be no assurance
that the investment objective of any Portfolio or any Underlying Smith Barney
Fund will be achieved.
 
 The value of the Underlying Smith Barney Funds' investments, and thus the net
asset value of both those Underlying Smith Barney Funds' and the Select Port-
folios' 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 Underlying Smith Barney Funds invest. For a description of the risks
involved in an investment in the Select Portfolios, see "Investment Objectives
and Management Policies," "Description of the Underlying Smith Barney Funds"
and the Appendix to this Prospectus.
       
                                                                              3
<PAGE>
 
WHY INVEST IN THE CONCERT SERIES
   
 The Select Portfolios are designed to meet the needs of investors who prefer
to have their asset allocation decisions made by professional money managers,
and appreciate the advantages of broad diversification.     
   
 The Concert Series will be managed so that each Portfolio can serve as a com-
plete investment program or as a core part of a larger portfolio. Each of the
Portfolios invests in a select group of Underlying Smith Barney Funds suited to
the Portfolio's particular investment objective. The allocation of assets among
Underlying Smith Barney Funds within each Portfolio is determined by TIA
according to fundamental and quantitative analysis. Because the assets will be
adjusted only periodically and only within pre-determined ranges that will
attempt to ensure broad diversification, there should not be any sudden large-
scale changes in the allocation of a Portfolio's investments among Underlying
Smith Barney Funds. The Concert Series is not designed as a market timing vehi-
cle, but rather as a simple and conservative approach to helping investors meet
retirement and other long-term goals.     
                                              
FINANCIAL HIGHLIGHTS (UNAUDITED)              FOR THE PERIOD FROM FEBRUARY 5,
                                                1997 TO APRIL 30, 1997     
   
FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE PERIOD:     
<TABLE>   
<CAPTION>
                              HIGH
                             GROWTH     GROWTH    BALANCED  CONSERVATIVE   INCOME
                           PORTFOLIO* PORTFOLIO* PORTFOLIO*  PORTFOLIO*  PORTFOLIO*
-----------------------------------------------------------------------------------
<S>                        <C>        <C>        <C>        <C>          <C>
NET ASSET VALUE, BEGIN-
 NING OF PERIOD              $10.00     $10.00     $10.00      $10.00      $10.00
-----------------------------------------------------------------------------------
INCOME FROM OPERATIONS:
  Net investment income        0.04       0.02       0.04        0.16        0.16
  Net realized and
   unrealized gain (loss)     (0.39)     (0.20)      0.04       (0.06)      (0.04)
-----------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
 OPERATIONS                   (0.35)     (0.18)      0.08        0.10        0.12
-----------------------------------------------------------------------------------
LESS DISTRIBUTION FROM:
  Net investment income         --         --         --          --          --
  Net realized gains            --         --         --          --          --
-----------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS             --         --         --          --          --
-----------------------------------------------------------------------------------
NET ASSET VALUE, END OF
 PERIOD                      $ 9.65     $ 9.82     $10.08      $10.10      $10.12
-----------------------------------------------------------------------------------
TOTAL RETURN++                (3.50)%    (1.80)%     0.80%       1.00%       1.20%
-----------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
 (000'S)                     $1,803     $2,740     $4,072      $  808      $  334
-----------------------------------------------------------------------------------
RATIOS TO AVERAGE NET
 ASSETS+:
  Expenses                     0.35%      0.35%      0.35%       0.35%       0.35
  Net investment income        2.03       4.10       6.96        8.96        7.52
-----------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE           0%         0%         0%          0%          0%
-----------------------------------------------------------------------------------
</TABLE>    
----------
   
* Per share amounts have been calculated using the average shares method, which
  more appropriately presents per share data for this year since the use of the
  undistributed income method did not accord with results of operations.     
   
+ Annualized.     
   
++Total return is not annualized, as it may not be representative of the total
  return for the year.     
 
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES
 
 
 The Concert Series is an open-end, non-diversified, management investment com-
pany that currently offers ten managed investment portfolios. Each portfolio
seeks to achieve its investment objective by investing within specified ranges
among Underlying Smith Barney Funds, as well as in repurchase agreements. Ini-
tially, each portfolio will invest in the Underlying Smith Barney Funds listed
below.
 
 The investment manager for each of the Select Portfolios, TIA, will allocate
investments for each Portfolio among Underlying Smith Barney Funds based on its
outlook for the economy, financial markets and the relative performance of the
Underlying Smith Barney Funds. The allocation among the Underlying Smith Barney
Funds will be made within investment ranges established by the Board of Direc-
tors of the Concert Series which designate minimum and maximum percentages for
each of the Underlying Smith Barney Funds.
 
 The Select High Growth Portfolio's investment objective is to seek capital
appreciation. The Select Growth Portfolio's investment objective is to seek
long-term growth of capital. The Select Balanced Portfolio's investment objec-
tive is to seek a balance of growth of capital and income. The Select Conserva-
tive Portfolio's investment objective is to seek income and, secondarily, long-
term growth of capital. The Select Income Portfolio's investment objective is
to seek high current income. Each Portfolio's investment objective is fundamen-
tal and may be changed only with the approval of a majority of the Portfolio's
outstanding shares. There can be no assurance that any Portfolio's investment
objective will be achieved.
 
4
<PAGE>
 
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES (CONTINUED)
 
 
 In investing in Underlying Smith Barney Funds, the Select Portfolios seek to
maintain different allocations between equity funds and fixed income funds (in-
cluding money market funds) depending on a Portfolio's investment objective.
Allocating investments between equity funds and fixed income funds permits each
Portfolio to attempt to optimize performance consistent with its investment
objective. The tables below illustrate the initial equity/fixed income fund
allocation targets and ranges for each Select Portfolio:
   
Equity/Fixed Income Fund Range (Percentage of Each Portfolio's Net Assets)     
 
<TABLE>
<CAPTION>
TYPE OF FUND                   TARGET  RANGE
----------------------------------------------
<S>                            <C>    <C>
Select High Growth Portfolio
 Equity                         90%   80%-100%
 Fixed Income                   10%    0%- 20%
Select Growth Portfolio
 Equity                         70%   60%- 80%
 Fixed Income                   30%   20%- 40%
Select Balanced Portfolio
 Equity                         50%   40%- 60%
 Fixed Income                   50%   40%- 60%
Select Conservative Portfolio
 Equity                         30%   20%- 40%
 Fixed Income                   70%   60%- 80%
Select Income Portfolio
 Equity                         10%    0%- 20%
 Fixed Income                   90%   80%-100%
----------------------------------------------
</TABLE>
 The Select Portfolios invest their assets in the Underlying Smith Barney Funds
listed below within the ranges indicated.
          
       Investment Range (Percentage of Each Portfolio's Net Assets)     
 
<TABLE>
<CAPTION>
                                SELECT     SELECT    SELECT      SELECT     SELECT
                              HIGH GROWTH  GROWTH   BALANCED  CONSERVATIVE  INCOME
UNDERLYING SMITH BARNEY FUND   PORTFOLIO  PORTFOLIO PORTFOLIO  PORTFOLIO   PORTFOLIO
------------------------------------------------------------------------------------
<S>                           <C>         <C>       <C>       <C>          <C>
Smith Barney Aggressive
Growth Fund Inc.                 10-30%      0-15%     --          --          --
Smith Barney Appreciation
Fund Inc.                         0-20%     10-30%    0-20%        --          --
Smith Barney Equity
Funds:
 Smith Barney Growth and
 Income Fund                      0-20%      0-20%    5-20%        --          --
Smith Barney Fundamental
Value Fund Inc.                   0-20%     10-30%    0-20%        --          --
Smith Barney Funds, Inc.:
 Equity Income Portfolio           --        0-20%    5-20%       5-20%       0-15%
 Short-Term U.S. Treasury
 Securities Portfolio              --        0-15%    5-20%       5-20%       5-30%
Smith Barney Income
Funds:
 Smith Barney High Income
 Fund                             0-20%      5-20%    0-15%       0-20%       0-20%
 Smith Barney Utilities
 Fund                              --        0-20%    5-20%       5-20%       0-15%
 Smith Barney Premium
 Total Return Fund                 --         --      5-20%       5-25%       0-15%
 Smith Barney Convertible
 Fund                              --         --      5-20%       5-15%       0-15%
 Smith Barney Diversified
 Strategic Income Fund             --         --      5-25%      10-30%      10-30%
Smith Barney Investment
Funds Inc.:
 Smith Barney Managed
 Growth Fund                      0-20%     10-30%    0-15%        --          --
 Smith Barney Special
 Equities Fund                   10-30%      0-15%     --          --          --
 Smith Barney Government
 Securities Fund                  0-15%      0-20%    0-20%       5-20%       5-20%
 Smith Barney Investment
 Grade Bond Fund                  0-15%      0-15%     --          --         0-15%
Smith Barney Managed
Governments Fund Inc.              --        0-15%    5-20%       5-25%       5-30%
Smith Barney Money Funds,
Inc.:
 Cash Portfolio                   0-20%      0-20%    0-25%       0-30%       0-30%
Smith Barney Natural
Resources Fund Inc.               0-10%      0-10%    0-10%        --          --
Smith Barney World Funds,
Inc.:
 International Equity
 Portfolio                       10-25%      5-20%    0-15%       0-10%       0-10%
 Emerging Markets
 Portfolio                        0-20%       --       --          --          --
 International Balanced
 Portfolio                        0-15%      0-10%    0-10%       0-10%       0-10%
 Global Government Bond
 Portfolio                        0-15%      0-15%    0-15%       0-20%       0-20%
------------------------------------------------------------------------------------
</TABLE>
 
                                                                               5
<PAGE>
 
INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES (CONTINUED)
 
 
 The Underlying Smith Barney Funds have been selected to represent a broad
spectrum of investment options for the Select Portfolios. The equity/fixed
income ranges and the investment ranges are based on the degree to which the
Underlying Smith Barney Funds selected are expected in combination to be appro-
priate for a Portfolio's particular investment objective. If, as a result of
appreciation or depreciation, the percentage of a Portfolio's assets invested
in an Underlying Smith Barney Fund exceeds or is less than the applicable per-
centage limitations set forth above, TIA will consider, in its discretion,
whether to reallocate the assets of the Portfolio to comply with the foregoing
percentage limitations. THE PARTICULAR UNDERLYING SMITH BARNEY FUNDS IN WHICH
EACH PORTFOLIO MAY INVEST, THE EQUITY/FIXED INCOME FUND TARGETS AND RANGES AND
THE INVESTMENT RANGES APPLICABLE TO EACH UNDERLYING SMITH BARNEY FUND MAY BE
CHANGED FROM TIME TO TIME BY THE CONCERT SERIES' BOARD OF DIRECTORS WITHOUT THE
APPROVAL OF THE PORTFOLIO'S SHAREHOLDERS.
 
 Each Portfolio can invest a certain portion of its cash reserves in repurchase
agreements. Each Portfolio may also invest its cash reserves in the Cash Port-
folio of Smith Barney Money Funds, Inc. A reserve position provides flexibility
in meeting redemptions, expenses and the timing of new investments, and serves
as a short-term defense during periods of unusual volatility.
 
 For information about the investment objectives of each of the Underlying
Smith Barney Funds and the investment techniques and the risks involved in the
Underlying Smith Barney Funds, please refer to "Description of the Underlying
Smith Barney Funds," the Appendix to this Prospectus, the Statement of Addi-
tional Information and the prospectus for each of the Underlying Smith Barney
Funds.
 
RISK FACTORS AND SPECIAL CONSIDERATIONS
 
 
 Non-Diversified Investment Company. The Concert Series is a "non-diversified"
investment company for purposes of the Investment Company Act of 1940, as
amended (the "1940 Act"), because it invests in the securities of a limited
number of mutual funds. However, the Underlying Smith Barney Funds themselves
are diversified investment companies (with the exception of the Global Govern-
ment Bond Portfolio, the International Balanced Portfolio and the Emerging Mar-
kets Portfolio). The Concert Series intends to qualify as a diversified invest-
ment company for the purposes of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code").
 
 Investing in Underlying Smith Barney Funds. The investments of each Portfolio
are concentrated in the Underlying Smith Barney Funds, so each Portfolio's
investment performance is directly related to the investment performance of the
Underlying Smith Barney Funds held by it. The ability of each Portfolio to meet
its investment objective is directly related to the ability of the Underlying
Smith Barney Funds to meet their objectives as well as the allocation among
those Underlying Smith Barney Funds by TIA. There can be no assurance that the
investment objective of any Portfolio or any Underlying Smith Barney Fund will
be achieved.
 
 Affiliated Persons. TIA, the investment manager of the Select Portfolios, and
the officers and directors of the Concert Series presently serve as investment
adviser, officers and directors, respectively, of many of the Underlying Smith
Barney Funds. Therefore, conflicts may arise as these persons fulfill their
fiduciary responsibilities to the Select Portfolios and the Underlying Smith
Barney Funds.
 
 Investment Practices of Underlying Smith Barney Funds. In addition to their
principal investments, certain Underlying Smith Barney Funds may: invest a por-
tion of their assets in foreign securities; enter into forward currency trans-
actions; lend their portfolio securities; enter into stock index, interest
rate, currency and gold futures contracts, and options on such contracts;
engage in options transactions; make short sales; purchase zero coupon bonds
and payment-in-kind bonds; purchase restricted and illiquid securities; enter
into forward roll transactions; purchase securities on a when-issued or delayed
delivery basis; enter into repurchase or reverse repurchase agreements; borrow
money; and engage in various other investment practices.
 
 High Yield Securities. Each of the Portfolios also may invest in an Underlying
Smith Barney Fund that invests primarily in high yield, high risk securities,
commonly referred to as junk bonds. As a result, the Select Portfolios may be
subject to some of the risks resulting from high yield investing. Further, each
of the Portfolios may invest in Underlying Smith Barney Funds that invest in
medium grade bonds. If these bonds are downgraded, the Select Portfolios will
consider whether to increase or decrease their investment in the affected
Underlying Smith Barney Fund. Lower quality debt instruments generally offer a
higher current yield than that available from higher grade issues, but typi-
cally involve greater risk. Lower rated and comparable unrated securities are
especially subject to adverse changes in general economic conditions, to
changes in the financial condition of their issuers, and to price fluctuation
in response to changes in interest rates. During periods of economic downturn
or rising interest rates, issuers of these instruments may experience financial
stress that could adversely affect their ability to make payments of principal
and interest and increase the possibility of default. Further information on
these investment policies and practices can be found under "Description of the
Underlying Smith Barney Funds," in the Appendix to this Prospectus and in the
Statement of Additional Information as well as the prospectus of each Under-
lying Smith Barney Fund.
 
6
<PAGE>
 
RISK FACTORS AND SPECIAL CONSIDERATIONS (CONTINUED)            
 
 
 Concentration. Each Portfolio other than the Select High Growth Portfolio may
invest in an Underlying Smith Barney Fund that concentrates its investments in
the utilities industry. Under certain unusual circumstances, this could result
in those Portfolios being indirectly concentrated in this industry. If this
were to occur, the relevant Portfolios would consider whether to maintain or
change their investment in that Underlying Smith Barney Fund.
 
 Market and Economic Factors. The Select Portfolios' share prices and yields
will fluctuate in response to various market and economic factors related to
both the stock and bond markets. All Select Portfolios may invest in mutual
funds that in turn invest in international securities and thus are subject to
additional risks of these investments, including changes in foreign currency
exchange rates and political risk.
 
PORTFOLIO TURNOVER
 
 
 Each Portfolio's turnover rate is not expected to exceed 25% annually. A Port-
folio may purchase or sell securities to: (a) accommodate purchases and sales
of its shares; (b) change the percentages of its assets invested in each of the
Underlying Smith Barney Funds in response to market conditions; and (c) main-
tain or modify the allocation of its assets between equity and fixed income
funds and among the Underlying Smith Barney Funds within the percentage limits
described above.
   
 The turnover rates of the Underlying Smith Barney Funds have ranged from 9% to
420% during their most recent fiscal years. There can be no assurance that the
turnover rates of these funds will remain within this range during subsequent
fiscal years. Higher turnover rates may result in higher expenses being
incurred by the Underlying Smith Barney Funds.     
 
INVESTMENT RESTRICTIONS
 
 
 In addition to the investment objectives of each Portfolio, the Concert Series
has adopted restrictions with respect to each Portfolio that may not be changed
without approval of a majority of the Portfolio's outstanding shares. The fun-
damental investment restrictions imposed by the Concert Series prohibit each
Portfolio from, among other things: (i) borrowing money except from banks for
temporary or emergency purposes, including the meeting of redemption requests
in an amount not exceeding 33 1/3% of the value of the Portfolio's total assets
(including the amount borrowed) valued at market less liabilities (not includ-
ing the amount borrowed) at the time the borrowing is made and (ii) making
loans to others, except through the purchase of portfolio securities consistent
with its investment objective and policies and through entering into repurchase
agreements.
 
 Certain other investment restrictions, including fundamental restrictions as
well as restrictions that may be changed without a shareholder vote, adopted by
the Concert Series are described in the Statement of Additional Information.
Investment restrictions of the Underlying Smith Barney Funds in which the
Select Portfolios invest may be more or less restrictive than those adopted by
the Concert Series.
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS
 
 
 The following is a concise description of the investment objectives and prac-
tices for each of the Underlying Smith Barney Funds in which the Select Portfo-
lios may invest. There can be no assurance that the investment objectives of
the Underlying Smith Barney Funds will be met. Additional information regarding
the investment practices of the Underlying Smith Barney Funds is located in the
Appendix to this Prospectus, in the Statement of Additional Information and in
the prospectus of each of the Underlying Smith Barney Funds. No offer is made
in this Prospectus of any of the Underlying Smith Barney Funds.
 
EQUITY FUNDS The following Underlying Smith Barney Funds are funds that invest
primarily in equity securities.
 
 Smith Barney Aggressive Growth Fund Inc. seeks capital appreciation by invest-
ing primarily in common stock of companies the Fund's investment adviser
believes are experiencing, or have the potential to experience, growth in earn-
ings that exceed the average earnings growth rate of companies whose securities
are included in the Standard & Poor's Daily Price Index of 500 Common Stocks
(the "S&P 500"), a weighted index that measures the aggregate change in market
value of 400 industrials, 60 transportation stocks and utility companies and 40
financial issues. SBMFM focuses its stock selection for the Fund on a diversi-
fied group of small- or medium-sized emerging growth companies that have passed
their "start-up" phase and show positive earnings and the prospect of achieving
significant profit gains in the two to three years after the Fund acquires
their stocks. These companies generally may be expected to benefit from new
technologies, techniques, products or services or cost-reducing measures, and
may be affected by changes in management, capitalization or asset deployment,
government regulations or other external circumstances.
 
 
                                                                               7
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
 Although SBMFM anticipates that the assets of the Fund ordinarily will be
invested primarily in common stocks of U.S. companies, the Fund may invest in
convertible securities, preferred stocks, securities of foreign issuers, war-
rants and restricted securities. The Fund also is authorized to borrow up to
33 1/3% of its total assets less liabilities for leveraging purposes. Securi-
ties of the kinds of companies in which the Fund invests may be subject to
significant price fluctuation and above average risk.
 
 Smith Barney Appreciation Fund Inc. seeks long-term appreciation of share-
holders' capital. The Fund attempts to achieve its investment objective by
investing primarily in equity securities (consisting of common stocks, pre-
ferred stocks, warrants, rights and securities convertible into common stocks)
that are believed to afford attractive opportunities for investment apprecia-
tion. The core holdings of the Fund are blue chip companies that are dominant
in their industries; however, at the same time, the Fund may hold securities
of companies with prospects of sustained earnings growth and/or companies with
a cyclical earnings record if it is felt these offer attractive investment
opportunities. Typically, the Fund invests in middle- and larger-sized compa-
nies, though it does invest in smaller companies whose securities may reasona-
bly be expected to appreciate. The Fund's investments are spread broadly among
different industries. The Fund may hold issues traded over-the-counter as well
as those listed on one or more national securities exchanges, and the Fund may
make investments in foreign securities although management intends to limit
such investments to 10% of the Fund's assets.
 
 Smith Barney Fundamental Value Fund Inc.'s investment objective is long-term
capital growth. Current income is a secondary objective. The Fund seeks to
achieve its primary objective by investing in a diversified portfolio of com-
mon stocks and common stock equivalents and, to a lesser extent, in bonds and
other debt instruments. The Fund's investment emphasis is on securities that
are undervalued in the marketplace and, accordingly, have above-average poten-
tial for capital growth. In general, the Fund invests in securities of compa-
nies that are temporarily unpopular among investors but which SBMFM regards as
possessing favorable prospects for earnings growth and/or improvements in the
value of their assets and, consequently, as having a reasonable likelihood of
experiencing a recovery in market price.
 
 Smith Barney Special Equities Fund, an investment portfolio of Smith Barney
Investment Funds Inc., seeks long-term capital appreciation by investing in
equity securities (common stocks or securities that are convertible into or
exchangeable for such stocks, including warrants) that SBMFM believes to have
superior appreciation potential. The Fund invests primarily in equity securi-
ties of secondary growth companies, generally not within the S&P 500, as iden-
tified by SBMFM. These companies may not have reached a fully mature stage of
earnings growth, since they may still be in the developmental stage, or may be
older companies that appear to be entering a new stage of more rapid earnings
progress due to factors such as management change or development of new tech-
nology, products or markets. A significant number of these companies may be in
technology areas, including health care related sectors, and may have annual
sales of less than $300 million. The Fund may also choose to invest in some
relatively unseasoned stocks, i.e., securities issued by companies whose mar-
ket capitalization is under $100 million. Investing in smaller, newer issuers
generally involves greater risk than investing in larger, more established
issuers.
 
 Smith Barney Managed Growth Fund, an investment portfolio of Smith Barney
Investment Funds Inc., has as its investment objective long term growth of
capital. The Fund attempts to achieve its objective by investing primarily in
undervalued or out of favor common stock and other securities, including debt
securities that are convertible into common stock and that are currently price
depressed. Such securities might typically be valued at the low end of their
52-week trading range. Although under normal circumstances the Fund's portfo-
lio will primarily consist of these securities, the Fund may also invest in
preferred stocks and warrants when SBMFM perceives an opportunity for capital
growth from such securities.
 
 The Natural Resources Fund seeks long-term capital appreciation by investing
at least 65% under normal market conditions in "Natural Resource Investments."
Natural Resource Investments are defined as equity and debt securities of
issuers that: (1) own or process natural resources, such as precious metals,
other minerals, water, timberland, agricultural commodities and forest prod-
ucts; (2) own or produce sources of energy such as oil, natural gas, coal,
uranium, geothermal, oil shale and biomass; (3) participate in the exploration
and development, transportation, distribution and/or processing of natural
resources; (4) own or control oil, gas, or other mineral leases, rights or
royalties; (5) provide related services or supplies, such as drilling, well
servicing, chemicals, parts and equipment; (6) develop or participate in ener-
gy-efficient technologies; and (7) are involved in the upgrading or processing
of raw commodities into intermediate products. The Fund may also invest in
gold bullion and gold coins. (A company is considered a "Natural Resources
Investment" when it derives at least 50% of its total revenue from a business
or activity described above.)
 
 Up to 35% of the Fund's assets may be invested in companies not in the natu-
ral resources area, investment grade corporate debt securities, U.S. Govern-
ment securities and, for cash management purposes, money market instruments.
For temporary defensive purposes, the Fund may invest in excess of 35% in
money market instruments. The Fund may utilize up to 10% of its assets to pur-
chase put options on securities it owns and up to an additional 10% of its
assets to purchase call options on securities it may acquire in the future.
The Fund may purchase only put options that are traded on a regulated
exchange. It also may write covered put and call options on
 
8
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
securities. The Fund may enter into futures on domestic and foreign stock
indexes and purchase and write related put and call options to hedge against
risks of market-wide movements affecting that portion of its assets invested in
the country whose stocks are subject to the hedges.
 
 The Fund may invest in debt securities when SBMFM believes they will enhance
the Fund's ability to achieve long-term capital appreciation. The Fund may
invest in fixed-income securities that are rated as low as B by Moody's Invest-
ors Service, Inc. ("Moody's") or Standard & Poor's Rating Services ("S&P") or
if unrated, are deemed by SBMFM to be of comparable quality.
 
 Because issuers of Natural Resource Investments often are located outside the
United States, a significant portion of the Fund's investments may consist of
securities of foreign issuers. The percentage of assets invested in particular
countries or regions will change from time to time in accordance with the judg-
ment of the Fund's investment manager, which may be based on, among other
things, consideration of the political stability and economic outlook of these
countries or regions.
 
 The Equity Income Portfolio, an investment portfolio of Smith Barney Funds,
Inc., seeks current income and long-term growth of capital. The Fund invests
primarily in common stocks offering a current return from dividends and will
also normally include some interest-paying debt obligations (such as U.S. gov-
ernment obligations, investment grade bonds and debentures) and high quality
short-term debt obligations (such as commercial paper and repurchase agreements
collateralized by U.S. government securities with broker/dealers or other
financial institutions, including the Fund's custodian) and may also purchase
preferred stocks and convertible securities. Temporary defensive investments or
a higher percentage of debt securities may be held when deemed advisable by
SBMFM, the Fund's adviser. In the selection of common stock investments, empha-
sis is generally placed on issues with established dividend records as well as
potential for price appreciation. From time to time, however, a portion of the
assets may be invested in non-dividend paying stocks. The Fund may make invest-
ments in foreign securities, though management currently intends to limit such
investments to 5% of the Fund's assets, and an additional 10% of its assets may
be invested in American Depository Receipts ("ADRs") representing shares in
foreign securities that are traded in U.S. securities markets.
 
 Smith Barney Growth and Income Fund, an investment portfolio of Smith Barney
Equity Funds, seeks long-term capital growth and income by investing in income
producing equity securities, including dividend-paying common stocks, securi-
ties that are convertible into common stocks and warrants. Consistent with data
used in developing and maintaining quantitative investment criteria developed
by SBMFM to evaluate investment decisions, the Fund expects to invest primarily
in domestic companies of varying sizes, generally with capitalizations exceed-
ing $250 million in a wide range of industries. The Fund may also invest up to
20% in the securities of foreign issuers, including ADRs or European Depository
Receipts. Under normal market conditions, the Fund will invest substantially
all, but not less than 65%, of its assets in equity securities. The Fund may
invest the remainder of its assets in high grade money market instruments in
order to develop income, as well as in corporate bonds and mortgage related
securities that are rated investment grade or are deemed by SBMFM to be of com-
parable quality and in U.S. government securities.
 
 Smith Barney Premium Total Return Fund, an investment portfolio of Smith Bar-
ney Income Funds, seeks to provide shareholders with total return, consisting
of long-term capital appreciation and income, by investing primarily in a
diversified portfolio of dividend-paying common stocks. The Fund also purchases
put and call options and writes covered put and call options on securities it
holds and on stock indexes primarily as a hedge to reduce investment risk.
Because the Fund seeks total return by emphasizing investments in dividend-pay-
ing common stocks, it will not have as much investment flexibility as total
return funds that may pursue their objective by investing in both income and
equity stocks without such an emphasis. The Fund also may invest up to 10% of
its assets in: (a) securities rated less than investment grade by Moody's or
S&P or unrated securities of comparable quality; (b) interest-paying debt secu-
rities, such as U.S. government securities; and (c) other securities, including
convertible bonds, convertible preferred stock and warrants.
 
 The Emerging Markets Portfolio, an investment portfolio of Smith Barney World
Funds, Inc., seeks long term capital appreciation on its assets through a port-
folio invested primarily in securities of emerging country issuers (consisting
of dividend and non-dividend paying common stocks, preferred stocks, convert-
ible securities and rights and warrants to such securities). The Fund will also
invest in debt securities having a high potential for capital appreciation,
especially in countries where direct equity investment is not permitted. Under
normal conditions, at least 70% of the Fund's assets will be invested in equity
securities. For purposes of its investment objective, the Fund considers as
"emerging" all countries other than the United States, Canada, Ireland, the
United Kingdom, Sweden, Norway, Finland, Denmark, Holland, Germany, Switzer-
land, Belgium, France, Italy, Spain and Japan. The Fund is a non-diversified
portfolio, but will generally invest its assets broadly among countries and
will normally have at least 65% of its assets invested in issuers in not less
than three different countries.
 
 The Fund also may invest in debt securities of issuers in countries having
smaller capital markets. Capital appreciation in debt securities may arise as a
result of a favorable change in relative foreign exchange rates, in relative
interest rate levels, or in the creditworthiness of issuers. The Fund will not
seek to benefit from anticipated short-term fluctuations in currency exchange
rates. The
 
                                                                               9
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
Fund may invest in debt securities with relatively high yields (as compared to
other debt securities meeting the Fund's investment criteria), notwithstanding
that the Fund may not anticipate that such securities will experience substan-
tial capital appreciation. The Fund also may invest in debt securities issued
or guaranteed by foreign governments (including foreign states, provinces and
municipalities) or their agencies and instrumentalities, issued or guaranteed
by supranational organizations or issued by foreign corporations or financial
institutions.
 
 The International Equity Portfolio, an investment portfolio of Smith Barney
World Funds, Inc., seeks a total return on its assets from growth of capital
and income. Under normal market conditions, the Fund invests at least 65% of
its assets in a diversified portfolio of equity securities consisting of divi-
dend and non-dividend paying common stock, preferred stock, convertible debt
and rights and warrants to such securities and up to 35% of the Fund's assets
in bonds, notes and debt securities (consisting of securities issued in the
Eurocurrency markets or obligations of the U.S. or foreign governments and
their political subdivisions) of established non-U.S. issuers. Investments may
be made for capital appreciation or for income or any combination of both for
the purpose of achieving a higher overall return than might otherwise be
obtained solely from investing for growth of capital or for income. There is no
limitation on the percent or amount of the Fund's assets that may be invested
for growth or income and, therefore, from time to time the investment emphasis
may be placed solely or primarily on growth of capital or solely or primarily
on income. The Fund may borrow up to 25% of the value of its assets for invest-
ment purposes, which involves certain risk considerations.
 
 The Fund will generally invest its assets broadly among countries and will
normally have represented in the portfolio business activities in not less than
three different countries. The Fund will normally invest at least 65% of its
assets in companies organized or governments located in any area of the world
other than the U.S. However, under unusual economic or market conditions as
determined by the investment adviser, for defensive purposes the Fund may tem-
porarily invest all or a major portion of its assets in U.S. government securi-
ties or in debt or equity securities of companies incorporated in and having
their principal business activities in the U.S.
 
FIXED INCOME FUNDS The following Underlying Smith Barney Funds invest primarily
in fixed income securities, including the money market fund in which each Port-
folio may invest and which may serve as the cash reserve portion of each Port-
folio.
 
 Smith Barney High Income Fund, an investment portfolio of the Smith Barney
Income Funds, seeks to provide shareholders with high current income. Although
growth of capital is not an investment objective of the Fund, SBMFM may con-
sider potential for growth as one factor, among others, in selecting invest-
ments for the Fund. The Fund will seek high current income by investing, under
normal circumstances, at least 65% of its assets in high risk, high-yielding
corporate bonds, debentures and notes denominated in U.S. dollars or foreign
currencies. Up to 40% of the Fund's assets may be invested in fixed-income
obligations of foreign issuers, and up to 20% of its assets may be invested in
common stock or other equity-related securities, including convertible securi-
ties, preferred stock, warrants and rights. Securities purchased by the Fund
generally will be rated in the lower rating categories of recognized rating
agencies, as low as Caa by Moody's or D by S&P, or in unrated securities that
SBMFM deems of comparable quality. However, the Fund will not purchase securi-
ties rated lower than B by both Moody's and S&P unless, immediately after such
purchase, no more than 10% of its total assets are invested in such securities.
The Fund may hold securities with higher ratings when the yield differential
between low-rated and higher-rated securities narrows and the risk of loss may
be reduced substantially with only a relatively small reduction in yield. The
Fund also may invest in higher-rated securities when SBMFM believes that a more
defensive investment strategy is appropriate in light of market or economic
conditions.
 
 Smith Barney Investment Grade Bond Fund, an investment portfolio of Smith Bar-
ney Investment Funds Inc., seeks to provide as high a level of current income
as is consistent with prudent investment management and preservation of capi-
tal. Except when in a temporary defensive investment position, the Fund intends
to maintain at least 65% of its assets invested in bonds. The Fund seeks to
achieve its objective by investing in any of the following securities: corpo-
rate bonds rated Baa or better by Moody's or BBB or better by S&P; U.S. govern-
ment securities; commercial paper issued by domestic corporations and rated
Prime-1 or Prime-2 by Moody's or A-1 or A-2 by S&P, or, if not rated, issued by
a corporation having an outstanding debt issue rated Aa or better by Moody's or
AA or better by S&P; negotiable bank certificates of deposit and bankers'
acceptances issued by domestic banks (but not their foreign branches) having
total assets in excess of $1 billion; and high-yielding common stocks and war-
rants. A reduction in the rating of a security does not require the sale of the
security by the Fund.
 
 Smith Barney Government Securities Fund, an investment portfolio of Smith Bar-
ney Investment Funds Inc., seeks high current return by investing in obliga-
tions of, or guaranteed by, the U.S. government, its agencies or instrumentali-
ties ("U.S. government securities") (including, without limitation, Treasury
bills and bonds, mortgage participation certificates issued by the Federal Home
Loan Mortgage Corporation ("FHLMC") and mortgage-backed securities issued by
the Government National Mortgage Association ("GNMA"). The Fund may invest up
to 5% of its net assets in U.S. government securities for which the principal
repayment at maturity, while paid in U.S. dollars, is determined by reference
to the exchange rate between the U.S. dollar and the currency of one or more
foreign countries. In addition, the Fund may borrow money (up to 25% of its
total assets) to increase its investments, thereby leveraging its portfolio and
 
10
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
exaggerating the effect on net asset value of any increase or decrease in the
market value of the Fund's securities. Except when in a temporary defensive
investment position, the Fund intends to maintain at least 65% of its assets
invested in U.S. government securities (including futures contracts and options
thereon and options relating to U.S. government securities).
 
 The Short-Term U.S. Treasury Securities Portfolio, an investment portfolio of
Smith Barney Funds, Inc., seeks current income, preservation of capital and
liquidity. The Fund seeks to achieve its objective by investing its assets in
U.S. Treasury securities backed by the full faith and credit of the U.S. gov-
ernment. Shares of the Fund are not issued, insured or guaranteed, as to value
or yield, by the U.S. government or its agencies or instrumentalities. In an
effort to minimize fluctuations in market value of its portfolio securities,
the Fund is expected to maintain a dollar-weighted average maturity of approxi-
mately three years. Pending direct investment in U.S. Treasury debt securities,
the Fund may enter into repurchase agreements secured by such securities in an
amount up to 10% of the value of its total assets. The Fund may, to a limited
degree, engage in short-term trading to attempt to take advantage of short-term
market variations, or may dispose of a portfolio security prior to its maturity
if it believes such disposition advisable or it needs to generate cash to sat-
isfy redemptions.
 
 Smith Barney Managed Governments Fund Inc. seeks high current income consis-
tent with liquidity and safety of capital. The Fund invests substantially all
of its assets in U.S. government securities and, under normal circumstances,
the Fund is required to invest at least 65% of its assets in such securities.
The Fund's portfolio of U.S. government securities consists primarily of mort-
gage-backed securities issued or guaranteed by GNMA, the Federal National Mort-
gage Association ("FNMA") and FHLMC. Assets not invested in such mortgage-
backed securities are invested primarily in direct obligations of the United
States Treasury and other U.S. government securities. The weighted average
maturity of the Fund's portfolio will vary from time to time and the Fund may
invest in U.S. government securities of all maturities: short-term, intermedi-
ate-term and long-term. The Fund may invest without limit in securities of any
issuer of U.S. government securities, and may invest up to an aggregate of 15%
of its total assets in securities with contractual or other restrictions on
resale and other instruments that are not readily marketable (such as repur-
chase agreements with maturities in excess of seven days). The Fund may invest
up to 5% of its net assets in U.S. government securities for which the princi-
pal repayment at maturity, while paid in U.S. dollars, is determined by refer-
ence to the exchange rate between the U.S. dollar and the currency of one or
more foreign countries.
 
 Smith Barney Diversified Strategic Income Fund, an investment portfolio of
Smith Barney Income Funds, seeks high current income primarily through invest-
ment in fixed-income securities. The Fund attempts to achieve its objective by
allocating and reallocating its assets primarily among various types of fixed-
income securities selected by Greenwich Street Advisors (a division of SBMFM)
based on its analysis of economic and market conditions and the relative risks
and opportunities of particular securities. The types of fixed-income securi-
ties among which the Fund's assets will be primarily allocated are: obligations
issued or guaranteed as to principal and interest by the United States govern-
ment; mortgage-related securities issued by various governmental and non-gov-
ernmental entities; domestic and foreign corporate securities; and foreign gov-
ernment securities. Under normal conditions, at least 65% of the Fund's assets
will be invested in fixed-income securities, which includes non-convertible
preferred stocks. The Fund generally will invest in intermediate- and long-term
fixed-income securities with the result that, under normal market conditions,
the weighted average maturity of the Fund's securities is expected to be
between five and 12 years.
 
 Mortgage-related securities in which the Fund may invest include mortgage
obligations collateralized by mortgage loans or mortgage pass-through certifi-
cates. Mortgage-related securities held by the Fund generally will be rated no
lower than Aa by Moody's or AA by S&P or, if not rated, of equivalent invest-
ment quality as determined by Greenwich Street Advisors. The Fund may invest up
to 35% of its assets in corporate fixed-income securities of domestic issuers
rated Ba or lower by Moody's or BB or lower by S&P or in nonrated securities
deemed by Greenwich Street Advisors to be of comparable quality. The Fund may
invest in fixed-income securities rated as low as Caa by Moody's or CCC by S&P.
 
 In general, the Fund may invest in debt securities issued by foreign govern-
ments or any of their political subdivisions that are considered stable by
Smith Barney Global Capital Management, Inc., the Fund's subadviser. Up to 5%
of the Fund's assets may be invested in foreign securities issued by countries
with developing economies. The Fund may also invest in securities issued by
supranational organizations.
 
