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. 19
	[X]

and

REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940			[X]

Amendment No. 20						[X]


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

7 World Trade Center, New York, NY 10048
 (Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code:
212-783-0693

Christina T. Sydor, Esq.
Smith Barney Fund Management LLC
7 World Trade Center
New York, New York 10048
 (Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering:
Continuous

It is proposed that this filing will become
effective:

	immediately upon filing pursuant to paragraph
(b)

XXX	on May 31, 2001 pursuant to paragraph (b) of
Rule 485

	60 days after filing pursuant to paragraph
(a)(i) of Rule 485

	on (date) pursuant to paragraph (a)(i) of Rule
485

	75 days after filing pursuant to paragraph
(a)(ii)of Rule 485

	on (date) pursuant to paragraph (a)(ii) of Rule
485.

If appropriate, check the following box:

	this post-effective amendment designates a new
effective date for a
previously filed post-effective amendment.


PART A

<PAGE>

                                    [PHOTO]



                                 SMITH BARNEY
                            ALLOCATION SERIES INC.


                                  PROSPECTUS

                                 MAY 31, 2001

                          CLASS A, B, L AND Y SHARES

                         Prospectus begins on page one

  INVESTMENT PRODUCTS: NOT FDIC INSURED . NO BANK GUARANTEE . MAY LOSE VALUE

   The Securities and Exchange Commission has
   not approved or disapproved these securities or
   determined whether this prospectus is accurate or
   complete. Any statement to the contrary is a crime.


[LOGO] Smith Barney

       Mutual Funds



Your Serious Money. Professionally Managed./SM/

<PAGE>



Contents

Smith Barney Allocation Series Inc. consists of 9 separate investment
portfolios, each with its own investment objective and policies. This
prospectus relates to 6 of those portfolios. Each portfolio offers different
levels of potential return and involves different levels of risk.

<TABLE>
<CAPTION>
               <S>                                           <C>
               Investments, risks and performance             2

               -------------------------------------------------
                Global Portfolio                              3

               -------------------------------------------------
                High Growth Portfolio                         6

               -------------------------------------------------
                Growth Portfolio                              9

               -------------------------------------------------
                Balanced Portfolio                           12

               -------------------------------------------------
                Conservative Portfolio                       15

               -------------------------------------------------
                Income Portfolio                             18

               -------------------------------------------------

               More on the portfolios' investments           21

               -------------------------------------------------

               Investment strategies and related risks       23

               -------------------------------------------------

               Management                                    25

               -------------------------------------------------

               Choosing a class of shares to buy             26

               -------------------------------------------------

               Comparing the portfolios' classes             27

               -------------------------------------------------

               Sales charges                                 28

               -------------------------------------------------

               More about deferred sales charges             30

               -------------------------------------------------

               Buying shares                                 31

               -------------------------------------------------

               Exchanging shares                             32

               -------------------------------------------------

               Redeeming shares                              33

               -------------------------------------------------

               Other things to know about share transactions 34

               -------------------------------------------------

               Dividends, distributions and taxes            35

               -------------------------------------------------

               Share price                                   36

               -------------------------------------------------

               Financial highlights                          37

               -------------------------------------------------
</TABLE>

                                       1


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Investments, Risks and Performance


About the portfolios

Each portfolio is a "fund of funds"--meaning it invests in other mutual funds
rather than directly in portfolio securities like stocks, bonds and money
market instruments. These underlying mutual funds will be open-end funds
managed by the investment manager or its affiliates and have investment goals
similar, but not identical to, those of the portfolios.

Each portfolio is managed as an asset allocation program with a Target
Allocation and a Target Range.

  Target Allocation is the manager's initial strategic focus in allocating
  between equity funds and fixed income funds.

  Target Range is the range in which the manager may vary from the Target
  Allocation.

Investing primarily in other mutual funds presents special risks:

 . In addition to the portfolio's operating expenses, you will indirectly bear
  the operating expenses of the underlying funds. For instance, you will pay
  management fees of both the portfolio and the underlying funds.

 . One underlying fund may buy the same securities that another underlying fund
  sells. You would indirectly bear the costs of these trades without
  accomplishing any investment purpose.

 . You may receive taxable gains from portfolio transactions by the underlying
  funds as well as taxable gains from transactions in shares of the underlying
  funds by a portfolio.

You should know:

You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments

An investment in any of the portfolios is not a bank deposit and is not insured
or guaranteed by the FDIC or any other government agency

Principal risks of investing in fixed income securities and equity securities

The underlying funds invest in fixed income securities and equity securities.
Risks common to investments in fixed income securities and equity securities
are set forth below. Because each portfolio has a different investment
strategy, there are also principal risks that are specific to an investment in
a particular portfolio. These unique risks are described in the portfolio
summaries beginning on the next page.

Fixed Income Securities:

 . When interest rates go up, prices of fixed income securities go down

 . An issuer of a security may default on its obligation to pay principal and/or
  interest or the security's credit rating may be downgraded

 . An issuer of a security may prepay principal earlier than scheduled, which
  would force an underlying fund to reinvest in lower yielding securities. This
  is known as call or prepayment risk

 . Slower than expected principal payments may extend a security's life. This
  locks in a below-market interest rate, increases the security's duration and
  reduces the value of the security. This is known as extension risk

Equity Securities:

 . Stock prices may decline generally

 . If an adverse event occurs, such as the issuance of an unfavorable earnings
  report, the value of a particular issuer's security may be depressed

                                       2


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Global Portfolio

Investment objective

Capital appreciation.

Principal investment strategies

The portfolio is a fund of funds. It invests in the Smith Barney global,
international and U.S. equity funds listed below.

Selection process

The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the
equity markets in general, particular sectors of such markets and the
performance outlook for the underlying funds. In assessing the equity markets,
the manager considers the relative outlook for domestic and international
equity mar-kets, a broad range of market and economic trends and quantitative
factors. The performance of the underlying funds also influences their
weighting in the portfolio. The manager tends to emphasize a mix of underlying
funds that together reflect a broad range of U.S. and international equity
investments. The portfolio can invest in underlying funds that have a range of
investment styles and focuses. Under normal market conditions, the portfolio
allocates all of its assets to funds that invest primarily in equity
securities.

---------------------------------------------
<TABLE>
<CAPTION>
                           Target Allocation

                           --------------------------
                           <S>                <C>
                           Equity Funds          100%

                           --------------------------
                           Target Range

                           --------------------------
                           Equity Funds       80-100%

                           --------------------------
                           Fixed Income Funds   0-20%

                           --------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                           <C>    <C>                                      <C>
Smith Barney Hansberger Global Value Fund     15-40% Smith Barney Small Cap Core Fund, Inc.   0-20%

---------------------------------------------------------------------------------------------------
International All Cap Growth Portfolio        10-40% European Portfolio                       0-15%

---------------------------------------------------------------------------------------------------
Cash Portfolio                                 0-20% Smith Barney Mid Cap Core Fund           0-15%

---------------------------------------------------------------------------------------------------
Smith Barney Peachtree Growth Fund             0-20% Smith Barney Small Cap Growth Fund       0-15%

---------------------------------------------------------------------------------------------------
Large Cap Value Fund                           0-20% Smith Barney Small Cap Value Fund        0-15%

---------------------------------------------------------------------------------------------------
Smith Barney Aggressive Growth Fund Inc.       0-20% Smith Barney Appreciation Fund Inc.      0-10%

---------------------------------------------------------------------------------------------------
Smith Barney Growth and Income Fund            0-20% Smith Barney Fundamental Value Fund Inc. 0-10%

---------------------------------------------------------------------------------------------------
Smith Barney Large Capitalization Growth Fund  0-20%

---------------------------------------------------------------------------------------------------
</TABLE>


Principal risks of investing in the portfolio

Your investment in the portfolio is subject to the risks associated with
investing in equity securities generally. The principal risks associated with
investing in these securities are described on page 2 under "About the
portfolios". Your investment in the portfolio is also subject to the following
specific risks:

 . You could lose money on your investment in a portfolio, or the portfolio may
  not perform as well as other investments

 . An underlying fund's investments in foreign securities may decline because of
  adverse governmental action or political, economic or market instability in a
  foreign country or region. In addition, currency fluctuations could erase
  investment gains or add to investment losses. These risks are heightened for
  investments in emerging markets

 . The manager's judgment about the attractiveness and risk adjusted return
  potential of particular asset classes, investment styles, underlying funds or
  other issues may prove to be wrong

Who may want to invest

The portfolio may be an appropriate investment if you:

 . Are an aggressive investor seeking capital appreciation

 . Currently have exposure to fixed income investments and less volatile equity
  investments and wish to broaden your investment portfolio

 . Are willing to accept the risks of the stock market and the special risks of
  investing in foreign securities, including those of emerging markets

 . Have a long-term time horizon and no need for current income

                                       3


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                     Global Portfolio, continued


Risk return bar chart

--------------------------------------------------------------------------------

The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for the past 2 calendar years.
Class B, L and Y shares have different performance because of different
expenses. Performance information in the chart does not reflect sales charges,
which would reduce your return.

Past performance does not necessarily indicate how the portfolio will perform
in the future.

Quarterly Returns: Highest: 22.76% in 4th quarter 1999; Lowest: (8.24)% in 2nd
quarter 1999

Year-to-date: (13.96)% (through 3/31/01)


Percentage Total Returns for Class A shares

[CHART]

99     33.62

2000  -15.69

Calendar year ended December 31

Risk return table

--------------------------------------------------------------------------------
The table assumes the imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.

The table indicates the risks of investing in the portfolio by comparing the
average annual total return of each class for the periods shown to that of the
S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Russell 2000 Index (Russell 2000), a broad-based
unmanaged capitalization weighted index of small capitalization companies; the
Morgan Stanley Capital International EAFE Index (MSCI EAFE), a broad-based
unmanaged index of foreign stocks; and the Morgan Stanley Capital International
Emerging Markets Index (MSCI EMI), a broad-based unmanaged index of emerging
market companies with an average size of $800 million and the index performance
of emerging markets in South America, South Africa, Asia and Eastern Europe.

<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar years ended December 31, 2000)

-----------------------------------------------------------------------------------------------
<S>               <C>        <C>        <C>        <C>       <C>      <C>     <C>      <C>
                                                                  S&P Russell     MSCI     MSCI
                     Class A    Class B    Class L  Class Y*      500    2000     EAFE      EMI

-----------------------------------------------------------------------------------------------
1 Year              (19.92)%   (20.40)%   (17.96)%       n/a  (9.11)% (3.02)% (14.17)% (28.84)%

-----------------------------------------------------------------------------------------------
Since Inception        1.21%      1.28%      1.93%       n/a    9.37%   2.51%    5.93%  (3.89)%

-----------------------------------------------------------------------------------------------
Inception Date        3/9/98     3/9/98     3/9/98       n/a       **      **       **       **

-----------------------------------------------------------------------------------------------
</TABLE>
*  There were no Class Y shares outstanding for the calendar year ended
   December 31, 2000.
** Index comparison begins on March 9, 1998.

Fee table

--------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.

Based on the expense ratios of underlying Smith Barney funds in which the
Global portfolio was invested on January 31, 2001, the approximate expense
ratios are expected to be as follows: Class A 2.14%, Class B 2.94%, Class L
3.61% and Class Y 1.46%. Fee table expenses would be higher if the expense
ratios of the underlying funds were -included.

<TABLE>
<CAPTION>
Shareholder fees (fees paid directly from your investment) Class A Class B Class L Class Y
------------------------------------------------------------------------------------------
<S>                                                        <C>     <C>     <C>     <C>
Maximum sales charge (load) imposed on purchases
(as a % of offering price)                                  5.00%     None   1.00%    None
------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of the
lower of net asset value at purchase or redemption)          None*   5.00%   1.00%    None
------------------------------------------------------------------------------------------
Annual fund operating expenses**
(expenses deducted from portfolio assets)
------------------------------------------------------------------------------------------
Management fee                                              0.20%    0.20%   0.20%   0.20%
------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees                       0.25%    1.00%   1.00%    None
------------------------------------------------------------------------------------------
Other expenses                                              0.78%    0.83%   1.50%   0.35%
------------------------------------------------------------------------------------------
Total annual fund operating expenses                        1.23%    2.03%   2.70%   0.55%
------------------------------------------------------------------------------------------
</TABLE>
*  You may buy Class A shares in amounts of $1,000,000 or more at net asset
   value (without an initial sales charge) but if you redeem those shares
   within 12 months of purchase you will pay a deferred sales charge of 1.00%.
** Total annual fund operating expenses have been restated based on a
   management fee decrease and estimated "other expenses" effective July 6,
   2001 as if such fees had been in effect for the fiscal year ended January
   31, 2001. Actual fund operating expenses will be capped at 0.80% for Class
   A, 1.55% for Classes B and L, and 0.55% for Class Y and reflect voluntary
   fee waivers and expense reimbursements of 0.43%, 0.48% and 1.15% for Classes
   A, B and L, respectively. Any increases in the caps are subject to Board
   approval.

                                       4


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>


                                                     Global Portfolio, continued



Example

--------------------------------------------------------------------------------
The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.

<TABLE>
<CAPTION>
Number of years you own your shares            1 year(*) 3 years(*) 5 years(*) 10 years(*)

------------------------------------------------------------------------------------------
<S>                                            <C>       <C>        <C>        <C>
Class A (with or without redemption)                $706     $1,136     $1,592      $2,849

------------------------------------------------------------------------------------------
Class B (assuming redemption at end of period)      $797     $1,210     $1,648      $3,073

------------------------------------------------------------------------------------------
Class B (assuming no redemption)                    $297     $  910     $1,548      $3,073

------------------------------------------------------------------------------------------
Class L (assuming redemption at end of period)      $560     $1,195     $1,950      $3,932

------------------------------------------------------------------------------------------
Class L (assuming no redemption)                    $460     $1,195     $1,950      $3,932

------------------------------------------------------------------------------------------
Class Y (with or without redemption)                $149     $  462     $  797      $1,746

------------------------------------------------------------------------------------------
</TABLE>
*  The example assumes:
 . You invest $10,000 for the period shown
 . Your investment has a 5% return each year
 . You reinvest all distributions and dividends without a sales charge
 . The portfolio's operating expenses remain the same
 . The expenses of the underlying Smith Barney funds are reflected.


                                       5


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



High Growth Portfolio


Investment objective

Capital appreciation.

Principal investment strategies

The portfolio is a fund of funds. It invests in the Smith Barney mutual funds
listed below, which are primarily equity funds.

Selection process

The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the
equity markets in general, particular sectors of such markets and the
performance outlook for the underlying funds. In assessing the equity markets,
the manager considers a broad range of market and economic trends and
quantitative factors. The performance of the underlying funds
also influences their weighting in the portfolio. The manager tends to
emphasize underlying funds that focus upon smaller cap, higher growth
companies. However, the portfolio can invest in underlying funds that have a
range of investment styles and focuses, including large cap, international,
emerging markets and high yield (Smith Barney High Income Fund) funds. The
portfolio also allocates a portion of its assets to underlying funds that
primarily invest in debt securities.

---------------------------------------------
<TABLE>
<CAPTION>
Target Allocation

--------------------------
<S>                <C>
Equity Funds           90%

--------------------------
Fixed Income Funds     10%

--------------------------
Target Range

--------------------------
Equity Funds       80-100%

--------------------------
Fixed Income Funds   0-20%

--------------------------
</TABLE>

Underlying Funds and Target Percentage of Portfolio

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                       <C>   <C>                                           <C>
Smith Barney Aggressive Growth Fund Inc.  5-30% Smith Barney Growth and Income Fund           0-20%

---------------------------------------------------------------------------------------------------
International All Cap Growth Portfolio    5-25% Smith Barney High Income Fund                 0-20%

---------------------------------------------------------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-25% Smith Barney Large Capitalization Growth Fund 0-20%

---------------------------------------------------------------------------------------------------
Smith Barney Small Cap Core Fund, Inc.    0-25% Global Government Bond Portfolio              0-15%

---------------------------------------------------------------------------------------------------
Cash Portfolio                            0-20% Smith Barney Government Securities Fund       0-15%

---------------------------------------------------------------------------------------------------
Smith Barney Peachtree Growth Fund        0-20% Smith Barney Investment Grade Bond Fund       0-15%

---------------------------------------------------------------------------------------------------
Large Cap Value Fund                      0-20% Smith Barney Mid Cap Core Fund                0-15%

---------------------------------------------------------------------------------------------------
Smith Barney Appreciation Fund Inc.       0-20% Smith Barney Small Cap Growth Fund            0-15%

---------------------------------------------------------------------------------------------------
Smith Barney Fundamental Value Fund Inc.  0-20% Smith Barney Small Cap Value Fund             0-15%

---------------------------------------------------------------------------------------------------
</TABLE>

Principal risks of investing in the portfolio

Your investment in the portfolio is subject to the risks associated with
investing in equity securities generally. The principal risks associated with
investing in equity securities are described on page 2 under "About the
portfolios". Your investment in the portfolio is also subject to the following
specific risks:

 . You could lose money on your investment in a portfolio, or the portfolio may
  not perform as well as other investments

 . Growth stocks or small capitalization stocks (generally those comprising the
  Russell 2000 Indices) may fall out of favor with investors and may experience
  greater volatility, as well as greater potential for gain or loss

 . An underlying fund's investments in foreign securities may decline because of
  adverse governmental action or political, economic or market instability in a
  foreign country or region. In addition, currency fluctuations could erase
  investment gains or add to investment losses. These risks are heightened for
  investments in emerging markets

 . The manager's judgment about the attractiveness and risk adjusted return
  potential of particular asset classes, investment styles, underlying funds or
  other issues may prove to be wrong

Who may want to invest

The portfolio may be an appropriate investment if you:

 . Currently have exposure to fixed income investments and less volatile equity
  investments and wish to broaden your investment portfolio

 . Are willing to accept the risks of the stock market

 . Have a long-term time horizon and no need for current income

                                       6


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                High Growth Portfolio, continued

Risk return bar chart

--------------------------------------------------------------------------------

The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 4 calendar
years. Class B, L and Y shares have different performance because of different
expenses. Performance information in the chart does not reflect sales charges,
which would reduce your return.

Past performance does not necessarily indicate how the portfolio will perform
in the future.

Quarterly Returns: Highest: 22.13% in 4th quarter 1998; Lowest: (15.61)% in 3rd
quarter 1998

Year-to-date: (12.71)% (through 3/31/01)



                                    [CHART]

97     12.46

98     15.52

99     27.46

2000   -6.72

Risk return table

--------------------------------------------------------------------------------
-The table assumes the imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.

The table indicates the risks of investing in the portfolio by comparing the
average annual total return of each class for the periods shown to that of the
S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Russell 2000 Index (Russell 2000), a broad-based
unmanaged capitalization weighted index of small capitalization companies; the
Morgan Stanley Capital International EAFE Index (MSCI EAFE), a broad-based
unmanaged index of foreign stocks; and the Salomon Smith Barney High Yield
Market Index (High Yield), a broad-based unmanaged index of high yield
securities.

<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar years ended December 31, 2000)

-----------------------------------------------------------------------------------
<S>             <C>      <C>      <C>     <C>      <C>     <C>     <C>      <C>
                                                       S&P Russell     MSCI    High
                 Class A  Class B Class L Class Y*     500    2000     EAFE   Yield

-----------------------------------------------------------------------------------
1 Year          (11.37)% (11.64)% (9.19)%      n/a (9.11)% (3.02)% (14.17)% (5.68)%

-----------------------------------------------------------------------------------
Since Inception    9.51%    9.63%   9.55%      n/a  17.67%  10.32%    7.32%   4.32%

-----------------------------------------------------------------------------------
Inception Date    2/5/96   2/5/96  2/5/96      n/a      **      **       **     ***

-----------------------------------------------------------------------------------
</TABLE>
*   There were no Class Y shares outstanding for the calendar year ended
    December 31, 2000.
**  Index comparison begins on February 5, 1996.
*** Index comparison begins on February 29, 1996.

Fee table

--------------------------------------------------------------------------------

The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.

Based on the expense ratios of underlying Smith Barney funds in which the High
Growth portfolio was invested on January 31, 2001, the approximate expense
ratios are expected to be as follows: Class A 2.16%, Class B 2.44%, Class L
2.27% and Class Y 1.38%. Fee table expenses would be higher if the expense
ratios of the underlying funds were included.

<TABLE>
<CAPTION>
Shareholder fees (fees paid directly from your investment) Class A Class B Class L Class Y

------------------------------------------------------------------------------------------
<S>                                                        <C>     <C>     <C>     <C>
Maximum sales charge (load) imposed on purchases
(as a % of offering price)                                  5.00%     None   1.00%    None

------------------------------------------------------------------------------------------
Maximum deferred sales charge (load)
(as a % of the lower of net asset value at purchase or
redemption)                                                  None*   5.00%   1.00%    None

------------------------------------------------------------------------------------------
Annual fund operating expenses**
(expenses deducted from portfolio assets)

------------------------------------------------------------------------------------------
Management fee                                              0.20%    0.20%   0.20%   0.20%

------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees                       0.25%    1.00%   1.00%    None

------------------------------------------------------------------------------------------
Other expenses                                              0.88%    0.41%   0.24%   0.35%

------------------------------------------------------------------------------------------
Total annual fund operating expenses                        1.33%    1.61%   1.44%   0.55%

------------------------------------------------------------------------------------------
</TABLE>
*   You may buy Class A shares in amounts of $1,000,000 or more at net asset
    value (without an initial sales charge) but if you redeem those shares
    within 12 months of purchase you will pay a deferred sales charge of 1.00%.
**  Total annual fund operating expenses have been restated based on a
    management fee decrease and estimated "other expenses" effective July 6,
    2001 as if such fees had been in effect for the fiscal year ended January
    31, 2001. Actual fund operating expenses will be capped at 0.80% for Class
    A, 1.55% for Classes B and L, and 0.55% for Class Y and reflect voluntary
    fee waivers and expense reimbursements of 0.53%, and 0.06% for Classes A
    and B, respectively. Any increases in the caps are subject to Board
    approval.

                                       7


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>


                                                High Growth Portfolio, continued


Example

--------------------------------------------------------------------------------

The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower
<TABLE>
<CAPTION>
Number of years you own your shares            1 year* 3 years* 5 years* 10 years*

----------------------------------------------------------------------------------
<S>                                            <C>     <C>      <C>      <C>
Class A (with or without redemption)              $708   $1,142   $1,601    $2,868

----------------------------------------------------------------------------------
Class B (assuming redemption at end of period)    $747   $1,061   $1,401    $2,707

----------------------------------------------------------------------------------
Class B (assuming no redemption)                  $247   $  761   $1,301    $2,707

----------------------------------------------------------------------------------
Class L (assuming redemption at end of period)    $428   $  802   $1,303    $2,679

----------------------------------------------------------------------------------
Class L (assuming no redemption)                  $328   $  802   $1,303    $2,679

----------------------------------------------------------------------------------
Class Y (with or without redemption)              $140   $  437   $  755    $1,657

----------------------------------------------------------------------------------
</TABLE>
* The example assumes:
 . You invest $10,000 for the period shown
 . Your investment has a 5% return each year
 . You reinvest all distributions and dividends without a sales charge
 . The portfolio's operating expenses stay the same
 . The expenses of the underlying Smith Barney funds are reflected

                                       8


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Growth Portfolio


Investment objective

Long-term growth of capital.

Principal investment strategies

The portfolio is a fund of funds. It invests in the Smith Barney mutual funds
listed below, which are primarily equity funds.

Selection process

The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the
equity markets in general, and, to a lesser degree, the bond markets,
particular sectors of such markets and the performance outlook for the
underlying funds. In assessing the equity markets, the manager considers a
broad range of market and economic trends and quantitative factors. The
performance of the underlying funds also influences their weighting in the
portfolio. The manager tends to emphasize underlying funds that focus upon
larger capitalization companies. However, the portfolio can invest in
underlying funds that have a range of investment styles and focuses, including
small cap, international and high yield (Smith Barney High Incom-e Fund)
funds-. The portfolio also allocates a significant portion of its assets to
underlying funds that primarily invest in a broad range of debt securities to
help reduce volatility.

---------------------------------------------
<TABLE>
<CAPTION>
Target Allocation
-------------------------
<S>                <C>
Equity Funds          70%

-------------------------
Fixed Income Funds    30%

-------------------------
Target Range

-------------------------
Equity Funds       60-80%

-------------------------
Fixed Income Funds 20-40%

</TABLE>
Underlying Funds and Target Percentage of Portfolio

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                       <C>   <C>                                           <C>
Smith Barney High Income Fund             5-20% Smith Barney Large Capitalization Growth Fund 0-20%

---------------------------------------------------------------------------------------------------
Smith Barney Appreciation Fund Inc.       0-30% Smith Barney Small Cap Core Fund, Inc.        0-20%

---------------------------------------------------------------------------------------------------
Smith Barney Fundamental Value Fund Inc.  0-30% Global Government Bond Portfolio              0-15%

---------------------------------------------------------------------------------------------------
Cash Portfolio                            0-20% Short-Term High Grade Bond Fund               0-15%

---------------------------------------------------------------------------------------------------
Smith Barney Peachtree Growth Fund        0-20% Smith Barney Aggressive Growth Fund Inc.      0-15%

---------------------------------------------------------------------------------------------------
International All Cap Growth Portfolio    0-20% Smith Barney Investment Grade Bond Fund       0-15%

---------------------------------------------------------------------------------------------------
Large Cap Value Fund                      0-20% Smith Barney Managed Governments Fund Inc.    0-15%

---------------------------------------------------------------------------------------------------
Smith Barney Government Securities Fund   0-20% Smith Barney Mid Cap Core Fund                0-10%

---------------------------------------------------------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-20% Smith Barney Small Cap Growth Fund            0-10%

---------------------------------------------------------------------------------------------------
Smith Barney Growth and Income Fund       0-20% Smith Barney Small Cap Value Fund             0-10%

---------------------------------------------------------------------------------------------------
</TABLE>

Principal risks of investing in the portfolio

Your investment in the portfolio is subject to the risks associated with
investing in equity securities and, to a lesser degree, fixed income securities
generally. The principal risks associated with investing in equity securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:

 . You could lose money on your investment in a portfolio, or the portfolio may
  not perform as well as other investments

 . An underlying fund's investments in foreign securities may decline because of
  adverse governmental action or political, economic or market instability in a
  foreign country or region. In addition, currency fluctuations could erase
  investment gains or add to investment losses. These risks are heightened for
  investments in emerging markets

 . The manager's judgment about the attractiveness and risk adjusted return
  potential of particular asset classes, investment styles, underlying funds or
  other issues may prove to be wrong

 . Growth stocks or small capitalization stocks (generally those comprising the
  Russell 2000 Indices) may fall out of favor and may experience greater
  volatility, as well as greater potential for gain or loss

 . When interest rates go up, prices of fixed income securities go down

Who may want to invest

The portfolio may be an appropriate investment if you:

 . Are seeking growth of capital

 . Are willing to accept the risks of the stock market, although lessened
  through greater exposure to fixed income securities than the High Growth
  Portfolio

 . Have a long-term time horizon and no need for current income

                                       9


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>


                                                     Growth Portfolio, continued

Risk return bar chart

--------------------------------------------------------------------------------

The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 4 calendar
years. Class B, L and Y shares have different performance because of different
expenses. Performance information in the chart does not reflect sales charges,
which would reduce your return.

Past performance does not necessarily indicate how the portfolio will perform
in the future.

Quarterly Returns: Highest: 15.29% in 4th quarter 1998; Lowest: (10.67)% in 3rd
quarter 1998

Year-to-date: (9.45)% (through 3/31/01)




Percentage Total Returns for Class A shares

[CHART]

97     14.68

98     13.61

99     17.23

2000   -4.83

Calendar years ended December 31

Risk return table

--------------------------------------------------------------------------------

The table assumes the imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.

The table indicates the risks of investing in the portfolio by comparing the
average annual total return of each class for the periods shown to that of the
S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Russell 2000 Index (Russell 2000), a broad-based
unmanaged capitalization weighted index of small capitalization companies; the
Morgan Stanley Capital International EAFE Index (MSCI EAFE), a broad-based
unmanaged index of foreign stocks; and the Lehman Government/Corporate Bond
Index (Lehman), a broad-based index of fixed income securities.

<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended December 31, 2000)

---------------------------------------------------------------------------------------------
<S>                <C>       <C>       <C>       <C>        <C>       <C>     <C>      <C>
                                                                  S&P Russell     MSCI
                     Class A   Class B   Class L   Class Y*       500    2000     EAFE Lehman

---------------------------------------------------------------------------------------------
1 Year               (9.59)%   (9.82)%   (7.39)%        n/a   (9.11)% (3.02)% (14.17)% 11.85%

---------------------------------------------------------------------------------------------
Since Inception        8.40%     8.57%     8.49%        n/a    17.67%  10.32%    7.32%  6.80%

---------------------------------------------------------------------------------------------
Inception Date        2/5/96    2/5/96    2/5/96        n/a        **      **       **    ***

---------------------------------------------------------------------------------------------
</TABLE>
*   There were no Class Y shares outstanding for the calendar year ended
    December 31, 2000.
**  Index comparison begins on February 5, 1996.
*** Index comparison begins on February 29, 1996.

Fee table

--------------------------------------------------------------------------------

The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.

Based on the expense ratios of underlying Smith Barney funds in which the
Growth portfolio was invested on January 31, 2001, the approximate expense
ratios are expected to be as follows: Class A 1.52%, Class B 2.24%, Class L
2.17% and Class Y 1.31%. Fee table expenses would be higher if the expense
ratios of the underlying funds were included.

<TABLE>
<CAPTION>
Shareholder fees (fees paid directly from your investment) Class A Class B Class L Class Y

------------------------------------------------------------------------------------------
<S>                                                        <C>     <C>     <C>     <C>
Maximum sales charge (load) imposed on purchases
(as a % of offering price)                                  5.00%     None   1.00%    None

------------------------------------------------------------------------------------------
Maximum deferred sales charge (load)
(as a % of the lower of net asset value at purchase or
redemption)                                                  None*   5.00%   1.00%    None

------------------------------------------------------------------------------------------
Annual fund operating expenses**
(expenses deducted from portfolio assets)

------------------------------------------------------------------------------------------
Management fee                                              0.20%    0.20%   0.20%   0.20%

------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees                       0.25%    1.00%   1.00%    None

------------------------------------------------------------------------------------------
Other expenses                                              0.31%    0.28%   0.21%   0.35%

------------------------------------------------------------------------------------------
Total annual fund operating expenses                        0.76%    1.48%   1.41%   0.55%

------------------------------------------------------------------------------------------
</TABLE>
*   You may buy Class A shares in amounts of $1,000,000 or more at net asset
    value (without an initial sales charge) but if you redeem those shares
    within 12 months of purchase you will pay a deferred sales charge of 1.00%.
**  Total annual fund operating expenses have been restated based on a
    management fee decrease and estimated "other expenses" effective July 6,
    2001 as if such fees had been in effect for the fiscal year ended January
    31, 2001. Actual fund operating expenses will be capped at 0.80% for Class
    A, 1.55% for Classes B and L, and 0.55% for Class Y, with any increases in
    the caps subject to Board approval.

                                      10


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>

                                                     Growth Portfolio, continued

Example

--------------------------------------------------------------------------------

The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
<TABLE>
<CAPTION>
Number of years you own your shares            1 year* 3 years* 5 years* 10 years*

----------------------------------------------------------------------------------
<S>                                            <C>     <C>      <C>      <C>
Class A (with or without redemption)              $647   $  956   $1,287    $2,222

----------------------------------------------------------------------------------
Class B (assuming redemption at end of period)    $727   $1,000   $1,300    $2,394

----------------------------------------------------------------------------------
Class B (assuming no redemption)                  $227   $  700   $1,200    $2,394

----------------------------------------------------------------------------------
Class L (assuming redemption at end of period)    $418   $  772   $1,253    $2,578

----------------------------------------------------------------------------------
Class L (assuming no redemption)                  $318   $  772   $1,253    $2,578

----------------------------------------------------------------------------------
Class Y (with or without redemption)              $133   $  415   $  718    $1,579

----------------------------------------------------------------------------------
</TABLE>
* The example assumes:
 . You invest $10,000 for the period shown
 . Your investment has a 5% return each year
 . You reinvest all distributions and dividends without a sales charge
 . The portfolio's operating expenses stay the same
 . The expenses of the underlying Smith Barney funds are reflected

 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS

                                      11

<PAGE>



Balanced Portfolio

Investment objective

Balance of growth of capital and income.

Principal investment strategies

The portfolio is a fund of funds. It invests in the Smith Barney equity and
fixed income funds listed below.

Selection process

The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the
equity and bond markets in general, particular sectors of such markets and the
performance outlook for the underlying funds. In assessing the equity and bond
markets, the manager considers a broad range of market and economic
trends and quantitative factors. The performance of the underlying funds also
influences their weighting in the portfolio. In selecting equity funds, the
manager tends to emphasize underlying funds that focus upon established
large-capitalization U.S. stocks. The portfolio's fixed income funds mainly
invest in U.S. government and agency securities and mortgage-backed securities.
However, the portfolio can invest in underlying funds that have a range of
investment styles and focuses.

---------------------------------------------
<TABLE>
<CAPTION>
                           Target Allocation

                           -------------------------
                           <S>                <C>
                           Equity Funds          50%

                           -------------------------
                           Fixed Income Funds    50%

                           -------------------------
                           Target Range

                           -------------------------
                           Equity Funds       40-60%

                           -------------------------
                           Fixed Income Funds 40-60%

                           -------------------------
</TABLE>

Underlying Funds and Target Percentage of Portfolio

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                            <C>   <C>                                           <C>
Smith Barney Diversified Strategic Income Fund 5-25% Smith Barney Fundamental Value Fund Inc.      0-20%

--------------------------------------------------------------------------------------------------------
Smith Barney Convertible Fund                  5-20% Smith Barney Government Securities Fund       0-20%

--------------------------------------------------------------------------------------------------------
Smith Barney Managed Governments Fund Inc.     5-20% Smith Barney Peachtree Growth Fund            0-15%

--------------------------------------------------------------------------------------------------------
Smith Barney Premium Total Return Fund         5-20% Global Government Bond Portfolio              0-15%

--------------------------------------------------------------------------------------------------------
Cash Portfolio                                 0-25% International All Cap Growth Portfolio        0-15%

--------------------------------------------------------------------------------------------------------
Large Cap Value Fund                           0-20% Smith Barney Hansberger Global Value Fund     0-15%

--------------------------------------------------------------------------------------------------------
Smith Barney Growth and Income Fund            0-20% Smith Barney High Income Fund                 0-15%

--------------------------------------------------------------------------------------------------------
Short-Term High Grade Bond Fund                0-20% Smith Barney Large Capitalization Growth Fund 0-15%

--------------------------------------------------------------------------------------------------------
Smith Barney Appreciation Fund Inc.            0-20% Smith Barney Small Cap Core Fund, Inc.        0-15%

--------------------------------------------------------------------------------------------------------
</TABLE>

Principal risks of investing in the portfolio

Your investment in the portfolio is subject to the risks associated with
investing in both fixed income securities and equity securities generally. The
principal risks associated with investing in these securities are described on
page 2 under "About the portfolios". Your investment in the portfolio is also
subject to the following specific risks:

 . You could lose money on your investment in a portfolio, or the portfolio may
  not perform as well as other investments

 . An underlying fund's investments in foreign securities may decline because of
  adverse governmental action or political, economic or market instability in a
  foreign country or region. In addition, currency fluctuations could erase
  investment gains or add to investment loss-es. These risks are heightened for
  investments in emerging markets

 . The manager's judgment about the attractiveness and risk adjusted return
  potential of particular asset classes, investment styles, underlying funds or
  other issues may prove to be wrong

 . When interest rates go up, prices of fixed income securities go down

Who may want to invest

The portfolio may be an appropriate investment if you:

 . Are willing to sacrifice some growth potential for less volatility

 . Are willing to accept the risks of the stock market

 . Have a long-term time horizon

                                      12


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                   Balanced Portfolio, continued


Risk return bar chart

--------------------------------------------------------------------------------

The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 4 calendar
years. Class B, L and Y shares have different performance because of different
expenses. Performance information in the chart does not reflect sales charges,
which would reduce your return.

Past performance does not necessarily indicate how the portfolio will perform
in the future.

Quarterly returns: Highest: 7.71% in 4th quarter 1998; Lowest: (5.18)% in 3rd
quarter 1998

Year-to-date: (2.07)% (through 3/31/01)


Percentage Total Returns for Class A shares

[CHART]

97    12.78

98     8.84

99     7.35

2000   4.68

Calendar years ended December 31

Risk return table

--------------------------------------------------------------------------------

The table assumes the imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.

The table indicates the risks of investing in the portfolio by comparing the
average annual total return of each class for the periods shown to that of the
S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Lehman Government/Corporate Bond Index (Lehman),
a broad-based unmanaged index of fixed income securities; the Salomon Smith
Barney One-Year Treasury Bill Index (T-bill), consisting of a single 1-Year
U.S. Treasury bill whose return is tracked until maturity; and the Salomon
Smith Barney World Government Bond Index (World Bond), a broad-based unmanaged
index of international fixed income securities.

<TABLE>
<CAPTION>
  Average Annual Total Returns (Calendar Years Ended December 31, 2000)

  ----------------------------------------------------------------------------
  <S>             <C>     <C>     <C>     <C>      <C>     <C>    <C>    <C>
                                                       S&P               World
                  Class A Class B Class L Class Y*     500 Lehman T-bill  Bond

  ----------------------------------------------------------------------------
  1 Year          (0.52)% (0.83)%   1.95%      n/a (9.11)% 11.85%  7.10% 1.59%

  ----------------------------------------------------------------------------
  Since Inception   7.53%   7.70%   7.62%      n/a  17.67%  6.80%  5.79% 3.34%

  ----------------------------------------------------------------------------
  Inception Date   2/5/96  2/5/96  2/5/96      n/a      **    ***     **    **

  ----------------------------------------------------------------------------
</TABLE>
*   There were no Class Y shares outstanding for the calendar year ended
    December 31, 2000.
**  Index comparison begins on February 5, 1996.
*** Index Comparison begins on February 29, 1996.

Fee table

--------------------------------------------------------------------------------

The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.

Based on the expense ratios of underlying Smith Barney funds in which the
Balanced portfolio was invested on January 31, 2001, the approximate expense
ratios are expected to be as follows: Class A 1.34%, Class B 2.10%, Class L
2.06% and Class Y 1.25%. Fee table expenses would be higher if the expense
ratios of the underlying funds were included.

<TABLE>
<CAPTION>
Shareholder fees (fees paid directly from your investment) Class A Class B Class L Class Y

------------------------------------------------------------------------------------------
<S>                                                        <C>     <C>     <C>     <C>
Maximum sales charge (load) imposed on purchases
(as a % of offering price)                                  5.00%     None   1.00%    None

------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of the
lower of net asset value at purchase or redemption)          None*   5.00%   1.00%    None

------------------------------------------------------------------------------------------
Annual fund operating expenses**
(expenses deducted from portfolio assets)

------------------------------------------------------------------------------------------
Management fee                                              0.20%    0.20%   0.20%   0.20%

------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees                       0.25%    1.00%   1.00%    None

------------------------------------------------------------------------------------------
Other expenses                                              0.19%    0.20%   0.16%   0.35%

------------------------------------------------------------------------------------------
Total annual fund operating expenses                        0.64%    1.40%   1.36%   0.55%

------------------------------------------------------------------------------------------
</TABLE>
*   You may buy Class A shares in amounts of $1,000,000 or more at net asset
    value (without an initial sales charge) but if you redeem those shares
    within 12 months of purchase you will pay a deferred sales charge of 1.00%.
**  Total annual fund operating expenses have been restated based on a
    management fee decrease and estimated "other expenses" effective July 6,
    2001 as if such fees had been in effect for the fiscal year ended January
    31, 2001. Actual fund operating expenses will be capped at 0.80% for Class
    A, 1.55% for Classes B and L, and 0.55% for Class Y, with any increases in
    the caps subject to Board approval.

                                      13


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>


                                                   Balanced Portfolio, continued


Example

--------------------------------------------------------------------------------

The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
<TABLE>
<CAPTION>
Number of years you own your shares            1 Year* 3 Years* 5 Years* 10 Years*

----------------------------------------------------------------------------------
<S>                                            <C>     <C>      <C>      <C>
Class A (with or without redemption)              $630     $903   $1,197    $2,032

----------------------------------------------------------------------------------
Class B (assuming redemption at end of period)    $713     $958   $1,229    $2,237

----------------------------------------------------------------------------------
Class B (assuming no redemption)                  $213     $658   $1,129    $2,237

----------------------------------------------------------------------------------
Class L (assuming redemption at end of period)    $407     $739   $1,197    $2,466

----------------------------------------------------------------------------------
Class L (assuming no redemption)                  $307     $739   $1,197    $2,466

----------------------------------------------------------------------------------
Class Y (with or without redemption)              $127     $397   $  686    $1,511

----------------------------------------------------------------------------------
</TABLE>
* The example assumes:
 . You invest $10,000 for the period shown
 . Your investment has a 5% return each year
 . You reinvest all distributions and dividends without a sales charge
 . The portfolio's operating expenses stay the same
 . The expenses of the underlying Smith Barney funds are reflected

                                      14


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Conservative Portfolio


Investment objective

Primary: Income. Secondary: Long-term growth of capital.