 The Global Government Bond Portfolio, an investment portfolio of Smith Barney
World Funds, Inc., seeks as high a level of current income and capital appreci-
ation as is consistent with its policy of investing principally in high quality
bonds of the U.S. and foreign governments. Under normal market conditions, the
Fund invests at least 65% of its total assets in bonds issued or guaranteed by
the U.S. or foreign governments (including foreign states, provinces, cantons
and municipalities) or their agencies, authorities or instrumentalities denomi-
nated in various currencies, including U.S. dollars, or in multinational cur-
rency units, such as the European Currency Unit. Except with respect to govern-
ment securities of less developed countries, the Fund invests in foreign gov-
ernment securities only if the issue or the issuer thereof is rated in the two
highest rating categories by Moody's or S&P, or if unrated, are of comparable
quality in the determination of the investment adviser.
 
                                                                              11
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
 
 Under normal circumstances the Fund may invest up to 35% of its total assets
in debt obligations (including debt obligations convertible into common stock)
of U.S. or foreign corporations and financial institutions and supranational
entities. Any non-governmental investment would be limited to issues that are
rated A or better by Moody's or S&P, or if not rated, determined to be of com-
parable quality by the investment adviser.
   
 The Fund is a non-diversified portfolio and currently contemplates investing
primarily in obligations of the U.S. and of developed nations (i.e., industri-
alized countries) that the investment adviser believes to pose limited credit
risks. These countries currently are Australia, Austria, Belgium, Canada, Den-
mark, Finland, France, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zea-
land, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom and Ger-
many. Investments may be made from time to time in government securities,
including loan assignments and loan participations, of less developed coun-
tries. Such countries currently include Argentina, Brazil, Bulgaria, Czech
Republic, Ecuador, Hungary, Indonesia, Lithuania, Malaysia, Mexico, Peru, Phil-
ippines, Poland, Russia, Slovakia, South Africa, Thailand, Turkey, Uruguay and
Venezuela. Countries may be added or deleted from this list as economic and
political conditions warrant. Historical experience indicates that markets of
less developed countries have been more volatile than the markets of the mature
economies of developed countries; however, such markets often provide rates of
return to investors commensurate with the credit and market risks. The invest-
ment adviser does not intend to invest more than 10% of the Fund's total assets
in government securities of less developed countries and will not invest more
than 5% of its assets in the government securities of any one such country.
Such investments may be unrated or rated below investment grade or may be in
default. Securities rated below investment grade (and comparable unrated secu-
rities) are the equivalent of high yield, high risk bonds. Such securities are
regarded as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the obliga-
tions and involve major risk exposure to adverse business, financial, economic,
and political conditions, whether or not occurring within the issuers' borders.
Under normal market conditions the Fund invests at least 65% of its assets in
issues of not less than three different countries; issues of any one country
(other than the United States) will represent no more than 45% of the Fund's
total assets.     
 
 The Cash Portfolio is an investment portfolio of Smith Barney Money Funds,
Inc., a money market fund that seeks maximum current income and preservation of
capital. The Fund may invest in domestic and foreign money market securities
consisting of bank obligations and high quality commercial paper, corporate
obligations and municipal obligations, in addition to U.S. government obliga-
tions and related repurchase agreements. The Fund intends to maintain at least
25% of its total assets invested in obligations of domestic and foreign banks.
Shares of the Fund are not insured or guaranteed by the U.S. government.
 
 The Fund has adopted certain investment policies to assure that, to the extent
reasonably possible, the Fund's price per share will not change from $1.00,
although no assurance can be given that this goal will be achieved on a contin-
uous basis. In order to minimize fluctuations in market price, the Fund will
not purchase a security with a remaining maturity of greater than 13 months or
maintain a dollar-weighted average portfolio maturity in excess of 90 days (se-
curities used as collateral for repurchase agreements are not subject to these
restrictions).
 
 The Fund's investments are limited to U.S. dollar-denominated instruments that
have received the highest rating from the "Requisite NRSROs," securities of
issuers that have received such rating with respect to other short-term debt
securities and comparable unrated securities. "Requisite NRSROs" means (a) any
two nationally recognized statistical ratings organizations ("NRSROs") that
have issued a rating with respect to a security or class of debt obligations of
an issuer, or (b) one NRSRO, if only one NRSRO has issued such a rating at the
time that the Fund acquires the security. The NRSROs currently designated as
such by the Securities and Exchange Commission (the "SEC") are S&P, Moody's,
Fitch Investors Services, L.P., Duff and Phelps Inc., IBCA Limited and its
affiliate, IBCA, Inc. and Thomson BankWatch.
 
 For purposes of the equity/fixed income fund allocation targets and ranges
applicable to each Portfolio (see page 5), each of the following Underlying
Smith Barney Funds is considered to be an equity fund with respect to 50% of a
Portfolio's investment in such Fund and an income fund with respect to the
remaining 50% of such Portfolio's investment.
 
 The Smith Barney Convertible Fund, an investment portfolio of Smith Barney
Income Funds, seeks current income and capital appreciation by investing in
convertible securities and in combinations of nonconvertible fixed-income secu-
rities and warrants or call options that together resemble convertible securi-
ties ("synthetic convertible securities"). Under normal circumstances, the Fund
will invest at least 65% of its assets in convertible securities, but is not
required to sell securities to conform to this limitation and may retain on a
temporary basis securities received upon the conversion or exercise of such
securities. The Fund will not invest in fixed-income securities that are rated
lower than B by Moody's or S&P or, if unrated, deemed by SBMFM to be comparable
to securities rated lower than B. The Fund may invest up to 35% of its assets
in synthetic convertible securities and in equity and debt securities that are
not convertible into common stock and, for temporary defensive purposes, may
invest in these securities without limitation.
 
12
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
 
 The Smith Barney Utilities Fund, an investment portfolio of Smith Barney
Income Funds, seeks current income by investing in equity and debt securities
of companies in the utility industry. Long-term capital appreciation is a sec-
ondary objective of the Fund. The utility industries are deemed to be comprised
of companies principally engaged (that is, at least 50% of a company's assets,
gross income or net profits results from utility operations or the company is
regulated as a utility by a government agency or authority) in the manufacture,
production, generation, transmission and sale of electric and gas energy and
companies principally engaged in the communications field, including entities
such as telephone, telegraph, satellite, microwave and other companies regu-
lated by governmental agencies as utilities that provide communication facili-
ties for the public benefit, but not including those in public broadcasting.
The Fund will invest primarily in utility equity and debt securities that have
a high expected rate of return as determined by SBMFM. Under normal market con-
ditions, the Fund will invest at least 65% of its assets in such securities.
The Fund may invest up to 35% of its assets in equity and debt securities of
non-utility companies believed to afford a reasonable opportunity for achieving
the Fund's investment objectives. The Fund will invest in investment grade debt
securities, but may invest up to 10% of its assets in securities rated BB or B
by S&P or Ba or B by Moody's whenever SBMFM believes that the incremental yield
on such securities is advantageous to the Fund in comparison to the additional
risk involved.
 
 The International Balanced Portfolio, an investment portfolio of Smith Barney
World Funds, Inc., seeks a competitive total return on its assets from growth
of capital and income through a portfolio invested primarily in securities of
established non-U.S. issuers. The Fund may borrow up to 15% of the value of its
assets for investment purposes, which involves certain risks. Under normal mar-
ket conditions, the Fund will invest its assets in an international portfolio
of equity securities (consisting of dividend and non-dividend paying common
stocks, preferred stocks, convertible securities, ADRs and rights and warrants
to such securities) and debt securities (consisting of corporate debt securi-
ties, sovereign debt instruments issued by governments or governmental enti-
ties, including supranational organizations and U.S. and foreign money market
instruments). The Fund attempts to achieve a balance between equity and debt
securities. However, the proportion of equity and debt held by the Fund at any
one time will depend on SBMFM's views on current market and economic condi-
tions. Under normal conditions, no more than 70%, nor less than 30%, of the
Fund's assets will be invested in either equity or debt securities; however,
there is no limitation on the percent or amount of the Fund's assets that may
be invested for growth or income.
 
 The Fund is a non-diversified portfolio but will generally invest its assets
broadly among countries and will normally have at least 65% of its assets
invested in business activities in not less than three different countries out-
side of the U.S. The Fund will invest in a broad range of industries and sec-
tors and will mainly invest in securities issued by companies with market capi-
talization of at least $50,000,000. The Fund may invest in companies organized
or governments located in any area of the world. However, under unusual eco-
nomic or market conditions as determined by the investment adviser, for defen-
sive purposes the Fund may temporarily invest all or a major portion of its
assets in U.S. government securities, debt or equity securities of companies
incorporated in and having their principal business activities in the U.S. or
in U.S. as well as foreign money market instruments and equivalents.
 
 The debt securities in which the Fund invests generally range in maturity from
two to ten years. Debt securities of developed foreign countries must be rated
investment grade (or deemed by SBMFM to be of comparable quality) at the time
of purchase. Debt securities of emerging market countries may be rated below
investment grade and could include securities that are in default as to pay-
ments of principal or interest. Up to 25% of the total assets of the Fund may
be invested in securities of emerging market countries.
 
                                                                              13
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
 
 PERFORMANCE OF UNDERLYING SMITH BARNEY FUNDS
   
 The following chart shows the average annual total returns for the longest
outstanding class of shares for each of the Underlying Smith Barney Funds in
which the Select Portfolios may invest (other than the Cash Portfolio of Smith
Barney Money Funds, Inc.) for the most recent one-, five- and ten-year periods
(or since inception if shorter and giving effect to the maximum applicable
sales charges) and the 30-day yields for income-oriented funds, in each case
for the period ended December 31, 1996.     
 
<TABLE>   
<CAPTION>
                                                                              AVERAGE ANNUAL TOTAL RETURNS
                                                ASSETS OF ALL                   THROUGH DECEMBER 31, 1996      30-DAY YIELD FOR
                                                CLASSES AS OF                 ------------------------------     PERIOD ENDED
                                                DECEMBER 31,  INCEPTION                                          DECEMBER 31,
        UNDERLYING SMITH BARNEY FUND            1996 ($000'S)   DATE    CLASS ONE YEAR  FIVE YEARS TEN YEARS         1996
-------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>       <C>   <C>       <C>        <C>         <C>
Smith Barney Aggressive Growth Fund Inc.          $ 607,914   10/24/83    A     (2.38)%   10.00%     13.39 %          --
Smith Barney Appreciation Fund Inc.               3,486,429   03/10/70    A     13.33     10.82      12.78            --
Smith Barney Equity Funds:
 Smith Barney Growth and Income Fund                328,347   11/06/92     A    12.82       --       11.11 (+)        --
Smith Barney Fundamental Value Fund Inc.          1,390,274   11/12/81    A     13.77     15.20      13.65            --
Smith Barney Funds, Inc.:
 Equity Income Portfolio                            837,512   01/01/72    A     10.25     11.86      11.13            --
 Short-Term U.S. Treasury Securities Portfo-
  lio                                               115,438   11/11/91    A      2.15      5.04       5.47 (+)       4.96%
Smith Barney Income Funds:
 Smith Barney High Income Fund                    1,138,694   09/02/86    B      7.87     12.17       9.12           6.86
 Smith Barney Utilities Fund                      1,510,568   03/28/88    B     (3.10)     7.32      10.08 (+)        --
 Smith Barney Premium Total Return Fund           3,032,742   09/16/85    B     15.09     13.40      12.76            --
 Smith Barney Convertible Fund                       97,978   09/02/86    B      5.73      9.61       8.58           2.93
 Smith Barney Diversified Strategic Income Fund   2,819,870   12/28/89    B      5.43      7.71       9.36 (+)       5.76
Smith Barney Investment Funds Inc.:
 Smith Barney Managed Growth Fund                   859,735   06/30/95    A     10.54       --        7.94 (+)        --
 Smith Barney Special Equities Fund                 732,687   12/13/82    B    (11.12)    15.31      10.26            --
 Smith Barney Government Securities Fund            551,567   03/20/84    B     (3.08)     5.26       6.50           5.55
 Smith Barney Investment Grade Bond Fund            489,231   01/04/82    B     (5.35)     8.97       8.83           6.33
Smith Barney Managed Governments Fund Inc.          597,264   09/04/84    A     (1.06)     5.08       6.94           6.16
Smith Barney Natural Resources Fund Inc.            143,674   12/24/86    A     28.08     10.32       4.56            --
Smith Barney World Funds, Inc.:
 International Equity Portfolio                   1,330,885   02/18/86    A      7.92      9.13       9.82            --
 Emerging Markets Portfolio                          28,681   05/11/95    A     14.07       --        2.39 (+)        --
 International Balanced Portfolio                    49,191   08/25/94    A      6.43       --        7.28 (+)        --
 Global Government Bond Portfolio                   150,356   07/22/91    A      2.69      6.45       8.20 (+)       4.37
-----------
</TABLE>    
+ Since inception (less than 10 years)
--------------------------------------------------------------------------------
   
 For the seven-day period ended December 31, 1996, the yield for the Cash Port-
folio of Smith Barney Money Funds, Inc. was 4.90% and the effective yield was
5.02%.     
 
 The performance data relating to the Underlying Smith Barney Funds set forth
above is not, and should not be viewed as, indicative of the future performance
of either the Underlying Smith Barney Funds or the Concert Series. The perfor-
mance reflects the impact of sales charges and other distribution related
expenses that will not be incurred by the Class Y shares of the Underlying
Smith Barney Funds in which the Portfolios will invest.
 
 INVESTMENT POLICIES AND STRATEGIES OF THE UNDERLYING SMITH BARNEY FUNDS
 
 In pursuing their investment objectives and programs, each of the Underlying
Smith Barney Funds is permitted to engage in a wide range of investment poli-
cies. The Underlying Smith Barney Funds' risks are determined by the nature of
the securities held and the investment strategies used by the Funds' adviser.
Certain of these policies are described below and further information about the
investment policies and strategies of the Underlying Smith Barney Funds in
which the Select Portfolios may invest is contained in the Appendix to this
Prospectus and in the Statement of Additional Information as well as the pro-
spectuses of the Underlying Smith Barney Funds. Because each Portfolio invests
in the Underlying Smith Barney Funds, shareholders of each Portfolio will be
affected by these investment policies in direct proportion to the amount of
assets each Portfolio allocates to the Underlying Smith Barney Funds pursuing
such policies.
 
 Securities of Non-U.S. Issuers. The Select Portfolios will each invest in cer-
tain Underlying Smith Barney Funds that invest all or a portion of their assets
in securities of non-U.S. issuers. These include non-dollar denominated securi-
ties traded outside the U.S. and dollar-denominated securities traded in the
U.S. (such as ADRs). Such investments involve some special risks such as fluc-
tuations in foreign exchange rates, future political and economic developments,
and the possible imposition of exchange controls or other foreign governmental
laws or restrictions. In addition, with respect to certain countries, there is
the possibility of expropriation of assets,
 
14
<PAGE>
 
DESCRIPTION OF UNDERLYING SMITH BARNEY FUNDS (CONTINUED)
 
repatriation, confiscatory taxation, political or social instability or diplo-
matic developments that could adversely affect investments in those countries.
There may be less publicly available information about a foreign company than
about a U.S. company, and foreign companies may not be subject to accounting,
auditing, and financial reporting standards and requirements comparable to or
as uniform as those of U.S. companies. Non-U.S. securities markets, while grow-
ing in volume, have, for the most part, substantially less volume than U.S.
markets, and securities of many foreign companies are less liquid and their
prices more volatile than securities of comparable U.S. companies. Transaction
costs on non-U.S. securities markets are generally higher than in the U.S.
There is generally less government supervision and regulation of exchanges,
brokers and issuers than there is in the U.S. An Underlying Smith Barney Fund
might have greater difficulty taking appropriate legal action in non-U.S.
courts. Dividend and interest income from non-U.S. securities will generally be
subject to withholding taxes by the country in which the issuer is located and
may not be recoverable by the Underlying Smith Barney Fund or a Portfolio
investing in such Fund.
   
 Options and Futures. Certain of the Underlying Smith Barney Funds may enter
into stock index, interest rate and currency futures contracts (or options
thereon, including swaps, caps, collars and floors) as a hedging device, or as
an efficient means of regulating their exposure to various markets. Certain of
the Underlying Smith Barney Funds may also purchase and sell call and put
options. Futures (a type of potentially high-risk derivative) are often used to
manage risk because they enable the investor to buy or sell an asset at a pre-
determined price in the future. The Underlying Smith Barney Funds may buy and
sell futures and options contracts for a number of reasons including: to manage
their exposure to changes in interest rates, stock and bond prices, and foreign
currencies; as an efficient means of adjusting their overall exposure to cer-
tain markets; to adjust the portfolio's duration; to enhance income; and to
protect the value of the portfolio securities. Certain of the Underlying Smith
Barney Funds may purchase, sell or write call and put options on securities,
financial indices, and foreign currencies. Options and futures can be volatile
investments, and involve certain risks. If the adviser to the Underlying Smith
Barney Fund applies a hedge at an inappropriate time or judges market condi-
tions incorrectly, options and futures strategies may lower the Underlying
Smith Barney Fund's return. Further losses could also be experienced if the
options and futures positions held by an Underlying Smith Barney Fund were
poorly correlated with its other investments, or if it could not close out its
positions because of an illiquid secondary market.     
 
 The Smith Barney Natural Resources Fund may also enter into futures contracts
for the purchase and sale of gold, purchase put and call options on those
future contracts and write call options on those futures contracts. The Smith
Barney Natural Resources Fund will purchase or write options on gold futures
only on a regulated domestic or foreign exchange approved for such purpose by
the Commodities Futures Trading Commission.
 
 Debt Securities. Certain of the Underlying Smith Barney Funds may be affected
by general changes in interest rates, which will result in increases or
decreases in the market value of the debt securities held by the Funds. The
market value of the fixed-income obligations in which the Underlying Smith Bar-
ney Funds may invest can be expected to vary inversely in relation to the
changes in prevailing interest rates and also may be affected by other market
and credit factors.
 
 Certain of the Underlying Smith Barney Funds may invest only in high quality,
high grade or investment grade securities. High quality securities are those
rated in the two highest categories by Moody's (Aaa or Aa) or S&P (AAA or AA).
High grade securities are those rated in the three highest categories by
Moody's (Aaa, Aa or A) or S&P (AAA, AA or A). Investment grade securities are
those rated in the four highest categories by Moody's (Aaa, Aa, A or Baa) or
S&P (AAA, AA, A or BBB). Securities rated Baa or BBB have speculative charac-
teristics and changes in economic conditions or other circumstances are more
likely to lead to a weakened capacity of their issuers to make principal and
interest payments than is the case with higher grade securities.
 
 Certain Underlying Smith Barney Funds may invest in securities that are rated
below investment grade; that is, rated below Baa by Moody's or BBB by S&P.
Securities rated below investment grade (and comparable unrated securities) are
the equivalent of high yield, high risk bonds, commonly known as "junk bonds."
Such securities are regarded as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligations and involve major risk exposure to adverse business,
financial, economic or political conditions. See the Appendix to the Statement
of Additional Information for additional information on the bond ratings by
Moody's and S&P.
 
VALUATION OF SHARES
 
 
 Each Select Portfolio'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 Portfolio's net assets by the total number of shares
of the Portfolio outstanding. The value of each Underlying Smith Barney Fund
will be its net asset value at the time of computation. Short-term investments
that have a maturity of more than 60 days are valued at prices based on market
quotations for securities of similar type, yield and maturity. Short-term
investments that have a maturity of 60 days or less are valued at amortized
cost unless conditions dictate otherwise.
 
                                                                              15
<PAGE>
 
DIVIDENDS, DISTRIBUTIONS AND TAXES
 
 
 DIVIDENDS AND DISTRIBUTIONS
 
 The Concert Series intends to declare monthly income dividends on shares of
the Select Income Portfolio, quarterly income dividends on shares of the Select
Conservative Portfolio and the Select Balanced Portfolio and annual income div-
idends on shares of the Select High Growth Portfolio and the Select Growth
Portfolio. In addition, the Concert Series intends to make annual distributions
of capital gains, if any, on the shares of each Portfolio.
 
 Income dividends and capital gain distributions that are invested are credited
to shareholders' accounts in additional shares at the net value as of the close
of business on the payment date. A shareholder may change the option at any
time by notifying his or her Smith Barney Financial Consultant. Shareholders
whose accounts are held directly by First Data Investor Services Group Inc.
("First Data") should notify First Data in writing at least five business days
prior to the payment date to permit the change to be entered in the sharehold-
er's account.
 
 TAXES
 
 Each Portfolio of the Concert Series intends to qualify as a "regulated
investment company" under Subchapter M of the Code. To qualify, each Portfolio
must meet certain tests, including distributing at least 90% of its investment
company taxable income, and deriving less than 30% of its gross income from the
sale or other disposition of certain investments held for less than three
months. Each Select Portfolio intends at least annually to declare and make
distributions of substantially all of its taxable income and net taxable capi-
tal gains to its shareowners (i.e., the Separate Accounts). Such distributions
are automatically reinvested in additional shares of the Portfolio at net asset
value and are includable in gross income of the Separate Accounts holding such
shares. See the accompanying Contract prospectus for information regarding the
federal income tax treatment of distributions to the Separate Accounts and to
holders of the Contracts.
 
 Each Select Portfolio of the Concert Series is also subject to asset diversi-
fication regulations promulgated by the U.S. Treasury Department under the
Code. The regulations generally provide that, as of the end of each calendar
quarter or within 30 days thereafter, no more than 55% of the total assets of
each Portfolio may be represented by any one investment, no more than 70% by
any two investments, no more than 80% by any three investments, and no more
than 90% by any four investments. For this purpose all securities of the same
issuer are considered a single investment. If a Select Portfolio should fail to
comply with these regulations, Contracts invested in that Portfolio would not
be treated as annuity, endowment or life insurance contracts under the Code.
 
PURCHASE OF SHARES
 
 Investment in the Select Portfolios of the Concert Series is available to own-
ers of either variable annuity or variable life insurance contracts issued by
insurance companies through their separate accounts and qualified pension and
retirement plans. It is possible that in the future it may become disadvanta-
geous for both variable annuity and variable life insurance separate accounts
to be invested simultaneously in the Concert Series. However, the Concert
Series does not currently foresee any disadvantages to the contract owners of
the different contracts which are funded by such separate accounts. The Board
of Directors of the Concert Series monitors events for the existence of any
material irreconcilable conflict between or among such owners, and each insur-
ance company will take whatever remedial action may be necessary to resolve any
such conflict. Such action could include the sale of the Concert Series shares
by one or more of the insurance company separate accounts which fund these con-
tracts, which could have adverse consequences to the Concert Series. Material
irreconcilable conflicts could result from, for example: (a) changes in state
insurance laws; (b) changes in U.S. federal income tax laws; or (c) differences
in voting instructions between those given by variable annuity contract owners
and those given by variable life insurance contract owners. If the Board were
to conclude that separate series of the Concert Series should be established
for variable annuity and variable life separate accounts, each insurance com-
pany would bear the attendant expenses. Should this become necessary, contract
owners would presumably no longer have the economies of scale resulting from a
larger combined mutual fund.
 
REDEMPTION OF SHARES
 
 
 The redemption price of the shares of each Select Portfolio will be the net
asset value next determined after receipt by the Concert Series of a redemption
order from a Separate Account, which may be more or less than the price paid
for the shares. The Concert Series will ordinarily make payment within one
business day, though redemption proceeds must be remitted to a Separate Account
on or before the third day following receipt of proper tender, except on a day
on which the NYSE is closed or as permitted by the SEC in extraordinary circum-
stances.
 
16
<PAGE>
 
PERFORMANCE
 
 
 From time to time the Concert Series may include a Portfolio's total return,
average annual total return, yield and current distribution return in adver-
tisements and/or other types of sales literature. THESE FIGURES ARE BASED ON
HISTORICAL EARNINGS AND ARE NOT INTENDED TO INDICATE FUTURE PERFORMANCE. In
addition, these figures will not reflect the deduction of the charges that are
imposed on the Contracts by the Separate Account (see Contract prospectus)
which, if reflected, would reduce the performance quoted. Total return is com-
puted for a specified period of time assuming reinvestment of all income divi-
dends and capital gains distributions at net asset value on the ex-dividend
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 over differ-
ent periods of time by means of aggregate, average, year-by-year, or other
types of total return figures. The yield of a Portfolio refers to the net
investment income earned by investments in the Portfolio over a thirty-day
period. This net investment income is then annualized, i.e., the amount of
income earned by the investments during that thirty-day period is assumed to
be earned each 30-day period for twelve periods and is expressed as a percent-
age of the investments. The yield quotation is calculated according to a for-
mula prescribed by the SEC to facilitate comparison with yields quoted by
other investment companies. The Concert Series calculates current distribution
return for each Portfolio by dividing the distributions from investment income
declared during the most recent period by the net asset value on the last day
of the period for which current distribution return is presented. A Portfo-
lio's current distribution return may vary from time to time depending on mar-
ket conditions, the composition of its investment portfolio and operating
expenses. These factors and possible differences in the methods used in calcu-
lating current distribution return, and the charges that are imposed on the
Contracts by the Separate Account, should be considered when comparing the
Portfolio's current distribution return to yields published for other invest-
ment companies and other investment vehicles.
 
MANAGEMENT OF THE CONCERT SERIES
 
 BOARD OF DIRECTORS
 
 Overall responsibility for management and supervision of the Concert Series
rests with the Concert Series' Board of Directors. A majority of the Series'
directors are non-interested persons as defined in Section 2(a)(19) of the
1940 Act. However, the directors and officers of the Series also serve in sim-
ilar positions with many of the Underlying Smith Barney Funds. Thus, if the
interests of a Portfolio and the Underlying Smith Barney Funds were ever to
become divergent, it is possible that a conflict of interest could arise and
affect how the directors and officers of the Series fulfill their fiduciary
duties to that Portfolio and the Underlying Smith Barney Funds. The directors
of the Series believe they have structured each Portfolio to avoid these con-
cerns. However, conceivably a situation could occur where proper action for
the Series or a Portfolio separately could be adverse to the interests of an
Underlying Smith Barney Fund, or the reverse could occur. If such a possibil-
ity arises, the directors and officers of the Series, the affected Underlying
Smith Barney Funds, TIA and SBMFM will carefully analyze the situation and
take all steps they believe reasonable to minimize and, where possible, elimi-
nate the potential conflict. Moreover, limitations on aggregate investments in
the Underlying Smith Barney Funds have been adopted by the Series to minimize
this possibility, and close and continuous monitoring will be exercised to
avoid, insofar as is possible, these concerns. The Statement of Additional
Information contains background information regarding each director and execu-
tive officer of the Concert Series.
    
 INVESTMENT MANAGER     
   
 TIA, the investment manager to each Select Portfolio, is a registered invest-
ment adviser whose principal offices are located at 388 Greenwich Street, New
York, New York 10013. TIA was incorporated in 1996 under the laws of Delaware.
TIA renders investment advice to various investment company clients that had
aggregate assets under management as of December 31, 1996 in excess of
$900 million. Subject to the supervision and direction of the Concert Series'
Board of Directors, TIA will determine how each Select Portfolio's assets will
be invested in the Underlying Smith Barney Funds and in repurchase agreements
pursuant to the investment objective and policies of each Select Portfolio set
forth in this Prospectus and make recommendations to the Board of Directors
concerning changes to (a) the Underlying Smith Barney Funds in which the Port-
folios may invest, (b) the percentage range of assets that may be invested by
each Portfolio in any one Underlying Smith Barney Fund and (c) the percentage
range of assets of any Portfolio that may be invested in equity funds and
fixed income funds (including money market funds). The directors of the Con-
cert Series will periodically monitor the allocations made and the basis upon
which such allocations were made or maintained. TIA also furnishes each Select
Portfolio with bookkeeping, accounting and administrative services, office
space and equipment, and the services of the officers and employees of the
Concert Series. Under the Asset Allocation and Administration Agreement with
each Select Portfolio, TIA has agreed to bear all expenses of the Select Port-
folios other than the management fee and extraordinary expenses. For each
Select Portfolio's most recent fiscal period, for the services rendered and
expenses borne, each Select Portfolio paid TIA a monthly fee at the annual
rate of 0.35% of the value of its average daily net assets.     
 
                                                                             17
<PAGE>
 
MANAGEMENT OF THE CONCERT SERIES (CONTINUED)
   
 SBMFM serves as investment adviser to each of the Underlying Smith Barney
Funds in which the Select Portfolios may invest (other than the Smith Barney
Premium Total Return Fund) and is responsible for the selection and management
of each of the Underlying Smith Barney Fund's investments. SBMFM is a
registered investment adviser whose principal offices are located at 388
Greenwich Street, New York, New York 10013. SBMFM renders investment advice to
a wide variety of investment company clients that had aggregate assets under
management as of January 31, 1997 in excess of $80 billion. SBSA, located at
388 Greenwich Street, New York, New York 10013, serves as investment adviser to
Smith Barney Premium Total Return Fund. SBSA has been in the investment
counseling business since 1968 and is a wholly owned subsidiary of SBMFM. SBSA
renders investment advice to investment companies that had aggregate assets
under management as of January 31, 1997 in excess of $3 billion.     
 
 Each Portfolio, as a shareholder in the Underlying Smith Barney Funds, will
indirectly bear its proportionate share of any investment management fees and
other expenses paid by the Underlying Smith Barney Funds. The effective manage-
ment fee of each of the Underlying Smith Barney Funds in which the Select Port-
folios may invest is set forth below as a percentage rate of the Fund's annual
net assets:
 
<TABLE>   
<CAPTION>
                                                MANAGEMENT
UNDERLYING SMITH BARNEY FUND                       FEES
----------------------------------------------------------
<S>                                             <C>
Smith Barney Aggressive Growth Fund Inc.           0.80%
Smith Barney Appreciation Fund Inc.                0.60
Smith Barney Equity Funds
 Smith Barney Growth and Income Fund               0.65
Smith Barney Fundamental Value Fund Inc.           0.75
Smith Barney Funds, Inc.
 Equity Income Portfolio                           0.58
 Short-Term U.S. Treasury Securities Portfolio     0.45
Smith Barney Income Funds
 Smith Barney High Income Fund                     0.70
 Smith Barney Utilities Fund                       0.65
 Smith Barney Premium Total Return Fund            0.75
 Smith Barney Convertible Fund                     0.70
 Smith Barney Diversified Strategic Income Fund    0.65
Smith Barney Investment Funds Inc.
 Smith Barney Managed Growth Fund                  0.85
 Smith Barney Special Equities Fund                0.75
 Smith Barney Government Securities Fund           0.55
 Smith Barney Investment Grade Bond Fund           0.65
Smith Barney Managed Governments Fund Inc.         0.65
Smith Barney Money Funds, Inc.
 Cash Portfolio                                    0.40
Smith Barney Natural Resources Fund Inc.           0.75
Smith Barney World Funds, Inc.
 International Equity Portfolio                    0.85
 Emerging Markets Portfolio                        1.00
 International Balanced Portfolio                  0.85
 Global Government Bond Portfolio                  0.75
----------------------------------------------------------
</TABLE>    
 
 PORTFOLIO MANAGEMENT
 
 Thomas B. Stiles II, Chief Investment Officer of TIA, has primary responsibil-
ity for the day-to-day management of each Select Portfolio. Mr. Stiles, born in
1940, is Chairman and Chief Executive Officer of Greenwich Street Advisors, a
division of SBMFM, and a Managing Director of Smith Barney. Certain managing
directors of TIA will assist Mr. Stiles in managing the Select Portfolios.

SHARES OF THE CONCERT SERIES
   
 The Concert Series, an open-end, non-diversified investment company, was
incorporated in Maryland on August 11, 1995. The Concert Series commenced oper-
ations on February 5, 1996 under the name Smith Barney Concert Series Inc. The
Select Portfolios of Concert Series commenced operations on February 5, 1997.
On February 24, 1997, the Concert Series changed its name to Smith     
 
18
<PAGE>
 
SHARES OF THE CONCERT SERIES (CONTINUED)
   
Barney Concert Allocation Series Inc. The Concert Series has authorized capital
of 5,500,000,000 shares with a par value of $.001 per share. The Board of
Directors has authorized the issuance of ten series of shares, each represent-
ing shares in one of ten separate portfolios and may authorize the issuance of
additional series of shares in the future. The assets of each portfolio are
segregated and separately managed and a shareholder's interest is in the assets
of the portfolio in which he or she holds shares.     
 
 PNC Bank, National Association, located at 17th and Chestnut Streets, Phila-
delphia, Pennsylvania 19103, serves as custodian of the Select Portfolios'
investments.
 
 First Data, located at Exchange Place, Boston, Massachusetts 02109, serves as
the Concert Series' transfer agent.
 
 The Concert Series intends to send its shareholders a semi-annual report and
an audited annual report, which will include listings of the investment securi-
ties held by the Concert Series at the end of the period covered. In an effort
to reduce the Concert Series' printing and mailing costs, the Concert Series
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 Concert Series plans to consolidate the mailing of its Pro-
spectus so that a shareholder having multiple accounts will receive a single
Prospectus annually. Shareholders who do not want this consolidation to apply
to their account should contact their Smith Barney Financial Consultant or the
Concert Series' transfer agent.
 
 VOTING RIGHTS
 
 The Concert Series offers shares of the Select High Growth, Select Growth,
Select Balanced, Select Conservative and Select Income Portfolios only for pur-
chase by insurance company separate accounts and qualified pension and retire-
ment plans. In the case of insurance company separate accounts, the insurance
company is technically the shareholder of these Portfolios and, under the 1940
Act, is deemed to be in control of the these Portfolios. Nevertheless, with
respect to any Concert Series shareholder meeting, an insurance company will
solicit and accept timely voting instruction from its contract owners who own
units in a separate account investment division which corresponds to shares in
the Portfolios in accordance with the procedures set forth in the accompanying
prospectus of the applicable contract issued by the insurance company and to
the extent required by law. Shares of the Concert Series attributable to con-
tract owner interests for which no voting instructions are received will be
voted by an insurance company in proportion to the shares for which voting
instructions are received.
 
 Each share of a Portfolio represents an equal proportionate interest in that
Portfolio with each other share of the same Portfolio and is entitled to such
dividends and distributions out of the net income of that Portfolio as are
declared in the discretion of the Directors. Shareowners are entitled to one
vote for each share held and will vote by individual Portfolio except to the
extent required by the 1940 Act. The Concert Series is not required to hold
annual shareowner meetings, although special meetings may be called for the
Concert Series as a whole, or a specific Portfolio, for purposes such as elect-
ing or removing Directors, changing fundamental policies or approving a manage-
ment contract. Shareowners may cause a meeting of shareowners to be held upon a
vote of 10% of the Series' outstanding shares for the purposes of voting on the
removal of Directors.
 
                                                                              19
<PAGE>
 
                      
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<PAGE>
 
APPENDIX
 
 DESCRIPTIONS OF CERTAIN RISKS RELATED TO VARIOUS SECURITIES INVESTED IN, AND
 INVESTMENT STRATEGIES EMPLOYED BY, THE UNDERLYING SMITH BARNEY FUNDS IN WHICH
 THE SELECT PORTFOLIOS MAY INVEST
 
 Repurchase Agreements. Repurchase agreements, as utilized by an Underlying
Smith Barney Fund or a Portfolio of the Concert Series, could involve certain
risks in the event of default or insolvency of the other party, including pos-
sible delays or restrictions upon the ability of an Underlying Smith Barney
Fund or a Portfolio to dispose of the underlying securities, the risk of a pos-
sible decline in the value of the underlying securities during the period in
which an Underlying Smith Barney Fund or a Portfolio seeks to assert its rights
to them, the risk of incurring expenses associated with asserting those rights
and the risk of losing all or part of the income from the agreement.
 
 Reverse Repurchase Agreements. Certain of the Underlying Smith Barney Funds
may engage in reverse repurchase agreement transactions with banks, brokers and
other financial institutions. Reverse repurchase agreements involve the risk
that the market value of the securities sold by the Underlying Smith Barney
Fund may decline below the repurchase price of the securities.
 
 Lending of Portfolio Securities. The risks in lending portfolio securities,
like those associated with other extensions of secured credit, consist of pos-
sible delays in receiving additional collateral or in the recovery of the secu-
rities or possible loss of rights in the collateral should the borrower fail
financially. Loans will be made to firms deemed by the adviser to the Under-
lying Smith Barney Fund to be of good standing and will not be made unless, in
the judgment of the adviser, the consideration to be earned from such loans
would justify the risk.
 
 When-Issued Securities and Delayed-Delivery Transactions. The purchase of
securities on a when-issued or delayed-delivery basis involves the risk that,
as a result of an increase in yields available in the marketplace, the value of
the securities purchased will decline prior to the settlement date. The sale of
securities for delayed delivery involves the risk that the prices available in
the market on the delivery date may be greater than those obtained in the sale
transaction.
 
 Non-Diversified Funds. Certain of the Underlying Smith Barney Funds are
classified as non-diversified investment companies under the 1940 Act. Since,
as a non-diversified fund, such an Underlying Smith Barney Fund is permitted to
invest a greater proportion of its assets in the securities of a smaller number
of issuers, each such Fund may be subject to greater risk with respect to its
individual portfolio than a Fund that is more broadly diversified.
 
 Securities of Unseasoned Issuers. Securities in which certain of the Under-
lying Smith Barney Funds may invest may have limited marketability and, there-
fore, may be subject to wide fluctuations in market value. In addition, certain
securities may lack a significant operating history and be dependent on prod-
ucts or services without an established market share.
 
 Convertible Securities and Synthetic Convertible Securities. While convertible
securities generally offer lower yields than non-convertible debt securities of
similar quality, their prices may reflect changes in the value of the under-
lying common stock. Convertible securities entail less credit risk than the
issuer's common stock.
 
 Synthetic convertible securities are created by combining non-convertible
bonds or preferred stocks with warrants or stock call options. Synthetic con-
vertible securities differ from convertible securities in certain respects,
including that each component of a synthetic convertible security has a sepa-
rate market value and responds differently to market fluctuations. Investing in
synthetic convertible securities involves the risks normally involved in hold-
ing the securities comprising the synthetic convertible security.
 
 Securities of Developing Countries. A developing country generally is consid-
ered to be a country that is in the initial stages of its industrialization
cycle. Investing in the equity and fixed-income markets of developing countries
involves exposure to economic structures that are generally less diverse and
mature, and to political systems that can be expected to have less stability,
than those of developed countries. Historical experience indicates that the
markets of developing countries have been more volatile than the markets of the
more mature economies of developed countries; however, such markets often have
provided higher rates of return to investors.
 
 Sovereign Debt Obligations. Sovereign debt of developing countries may involve
a high degree of risk, and may be in default or present the risk of default.
Governmental entities responsible for repayment of the debt may be unable or
unwilling to repay principal and interest when due, and may require renegoti-
ation or rescheduling of debt payments. In addition, prospects for repaying of
principal and interest may depend on political as well as economic factors.
Although some sovereign debt, such as Brady Bonds, is collateralized by U.S.
government securities, repayment of principal and interest is not guaranteed by
the U.S. government.
 
 Restrictions on Foreign Investment. Some countries prohibit or impose substan-
tial restrictions on investments in their capital markets, particularly their
equity markets, by foreign entities. As illustrations, certain countries
require governmental approval prior to investments by foreign persons, or limit
the amount of investment by foreign persons in a particular company, or limit
the investment by foreign persons to only a specific class of securities of a
company that may have less advantageous terms than securities of the company
available for purchase by nationals or limit the repatriation of funds for a
period of time.
 
                                                                             A-1
<PAGE>
 
APPENDIX (CONTINUED)
 
 
 Smaller capital markets, while often growing in trading volume, have substan-
tially less volume than U.S. markets, and securities in many smaller capital
markets are less liquid and their prices may be more volatile than securities
of comparable U.S. companies. Brokerage commissions, custodial services, and
other costs relating to investment in smaller capital markets are generally
more expensive than in the U.S. Such markets have different clearance and set-
tlement procedures, and in certain markets there have been times when settle-
ments have been unable to keep pace with the volume of securities transactions,
making it difficult to conduct such transactions. Further, satisfactory custo-
dial services for investment securities may not be available in some countries
having smaller capital markets, which may result in an Underlying Smith Barney
Fund incurring additional costs and delays in transporting and maintaining cus-
tody of such securities outside such countries. Delays in settlement could
result in temporary periods when assets of a Fund are uninvested and no return
is earned thereon. The inability of an Underlying Smith Barney Fund to make
intended security purchases due to settlement problems could cause such Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems could result either in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible lia-
bility to the purchaser. There is generally less government supervision and
regulation of exchanges, brokers and issuers in countries having smaller capi-
tal markets than there is in the U.S.
 
 Mortgage-Related Securities. To the extent that an Underlying Smith Barney
Fund purchases mortgage-related securities at a premium, mortgage foreclosures
and prepayments of principal by mortgagors (which may be made at any time with-
out penalty) may result in some loss of the Fund's principal investment to the
extent of the premium paid. The Underlying Smith Barney Fund's yield may be
affected by reinvestment of prepayments at higher or lower rates than the orig-
inal investment. In addition, like other debt securities, the values of mort-
gage-related securities, including government and government-related mortgage
pools, generally will fluctuate in response to market interest rates.
 
 Non-Publicly Traded and Illiquid Securities. The sale of securities that are
not publicly traded is typically restricted under the Federal securities laws.
As a result, an Underlying Smith Barney Fund may be forced to sell these secu-
rities at less than fair market value or may not be able to sell them when the
Fund's adviser believes it desirable to do so. Investments by an Underlying
Smith Barney Fund in illiquid securities are subject to the risk that should
the Fund desire to sell any of these securities when a ready buyer is not
available at a price that the Fund's adviser deems representative of its value,
the value of the Underlying Smith Barney Fund's net assets could be adversely
affected.
 
 Short Sales. Possible losses from short sales differ from losses that could be
incurred from a purchase of a security, because losses from short sales may be
unlimited, whereas losses from purchases can equal only the total amount
invested.
 
 Forward Roll Transactions. Forward roll transactions involve the risk that the
market value of the securities sold by an Underlying Smith Barney Fund may
decline below the repurchase price of the securities. Forward roll transactions
are considered borrowings by a Fund. Although investing the proceeds of these
borrowings in repurchase agreements or money market instruments may provide an
Underlying Smith Barney Fund with the opportunity for higher income, this
leveraging practice will increase a Fund's exposure to capital risk and higher
current expenses. Any income earned from the securities purchased with the
proceeds of these borrowings that exceeds the cost of the borrowings would
cause a Fund's net asset value per share to increase faster than would
otherwise be the case; any decline in the value of the securities purchased
would cause a Fund's net asset value per share to decrease faster than would
otherwise be the case.
 
 Leverage. Certain of the Underlying Smith Barney Funds may borrow from banks,
on a secured or unsecured basis, in order to leverage their portfolios. Lever-
age creates an opportunity for increased returns to shareholders of an Under-
lying Smith Barney Fund but, at the same time, creates special risk considera-
tions. For example, leverage may exaggerate changes in the net asset value of a
Fund's shares and in a Fund's yield. Although the principal or stated value of
such borrowings will be fixed, the Fund's assets may change in value during the
time the borrowing is outstanding. Leverage will create interest or dividend
expenses for the Fund that can exceed the income from the assets retained. To
the extent the income or other gain derived from securities purchased with bor-
rowed funds exceeds the interest or dividends the Fund will have to pay in
respect thereof, the Fund's net income or other gain will be greater than if
leverage had not been used. Conversely, if the income or other gain from the
incremental assets is not sufficient to cover the cost of leverage, the net
income or other gain of the Fund will be less than if leverage had not been
used. If the amount of income for the incremental securities is insufficient to
cover the cost of borrowing, securities might have to be liquidated to obtain
required funds. Depending on market or other conditions, such liquidations
could be disadvantageous to the Underlying Smith Barney Fund.
 
 Floating and Variable Rate Income Securities. Floating and variable rate
income securities include securities whose rates vary inversely with changes in
market rates of interest. Such securities may also pay a rate of interest
determined by applying a multiple to the variable rate. The extent of increases
and decreases in the value of securities whose rates vary inversely with
changes in market rates of interest generally will be larger than comparable
changes in the value of an equal principal amount of a fixed rate security hav-
ing similar credit quality, redemption provisions and maturity.
 
A-2
<PAGE>
 
APPENDIX (CONTINUED)
 
 
 Zero Coupon, Discount and Payment-in-Kind Securities. Zero coupon securities
generally pay no cash interest (or dividends in the case of preferred stock) to
their holders prior to maturity. Payment-in-kind securities allow the lender,
at its option, to make current interest payments on such securities either in
cash or in additional securities. Accordingly, such securities usually are
issued and traded at a deep discount from their face or par value and generally
are subject to greater fluctuations of market value in response to changing
interest rates than securities of comparable maturities and credit quality that
pay cash interest (or dividends in the case of preferred stock) on a current
basis.
 
 Premium Securities. Premium securities are income securities bearing coupon
rates higher than prevailing market rates. Premium securities are typically
purchased at prices greater than the principal amounts payable on maturity. If
securities purchased by an Underlying Smith Barney Fund at a premium are called
or sold prior to maturity, the Fund will recognize a capital loss to the extent
the call or sale price is less than the purchase price. Additionally, the Fund
will recognize a capital loss if it holds such securities to maturity.
 
 Yankee Bonds. Yankee bonds are U.S. dollar-denominated bonds sold in the U.S.
by non-U.S. issuers. As compared with bonds issued in the U.S., such bond
issues normally carry a higher interest rate but are less actively traded.
 
 Swap Agreements. As one way of managing its exposure to different types of
investments, certain of the Underlying Smith Barney Funds may enter into inter-
est rate swaps, currency swaps, and other types of swap agreements such as
caps, collars, and floors. Swap agreements can be highly volatile and may have
a considerable impact on a Fund's performance. Swap agreements are subject to
risks related to the counterparty's ability to perform, and may decline in
value if the counterparty's creditworthiness deteriorates. A Fund may also suf-
fer losses if it is unable to terminate outstanding swap agreements or reduce
its exposure through offsetting transactions.
 
 Indexed Securities. Certain of the Underlying Smith Barney Funds may invest in
indexed securities, including inverse floaters, whose value is linked to cur-
rencies, interest rates, commodities, indices, or other financial indicators.
Indexed securities may be positively or negatively indexed (i.e., their value
may increase or decrease if the underlying instrument appreciates), and may
have return characteristics similar to direct investments in the underlying
instrument or to one or more options on the underlying instrument. Indexed
securities may be more volatile than the underlying instrument itself.
 
 Investment in Utility Securities. The Smith Barney Utilities Fund is particu-
larly subject to risks that are inherent to the utility industries, including
difficulty in obtaining an adequate return on invested capital, difficulty in
financing large construction programs during an inflationary period, restric-
tions on operations and increased cost and delays attributable to environmental
considerations and regulation, difficulty in raising capital in adequate
amounts on reasonable terms in periods of high inflation and unsettled capital
markets, increased costs and reduced availability of certain types of fuel,
occasional reduced availability and high costs of natural gas for resales, the
effects of energy conservation, the effects of a national energy policy and
lengthy delays and greatly increased costs and other problems associated with
the design, construction, licensing, regulation and operation of nuclear facil-
ities for electric generation, including, among other considerations, the prob-
lems associated with the use of radioactive materials and the disposal of
radioactive wastes. There are substantial differences between the regulatory
practices and policies of various jurisdictions, and any given regulatory
agency may make major shifts in policy from time to time. There is no assurance
that regulatory authorities will grant rate increases in the future or that
such increases will be adequate to permit the payment of dividends on common
stocks. Additionally, existing and possible future regulatory legislation may
make it even more difficult for these utilities to obtain adequate relief. Cer-
tain of the issuers of securities held by the Smith Barney Utilities Fund may
own or operate nuclear generating facilities. Governmental authorities may from
time to time review existing policies, and impose additional requirements gov-
erning the licensing, construction and operation of nuclear power plants.
 
 Each of the risks referred to above could adversely affect the ability and
inclination of public utilities to declare or pay dividends and the ability of
holders of common stock to realize any value from the assets of the issuer upon
liquidation or bankruptcy. All of the utilities that are issuers of the securi-
ties held by the Smith Barney Utilities Fund have been experiencing one or more
of these problems in varying degrees. Moreover, price disparities within
selected utility groups and discrepancies in relation to averages and indices
have occurred frequently for reasons not directly related to the general move-
ments or price trends of utility common stocks. Causes of these discrepancies
include changes in the overall demand for and supply of various securities (in-
cluding the potentially depressing effect of new stock offerings), and changes
in investment objectives, market expectations or cash requirements of other
purchasers and sellers of securities.
 
                                                                             A-3
<PAGE>
 
                      
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<PAGE>
 

                             VINTAGE TIFFANY LAMP


                                     [ART]


                                  PROSPECTUS
                                                                        
L 12410            SMITH BARNEY CONCERT ALLOCATION SERIES INC.      SB Ed. 5.97
                                                                                

PART B
Statement of Additional Information
   
May 30, 1997
Smith Barney Concert Allocation Series Inc.
    
HIGH GROWTH PORTFOLIO
GROWTH PORTFOLIO
BALANCED PORTFOLIO
CONSERVATIVE PORTFOLIO
INCOME PORTFOLIO

388 Greenwich Street, New York, New York 10013 (800) 451-2010

   
This Statement of Additional Information expands upon and supplements 
the information contained in the current Prospectuses of Smith Barney 
Concert Allocation Series Inc. (the "Concert Series") dated May 30, 
1997 for Class A, Class B, Class C, Class Y and Class Z shares of the 
High Growth Portfolio, Growth Portfolio, Balanced Portfolio, 
Conservative Portfolio and Income Portfolio (individually, a 
"Portfolio" and collectively, the "Portfolios"), as amended or 
supplemented from time to time (collectively the "Prospectus"), and 
should be read in conjunction therewith.  The Concert Series 
currently offers ten  investment portfolios, five of which are 
offered hereby.  Each Portfolio seeks to achieve its objective by 
investing in a number of open-end management investment companies or 
series thereof ("Underlying Smith Barney Funds") for which Smith 
Barney Inc. ("Smith Barney") now or in the future acts as principal 
underwriter or for which Smith Barney, Smith Barney Mutual Funds 
Management Inc. ("SBMFM") or Smith Barney Strategy Advisers Inc. 
("SBSA") now or in the future acts as investment adviser.  The 
Prospectus may be obtained from a Smith Barney Financial Consultant 
or an Investment Representative of PFS Distributors, Inc. ("PFS"), or 
by writing or calling the Concert Series at the address or telephone 
number listed above.  This Statement of Additional Information, 
although not in itself a prospectus, is incorporated by reference 
into the Prospectus in its entirety.

    
TABLE OF CONTENTS

For ease of reference, the same section headings are used in the 
Prospectus and this Statement of Additional Information, except as 
shown below:

Caption	Page
Management of the Concert Series 	 2
Investment Objectives and Management Policies 	 5
Purchase of Shares 	 21
Redemption of Shares 	 22
Distributors 	 22
Valuation of Shares 	 24
Exchange Privilege 	 25
IRA and other Prototype Plans 	 25
Performance 	 26
Taxes (see in the Prospectus "Dividends, Distributions And Taxes") 	 29
Voting (see in the Prospectus "Additional Information") 	 31
Additional Information 	 36
Financial Statement 	 36
Appendix - Ratings of Debt Obligations 	 A-1

MANAGEMENT OF THE CONCERT SERIES

The executive officers of the Concert Series are employees of certain 
of the organizations that provide services to the Concert Series.  
These organizations are the following:

Smith Barney and PFS 	 Distributors
SBMFM 	 Investment Manager
PNC Bank, National Association ("PNC Bank") 	 Custodian
First Data Investor Services Group, Inc. ("First Data"), 
a subsidiary of First Data Corporation 	 Transfer Agent
PFS Shareholder Services (the "Sub-Transfer Agent")  Sub-Transfer 
Agent

These organizations and the functions they perform for the Concert 
Series are discussed in the Prospectus and in this Statement of 
Additional Information.

Directors and Executive Officers of the Concert Series

The names of the directors and executive officers of the Concert 
Series, together with information as to their principal business 
occupations during the past five years, are shown below.  Each 
director who is an "interested person" of the Concert Series, as 
defined in the Investment Company Act of 1940, as amended (the "1940 
Act"), is indicated by an asterisk.
   
	Walter E. Auch, Director (Age 76).  Consultant to companies in 
the financial services industry; Director of Pimco Advisers L.P.  His 
address is 6001 N. 62nd Place, Paradise Valley, Arizona 85253.

	Martin Brody, Director (Age 75).  Vice Chairman of the Board of 
Restaurant Associates Industries, Inc.  His address is c/o HMK 
Associates, 30 Columbia Turnpike, Florham Park, New Jersey 07932.

	H. John Ellis, Jr., Director (Age 70).  Prior to 1992, 
Executive Vice President of the Consulting Services Division of 
Shearson Lehman Brothers Inc. ("Shearson Lehman Brothers").  His 
address is 858 East Crystal Downs Drive, Frankfort, Michigan 49635.

	Stephen E. Kaufman, Director (Age 65).  Attorney.  His address 
is 277 Park Avenue, New York, New York 10172. 

	Armon E. Kamesar, Director (Age 70).  Chairman of TEC, an 
international organization of Chief Executive Officers; Trustee, U.S. 
Bankruptcy Court.  His address is 7328 Country Club Drive, LaJolla, 
California 92037.

	*Heath B. McLendon, Chairman of the Board (Age 64).  Managing 
Director of Smith Barney, Chairman of the Board of Smith Barney 
Strategy Advisers Inc. and President of SBMFM and Travelers 
Investment Adviser, Inc. ("TIA"); prior to July 1993, Senior 
Executive Vice President of Shearson Lehman Brothers, Vice Chairman 
of Shearson Asset Management. Mr. McLendon also serves as Chairman of 
the Board of 41 investment companies sponsored by Smith Barney 
("Smith Barney Mutual Funds").  His address is 388 Greenwich Street, 
New York, New York 10013.

	Madelon DeVoe Talley, Director (Age 64).  Author.  Governor-at-
large of the National Association of Securities Dealers, Inc.; 
Commissioner of Port Authority of New York and New Jersey as of 1996.  
Her address is 876 Park Avenue, New York, New York 10021.



	Jessica M. Bibliowicz, President (Age 37).  Executive Vice 
President of Smith Barney; Chairman of the Board and Chief Executive 
Officer of SBMFM and TIA; Director of twelve investment companies 
associated with Smith Barney and President of 41 Smith Barney Mutual 
Funds.; prior to 1994, Director of Sales and Marketing for Prudential 
Mutual Funds. Her address is 388 Greenwich Street, New York, New York 
10013. 

	Lewis E. Daidone, Senior Vice President and Treasurer (Age 39).  
Managing Director of Smith Barney; Director and Senior Vice President 
of SBMFM and TIA.  Mr. Daidone also serves as Senior Vice President 
and Treasurer of 41 Smith Barney Mutual Funds.  His address is 388 
Greenwich Street, New York, New York 10013. 

	R. Jay Gerken, Vice President and Investment Officer (Age 43). 
Managing Director of Smith Barney and  portfolio manager of  one 
other investment company of Smith Barney Mutual Funds; prior to July 
1993, Managing Director of Shearson Lehman Advisors. His address is 
388 Greenwich Street, New York, New York 10013.

	Christina T. Sydor, Secretary (Age 46).  Managing Director of 
Smith Barney; General Counsel and Secretary of SBMFM and TIA.  Ms. 
Sydor also serves as Secretary of 41 Smith Barney Mutual Funds.  Her 
address is 388 Greenwich Street, New York, New York 10013. 


Each Director also serves as a director, trustee, consultant and/or 
general partner of certain other mutual funds for which Smith Barney 
serves as distributor.  As of May 15, 1997, the Directors and 
officers of the Fund, as a group, owned less than 1.00% of the 
outstanding common stock of the Fund.

No officer, director or employee of Smith Barney, PFS or any of their 
affiliates will receive any compensation from the Concert Series for 
serving as an officer or director of the Concert Series.  The Concert 
Series pays each director who is not an officer, director or employee 
of Smith Barney, PFS or any of their affiliates a fee of $5,000 per 
annum plus $100 per Portfolio per meeting attended and reimburses 
travel and out-of-pocket expenses.  Upon attainment of age 80 
Directors are required to change to emeritus status.  Directors 
Emeritus are entitled to serve in emeritus status for a maximum of 10 
years during which time they receive 50% of the annual retainer fee 
and meeting fees otherwise applicable to the Concert Series 
Directors.  All Directors are reimbursed for travel and out-of-pocket 
expenses incurred in attending such meetings.

    

The following table shows the compensation paid by Concert Series to 
each incumbent Director during its first fiscal year:
   
Compensation Table
		                                                       	              Total
	                           	      Pension or		Total	 	Number
	              	     Retirement Benefits	Compensation	of Funds
	 	Aggregate	Accrued as Expense	From	Served in
	Name	Compensation	of Concert Series	Fund Complex	Complex
Heath B. McLendon*	None	None		None		41
Walter Auch		$  5,350	None		$ 37,935		2
Martin Brody		5,350	None		121,685		19
H. John Ellis		5,450	None		36,800		1
Armon E. Kamesar	5,950	None		38,635		2
Stephen E. Kaufman	5,950	None		89,735		13
Madelon DeVoe Talley+	5,950	None 		90,685		3

* Designates "interested director".
+ Pursuant to the Fund's deferred compensation plan, the indicated 
Director has elected to defer the following payment of some or all of 
her compensation: M. DeVoe Talley - $2,975.
    
Investment Manager

SBMFM acts as investment manager to each Portfolio pursuant to 
separate asset allocation and administration agreements (the "Asset 
Allocation and Administration Agreements").  SBMFM is a wholly owned 
subsidiary of Smith Barney Holdings Inc. ("Holdings") and Holdings is 
a wholly owned subsidiary of  Travelers Group Inc. ("Travelers").  
The Asset Allocation and Administration Agreements with respect to 
each Portfolio were approved by the Board of Directors, including a 
majority of the directors who are not "interested persons" of the 
Concert Series or SBMFM (the "Independent Directors"), on December 
14, 1995 and by the initial shareholder of the respective Portfolios 
on January 31, 1996.  Pursuant to the Asset Allocation and 
Administration Agreements, SBMFM will determine how each Portfolio's 
assets will be invested in the Underlying Smith Barney Funds and in 
repurchase agreements pursuant to the investment objectives and 
policies of each Portfolio set forth in the Prospectus and make 
recommendations to the Board of Directors concerning changes to (a) 
the Underlying Smith Barney Funds in which the Portfolios may invest, 
(b) the percentage range of assets that may be invested by each 
Portfolio in any one Underlying Smith Barney Fund and (c) the 
percentage range of assets of any Portfolio that may be invested in 
equity funds and fixed income funds (including money market funds).  
In addition to such services, SBMFM pays the salaries of all officers 
and employees who are employed by both it and the Concert Series, 
maintains office facilities for the Concert Series, furnishes the 
Concert Series with statistical and research data, clerical help and 
accounting, data processing, bookkeeping, internal auditing and legal 
services and certain other services required by the Concert Series 
and each Portfolio, prepares reports to each Portfolio's shareholders 
and prepares tax returns, reports to and filings with the Securities 
and Exchange Commission (the "SEC") and state Blue Sky authorities.  
SBMFM provides investment advisory and management services to 
investment companies affiliated with Smith Barney.

The management fee for each Portfolio is calculated at the annual 
rate of 0.35% of  that Portfolio's average daily net assets.  Under 
the Asset Allocation and Administration Agreements, SBMFM has agreed 
to bear all expenses incurred in the operation of each Portfolio 
other than the management fee, the fees payable pursuant to the plan 
adopted pursuant to Rule 12b-1 under the 1940 Act and extraordinary 
expenses.  Such expenses include taxes, interest, brokerage fees and 
commissions, if any; fees of directors who are not officers, 
directors, shareholders or employees of Smith Barney or SBMFM; SEC 
fees and state Blue Sky qualification fees; charges of custodians; 
transfer and dividend disbursing agent's fees; certain insurance 
premiums; outside auditing and legal expenses; costs of maintenance 
of corporate existence; investor services (including allocated 
telephone and personnel expenses); and costs of preparation and 
printing of the prospectus for regulatory purposes and for 
distribution to existing shareholders; cost of shareholders' reports 
and shareholder meetings and meetings of the officers or Board of 
Directors of the Concert Series.
   
For the fiscal period ended January 31, 1997, the management fees for 
each Portfolio were as follows:

Portfolio


High Growth	$528,764
Growth		  678,365
Balanced	  369,783
Conservative	  109,360
Income		    69,248
    
Counsel and Auditors

Willkie Farr & Gallagher serves as legal counsel to the Concert 
Series.  The Independent Directors of the Concert Series have 
selected Stroock & Stroock & Lavan LLP as their legal counsel.

KPMG Peat Marwick LLP, independent accountants, 345 Park Avenue, New 
York, New York 10154, have been selected as auditors for the Concert 
Series for its fiscal year ending January 31, 1998 to examine and 
report on the Concert Series' financial statements and highlights.


INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES

The Prospectus discusses the investment objectives of the Portfolios 
and each of the Underlying Smith Barney Funds in which the Portfolios 
may invest, as well as the policies employed to achieve those 
objectives.  This section contains supplemental information 
concerning the types of securities and other instruments in which the 
Underlying Smith Barney Funds may invest (and repurchase agreements 
in which the Portfolios and/or the Underlying Smith Barney Funds may 
invest), the investment policies and portfolio strategies the 
Underlying Smith Barney Funds may utilize and certain risks attendant 
to such investments, policies and strategies.  There can be no 
assurance that the respective investment objectives of the Portfolios 
or the Underlying Smith Barney Funds will be achieved.

The Articles of Incorporation of the Concert Series permit the Board 
of Directors to establish additional Portfolios of the Concert Series 
from time to time.  The investment objectives, policies and 
restrictions applicable to additional Portfolios would be established 
by the Board of Directors at the time such Portfolios were 
established and may differ from those set forth in the Prospectus and 
this Statement of Additional Information.  

MONEY MARKET INSTRUMENTS.  Each of the Underlying Smith Barney Funds 
may invest in certain types of money market instruments which may 
include: U.S. government securities; certificates of deposit ("CDs"), 
time deposits ("TDs") and bankers' acceptances issued by domestic 
banks (including their branches located outside the United States and 
subsidiaries located in Canada), domestic branches of foreign banks, 
savings and loan associations and similar institutions; high grade 
commercial paper; and repurchase agreements with respect to the 
foregoing types of instruments.  The following is a more detailed 
description of such money market instruments.

U.S. GOVERNMENT SECURITIES.  U.S. government securities include debt 
obligations of varying maturities issued or guaranteed by the U.S. 
Government or its agencies or instrumentalities.  U.S. government 
securities include not only direct obligations of the U.S. Treasury, 
but also securities issued or guaranteed by the Federal Housing 
Administration, Farmers Home Administration, Export-Import Bank of 
the United States, Small Business Administration, Government National 
Mortgage Association ("GNMA"), General Services Administration, 
Central Bank for Cooperatives, Federal Intermediate Credit Banks, 
Federal Land Banks, Federal National Mortgage Association ("FNMA"), 
Maritime Administration, Tennessee Valley Authority, District of 
Columbia Armory Board, Student Loan Marketing Association, 
International Bank for Reconstruction and Development and Resolution 
Trust Corporation.  Certain U.S. government securities, such as those 
issued or guaranteed by GNMA, FNMA and Federal Home Loan Mortgage 
Corporation ("FHLMC"), are mortgage-related securities.  Because the 
U.S. Government is not obligated by law to provide support to an 
instrumentality that it sponsors, a Portfolio or an Underlying Smith 
Barney Fund will invest in obligations issued by such an 
instrumentality only if its investment adviser determines that the 
credit risk with respect to the instrumentality does not make its 
securities unsuitable for investment by the Portfolio or the Fund, as 
the case may be.

BANK OBLIGATIONS.  Domestic commercial banks organized under Federal 
law are supervised and examined by the Comptroller of the Currency 
and are required to be members of the Federal Reserve System and to 
be insured by the Federal Deposit Insurance Corporation (the "FDIC").  
Domestic banks organized under state law are supervised and examined 
by state banking authorities but are members of the Federal Reserve 
System only if they elect to join.  Most state banks are insured by 
the FDIC (although such insurance may not be of material benefit to 
an Underlying Smith Barney Fund, depending upon the principal amount 
of certificates of deposit ("CDs") of each held by the Fund) and are 
subject to Federal examination and to a substantial body of Federal 
law and regulation.  As a result of Federal and state laws and 
regulations, domestic branches of domestic banks are, among other 
things, generally required to maintain specified levels of reserves, 
and are subject to other supervision and regulation designed to 
promote financial soundness.

Obligations of foreign branches of U.S. banks, such as CDs and TDs, 
may be general obligations of the parent bank in addition to the 
issuing branch, or may be limited by the terms of a specific 
obligation and governmental regulation.  Obligations of foreign 
branches of U.S. banks and foreign banks are subject to different 
risks than are those of U.S. banks or U.S. branches of foreign banks.  
These risks include foreign economic and political developments, 
foreign governmental restrictions that may adversely affect payment 
of principal and interest on the obligations, foreign exchange 
controls and foreign withholding and other taxes on interest income.  
Foreign branches of U.S. banks are not necessarily subject to the 
same or similar regulatory requirements that apply to U.S. banks, 
such as mandatory reserve requirements, loan limitations and 
accounting, auditing and financial recordkeeping requirements.  In 
addition, less information may be publicly available about a foreign 
branch of a U.S. bank than about a U.S. bank.  CDs issued by wholly 
owned Canadian subsidiaries of U.S. banks are guaranteed as to 
repayment of principal and interest, but not as to sovereign risk, by 
the U.S. parent bank.

Obligations of U.S. branches of foreign banks may be general 
obligations of the parent bank in addition to the issuing branch, or 
may be limited by the terms of a specific obligation and by Federal 
and state regulation as well as governmental action in the country in 
which the foreign bank has its head office.  A U.S. branch of a 
foreign bank with assets in excess of $1 billion may or may not be 
subject to reserve requirements imposed by the Federal Reserve System 
or by the state in which the branch is located if the branch is 
licensed in that state.  In addition, branches licensed by the 
Comptroller of the Currency and branches licensed by certain states 
("State Branches") may or may not be required to: (a) pledge to the 
regulator by depositing assets with a designated bank within the 
state, an amount of its assets equal to 5% of its total liabilities; 
and (b) maintain assets within the state in an amount equal to a 
specified percentage of the aggregate amount of liabilities of the 
foreign bank payable at or through all of its agencies or branches 
within the state.  The deposits of State Branches may not necessarily 
be insured by the FDIC.  In addition, there may be less publicly 
available information about a U.S. branch of a foreign bank than 
about a U.S. bank.



COMMERCIAL PAPER.  Commercial paper consists of short-term (usually 
from 1 to 270 days) unsecured promissory notes issued by corporations 
in order to finance their current operations.  A variable amount 
master demand note (which is a type of commercial paper) represents a 
direct borrowing arrangement involving periodically fluctuating rates 
of interest under a letter agreement between a commercial paper 
issuer and an institutional lender, such as one of the Underlying 
Smith Barney Funds, pursuant to which the lender may determine to 
invest varying amounts.  Transfer of such notes is usually restricted 
by the issuer, and there is no secondary trading market for such 
notes.

REPURCHASE AGREEMENTS.  The Portfolios and the Underlying Smith 
Barney Funds may purchase securities and concurrently enter into 
repurchase agreements with certain member banks which are the issuers 
of instruments acceptable for purchase by the Portfolio or the Fund, 
as the case may be, and with certain dealers on the Federal Reserve 
Bank of New York's list of reporting dealers.  Repurchase agreements 
are contracts under which the buyer of a security simultaneously 
commits to resell the security to the seller at an agreed-upon price 
and date.  Under each repurchase agreement, the selling institution 
will be required to maintain the value of the securities subject to 
the repurchase agreement at not less than their repurchase price.  
Repurchase agreements could involve certain risks in the event of 
default or insolvency of the other party, including possible delays 
or restrictions upon a Portfolio's or a Fund's ability to dispose of 
the underlying securities, the risk of a possible decline in the 
value of the underlying securities during the period in which the 
Portfolio or Fund seeks to assert its rights to them, the risk of 
incurring expenses associated with asserting those rights and the 
risk of losing all or part of the income from the repurchase 
agreement.

WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. To secure 
an advantageous price or yield, certain of the Underlying Smith 
Barney Funds may purchase certain securities on a when-issued basis 
or purchase or sell securities for delayed delivery.  Delivery of the 
securities in such cases occurs beyond the normal settlement periods, 
but no payment or delivery is made by a Fund prior to the reciprocal 
delivery or payment by the other party to the transaction.  In 
entering into a when-issued or delayed-delivery transaction, an 
Underlying Smith Barney Fund will rely on the other party to 
consummate the transaction and may be disadvantaged if the other 
party fails to do so.

U.S. government securities normally are subject to changes in value 
based upon changes, real or anticipated, in the level of interest 
rates and the public's perception of the creditworthiness of the 
issuers.  In general, U.S. government securities tend to appreciate 
when interest rates decline and depreciate when interest rates rise.  
Purchasing these securities on a when-issued or delayed-delivery 
basis, therefore, can involve the risk that the yields available in 
the market when the delivery takes place may actually be higher than 
those obtained in the transaction itself.  Similarly, the sale of 
U.S. government securities for delayed delivery can involve the risk 
that the prices available in the market when the delivery is made may 
actually be higher than those obtained in the transaction itself.

In the case of the purchase by an Underlying Smith Barney Fund of 
securities on a when-issued or delayed-delivery basis, a segregated 
account in the name of the Fund consisting of cash or liquid debt 
securities equal to the amount of the when-issued or delayed-delivery 
commitments will be established at the Fund's custodian.  For the 
purpose of determining the adequacy of the securities in the 
accounts, the deposited securities will be valued at market or fair 
value.  If the market or fair value of the securities declines, 
additional cash or securities will be placed in the account daily so 
that the value of the account will equal the amount of such 
commitments by the Fund involved.  On the settlement date, a Fund 
will meet its obligations from then-available cash flow, the sale of 
securities held in the segregated account, the sale of other 
securities or, although it would not normally expect to do so, from 
the sale of the securities purchased on a when-issued or delayed-
delivery basis (which may have a value greater or less than the 
Fund's payment obligations).

LENDING OF PORTFOLIO SECURITIES.  Certain of the Underlying Smith 
Barney Funds have the ability to lend portfolio securities to 
brokers, dealers and other financial organizations.  A Fund will not 
lend portfolio securities to Smith Barney unless it has applied for 
and received specific authority to do so from the SEC.  Loans of 
portfolio securities will be collateralized by cash, letters of 
credit or U.S. government securities which are maintained at all 
times in an amount at least equal to the current market value of the 
loaned securities.  From time to time, an Underlying Smith Barney 
Fund may pay a part of the interest earned from the investment of 
collateral received for securities loaned to the borrower and/or a 
third party which is unaffiliated with the Fund and is acting as a 
"finder."

By lending its securities, an Underlying Smith Barney Fund can 
increase its income by continuing to receive interest on the loaned 
securities as well as by either investing the cash collateral in 
short-term instruments or obtaining yield in the form of interest 
paid by the borrower when U.S. government securities are used as 
collateral.  A Fund will comply with the following conditions 
whenever its portfolio securities are loaned: (a) the Fund must 
receive at least 100% cash collateral or equivalent securities from 
the borrower; (b) the borrower must increase such collateral whenever 
the market value of the securities loaned rises above the level of 
such collateral; (c) the Fund must be able to terminate the loan at 
any time; (d) the Fund must receive reasonable interest on the loan, 
as well as any dividends, interest or other distributions on the 
loaned securities, and any increase in market value; (e) the Fund may 
pay only reasonable custodian fees in connection with the loan; and 
(f) voting rights on the loaned securities may pass to the borrower; 
provided, however, that if a material event adversely affecting the 
investment in the loaned securities occurs, the Fund's trustees or 
directors, as the case may be, must terminate the loan and regain the 
right to vote the securities.  The risks in lending portfolio 
securities, as with other extensions of secured credit, consist of a 
possible delay 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 
each Underlying Smith Barney Fund's investment adviser to be of good 
standing and will not be made unless, in the judgment of the adviser, 
the consideration to be earned from such loans would justify the 
risk.

OPTIONS ON SECURITIES.  Certain of the Underlying Smith Barney Funds 
may engage in transactions in options on securities, which, depending 
on the Fund, may include the writing of covered put options and 
covered call options, the purchase of put and call options and the 
entry into closing transactions.

The principal reason for writing covered call options on securities 
is to attempt to realize, through the receipt of premiums, a greater 
return than would be realized on the securities alone.  Certain 
Underlying Smith Barney Funds, however, may engage in option 
transactions only to hedge against adverse price movements in the 
securities that it holds or may wish to purchase and the currencies 
in which certain portfolio securities may be denominated.  In return 
for a premium, the writer of a covered call option forfeits the right 
to any appreciation in the value of the underlying security above the 
strike price for the life of the option (or until a closing purchase 
transaction can be effected).  Nevertheless, the call writer retains 
the risk of a decline in the price of the underlying security.  
Similarly, the principal reason for writing covered put options is to 
realize income in the form of premiums.  The writer of a covered put 
option accepts the risk of a decline in the price of the underlying 
security.  The size of the premiums that a Fund may receive may be 
adversely affected as new or existing institutions, including other 
investment companies, engage in or increase their option-writing 
activities.

Options written by an Underlying Smith Barney Fund normally will have 
expiration dates between one and nine months from the date written.  
The exercise price of the options may be below, equal to or above the 
market values of the underlying securities at the times the options 
are written.  In the case of call options, these exercise prices are 
referred to as "in-the-money," "at-the-money" and "out-of-the-money," 
respectively.  An Underlying Smith Barney Fund with option-writing 
authority may write (a) in-the-money call options when its investment 
adviser expects that the price of the underlying security will remain 
flat or decline moderately during the option period, (b) at-the-money 
call options when its adviser expects that the price of the 
underlying security will remain flat or advance moderately during the 
option period and (c) out-of-the-money call options when its adviser 
expects that the price of the underlying security may increase but 
not above a price equal to the sum of the exercise price plus the 
premiums received from writing the call option.  In any of the 
preceding situations, if the market price of the underlying security 
declines and the security is sold at this lower price, the amount of 
any realized loss will be offset wholly or in part by the premium 
received.  Out-of-the-money, at-the-money and in-the-money put 
options (the reverse of call options as to the relation of exercise 
price to market price) may be utilized in the same market 
environments that such call options are used in equivalent 
transactions.

So long as the obligation of an Underlying Smith Barney Fund as the 
writer of an option continues, the Fund may be assigned an exercise 
notice by the broker-dealer through which the option was sold, 
requiring the Fund to deliver, in the case of a call, or take 
delivery of, in the case of a put, the underlying security against 
payment of the exercise price.  This obligation terminates when the 
option expires or the Fund effects a closing purchase transaction.  A 
Fund can no longer effect a closing purchase transaction with respect 
to an option once it has been assigned an exercise notice.  To secure 
its obligation to deliver the underlying security when it writes a 
call option, or to pay for the underlying security when it writes a 
put option, an Underlying Smith Barney Fund will be required to 
deposit in escrow the underlying security or other assets in 
accordance with the rules of the Options Clearing Corporation (the 
"Clearing Corporation") or similar foreign clearing corporation and 
of the securities exchange on which the option is written.

Certain Underlying Smith Barney Funds may purchase and sell put, call 
and other types of option securities that are traded on domestic or 
foreign exchanges or the over-the-counter market including, but not 
limited to, "spread" options, "knock-out" options, "knock-in" options 
and "average rate" or "look-back" options. "Spread" options are 
dependent upon the difference between the price of two securities or 
futures contracts, "knock-out" options are canceled if the price of 
the underlying asset reaches a trigger level prior to expiration, 
"knock-in" options only have value if the price of the underlying 
asset reaches a trigger level and, "average rate" or "look-back" 
options are options where, at expiration, the option's strike price 
is set based on either the average, maximum or minimum price of the 
asset over the period of the option.

An option position may be closed out only where there exists a 
secondary market for an option of the same series on a recognized 
securities exchange or in the over-the-counter market.  Certain 
Underlying Smith Barney Funds with option-writing authority may write 
options on U.S. or foreign exchanges and in the over-the-counter 
market.

An Underlying Smith Barney Fund may realize a profit or loss upon 
entering into a closing transaction.  In cases in which a Fund has 
written an option, it will realize a profit if the cost of the 
closing purchase transaction is less than the premium received upon 
writing the original option and will incur a loss if the cost of the 
closing purchase transaction exceeds the premium received upon 
writing the original option.  Similarly, when a Fund has purchased an 
option and engages in a closing sale transaction, whether the Fund 
realizes a profit or loss will depend upon whether the amount 
received in the closing sale transaction is more or less than the 
premium that the Fund initially paid for the original option plus the 
related transaction costs.