Principal investment strategies

The portfolio is a fund of funds. It invests primarily in the Smith Barney
funds listed below that focus on taxable fixed income securities and stocks of
U.S. large capitalization companies.

Selection process

The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the
different sectors of the bond market and, to a lesser degree, the equities
markets. In assessing the bond markets, the manager considers a broad range of
economic trends and quantitative factors. The performance of the underlying
funds also influences their weighting in the portfolio. The portfolio's fixed
income funds mainly invest in U.S. government and agency securities and
mortgage-backed securities. In selecting equity funds, the manager tends to
emphasize underlying funds that focus upon large capitalization stocks.
However, the portfolio can invest in underlying funds that have a range of
investment styles and focuses.

---------------------------------------------
<TABLE>
<CAPTION>
Target Allocation

-------------------------
<S>                <C>
Equity Funds          30%

-------------------------
Fixed Income Funds    70%

-------------------------
Target Range

-------------------------
Equity Funds       20-40%

-------------------------
Fixed Income Funds 60-80%

-------------------------
</TABLE>

Underlying Funds and Target Percentage of Portfolio

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                            <C>    <C>                                       <C>
Smith Barney Diversified Strategic Income Fund 10-30% Large Cap Value Fund                      0-20%

-----------------------------------------------------------------------------------------------------
Smith Barney Managed Governments Fund Inc.      5-25% Short-Term High Grade Bond Fund           0-20%

-----------------------------------------------------------------------------------------------------
Smith Barney Government Securities Fund         5-20% Smith Barney High Income Fund             0-20%

-----------------------------------------------------------------------------------------------------
Smith Barney Convertible Fund                   5-15% Smith Barney Appreciation Fund Inc.       0-15%

-----------------------------------------------------------------------------------------------------
Cash Portfolio                                  0-30% Smith Barney Fundamental Value Fund Inc.  0-15%

-----------------------------------------------------------------------------------------------------
Smith Barney Premium Total Return Fund          0-25% International All Cap Growth Portfolio    0-10%

-----------------------------------------------------------------------------------------------------
Global Government Bond Portfolio                0-20% Smith Barney Hansberger Global Value Fund 0-10%

-----------------------------------------------------------------------------------------------------
</TABLE>

Principal risks of investing in the portfolio

Your investment in the portfolio is subject to the risks associated with
investing in fixed income securities and, to a lesser degree, equity securities
generally. The principal risks associated with investing in these securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:

 . You could lose money on your investment in a portfolio, or the portfolio may
  not perform as well as other investments

 . The manager's judgment about the attractiveness and risk adjusted return
  potential of particular asset classes, investment styles, underlying funds or
  other issues may prove to be wrong

 . When interest rates go up, prices of fixed income securities go down

 . An issuer of a security may prepay principal earlier than scheduled, which
  would force an underlying fund to reinvest in lower yielding securities

Who may want to invest

The portfolio may be an appropriate investment if you:

 . Are seeking income, but also some long-term growth of capital to help offset
  the loss of purchasing power because of inflation

 . Are a conservative investor willing to sacrifice some growth potential in
  exchange for less (but not zero) volatility

                                      15


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                               Conservative Portfolio, continued


Risk return bar chart

--------------------------------------------------------------------------------

The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 4 calendar
years. Class B, L and Y shares have different performance because of different
expenses. Performance information in the chart does not reflect sales charges,
which would reduce your return.

Past performance does not necessarily indicate how the portfolio will perform
in the future.

Quarterly Returns: Highest: 6.01% in 2nd quarter 1997; Lowest: (3.42)% in 3rd
quarter 1998

Year to date: 0.37% (through 3/31/01)



Percentage Total Returns for Class A Shares



[CHART]



97      11.81%

98       6.02%

99       3.98%

2000     4.04%



Calendar years ended December 31



Risk return table

--------------------------------------------------------------------------------

The table assumes the imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.

The table indicates the risks of investing in the portfolio by comparing the
average annual total return of each class for the periods shown to that of the
S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Lehman Government/Corporate Bond Index (Lehman),
a broad-based unmanaged index of fixed income securities; Salomon Smith Barney
High Yield Market Index (High Yield), a broad-based unmanaged index of high
yield securities and the Salomon Smith Barney One-Year Treasury Bill Index
(T-bill), consisting of a single 1-Year U.S. Treasury bill whose return is
tracked until maturity.

<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended December 31, 2000)

-------------------------------------------------------------------------------------------
<S>                <C>       <C>       <C>       <C>        <C>       <C>    <C>     <C>
                                                                  S&P           High
                     Class A   Class B   Class L   Class Y*       500 Lehman   Yield T-bill

-------------------------------------------------------------------------------------------
1 Year               (0.66)%   (0.73)%     1.62%        n/a   (9.11)% 11.85% (5.68)%  7.10%

-------------------------------------------------------------------------------------------
Since Inception        5.78%     6.10%     6.09%        n/a    17.67%  6.80%   4.32%  5.79%

-------------------------------------------------------------------------------------------
Inception Date        2/5/96    2/5/96    2/5/96        n/a        **    ***     ***     **

-------------------------------------------------------------------------------------------
</TABLE>
*   There were no Class Y shares outstanding for the calendar year ended
    December 31, 2000.
**  Index comparison begins on February 5, 1996.
*** Index comparison begins on February 29, 1996.

Fee table

--------------------------------------------------------------------------------

The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.

Based on expense ratios of underlying Smith Barney funds in which the
Conservative portfolio was invested on January 31, 2001, the approximate
expense ratios are expected to be as follows: Class A 1.35%, Class B 1.86%,
Class L 1.96% and Class Y 1.26%. Fee table expenses would be higher if the
expense ratios of the underlying funds were included.

<TABLE>
<CAPTION>
Shareholder fees (fees paid directly from your investment) Class A Class B Class L Class Y

------------------------------------------------------------------------------------------
<S>                                                        <C>     <C>     <C>     <C>
Maximum sales charge (load) imposed on purchases
(as a % of offering price)                                   4.50%    None   1.00%    None

------------------------------------------------------------------------------------------
Maximum deferred sales charge (load)
(as a % of the lower of net asset value at purchase or
redemption)                                                  None*   4.50%   1.00%    None

------------------------------------------------------------------------------------------
Annual fund operating expenses**
(expenses deducted from portfolio assets)

------------------------------------------------------------------------------------------
Management fee                                               0.20%   0.20%   0.20%   0.20%
------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees                        0.25%   0.75%   0.70%    None
------------------------------------------------------------------------------------------
Other expenses                                               0.19%   0.20%   0.35%   0.35%
------------------------------------------------------------------------------------------
Total annual fund operating expenses                         0.64%   1.15%   1.25%   0.55%
------------------------------------------------------------------------------------------
</TABLE>
*   You may buy Class A shares in amounts of $500,000 or more at net asset
    value (without an initial sales charge) but if you redeem those shares
    within 12 months of purchase you will pay a deferred sales charge of 1.00%.
**  Total annual fund operating expenses have been restated based on a
    management fee decrease and estimated "other expenses" effective July 6,
    2001 as if such fees had been in effect for the fiscal year ended January
    31, 2001. Actual fund operating expenses will be capped at 0.80% for Class
    A, 1.30% for Class B, 1.25% for Class L and 0.55% for Class Y, with any
    increases in the caps subject to Board approval.

                                      16


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>


                                               Conservative Portfolio, continued


Example

--------------------------------------------------------------------------------

The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.

<TABLE>
<CAPTION>
Number of years you own your shares            1 year* 3 years* 5 years* 10 years*

----------------------------------------------------------------------------------
<S>                                            <C>     <C>      <C>      <C>
Class A (with or without redemption)              $581     $858   $1,156    $2,001

----------------------------------------------------------------------------------
Class B (assuming redemption at end of period)    $639     $885   $1,106    $2,047

----------------------------------------------------------------------------------
Class B (assuming no redemption)                  $189     $585   $1,006    $2,047

----------------------------------------------------------------------------------
Class L (assuming redemption at end of period)    $397     $709   $1,147    $2,362

----------------------------------------------------------------------------------
Class L (assuming no redemption)                  $297     $709   $1,147    $2,362

----------------------------------------------------------------------------------
Class Y (with or without redemption)              $128     $400   $  692    $1,523

----------------------------------------------------------------------------------
</TABLE>
 * The example assumes:
 .  You invest $10,000 for the period shown
 .  Your investment has a 5% return each year
 .  You reinvest all distributions and dividends without a sales charge
 .  The portfolio's operating expenses remain the same
 .  The expenses of the underlying Smith Barney funds are reflected.



                                      17


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Income Portfolio

Investment objective

High current income.

Principal investment strategies

The portfolio is a fund of funds. It invests primarily in the Smith Barney
funds listed below that focus on taxable fixed income securities.

Selection process

The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the
different sectors of the bond market. In assessing the bond markets, the
manager considers a broad range of economic trends and quan-titative factors.
The performance of the underlying funds also influences their weighting in the
portfolio. The portfolio focuses on funds that invest in a broad range of fixed
income securities. The portfolio also allocates a portion of its assets to
underlying funds that primarily invest in equity securities.

---------------------------------------------
<TABLE>
<CAPTION>
Target Allocation

--------------------------
<S>                <C>
Equity Funds           10%

--------------------------
Fixed Income Funds     90%

--------------------------
Target Range

--------------------------
Equity Funds         0-20%

--------------------------
Fixed Income Funds 80-100%

--------------------------
</TABLE>

Underlying Funds and Target Percentage of Portfolio

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                            <C>    <C>                                      <C>
Smith Barney Diversified Strategic Income Fund 10-30% Large Cap Value Fund                     0-15%

----------------------------------------------------------------------------------------------------
Short-Term High Grade Bond Fund                 5-30% Smith Barney Convertible Fund            0-15%

----------------------------------------------------------------------------------------------------
Smith Barney Managed Governments Fund Inc.      5-30% Smith Barney Investment Grade Bond Fund  0-15%

----------------------------------------------------------------------------------------------------
Smith Barney Government Securities Fund         5-20% Smith Barney Premium Total Return Fund   0-15%

----------------------------------------------------------------------------------------------------
Cash Portfolio                                  0-30% International All Cap Growth Portfolio   0-10%

----------------------------------------------------------------------------------------------------
Smith Barney High Income Fund                   0-25% Smith Barney Appreciation Fund Inc.      0-10%

----------------------------------------------------------------------------------------------------
Global Government Bond Portfolio                0-20% Smith Barney Fundamental Value Fund Inc. 0-10%

----------------------------------------------------------------------------------------------------
</TABLE>

Principal risks of investing in the portfolio

Your investment in the portfolio is subject to the risks associated with
investing in fixed income securities and, to a lesser degree, equity securities
generally. The principal risks associated with investing in these securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:

 . You could lose money on your investment in a portfolio, or the portfolio may
  not perform as well as other investments

 . The manager's judgment about the attractiveness and risk adjusted return
  potential of particular asset classes, investment styles, underlying funds or
  other issues may prove to be wrong

 . When interest rates go up, prices of fixed income securities go down

 . An issuer of a security may prepay principal earlier than scheduled, which
  would force an underlying fund to reinvest in lower yielding securities

 . An issuer of a security may default on its obligation to pay principal and/or
  interest or the security's credit rating may be downgraded

Who may want to invest

The portfolio may be an appropriate investment if you:

 . Are seeking current income

 . Are a conservative investor willing to sacrifice growth potential for less
  (but not zero) volatility

                                      18


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                     Income Portfolio, continued


Risk return bar chart

--------------------------------------------------------------------------------

The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 4 calendar
years. Class B, L and Y shares have different performance because of different
expenses. Performance information in the chart does not reflect sales charges,
which would reduce your return.

Past performance does not necessarily indicate how the portfolio will perform
in the future.

Quarterly Returns: Highest: 5.09% in 2nd quarter 1997; Lowest: (1.10)% in 3rd
quarter 1998

Year-to-date: 1.85% (through 3/31/01)


Percentage Total Returns for Class A shares

[CHART]



97 11.00%

98 5.32%

99 0.34%

00 3.64%

Calendar years ended December 31

Risk return table

--------------------------------------------------------------------------------

The table assumes the imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.

The table indicates the risks of investing in the portfolio by comparing the
average annual total return of each class for the periods shown to that of the
S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Lehman Government/Corporate Bond Index (Lehman),
a broad-based unmanaged index of fixed income securities; Salomon Smith Barney
High Yield Market Index (High Yield), a broad-based unmanaged index of high
yield securities and the Salomon Smith Barney One-Year Treasury Bill Index
(T-bill), consisting of a single 1-Year U.S. Treasury bill whose return is
tracked until maturity.

<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended December 31, 2000)

-------------------------------------------------------------------------------------------
<S>                <C>       <C>       <C>       <C>        <C>       <C>    <C>     <C>
                                                                  S&P           High
                     Class A   Class B   Class L   Class Y*       500 Lehman   Yield T-bill

-------------------------------------------------------------------------------------------
1 Year               (1.05)%   (1.21)%     1.16%        n/a   (9.11)% 11.85% (5.68)%  7.10%

-------------------------------------------------------------------------------------------
Since Inception        4.26%     4.57%     4.55%        n/a    17.67%  6.80%   4.32%  5.79%

-------------------------------------------------------------------------------------------
Inception Date        2/5/96    2/5/96    2/5/96        n/a        **    ***     ***     **

-------------------------------------------------------------------------------------------
</TABLE>
*   There were no Class Y shares outstanding for the calendar year ended
    December 31, 2000.
**  Index comparison begins on February 5, 1996.
*** Index comparison begins on February 29, 1996.

Fee table

--------------------------------------------------------------------------------

The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.

Based on expense ratios of underlying Smith Barney funds in which the Income
portfolio was invested on January 31, 2001, the approximate expense ratios are
expected to be as follows: Class A 1.33%, Class B 1.86%, Class L 2.12% and
Class Y 1.22%. Fee table expenses would be higher if the expense ratios of the
underlying funds were included.

<TABLE>
<CAPTION>
Shareholder fees (fees paid directly from your investment) Class A Class B Class L Class Y

------------------------------------------------------------------------------------------
<S>                                                        <C>     <C>     <C>     <C>
Maximum sales charge (load) imposed on purchases
(as a % of offering price)                                   4.50%    None   1.00%    None

------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of the
lower of net asset value at purchase or redemption)          None*   4.50%   1.00%    None

------------------------------------------------------------------------------------------
Annual fund operating expenses**
(expenses deducted from portfolio assets)

------------------------------------------------------------------------------------------
Management fee                                               0.20%   0.20%   0.20%   0.20%

------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees                        0.25%   0.75%   0.70%    None

------------------------------------------------------------------------------------------
Other expenses                                               0.21%   0.24%   0.55%   0.35%

------------------------------------------------------------------------------------------
Total annual fund operating expenses                         0.66%   1.19%   1.45%   0.55%

------------------------------------------------------------------------------------------
</TABLE>
*   You may buy Class A shares in amounts of $500,000 or more at net asset
    value (without an initial sales charge) but if you redeem those shares
    within 12 months of purchase you will pay a deferred sales charge of 1.00%.
**  Total annual fund operating expenses have been restated based on a
    management fee decrease and estimated "other expenses" effective July 6,
    2001 as if such fees had been in effect for the fiscal year ended January
    31, 2001. Actual fund operating expenses will be capped at 0.80% for Class
    A, 1.30% for Class B, 1.25% for Class L and 0.55% for Class Y and reflect a
    voluntary fee waiver and expense reimbursement of 0.20% for Class L. Any
    increases in the caps are subject to Board approval.

                                      19


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                     Income Portfolio, continued


Example

--------------------------------------------------------------------------------

The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
<TABLE>
<CAPTION>
Number of years you own your shares            1 year* 3 years* 5 years* 10 years*

----------------------------------------------------------------------------------
<S>                                            <C>     <C>      <C>      <C>
Class A (with or without redemption)              $579     $852   $1,146    $1,979

----------------------------------------------------------------------------------
Class B (assuming redemption at end of period)    $639     $885   $1,106    $2,042

----------------------------------------------------------------------------------
Class B (assuming no redemption)                  $189     $585   $1,006    $2,042

----------------------------------------------------------------------------------
Class L (assuming redemption at end of period)    $413     $757   $1,228    $2,527

----------------------------------------------------------------------------------
Class L (assuming no redemption)                  $313     $757   $1,228    $2,527

----------------------------------------------------------------------------------
Class Y (with or without redemption)              $124     $387   $  670    $1,477

----------------------------------------------------------------------------------
</TABLE>
* The example assumes:
 . You invest $10,000 for the period shown
 . Your investment has a 5% return each year
 . You reinvest all distributions and dividends without a sales charge
 . The portfolio's operating expenses stay the same
 . The expenses of the underlying Smith Barney funds are reflected

                                      20


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



More on the Portfolios' Investments


Underlying funds

The following is a description of the investment objectives and principal
investments of the underlying funds in which the portfolios invest.

The underlying funds that invest primarily in equity securities are:

Smith Barney Aggressive Growth Fund Inc. seeks capital appreciation by
investing primarily in common stocks of companies the adviser believes are
experiencing, or have the potential to experience, growth in earnings that
exceed the average earnings growth rate of companies whose securities are
included in the Standard & Poor's 500 Index.

Smith Barney Appreciation Fund Inc. seeks long-term appreciation of shareholder
capital by investing primarily in equity securities of U.S. companies. The core
holdings of the fund are blue chip companies that are dominant in their
industries.

Smith Barney Growth and Income Fund seeks reasonable growth and income by
investing in a portfolio consisting principally of equity securities, including
convertible securities, that provide dividend or interest income and potential
appreciation in value. The fund emphasizes U.S. stocks with large market
capitalizations and its convertible securities may be of any credit quality and
may include below investment grade securities.

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 common
stocks and common stock equivalents and, to a lesser extent, in bonds and other
debt instruments.

Large Cap Value Fund seeks current income and long-term growth of capital. The
fund invests primarily in common stocks of companies having a market
capitalization of at least $5 billion that are considered by its adviser (i) to
be undervalued by the marketplace, (ii) to offer potential opportunities not
yet recognized by the marketplace, or (iii) to have been out of favor in the
marketplace but that are poised to turn around because of a new management
team, product or business strategy.

Smith Barney Large Capitalization Growth Fund seeks long-term growth of capital
by investing in equity securities of large capitalization companies with market
capitalizations greater than $5 billion at the time of investment that are
believed to afford attractive opportunities for investment growth.

Smith Barney Mid Cap Core Fund seeks long-term growth of capital by investing
primarily in equity securities of medium-sized companies whose market
capitalizations are no greater than the market capitalizations of companies in
the S&P MidCap Index at the time of investment.

Smith Barney Peachtree Growth Fund's investment objective is capital
appreciation by investing in securities believed to have above average
potential for capital appreciation. In attempting to achieve the fund's
investment objective, the fund uses a disciplined approach to identify equity
securities of companies having prospects of strong, sustainable earnings growth
and that are believed to afford attractive opportunities for stock price
appreciation.

Smith Barney Small Cap Core Fund, Inc. seeks long-term capital appreciation by
investing primarily in the common stocks of U.S. companies with relatively
small market capitalizations at the time of investment.

Smith Barney Small Cap Growth Fund seeks long-term growth of capital by
investing primarily in equity securities of high growth companies. These
companies possess a market capitalization within the market capitalization
range of companies in the Russell 2000 Growth Index at the time of the fund's
investment.

Smith Barney Small Cap Value Fund seeks long-term growth of capital by
investing primarily in equity securities of smaller capitalized companies whose
market capitalizations are no greater than the market capitalization of
companies in the Russell 2000 Value Index at the time of investment.

Smith Barney Premium Total Return Fund seeks to provide shareholders with total
return, consisting of long-term capital appreciation and income, by investing
primarily in a diversified portfolio of equity and fixed income securities.

Smith Barney Hansberger Global Value Fund seeks long-term capital growth by
investing primarily in equity securities of companies in any country including
the United States which, in the opinion of its advisers, are undervalued.
Income is an incidental consideration.

International All Cap Growth Portfolio seeks total return on its assets from
growth of capital and income. The fund invests primarily in a diversified
portfolio of equity securities of foreign companies including exchange traded
and over-the-counter common stocks and preferred shares, debt securities
convertible into equity securities and rights and warrants relating to equity
securities.

European Portfolio seeks long-term capital appreciation by investing primarily
in the equity securities of issuers based in European countries including
countries located

                                      21


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                  More on the Portfolios' Investments, continued



in Western Europe (e.g., France, Germany, Italy, the Netherlands, Switzerland
and the United Kingdom) and Eastern Europe (e.g., Czech Republic, Hungary,
Poland and the countries of the former Soviet Union).

The underlying funds that invest primarily in fixed income securities are:

Smith Barney High Income Fund seeks to provide shareholders with high current
income. Although growth of capital is not an investment objective of the fund,
its adviser may consider potential for growth as one factor, among others, in
selecting investments for the fund. The fund will seek high current income by
investing in high risk, high-yielding corporate bonds, debentures and notes
denominated in U.S. dollars or foreign currencies.

Smith Barney Investment Grade Bond Fund seeks to provide as high a level of
current income as is consistent with prudent investment management and
preservation of capital. The fund invests primarily in a portfolio of
investment grade bonds.

Smith Barney Government Securities Fund seeks high current return by investing
in obligations of, or securities guaranteed by, the U.S. government, its
agencies or instrumentalities (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").

Short-Term High Grade Bond Fund seeks current income, preservation of capital
and liquidity. The fund seeks to achieve its objective by investing its assets
in corporate debt securities, bank obligations and securities issued by the
U.S. Government and its agencies and instrumentalities.

Smith Barney Managed Governments Fund Inc. seeks high current income consistent
with liquidity and safety of capital. The fund invests substantially all of its
assets in U.S. government securities. The fund's portfolio consists primarily
of mortgage-backed securities issued or guaranteed by GNMA, the Federal
National Mortgage Association ("FNMA") and FHLMC.

Smith Barney Diversified Strategic Income Fund seeks high current income
primarily through investment in fixed income securities, including high yield
securities. The fund attempts to achieve its objective by allocating and
reallocating its assets primarily among various types of fixed-income
securities such as: obligations issued or guaranteed as to principal and
interest by the U.S. government; mortgage-related securities issued by various
governmental and non-governmental entities; domestic and foreign corporate
securities; and foreign government securities.

Global Government Bond Portfolio seeks as high a level of current income and
capital appreciation as is consistent with its policy of investing principally
in high quality bonds of the U.S. and foreign governments.

Cash Portfolio is a money market fund that seeks maximum current income and
preservation of capital by investing in high quality U.S. dollar denominated
short-term debt securities.

Smith Barney Convertible Fund seeks current income and capital appreciation by
investing in investment and non-investment grade convertible securities and in
combinations of non-convertible fixed-income securities and warrants or call
options that together resemble convertible securities.

Temporary defensive investments (all portfolios)

Each of the portfolios may depart from its principal investment strategies in
response to adverse market, economic or political conditions by taking
temporary defensive positions in the Cash Portfolio, a series of Smith -Barney
Money Funds, Inc., repurchase agreements or cash. If a portfolio takes a
temporary defensive position, it may be unable to achieve its investment
objective.

                                      22


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Investment Strategies and Related Risks


Portfolio turnover (all portfolios)

Each underlying fund may engage in active and frequent trading to achieve its
principal investment strategies. As a result, an underlying fund may realize
and distribute to a portfolio higher capital gains, which could increase the
tax liability for the portfolio's shareholders. Frequent trading also increases
transaction costs, which could detract from an underlying fund's performance.

Non-diversification

Each portfolio is not diversified, which means that it can invest a higher
percentage of its assets in any one underlying fund than a diversified
portfolio. Being non-diversified may magnify a portfolio's losses from adverse
events affecting a particular underlying fund. However, each of the underlying
funds (except Global Government Bond Portfolio) is diversified.

Changes in allocations

The underlying funds in which the portfolios may invest, and the range of
assets allocated to each fund, may be changed by the board of directors from
time to time. Similarly, the target allocation between equity and fixed income
oriented investments may be adjusted from time to time. If the target limits
for investment in a particular fund are exceeded or are not met because of cash
flows or changes in the market value of the shares of the underlying funds, the
investment manager may, but is not required to, adjust the portfolio's
holdings.

High yield securities

Certain of the underlying funds can invest all or a portion of their assets in
high yield securities. High yield securities involve a substantial risk of
loss. These securities are considered speculative with respect to the issuer's
ability to pay interest and principal and are susceptible to default or decline
in market value because of adverse economic and business developments. The
market values for high yield securities tend to be very volatile, and these
securities are less liquid than investment grade debt securities. Underlying
funds that hold these issues are subject to the following specific risks:

 . Increased price sensitivity to changing interest rates

 . Greater risk of loss because of default or declining credit quality

 . Adverse company specific events are more likely to render the issuer unable
  to make interest and/or principal payments

 . A negative perception of the high yield market may develop, depressing the
  price and liquidity of high yield securities. This negative perception could
  last for a significant period of time

Foreign securities

Certain of the underlying funds focus upon foreign securities and other
underlying funds may invest a portion of their assets outside the U.S.
Investing in non-U.S. issuers involves unique risks compared to investing in
the securities of U.S. issuers. These risks are more pronounced to the extent a
fund invests in issuers in countries with emerging markets. These risks may
include:

 . Less information about non-U.S. issuers or markets may be available because
  of less rigorous disclosure and accounting standards or regulatory practices

 . Many non-U.S. markets are smaller, less liquid and more volatile than U.S.
  markets. In a changing market, the adviser may not be able to sell the fund's
  portfolio securities in amounts and at prices the adviser considers
  reasonable

 . The U.S. dollar may appreciate against non-U.S. currencies or a foreign
  government may impose restrictions on currency conversion or trading

 . The economies of non-U.S. countries may grow at a slower rate than expected
  or may experience a downturn or recession

 . Economic, political and social developments may adversely affect the
  securities markets

 . Foreign governmental obligations may involve the risk of debt moratorium,
  repudiation or renegotiation and the fund may be unable to enforce its rights
  against the issuers

Economic and Monetary Union (EMU) and the introduction of a single European
currency (the Euro), which began on January 1, 1999, may increase uncertainties
relating to investment in European markets. Among other things, EMU entails
sharing a single currency and official interest rate and adhering to limits on
government borrowing by participating countries. EMU is driven by the
expectation of economic benefits; however, there are significant risks
associated with EMU. Monetary and economic union on this scale has not been
attempted before, and there is uncertainty whether participating countries will
remain committed to EMU in the face of changing economic conditions.

                                      23


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                              Investment Strategies and Related Risks, continued




Small capitalization issuers

Certain of the underlying funds focus on small capitalization companies.
Investing in small companies involves unique risks. Compared to large
companies, small companies, and the market for their common stocks, are likely
to:

 . Be more sensitive to changes in the economy, earnings results and investor
  expectations

 . Have more limited product lines and capital resources

 . Experience sharper swings in market values

 . Be harder to sell at the times and prices the fund thinks appropriate

 . Offer greater potential for gain and loss

Derivatives

Certain of the underlying funds may, but need not, use derivative contracts,
such as futures and options on securities, securities indices or currencies;
options on these futures; forward currency contracts; and interest rate or
currency swaps for any of the following purposes:

 . To hedge against the economic impact of adverse changes in the market value
  of its securities, because of changes in stock market prices, currency
  exchange rates or interest rates

 . As a substitute for buying or selling securities

A derivative contract will obligate or entitle an underlying fund to deliver or
receive an asset or cash payment based on the change in value of one or more
securities, currencies or indices. Even a small investment in derivative
contracts can have a big impact on an underlying fund's stock market, currency
and interest rate exposure. Therefore, using derivatives can disproportionately
increase losses and reduce opportunities for gains when stock prices, currency
rates or interest rates are changing. The underlying fund may not fully benefit
from or may lose money on derivatives if changes in their value do not
correspond accurately to changes in the value of the fund's holdings. The other
parties to certain derivative contracts present the same types of credit risk
as issuers of fixed income securities. Derivatives can also make the underlying
fund less liquid and harder to value, especially in declining markets.

Investment policies (all portfolios)

Each portfolio's investment policies, including the particular underlying funds
in which each portfolio may invest and the equity/fixed income targets
applicable to each portfolio, generally may be changed by the board of
directors without shareholder approval.

                                      24


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Management


Portfolio manager

The portfolios' investment manager is Smith Barney Fund Management LLC ("SBFM")
(formerly known as SSB Citi Fund Management LLC), an affiliate of Salomon Smith
Barney Inc ("Salomon Smith Barney"). The manager's address is 7 World Trade
Center, New York, NY 10048. The manager selects the portfolios' investments and
oversees their operations. The manager and Salomon Smith Barney are
subsidiaries of Citigroup Inc. Citigroup businesses produce a broad range of
financial services and asset management, banking and consumer finance, credit
and charge cards, insurance, investments, investment banking and trading and
use diverse channels to make them available to consumer and corporate customers
around the world.

R. Jay Gerken, a Managing Director of Salomon Smith Barney, has been
responsible for the day-to-day operations of the portfolios since inception.
Mr. Gerken has been with Salomon Smith Barney or companies that are now part of
Salomon Smith Barney since 1988.

Management fees
MANAGEMENT FEES PAID DURING THE FISCAL YEAR ENDED JANUARY 31, 2001*
(as % of average daily net assets)

Global High Growth Growth Balanced Conservative Income

------------------------------------------------------
0.35%        0.35%  0.35%    0.35%        0.35%  0.35%

------------------------------------------------------
*For more information regarding the management fees of the underlying funds,
     please consult the Statement of Additional Information ("SAI").

At a meeting of shareholders of each portfolio held on March 2, 2001, the
shareholders of each portfolio approved new Asset Allocation and Administration
Agreements for each portfolio. These new Asset Allocation and Administration
Agreements become effective on or about July 6, 2001 and provide for a
management fee of 0.20% of each portfolio's average daily net assets. The new
Asset Allocation and Administration Agreements provide for a decrease in the
management fee and an effective increase in total annual fund operating
expenses.

The new fee structure will be subject to a voluntary fee waiver and expense
reimbursement in order to maintain an expense cap on each of the portfolios
that is no more than 0.20% higher than current expenses, for the Global, High
Growth, Growth and Balanced Portfolios, a maximum increase from 0.60% to 0.80%
for Class A shares, from 1.35% to 1.55% for Class B and Class L shares, and
from 0.35% to 0.55% for Class Y shares; for the Conservative and Income
Portfolios, a maximum increase from 0.60% to 0.80% for Class A shares, from
1.10% to 1.30% for Class B shares, from 1.05% to 1.25% for Class L shares, and
from 0.35% to 0.55% for Class Y. This expense cap will not be changed in the
future without the approval of the Board of Directors of Smith Barney
Allocation Series Inc. ("Allocation Series").

Distribution plan

The portfolios have each adopted a Rule 12b-1 distribution plan for their Class
A, B and L shares. Under each plan, the portfolio pays distribution and/or
service fees. These fees are an ongoing expense and, over time, may cost you
more than other types of sales charges.

In addition, the distributors may make payments for distribution and/or
shareholder servicing activities out of their past profits and other available
sources. The distributors may also make payments for marketing, promotional or
related expenses to dealers. The amount of these payments is determined by the
distributors and may be substantial. SBFM or an affiliate may make similar
payments under similar arrangements.

Transfer agent and shareholder servicing agent

Citi Fiduciary Trust Company serves as the portfolios' transfer agent and
shareholder servicing agent (the "transfer agent"). The transfer agent has
entered into sub-transfer agency and services agreements with PFPC Global Fund
Services and PFS Shareholder Services to serve as the portfolios' sub-transfer
agents (the "sub-transfer agents"). The sub-transfer agents will perform
certain shareholder record keeping and accounting services.

Possible conflict of interest

The Directors and officers of Allocation Series also serve in similar positions
with many of the underlying Smith Barney funds. Thus, if the interests of a
portfolio and the underlying 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 Allocation Series fulfill their fiduciary duties to that
portfolio and the underlying funds. The Directors of the Allocation Series
believe they have structured each portfolio to avoid these concerns. However,
conceivably a situation could occur where proper action for the Allocation
Series or a portfolio separately could be adverse to the interests of an
underlying fund, or the reverse could occur. If such a possibility arises, the
directors and officers of the Allocation Series, the affected underlying funds
and SBFM 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 funds have
been adopted by the Allocation Series to minimize this possibility, and close
and continuous monitoring will be exercised to avoid, insofar as is possible,
these concerns.

                                      25


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Choosing a Class of Shares to Buy


Share classes

--------------------------------------------------------------------------------

You can choose among four classes of shares: Classes A, B, L and Y. Each class
has different sales charges and expenses, allowing you to choose the class that
best meets your needs. Which class is more beneficial to an investor depends on
the amount and intended length of the investment.

 . If you plan to invest regularly or in large amounts, buying Class A shares
  may help you reduce sales charges and ongoing expenses.

 . For Class B shares, all of your purchase amount and, for Class L shares, more
  of your purchase amount (compared to Class A shares) will be immediately
  invested. This may help offset the higher expenses of Class B and Class L
  shares, but only if the portfolio performs well.

 . Class L shares have a shorter deferred sales charge period than Class B
  shares. However, because Class B shares convert to Class A shares, and Class
  L shares do not, Class B shares may be more attractive to long- term
  investors. Class L shares are also subject to an ongoing distribution fee. As
  a result, long term shareholders of Class L shares may pay more than the
  economic equivalent of the maximum front-end sales charge permitted by the
  National Association of Securities Dealers, Inc.

You may buy shares from:

 . A broker/dealer, financial intermediary, financial institution or a
  distributor's financial consultants (each called a "Service Agent")

All classes of shares are not available through all Service Agents. You should
contact your Service Agent for further information.

 . The portfolios, but only if you are investing through certain qualified plans
  or Service Agents

Investment minimums

--------------------------------------------------------------------------------
Minimum initial and additional investment amounts vary depending on the class
of shares you buy and the nature of your investment account.

<TABLE>
<CAPTION>
                                                                       Initial             Additional

------------------------------------------------------------------------------------------------------
                                                            Classes A, B and L     Class Y All Classes

------------------------------------------------------------------------------------------------------
<S>                                                         <C>                <C>         <C>
General                                                                 $1,000 $15 million         $50

------------------------------------------------------------------------------------------------------
IRAs, Self Employed Retirement Plans, Uniform Gift to Minor
 Accounts                                                               $  250 $15 million         $50

------------------------------------------------------------------------------------------------------
Qualified Retirement Plans(*)                                           $   25 $15 million         $25

------------------------------------------------------------------------------------------------------
Simple IRAs                                                             $    1         n/a         $ 1

------------------------------------------------------------------------------------------------------
Monthly Systematic Investment Plans                                     $   25         n/a         $25

------------------------------------------------------------------------------------------------------
Quarterly Systematic Investment Plans                                   $   50         n/a         $50

------------------------------------------------------------------------------------------------------
</TABLE>
(*) Qualified Retirement Plans are qualified under Section 403(b)(7) or Section
401(a) of the Internal Revenue Code, including 401(k) plans

                                      26


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Comparing the Portfolios' Classes


Your Service Agent can help you decide which class meets your goals. The
Service Agent may receive different compensation depending upon which class you
choose.

<TABLE>
<CAPTION>
<S>                     <C>                        <C>                         <C>
Key features            Class A                    Class B                     Class L

                        .Initial sales charge      .No initial sales charge    .Initial sales charge is
                                                                                lower than Class A
                        .You may qualify for       .Deferred sales charge
                         reduction or waiver of     declines over time         .Deferred sales charge for
                         initial sales charge                                   only 1 year
                                                   .Converts to Class A shares
                        .Lower annual expenses      after 8 years              .Does not convert to
                         than Class B and Class L                               Class A
                                                   .Higher annual expenses
                                                    than Class A               .Higher annual expenses
                                                                                than Class A
                                                                                    (less than)/TC

Initial sales charge    Up to 5.00%, reduced for              None                       1.00%
                        large purchases and
                        waived for certain
                        investors; no charge for
                        purchases of $1,000,000
                        or more (Applicable for
                        the Global, High
                        Growth, Growth and
                        Balanced Portfolios)

                        Up to 4.50%, reduced for
                        large purchases and
                        waived for certain
                        investors; no charge for
                        purchases of $500,000 or
                        more (Applicable for the
                        Conservative and
                        Income Portfolios)


Deferred sales charge   1.00% on purchases of      Up to 5.00% charged         1.00% if you redeem
                        $1,000,000 or more if you  when you redeem             within 1 year of purchase
                        -redeem within 1 year of   shares. The charge is
                        purchase (Applicable for   reduced over time and
                        the Global, High           there is no deferred sales
                        Growth, Growth and         charge after 6 years
                        Balanced Portfolios)       (Applicable for the
                                                   Global, High Growth,
                        1.00% on purchases of      Growth and Balanced
                        $500,000 or more if you    Portfolios)
                        redeem within 1 year of
                        purchase (Applicable for   Up to 4.50% charged when
                        the Conservative and       you redeem shares. This
                        Income Portfolios)         charge is reduced over time
                                                   and there is no deferred
                                                   sales charge after 6 years
                                                   (Applicable for the
                                                   Conservative and Income
                                                   Portfolios)

Annual distribution and 0.25% of average daily     1.00% of average daily      1.00% of average daily
service fees            net assets                 net assets (Applicable for  net assets (Applicable for
                                                   the Global, High            the Global, High
                                                   Growth, Growth and          Growth, Growth and
                                                   Balanced Portfolios)        Balanced Portfolios)

                                                   0.75% of average daily      0.70% of average daily
                                                   net assets (Applicable for  net assets (Applicable for
                                                   the Conservative and        the Conservative and
                                                   Income Portfolios)          Income Portfolios)

Exchange privilege(*)   Class A shares of most     Class B shares of most      Class L shares of most
                        Smith Barney funds         Smith Barney funds          Smith Barney funds

<S>                     <C>
Key features            Class Y

                        .No initial or deferred
                         sales charge

                        .Must invest at least $15
                         million

                        .Lower annual expenses
                         than the other classes





Initial sales charge              None



















Deferred sales charge             None



















Annual distribution and           None
service fees









Exchange privilege(*)   Class Y shares of most
                        Smith Barney funds

</TABLE>
(*) Ask your Service Agent for the Smith Barney funds available for exchange.

                                      27

<PAGE>



Sales Charge: Class A Shares


Class A sales charge

You buy Class A shares at the offering price, which is the net asset value plus
a sales charge. You pay a lower sales charge as the size of your investment
increases to certain levels called breakpoints. You do not pay a sales charge
on the fund's distributions or dividends you reinvest in additional Class A
shares.

The table below shows the rate of sales charges you pay, depending on the
amount you purchase.

The table below also shows the amount of broker/dealer compensation that is
paid out of the sales charge. This compensation includes commissions and other
fees that Service Agents that sell shares of the portfolios receive. The
distributor keeps up to approximately 10% of the sales charges imposed on Class
A shares. Service Agents will also receive the service fee payable on Class A
shares at an annual rate equal to 0.25% of the average daily net assets
represented by the Class A shares serviced by them.


--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                  For High Growth Portfolio,
                                   Growth Portfolio, Global
                                    Portfolio and Balanced                    For Conservative Portfolio
                                         Portfolio(*)                          and Income Portfolio(**)

-----------------------------------------------------------------------------------------------------------------------
                                    Sales Charge as a % of                      Sales Charge as a % of

-----------------------------------------------------------------------------------------------------------------------
                                                              Broker/Dealer                              Broker/Dealer
                                                                Commission                                 Commission
                                   Offering     Net amount       as % of       Offering     Net amount      as % of
Amount of purchase                 price (%)   invested (%)   offering price   price (%)   invested (%)  offering price

-----------------------------------------------------------------------------------------------------------------------
<S>                               <C>         <C>            <C>              <C>         <C>            <C>
Less than $25,000                       5.00%          5.26%        4.50%           4.50%          4.71%          4.05%

-----------------------------------------------------------------------------------------------------------------------
$25,000 but less than $50,000           4.25           4.44         3.83            4.00           4.17           3.60

-----------------------------------------------------------------------------------------------------------------------
$50,000 but less than $100,000          3.75           3.90         3.38            3.50           3.63           3.15

-----------------------------------------------------------------------------------------------------------------------
$100,000 but less than $250,000         3.25           3.36         2.93            2.50           2.56           2.25

-----------------------------------------------------------------------------------------------------------------------
$250,000 but less than $500,000         2.75           2.83         2.48            1.50           1.52           1.35

-----------------------------------------------------------------------------------------------------------------------
$500,000 but less than $1,000,000       2.00           2.04         1.80             -0-            -0-            -0-

-----------------------------------------------------------------------------------------------------------------------
$1,000,000 or more                       -0-            -0-  up to 1.00 (***)        -0-            -0-            -0-

-----------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) You do not pay an initial sales charge when you buy $1,000,000 or more of
Class A shares. However, if you redeem these Class A shares within one year of
purchase, you will pay a deferred sales charge of 1%.
(**) You do not pay an initial sales charge when you buy $500,000 or more of
Class A shares. However, if you redeem these Class A shares within one year of
purchase, you will pay a deferred sales charge of 1%.
(***)A distributor pays up to 1.00% to Service Agents.