Although an Underlying Smith Barney Fund generally will purchase or 
write only those options for which its adviser believes there is an 
active secondary market so as to facilitate closing transactions, 
there is no assurance that sufficient trading interest to create a 
liquid secondary market on a securities exchange will exist for any 
particular option or at any particular time, and for some options no 
such secondary market may exist.  A liquid secondary market in an 
option may cease to exist for a variety of reasons.  In the past, for 
example, higher than anticipated trading activity or order flow, or 
other unforeseen events, have at times rendered inadequate certain of 
the facilities of the Clearing Corporation and U.S. and foreign 
securities exchanges and resulted in the institution of special 
procedures, such as trading rotations, restrictions on certain types 
of orders or trading halts or suspensions in one or more options.  
There can be no assurance that similar events, or events that may 
otherwise interfere with the timely execution of customers' orders, 
will not recur.  In such event, it might not be possible to effect 
closing transactions in particular options.  If as a covered call 
option writer a Fund is unable to effect closing purchase transaction 
in a secondary market, it will not be able to sell the underlying 
security until the option expires or it delivers the underlying 
security upon exercise.

Securities exchanges generally have established limitations governing 
the maximum number of calls and puts of each class which may be held 
or written, or exercised within certain time periods, by an investor 
or group of investors acting in concert (regardless of whether the 
options are written on the same or different securities exchanges or 
are held, written or exercised in one or more accounts or through one 
or more brokers).  It is possible that the Underlying Smith Barney 
Funds with authority to engage in options transactions and other 
clients of their respective advisers and certain of their affiliates 
may be considered to be such a group.  A securities exchange may 
order the liquidation of positions found to be in violation of these 
limits and it may impose certain other sanctions.

In the case of options written by an Underlying Smith Barney Fund 
that are deemed covered by virtue of the Fund's holding convertible 
or exchangeable preferred stock or debt securities, the time required 
to convert or exchange and obtain physical delivery of the underlying 
common stocks with respect to which the Fund has written options may 
exceed the time within which the Fund must make delivery in 
accordance with an exercise notice.  In these instances, an 
Underlying Smith Barney Fund may purchase or borrow temporarily the 
underlying securities for purposes of physical delivery.  By so 
doing, the Fund will not bear any market risk because the Fund will 
have the absolute right to receive from the issuer of the underlying 
security an equal number of shares to replace the borrowed stock, but 
the Fund may incur additional transaction costs or interest expenses 
in connection with any such purchase or borrowing.

Additional risks exist with respect to certain of the U.S. government 
securities for which an Underlying Smith Barney Fund may write 
covered call options.  If a Fund writes covered call options on 
mortgage-backed securities, the securities that it holds as cover 
may, because of scheduled amortization or unscheduled prepayments, 
cease to be sufficient cover.  The Fund will compensate for the 
decline in the value of the cover by purchasing an appropriate 
additional amount of those securities.

STOCK INDEX OPTIONS.  Certain of the Underlying Smith Barney Funds 
may purchase and write put and call options on U.S. stock indexes 
listed on U.S. exchanges for the purpose of hedging its portfolio.  A 
stock index fluctuates with changes in the market values of the 
stocks included in the index.  Some stock index options are based on 
a broad market index such as the New York Stock Exchange Composite 
Index or a narrower market index such as the Standard & Poor's 100.  
Indexes also are based on an industry or market segment such as the 
American Stock Exchange Oil and Gas Index or the Computer and 
Business Equipment Index.

Options on stock indexes are similar to options on stock except that 
(a) the expiration cycles of stock index options are monthly, while 
those of stock options currently are quarterly, and (b) the delivery 
requirements are different.  Instead of giving the right to take or 
make delivery of stock at a specified price, an option on a stock 
index gives the holder the right to receive a cash "exercise 
settlement amount" equal to (a) the amount, if any, by which the 
fixed exercise price of the option exceeds (in the case of a put) or 
is less than (in the case of a call) the closing value of the 
underlying index on the date of exercise, multiplied by (b) a fixed 
"index multiplier." Receipt of this cash amount will depend upon the 
closing level of the stock index upon which the option is based being 
greater than, in the case of a call, or less than, in the case of a 
put, the exercise price of the option.  The amount of cash received 
will be equal to such difference between the closing price of the 
index and the exercise price of the option expressed in dollars times 
a specified multiple.  The writer of the option is obligated, in 
return for the premium received, to make delivery of this amount.  
The writer may offset its position in stock index options prior to 
expiration by entering into a closing transaction on an exchange or 
it may let the options expire unexercised.

The effectiveness of purchasing or writing stock index options as a 
hedging technique will depend upon the extent to which price 
movements in the portion of a securities portfolio being hedged 
correlate with price movements of the stock index selected.  Because 
the value of an index option depends upon movements in the level of 
the index rather than the price of a particular stock, whether a Fund 
will realize a gain or loss from the purchase or writing of options 
on an index depends upon movements in the level of stock prices in 
the stock market generally or, in the case of certain indexes, in an 
industry or market segment, rather than movements in the price of a 
particular stock.  Accordingly, successful use by a Fund of options 
on stock indexes will be subject to its adviser's ability to predict 
correctly movements in the direction of the stock market generally or 
of a particular industry.  This requires different skills and 
techniques than predicting changes in the prices of individual 
stocks.

An Underlying Smith Barney Fund will engage in stock index options 
transactions only when determined by its adviser to be consistent 
with the Fund's efforts to control risk.  There can be no assurance 
that such judgment will be accurate or that the use of these 
portfolio strategies will be successful.  When a Fund writes an 
option on a stock index, the Fund will establish a segregated account 
with its custodian in an amount equal to the market value of the 
option and will maintain the account while the option is open.

MORTGAGE-RELATED SECURITIES.  The average maturity of pass-through 
pools of mortgage related securities varies with the maturities of 
the underlying mortgage instruments.  In addition, a pool's stated 
maturity may be shortened by unscheduled payments on the underlying 
mortgages.  Factors affecting mortgage prepayments include the level 
of interest rates, general economic and social conditions, the 
location of the mortgaged property and age of the mortgage.  Because 
prepayment rates of individual pools vary widely, it is not possible 
to accurately predict the average life of a particular pool.  Common 
practice is to assume that prepayments will result in an average life 
ranging from 2 to 10 years for pools of fixed-rate 30-year mortgages.  
Pools of mortgages with other maturities or different characteristics 
will have varying average life assumptions.

Mortgage-related securities may be classified as private, 
governmental or government-related, depending on the issuer or 
guarantor.  Private mortgage-related securities represent pass-
through pools consisting principally of conventional residential 
mortgage loans created by non-governmental issuers, such as 
commercial banks, savings and loan associations and private mortgage 
insurance companies.  Governmental mortgage-related securities are 
backed up by the full faith and credit of the U.S. Government. GNMA, 
the principal guarantor of such securities, is a wholly owned U.S. 
government corporation within the Department of Housing and Urban 
Development.  Government-related mortgage-related securities are not 
backed by the full faith and credit of the U.S. Government.  Issuers 
of such securities include FNMA and FHLMC.  FNMA is a government-
sponsored corporation owned entirely by private stockholders, which 
is subject to general regulation by the Secretary of Housing and 
Urban Development.  Pass-through securities issued by FNMA are 
guaranteed as to timely payment of principal and interest by FNMA.  
FHLMC is a corporate instrumentality of the U.S., the stock of which 
is owned by Federal Home Loan Banks.  Participation certificates 
representing interests in mortgages from FHLMC's national portfolio 
are guaranteed as to the timely payment of interest and ultimate 
collection of principal by FHLMC.

Private U.S. governmental or government-related entities create 
mortgage loan pools offering pass-through investments in addition to 
those described above.  The mortgages underlying these securities may 
be alternative mortgage instruments, that is, mortgage instruments 
whose principal or interest payments may vary or whose terms to 
maturity may be shorter than previously customary.  As new types of 
mortgage-related securities are developed and offered to investors, 
certain of the Underlying Smith Barney Funds, consistent with their 
investment objective and policies, may consider making investments in 
such new types of securities.

CURRENCY TRANSACTIONS.  Certain of the Underlying Smith Barney Funds 
may enter into forward currency exchange transactions.  A forward 
currency contract is an obligation to purchase or sell a currency 
against another currency at a future date and price as agreed upon by 
the parties.  An Underlying Smith Barney Fund that enters into a 
forward currency contract may either accept or make delivery of the 
currency at the maturity of the forward contract or, prior to 
maturity, enter into a closing transaction involving the purchase or 
sale of an offsetting contract.  A Fund may engage in forward 
currency transactions in anticipation of, or to protect itself 
against, fluctuations in exchange rates.  A Fund might sell a 
particular foreign currency forward, for example, when it holds bonds 
denominated in that currency but anticipates, and seeks to be 
protected against, decline in the currency against the U.S. dollar.  
Similarly, a Fund may sell the U.S. dollar forward when it holds 
bonds denominated in U.S. dollars but anticipates, and seeks to be 
protected against, a decline in the U.S. dollar relative to other 
currencies.  Further, a Fund may purchase a currency forward to "lock 
in" the price of securities denominated in that currency which it 
anticipates purchasing.

Transaction hedging is the purchase or sale of forward currency 
contracts with respect to a specific receivable or payable of the 
Fund generally arising in connection with the purchase or sale of its 
securities.  Position hedging, generally, is the sale of forward 
currency contracts with respect to portfolio security positions 
denominated or quoted in the currency.  A Fund may not position hedge 
with respect to a particular currency to an extent greater than the 
aggregate market value at any time of the security or securities held 
in its portfolio denominated or quoted in or currently convertible 
(such as through exercise of an option or consummation of a forward 
currency contract) into that particular currency, except that certain 
Underlying Smith Barney Funds may utilize forward currency contracts 
denominated in the European Currency Unit to hedge portfolio security 
positions when a security or securities are denominated in currencies 
of member countries in the European Monetary System.  If a Fund 
enters into a transaction hedging or position hedging transaction, it 
will cover the transaction through one or more of the following 
methods: (a) ownership of the underlying currency or an option to 
purchase such currency; (b) ownership of an option to enter into an 
offsetting forward currency contract; (c) entering into a forward 
contract to purchase currency being sold or to sell currency being 
purchased, provided that such covering contract is itself covered by 
any one of these methods unless the covering contract closes out the 
first contract; or (d) depositing into a segregated account with the 
custodian or a sub-custodian of the Fund cash or readily marketable 
securities in an amount equal to the value of the Fund's total assets 
committed to the consummation of the forward currency contract and 
not otherwise covered.  In the case of transaction hedging, any 
securities placed in an account must be liquid debt securities.  In 
any case, if the value of the securities placed in the segregated 
account declines, additional cash or securities will be placed in the 
account so that the value of the account will equal the above amount.  
Hedging transactions may be made from any foreign currency into 
dollars or into other appropriate currencies.

At or before the maturity of a forward contract, a Fund either may 
sell a portfolio security and make delivery of the currency, or 
retain the security and offset its contractual obligation to deliver 
the currency by purchasing a second contract pursuant to which the 
relevant Fund will obtain, on the same maturity date, the same amount 
of the currency which it is obligated to deliver.  If a Fund retains 
the portfolio security and engages in an offsetting transaction, the 
Fund, at the time of execution of the offsetting transaction, will 
incur a gain or loss to the extent movement has occurred in forward 
contract prices.  Should forward prices decline during the period 
between a Fund's entering into a forward contract for the sale of a 
currency and the date that it enters into an offsetting contract for 
the purchase of the currency, the Fund will realize a gain to the 
extent that the price of the currency it has agreed to sell exceeds 
the price of the currency it has agreed to purchase.  Should forward 
prices increase, the Fund will suffer a loss to the extent the price 
of the currency it has agreed to purchase exceeds the price of the 
currency it has agreed to sell.

The cost to a Fund of engaging in currency transactions varies with 
factors such as the currency involved, the length of the contract 
period and the market conditions then prevailing.  Because 
transactions in currency exchange are usually conducted on a 
principal basis, no fees or commissions are involved.  The use of 
forward currency contracts does not eliminate fluctuations in the 
underlying prices of the securities, but it does establish a rate of 
exchange that can be achieved in the future.  In addition, although 
forward currency contracts limit the risk of loss due to a decline in 
the value of the hedged currency, at the same time, they limit any 
potential gain that might result should the value of the currency 
increase.  If a devaluation is generally anticipated a Fund may not 
be able to contract to sell the currency at a price above the 
devaluation level they anticipate.

FOREIGN CURRENCY OPTIONS.  Certain Underlying Smith Barney Funds may 
purchase or write put and call options on foreign currencies for the 
purpose of hedging against changes in future currency exchange rates.  
Foreign currency options generally have three, six and nine month 
expiration cycles.  Put options convey the right to sell the 
underlying currency at a price which is anticipated to be higher than 
the spot price of the currency at the time the option expires.  Call 
options convey the right to buy the underlying currency at a price 
which is expected to be lower than the spot price of the currency at 
the time that the option expires.

An Underlying Smith Barney Fund may use foreign currency options 
under the same circumstances that it could use forward currency 
exchange transactions.  A decline in the dollar value of a foreign 
currency in which a Fund's securities are denominated, for example, 
will reduce the dollar value of the securities, even if their value 
in the foreign currency remains constant.  In order to protect 
against such diminutions in the value of securities that it holds, 
the Fund may purchase put options on the foreign currency.  If the 
value of the currency does decline, the Fund will have the right to 
sell the currency for a fixed amount in dollars and will thereby 
offset, in whole or in part, the adverse effect on its securities 
that otherwise would have resulted.  Conversely, if a rise in the 
dollar value of a currency in which securities to be acquired are 
denominated is projected, thereby potentially increasing the cost of 
the securities, the Fund may purchase call options on the particular 
currency.  The purchase of these options could offset, at least 
partially, the effects of the adverse movements in exchange rates.  
The benefit to the Fund derived from purchases of foreign currency 
options, like the benefit derived from other types of options, will 
be reduced by the amount of the premium and related transaction 
costs.  In addition, if currency exchange rates do not move in the 
direction or to the extent anticipated, the Fund could sustain losses 
on transactions in foreign currency options that would require it to 
forego a portion or all of the benefits of advantageous changes in 
the rates.

FOREIGN GOVERNMENT SECURITIES.  Among the foreign government 
securities in which certain Underlying Smith Barney Funds may invest 
are those issued by countries with developing economies, which are 
countries in the initial stages of their industrialization cycles.  
Investing in securities of countries with developing economies 
involves exposure to economic structures that are generally less 
diverse and less mature, and to political systems that can be 
expected to have less stability, than those of developed countries.  
The markets of countries with developing economies historically have 
been more volatile than markets of the more mature economies of 
developed countries, but often have provided higher rates of return 
to investors.

RATINGS AS INVESTMENT CRITERIA.  In general, the ratings of 
nationally recognized statistical rating organization ("NRSROs") 
represent the opinions of these agencies as to the quality of 
securities that they rate.  Such ratings, however, are relative and 
subjective, and are not absolute standards of quality and do not 
evaluate the market value risk of the securities.  These ratings will 
be used the by Underlying Smith Barney Funds as initial criteria for 
the selection of portfolio securities, but the Funds also will rely 
upon the independent advice of their respective advisers to evaluate 
potential investments.  Among the factors that will be considered are 
the long-term ability of the issuer to pay principal and interest and 
general economic trends.  The Appendix to this Statement of 
Additional Information contains further information concerning the 
rating categories of NRSROs and their significance.

Subsequent to its purchase by a Fund, an issue of securities may 
cease to be rated or its rating may be reduced below the minimum 
required for purchase by the Fund.  In addition, it is possible that 
an NRSRO might not change its rating of a particular issue to reflect 
subsequent events.  None of these events will require sale of such 
securities by a Fund, but the Fund's adviser will consider such 
events in its determination of whether the Fund should continue to 
hold the securities.  In addition, to the extent that the ratings 
change as a result of changes in such organizations or their rating 
systems, or due to a corporate reorganization, a Fund will attempt to 
use comparable ratings as standards for its investments in accordance 
with its investment objective and policies.

FUTURES CONTRACTS.  The purpose of the acquisition or sale of a 
futures contract by a Fund is to mitigate the effects of fluctuations 
in interest rates or currency or market values, depending on the type 
of contract, on securities or their values without actually buying or 
selling the securities.  Of course, because the value of portfolio 
securities will far exceed the value of the futures contracts sold by 
a Fund, an increase in the value of the futures contracts could only 
mitigate -- but not totally offset -- the decline in the value of the 
Fund.

Certain of the Underlying Smith Barney Funds may enter into futures 
contracts or related options on futures contracts that are traded on 
a domestic or foreign exchange or in the over-the-counter market.  
Generally, these investments may be made solely for the purpose of 
hedging against changes in the value of its portfolio securities due 
to anticipated changes in interest rates, currency values and/or 
market conditions when the transactions are economically appropriate 
to the reduction of risks inherent in the management of the Fund and 
not for purposes of speculation.  However, the International Equity 
Portfolio and the International Balanced Portfolio may also enter 
into futures transactions for non-hedging purposes, subject to 
applicable law.  The ability of the Funds to trade in futures 
contracts may be limited by the requirements of the Internal Revenue 
Code of 1986 as amended (the "Code"), applicable to a regulated 
investment company.

No consideration is paid or received by a Fund upon entering into a 
futures contract.  Initially, a Fund will be required to deposit with 
its custodian an amount of cash or cash equivalents equal to 
approximately 1% to 10% of the contract amount (this amount is 
subject to change by the board of trade on which the contract is 
traded and members of such board of trade may charge a higher 
amount).  This amount, known as initial margin, is in the nature of a 
performance bond or good faith deposit on the contract and is 
returned to a Fund upon termination of the futures contract, assuming 
that all contractual obligations have been satisfied.  Subsequent 
payments, known as variation margin, to and from the broker, will be 
made daily as the price of the securities, currency or index 
underlying the futures contract fluctuates, making the long and short 
positions in the futures contract more or less valuable, a process 
known as "marking-to-market." At any time prior to expiration of a 
futures contract, a Fund may elect to close the position by taking an 
opposite position, which will operate to terminate the Fund's 
existing position in the contract.

Several risks are associated with the use of futures contracts as a 
hedging device.  Successful use of futures contracts by a Fund is 
subject to the ability of its adviser to predict correctly movements 
in interest rates, stock or bond indices or foreign currency values.  
These predictions involve skills and techniques that may be different 
from those involved in the management of the portfolio being hedged.  
In addition, there can be no assurance that there will be a 
correlation between movements in the price of the underlying 
securities, currency or index and movements in the price of the 
securities which are the subject of the hedge.  A decision of 
whether, when and how to hedge involves the exercise of skill and 
judgment, and even a well-conceived hedge may be unsuccessful to some 
degree because of market behavior or unexpected trends in interest 
rates or currency values.

There is no assurance that an active market will exist for future 
contracts at any particular time.  Most futures exchanges and boards 
of trade limit the amount of fluctuation permitted in futures 
contract prices during a single trading day.  Once the daily limit 
has been reached in a particular contract, no trades may be made that 
day at a price beyond that limit.  It is possible that futures 
contract prices could move to the daily limit for several consecutive 
trading days with little or no trading, thereby preventing prompt 
liquidation of futures positions and subjecting some futures traders 
to substantial losses.  In such event, and in the event of adverse 
price movements, a Fund would be required to make daily cash payments 
of variation margin, and an increase in the value of the portion of 
the portfolio being hedged, if any, may partially or completely 
offset losses on the futures contract.  As described above, however, 
there is no guarantee that the price of the securities being hedged 
will, in fact, correlate with the price movements in a futures 
contract and thus provide an offset to losses on the futures 
contract.

If a Fund has hedged against the possibility of a change in interest 
rates or currency or market values adversely affecting the value of 
securities held in its portfolio and rates or currency or market 
values move in a direction opposite to that which the Fund has 
anticipated, the Fund will lose part or all of the benefit of the 
increased value of securities which it has hedged because it will 
have offsetting losses in its futures positions.  In addition, in 
such situations, if the Fund had insufficient cash, it may have to 
sell securities to meet daily variation margin requirements at a time 
when it may be disadvantageous to do so.  These sales of securities 
may, but will not necessarily, be at increased prices which reflect 
the change in interest rates or currency values, as the case may be.

OPTIONS ON FUTURES CONTRACTS.  An option on an interest rate futures 
contract, as contrasted with the direct investment in such a 
contract, gives the purchaser the right, in return for the premium 
paid, to assume a position in the underlying interest rate futures 
contract at a specified exercise price at any time prior to the 
expiration date of the option.  An option on a foreign currency 
futures contract, as contrasted with the direct investment in such a 
contract, gives the purchaser the right, but not the obligation, to 
assume a long or short position in the relevant underlying foreign 
currency futures contract at a predetermined exercise price at a time 
in the future.  Upon exercise of an option, the delivery of the 
futures position by the writer of the option to the holder of the 
option will be accompanied by delivery of the accumulated balance in 
the writer's futures margin account, which represents the amount by 
which the market price of the futures contract exceeds, in the case 
of a call, or is less than, in the case of a put, the exercise price 
of the option on the futures contract.  The potential for loss 
related to the purchase of an option on futures contracts is limited 
to the premium paid for the option (plus transaction costs).  Because 
the value of the option is fixed at the point of sale, there are no 
daily cash payments to reflect changes in the value of the underlying 
contract; however, the value of the option does change daily and that 
change would be reflected in the net asset value of a Fund investing 
in the options.

Several risks are associated with options on futures contracts.  The 
ability to establish and close out positions on such options will be 
subject to the existence of a liquid market.  In addition, the 
purchase of put or call options on interest rate and foreign currency 
futures will be based upon predictions by a Fund's adviser as to 
anticipated trends in interest rates and currency values, as the case 
may be, which could prove to be incorrect.  Even if the expectations 
of an adviser are correct, there may be an imperfect correlation 
between the change in the value of the options and of the portfolio 
securities in the currencies being hedged.

FOREIGN INVESTMENTS.  Investors should recognize that investing in 
foreign companies involves certain considerations which are not 
typically associated with investing in U.S. issuers.  Since certain 
Underlying Smith Barney Funds will be investing in securities 
denominated in currencies other than the U.S. dollar, and since 
certain Funds may temporarily hold funds in bank deposits or other 
money market investments denominated in foreign currencies, the Funds 
may be affected favorably or unfavorably by exchange control 
regulations or changes in the exchange rate between such currencies 
and the dollar.  A change in the value of a foreign currency relative 
to the U.S. dollar will result in a corresponding change in the 
dollar value of a Fund's assets denominated in that foreign currency.  
Changes in foreign currency exchange rates may also affect the value 
of dividends and interest earned, gains and losses realized on the 
sale of securities and net investment income and gain, if any, to be 
distributed to shareholders by the Fund.

The rate of exchange between the U.S. dollar and other currencies is 
determined by the forces of supply and demand in the foreign exchange 
markets.  Changes in the exchange rate may result over time from the 
interaction of many factors directly or indirectly affecting economic 
conditions and political developments in other countries.  Of 
particular importance are rates of inflation, interest rate levels, 
the balance of payments and the extent of government surpluses or 
deficits in the U.S. and the particular foreign country, all of which 
are in turn sensitive to the monetary, fiscal and trade policies 
pursued by the governments of the U.S. and other foreign countries 
important to international trade and finance.  Governmental 
intervention may also play a significant role.  National governments 
rarely voluntarily allow their currencies to float freely in response 
to economic forces.  Sovereign governments use a variety of 
techniques, such as intervention by a country's central bank or 
imposition of regulatory controls or taxes, to affect the exchange 
rates of their currencies.

Securities held by an Underlying Smith Barney Fund may not be 
registered with, nor the issuers thereof be subject to reporting 
requirements of, the SEC.  Accordingly, there may be less publicly 
available information about the securities and about the foreign 
company or government issuing them than is available about a domestic 
company or government entity.  Foreign issuers are generally not 
subject to uniform financial reporting standards, practices and 
requirements comparable to those applicable to U.S. issuers.  In 
addition, with respect to some foreign countries, there is the 
possibility of expropriation or confiscatory taxation, limitations on 
the removal of funds or other assets of the Fund, political or social 
instability, or domestic developments which could affect U.S. 
investments in those countries.  Moreover, individual foreign 
economies may differ favorably or unfavorably from the U.S. economy 
in such respects as growth of gross national product, rate of 
inflation, capital reinvestment, resource self-sufficiency and 
balance of payments positions.  Certain Underlying Smith Barney Funds 
may invest in securities of foreign governments (or agencies or 
instrumentalities thereof), and many, if not all, of the foregoing 
considerations apply to such investments as well.

Securities of some foreign companies are less liquid and their prices 
are more volatile than securities of comparable domestic companies.  
Certain foreign countries are known to experience long delays between 
the trade and settlement dates of securities purchased or sold.

The interest payable on a Fund's foreign securities may be subject to 
foreign withholding taxes, and while investors may be able to claim 
some credit or deductions for such taxes with respect to their 
allocated shares of such foreign tax payments, the general effect of 
these taxes will be to reduce the Fund's income.  Additionally, the 
operating expenses of a Fund can be expected to be higher than that 
of an investment company investing exclusively in the U.S. 
securities, since the expenses of the Fund, such as custodial costs, 
valuation costs and communication costs, as well as the rate of the 
investment advisory fees, though similar to such expenses of some 
other international funds, are higher than those costs incurred by 
other investment companies.

FOREIGN COMMODITY EXCHANGES.  Unlike trading on domestic commodity 
exchanges, trading on foreign commodity exchanges is not regulated by 
the Commodity Futures Trading Commission and may be subject to 
greater risks than trading on domestic exchanges.  For example, some 
foreign exchanges may be principal markets so that no common clearing 
facility exists and a trader may look only to the broker for 
performance of the contract.  In addition, unless an Underlying Smith 
Barney Fund trading on a foreign commodity exchange hedges against 
fluctuations in the exchange rate between the U.S. dollar and the 
currencies in which trading is done on foreign exchanges, any profits 
that the Fund might realize in trading could be eliminated by adverse 
changes in the exchange rate, or the Fund could incur losses as a 
result of those changes.

SHORT SALES.  Certain of the Underlying Smith Barney Funds may from 
time to time sell securities short.  A short sale is a transaction in 
which the Fund sells securities that it does not own (but has 
borrowed) in anticipation of a decline in the market price of the 
securities.

When a Fund makes a short sale, the proceeds it receives from the 
sale are retained by a broker until the Fund replaces the borrowed 
securities.  To deliver the securities to the buyer, the Fund must 
arrange through a broker to borrow the securities and, in so doing, 
the Fund becomes obligated to replace the securities borrowed at 
their market price at the time of replacement, whatever that price 
may be.  The Fund may have to pay a premium to borrow the securities 
and must pay any dividends or interest payable on the securities 
until they are replaced.

A Fund's obligation to replace the securities borrowed in connection 
with a short sale will be secured by collateral deposited with the 
broker that consists of cash or U.S. government securities.  In 
addition, the Fund will place in a segregated account with its 
custodian an amount of cash or U.S. government securities equal to 
the difference, if any, between (a) the market value of the 
securities sold at the time they were sold short and (b) any cash or 
U.S. government securities deposited as collateral with the broker in 
connection with the short sale (not including the proceeds of the 
short sale).  Until it replaces the borrowed securities, the Fund 
will maintain the segregated account daily at a level so that the 
amount deposited in the account plus the amount deposited with the 
broker (not including the proceeds from the short sale) (a) will 
equal the current market value of the securities sold short and (b) 
will not be less than the market value of the securities at the time 
they were sold short.

SHORT SALES AGAINST THE BOX.  Certain of the Underlying Smith Barney 
Funds may enter into a short sale of common stock such that when the 
short position is open the Fund involved owns an equal amount of 
preferred stocks or debt securities, convertible or exchangeable, 
without payment of further consideration, into an equal number of 
shares of the common stock sold short.  This kind of short sale, 
which is described as "against the box," will be entered into by a 
Fund for the purpose of receiving a portion of the interest earned by 
the executing broker from the proceeds of the sale.  The proceeds of 
the sale will be held by the broker until the settlement date when 
the Fund delivers the convertible securities to close out its short 
position.  Although prior to delivery a Fund will have to pay an 
amount equal to any dividends paid on the common stock sold short, 
the Fund will receive the dividends from the preferred stock or 
interest from the debt securities convertible into the stock sold 
short, plus a portion of the interest earned from the proceeds of the 
short sale.  The Funds will deposit, in a segregated account with 
their custodian, convertible preferred stock or convertible debt 
securities in connection with short sales against the box.

SWAP AGREEMENTS.  Among the hedging transactions into which certain 
Underlying Smith Barney Funds may enter are interest rate swaps and 
the purchase or sale of interest rate caps and floors.  Interest rate 
swaps involve the exchange by a Fund with another party of their 
respective commitments to pay or receive interest, e.g., an exchange 
of floating rate payments for fixed rate payments.  The purchase of 
an interest rate cap entitles the purchaser, to the extent that a 
specified index exceeds a predetermined interest rate, to receive 
payments of interest on a notional principal amount from the party 
selling such interest rate cap.  The purchase of an interest rate 
floor entitles the purchaser, to the extent that a specified index 
falls below a predetermined interest rate, to receive payment of 
interest on a notional principal amount from the party selling such 
interest rate floor.

Certain Underlying Smith Barney Funds may enter into interest rate 
swaps, caps and floors on either an asset-based or liability-based 
basis, depending on whether it is hedging its assets or its 
liabilities, and will usually enter into interest rate swaps on a net 
basis, i.e., the two payment streams are netted, with the Fund 
receiving or paying, as the case may be, only the net amount of the 
two payments.  Inasmuch as these hedging transactions are entered 
into for good faith hedging purposes, the investment adviser and the 
Fund believe such obligations do not constitute senior securities 
and, accordingly will not treat them as being subject to its 
borrowing restrictions.  The net amount of the excess, if any, of a 
Fund's obligations over its entitlement with respect to each interest 
rate swap will be accrued on a daily basis and an amount of cash or 
liquid securities having an aggregate net asset value at least equal 
to the accrued excess will be maintained in a segregated account with 
PNC Bank. If there is a default by the other party to such a 
transaction, a Fund will have contractual remedies pursuant to the 
agreement related to the transaction.  The swap market has grown 
substantially in recent years with a large number of banks and 
investment banking firms acting both as principals and as agents.  As 
a result, the swap market has become relatively liquid.  Caps and 
floors are more recent innovations for which standardized 
documentation has not yet been developed and, accordingly, they are 
less liquid than swaps.

RESTRICTED SECURITIES.  Certain of the Underlying Smith Barney Funds 
may invest in securities the disposition of which is subject to legal 
or contractual restrictions.  The sale of restricted securities often 
requires more time and results in higher brokerage charges or dealer 
discounts and other selling expenses than does the sale of securities 
eligible for trading on a national securities exchange that are not 
subject to restrictions on resale.  Restricted securities often sell 
at a price lower than similar securities that are not subject to 
restrictions on resale.

REVERSE REPURCHASE AGREEMENTS.  Certain Underlying Smith Barney Funds 
may enter into reverse repurchase agreements with banks or broker-
dealers.  A reverse repurchase agreement involves the sale of a money 
market instrument held by an Underlying Smith Barney Fund coupled 
with an agreement by the Fund to repurchase the instrument at a 
stated price, date and interest payment.  The Fund will use the 
proceeds of a reverse repurchase agreement to purchase other money 
market instruments which either mature at a date simultaneous with or 
prior to the expiration of the reverse repurchase agreement or which 
are held under an agreement to resell maturing as of that time.

An Underlying Smith Barney Fund will enter into a reverse repurchase 
agreement only when the interest income to be earned from the 
investment of the proceeds of the transaction is greater than the 
interest expense of the transaction.  Under the 1940 Act, reverse 
repurchase agreements may be considered to be borrowings by the 
seller. Entry into such agreements requires the creation and 
maintenance of a segregated account with the Fund's custodian 
consisting of U.S. government securities, cash or cash equivalents.

LEVERAGING.  Certain of the Underlying Smith Barney Funds may from 
time to time leverage their investments by purchasing securities with 
borrowed money.  A Fund is required under the 1940 Act to maintain at 
all times an asset coverage of 300% of the amount of its borrowings.  
If, as a result of market fluctuations or for any other reason, the 
Fund's asset coverage drops below 300%, the Fund must reduce its 
outstanding borrowings within three business days so as to restore 
its asset coverage to the 300% level.

Any gain in the value of securities purchased with borrowed money 
that exceeds the interest paid on the amount borrowed would cause the 
net asset value of the Underlying Smith Barney Fund's shares to 
increase more rapidly than otherwise would be the case.  Conversely, 
any decline in the value of securities purchased would cause the net 
asset value of the Fund's shares to decrease more rapidly than 
otherwise would be the case.  Borrowed money thus creates an 
opportunity for greater capital gain but at the same time increases 
exposure to capital risk.  The net cost of any borrowed money would 
be an expense that otherwise would not be incurred, and this expense 
could restrict or eliminate a Fund's net investment income in any 
given period.  

AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITORY RECEIPTS.  Certain of 
the Underlying Smith Barney Funds may invest in the securities of 
foreign and domestic issuers in the form of American Depository 
Receipts ("ADRs") and European Depository Receipts ("EDRs").  These 
securities may not necessarily be denominated in the same currency as 
the securities into which they may be converted.  ADRs are receipts 
typically issued by a U.S. bank or trust company that evidence 
ownership of underlying securities issued by a foreign corporation.  
EDRs, which sometimes are referred to as Continental Depository 
Receipts ("CDRs"), are receipts issued in Europe typically by foreign 
banks and trust companies that evidence ownership of either foreign 
or domestic securities.  Generally, ADRs, in registered form, are 
designed for use in U.S. securities markets and EDRs and CDRs are 
designed for use in European securities markets.

CONVERTIBLE SECURITIES.  Convertible securities are fixed-income 
securities that may be converted at either a stated price or stated 
rate into underlying shares of common stock.  Convertible securities 
have general characteristics similar to both fixed-income and equity 
securities.  Although to a lesser extent than with fixed-income 
securities generally, the market value of convertible securities 
tends to decline as interest rates increase and, conversely, tends to 
increase as interest rates decline.  In addition, because of the 
conversion feature, the market value of convertible securities tends 
to vary with fluctuations in the market value of the underlying 
common stocks and, therefore, also will react to variations in the 
general market for equity securities.  A unique feature of 
convertible securities is that as the market price of the underlying 
common stock declines, convertible securities tend to trade 
increasingly on a yield basis, and so may not experience market value 
declines to the same extent as the underlying common stock.  When the 
market price of the underlying common stock increases, the prices of 
the convertible securities tend to rise as a reflection of the value 
of the underlying common stock.  While no securities investments are 
without risk, investments in convertible securities generally entail 
less risk than investments in common stock of the same issuer.

As fixed-income securities, convertible securities are investments 
that provide for a stable stream of income with generally higher 
yields than common stocks.  Of course, like all fixed-income 
securities, there can be no assurance of current income because the 
issuers of the convertible securities may default on their 
obligations.  Convertible securities, however, generally offer lower 
interest or dividend yields than non-convertible securities of 
similar quality because of the potential for capital appreciation.  A 
convertible security, in addition to providing fixed income, offers 
the potential for capital appreciation through the conversion 
feature, which enables the holder to benefit from increases in the 
market price of the underlying common stock.  There can be no 
assurance of capital appreciation, however, because securities prices 
fluctuate.

Convertible securities generally are subordinated to other similar 
but non-convertible securities of the same issuer, although 
convertible bonds, such as corporate debt obligations, enjoy 
seniority in right of payment to all equity securities, and 
convertible preferred stock is senior to common stock, of the same 
issuer.  Because of the subordination feature, however, convertible 
securities typically have lower ratings than similar nonconvertible 
securities.

WARRANTS.  Because a warrant does not carry with it the right to 
dividends or voting rights with respect to the securities that the 
warrant holder is entitled to purchase, and because it does not 
represent any rights to the assets of the issuer, a warrant may be 
considered more speculative than certain other types of investments.  
In addition, the value of a warrant does not necessarily change with 
the value of the underlying securities and a warrant ceases to have 
value if it is not exercised prior to its expiration date.  Warrants 
acquired by an Underlying Smith Barney Fund in units or attached to 
securities may be deemed to be without value.

PREFERRED STOCK.  Preferred stocks, like debt obligations, are 
generally fixed-income securities.  Shareholder of preferred stocks 
normally have the right to receive dividends at a fixed rate when and 
as declared by the issuer's board of directors, but do not 
participate in other amounts available for distribution by the 
issuing corporation.  Dividends on the preferred stock may be 
cumulative, and all cumulative dividends usually must be paid prior 
to common shareholders receiving any dividends.  Preferred stock 
dividends must be paid before common stock dividends and, for that 
reason, preferred stocks generally entail less risk than common 
stocks.  Upon liquidation, preferred stocks are entitled to a 
specified liquidation preference, which is generally the same as the 
par or stated value, and are senior in right of payment to common 
stock.  Preferred stocks are, however, equity securities in the sense 
that they do not represent a liability of the issuer and, therefore, 
do not offer as great a degree of protection of capital or assurance 
of continued income as investments in corporate debt securities.  In 
addition, preferred stocks are subordinated in right of payment to 
all debt obligations and creditors of the issuer, and convertible 
preferred stocks may be subordinated to other preferred stock of the 
same issuer.

Investment Restrictions

The Concert Series has adopted the following investment restrictions 
for the protection of shareholders.  Restrictions 1 through 6 below 
have been adopted by the Concert Series with respect to each 
Portfolio as fundamental policies.  Under the 1940 Act, a fundamental 
policy of a Portfolio may not be changed without the vote of a 
majority, as defined in the 1940 Act, of the outstanding voting 
securities of the Portfolio.  Such majority is defined as the lesser 
of (a) 67% or more of the shares present at the meeting, if the 
holders of more than 50% of the outstanding shares of the Portfolio 
are present or represented by proxy, or (b) more than 50% of the 
outstanding shares.  Investment restrictions 7 through 15 may be 
changed by a vote of a majority of the Concert Series' Board of 
Directors at any time.

The investment policies adopted by the Concert Series prohibit a 
Portfolio from:

1.  Borrowing money except from banks for temporary or emergency 
purposes, including the meeting of redemption requests in an amount 
not exceeding 33-1/3% of the value of a Portfolio's total assets 
(including the amount borrowed) valued at market less liabilities 
(not including the amount borrowed) at the time the borrowing is 
made.

2.  Making loans of money to others, except through the purchase of 
portfolio securities consistent with its investment objective and 
policies and repurchase agreements.

3.  Underwriting the securities of other issuers, except insofar as 
the Portfolio may be deemed an underwriter under the Securities Act 
of 1933, as amended, by virtue of disposing of portfolio securities.

4.  Purchasing or selling real estate except that each Portfolio may 
purchase and sell money market securities that are secured by real 
estate or issued by companies that invest or deal in real estate.

5.  Investing in commodities.

6.  Issuing senior securities except as permitted by investment 
restriction 1.

7.  Purchasing securities on margin.

8.  Making short sales of securities or maintaining a short position.

9.  Pledging, hypothecating, mortgaging or otherwise encumbering more 
than 33-1/3% of the value of a Portfolio's total assets.

10.  Investing in oil, gas or other mineral exploration or 
development programs.

11.  Writing or selling puts, calls, straddles, spreads or 
combinations thereof.

12.  Purchasing restricted securities, illiquid securities (such as 
repurchase agreements with maturities in excess of seven days) or 
other securities that are not readily marketable.

13.  Purchasing any security if as a result the Portfolio would then 
have more than 5% of its total assets invested in securities of 
companies (including predecessors) that have been in continuous 
operation for fewer than three years (except for Underlying Smith 
Barney Funds).

14.  Making investments for the purpose of exercising control or 
management.

15.  Purchasing or retaining securities of any company if, to the 
knowledge of the Concert Series, any officer or director of the 
Concert Series or SBMFM individually owns more than 1/2 of 1% of the 
outstanding securities of such company and together they own 
beneficially more than 5% of such securities.

The Concert Series may make commitments more restrictive than the 
restrictions listed above with respect to a Portfolio so as to permit 
the sale of shares of the Portfolio in certain states.  Should the 
Concert Series determine that any such commitment is no longer in the 
best interests of the Portfolio and its shareholders, the Concert 
Series will revoke the commitment by terminating the sale of shares 
of the Portfolio in the relevant state.  The percentage limitations 
contained in the restrictions listed above (other than with respect 
to (1) above) apply at the time of purchases of securities.

Notwithstanding the foregoing investment restrictions, the Underlying 
Smith Barney Funds in which the Portfolios invest have adopted 
certain investment restrictions which may be more or less restrictive 
than those listed above, thereby permitting a Portfolio to engage in 
investment strategies indirectly that are prohibited under the 
investment restrictions listed above.  The investment restrictions of 
an Underlying Smith Barney Fund are located in its Statement of 
Additional Information.

Pursuant to an exemptive order issued by the SEC (Investment Company 
Act Release No. IC-21613, December 19, 1995) each Portfolio may (i) 
purchase more than 3% of the outstanding voting securities of any 
Underlying Smith Barney Fund, (ii) invest more than 5% of its assets 
in any one Underlying Smith Barney Fund and (iii) invest 
substantially all of its assets in the Underlying Smith Barney Funds.

Because of their investment objectives and policies, the Portfolios 
will each concentrate more than 25% of their assets in the mutual 
fund industry.  In accordance with the Portfolios' investment 
programs set forth in the Prospectus, each of the Portfolios may 
invest more than 25% of its assets in certain Underlying Smith Barney 
Funds.  However, each of the Underlying Smith Barney Funds in which 
each Fund will invest (other than the Smith Barney Utilities Fund) 
will not concentrate more than 25% of its total assets in any one 
industry.  The Smith Barney Utilities Fund will invest at least 65% 
of its assets in securities of companies in the utility industries.

Portfolio Turnover

Each Portfolio's turnover rate is not expected to exceed 25% 
annually.  A Portfolio may purchase or sell securities to: (a) 
accommodate purchases and sales of its shares, (b) change the 
percentages of its assets invested in each of the Underlying Smith 
Barney Funds in response to market conditions, and (c) maintain or 
modify the allocation of its assets between equity and fixed income 
funds and among the Underlying Smith Barney Funds within the 
percentage limits described in the Prospectus.
   
The turnover rates of the Underlying Smith Barney Funds have ranged 
from 9% to 420% during their most recent fiscal years.  There can be 
no assurance that the turnover rates of these funds will remain 
within this range during subsequent fiscal years.  Higher turnover 
rates may result in higher expenses being incurred by the Underlying 
Smith Barney Funds.
    
PURCHASE OF SHARES

Volume Discounts

The schedule of sales charges on Class A shares described in the 
Prospectus applies to purchases made by any "purchaser," which is 
defined to include the following: (a) an individual; (b) an 
individual's spouse and his or her children purchasing shares for his 
or her own account; (c) a pension, profit-sharing or other employee 
benefit plan qualified under Section 401(a) of the Internal Revenue 
Code of 1986, as amended (the "Code"), and qualified employee benefit 
plans of employers who are "affiliated persons" of each other within 
the meaning of the 1940 Act; (d) tax-exempt organizations enumerated 
in Section 501(c)(3) or (13) of the Code; and (e) a trustee or other 
professional fiduciary (including a bank, or an investment adviser 
registered with the SEC under the Investment Advisers Act of 1940, as 
amended) purchasing shares of a Portfolio for one or more trust 
estates or fiduciary accounts.  Purchasers who wish to combine 
purchase orders to take advantage of volume discounts on Class A 
shares should contact a Smith Barney Financial Consultant.

Combined Right of Accumulation

Reduced sales charges, in accordance with the schedule in the 
Prospectus, apply to any purchase of Class A shares from Smith Barney 
if the aggregate investment in Class A shares of a Portfolio and in 
Class A shares of other funds of the Smith Barney Mutual Funds that 
are offered with an initial sales charge, including the purchase 
being made, of any purchaser is $25,000 or more.  The reduced sales 
charge is subject to confirmation of the shareholder's holdings 
through a check of appropriate records.  The Concert Series reserves 
the right to terminate or amend the combined right of accumulation at 
any time after written notice to shareholders.  For further 
information regarding the combined right of accumulation, 
shareholders should contact a Smith Barney Financial Consultant.




Determination of Public Offering Price

The Concert Series offers its shares to the public on a continuous 
basis.  The public offering price for Class A shares of the Concert 
Series is equal to the net asset value per share at the time of 
purchase plus an initial sales charge based on the aggregate amount 
of the investment.  The public offering price for Class B, Class C, 
Class Y and Class Z shares (and Class A share purchases, including 
applicable rights of accumulation, equaling or exceeding $500,000) is 
equal to the net asset value per share at the time of purchase and no 
sales charge is imposed at the time of purchase.  A contingent 
deferred sales charge ("CDSC"), however, is imposed on certain 
redemptions of Class B and Class C shares, and of Class A shares when 
purchased in amounts equaling or exceeding $500,000. The method of 
determining a Portfolio's net asset value is discussed below under 
"Valuation of Shares."

REDEMPTION OF SHARES

The right of redemption may be suspended or the date of payment 
postponed (a) for any period during which the NYSE is closed (other 
than for customary weekend or holiday closings), (b) when trading in 
markets a Portfolio normally utilizes is restricted, or an emergency, 
as determined by the SEC, exists so that disposal of a Portfolio's 
investments or determination of net asset value is not reasonably 
practicable or (c) for such other periods as the SEC by order may 
permit for protection of a Portfolio's shareholders.

Automatic Cash Withdrawal Plan

An automatic cash withdrawal plan (the "Withdrawal Plan") is 
available to shareholders who own shares with a value of at least 
$10,000 ($5,000 for retirement plan accounts) and who wish to receive 
specific amounts of cash monthly or quarterly.  Withdrawals of at 
least $100 may be made under the Withdrawal Plan by redeeming as many 
shares of a Portfolio as may be necessary to cover the stipulated 
withdrawal payment.  Any applicable CDSC will not be waived on 
amounts withdrawn by shareholders that exceed 1.00% per month of the 
value of a shareholder's shares at the time the Withdrawal Plan 
commences. (With respect to Withdrawal Plans in effect prior to 
November 7, 1994, any applicable CDSC will be waived on amounts that 
do not exceed 2.00% per month of the value of a shareholder's shares 
at the time the Withdrawal Plan commences.) To the extent withdrawals 
exceed dividends, distributions and appreciation of a shareholder's 
investment in a Portfolio, there will be a reduction in the value of 
the shareholder's account and continued withdrawal payments will 
reduce the shareholder's investment and ultimately may exhaust it.  
Withdrawal payments should not be considered as income from 
investment in a Portfolio.  Furthermore, as it generally would not be 
advantageous to a shareholder to make additional investments in a 
Portfolio at the same time he or she is participating in the 
Withdrawal Plan, purchases by such shareholders in amounts of less 
than $5,000 ordinarily will not be permitted.

Shareholders who wish to participate in the Withdrawal Plan and who 
hold their shares in certificate form must deposit their share 
certificates with First Data as agent for Withdrawal Plan members.  
All dividends and distributions on shares in the Withdrawal Plan are 
reinvested automatically at net asset value in additional shares of 
the Portfolio. Withdrawal Plans should be set up with a Smith Barney 
Financial Consultant.  Shareholders who purchase shares directly 
through First Data may continue to do so and applications for 
participation in the Withdrawals Plan must be received by First Data 
no later than the eighth day of the month to be eligible for 
participation beginning with that month's withdrawal.  For additional 
information, shareholders should contact a Smith Barney Financial 
Consultant.  


DISTRIBUTORS

SMITH BARNEY.  Smith Barney serves as a principal underwriter of the 
Concert Series on a best efforts basis pursuant to a distribution 
agreement (the "Distribution Agreement").  The Distribution Agreement 
also gives authority to the Concert Series to use the "Smith Barney" 
name so long as the Distribution Agreement is in effect.  To 
compensate its distributors for the services provided and for the 
expenses borne, the Concert Series has adopted a services and 
distribution plan (the "Plan'") pursuant to Rule 12b-1 under the 1940 
Act.  Under the Plan, each Portfolio pays Smith Barney a service fee, 
accrued daily and paid monthly, calculated at the annual rate of 
0.25% of the value of the Portfolio's average daily net assets 
attributable to the Class A, Class B and Class C shares sold through 
Smith Barney.  In addition, each Portfolio pays Smith Barney a 
distribution fee with respect to the Class B and Class C shares sold 
through Smith Barney primarily intended to compensate Smith Barney 
for its initial expense of paying Financial Consultants a commission 
upon sales of those shares.  The distribution fees applicable to 
Class B and Class C shares of the High Growth Portfolio, the Growth 
Portfolio and the Balanced Portfolio, accrued daily and paid monthly, 
are calculated at the annual rate of 0.75% of the value of a 
Portfolio's average daily net assets attributable to the shares of 
the respective Class.  The distribution fees applicable to Class B 
and Class C shares of the Conservative Portfolio and the Income 
Portfolio, accrued daily and paid monthly, are calculated at the 
annual rate of 0.50% and 0.45%, respectively, of the value of the 
Portfolio's average daily net assets attributable to the shares of 
the respective Class.
   
For the fiscal period ended January 31, 1997, Smith Barney received 
approximately $2.7 million in sales charges for the sale of Class A 
shares. For the fiscal period ended January 31, 1997, Smith Barney 
received approximately $8,000, $249,000 and $22,000 representing CDSC 
on redemptions of  Concert Series ' Class A, Class B and Class C 
shares, respectively.

For the fiscal period ended January 31, 1997, the table below 
represents the fees which have been accrued and/or paid to Smith 
Barney under the Plan.  The distribution expenses for 1997 included 
compensation of financial consultants and printing costs of 
prospectuses and marketing materials.

Portfolio		Class A		Class B		Class C		Class Y		Total

High Growth	$181,145	$689,309	$97,014		N/A	$967,468	
Growth		188,769		1,020,855	162,265		N/A	1,371,889
Balanced	102,703		541,210		104,502		N/A	748,415
Conservative	37,430		106,340		14,674		N/A	158,444
Income		22,108		73,157		8,332		N/A	103,597
    
PFS.  PFS, located at 3100 Breckinridge Boulevard, Building 200, 
Duluth, Georgia 30199-0062, also distributes shares of each Portfolio 
as a principal underwriter and as such conducts 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.  The only 
Classes of shares being offered for sale through PFS are Class A 
shares and Class B shares.  Pursuant to the Plan (described above), 
PFS is paid a service fee with respect to Class A and Class B shares 
of each Portfolio sold through PFS at the annual rate of 0.25% of the 
average daily net assets attributable to each Class.  PFS is also 
paid a distribution fee with respect to Class B shares of the High 
Growth Portfolio, the Growth Portfolio and the Balanced Portfolio 
sold through PFS at the annual rate of 0.75% of the average daily net 
assets attributable to that Class.  PFS is paid a distribution fee 
with respect to Class B shares of the Conservative Portfolio and the 
Income Portfolio sold through PFS at the annual rate of 0.50% of the 
average daily net assets attributable to that Class.  Class B shares 
that automatically convert to Class A shares eight years after the 
date of original purchase will no longer be subject to a distribution 
fee.  The fees are paid to PFS, which in turn, pays PFS Investments 
Inc. ("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 prospectuses to potential investors; payments to 
and expenses of Investments Representatives 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 Investments associated with the sale of Portfolio 
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, with respect to Class A and Class B shares, a 
continuing fee for servicing shareholder accounts for as long as a 
shareholder remains a holder of that Class.  Investments 
Representatives may receive different levels of compensation for 
selling different Classes of shares.

PFS Investments may be deemed to be an underwriter for purposes of 
the Securities 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 Representatives that sell shares of each Portfolio.

Under its terms, the Plan continues from year to year, provided such 
continuance is approved annually by vote of the Concert Series' Board 
of Directors, including a majority of the Independent Directors.  The 
Plan may not be amended to increase the amount of the service and 
distribution fees without shareholder approval, and all material 
amendments of the Plan also must be approved by the directors and 
Independent directors in the manner described above.  The Plan may be 
terminated with respect to a Class of a Portfolio at any time, 
without penalty, by the vote of a majority of the Independent 
Directors or by a vote of a majority of the outstanding voting 
securities of the Class (as defined in the 1940 Act).  Pursuant to 
the Plan, Smith Barney and PFS will provide the Concert Series' Board 
of Directors with periodic reports of amounts expended under the Plan 
and the purpose for which such expenditures were made.

GENERAL.  Actual distribution expenses for Class B shares of each 
Portfolio for any given year may exceed the fees received pursuant to 
the Plan and will be carried forward and paid by each Portfolio in 
future years so long as the Plan is in effect.  Interest is accrued 
monthly on such carryforward amounts at a rate comparable to that 
paid by Smith Barney for bank borrowings.  The Concert Series' Board 
of Directors will evaluate the appropriateness of the Plan and its 
payment terms on a continuing basis and in so doing will consider all 
relevant factors, including amounts received under the Plan and 
proceeds of the CDSC.


VALUATION OF SHARES

The net asset value of each Portfolio's Classes of Shares will be 
determined on any day that the New York Stock Exchange (the "NYSE") 
is open.  The NYSE is closed on the following holidays: New Year's 
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, 
Labor Day, Thanksgiving Day and Christmas Day, and on the preceding 
Friday or subsequent Monday when one of these holidays falls on a 
Saturday or Sunday, respectively.  Because of the differences in 
distribution fees and Class-specific expenses, the per share net 
asset value of each Class may differ.  The following is a description 
of the procedures used by each Portfolio in valuing its assets.

The value of each Underlying Smith Barney Fund will be its net asset 
value at the time of computation.  Short-term investments that have a 
maturity of more than 60 days are valued at prices based on market 
quotations for securities of similar type, yield and maturity.  
Short-term investments that have a maturity of 60 days or less are 
valued at amortized cost, which constitutes fair value as determined 
by the Concert Series' Board of Directors.  Amortized cost involves 
valuing an instrument at its original cost to the Portfolio and 
thereafter assuming a constant amortization to maturity of any 
discount or premium regardless of the effect of fluctuating interest 
rates on the market value of the instrument.





EXCHANGE PRIVILEGE

Except as noted below and in the Prospectus, shareholders of any 
Portfolio and of any other  Smith Barney Mutual Fund may exchange all 
or part of their shares for shares of the same class of any other 
Portfolio or of other Smith Barney Mutual Funds, to the extent such 
shares are offered for sale in the shareholder's state of residence, 
on the basis of relative net asset value per share at the time of 
exchange as follows:
   
A.  Class A shares of any fund purchased with a sales charge may be 
exchanged for Class A shares of any of the other funds.  Class A 
shares of any fund may be exchanged without a sales charge for shares 
of the funds that are offered without a sales charge.  Class A shares 
of any fund purchased without a sales charge may be exchanged for 
shares sold with a sales charge, and the appropriate sales charge 
differential will be applied.

B.  Class A shares of any fund acquired by a previous exchange of 
shares may be exchanged for Class A shares of any of the other funds.
    
C.  Class B shares of any fund may be exchanged without a sales 
charge.  Class B shares of any fund exchanged for Class B shares of 
another fund will be subject to the higher applicable CDSC of the two 
funds and, for purposes of calculating CDSC rates, and conversion 
periods, will be deemed to have been held since the date the shares 
being exchanged were deemed to be purchased.

AS STATED IN THE PROSPECTUS FOR SHARES DISTRIBUTED THROUGH PFS, THE 
EXCHANGE PRIVILEGE IS LIMITED.  Dealers other than Smith Barney must 
notify First Data of the investor's prior ownership of Class A shares 
of Smith Barney High Income Fund and the account number in order to 
accomplish an exchange of shares of Smith Barney High Income Fund 
under paragraph B above.

The exchange privilege enables shareholders to acquire shares of the 
same Class in a fund with different investment objectives when they 
believe that a shift between funds is an appropriate investment 
decision.  This privilege is available to shareholders residing in 
any state in which the fund shares being acquired may legally be 
sold.  Prior to any exchange, the shareholder should obtain and 
review a copy of the current prospectus of each fund into which an 
exchange is being considered.  Prospectuses may be obtained from a 
Smith Barney Financial Consultant or a PFS Investments 
Representative.

Upon receipt of proper instructions and all necessary supporting 
documents, shares submitted for exchange are redeemed at the then-
current net asset value and, the proceeds are immediately invested, 
at a price as described above, in shares of the fund being acquired.  
Smith Barney and PFS reserve the right to reject any exchange 
request.  The exchange privilege may be modified or terminated at any 
time after written notice to shareholders.


IRA AND OTHER PROTOTYPE PLANS

	Copies of the following plans with custody or trust agreements 
have been approved by the Internal Revenue Service and are available 
from the Fund or Smith Barney; investors should consult with their 
own tax or retirement planning advisors prior to the establishment of 
a plan. 

IRA, Rollover IRA and Simplified Employee Pension - IRA
   
	The Small Business Job Protection Act of 1996 changed the 
eligibility requirements for participants in Individual Retirement 
Accounts ("IRAs").  Under these new provisions, if you or your spouse 
have earned income, each of you may establish an IRA and make maximum 
annual contributions equal to the lesser of earned income or $2,000.  
As a result of this legislation, married couples where one spouse is 
non-working may now contribute a total of $4,000 annually to their 
IRAs.

	If you or your spouse is an active participant in an employer-
sponsored retirement plan, a deduction for contributions to an IRA 
might still be allowed in full or in part, depending on your combined 
adjusted gross income.  For married couples filing jointly, a full 
deduction for contributions to an IRA will be allowed where the 
couples' adjusted gross income is below $40,001 ($25,001 for an 
unmarried individual); a partial deduction will be allowed when 
adjusted gross income is between $40,001 - $50,000 ($25,001-$35,000 
for an unmarried individual);  and no deduction when adjusted gross 
income is $50,000 ($35,000 for an unmarried individual).

	A Rollover IRA is available to defer taxes on lump sum payments 
and other qualifying rollover amounts (no maximum) received from 
another retirement plan. 

	An employer who has established a Simplified Employee Pension - 
IRA ("SEP-IRA") on behalf of eligible employees may make a maximum 
annual contribution to each participant's account of 15% (up to 
$24,000) of each participant's compensation.  Compensation is capped 
at $160,000 for 1997.

When investing in The Concert Series through the Smith Barney 401(k) 
Program, the following tools will also be available to prospective 
participants:  (i) a  participant profile that contains questions 
designed to help participants  choose the appropriate Concert Series 
Portfolio(s); (ii) a performance summary 
showing the total returns of each Concert Series Portfolio and of 
each underlying Smith Barney Mutual Fund; (iii) an enrollment video 
that provides a  concise presentation on investing basics and The 
Concert Series; (iv) a  pamphlet describing each Concert Series 
Portfolio and target mutual fund 
allocation and market components; and (v) an investment planning 
calculator that demonstrates the growth of hypothetical investments 
over a variety of  time periods, assuming several stated annual rates 
of return.

Paired Defined Contribution Prototype

	Corporations (including Subchapter S corporations) and non-
corporate entities may purchase shares of the Fund through the Smith 
Barney Prototype Paired Defined Contribution Plan (the "Prototype").  
The Prototype permits adoption of profit-sharing provisions, money 
purchase pension provisions, or both, to provide benefits for 
eligible employees and their beneficiaries.  The Prototype provides 
for a maximum annual tax deductible contribution on behalf of each 
Participant of up to 25% of compensation, but not to exceed $30,000 
(provided that a money purchase pension plan or both a profit-sharing 
plan and a money purchase pension plan are adopted thereunder). 

    
PERFORMANCE

From time to time, the Concert Series may quote a Portfolio's yield 
or total return in advertisements or in reports and other 
communications to shareholders.  The Concert Series may include 
comparative performance information in advertising or marketing the 
Portfolio's shares.  Such performance information may include data 
from the following industry and financial publications: BARRON'S, 
BUSINESS WEEK, CDA INVESTMENT TECHNOLOGIES, INC., CHANGING TIMES, 
FORBES, FORTUNE, INSTITUTIONAL INVESTOR, INVESTORS DAILY, MONEY, 
MORNINGSTAR MUTUAL FUND VALUES, THE NEW YORK TIMES, USA TODAY AND THE 
WALL STREET JOURNAL.



Yield

A Portfolio's 30-day yield figure described below is calculated 
according to a formula prescribed by the SEC.  The formula can be 
expressed as follows: YIELD = 2[( [(a-b/(c*d))/1] + 1)6 - 1], where

	a = dividends and interest earned during the period.
	b = expenses accrued for the period (net of reimbursement).
	c = the average daily number of shares outstanding during the 
period that were entitled to receive dividends.
	d = the maximum offering price per share on the last day of the 
period.

For the purpose of determining the interest earned (variable "a" in 
the formula) on debt obligations purchased by the Portfolio at a 
discount or premium, the formula generally calls for amortization of 
the discount or premium; the amortization schedule will be adjusted 
monthly to reflect changes in the market values of the debt 
obligations.

Investors should recognize that in periods of declining interest 
rates a Portfolio's yield will tend to be somewhat higher than 
prevailing market rates, and in periods of rising interest rates, the 
Portfolio's yield will tend to be somewhat lower.  In addition, when 
interest rates are falling, the inflow of net new money to the 
Portfolio from the continuous sale of its shares will likely be 
invested in portfolio instruments producing lower yields than the 
balance of the Portfolio's investments, thereby reducing the current 
yield of the Portfolio.  In periods of rising interest rates, the 
opposite can be expected to occur.

Average Annual Total Return

"Average annual total return" figures, as described below, are 
computed according to a formula prescribed by the SEC.  The formula 
can be expressed as follows: P(1+T)/n = ERV, where:

	P  = 	a hypothetical initial payment of $1,000.
	T  =	average annual total return.
	n  = 	number of years.
	ERV  = 	Ending Redeemable Value of a Hypothetical $1,000 
investment made at the beginning of a 1-, 5- or 10-year 
period at the end of the 1-, 5- or 10-year period (or 
fractional portion thereof), assuming reinvestment of all 
dividends and distributions.  A Class' total return 
figures calculated in accordance with the above formula 
assume that the maximum applicable sales charge or 
maximum applicable CDSC, as the case may be, has been 
deducted from the hypothetical $1,000 initial investment 
at the time of purchase or redemption, as applicable.

   

	Each Portfolio's average annual total return with respect to its 
Class A Shares for the one-year period, five-year period, if any, and 
for the life of the Portfolio ended January 31, 1997 is as follows:


	One Year	Five Years	Life	Inception Date

High Growth 	N/A	N/A		5.49%	2/5/96

Growth		N/A	N/A		5.52	2/5/96	

Balanced	N/A	N/A		5.11	2/5/96

Conservative	N/A	N/A		3.68	2/5/96

Income		N/A	N/A		1.60	2/5/96

	        Each Portfolio's average annual total return with respect to 
its Class B Shares (where applicable) for the one-year period and the 
life of such Portfolio's Class B shares through January 31, 1997 is 
as follows: 

Portfolio 	One Year	Five Years	Life	Inception Date

High Growth 	N/A		N/A	      4.91%	2/5/96

Growth		N/A		N/A	      5.32		2/5/96	

Balanced	N/A		N/A	4.90		2/5/96

Conservative	N/A		N/A	3.53		2/5/96

Income		N/A		N/A	1.39		2/5/96


Each Portfolio's average annual total return with respect to its 
Class C Shares (where applicable) for the one-year period and for the 
life of such Portfolio's Class C shares through January 31, 1997 is 
as follows: 

Portfolio 	One Year	Five Years	Life	Inception Date

High Growth 	N/A		N/A		9.00%	2/5/96

Growth		N/A		N/A		9.32	2/5/96	

Balanced	N/A		N/A		8.90	2/5/96

Conservative	N/A		N/A		7.08	2/5/96

Income		N/A		N/A		4.94	2/5/96


There is no performance information for each Portfolio's Class Y 
Shares because there were no outstanding Class Y Shares as of January 
31, 1997.



Each Portfolio's average annual total return with respect to its 
Class Z Shares (where applicable) for the life of such Portfolio's 
Class Z shares through January 31, 1997 is as follows: 

Portfolio 	One Year	Five Years	Life	Inception Date

High Growth 	N/A		N/A		1.39%	1/17/97

Growth		N/A		N/A		1.15	1/17/97	

Balanced	N/A		N/A		0.25	1/17/97

Conservative	N/A		N/A		0.08	1/17/97

Income		N/A		N/A		0.39	1/17/97


    
TAXES

The following is a summary of certain Federal income tax 
considerations that may affect the Concert Series and its 
shareholders.  The summary is not intended as a substitute for 
individual tax advice, and investors are urged to consult their tax 
advisors as to the tax consequences of an investment in any Portfolio 
of the Concert Series .

Tax Status of the Portfolios

Each Portfolio will be treated as a separate taxable entity for 
Federal income tax purposes.

Each Portfolio intends to qualify separately each year as a 
"regulated investment company" under the Code.  A qualified Portfolio 
will not be liable for Federal income taxes to the extent that its 
taxable net investment income and net realized capital gains are 
distributed to its shareholders, provided that each Portfolio 
distributes at least 90% of its net investment income.

Each Portfolio intends to accrue dividend income for Federal income 
tax purposes in accordance with the rules applicable to regulated 
investment companies.  In some cases, these rules may have the effect 
of accelerating (in comparison to other recipients of the dividend) 
the time at which the dividend is taken into account by a Portfolio 
as taxable income.

Distributions of an Underlying Smith Barney Fund's investment company 
taxable income are taxable as ordinary income to a Portfolio which 
invests in the Fund.  Distributions of the excess of an Underlying 
Smith Barney Fund's net long-term capital gain over its net short-
term capital loss, which are properly designated as "capital gain 
dividends," are taxable as long-term capital gain to a Portfolio 
which invests in the Fund, regardless of how long the Portfolio held 
the Fund's shares, and are not eligible for the corporate dividends-
received deduction.  Upon the sale or other disposition by a 
Portfolio of shares of any Underlying Smith Barney Fund, the 
Portfolio generally will realize a capital gain or loss which will be 
long-term or short-term, generally depending upon the Portfolio's 
holding period for the shares.


Tax Treatment of Shareholders

Distributions of investment company taxable income generally are 
taxable to shareholders as ordinary income.  If an Underlying Smith 
Barney Fund derives dividends from domestic corporations, a portion 
of the income distributions of a Portfolio which invests in that Fund 
may be eligible for the 70% deduction for dividends received by 
corporations.  Shareholders will be informed of the portion of 
dividends that qualify.  The dividends received deduction is reduced 
to the extent the shares of the Underlying Smith Barney Fund with 
respect to which the dividends are received are treated as debt-
financed under federal income tax law and is eliminated if either the 
shares of the corporation paying the dividend, the shares of the 
Underlying Smith Barney Fund or the shares of the Portfolio are 
deemed to have been held by the Underlying Smith Barney Fund, the 
Portfolio or the shareholders, as the case may be, for less than 46 
days.

Distributions of net realized capital gain designated by a Portfolio 
as capital gain dividends are taxable to shareholders as long-term 
capital gain, regardless of the length of time the shares of a 
Portfolio have been held by a shareholder.  Distributions of capital 
gain, whether long- or short-term, are not eligible for the dividends 
received deduction.

Dividends (including capital gain dividends) declared by a Portfolio 
in October, November or December of any calendar year to shareholders 
of record on a date in such a month will be deemed to have been 
received by shareholders on December 31 of that calendar year, 
provided that the dividend is actually paid by the Portfolio during 
January of the following calendar year.

All dividends are taxable to the shareholder whether reinvested in 
additional shares or received in cash.  Shareholders receiving 
distributions in the form of additional shares will have a cost basis 
for Federal income tax purposes in each share received equal to the 
net asset value of a share of Portfolio on the reinvestment date.  
Shareholders will be notified annually as to the Federal tax status 
of distributions.

Distributions by a Portfolio reduce the net asset value of the 
Portfolio's shares.  Should a distribution reduce the net asset value 
below a shareholder's cost basis, such distribution nevertheless 
generally would be taxable to the shareholder as ordinary income or 
capital gain as described above, even though, from an investment 
standpoint, it may constitute a partial return of capital.  In 
particular, investors should be careful to consider the tax 
implications of buying shares just prior to a distribution.  The 
price of shares purchased at that time includes the amount of the 
forthcoming distribution but the distribution generally would be 
taxable to him or her.

Upon redemption, sale or exchange of his shares, a shareholder will 
realize a taxable gain or loss depending upon his basis for his 
shares.  Such gain or loss will be treated as capital gain or loss if 
the shares are capital assets in the shareholder's hands.  Such gain 
or loss generally will be long-term or short-term depending upon the 
shareholder's holding period for the shares.  However, a loss 
realized by a shareholder on the sale of shares of a Portfolio with 
respect to which capital gain dividends have been paid will, to the 
extent of such capital gain dividends, be treated as long-term 
capital loss if such shares have been held by the shareholder for six 
months or less.  A gain realized on a redemption, sale or exchange 
will not be affected by a reacquisition of shares.  A loss realized 
on a redemption, sale or exchange, however, will be disallowed to the 
extent the shares disposed of are replaced (whether through 
reinvestment of distributions or otherwise) within a period of 61 
days beginning 30 days before and ending 30 days after the 
disposition of the shares.  In such a case, the basis of the shares 
acquired will be adjusted to reflect the disallowed loss.

If a shareholder (a) incurs a sales charge in acquiring shares of the 
Concert Series, (b) disposes of those shares within 90 days and (c) 
acquires shares in a mutual fund for which the otherwise applicable 
sales charge is reduced by reason of a reinvestment right (i.e., 
exchange privilege), the original sales charge increases the 
shareholder's tax basis in the original shares only to the extent the 
otherwise applicable sales charge for the second acquisition is not 
reduced.  The portion of the original sales charge that does not 
increase the shareholder's tax basis in the original shares would be 
treated as incurred with respect to the second acquisition and, as a 
general rule, would increase the shareholder's tax basis in the newly 
acquired shares.  Furthermore, the same rule also applies to a 
disposition of the newly acquired shares made within 90 days of the 
subsequent acquisition.  This provision prevents a shareholder from 
immediately deducting the sales charge by shifting his or her 
investment in a family of mutual funds.

BACKUP WITHHOLDING.  If a shareholder fails to furnish a correct 
taxpayer identification number, fails to fully report dividend or 
interest income, or fails to certify that he or she has provided a 
correct taxpayer identification number and that he or she is not 
subject to such withholding, then the shareholder may be subject to a 
31% "backup withholding tax" with respect to (a) any taxable 
dividends and distributions and (b) any proceeds of any redemption of 
the Concert Series shares.  An individual's taxpayer identification 
number is his or her social security number.  The backup withholding 
tax is not an additional tax and may be credited against a 
shareholder's regular federal income tax liability.

Taxation of the Underlying Smith Barney Funds

Each Underlying Smith Barney Fund intends to qualify annually and 
elect to be treated as a regulated investment company under 
Subchapter M of the Code.  In any year in which an Underlying Smith 
Barney Fund qualifies as a regulated investment company and timely 
distributes all of its taxable income, the Underlying Smith Barney 
Fund generally will not pay any federal income or excise tax.

If more than 50% in value of an Underlying Smith Barney Fund's assets 
at the close of any taxable year consists of stocks or securities of 
foreign corporations, that Underlying Smith Barney Fund may elect to 
treat certain foreign taxes paid by it as paid by its shareholders.  
The shareholders would then be required to include their 
proportionate share of the electing Fund's foreign income and related 
foreign taxes in income even if the shareholder does not receive the 
amount representing foreign taxes.  Shareholders itemizing deductions 
could then deduct the foreign taxes, or, whether or not deductions 
are itemized but subject to certain limitations, claim a direct 
dollar for dollar tax credit against their U.S. federal income tax 
liability attributable to foreign income.  In many cases, a foreign 
tax credit will be more advantageous than a deduction for foreign 
taxes.  Each of the Portfolios may invest in some Underlying Smith 
Barney Funds that expect to be eligible to make the above-described 
election.  While a Portfolio will be able to deduct the foreign taxes 
that it will be treated as receiving if the election is made, the 
Portfolio will not itself be able to elect to treat its foreign taxes 
as paid by its shareholders.  Accordingly, the shareholders of the 
Portfolio will not have an option of claiming a foreign tax credit 
for foreign taxes paid by the Underlying Smith Barney Funds, while 
persons who invest directly in such Underlying Smith Barney Funds may 
have that option.



General

The foregoing discussion related only to Federal income tax law as 
applicable to U.S. citizens.  Distributions by the Portfolio also may 
be subject to state, local and foreign taxes, and their treatment 
under state, local and foreign income tax laws may differ from the 
Federal income tax treatment.  Shareholders should consult their tax 
advisors with respect to particular questions of Federal, state, 
local and foreign taxation.


VOTING

As permitted by Maryland law, there will normally be no meetings 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.  At that time, the directors then 
in office will call a shareholders' meeting for the election of 
directors.  The directors must call a meeting of shareholders when 
requested in writing to do so by the record holders of not less than 
10% of the outstanding shares of the Concert Series.  At such a 
shareholder meeting called for the purpose, a director may be removed 
after the holders of record of not less than a majority of the 
outstanding shares of the Concert Series have declared that the 
director be removed by votes cast in person or by proxy.  Except as 
set forth above, the directors shall continue to hold office and may 
appoint successor directors.

On matters submitted for consideration by shareholders of any 
Underlying Smith Barney Fund, a Portfolio will vote its shares in 
proportion to the vote of all other holders of shares of that Fund 
or, in certain limited instances, the Portfolio will vote its shares 
in the manner indicated by a vote of holders of shares of the 
Portfolio.

As used in the Prospectus and this Statement of Additional 
Information, a "vote of a majority of the outstanding voting 
securities" means the affirmative vote of the lesser of (a) more than 
50% of the outstanding shares of the Concert Series (or the affected 
Portfolio or Class) or (b) 67% or more of such shares present at a 
meeting if more than 50% of the outstanding shares of the Concert 
Series (or the affected Portfolio or Class) are represented at the 
meeting in person or by proxy.  A Portfolio or Class shall be deemed 
to be affected by a matter unless it is clear that the interests of 
each Portfolio or Class in the matter are identical or that the 
matter does not affect any interest of the Portfolio or Class.  The 
approval of a management agreement, a distribution agreement or any 
change in a fundamental investment policy would be effectively acted 
upon with respect to a Portfolio only if approved by a "vote of a 
majority of the outstanding voting securities" of the Portfolio 
affected by the matter; however, the ratification of independent 
accountants and the election of directors are not subject to separate 
voting requirements and may be effectively acted upon by a vote of 
the holders of a majority of all Concert Series shares voting without 
regard to Portfolio.
   
As of  May 15, 1997, to the knowledge of the Fund and the Board of 
Directors, no single shareholder or "group" (as that term is used in 
Section 13(d) of the Securities Act of 1934) beneficially owned more 
than 5% of the outstanding shares of the Fund with the exception of 
the following:

Balanced Portfolio

Class A

PFS Shareholder Services (A)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
owned 6,787,531.788 (73.74%) shares

Class B

PFS Shareholder Services (B)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
owned 4,893,440.462 (43.62%) shares

Class Z

Citibank NA Cust Smith Barney
Shearson 401k Savings Plan
Smith Barney Account
Attn. Nancy Kronenberg
111 Wall Street FISD/20th Floor
New York, NY 10043
owned 6,685.313 (100%) shares

Conservative Portfolio

Class A

PFS Shareholder Services (A)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
owned 2,519,102.032 (83.83%) shares

Class B

PFS Shareholder Services (B)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
owned 1,724,831.577 (60.73%) shares

Class C

Frank A Abacherli
Shirley M. Abacherli TTEES
FBO Abacherli Family Trust
DTD 10/06/89
29875 Newport Road
Menifee, CA 92584-9524
owned 37,018.280 (10.17%) shares

Sharon Columbo
32 Ella Street
Valley Stream, NY 11580-3119
owned 22,003.571 (6.05%) shares




Paul B. Demitriades
2254 Evergreen Point Road
Medina, WA 98039-2341
owned 20,914.404 (5.75%) shares

Class Z

Citibank NA Cust Smith Barney
Shearson 401k Savings Plan
Smith Barney Account
Attn. Nancy Kronenberg
111 Wall Street FISD/20th Floor
New York, NY 10043
owned  5,164.637 (100%) shares

Growth Portfolio

Class A

PFS Shareholder Services (A)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
owned 10,295,186.32 (65.93%) shares

Class B

PFS Shareholder Services (B)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
owned 7,061,117.75 (35.68%) shares

Class Z

Citibank NA Cust Smith Barney
Shearson 401k Savings Plan
Smith Barney Account
Attn. Nancy Kronenberg
111 Wall Street FISD/20th Floor
New York, NY 10043
owned 15,377.98 (100%) shares

High Growth Portfolio

Class A

PFS Shareholder Services (A)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
owned 11,372,074.101 (76.80%) shares


Class B

PFS Shareholder Services (B)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
owned 6,673,961.699 (49.95%) shares

Class Z

Citibank NA Cust Smith Barney
Shearson 401k Savings Plan
Smith Barney Account
Attn. Nancy Kronenberg
111 Wall Street FISD/20th Floor
New York, NY 10043
owned 16,129.39 (100%) shares

Income Portfolio

Class A

PFS Shareholder Services (A)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
owned 1,393,000.204 (78.35%) shares

Class B

PFS Shareholder Services (B)
Attn. Jay Barnhill
3100 Breckinridge Blvd.
Duluth, GA 30199
owned 738,083.495 (43.05%) shares

Class C Shares

Morris Watson TTEE
FBO Morris R. Watson
U/A/D 1/17/90
912 River Oaks Drive
Bakersfield, CA 93309-2857
owned 18,998.273 (8.98%) shares

Rita Diana
Smith Barney Inc. IRA Custodian
108 Palmetto Lane Road
Milford, PA 18337
owned 15, 274.539 (7.22%) shares



Class Z

Citibank NA Cust Smith Barney
Shearson 401k Savings Plan
Smith Barney Account
Attn. Nancy Kronenberg
111 Wall Street FISD/20th Floor
New York, NY 10043
owned 14,258.985 (100%) shares

    
ADDITIONAL INFORMATION

The Concert Series was incorporated in Maryland on August 11, 1995.