Qualifying for a reduced Class A sales charge. There are several ways you can
combine multiple purchases of Class A shares of Smith Barney funds to take
advantage of the breakpoints in the sales charge schedule.

Accumulation privilege--lets you combine the current value of Class A shares
owned

 . by you, or

 . by members of your immediate family,

and for which a sales charge was paid, with the amount of your next purchase of
Class A shares for purposes of calculating the initial sales charge. Certain
trustees and fiduciaries may be entitled to combine accounts in determining
their sales charge.

Letter of intent--lets you purchase Class A shares of the fund and other Smith
Barney funds over a 13-month period and pay the same sales charge, if any, as
if all shares had been purchased at once. You may include purchases on which
you paid a sales charge made within 90 days before you sign the letter.

Waivers for certain Class A investors. Class A initial sales charges are waived
for certain types of investors, including:

 . Employees of NASD members

 . Investors participating in a fee-based program sponsored by certain
  broker-dealers affiliated with Citigroup

 . Investors who redeemed Class A shares of a Smith Barney fund in the past 60
  days, if the investor's Service Agent is notified

If you want to learn about additional waivers of Class A initial sales charges,
contact your Service Agent or consult the SAI.


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS

                                      28
<PAGE>



Sales Charge: Class B Shares


Class B deferred sales charge

You buy Class B shares at net asset value without paying an initial sales
charge. However, if you redeem your Class B shares within six years of
purchase, you will pay a deferred sales charge. The deferred sales charge
decreases as the number of years since your purchase increases.


--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                              Year after purchase

----------------------------------------------------------------------------
                                                                     6th
Deferred sales charge for:          1st   2nd   3rd   4th   5th  through 8th

----------------------------------------------------------------------------
<S>                                <C>   <C>   <C>   <C>   <C>   <C>
Conservative and Income Portfolios 4.50% 4.00% 3.00% 2.00% 1.00%         -0-

----------------------------------------------------------------------------
All other portfolios               5.00% 4.00% 3.00% 2.00% 1.00%         -0-

----------------------------------------------------------------------------
</TABLE>
Service Agents selling Class B shares of the Global Portfolio, High Growth
Portfolio, Growth Portfolio and Balanced Portfolio receive a commission of up
to 4.50% of the purchase price of the Class B shares they sell. Service Agents
selling Class B shares of the Conservative and Income Portfolios receive a
commission of up to 4.00% of the purchase price of the Class B shares they
sell. Service Agents also receive a service fee at an annual rate equal to
0.25% of the average daily net assets represented by the Class B shares they
are servicing.

Class B conversion

After 8 years, Class B shares automatically convert into Class A shares. This
helps you because Class A shares have lower annual expenses. Your Class B
shares will convert to Class A shares as follows:

---------------------------------------------
Shares issued: At initial purchase
---------------------------------------------
 . Eight years after the date of purchase

Shares issued: On reinvestment of distributions and dividends
---------------------------------------------
 . In the same proportion as the number of Class B shares converting is to the
  total Class B shares you own (excluding shares issued as dividends)

Shares issued: Upon exchange from another Smith Barney fund
---------------------------------------------
 . On the date the shares originally acquired would have converted into Class A
  shares
---------------------------------------------

                                      29


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Sales Charge: Class L Shares

Class L sales charge (available through certain Service Agents)

You buy Class L shares at the offering price, which is the net asset value plus
a sales charge of 1% (1.01% of the net amount invested). In addition, if you
redeem your Class L shares within one year of purchase, you will pay a deferred
sales charge of 1%. If you held Class C shares of a portfolio and/or other
Smith Barney funds on June 12, 1998, you will not pay an initial sales charge
on Class L shares you buy before June 22, 2001.

Service Agents selling Class L shares of the Global Portfolio, High Growth
Portfolio, Growth Portfolio and Balanced Portfolio receive a commission of up
to 2.00% of the purchase price of the Class L shares they sell. Service Agents
selling Class L shares of the Conservative and Income Portfolios receive a
commission of up to 1.75% of the purchase price of the Class L shares they
sell. Starting in the thirteenth month, Service Agents also receive an annual
fee of up to 1.00% of the average daily net assets represented by the Class L
shares serviced by them.

Sales Charge: Class Y Shares

Class Y sales charge (available through certain Service Agents)

You buy Class Y shares at net asset value with no initial sales charge and no
deferred sales charge when you redeem. You must meet the $15,000,000 initial
investment requirement. You can use a letter of intent to meet this requirement
by buying Class Y shares of a portfolio over a 13-month period. To qualify, you
must initially invest $5,000,000.



The deferred sales charge is based on the net asset value at the time of
purchase or redemption, whichever is less, and therefore you do not pay a sales
charge on amounts representing appreciation or depreciation.

In addition, you do not pay a deferred sales charge on:

 . Shares exchanged for shares of another Smith Barney fund

 . Shares representing reinvested distributions and dividends

 . Shares no longer subject to the deferred sales charge

Each time you place a request to redeem shares, a portfolio will first redeem
any shares in your account that are not subject to a deferred sales charge and
then the shares in your account that have been held the longest.

If you redeemed shares of a Smith Barney fund in the past 60 days and paid a
deferred sales charge, you may buy shares of the fund at the current net asset
value and be credited with the amount of the deferred sales charge, if you
notify your Service Agent.

The portfolios' distributors receive deferred sales charges as partial
compensation for their expenses in selling shares, including the payment of
compensation to your Service Agent.

Deferred sales charge waivers

The deferred sales charge for each share class will generally be waived:

 . On payments made through certain systematic withdrawal plans

 . On certain distributions from a retirement plan

 . For involuntary redemptions of small account balances

 . For 12 months following the death or disability of a shareholder

If you want to learn more about additional waivers of deferred sales charges,
contact your Service Agent or consult the SAI.

                                      30


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Buying Shares


Through a Service Agent

You should contact your Service Agent to open a brokerage account and make
arrangements to buy shares.

If you do not provide the following information, your order will be rejected:

 . Name of portfolio and class of shares being bought

 . Dollar amount or number of shares being bought

Your Service Agent may charge an annual account maintenance fee.

Through the portfolios

Qualified retirement plans and certain other investors who are clients of
certain Service Agents are eligible to buy shares directly from the portfolios.

 . Write the portfolios at the following address:

  Smith Barney Allocation Series Inc.
  (Specify portfolio and class of shares)
  c/o PFPC Global Fund Services
  P.O. Box 9699
  Providence, RI 02940-9699

 . Enclose a check to pay for the shares. For initial purchases, complete and
  send an account application.

 . For more information, please call Smith Barney Shareholder Services at
  1-800-451-2010.

Through a systematic investment plan

You may authorize your Service Agent or the applicable sub-transfer agent to
transfer funds automatically from a regular bank account, cash held in a
brokerage account opened with a Service Agent or certain money market funds in
order to buy shares on a regular basis.

 . Amounts transferred should be at least: $25 monthly or $50 quarterly.

 . If you do not have sufficient funds in your account on a transfer date, your
  Service Agent or the sub-transfer agent may charge you a fee.

For more information, contact your Service Agent or the transfer agent or
consult the SAI.

                                      31


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Exchanging Shares


You should contact your Service Agent to exchange into other Smith Barney
funds. Be sure to read the prospectus of the Smith Barney fund you are
exchanging into. An exchange is a taxable transaction.

 . You may exchange shares only for shares of the same class of another Smith
  Barney fund. Not all Smith Barney funds offer all classes.

 . Not all Smith Barney funds may be offered for sale in your state of
  residence. Contact your Service Agent or the transfer agent for further
  information.

 . Exchanges of Class A, Class B and Class L shares are subject to minimum
  investment requirements (except for systematic investment plan exchanges) and
  all shares are subject to the other requirements of the fund into which
  exchanges are made.

 . If you hold share certificates, the applicable sub-transfer agent must
  receive the certificates endorsed for transfer or with signed stock powers
  (documents transferring ownership of certificates) before the exchange is
  -effective.

 . The portfolios may suspend or terminate your exchange privilege if you engage
  in an excessive pattern of exchanges.

Waiver of additional sales charges

Your shares will not be subject to an initial sales charge at the time of the
exchange.

Your deferred sales charge (if any) will continue to be measured from the date
of your original purchase. If the fund you exchange into has a higher deferred
sales charge, you will be subject to that charge. If you exchange at any time
into a fund with a lower charge, the sales charge will not be reduced.

By telephone

If you do not have a brokerage account with a Service Agent, you may be
eligible to exchange shares through the portfolios. You must complete an
authorization form to authorize telephone transfers. If eligible, you may make
telephone exchanges on any day the New York Stock Exchange is open. For clients
of a PFS Investments Registered Representative, call PFS Shareholder Services
at 1-800-544-5445 between 8:00 a.m. and 8:00 p.m. (Eastern time). All other
shareholders should call the transfer agent at 1-800-451-2010 between 9:00 a.m.
and 4:00 p.m. (Eastern time). Requests received after the close of regular
trading on the Exchange are priced at the net asset value next determined.

You can make telephone exchanges only between accounts that have identical
registrations.

By mail

If you do not have a brokerage account, contact your Service Agent or write to
the applicable sub-transfer agent at the address on the following page.

                                      32


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Redeeming Shares


Generally

Contact your Service Agent to redeem shares of a portfolio.

If you hold share certificates, the applicable sub-transfer agent must receive
the certificates endorsed for transfer or with signed stock powers before the
redemption is effective.

If the shares are held by a fiduciary or corporation, other documents may be
required.

Your redemption proceeds will be sent within three business days after your
request is received in good order. However, if you recently purchased your
shares by check, your redemption proceeds will not be sent to you until your
original check clears, which may take up to 15 days.

If you have a brokerage account with a Service Agent, your redemption proceeds
will be placed in your account and not reinvested without your specific
instruction. In other cases, unless you direct otherwise, your redemption
proceeds will be paid by check mailed to your address of record.

By mail

For accounts held directly at the portfolio, send written requests to the
portfolio at the applicable address:

For clients of a PFS Investments Registered Representative, write PFS
Shareholder Services at the following address:

  PFS Shareholder Services
  P.O. Box 105033
  Atlanta, GA 30348-5033

For all other investors, send your request to PFPC Global Fund Services at the
following address:

   Smith Barney Allocation Series Inc.
   (Specify portfolio and class of shares)
   c/o PFPC Global Fund Services
   P.O. Box 9699
   Providence, Rhode Island 02940-9699

Your written request must provide the following:

 . Your account number

 . The name of the portfolio and class of shares

 . The dollar amount or number of shares to be redeemed

 . Signatures of each owner exactly as the account is registered

By telephone

If you do not have a brokerage account with a Service Agent, you may be
eligible to redeem shares (except those held in retirement plans) in amounts up
to $50,000 per day through the Allocation Series. You must complete an
authorization form to authorize telephone redemptions. If eligible, you may
request redemptions by telephone on any day the New York Stock Exchange is
open. For clients of a PFS Investments Registered Representative, call PFS
Shareholder Services at 1-800-544-5445 between 8:00 a.m. and 8:00 p.m. (Eastern
time). All other shareholders should call the transfer agent at 1-800-451-2010
between 9:00 a.m. and 4:00 p.m. (Eastern time). Requests received after the
close of regular trading on the Exchange are priced at the net asset value next
determined.

Your redemption proceeds can be sent by check to your address of record or by
wire or electronic transfer (ACH) to a bank account designated on your
authorization form. You must submit a new authorization form to change the bank
account designated to receive wire or electronic transfers and you may be asked
to provide certain other documents. A sub-transfer agent may charge a fee on an
electronic transfer (ACH) or wire.

Automatic cash withdrawal plans

You can arrange for the automatic redemption of a portion of your shares on a
monthly or quarterly basis. To qualify you must own shares of the portfolio
with a value of at least $10,000 ($5,000 for retirement plan accounts) and each
automatic redemption must be at least $50. If your shares are subject to a
deferred sales charge, the sales charge will be waived if your automatic
payments do not exceed 1% per month of the value of your shares subject to a
deferred sales charge.

The following conditions apply:

 . Your shares must not be represented by certificates

 . All dividends and distributions must be reinvested

For more information, contact your Service Agent or consult the SAI.

                                      33


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Other Things To Know About Share Transactions


When you buy, exchange or redeem shares, your request must be in good order.
This means you have provided the following information, without which your
request will not be processed:

 . Name of the portfolio

 . Account number

 . Class of shares being bought, exchanged or redeemed

 . Dollar amount or number of shares being bought, exchanged or redeemed

 . Signature of each owner exactly as the account is registered

The portfolios will employ reasonable procedures to confirm that any telephone
exchange or redemption request is genuine, including recording calls, asking
the caller to provide certain personal identification information for your
account, sending you a written confirmation or requiring other confirmation
procedures from time to time. If these procedures are employed, neither the
portfolios nor the transfer agent will bear any liability for such
transactions.

Signature guarantees

To be in good order, your redemption request must include a signature guarantee
if you:

 . Are redeeming over $50,000

 . Are sending signed share certificates or stock powers to the applicable
  sub-transfer agent

 . Instruct the applicable sub-transfer agent to mail the check to an address
  different from the one on your account

 . Changed your account registration

 . Want the check paid to someone other than the account owner(s)

 . Are transferring the redemption proceeds to an account with a different
  registration

You can obtain a signature guarantee from most banks, dealers, brokers, credit
unions and federal savings and loan institutions, but not from a notary public.

Each portfolio has the right to:

 . Suspend the offering of shares

 . Waive or change minimum and additional investment amounts

 . Reject any purchase or exchange order

 . Change, revoke or suspend the exchange privilege

 . Suspend telephone transactions

 . Suspend or postpone redemptions of shares on any day when trading on the New
  York Stock Exchange is restricted, or as otherwise permitted by the
  Securities and Exchange Commission

 . Pay redemption proceeds by giving you securities. You may pay transaction
  costs to dispose of the securities

Small account balances

If your account falls below $500 ($250 for IRA accounts) because of redemption
of portfolio shares, the portfolio may ask you to bring your account up to the
applicable minimum investment amount. If you choose not to do so within 60
days, the portfolio may close your account and send you the redemption
proceeds.

For more information, contact your Service Agent or the transfer agent or
consult the SAI.

Excessive exchange transactions

The manager may determine that a pattern of frequent exchanges is detrimental
to a portfolio's performance and other shareholders. If so, the portfolio may
limit additional purchases and/or exchanges by the shareholder.

Share certificates

The portfolios do not issue share certificates unless a written request signed
by all registered owners is made to the applicable sub-transfer agent. If you
hold share certificates, it will take longer to exchange or redeem shares.

                                      34


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Dividends, Distributions and Taxes


Dividends and distributions

Annual distributions of capital gain normally take place at the end of the year
in which the gain is realized or the beginning of the next year.

The portfolios normally pay dividends and distribute capital gains, if any, as
follows:


--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                         Income Dividend Capital Gain  Distributions
            Portfolio     Distributions  Distributions  Mostly From

            --------------------------------------------------------
            <S>          <C>             <C>           <C>
            Global              Annually      Annually          Gain

            --------------------------------------------------------
            High Growth         Annually      Annually          Gain

            --------------------------------------------------------
            Growth              Annually      Annually          Gain

            --------------------------------------------------------
            Balanced           Quarterly      Annually          Gain

            --------------------------------------------------------
            Conservative       Quarterly      Annually        Income

            --------------------------------------------------------
            Income               Monthly      Annually        Income

            --------------------------------------------------------
</TABLE>

The portfolios may pay additional distributions and dividends at other times if
necessary for a portfolio to avoid a federal tax. Capital gain distributions
and dividends are reinvested in additional portfolio shares of the same class
that you hold. You do not pay a sales charge on reinvested distributions or
dividends. Alternatively, you can instruct your Service Agent, the transfer
agent or the applicable sub-transfer agent to have your distributions and/or
dividends paid in cash. You can change your choice at any time to be effective
as of the next distribution or dividend, except that any change given to your
Service Agent, the transfer agent or the applicable sub-transfer agent less
than five days before the payment date will not be effective until the next
distribution or dividend is made.

Taxes

In general, redeeming shares, exchanging shares and receiving distributions
(whether in cash or additional shares) are all taxable events.

---------------------------------------------
<TABLE>
<CAPTION>

Transaction               Federal income tax status

--------------------------------------------------------
<S>                       <C>
Redemption or exchange of Usually capital gain or loss;
 shares                   long-term only if shares owned
                          more than one year

--------------------------------------------------------
Long-term capital gain
 distributions            Long-term capital gain

--------------------------------------------------------
Short-term capital gain
 distributions            Ordinary income

--------------------------------------------------------
Dividends                 Ordinary income

--------------------------------------------------------
</TABLE>

Long-term capital gain distributions are taxable to you as long-term capital
gain regardless of how long you have owned your shares. You may want to avoid
buying shares when a portfolio is about to declare a long-term capital gain
distribution or a taxable dividend, because it will be taxable to you even
though it may actually be a return of a portion of your investment.

After the end of each year, the portfolios will provide you with information
about the distributions and dividends you received and any redemptions of
shares during the previous year. If you do not provide a portfolio with your
correct taxpayer identification number and any required certifications, you may
be subject to back-up withholding of 31% of your distributions, dividends and
redemption proceeds. Because each shareholder's circumstances are different and
special tax rules may apply, you should consult your tax adviser about your
investment in a portfolio.

                                      35


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Share Price

You may buy, exchange or redeem portfolio shares at their net asset value, plus
any applicable sales charge, next determined after receipt of your request in
good order. Each portfolio's net asset value is the value of its assets minus
its liabilities. Net asset value is calculated separately for each class of
shares. Each portfolio calculates its net asset value every day the New York
Stock Exchange is open. The Exchange is closed on certain holidays listed in
the SAI. This calculation is based on the net asset value of the underlying
funds, which is calculated when regular trading closes on the Exchange
(normally 4:00 p.m., Eastern time). If the New York Stock Exchange closes
early, each portfolio and each underlying fund accelerates the calculation of
its net asset value to the actual closing time.

International markets may be open on days when U.S. markets are closed and the
value of foreign securities owned by an underlying fund could change on days
when you cannot buy or redeem shares.

Each portfolio and underlying fund generally values its fund securities based
on market prices or quotations. To the extent an underlying fund holds
securities denominated in a foreign currency, the fund's currency conversions
are done when the London Stock Exchange closes. When reliable market prices or
quotations are not readily available, or when the value of a security held by
an underlying fund has been materially affected by events -occurring after a
foreign exchange closes, the underlying fund may price those securities at fair
value. Fair value is determined in accordance with procedures approved by the
fund's board. A fund that uses fair value to price securities may value those
securities higher or lower than another fund using market quotations to price
the same securities.

Short-term investments that have a maturity of more than 60 days are generally
valued based on market prices or quotations. Short-term investments that have a
maturity of 60 days or less are valued at amortized cost. Using this method, a
portfolio and underlying fund constantly amortizes over the remaining life of a
security the difference between the principal amount due at maturity and the
cost of the security to the portfolio and underlying fund.

In order to buy, redeem or exchange shares at that day's price, you must place
your order with your Service Agent or the applicable sub-transfer agent before
the New York Stock Exchange closes. If the Exchange closes early, you must
place your order prior to the actual closing time. Otherwise, you will receive
the next business day's price.

Service Agents must transmit all orders to buy, exchange or redeem shares to
the applicable sub-transfer agent before the applicable sub-transfer agent's
close of business.

                                      36


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>




Financial Highlights


The financial highlights tables are intended to help you understand the
performance of each portfolio's classes since inception. Certain information
reflects financial results for a single share. Total return represents the rate
that a shareholder would have earned (or lost) on a portfolio share assuming
reinvestment of all dividends and distributions. The information in the
following tables was audited by KPMG LLP, independent auditors, whose report,
along with the portfolio's financial statements is included in the annual
report (available upon request). No information is presented for Class Y shares
of any portfolio because no Class Y shares were outstanding for the years
shown.

For a share of each class of capital stock outstanding throughout each year or
period ending January 31:


Global Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                          Class A
                                                 2001(1)  2000(1)  1999(1)(2)

  ---------------------------------------------------------------------------
  <S>                                          <C>       <C>      <C>
  Net asset value, beginning of year            $13.67    $11.16     $11.40

  ---------------------------------------------------------------------------
  Income (loss) from operations:
     Net investment income(3)                     0.12      0.21       0.07
     Net realized and unrealized gain (loss)     (1.38)     2.54      (0.26)

  ---------------------------------------------------------------------------
  Total income (loss) from operations            (1.26)     2.75      (0.19)

  ---------------------------------------------------------------------------
  Less distributions from:
     Net investment income                       (0.12)    (0.20)     (0.04)
     Net realized gains                          (0.36)    (0.04)     (0.01)

  ---------------------------------------------------------------------------
  Total distributions                            (0.48)    (0.24)     (0.05)

  ---------------------------------------------------------------------------
  Net asset value, end of year                  $11.93    $13.67     $11.16

  ---------------------------------------------------------------------------
  Total return                                   (9.29)%   24.57%   (1.60)%++

  ---------------------------------------------------------------------------
  Net assets, end of year (000's)              $20,333   $18,133    $10,766

  ---------------------------------------------------------------------------
  Ratios to average net assets:
     Expenses                                     0.60%     0.60%     0.59%+
     Net investment income                        0.94      1.73      0.80+

  ---------------------------------------------------------------------------
  Portfolio turnover rate                           10%        0%         0%

  ---------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from March 9, 1998 (inception date) to January 31, 1999.
(3) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      37


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued

Global Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                          Class B
                                                  2001(1)  2000(1) 1999(1)(2)

  ---------------------------------------------------------------------------
  <S>                                          <C>        <C>      <C>
  Net asset value, beginning of year             $13.65    $11.15    $11.40

  ---------------------------------------------------------------------------
  Income (loss) from operations:
     Net investment income(3)                      0.02      0.10      0.00*
     Net realized and unrealized gain (loss)     (1.36)      2.53     (0.24)

  ---------------------------------------------------------------------------
  Total income (loss) from operations             (1.34)     2.63     (0.24)

  ---------------------------------------------------------------------------
  Less distributions from:
     Net investment income                        (0.03)    (0.09)       --
     Net realized gains                           (0.36)    (0.04)    (0.01)

  ---------------------------------------------------------------------------
  Total distributions                             (0.39)    (0.13)    (0.01)

  ---------------------------------------------------------------------------
  Net asset value, end of year                   $11.92    $13.65    $11.15

  ---------------------------------------------------------------------------
  Total return                                    (9.92)%   23.59%  (2.16)%++

  ---------------------------------------------------------------------------
  Net assets, end of year (000's)               $15,200   $14,392    $9,220

  ---------------------------------------------------------------------------
  Ratios to average net assets:
     Expenses                                      1.35%     1.35%    1.32%+
     Net investment income                         0.17      0.83     0.06+

  ---------------------------------------------------------------------------
  Portfolio turnover rate                            10%        0%        0%

  ---------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from March 9, 1998 (inception date) to January 31, 1999.
(3) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 *  Amount represents less than $0.01 per share.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.


                                      38


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued


Global Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                          Class L
                                                2001(1) 2000(1) 1999(1)(2)(3)

  ---------------------------------------------------------------------------
  <S>                                          <C>      <C>     <C>
  Net asset value, beginning of year           $13.64   $11.14       $11.40

  ---------------------------------------------------------------------------
  Income (loss) from operations:
     Net investment income (loss)(4)             0.05     0.30        (0.02)
     Net realized and unrealized gain (loss)    (1.39)    2.33        (0.23)

  ---------------------------------------------------------------------------
  Total income (loss) from operations           (1.34)    2.63        (0.25)

  ---------------------------------------------------------------------------
  Less distributions from:
     Net investment income                      (0.03)   (0.09)          --
     Net realized gains                         (0.36)   (0.04)       (0.01)

  ---------------------------------------------------------------------------
  Total distributions                           (0.39)   (0.13)       (0.01)

  ---------------------------------------------------------------------------
  Net asset value, end of year                 $11.91   $13.64       $11.14

  ---------------------------------------------------------------------------
  Total return                                  (9.93)%  23.61%     (2.25)%++

  ---------------------------------------------------------------------------
  Net assets, end of year (000's)              $1,473     $758         $244

  ---------------------------------------------------------------------------
  Ratios to average net assets:
     Expenses                                    1.35%    1.35%       1.32%+
     Net investment income (loss)                0.36     2.36       (0.12)+

  ---------------------------------------------------------------------------
  Portfolio turnover rate                          10%       0%           0%

  ---------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from March 9, 1998 (inception date) to January 31, 1999.
(3) On June 12, 1998, Class C shares were renamed Class L shares.
(4) Net investment income (loss) per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      39


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued

High Growth Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                Class A Shares
                                                2001(1)   2000(1)   1999(1)      1998     1997(2)

-------------------------------------------------------------------------------------------------
<S>                                          <C>        <C>       <C>       <C>       <C>
Net asset value, beginning of year             $16.81     $14.86    $12.97    $12.41      $11.40

-------------------------------------------------------------------------------------------------
Income (loss) from operations:
   Net investment income(3)                      0.66       0.54      0.09      0.11        0.20
   Net realized and unrealized gain (loss)      (0.85)      2.29      2.36      0.91        1.05

-------------------------------------------------------------------------------------------------
Total income (loss) from operations             (0.19)      2.83      2.45      1.02        1.25

-------------------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                        (0.67)     (0.53)    (0.08)    (0.13)      (0.20)
   Net realized gains                           (0.84)     (0.35)    (0.48)    (0.33)      (0.04)

-------------------------------------------------------------------------------------------------
Total distributions                             (1.51)     (0.88)    (0.56)    (0.46)      (0.24)

-------------------------------------------------------------------------------------------------
Net asset value, end of year                   $15.11     $16.81    $14.86    $12.97      $12.41

-------------------------------------------------------------------------------------------------
Total return                                    (0.94)%    18.97%    19.15%     8.25%    11.04%++

-------------------------------------------------------------------------------------------------
Net assets, end of year (000's)              $452,084   $441,050  $365,225  $259,212    $154,069

-------------------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                                      0.60%      0.60%     0.60%     0.60%      0.60%+
   Net investment income                         3.90       3.44      0.68      1.00       2.79+

-------------------------------------------------------------------------------------------------
Portfolio turnover rate                             9%         2%       21%       39%          0%

-------------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      40


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued

High Growth Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                               Class B Shares
                                               2001(1)   2000(1)   1999(1)      1998     1997(2)

------------------------------------------------------------------------------------------------
<S>                                          <C>       <C>       <C>       <C>       <C>
Net asset value, beginning of year             $16.74    $14.81    $12.95    $12.41      $11.40

------------------------------------------------------------------------------------------------
Income (loss) from operations:
   Net investment income (loss)(3)               0.52      0.41     (0.01)     0.03        0.08
   Net realized and unrealized gain (loss)      (0.82)     2.26      2.35      0.89        1.04

------------------------------------------------------------------------------------------------
Total income (loss) from operations             (0.30)     2.67      2.34      0.92        1.12

------------------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                        (0.52)    (0.39)       --     (0.05)      (0.07)
   Net realized gains                           (0.84)    (0.35)    (0.48)    (0.33)      (0.04)

------------------------------------------------------------------------------------------------
Total distributions                             (1.36)    (0.74)    (0.48)    (0.38)      (0.11)

------------------------------------------------------------------------------------------------
Net asset value, end of year                   $15.08    $16.74    $14.81    $12.95      $12.41

------------------------------------------------------------------------------------------------
Total return                                   (1.65)%    18.01%    18.30%     7.44%     9.91%++

------------------------------------------------------------------------------------------------
Net assets, end of year (000's)              $367,656  $375,224  $318,101  $230,142    $141,241

------------------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                                      1.35%     1.35%     1.35%     1.35%      1.35%+
   Net investment income (loss)                  3.10      2.65     (0.07)     0.25       2.04+

------------------------------------------------------------------------------------------------
Portfolio turnover rate                             9%        2%       21%       39%          0%

------------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Net investment income (loss) per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      41


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued

High Growth Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                              Class L Shares
                                               2001(1)  2000(1) 1999(1)(2)     1998    1997(3)

----------------------------------------------------------------------------------------------
<S>                                          <C>       <C>      <C>        <C>      <C>
Net asset value, beginning of year           $ 16.75   $ 14.81    $ 12.96  $ 12.42    $ 11.40

----------------------------------------------------------------------------------------------
Income (loss) from operations:
   Net investment income (loss)(4)              0.54      0.43      (0.01)    0.03       0.08
   Net realized and unrealized gain (loss)     (0.84)     2.25       2.34     0.89       1.05

----------------------------------------------------------------------------------------------
Total income (loss) from operations            (0.30)     2.68       2.33     0.92       1.13

----------------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                       (0.52)    (0.39)        --    (0.05)     (0.07)
   Net realized gains                          (0.84)    (0.35)     (0.48)   (0.33)     (0.04)

----------------------------------------------------------------------------------------------
Total distributions                            (1.36)    (0.74)     (0.48)   (0.38)     (0.11)

----------------------------------------------------------------------------------------------
Net asset value, end of year                 $ 15.09   $ 16.75    $ 14.81  $ 12.96    $ 12.42

----------------------------------------------------------------------------------------------
Total return                                   (1.65)%   18.08%     18.21%    7.44%   10.00%++

----------------------------------------------------------------------------------------------
Net assets, end of year (000's)              $51,092   $45,979    $37,969  $27,845    $19,340

----------------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                                     1.35%     1.35%      1.35%    1.35%     1.35%+
   Net investment income (loss)                 3.21      2.74      (0.07)    0.25      2.04+

----------------------------------------------------------------------------------------------
Portfolio turnover rate                            9%        2%        21%      39%         0%

----------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) For the period from February 5, 1996 (inception date) to January 31, 1997.
(4) Net investment income (loss) per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      42


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued


Growth Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                               Class A Shares
                                               2001(1)   2000(1)   1999(1)   1998(1)     1997(2)

------------------------------------------------------------------------------------------------
<S>                                          <C>       <C>       <C>       <C>       <C>
Net asset value, beginning of year             $15.11    $14.43    $12.99    $12.32      $11.40

------------------------------------------------------------------------------------------------
Income (loss) from operations:
   Net investment income(3)                      0.58      0.47      0.26      0.31        0.33
   Net realized and unrealized gain (loss)      (0.57)     1.05      1.82      1.14        0.92

------------------------------------------------------------------------------------------------
Total income from operations                     0.01      1.52      2.08      1.45        1.25

------------------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                        (0.60)    (0.49)    (0.27)    (0.32)      (0.31)
   Net realized gains                           (0.88)    (0.35)    (0.37)    (0.46)      (0.02)

------------------------------------------------------------------------------------------------
Total distributions                             (1.48)    (0.84)    (0.64)    (0.78)      (0.33)

------------------------------------------------------------------------------------------------
Net asset value, end of year                   $13.64    $15.11    $14.43    $12.99      $12.32

------------------------------------------------------------------------------------------------
Total return                                     0.21%    10.53%    16.20%    11.82%    11.08%++

------------------------------------------------------------------------------------------------
Net assets, end of year (000's)              $432,596  $432,580  $391,235  $279,842    $161,026

------------------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                                      0.60%     0.60%     0.60%     0.60%      0.60%+
   Net investment income                         3.91      3.23      1.93      2.77       4.79+

------------------------------------------------------------------------------------------------
Portfolio turnover rate                             9%        2%       10%       41%          0%

------------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      43


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued

Growth Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                Class B Shares
                                                2001(1)   2000(1)   1999(1)      1998     1997(2)

-------------------------------------------------------------------------------------------------
<S>                                          <C>        <C>       <C>       <C>       <C>
Net asset value, beginning of year             $15.18     $14.48    $13.00    $12.33      $11.40

-------------------------------------------------------------------------------------------------
Income (loss) from operations:
   Net investment income(3)                      0.47       0.36      0.16      0.22        0.23
   Net realized and unrealized gain (loss)      (0.57)      1.03      1.82      1.12        0.94

-------------------------------------------------------------------------------------------------
Total income (loss) from operations             (0.10)      1.39      1.98      1.34        1.17

-------------------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                        (0.46)     (0.34)    (0.13)    (0.21)      (0.22)
   Net realized gains                           (0.88)     (0.35)    (0.37)    (0.46)      (0.02)

-------------------------------------------------------------------------------------------------
Total distributions                             (1.34)     (0.69)    (0.50)    (0.67)      (0.24)

-------------------------------------------------------------------------------------------------
Net asset value, end of year                   $13.74     $15.18    $14.48    $13.00      $12.33

-------------------------------------------------------------------------------------------------
Total return                                    (0.56)%     9.61%    15.40%    10.93%    10.32%++

-------------------------------------------------------------------------------------------------
Net assets, end of year (000's)              $453,823   $486,164  $452,943  $343,474    $211,434

-------------------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                                      1.35%      1.35%     1.35%     1.35%      1.35%+
   Net investment income                         3.11       2.43      1.18      1.96       4.04+

-------------------------------------------------------------------------------------------------
Portfolio turnover rate                             9%         2%       10%       41%          0%

-------------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      44


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued


Growth Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                              Class L Shares
                                               2001(1)  2000(1) 1999(1)(2)     1998    1997(3)

----------------------------------------------------------------------------------------------
<S>                                          <C>       <C>      <C>        <C>      <C>
Net asset value, beginning of year            $15.19    $14.48     $13.00   $12.33     $11.40

----------------------------------------------------------------------------------------------
Income (loss) from operations:
   Net investment income(4)                     0.47      0.35       0.16     0.22       0.24
   Net realized and unrealized gain (loss)     (0.58)     1.05       1.82     1.12       0.93

----------------------------------------------------------------------------------------------
Total income (loss) from operations            (0.11)     1.40       1.98     1.34       1.17

----------------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                       (0.46)    (0.34)     (0.13)   (0.21)     (0.22)
   Net realized gains                          (0.88)    (0.35)     (0.37)   (0.46)     (0.02)

----------------------------------------------------------------------------------------------
Total distributions                            (1.34)    (0.69)     (0.50)   (0.67)     (0.24)

----------------------------------------------------------------------------------------------
Net asset value, end of year                  $13.74    $15.19     $14.48   $13.00     $12.33

----------------------------------------------------------------------------------------------
Total return                                   (0.62)%    9.68%     15.40%   10.92%   10.32%++

----------------------------------------------------------------------------------------------
Net assets, end of year (000's)              $55,586   $57,596    $53,319  $42,983    $31,279

----------------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                                     1.35%     1.35%      1.35%    1.35%     1.35%+
   Net investment income                        3.12      2.39       1.18     1.96      4.04+

----------------------------------------------------------------------------------------------
Portfolio turnover rate                            9%        2%        10%      41%         0%

----------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) For the period from February 5, 1996 (inception date) to January 31, 1997.
(4) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      45


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued


Balanced Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                        Class A Shares
                                        2001(1)   2000(1)   1999(1)      1998    1997(2)

----------------------------------------------------------------------------------------
<S>                                   <C>       <C>       <C>       <C>       <C>
Net asset value, beginning of year      $12.58    $12.95    $12.62    $12.14     $11.40

----------------------------------------------------------------------------------------
Income from operations:
   Net investment income(3)               0.58      0.45      0.42      0.58       0.45
   Net realized and unrealized gain       0.55      0.10      0.73      0.80       0.74

----------------------------------------------------------------------------------------
Total income from operations              1.13      0.55      1.15      1.38       1.19

----------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                 (0.63)    (0.46)    (0.45)    (0.54)     (0.45)
   Net realized gains                    (0.70)    (0.46)    (0.37)    (0.36)        --

----------------------------------------------------------------------------------------
Total distributions                      (1.33)    (0.92)    (0.82)    (0.90)     (0.45)

----------------------------------------------------------------------------------------
Net asset value, end of year            $12.38    $12.58    $12.95    $12.62     $12.14

----------------------------------------------------------------------------------------
Total return                              9.42%     4.37%     9.33%    11.59%   10.64%++

----------------------------------------------------------------------------------------
Net assets, end of year (000's)       $220,781  $222,275  $227,674  $166,806    $90,938

----------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                               0.60%     0.60%     0.60%     0.60%     0.60%+
   Net investment income                  4.61      3.54      3.24      4.79      4.88+

----------------------------------------------------------------------------------------
Portfolio turnover rate                      5%        4%       10%       23%         0%

----------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      46


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued


Balanced Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                        Class B Shares
                                        2001(1)   2000(1)   1999(1)      1998     1997(2)

-----------------------------------------------------------------------------------------
<S>                                   <C>       <C>       <C>       <C>       <C>
Net asset value, beginning of year      $12.64    $12.95    $12.61    $12.14      $11.40

-----------------------------------------------------------------------------------------
Income from operations:
   Net investment income(3)               0.49      0.35      0.32      0.48        0.37
   Net realized and unrealized gain       0.56      0.09      0.74      0.80        0.74

-----------------------------------------------------------------------------------------
Total income from operations              1.05      0.44      1.06      1.28        1.11

-----------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                 (0.44)    (0.29)    (0.35)    (0.45)      (0.37)
   Net realized gains                    (0.70)    (0.46)    (0.37)    (0.36)         --

-----------------------------------------------------------------------------------------
Total distributions                      (1.14)    (0.75)    (0.72)    (0.81)      (0.37)

-----------------------------------------------------------------------------------------
Net asset value, end of year            $12.55    $12.64    $12.95    $12.61      $12.14

-----------------------------------------------------------------------------------------
Total return                              8.66%     3.48%     8.62%    10.67%     9.90%++

-----------------------------------------------------------------------------------------
Net assets, end of year (000's)       $226,548  $238,456  $247,733  $193,791    $111,918

-----------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                               1.35%     1.35%     1.35%     1.35%      1.35%+
   Net investment income                  3.83      2.75      2.50      3.96       4.14+

-----------------------------------------------------------------------------------------
Portfolio turnover rate                      5%        4%       10%       23%          0%

-----------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      47


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued


Balanced Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                       Class L Shares
                                       2001(1)  2000(1) 1999(1)(2)     1998    1997(3)

--------------------------------------------------------------------------------------
<S>                                   <C>      <C>      <C>        <C>      <C>
Net asset value,    of year            $12.64   $12.94     $12.61   $12.14     $11.40

--------------------------------------------------------------------------------------
Income from operations:
   Net investment income(4)              0.50     0.36       0.32     0.46       0.37
   Net realized and unrealized gain      0.55     0.09       0.73     0.82       0.74

--------------------------------------------------------------------------------------
Total income from operations             1.05     0.45       1.05     1.28       1.11

--------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                (0.44)   (0.29)     (0.35)   (0.45)     (0.37)
   Net realized gains                   (0.70)   (0.46)     (0.37)   (0.36)        --

--------------------------------------------------------------------------------------
Total distributions                     (1.14)   (0.75)     (0.72)   (0.81)     (0.37)

--------------------------------------------------------------------------------------
Net asset value, end of year           $12.55   $12.64     $12.94   $12.61     $12.14

--------------------------------------------------------------------------------------
Total return                             8.67%    3.56%      8.53%   10.67%    9.90%++

--------------------------------------------------------------------------------------
Net assets, end of year (000's)       $35,202  $33,989    $34,809  $27,473    $19,968

--------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                              1.35%    1.35%      1.35%    1.35%     1.35%+
   Net investment income                 3.89     2.76       2.50     3.69      4.14+

--------------------------------------------------------------------------------------
Portfolio turnover rate                     5%       4%        10%      23%         0%

--------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) For the period from February 5, 1996 (inception date) to January 31, 1997.
(4) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      48


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued


Conservative Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                             Class A Shares
                                              2001(1)  2000(1)  1999(1)     1998    1997(2)

-------------------------------------------------------------------------------------------
<S>                                          <C>      <C>      <C>      <C>      <C>
Net asset value, beginning of year            $11.47   $12.04   $12.17   $11.90     $11.46

-------------------------------------------------------------------------------------------
Income (loss) from operations:
   Net investment income(3)                     0.67     0.56     0.58     0.73       0.53
   Net realized and unrealized gain (loss)      0.31    (0.33)    0.11     0.63       0.43

-------------------------------------------------------------------------------------------
Total income from operations                    0.98     0.23     0.69     1.36       0.96

-------------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                       (0.73)   (0.55)   (0.58)   (0.69)     (0.52)
   Net realized gains                          (0.21)   (0.25)   (0.24)   (0.40)        --

-------------------------------------------------------------------------------------------
Total distributions                            (0.94)   (0.80)   (0.82)   (1.09)     (0.52)

-------------------------------------------------------------------------------------------
Net asset value, end of year                  $11.51   $11.47   $12.04   $12.17     $11.90

-------------------------------------------------------------------------------------------
Total return                                    8.91%    1.96%    5.85%   11.70%    8.57%++