Portfolio securities and cash owned by the Concert Series are held in 
the custody of PNC Bank, National Association, 17th and Chestnut 
Streets, Philadelphia, Pennsylvania 19103.

In the event of the liquidation or dissolution of the Concert Series, 
shareholders of a Portfolio are entitled to receive the assets 
belonging to that Portfolio that are available for distribution and a 
proportionate distribution, based upon the relative net assets of the 
respective Portfolios, of any general assets not belonging to any 
particular Portfolio that are available for distribution.


FINANCIAL STATEMENTS

The Concert Series'  Annual Report for the fiscal year ended  January 
31, 1997 is incorporated herein by reference in its entirety.




APPENDIX - RATINGS OF DEBT OBLIGATIONS

BOND (AND NOTE) RATINGS

Moody's Investors Services, Inc.

Aaa - Bonds that are rated "Aaa" are judged to be of the best 
quality.  They carry the smallest degree of investment risk and are 
generally referred to as "gilt edged." Interest payments are 
protected by a large or by an exceptionally stable margin and 
principal is secure.  While the various protective elements are 
likely to change, such changes as can be visualized are most unlikely 
to impair the fundamentally strong position of such issues.

Aa - Bonds that are rated "Aa" are judged to be of high quality by 
all standards.  Together with the "Aaa" group they comprise what are 
generally known as high grade bonds.  They are rated lower than the 
best bonds because margins of protection may not be as large as in 
"Aaa" securities or fluctuation of protective elements may be of 
greater amplitude or there may be other elements present that make 
the long term risks appear somewhat larger than in "Aaa" securities.

A - Bonds that are rated "A" possess many favorable investment 
attributes and are to be considered as upper medium grade 
obligations.  Factors giving security to principal and interest are 
considered adequate but elements may be present that suggest a 
susceptibility to impairment sometime in the future.

Baa - Bonds that are rated "Baa" are considered as medium grade 
obligations, i.e., they are neither highly protected nor poorly 
secured.  Interest payments and principal security appear adequate 
for the present but certain protective elements may be lacking or may 
be characteristically unreliable over any great length of time.  Such 
bonds lack outstanding investment characteristics and in fact have 
speculative characteristics as well.

Ba - Bonds which are rated Ba are judged to have speculative 
elements; their future cannot be considered as well assured.  Often 
the protection of interest and principal payments may be very 
moderate and thereby not well safeguarded during both good and bad 
times over the future.  Uncertainty of position characterizes bonds 
in this class.

B - Bonds which are rated B generally lack characteristics of the 
desirable investment.  Assurance of interest and principal payments 
or of maintenance of other terms of the contract over any long period 
of time may be small.

Caa - Bonds which are rated Caa are of poor standing.  Such issues 
may be in default or there may be present elements of danger with 
respect to principal or interest.

Ca - Bonds which are rated Ca represent obligations which are 
speculative in a high degree.  Such issues are often in default or 
have other marked shortcomings.

C - Bonds which are rated C are the lowest class of bonds and issues 
so rated can be regarded as having extremely poor prospects of ever 
attaining any real investment standing.

Con (..) - Bonds for which the security depends upon the completion 
of some act or the fulfillment of some condition are rated 
conditionally.  These are bonds secured by (a) earnings of projects 
under construction, (b) earnings of projects unseasoned in operating 
experience, (c) rentals which begin when facilities are completed, or 
(d) payments to which some other limiting condition attaches.  
Parenthetical rating denotes probable credit stature upon completion 
of construction or elimination of basis of condition.

Note: The modifier 1 indicates that the security ranks in the higher 
end of its generic rating category; the modifier 2 indicates a mid-
range ranking; and the modifier 3 indicates that the issue ranks in 
the lower end of its generic rating category.

Standard & Poor's Corporation

AAA - Debt rated "AAA" has the highest rating assigned by Standard & 
Poor's.  Capacity to pay interest and repay principal is extremely 
strong.  

AA - Debt rated "AA" has a very strong capacity to pay interest and 
repay principal and differs from the highest rated issues only in 
small degree.

A - Debt rated "A" has a strong capacity to pay interest and repay 
principal although it is somewhat more susceptible to the adverse 
effects of changes in circumstances and economic conditions than debt 
in higher rated categories.

BBB - Debt rated "BBB" is regarded as having an adequate capacity to 
pay interest and repay principal.  Whereas it normally exhibits 
adequate protection parameters, adverse economic conditions or 
changing circumstances are more likely to lead to a weakened capacity 
to pay interest and repay principal for debt in this category than in 
higher rated categories.

BB, B, CCC, CC, C - Debt rated 'BB', 'B', 'CCC', 'CC' and 'C' is 
regarded, on balance, as predominantly speculative with respect to 
capacity to pay interest and repay principal in accordance with the 
terms of the obligation.  'BB' indicates the lowest degree of 
speculation and 'C' the highest degree of speculation.  While such 
debt will likely have some quality and protective characteristics, 
these are outweighed by large uncertainties or major risk exposures 
to adverse conditions.

Plus (+) or Minus (-): The ratings from 'AA' to 'B' may be modified 
by the addition of a plus or minus to show relative standing within 
the major rating categories.

Provisional Ratings: The letter "p" indicates that the rating is 
provisional.  A provisional rating assumes the successful completion 
of the project being financed by the debt being rated and indicates 
that payment of debt service requirements is largely or entirely 
dependent upon the successful and timely completion of the project.  
This rating, however, while addressing credit quality subsequent to 
completion of the project, makes no comment on the likelihood of, or 
the risk of default upon failure of, such completion.  The investor 
should exercise judgment with respect to such likelihood and risk.

L - The letter "L" indicates that the rating pertains to the 
principal amount of those bonds where the underlying deposit 
collateral is fully insured by the Federal Savings & Loan Insurance 
Corp. or the Federal Deposit Insurance Corp.

+ Continuance of the rating is contingent upon S&P's receipt of 
closing documentation confirming investments and cash flow.

* Continuance of the rating is contingent upon S&P's receipt of an 
executed copy of the escrow agreement.

NR Indicates no rating has been requested, that there is insufficient 
information on which to base a rating, or that S&P does not rate a 
particular type of obligation as a matter of policy.


COMMERCIAL PAPER RATINGS

Moody's Investors Service, Inc.

Issuers rated "Prime-1" (or related supporting institutions) have a 
superior capacity for repayment of short-term promissory obligations. 
Prime-1 repayment will normally be evidenced by the following 
characteristics: leading market positions in well-established 
industries; high rates of return on funds employed; conservative 
capitalization structures with moderate reliance on debt and ample 
asset protection; broad margins in earnings coverage of fixed 
financial charges and high internal cash generation; well-established 
access to a range of financial markets and assured sources of 
alternate liquidity.

Issuers rated "Prime-2" (or related supporting institutions) have 
strong capacity for repayment of short-term promissory obligations.  
This will normally be evidenced by many of the characteristics cited 
above but to a lesser degree.  Earnings trends and coverage ratios, 
while sound, will be more subject to variation.  Capitalization 
characteristics, while still appropriate, may be more affected by 
external conditions.  Ample alternate liquidity is maintained.  

Standard & Poor's Corporation

A-1 - This designation indicates that the degree of safety regarding 
timely payment is either overwhelming or very strong.  Those issuers 
determined to possess overwhelming safety characteristics will be 
noted with a plus (+) sign designation.

A-2 - Capacity for timely payment on issues with this designation is 
strong.  However, the relative degree of safety is not as high as for 
issues designated A-1.






Statement of Additional Information
   
May 30, 1997

SMITH BARNEY 
CONCERT ALLOCATION SERIES INC.
    
SELECT HIGH GROWTH PORTFOLIO
SELECT GROWTH PORTFOLIO
SELECT BALANCED PORTFOLIO
SELECT CONSERVATIVE PORTFOLIO
SELECT INCOME PORTFOLIO

388 Greenwich Street, New York, New York 10013 (800) 451-2010

The Concert Series currently offers ten investment portfolios, five 
of which are offered by this Statement of Additional Information 
(individually, a "Portfolio" and collectively, the "Select 
Portfolios").  This Statement of Additional Information expands upon 
and supplements the information contained in the current Prospectus 
of Smith Barney Concert Allocation Series Inc. (the "Concert Series") 
dated May 30, 1997 for the Select Portfolios, as amended or 
supplemented from time to time (the "Prospectus"), and should be read 
in conjunction therewith. Each of the Select Portfolios seeks to 
achieve its objective by investing in a number of open-end management 
investment companies or series thereof ("Underlying Smith Barney 
Funds") for which Smith Barney Inc. ("Smith Barney") now or in the 
future acts as principal underwriter or for which Smith Barney, Smith 
Barney Mutual Funds Management Inc. ("SBMFM"), or Smith Barney 
Strategy Advisers Inc. ("SBSA") now or in the future acts as 
investment adviser. A Prospectus may be obtained from designated 
insurance companies offering separate accounts ("Separate Accounts") 
which fund certain variable annuity and variable life insurance 
contracts (each a "Contract") or by writing or calling the Concert 
Series at the address or telephone number listed above.  This 
Statement of Additional Information, although not in itself a 
prospectus, is incorporated by reference into the Prospectus in its 
entirety.


TABLE OF CONTENTS

For ease of reference, the same section headings are used in the 
Prospectus for the Select Portfolios and this Statement of Additional 
Information, except as shown below:

Caption	Page
Management of the Concert Series 	 2
Investment Objectives and Management Policies 	 4 
Purchase of Shares 	 20 
Redemption of Shares 	 20 
Valuation of Shares 	 21 
Performance 	 21 
Taxes (See in the Prospectus "Dividends, Distributions and Taxes") 	 22 
Voting (See in the Prospectus "Additional Information") 	 24 
Additional Information 	 25 
Appendix - Ratings of Debt Obligations 	 A-1



MANAGEMENT OF THE CONCERT SERIES

The executive officers of the Concert Series are employees of certain 
of the organizations that provide services to the Concert Series.  
These organizations are the following:

Travelers Investment Adviser, Inc. ("TIA") 	 Investment 
Manager
PNC Bank, National Association ("PNC Bank") 	 Custodian
First Data Investor Services Group, Inc. ("First Data")	 Transfer 
Agent

These organizations and the functions they perform for the Concert 
Series are discussed in the Prospectus and in this Statement of 
Additional Information.

Directors and Executive Officers of the Concert Series

The names of the directors and executive officers of the Concert 
Series, together with information as to their principal business 
occupations during the past five years, are shown below.  Each 
director who is an "interested person" of the Concert Series, as 
defined in the Investment Company Act of 1940, as amended (the "1940 
Act"), is indicated by an asterisk.
   
	Walter E. Auch, Director (Age 76).  Consultant to companies in 
the financial services industry; Director of Pimco Advisers L.P.  His 
address is 6001 N. 62nd Place, Paradise Valley, Arizona 85253.

	Martin Brody, Director (Age 75).  Vice Chairman of the Board of 
Restaurant Associates Industries, Inc.  His address is c/o HMK 
Associates, 30 Columbia Turnpike, Florham Park, New Jersey 07932.

	H. John Ellis, Jr., Director (Age 70).  Prior to 1992, 
Executive Vice President of the Consulting Services Division of 
Shearson Lehman Brothers Inc. ("Shearson Lehman Brothers").  His 
address is 858 East Crystal Downs Drive, Frankfort, Michigan 49635.

	Stephen E. Kaufman, Director (Age 65).  Attorney.  His address 
is 277 Park Avenue, New York, New York 10172.

	Armon E. Kamesar, Director (Age 70).  Chairman of TEC, an 
international organization of Chief Executive Officers; Trustee, U.S. 
Bankruptcy Court.  His address is 7328 Country Club Drive, LaJolla, 
California 92037.

	*Heath B. McLendon, Chairman of the Board (Age 64).  Managing 
Director of Smith Barney, Chairman of the Board of Smith Barney 
Strategy Advisers Inc. and President of SBMFM and TIA; prior to July 
1993, Senior Executive Vice President of Shearson Lehman Brothers, 
Vice Chairman of Shearson Asset Management. Mr. McLendon also serves 
as Chairman of the Board of 41 investment companies sponsored by 
Smith Barney ("Smith Barney Mutual Funds").  His address is 388 
Greenwich Street, New York, New York 10013.

	Madelon DeVoe Talley, Director (Age 64).  Author.  Governor-at-
large of the National Association of Securities Dealers, Inc. .; 
Commissioner of  Port Authority of New York and New Jersey as of 
1996.  Her address is 876 Park Avenue, New York, New York 10021.

	Jessica M. Bibliowicz, President (Age 37).  Executive Vice 
President of Smith Barney; Chairman of the Board and Chief Executive 
Officer of SBMFM and TIA; Director of twelve investment companies 
associated with Smith Barney and President of 41 Smith Barney Mutual 
Funds.; prior to 1994, Director of Sales and Marketing for Prudential 
Mutual Funds. Her address is 388 Greenwich Street, New York, New York 
10013. 

	Lewis E. Daidone, Senior Vice President and Treasurer (Age 38).  
Managing Director of Smith Barney; Director and Senior Vice President 
of SBMFM and TIA.  Mr. Daidone also serves as Senior Vice President 
and Treasurer of 41 Smith Barney Mutual Funds.  His address is 388 
Greenwich Street, New York, New York 10013. 

	R. Jay Gerken, Vice President and Investment Officer (Age 43). 
Managing Director of Smith Barney and  portfolio manager of  one 
other investment company of Smith Barney Mutual Funds; prior to July 
1993, Managing Director of Shearson Lehman Advisors. His address is 
388 Greenwich Street, New York, New York 10013.

	Christina T. Sydor, Secretary (Age 46).  Managing Director of 
Smith Barney; General Counsel and Secretary of SBMFM and TIA.  Ms. 
Sydor also serves as Secretary of 41 Smith Barney Mutual Funds.  Her 
address is 388 Greenwich Street, New York, New York 10013. 

Each Director also serves as a director, trustee, consultant and/or 
general partner of certain other mutual funds for which Smith Barney 
serves as distributor.  As of May 15, 1997, the Directors and 
officers of the Fund, as a group, owned less than 1.00% of the 
outstanding common stock of the Fund.

No officer, director or employee of SBMFM, or any of its affiliates 
will receive any compensation from the Concert Series for serving as 
an officer or director of the Concert Series.  The Concert Series 
pays each director who is not an officer, director or employee of 
SBMFM or any of its affiliates a fee of $5,000 per annum plus $100 
per Portfolio per meeting attended and reimburses travel and out-of-
pocket expenses.
Upon attainment of age 80 Directors are required to change to 
emeritus status.  Directors Emeritus are entitled to serve in 
emeritus status for a maximum of 10 years during which time they 
receive 50% of the annual retainer fee and meeting fees otherwise 
applicable to the Concert Series Directors.  All Directors are 
reimbursed for travel and out-of-pocket expenses incurred in 
attending such meetings.
    
The following table shows the compensation paid by Concert Series to 
each incumbent Director during its first fiscal year:
   
Compensation Table
								Total
					Pension or	Total	Number
			Retirement Benefits	Compensation	of Funds
		Aggregate	Accrued as Expense	From	Served in
	Name	Compensation	of Concert Series	Fund Complex	Complex
Heath B. McLendon*	None		None		None	  41
Walter Auch		$  5,350		None		$ 37,935	    2
Martin Brody		5,350		None		121,685	  19
H. John Ellis		5,450		None		36,800	    1
Armon E. Kamesar	5,950		None		38,635	   2
Stephen E. Kaufman	5,950		None		89,735	  13
Madelon DeVoe Talley+	5,950		None 		90,685	  3

* Designates "interested director".
+ Pursuant to the Fund's deferred compensation plan, the indicated 
Director has elected to defer the following payment of some or all of 
her compensation: M. DeVoe Talley - $2,975.
    
Investment Manager - TIA

TIA acts as investment manager to each Select Portfolio pursuant to 
separate asset allocation and administration agreements (the "Asset 
Allocation and Administration Agreements").  TIA is an indirect 
wholly owned subsidiary of Travelers Group Inc. ("Travelers").  The 
Asset Allocation and Administration Agreements with respect to each 
Select Portfolio were approved by the Board of Directors, including a 
majority of the directors who are not "interested persons" of the 
Concert Series or TIA (the "Independent Directors"), on September 5, 
1996.  Pursuant to the Asset Allocation and Administration 
Agreements, TIA will determine how each Select Portfolio's assets 
will be invested in the Underlying Smith Barney Funds and in 
repurchase agreements pursuant to the investment objectives and 
policies of each Portfolio set forth in the Prospectus and make 
recommendations to the Board of Directors concerning changes to (a) 
the Underlying Smith Barney Funds in which the Select Portfolios may 
invest, (b) the percentage range of assets that may be invested by 
each Portfolio in any one Underlying Smith Barney Fund and (c) the 
percentage range of assets of any Portfolio that may be invested in 
equity funds and fixed income funds (including money market funds).  
In addition to such services, TIA pays the salaries of all officers 
and employees who are employed by both it and the Concert Series, 
maintains office facilities for the Concert Series, furnishes the 
Concert Series with statistical and research data, clerical help and 
accounting, data processing, bookkeeping, internal auditing and legal 
services and certain other services required by the Concert Series 
and each Select Portfolio, prepares reports to each Portfolio's 
shareholders and prepares tax returns, reports to and filings with 
the Securities and Exchange Commission (the "SEC") and state Blue Sky 
authorities.  SBMFM provides investment advisory and management 
services to investment companies affiliated with Smith Barney.

The management fee for each Select Portfolio is calculated at the 
annual rate of 0.35% of  that Portfolio's average daily net assets.  
Under the Asset Allocation and Administration Agreements, TIA has 
agreed to bear all expenses incurred in the operation of each Select 
Portfolio other than the management fee and extraordinary expenses.  
Such expenses include taxes, interest, brokerage fees and 
commissions, if any; fees of directors who are not officers, 
directors, shareholders or employees of Smith Barney or TIA; SEC fees 
and state Blue Sky qualification fees; charges of custodians; 
transfer and dividend disbursing agent's fees; certain insurance 
premiums; outside auditing and legal expenses; costs of maintenance 
of corporate existence; investor services (including allocated 
telephone and personnel expenses); and costs of preparation and 
printing of the prospectus for regulatory purposes and for 
distribution to existing shareholders; cost of shareholders' reports 
and shareholder meetings and meetings of the officers or Board of 
Directors of the Concert Series.


Counsel and Auditors

Willkie Farr & Gallagher serves as legal counsel to the Concert 
Series.  The Independent Directors of the Concert Series have 
selected Stroock & Stroock & Lavan LLP as their legal counsel

KPMG Peat Marwick LLP, independent accountants, 345 Park Avenue, New 
York, New York 10154, have been selected as auditors for the Concert 
Series for its fiscal year ending January 31, 1998 to examine and 
report on the Concert Series' financial statements and highlights.

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES

The Prospectus discusses the investment objectives of the Select 
Portfolios and each of the Underlying Smith Barney Funds in which the 
Select Portfolios may invest, as well as the policies employed to 
achieve those objectives.  This section contains supplemental 
information concerning the types of securities and other instruments 
in which the Underlying Smith Barney Funds may invest (and repurchase 
agreements in which the Select Portfolios and/or the Underlying Smith 
Barney Funds may invest), the investment policies and portfolio 
strategies the Underlying Smith Barney Funds may utilize and certain 
risks attendant to such investments, policies and strategies.  There 
can be no assurance that the respective investment objectives of the 
Select Portfolios or the Underlying Smith Barney Funds will be 
achieved.

The Articles of Incorporation of the Concert Series permit the Board 
of Directors to establish additional portfolios of the Concert Series 
from time to time.  The investment objectives, policies and 
restrictions applicable to additional portfolios would be established 
by the Board of Directors at the time such portfolios were 
established and may differ from those set forth in the Prospectus and 
this Statement of Additional Information.  

MONEY MARKET INSTRUMENTS.  Each of the Underlying Smith Barney Funds 
may invest in certain types of money market instruments which may 
include: U.S. government securities; certificates of deposit ("CDs"), 
time deposits ("TDs") and bankers' acceptances issued by domestic 
banks (including their branches located outside the United States and 
subsidiaries located in Canada), domestic branches of foreign banks, 
savings and loan associations and similar institutions; high grade 
commercial paper; and repurchase agreements with respect to the 
foregoing types of instruments.  The following is a more detailed 
description of such money market instruments.

U.S. GOVERNMENT SECURITIES.  U.S. government securities include debt 
obligations of varying maturities issued or guaranteed by the U.S. 
government or its agencies or instrumentalities.  U.S. government 
securities include not only direct obligations of the U.S. Treasury, 
but also securities issued or guaranteed by the Federal Housing 
Administration, Farmers Home Administration, Export-Import Bank of 
the United States, Small Business Administration, Government National 
Mortgage Association ("GNMA"), General Services Administration, 
Central Bank for Cooperatives, Federal Intermediate Credit Banks, 
Federal Land Banks, Federal National Mortgage Association ("FNMA"), 
Maritime Administration, Tennessee Valley Authority, District of 
Columbia Armory Board, Student Loan Marketing Association, 
International Bank for Reconstruction and Development and Resolution 
Trust Corporation.  Certain U.S. government securities, such as those 
issued or guaranteed by GNMA, FNMA and Federal Home Loan Mortgage 
Corporation ("FHLMC"), are mortgage-related securities.  Because the 
U.S. Government is not obligated by law to provide support to an 
instrumentality that it sponsors, a Portfolio or an Underlying Smith 
Barney Fund will invest in obligations issued by such an 
instrumentality only if its investment adviser determines that the 
credit risk with respect to the instrumentality does not make its 
securities unsuitable for investment by the Portfolio or the Fund, as 
the case may be.

BANK OBLIGATIONS.  Domestic commercial banks organized under Federal 
law are supervised and examined by the Comptroller of the Currency 
and are required to be members of the Federal Reserve System and to 
be insured by the Federal Deposit Insurance Corporation (the "FDIC").  
Domestic banks organized under state law are supervised and examined 
by state banking authorities but are members of the Federal Reserve 
System only if they elect to join.  Most state banks are insured by 
the FDIC (although such insurance may not be of material benefit to 
an Underlying Smith Barney Fund, depending upon the principal amount 
of certificates of deposit ("CDs") of each held by the Fund) and are 
subject to Federal examination and to a substantial body of Federal 
law and regulation.  As a result of Federal and state laws and 
regulations, domestic branches of domestic banks are, among other 
things, generally required to maintain specified levels of reserves, 
and are subject to other supervision and regulation designed to 
promote financial soundness.

Obligations of foreign branches of U.S. banks, such as CDs and TDs, 
may be general obligations of the parent bank in addition to the 
issuing branch, or may be limited by the terms of a specific 
obligation and governmental regulation.  Obligations of foreign 
branches of U.S. banks and foreign banks are subject to different 
risks than are those of U.S. banks or U.S. branches of foreign banks.  
These risks include foreign economic and political developments, 
foreign governmental restrictions that may adversely affect payment 
of principal and interest on the obligations, foreign exchange 
controls and foreign withholding and other taxes on interest income.  
Foreign branches of U.S. banks are not necessarily subject to the 
same or similar regulatory requirements that apply to U.S. banks, 
such as mandatory reserve requirements, loan limitations and 
accounting, auditing and financial recordkeeping requirements.  In 
addition, less information may be publicly available about a foreign 
branch of a U.S. bank than about a U.S. bank.  CDs issued by wholly 
owned Canadian subsidiaries of U.S. banks are guaranteed as to 
repayment of principal and interest, but not as to sovereign risk, by 
the U.S. parent bank.

Obligations of U.S. branches of foreign banks may be general 
obligations of the parent bank in addition to the issuing branch, or 
may be limited by the terms of a specific obligation and by Federal 
and state regulation as well as governmental action in the country in 
which the foreign bank has its head office.  A U.S. branch of a 
foreign bank with assets in excess of $1 billion may or may not be 
subject to reserve requirements imposed by the Federal Reserve System 
or by the state in which the branch is located if the branch is 
licensed in that state.  In addition, branches licensed by the 
Comptroller of the Currency and branches licensed by certain states 
("State Branches") may or may not be required to: (a) pledge to the 
regulator by depositing assets with a designated bank within the 
state, an amount of its assets equal to 5% of its total liabilities; 
and (b) maintain assets within the state in an amount equal to a 
specified percentage of the aggregate amount of liabilities of the 
foreign bank payable at or through all of its agencies or branches 
within the state.  The deposits of State Branches may not necessarily 
be insured by the FDIC.  In addition, there may be less publicly 
available information about a U.S. branch of a foreign bank than 
about a U.S. bank.

COMMERCIAL PAPER.  Commercial paper consists of short-term (usually 
from 1 to 270 days) unsecured promissory notes issued by corporations 
in order to finance their current operations.  A variable amount 
master demand note (which is a type of commercial paper) represents a 
direct borrowing arrangement involving periodically fluctuating rates 
of interest under a letter agreement between a commercial paper 
issuer and an institutional lender, such as one of the Underlying 
Smith Barney Funds, pursuant to which the lender may determine to 
invest varying amounts.  Transfer of such notes is usually restricted 
by the issuer, and there is no secondary trading market for such 
notes.

REPURCHASE AGREEMENTS.  The Select Portfolios and the Underlying 
Smith Barney Funds may purchase securities and concurrently enter 
into repurchase agreements with certain member banks which are the 
issuers of instruments acceptable for purchase by the Portfolio or 
the Fund, as the case may be, and with certain dealers on the Federal 
Reserve Bank of New York's list of reporting dealers.  Repurchase 
agreements are contracts under which the buyer of a security 
simultaneously commits to resell the security to the seller at an 
agreed-upon price and date.  Under each repurchase agreement, the 
selling institution will be required to maintain the value of the 
securities subject to the repurchase agreement at not less than their 
repurchase price.  Repurchase agreements could involve certain risks 
in the event of default or insolvency of the other party, including 
possible delays or restrictions upon a Portfolio's or a Fund's 
ability to dispose of the underlying securities, the risk of a 
possible decline in the value of the underlying securities during the 
period in which the Portfolio or Fund seeks to assert its rights to 
them, the risk of incurring expenses associated with asserting those 
rights and the risk of losing all or part of the income from the 
repurchase agreement.

WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. To secure 
an advantageous price or yield, certain of the Underlying Smith 
Barney Funds may purchase certain securities on a when-issued basis 
or purchase or sell securities for delayed delivery.  Delivery of the 
securities in such cases occurs beyond the normal settlement periods, 
but no payment or delivery is made by a Fund prior to the reciprocal 
delivery or payment by the other party to the transaction.  In 
entering into a when-issued or delayed-delivery transaction, an 
Underlying Smith Barney Fund will rely on the other party to 
consummate the transaction and may be disadvantaged if the other 
party fails to do so.

U.S. government securities normally are subject to changes in value 
based upon changes, real or anticipated, in the level of interest 
rates and the public's perception of the creditworthiness of the 
issuers.  In general, U.S. government securities tend to appreciate 
when interest rates decline and depreciate when interest rates rise.  
Purchasing these securities on a when-issued or delayed-delivery 
basis, therefore, can involve the risk that the yields available in 
the market when the delivery takes place may actually be higher than 
those obtained in the transaction itself.  Similarly, the sale of 
U.S. government securities for delayed delivery can involve the risk 
that the prices available in the market when the delivery is made may 
actually be higher than those obtained in the transaction itself.

In the case of the purchase by an Underlying Smith Barney Fund of 
securities on a when-issued or delayed-delivery basis, a segregated 
account in the name of the Fund consisting of cash or liquid debt 
securities equal to the amount of the when-issued or delayed-delivery 
commitments will be established at the Fund's custodian.  For the 
purpose of determining the adequacy of the securities in the 
accounts, the deposited securities will be valued at market or fair 
value.  If the market or fair value of the securities declines, 
additional cash or securities will be placed in the account daily so 
that the value of the account will equal the amount of such 
commitments by the Fund involved.  On the settlement date, a Fund 
will meet its obligations from then-available cash flow, the sale of 
securities held in the segregated account, the sale of other 
securities or, although it would not normally expect to do so, from 
the sale of the securities purchased on a when-issued or delayed-
delivery basis (which may have a value greater or less than the 
Fund's payment obligations).

LENDING OF PORTFOLIO SECURITIES.  Certain of the Underlying Smith 
Barney Funds have the ability to lend portfolio securities to 
brokers, dealers and other financial organizations.  A Fund will not 
lend portfolio securities to Smith Barney unless it has applied for 
and received specific authority to do so from the SEC.  Loans of 
portfolio securities will be collateralized by cash, letters of 
credit or U.S. government securities which are maintained at all 
times in an amount at least equal to the current market value of the 
loaned securities.  From time to time, an Underlying Smith Barney 
Fund may pay a part of the interest earned from the investment of 
collateral received for securities loaned to the borrower and/or a 
third party which is unaffiliated with the Fund and is acting as a 
"finder."

By lending its securities, an Underlying Smith Barney Fund can 
increase its income by continuing to receive interest on the loaned 
securities as well as by either investing the cash collateral in 
short-term instruments or obtaining yield in the form of interest 
paid by the borrower when U.S. government securities are used as 
collateral.  A Fund will comply with the following conditions 
whenever its portfolio securities are loaned: (a) the Fund must 
receive at least 100% cash collateral or equivalent securities from 
the borrower; (b) the borrower must increase such collateral whenever 
the market value of the securities loaned rises above the level of 
such collateral; (c) the Fund must be able to terminate the loan at 
any time; (d) the Fund must receive reasonable interest on the loan, 
as well as any dividends, interest or other distributions on the 
loaned securities, and any increase in market value; (e) the Fund may 
pay only reasonable custodian fees in connection with the loan; and 
(f) voting rights on the loaned securities may pass to the borrower; 
provided, however, that if a material event adversely affecting the 
investment in the loaned securities occurs, the Fund's trustees or 
directors, as the case may be, must terminate the loan and regain the 
right to vote the securities.  The risks in lending portfolio 
securities, as with other extensions of secured credit, consist of a 
possible delay 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 
each Underlying Smith Barney Fund's investment adviser to be of good 
standing and will not be made unless, in the judgment of the adviser, 
the consideration to be earned from such loans would justify the 
risk.

OPTIONS ON SECURITIES.  Certain of the Underlying Smith Barney Funds 
may engage in transactions in options on securities, which, depending 
on the Fund, may include the writing of covered put options and 
covered call options, the purchase of put and call options and the 
entry into closing transactions.

The principal reason for writing covered call options on securities 
is to attempt to realize, through the receipt of premiums, a greater 
return than would be realized on the securities alone.  Certain 
Underlying Smith Barney Funds, however, may engage in option 
transactions only to hedge against adverse price movements in the 
securities that it holds or may wish to purchase and the currencies 
in which certain portfolio securities may be denominated.  In return 
for a premium, the writer of a covered call option forfeits the right 
to any appreciation in the value of the underlying security above the 
strike price for the life of the option (or until a closing purchase 
transaction can be effected).  Nevertheless, the call writer retains 
the risk of a decline in the price of the underlying security.  
Similarly, the principal reason for writing covered put options is to 
realize income in the form of premiums.  The writer of a covered put 
option accepts the risk of a decline in the price of the underlying 
security.  The size of the premiums that a Fund may receive may be 
adversely affected as new or existing institutions, including other 
investment companies, engage in or increase their option-writing 
activities.

Options written by an Underlying Smith Barney Fund normally will have 
expiration dates between one and nine months from the date written.  
The exercise price of the options may be below, equal to or above the 
market values of the underlying securities at the times the options 
are written.  In the case of call options, these exercise prices are 
referred to as "in-the-money," "at-the-money" and "out-of-the-money," 
respectively.  An Underlying Smith Barney Fund with option-writing 
authority may write (a) in-the-money call options when its investment 
adviser expects that the price of the underlying security will remain 
flat or decline moderately during the option period, (b) at-the-money 
call options when its adviser expects that the price of the 
underlying security will remain flat or advance moderately during the 
option period and (c) out-of-the-money call options when its adviser 
expects that the price of the underlying security may increase but 
not above a price equal to the sum of the exercise price plus the 
premiums received from writing the call option.  In any of the 
preceding situations, if the market price of the underlying security 
declines and the security is sold at this lower price, the amount of 
any realized loss will be offset wholly or in part by the premium 
received.  Out-of-the-money, at-the-money and in-the-money put 
options (the reverse of call options as to the relation of exercise 
price to market price) may be utilized in the same market 
environments that such call options are used in equivalent 
transactions.

So long as the obligation of an Underlying Smith Barney Fund as the 
writer of an option continues, the Fund may be assigned an exercise 
notice by the broker-dealer through which the option was sold, 
requiring the Fund to deliver, in the case of a call, or take 
delivery of, in the case of a put, the underlying security against 
payment of the exercise price.  This obligation terminates when the 
option expires or the Fund effects a closing purchase transaction.  A 
Fund can no longer effect a closing purchase transaction with respect 
to an option once it has been assigned an exercise notice.  To secure 
its obligation to deliver the underlying security when it writes a 
call option, or to pay for the underlying security when it writes a 
put option, an Underlying Smith Barney Fund will be required to 
deposit in escrow the underlying security or other assets in 
accordance with the rules of the Options Clearing Corporation (the 
"Clearing Corporation") or similar foreign clearing corporation and 
of the securities exchange on which the option is written.

Certain Underlying Smith Barney Funds may purchase and sell put, call 
and other types of option securities that are traded on domestic or 
foreign exchanges or the over-the-counter market including, but not 
limited to, "spread" options, "knock-out" options, "knock-in" options 
and "average rate" or "look-back" options. "Spread" options are 
dependent upon the difference between the price of two securities or 
futures contracts, "knock-out" options are canceled if the price of 
the underlying asset reaches a trigger level prior to expiration, 
"knock-in" options only have value if the price of the underlying 
asset reaches a trigger level and, "average rate" or "look-back" 
options are options where, at expiration, the option's strike price 
is set based on either the average, maximum or minimum price of the 
asset over the period of the option.

An option position may be closed out only where there exists a 
secondary market for an option of the same series on a recognized 
securities exchange or in the over-the-counter market.  Certain 
Underlying Smith Barney Funds with option-writing authority may write 
options on U.S. or foreign exchanges and in the over-the-counter 
market.

An Underlying Smith Barney Fund may realize a profit or loss upon 
entering into a closing transaction.  In cases in which a Fund has 
written an option, it will realize a profit if the cost of the 
closing purchase transaction is less than the premium received upon 
writing the original option and will incur a loss if the cost of the 
closing purchase transaction exceeds the premium received upon 
writing the original option.  Similarly, when a Fund has purchased an 
option and engages in a closing sale transaction, whether the Fund 
realizes a profit or loss will depend upon whether the amount 
received in the closing sale transaction is more or less than the 
premium that the Fund initially paid for the original option plus the 
related transaction costs.

Although an Underlying Smith Barney Fund generally will purchase or 
write only those options for which its adviser believes there is an 
active secondary market so as to facilitate closing transactions, 
there is no assurance that sufficient trading interest to create a 
liquid secondary market on a securities exchange will exist for any 
particular option or at any particular time, and for some options no 
such secondary market may exist.  A liquid secondary market in an 
option may cease to exist for a variety of reasons.  In the past, for 
example, higher than anticipated trading activity or order flow, or 
other unforeseen events, have at times rendered inadequate certain of 
the facilities of the Clearing Corporation and U.S. and foreign 
securities exchanges and resulted in the institution of special 
procedures, such as trading rotations, restrictions on certain types 
of orders or trading halts or suspensions in one or more options.  
There can be no assurance that similar events, or events that may 
otherwise interfere with the timely execution of customers' orders, 
will not recur.  In such event, it might not be possible to effect 
closing transactions in particular options.  If as a covered call 
option writer a Fund is unable to effect a closing purchase 
transaction in a secondary market, it will not be able to sell the 
underlying security until the option expires or it delivers the 
underlying security upon exercise.

Securities exchanges generally have established limitations governing 
the maximum number of calls and puts of each class which may be held 
or written, or exercised within certain time periods, by an investor 
or group of investors acting in concert (regardless of whether the 
options are written on the same or different securities exchanges or 
are held, written or exercised in one or more accounts or through one 
or more brokers).  It is possible that the Underlying Smith Barney 
Funds with authority to engage in options transactions and other 
clients of their respective advisers and certain of their affiliates 
may be considered to be such a group.  A securities exchange may 
order the liquidation of positions found to be in violation of these 
limits and it may impose certain other sanctions.

In the case of options written by an Underlying Smith Barney Fund 
that are deemed covered by virtue of the Fund's holding convertible 
or exchangeable preferred stock or debt securities, the time required 
to convert or exchange and obtain physical delivery of the underlying 
common stocks with respect to which the Fund has written options may 
exceed the time within which the Fund must make delivery in 
accordance with an exercise notice.  In these instances, an 
Underlying Smith Barney Fund may purchase or borrow temporarily the 
underlying securities for purposes of physical delivery.  By so 
doing, the Fund will not bear any market risk because the Fund will 
have the absolute right to receive from the issuer of the underlying 
security an equal number of shares to replace the borrowed stock, but 
the Fund may incur additional transaction costs or interest expenses 
in connection with any such purchase or borrowing.