-------------------------------------------------------------------------------------------
Net assets, end of year (000's)              $62,582  $70,327  $71,583  $51,233    $30,478

-------------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                                     0.60%    0.60%    0.60%    0.60%     0.60%+
   Net investment income                        5.84     4.76     4.80     6.17      5.66+

-------------------------------------------------------------------------------------------
Portfolio turnover rate                            1%       3%       5%      28%         0%

-------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      49


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued


Conservative Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                         Class B Shares
                                             2001(1) 2000(1) 1999(1)    1998 1997(2)

------------------------------------------------------------------------------------
<S>                                          <C>     <C>     <C>     <C>     <C>
Net asset value, beginning of year            $11.50  $12.02  $12.16  $11.89  $11.46

------------------------------------------------------------------------------------
Income (loss) from operations:
   Net investment income(3)                     0.61    0.51    0.52    0.66    0.48
   Net realized and unrealized gain (loss)      0.31  (0.33)    0.10    0.64    0.42

------------------------------------------------------------------------------------
Total income from operations                    0.92    0.18    0.62    1.30    0.90

------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                      (0.61)  (0.45)  (0.52)  (0.63)  (0.47)
   Net realized gains                         (0.21)  (0.25)  (0.24)  (0.40)      --

------------------------------------------------------------------------------------
Total distributions                           (0.82)  (0.70)  (0.76)  (1.03)  (0.47)

------------------------------------------------------------------------------------
Net asset value, end of year                  $11.60  $11.50  $12.02  $12.16  $11.89

------------------------------------------------------------------------------------
Total return                                   8.33%   1.50%   5.22%  11.21% 8.03%++

------------------------------------------------------------------------------------
Net assets, end of year (000's)              $52,197 $64,910 $64,983 $48,584 $28,297

------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                                    1.10%   1.10%   1.09%   1.10%  1.10%+
   Net investment income                        5.30    4.29    4.31    5.67   5.16+

------------------------------------------------------------------------------------
Portfolio turnover rate                           1%      3%      5%     28%      0%

------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      50


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued


Conservative Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                            Class L Shares
                                             2001(1) 2000(1) 1999(1)(2)    1998   1997(3)

-----------------------------------------------------------------------------------------
<S>                                          <C>     <C>     <C>        <C>     <C>
Net asset value, beginning of year           $11.50  $12.02     $12.16  $11.89    $11.46

-----------------------------------------------------------------------------------------
Income (loss) from operations:
   Net investment income(4)                    0.64    0.51       0.53    0.69      0.48
   Net realized and unrealized gain (loss)     0.29   (0.32)      0.10    0.62      0.42

-----------------------------------------------------------------------------------------
Total income from operations                   0.93    0.19       0.63    1.31      0.90

-----------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                      (0.63)  (0.46)     (0.53)  (0.64)    (0.47)
   Net realized gains                         (0.21)  (0.25)     (0.24)  (0.40)       --

-----------------------------------------------------------------------------------------
Total distributions                           (0.84)  (0.71)     (0.77)  (1.04)    (0.47)

-----------------------------------------------------------------------------------------
Net asset value, end of year                 $11.59  $11.50     $12.02  $12.16    $11.89

-----------------------------------------------------------------------------------------
Total return                                   8.35%   1.59%      5.29%  11.25%   8.08%++

-----------------------------------------------------------------------------------------
Net assets, end of year (000's)              $7,530  $6,952     $6,899  $5,386    $4,129

-----------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                                    1.05%   1.05%      1.05%   1.05%    1.05%+
   Net investment income                       5.49    4.34       4.32    5.72     5.21+

-----------------------------------------------------------------------------------------
Portfolio turnover rate                           1%      3%         5%     28%        0%

-----------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) For the period from February 5, 1996 (inception date) to January 31, 1997.
(4) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      51


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued

Income Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                             Class A Shares
                                              2001(1)  2000(1)  1999(1)     1998    1997(2)

-------------------------------------------------------------------------------------------
<S>                                          <C>      <C>      <C>      <C>      <C>
Net asset value, beginning of year            $10.64   $11.50   $11.75   $11.53     $11.46

-------------------------------------------------------------------------------------------
Income (loss) from operations:
   Net investment income(3)                     0.72     0.64     0.69     0.76       0.63
   Net realized and unrealized gain (loss)      0.07    (0.76)   (0.14)    0.52       0.07

-------------------------------------------------------------------------------------------
Total income (loss) from operations             0.79    (0.12)    0.55     1.28       0.70

-------------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                       (0.76)   (0.63)   (0.69)   (0.77)     (0.63)
   Net realized gains                          (0.02)   (0.11)   (0.11)   (0.29)        --

-------------------------------------------------------------------------------------------
Total distributions                            (0.78)   (0.74)   (0.80)   (1.06)     (0.63)

-------------------------------------------------------------------------------------------
Net asset value, end of year                  $10.65   $10.64   $11.50   $11.75     $11.53

-------------------------------------------------------------------------------------------
Total return                                    7.74%  (1.04)%    4.88%   11.44%    6.39%++

-------------------------------------------------------------------------------------------
Net assets, end of year (000's)              $26,354  $32,111  $36,390  $29,574    $17,817

-------------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                                     0.60%    0.60%    0.60%    0.60%     0.60%+
   Net investment income                        6.80     5.78     5.95     6.62      6.32+

-------------------------------------------------------------------------------------------
Portfolio turnover rate                            0%       4%       0%      28%         0%

-------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      52


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued

Income Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                             Class B Shares
                                              2001(1)   2000(1)  1999(1)     1998    1997(2)

--------------------------------------------------------------------------------------------
<S>                                          <C>      <C>       <C>      <C>      <C>
Net asset value, beginning of year            $10.65   $11.50    $11.76   $11.53     $11.46

--------------------------------------------------------------------------------------------
Income (loss) from operations:
   Net investment income(3)                     0.67     0.59      0.63     0.70       0.58
   Net realized and unrealized gain (loss)      0.07    (0.75)    (0.15)    0.52       0.07

--------------------------------------------------------------------------------------------
Total income (loss) from operations             0.74    (0.16)     0.48     1.22       0.65

--------------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                       (0.65)   (0.58)    (0.63)   (0.70)     (0.58)
   Net realized gains                          (0.02)   (0.11)    (0.11)   (0.29)        --

--------------------------------------------------------------------------------------------
Total distributions                            (0.67)   (0.69)    (0.74)   (0.99)     (0.58)

--------------------------------------------------------------------------------------------
Net asset value, end of year                  $10.72   $10.65    $11.50   $11.76     $11.53

--------------------------------------------------------------------------------------------
Total return                                    7.21%   (1.47)%    4.25%   10.93%    5.89%++

--------------------------------------------------------------------------------------------
Net assets, end of year (000's)              $22,799  $28,302   $34,497  $26,563    $17,800

--------------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                                     1.10%    1.10%     1.10%    1.10%     1.10%+
   Net investment income                        6.29     5.27      5.45     6.12      5.82+

--------------------------------------------------------------------------------------------
Portfolio turnover rate                            0%       4%        0%      28%         0%

--------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from February 5, 1996 (inception date) to January 31, 1997.
(3) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      53


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



                                                 Financial Highlights, continued

Income Portfolio

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                            Class L Shares
                                             2001(1)  2000(1) 1999(1)(2)    1998   1997(3)

------------------------------------------------------------------------------------------
<S>                                          <C>     <C>      <C>        <C>     <C>
Net asset value, beginning of year           $10.65  $11.50      $11.76  $11.53    $11.46

------------------------------------------------------------------------------------------
Income (loss) from operations:
   Net investment income(4)                    0.68    0.60        0.64    0.71      0.59
   Net realized and unrealized gain (loss)     0.06   (0.76)      (0.15)   0.52      0.07

------------------------------------------------------------------------------------------
Total income (loss) from operations            0.74   (0.16)       0.49    1.23      0.66

------------------------------------------------------------------------------------------
Less distributions from:
   Net investment income                      (0.66)  (0.58)      (0.64)  (0.71)    (0.59)
   Net realized gains                         (0.02)  (0.11)      (0.11)  (0.29)       --

------------------------------------------------------------------------------------------
Total distributions                           (0.68)  (0.69)      (0.75)  (1.00)    (0.59)

------------------------------------------------------------------------------------------
Net asset value, end of year                 $10.71  $10.65      $11.50  $11.76    $11.53

------------------------------------------------------------------------------------------
Total return                                   7.22%  (1.42)%      4.31%  10.98%   5.94%++

------------------------------------------------------------------------------------------
Net assets, end of year (000's)              $3,229  $3,698      $3,945  $3,568    $2,113

------------------------------------------------------------------------------------------
Ratios to average net assets:
   Expenses                                    1.05%   1.05%       1.05%   1.05%    1.05%+
   Net investment income                       6.35    5.36        5.47    6.17     5.87+

------------------------------------------------------------------------------------------
Portfolio turnover rate                           0%      4%          0%     28%        0%

------------------------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) On June 12, 1998, Class C shares were renamed Class L shares.
(3) For the period from February 5, 1996 (inception date) to January 31, 1997.
(4) Net investment income per share includes short-term capital gain
    distributions from Underlying Funds.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      54


 THE SMITH BARNEY ALLOCATION SERIES PROSPECTUS
<PAGE>



Smith Barney
Allocation
Series Inc.

                              [LOGO] Smith Barney
                                     Mutual Funds
                Your Serious Money. Professionally Managed./SM/

                  Global Portfolio      Balanced Portfolio

                  High Growth Portfolio Conservative Portfolio

                  Growth Portfolio      Income Portfolio



--------------------------------------------------------------------------------

Additional Information About the Portfolios

SHAREHOLDER REPORTS
Annual and semiannual reports to shareholders provide additional information
about the portfolios' investments. These reports discuss the market conditions
and investment strategies that significantly affected- each portfolio's
performance during its last fiscal year or period.

The portfolios send only one report to a household if more than one account has
the same address. Contact your Service Agent or the transfer agent if you do
not want this policy to apply to you.

STATEMENT OF ADDITIONAL INFORMATION
The statement of additional information provides more detailed information
about each portfolio. It is incorporated by reference into (is legally part of)
this prospectus.

You can make inquiries about the portfolios or obtain shareholder reports or
the statement of additional information (without charge), by contacting your
Service Agent, by calling the applicable sub-transfer agent (PFS Shareholder
Services at 1-800-544-5445 or PFPC Global Fund Services at 1-800-451-2010), or
by writing to the portfolios at Smith Barney Mutual Funds, 7 World Trade
Center, 39th Floor, New York, New York 10048.

Information about the portfolios (including the SAI) can be reviewed and copied
at the Securities and Exchange Commission's (the "Commission") Public Reference
Room in Washington, D.C. In addition, information on the operation of the
Public Reference Room may be obtained by calling the Commission at
1-202-942-8090. Reports and other information about the portfolios are
available on the EDGAR Database on the Commission's Internet site at
http://www.sec.gov. Copies of this information may be obtained for a
duplicating fee by electronic request at the following E-mail address:
publicinfo@sec.gov, or by writing the Commission's Public Reference Section,
Washington, D.C. 20549-0102.

If someone makes a statement about the portfolios that is not in this
prospectus, you should not rely upon that information. Neither the portfolios
nor the distributors are offering to sell shares of the portfolios to any
person to whom the portfolios may not lawfully sell their shares.


Your Serious Money. Professionally Managed.  is a service mark of Salomon Smith
Barney Inc.

(Investment Company Act file no. 811-07435)

[FD01083 5/01 16794]


<PAGE>


                                                                    SMITH BARNEY


                                                                     Allocation
                                                                Series Inc.


                                                                      Prospectus


                                                             Class Z Shares Only


                                                               MAY 31, 2001



--------------------------------------------------------------------------------

INVESTMENT PRODUCTS: NOT FDIC INSURED . NO BANK GUARANTEE . MAY LOSE VALUE

--------------------------------------------------------------------------------


The Securities and Exchange Commission has not
approved or disapproved these securities or
determined whether this prospectus is accurate or
complete. Any statement to the contrary is a
crime.

[LOGO] Smith Barney

       Mutual Funds

Your Serious Money. Professionally Managed./SM/


<PAGE>



Contents


Smith Barney Allocation Series Inc. consists of 9 separate investment
portfolios, each with its own investment objective and policies. This
prospectus relates to 6 of those portfolios. Each portfolio offers different
levels of potential return and involves different levels of risk.

<TABLE>
<CAPTION>
<S>                                             <C>
Investments, risks and performance               2

---------------------------------------------------
 Global Portfolio                                3

---------------------------------------------------
 High Growth Portfolio                           6

---------------------------------------------------
 Growth Portfolio                                9

---------------------------------------------------
 Balanced Portfolio                             12

---------------------------------------------------
 Conservative Portfolio                         15

---------------------------------------------------
 Income Portfolio                               18

---------------------------------------------------

More on the portfolios' investments             21

---------------------------------------------------

Investment strategies and related risks         23

---------------------------------------------------

Management                                      25

---------------------------------------------------

Buying, redeeming and exchanging Class Z Shares 26

---------------------------------------------------

Dividends, distributions and taxes              27

---------------------------------------------------

Share price                                     28

---------------------------------------------------

Financial highlights                            29

---------------------------------------------------
</TABLE>


Class Z shares described in this prospectus are offered exclusively for sale to
tax-exempt employee benefit and retirement plans of Salomon Smith Barney Inc.
and any of its affiliates.

                                       1



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



Investments, Risks and Performance

About the portfolios

Each portfolio is a "fund of funds"--meaning it invests in other mutual funds
rather than directly in portfolio securities like stocks, bonds, and money
market instruments. These underlying mutual funds will be open-end funds
managed by the investment manager or its affiliates and have investment goals
similar, but not identical to, those of the portfolios.

Each portfolio is managed as an asset allocation program with a Target
Allocation and a Target Range.

  Target Allocation is the manager's initial strategic focus in allocating
  between equity funds and fixed income funds.

  Target Range is the range in which the manager may vary from the Target
  Allocation.

Investing primarily in other mutual funds presents special risks:

 . In addition to the portfolio's operating expenses, you will indirectly bear
  the operating expenses of the underlying funds. For instance, you will pay
  management fees of both the portfolio and the underlying funds.

 . One underlying fund may buy the same securities that another underlying fund
  sells. You would indirectly bear the costs of these trades without
  accomplishing any investment purpose.

 . You may receive taxable gains from portfolio transactions by the underlying
  funds as well as taxable gains resulting from transactions in shares of the
  underlying funds by a portfolio.

You should know:

You could lose money on your investment in a portfolio, or the portfolio may
not perform as well as other investments

An investment in any of the portfolios is not a bank deposit and is not insured
or guaranteed by the FDIC or any other government agency

Principal risks of investing in fixed income securities and equity securities

The underlying funds invest in fixed income securities and equity securities.
Risks common to investments in fixed income securities and equity securities
are set forth below. Because each portfolio has a different investment
strategy, there are also principal risks that are specific to an investment in
a particular portfolio. These unique risks are described in the portfolio
summaries beginning on the next page.

Fixed Income Securities:

 . When interest rates go up, prices of fixed income securities go down


 . An issuer of a security may default on its obligation to pay principal and/or
  interest or the security's credit rating may be downgraded

 . An issuer of a security may prepay principal earlier than scheduled, which
  would force an underlying fund to reinvest in lower yielding securities. This
  is known as call or prepayment risk

 . Slower than expected principal payments may extend a security's life. This
  locks in a below-market interest rate, increases the security's duration and
  reduces the value of the security. This is known as extension risk

Equity Securities:

 . Stock prices may decline generally

 . If an adverse event occurs, such as the issuance of an unfavorable earnings
  report, the value of a particular issuer's security may be depressed

                                       2



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



Global Portfolio

Investment objective

Capital appreciation.

Principal investment strategies

The portfolio is a fund of funds. It invests in the Smith Barney global,
international and U.S. equity funds listed below.

Selection process

The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the
equity markets in general, particular sectors of such markets, and the
performance outlook for the underlying funds. In assessing the equity markets,
the manager considers the relative outlook for domestic and international
equity markets, a broad range of market and economic trends and quantitative
factors. The performance of the underlying funds also influences their
weighting in the portfolio. The manager tends to emphasize a mix of underlying
funds that together reflect a broad range of U.S. and international equity
investments. The portfolio can invest in underlying funds that have a range of
investment styles and focuses. Under normal market conditions, the portfolio
allocates all of its assets to funds that invest primarily in equity
securities.

---------------------------------------------
<TABLE>
<CAPTION>
Target Allocation

----------------------------------
<S>                        <C>
Equity Funds                  100%

----------------------------------
Target Range

----------------------------------
Equity Funds               80-100%

----------------------------------
Fixed Income Funds           0-20%

----------------------------------
</TABLE>

Underlying Funds and Target Percentage of Portfolio

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                           <C>    <C>                                      <C>
Smith Barney Hansberger Global Value Fund     15-40% Smith Barney Small Cap Core Fund, Inc.   0-20%

---------------------------------------------------------------------------------------------------
International All Cap Growth Portfolio        10-40% European Portfolio                       0-15%

---------------------------------------------------------------------------------------------------
Cash Portfolio                                 0-20% Smith Barney Mid Cap Core Fund           0-15%

---------------------------------------------------------------------------------------------------
Smith Barney Peachtree Growth Fund             0-20% Smith Barney Small Cap Growth Fund       0-15%

---------------------------------------------------------------------------------------------------
Large Cap Value Fund                           0-20% Smith Barney Small Cap Value Fund        0-15%

---------------------------------------------------------------------------------------------------
Smith Barney Aggressive Growth Fund Inc.       0-20% Smith Barney Appreciation Fund Inc.      0-10%

---------------------------------------------------------------------------------------------------
Smith Barney Growth and Income Fund            0-20% Smith Barney Fundamental Value Fund Inc. 0-10%

---------------------------------------------------------------------------------------------------
Smith Barney Large Capitalization Growth Fund  0-20%

---------------------------------------------------------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio

Your investment in the portfolio is subject to the risks associated with
investing in equity securities generally. The principal risks associated with
investing in these securities are described on page 2 under "About the
portfolios". Your investment in the portfolio is also subject to the following
specific risks:

 . You could lose money on your investment in a portfolio, or the portfolio may
  not perform as well as other investments

 . An underlying fund's investments in foreign securities may decline because of
  adverse governmental action or political, economic or market instability in a
  foreign country or region. In addition, currency fluctuations could erase
  investment gains or add to investment losses. These risks are heightened for
  investments in emerging markets

 . The manager's judgment about the attractiveness and risk adjusted return
  potential of particular asset classes, investment styles, underlying funds or
  other issues may prove to be wrong

Who may want to invest

The portfolio may be an appropriate investment if you:

 . Are an aggressive investor seeking capital appreciation

 . Currently have exposure to fixed income investments and less volatile equity
  investments and wish to broaden your investment portfolio

 . Are willing to accept the risks of the stock market and the special risks of
  investing in foreign securities, including those of emerging markets

 . Have a long-term time horizon and no need for current income

                                       3



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



                                                     Global Portfolio, continued

Risk return bar chart

--------------------------------------------------------------------------------


The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for the past 2 calendar years.
Since the portfolio did not have any Class Z shares outstanding during the
calendar years ended December 31, 1999 and 2000, the portfolio is showing total
return, quarterly returns and comparative performance of its Class A shares
(the class with the greatest net assets) to provide you with some indication of
the portfolio's historical performance. Class Z shares have different
performance because of different expenses. Performance information in the chart
does not reflect sales charges, which would reduce your return.

Past performance does not necessarily indicate how the portfolio will perform
in the future.


Quarterly Returns: Highest: 22.76% in 4th quarter 1999; Lowest: (8.24)% in 2nd
quarter 1999.


Year to date: (13.96)% (through 3/31/01)


                  Percentage Total Returns for Class A shares



                                    [CHART]



                        Calendar years ended December 31

                               99                00

                             ------           --------

                             33.62%           (15.69)%






Risk return table

--------------------------------------------------------------------------------


The table assumes the imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.


The table indicates the risks of investing in the portfolio by comparing the
average annual total return of Class A for the periods shown to that of the S&P
500 Composite Stock Index (S&P 500), a broad-based unmanaged index of widely
held common stocks; the Russell 2000 Index (Russell 2000), a broad-based
unmanaged capitalization weighted index of small capitalization companies; the
Morgan Stanley Capital International EAFE Index (MSCI EAFE), a broad-based
unmanaged index of foreign stocks; and the Morgan Stanley Capital International
Emerging Markets Index (MSCI EMI), a broad-based unmanaged index of emerging
market companies with an average size of $800 million and the index performance
of emerging markets in South America, South Africa, Asia and Eastern Europe.

<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar years ended December 31, 2000)

---------------------------------------------------------------------------------------
<S>                     <C>             <C>            <C>            <C>      <C>
                                                   S&P        Russell     MSCI     MSCI
                                Class A            500           2000     EAFE      EMI

---------------------------------------------------------------------------------------
1 Year                         (19.92)%        (9.11)%        (3.02)% (14.17)% (28.84)%

---------------------------------------------------------------------------------------
Since Inception                   1.21%          9.37%          2.51%    5.93%  (3.89)%

---------------------------------------------------------------------------------------
Inception Date                   3/9/98              *              *        *        *

---------------------------------------------------------------------------------------
</TABLE>

* Index comparison begins on March 9, 1998.

Fee table

--------------------------------------------------------------------------------


The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.


Based on expense ratios of underlying Smith Barney funds in which the Global
portfolio was invested on January 31, 2001, the approximate expense ratio is
expected to be 1.46%. Fee table expenses would be higher if the expense ratios
of the underlying funds were included.
<TABLE>
<CAPTION>
Shareholder fees (fees paid directly from your investment)
------------------------------------------------------------------------------------------
<S>                                                                                  <C>
Maximum sales charge on purchases (as a % of offering price)                          None
------------------------------------------------------------------------------------------
Maximum deferred sales charge on redemptions (as a % of the lower of net asset value
 at purchase or redemption)                                                           None
------------------------------------------------------------------------------------------
Annual fund operating expenses (paid by the portfolio as a % of net assets)*
------------------------------------------------------------------------------------------
Management fee                                                                       0.20%
------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees                                                 None
------------------------------------------------------------------------------------------
Other expenses                                                                       0.35%
------------------------------------------------------------------------------------------
Total annual fund operating expenses                                                 0.55%
------------------------------------------------------------------------------------------
</TABLE>

* Total annual fund operating expenses have been restated based on a management
  fee decrease and estimated "other expenses" effective July 6, 2001, as if
  such fees had been in effect for the fiscal year ended January 31, 2001.
  Actual fund operating expenses will be capped at 0.55%. Any increase in the
  cap is subject to Board approval.

                                       4



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



                                                     Global Portfolio, continued


Example

--------------------------------------------------------------------------------
The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
(*) The example assumes:
 .  You invest $10,000 for the period shown
 .  Your investment has a 5% return each year
 .  You reinvest all distributions and dividends without a sales charge
 .  The portfolio's operating expenses remain the same
 .  The expenses of the underlying Smith Barney funds are reflected.
<TABLE>
<CAPTION>
Number of years you own your shares  1 year(*) 3 years(*) 5 years(*) 10 years(*)
<S>                                  <C>       <C>        <C>        <C>

--------------------------------------------------------------------------------
Class Z (with or without redemption)      $149       $462       $797      $1,746

--------------------------------------------------------------------------------
</TABLE>

                                       5



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



High Growth Portfolio

Investment objective

Capital appreciation.

Principal investment strategies

The portfolio is a fund of funds. It invests in the Smith Barney mutual funds
listed below, which are primarily equity funds.

Selection process

The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the
equity markets in general, particular sectors of such markets and the
performance outlook for the underlying funds. In assessing the equity markets,
the manager considers a broad range of market and economic trends and
quantitative factors. The performance of the underlying funds also influences
their weighting in the portfolio. The manager tends to emphasize underlying
funds that focus upon smaller cap, higher growth companies. However, the
portfolio can invest in underlying funds that have a range of investment styles
and focuses, including large cap, international, emerging markets and high
yield (Smith Barney High Income Fund) funds. The portfolio also allocates a
portion of its assets to underlying funds that primarily invest in debt
securities.

---------------------------------------------
<TABLE>
<CAPTION>
Target Allocation

----------------------------------
<S>                        <C>
Equity Funds                   90%

----------------------------------
Fixed Income Funds             10%

----------------------------------
Target Range

----------------------------------
Equity Funds               80-100%

----------------------------------
Fixed Income Funds           0-20%

----------------------------------
</TABLE>

Underlying Funds and Target Percentage of Portfolio

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                       <C>   <C>                                           <C>
Smith Barney Aggressive Growth Fund Inc.  5-30% Smith Barney Growth and Income Fund           0-20%

---------------------------------------------------------------------------------------------------
International All Cap Growth Portfolio    5-25% Smith Barney High Income Fund                 0-20%

---------------------------------------------------------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-25% Smith Barney Large Capitalization Growth Fund 0-20%

---------------------------------------------------------------------------------------------------
Smith Barney Small Cap Core Fund, Inc.    0-25% Global Government Bond Portfolio              0-15%

---------------------------------------------------------------------------------------------------
Cash Portfolio                            0-20% Smith Barney Government Securities Fund       0-15%

---------------------------------------------------------------------------------------------------
Smith Barney Peachtree Growth Fund        0-20% Smith Barney Investment Grade Bond Fund       0-15%

---------------------------------------------------------------------------------------------------
Large Cap Value Fund                      0-20% Smith Barney Mid Cap Core Fund                0-15%

---------------------------------------------------------------------------------------------------
Smith Barney Appreciation Fund Inc.       0-20% Smith Barney Small Cap Value Fund             0-15%

---------------------------------------------------------------------------------------------------
Smith Barney Fundamental Value Fund Inc.  0-20% Smith Barney Small Cap Growth Fund            0-15%

---------------------------------------------------------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio

Your investment in the portfolio is subject to the risks associated with
investing in equity securities generally. The principal risks associated with
investing in equity securities are described on page 2 under "About the
portfolios". Your investment in the portfolio is also subject to the following
specific risks:

 . You could lose money on your investment in a portfolio, or the portfolio may
  not perform as well as other investments


 . Growth stocks or small capitalization stocks (generally those comprising the
  Russell 2000 Indices) may fall out of favor with investors and may experience
  greater volatility, as well as greater potential for gain or loss

 . An underlying fund's investments in foreign securities may decline because of
  adverse governmental action or political, economic or market instability in a
  foreign country or region. In addition, currency fluctuations could erase
  investment gains or add to investment losses. These risks are heightened for
  investments in emerging markets

 . The manager's judgment about the attractiveness and risk adjusted return
  potential of particular asset classes, investment styles, underlying funds or
  other issues may prove to be wrong

Who may want to invest

The portfolio may be an appropriate investment if you:

 . Currently have exposure to fixed income investments and less volatile equity
  investments and wish to broaden your investment portfolio

 . Are willing to accept the risks of the stock market

 . Have a long-term time horizon and no need for current income

                                       6



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



                                                High Growth Portfolio, continued

Risk return bar chart

--------------------------------------------------------------------------------

The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for the past 4 calendar years.
Since the portfolio did not have any Class Z shares outstanding during the
calendar year ended December 31, 2000, the portfolio is showing total return,
quarterly returns and comparative performance of its Class A shares (the class
with the greatest net assets) to provide you with some indication of the
portfolio's historical performance. Class Z shares have different performance
because of different expenses. Performance information in the chart does not
reflect sales charges, which would reduce your return.

Past performance does not necessarily indicate how the portfolio will perform
in the future.


Quarterly returns: Highest: 22.13% in 4th quarter 1998; Lowest: (15.61)% in 3rd
quarter 1998


Year to date: (12.71)% (through 3/31/01)
                           Percentage Total Returns for Class A shares



                                    [CHART]



                        Calendar years ended December 31

                       97         98        99       00

                     ------     ------    ------   ------

                     12.46%     15.52%    27.46%   (6.72)%
Risk return table

--------------------------------------------------------------------------------
The table assumes the imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.


The table indicates the risks of investing in the portfolio by comparing the
average annual total return of Class A Shares for the periods shown to that of
the S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Russell 2000 Index (Russell 2000), a broad-based
unmanaged capitalization weighted index of small capitalization companies;
Salomon Smith Barney High Yield Market Index (High Yield), a broad-based
unmanaged index of high yield securities and the Morgan Stanley Capital
International EAFE Index (MSCI EAFE), a broad-based unmanaged index of foreign
stocks.
<TABLE>
<CAPTION>

Average Annual Total Returns (Calendar Years Ended December 31, 2000)
------------------------------------------------------------------------------------------
<S>                   <C>            <C>           <C>                <C>        <C>
                             Class A       S&P 500       Russell 2000 High Yield MSCI EAFE
------------------------------------------------------------------------------------------
1 Year                      (11.37)%       (9.11)%            (3.02)%    (5.68)%  (14.17)%
------------------------------------------------------------------------------------------
Since Inception                9.51%        17.67%             10.32%      4.32%     7.32%
------------------------------------------------------------------------------------------
Inception Date               1/17/97             *                  *         **         *
------------------------------------------------------------------------------------------
</TABLE>

*  Index comparison begins on February 5, 1996.

** Index comparison begins on February 29, 1996.
Fee table

--------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio


Based on the expense ratios of underlying Smith Barney funds in which the High
Growth portfolio was invested on January 31, 2001, the approximate expense
ratio is expected to be 1.38%. Fee table expenses would be higher if the
expense ratios of the underlying funds were included.
<TABLE>
<CAPTION>
Shareholder fees (fees paid directly from your investment)
-------------------------------------------------------------------------------------------------
<S>                                                                                         <C>
Maximum sales charge (load) imposed on purchases (as a % of offering price)                  None
-------------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of the lower of net asset value at purchase or
 redemption)                                                                                 None
-------------------------------------------------------------------------------------------------
Annual fund operating expenses (expenses deducted from portfolio assets)*
-------------------------------------------------------------------------------------------------
Management fees                                                                             0.20%
-------------------------------------------------------------------------------------------------
Distribution and service (12-b) fees                                                         None
-------------------------------------------------------------------------------------------------
Other expenses                                                                              0.35%
-------------------------------------------------------------------------------------------------
Total annual fund operating expenses                                                        0.55%
-------------------------------------------------------------------------------------------------
</TABLE>
*  Total annual fund operating expenses have been restated based on a
   management fee decrease and estimated "other expenses" effective July 6,
   2001, as if such fees had been in effect for the fiscal year ended January
   31, 2001. Actual fund operating expenses will be capped at 0.55%. Any
   increase in the cap is subject to Board approval.

                                       7



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



                                                High Growth Portfolio, continued


Example

--------------------------------------------------------------------------------

The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
* The example assumes:
 . You invest $10,000 for the period shown
 . Your investment has a 5% return each year
 . You reinvest all distributions and dividends without a sales charge
 . The portfolio's operating expenses remain the same
 . The expenses of the underlying Smith Barney funds are reflected.
<TABLE>
<CAPTION>
Number of years you own your shares  1 year* 3 years* 5 years* 10 years*
<S>                                  <C>     <C>      <C>      <C>

------------------------------------------------------------------------
Class Z (with or without redemption)    $140     $437     $755    $1,657

------------------------------------------------------------------------
</TABLE>

                                       8



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



Growth Portfolio

Investment objective

Long-term growth of capital.

Principal investment strategies

The portfolio is a fund of funds. It invests in the Smith Barney mutual funds
listed below, which are primarily equity funds.

Selection process

The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the
equity markets in general, and, to a lesser degree, the bond markets,
particular sectors of such markets, and the performance outlook for the
underlying funds. In assessing the equity markets, the manager considers a
broad range of market and economic trends and quantitative factors. The
performance of the underlying funds also influences their weighting in the
portfolio. The manager tends to emphasize underlying funds that focus upon
larger capitalization companies. However, the portfolio can invest in
underlying funds that have a range of investment styles and focuses, including
small cap, international and high yield (Smith Barney High Income Fund) funds.
The portfolio also allocates a significant portion of its assets to underlying
funds that primarily invest in a broad range of debt securities to help reduce
volatility.

---------------------------------------------
<TABLE>
<CAPTION>
Target Allocation

---------------------------------
<S>                        <C>
Equity Funds                  70%

---------------------------------
Fixed Income Funds            30%

---------------------------------
Target Range

---------------------------------
Equity Funds               60-80%

---------------------------------
Fixed Income Funds         20-40%

---------------------------------
</TABLE>
Underlying Funds and Target Percentage of Portfolio

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                       <C>   <C>                                           <C>
Smith Barney High Income Fund             5-20% Smith Barney Large Capitalization Growth Fund 0-20%

---------------------------------------------------------------------------------------------------
Smith Barney Appreciation Fund Inc.       0-30% Smith Barney Small Cap Core Fund, Inc.        0-20%

---------------------------------------------------------------------------------------------------
Smith Barney Fundamental Value Fund Inc.  0-30% Global Government Bond Portfolio              0-15%

---------------------------------------------------------------------------------------------------
Cash Portfolio                            0-20% Short-Term High Grade Bond Fund               0-15%

---------------------------------------------------------------------------------------------------
Smith Barney Peachtree Growth Fund        0-20% Smith Barney Aggressive Growth Fund Inc.      0-15%

---------------------------------------------------------------------------------------------------
International All Cap Growth Portfolio    0-20% Smith Barney Investment Grade Bond Fund       0-15%

---------------------------------------------------------------------------------------------------
Large Cap Value Fund                      0-20% Smith Barney Managed Governments Fund         0-15%

---------------------------------------------------------------------------------------------------
Smith Barney Government Securities Fund   0-20% Smith Barney Mid Cap Core Fund                0-10%

---------------------------------------------------------------------------------------------------
Smith Barney Hansberger Global Value Fund 0-20% Smith Barney Small Cap Growth Fund            0-10%

---------------------------------------------------------------------------------------------------
Smith Barney Growth and Income Fund       0-20% Smith Barney Small Cap Value Fund             0-10%

---------------------------------------------------------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio

Your investment in the portfolio is subject to the risks associated with
investing in equity securities and, to a lesser degree, fixed income securities
generally. The principal risks associated with investing in equity securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:

 . You could lose money on your investment in a portfolio, or the portfolio may
  not perform as well as other investments

 . An underlying fund's investments in foreign securities may decline because of
  adverse governmental action or political, economic or market instability in a
  foreign country or region. In addition, currency fluctuations could erase
  investment gains or add to investment losses. These risks are heightened for
  investments in emerging markets

 . The manager's judgment about the attractiveness and risk adjusted return
  potential of particular asset classes, investment styles, underlying funds or
  other issues may prove to be wrong


 . Growth stock or small capitalization stocks (generally those comprising the
  Russell 2000 Indices) may fall out of favor and may experience greater
  volatility, as well as greater potential for gain or loss-

 . When interest rates go up, prices of fixed income securities go down

Who may want to invest

The portfolio may be an appropriate investment if you:

 . Are seeking growth of capital

 . Are willing to accept the risks of the stock market, although lessened
  through greater exposure to fixed income securities than the High Growth
  Portfolio

 . Have a long-term time horizon and no need for current income

                                       9



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



                                                     Growth Portfolio, continued

Risk return bar chart

--------------------------------------------------------------------------------

The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for the past 4 calendar years.
Since the portfolio did not have any Class Z shares outstanding during the
calendar year ended December 31, 2000, the portfolio is showing total return,
quarterly returns and comparative performance of its Class A shares (the class
with the greatest net assets) to provide you with some indication of the
portfolio's historical performance. Class Z shares have different performance
because of different expenses. Performance information in the chart does not
reflect sales charges, which would reduce your return.

Past performance does not necessarily indicate how the portfolio will perform
in the future.

Quarterly returns: Highest: 15.29% in 4th quarter 1998; Lowest: (10.67)% in 3rd
quarter 1998

Year to date: (9.45)% (through 3/31/01)

                           Percentage Total Returns for Class A shares



                                    [CHART]



                        Calendar years ended December 31



                     97         98         99         00

                   ------     ------     ------    -------

                   14.68%     13.61%     17.23%    (4.83)%




Risk return table

--------------------------------------------------------------------------------

The table assumes the imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.

The table indicates the risks of investing in the portfolio by comparing the
average annual total return of Class A Shares for the periods shown to that of
the S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Lehman Government/Corporate Bond Index (Lehman),
a broad-based unmanaged index of fixed income securities; the Russell 2000
Index (Russell 2000), a broad-based unmanaged capitalization weighted index of
small capitalization companies; the Morgan Stanley Capital International EAFE
Index (MSCI EAFE), a broad-based unmanaged index of foreign stocks.

<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended December 31, 2000)
<S>                     <C>             <C>             <C>           <C>      <C>

----------------------------------------------------------------------------------------
                                                   S&P                Russell      MSCI
                                Class A            500         Lehman    2000      EAFE

----------------------------------------------------------------------------------------
1 Year                          (9.59)%        (9.11)%         11.85% (3.02)%  (14.17)%

----------------------------------------------------------------------------------------
Since Inception                   8.40%         17.67%          6.80%  10.32%     7.32%

----------------------------------------------------------------------------------------
Inception Date                   2/5/96               *            **        *         *

----------------------------------------------------------------------------------------
</TABLE>

*  Index comparison begins on February 5, 1996.
** Index comparison begins on February 29, 1996.

Fee table

--------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.


Based on the expense ratios of underlying Smith Barney funds in which the
Growth portfolio was invested on January 31, 2001, the approximate expense
ratio is expected to be 1.31%. Fee table expenses would be higher if the
expense ratios of the underlying Funds were included.
<TABLE>
<CAPTION>
Shareholder fees (fees paid directly from your investment)
<S>                                                                                                     <C>

-------------------------------------------------------------------------------------------------------------
Maximum sales charge (load) imposed on purchases (as a % of offering price)                              None

-------------------------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of the lower of net asset value at purchase or redemption)  None

-------------------------------------------------------------------------------------------------------------
Annual fund operating expenses (expenses deducted from portfolio assets)*

-------------------------------------------------------------------------------------------------------------
Management fee                                                                                          0.20%

-------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees                                                                    None

-------------------------------------------------------------------------------------------------------------
Other expenses                                                                                          0.35%

-------------------------------------------------------------------------------------------------------------
Total annual fund operating expenses                                                                    0.55%

-------------------------------------------------------------------------------------------------------------
</TABLE>

* Total annual fund operating expenses have been restated based on a management
fee decrease and estimated "other expenses" effectively July 6, 2001, as if
such fees had been in effect for the fiscal year ended January 31, 2001. Actual
fund operating expenses will be capped at 0.55%. Any increase in the cap is
subject to Board approval.

                                      10



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



                                                     Growth Portfolio, continued

Example

--------------------------------------------------------------------------------

The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
* The example assumes:
 . You invest $10,000 for the period shown
 . Your investment has a 5% return each year
 . You reinvest all distributions and dividends without a sales charge
 . The portfolio's operating expenses remain the same
 . The expenses of the underlying Smith Barney funds are reflected.
<TABLE>
<CAPTION>
Number of years you own your shares  1 year* 3 years* 5 years* 10 years*
<S>                                  <C>     <C>      <C>      <C>

------------------------------------------------------------------------
Class Z (with or without redemption)    $133     $415     $718    $1,579

------------------------------------------------------------------------
</TABLE>

                                      11



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



Balanced Portfolio


Investment objective

Balance of growth of capital and income.

Principal investment strategies

The portfolio is a fund of funds. It invests in the Smith Barney equity and
fixed income funds listed below.

Selection process

The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the
equity and bond markets in general, particular sectors of such markets, and the
performance outlook for the underlying funds. In assessing the equity and bond
markets, the manager considers a broad range of market and economic
trends and quantitative factors. The performance of the underlying funds also
influences their weighting in the portfolio. In selecting equity funds, the
manager tends to emphasize underlying funds that focus upon established
large-capitalization, U.S. stocks. The portfolio's fixed income funds mainly
invest in U.S. government and agency securities and mortgage-backed securities.
However, the portfolio can invest in underlying funds that have a range of
investment styles and focuses.