Additional risks exist with respect to certain of the U.S. government 
securities for which an Underlying Smith Barney Fund may write 
covered call options.  If a Fund writes covered call options on 
mortgage-backed securities, the securities that it holds as cover 
may, because of scheduled amortization or unscheduled prepayments, 
cease to be sufficient cover.  The Fund will compensate for the 
decline in the value of the cover by purchasing an appropriate 
additional amount of those securities.

STOCK INDEX OPTIONS.  Certain of the Underlying Smith Barney Funds 
may purchase and write put and call options on U.S. stock indexes 
listed on U.S. exchanges for the purpose of hedging its portfolio.  A 
stock index fluctuates with changes in the market values of the 
stocks included in the index.  Some stock index options are based on 
a broad market index such as the New York Stock Exchange Composite 
Index or a narrower market index such as the Standard & Poor's 100.  
Indexes also are based on an industry or market segment such as the 
American Stock Exchange Oil and Gas Index or the Computer and 
Business Equipment Index.

Options on stock indexes are similar to options on stock except that 
(a) the expiration cycles of stock index options are monthly, while 
those of stock options currently are quarterly, and (b) the delivery 
requirements are different.  Instead of giving the right to take or 
make delivery of stock at a specified price, an option on a stock 
index gives the holder the right to receive a cash "exercise 
settlement amount" equal to (a) the amount, if any, by which the 
fixed exercise price of the option exceeds (in the case of a put) or 
is less than (in the case of a call) the closing value of the 
underlying index on the date of exercise, multiplied by (b) a fixed 
"index multiplier." Receipt of this cash amount will depend upon the 
closing level of the stock index upon which the option is based being 
greater than, in the case of a call, or less than, in the case of a 
put, the exercise price of the option.  The amount of cash received 
will be equal to such difference between the closing price of the 
index and the exercise price of the option expressed in dollars times 
a specified multiple.  The writer of the option is obligated, in 
return for the premium received, to make delivery of this amount.  
The writer may offset its position in stock index options prior to 
expiration by entering into a closing transaction on an exchange or 
it may let the options expire unexercised.

The effectiveness of purchasing or writing stock index options as a 
hedging technique will depend upon the extent to which price 
movements in the portion of a securities portfolio being hedged 
correlate with price movements of the stock index selected.  Because 
the value of an index option depends upon movements in the level of 
the index rather than the price of a particular stock, whether a Fund 
will realize a gain or loss from the purchase or writing of options 
on an index depends upon movements in the level of stock prices in 
the stock market generally or, in the case of certain indexes, in an 
industry or market segment, rather than movements in the price of a 
particular stock.  Accordingly, successful use by a Fund of options 
on stock indexes will be subject to its adviser's ability to predict 
correctly movements in the direction of the stock market generally or 
of a particular industry.  This requires different skills and 
techniques than predicting changes in the prices of individual 
stocks.

An Underlying Smith Barney Fund will engage in stock index options 
transactions only when determined by its adviser to be consistent 
with the Fund's efforts to control risk.  There can be no assurance 
that such judgment will be accurate or that the use of these 
portfolio strategies will be successful.  When a Fund writes an 
option on a stock index, the Fund will establish a segregated account 
with its custodian in an amount equal to the market value of the 
option and will maintain the account while the option is open.

MORTGAGE-RELATED SECURITIES.  The average maturity of pass-through 
pools of mortgage related securities varies with the maturities of 
the underlying mortgage instruments.  In addition, a pool's stated 
maturity may be shortened by unscheduled payments on the underlying 
mortgages.  Factors affecting mortgage prepayments include the level 
of interest rates, general economic and social conditions, the 
location of the mortgaged property and age of the mortgage.  Because 
prepayment rates of individual pools vary widely, it is not possible 
to accurately predict the average life of a particular pool.  Common 
practice is to assume that prepayments will result in an average life 
ranging from 2 to 10 years for pools of fixed-rate 30-year mortgages.  
Pools of mortgages with other maturities or different characteristics 
will have varying average life assumptions.

Mortgage-related securities may be classified as private, 
governmental or government-related, depending on the issuer or 
guarantor.  Private mortgage-related securities represent pass-
through pools consisting principally of conventional residential 
mortgage loans created by non-governmental issuers, such as 
commercial banks, savings and loan associations and private mortgage 
insurance companies.  Governmental mortgage-related securities are 
backed up by the full faith and credit of the U.S. Government. GNMA, 
the principal guarantor of such securities, is a wholly owned U.S. 
government corporation within the Department of Housing and Urban 
Development.  Government-related mortgage-related securities are not 
backed by the full faith and credit of the U.S. Government.  Issuers 
of such securities include FNMA and FHLMC.  FNMA is a government-
sponsored corporation owned entirely by private stockholders, which 
is subject to general regulation by the Secretary of Housing and 
Urban Development.  Pass-through securities issued by FNMA are 
guaranteed as to timely payment of principal and interest by FNMA.  
FHLMC is a corporate instrumentality of the U.S., the stock of which 
is owned by Federal Home Loan Banks.  Participation certificates 
representing interests in mortgages from FHLMC's national portfolio 
are guaranteed as to the timely payment of interest and ultimate 
collection of principal by FHLMC.

Private U.S. governmental or government-related entities create 
mortgage loan pools offering pass-through investments in addition to 
those described above.  The mortgages underlying these securities may 
be alternative mortgage instruments, that is, mortgage instruments 
whose principal or interest payments may vary or whose terms to 
maturity may be shorter than previously customary.  As new types of 
mortgage-related securities are developed and offered to investors, 
certain of the Underlying Smith Barney Funds, consistent with their 
investment objective and policies, may consider making investments in 
such new types of securities.

CURRENCY TRANSACTIONS.  Certain of the Underlying Smith Barney Funds 
may enter into forward currency exchange transactions.  A forward 
currency contract is an obligation to purchase or sell a currency 
against another currency at a future date and price as agreed upon by 
the parties.  An Underlying Smith Barney Fund that enters into a 
forward currency contract may either accept or make delivery of the 
currency at the maturity of the forward contract or, prior to 
maturity, enter into a closing transaction involving the purchase or 
sale of an offsetting contract.  A Fund may engage in forward 
currency transactions in anticipation of, or to protect itself 
against, fluctuations in exchange rates.  A Fund might sell a 
particular foreign currency forward, for example, when it holds bonds 
denominated in that currency but anticipates, and seeks to be 
protected against, decline in the currency against the U.S. dollar.  
Similarly, a Fund may sell the U.S. dollar forward when it holds 
bonds denominated in U.S. dollars but anticipates, and seeks to be 
protected against, a decline in the U.S. dollar relative to other 
currencies.  Further, a Fund may purchase a currency forward to "lock 
in" the price of securities denominated in that currency which it 
anticipates purchasing.

Transaction hedging is the purchase or sale of forward currency 
contracts with respect to a specific receivable or payable of the 
Fund generally arising in connection with the purchase or sale of its 
securities.  Position hedging, generally, is the sale of forward 
currency contracts with respect to portfolio security positions 
denominated or quoted in the currency.  A Fund may not position hedge 
with respect to a particular currency to an extent greater than the 
aggregate market value at any time of the security or securities held 
in its portfolio denominated or quoted in or currently convertible 
(such as through exercise of an option or consummation of a forward 
currency contract) into that particular currency, except that certain 
Underlying Smith Barney Funds may utilize forward currency contracts 
denominated in the European Currency Unit to hedge portfolio security 
positions when a security or securities are denominated in currencies 
of member countries in the European Monetary System.  If a Fund 
enters into a transaction hedging or position hedging transaction, it 
will cover the transaction through one or more of the following 
methods: (a) ownership of the underlying currency or an option to 
purchase such currency; (b) ownership of an option to enter into an 
offsetting forward currency contract; (c) entering into a forward 
contract to purchase currency being sold or to sell currency being 
purchased, provided that such covering contract is itself covered by 
any one of these methods unless the covering contract closes out the 
first contract; or (d) depositing into a segregated account with the 
custodian or a sub-custodian of the Fund cash or readily marketable 
securities in an amount equal to the value of the Fund's total assets 
committed to the consummation of the forward currency contract and 
not otherwise covered.  In the case of transaction hedging, any 
securities placed in an account must be liquid debt securities.  In 
any case, if the value of the securities placed in the segregated 
account declines, additional cash or securities will be placed in the 
account so that the value of the account will equal the above amount.  
Hedging transactions may be made from any foreign currency into 
dollars or into other appropriate currencies.

At or before the maturity of a forward contract, a Fund either may 
sell a portfolio security and make delivery of the currency, or 
retain the security and offset its contractual obligation to deliver 
the currency by purchasing a second contract pursuant to which the 
relevant Fund will obtain, on the same maturity date, the same amount 
of the currency which it is obligated to deliver.  If a Fund retains 
the portfolio security and engages in an offsetting transaction, the 
Fund, at the time of execution of the offsetting transaction, will 
incur a gain or loss to the extent movement has occurred in forward 
contract prices.  Should forward prices decline during the period 
between a Fund's entering into a forward contract for the sale of a 
currency and the date that it enters into an offsetting contract for 
the purchase of the currency, the Fund will realize a gain to the 
extent that the price of the currency it has agreed to sell exceeds 
the price of the currency it has agreed to purchase.  Should forward 
prices increase, the Fund will suffer a loss to the extent the price 
of the currency it has agreed to purchase exceeds the price of the 
currency it has agreed to sell.

The cost to a Fund of engaging in currency transactions varies with 
factors such as the currency involved, the length of the contract 
period and the market conditions then prevailing.  Because 
transactions in currency exchange are usually conducted on a 
principal basis, no fees or commissions are involved.  The use of 
forward currency contracts does not eliminate fluctuations in the 
underlying prices of the securities, but it does establish a rate of 
exchange that can be achieved in the future.  In addition, although 
forward currency contracts limit the risk of loss due to a decline in 
the value of the hedged currency, at the same time, they limit any 
potential gain that might result should the value of the currency 
increase.  If a devaluation is generally anticipated a Fund may not 
be able to contract to sell the currency at a price above the 
devaluation level anticipated.

FOREIGN CURRENCY OPTIONS.  Certain Underlying Smith Barney Funds may 
purchase or write put and call options on foreign currencies for the 
purpose of hedging against changes in future currency exchange rates.  
Foreign currency options generally have three, six and nine month 
expiration cycles.  Put options convey the right to sell the 
underlying currency at a price which is anticipated to be higher than 
the spot price of the currency at the time the option expires.  Call 
options convey the right to buy the underlying currency at a price 
which is expected to be lower than the spot price of the currency at 
the time that the option expires.

An Underlying Smith Barney Fund may use foreign currency options 
under the same circumstances that it could use forward currency 
exchange transactions.  A decline in the dollar value of a foreign 
currency in which a Fund's securities are denominated, for example, 
will reduce the dollar value of the securities, even if their value 
in the foreign currency remains constant.  In order to protect 
against such diminutions in the value of securities that it holds, 
the Fund may purchase put options on the foreign currency.  If the 
value of the currency does decline, the Fund will have the right to 
sell the currency for a fixed amount in dollars and will thereby 
offset, in whole or in part, the adverse effect on its securities 
that otherwise would have resulted.  Conversely, if a rise in the 
dollar value of a currency in which securities to be acquired are 
denominated is projected, thereby potentially increasing the cost of 
the securities, the Fund may purchase call options on the particular 
currency.  The purchase of these options could offset, at least 
partially, the effects of the adverse movements in exchange rates.  
The benefit to the Fund derived from purchases of foreign currency 
options, like the benefit derived from other types of options, will 
be reduced by the amount of the premium and related transaction 
costs.  In addition, if currency exchange rates do not move in the 
direction or to the extent anticipated, the Fund could sustain losses 
on transactions in foreign currency options that would require it to 
forego a portion or all of the benefits of advantageous changes in 
the rates.

FOREIGN GOVERNMENT SECURITIES.  Among the foreign government 
securities in which certain Underlying Smith Barney Funds may invest 
are those issued by countries with developing economies, which are 
countries in the initial stages of their industrialization cycles.  
Investing in securities of countries with developing economies 
involves exposure to economic structures that are generally less 
diverse and less mature, and to political systems that can be 
expected to have less stability, than those of developed countries.  
The markets of countries with developing economies historically have 
been more volatile than markets of the more mature economies of 
developed countries, but often have provided higher rates of return 
to investors.

RATINGS AS INVESTMENT CRITERIA.  In general, the ratings of 
nationally recognized statistical rating organization ("NRSROs") 
represent the opinions of these agencies as to the quality of 
securities that they rate.  Such ratings, however, are relative and 
subjective, and are not absolute standards of quality and do not 
evaluate the market value risk of the securities.  These ratings will 
be used the by Underlying Smith Barney Funds as initial criteria for 
the selection of portfolio securities, but the Funds also will rely 
upon the independent advice of their respective advisers to evaluate 
potential investments.  Among the factors that will be considered are 
the long-term ability of the issuer to pay principal and interest and 
general economic trends.  The Appendix to this Statement of 
Additional Information contains further information concerning the 
rating categories of NRSROs and their significance.

Subsequent to its purchase by a Fund, an issue of securities may 
cease to be rated or its rating may be reduced below the minimum 
required for purchase by the Fund.  In addition, it is possible that 
an NRSRO might not change its rating of a particular issue to reflect 
subsequent events.  None of these events will require sale of such 
securities by a Fund, but the Fund's adviser will consider such 
events in its determination of whether the Fund should continue to 
hold the securities.  In addition, to the extent that the ratings 
change as a result of changes in such organizations or their rating 
systems, or due to a corporate reorganization, a Fund will attempt to 
use comparable ratings as standards for its investments in accordance 
with its investment objective and policies.

FUTURES CONTRACTS.  The purpose of the acquisition or sale of a 
futures contract by a Fund is to mitigate the effects of fluctuations 
in interest rates or currency or market values, depending on the type 
of contract, on securities or their values without actually buying or 
selling the securities.  Of course, because the value of portfolio 
securities will far exceed the value of the futures contracts sold by 
a Fund, an increase in the value of the futures contracts could only 
mitigate -- but not totally offset -- the decline in the value of the 
Fund.

Certain of the Underlying Smith Barney Funds may enter into futures 
contracts or related options on futures contracts that are traded on 
a domestic or foreign exchange or in the over-the-counter market.  
Generally, these investments may be made solely for the purpose of 
hedging against changes in the value of its portfolio investments due 
to anticipated changes in interest rates, currency values and/or 
market conditions when the transactions are economically appropriate 
to the reduction of risks inherent in the management of the Fund and 
not for purposes of speculation.  However, the International Equity 
Portfolio, the International Balanced Portfolio and the Natural 
Resources Fund may also enter into futures transactions for non-
hedging purposes, subject to applicable law.  The ability of the 
Funds to trade in futures contracts may be limited by the 
requirements of the Internal Revenue Code of 1986, as amended (the 
"Code"), applicable to a regulated investment company.

No consideration is paid or received by a Fund upon entering into a 
futures contract.  Initially, a Fund will be required to deposit with 
its custodian an amount of cash or cash equivalents equal to 
approximately 1% to 10% of the contract amount (this amount is 
subject to change by the board of trade on which the contract is 
traded and members of such board of trade may charge a higher 
amount).  This amount, known as initial margin, is in the nature of a 
performance bond or good faith deposit on the contract and is 
returned to a Fund upon termination of the futures contract, assuming 
that all contractual obligations have been satisfied.  Subsequent 
payments, known as variation margin, to and from the broker, will be 
made daily as the price of the securities, currency, index or gold 
underlying the futures contract fluctuates, making the long and short 
positions in the futures contract more or less valuable, a process 
known as "marking-to-market." At any time prior to expiration of a 
futures contract, a Fund may elect to close the position by taking an 
opposite position, which will operate to terminate the Fund's 
existing position in the contract.

Several risks are associated with the use of futures contracts as a 
hedging device.  Successful use of futures contracts by a Fund is 
subject to the ability of its adviser to predict correctly movements 
in interest rates, stock or bond indices, the price of gold or 
foreign currency values.  These predictions involve skills and 
techniques that may be different from those involved in the 
management of the portfolio being hedged.  In addition, there can be 
no assurance that there will be a correlation between movements in 
the price of the underlying securities, currency, index or gold and 
movements in the price of the investments which are the subject of 
the hedge.  A decision of whether, when and how to hedge involves the 
exercise of skill and judgment, and even a well-conceived hedge may 
be unsuccessful to some degree because of market behavior or 
unexpected trends in interest rates or currency values.

There is no assurance that an active market will exist for future 
contracts at any particular time.  Most futures exchanges and boards 
of trade limit the amount of fluctuation permitted in futures 
contract prices during a single trading day.  Once the daily limit 
has been reached in a particular contract, no trades may be made that 
day at a price beyond that limit.  It is possible that futures 
contract prices could move to the daily limit for several consecutive 
trading days with little or no trading, thereby preventing prompt 
liquidation of futures positions and subjecting some futures traders 
to substantial losses.  In such event, and in the event of adverse 
price movements, a Fund would be required to make daily cash payments 
of variation margin, and an increase in the value of the portion of 
the portfolio being hedged, if any, may partially or completely 
offset losses on the futures contract.  As described above, however, 
there is no guarantee that the price of the securities being hedged 
will, in fact, correlate with the price movements in a futures 
contract and thus provide an offset to losses on the futures 
contract.

If a Fund has hedged against the possibility of a change in interest 
rates or currency or market values adversely affecting the value of 
investments held in its portfolio and rates or currency or market 
values move in a direction opposite to that which the Fund has 
anticipated, the Fund will lose part or all of the benefit of the 
increased value of investments which it has hedged because it will 
have offsetting losses in its futures positions.  In addition, in 
such situations, if the Fund had insufficient cash, it may have to 
sell investments to meet daily variation margin requirements at a 
time when it may be disadvantageous to do so.  These sales of 
investments may, but will not necessarily, be at increased prices 
which reflect the change in interest rates or currency or market 
values, as the case may be.

OPTIONS ON FUTURES CONTRACTS.  An option on an interest rate or gold 
futures contract, as contrasted with the direct investment in such a 
contract, gives the purchaser the right, in return for the premium 
paid, to assume a position in the underlying interest rate futures 
contract at a specified exercise price at any time prior to the 
expiration date of the option.  An option on a foreign currency 
futures contract, as contracted with the direct investment in such a 
contract, gives the purchaser the right, but not the obligation, to 
assume a long or short position in the relevant underlying foreign 
currency futures contract at a predetermined exercise price at a time 
in the future.  Upon exercise of an option, the delivery of the 
futures position by the writer of the option to the holder of the 
option will be accompanied by delivery of the accumulated balance in 
the writer's futures margin account, which represents the amount by 
which the market price of the futures contract exceeds, in the case 
of a call, or is less than, in the case of a put, the exercise price 
of the option on the futures contract.  The potential for loss 
related to the purchase of an option on a futures contract is limited 
to the premium paid for the option (plus transaction costs).  Because 
the value of the option is fixed at the point of sale, there are no 
daily cash payments to reflect changes in the value of the underlying 
contract; however, the value of the option does change daily and that 
change would be reflected in the net asset value of a Fund investing 
in the options.

Several risks are associated with options on futures contracts.  The 
ability to establish and close out positions on such options will be 
subject to the existence of a liquid market.  In addition, the 
purchase of put or call options on interest rate, foreign currency 
and gold futures will be based upon predictions by a Fund's adviser 
as to anticipated trends in interest rates, currency and gold values, 
as the case may be, which could be incorrect.  Even if the 
expectations of an adviser are correct, there may be an imperfect 
correlation between the change in the value of the options and of the 
portfolio investments being hedged.

FOREIGN INVESTMENTS.  Investors should recognize that investing in 
foreign companies involves certain considerations which are not 
typically associated with investing in U.S. issuers.  Since certain 
Underlying Smith Barney Funds will be investing in securities 
denominated in currencies other than the U.S. dollar, and since 
certain Funds may temporarily hold funds in bank deposits or other 
money market investments denominated in foreign currencies, the Funds 
may be affected favorably or unfavorably by exchange control 
regulations or changes in the exchange rate between such currencies 
and the dollar.  A change in the value of a foreign currency relative 
to the U.S. dollar will result in a corresponding change in the 
dollar value of a Fund's assets denominated in that foreign currency.  
Changes in foreign currency exchange rates may also affect the value 
of dividends and interest earned, gains and losses realized on the 
sale of securities and net investment income and gain, if any, to be 
distributed to shareholders by the Fund.

The rate of exchange between the U.S. dollar and other currencies is 
determined by the forces of supply and demand in the foreign exchange 
markets.  Changes in the exchange rate may result over time from the 
interaction of many factors directly or indirectly affecting economic 
conditions and political developments in other countries.  Of 
particular importance are rates of inflation, interest rate levels, 
the balance of payments and the extent of government surpluses or 
deficits in the U.S. and the particular foreign country, all of which 
are in turn sensitive to the monetary, fiscal and trade policies 
pursued by the governments of the U.S. and other foreign countries 
important to international trade and finance.  Governmental 
intervention may also play a significant role.  National governments 
rarely voluntarily allow their currencies to float freely in response 
to economic forces.  Sovereign governments use a variety of 
techniques, such as intervention by a country's central bank or 
imposition of regulatory controls or taxes, to affect the exchange 
rates of their currencies.

Securities held by an Underlying Smith Barney Fund may not be 
registered with, nor the issuers thereof be subject to reporting 
requirements of, the SEC.  Accordingly, there may be less publicly 
available information about the securities and about the foreign 
company or government issuing them than is available about a domestic 
company or government entity.  Foreign issuers are generally not 
subject to uniform financial reporting standards, practices and 
requirements comparable to those applicable to U.S. issuers.  In 
addition, with respect to some foreign countries, there is the 
possibility of expropriation or confiscatory taxation, limitations on 
the removal of funds or other assets of the Fund, political or social 
instability, or domestic developments which could affect U.S. 
investments in those countries.  Moreover, individual foreign 
economies may differ favorably or unfavorably from the U.S. economy 
in such respects as growth of gross national product, rate of 
inflation, capital reinvestment, resource self-sufficiency and 
balance of payments positions.  Certain Underlying Smith Barney Funds 
may invest in securities of foreign governments (or agencies or 
instrumentalities thereof), and many, if not all, of the foregoing 
considerations apply to such investments as well.

Securities of some foreign companies are less liquid and their prices 
are more volatile than securities of comparable domestic companies.  
Certain foreign countries are known to experience long delays between 
the trade and settlement dates of securities purchased or sold.

The interest payable on a Fund's foreign securities may be subject to 
foreign withholding taxes, and while investors may be able to claim 
some credit or deductions for such taxes with respect to their 
allocated shares of such foreign tax payments, the general effect of 
these taxes will be to reduce the Fund's income.  Additionally, the 
operating expenses of a Fund can be expected to be higher than that 
of an investment company investing exclusively in the U.S. 
securities, since the expenses of the Fund, such as custodial costs, 
valuation costs and communication costs, as well as the rate of the 
investment advisory fees, though similar to such expenses of some 
other international funds, are higher than those costs incurred by 
other investment companies.

FOREIGN COMMODITY EXCHANGES.  Unlike trading on domestic commodity 
exchanges, trading on foreign commodity exchanges is not regulated by 
the Commodity Futures Trading Commission and may be subject to 
greater risks than trading on domestic exchanges.  For example, some 
foreign exchanges may be principal markets so that no common clearing 
facility exists and a trader may look only to the broker for 
performance of the contract.  In addition, unless an Underlying Smith 
Barney Fund trading on a foreign commodity exchange hedges against 
fluctuations in the exchange rate between the U.S. dollar and the 
currencies in which trading is done on foreign exchanges, any profits 
that the Fund might realize in trading could be eliminated by adverse 
changes in the exchange rate, or the Fund could incur losses as a 
result of those changes.

SHORT SALES.  Certain of the Underlying Smith Barney Funds may from 
time to time sell securities short.  A short sale is a transaction in 
which the Fund sells securities that it does not own (but has 
borrowed) in anticipation of a decline in the market price of the 
securities.

When a Fund makes a short sale, the proceeds it receives from the 
sale are retained by a broker until the Fund replaces the borrowed 
securities.  To deliver the securities to the buyer, the Fund must 
arrange through a broker to borrow the securities and, in so doing, 
the Fund becomes obligated to replace the securities borrowed at 
their market price at the time of replacement, whatever that price 
may be.  The Fund may have to pay a premium to borrow the securities 
and must pay any dividends or interest payable on the securities 
until they are replaced.

A Fund's obligation to replace the securities borrowed in connection 
with a short sale will be secured by collateral deposited with the 
broker that consists of cash, U.S. government securities, equity 
securities or debt securities of any grade so long as such assets are 
liquid, unencumbered and marked to market daily.  In addition, the 
Fund will place in a segregated account with its custodian an amount 
of cash or U.S. government securities equal to the difference, if 
any, between (a) the market value of the securities sold at the time 
they were sold short and (b) any cash or U.S. government securities 
deposited as collateral with the broker in connection with the short 
sale (not including the proceeds of the short sale).  Until it 
replaces the borrowed securities, the Fund will maintain the 
segregated account daily at a level so that the amount deposited in 
the account plus the amount deposited with the broker (not including 
the proceeds from the short sale) (a) will equal the current market 
value of the securities sold short and (b) will not be less than the 
market value of the securities at the time they were sold short.

SHORT SALES AGAINST THE BOX.  Certain of the Underlying Smith Barney 
Funds may enter into a short sale of common stock such that when the 
short position is open the Fund involved owns an equal amount of 
preferred stocks or debt securities, convertible or exchangeable, 
without payment of further consideration, into an equal number of 
shares of the common stock sold short.  This kind of short sale, 
which is described as "against the box," will be entered into by a 
Fund for the purpose of receiving a portion of the interest earned by 
the executing broker from the proceeds of the sale.  The proceeds of 
the sale will be held by the broker until the settlement date when 
the Fund delivers the convertible securities to close out its short 
position.  Although prior to delivery a Fund will have to pay an 
amount equal to any dividends paid on the common stock sold short, 
the Fund will receive the dividends from the preferred stock or 
interest from the debt securities convertible into the stock sold 
short, plus a portion of the interest earned from the proceeds of the 
short sale.  The Fund will deposit, in a segregated account with 
their custodian, convertible preferred stock or convertible debt 
securities in connection with short sales against the box.

SWAP AGREEMENTS.  Among the hedging transactions into which certain 
Underlying Smith Barney Funds may enter are interest rate swaps and 
the purchase or sale of interest rate caps and floors.  Interest rate 
swaps involve the exchange by a Fund with another party of their 
respective commitments to pay or receive interest, e.g., an exchange 
of floating rate payments for fixed rate payments.  The purchase of 
an interest rate cap entitles the purchaser, to the extent that a 
specified index exceeds a predetermined interest rate, to receive 
payments of interest on a notional principal amount from the party 
selling such interest rate cap.  The purchase of an interest rate 
floor entitles the purchaser, to the extent that a specified index 
falls below a predetermined interest rate, to receive payment of 
interest on a notional principal amount from the party selling such 
interest rate floor.

Certain Underlying Smith Barney Funds may enter into interest rate 
swaps, caps and floors on either an asset-based or liability-based 
basis, depending on whether it is hedging its assets or its 
liabilities, and will usually enter into interest rate swaps on a net 
basis, i.e., the two payment streams are netted, with the Fund 
receiving or paying, as the case may be, only the net amount of the 
two payments.  Inasmuch as these hedging transactions are entered 
into for good faith hedging purposes, the investment adviser and the 
Fund believe such obligations do not constitute senior securities 
and, accordingly will not treat them as being subject to its 
borrowing restrictions.  The net amount of the excess, if any, of a 
Fund's obligations over its entitlement with respect to each interest 
rate swap will be accrued on a daily basis and an amount of cash or 
liquid securities having an aggregate net asset value at least equal 
to the accrued excess will be maintained in a segregated account with 
PNC Bank. If there is a default by the other party to such a 
transaction, a Fund will have contractual remedies pursuant to the 
agreement related to the transaction.  The swap market has grown 
substantially in recent years with a large number of banks and 
investment banking firms acting both as principals and as agents.  As 
a result, the swap market has become relatively liquid.  Caps and 
floors are more recent innovations for which standardized 
documentation has not yet been developed and, accordingly, they are 
less liquid than swaps.

RESTRICTED SECURITIES.  Certain of the Underlying Smith Barney Funds 
may invest in securities the disposition of which is subject to legal 
or contractual restrictions.  The sale of restricted securities often 
requires more time and results in higher brokerage charges or dealer 
discounts and other selling expenses than does the sale of securities 
eligible for trading on a national securities exchange that are not 
subject to restrictions on resale.  Restricted securities often sell 
at a price lower than similar securities that are not subject to 
restrictions on resale.

REVERSE REPURCHASE AGREEMENTS.  Certain Underlying Smith Barney Funds 
may enter into reverse repurchase agreements with banks or broker-
dealers.  A reverse repurchase agreement involves the sale of a money 
market instrument held by an Underlying Smith Barney Fund coupled 
with an agreement by the Fund to repurchase the instrument at a 
stated price, date and interest payment.  The Fund will use the 
proceeds of a reverse repurchase agreement to purchase other money 
market instruments which either mature at a date simultaneous with or 
prior to the expiration of the reverse repurchase agreement or which 
are held under an agreement to resell maturing as of that time.

An Underlying Smith Barney Fund will enter into a reverse repurchase 
agreement only when the interest income to be earned from the 
investment of the proceeds of the transaction is greater than the 
interest expense of the transaction.  Under the 1940 Act, reverse 
repurchase agreements may be considered to be borrowings by the 
seller. Entry into such agreements requires the creation and 
maintenance of a segregated account with the Fund's custodian 
consisting of U.S. government securities, cash, equity securities or 
debt securities of any grade so long as such assets are liquid, 
unencumbered and marked to market daily.

LEVERAGING.  Certain of the Underlying Smith Barney Funds may from 
time to time leverage their investments by purchasing securities with 
borrowed money.  A Fund is required under the 1940 Act to maintain at 
all times an asset coverage of 300% of the amount of its borrowings.  
If, as a result of market fluctuations or for any other reason, the 
Fund's asset coverage drops below 300%, the Fund must reduce its 
outstanding borrowings within three business days so as to restore 
its asset coverage to the 300% level.

Any gain in the value of securities purchased with borrowed money 
that exceeds the interest paid on the amount borrowed would cause the 
net asset value of the Underlying Smith Barney Fund's shares to 
increase more rapidly than otherwise would be the case.  Conversely, 
any decline in the value of securities purchased would cause the net 
asset value of the Fund's shares to decrease more rapidly than 
otherwise would be the case.  Borrowed money thus creates an 
opportunity for greater capital gain but at the same time increases 
exposure to capital risk.  The net cost of any borrowed money would 
be an expense that otherwise would not be incurred, and this expense 
could restrict or eliminate a Fund's net investment income in any 
given period.  

AMERICAN, EUROPEAN AND CONTINENTAL DEPOSITORY RECEIPTS.  Certain of 
the Underlying Smith Barney Funds may invest in the securities of 
foreign and domestic issuers in the form of American Depository 
Receipts ("ADRs") and European Depository Receipts ("EDRs").  These 
securities may not necessarily be denominated in the same currency as 
the securities into which they may be converted.  ADRs are receipts 
typically issued by a U.S. bank or trust company that evidence 
ownership of underlying securities issued by a foreign corporation.  
EDRs, which sometimes are referred to as Continental Depository 
Receipts ("CDRs"), are receipts issued in Europe typically by foreign 
banks and trust companies that evidence ownership of either foreign 
or domestic securities.  Generally, ADRs, in registered form, are 
designed for use in U.S. securities markets and EDRs and CDRs are 
designed for use in European securities markets.

CONVERTIBLE SECURITIES.  Convertible securities are fixed-income 
securities that may be converted at either a stated price or stated 
rate into underlying shares of common stock.  Convertible securities 
have general characteristics similar to both fixed-income and equity 
securities.  Although to a lesser extent than with fixed-income 
securities generally, the market value of convertible securities 
tends to decline as interest rates increase and, conversely, tends to 
increase as interest rates decline.  In addition, because of the 
conversion feature, the market value of convertible securities tends 
to vary with fluctuations in the market value of the underlying 
common stocks and, therefore, also will react to variations in the 
general market for equity securities.  A unique feature of 
convertible securities is that as the market price of the underlying 
common stock declines, convertible securities tend to trade 
increasingly on a yield basis, and so may not experience market value 
declines to the same extent as the underlying common stock.  When the 
market price of the underlying common stock increases, the prices of 
the convertible securities tend to rise as a reflection of the value 
of the underlying common stock.  While no securities investments are 
without risk, investments in convertible securities generally entail 
less risk than investments in common stock of the same issuer.

As fixed-income securities, convertible securities are investments 
that provide for a stable stream of income with generally higher 
yields than common stocks.  Of course, like all fixed-income 
securities, there can be no assurance of current income because the 
issuers of the convertible securities may default on their 
obligations.  Convertible securities, however, generally offer lower 
interest or dividend yields than non-convertible securities of 
similar quality because of the potential for capital appreciation.  A 
convertible security, in addition to providing fixed income, offers 
the potential for capital appreciation through the conversion 
feature, which enables the holder to benefit from increases in the 
market price of the underlying common stock.  There can be no 
assurance of capital appreciation, however, because securities prices 
fluctuate.

Convertible securities generally are subordinated to other similar 
but non-convertible securities of the same issuer, although 
convertible bonds, such as corporate debt obligations, enjoy 
seniority in right of payment to all equity securities, and 
convertible preferred stock is senior to common stock, of the same 
issuer.  Because of the subordination feature, however, convertible 
securities typically have lower ratings than similar nonconvertible 
securities.

WARRANTS.  Because a warrant does not carry with it the right to 
dividends or voting rights with respect to the securities that the 
warrant holder is entitled to purchase, and because it does not 
represent any rights to the assets of the issuer, a warrant may be 
considered more speculative than certain other types of investments.  
In addition, the value of a warrant does not necessarily change with 
the value of the underlying securities and a warrant ceases to have 
value if it is not exercised prior to its expiration date.  Warrants 
acquired by an Underlying Smith Barney Fund in units or attached to 
securities may be deemed to be without value.

PREFERRED STOCK.  Preferred stocks, like debt obligations, are 
generally fixed-income securities.  Shareholders of preferred stocks 
normally have the right to receive dividends at a fixed rate when and 
as declared by the issuer's board of directors, but do not 
participate in other amounts available for distribution by the 
issuing corporation.  Dividends on the preferred stock may be 
cumulative, and all cumulative dividends usually must be paid prior 
to common shareholders receiving any dividends.  Preferred stock 
dividends must be paid before common stock dividends and, for that 
reason, preferred stocks generally entail less risk than common 
stocks.  Upon liquidation, preferred stocks are entitled to a 
specified liquidation preference, which is generally the same as the 
par or stated value, and are senior in right of payment to common 
stock.  Preferred stocks are, however, equity securities in the sense 
that they do not represent a liability of the issuer and, therefore, 
do not offer as great a degree of protection of capital or assurance 
of continued income as investments in corporate debt securities.  In 
addition, preferred stocks are subordinated in right of payment to 
all debt obligations and creditors of the issuer, and convertible 
preferred stocks may be subordinated to other preferred stock of the 
same issuer.

Investment Restrictions

The Concert Series has adopted the following investment restrictions 
for the protection of shareholders.  Restrictions 1 through 6 below 
have been adopted by the Concert Series with respect to each 
Portfolio as fundamental policies.  Under the 1940 Act, a fundamental 
policy of a Portfolio may not be changed without the vote of a 
majority, as defined in the 1940 Act, of the outstanding voting 
securities of the Portfolio.  Such majority is defined as the lesser 
of (a) 67% or more of the shares present at the meeting, if the 
holders of more than 50% of the outstanding shares of the Portfolio 
are present or represented by proxy, or (b) more than 50% of the 
outstanding shares.  Investment restrictions 7 through 15 may be 
changed by a vote of a majority of the Concert Series' Board of 
Directors at any time.

The investment policies adopted by the Concert Series prohibit a 
Portfolio from:

1.  Borrowing money except from banks for temporary or emergency 
purposes, including the meeting of redemption requests in an amount 
not exceeding 33-1/3% of the value of a Portfolio's total assets 
(including the amount borrowed) valued at market less liabilities 
(not including the amount borrowed) at the time the borrowing is 
made.

2.  Making loans of money to others, except through the purchase of 
portfolio securities consistent with its investment objective and 
policies and repurchase agreements.

3.  Underwriting the securities of other issuers, except insofar as 
the Portfolio may be deemed an underwriter under the Securities Act 
of 1933, as amended, by virtue of disposing of portfolio securities.

4.  Purchasing or selling real estate except that each Portfolio may 
purchase and sell money market securities that are secured by real 
estate or issued by companies that invest or deal in real estate.

5.  Investing in commodities.

6.  Issuing senior securities except as permitted by investment 
restriction 1.

7.  Purchasing securities on margin.

8.  Making short sales of securities or maintaining a short position.

9.  Pledging, hypothecating, mortgaging or otherwise encumbering more 
than 33-1/3% of the value of a Portfolio's total assets.

10.  Investing in oil, gas or other mineral exploration or 
development programs.

11.  Writing or selling puts, calls, straddles, spreads or 
combinations thereof.

12.  Purchasing restricted securities, illiquid securities (such as 
repurchase agreements with maturities in excess of seven days) or 
other securities that are not readily marketable.

13.  Purchasing any security if as a result the Portfolio would then 
have more than 5% of its total assets invested in securities of 
companies (including predecessors) that have been in continuous 
operation for fewer than three years (except for Underlying Smith 
Barney Funds).

14.  Making investments for the purpose of exercising control or 
management.

15.  Purchasing or retaining securities of any company if, to the 
knowledge of the Concert Series, any officer or director of the 
Concert Series or TIA individually owns more than 1/2 of 1% of the 
outstanding securities of such company and together they own 
beneficially more than 5% of such securities.

The Concert Series may make commitments more restrictive than the 
restrictions listed above with respect to a Portfolio so as to permit 
the sale of shares of the Portfolio in certain states.  Should the 
Concert Series determine that any such commitment is no longer in the 
best interests of the Portfolio and its shareholders, the Concert 
Series will revoke the commitment by terminating the sale of shares 
of the Portfolio in the relevant state.  The percentage limitations 
contained in the restrictions listed above (other than with respect 
to (1) above) apply at the time of purchases of securities.