---------------------------------------------
<TABLE>
<CAPTION>
Target Allocation

---------------------------------
<S>                        <C>
Equity Funds                  50%

---------------------------------
Fixed Income Funds            50%

---------------------------------
Target Range

---------------------------------
Equity Funds               40-60%

---------------------------------
Fixed Income Funds         40-60%

---------------------------------
</TABLE>

Underlying Funds and Target Percentage of Portfolio

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                            <C>   <C>                                           <C>
Smith Barney Diversified Strategic Income Fund 5-25% Smith Barney Fundamental Value Fund Inc.      0-20%

--------------------------------------------------------------------------------------------------------
Smith Barney Convertible Fund                  5-20% Smith Barney Government Securities Fund       0-20%

--------------------------------------------------------------------------------------------------------
Smith Barney Managed Governments Fund Inc.     5-20% Smith Barney Peachtree Growth Fund            0-15%

--------------------------------------------------------------------------------------------------------
Smith Barney Premium Total Return Fund         5-20% Global Government Bond Portfolio              0-15%

--------------------------------------------------------------------------------------------------------
Cash Portfolio                                 0-25% International All Cap Growth Portfolio        0-15%

--------------------------------------------------------------------------------------------------------
Large Cap Value Fund                           0-20% Smith Barney Hansberger Global Value Fund     0-15%

--------------------------------------------------------------------------------------------------------
Short-Term High Grade Bond Fund                0-20% Smith Barney High Income Fund                 0-15%

--------------------------------------------------------------------------------------------------------
Smith Barney Appreciation Fund Inc.            0-20% Smith Barney Large Capitalization Growth Fund 0-15%

--------------------------------------------------------------------------------------------------------
Smith Barney Growth and Income Fund            0-20% Smith Barney Small Cap Core Fund, Inc.        0-15%

--------------------------------------------------------------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio

Your investment in the portfolio is subject to the risks associated with
investing in both fixed income securities and equity securities generally. The
principal risks associated with investing in these securities are described on
page 2 under "About the portfolios". Your investment in the portfolio is also
subject to the following specific risks:

 You could lose money on your investment in a portfolio, or the portfolio may
  not perform as well as other investments

 . An underlying fund's investments in foreign securities may decline because of
  adverse governmental action or political, economic or market instability in a
  foreign country or region. In addition, currency fluctuations could erase
  investment gains or add to investment losses
  These risks are heightened for investments in emerging markets

 . The manager's judgment about the attractiveness and risk adjusted return
  potential of particular asset classes, investment styles, underlying funds or
  other issues may prove to be wrong

 . When interest rates go up, prices of fixed income securities go down

Who may want to invest

The portfolio may be an appropriate investment if you:

 . Are willing to sacrifice some growth potential for less volatility

 . Are willing to accept the risks of the stock market

 . Have a long-term time horizon

                                      12



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



                                                   Balanced Portfolio, continued

Risk return bar chart

--------------------------------------------------------------------------------





The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class Z shares for the past 3 calendar years.


Past performance does not necessarily indicate how the portfolio will perform
in the future.

Quarterly returns: Highest: 7.86% in 4th quarter 1998; Lowest: (5.20)% in 3rd
quarter 1998


Year to date: (2.07)% (through 3/31/01)





                  Percentage Total Returns for Class Z shares



                                    [CHART]



                        Calendar years ended December 31

                           98          99         00

                         -----       -----      -----

                         9.20%       7.58%      4.89%

Risk return table

--------------------------------------------------------------------------------


The table assumes redemption of shares at the end of the period and
reinvestment of distributions and dividends.


The table indicates the risks of investing in the portfolio by comparing the
average annual total return of Class Z shares for the periods shown to that of
the S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Lehman Government/Corporate Bond Index (Lehman),
a broad-based unmanaged index of fixed income securities; the Salomon Smith
Barney One-Year Treasury Bill Index (T-bill), consisting of a single 1-Year
U.S. Treasury bill whose return is tracked until maturity; and the Salomon
Smith Barney World Government Bond Index (World Bond), a broad-based unmanaged
index of international fixed income -securities.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended December 31, 2000)

---------------------------------------------------------------------------------------
<S>                     <C>             <C>             <C>           <C>    <C>
                                Class Z         S&P 500        Lehman T-bill World Bond

---------------------------------------------------------------------------------------
1 Year                            4.89%         (9.11)%        11.85%  7.10%      1.59%

---------------------------------------------------------------------------------------
Since Inception                   8.38%          16.04%         7.21%  7.87%      3.34%

---------------------------------------------------------------------------------------
Inception Date                  1/17/97               *            **      *          *

---------------------------------------------------------------------------------------
</TABLE>

*  Index comparison begins on January 17, 1997.
** Index comparison begins on January 31, 1997.



Fee table

--------------------------------------------------------------------------------

The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.


Based on the expense ratios of underlying Smith Barney funds in which the
Balanced portfolio was invested on January 31, 2001, the approximate expense
ratio is expected to be 1.25%. Fee table expenses would be higher if the
expense ratios of the underlying funds were included.

<TABLE>
<CAPTION>
Shareholder fees (fees paid directly from your investment)

---------------------------------------------------------------------------------
<S>                                                                         <C>
Maximum sales charge (load) imposed on purchases (as a % of offering price)  None

---------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of the lower of net asset
value at purchase or redemption)                                             None

---------------------------------------------------------------------------------
Annual fund operating expenses (expenses deducted from portfolio assets)*

---------------------------------------------------------------------------------
Management fee                                                              0.20%

---------------------------------------------------------------------------------
Distribution and service (12b-1) fees                                        None

---------------------------------------------------------------------------------
Other expenses                                                              0.35%

---------------------------------------------------------------------------------
Total annual fund operating expenses                                        0.55%

---------------------------------------------------------------------------------
</TABLE>
*  Total annual fund operating expenses have been restated based on a
   management fee decrease and estimated "other expenses" effective July 6,
   2001, as if such fees had been in effect for the fiscal year ended January
   31, 2001. Actual fund operating expenses will be capped at 0.55%. Any
   increase in the cap is subject to Board approval.

                                      13



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



                                                   Balanced Portfolio, continued


Example

--------------------------------------------------------------------------------

The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
* The example assumes:
 . You invest $10,000 for the period shown
 . Your investment has a 5% return each year
 . You reinvest all distributions and dividends without a sales charge
 . The portfolio's operating expenses remain the same
 . The expenses of the underlying Smith Barney funds are reflected.
<TABLE>
<CAPTION>
Number of years you own your shares  1 year* 3 years* 5 years* 10 years*
<S>                                  <C>     <C>      <C>      <C>

------------------------------------------------------------------------
Class Z (With or without redemption)    $127     $397     $686    $1,511

------------------------------------------------------------------------
</TABLE>

                                      14



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



Conservative Portfolio

Investment objective

Primary: Income. Secondary: Long-term growth of capital.

Principal investment strategies


The portfolio is a fund of funds. It invests primarily in the Smith Barney
funds listed below that focus on taxable fixed income securities
and stocks of U.S. large


Selection process

The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the
different sectors of the bond market and, to a lesser degree, the equities
markets. In assessing the bond markets, the manager considers a broad range of
economic trends and quantitative factors. The performance of the underlying
funds also influences their weighting in the portfolio. The portfolio's fixed
income funds mainly invest in U.S. government and agency securities and
mortgage-backed securities. In selecting equity funds, the manager tends to
emphasize underlying funds that focus upon large capitalization stocks.
However, the portfolio can invest in underlying funds that have a range of
investment styles and focuses.

---------------------------------------------
<TABLE>
<CAPTION>
Target Allocation

---------------------------------
<S>                        <C>
Equity Funds                  30%

---------------------------------
Fixed Income Funds            70%

---------------------------------
Target Range

---------------------------------
Equity Funds               20-40%

---------------------------------
Fixed Income Funds         60-80%

---------------------------------
</TABLE>

Underlying Funds and Target Percentage of Portfolio

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                            <C>    <C>                                       <C>
Smith Barney Diversified Strategic Income Fund 10-30% Large Cap Value Fund                      0-20%

-----------------------------------------------------------------------------------------------------
Smith Barney Managed Governments Fund Inc.      5-25% Short-Term High Grade Bond Fund           0-20%

-----------------------------------------------------------------------------------------------------
Smith Barney Government Securities Fund         5-20% Smith Barney High Income Fund             0-20%

-----------------------------------------------------------------------------------------------------
Smith Barney Convertible Fund                   5-15% Smith Barney Appreciation Fund Inc.       0-15%

-----------------------------------------------------------------------------------------------------
Cash Portfolio                                  0-30% Smith Barney Fundamental Value Fund Inc.  0-15%

-----------------------------------------------------------------------------------------------------
Smith Barney Premium Total Return Fund          0-25% International All Cap Growth Portfolio    0-10%

-----------------------------------------------------------------------------------------------------
Global Government Bond Portfolio                0-20% Smith Barney Hansberger Global Value Fund 0-10%

-----------------------------------------------------------------------------------------------------
</TABLE>
Principal risks of investing in the portfolio

Your investment in the portfolio is subject to the risks associated with
investing in fixed income securities and, to a lesser degree, equity securities
generally. The principal risks associated with investing in these securities
are described on page 2 under "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:

 . You could lose money on your investment in a portfolio, or the portfolio may
  not perform as well as other investments

 . The manager's judgment about the attractiveness and risk adjusted return
  potential of particular asset classes, investment styles, underlying funds or
  other issues may prove to be wrong

 . When interest rates go up, prices of fixed income securities go down

 . An issuer of a security may prepay principal earlier than scheduled, which
  would force an underlying fund to reinvest in lower yielding securities

Who may want to invest

The portfolio may be an appropriate investment if you:

 . Are seeking income, but also some long-term growth of capital to help offset
  the loss of purchasing power due to inflation

 . Are a conservative investor willing to sacrifice some growth potential in
  exchange for less (but not zero) volatility

                                      15



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES

<PAGE>



                                               Conservative Portfolio, continued

Risk return bar chart

--------------------------------------------------------------------------------

The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for the past 4 calendar years.
Since the portfolio did not have any Class Z shares outstanding during the
calendar years ended December 31, 1999 and December 31, 2000, the portfolio is
showing total return, quarterly returns and comparative performance of its
Class A shares (the class with the greatest net assets) to provide you with
some indication of the portfolio's historical performance. Class Z shares have
different performance because of different expenses. Performance information in
the chart does not reflect sales charges, which would reduce your return.

Past performance does not necessarily indicate how the portfolio will perform
in the future.

Quarterly returns: Highest: 6.01% in 2nd quarter 1997; Lowest: (3.42)% in 3rd
quarter 1998




Year to date: 0.37% (through 3/31/01)




                  Percentage Total Returns for Class A shares



                                    [CHART]



                        Calendar years ended December 31

                           97       98       99       00

                        ------    -----    -----    -----

                        11.81%    6.02%    3.98%    4.04%


Risk return table

--------------------------------------------------------------------------------


The table assumes the imposition of the maximum sales charge applicable to the
class, redemption of shares at the end of the period, and reinvestment of
distributions and dividends.

The table indicates the risks of investing in the portfolio by comparing the
average annual total return of Class A Shares for the periods shown to that of
the S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Lehman Government/Corporate Bond Index (Lehman),
a broad-based unmanaged index of fixed income securities; Salomon Smith Barney
High Yield Market Index (High Yield), a broad-based unmanaged index of high
yield securities and the Salomon Smith Barney One-Year Treasury Bill Index
(T-bill), consisting of a single 1-Year U.S. Treasury bill whose return is
tracked until maturity.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended December 31, 2000)

---------------------------------------------------------------------------------------
<S>                    <C>            <C>             <C>             <C>       <C>
                                                 S&P                     High
                              Class A            500         Lehman     Yield   T-bill

---------------------------------------------------------------------------------------
1 Year                        (0.66)%        (9.11)%         11.85%   (5.68)%    7.10%

---------------------------------------------------------------------------------------
Since Inception                5.78 %        17.67 %          6.80%    4.32 %    5.79%

---------------------------------------------------------------------------------------
Inception Date                 2/5/96               *              **        **       *

---------------------------------------------------------------------------------------
</TABLE>

*  Index comparison begins on February 5, 1996.

** Index comparison begins on February 29, 1996.

Fee table

--------------------------------------------------------------------------------
The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.


Based on the expense ratios of underlying Smith Barney funds in which the
Conservative portfolio invested during the most recent fiscal year, the
approximate expense ratio is expected to be 1.26%. Fee table expenses would be
higher if the expense ratios of the underlying funds were included.
<TABLE>
<CAPTION>
Shareholder fees (fees paid directly from your investment)

-------------------------------------------------------------------------------------------------------------
<S>                                                                                                     <C>
Maximum sales charge (load) imposed on purchases (as a % of offering price)                              None

-------------------------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of the lower of net asset value at purchase or redemption)  None

-------------------------------------------------------------------------------------------------------------
Annual fund operating expenses (expenses deducted from portfolio assets)*

-------------------------------------------------------------------------------------------------------------
Management fee                                                                                          0.20%

-------------------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees                                                                    None

-------------------------------------------------------------------------------------------------------------
Other expenses                                                                                          0.35%

-------------------------------------------------------------------------------------------------------------
Total annual fund operating expenses                                                                    0.55%

-------------------------------------------------------------------------------------------------------------
</TABLE>

*  Total annual fund operating expenses have been restated based on a
   management fee decrease and estimated "other expenses" effective July 6,
   2001, as if such fees had been in effect for the fiscal year ended January
   31, 2001. Actual fund operating expenses will be capped at 0.55%. Any
   increase in the cap is subject to Board approval.

                                      16



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



                                               Conservative Portfolio, continued


Example

--------------------------------------------------------------------------------

The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
* The example assumes:
 . You invest $10,000 for the period shown
 . Your investment has a 5% return each year
 . You reinvest all distributions and dividends without a sales charge
 . The portfolio's operating expenses remain the same
 . The expenses of the underlying Smith Barney funds are reflected.
<TABLE>
<CAPTION>
Number of years you own your shares  1 year* 3 years* 5 years* 10 years*
<S>                                  <C>     <C>      <C>      <C>

------------------------------------------------------------------------
Class Z (With or without redemption)    $128     $400     $692    $1,523

------------------------------------------------------------------------
</TABLE>

                                      17



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



Income Portfolio


Investment objective

High current income.

Principal investment strategies

The portfolio is a fund of funds. It invests primarily in the Smith Barney
funds listed below that focus on taxable fixed income securities.

Selection process

The manager periodically adjusts the allocation of the portfolio's assets among
different Smith Barney funds depending upon the manager's outlook for the
different sectors of the bond market. In assessing the bond markets,
the manager considers a broad range of economic trends and quantitative
factors. The performance of the underlying funds also influences their
weighting in the portfolio. The portfolio focuses on funds that invest in a
broad range of fixed income securities. The portfolio also allocates a portion
of its assets to underlying funds that primarily invest in equity securities.

---------------------------------------------
<TABLE>
<CAPTION>
Target Allocation

----------------------------------
<S>                        <C>
Equity Funds                   10%

----------------------------------
Fixed Income Funds             90%

----------------------------------
Target Range

----------------------------------
Equity Funds                 0-20%

----------------------------------
Fixed Income Funds         80-100%

----------------------------------
</TABLE>

Underlying Funds and Target Percentage of Portfolio

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
<S>                                            <C>    <C>                                      <C>
Smith Barney Diversified Strategic Income Fund 10-30% Large Cap Value Fund                     0-15%

----------------------------------------------------------------------------------------------------
Short-Term High Grade Bond Fund                 5-30% Smith Barney Convertible Fund            0-15%

----------------------------------------------------------------------------------------------------
Smith Barney Managed Governments Fund Inc.      5-30% Smith Barney Investment Grade Bond Fund  0-15%

----------------------------------------------------------------------------------------------------
Smith Barney Government Securities Fund         5-20% Smith Barney Premium Total Return Fund   0-15%

----------------------------------------------------------------------------------------------------
Cash Portfolio                                  0-30% International All Cap Growth Portfolio   0-10%

----------------------------------------------------------------------------------------------------
Smith Barney High Income Fund                   0-25% Smith Barney Appreciation Fund Inc.      0-10%

----------------------------------------------------------------------------------------------------
Global Government Bond Portfolio                0-20% Smith Barney Fundamental Value Fund Inc. 0-10%

----------------------------------------------------------------------------------------------------
</TABLE>

Principal risks of investing in the portfolio

Your investment in the portfolio is subject to the risks associated with
investing in fixed income securities and, to a lesser degree, equity securities
generally. The principal risks associated with investing in these securities
are described on page 2 in "About the portfolios". Your investment in the
portfolio is also subject to the following specific risks:

 . You could lose money on your investment in a portfolio, or the portfolio may
  not perform as well as other investments

 . The manager's judgment about the attractiveness and risk adjusted return
  potential of particular asset classes, investment styles, underlying funds or
  other issues may prove to be wrong

 . When interest rates go up, prices of fixed income securities go down

 . An issuer of a security may prepay principal earlier than scheduled, which
  would force an underlying fund to reinvest in lower yielding securities

 . An issuer of a security may default on its obligation to pay principal and/or
  interest or the security's credit rating may be downgraded

Who may want to invest

The portfolio may be an appropriate investment if you:

 . Are seeking current income

 . Are a conservative investor willing to sacrifice growth potential for less
  (but not zero) volatility

                                      18



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



                                                     Income Portfolio, continued

Risk return bar chart

--------------------------------------------------------------------------------


The bar chart indicates the risks of investing in the portfolio by showing the
performance of the portfolio's Class A shares for each of the past 4 calendar
years. Since the portfolio did not have any Class Z shares outstanding during
the calendar years ended December 31, 1999 and December 31, 2000, the portfolio
is showing total return, quarterly returns and comparative performance of its
Class A shares (the class with the greatest net assets) to provide you with
some indication of the portfolio's historical performance. Class Z shares have
different performance because of different expenses. Performance information in
the chart does not reflect sales charges, which would reduce your return.

Past performance does not necessarily indicate how the portfolio will perform
in the future.

Quarterly returns: Highest: 5.09% in 2nd quarter 1997; Lowest: (1.10)% in 3rd
quarter 1998


Year to date: --1.85% (through 3/31/01)


                  Percentage Total Returns for Class A Shares



                                    [CHART]



                        Calendar years ended December 31

                          97       98       99       00

                       ------    -----    -----    -----

                       11.00%    5.32%    0.34%    3.64%


Risk return table

--------------------------------------------------------------------------------

The table assumes redemption of shares at the end of the period and
reinvestment of distributions and dividends.

The table indicates the risks of investing in the portfolio by comparing the
average annual total return of Class A shares for the periods shown to that of
the S&P 500 Composite Stock Index (S&P 500), a broad-based unmanaged index of
widely held common stocks; the Lehman Government/Corporate Bond Index (Lehman),
a broad-based unmanaged index of fixed income securities; Salomon Smith Barney
High Yield Market Index (High Yield), a broad-based unmanaged index of high
yield securities and the Salomon Smith Barney One-Year Treasury Bill Index
(T-bill), consisting of one 1-Year U.S. Treasury bill whose return is tracked
until maturity.
<TABLE>
<CAPTION>
Average Annual Total Returns (Calendar Years Ended December 31, 2000)
---------------------------------------------------------------------------------------
<S>                     <C>             <C>             <C>           <C>        <C>
                                Class A         S&P 500        Lehman High Yield T-bill
---------------------------------------------------------------------------------------
1 Year                          (1.05)%         (9.11)%        11.85%    (5.68)%  7.10%
---------------------------------------------------------------------------------------
Since Inception                  4.26 %         17.67 %         6.80%      4.32%  5.79%
---------------------------------------------------------------------------------------
Inception Date                   2/5/96               *            **         **      *
---------------------------------------------------------------------------------------
</TABLE>

*  Index comparison begins on February 5, 1996.

** Index comparison begins on February 29, 1996.

Fee table

--------------------------------------------------------------------------------


The table sets forth the fees and expenses you will pay if you invest in shares
of the portfolio.


Based on the expense ratios of underlying Smith Barney funds in which the
Income portfolio invested during the most recent fiscal year, the approximate
expense ratio is expected to be 1.22%. Fee table expenses would be higher if
the expense ratios of the underlying funds were included.

<TABLE>
<CAPTION>
Shareholder fees (fees paid directly from your investment)
-------------------------------------------------------------------------------------------------
<S>                                                                                         <C>
Maximum sales charge (load) imposed on purchases (as a % of offering price)                  None
-------------------------------------------------------------------------------------------------
Maximum deferred sales charge (load) (as a % of the lower of net asset value at purchase or
 redemption)                                                                                 None
-------------------------------------------------------------------------------------------------
Annual fund operating expenses (expenses deducted from portfolio assets)*
-------------------------------------------------------------------------------------------------
Management fee                                                                              0.20%
-------------------------------------------------------------------------------------------------
Distribution and service (12b-1) fees                                                        None
-------------------------------------------------------------------------------------------------
Other expenses                                                                              0.35%
-------------------------------------------------------------------------------------------------
Total annual fund operating expenses                                                        0.55%
-------------------------------------------------------------------------------------------------
</TABLE>

*  Total annual fund operating expenses have been restated based on a
   management fee decrease and estimated "other expenses" effective July 6,
   2001, as if such fees had been in effect for the fiscal year ended January
   31, 2001. Actual fund operating expenses will be capped at 0.55%. Any
   increase in the cap is subject to Board approval.

                                      19



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



                                                     Income Portfolio, continued



Example

--------------------------------------------------------------------------------

The example helps you compare the costs of investing in the portfolio with
other mutual funds. Your actual costs may be higher or lower.
* The example assumes:
 . You invest $10,000 for the period shown
 . Your investment has a 5% return each year
 . You reinvest all distributions and dividends without a sales charge
 . The portfolio's operating expenses remain the same
 . The expenses of the underlying Smith Barney funds are reflected.
<TABLE>
<CAPTION>
    Number of years you own your shares  1 year* 3 years* 5 years* 10 years*
    <S>                                  <C>     <C>      <C>      <C>

    ------------------------------------------------------------------------
    Class Z (with or without redemption)    $124     $387     $670    $1,477

    ------------------------------------------------------------------------
</TABLE>

                                      20



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



More On The Portfolios' Investments

Underlying funds

The following is a description of the investment objectives and principal
investments of the underlying funds in which the portfolios invest.

The underlying funds that invest primarily in equity securities are:

Smith Barney Aggressive Growth Fund Inc. seeks capital appreciation by
investing primarily in common stocks of companies the adviser believes are
experiencing, or have the potential to experience, growth in earnings that
exceed the average earnings growth rate of companies whose securities are
included in the Standard & Poor's 500 Index.

Smith Barney Appreciation Fund Inc. seeks long-term appreciation of shareholder
capital by investing primarily in equity securities of U.S. companies. The core
holdings of the fund are blue chip companies that are dominant in their
industries.

Smith Barney Growth and Income Fund seeks reasonable growth and income by
investing in a portfolio consisting principally of equity securities, including
convertible securities, that provide dividend or interest income and potential
appreciation in value. The fund emphasizes U.S. stocks with large market
capitalizations and its convertible securities may be of any credit quality and
may include below investment grade securities.

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 common
stocks and common stock equivalents and, to a lesser extent, in bonds and other
debt instruments.

Large Cap Value Fund seeks current income and long-term growth of capital. The
fund invests primarily in common stocks of companies having a market
capitalization of at least $5 billion that are considered by its adviser (i) to
be undervalued by the marketplace, (ii) to offer potential opportunities not
yet recognized by the marketplace, or (iii) to have been out of favor in the
marketplace but that are poised to turn around because of a new management
team, product or business strategy.


Smith Barney Large Capitalization Growth Fund seeks long-term growth of capital
by investing in equity securities of large capitalization companies with market
capitalizations greater than $5 billion at the time of investment that are
believed to afford attractive opportunities for investment growth.


Smith Barney Mid Cap Core Fund seeks long-term growth of capital by investing
primarily in equity securities of medium-sized companies whose market
capitalizations are no greater than the market capitalizations of companies in
the S&P MidCap Index at the time of investment.


Smith Barney Peachtree Growth Fund's investment objective is capital
appreciation by investing in securities believed to have above average
potential for capital appreciation. In attempting to achieve the fund's
investment objective, the fund uses a disciplined approach to identify equity
securities of companies having prospects of strong, sustainable earnings growth
and that are believed to afford attractive opportunities for stock price
appreciation.


Smith Barney Small Cap Core Fund, Inc. seeks long-term capital appreciation by
investing primarily in the common stocks of U.S. companies with relatively
small market capitalizations at the time of investment.

Smith Barney Small Cap Growth Fund seeks long-term growth of capital by
investing primarily in equity securities of high growth companies. These
companies possess a market capitalization within the market capitalization
range of companies in the Russell 2000 Growth Index at the time of the fund's
investment.

Smith Barney Small Cap Value Fund seeks long-term growth of capital by
investing primarily in equity securities of smaller capitalized companies whose
market capitalizations are no greater than the market capitalizations of
companies in the Russell 2000 Value Index at the time of investment.

Smith Barney Premium Total Return Fund seeks to provide shareholders with total
return, consisting of long-term capital appreciation and income, by investing
primarily in a diversified portfolio of equity and fixed income securities.

Smith Barney Hansberger Global Value Fund seeks long-term capital growth by
investing primarily in equity securities of companies in any country including
the United States which, in the opinion of its advisers, are undervalued.
Income is an incidental consideration.



International All Cap Growth Portfolio seeks total return on its assets from
growth of capital and income. The fund invests primarily in a diversified
portfolio of equity securities of foreign companies including exchange traded
and over-the-counter common stocks and preferred shares, debt securities
convertible into equity securities and rights and warrants relating to equity
securities.

European Portfolio seeks long-term capital appreciation by investing primarily
in the equity securities of issuers based in European countries including
countries located

                                      21



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



                                  More on the Portfolios' Investments, continued


in Western Europe (e.g., France, Germany, Italy, the Netherlands, Switzerland
and the United Kingdom) and Eastern Europe (e.g., Czech Republic, Hungary,
Poland and the countries of the former Soviet Union).


The underlying funds that invest primarily in fixed income securities are:

Smith Barney High Income Fund seeks to provide shareholders with high current
income. Although growth of capital is not an investment objective of the fund,
its adviser may consider potential for growth as one factor, among others, in
selecting investments for the fund. The fund will seek high current income by
investing in high risk, high-yielding corporate bonds, debentures and notes
denominated in U.S. dollars or foreign currencies.

Smith Barney Investment Grade Bond Fund seeks to provide as high a level of
current income as is consistent with prudent investment management and
preservation of capital. The fund invests primarily in a portfolio of
investment grade bonds.

Smith Barney Government Securities Fund seeks high current return by investing
in obligations of, or securities guaranteed by, the U.S. government, its
agencies or instrumentalities (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").

Short-Term High Grade Bond Fund seeks current income, preservation of capital
and liquidity. The fund seeks to achieve its objective by investing its assets
in corporate debt securities, bank obligations and securities issued by the
U.S. government and its agencies and instrumentalities.

Smith Barney Managed Governments Fund Inc. seeks high current income consistent
with liquidity and safety of capital. The fund invests substantially all of its
assets in U.S. government securities. The fund's portfolio consists primarily
of mortgage-backed securities issued or guaranteed by GNMA, the Federal
National Mortgage Association ("FNMA") and FHLMC.

Smith Barney Diversified Strategic Income Fund seeks high current income
primarily through investment in fixed income securities, including high yield
securities. The fund attempts to achieve its objective by allocating and
reallocating its assets primarily among various types of fixed-income
securities such as: obligations issued or guaranteed as to principal and
interest by the U.S. government; mortgage-related securities issued by various
governmental and non-governmental entities; domestic and foreign corporate
securities; and foreign government securities.

Global Government Bond Portfolio seeks as high a level of current income and
capital appreciation as is consistent with its policy of investment principally
in high quality bonds of the U.S. and foreign governments.

Cash Portfolio is a money market fund that seeks maximum current income and
preservation of capital by investing in high quality U.S. dollar denominated
short-term debt securities.

Smith Barney Convertible Fund seeks current income and capital appreciation by
investing in investment and non-investment grade convertible securities and in
combinations of non-convertible fixed-income securities and warrants or call
options that together resemble convertible securities.

Temporary defensive investments (all portfolios)

Each of the portfolios may depart from its principal investment strategies in
response to adverse market, economic or political conditions by taking
temporary defensive positions in the Cash Portfolio, a series of Smith Barney
Money Funds, Inc., repurchase agreements or cash. If a portfolio takes a
temporary defensive position, it may be unable to achieve its investment
objective.

                                      22



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>




Investment Strategies and Related Risks


Portfolio turnover (all portfolios)

Each underlying fund may engage in active and frequent trading to achieve its
principal investment strategies. As a result, an underlying fund may realize
and distribute to a portfolio higher capital gains, which could increase the
tax liability for the portfolio's shareholders. Frequent trading also increases
transaction costs, which could detract from an underlying fund's performance.

Non-diversification

Each portfolio is not diversified, which means that it can invest a higher
percentage of its assets in any one underlying fund than a diversified
portfolio. Being non-diversified may magnify a portfolio's losses from adverse
events affecting a particular underlying fund. However, each of the underlying
funds (except Global Government Bond Portfolio)
is diversified.

Changes in allocations

The underlying funds in which the portfolios may invest, and the range of
assets allocated to each fund, may be changed by the board of directors from
time to time. Similarly, the target allocation between equity and fixed income
oriented investments may be adjusted from time to time. If the target limits
for investment in a particular fund are exceeded or are not met because of cash
flows or changes in the market value of the shares of the underlying funds, the
investment manager may but is not required to adjust the portfolio's holdings.

High yield securities

Certain of the underlying funds can invest all or a portion of their assets in
high yield securities. High yield securities involve a substantial risk of
loss. These securities are considered speculative with respect to the issuer's
ability to pay interest and principal and are susceptible to default or decline
in market value because of adverse economic and business developments. The
market values for high yield securities tend to be very volatile, and these
securities are less liquid than investment grade debt securities. Underlying
funds that hold these issues are subject to the following specific risks:

 . Increased price sensitivity to changing interest rates

 . Greater risk of loss because of default or declining credit quality

 . Adverse company specific events are more likely to render the issuer unable
  to make interest and/or principal payments

 . A negative perception of the high yield market may develop, depressing the
  price and liquidity of high yield securities. This negative perception could
  last for a significant period of time

Foreign securities

Certain of the underlying funds focus upon foreign securities and other
underlying funds may invest a portion of their assets outside the U.S.
Investing in non-U.S. issuers involves unique risks compared to investing in
the securities of U.S. issuers. These risks are more pronounced to the extent a
fund invests in issuers in countries with emerging markets. These risks may
include:

 . Less information about non-U.S. issuers or markets may be available because
  of less rigorous disclosure and accounting standards or regulatory practices

 . Many non-U.S. markets are smaller, less liquid and more volatile than U.S.
  markets. In a changing market, the adviser may not be able to sell the fund's
  portfolio securities in amounts and at prices the adviser considers
  reasonable

 . The U.S. dollar may appreciate against non-U.S. currencies or a foreign
  government may impose restrictions on currency conversion or trading

 . The economies of non-U.S. countries may grow at a slower rate than expected
  or may experience a downturn or recession

 . Economic, political and social developments may adversely affect the
  securities markets

 . Foreign governmental obligations may involve the risk of debt moratorium,
  repudiation or renegotiation and the fund may be unable to enforce its rights
  against the issuers

Economic and Monetary Union (EMU) and the introduction of a single European
currency (the Euro), which began on January 1, 1999, may increase uncertainties
relating to investment in European markets. Among other things, EMU entails
sharing a single currency and official interest rate and adhering to limits on
government borrowing by participating countries. EMU is driven by the
expectation of economic benefits; however, there are significant risks
associated with EMU. Monetary and economic union on this scale has not been
attempted before, and there is uncertainty whether participating countries will
remain committed to EMU in the face of changing economic conditions.

                                      23



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



                              Investment Strategies and Related Risks, continued



Small capitalization issuers

Certain of the underlying funds focus on small capitalization companies.
Investing in small companies involves unique risks. Compared to large
companies, small companies, and the market for their common stocks, are likely
to:


 . Be more sensitive to changes in the economy, earnings results and investor
  expectations


 . Have more limited product lines and capital resources


 . Experience sharper swings in market values


 . Be harder to sell at the times and prices the fund thinks appropriate


 . Offer greater potential for gain and loss

Derivatives

Certain of the underlying funds may, but need not, use derivative contracts,
such as futures and options on securities, securities indices or currencies;
options on these futures; forward currency contracts; and interest rate or
currency swaps for any of the following purposes:


 . To hedge against the economic impact of adverse changes in the market value
  of its securities, because of changes in stock market prices, currency
  exchange rates or interest rates


 . As a substitute for buying or selling securities

A derivative contract will obligate or entitle an underlying fund to deliver or
receive an asset or cash payment based on the change in value of one or more
securities, currencies or indices. Even a small investment in derivative
contracts can have a big impact on an underlying fund's stock market, currency
and interest rate exposure. Therefore, using derivatives can disproportionately
increase losses and reduce opportunities for gains when stock prices, currency
rates or interest rates are changing. The underlying fund may not fully benefit
from or may lose money on derivatives if changes in their value do not
correspond accurately to changes in the value of the fund's holdings. The other
parties to certain derivative contracts present the same types of credit risk
as issuers of fixed income securities. Derivatives can also make the underlying
fund less liquid and harder to value, especially in declining markets.

Investment Policies (all portfolios)

Each portfolio's investment policies, including the particular underlying funds
in which each portfolio may invest and the equity/fixed income targets
applicable to each portfolio, generally may be changed by the board of
directors without shareholder approval.

                                      24



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



Management

Portfolio manager


The portfolios' investment manager is Smith Barney Fund Management LLC ("SBFM")
(formerly known as SSB Citi Fund Management LLC), an affiliate of Salomon Smith
Barney Inc. ("Salomon Smith Barney"). The manager's address is 7 World Trade
Center, New York, NY 10048. The manager selects the portfolios' investments and
oversees their operations. The manager and Salomon Smith Barney are
subsidiaries of Citigroup Inc. Citigroup businesses produce a broad range of
financial services--asset management, banking and consumer finance, credit and
charge cards, insurance, investments, investment banking and trading--and use
diverse channels to make them available to consumer and corporate customers
around the world.

R. Jay Gerken, a Managing Director of Salomon Smith Barney, has been
responsible for the day-to-day operations of the portfolios since inception.
Mr. Gerken has been with Salomon Smith Barney or companies that are now part of
Salomon Smith Barney since 1988.

Management fees

MANAGEMENT FEES PAID DURING THE FISCAL YEAR ENDED JANUARY 31, 2001*
(as % of average daily net assets)

<TABLE>
<CAPTION>
        Global**    High Growth** Growth** Balanced Conservative** Income**

     ----------------------------------------------------------------------
     <S>            <C>           <C>      <C>      <C>            <C>
         0.35%              0.35%    0.35%    0.35%          0.35%    0.35%

     ----------------------------------------------------------------------
</TABLE>
*  For more information regarding the management fees of the underlying funds,
   please consult the Statement of Additional Information ("SAI").

** For the fiscal year ended January 31, 2001, the Global, High Growth, Growth,
   Conservative and Income Portfolios, did not incur management fees because no
   Class Z shares were outstanding.

At a meeting of shareholders of each portfolio held on March 2, 2001, the
shareholders of each portfolio approved new Asset Allocation and Administration
Agreements for each portfolio. These new Asset Allocation and Administration
Agreements are anticipated to become effective on or about July 6, 2001 and
provide for a management fee of 0.20% of each portfolio's average daily net
assets. The new Asset Allocation and Administration Agreements provide for a
decrease in the management fee and an effective increase in total annual fund
operating expenses.


The new fee structure will be subject to a voluntary fee waiver and expense
reimbursement in order to maintain an expense cap on each of the portfolios
that is no more than 0.20% higher than current expenses, from 0.35% to 0.55%.
This expense cap will not be changed in the future without the approval of the
Board of Directors of Smith Barney Allocation Series Inc. ("Allocation
Series").


Transfer agent and shareholder servicing agent

Citi Fiduciary Trust Company serves as the portfolios' transfer agent and
shareholder servicing agent (the "transfer agent"). Pursuant to a sub-transfer
agency andservices agreement with the transfer agent, PFPC Global Fund Services
serves as the portfolios' sub-transfer agent to render certain shareholder
record keeping and accounting services and functions.

Possible conflict of interest


The Directors and officers of Allocation Series also serve in similar positions
with many of the underlying Smith Barney funds. Thus, if the interests of a
portfolio and the underlying 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 Allocation Series fulfill their fiduciary duties to that
portfolio and the underlying funds. The Directors of the Allocation Series
believe they have structured each portfolio to avoid these concerns. However,
conceivably a situation could occur where proper action for the Allocation
Series or a portfolio separately could be adverse to the interests of an
underlying fund, or the reverse could occur. If such a possibility -arises, the
directors and officers of the Allocation Series, the affected underlying funds
and SBFM 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 funds have
been adopted by the Allocation Series to minimize this possibility, and close
and continuous monitoring will be exercised to avoid, insofar as is possible,
these concerns.

                                      25



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



Buying, Redeeming and Exchanging Class Z Shares

Through a qualified plan

You may buy, redeem or exchange Class Z shares only through a "qualified plan."
A qualified plan is a tax-exempt employee benefit or retirement plan of Salomon
Smith Barney, Inc. or one of its affiliates.

There are no minimum investment requirements for Class Z shares. However, each
portfolio reserves the right to change this policy at any time.

Buying

Orders to buy Class Z shares must be made in accordance with the terms of a
qualified plan. If you are a participant in a qualified plan, you may place an
order with your plan to buy Class Z shares at net asset value, without any
sales charge. Payment is due to Salomon Smith Barney on settlement date, which
is the third business day after your order is accepted. If you make payment
prior to this date, you may designate a temporary investment (such as a money
market fund of the Smith Barney funds) for payment until settlement date. Each
portfolio reserves the right to reject any order to buy shares and to suspend
the offering of shares for a period of time.

Redeeming

Qualified plans may redeem their shares on any day on which each portfolio
calculates its net asset value. You should consult the terms of your qualified
plan for special redemption provisions.

Exchanging

You should consult your qualified plan for information about available exchange
options.

Other Information


Each portfolio has the right to:

 . Suspend the offering of shares

 . Waive or change minimum and additional investment amounts

 . Reject any purchase or exchange order

 . Change, revoke or suspend the exchange privilege

 . Suspend telephone transactions

                                      26



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



Dividends, Distributions and Taxes

An investment in a portfolio will have the following consequences for a
qualified plan as the owner of shares in the fund. Qualified plan participants
should consult their plan document or tax advisors about the tax consequences
of participating in a qualified plan.

Dividends Each portfolio generally pays dividends from net investment income
periodically and makes capital gain distributions, if any, once a year,
typically in December. Each portfolio may pay additional distributions and
dividends at other times if necessary for the fund to avoid a federal tax.
Capital gain distributions and dividends are reinvested in additional Class Z
shares. Each portfolio expects distributions to be primarily from income. No
sales charge is imposed on reinvested distributions or dividends.


Taxes Provided that a qualified plan has not borrowed to finance its investment
in a portfolio, it will not be taxable on the receipt of dividends and
distributions from such portfolio.

                                      27



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



Share Price

Qualified plans may buy, exchange or redeem Class Z shares of each portfolio at
their net asset value next determined after receipt of your request in good
order. Each portfolio's net asset value is the value of its assets minus its
liabilities. Net asset value is calculated separately for each class of shares.
Each portfolio calculates its net asset value every day the New York Stock
Exchange is open. The Exchange is closed on certain holidays listed in the
Statement of Additional Information. This calculation is based on the net asset
value of the underlying funds, which is calculated when regular trading closes
on the Exchange (normally 4:00 p.m., Eastern time). If the New York Stock
Exchange closes early, each portfolio and each underlying fund accelerates the
calculation of its net asset value to the actual closing time.

International markets may be open on days when U.S. markets are closed and the
value of foreign securities owned by an underlying fund could change on days
when you can not buy or redeem shares.

Each portfolio and underlying fund generally values its fund securities based
on market prices or quotations. To the extent an underlying fund holds
securities denominated in a foreign currency, the fund's currency conversions
are done when the London Stock Exchange closes. When reliable market prices or
quotations are not readily available, or when the value of a security held by
an underlying fund has been materially affected by events occurring after a
foreign exchange closes, the fund may price those securities at fair value.
Fair value is determined in accordance with procedures approved by the fund's
board. A fund that uses fair value to price securities may value those
securities higher or lower than another fund using market quotations to price
the same securities.

Short-term investments that have a maturity of more than 60 days are generally
valued based on market prices or quotations. Short-term investments that have a
maturity of 60 days or less are valued at amortized cost. Using this method, a
portfolio and underlying fund constantly amortizes over the remaining life of a
security the difference between the principal amount due at maturity and the
cost of the security to the portfolio and underlying fund.

In order to buy, redeem or exchange shares at that day's price, you must place
your order with your qualified plan before the New York Stock Exchange closes.
If the Exchange closes early, you must place your order prior to the actual
closing time. Otherwise, you will receive the next business day's price.

Your qualified plan must transmit all orders to buy, exchange or redeem shares
to the portfolios' agent before the agent's close of business.