Notwithstanding the foregoing investment restrictions, the Underlying 
Smith Barney Funds in which the Portfolios invest have adopted 
certain investment restrictions which may be more or less restrictive 
than those listed above, thereby permitting a Portfolio to engage in 
investment strategies indirectly that are prohibited under the 
investment restrictions listed above.  The investment restrictions of 
an Underlying Smith Barney Fund are located in its Statement of 
Additional Information.

Under Rule 12d(1)(G) of the 1940 Act, each Select Portfolio may 
invest substantially all of its assets in the Underlying Smith Barney 
Funds.

Because of their investment objectives and policies, the Select 
Portfolios will each concentrate more than 25% of their assets in the 
mutual fund industry.  In accordance with the Select Portfolios' 
investment programs set forth in the Prospectus, each of the 
Portfolios may invest more than 25% of its assets in certain 
Underlying Smith Barney Funds.  However, each of the Underlying Smith 
Barney Funds in which each Fund will invest (other than the Smith 
Barney Utilities Fund) will not concentrate more than 25% of its 
total assets in any one industry.  The Smith Barney Utilities Fund 
will invest at least 65% of its assets in securities of companies in 
the utility industries.

Portfolio Turnover

Each Portfolio's turnover rate is not expected to exceed 25% 
annually.  A Portfolio may purchase or sell securities to: (a) 
accommodate purchases and sales of its shares, (b) change the 
percentages of its assets invested in each of the Underlying Smith 
Barney Funds in response to market conditions, and (c) maintain or 
modify the allocation of its assets between equity and fixed income 
funds and among the Underlying Smith Barney Funds within the 
percentage limits described in the Prospectus.
   
The turnover rates of the Underlying Smith Barney Funds have ranged 
from 9% to 420% during their most recent fiscal years.  There can be 
no assurance that the turnover rates of these funds will remain 
within this range during subsequent fiscal years.  Higher turnover 
rates may result in higher expenses being incurred by the Underlying 
Smith Barney Funds.
    
PURCHASE OF SHARES

The Concert Series offers its shares of capital stock on a continuous 
basis.  Shares can only be acquired by buying a Contract from a life 
insurance company designated by Concert Series and directing the 
allocation of part or all of the net purchase payment to one or more 
of five subaccounts (the "Subaccounts"), each of which invests in a 
Select Portfolio as permitted under the Contract prospectus.  
Investors should read this Statement of Additional Information and 
the Fund's Prospectus for the Select Portfolios dated May 30, 1997 
along with the Contract prospectus.




Sales Charges and Surrender Charges

The Concert Series does not assess any sales charge, either when it 
sells or when it redeems shares of a Portfolio.  Surrender charges 
may be assessed under the Contract, as described in the Contract 
prospectus.  Mortality and expense risk fees and other charges are 
also described in that prospectus.


REDEMPTION OF SHARES

The Concert Series will redeem any shares of the Select Portfolios 
presented by the Subaccounts, its sole shareholders, for redemption.  
The Subaccounts' policy on when or whether to buy or redeem Portfolio 
shares is described in the Contract prospectus.

Payment upon redemption of shares of a Portfolio is normally made 
within three days of receipt of such request.  The right of 
redemption of shares of a Portfolio may be suspended or the date of 
payment postponed (a) for any periods during which the New York Stock 
Exchange, Inc. ("NYSE") is closed (other than for customary weekend 
and holiday closings), (b) when trading in the markets the Portfolio 
customarily utilizes is restricted, or an emergency, as defined by 
the rules and regulations of the SEC, exists, making disposal of the 
Portfolio's investments or determination of its net asset value not 
reasonably practicable, or (c) for such other periods as the SEC by 
order may permit for the protection of the Portfolio's shareholders.

Should the redemption of shares of a Portfolio be suspended or 
postponed, the Concert Series' Board of Directors may make a 
deduction from the value of the assets of the Portfolio to cover the 
cost of future liquidations of the assets so as to distribute fairly 
these costs among all owners of the Contract.


VALUATION OF SHARES

The net asset value of each Portfolio's Classes of Shares will be 
determined on any day that the NYSE is open.  The NYSE is closed on 
the following holidays: New Year's Day, Presidents' Day, Good Friday, 
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and 
Christmas Day, and on the preceding Friday or subsequent Monday when 
one of these holidays falls on a Saturday or Sunday, respectively. 
The following is a description of the procedures used by each Select 
Portfolio in valuing its assets.

The value of each Underlying Smith Barney Fund will be its net asset 
value at the time of computation.  Short-term investments that have a 
maturity of more than 60 days are valued at prices based on market 
quotations for securities of similar type, yield and maturity.  
Short-term investments that have a maturity of 60 days or less are 
valued at amortized cost, which constitutes fair value as determined 
by the Concert Series' Board of Directors.  Amortized cost involves 
valuing an instrument at its original cost to the Portfolio and 
thereafter assuming a constant amortization to maturity of any 
discount or premium regardless of the effect of fluctuating interest 
rates on the market value of the instrument.


PERFORMANCE

From time to time, the Concert Series may quote a Portfolio's yield 
or total return in advertisements or in reports and other 
communications to shareholders.  The Concert Series may include 
comparative performance information in advertising or marketing the 
Portfolio's shares.  Such performance information may include data 
from the following industry and financial publications: BARRON'S, 
BUSINESS WEEK, CDA INVESTMENT TECHNOLOGIES, INC., CHANGING TIMES, 
FORBES, FORTUNE, INSTITUTIONAL INVESTOR, INVESTORS BUSINESS DAILY, 
MONEY, MORNINGSTAR MUTUAL FUND VALUES, THE NEW YORK TIMES, USA TODAY 
and THE WALL STREET JOURNAL.

Yield

A Portfolio's 30-day yield figure described below is calculated 
according to a formula prescribed by the SEC.  The formula can be 
expressed as follows: YIELD = 2[( [(a-b/(c*d))/1] + 1)6 - 1], where:

	a =	dividends and interest earned during the period.
	b =	expenses accrued for the period (net of reimbursement).
	c =	the average daily number of shares outstanding during the 
period that were entitled to receive dividends.
	d =	the maximum offering price per share on the last day of 
the period.

For the purpose of determining the interest earned (variable "a" in 
the formula) on debt obligations purchased by the Portfolio at a 
discount or premium, the formula generally calls for amortization of 
the discount or premium; the amortization schedule will be adjusted 
monthly to reflect changes in the market values of the debt 
obligations.

Investors should recognize that in periods of declining interest 
rates a Portfolio's yield will tend to be somewhat higher than 
prevailing market rates, and in periods of rising interest rates, the 
Portfolio's yield will tend to be somewhat lower.  In addition, when 
interest rates are falling, the inflow of net new money to the 
Portfolio from the continuous sale of its shares will likely be 
invested in portfolio instruments producing lower yields than the 
balance of the Portfolio's investments, thereby reducing the current 
yield of the Portfolio.  In periods of rising interest rates, the 
opposite can be expected to occur.

Average Annual Total Return

"Average annual total return" figures, as described below, are 
computed according to a formula prescribed by the SEC.  The formula 
can be expressed as follows: P(1+T)/n = ERV, where:

	P  = 	a hypothetical initial payment of $1,000.
	T  =	average annual total return.
	n  = 	number of years.
	ERV  = 	Ending Redeemable Value of a hypothetical $1,000 
investment made at the beginning of a 1-, 5- or 10-year 
period at the end of the 1-, 5- or 10-year period (or 
fractional portion thereof), assuming reinvestment of all 
dividends and distributions.


TAXES

The following is a summary of certain Federal income tax 
considerations that may affect the Concert Series and its 
shareholders.  The summary is not intended as a substitute for 
individual tax advice, and investors are urged to consult their tax 
advisors as to the tax consequences of an investment in any Portfolio 
of the Concert Series .

Tax Status of the Portfolios

Each Portfolio will be treated as a separate taxable entity for 
Federal income tax purposes.

Each Portfolio intends to qualify separately each year as a 
"regulated investment company" under the Code.  A qualified Portfolio 
will not be liable for Federal income taxes to the extent that its 
taxable net investment income and net realized capital gains are 
distributed to its shareholders, provided that each Portfolio 
distributes at least 90% of its net investment income.

Each Portfolio intends to accrue dividend income for Federal income 
tax purposes in accordance with the rules applicable to regulated 
investment companies.  In some cases, these rules may have the effect 
of accelerating (in comparison to other recipients of the dividend) 
the time at which the dividend is taken into account by a Portfolio 
as taxable income.

Distributions of an Underlying Smith Barney Fund's investment company 
taxable income are taxable as ordinary income to a Portfolio which 
invests in the Fund.  Distributions of the excess of an Underlying 
Smith Barney Fund's net long-term capital gain over its net short-
term capital loss, which are properly designated as "capital gain 
dividends," are taxable as long-term capital gain to a Portfolio 
which invests in the Fund, regardless of how long the Portfolio held 
the Fund's shares, and are not eligible for the corporate dividends-
received deduction.  Upon the sale or other disposition by a 
Portfolio of shares of any Underlying Smith Barney Fund, the 
Portfolio generally will realize a capital gain or loss which will be 
long-term or short-term, generally depending upon the Portfolio's 
holding period for the shares.


Tax Treatment of Shareholders

The Concert Series has been informed that certain of the life 
insurance companies offering Contracts intend to qualify each of the 
Subaccounts as a "segregated asset account" within the meaning of the 
Code.  For a Subaccount to quality as a segregated asset account, the 
Select Portfolio in which such Subaccount holds shares must meet the 
diversification requirements of Section 817(h) of the Code and the 
regulations promulgated thereunder.  To meet those requirements, a 
Select Portfolio may not invest more than certain specified 
percentages of its assets in the securities of any one, two, three or 
four issuers.  However, certain increases are made to the percentage 
limitations to the extent of investments in United States Treasury 
obligations.  For these purposes, all obligations of the United 
States Treasury and each instrumentality are treated as securities of 
separate issuers.

Income on assets of a Subaccount qualified as a segregated asset 
account whose underlying investments are adequately diversified will 
not be taxable to Contract owners.  However, in the event a 
Subaccount is not so qualified, all annuities allocating any amount 
of premiums to such Subaccount will not qualify as annuities for 
federal income tax purposes and the holders of such annuities would 
be taxed on any income on the annuities during the period of 
disqualification.

The Concert Series has undertaken to meet the diversification 
requirements of Section 817(h) of the Code.  This undertaking may 
limit the ability of a particular Select Portfolio to make certain 
otherwise permitted investments.

Taxation of the Underlying Smith Barney Funds

Each Underlying Smith Barney Fund intends to qualify annually and 
elect to be treated as a regulated investment company under 
Subchapter M of the Code.  In any year in which an Underlying Smith 
Barney Fund qualifies as a regulated investment company and timely 
distributes all of its taxable income, the Underlying Smith Barney 
Fund generally will not pay any federal income or excise tax.

If more than 50% in value of an Underlying Smith Barney Fund's assets 
at the close of any taxable year consists of stocks or securities of 
foreign corporations, that Underlying Smith Barney Fund may elect to 
treat certain foreign taxes paid by it as paid by its shareholders.  
The shareholders would then be required to include their 
proportionate share of the electing Fund's foreign income and related 
foreign taxes in income even if the shareholder does not receive the 
amount representing foreign taxes.  Shareholders itemizing deductions 
could then deduct the foreign taxes, or, whether or not deductions 
are itemized but subject to certain limitations, claim a direct 
dollar for dollar tax credit against their U.S. federal income tax 
liability attributable to foreign income.  In many cases, a foreign 
tax credit will be more advantageous than a deduction for foreign 
taxes.  Each of the Portfolios may invest in some Underlying Smith 
Barney Funds that expect to be eligible to make the above-described 
election.  While a Portfolio will be able to deduct the foreign taxes 
that it will be treated as receiving if the election is made, the 
Portfolio will not itself be able to elect to treat its foreign taxes 
as paid by its shareholders.  Accordingly, the shareholders of the 
Portfolio will not have an option of claiming a foreign tax credit 
for foreign taxes paid by the Underlying Smith Barney Funds, while 
persons who invest directly in such Underlying Smith Barney Funds may 
have that option.

General

The foregoing discussion related only to Federal income tax law as 
applicable to U.S. citizens.  Distributions by the Portfolio also may 
be subject to state, local and foreign taxes, and their treatment 
under state, local and foreign income tax laws may differ from the 
Federal income tax treatment.  Shareholders should consult their tax 
advisors with respect to particular questions of Federal, state, 
local and foreign taxation.


VOTING

Voting Rights

The Concert Series offers shares of the Select High Growth, Select 
Growth, Select Balanced, Select Conservative and Select Income 
Portfolios only for purchase by insurance company separate accounts.  
Thus, the insurance company is technically the shareholder of these 
Portfolios, and under the 1940 Act, is deemed to be in control of 
these Portfolios.  Nevertheless, with respect to any Concert Series 
shareholder meeting, an insurance company will solicit and accept 
timely voting instruction from its contract owners who own units in a 
separate account investment division which corresponds to shares in 
the Select Portfolios in accordance with the procedures set forth in 
the accompanying prospectus of the applicable contract issued by the 
insurance company and to the extent required by law.  Shares of the 
Concert Series attributable to contract owner interests for which no 
voting instructions are received will be voted by an insurance 
company in proportion to the shares for which voting instructions are 
received.

Each share of a Portfolio represents an equal proportionate interest 
in that Portfolio with each other share of the same Portfolio and is 
entitled to such dividends and distributions out of the net income of 
that Portfolio as are declared in the discretion of the Directors.  
Shareowners are entitled to one vote for each share held and will 
vote by individual Portfolio except to the extent required by the 
1940 Act.  The Concert Series is not required to hold annual 
shareowner meetings, although special meetings may be called for the 
Concert Series as a whole, or a specific Portfolio, for purposes such 
as electing or removing Directors, changing fundamental policies or 
approving a management contract.  Shareowners may cause a meeting of 
shareowners to be held upon a vote of 10% of the Fund's outstanding 
shares for the purposes of voting on the removal of Directors.

As used in the Prospectus and this Statement of Additional 
Information, a "vote of a majority of the outstanding voting 
securities" means the affirmative vote of the lesser of (a) more than 
50% of the outstanding shares of the Concert Series (or the affected 
Portfolio) or (b) 67% or more of such shares present at a meeting if 
more than 50% of the outstanding shares of the Concert Series (or the 
affected Portfolio are represented at the meeting in person or by 
proxy.  A Portfolio shall be deemed to be affected by a matter unless 
it is clear that the interests of each Portfolio in the matter are 
identical or that the matter does not affect any interest of the 
Portfolio.  The approval of a management agreement, a distribution 
agreement or any change in a fundamental investment policy would be 
effectively acted upon with respect to a Portfolio only if approved 
by a "vote of a majority of the outstanding voting securities" of the 
Portfolio affected by the matter; however, the ratification of 
independent accountants and the election of directors are not subject 
to separate voting requirements and may be effectively acted upon by 
a vote of the holders of a majority of all Concert Series shares 
voting without regard to Portfolio.  




ADDITIONAL INFORMATION

The Concert Series was incorporated in Maryland on August 11, 1995.

Portfolio securities and cash owned by the Concert Series are held in 
the custody of PNC Bank, National Association, 17th and Chestnut 
Streets, Philadelphia, Pennsylvania 19103.

In the event of the liquidation or dissolution of the Concert Series, 
shareholders of a Portfolio are entitled to receive the assets 
belonging to that Portfolio that are available for distribution and a 
proportionate distribution, based upon the relative net assets of the 
respective Portfolios, of any general assets not belonging to any 
particular Portfolio that are available for distribution.




APPENDIX - RATINGS OF DEBT OBLIGATIONS

BOND (AND NOTE) RATINGS

Moody's Investors Services, Inc. ("Moody's")

Aaa - Bonds that are rated "Aaa" are judged to be of the best 
quality.  They carry the smallest degree of investment risk and are 
generally referred to as "gilt edged." Interest payments are 
protected by a large or by an exceptionally stable margin and 
principal is secure.  While the various protective elements are 
likely to change, such changes as can be visualized are most unlikely 
to impair the fundamentally strong position of such issues.

Aa - Bonds that are rated "Aa" are judged to be of high quality by 
all standards.  Together with the "Aaa" group they comprise what are 
generally known as high grade bonds.  They are rated lower than the 
best bonds because margins of protection may not be as large as in 
"Aaa" securities or fluctuation of protective elements may be of 
greater amplitude or there may be other elements present that make 
the long term risks appear somewhat larger than in "Aaa" securities.

A - Bonds that are rated "A" possess many favorable investment 
attributes and are to be considered as upper medium grade 
obligations.  Factors giving security to principal and interest are 
considered adequate but elements may be present that suggest a 
susceptibility to impairment sometime in the future.

Baa - Bonds that are rated "Baa" are considered as medium grade 
obligations, i.e., they are neither highly protected nor poorly 
secured.  Interest payments and principal security appear adequate 
for the present but certain protective elements may be lacking or may 
be characteristically unreliable over any great length of time.  Such 
bonds lack outstanding investment characteristics and in fact have 
speculative characteristics as well.

Ba - Bonds which are rated "Ba" are judged to have speculative 
elements; their future cannot be considered as well assured.  Often 
the protection of interest and principal payments may be very 
moderate and thereby not well safeguarded during both good and bad 
times over the future.  Uncertainty of position characterizes bonds 
in this class.

B - Bonds which are rated "B" generally lack characteristics of the 
desirable investment.  Assurance of interest and principal payments 
or of maintenance of other terms of the contract over any long period 
of time may be small.

Caa - Bonds which are rated "Caa" are of poor standing.  Such issues 
may be in default or there may be present elements of danger with 
respect to principal or interest.

Ca - Bonds which are rated "Ca" represent obligations which are 
speculative in a high degree.  Such issues are often in default or 
have other marked shortcomings.

C - Bonds which are rated "C" are the lowest class of bonds and 
issues so rated can be regarded as having extremely poor prospects of 
ever attaining any real investment standing.

Con (..) - Bonds for which the security depends upon the completion 
of some act or the fulfillment of some condition are rated 
conditionally.  These are bonds secured by (a) earnings of projects 
under construction, (b) earnings of projects unseasoned in operating 
experience, (c) rentals which begin when facilities are completed, or 
(d) payments to which some other limiting condition attaches.  
Parenthetical rating denotes probable credit stature upon completion 
of construction or elimination of basis of condition.

Note: The modifier 1 indicates that the security ranks in the higher 
end of its generic rating category; the modifier 2 indicates a mid-
range ranking; and the modifier 3 indicates that the issue ranks in 
the lower end of its generic rating category.

Standard & Poor's Ratings Services ("S&P") 

AAA - Debt rated "AAA" has the highest rating assigned by S&P.  
Capacity to pay interest and repay principal is extremely strong.  

AA - Debt rated "AA" has a very strong capacity to pay interest and 
repay principal and differs from the highest rated issues only in 
small degree.

A - Debt rated "A" has a strong capacity to pay interest and repay 
principal although it is somewhat more susceptible to the adverse 
effects of changes in circumstances and economic conditions than debt 
in higher rated categories.

BBB - Debt rated "BBB" is regarded as having an adequate capacity to 
pay interest and repay principal.  Whereas it normally exhibits 
adequate protection parameters, adverse economic conditions or 
changing circumstances are more likely to lead to a weakened capacity 
to pay interest and repay principal for debt in this category than in 
higher rated categories.

BB, B, CCC, CC, C - Debt rated "BB", "B", "CCC", "CC" and "C" is 
regarded, on balance, as predominantly speculative with respect to 
capacity to pay interest and repay principal in accordance with the 
terms of the obligation.  'BB' indicates the lowest degree of 
speculation and 'C' the highest degree of speculation.  While such 
debt will likely have some quality and protective characteristics, 
these are outweighed by large uncertainties or major risk exposures 
to adverse conditions.

Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified 
by the addition of a plus or minus to show relative standing within 
the major rating categories.

Provisional Ratings: The letter "p" indicates that the rating is 
provisional.  A provisional rating assumes the successful completion 
of the project being financed by the debt being rated and indicates 
that payment of debt service requirements is largely or entirely 
dependent upon the successful and timely completion of the project.  
This rating, however, while addressing credit quality subsequent to 
completion of the project, makes no comment on the likelihood of, or 
the risk of default upon failure of, such completion.  The investor 
should exercise judgment with respect to such likelihood and risk.

L - The letter "L" indicates that the rating pertains to the 
principal amount of those bonds where the underlying deposit 
collateral is fully insured by the FDIC.

+ Continuance of the rating is contingent upon S&P's receipt of 
closing documentation confirming investments and cash flow.

* Continuance of the rating is contingent upon S&P's receipt of an 
executed copy of the escrow agreement.

"NR" Indicates no rating has been requested, that there is 
insufficient information on which to base a rating, or that S&P does 
not rate a particular type of obligation as a matter of policy.


COMMERCIAL PAPER RATINGS

Moody's 

Issuers rated "Prime-1" (or related supporting institutions) have a 
superior capacity for repayment of short-term promissory obligations. 
Prime-1 repayment will normally be evidenced by the following 
characteristics: leading market positions in well-established 
industries; high rates of return on funds employed; conservative 
capitalization structures with moderate reliance on debt and ample 
asset protection; broad margins in earnings coverage of fixed 
financial charges and high internal cash generation; well-established 
access to a range of financial markets and assured sources of 
alternate liquidity.

Issuers rated "Prime-2" (or related supporting institutions) have 
strong capacity for repayment of short-term promissory obligations.  
This will normally be evidenced by many of the characteristics cited 
above but to a lesser degree.  Earnings trends and coverage ratios, 
while sound, will be more subject to variation.  Capitalization 
characteristics, while still appropriate, may be more affected by 
external conditions.  Ample alternate liquidity is maintained.  

S&P

A-1 - This designation indicates that the degree of safety regarding 
timely payment is either overwhelming or very strong.  Those issuers 
determined to possess overwhelming safety characteristics will be 
noted with a plus (+) sign designation.

A-2 - Capacity for timely payment on issues with this designation is 
strong.  However, the relative degree of safety is not as high as for 
issues designated A-1.








PART C

	Information required to be included in Part C is set forth after the 
appropriate item, so numbered, in Part C of this Registration Statement.

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

         Included in Part A:

                Financial  Highlights  are  incorporated  by
reference to Part A filed herewith.

         Included in Part B:

               The  Registrant's Annual Report for the  year
               ended  January  31, 1997 and  the  Report  of
               Independent  Accountants are incorporated  by
               reference  to the Definitive 30b-1  filed  on
               April 8,  1997  as  Accession  #   91155-97-
               184.

         Included in Part C:

               Consent  of Independent Accountants is  filed
herein.

(b) Exhibits

b.	Exhibits:

	1.	Articles of Incorporation of the Registrant is incorporated by 
reference to Registrant's Registration Statement Pre-Effective Amendment No. 1 
on Form N-1A as filed on January 23, 1996 (the "Registration Statement").

	1(a)	Articles Supplementary to the Articles of Incorporation of the 
Registrant dated October 28, 1996 is incorporated by reference to Post-
Effective Amendment No. 4 to the  Registration Statement as filed on October 
31, 1996 ("Post-Effective Amendment No. 4").

	2.	Restated By-Laws of the Registrant is incorporated by reference to 
the Registration Statement.

	3.	Inapplicable.

	4.(a)	Registrant's form of stock certificates for Class A, B, C and Y 
shares of the High Growth Portfolio is  incorporated  by reference the 
Registration Statement.

	(b)	Registrant's form of stock certificates for Class A, B, C and Y 
shares of the Growth Portfolio is incorporated by reference to the 
Registration Statement.

	(c)	Registrant's form of stock certificates for Class A, B, C and Y 
shares of the Balanced Portfolio is incorporated by reference to the 
Registration Statement.

	(d)	Registrant's form of stock certificates for Class A, B, C and Y 
shares of the Conservative Portfolio is incorporated by reference to the 
Registration Statement.

	(e)	Registrant's form of stock certificates for Class A, B, C and Y 
shares of the Income Portfolios incorporated  by reference to the Registration 
Statement.

	(f)	Registrant's form of stock certificate for shares of the Smith 
Barney Concert Series - Select High Growth Portfolio is incorporated by 
reference to Post-Effective Amendment No. 3 to Registration Statement as filed 
August 13, 1996 ("Post-Effective Amendment No. 3").

	(g)	Registrant's form of stock certificate for shares of the Smith 
Barney Concert Series - Select Growth Portfolio is incorporated by reference 
to Post-Effective Amendment No. 3.

	(h)	Registrant's form of stock certificate for shares of the Smith 
Barney Concert Series - Select Balanced Portfolio is incorporated by reference 
to Post-Effective Amendment No. 3.

	(i)	Registrant's form of stock certificate for  shares of the Smith 
Barney Concert Series - Select Conservative Portfolio is incorporated by 
reference to Post-Effective Amendment No. 3.

	(j)	Registrant's form of stock certificate for shares of the Smith 
Barney Concert Series - Select Income Portfolio is incorporated by reference 
to Post-Effective Amendment No. 3.

	(k)	Registrant's form of stock certificate for Class Z shares of the 
High Growth Portfolio is incorporated by reference to Post-Effective Amendment 
No. 5. 

	(l)	Registrant's form of stock certificate for Class Z shares of the 
Growth Portfolio is incorporated by reference to Post-Effective Amendment No. 
5.

	(m) 	Registrant's form of stock certificate for Class Z shares of the 
Balanced Portolio is incorporated by reference to Post-Effective Amendment No. 
5.

	(n)	Registrant's form of stock certificate for Class Z shares of the 
Conservative Portfolio is incorporated by reference to Post-Effective 
Amendment No. 5.

	(o)	Registrant's form of stock certificate for Class Z shares of the 
Income Portfolio is incorporated by reference to Post-Effective Amendment No. 
5.


	(p)	Registrant's form of stock certificate for Class A, B, C and Y 
shares of the Global Portfolio will be filed by amendment.

	5.(a)	Form of Asset Allocation and Administration Agreement between the 
Registrant and Smith Barney Mutual Funds Management Inc. is incorporated by 
reference to the Registration Statement  for each of the following:

	(i)	High Growth Portfolio

	(ii)	Growth Portfolio

	(iii)	Balanced Portfolio

	(iv)	Conservative Portfolio

	(v)	Income Portfolio

	(vi)	Global Portfolio


	5.(b)	Form of Asset Allocation and Administration Agreement between the 
Registrant and Travelers Investment Adviser, Inc. is incorporated by reference 
to Post-Effective Amendment No. 4 for each of the following:


	(i)	Select High Growth Portfolio

	(ii)	Select Growth Portfolio

	(iii)	Select Balanced Portfolio
 
	(iv)	Select Conservative Portfolio

	(v)	Select Income Portfolio

	6.(a)	Form of the Distribution Agreement between the Registrant and 
Smith Barney Inc. is incorporated by reference to the Registration Statement.

	(b)	Form of the Distribution Agreement between the Registrant and PFS 
Distributors, Inc. is incorporated by reference to the Registration Statement.

	(c)	Form of Participation Agreement between the Registrant and 
Travelers Fund BD for Variable Annuities and Travelers Fund BD II for Variable 
Annuities is incorporated by reference to Post-Effective Amendment No. 4.

	7.	Inapplicable.

	8	Form of Custodian Agreement between the Registrant and PNC Bank, 
National Association is incorporated by reference to the Registration 
Statement.

	9.(a)	Form of Transfer Agency and Service Agreement between the 
Registrant and The Shareholder Services Group, Inc. is incorporated by 
reference to the Registration Statement.

	(b)	Form of Sub-Transfer Agency Agreement between the Registrant and 
PFS Shareholders Services is incorporated by reference to the Registration 
Statement.

	10.	Opinion and Consent of Willkie Farr & Gallagher as to legality of 
the series of shares being registered is incorporated by reference to the 
Registration Statement and Post-Effective 
Amendment No. 4.


	11.	Consent of Independent Public Accountants is  filed herein.


	12.	Inapplicable.

	13.	Form of Purchase  Agreement  between the  Registrant  and the 
Purchaser of the initial shares is incorporated by reference to the 
Registration Statement.

	14.	Inapplicable.

	15.	Form of Service and Distribution Plan pursuant to Rule 12b-1 
between the Registrant and Smith Barney Inc. is incorporated by reference to 
the Registration Statement.

	16.	Inapplicable.

	17.	Inapplicable.

	18.	Form of Multiple  Class Plan pursuant to Rule 18f-3(d) of the 
Investment Company Act of 1940 is incorporated by reference to the 
Registration Statement.

Item 25.	Persons Controlled by or Under Common Control with Registrant.

			None.

Item 26. 	Number of Holders of Securities.

		May 15, 1997				Record Holders
		Balanced Portfolio Class A		1,184
		Balanced Portfolio Class B 		4,146
		Balanced Portfolio Class C		1,142
		Balanced Portfolio Class Y		2
		Balanced Portfolio Class Z		2

		Income Portfolio Class A	 		176
		Income Portfolio Class  B			493
		Income Portfolio Class  C			160
		Income Portfolio Class  Y			2
		Income Portfolio Class Z			2			

		High Growth Portfolio Class A		4,564
		High Growth Portfolio Class B		9,446
		High Growth Portfolio Class C		2,834
		High Growth Portfolio Class Y		3
		High Growth Portfolio Class Z		2

		Conservative Portfolio Class A		249
		Conservative Portfolio Class B		646
		Conservative Portfolio Class C		249
		Conservative Portfolio Class Y		2
		Conservative Portfolio Class Z		2


		Growth Portfolio Class A			4,357
		Growth Portfolio Class B			11,719
		Growth Portfolio Class C			2,810
		Growth Portfolio Class Y			2
		Growth Portfolio Class Z			2
	
Item 27. Indemnification.

	The response to this item is incorporated by reference to the Registrant 
Statement filed with the SEC on January 23, 1996.

Item 28.	Business or Other Connections of Investment Adviser.

Investment  Adviser -- Smith  Barney  Mutual  Funds  Management  Inc., 
formerly known as Smith Barney Advisers, Inc.


SBMFM was incorporated in December 1968 under the laws of the State of 
Delaware.  SBMFM is a wholly  owned  subsidiary  of Smith Barney  Holdings 
Inc.  (formerly  known as Smith Barney  Shearson  Holdings  Inc.),  which in 
turn is a wholly owned subsidiary of  Travelers Group Inc. ("Travelers").  
SBMFM is registered as an 
investment adviser under the Investment Advisers Act of 1940 (the "Advisers 
Act").

The list  required by this Item 28 of officers and  directors of  SBMFM 
together with  information  as to any other  business,  profession,  vocation 
or employment  of a  substantial  nature  engaged in by such officers and 
directors during the past two years,  is incorporated by reference to 
Schedules A and D of the  Form ADV  filed  by  SBMFM  pursuant  to the 
Advisers  Act  (SEC  File No.  801-8314).

Travelers Investment Adviser, Inc. ("TIA") was incorporated in June 1996 under 
the laws of the State of Delaware.  TIA is a wholly owned subsidiary of  The 
Plaza Corporation which, in turn, is an indirect wholly owned subsidiary of 
Travelers.  TIA is registered as an investment adviser under the Advisers Act.

The list  required by this Item 28 of officers and  directors of  TIA together 
with  information  as to any other  business,  profession,  vocation or 
employment  of a  substantial  nature  engaged in by such officers and 
directors during the past two years,  is incorporated by reference to 
Schedules A and D of the  Form ADV  filed  by  TIA  pursuant  to the Advisers  
Act  (SEC  File No.  801-52365).


Item 29.	Principal Underwriters.

Smith Barney Inc. ("Smith Barney") also serves as distributor for each of the 
following investment companies:

	(a)	Smith Barney Managed Municipals Fund Inc.
		Smith Barney California Municipals Fund Inc.
		Smith Barney Massachusetts Municipals Fund
		Smith Barney Aggressive Growth Fund Inc.
		Smith Barney Appreciation Fund Inc.
		Smith Barney Principal Return Fund
		Smith Barney Income Funds
		Smith Barney Equity Funds
		Smith Barney Investment Funds Inc.
		Smith Barney Natural Resources Fund Inc.
		Smith Barney Telecommunications Trust
		Smith Barney Arizona Municipals Fund Inc.
		Smith Barney New Jersey Municipals Fund Inc.
		Smith Barney Managed Governments Fund
		The USA High Yield Fund N.V.
		Smith Barney Institutional Cash Management Fund Inc.
		Smith Barney Fundamental Value Fund Inc.
		Smith Barney Series Fund
		Consulting Group Capital Markets Funds
		Smith Barney Investment Trust
		Smith Barney Adjustable Rate Government Income Fund
		Smith Barney Oregon Municipals Fund
		Smith Barney Funds, Inc.
		Smith Barney Muni Funds
		Smith Barney World Funds, Inc.
		Smith Barney Money Funds, Inc.
		Smith Barney Municipal Money Market Fund, Inc.
		Smith Barney Variable Account Funds
		Travelers Series Fund Inc.
		Smith Barney Small Cap Disciplined Fund Inc.
		Smith Barney U.S. Dollar Reserve Fund (Cayman)
		Worldwide Special Fund, N.V.
		Worldwide Securities Limited (Bermuda)
		Smith Barney International Fund (Luxembourg),
		various series of unit investment trusts and
		various closed-end funds.


	(b)	The  information  required by this Item 29(b) with  respect to 
each director and officer of Smith Barney is incorporated by reference to 
Schedule A of the Form BD filed by Smith Barney pursuant to the  Securities  
Exchange  Act of 1934 (File No. 8-8177).

	(c)	Inapplicable.


Item 30.	 Location of Accounts and Records.

	Certain accounts, books and other documents required to be maintained by 
Section 31(a) of the Investment Company Act of 1940, as amended (the 
"Investment Company Act"), and the Rules promulgated thereunder are maintained 
by Smith Barney Inc., 388 Greenwich Street,  New York, New York 10013. 

	Records relating to the duties of the Registrant's  custodian are 
maintained by PNC Bank, National Association, 17th and Chestnut Streets, 
Philadelphia, Pennsylvania.  Records relating to the duties of the 
Registrant's  transfer agent are  maintained by  First Data Investor  Services 
Group, Inc., Exchange Place, Boston, Massachusetts. 

Item 31.	 Management Services.

		Inapplicable.	

Item 32.	Undertakings.

The Registrant  hereby undertakes to furnish each person to whom a prospectus 
is delivered with a copy of the  Registrant's  latest annual report to 
shareholders upon request and without charge. 

The  Registrant  hereby  undertakes  to call a meeting of  shareholders  for 
the purpose of voting on the  question  of removal of a Director or  Directors 
when requested  to do  so  by  the  holders  of at  least  10%  of  the 
Registrant's outstanding  shares  and in  connection  with such  meeting  to 
comply  with the provisions  of  Section  16(c)  of  the  Investment   Company 
Act  relating  to shareholder communications.

The  Registrant  hereby  undertakes,  insofar as  indemnification  for 
liability arising under the  Securities  Act may be permitted to  Directors, 
officers and controlling persons of the Registrant pursuant to the foregoing 
provisions,  or otherwise,  to indemnify the Directors,  officers and 
controlling persons of the Registrant.  The  Registrant  has  been  advised 
that  in  the  opinion  of the Securities and Exchange Commission such 
indemnification is against public policy as expressed in the Securities  Act, 
and is,  therefore,  unenforceable.  In the event that a claim for 
indemnification  against such liabilities (other than the payment by the 
Registrant of expenses incurred or paid by a Director, officer or controlling 
person of the Registrant in the  successful  defense of any action, suit or 
proceeding) is asserted by such Director,  officer or controlling person in 
connection with the securities being registered,  the Registrant will, unless 
in the  opinion  of its  counsel  the matter  has been  settled  by 
controlling precedent,  submit to a court of appropriate  jurisdiction  the 
question whether such  indemnification  by it is  against  public  policy  as 
expressed  in  the Securities Act and will be governed by the final 
adjudication of such issue.

The  Registrant  hereby  undertakes to file, with respect to the Select High 
Growth Portfolio, Select Growth Portfolio, Select Balanced Portfolio, Select 
Conservative Portfolio and Select Income Portfolio, a  post-effective  
amendment, using financial statements which need not be certified, within four 
to six months from the effectiveness date of this Amendment to the 
Registrant's Registration Statement under the Securities Act of 1933, as 
amended (the "Securities Act").

SIGNATURES

	Pursuant to the requirements of the Securities Act of 1933 and the 
Investment  Company  Act of  1940,  the  Registrant  has duly  caused  this 
Amendment  to its  Registration  Statement  to be  signed  on its  behalf by 
the undersigned, thereunto duly authorized, in the City of New York and the 
State of New York on the 29th day of  May, 1997.




SMITH BARNEY CONCERT  ALLOCATION SERIES INC.

Pursuant to the requirements of Rule 485(b) of the Securities Act of 1933,  
as amended, and  the Investment Company Act of 1940, as amended, 
the  Registrant, Smith Barney Concert Allocation Series Inc.,
 has duly caused this Post-Effective Amendment No.9 to the 
Registration Statement to be signed on its behalf  by the undersigned, 
thereunto duly authorized, all in the City of  New York, State of New York as 
of the 29th day of  May, 1997.   

						By:/s/ Heath B. McLendon
						Heath B. McLendon
						Chairman of the Board of Directors




Signature

Title
Date

/s/ Heath B. McLendon
Heath B. McLendon

Director; Chairman of 
the Board
May 29, 1997

/s/ Jessica M. Bibliowicz
Jessica M. Bibliowicz
President
May 29, 1997

/s/ Lewis E. Daidone
Lewis E. Daidone
Senior Vice President; 
Treasurer (Principal 
Accounting Officer)

May 29, 1997


/s/ Walter E. Auch*
Walter E. Auch

Director
May 29, 1997

/s/ Martin Brody*
Martin Brody
Director

May 29, 1997


/s/ H. John Ellis*
H. John Ellis

Director
May 29, 1997

/s/ Stephen E. 
Kaufman*
Stephen E. Kaufman
Director
May 29, 1997


/s/ Armon E. Kamesar*
Armon E. Kamesar
Director

May 29, 1997

/s/ Madelon DeVoe 
Talley*
Madelon DeVoe Talley
Director

May 29, 1997



* Signed by Heath B. McLendon, their duly authorized attorney-in-fact, 
pursuant to power of attorney dated January 23, 1996.

/s/ Heath B. McLendon
Heath B. McLendon