                                      28



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



Financial Highlights


The financial highlights tables are intended to help you understand the
performance of each portfolio's Class Z shares since inception. Certain
information reflects financial results for a single share. Total return
represents the rate that a shareholder would have earned (or lost) on a
portfolio share assuming reinvestment of all dividends and distributions. The
information in the following tables was audited by KPMG LLP, independent
auditors, whose report, along with each portfolio's financial statements is
included in the annual report (available upon request). No information is
presented for the Global Portfolio because no Class Z shares were outstanding
for the years shown.
For a share of capital stock outstanding throughout each year ended January 31:

---------------------------------------------------------------------
<TABLE>
<CAPTION>
                                        High Growth Portfolio*
Class Z Shares                      2000(1) 1999(1) 1998(1) 1997(2)

-------------------------------------------------------------------
<S>                                 <C>     <C>     <C>     <C>
Net asset value, beginning of year   $14.86  $12.97  $12.41  $12.24

-------------------------------------------------------------------
Income from operations:
  Net investment income(3)             0.63    0.13    0.17    0.01
  Net realized and unrealized gain     2.24    2.36    0.89    0.16

-------------------------------------------------------------------
Total income from operations           2.87    2.49    1.06    0.17

-------------------------------------------------------------------
Less distributions from:
  Net investment income              (0.57)  (0.12)  (0.17)      --
  Net realized gains                 (0.35)  (0.48)  (0.33)      --

-------------------------------------------------------------------
Total distributions                  (0.92)  (0.60)  (0.50)      --

-------------------------------------------------------------------
Net asset value, end of year         $16.81  $14.86  $12.97  $12.41

-------------------------------------------------------------------
Total return                         19.26%  19.45%   8.58% 1.39%++

-------------------------------------------------------------------
Net assets, end of year (000's)     $10,038  $6,712  $3,037      $4

-------------------------------------------------------------------
Ratios to average net assets:
  Expenses                            0.35%   0.35%   0.35%  0.35%+
  Net investment income                4.00    0.95    1.25  3.33**

-------------------------------------------------------------------
Portfolio turnover rate                  2%     21%     39%      0%

-------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from January 17, 1997 (inception date) to January 31, 1997.

(3) Net investment income per share includes short-term capital gain
    distributions from underlying funds.

 *  There were no Class Z shares outstanding for the year ended January 31,
    2001.

**  Not annualized.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

---------------------------------------------------------------------
<TABLE>
<CAPTION>
                                           Growth Portfolio*
Class Z Shares                      2000(1) 1999(1) 1998(1) 1997(2)

-------------------------------------------------------------------
<S>                                 <C>     <C>     <C>     <C>
Net asset value, beginning of year   $14.41  $12.99  $12.32  $12.18

-------------------------------------------------------------------
Income from operations:
  Net investment income(3)             0.55    0.30    0.73    0.02
  Net realized and unrealized gain     1.00    1.81    0.75    0.12

-------------------------------------------------------------------
Total income from operations           1.55    2.11    1.48    0.14

-------------------------------------------------------------------
Less distributions from:
  Net investment income              (0.58)  (0.32)  (0.35)      --
  Net realized gains                 (0.35)  (0.37)  (0.46)      --

-------------------------------------------------------------------
Total distributions                  (0.93)  (0.69)  (0.81)      --

-------------------------------------------------------------------
Net asset value, end of year         $15.03  $14.41  $12.99  $12.32

-------------------------------------------------------------------
Total return                         10.76%  16.47%  12.08% 1.15%++

-------------------------------------------------------------------
Net assets, end of year (000's)      $8,080  $6,190  $2,908      $6

-------------------------------------------------------------------
Ratios to average net assets:
  Expenses                            0.35%   0.35%   0.35%  0.35%+
  Net investment income                3.72    2.18    5.24  5.30**

-------------------------------------------------------------------
Portfolio turnover rate                  2%     10%     41%      0%

-------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.
(2) For the period from January 17, 1997 (inception date) to January 31, 1997.

(3) Net investment income per share includes short-term capital gain
    distributions from underlying funds.

 *  There were no Class Z shares outstanding for the year ended January 31,
    2001.

**  Not annualized.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

                                      29



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>



                                                 Financial Highlights, continued


For a share of capital stock outstanding throughout each year ended January 31:


--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                              Balanced Portfolio
Class Z Shares                      2001(1) 2000(1) 1999(1) 1998(1) 1997(2)

---------------------------------------------------------------------------
<S>                                 <C>     <C>     <C>     <C>     <C>
Net Asset Value, Beginning of Year   $12.55  $12.95  $12.61  $12.13  $12.10

---------------------------------------------------------------------------
Income From Operations:
  Net investment income(3)             0.44    0.45    0.45    1.11   0.00#
  Net realized and unrealized gain     0.71    0.13    0.74    0.30    0.03

---------------------------------------------------------------------------
Total Income From Operations           1.15    0.58    1.19    1.41    0.03

---------------------------------------------------------------------------
Less Distributions From:
  Net investment income              (0.69)  (0.52)  (0.48)  (0.57)      --
  Net realized gains                 (0.70)  (0.46)  (0.37)  (0.36)      --

---------------------------------------------------------------------------
Total Distributions                  (1.39)  (0.98)  (0.85)  (0.93)      --

---------------------------------------------------------------------------
Net Asset Value, End of Year         $12.31  $12.55  $12.95  $12.61  $12.13

---------------------------------------------------------------------------
Total Return                          9.65%   4.58%   9.70%  11.82% 0.25%++

---------------------------------------------------------------------------
Net Assets, End of Year (000's)        $574 $29,653 $36,726  $2,919      $2

---------------------------------------------------------------------------
Ratios to Average Net Assets:
  Expenses                            0.35%   0.35%   0.35%   0.35%  0.35%+
  Net investment income                3.70    3.48    3.50    8.31   5.39*

---------------------------------------------------------------------------
Portfolio Turnover Rate                  5%      4%     10%     23%      0%

---------------------------------------------------------------------------
</TABLE>
(1) Per share amounts have been calculated using the monthly average shares
    method.

(2) For the period from January 17, 1997 (inception date) to January 31, 1997.


(3) Net investment income per share includes short-term capital gain
    distributions from underlying funds.
 #  Amount represents less than $0.01.
 *  Not annualized.
 ++ Total return is not annualized, as it may not be representative of the
    total return for the year.
 +  Annualized.

For a Class Z share of capital stock outstanding throughout each year ended
January 31:


--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                           Conservative Portfolio* Income Portfolio*
                                               1998(3)     1997(1)    1998   1997(1)

------------------------------------------------------------------------------------
<S>                                        <C>         <C>         <C>     <C>
Net asset value, beginning of year              $11.90      $11.89  $11.53    $11.55

------------------------------------------------------------------------------------
Income (loss) from operations:
  Net investment income(2)                        0.84        0.01    0.84      0.07
  Net realized and unrealized gain (loss)         0.56          --    0.49    (0.03)

------------------------------------------------------------------------------------
Total income from operations                      1.40        0.01    1.33      0.04

------------------------------------------------------------------------------------
Less distributions from:
  Net investment income                         (0.73)          --  (0.82)    (0.06)
  Net realized gains                            (0.40)          --  (0.29)        --

------------------------------------------------------------------------------------
Total distributions                             (1.13)          --  (1.11)    (0.06)

------------------------------------------------------------------------------------
Net asset value, end of year                    $12.17      $11.90  $11.75    $11.53

------------------------------------------------------------------------------------
Total return                                    12.09%    0.08%(4)  11.88%  0.35%(4)

------------------------------------------------------------------------------------
Net assets, end of year (000's)                   $638          $1    $691      $0.2

------------------------------------------------------------------------------------
Ratios to average net assets:
  Expenses                                       0.35%    0.35%(5)   0.35%  0.35%(5)
  Net investment income                           6.42     6.15(6)    6.85   6.86(6)

------------------------------------------------------------------------------------
Portfolio turnover rate                            28%          0%     28%        0%

------------------------------------------------------------------------------------
</TABLE>
(1) For the period from January 17, 1997 (inception date) to January 31, 1997.
(2) Net investment income per share includes short-term capital gain
    distributions from underlying funds.
(3) Per share amounts calculated using the monthly average shares method.
(4) Total return is not annualized, as it may not be representative of the
    total return for the year.
(5) Annualized.
(6) Not annualized

 *  There were no Class Z shares outstanding for the years ended January 31,
    2001, January 31, 2000 and January 31, 1999.

                                      30



 THE SMITH BARNEY ALLOCATION SERIES CLASS Z SHARES
<PAGE>




                   (This page is intentionally left blank.)


<PAGE>



Smith Barney
Allocation
Series Inc.--Class Z

                                         [LOGO] Smith Barney
                                                Mutual Funds
                                Your Serious Money. Professionally Managed./SM/

Global Portfolio                                Balanced Portfolio

High Growth Portfolio                           Conservative Portfolio

Growth Portfolio                                Income Portfolio



--------------------------------------------------------------------------------

Additional Information About the Portfolios

SHAREHOLDER REPORTS
Annual and semiannual reports to shareholders provide additional information
about the portfolios' investments. These reports discuss the market conditions
and investment strategies that significantly affected- each portfolio's
performance during its last fiscal year or period.

The portfolios send only one report to a household if more than one account has
the same address. Contact your qualified plan or the transfer agent if you do
not want this policy to apply to you.

STATEMENT OF ADDITIONAL INFORMATION
The statement of additional information provides more detailed information
about each portfolio. It is incorporated by reference into (is legally part of)
this prospectus.


You can make inquiries about the portfolios or obtain shareholder reports or
the statement of additional information (without charge), by contacting your
qualified plan, by calling the portfolios at 1-800-451-2010), or by writing to
the portfolios at Smith Barney Mutual Funds, 7 World Trade Center, 39th Floor,
New York, New York 10048.

Information about the portfolios (including the SAI) can be reviewed and copied
at the Securities and Exchange Commission's (the "Commission") Public Reference
Room in Washington, D.C. In addition, information on the operation of the
Public Reference Room may be obtained by calling the Commission at
1-202-942-8090. Reports and other information about the portfolios are
available on the EDGAR Database on the Commission's Internet site at
http://www.sec.gov. Copies of this information may be obtained for a
duplicating fee by electronic request at the following E-mail address:
publicinfo@sec.gov, or by writing the Commission's Public Reference Section,
Washington, D.C. 20549-0102.

If someone makes a statement about the portfolios that is not in this
prospectus, you should not rely upon that information. Neither the portfolios
nor the distributor is offering to sell shares of the portfolios to any person
to whom the portfolios may not lawfully sell their shares.

Your Serious Money. Professionally Managed.  is a service mark of Salomon Smith
Barney Inc.

(Investment Company Act file no. 811-07435)

[FD 01233 5/01]



PART B

   May 31, 2001

Statement of Additional Information
Smith Barney Allocation Series Inc.

High Growth Portfolio
Balanced Portfolio
Growth Portfolio
Conservative Portfolio
Global Portfolio
Income Portfolio

7 World Trade Center, New York, New York 10048
(800) 451-2010

This Statement of Additional Information ("SAI")
expands upon and supplements the information contained
in the current Prospectus of Smith Barney Allocation
Series Inc. (the "Allocation Series" or the "fund")
(formerly known as Smith Barney Concert Allocation
Series Inc.) dated May 31, 2001 for Class A, Class B,
Class L, Class Y and Class Z shares of the Global
Portfolio, 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 Allocation Series currently offers nine investment
portfolios, six of which are described herein.  Each
portfolio seeks to achieve its objective by investing
in a number of open-end management investment
companies or series thereof ("underlying funds") for
which Salomon Smith Barney Inc. ("Salomon Smith
Barney") now or in the future acts as principal
underwriter or for which Salomon Smith Barney, Smith
Barney Fund Management LLC ("SBFM" or the "manager")
(formerly known as SSB Citi Fund Management LLC) or
Travelers Investment Management Company ("TIMCO") now
or in the future acts as investment adviser.  The
prospectus may be obtained from a Salomon Smith Barney
Financial Consultant or a PFS Investments registered
representative, a broker-dealer, financial
intermediary, financial institution, (each called a
"Service Agent") or by writing or calling the
Allocation Series at the address or telephone number
listed above. This SAI, although not in itself a
prospectus, is incorporated by reference into the
prospectus in its entirety.


CONTENTS	Page
Why Invest in the Allocation Series
2
Directors and Executive Officers of the Allocation
Series................................................................
2
Investment Objectives, Management Policies and Risk
Factors.........................................................
4
Additional Risk Factors.
20
Investment Restrictions
25
Portfolio Turnover.
27
Purchase of Shares..
27
Redemption of Shares..
35
Exchange Privilege.
37
Taxes.
38
Performance......
42
Valuation of Shares....
48
Investment Management and Other Services.
48
Additional Information About the Portfolios..
57
Financial Statements..
60
Appendix - Ratings of Debt Obligations..
A-1

WHY INVEST IN THE ALLOCATION 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 experience, 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
diversification.  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.

Each of the portfolios invests in a select
group of underlying funds suited to the portfolio's
particular investment objective.  The allocation of
assets among underlying funds within each portfolio
is determined by SBFM 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 funds.  The
Allocation Series is not designed as a market timing
vehicle, but rather as a simple and conservative
approach to helping investors meet retirement and
other long-term goals.

DIRECTORS AND EXECUTIVE OFFICERS OF THE ALLOCATION
SERIES

Overall responsibility for management and
supervision of the fund rests with the fund's Board
of Directors.  The Directors approve all significant
agreements between the portfolios and the companies
that furnish services to the portfolios, including
agreements with the portfolios' distributor,
investment adviser, custodian and Transfer Agent.
The day-to-day operations of the portfolios are
delegated to the portfolios' manager, SBFM.
The names of the directors and executive officers of
the Allocation 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 Allocation 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 80). Consultant
to companies in the financial services industry;
Director of Brinson Partners; Nicholas-Applegate
(each a registered investment adviser); Legend
Properties, a real estate management company; Banyan
Realty Trust; and Banyan Land Fund II. Director or
trustee of 2 investment companies associated with
Citigroup Inc. ("Citigroup"). His address is 6001 N.
62nd Place, Paradise Valley, Arizona 85253.

Martin Brody, Director (Age 79).  Consultant,
HMK Associates; Retired Vice Chairman of the Board
of Restaurant Associates Industries, Inc. Director
or trustee of 21 investment companies associated
with Citigroup. His address is c/o HMK Associates,
30 Columbia Turnpike, Florham Park, New Jersey
07932.

H. John Ellis, Jr., Director (Age 74).
Retired. Director or trustee of 2 investment
companies associated with Citigroup.His address is
858 East Crystal Downs Drive, Frankfort, Michigan
49635.

Stephen E. Kaufman, Director (Age 69).
Attorney. Director or trustee of 13 investment
companies associated with Citigroup. His address is
277 Park Avenue, New York, New York 10172.
Armon E. Kamesar, Director (Age 74).  Chairman
of TEC, an international organization of Chief
Executive Officers; Trustee, U.S. Bankruptcy Court.
Director or trustee of 2 investment companies
associated with Citigroup.  His address is 7328
Country Club Drive, La Jolla, California 92037.

*Heath B. McLendon, Chairman of the Board (Age
68).  Managing Director of Salomon Smith Barney, and
President of SBFM and TIA.  Mr. McLendon also serves as
Chairman or Co-Chairman of 77 investment companies
associated with Citigroup.  His address is 7 World
Trade Center, New York, New York 10048.

Lewis E. Daidone, Senior Vice President and
Treasurer (Age 43).  Managing Director of Salomon Smith
Barney; Director and Senior Vice President of SBFM and
TIA.  Mr. Daidone also serves as Senior Vice President
or Executive Vice President and Treasurer of 83
investment companies associated with Citigroup.  His
address is 125 Broad Street, New York, New York 10004.

Jay Gerken, Vice President and Investment Officer
(Age 49).  Managing Director of Salomon Smith Barney
and portfolio manager of four investment companies
associated with Citigroup.  His address is 7 World
Trade Center, New York, New York 10048.

Irving David, Controller (Age 40). Director of
Salomon Smith Barney. Controller or Assistant
Treasurer of 43 investment companies associated with
Citigroup; His address is 125 Broad Street, New York,
New York 10004.

Christina T. Sydor, Secretary (Age 50).  Managing
Director of Salomon Smith Barney; General Counsel and
Secretary of SBFM and TIA.  Ms. Sydor also serves as
Secretary of 61 investment companies associated with
Citigroup. Her address is 7 World Trade Center, New
York, New York 10048.

Each Director also serves as a director, trustee,
consultant and/or general partner of certain other
mutual funds for which Salomon Smith Barney serves as
the principal distributor.  As of May 11, 2001, the
Directors and officers of the portfolios, as a group,
owned less than 1.00% of the outstanding common stock
of the portfolios.

No officer, director or employee of Salomon Smith
Barney, PFS Distributors Inc. ("PFS") or any of their
affiliates will receive any compensation from the
Allocation Series for serving as an officer or
director of the Allocation Series.  The Allocation
Series pays each director who is not an officer,
director or employee of Salomon Smith Barney or PFS or
any of their affiliates a fee of $10,000 per annum
plus $100 per portfolio per meeting attended and
reimburses travel and out-of-pocket expenses.  In
addition, each such director is paid $100 per
telephonic meeting attended.  By the end of the
calendar year in which a Director attains the age of
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 Allocation
Series' Directors.  All Directors are reimbursed for
travel and out-of-pocket expenses incurred in
attending such meetings. . For the fiscal year ended
January 31, 2001, the directors were reimbursed, in
the aggregate, $10,355 for travel and out-of-pocket
expenses.


The following table shows the compensation paid by
Allocation Series to each incumbent Director for the
fiscal year ended January 31, 2001:






Name

Aggregate
Compensation
from
Allocation
Series
Pension or
Retirement
Benefits
Accrued as
Expense
of Allocation
Series


Total
Compensation
From
Fund
Complex**

Total
Number
of Funds
Served in
Complex
Heath B. McLendon*
None
None
None
77
Walter Auch
$18,100
None
$52,800
2
Martin Brody
15,900
None
132,950
21
H. John Ellis
19,200
None
54,900
2
Armon E. Kamesar
19,300
None
55,100
2
Stephen E. Kaufman
19,300
None
114,400
13
*	Designates "interested director" of Allocation Series.
**	As of December 31, 2000.

INVESTMENT OBJECTIVES, MANAGEMENT POLICIES AND RISK
FACTORS

The Allocation Series is an open-end, non-diversified
management investment company.  The prospectus
discusses the investment objectives of the portfolios
and each of the underlying funds in which the
portfolios may invest.  In pursuing their investment
objectives and policies, each of the underlying funds
is permitted to engage in a wide-range of investment
policies.  Because the portfolios invest in the
underlying 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 funds pursuing such policy.
This section contains supplemental information
concerning the types of securities and other
instruments in which the underlying funds may invest
(and repurchase agreements in which the portfolios
and/or the underlying funds may invest), the investment
policies and portfolio strategies the underlying 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 funds will be
achieved.

The Articles of Incorporation of the Allocation Series
permit the Board of Directors to establish additional
portfolios of the Allocation 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 are established and may differ from those
set forth in the prospectus and this SAI.

EQUITY SECURITIES
Common Stocks.  Certain of the underlying funds
invest primarily in common stocks.  Common stocks
are shares of a corporation or other entity that
entitle the holder to a pro rata share of the
profits of the corporation, if any, without
preference over any other shareholder or class of
shareholders, including holders of the entity's
preferred stock and other senior equity.  Common
stock usually carries with it the right to vote and
frequently an exclusive right to do so.
Preferred Stock.  Certain of the underlying funds
invest in preferred stocks which, like debt
obligations, have characteristics similar to fixed-
income securities.  Holders 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 preferred stock may be
cumulative, and all cumulative dividends usually
must be paid prior to common shareholders receiving
any 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.

Foreign Investments.  The portfolios will each
invest in certain underlying funds that invest all
or a portion of their assets in securities of non-
U.S. issuers.  Foreign investments include non-
dollar denominated securities traded outside the
U.S. and dollar-denominated securities traded in the
U.S. (such as American Depositary Receipts).
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 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 fund may not be
registered with, nor the issuers thereof be subject
to reporting requirements of, the Securities and
Exchange Commission (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 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 and dividends payable on a fund's
foreign securities may be subject to foreign
withholding taxes, and 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 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.  In
addition, 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 fund or
a portfolio investing in such fund.
American, European and Continental Depositary
Receipts.  Certain of the underlying funds may
invest in the securities of foreign and domestic
issuers in the form of American Depositary Receipts
("ADRs") and European Depositary 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 evidencing
ownership of underlying securities issued by a
foreign corporation.  EDRs, which sometimes are
referred to as Continental Depositary Receipts
("CDRs"), are receipts issued in Europe typically by
foreign banks and trust companies evidencing
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.
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 fund in units or attached to securities
may be deemed to be without value.
FIXED-INCOME SECURITIES
General.  Fixed income securities 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 underlying funds.  The
market value of the fixed-income obligations in
which the underlying 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 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 Investors
Service ("Moody's") (Aaa or Aa) or Standard & Poor's
Ratings Group ("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 characteristics
and changes in economic conditions or other
circumstances are more likely to lead to a weakened
capacity of their issuer to make principal and
interest payments than is the case with higher grade
securities.
High Yield Securities.  Certain of the underlying
funds may invest in securities rated below
investment grade; that is rated below Baa by Moody's
or BBB by S&P, or determined by the underlying
fund's adviser to be of comparable quality.
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 for additional
information on the bond ratings by Moody's and S&P.
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.
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 underlying 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
convertible securities differ from convertible
securities in certain respects, including that each
component of a synthetic convertible security has a
separate market value and responds differently to
market fluctuations.  Investing in synthetic
convertible securities involves the risks normally
involved in holding the securities comprising the
synthetic convertible security.
Convertible securities generally are subordinated to
other similar but non-convertible securities of the
same issuer, although convertible bonds, 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.
Money Market Instruments.  Money market instruments
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.
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, 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 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
underlying fund, as the case may be.
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 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 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
funds, consistent with their investment objective
and policies, may consider making investments in
such new types of securities.
Foreign Government Securities.  Among the foreign
government securities in which certain underlying
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.
Brady Bonds.  Certain of the underlying funds may
invest in Brady bonds which are debt securities,
generally denominated in U.S. dollars, issued under
the framework of the Brady Plan.  In restructuring
its external debt under the Brady Plan framework, a
debtor nation negotiates with its existing bank
lenders as well as multinational institutions such
as the International Bank for Reconstruction and
Development (the "World Bank") and the International
Monetary Fund (the "IMF").  Brady bonds may also be
issued in respect of new money being advanced by
existing lenders in connection with the debt
restructuring.  Under these arrangements with the
World Bank and/or the IMF, debtor nations have been
required to agree to the implementation of certain
domestic monetary and fiscal reforms including
liberalization of trade and foreign investment,
privatization of state-owned enterprises and
establishing targets for public spending and
borrowing.
Brady Bonds which have been issued to date are rated
in the categories "BB" or "B" by S&P or "Ba" or "B"
by Moody's or, in cases in which a rating by S&P or
Moody's has not been assigned, are generally
considered by the underlying fund's investment
adviser to be of comparable quality.
Agreements implemented under the Brady Plan to date
are designed to achieve debt and debt-service
reduction through specific options negotiated by a
debtor nation with its creditors.  As a result, the
financial packages offered by each country differ.
Brady bonds issued to date have traded at a deep
discount from their face value.  Certain sovereign
bonds are entitled to 'value recovery payments" in
certain circumstances, which constitute supplemental
interest payments but generally are not
collateralized.  Certain Brady bonds have been
collateralized as to principal due at maturity
(typically 30 years from the date of issuance) by
U.S. Treasury zero coupon bonds with a maturity
equal to the final maturity of such Brady Bonds,
although the collateral is not available to
investors until the final maturity of the Brady
Bonds.
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 fund, depending upon the principal amount
of 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 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.
Ratings as Investment Criteria.  In general, the
ratings of nationally recognized statistical rating
organizations ("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 by the
underlying 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 SAI 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 because of a corporate
reorganization, a fund will attempt to use
comparable ratings as standards for its investments
in accordance with its investment objective and
policies.

INVESTMENT PRACTICES
In attempting to achieve its investment objective,
an underlying fund may employ, among others, the
following portfolio strategies.
Repurchase Agreements.  The portfolios and the
underlying 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 underlying 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 an underlying 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 underlying 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 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 an underlying 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 fund will rely on the other party to
consummate the transaction and may be disadvantaged
if the other party fails to do so.
Fixed income 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, fixed income 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 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 securities equal to the
amount of the when-issued or delayed-delivery
commitments will be established.  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 funds have the ability to lend portfolio
securities to brokers, dealers and other financial
organizations.  A fund will not lend portfolio
securities to Salomon 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 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 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 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.
Short Sales.  Certain of the underlying 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 funds may enter into a short sale of
common stock such that when the short position is
open the fund involved owns an 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.
Restricted Securities.  Certain of the underlying
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
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 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 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 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 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.
DERIVATIVE TRANSACTIONS
Derivative transactions, including the options and
futures transactions described below, are used for a
number of reasons including: to manage exposure to
changes in interest rates, stock and bond prices and
foreign currencies; as an efficient means of
adjusting overall exposure to certain markets; to
adjust duration; to enhance income; and to protect
the value of portfolio securities.  Options and
futures can be volatile instruments, and involve
certain risks.  If the adviser to the underlying
fund applies a hedge at an inappropriate time or
judges market conditions incorrectly, options and
futures strategies may lower the underlying fund's
return.  Further losses could also be experienced if
the options and futures positions held by an
underlying fund were poorly correlated with its
other investments, or if it could not close out its
positions because of an illiquid secondary market.

Certain of the underlying funds may enter into stock
index, interest rate and currency futures contracts
(or options thereon, including swaps, caps, collars
and floors).  Certain underlying funds may also
purchase and sell call and put options, futures and
options contracts.
Options On Securities.  Certain of the underlying
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 funds, however, may engage in
option transactions only to hedge against adverse
price movements in the securities that they hold 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 forgoes 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 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 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 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 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 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
funds with option-writing authority may write
options on U.S. or foreign exchanges and in the
over-the-counter market.
An underlying 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 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 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 a closing transaction in a
particular option.  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 fund 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 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 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 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 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.
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 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.
Currency Transactions.  Certain of the underlying
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 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 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 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 it
anticipates.
Foreign Currency Options.  Certain underlying 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 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.
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 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 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
fund's 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.
Swap Agreements.  Among the hedging transactions into
which certain underlying 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 funds may enter into interest rate
swaps, caps and floors on either an asset-based or
liability-based basis, depending on whether a fund 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 entitlements 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 funds 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.

ADDITIONAL RISK FACTORS
Investment in Other Mutual Funds.  The investments of
each portfolio are concentrated in underlying funds so
each portfolio's performance is directly related to
the investment performance of the underlying funds
held by it.  The ability of each portfolio to meet its
investment objective is directly related to the
ability of the underlying funds to meet their
objectives as well as the allocation among those
underlying funds by SBFM.  There can be no assurance
that the investment objective of any portfolio or any
underlying fund will be achieved.  The portfolios will
only invest in Class Y shares of the underlying Smith
Barney funds and, accordingly, will not pay any sales
loads or 12b-1 or service or distribution fees in
connection with their investments in shares of the
underlying 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 funds in
which it is invested.
Non-Diversified Portfolios.  Each portfolio and
certain of the underlying funds are classified as non-
diversified investment companies under the 1940 Act.
Since, as a non-diversified investment company, each
such company is permitted to invest a greater
proportion of its assets in the securities of a
smaller number of issuers, each such company may be
subject to greater risk with respect to its individual
portfolio than an investment company that is more
broadly diversified.
Securities of Unseasoned Issuers.  Securities in which
certain of the underlying funds may invest may have
limited marketability and, therefore, may be subject
to wide fluctuations in market value.  In addition,
certain securities may lack a significant operating
history and be dependent on products or services
without an established market share.
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
renegotiation or rescheduling of debt payments.  In
addition, prospects for repaying 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.
Brady Bonds.  A significant amount of the Brady bonds
that the underlying funds may purchase have no or
limited collateralization, and an underlying fund will
be relying for payment of interest and (except in the
case of principal collateralized Brady bonds)
principal primarily on the willingness and ability of
the foreign government to make payment in accordance
with the terms of the Brady bonds.  In the event of a
default on collateralized Brady bonds for which
obligations are accelerated, the collateral for the
payment of principal will not be distributed to
investors, nor will such obligations be sold and the
proceeds distributed.  In light of the residual risk
of the Brady bonds and, among other factors, the
history of default with respect to commercial bank
loans by public and private entities of countries
issuing Brady bonds, investments in Brady bonds are to
be viewed as speculative.
Sovereign obligors in developing and emerging market
countries are among the world's largest debtors to
commercial banks, other governments, international
financial organizations and other financial
institutions.  These obligors have in the past
experienced substantial difficulties in servicing
their external debt obligations, which led to defaults
on certain obligations and the restructuring of
certain indebtedness.  Restructuring arrangements have
included, among other things, reducing and
rescheduling interest and principal payments by
negotiating new or amended credit agreements or
converting outstanding principal and unpaid interest
to Brady bonds, and obtaining new credit to finance
interest payments.  Holders of certain foreign
sovereign debt securities may be requested to
participate in the restructuring of such obligations
and to extend further loans to their issuers.  There
can be no assurance that the Brady bonds and other
foreign sovereign debt securities in which the funds
may invest will not be subject to similar
restructuring arrangements or to requests for new
credit which may adversely affect a fund's holdings.
Furthermore, certain participants in the secondary
market for such debt may be directly involved in
negotiating the terms of these arrangements and may
therefore have access to information not available to
other market participants.
Restrictions on Foreign Investment.  Some countries
prohibit or impose substantial restrictions on
investments in their capital markets, particularly
their equity markets, by foreign entities.  For
example, 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 substantially 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 settlement
procedures, and in certain markets there have been
times when settlements have been unable to keep pace
with the volume of securities transactions, making it
difficult to conduct such transactions.  Further,
satisfactory custodial services for investment
securities may not be available in some countries
having smaller capital markets, which may result in an
underlying fund incurring additional costs and delays
in transporting and custodying 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 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
because of 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 liability to the purchaser.  There is
generally less government supervision and regulation
of exchanges, brokers and issuers in countries having
smaller capital markets than there is in the U.S.
Economic and Monetary Union (EMU).  EMU began on
January 1, 1999 when 11 European countries adopted a
single currency -- the Euro.  EMU may create new
economic opportunities for investors, such as lower
interest rates, easier cross-border mergers,
acquisitions and similar restructurings, more
efficient distribution and product packaging and
greater competition.  Budgetary decisions remain in
the hands of each participating country, but are
subject to each country's commitment to avoid
"excessive deficits" and other more specific budgetary
criteria.  A European Central Bank is responsible for
setting the official interest rate within the Euro
zone.  EMU and the introduction of the Euro, however,
present unique risks and uncertainties for investors
in EMU-participating countries, including:  (i)
monetary and economic union on this scale has never
before been attempted; (ii) there is uncertainty
whether participating countries will remain committed
to EMU in the face of changing economic conditions;
(iii) instability within EMU may increase the
volatility of European markets and may adversely
affect the prices of securities of European issuers in
the funds' portfolios; (iv) there is uncertainty
concerning the fluctuation of the Euro relative to
non-Euro currencies during the transition period; and
(v) there is no assurance that interest rate, tax and
labor regimes of EMU-participating countries will
converge over time.  These and other factors may cause
market disruption and could adversely affect European
securities and currencies held by the funds.
Mortgage-Related Securities.  To the extent an
underlying fund purchases mortgage-related securities
at a premium, mortgage foreclosures and prepayments of
principal by mortgagors (which may be made at any time
without penalty) may result in some loss of the fund's
principal investment to the extent of the premium
paid.  The underlying fund's yield may be affected by
reinvestment of prepayments at higher or lower rates
than the original investment.  In addition, like other
debt securities, the values of mortgage-related
securities, including government and government-
related mortgage pools, generally will fluctuate in
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 fund may be forced
to sell these securities 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 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 fund's net assets could be adversely
affected.
High Yield Securities.  An underlying fund may invest
in high yield, below investment grade securities.
Investments in high yield securities are subject to
special risks, including a greater risk of loss of
principal and non-payment of interest.  An investor
should carefully consider the following factors before
investing in these funds.
Generally, high yield, below investment grade
securities offer a higher return potential than
higher-rated securities but involve greater volatility
of price and greater risk of loss of income and
principal, including the possibility of default or
bankruptcy of the issuers of such securities.  Below
investment grade securities and comparable non-rated
securities will likely have large uncertainties or
major risk exposure to adverse conditions and are
predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in
accordance with the terms of the obligation.  The
occurrence of adverse conditions and uncertainties
would likely reduce the value of securities held by an
underlying fund, with a commensurate effect on the
value of the underlying fund's shares.
The markets in which below investment grade securities
or comparable non-rated securities are traded
generally are more limited than those in which higher-
quality securities are traded.  The existence of
limited markets for these securities may restrict the
availability of securities for an underlying fund to
purchase and also may restrict the ability of an
underlying fund to obtain accurate market quotations
for purposes of valuing securities and calculating net
asset value or to sell securities at their fair value.
An economic downturn could adversely affect the
ability of issuers of high yield securities to repay
principal and pay interest thereon.
While the market values of below investment grade
securities and comparable non-rated securities tend to
react less to fluctuations in interest rate levels
than do those of higher-quality securities, the market
values of certain of these securities also tend to be
more sensitive to individual corporate developments
and changes in economic conditions than higher-quality
securities.  In addition, below investment grade
securities and comparable non-rated securities
generally present a higher degree of credit risk.
Issuers of below investment grade securities and
comparable non-rated securities are often highly
leveraged and may not have more traditional methods of
financing available to them so that their ability to
service their debt obligations during an economic
downturn or during sustained periods of rising
interest rates may be impaired.  The risk of loss
because of default by such issuers is significantly
greater because below investment grade securities and
comparable non-rated securities generally are
unsecured and frequently are subordinated to the prior
payment of senior indebtedness.  An underlying fund
may incur additional expenses to the extent it is
required to seek recovery upon a default in the
payment of principal or interest on its portfolio
holdings.
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.
Repurchase Agreements.  Repurchase agreements, as
utilized by an underlying fund or a portfolio of the
Allocation Series, could involve certain risks in the
event of default or insolvency of the other party,
including possible delays or restrictions upon the
ability of an underlying fund or a portfolio to
dispose of the underlying securities, the risk of a
possible decline in the value of the underlying
securities during the period in which an underlying
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 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 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 possible
delays in receiving additional collateral or in the
recovery of the securities or possible loss of rights
in the collateral should the borrower fail
financially.  Loans will be made to firms deemed by
the adviser to the underlying 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.
Leverage.  Certain of the underlying funds may borrow
from banks, on a secured or unsecured basis, in order
to leverage their portfolios.  Leverage creates an
opportunity for increased returns to shareholders of
an underlying fund but, at the same time, creates
special risk considerations.  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 borrowed 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 fund.
Indexed Securities.  Certain of the underlying funds
may invest in indexed securities, including inverse
floaters, whose value is linked to currencies,
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.
Forward Roll Transactions.  Forward roll transactions
involve the risk that the market value of the
securities sold by an underlying 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 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.
Swap Agreements.  As one way of managing their
exposure to different types of investments, certain of
the underlying funds may enter into interest 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 suffer losses if it is
unable to terminate outstanding swap agreements or
reduce its exposure through offsetting transactions.
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 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 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.
INVESTMENT RESTRICTIONS
The Allocation Series has adopted the following
fundamental investment restrictions for the protection
of shareholders.  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.  The
percentage limitations contained in the restrictions
listed below (other than with respect to (1) below)
apply at the time of purchases of securities.
The investment policies adopted by the Allocation
Series prohibit a portfolio from:
1.	Borrowing money except that (a) the
portfolio may borrow from banks for
temporary or emergency (not leveraging)
purposes, including the meeting of
redemption requests which might otherwise
require the untimely disposition of
securities, and (b) the portfolio may, to
the extent consistent with its investment
policies, enter into reverse repurchase
agreements, forward roll transactions
similar investment strategies and
techniques.  To the extent that it engages
in transactions described in (a) and (b),
the portfolio will be limited so that no
more than 33-1/3% of the value of its
total assets (including the amount
borrowed) valued at the lesser of cost or
market, less liabilities (not including
the amount borrowed) is derived from such
transactions.
2.	Making loans.  This restriction does not
apply to: (a) the purchase of debt
obligations in which the portfolio may
invest consistent with its investment
objectives and policies; (b) repurchase
agreements; and (c) loans of its portfolio
securities, to the fullest extent
permitted under the 1940 Act.
3.	Engaging in the business of underwriting
securities issued by other persons, except
to the extent that the portfolio may
technically be deemed to be an underwriter
under the Securities Act of 1933, as
amended, in disposing of portfolio
securities.
4.	Purchasing or selling real estate, real
estate mortgages, commodities or commodity
contracts, but this restriction shall not
prevent the portfolio from (a) investing
in securities of issuers engaged in the
real estate business or business of
investing in real estate (including
interests in limited partnerships owning
or otherwise engaging in the real estate
business or the business of investing in
real estate) and securities which are
secured by real estate or interests
therein; (b) holding or selling real
estate received in connection with
securities it holds or held; (c) trading
in futures contracts and options on
futures contracts (including options on
currencies to the extent consistent with
the portfolio's investment objective and
policies); or (d) investing in real estate
investment trust securities.
5.	Issuing "senior securities" as defined in
the 1940 Act and the rules, regulations
and orders thereunder, except as permitted
under the 1940 Act and the rules,
regulations and orders thereunder.
The portfolios have also adopted certain non-
fundamental investment restrictions that may be
changed by the portfolios' Board of Directors at any
time.  Accordingly the portfolios are prohibited from:
1.	Purchasing securities on margin.
2.	Making short sales of securities or
maintaining a short position.
3.	Pledging, hypothecating, mortgaging or
otherwise encumbering more than 33-1/3% of
the value of a portfolio's total assets.
4.	Investing in oil, gas or other mineral
exploration or development programs.
5.	Writing or selling puts, calls, straddles,
spreads or combinations thereof.
6.	Purchasing restricted securities, illiquid
securities (such as repurchase agreements
with maturities in excess of seven days)
or other securities that are not readily
marketable.
7.	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 funds).
8.	Making investments for the purpose of
exercising control or management.
9.	Purchasing or retaining securities of any
company if, to the knowledge of the
Allocation Series, any officer or director
of the Allocation Series or SBFM
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.
Notwithstanding the foregoing investment restrictions,
the underlying 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 fund are located in its
SAI.
Under Section 12d(l)(G) of the 1940 Act, each
portfolio may invest substantially all of its assets
in the underlying 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 funds.  However, each of the underlying
funds in which each portfolio will invest (other than
the Smith Barney Money Funds - Cash Portfolio) will
not concentrate more than 25% of its total assets in
any one industry.  The Smith Barney Money Funds - Cash
Portfolio will invest at least 25% of its assets in
obligations issued by banks.


PORTFOLIO TURNOVER
Each portfolio's turnover rate is not expected to
exceed 25% annually. Under certain market conditions,
a portfolio may experience high portfolio turnover as
a result of its investment strategies.  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 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 funds within the percentage limits
described in the Prospectus.
The portfolio turnover for the two most recent fiscal
years for each portfolio is contained in the following
table:





Fiscal Year
Fiscal Year
Name of Portfolio
Ended 1/31/01
Ended 01/31/00
High Growth
Portfolio
   9%
 2%
Global Portfolio
 10%
 0%
Growth Portfolio
   9%
 2%
Balanced Portfolio
   5%
 4%
Conservative
Portfolio
   1%
 3%
Income Portfolio
   0%
 4%
The turnover rates of the underlying funds have ranged
from 1% to 280% 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 funds.


PURCHASE OF SHARES
Sales Charge Alternatives

The following Classes of shares are available for
purchase.  See the prospectus for a discussion of
factors to consider in selecting which Class of shares
to purchase.

Class A Shares. Class A shares are sold to investors
at the public offering price, which is the net asset
value plus an initial sales charge as follows:


High
Growth
Portfolio,
Global
Portfolio,
Growth
Portfolio
and
Balanced
Portfolio
*


Conservative
Portfolio
and Income
Portfolio
**


Amount of
Investment
Sales
Charge as
% of
Offering
Price

Sales
Charge
as % of
Amount
Invested
Broker/Dealer
Commission
as % of
Offering
Price

Sales
Charge as
% of
Offering
Price
Sales
Charge
as % of
Amount
Invested

Broker/Dealer
Commission as %
of
Offering
Price


Less than $25,000
5.00%
5.26%
4.50%
4.50%
4.71%
4.05%
$ 25,000 - 49,999
4.25
4.44
3.83
4.00
4.17
3.60
50,000 - 99,999
3.75
3.90
3.38
3.50
3.63
3.15
100,000 - 249,999
3.25
3.36
2.93
2.50
2.56
2.25
250,000 - 499,999
2.75
2.83
2.48
1.50
1.52
1.35
500,000 - 999,999
2.00
2.04
1.80
-0-
  -0-
  -0-
1,000,000 and over
-0-
-0-
Up to 1.00
***
-0-
  -0-
  -0-

* You do not pay an initial sales charge when you buy
$1,000,000 or more of Class A shares.  However, if you
redeem these Class A shares within one year of
purchase, you will pay a deferred sales charge of
1.00%.
** You do not pay an initial sales charge when you buy
$500,000 or more of Class A shares.  However, if you
redeem these Class A shares within one year of
purchase, you will pay a deferred sales charge of
1.00%
*** The distributor pays up to 1.00% to Service
Agents.
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.
Class B Shares.  Class B shares are sold without an
initial sales charge but are subject to a deferred
sales charge payable upon certain redemptions.  See
"Deferred Sales Charge Provisions" below.
Class L Shares. Class L shares are sold with an
initial sales charge of 1.00% (which is equal to 1.01%
of the amount invested) and are subject to a deferred
sales charge payable upon certain redemptions.  See
"Deferred Sales Charge Provisions" below.  Until June
22, 2002 purchases of Class L shares by investors who
were holders of Class C shares of the portfolio and/or
other Smith Barney funds on June 12, 1998 will not be
subject to the 1% initial sales charge.
Class Y Shares. Class Y shares are sold without an
initial sales charge or deferred sales charge and are
available only to investors investing a minimum of
$15,000,000.

Class Z Shares.  Class Z Shares are sold without an
initial sales charge or deferred sales charge and are
currently offered exclusively for sale to tax-exempt
employee benefit and retirement plans of Salomon Smith
Barney or any of its affiliates ("Qualified Plans")
and to certain unit investment trusts ("UIT) sponsored
by Salomon Smith Barney or any of its affiliates.
General

Investors in Class A, Class B, and Class L shares may
open an account by making an initial investment in a
portfolio of at least $1,000 for each account, or $250
for an IRA or a Self-Employed Retirement Plan.
Investors in Class Y shares may open an account by
making an initial investment of $15,000,000.
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 Internal Revenue Code of 1986, as amended (the
"Code"), the minimum initial and subsequent investment
requirement for Class A, Class B, and Class L 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 L 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 L shares and the subsequent
investment requirement for all Classes is $50.  There
are no minimum investment requirements in Class A
shares for employees of Citigroup and its
subsidiaries, including Salomon Smith Barney, unit
holders who invest distributions from a UIT sponsored
by Salomon Smith Barney, directors or trustees of any
of the Smith Barney Mutual Funds, and their spouses
and children. The portfolios reserve the right to
waive or change minimums, to decline any order to
purchase their shares and to suspend the offering of
shares from time to time. Shares purchased will be
held in the shareholder's account by PFPC Global Fund
Services ("PFPC"), a sub-transfer agent or PFS
Shareholder Services ("PFS Shareholder Services"), a
sub-transfer agent.  Share certificates are issued
only upon a shareholder's written request to PFPC or
PFS Shareholder Services.

Salomon Smith Barney Accounts.  Purchases of shares of
each portfolio must be made through a brokerage
account maintained with a Service Agent. In addition,
certain investors, including qualified retirement
plans and certain other institutional investors, may
purchase shares directly from the funds through the
Citi Fiduciary Trust Company  (the "Transfer Agent").
When purchasing shares of a fund, investors must
specify whether the purchase is for Class A, Class B,
Class L, or Class Y shares. Salomon 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 holds shares. Accounts held directly at PFPC are
not subject to a maintenance fee.

PFS Investments Accounts. The portfolios offer two
Classes of shares to investors purchasing through PFS
Investments: Class A shares and Class B shares.

Initial purchases of shares of each portfolio must be
made through a PFS Investments Registered
Representative by completing the appropriate
application found in this Prospectus. The completed
application should be forwarded to PFS Shareholder
Services, P.O. Box 105033, Atlanta, Georgia 30348.
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 PFS Shareholder Services.  In
processing applications and investments, PFS
Shareholder Services acts as agent for the investor
and for PFS Investments and also as agent for PFS, in
accordance with the terms of the Prospectus.  If the
Transfer Agent ceases to act as such, a successor
company named by the Allocation Series will act in the
same capacity so long as the account remains open.

Shares purchased will be held in the shareholder's
account by PFS Shareholder Services. Share
certificates are issued only upon a shareholder's
written request to PFS Shareholder Services. A
shareholder who has insufficient funds to complete any
purchase, will be charged a fee of $30 per returned
purchase by PFS Shareholder Services.

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 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 Section 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 the
portfolios is $25. There are no minimum investment
requirements in Class A shares for employees of
Citigroup and its subsidiaries, including Salomon
Smith Barney, Directors or Trustees of any of the
Smith Barney Mutual Funds, and their spouses and
children. The portfolios reserve 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.  Purchase orders received by the Transfer
Agent or PFS Shareholder Services prior to the close
of regular trading on the NYSE, on any day the fund
calculates its net asset value, are priced according
to the net asset value determined on that day.

Upon completion of certain automated systems, initial
purchases of a portfolio's shares may be made by wire.
The minimum investment that can be made by wire is
$10,000. Before sending the wire, the PFS Investments
Registered Representative must contact PFS Shareholder
Services at (800) 665-8677 to obtain proper wire
instructions.  Once an account is open, a shareholder
may make additional investments by wire.  The
shareholder should contact PFS Shareholder Services at
(800) 544-5445 to obtain proper wire instructions.

Upon completion of certain automated systems,
shareholders who establish telephone transaction
authority on their account and supply bank account
information will be able to make additions to their
accounts at any time.  Shareholders should contact PFS
Shareholder Services at (800) 544-5445 between 8:00
a.m. and 8:00 p.m. eastern time any day that the NYSE
is open.  If a shareholder does not wish to allow
subsequent telephone investments by any person in his
account, he should decline the telephone transaction
option on the account application.  The minimum
subsequent telephone investment is $250 and can be up
to a maximum of $10,000.  By requesting a subsequent
purchase by telephone, you authorize PFS Shareholder
Services  to transfer funds from the bank account
provided for the amount of the purchase.  A
shareholder who has insufficient funds to complete the
transfer will be charged a fee of up to $30 by PFS
Shareholder Services.  A shareholder who places a stop
payment on a transfer or the transfer is returned
because the account has been closed, will also be
charged a fee of up to $30 by PFS Shareholder
Services.  Subsequent investments by telephone may not
be available if the shareholder cannot reach PFS
Shareholder Services whether because all telephone
lines are busy or for any other reason; in such case,
a shareholder would have to use the portfolios'
regular subsequent investment procedure described
above.

PFS 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 distributed by an entity other than PFS
Investments. In order to obtain such discounts, the
purchaser must provide sufficient information at the
time of purchase to permit verification that the
purchase would qualify for the elimination of the
sales charge.

In addition, Class A shares of a portfolio may be
purchased at net asset value by the PFS Primerica
Corporation Savings and Retirement Plan (the
''Primerica Plan'') for its participants, subject to
the provisions of the Employee Retirement Income
Security Act of 1974, as amended (''ERISA''). Class A
shares so purchased are purchased for investment
purposes and may not be resold except by redemption or
repurchase by or on behalf of the Primerica Plan.
Class A shares are also offered at net asset value to
accounts opened for shareholders by PFS Investments
Registered Representatives where the amounts invested
represent the redemption proceeds from investment
companies distributed by an entity other than PFS, if
such redemption has occurred no more than 60 days
prior to the purchase of shares of the Allocation
Series, and the shareholder paid an initial sales
charge and was not subject to a deferred sales charge
on the redeemed account. Class A shares are offered at
net asset value to such persons because of anticipated
economies in sales efforts and sales related expenses.
A portfolio may terminate, or amend the terms of,
offering shares of such portfolio at net asset value
to such persons at any time. PFS may pay PFS
Investments Registered Representatives through whom
purchases are made at net asset value an amount equal
to 0.40% of the amount invested if the purchase
represents redemption proceeds from an investment
company distributed by an entity other than PFS.
Contact PFS Shareholder Services at (800) 544-5445 for
further information and appropriate forms.

An Account Transcript is available at a shareholder's
request, which identifies every financial transaction
in an account since it has opened.  To defray
administrative 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 PFS Shareholder
Services may be obtained by contacting the Client
Services Department at (800) 544-5445.

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, shareholders can invest at least $25 on a
monthly basis or at least $50 on a quarterly basis
(not available to PFS accounts) to charge the regular
bank account or other financial institution indicated
by the shareholder, 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 Salomon Smith
Barney or PFS Investments. The Systematic Investment
Plan also authorizes Salomon Smith Barney to apply
cash held in the shareholder's Salomon 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 Allocation Series or a Service Agent.

Sales Charge Waivers and Reductions
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 to
(i) Board Members and employees of Citigroup and its
subsidiaries and any Citigroup affiliated portfolios
including the Smith Barney Mutual Funds (including
retired Board Members and employees); the immediate
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 combination 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 Salomon Smith Barney
Financial Consultant (for a period up to 90 days from
the commencement of the Financial Consultant's
employment with Salomon Smith Barney), on the
condition the purchase of Class A shares is made with
the proceeds of the redemption of shares of a mutual
portfolio which (i) was sponsored by the Financial
Consultant's prior employer, (ii) was sold to the
client by the Financial Consultant 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 Smith Barney
Mutual Fund that is offered with a sales charge) and
who wish to reinvest their redemption proceeds in a
portfolio, provided the reinvestment is made within 60
calendar days of the redemption; (e) purchases by
accounts managed by registered investment advisory
subsidiaries of Citigroup; (f) direct rollovers by
plan participants of distributions from a 401(k) plan
offered to employees of Citigroup or its subsidiaries
or 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 a
separate account used to fund certain unregistered
variable annuity contracts; (h) investments of
distributions from or proceeds from a sale of a UIT
sponsored by Salomon Smith Barney; (i) purchases by
investors participating in a Salomon Smith Barney fee-
based arrangement; (j) purchases by Section 403(b) or
Section 401(a) or (k) accounts associated with
Copeland Retirement Programs; and (k) purchases by
401(k) plans sponsored by Citigroup or its affiliates.
In order to obtain such discounts, the purchaser must
provide sufficient information at the time of purchase
to permit verification that the purchase would qualify
for the elimination of the sales charge.
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 aggregating the dollar amount of the new
purchase and the total net asset value of all Class A
shares of the portfolio and of most other Smith Barney
Mutual Funds that are offered with a sales charge 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.

Letter of Intent - Class A Shares.  A Letter of Intent
for an amount of $25,000 or more provides an
opportunity for an investor to obtain a reduced sales
charge by aggregating investments over a 13 month
period, provided 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 sales charge table in "Purchase of Shares - Sales
Charge Alternatives - Class A Shares" includes (i) all
Class A shares of a portfolio and other Smith Barney
Mutual Funds offered with a sales charge acquired
during the term of the letter plus (ii) the value of
all Class A shares which paid an initial sales charge
previously purchased and still owned.  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
appropriate number of escrowed shares will be
redeemed.  The term of the Letter will commence upon
the date the Letter is signed, or at the option of the
investor, up to 90 days before such date.  Please
contact a Service Agent or the Transfer Agent to
obtain a Letter of Intent application.


Letter of Intent - 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.
For each of the portfolios, investors must make an
initial minimum purchase of $5,000,000 in Class Y
shares of a portfolio and agree to purchase a total of
$15,000,000 of Class Y shares of a portfolio within 13
months from the date of the Letter.  If a total
investment of $15,000,000 is not made within the 13-
month period, all Class Y shares purchased to date
will be transferred to Class A shares, where they will
be subject to all fees (including a service fee of
0.25%) and expenses applicable to the portfolio's
Class A shares, which may include a deferred sales
charge of 1.00%. Please contact a Service Agent or the
Transfer Agent for further information.
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 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 Service Agent.

Deferred Sales Charge Provisions

"Deferred Sales Charge Shares" are: (a) Class B
shares; (b) Class L shares; and (c) Class A shares
that were purchased without an initial sales charge
but are subject to a deferred sales charge.  A
deferred sales charge may be imposed on certain
redemptions of these shares.
Any applicable deferred sales charge 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.  Deferred Sales Charge
Shares which are redeemed will not be subject to a
deferred sales charge to the extent that the value of
such shares represents: (a) capital appreciation of
portfolio assets; (b) reinvestment of dividends or
capital gain distributions; (c) with respect to Class
B shares, shares redeemed more than five years after
their purchase; or (d) with respect to Class L shares
and Class A shares that are Deferred Sales Charge
Shares, shares redeemed more than 12 months after
their purchase.

Class L shares and Class A shares that are Deferred
Sales Charge Shares are subject to a 1.00% deferred
sales charge if redeemed within 12 months of purchase.
In circumstances in which the deferred sales charge 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 Salomon 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 Class B shares
held under the Smith Barney 401(k) Program, as
described below.  See "Purchase of Shares-Salomon
Smith Barney Retirement Programs."


Deferred Sales Charge
Year Payment Was
Made Since
Purchase
Conservative Portfolio
and Income Portfolio
High Growth Portfolio, Global
Portfolio, Growth Portfolio
and Balanced Portfolio
First
4.50%
5.00%
Second
4.00
4.00
Third
3.00
3.00
Fourth
2.00
2.00
Fifth
1.00
1.00
Sixth and thereafter
0.00
0.00
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 proportion of Class B Dividend
Shares (Class B shares that were acquired through the
reinvestment of dividends and distributions) owned by
the shareholder as the total number of his or her
Class B shares converting at the time bears to the
total number of outstanding Class B shares (other than
Class B Dividend Shares) owned by the shareholder.

In determining the applicability of any deferred sales
charge, it will be assumed that 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
Deferred Sales Charge 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 considered to
represent, as applicable, capital appreciation or
dividend and capital gain distribution reinvestments
in such other portfolios.  For Federal income tax
purposes, the amount of the deferred sales charge will
reduce the gain or increase the loss, as the case may
be, on the redemption.  The amount of any deferred
sales charge will be paid to Salomon 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
additional 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 deferred sales
charge would not be applied to the amount which
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 Deferred Sales Charge
The deferred sales charge 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') (but, automatic cash
withdrawals in amounts equal to or less than 2.00% per
month of the value of the shareholder's shares will be
permitted for withdrawal plans that were established
prior to November 7, 1994); (c) redemptions of shares
within 12 months following the death or disability of
the shareholder; (d) redemptions of shares made in
connection with qualified distributions from
retirement plans or IRAs upon the attainment of age
591/2; (e) involuntary redemptions; and (f) redemptions
of shares to effect a combination of a portfolio with
any investment 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 deferred sales charge
imposed on the prior redemption.
Deferred sales charge waivers will be granted subject
to confirmation (by a Service Agent or by the Transfer
Agent) of the shareholder's status or holdings, as the
case may be.

Salomon Smith Barney Retirement Programs.  You may be
eligible to participate in a retirement program
sponsored by Salomon Smith Barney or one of its
affiliates.  Each portfolio offers Class A and Class L
shares at net asset value to participating plans under
the programs. You can meet minimum investment and
exchange amounts, if any, by combining the plan's
investments in any of the Smith Barney mutual funds.

There are no sales charges when you buy or sell shares
and the Class of shares you may purchase depends on
the amount of your initial investment and/or the date
your account is opened.  Once a Class of shares is
chosen, all additional purchases must be of the same
Class.

For plans opened on or after March 1, 2000 that are
not plans for which Paychex Inc. or an affiliate
provides administrative services (a "Paychex plan"),
Class A shares may be purchased regardless of the
amount invested.

For plans opened prior to March 1, 2000 and for
Paychex plans, the Class of shares you may purchase
depends on the amount of your initial investment:

Class A Shares.  Class A shares may be purchased by
plans investing at least $1million.

Class L Shares.  Class L shares may be purchased by
plans investing less than $1 million.  Class L shares
are eligible to exchange into Class A shares not later
than 8 years after the plan joined the program. They
are eligible for exchange in the following
circumstances:
If the plan was opened on or after June 21, 1996 and a
total of $1 million is invested in Smith Barney Funds
Class L shares (other than money market funds), all
Class L shares are eligible for exchange after the
plan is in the program 5 years.
If the plan was opened before June 21, 1996 and a
total of $500,000 is invested in Smith Barney Funds
Class L shares (other than money market funds) on
December 31 in any year, all Class L shares are
eligible for exchange on or about March 31 of the
following year.

For more information, call your Service Agent or the
Transfer Agent.

Retirement Programs Opened On or After June 21, 1996.
If, at the end of the fifth year after the date the
participating plan enrolled in the Smith Barney 401(k)
Program or ExecChoiceTM Program, a participating
plan's total Class L holdings in all non-money market
Smith Barney Mutual Funds equal at least $1,000,000,
the participating plan will be offered the opportunity
to exchange all of its Class L shares for Class A
shares of the fund. (For participating plans that were
originally established through a Salomon 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 enrollment 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 to 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.

Retirement Programs Opened Prior to June 21, 1996.
In any year after the date a participating plan
enrolled in the Smith Barney 401(k) Program, if its
total Class L 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 L
shares for Class A shares of the same 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
ExecChoiceTM Program, 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 L shares for
Class A shares of the same 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 ExecChoiceTM 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 L shares, but
instead may acquire Class A shares of the same
portfolio. Any Class L 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 ExecChoiceTM Program must purchase
such shares directly from the Transfer Agent. For
further information regarding these Programs,
investors should contact a Service Agent.

REDEMPTION OF SHARES
The Allocation 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 deferred sales charge.  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 redemption must specify the Class
being redeemed.  In the event of a failure to specify
which Class, or if the investor owns fewer shares of
the Class than specified, the redemption request will
be delayed until the Allocation Series' Transfer Agent
receives further instructions from a Service Agent or
if the shareholder's account is not with a Service
Agent, 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
permitted under the 1940 Act in extraordinary
circumstances.
Generally, if the redemption proceeds are remitted to
a Salomon Smith Barney brokerage account, these funds
will not be invested for the shareholder's benefit
without specific instruction and Salomon 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 fifteen days or more.
a.	Salomon Smith Barney Accounts
Shares held by Salomon Smith Barney as custodian must
be redeemed by submitting a written request to a
Service Agent.  Shares other than those held by
Salomon Smith Barney as custodian may be redeemed
through an investor's Service Agent or by submitting a
written request for redemption to:
Smith Barney Allocation Series Inc./ [Name of
Portfolio]
Class A, B, L or Y (please specify)
c/o PFPC Global Fund Services
P.O. Box 9699
Providence, RI  02940-9699
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 registered.  If the shares to be redeemed
were issued in certificate form, the certificates must
be endorsed for transfer (or be accompanied by an
endorsed stock power) and must be submitted to the
applicable sub-transfer agent.  Any signature required
in connection with a redemption request in excess of
$50,000 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
$50,000 or less do not require a signature guarantee.
The Transfer Agent 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 the Transfer Agent receives all
required documents in proper form.  Redemption
proceeds will be mailed to the shareholder's address
of record.
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.
Telephone Redemption and Exchange Program.
Shareholders who do not have a Salomon Smith Barney
brokerage account may be eligible to redeem and
exchange portfolio shares by telephone.  To determine
if a shareholder is entitled to participate in this
program, he or she should contact a sub-transfer agent
at (800) 451-2010.  Once eligibility is confirmed, the
shareholder must complete and return a Telephone/Wire
Authorization Form, including a signature guarantee,
that will be provided by the applicable sub-transfer
agent upon request. (Alternatively, an investor may
authorize telephone redemptions on the new account
application with a signature guarantee when making
his/her initial investment in the Allocation Series.)
Redemptions.  Redemption requests of up to $50,000 of
any Class or Classes of a portfolio's shares may be
made by eligible shareholders by calling the Transfer
Agent at (800) 451-2010.  Such requests may be made
between 9:00 a.m. and 4:00 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 permitted 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 of a member bank.  The
Allocation Series reserves the right to charge
shareholders a nominal fee for each wire redemption.
Such charges, if any, will be assessed against the
shareholder'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 the
Transfer Agent at (800) 451-2010 between 9:00 a.m. and
4:00 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 Allocation Series
nor its agents will be liable for following
instructions communicated by telephone that are
reasonably believed to be genuine.  The Allocation
Series and its agents will employ procedures designed
to verify the identity of the caller and legitimacy of
instructions (for example, a shareholder's name and
account number will be required and phone calls may be
recorded).  The Allocation Series reserves the right
to suspend, modify or discontinue 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.

b.	PFS Investments Accounts

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 a sub-transfer
agent, PFS Shareholder Services, at P.O. Box 105033,
Atlanta, Georgia 30348-5033. If you should have any
questions concerning how to redeem your account after
reviewing the information below, please contact PFS
Shareholder Services at (800) 544-5445, Spanish-
speaking representatives (800) 544-7278 or TDD Line
for the Hearing Impaired (800) 824-1721.
The request for redemption must be signed by all
persons in whose names the shares are registered.
Signatures must conform exactly to the account
registration. 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 shareholder(s)
has had an address change within 45 days or less of
the shareholder's redemption request, or if the
shareholder(s) is a corporation, sole proprietor,
partnership, trust or fiduciary, signature(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 savings and loan association; or
a federal savings bank.

Generally, a properly completed Redemption Form with
any required signature guarantee is all that is
required for a redemption. In some cases, however,
other documents may be necessary. For example, in the
case of shareholders holding certificates, the
certificates for the shares being redeemed must
accompany the redemption request. Additional
documentary evidence of authority is also required by
PFS Shareholder Services in the event redemption is
requested by a corporation, partnership, trust,
fiduciary, executor or administrator. Additionally, if
a shareholder requests a redemption from a Retirement
Plan account (IRA or SEP), such request must state
whether or not federal income tax is to be withheld
from the proceeds of the redemption check. Redemption
from a 403(b)(7) account requires completion of a
special form.  Please call PFS Shareholder Services at
(800) 544-5445 between 8:00 a.m. and 8:00 p.m. Eastern
time to obtain the proper forms.

A shareholder may utilize PFS Shareholder Services
Telephone Redemption service to redeem his or her
account as long as they have authorized the telephone
redemption option.  If a shareholder does not wish to
allow telephone redemptions by any person in his
account, he should decline the telephone transaction
option on the account application.  The telephone
redemption option can be used only if: (a) the
redemption proceeds are to be mailed to the address of
record and there has been no change of address of
record within the preceding 45 days; (b) the shares to
be redeemed are not in certificate form; (c); the
person requesting the redemption can provide proper
identification information; and (d) the proceeds of
the redemption do not exceed $50,000.  403(b)(7)
accounts and accounts not registered in the name of
individual(s) are not eligible for the telephone
redemption option.  Telephone redemption requests can
be made by contacting PFS Shareholder Services at
(800) 544-5445 between 8:00 a.m. and 8:00 p.m. Eastern
time any day that the NYSE is open.  Telephone
redemption may not be available if the shareholder
cannot reach PFS Shareholder Services whether because
all telephone lines are busy or for any other reason;
in such case, a shareholder would have to use the
Allocation Series' regular redemption procedure
described above.

A shareholder may utilize PFS Shareholder Services FAX
to redeem the shareholder's 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 PFS
Shareholder Services at (800) 554-2374. Facsimile
redemptions may not be available if the shareholder
cannot reach PFS Shareholder Services by FAX, whether
because all telephone lines are busy or for any other
reason; in such case, a shareholder would have to use
the fund's regular redemption procedure described
above. Facsimile redemptions received by PFS
Shareholder Services  prior to 4:00 p.m. Eastern time
on a regular business day will be processed at the net
asset value per share determined that day.

Redemption proceeds can be sent by check to the
address of record, by wire transfer to a bank account
designated on the application or to a bank account
designated on the application via the Automated
Clearinghouse (ACH).  A shareholder will be charged a
$25 service fee for wire transfers and a nominal
service fee for transfers made directly to the
shareholder's bank by the ACH. PFS Shareholder
Services will process and mail a shareholder's
redemption check usually within two to three business
days after receiving the redemption request in good
order.  The shareholder may request the proceeds to be
mailed by two-day air express for an $8 fee that will
be deducted from the shareholder's account or by one-
day air express for a $15 fee that will be deducted
from the shareholder's account.
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 and who wish to receive specific
amounts of cash of at least $50 monthly or quarterly.
Retirement plan accounts are eligible for automatic
cash withdrawal plans only where the shareholder is
eligible to receive qualified distributions and has an
account value of at least $5,000.  The withdrawal plan
will be carried over on exchanges between funds or
Classes of a portfolio.  Withdrawals 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 deferred sales
charge 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.  To the extent withdrawals exceed
dividends, distributions and appreciation of a
shareholders' 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 the
applicable sub-transfer agent 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 Service Agent.  Shareholders who purchase
shares directly through a sub-transfer agent may
continue to do so and applications for participation
in the Withdrawals Plan must be received by the
applicable sub-transfer agent 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
Service Agent.

EXCHANGE PRIVILEGE
Shares of each Class of a portfolio may be exchanged
for shares of the same Class of certain 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 L shares are
subject to minimum investment requirements and all
shares are subject to the other requirements of the
fund into which exchanges are made.
Class B Exchanges. If a Class B shareholder wishes to
exchange all or a portion of his or her shares in any
of the funds imposing a higher deferred sales charge
than that imposed by a portfolio, the exchanged Class
B shares will be subject to the higher applicable
deferred sales charge.  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 L Exchanges.  Upon an exchange, the new Class L
shares will be deemed to have been purchased on the
same date as the Class L shares of the portfolio that
have been exchanged.
Class A and Class Y Exchanges.  Class A and Class Y
shareholders of the portfolio who wish to exchange all
or a portion of their shares for shares of the
respective Class in any of the available Smith Barney
Mutual Funds may do so without imposition of any
charge.
Additional Information Regarding the Exchange
Privilege.  Although the exchange privilege is an
important benefit, excessive exchange transactions can
be detrimental to the portfolio's performance and its
shareholders.  The manager may determine that a
pattern of frequent exchanges is excessive and
contrary to the best interests of a portfolio's other
shareholders.  In this event, the portfolio may, at
its discretion, decide to limit additional purchases
and/or exchanges by the shareholder.  Upon such a
determination, the portfolio 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 available 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 "Redemption of Shares-Salomon Smith
Barney Accounts - Telephone Redemptions and Exchange
Program and PFS Investments Accounts." Exchanges will
be processed at the net asset value next determined.
Redemption procedures discussed above 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 portfolio being acquired is identical to
the registration of the shares of the portfolio
exchanged, no signature guarantee is required.  An
exchange involves a taxable redemption of shares,
subject to the tax treatment described in "Taxes",
followed by a purchase of shares of a different
portfolio.  Before exchanging shares, investors should
read the current prospectus describing the shares to
be acquired.  The portfolio reserves the right to
modify or discontinue exchange privileges upon 60
days' prior notice to shareholders.
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 Service Agent.
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 portfolio being
acquired.  Salomon 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.

TAXES

General. The following is a summary of certain federal
income tax considerations that may affect the
Allocation Series and its shareholders.  The
discussion relates only to federal income tax law as
applicable to U.S. citizens.  Distributions by a
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.  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 Allocation 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 continue 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 its taxable net
investment income and net realized capital gains are
distributed to its shareholders, provided such
portfolio distributes at least 90% of the sum of its
net investment income and any excess of its net short-
term capital gain over its net long-term capital loss.
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 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 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 has 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
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.

On January 31, 2001, the unused capital loss
carryforwards of the Income Portfolio were
approximately $712,000. For federal income tax
purposes, this amount is available to be applied
against future capital gains of the Income Portfolio,
that are realized prior to the expiration of the
carryforwards.  The carryforwards expire on January
31, 2009.

If, in any taxable year, a portfolio fails to qualify
as a regulated investment company under the Code or
fails to meet the distribution requirement, it would
be taxed in the same manner as an ordinary corporation
and distributions to its shareholders would not be
deductible by the portfolio in computing its taxable
income.  In addition, in the event of a failure to
qualify, the portfolio's distributions, to the extent
derived from the portfolio's current or accumulated
earnings and profits, would constitute dividends
(eligible for the corporate dividends-received
deduction) which are taxable to shareholders as
ordinary income, even though those distributions might
otherwise (at least in part) have been treated in the
shareholders' hands as long-term capital gains.  If
the portfolio fails to qualify as a regulated
investment company in any year, it must pay out its
earnings and profits accumulated in that year in order
to qualify again as a regulated investment company.
In addition, if a portfolio failed to qualify as a
regulated investment company for a period greater than
one taxable year, the portfolio may be required to
recognize any net built-in gains (the excess of the
aggregate gains, including items of income, over
aggregate losses that would have been realized if it
had been liquidated) with respect to certain of its
assets in order to qualify as a regulated investment
company in a subsequent year.
Dividends and Distributions.  The Income Portfolio
declares and pays monthly dividends from its net
investment income.  The Balanced Portfolio and
Conservative Portfolio declare and pay quarterly
dividends from net investment income.  The Global
Portfolio, Growth Portfolio and High Growth Portfolio
declare and pay annual dividends from net investment
income.  Dividends from net realized capital gains, if
any, in each of the separate portfolios will be
distributed annually.  Each separate portfolio may
also pay additional dividends shortly before December
31 from certain amounts of undistributed ordinary
income and realized capital gains in order to avoid a
Federal excise tax liability.
If a shareholder does not otherwise instruct,
dividends and capital gain distributions paid will
automatically be reinvested in additional shares of
the same Class at net asset value, with no additional
sales charge or deferred sales charge.  A shareholder
may change the option at any time by notifying his or
her Service Agent.  Shareholders whose accounts are
held directly by a sub-transfer agent should notify
the applicable sub-transfer agent in writing,
requesting a change to this automatic reinvestment
option.
Tax Treatment of Shareholders.  Distributions of
investment company taxable income generally are
taxable to shareholders as ordinary income.  If an
underlying 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 so qualify.
The dividends received deduction is reduced to the
extent the shares of the corporation paying the
dividend, the shares of the underlying fund or the
shares of the portfolio receiving the dividends 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 fund or the shares of the portfolio
receiving the dividends are deemed to have been held
by the underlying fund, the portfolio or the
shareholders, as the case may be, for less than a
minimum period, generally 46 days, during a prescribed
period with respect to each dividend.
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 the portfolio have
been held by a shareholder.  Distributions of capital
gain, whether long-term 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 a 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 amount of cash they would have received had they
elected to receive cash, divided by the number of
shares received.  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 generally 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 redemption 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, except as described in the next paragraph.  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 a portfolio, (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
(e.g., an 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 dividends and distributions and (b)
any proceeds of any redemption of shares of a
portfolio.  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 funds.  Each underlying
fund intends to continue 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 fund qualifies as a regulated investment
company and timely distributes all of its taxable
income, the underlying fund generally will not pay any
federal income or excise tax.

If more than 50% in value of an underlying fund's
assets at the close of any taxable year consists of
stocks or securities of foreign corporations, that
underlying 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 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 having paid if the election
is made, the portfolio will not itself be able to
elect to treat such foreign taxes as paid by its
shareholders.  Accordingly, the shareholders of the
portfolio will not have an option of claiming a
foreign tax credit or deduction for foreign taxes paid
by the underlying funds, while persons who invest
directly in such underlying funds may have that
option.

Class Z. Qualified plan participants should consult
their plan document or tax advisors about the tax
consequences of participating in a Qualified Plan.
Provided a Qualified Plan has not borrowed to finance
its investment in a portfolio, it will not be taxable
on the receipt of dividends and distributions from the
portfolio.

Other Taxation. Distributions also may be subject to
additional state, local and foreign taxes depending on
each shareholder's particular situation.

PERFORMANCE

From time to time, the Allocation Series may quote a
portfolio's yield or total return in advertisements or
in reports and other communications to shareholders.
The Allocation 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 + 1)6 - 1]
       cd
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 l-, 5- or 10-year period at the end of
the l-, 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 initial sales
charge or maximum applicable deferred sales
charge, 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 (if
applicable) and for the life of such portfolio's Class A
shares through January 31, 2001 is as follows:

One Year
Since Inception
Inception Date
High Growth
(5.87)%
9.93%
2/5/96
Growth
(4.83)%
8.74%
2/5/96
Global
(13.83)%
1.91%
3/9/98
Balanced
     3.97%
7.95%
2/5/96
Conservative
     4.01%
6.38%
2/5/96
Income
      2.91%
4.84%
2/5/96
Each portfolio's average annual total return with
respect to its Class B shares for the one-year period
(if applicable) and for the life of such portfolio's
Class B shares through January 31, 2001 is as follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
(6.15)%
10.04%
2/5/96
Growth
(5.08)%
8.89%
2/5/96
Global
(14.29)%
2.01%
3/9/98
Balanced
     3.70%
8.11%
2/5/96
Conservative
      3.83%
6.67%
2/5/96
Income
      2.71%
5.14%
2/5/96


Each portfolio's average annual total return with
respect to its Class L Shares for the one- year period
(if applicable) and for the life of such portfolio's
Class L shares through January 31, 2001 is as follows:

Portfolio
One Year
Since Inception
Inception Date
High Growth
(3.53)%
9.95%
2/5/96
Growth
(2.49)%
8.80%
2/5/96
Global
(11.71)%
2.59%
3/9/98
Balanced
    6.58%
8.03%
2/5/96
Conservative
     6.24%
6.65%
2/5/96
Income
     5.14%
5.12%
2/5/96
There is no performance information for Class Y Shares
because there were no outstanding Class Y Shares as of
January 31, 2001.

Each portfolio's average annual total return with respect
to its Class Z Shares for the one-year period (if
applicable) and for the life of such portfolio's Class Z
shares through January 31, 2001 is as follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
N/A
N/A
2/5/96
Growth
N/A
N/A
2/5/96
Global
N/A
N/A
3/9/98
Balanced
9.65%
8.88%
1/17/97
Conservative
N/A
N/A
2/5/96
Income
N/A
N/A
2/5/96
There is no performance information for Class Z Shares
for the Global, High Growth, Growth, Conservative and
Income Portfolios because there were no outstanding Class
Z Shares as of January 31, 2001.

Each portfolio may, from time to time, advertise its
average annual total return calculated as shown above but
without including the deduction of the maximum applicable
initial sales charge or deferred sales charge.  The
average annual total return for each portfolio's Class A
Shares, for the periods shown ended January 31, 2001,
without including the deduction of the maximum applicable
sales charge is as follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
(0.94)%
11.06%
2/5/96
Growth
0.21%
9.86%
2/5/96
Global
(9.29)%
3.73%
3/9/98
Balanced
9.42%
9.06%
2/5/96
Conservative
8.91%
7.36%
2/5/96
Income
7.74%
5.81%
2/5/96

The average annual total return for each portfolio's
Class B Shares, for the periods shown ended January 31,
2001, without including the deduction of the maximum
applicable deferred sales charge is as follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
(1.65)%
10.17%
2/5/96
Growth
(0.56)%
9.03%
2/5/96
Global
(9.92)%
3.00%
3/9/98
Balanced
   8.66%
8.26%
2/5/96
Conservative
   8.33%
6.82%
2/5/96
Income
    7.21%
5.29%
2/5/96

The average annual total return for each portfolio's
Class L Shares, for the periods shown ended January 31,
2001, without including the deduction of the maximum
applicable initial sales charge or deferred sales charge
is as follows:
Portfolio
One Year
Since Inception
Inception Date
High Growth
(1.65)%
10.19%
2/5/96
Growth
(0.62)%
9.03%
2/5/96
Global
(9.93)%
2.97%
3/9/98
Balanced
   8.67%
8.26%
2/5/96
Conservative
    8.35%
6.88%
2/5/96
Income
    7.22%
5.34%
2/5/96
Neither Class Y nor Class Z shares impose an initial
sales charge or deferred sales charge.

Performance of Underlying Funds
The following chart shows the average annual total return
(unaudited) for the longest
outstanding Class of shares for each of the underlying 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, 2000.







Average Annual Total Returns
through
December 31, 2000
30-Day
Yield for
period
ended
December
31,
Underlying Fund

Net Assets
of all
Classes as
of
December
31, 2000
($000's)

Inceptio
n
Date

Clas
s


One
Year


Five
Years


Ten
Years
2000
Smith Barney Aggressive Growth Fund
Inc.

$2,402,888

10/27/83
A
  13.16%
26.99%
22.73%
N/A
Smith Barney Appreciation Fund Inc.


5,046,432

03/10/70
A
  (4.32)
14.84
14.09
N/A
Smith Barney Fundamental Value Fund
Inc.

1,974,035

11/12/81
A
   10.48
18.23
18.41
N/A
Smith Barney Funds, Inc.:
Large Cap Value Fund
Short-Term High Grade Bond Fund


1,318,999

97,421


01/01/72
11/11/91

A
A


7.31

7.69

12.57
  4.64

13.78
  5.39(+)

N/A
5.66%
Smith Barney Income Funds:
Smith Barney High Income Fund
Smith Barney Balanced Fund
Smith Barney Premium Total Return
Fund
Smith Barney Convertible Fund
Smith Barney Diversified Strategic
Income Fund


1,570,593
   888,957
2,013,758
   138,004
2,380,334


09/02/86
03/28/88
09/16/85
09/02/86
12/28/89

B
B
B
B
B


(13.15)

(5.83)

1.40

2.73

(2.04)

   3.01
   8.41
 11.77
   5.54
   4.54

  6.76(+)
  9.93
13.50
  9.01
  7.11

11.22
N/A
N/A
3.25
7.85
Smith Barney Investment Funds Inc.:
Smith Barney Peachtree Growth Fund
Smith Barney Hansberger Global Value
Fund
Smith Barney Small Cap Growth Fund
Smith Barney Small Cap Value Fund
Smith Barney Government Securities
Fund
Smith Barney Investment Grade Bond
Fund



375,136

258,850

553,300
   173,400
   819,264
   524,369



06/30/95
12/19/97
10/11/99
02/26/99
03/20/84
01/04/82

A
A
A
A
B
B


(24.14)

(17.91)

(11.88)

26.75

6.56

6.23

   7.74
N/A
N/A
N/A
  4.72
  4.36

10.29(+)
  0.98(+)
12.17(+)
   18.36
   6.60
   9.07

N/A
N/A
N/A
N/A
5.14
6.16
Smith Barney Investment Series
     Smith Barney Growth & Income Fund


$1,800,000


08/18/96

A


(14.11)%

N/A

12.70%(+)

N/A
Smith Barney Investment Trust
Smith Barney Large Capitalization
Growth Fund
Smith Barney Mid Cap Core Fund


3,724,161
   760,578


08/29/97
09/01/98

A
A


(13.32)
   11.58

N/A
N/A

20.50(+)
34.48(+)

N/A
N/A
Smith Barney Managed Governments
Fund, Inc.

   476,822

09/04/84
A

4.87
  4.54%
  6.51
5.71%
Smith Barney Small Cap Core Fund,
Inc.


367,449

01/23/90
A

(3.51)
12.26
12.15
N/A
Smith Barney World Funds, Inc.:
International All Cap Growth
Portfolio
European Portfolio
Global Government Bond Portfolio


1,312,722
   102,700

121,526


02/18/86
02/07/94
07/22/91

A
A
A


(34.23)

(11.76)

4.43

  6.40
13.97
  4.92


10.43
12.15(+)
7.04(+)

N/A
N/A
4.04

+   inception (less than 10 years)


For the seven-day period ended December 31, 2000,
the yield for the Class A shares
of Cash Portfolio of Smith Barney Money Funds, Inc. was
6.08% and the effective
yield was 6.26%.

The performance data relating to the underlying funds set forth
above is not, and
should not be viewed as, indicative of the future performance of either the
underlying funds or the Allocation Series.  The performance
reflects the impact of
sales charges and other distribution related expenses that will
not be incurred by
the Class Y shares of underlying funds in which the portfolios invest.



The portfolios will invest only in Class Y shares of
the underlying 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
underlying funds.  The portfolios, however, will
indirectly bear their pro rata share of the fees and
expenses incurred by the underlying funds that are
applicable to Class Y shareholders.  The investment
returns of each portfolio, therefore, will be net of
the expense of the underlying funds in which it is
invested.  The following chart shows the expense
ratios applicable to Class Y shareholders of each
underlying fund held by a portfolio, based on
operating expenses for its most recent fiscal year:

Underlying Fund
Expense Ratio
Smith Barney Aggressive Growth Fund Inc.
0.82%
Smith Barney Appreciation Fund Inc.
0.58
Smith Barney Fundamental Value Fund Inc.
0.75
Smith Barney Funds, Inc.:

Large Cap Value Fund
0.57
Short-Term High Grade Bond Fund
0.54
Smith Barney Income Funds:

Smith Barney High Income Fund
0.71
Smith Barney Balanced Fund*
0.79
Smith Barney Premium Total Return Fund
0.77
Smith Barney Convertible Fund
0.87
Smith Barney Diversified Strategic Income Fund
0.69
Smith Barney Investment Funds Inc.:

Smith Barney Peachtree Growth Fund
0.97
Smith Barney Hansberger Global Value Fund
1.06
Smith Barney SmallCap Growth Fund
0.86
Smith Barney Small Cap Value Fund*
1.03
Smith Barney Government Securities Fund
0.58
Smith Barney Investment Grade Bond Fund
0.69
Smith Barney Investment Series

      Smith Barney Growth & Income Fund*
0.73
Smith Barney Investment Trust

Smith Barney Large Capitalization Growth Fund
0.76
Smith Barney Mid Cap Core Fund
0.82
Smith Barney Managed Governments Fund Inc.
0.71
Smith Barney Money Funds, Inc.
      Cash Portfolio

0.38
Smith Barney Small Cap Core Fund, Inc.

Smith Barney World Funds, Inc.:
0.79
International All Cap Growth Portfolio
0.92
European Portfolio*
1.21
Global Government Bond Portfolio
0.85

*Operating expenses of Class Y shares for Smith Barney
Income Funds - Balanced Fund, Smith Barney Investment
Series - Smith Barney Growth and Income Fund, Smith
Barney Investment Funds Inc.-Smith Barney Small Cap
Value Fund and Smith Barney World Funds, Inc.-European
Portfolio are estimated because no Class Y shares were
outstanding during each underlying fund's most recent
fiscal year.




Based on a weighted average of the Class Y expense
ratios of the underlying funds in which a particular
portfolio is expected to invest during the current
fiscal year, the approximate expense ratios are
expected to be as follows: High Growth Portfolio,
Class A 2.16%, Class B 2.44%, Class L 2.27%, Class Y
1.38% and Class Z 1.38%; Growth Portfolio, Class A
1.52%, Class B 2.24%, Class L 2.17%, Class Y 1.31% and
Class Z 1.31%; Global Portfolio, Class A 2.14%, Class
B 2.94%, Class L 3.61%, Class Y 1.46% and Class Z
1.46%; Balanced Portfolio, Class A 1.34%, Class B
2.10%, Class L 2.06%, Class Y 1.25% and Class Z 1.25%;
Conservative Portfolio, Class A 1.35%, Class B 1.86%,
Class L 1.96%, Class Y 1.26% and Class Z 1.26%; and
Income Portfolio, Class A 1.33%, Class B 1.86%, Class
L 2.12%, Class Y 1.22% and Class Z 1.22%. The expense
ratios may be higher or lower depending on the
allocation of the underlying funds within a portfolio.


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,
Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas, and on the preceding
Friday or subsequent Monday when one of these holidays
falls on a Saturday or Sunday, respectively.  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 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 Allocation
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.

INVESTMENT MANAGEMENT AND OTHER SERVICES
Investment Manager

SBFM acts as investment manager to the portfolios
pursuant to a separate asset allocation and
administration agreement for each portfolio (an "Asset
Allocation and Administration Agreement").  SBFM is a
wholly owned subsidiary of Salomon Smith Barney
Holdings Inc. ("Holdings") and Holdings is a wholly
owned subsidiary of Citigroup.

Pursuant to each portfolio's Asset Allocation and
Administration Agreements, SBFM will determine how
each portfolio's assets will be invested in the
underlying 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 funds in which the
portfolios may invest, (b) the percentage range of
assets that may be invested by each portfolio in any
one underlying 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, SBFM pays the
salaries of all officers and employees who are
employed by both it and the Allocation Series,
maintains office facilities for the Allocation Series,
furnishes the Allocation 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
Allocation Series and each portfolio, prepares reports
to each portfolio's shareholders and prepares tax
returns, reports to and filings with the SEC and state
Blue Sky authorities.  SBFM provides investment
advisory and management services to investment
companies affiliated with Salomon Smith Barney.

Currently, the management fee for each portfolio is
calculated at the annual rate of 0.35% of that
portfolio's average daily net assets.  Under each
portfolio's Asset Allocation and Administration
Agreement, SBFM 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 Salomon Smith
Barney or SBFM; 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
Allocation Series.

At a meeting of shareholders of each portfolio held on
March 2, 2001, the shareholders of each portfolio
approved new Asset Allocation and Administration
Agreements for each portfolio. These new Asset
Allocation and Administration Agreements become
effective on or about July 6, 2001 and provide for a
management fee of 0.20% of each portfolio's average
daily net assets. The new Asset Allocation and
Administration Agreements provide for a decrease in
the management fee and an effective increase in total
annual fund operating expenses.

The new fee structure will be subject to a voluntary
fee waiver and expense reimbursement in order to
maintain an expense cap on each of the portfolios that
is no more than 0.20% higher than current expenses,
for the Global, High  Growth, Growth and Balanced
Portfolios, a maximum increase from 0.60% to 0.80%
for Class A shares, from 1.35% to 1.55% for Class B
and Class L shares, and from 0.35% to 0.55% for Class
Y and Class Z shares; for the Conservative and Income
Portfolios, a maximum increase from 0.60% to 0.80% for
Class A shares, from 1.10% to 1.30% for Class B
shares, from 1.05% to 1.25% for Class L shares, and
from 0.35% to 0.55% for Class Y and Class Z shares.
This expense cap will not be changed in the future
without the approval of the Board of Directors of
Allocation Series.

For the fiscal years ended January 31, 2001, January
31, 2000 and January 31, 1999, the management fees for
each portfolio were as follows:

Portfolio
2001
2000
1999
High Growth
$3,134,220
$2,747,177
$2,147,850
Growth
  3,426,765
  3,282,233
  2,712,756
Global
     128,377
       93,310
       29,278
Balanced
  1,749,166
  1,899,634
  1,605,830
Conservative
     444,760
     519,947
     433,128
Income
     197,892
     248,660
     237,885

SBFM also serves as investment adviser to each of the
underlying funds in which the portfolios may invest
(other than Smith Barney Small Cap Core Fund, Inc.)
and is responsible for the selection and management of
each of the underlying fund's investments.  TIMCO,
located at One Tower Square, Hartford, Connecticut
06183, serves as investment adviser to Smith Barney
Small Cap Core Fund, Inc.  TIMCO is a wholly-owned
subsidiary of Salomon Smith Barney Holdings Inc.

Decisions to buy and sell shares of the underlying
funds for the portfolios are made by SBFM, subject to
the overall supervision and review of the Allocation
Series' Board of Directors.


Each portfolio, as a shareholder in the underlying
funds, will indirectly bear its proportionate share of
any investment management fees and other expenses paid
by the underlying funds.  The effective management fee
of each of the underlying funds in which the
portfolios may invest is set forth below as a
percentage rate of the fund's average net assets:

Underlying Fund

Management
Fees
Smith Barney Aggressive Growth Fund Inc.
0.80%
Smith Barney Appreciation Fund Inc.
0.56
Smith Barney Fundamental Value Fund Inc.
0.75
Smith Barney Funds, Inc.:

Large Cap Value Fund
0.55
Short-Term High Grade Bond Fund
0.45
Smith Barney Income Funds:

Smith Barney High Income Fund
0.70
Smith Barney Balanced 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 Peachtree Growth Fund
1.00
Smith Barney Hansberger Global Value Fund
0.95
Smith Barney Small Cap Growth Fund
0.75
Smith Barney Small Cap Value Fund
0.75
Smith Barney Government Securities Fund
0.55
Smith Barney Investment Grade Bond Fund
0.65
Smith Barney Investment Series

      Smith Barney Growth & Income Fund
0.65
Smith Barney Investment Trust:

Smith Barney Large Capitalization Growth
Fund
0.75
Smith Barney Mid Cap Core Fund
0.75
Smith Barney Managed Governments Fund Inc.
0.65
Smith Barney Money Funds, Inc.
       Cash Portfolio

0.38
Smith Barney Small Cap Core Fund, Inc.
0.75
Smith Barney World Funds, Inc.:

International All Cap Growth Portfolio
0.85
European Portfolio
0.85
Global Government Bond Portfolio
0.75




Code of Ethics

Pursuant to Rule 17j-1 of the 1940 Act, the fund, its
investment advisers and principal underwriter have
adopted codes of ethics that permit personnel to
invest in securities for their own accounts, including
securities that may be purchased or held by the fund.
All personnel must place the interests of clients
first and avoid activities, interests and
relationships that might interfere with the duty to
make decisions in the best interests of the clients.
All personal securities transactions by employees must
adhere to the requirements of the codes and must be
conducted in such a manner as to avoid any actual or
potential conflict of interest, the appearance of such
a conflict, or the abuse of an employee's position of
trust and responsibility.
A copy of the fund's Code of Ethics is on file with
the Securities and Exchange Commission.

Distributors

Distributors. Salomon Smith Barney, located at 388
Greenwich Street, New York, NY 10013 and PFS, located
at 3120 Breckinridge Boulevard, Duluth, GA 30099,
serve as the fund's distributors pursuant to written
agreements dated June 5, 2000 (the "Distribution
Agreements") which were approved by the fund's Board
of Directors, including a majority of the Independent
Directors on March 1, 2000.

The distributors may be deemed to be underwriters for
purposes of the Securities Act of 1933. From time to
time, the distributors or their affiliates may also
pay for certain non-cash sales incentives provided to
PFS Investments Registered 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
Registered Representatives that sell shares of each
portfolio.

Salomon Smith Barney has entered into a selling
agreement with PFS and PFS has entered into an
agreement with PFS Investments Inc. giving PFS
Investments Inc. the right to sell shares of each
portfolio of the fund on behalf of PFS.  Each
distributor's obligation is an agency or "best
efforts" arrangement under which each distributor is
required to take and pay only for such shares of each
portfolio as may be sold to the public.  Each
distributor is not obligated to sell any stated number
of shares.  The Distribution Agreements are renewable
from year to year if approved (a) by the directors or
by a vote of a majority of the fund's outstanding
voting securities, and (b) by the affirmative vote of
a majority of directors who are not parties to the
Distribution Agreements or interested persons of any
party by votes cast in person at a meeting called for
such purpose.  The Distribution Agreements provide
that it will terminate if assigned, and that it may be
terminated without penalty by either party on 60 days'
written notice.

Commissions on Class A Shares.

For the period February 1, 1998 through October 7,
1998 and for the period October 8, 1998 through
January 31, 1999, the aggregate dollar amounts of
commissions on Class A shares, were as follows:

Name of Portfolio
02/01/98 through
10/07/98*
10/08/98 through
01/31/99**
High Growth Portfolio
$147,000
$47,000
Global Portfolio
      2,000
    1,000
Growth Portfolio
   186,000
  55,000
Balanced Portfolio
     58,000
  33,000
Conservative
Portfolio
      20,000
    7,000
Income Portfolio
        7,000
    1,000

For the fiscal year ended January 31, 2000, the
aggregate dollar amounts of commissions on Class A
shares, were as follows:

Name of Portfolio
2/1/99 through
01/31/00***
High Growth Portfolio
$132,000
Global Portfolio
    10,000
Growth Portfolio
  127,000
Balanced Portfolio
  42,000
Conservative
Portfolio
    7,000
Income Portfolio
    4,000

* The entire amount was paid to Salomon Smith Barney.

**The following amounts were paid to Salomon Smith
Barney: $42,300, $900, $49,500, $29,700, $6,300, $900,
respectively, with respect to each portfolio in
descending order and the remaining amounts were paid
to CFBDS, Inc.

*** The following amounts were paid to Salomon Smith
Barney: $118,800, $9,000, $114,300, $37,800, $6,300,
$3,600, respectively, to each portfolio in descending
order and the remaining amounts were paid to CFBDS,
Inc.


For the fiscal year ended January 31, 2001, the
aggregate dollar amounts of commissions on Class A
shares paid to Salomon Smith Barney, PFS and CFBDS,
Inc., were as follows:

Name of Portfolio
2/1/00 through 01/31/01*
High Growth Portfolio
$149,000
Global Portfolio
     8,000
Growth Portfolio
  174,000
Balanced Portfolio
  42,000
Conservative
Portfolio
    4,000
Income Portfolio
    3,000


Commissions on Class L Shares.  For the period June
12, 1998 through October 7, 1998 and for the period
October 8, 1998 through January 31, 1999, the
aggregate dollar amounts of commission on Class L
shares were as follows:


(On June 12,1998, Class C shares were
renamed
Class L Shares)

06/12/98 through
10/08/98 through
Name of Portfolio
     10/07/98*
    01/31/99**
High Growth Portfolio
$10,000
$4,000
Global Portfolio
0
  1,000
Growth Portfolio
  17,000
17,000
Balanced Portfolio
  22,000
22,000
Conservative Portfolio
    5,000
 7,000
Income Portfolio
0
 3,000
* The entire amount was paid to Salomon Smith Barney.

**The following amounts were paid to Salomon Smith
Barney: $3,600, $900, $15,300, $19,800, $6,300,
$2,700, respectively, with respect to each portfolio
in descending order.


For the fiscal year ended January 31, 2000, the
aggregate dollar amounts of commissions on Class L
shares, were as follows:

Name of Portfolio
2/1/99 through 01/31/00*
High Growth Portfolio
$39,000
Global Portfolio
    2,000
Growth Portfolio
  64,000
Balanced Portfolio
  44,000
Conservative
Portfolio
    6,000
Income Portfolio
    9,000

*The following amounts were paid to Salomon Smith
Barney: $35,100, $1,800, $57,600, $39,600, $5,400,
$8,100, respectively, with respect to each portfolio
in descending order.

For the fiscal year ended January 31, 2001, the
aggregate dollar amounts of commissions on Class L
shares paid to Salomon Smith Barney, PFS and CFBDS,
Inc., were as follows:

Name of Portfolio
2/1/00 through 01/31/01
High Growth Portfolio
$48,000
Global Portfolio
    2,000
Growth Portfolio
  44,000
Balanced Portfolio
  23,000
Conservative
Portfolio
    4,000
Income Portfolio
    1,000


Deferred Sales Charges on Class A, B and L Shares For
each of the fiscal years ended January 31, 1999,
January 31, 2000 and January 31, 2001, the following
deferred sales charges were paid on redemptions of the
portfolios' shares:


Class A



Fiscal Year
Fiscal Year
Fiscal Year
Name of Portfolio
Ended 01/31/99
Ended 01/31/00
Ended 01/31/01
High Growth
Portfolio
$0
$3,000
$0
Global Portfolio
  0
         0
  0
Growth Portfolio
  0
  2,000
  0
Balanced Portfolio
  0
         0
  0
Conservative
Portfolio
  0
  1,000
  0
Income Portfolio
  0
         0
  0



Class B



Fiscal Year
Fiscal Year
Fiscal Year
Name of Portfolio
Ended 01/31/99
Ended 01/31/00
Ended 01/31/01
High Growth
Portfolio
$280,000
$257,000
$162,000
Global Portfolio
       2,000
             0
      4,000
Growth Portfolio
   490,000
  432,000
  315,000
Balanced Portfolio
   232,000
  280,000
  173,000
Conservative
Portfolio
     35,000
    48,000
     28,000
Income Portfolio
     34,000
    32,000
     21,000



Class L



Fiscal Year
Fiscal Year
Fiscal Year
Name of Portfolio
Ended 01/31/99
Ended 01/31/00
Ended 01/31/01
High Growth
Portfolio
$8,000
$4,000
$6,000
Global Portfolio
   0
         0
         0
Growth Portfolio
   4,000
 11,000
11,000
Balanced Portfolio
   3,000
   6,000
  4,000
Conservative
Portfolio
     0
   2,000
         0
Income Portfolio
     0
          0
   1,000


Distribution Arrangements.  To compensate each of
Salomon Smith Barney and PFS Investments Inc. for the
service it provides and for the expenses it bears,
each portfolio has adopted a plan of distribution (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act.
Under the Plan, Salomon Smith Barney is paid a fee
with respect to shares of each portfolio sold through
Salomon Smith Barney; and PFS Investments Inc. is paid
a fee with respect to shares (Classes A and B) of each
portfolio sold through PFS.  Under the Plan, each
portfolio pays Salomon Smith Barney or PFS Investments
Inc. (who pays its Registered Representatives), as the
case may be, 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 L
shares.  The service fee is primarily used to pay
Salomon Smith Barney Financial Consultants and PFS
Investments Representatives for servicing shareholder
accounts.  In addition, each portfolio pays Salomon
Smith Barney a distribution fee with respect to Class
B and Class L (and pays PFS Investments Inc. with
respect to 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 Salomon Smith
Barney Financial Consultants, PFS 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 Salomon Smith Barney and PFS
Investments Inc. associated with the sale of portfolio
shares, including lease, utility, communications and
sales promotion expenses.  For the Conservative
Portfolio and the Income Portfolio the Class B and
Class L distribution fee is calculated at the annual
rate of 0.50% and 0.45% of the value of the
portfolio's average daily net assets attributable to
the shares of the respective Class.  For the High
Growth Portfolio, the Global Portfolio, the Growth
Portfolio and the Balanced Portfolio, the Class B and
Class L distribution fee is calculated at the annual
rate of 0.75% of the value of such portfolio's average
net assets attributable to the shares of the
respective Class.

Payments under each Plan are not tied exclusively to
the distribution and shareholder services expenses
actually incurred by Salomon Smith Barney or PFS
Investments Inc. and the payments may exceed
distribution expenses actually incurred.  The fund's
Board of Directors will evaluate the appropriateness
of each Plan and its payment terms on a continuing
basis and in so doing will consider all relevant
factors, including expenses borne by Salomon Smith
Barney and PFS Investments Inc., and amounts received
under the Plan and proceeds of the deferred sales
charges.

For the fiscal years ended January 31, 1999, January
31, 2000 and January 31, 2001, the following
distribution and service fees were accrued and/or paid
to Salomon Smith Barney and PFS, who in turn, paid PFS
Investments Inc.:



Class A


Fiscal Year
Fiscal Year
Fiscal Year
Name of Portfolio
Ended 01/31/99
Ended 01/3l/00
Ended 01/3l/01
High Growth
Portfolio
$765,218
$988,428
$1,147,326
Global Portfolio
   10,958
    36,155
       50,382
Growth Portfolio
 823,014
1,021,504
  1,104,312
Balanced Portfolio
 497,891
   570,225
     552,874
Conservative
Portfolio
 152,606
   181,917
     161,730
Income Portfolio
   82,447
     87,026
       70,668



Class B


Fiscal Year
Fiscal Year
Fiscal Year
Name of Portfolio
Ended 01/31/99
Ended 01/31/00
Ended 01/31/01
High Growth
Portfolio
$2,700,351
$3,407,0
50
$3,836,237
Global Portfolio

38,673

117,753
     153,625
Growth Portfolio
  3,941,671

4,667,87
6
  4,777,131
Balanced Portfolio
  2,220,756

2,480,30
9
  2,317,100
Conservative
Portfolio

419,651

514,670
     415,170
Income Portfolio

227,917

240,920
     186,152





Class L(formerly
Class C shares
as of June 12,
1998)


Fiscal Year
Fiscal Year
Fiscal Year
Name of Portfolio
Ended
01/31/99
Ended 01/31/00
Ended 01/31/01
High Growth
Portfolio
$ 327,957
$408,449
$499,583
Global Portfolio
      1,146
      4,224
    11,640
Growth Portfolio
   472,118
  553,509
  579,043
Balanced Portfolio
   310,701
  357,049
  342,375
Conservative
Portfolio
     41,006
    50,168
    49,185
Income Portfolio
     25,272
    28,787
    24,170

For the fiscal year ended January 31, 2001, Salomon
Smith Barney and PFS incurred the following
distribution expenses for the portfolios:


















Printing
and




Portfolio

Mailing of
Support
Service
Interest

Name
Advertisi
ng
Prospectus
es
Services
Agents
Expense
Total







High
Growth
$
58,898
$10,875
$877,550
$7,059,67
9
$120,887
$8,127,8
89
Global

2,050
      112

40,212

459,126

10,979

512,479
Growth

67,494
 16,702
1,056,38
1

7,092,208

108,988

8,341,77
3
Balanced

28,264
   7,139

485,565

3,786,846

57,924

4,365,73
8
Conservati
ve

7,326
   1,439

106,518

825,321

12,680

953,284
Income

3,422
      827

78,799

308,546

3,684

395,278


Each of PFS and Salomon Smith Barney will pay for the
printing, at printer's overrun cost, of prospectuses
and periodic reports after they have been prepared,
set in type and mailed to shareholders, and will also
pay the cost of distributing such copies used in
connection with the offering to prospective investors
and will also pay for supplementary sales literature
and other promotional costs.  Such expenses incurred
by Salomon Smith Barney and PFS are distribution
expenses within the meaning of the Plans and may be
paid from amounts received by Salomon Smith Barney
from Allocation Series under the Plans.

From time to time, PFS Investments Inc. 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 Allocation 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, Salomon Smith Barney and PFS Investments Inc.
will provide the Allocation 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 carry forward amounts at a
rate comparable to that paid by Salomon Smith Barney
for bank borrowings.  The Allocation 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 deferred sales charge.

ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS

Portfolio history. The Allocation Series, an open-end,
non-diversified investment company, was incorporated
in Maryland on August 11, 1995.  The Allocation Series
commenced operations on February 5, 1996 under the
name Smith Barney Concert Series Inc.  The Select
Portfolios of Allocation Series commenced operations
on February 5, 1997.  On February 24, 1997, the
Allocation Series changed its name to Smith Barney
Concert Allocation Series Inc. and changed its name to
the Smith Barney Allocation Series Inc. on September
11, 2000. The Allocation Series has authorized capital
of 6,100,000,000 shares with a par value of $.001 per
share.  The Board of Directors has authorized the
issuance of eleven series of shares, each representing
shares in one of eleven 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 L, 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
Allocation Series' Rule 12b-1 distribution plan that
pertain to a particular Class.

Custodian.  Portfolio securities and cash owned by the
Allocation Series are held in the custody of PFPC
Trust Company (successor as assigned by PNC Bank,
National Association) is located at 8800 Tinicum
Blvd., Philadelphia, Pennsylvania 19153.


Auditors.  KPMG LLP, 757 Third Avenue, New York, New
York 10017, has been selected as independent auditors
for the Allocation Series for its fiscal year ending
January 31, 2002 to examine and report on the
Allocation Series' financial statements and financial
highlights.

Transfer Agent.  Citi Fiduciary Trust Company, located
at 125 Broad Street, New York, New York 10004, serves
as the fund's transfer and dividend-paying agent.
Under the transfer agency agreement, the Transfer
Agent maintains the shareholder account records for
the fund, handles certain communications between
shareholders and the fund, distributes dividends and
distributions payable by the fund and produces
statements with respect to account activity for the
fund and its shareholders.  For these services, the
Transfer Agent receives fees from the fund computed on
the basis of the number of shareholder accounts that
the Transfer Agent maintains for the fund during the
month and is reimbursed for out-of-pocket expenses.

Sub-Transfer Agent.  PFPC Global Fund Services,
located at P.O. Box 9699, Providence, RI 02940-9699,
serves as one of the fund's sub-transfer agents.
Under the transfer agency agreement, the sub-transfer
agent maintains the shareholder account records for
the fund, handles certain communications between
shareholders and the fund and distributes dividends
and distributions payable by the fund.  For these
services, the sub-transfer agent receives a monthly
fee computed on the basis of the number of shareholder
accounts it maintains for the fund during the month,
and is reimbursed for out-of-pocket expenses.

The fund has also engaged the services of PFS
Shareholder Services as a sub-transfer agent for PFS
Investment Accounts.  This sub-transfer agent is
located at 3100 Breckinridge Blvd., Bldg. 200, Duluth,
GA 30099.

Minimum Account Size.  The Allocation Series reserves
the right to involuntarily liquidate any shareholder'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 Allocation Series, however,
will not redeem shares based solely on market
reductions in net asset value.  Before the Allocation
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.

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
Allocation 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 Allocation
Series have declared that the director be removed.
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 fund, a portfolio will vote its
shares in proportion to the vote of all other holders
of shares of that underlying 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 SAI, 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 Allocation 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 Allocation 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 Allocation Series shares voting
without regard to portfolio.

In the event of the liquidation or dissolution of the
Allocation 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.


As of May 11, 2001, to the knowledge of the fund, 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:



Portfolio

Class

Shareholder Name

Shareholder
Address
Number of
Shares

Percent
High
Growth
Class
A
PFS Shareholders
Services (A)
Attn.  Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
25,060,992.
198*
84.35%

Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
17,529,944.
637*
72.37%
Growth
Class
A
PFS Shareholder
Services (A)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
25,102,115.
590*
80.09%

Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
20,482,262.
893*
63.48%
Global
Class
A
PFS Shareholder
Services (A)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
1,636,393.4
18*
94.06%

Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
1,228,280.0
00*
96.30%
Balanced
Class
A
PFS Shareholder
Services (A)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
14,492,594.
153*
81.63%

Class
A
Travelers Insurance
Company
Separate Account
QPN 401(k)-TIC
Travelers Insurance
Company
Attn: Roger Ferland
5 MS
One Tower
Square
Hartford, CT
06183
1,053,181.6
27*
5.93%

Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100
Breckinridge
Blvd.
Duluth, GA
30199
12,732,621.
427*
71.74%

* The fund believes that these entities are not the
beneficial owners of shares held of record by
them.




Portfoli
o

Class

Shareholder Name

Shareholder
Address
Number of
Shares

Percent
Conserva
tive
Class
A
PFS Shareholder
Services (A)
Attn. Jay Barnhill
3100 Breckinridge
Blvd.
Duluth, GA  30199
4,537,436.
778*
84.30%

Class
A
Travelers Insurance
Company
Separate Account QPN
401(k)-TIC
Travelers Insurance
Company
Attn: Roger Ferland
5 MS
One Tower Square
Hartford, CT
06183
350,890.57
3*
6.52%

Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100 Breckinridge
Blvd.
Duluth, GA 30199
3,423,011.
355*
   77.17%

Class
L
Frank A Abacherli
Shirley M. Abacherli
TTEES
FBO Abacherli Family
Trust
DTD 10/06/89
29875 Newport
Road
Menifee, CA
92584-9524
48,855.285
7.11%

Class
L
CSTC 389365825211
TTEE Sylvan Learning
Systems
Non-Qualified
Deferred
Compensation Plan
Robin Khan
153 E. 53rd
Street, 23rd Floor
New York, NY10043
43,512.728
6.33%
Income
Class
A
PFS Shareholder
Services (A)
Attn. Jay Barnhill
3100 Breckinridge
Blvd.
Duluth, GA 30199
2,050,753.
400*
93.39%

Class
B
PFS Shareholder
Services (B)
Attn. Jay Barnhill
3100 Breckinridge
Blvd.
Duluth, GA 30199
1,435,017.
302*
68.71%

Class
L
D. Joyce Engel TTEE
FBO Robert T Cowan
Family TR, U/A/D
2/20/97
161 S. Civic
Drive, #8
Palm Springs, CA
92262
29,775.070
9.57%

Class
L
Frontier Trust
Company
TTEE
Citizens State Bank
Salary
Savings
111 Monument
Circle
Ste. 3100
Indianapolis, IN
46204-5100
26,952.317
8.67%

Class
L
Rita Diana
SSB IRA Cust
108 Palmetto Lane
Road
Milford, PA 18337
18,095.127
5.92%

Class
L
CSTC 389365825211
TTEE Sylvan Learning
Systems
Non-Qualified
Deferred
Compensation Plan
Robin Khan
153 E. 53rd
Street, 23rd Floor
New York, NY10043
18,081.941
5.81%

* The fund believes that these entities are not the
beneficial owners of shares held of record by
them.

FINANCIAL STATEMENTS

The Allocation Series' Annual Reports for the fiscal
year ended January 31, 2001 are incorporated herein by
reference in their entirety.  It was filed with the
Securities and Exchange Commission on April 5, 2001
(Accession Number 950130-01-500511).  A copy of the
reports is furnished with this Statement of Additional
Information.


OTHER  INFORMATION
Styles of Fund Management: In an industry where the
average portfolio manager has seven years of
experience (source: ICI, 1998), the portfolio managers
of Smith Barney mutual funds average 21 years in the
industry and 15 years with the firm.
Smith Barney mutual funds offers more than 60
mutual funds.  We understand that many investors
prefer an active role in allocating the mix of funds
in their portfolio, while others want the asset
allocation decisions to be made by experienced
managers.

That's why we offer five "styles" of fund management
that can be tailored to suit each investor's unique
financial goals.

	Classic Series  - our portfolio manager driven
funds

Our Classic Series lets investors participate in
mutual funds whose investment decisions are
determined by experienced portfolio managers,
based on each fund's investment objectives and
guidelines.  Classic Series funds invest across
asset classes and sectors, utilizing a range of
strategies in order to achieve their objectives.


Index Series - funds that track the market

Our Index funds are designed to provide
investment results that track, as closely as
possible, the performance of a stock or bond
market index.  This strategy distinguishes an
index fund from an "actively managed" mutual
fund.  Instead of trying to outperform a market
or segment, a portfolio manager looks to an
index to determine which securities the fund
should own.

	Premier Selections Series - our best ideas,
concentrated funds

We offer a series of Premier Selections funds
managed by several of our most experienced and
proven managers.  This series of funds is built
on a unique strategy of combining complementary
investment management styles to create broader,
multiclass and multicap products that are
distinguished by a highly concentrated focus.

Research Series - driven by exhaustive
fundamental securities analysis
Built on a foundation of substantial buy-side
research under the direction of our Citibank
Global Asset Management (CGAM) colleagues, our
Research funds focus on well-defined industries,
sectors and trends.
Style Pure Series - our solution to funds that
stray
Our Style Pure Series funds are the building
blocks of asset allocation.  The funds stay
fully invested within their asset class and
investment style, enabling you to make asset
allocation decisions in conjunction with your
financial professional.

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 Ratings Group

AAA - Debt rated "AAA" has the highest rating assigned
by Standard & Poor's Ratings Group ("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
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-l" (or related supporting
institutions) have a superior capacity for repayment
of short-term promissory obligations.  Priine-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 Ratings Group

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 23. Exhibits

	(a)(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").

	(a)(2) 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").

	(a)(3) Articles Supplementary to the Articles
of Incorporation of the
Registrant dated June 2, 1998 is incorporated by
reference to Post-
Effective Amendment No. 16 to the Registration
Statement as filed on June 1, 1999 ("Post-Effective
Amendment No. 16").

	(a)(4) Articles of Amendment to the Articles of
Incorporation of the
Registrant dated June 4, 1998 is incorporated by
reference to Post-Effective Amendment No. 16.

	(a)(5) Articles of Amendment to the Articles of
Incorporation of the
Registrant dated September 13, 2000 is incorporated
by reference to Post-
Effective Amendment No. 18 to the Registration
Statement as filed on
April 24, 2001 ("Post-Effective Amendment No. 18")..

	(a)(6) Articles of Amendment to the Articles of
Incorporation of the
Registrant dated February 15, 2001 is incorporated by
reference to Post-
Effective Amendment No. 18.

	(a)(7) Articles of Amendment to the Articles of
Incorporation of the
Registrant dated April 9, 2001 is incorporated by
reference to Post-
Effective Amendment No. 18.

	(a)(8) Articles of Amendment to the Articles of
Incorporation of the
Registrant dated April 24, 2001 is filed herein.

	(b)	Restated By-Laws of the Registrant is
incorporated by reference to
the Registration Statement.

	(c)(1) 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.

	(c)(2) 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)(3) 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.

	(c)(4) 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.

	(c)(5)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.

	(c)(6) 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").

	(c)(7) 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.

	(c)(8) 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.

	(c)(9)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.

	(c)(10)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.

	(c)(11)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.

	(c)(12)Registrant's form of stock certificate
for Class Z shares of the
Growth Portfolio is incorporated by reference to
Post-Effective Amendment No.
5.

	(c)(13) Registrant's form of stock certificate
for Class Z shares of the
Balanced Portolio is incorporated by reference to
Post-Effective Amendment No.
5.

	(c)(14) Registrant's form of stock certificate
for Class Z shares of the
Conservative Portfolio is incorporated by reference
to Post-Effective
Amendment No. 5.


	(c)(15) Registrant's form of stock certificate
for Class Z shares of the
Income Portfolio is incorporated by reference to
Post-Effective Amendment No.
5.


	(c)(16) Registrant's form of stock certificate
for Class A, B, C and Y
shares of the Global Portfolio will be filed by
amendment.

	(d)(1) 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


	(d)(2) 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

	(e)(1) Form of the Distribution Agreement
between the Registrant and
Smith Barney Inc. is incorporated by reference to the
Registration Statement.

	(e)(2) Form of the Distribution Agreement
between the Registrant and PFS
Distributors, Inc. is incorporated by reference to
the Registration Statement.

	(e)(3) 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.

	(e)(4) Form of Distribution Agreement between
Registrant and
CFBDS, Inc. is incorporated by reference to Post-
Effective Amendment No. 16.

	(e)(5) Form of Selling Group Agreement is
incorporated by reference to Post-Effective Amendment
No. 16.

(e)(6) Form of Distribution Agreement between
the Registrant
and Salomon Smith Barney Inc. is filed herein.

(e)(7) Form of Distribution Agreement between
the Registrant
and PFS Distributors is filed herein.

	(f)	Inapplicable.

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

	(h)(1) Form of Transfer Agency and Service
Agreement between the
Registrant and The Shareholder Services Group, Inc.
is incorporated by
reference to the Registration Statement.

	(h)(2) Form of Sub-Transfer Agency Agreement
between the Registrant and
PFS Shareholders Services is incorporated by
reference to the Registration
Statement.

(h)(3) Form of Transfer Agency Agreement
between the Registrant and
Citi Fiduciary Trust Company is filed herein.

(h)(4) Form of Sub-Transfer Agency Agreement
between the Registrant and
PFPC Global Fund Services is filed herein.

(h)(5) Form of Sub-Transfer Agency Agreement
between the Registrant and
PFS Shareholder Services is filed herein.

	(i)	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.


	(j)	Consent of Independent Public Accountants
is filed herewith.

	(k)	Inapplicable.

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

	(m)(1) Form of Service and Distribution Plan
pursuant to Rule 12b-1
is incorporated by reference to the Registration
Statement.

	(m)(2) Form of Amended Service and Distribution
Plan pursuant to
Rule 12b-1 is incorporated by reference to Post-
Effective Amendment No. 16.

(m)(3) Form of Amended and Restated Shareholder
Services and Distribution
Plan pursuant to Rule 12b-1 with Salomon Smith Barney
and PFS Distributors Inc.
is filed herein.

	(n)	Not Applicable

	(o)(1) 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.

	(o)(2) Form of Amended Multiple Class Plan
pursuant to Rule 18f-3(d) of the Investment Company
Act of 1940 is incorporated by reference to Post-
Effective Amendment No. 16.

(p)Code of Ethics - North America is
incorporated by reference to Post-Effective Amendment
No. 17 filed on May 26, 2000.


Item 24.	Persons Controlled by or Under Common
Control with Registrant.

			None.

Item 25. Indemnification.

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

Item 26.	Business or Other Connections of
Investment Advisers.

(a)	Investment Adviser-Smith Barney Fund Management
LLC
(formerly known as SSB Citi Fund Management LLC)
("SBFM")


SBFM was incorporated in December 1968 under the
laws of the State of Delaware and converted to a
Delaware limited liability company in 1999. SBFM
is a wholly owned subsidiary of Salomon Smith Barney
Holdings Inc., formerly known as Smith Barney
Holdings
Inc., which in turn is a wholly owned subsidiary of
Citigroup Inc. ("Citigroup"). SBFM is registered
as an investment adviser under the Investment
Advisers
Act of 1940 (the "1940 Act").

The list required by this Item 26 of officers and
directors of SBFM together with information as to
any other business, profession, vocation or
employment
of a substantial nature engaged in by such officers
and directors during the past two years, is
incorporated by reference to Schedules A and D of
Form
ADV filed by SBFM pursuant to the Investment
Advisers Act of 1940 Act (the "Advisers Act") (SEC
File No. 801-8314).

(b)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
Citigroup.  TIA is registered as an investment
adviser under the Advisers Act.

The list  required by this Item 26 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 27.	Principal Underwriters.
    Salomon Smith Barney, Inc., ("Salomon Smith
Barney")
the Registrant's Distributor, is also the distributor
for
the following Smith Barney
funds: Smith Barney Investment Series, Consulting
Group
Capital Markets Funds, Greenwich Street Series Fund,
Smith Barney Adjustable Rate Government Income Fund,
Smith Barney Aggressive Growth Fund Inc., Smith
Barney
Appreciation Fund Inc., Smith Barney Arizona
Municipals
Fund Inc., Smith Barney California Municipals Fund
Inc.,
Smith Barney
Equity Funds, Smith Barney Fundamental Value Fund
Inc.,
Smith Barney Funds, Inc., Smith Barney Income Funds,
Smith Barney Institutional Cash Management Fund,
Inc.,
Smith Barney Investment Funds Inc., Smith Barney
Investment Trust, Smith Barney Managed
Governments Fund Inc.,Smith Barney Managed Municipals
Fund Inc.,Smith Barney Massachusetts Municipals Fund,
Smith Barney Money Funds, Inc., Smith Barney Muni
Funds, Smith Barney Municipal
Money Market Fund, Inc., Smith
Barney New Jersey Municipals Fund Inc., Smith Barney
Oregon Municipals Fund Inc., Smith Barney Principal
Return Fund, Smith Barney Sector Series Inc.,
Smith Barney Small Cap Core Fund, Inc.,
Smith Barney Telecommunications Trust, Smith Barney
Variable Account Funds, Smith Barney World Funds,
Inc.,
Travelers Series Fund Inc., and various
series of unit investment trusts.


PFS Distributors, Inc., ("PFS Distributors"),
a Distributor of the Registrant, is also a
distributor for the
following Smith Barney funds:

Smith Barney Investment Series,
Smith Barney Aggressive Growth Fund Inc.,
Smith Barney Appreciation Fund Inc.,
Smith Barney Equity Funds,
Smith Barney Fundamental Value Fund Inc.
Smith Barney Income Funds,
Smith Barney Investment Funds Inc.,
Smith Barney Investment Trust,
Smith Barney Managed Municipals Fund Inc.,
Smith Barney Money Funds, Inc.
Smith Barney Sector Series Inc.

(b) The information required by this Item 27 with
respect
to each director, officer and partner of Salomon
Smith Barney
is incorporated by reference to Schedule A of Form BD
filed by Salomon Smith Barney  pursuant to the
Securities
Exchange Act of 1934 (SEC File No. 812-8510).

The information required by this Item 27 with respect
to each director, officer and partner of PFS
Distributors
is incorporated by reference to Schedule A of Form BD
filed by PFS Distributors  pursuant to the Securities
Exchange Act of 1934 (SEC File No. 8-37352).


(c)	Not applicable.



Item 28.	 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 Salomon Smith Barney Inc., 388 Greenwich Street,
New York, New York 10013.

(1)	Smith Barney Fund Management LLC
	7 World Trade Center
	New York, New York  10048
	(Records relating to its function as Investment
Adviser and Administrator)

(2)	Travelers Investment Adviser, Inc.
	388 Greenwich Street
	New York, New York  10013
	(Records relating to its function as Investment
Adviser)


(3)		Salomon Smith Barney Inc.
		388 Greenwich Street
		New York, New York 10013

		And

		PFS Distributors Inc.
3120 Breckinridge Blvd.
		Duluth, GA 30099-0062
	(Records relating to its function as
Distributor)

(4)		PFPC Trust Co.
		8800 Tinicum Blvd.
		Philadelphia, PA, 19153
	(Records relating to its function as Custodian)

(5) 		Citi Fiduciary Trust Company
125 Broad Street
New York, New York 10004
(Records relating to its function as
Transfer Agent
and Dividend Paying Agent)

(6)		PFPC Global Fund Services
		P. O. Box 9699
		Providence, RI 02940-9699
		(Records relating to its function as Sub-
Transfer
Agent)

(7) PFS Shareholder Services
3100 Breckinridge Blvd., Bldg. 200
Duluth, Georgia 30099
	(Records relating to its function as Sub-
Transfer
Agent)

Item 29.	 Management Services.

		Inapplicable.

Item 30.	Undertakings.

		Inapplicable

SIGNATURES

     Pursuant to the requirements of the Securities
Act of 1933 and the
Investment Company Act of 1940, the Registrant
certifies that it meets all
the requirements for effectiveness of this
Registration Statement pursuant
to Rule 485(b)under the 1933 Act and has duly caused
this Post-Effective
Amendment to its Registration Statement to be signed
on its behalf by the
undersigned, and where applicable, the true and
lawful attorney-in-fact,
thereto duly authorized, in the City of New York and
State of New York on
the 30th day of May 2001.


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


     Pursuant to the requirements of the Securities
Act of 1933, this Post-Effective Amendment to the Registration
Statement has been signed below by the following persons in
the capacities and on the date indicated.

Signatures		Title					Date


/s/ Heath B. McLendon	Director, and
(Heath B. McLendon)	Chief Executive Officer
5/30/01

Signature                     Title             Date

/s/ Heath B. McLendon		Director; Chairman 5/30/01
Heath B. McLendon			of the Board


/s/ Lewis E. Daidone		Senior Vice President; 5/30/01
Lewis E. Daidone			Treasurer
		(Principal
Accounting Officer)

/s/ Walter E. Auch*		Director		5/30/01
Walter E. Auch

/s/ Martin Brody*			Director		5/30/01
Martin Brody


/s/ H. John Ellis*		Director		5/30/01
H. John Ellis

/s/ Stephen E. Kaufman*		Director		5/30/01
Stephen E. Kaufman


/s/ Armon E. Kamesar*		Director		5/30/01
Armon E. Kamesar



* 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


EXHIBIT INDEX

Exhibit No.		Exhibit

(a)(8)		Articles of Amendment to Articles of Incorporation dated
April 24, 2001

(e)(6)		Form of Distribution Agreement with Salomon Smith Barney Inc.

(e)(7)		Form of Distribution Agreement with PFS Distributors Inc.

(h)(3)		Transfer Agency Agreement with Citi Fiduciary Trust Company

(h)(4)		Sub-Transfer Agency Agreement with PFPC Global Fund Services

(h)(5)		Sub-Transfer Agency Agreement with PFS Shareholder Services

(j)			Auditor's Consent

(m)(3)     Form of Amended and Restated Shareholder Services and
                Distribution Plan pursuant to Rule 12b-1 with Salomon Smith
	Barney and PFS Distributors Inc.